NEW YORK--(BUSINESS WIRE)--WCAS Fraser Sullivan Investment Management (“WCAS-FS”) announced today that the U.S. Bankruptcy Court for the Southern District of New York (the “Court”) has approved an Asset Management Agreement (the “Agreement”) between WCAS-FS and Lehman Brothers Holdings Inc. (“LBHI”), under which WCAS-FS will manage LBHI’s $5.3 billion commercial loan portfolio (the “Loan Portfolio”), including $3.8 billion in commercial loans and $1.5 billion in unfunded loan commitments.
As provided in the Agreement, WCAS-FS will transfer assets from the Loan Portfolio into a series of static collateralized loan obligations (CLOs). WCAS-FS expects to issue one or more CLO transactions involving collectively at least $500 million in loans within the next six months and one or more CLO transactions involving collectively at least an additional $500 million in loans within a year. It is expected that the CLOs will monetize up to $2 billion of Loan Portfolio assets for the benefit of the LBHI estate and its creditors. In addition, LBHI will retain the equity interests in the CLOs.
The Agreement also provides for WCAS-FS to manage the portion of the portfolio that is deemed ineligible to be securitized, which includes the unfunded commitments and a small portion of the existing commercial loans.
“We are very pleased with the Court’s approval of the Asset Management Agreement,” said John Fraser, Founder, Managing Partner and CIO of WCAS-FS. “We look forward to using our asset management expertise and extensive experience structuring and managing CLOs to benefit the creditors of the Lehman estate.”
“This is a great outcome for the estate and for our creditors,” said Doug Lambert, Managing Director of Alvarez & Marsal, the restructuring firm managing the liquidation of the Lehman estate, and Chief Executive Officer of Lehman’s Legacy Asset Management Company (“LAMCO”), which currently manages the Loan Portfolio. “The agreement with WCAS Fraser Sullivan will provide for maximization of recovery value from our loan portfolio over the long term, while ensuring continuity of management who are aligned with the estate’s mission to deliver that value back to creditors.”
To ensure seamless management and to avoid any impairment of the performance and value of the Loan Portfolio due to a disruption of the personnel managing the loans, under the Agreement, WCAS-FS will hire ten current LAMCO employees, including three senior portfolio managers, Frank Turner, Francis Chang and Patrick Marshall.
“With a significant portion of the LAMCO team coming on board to support us, we are in the best position to effectively manage the Lehman portfolio and to securitize the eligible assets in a manner that produces the best possible outcome for the estate,” said Tighe Sullivan, Founder, Managing Partner and COO of WCAS-FS.
Copies of the Agreement and the related motion and Court order are available at http://chapter11.epiqsystems.com/LBH.
For more information about WCAS Fraser Sullivan, please visit http://www.frasersullivan.com.
About WCAS Fraser Sullivan Investment Management
WCAS Fraser Sullivan Investment Management is a global asset manager specializing in the high yield credit market, with a particular focus on leveraged loans. Founded in 2005 by John Fraser and Tighe Sullivan, WCAS Fraser Sullivan has offices in New York and London and a highly skilled team of investment management professionals averaging over 15 years of experience. The firm has $7.8 billion in assets under management across five cash flow CLOs, two credit opportunity funds and separate accounts. www.frasersullivan.com.