Patna. Feb. 23: The State Investment Promotion Board (SIPB), which held its meeting today after a gap of almost five months, cleared all 116 proposals, except about half-a-dozen that have been put on hold.
Among the proposals that were set aside for the time being included one that talked about setting up of an aircraft manufacturing unit in the state.
Beltronics Techno Pvt Ltd, Patna, had come up with an investment proposal to set up a manufacturing unit of aeroplane and air taxi, besides carrying out maintenance work of aircraft in the vicinity of the state capital.
The company, which claimed that it has already entered into a tie-up with a UK-based firm for financing the project, said it would pump in Rs 92,000 crore for the purpose.
“We have asked them (the company) to give a presentation before the board. We want to see their project details. We would like to know what it wants to do and how it plans to go about? We also want to know what are the land and other requirements of the entrepreneur?” principal secretary (industries) C.K. Mishra told The Telegraph.
SIPB was set up by the Nitish Kumar-led NDA government after assuming power in November 2005 with an aim to promote private investment in the state.
The board has, so far, approved 603 project proposals, which entail an investment of Rs 2.48 lakh crore with a capacity to generate 1.85 lakh jobs.
Sources said if the aircraft manufacturing unit gets the board’s approval, the chances of which are very bleak, it would bring Rs 92,000 crore in investment alone to the state.
In the wake of entrepreneurs, especially Aditya Birla Group chairman Kumar Mangalam Birla who made a fervent appeal to the government at the just concluded “Global Bihar Summit” for speedy approval of the project, the SIPB decided to hold regular meetings in order to avoid delay in giving approvals to proposals.
Bihar Industries Association (BIA) president KPS Keshri, who is also a member of the SIPB, told The Telegraph: “SIPB meeting would now be held twice a month. The aim is to ensure that the proposed projects do not get delayed in getting the board’s approval.”
He added, “It was also decided that those entrepreneurs, who could not apply to the SIPB, would be given a chance to apply to the board.”
According to the industrial incentive policy of 2011, projects having SIPB’s approval would get incentives.
Since there was no fixed time-frame for holding the meeting of the board for approving the investment projects, it led to accumulation of a long list (116) of investment proposals requiring the board’s approval.
The last time a meeting of the board was held was in the last week of September last year
Any fresh investment proposal, once cleared by the SIPB, of up to Rs 100 crore investment would be put up before chief minister Nitsih Kumar for his approval, whereas proposals of over Rs 100 crore would be sent to the cabinet for the necessary approval.
The proposals, which got the board’s approval included investments from sectors like food processing, power, cold storage, flour mills, rice mills, beer factories and others.
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2012年2月24日星期五
2012年2月19日星期日
Blackstone to make major investments in Israel
The Blackstone Group LP (NYSE: BX) will reportedly invest hundreds of millions of dollars in Israel, through a joint venture that it will set up with Markstone Capital Partners Group LLC. Markstone, headed by managing directors Ron Lubash and Amir Kess, will apparently become Blackstone’s exclusive representative in Israel. Markstone will seek Israeli companies in which the two private equity funds will invest.
The deal will be closed in a few weeks. Markstone has declined to respond to the report.
Blackstone, with $166.2 billion in assets under management, is the world’s largest private equity fund, larger than Apax Partners, which has invested billions of shekels in Israel, including the acquisition of the controlling interests in Tnuva Food Industries Ltd. and Psagot Investment House Ltd.
New York-based Blackstone was founded by CEO Stephen Schwarzman in 1985. It has a market cap of $7.66 billion, and posted a net profit of $1.4 billion in 2011.
Markstone has had a mixed track record with its investments in Israel. It founded Prisma Investment House, which went bankrupt. Its investments in Elran (DD) Real Estate Ltd. (TASE:ELRE) and Tomcar Ltd., which developed a commercial off-road utility vehicle, both failed. Successful exits on investments include Golden Pages Ltd., improved seed varieties developer Zeraim Gedera Ltd., and Netafim Ltd.
Markstone raised $800 million in 2003-04 from institutional investors, including California Public Employees’ Retirement System (CalPERS) and New York State Pension Fund in the US, and Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) and Menorah Mivtachim Holdings Ltd. (TASE: MORA) in Israel. Markstone chairman Elliot Broidy resigned after a plea bargain for bribery in the US. In September 2010, Markstone reached a settlement with then-New York State Attorney General Andrew Cuomo, in which the Israeli private equity fund paid $18 million.
Published by Globes [online], Israel business news – www.globes-online.com – on February 19, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012http://tourism9.cm/ http://vkins.com/
The deal will be closed in a few weeks. Markstone has declined to respond to the report.
Blackstone, with $166.2 billion in assets under management, is the world’s largest private equity fund, larger than Apax Partners, which has invested billions of shekels in Israel, including the acquisition of the controlling interests in Tnuva Food Industries Ltd. and Psagot Investment House Ltd.
New York-based Blackstone was founded by CEO Stephen Schwarzman in 1985. It has a market cap of $7.66 billion, and posted a net profit of $1.4 billion in 2011.
Markstone has had a mixed track record with its investments in Israel. It founded Prisma Investment House, which went bankrupt. Its investments in Elran (DD) Real Estate Ltd. (TASE:ELRE) and Tomcar Ltd., which developed a commercial off-road utility vehicle, both failed. Successful exits on investments include Golden Pages Ltd., improved seed varieties developer Zeraim Gedera Ltd., and Netafim Ltd.
Markstone raised $800 million in 2003-04 from institutional investors, including California Public Employees’ Retirement System (CalPERS) and New York State Pension Fund in the US, and Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) and Menorah Mivtachim Holdings Ltd. (TASE: MORA) in Israel. Markstone chairman Elliot Broidy resigned after a plea bargain for bribery in the US. In September 2010, Markstone reached a settlement with then-New York State Attorney General Andrew Cuomo, in which the Israeli private equity fund paid $18 million.
Published by Globes [online], Israel business news – www.globes-online.com – on February 19, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012http://tourism9.cm/ http://vkins.com/
2012年2月8日星期三
Apollo Investment Corporation Announces Quarterly Financial Results, Senior Management Changes, Quarterly Dividend …
NEW YORK, NY–(Marketwire -02/08/12)- Apollo Investment Corporation (NASDAQ: AINV – News)
The Board announced today that Mr. Edward Goldthorpe will be joining Apollo Investment Corporation as its President, succeeding Mr. Patrick Dalton, who formerly held positions as President and Chief Operating Officer. Mr. Edward Goldthorpe will also replace Mr. Dalton as Chief Investment Officer of our investment adviser. The Company announced that its Board of Directors has appointed Mr. James Zelter as the Company‘s interim President, effective immediately. He will also serve as interim CIO of Apollo Investment Management until Mr. Goldthorpe joins, which is expected to occur in the next 90 days. Mr. Zelter will retain his position as Chief Executive Officer of the Company. Apollo Investment also announced that its Board of Directors has appointed Mr. Gene Donnelly, Apollo Global Management, LLC’s CFO, as interim CFO and Treasurer for the Company. Mr. Donnelly succeeds Mr. Richard Peteka who formerly served as the Company’s CFO and Treasurer. Mr. Donnelly will serve as interim CFO and Treasurer until a permanent replacement has been appointed by the Board. The Board also named Ms. Eileen Patrick as the Executive Vice President of Corporate Strategy for the Company. In this newly created role, Ms. Patrick will assist in the execution of Apollo Investment Corporation’s strategic expansion during this period of transition.
In order to capitalize on various proprietary market opportunities and to maintain an appropriate capital structure, the Board has authorized management to explore whether the Company should raise up to $200 million of additional equity capital, which may be conducted, among other means, through either a marketed deal or a rights offering. Apollo Global Management has informed the Company that it intends to support AINV’s equity capital raise, which in the case of a rights offering could include the exercise of oversubscription rights as a backstop for up to $50 million. In further support of an equity offering, Apollo Investment Management has informed the Company that it intends to waive its management and incentive fees associated with any shares issued through this offering. Additionally, Apollo Global Management may also purchase shares of AINV in the open market.
The Company also announced that its Board of Directors has declared for the fourth fiscal quarter of 2012 a dividend of $0.20 per share, payable on April 3, 2012 to stockholders of record as of February 18, 2012. We believe having a dividend that is more closely aligned with net investment income per share is prudent and appropriate. The specific tax characteristics of this dividend will be reported to stockholders on Form 1099 after the end of the calendar year.
Mr. Zelter, Apollo Investment Corporation’s Chief Executive Officer, said, “Since the onset of the global credit crisis, we believe the role of business development companies such as Apollo Investment Corporation has become increasingly important, filling the gap left by banks and traditional financial services companies. Prior to the credit crisis, AINV focused primarily on providing acquisition financing to middle market private equity sponsors. Today, we believe the growing void in the capital markets creates attractive opportunities for our business. Consequently, we intend to expand our footprint to provide a wider array of proprietary private financing solutions for companies across a broad spectrum of industries and situations. The changes we have announced today, including more closely aligning our dividend with our net investment income and our decision to explore the raising of additional equity capital, are designed to reposition us to grow our business in the current environment.”
Mr. Zelter continued, “We are very pleased that industry veteran Edward Goldthorpe has agreed to join the senior management team at AINV, and we are confident he will play a major role in driving growth and value creation for the Company. Broadly speaking, we believe the changes we have made will enable us to capitalize on the meaningful opportunities we see in the current market and generate attractive risk-adjusted returns for our shareholders.”
ABOUT EDWARD J. GOLDTHORPE:Mr. Goldthorpe was most recently with Goldman Sachs for the past 13 years, where he served as a Managing Director with the Bank Loan Distressed Investing Desk (2009-2012), and prior to that Mr. Goldthorpe was a Managing Director with the Special Situations Group within the firm’s Securities Division (2005-2009). Previously, Mr. Goldthorpe was a Vice President in the High Yield Distressed Group (2001-2005), an analyst in the Merchant Banking Division (2000-2001), and an analyst in the Investment Banking Division (1999-2000).
FINANCIAL HIGHLIGHTS FOR THE QUARTER ENDED DECEMBER 31, 2011:
At December 31, 2011:
Total Assets: $2.9 billion
Investment Portfolio: $2.8 billion
Net Assets: $1.6 billion
Net Asset Value per share: $8.16
Portfolio Activity for the Quarter Ended December 31, 2011:
Investments made during the quarter: $95 million
Number of new portfolio companies invested: 3
Investments sold or prepaid during the quarter: $175 million
Number of portfolio company exits: 5
Operating Results for the Quarter Ended December 31, 2011 (in thousands, except per share amounts):
Net investment income: $38,538
Net realized and unrealized gain: $25,159
Net increase in net assets from operations: $63,697
Net investment income per share: $0.20
Net realized and unrealized gain per share: $0.12
Earnings per share — basic: $0.32
Earnings per share — diluted: $0.31
CONFERENCE CALL / WEBCAST AT 11:00 AM EST ON FEBRUARY 8, 2012
The Company will host a conference call at 11:00 a.m. (Eastern Standard Time) on Wednesday, February 8, 2012 to present third fiscal quarter results. All interested parties are welcome to participate in the conference call by dialing (888) 802-8579 approximately 5-10 minutes prior to the call, international callers should dial (973) 633-6740. Participants should reference Apollo Investment Corporation or Conference ID: 40610975 when prompted. Following the call you may access a replay of the event either telephonically or via audio webcast. The telephonic replay will be available through February 22, 2012 by calling (800) 585-8367; international callers please dial (404) 537-3406, reference pin #40610975. The audio webcast will be available later that same day. To access the audio webcast please visit the Event Calendar in the Investor Relations section of our website at www.apolloic.com.
PORTFOLIO AND INVESTMENT ACTIVITYDuring the three months ended December 31, 2011, we invested $95 million across 3 new and 6 existing portfolio companies, through a combination of primary and secondary market purchases. This compares to investing $382 million in 8 new and 3 existing portfolio companies for the three months ended December 31, 2010. Investments sold or prepaid during the three months ended December 31, 2011 totaled $175 million versus $481 million for the three months ended December 31, 2010.
At December 31, 2011, our portfolio consisted of 67 portfolio companies and was invested 29% in senior secured loans, 60% in subordinated debt, 1% in preferred equity and 10% in common equity and warrants measured at fair value versus 69 portfolio companies invested 29% in senior secured loans, 62% in subordinated debt, 1% in preferred equity and 8% in common equity and warrants at December 31, 2010.
The weighted average yields on our senior secured loan portfolio, subordinated debt portfolio and total debt portfolio as of December 31, 2011 at our current cost basis were 9.7%, 12.6% and 11.7%, respectively. At December 31, 2010, the yields were 8.7%, 12.9% and 11.5%, respectively.
Since the initial public offering of Apollo Investment in April 2004 and through December 31, 2011, invested capital totaled over $8.6 billion in 164 portfolio companies. Over the same period, Apollo Investment completed transactions with more than 100 different financial sponsors.
At December 31, 2011, 66% or $1.7 billion of our income-bearing investment portfolio is fixed rate and 34% or $0.8 billion is floating rate, measured at fair value. On a cost basis, 65% or $1.8 billion of our income-bearing investment portfolio is fixed rate and 35% or $1.0 billion is floating rate. At December 31, 2010, 63% or $1.7 billion of our income-bearing investment portfolio was fixed rate and 37% or $1.0 billion was floating rate. On a cost basis, 63% or $1.8 billion of our income-bearing investment portfolio was fixed rate and 37% or $1.0 billion was floating rate.
RESULTS OF OPERATIONS
Results comparisons below are for the three and nine months ended December 31, 2011 and December 31, 2010.
Investment Income
For the three and nine months ended December 31, 2011, gross investment income totaled $83.8 million and $272.4 million, respectively. For the three and nine months ended December 31, 2010, gross investment income totaled $94.3 million and $264.1 million, respectively. The decrease in gross investment income for the three months ended December 31, 2011 as compared to the three months ended December 31, 2010 was primarily due to a decrease in the receipt of prepayment premiums and other deal related income. The increase in gross investment income for the nine months ended December 31, 2011 as compared to the nine months ended December 31, 2010 was primarily due to an increase in the receipt of prepayment premiums and other deal related income.
Expenses
Expenses totaled $45.3 million and $140.7 million, respectively, for the three and nine months ended December 31, 2011, of which $24.3 million and $75.6 million, respectively, were base management fees and performance-based incentive fees and $16.9 million and $50.2 million, respectively, were interest and other debt expenses. Administrative services and other general and administrative expenses totaled $4.0 million and $14.9 million, respectively, for the three and nine months ended December 31, 2011. Expenses totaled $44.2 million and $122.9 million, respectively, for the three and nine months ended December 31, 2010, of which $27.7 million and $80.1 million, respectively, were base management fees and performance-based incentive fees and $13.4 million and $34.1 million, respectively, were interest and other debt expenses. Administrative services and other general and administrative expenses totaled $3.0 million and $8.8 million, respectively, for the three and nine months ended December 31, 2010. Expenses consist of base investment advisory and management fees, insurance expenses, administrative services fees, legal fees, directors’ fees, audit and tax services expenses, and other general and administrative expenses. The increase in expenses from the December 2010 periods to the December 2011 periods was primarily due to an increase in interest expense as our average interest cost in the current periods is over 100 basis points higher than in the year ago periods and the average debt outstanding is roughly $150 million higher on a year over year basis. The increase in average interest cost resulted from the issuance of new tranches of long-term fixed rate debt in periods during and subsequent to the three and nine month periods ended December 31, 2010. In addition, in the nine month period ended December 31, 2011, the Company recognized approximately $4.0 million in net non-recurring expenses, including legal and other professional expenses of $4.7 million net of a non-recurring reduction of administrative expenses.
Net Investment Income
The Company’s net investment income totaled $38.5 million and $131.7 million, or $0.20 and $0.67, per average basic share, respectively, for the three and nine months ended December 31, 2011. The Company’s net investment income totaled $50.1 million and $141.1 million, or $0.26 and $0.73, per average basic share, respectively, for the three and nine months ended December 31, 2010.
Net Realized Losses
The Company had investment sales and prepayments totaling $175 million and $1.3 billion, respectively, for the three and nine months ended December 31, 2011. The Company had investment sales and prepayments totaling $481 million and $722 million, respectively, for the three and nine months ended December 31, 2010. Net realized losses for the three and nine months ended December 31, 2011 were $275.0 million and $341.1 million, respectively. For the three and nine months ended December 31, 2010, net realized losses totaled $64.9 million and $150.5 million, respectively. Net realized losses for the three and nine month periods ended December 31, 2011 were primarily derived from the exits of select investments, specifically Grand Prix Holdings, which accounted for $274 million of the realized loss totals, but also included Playpower Holdings, TL Acquisitions and FSC Holdings. The realized losses incurred upon the exit of these investments reversed out previously reported unrealized losses. Net realized losses for the three and nine months ended December 31, 2010 were primarily derived from selective exits and restructurings of underperforming investments.
