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Jefferies has said that one of its credit funds has about $715mn of exposure linked to First Brands Group, making the US investment bank one of the largest-known creditors to the bankrupt auto parts company.
The bank is one of several high-profile Wall Street firms hurt by investment in First Brands debt, with private asset specialists such as Blackstone having already booked losses on loans they extended in the run-up to the Ohio-based group’s chaotic bankruptcy last month.
Jefferies is under intense scrutiny for its long-standing relationship with First Brands. It provided opaque invoice financing to the sprawling group, while advising the company and placing billions of dollars of loans with other investors.
Jefferies on Wednesday confirmed that a specialist invoice-finance fund it manages, Point Bonita Capital, has approximately $715mn invested in “receivables” — customer invoices — that are “almost entirely due from Walmart, AutoZone, NAPA, O’Reilly Auto Parts, and Advanced Auto Parts”.
These retailers sold First Brands products such as spark plugs, brake components and windscreen wipers to American consumers.
Point Bonita held a total of about $3bn in “trade-finance assets”, Jefferies said.
The Financial Times revealed this week that Jefferies earned undisclosed fees on financing it provided to First Brands, in an arrangement that could spark recriminations from other lenders that were unaware of the sweeteners.
“We are in communication with First Brands’ advisers and are working diligently to determine what the impact on Point Bonita might be,” Jefferies said. “We intend to exert every effort to protect the interests and enforce the rights of Point Bonita and its investors.”
This is a developing story
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