CLOs

Big-box retailers in China are struggling to keep pace in a market whose shoppers are turning towards upstarts that deliver items directly to customers’ homes. France’s Carrefour, one of Europe’s largest grocery retailers, and once a dominant force in many Chinese cities, is the latest Western company to pull back from China as upstart domestic rivals have been better able to respond to demand. Carrefour is selling an 80 percent stake in its China business to Nanjing-based Suning.com Co. for about US$700 million. Delivery is tricky for many companies in the food business, and finding a profitable business model has been complicated, reports the Wall Street Journal (24 June, Wernau). In China, local rivals have snatched market share, complicating the process for newcomers in the delivery market. To compete, brands have either partnered with one of the domestic titans or sold to their competitors. For example, earlier this year Amazon.com Inc. sold its third-party online marketplace in China to a competitor after years of declining market share.

From "Rising Demand for Delivery Is Shifting China’s Grocery Landscape"
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Smith & Nephew board members have discussed moving the company’s share listing to the United States, in part to escape the United Kingdom’s stricter attitude towards executive pay. According to two people familiar with the matter, the discussion over a listing change was prompted in part by efforts to narrow the gap between Chief Executive Namal Nawana’s pay at his former company Alere, and his current role at the FTSE 100 medical devices maker, which he joined in May 2018. At Alere, Nawana earned a US$8.6million pay package in 2016, and US$11.1 million in 2015. At Smith & Nephew, he earned US$2.8 million for the seven months of 2018, reports the Financial Times (25 June, Neville, Massoudi, Jenkins).

From "Smith & Nephew Directors Discussed US Listing to Boost CEO Pay"
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After three years of rebuilding their home networks by bolstering hubs and adding flights to smaller cities, US airlines are adding new routes to expand overseas. US carriers will fly around two million more seats to and from Europe between May and July this year compared with the same period last year, according to published schedules, while domestic capacity will rise at less than half that pace. American Airlines Group Inc., Delta Air Lines Inc., and United Continental Holdings Inc. were outgunned by the expansion of carriers from the Middle East and China, and new low-cost, long-haul airlines. Now, rivals such as Emirates Airline have slowed their expansion while US carriers grow abroad again, reports the Wall Street Journal (24 June, Cameron).

From "US Airlines, After Rebuilding Home Networks, Look to Expand Overseas"
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The US Supreme Court on Monday ruled the government cannot reject trademarks it deems immoral or scandalous. "The First Amendment does not allow the government to penalize views just because many people, whether rightly or wrongly, see them as offensive," Justice Elena Kagan, who wrote for the court, said from the bench. Two years ago, the court struck down a related provision denying registration to disparaging trademarks, which the government had invoked to cancel the Washington Redskins professional football team’s trademark and to reject an application from the Slants, an Asian-American rock band. The same rationale, said Justice Kagan, required invalidation of the restriction on immoral or scandalous marks: The 1946 trademark law, the Lanham Act, was unconstitutional to the extent it "disfavors certain ideas." The court’s decision was a win for Erik Brunetti, a Los Angeles designer who has been selling clothes since 1991 under an acronym he says stands for Friends U Can’t Trust. The Trademark Office refused to register the brand name, and the Trademark Trial and Appeal Board upheld that decision, notes the Financial Times (24 June, Gray).

From "US Supreme Court Strikes Down Ban on 'Immoral' Trademarks"
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Angelee J. Harris has joined Opus Bank as executive vice president, general counsel, and has been appointed to Opus’ Executive Committee. Harris succeeds Carlton Langer, who served as interim general counsel since joining Opus in November 2018, reports Business Wire (24 June). Harris joins Opus from Banc of California, where she most recently served as executive vice president, general counsel.

From "Opus Bank Appoints Angelee Harris EVP, General Counsel"
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Warner Bros. will have a female CEO for the first time in its history. John Stankey, CEO of parent company WarnerMedia, is replacing ousted Warner Bros. chief Kevin Tsujihara with BBC executive Ann Sarnoff. She will be based in Los Angeles, and take the reins of the historic film and TV studio at an undisclosed date later this summer. Sarnoff has been serving as president of BBC Studios Americas, having joined BBC Worldwide in 2010 after previous stints serving as president of Dow Jones Ventures, and COO of the WNBA, reports the Hollywood Reporter (24 June, Jarvey, Hayden).

From "Ann Sarnoff Named Warner Bros. CEO in Surprise Pick"
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Hiroto Saikawa, Nissan’s embattled chief executive, was reelected to the company’s board during its annual meeting in which shareholders vented their anger at the scandal-wracked company’s French partner Renault. Saikawa apologized to shareholders for the company’s financial misconduct issues, which have rocked Nissan, and led to charges against Carlos Ghosn, its former chairman. Saikawa said he would implement an overhaul of Nissan’s corporate governance structure, which shareholders approved on 25 June. The new system introduces independent committees for nominations and compensation, putting the company in line with global governance standards, reports the New York Times (25 June, Dooley).

