PE feeds on Bankruptcies

March 20, 2009

KENYABack in February, Apollo Management founder Leon Black said he expected no return to the leveraged buyout salad days for at least two years, and that his and other dens of private equity would have to make do on paltry meals of distressed debt until then.

That carrion diet is still the order of the day. Caroline Humer reports that Apollo plans to take ownership of most of Charter Communications through the cable company’s reorganization in bankruptcy court. Citing three sources familiar with the situation, she says Apollo, which has purchased Charter’s debt, plans to own the majority of its equity following the bankruptcy restructuring, which includes a preplanned reorganization of its debt and an equity rights offering.

Apollo’s move seems to be more evidence that what Black said in Germany earlier this year is settling into the permafrost of the great credit freeze. “The big public-to-privates are gone the way of the dodo,” he said.

If financing really thaws (and we note ominously that a freak snow storm, heavy enough to bury several legions of groundhogs, is hitting midtown Manhattan this morning), Black said he would invest the last half of his latest fund in traditional buyouts.

Deals of the Day:

* Skincare specialist Stiefel Laboratories Inc is considering selling itself in a deal that could be worth more than $3 billion.

* Indian Oil Corp and the Indian unit of Royal Dutch Shell are front runners for buying a 50 percent stake in Reliance Industries’ retail fuel business, the Economic Times said on Friday.

* GlaxoSmithKline has sold a further chunk of its stake in Quest Diagnostics for $256 million.

* Norwegian telecom group Telenor invested an initial $250 million in Indian operator Unitech Wireless for a 33.5 percent stake and will inject the remaining $970 million in three tranches this year, Telenor said on Friday.

* Shares in Russia’s PIK Group rose by more than 24 percent on Friday after business daily Vedomosti said billionaire Suleiman Kerimov was in talks to buy 40-45 percent of the housing developer.

* Nappy material maker Fiberweb said it had agreed to acquire the 50 percent interest of its joint venture partner Nordenia International in Coronor Composites GmbH for 3.1 million euros ($4.23 million) in cash.

* Australian wheat exporter AWB Ltd said on Friday it has not had any more talks with rival ABB Grain after the two ended merger talks in December.

* Australian software firm eServGlobal cut its revenue forecast for the year to June citing order delays and volatility in customer project schedules, and said that it ended talks with external parties interested in acquiring the company.

(PHOTO: Vultures sit in a tree in the Masai Mara game reserve August 5, 2006. Picture taken August 5, 2006. REUTERS/Radu Sigheti (KENYA)

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