Net Unrealized Appreciation (Depreciation) on Investments, Cash Equivalents and Foreign Currencies
For the three and nine months ended December 31, 2011, net change in unrealized appreciation on the Company’s investments, cash equivalents, foreign currencies and other assets and liabilities totaled $300.2 million and $5.9 million, respectively. For the three and nine months ended December 31, 2010, net change in unrealized appreciation on the Company’s investments, cash equivalents, foreign currencies and other assets and liabilities totaled $99.3 million and $77.7 million, respectively. For the three months ended December 31, 2011, the increase in unrealized appreciation was mainly derived from the reclassification of $274 million of previously recognized unrealized depreciation on our investment in Grand Prix Holdings to a realized loss. For the nine months ended December 31, 2011, the change in unrealized depreciation was comprised of the impact from Grand Prix Holdings together with the general decline in capital market conditions during the period. For the three and nine months ended December 31, 2010, net unrealized appreciation was impacted by net changes in specific portfolio company fundamentals and stronger capital market conditions.
Net Increase (Decrease) in Net Assets From Operations
For the three months ended December 31, 2011, the Company had a net increase in net assets resulting from operations of $63.7 million. For the nine months ended December 31, 2011, the Company had a net decrease in net assets resulting from operations of $203.5 million. For the three and nine months ended December 31, 2010, the Company had a net increase in net assets resulting from operations of $84.5 million and $68.4 million, respectively. For the three months ended December 31, 2011 basic and diluted earnings per average share were $0.32 and $0.31, respectively. For the nine months ended December 31, 2011, basic and diluted losses per average share were $1.04 and $1.04, respectively. The basic and diluted earnings per average share were $0.43 and $0.36 for the three and nine months ended December 31, 2010.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s liquidity and capital resources are generated and generally available through periodic follow-on equity and debt offerings, our senior secured, multi-currency $1.254 billion revolving credit facility maturing on April 12, 2013 (see note 10 within the Notes to Financial Statements) (the “Facility”), our senior secured notes, investments in special purpose entities in which we hold and finance particular investments on a non-recourse basis, as well as from cash flows from operations, investment sales of liquid assets and prepayments of senior and subordinated loans and income earned from investments. The Company also has investments in its portfolio that contain PIK provisions. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received). PIK generally becomes due at maturity of the investment or upon the investment being called by the issuer. In order to maintain the Company’s status as a RIC, this non-cash source of income must be paid out to stockholders annually in the form of dividends, even though the Company has not yet collected the cash. For the nine months ended December 31, 2011, accrued PIK totaled $13.1 million, on total investment income of $272.4 million. On April 13, 2011, $380 million of commitments on the Facility matured. At December 31, 2011, the Company had $743 million in borrowings outstanding on its Facility and $511 million of unused capacity. As of December 31, 2011, aggregate lender commitments under the Facility total $1.254 billion.
On May 3, 2010, the Company closed on its most recent follow-on public equity offering of 17.25 million shares of common stock at $12.40 per share raising approximately $204 million in net proceeds. In the future, the Company may raise additional equity or debt capital, among other considerations. The primary use of funds will be investments in portfolio companies, reductions in debt outstanding and other general corporate purposes, including the payment of interest, fees or distributions to shareholders.
On September 30, 2010, the Company entered into a note purchase agreement, providing for a private placement issuance of $225 million in aggregate principal amount of five-year, senior secured notes with a fixed interest rate of 6.25% and a maturity date of October 4, 2015 (the “Senior Secured Notes”). On October 4, 2010, the Senior Secured Notes were sold to certain institutional accredited investors pursuant to an exemption from registration under the Securities Act of 1933, as amended. Interest on the Senior Secured Notes will be due semi-annually on April 4 and October 4, commencing on April 4, 2011. The proceeds from the issuance of the Senior Secured Notes were primarily used to reduce other outstanding borrowings and/or commitments on the Company’s Facility.
On January 25, 2011, the Company closed a private offering of $200 million aggregate principal amount of senior unsecured convertible notes (the “Convertible Notes”). The Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. The Convertible Notes bear interest at an annual rate of 5.75%, payable semi-annually in arrears on January 15 and July 15 of each year, commencing on July 15, 2011. The Convertible Notes will mature on January 15, 2016 unless earlier converted or repurchased at the holder’s option. Prior to December 15, 2015, the Convertible Notes will be convertible only upon certain corporate reorganizations, dilutive recapitalizations or dividends, or if, during specified periods our shares trade at more than 130% of the then applicable conversion price or the Convertible Notes trade at less than 97% of their conversion value and, thereafter, at any time. The Convertible Notes will be convertible by the holders into shares of common stock, initially at a conversion rate of 72.7405 shares of the Company’s common stock per $1,000 principal amount of Convertible Notes (14,548,100 common shares) corresponding to an initial conversion price per share of approximately $13.75, which represents a premium of 17.5% to the $11.70 per share closing price of the Company’s common stock on The NASDAQ Global Select Market on January 19, 2011. The conversion rate will be subject to adjustment upon certain events, such as stock splits and combinations, mergers, spin-offs, increases in dividends in excess of $0.28 per share per quarter and certain changes in control. Certain of these adjustments, including adjustments for increases in dividends, are subject to a conversion price floor of $11.70 per share. The Convertible Notes are senior unsecured obligations and rank senior in right of payment to our existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.
On August 11, 2011, the Company adopted a plan for the purpose of repurchasing up to $200 million of its common stock in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934. The Company’s plan was designed to allow it to repurchase its shares both during its open window periods and at times when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods. A broker selected by the Company will have the authority under the terms and limitations specified in the plan to repurchase shares on the Company’s behalf in accordance with the terms of the plan. Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the plan. While the portion of the plan reliant on Rule 10b-18 remains in effect, the portion reliant on Rule 10b5-1 is subject to periodic renewal and is not currently in effect. As of December 31, 2011, no shares have been repurchased.
On September 29, 2011, the Company closed a private offering of $45 million aggregate principal amount of senior secured notes (the “Notes”) consisting of two series: (1) 5.875% Senior Secured Notes, Series A, of the Company due September 29, 2016 in the aggregate principal amount of $29 million; and (2) 6.250% Senior Secured Notes, Series B, of the Company due September 29, 2018, in the aggregate principal amount of $16 million. The Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The net proceeds from the offering of Notes are intended to be used to fund new portfolio investments, reduce outstanding borrowings on the Company’s Facility and for general corporate purposes, including the payment of interest, fees or distributions to shareholders.
Apollo Investment Corporation is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. The Company’s investment portfolio is principally in middle-market private companies. From time to time, the Company may also invest in public companies. The Company invests primarily in senior secured loans and mezzanine loans and equity in furtherance of its business plan. Apollo Investment Corporation is managed by Apollo Investment Management, L.P., an affiliate of Apollo Management, L.P., a leading private equity investor.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, including, but not limited to, statements as to our future operating results; our business prospects and the prospects of our portfolio companies; the impact of investments that we expect to make; the dependence of our future success on the general economy and its impact on the industries in which we invest; the ability of our portfolio companies to achieve their objectives; our expected financings and investments; the adequacy of our cash resources and working capital; and the timing of cash flows, if any, from the operations of our portfolio companies.
We may use words such as “anticipates,” “believes,” “expects,” “intends”, “will”, “should,” “may” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. We do not undertake to update our forward-looking statements unless required by law.
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- Reports Net Assets of $1.6 billion and Net Asset Value per share of $8.16 as of December 31, 2011 and Net Investment Income of $0.20 per share for the quarter ended December 31, 2011
- Names Respected Industry Veteran Edward Goldthorpe as President
- Seeks to Capitalize on Current Market Opportunities by Providing Diverse Array of Private Debt Market Investment Solutions
- Declares a Dividend of $0.20 per share for the Fiscal Fourth Quarter of 2012
- Considers an Equity Capital Raise with Support from Apollo Global Management and Related Fee Waiver from Apollo Investment Management
The Board announced today that Mr. Edward Goldthorpe will be joining Apollo Investment Corporation as its President, succeeding Mr. Patrick Dalton, who formerly held positions as President and Chief Operating Officer. Mr. Edward Goldthorpe will also replace Mr. Dalton as Chief Investment Officer of our investment adviser. The Company announced that its Board of Directors has appointed Mr. James Zelter as the Company‘s interim President, effective immediately. He will also serve as interim CIO of Apollo Investment Management until Mr. Goldthorpe joins, which is expected to occur in the next 90 days. Mr. Zelter will retain his position as Chief Executive Officer of the Company. Apollo Investment also announced that its Board of Directors has appointed Mr. Gene Donnelly, Apollo Global Management, LLC’s CFO, as interim CFO and Treasurer for the Company. Mr. Donnelly succeeds Mr. Richard Peteka who formerly served as the Company’s CFO and Treasurer. Mr. Donnelly will serve as interim CFO and Treasurer until a permanent replacement has been appointed by the Board. The Board also named Ms. Eileen Patrick as the Executive Vice President of Corporate Strategy for the Company. In this newly created role, Ms. Patrick will assist in the execution of Apollo Investment Corporation’s strategic expansion during this period of transition.
In order to capitalize on various proprietary market opportunities and to maintain an appropriate capital structure, the Board has authorized management to explore whether the Company should raise up to $200 million of additional equity capital, which may be conducted, among other means, through either a marketed deal or a rights offering. Apollo Global Management has informed the Company that it intends to support AINV’s equity capital raise, which in the case of a rights offering could include the exercise of oversubscription rights as a backstop for up to $50 million. In further support of an equity offering, Apollo Investment Management has informed the Company that it intends to waive its management and incentive fees associated with any shares issued through this offering. Additionally, Apollo Global Management may also purchase shares of AINV in the open market.
The Company also announced that its Board of Directors has declared for the fourth fiscal quarter of 2012 a dividend of $0.20 per share, payable on April 3, 2012 to stockholders of record as of February 18, 2012. We believe having a dividend that is more closely aligned with net investment income per share is prudent and appropriate. The specific tax characteristics of this dividend will be reported to stockholders on Form 1099 after the end of the calendar year.
Mr. Zelter, Apollo Investment Corporation’s Chief Executive Officer, said, “Since the onset of the global credit crisis, we believe the role of business development companies such as Apollo Investment Corporation has become increasingly important, filling the gap left by banks and traditional financial services companies. Prior to the credit crisis, AINV focused primarily on providing acquisition financing to middle market private equity sponsors. Today, we believe the growing void in the capital markets creates attractive opportunities for our business. Consequently, we intend to expand our footprint to provide a wider array of proprietary private financing solutions for companies across a broad spectrum of industries and situations. The changes we have announced today, including more closely aligning our dividend with our net investment income and our decision to explore the raising of additional equity capital, are designed to reposition us to grow our business in the current environment.”
Mr. Zelter continued, “We are very pleased that industry veteran Edward Goldthorpe has agreed to join the senior management team at AINV, and we are confident he will play a major role in driving growth and value creation for the Company. Broadly speaking, we believe the changes we have made will enable us to capitalize on the meaningful opportunities we see in the current market and generate attractive risk-adjusted returns for our shareholders.”
ABOUT EDWARD J. GOLDTHORPE:Mr. Goldthorpe was most recently with Goldman Sachs for the past 13 years, where he served as a Managing Director with the Bank Loan Distressed Investing Desk (2009-2012), and prior to that Mr. Goldthorpe was a Managing Director with the Special Situations Group within the firm’s Securities Division (2005-2009). Previously, Mr. Goldthorpe was a Vice President in the High Yield Distressed Group (2001-2005), an analyst in the Merchant Banking Division (2000-2001), and an analyst in the Investment Banking Division (1999-2000).
FINANCIAL HIGHLIGHTS FOR THE QUARTER ENDED DECEMBER 31, 2011:
At December 31, 2011:
Total Assets: $2.9 billion
Investment Portfolio: $2.8 billion
Net Assets: $1.6 billion
Net Asset Value per share: $8.16
Portfolio Activity for the Quarter Ended December 31, 2011:
Investments made during the quarter: $95 million
Number of new portfolio companies invested: 3
Investments sold or prepaid during the quarter: $175 million
Number of portfolio company exits: 5
Operating Results for the Quarter Ended December 31, 2011 (in thousands, except per share amounts):
Net investment income: $38,538
Net realized and unrealized gain: $25,159
Net increase in net assets from operations: $63,697
Net investment income per share: $0.20
Net realized and unrealized gain per share: $0.12
Earnings per share — basic: $0.32
Earnings per share — diluted: $0.31
CONFERENCE CALL / WEBCAST AT 11:00 AM EST ON FEBRUARY 8, 2012
The Company will host a conference call at 11:00 a.m. (Eastern Standard Time) on Wednesday, February 8, 2012 to present third fiscal quarter results. All interested parties are welcome to participate in the conference call by dialing (888) 802-8579 approximately 5-10 minutes prior to the call, international callers should dial (973) 633-6740. Participants should reference Apollo Investment Corporation or Conference ID: 40610975 when prompted. Following the call you may access a replay of the event either telephonically or via audio webcast. The telephonic replay will be available through February 22, 2012 by calling (800) 585-8367; international callers please dial (404) 537-3406, reference pin #40610975. The audio webcast will be available later that same day. To access the audio webcast please visit the Event Calendar in the Investor Relations section of our website at www.apolloic.com.
PORTFOLIO AND INVESTMENT ACTIVITYDuring the three months ended December 31, 2011, we invested $95 million across 3 new and 6 existing portfolio companies, through a combination of primary and secondary market purchases. This compares to investing $382 million in 8 new and 3 existing portfolio companies for the three months ended December 31, 2010. Investments sold or prepaid during the three months ended December 31, 2011 totaled $175 million versus $481 million for the three months ended December 31, 2010.
At December 31, 2011, our portfolio consisted of 67 portfolio companies and was invested 29% in senior secured loans, 60% in subordinated debt, 1% in preferred equity and 10% in common equity and warrants measured at fair value versus 69 portfolio companies invested 29% in senior secured loans, 62% in subordinated debt, 1% in preferred equity and 8% in common equity and warrants at December 31, 2010.
The weighted average yields on our senior secured loan portfolio, subordinated debt portfolio and total debt portfolio as of December 31, 2011 at our current cost basis were 9.7%, 12.6% and 11.7%, respectively. At December 31, 2010, the yields were 8.7%, 12.9% and 11.5%, respectively.
Since the initial public offering of Apollo Investment in April 2004 and through December 31, 2011, invested capital totaled over $8.6 billion in 164 portfolio companies. Over the same period, Apollo Investment completed transactions with more than 100 different financial sponsors.
At December 31, 2011, 66% or $1.7 billion of our income-bearing investment portfolio is fixed rate and 34% or $0.8 billion is floating rate, measured at fair value. On a cost basis, 65% or $1.8 billion of our income-bearing investment portfolio is fixed rate and 35% or $1.0 billion is floating rate. At December 31, 2010, 63% or $1.7 billion of our income-bearing investment portfolio was fixed rate and 37% or $1.0 billion was floating rate. On a cost basis, 63% or $1.8 billion of our income-bearing investment portfolio was fixed rate and 37% or $1.0 billion was floating rate.
RESULTS OF OPERATIONS
Results comparisons below are for the three and nine months ended December 31, 2011 and December 31, 2010.
Investment Income
For the three and nine months ended December 31, 2011, gross investment income totaled $83.8 million and $272.4 million, respectively. For the three and nine months ended December 31, 2010, gross investment income totaled $94.3 million and $264.1 million, respectively. The decrease in gross investment income for the three months ended December 31, 2011 as compared to the three months ended December 31, 2010 was primarily due to a decrease in the receipt of prepayment premiums and other deal related income. The increase in gross investment income for the nine months ended December 31, 2011 as compared to the nine months ended December 31, 2010 was primarily due to an increase in the receipt of prepayment premiums and other deal related income.
Expenses
Expenses totaled $45.3 million and $140.7 million, respectively, for the three and nine months ended December 31, 2011, of which $24.3 million and $75.6 million, respectively, were base management fees and performance-based incentive fees and $16.9 million and $50.2 million, respectively, were interest and other debt expenses. Administrative services and other general and administrative expenses totaled $4.0 million and $14.9 million, respectively, for the three and nine months ended December 31, 2011. Expenses totaled $44.2 million and $122.9 million, respectively, for the three and nine months ended December 31, 2010, of which $27.7 million and $80.1 million, respectively, were base management fees and performance-based incentive fees and $13.4 million and $34.1 million, respectively, were interest and other debt expenses. Administrative services and other general and administrative expenses totaled $3.0 million and $8.8 million, respectively, for the three and nine months ended December 31, 2010. Expenses consist of base investment advisory and management fees, insurance expenses, administrative services fees, legal fees, directors’ fees, audit and tax services expenses, and other general and administrative expenses. The increase in expenses from the December 2010 periods to the December 2011 periods was primarily due to an increase in interest expense as our average interest cost in the current periods is over 100 basis points higher than in the year ago periods and the average debt outstanding is roughly $150 million higher on a year over year basis. The increase in average interest cost resulted from the issuance of new tranches of long-term fixed rate debt in periods during and subsequent to the three and nine month periods ended December 31, 2010. In addition, in the nine month period ended December 31, 2011, the Company recognized approximately $4.0 million in net non-recurring expenses, including legal and other professional expenses of $4.7 million net of a non-recurring reduction of administrative expenses.
