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The Deal: Gleacher at Decision Time

Tickers in this article: GLCH

NEW YORK (TheStreet) -- At Gleacher & Co.'s annual meeting May 23, shareholders in the investment bank founded by Eric Gleacher face a stark choice: liquidate the company or hand control to investment funds that may not have their best interests at heart.

Competing scenarios have been sketched out by New York-based Gleacher's top shareholder, MatlinPatterson Global Advisers LLC, in a proxy statement filed with the Securities and Exchange Commission on Monday.

Those included continuing the wind down of the businesses -- Gleacher already ended the last of its trading business when it laid off about 160 staff earlier this year in closing its fixed-income operation -- and making a distribution of the proceeds to stockholders; trying to find a buyer or other business combination; or re-investing the company's cash reserves of about $45 million in opportunities, such as acquiring additional interests in FA

TechnologyVentures LP, its venture capital investment subsidiary. With another investor, Clinton Group Inc., backing out of running its own slate this week, shareholders on May 23 have few options. MatlinPatterson's director slate is all that's left in the running. If shareholders vote for those nominees, they will be betting that one of those MatlinPatterson's three alternatives will provide a better return than the one-third loss their stakes have suffered from Gleacher's 52-week high of 98 cents per share.

If shareholders withhold their approval, MatlinPatterson could still go ahead with their plans, but it might have to come clean about its valuation methods in order to forestall lawsuits.

Despite setting out the alternatives, however, sources on Wall Street believe that MatlinPatterson has only one goal, in line with founder Eric Gleacher, who retains an 11% stake in the company: to liquidate the company.

MatlinPatterson got its stake in Gleacher through an earlier controlling buy-in of Broadpoint Securities Inc., through which Gleacher went public in a reverse merger. But the private investment firm, known primarily for its focus on distressed companies, moved to minority status when the merger went through -- something it wasn't accustomed to, according to some with knowledge of the company.