The Detroit Free Press and Wall Street Journal both have greater detail from the court documents and their own reporting on what the various expressions of interest are concerning the Detroit Institute of Arts collection. The effort is being driven by a bond insurer that stands to lose a great deal of money in the bankruptcy. To stave off their loss, the FGIC has solicited interest from a range of financial entities. One is a collector offering to buy the whole collection or nothing at all. Another offer comes from Poly Auction just to acquire the Chinese works which raises an interesting cultural question about where those works “belong.”
In documents filed in court, FGIC said its financial adviser, Houlihan Lokey, had “conducted an exhaustive examination” of the value of the DIA by examining works in person, reviewing publicly available DIA records, reading books about the museum and discussing the situation with experts.
The insurer compiled the information into a 259-page document sent to 19 prospective investors after initially contacting 38 parties about potential bids. The insurer listed four indications of interest with prospective bids:
Catalyst Acquisitions and Bell Capital Partners: Offered $1.75 billion for “all assets held in the DIA” to be funded by the two companies and “a syndicate of leading global investors.”
Art Capital Group: Offered a $2 billion loan with the DIA’s entire collection used as collateral. The loan would carry a minimum interest rate of 6% to 9%. A person close to the bid solicitation said the city would likely have to sell some art to pay off the loan.
But some of the proceeds could be used to invest in city services and pay off creditors.
“Art Capital Group is providing financing that enables the people and community of Detroit to keep its treasured art assets,” said Montieth M. Illingworth, spokesman for Art Capital Group, in an email. “Our solution does not require the sale of this art collection. It is one of the country’s most important collections and it should stay in and with the people of Detroit. We also believe that our proposal addresses the requirements of creditors and is superior to the alternatives that have been made available today.”
Yuan Capital: The Asia-based investor offered $895 million to $1.473 billion for 116 specific works, including most of the museum’s most valuable pieces, with funding led by a “consortium” of investors.
Poly International Auction: The Beijing-based auction house offered up to $1 billion for the Chinese art collection, although the bid would be conditioned on a review of the specific pieces owned by the museum.
“Ignoring the proposals, or failing to cooperate with the interested parties to advance the process, would be another egregious example of the City placing politics over the financial and legal realities of the situation – this would almost certainly result in drawn-out litigation, which no one wants,” Spencer said.
Separately, bond insurer Syncora and the city’s retiree committee recently delivered subpoenas to the DIA seeking a massive list of documents detailing the DIA’s collection and finances.
The Wall Street Journal adds:
Marc Bell, a Boca Raton, Fla., investor said his namesake firm Marc Bell Capital Partners and a subsidiary of his firm, Catalyst Acquisition Group in New Jersey, have offered to buy the museum’s entire 66,000-piece collection for $1.75 billion. Such a deal would probably not close for six months, documents show.
Mr. Bell’s firm is known for focusing on mortgage-backed securities, but he also helped produce several award-winning Broadway musicals and plays, including “Jersey Boys” and “August: Osage County.” Mr. Bell, in an interview, said he started collecting contemporary art 15 years ago and owns pieces by 1980s art stars like Keith Haring and Kenny Scharf as well as Dutch graphic artist M.C. Escher.
He said he hasn’t yet decided what do with his art trove should the city approve his offer, but he said it could involve a combination of auction and private sales of some pieces, and loans or sales to museums where possible.
“I love art, but it’s also an investment,” he said. “And I don’t think it’s right that 30,000 people in Detroit should get shorted their pensions because the city can’t figure out what to do with its art. Somebody has got to step in, and we’re offering cash in the bank.”
He added that his offer price could change based on future valuations of the museum collection, but he said he wants to buy the entire collection, not just the masterpieces. “Our offer is all or nothing.”
The other groups offered either a loan based on the value of the art or a sale of part of the collection. Poly International Auction, which offered to spend up to $1 billion for the DIA’s Chinese art collection, is a Beijing-based auction house. Over the past decade, Poly has risen to become an unlikely power broker in the international art world. Controlled by Chinese state-owned China Poly Group, which began as a unit of the People’s Liberation Army, Poly is now the largest auctioneer in Asia and ranks only behind Sotheby’s and Christie’s in terms of total art sales.
Less is known about another interested Hong Konk-based entity, Yuan Management, which offered to buy 116 works in the collection, including some not valued by Christie’s last year.
Insurer solicits offers for DIA artwork; several billion-dollar bids received (Detroit Free Press)
Detroit Art Draws Potential Buyers, Says Bond Insurer (WSJ.com)
