view release on metacpan or  search on metacpan

share/SpamAssassin/easy_ham/00302.9aa28800eefcb167ac80f4b6b1e939d6  view on Meta::CPAN

businesses untenable. 

Instead, Texas Pacific began to hastily exit some existing
investments, taking more than $2 billion in profits during
that stretch. 

"They started to cash out early in the cycle," said Mario
Giannini, chief executive of Hamilton Lane, a money
management firm, some of whose clients are Texas Pacific
investors. 

The good times of the late 1990's were not ideal for Texas
Pacific - it struggled to find downtrodden companies that
needed its help. 

But Texas Pacific did manage to spot a few diamonds in the
rough. It revived Oxford Health Plans, the health
maintenance organization that nearly collapsed in the
mid-1990's, almost doubling its money after bringing in new
managers and upgrading computer systems. In 1996, it made a
$280 million investment in Ducati Motor, the Italian
motorcycle maker, whose profits have since more than
quadrupled. 

But Texas Pacific also stumbled, usually when it bought at
the top of the market. Texas Pacific's $560 million
investment in the J. Crew Group, the clothing retailer, for
which it paid a steep price of 10 times cash flow in 1997,
has been a disappointment. So has its 1999 purchase of
Bally, the shoe maker, which has suffered from lower demand
for luxury goods. 

Texas Pacific also lost more than $100 million on Zilog, a
semiconductor company, and Favorite Brands, a candy maker,
both of which filed for bankruptcy. 

Some of these investments have taken a toll on the firm's
performance. Texas Pacific is still selling off holdings in
two investment funds it raised over the last decade. The
first fund, a $720 million portfolio raised in 1993 and
including investments made through March 1997, should
return more than 40 percent, according to one Texas Pacific
investor. But its second fund - $2.5 billion raised in 1997
- could return less than half that, this investor
estimated, since the firm had less time to take profits on
these investments before the stock market sank. 

But because Texas Pacific has not sold many of its holdings
in the second fund, profits on these investments could
rebound. It is hoping, for example, that with new
management in place, J. Crew will turn around as the
economy rebounds. In any case, one competitor said, "their
returns look pretty good when you consider that some other
funds won't return any capital" to investors. 

But with the weak economy throwing many companies into
trouble, Texas Pacific seems poised to repeat its earlier
success, the investor said. "They should do exceptionally
well," he said. 

Texas Pacific has a distinct style - if not formula. It
relies on talented, self-sufficient managers to restructure
troubled companies, preferring to remain hands-off, except
for surveillance from the boardroom. When necessary, it
replaces managers. 

Less than a year after Continental emerged from bankruptcy,
for example, Mr. Bonderman watched with frustration as his
old friend Robert R. Ferguson, the chief executive, led it
to the edge of another trip to bankruptcy court. 

Continental's board, where Mr. Bonderman was chairman, then
brought in Gordon M. Bethune, an executive at Boeing, and
in October 1994 he replaced Mr. Ferguson as chief
executive. Mr. Bethune quickly did a top-to-bottom overhaul
of the company and is now considered a great turnaround
artist of the industry. 

"The biggest conflict I've ever seen was with Bob
Ferguson," said Clark Onstad, a former general counsel for
the Federal Aviation Administration, in describing the
thinking of Mr. Bonderman, whom he has known since the 1982
Braniff bankruptcy. "He chose Bethune over his longtime
friend Ferguson because he thought Bethune would do a
better job." 

At America West, Texas Pacific initiated an even more
extensive management overhaul. This time, the charge was
led by Mr. Coulter and Mr. Schifter, both directors. 

W. Douglas Parker, the current chief executive, flew to Mr.
Coulter's home in San Francisco to interview for the job of
chief financial officer. They talked for hours, and Mr.
Parker said the two men quickly realized they had "somewhat
kindred spirits." 

The board replaced most senior managers at America West,
except William Franke, the chief executive, who stepped
down last September. His restructuring plan had made the
airline profitable a year and a half before it emerged from
bankruptcy in August 1994. 

Texas Pacific owns just 3 percent of America West, worth
about $33.7 million. But those are controlling shares, and
the group holds more than 50 percent of the votes. 

"These are not passive investors, nor am I," said Donald L.
Sturm, a Denver businessman who serves on Continental's
board with Mr. Bonderman and Mr. Price. "You're active.
Your money is at stake. Your reputation is at stake." 

After overseeing managers who worked successfully with
unions at Continental and America West, Texas Pacific has a
good reputation with labor. That was one reason US Airways
was interested in a Texas Pacific investment, said Chris
Chiames, a spokesman for the airline. 

Mr. Siegel wanted an investor who would "be as labor
friendly as possible," Mr. Chiames said. But US Airways can
still entertain other bids this fall, and Marvin Davis, the
billionaire investor from Los Angeles, has expressed