Creditor to predator

By Henny Sender
It was 2004 and America's housing boom was near its height – 2.2m homes were started in the US that year and, if there was one thing they all needed inside and out, it was doors. One main supplier of those: Masonite International, a Canadian company that for 80 years had been in a construction materials business William Mason, its founder, helped develop with his trademarked hardboard.
So it came as little surprise that Masonite caught the eye of the mighty Kohlberg Kravis Roberts, which days before that Christmas won management's approval for it to take over the group. Outside shareholders held out against the New York private equity house and a few months later were won round only by an improvement in the terms to value Masonite at C$3.3bn.
Four years on, with housing markets ravaged by subprime defaults and the wider crisis those triggered, Masonite finally filed this March for bankruptcy protection in the Delaware and Ontario courts. Under the ownership of KKR, which had borrowed $1.5bn from the banks and issued an additional $770m in high-yield bonds to help gain control, it had closed or consolidated two dozen facilities and, from some 15,000 staff, it was down to fewer than 8,500. Last year the group sold only 36m doors, compared with 55m in 2006.
But what is most telling of all about Masonite is who its next owners may be. They are likely to include Oaktree Capital, a little-known investment firm based in Los Angeles. Despite its low profile, Oaktree is emerging as one of the dominant players of an arcane game that will dominate the financial world this year – investing in the debt of troubled companies in anticipation that some debtholders will end up controlling them at bargain prices.
In bankruptcy, ownership of a company passes to the debtholders from those who control the equity. But in a twist of fate among the practitioners of tooth-and-claw capitalism, it is the private equity buy-out groups – which loaded with debt the companies they acquired and squeezed those assets to improve their returns – that are now about to be bested by other masters of the fleet-footed financial arts.
Among targets of these predators are many of the less happy purchases made by the world's most renowned private equity firms. “Creditors are about to become the owners of many companies,” says Howard Marks, Oaktree's chairman. “Equity owners will be wiped out. When you buy with borrowed money, there are some environments you can't withstand.”
The end of the boom brought a halt to the ownership drive by private equity that used cheap debt to acquire ever larger companies, paying a big premium over the public market. In 2005-07, the industry spent almost $2,000bn on deals, according to Carlyle Group. Now, the transfer of part of the west's corporate landscape to investors in distressed debt is just beginning.
Just like private equity, distressed debt investors are used to playing hardball to get their way. But because they thrive on the misfortunes of others, they are inevitably referred to as vultures or grave-dancers. Yet the business of Oaktree and others such as Apollo Management, Avenue Capital and Centerbridge Partnersis not for the faint of heart. It has about as much predictability as Russian roulette. Success can depend on obscure legal arguments, with billions of dollars riding on a judge's interpretation of minor technical points.
On the occasions that this pays off, however, distressed debt players can acquire companies at a fraction of the price the private equity firms paid – as little as 20 or 30 cents on the dollar.
Buy-out firms have been good at acquiring companies. But their ability to operate them has increasingly been questioned as more and more of the solid operating businesses they own default on their bequeathed debt and file for bankruptcy. The question then also becomes whether investors in distressed debt will be any better at the exigencies of day-to-day business once such groups pass into their hands.
Certainly, the approach of each varies greatly. Some are mere traders, wanting to flip their stakes on the slightest rise in the value of the debt or if they can cut a deal with other stakeholders. But Oaktree and Centerbridge are among those to have developed capabilities in owning companies for years, adding value and learning from the mistakes of their previous owners.
When the buy-out firms bought these companies during the boom years, executives claimed that the debt they were piling on to their acquisitions would not be a problem. Agreements with lenders imposed virtually no conditions, while innovations such as the ability to suspend cash interest payments on part of the debt gave added flexibility. But, like others, they underestimated the severity of the recession. “Private equity firms anticipated a 30-year storm,” says Mr Marks. “They did not anticipate a 100-year storm. They had good companies but there was too much financial engineering and too much leverage.”
By buying cheaply, reducing the debt burden and improving their operating performance, distressed investors are positioning themselves to be able to resell these businesses for huge profits.
