Live-Blogging Blackstone/GSO Call

No, I really do not have anything better to do this afternoon (save for a Madden playoff game). Three big questions I’m hoping get answered: (1) Why announce the “agreement in principle,” rather than waiting until there is actually a final agreement? (2) How will this announcement affect GSO’s renegotiation with Reddy Ice? (3) Is Merrill Lynch selling its stake in GSO, which it acquired just last May?

The fun begins at 1:30pm…

– Joan Solotar, Blackstone’s director of public markets, reminding us that nothing they’re discussing is guaranteed to happen… Market conditions and all.

– Schwarzman is doing the call. This is a change from the prior strategy of using Tony James (who’s smooth as silk on these things). James is on the call, however, and may be the guy handling Q&A.

– Lots of talk about how this grows Blackstone’s debt capacity. Wonder if debt will eventually outstrip private equity in terms of money under management.

– Bennett Goodman of GSO will join Blackstone’s executive committee. Schwarzman says Blackstone tried repeatedly to hire him, prior to the formation of GSO.

– Now Tony James is taking over, to talk deal terms. Nothing much here that isn’t in the press release (Blackstone_GSO.pdf).

– Goodman says the “timing could not be better.” Assume that doesn’t reference Reddy Ice, but rather just the general credit crunch.

– It’s been 12 minutes, and I’m already bored of the boilerplate (culture, synergy, etc.). Let’s get to Q&A.

– Tony James says this deal is a “tangible example” of the extra flexibility Blackstone has as a public entity. Not sure I buy it. Yeah they’re partially using stock to buy GSO, but they could have offered partnership units privately.

– Q&A time.

– First questioner has now asked three different things. Roger someone. Time hog.

– Make that four questions from the same guy (assume he’s an analyst). More than eight minutes and counting. All about financial services market. Is there a moderator in the room?

– New analyst up: Asks if this helps Blackstone get more active on the distressed side. 

– Blackstone has $1.9 billion of distressed under management. Goodman says GSO has a 10% allocation in its hedge fund to distressed, although it was closer to 50% in 2001-2002. Expects it to rise again. Both firms have raised liquidity funds.

– Really not learning much here. Madden game is looking more and more appealing. Best guess is that reporters won’t get to ask questions. Only analysts.

– James says that Blackstone will have a few realizations early this year, but will mostly stay put. A Citi analyst swoons at their prudence.

– Merrill analyst asks about GSO performance. Solotar claims it was the “best-performing credit hedge fund of 2007.” Then she puts it back inside the black box. Analyst doesn’t press for details.

– Sounds like Blackstone clients should expect a call from Bennett Goodman any day now.

– PHH termination question: Any implications for pipeline of committed deals that haven’t closed? Schwarzman says no, it was specific to the free-falling mortgage sector.

– That’s it. No more questions, including none from the press. I went 0-for-3 on my questions… Oh well, time to ask via more conventional means…

– The End.

Update: Blackstone spokesman confirms that the firm will buy all of GSO, including the Merrill Lynch position.