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New York (HedgeCo.Net) – It doesn’t help matters when a company, who is at the forefront of a government bailout, is expected to provide rescue to another faltering company. But that’s exactly what General Motors has found themselves in the middle of, as Delphi is again turning to their former parent company for assistance.
GM is in talks to buy back some parts of the Troy, Michigan-based auto parts supplier, including some unprofitable plants. While this may help Delphi achieve the exit refinancing that they need to emerge from Chapter 11, it certainly doesn’t make things easy on GM, who is already set to receive over $13 billion in government aid. However, some believe that Delphi’s dependence could help GM’s case in requesting more federal funds.
Since Delphi filed for bankruptcy protection in October 2005, they have faced a string of disappointments in trying to secure the needed capital. A $6.1 billion refinancing plan, led by hedge fund Appaloosa Management, was supposed to provide the influx of capital. GM had also promised a $2 billion chunk of the puzzle to ensure Delphi met the minimum requirements. When the hedge fund backed out of the deal at the last minute, Delphi was left without an alternative.
GM has agreed to advance up to $100 million this month to Delphi, to keep the company running for the next few months. Delphi has until Feb 27th to restructure its exit plan, including an amended budget with payouts to creditors and how they plan on becoming profitable following the exit of Chapter 11 protection. They have also requested that the U.S. Bankruptcy Court allow them to halt their retiree medical benefits.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – As the Obama administration prepares to distribute the remaining $350 billion in the Troubled Asset Relief Program, a new requirement will ensure that the salaries of top executives be capped at $500,000 a year.
“For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste, it’s a bad strategy, and I will not tolerate it as president,” Obama said at a White House press conference.
While last year saw a handful of top financial organizations crumble amidst record write downs and unsustainable losses, companies continued to dole out bonuses to those in high positions. Even as the first half of the TARP funds were distributed by the Bush administration, the public demanded transparency for fear that taxpayer money was being used to pad the paychecks of the ultra wealthy; the individuals whose greed was no doubt responsible for the financial meltdown in the first place. It was estimated that the banks receiving bailouts paid their top officials $1.6 billion in salaries and bonuses last year, according to the Associated Press.
Merrill Lynch CEO John Thain took home a record $83 million in 2008, despite taking $10 billion of taxpayer-funded government aid to keep his company afloat. Lloyd Blankfein, CEO of Goldman Sachs, pocketed $54 million while the company shelled out $242 million to their top five execs. Jamie Dimon of JPMorgan Chase, on the other hand, pocketed a mere $1 million while forgoing any bonus.
Treasury Secretary Tim Geithner was also on board with the new plan, saying that our economic woes were “made worse by a loss in faith,” referring to the gluttony of these top execs. While the plan cannot retroactively take back bonuses that were awarded with the first half of the TARP funds, provisions will likely be set in place that can reclaim compensation from senior executives if they are discovered engaging in any fraudulent practices.
In addition to outlining the plan, Obama urged Congress to finalize the economic stimulus legislation, saying that any delays “will turn crisis into a catastrophe and guarantee a longer recession.”
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
New York (HedgeCo.Net) – Daniel Och, CEO of New York-based hedge fund Och-Ziff Capital Management, is showing his confidence in his company, racking up another 1.6 million shares.
Och shelled out about $7 million between November 13 and February 2, at prices ranging from $3.89 to $4.98 a share according to the most recent filing with the Securities and Exchange Commission.
Och-Ziff, who is one of just a few hedge funds that is traded on the market, went public in November 2007, with their IPO going for $32 a share. The financial turmoil of 2008 caused their stock prices to plummet 80 percent as their hedge funds posted record losses.
However, gains in January have investors talking about a comeback. The company’s OZ Master Fund posted returns of 3.12 percent while their other three hedge funds also enjoyed positive returns.
Och-Ziff regularly files performance reports with the U.S. SEC because they are a publically traded company. Most hedge funds are not required to do so. However, a recent push for greater transparency in the troubled industry has caused many individuals in Washington to act. If a proposed plan brought on by two U.S. Senators gets approved, all hedge funds will be required to register with the SEC.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
