-- Olivia Thetgyi
Vanquish Capital Group, a firm that has specialized in finding and exercising control rights as a collateralized debt obligation equity holder, is now considering doing the same as a super senior investor. As super senior pieces have suffered downgrades and are trading well below par, the Delray Beach, Fla.-based investment boutique is considering buying enough of these tranches to attain control rights in the deal. Control rights give a firm the ability to liquidate or accelerate investment, or remove and replace managers.
The firm has already focused on using its control rights as an equity holder to change managers or call deals. Doing so from the opposite end of the capital structure has recently become a hot topic as about 10 CDOs have hit events of default, giving senior investors the option to liquidate the trust or accelerate payouts (TS, 11/2).
While the super senior piece may make up the majority of the deal, it may not be necessary to buy the entire tranche to gain the rights, said Don Uderitz, ceo. In addition, these tranches are trading so cheaply now that gaining the rights may be relatively inexpensive. The firm is currently looking at deals to determine which parties actually owns those rights and what rights are encompassed, but he declined to give examples of possible trades.