Long-Term Capital to Repay Banks, Investors


Long-Term Capital Management, the large hedge fund that was bailed out last fall by a group of 14 banks, said it will return $1.3 billion of capital to banks and investors. LTCM will return $1 billion to the consortium of banks that rescued it with an equity infusion of $3.6 billion. Another $300 million will be returned to investors other than LTCM insiders and affiliates. The banks that oversee operations at Long-Term Capital voted Tuesday to take back some of their investments after the hedge fund posted a 14.1% return as of June 30, from the date of the original bank investment last September. It is up 4.1% this year, the banks said. The hedge fund founded by John Meriwether, a former chief of bond trading at Salomon Bros. Inc., nearly collapsed last fall as turmoil in financial markets turned into huge losses for the fund. The $1.3-billion payment will be the first time LTCM has returned money to the banks and investors that gave it a lifeline.

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