Word broke last week that equity buyout firm CFN Investment Holdings and a unit of GE Capital Corp. had won the bidding for the debt-laden Conseco Finance unit of bankrupt insurer Conseco Inc. As of late Thursday, there was still no announcement as to the future of the servicing fees within the CF/GT manufactured housing portfolio. Late on Thursday, negotiations were ongoing between CFN and bondholder representative groups over the treatment of the servicing fees for the platform that CFN was awarded.
Wednesday it was reported that CFN would pay $700 million for the majority of the company, including the entire MH platform, with GE Consumer Finance buying just the Mill Creek Bank assets for $310 million, netting Conseco just over $1 billion for the former Green Tree Financial unit it acquired in 1998. GE Consumer Finance acquired Mill Creek's consumer credit card business, including private label, credit card, residential and home improvement installment loans.
With the auction final, ABS and unsecured bondholders found themselves stuck to negotiate with CFN, with little leverage. There was still hope throughout the bid auction process that a winner would emerge who would keep servicing fees intact or, at least, in a more bondholder-friendly position on the payment waterfall.
Since the Feb. 24 submission deadline, bids were reportedly submitted from investment banks Lehman Brothers and Bear Stearns. Also bidding, buyout specialists Berkadia LLC, a joint venture between Berkshire Hathaway Inc. and Leucadia National Corp. - the leading contender to purchase bankrupt MH ABS issuer Oakwood Homes Inc. - as well as GSE Fannie Mae making a $70 million "floor bid."
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