APRIL 9, 2002
Now JP Morgan becomes a player
THE collapse of the Kirch Group will have considerable fall-out in the weeks ahead but at the moment nothing is very clear. The court-appointed administrator will now analyze whether or not the Kirch empire can be run as a going concern (which seems unlikely) or whether it must be broken up and sold off. The company's shares in Formula 1's holding company SLEC are believed to be amongst the Kirch Media assets and these could be sold off if a buyer can be found. However there are believed to be a complicated series of options involved and it is also thought that the investment bank JP Morgan was offered Kirch's SLEC stake as security for a $1.3bn loan when the shares were purchased.
If this is the case JP Morgan may claim the F1 shares from the administrator as there is little chance at the moment of the loan being paid by any other means. The bank could then sell them on to the highest bidder or hold on to them until the economic situation improves.
JP Morgan was founded in 1895 and has long been one of the most powerful banks in the world. Today it is America's second biggest banking organization but it has been struggling in recent months as a result of the collapse of Enron. JP Morgan acted as a lender, underwriter and adviser to Enron and is owed a total of $2.6 billion by the defunct energy company.