Which buyout is most at risk? 4 Dec 2007 The bankruptcies of Revco and Federated heralded the end of the 1980s buyout boom. Which of today s monster LBOs will be first to succumb? One hint the guy who bailed out Revco two decades ago is backing today s biggest potential timebomb.
Cerberus revisits its distressed investing roots 4 Dec 2007 The threeheaded dog found fame as a distressed investor. It's now dropping some traditional buyouts, including Option One. That's wise, especially if the distressed opportunities look better. But investors should hope its nose for a bargain is better than it was with GMAC.
When is a takeover bid not a bid? 4 Dec 2007 When it s a preconditional proposal, of course. Under UK rules, wouldbe bidders can virtually go hostile without even making an offer. And potential bids for targets such as Rio Tinto and S&N can drag on indefinitely. Dawdling, though, could prove a foolish tactic.
Wall Street duffers can soon safely hit the links again 4 Dec 2007 There s a reason for Jimmy Cayne to be cheerful about 2008. It'll be harder to keep track of how often the Bear Stearns boss is out of the office playing golf. Records of scores, currently publicly accessible, are set to become less transparent a pity for shareholders.
UK finally does something right with Rock 4 Dec 2007 By finding a practical way to pay out depositors of the stricken bank in extremis, the government can credibly threaten to put Northern Rock into administration. That should let the authorities stand up to shareholders extortionist demands. Pity it has taken so long.
Investors get what they deserve with illiquid UK property funds 4 Dec 2007 Hot money flooded into such funds when the only way seemed to be up. Too many investors ignored the liquidity risks. Now the market is softer and, as some investors try to rush for the exits, they are finding them jammed.
US airline capacity cuts are a good sign 4 Dec 2007 Southwest s decision to follow Continental and Delta in cutting capacity amid concerns of a slowdown in the US economy will help keep the industry s dismal profit margins from disappearing.
ABN bankers should count their lucky stars 4 Dec 2007 Some investment bankers are sore that their bonuses don't vest after RBS s bid. Yet they should be thankful that they received guaranteed bonuses before the credit crunch. What's more, the value of the ABN shares in their bonus pools has soared. That's pretty unique in the City.
Rio has most to lose from Chinese intervention 4 Dec 2007 It s easy to see why China's Baosteel might want to block a deal between Rio Tinto and fellow miner BHP Billiton. But a full bid would cost $200bn and be politically risky. Buying a blocking stake makes more sense and would be bad news for Rio.
Subprime conflagration jumps the debt firebreak 3 Dec 2007 It was originally fuelled by gobs of leverage, which forced entities like Bear Stearns hedge funds to dump assets to meet margin calls. But unleveraged funds, like those run by Florida, Montana and Connecticut, are being scorched. Only patience can help limit the damage.
Goldman has its cake and eats it with mining deals 3 Dec 2007 Despite advising BHP on its $150bn assault on Rio, Goldman has partially retained Anglo American as a client. In an earlier era, when relationship banking mattered, the bank would have been sacked.
In a crunch, company books are unreliable memoirs 3 Dec 2007 Financial groups the world over are writing down structured finance assets. Meanwhile, Lennar is the latest homebuilder to take a haircut on its land holdings, to the tune of a whopping 60%. Book values, at times a reliable floor for valuations, aren t trustworthy right now.
Chavez vulnerable to oil price downturn 3 Dec 2007 The Venezuelan caudillo s referendum loss prevents him cementing himself in power. The nation s economic difficulties are increasing, and a drop in oil prices would bring economic crisis. At that point, Chavez s popular support may no longer be enough to prolong his rule.
Hillary Clinton wants US beggars to be choosier 3 Dec 2007 With a huge trade deficit and a zerosavings culture, the US hardly seems in a position to dictate terms of trade. But the wouldbe president has endorsed a rethink on free trade and a tough line on SWFs. Such policies might win votes, but they could hurt the already weak dollar.
Applying the Goldman touch to Merrill is only half Thain’s battle 3 Dec 2007 John Thain wants to bring the flavour of Goldman to Merrill s risk management and senior management culture. But the two firms are different. Pulling Merrill out of its rut will require drawing on its own culture as well as best practice elsewhere.
Pound could head down as UK feels crunch 3 Dec 2007 As the UK begins to feel the strain of higher interest rates and credit crunch, the pound remains close to 26yearhighs against the US dollar. But as the UK economy begins to struggle, the pound is likely to fall against the greenback.
Xstrata should show it knows when to sell 3 Dec 2007 The tieup of Rio Tinto and BHP could trigger a wave of mining consolidation. Xstrata and AngloAmerican are an obvious pair. But prices are pretty high. Xstrata s boss, Mick Davies, bought when the cycle was low. Now could be a good time to do the opposite.
Germany may regulate away postal competition 3 Dec 2007 Axel Springer could be the victim of the government s decision to impose a minimum wage on postal providers. That will make it tougher for the German publisher to sell its Pin subsidiary. Lacking competitive wages, potential rivals to incumbent Deutsche Post will hesitate.
Citi’s lean to Pandit requires strong Chairman 3 Dec 2007 The former Morgan Stanley chief appears atop the bank s painfully short shortlist. His elevation to CEO wouldn t be a bad outcome. He is a master of Citi s most troubled business. But he needs to be overseen by a strong nonexec chairman such as HSBC s former boss John Bond.
SEC’s block on shareholder director nominations isn’t disastrous 3 Dec 2007 SEC chairman Christopher Cox says the commission's recent ruling on proxy access upholds the status quo, giving regulators time to work on a better solution next year. The decision is a blow to shareholder rights, but not a fatal one. There is still room for a compromise.
Buffett may beat Kravis’s return – with less risk – on TXU bet 3 Dec 2007 Berkshire bought $2bn of the debt at a big discount. Its yield could be more than the buyout s equity investors KKR and Goldman reap on a portion of the deal. And Buffett has secured a moresenior position in TXU s capital structure.
Northern Rock funding isn’t rock-solid 2 Dec 2007 The suitors circling the stricken bank will need to find £11bnplus in loans. But none, including frontrunner Virgin, appears to have any guaranteed money. These wouldbe emperors aren t fully dressed.