Onex Corp.'s deal hunters don't see much light in the acquisition tunnel right now with financing still all but unavailable.
Onex founder Gerry Schwartz said the billions thrown at the banks in the U.S. under the Troubled Asset Relief Program have yet to grease the wheels.
"Nothwithstaniding all the banks taking down TARP funding it has not seemed to flow down," the buyout veteran said on Onex's third-quarter conference call. When asked whether smaller deals were feasible, he said, "I wouldn't even go that far. I wouldn't even go that far."
"Even situations that should be easy to finance are almost impossible to finance," he said.
He said he doesn't see any near-term cures for what's going on in markets, echoing what he told The Globe and Mail in a September interview.
"I hate to answer the question because along with most of my colleagues in this industry, I'm a real novice at understanding how long this is going to last," Mr. Schwartz said, adding later that "The momentum is still downward and I can't see any reason why there'd be a real pullout from where we are at least anywhere short of 18 months. I hope I'm wrong."
Still, Onex is pursuing some deals. It's made a short list of three bidders in its attempt to win a casino licence in Illinois with an eye to building a casino just outside Chicago.
Existing businesses are generally performing ahead of plan, the Onex team said, including Husky Injection Molding. Another recent purchase, Allison Transmission, is holding up better than many expected because while sales to the North American truck market have cooled, other areas such as the military business are compensating.
There was a lot of focus in the call on Onex's foray into real estate, given what's happening in the United States. Onex is likely to have to hold some properties long-term that it had planned to sell, and may have to add some capital to some to refinance properties and other financial investments.
