Gleacher CEO sends more signals about possible sale

Thu Nov 8, 2012 3:49pm EST

* New York firm puts saving its Nasdaq listing on back burner

* CEO Hughes discusses broader strategic initiatives

* "He's close to something," large investor says

By Jed Horowitz

NEW YORK, Nov 8 (Reuters) - Gleacher & Co, a small broker-dealer whose shares have plunged 43 percent in the past 12 months, said it is no longer pursuing short-term fixes for its low share price, prompting investor speculation that it is close to a sale.

Chief Executive Thomas Hughes was asked on an investor call Thursday if he is considering a reverse stock split or tender offer to lift Gleacher shares above a dollar to avoid delisting by the Nasdaq Stock Market. Three months ago, Hughes identified saving the listing as a priority..

"We've chosen not to proceed with any of those activities for reasons that you probably understand," Hughes said.

Mendon Capital Advisors President Anton Schutz, who asked the question on the conference call, said the response signals that a deal may be imminent.

"He's indicating he's close to something," said Schutz, whose firm owns 10.5 million shares of Gleacher. "He's motivated to do something. It sounds like the Nasdaq listing is going to take care of itself."

Shares of Gleacher, which have traded below $1 since early May, were up 4.5 percent--or 3 cents a share--to 69 cents in afternoon trading on Thursday.

The firm, whose chairman is former Morgan Stanley investment banker Eric Gleacher, o n T hursday reported a third-quarter operating loss of $2.8 million, or 2 cents a share--about half the loss forecast by the small group of analysts that follow Gleacher.

In this year's second quarter, the company, which has about 125 million shares outstanding, lost $60.8 million.

Gleacher's profitability problems are a microcosm of issues facing small firms across Wall Street, which are suffering from rising capital requirements, high compensation costs and a paucity of investment banking deals and trading volume.

A Gleacher spokesman declined to comment on Hughes's remarks on the conference call. The New York-based firm hired Credit Suisse in August to "explore strategic alternatives."

In a statement issued on Thursday, Hughes said the strategic review "may end in merger with a strategic counterparty, a strategic acquisition, divestiture of business units, investment in our company by a third party or a stay-the-course outcome."

Gleacher also said Thursday it will try to sell ClearPoint Funding, a money-losing mortgage lender that it bought in January 2011. A sale would help Gleacher recapture $30 million of cash held in the business, company executives said.

Hughes has replaced Gleacher's entire management team since his arrival in May 2011, trimmed its balance sheet by more than $2 billion, dismantled its stock trading unit and slashed costs. The firm's break-even target for profitability has fallen to $160 million of revenue from about $240 million in 2010, he said on the call.

Gleacher continues to experience an exodus of senior traders and bankers, but Hughes said it also has recently recruited "dozens of highly respected" fixed-income salespeople, traders and bankers and may enter new areas such as investment management and raising capital for small banks.

"Our goal now is to grow as fast as we possibly can," Hughes said at the end of his investor conference call on Thursday.

Despite its name, Gleacher evolved from regional banking firm First Albany, which sold a majority stake in 2007 to private equity firm Matlin Patterson Global Advisers. The new owners changed its name to Broadpoint Securities and two years later tried to raise its cachet by buying the investment banking boutique that Eric Gleacher founded in 1990. Gleacher, who also advised on mergers and acquisitions at Lehman Brothers Holdings, is now chairman of the eponymous firm.