Carlyle co-founder David Rubenstein
One of the largest private-equity firms in the world, if not the largest, took 20% of a company called
back in October 2009, when it participated in a private-placement deal with the organic fertilizer producer. About a month earlier, Agritech's shares had been "uplisted" to the
from the over-the-counter markets, having reverse-merged into a shell in 2005. As is the case with many such deals, there were "make-good" provisions in the private-placement contract with Carlyle. If Agritech didn't hit certain earnings targets, it would owe Carlyle more shares.
Agritech hit those earnings targets.
The investment was a flyspeck relative to Carlyle's many, many billions worth of portfolio companies, but the fund's presence as anchor investor seemed to suggest that heavy-duty, private-equity-style due diligence had at least taken place. Another institutional investor,
Glickenhaus & Co.
ended up taking a 1.6% stake in China Agritech
based in part on the Carlyle imprimatur
After gaining the Nasdaq listing, the company's stock ramped to highs of more than $30 before beginning a long collapse as short sellers attacked and auditors decided they didn't like what they saw. Neither did
, which expelled the equity to the over-the-counter markets this year after yet another public battle between bears and bulls played out in the media and in the blogosphere. The company has yet to file a 10-K annual report for the year 2010.
Carlyle hasn't sold any of its Agritech stock, according to a person familiar with the matter
A spokesperson at the firm's Washington headquarters declined to comment.