Diamond takes home £22m from Barclays Barclays’ Diamond Says `Confident’ on ABN Amro Talks Why the Blackstone offer may signify a bubble Credit Suisse Raised Chairman Kielholz’s Pay by 33% Citigroup denies insider trading charge Former Morgan Stanley CIO launches hedge fund Burned Tyco Bondholders Prepare to Wage `War’ With Shareholders More headlines below
Sketchy Loans Abound – With Capital Plentiful, Debt Buyers Take Subprime-Type Risks ResCap Bonds Cut by Bank of America as Finance Executives Leave Analysts Say Bankruptcy Filing From New Century Is Imminent Heard on the Street: How Borrowing Yields Dividends At Many Firms Porsche’s unusual VW bid Sapporo Hires Nikko Citigroup to Advise on Defense Wal-Mart’s Asda weighs Sainsbury’s bid Sainsbury Trustees `Saber-Rattling,’ RBC Note Says
Diamond takes home £22m from Barclays – Financial Times
Bob Diamond, president of Barclays, has amassed shares in the UK’s third-largest bank worth more than £68m and took home more than £22m last year, including a £10.4m performance bonus.
The American investment banker, who is one of the driving forces behind Barclays’ proposed takeover of ABN Amro, the Dutch bank, in 2006 received a basic salary of £250,000 plus a £10.4m bonus as well as £4.5m of shares under an executive share award scheme.
He also received 934,516 shares at £7.33 each and worth about £6.85m under a performance share plan.
In addition to his 2006 remuneration, the bank’s annual report also showed that Mr Diamond exercised shares worth £7.7m last year relating to Barclays Global Investors, the asset management business….
Barclays’ Diamond Says `Confident’ on ABN Amro Talks – Bloomberg
Barclays Plc President Robert Diamond said he is “very confident” about the U.K. company’s talks to buy ABN Amro Holding NV, the biggest Dutch bank.
“We are in a very strong position,” Diamond told reporters today at a financial-services conference organized by Morgan Stanley in London. Barclays Chief Executive Officer John Varley and Diamond have had “terrific meetings with shareholders,” he said.
Barclays, the third-largest U.K. bank, said on March 20 it agreed on some merger terms with ABN Amro for what would be the world’s biggest financial-services takeover. A deal with ABN Amro would help London-based Barclays extend retail banking outside the U.K. to Italy, the U.S. and India and build its securities, asset- and wealth-management units.
“We are very focused on value,” Diamond said. Barclays shares fell 1.2 percent to 733 pence at 10:45 a.m. in London. Shares of ABN Amro were unchanged at 32.75 euros in Amsterdam, valuing the Dutch bank at 62.4 billion ($83 billion)….
Credit Suisse Raised Chairman Kielholz’s Pay by 33% – Bloomberg
Credit Suisse Group said it paid Chairman Walter Kielholz 16 million Swiss francs ($13.2 million) last year, one-third more than a year earlier, after profit at Switzerland’s second-largest bank rose to a record.
Kielholz, who earned 12 million francs in 2005, received 9 million francs in cash and 7 million francs in share-based compensation, the Zurich-based bank said in its 2006 annual report, published today. Marcel Ospel, chairman of larger Swiss rival UBS AG, received 26.6 million francs.
Kielholz’s pay reflects his “leadership and significant achievements in several areas” as well as the “complexity and scope” of his job, Credit Suisse said in its report.
The 56-year-old chairman last year oversaw the integration of the bank’s units under one brand and the sale of its Winterthur insurance business. Credit Suisse last month said full-year net income almost doubled to 11 billion francs, helped by the Winterthur sale and rising profit at the investment bank…
Why the Blackstone offer may signify a bubble – Financial Times
We can feel it in our bones. Something is happening here. First, the alternative asset management firm Fortress Investment Group goes public and trades up to previously unheard-of valuations for companies in the investment arena. Next, the private equity colossus Blackstone files for its own initial public offering, with the potential of generating a huge payout for its chairman, Stephen Schwarzman.
These self-motivated, intelligent individuals are trying to tell us something important. The question is: do we have the ability to look beyond their words and actions and intuit motivation? Greed, uncertainty and fear. What are the implications? That the equity markets are in trouble? That the credit markets are on the verge of a sharp sell-off? That we are at the dangerous stage of a private equity bubble?
My assessment is that we are in a private equity bubble of sorts. However, it is not one that has ghastly implications for the overall market but, instead, will have negative outcomes for those invested in private equity funds – and certainly for those buying into the public shares of private equity management companies such as Blackstone….
Citigroup denies insider trading charge – Financial TImes
Citigroup told an Australian judge on Monday the securities regulator was pursuing an “utterly hopeless’’ case in trying to show that the world’s largest financial services group violated its fiduciary duties toward one of its largest corporate clients.
