Lyndhurst, known as The Jay Gould Estate, is a magnificent Gothic Revival mansion overlooking the Hudson River, just south of the Tappan Zee
Bridge. Its four-story Gothic tower and castle-like
turrets loom over the 65-acre garden of the estate.
The mansion’s glass and steel conservatory is 400 feet
long and was the first in the United States. Along with
The Breakers and other mansions in Newport and the
Hudson River Valley, Lyndhurst became a symbol of
the Gilded Age of finance and industry. It was a home
that any modern day hedge fund manager in Greenwich
would envy today.
In 1869, Gould created a price bubble in gold when
he attempted to corner the U.S. gold market. The two-week frenzy on the gold market virtually halted the
country’s foreign trade, which relied on gold as the
medium of exchange, and threatened to broaden into
an economic panic.
Fast Forward to January 2012
• • A clothing retailer that sold products targeting
customers 55 and older borrowed extensively
against pro-forma EBITDA in 2009-2010. When
this pro-forma EBITDA failed to materialize, the
company filed Chapter 11 in 2011 with $725
million in funded debt. The bankruptcy plan
eliminated $400 million of this debt. One cash-
flow lender that had $463 million in first and
second lien debt had to mark its debt down to $89
million, and take some equity;
Many lenders would concur that there is a bubble in pricing, but
don’t think there’s a bubble with respect to structure. For starters,
lenders are pulling back from lending against pro-forma EBITDA…
Today, pro-forma EBITDA is the proverbial third rail in a deal.