Goldman Sachs Offered Libya Debt, Not Equity
Senior Editor, CNBC.com
Goldman Sachs did not really negotiate with Libya’s sovereign investment fund to sell it an equity stake in the Wall Street firm, according to a person familiar with the transactions.
The Wall Street Journal has reported that Goldman offered Libya the chance to become a major shareholder in the firmafter investments Libya made through Goldman lost more than a billion dollars in 2008. Goldman denies the report.
Goldman did, however, offer a number of restructuring options in an effort to repair the firm’s relationships with the sovereign fund, the person said.
Among those options was a purchase of dividend-paying preferred stock issued by Goldman.
But those preferred shares did not contain an ability to convert to equity, the person said.
That means that what Goldman was really doing was offering to take a loan from Libya. Preferred shares that aren’t convertible are really much more like debt than they are equity.
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