But first they must identify companies with a sound underlying business but that are faltering because they have too little cash flow to support their debt. Then they have to determine how much a company is worth and examine how its debt is structured – as highly leveraged groups invariably have different classes of debt, each with its own place in the creditors' pecking order. The key is to guess which portion will turn into equity – and then build up control of that class of debt.
Secrecy is the key to accumulating a big enough position to be able to control a company when it hits the wall. If word gets out, the price will rise and the exercise becomes more costly as others piggyback.
Miscalculations can mean an investment ends up worth zero – “a bagel”, in Wall Street's pithy jargon. Aim too low and you can get wiped out because there is not enough money to go around. Aim too high and at best you are merely paid back. “The business is all about probabilities,” says Jeff Aronson, co-founder of Centerbridge.
That gamble is clear from what happened with Aleris, an ailing aluminium sheet maker. In the last quarter of 2008, Oaktree started buying chunks of its debt. Nobody was immediately around to piggy back. “We were like pigs in mud,” Bruce Karsh, co-head of Oaktree, recalls fondly.
TPG, the San Francisco-based private equity firm, had paid $3.5bn for control of Aleris with $850m of equity and the rest in debt. But as the economy worsened, so did the prospects of Aleris. In December, TPG had to post money with the banks on its behalf, a sign that it was standing by the company. That made the debt worth more but the big prize – control – threatened to elude Oaktree. “We can't predict what will restructure and what won't,” Mr Karsh says philosophically. “All we can do is try to identify what is good value.”
But by February, as Aleris bled, TPG had withdrawn its support and the group filed for Chapter 11. As the largest lenders, Oaktree and Apollo, which turned out also to have bought some of the debt, were asked to give the company the so-called debtor-in-possession money to function while operating under bankruptcy protection. When it emerges, the two are likely to own Aleris for a fraction of what TPG paid.
Private equity's splurge left companies with so much debt. It is harder to know which class of it will be paid off fully, which will return nothing (since recoveries are likely to be far lower than before) and which class will take over a company – the distressed debt equivalent of scoring a touchdown.
To play successfully therefore requires patience and a variety of skills as well as luck at any one of several crucial junctures. About a year ago, Oaktree and Centerbridge both began looking at the long list of good cyclical companies that were likely to have difficulty repaying their debt as the economy slowed. Unbeknowns to each other, Masonite was one that showed up on both their screens. Working independently, each monitored the company for signs of distress, which included clues such as whether it was drawing down bank lines of credit. The two then contacted the trading desks of Wall Street to let them know they were buyers and began accumulating.
Initially, Oaktree bought the bonds but quickly switched to the bank loans as it became clear that holders of the bank debt would become the new owners. “To be fair, it was a miscalculation,” Mr Karsh says.
Through last autumn and winter, Masonite was in talks with its lenders to restructure the $2.2bn debt that its sales could no longer support. An agreement was reached that would mean a Chapter 11 filing. Oaktree and Centerbridge will own the largest chunk of equity and may have control when it emerges from court protection.
Oaktree's approach is seen as more cautious and cerebral than many of its peers. “They are among the most thoughtful groups out there,” says Mark Bradley, responsible for relations with the private equity groups at Morgan Stanley. “The [recessionary] environment fits their capability perfectly.”
Mr Marks sends out letters to his investors that have acquired cult status in almost the same way as those of Warren Buffett (who threw in his lot with Oaktree in the Enron bankruptcy and has used data from Oaktree in his own letters). Among readers are Bader al-Sa'ad, head of the Kuwait Investment Authority. Although Mr Marks is a product of the University of Chicago, with its markets-know-best approach, he believes securities prices are not always right but merely reflect consensus. His favourite observation is that a 6ft man can drown in a stream whose average depth is 5ft.
Today, Oaktree is waiting to see what will happen to its investments in Masonite and in Charter Communications, the fourth largest US cable operator, which in March filed for Chapter 11 with almost $22bn (€16bn, £14.4bn) in debt. Bank lenders to Charter plan to go to court next month in an effort to block a restructuring that would give Oaktree and Apollo control.