The landmark civil trial is seen as a test case of how investment banks manage possible conflicts when advising clients while at the same time conducting proprietary trading on their own. For Citigroup, which denies any wrongdoing, it is also a challenge to its reputation, which it has worked hard to repair after high- profile regulatory disputes in the US, the UK and Japan.
The regulator’s complaint against Citigroup dates back to August 2005 when the bank traded in shares of Patrick, a logistics company, at a time when it was advising Toll, its rival, on a A$4.6bn ($3.7bn) hostile bid for Patrick. The Australian Securities and Investments Commission, the regulator, contends that Citigroup was not only guilty of insider trading but also of breaching its obligations towards its client….
Former Morgan Stanley CIO launches hedge fund – HedgeWeek
Joseph McAlinden, the former chief investment officer at Morgan Stanley Investment Management, has formally announced the establishment of Catalpa Capital, an investment management firm.
McAlinden has also revealed the support of initial investors including his former employer, unveiled the new firm’s senior management team, and launched Catalpa Capital’s first investment product, a global hedge fund.
‘We are extremely pleased with our partners who have chosen to invest in Catalpa,’ McAlinden says. ‘We have received seed money from a few prominent investors, and we are excited that Morgan Stanley is supportive of our venture.’…
Burned Tyco Bondholders Prepare to Wage `War’ With Shareholders – Bloomberg
Tyco International Ltd. bondholders, who lost more than $1.2 billion five years ago when a debt-fueled buying binge led to accounting errors, are making sure they won’t get fooled again.
Enter Andrew Rosenberg, the lawyer who got Blackstone Group LP to pay investors almost $225 million more than face value for the bonds of Equity Office Properties Trust when the real estate company was bought this year in the biggest leveraged buyout.
Debt investors hired Rosenberg to fight for the $750 million they say they’re entitled to as part of Bermuda-based Tyco’s plan to split into three companies. The owner of ADT security systems and maker of health-care and electronics products two months ago said it may spend $1.6 billion on the plan. Bondholders say that means the company may try to buy back their debt at a discount.
“The best way to avoid a war
is to be prepared for one,” Rosenberg, 43, said in an interview from his office at Paul, Weiss, Rifkind, Wharton & Garrison LLP in New York. Tyco should get the consent of a majority of bondholders before proceeding with a breakup that will strip “substantially all” of the assets backing their holdings, he said….
Sketchy Loans Abound – With Capital Plentiful, Debt Buyers Take Subprime-Type Risks – Wall Street Journal
In a frank moment several weeks ago, Bill Conway, co-founder of private-equity heavyweight Carlyle Group, issued a directive to employees warning of a corporate debt market bubble. Wall Street bankers bluntly describe it as a house of cards, too.
So here’s a question. If borrowers and lenders alike agree the corporate debt boom can’t last, why isn’t anyone stopping it?
Lenders have been doling out increasingly large sums of money and accepting increasingly crummy conditions and meager returns on their loans. Remember those "low-doc" loans that got subprime home buyers in trouble — the ones that required minimal proof of ability to repay? These are their corporate cousins.
Waves of money are coming at the markets from investors around the world. Bond and loan buyers have to put this money to work, even if the deals are shoddy. In the last year alone, they bought up $148 billion in new junk bonds from U.S. issuers, the largest sum in history by more than half for such high-risk debt….
ResCap Bonds Cut by Bank of America as Finance Executives Leave – Bloomberg
Bonds of GMAC LLC’s Residential Capital division, or ResCap, were cut to “neutral” from “buy” by Banc of America Securities LLC following the departure of two top finance executives.
GMAC announced the resignation of ResCap’s chief financial officer, James Giertz, on March 23. Three days earlier, treasurer Louise Herrle said she planned to leave in April. The company attributed the resignations to personal reasons. Yield premiums on ResCap bonds have increased since the beginning of the year on concerns about rising default rates on subprime mortgages.
“We view the departure of ResCap’s two most senior finance executives as a significant negative given the challenges the company is facing,” Banc of America credit analyst John Guarnera in Charlotte, North Carolina, wrote in a research note today.
Minneapolis-based Rescap is the seventh-largest originator and servicer of U.S. residential mortgage loans, and operates under brands including GMAC Mortgage and Ditech.com…..
Analysts Say Bankruptcy Filing From New Century Is Imminent – Wall Street Journal
New Century Financial Corp. likely will file for bankruptcy imminently, analysts said Monday, pointing to the latest move by two of the company’s major bank lenders to take possession of loans previously used to secure their financing.
The Irvine, Calif., lender of high-risk, high-yield mortgages disclosed in a regulatory filing Thursday that it agreed to transfer to Barclays PLC the outstanding loans it made with lines of credit provided by the London-based bank — in exchange for Barclays forgiving its obligation to buy back $900 million of those loans to repay the bank.
