Amaranth Suspends Redemptions

Date: Monday, October 2, 2006
Author: HFN Daily Report

Troubled hedge fund firm Amaranth is suspending redemptions until after Oct. 31 "with the goal of maximizing the proceeds of asset dispositions" the Greenwich, Conn.-based multi-strategy specialist said in a letter to investors.

According to the letter, Amaranth will waive redemption fees and charges once investors are allowed to withdraw their money. The firm also pledged to be equitable in divvying up the less than $3 billion in assets left of a hedge fund trove that once topped $9 billion.

Amaranth lost more than $6 billion in a single month following a wrong-way bet on natural gas prices made by the firm's star energy trader, Brian Hunter. He subsequently left the firm and Amaranth's outstanding energy trades were sold to Citadel and JP Morgan Chase.

The firm had been rumored to be in talks with Citigroup to sell the banking giant some or all of its assets, but Amaranth said in the letter it had no immediate announcement to make. The Wall Street Journal reported that Citigroup ended its talks with Amaranth last week.

Amaranth founder Nicholas Maounis said the firm is hiring Fortress Investment Group as a sub-advisor to help sell its assets. Maounis said Fortress is being paid with the firm's money and not out of investors' funds.

Founded in 1998, Fortress has about $24 billion in assets under management in private equity, hedge funds, real estate and distressed debt.

Federal regulators at the Securities and Exchange Commission have been keeping close tabs on Amaranth, but say they have no reason to bring enforcement action against the fund at this time.