Proven Results: Project Summaries
Monaco Finance, Inc.
Scorecard Development
Background
Monaco Finance, Inc. was a publicly traded sub-prime automobile lender headquartered in Denver, Colorado. Faced with declining profits in a beleagured industry, the company hired Guyer to restructure their credit risk division in anticipation of re-attacking the market.
Solutions
In addition to building an entirely new credit risk department, Guyer developed and applied the most accurate scoring system in the industry for loan applicants. Using highly complex statistical tools including multi-variable logistic regression, CHAID, and Kolmogorov-Smirnov validation, the system predicted defaults and net losses within one percentage point of actual performance.
The scoring system was integrated with a sophisticated and comprehensive risk analysis model for Monaco Finance–the most unique in the industry. The entire risk analysis model provided purchasing decisions support in real time, guaranteeing management’s stated return on investment.
Finally, to help speed the company’s financial growth, Guyer prepared extensive support and analysis for negotiating terms for multi-tranche securitized bond issues. Based on $103 million in principal, the structure created over $2 million for the issuer at the time of execution and produced a residual cash flow stream in excess of $9 million.
Results
Over a period of three years, the initiatives implemented by Guyer for Monaco Finance helped the company weather a tough market and supported portfolio growth of over 100%, increasing the basis from $80 million to $163 million. Guyer also successfully quadrupled the size of the credit risk division. The scoring system and risk analysis model developed by Guyer have continued to prove successful and are still in use today in a web-based, nationally deployed application.
The Moore Companies
Financial Turnaround
Background
One of the original real estate companies in Denver, The Moore Companies found itself facing financial difficulties during the depressed real estate market of the late 1980s and early 1990s. Confronted with the possibility of defaulting on its obligations to investors, as well as operating expenses in excess of revenue, The Moore Companies hired Guyer to reverse its fortunes.
Solutions
After performing extensive strategic financial impact analysis and modeling, Guyer created a plan that reduced company costs by 45%–a savings of $400,000. Guyer also created improved computer support systems and reporting methods. The time required to produce monthly financial statements was reduced from 20 to 5 working days after calendar month end.
Furthermore, compensation structures for over 300 salesmen and 125 employees were reviewed and revised. Acquisition and debt/equity structure alternatives were created to preserve the firm.
Finally, in an effort to stave off foreclosure, Guyer acted as mediator and facilitator, re-negotiating six creditor relationships.
Results
Guyer successfully negotiated with all of The Moore Companies’ creditors. As a result, the company was able to successfully weather the depressed real estate market, remain solvent, and restore its position as the premier real estate firm in the Rocky Mountain west.
United Cable Television Corp. (Now AT&T Broadband)
Financial Turnaround
Background
United Cable Television was one of the pioneers of the cable industry, predating even HBO. Headquartered in Tulsa, Oklahoma, United Cable relocated to Denver, Colorado. Disgruntled employees in Oklahoma destroyed virtually all of the company’s financial records and left it with five months’ worth of incomplete, unclosed books. United Cable tasked Guyer with cleaning up the financial mess.
Solutions
Guyer redeveloped and administered the entire financial reporting and modeling, accounting, and data processing functions for United Cable. In addition, Guyer wrote and programmed a technology-based engineering system for them and constructed one of the first real-time accounting systems implemented anywhere.
To position United Cable for optimal financial growth, Guyer performed system analysis, vendor evaluations, contract negotiation, and strategic planning.
Results
Despite the financial turmoil caused by relocation and employee sabotage, United Cable never missed a beat. Accounting systems implemented by Guyer, working in real time, filled in the gaps quickly and thoroughly. As a result, United Cable never missed a filing, didn’t default on any of its loans, and went on to become a driving force in the industry.
Furthermore, within three and a half years United Cable grew more than 300%. Its stock moved from the over the counter market to the New York Stock Exchange. Subsequently, United Artists purchased United Cable, which was then sold to TCI (now AT&T Broadband).
Guyer’s ability to supply every piece of financial information that was lost during the move–plus systems implemented to support financial and accounting operations–helped make growth possible and contributed to United Cable’s ultimate success.