CLOs

China is expected to register its weakest economic growth in more than 27 years today, reports Reuters (17 October, Yao), ratcheting up pressure on Beijing "to roll out more stimulus to counter the effects of a costly trade war with the United States. Most analysts believe the scope for aggressive stimulus is limited in an economy already saddled with heavy debt loads following previous easing cycles that have sent residential real estate prices sharply higher. Analysts surveyed by Reuters expect gross domestic product (or GDP) to have grown 6.1 percent in the third quarter versus a year prior, the slowest pace since 1992's first quarter. That would mark a further loss of momentum from the previous quarter's 6.2 percent pace.

From "China's GDP Growth to Grind to 27-1/2 Year Low"
Abstract News © 2019 Information, Inc.

The Associated Press (17 October) reports that Anheuser-Busch is suing MillerCoors over its confidential recipes for Bud Light and Michelob Ultra. Anheuser-Busch claims MillerCoors illegally obtained the recipes through one of its employees, who used to work for Anheuser-Busch. Anheuser-Busch says MillerCoors wanted the recipes because it was planning to retaliate for Anheuser-Bush's Super Bowl ads, which chided MillerCoors for brewing beer using corn syrup. Anheuser-Busch is seeking unspecified damages from MillerCoors. The filing was the latest in a legal battle that began late in this year's first quarter. MillerCoors sued Anheuser-Busch over the corn syrup ad campaign, calling it "false" and "misleading." In September, a federal judge ruled in MillerCoors' favor and ordered Anheuser-Busch to cease using packaging that implies its rival beer contains corn syrup. Anheuser-Busch has filed an appeal.

From "Anheuser-Busch Accuses MillerCoors of Stealing Recipes"
Abstract News © 2019 Information, Inc.

CBS News (17 October) reports that Johnson & Johnson (J&J) has agreed to a US$117 million multi-state settlement over allegations it deceptively marketed its pelvic mesh products, which support women's sagging pelvic organs. Ohio's attorney general announced yesterday an investigation found the world's largest health products maker violated state consumer protection laws by not fully disclosing the devices' risks. A number of women have come forward claiming the hammock-like devices caused bleeding, infections, and severe pain. The settlement covers 41 states and Washington, DC. It requires the company to fully disclose risks and stop making inaccurate safety claims. J&J was quick to point out that the settlement does not include any admission of guilt.

From "J&J Agrees to Settlement Over Pelvic Mesh Devices"
Abstract News © 2019 Information, Inc.

Saudi Aramco has postponed the launch of its initial public offering (IPO), reports the Wall Street Journal (18 October, Said, Jones), the latest setback for what would be the world's largest-ever stock market listing. The state-oil firm had been preparing to give the green light to proceed with the share sale on 20 October. Now, it is delaying the IPO until at least December or January. Aramco executives reportedly now want to issue a prospectus, then market the IPO in order to better sell the listing to investors. Aramco had already faced investor questions regarding the listing's viability. In a pre-IPO investor meeting with Fidelity Investments, Aramco finance chief Khalid al-Dabbagh didn't provide what fund managers considered standard information, including a deeper understanding of how the company determined its value.

From "Saudi Aramco Delays Launch of World’s Largest IPO"
Abstract News © 2019 Information, Inc.

Al Jazeera (17 October, Ghani) reports that Qatar has promised to abolish its kafala labor system, which sees migrant workers tied to their employers with restricted freedoms. Qatar's Prime Minister Abdullah bin Nasir bin Khalifa Al Thani tweeted Wednesday that labor and worker welfare reforms were imminent, pledging to show "full commitment to the fundamental rights relating to labor." Under the kafala system, migrant workers must obtain employer permission before leaving the country or switching jobs. Qatar's labor laws have come under increased scrutiny since the country was chosen to host the 2022 men's World Cup soccer tournament. At the end of the summer, thousands of workers protested working conditions and laws. Protesters said then that they had not been paid for months, that their work permits had not been renewed, and that they were not given permission to switch employers. Amnesty International condemned Qatar's working conditions in September, prompting the government to defend itself in a statement touting its progress and commitment to continued reform.

From "Qatar Moves to Announce Abolishment of Kafala System"
Abstract News © 2019 Information, Inc.

