Leverage buyout king Castle, CEO of Castle Harlan, is a a personal friend and frequent Palm Beach host of U.S. Sen.

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Back in the late '80s, Drexel Burnham was busy coming to market with a succession of shaky leverage buyout deals with fixed-charge coverage ratios of just one times.

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Leverage buyout king Castle is known on The Island as an abrasive character who often snaps at the help, which in his case includes half a dozen servants, chauffeurs and yacht captain.

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Europe has been keeping a wary eye on the United States, where fears persist that troubles in the housing market is leading to an imminent credit crunch which could burst the leverage buyout bubble.

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Wahlstrom says the company meets the requirements for a leveraged buyout or management buyout, chiefly positive free cash flow and low financial leverage, and says it is "more likely than not" that a buyout will happen.

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The suspicion is that the buyout firm that controlled the smokestack company, Saratoga Partners, was looking to leverage it up and extract a tasty dividend.

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