Jefferies CEO & President Address Point Bonita Capital and First Brands Group

10/12/2025 – 08:50 PM

NEW YORK – Jefferies Financial Group Inc. (NYSE: JEF) moved to reassure investors Monday evening, addressing concerns stemming from the First Brands bankruptcy with a detailed letter from CEO Rich Handler and President Brian Friedman. The communication aims to clarify Jefferies’ position and mitigate what the firm believes is an overblown negative market reaction.

The core message emphasizes Jefferies’ robust financial health. As of August 31, 2025, the firm reported a total equity of $10.5 billion and tangible equity of $8.5 billion. Liquidity is also strong, with $11.5 billion in cash reserves. Furthermore, Jefferies highlighted recent strong performance, citing annualized third-quarter results that project net revenues of $8.2 billion, pre-tax earnings of $1.3 billion, and net earnings of $1.0 billion.

Adding to the stability narrative, Jefferies underscored its strengthened partnership with Sumitomo Mitsui Banking Corporation (SMBC). The expanded Global Strategic Alliance includes $2.5 billion in new credit facilities, with SMBC планируя увеличить свою долю собственности в Jefferies с 14,5% до 20%.

The letter directly addresses the First Brands situation, framing it as a consequence of the bankrupt company’s own decisions and potential improprieties. Jefferies contends that First Brands, despite prior audits by top accounting firms and support from major financial institutions, ultimately succumbed to internal issues that triggered its downfall. The U.S. Department of Justice is reportedly investigating the matter.

While acknowledging potential financial losses associated with First Brands, Jefferies downplays the impact. The company estimates its direct exposure to be around $43 million related to purchased receivables and a $2 million interest in First Brands’ bank loans. Executives stated that these potential losses are manageable and do not represent a systemic threat to Jefferies’ overall financial stability or business operations.

The letter then transitions into a Q&A format to address specific allegations circulating regarding Jefferies’ involvement with First Brands:

Allegation: Undisclosed Fees? Jefferies denies earning any undisclosed fees through a “side letter” related to financing provided to First Brands. The firm clarifies that a written agreement with Point Bonita was disclosed to all lenders and benefitted Point Bonita investors, not Jefferies directly.

Redemption Management: Addressing redemptions from Point Bonita, Jefferies explained that it anticipated and supported investors submitting redemption requests after the discovery of the First Brands issues. Redemptions will be paid out over four quarters, beginning December 31, 2025, allowing Point Bonita ample time to maximize the value of its remaining portfolio.

Investment Banking Role: Jefferies clarifies its limited engagement as financial advisor to First Brands, noting it was primarily on the opposite side of the table in acquisition negotiations. They also specified that financings arranged by Jefferies for First Brands were generally on a best-efforts basis, with the exception of one $300 million loan in 2023. Nine other banks were also involved in the First brands’ acquisitions or loan arrangements.

Awareness of Fraud: The firm vehemently denies any prior knowledge of fraudulent activity at First Brands, stating that they only became aware of the allegations after First Brands ceased payments to Point Bonita.

Refinancing Failure: The planned refinancing of First Brands’ debt was abandoned due to First Brands failing to deliver an expected quality-of-earnings report during the due diligence process.

Point Bonita’s Contribution: Management and incentive fees from Point Bonita represent a negligible portion of Jefferies’ overall revenue, accounting for a mere 0.8% of net revenues in the twelve months ending August 31, 2025.

CLO Exposure: Jefferies Finance’s indirect exposure via CLOs managed by Apex Credit Partners is considered minimal. While the CLOs hold $48 million in First Brands term loans, this represents only about 1% of their assets, with a current market value closer to $17 million. Jefferies’ estimated economic exposure is roughly $2 million.

CNBC Analysis: This situation highlights the inherent risks involved in complex financial structures and the potential for contagion when a player experiences significant distress. Point Bonita’s role as a specialty finance fund purchasing accounts receivable added another layer of complexity, and questions are raised about the initial due diligence and monitoring of First Brands, which could serve as a case study for other firms involved in similar arrangements.

Jefferies’ communication is a calculated effort to control the narrative and reassure investors. The emphasis on liquidity, strong earnings, and a fortified partnership with SMBC is designed to offset concerns stemming from the First Brands situation. However, the lingering questions surrounding the diligence process and the full scope of potential losses mean investors will likely remain cautious until further clarity emerges. Market watchers will be scrutinizing Jefferies’ performance in the coming quarters to assess the true impact of this evolving situation.

The article reflects sentiments expressed by the Jefferies CEO and President, but does not necessarily reflect the opinions of CNBC.

Rich Handler and Brian Friedman concluded their letter by thanking readers and reinforcing their commitment to recovering assets for Point Bonita investors. They emphasized their positive outlook for Jefferies’ future prospects.

About Jefferies Financial Group Inc.

Jefferies is a leading, global, full-service investment banking and capital markets firm. With more than 40 offices around the world, we offer insights and expertise to investors, companies and governments.

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