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December 23,
2009
TLC Vision, Senior Lenders See Eye-to-Eye on Swap
TLC Vision (USA)
Corp., an eye care company that sponsors golfer Tiger Woods, has filed
for bankruptcy protection after reaching terms on a debt-for-equity swap
with its senior lenders, The Deal Pipeline reported yesterday. The
Chesterfield, Mo.-based company, affiliate TLC Management Services Inc.
and Mississauga, Ontario, parent company TLC Vision Corp. filed chapter
11 petitions with the U.S. Bankruptcy Court for the District of Delaware
in Wilmington on Dec. 21. The parent company also made a filing in the
Ontario Superior Court under the Companies' Creditors Arrangement Act.
TLC's bankruptcy filing follows two consecutive years of losses and an
inability to tap into credit markets to refinance a debt burden it could
not shoulder. Instead of refinancing its debt, TLC entered bankruptcy
with a prenegotiated plan to swap about $101 million in outstanding
first-lien debt for all of its new equity and $80 million in new senior
notes (to be issued in separate $50 million and $30 million tranches).
TLC has yet to file a chapter 11 plan outlining its restructuring, but
said in court filings that about 55 percent of its first-lien lenders
have signed a plan support agreement. As of Monday's bankruptcy filing,
TLC's first-lien lenders, led by Wells Fargo Bank NA, are owed about
$76.7 million on an $85 million prepetition term loan and $23.4 million
on a $25 million revolver, court filings show.
href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005369672'>Read
more (subscription required).
Survey: Energy, Financials May Lead Rebound in Takeovers
Energy and
financial-services companies may lead a rebound in takeovers in 2010
after the value of acquisitions worldwide dropped 34 percent this year,
according to a Bloomberg survey published today. Ninety-two percent of
those surveyed expect mergers and acquisitions to increase next year,
the Global M&A Outlook found. Bloomberg's survey included about 250
investment bankers, lawyers and investors, and about 21 percent of those
surveyed expected energy companies to lead in M&A next year, while 17
percent chose financial firms. The value of takeovers dropped this year
to $1.6 trillion through Dec. 15, the lowest in six years, Bloomberg
data show. Gyrating financial markets and a global economic slump cut
M&A by more than half since a record $4 trillion in deals in 2007. The
biggest transaction of the year was drugmaker Pfizer Inc.'s $68 billion
purchase of Wyeth. Exxon Mobil Corp.'s $30 billion deal for XTO Energy
Inc., reached this month, may augur more takeovers by oil and gas
producers to win access to shale formations. The energy industry was the
third-most active in 2009 among the 10 groups tracked by Bloomberg, with
14 percent of activity. Financial companies were the most common targets
this year, with 22 percent, the data show.
href='http://www.bloomberg.com/apps/news?pid=20601087&sid=a0HsgLx0hgMU&pos=5'>Read more.
Nortel Seeks Sale of Carrier VOIP Business for $282 Million
Bankrupt telecom equipment maker Nortel Networks Corp. has sought court approval
to sell certain assets of its carrier voice over Internet protocol
(VOIP) and application solutions business to Genband Inc. for $282
million, Reuters reported today. In a filing early on Wednesday, the
company said Genband will act as the stalking-horse bidder and set the
floor price for the assets at an auction supervised by the bankruptcy
court. The purchase price was subject to balance sheet and other
adjustments estimated at about $100 million. Nortel, once North
America's biggest telecommunications equipment company, filed for
bankruptcy protection in January. Rather than attempting to restructure,
it is auctioning off its assets in an attempt to pay back debtholders.
The case is Nortel Networks Inc., et al., No. 09-10138 in the U.S.
Bankruptcy Court for the District of Delaware.
href='http://www.reuters.com/article/idUSSGE5BM0HU20091223'>Read
more.
FDIC Draws Brisk Bidding on Loans by Failed Banks
Investors are jostling
for the chance to buy a $1.1 billion package of commercial real-estate
loans extended by failed banks, as these once-toxic assets are
attracting increased interest, the Wall Street Journal reported today.
