A spokesman from the Blackstone Group L.P., owner of subprime auto finance company Exeter Finance Co., told Auto Finance News, that “at this stage,” the private equity firm does not want to comment further on an ABS Alert news story alleging it had grown impatient with efforts to make Exeter profitable ahead of a potential initial public offering.
The ABS Alert report also alleged that Exeter had received a subpoena from a New York regulator, and that bookrunners of a recent $500 million Exeter ABS deal weren’t aware of that issue. But once they knew, the news spooked potential investors. Auto Finance News contacted the U.S Department of Justice Southern District of New York Office as well as the New York State Department of Financial Services. Both agencies declined to confirm or deny they had issued any subpoena to Exeter.
Legal experts tell AFN that a subpoena is considered a confidential investigation, and therefore, can be difficult to to confirm. Meanwhile, private equity players have told AFN in recent months that private equity firms were looking to exit subprime auto soon.
But the bigger point of the ABS Alert story was the implication that former Exeter chief executive Mark Floyd was muscled out by the New York private equity firm when this latest ABS deal got priced “well wide of price talk.” Once again, Blackstone declined comment. However, when asked about industry rumors that Floyd had been forced out, Blackstone spokesman Peter Rose denied it, telling AFN that “Mark was not forced out and any implication that he was is simply incorrect.”
Floyd was replaced by Thomas Anderson, a turnaround vet who has worked for companies such as Capital One, AmeriFree Financial, and several other finance firms.
Yesterday, an SEC spokesperson would not speculate or offer guidance on what the repercussions might be for a privately held company that does not disclose that it has been issued a subpoena prior to making an ABS offering available to investors. Regarding publicly traded companies, the 1934 SEC Act says the agency has the power to bring enforcement actions against companies that disseminate “fraudulent or incomplete information” in violation of the federal securities laws.