Net Investment Income
The Company’s net investment income totaled $38.5 million and $131.7 million, or $0.20 and $0.67, per average basic share, respectively, for the three and nine months ended December 31, 2011. The Company’s net investment income totaled $50.1 million and $141.1 million, or $0.26 and $0.73, per average basic share, respectively, for the three and nine months ended December 31, 2010.
Net Realized Losses
The Company had investment sales and prepayments totaling $175 million and $1.3 billion, respectively, for the three and nine months ended December 31, 2011. The Company had investment sales and prepayments totaling $481 million and $722 million, respectively, for the three and nine months ended December 31, 2010. Net realized losses for the three and nine months ended December 31, 2011 were $275.0 million and $341.1 million, respectively. For the three and nine months ended December 31, 2010, net realized losses totaled $64.9 million and $150.5 million, respectively. Net realized losses for the three and nine month periods ended December 31, 2011 were primarily derived from the exits of select investments, specifically Grand Prix Holdings, which accounted for $274 million of the realized loss totals, but also included Playpower Holdings, TL Acquisitions and FSC Holdings. The realized losses incurred upon the exit of these investments reversed out previously reported unrealized losses. Net realized losses for the three and nine months ended December 31, 2010 were primarily derived from selective exits and restructurings of underperforming investments.
Net Unrealized Appreciation (Depreciation) on Investments, Cash Equivalents and Foreign Currencies
For the three and nine months ended December 31, 2011, net change in unrealized appreciation on the Company’s investments, cash equivalents, foreign currencies and other assets and liabilities totaled $300.2 million and $5.9 million, respectively. For the three and nine months ended December 31, 2010, net change in unrealized appreciation on the Company’s investments, cash equivalents, foreign currencies and other assets and liabilities totaled $99.3 million and $77.7 million, respectively. For the three months ended December 31, 2011, the increase in unrealized appreciation was mainly derived from the reclassification of $274 million of previously recognized unrealized depreciation on our investment in Grand Prix Holdings to a realized loss. For the nine months ended December 31, 2011, the change in unrealized depreciation was comprised of the impact from Grand Prix Holdings together with the general decline in capital market conditions during the period. For the three and nine months ended December 31, 2010, net unrealized appreciation was impacted by net changes in specific portfolio company fundamentals and stronger capital market conditions.
Net Increase (Decrease) in Net Assets From Operations
For the three months ended December 31, 2011, the Company had a net increase in net assets resulting from operations of $63.7 million. For the nine months ended December 31, 2011, the Company had a net decrease in net assets resulting from operations of $203.5 million. For the three and nine months ended December 31, 2010, the Company had a net increase in net assets resulting from operations of $84.5 million and $68.4 million, respectively. For the three months ended December 31, 2011 basic and diluted earnings per average share were $0.32 and $0.31, respectively. For the nine months ended December 31, 2011, basic and diluted losses per average share were $1.04 and $1.04, respectively. The basic and diluted earnings per average share were $0.43 and $0.36 for the three and nine months ended December 31, 2010.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s liquidity and capital resources are generated and generally available through periodic follow-on equity and debt offerings, our senior secured, multi-currency $1.254 billion revolving credit facility maturing on April 12, 2013 (see note 10 within the Notes to Financial Statements) (the “Facility”), our senior secured notes, investments in special purpose entities in which we hold and finance particular investments on a non-recourse basis, as well as from cash flows from operations, investment sales of liquid assets and prepayments of senior and subordinated loans and income earned from investments. The Company also has investments in its portfolio that contain PIK provisions. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received). PIK generally becomes due at maturity of the investment or upon the investment being called by the issuer. In order to maintain the Company’s status as a RIC, this non-cash source of income must be paid out to stockholders annually in the form of dividends, even though the Company has not yet collected the cash. For the nine months ended December 31, 2011, accrued PIK totaled $13.1 million, on total investment income of $272.4 million. On April 13, 2011, $380 million of commitments on the Facility matured. At December 31, 2011, the Company had $743 million in borrowings outstanding on its Facility and $511 million of unused capacity. As of December 31, 2011, aggregate lender commitments under the Facility total $1.254 billion.
On May 3, 2010, the Company closed on its most recent follow-on public equity offering of 17.25 million shares of common stock at $12.40 per share raising approximately $204 million in net proceeds. In the future, the Company may raise additional equity or debt capital, among other considerations. The primary use of funds will be investments in portfolio companies, reductions in debt outstanding and other general corporate purposes, including the payment of interest, fees or distributions to shareholders.
On September 30, 2010, the Company entered into a note purchase agreement, providing for a private placement issuance of $225 million in aggregate principal amount of five-year, senior secured notes with a fixed interest rate of 6.25% and a maturity date of October 4, 2015 (the “Senior Secured Notes”). On October 4, 2010, the Senior Secured Notes were sold to certain institutional accredited investors pursuant to an exemption from registration under the Securities Act of 1933, as amended. Interest on the Senior Secured Notes will be due semi-annually on April 4 and October 4, commencing on April 4, 2011. The proceeds from the issuance of the Senior Secured Notes were primarily used to reduce other outstanding borrowings and/or commitments on the Company’s Facility.
On January 25, 2011, the Company closed a private offering of $200 million aggregate principal amount of senior unsecured convertible notes (the “Convertible Notes”). The Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. The Convertible Notes bear interest at an annual rate of 5.75%, payable semi-annually in arrears on January 15 and July 15 of each year, commencing on July 15, 2011. The Convertible Notes will mature on January 15, 2016 unless earlier converted or repurchased at the holder’s option. Prior to December 15, 2015, the Convertible Notes will be convertible only upon certain corporate reorganizations, dilutive recapitalizations or dividends, or if, during specified periods our shares trade at more than 130% of the then applicable conversion price or the Convertible Notes trade at less than 97% of their conversion value and, thereafter, at any time. The Convertible Notes will be convertible by the holders into shares of common stock, initially at a conversion rate of 72.7405 shares of the Company’s common stock per $1,000 principal amount of Convertible Notes (14,548,100 common shares) corresponding to an initial conversion price per share of approximately $13.75, which represents a premium of 17.5% to the $11.70 per share closing price of the Company’s common stock on The NASDAQ Global Select Market on January 19, 2011. The conversion rate will be subject to adjustment upon certain events, such as stock splits and combinations, mergers, spin-offs, increases in dividends in excess of $0.28 per share per quarter and certain changes in control. Certain of these adjustments, including adjustments for increases in dividends, are subject to a conversion price floor of $11.70 per share. The Convertible Notes are senior unsecured obligations and rank senior in right of payment to our existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.
On August 11, 2011, the Company adopted a plan for the purpose of repurchasing up to $200 million of its common stock in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934. The Company’s plan was designed to allow it to repurchase its shares both during its open window periods and at times when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods. A broker selected by the Company will have the authority under the terms and limitations specified in the plan to repurchase shares on the Company’s behalf in accordance with the terms of the plan. Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the plan. While the portion of the plan reliant on Rule 10b-18 remains in effect, the portion reliant on Rule 10b5-1 is subject to periodic renewal and is not currently in effect. As of December 31, 2011, no shares have been repurchased.
On September 29, 2011, the Company closed a private offering of $45 million aggregate principal amount of senior secured notes (the “Notes”) consisting of two series: (1) 5.875% Senior Secured Notes, Series A, of the Company due September 29, 2016 in the aggregate principal amount of $29 million; and (2) 6.250% Senior Secured Notes, Series B, of the Company due September 29, 2018, in the aggregate principal amount of $16 million. The Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The net proceeds from the offering of Notes are intended to be used to fund new portfolio investments, reduce outstanding borrowings on the Company’s Facility and for general corporate purposes, including the payment of interest, fees or distributions to shareholders.
APOLLO INVESTMENT CORPORATION STATEMENTS OF ASSETS AND LIABILITIES (in thousands, except per share amounts) December 31, 2011 (unaudited) March 31, 2011 ----------------- --------------- Assets Non-controlled/non-affiliated investments, at value (cost--$2,813,436 and $2,900,378, respectively) $ 2,577,312 $ 2,901,295 Non-controlled/affiliated investments, at value (cost--$0 and $22,407, respectively) -- 37,295 Controlled investments, at value (cost-- $221,639 and $376,051, respectively) 201,543 111,568 Cash -- 5,471 Foreign currency (cost--$632 and $881, respectively) 635 883 Receivable for investments sold 81,810 13,461 Interest receivable 60,505 45,686 Dividends receivable 13 5,131 Miscellaneous income receivable 1,216 -- Receivable from investment adviser -- 576 Prepaid expenses and other assets 19,902 27,447 ----------------- --------------- Total assets $ 2,942,936 $ 3,148,813 ----------------- --------------- Liabilities Debt $ 1,213,185 $ 1,053,443 Payable for investments purchased 25,000 37,382 Dividends payable 55,172 54,740 Management and performance-based incentive fees payable) 24,327 27,553 Interest payable 10,614 9,703 Accrued administrative expenses 2,502 1,738 Other liabilities and accrued expenses 2,665 3,223 Due to custodian 2,064 -- ----------------- --------------- Total liabilities $ 1,335,529 $ 1,187,782 ----------------- --------------- Net Assets Common stock, par value $.001 per share, 400,000 and 400,000 common shares authorized, respectively, and 197,043 and 195,502 issued and outstanding, respectively $ 197 $ 196 Paid-in capital in excess of par 2,886,449 2,871,559 Undistributed net investment income 23,271 56,557 Accumulated net realized loss (1,055,001) (713,873) Net unrealized depreciation (247,509) (253,408) ----------------- --------------- Total net assets $ 1,607,407 $ 1,961,031 ----------------- --------------- Total liabilities and net assets $ 2,942,936 $ 3,148,813 ----------------- --------------- Net Asset Value Per Share $ 8.16 $ 10.03 ----------------- --------------- APOLLO INVESTMENT CORPORATION STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share amounts) Three months ended Nine months ended -------------------------- -------------------------- December 31, December 31, December 31, December 31, 2011 2010 2011 2010 ------------ ------------ ------------ ------------ INVESTMENT INCOME: From non- controlled/non- affiliated investments: Interest $ 77,220 $ 83,820 $ 238,264 $ 233,166 Dividends 1,125 992 5,410 3,712 Other income 3,521 6,650 16,761 11,958 From non- controlled/ affiliated investments: Interest -- 2,746 899 9,088 From controlled investments: Interest 1,297 -- 2,565 -- Dividends 652 -- 8,489 6,031 Other income -- 110 -- 110 ------------ ------------ ------------ ------------ Total Investment Income $ 83,815 $ 94,318 $ 272,388 $ 264,065 ------------ ------------ ------------ ------------ EXPENSES: Management fees $ 14,693 $ 15,203 $ 46,171 $ 44,787 Performance-based incentive fees 9,634 12,532 29,398 35,284 Interest and other debt expenses 16,926 13,433 50,222 34,079 Administrative services expense 1,500 1,540 3,887 4,348 Other general and administrative expenses 2,524 1,484 10,978 4,432 ------------ ------------ ------------ ------------ Total expenses 45,277 44,192 140,656 122,930 ------------ ------------ ------------ ------------ Net investment income $ 38,538 $ 50,126 $ 131,732 $ 141,135 ------------ ------------ ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, CASH EQUIVALENTS AND FOREIGN CURRENCIES: Net realized gain (loss): Non-controlled/ non-affiliated investments and cash equivalents $ (1,746) $ (55,650) $ (85,208) $ (142,777) Non-controlled/ affiliated investments 167 -- 19,039 -- Controlled investments (274,452) -- (274,452) -- Foreign currencies 1,036 (9,289) (507) (7,673) ------------ ------------ ------------ ------------ Net realized loss (274,995) (64,939) (341,128) (150,450) ------------ ------------ ------------ ------------ Net change in unrealized gain (loss): Investments and cash equivalents 298,005 89,088 (7,464) 71,140 Foreign currencies 2,149 10,229 13,363 6,535 ------------ ------------ ------------ ------------ Net change in unrealized gain (loss) 300,154 99,317 5,899 77,675 ------------ ------------ ------------ ------------ Net realized and unrealized gain (loss) from investments, cash equivalents and foreign currencies 25,159 34,378 (335,229) (72,775) ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 63,697 $ 84,504 $ (203,497) $ 68,360 ------------ ------------ ------------ ------------ EARNINGS (LOSS) PER SHARE BASIC $ 0.32 $ 0.43 $ (1.04) $ 0.36 DILUTED $ 0.31 $ 0.43 $ (1.04) $ 0.36 ------------ ------------ ------------ ------------About Apollo Investment Corporation
Apollo Investment Corporation is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. The Company’s investment portfolio is principally in middle-market private companies. From time to time, the Company may also invest in public companies. The Company invests primarily in senior secured loans and mezzanine loans and equity in furtherance of its business plan. Apollo Investment Corporation is managed by Apollo Investment Management, L.P., an affiliate of Apollo Management, L.P., a leading private equity investor.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, including, but not limited to, statements as to our future operating results; our business prospects and the prospects of our portfolio companies; the impact of investments that we expect to make; the dependence of our future success on the general economy and its impact on the industries in which we invest; the ability of our portfolio companies to achieve their objectives; our expected financings and investments; the adequacy of our cash resources and working capital; and the timing of cash flows, if any, from the operations of our portfolio companies.
We may use words such as “anticipates,” “believes,” “expects,” “intends”, “will”, “should,” “may” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. We do not undertake to update our forward-looking statements unless required by law.
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2012年2月6日星期一
Caixin Online: The basics of Chinese inbound investment deals
By Andrew Ross
BEIJING (
Caixin Online
) — An accelerating number of Chinese companies are engaging in acquisitions and joint ventures in the United States and while it’s generally understood that a large number of other Chinese companies are also considering doing so, many still hesitate.
The first point to note is that the rate of deals is increasing, and is doing so dramatically. A second point is that as a percentage of the total number of deals, small- to medium-size deals make up the majority, although there are a few larger ones, and the buyers are generally not SOEs (state-owned enterprises). Third, the industries of the acquired companies cover a broad range, from technology, apparel, consulting services, auto parts, hotels and many more.
/conga/story/misc/caixin.html
61611In 2011, several Chinese companies announced their intentions to enter into deals in the U.S., including Shanghai Pharmaceuticals
, with its publicly stated reasons being to seek new drugs to expand its product line and noting declining overseas prices and a strong Yuan, Bright Food Group, China National Materials Co. (Sinoma)
and Fosun Group, which stated it is looking at consumer brands. Many Chinese companies are going global in the U.S., more and more will be doing so, and for those Chinese companies for which this makes sense and which proceed to do so, they will be in very good company.
/quotes/zigman/1859134 CN:601607
+0.51%
/quotes/zigman/40694 HK:1893
+1.72%
So what are some of the strategies, procedures and lessons on pitfalls that can be garnered from recent deals?
Perhaps one of the most important points regarding engaging in transactions in the United States is to recall the reaction of many Chinese businesses when foreign companies came to China and sought to dictate that deals in China be done in the same manner as in those companies’ respective homelands. This generated ill feelings and often did and can easily result in failure in a deal. The same is true in the United States. Companies from many different countries make acquisitions in the U.S. all the time, and one of the accepted norms is that the deal will be done in “U.S. style.”
While not successful on occasion, the advisor for the U.S. company looking to be sold (especially a “hot” company) may seek to create an auction for the company, thus seeking to maximize the price and otherwise obtain the most favorable terms. Even if they do not succeed in doing this, they will generally seek to have the process move as rapidly as possible. Prospective buyers who are unwilling to follow an auction process when established or move too slowly are simply left behind. An important aspect in dealing with this is to be prepared. This means having done industry and market analysis in advance so as to be able to readily determine one’s interest and willingness to devote the necessary resources to explore the deal, and have ready or be able to quickly assemble a team of qualified Chinese and U.S. advisors.
Many U.S. businessmen object to the alleged slow deal pace of foreign businessmen (and not just Chinese), thus often giving U.S. buyers an advantage. Timing delays are, of course, a tactic to be considered; however they should only be used as deemed appropriate, such as to express reservations or concerns so as to try and enhance one’s bargaining position. However, a buyer should not allow its perceived slowness to cost it a deal it otherwise wants.
While most people properly say “a deal is not done until it is done,” in many U.S. negotiations the same often is not true of individual issues. Once an issue is resolved, it is generally not renegotiated absent special circumstances. A party which acts contrary to this undercuts its counter-party’s trust in it.
There is great significance in the U.S. placed on the transaction contract, as each party seeks to maximize its benefits and protections. As a general rule, legal counsel for a U.S. party, will seek as much protection for its client and clarity in the terms of an agreement as possible. This can be especially important for a buyer or investor. This often means lengthy detailed contracts, and also emphasizes the need for the parties to make decisions relatively quickly with respect to the many points involved. In fact, one view is that many U.S. business persons and their lawyers will only encourage ambiguity in an agreement if they think that addressing the ambiguity in the negotiations would result in it being resolved contrary to their interests or if they think they will have greater negotiating leverage on the point once the agreement is signed or the deal is consummated.
