A company that wants to do for the bank loan market what eBay Inc. has done for collectibles has just added to its venture capital hoard.

The New York firm, ereorg.com Inc., got $7.5 million from Warburg, Pincus Equity Partners LP, a $5 billion private equity fund.

Ereorg.com - "reorg" is short for "reorganize" - said it will use the money to promote its Web site for secondary-market auctions of par and distressed bank loans, trade claims, and sovereign debt. Secondary trading of par and distressed bank loans tallied $67.3 billion in the United States in 1998, according to Loan Pricing Corp., a New York company that tracks the syndicated loan market.

Ronald DeKoven, ereorg.com's co-founder and chief executive officer, said the site, which will open for auctions in January, will bring more efficiency and transparency to these markets and make it easier for some banks to become active.

"Some institutions of significant size are not entirely comfortable trading in this marketplace," said Mr. DeKoven, a former partner in the corporate restructuring practice at Shearman & Sterling, a New York law firm. He said this is because banks active in secondary market trading need large staffs to carry out the phone negotiations, deal analyses, and legal documentation.

Neil Augustine, group portfolio manager at Morgens Waterfall Vintiadis & Co., a New York investment company specializing in distressed debt, said ereorg.com is "a great concept. It could enhance liquidity and transparency in the distressed debt market."

Still, ereorg faces the challenge of getting a critical mass of commercial banks to sign up as loan sellers, Mr. Augustine said.

Though bankers like the idea of a single trading platform, many question the viability of an electronic trading forum in a private market. Don Pollard, loan trader at Donaldson, Lufkin & Jenrette, said that despite estimated 5% to 10% growth in the loan market in the last year, trades continue to be negotiated in meetings or by phone.

"I don't think retail customers really like to show their hand by putting out bids and offers," he said. "It's more a finesse market, a place where you can do trading discreetly."

The ereorg.com Web site is intended to let registered users anonymously post details of a loan or trade claim and set an auction time. Other users could make anonymous bids, displayed to all participants. At an auction's close, ereorg.com would reveal the seller's and top bidder's identities to each other but not to other participants. The company would pocket fees - on completed transactions only - of 5 basis points each from the buyer and seller.

Mr. DeKoven said he has developed master confidentiality agreements and legal documentation designed to speed auctions and make participants comfortable.

The idea of linking buyers and sellers in the loan market is not new. Kevin Meenan, head of loan sales and trading at Societe Generale, launched a Web site two years ago at his former firm, Meenan McDevitt & Co., that let buyers and sellers post information about par-loan trading. Mr. Meenan said he was ahead of his time.

"On any pioneering effort like ours, you expect that it's going to meet with resistance from the dealer community," he said.

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