Having trouble seeing this email? View
online.
To ensure delivery to your inbox, please add
mergersunleashed@e.mergersunleashed.com to your address book.
Click here for
instructions on how to add mergersunleashed.com to your address
book.
| |
About Merger Mogul | Sign up now! | Manage My Account | Advertise with us | |
|
|
|
A Lookback
As someone who covers the private equity industry and has several
family members working at investment banking houses, I am constantly
reading the mainstream news and looking back, trying to figure out
exactly when everything went so wrong. Last week, I came across an
article from The New York Times, dated Sept. 30, 1999. The article talks
about easing credit to afford people the opportunity to buy houses. I
found the piece very interesting given where we are today. I have
excerpted a few passages below.
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES Published: September 30, 1999In a move that could help increase home ownership rates among low-income consumers, the Fannie Mae Corp. is easing the credit requirements on loans that it will purchase from banks and other lenders. The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans. In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's. ''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'' Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings. Danielle Fugazy danielle.fugazy@sourcemedia.com
| |
DEALSeBay Plans To Cut and BuyThe online retailer announced plans to slash 10 percent of the company’s current staff, and will acquire two online classifieds companies and an online payments business. Arsenal To Acquire Ferro's Fine Chemicals UnitArsenal Capital Partners, a New York private equity firm, has agreed to acquire the fine chemicals unit of Ferro Corp. for $66 million. National City is providing senior debt financing for the transaction, while Arsenal is investing equity from its second $500 million fund in the deal, which is expected to involve some mezzanine financing, according to Terrence Mullen, a managing director at Arsenal Capital. Guardian Buys Corporate Call CenterGuardian Capital Partners, a private equity firm that invests in lower middle market manufacturing and service companies, has acquired a controlling interest in Corporate Call Center Inc. (CCC), a privately held teleservices and call center company headquartered in Blue Bell, PA. Terms of the transaction were not disclosed. Perseus Makes Waves in Down WeekPhysicians Interactive, an e-marketing firm for pharmaceutical, biotech and medical device companies, has been acquired by a fund run by merchant bank and private equity firm Perseus. Perseus made the buy from Allscripts Healthcare Solutions, with which Physicians Interactive will maintain a two-year co-development period that will have the former owner and its old property sharing business products and services and e-prescription solutions. Terms of the deal were not disclosed. Tramuto will also serve as chief executive and vice chairman of Perseus Acquisition Holdings and will have a board seat. Other execs with Physicians Interactive will remain with the organization. Buffett To Inject $3B Into GEWarren Buffett, whose confidence in Wall Street during the reeling of the financial services sector has been well documented, will invest $3 billion into financial giant General Electric. Buffett’s vote of confidence in GE, a company whose finance arm is hard hit, comes on the same day the conglomerate announced an offering of at least $12 billion in common stock to the public. It also comes just days after Buffett swooped in and injected $5 billion in Goldman Sachs. The investment is structured so that Buffett’s Berkshire Hathaway will buy GE perpetual preferred shares in a private offering. The shares pay of dividend of 10% and are callable at a 10% premium after three years. Buffett also received warrants to buy an additional $3 billion in common stock priced at $22.25 per share over the next five years. GE’s exposure to the financial sector through its finance arm has weighed heavily on the stock of late, and just last week the company lowered third-quarter and full-year earnings expectations citing "unprecedented weakness and volatility in the financial-services markets.” The company also suspended stock buybacks and may interrupt a dividend increase that has been steady since the 1970’s. Its shares have been under pressure, and remain down about 3% in late-afternoon trading. Allied Capital Sells Norwesco EquityAllied Capital sold its stake in Norwesco Inc. to Olympus Partners, the debt- and equity-financier. Allied Capital first established a relationship with Norwesco in 2004 as a subordinated debt lender to the company, and followed up on that when its management led a buyout of the polyethylene storage tank company the following year. The news comes on the heels of the announcement that Allied’s subsidiary Ciena Capital filed for bankruptcy, which Allied, in a statement, attributed to “significant deterioration in the value of its assets as a result of increasing uncertainty in the financial markets, decreasing bid prices and a reduction in the number of loan buyers.” HCPro Purchases Beacon HealthHCPro, a portfolio company of Halyard Capital, has expanded its presence in the homecare and hospice industry with the acquisition of Beacon Health. Beacon Health provides information and published products for the homecare and hospice industry. Bedford Funding Buys AuthoriaAuthoria, Inc., a talent management solutions company has agreed to be acquired by Bedford Funding, a private equity firm, for $63.1 million. In addition to the purchase price, Bedford Funding will make an additional $8 million investment in working capital to enhance Authoria’s overall corporate growth. Authoria helps the employers achieve business results, by optimizing the way they recruit, develop, compensate, retain, and engage talent.
The Leading Authority on Corporate Growth.
| |
