Private Equity
Had to Happen Sometime: Apollo is getting burned on the distressed Lyondell Chemical Co. debt it purchased. (The Deal) Porn Adult Entertainment Industry Bailout: Yes, thank you Fox Business News for covering this big story. "Girls Gone Wild" CEO Joe Francis and "Hustler" magazine publisher Larry Flynt have said they will petition Congress for financial aid along the lines of what the Big Three auto makers are getting." (Fox Business) FYI: The Ascent of Money, a Niall Ferguson documentary and book about the financial crisis, is airing on PBS Jan. 13. (Very Short List) With Dignity, I Guess: How Satyam's Chairman announced his massive fraud. (Clusterstock) Don't Count On Exits: The IPO Chill may last through 2010. (Deabook)
1 min read · 07 January 2009
Tomorrow is January 8, and for many GE Capital employees, that means D-Day. peHUB reported in December that the GE Capital and its mid-market lending subsidiary, GE Antares, had suspended a planned round of planned layoffs until January 8, in order to implement a new, lower severance package plan. We haven't been able to confirm specifics, but rumors are that the severance package may be less than two weeks salary for each year of service. Perhaps the pitiful severance package isn't surprising, given the pressure on financial firms to curb executive pay. But since GE has not recieved any TARP money yet, that's hardly a valid excuse.
2 min read · 07 January 2009
Seemingly out of nowhere, Sun Capital is laying off 10% of its workforce. The turnaround buyout firm—which I was just writing about as having a strong position going into the new year—is cutting 23 from its 200-person staff, a spokesperson confirmed. This is confusing to me since the firm only last year raised its largest ever fund, oversubscribed by $2 billion. Meanwhile, it is in the midst of prime feeding season for turnaround firms like itself. Sun’s biggest selling point is its massive staff of seasoned turnaround operating experts. Did the firm get ahead of itself in its 2008 ramp-up?
3 min read · 07 January 2009
It's a familiar story line these days: Once the masters of their domains, private equity pros have faded from power and prestige with the onset of the credit crunch. Et cetera, et cetera. Yesterday's news provided further proof of this narrative. Macrovision rejected One Equity Partners, the firm it had lined up to buy TV Guide Network, in lieu of a strategic buyer. The price, $255 million, was only a slight bump from One Equity's $225 million. The biggest difference of course, is those pesky contingencies. Unlike One Equity, strategic suitor Lionsgate would pay it all in cash. Private equity has been abandoned at the alter, and frankly, it's a bummer. I can't say I'm surprised with the number of things that can do wrong in the deal-closing process these days. The flood of stories claiming
3 min read · 07 January 2009
This is what happens when tens of thousands of laid-off bankers have a lot of time on their hands. They create YouTube videos of Bernard Madoff rapping. About Libor. And 2 & 20. If that didn't sate your novelty Madoff hunger, there's the Bernard Madoff ringtone, comprised of phrases from his famous "fraud" speech. Both via Cityfile.
1 min read · 07 January 2009
What a Find: A family finds $10,000 in cash in a box of Annie's Organic crackers purchased from Whole Foods. In a most-improbable zany mix-up, the cash turns out to be some lady's life savings. "The Lake Forest woman, whose identity was not released, had lost faith in her bank and decided the box would be a safer place for the money." Apparently not. (Business Pundit) The Anonymous Equity Private: Speaks with Marketplace, leaving a few clues as to her identity. (HT AR). Now Hiring: A Job Posting for a Wall Streeter interesting in gaming from A VC. Get Over It Guys: Even though it is completely irrational in a recession, applications for luxury management MBA programs remains high. (BusinessWeek)
1 min read · 06 January 2009
What are they going to do? There hasn’t been a new SPAC deal announced in months, after what seemed like a nonstop flurry of “SPAC-Attack!” announcements. Yet as I recall, SPACs raised $12 billion in 2007. According to research site SPAC Analytics, and 52 SPACs, or $10 billion worth, have yet to find an acquisition. If we subtract the $3.8 billion they raised in 2008, we can roughly estimate at least $6 billion worth of SPACs will be meeting their 18-month deadlines to strike a deal in the coming year. Even if they do find a willing seller, those SPACs have a boatload of headwinds working against them. For starters, you may have noticed the public markets have redefined ugly. SPACs have almost universally seen their share prices drop this year, which bodes poorly for getting a deal approved. Then we have the natural buyer of SPAC shares—hedge funds. It’s an understatement to say they’ve been blasted by redemptions. The blind pools are dry as the desert, and their shareholders have every motivation to vote against any proposed merger to get their money back.
2 min read · 06 January 2009
Add one more bruise to the growing list of battered Apollo management investments. Analysts at Stifel Nicolaus believe Inkeepers USA, a hotel REIT investment made by the firm's publicly traded BDC, is heading for default in '09. For background, Apollo Investments is a BDC traded on NASDAQ under the ticker AINV. It makes equity, debt and senior secured loan investments across a variety of sectors and has a $1.34 billion market cap. You may remember the fund's CEO, John Hannan, resigned in November; he's been replaced by COO James Zelter. The fund took Innkeepers USA Trust private in April 2007 for $1.5 billion. According to the analyst report, the deal brought Innkeepers from 4x leverage to an estimated 10x proforma expected 2008 EBITDA (page nine has a nice before and after cap structure chart). The report states that the investment is "significantly underperforming," and likely to see a rocky '09.
2 min read · 06 January 2009
Fired: The biggest CEO firings of 2008. (MSNBC) Gossipy: Wall Street Folly has a photo of George Soros partying with what the blog purports to be his "nieces" on New Years Eve, while afloat on his Octopus yacht. (Wall St. Folly) The Worst: Footnote of 2008 goes to...A. Schulman's fish camp! (Footnoted) Banned Words: This year the lists includes the likes of "Maverick," "staycation," game-changer," "green," and "Wall St./Main St." But I like the ones suggested in the comments of Paul Kedrosky's blog post about it, which includes "Joe the X," "print money" and "unprecedented times." (Infectious Greed)
2 min read · 05 January 2009
The final list of 2008 LBO-backed bankruptcies has 49 Chapter 11s. Download it after the jump. Repeat offenders include our turnaround investing friends at Sun Capital and Cerberus and our non-turnaround investing friends at Catterton Partners, Carlyle Group, Thomas H. Lee Partners, and Madison Dearborn Partners. The auto industry tops the list as worst-hit, claiming 11 of the Ch. 11's. Tied with automotive is retail, with 11 more of the 11's. Three of those are furniture retailers. Beyond that it's a toss-up with transportation + airlines claiming six, three media properties, three consumer products vendors, and two restaurants. Four of the companies have emerged from bankruptcy; several others have headed for Chapter 7 liquidation. For the record, it's nice to revisit the 2007 list, which included all of
2 min read · 05 January 2009
