Babson Capital acquires Murray Capital distressed debt management business

By Caroline Salls and Stephanie N. Rotondo

Pittsburgh, April 22 - Babson Capital Management LLC acquired Murray Capital Management, Inc.'s distressed debt management business to expand its platform of client investment offerings, according to a Babson news release.

Terms of the acquisition were not disclosed.

According to the release, Murray Capital specializes in distressed debt, transitional and stressed high yield, special situation equities and private claims investing.

Murray Capital founder, president, portfolio manager and senior research analyst Marti P. Murray and her investment team will join Babson Capital. Murray will report to Cliff Noreen, Babson vice chairman and head of its corporate securities division.

"This acquisition is consistent with our philosophy of selectively adding capabilities that complement and extend the investment strategies we offer our clients," Noreen said in the release. "It is also well-timed given the unprecedented market dislocation that is creating distressed debt investment opportunities."

In an interview with Prospect News, Murray said the merging of the companies is "a great growth opportunity for my company."

Murray founded the company 13 years ago - "almost to the day," she notes - and said she has thought about ways to increase her business for some time and, in talking with Babson, realized there were opportunities on both sides.

"I feel very fortunate that I was able to work with Babson and complete this transaction," she said. She said that the companies are "complimentary, not duplicative," which gives current clients of Babson a new skill set and service that had not been available before.

Murray also agreed that the timing was right.

"This is an opportune time given what is going on in the current credit market," she said. "There is a lot of dislocation, which means a lot more opportunity."

Murray went on to explain that currently in the junk sector, 20% of high-yield issues are trading at distressed levels, while 70% are trading at "stressed" levels. With the vast majority of the high-yield sector trading between distressed and stressed markers, the time has come to "at least start evaluating, if not start investing in [the market]."

The acquisition is Babson Capital's third in six years, according to the release. Babson Capital acquired its U.S. Bank Loan Team from Wachovia Corp. in 2002 and its European bank loan business Babson Capital Europe Ltd. from Duke Street Capital in 2004.

Murray has 21 years of experience investing in distressed debt securities and is an author, lecturer and speaker on the subject. She is also an adjunct professor at New York University Stern School of Business, where she received her MBA. She earned her BA in international relations and Chinese from Colgate University.

Babson Capital is an investment management firm based in Springfield, Mass., and Boston.

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