Jefferies discloses USD715m fund exposure to First Brands bankruptcy
Make us a preferred source
Make us a preferred source on Google
The news: US investment bank, Jefferies, has disclosed that its Leucadia Asset Management fund holds about USD715 million ($1.08 billion) in receivables linked to bankrupt auto-parts maker First Brands Group.
The context: Late last month, First Brands filed for bankruptcy protection, listing more than USD10 billion in liabilities, marking the collapse of a company whose spiralling finances had been unnerving debt investors.
On Wednesday, Jefferies confirmed that a specialist invoice-finance fund it manages, Point Bonita Capital, has approximately USD715 million of its trade finance portfolio invested in “receivables” – customer invoices - that are “almost entirely due from Walmart, AutoZone, NAPA, O’Reilly Auto Parts, and Advanced Auto Parts”.
Point Bonita primarily carried out invoice factoring for the group, which meant that repayment relied on these blue-chip, often investment-grade rated companies, rather than First Brands itself.
Point Bonita held a total of about USD3 billion in “trade-finance assets”, Jefferies said.
While the fund’s investments are not held on Jefferies’ balance sheet, the bank is exposed to some of First Brands’ debt, as USD113 million of Point Bonita’s “total invested equity of $1.9 billion” was from Jefferies’ Leucadia Asset Management division.
In a statement published Wednesday Jefferies said: “We are in communication with First Brands’ advisors and are working diligently to determine what the impact on Point Bonita might be. We intend to exert every effort to protect the interests and enforce the rights of Point Bonita and its investors.”
Jefferies also disclosed that another of its investment vehicles, Apex Credit Partners, has been pulled into the First Brands saga. Apex, in which Jefferies holds a 50% stake, held about USD48 million of loans to First Brands through CLO vehicles, the bank said.
Earlier this month court documents revealed that funds under the UBS Group face over USD500 million of exposure to the auto supplier.
The sources: Jefferies statement, Reuters, Bloomberg, FT
