Private Equity
As usual, we have a week's worth of ratings actions on the debt of LBO-backed companies from Standard & Poor's Ratings Services and Moody's Investors Service. This week was relatively slow, with the big news coming from the largest LBO of all time, KKR and TPG's buyout of TXU (now known as Energy Future Holdings). The Texas-based energy giant proposed a distressed debt exchange which will reduce its obscene debt load from $44 billion to $42 billion. Naturally the move warranted a downgrade from both Moody's and S&P. Moody's expressed concerns over "looming maturities" on around $23 billion of debt in 2014, which it said will need to be addressed before 2013. Meanwhile, carbon and mercury legislation threatens the company's "coal-fired margins," Moody's wrote. Read more on the mega-buyout's financial situation below.
2 min read · 09 October 2009
Here are some potential target ideas, rumored or official, to jumpstart your deal pipeline. Our sources are various news reports and the Buyouts "Seeking Buyers" list. For prior lists, see below, and send any additions my way. Sentry Select Primary Metals Corp., a Canadian metal exploration and production company, has retained independent legal counsel and is in the later stages of retaining independent financial advisors to review strategic alternatives. Salesforce.com, Compellent Tech, CommVault, Cerner Corp., Computer Program Systems, and Eclipsys Corp. were named as takeover targets. (Read more) Alexion, a Cheshire, Conn.-based biotechnology company, has been named as a takeover target. (Read more)
2 min read · 07 October 2009
How Nonsense Sharpens the Intellect: A study suggests that a feeling of absurdity "may prime the brain to sense patterns it would otherwise miss - in mathematical equations, in language, in the world at large." (WSJ) Thank You: A UK woman is taking up George Carlin's torch, combating nonsensical corporate jargon, including at financial institutions. (WSJ) Continuing Debates: Is Michael Moore a fan of "Blue Bails"? (The Big Money) Grocery Sale: The unnamed PE bidder for grocery store Ukrop's has pulled out of its deal. (Supermarket News via Roanoke Times)
1 min read · 06 October 2009
3 min read · 06 October 2009
2 min read · 06 October 2009
1 min read · 06 October 2009
Auction Time: If you wanna do a deal, you gotta be "creative." (FT) Advancing the Story: Private equity firms ravaged Simmons, could they do the same to banks? (Daily Finance) Speaking of the Story: 92K for a yacht captain? Yeesh. (NYT) And the Responses: "Shareholder Value for Beginners." (Baseline Scenario) "Blame the Banks." (Clusterstock) Now Hiring: Deloitte is looking at community colleges to increase its diversity. (BusinessWeek)
1 min read · 05 October 2009
In the context of the New York Times private equity take-down, I think most peHUB readers would say that there is value created by private equity firms. It's also safe to say that buyout bosses are just as capable of destroying value. Taking it a step further, I'm of the opinion that while that dividend recap may take some risk off the table, they are generally not necessary. I also agree with Dan that management fees are an abomination. With that out of the way, here are examples of five more buyout-backed companies which underwent a dreaded dividend recap and ended up in bankruptcy. There isn't necessarily a straight line from recap to bankruptcy, nor is there a clear case that the company wouldn't have failed on its own apart from private equity involvement. But it sure doesn't look good. In some cases, the firms re-invested in the company, possibly to avoid a clawback if the fund from which the investment came from ends up underwater.
3 min read · 05 October 2009
Today's NYT package story on THL Partners and its dividend recap of (soon to be) bankrupt Simmons Bedding Co. was destined to tap into a little populist anger. It's manifested in the site's comments section, with commenters calling buyout professionals thieves, colonizers, goons, mafia men and "rapists, pillagers and destroyers." Some of the harshest reactions, along with some of the more rational defenses, are after the jump...
2 min read · 05 October 2009
3 min read · 05 October 2009
