aurelius capital management
image: marie - lan nguyen, fragment of a bronze portrait of marcus aurelius, louvre. aurelius® and aurelius capital management® are trademarks of aurelius capital management, lp, and are registered in the united states and other jurisdictions .
one of the hedge funds, aurelius capital management, is best known for a long - running battle to force argentina to pay out $ 1. 3bn (£800m) while silver point capital has been linked to a number of troubled financial firms such as lehman and iceland' s glitnir .
tasked with delivering returns on client capital, a common dilemma for many alternative ...
connecting. connecting strong capital base, international contacts and a large team of experienced specialists .
mark brodsky’s distressed debt hedge fund aurelius capital management alleged in a court filing on monday that an element of puerto rico' s historic $ 72 billion bankruptcy case violates the u. s. constitution and should be dismissed .
brodsky, a former bankruptcy lawyer at paul singer’s elliott associates, founded new york - based aurelius capital management in 2005 and has more than $ 4. 5 billion in aum. it rose to prominence during a long and ultimately profitable battle with argentina over its defaulted sovereign debt .
wilmington, del (reuters) - a delaware judge ruled friday that wireless carrier clearwire corp was sold in 2013 for more than twice its fair value, a decision that dealt a stinging loss to the aurelius capital management hedge fund which spent years battling to prove clearwire was vastly underpriced .
unlike singer’s $ 27 billion elliott management, which has also become a major activist player in the stock market, aurelius is a much smaller fund that is solely focused on distressed debt .
the saga with argentina started when the country defaulted on its debt in 2001, in the midst of the worst economic and social crisis of its history. after the default, a group of hedge funds that included nml capital (a subsidiary of elliot management, which we’ll talk about again later), aurelius capital management, dart management, blue angel capital, bracebridge capital, olifant fund, and montreux partners bought argentine defaulted bonds in secondary markets on the cheap. nml, for instance, paid an average price of about 27 cents on the dollar over its declared purchases. they litigated in new york courts, demanding the country pay the full face value and the interest rate that had been included in the terms of the original contracts. due to the well - known default risks, the interest rates were high, about 10% per year on most contracts; in one of the bond series, fran, interest rate was linked to the country default risk, and after the default the contracted annual interest rate skyrocketed to 101% .
aurelius group is a pan - european asset manager with offices in munich, london, stockholm, and madrid. over the last ten years, aurelius has grown from a local turnaround investor to an international multi - asset manager investing in a wide range of sectors and across the capital structure .
we have a track record of successful investment in more than 50 companies in numerous geographies, industries and sectors. aurelius improves the operational performance of companies by providing management capabilities and financial resources for investing in products, sales and r & d. aurelius has liquid cash resources for investment of over £200m .
the main hurdle for puerto rico is mark brodsky, a former bankruptcy lawyer who in 2004 left singer’s elliott management after 10 years to strike out on his own .
brodsky’s firm, the $ 4. 5 billion aurelius capital, is one of several hedge funds that own puerto rico’s general obligations bonds and are due an interest payment of $ 267 million on dec. 1 — a debt puerto rico said it can’t pay .
at aurelius group we are always on the lookout for people who want more than just a job .
he’s also having a bad year. aurelius had lost 3 percent this year through october, according to investors .
aurelius’ experienced uk team comprises both investment specialists and operational managers, who together are dedicated to sourcing, executing and managing investments across the uk & ireland. we are supported by aurelius group' s executive, investment and operational teams .
aurelius owns a big chunk of puerto rico’s $ 12 billion in general obligation debt — part of its overall debt load .
a spokesman for aurelius, which spent years battling argentina over its defaulted debt, did not immediately respond to a request for comment .
over the next 16 days (and beyond), aurelius is expected to be just as sharp a thorn in puerto rico’s side .
