Long-Term Capital May Start Paying Off its Banks by June as Money Rolls In
Long-Term Capital May Start Paying Off its Banks by June
New York, March 24 (Bloomberg) -- Long-Term Capital
Management LP is making so much money it may start paying back
the 14 banks and securities firms that rescued it six months ago.
The Greenwich, Connecticut-based hedge fund, founded by
former Salomon Inc. Vice Chairman John Meriwether, may start
making the payments by June, people with knowledge of the group's
plans said. Details are being hammered out by the six-bank
committee that oversees the fund and are scheduled to be
presented to the firms in the next two weeks.
Goldman Sachs Group Inc., Merrill Lynch & Co., J.P. Morgan &
Co. and 11 other firms pumped a total of $3.6 billion into Long-
Term Capital in September, after it lost $4 billion. They took a
90 percent stake rather than risk the tremors a total collapse
would have sent through global financial markets. The banks
contributed $100 million to $300 million apiece for as long as
three years.
Since then, Long-Term Capital's profits boosted its net
assets by about 25 percent to about $5 billion at the end of
February from $400 million just before the cash infusion. The key
was the recovery in world bond markets after Russia's default in
August touched off a rout that decimated the hedge fund. Long-
Term Capital had made wagers of more than $125 billion, mostly
with borrowed money.
At next month's meeting, the oversight committee will
outline a blueprint for the fund that may allow Meriwether and
his 13 partners, including former Salomon traders Eric Rosenfeld
and Lawrence Hilibrand, to start raising money within a year, the
people said.
A spokesman for the group of banks declined to comment on
the committee's plans.
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