Moody’s Investors Service Inc. shifted to a more positive stance regarding financial prospects at Heller Financial Inc., saying the Chicago commercial-finance concern has made “significant strides in improving its credit profile” over the past several years.
Chicago-based Heller went public in May 1998, through a $1.04 billion initial stock offering. The company, founded in 1919, had been a fully owned unit of Japan’s Fuji Bank Ltd. since 1983. As a result of the IPO, Fuji’s stake in Heller has been diminished but it remains majority holder: Fuji controls 52 percent of Heller on an equity basis, and the Japanese concern retains a 77 percent voting interest through its holding of certain super-voting stock.
Heller provides midmarket and small-business clients with equipment financing, leasing and related services. Of late, it has been tightening the focus of its operations.
Last year, the company paid $483 million to acquire HealthCare Financial Partners, a maker of secured loans to health-care providers, and then sold a unit that provides accounts-receivable “factoring” services for $560 million. Proceeds from that sale have been used to bolster the company’s lending in higher-margin financing segments.
Moody’s said Wednesday that Heller has “broadened and deepened its franchise, focusing on asset-based financing to the middle market.” That strategy, the New York-based rating concern said, has yielded improved asset quality for Heller. In part, the improvement in the performance of Heller’s loans reflects the fact that Heller is now able to be “more selective in its underwriting,” Moody’s said.
Through the first six months of the current year, Heller’s net income has climbed 26 percent, to $145 million, or $1.35 a diluted share, from the year-earlier period’s $115 million, or $1.12 a share.
Moody’s didn’t raise the credit ratings on Heller debt; the Chicago company’s senior debt remains rated A3. But the rating concern, saying it expects Heller’s earnings to exhibit improved stability in the future, revised its rating outlook for Heller to “positive” from “stable.”
Heller’s assets stood at about $20 billion as of midyear, Moody’s noted.
Heller officials couldn’t be reached for comment. In New York Stock Exchange trading Wednesday, Heller Class A shares rose 75 cents a share, to $29.25.
