"LTCM Group trying to raise financing - WSJ (Reuters)"
Wednesday October 28, 4:57 am Eastern Time
LTCM Group trying to raise financing - WSJ
NEW YORK, Oct 28 (Reuters) - The collection of brokerage firms and banks that oversee hedge fund Long-Term Capital Management LP is trying to raise funding to replace secured credit lines that were previously provided by banks outside the group as they expire in the next couple of months, the Wall Street Journal reported Wednesday.
This news comes as the beleaguered fund on Tuesday laid off 20 percent of its work force in an effort to trim costs, people familiar with the situation told the paper.
The Greenwich, Conn., hedge fund is also considering reducing its number of partners, the report said.
It is unclear how much in financing will have to be raised, but some people familiar with the situation say between 15 percent and 20 percent of Long-Term Capital's $100 billion balance sheet was financed by banks that weren't among the group of 14 firms and banks that bailed out the fund, the report said.
Not all of Long-Term Capital's nongroup lenders necessarily will back away from financing the hedge fund when their credit lines expire, these sources told the paper.
Meanwhile, it is unclear how receptive the 14 Wall Street securities firms and commercial banks that have each sunk $300 million into rescuing Long-Term Capital will be to assuming financing of more of the hedge fund's positions, the sources also told the Journal.
Tuesday, a spokesman for the Wall Street group said in response: ''There absolutely is no dissent at the board level or the oversight committee level on this issue. Clearly, there have been open discussions about the issue, but there has been no dissent of any kind,'' the report said.
If Long-Term Capital can't roll over credit lines that aren't renewed by nongroup banks, then the hedge fund could have to liquidate more of its positions, the report noted. |
