Falcone Renews Financing for Harbinger Stake

Chidem Kurdas

Certainly it could be worse for Philip Falcone. He has emerged from his long tussle with the US Securities and Exchange Commission. While barred from raising capital for his hedge funds and required to return money expeditiously to fund clients, he retains 74.2% ownership of the public company, Harbinger Group.

Six months ago, while still in the midst of fighting serious allegations by the SEC, Mr. Falcone wanted to sell to the public 20 million or more shares of Harbinger Group owned by the funds he controls — which are winding down, albeit very slowly.

The public offering has not yet happened. The deal Mr. Falcone reached with regulators allows him to remain the chief executive of the company. The WSJ reported that the firm’s operations are expected to continue as usual.

In the meantime, he has re-negotiated the financing arrangement for Harbinger Group with the same lender that gave him a loan last year. The collateral for the loan now contains less Harbinger Group stock and more other securities, owned by Mr. Falcone’s master hedge fund.

The lender is presumably Jefferies & Co., which had agreed to lead the underwriters in the hoped-for public offering. Mr. Falcone must have sweetened the credit agreement by pledging other securities.

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