The 2014 deal included one unusual investor: Lehman Brothers, the bank that collapsed in 2008 at the height of the financial crisis.
Lehman may be long gone from Wall Street, but its bankruptcy estate still manages a portfolio of more than $10 billion in assets, exceeding the market capitalization of fashion house Ralph Lauren Corp. or property investment firm Kimco Realty Corp.
From an office in Manhattan, Lehman's staff manage piles of cash and securities, interests in real estate and private equity investments, including a stake in Formula One motor racing.
While bankruptcy estates focus on liquidating assets for the benefit of creditors, Lehman dusted off its investing expertise last year and spent $151 million on private placement of stock in First Data.
According to a court filing, the money was spent on a "pro-rata" share of the private placement, indicating Lehman had a previous relationship with First Data. Lehman provided financing in 2007 for the buyout of First Data, which was led by KKR & Co.
"When you get a $3.5 billion vote of confidence by some fabulous investors," Bisignano told an analysts call in July 2014, "the who's who in equity investing in it gives your customers great confidence in your ability."
The private placement of stock was credited by Bisignano for providing cash to pay down First Data's debt and returning the company to profit after years of losses.
Lehman's management can make investments if they determine it will likely benefit creditors.
Lehman and First Data declined to comment on the Lehman stake.
Lehman did not disclose how the First Data investment performed.
KKR, which was the lead investor in the 2014 private placement, has estimated in securities filings the value of its investment in First Data rose about 13 percent from the private placement through June 30. However, those gains may have been offset after First Data cut the IPO price by 20 percent from the top of its target range.
Shares in First Data were little changed at $15.36 on Thursday, below the $16 IPO price.
Complex cases
Lehman emerged from bankruptcy in 2012 with a new board selected by creditors, overseen by Chairman David Pauker, formerly the executive managing director of Goldin Associates, a financial consultancy. Christopher O'Meara, a former chief financial officer of Lehman, is the chief executive.
"I do think it's remarkable both how significant Lehman's assets have turned out to be and how much they still have," said David Skeel, a professor at University of Pennsylvania Law School.
The First Data deal is not even the largest investment by the bankrupt firm. In 2012, it ponied up about $3 billion to buy two minority positions held by other banks in Archstone, an owner of apartment complexes, giving it full ownership. It later sold Archstone for $6.5 billion.
Lehman had teamed up with Tishman Speyer to acquire Archstone for $22.2 billion, including debt, in 2007.
In total, Lehman's bankruptcy estate has distributed $105.4 billion to creditors. Of that, $77.2 billion was paid to third-party claims, with the rest paid to other Lehman affiliates. While more than $1 trillion of claims were filed, the estate will recognize about $330 billion, according to court documents.
Jonathan Lipson, a professor at Temple University School of Law, said the case could still require years of work as the estate pursues lingering litigation and awaits overseas affiliates to complete their liquidations.
"Enron's estate lasted forever and ever," Lipson said, referring to the power company that filed in 2001 and closed its bankruptcy case only last year. "That's what happens with really complex cases."
source: interaksyon.com
