While defaults rise and growing numbers of private-equity backed companies continue their march to bankruptcy (though not necessarily losses for the funds which marched them there), the "creative" financial devices which helped fuel the buyout boom appear poised for a comeback.
Continue reading "Recap Rerun: Short Memories, Missing Regulation" »
Private Equity funds may have found a new use for the uninvested funds (known in industry jargon as "dry powder") they're currently sitting on, which are estimated to total from USD 500 billion to as much as a trillion.
"This is an absolute wonderful time" to be in the private equity business, Blackstone head Stephen Schwarzman has told Bloomberg. Blackstone is currently raking in fees "advising" insurance giant AIG on how to raise cash through selloffs in the wake of the gigantic 2008 bailout.
Blackstone and the other pe funds have been lobbying hard to shape the Obama administration's stimulus package, now headed for the Senate, to extract maximum benefit from possible tax relief provisions on cancelled debt.
Desperate to move off the books over USD 43 billion in leveraged loans - loans it couldn't securitize and unload when the global credit crisis hit - Citigroup has found the ideal buyer: the private equity firms whose buyouts generated the loans.
Continue reading "Locusts into Vultures 2: Funds in $12.5 Billion Debt Buyback Deal " »
In 2003, Debenhams, a department store chain with 142 units in the UK and Ireland, was taken private by three private equity funds: CVC, TPG and Merrill Lynch Private Equity.
Continue reading "The Debenhams Deal: Autopsy of a Quick Flip" »
The UK-based brewers Scottish & Newcastle (S&N) have turned to private equity firms Blackstone and TPG in their efforts to wring the maximum out of their 50% stake in Baltic Beverages Holdings (BBH).
Private-equity owned Burger King, the world's second largest restaurant chain (over 11,200 units in 65 countries), adamantly opposes an agreement which would see Florida farm workers receive one extra US cent for every pound of tomatoes purchased by the fast food giant.
Continue reading "Penny a Basket for Tomato Pickers Too Much for PE-Owned Burger King" »
Cadbury-Schweppes' projected sell off it's US drinks division to private equity appears to be advancing on schedule, following the March demerger of the two divisions.
Continue reading "Cadbury US Beverages Sale to "Unlock" Shareholder Windfall " »
The International Brotherhood of Electrical Workers, representing TXU Electric Delivery workers, reached an agreement with the prospective buyers of TXU Corp, KKR and Texas Pacific Group, which have launched a US$32 billion leveraged buyout of the company. The agreement calls for the immediate suspension of a transmission and distribution joint venture planned by TXU and the scrapping of a proposed outsourcing agreement.
Continue reading "TXU maintenance workers reach deal with TXU buyers, KKR and Texas Pacific Group" »
As Stephen A. Schwarzman, CEO and co-founder of the Blackstone Group, splashed out on a US$3 million birthday party, it's clear where the wealth that's being sucked out of companies is ending up. As this report from ABC News reminds us (though we don't need reminding): "It's All About the Cash".
"These guys are not people who buy and hold. They buy, transform and sell. They're sort of a new beast out there."
Colin Blaydon, director of the Center for Private Equity and Entrepreneurship at Dartmouth's Tuck School of Business
Contine reading: Scott Mayerowitz, 'The New Titans of Wall Street - Unlike Past Entrepreneurs These Men Like to Hide in the Shadows out of the Public's Scrutiny', ABC News, 12 April, 2007.
“Investors are lining up to buy the American drinks division of Cadbury Schweppes should the company decide to sell the business, which includes name brands such as 7Up, Dr Pepper and Snapple. Private equity firms including as Kohlberg Kravis Roberts and Texas Pacific Group are among those believed to be interested in bidding for the beverage group, while Lion Capital and Blackstone – who acquired the Cadbury bottling business in 2005 – have also been mentioned.”
“... there is concern that once the sale is completed the private equity speculators will turn their attention to the company's confectionary business.”
Continue reading: Duncan Tift, ‘Cadbury a sweet target for bidders’, The Birmingham Post, Mar 23 2007.
According to a March 2 Reuters report, "A day after Texas Pacific Group [TPG.UL] joined other powerful private equity houses in a call for more transparency, the firm's mystery sell-off of Gate Gourmet reveals just how much work the industry has ahead of it. TPG, which bought the airline catering firm in late 2002 from Swissair, has quietly reduced its stake in the business over the past year without any disclosure, selling the last piece to Merrill Lynch on Thursday."
At the time of its acquistion by TPG in 2002, the airline caterer employed 25,000 workers. TPG immediately launched an aggressive drive for steep reductions in payrolls, wages and benefits involving closures and assaults on union rights. According to the Reuters report, the company today employs "about" 20,000 people.
Gate Gourmet, the catering division of SwissAir, was bought by Texas Pacific Group in the wake of the airline company's bankruptcy in 2002 . At the time of its acquisition by Texas Pacific Group, Gate Gourmet employed over 25,000 workers in 29 countries with 140 flight kitchens. For 2005, the figures are 22,000 workers and 109 flight kitchens. The path to "organic growth" at Gate Gourmet began with a meticulously planned assault on trade unions.
"Burger King Corp.'s private equity backers are looking to king-size their returns from the chain ahead of its initial public offering, with plans to collect a $400 million dividend, according to Moody's Investors Services. The payout would put the investors - Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners - in the black on their investment, as they are believed to have injected $325 million in equity during the $1.5 billion purchase of Burger King in 2002."
Read more.... "Burger King holders plan whopper dividend: Moody's says private equity backers will collect $400 million before taking fast-food chain public", CNNMoney.com (2 Feb 2006)