By having a contract be as detailed and precise as possible, the likelihood of a dispute is reduced. This is augmented by the fact that in the U.S. there is a very substantial body of court rulings and laws which help determine what a particular contractual phrase will mean in a particular context, thus creating even greater potential certainty. Finally, it should be recognized that other than private arbitrators and mediators and the courts — all of which are objective but the last of which is slow — no governmental entity or person such as a governmental bureaucrat plays a meaningful role in resolving contractual disputes.
While concerns abound over the possible legal burdens that Chinese companies face in the U.S., there are many reasons for Chinese companies to go global, and in particular to do so in the United States.
Read this commentary on Caixin Online.
Andrew Ross is partner and chair of the mergers and acquisitions practice group at Loeb & Loeb LLP. This article is an abridged version of a paper titled, “Acquisitions by Chinese companies in the United States: The case for moving forward now.”
http://tourism9.cm/ http://vkins.com/
BEIJING (
Caixin Online
) — An accelerating number of Chinese companies are engaging in acquisitions and joint ventures in the United States and while it’s generally understood that a large number of other Chinese companies are also considering doing so, many still hesitate.
The first point to note is that the rate of deals is increasing, and is doing so dramatically. A second point is that as a percentage of the total number of deals, small- to medium-size deals make up the majority, although there are a few larger ones, and the buyers are generally not SOEs (state-owned enterprises). Third, the industries of the acquired companies cover a broad range, from technology, apparel, consulting services, auto parts, hotels and many more.
About Caixin
Caixin is a Beijing-based media group dedicated to providing high-quality
and authoritative financial and business news and information through
periodicals, online and TV/video programs.
• Get the Caixin
e-newsletter
Caixin is a Beijing-based media group dedicated to providing high-quality
and authoritative financial and business news and information through
periodicals, online and TV/video programs.
• Get the Caixin
e-newsletter
61611
, with its publicly stated reasons being to seek new drugs to expand its product line and noting declining overseas prices and a strong Yuan, Bright Food Group, China National Materials Co. (Sinoma)
and Fosun Group, which stated it is looking at consumer brands. Many Chinese companies are going global in the U.S., more and more will be doing so, and for those Chinese companies for which this makes sense and which proceed to do so, they will be in very good company.
/quotes/zigman/1859134 CN:601607
+0.51%
/quotes/zigman/40694 HK:1893
+1.72%
So what are some of the strategies, procedures and lessons on pitfalls that can be garnered from recent deals?
Perhaps one of the most important points regarding engaging in transactions in the United States is to recall the reaction of many Chinese businesses when foreign companies came to China and sought to dictate that deals in China be done in the same manner as in those companies’ respective homelands. This generated ill feelings and often did and can easily result in failure in a deal. The same is true in the United States. Companies from many different countries make acquisitions in the U.S. all the time, and one of the accepted norms is that the deal will be done in “U.S. style.”
While not successful on occasion, the advisor for the U.S. company looking to be sold (especially a “hot” company) may seek to create an auction for the company, thus seeking to maximize the price and otherwise obtain the most favorable terms. Even if they do not succeed in doing this, they will generally seek to have the process move as rapidly as possible. Prospective buyers who are unwilling to follow an auction process when established or move too slowly are simply left behind. An important aspect in dealing with this is to be prepared. This means having done industry and market analysis in advance so as to be able to readily determine one’s interest and willingness to devote the necessary resources to explore the deal, and have ready or be able to quickly assemble a team of qualified Chinese and U.S. advisors.
Clinton calls U.N. veto on Syria a ‘travesty’
U.S. Secretary of State Clinton called the veto by Russia and China of the U.N. resolution on Syria a “travesty” as Syria’s President Bashar al-Assad attended mosque service. (Video: Reuters/Photo: Getty Images)While most people properly say “a deal is not done until it is done,” in many U.S. negotiations the same often is not true of individual issues. Once an issue is resolved, it is generally not renegotiated absent special circumstances. A party which acts contrary to this undercuts its counter-party’s trust in it.
There is great significance in the U.S. placed on the transaction contract, as each party seeks to maximize its benefits and protections. As a general rule, legal counsel for a U.S. party, will seek as much protection for its client and clarity in the terms of an agreement as possible. This can be especially important for a buyer or investor. This often means lengthy detailed contracts, and also emphasizes the need for the parties to make decisions relatively quickly with respect to the many points involved. In fact, one view is that many U.S. business persons and their lawyers will only encourage ambiguity in an agreement if they think that addressing the ambiguity in the negotiations would result in it being resolved contrary to their interests or if they think they will have greater negotiating leverage on the point once the agreement is signed or the deal is consummated.
By having a contract be as detailed and precise as possible, the likelihood of a dispute is reduced. This is augmented by the fact that in the U.S. there is a very substantial body of court rulings and laws which help determine what a particular contractual phrase will mean in a particular context, thus creating even greater potential certainty. Finally, it should be recognized that other than private arbitrators and mediators and the courts — all of which are objective but the last of which is slow — no governmental entity or person such as a governmental bureaucrat plays a meaningful role in resolving contractual disputes.
While concerns abound over the possible legal burdens that Chinese companies face in the U.S., there are many reasons for Chinese companies to go global, and in particular to do so in the United States.
Read this commentary on Caixin Online.
/quotes/zigman/1859134
Volume: 17.31M
Feb. 6, 2012 1:34p
Feb. 6, 2012 1:34p
/quotes/zigman/40694
Volume: 7.48M
Feb. 6, 2012 1:33p
Feb. 6, 2012 1:33p
http://tourism9.cm/ http://vkins.com/
2012年1月23日星期一
NYT: Romney fan and private equity poster boy
updated 1 minute ago 2012-01-22T23:36:00
It was, the gossip pages would later report, the talk of the Hamptons — a midsummer night’s bacchanal in the playground of the 1 percent.
Beyond the windswept dunes in Bridgehampton, at a $400,000-a-month oceanfront mansion, bright young things bubbled up and the Champagne flowed fast. Into the small hours, professional dancers in exotic clothing gyrated atop platforms. One couple twirled flaming torches. The sounds of techno boomed over the beach.
The New York Post summed up the evening’s Dionysian mysteries with the following headline: “Nude Frolic in Tycoon’s Pool.”
The Post’s tycoon, and the party’s host, was a financier named Marc J. Leder, and those weekend revels last July had the East End of Long Island buzzing. Like many deal makers, though, Mr. Leder, 50, is virtually unknown outside financial circles. But from his headquarters in Boca Raton, Fla., he presides over a multibillion-dollar private empire. He is a practitioner of a Wall Street art that helped define an age of hyperwealth, and which has now been dragged into the white-hot spotlight of presidential politics: private equity.
It was through private equity that one Republican candidate, Mitt Romney, amassed his wealth — and, it turns out, it was through private equity that Mr. Romney first met Mr. Leder. A couple of months after the blowout in Bridgehampton, Mr. Leder was host for a fund-raiser at his Boca Raton home for Mr. Romney’s campaign. But the connection goes back even further. Years ago, a visit to Mr. Romney’s investment firm inspired Mr. Leder to get into private equity in the first place. Mr. Romney was an early investor in some of the deals done by Mr. Leder’s investment company, Sun Capital, which today oversees about $8 billion in equity.
Mr. Romney’s own time in the private equity business, at Bain Capital, has provoked fierce attacks from Republican rivals and others. It has also prompted a lot of questions, including the big one: What good is this business, anyway? Detractors say private equity has enriched a handful of financiers at the expense of ordinary Americans. The deal makers, this line goes, buy companies and then bleed the life out of them. Jobs are often among the casualties.
Whether there’s truth to such claims depends on whom you ask. Private equity executives, as well as Mr. Romney, who left Bain in 1999, say the industry fixes troubled companies and ultimately creates jobs. Whatever the case, three decades after this sort of deal-making burst onto the scene in the merger mania of the 1980s, there are surprisingly few solid answers from either side.
What is certain is that buyout specialists upended the old order and made vast fortunes for themselves. Fueled by easy money from banks, and from endowments and pension funds, these private investors were able to buy companies with borrowed money and put down relatively little of their own cash.
Today, many of these private kingdoms rival the nation’s mightiest public companies. In all, the private equity industry oversees $3 trillion in global assets, according to Preqin, the research firm. Buyout kings control more than 14,000 American companies, including brands like Hilton Hotels and Burger King.
But financiers weren’t the only ones to embrace private equity. On the campaign trail, Rick Perry called private equity artists “vulture capitalists.” But as governor of Texas, he blessed the largest corporate buyout in history — the $44.4 billion takeover of the utility TXU by several investment firms in 2007. Indeed, as in many other places nationwide, public pension funds in Texas used public money to bet on private equity, in hopes of generating the investment returns they needed to pay retirees.
Against this backdrop, the story of Marc Leder might seem a footnote in the nation’s economic ledger. But it is a story worth knowing. That’s because, in many ways, Mr. Leder personifies the debates now swirling around this lucrative corner of finance.
To his critics, he represents everything that’s wrong with this setup. In recent years, a large number of the companies that Sun Capital has acquired have run into serious trouble, eliminated jobs or both. Since 2008, some 25 of its companies — roughly one of every five it owns — have filed for bankruptcy.
Among the losers was Friendly’s, the restaurant chain known for its Jim Dandy sundaes and Fribble shakes. (Sun Capital was accused by a federal agency of pushing Friendly’s into bankruptcy last year to avoid paying pensions to the chain’s employees; Sun disputes that contention.) Another company that sank into bankruptcy was Real Mex, owner of the Chevy’s restaurant chain. In that case, Mr. Leder lost money for his investors not once, but twice.
Yet Mr. Leder doesn’t seem to be suffering too much himself. In fact, he is living so large that he can’t avoid the limelight. Last July, he used part of his personal fortune to join a group of investors in buying the Philadelphia 76ers. In December, he was spotted on St. Bart’s with Russell Simmons, of Def Jam and Phat Farm fame, and Rachel Zoe, the celebrity stylist. That again landed him in The New York Post, which dubbed him a “private equity party boy.”
Mr. Leder says that characterization couldn’t be further from the truth. He focuses on what are known as “scratch and dent” deals, which typically involve companies that are struggling to begin with. One-third of the companies Sun Capital has bought are losing money. It’s a tricky game in good times, and downright dangerous in bad ones. Mr. Leder and his defenders say Sun Capital has saved many companies and, with them, many, many jobs.
“I think the portrayal of me as having wild and crazy parties is absolutely incorrect,” Mr. Leder said during a wide-ranging interview in Sun Capital’s offices in Midtown Manhattan. “I spend a small percentage throwing some parties, attending some parties. I like music. I like to dance. But rather than reporting on how I spend 340 days and nights of my year, the media likes to report on the other 25.”
Paul Jones, chief executive of the Midwest retailer ShopKo, which Sun Capital acquired in 2005, said Mr. Leder has kept a close eye on his company. “I get e-mails from him, usually on Sunday mornings, in which he’s says we had an impressive week or sometimes it’s just to give our team an ‘attaboy,’ ” Mr. Jones said.
For more than 28 years, Helen Smolak worked at the Friendly’s in Denham, Mass. Day in and day out, she served Big Beef Burgers and Fribbles, collected tips and made a decent living.
All that changed one evening last October. That was when Ms. Smolak’s supervisor called to tell her the restaurant was shutting down — immediately.
“It was my family. That was my home,” said Ms. Smolak, 56. “Friendly’s always came first. I was supposed to retire with these people and with this company.”
What went wrong? Sun Capital acquired Friendly’s in 2007 for $395 million — an 8 percent premium based on Friendly’s stock price at the time. But now Sun was saying the weak economy and the rising prices of milk and other ingredients had pushed Friendly’s, a 76-year-old chain, to the brink.
The Pension Benefit Guaranty Corporation, the federal agency that helps safeguard corporate pensions, wasn’t so sure. It accused Sun Capital in bankruptcy court filings of using the bankruptcy to shift Friendly’s pension burden onto the agency.
“That’s absolutely not true,” Mr. Leder said. Friendly’s pension fund, he said, was underfunded well before Sun Capital bought the company. The outcome, he added, is simply the way the bankruptcy process works.
“We don’t make the rules,” he said with a shrug. He said the matter was settled with the agency for a “nominal” sum.
Bankruptcy is never pretty. But, in this case, Sun Capital was particularly adept at getting what it wanted. Only months after Friendly’s went bankrupt, Mr. Leder has already regained control of the company. It was a calculated move, and one that is potentially lucrative for Sun Capital and its investors. In filing for bankruptcy, Friendly’s also cut hundreds of jobs, closed dozens of restaurants and bought some time to regroup. Now, if Sun Capital can turn around Friendly’s, it might eventually be able to sell the chain at a profit.
Beyond the windswept dunes in Bridgehampton, at a $400,000-a-month oceanfront mansion, bright young things bubbled up and the Champagne flowed fast. Into the small hours, professional dancers in exotic clothing gyrated atop platforms. One couple twirled flaming torches. The sounds of techno boomed over the beach.
The New York Post summed up the evening’s Dionysian mysteries with the following headline: “Nude Frolic in Tycoon’s Pool.”
The Post’s tycoon, and the party’s host, was a financier named Marc J. Leder, and those weekend revels last July had the East End of Long Island buzzing. Like many deal makers, though, Mr. Leder, 50, is virtually unknown outside financial circles. But from his headquarters in Boca Raton, Fla., he presides over a multibillion-dollar private empire. He is a practitioner of a Wall Street art that helped define an age of hyperwealth, and which has now been dragged into the white-hot spotlight of presidential politics: private equity.
It was through private equity that one Republican candidate, Mitt Romney, amassed his wealth — and, it turns out, it was through private equity that Mr. Romney first met Mr. Leder. A couple of months after the blowout in Bridgehampton, Mr. Leder was host for a fund-raiser at his Boca Raton home for Mr. Romney’s campaign. But the connection goes back even further. Years ago, a visit to Mr. Romney’s investment firm inspired Mr. Leder to get into private equity in the first place. Mr. Romney was an early investor in some of the deals done by Mr. Leder’s investment company, Sun Capital, which today oversees about $8 billion in equity.
Mr. Romney’s own time in the private equity business, at Bain Capital, has provoked fierce attacks from Republican rivals and others. It has also prompted a lot of questions, including the big one: What good is this business, anyway? Detractors say private equity has enriched a handful of financiers at the expense of ordinary Americans. The deal makers, this line goes, buy companies and then bleed the life out of them. Jobs are often among the casualties.
Whether there’s truth to such claims depends on whom you ask. Private equity executives, as well as Mr. Romney, who left Bain in 1999, say the industry fixes troubled companies and ultimately creates jobs. Whatever the case, three decades after this sort of deal-making burst onto the scene in the merger mania of the 1980s, there are surprisingly few solid answers from either side.
What is certain is that buyout specialists upended the old order and made vast fortunes for themselves. Fueled by easy money from banks, and from endowments and pension funds, these private investors were able to buy companies with borrowed money and put down relatively little of their own cash.
Today, many of these private kingdoms rival the nation’s mightiest public companies. In all, the private equity industry oversees $3 trillion in global assets, according to Preqin, the research firm. Buyout kings control more than 14,000 American companies, including brands like Hilton Hotels and Burger King.
But financiers weren’t the only ones to embrace private equity. On the campaign trail, Rick Perry called private equity artists “vulture capitalists.” But as governor of Texas, he blessed the largest corporate buyout in history — the $44.4 billion takeover of the utility TXU by several investment firms in 2007. Indeed, as in many other places nationwide, public pension funds in Texas used public money to bet on private equity, in hopes of generating the investment returns they needed to pay retirees.
Against this backdrop, the story of Marc Leder might seem a footnote in the nation’s economic ledger. But it is a story worth knowing. That’s because, in many ways, Mr. Leder personifies the debates now swirling around this lucrative corner of finance.
To his critics, he represents everything that’s wrong with this setup. In recent years, a large number of the companies that Sun Capital has acquired have run into serious trouble, eliminated jobs or both. Since 2008, some 25 of its companies — roughly one of every five it owns — have filed for bankruptcy.
Among the losers was Friendly’s, the restaurant chain known for its Jim Dandy sundaes and Fribble shakes. (Sun Capital was accused by a federal agency of pushing Friendly’s into bankruptcy last year to avoid paying pensions to the chain’s employees; Sun disputes that contention.) Another company that sank into bankruptcy was Real Mex, owner of the Chevy’s restaurant chain. In that case, Mr. Leder lost money for his investors not once, but twice.
Yet Mr. Leder doesn’t seem to be suffering too much himself. In fact, he is living so large that he can’t avoid the limelight. Last July, he used part of his personal fortune to join a group of investors in buying the Philadelphia 76ers. In December, he was spotted on St. Bart’s with Russell Simmons, of Def Jam and Phat Farm fame, and Rachel Zoe, the celebrity stylist. That again landed him in The New York Post, which dubbed him a “private equity party boy.”
