Erin Griffith
Wishful Thinking or Reality? Restructuring industry firms said they're "bolstering their ranks" for a "sustained demand for their services" over "three to five years." Green shoots, my a**! (Reuters) BX World: Blackstone Investor meetings may very well include appearances from Shamu. The firm is nearing a deal to purchase Seaworld and other theme parks from Anheuser Busch. (WSJ) Moody's in a Bad Mood: And the ratings agency is taking it out on private equity. "Private-equity firms could add more debt to their target companies' balance sheets in order to reap dividends, which could weaken the position of existing bondholders, a report by Moody's Investors Services said on Thursday." (Reuters) Weirdest, Most Random Niche Deal Ever: Riverside Partners acquires a Portugal-based umbilical cord blood collection company. What the heck is that? (peHUB)
Investment pros disagree on the level of restructuring activity we should expect in the next quarter and year. At least this time around, half of ‘em will be right. Because we were wrong about 2009. Around this time last year, investment pros boldly predicted a giant tsunami of bankruptcies in Q1 of 2009, with LBO-backed […]
Sun Capital Partners held its mid-year meeting two weeks ago and it wasn’t all bad news. The turnaround firm’s leaders Rodger Krouse and Marc Leder were even bold enough to open their presentation with what we hope is a nod to peHUB’s vigilant Sun Capital coverage: “Reports of my death were greatly exaggerated.” Maybe they’re just big Mark […]
As usual, we have a week’s worth of ratings action on the debt of LBO-backed companies from ratings agencies Standard & Poor’s Investor Services and Moody’s Investors Service. The big action this week was all the toggling going on at Realogy, Apollo Management’s ill-timed real estate mega-deal. The company underwent a distressed debt exchange of its senior toggle notes, in which Carl Icahn received $150 million of a $475 million second lien term loan for a previously held $280 million senior toggle notes due 2014. The money will be used to repay first lien credit facilities. Icahn Partners is selling the rest of its toggle notes to Apollo, which will invest the cash in the new second-lien term loan. My question: Which mega-buyouts haven’t successfully undergone a distressed debt exchange? Seems most of ‘em have succeeded in pushing their debt band-aids through and “kicked the can down the road,” as the PE pros have been saying. But have any tried and failed? Have any not even tried yet?
Bob Dylan Sells (Out): He's teaming up with Citigroup to release his Christmas album. (Cityfile) Just Friedman? Hellman & Friedman co-founder Warren Hellman is stepping down. (Reuters) M&A is BACK! Or, at least, Confidence in M&A. Or at least, M&A has hit its cyclical trough and is starting a slow slog back up. (Deal Journal) Lessons From U.S. For Private Equity: The United States buyout firms did better damage control than European firms in the credit crisis and have had more success than European firms. (Breakingviews)
Forbes released its annual list of the 400 Richest Americans and while slightly less filthy rich than years past, buyout pros were still well-represented. Carl Icahn was the top LBO professional on the list at number 22. Rob Perelman came in second at number 23. Blackstone Chief Steven Schwarzman clocked in as the third-richest buyout pro at number 50 with a new worth of $4.7 billion Rival Henry Kravis of KKR appeared 27 slots later with a net worth of $3.8 billion. George Roberts, the "R" in KKR, weighs in at number 85. (I guess that's what you get when your name is last on the marquee.) Every single one of the 17 buyout pros on the list have seen their net worth drop in the past year. While their investments may have suffered in the recession, their fees and carried interest from boom eras past ensured that the leveraged buyout community was well-represented on the list. Judging by my unscientific observation, the number of buyout pros on the list tops VCs and possibly ties hedge fund pros. (Entrepreneurs is a different story.) Follow the jump for the richest LBO barons in America.
#1. Station Casinos The Las Vegas-based casino company was acquired by Colony Capital LLC and the Fertitta family in 2007 for $8.9 billion. The firm invested $2.7 billion in equity across Colony Investors VII and Colony Investors VIII. What Went Wrong? With more than $5.285 billion in debt, the company could not sustain the prolonged […]
#3. Chrysler LLC Cerberus Capital Management purchased Detroit-based Chrysler for $7.4 billion in 2007. The firm invested up to $1.2 billion in equity in Chrysler and GMAC, its financing arm from Cerberus Institutional Partners LP Series IV. What Went Wrong? Everyone knows this story by heart, but we’ll summarize it anyways. The deal heralded Cerberus […]
#2. Extended Stay Inc. Lightstone Group LLC purchased the Spartanburg, South Carolina-based hotel company in 2008 for $8 billion. The firm invested $600 million in equity from an undisclosed fund. What Went Wrong? With $7.4 billion in debt, the company collapsed as hotel industry prices declined around the country to stay competitive in a recession. […]
#4. Aleris International TPG purchased the Beachwood, Ohio—based company in 2006 for $3.3 billion. The firm invested $849 million in equity from TPG Partners V LP. What Went Wrong? The company’s capital structure had very few covenants and a covenant-free revolver. But a sudden and dramatic drop in aluminum prices hurt the automotive and industrial […]