Private Equity
2 min read · 24 October 2008
Zero: Daimler's 20% stake in Cerberus-backed Chrysler, once worth $1.18 billion, is now valued at zero. That will make for an interesting deal if Daimler succeeds in selling that stake back to Cerberus, as planned. Bloomberg: Joe The Plumber versus Joe The Hedge Fund Manager. The Real Vultures: From Spirit Halloween Stores, the ACON Investments-backed seasonal costume store that has moved into former Linens ‘N Things stores. "ACON might just be the poster child for other companies looking to prey off the economy's growing pile of stiffs and zombies," Business Pundit writes. Comeback: Citigroup's architect, Sandy Weil, is thinking about raising a PE fund to invest in undervalued financial firms. The fund would have a target of $5 billion.
2 min read · 23 October 2008
Thanks to an amazingly lucky (or brilliantly calculated) set of macro-trends, PNC Equity has shaken three equity recaps out of one of its early portfolio companies, scoring a return greater than its initial investment before even thinking about its exit. PNC Equity bought Tangent Rail Corporation in 2005 out of its first fund raised independently of parent firm PNC. Since then, the PE arm has watched the rail industry take off as its customers consolidate. The firm used five different lenders on the recap, a deal that wouldn't have happened if it had started talks 30 days later, according to David Hillman of PNC Equity Partners. The full story, after the jump.
3 min read · 23 October 2008
Bankruptcy Lite: Paul Kedrosky doesn't think Fortress Investment Group's Intrawest will have to file for bankruptcy, but it has to restructure somehow. His theory for the debt, and the debt of many PE deals from of 05-early 07 days is "some sort of prepackaged bankruptcy-lite deal." Tell me more... Dealbreaker: In times of distress, do we not even attempt to keep up appearances? AIG has loosened its dress code to "business casual." F The Economy: Buying a t-shirt is certainly not the most productive way to deal with it, my dear recessionistas. Let The Denomination Begin: Calpers has seen its asset decline by 20% in its more recent quarter, which may lead to increased contributions from employers, WSJ reports.
1 min read · 22 October 2008
1 min read · 22 October 2008
The House Oversight Committee today grilled the credit agencies for their role in the subprime crisis, revealing the official instant message between Standard & Poors employees, and it doesn't help the ratings agency in the credit crisis blame game. I'm sure Rahul Dilip Shah and Shannon Mooney didn't think their casual conversation that includes the topics of naps and trash talking on colleagues would ever be at the center of an economic crisis. Here's the link, and here's the conversation: Shah: btw-that deal is ridiculous Mooney: I know right... model def does not capture half of the risk Shah: we should not be rating it Mooney: we rate every deal. It could be structured by cows and we would rate it Shah: but there's a lot of risk associated with it - I personally don't feel comfy signing off as a committee member
2 min read · 22 October 2008
It's true: Peter Kaufman is a managing director at Bacchus Capital Management, a wine-focused investment fund, and he doesn't really care for wine. He's "more of a beer and shot guy," he said at a conference earlier this year. I bring this up because Bacchus Capital announced its first investment today. The firm provided a mezzanine loan to Cameron Hughes Wine, a sourcer of super- and ultra-premium wine for stores like Sam's Club and Costco. You must be thinking, the words "premium" and Costco sure do not belong in the same sentence. Could that contradiction be a result of the Joe Six Packs on Bacchus Capital's deal team?
1 min read · 22 October 2008
The Thaw: The Dow surged 400 on a "hint of a thaw."And Libor rates have finally fallen to a trust-friendly rate. Signs of a turning tide? Or Not: Investor confidence is at a record low, according to Strate Street and things aren't going to change for TWO YEARS for you PE folks, a Goldman Sachs heavyweight says. ARS Agrees: One Day Does Not Make A Trend. The Leveraged Sell-Out: Making the dubious argument that pop star Rihanna is a closet economist. "Any one of the pop singer Rihanna's many hits is a template for banker music: simple, catchy, allowing numerous opportunities to launch one's hands in the air and point at things." Ok...
2 min read · 21 October 2008
We've seen the size of PE bankruptcies increase as the year toils on, with Linen's ‘N Things (purchased by Apollo for $1.3 billion) narrowly topping Mervyns (purchased by Sun Capital and Cerberus for $1.2 billion). Those could soon be outdone by KKR's C$3.2 billion purchase of Masonite International, if the company files for bankruptcy. It's not a sure bet, but is beginning to look better than even money. On Friday, the company went into default on a $42 million interest payment to its $768.9 million senior sub notes due 2015. Yesterday S&P lowered its rating to D and Moody's lowered its corporate rating two levels to Caa3. This payment miss is surprising for two reasons. ...
2 min read · 21 October 2008
Lifestyles Of The No Longer Rich And Never Very Famous: New York Magazine published a cringe-worthy story about whiny bankers who won't be getting their bonuses this year. It's not helping the whole PR battle against Wall Street right now-why not cover the out-of-work bankers who are having one hell of a time trying to find a new job? Dealbook has a summary. Dear Chrysler, Head To Delaware: Or so that's why Peter Morici, a business professor, thinks is the best option for the Cerberus-backed auto maker, ruling out a merger with GM. However, a Chapter 11 move would wipe out Cerberus' 81% stake, something I highly doubt the turnaround firm would readily agree to. AHA!: I knew it. Henry Kravis finally admitted that private equity got his returns through quick flips and dividend recaps. Dan has already covered these speeches of guilt admission, but I wanted to point out that I desperately hope this sentiment trickles down to the middle market. The phrase "value-add" is such a cliché, regardless of whether or not its true. At least someone isn't trying to spin us. Meanwhile: Reuters outlines in greater depth the possibility of bankers apologizing to "main street" and employees as a way to re-gain trust and respect. It wouldn't hurt. Hey, it might make visits to the gym safer for Dick Fuld (just kidding, that punch looks like it was an unsubstantiated rumour).
2 min read · 20 October 2008
