The end result will be another 1929 crash
Buff Deamons | 27.06.2007 08:21
Infinity-pool4
The trio of private equity houses behind the £6.15bn merger of Saga and the AA are taking out £2bn in loot out as part of the scam.
It has been possible to loot this amount of money because of the way in which the scam has been structured.
The scam involves a new holding company buying both companies.
The new company is over-valued at £6.15bn by a pen-stroke doubling of the debt to £4.8bn to service the loot.
This is being provided by a syndicate led by Barclays Capital and Japanese bank Mizuho.
The two companies, Saga and the AA, originally had only £2.8bn of debt between them.
The £2bn increase in debt reflect the cash the private equity firms are looting out of the business as part of the scam.
CVC and Permira put up only £500m into the AA as part of their £1.75bn acquisition of the motoring services business from Centrica three years ago.
Charterhouse put an equally small amount into Saga in October 2004 at the time of its £1.35bn management buyout from the founding de Haan family.
Yesterday's deal over burdens the AA at a value of £3.35bn and Saga at £2.8bn, both approximately twice the value of three years ago without adding any real value.
That’s the scam.
It is a criminal business conspiracy.
This type of criminal looting of proper companies will eventually lead to, say in the AA case, to customers fixing their own cars.
The end result will be a 1929 crash.
It has been possible to loot this amount of money because of the way in which the scam has been structured.
The scam involves a new holding company buying both companies.
The new company is over-valued at £6.15bn by a pen-stroke doubling of the debt to £4.8bn to service the loot.
This is being provided by a syndicate led by Barclays Capital and Japanese bank Mizuho.
The two companies, Saga and the AA, originally had only £2.8bn of debt between them.
The £2bn increase in debt reflect the cash the private equity firms are looting out of the business as part of the scam.
CVC and Permira put up only £500m into the AA as part of their £1.75bn acquisition of the motoring services business from Centrica three years ago.
Charterhouse put an equally small amount into Saga in October 2004 at the time of its £1.35bn management buyout from the founding de Haan family.
Yesterday's deal over burdens the AA at a value of £3.35bn and Saga at £2.8bn, both approximately twice the value of three years ago without adding any real value.
That’s the scam.
It is a criminal business conspiracy.
This type of criminal looting of proper companies will eventually lead to, say in the AA case, to customers fixing their own cars.
The end result will be a 1929 crash.
Buff Deamons