Drexel Gives Up The GhostLeah Nathans Spiro
"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.