-150-
O’Melveny & Myers an article entitled “GE Capital Wins Bid for a
Portfolio of Bad Loans from Credit Lyonnais”. The article was
from the December 12, 1996, issue of the Wall Street Journal and
discussed General Electric’s purchase of a $190.3 million
portfolio of “bad” French property loans from Credit Lyonnais.
In an attached memorandum letter to Mr. Carlton, Mr. Lerner
explains that “Attached is an article from today’s Wall Street
Journal * * * describing a transaction similar to ours. This
gives good support for our business purpose for doing the deal.”
The article states in relevant part:
U.S. financial-services giant General Electric
Capital Corp. won the bidding for a portfolio of Credit
Lyonnais’s bad French property loans, which have a book
value of one billion francs ($190.3 million). The
transaction was another sign that competition is
heating up among U.S. vulture funds seeking to take
advantage of France’s long-running real-estate crisis.
The sale was carried out by Consortium de
Realisation, an entity set up last year by the French
state to take on most of Credit Lyonnais’s nonbanking
assets as part of a rescue plan for the crippled state-
owned bank. * * *
* * * * * * *
The sale of the bundle of 127 lines was the first
by CDR, with more expected to follow. French banks and
insurers have been severely hurt by their exposure to
the domestic real-estate market, but for a long time
they refused to write down their loans.
3. Conclusion
In sum, the Credit Lyonnais group had a very troubled
history in the film business. In 1996, they were seeking to
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