“In 2001, in the last distressed cycle, the lesson was to jump in quickly or miss the opportunity,” says Steve Kaplan, another of the half-dozen who founded Oaktree six years earlier. This time, the cycle is likely to last far longer. “Once we gain control, we forget we were distressed investors and become owners,” he adds.
As that last cycle became more severe, Oaktree for example spent $100m acquiring the debt of SpectraSite, gaining control at the provider of signal towers for mobile phone operators along with Apollo in 2003. Nursed back to health, SpectraSite emerged as a public company and Oaktree tripled its money. In 2005, SpectraSite merged with American Tower in a deal valuing it at $3.8bn including debt.
But whatever distressed investors' skills at running businesses rather than just running a slide rule over them, the companies over which they preside have far less debt than before.
未经英国《金融时报》书面许可，对于英国《金融时报》拥有版权和/或其他知识产权的任何内容，任何人不得复制、转载、摘编或在非FT中文网（或：英国《金融时报》中文网）所属的服务器上做镜像或以其他任何方式进行使用。已经英国《金融时报》授权使用作品的，应在授权范围内使用。“秃鹫”在危机中翱翔
作者：英国《金融时报》汉妮•桑德尔(Henny Sender)
2004年，美国房地产热潮接近顶峰，当年新开工房屋数量达到220万套，如果说有一样东西是家里家外都需要的，那就是门。加拿大美森耐国际集团(Masonite International)是主要供应商之一，该公司从事建材行业已有80年之久，该公司创始人威廉•美森(William Mason)凭借注册了自己商标的纤维板，帮助促进了行业的发展。
因此，美森耐引起财大气粗的KKR(Kohlberg Kravis Roberts)的注意不足为奇。在圣诞节前几天，这家纽约私人股本公司获得了美森耐管理层的批准，将收购美森耐，但遭到美森耐外部股东的抵制。几个月后，KKR提出更优厚的条件，把美森耐的估值提高到33亿加元，终于把那些曾表示反对的股东争取了过来。
4年过去了，由于次贷违约及其引发的更广泛危机令房地产市场受到重创，美森耐最终于今年3月在美国特拉华州和加拿大安大略省两地向法院申请了破产保护。在KKR收购后，美森耐有20多家工厂被关闭或整合，员工总数从1.5万左右，降至不足8500人。去年，美森耐仅售出3600万扇门，而2006年的销量为5500万扇。此前，为获得美森耐的控股权，KKR向银行贷款15亿美元，并发行了7.7亿美元高收益率债券。
但就美森耐而言，目前最突出的问题是：它的下一个所有者会是谁？其中可能包括橡树资本(Oaktree Capital)，这是一家没什么名气的投资公司，总部位于洛杉矶。橡树资本虽然低调，却正成为今年金融界盛行的一种神秘游戏的主要玩家之一：投资于陷入困境的公司的债务，希望部分债券持有人最终将以低价控股这些公司。
