CLOs

USA Today (13 October, Lin-Fisher) reports that 7-Eleven will be closing 444 underperforming stores in the United States, its Japanese parent company Seven & i Holdings announced. The stores set to close are among 13,000 locations the convenience store giant has throughout the United States and Canada. The closures will likely occur in this year’s fourth quarter. Seven & i Holdings, the parent company of 7-Eleven, is facing pressure to convince investors it can enhance value after having rejected a first bid in August by Alimentation Couche-Tard, operator of Circle K, saying it undervalued the company and its growth potential.

From "More Than 400 7-Eleven US Stores to Close by End of the Year"
Abstract News © 2024 SmithBucklin

Johnson & Johnson’s (J&J) successful use of a “court-shopping” legal tactic to advance its latest plan for resolving thousands of cancer claims spotlights a controversial bankruptcy maneuver corporations have long employed to avoid unfavorable rulings, reports Bloomberg (11 October, Randles, Church). A federal bankruptcy judge in Texas said Thursday he’ll keep a J&J subsidiary in his Houston courtroom, dismissing allegations the company improperly skirted a federal appeals court for New Jersey that has twice stopped the health-care giant’s use of insolvency to settle mass lawsuits claiming its famous baby powder products caused cancer. The case is now set to proceed in a court far from the company’s hometown, in a jurisdiction that’s more likely to let J&J’s plan go forward. Judges for decades have permitted the strategy, also known as forum-shopping, to allow companies to select what they believe will be friendly bankruptcy courts thousands of miles from their headquarters. And while the ruling is a big step forward for J&J, to critics the tactics involved are a gross distortion of the legal system being used to shield a US$390 billion company with plenty of money to face legal claims.

From "J&J’s Court-shopping Win Highlights Irresistible Bankruptcy Tool"
Abstract News © 2024 SmithBucklin

CNN (12 October, Isidore, Yurkevich) reports that Boeing will cut 10 percent of its global workforce and delay first deliveries of its 777X jet by a year as the planemaker continues to spiral during a month-long strike by thousands of US West Coast workers. The strike has halted production of the company’s 737 MAX, 767, and 777 jets. “Restoring our company requires tough decisions and we will have to make structural changes to ensure we can stay competitive and deliver for our customers over the long term,” CEO Kelly Ortberg wrote in a memo to staffers Friday. The sweeping changes are a major move by Ortberg, who took the reins of the beleaguered planemaker back in August pledging to reset relations with the International Association of Machinists and Aerospace Workers union and its employees. Analysts estimate that Boeing would need to raise between more than US$10 billion in order to maintain its ratings, which are currently one notch above junk.

From "Boeing to Lay Off Roughly 10 Percent of Its Workforce"
Abstract News © 2024 SmithBucklin

Brazilian President Luiz Inacio Lula da Silva said on Friday that it made “no sense” for the US Department of Justice to request information from Saab over Brazil’s purchase of the Swedish firm’s Gripen fighter jets in 2014, reports Reuters (11 October, Araujo). Saab revealed the US request on Thursday and said it intended to comply, without providing further details. Lula is in the middle of his third non-consecutive term, having previously served as president between 2003 and 2010. The deal with Saab, which beat US planemaker Boeing and France’s Dassault to secure the contract, was inked under Lula’s handpicked successor, former President Dilma Rousseff. Brazilian prosecutors in 2016 formally accused Lula of using his influence to help Saab win the tender for the 36 fighter jets worth US$5.4 billion. The case was tossed out by Brazil’s Supreme Court in 2022.

From "Lula Slams US Request for Information on Brazil Fighter Jet Deal"
Abstract News © 2024 SmithBucklin

Two CSX Transportation employees fired nearly seven years ago for raising safety issues on their jobs will get their positions back and be paid US$453,510, reports UPI (11 October, Hughes), after the US Labor Department ruled the rail company violated the workers’ whistleblower rights. The Labor Department said they were unjustly fired after a November 2017 incident in Waycross, Georgia, where they reported a blue flag on the tracks of a rail yard, signaling they could not move their trains safely. The department said CSX responded by removing them from their assignment and firing them. An investigation followed by the US Occupational Safety and Health Administration. A Labor Department Office of Administrative Law Judged that the employee’s rights were violated.

