Carlyle Capital To Unwind Remaining Assets

Mar 17 2008 | 9:53am ET

Troubled hedge fund Carlyle Capital is calling it quits and will begin to unwind all of its remaining assets. News of the move sent the firm’s shares tumbling more than 50% today, and it admitted that there would not be any money left for shareholders.

“As expected, the company received default notices from its remaining two lenders and it believes that its lenders have now taken possession of substantially all of its U.S. government agency AAA-rated residential mortgage-backed securities (RMBS),” said the firm. “As a result, the company believes its liabilities exceed its assets.”

Carlyle will work with a court appointed liquidator to “ensure an orderly realization of assets and their subsequent distribution.”

Earlier this month, Carlyle received margin calls in excess of $400 million and in total, through March 12, the Carlyle Group affiliate had defaulted on approximately $16.6 billion.

The hedge fund’s parent had pumped in $250 million in credit and loan facilities and was prepared to provide substantial additional capital if the fund could successfully refinance with its lenders. But negotiations deteriorated late last week when, among other things, the pricing service utilized by certain lenders reported a drop in the value of the RMBS collateral.

Carlyle Group management has a 15% stake in the hedge fund.


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