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| Ivins, Judith Miller, BioPort Timeline continued go to Timeline begin | |
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| Carlyle Capital Nears Collapse as Rescue Talks Fail
(Update7) By Edward Evans
March 13 (Bloomberg) -- Carlyle Group said creditors plan to seize the assets of its mortgage-bond fund after it failed to meet more than $400 million of margin calls on mortgage- backed collateral that plunged in value. Carlyle Capital Corp., which began to buckle a week ago from the strain of shrinking home-loan assets, said in a statement it defaulted on about $16.6 billion of debt as of yesterday. The dollar fell to a 12-year low against the yen and European stocks tumbled. The fund fell 87 percent in Amsterdam trading. Carlyle Group, co-founded by David Rubenstein, tapped public markets for $300 million in July to fuel the fund just as rising foreclosures caused credit markets to seize up. In the past month, managers led by Peloton Partners LLP have closed at least a dozen funds, sold assets or sought fresh capital as banks tightened lending standards. ``If Carlyle's lenders want their money right away, they'll liquidate the fund,'' said Hank Calenti, a London-based analyst at RBC Capital Markets. ``That will put pressure on already stressed credit markets.'' Lenders will ``promptly'' take over all of its remaining assets after it failed to reach an agreement with lenders, Carlyle Capital said. Any remaining debt is expected to go into default ``soon,'' the fund added. `Single Fund' The fund's losses were caused by ``excessive leverage,'' said Arthur Levitt, a senior Carlyle adviser, in a Bloomberg Radio interview today. ``This did not affect the overall Carlyle enterprise,'' said Levitt, former chairman of the Securities and Exchange Commission and a board member of Bloomberg LP, the parent of Bloomberg News. ``This was a single fund, and I suspect as this plays out, you are going to see a lot of other private-equity companies, a lot of banks, going down the same road,'' he said. Carlyle Capital's plea for refinancing on residential mortgage-backed securities failed late yesterday after a pricing service used by some lenders reported a decrease in the value of the assets, the firm said. ``The basis on which lenders are willing to provide financing against the company's collateral has changed so substantially that a successful refinancing is not possible,'' Carlyle said in the statement. It expects additional margin calls today of $97.5 million. `All Options' Carlyle Group and its funds are not liable for repurchase agreements that Carlyle Capital used to buy residential mortgage-backed securities, Hong Kong-based spokeswoman Dorothy Lee said in an e-mail today. ``The Carlyle Group's only material financial exposure to CCC is through a $150 million unsecured subordinated revolving credit agreement with CCC,'' she said. ``At this point we are exploring all options'' for Carlyle Capital, Emma Thorpe, a spokeswoman for Carlyle Group in London, said in a telephone interview. She declined to specify the options being considered. Carlyle Group said in a statement it had worked ``exhaustively'' with the fund to negotiate new financing. ``Carlyle took extraordinary measures to help CCC manage through its liquidity crisis,'' the e-mailed statement said. ``Unfortunately, extreme volatility and market movement during this liquidity crisis created a hostile environment for CCC and similar types of vehicles.'' Carlyle's fund has said its so-called agency debt has an ``implied guarantee'' from the U.S. government. Contagion Delay The industry is reeling from its worst crisis because bankers -- staggered by almost $190 billion of asset writedowns and credit losses -- are raising borrowing rates and demanding extra collateral for loans. The Standard & Poor's 500 Index fell as much as 2 percent today, gold traded at $1,000 an ounce for the first time in New York and Treasuries extended gains as investors took the collapse of the talks as a sign that credit losses are deepening. ``This is not only a problem for Carlyle,'' Jochen Felsenheimer, the Munich-based head of credit strategy at UniCredit SpA, wrote in a note to clients today. ``We expect a further flood of downgrades especially of higher-rated securities, putting enormous pressure on the system.'' Carlyle Capital originally delayed and then cut the size of its IPO by about 25 percent as the subprime contagion began. In all, the fund used about $670 million of equity to amass a $22 billion portfolio of mortgage debt. For every dollar of equity, the pool borrowed $32. ``It was a poorly conceived fund launched at the worst time,'' said Toby Nangle, a member of the strategic policy group at Baring Asset Management in London, which manages $55 billion. The shares, first sold to investors for $19 each, fell $2.45 to 35 cents today. `Monitoring Developments' ``At this moment there's no cause for us to suspend trading'' in Carlyle Capital, Paul van Dijk, a spokesman for the Dutch securities regulator AFM in Amsterdam, said in an interview today. ``We're closely monitoring developments.'' Carlyle's counterparties are a dozen Wall Street firms including Citigroup Inc. and Deutsche Bank AG, according to the