On February 5, 2015 electronics retailer RadioShack Corp. filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware, after reaching a deal to sell up to 2,400 of its stores to the hedge fund Standard General LP, one of the lenders and its largest shareholder.
RadioShack Filed for Chapter 11 Bankruptcy Protection
CIT and One West to Merge
Commercial Investment Trust, a private commercial lender that focuses mainly on middle-market lending in various industries, recently announced its intent to acquire fellow bank One West. The CEO of CIT, John Thain, wants to take advantage of the synergies that will be created by marrying the commercial lending of CIT to the residential lending that dominates One West’s asset sheet. Yet investors may not be as keen on the deal given the two banks rocky experiences with the financial crisis.
2015 Starts Strong in Europe with Four Major I.P.O.s
Last week, four companies – Sunrise Communications, Vision Express, GrandVision and Générale d’Optique – launched their shares on exchanges in the European market. Investors responded eagerly, with several offerings, such as Sunrise and GrandVision, being oversubscribed multiple times and shares moving to substantially higher levels in their debuts.
Staples Proposes Merger with Office Depot: Merging the 3 Largest Office Supply Retailers
In an effort to compete with giants like Wal-Mart and Amazon, Staples announced its plan to purchase Office Depot in a $6.3 billion dollar deal. Staples is currently the world’s largest office supply chain store, posting annual revenues of $23.1 billion in 2013 [read performance summary here]. Office Depot posted revenues of $11.24 billion in the same year. Together, Staples and Office Depot control more than 70 percent of the office supply market.
Zoetis Appoints New Board Member from Activist Investor Ackman’s Hedge Fund Firm
On February 4, 2015, Zoetis (ZTS), an animal healthcare company, announced the appointment of William F. Doyle, through the hedge fund firm Pershing Square Capital Management LP, as its new board member, expanding its board to ten members. Doyle is a former McKinsey & Co. consultant and former Johnson & Johnson executive. He also attended Harvard Business School with Pershing Square’s founder and CEO, William Ackman. Pershing Square is expected to add a second member to Zoetis’ board in the near future.
Consolidation in the Reinsurance Industry
Reinsurance is used by insurance companies to transfer some of their risk to other parties. The company willing to accept the risk is known as the reinsurer and the company transferring the risk is known as the “ceding company”. The reinsurer agrees to indemnify the ceding company against some of the primary insurance risks underwritten by the ceding company under one or more insurance contracts. The ceding company pays a premium to the reinsurer and in return it will receive a payment if specified event occurs. Examples include extensive damage from flooding and earthquakes.
UBS Dark Pool Leads to $14.5 Million in Settlement Paid to SEC
Dark pools are private exchanges or forums for trading securities that primarily facilitate large block trades by institutional investors. Dark pools offer the efficiency (in the form of liquidity) of trading on a public exchange, but allow the transactions to remain secret—neither the price nor the identity of the firm is disclosed—until the trade is filled. The lack of transparency in dark pool trades allows large trades to be made by institutional investors without influencing the market and adversely affecting the price. Private banks and brokerages generally operate dark pools, which are subject to more relaxed public disclosure requirements than public exchanges. But that is not to say that dark pools are not subject to federal securities laws, as evidenced by the SEC investigation of and charges brought against Swiss banking-giant UBS.
Court Looks to Obscure Law: Trust Indenture Act of 1939
When some bondholders purchased debt in casinos operated by Caesars Entertainment, they felt comfort in the guarantees of the parent company that it would stand behind the debt payments, even if something were to go awry. When Caesars found itself in financial distress, the company abruptly eliminated its guarantees, leaving bondholders to turn to an obscure Depression-era law: the Trust Indenture Act of 1939 (The Act). The Act was originally devised to protect bondholders from abusive tactics, such as back-room deals that stripped bondholders of their rights.
Facebook Aims to Retaliate Against DLA Piper and Other Firms
On Monday, October 20th Facebook filed charges against DLA Piper along with several other firms and attorneys that had represented Paul Ceglia in an earlier suit opposing Facebook. The October 20 lawsuit, filed in the New York Supreme Court, is based largely on facts pertaining to a 2010 action in which Ceglia sued Facebook.
SolarCity Corp. Issues Bonds To Raise Money For More Clean Energy
SolarCity, whose stocks are traded on NASDAQ, operates in the area of installation and deployment of energy efficiency products and services. It is the biggest firm in the US operating in residential solar systems solutions alongside Sungevity and Vivint Solar.