CLOs

The U.K. retail sector is facing increasing cost pressures as foot traffic decreased by 2.1 percent in 2018. The crisis is set to push the number of chain-store closures above 1,000, prompting more retailers turn to a controversial insolvency procedure to avoid collapse. Company voluntary arrangements (CVAs) allow insolvent companies to agree to new repayment plans with their creditors, including landlords, and usually involve rent reductions of 20 percent to 75 percent. PwC said the use of these agreements has increased, sparking frustration from landlords and property funds forced to cut their rents. Since January four retailers and restaurant groups have initiated CVAs, with at least five more in talks to do so, putting 2019 on track to be a record year, reports the Financial Times (21 April, Gross, Hancock).

From "U.K. Store Closures Set to Top 1,000 as Use of Controversial CVAs Mounts"
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General Motors CEO Mary Barra took a 0.4 percent pay reduction in 2018, but even so, GM's proxy filing shows that Barra made nearly US$21.9 million. Portions of her compensation linked to GM's performance shrank slightly as the company's US$11.8 billion in adjusted earnings before interest and taxes dipped after record profits the previous two years. Barra's pay is almost certain to be scrutinized in the wake of the company's fourth-quarter announcement that it planned to shutter four U.S. factories by the end of this year. Additionally, the vehicle maker is cutting thousands of salaried jobs as it eliminates unpopular sedan models and prepares to spend billions developing self-driving technology and electric automobiles. The cutbacks have been criticized by everyone from President Trump to former Vice President Joe Biden, reports The Hour (20 April, Welch).

From "GM Pays CEO Barra US$21.9 Million as Trump and Biden Attack Plant Closings"
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Fiat Chrysler is recalling more than 320,000 vehicles in North America and elsewhere due to a transmission problem that could cause them to unexpectedly roll away. The recall covers Dodge Dart compact automobiles with six-speed automatic transmissions manufactured from 2013 through 2016, the Italian-American auto manufacturer detailed in a report. Fiat Chrysler said it was not aware of any related crashes or injuries, but it has logged several thousand reports of related repairs to the vehicles. The recall is expected to commence 31 May and includes approximately 298,000 U.S. vehicles, 20,117 in Canada, 3,400 in Mexico and roughly 900 outside of North America, reports CBS News (19 April).

From "Fiat Chrysler Recalls More Than 320,000 Cars Due to Rollaway Risk"
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Pressure is mounting among U.S. government officials to take action against Facebook CEO Mark Zuckerberg for the social networking company's handling of customer data. Two Democratic senators recently called for Zuckerberg to be held personally accountable for the company's privacy fumbles following a news report that claimed the FTC is considering how to hold him directly responsible. "Holding Mark Zuckerberg and other top Facebook executives personally at fault and liable for further wrongdoing would send a powerful message to business leaders across the country," said Sen. Richard Blumenthal (D-Conn.), a member of the judiciary committee. Sen. Ron Wyden (D-Ore.) echoed Blumenthal's calls. However, he said in his own statement that the FTC lacks the ability to take appropriate action against Facebook, hence his ongoing push for stronger privacy legislation, reports CNBC (19 April, Feiner).

From "Lawmakers Call for Zuckerberg to Be Held Accountable for Facebook’s Privacy Fumbles"
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BP PLC and its partners will lead a US$6 billion development of the giant Azeri-Chirag-Deepwater Gunashli oil-field complex offshore Azerbaijan. The Azeri Central East project in the Caspian Sea is expected to achieve its first production in 2023 and to produce up to 300 million barrels over its lifetime, reports the Wall Street Journal (19 April, Kellaher). BP operates and has a nearly 30 percent ownership interest in the complex, while Azerbaijan's state oil company Socar owns 25 percent. Partners holding stakes of less than 10 percent range from U.S. energy majors Chevron Corp. and Exxon Mobil Corp. to Japan's Inpex Corp. and Itochu Corp.

From "BP, Partners to Invest US$6 Billion in Offshore Azerbaijan Project"
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Large corporations are partnering with universities to offer employees fully-subsidized Bachelor's or Master's degrees in order to compete in a tight labor market. Starbucks has led the new wave of companies offering full tuition reimbursement to help hourly workers earn a college degree at four-year institutions. Last spring, Walmart followed suit in announcing it would pay for full- and part-time employees to go back to school, with employees required to pay US$1 a day during their studies, while the retail giant will cover the cost of tuition, books, and fees. Meanwhile, Disney's US$50 million Disney Aspire program offers everything from English-language learning to Master's degrees, with the company covering 100 percent of tuition costs, along with fees for books and other materials, reports Yahoo! Finance (20 April, Fujita).

