$100 million raised by Foothill to invest with indebted firms.$100 million raised by Foothill to invest with indebted firms The Foothill Group Inc. announced last week that its Foothill Partners Limited Partnership has raised $100 million in commitments to invest in bank debt of distressed companies. The new Foothill fund will target investments in performing and nonperforming loans to distressed and bankrupt companies while avoiding subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". or high-yield junk bonds junk bond, a bond that involves greater than usual risk as an investment and pays a relatively high rate of interest, typically issued by a company lacking an established earnings history or having a questionable credit history. . A senior executive at the Los Angeles-based company said that large institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. have responded to the fund as a means of earning returns larger than Treasury securities without the risk of junk bonds. "There is a little more risk reward (than Treasury securities) but it is a safe investment," said Henry Jordan Henry Wendell Jordan (January 26, 1935 - February 21, 1977) was a former American football defensive tackle who played for two teams, the Green Bay Packers and the Cleveland Browns during his thirteen year National Football League career from 1957 to 1969. , chief financial officer for the Foothill Group. "This is mostly secured senior bank debt that is performing or where we feel emergence from bankruptcy is expected in the near term." Jordan also noted that the partnership may receive better terms from banks to assume their debt given pressures to reduce relatively risky assets under federal capital standards. Foothill has managed two other bank debt funds since 1988, representing commitments of more than $77 million. Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. Capital Markets acted as exclusive financial advisor and placement agent in the current private placement offering. |
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