More bidders for REFCO include Interactive Brokers.
I think it is highly unklile the Flowers bid stands as is. I forsee the entire REFCO, INc. being sold for about $1.25B
The story is still young...........
===
Print
Refco Wants to Sell Assets Right Away, Lawyers Say (Update1)
Oct. 19 (Bloomberg) -- Refco Inc., the futures trader that filed for bankruptcy protection Oct. 17, wants to begin selling the company's assets right away, a company lawyer told a judge today.
``This is an ice cube that has been melting at an extraordinarily rapid rate,'' J. Gregory Milmoe, Refco's lawyer, told U.S. Bankruptcy Judge Robert Drain at a hearing today in New York. ``Nonetheless the company is committed to stopping the melting.''
Refco agreed to sell its regulated futures trading units for $768 million to J.C. Flowers & Co. That sale is subject to court approval, even though those units weren't part of the parent's original bankruptcy filing. Other bidders that may include the government of Dubai will be permitted to bid against Flowers for any or all of Refco's units.
Interactive Brokers Group LLC, a Greenwich, Connecticut- based electronic brokerage, is interested in bidding for Refco's regulated futures business, said Isabelle Clary, an Interactive Brokers spokeswoman. Gary J. Mennitt, a lawyer for Interactive, said he thought the Flowers bid was too low and that Interactive may make a higher bid. Interactive, which Mennitt said has $2 billion and ``significant liquidity,'' wants more time to do research on Refco, he said.
Asset Snafu
Today's hearing follows Refco's report that it used inaccurate financial statements when it reported assets of $48.8 billion in its original bankruptcy petition. The company filed a second petition late yesterday listing assets of $16.5 billion.
Refco has ``minimal'' cash on hand, said Donald Bernstein, a lawyer for Bank of America Corp., the agent of a $648 million syndicated loan to Refco. Bernstein, a partner at Davis Polk & Wardwell, told Drain that Bank of America has a lien on Refco's cash collateral and other assets and asked the judge to provide adequate protection for the bank's claims.
Refco's filing for bankruptcy protection means that all of its units, solvent or not, will be offered for auction under court supervision. Milmoe said Refco has gotten 30 inquiries, three of which it considered serious enough to deal with.
Refco's lawyers asked Drain to schedule a sale hearing for next week. Drain didn't commit to a date.
Volume Investment Group and Interactive Brokers Group LLC are both interested bidders. Some of the other bidders want more time to examine the company's finances, a process known as due diligence.
``The Flowers group made this commitment without the due diligence,'' Milmoe told the court. ``It is at least possible that other people can come forward and make that commitment.''
Break-Up Fee
If another bidder wins the auction, Flowers is entitled to a breakup fee of 2.8 percent of the sale price.
Refco will post the rules of the auction later this week, as it's required to do under bankruptcy law. All bidders will have the opportunity to examine Refco's books.
In its original filing on Oct. 17, Refco listed $48.8 billion in assets as of February 2005, adding in a footnote that the company's financial statements as of February 2002-2005 couldn't be relied upon. Court papers submitted yesterday listed assets of $16.5 billion as of August 2005.
Milmoe, an attorney at Skadden Arps Slate Meagher & Flom, told the judge that Refco wanted to sell ``the greater part of the regulated business'' and put the proceeds into the unregulated part of the company ``to preserve substantial value.''
Milmoe said that as of last night there was $4.1 billion in customer accounts at the regulated units.
``We have a relatively brief window in which we may well be able to capture some value,'' Milmoe told the judge.
Broker Salaries
Richard Levin, another lawyer for Refco, told Drain the company wants to continue paying commissions to brokers.
``Our assets are our brokers,'' said Levin, who also works at Skadden. He told the judge he didn't want the brokers to leave the company. Drain said that while the company could continue paying salaries, Refco would have to file a separate request to keep paying commissions.
Refco announced Oct. 10 that it had discovered a $430 million debt to the company owed by then-chief executive Phillip Bennett, who was then relieved of his duties. Bennett, 57, was arrested the next day and charged with securities fraud for hiding the debt, which he has repaid.
The company held its first public offering of stock in August. The shares, which had traded as high as $29.90 on the New York Stock Exchange, plunged almost 50 percent last week. The NYSE delisted Refco on Oct. 18. Today the shares rose 19 cents to 84 cents in over-the-counter trading.
The case is In re Refco Inc., No. 05-60006, U.S. Bankruptcy Court, Southern District of New York.
To contact the reporter on this story: Andrew Dunn in New York
at adunn8@bloomberg.net; Tom Becker in
U.S. Bankruptcy Court in New York tbecker5@bloomberg.net.