Mr. Leder says that characterization couldn’t be further from the truth. He focuses on what are known as “scratch and dent” deals, which typically involve companies that are struggling to begin with. One-third of the companies Sun Capital has bought are losing money. It’s a tricky game in good times, and downright dangerous in bad ones. Mr. Leder and his defenders say Sun Capital has saved many companies and, with them, many, many jobs.
“I think the portrayal of me as having wild and crazy parties is absolutely incorrect,” Mr. Leder said during a wide-ranging interview in Sun Capital’s offices in Midtown Manhattan. “I spend a small percentage throwing some parties, attending some parties. I like music. I like to dance. But rather than reporting on how I spend 340 days and nights of my year, the media likes to report on the other 25.”
Paul Jones, chief executive of the Midwest retailer ShopKo, which Sun Capital acquired in 2005, said Mr. Leder has kept a close eye on his company. “I get e-mails from him, usually on Sunday mornings, in which he’s says we had an impressive week or sometimes it’s just to give our team an ‘attaboy,’ ” Mr. Jones said.
For more than 28 years, Helen Smolak worked at the Friendly’s in Denham, Mass. Day in and day out, she served Big Beef Burgers and Fribbles, collected tips and made a decent living.
All that changed one evening last October. That was when Ms. Smolak’s supervisor called to tell her the restaurant was shutting down — immediately.
“It was my family. That was my home,” said Ms. Smolak, 56. “Friendly’s always came first. I was supposed to retire with these people and with this company.”
What went wrong? Sun Capital acquired Friendly’s in 2007 for $395 million — an 8 percent premium based on Friendly’s stock price at the time. But now Sun was saying the weak economy and the rising prices of milk and other ingredients had pushed Friendly’s, a 76-year-old chain, to the brink.
The Pension Benefit Guaranty Corporation, the federal agency that helps safeguard corporate pensions, wasn’t so sure. It accused Sun Capital in bankruptcy court filings of using the bankruptcy to shift Friendly’s pension burden onto the agency.
“That’s absolutely not true,” Mr. Leder said. Friendly’s pension fund, he said, was underfunded well before Sun Capital bought the company. The outcome, he added, is simply the way the bankruptcy process works.
“We don’t make the rules,” he said with a shrug. He said the matter was settled with the agency for a “nominal” sum.
Bankruptcy is never pretty. But, in this case, Sun Capital was particularly adept at getting what it wanted. Only months after Friendly’s went bankrupt, Mr. Leder has already regained control of the company. It was a calculated move, and one that is potentially lucrative for Sun Capital and its investors. In filing for bankruptcy, Friendly’s also cut hundreds of jobs, closed dozens of restaurants and bought some time to regroup. Now, if Sun Capital can turn around Friendly’s, it might eventually be able to sell the chain at a profit.
And profit, after all, is what private equity is really about. Among the Sun Capital investors that stand to benefit from all of this are the New York State Teachers’ Retirement System, the Indiana State Teachers’ Retirement Fund and the Ford Foundation.
Jeffrey States is the investment officer for the Nebraska Investment Council, another Sun Capital investor. He said some private equity firms do provide information about how their dealings might affect things like jobs. But not all investors ask for such details.
“The primary objective is returns,” Mr. States said.
Mr. Leder, for his part, has never been shy about turning a profit. He and another banker, Rodger R. Krouse, were working at Lehman Brothers when they saw the huge money-making potential of private equity. They hatched their plan to get into the business one April afternoon in 1995, after a meeting at Mr. Romney’s Bain Capital in Boston.
The executives at Bain had been grousing about a deal in which Bain had doubled its money. But the Bain executives were lamenting that if they had sold sooner, they could have made much more.
On the plane back to New York, Mr. Leder and Mr. Krouse sat stunned.
“We’re looking at each other saying, ‘This is an industry where double your money is not that good of a deal?’ ” Mr. Leder recalls.
At 10 the next morning, Mr. Leder and Mr. Krouse marched into their bosses’ offices and quit. They then decided to base their new private equity firm in Boca Raton, and became its co-chief executives, believing the location would give them an edge in spotting potential acquisitions in the Southeast before their rivals in New York and Boston. But competitors kept outbidding them for companies.
It took 20 months, but they finally got their foot in the door. Friends and family members invested in their first dozen deals. Mr. Romney also invested personally in some early transactions, including an acquisition of a company that made speakers for computers and another that made carbon paper.
(Mr. Romney’s 2011 financial disclosures included stakes worth less than $15,000 apiece in two Sun-controlled companies — a pittance, given his estimated wealth of as much as $250 million. A spokeswoman for Mr. Romney’s campaign did not respond to an e-mail or a call seeking comment.)
Sun Capital soon carved a niche in doing turnarounds. In 1997, it acquired a majority stake in a maker of injection-molded polypropylene panels. By 2002, that company had more than doubled its sales.
One success led to another. Mr. Leder and Mr. Krouse invested $1.5 million in a company that supplied parts for Corvettes and walked away with $20 million. Two Sun investors were so tickled that they bought each man a red Corvette.
Such successes aside, Mr. Leder and Mr. Krouse make something of an odd couple. Mr. Krouse has the quiet demeanor of an accountant and tends to shift in his seat when conversations turn to his private life. (Former associates say he is a family man who likes to spend his spare time reading.)
Mr. Leder, by contrast, is bigger than life. He storms into a room and seems to suck out all of the air. Several former colleagues say he appears to have a photographic memory. He speaks rapidly and rarely holds back.
In a conversation about his business dealings, he segued into how his father wanted him to be a doctor but that he opted for other pursuits because he hated dissecting frogs in biology class. And he mentioned how he used crushed graham crackers as the secret ingredient in the pancakes he used to make for his youngest daughter.
He also said he started reading The Wall Street Journal when he was 12, and that in high school he delivered chickens and started a D. J. business. And he said that he typically sleeps for two to three hours at a time at night before waking up to answer e-mails.
AS word got out about Sun Capital’s early investment successes, pension funds and endowments were soon clamoring to get into its funds. Sun Capital raised fund after fund, each bigger than the last. In 2007, it raised $6 billion for a single fund. Sun Capital had hit the big time.
Then the Great Recession struck. The private equity boom turned bust fast.
By early 2009, numerous companies that Sun Capital had acquired were struggling to survive. Sun was racked by internal dissent. And Mr. Leder’s personal life had hit a rough patch.
By that spring, several Sun companies, including Drug Fair, Big 10 Tires and Mark IV Industries, had spiraled into bankruptcy. The firm had already taken losses on a large deal, a hostile takeover of the fashion company Kellwood, which Sun Capital had acquired without the usual due diligence.
Then came other, more personal blows. Mr. Leder and Mr. Krouse both lost money that they had personally invested with Bernard L. Madoff. Mr. Leder and his wife of 22 years, Lisa, began to go through a messy divorce. She demanded half of his total wealth, which she contended was more than $400 million at the time. The two eventually settled for an undisclosed amount.
Its business in retreat, Sun Capital laid off a number of its own employees. Those who stayed were told they would receive no cash bonuses. Instead, everyone was given a bigger slice of the portfolio of companies that, at that time, was losing value every day.
Angry employees fired off a list of dozens of pointed questions to Mr. Leder and Mr. Krouse, asking how much money the two co-founders had been paid and how much they had taken out of Sun Capital. The employees wanted to know how a firm that had just raised a $6 billion fund, and which was collecting about $120 million a year in management fees alone, could possibly be running low on cash.
Mr. Leder and Mr. Krouse had, in fact, already paid themselves handsomely for their giant fund. As 50-50 partners, they kept the first year’s fees, in cash, for themselves, according to former employees. A spokesman for Sun Capital declined to comment.
Mr. Leder said that even during its worst year, Sun Capital booked a small profit. He denied that his decisions were driven by his own financial interests. And Sun Capital paid its employees cash bonuses early for 2009 , he said, because “we realized we had pulled in the reins a little too hard.”
To critics who say that Sun Capital grew too big, too fast, Mr. Leder pointed to ShopKo, which it bought for $1.2 billion. Sun brought in new management, freshened up stores and plans to merge it with another Midwest retailer, Pamida. Sun Capital has already paid itself a dividend on that deal, and Mr. Leder says he expects it will generate big returns.
In a smaller deal, Sun Capital bought the Midwest retailer Gordmans for $56 million in 2008. It doubled its returns through two dividend payments and proceeds from the Gordmans initial public offering in 2010.
When asked if private equity could withstand the heat of election-year politics, Mr. Leder seems unfazed. He is among the top contributors to the political action committee Restore Our Future, a so-called super-PAC created to help Mr. Romney. He insists his business isn’t politics — it’s private equity.
“I don’t worry about what I can’t affect,” he said.
This story, “In a Romney Believer, Private Equity’s Risks and Rewards,” oringinally appeared in The New York Times.
Copyright © 2012 The New York Times
http://tourism9.cm/ http://vkins.com/
Jeffrey States is the investment officer for the Nebraska Investment Council, another Sun Capital investor. He said some private equity firms do provide information about how their dealings might affect things like jobs. But not all investors ask for such details.
“The primary objective is returns,” Mr. States said.
Mr. Leder, for his part, has never been shy about turning a profit. He and another banker, Rodger R. Krouse, were working at Lehman Brothers when they saw the huge money-making potential of private equity. They hatched their plan to get into the business one April afternoon in 1995, after a meeting at Mr. Romney’s Bain Capital in Boston.
The executives at Bain had been grousing about a deal in which Bain had doubled its money. But the Bain executives were lamenting that if they had sold sooner, they could have made much more.
On the plane back to New York, Mr. Leder and Mr. Krouse sat stunned.
“We’re looking at each other saying, ‘This is an industry where double your money is not that good of a deal?’ ” Mr. Leder recalls.
At 10 the next morning, Mr. Leder and Mr. Krouse marched into their bosses’ offices and quit. They then decided to base their new private equity firm in Boca Raton, and became its co-chief executives, believing the location would give them an edge in spotting potential acquisitions in the Southeast before their rivals in New York and Boston. But competitors kept outbidding them for companies.
It took 20 months, but they finally got their foot in the door. Friends and family members invested in their first dozen deals. Mr. Romney also invested personally in some early transactions, including an acquisition of a company that made speakers for computers and another that made carbon paper.
(Mr. Romney’s 2011 financial disclosures included stakes worth less than $15,000 apiece in two Sun-controlled companies — a pittance, given his estimated wealth of as much as $250 million. A spokeswoman for Mr. Romney’s campaign did not respond to an e-mail or a call seeking comment.)
Sun Capital soon carved a niche in doing turnarounds. In 1997, it acquired a majority stake in a maker of injection-molded polypropylene panels. By 2002, that company had more than doubled its sales.
One success led to another. Mr. Leder and Mr. Krouse invested $1.5 million in a company that supplied parts for Corvettes and walked away with $20 million. Two Sun investors were so tickled that they bought each man a red Corvette.
Such successes aside, Mr. Leder and Mr. Krouse make something of an odd couple. Mr. Krouse has the quiet demeanor of an accountant and tends to shift in his seat when conversations turn to his private life. (Former associates say he is a family man who likes to spend his spare time reading.)
Mr. Leder, by contrast, is bigger than life. He storms into a room and seems to suck out all of the air. Several former colleagues say he appears to have a photographic memory. He speaks rapidly and rarely holds back.
In a conversation about his business dealings, he segued into how his father wanted him to be a doctor but that he opted for other pursuits because he hated dissecting frogs in biology class. And he mentioned how he used crushed graham crackers as the secret ingredient in the pancakes he used to make for his youngest daughter.
He also said he started reading The Wall Street Journal when he was 12, and that in high school he delivered chickens and started a D. J. business. And he said that he typically sleeps for two to three hours at a time at night before waking up to answer e-mails.
AS word got out about Sun Capital’s early investment successes, pension funds and endowments were soon clamoring to get into its funds. Sun Capital raised fund after fund, each bigger than the last. In 2007, it raised $6 billion for a single fund. Sun Capital had hit the big time.
Then the Great Recession struck. The private equity boom turned bust fast.
By early 2009, numerous companies that Sun Capital had acquired were struggling to survive. Sun was racked by internal dissent. And Mr. Leder’s personal life had hit a rough patch.
By that spring, several Sun companies, including Drug Fair, Big 10 Tires and Mark IV Industries, had spiraled into bankruptcy. The firm had already taken losses on a large deal, a hostile takeover of the fashion company Kellwood, which Sun Capital had acquired without the usual due diligence.
Then came other, more personal blows. Mr. Leder and Mr. Krouse both lost money that they had personally invested with Bernard L. Madoff. Mr. Leder and his wife of 22 years, Lisa, began to go through a messy divorce. She demanded half of his total wealth, which she contended was more than $400 million at the time. The two eventually settled for an undisclosed amount.
Its business in retreat, Sun Capital laid off a number of its own employees. Those who stayed were told they would receive no cash bonuses. Instead, everyone was given a bigger slice of the portfolio of companies that, at that time, was losing value every day.
Angry employees fired off a list of dozens of pointed questions to Mr. Leder and Mr. Krouse, asking how much money the two co-founders had been paid and how much they had taken out of Sun Capital. The employees wanted to know how a firm that had just raised a $6 billion fund, and which was collecting about $120 million a year in management fees alone, could possibly be running low on cash.
Mr. Leder and Mr. Krouse had, in fact, already paid themselves handsomely for their giant fund. As 50-50 partners, they kept the first year’s fees, in cash, for themselves, according to former employees. A spokesman for Sun Capital declined to comment.
Mr. Leder said that even during its worst year, Sun Capital booked a small profit. He denied that his decisions were driven by his own financial interests. And Sun Capital paid its employees cash bonuses early for 2009 , he said, because “we realized we had pulled in the reins a little too hard.”
To critics who say that Sun Capital grew too big, too fast, Mr. Leder pointed to ShopKo, which it bought for $1.2 billion. Sun brought in new management, freshened up stores and plans to merge it with another Midwest retailer, Pamida. Sun Capital has already paid itself a dividend on that deal, and Mr. Leder says he expects it will generate big returns.
In a smaller deal, Sun Capital bought the Midwest retailer Gordmans for $56 million in 2008. It doubled its returns through two dividend payments and proceeds from the Gordmans initial public offering in 2010.
When asked if private equity could withstand the heat of election-year politics, Mr. Leder seems unfazed. He is among the top contributors to the political action committee Restore Our Future, a so-called super-PAC created to help Mr. Romney. He insists his business isn’t politics — it’s private equity.
“I don’t worry about what I can’t affect,” he said.
This story, “In a Romney Believer, Private Equity’s Risks and Rewards,” oringinally appeared in The New York Times.
Copyright © 2012 The New York Times
http://tourism9.cm/ http://vkins.com/
In a Romney Believer, Private Equity’s Risks and Rewards
IT was, the gossip pages would later report, the talk of the Hamptons — a midsummer night’s bacchanal in the playground of the 1 percent.
Beyond the windswept dunes in Bridgehampton, at a $400,000-a-month oceanfront mansion, bright young things bubbled up and the Champagne flowed fast. Into the small hours, professional dancers in exotic clothing gyrated atop platforms. One couple twirled flaming torches. The sounds of techno boomed over the beach.
The New York Post summed up the evening’s Dionysian mysteries with the following headline: “Nude Frolic in Tycoon’s Pool.”
The Post’s tycoon, and the party’s host, was a financier named Marc J. Leder, and those weekend revels last July had the East End of Long Island buzzing. Like many deal makers, though, Mr. Leder, 50, is virtually unknown outside financial circles. But from his headquarters in Boca Raton, Fla., he presides over a multibillion-dollar private empire. He is a practitioner of a Wall Street art that helped define an age of hyperwealth, and which has now been dragged into the white-hot spotlight of presidential politics: private equity.
It was through private equity that one Republican candidate, Mitt Romney, amassed his wealth — and, it turns out, it was through private equity that Mr. Romney first met Mr. Leder. A couple of months after the blowout in Bridgehampton, Mr. Leder was host for a fund-raiser at his Boca Raton home for Mr. Romney’s campaign. But the connection goes back even further. Years ago, a visit to Mr. Romney’s investment firm inspired Mr. Leder to get into private equity in the first place. Mr. Romney was an early investor in some of the deals done by Mr. Leder’s investment company, Sun Capital, which today oversees about $8 billion in equity.
Mr. Romney’s own time in the private equity business, at Bain Capital, has provoked fierce attacks from Republican rivals and others. It has also prompted a lot of questions, including the big one: What good is this business, anyway? Detractors say private equity has enriched a handful of financiers at the expense of ordinary Americans. The deal makers, this line goes, buy companies and then bleed the life out of them. Jobs are often among the casualties.
Whether there’s truth to such claims depends on whom you ask. Private equity executives, as well as Mr. Romney, who left Bain in 1999, say the industry fixes troubled companies and ultimately creates jobs. Whatever the case, three decades after this sort of deal-making burst onto the scene in the merger mania of the 1980s, there are surprisingly few solid answers from either side.
