Are Buyout Chums Headed for a Falling Out?
The leveraged buyout club’s chummy days may be over, Breakingviews says. Not long ago, the government was investigating private equity firms for acting too clubby. However, as the brewing battle over Clear Channel Communications’ proposed $2.5 billion debt exchange suggests, it could soon be more like open warfare in the land of the barbarians, the publication says. Some private equity firms are trying to salvage overleveraged companies acquired during the boom by asking debt investors to exchange their existing holdings for other kinds of debt that may be less desirable. This is the case with Clear Channel, the radio company. The plea from its owners, Bain Capital and Thomas H. Lee, is facing resistance from creditors, according to The Financial Times. The wrinkle is that some of the creditors are rival private equity firms, like Apollo and the Blackstone Group’s debt hedge fund. Any rumble between private equity firms would be an about-face from the type of relationship they had when
