Word: bonderman
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When Continental Airlines, one of the most maligned passenger carriers in history, was headed into bankruptcy in 1993, moneyman David Bonderman rushed in with Texas Pacific Group, like a team of trauma surgeons, to give it a $66 million transfusion. A year later, the group pumped in $40 million to save America West. So when US Airways filed for bankruptcy last week, guess who pulled $200 million out of their first-aid kit to help revive the sixth largest U.S. carrier? Bonderman's boys...
...odds are good that Texas Pacific wants a hand in healing it--in return for a big ownership stake. After 9/11, few other investors would touch the airlines, which have lost two-thirds of their value in the past year. But ever since the Continental deal--which brought Bonderman and his partners 10 times their original investment--Texas Pacific has made a profitable habit of picking up airlines so far down on their luck that nobody wants them. "We're contrarian by nature," says co-founder Jim Coulter. "On many of our best deals, friends in the business call...
...investment of $200 million. And that's not its only deal in the works. While public attention naturally attached to the US Airways transaction, Texas Pacific was quietly closing a deal 10 times larger: a $2.26 billion cash buyout of Burger King from Diageo, based in London. Bonderman and his partners are also finalizing the purchase of bankrupt Swissair's catering subsidiary, Gate Gourmet, No. 2 in the world with $2 billion in annual sales...
That approach paid off big for Bonderman's first turnaround, Continental Airlines. Thanks to a clever purchasing arrangement, TPG's partnership controlled Continental, though it owned just 14% of its stock. Not just an investor with deep pockets, TPG closely watched costs and CEO Gordon Bethune. Continental's share price, once down around $2, soared to $65 by 1998. "It was a huge gamble with an even larger payoff in an industry where net profits are close to zero," says Continental board member George Parker. After eight years, TPG's total return on its $66 million investment was nearly...
...Bonderman and Coulter learned from the best; they worked for one of the billionaire Bass brothers, Robert, in Fort Worth during the 1980s before opening Texas Pacific with lawyer William Price III in 1993. When European newspapers write about TPG's deals there, they love to run cartoons of the Texas raiders in cowboy hats. But none of the co-founders fell off a watermelon truck. Bonderman, 59, a skilled negotiator, is a Harvard law graduate. Coulter, 42, the savvy stock picker, is a Stanford M.B.A. Price, 46, who figures out how to restructure the distressed firms in which...