PARSIPPANY, N.J. – Dec. 3, 2008 – Private equity firm Apollo Management’s timing was bad when it took over Realogy at the end of 2006, shortly before the real estate bubble burst, analysts say.

Realogy – whose franchised businesses include Century 21, Coldwell Banker, Coldwell Banker Commercial, The Corcoran Group, ERA, Sotheby’s International Realty®, NRT Incorporated, Cartus and Title Resource Group – is now working with Apollo to revise its capital structure to make nearly $650 million in debt go away by trading new bonds for old.

The new loans are senior to the old ones and they mature a few months earlier. That reduces the likelihood that holders of the old bonds will get their money back if Realogy declares bankruptcy.

Some of the company’s bondholders are calling the tactic illegal, but it doesn’t apparently violate any federal law.

Realogy isn’t in default yet, but its business is suffering and revenues so far this year are down 21 percent.

Owners of a majority of one class of bonds have apparently threatened to sue. Reportedly, one person involved in the case is financier Carl C. Icahn.

Source: The New York Times, Floyd Norris (11/28/08)

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