Sallie Mae


Oh hey, more terrible news. Unofficial DealBreaker mascot and my personal Jesus, Albert Lord, has been demoted; effective I don’t know when, Anthony Terracciano is Chairman of the Board. Insiders says that Tony previously worked at a bunch of banks, and doesn’t curse on analyst calls. Coming right out and saying it is me- this is ridiculous.
Al will continue in his capacity as chief executive, in addition to the lesser role of Vice Chairman of the Board, and in a most sickening turn of events that can only mean one thing (Ludovico technique), The Lord has been brainwashed into A. conducting business/conference calls in an “manner befitting the head of a public company” B. Believing that this whole thing was his idea.
Says the patient: “In a variety of chief executive and board leadership roles, Mr. Terracciano has a long and successful track record of delivering on his commitments to shareholders. When I asked the Board to consider returning to a split of the chairman and chief executive positions, Tony was the logical choice to lead the Board.” If you, too, think this is BS, I encourage you to air your grievances in the form of a Molotov-cocktail through the front window of your local Sallie Mae branch office. It probably won’t change anything, but it’ll show them we mean business.
Earlier: “And I’ll Just Leave It At That”
Sallie Mae Appoints Tony Terracciano Chairman of the Board [Reuters]

Merry Christmas, Dad

Since his little performance during Wednesday’s conference call, a lot of people have been taking bets on how long it’ll be before Sallie Mae Chief Executive Albert Lord is fired or involuntarily resigns. At Dealbreaker, we think this is ridiculous. This man shouldn’t be fired, he should be promoted, and this might seem excessive to shareholders, but we suggest the prominent placement of a bronze statue in Mr. Lord’s likeness, inscribed with whatever is Latin for “Let’s get the fuck out here.” We’ll even consider chipping in, since poor Al lost about $200m in that little margin call from his local branch.
As a bit of housekeeping, I’d also like to take this opportunity to offer an apology. Not like the fake one I gave to Goldman last week, but a real, honest apology. Well, actually, it’s not so much an apology as a clarification but whatever, let’s not argue semantics. After all, it’s Christmas. Some of you may remember that the last time we discussed A. Lord, I mentioned that I felt especially close to him because of his “predilection for cutting people down with dismissive statements such as those excerpted above reminds me so much of my father.” Apparently my dad saw this mention, and felt that I took artistic liberties in my description. This was largely true, but I figured that since he rarely reads the site, it’d be no probs. Oh, but it was! My mother claims he was hurt– this I find hard to believe, the man has never exhibited emotion in my presence– my brother texted, “that thing about dad was cold,” though his defense of the man isn’t surprising, as he’s always been my father’s favorite. Anyway, at this time, I would like to say that contrary to what may have been implied earlier, I have a really good dad. To prove this, I’ve come up with list. Dad:
– you let me have a “Reservoir Dogs” table at my Bat Mitzvah party, where the theme was movies, even though mom thought it was inappropriate.
– you always came to all my field hockey games and cheered the loudest.
– you wouldn’t let me go to prom with [redacted] junior year, because he’d just been caught with two pounds of marijuana in his locker. (I didn’t speak to you for two weeks because of it, but I realize now that you had my best interest at heart).
– you paid my fine when I ran into trouble with the RIAA.
-you only yelled at me for a few hours that time I caused thousands of dollars in damage to your car, and lied and said I had no idea what happened. To this day I feign ignorance to how the bottom got ripped out, or what the mechanic was talking about when he told you, “I’m surprised the person driving didn’t go through the windshield.” To show you that I really do appreciate what a good dad you are, at this time I’m going to admit the truth. To the readers, before you jump at the chance take this annecdote as a reflection on the vehicular capabilities of women, don’t. It’s not a reflection on the vehicular capabilities of women, it’s barely even a reflection on me. I drive really good usually. Anyway, dad: even though it wasn’t a lie to say that technically, car parts-wise, I couldn’t tell you what happened when I pulled into the parking spot, and when I meant to slam my foot on the brake, hit the accelerator instead, causing the car to jump over the cement divider thing at the end, put the car into reverse and dragged it back down to the ground…that’s what happened.
Felt ripped off by this tribute? Here, have this, on me:

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“And I’ll Just Leave It At That”

so gloriously smug.jpgI like to think I live without regrets but I more or less want to kill myself for not listening to Sallie Mae’s call this morning (a replay is not the same as hearing it live), for two reasons:
a. CEO Albert Lord’s comment that although he sold 97 percent of his stock, “that doesn’t reflect my optimism for the company. And I’ll just leave it at that.”
b. CEO Albert Lord’s unorthodox (but awesome) way of finishing things up: “There are no more questions, let’s get the fuck out of here.”
Say what you want, but I know I can’t be the only one who now feels a special connection to this man (because his predilection for cutting people down with dismissive statements such as those excerpted above reminds me so much of my father, and my childhood in general). Viva la A.Lord! But, you know, sell SML. That thing makes SMD look good. Which probably isn’t fair, because, to me, SMD always looks good. No more stock tips for today.