From "Nissan Reappoints Saikawa to Board as Shareholders Hammer Renault"
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Bristol-Myers Squibb Co. on Monday announced its US$74 billion merger with Celgene Corp. will be delayed as it works to allay the concerns of federal regulators by selling off Otezla, Celgene's anti-inflammatory drug, that recorded global sales of US$1.6 billion in 2018. Bristol-Myers, which expected the merger to close in the third quarter of this year, now believes that the deal will now be complete by the end of 2019 or early 2020, reports the Wall Street Journal (24 June, Walker). Company officials are hopeful that the planned divestiture of Otezla will resolve the US Federal Trade Commission's anticompetitive concerns about clearing the merger. Analysts say the divestiture is the latest sign that regulators are taking a tougher stance in their scrutiny of pharmaceutical industry mergers.

From "Antitrust Concerns Delay Bristol-Myers’ US$74 Billion Merger With Celgene"
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FedEx has filed a lawsuit against the US government, arguing that it should not be required to enforce federal government export bans. The lawsuit comes after the US delivery company mishandled a few deliveries for Huawei, and failed to deliver a Huawei smartphone shipped from Britain to the United States, reports CNN (25 June, Pham). In May, the Trump administration added Huawei, the world’s largest telecommunications equipment maker, to a trade blacklist, barring US companies from selling or exporting technology to the Chinese tech firm without first obtaining a US government license. FedEx said that the US Export Administration Regulations "violate common carriers' rights" by making delivery companies liable for shipments that may violate US restrictions. "FedEx is a transportation company, not a law enforcement agency," a company statement said.

From "FedEx Sues US Commerce Department Over Export Restrictions That Affect Huawei"
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JetBlue Airways Corp. has sued Walmart Inc. for trademark infringement. In a complaint filed late last week, JetBlue said Walmart began using the name Jetblack for its text-based personal shopping service, which is a "transparent attempt" by the retail giant to capitalize on the goodwill associated with the carrier's trademarks. JetBlue further charges that Jetblack will likely cause "significant consumer confusion" as Walmart expands the service, reports Reuters (24 June, Stempel). JetBlue has cautioned that Walmart intends further infringements by using additional "Jet+color" names, including Jetgold and Jetsilver.

From "JetBlue Is Suing Walmart Over the Retail Giant's Allegedly 'Transparent' Copyright Infringement"
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Australia’s Domino’s Pizza Enterprises was hit on Tuesday by a class-action lawsuit over employee underpayment which the fast-food chain said it would defend itself against. The suit, filed by law firm Phi Finney McDonald in the Federal Court of Australia, alleges that Domino’s misled franchisees by telling them not to pay delivery drivers and in-store workers wages as per industry standards. According to the Australian Fair Work Commission, fast food employees are entitled to a minimum weekly wage of A$813.60 (US$565.86). The suit was filed on behalf of Australian employees who were employed as delivery drivers or in-store workers between 24 June, 2013 and 24 January, 2018, Phi Finney McDonald said. The claim alleges that benefits mandated under the Fast Food Industry Award 2010 were systematically avoided by Domino’s, according to Reuters (25 June, Ramakrishnan).

From "Australia's Domino's Pizza Sued for Underpaying Staff"
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A small, but growing number of companies have started linking a portion of executive pay to corporate environmental, social and governance (ESG) goals. In doing so, they are deploying a tactic they say aligns management's mindset with the company's ESG strategy. Proponents say the general idea is to give managers a personal incentive to incorporate such considerations into business decisions on a daily basis. If everyone from the CEO to the plant manager factors such things as carbon emissions into capital-expenditure decisions, it stands to reason that rank-and-file workers will also make choices that help the company reach its goals more quickly, reports the Wall Street Journal (24 June, Shumsky). Jenny Davis-Peccoud, global leader of Bain & Co.'s sustainability and corporate-responsibility practice, calls on CFOs to support ESG-linked compensation plans by creating processes that enable managers to incorporate sustainability into what they do every day. Overall, however, success has been elusive for most corporate ESG programs. In a 2018 survey of 297 global companies by Bain, 47 percent said they had failed to meet even half of their sustainability targets, while only 4 percent reported achieving or exceeding their goals. Some investors worry that ESG-linked compensation programs, unless structured correctly, might not lead to thoughtful action on sustainability.

From "More Companies Link Executive Pay to Sustainability Targets"
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Last week, the number of Americans filing applications for unemployment benefits fell more than expected, pointing to underlying market strength despite a slowdown in job growth in May. According to the latest Labor Department data, initial claims for state unemployment benefits dropped 6,000 to a seasonally adjusted 216,000 for the week ended 15 June. Economists surveyed by Reuters had projected claims would decrease to 220,000 in the latest week. The drop in claims followed three consecutive weekly increases. Claims are being watched for signs of a rise in layoffs stemming from escalation in trade tensions between the United States and China, reports CNBC (20 June).

