Saturday, July 14, 2012

Carlyle to Bleed Booz

The Carlyle Group plans to load Booz Allen Hamilton up with $1.75 billion in debt, with $1 billion of the proceeds paid out as a special dividend.  At the end of this liquidity recapitalization, PEU speak for dividend bleeding, Booz will have a debt to equity ratio of almost 15:1 and negative tangible equity of $1 billion.  

Booz is a huge government contractor, which means Uncle Sam will pick up the tab for Carlyle's subversive cash in.  How do interest costs get passed through the lion's share of Booz' federal contracts?

Bain Capital and KKR led a liquidity recap of giant hospital company HCA.  Uncle Sam pays a portion of hospital capital costs through Medicare & Medicaid.  PEU's are the bane of our existence.

Update 7-15-12:  WaPo came to the rescue on Carlyle's bleeding of Booz.  Nothing to see here folks, but come back in five years to see if Booz is still a going concern.