Carlyle Capital says continues talks with major lenders UPDATE

[salin]

Source: CNN Money

Carlyle Capital says continues talks with major lenders UPDATE

March 10, 2008: 03:06 AM EST


(Updates with background)
LONDON, Mar. 10, 2008 (Thomson Financial delivered by Newstex) -- Carlyle Capital Corp Ltd (OOTC:CARYF) said the company, with the assistance of the Carlyle Group, is continuing to meet with its lenders and is evaluating all available options after the lenders issued margins calls on more than 400 mln usd.

In a statement, the company said it is also continuing to work with the various regulatory agencies.

--- snip ---

Shares in the fund, a listed mortgage-bond fund managed by private equity firm the Carlyle Group, were suspended Friday. Carlyle is one of the world's largest private-equity firms with 76 bln usd in assets under management.

Carlyle Capital leverages its 670 mln usd equity 32 times to finance a 21.7 bln usd portfolio of residential mortgage-backed securities issued by US housing agencies Freddie Mac (NYSE:FRE) and Fannie Mae. (NYSE:FNM)


Read more: http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-23643498.htm

---

Take that last paragraph in - it leveraged (e.g., got loans/financing based on equity) 670 million ... 32 times - to finance 21.7 Billion in "mortgage-backed securities". Am I reading that correctly? Let's pretend for a minute that this was financing for a single (albiet HUGE) house- that would be like putting about 3% down (.67billion/21.7 billion.) Mind numbing experiment - now think about all of the other leveraged fund out there to try to get an idea of the scope/magnitude of the exposed risk to financial institutions that provided the leveraged financing.

Now a question, Carlyle, it says has 76 billion in assets. Is Carlyle Capital seperate or is the 21.7 billion in its "portfolio" a big chunk of Carlyle's 76 billion in assets?

[natrat]

1. wow maybe facist republicans really are stupid

[aquart]

5. But, hopefully, they can spell and punctuate.

[donheld]

8. After all spelling and punctuation are all that matter.

[Festivito]

12. Maybe not. Bush Sr. pulled out years ago.

Every couple of days this comes up and some posters put Bush in CURRENT driver's seat. Poppy Bush, #41, left Carlyle and no one here knows where his money went. Hmmmm.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3216084

[nradisic]

13. Greedy and stupid...

Greedy Obtuse and Petulant.....spells GOP.

[lapfog_1]

2. You gotta know how this works...

CG will count as it's assets anything that is positive... like Carlyle Capital. Now that this is about to go under, unless they can work a sweetheart deal with some banks, then they write off the $670M and deduct the $21.7 B from their assets... and they never heard of Carlyle Capital.

But there will be some pissed off Saudis and Kuwaitis... at least until oil hits $110/barrel.

$21 B... no problem.

[aquart]

6. They defaulted. It's a problem.

[Demeter]

3. The Inevitable Outcome Of "Investing" With Other People's Money

[Delphinus]

10. But isn't that

(investing) what the stock market is all about?

[Demeter]

11. There's Investing, and There's Gambling

and these days, it's hard if not impossible to tell the difference.

[heliarc]

14. With Carlyle there's very little gambling

Or at least there didn't used to be. The consultant and investors list included a lot of policy makers which means that if business needs a war... they start one. Go figure that Carlyle purchases a whole lot of Tech and Defense industry stock and HDubya is tight with these a**holes.

[salin]

4. another update (more info from Bloomberg)

Carlyle Capital Says Lenders May Sell More Securities

By Joseph Galante

March 10 (Bloomberg) -- Carlyle Group's mortgage-bond fund said some of the lenders holding a combined $16 billion of securities as collateral may sell their holdings unless it reaches an agreement on debt repayments.

Lenders have already liquidated collateral securing $5 billion of debt, Carlyle Capital Corp. said in a statement today. The fund, assisted by Carlyle Group, is meeting with its lenders to discuss margin calls in excess of $400 million and is ``evaluating all options,'' the release said.

--- snip ---

Unless Carlyle Group provides additional financing, the fund ``could be forced into significant asset sales into a weak market or could face bankruptcy,'' Citigroup Inc. analysts including Donald Fandetti in New York wrote last week in a note to clients.

more at link: http://www.bloomberg.com/apps/news?pid=20601103&sid=ambyU.Ca6Iek&refer=us

What does liquidation of "mortgage-backed" securities entail? Who would buy these assets, or better yet how low (pennies per dollar) would the sale price have to go before buyers are found - and what does that mean on a micro level (per the actual mortgage holders)? Would it mean that a) the securities drop in value and b) the houses (original assets) have dropped in value - but the mortgages and what is owed on them remains the same? Given that the securities somehow are quite divorced from the actual mortgages (remember the attempts at foreclosure in Ohio that were turned back by a court until some entity could prove "ownership" of the actual mortgages), this whole scenario seems plausable (that everything around the mortgage drops in value but has no effect on the what is owed on the mortgage itself).

Can anyone venture a guess - or an answer (if familiar with the securitization market) as to what the macro ramifications are of massive funds like Carlyle Capital liquidating their mortgage-backed securities?

[Finishline42]

7. Who is the Carlyle Group?

Private Equity company with George HW Bush, James Baker, and John Major as investors.

Note: The first one minute forty seven seconds of this program is in broadcast in Dutch, The remainder is in English.

http://www.informationclearinghouse.info/article3995.htm

[santamargarita]

9. A Republican Owned Criminal Enterprise

Old man Bush is involved!