From "Labor Department Orders CSX to Pay Two Whistleblowers More Than US$450,000"
Abstract News © 2024 SmithBucklin

A Russian court has ordered the seizure of JPMorgan Chase’s assets, reports the Moscow Times (11 October), as part of a lawsuit by Russia’s second-largest bank VTB to regain its funds blocked abroad by sanctions. The St. Petersburg Arbitration Court ordered a seizure of US$155.8 million in any currency from all JPMorgan bank accounts. It noted that the asset seizure does not affect funds held in so-called type C accounts, which cannot be moved out of Russia but also cannot be seized under presidential decrees. VTB lodged cases on October 7 seeking damages from nine JPMorgan-related defendants, including its Russian subsidiary JPMorgan International. The US Treasury sanctioned VTB in February 2022 in response to Russia’s invasion of Ukraine.

From "Russian Court Orders Seizure of JPMorgan Funds as VTB Seeks Damages for Assets Blocked Abroad"
Abstract News © 2024 SmithBucklin

The US Securities and Exchange Commission (SEC) has ordered Moog Inc. to pay a US$1.1 million civil penalty to resolve charges it violated the Foreign Corrupt Practices Act with bribes paid by its subsidiary in India, reports CFO Dive (11 October, Tyson). SEC officials allege that between 2020 and 2022, employees at Moog Motion Controls in India bribed aeronautics, railway, and other officials to exclude competitors and win contracts, funneling illicit cash via third-party agents. Moog specializes in manufacturing motion controls systems for aerospace, defense, and other systems.

From "SEC Sanctions Moog Inc. for Alleged Bribes, Accounting Flaws in India"
Abstract News © 2024 SmithBucklin

Tesla Inc.’s legal bid to lift a blockade of deliveries of license plates for new electric vehicles (EVs) has been rejected by a Stockholm court, reports Bloomberg (11 October, Ekblom). The blockade is part of a campaign by labor unions in the Nordic country against the US automaker as a strike among its industrial workers approaches its first anniversary. Initially kicked off by auto mechanics and technicians working for Tesla, postal workers were among several unions that quickly threw their weight behind the action. On Friday, the court said that Swedish unions have wide-ranging rights to strike and take part in sympathy actions. These constitutional rights are a key reason why Tesla’s suit was struck down, the court said.

From "Tesla Loses Swedish Postal Blockade Lawsuit in Latest Setback"
Abstract News © 2024 SmithBucklin

Michelle Peluso has been named CEO of Revlon Group and will be tasked with leading its “next phase of growth,” according to Cosmetics Business (11 October, May). Starting November 4, she will succeed Elizabeth Smith, who has been serving as interim chief executive since August 2023. Peluso joins Revlon from CVS Health where she works as Executive VP and Chief Customer and Experience Officer. She is also a member Nike’s board of directors.

From "Revlon Group Names Retail Veteran Michelle Peluso CEO"
Abstract News © 2024 SmithBucklin

A day after the death of Ratan Tata, his half-brother Noel Tata has been named as the new chairperson of Tata Trusts, reports BBC News (11 October, Sebastian, Farooquee). Tata Trusts is the company’s philanthropic arm which holds a majority stake of 66 percent in Tata Sons, one of India’s largest business groups, with annual revenues in excess of US$100 billion. Noel Tata is on the boards of many Tata companies, including Tata Trusts, and will now step up to lead its charities. He is the chairman of Tata International Limited, Voltas, and Tata Investment Corporation and the vice-chairman at Tata Steel and Titan Company Limited. He also heads Tata’s massive apparel retail company, Trent Limited, which has seen tremendous growth since he took its leadership in 2014.

