Would-be Sixers owner has a record of profiting from junk

Maybe this is who the Sixers need: According to Joseph M. Manko Jr., managing director at Mufson Hunter Howe LLC, a Philadelphia investment bank:

Both Joshua Harris (head of a group that hopes to buy the NBA's Philadelphia 76ers) and Leon Black, his partner at big NY buyout firm Apollo Global, spent part of the 1980s at the former Drexel Burnham Lambert, the Philadelphia-based investment bank made infamous in the 1980s by junk-bond king Michael Milken.

Milken's criminal conviction and imprisonment wrecked Drexel. But Harris and Black went on to start Apollo by buying the portfolio of (Drexel-financed) junk bonds formerly owned by the Executive Life Insurance Co. when it collapsed in one of the costliest insurance-company failures in U.S. history.

Apollo got its start "by purchasing the Executive Life junk bond portfolio for cents on the dollar after they crashed," Manko said. "It was filled with bonds that Drexel had underwritten. Apollo sifted through it to find the gems, and took control of those companies," converting the debt to creditors' equity ownership of the companies "for nothing." They "restructured the debt and then, sometimes within six months, were taking the companies public for $15 a share. It was a great business."

Manko was, at the time, an attorney with Skadden Arps Slate Meagher & Flom, the powerful corporate law firm. Soon after, he left the law for the investment business. Watching Harris and Black "kind of whet my appetite for the business."

Turning junk into gold. Does that work in the NBA too?

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