MJX Asset Management last week closed Veer Cash Flow CLO, a newly restructured incarnation of a market value transaction, Veer Loan Opportunities Fund.

As part of the restructuring, MJX purchased the entire $15 million mezzanine tranche and refinanced $105 million in floating-rate notes rated triple-A by both Standard & Poor's and Moody's Investors Service. The previous class of senior notes had been redeemed in full and canceled.

The newly restructured fund was arranged by UBS. Citigroup is the trustee on the transaction.

While calls to MJX Chief Executive Officer Hans Christensen were not returned by press time, in a company release he cited the continued financial support of Robert F.X. Sillerman, the firm's majority equity holder, as instrumental to MJX's ability to restructure the fund. "We are very pleased that in today's difficult credit market we were able to use our resources to support the conversion of our market value fund to a cash flow fund in an effort to aid our equity investors," Christensen said.

The collateral pool securing the senior notes is expected to consist of $137.25 million, primarily in senior secured loans, S&P said in a presale report. Approximately 1.5% of the collateral might be invested in catastrophe bonds and approximately 20% in covenant-lite loans, the report said.

Cat bonds are a relatively unusual investment for CLOs, which makes them a noted concern, an S&P analyst said. These bonds will carry a CCC-' rating and a 0% recovery rate.

The deal also has a maximum 5% allocation for debtor-in-possession loans, 7.5% for second-lien loans and 7.5% for CCC'-rated assets, the presale report said.

MJX currently manages 10 CDOs, primarily invested in leveraged loans. The company acquired Barclays' U.S. CDO investment management business in November 2003.

(c) 2008 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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