Jefferies Financial Group has defended its dealings with First Brands Group, stating that its exposure to the bankrupt auto-parts supplier is minimal. This announcement comes as the investment bank seeks to restore investor confidence following a significant sell-off of its stock. Jefferies Financial Group provides financial services, including investment banking and capital markets, asset management and direct investing. The company operates through its various subsidiaries to serve a global client base.
Shares of Jefferies advanced on Monday after the bank communicated on Sunday that the First Brands situation could lead to financial losses “over time”, but indicated that these amounts were relatively small. Since the emergence of First Brands’ financial difficulties last month, Jefferies’ stock had lost approximately a quarter of its value.
In its statement, Jefferies disclosed indirect investments, including $US43 million (or 5.9 per cent) of Point Bonita Capital’s accounts receivable purchased from the auto-parts company, and a $US2 million interest in First Brands’ bank loans via Jefferies Finance’s Apex platform. Point Bonita is a unit of Jefferies’ Leucadia Asset Management arm. According to the statement, Jefferies is confident that any losses or expenses from these investments, or otherwise related to First Brands, can be readily absorbed without threatening its financial condition or business momentum.
Near 12.30pm in New York, shares in Jefferies were trading 3.8 per cent higher at $US52.82, giving the company a market capitalisation of nearly $US11 billion. The statement was jointly issued by chief executive officer Rich Handler and president Brian Friedman.
