Carlyle fund faces liquidation after missed margin calls

[tpsbmam]

Source: Independent UK

Carlyle Capital Corp, an investment fund managed by the US private equity giant Carlyle Group, said yesterday it had received additional margin calls from banks that could cause it to run out of cash.

The fund's shares were suspended in Amsterdam after they lost more than half their value on Thursday when it announced it had missed margin calls. Analysts said liquidation of the fund had become a possibility.

If margin calls erode its capital and the fund is liquidated, shareholders would end up with nothing. The fund's annual report said that at the end of 2007 its lending counterparties included Citigroup, Merrill Lynch and UBS, three of the banks hit hardest by credit crunch losses.

The shares were suspended at $5 after dropping 58 per cent on Thursday. Carlyle Capital sold shares in the fund for $19 in July in a $300m initial public offering on the Euronext exchange. The fund, which invested in mortgage debt, raised its cash when fears about the US sub-prime market. Those fears forced it to reduce the size of the IPO from a planned $400m.

Read more: http://www.independent.co.uk/news/business/news/carlyle...

[EmperorHasNoClothes]

1. I feal really REALLY bad for Bush Sr.

No, really.

[Kittycat]

2. Beat me to it...

[Wilms]

7. Madeline Albright comes to mind.

Seems Carlyle isn't "worth it", now is it, Ms Albright.

http://www.fair.org/index.php?page=1084

http://www.youtube.com/watch?v=lK_QshS2EW8

[aquart]

19. So NOT going to war is a bad idea to you?

What a let's all sit in the grass and make sweet daisy chains view of the world you have.

Or do you prefer not having the option of sanctions as opposed to just bombing the shit out of them? You really think things are BETTER now?

[Wilms]

27. Nice try.

And I bet some buy that line.

But others don't make excuses like yours, or Albright's.

[aquart]

43. And some don't feel the need to demonize all things Clinton.

Some remain remarkably sane.

I was NOT making excuses. I was giving you a fair chance before giving up on you altogether.

[Wilms]

44. Well you need not threaten to give up on me. Seems a bit extreme.

And I didn't demonize all things Clinton by criticizing his Iraq policy and Albright's comment.

But I'll try to be sensitive and bear in mind that many posts are seen through the lens of a bitter primary fight.

[tpsbmam]

3. I keep hoping he's not too diversified .....

and loses TONS of his wealth.

[Festivito]

13. Poppy LEFT CARLYLE years ago. (Same as other DU post.)

http://www.democraticunderground.com/discuss/duboard.ph...

With the same quick post about Bush 41. Wow. Keeps happening.

Oh, the sarcasm is cute, you don't feel bad at all, nor sad for that matter.

[The Doctor.]

32. He was likely invested in the fund. Not being part of the group anymore

might only mean he didn't get out fast enough.

[olddad56]

35. He probably stole the money that was once in the fund.

[Festivito]

37. Rather, I think he sold high. (Could play same game W played.)

I think his involvement became too hot.

Recall that DUers could not find where the money went after removal.

Just thinking.
W played a game where the company borrows money,
tells no one about the loan,
he cashes his stock,
loan announcement is made,
stock tanks,
FEC investigates,
a Bush is in charge of FEC hiring/firing,
a strongly worded letter is written,
no charges lain.

Did Cheney play the same game with Halliburton? Needing contracts sent to them so they would keep sending him his million a year...

But, no matter, poppy may have moved on to anything else. The anti-missile system would be a great place. No oversight at all, all the money in the treasury as his call.

[tularetom]

Boo fuckin hoo

The shitty bush economy has finally bitten some of the right people in the ass.

[aquart]

17. $19 a share? They weren't targeting the rich guys.

That IPO looks to me like it was targeted to the upper middle class that wanted to feel like they were in billionaire company.

[AnneD]

36. Well,

considering his base is the haves and the have mores....I think he just screwed the haves. If I were the have mores...I'd be counting the silverware right about now.

[aquart]

39. "He"?

[AnneD]

42. Anyone that

partners with the Bush's whether politics or business.

[cliss]

38. I agree.

I think this financial crisis is going to take down some awfully big operators. ...like Poppy Bush, Dick Cheney.

Just imagine, the Sec. of the Treasury Hank Paulsen made $1 billion dollars last year kiting the subprime mortgage mess.
The more they have, the more they will lose.

"The bigger they are, the harder they fall"


NOW I know why Poppy Bush has been crying in interviews lately.

[Me.]

4. IMAGINE!

[Prisoner_Number_Six]

5. The chickens have come home & they're starting to roost.

Attaboy, Georgie Boy. Looks like this is where all your financial edumucation begins to get you what you deserve- a real chickenshit shitstorm. I'm sure all your two percenter buddies are looking on with real pride in their knowledge that they enabled all this.

[CJCRANE]

6. Shut 'em down nt

[monmouth]

8. I have this stupid grin on my face and it just won't go away!...n/t

[MasonJar]

9. I am hoping that you are right, but this is confusing to me. The big

giant Carlyle should be required to settle this I would think. If not, then why not? The reimbursement should come from them, n'est pas? Or is this just another BFEE scheme to rip others off?

