Re: Carlyle faces more margin calls

"Uncle_vito" <uncle_vito2002@[EMAIL PROTECTED]
> wrote in message 
news:UcadnfWyfaAlI0_anZ2dnUVZ_oSunZ2d@[EMAIL PROTECTED]
>I cannot believe these IDIOTS used margin.  I guess they were trying to 
>JUICE their returns.  My financial advisor said never to use margin.
>
> These idiots are not using their money so they do not care.  They are 
> investing your and my money so they do not care if they default.
>
> Vito

Every private equity firm is margined 50/50, more or less. This is only
the 
first of the margin calls.

JG

>
>
> "Papadillos" <papadillos@[EMAIL PROTECTED]
> wrote in message 
> news:C3F7E23B.5833%papadillos@[EMAIL PROTECTED]
>> Carlyle faces more margin calls
>>
>> By Henny Sender and Martin Arnold in London
>>
>> Financial Times
>> Published: March 7 2008 18:56
>>
>> The confrontation between the Carlyle Group and its bankers intensified

>> on
>> Friday as the private equity groupbs Amsterdam-listed fund teetered on

>> the
>> brink of collapse after receiving margin calls and default notices from
>> lenders.
>>
>> As analysts forecast that Carlyle Capital Corp could go bankrupt unless

>> its
>> private equity founder injects more money, bankers said the situation
was
>> likely to leave a stain on the reputation of one of the worldbs
biggest
>> buy-out firms.
>>
>> CCC said its lenders had started to liquidate its ****tfolio of 
>> residential
>> mortgage-backed securities, which was worth $21.7bn at the end of 
>> February,
>> after it had failed to meet a number of margin calls in the past week.
>>
>> Shares in CCC were suspended on the Amsterdam stock exchange as it
warned
>> that badditional margin calls and increased collateral requirements 
>> could
>> quickly deplete its liquidity and impair its capitalb.
>>
>> The company said: bManagement is closely monitoring the situation and
>> considering all available options for the company.b
>>
>> Its shares were suspended at $5, well below their $19 initial public
>> offering price last July.
>>
>> Analysts at Citigroup warned that unless Carlyle pumps more money into 
>> CCC
>> it bcould be forced into significant asset sales into a weak market or

>> could
>> face bankruptcyb. Carlyle has already extended a $150m loan to help
its
>> stricken fund.
>>
>> Carlyle, like many other funds, is locked in a showdown with banks who 
>> are
>> reducing their financing lines to funds with big investments in
mortgage 
>> and
>> cor****ate securities. But the banksb attempt to manage their exposure,

>> which
>> makes sense on an individual basis, risks precipitating a systemic 
>> crisis.
>>
>> By cutting back on their lending, the banks are forcing funds to unload
>> securities. At the same time they are increasing the likelihood of a 
>> death
>> spiral in the market as funds such as Carlylebs are selling those
debts 
>> into
>> a falling market, causing the prices to plunge further, which in turn 
>> brings
>> on additional margin calls.
>>
>> To the extent that banks hold many of those same securities, the banks
>> become victims of their own actions as they mark down their own 
>> positions.
>>
>> The crisis in the mortgage-backed securities market has also hit
Kohlberg
>> Kravis Roberts, which is struggling to keep its listed investment fund,

>> KKR
>> Financial Holdings, afloat after Standard & Poorbs cut ratings on its
>> commercialb paperb notesb thisb week.
>>
>> http://www.ft.com/cms/s/0/9025b64c-ec77-11dc-86be-0000779fd2ac.html
>>
>>
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