CORRECTION: The previously posted file contained three companies which were in default but had not yet filed for bankruptcy. Those non-bankrupt (but in default) companies are Monitor Clipper Partners’s Recycled Paper Greetings, Cerberus’s Residential Capital Partners, and GWLS Holdings, owned by Investcorp. The updated file, sans defaulters, is available for download after the jump.
And another one gone and another one gone… Today SemGroup, an energy service provider backed by Carlyle Group and Riverstone Holdings, filed for Chapter 11. It’s apparently the largest bankruptcy this year, in terms of assets. The company had assets of nearly $6.14 billion and liabilities of around $7.53 billion.
In light of SemGroup’s filing and the rumors surrounding Sun Capital’s Mervyns, I thought we ought to revisit the LBO Bankruptcy Class of 2008. I started this chart a few months back in Buyouts, but it turns out the chart isn’t available online, and anyways I’m sure you’re all hungry to see an updated one.
But before we look at the already-dead fish, a list of some of the ones still gasping for air. The most at-risk companies, as compiled from Buyouts’s analysis of the Standard & Poor’s “Weakest Links” list, include 16 companies with CCC+ or lower ratings.
At a glance, it looks like Eurofresh, owned by Bruchmann Rosser Sherrill & Co, and two Cerberus companies, Residential Capital and IAP Worldwide Services, are in the most danger of default. The three companies have been assigned a “CC” credit rating with CreditWatch Negative. They ratings affect, respectively, $234 million, $535 million, and $234 million in debt. Eurofresh recently got upgraded (from a “D”!) thanks to an amendment with its senior secured lenders, but IAP got downgraded thanks to covenant violation and a high likelihood of Chapter 11.
Anyways, on to the body count. I think it really supports the idea that if you play too close to the fire, you’re going to get burnt. Just look at Cerberus and Sun Capital, two turnaround artists that make the most repeat appearances. Not to speak for them, but I’m guessing their response would go something like this: Since they’re in the business of buying broken companies, they don’t ever pay much to start with. That explains how Sun Capital scored a 25X-plus return on a company like Mattress Firm last year.
Here’s the corrected chart: LBO Bankruptcies 7.25.08.xls