Report says MF Global exploring sale, options

AP News
Posted: Oct 26, 2011 12:07 PM
Report says MF Global exploring sale, options

Shares of MF Global Holdings Ltd. continued freefalling Wednesday after a published report said the brokerage firm is considering putting itself up for sale.

The Wall Street Journal reported that the company, headed by former New Jersey Gov. Jon Corzine, had hired Evercore Partners and at least one other bank to help it explore options, including mergers and asset sales. The report cited an unnamed source familiar with the company.

A spokeswoman for MF Global said the company does not comment on market rumors and stock price activity. A representative for Evercore also declined to comment.

MF Global's stock slid 47 cents, or 25 percent, to $1.39 in midday trading. Earlier it traded at an all-time low of $1.07. The stock had closed down $1.69, or 48 percent, at $1.86 Tuesday after the New York company reported its biggest-ever quarterly loss since going public in 2007.

MF Global is a broker-dealer in futures, commodities, foreign exchange and other markets. The company's disappointing performance raised questions about the plans of Corzine, who had served as CEO of Goldman Sachs Group Inc., to build MF Global into a bigger Wall Street player.

For its second fiscal quarter, MF Global said it lost $186.6 million, or $1.16 per share. That was far more than the loss of $38.8 million, or 59 cents per share, in the same period a year ago. Weaker-than-expected trading revenue was partly to blame, though the company also took charges related to deferred tax assets, restructuring costs and paying down debt early.

Excluding those charges, MF Global posted a loss of 9 cents per share. That still missed analysts' expectations for a profit of 4 cents per share.

Revenue, after stripping out interest costs, sales commissions and other fees, fell 14 percent to $205.9 million. That was also far short of analysts' expectations for about $302 million. The company blamed the lower revenue on its decision to scale back on its own trading activities.

On Monday, Moody's had cut MF Global's credit rating to its lowest investment-grade level over concerns about its exposure to European debt. Moody's analyst Al Bush said that he was concerned with MF Global's risk management strategies as it underwent a "substantial re-engineering of the firm."