Blackstone Says The New York Times Inaccurate and Misleading

Partners to Pay Over $900 million in taxes as a result of IPO

NEW YORK, July 13, 2007 — Blackstone Group (NYSE: BX) said today that a front page article in The New York Times is filled with inaccuracies, myths, and misrepresentations that give a false impression of Blackstone’s tax situation and that of its partners.

Blackstone is not in any way taking advantage of tax loopholes, but rather is using a standard tax method used widely by private and public companies when business assets are sold.

The Times said that Blackstone partners will effectively avoid paying taxes on the sale of interests when in fact the Blackstone partners will pay taxes on every dollar they receive from the IPO at a normal capital gains rate. The Times further alleged that the partners at Blackstone would receive benefits from the government in excess of the taxes being paid on the sale of interests, which is completely inaccurate. The partners will not obtain any tax credits or payments from the government, as was alleged by the Times.

The Blackstone owners sold interests in their business to an entity owned by the public. As in any sale of business assets, the buyer is entitled to tax benefits based on the purchase price. Normally, a buyer and seller take tax benefits into account in determining the purchase price. The buyer generally pays more if the buyer obtains tax benefits, such as a step-up in basis, than if the buyer does not obtain such tax benefits. This was structured with the underwriters and fully disclosed to the public as part of the IPO.

The only difference in Blackstone’s case is the parties agreed that the public buying the business interests would pay the additional purchase price over time rather than immediately. This same approach has been used in public and private transactions over the years, and is not an inappropriate use of the tax code.

The article failed to mention that Blackstone partners will pay taxes on all of the future payments, which constitute taxable income. The article’s analysis used an unusually low discount rate to attempt to mischaracterize the benefits and omitted any mention that the partners pay taxes on those payments.

Blackstone partners are expected to pay more than $900 million in tax payments as a result of the IPO, as opposed to the article’s statement that Blackstone partners will pay no taxes on the sale.

Lastly, The Times further mischaracterizes the IPO by saying the partners sold the good will from their “left pocket to their right” when in fact the Blackstone partners sold business interests to the public.

About The Blackstone Group

The Blackstone Group is a leading global alternative asset manager and provider of financial advisory services. Its alternative asset management businesses include the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds, mezzanine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds. The Blackstone Group also provides various financial advisory services, including mergers and acquisitions advisory, restructuring and reorganization advisory and fund placement services.

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