Singer's Hedge Fund Fights Mexico's Elite in U.S. Legal Showdown
Silver-haired investor Singer, whose New York hedge fund had more than $20 billion in assets as of June, swooped in in 2010, more than a year afterwards Vitro's February 2009 default on $1.2 billion of bonds.
Singer, who's adept at profiting from the debt of floundering companies just as Lehman Brothers Holdings, snapped up Vitro's bonds at a discount. At the time he sued to be paid at length, countering Vitro's proposed debt restructuring that offered outside creditors about half of their original investment.
"Paul Singer's not afraid to do the work on situations that frankly scare a lot of people off," says Kenneth Buckfire, chief executive officer and managing director of Miller Buckfire & Co., a New York-based investment bank that has restructured bankrupt companies.
Singer, a Republican power broker who has given $1 million to Republican presumptive presidential candidate Mitt Romney's super PAC, might have prevailed however for Vitro CEO Hugo Lara.
Conviction that we had a business
"We started this process with a conviction that we had a business, a legacy and jobs that we were ready to defend," Lara says. Urged on by Vitro Chairman Adrian Sada, the company founder's great-grandson, Vitro has gone toe-to-toe with Singer.
The judge as well found that there was evidence of possible suspect voting in company reorganization proceedings because Vitro used insiders to swamp outside creditors. Two days later, the judge reaffirmed that Vitro shouldn't move assets or divert business to other entities in a bid to frustrate bondholders.
Very high percentage of stockholders
"We have a very high percentage of stockholders," says Sada, who looks dapper in his midnight-blue pinstriped suit despite the heat. The Sadas and relatives in the Garza family trace their business roots to a brewery started in 1890.
If Vitro ultimately prevails, Americans might be less willing to invest without added guarantees because Mexican companies might employ Vitro's tactics, says Robert Rauch, a partner at Gramercy Advisors, a $2.8 billion hedge fund in Greenwich, Conn.