The details of this are great…..for Baupost and Klarman..
HedgeFund.net reports:
A Boston hedge fund is taking part in the multibillion-dollar bailout of CIT Group.
The hedge fund, Baupost Group, has agreed to pitch in for the $2 billion bridge loan Barclays Capital put together for the commercial finance company. Century-old CIT Group is facing bankruptcy after the government rejected its request for a second bailout.
Baupost Group is a bondholder in CIT Group. In addition to the hedge fund, the $2 billion loan is comprised of private equity capital. Centerbridge, Oaktree Capital Management and Silver Point Capital Management are contributing a chunk of the financing.
Pacific Investment Management Co., headed by bond king Bill Gross, is the largest bondholder in CIT Group, followed by mutual fund company Capital Research & Management.
CIT Group is expecting to raise an additional billion. The New York company has lost $3 billion since 2008, and was granted a $2.4 billion rescue in December. CIT Group has a $75 billion asset base.
Baupost Group is run by value investor Seth Klarman, who joined the company at 25 after graduating from Harvard Business School. He has published a book on investing, and in May bought a piece of professional baseball franchise the Boston Red Sox.
Baupost Group has $16 billion in capital.
The terms are for a $3B cash injection secured by $30B in assets. The loans pay a 13% initial interest rate (10% above LIBOR with a 3% floor).
Not a bad deal at all…..
Disclosure (“none” means no position):