Crédit Agricole Indosuez is negotiating with investors in one of its collateralized loan obligations to ensure management of the vehicle stays with the French bank and is not transferred to competitor RBC Leveraged Capital. The CLO at issue is Indosuez Capital Funding VI, which contains a trigger that allows investors to switch the manager if key management leaves. But Crédit Agricole is disputing the grounds for the proposed switch and asserts that the vehicle has been reaffirmed and approved.
Some investors wrote and said they wanted the collateral manager removed in December, citing the key management issue, confirmed Michael Walsh, general counsel of Crédit Agricole. "But there is no longer, under the terms of the indentures, grounds for this," he said. "There is still one noteholder that does not agree, but we are trying to have conversations with this investor," he added, denying that there was more than one investor still seeking the change.
Key members of Crédit Agricole, including Daniel Smith and Ken Kencel, left to form Royal Bank of Canada's leveraged capital unit last October. The defections led to a bitter legal battle that is still ongoing in the New York courts (LMW, 11/12). Furthermore, investors in Indosuez Capital Funding IV, a $1.3 billion collateralized debt obligation, voted to switch management over to RBC in November due to the management trigger (11/29). That changeover occurred at the start of this year.
In November, Crédit Agricole brought in Paul Travers from Bear Stearns, where he was a senior managing director of the leveraged loan group, satisfying the indentures that require an experienced manager, Walsh said. He added that the ratings agencies do not disagree and the issuer, Salomon Smith Barney, and trustee, J.P. Morgan, have not acted.