The German government has reportedly accused JC Flowers of being “uncooperative” over a potential rescue plan for the embattled commercial real estate lender, Hypo Real Estate.
The private equity firm has proved reluctant for Berlin to take a 75 percent stake of Hypo in a bid to inject capital and liquidity into the struggling bank, according to a report in the Financial Times
JC Flowers and Grove International, working with Japanese financial institution Shinsei Bank, invested €1.1 billion in Hypo in June 2008 for up to 24.13 percent of the firm’s shares. Since that time, Hypo’s shares have plummeted more than 90 percent.
The report said that the German government needed approval from JC Flowers and Grove because the 24 percent stake could be a blocking minority at any shareholders’ meeting. The report added that investment funds sympathetic to JC Flowers could also create obstacles to the part-nationalisation.
JC Flowers and Grove International were unavailable for comment at press time.
The Financial Times report a person close to JC Flowers as dismissing the charges. “JC Flowers always wanted to be a co-operative investor. The firm wants to stabilise HRE. But it can only talk to Berlin when Berlin knows what it wants,” the source said, calling on Berlin to present “its entire plan”.
To date, Hypo Real Estate has received €42 billion in guarantees from the German government bailout plan.
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