Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Businessweek Archives

Drexel Gives Up The Ghost


Up Front: THE DEAL MILL

DREXEL GIVES UP THE GHOST

"Swashbuckling Drexel, the seat of Michael Milken's junk-bond empire, is at last no more. On Feb. 24, the final vestige of once-mighty Drexel Burnham Lambert, renamed New Street Capital, was to be sold to an Atlanta financier, Holcombe Green, for $209 million. Green gets the remnants of Drexel's securities portfolio, mainly stocks. This removes any trace of the House of Milken: New Street will vanish, absorbed into the new owner's merchant bank, Green Capital.

Drexel has gradually sold off its $2.5 billion in assets, mostly junk bonds, to satisfy debt holders. With its emergence from Chapter 11 in 1992, creditors insisted it not retain the old name. So it opted for New Street, where lies the backdoor to its Manhattan headquarters on 60 Broad St. Now, the 30 remaining employees, who have been selling off the assets, will soon be out of work. "There's a feeling of sadness here," says New Street head John Sorte, former co-chief of corporate finance at Drexel. He and several colleagues are planning to start a boutique investment outfit, New Street Advisors.

Green, however, will benefit nicely from Drexel's carcass. The reason? It gives him almost 7.6 million shares of textile maker WestPoint Stevens, boosting his ownership of the onetime troubled Drexel client from 12% to 34%. Plus, Sorte says, he gets $85 million in Drexel's capital losses, useful to shelter future capital gains. In short, a deal that would make Milken proud.EDITED BY LARRY LIGHT AND JULIE TILSNER Leah Nathans Spiro


LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus