Bank of America (BAC) Represents CQO in Property Sale

According to people familiar with the situation, Bank of America (NYSE:BAC) is sending out materials to companies of interest concerning the U.S. portfolio held by Charter Hall Office REIT (CQO), which could end up selling for over the $1.7 billion book value of the assets.

Companies reportedly interested in the properties are Blackstone Group LP (NYSE:BX), Brookfield Asset Management Inc. (NYSE:BAM) and Highwoods Properties Inc. (NYSE:HIW), among others.

According to Orange Capital managing partner Daniel Lewis, “The stated book value here of about $1.7 billion is way off and these assets could trade at a significant premium to book value. We are adamantly opposed to the proposed joint venture and have made our view clear to the board.”

Charter Hall spokeswoman Rachel West said, “We’re exploring interest from a broad range of interested parties and any decision we make as always will be in the best interest of unit holders.”

Bank of America (BAC) Downgrades Citi (C), Goldman (GS)

Citigroup (NYSE:C) and Goldman Sachs (NYSE:GS) were downgraded by Bank of America (NYSE:BAC) analyst Guy Moszkowski, citing weak results in the first quarter.

Moszkowski said in the note to clients, "Results [are] unlikely to be dismal, and should show improvement over Q4, but we don't expect seasonal improvement as strong [and] as often seen in the past. Client engagement remains subdued, Mid-East turmoil likely only to further reduce customer risk appetite."

Also noted were the effects of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which will probably drive investors to financial institutions like The Blackstone Group (NYSE:BX), KKR (NYSE:KKR) and Lazard (NYSE:LAZ), which benefit from the new rules, or at minimum aren't affected as much by them.

Citigroup was trading at $4.57, down $0.11, or 2.46 percent, as of 12:03 PM EST. Goldman Sachs was trading at $161.91, down $2.58, or 1.57 percent.

Citigroup (NYSE:C) Enters Second Round with OneMain

OneMain, the subprime consumer lending unit of Citigroup's (NYSE:C) CitiFinancial unit, has entered into the second round of the auction process, according to sources close to the matter.

Sources said one of the first companies that is headed to the next round is Blackstone Group. About a dozen companies were looking at OneMain in the first round of the auction.

Even so, OneMain has its work cut out for it in attempting to sell companies on the viability of investing in subprime lending at a time when the majority of banks have exited it. It also must convince potential suitors that subprime is a growth segment going forward.

With businesses in the consumer lending segment being backed by the FDIC, the deal for OneMain would have to be an investment-grade leveraged buyout.

In a move to keep confidential data from being released into the market, stories have circulated that Citigroup would provide staple financing for the deal. According to sources, there hasn't been a decision made concerning that issue one way or the other.

Citigroup closed Friday at $4.91, dropping $0.03, or 0.61 percent.

Citigroup (NYSE:C), Deutsche (NYSE:DB) Leading Freescale IPO

Freescale Semiconductor is being brought back to being a publicly traded company, led by financial giants Citigroup (NYSE:C) and Deutsche Bank (NYSE:DB).

Blackstone Group, TPG Capital, Carlyle Group and Permira took Freescale private in 2006 in a $17.6 billion buyout.

As of the end of 2010, Freescale had a huge debt load of $7.6 billion. Freescale said they will use a part of the proceeds from the IPO to pay down the debt, which they paid about $537 million in interest on for the whole year.

The company has had a checkered performance over the last several years, generating net sales of $4.46 billion in 2008, a gain of about 27 percent from 2007. In 2009 they generated net income of $748 million, but plummeted in 2010, losing $1.05 billion for the year.

JPMorgan (NYSE:JPM) and Credit Suisse (NYSE:CS) are underwriters for the IPO.

Citigroup (NYSE:C), Deutsche Bank (NYSE:DB) Lead Managers on Freescale IPO, Credit Suisse (NYSE:CS) and Barclays (NYSE:BCS) Added

After going private in 2006 in a leveraged buyout, Freescale Semiconductor is close to returning to the public arena with an IPO, which is being led by Citigroup (NYSE:C) and Deutsche Bank (NYSE:DB), with additional help from Credit Suisse (NYSE:CS) and Barclays Capital(NYSE:BCS).

In 2006 the company was taken private in a $17.6 billion buyout, which left Freescale heavily indebted. As of the end of 2010, they had long-term debt of 7.58 billion.

After struggling for some time, Freescale seems to have turned the corner, generating better results recently. Revenue in the fourth quarter, which the reported last week rose by 24 percent over the year before, while their losses in the quarter shrunk.

Private equity firms Blackstone Group, Carlyle Group, Permira Funds and TPG Capital, which were involved in the buyout, have all refused to comment on the story.

Even with semiconductor sales improving, concerns over the sustainability weighs on the sector, and Freescale as well.

Dynegy (NYSE:DYN) Approves Icahn's Bid

The 10 percent premium offered for Dynegy (NYSE:DYN) by Carl Icahn over Blackstone's (NYSE:BX) bid was enough to push Dynegy to accept the offer.

Icahn upped the bid for Dynegy from the $5 a share Blackstone offered to $5.50.

The values Dynegy as about $665 million, which would be an all-cash deal.

A subsidiary of Icahn Enterprises (NYSE:IEP) will make the tender offer on December 22.

If any better offers are made for Dynegy, the company will consider them through January 24, 2011.

Assuming no other offers, the deal is expected to close sometime in the first quarter of 2011.

Greenhill (NYSE:GHL) Backlog Weakened After Dynegy (NYSE:DYN) Decision with Blackstone (NYSE:BX)

After Dynegy (NYSE:DYN) decided to end their deal with Blackstone (NYSE:BX), Greenhill's (NYSE:GHL) backlog was weakend, although news they were hired by the Treasury Department to consult them on getting rid of their stake in AIG helped them a lot.

Ticonderoga said, "This morning, Dynegy announced its decision to terminate its pact with Blackstone and seek other offers. GHL was advising Dynegy and may continue to do so, but the deal was an estimated 18% of the backlog. Excluding the Dynegy deal, we estimate the backlog coverage ratio (est. fees from the current backlog/our forward 3Q revenue est.) drops to roughly 30% from 36%; this compares to 87% for Lazard (NYSE:LAZ) and 80% for Evercore (NYSE:EVR).

"While there is still time for GHL to build the backlog, consensus 2011 EPS estimates call for a 97% increase vs. 2010. This compares to 26% for LAZ and 77% for EVR. If we do not see a material improvement in deal activity over the next few months, we would expect 2011 EPS estimates to be negatively impacted."

Greenhill closed Tuesday at $75.57, falling $0.38, or 0.50 percent. Ticonderoga maintains a "Neutral" rating on them.