What is certain is that buyout specialists upended the old order and made vast fortunes for themselves. Fueled by easy money from banks, and from endowments and pension funds, these private investors were able to buy companies with borrowed money and put down relatively little of their own cash.
Today, many of these private kingdoms rival the nation’s mightiest public companies. In all, the private equity industry oversees $3 trillion in global assets, according to Preqin, the research firm. Buyout kings control more than 14,000 American companies, including brands like Hilton Hotels and Burger King.
BUT financiers weren’t the only ones to embrace private equity. On the campaign trail, Rick Perry called private equity artists “vulture capitalists.” But as governor of Texas, he blessed the largest corporate buyout in history — the $44.4 billion takeover of the utility TXU by several investment firms in 2007. Indeed, as in many other places nationwide, public pension funds in Texas used public money to bet on private equity, in hopes of generating the investment returns they needed to pay retirees.
Against this backdrop, the story of Marc Leder might seem a footnote in the nation’s economic ledger. But it is a story worth knowing. That’s because, in many ways, Mr. Leder personifies the debates now swirling around this lucrative corner of finance.
To his critics, he represents everything that’s wrong with this setup. In recent years, a large number of the companies that Sun Capital has acquired have run into serious trouble, eliminated jobs or both. Since 2008, some 25 of its companies — roughly one of every five it owns — have filed for bankruptcy.
Among the losers was Friendly’s, the restaurant chain known for its Jim Dandy sundaes and Fribble shakes. (Sun Capital was accused by a federal agency of pushing Friendly’s into bankruptcy last year to avoid paying pensions to the chain’s employees; Sun disputes that contention.) Another company that sank into bankruptcy was Real Mex, owner of the Chevy’s restaurant chain. In that case, Mr. Leder lost money for his investors not once, but twice.
Yet Mr. Leder doesn’t seem to be suffering too much himself. In fact, he is living so large that he can’t avoid the limelight. Last July, he used part of his personal fortune to join a group of investors in buying the Philadelphia 76ers. In December, he was spotted on St. Bart’s with Russell Simmons, of Def Jam and Phat Farm fame, and Rachel Zoe, the celebrity stylist. That again landed him in The New York Post, which dubbed him a “private equity party boy.”
Mr. Leder says that characterization couldn’t be further from the truth. He focuses on what are known as “scratch and dent” deals, which typically involve companies that are struggling to begin with. One-third of the companies Sun Capital has bought are losing money. It’s a tricky game in good times, and downright dangerous in bad ones. Mr. Leder and his defenders say Sun Capital has saved many companies and, with them, many, many jobs.
“I think the portrayal of me as having wild and crazy parties is absolutely incorrect,” Mr. Leder said during a wide-ranging interview in Sun Capital’s offices in Midtown Manhattan. “I spend a small percentage throwing some parties, attending some parties. I like music. I like to dance. But rather than reporting on how I spend 340 days and nights of my year, the media likes to report on the other 25.”
Paul Jones, chief executive of the Midwest retailer ShopKo, which Sun Capital acquired in 2005, said Mr. Leder has kept a close eye on his company. “I get e-mails from him, usually on Sunday mornings, in which he’s says we had an impressive week or sometimes it’s just to give our team an ‘attaboy,’ ” Mr. Jones said.
FOR more than 28 years, Helen Smolak worked at the Friendly’s in Denham, Mass. Day in and day out, she served Big Beef Burgers and Fribbles, collected tips and made a decent living.
All that changed one evening last October. That was when Ms. Smolak’s supervisor called to tell her the restaurant was shutting down — immediately.
“It was my family. That was my home,” said Ms. Smolak, 56. “Friendly’s always came first. I was supposed to retire with these people and with this company.”
What went wrong? Sun Capital acquired Friendly’s in 2007 for $395 million — an 8 percent premium based on Friendly’s stock price at the time. But now Sun was saying the weak economy and the rising prices of milk and other ingredients had pushed Friendly’s, a 76-year-old chain, to the brink.
The Pension Benefit Guaranty Corporation, the federal agency that helps safeguard corporate pensions, wasn’t so sure. It accused Sun Capital in bankruptcy court filings of using the bankruptcy to shift Friendly’s pension burden onto the agency.
“That’s absolutely not true,” Mr. Leder said. Friendly’s pension fund, he said, was underfunded well before Sun Capital bought the company. The outcome, he added, is simply the way the bankruptcy process works.
“We don’t make the rules,” he said with a shrug. He said the matter was settled with the agency for a “nominal” sum.
Bankruptcy is never pretty. But, in this case, Sun Capital was particularly adept at getting what it wanted. Only months after Friendly’s went bankrupt, Mr. Leder has already regained control of the company. It was a calculated move, and one that is potentially lucrative for Sun Capital and its investors. In filing for bankruptcy, Friendly’s also cut hundreds of jobs, closed dozens of restaurants and bought some time to regroup. Now, if Sun Capital can turn around Friendly’s, it might eventually be able to sell the chain at a profit.
And profit, after all, is what private equity is really about. Among the Sun Capital investors that stand to benefit from all of this are the New York State Teachers’ Retirement System, the Indiana State Teachers’ Retirement Fund and the Ford Foundation.
Jeffrey States is the investment officer for the Nebraska Investment Council, another Sun Capital investor. He said some private equity firms do provide information about how their dealings might affect things like jobs. But not all investors ask for such details.
“The primary objective is returns,” Mr. States said.
Mr. Leder, for his part, has never been shy about turning a profit. He and another banker, Rodger R. Krouse, were working at Lehman Brothers when they saw the huge money-making potential of private equity. They hatched their plan to get into the business one April afternoon in 1995, after a meeting at Mr. Romney’s Bain Capital in Boston.
The executives at Bain had been grousing about a deal in which Bain had doubled its money. But the Bain executives were lamenting that if they had sold sooner, they could have made much more.
On the plane back to New York, Mr. Leder and Mr. Krouse sat stunned.
“We’re looking at each other saying, ‘This is an industry where double your money is not that good of a deal?’ ” Mr. Leder recalls.
At 10 the next morning, Mr. Leder and Mr. Krouse marched into their bosses’ offices and quit. They then decided to base their new private equity firm in Boca Raton, and became its co-chief executives, believing the location would give them an edge in spotting potential acquisitions in the Southeast before their rivals in New York and Boston. But competitors kept outbidding them for companies.
It took 20 months, but they finally got their foot in the door. Friends and family members invested in their first dozen deals. Mr. Romney also invested personally in some early transactions, including an acquisition of a company that made speakers for computers and another that made carbon paper.
(Mr. Romney’s 2011 financial disclosures included stakes worth less than $15,000 apiece in two Sun-controlled companies — a pittance, given his estimated wealth of as much as $250 million. A spokeswoman for Mr. Romney’s campaign did not respond to an e-mail or a call seeking comment.)
Sun Capital soon carved a niche in doing turnarounds. In 1997, it acquired a majority stake in a maker of injection-molded polypropylene panels. By 2002, that company had more than doubled its sales.
One success led to another. Mr. Leder and Mr. Krouse invested $1.5 million in a company that supplied parts for Corvettes and walked away with $20 million. Two Sun investors were so tickled that they bought each man a red Corvette.
Such successes aside, Mr. Leder and Mr. Krouse make something of an odd couple. Mr. Krouse has the quiet demeanor of an accountant and tends to shift in his seat when conversations turn to his private life. (Former associates say he is a family man who likes to spend his spare time reading.)
Mr. Leder, by contrast, is bigger than life. He storms into a room and seems to suck out all of the air. Several former colleagues say he appears to have a photographic memory. He speaks rapidly and rarely holds back.
In a conversation about his business dealings, he segued into how his father wanted him to be a doctor but that he opted for other pursuits because he hated dissecting frogs in biology class. And he mentioned how he used crushed graham crackers as the secret ingredient in the pancakes he used to make for his youngest daughter.
He also said he started reading The Wall Street Journal when he was 12, and that in high school he delivered chickens and started a D. J. business. And he said that he typically sleeps for two to three hours at a time at night before waking up to answer e-mails.
AS word got out about Sun Capital’s early investment successes, pension funds and endowments were soon clamoring to get into its funds. Sun Capital raised fund after fund, each bigger than the last. In 2007, it raised $6 billion for a single fund. Sun Capital had hit the big time.
Then the Great Recession struck. The private equity boom turned bust fast.
By early 2009, numerous companies that Sun Capital had acquired were struggling to survive. Sun was racked by internal dissent. And Mr. Leder’s personal life had hit a rough patch.
By that spring, several Sun companies, including Drug Fair, Big 10 Tires and Mark IV Industries, had spiraled into bankruptcy. The firm had already taken losses on a large deal, a hostile takeover of the fashion company Kellwood, which Sun Capital had acquired without the usual due diligence.
Then came other, more personal blows. Mr. Leder and Mr. Krouse both lost money that they had personally invested with Bernard L. Madoff. Mr. Leder and his wife of 22 years, Lisa, began to go through a messy divorce. She demanded half of his total wealth, which she contended was more than $400 million at the time. The two eventually settled for an undisclosed amount.
Its business in retreat, Sun Capital laid off a number of its own employees. Those who stayed were told they would receive no cash bonuses. Instead, everyone was given a bigger slice of the portfolio of companies that, at that time, was losing value every day.
Angry employees fired off a list of dozens of pointed questions to Mr. Leder and Mr. Krouse, asking how much money the two co-founders had been paid and how much they had taken out of Sun Capital. The employees wanted to know how a firm that had just raised a $6 billion fund, and which was collecting about $120 million a year in management fees alone, could possibly be running low on cash.
Mr. Leder and Mr. Krouse had, in fact, already paid themselves handsomely for their giant fund. As 50-50 partners, they kept the first year’s fees, in cash, for themselves, according to former employees. A spokesman for Sun Capital declined to comment.
Mr. Leder said that even during its worst year, Sun Capital booked a small profit. He denied that his decisions were driven by his own financial interests. And Sun Capital paid its employees cash bonuses early for 2009 , he said, because “we realized we had pulled in the reins a little too hard.”
To critics who say that Sun Capital grew too big, too fast, Mr. Leder pointed to ShopKo, which it bought for $1.2 billion. Sun brought in new management, freshened up stores and plans to merge it with another Midwest retailer, Pamida. Sun Capital has already paid itself a dividend on that deal, and Mr. Leder says he expects it will generate big returns.
In a smaller deal, Sun Capital bought the Midwest retailer Gordmans for $56 million in 2008. It doubled its returns through two dividend payments and proceeds from the Gordmans initial public offering in 2010.
When asked if private equity could withstand the heat of election-year politics, Mr. Leder seems unfazed. He is among the top contributors to the political action committee Restore Our Future, a so-called super-PAC created to help Mr. Romney. He insists his business isn’t politics — it’s private equity.
“I don’t worry about what I can’t affect,” he said.
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The New York Post summed up the evening’s Dionysian mysteries with the following headline: “Nude Frolic in Tycoon’s Pool.”
The Post’s tycoon, and the party’s host, was a financier named Marc J. Leder, and those weekend revels last July had the East End of Long Island buzzing. Like many deal makers, though, Mr. Leder, 50, is virtually unknown outside financial circles. But from his headquarters in Boca Raton, Fla., he presides over a multibillion-dollar private empire. He is a practitioner of a Wall Street art that helped define an age of hyperwealth, and which has now been dragged into the white-hot spotlight of presidential politics: private equity.
It was through private equity that one Republican candidate, Mitt Romney, amassed his wealth — and, it turns out, it was through private equity that Mr. Romney first met Mr. Leder. A couple of months after the blowout in Bridgehampton, Mr. Leder was host for a fund-raiser at his Boca Raton home for Mr. Romney’s campaign. But the connection goes back even further. Years ago, a visit to Mr. Romney’s investment firm inspired Mr. Leder to get into private equity in the first place. Mr. Romney was an early investor in some of the deals done by Mr. Leder’s investment company, Sun Capital, which today oversees about $8 billion in equity.
Mr. Romney’s own time in the private equity business, at Bain Capital, has provoked fierce attacks from Republican rivals and others. It has also prompted a lot of questions, including the big one: What good is this business, anyway? Detractors say private equity has enriched a handful of financiers at the expense of ordinary Americans. The deal makers, this line goes, buy companies and then bleed the life out of them. Jobs are often among the casualties.
Whether there’s truth to such claims depends on whom you ask. Private equity executives, as well as Mr. Romney, who left Bain in 1999, say the industry fixes troubled companies and ultimately creates jobs. Whatever the case, three decades after this sort of deal-making burst onto the scene in the merger mania of the 1980s, there are surprisingly few solid answers from either side.
What is certain is that buyout specialists upended the old order and made vast fortunes for themselves. Fueled by easy money from banks, and from endowments and pension funds, these private investors were able to buy companies with borrowed money and put down relatively little of their own cash.
Today, many of these private kingdoms rival the nation’s mightiest public companies. In all, the private equity industry oversees $3 trillion in global assets, according to Preqin, the research firm. Buyout kings control more than 14,000 American companies, including brands like Hilton Hotels and Burger King.
BUT financiers weren’t the only ones to embrace private equity. On the campaign trail, Rick Perry called private equity artists “vulture capitalists.” But as governor of Texas, he blessed the largest corporate buyout in history — the $44.4 billion takeover of the utility TXU by several investment firms in 2007. Indeed, as in many other places nationwide, public pension funds in Texas used public money to bet on private equity, in hopes of generating the investment returns they needed to pay retirees.
Against this backdrop, the story of Marc Leder might seem a footnote in the nation’s economic ledger. But it is a story worth knowing. That’s because, in many ways, Mr. Leder personifies the debates now swirling around this lucrative corner of finance.
To his critics, he represents everything that’s wrong with this setup. In recent years, a large number of the companies that Sun Capital has acquired have run into serious trouble, eliminated jobs or both. Since 2008, some 25 of its companies — roughly one of every five it owns — have filed for bankruptcy.
Among the losers was Friendly’s, the restaurant chain known for its Jim Dandy sundaes and Fribble shakes. (Sun Capital was accused by a federal agency of pushing Friendly’s into bankruptcy last year to avoid paying pensions to the chain’s employees; Sun disputes that contention.) Another company that sank into bankruptcy was Real Mex, owner of the Chevy’s restaurant chain. In that case, Mr. Leder lost money for his investors not once, but twice.
Yet Mr. Leder doesn’t seem to be suffering too much himself. In fact, he is living so large that he can’t avoid the limelight. Last July, he used part of his personal fortune to join a group of investors in buying the Philadelphia 76ers. In December, he was spotted on St. Bart’s with Russell Simmons, of Def Jam and Phat Farm fame, and Rachel Zoe, the celebrity stylist. That again landed him in The New York Post, which dubbed him a “private equity party boy.”
Mr. Leder says that characterization couldn’t be further from the truth. He focuses on what are known as “scratch and dent” deals, which typically involve companies that are struggling to begin with. One-third of the companies Sun Capital has bought are losing money. It’s a tricky game in good times, and downright dangerous in bad ones. Mr. Leder and his defenders say Sun Capital has saved many companies and, with them, many, many jobs.
“I think the portrayal of me as having wild and crazy parties is absolutely incorrect,” Mr. Leder said during a wide-ranging interview in Sun Capital’s offices in Midtown Manhattan. “I spend a small percentage throwing some parties, attending some parties. I like music. I like to dance. But rather than reporting on how I spend 340 days and nights of my year, the media likes to report on the other 25.”
Paul Jones, chief executive of the Midwest retailer ShopKo, which Sun Capital acquired in 2005, said Mr. Leder has kept a close eye on his company. “I get e-mails from him, usually on Sunday mornings, in which he’s says we had an impressive week or sometimes it’s just to give our team an ‘attaboy,’ ” Mr. Jones said.
FOR more than 28 years, Helen Smolak worked at the Friendly’s in Denham, Mass. Day in and day out, she served Big Beef Burgers and Fribbles, collected tips and made a decent living.
All that changed one evening last October. That was when Ms. Smolak’s supervisor called to tell her the restaurant was shutting down — immediately.
“It was my family. That was my home,” said Ms. Smolak, 56. “Friendly’s always came first. I was supposed to retire with these people and with this company.”
What went wrong? Sun Capital acquired Friendly’s in 2007 for $395 million — an 8 percent premium based on Friendly’s stock price at the time. But now Sun was saying the weak economy and the rising prices of milk and other ingredients had pushed Friendly’s, a 76-year-old chain, to the brink.
The Pension Benefit Guaranty Corporation, the federal agency that helps safeguard corporate pensions, wasn’t so sure. It accused Sun Capital in bankruptcy court filings of using the bankruptcy to shift Friendly’s pension burden onto the agency.
“That’s absolutely not true,” Mr. Leder said. Friendly’s pension fund, he said, was underfunded well before Sun Capital bought the company. The outcome, he added, is simply the way the bankruptcy process works.
