As the deadline looms for the Refco auction, the contenders have begun lining up. Refco is scheduled to hold the auction for its assets tomorrow, and a winner will be named on Thursday, November 10.
According to reports, the largest offer that has been submitted so far was made last month by strategic bidder Interactive Brokers Group. The bid from the Greenwich-based firm set the ceiling at $858 million for the Refco assets, and trumped another $828 million offer made public that came from the Yucaipa Companies’ Ronald Burkle and Dubai Investment Group.
Multiple reports from the past couple days have indicated that other offers are expected to come from the likes of The Man Group, Cerberus Capital Management and JC Flowers & Co., which originally bid $768 million for the futures brokerage, but pulled the offer over a dispute regarding the break-up fee.
The speculation in the press is that the final purchase price will approach the $1 billion range. A press release issued Friday by Refco indicated that the company has received bids from five groups, which have ranged from offers for “substantially all of Refco’s assets” to bids for separate parts of the company. Refco also noted that the bidders have expressed interest in its business in the US, Europe and Asia.
According to the rules established for the bankruptcy auction, the company will only accept all-cash offers for bids up to $900 million, and for offers exceeding that level, the courts will allow debt to be included in the purchase price.
Refco, a publicly held portfolio company of Thomas H. Lee Partners, collapsed last month after its head Phillip Bennett disclosed that he had masked $430 million of debt. Soon after, the company filed for bankruptcy protection. Greenhill & Co. was hired as Refco’s sole advisor, and will be running the auction for the company’s assets.