Vulcan Materials Company has announced that Denson "D" Franklin III will step into the senior vice president and general counsel position effective 2 December, replacing outgoing general counsel Michael Mills. Franklin, a graduate of Vanderbilt University Law School, has represented Vulcan as an outside counsel for more than 20 years, according to PR Newswire (17 October). Tom Hill, chairman and CEO of the construction aggregate producer, praised Franklin in a statement. "We are fortunate to bring him in-house to add his experience and perspective from years counseling companies, large and small, on mergers and acquisitions, corporate governance, compliance, securities issues, and overseas operations," Hill said.

From "Vulcan Materials Company Names D. Franklin Senior Vice President and General Counsel"
Abstract News © 2019 Information, Inc.

Footwear and accessories company Genesco is set to welcome Scott Becker to serve as its new senior vice president, general counsel, and corporate secretary. Becker, who is replacing Roger Sisson, will officially start at the company on 23 October, according to Corporate Secretary (17 October, Maiden). Becker's most recent position was as general counsel, corporate secretary, and vice president for legal and government affairs at Nissan Group of North America and Latin America. During his time at the company, Becker served on the executive management committee and as a member of the board of Nissan North America, Nissan Motor Acceptance Corporation, Nissan Canada, and Nissan do Brasil. Genesco Chair, President, and CEO Robert Dennis praised Becker's experience, predicting that he will be a "strategic asset" for Genesco.

From "Genesco Recruits New General Counsel"
Abstract News © 2019 Information, Inc.

New standards addressing non-financial risk are expected to improve corporate governance in Australia, reports Consultancy.com.au (17 October). The new regulatory guidelines from the Australian Securities and Investments Commission (ASIC) mean organizations will have to answer for risk stemming from conduct, operational, compliance, and strategic factors more than ever before. The standard covers board structure for monitoring and supervising, risk governance, board and management accountability, reporting and information flows, and risk resourcing, says Karen Den-Toll, a partner in Deloitte's Sydney office. The ASIC effort builds on the premise of the 2019 report by the Royal Commission that examined misconduct in banking, superannuation, and financial services, which deemed every unlawful act as an organizational failure. Although ASIC's initial focus was on seven financial services companies, Australian Securities Exchange-listed entities in every sector should be contemplating a potential review by corporate regulators, says Deborah Latimer, a partner at Deloitte Australia who specializes in corporate governance. She describes the new approach as one of "why not litigate."

From "New ASIC Standards Will Make Organizations More Risk Aware"
Abstract News © 2019 Information, Inc.

The European Commission has announced that it plans to study antitrust concerns related to Apple Pay, reports the Financial Times (16 October, McGee, Espinoza). A spokesman for the commission said that it was actively monitoring mobile payment options for anti-competitive behavior, signaling that Apple will face scrutiny from yet another angle in the European Union. It is the latest example of the European Union scrutinizing mobile payment options provided by US tech giants, coming after Facebook's Libra cryptocurrency sparked worries of financial risks. The commission is reportedly investigating whether Apple's Wallet app refuses to carry rival payment methods, reaching out to online payment providers, banks, and app businesses to find out more.

From "EU Sets Sights on Apple Pay Over Antitrust Concerns"
Abstract News © 2019 Information, Inc.

US prosecutors filed an indictment Tuesday in Manhattan federal court alleging that Turkey's government-owned Halkbank participated in a scheme to violate prohibitions on Iran's access to the US financial system. US Attorney Geoffrey Berman alleged that Halkbank's wrongdoing extended to the upper echelons of the bank's management as well as high-ranking government officials in Turkey and Iran, reports Bloomberg (15 October, Farrell, Berthelson). Shares in the bank fell 7.4 percent in the aftermath of the indictment filing, while the Turkish lira fell almost 1 percent. US officials speaking anonymously said there is a chance Turkey might perceive the attack as politically motivated given the recent tensions over Turkey's aggression in Syria. Two people, including a senior Halkbank executive, were previously convicted in the case, which led to the airing in a Manhattan courtroom of many of Halkbank’s activities. At that time, Turkish President Recep Erdogan blasted the investigation as an "international coup attempt." At the heart of the legal action is the allegation that Turkey helped launder money to Dubai, where it entered the global financial system and was used to help Iran pay its bills.

From "Turkey's Halkbank Faces US Charges as Tensions Mount"
Abstract News © 2019 Information, Inc.

