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Highly Confident Letter
The "highly confident letter" was a financing tool created by investment bankers at Drexel Burnham Lambert, dominated by Michael Milken, in the 1980s. Its objective was to enable corporate raiders to launch leveraged buyout (LBO) offers without the debt component of their financing package fully in place. The letter was first crafted in 1983 for use in Carl Icahn's attempt to take ownership of Phillips 66. The conventional wisdom was that due to Icahn's reputation as a takeover artist combined with the junk bond's perception as below investment grade paper, no bank would want to commit the cash necessary to augment any bonds Drexel would raise. Leon Black, Drexel's lead investment banker on the deal, proposed that Drexel write a letter advising the banks that it was "highly confident" that it would be able to raise the required debt in time to fulfill Icahn's obligations. A large portion of the debt financing would be composed of junk bonds raised by Milken. In essence, Drexel, as ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Investment Bank
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort. In finance, the purpose of investing is to generate a return from the invested asset. The return may consist of a gain (profit) or a loss realized from the sale of a property or an investment, unrealized capital appreciation (or depreciation), or investment income such as dividends, interest, or rental income, or a combination of capital gain and income. The return may also include currency gains or losses due to changes in the foreign currency exchange rates. Investors generally expect higher returns from riskier investments. When a low-risk investment is made, the return is also generally low. Similarly, high risk comes with a chance of high losses. Investors, particularly novices, are often advised to diversify their portfolio. Diversification has the statistical effect ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Drexel Burnham Lambert
Drexel Burnham Lambert was an American multinational investment bank that was forced into bankruptcy in 1990 due to its involvement in illegal activities in the junk bond market, driven by senior executive Michael Milken. At its height, it was a Bulge Bracket bank, as the fifth-largest investment bank in the United States. The firm had its most profitable fiscal year in 1986, netting $545.5 million—at the time, the most profitable year ever for a Wall Street firm, and equivalent to $ billion in . Milken, who was Drexel's head of high-yield securities, was paid $295 million, the highest salary that an employee in the modern history of the world has ever received. The firm's aggressive culture led many Drexel employees to stray into unethical, and sometimes illegal, conduct. Milken and his colleagues at the high-yield bond department believed the securities laws hindered the free flow of trade. Eventually, Drexel's excessive ambition led it to abuse the junk bond market a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Michael Milken
Michael Robert Milken (born July 4, 1946) is an American financier. He is known for his role in the development of the market for high-yield bonds ("junk bonds"), and his conviction and sentence following a guilty plea on felony charges for violating U.S. securities laws. Milken's compensation while head of the high-yield bond department at Drexel Burnham Lambert in the late 1980s exceeded $1 billion over a four-year period, a record for U.S. income at that time. With a net worth of $6 billion as of 2022, he is ranked by ''Forbes'' magazine as the 412th richest person in the world. Milken was indicted for racketeering and securities fraud in 1989 in an insider trading investigation. As the result of a plea bargain, he pleaded guilty to securities and reporting violations but not to racketeering or insider trading. Milken was sentenced to ten years in prison, fined $600 million (although his personal website claims $200 million) and permanently barred from the securities indu ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Corporate Raider
A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and recognized as such in law for certain purposes. Early incorporated entities were established by charter (i.e. by an ''ad hoc'' act granted by a monarch or passed by a parliament or legislature). Most jurisdictions now allow the creation of new corporations through registration. Corporations come in many different types but are usually divided by the law of the jurisdiction where they are chartered based on two aspects: by whether they can issue stock, or by whether they are formed to make a profit. Depending on the number of owners, a corporation can be classified as ''aggregate'' (the subject of this article) or '' sole'' (a legal entity consisting of a single incorporated office occupied by a single natural person). One of the most attract ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Leveraged Buyout
A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money (leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company. The use of debt, which normally has a lower cost of capital than equity, serves to reduce the overall cost of financing the acquisition. The cost of debt is lower because interest payments often reduce corporate income tax liability, whereas dividend payments normally do not. This reduced cost of financing allows greater gains to accrue to the equity, and, as a result, the debt serves as a lever to increase the returns to the equity. The term LBO is usually employed when a financial sponsor acquires a company. However, many corporate transactions are partially funded by bank debt, thus effectively also representing an LBO. LBOs can have many different forms such as management buyout (MBO), ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Carl Icahn
