They are issuing new debt to push back maturities on their existing loans. They are deleveraging through so-called exchange offers and debt repurchases. They are injecting more equity into deals to strengthen their balance sheets. Some are creating "annex funds" in which investors are asked to pony up more money to prop up ailing portfolio companies.
Some lenders to IMO have bought into the company's debt over the last year, one source said, with an eye on a restructuring deal in the future.
Such a "loan to own" strategy is becoming increasingly common in Europe as distressed debt investors scoop up heavily discounted loans and bonds, expecting either high returns or a stake in the company.
*The firm also said it wants to invest "with the government as a partner or counterparty in credit and liquidity-exposed situations in the belief that these partnerships can provide favourable loss-sharing arrangements, which can protect capital in a stress-case scenario."
The state's primary objective in pursuing the lease was to maximize the asset's value to the state for reinvestment in transportation facilities while maintaining the road's safety standards, service levels and overall quality.
General James L. Jones
Richard Holbrooke
Dennis Ross
Henry Kissinger
Keith Sullivan
Tim Geithner
Larry Summers
Paul Volcker
James Steinberg
Paul Wolfowitz
Robert Kagan
Richard Pearle
David Rockefeller
Henry Kravis
Roger Altman
Vernon Jordan
James Wolfensohn
Barnett Rubin
Niall Ferguson
Donald Graham-WaPo
Fareed Zakaria-Newsweek, CNN
Both Visteon, which Ford Motor Co. spun off in 2000, and Metaldyne Corp, a unit of Japan's Asahi Tec, said on Thursday that the bankruptcy filings do not include their non-U.S. entities or operations.Corporation structures are complex and fire-walled, supposedly reducing risk. However, it makes it easier to shed a loser. In this case, the taxpayer may shoulder the burden. While the public pays for the casket of living dead AIG and a shuttered BankUnited, corporate vultures pick at the carcass, even carrying them off whole.
Carlyle plans to purchase portions of Metaldyne's Chassis business assets in the U.S., Mexico and Spain. More details were not released.
Neil Dekoker, with Original Equipment Suppliers Association, told Local 4 Business Editor Rod Meloni, "Suppliers have to ramp up buying materials and starting to pay employees and bringing them back again and they won't have the cash unless they can borrow the money from the banks and banks are currently not loaning money to the auto industry."Mr. Dekoker goes to Washington with another plan asking taxpayers to fill the role of the financial system? How many ways will the big money boys win?
Dekoker has prepared a plan to put $8 billion dollars into supplier hands. He said he'll take that plan to Washington next week.
"Sensible restrictions should be placed on banks, especially those that have received government capital, from investing their own balance sheets in a backdoor effort to reacquire what could be their own assets with an enormous amount of federally guaranteed leverage," said Daniel Alpert, managing director at Westwood Capital LLC, an investment bank.
BankUnited, a smaller player in a Florida market dominated by giants like Bank of America and Wachovia, now has an advantage over competitors because it is "overcapitalized" and completely independent, with no federal government TARP money.
On June 12, 2007 two Bear Stearns hedge funds speculating in mortgage-backed securities melted down.
Carlyle Capital Corporation, a 39-1 leveraged fund specializing in mortgage backed securities, imploded March 17, 2008.
September 14, 2008 Lehman Brothers filed for bankruptcy.
BankUnited Financial Corporation (bank holding company for shuttered BankUnited) and the interests of equity, debt holders or other creditors of BankUnited Financial Corporation are not included in the closure or receivership of the institution. Any claims by equity holders were not acquired by the assuming institution.
Senator Warner: I am very, very troubled by your comments on AIG and our obligation to maintain 100 cents on the dollar to counter parties....
Secretary Geithner: ...Everything we do on AIG going forward, we are going to try to balance what we think is the best way to reduce risk to the taxpayer over time, at the least potential damage to the financial system as a whole. It is an incredibly difficult balance. And uh, it is very hard to know if we get that balance right, but we've kind of had a good experience with what happens to people when we get that balance wrong....
Senator Warner: The taxpayer should be expected to continue to honor all of the AIG obligations at 100 cents on the dollar for as long as we're in AIG?
