So things aren’t great at Yucaipa Cos. It’s bounced back a bit since its books showed a 40% loss at the end of 2011, but it was still down 19% at the beginning of this year. And, it seems, investors were insufficiently impressed with the discount he consequently offered.
The fee cut wasn’t enough. Last fall, some of the pension investors raised the possibility of ousting Mr. Burkle as the fund’s manager, according to two people with knowledge of the fund. A Yucaipa spokesman said no such threat was made directly to the firm.
In November, representatives from several investors including Calstrs, Calpers and the New York pension fund met with Mr. Burkle at the Manhattan headquarters of Bank of America Merrill Lynch, which serves as a consultant to the California teachers’ pension fund. In the three-hour meeting, the investors conveyed their disappointment in the fund and lack of confidence in its future, according to people with knowledge of the discussions.
So Burkle, who would really very much like to raise a new fund one day, caved, waived his management fee and committed not to invest/lose the $50 million in commitments the fund’s got left.
Amid the grumbling, Mr. Burkle offered a broader set of concessions. Along with forgoing his annual management fees of just under 2 percent, Yucaipa would not invest most of the remaining commitments, about $50 million. And the firm would not recover any of its own money in the fund until the investors got their money back.