Carl Celian Icahn (; born February 16, 1936) is an American financier. He is the founder and controlling shareholder of Icahn Enterprises, a public company and diversified conglomerate holding company based in Sunny Isles Beach. Icahn takes large stakes in companies that he believes will appreciate via changes to corporate policy and he then pressures management to make changes that he believes will benefit shareholders. He was one of the first activist shareholders and is credited with making that investment strategy mainstream for hedge funds. In the 1980s, Icahn developed a reputation as a "corporate raider" after profiting from the hostile takeover and asset stripping of Trans World Airlines. Icahn is on the ''Forbes'' 400 and has a net worth of approximately $17 billion to $24 billion. Since 2011, Icahn no longer manages money for outside clients, although investors can invest in Icahn Enterprises. Early life and education Icahn was born in Brooklyn to an Ashkenazi J ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Phillips 66
The Phillips 66 Company is an American Multinational corporation, multinational energy company headquartered in Westchase, Houston, Westchase, Houston, Houston, Texas. Its name, dating back to 1927 as a trademark of the Phillips Petroleum Company, helped ground the newly reconfigured Phillips 66. The company today was formed ten years after Phillips merged with Conoco to form ConocoPhillips, the merged company spun off its refining, chemical, and retail assets (known as Downstream (petroleum industry), downstream operations in the oil industry) into a new company bearing the Phillips name. It began trading on the New York Stock Exchange on May 1, 2012, under the ticker PSX. The company is engaged in refining, transporting, and marketing natural gas liquids (NGL) petrochemicals. They are also active in research and development of emerging energy sources and partners with Chevron Corporation, Chevron on chemicals through a joint venture known as Chevron Phillips Chemical. Philli ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Junk Bond
In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade by credit rating agencies. These bonds have a higher risk of default or other adverse credit events, but offer higher yields than investment-grade bonds in order to compensate for the increased risk. Default risk As indicated by their lower credit ratings, high-yield debt entails more risk to the investor compared to investment grade bonds. Investors require a greater yield to compensate them for investing in the riskier securities. In the case of high-yield bonds, the risk is largely that of default: the possibility that the issuer will be unable to make scheduled interest and principal payments in a timely manner. The default rate in the high-yield sector of the U.S. bond market has averaged about 5% over the long term. During the liquidity crisis of 1989-90, the default rate was in the 5.6% to 7% range. During the pandemic of 20 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Leon Black
Leon David Black (born July 31, 1951) is an American investor and the co-founder and former-CEO of the private equity firm Apollo Global Management. Black also served as the chairman of The Museum of Modern Art (MoMA) in New York City from July 2018 until July 2021. Black stepped down as CEO and chairman of Apollo Global Management in 2021, after revelations that he paid the disgraced businessman and convicted sex offender Jeffrey Epstein $158 million for family office tax-related advice over the period from 2012 to 2017. Early life and education Black is a son of Eli M. Black (1921–1975), a prominent Jewish businessman who emigrated from Poland and was best known for owning the United Brands Company. His mother, Shirley Lubell (sister of Tulsa oil executive Benedict I. Lubell) was an artist. In 1975, his father died by suicide, jumping out of the 44th floor of the Pan Am Building in New York City. It was later made public that, at the time, federal regulators were inves ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Underwriter
Underwriting (UW) services are provided by some large financial institutions, such as banks, insurance companies and investment houses, whereby they guarantee payment in case of damage or financial loss and accept the financial risk for liability arising from such guarantee. An underwriting arrangement may be created in a number of situations including insurance, issues of security in a public offering, and bank lending, among others. The person or institution that agrees to sell a minimum number of securities of the company for commission is called the underwriter. History The term "underwriting" derives from the Lloyd's of London insurance market. Financial backers (or risk takers), who would accept some of the risk on a given venture (historically a sea voyage with associated risks of shipwreck) in exchange for a insurance premium, premium, would literally write their names under the risk information that was written on a Lloyd's slip created for this purpose. Securities un ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
James B
James is a common English language surname and given name: *James (name), the typically masculine first name James * James (surname), various people with the last name James James or James City may also refer to: People * King James (other), various kings named James * Saint James (other) * James (musician) * James, brother of Jesus Places Canada * James Bay, a large body of water * James, Ontario United Kingdom * James College, York, James College, a college of the University of York United States * James, Georgia, an unincorporated community * James, Iowa, an unincorporated community * James City, North Carolina * James City County, Virginia ** James City (Virginia Company) ** James City Shire * James City, Pennsylvania * St. James City, Florida Arts, entertainment, and media * James (2005 film), ''James'' (2005 film), a Bollywood film * James (2008 film), ''James'' (2008 film), an Irish short film * James (2022 film), ''James'' (2022 film), an Indian Kannada ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
