Carlyle Capital Asks for Standstill from Lenders

AMSTERDAM (Reuters) - Carlyle Capital Corp CARC.AS, an affiliate of private equity firm Carlyle Group [CYL.UL], said on Monday it has asked lenders for a standstill agreement as it faces more than $400 million in margin calls.

Dutch-listed Carlyle Capital Corp (CCC), 15 percent owned by the private equity group's managers, said earlier on Monday it was still in talks with its lenders who believe the company is in default under financing agreements.

CCC said its lenders had significantly reduced the amount they were willing to lend against the company's portfolio of U.S. government agency AAA-rated residential mortgage-backed securities due to recent turmoil in that market.

CCC warned on Friday that its cash could run out, and its shares were suspended on Amsterdam's stock exchange after closing at $5, having lost more than half their value.

Regulators said on Monday trade in CCC would resume pending further material information from the company.

Some lenders may have liquidated collateral securing approximately $5 billion of CCC's debt, it said, but added that it did not receive any deficiency notices from those lenders who sold collateral to cover the borrowings.

"The company is in ongoing negotiations with the remaining lenders, who hold approximately $16 billion in securities, and, if a mutually beneficial agreement is not reached, some of these lenders may also liquidate their securities," Carlyle said.

"While these talks continue, the company has discussed and requested a standstill agreement whereby its lenders would refrain from foreclosing and liquidating their collateral, and we are awaiting responses."

Parent Carlyle Group has a $150 million exposure to CCC through a credit facility. A spokeswoman for the buyout firm on Friday refused to say whether Carlyle would provide more support to CCC.

Carlyle Group's affiliation with CCC includes management links as Carlyle Group partners Bill Conway and Michael Zupon sit on CCC's board of directors.

According to CCC's annual report, counterparties for its repurchasing agreements -- a means of short-term borrowing -- were as of the end of 2007: Bank of America, Bear Stearns, BNP Paribas, Calyon, Citigroup, Credit Suisse, Deutsche Bank, ING, JP Morgan, Lehman Brothers, Merrill Lynch and UBS.

Listed on the Amsterdam exchange last July, CCC invests in products including investment grade mortgage-backed securities.

As of last month, CCC had a $21.7 billion investment portfolio of AAA-rated floating-rate capped U.S. mortgage-backed securities issued by Fannie Mae and Freddie Mac.

Mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac, like those traded by CCC, are seen as posing little credit risk but as banks and other large investors shed riskier debt, they are asking dealers with already bloated inventories to buy their holdings, creating a glut in the market.

(Reporting by Reed Stevenson; additional reporting by Yinka Adegoke in New York; Editing by Erica Billingham/Elizabeth Fullerton)