DATE: Wednesday, November 26, 1997          TAG: 9711260483

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY TOM SHEAN, STAFF WRITER 

                                            LENGTH:   56 lines

DOMINION CAPITAL CREATES A NEW LENDING UNIT

Dominion Capital, a Dominion Resources Inc. unit that has steadily expanded its offering of financial services, has formed a unit to finance high-risk acquisitions, leveraged buyouts and corporate restructurings.

The new unit, First Dominion Capital, expects to attract borrowers by moving more quickly than other lenders, including commercial banks and investment banks, said Hayden D. McMillian, senior vice president and chief financial officer of Dominion Capital.

Many banks, he said, tout their ability to provide one-stop shopping, but borrowers still have to visit different units of a large institution to get all of the financing they need.

``We think there are niches (that other lenders) don't serve well,'' McMillian said.

Dominion Capital's Richmond-based parent, Dominion Resources, also is the parent of Virginia Power, the largest electric utility in Virginia.

First Dominion Capital will provide loans of $50 million to $300 million. In addition, it will take an equity stake in some of the companies it finances.

First Dominion Capital's five managing directors came from a large French-owned commercial bank and have investment banking experience, McMillian said.

Dominion Capital, he said, holds a ``significant'' stake in the new venture, and the managing directors are part owners. He declined to say how large a stake Dominion Capital has or how much capital it put into the company.

The expansion of Dominion Capital's lending and investment activities has taken place in the midst of a massive consolidation in financial services. In addition to the wave of bank mergers taking place, many large non-financial companies have been spinning off or selling their finance subsidiaries in recent years.

Ford Motor Co. announced plans in October to spin off its Associates subsidiary. AT&T Corp. is in the process of selling its Universal credit-card unit.

Dominion Capital's financial-service activities include:

First Source Financial L.L.P., a Chicago-based lender that began three years ago as a joint venture between Dominion Capital and Household International Inc. Dominion Capital later became the sole owner. First Source finances corporate expansions, buyouts and recapitalizations.

Saxon Mortgage Inc., a Richmond-based residential mortgage concern that was purchased last year.

Cambrian Partners L.P., a Houston-based lender to small and medium-sized energy companies.

Dominion Capital's operations also include the Norfolk-based commercial real estate concern Goodman Segar Hogan Hoffler; residential real estate developments in Virginia and North Carolina; a hydroelectric power facility in Louisiana and a portfolio of investment securities.

In 1996, Dominion Capital generated net income of $28.5 million on revenues of $186.3 million.

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