Secretary Geithner: I think Senator I would say it differently. What my obligation is, again, is to try to manage through this incredibly difficult problem in a the way that minimizes losses to the taxpayer and minimizes broader risk of damage to rest of the financial system, because as we saw last year the effects of getting that judgment wrong are deeply traumatic to people who were careful and responsible... My obligation is not to protect the counter parties at AIG. I would not give a penny to the counter parties at AIG. What I care about is trying to make sure that we reduce risk of loss to the taxpayer, and we reduce the risk of avoidable damage to the fabric of confidence in our financial system because of the effect it has on pension values (big smile), again on business viability, on the cost of credit, on the ability to put your kids through college, on the viability of business on Main Street, on the level of unemployment. I know that connection seems remote, is hard to appreciate, cannot be certain we get that balance right, but look what happened when reasonably careful people got that balance wrong.
Cerner Corp's current price is $56.52
Nancy-Ann's 13,300 in stock options are for $15.46
If she flipped them, Ms. DeParle would make $41.06 per share, or a total of $546,000
March 2 $35.00
May 22 $56.52
Increase $21.52
Percent Increase 61.5%
Voices like Mr. Fisher's can be a problem for the politicians, which may be why recently there have been rumblings in Washington about revoking the automatic FOMC membership that comes with being a regional bank president. Does Mr. Fisher have any thoughts about that?This is nothing new, he points out, briefly reviewing the history of the political struggle over monetary policy in the U.S. "The reason why the banks were put in the mix by [President Woodrow] Wilson in 1913, the reason it was structured the way it was structured, was so that you could offset the political power of Washington and the money center in New York with the regional banks. They represented Main Street."Now we have this great populist fervor and the banks are arguing for Main Street, largely. I have heard these arguments before and studied the history. I am not losing a lot of sleep over it," he says with a defiant Texas twang that I had not previously detected. "I don't think that it'd be the best signal to send to the market right now that you want to totally politicize the process."
The banks sent the Treasury a plan written in February titled “Outline of Potential OTC Derivatives Legislative Proposal,” saying the Federal Reserve should extend capital and margin requirements to companies and hedge funds that trade in the $592 trillion unregulated market, according to a document obtained by Bloomberg News and confirmed by the Treasury. Energy companies, corporations and hedge funds don’t face such requirements now, while banks do under central bank oversight.
“The banks appear to wish to maintain the intra-dealer market and raise barriers to new entrants to keep the OTC business as compartmentalized as possible and to protect their profitable market conditions,” said Brad Hintz, an analyst at Sanford C. Bernstein & Co. in New York. “The Street’s lobbyists appear to be asking for a ‘club’ structure in OTC trading.”
(The Geithner plan includes) “All OTC dealers and other firms who create large exposures to counterparties should be subject to a robust regime of prudential supervision and regulation,” the proposal said. These included “conservative capital requirements,” “reporting requirements,” and “initial margin requirements.”
The bank-written plan, dated Feb. 13, said the systemic regulator “shall promulgate rules” requiring “capital adequacy,” “regulatory and market transparency” and “counterparty collateral requirements.”
Tim Geithner's sketchy plan is remarkably similar to the bank suggestion. Will ex-Wall Streeters get the franchise and the systemic regulator they want?
The devil is in the details, which will be revealed, likely late Friday afternoon of a holiday weekend.
The Fed is in the process of buying $300 billion of long- term Treasuries through September, as authorized at the March meeting of the Federal Open Market Committee. Policy makers also at the time more than doubled planned purchases of mortgage- backed securities to $1.25 trillion this year and boosted federal agency debt purchases to $200 billion from $100 billion.
Purchases may increase nominal gross domestic product as much as $1 trillion “over the next several years,” Kohn said in a footnote to his remarks.
Alan Blinder, a former Fed vice chairman who is a Princeton economics professor, said Kohn’s estimate of the effect on GDP from the mortgage-bond purchases is “believable.”
“It was supposed to reduce the risk spread between mortgage rates and other rates, and I think it has,” Blinder said in an interview. “You get these multiplier effects” on the economy from spending on housing, said Blinder, a panelist with Kohn at the conference.
You get these multiplier effects? I expected a little more logic to the estimate.
Kohn reiterated his view that the U.S. economy “is only now beginning to show signs that it might be stabilizing, and the upturn, when it begins, is likely to be gradual amid the balance sheet repair of financial intermediaries and households.”Let's say GDP grows a trillion over the next few years. How much of that is inflation? How much is hyper-inflation?
John Kanas, BankUnited's new leader, said Florida’s largest local bank will focus on attracting commercial and small business loans.The Carlyle Group has hundreds of affiliates. Are any candidates for BankUnited's services? What about Blackstone's corporate assets? Do they need commercial catering? The PEU boys have a captive bank. I feel a credit thaw coming. It's aided by $4.9 billion in FDIC support.
