Tags: Currencies, Fees, Hedge funds, Jim Rogers, LBO / MBO, Treasury Bonds, Venture Capital
Rumors have been around for weeks that Lehman Brothers might try to take itself private as one way to take advantage of its chronically leaky stock price, and this morning’s NY Post accelerates them.
According to sources, talks internally
centering on privatizing Lehman have gotten very serious consideration after a
blistering onslaught of rumors and questions about the firm’s solvency have caused the venerable bond shop to shed more than 79 percent this year
Yesterday, Fox-Pitt bank analyst David
Trone, issued a report suggesting Lehman go private at a 25 percent premium to
its stock price in order to stem the bleeding its incurred of late.
LehmanLooks At Taking Firm Private – NY Post
Tags: LBO / MBO, Lehman Brothers
Tags: Derivatives, Distressed, LBO / MBO
Could this be heading for liquidation?: According to the NY Post, sales have taken a dive at the Leon Black / Apollo LBO, and their cash position is getting worse. Large vendors are being paid up front to keep shipments going. That prepack that they were trying to do (of which we were skeptical) is sounding like a no-go….
The Clifton, NJ, home-furnishings chain’s
comparable sales – or sales at stores open at least a year, a closely watched
measure of retail performance – are down 5 percent since the start of the year,
according to internal company documents reviewed by The Post.That’s sharply lower than the 1 percent
drop Linens ‘n Things reported during last year’s fourth quarter, and includes a
steeper-than-expected first-quarter comparable-sales decline that’s closer to 6
percent, documents show. While trends improved slightly in April, sources
chalked it up to a calendar quirk that affected the timing of Easter.
Tags: Apollo, Bankruptcy, LBO / MBO, Leon Black
The bank group trying to wiggle out of their contractual obligation to finance the Clear Channel buyout was dealt a well deserved (in our humble opinion) legal blow yesterday. Their attempt to shop for a possibly friendlier trial venue was smacked down by federal judge Orlando Garcia who said that the banks didn’t prove that the federal court had jurisdiction. Sorry guys, but the trial will go on in Texas. Perhaps the thought of those famously large Texas punitive damage awards (like the one that the Clear Channel pit bull lawyer Joe Jamail (known as the "king of torts") won against Texaco) will move them to close. Otherwise it’ll be fun to watch the public ass whooping that we suspect they’ll face.
The banks had sought to move the case out
of Clear Channel’s home court after a Bexar County judge issued a temporary
restraining order against them just hours after the lawsuit was filed last week.Clear Channel and its proposed buyers, Bain
Capital and Thomas H. Lee Partners, filed suit against six banks claiming they
were trying to sink the $19.5 billion buyout of the company by failing to honor
earlier loan commitments — commitments that would now be costly to the banks.
Tags: Clear Channel, LBO / MBO, Legal
Squishy rumors to that effect are going around. Per Briefing.com:
11:19 CCU Clear Channel pops a quick point as rumor of possible deal financing agreement circulates (28.74 +0.24) -Update-
Tags: Banks, Clear Channel, LBO / MBO
Highly leveraged after their MBO, Outback Steakhouse’s co-founder Tim Gannon talks about business on Fox Business’ "Happy Hour".
Tags: high yield bonds, LBO / MBO, Restaurants
Screw the banks. Blackstone thinks they don’t need them. According to Blackstone President Hamilton James, they’ll find their own sources of cash to fund their LBOs. That’s gonna mean lower fees to Wall Street banks..
The firm is contacting hedge funds and
mutual funds to provide loans for takeovers, James said after a panel discussion
today at the Super Return conference in Munich. Other firms may follow New
York-based Blackstone’s lead, he added.“We’re bypassing the banks,” James said.
“There’s still ultimately demand for this paper out there if you can go
directly to the buyers.”
Tags: Banks, Blackstone, LBO / MBO
It’s that time of year again. The biggest of the big LBO firms are gathering in Germany at the Super Return conference, where this year they’ll no doubt be swapping wistful war stories about the good old days (like last year) when there were multi-zillion dollar LBO deals announced almost daily…..
Carlyle Group founder David Rubenstein and
TPG Inc.’s David Bonderman will join a meeting of about 1,500 executives from
the leveraged buyout industry in Germany this week, as funding for takeovers
vanishes and returns deteriorate.At last year’s Super Return conference,
executives toasted an unprecedented $713 billion of acquisitions with a
reception at the Frankfurt Zoo, where they were entertained by a dance troupe
and challenged to find the glass of champagne containing a real diamond.