briar is a provider of crop protection and specialty industrial chemicals and aurelius’ third major acquisition in the chemicals industry. an aurelius investment since september 2012, the norwich - based business was acquired from bayer cropscience. our strategy since investment has been to focus on extending briar’s product portfolio and expanding contract production for third - party customers, as well as maximising the marketing expertise of existing aurelius affiliates in the specialty chemicals sector
aurelius equity opportunities se & co. kgaa 1. 00 per cent convertible bonds due 2020 (isin: de000a168544) (the “bonds” )
in taking on the co - op, aurelius is working with the silver point capital firm set up in connecticut in 2002 by two former goldman sachs employees edward mulé and robert o' shea. it has wide - range of investments covering broadcasting – it bought two us tv stations out of bankruptcy – as well as car makers and financial services. silver point played a high profile role in the bankruptcy of hostess, the us food company best known for its twinkies cakes .
the commonwealth’s federally appointed oversight board initiated a broad swath of cost - cutting measures in may under the authority of the 2016 puerto rico oversight management and economic stability act, better known as promesa, since puerto rico is barred from declaring traditional municipal bankruptcy protection via chapter 9 of the u. s. code .
the two hedge funds are thought to have built up heir holdings in co - op bonds after the bank was downgraded to junk in may and its chief executive barry tootell quit. on friday the banker who stood in until a full time successor was found, rod bulmer, announced he would quit in the latest management upheaval .
typically, each side presents extreme valuations and the judge finds fair value somewhere in the middle. instead, laster took clearwire' s valuation and rejected aurelius' s .
but aurelius hasn’t been in the creditor meetings, sources said. in fact, aurelius’ posture is one of the reasons the so - called ad hoc group of puerto rican creditors — to which it belonged — recently broke up after many of the funds realized that lobbying for full payment wasn’t going to work, these sources told the post .
“it’s one thing to have a claim, and it’s another thing to expect to get that, ” said one hedge fund manager regarding aurelius’ take - no - prisoners attitude .
aurelius uk invests in european, middle market, private and public companies which have improvement potential through financial and operational support. we make investment decisions based on the following criteria :
this year’s survey canvassed the opinions of respondents from aurelius’ network of uk and continental european advisory and corporate contacts on their expectations for corporate carve - out activity in the european market in 2017 .
after clearwire shareholders approved the deal, an affiliate of aurelius that had opposed the sprint acquisition brought what is known as an appraisal action, asking a judge to determine fair value of the stock .
when brodsky teamed up with his ally singer as investors in argentine debt, it was aurelius who was the most stubborn holdout — not singer, who got most of the headlines, sources said .
brodsky, a lawyer by background, had worked at elliott before he set up his own venture in 2005, naming it after the respected roman emperor marcus aurelius. aurelius has been involved in debt restructurings as diverse as dubai world and of the us publisher tribune co, owner of the los angeles times. its projects can be long - running. some of its legal battles have lasted a decade .
indeed, there used to be a law that prohibited this behavior— the so - called champerty defense, which prohibited the purchase of debt in default with the intent of suing the issuer. in 1998, however, elliot management, the same hedge fund that led the dispute against argentina and that had bought peruvian debt in default, sued the country and won. the case set an awful precedent .
vice chancellor travis laster on friday sided with clearwire, which had said the fair price was $ 2. 13 per share, or about $ 53 million for the fund' s stock. aurelius will also collect interest .
aurelius and silver point are known for fighting hard when their investments run into trouble. led by mark brodsky, aurelius is locked in court battles to get $ 1. 3bn from argentina – along with nml, part of elliott associates. last month a new york appeal court rejected attempts by argentina to overturn an earlier ruling that requires the country to pay the money related its 2002 default. the case has now gone to the us supreme court .
over the past decade aurelius group has invested in more than 60 companies across europe. our current portfolio companies employ more than 23, 000 people, generating combined annual revenues in excess of £2. 5 billion. set out below are those of our deals that have uk operations .
accordingly, affiliates of aurelius contend in the filing, the creation of the oversight board is violation of the appointments clause of the constitution, since its members answer only to the u. s. president but were never officially confirmed by the senate, thus violating the separation of powers principle .