Kanas said he will continue to live in New York, but will commute to Coral Gables and stay there several days a week. He said he will use his business contacts in the Northeast to find many investors eager to make deals in South Florida.In addition to going after commercial, industrial and small-business loans, he said BankUnited will start seeking more business deposits, in addition to its retail deposit base.
"If success in this regard serves to shrink the traditional employment-based insurance system, so be it.”
It’s not the outcome, it’s the plan. The race continues to the lowest global common denominator on worker pay/benefits. Employers want to dump the employment-based insurance system. Uwe provides a nice cover in his piece.
As for Uwe, I hope he declared his conflicts of interests. He sits on a number of for-profit health care boards and owns huge chunks of stock, including options.
He just got options for 6,230 shares of AmeriGroup stock, a health insurer. They become exercisable in 2010 and last through 2016. Uwe also holds 144,558 AmeriGroup shares, 134,856 of which are options. Dr. Reinhardt has a strong incentive to see AmeriGroup's stock price grow. It would help if Obama’s "public plan" is really a public-private hybrid. AmeriGroup excels at that. Dr. Reinhardt's Board pay from AmeriGroup in 2008 was $226,531.
Dr. Reinhardt is a Trustee of the H&Q Healthcare Investors, H&Q Life Sciences Investors and Hambrecht & Quist Capital Management LLC. He is a member of the boards of directors of Amerigroup Corporation and Legacy Hospital Partners, Inc.
Contact the FDIC and Treasury. They're the pair arranging sweet deals for private equity underwriters.Question: What about my shares of stock, notes or subordinated notes that I own in BankUnited Financial Corp.?
There was no publicly owned stock in BankUnited, FSB. If you are an equity shareholder, your shares are in BankUnited Financial Corp. in Coral Gables, the holding company for BankUnited, FSB, and not the institution. BankUnited Financial and the interests of equity, debt holders or other creditors of BankUnited Financial are not included in the closure or receivership of the institution. Any claims by equity holders were not acquired by the assuming institution. Please do not file a claim with the Receiver; instead, you should contact BankUnited Financial directly for information.
The PEU boys win again. It's a familiar refrain.Question: Will I continue to earn interest at the same rate? Will I be charged an early withdrawal penalty?
BankUnited will be reviewing rates and will notify you.
"We're assuming that things will get a lot worse and that's why there was the need for the $4.9 billion from the FDIC on top of our $900 million," Ross told "Squawk Box."
The FDIC said on Thursday it is close to providing more guidance for how private equity firms can invest in failing banks. The government is looking for ways to better tap the $1 trillion of total uninvested private equity capital as bank failures accelerate.
9. US Steel--supported Senator Bayh with $38,000
13. Peabody Energy--gave $33,800 in donations
1. Goldman Sachs--$123,750
14, Oaktree Capital Management--$33,400
15. The Carlyle Group--$32,750
19. AIG--$26,700
2. Eli Lilly--$65,722
7. Blue Cross/Blue Shield--$44,500
Is the $74.9 billion the most up to date number for Carlyle's assets under management? It was $91.1 billion in late 2008. After write downs, it fell to $85.5 billion. Carlyle's website hasn't changed from the $85 billion number. One might expect a head of state to get the most up to date information.According to the press service, D. Rubenstein informed the President on the company plans on investment in various branches of the economy of Kazakhstan.
Carlyle Group - one of the largest investment funds, operating the assets for the sum of more than $74.9 billion and specializes in venture investments.
About 40 percent of collateralized loan obligation funds in Europe are failing tests that may trigger immediate debt repayments to senior lenders and cut off interest owed to junior investors, according to Fitch Ratings.Will Uncle Sam ride to the rescue yet again? Or will it be the Fed widening TALF for existing toxic commercial loans? Defaults are on the horizon.Failures of over-collateralization ratios could cause some CLOs to default by the end of next year, Fitch said in a separate report today.
The main losers are CLO managers, among the largest of which are The Carlyle Group, Dublin-based Harbourmaster Capital and Alcentra Group Ltd., owned by Bank of New York Mellon Corp.
Service on the AIG Board from 2001 to July 2008
2 Countrywide loans from the Friends of Angelo (Mozilla) program, one at 5% & the other at 5 3/8%
Speaking fees from Bear Stearns
Stock holdings in numerous American branded multi-nationals, including big oil, major health insurers, big pharma
BOA loan to finance partial interest ($500,000-$1 million) in a Cessna 680 jet, rate is 4.236%
Carlyle's David Marchick expressed concern to Congress over huge debt that needed refinancing from 2010-2014. The piper will need to be paid, one way or the other.The sale comes as many in the private equity industry struggle with falling revenues in the companies they own while debt financing conditions deteriorate.