[aquart]

18. Reimbursement?

What a funny, sweet world you live in.

[ben_meyers]

10. Can you imagine that next investors meeting?

Bush and Soros already hate each other, I wonder if they will try to strangle each other? I can just see to old guys rolling on the floor and swearing.

[ladywnch]

11. jr's legacey......first he screwed the country then the family business

...yeah, he showed daddy alright.....showed him to NEVER under estimate the incompetence of his son....he dumber than you think! There goes jr's trust fund!!!!

[jwirr]

12. Is this Enron II?

[0xDEADBEEF]

14. And in an unrelated new story...

George W. Bush finally admits that the economy may have slowed.


It's 3 AM, and the phone rings at the White House.
"Son, you're making me lose money!"

[aquart]

15. Wait a minute. JULY?????

They KNEW the mortgages were unstable in July. They KNEW.

Oh, they have been VERY bad boys. How can they POSSIBLY say the debt would have been secure when they were already forced to lower the IPO because word was getting out?

Anybody have clearer thinking on this? What am I missing? Because to me it looks like they wanted to dump the impending losses on the suckers.

[Karenina]

21. Bingo!

The amount they would have had to pony up to avoid default was chump change. 150 mil IIRC. They're just taking out the trash.

[barbtries]

16. a bush business

you can be sure those at the top have already appropriated much more than their share of the cash.

[L0oniX]

20. DIE Carlyle Capital Corp ...DIE ...DIE ...DIE

blood sucking war pigs

[vssmith]

22. Do I smell a government bail out ?

[Capn Sunshine]

23. What's this corporate world coming to when the vultures are on life support?

Funny to see another hedge fund crash because they were too smart by half. What's Junior going to do for a phoney-baloney job NOW?

[RobNYNY]

24. Carlyle wins again

I'm involved in this industry. While I don't understand from the press reports exactly how this deal was structured, what it probably means is this:

Last summer, Carlyle had a pool of mortgages, and it wanted to get rid of the risk and in effect sell them for cash. It put together this deal, and transferred the risk of default on the mortgages to the investors in the fund. Carlyle comes out with $300 million in cash, and the investors are now watching the pool go to hell. If anything, the owners of Carlyle are congratulating themselves on shifting the risk with such brillian timing.

[Hannah Bell]

26. yep. planned failure. n/t

[RobNYNY]

28. Yes, but ...

Without knowing the characteristics of the pool, we can't really know if $300 million was too high or low a price for a risky portfolio. $300 million may have been a deep discount (if, say, there were $500 million of mortgages in the pool) and might properly reflect the value of the pool, if it was risky. But that being said, for a pool to collapse in a little over six months is pretty amazing, since mortgage pools generally run for about 30 years. That means that a large percentage of the borrowers under the mortgages must have started defaulting very, very shortly after the bonds were shares were issued.

[Hannah Bell]

34. Why would that be surprising when

a large percentage of the borrowers didn't meet standard lending criteria - & the loans were diced & sold repeated?

I say "planned failure" because the pattern - sucking an "asset" dry, then inviting the rubes to buy it while insiders sell out - is ubiquitous through financial history, to the point where one has to assume that some of it is planned & deliberate.

[NYC]

40. Thanks for the explanation.

Welcome to DU.

[ooglymoogly]

25. They have known for a long time the end was nie for this reckless high flying pile.

My bet is that the biggest share of the capital is offshore and disappeared leaving the suckers to take the fall and the lawsuits.

[Ian_walker]

29. Was the IPO miss sold to outside investors to protect Carlyle Group itself?

If you look at the article it is essentially saying that Carlyle Group sold the IPO with full knowledge that the shares were about to go down. There will almost certainly be a big court case about this. Insider trading is really big crime. Expect the shredders at Carlyle Group to be running full blast as the subpoenas role in. With all its political arbitrage there are going to be some big names on the witness stand.

[zbdent]

30. Couldn't happen to a nicer group of people ...

[Hulk]

31. Don't be walking under any high windows on Wall Street for awhile...

I'm thinking this is the beginning of the end for the American economy...for awhile. The Great Depression is about to be relived. I've been watching my 401K dwindle down in size about 15-20% recently...and I don't think the end is in sight.

Remember....1974 when the Vietnam War dried up, so did our economy (based on bombs and military equipment). I see an instant replay on the way. When this fiasco in Iraq is finished and our "false economy" is called in, we are in for some real dry times.

Thanks chimp...and Co.

[pnwmom]

33. Obviously none of us care about the Carlyle Group, but if the

repercussions spread to banks like Citigroup, the whole US economy might be in much deeper trouble.

[dflprincess]

41. Wasn't Tony Blair supposed to go to work for them?

Does this mean he'll wind up unemployed? Not unlike in the BBC movie "The Trial of Tony Blair".