The Carlyle Group Issues Additional Statement on CCC
Washington, DC -- Global private equity firm The Carlyle Group today issued the following statement related to Carlyle Capital Corporation (CCC).
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Carlyle Capital Corporation (CCC), a publicly-listed company on Euronext Amsterdam N.V., announced on March 12th that its negotiations with lenders to refinance its portfolio of U.S. government agency AAA-rated residential mortgage-backed securities (RMBS) had ended. CCC was unable to reach a deal with lenders to refinance its portfolio on sustainable terms. As a result, it is expected that CCC’s lenders will take possession of CCC’s remaining RMBS assets.
The Carlyle Group worked exhaustively to assist CCC with its negotiations to obtain financing arrangements that would have allowed CCC to retain a portion of its portfolio of assets in an effort to generate value for the interested parties. Carlyle took extraordinary measures to help CCC manage through its liquidity crisis, including providing a $150 million subordinated line of credit to the fund.
CCC is a separate legal and business entity, and we believe it will not have a measurable impact on any of our other funds, investments and portfolio companies. CCC’s defaults under its repurchase agreements with its lenders do not trigger cross-defaults for any borrowings by The Carlyle Group, any of its other investment funds or any of The Carlyle Group’s portfolio companies.
The Carlyle Group manages $81.1 billion in 60 investment funds in buyouts, real estate, growth capital and leveraged finance across Africa, Asia, Australia, Europe, North America and South America. Since 1987, the firm has invested $43.0 billion of equity in 774 corporate and real estate transactions for a total purchase price of $229.3 billion. We continue to work to generate what we believe are good returns for our investors from our many other funds and businesses spanning the globe.
When The Carlyle Group created CCC in 2006, it was designed to provide attractive risk-adjusted returns for shareholders by investing in a diversified portfolio of fixed income assets consisting of U.S. government agency AAA-rated RMBS securities and leveraged finance assets. Due to the low-risk, low-return nature of the U.S. government agency-backed securities, a large position (and thus a correspondingly large amount of leverage) was required to realize gains substantial enough to warrant the investment. At the time, this approach was time tested in the market for these types of assets. Unfortunately, extreme volatility and market movement during this liquidity crisis created a hostile environment for CCC and similar types of vehicles.
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