This didn’t take long. A couple of days ago I wrote a piece on how private equity’s leveraged buyouts of companies was akin to a mob bust-out
This afternoon Bloomberg News reported that Apollo Global Management Inc (private equity firm) is “losing” one of their investments, Lumileds Holdings BV, to bankruptcy. While Lumileds is a Dutch company they have a presence in the U.S.
However, before you start feeling sorry for Apollo there this gem. Since 2017 Apollo managed to get themselves $525 million in “special dividends”, nearly all financed with debt that was put on Lumileds balance sheet. You read that right. They went to the leveraged loan market and essentially put their investment, plus profit on Lumileds tab and now well…. To quote Mr. Hill again
“When you can’t borrow another buck from the bank or buy another case of booze, you bust the joint out. You light a match.”– Henry Hill – Goodfellas
I still have no idea how they can issue debt to pay themselves.....and then CLOs snap them up like hotcakes!
$525 million. That sounds like a lot.