MF Global’s Board Said to Meet on Possible Sale

By Matthew Leising - Oct 30, 2011 4:20 AM GMT+0700

MF Global Holdings Ltd.’s board of directors planned to meet today to discuss options for the sale of the company, according to a person with direct knowledge of the meeting.

The session was set to begin at 4 p.m. New York time, said the person, who asked not to be identified because the talks are private. New York-based MF Global was in discussions with five potential buyers for all or parts of the company, including banks, private-equity firms and brokers, a person with knowledge of the matter said yesterday.

Urgency for a move was mounting after MF Global declined 67 percent this week and its bonds started trading at distressed levels. The firm run by Jon Corzine reported a $191.6 million quarterly loss on Oct. 25 and Moody’s Investors Service and Fitch Ratings cut its credit ratings to junk.

Corzine, the former co-chief executive officer of Goldman Sachs Group Inc., reached out to his former firm about selling all or part of the company, according to two people with knowledge of the firm’s deliberations. Goldman Sachs may be interested in acquiring futures positions or other financial assets at the right price, said the people, who asked not to be named because the discussions were private.

Diana DeSocio, an MF Global spokeswoman, didn’t immediately return a telephone call and e-mail requesting comment.

Board Members

MF Global’s eight-member board consists of Corzine, MF Global’s chairman and CEO; Edward Goldberg, managing member of Dix Hills Partners LLC; David Gelber, chairman of Walker Crips Group Plc; Robert Sloan, managing partner of S3 Partners LLC; Martin Glynn, the former CEO of HSBC Bank USA; David Schamis, managing director at JC Flowers & Co.; David Bolger, former chief financial officer of Aon Corp.; and Eileen Fusco, vice chairman, Pro Mujer International, according to data compiled by Bloomberg.

The company tapped the entirety of two bank lines, three people with knowledge of the matter said this week. MF Global said in an Oct. 25 investor presentation that it had $1.3 billion in unused credit facilities, without giving a date for the tally.

MF Global’s lenders include Citigroup Inc., Bank of America Corp., and JPMorgan Chase & Co., Bloomberg data show.

The firm is getting advice from Evercore Partners Inc. as it seeks buyers.

Futures Unit

“We believe MF could generate proceeds from sale of its customer asset portfolio or FCM which frees up capital,” Niamh Alexander, an analyst at KBW Inc. in New York, wrote in an Oct. 27 note to clients, referring to a so-called futures commission merchant, or futures brokerage. “However, we cannot quantify the cost of wind down or exiting broker positions that could offset those proceeds and wipe out equity.”

Alexander estimated MF Global could get about $765 million for the futures unit. A sale would also free up as much as $1.3 billion in regulatory capital MF Global is required to hold against its $12.7 billion in customer collateral, Alexander said.

To contact the reporter on this story: Matthew Leising in New York at mleising@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net