From "Tata Leadership to Remain in the Family"
Abstract News © 2024 SmithBucklin

Chinese authorities have detained four employees of Foxconn, the Taiwanese manufacturer that makes Apple iPhones, reports the New York Times (11 October, Bradsher, Chien). The police in Zhengzhou, China, had accused each of the four Taiwanese workers of an offense comparable to Taiwan’s “crime of breach of trust,” according to a statement on Thursday from Taiwan’s Mainland Affairs Council. The council described Foxconn as saying that “the company did not suffer any losses, and the four employees also did not harm the company’s interests.” The statement from the Taiwan government added that the detentions could have been the result of “corruption and abuse of power” by law enforcement officers. Since January, there have been 77 incidents in which Taiwanese have gone missing in mainland China, often in cases involving fraud allegations, according to Luo Wen-jia, secretary general of the Straits Exchange Foundation, a semiofficial organization in Taiwan that handles relations with mainland China. Foreign and domestic businesses in mainland China have increasingly faced fines and tax audits. Chinese state media reported in October 2023 that Foxconn faced tax audits in four provinces, including Henan, of which Zhengzhou is the capital. Many multinationals and Taiwanese enterprises depend on large numbers of Taiwanese to run their operations in mainland China.

From "Taiwanese Employees of Apple Supplier Detained in China"
Abstract News © 2024 SmithBucklin

Seoul Semiconductor’s recent patent case against German online retailer expert e-Commerce has led to the Unified Patent Court’s ban on light-emitting diode products violating patent rights in eight European countries simultaneously, reports the Wall Street Journal (14 October, Jun). The UPC, a common European patent court established in June 2023, said in an October 10 ruling for the South Korean LED maker that the German retailer should stop selling LED goods unlawfully using Seoul Semiconductor’s patented technology, according to insiders. The landmark UPC ruling took effect at the same time in Germany, Austria, Belgium, France, Italy, Luxembourg, the Netherlands, and Sweden. Expert e-Commerce, the third largest European online retailer, was also ordered by the UPC to retrieve and destroy all such LED goods already sold in the region. Seoul Semiconductor has filed a series of lawsuits against rival LED makers and global retailers for selling LED products allegedly infringing on its patented technology. The company has accused them of violating its “WICOP” technology and other signature patents for micro LEDs for display products, which it says are crucial to making LED products smaller and more powerful.

From "Seoul Semiconductor’s Patent Case Leads to LED Sales Ban in Eight European Countries"
Abstract News © 2024 SmithBucklin

Unilever has sold off its Russian operations to a local manufacturing group, reports the UK's Guardian (10 October, Butler), after pressure from campaigners who claimed that the presence of the company in the country was supporting the war in Ukraine. Arnest Group, a Russian manufacturer of perfume, cosmetics, and household products will take control of Unilever Rus, which includes four factories, as well as the group’s interests in Belarus. Arnest is owned by the businessman Alexey Sagal and bought the brewer Heineken’s business in the country last summer. Unilever Rus employs about 3,000 people. Unilever has faced sustained pressure to sell the subsidiary since Russia’s full-scale invasion of Ukraine in February 2022, after it failed to follow an initial stampede of British multinationals out of the country. The terms of the deal, which must be approved by the Russian government, were not disclosed. However, it has been reported that the sale could be worth more than €500 million to Unilever.

From "Unilever Sells Russian Business After Pressure from Campaigners"
Abstract News © 2024 SmithBucklin

Price increases have slowed considerably from their peak two years ago, reports CNN (10 October, Wallace) and are now increasing at a similar pace to inflation in 2017 and 2018. The US Bureau of Labor Statistics’ Consumer Price Index was 2.4 percent for the 12 months ended in September, slowing from a 2.5 percent annual rate in August. On a monthly basis, prices rose 0.2 percent, in line with the advance in August.

From "Consumer Price Inflation Slows in September"
Abstract News © 2024 SmithBucklin

Pfizer Inc. company officials threatened legal action against two former top executives who had been working with Starboard Value to push for changes at the drugmaker, the activist investor alleged Thursday in a letter to the company’s board, reports Bloomberg (10 October, Langreth). Pfizer officials or their representatives threatened former Chief Executive Officer Ian Read and former Chief Financial Officer Frank D’Amelio with “costly litigation” for working with the activist, the letter alleged, saying Pfizer had warned it would claw back their prior compensation and cancel some unvested stock unless they publicly released a statement supporting Pfizer Chief Executive Officer Albert Bourla. The executives had been in talks with Starboard about the future of Pfizer but abruptly pulled out of the effort Wednesday night, saying in a statement they had decided “not to be involved” with the effort and were “fully supportive” of Bourla, his senior management, and the board of directors.

