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Contrarian Capital Management: An Overview of White Knight Financing

A multi-billion-dollar international distressed-securities investment firm, Contrarian Capital Management has its global headquarters in Greenwich, Connecticut, with international offices located in Sao Paolo, Paris, and Hong Kong. With a special focus on capital preservation, Contrarian Capital Management has a strong interest in private securities, and is dedicated to locating unique “off-the-run” risk/reward investment opportunities.

When a target organization risks being taken over by an undesirable potential acquirer, it may solicit or receive investment interest from a third, more desirable party, known as a “white knight.” This individual or corporation may succeed in rescuing the distressed organization from a hostile acquisition situation. The unfriendly acquiring entity is referred to as the “black knight,” and may have had plans to replace the target company’s board of directors or management following takeover.

The white knight may succeed in acquiring the distressed organization by negotiating with management and suggesting more favorable terms, or by offering a higher bid. Sometimes, a new bidding party appears, perhaps a “gray knight,” that is, a corporation or individual considered more favorable than the black knight, but less favorable than the white knight.

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