Subprime Sinks Blackstone Deal

Jan 2 2008 | 11:18am ET

The subprime debacle was good to the Blackstone Group in 2007, as the private equity giant was called in to advise some of the biggest casualties of the collapse. But this year is starting out somewhat differently: Blackstone’s lenders were not so lucky last year, and that’s forced the firm to pull the plug on a $1.8 billion buyout.

PHH Corp., the New Jersey mortgage and vehicle-leasing company which Blackstone and General Electric had agreed to buy and divide between them, said the deal had fallen apart, after Blackstone was unable to come up with the financing for its half of the arrangement. The company said it would seek a $50 million break-up fee from Blackstone.

The deal, under which GE would have bought PHH and then sold its mortgage unit to Blackstone, first ran into trouble in September, when both JPMorgan Chase and Lehman Brothers warned Blackstone that they might have to renege on the promised financing. Blackstone’s inability to come up with the money also sinks GE’s purchase of PHH.


In Depth

U.S. Treasury Moves on Reinsurance Loophole

Apr 24 2015 | 5:11pm ET

The U.S. Treasury Department has released proposed rules aimed at limiting the ability...

Lifestyle

Puerto Rico Woos The Rich But So Far Gains Little

Apr 17 2015 | 2:45am ET

Hedge fund manager Rob Rill grins. He has just had word that U.S. financial regulators...

Guest Contributor

Starting a ‘40 Act Fund Family? Don’t Forget Your Board

Apr 30 2015 | 7:18am ET

The convergence of the hedge fund and mutual fund worlds continues unabated, as...

 

Editor's Note