Jon Corzine’s embattled MF Global has asked a second adviser, JPMorgan Chase, to work with boutique investment bank Evercore Partners to explore options for the broker-dealer, The Post has learned.
Rampant speculation up and down Wall Street about the ability of MF Global to weather its economic storm has forced Corzine, a former New Jersey governor, to consider a sale of all or part of the firm, sources said.
Calls to MF Global and Evercore were not immediately returned and JPMorgan declined to comment.
The Wall Street Journal reported that Corzine received approval from his board to seek a sale of MF Global and to hire Evercore.
Corzine, who spent much of his Wall Street career as a top executive at Goldman Sachs, has been reaching out to a handful of firms over the past 24 hours to seek advice but is unable to work with some because they are also creditors, sources told The Post.
A possible sale of MF Global is on a limited list of options left for the broker-dealer, which finds itself in a maelstrom driven by fears that it will be engulfed by a Euro-fueled crash.
The concerns center on some $6.3 billion in net exposure to troubled European debt that MF Global holds. That tally is more than double the Euro-zone exposures of Morgan Stanley and Goldman Sachs combined.
Sources said that the broker dealer is fighting for its survival after two brutal days of trading in which its stock has plunged nearly 56 percent.
The company’s stock closed down 8.6 percent yesterday at $1.70. That was off its low of $1.07 before news of its sale plans emerged.
Corzine had sought to convert the broker-dealer into an investment bank on par with Goldman. So far, that strategy hasn’t translated into fat profits of the sort that Goldman produced in 2007 before the financial meltdown.
Instead, MF Global has piled up 2007-like leverage of nearly $33 for every dollar of equity it holds.
One bank analyst, who declined to be identified described the ratio as “very aggressive in light of the market volatility.”
In better times, firms like Goldman and Morgan Stanley along with big banks would be interested in scooping up the broker dealer business.
However, few entities appear to be willing to take on MF’s European exposure in this environment, sources said.
An official at one large New York-based rival broker-dealer said he saw MF’s predicament as an opportunity to scoop up bodies selectively but expressed little desire to buy the entire operation.
Wall Street sources openly wondered yesterday if Corzine’s shop could continue operating as a going concern and whether it might be forced into Chapter 11 bankruptcy.
That’s exactly the scenario that Corzine has been trying to stave off over the past two days.
Sources believe that unless he can sell assets quickly, the firm won’t be able to conduct business as usual because of a credit downgrade and general anxiety on Wall Street.
Adding to the bank’s woes, yesterday Standard & Poor’s also threatened to lower the bank’s credit rating to dreaded junk status — two days after Moody’s Investors Service lowered the firm’s rating to just one notch short of junk at Baa3.