According to a market source, FirstLight Financial made another round of cuts in late March, trimming its staff to just 15 employees. FirstLight was also said to have closed its Atlanta office as part of the restructuring. A call to the firm was not returned by press time, but one of the impacted employees, when reached on a cell phone, confirmed there was “another round of layoffs,” but wouldn’t comment as to the details.

FirstLight Financial’s Web site also hints to the rearrangement as the phone number to the Atlanta office was removed, and a notable absence now fills the area on the top navigation bar that used to direct viewers to the firm’s list of managers.

The struggles of FirstLight have been shared with a number of lenders to the middle market. Cratos Capital Partners also suffered significant cutbacks, as the firm reportedly trimmed its staff by roughly a third late last year. Also CIT Group, last month, was forced to draw down billions of emergency credit in order to keep its core commercial franchises up and running. CIT also said it would divest nonstrategic assets as a way to shore up its balance sheet. And, of course, market watchers are all too familiar with the situation at Bear Stearns.

According to lenders in the middle market, even the ones that are still active, the news is making business difficult for the entire market, as each negative headline brings yet more pessimism into the space. “There’s this recurring drumbeat around liquidity in the financial services space that you didn’t see the last time around,” says one middle-market lender, referring to the struggles of CIT and Bear.

A separate source, also a mid-market lender, notes “the list is shrinking,” referring to active players in the market. "A lot of the funds that have a CLO element are out of money or have become extremely selective."

FirstLight, based in Old Greenwich, Conn., was launched back in April 2007. In early marketing materials, it described itself as a “one-stop” source of capital, including senior debt, second lien and mezzanine debt, structured financings and equity. Ron Carapezzi, a 24-year veteran of GE, founded the firm, with initial funding of $1 billion in equity, backed by Catterton Partners and Ares Capital Corp., according to early press reports, and loans financed by Wachovia Securities and Ixis Capital Partners.

It was reported earlier this year, in January, that FirstLight had fired a third of its staff, which, according to sources, had as many as 62 employees at one point.



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