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Thursday, November 5, 2009

Is PNC mystery buyer for Capmark? Updates

Updated: Capmark Financial Group Inc. of Horsham, the giant commercial real estate lender that filed for bankruptcy protection in Delaware last month, agreed earlier this year that, if it went bankrupt, it would be acquired by Warren Buffett's Berkshire Hathaway Inc. and Leucadia National Corp. ("Berkadia") for a premium of about half a billion dollars, unless someone offered more.

Yesterday, Capmark lawyer Michael Kessler said a rival potential owner - a company "already in the loan servicing business" -  has proposed negotiating a higher price, as Bloomberg and the Inquirer noted here (scroll to fourth item). This potential owner, who wasn't identified, "does not plan to hire Capmark's servicing employees," Bloomberg reporter Steve Church wrote. Capmark's assets will be offered at auction Nov. 20.

Who's the mystery buyer? Shmuel Vasser, of Philadelphia-based Dechert, has been in court representing PNC Financial Group's Midland Loan Services commercial loan-servicing unit in Kansas City, one of Capmark's two surviving competitors (the other is Wells Fargo & Co.) and asking questions about the pending auction.

PNC's interest has some folks at Capmark worried because, since PNC owns Midland, it isn't likely to need the several hundred people who still work at Capmark in Horsham. Besides jobs, public money is at stake here: Both Capmark and Midland service apartment loans for government-supported Fannie Mae and Freddie Mac, which face reorganization and, probably, more federal bailouts next year.

PNC spokesman Brian Goerke says his company doesn't comment on merger speculation. PNC, the fifth-largest U.S. bank, is backed by around $7.6 billion in federal Troubled Asset Replacement Program assets, and has been an acquirer of troubled companies like Cleveland's National City Bank.
Posted by Joseph N. DiStefano @ 12:05 PM  Permalink | 3 comments
Comments   
  • 0 like this / 0 don't   •   Posted 3:22 PM, 11/05/2009
    What happens to the 1,200 or so servicing employees that currently work for Capmark? Their jobs disappear. What's better yet is that the competing bidder needs the cooperation of those employees for a transition period! So the employees will be asked to transition their jobs away!
    — K-Max
  • 0 like this / 0 don't   •   Posted 3:51 PM, 11/05/2009
    Didn't PNC get over $8B in TARP money (est.)? How about paying that money back to the government before you put 950 people out of work. This is not logical that a government-backed bank can use borrowed money to ADD 950 people to the unemployment roll. Especially when JOBS are the administration's number one concern.
    — Newman1234
  • 0 like this / 0 don't   •   Posted 11:29 PM, 11/05/2009
    So rather than paying back TARP funds, PNC is using these funds to purchase this company and put 1,000 people out of jobs? Didn't the government pump this money into the system to stimulate the economy with the ultimate goal being to promote job growth? Why is this allowed?
    — worknmom


3 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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