The buzz around the handful of LBOs yet to close is reaching fever pitch. 

One deal in particular was on everyone’s lips at a two-day private equity conference sponsored by Dow Jones this week - Clear Channel. Leaning against walls in corridors and settled in armchairs, conference-goers had hushed cellphone conversations about the $20 billion deal, still to close.

Two executives at the private equity firms buying the radio operator – Bain and Thomas H. Lee – showed up to talk about trends in the buyout industry. That wasn’t quite satisfying enough for a pack of investors who hotly pursued them after the conference (admittedly that’s an assumption that they all hold positions in the stock but one wonders why the frenzied interest otherwise). The Bain exec managed to escape by squeezing into an elevator with his press representative. ”No comment” was about the sum total that the crowd got. 

Reuters correspondent Jonathan Stempel reports that whenever the dust settles from turmoil in the bond industry, there’s likely to be one familiar winner sitting atop the debris.

Berkshire Hathaway’s Warren Buffett is well-positioned to cash in whether bond insurers get rescued as regulators seek possible new sources of capital for them, or suffer credit rating downgrades that threaten their business, or even their survival.

Berkshire, which created Berkshire Hathaway Assurance Corp on December 28 to enter the bond insurance market, has the balance sheet, credit ratings and pedigree to gain a strong foothold and become a major force, experts said. In creating a bond insurer, Buffett is counting on issuers paying him higher fees for the security of having the backing of “triple-A” rated Berkshire and its $47.08 billion cushion of cash.

He has not shown any interest in bailing out an entire business, as he tried in 1991 when he took over Salomon Brothers after a scandal involving fictitious bids on U.S. Treasury sales. That is considered one of Buffett’s worst investments.

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The BHP-Rio Tinto saga is heating up again, with a growing consensus among investors that BHP will issue a sweetened offer by next Wednesday’s “put up or shut up” deadline set by Australia’s Britain’s Takeover Panel. Rio Tinto shares surged 7.6 percent and BHP climbed 2.6 percent. “I just expect them to come back with a definite offer and get the ball rolling. And their first offer won’t be their last offer,” said Warwick Cumming, deputy head of equities at Tyndall Investment Management, which holds shares in both companies.

Surprising absolutely no one, BNP Paribas has confirmed that it is indeed weighing a takeover bid for its weakened compatriot Societe Generale, laid low by a rogue trading scandal. “We are studying it because all Europe’s banks are studying it,” said a spokesman. Of course, all of Europe’s banks except the French ones would have to overcome the government’s determination to fend off foreign “predators.”

Tata Group isn’t about to stop its acquistion binge. Already on the verge of buying Jaguar from Ford, the Indian conglomerate’s Tata Chemicals unit has agreed to acquire U.S. soda ash maker General Chemical Industrial Products for $1.005 billion from Harbinger Capital Partners.

Private equity’s “golden age” is looking a little less shiny for lenders behind the LBO boom.

Here’s what has them nervous: many LBOs were in industries which are vulnerable in a downturn; borrowers were leveraged to the hilt after a buyout, and a lot of leveraged loans are “covenant lite” — which means they lack fundamental control mechanisms.

With the specter of a recession looming, that’s enough to make even the most solid LBO credit loose its luster — which may be why banks have struggled placing $2 billion in loans behind the LBO of computer retailer CDW Corp by Madison Dearborn and Providence Equity Partners.

And the leveraged loan default rate, while at a historic low, may not give much comfort — in the case of covenant lite loans, low defaults may mean low recoveries as companies deteriorate without triggering defaults.

Of the nearly $690 billion in leveraged loans issued last year, 10 percent were covenant lite, according to Reuters LPC. That’s up from 4 percent of the $612 billion issued on 2006. Below is a chart on covenant lite issuance from RLPC.

Talk of a potential bid by BNP Paribas for its rogue trading-stricken compatriot Societe Generale pushed up SocGen shares by more than 10 percent on Tuesday, and BNP isn’t doing much to squelch the rumors. Chief Financial Officer Philippe Bordenave ducked questions on whether BNP might bid for its French rival, which it previously tried to buy in 1999, saying: “My team and I have worked around the clock to get the figures that we are publishing today. During that very short timeframe I have not had much time to elaborate much further on SocGen.” Given the French government’s determination to fend off foreign aggressors, the market seems to like BNP’s chances.

The cheap dollar has Italy’s biggest insurer Generali hunting for bargains in the United States, particularly in specialized sectors like pensions and long-term care, its co-CEO said on Wednesday. Even if the dollar strengthens, “an investment in the United States does not depend only on that, the first objective is to create value,” Sergio Balbinot said.

Lazard Chief Bruce Wasserstein has received a hefty payday: restricted stock worth $96.3 million as part of new five-year employment agreement, plus additional shares to be granted over three years at the discretion of the merger advisory firm’s compensation committee. Lazard shares are down 31 percent over the past year.

After 157 years as an elite private partnership steeped in Old World secrecy and intrigue, investment bank Lazard went public in May 2005 on the New York Stock Exchange. Alas, old habits die hard.

We submit as evidence this late breaking news release from Lazard, which waited until after U.S. markets closed Tuesday to reveal it would announce fourth-quarter results Wednesday. That translates to roughly 16 hours notice for analysts, investors and reporters who follow the activities of this expanding merger advisor.

Not that anybody is breaking the rules here, but it makes you wonder why a company held by small and big investors alike waited so long.  Certainly famed Lazard chief Bruce Wasserstein wants his efforts to get plenty of attention, right?

According to this glowing profile  in Portfolio magazine,  ”Bid ‘em up Bruce” has made a full recovery from a wealthy but somewhat marginalized banker to become an even richer, vindicated genius. That’s because he runs a firm that makes most of its money by providing advice to companies and governments and by managing money: no exotic CDOs, no ill-advised bets on mortgages, no hung LBO loans.

Analysts expect Lazard fourth-quarter earnings to soar, capping off a strong 2007  with a second half much stronger than the first. Company executives in recent months assured that the outlook for strategic M&A, or deals not involving leveraged buyout firms, should remain healthy.

Yet Lazard’s share price tells a more cautious story. Despite its lack of exposure to the credit crunch and its recent success serving as consigliere to sovereign wealth funds, Lazard stock is down 15 percent in the past month and down 31 percent over three months. The market seems to be taking the position that if corporate chiefs choose to stay on the sidelines, a firm depending on M&A will suffer.

Which brings us to Wednesday’s surprise earnings results. Investors can only hope that Lazard is more forthcoming about the outlook for its business than it was about the date of their quarterly confessional.

The air is getting thicker over at Liberty Media Corp. Liberty is seeking the ouster of IAC/InterActive Corp Chairman Barry Diller (pictured) from its board of directors in an escalating dispute over how to restructure the Internet conglomerate, legal filings showed on Monday. Liberty also wants to remove Diller’s wife, Diane Von Furstenberg, Edgar Bronfman Jr, Victor Kaufman, Arthur Martinez, Steven Rattner and Alan Spoon. Tensions between Diller and Liberty Chairman John Malone went public last week over a plan to spin off the HSN shopping network, Ticketmaster box office service, Interval time-share exchange and LendingTree morgage service from IAC. In a statement, IAC called the action “preposterous”.

The saga at Societe Generale, reeling from an alleged $7 billion fraud the banking giant said was committed by a lone rogue trader, has taken another twist. French prosecutors will not appeal a decision to throw out the accusation of fraud leveled against the trader, Jerome Kerviel, a senior judicial source said on Tuesday. This would be a blow for SocGen managers, because it is likely to spread the blame. Meanwhile, France’s economy minister, stating the obvious, said the bank is in crisis and may need to ditch its chairman. Really? Rival bank BNP Paribas may be getting giddy — speculation has reignited that France’s biggest listed lender might make a bid.

Market talk that Qatar was interested in building a stake in Julius Baer helped push the Swiss banking group’s stock up 3.5 percent on Tuesday. Julius declined to comment on the talk. Qatar Investment Authority, the Gulf Arab state’s $60 billion sovereign wealth fund, last year bought stakes in the London Stock Exchange and Nordic and Baltic bourse company OMX AG as part of a strategy to build up non-oil assets.

As protests go, this one may not be worth hiring bodyguards for. But plans by a few dozen union members to descend on Dow Jones’ annual Private Equity Analyst Outlook conference on Tuesday at New York’s Grand Hyatt hotel highlight the fact that private equity isn’t unanimously loved and supported.

“Tomorrow’s event is about a forecast for the industry,” said Evan Thies, a representative for the protesters which include a mix of unions like SEIU. “So we are going there in raincoats to say, well it’s a stormy forecast for private equity. Over the last few months it’s been harder and harder to get their deals together and … things are going to get even stormier.”

In a statement, the protesters said they’d “engage analysts and be available to media to speak about the industry and several upcoming fights that will further push private equity to discuss how it impacts job losses, the quality and safety of services and products, and the tax dodges its dealmakers use to increase profits.”  

Some of the issues they’re scrutinizing include the fees pension funds pay buyout managers and issues from investment by Sovereign Wealth Funds, as well as concerns with individual deals.

Inside, out of the storm, scheduled speakers over the two day event include Carlyle chairman Lou Gerstner and Blackstone’s chief operating officer Hamilton James.

If the takeover of Alliance Data Systems Corp. collapses under regulatory pressures, Blackstone Group would face the dubious distinction of tying with rival private equity shop Cerberus for having the largest number of withdrawn buyouts.

According to research firm Dealogic, Cerberus has had four withdrawn deals since 2006, while Blackstone and Kohlberg Kravis Roberts & Co. each have seen three deals collapse in that time.

If the $6.76 billion buyout of Alliance Data, a credit-card transaction processor, crumbles, Blackstone would tie with Cerberus, which is named after the mythical three-headed guard dog at the gates of Hades, the Greek underworld. Blackstone could not be immediately reached for comment.

Last year, 25 U.S. buyouts valued at $84.19 billion were withdrawn, up from 16 deals valued at $42.49 billion in 2006, according to Dealogic.

The problem with the Alliance Data deal isn’t related to the price tag but instead stems from regulatory conditions that could be imposed on the deal, a source familiar with the transaction said.

Still, for months, the market has doubted this deal would close. Since the deal was announced in May, Alliance Data’s stock has regularly traded below the $81.75 takeover price. Twice this month alone, Alliance Data has tried to quell market concerns about the deal by saying the buyout was not being renegotiated and it believed deal-financing remained fully committed. Alliance Data’s stock had fallen 12.5 percent in January before the announcement on Monday, which sent the stock down another 36 percent in afternoon trading.

Blackstone said the U.S. Office of the Comptroller of the Currency had demanded “unprecedented and unacceptable financial and operational requirements that would impose an unlimited and indefinite liability” on the buyout firm and its funds. These were “far in excess of any obligation” Blackstone has under the merger agreement.

The source familiar with the deal said the regulator had asked in November for an unlimited guarantee from the buyout firm, rather than the modest guarantee that had been expected. Blackstone said it was ready to work with Alliance Data to complete the deal and was willing to resubmit its proposal to the OCC.

Alliance Data said it believes Blackstone has the ability to close the deal and it would evaluate possible courses of action.

(Illustration: www.elucidationimages.com)

Alliance Data Systems says its $6.76 billion sale to private equity firm Blackstone is in jeopardy, and comments from the financial services company make it sound like this one could be headed for the courthouse. ADS said Blackstone, run by private equity guru Stephen Schwarzman (pictured left), sent it a notice after the market closed on Friday that it does not expect to win regulatory approval from the U.S. Office of the Comptroller of the Currency for the merger, and that Blackstone is unwilling to satisfy requirements that the OCC has set. Alliance Data said it thinks Blackstone can close, and strongly disagrees with it over the OCC. Shares in Alliance Data plummeted 43 percent to $37.21 in pre-market trading.

Student-lending company Sallie Mae says it settled a lawsuit over its failed buyout by a group led by JC Flowers and had received commitments for $31 billion of financing. It said the funding commitments from a group of banks replace a $30 billion interim financing put in place by Bank of America and JPMorgan as part of the planned $25 billion buyout. The buyout collapsed after the Flowers group walked away, saying that Sallie Mae had suffered a “material adverse change” to its business due to the credit market squeeze and recent legislation that slashes subsidies to student lenders.

Citigroup said in a research note that British-based bank HSBC might be interested in bidding for Societe Generale, the French bank hit by a rogue-trading scandal. “Overall, we think HSBC would be among the most convincing bidders for SG (SocGen),” Citigroup said in the note dated January 25. “The emerging Europe focused international retail unit and the CIB (corporate and investment banking)/derivatives unit would fill two holes in the HSBC footprint.”