“We don’t make the rules,” he said with a shrug. He said the matter was settled with the agency for a “nominal” sum.
Bankruptcy is never pretty. But, in this case, Sun Capital was particularly adept at getting what it wanted. Only months after Friendly’s went bankrupt, Mr. Leder has already regained control of the company. It was a calculated move, and one that is potentially lucrative for Sun Capital and its investors. In filing for bankruptcy, Friendly’s also cut hundreds of jobs, closed dozens of restaurants and bought some time to regroup. Now, if Sun Capital can turn around Friendly’s, it might eventually be able to sell the chain at a profit.
And profit, after all, is what private equity is really about. Among the Sun Capital investors that stand to benefit from all of this are the New York State Teachers’ Retirement System, the Indiana State Teachers’ Retirement Fund and the Ford Foundation.
Jeffrey States is the investment officer for the Nebraska Investment Council, another Sun Capital investor. He said some private equity firms do provide information about how their dealings might affect things like jobs. But not all investors ask for such details.
“The primary objective is returns,” Mr. States said.
Mr. Leder, for his part, has never been shy about turning a profit. He and another banker, Rodger R. Krouse, were working at Lehman Brothers when they saw the huge money-making potential of private equity. They hatched their plan to get into the business one April afternoon in 1995, after a meeting at Mr. Romney’s Bain Capital in Boston.
The executives at Bain had been grousing about a deal in which Bain had doubled its money. But the Bain executives were lamenting that if they had sold sooner, they could have made much more.
On the plane back to New York, Mr. Leder and Mr. Krouse sat stunned.
“We’re looking at each other saying, ‘This is an industry where double your money is not that good of a deal?’ ” Mr. Leder recalls.
At 10 the next morning, Mr. Leder and Mr. Krouse marched into their bosses’ offices and quit. They then decided to base their new private equity firm in Boca Raton, and became its co-chief executives, believing the location would give them an edge in spotting potential acquisitions in the Southeast before their rivals in New York and Boston. But competitors kept outbidding them for companies.
It took 20 months, but they finally got their foot in the door. Friends and family members invested in their first dozen deals. Mr. Romney also invested personally in some early transactions, including an acquisition of a company that made speakers for computers and another that made carbon paper.
(Mr. Romney’s 2011 financial disclosures included stakes worth less than $15,000 apiece in two Sun-controlled companies — a pittance, given his estimated wealth of as much as $250 million. A spokeswoman for Mr. Romney’s campaign did not respond to an e-mail or a call seeking comment.)
Sun Capital soon carved a niche in doing turnarounds. In 1997, it acquired a majority stake in a maker of injection-molded polypropylene panels. By 2002, that company had more than doubled its sales.
One success led to another. Mr. Leder and Mr. Krouse invested $1.5 million in a company that supplied parts for Corvettes and walked away with $20 million. Two Sun investors were so tickled that they bought each man a red Corvette.
Such successes aside, Mr. Leder and Mr. Krouse make something of an odd couple. Mr. Krouse has the quiet demeanor of an accountant and tends to shift in his seat when conversations turn to his private life. (Former associates say he is a family man who likes to spend his spare time reading.)
Mr. Leder, by contrast, is bigger than life. He storms into a room and seems to suck out all of the air. Several former colleagues say he appears to have a photographic memory. He speaks rapidly and rarely holds back.
In a conversation about his business dealings, he segued into how his father wanted him to be a doctor but that he opted for other pursuits because he hated dissecting frogs in biology class. And he mentioned how he used crushed graham crackers as the secret ingredient in the pancakes he used to make for his youngest daughter.
He also said he started reading The Wall Street Journal when he was 12, and that in high school he delivered chickens and started a D. J. business. And he said that he typically sleeps for two to three hours at a time at night before waking up to answer e-mails.
AS word got out about Sun Capital’s early investment successes, pension funds and endowments were soon clamoring to get into its funds. Sun Capital raised fund after fund, each bigger than the last. In 2007, it raised $6 billion for a single fund. Sun Capital had hit the big time.
Then the Great Recession struck. The private equity boom turned bust fast.
By early 2009, numerous companies that Sun Capital had acquired were struggling to survive. Sun was racked by internal dissent. And Mr. Leder’s personal life had hit a rough patch.
By that spring, several Sun companies, including Drug Fair, Big 10 Tires and Mark IV Industries, had spiraled into bankruptcy. The firm had already taken losses on a large deal, a hostile takeover of the fashion company Kellwood, which Sun Capital had acquired without the usual due diligence.
Then came other, more personal blows. Mr. Leder and Mr. Krouse both lost money that they had personally invested with Bernard L. Madoff. Mr. Leder and his wife of 22 years, Lisa, began to go through a messy divorce. She demanded half of his total wealth, which she contended was more than $400 million at the time. The two eventually settled for an undisclosed amount.
Its business in retreat, Sun Capital laid off a number of its own employees. Those who stayed were told they would receive no cash bonuses. Instead, everyone was given a bigger slice of the portfolio of companies that, at that time, was losing value every day.
Angry employees fired off a list of dozens of pointed questions to Mr. Leder and Mr. Krouse, asking how much money the two co-founders had been paid and how much they had taken out of Sun Capital. The employees wanted to know how a firm that had just raised a $6 billion fund, and which was collecting about $120 million a year in management fees alone, could possibly be running low on cash.
Mr. Leder and Mr. Krouse had, in fact, already paid themselves handsomely for their giant fund. As 50-50 partners, they kept the first year’s fees, in cash, for themselves, according to former employees. A spokesman for Sun Capital declined to comment.
Mr. Leder said that even during its worst year, Sun Capital booked a small profit. He denied that his decisions were driven by his own financial interests. And Sun Capital paid its employees cash bonuses early for 2009 , he said, because “we realized we had pulled in the reins a little too hard.”
To critics who say that Sun Capital grew too big, too fast, Mr. Leder pointed to ShopKo, which it bought for $1.2 billion. Sun brought in new management, freshened up stores and plans to merge it with another Midwest retailer, Pamida. Sun Capital has already paid itself a dividend on that deal, and Mr. Leder says he expects it will generate big returns.
In a smaller deal, Sun Capital bought the Midwest retailer Gordmans for $56 million in 2008. It doubled its returns through two dividend payments and proceeds from the Gordmans initial public offering in 2010.
When asked if private equity could withstand the heat of election-year politics, Mr. Leder seems unfazed. He is among the top contributors to the political action committee Restore Our Future, a so-called super-PAC created to help Mr. Romney. He insists his business isn’t politics — it’s private equity.
“I don’t worry about what I can’t affect,” he said.
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2012年1月15日星期日
’11 investments up 4%: DTI
The regional office of the Department of Trade and Industry (DTI) reported a four percent increase on new fresh investments last year compared with 2010 which attributed to its investment promotion and financing facilitation activities.
Marizon Loreto, regional director of DTI-XI, said on Friday during the Kapehan sa PIA that new investments last year hit P10.998 billion while the record showed investments in 2010 were worth P9.950 billion.
“Several projects were approved and in place as results of DTI-XI’s initiatives,” Loreto said, pointing out that among the initiatives were the investment facilitation, investment matching and financing facilitation.
The agency’s field office in Davao Oriental, for instance, conducted the annual business name registration caravan in key municipalities and institutionalized the Local Economic and Investment Promotion Officers Network.
The Mati City government also revised its investment incentive code.
The DTI office in the province report about P593.356 million of total investments was generated the previous year, mostly from the industries involved on mining and coconut.
Last year, one of the top investments was the P25 billion coal-fired power project in between Davao City and Davao del Sur of Therma South Inc., a subsidiary of Aboitiz Power Corp., that could generate 300 megawatts of energy.
The tile firm-Nakayama Technology Corp. in Digos City, Davao del Sur has poured in an additional of P80 million worth of investments to venture into the production of modular kitchen facilities and accessories as its new product line.
Some projects are also expected to be on the ground this year from the investment leads in 2011 that amount to P4.982 billion. Those are the projects involved on coconut products, housing, palm oil, convention center, agriculture, Hijo resources and energy.
Edwin Banquerigo, provincial director of DTI-Davao del Sur, said two different companies already showed an intention to establish solar projects. The Phil-New Energy, for instance, has eyed to invest around P7 billion for the establishment of a 35-megawatt solar power plant.
“It would be the biggest solar project in the country once the firm would finally pursue its plan,” he said. The proposed plant is a joint project of Ayala Corp. and Mitsubishi Corp. that would be established in Darong, Sta. Cruz, Davao del Sur.
The other proposed project is the solar power plant of Inifinity, a Chinese corporation that will be using a Belgian technology. The firm plans to set up a solar power plant in Hagonoy, Davao del Sur that could generate around 20 megawatts with an investment of P3 billion.
Marizon Loreto, regional director of DTI-XI, said on Friday during the Kapehan sa PIA that new investments last year hit P10.998 billion while the record showed investments in 2010 were worth P9.950 billion.
“Several projects were approved and in place as results of DTI-XI’s initiatives,” Loreto said, pointing out that among the initiatives were the investment facilitation, investment matching and financing facilitation.
The agency’s field office in Davao Oriental, for instance, conducted the annual business name registration caravan in key municipalities and institutionalized the Local Economic and Investment Promotion Officers Network.
The Mati City government also revised its investment incentive code.
The DTI office in the province report about P593.356 million of total investments was generated the previous year, mostly from the industries involved on mining and coconut.
Last year, one of the top investments was the P25 billion coal-fired power project in between Davao City and Davao del Sur of Therma South Inc., a subsidiary of Aboitiz Power Corp., that could generate 300 megawatts of energy.
The tile firm-Nakayama Technology Corp. in Digos City, Davao del Sur has poured in an additional of P80 million worth of investments to venture into the production of modular kitchen facilities and accessories as its new product line.
Some projects are also expected to be on the ground this year from the investment leads in 2011 that amount to P4.982 billion. Those are the projects involved on coconut products, housing, palm oil, convention center, agriculture, Hijo resources and energy.
Edwin Banquerigo, provincial director of DTI-Davao del Sur, said two different companies already showed an intention to establish solar projects. The Phil-New Energy, for instance, has eyed to invest around P7 billion for the establishment of a 35-megawatt solar power plant.
“It would be the biggest solar project in the country once the firm would finally pursue its plan,” he said. The proposed plant is a joint project of Ayala Corp. and Mitsubishi Corp. that would be established in Darong, Sta. Cruz, Davao del Sur.
The other proposed project is the solar power plant of Inifinity, a Chinese corporation that will be using a Belgian technology. The firm plans to set up a solar power plant in Hagonoy, Davao del Sur that could generate around 20 megawatts with an investment of P3 billion.
2012年1月6日星期五
US Exim Bank to diversify investment portfolio in India
Hyderabad, Jan 6 (IANS) The US Export-Import Bank is looking to diversify its India portfolio, financing projects in education, healthcare and agriculture, its chairman and president Fed P. Hochberg said here Friday.
With a $7 billion commitment, India is currently the second biggest investment destination for the bank after Mexico.
‘In India, our commitments are $7 billion and at the rate India is growing this will be the single largest market in 12 to 18 months,’ said Hochberg.
Exim Bank focuses its efforts on nine countries that are building infrastructure and growing rapidly. It has already disbursed most of the $7 billion funds it committed for various projects in India.
It is considering more projects worth $2 billion.
‘We have many projects in the pipeline. Right now $2 billion projects in the full range of projects in the entire countryside from renewable energy to conventional energy to water treatment,’ he said.
The projects of $2 billion that the bank is considering do not include its commitment to Air India. He said Exim Bank would continue to support Air India. ‘Air India has been very good customer. We have supported Air India over many years. They are passing through difficulties.’
‘That is the case that we have dealt in the court in the US,’ he remarked when asked about the opposition from the US airlines to the commitment to Air India.
He pointed out that Exim Bank had also financed Jet Airways and SpiceJet. The two are among 36 airlines around the world being financed by the bank.
Hochberg said 30 percent of the projects the Exim Bank was financing in India were power projects. Since the US is one of the leaders in renewable power and petrochemicals, it is looking to invest more in these areas.
‘We are excited by power sector in India. India’s growth has been extraordinary. It is possible to continue more investment in power,’ he added.
Hochberg said solar power would be another key area of interest for Exim Bank as India has set a target of 20,000 MW of solar power by 2020. ‘We were impressed with the progress made in 2011. With new five-year plan beginning this week, we are seeing more interest.’
He also said that Exim Bank would not fund a project which is detrimental to the environment. ‘Environmental concerns are of primary interest to us. Environment is part of our mandate. Will not do projects which we believe are environmentally detrimental,’ he said when asked about environmental impact of power projects.
On corruption, the Exim Bank chief said that was something the bank was concerned about in every place in the world.
‘This is something that we take very seriously in doing our transactions and we do a lot of due diligence.’
Hochberg was talking to reporters in Hyderabad, his third and last stop in his first-ever visit to South India. He met Chief Minister Kiran Kumar Reddy and Industries Minister J. Geeta Reddy and discussed infrastructure projects in the state
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With a $7 billion commitment, India is currently the second biggest investment destination for the bank after Mexico.
‘In India, our commitments are $7 billion and at the rate India is growing this will be the single largest market in 12 to 18 months,’ said Hochberg.
Exim Bank focuses its efforts on nine countries that are building infrastructure and growing rapidly. It has already disbursed most of the $7 billion funds it committed for various projects in India.
It is considering more projects worth $2 billion.
‘We have many projects in the pipeline. Right now $2 billion projects in the full range of projects in the entire countryside from renewable energy to conventional energy to water treatment,’ he said.
The projects of $2 billion that the bank is considering do not include its commitment to Air India. He said Exim Bank would continue to support Air India. ‘Air India has been very good customer. We have supported Air India over many years. They are passing through difficulties.’
‘That is the case that we have dealt in the court in the US,’ he remarked when asked about the opposition from the US airlines to the commitment to Air India.
He pointed out that Exim Bank had also financed Jet Airways and SpiceJet. The two are among 36 airlines around the world being financed by the bank.
Hochberg said 30 percent of the projects the Exim Bank was financing in India were power projects. Since the US is one of the leaders in renewable power and petrochemicals, it is looking to invest more in these areas.
‘We are excited by power sector in India. India’s growth has been extraordinary. It is possible to continue more investment in power,’ he added.
Hochberg said solar power would be another key area of interest for Exim Bank as India has set a target of 20,000 MW of solar power by 2020. ‘We were impressed with the progress made in 2011. With new five-year plan beginning this week, we are seeing more interest.’
He also said that Exim Bank would not fund a project which is detrimental to the environment. ‘Environmental concerns are of primary interest to us. Environment is part of our mandate. Will not do projects which we believe are environmentally detrimental,’ he said when asked about environmental impact of power projects.
On corruption, the Exim Bank chief said that was something the bank was concerned about in every place in the world.
‘This is something that we take very seriously in doing our transactions and we do a lot of due diligence.’
Hochberg was talking to reporters in Hyderabad, his third and last stop in his first-ever visit to South India. He met Chief Minister Kiran Kumar Reddy and Industries Minister J. Geeta Reddy and discussed infrastructure projects in the state
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2012年1月3日星期二
Financing College Costs in 2012: Smart Tips
Most likely, your 529 plan and equity in your home are still down, but tuition keeps rising. Still, there’s money out there for students who need help with college financing. Here are 12 tips to help you attend school for less in 2012.
Go to college despite the job market
The year 2011 provided several arguments to skip college — high unemployment rates, tuition hikes and a harsh job market for grads. Go anyway.
“The jobs that are growing, the industries that are growing and the markets that are going to be available to students are those that require higher education,” says Brittania Morey, spokeswoman for the Iowa College Access Network. “Students who are choosing to go to college are preparing themselves for the work world of tomorrow.”
According to a 2010 report by Georgetown University, 63% of jobs offered by 2018 will require postsecondary education. Morey says students can cut college costs by searching for scholarships early and investigating awards in their community.
Don’t eliminate yourself
The biggest mistake students make is believing they’re not eligible for college aid. A 2009 study by Finaid.org showed that 2.3 million students who would have been eligible for the federal Pell Grant missed free college cash because they didn’t apply.
While students attending pricey institutions frequently apply for aid, the likelihood is lower at cheaper schools and community colleges, says Diana Fuentes-Michel, executive director of the California Student Aid Commission.
“That’s where folks tend to believe that they wouldn’t qualify for financial aid because of the low cost,” she says.
The U.S. Department of Education reports that all students, regardless of income or financial assets, are eligible for up to $27,000 in federal Stafford Loans over four years.
File for FAFSA fast
The Free Application for Federal Student Aid, or FAFSA, qualifies students for federal grants, loans and work-study jobs as well as some private and state-sponsored awards. Filing it as close to Jan. 1 as possible maximizes your college aid eligibility, says Lynda Forster, CEO of the financial aid consulting group Collegiate Capital Corp. in Mineola, N.Y.
“Most (families) think that financial aid forms must be completed after the tax returns are done, and that is not accurate,” she says. “You cannot wait until April. All of the money is already awarded.”
