NEW YORK (HedgeWorld.com)–Refco Inc. announced that it has received approval from the U.S. Bankruptcy Court to sell substantially all the assets of its regulated commodities futures business to Man Financial Inc., a wholly owned subsidiary of Man Group plc, the hedge fund management firm.
It as also announced a memorandum of understanding with Forex Capital Markets LLC, a futures commission merchant, for the sale of some of its retail FX assets.
The terms of the sale of the commodities business were established at an auction Wednesday [Nov. 9], and involve the payment of US$282 million in cash and the assumption of roughly US$41 million in liabilities.
It has been a busy week for Refco news mongerers. Man announced Monday [Nov. 7] that it was submitting a bid. On the same day, the deadline for offers, Refco said that it had received five. Its new chief executive, William Sexton, expressed the company’s satisfaction with the number and quality of the bids in a statement that day.
Though the statement didn’t list the bidders, the scorecard was, in general terms, pretty well known by then. Along with Man, the bidders included a Dubai-based group, the Flowers group, which had been a stalking horse when the process began, Interactive Brokers Group, and Alaron. Alaron was later disqualified because it didn’t want to bid for the whole of the package that Refco was trying to sell.
The Dubai-based group consisted of the Dubai Investment Group, which is the investment arm of the Dubai government, as well as U.S. buyout firm Yucaipa Cos., and Marathon Asset Management LLC. A similar group (in which Marathon was not yet involved) had earlier, and publicly, offered US$828 million.
Wednesday [Nov. 9], Credit Suisse Group filed a quarterly report with the Securities and Exchange Commission indicating that it had received subpoenas and information requests from various regulators, including the SEC itself, concerning Refco’s public offering in August. That IPO is now under scrutiny because the less-than-candid bookkeeping at Refco arguably induced investors to pay more than the company was then worth. Credit Suisse was one of the three underwriters there–the others were Bank of America and Goldman Sachs. Bank of America also has acknowledged such requests. Goldman, thus far, has not commented on this point.
In the end, the winning bid by Man Financial, involved a much lower price than had floated with many of the earlier trial balloons.
Whether Man got it for a song or not, on Thursday [Nov. 10] the court approved this sale. A spokesman for Refco said Friday that the order itself isn’t yet publicly available and likely won’t be until Monday [Nov. 14], due to the Veterans Day holiday in the United States Friday.
In a statement, Chief Executive William Sexton said that the sale provides the best outcome for Refco’s employees, brokers, customers, and creditors.
“Man Financial has expressed their high regard for Refco’s people, products and services and looks forward to working with our employees to realize the potential that a combination of the businesses creates for global clients.”
Contact Bob Keane with questions or comments at [email protected].