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Refco plans breakup and files for Chapter 11

Refco is preparing to sell off its futures brokerage to an investor group led by JC Flowers, as it files for bankruptcy protection.

    • Alexander Campbell
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The futures brokerage business includes Refco LLC in the US, Refco Overseas Ltd and Refco Singapore Ltd. Refco is negotiating its sale to a group of private equity firms consisting of JC Flowers, Enstar, Silver Point Capital, MatlinPatterson and Texas Pacific Group.

After the sale, Mark Winkelman will take up the post of chairman of Refco LLC with Jacob Goldfield as vice-chairman. Winkelman was formerly head of J Aron & Co and subsequently co-head of Goldman Sachs' fixed-income division.

The sale is expected to bring Refco $768 million - 103% of the businesses' net capital. Refco will also have the option of retaining up to 20% of the businesses. However, Refco emphasised that no sale had yet been agreed.

Meanwhile, Refco itself and several of its subsidiaries - not including the futures brokerage nor the Refco Securities broker-dealer - have filed for Chapter 11 bankruptcy protection.

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