Tags: Conferences, LBO / MBO
It’s become something of a joke that now that Blackstone’s stock is trading so far under its $31 IPO price that they’d be taking themselves private soon. Well that may not be so far fetched with this morning’s announcement that they’re buying back up to $500 million of their own stock. Oh, and they’re also spending as much as $920 million to buy hedge fund GSO..
Blackstone will pay $620 million up front
in cash and stock, and up to an additional $310 million over the next five years
based on meeting certain earnings targets.GSO is an alternative asset manager, specializing in leveraged finance. It
currently has about $10 billion under management. With the acquisition,
Blackstone’s alternative asset management business will have more than $21
billion under management.Blackstone is repurchasing stock, in part to offset the issuance of new stock
for the GSO acquisition.
Tags: Blackstone, Hedge funds, IPO, LBO / MBO
At least reclusive Cerberus CEO Steve Feinberg’s public court appearance wasn’t in vain. Cerberus won their case against United Rentals. A judge said that they don’t have to follow through with their buyout of the firm:
Delaware Chancery Court Judge William B.
Chandler III ruled today that United Rentals officials should have known that
Cerberus executives believed they had a right to pull out of the deal at any
time as long as they paid a $100 million fee.“There’s some clarity here for the private-equity firms that if you have an
agreement, you’re protected,” Steven Kaplan, a professor at the University of
Chicago Graduate School of Business, said in a phone interview. “For United
Rentals, part of this can’t be recovered because it was predicated on debt
markets that no longer exist.”United alleged Cerberus’s RAM Holdings buyout entities agreed in July to pay
$34.50 per share for United Rentals’ stock, and reneged on the deal in November
amid weakened U.S. credit markets.
United Rentals Can’t Force $4 Billion Cerberus Buyout – Bloomberg
The LBO bacchanalia is over, and investors are waking up with a bad hangover and the realization that girl they wound up in bed with doesn’t look nearly as good in the light of day…..
Soon, investors in private-equity funds,
and the employees who work in their portfolio companies, will be making some
very fundamental queries. How much did private-equity firms, aided by the Wall
Street debt machine, overpay for the deals done in 2006 and 2007? What would the
likes of a Univision, Freescale Semiconductor or Canadian phone company BCE
fetch if they were auctioned today as opposed to the debt-debauched days of
yore?They would be "hard-pressed to achieve
those valuations again," says Jake Newman, a media analyst at research firm
CreditSights Ltd. Or, as one banker succinctly put it yesterday: "No
way."
Tags: LBO / MBO
Did we happen to mention before that we LOVE volatility? Well today we got it in spades, with Bear Stearns, where the talk that Warren Buffett and others might take a stake in that besieged stock caused it to skyrocket, and Sallie Mae, where many bailed prematurely on the stock and left it for road kill after they read a statement from SLM that they interpreted as a definitive one that the deal wouldn’t close. Here’s what the statement said:
SLM Corporation, commonly known as Sallie Mae, announced today that it has been informed by a representative of the buyer group led by J. C. Flowers, Bank of America and JPMorgan Chase that the buyer group does not expect to consummate the acquisition of Sallie Mae under the terms of the merger agreement. Sallie Mae firmly believes that the buyer group has no contractual basis to repudiate its obligations under the merger agreement and intends to pursue all remedies available to it to the fullest extent permitted by law.
Tags: Bank of America, Charts, Credit Crunch, LBO / MBO, Legal, Risk arbitrage
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Tags: CDO, Fidelity, LBO / MBO, Private equity
Revised bonus expectation time? Was last year the high water mark?:
With the turmoil in the markets and the expectation of slowing of LBO’s and other fee generating transactions, Wall Streeters might be making less than they did last year come bonus time ending the record annual escalation we’ve all grown to expect.
A new report out of Standard and Poors today talks about how banking fees might be affected and which firms could be affected most:
Group revenue at Switzerland’s
second-largest bank could fall by 3.8 percent were leveraged buyout fees to fall
by half, S&P said. Earnings at Credit Suisse and UBS AG could plunge up to
19 percent as buyouts slow, Deutsche Bank AG analyst Matt Spick said on July 26.The risk of owning corporate bonds soared
to the highest level on record in the U.S. and Europe last week as banks
struggled to find investors for loans to pay for buyouts of Alliance Boots Plc
and Chrysler. Buyout firms will need to pay more to borrow and put more of their
own money into deals, the rating company said.“It seems certain that the LBO market’s glory days are over and the future
environment will be more challenging for sponsors and banks alike,” S&P
said.
