Bear Stearns to wind down troubled hedge funds

Date: Wednesday, July 18, 2007
Author: Reportonbusiness.com

BUSINESS TICKER: NORTH AMERICA: SERVICES: FINANCIAL

Bear Stearns Cos. Inc.'s two troubled hedge funds that bet heavily on risky subprime loans now have "very little value," the company said in a letter sent to investors yesterday. Bear Stearns in June had said it would provide up to $3.2-billion (U.S.) in financing for its High-Grade Structured Credit Strategies Fund. The investment bank had also said its Enhanced Leverage Fund had taken greater risk in investments backed by subprime mortgages. "The preliminary estimates show there is effectively no value left for the investors in the Enhanced Leverage Fund and very little value left for the investors in the High-Grade Fund as of June 30, 2007," according to the letter. Bear Stearns Asset Management said it "will seek an orderly wind-down of the funds over time," the letter stated. BSC (NYSE) fell 40 cents to $139.91.