transform is the uk’s leading provider of surgical and non - surgical cosmetic procedures. the company, which has belonged to the aurelius group since the end of june 2015, comprises 25 clinics in england, scotland, wales, and northern ireland, as well as three dedicated cosmetic procedures hospitals in manchester, birmingham, and london. the business was enlarged by the acquisition of the hospital group in 2016
calachem fine chemicals is a leading producer of fine chemicals for renowned clients in the agrochemical, pharmaceutical and speciality chemical sectors. the company offers a range of services including manufacture, development and large - scale production. it also provides a range of services to other companies adjacent to its site in grangemouth, scotland. before being acquired by aurelius, calachem was a subsidiary of the 3i - backed finnish kemfine group
aurelius, which owns approximately $ 468 million in debt whose principal is essentially guaranteed by the puerto rico constitution, seeks to bar the board from operating until it has been properly constituted, according to a reuters article. although initially supported by many of the commonwealth’s creditors, the board has sought to impose severe haircuts to bondholders while also pushing for broad austerity and cost - cutting measures for the island in general .
the continued development of our business heavily relies on us recruiting bright people able to source and execute investments as well as manage and restructure companies. we are a long - term investor and have the same commitment to our people. in our dynamically growing group, we offer employees a great career opportunity – whether you are looking for a role as an intern or managing director, lawyer or operational manager, aurelius will be a good home for your career .
sealine international is a leading motor boat builder acquired in september 2013 by aurelius group, as a bolt - on to hanseyachts. during its 40 year history, sealine has developed a reputation for 35 - 60 ft motor yachts which feature ground - breaking, cutting - edge designs. following acquisition, production of the sealine range has been moved to one of the most state - of - the - art yacht yards in the world, located at greifswald, germany
the co - operative bank may be forced into flotation by two us hedge funds. photograph: martin argles for the guardian
two us hedge funds have forced the co - operative bank to set up an independent committee to review the american investors' plan to turn the 140 - year - old mutually owned bank into a listed company .
through their lt2 group – so called because they own what are known as lower tier two bonds – they are attempting to derail a plan to force bondholders to take losses on their investments to plug a £1. 5bn hole in the bank .
the co - operative group – formed by the rochdale pioneers in 1844 and now owners of grocers, pharmacies and funeral homes as well as the bank – wants bondholders to agree to take £500m of losses in return for the conglomerate putting £1bn into the bank. about £500m of that £1bn will come through selling off insurance businesses and another £500m by issuing new bonds to existing bondholders who will also get shares in the bank. the shares will be listed on the stock market, but majority owned by the co - op group .
euan sutherland, the new boss of the co - op group, warned last month that the only alternative to the co - op plan was nationalisation, but the hedge funds argue that their plan, a straight - forward swap of £1. 3bn of debt into equity, is a real alternative .
on friday night, the co - op bank and the group said they would form an independent committee – chaired by the bank' s chairman richard pym and advised by bankers at greenhill – to
consider third - party approaches in relation to the group' s recapitalisation plan
in direct response to the approach by lt2 at the start of the week .
the identities of the dozen or so other members of lt2 is not known publicly and not even to other members of the group, which is being advised by specialist investment bank moelis .
the lt2 group reckons it has a big enough combined stake to block the co - op' s current restructuring plan, which has already been approved by the prudential regulation authority and needs to be voted through by 75% of bondholders. there are two other groups of bond holders – one run by mark taber for private investors and another involving cls holdings that has around 2% of the debt. the latter is thought to be supportive of the lt2 group idea .
