The Distressed Debt Report - May 21, 2006

Senior Lenders Fight Bankrupt Firm's Payout to Sub Lenders in Sale to Icahn

An ongoing legal battle involving investment giant Carl Icahn might set a precedent making it harder for second lienholders to recover claims from bankruptcy auctions. A group of senior lenders has at least temporarily blocked an Icahn-led group holding the majority second lien position from receiving stock valued at $95 million in WestPoint Stevens, a Georgia-based manufacturer of bedding and bath towels. Full Story

The mezzanine and private equity markets stand amazed at Kohlberg Kravis Roberts’ accomplishment earlier this month of raising $5 billion for a private equity fund through a public offering of stock. But the broader meaning of KKR’s innovation for the subordinated debt markets remains open to interpretation. Some say that KKR’s public offering heralds a new wave of innovation in fundraising techniques that take advantage of individual investors’ new awareness of the private investment market. Full Story

Heavyweight Buyout Firms Raise a Combined $1.5B

Blackstone Group and Carlyle Group completed the raising of two new mezzanine funds last week giving two of the world’s biggest leverage buyout firms $1.5 billion to invest in subordinated debt. Blackstone said it raised $1.06 billion for its Mezzanine Partners II fund. New York-based Blackstone said in a May 15 statement that it now has a total of $1.6 billion under management for mezzanine investments. Full Story

• Wachovia, Goldman Raising $762M for Newspaper Acquisition
• Siguler Guff Raises $800M for Distressed Fund
• Goldman, Morgan Stanley To Provide J.L. French Exit Financing
• Prairie Capital, Other 'Sponsorless' Mezz Firms, Expand
• Former Bank One Execs Raising $40M SBIC
• Events
• Hirings and Firings

GE Antares Capital arranged $143 million in debt, including a $50 million term B loan, for Augusta Sportswear, in one of the largest recent middle market financing deals. Full Story