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Posts Tagged ‘leucadia Natioanl Corp.’

Last week, A Warren Buffet-led group struck a deal to acquire Capmark Financial Group Inc.’s mortgage banking business . A newly formed entity owned by Buffet’s Berkshire Hathaway Inc. and Leucadia National Corp. was given a put option to purchase Capmark’s North American servicing and mortgage banking businesses. Capmark operates three core business lines: lending and mortgage banking, investments and funds management, and servicing. The latter of which is, and has been drastically adversely affected by the poor performance of the first two. Jeff Zaun from S & P remarked recently, “We expect Capmark either to enter Chapter 11 bankruptcy proceedings or to negotiate a distressed exchange outside of bankruptcy, which most likely would affect most of its debt. We will consider either of these events to be a default.” And Buffet’s bid reflects either possibility, offering $490M, or $415M if Capmark files for bankruptcy. So why do I expect Capmark to choose bankruptcy?

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