Blackstone Says The New York Times Inaccurate and Misleading Partners to Pay over $900 Million in Taxes as a Result of IPO.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Blackstone Group Blackstone Group L.P. (NYSE: BX) is a prominent private equity and investment management firm founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman. The company is based in New York City, in River House on Park Avenue at Fifty-first Street, with offices in Atlanta, (NYSE NYSE See: New York Stock Exchange : BX) said today that a front page article in The New York Times is filled with inaccuracies, myths, and misrepresentations that give a false impression of Blackstone's tax situation and that of its partners. Blackstone is not in any way taking advantage of tax loopholes, but rather is using a standard tax method used widely by private and public companies when business assets are sold. The Times said that Blackstone partners will effectively avoid paying taxes on the sale of interests when in fact the Blackstone partners will pay taxes on every dollar they receive from the IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. at a normal capital gains rate. The Times further alleged that the partners at Blackstone would receive benefits from the government in excess of the taxes being paid on the sale of interests, which is completely inaccurate. The partners will not obtain any tax credits or payments from the government, as was alleged by the Times. The Blackstone owners sold interests in their business to an entity owned by the public. As in any sale of business assets, the buyer is entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to tax benefits based on the purchase price. Normally, a buyer and seller take tax benefits into account in determining the purchase price. The buyer generally pays more if the buyer obtains tax benefits, such as a step-up in basis Step-Up In Basis The readjustment of the value of an appreciated asset for tax purposes upon inheritance. With a step-up in basis, the value of the asset is determined to be the higher market value of the asset at the time of inheritance, not the value at which the original party , than if the buyer does not obtain such tax benefits. This was structured with the underwriters and fully disclosed to the public as part of the IPO. The only difference in Blackstone's case is the parties agreed that the public buying the business interests would pay the additional purchase price over time rather than immediately. This same approach has been used in public and private transactions over the years, and is not an inappropriate use of the tax code. The article failed to mention that Blackstone partners will pay taxes on all of the future payments, which constitute taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. . The article's analysis used an unusually low discount rate to attempt to mischaracterize mis·char·ac·ter·ize tr.v. mis·char·ac·ter·ized, mis·char·ac·ter·iz·ing, mis·char·ac·ter·iz·es To give a false or misleading character to: mischaracterized the findings of the study. the benefits and omitted any mention that the partners pay taxes on those payments. Blackstone partners are expected to pay more than $900 million in tax payments as a result of the IPO, as opposed to the article's statement that Blackstone partners will pay no taxes on the sale. Lastly, The Times further mischaracterizes the IPO by saying the partners sold the good will from their "left pocket to their right" when in fact the Blackstone partners sold business interests to the public. About The Blackstone Group The Blackstone Group is a leading global alternative asset manager and provider of financial advisory services advisory services advisory services provided to the public, in their capacity as owners and managers of animals, are an important part of veterinary science. They may be provided by government bureaux, by commercial companies who deal in pharmaceuticals or animals or animal . Its alternative asset management businesses include the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" , mezzanine funds A mezzanine fund is a type of private equity or merchant banking fund. A typical mezzanine investment consists of a debt or debt-like instrument, paired with an equity “sweetener. , senior debt funds, proprietary hedge funds and closed-end mutual funds. The Blackstone Group also provides various financial advisory services, including mergers and acquisitions advisory, restructuring and reorganization advisory and fund placement services. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which reflect our current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as ''outlook,'' ''believes,'' ''expects,'' ''potential,'' ''continues,'' ''may,'' ''will,'' ''should,'' ''seeks,'' ''approximately,'' ''predicts,'' ''intends,'' ''plans,'' ''estimates,'' ''anticipates'' or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to those described under the section entitled ''Risk Factors'' in our prospectus dated June 21, 2007, filed with the SEC in accordance with Rule 424(b) of the Securities Act on June 25, 2006 (the "Prospectus"), which is accessible on the Securities and Exchange Commission's website at sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the Prospectus. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. |
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