Apparently selling buggy whips paper for newspapers, magazines and coupons is not as profitable as – wait, who thought it was profitable? Cerberus? Sadly, that did not work out for them:
NewPage Corp., the largest North American maker of coated papers, filed for bankruptcy six years after being bought by Cerberus Capital Management LP.
NewPage had $3.4 billion in assets and $4.2 billion in debt as of June 30, according to today’s Chapter 11 filing in Wilmington, Delaware. The Miamisburg, Ohio-based company was bought by New York-based Cerberus for $2.3 billion in January 2005, and issued $900 million in junk bonds to fund the purchase. It has been unprofitable since 2006.
A 2005-vintage leveraged buyout company crushed by an unsustainable debt load and operational failure is a good excuse to mention a neat paper posted today on Harvard Law School’s Forum on Corporate Governance and Financial Regulation. The authors, three UT-Austin business professors, use tax return data to examine what happens to 1995-2007 vintage U.S. LBO targets. And they are pretty confident that they can dismiss many of the traditional explanations for how private equity firms make money – both the flattering and the unflattering ones. From the paper: Continue reading »
The cheery infernal canines at Cerberus Capital Management have been pretty consistent in saying that (1) they’d rather not close on their deal to buy Innkeepers out of bankruptcy, (2) it’s because there’s been a material adverse effect, and (3) no, thanks, they’d rather not tell anyone what that MAE was. And in “anyone” they’re going to include the bankruptcy court, as they demonstrated yesterday. The judge remains curious, however, and set a trial for October:
Judge Chapman sympathized with Innkeepers’ desire to resolve the MAE issue as quickly as possible, citing widespread media coverage about the uncertainty of the deal.
She rejected Cerberus lawyer Adam Harris’ argument that Innkeepers should have done more to affirm its readiness to close the deal in August.
“Come on, Innkeepers was ready to close,” she said. “They were there. It’s not like asking a girl to dance. You didn’t need to hear from them the next day, saying: ‘We’re really, really ready to close.’”
Cerberus is not gambling everything on its strategy of never, ever saying what the MAE was. It released a statement saying:
Continue reading »
Three-headed hell-dog of a private equity firm Cerberus recently backed out of a deal to buy hotel operator Innkeepers out of bankruptcy because … uh … well, it’s been a bit of an intriguing mystery so far. Turns out it’s still a mystery to Innkeepers as well, so they’ve decided to sue and find out:
Continue reading »
For its September issue, Absolute Return is running a “hedge fund report card.” The magazine polled hundreds of investors, asking them to rate their respective funds based on factors that included alignment of interests, alpha generation, independent oversight, infrastructure, transparency and liquidity terms. The results put York Capital at number one, followed by Bridgewater Associates, Bain’s Brookside Capital, Adage Capital and Cayon Capital overall. Bringing up the rear were SAC Capital, TPG-Axon, QVT Financial, Citadel and Cerberus Capital in dead last. In addition to asking the investors to simply provide scores, AR also afforded them their opportunity to air their grievances. Let out what they’ve been holding in, etc. For instance, someone with Citadel apparently doesn’t think Ken Griffin treats his clients right, noting that KG “holds his investors somewhere between indifference and disdain.” Which doesn’t really seem that fair! Continue reading »
