Deal Boutique Greenhill Lands a Lifeline

By Liz Hoffman Features Dow Jones Newswires

Legendary Wall Street deal maker Robert Greenhill is throwing a lifeline to the firm he founded two decades ago, which has been largely left behind in the recent merger boom.

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Greenhill & Co. said its founder, along with current chief executive Scott Bok, will each invest $10 million in the company as part of a broader reorganization that will put a bigger chunk of the company's publicly traded shares back with the company and its executives.

Greenhill plans to borrow to repurchase more than one-third of its stock, and said it would cut or eliminate its dividend, the cost of which is set to exceed operating profits this year.

The recapitalization "addresses a lot of the noise around our stock," Mr. Bok said Monday. He is taking a 90% salary cut as part of the revamp. He said that he and Mr. Greenhill "have great confidence in the future and think the stock represents good value."

Greenhill also said Monday it will borrow $300 million from Goldman Sachs Group Inc. to buy back stock, starting with an open-market offer for up to 9 million shares at $17 apiece, 18% above its closing price Monday. The firm has about 30 million shares outstanding.

The borrowing will triple Greenhill's debt load. Already, some stock analysts had questioned whether the firm had enough cash coming to make its interest payments.

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"Actual borrowings in the market are a much better measure of debt capacity than the comments of equity research analysts," Mr. Bok said Monday.

Greenhill was the first so-called merger boutique to go public, doing so in 2004, and thrived over the next several years. But it has largely been left out of the most-recent M&A boom, even as boutique rivals have charged up the deal rankings.

Greenhill ranks 49th this year among global deal advisers, down from 16th in 2012, according to research firm Dealogic. Year-to-date revenue is 20% below 2016 and, with few big fees coming soon, executives have signaled the third quarter is likely to be another tough one.

The decline has been costly for Mr. Greenhill, who remains chairman of the company and still owns a 4.3% stake worth an estimated $22 million. At the firm's peak share price in 2009, that same stake was worth $120 million, according to FactSet.

A tireless deal maker who once snowmobiled 15 miles on vacation in rural Maine in search of cellphone reception, Mr. Greenhill has stepped back from the business in recent years, friends and employees say. Key relationships that spurred deals in the firm's early years have gone quiet as key contacts retire.

Write to Liz Hoffman at liz.hoffman@wsj.com

(END) Dow Jones Newswires

September 25, 2017 18:40 ET (22:40 GMT)