Buyout beat, week of Dec. 3, 2007

Restoration Hardware may play ball with Sears

Furniture retailer Restoration Hardware Inc. said last week that it will give potential buyer Sears Holding Corp. the financial information it wants if Sears agrees to sign a confidentiality and standstill agreement.

Sears, which already owns 13.7% of the home-goods company, is attempting to buy Restoration Hardware. Late last month, Sears made a tentative offer of $6.75 per share, a nearly 5% discount to the company’s closing price Monday of $7.07. Sears has said it will make a binding offer once it gets access to Restoration Hardware’s confidential financial information. But so far the furniture retailer has rebuffed Sears’ requests for the documents.

Corte Madera, Calif.-based Restoration Hardware said that if Sears signs the agreement, “it would be pleased” to provide the documents. The chain said other interested buyers have agreed to sign the papers. Those interested parties include private equity firm Catterton Partners, which offered Restoration Hardware $6.70 per share earlier in November. The two companies said the total equity value of that deal is $267 million. —Associated Press

Richardson bucks Dems on carried interest tax

New Mexico Gov. and Democratic Presidential candidate Bill Richardson has broken ranks with his fellow Democrats as he has come out in opposition to a change in tax treatment of carried interest for venture capital and private equity investors. He does, however, believe that such an increase should be imposed on hedge funds and publicly traded partnerships.

Richardson’s campaign issued a statement last week that lauds Congressional Democrats for trying to do something about the looming AMT disaster, but says that VCs and PE pros should not be asked to help pick up the lost federal revenue. He claims that a change to carried interest tax treatment would “damage our economy as well as our capacity for innovation,” but he does not actually address why either of those things would happen. Richardson also doesn’t spend any real time on the buyout side of the equation, instead focusing most of his rhetorical effort on VCs.

All of the other major Democratic candidates are on record as supporting a change to carried interest tax treatment, from capital gains to ordinary income. All of the major Republicans favor maintaining the status quo.

Dana nears bankruptcy exit

Dana Corp. (Nasdaq: DCNAQ), a Toledo, Ohio-based supplier of axles, drive shafts and thermal-management products for cars, has obtained fully underwritten commitments for a $2 billion exit financing facility, paving the way for buyout shop Centerbridge Capital Partners to act as lead equity investor.

Dana appears positioned to emerge from Chapter 11 bankruptcy protection by the end of January or earlier. Citigroup Global Markets Inc., Lehman Brothers Inc. and Barclays Capital will underwrite the facility, which consist of a $650 million asset-based revolving credit facility and a $1.35 billion term loan facility.

The Associated Press reported that Dana also will fund its bankruptcy exit with $790 million in new equity. Centerbridge defeated a bid by hedge fund Appaloosa Management to help finance Dana’s bankruptcy exit.

Flowers-led group bids on Japanese bank

J.C. Flowers & Co. is leading a consrotium that has made a $1.8 billion offer for a 32.6% stake in Shinsei Bank of Japan. The Flowers group also includes Grupo Santander and Swiss Re.

This would be J.C. Flowers chief Christopher Flowers’ second go-around with Shinsei. He was a partner with Ripplewood Holdings when it acquired the bank for $1.2 billion in 2000, and helped turn it around for one of the most profitable private equity deals in history.