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News > Companies
LTCM to repay debts
June 18, 1999: 2:03 p.m. ET

Original investors in Long-Term Capital to get money back by January
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NEW YORK (CNNfn) - Long-Term Capital Management, the embattled hedge fund that required a $3.5 billion bailout from Wall Street's top investment banks last year, plans to repay its original investors by the end of the year.
     In a letter sent to its earliest investors Thursday, Long-Term Capital's managers said it would repay the group's initial investors -- primarily wealthy individuals and institutions -- in full by year's end "to permit them to reinvest as they choose," said Peter Rosenthal, a company spokesman.
     The payment -- which sources place between $450 million and $500 million -- comes as the hedge fund reported a 20 percent gain in portfolio value since it nearly collapsed last fall.
     The 14 investment banks that helped bail the fund out last September --including Merrill Lynch & Co. (MER), Goldman Sachs (GS), Morgan Stanley Dean Witter and USB Securities, among others -- also could see some return on their investment as well, although such payments are not clearly spelled out in the letter.
     The Greenwich, Conn.-based hedge fund, founded by former Salomon Inc. Vice Chairman John Meriwether, roiled markets last fall when it was nearly forced to liquidate billions of dollars in investments to meet minimum capital requirements before the Federal Reserve stepped in to negotiate a bail-out plan.
     Using less risky investments controlled predominantly by the investment bank consortium, the fund quickly returned to profitability, however, and Meriwether is now reportedly talking to other Wall Street executives about buying out the fund and re-launching it under a new image.
     Steven Lonsdorf, president of Van Hedge Fund Advisor International, said while the repayment plan is "a nice gesture," he would be very surprised if many are willing to hand over large chunks of capital to Meriwether again.
     "With the stigma that's on this fund, I can't believe there would be much interest in jumping back in with John Meriwether with a big chunk of money," Lonsdorf said. "He may be able to attract some new money because he has a reputation for making money. But I would assume that [the original investors] ... will be very happy to get their original investment back and go home."Back to top

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

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Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.