When CanWest Global Communications Corp. started defaulting on debt related to its newspaper operations last year, the company soon came up against GoldenTree Asset Management.
The New York-based fund specializes in distressed assets and it quickly became a driving force behind CanWest's reorganization, which culminated in a proposed sale of the newspaper division this week to a group that includes GoldenTree.
For months last year, court filings show GoldenTree bought up a majority of more than $300-million (U.S.) worth of notes issued by CanWest and then pulled together a committee of creditors to press their case. The fund waged fierce battles over everything from the hiring of lawyers and financial advisers to the ultimate sale process for the papers, court filings show. None of this aggressive posturing should have surprised CanWest.
The fund was founded nearly 10 years ago by a group that includes Leon Wagner, the former head of high-yield sales and trading at CIBC World Markets. Mr. Wagner spent five years at CIBC, before helping start GoldenTree in 2000. He also worked at Argosy Group LP from 1993 until its acquisition by CIBC in 1995.
GoldenTree now manages about $11-billion and specializes in a variety of distressed assets including real estate, communications companies and newspapers. Along with CanWest, the firm's media interests have included turnaround situations at Readers' Digest, Tribune Co. and a company that used to own the Dallas Morning News.
"We look for interesting value situations," co-founder Steve Tananbaum told Barron's magazine in 2006 in a rare interview. "Then we discuss, given our views on a company, what the best way is to execute it."
Like many hedge funds, GoldenTree has not been immune to turbulence in the markets. GoldenTree Asset Management had a net inflow of 4 per cent in 2008. The fund offered investors the chance to take redemptions in the form of securities rather than cash.
An earlier online version of this story incorrectly stated that GoldenTree faced redemptions totalling nearly 30 per cent of its assets under management. This online version has been corrected.