The United Kingdom and the European Union just reached a new Brexit deal, but companies have been left in the dark about how they should handle the movement of personal data out of the bloc and into the United Kingdom. Under the terms of the tentative deal, the United Kingdom has until the end of 2020 to reach an agreement with the European Union on data transfers and protection, according to Bloomberg (17 October, Drozdiak). The current EU data protection policy, the General Data Protection Regulation (GDPR), penalizes violators with fines of up to 4 percent of annual sales. Until the end of 2020, the United Kingdom will operate under a system recognizing its data protection policy as in harmony with Europe's. But experts warned there could be complications ahead. UK data-collection practices for national security purposes are likely to come under heavy scrutiny during a review process that may take years, lawyers have said.

From "Brexit Deal Leaves Companies in Limbo Over Data Flows"
Abstract News © 2019 Information, Inc.

Pro-democracy protesters in Hong Kong have turned their sights on companies they perceive to be friendly with Beijing, including Starbucks, Yoshinoya, and Activision Blizzard. The protesters are employing a number of tactics against these companies, including boycotts and vandalism, to show their displeasure, reports the New York Times (15 October, Wong). Rumors, some unsubstantiated and some true, are circulating through mobile apps and social media, alerting the protesters to companies' potential ties to China. Starbucks and Yoshinoya have faced protests because of the owners of their Hong Kong franchises, while Activision Blizzard has drawn ire for trying to censor a pro-democracy online game player in Hong Kong. Companies are now increasingly trying to walk the line between the Chinese government and Hong Kong, trying not to offend either party so as to retain business from both mainland China and Hong Kong. Last weekend, protesters called for action in shopping malls, with some of the more ardent demonstrators advocating for destruction and graffiti in allegedly pro-China restaurants and stores. Apple may be the next company to face protests, because it enraged pro-democracy demonstrators when it removed an app from its App Store that they used to find police officers in the city.

From "Hong Kong Protesters Are Targeting Starbucks. Apple Could Be Next."
Abstract News © 2019 Information, Inc.

The Financial Accounting Standards Board (FASB) has extended the implementation deadline for several accounting standards, giving many US companies additional time to prepare. The accounting standard-setter on Wednesday approved its proposals for companies—mostly private businesses and nonprofits—that haven’t yet had to implement new rules on lease and hedge accounting, reports the Wall Street Journal (16 October, Maurer). The FASB also extended implementation deadlines for a standard that requires lenders to record expected future losses as soon as loans are issued, and one requiring insurers to revise how they value long-term insurance contracts. The FASB, which voted in July for proposals to delay the effective dates by a range of one to three years, said it plans to issue documents on the changes in mid-November. Meanwhile, the delayed implementation of the insurance standard will affect all insurers. SEC-filing insurers will have until the fiscal year after 15 December, 2021, while all other insurers will have until the fiscal year after 15 December, 2023.

From "FASB Delays Implementation of Accounting Standards for Some Companies"
Abstract News © 2019 Information, Inc.

The Wall Street Journal (17 October, Randazzo) reports that three major drug distributors—McKesson, AmerisourceBergen, and Cardinal Health—are in negotiations to pay US$18 billion to settle litigation brought by state and local governments blaming them for fueling the opioid crisis. The three company would collectively pay the sum over 18 years under the deal currently being discussed. If finalized, the settlement would be the first to achieve a broad resolution of the opioid lawsuits outside of bankruptcy. Pressure has mounted on pharmaceutical companies to settle the opioid lawsuits and cap the liability. The three drug distributors are among a number of companies slated to go to trial Monday in federal court in Cleveland in the cases of two Ohio counties that have been chosen to serve as a bellwether for broader litigation. Any final deal could include other companies.

From "Drug Distributors in Talks to Settle Opioid Litigation for US$18 Billion"
Abstract News © 2019 Information, Inc.

Japan's new tight foreign investment regulations will not apply to asset management companies, including hedge funds, reports Nikkei Asian Review (17 October). The new regulations are designed to protect sensitive industries and national security, restricting foreign investment in order to prevent leaks of confidential information to other countries, especially China. Under the new system, foreign investors would have to obtain approval from regulators before buying stakes of 1 percent or more in Japanese companies involved in strategic sectors. The 1 percent threshold marks a significant drop-off from the current level, which is 10 percent. Some experts have said the new plan is ambiguous and does not clearly define what types of investors would be affected. The government intends to clarify, through a ministerial ordinance, that investment deals that do not influence the companies' corporate management will be excluded from the restrictions, and that asset management companies will not have to seek prior approval, in principle.

From "Japan to Exempt Asset Managers From Stricter Investment Rules"
Abstract News © 2019 Information, Inc.