Candover is mulling a sale of all of parts of its business, having said in March it had run out of cash to invest in its own 2008 private equity fund, throwing the future of the firm into doubt.
Springer Science is facing a payments crunch on its 3.08 billion euro leveraged loan. The sale of the stake could help the company to reduce debt and give it the financial firepower to strike a deal with its banks.
"While the exact form of regulatory reporting is still to be finalized, it is clear from our discussions with market participants and U.S. governing bodies that there is going to be an overwhelming need for the kind of flexible risk and regulatory reporting tools developed by FRSGlobal that have helped hundreds of banks worldwide meet the their regulatory needs over the past twenty years. This experience and expertise is now going to be available to the hedge fund industry."
"You want to move at a point where people still have the memory of the trauma. If you wait for the memory to fade, then the impetus for reform will fade and you probably get less change than you need."Funny, Tim didn't mention Treasury's allowing private equity underwriters to buy U.S. thrifts, savings & loans and credit unions. Are banks far behind? Tim did side with CEO's, suggesting no restrictions on executive pay. My memory hasn't faded on the role of greed and leverage in last fall's Wall Street implosion. CEO incentive pay played a clear role. Tim's fast in some areas and slow in others, especially those involving his Wall Street chums.
Mr. Cohen was recently Tim Geithner's nominee for Deputy Treasury Secretary. He withdrew his name. Tim's mentor at the New York Fed was the Blackstone Group's Pete Peterson.H. Rodgin Cohen, chairman of Sullivan & Cromwell, the New York law firm that represented MatlinPatterson on the Flagstar deal, as well as other private-equity firms, defended the concept at a forum sponsored by Bloomberg on May 4.
“I see no reason why private equity should not be able to invest fully in banking institutions, take control of stakes,” Cohen said. “There are structures which will accomplish this, and you could put in real barriers to preserve the safeness and soundness of the institution and to prevent conflicts of interest.”
Blackstone Group LP and Carlyle Group, the world’s two biggest LBO firms, are among those eager to snap up banks on the cheap after global losses tied to the credit crisis topped $1.4 trillion and slashed the valuations of lenders.Tim Geithner and Larry Summers recently rubbed elbows with Carlyle co-founder David Rubenstein at the Economic Club of Washington. Olivier Sarkozy, Carlyle's co-head of financial-services investments said:
“While there are valid public-interest issues that would need to be discussed and addressed to everyone’s satisfaction, not being able to control a bank we invest in increases our risk and therefore results in our demanding a higher return,” Sarkozy said. “That in turn increases the ultimate costs to the taxpayer of the industry’s necessary recapitalization.”Carlyle bid on BankUnited. They may soon have a captive bank. How does that impact customer service, while Carlyle pursues Super Returns? News reports show Carlyle hoping to zero out BankUnited equity holders and wanting billions in financing from Uncle Sam. Those super returns could come on shareholders' and taxpayers' backs. Shadow bankers imploded Wall Street. They'll soon be majority owners of thrifts. Disaster capitalism thrives.
Net volumes of around $333.6 million are outstanding on R.H. Donnelley's debt, according to the Depository Trust & Clearing Corp.The Carlyle Group once held R.H. Donnelley, but exited their investment in 2002. As of December 31, 2008 Donnelley had $9.6 billion in outstanding debt according to SEC filings. The company wrote down goodwill by $3.1 billion. How much of that Carlyle "valued added" disappeared with the swipe of a pen? Goodwill sits at zero. Intangible assets were written down by another $750 billion.
“When you look at some of who the placement agents are, you say these are people who are really not in the financial business,” said Orin Kramer, who oversees pensions as head of New Jersey’s Investment Council. “These are politically connected intermediaries, and that’s not a way it ought to operate.”The Carlyle Group settled with New York for $20 million for its role in a pay to play scandal. President Obama sees private equity underwriters (PEU's) like Carlyle as the solution to America's economic problems. Shadow bankers will soon invest alongside Uncle Sam in distressed assets. PEU's will partner to buy banks, while avoiding any serious regulatory scrutiny. PEU affiliates will line up at Treasury's cash window to fund supplies, executive incentive compensation and their pension obligations.
Indictments and civil complaints filed by regulators so far depict public officials allowing such connections and financial self-interest to trump merit when deciding who will be entrusted to invest taxpayer money.
