Sector developments and company hires

Call for Och ‘feud’ to end
Sculptor Capital Management’s independent board members and Jimmy Levin, the firm’s current cio and ceo, have issued statements in response to a recent court filing related to a dispute brought by former chairman and ceo Daniel Och. The filing mentions a “personal issue” from Levin’s past, which was thoroughly reviewed at the time and resulted in his exoneration.

Och is suing Sculptor, alleging that the firm he helped found is allowing its ceo to extract increasing levels of remuneration, despite its subpar performance. The lawsuit seeks books and records concerning Levin’s pay to assess whether there were breaches of fiduciary duty and whether Sculptor’s board is truly independent.

In his statement, Levin discloses that 20 years ago he was falsely accused of sexual misconduct, having been exonerated after a thorough Harvard University administrative review. The statement says that the matter was brought to the attention of the firm, its officers and its directors in 2015 and that after the firm’s review, Levin received unconditional support, including from Och as then chairman and ceo. In the years that followed, Och promoted Levin multiple times, consistently praised him in various internal and external communications and executed a long-term employment contract with him.

Levin goes on to explain that his relationship with Och changed in late 2017, after he supported the independent board members’ efforts to restructure the firm’s governance and finances in ways that would have resulted in Och ceding his unilateral control of the firm (following SEC charges against him) and making financial concessions to ease the burden of significant debt and liabilities incurred to settle the firm’s FCPA bribery matter. This culminated in Och overruling both the decision of the independent directors to appoint Levin as the next ceo and their recommendation to adopt a series of financial restructurings.

The statement ends with a plea for Och to “end this feud he continues to pursue”.

Meanwhile, the board’s statement confirms the soundness of the firm’s review of Levin’s personal matter, when Och was chair. It further states: “Mr Och has long been aware of the facts, including when he championed Mr Levin and promoted him to senior ranks of the firm. Mr Och raising this now, with knowledge of the facts, is extremely disappointing.”

Levin succeeded Robert Shafir as ceo of Sculptor on 1 April 2021. Prior to joining the firm in 2006, he was an associate at Dune Capital Management and an analyst at Sagamore Hill Capital Management.

Och-Ziff Capital Management Group changed its name to Sculptor Capital Management in September 2019, to reflect the leadership and governance changes that transferred ownership and control from Och to the executive mds and led to him resigning as a director.

Och and Joel Frank, the cfo at the time, agreed to US SEC orders in September 2016 finding that they contributed to Och-Ziff’s violation of the books and records provisions of the FCPA, after two former employees participated in a bribery scheme.

In other news…

EMEA
Pemberton Asset Management has recruited Jessica Xian as an associate, based in London. She was previously avp, EMEA credit structuring at Citi, specialising in originating and executing credit risk-sharing transactions.

US CMBS loan refis gauged
Fitch has conducted three plausible scenarios to determine if the nearly US$26.5bn, or 1,493, of non-defaulted and non-defeased US conduit and agency CMBS loans within its rated universe that are due to mature by year-end 2023 are able to meet certain DSCR and LTV parameters in order to secure refinancing. The agency notes that these loans’ combined weighted average coupon of 4.70% is well below current market rates.

At a 6.75% market interest rate, Fitch’s analysis shows 65% to 68% of the maturing loan volume is able to satisfy the two DSCR scenarios, based on a threshold of 1.25x for an amortising loan and 1.40x for an interest-only loan. In the LTV scenario, which sets a maximum 75% LTV, 72% is able to secure refinancing based on current market capitalisation rates.

However, 23%, or US$6.2bn, of maturing volume would not be able to refinance under any of the scenarios. NOI growth averaging at least 1.5x current in-place NOI or a new equity infusion that deleverages existing debt by at least one-third, on average, would be needed to pass the refinancing thresholds.

Fitch anticipates that servicers will grant loan modifications and extensions for stable performing assets and those with committed borrowers. The agency believes servicers are appropriately staffed to address the US$6.2bn of potential maturity defaults for loans unable to refinance under any of the scenarios, which is below the peak volume of coronavirus-related transfers to special servicing in 2020 and 2021.

Webinar free to view
Leading capital relief trade practitioners from Arch MI, ArrowMark Partners, Credit Benchmark and Guy Carpenter discussed current risk transfer trends yesterday, during a webinar hosted by SCI. Watch a replay here for more on the outlook for the synthetic securitisation sector, in light of today’s macroeconomic headwinds.