General Motors (GM) workers with the United Auto Workers (UAW) union celebrated a tentative contract deal this week after 31 days of strikes, reports the Associated Press (16 October, Krishner). The contract deal is set to last four years and reportedly includes significant concessions from GM, including wage increases and lump-sum payments, top-notch health insurance at little cost to workers, promises of new products for many US factories, and a path to full-time work for temporary workers. Terry Dittes, the UAW’s chief bargainer with GM, said the deal represents a major victory for union workers. The picketing workers will stay off work for several more days as union committees review and approve the deal. After workers vote to approve the deal, they can return to the factories. The deal is a big victory for the union, too, given that it flexed its muscles and showed its influence with GM at a time when its membership is far below the peak it had in 1979. Analysts projected that the strikes will end up costing GM a total of US$2 billion in lost production. Auto workers, who each lost upward of US$3,000 over the course of the strikes, said they hoped the deal was as good as advertised, and were eager to get back to work. If the deal is approved, it will become the template for future talks between the UAW, Ford, and Fiat Chrysler.

From "Workers Celebrate Deal with GM, Show Union Power in Industry"
Abstract News © 2019 Information, Inc.

The US Federal Communications Commission (FCC) voted to approve T-Mobile's acquisition of Sprint, reports Ars Technica (16 October, Brodkin). The two companies previously secured merger approval from the US Department of Justice, so the deal has been fully cleared by the federal government. T-Mobile and Sprint still face a lawsuit from a group of state attorneys general who are attempting to block the deal.

From "T-Mobile and Sprint Get FCC Approval to Merge"
Abstract News © 2019 Information, Inc.

The United Kingdom has launched a formal antitrust investigation into Amazon's investment in Deliveroo, a British food-delivery startup, according to the Wall Street Journal (16 October, Olson, Michaels). If the Competition and Markets Authority (CMA), the country's antitrust regulator, finds that antitrust rules have been broken, it could block the deal from moving forward. The probe is the latest European investigation into tech companies, and recent events suggest European jurisdictions will only get tougher on tech giants in the future. The EU antitrust regulator issued an injunction Wednesday ordering chipmaker Broadcom to take certain anticompetitive clauses out of its contracts, the first time in 18 years that such an injunction has come into play. Amazon and Deliveroo will know by 11 December whether the CMA is moving ahead with a new phase of the probe or their deal is acceptable and can go forward as planned. Legal experts said the CMA has been looking at big tech investments in startups to determine whether they are essentially targeted toward blunting budding competitors. One particular issue the CMA might be concerned with is whether Amazon’s investment in Deliveroo would allow it to curb the startup’s plans for grocery delivery to its own advantage.

From "Amazon's Deliveroo Investment Attracts Formal UK Probe"
Abstract News © 2019 Information, Inc.

Venezuelan President Nicolás Maduro has quietly dropped price controls, which were in place for 15 years, easing the stress on the country's industrial factories. Given that Maduro, who runs a socialist government, never officially announced the pause in price controls, it is difficult to pinpoint an exact date when they were removed. Business people in Valencia who spoke with Bloomberg (16 October, Bristow) were not clear whether the new state of affairs represents a real change in philosophy or a brief respite ahead of a new wave of attacks by the price-control agency. But in recent months, Venezuelan stores have begun restocking shelves and easing shortages of essential items like toothpaste and toilet paper. Those items, though, are now being sold at a price many Venezuelans cannot afford. The cost of living has skyrocketed since the beginning of the year, prompting uneasiness and irritation among the Venezuelan people. Some experts predicted that a fresh wave of price-control attacks on private businesses could be popular nationally.

From "Venezuela Ditches Cuba-Style Controls, Helping Companies Survive"
Abstract News © 2019 Information, Inc.

According to TechCrunch (16 October, Lomas), Europe has ordered chipmaker Broadcom to cease applying exclusivity clauses in accords with a half-dozen of its major customers, imposing so-called "interim measures" based on preliminary findings from an ongoing antitrust probe. The move follows a formal statement of objections that the Competition Commission issued earlier this summer. Not only has Broadcom been ordered to unilaterally stop applying "anti-competitive provisions" in agreements with the six customers, it must also inform them it will no longer apply such measures. Additionally, it is barred from agreeing provisions with the same or similar effect and from taking any retaliatory practices aimed at punishing customers with an equivalent effect.

From "Europe Issues Interim Antitrust Order Against Broadcom as Probe Continues"
Abstract News © 2019 Information, Inc.