一家公司破产后，其所有权将从控股者手中转移到债券持有人手中。然而，在弱肉强食资本主义的实践者中，命运发生了转折：如今，败在其他擅长快速金融艺术的大师手上的将是私人股本收购集团，它们让它们所收购的公司背上债务负担，同时为提高收益而拼命榨取那些资产。
这些掠夺者的目标，包括全球最知名的私人股本公司进行的许多不甚愉快的收购。“债权人将成为许多公司的所有者，”橡树资本主席马浩华(Howard Marks)表示，“股权所有者将被清场。如果你总是借钱买东西，有时候形势可能会让你无法忍受。”
当繁荣不再，私人股本公司也只得停下夺取公司所有权的行动——他们通过低成本举债，开出较公开市场价格有大笔溢价的价格，收购那些规模更大的公司。凯雷集团(Carlyle Group)的数据显示，2005年至2007年，私人股本行业共斥资近2万亿美元用于收购交易。如今，把西方企业的部分江山转移到不良债务投资者手中，只不过刚刚拉开序幕。
与私人股本公司一样，不良债务投资者也惯于使用强硬手段，随心所欲。但由于他们是在别人落难时借机生财，难免被比作“秃鹫”或“坟墓上的舞者”(grave-dancers)。橡树资本以及阿波罗管理公司(Apollo Management)、艾威基金(Avenue Capital)和Centerbridge Partners等所从事的业务，可不适合心灵脆弱的人。这种事跟俄罗斯轮盘赌一样不可预测。有时成功可能依靠隐晦的法律论据，数十亿美元的投资，要取决于法官对次要技术问题的解读。
然而，一旦上述过程进展顺利，不良债务投资者就能够以过去私人股本公司出价的一部分收购公司，最低可能是20％或30％。
私人股本公司擅长收购公司。但它们的经营这些公司的能力却越来越受到质疑，因为在他们所拥有的运营稳健的公司之中，越来越多的公司无力偿还转移到它们手中的债务，并申请破产保护。然后，问题变成：一旦这些公司落入不良债务投资者手中，他们会更善于处理那些日常紧急事务吗？
当然，每位投资者的方法都大相径庭。有些只是交易员，希望在相关债务略微升值之时，或如果能够与其他利益相关者达成交易，就将手中股权脱手。但在持有公司股权数年、使其增值并从以往所有者所犯的错误中学习借鉴方面，橡树资本和Centerbridge等公司积累了很多的经验。
私人股本公司在繁荣时期收购这些公司时，其高管们声称，在收购中累积起来的债务不会成为问题。与银行的协议几乎没有设定任何条件，而暂停支付部分债务现金利息等创新带来了更多的灵活性。然而，与其他人一样，他们低估了此次经济衰退的严重程度。“私人股本公司预期这是一场30年一遇的风暴，”马浩华表示，“他们没料到这是一场百年一遇的风暴。他们拥有优秀的公司，但存在太多金融工程和负债。”
通过低价买进、减轻债务负担以及提升其经营表现，不良债务投资者将能够转手卖出这些业务，获取高额利润。
但首先，他们必须辨别哪些公司具有稳健的基础业务，只是因为现金流过少、无法支撑其债务，而摇摇欲坠。然后，他们必须评估目标公司的价值，研究其债务结构——负债比率较高的公司，总是拥有各种不同级别的债务，每种债务有各自的清偿次序。关键在于猜测哪些债务将转化为股权，然后逐渐控制那种级别的债务。
要积累足够多的债权，以便在一家公司陷入困境时夺取控制权，关键是保密。如果泄露了风声，价格就会上涨，就会有人混水摸鱼，运作中就要付出更高的代价。
如果估计错误，这笔投资最终可能一文不值——用华尔街一句精炼的行话来讲，就是“硬面包圈”(bagel)。目标定得太低，你可能因为没有足够的资金周转而被淘汰出局；定得太高，充其量你只能收回成本。“这一行当充满各种可能性，”Centerbridge联合创始人杰夫•阿朗逊(Jeff Aronson)表示。
要清楚的了解这一赌博的经过，可以看看铝材生产商Aleris的故事。2008年第四季度，橡树资本开始收购这家公司的大量债务。没有人马上跟着混水摸鱼。“我们就像在泥浆中行走的猪一样快乐，”橡树资本联席总裁布鲁斯•卡什(Bruce Karsh)愉快地回忆道。
此前，总部位于旧金山的私人股本公司TPG以35亿美元控股了Aleris，其中8.5亿美元用于购入其股权、剩下的资金则用于购买该公司的债务。但随着经济形势恶化，Aleris的前景也变得不妙起来。去年12月，TPG不得不以自己的名义，帮助该公司向银行贷款。这表明它在为该公司做担保。此举令Aleris的债务升值，但对橡树资本来说，“大奖”（即控制权）有可能旁落。“我们无法预测哪些债务会重组，哪些不会，”卡什平静地表示，“我们能做的只是试着判断哪些更值得购买。”
