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05 December 2023

Carlyle continues talks with lenders

By Agencies


Carlyle Capital, an affiliate of private equity firm Carlyle Group, said yesterday it was still in talks with its lenders who believe the company is in default under financing agreements.

Margin calls and default notices from lenders ballooned to more than $400 million (Dh1.5 billion) last week, Dutch-listed Carlyle Capital Corp (CCC) said.

CCC said its lenders had significantly reduced the amount they were willing to lend against the company’s portfolio of United States’ government agency AAA-rated residential mortgage-backed securities due to recent turmoil in that market.

CCC warned earlier that its cash could run out.

Some lenders may have liquidated collateral securing approximately $5bn of CCC’s debt, it said, but added that it did not receive any deficiency notices from those lenders who sold collateral to cover the borrowings.

“The company is in ongoing negotiations with the remaining lenders, who hold approximately $16bn in securities, and, if a mutually beneficial agreement is not reached, some of these lenders may also liquidate their securities,” Carlyle said.

“While these talks continue, the company has discussed and requested a standstill agreement whereby its lenders would refrain from foreclosing and liquidating their collateral, and we are awaiting responses.”

Parent Carlyle Group has a $150m exposure to CCC through a credit facility. A spokeswoman for the buyout firm on Friday refused to say whether Carlyle would provide any further support to CCC.

Carlyle Group’s affiliation with CCC includes management links as Carlyle Group partners Bill Conway and Michael Zupon sit on CCC’s board of directors.

According to CCC’s annual report, counterparties for its repurchasing agreements were as of the end of 2007: Bank of America, Bear Stearns, BNP Paribas, Calyon, Citigroup, Credit Suisse, Deutsche Bank, ING, JPMorgan, Lehman Brothers, Merrill Lynch and UBS. (Reuters)