fund's annual report. The banks use repurchase agreements to lend money and require securities be put up as collateral. As the perceived creditworthiness of asset-backed bonds declined, the amount of money that can be borrowed using them as collateral fell. Not the End Drake Management LLC, the New York based-firm started by former BlackRock Inc. money managers, said yesterday it may shut its largest hedge fund, while GO Capital Asset Management BV blocked clients from withdrawing cash from one of its funds. Other funds hit include Peloton Partners LLP's $1.8 billion ABS Fund, Tequesta Capital Advisor's mortgage fund and Focus Capital Investors LLC, which invested in midsize Swiss companies. ``Carlyle won't be the end of it,'' said Greg Bundy, executive chairman of Sydney-based merger advisory firm InterFinancial Ltd. and a former head of Merrill Lynch & Co.'s Australian unit. ``There's more to come. The problem is no one can give you an educated guess about how much.'' To contact the reporter on this story: Edward Evans in London at at eevans3@bloomberg.net
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BioPort had been reluctant to discuss its protracted, often tense negotiations with the government, which officials attribute partly to the Michigan plant's well-documented production problems. The plant was renovated from 1999 to 2001 to meet the drug agency's standards. The military invested some $75 million in the renovations, but even after them, agency inspectors found many deficiencies that kept the plant from making new vaccine and releasing some 500,000 existing doses until late January. Some problems have lingered, such as the company's decision in June to discard 180,000 doses of vaccine that it called substandard. Mr. Kramer characterized the incident as a "nonevent" and "a normal part of the manufacturing process." The decision, he said, "had no impact on the production schedule and our ability to meet our obligation to the government." But Anna Johnson-Winegar, a civilian microbiologist for the Army who oversees some of the military's vaccine programs, said that the incident showed how tricky it was to estimate BioPort'sproduction capacity and to figure how much surplus the company might have for non-government customers. The company's production estimates, Dr. Johnson-Winegar said, "assumes that everything will go well." "It assume a perfect world," she said. Nevertheless, Dr. Johnson-Winegar expressed some sympathy for the company in its growing frustration with the pace of the government's negotiations. "They do need money for re-capitalization," she said. "But that's difficult since they are for the moment a one-product company with one customer." At the same time, other Pentagon officials complained, BioPort's financial predicament is partly the result of its own miscalculations. "They initially underestimated how much it would cost to produce product that could meet F.D.A. standards, or how much of their costs the State of Michigan, which once owned the plant, routinely picked up," one official said. The assumption that the company could turn a profit as the sole supplier of anthrax vaccine "may have been overly optimistic," the official said. BioPort was bought in 1998 for nearly $25 million by a group of private investors, including executives who had worked at the plant under Michigan ownership; Fuad El-Hibri; and Adm. William J. Crowe Jr., a former chairman of the Joint Chiefs of Staff. Many details of BioPort's contract and its production obligations are secret. But Pentagon officials said the company was permitted to sell up to 20 percent of its annual production after it produced the estimated 3.4 million doses that the Pentagon agreed to buy in 1999. While neither the government nor the company will say how much vaccine BioPort is producing, or its production capacity, Mr. Kramer said the government was "taking delivery of doses as fast as we can produce them."
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June 18, 2006 -- WMR (Wayne Madsen) has heard through the grapevine that Karl Rove and his pimply-faced minions at the Republican National Committee and right-wing boiler shops around the country are going to target this editor WMR
Wayne Madsen New “Person of Interest” in
Anthrax Probe ? An OSI News
Exclusive ! OSI : Information THEY don’t want you to see
… Washington, June 4, 2006 : Federal investigators have
refused to comment on rumors a mysterious “ W. MADSEN” ,who
is said to have had ties to and dealings with the controversial
NSA “spy shop”,is being “looked at as a person of
interest” in the nearly five-year-old Amerithrax
investigation.
http://www.fbi.gov/anthrax/amerithraxlinks.htm We have been able to confirm there is a Wayne Madsen : self-described as a Washington-based investigative reporter, who was employed by NSA during the Reagan Administration , and who is, to judge by his website : http://www.waynemadsenreport.com/ still privy to much top-secret government information. Our informants point out that Washington, DC is not very far from Ft. Detrick, Maryland-home of the Army’s Bio-research program-and a relatively short train ride away from Princeton, NJ , location of the deadly “anthrax mailbox” .
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