One can imagine the shock at Thomas H. Lee Partners to read that it lost 99% of the value of its 57% stake in Refco. Media outlets had reported that its THL Equity V‘s investment in the collapsed futures brokerage had sunk from $1.38 billion to a measly $21.5 million, but the private equity firm is at a loss to understand how the conclusion was reached based on a filing with the Securities and Exchange Commission. According to a Lee spokeswoman, the figures were referring to a drop in fair market value in Refco’s common stock as a result of its bankruptcy filing. In reality, the fund’s loss is comparatively minuscule. Fund V had invested only $453 million of its $6.1 billion AUM in Refco, and lost about $245 million.
“Because Equity Fund V did not purchase its common stock holdings in Refco for $1.38 billion, it did not experience a net loss of $1.36 billion,” said the spokeswoman.
Meanwhile, U.S. Bankruptcy Judge Robert Drain has OK’d a Refco request to retain Goldin Associates, headed by former New York City Comptroller Harrison Goldin, as a crisis manager and consultant, which it says is in the best interest of Refco. The order is just temporary, pending a final hearing scheduled for Feb. 14. Finally, Refco has asked the court to allow auction house Christie’s to auction off the brokerage’s photography collection, valued at about $7 million.