Saturday, June 9, 2012

Perry's Last Chance to Ask Carlyle to Repay

The Carlyle Group will sell its remaining shares in Vought/Triumph next week, according to Bloomberg-BusinessWeek.  The offering of 4.666,166 shares will close Tuesday, pending the arrangement of buyers by Credit Suisse.  Investors are instructed to request a copy of the prospectus from Credit Suisse. 

Public offerings haven't done well recently.  How might Carlyle's third Triumph offering fly? The Carlyle Group sold 5 million shares in November 2011.  Morgan Stanley floated those shares.  That was after a May 2011 offering of 2.5 million shares by Deutsche Bank

Carlyle shares total 12.16 million vs. 7.5 million reported by Bloomberg-BW.

Carlyle received about 7.5 million Triumph shares two years ago for selling Vought Aircraft Industries Inc. to Triumph.

Triumph took on Vought's obligations when it did the deal with Carlyle in 2010.  That included $35 million in Texas Enterprise Grant funds, courtesy of Governor Rick Perry.  Perry executed the deal in 2004.  Vought publicly reneged on their employment promises in 2007.  Despite this clear default Perry renegotiated the Carlyle's Vought deal in early 2010, just in time for the Triumph purchase.

Governor Perry could use his bully pulpit to ask Carlyle's billionaire co-founders to make Texas taxpayers whole, but that's not his style.  Pistolero Perry would rather ask for another 10% cut in the state budget.  It seems Perry's principals override his principles.

Last chance to ask the DBD's to refund Texas taxpayers.  Tuesday's coming and they should have plenty of cash.  Ironically, Vought's remaining TEF obligation is roughly 10% of Carlyle's expected proceeds of $280 million.