Those included continuing the wind down of the businesses -- Gleacher already ended the last of its trading business when it laid off about 160 staff earlier this year in closing its fixed-income operation -- and making a distribution of the proceeds to stockholders; trying to find a buyer or other business combination; or re-investing the company's cash reserves of about $45 million in opportunities, such as acquiring additional interests in FA TechnologyVentures LP, its venture capital investment subsidiary. With another investor, Clinton Group Inc., backing out of running its own slate this week, shareholders on May 23 have few options. MatlinPatterson's director slate is all that's left in the running. If shareholders vote for those nominees, they will be betting that one of those MatlinPatterson's three alternatives will provide a better return than the one-third loss their stakes have suffered from Gleacher's 52-week high of 98 cents per share. If shareholders withhold their approval, MatlinPatterson could still go ahead with their plans, but it might have to come clean about its valuation methods in order to forestall lawsuits. Despite setting out the alternatives, however, sources on Wall Street believe that MatlinPatterson has only one goal, in line with founder Eric Gleacher, who retains an 11% stake in the company: to liquidate the company.
MatlinPatterson got its stake in Gleacher through an earlier controlling buy-in of Broadpoint Securities Inc., through which Gleacher went public in a reverse merger. But the private investment firm, known primarily for its focus on distressed companies, moved to minority status when the merger went through -- something it wasn't accustomed to, according to some with knowledge of the company.
"He went ballistic," one person said about Eric Gleacher's reaction to the compensation committee's decision. Eric Gleacher resigned from his chairman position in January, but his shares are pledged to back MatlinPatterson, as are shareholder Mendon Capital Advisors', according to people with knowledge of the situation. Liquidating a public company outside of a bankruptcy proceeding is something easier said than done because there are still those pesky 60% shareholders that might want to have a say in what happens to the assets. Although a sale of the company has been bandied about for almost a year and investment bank Stifel, Nicolaus & Co. as well as brokerage firm Sterne Agee Group Inc. were said to be taking closer looks, that alternative is looking unlikely after the company shrank to its present size of about 50 to 60 employees without a trading arm and no investment bankers to speak of. Eric Gleacher was said to have offered to be the investment banker for his own company, but the independent directors on the board declined his services and formed a special committee. Cahill Gordon & Reindel LLP was brought on as counsel while Houlihan Lokey Inc. was hired to value the assets, according to sources.