bloggingbuyouts

The Carlyle Group isn't worrying about the PR fallout from that one fund blow-up. At least that is how it looks today.

The private equity giant has announced the close of the tenth U.S. Leveraged Finance team's Collateralized Loan Obligation, or CLO, fund. This one has been named the Carlyle Credit Partners Financing I and the funding was for $450 million.

The fund will use traditional CLO structure for AAA, AA, A and BBB rated liabilities. Carlyle believes this fund will allow Carlyle to purchase senior loans at attractive prices and finance them with 12 year debt. The advantage to this is that Carlyle noted that there will be no mark-to-market pricing triggers. That will allow these to be bought and held for the duration and will help allow for less of the mess in the current environment if the conditions of today prevail.

With the close, Carlyle now manages $10.3 billion in leveraged finance assets in CLO's. JP Morgan, of JPMorgan Chase & Co. (NYSE: JPM) completed the structuring and acted as placement agent.

Jon Ogg is producer and editor of the Special Situation newsletter for 247WallSt.com.

JP Morgan Chase & Co. (NYSE: JPM) has announced the launch of DealVault. This is a new technology that tracks private equity investments valuations, performance, risk and exposure analysis. JP Morgan's unit called Private Equity Fund Services (PEFS) developed the system to provide CFOs, deal and investor relations professionals with a platform to centralize deal tracking information.

DealVault will also integrate with accounting and back office systems, in order to allow administration one platform. Private equity managers will be able to store portfolio company information in a web-based solution, package information in an auditor-friendly format, allow independent valuation reviews, and to cut time spent aggregating and reconciling volumes of data.

This "PEFS" unit already provides a full suite of administration services to private equity firms, real estate firms, and institutional investors; and it currently services more than 200 funds representing $50 billion in committed capital, and serves the world's largest institutions with $110 billion in aggregate committed capital across thousands of private equity investments.

Does something seem wrong or off about the timing of this launch? In 2006 this would have garnered much attention. In 2007 it would have been mandatory. While the billionaires are all supposed to be immune to economic sensitivity, that just isn't quite holding up right now. Another wave of private equity will come again, at least that is what history dictates. But the launch timing is probably one that could have been picked better.

Sallie Mae (NYSE: SLM) is sick of having sand kicked in its face by its potential buyer, JC Flowers, and Flowers' banks.The private equity firm that agreed to pay $25 billion for the student loan company has come back with a lower price, claiming that Sallie Mae's financial future has gotten much worse. Now, Sallie Mae is suing to get its break-up fee of $900 million

According to Reuters, "The suit seeks a declaration that Sallie Mae may terminate the merger agreement and collect the damages, that the buyer group has repudiated the merger agreement, and that no material adverse effect has occurred." SLM is arguing that there has been no meaningful change in its business since Flowers made its offer. The buyout firm and its banks make the case that legislation slashing subsidies to student lenders and a serious credit squeeze have cut Sallie Mae's value. Flower's banks are JP Morgan (NYSE: JPM) and Bank of America (NYSE: BAC).

The move by SLM may usher in a new wave of litigation as private equity buyers walk away from buyouts that they no longer think make financial sense. If Sallie Mae can win in court and collect its $900 million, a number of legal actions could follow brought by public companies that watched buyouts fall apart.

While it may seem odd, it is possible that the legal system will slow buyouts as much as the current credit crunch.

Douglas A. McIntyre is a partner at 24/7 Wall St.

You know the feeling. You've done a lot of shopping -- and used your credit card heavily. It's so easy, right? Of course, until the heavy interest payments pile up.

Simply put, that has been the story for big-time financiers, such as Goldman Sachs (NYSE: GS), Lehman Brothers (NYSE: LEH), Merrill Lynch (NYSE: MER), Citigroup (NYSE: C), JP Morgan (NYSE: JPM) and so on. They kept committing their balance sheets to provide loans to buy up companies. And, of course, private equity funds -- like KKR, TPG, Apollo, and Blackstone (NYSE: BX) -- were ready, willing, and able to take the largesse.

But now the bill is coming due.

Well, in this week's Barron's [a paid publication], there's an excellent story on this topic. In fact, the lenders were so eager to make these mega loans that they were loosey-goosey on the terms. For example, some loans even allowed for deferring debt payments (perhaps the subprime market was not the only crazy place, huh?)

Oh, the lenders also were willing to forgo escape clauses in loan agreements. Hey, wouldn't the gravy train last forever?

So what happens to the hundreds of billions in buyout debt? Barron's thinks that the lenders will sell the stuff at deep discounts. True, this will mean significant losses. But, if things are bad, might as well get everything written down now and then pave the way for a better future, right? Although, I have a feeling banks are going to be a little more circumspect when it comes to new buyout loans.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements