Things are looking up, but only slightly, for Bahama billionaire Joe Lewis.
JPMorgan Chase today upped its offer for Bear Stearns from the bargain-basement price of $2 a share to $10 share. The increase amounts to an additional $97 million for Lewis, who holds 8.35% of the company stock.
Yet even at the higher price, Lewis will lose mightily. Over the past year, he has bought up Bear Stearns shares at an average price of $104. At $10 per share, his losses would exceed $1 billion.
Like many stockholders, Lewis was outraged by the initial deal. In documents filed last week with the Securities and Exchange Commission, he promised that his companies would “take whatever action that they deem necessary and appropriate to protect the value of their investment.”
The Bear Stearns bailout and the resulting shareholder outcry have combined to bring unwanted attention to Lewis and his financial empire. As his daughter Vivienne once explained, “He doesn’t like to talk to people. It aggravates him.”
Lewis started building his fortune as a teenager, when he left school to work for his father’s London catering firm. He made millions when he sold the business in 1979, then moved to the Bahamas, where he made millions more in currency trading. He oversees a complex of companies centered around a holding company, the Tavistock Group.
His interests include land development, life sciences, energy, restaurants such as the Napa Valley Grille and the Alcatraz Brewing Company, and sports, including the Tottenham Hotspur soccer team. His company organizes the annual Tavistock Cup golf tournament, scheduled to be played today and tomorrow, with his friend Tiger Woods among the competitors.
Lewis hasn’t yet publicly responded to JPMorgan’s revised offer, and the SEC listed no new filings from him by the close of the business day. Maybe he chose to spend the day concentrating on golf.
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1 Comments
#1. gk 04.07.2008
Bear Stearns had hired Blackstone as an advisor prior to the bargain basement sale. This provided insider information to Blackstone. Peter Peterson of Blackstone is chair of the nY Fed Res. Board, and hired Tiim Geithner to run the NY Fed as Pres. Previously, Geithner worked for Kissinger, at Kissinger Assoc., and at the Treasury for Robert Rubin of Citigroup., also of the Council on Foreign Relations where he too worked for Peterson. It appears that the Bear Stearns intervention provided an open window to Citigroup which swapped its mortgage debt to the Fed in exchange for new financing (it used the mortgages as collateral). The dump of the BS and Citi portfolios would naturally depress these assets value.so prior to the collapse it appears that Blackstone used its arms length affiliate, Blackkrock to begin setting up a company to buy the mortgage linked securities at a deep discount. Geithner employed Petersons affiliate Blackrock as an advisor, but we know Blackstone itself preceded the use of Blackrock. The obvious conflict of interest of the NY Fed chairman made this necessary. However it may be that Blackstone is an investor in Blackrock given its amicable spinoff from Blackstone.
Enter Jp Morgan, default of Bear Stearns would most likely result in billions of losses on its Mark to market derivative profits with the counterparty BS. Its not clear that a bankruptcy court would allow set off given the higher priority of other lenders in front of JP in the credit queue. Thus an asymetrical default of the BS profits, and held obligations to BS by JP, would result in huge losses to the bank via the enormous notional value of its derivativ4e portfolio. Hence it accepted the first 1 billion in losses as part of the deal, with a cap on further losses, in other words, it traded tens of billions of loss exposure for a certain one billion loss via the Fed deal.
The losses exceeding the 1 B would either be printed by the Fed, or as suggested by Steel of Treasury, passed on to taxpaers. JP Morgan of course is a major funding source like Citi of the Council on Foreign Relations, Petersons Saudi China lobbying group.
Thus Citi *Rubin boss of Geithner) and JP were bailed out on their derivative losses, as were the creditors of Bear Stearns. JP like in the case of Long Term Capital will also profit from the movement of the BS portfolio into its own books at a mark of 2$ a share. Blackstone-Blackrock earns a fee and buys the sold off junk at a deep discount, profiting when “stability” returns to the markets.
Yet it may be that foreign governments were also part of this negogiation. Both the Saudis and Chi-Coms are major financing suppliers to the Fed, Chinese speaking Geithner may be their man at the Fed, his loyalty proven at Kissinger Assoc,. and at Treasury. Blackstone itself has a 3 B stake from China, to which we know of. Kissinger Assoc, created the China manufacturing powerhouse through its joint ventures initiations while Geithner worked there. Rubin a senior exec. at Citi of course would be the contact to Saudi Arabia, wheras Citi’s largest investor is Saudi Kingdom Holding Corp or affiliates.
Incidently,at about or overlapping with Geitner’s tenure at Kissinger Assoc., ( a Saudi-China lobbying group well known to Peterson via his other chairmanship of the Council on Foreign Relations); the company was investigated-(subpoena) by the US Congress as part of the BCCI money laundering scandal and bankruptcy. Geithner is a East Asia economics specialist so presumably he worked on the China Joint Venture but could have been involved in the Kissinger-BCCI influence peddling in Brazil investigated by the Congress.BCCI was of course a criminal enterprise with its management and financial locus in the Gulf States.
Where there is somke theres usually fire, but this is entirely speculative at this point, but easily verified by inspection of wire, and email data prior to the scam. Helicopter Ben is already cracking, could hardly speak at the Senate Banking comm. Geithner was aloo very circumspect in his answers especially to Shumer.
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