Ladenburg Thalmann to Merge

Financial services firm Ladenburg Thalmann (LTS) has announced a merger with Advisor Group. The deal supposedly will close during the 1st 1/2 of 2020.

Yesterday in the comments under “Ladenburg Thalmann Announces Earnings”, 2 whiteroses posted a Barrons article on this particular possibility and folks discussed it further. Last night Nomad picked up the formal announcement during the evening

Currently we do not own any of this issue and whether it is good or bad–??–everyone probably has an opinion.

The press release is here.

28 thoughts on “Ladenburg Thalmann to Merge”

  1. LTS baby bonds dropped due to uncertainty about whether they will be delisted. It is possible they will trade in the pink sheets like AFFT and AFFS when AFSI was bought. LTS is being bought by a private company. Also, it is impossible to know the financial strength of the private company buying LTS. LTS bonds will be bonds from a larger company now, so that is a plus.

    1. Did minor research here on Advisor Group. What crap fest. It was under AIG’s wing until 2016 where it was under safety of AIG’s Baa1 rating. Advisor Group was sold to a private out fit then. In 2018 they take out a $600 million private secured loan that Moodys rated B1. They then take part of the borrowed proceeds to pay the private shareholders a dividend. Yes they borrowed money in part to pay themselves a dividend. Even Moodys said this was not a wise use of capital. They are over 5X levered debt to EBITA. The LTS notes would be slotted about B3 I suspect if rated. No wonder they are dropping. And now they are going to I presume go further in the ditch to buy a company that has never made enough money to actually pay their preferreds.
      2White Roses is more aggressive than me so he is getting ready to load up I suspect, but I am going to pass. 🙂

      1. Grid – that shouldn’t be a smiley face at the end of your post. It should be a “SAY WHAT?” Gee, and after your post on INBKL, I thought you knew me… lol.

        1. I was just checking to make sure you were reading my posts…Tim gives me a penny a click on my posts since I have proven to be every bit as intelligent as Pendragon. As you can see, Tim set the bar low for me to collect, ha.

          1. Yes Grid–a penny a click–I like to have a site running at pure negative income (it is already negative enough). If you were Pen you would be immediately banished forever–although I like to watch and see how many posts Pen has trying defend a particular position–the thinnest skin of any human I have ever seen.

          2. Grid,
            Would you kindly share your personal Egan-Jones rating? I think full disclosure is important here…. LOL

      2. Glad you did the research, saving me the pain. These two companies belong together. If they acquire Egan-Jones they would be the complete package.

      3. @Gridbird, can you post sources on any of that? All of the Moody’s stuff I see start in June 2019 when they got LBO’ed.

  2. Held the 8% preferred for years got in 22+ 12% ROE for 4yrs
    Will they call them???

    1. Just picked up some LTSL @24.50 on the bid 8 5/8% if they don’t call it

      1. Harvey – Is that a typo? Do you mean 6 5/8%? If not, please explain.

        1. 2% CG .5/24.5+ 6 5/8% (6.5 COUPON @24.50) BASED UPON THE CALL DATE 11/2020.

          1. Sorry, Harvey but I’m kinda slow at times… “2% CG.5/24.5” means what? You are saying you mean 8 5/8% “if they don’t call it?” I don’t understand your assumptions….

            BTW, it’s interesting to remember that a year ago in December, LTS’s largest shareholder ended up selling all his common shares at $2.50/share and got paid 40% in cash and 60% appox ($76.35 mil) in LTSK. If I remember correctly, this was somewhat of a forced sale due to his disgraced status, but nevertheless, that leaves one important insider truly interested in the fate of the LTS preferreds –

            1. 2WR, I believe he is baking in the cap gain if redeemed upon first call date. Interestingly, just on todays pricing alone, market respects ability of company to redeem the preferred, and yet fret over increased risk of the debt by this company taking them over.
              But one should never base anything on day after trading results. If that outfit didnt have such a pitiful credit rating I might have jumped in myself, but my high risk bucket is full enough… You take a B+ senior secured, that makes senior unsecured in B/B- area. Subordinated debt would be B-/CCC+.. So preferred would be in CCC/CCC-… Ugh…..

              1. Thanks, Grid – “CG” as “capital gains’ just wasn’t computing to me.. As you know, I’m an old bond guy, so I’d figure yield differently but I have no issue with Harvey’s conclusion.

            2. Yes–2WR–Dr Frost–very wealthy dude fell out of grace. He was an original reason that I owned some of this years ago–it always helps to have a ‘sugar daddy’ billionaire in your court.

  3. Why should any LTS issue drop below par at this point? Some threat to redemption in the merger?

        1. The way I see it is this. Fortunately for the preferred holders there is a “change of control” provision. Kind of complicated but it looked at worse to be converted into common shares. But apparently this being a private company that will not be an option. So it appears on the surface they would be redeemed. That is what the price action is showing…
          The bonds have no such provision. So they could be left outstanding and presumably from a dirt bag credit rating outfit. Then there is always the specter of delistment being its a private company.

          1. Grid-
            Thanks. From the wording in their statement, LTS will remain LTS– so that might simplify or make it complicated- not sure. I was thinking primarily of the note LTSL.

            1. Gary, many companies that get acquired keep their name and even whatever is trading on the market too stays that way. Of course you read already they are keeping separate names and will remain LTS.
              But that really doesnt determine whether securities stay outstanding or not. My experiences are some do, some do not, and some even keep the securities outstanding and change the names to properly reflect any changes that happen, in terms of what the company is now called.

          2. The COC provision for LTS-A is interesting. Already had some under par, so with Ex-D today, I went and bit from the apple yesterday at $25.08. Pocket the little more than 16 cents/share, so my cost ends up below par. A few more divs to be paid before deal closes. QDI with return of 8%+ is nice and I’ll expect it will get redeemed or some provision for holders to cash in since, as mentioned, no common shares to convert to.

            1. From today’s 8-k filing, regarding LTS-A:

              “Each share of the Company’s 8.00% Series A Cumulative Redeemable Preferred Stock, par value $0.0001 per share (collectively, the “Preferred Shares”), will remain outstanding at the Effective Time, but the closing of the Merger will constitute a “Change of Control” within the meaning of the Company’s Articles of Incorporation, as amended. At the Effective Time, upon the occurrence of such Change of Control, each holder of Preferred Shares will have the right to convert some or all of such holder’s Preferred Shares into cash (unless, prior to the change of control conversion date, the surviving company in the Merger has provided notice of its election to redeem some or all of the Preferred Shares for cash) in accordance with the Company’s Articles of Incorporation, as amended.

              Regarding the Notes:
              At the Effective Time, the debt securities issued by the Company, including the 6.5% Senior Notes due 2027, the 7.0% Senior Notes due 2028, the 7.25% Senior Notes due 2028, and the 7.75% Senior Notes due 2029 (collectively, the “Debt Securities”), will remain outstanding as debt securities of the surviving corporation in the Merger.


      1. No chance. The acquiring company has a worse credit profile or no better than LTS.

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