From "Pfizer Threatened Ex-CEO over Work with Activist, Starboard Says"
Abstract News © 2024 SmithBucklin

Teva Pharmaceuticals has agreed to pay US$450 million to resolve two claims that allege the company violated the Anti-Kickback Statute, reports UPI (10 October, Moran). “Kickbacks designed to induce referrals or purchases of healthcare goods or services distort physician and patient decision-making, thwart competition and bypass controls put in place to protect federal health care programs,” Principal Deputy Assistant Attorney General Brian Boynton, head of the US Justice Department’s Civil Division, said. “The Justice Department is committed to pursuing those who engage in kickback violations, including drug manufacturers, to ensure that federal health care programs continue to serve the interests of taxpayers and program beneficiaries."

From "Teva Pays US$450 Million to Settle Kickback Scheme Charges"
Abstract News © 2024 SmithBucklin

The French government unveiled a budget for next year that aims to deliver a €60.6 billion remedy for its struggling public finances and rebuild investor confidence, reports Bloomberg (11 October, Horobin, Nussbaum, Adghirni). Finance Minister Antoine Armand called an unheard-of fiscal effort, with the rest coming from higher taxes on businesses, the wealthy and energy. “Our country is in an unprecedented situation and at a pivotal moment,” he told reporters during a presentation of the delayed draft bill on Thursday. “The French economy is holding up, but our public debt is colossal. It would be both cynical and fatal not to see it, say it and recognize it.” Under the plans, temporary levies on some 440 profitable companies with annual revenue of more than €1 billion would generate €8 billion next year and €4 billion in 2026. An exceptional tax on maritime transport companies would contribute €500 million and €300 million in those same years. The government will also propose increased taxes on plane tickets and a tax on private-jet usage. Company stock buybacks would also be subject to an exceptional tax when the shares are canceled.

From "France Hits Big Firms, Wealthy to Trim ‘Colossal’ Debt Pile"
Abstract News © 2024 SmithBucklin

Japan’s Seven & i Holdings will set up a holding company for its non-core assets to bring in outside investment and is planning to change its name, reports Reuters (10 October, Bridge). The announcements mark an acceleration in its plans to boost corporate value and focus on its core convenience store business in part to resist a takeover bid by Canada’s Alimentation Couche-Tard. The operator of 7-Eleven stores has been under pressure from investors to divest from its large portfolio of peripheral businesses. The parent company’s tentative new name is “7-Eleven Corp” to emphasize the focus on convenience stores. Seven & i said the change will be “addressed” at its annual shareholders’ meeting in May 2025.

From "Japan's Seven & i to Separate Some Assets"
Abstract News © 2024 SmithBucklin

Brazil on Thursday recommended a reform to its competition law that would allow antitrust authority CADE to designate certain digital platforms as systemically relevant, reports Reuters (10 October, Ayres), subjecting them to new obligations if necessary. Brazil’s Finance Ministry says that local legislation needs to be equipped with more tools to address a new reality where big tech firms, due to their size and market power, inhibit competition. The government mentions practices such as exclusivity agreements, “killer acquisitions,” and self-preferencing, where a company’s own products, or services, appear first in Internet searches. New requirements would include pre-merger notifications, transparency rules for end-users and businesses regarding commercially relevant information on service and product usage and offerings, and a mandate to disclose changes in terms of service or conditions. The government said that the proposed legislative change is a middle ground between the US and EU models for regulating large tech platforms, drawing inspiration from practices adopted in Japan, the United Kingdom, and Germany. For the changes to take effect, the government must decide whether to submit the recommendations as a new bill to Congress or introduce a substitute text that could be incorporated into an existing legislative proposal already under consideration.

From "Brazil Suggests Reform to Tighten Antitrust Regulation for Big Techs"
Abstract News © 2024 SmithBucklin

The Wall Street Journal (10 October, Simon, Francis) reports that more large companies are either dropping or reshaping grants and other aid programs that were directed at Black- and Hispanic-owned small businesses amid increasing legal and public pressure. The legal climate is clearly leading these big firms to make changes that go beyond revisiting internal diversity policies. Of more than 60 small-business grant programs that last year included race or ethnicity in their criteria, more than 40 percent no longer exist or are in terminal decline, according to research by Skip, an online platform for small-business owners.

From "Companies Are Scrapping or Rolling Back DEI Grants"
Abstract News © 2024 SmithBucklin