Erin Griffith

As usual, we have a week's worth of ratings actions on the debt of LBO-backed companies from Standard & Poor's Ratings Services and Moody's Investors Service. This week was relatively slow, with the big news coming from the largest LBO of all time, KKR and TPG's buyout of TXU (now known as Energy Future Holdings). The Texas-based energy giant proposed a distressed debt exchange which will reduce its obscene debt load from $44 billion to $42 billion. Naturally the move warranted a downgrade from both Moody's and S&P. Moody's expressed concerns over "looming maturities" on around $23 billion of debt in 2014, which it said will need to be addressed before 2013. Meanwhile, carbon and mercury legislation threatens the company's "coal-fired margins," Moody's wrote. Read more on the mega-buyout's financial situation below.

Here are some potential target ideas, rumored or official, to jumpstart your deal pipeline. Our sources are various news reports and the Buyouts "Seeking Buyers" list. For prior lists, see below, and send any additions my way. Sentry Select Primary Metals Corp., a Canadian metal exploration and production company, has retained independent legal counsel and is in the later stages of retaining independent financial advisors to review strategic alternatives. Salesforce.com, Compellent Tech, CommVault, Cerner Corp., Computer Program Systems, and Eclipsys Corp. were named as takeover targets. (Read more) Alexion, a Cheshire, Conn.-based biotechnology company, has been named as a takeover target. (Read more)

How Nonsense Sharpens the Intellect: A study suggests that a feeling of absurdity "may prime the brain to sense patterns it would otherwise miss - in mathematical equations, in language, in the world at large." (WSJ) Thank You: A UK woman is taking up George Carlin's torch, combating nonsensical corporate jargon, including at financial institutions. (WSJ) Continuing Debates: Is Michael Moore a fan of "Blue Bails"? (The Big Money) Grocery Sale: The unnamed PE bidder for grocery store Ukrop's has pulled out of its deal. (Supermarket News via Roanoke Times)

The asset management arm of J.P. Morgan has raised a just over $1 billion toward a new fund targeting investments in the secondary market, adding to the recent flood of capital in the sector. According to a regulatory filing, the fund, J P Morgan Secondary Private Equity Investors LLC, raised $781.2 million from 324 investments, […]

Grant Thornton today released a white paper the IPO crisis and what can be done to fix the problem. It is a follow up to Grant Thornton’s original study, Why are IPOs in the ICU?, which was published in November 2008, and provides fresh market data and incorporates additional insight gleaned from discussions with a […]

Auction Time: If you wanna do a deal, you gotta be "creative." (FT) Advancing the Story: Private equity firms ravaged Simmons, could they do the same to banks? (Daily Finance) Speaking of the Story: 92K for a yacht captain? Yeesh. (NYT) And the Responses: "Shareholder Value for Beginners." (Baseline Scenario) "Blame the Banks." (Clusterstock) Now Hiring: Deloitte is looking at community colleges to increase its diversity. (BusinessWeek)

In the context of the New York Times private equity take-down, I think most peHUB readers would say that there is value created by private equity firms. It's also safe to say that buyout bosses are just as capable of destroying value. Taking it a step further, I'm of the opinion that while that dividend recap may take some risk off the table, they are generally not necessary. I also agree with Dan that management fees are an abomination. With that out of the way, here are examples of five more buyout-backed companies which underwent a dreaded dividend recap and ended up in bankruptcy. There isn't necessarily a straight line from recap to bankruptcy, nor is there a clear case that the company wouldn't have failed on its own apart from private equity involvement. But it sure doesn't look good. In some cases, the firms re-invested in the company, possibly to avoid a clawback if the fund from which the investment came from ends up underwater.

Today's NYT package story on THL Partners and its dividend recap of (soon to be) bankrupt Simmons Bedding Co. was destined to tap into a little populist anger. It's manifested in the site's comments section, with commenters calling buyout professionals thieves, colonizers, goons, mafia men and "rapists, pillagers and destroyers." Some of the harshest reactions, along with some of the more rational defenses, are after the jump...

A third quarter report from NYPPEX, a secondary QMS service, shows that pricing in the market for secondary private equity interest sales has increased. After hitting a low point earlier this year, the median bid has increased by 29.3% to 51.58% of NAV (net asset value). The increase is driven by heightened confidence in the […]

Here's a look at the past two weeks of scoops, opinions and analysis from the peHUB blogging team. Read ‘em before they go behind our subscriber paywall... The Biggest PE-Backed Busts of 2009 Private Equity: The Sun'll Come Out Tomorrow? PE-Backed Busts: What's in Store for Q4 and Beyond? Perseus Hits The Road For Fresh Capital Let's Sleep On It: Notes on Mega-Mattress M&A Fund Performance Data from CalSTRS KKR Looks Inward for Investor Relations Chief Insight Venture Partners Talks Twitter What's Next for Churchill and Peers? Private Equity Deal Volume Doubles in Q3 PE Fundraising Falls To Six-Year Low Wellington Management To Close PPIP Fund Today 19 Buyout Pros on Forbes "Richest Americans" List Lynn Tilton Forgoes LP Dollars for Her Own Auto Suppliers and Busted Banks are Old News. Wilbur Ross' Next Target is Casinos Laundry Room Chronicles: Talking PE-Backed IPOs NewStar Financial Lays Off 17 Drivers of PIPE Activity in the Next Year GI Partners Nearing Close on Fund Three