Since federal grants are distributed on a first-come, first-served basis, Forster recommends that families file the form using estimates of their income and assets. If they need to change something, families can file corrections at FAFSA.ed.gov.
Choose your major carefully
From private loan-forgiveness programs to state and federal grants, there’s money available to students majoring in high-demand fields. While the federal government offers up to $4,000 per year to future educators through the Teacher Education Assistance for College and Higher Education, or TEACH, Grant Program, individual states offer similar college financing initiatives for up-and-coming teachers, nurses, fire and emergency medical technicians, public defenders, child care employees, health care workers and those pursuing jobs in other fields.
Students who know their major can check with their school’s financial aid office to see if there are awards available in their fields. Professional organizations and nonprofits, such as the National Restaurant Association and the National Environmental Health Association, also offer awards to students in specific fields of study.
Find a ‘safety’ school
Guidance counselors recommend that students apply to an academically safe school. Martha Savery, director of community outreach for the Massachusetts Educational Financing Authority, recommends that students apply to a financially safe school, too.
“We always tell families (not to) self-select based on the cost that you see in the admissions material because many colleges and universities are able to provide a substantive financial aid package,” Savery says.
As of Oct. 29, all institutions that receive federal funding are required to post a net price calculator on their website that can help families estimate college costs with aid factored in, according to the National Center for Education Statistics. Students also can compare net prices of different schools by income level on the NCES website.
Meet the deadlines
With more students vying for aid, there’s stiff competition for dollars. Don’t eliminate yourself by missing a deadline, Savery says.
“If your child was applying for admission to XYZ university, you would not contact that admissions office and say ‘You know, I’d like just three or four more days just to tweak my essay,’” she says. “(Families) need to look at the deadlines from a financial aid perspective in exactly the same way.”
Ask the boss
A 2010 study by Business and Legal Resources, a compliance consulting firm in Old Saybrook, Conn., showed that nearly 85% of U.S. companies offer tuition reimbursement to employees. That’s up from 52% in 2007.
There are some pretty big catches. More than 75% of employers require that course work be job-related to qualify for reimbursement. Companies also may restrict how much reimbursement employees can get, require a certain grade point average or limit reimbursement to employees at a certain job level. More than 60% of companies offering reimbursement require employees to stay with the organization after completing study.
Go federal first
Federal loans are still the cheapest student loans. Through June 30, subsidized Stafford Loans will carry a 3.4% fixed interest rate. All Stafford Loans — subsidized, unsubsidized and grad loans included — disbursed after June 30 have a 6.8% fixed interest rate, according to the Department of Education. Stafford Loans are capped at $27,000 over four years for dependent students, but Morey says that federal loans to parents can help.
Through the Parent PLUS Loan, families can borrow up to the cost of attendance minus financial aid the student has received, and they’ll only pay 7.9% in interest — a rate that’s far below those of many private loans, according to DOE.
Cap those loans
Federal student loans also can be capped at 15% of a student’s “discretionary income.” That’s defined as earnings above 150% of the poverty line. For 2011, discretionary income would include earnings above $16,335 for a family of one, according to the Department of Health and Human Services. Earn less than $16,335, and the federal government won’t charge you anything for your student loan as long as your income stays below that threshold.
A double bonus is that students who make consecutive loan payments for 25 years will have their debt forgiven, according to the Oakland, Calif.-based Project on Student Debt. The time frame is reduced to 10 years for students who work in public-service professions such as teaching or social work after graduation.
Despite the tremendous potential savings, research shows that few students take advantage of the program. A White House fact sheet from October says that only about 1.3% of students with federal loans opt for income-based repayment.
Fight the hikes
Thanks to state budget cuts, tuition and fees at the average two- and four-year public institutions rose by about 7% this year, according to the College Board in New York. But in states such as Florida and California, prices at undergraduate state universities rose by 15% or more.
“The immediate kind of response to (tuition hikes) is to put it on a credit card or to look to their parents to try to get them to take a loan out,” says Fuentes-Michel.
The problem is that parents frequently can’t take on additional debt, and credit card interest rates are substantially higher than those of federal student loans. Instead of falling in the plastic trap, Fuentes-Michel recommends that students look to federal loans, private scholarships and part-time employment for college financing.
Save the right way
One of the strangest loopholes of financial aid is that how you save can impact your aid just as much as how much you save.
“Money put into a student’s name is not the place where you want to park it,” says Forster. “A student’s assets and income (are) counted much higher than a parent’s.”
While assets saved in a parent’s name can subtract up to 6 cents for every dollar from your federal need-based scholarships and grants package, every dollar of student assets takes away 20 cents, according to the White House’s National Economic Council. Money saved in a grandparent’s or relative’s name won’t count at all. However, 529 plans are one exception. Funds stored in a 529 plan in the student’s name count as parental assets, according to FinAid.org, the college financing resources website.
Reconsider 529 college savings plans
Many 529 plans lost value when the market dipped in 2008, but they’re coming back — this time with more conservative investment options. In the past two years, states including Nebraska and Indiana have added financial options insured by the Federal Deposit Insurance Corp. that allow parents to access 529 tax incentives without taking any market risks.
On top of providing federal tax-free growth, certain states also provide state tax incentives and matching grants to encourage account holders to save.
Copyright 2012, Bankrate Inc.
http://tourism9.com/
Go to college despite the job market
The year 2011 provided several arguments to skip college — high unemployment rates, tuition hikes and a harsh job market for grads. Go anyway.
“The jobs that are growing, the industries that are growing and the markets that are going to be available to students are those that require higher education,” says Brittania Morey, spokeswoman for the Iowa College Access Network. “Students who are choosing to go to college are preparing themselves for the work world of tomorrow.”
According to a 2010 report by Georgetown University, 63% of jobs offered by 2018 will require postsecondary education. Morey says students can cut college costs by searching for scholarships early and investigating awards in their community.
Don’t eliminate yourself
The biggest mistake students make is believing they’re not eligible for college aid. A 2009 study by Finaid.org showed that 2.3 million students who would have been eligible for the federal Pell Grant missed free college cash because they didn’t apply.
While students attending pricey institutions frequently apply for aid, the likelihood is lower at cheaper schools and community colleges, says Diana Fuentes-Michel, executive director of the California Student Aid Commission.
“That’s where folks tend to believe that they wouldn’t qualify for financial aid because of the low cost,” she says.
The U.S. Department of Education reports that all students, regardless of income or financial assets, are eligible for up to $27,000 in federal Stafford Loans over four years.
File for FAFSA fast
The Free Application for Federal Student Aid, or FAFSA, qualifies students for federal grants, loans and work-study jobs as well as some private and state-sponsored awards. Filing it as close to Jan. 1 as possible maximizes your college aid eligibility, says Lynda Forster, CEO of the financial aid consulting group Collegiate Capital Corp. in Mineola, N.Y.
“Most (families) think that financial aid forms must be completed after the tax returns are done, and that is not accurate,” she says. “You cannot wait until April. All of the money is already awarded.”
Since federal grants are distributed on a first-come, first-served basis, Forster recommends that families file the form using estimates of their income and assets. If they need to change something, families can file corrections at FAFSA.ed.gov.
Choose your major carefully
From private loan-forgiveness programs to state and federal grants, there’s money available to students majoring in high-demand fields. While the federal government offers up to $4,000 per year to future educators through the Teacher Education Assistance for College and Higher Education, or TEACH, Grant Program, individual states offer similar college financing initiatives for up-and-coming teachers, nurses, fire and emergency medical technicians, public defenders, child care employees, health care workers and those pursuing jobs in other fields.
Students who know their major can check with their school’s financial aid office to see if there are awards available in their fields. Professional organizations and nonprofits, such as the National Restaurant Association and the National Environmental Health Association, also offer awards to students in specific fields of study.
Find a ‘safety’ school
Guidance counselors recommend that students apply to an academically safe school. Martha Savery, director of community outreach for the Massachusetts Educational Financing Authority, recommends that students apply to a financially safe school, too.
“We always tell families (not to) self-select based on the cost that you see in the admissions material because many colleges and universities are able to provide a substantive financial aid package,” Savery says.
As of Oct. 29, all institutions that receive federal funding are required to post a net price calculator on their website that can help families estimate college costs with aid factored in, according to the National Center for Education Statistics. Students also can compare net prices of different schools by income level on the NCES website.
Meet the deadlines
With more students vying for aid, there’s stiff competition for dollars. Don’t eliminate yourself by missing a deadline, Savery says.
“If your child was applying for admission to XYZ university, you would not contact that admissions office and say ‘You know, I’d like just three or four more days just to tweak my essay,’” she says. “(Families) need to look at the deadlines from a financial aid perspective in exactly the same way.”
Ask the boss
A 2010 study by Business and Legal Resources, a compliance consulting firm in Old Saybrook, Conn., showed that nearly 85% of U.S. companies offer tuition reimbursement to employees. That’s up from 52% in 2007.
There are some pretty big catches. More than 75% of employers require that course work be job-related to qualify for reimbursement. Companies also may restrict how much reimbursement employees can get, require a certain grade point average or limit reimbursement to employees at a certain job level. More than 60% of companies offering reimbursement require employees to stay with the organization after completing study.
Go federal first
Federal loans are still the cheapest student loans. Through June 30, subsidized Stafford Loans will carry a 3.4% fixed interest rate. All Stafford Loans — subsidized, unsubsidized and grad loans included — disbursed after June 30 have a 6.8% fixed interest rate, according to the Department of Education. Stafford Loans are capped at $27,000 over four years for dependent students, but Morey says that federal loans to parents can help.
Through the Parent PLUS Loan, families can borrow up to the cost of attendance minus financial aid the student has received, and they’ll only pay 7.9% in interest — a rate that’s far below those of many private loans, according to DOE.
Cap those loans
Federal student loans also can be capped at 15% of a student’s “discretionary income.” That’s defined as earnings above 150% of the poverty line. For 2011, discretionary income would include earnings above $16,335 for a family of one, according to the Department of Health and Human Services. Earn less than $16,335, and the federal government won’t charge you anything for your student loan as long as your income stays below that threshold.
A double bonus is that students who make consecutive loan payments for 25 years will have their debt forgiven, according to the Oakland, Calif.-based Project on Student Debt. The time frame is reduced to 10 years for students who work in public-service professions such as teaching or social work after graduation.
Despite the tremendous potential savings, research shows that few students take advantage of the program. A White House fact sheet from October says that only about 1.3% of students with federal loans opt for income-based repayment.
Fight the hikes
Thanks to state budget cuts, tuition and fees at the average two- and four-year public institutions rose by about 7% this year, according to the College Board in New York. But in states such as Florida and California, prices at undergraduate state universities rose by 15% or more.
“The immediate kind of response to (tuition hikes) is to put it on a credit card or to look to their parents to try to get them to take a loan out,” says Fuentes-Michel.
The problem is that parents frequently can’t take on additional debt, and credit card interest rates are substantially higher than those of federal student loans. Instead of falling in the plastic trap, Fuentes-Michel recommends that students look to federal loans, private scholarships and part-time employment for college financing.
Save the right way
One of the strangest loopholes of financial aid is that how you save can impact your aid just as much as how much you save.
“Money put into a student’s name is not the place where you want to park it,” says Forster. “A student’s assets and income (are) counted much higher than a parent’s.”
While assets saved in a parent’s name can subtract up to 6 cents for every dollar from your federal need-based scholarships and grants package, every dollar of student assets takes away 20 cents, according to the White House’s National Economic Council. Money saved in a grandparent’s or relative’s name won’t count at all. However, 529 plans are one exception. Funds stored in a 529 plan in the student’s name count as parental assets, according to FinAid.org, the college financing resources website.
Reconsider 529 college savings plans
Many 529 plans lost value when the market dipped in 2008, but they’re coming back — this time with more conservative investment options. In the past two years, states including Nebraska and Indiana have added financial options insured by the Federal Deposit Insurance Corp. that allow parents to access 529 tax incentives without taking any market risks.
On top of providing federal tax-free growth, certain states also provide state tax incentives and matching grants to encourage account holders to save.
Copyright 2012, Bankrate Inc.
http://tourism9.com/
2012年1月2日星期一
The Sterling Group Acquires Liqui-Box From DuPont
HOUSTON , Dec. 30, 2011 /PRNewswire/ — The Sterling Group (” Sterling “), a Houston based private equity investment firm, today announced that its affiliated investment fund, Sterling Group Partners III, L.P., has completed the acquisition of the Liqui-Box Corporation (“Liqui-Box”) from DuPont. The acquisition is Sterling ‘s third investment in its third fund, an $820 million fund raised in 2010. Liqui-Box is the twenty-first corporate carve-out in Sterling ‘s thirty year history and the fourth business Sterling has acquired from DuPont.
(Logo: http://photos.prnewswire.com/prnh/20110802/DA46065LOGO)
Headquartered in Worthington, Ohio , Liqui-Box is a leading supplier of bag-in-box flexible packaging to the global dairy, beverage and bulk food markets. Bag-in-box packaging is primarily used in the foodservice industry to package dairy mix for milkshakes and coffee drinks, fountain beverage syrup and pumpable liquid foods such as food concentrates and sauces. Liqui-Box also produces pouches and rigid plastic water bottles. The company’s product offering includes consumables, such as fitmented bags and pouch films, as well as filling machines.
“The entire Liqui-Box team is energized to partner with Sterling who has a proven track record of successfully transitioning unique, specialty businesses like ours to more nimble, stand alone companies and equipping them for future growth. We look forward to executing on a number of initiatives to expand our business and enhance our delivery of top quality products to our customers,” said Roszann Graham, CEO of Liqui-Box.
Greg Elliott , a Partner of Sterling noted, “Roszann and her team have done an exceptional job positioning Liqui-Box as a leading provider of bag-in-box packaging solutions. Over the past several years, Liqui-Box has streamlined its operations to focus on its core products. Our focus now is to expand our global footprint, invest in technology and expand our offering of solutions to our customers.”
The acquisition was financed with equity from Sterling Group Partners III, L.P. Senior debt financing was provided by BNP Paribas and BMO, and mezzanine debt was provided by Oaktree Capital Management.
About The Sterling Group, L.P.
Founded in 1982, The Sterling Group is a private equity investment firm that targets controlling interests in basic manufacturing, distribution and industrial services companies. Typical enterprise values of these companies range from $100 million to $500 million . Sterling has sponsored the buyout of 41 platform companies and numerous add-on acquisitions for a total transaction value of approximately $9.5 billion . Currently, Sterling has $1.3 billion of committed capital under management through three funds. Current portfolio companies include North American Energy Partners, CST Industries, Roofing Supply Group, Universal Fiber Systems, Velcon Filters, Express, B&G Crane, Saxco International and Stackpole International. The Sterling Group has a proven track record with corporate carve-outs, as over half of its transactions over the last thirty years have been the purchases of businesses from large corporations.
http://tourism9.com/
(Logo: http://photos.prnewswire.com/prnh/20110802/DA46065LOGO)
Headquartered in Worthington, Ohio , Liqui-Box is a leading supplier of bag-in-box flexible packaging to the global dairy, beverage and bulk food markets. Bag-in-box packaging is primarily used in the foodservice industry to package dairy mix for milkshakes and coffee drinks, fountain beverage syrup and pumpable liquid foods such as food concentrates and sauces. Liqui-Box also produces pouches and rigid plastic water bottles. The company’s product offering includes consumables, such as fitmented bags and pouch films, as well as filling machines.
“The entire Liqui-Box team is energized to partner with Sterling who has a proven track record of successfully transitioning unique, specialty businesses like ours to more nimble, stand alone companies and equipping them for future growth. We look forward to executing on a number of initiatives to expand our business and enhance our delivery of top quality products to our customers,” said Roszann Graham, CEO of Liqui-Box.
Greg Elliott , a Partner of Sterling noted, “Roszann and her team have done an exceptional job positioning Liqui-Box as a leading provider of bag-in-box packaging solutions. Over the past several years, Liqui-Box has streamlined its operations to focus on its core products. Our focus now is to expand our global footprint, invest in technology and expand our offering of solutions to our customers.”
The acquisition was financed with equity from Sterling Group Partners III, L.P. Senior debt financing was provided by BNP Paribas and BMO, and mezzanine debt was provided by Oaktree Capital Management.
About The Sterling Group, L.P.
Founded in 1982, The Sterling Group is a private equity investment firm that targets controlling interests in basic manufacturing, distribution and industrial services companies. Typical enterprise values of these companies range from $100 million to $500 million . Sterling has sponsored the buyout of 41 platform companies and numerous add-on acquisitions for a total transaction value of approximately $9.5 billion . Currently, Sterling has $1.3 billion of committed capital under management through three funds. Current portfolio companies include North American Energy Partners, CST Industries, Roofing Supply Group, Universal Fiber Systems, Velcon Filters, Express, B&G Crane, Saxco International and Stackpole International. The Sterling Group has a proven track record with corporate carve-outs, as over half of its transactions over the last thirty years have been the purchases of businesses from large corporations.
http://tourism9.com/
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