Deal Boutique Greenhill Lands a Lifeline
September 25 2017 - 6:55PM
Dow Jones News
By Liz Hoffman
Legendary Wall Street deal maker Robert Greenhill is throwing a
lifeline to the firm he founded two decades ago, which has been
largely left behind in the recent merger boom.
Greenhill & Co. said its founder, along with current chief
executive Scott Bok, will each invest $10 million in the company as
part of a broader reorganization that will put a bigger chunk of
the company's publicly traded shares back with the company and its
executives.
Greenhill plans to borrow to repurchase more than one-third of
its stock, and said it would cut or eliminate its dividend, the
cost of which is set to exceed operating profits this year.
The recapitalization "addresses a lot of the noise around our
stock," Mr. Bok said Monday. He is taking a 90% salary cut as part
of the revamp. He said that he and Mr. Greenhill "have great
confidence in the future and think the stock represents good
value."
Greenhill also said Monday it will borrow $300 million from
Goldman Sachs Group Inc. to buy back stock, starting with an
open-market offer for up to 9 million shares at $17 apiece, 18%
above its closing price Monday. The firm has about 30 million
shares outstanding.
The borrowing will triple Greenhill's debt load. Already, some
stock analysts had questioned whether the firm had enough cash
coming to make its interest payments.
"Actual borrowings in the market are a much better measure of
debt capacity than the comments of equity research analysts," Mr.
Bok said Monday.
Greenhill was the first so-called merger boutique to go public,
doing so in 2004, and thrived over the next several years. But it
has largely been left out of the most-recent M&A boom, even as
boutique rivals have charged up the deal rankings.
Greenhill ranks 49th this year among global deal advisers, down
from 16th in 2012, according to research firm Dealogic.
Year-to-date revenue is 20% below 2016 and, with few big fees
coming soon, executives have signaled the third quarter is likely
to be another tough one.
The decline has been costly for Mr. Greenhill, who remains
chairman of the company and still owns a 4.3% stake worth an
estimated $22 million. At the firm's peak share price in 2009, that
same stake was worth $120 million, according to FactSet.
A tireless deal maker who once snowmobiled 15 miles on vacation
in rural Maine in search of cellphone reception, Mr. Greenhill has
stepped back from the business in recent years, friends and
employees say. Key relationships that spurred deals in the firm's
early years have gone quiet as key contacts retire.
Write to Liz Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
September 25, 2017 18:40 ET (22:40 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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