Archive for August, 2009

Cerberus clients overwhelmingly want out: report (Reuters)

Friday, August 28th, 2009 | Finance News

BOSTON (Reuters) –
Cerberus Capital Management has been swamped with redemption requests with the Wall Street Journal reporting that investors are asking to pull out $5.5 billion or 71 percent of assets from its hedge funds.

Cerberus last month tried to entice investors into staying with the firm, but found that its clients overwhelmingly wanted to leave, the newspaper reported.

"We have been surprised by this response," Cerberus chief Stephen Feinberg and co-founder William Richter wrote in a letter delivered to clients late on Thursday, according to the newspaper.

A spokesman for the firm was not immediately available for comment.

The bulk of investors elected to put their money into a fund that will liquidate hard-to-sell assets over time.

The news comes as several prominent hedge fund managers have closed their funds and as investors are less willing to leave their money locked up in potentially risky hedge funds.

Last year, when the average hedge fund lost 19 percent, Partners lost 24.5 percent on investments.

(Reporting by Svea Herbst-Bayliss, editing by Leslie Gevirtz)


Blockbuster shares jump after Irish retailer sale (AP)

Friday, August 28th, 2009 | Finance News

NEW YORK – Shares of Blockbuster Inc. jumped Friday after the chain said it sold Irish entertainment retailer Xtra-vision Ltd. in a deal valued at up to $45 million.

The movie and video game rental chain, which bought Xtra-vision in 1997, said it plans to use most of the proceeds for boost its liquidity.

At least one analyst said Friday that the sale should significantly help the company do that.

"(Blockbuster) has shown substantial progress in generating the required cash flows necessary to meet debt obligations totaling $415 million by the end of 2010," Janney Montgomery Scott analyst Tony Wible said in a note to clients. "With $100 million in potential international asset sales, we believe the company is on track to emerge from the credit crisis."

In the near-term, he thinks that a promising second-quarter rental slate, other positive business trends and ongoing cost cuts will help boost results in the second half of this year.

He kept his "Buy" rating.

Xtra-vision has 186 stores in the Republic of Ireland and Northern Ireland, offering movies and games for rental or purchase, music, consumer electronics and mobile phones. It was purchased by Ireland's Birchhall Investments Ltd.

Shares rose 6 cents, or 7 percent, to 98 cents.


SEC slapped on oversight of credit agencies (Reuters)

Friday, August 28th, 2009 | Finance News

WASHINGTON (Reuters) –
The Securities and Exchange Commission's internal watchdog has criticized the agency for approving a credit rating agency, even though it had suspicions about the accuracy of its financial information.

There were "serious questions" as to whether the approval of the application of the undisclosed credit rating agency was in the public interest, said SEC Inspector General David Kotz in a report released on Friday.

Eleven credit agencies including the three that dominate the industry -- Moody's Corp (MCO.N), McGraw-Hill Cos Inc's (MHP.N) Standard & Poor's, and Fimalac SA's (LBCP.PA) Fitch Ratings -- are registered with the SEC.

According to the report, SEC trading and markets staff had concerns about the adequacy of the unnamed credit agency's management, including the experience of its compliance officer.

SEC staff also identified concerns with the applications of other credit rating agencies but approved them anyway and said the issues would be addressed after the applications were approved, Kotz's report said.

These concerns included information on a firm's process for rating complex products like mortgage-backed securities and some of the procedures for handling material nonpublic information.

"We believe that there is risk in the approach" of resolving problems after the application's approval, Kotz said.

SEC staff however disagreed with parts of his report and said that to successfully deny an application, the SEC must make "substantial factual and legal findings."

The issues identified did not provide a "legally viable basis" for denying the application, SEC trading and markets staff said in their written response.

Kotz's report made a number of recommendations to improve oversight of the credit rating agency industry, which has been criticized for giving top ratings to risky debt that later dropped in value.

The recommendations include requiring credit rating agency auditors to be overseen by the Public Company Accounting Oversight Board, which was established after the Enron and WorldCom accounting scandals and set up to police auditors of public companies.

Kotz also called for more disclosure about the process used to arrive at particular ratings.

Global regulators and policymakers have been pushing for more oversight of the industry after the worst financial crisis in decades exposed gaps in supervision.

(Reporting by Rachelle Younglai; Editing by Tim Dobbyn)