Carlyle Capital Corporation (OOTC: CARYF) received a $1.45 billion dollar loan from ING Group (NYSE:ING) in January according to a Dutch news site. The site found a reference to the loan in Carlyle Capital's annual report, but since the story has broke neither ING nor Carlyle have commented.

Carlyle Capital shares were suspended in trading on the Amsterdam Euronext stock exchange, where it is listed, on the news.

Carlyle Capital was floated from its parent, the private-equity firm Carlyle Group, just this last July. Washington, D.C.-based Carlyle Group has more than $74 billion in equity under its management. Founded in 1987, the firm became known for leveraged buyouts in the defense, automotive, and telecommunications sectors. Carlyle Capital was a branch designed to invest in mortgage backed securities using large amounts of leverage. Investing is such securities with leverage, combined with its distinction from Carlyle Group, meaning the parent is not responsible for its debts, immediately raised eyebrows.

It seems as though the fears have become reality as the subprime mortgage crisis has put Carlyle Capital on the brink. The only real financial connection Carlyle Group has to Carlyle Capital is a $150 million credit line, which presumably Carlyle Capital has already exhausted.

'The company believes these additional margin calls and increased collateral requirements could quickly deplete its liquidity and impair its capital,' Carlyle Capital released in a statement. It looks like Carlyle Capital's coming debacle will have to serve as another stern reminder of the seriousness of the remaining mortgage fallout. Only time will tell who's next.

Related Companies
Prudential Financial, Inc. (PRU)
Sun Life Financial Inc. (SLF)
Principal Financial Group, Inc. (PFG)
Prudential Public Limited Company (PUK)

Ambac Financial Group, Inc. (NYSE: ABK) shares dropped sharply today after the company announced that it would raise $1.5 billion by issuing stock in an effort to maintain its rating. The move will massively dilute existing shareholders by nearly tripling the number of shares while many analysts still question whether it will be enough for the bond insurer to stay alive. Meanwhile, investors sold off the stock again as questions intensify regarding Ambac’s ability to stay afloat. So, will this latest attempt be enough to pull the company out of the water?

Ambac initially ran into trouble when the subprime mortgage market collapsed. Many complex securities comprised of these mortgages and other assets (like CDOs) saw their values decline substantially- and these were insured by Ambac. Now, Ambac is responsible to paying out these claims that many estimate to be $100 billion for the entire financial sector. Many activist investors like Bill Ackman suggest that there simply is not enough money to go around and believes bond insurers will be forced to declare bankruptcy. Meanwhile, Buffett even pulled his offer to help amid worry.

That’s not the only problem: Bond insurers are also losing out on any new business. These companies rely heavily on ratings organizations to give them credibility, so the recent downgrade by Fitch from “AAA” to “AA” puts Ambac in some serious trouble. It is unlikely that the company will be able to attract any new business without a top “AAA” rating. Ambac’s latest attempt to raise $1.5 billion is designed to help it regain this “AAA” rating, but many analysts feel that it will still come up short. Fitch analyst Thomas Abruzzo said in an interview that the company still don’t have triple A levels of capital even with this raise. Instead, they need to effectively lower the downside risk on the structured finance CDOs that they have insured, which now amounts to around $32 billion.

Finally, the move also has shareholders outraged. The troubled bond insurer priced the shares at $6.75, which is 9% below Thursday’s closing price. Since the new shares will more than triple the number of shares outstanding, this effectively automatically lowered the stock price by ten percent without warning while also forcing existing shareholders to share much of any potential upside. Ambac said that it has already sold 14.1 million shares in a $95 million private placement while concurrently pricing a $250 million offering of five million equity units.

In the end, this is bad news for shareholders as they are not only diluted but still own a company with serious problems. Many analysts are unsure whether or not Ambac will be able to pull itself out of the water, and shares are likely to only continue their move downwards until everything gets sorted out. Combined, these factors make ABK a stock worth watching!

Related Companies
MBIA Inc. (MBI)
Assured Guaranty Ltd. (AGO)
Radian Group Inc. (RDN)
Security Capital Assurance Ltd. (SCA)
NYMAGIC, Inc. (NYM)
Berkshire Hathaway Inc. (BRK)
The Travelers Companies, Inc. (TRV)
CNA Surety Corporation (SUR)
The PMI Group, Inc. (PMI)
Old Republic International Corporation (ORI)

Sprint Nextel Corporation (NYSE: S) shares rose sharply today after the rumor mill shifted into over-drive and suggested that the company may be interested in spinning off Nextel. The speculation stems from the fact that the telecom company will likely have to write-off most of the remaining $30.7 billion in non-cash goodwill value from its $35 billion ill-fated acquisition of Nextel and its affiliates. Indeed, the acquisition has proven to be nothing but problems as Sprint stock lost more than 60 percent of its value trying to integrate the two companies. So, does this rumor have any merit and what would it mean for shareholders?

The idea of a Nextel spin off should come as that much of a surprise. Activist investor Ralph Whitworth was appointed to the board in February and there has been much talk that he would push for drastic changes. Whitworth’s Relational Investors owns a 2% stake in the firm and has been critical of Sprint’s poor performance. In particular, he was very concerned about the company’s plan to spend $5 billion or more on its WiMax initiatives. Instead, the investor hinted that the company pursue other initiatives aimed at unlocking value instead of building expenses.

The Nextel acquisition itself was ill-fated from the very beginning. Sprint experienced a massive customer migration to competitors Verizon Wireless (NYSE: VZ) and AT&T Inc. (NYSE: T) shortly after the merger thanks to technical problems, unfocused marketing and difficulty in combining the two very different company cultures. Shareholders who are already stinging from a $29.7 billion write-down in the fourth quarter are surely ready to get rid of this dog before it attracts more fleas.The idea of a spin off is appealing because it could end up solving all of these problems.

The other big reason to spin off Nextel is to make Sprint a cheaper stock. Merrill Lynch analysts are suggesting that Deutsche Telekon, which owns T-Mobile, may be interested in acquiring Sprint in order to block a price war in the mobile phone industry. A spin off of Nextel would make Sprint a much cheaper purchase with far less of a burden and may increase the likelihood of such a deal. The only downside is that Sprint would be getting a bad price for the Nextel business given the poor market. In the end, this is definitely an interesting situation that is worth following!

Related Companies
Verizon Communications Inc. (VZ)
AT&T Inc. (T)
Qwest Communications International Inc. (Q)
Embarq Corporation (EQ)
Clearwire Corporation (CLWR)
Level 3 Communications, Inc. (LVLT)
Covad Communications Group, Inc. (DVW)
IDT Corporation (IDT)
iPCS, Inc. (IPCS)
Shenandoah Telecommunications Company (SHEN)