Amaranth Advisors LLC, the hedge fund manager that lost $6.5-billion (U.S.) betting on natural gas, has hired Fortress Investment Group LLC to help liquidate its assets.
Amaranth said on Friday that it had suspended client redemptions to sell off about $3-billion in investments remaining in its two main funds. The funds tumbled as much as 70 per cent from a peak of $9.5-billion at the end of August.
The amount investors eventually get back from Amaranth depends on how effectively it and Fortress Investment unload the funds' holdings. Amaranth last month gave up its natural gas trades to Citadel Investment Group LLC and JPMorgan Chase & Co. and sold other investments to avoid being shut down by creditors.
Fortress will provide Amaranth with "an independent perspective, as well as potential strategic support," Nicholas Maounis, 43, Amaranth's chief executive officer, said yesterday in a statement.
Fortress, based in New York, manages $24-billion, including private equity funds, real estate, hedge funds and distressed debt. It was founded in 1998 by Wesley Edens, Robert Kauffman and Randal Nardone, who previously worked together at BlackRock Asset Investors, a New York-based private-equity fund.
Greenwich, Conn.-based Amaranth imploded two weeks ago after making wrong-way bets on the direction of natural gas prices. Talks to sell some or all of its assets to Citigroup Inc., the largest U.S. bank, broke down two days ago.
Fortress will be paid by Amaranth, not the funds themselves, Amaranth said in the statement. Terms weren't disclosed.
Shawn Pattison, a spokesman for Amaranth, declined to comment. Lilly Donohue, a managing director at Fortress, couldn't immediately be reached for comment.
© 2007 The Globe and Mail. All rights reserved.
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