National Can

"Peltz appeared to share little of his bankers’ anxiety. In mid-1985 he purchased through Triangle a $ 2 million apartment in Paris. “Mike made him put it on the market,” commented one Drexel investment banker, “which was the right thing to do. We have a responsibility to our bondholders. What’s he going out and spending the company’s money like that for, when he’s got this mountain of debt?” By the beginning of 1986, however, the first good news was in (and Peltz took the apartment, still unsold, off the market). National Can had had a record year in 1985; its earnings (for April 17 through December) were $ 162 million, up from $ 68,775 the year before; Triangle’s stock had quadrupled, making it the third-best performer on the New York Stock Exchange. With interest rates down, Peltz and May were refinancing the company’s acquisition debt, meaning they were paying down that debt and replacing it with newer debt at lower interest rates. And their combined personal stakes in the company had gone from a market value of roughly $ 8–9 million when they purchased the controlling block of Triangle stock, in 1983, to about $ 34 million. Adding in a premium for control, which would have been present if they were to sell their block, it was now worth more than $ 40 million."

"NELSON PELTZ went through the four days of the Predators’ Ball, as he would later say, as a “nervous wreck.” Peltz, who had a track record in business that can be described as lackluster, saw National Can as the opportunity of a lifetime. He had run his family’s frozen-food business, expanding it through acquisitions and then selling it in the midseventies; it later went bankrupt. Peltz had struggled for years, been close to broke, finally managed in 1982 to acquire with Peter May a controlling block of Triangle Industries, which he intended to leverage up as his vehicle for acquisitions. Until now, nothing had worked. And he"

"“Coastal was a big company, with significant assets. It wasn’t so leveraged. Triangle was a company with a fifty-million-dollar net worth. This was the first of the superleveraged buyouts to go through.” The acquisition of National Can cost $ 465 million. Triangle contributed $ 70 million as equity, to which another $ 30 million was added through its sale (underwritten by Drexel) of preferred stock; the debt portion layered above that consisted of $ 365 million raised with junk bonds by Drexel. And after the deal closed, Drexel raised another $ 200 million from junk bonds, in order to pay down National Can’s preexisting bank debt. So the total debt of National Can, once the $ 200 million was added to the preceding $ 365 million, was $ 565 million. Five hundred sixty-five million dollars was a towering debt load for $ 100 million of equity to carry. And Peltz pointed out that even the $ 70 million from Triangle, at the equity base, came from its earlier offering of junk. “We put the hundred million in the sub [the subsidiary, Triangle Acquisition Corporation, formed for the buyout]. But it was all debt! We called it equity here [at Triangle Acquisition Corporation], but it was debt over here [at Triangle]. Do you understand the leverage in this deal? It was eleven to one!"

"Peltz appeared to share little of his bankers’ anxiety. In mid-1985 he purchased through Triangle a $2 million apartment in Paris. “Mike made him put it on the market,” commented one Drexel investment banker, “which was the right thing to do. We have a responsibility to our bondholders. What’s he going out and spending the company’s money like that for, when he’s got this mountain of debt?” By the beginning of 1986, however, the first good news was in (and Peltz took the apartment, still unsold, off the market). National Can had had a record year in 1985; its earnings (for April 17 through December) were $162 million, up from $68,775 the year before; Triangle’s stock had quadrupled, making it the third-best performer on the New York Stock Exchange. With interest rates down, Peltz and May were refinancing the company’s acquisition debt, meaning they were paying down that debt and replacing it with newer debt at lower interest rates. And their combined personal stakes in the company had gone from a market value of roughly $8–9 million when they purchased the controlling block of Triangle stock, in 1983, to about $34 million. Adding in a premium for control, which would have been present if they were to sell their block, it was now worth more than $40 million."

"“Coastal was a big company, with significant assets. It wasn’t so leveraged. Triangle was a company with a fifty-million-dollar net worth. This was the first of the superleveraged buyouts to go through.” The acquisition of National Can cost $465 million. Triangle contributed $70 million as equity, to which another $30 million was added through its sale (underwritten by Drexel) of preferred stock; the debt portion layered above that consisted of $365 million raised with junk bonds by Drexel. And after the deal closed, Drexel raised another $200 million from junk bonds, in order to pay down National Can’s preexisting bank debt. So the total debt of National Can, once the $200 million was added to the preceding $365 million, was $565 million. Five hundred sixty-five million dollars was a towering debt load for $100 million of equity to carry. And Peltz pointed out that even the $70 million from Triangle, at the equity base, came from its earlier offering of junk. “We put the hundred million in the sub [the subsidiary, Triangle Acquisition Corporation, formed for the buyout]. But it was all debt! We called it equity here [at Triangle Acquisition Corporation], but it was debt over here [at Triangle]. Do you understand the leverage in this deal? It was eleven to one!"

"NELSON PELTZ went through the four days of the Predators’ Ball, as he would later say, as a “nervous wreck.” Peltz, who had a track record in business that can be described as lackluster, saw National Can as the opportunity of a lifetime. He had run his family’s frozen-food business, expanding it through acquisitions and then selling it in the midseventies; it later went bankrupt. Peltz had struggled for years, been close to broke, finally managed in 1982 to acquire with Peter May a controlling block of Triangle Industries, which he intended to leverage up as his vehicle for acquisitions. Until now, nothing had worked. And he"