Tags: Bonuses, Compensation, Hedge funds, IPO, LBO / MBO
Given the dismal performance of Blackstone’s IPO and the state of turmoil in the debt and equity markets, it’s sounding more likely that KKR may have a problem with its own planned IPO….
Jeff Arricale, who runs a financial-stock
mutual fund for T. Rowe Price Group Inc., said he doubts KKR will be able to
find enough investors to pull off an IPO if current market conditions continue.
"Sure, at some price it is possible to do it, but I’d be shocked if they
end up doing this IPO."Five blocks south of KKR’s New York headquarters overlooking Central Park, rival
firm Blackstone Group LP is learning just how tough this market has become.
Shares of its own initial public offering — priced just over a month ago — are
now 17% below their $31 debut, and closed yesterday in 4 p.m. New York Stock
Exchange composite trading at $25.70, up 19 cents, or 0.7%.
Tags: Blackstone, IPO, KKR, LBO / MBO
Tags: Blackstone, KKR, LBO / MBO
Everyone knew that someone would get stuck holding the bag in the overheated LBO frenzy, and it sounds like even though bankers bragged that the market seemed to have virtually limitless demand, that time is now. Goldman, JP Morgan (and we’d venture to guess others) are sitting on $11 billion of loans that they can’t move and they may get burned in the game of loan hot potato:
The banks have had to dig into their own pockets to finance parts of at least five leveraged buyouts over the past month because of the worst bear market in high-yield debt in more than two years, data compiled by Bloomberg show.
Bankers, who just a few months ago boasted that demand for high-yield assets was so great that they would have no problem raising debt for a $100 billion
LBO, are now paying for their overconfidence. The cost of tying up their own capital may curb earnings and stem the flood of
LBOs, which generated a record $8.4 billion in fees during the first half of 2007, according to Brad Hintz, the former chief financial officer at New York-based Lehman Brothers Holdings Inc.
Tags: Distressed, Goldman Sachs, high yield bonds, JPM Chase, LBO / MBO
Tags: Distressed, Hedge funds, LBO / MBO, LSE, NYSE, Private equity
Goldman Sachs is "organizing" themselves "like the market is undervaluing risk." according to the CEO Lloyd Blankfein’s comments at the Wall Street Journal’s Deals & Deal Makers Conference yesterday…..
"The biggest risk we face would be a
very big crisis in the credit markets," Mr. Blankfein said. What could
cause that? A "sentiment shift," which "could unravel very
quickly" the vast wealth that has been created by the boom, he said.To be sure, Mr. Blankfein didn’t strike a
particular tone of nervousness. He said he doesn’t think the leveraged-buyout
boom has peaked — "We’ve called this peak a number of times," he
said. He also said that conditions "seem quite benign," marked by low
rates of inflation and low interest rates around the world. Of course, the
diminutive Wall Street titan then added, "I start at a high state of
worry."
Carl Icahn, on the flip side, thinks that the LBO market may have peaked.
Goldman’s Chief Admits Nerves – Wall Street Journal
Goldman CEO: World less risky, but stay on guard – Reuters
Tags: bonds, Carl Icahn, Goldman Sachs, LBO / MBO, Lloyd Blankfein
With the rise of shareholders activists – who are rejecting what are now more often being perceived as lowball LBO bids — not to mention balking bondholders and a more difficult financing environment, Carl Icahn thinks that the LBO market has peaked:
Billionaire financier Carl Icahn on
Wednesday told an investor audience that the spate of recent leveraged buyouts
has "peaked" because shareholders are balking at selling their
companies too cheaply and deal financing is getting more expensive.The 71-year-old financier, who has built up an estimated net worth of $13
billion by buying and selling companies over 25 years, predicted that LBO firms
won’t be able to win shareholder approval for deals as easily as in recent
years.
Tags: bonds, Carl Icahn, LBO / MBO
- CNBC Calls In a Judge
- Risky Business: Growth Of ‘Covenant-Lite’ Debt
- Quadrangle says to buy "Maxim" publisher Dennis
Tags: CNBC, Distressed, high yield bonds, LBO / MBO
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