Jefferies Financial Group (NYSE:JEF) shares came under pressure after it was revealed that the firm has significant exposure to the bankrupt auto parts supplier First Brands, with estimates of potential losses around $161 million.
The investment bank’s exposure is primarily through its Leucadia Asset Management fund, Point Bonita Capital, which holds approximately $113 million in receivables tied to First Brands.
In addition, Jefferies owns a 50% stake in Apex Credit Partners, which had extended roughly $48 million in loans to First Brands through collateralized loan obligations (CLOs).
The exposure stems from trade receivables and loans linked to First Brands’ bankruptcy, highlighting the financial risks inherent in some of Jefferies’ fund investments.
Point Bonita Capital’s portfolio, valued at $3 billion, includes about $715 million in receivables from First Brands’ customers, such as Walmart and O’Reilly Auto Parts.
First Brands stopped making payments on September 15, raising concerns about potential losses.
Jefferies has said it is working closely with First Brands’ advisors to evaluate the impact of the bankruptcy on its holdings.
First Brands filed for bankruptcy on September 28 amid financial distress and worries over its $6 billion debt load and reliance on trade financing.
Shares of Jefferies traded 1.5% lower at about $58 on Wednesday morning.