More than $50 million of Finova Group's bank debt traded and the paper jumped about seven points as the company's plans with Berkadia were finalized. Over the week the paper went to 92 from 85 and one desk reported trading $20 million of the paper last Thursday alone. Early last week, a U.S. Bankruptcy Court in Delaware approved Berkadia's plan to bail out Finova. That effectively ended a bidding war Berkadia had been waging with Goldman Sachs and General Electric Capital Corp., which had teamed up to present their own counter offer. Finova is a commercial lender based in Scottsdale, Ariz. Calls to the company were not returned. Calls to Berkshire Hathaway, Goldman Sachs, and GE Capital were not returned by press time.
Until two weeks ago, dealers were placing their hypothetical chips on the Goldman/GE Capital proposal, but then Berkadia threw in a revised proposal that removed due diligence from the language. Dealers said the likelihood of the deal going through improved greatly. "The deal is now pretty much past, with no more potential upside vis-à-vis changing the deal," said a dealer. Another trader agreed the latest news ends debate about the company.
Dealers said this improved the odds of the deal going through considerably. The bidding war pushed up Finova's levels, which had bottomed out late last year over weak earnings.