The Distressed Debt Report - May 8, 2007

Sluggish Sales, Subprime Meltdown Force Builders to Confront Leverage Risk

Last fall, some homebuilders were still predicting that the new home market had hit bottom and that a recovery would emerge in the spring. Instead, sales cancellations have continued to swell as scores of potential buyers have forfeited deposits rather than risk a possible drop in home values. Full Story

‘Big Boy’ Letters Raise Legal Ambiguity

A Securities and Exchange Commission investigation of Barclays PLC has shined a spotlight on the potential for debt providers that sit on bankruptcy committees to trade on confidential information. And with case law and regulators’ attitudes still unclear about this subset of the insider trading issue, players in the distressed debt market are expressing concern. Full Story

Offerings Keep Coming Despite Subprime Mortgage Fears

Issuers of middle market collateralized loan obligations continued to market several new offerings last week, despite the subprime mortgage scare, which caused spreads to widen on lower-rated tranches. Full Story

• Holders of 2nd Lien Vendor Claims Against Musicland Face Hurdles
• American Capital Profit, Shares Fall
• Former Merrill Fund Manager Marchand Starting New Firm
• American Capital-backed Finance Company Raises $400M
• CapitalSouth Plans $300M Fund for Mezz and Control Equity
• LaSalle CLO Delayed for Potential BofA Sale
• UBS Shutting Down Dillon Read Hedge Fund Unit
• Gladstone Raises $45.6M
• Lehman Names New Head of Fixed Income

Universal Hospital to Repurchase $260M

Oil explorer Dune Energy sold $300 million in senior secured notes and $180 million in senior redeemable convertible preferred stock in a private offering, raising capital for an acquisition. The offering was made to qualified institutional buyers under Rule 144A of the Securities Act. Full Story