No $$ for Carlyle Cap Shareholders

LONDON (AP) – Shares in Carlyle Capital Corp. dropped more than 50 percent on Monday after the mortgage bond fund said it will wind up its operations, adding there would not be any money left for shareholders.

The fund said on Monday that its Class A shareholders — who consist of six partners of its affiliate U.S.-based equity firm Carlyle Group — voted on Sunday to wind up the fund in Guernsey, where it is incorporated.

Carlyle Capital said it has received default notices on funding lines for its entire US$21.7 billion (euro13.9 billion) portfolio of mortgage-backed securities, and that it believes that its liabilities are more than its assets.

The fund's demise just eight months after it listed on the Euronext exchange marks the latest casualty of the global credit crisis.

Shares in the fund were 57 percent lower at US$0.41 (euro0.26) in midmorning trade on Euronext Amsterdam.

The fall wiped out much of a rise in the shares on Friday after David Rubinstein, the co-founder of private equity firm Carlyle Group, said it was looking at ways to potentially compensate investors in the mortgage-bond fund. Even at that, the shares were worth only a fraction of what they were at the start of the year

Carlyle Group created the fund as part of its efforts to diversify its business, and to give public shareholders a way to get exposure to some of its funds.

However, it was forced to make its first bailout of the fund within weeks of the July listing, and is now owed at least US$150 million (euro96.4 million) from the failed business.