Skip to: Content
Skip to: Site Navigation
Skip to: Search
SATURDAY, NOVEMBER 21, 2009
| Subscribe to Newser's RSS feeds RSS | Follow Newser on Twitter Twitter


0

Lone Star Buys Big at Mortgage Fire Sale

Texas fund grabs $6.7B in Merrill castoffs, is hungry for more

Share

(Newser) – Lone Star Fund is looking to profit from the castoffs of the credit meltdown, buying billions of marked-down assets and betting on just some of them to rebound, reports the Wall Street Journal. The Dallas-based private-equity firm run by John Grayken has closed a deal on $6.7 billion in Merrill Lynch mortgage backed assets once valued at $30.6 billion.

With Merrill financing 75%, Lone Star has some $8 billion to continue its bargain shopping after wrapping up a $10 billion fundraising push last week for its two newest funds. Grayken honed his investment strategy for Lone Star "while resolving bad debt during the savings-and-loan crisis in the 1980s," the Journal notes, adding that the fund made its name by buying distressed companies and turning them around.

Lone Star bought most of Korea Exchange Bank or KEB, in 2003, and is now selling it for as much as $5 billion in profit.
Lone Star bought most of Korea Exchange Bank or KEB, in 2003, and is now selling it for as much as $5 billion in profit.   (AP Photo)
John Grayken, the chairman of Dallas, Texas-based Lone Star Funds.
John Grayken, the chairman of Dallas, Texas-based Lone Star Funds.   (AP Photo)
John Grayken, the chairman of Lone Star Funds.
John Grayken, the chairman of Lone Star Funds.   (AP Photo)
« Prev« Prev | Next »Next » Slideshow
OFF THE GRID
11.20.09
The Health-Care Wars Have Just Begun
11.19.09
Sarah Palin Deserves Some More Attention
0 comments
VIEWING:
 
LEAVE A
COMMENT Comment Policy
Facebook ConnectPost this comment to Facebook?

After connecting you will have the option to post your comment on your Facebook profile.

 

Related Newser Stories

3 Stories

Profits Were Fake, Bonuses All Too Real

How risky schemes
left bankers flush, banks broke

Dec 18, 08 8:36 AM CST
(Newser) - Dow Kim was one of the leading bond traders at Merrill Lynch, and in 2006 he bundled together $500 million in loans into a huge CDO with the charming name Costa Bella. Since the subprime collapse, Costa Bella has cost Merrill millions—but Kim had already cashed out, awarded a... More »

MORE ABOUT:
executive compensation • Merrill Lynch • CDO • bonuses • mortgage backed securities • compensation • collateralized debt obligations • financial crisis

ANALYSIS

 Denial Exacerbated Meltdown 

Banks, like homeowners, refused to believe how bad things really are

Sep 16, 08 1:04 PM CDT
(Newser) - The collapse of Lehman Brothers and the fire sale of Merrill Lynch are stunning developments, Joe Nocera writes in the New York Times, as is the fact Goldman Sachs and Morgan Stanley are the only big investment banks standing. But the turmoil isn’t simply the result of complex trading... More »

MORE ABOUT:
Goldman Sachs • Morgan Stanley • Merrill Lynch • Lehman Brothers • mortgage debt • banking • subprime crisis • investment banks

analysis

Merrill Panic May Mark Bottom of Stock Market

Once regaled for cavalier confidence, CEO's chief cuts losses

Aug 1, 08 10:30 AM CDT
(Newser) - Merrill Lynch CEO John Thain has seen better days, Floyd Norris writes in the New York Times. He's gone from “cockiness to capitulation. Distinction to desperation.” Thain recently unloaded a bundle of his company’s securities for 22 cents on the dollar and raised $8.5 billion from... More »

MORE ABOUT:
Merrill Lynch • CDO • mortgage debt • mortgage backed securities • John Thain • financial sector • subprime crisis • stock offering • banking industry

3 Stories


Merrill's fire sale of the century
Bloomberg

Merrill's sale to Lone Star puts spotlight on other firms
New York Times


Business 
TwitterFollow @NewserBusiness on Twitter

 
Merrill Lynch • CDO • Lone Star • mortgage debt • private equity firms

from our news partners