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argentine activists burn a united states flag in the midst of the country' s economic debt crisis .
recently, a resonant legal victory of hedge funds over argentina has captured the attention of the global community. the hedge funds in this case aren’t run of the mill investment shops, however. popularly known as vulture funds, their modus operandi is to buy up the debt of countries suffering crises at bargain prices, only to fiercely litigate with them afterwards. they attempt to claim full payment—principal and interest—employing a variety of tactics (including hiring lobbyists) to put pressure on the distressed debtors to satisfy their claims. and in the wake of argentina’s loss, puerto rico may be in their crosshairs next .
it may not seem to matter whether a sovereign debt crisis is resolved quickly or not, but in fact delays in resolution are bad for almost everyone involved. they worsen the situation of the country in distress, and dim prospects for creditors to recover their investments. the small group of notorious wall street vulture funds have seized on these national crises to create extraordinary business opportunities for themselves. over the past twenty years, these companies have raked in billions by undercutting orderly operation of the world’s financial markets .
notorious vulture funds have seized on national crises to create extraordinary business opportunities for themselves .
and they won. in 2012, judge t. griesa (from the southern district of new york) ruled in their favor. following the default, and two rounds of restructuring (in 2005 and 2010), 93% of the country’s bondholders accepted new bonds in exchange of the defaulted ones with a discount of about two - thirds. griesa’s decision, besides creating an enormous inequity among the different bondholders, also violated the right of the restructured bondholders to get paid, as upon the vultures’ request he granted an injunction that prohibited any payment to those bondholders until the vultures got paid in full (in 2014 the us supreme court declined to review the case). last april, argentina finally settled. nml, the leading litigant, made more than $ 2 billion, a return of over 1, 200% . the others (including non - vulture holdout creditors) also made handsome profits .
describing these hedge funds as “vultures” is likely unfair to the actual birds. vultures, at least, play an important role in the ecosystem. these wall street vultures, on the other hand, play no positive role for the functioning of the international financial system. instead they undermine it, impeding the finalization of sovereign debt restructurings that are needed for countries in deep distress to put their economies back on track .
unfortunately, the tactics used in argentina are not new; argentina’s case was simply bigger. astonishingly, what these companies do is legal. but they also helped shape the laws that make it legal .
in 2004, vultures obtained an even larger victory: champerty was eliminated from new york state legislation for transactions greater than $ 500, 000. new york state senator john marchi presented the bill and it passed, despite evidence of alleged connections between the vulture hedge fund and the politician: on mar. 25, 2004, paul singer, head of elliott, made a donation to a group affiliated with the politician .
not surprisingly, litigation in sovereign defaults has increased steadily in the past decade. but the vultures’ victory over argentina represents a new low, both legally and ethically. why, going forward, would any bondholder agree to a discounted rate of return if there’s a chance to be a holdout and collect returns that are orders of magnitude greater ?
more often than not, sovereign debt restructurings are not deep enough to restore a national economy’s capacity for growth. but they are the best worst option for governments in desperate situations. the vultures’ most recent victory will only aggravate this problem, as debtor countries will become more prone to settle on terms even friendlier for creditors, even if those terms do not restore debt sustainability. the end of the commodity boom means we’re likely to see more countries put in this position .
astonishingly, what these companies do is legal. but they also helped shape the laws that make it legal .
more recently, puerto rico—not a sovereign nation—has found itself in a severe debt spiral. even though puerto rico is a us territory, the us bankruptcy code does not extend to the island—which would make the restructuring process that the country desperately needs chaotic and difficult to finalize. this would be the perfect land for vulture funds .
puerto rico has been trying hard to convince the us to extend the bankruptcy law to include the territory, but so far it has not succeeded. unsurprisingly, some hedge funds have been lobbying against this legal change. puerto rico also tried to enact its own bankruptcy law, but following a demand from oppenheimer funds and franklin templeton investments, the federal court in puerto rico and the us court of appeals for the first circuit declared any such law unconstitutional—and on june 13 the us supreme court affirmed the decision. the us congress has now the chance to pass new legislation to avoid a disaster in its own territory .
vulture hedge funds’ predatory behavior is bad for individual countries but ultimately, it also threatens the entire global financial system. to improve the workings of globalization, the international financial architecture needs new rules. in 2014, the united nations took the lead for pushing reforms, but the us and the uk, the two largest lending jurisdictions, did not support the process. for the good health of the global economy, it’s time for advanced nations to join efforts with the less developed ones, and work seriously on rules that work for everyone—not just for the vultures .
