Erin Griffith

Lynn Tilton is on a mission. Each day the founder of distressed buyout firm Patriarch Partners hears from more than 20 worthy middle market companies in need of rescue financing. The high volume is due, in part, to the lack of access to capital for middle market companies. They are too small to qualify for money from government plan TARP, and traditional sources of capital for middle market companies have retreated from the market to lick their wounds. Tilton has a solution to the middle market capital drought which involves using money allocated for PPIP alongside cash from private investors. She's proposed the plan, called SME Rescue Loans Program, to the Treasury and White House in a white paper (posted below). I spoke with her about the plan's terms, incentives, and status. PPIP hasn't exactly gotten off the ground. Why will this plan be more attractive to investors than PPIP, particularly since it gives the first loss to private investors? The reason PPIP hasn't gotten off the ground is not because it hasn't been attractive to investors. The problem is that you're not getting banks to sell their mortgage assets because they've been given TALF, and so they've been able to take themselves out of the mess they were in. They're not looking to sell their mortgage assets at a discount.

HA: When it comes to Leon Black, The NY Post photo illustration team was not to be outdone by the Times' Greek god-themed image from earlier this year. No, no. The Post has stepped up by superimposing Black's head on the body of a vulture. Get it? Because he's buying up distressed debt! He's a vulture! But if you read the story, you'll learn that he's also The Dark Prince. And apparently the Dark Vulture Prince is attempting, through a loan-to-own process, to buy Charter Communications. Keep reading for a random anecdote about Black's past as an uncommitted high school basketball player. (NY Post) Quick Look: The Tech IPO market-time to party like its 1999? (Deal Journal) Should Goldman Sachs Lower its Bonuses? Some analysts think so. (Dealbook) Crunch Crunch: The tight credit market has kept activist investors sidelined. (Reuters) What's a Mini-MBA? It's a Short program that provides an overview of management essentials. (BW)

Sankaty Advisors, the credit affiliate of Bain Capital, wants to help plug the gaping hole that is middle-market lending. The Boston-based firm has launched two new funds in recent weeks, one designed to invest in middle-market debt, and another to capitalize on the bankruptcy bubble with DIP loans. According to sources familiar with the efforts, Sankaty is looking to raise $750 million for Sankaty Middle Market Opportunities Fund, and $400 million for Sankaty DIP Opportunities Fund. Sankaty Middle Market Opportunities Fund (MMOF) will invest in middle-market mezzanine loans with some senior debt and equity. More specifically, it would target credit for new buyouts, rescue financings and secondary purchases of mezzanine debt. Sankaty expects to close on fundraising in November 2009, and then invest over the subsequent four years. Sankaty MMOF will charge a 1.25% fee on drawn capital with a

Arlington Capital has held a first close on its third fund, according to a regulatory filing. The vehicle features a a $750 million target, and has secured $204.7 million in commitments from 13 investors. Arlington began circulating its private placement memorandums in January of this year. Credit Suisse is the firm’s placement agent on this fund, even though it used UBS for its second fund, a $585 million pool. Apparently UBS told the firm that the leap from $585 million to $750 million was too steep given the environment. Likewise, the firm’s main contact at UBS, Mark Bourgeois, left UBS to go to Lehman Brothers in March 2008.

CNBC Is Hiring: The financial news network has "extended an invitation to anyone who owns a suit to drop by the financial news network and be a guest expert, cohost a show with Larry Kudlow, or do whatever." (The Onion) Citadel: One more way to keep your leveraged loan holdings liquid. Citadel has opened a trading operation for bank debt. (Bloomberg) FYI: Illinios Teachers plans to commit between $700 million and $1.2 billion next year with between nine and 16 funds. (P&I) Light On The Ladies: "Women represent just 10% of the 747 Europe-based investment professionals at Europe's 10 biggest firms in the private-equity industry, according to figures from data provider Preqin and the firms themselves." (Dow Jones)

Here's a look at the past two weeks of scoops, opinions and analysis from the peHUB blogging team. Corsair Capital Targets Almost Double for New Fund Celebri-VCs Try to Educate Washington [Keyword "try"] (Another) Venture Capitalist Joins the FCC [That Helps] Nycomed Crafts A Buyout, 2009-Style [Creativity] Is Private Equity Back? [He Said] It's Too Early for Private Equity To Be "Back" [She Said] Good To Be Here [Introductions] How Heller Ehrman Went Under [Forensics] Deloitte Cans Its Fund Placement Team [More Bad News] VC Performance Continues To Decline [Stats] Who's Active In Secondaries? Anyone BUT Secondary Firms [Studies] "It'll Be An LP-Friendly World For Awhile:" Q&A With TA Associates [Someone Raised a Fund!] MDV Raises Annex Capital for Three Funds [Money In The Bank] LPs Ask Sun Capital To Cut Fund Size [Someone's Shrinking a Fund] More Details on Sun Capital's Potential Fund Size Reduction [By a Lot]

Renminbi: More details on Blackstone's China fund. The firm is partnering with the Peoples' Government of Shanghai Pudong New Area. (FT) So Much For That: Recent evidence suggests not only has Wall Street survived, but it is essentially unchanged. (WSJ) IPO Fever: "The worst thing that could happen to an infant exit market is for an over-aggressive listing to dent its fragile confidence." (FT) Everyone Freak Out: Look at all those IPOs. Too bad this BusinessWeek article overlooks the fact that private equity-backed IPOs aren't for profits, they're for debt! (BW) Meanwhile: Barclays is fanning the fire, preparing for a "tidal wave" of private equity-backed IPOs. (Financial News)

A new white paper from the lender CastleGuard Partners addresses what it calls a hole in the government’s economic recovery plans. Nearly one third of all middle market companies are having difficulty accessing credit, due in part to the hole. “Mid-size companies, too large for SBA loans but too small to issue bonds or benefit […]

As usual, we have a weeks worth of ratings actions on the debt of buyout-backed companies from ratings agencies Moody’s and Standard & Poor’s. Both agencies appear to be on vacation, since the list is light for the fourth week in a row. Either that, or all the low-rated debt is undergoing distressed exchanges or getting terms amended. Once again, all of the ratings actions are related to exchanges or repurchases. Company: Dana Holding Corporation Sponsor: Centerbridge Capital Partners LP Revision: Moody’s revised the company’s probability of default rating to Caa1\LD from Caa1. Highlights: “The positioning of Dana's PDR at Caa1\LD reflects the company's second quarter earnings call announcement of completing additional open market purchases of its senior secured term loan at distressed prices beyond levels previously achieved through the Dutch auction concluded in May 2009.

Finance DOES Pay: Steve Schwarzman is the highest paid CEO in the US. (peHUB) Blackstone Issues Its First Ever Bond Offering: And its for "general corporate purposes." Is the firm on the prowl for strategic acquisitions? There are plenty of targets out there and Steve and Tony have always hinted at expanding via asset management plays. (Reuters) Is Private Equity Creating a Microlending Bubble? Private equity funds have "poured billions of dollars over the past few years into microfinance world-wide," leading to poor neighborhoods in India being "carpet-bombed" with loans. (WSJ) The Real Housewives of Goldman Sachs: Part two. Now a Goldman wife has been arrested for a DWI. Oy. (Dealscape)