Convergent Inc, San Jose has done a deal with Manhattan Leasing Co of Los Angeles that will enable it to sell to Chase up to $40m of customer lease and installment sale contracts. The agreement has already been activated, with sale last month of a portion of the contracts originated by Convergent’s wholly owned Baron Data Systems. The $21.3m proceeds were used to establish an interest bearing reserve of $3.2m to retire all of Baron’s bank term loan of approximately $9.4m, and with the balance, to increase the company’s cash position by $8.7m. Convergent is also forming a separate operation to provide lease and installment sales finance to its customers, and says that the agreement with Chase represents the first step in that process. The company points out that the initial Chase financing adds to an already strong liquidity position.
