The scuttled deal for Sallie Mae (NYSE: SLM) by J.C. Flowers has been one of the more fascinating buyout busts of the last few months. It featured a plummeting stock price for SLM, a restructured (and rejected) offer by J.C. Flowers, the threat of a capital crisis, and even a bizarre phone call in which Albert Lord, Sallie Mae's CEO, cursed at analysts.
The litigation between J.C. Flowers and SLM promised more intrigue and pain, but over the weekend it was announced that the two sides have reached an agreement to bring the conflict to an end. Sallie Mae has given up its claim on a $900 million break-up fee, and both sides have agreed to end litigation.
Aside from the broken deal itself, one of the main problems Sallie Mae was facing was its inability to float new debt backed by student loans. The new agreement solves that problem too, providing $31 billion in financing from various banks for the next year, according to Bloomberg.
So it looks like the loan giant will survive the current credit crisis, and live to be bought out another day.
Stick a fork in it: Sallie Mae, J.C. Flowers sign break-up agreement
Recent Posts
- Private equity tries to feast on Lyondell blow-up (1/07/2009)
- New Year's resolution for VCs: Survival (1/05/2009)
BloggingBuyouts is provided for informational purposes only. Nothing on the service is intended to provide personally tailored advice concerning the nature, potential, value or suitability of any particular security, portfolio or securities, transaction, investment strategy or other matter. You are solely responsible for any investment decisions that you make. The contributors who provide the content of BloggingBuyouts may, from time to time, hold positions in the securities discussed at the time of writing and they may trade for their own accounts. Such holdings will be disclosed at the time of writing. By using the site, you agree to abide to BloggingBuyouts' Terms of Use.
