GLG to Issue $214 Million in Debt in Private Placement

U.K. asset manager GLG Partners LP announced the details of a plan to issue about $214 million in convertible notes as part of an effort to restructure its debt.

The move comes at a time when GLG has come close to breaching the terms of its current loan agreements, which give creditors the right to demand their money back if the firm’s assets fall below a certain level. The convertible-note issue, if successful, would allow GLG to pay back some of that debt to lenders at about 60 cents on the dollar. As part of the restructuring, GLG also would be freed from the financial covenants on the remainder of the debt but would pay a higher interest rate.

GLG Monday said it would raise capital through a private placement of subordinated notes, which can be converted into GLG stock. On Tuesday, it said the offering would be a mix of dollar- and euro-denominated notes. Late Tuesday, it said it planned to offer only dollar-denominated notes totalling about $214 million. Of that total, GLG’s three most senior executives– Noam Gottesman, Emmanuel Roman and Pierre Lagrange — plan to buy a combined $30 million.

The company plans to use the proceeds to pay down loans with a par value of $285 million, part of a total $570 million the company borrowed in 2007 to help finance its listing on the New York Stock Exchange. The debt includes a covenant that GLG needed to maintain $15 billion of fee-paying assets at the end of 2008. At the end of December, GLG’s fee-paying assets stood at $16 billion.

Net assets, excluding those invested by GLG internally, totaled $14 billion as of the end of March, down 43% from a year earlier. Including assets from the acquisition of the U.K. fund-management unit of French bank Société Générale SA, which GLG completed in April, net assets at the end of the first quarter would have totaled $18.1 billion.

GLG is one of a number of asset managers that have renegotiated terms with lenders, said Robert Lee, an analyst at investment firm Keefe, Bruyette & Woods. He said GLG is buying its debt back at attractive prices, and the move would help remove “any latent concerns” about the covenants.

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