Meanwhile, Morgan Stanley has arranged an auction of $2.48 billion of subprime mortgages from New Century, which represent the collateral backing the investment bank’s $2.5 billion credit line earlier extended to the lender, according to an advertisement the New York firm posted in The Wall Street Journal on Friday….
Heard on the Street: How Borrowing Yields Dividends At Many Firms – Wall Street Journal
This past winter, executives at Scotts Miracle-Gro Co. took a cold, hard look at their business and figured they could do with a lot more debt.
The maker of garden products didn’t see any major investment opportunities on the horizon and believed it could keep churning out profits for years. Interest rates on corporate debt, meanwhile, were hovering at multiyear lows.
"We felt like the moons were aligned, and so we went for it," says Dave Evans, Scotts’ chief financial officer. The Marysville, Ohio, company obtained $775 million in additional debt and paid out $750 million to its shareholders by distributing a special dividend and repurchasing a chunk of its shares.
A number of public companies are taking a leaf out of the playbook of private-equity firms and loading up on debt to improve returns for their shareholders. In doing so, they are taking on more risk and making big bets that they will stay profitable for years to come….
Porsche’s unusual VW bid – Financial Times
Porsche’s takeover bid for Volkswagen evokes the rapid firing of an ignition, followed by a disappointing silence as it fails to take hold. At just under €101 per common share, VW’s shareholders are being offered the absolute minimum required by law, the weighted average price over the past three months. That is a 14 per cent discount to the March 23 close. The discount on the preferred shares – representing one fifth of VW’s market capitalisation – looks likely to be wider.
That has the hallmark of a bid designed to fail. Not that Porsche will be worried. By last Friday, VW’s ordinary shares had surged by 37 per cent since the start of 2007. That has allowed Porsche to raise its holding from 27 per cent to 31 per cent – above the 30 per cent threshold for triggering a takeover – but still fulfil its obligations with a low-ball offer that few are likely to accept. It is now free to increase its control of VW at its own pace. Some €2.4bn, or 5.5 per cent, was wiped off VW’s market cap on Monday morning.
The only shareholder who might be seriously tempted is the state of Lower Saxony, which owns a fifth of VW’s ordinary shares. After all, with Porsche in the driving seat, finding another block buyer, particularly a German one, looks unlikely, so selling at a discount could be justified. If it did, Porsche’s voting rights would rise to above 50 per cent, although its economic interest would only be 37 per cent…..
Sapporo Hires Nikko Citigroup to Advise on Defense - Bloomberg
Sapporo Holdings Ltd., Japan’s third-largest beer maker, hired Nikko Citigroup Ltd. and Mizuho Securities Co. to help it block a takeover attempt by Warren Lichtenstein’s Steel Partners Japan Strategic Fund L.P.
Nikko Citigroup and Mizuho Securities will provide the brewer with advice should Steel Partners, which owns a 17.52 percent stake, make a hostile bid, Sapporo spokesman Katsuhito Ogawa said today. The U.S. investment fund, seeking 66.6 percent of the brewer’s voting rights, now has a 17.52 percent stake.
The beer maker last year introduced anti-takeover measures, allowing stock dilution to rebuff a hostile bid from overseas funds attracted to its real estate assets. Sapporo shareholders will vote March 29 whether to accept the defensive system, with Steel Partners urging investors to reject it….
Wal-Mart’s Asda weighs Sainsbury’s bid – The Times of London
Asda, the UK supermarket owned by Wal-Mart, of the US, is considering entering the £10 billion race to buy its rival J Sainsbury and potentially disrupting an offer from a CVC-led private equity consortium that is scheduled to materialise within days.
It is understood that Asda is consulting with the Competition Commission over the potential antitrust issues that a combination of the two supermarkets would create, Reuters reports, citing two sources.
A tie-up between the two companies would pool together 1,104 stores and create a serious UK competitor to Tesco, which has 1,252 outlets in Britain….
Sainsbury Trustees `Saber-Rattling,’ RBC Note Says – Bloomberg
J Sainsbury Plc’s pension trustees are “saber-rattling” by claiming private-equity bidders for the grocery chain may face a 3 billion pound ($5.9 billion) funding s
hortfall, a note written for RBC Capital Markets said.The trustees said March 23 that bidders may face a pension hole that size under some assumptions. They may be trying to force buyout firms to shelve attempts to buy the third-largest British supermarket company or sweeten any offer with more cash, according to John Ralfe, an independent pension consultant working on behalf of RBC, a unit of Royal Bank of Canada.
The trustees “are flexing their muscles in an attempt to see the private equity companies off,” Ralfe said in a telephone interview on March 26. Nick Denton, a spokesman for London-based Sainsbury’s pension trustees, declined to comment….
