Search This Blog

1 Mar 2007

Hedge Fund Shareholders Withdraw from Northwest Deal

Hedge fund shareholders withdrew their motion to have a say in the payment deals after the Northwest Airline Corp reorganization, surprising U.S. Bankruptcy Judge Allan Gropper. The hedge fund committee claims that Jugde Gropper has not allowed an investigation into whether Northwest plans to merge with Delta.

The temporary committee of hedge fund investors tried to subpoena rival airlines that may have held merger talks with Northwest, in a effort to prove that it is worth more than it claims. Northwest said shareholders will receive nothing and existing shares will be canceled upon the carrier’s exit from bankruptcy.

The shareholder group led by the Owl Creek hedge fund has been fighting Northwest’s claims that there won’t be enough cash to pay the shareholders after the bankruptcy reorganization.

Northwest Airlines said it had a net loss of $349 million for January. Revenue was $892 million, the carrier said in a filing with U.S. Bankruptcy Court in New York.

Northwest Airlines said that it expected to be worth roughly $7 billion when it emerged from bankruptcy later this year and that it would pay unsecured creditors roughly three-quarters of what they were owed.

Ritchie to Sell Flagship Hedge Fund

Ritchie Capital Management Ltd has been struggling for two years now with below-average returns and the word is out that the company plans to sell its flagship hedge fund to equal partners in the venture, Reservoir Capital Group and Coller Capital.

Ritchie Capital, which oversees about $2.8 billion including borrowed money, will liquidate its Multistrategy Global Fund and return cash to investors. The company told investors that the Ritchie Capital Management flagship multi-strategy hedge fund had about $730 million in assets in mid-2006.

Richie is negotiating to sell the flagship hedge fund's assets to Reservoir, the $3 billion hedge fund investor, and Coller, which manages about $3.5 billion, in a deal that could be worth more than $1 billion. According to the deal with Coller, the current chief executive, Thane Ritchie, may continue to manage the fund after the sale.

Chicago-based Ritchie, a diversified hedge fund group that faced an extended period of under performance and investor demands for capital returns, has been in exclusive talks with Reservoir and Coller for several months to buy the flagship fund, sources have said.