Erin Griffith

As usual, we have a week's worth of ratings actions on LBO-backed companies from ratings agencies Standard & Poor's and Moody's Investor Services. It's the second light week in a row--last week S&P and Moody's only took a ratings action on one company. This week we have four. Company Station Casinos Inc. Sponsor: Colony Capital LLC Action: S&P lowered its issue-level rating on the business to ‘D' after it filed for Chapter 11 bankruptcy protection and revised its recovery rating on the company's senior unsecured notes to '5' from '4'. Moody's downgraded the company's probability of default rating to D from Ca and downgraded the ratings on the company's senior secured revolver and term loan were downgraded to Caa3 from B3. Highlights: From S&P: "This rating action follows our Feb. 4, 2009, research report in which we lowered our corporate credit rating on Station and our issue-level rating on its 6.5% senior subordinated notes to 'D' following th" Given the severe challenges faced by the gaming industry and by Station in particular, Moody's used a fundamental distressed EBITDA valuation (6 times multiple) to estimate loss-give-default rather than the 50% mean family recovery rate."

Selling private equity fund stakes on the secondary market is never as simple as it sounds. For investors in Thomas H. Lee Equity Partners Fund VI, it's become a waiting game. The $8.1 billion vehicle has maxed out on the permitted annual percentage of secondary sales for 2009 and is waitlisting all interested sellers until 2010, according to a source familiar with the situation. The fund closed in December 2007 alongside a $2 billion co-investment vehicle, but plenty of it had been deployed prior to the final close. THL Partners Fund VI includes such mega-deals as Univision, Clear Channel and Ceridian. Given the well-publicized troubles of some of these companies (ahem, Clear Channel), it's no surprise that some investors are running for the door. The problem, of course, lies in a set of "draconian" regulations, which state (in over-simplified terms) that if more than 2% of a fund's LP stakes trade on the secondary market in a calendar year, the fund could be audited and deemed a publicly-traded partnership, or PTP. The PE fund then is no longer a flow-through vehicle and, as a result, end up having its returns taxed twice

One Take on The Delphi Saga: "Through all the gyrations and the endless bankruptcy, nothing much has changed: GM still can't afford to lose Delphi, and Delphi still can't afford to be liquidated. So did it really make sense to spin Delphi off in 1999? Of course not. But that's what Wall Street wanted, and that's what Wall Street got. One can never underestimate the finance business's hatred for old-line vertically integrated companies." (Big Money) Six Words To Live By on the Internet: According to Fred Wilson: open, global, mobile, social, playful, and intelligent. He says we need to work on the intelligent part. (A VC) Michael Milken's New Project: a user-generated website focused on executives. (Bits) HR: Meet the new head of private equity at Illinois Teachers. (P&I) No Short Sleeves or Yellow Pantsuits: Life as a Woman at Lehman Japan (Deal Journal)

First Avago Technologies sets its IPO terms. Then came S-1 filings from Vitamin Shoppe, Emdeon and Bayview Mortgage Capital. Then comes today's news that discount retailer Dollar General has its registration on standby. A storm after months of calm, and we're left wondering about what tomorrow might bring. It's entirely possible that we'll see a growing number of PE-backed companies gearing up for public market listings. Look no further than the likes of Rosetta Stone, backed by ABS Capital, and Bridgepoint Education, backed by Warburg Pincus, to see that this year's small handful of buyout-backed IPOs have performed relatively well (on the venture side, it's even more hopeful). If Dollar General sees a warm reception even with its approximate 4x leverage, it may break the seal for more mega-buyouts to test the waters. So cheer up, mega-buyout investors! Even though your stakes are worth next to nothing on the secondary market, some realizations may be heading your way. Even the

Now that the weather has finally warmed up, plenty of M&A bankers are hoping the market for deals will as well. We’ve noticed a few more targets coming to market in recent weeks and have compiled a list of some of those we’ve come across. Our sources are various news reports and the Buyouts “Seeking Buyers” list. The following companies (among many others) are either formally considering “strategic alternatives,” reported to be on the block or are rumored to be in sales talks. For prior lists, see below, and send any additions my way. Coinmach Services Corp., backed by Babcock & Brown, may end up undergoing a debt-for-equity swap with its underwriters due to its heavy debt load, Debtwire reports. Aetna Inc has hired Bank of America and Credit Suisse Group to help it sell its pharmacy-benefit management business, Reuters reported. ... Friends, Britain's sixth-biggest life insurer by market value, also said it had rejected as "wholly inadequate" a new takeover proposal from Resolution, Reuters reported.

The Barbarians are Coming: The Economist argues that, thanks to a few IPOs and a handful of deals, private equity is waking up from the dead. I think it's a little early to say that. (Economist) New Terms: This one is new to me at least-"Ramen Profitable" aka a startup that makes just enough to pay the founders' living expenses. (Paul Graham) Rants: Why Neal Patel doesn't want you to start a company. (Quick Sprout) According to an anecdote: Sex in the office is yet another victim of the recession. (Clusterstock) An Outsiders Point of View: Is private equity good for technology vendors? (Human Capitalist)

Adams Street has accumulated almost half of its target for its second private equity secondary fund, according to a regulatory filing. The firm, which entered the market in Adams Street Global Opportunities Secondary Fund II in earlier this year, is seeking $600 million. The firm’s first secondary vehicle had $390 million in commitments. To date, […]

Although it's not yet been posted to the FDIC's comment page, Wilbur Ross has submitted his two cents to on the agency's onerous reform proposals for buyout firm investments in banks, he told Bloomberg. Once the loudest proponent of bank investing, Ross said his firm, WL Ross & Co., will "never again" submit a bid for a failing bank under the proposed set of rules. Those are strong words coming from someone who attended Sheila Bair's roundtable discussion in early June and walked away calling the meeting "highly productive." I suppose his speaking out is just a matter of taking extra care to ensure the FDIC hears and abides by his concerns. Maybe he's also trying to scare up more support from his bank-buying private equity peers. Their comments are suspiciously absent from the the FDIC's comment board, which has garnered a few more letters since we last checked in.

Take-Downs: The New York Post puts a hit on Sun Capital Partners. Not once, but twice in one issue. When Wasn't Friendster For Sale? (I mean, ever since the social networking site turned down its first ever buyout offer and realized it wasn't getting another...) Either way, TechCrunch has obtained (perhaps in an attempt by Friendster's I-bankers Morgan Stanley to drum up some bids) Friendster's official marketing materials aimed at potential Asian suitors. (TechCrunch) The New Joblessness: The U.S. economy is not only shedding jobs at a record rate; it is shedding more jobs than it is supposed to. (NYT) Surprise! A buyout firm actually write its portfolio up this quarter! (Reuters) Buffet's Cartoon: The "Secret Millionaires Club" is the title of a new cartoon staring the Oracle of Omaha, in which Buffett's cartoon likeness ... dispenses investment advice to a motley crew of kids from Omaha. (Deal Journal)

The Audax Group will wait to come to market with its fourth buyout fund, despite several months of pre-marketing, the firm told peHUB. According to Co-CEO Geoff Rehnert, Boston-based Audax made the decision because it hasn’t deployed enough of its current fund to justify raising another. Even after doing ten add-on transactions this year, Fund III is only around 50% deployed. That means the firm is sitting on around $500 million of the $1 billion pool, which closed in 2007. Audax Private Equity invests $10 million to $100 million in transactions valued between $25 million and $500 million. Rehnert wrote in an email: “Last Fall, we anticipated we would be further along investing Fund III at this point in time, but our investment pace has slowed as credit tightened and deal activity has slowed.” The fourth fund is expected to have a similar target to its predecessor.