Private Equity

The private equity business is in "purgatory," and professional investors need to polish their tarnished public image, Carlyle Group cofounder David Rubenstein told the Wharton Private Equity Conference in Center City yesterday. As if to underline his point, Rubenstein's talk to more than 300 investors and students was delayed half an hour when two dozen activists from the Service Employees International Union heckled the head of the $70 billion-asset investment firm, jostling Park Hyatt Hotel security and draping a giant banner in the meeting hall reading, "Carlyle, fix Manor Care nursing homes now. " Manor Care is a Toledo-based chain of 500 residences, which Carlyle bought last month for $6.3 billion.

The Hershey Co. has forced out six directors and two others resigned, raising new concerns about the future of the venerable Pennsylvania company. The bold shake-up - which included adding two board members from private equity buyout firms - has sparked questions as to whether the company may again explore a sale. The Hershey Trust, which controls the majority of company stock and pushed for the board ousters, said that the changes were not about finding a buyer, but rather to secure the company's financial future.

Senate Democrats are caving to a well-financed lobbying blitz aimed at stopping them from imposing a new tax on the super-wealthy. Senate Majority Leader Harry Reid (D., Nev.) has quietly squelched plans in Congress to increase taxes on some of the richest wage-earners in the land: private equity managers. These wealthy individuals often earn hundreds of millions of dollars per year, which should subject them to an income tax rate of 35 percent. But because of a wrinkle in federal tax law, private equity managers pay only a capital gains tax rate of 15 percent on most of their income.

Tengion Inc., an East Norriton start-up developing regenerated human organs, said yesterday that it had raised $33 million from private-equity investors. The company earlier had raised $89 million in venture capital. Tengion's first product is a replacement human bladder constructed from a patient's own cells. The replacement bladders are now being evaluated in two midstage Phase 2 trials in 10 children with defective bladders attributed to spina bifida and in 10 adults with spinal-cord injury.

Faltering debt markets might torpedo the sale of PHH Corp. to a unit of General Electric Capital Corp. and the Blackstone Group L.P. for $9.61 billion, PHH said yesterday. The Mount Laurel mortgage lender and vehicle-fleet manager said the investment banks raising billions toward Blackstone's purchase of the mortgage operation were leaving the private-equity firm $750 million short. PHH employs about 4,500 people in Mount Laurel, according to undated data on the Web site of the Burlington County Department of Economic Development.

There's nothing worse than being an angry woman in the workplace. Even if a colleague blows an important client relationship by not showing up for a sales call and losing the account in the process. Nope, she can't get angry. Not if she wants to get hired. Not if she wants to get paid. Not if she wants some status in her firm. A man can blow his top, stomp his feet, and shout, and what'll it get him? A raise. Respect. Status. What it'll get a woman? $14,000 less a year.

Although still flush with cash, equity markets are becoming a bit more demure with their investments over fears about interest rates and potential changes in tax rules for private-equity firms. And that's bad news for Trump Entertainment Resorts Inc., an underperforming company with lots of debt, as it tries to sell itself, according to Wall Street analysts. If that wasn't enough, there are three major leveraged buyouts involving the gambling industry: Harrah's Entertainment Inc., Penn National Gaming Inc., and Station Casinos Inc. All three are being bought by private-equity firms.

The class president stood in the gym at Abington High School, all set to deliver his reelection speech. He found his fellow sophomores distracted, more restive than rapt. So the erstwhile track star - the self-assured smart kid who always came prepared - raised a starter's pistol above his head and fired, stunning his audience into silence. Stephen A. Schwarzman, circa 1963. "And then I beat his ass," Glenn Price, Schwarzman's long-ago high school political rival, said with a chuckle, recalling the episode last week.

PHH Corp.'s largest shareholder reiterated his objections yesterday to the Mount Laurel company's proposed sale to General Electric Co. for $1.8 billion, or $31.50 a share. Alan P. Fournier, managing member of Pennant Capital Management L.L.C., urged PHH's board to consider allowing PHH's mortgage business to remain in the hands of shareholders while spinning off the company's vehicle-fleet-management unit in a tax-free transaction. Fournier, whose hedge fund manages $1.6 billion, estimated in a letter filed with the Securities and Exchange Commission that public shareholders could realize $51 to $68 a share over two or three years under continued public ownership.

In the first sign of housecleaning as the Trump casinos here entertain offers from private-equity firms, Trump's chief executive officer announced that he would retire next month. James B. Perry's retirement comes two years after Trump plucked him out of retirement to lead his embattled casino company after it emerged from a second bankruptcy in May 2005. Perry, a former CEO of Argosy Gaming Co., was brought on board alongside Mark Juliano, the former president of Caesars Palace in Las Vegas, to give the Trump casinos an overhaul and restore confidence among Trump shareholders.