Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
Reuters – Capmark Financial Group Inc., the commercial real estate company created through a 2006 leveraged buyout of certain GMAC assets, is preparing to file for bankruptcy possibly by the end of next week, according to a source with direct knowledge of the situation.
The company, which owns a bank that will continue to operate while it is in court, is in negotiations with lenders, bondholders and the Federal Deposit Insurance Company that will result in a filing by the end of October at the latest, the source said.
SF Gate – Apparently, hedge funds are so toxic in Alameda that just throwing the word around is enough to qualify as in depth criticism of the Alameda Point Revitalization initiative. The question at Alameda Point is whether or not there will be money to build the projects, and it seems that Hedge Fund money is unacceptable, unlike traditional multinational investment money like Lehman Brothers.
D.E. Shaw, the financial partner involved in the Alameda Point Revitalization project, has routinely been one of the top performing hedge funds over the last tumultuous years, and hasn’t gone under, threatened bankruptcy, etc. No bailout here. So the undefined attack on the source of the money seems strange.
The Associated Press – CIT Group Inc. shares plunged in premarket trading Wednesday as the commercial lender is reportedly trying to craft an exchange that would cut its debt and offer bondholders an equity stake in the company in a bid to avoid bankruptcy.
Shares of the New York-based financial firm, one of the nation’s largest lenders to small and midsize businesses, fell 61 cents, or 27.7 percent, to $1.59 in premarket trading.
CIT Group is preparing an exchange offer that would eliminate as much as 40 percent of its more than $30 billion in outstanding debt, The Wall Street Journal said, citing anonymous sources. The exchange would hand control of the company over to its bondholders and wipe out common stockholders, according to the report.
Reuters – Hedge fund Citadel Investment Group claims it is owed $470.5 million on derivatives contracts it held with Lehman Brothers, according to a claim filed in a New York bankruptcy court last week.
Citadel, which manages around $12 billion in assets, claims it is owed the money in its Citadel Equity Fund. The filing said the claim was at least partly based on a guarantee, but did not give details.
Globe and Mail – When Salida Capital Corp. beat all other bidders in a charity auction last month to score lunch with Warren Buffett, the $1.68-million (U.S.) win sent a signal to Bay Street: Salida is back.
Salida, the once high-flying, resource-focused hedge fund manager known for its appetite for risk, became one of Canada’s high-profile victims of last year’s market meltdown when its flagship Multi Strategy Fund plunged 67 per cent and three of its hedge funds got locked up in the Lehman Brothers Holdings Inc. bankruptcy.
That was followed by a rapid exodus of key staffers and by dwindling assets under management.
Private Equity Hub – A group of hedge funds that provided bankruptcy funding to Delphi Corp on Monday won a high-stakes auction to take control of the auto parts supplier, scuttling a rival deal brokered by the Obama administration.
Delphi’s board of directors and GM both offered their support for the proposed deal that would hand the company’s assets over to its debtor-in-possession lenders in exchange for their forgiveness of nearly $3.5 billion in loans.
The result, announced by Delphi late Monday, came after a two-day auction in New York.
Reuters – CIT Group Inc (CIT.N), which is looking at selling off some assets, is most likely to sell its aviation-finance and rail-finance operations, the Wall Street Journal said, citing sources familiar with the matter.
The people, who said evaluations were still in the early stages, told the paper that CIT was approached by Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) (BRKb.N) and Leucadia National (LUK.N) to buy parts of the company, but spurned the offers because of low bids.
CIT, which is a lender to nearly a million small- and mid-sized businesses, averted a crisis and bought some time this week with a $3 billion emergency financing from large bondholders to restructure its debt and avoid bankruptcy, after the collapse of rescue talks with the U.S. government.
Bloomberg – Lehman Brothers Holdings Inc. may return hedge-fund assets as soon as next year that were frozen when the New York-based securities firm collapsed in the largest bankruptcy on record.
PricewaterhouseCoopers, Lehman Brothers International Europe’s administrator, plans today to ask a U.K. court to block any creditor claims for assets after this year, the accounting firm said in a statement. That would allow PwC to return money Lehman had held in trust for fund managers as soon as the first quarter of 2010.
Reuters – General Motors Corp will file for bankruptcy later on Monday, U.S. officials said, forcing the 100-year-old automaker once seen as a symbol of American economic might and dynamism into a new and uncertain era of government ownership.
The planned filing, confirmed by Obama administration officials, would be the third-largest in U.S. history and the largest-ever U.S. manufacturing bankruptcy.
The decision to push GM into a fast-track bankruptcy, and provide $30 billion of additional taxpayer funds to restructure the automaker is a huge gamble for the Obama presidency.
Bloomberg – At last year’s Ira W. Sohn Investment Research Conference, Greenlight Capital Inc.’s David Einhorn told an audience of hedge-fund managers that Lehman Brothers Holdings Inc. wasn’t disclosing the whole truth about its finances.
Four months later, Lehman filed the largest bankruptcy in U.S. history. The conference attendees who followed his advice got a jump on the rest of the industry. They also got a tax write-off since all the registration fees go to cancer research and an art-therapy program for seriously ill children.
Bloomberg – Hedge fund manager George Schultze says he may avoid lending to any more unionized companies after being burned by President Barack Obama in Chrysler LLC’s bankruptcy.
Obama put Chrysler under court protection on April 30 after lenders balked at a proposal giving them about 29 cents on the dollar for their $6.9 billion in debt. The investors said the president’s plan favored a union retiree medical fund whose claims ranked behind them for repayment. It was offered a 55 percent equity stake in the automaker.
Pottstown Mercury – I have seen the future of conservatism and … he is a hedge fund manager.
I refer to hedge fund manager Clifford S. Asness, and I’m only halfway kidding. Or maybe I’m not kidding at all. The fact is, Asness has launched the single most lucid and inspiring counter-attack against the Obama administration’s brazen assault on capitalism as seen in its Chrysler bankruptcy shakedown.
