As Margin Calls Mount, Carlyle Holds 'Crisis Talks'

Private equity giant's subsidiary imperiled
By Kevin Spak,  Newser Staff
Posted Mar 10, 2008 12:40 PM CDT
Bruce Rosenblum, managing director, The Carlyle Group, testifies on Capitol Hill in this file photo. (AP Photo/Gerald Herbert)   (Associated Press)
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(Newser) – The Carlyle Group is holding emergency talks with lenders to try to save its drowning Carlyle Capital division, the Washington Post reports. Creditors have decided that Carlyle’s portfolio of traditionally safe mortgage-backed securities holdings isn’t good enough in the current market, and they're demanding $400 million more in collateral. Some have declared Carlyle Capital in default and may have sold $5 billion in assets.

That $5 billion represents almost 25% of the subsidiary’s holdings. Carlyle Capital is asking for a “standstill agreement” to prevent further bleeding while talks are under way. It has also suspended trading on its stock, which fell 60% on Friday, to $5 a share. If a deal isn’t reached, the group will have to liquidate $16 billion in securities. (Read more credit market stories.)