How better to grow your credit market business than hiring former junk bond pros of Drexel Burnham Lambert fame? Nelson Peltz's hedge fund Trian Fund Management LP hired two former Drexel bankers, Jay
Bloom and Dean Kehler, to help Peltz (pictured) grow Trian's presence in the ailing
credit market, according to a Thursday report by The Wall Street
Journal. Bloom and Kehler are reportedly leaving their posts as
managing partners of private asset management firm Trimaran Capital
Partners LLC, which they co-founded. The Deal caught up with Ed Garden, one of Trian's three principals, to discuss the hiring.
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"We have known Jay and Dean for many years, and we are pleased to be
able to work with them. They and their team bring extensive experience
in fixed income, private equity and restructuring, and we expect they
will be tremendous assets to Trian as we grow our credit business in
the years ahead," stated Garden.
"There are unusually attractive investment opportunities in today's
dislocated credit markets, and we believe Trian is uniquely positioned
to capitalize on them through our ownership orientation, deep
understanding of credit risk and track record of successful
operational turnarounds."
Bloom and Kehler will focus on
Trian's credit investments, such as leveraged loans, high-yield bonds,
distressed debt and other securities of leveraged companies as part of
Trian's range of investment activities. Bloom and Kehler will also
continue to manage Trimaran's private equity and CLO funds with
Trimaran's existing team, according to a source familiar with the
situation.
Bloom and Kehler have been inseparable for some time.
Before founding Trimaran, both were vice chairmen at CIBC World Markets
Corp. and co-heads of CIBC Argosy Merchant Banking Funds. Prior to
joining CIBC, the two co-founded junk bond boutique the Argosy Group LP
in 1995 after Drexel's collapse. Both served as managing directors at
Drexel.
Now the former disciples of Leon Black, who they served
under at Drexel and who helped develop the junk bond market with the
infamous Michael Milken, will help Trian's principals Peltz,
Peter May and Garden branch out further into distressed debt.
Peltz
and May have crossed paths with Bloom and Milken in their past lives,
having worked with them on the mid-1980s purchases of National Can Co.
and American Can Co., which were financed with junk bonds, according to
reports.
While bargain basement distressed debt may be on the agenda
for Peltz and crew, they have not forgotten their activist roots. Trian
in a Friday SEC filing disclosed a 7.18% stake in Dr Pepper Snapple
Group Inc., which was spun off from Cadbury Schweppes plc earlier this
year after Nelson Peltz had amassed a near 3% stake in Cadbury in 2007.
Trian said in the filing that it met with the drink maker's board
and management and expressed concerns that investors view the company as
more of a beverage bottler than a branded beverage company, despite
that it owns its most important brands and, therefore, "relative to
bottlers, has higher margins, higher free cash flow as a percentage of
sales and greater control over brand marketing." Trian hopes to boost
the company's share price via "sharper strategic focus, better
operational execution and more efficient uses of capital." The fund
said it may propose nominees to Dr Pepper's board. - Michael Rudnick