From "Disney, Starbucks, Walmart: Big Companies Are Increasingly Offering Education Benefits for Employees"
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Los Angeles-based cannabis retailer MedMen reports that its General Counsel Lisa “LD” Sergi Trager and its Chief Operating Officer Ben Cook have resigned from the company. Dan Edwards, the company’s senior vice president of legal affairs, will keep his title and lead the legal team. It is unclear if the company is searching for a new general counsel, says Law.com (19 April, Clark). Trager’s departure comes almost three months after the company’s former Chief Financial Officer James Parker filed suit against the company claiming he was unduly stripped of his powers as CFO and unable to do his job. In his suit, he describes the culture at MedMen as “racist” and “homophobic.”

From "Cannabis Retailer MedMen Loses General Counsel"
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Kraft Heinz Co. has named a new chief executive, hiring the chief marketing officer and a former leader of brewer Anheuser-Busch InBev SA to lead the giant foodmaker's attempted turnaround after years of cost cuts and weak sales. Miguel Patricio will succeed Bernardo Hees as chief executive on 1 July, Kraft said on Monday. The company in February disclosed an investigation by federal security regulators into its business and wrote down the value of its Kraft and Oscar Mayer brands by some US$15 billion, notes the Financial Times (22 April, Fontanella-Khan, Gray). Patricio says he plans to move Kraft Heinz’s strategy in a new direction after years of cost-cutting that left its brands in a weaker position to compete on store shelves.

From "Kraft Heinz Replaces CEO"
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Tesla Inc. will reduce the size of its board to seven from 11 directors in order to improve corporate governance. Disclosed in a proxy filing 19 April, the phaseout of four board members follows a 2018 SEC settlement that required CEO Elon Musk to step down as chairman for three years and the company to add two independent directors. Brad Buss, who has been a board member since 2009, and Linda Johnson Rice, who joined as an independent director in 2017, do not plan to seek re-election this year. The board will not fill their seats. Steve Jurvetson and Antonio Gracias, two early investors, plan to step down in 2020, and those seats also won't be filled. Tesla has also laid out a series of shareholder proposals designed to improve its corporate governance, including the removal of a supermajority voting requirement and shortening director terms from three years to two, reports the Wall Street Journal (19 April, Higgins).

From "Tesla to Cut Down on Board Members"
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Britain’s oldest package holiday operator Thomas Cook, which is struggling with a fall in demand and online competition, could be split up in a takeover. Fosun, a Chinese company and the largest Thomas Cook shareholder, is among a number of groups to have expressed interested in buying all or part of the business. EU rules banning majority foreign ownership would block Fosun from running Thomas Cook’s airline arm, but the company’s tour operations would add to Fosun’s 2015 purchase of the French travel company Club Med, reports The Guardian (21 April, Jolly). Many companies have also expressed interest in Thomas Cook’s tour business after the company put its airline up for sale.

From "Potential Bidders Circle Thomas Cook as it Hires Turnaround Specialist"
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Nissan Motor Co. Ltd will reportedly reject a management integration proposal from French partner Renault SA and will call for an equal capital relationship. Nissan’s management is said to believe the Japanese company has not been treated as an equal of Renault under existing capital ties, and a merger would make this inequality permanent, according to Reuters (22 April). Renault has argued in its proposal that an integration would maximize synergies within the French-Japanese alliance. The alliance between Renault and Nissan was first set up in 1999 and was expanded in 2016 to include Mitsubishi Motors.

From "Nissan to Reject New Integration Proposal From Renault"
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Carlos Ghosn was indicted Monday on charges that he misappropriated funds sent by Nissan Motor Co. to a distributor in the Middle East. Tokyo prosecutors arrested the former Nissan and Renault SA chairman on 4 April, which was his fourth arrest since 19 November. In the latest set of charges, prosecutors allege that between 2017 and 2018 Ghosn arranged for a company he controlled to receive a portion of money sent by Nissan to its overseas distributor. Of a total US$10 million sent by Nissan during this period, prosecutors allege Ghosn received US$5 million. Prosecutors haven’t named the distributor, but Ghosn’s legal team has identified it as Oman-based Suhail Bahwan Automobiles, reports the Wall Street Journal (22 April, McLain). A Tokyo court had authorized Ghosn’s detention without possibility of bail through 22 April. By indicting Ghosn, prosecutors can keep him behind bars for the moment, although he can seek release on bail.

From "Carlos Ghosn Indicted on New Charges of Misappropriating Funds"
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China had planned to release regulations restricting cross-border data transfers by the end of 2018, but is delaying that measure as U.S.-China trade talks reach a critical stage. The regulations would require some companies to localize global data analytics processes in China, bringing proprietary software and possibly even personnel into the country. Regulators reportedly want to avoid sparking another confrontation with U.S. companies. Multinationals worry that a requirement to keep “important data” within China could force a costly restructuring of the way they store data in the cloud. Under draft measures released two years ago, “important data” was broadly defined as data related to “economic development” and “public interest," reports the Financial Times (21 April, Yang).

