Wednesday, April 5, 2017

Two Pre-Crisis Deals Near Critical Refinancing

Two 2007 multi-billion deals face the prospect of refinancing.  Kushner Co. purchased 666 Fifth Avenue for $1.8 billion in January 2007 and needs to refinance an interest only loan for $1.2 billion.  The Carlyle Group bought Sequa Corp in December 2007 for $2.7 billion and faces $1.35 billion in debt due June 2017.

Both Carlyle and Kushner have prestigious political connections.  Carlyle located in Washington, D.C. for that very reason.  The Kushner's have connections to current President Donald Trump. 

If these folks can't get their billion dollar loans refinanced then the next financial crisis may be looming.  Crisis arise when the big money boys no longer trust one another to make good on their bets, I mean debts.

Carlyle prepared to keep at least a small equity stake if Sequa folds.  Forbes reported:

(Carlyle) scooped up $235 million in face amount of Sequa’s $350 million in unsecured bonds, buying them at cents on the dollar in the open market throughout 2015.  
Oddly, Carlyle helped rescue 666 Fifth Avenue in 2008.  It flipped its stake in 2012.  We'll see if banks and other big money boys trust Kushner and Carlyle to make good on their debts.  If yes, they'll get financing.  If no, these could be like Carlyle Capital Corporation, the canary in the Fall 2008 financial crisis.