More than a dozen investors, including Texas banker Andrew Beal, have
submitted bids to the Federal Deposit Insurance Corp. for the portfolio
of loans held by Franklin Bank, IndyMac Bank and other failed lenders,
but the portfolio represents only a fraction of the real-estate loans
held by the FDIC, and the volume is mounting as more banks fail. The
FDIC, which declined to comment on pending transactions, is expected to
announce the winning bidder within weeks in what will be its
second-largest bulk sale of commercial-property assets since the
downturn. The largest deal involved the sale in October of about $5
billion in condominium loans and other property made by now-defunct
Corus Bank. But many banks won't sell, and some, especially community
and regional banks, have not marked down the value of their existing
loan portfolios to current market ratesâ??something that could jeopardize
the survival of weaker lenders. Many hope the low cost of funds offered
by historically low interest rates will let them earn their way out of
troubleâ??which makes the FDIC practically the only game in town. The
agency has to sell off a growing pipeline of real-estate assets acquired
from banks that collapsed after lending too aggressively to owners of
offices, shopping malls, apartments and other commercial property.
href='http://online.wsj.com/article/
SB10001424052748704157304574612601175471522.html'>Read more
(subscription required).
Ford Reaches Deal to Sell Volvo to Chinese Automaker
Ford Motor Co. said
today that it and Zhejiang Geely Holding Group had settled 'all
substantive commercial terms' on a sale of Volvo, clearing the way for
the Chinese automaker to purchase the Swedish business early next year,
the New York Times reported today. The U.S. automaker said that while
final documentation, financing and government approvals remain to be
completed, 'Ford and Geely anticipate that a definitive sale agreement
will be signed in the first quarter of 2010, with closing of the sale
likely to occur in the second quarter 2010, subject to appropriate
regulatory approvals.' Ford did not disclose a price for the sale. Ford
paid $6 billion in 1999 to buy Volvo, and unconfirmed reports have said
that Zhejiang Geely could pay $2 billion for the unit in the currently
depressed market for automakers. Geely, based in Hangzhou, is the
largest private automaker in China. A Volvo deal would mark one of the
biggest moves yet by a Chinese car company in Europe or the United
States. On Dec. 15, Beijing Automotive Industry Holding said it would
buy carmaking technology for Saab cars from General Motors. The
announcement by Ford could ease the Chinese company's efforts to finance
the deal. Ford said it would continue to cooperate with Volvo in several
areas, but it did not intend to retain a stake in the Swedish company.
href='http://www.nytimes.com/2009/12/24/business/global/24auto.html?_r=1&ref=
business'>Read more.
U.S. Seeks Sentence of at Least 15 Years for Butler
Former Credit Suisse
Group broker Eric Butler should face at least 15 years in prison on
charges that he was part of an alleged scheme to mislead clients about
the nature of auction-rate securities they were buying in order to
generate higher commissions, federal prosecutors said in a filing late
Monday, according to a report in today's Wall Street Journal. In August,
a jury convicted Butler of all charges related to the alleged scheme.
After less than a day of deliberations, the jury found him guilty of
securities fraud and two counts of conspiracy. At that time, a U.S.
district judge said he likely would not impose the maximum sentence of
45 years sought by prosecutors. Butler's sentencing is scheduled for
Jan. 22. Prosecutors from the U.S. Attorney's office in Brooklyn have
alleged that Butler and Julian Tzolov, both formerly of Credit Suisse,
engaged in a scheme to get higher commissions by selling clients
higher-risk auction-rate securities backed by mortgages, when those
clients actually wanted to buy lower-risk securities backed by student
loans. Tzolov pleaded guilty to criminal charges related to the alleged
scheme in July and implicated Butler during his plea, saying they made
statements that misled or intended to mislead clients about the nature
of the securities. The government claimed that Butler and Tzolov changed
the names of securities on communications with clients to hide that the
securities were not backed by federally guaranteed student loans. The
losses to investors were nearly $1 billion, prosecutors said.
href='http://online.wsj.com/article/
SB10001424052748704157304574612510958993546.html'>Read
more (subscription required).
Fed, FTC to Require Notices for Credit Decisions
The Federal Reserve
Board and the Federal Trade Commission yesterday announced rules giving U.S.
consumers more information when they're lent money at higher rates
because of their credit report, Bloomberg News reported yesterday.
