Thomas H. Lee has written down $524 million of its investments to comply with the FAS 157 rule that came into effect for fiscal years beginning after November 15, 2007. The rule states that private equity firms must now value their investments as short-term holdings meaning they now basically have to mark them to market. Previously investments were carried at net asset value or acquisition cost.
Thomas H. Lee wrote down the value of Univision from $497 million to $373 million. Nielsen is now valued at 1.25 times cost, down from 1.5 times cost. Finally, in a big hit, Hawkeye was devalued from $352 million to $64 million. The firm though has yet to mark down its $684 million investment in Clear Channel Communications which co-investor Bain Capital has already marked down by 15%. Expect many more of these write downs as investors begin to detail the year-end valuations of their investments.