The bonds of Refco climbed to 79.56 last Thursday after Man Financial, the brokerage side of hedge fund Man Group, won the auction for the company. The bonds rose around five points since early last Thursday morning, before the auction results were made public. Refco's term loan "B" was also up. It stood at 97-98 by the end of Thursday, up two-three points since the morning.
Beginning with the week of Oct. 3, just prior to Refco's collapse, the company's '12 bonds stood at 108.00. Once the trouble started, the bonds were trading as low as 16.
The auction was held last Wednesday with the results submitted for court approval by the U.S. Bankruptcy Court last Thursday. Other groups vying for Refco at various times were J.C. Flowers & Co., Interactive Brokers Group and a collaboration of the investment arm of the government of Dubai, and Cerberus Capital Management.
Man Financial's winning bid was valued at $282 million in cash and it has agreed to absorb $41 million of Refco's debt and other considerations. The winning bid gives Man Financial control of Refco's regulated commodity futures business in Asia, the United States, Canada and London. Judging on the ruling of the bankruptcy court, Man Financial may be able to liquidate the assets it has won from Refco, possibly within a matter of days. Man Financial officials declined to comment on their winning bid.
"We believe that a sale of these businesses under the terms of Man's bid is in the best interests of Refco's employees, brokers, customers and creditors. Our goal is to close this sale transaction in a matter of days," said William Sexton, ceo at Refco in a released statement following the auction.