Last Updated: October 19, 2005 16:32 EDT
Print
I think it is highly unklile the Flowers bid stands as is. I forsee the entire REFCO, INc. being sold for about $1.25B
The story is still young...........
===
Refco Wants to Sell Assets Right Away, Lawyers Say (Update1)
Oct. 19 (Bloomberg) -- Refco Inc., the futures trader that filed for bankruptcy protection Oct. 17, wants to begin selling the company's assets right away, a company lawyer told a judge today.
``This is an ice cube that has been melting at an extraordinarily rapid rate,'' J. Gregory Milmoe, Refco's lawyer, told U.S. Bankruptcy Judge Robert Drain at a hearing today in New York. ``Nonetheless the company is committed to stopping the melting.''
Refco agreed to sell its regulated futures trading units for $768 million to J.C. Flowers & Co. That sale is subject to court approval, even though those units weren't part of the parent's original bankruptcy filing. Other bidders that may include the government of Dubai will be permitted to bid against Flowers for any or all of Refco's units.
Interactive Brokers Group LLC, a Greenwich, Connecticut- based electronic brokerage, is interested in bidding for Refco's regulated futures business, said Isabelle Clary, an Interactive Brokers spokeswoman. Gary J. Mennitt, a lawyer for Interactive, said he thought the Flowers bid was too low and that Interactive may make a higher bid. Interactive, which Mennitt said has $2 billion and ``significant liquidity,'' wants more time to do research on Refco, he said.
Asset Snafu
Today's hearing follows Refco's report that it used inaccurate financial statements when it reported assets of $48.8 billion in its original bankruptcy petition. The company filed a second petition late yesterday listing assets of $16.5 billion.
Refco has ``minimal'' cash on hand, said Donald Bernstein, a lawyer for Bank of America Corp., the agent of a $648 million syndicated loan to Refco. Bernstein, a partner at Davis Polk & Wardwell, told Drain that Bank of America has a lien on Refco's cash collateral and other assets and asked the judge to provide adequate protection for the bank's claims.
Refco's filing for bankruptcy protection means that all of its units, solvent or not, will be offered for auction under court supervision. Milmoe said Refco has gotten 30 inquiries, three of which it considered serious enough to deal with.
Refco's lawyers asked Drain to schedule a sale hearing for next week. Drain didn't commit to a date.
Volume Investment Group and Interactive Brokers Group LLC are both interested bidders. Some of the other bidders want more time to examine the company's finances, a process known as due diligence.
``The Flowers group made this commitment without the due diligence,'' Milmoe told the court. ``It is at least possible that other people can come forward and make that commitment.''
Break-Up Fee
If another bidder wins the auction, Flowers is entitled to a breakup fee of 2.8 percent of the sale price.
Refco will post the rules of the auction later this week, as it's required to do under bankruptcy law. All bidders will have the opportunity to examine Refco's books.
In its original filing on Oct. 17, Refco listed $48.8 billion in assets as of February 2005, adding in a footnote that the company's financial statements as of February 2002-2005 couldn't be relied upon. Court papers submitted yesterday listed assets of $16.5 billion as of August 2005.
Milmoe, an attorney at Skadden Arps Slate Meagher & Flom, told the judge that Refco wanted to sell ``the greater part of the regulated business'' and put the proceeds into the unregulated part of the company ``to preserve substantial value.''
Milmoe said that as of last night there was $4.1 billion in customer accounts at the regulated units.
``We have a relatively brief window in which we may well be able to capture some value,'' Milmoe told the judge.
Broker Salaries
Richard Levin, another lawyer for Refco, told Drain the company wants to continue paying commissions to brokers.
``Our assets are our brokers,'' said Levin, who also works at Skadden. He told the judge he didn't want the brokers to leave the company. Drain said that while the company could continue paying salaries, Refco would have to file a separate request to keep paying commissions.
Refco announced Oct. 10 that it had discovered a $430 million debt to the company owed by then-chief executive Phillip Bennett, who was then relieved of his duties. Bennett, 57, was arrested the next day and charged with securities fraud for hiding the debt, which he has repaid.
The company held its first public offering of stock in August. The shares, which had traded as high as $29.90 on the New York Stock Exchange, plunged almost 50 percent last week. The NYSE delisted Refco on Oct. 18. Today the shares rose 19 cents to 84 cents in over-the-counter trading.
The case is In re Refco Inc., No. 05-60006, U.S. Bankruptcy Court, Southern District of New York.
To contact the reporter on this story: Andrew Dunn in New York
at adunn8@bloomberg.net; Tom Becker in
U.S. Bankruptcy Court in New York tbecker5@bloomberg.net.
Last Updated: October 19, 2005 16:32 EDT