Samuel Johnson once opined: "Depend upon it, sir, when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully."
This seems to be the feeling with the private equity folks at the Carlyle Group. Basically, they operate a troubled affiliate, Carlyle Capital. Unfortunately, the fund is chock-full of mortgage securities -- and, as a result, there are a variety of margin calls. Perhaps as much as $16 billion could be liquidated (in a market that doesn't want to make bids on any kind of mortgage paper).
So far, Carlyle's exposure is fairly light, with about $670 in capitalization (which includes Carlyle funds, associated investors and public shareholders). And confidence is at dire lows. After all, the shares of Carlyle Capital have been suspended (the fund is listed in Amsterdam).
No doubt, Carlyle is involved in intense discussions and is trying to secure a standstill with the creditors, which include firms like Citigroup Inc. (NYSE: C) and Bank of America Corporation (NYSE: BAC). But in the current environment, it's not easy to get financiers in a comfortable position. It seems that -- every day -- the markets continue to get worse. So why be optimistic?
In other words, it looks like Carlyle Capital may be a quick casualty of the snowballing credit crunch.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
3-10-2008 @ 7:35PM
ARMISTEAD said...
Not only the barbarians are at the gate, but so are the Abu Dhabians. Perhaps, Al Qaida is also manipulating the stock market to make U.S. assets so cheap, Osama bin Laden becomes master of the universe.
Foreigners are purchasing our national assets and stand ready to step in to buy U.S. banks and other financial institutions. Not to mention them soaking up U.S. real estate in New York City and elsewhere. Where is the Bush Treasury and Justice Department in stopping our country from being taken over by Muslim extremists manipulating the stock and real estate markets?
This is the fate of a country rapidly falling from its premier perch as the economic leader of the world to banana republic status. All in 7 years under the direction of Our National Dunce with the reverse Midas touch.
3-10-2008 @ 10:37PM
artin said...
Its mind boggling Armistead, the only way such treason can be attempted by so called Americans, this administration, is to bring down the US, and the only question is why?? Perhaps because if they bring down the US, then there is nothing standing in their way of bringing down Israel?