Dubai government eyes bankrupt Refco

The Dubai government is involved in a bidding war to snap up fraud-hit US derivatives broker Refco. The battle to take over the bankrupt firm heated up last week as the favourite to take over Refco’s assets dropped out and other suitors joined the fray, pushing up the asking price.

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By  David Robinson Published  October 30, 2005

The Dubai government is involved in a bidding war to snap up fraud-hit US derivatives broker Refco. The battle to take over the bankrupt firm heated up last week as the favourite to take over Refco’s assets dropped out and other suitors joined the fray, pushing up the asking price. At least six groups have expressed an interest in buying Refco’s futures trading arm — even though the initial bidder, a group led by US private equity firm JC Flowers & Co, dropped out of the race last week. Wall Street bank Goldman Sachs is running the auction. Refco, which has sought protection from creditors through the US procedure known as Chapter 11, had been seeking court approval for a takeover from the JC Flowers consortium. It had offered US$768 million. The terms of the deal included a break-up fee of 2.8% for the consortium if it failed. However, the bankruptcy judge said he would only approve the sale if the fee was reduced, prompting JC Flowers to withdraw its bid. Others bidders quickly stepped in. The Dubai Investment Group offered US$828 million, which was later topped by a US$858 million bid from the Interactive Brokers Group of the US. Marathon Asset Management, Apollo Management LLC, and Man Group Plc’s Man Financial are all considering or planning to bid, either alone or as part of consortia, according to reports. Bids are due by November 4. Refco and 23 subsidiaries filed for bankruptcy last week just seven days after disclosing it had suspended chief executive Phillip Bennett for hiding US$430 million he owed to the company.

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