Wednesday, April 9, 2008

Carlyle Takes Third Hit

The Carlyle Group lost a bit of its luster the last few weeks. It began with the collapse of Carlyle Capital Corporation, a publicly traded investment on the Amsterdam Exchange. Then Boeing Corporation snatched back an under performing supplier from Vought Aircraft Aviation, a Carlyle affiliate. On its website, the Firm Profile states:

Carlyle focuses on sectors in which it has demonstrated expertise: aerospace & defense, automotive & transportation, consumer & retail, energy & power, financial services, healthcare, industrial, infrastructure, real estate, technology & business services and telecommunications & media.

Despite Vought's paying the private equity firm over $2 million a year in management fees, the company couldn't work out the kinks in their joint venture with Alena. Management cited a liquidity problem that prevented them from ramping up their production lines fast enough. Boeing grew tired of the delays, already projected at eight months, and snatched up Vought's interest in the joint venture. Alena got to keep theirs. That looks bad for Carlyle. Just days after announcing the takeover, Boeing announced the delay ballooned to 15 months. They blamed slow progress on assembly and continuing problems with suppliers for the delays.

Carlyle Capital Corporation is permanently grounded along with Vought's interest in the Alena joint venture. Boeing's signature plane will stay Earth bound an extra 15 months due to another Carlyle failure to deliver. Did I mention the twenty four patients who died after Hurricane Katrina in another Carlyle affiliate, LifeCare of New Orleans? Three major blows to Carlyle's invincible aura, only one of which is public. They do an excellent job of "maintaining their good name."