In a companion diary, I pointed out that the operators of a huge global hedge fund, Cerberus-Gabriel, are implicated in the GOP funding scandal involving former Appropriations Committee Chair Rep. Jerry Lewis (R-CA). Lewis was under investigation by former US Attorney Carol Lam when she was fired this past January. See, http://www.dailykos.com/...
As Rayne points out today, the Lam firing also involved a major California GOP funder, Gerry Parsky, who is a described as a close friend of California Governor Schwartzenegger and of President George W. Bush.
It turns out that Parsky runs Aurora Capital, a so-called vulture capital firm with large Pentagon contracts, and that he was a partner in the LA law firm that late last year hired another former US Attorney, Debra Wong Yang, under some highly questionable circumstances.
MORE below . . .
The web connecting major GOP donors to the US Attorneys firing and defense/CIA contracting scandals has just gotten larger.
As Rayne points out in her diary this morning -- http://www.dailykos.com/... -- there's another player in the unfolding scandal, a well-connected figure in the California GOP, Gerald "Gerry" Parsky.
Parsky is identified as having headed a group, the "Parsky Commission", that compiled a list of replacements for those US Attorneys fired by Gonzales. Parsky also heads up the Board that oversaw the 2005 privatization of Los Alamos National Laboratories to a group headed by Bechtel executives. http://www.bechtel.com/...
Here's some additional background on Mr. Parsky that suggests that Parsky has some uncanny ties with other major GOP donors ensnaired in the US Attorney's and privatization scandals.
Parsky was a partner at the same Law Firm that hired former US Attorney Debra Wong Yang
From 1977 to 1992, Gerry Parsky was a senior partner in the LA law firm of Gibson Dunn & Crutcher. http://www.sfgate.com/...
Yang was the US Attorney in Los Angeles, and she resigned last year and accepted a $1.7 million signing bonus to join Gibson Dunn, the firm that represents Congressman Lewis, whom she had reportedly begun to investigate. Unlike Ms. Lam, attorney Yang was not fired, but accepted Gibson Dunn's offer. Gibson Dunn also employs former US Solicitor General Ted Olson, whose name is mentioned as a possible replacement for US Attorney Alberto Gonzales.
http://www.gibsondunn.com/news/firm/detail/id/526/?pubItemId=8231
U.S. Attorney Debra Wong Yang Joins Gibson Dunn in Los Angeles
October 17, 2006
Los Angeles. Gibson, Dunn & Crutcher LLP is pleased to announce Debra Wong Yang, the United States Attorney for the Central District of California in Los Angeles, will join the firm as partner in the Los Angeles office.
At Gibson Dunn, Yang will co-chair the firm’s Crisis Management Practice Group, along with Washington, D.C. partner Theodore B. Olson, the former Solicitor General of the United States, and New York partner Randy Mastro, the former New York Deputy Mayor of Operations. In addition, Yang will play a central role in the Business Crimes and Investigations Practice Group.
How do you spell, "Conflict of Interest"? How about, "Obstruction of Justice"?
Parsky Owns Vulture Capital/Defense Firm - Aurora Capital
Aurora's Advisory Board is run by a group of retired executives of big-name defense contractors.
http://www.auroracap.com/...
The company's business model is to pick-up distressed middle-sized companies that have significant market share, saddle them with debt, and then either take them public or sell them off, skimming the proceeds of the sale for its own investors. This mechanism is illustrated by Aurora's takeover of K&F Industries, the largest U.S. producer of civilian and military aircraft wheels, brakes and fuel tanks.
http://www.defensenews.com/story.php?F=1015036&C=airwar
Posted 08/05/05
K&F Industries Market Takeoff May Face Turbulence
By CHRISTIAN PLUMB, REUTERS, NEW YORK
Aircraft brake maker K&F Industries Holdings Inc.’s $284 million initial public offering could face stiff headwinds as investors consider that the proceeds will go mainly to pay off private equity insiders.
K&F’s elevated debt, slow growth and sweeping accounting changes could also dampen investors’ enthusiasm for the IPO even though shares of other aircraft parts makers like Goodrich Corp. and Rockwell Collins Inc. have soared to multiyear highs recently.
"What I see is the buyout funds are in there with their spreadsheets and they’ve maxed the company out," said Ipodesktop.com analyst Francis Gaskins.
New York-based K&F, which supplies wheels and brakes for regional, business and military jets, is the first U.S.-based aircraft supplier IPO to go public this year, although German’s MTU Aero Engines floated its shares in June.
Once spun off from bankrupt satellite operator Loral, K&F was acquired last October by private equity firm Aurora Capital Group and other investors for $1.06 billion.
If the company succeeds in carrying out its IPO at $17 a share, the middle of the estimated price range, initial market capitalization would be $672.96 million.
The lower market value is a reflection of the amount of debt involved in the original buyout, to which Aurora and its co-investors contributed just $315 million in equity.
As in many other recent IPOs, most of the proceeds will go to pay down part of that debt. The remainder, $95.3 million, will go toward paying a special cash dividend to shareholders.
Souring demand for IPOs aimed at paying off company insiders contributed to the May cancellation of wood and paper products company Boise Cascade Co.’s planned IPO.
‘Cashing Out’
SNIP
And investors may still be lured by K&F’s dominant position in some markets. The company, which also makes fuel tanks and interior panels, supplies 40 percent of regional jets and 50 percent of business jets worldwide.
"If an investor wants to play this market and believes that the growth story will pan out, this is a company that probably will fill the bill," said analyst Tom Taulli of investment bank Instream Partners.
Based on last year’s earnings, the company’s price-to-earnings ratio is a reasonable 17.7 at the middle of the announced range for the IPO. That compares with a sector average of 20, according to Reuters Estimates.
But Ipodesktop’s Gaskins said the multiple would be a stratospheric 86.3 if calculated by annualizing this year’s first-half net income, which plunged on interest and other costs from the Aurora buyout.
A new accounting system adopted after the Aurora buyout makes comparisons particularly difficult, he said.
"It’s buyer beware on this kind of stuff," he said.
Goldman Sachs Group Inc. and Lehman Brothers, Wall Street’s two top IPO dealmakers in the second quarter, are the lead underwriters on the offering. K&F plans to list its shares on the New York Stock Exchange under the symbol "KFI".
http://biz.yahoo.com/...
P.S. - On March 7, UK-based defense contractor, Meggitt,PLC, announced a $1.1 billion offer for K&F. That includes assumption of the full $700 million in debt acquired by K&F. The tendered price was $27/share, a large premium over the trading price.
To put this into perspective, look at what is happening to other U.S. defense contracting companies involved in the hydra-headed GOP funding scandal. There appears to be an exodus of capital and a move to offshore ownership among these companies.
Earlier this month, Halliburton announced it's intention to move its global headquarters offshore, to Dubai, UAE. Cerberus-Gabriel, a large Israeli hedge fund has been identified as the owner of scandal-plagued International American Products Global Services, which was awarded the contract to privatize Walter Reed Army Hospital. Cerberus' founder is a major contributor, along with MZM's Mitchell Wade, to former House Appropriations Chair Rep. Jerry Lewis, who was under investigation by then US Attorney Carol Lam when she was summarily fired in January by President Bush and Attorney General Alberto Gonzales.
There appears to be a larger pattern here. One which Chairman Waxman's staff might want take a close look at. See Part 1 of this series, http://www.dailykos.com/...
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- Mark G. Levey