DealZone

Lenders quiet on Yell support

For Yell, the publisher of Britain’s Yellow Pages directories, there is a world of difference between 90 and 95 percent.

The lower figure is the amount of lenders backing its debt financing plan, the higher figure is the amount it needs. If it falls short of its target this evening, the company may need to go to the court to push through a deal.

(News story here.)

The proposals are vital to the heavily indebted company’s short-term future, allowing it to rejig its capital structure and tap equity investors for up to 500 million pounds.

However, the size of the company’s lender group – 300 banks and funds – is working against it. Trying to get all the lenders signed up to the debt deal has been as difficult as herding cats, bankers say.

Going to the courts for approval can be lengthy and expensive, lawyers say. For Yell, a court case may mean they will miss tapping the equity markets before the end of the year. This will disappoint, as the equity markets have backed a range of weak companies in recent weeks, such as HeidelbergCement and Ladbrokes.

Sovereign Funds sextuple down

They may be placing smaller bets, but sovereign wealth funds were back with a vengeance in the third quarter.

Global corporate mergers and acquisitions activity involving sovereign wealth funds jumped sixfold to nearly $22 billion in the quarter, with 37 deals completed. Global announced M&A volumes involving state investment vehicles stood at $21.8 billion, up from $3.6 billion in the second quarter, according to our data.

The number of deals more than doubled from 17 in the April-June period. Only two weeks into the fourth quarter, there were five pending or completed deals with a combined value of $164.7 million. At the height of the boom in the first quarter of 2006, sovereign wealth funds sealed 35 deals worth $45.7 billion.

Citi selling its jewels

Occidental Petroleum is buying Citi’s commodities trading unit Phibro for roughly its net asset value. How much that is, exactly, is hard to tell. Occidental said its net investment in Phibro is expected to be about $250 million.

The bigger figure, of course, is the $100 million associated with star trader Andrew Hall. His pay package has been the subject of much hand-wringing at Citi and in Washington.

Phibro’s management team, headed by Hall, and its employees will remain with the unit after the sale, expected to close by year-end. Citigroup shares were fractionally lower in morning trading on the New York Stock Exchange, while Occidental shares were up about 1 percent.

from Summit Notebook:

Tax evaders on the run

  By Neil Chatterjee
    The U.S. has promised it will hunt down tax evaders.
    And it seems tax evaders are on the run.
    DBS bank, based in the growing offshore financial centre of
Singapore, told Reuters it had been approached by U.S. citizens
asking for its private banking services. But when told they would
have to sign U.S. tax declaration forms, the potential clients
disappeared.  
    Swiss banks also approached DBS on the hope they could
offload troublesome U.S. clients to a location that so far has
not been reached by the strong arms of Washington or Brussels.
    DBS said no thanks. In fact many private banks and boutique
advisors now seem to be avoiding U.S. clients.
    Will this spread to other nationalities, as governments
invest in tax spies and tax havens invest in white paint?
    Is this the end of offshore private private banking?

Diamonds in the rough

Diamond pictureSomewhere out there are ailing companies in need of a turnaround specialist. These experts — also known as company doctors — parachute into troubled businesses to turn their business around.

Funds, such as Oaktree Capital, HIG Capital and Apollo Management, specialise in buying up companies in distress (either through buying equity or debt) and turning them round.

And this should be a great time for these investors — banks are loaded with stakes in troubled companies and unwieldy corporates may want to spin off unwanted businesses.

Spark needed

Could the sale of Britain’s biggest electricity distribution network help re-energise infrastructure dealmaking?

The supposedly steady business of buying and running roads, ports, and power grids has had a torrid time. The credit crunch has undermined some big infrastructure players, made it tricky to finance deals, and revealed that demand for some services — like toll roads and airports — is flakier than expected. Asset sales have run aground, instead of commanding the big premiums they would have fetched in the frantic debt-fuelled auctions of yore.

Nonetheless, optimists say the world’s long-term infrastructure needs are enormous. They are also cheered by the record $100 billion or so of funds that Preqin says are currently being raised (albeit slowly). And there may be some chinks of light on the M&A front. As Greg Roumeliotis and I wrote earlier:

S&P: No subtext in industrial exodus from benchmark

Manitowoc Co is set to be the third U.S. manufacturer dropped from the Standard & Poor’s 500 index this year — but the brains behind the benchmark said the shift does not reflect a desire to soft-pedal the sector. 

David Blitzer“Our general concern about sectors is the proportions of sectors in the market and the index should be close to one another, and close is around a percentage point or so,” said David Blitzer, an S&P managing director who chairs the index committee. “Given that the 500 is 75 to 80 percent of the total market cap of the U.S. market, we’re never going to be too far off.”

S&P said late on Monday that it would remove Manitowoc, a maker of cranes and ships, from the benchmark S&P 500 after the close of trading on Aug. 31, noting that its market capitalization ranked it last in the group.

from Global Investing:

Lambs to the slaughter

The mood was not so much one of indignant fury but quiet disappointment in Founders Hall for the Candover AGM yesterday. 

A contrite and clearly uncomfortable chairman Gerry Grimstone took the stand – looking like a schoolboy caught with his hand in the biscuit tin, wishing he could be anywhere else. 

 

He said he had lain awake at night re-examining the decisions that have devastated the share price and brought the company to the brink of sale. And it was easy to believe him.