trending Market Intelligence /marketintelligence/en/news-insights/trending/NfnzpsbS9Og8VAhfl1_DBQ2 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us
In This List

First Eagle Investment to acquire NewStar Financial

Banking Essentials Newsletter - November Edition

University Essentials | COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations: Q&A with the Experts

Estimating Credit Losses Under COVID-19 and the Post-Crisis Recovery

StreetTalk – Episode 70: Banks' Liquidity Conundrum Could Fuel M&A Activity


First Eagle Investment to acquire NewStar Financial

First Eagle Investment Management LLC has agreed to acquire NewStar Financial Inc. for a total consideration of $12.32 per share to $12.44 per share.

The deal consideration consists of $11.44 per share in upfront cash and one nontransferable contingent value right for each NewStar share held at the closing of the transaction.

In a related transaction, NewStar entered into a definitive agreement to sell a portfolio of investment assets, including approximately $2.4 billion of middle-market loans and other credit investments, to a newly formed investment fund sponsored by GSO Capital Partners LP, the credit investment platform of Blackstone Group LP. The closing of First Eagle's acquisition of NewStar is subject to GSO's completion of the acquisition of these assets. At closing, NewStar will enter into a servicing agreement with GSO, under which NewStar’s current investment team will continue to service the portfolio of assets sold to the investment fund.

Each contingent value rights will entitle its holder to receive pro rata distributions of any tax refunds received by NewStar following the closing as a result of a carryback of NewStar's losses generated primarily from the sale of assets to GSO. About 30% of any such tax refund will be distributed to the contingent value right holders promptly upon receipt, with the remainder to be held in escrow pending approval from the Congressional Joint Committee on Taxation or the completion of applicable tax audits. NewStar estimates these refunds to total $1.00 per share if the transaction closes in 2017 or 88 cents per share if the deal closes in 2018. NewStar expects to be able to file for these refunds by the third quarter of 2018.

The agreements with First Eagle and GSO include a 30-day go shop period, during which NewStar will actively solicit, evaluate and potentially enter into negotiations with parties that offer alternative proposals to acquire NewStar. The go-shop period runs through Nov. 15. There can be no assurance that this process will result in a superior proposal.

First Eagle plans to fund the deal with cash from its balance sheet, the assumption of a modest amount of existing debt related to assets being purchased, and NewStar cash, including the net proceeds from GSO's acquisition of NewStar's assets. GSO has obtained a commitment letter for an asset-based revolving credit facility with borrowing capacity of up to $1.85 billion led by Wells Fargo Bank NA In addition, GSO has obtained equity commitments of $950 million from investors in a newly formed investment fund sponsored by GSO that will be purchasing the NewStar assets.

The deals are subject to approval of NewStar's stockholders as well as other customary closing conditions, including certain consents with respect to NewStar's existing funds.

Credit Suisse Securities (USA) LLC and Houlihan Lokey Capita Inc. are serving as NewStar's financial advisers and Simpson Thacher & Bartlett LLP and Locke Lord LLP are the legal counsel. Wells Fargo Securities LLC is First Eagle's and GSO's financial adviser, while Goodwin Procter LLP is First Eagle's legal counsel and Sidley Austin LLP is GSO's legal counsel.