Consumers given less-favorable terms will be given a notice and the
opportunity to get a free report, the Fed and the FTC said. Lenders can
also comply by giving customers a free credit score, which is usually
available for a fee from credit-reporting companies. Currently, lenders
don't have to explain why a borrower is getting particular terms. The
new rules, which will take effect on Jan. 1, 2011, will apply to all
forms of consumer credit, including credit cards, auto loans, mortgages
and student loans. In addition, notices will have to be sent when
consumers are granted terms 'materially less favorable' than 'a
substantial proportion' of the lenders' other customers receive,
according to the Federal Register. The regulations were written to
comply with a law passed by Congress in 2003 to increase the accuracy of
consumer credit reports, give consumers more control over solicitations,
and combat identity theft, according to the Federal Register.
name='8'>Report: U.S. Business Investment Showing Life
A trade group for the
lenders that finance half the capital equipment investment in the United
States said on Tuesday that the sharp pullback in business borrowing
that marked the recent downturn moderated markedly in November - an
encouraging sign that companies may be growing more confident in the
sustainability of the recovery, Reuters reported today. The Equipment
Leasing and Finance Association said its capex-financing index, which
measures the overall volume of financings used to fund equipment
acquisitions, fell to $4 billion in November, down 7 percent from last
November. It was another in a series of declines in the index, but it
was also the smallest year-over-year decline this year and was hailed by
ELFA's head as possible evidence that companies may be inching toward
the confidence they need to begin investing in their business again.
ELFA's report came on the same day the U.S. Commerce Department said the
economy grew at a slower rate than originally thought in the third
quarter, restrained by weak business investment and a slightly more
aggressive liquidation of inventories. ELFA's members include Bank of
America Corp., Canon Financial Services, Caterpillar Financial Services
Corp., CIT Group Inc., Dell Financial Services, John DeereCredit Corp.,
Siemens Financial Services and Verizon Capital Corp.
href='http://www.reuters.com/article/idUSTRE5BM02K20091223'>Read
more.
name='9'>Motorsports Authentics Scrambles to Avoid Bankruptcy
In an all-out
effort to avoid bankruptcy, the joint owners of Motorsports Authentics
are attempting to reorganize the troubled licensed merchandise company
and settle the millions of dollars it owes several NASCAR teams, Fox
Sports reported yesterday. MA's 50-50 owners, International Speedway
Corp. and Speedway Motorsports Inc., have been in constant contact with
the top teams since the end of the season, with one of NASCAR's top
executives, senior vice president Paul Brooks, acting as a mediator. It
is uncertain exactly how much MA owes the teams, but its contracts with
best-selling organizations such as Hendrick Motorsports, Roush Fenway
Racing and Dale Earnhardt Inc. guarantee each of them close to $3
million annually, according to industry insiders. MA, which has lost
money in three of its four years in existence, has been paying a portion
of those guarantees, about a third to half, based on their merchandise
sales.
href='http://msn.foxsports.com/nascar/story/Motorsports-Authentics-looks-to-
avoid-bankruptcy-122209'>Read more.
name='10'>Geithner: Tight Lending Threatens U.S. Recovery
U.S. Treasury Secretary
Timothy Geithner expressed confidence yesterday that the U.S. economy
was on a solid recovery path, but said tight lending practices by banks
still pose a risk, Reuters reported yesterday. 'Right now, the real risk
we face is that banks are not lending enough and not going to provide
the capital businesses need to grow for the economy to strengthen going
forward,' Geithner said in an interview on National Public Radio. 'The
risk is that the pendulum having been too soft and easy on the lending
side, the risk is that banks over-correct or that supervisors
over-correct and that's something we need to lean against because the
strength of recovery will depend in part on credit being available to
businesses.' Earlier on Tuesday, Geithner joined President Barack Obama
at a White House meeting with a group of small bankers chosen from
communities across the country to discuss the topic of willingness to
lend. Geithner said the Obama administration was determined to make sure
it does not withdraw support from the financial system too early, which
he said could potentially lengthen the economic slowdown. He said the
Treasury 'will do what is necessary' to prevent another severe downturn.
Geithner said he felt economic growth was accelerating during the fourth
quarter and cited rising consumer confidence and more consumer spending
as positive indicators.
href='http://www.reuters.com/article/idUSTRE5BL4HK20091223'>Read
more.
name='11'>Idearc Could Emerge from Bankruptcy by Year-End
Yellow Pages publisher
Idearc Inc. said Tuesday that the U.S. Bankruptcy Court in Dallas has
confirmed its reorganization plan, the Associated Press reported
yesterday. The decision positions the company, which was spun off from
Verizon in 2006, to emerge from its chapter 11 bankruptcy proceedings by
the end of the year in a much stronger financial position. Under the
proposed plan, the company's total debt will be reduced from roughly $9
billion to $2.75 billion of secured bank debt. The company's current
bank debt-holders, bondholders and certain other creditors will receive
new common stock or cash in the reorganized company. Current common
stockholders will be wiped out.
href='http://news.yahoo.com/s/ap/20091223/ap_on_bi_ge/
us_idearc_reorganization_1'>Read
more.
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