The loan syndications market needs to fundamentally change the way it communicates, according to John Sculley, the former chief executive officer of Apple Computer.
Speaking this week to a group of bankers in a symposium organized by J.P. Morgan & Co., Mr. Sculley and his brother Arthur, a former head of private banking at J.P. Morgan, were talking about their latest investment, a network communications utility service called Intralinks Inc.
Mr. Sculley and his brother have invested in Intralinks through their Sculley Brothers LLC venture capital vehicle.
New York-based Intralinks' service is designed to speed delivery and ease management of syndications documents and information, saving costs and improving communications, said its chief executive officer, Mark Adams.
Lenders can obtain digital notarization, followed by a paper copy, for loan documents that require it.
Intralinks has already signed up 200 banks and five syndicating agent banks including Citicorp, BankAmerica Corp., and J.P. Morgan, Mr. Adams said.
Though sophisticated technology is already a standard feature of risk management and analysis in the syndicated loan market, the movement of legal and financial documents and information is still largely conducted by mail, overnight delivery, fax, and telephone, he added.
More than $14 billion in loans have been successfully syndicated since last June using Intralinks, essentially a secure, private communications network that links banks and investors through the Internet.
During last month's United Parcel Service strike, when normal overnight delivery service was not available, Citicorp used Intralinks to distribute information about loans it was agenting. J.P. Morgan has successfully syndicated six loans through Intralinks, and BankAmerica recently used it to syndicate a $4 billion loan for Compaq Computer Inc. That loan closed Tuesday.
Intralinks is partnered with International Business Machines and Lotus Development Corp. and will be linked to the new syndicated loan data base developed by Securities Data Co. (Securities Data Co. is a sister company to American Banker.)
"After using Intralinks, even the most paper-loving of you out there will find yourselves pointing and clicking your way through it into syndicated loan documents," said Mary E. Watkins, managing director in J.P. Morgan's loan product group.
Some audience members, however, remained skeptical. "I'll take paper any day," said one lender attending the presentation, who spoke on condition of anonymity.