Bear Stearns' embattled CEO, James Cayne, plans to travel to China in the next few weeks to seek a partnership--and possibly a much-needed capital infusion--from a Chinese firm, according to people with knowledge of the situation.
His plan is to speak to Chinese institutions about a joint venture that could lead to a strategic partnership and a possible investment in the Wall Street firm.
Bear's stock plunged last month after two of its hedge funds collapsed, though the stock has recovered in the past few days with the rebound in financial shares. Bear's growing problems prompted Cayne to hold a conference call last Friday to assure the markets that rumors of the firm’s pending implosion were just that—rumors.
He also has met with Citigroup chief Chuck Prince and other Wall Street executives to tell them the firm has ample liquidity and funding to weather the storm in the markets, particularly the bond markets where Bear makes much of its profits.
In the past, Cayne personally attempted to woo the China Construction Bank -- but they weren't interested. Now Bear Stearns is trying to tap that well again, although the situation is clearly less favorable for Bear. Although it has a good capital position, the lack of confidence in the company has put pressure on Cayne to boost capital.
The only thing that would prevent the China trip is another blowup in the markets that makes Bear the focal point of the fallout, as it has been in recent days, or a lack of interest on the part of the Chinese because of Bear's recent problems.