Entry for January 28, 2006

The illustration is by long time labor activist Mark Pollack.  On January 21, Mark Reutter posted Q&A: Wilbur Ross and the Sago Mine Accident on the site for his book, Making Steel. Reutter started following Ross when he was involved in consoldating the steel industry.  He appears to  have great credentials from the Baltimore Sun and at the University of Illinois at Urbana-Champaign.  It’ too bad the publication to interview him on Sago was  Executive Intelligence Review. a LaRouche outfit.   Paul Gallagher, the interviewer,  is a close associate of LaRouche. 
I’ve asked Reutter for the original records (SEC and newsletters) .  I’ll let you know what I find out.  In the meanwhile, it’s interesting to read what he says about Ross.
In 1997, Ross purchased $41 million of senior debt in the Anker Coal Group through Rothschild Recovery Fund, which he ran as its managing director. Anker used this money to open the Sago Mine in 1999… By September 1999, Anker couldn’t pay interest on its debt, so in stepped Wilbur Ross.  Ross swapped Anker notes for Anker stock in a “private restructuring,” meaning there was no public disclosure to the Securities & Exchange Commission. But the terms came out in newsletters that track these things: The Rothschild Recovery Fund received $800 principal amount of 14.25 percent new notes for each $1,000 principal amount of 9.75 percent old notes exchanged, increasing annual debt service charges by almost one-fifth. In addition, Rothschild received warrants to purchase 20 percent of Anker’s common stock at the nominal exercise price of $0.001 per share.
Over the next year, Rothschild Recovery Fund forked over some additional cash and got more cheap Anker stock. By early 2001, WL Ross & Co. (successor to Rothschild Recovery) controlled more than 40 percent of Anker’s stock and Ross was sitting on the board of directors. A year later, the board threw out the old management and installed a “corporate workout” specialist. Anker then entered into Chapter 11 bankruptcy. When it emerged six months later in May 2003, its bondholders were wiped out, and Ross was de-facto boss. His right-hand lieutenant, Wendy L. Teramoto, was named chairman of Anker Coal. She also became CEO of CoalQuest Development, an Anker subsidiary that is now attempting to license a new mine in Taylor County near Grafton, W.Va.”

Ross served as the Executive Managing Director at Rothschild Inc., an investment banking firm, from October 1974 to March 2000.   In April 2000, he became  Chairman and Chief Executive Officer of WL Ross & Co. LLC, a merchant banking firm, according to his board bio at Mittal Steell , the world’s largest steelmaker after its 2004 buy-out of Ross’s  International Steel Group. for $4.5 billion, according to the January 27, 2006 Business Week.   

 Interestingly, the Board of Visitors of the University of Virginia invested $20,000,000 of its endowment in Rothschild in October of 1997, according to its minutes  due to “attractiveness of distressed debt as an opportunity for investment.”

Business Week published an interesting article on Ross in 2002 calling him the “king of bankrupcy.  If you haven’t already done so, check out my link to Ward Harkavy’s January 5 article I posted yesterday. 



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