Morgan Keegan Buyer May Get $200 Million In Seller Financing
- Created: Tuesday, 25 October 2011 07:07
Two private equity groups have emerged as final bidders for the troubled firm, which was slapped with $210 million in fines over the summer related to its boom-era mortgage securities sales.
The deal might value Morgan Keegan at around $1.1 billion while protecting all parties but the firm itself.
The $200 million in financing would effectively buffer the buyers' balance sheets from the liability the $210 million in fines represents.
And Regions itself will pull $250 million in equity from the firm before the deal closes.
Seller financing is crucial in this environment because third-party lenders are simply no longer as interested in sponsoring billion-dollar M&A without a personal stake in the proceedings.
Stifel was in the running as a potential buyer, but its offer was declined when Regions considered the likelihood that Morgan Keegan reps would jump ship rather than move to a rival brokerage firm.
As the property of several private equity firms, Morgan Keegan -- and its reps -- could enjoy a lot more operational freedom here. No bank parent, and the prospect of being absorbed into a rival looks scant.
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