From "Trade War With U.S. Delays China’s Rules Curbing Data Transfers"
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The National Enquirer has been sold to newspaper retailer James Cohen, CEO of the airport newsstand company Hudson News, for a reported sum of US$100 million. American Media Inc., the supermarket tabloid's parent company, also sold sister publications Globe and National Examiner to Cohen as part of the deal, reports NBC News (18 April, Li).

From "National Enquirer Sold to Hudson News CEO James Cohen"
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Wisconsin Governor Tony Evers inherited a deal to give Taiwan’s Foxconn US$4 billion in tax breaks and other incentives when he took office in January. Now, he said he wants to renegotiate because the firm is not expected to reach its job creation goals for the state. Foxconn has pledged to eventually create 13,000 jobs in Wisconsin, but said earlier this year it had slowed its pace of hiring. On 19 April, the company said it remains committed to its contract to build a display plant and tech research facilities in Wisconsin, reports Reuters (19 April, Lee).

From "Foxconn Says it Remains Committed to Wisconsin Investment Project"
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Nissan Motor will cut global production by approximately 15 percent over the next 12 months, as the Japanese automaker shifts away from the aggressive expansion campaign promoted by former Chairman Carlos Ghosn. The company aims to produce about 4.6 million units in the fiscal year ending March 2020 — the lowest figure in nine years — according to plans being communicated to its suppliers. Nissan predicted in February that it would make approximately 5.45 million cars in fiscal 2018, which ended last March. The final production numbers have not yet been released. The move could cast a pall over its alliance with French automaker Renault, notes Nikkei Asian Review (19 April, Yamamoto).

From "Nissan to Slash Global Production by 15 Percent"
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On 18 April, Uber Technologies struck a deal with auto maker Toyota Motor Corp., Japanese auto-parts maker Denso Corp., and SoftBank Group’s tech fund for a US$1 billion investment in its self-driving-car unit. The investment values the driverless-car division at US$7.25 billion. The deal with three Japanese investors gives Uber a boost as it gears up for an initial public offering next month, with plans to raise about US$10 billion, reports the Wall Street Journal (18 April, Brown). As part of the investment, Uber will establish the self-driving-car unit as its own corporate entity—with six board seats controlled by Uber, and one apiece for Toyota and SoftBank, according to a person familiar with the structure.

From "Uber Clinches US$1 Billion Investment in Self-Driving-Car Unit"
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Antitrust enforcement staff members recently told T-Mobile and Sprint executives they are unlikely to approve the telecom firms' proposed merger as it is currently structured. Soon after hearing that, Sprint, which has touted adding new wireless connections for six straight quarters, said that many of those gains were free lines or existing customers that switched services. With its proposed merger under pressure, the wireless carrier told regulators that its performance isn’t as strong as it appears and it will struggle to operate as a stand-alone company, reports the Wall Street Journal (18 April, Krouse, FitzGerald). In a regulatory filing, the company said the recent gains in so-called postpaid connections—a closely watched measure of monthly accounts not paid in advance—were driven by free lines given to existing Sprint customers. The tally also includes tablet connections and customers switching their phones from Sprint’s prepaid services. Sprint also cited an analyst report in the filing, suggesting that even entering into chapter 11 bankruptcy protection to restructure its balance sheet would not help long-term.

From "Sprint Tells Regulators Its Business Is Worse Than Earlier Portrayed"
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The U.S. Labor Department said claims for jobless aid fell by 5,000 last week to 192,000, the lowest level in nearly half a century. The four-week average dropped by 6,000 to 201,250, the lowest since November 1969. The low levels of unemployment claims show that most U.S. workers enjoy job security. The employment rate is 3.8 percent, the lowest in almost 50 years, reports Detroit News (18 April, Wiseman).

From "U.S. Claims for Unemployment Aid Hit Lowest Level Since ‘69"
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Women are just as likely to earn less than men when they work under a female supervisor or in a company with a high proportion of women at the top, according to a study published in the European Sociological Review. Academics found that hiring more women into senior posts did not appear to be a solution to wage inequality. The findings suggest female managers may struggle to challenge organizational structures that favor men, according to the paper’s lead author Margriet van Hek. The study compared data covering nearly 8,000 men and women at 231 organizations across nine countries. Researchers found a “considerable and significant gender gap,” with women earning 7 percent less than men on average - whether they worked for a man or a woman and regardless of the share of women managers in the organization, reports Reuters (18 April, Elks).

From "Study: Female Managers Do Not Close Gender Pay Gap"
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