Sallie Mae Didn’t Know How To Take No For An Answer

Sallie Mae sounded almost melancholy today when it announced that it had finally given up its attempt to sell itself to a group of investors led by JC Flowers. Like some desperate girl who had fallen under the delusion that she was being courted by a wealthy young man who actually wanted nothing to do with her, Sallie Mae spent the last eight weeks attempting to make its offers look attractive. No matter how many ways JC Flowers said no, Sallie Mae understood him to be asking for a better offer.
Now, at last, it has become apparent that no offer would be good enough to win back the interest of JC Flowers. Apparently there were quite a few investors who had shared the delusions of Miss Mae, and the resulting ticker of SLM looks absolutely bloody as investors are faced with the fact that this deal not getting done at any price. What’s more, at least a few must finally have begun to wonder what exactly it is that JC Flowers found when it reached into Sallie Mae’s chamber pot and fled forevermore.
Readers of DealBreaker, of course, have long known this deal was dead. Way back in September we told you that this deal was “Over, Done, Not Happening.” In case this was too subtle we included a video game graphic reading “Game Over.” In October we said it again. Since then we’ve mostly kept quiet on the grounds that if we hadn’t already convinced you on this point, you probably could never be convinced.
Acquirers Abandon Sallie Deal [Wall Street Journal]

Sallie Mae Will See JC Flowers & Co In Court!

When JC Flowers and the other buyers declared a MAC gave them the right to walk away or change the terms of their bid to acquire Sallie Mae, we said that it was “highly unlikely” the deal would ever close. This put us in dissent to most observers, who thought the talk of lawsuits and MACs was simply hard-ball negotiating and were convinced the deal would still get done.
Well, the odds shifted in our favor yesterday when Sallie Mae filed a lawsuit in the Delaware Chancery Court seeking to force the JC Flowers group to pay the $900 million break-up fee. They are asking the court to rule that no material adverse change has occurred.
We hate to said “told you so” but, you know, we totally did.
SLM Escalates Battle, Sues J.C. Flowers Group [Wall Street Journal]

Sallie Mae LBO: It’s Over, Done, Not Happening!

game_over.gifIt is over. Sallie Mae has just said that JC Flowers is pulling the plug. A representative of the buyout group led by Flowers apparently informed them of the news today. The buyers have told Sallie Mae that they won’t close the deal under the terms of the merger agreement.
But it’s never really over till the fat girl sings. And in this case, the Delaware Courts will be the ones making the fat girl noises. Sallie Mae says it doesn’t believe that the buyers have any contractual basis for terminating the merger agreement. It “intends to pursue all remedies.” Read: sue the Flower children for the $900 million break-up fee.
There are still some who are saying that the deal could close on new terms but that looks highly unlikely now. This break-up is too public, and Sallie Mae’s lawsuit threat too obvious, to lead us to think its very likely that the buyers and sellers are going to come to new terms. (But, you know, we’ve been wrong before. We’re just whiskey-soaked reporters speculating on a hypothesis.)
And the Bess Levin Award for unintentionally dirty headline writing goes to whoever it was at Big Charts who came up with this one: “PRIVATE-EQUITY SUITORS OF SALLIE MAE SAY THEY WON’T CONSUMMATE $25 BILLION DEAL.”
Text of SLM press release after the jump.

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Will Sallie Mae Eat The Big Mac?

bigmacattack.jpg Update: Yep. It’s over. This post has the honor of almost certainly being the last thing ever published on this deal before the world learned that it wasn’t happening. That’s special.
That’s what folks are wondering today. Now that First Data has closed and Harman International Industries and Genesco have fallen apart, eyes are on Sallie Mae. Which way will it go? Will the buyers call a MAC and bail on the deal?
The MAC speculation arises from legislation Congress passed this summer that expands financial aid to students while cutting back on subsidies to student loan lenders. But the odds of the deal falling apart went way up this morning when Bank of America chief executive Ken Lewis made comments that seemed to indicate that the legal changes were causing the buyers to re-evaluate the price they agreed to pay for Sallie Mae.
“We obviously have seen the change in the (education lending) laws. We are trying to assess the impact that might have on the price,” Lewis told the Charlotte Observer. Bank of America part of a group of investors led by buyout firm J.C. Flowers & Co. that agreed in April to by Sallie Mae.
Shares of Sallie Mae sunk on the news. And the price of bond insurance for Sallie Mae’s debt sunk to the lowest levels since July.
Things could get ugly. If the buyers do call a MAC, the sellers may well sue. This morning’s Deal Journal outlines the legal argument that Sallie Mae might make if the buyers tried to walk away. “At stake is the $900 million reverse break-up fee the buyers are on the hook for if they want to walk and can’t prove a MAC,” Deal Journal writes.
Sallie Mae shares fall on Lewis comments [Charlotte Observer]
Sallie Mae Credit Protection Costs Fall Amid Buyout Doubts
Sallie Mae CEO’s Counterattack Against Waffling LBO Buyers [Deal Journal]