Unstructured Finance

UF’s Weekend Reads

Here is Sam Forgione’s suggested weekend reads. And a reminder to our UF readers in the US that daylight savings time begins on Sunday, so set those clocks forward 1 hour.


From The New Yorker:

Nick Paumgarten traversed the restless egos of Davos for a candid look at the event. The story captures the ambivalence many feel toward the well-hyped forum.

From The Atlantic:

Megan McCardle asks how and why companies get complacent, even when they know they’re sinking, using GM and Blockbuster as examples.

From The Economist:

The weekly magazine considers whether Indian firms, which have orchestrated $129 billion in takeovers in the past decade, will be able to restructure their companies in a way that generates value.

From Forbes:

The world’s richest man, Carlos Slim Helu, shares his thoughts on how to improve the economy in this Forbes profile.

Deals wrap: Ghana oil fields targeted

China’s top offshore oil company CNOOC has made a joint $5 billion bid with Ghana National Petroleum Corp for Kosmos Energy’s assets, a source close to the deal told Reuters. Kosmos is prized for its stake in Jubilee, one of the largest oil discoveries in the world in recent years.

Previously a $4 billion bid by Exxon Mobile for Kosmos failed because it was unable to secure Ghanaian government support. GNPC sources have told Reuters since last year that it had been talking to CNOOC about a possible bid. *View article

FT’s Alphaville blog breaks down the ramifications of Barclays losing its court battle with Lehman Brothers over its purchase of Lehman’s brokerage unit in bankruptcy proceedings in 2008. A loss could cost Barclays as much as $10 billion. *View article

Deals wrap: Mulling a Whopper of a deal

A meal is pictured at a Burger King at a restaurant in Annandale, VA, August 24, 2010.  REUTERS/Kevin Lamarque  Burger King,which has underperformed rivals and has forecast weak demand, is considering a sale, a source familiar with the situation said. One potentially interested party is 3i Group, a source told Reuters.  *View article

August’s unseasonable burst of dealmaking — the busiest in over a decade — could herald a wider rebound in M&A for the remainder of the year as low interest rates, record cash piles and low stock-market values encourage chief executives to strike deals. *View article *View Seeking Alpha article on how the deals boom means trouble ahead

Regulators did not grant Lehman Brothers the same assistance as its competitors and thereby aggravated the global crisis, former Lehman Chief Executive Dick Fuld will tell a “too big to fail” commission. *View article *Full coverage

DealZone Daily

Lehman Brothers Holdings Inc used accountancy gimmicks and had been insolvent for weeks before it filed for bankruptcy in September 2008, a court-appointed examiner has found. The good news is, but there was not extensive wrongdoing.  Read the Reuters story here.

Norway’s Yara International said on Friday it would not raise its offer for Terra Industries to match or exceed a rival bid from CF Industries Holdings Inc, Reuters reported. Yara agreed last month to buy Terra for $4.1 billion to create the world’s biggest mineral fertiliser producer.

And in news from other media on Friday:

Buyout firm Advent International has appointed advisors to assess a possible sale of budget store chain Poundland, the Financial Times said. The group has hired Close Brothers to look at options.

It’s not just the leverage

If private equity is anything to go by, there is plenty of hope for hedge funds operating in the new, post-Lehman world of lower leverage.

RTXQA97A study by the Center for Entrepreneurial and Financial Studies and Capital Dynamics, out today, finds that two-thirds of private equity’s value creation is down to improving companies it owns or rising market multiples.

Leverage, in contrast, accounts for just one-third.

Hedge funds used leverage extensively in the run-up to the credit crisis and whilst it has crept up from the very low levels seen this year, some executives say it will never again reach some of the very high levels we saw.