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a delaware judge has dealt a blow to a $ 3. 5 billion hedge fund
sprint corp acquired clearwire in 2013 after a bidding war with dish network corp pushed the price to $ 5 per share, valuing clearwire at about $ 14 billion .
the affiliate had sought $ 16. 08 for each of its 25 million shares, or about $ 400 million .
the ruling stands out for a court that rarely finds fair value below deal price, let alone more than 50 percent below .
sprint, controlled by japan' s softbank group corp, said it was pleased the court recognized clearwire shareholders received a significant premium .
wall street dealmakers have urged delaware judges and lawmakers to discourage appraisal, which has been become an investment strategy for hedge funds .
minor myers, a professor at brooklyn law school who studies appraisal, called the ruling unusual .
i think it' s a message to litigants to be sure the arguments they put in front of the court are reasonable ,
said myers .
the court has been criticized by dealmakers for not deferring to the negotiated deal price when a company ran a proper marketing and sale process. laster found the clearwire sale was fair to minority investors, but only after dish intervened and the price was driven to $ 5 per share .
the delaware court has ruled in the past year that computer maker dell inc and dfc global corp, a lender, were both sold below fair value despite properly run mergers .
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the board is the entity that, under promesa, technically brought the bankruptcy filing .
hfrx global hedge fund index up + 0. 19% through mid - march
eurekahedge: hedge fund down - 1. 64% , the worst monthly loss since may 2010
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a member of a labor union shouts slogans while holding a puerto rico flag during a protest in san juan .
as puerto rico careens toward a major default on its $ 70 billion debt load, one hedge fund mogul is emerging as a stumbling block to any deal with creditors .
no, it’s not renowned “holdout” paul singer, who isn’t involved in the island .
this week, moody’s investors service said default is likely. while no official talks have been held, the island commonwealth has said it wants bondholders to take losses or exchange their debt for new bonds that pay a lower interest rate and carry a longer payout period .
so far, brodsky is less than bowled over by the idea, several sources said .
“he’s digging in his heels and refusing to compromise, ” said a person close to the informal discussions that have taken place among creditors .
in september, brodsky was at it again — trying to block a restructuring deal between ukraine and its bondholders, according to individuals involved in the talks, who said brodsky ended up cutting a side deal to get paid back 100 cents on the dollar .
the creditors have been meeting in recent weeks to try to find common ground on concessions they can agree on in upcoming negotiations with puerto rico .
in recent weeks, the treasury department has asked congress to intervene by passing a bankruptcy law for puerto rico .
such a change is unlikely to happen — at least not before the commonwealth runs out of money, sources said .
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aurelius capital management is a us hedge fund . the company is run by mark brodsky , a lawyer formerly employed by elliott associates . in october 2013 , aurelius attempted to force the government of argentina to pay $ 1.3 bn following the 2010 argentinian default on debt . aurelius has been involved in debt restructuring of dubai world and tribune co ; and , in october 2013 , the co-operative bank . aurelius led a push to apply $ 54 billion of petrobas bonds governed by u.s. law in the state of new york . 
aurelius capital management is a us hedge fund. the company is run by mark brodsky, a lawyer formerly employed by elliott associates. in october 2013, aurelius attempted to force the government of argentina to pay $ 1.3 bn following the 2010 argentinian default on debt. aurelius has been involved in debt restructuring of dubai world and tribune co; and, in october 2013, the co-operative bank. aurelius led a push to apply $ 54 billion of petrobas bonds governed by u.s. law in the state of new york.
aurelius capital management is a us hedge fund. the company is run by mark brodsky, a lawyer formerly employed by elliott associates. in october 2013, aurelius attempted to force the government of argentina to pay $ 1.3 bn following the 2010 argentinian default on debt. aurelius has been involved in debt restructuring of dubai world and tribune co; and, in october 2013, the co-operative bank. aurelius led a push to apply $ 54 billion of petrobas bonds governed by u.s. law in the state of new york.