Under the transaction, TFG acquired both Lyon Capital Management (LCM), to be renamed LCM Asset Management and certain collateralized loan obligation (CLO) securities with an aggregate face amount of $39m for a combined purchase price of $10m. The transaction also provided that all management fees earned by LCM, and cash flows received by Calyon from the CLOs, from August 16, 2009 through the closing of the transaction, less certain expenses of LCM, accrued for the benefit of TFG.

In connection with the transaction, LCM will enter into a joint venture with an affiliate of the investment manager, Polygon Management, pursuant to which Polygon will purchase a 25% equity interest in LCM. Certain Polygon affiliates will also enter into an agreement with LCM to provide operating, infrastructure and administrative services to LCM, including services that have historically been provided to LCM by Calyon.

David Wishnow, a principal of the investment manager at TFG, said: “We believe that LCM has a market leading track record in managing CLOs and we are very excited to bring them onto the TFG platform. LCM is a profitable business and has historically generated a significant pre-tax profit margin. We think the introduction of its high quality and repeatable income stream will diversify TFG’s current income and is a very positive development for TFG. Furthermore, the CLOs fit into TFG’s existing business and represent good value for the company.”

Farboud Tavangar, the existing and continuing manager of LCM, said: “We also think there are solid growth opportunities for LCM and the business is highly scalable. We can grow the business organically through reinvestment of LCM or TFG cash flows as well as through further acquisitions. TFG will continue to seek to position itself to benefit from consolidation in CLO asset management.”

LCM was established by Calyon, the corporate and investment bank of France-based Credit Agricole Group, as an asset manager in 2001. However, the entire existing LCM management team will continue in their current roles and will relocate to TFG’s investment manager’s, Polygon Credit Management, office in early February 2010.