Jefferies Financial Group
Investor Relations

Press Release

Jefferies Financial Group Combines Berkadia and Leucadia Asset Management into Jefferies Group LLC Subsidiary

Company Release - 10/1/2018 4:30 PM ET

NEW YORK--(BUSINESS WIRE)-- Jefferies Financial Group Inc. (NYSE:JEF) announced today that it has transferred its 50% interest in Berkadia and substantially all of Leucadia Asset Management (“LAM”) into its Jefferies Group LLC subsidiary.

Jefferies’ CEO, Rich Handler, and President, Brian Friedman, noted, “Consolidating our interests in Berkadia and LAM into Jefferies Group amalgamates all our primary financial services operating businesses into one platform. Investors will now be able to see the performance of and value added by our primary financial services businesses in one entity. The balance of our businesses and investments comprise our Merchant Banking business, including our interests in National Beef, Spectrum Brands (formerly HRG), Vitesse, HomeFed and other companies.

“The transfer of Berkadia should increase Jefferies Group’s annuity-like revenue flow and thereby dampen its earnings volatility. Also, the approximate $680 million of transferred Berkadia and LAM book value will be funded with an infusion of approximately $595 million of equity from Jefferies Financial Group and ultimately $85 million of long term debt issued by Jefferies Group. While this internal restructuring will be neutral to the consolidated Jefferies Financial Group, it will be modestly credit enhancing for Jefferies Group. Post transfer, tangible leverage(1) for Jefferies Group will drop by about 1 point from 10.6 times to 9.6 times.”

We will discuss these actions at our Investor Day this Thursday, October 4, as well as further steps we are taking to simplify and add greater transparency into Jefferies Financial Group.

About Jefferies Financial Group Inc.

Jefferies Financial Group Inc. operates the only independent full-service global investment banking firm headquartered in the U.S., together with an established merchant banking business with a proven track record. We engage in investment banking, sales and trading and asset management through Jefferies Group LLC.

 
(1) Jefferies Group tangible leverage is a non-GAAP financial measure defined as tangible assets divided by tangible Jefferies Group member’s equity. Pro-forma non-GAAP information represents actual results adjusted for the estimated impact of transactions involving Berkadia and Leucadia Asset Management, as if they had been completed May 31, 2018. These transactions include the transfer of net assets to Jefferies Group and the subsequent investment of an additional approximate $205 million. The following reconciles the as reported May 31, 2018 tangible leverage to the pro-forma May 31, 2018 tangible leverage (in billions of dollars except tangible leverage ratio):
   

As Reported
5/31/18

   

Pro-forma
Adjustments

   

Pro-forma
5/31/18

Total Assets $ 41.1 $ 2.2 $ 43.3

Less: Goodwill and Identifiable

   Intangible Assets

  (1.8 )   -   (1.8 )
Total Tangible Assets 39.3 2.2 41.5
Jefferies Group Member’s Equity 5.5 0.6 6.1

Less: Goodwill and Identifiable

   Intangible Assets

  (1.8 )   -   (1.8 )

Total Tangible Jefferies Group

   Member’s Equity

3.7 0.6 4.3
Tangible Leverage Ratio 10.6 9.6

Jefferies Financial Group Inc.
Laura Ulbrandt, (212) 460-1900

Source: Jefferies Financial Group Inc.

Jefferies Financial Group

Principal Executive Office:  520 Madison Avenue, New York, NY 10022

Principal Executive Office
520 Madison Avenue
New York, NY 10022

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