The front page splash in Thursday’s Daily Mail has certainly struck a nerve at private equity group Blackstone.
It’s just fired off the following statement:
A news report that appeared this morning on former Blackstone portfolio company Southern Cross was inaccurate and misleading. Blackstone, which manages assets on behalf of its investors, has not controlled Southern Cross since its IPO five years ago in July 2006. During Blackstone’s ownership, the company experienced growth and profitability and was healthy at the time of its IPO and was viewed as one of the highest quality operators in the sector.
As with any investment formerly owned by the funds we manage, Blackstone did not control the debt levels nor any additional transactions entered into by the new independent public company. Additionally, of the 578 care homes operated by Southern Cross at the time of its IPO in 2006, approximately 95% were operated under leases entered into prior to Blackstone funds’ investments. The remaining 5% were sold and leased back by Southern Cross in a transaction that occurred in 2005.
Now, we haven’t followed the Southern Cross meltdown too closely (although the FT certainly has) but can Blackstone really claim it had absoluely nothing to with company’s current problems?
Weren’t sale and leasebacks to fund expansion its big plan or were we just dreaming?
From the IPO prospetus.
Enough said.
Related link:
The financial lessons of Southern Cross – Robert Peston