Friday, October 10, 2014

Carlyle Siphons Park Water for $5 million in Dividends

The Missoulian reported:

In April, Class A holders – meaning the parent company, The Carlyle Group – received a dividend of $2.5 million from Park Water Co., according to the document. Another $2.5 million dividend is scheduled to go to Carlyle on Dec. 31 of this year.

Carlyle's multiple layer of chiefs will benefit from more than a series of final dividend bleedings.

“It is not uncommon for executives and senior employees in a limited liability company to receive profits interests or other equity interests designed to incent and align the management team with the owners to help increase the company’s value,” he explained. “Profits interests are akin to stock options in a corporation.” 
 Ah, stock options which proved how executives will cheat on a widespread basis to garner prizes.  Executives backdated nearly 30% of stock options to maximize their take home pay.  Optimizing executive pay actually decreased their company's value.  Those who forget the lessons of the past are doomed to repeat them.

Now who swung for the fences, packaging junk as investment gold?  This caused the fall 2008 financial meltdown.  Don't forget that Carlyle's Blue Wave Partners hedge fund and Carlyle Capital Corporation were two canaries in the financial coal mine.  Both imploded earlier in 2008.

Carlyle has been monetizing assets left and right recently.  It helps to have a cash cushion should another downturn arrive.  Missoula residents have done their part to enrich Carlyle.

Carlyle is ready to leave public infrastructure, like Park Water.  It aims to profit from energy infrastructure.  Carlyle cofounder David Rubenstein was coy with board members from the Alaskan Permanent Fund when asked about investing in energy infrastructure.  The story ran in Mrs. Rubenstein's Alaskan newspaper.

At a recent meeting of the Board of Trustees, outside investment adviser George Zinn questioned David Rubenstein, managing director of one of those private equity funds, The Carlyle Group, about the wisdom of investing in the Alaska natural gas pipeline.

The billionaire financier warned of the risks of  investing state money so close to home and said the politics of Alaska are even more complicated than those of Washington, D.C.

"I just don't know whether the economic upside is worth the political risk," Rubenstein said, but he cautioned that he wasn't familiar with the project's merits.

So why would he discourage the board from investing in a project when he is unaware of its merits?  Look for the Permanent Fund to partner with Carlyle on energy infrastructure.  Rubenstein is the consummate salesman.

I can hear the talk at 1001 Pennsylvania Avenue.  "Ready to cash in on Missoula water?"  Check.  "Line up the PEU sights for global energy infrastructure."  Sir, yes sir!  "PEU profit steam ahead!"