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Refco granted approval of bare-bones bidding procedures for futures brokerage unit sale
By Caroline Salls
Pittsburgh, Oct. 27 - Refco, Inc. has obtained approval of the bidding procedures for the proposed sale of its futures brokerage business, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.
As previously reported, a group of investors led by J.C. Flowers & Co., LLC, withdrew its acquisition agreement for the futures business Monday, but said it still may participate in the auction, which is scheduled for Nov. 9. A sale hearing is scheduled for Nov. 10.
The futures brokerage arm of Refco is conducted through Refco LLC, Refco Overseas Ltd., Refco Singapore Ltd., related subsidiaries and other assets.
A bidder may not request any break-up fee, termination fee or expense reimbursement, according to Wednesday's filing.
Each bid must be at least $2 million more than the previous bid.
The company will announce the material terms of each overbid at the auction, as well as the basis for its calculation of the total consideration offered in each overbid, and the company will then provide a floor for further bidding.
Under the sale agreement, Refco will have the option to retain up to a 20% interest in the business.
According to a company news release, the court's decision comes as the dollar amount offered for Refco's regulated businesses has grown.
In its Oct. 17 offer to buy the firm, the Flowers group proposed a price of $768 million. By Wednesday, there were reports of offers exceeding $850 million, the release said.
Refco, a New York-based commodities brokerage company, filed for bankruptcy Oct. 17. Its Chapter 11 case number is 05-60006.
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