Dow Jones
NEW YORK Dresdner Kleinwort Wasserstein, a unit of the German insurer Allianz AG, said on Wednesday that it will spin off its New York-based restructuring group.
The announcement came less than a year and a half after Dresdner Kleinwort, the investment banking arm of Dresdner Bank AG, inherited the business through its purchase of Wasserstein Perella Group.
The spinoff is designed to avert conflicts of interest that can crop up when services offered by the restructuring unit and the financial holdings of Dresdner Bank overlap those offered by Allianz.
This has been a rough year for Dresdner Bank. Bad loans associated with the recessions in Germany and the United States have forced it to cut profit goals and thousands of jobs.
The independent firm, to be called Miller Buckfire Lewis & Co. LLC, will be owned and controlled by Henry S. Miller, Kenneth A. Buckfire, Martin F. Lewis and its employees. It would be the largest stand-alone restructuring firm, starting with about 40 employees and more than 20 active restructuring deals as it assumes all of the current groups deals.
Because Dresdner holds so many bad loans, the restructuring group has lost a lot of business, Mr. Miller said in an interview. The firm is legally barred from working on restructuring deals for companies with outstanding loans made by other branches of Dresdner.
Mr. Miller, who founded the restructuring group in 1995 at Wasserstein Perella, said it was obvious when Dresdner bought Wasserstein last year that conflicts would arise.
But it did not become clear how significant their lending position was until time went on, he said. They were a lender to far more troubled companies than anyone had anticipated.
The potential for conflicts increased with Allianzs acquisition of Dresdner, Mr. Miller said.
Last year the restructuring unit was prevented from working on more than 20 deals involving troubled companies because of its relationship with Dresdner or its parent, he said. We did an analysis and we realized that we had to make ourselves independent.
Miller Buckfire will maintain a strategic relationship with Dresdner under which the German bank will provide the restructuring firms troubled clients with merger-and-acquisition advice and private equity and high-yield debt placement services.
Dresdner will get a share of the restructuring groups profits for a certain period, Mr. Miller said. He would not discuss that arrangement further.
The restructuring business, which has soared since the economic downturn, is dominated by a handful of players, including Mr. Millers group; Lazard LLC; Houlihan Lokey Howard & Zukin; and the Blackstone Group.
The spinoff of Miller Buckfire needs regulatory approval and is expected to be completed next month. It will inherit such high-profile clients as Kmart Corp. and Polaroid Corp.
Separately, Dresdner Kleinwort Wasserstein announced Wednesday that it would combine its debt and equities businesses in a new capital markets unit. The investment bank said the aim of the new unit is to maximize income from combining debt and equities, in particular in areas such as research and derivatives marketing.
