Thursday, April 2, 2009

Carlyle Writes Down Freescale, While Freescale Crams Down Debtholders

Who says a firm needs to be in bankruptcy to pay less than a dollar for debt or credit instruments? The Carlyle Group wrote down its investment in Freescale Semiconductor by 85%. It did so while the company crammed down junior debtholders and senior secured notes in one slashing move.

Freescale gave $1 billion in senior debt for $3 billion in junior notes. Junior noteholders got 33 cents on the dollar for their nearly worthless holdings. Adding senior debt became a haircut. Senior debt dropped from 60 cents on the dollar to 40 cents.

Got that President Obama, Congress and AIG? It also throws water on Geithners plan to wind down nonbank firms. They seem fully capable of winding down on their own.