THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, November 18, 1994 TAG: 9411180440
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Short : 47 lines
In a continuing effort to expand its financial-services business, Dominion Resources Inc. said Thursday it will form a joint venture with Household International Inc. to make loans to medium-sized corporations.
The Dominion-Household joint venture will concentrate on loans for buyouts, expansions, refinancings and recapitalizations of companies with annual sales of $250 million or less, said Hayden D. McMillian, vice president and treasurer of Dominion Capital, a subsidiary of Richmond-based Dominion Resources.
Dominion Resources' principal subsidiary is Virginia Power, an electric utility that serves most of Virginia and part of northeastern North Carolina.
Household, based in Prospect Heights, Ill., is a major credit-card and residential-mortgage lender. Its Household Credit Services unit in Chesapeake processes the General Motors-Household credit card.
When presented with an opportunity to team up with Household, Dominion decided to invest in the lending venture because ``we think we can earn a higher return there than we can earn elsewhere,'' McMillian said.
Dominion Capital already manages a securities portfolio of more than $300 million, a venture capital portfolio and a hydroelectric power plant in Louisiana. It also administers a utility mutual fund and manages and develops real estate through its Dominion Lands unit.
The new company, which does not yet have a name, will open later this year in the Chicago area.
Dominion and Household said each party will contribute $75 million of capital to the partnership and will share the profits equally.
To start, the new company will buy $600 million of commercial loans from Household. The partnership hopes to expand that portfolio to $1 billion within five years, Dominion Capital's McMillian said.
Household said its participation in the venture will remove commercial loans from its balance sheet and provide room to expand its consumer-loan receivables. Household has more than $1 billion of healthy commercial loans and leases, but has scaled back some types of commercial lending after suffering losses on some of its real-estate and acquisition loans, spokesman Bob Hartney said. by CNB