From "US Jobless Claims Fall More Than Expected"
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German regulators found that the Mercedes-Benz GLK 220 produced between 2012 and 2015 were fitted with software aimed at distorting emissions tests. Daimler must recall 60,000 of the diesel cars in Germany. Daimler plans to appeal against the Germany Transportation Ministry's decision while continuing to cooperate with regulators. The ministry, meanwhile, will be expanding its investigation into further models, reports Reuters (22 June, Banser).

From "Daimler to Recall 60,000 Mercedes Diesels in Germany Over Emissions"
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Officials at the Federal Reserve have spoken to senior executives at Deutsche Bank, asking them to explain their “bad bank” proposals. Under the proposals, Deutsche plans to shrink or close down large parts of its trading business outside continental Europe, reports the Financial Times (23 June, Stacey, Morris). The size of the bad bank is still being decided, but executives are considering putting as much as €50 billion worth of assets into it, according to two people with knowledge of the matter. The new strategy is likely to result in a reduction of its US business, according to some within the bank. Officials were concerned when they learnt of the strategy, given the uncertainty it now casts over the company’s entire US portfolio, said one person.

From "US Federal Reserve Questions Deutsche Bank on ‘Bad Bank’ Plans"
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Eldorado Resorts has agreed to acquire Caesars Entertainment Corp., one of the world’s largest gambling companies, in a cash-and-stock transaction valued at US$8.58 million. The combined company will retain the Caesars name, and will continue to trade on the Nasdaq Stock Market, reports the Wall Street Journal (24 June, Chin). Eldorado would also assume Caesars’ debt, which is about US$8.8 billion. After the deal is complete, Eldorado will own 51 percent of the combined company and Caesars will hold 49 percent.

From "Eldorado Resorts to Buy Caesars in US$8.58 Billion Casino Deal"
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Four more US states—Hawaii, Massachusetts, Minnesota, and Nevada—have joined an effort by state attorneys general (AGs) to stop T-Mobile‘s acquisition of Sprint. The four states have been included in an amended complaint filed 21 June. Attorneys for the states and the companies have proposed 7 October for the beginning of a trial, which could last as long as three weeks, reports the New York Post (21 June, Kosman). According to one person with knowledge of the talks, T-Mobile cut a deal with the AGs behind closed doors, agreeing not to close the merger, even if it gets regulatory approvals, until after the October trial. In turn, the AGs reportedly agreed to ask for an expedited October trial date instead of their previous goal of a December trial.

From "Four US States Join Effort to Stop T-Mobile's Acquisition of Sprint"
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The Bank for International Settlements (BIS) has warned that tech groups could “establish a dominant position” in global finance and pose a threat to competition, financial stability, and social welfare. The BIS said regulators worldwide may need to “revamp” rules to deal with the structural changes being brought about by entrants that control “key digital platforms” such as ecommerce sites and social networks. The warnings follow Facebook’s announcement to launch Libra, a “global digital currency.” Facebook has said Libra could improve financial inclusion for the 1.7 billion people without access to bank accounts, while Amazon has said it wants to fill the gap left by banks that are increasingly unwilling to lend to small businesses, reports the Financial Times (23 June, Megaw). Regulators have listed benefits to the launches, but have issued warnings as well. Mark Carney, the Bank of England governor, said that if Facebook was successful in attracting users “it would instantly become systemic and will have to be subject to the highest standards of regulation."

From "BIS Warns on Facebook Risk to Finance After Libra Plan Unveiled"
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The US Commerce Department has imposed new restrictions on American companies to stop them from doing business with five Chinese entities that make supercomputers and supercomputer components. Sugon, three entities tied to Sugon, and the Wuxi Jiangnan Institute of Computing Technology were placed on the Commerce Department's "Entity List" of firms that threaten the country's national security. The five companies reportedly use their supercomputers and components for military and nuclear purposes. Consequently, US companies will not be able to export components to those firms without a license. The restrictions are similar to the ones the United States recently placed on Huawei, reports CNN (21 June, Goldman, Duffy).

From "US Details New Restrictions on Chinese Supercomputer Companies"
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MGM Resorts International said more than 4,000 people are seeking damages after the Last Vegas Strip mass shooting, which left 58 people dead. In a newly filed lawsuit, the Las Vegas-based casino giant alleges breach-of-contract, and accuses its insurance company Zurich American Insurance Co. of failing to pay defense costs for damage claims stemming from the tragedy, reports MarketWatch (22 June). MGM Resorts owns both the Mandalay Bay hotel, where the shooter opened fire from a 32nd-floor window, and the Route 91 Harvest festival venue, where the concert goers died and more than 850 others were injured. Company spokesman Brian Ahern insists the lawsuit is about legal costs, not about coverage for a potential settlement with victims.

From "MGM Resorts Sues Insurance Company, Alleging Failure to Pay Legal Costs From Las Vegas Mass Shooting"
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