Banks to Seize Carlyle Capital Assets

NEW YORK — The likely liquidation of Carlyle Capital Corp.'s remaining assets sent the fund's shares plummeting more than 90 percent Thursday and rattled stock markets around the globe. It was also a high-profile setback for private equity fund Carlyle Group.
Carlyle Capital said late Wednesday that it expected creditors to seize all of the fund's remaining assets _ investment-grade mortgage-backed securities _ after unsuccessful negotiations to prevent its liquidation.
Its shares, which went public at $19 a share in July and traded at $12 just last week, tumbled 93.6 percent to 18 cents on the Euronext exchange.
"Although it has been working diligently with its lenders, the company has not been able to reach a mutually beneficial agreement to stabilize its financing," Carlyle Capital said in a statement.
Carlyle Capital said it has defaulted on about $16.6 billion of its debt as of Wednesday, and the rest is expected to go into default soon. About $5.7 billion of the defaulted debt has been sold, the Carlyle Group said Thursday. Spokeswoman Emma Thorpe said she couldn't say what has been done with the rest.
The Amsterdam-listed fund shook financial markets last week after missing margin calls from banks on its $21.7 billion portfolio of residential-mortgage-backed bonds.
Carlyle's troubles have amplified fears that billions of dollars of depressed mortgage-backed securities will flood the market, reducing their value even further. The Dow Jones industrial sank more than 200 points, following indexes in Asia and Europe lower.
The sell-off would mark a huge defeat for the Washington, D.C.-based Carlyle Group, one of the largest private equity firms in the world. Carlyle Capital, registered in Britain but managed by New York-based executives, was the first of its 55 funds to go public.

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