PE Sponsors Strip Distressed Bondholder Collateral via Restricted Payment Baskets
Peter Troob · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · Jul 2, 2018 · at 22:28
Peter Troob, CIO of Troob Capital Management, discusses how private equity sponsors exploit covenant loopholes to shift collateral away from high-yield bondholders.
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“What, I mean, you can see it in what they did with J.Crew, where they can, and now they're, I think they might be doing it in PetSmart as well, where they're able to have a restricted payment basket, move parts of companies out, and the bond guys get held, sitting there holding less assets and a worse company, and by the way, it's better off for the private equity guys. The private equity guys are in control of the future with their war chests, not the high yield guys.”
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