Daily News: August 1, 2012

CIFC in Strategic Transaction With GE Capital Unit

CIFC, a specialized asset manager of senior secured corporate loans, announced plans to enter into a five-year strategic relationship with GE Capital’s Bank Loan business.

Under the terms of the agreement, GE Capital will receive one million shares of CIFC common stock – valued at $7.25 million – warrants to purchase two million shares of newly created CIFC preferred stock and about $4.9 million in cash.

According the CIFC news release:

  • GE Capital Debt Advisors, a wholly owned indirect subsidiary of GE Capital, is exiting its third party investment advisory business, and has agreed to assign its role as manager of four “Navigator” collateralized loan obligation funds representing approximately $700 million in AUM to CIFC Asset Management, a wholly owned subsidiary of CIFC.
  • A commercial council comprised of senior members of both GE Capital and CIFC will be formed and meet regularly to assist in the exploration of business opportunities between the two firms, and to facilitate third party investment advisory referrals. Peter Gleysteen, chief executive officer of CIFC, and Neeraj Mehta, a GE officer, are slated to serve as co-chairs of the commercial council.
  • GE Capital has the right to appoint an executive to CIFC’s Board of Directors.

    CIFC’s Peter Gleysteen said: “We are excited about this strategic alliance and specific opportunities the combination will allow us to pursue, including new investments for investors. Partnering with GE Capital also positions CIFC for unique opportunities at the intersection of GE Capital’s business as a leading corporate lender and our loan asset management platform.”

    GE Capital’s Neeraj Mehta stated: “We look forward to finding complementary and mutually beneficial ways for our institutions to work together to create value and are excited to be a meaningful shareholder in CIFC.”

    The transaction is expected to close in September 2012. Berkshire Capital Securities advised CIFC in the transaction.

    CIFC said in the news release it is the largest specialized asset manager of senior secured corporate loans in the world. In the U.S. managed CLO segment, CIFC manages $10.3 billion across 28 CLOs as of March 31, 2012 and serves more than 200 institutional investors in North America, Europe, Asia and Australia.

    To read the CIFC news release, click here.