Just who is the Viceroy Fund?

Very sad to see the demise of Silverjet last week. I thought it was going to go under several weeks earlier but then they (seemed to) pull a stunning deal out of the bag – an £8.4 million loan facility, a £4.3 million share subscription (at a premium to the then share price), and the promise of a further $75 million at some point down the line. Truly a phenomenal piece of dealmaking from the CEO!

Who on earth had they convinced to come up with the money? Viceroy Holdings LLC, “which is affiliated with Viceroy Fund, an international luxury development fund based in the USA and UAE”.

Sounds like the perfect sort of investor in an all-business class airline. So just who are they? A hunt around Google reveals little. Try ” viceroy-fund -silverjet” – you get a total of 15 results, most of which do not yield any useful information . The first link is to the fund’s web page www.theviceroyfund.com, a holding page, proclaiming that it has been investing in the US since 1997 and globally since 2005. If that’s the case, why is there no information, anywhere on the Internet, about its investments? They’re obviously not too publicity shy, as they consented to having their name put in an RNS announcement from Silverjet. Peculiar.

Instead, try “Viceroy-Holdings-llc -silverjet” in Google. This time, you get 4 results, none of which is useful.

For a fund that was supposedly willing to invest $75 million in a single investment (and an almighty punt of an investment at that), it is strangely missing from the global investment community. Most peculiar.

 

Could the B&B rights issue be pulled?

So, Steven Crawshaw, the CEO of Bradford & Bingley, has resigned this weekend (see http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/01/cnbradford201.xml) amid talk of a profit warning that will be disclosed in the rights issue circular.

With the prospect of the shares falling below the rights issue price, there’s hardly much incentive for shareholders to take up their rights. But as it is fully underwritten by Citigroup and UBS, Bradford & Bingley will still get the £300 million that they need. Or will they?

Typically an underwriting agreement will contain a Material Adverse Change clause (or MAC) to protect the underwriters against unforeseen events that will have a material impact on the value of the business. If something unexpected happens, the underwriters will invoke the MAC clause and pull out of the agreement.

Two questions: (i) Does this putative profit warning constitute a MAC? and, (ii) would Citigroup and UBS actually pull out of their underwriting commitments and hence cause a run on another bank? (one thinks that the Treasury would not be too happy about that!)

In answer to (i) – I think it probably does, although I’m sure the lawyers would fight tooth and nail to argue it doesn’t. And (ii), well, I’d suspect not, given the implications of the rights issue failing, but it’s not as if Citigroup and UBS are exactly paragons (excuse the pun) of financial stability.

Interesting week ahead.