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.
Northern Star Online – Media conglomerate Tribune Co., smothered by $13 billion in debt and weak prospects for generating cash through advertising, on Monday became the first major newspaper publisher to seek bankruptcy protection since the Internet began siphoning readers from traditional outlets.
Although Tribune’s next major principal payment on the debt, of $593 million, isn’t due until June, has been in danger of missing lender-imposed financial targets at year’s end. Those targets are based on the level of Tribune’s debt relative to its cash flow, and become harder to meet as revenue declines, even if the debt itself doesn’t increase.
Other newspaper companies have also struggled with their debts, but many have successfully negotiated with lenders to ease their targets in exchange for higher interest rates.
Guardian.co.uk – Hedge funds and banks are expected to bear the brunt of derivative losses estimated at $15bn (£9.4bn) linked to the collapse of Iceland’s three major banks – Landsbanki, Glitnir and Kaupthing – which failed in rapid succession last month.
The complex unwinding of trades linked to debt issued by the banks began yesterday with a settlement auction to determine the payout price on credit default swap (CDS) contracts – insurance taken out against the risk of debts going bad – for Landsbanki.
Payouts on all three banks are expected to be some of the largest ever seen in the $54.6tn CDS market – greater than those relating to Lehman Brothers, whose collapse triggered the meltdown of the global financial system.
The high settlement prices for Icelandic bank CDSs will be a blow to hedge funds, banks and other derivative traders who insured the debt.
Sydney Morning Herald- The waste management business Transpacific has attempted to snuff out concerns about its ability to service its $2.6 billion of debts, arguing that the market has failed to recognise its "incredible cash flow" and the value of its landfill sites.
After spending six months appeasing investor concerns over the group’s debt exposure, the executive chairman, Terry Peabody, said landfill sites were "another great asset of the company that I don’t think very many people realise".
He told ABC TV’s Inside Business that Transpacific could realise up to $100 million from its 26 hectare Tullamarine tip in Melbourne, which has come to the end of its life.
The Australian- The shares of Macquarie Bank’s most ardent and successful imitator, Babcock & Brown, and several of its satellites, plumbed new depths yesterday as Barclays lost faith in the group.
Shares in Babcock’s headstock have slumped from $16 to $9.50 in just three weeks and many market observers believe the group’s large debts are being tested by hedge funds.
"It has fallen about 35 per cent over the past three weeks," Patersons Securities senior private client adviser Tony Tascone said yesterday.
It appeared Babcock & Brown was being shorted by hedge funds, he said.