但到今年2月，Aleris形势恶化，TPG不再提供支持，Aleris于是申请了破产保护。作为最大的贷方，橡树资本和阿波罗（事实证明，阿波罗也购买了Aleris部分债务）被要求提供该公司在破产保护下所需的运营资金。如今水落石出，这两家公司可能会以TPG当时出价的一小部分收购Aleris。
私人股本公司的大肆挥霍，给被收购公司留下沉重债务。如今更难说清哪些债务能够完全偿还，哪些将血本无归（因为目前的回收率可能远低于以前），以及哪些债务将接管这家公司——此类不良债务就相当于触地得分（译者注：美式足球中常见的得分方式）。
因此，要取得成功，需要在任何一个或几个关键环节都具备耐心、各种技能和运气。大约一年前，橡树资本和Centerbridge就都开始瞄准了众多具有良好周期性的公司，随着经济的放缓，这些公司可能无力偿还债务。他们都把美森耐列入了名单，只是相互之间并不知情。他们独立工作，都在寻找这家公司陷入困境的迹象，其中包括该公司是否在降低银行信用额度等线索。然后，两家公司分别联系了华尔街的交易员，提示他们自己将买进并逐渐加仓。
最初，橡树资本购买的是债券，但很快转向银行贷款，因为很明显，银行债务持有人将成为新的所有者。“公平而言，我们估计错了。”卡什表示。
去年秋冬期间，美森耐一直在与其银行协商债务重组事宜。该公司的销售额已无法支撑其高达22亿美元的负债。双方达成了申请破产保护的协议。橡树资本和Centerbridge所持的股权比例将最大，在美森耐脱离法庭保护后可能会获得该公司控制权。
与许多同行相比，橡树资本的策略更为谨慎和理性。“他们属于业内思维最缜密的，”摩根士丹利(Morgan Stanley)负责处理与私人股本集团关系的马克•布雷德利(Mark Bradley)表示，“在（衰退）环境下，他们能够充分发挥自己的能力。”
马浩华致信给投资者们，投资者们的狂热程度不亚于沃伦•巴菲特（Warren Buffett，在安然破产事件中，巴菲特与橡树资本共担风雨，他还在自己的致股东信中引用橡树资本的数据）。科威特投资局(Kuwait Investment Authority)局长巴达尔•阿尔•萨阿德(Bader Al-Sa'ad)也是收信人之一。尽管马浩华毕业于秉持“市场最清楚”观点的芝加哥大学(University of Chicago)，但他认为，证券价格并不总是合理的，而只是市场共识的反映。他最喜欢的一句话是：6英尺的人有可能淹死在平均水深5英尺的小河里。
如今，橡树资本正等着看自己在美森耐和Charter Communications的投资将会怎样。Charter Communications是美国第四大有线电视运营商，今年3月，该公司申请了破产保护，负债近220亿美元。为该公司提供贷款的各银行计划下月向法庭起诉，以阻止一项重组计划。根据这项计划，该公司的控股权将被赋予橡树资本和阿波罗。 　
“2001年，在上次低迷周期，我们学到的教训是：迅速行动，否则就会错过机会，”6年前创建橡树资本的6位创始人之一史蒂夫•卡普兰(Steve Kaplan)表示。这一次，低迷周期可能会持续更长时间。“一旦我们获得了控股权，我们就会忘记自己是不良债务投资者，转而变成了所有者，”他补充称。
例如，在上一轮低迷周期变得更为严重之际，橡树资本于2003年斥资1亿美元，收购了SpectraSite的债务，与阿波罗共同获得了这家公司的控股权。SpectraSite为移动运营商供应信号塔，在恢复健康后上市。橡树资本得到了3倍的投资回报。2005年，SpectraSite与American Tower合并，包括债务在内，其估值为38亿美元。
然而，不管不良债务投资者在经营业务（而非仅仅是对其业务进行衡量）方面的技能如何，他们控股的公司的负债规模确实远小于以前了。
译者/岱嵩
未经英国《金融时报》书面许可，对于英国《金融时报》拥有版权和/或其他知识产权的任何内容，任何人不得复制、转载、摘编或在非FT中文网（或：英国《金融时报》中文网）所属的服务器上做镜像或以其他任何方式进行使用。已经英国《金融时报》授权使用作品的，应在授权范围内使用。