One thing to start: Former UK prime minister Rishi Sunak has been appointed as a senior adviser by Microsoft and Anthropic. Sunak worked with both tech groups as the UK premier, setting up an AI safety summit in 2023.
And another thing: A New York federal judge has dismissed the rapper Drake’s defamation lawsuit against Universal Music Group over a Kendrick Lamar track that branded the Canadian singer a paedophile.
In today’s newsletter:
Let the First Brands autopsy begin
When American companies blow up spectacularly, the answers inevitably come out in bankruptcy court. And it’s no different for First Brands.
The autopsy of how a company with $12bn in debt fell apart practically overnight appears about to begin.
In the late hours on Wednesday, one of the company’s biggest creditors filed a motion in the car parts maker’s bankruptcy case, demanding an independent investigation into how as much as $2.3bn “simply vanished”.
The claim came from Raistone, one of the biggest firms to arrange off-balance sheet financing for First Brands.
DD readers who’ve been around for a few years might be tickled to know Raistone was founded by former Greensill Capital — yes, that Greensill — employee David Skirzenski.
Meanwhile, authorities are circling. DD’s Eric Platt, Kaye Wiggins and Ortenca Aliaj scooped on Thursday that the US Department of Justice is also looking into the case.
Raistone is far from the only one with questions. As DD’s Sujeet Indap writes, the blast radius from First Brands’ collapse has stretched from Jefferies to UBS to more niche supply chain finance players such as Onset.
While Raistone wants answers, it doesn’t really want them from the two independent directors that First Brands’ own advisers (law firm Weil Gotshal and investment bank Lazard) have appointed to look into allegations of wrongdoing.
The creditor instead wants an independent investigator, also known as a bankruptcy examiner, to focus on where the money went, and figure out what exactly went on with these purported “accounting irregularities”.
With any great bankruptcy filing (this one was 209 pages) some spicy emails were also attached as exhibits.
A lawyer for Raistone emailed one of First Brands’ lawyers with two questions: he asked whether the company had received the $1.9bn in factoring funds, and how much the company currently had in segregated accounts for those funds.
First Brands’ lawyer Sunny Singh was blunt: “# 1 — We don’t know #2 — $0.”
The footballing behemoth offered a breather by Ares
If there has ever been a sign of credit risk, an annual interest rate of 22 per cent is it.
That’s what Ares is charging Eagle Football Group, the prolific football investor and owner of Olympique Lyonnais, for part of the $450mn it’s owed.
Eagle Football was founded by John Textor, a former professional skateboarder who subsequently went into tech investing.
But the group has struggled with a heavy debt burden and the FT revealed this week that it’s long been in default on hundreds of millions of dollars of debt.
In June 2023, Eagle Football triggered a technical default by failing to provide Ares with adequate financial information “on a timely basis”, according to long-delayed accounts filed last weekend at UK Companies House.
Altogether, Eagle Football owes Ares about $300mn of ‘payment in kind’ debt with annual interest rates of 16 per cent, another $135mn at a rate of 18 per cent, and a final $27mn facility costing 22 per cent.
Not wanting to disturb the peace though, Ares has let the former minority owner of Crystal Palace off the hook.
The private capital group has been piling into European sports investments in recent years. Yet it decided against seizing Eagle Football’s assets and taking control of the clubs it owns.
Last week it told Textor’s group it wouldn’t seek repayment for a further 12 months. You might think that magnanimous, but Ares is starting to get its pound of flesh.
In July, Eagle Football sold its 45 per cent stake in Crystal Palace to New York Jets owner Robert “Woody” Johnson.
And it was none other than Ares that pocketed the vast majority of the £190mn proceeds from the sale.
Job moves
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Andreessen Horowitz has appointed ex-VMware CEO Raghu Raghuram as a general partner.
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Hg has hired Anna Tye as a partner in its Saturn Fund in New York. She joins from Carlyle Group.
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KPMG has promoted Josh Martin to global head of transaction services and Jose Zarzalejos to global head of corporate finance.
Smart reads
High stakes Intel claims to have made a breakthrough in chipmaking, the FT writes. But if it fails to impress sceptical Big Tech customers, the company could tip back into crisis.
Tie-up time Regional US banks have historically avoided consolidation, Lex writes. But regulatory changes mean more are starting to take the plunge.
Cash strapped Almost one in five US households are millionaires, but that’s not translating in to spending power, Bloomberg writes.
News round-up
UK monitors First Brands and Tricolor collapses for private credit risks (FT)
BP wins arbitration with Venture Global over disputed LNG cargoes (FT)
Citi rejects approach for Banamex to focus on IPO of Mexican bank (FT)
Anglo American planning to restart sale of coal mines early next year (FT)
Novo Nordisk to buy US biotech Akero in $5bn push beyond obesity drugs (FT)
Ørsted to cut quarter of workforce after US setbacks (FT)
HSBC offers $13.6bn for 100% control of Hong Kong lender Hang Seng (FT)
PepsiCo volumes slide as chief cites ‘constructive’ talks with Elliott (FT)
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