Wall $treet Folly

Blackstone is starting up an Asian Event Driven fund business

With private equity deals few and far between, Blackstone is delving deeper into the event driven fund business. And they're looking to further expand their interests in Asia with their most recently announced move.  Schwarzman & Co is starting up a unit that will invest in Asian event drivn opportunities indluding those related to mergers and bankruptcies.  SAC Capital alum Aaron Nieman will run it:

Blackstone Altius Advisors will be led by Senior Managing Director and Chief Investment Officer Aaron Nieman, New York- based Blackstone said in a statement issued through BusinessWire today. The fund will be based in Hong Kong with employees in Tokyo, Mumbai and New York.

``As Blackstone continues to aggressively seek opportunities within Asia, Aaron and his team will provide additional investment capability that will bolster our presence in the region,'' Antony Leung, Blackstone's Greater China chairman, said in the statement.

Nieman joined Blackstone from SAC Capital Management, where he was a managing director in the Canvas Capital Management unit overseeing merger arbitrage and event-driven investments in Asia- Pacific, the Blackstone statement said.

Blackstone to Start Asian Event-Driven Fund Business - Blackstone

Bankruptcy / Distressed: Corporate defaults running at the fastest pace since 2003

We suspect that it's going to accelerate from here....

The number of companies defaulting on their junk-rated debt and filing for bankruptcy in North America is running at its fastest pace in five years amid the slowing economy and contraction in credit markets.

So far this year, 28 “entities” have defaulted, according to Standard & Poor’s. The defaulted debt of the one Canadian and 27 US companies totals $18.4bn and exceeds the 17 defaults in the US for all of last year.

“As economic conditions deteriorated...and volatility in the financial markets protracted, corporate casualties began to emerge at a rate unseen in years,” said Diane Vazza, head of S&P’s Global Fixed Income Research Group. “The surge of defaults in the early months of 2008 is the first leg of an extended period of high default occurrences that will characterise the rest of 2008 and 2009.”

S&P said the pace of US defaults in the first five months of the year is the fastest since 2003.

Bankruptcies and defaults gather pace -Financial Times

No prepack for Linens 'N Things as it files for chapter 11

Just as we thought they would do: Linens 'N Things abandoned any thoughts of a prepackaged bankruptcy and filed voluntary chapter 11 today.   They'll be closing 120 stores. GE Capital, its secured lender before the filing, is supplying the $700 million of debtor in possession financing.

We hear that Apollo and the bondholder steering committee, of which Apollo is a member --the company was scarfing up tons of bonds before the company filed to protect its equity position in the event of debt for equita y deal -- were at odds.  The committee naturally wanted Apollo to pony up more cash to inject into the company and they weren't so thrilled with that idea.

Complicating the bankruptcy, now that Apollo owns a significant bond position, they're now setting up to clash heads with Linens' other equity sponsors: Silver Point Capital and NRDC Real estate advisors...

Linens files for Chapter 11, to close 120 stores - Reuters

Sounds like Linens 'N Things is getting closer to a bankruptcy filing....

Could this be heading for liquidation?: According to the NY Post, sales have taken a dive at the Leon Black / Apollo LBO, and their cash position is getting worse.  Large vendors are being paid up front to keep shipments going.  That prepack that they were trying to do (of which we were skeptical) is sounding like a no-go....

The Clifton, NJ, home-furnishings chain's comparable sales - or sales at stores open at least a year, a closely watched measure of retail performance - are down 5 percent since the start of the year, according to internal company documents reviewed by The Post.

That's sharply lower than the 1 percent drop Linens 'n Things reported during last year's fourth quarter, and includes a steeper-than-expected first-quarter comparable-sales decline that's closer to 6 percent, documents show. While trends improved slightly in April, sources chalked it up to a calendar quirk that affected the timing of Easter.

Wings clipped: EOS Airlines ceases operations and goes into bankruptcy

All business class carrier EOS Airlines shuttered operations and filed Chapter 11 as it couldn't scare up cash to continue operations.  It had a deal to raise $50 million, or so it thought, but that fell through last Thursday....   

The airline reconfigured Boeing 757s meant for 220 passengers with 48 seats that could extend into a fully flat bed. Flights served wine, champagne, cocktails and gourmet foods. There were individual DVD players, and helicopter rides to the airport were offered to some travelers.

The price for the New York to London flights, which it offered twice a day, ranged from $3,500 to $9,000 roundtrip.

The high-flying luxuries came to an end Sunday as Purchase, N.Y.-based Eos ceased operations after filing for bankruptcy protection, the latest casualty of a credit crunch and a money-losing airline industry that has been hit hard by high fuel prices.

Let the bankruptcy games begin: Apollo's disastrous Linens 'N Things a step closer to Chapter 11 after they said they wouldn't be paying the bond coupon due today...

Chapter 11 Watch:  Apollo's ill-conceived Linens 'N Things LBO  is entering a new stage today: It's not paying the coupon that's due on its $650 million Floating Rate Notes.  Ya, they have a 30 day grace period and say they're working on a consensual prepackaged Chapter 11 plan, but you know what happens to retailers at the mere whiff of credit problems: they death spiral into bankruptcy.  How come Leon Black & Co didn't start their discussions months ago on a prepack?  Maybe then they would have had a prayer of getting one done.  Barring a miracle, we don't see that happening.  We await the bankruptcy filing with eager anticipation. Here's the press release.

Credit market paralysis causing problems for Delphi's bankruptcy exit

Delphi Corp's emergence from bankruptcy is hitting financing snags as a result of the turmoil in the credit markets....

Delphi's chief lenders, J.P. Morgan Chase & Co. and Citigroup Inc.'s Citigroup Global Markets, are having difficulties syndicating the loan to other lenders, these people said. Hedge funds and other investors are also balking at the terms, saying that they aren't priced appropriately for the risk involved.

Increasingly, say investors and others involved in the matter, Delphi's former parent, General Motors Corp., may have to step in and provide financing to fill the gap. Yet too much GM involvement might spook stock investors, who don't want the country's largest parts supplier too beholden to GM and its price-cutting demands.

No truth to Countrywide bankruptcy rumors

At least not today...

Game over for Absolute Capital

Absolute Capital the latest credit crunch victim to go into bankruptcy....

Australian hedge fund Absolute Capital has been put into administration, making it the country's latest victim of the credit squeeze, The Sydney Morning Herald reported Wednesday citing the administrator McGrath Nicol.

The hedge fund provider, which is 50 percent owned by ABN Amro (NYSE:ABN) , manages about 410 million Australian dollars for investors.

McGrath Nicol was appointed after income was cut following Absolute's major fee generator, the Absolute Capital Yield Strategies Fund, being suspended after suffering losses in structured credit markets, the newspaper said.

Australian hedge fund Absolute Capital placed in administration - report - CNNMoney.com

 

With rumors of bankruptcy hitting the stock, Countrywide defends itself and says that they have "ample liquidity"

With rumors of an imminent bankruptcy filing hitting the stock and dragging it down to historic lows, Countrywide Financial issued a press release addressing their solvency:

Countrywide Financial Corporation today commented on its financial condition. Consistent with the commentary provided in connection with the Company's third quarter 2007 earnings conference call held on October 26, management continues to believe that Countrywide has ample liquidity and capital and will be a beneficiary of ongoing mortgage market consolidation.