A Dubai-led group yesterday topped two other bids to buy bankrupt Refco's futures brokerage unit and joined other suitors in an attempt to block a deal with JC Flowers & Co negotiated more than a week ago.
Filings to the US bankruptcy court overseeing the sale of the Refco unit also showed that its rival, Man Group, the world's largest listed hedge fund firm, re-emerged as a potential bidder for Refco's most sought after asset.
The Dubai bid, led by Dubai Investment Group LLC with private equity concern Yucaipa Cos, is worth about $828 million (€690.89 million) and tops the first offer of about $768 million from a group led by private equity firm JC Flowers.
Flowers was approached by Refco, the largest independent US futures and commodities broker, and asked for a bid as it spiralled into bankruptcy after its chief executive was charged with securities fraud over hidden debt. The scandal shook some clients' faith, spurring them to pull their assets.
"I understand the moral commitment to (JC Flowers)," judge Robert Drain told the bankruptcy court yesterday, adding that the court recognised the value that Flowers' swift bid had provided.
But judge Drain said the need to approve the sale agreement with Flowers was no longer so urgent with several bidders emerging and adjourned the hearing until later yeterday to give Refco time to consider adjusting its pending deal with Flowers.
Refco,s lawyer Gregory Milmoe, of Skadden, Arps, Slate, Meagher & Flom, said if the sale process did not proceed quickly, Refco's business ran the risk of eroding "to the point where we won't have anything to sell".
The new Dubai-led offer tops the Flowers' bid and also beats an offer from US broker-dealer Interactive Brokers Group of about $790 million submitted last week.
The new bid came as the bankruptcy court dealt with multiple objections to Refco's proposed process to sell the futures trading arm to the Flowers-led group for about $768 million, with a breakup fee of 2.8 per cent.
Several possible bidders, including Man and Marathon Asset Management, raised objections to the process and voiced concerns about the breakup fee, whether the unit would be sold to the highest bidder and Refco's push to seal a fast deal.
Man Financial, the futures brokerage unit of Man Group that had taken itself out of the bidding last week, said in a court filing that it could be a bidder for all or part of Refco's futures brokerage business, Refco LLC.
But Man objected to the way the Refco unit is being sold, saying the proposed bidding procedures "significantly impeded" its ability to bid.
