Wednesday, March 07, 2012

Goldman Made Big Bank Playing Both Sides Of Deal

Lloyd C. Blankfein had a script for his phone call.

“Hello, Doug — it’s been a long time since we have had the chance to visit,” say the notes prepared for his call with Douglas L. Foshee, chief executive of the El Paso Corporation, the big energy company that last fall was in talks to be sold to Kinder Morgan. “I was very pleased you reached out to us on this most recent matter,” the script goes, thanking Mr. Foshee for using Goldman as El Paso’s adviser in the transaction. Mr. Blankfein added that he knew Mr. Foshee was aware of Goldman’s investment in Kinder Morgan “and that we are very sensitive to the appearance of conflict.”

Somewhat awkwardly, Goldman had a 19.1 percent stake in Kinder Morgan, the pipeline and energy storage company, and two seats on its board. So the script went on, “We have asked our board members to recuse themselves and I know you have taken on a second adviser.” He added, “Really just wanted to reach out and say thank you.”

About a month later, Kinder Morgan announced it had agreed to acquire El Paso for $21.1 billion in cash and stock.

When the deal was announced, buried at the end of the news release was a list of Wall Street banks that had advised on the deal, including Goldman Sachs. Goldman received a $20 million fee for playing matchmaker for El Paso. The fee, of course, was not disclosed, nor was the Kinder Morgan stake owned by Goldman Sachs’s private equity arm, worth some $4 billion. Nor did the release disclose that the Goldman banker who advised El Paso to accept Kinder Morgan’s bid owned $340,000 worth of Kinder Morgan stock.

Read on.

1 comment:

Third Generation Chicago Native said...

Poor Urkel....NOT!

The guy that did all the underhanded finagullying and distorted Urkels Dad's condition, then moved from being an Alderman to Cook County Commissioner to babysit the the Hog with Big nuts ....Bill Beavers has to deal with the Feds.