LATEST ANALYSIS
November 2008
25 Nov 2008
Are health care issues about to rise to the top of every company's list of risk factors? A survey by Westlaw Business of the issues facing the new Obama administration might make you answer that with a strong affirmative. Issues start with those affecting companies in…
25 Nov 2008
Since our last events briefing significant headwinds from the credit markets have reappeared throughout the economy. Markets worldwide surged and plunged (mostly plunged it seemed) as bailouts were given to some and…
25 Nov 2008
Are the equity markets about to get a bit more confusing? It depends on your point of view. In the midst of the market turmoil, change has been the buzzword and as we all know it hasn’t always proven to be a good thing. Change to ticker symbols is coming from an unexpected quarter. Earlier this month…
25 Nov 2008
Did the big banks make a big mistake by taking CPP funds? To judge from the protestations of banks opting out of the program, you would think so. At the same time, firms continue to line up for the (almost) free money from the US Treasury…
25 Nov 2008
Shareholder relations look set to get tougher in our reborn era of hostile M&A. Between the rock-filled waters of the economic downturn, the shark-filled waters of collapsed equity markets, and the emerging hostile M&A activity, navigating shareholder/board relations has...
20 Nov 2008
How far will LBO targets go to appease the banks funding their deals? Quite far, to judging from the churn we’re seeing around several recent deals. Fear of bank withdrawal from funding commitments has led to surprising steps by all parties with…
20 Nov 2008
Automakers at the Brink: Disclosures Reflect Magnitude of Problems; Sign of the Times: Pepsi Announces Restructuring Initiative; Sign of the Times: KLA-Tenecor Announces Job Eliminations; Anticipating Proxy Season: Companies Revise Rules for Shareholder Proposals; Avoiding a Leadership Void: Symantec Moves Quickly to Replace CEO…
20 Nov 2008
Are PE funds legally on the hook for portfolio companies they once coveted, bought and even guaranteed? This issue is coming before bankruptcy and other courts more frequently in the current environment. It's likely to get even more…
20 Nov 2008
With stock prices so cheap, can companies withstand a feared rush of hostile M&A? A gleam in the eye during the frothy, high-priced days of yesteryear, hostile M&A is back, and so are the fears of it, in even bigger ways…
18 Nov 2008
Is stifling regulation about to hit the Credit Default Swap (CDS) market? Stifling may be in the eye of the stifled, as any amount of structure and regulation might be considered overwhelming for a market that has gotten away with none for too long. Laser focus is now being applied to the systemic dangers presented by this market, due to the counterparty risk in its very fabric.
18 Nov 2008
Does Mark to Market valuation hold up under litigation? Perhaps not, says the US Bankruptcy Court for the Southern District of New York. In a bold move relating to a $350 million contract with Lehman Brothers, Sumitomo Mitsui Banking Corporation (SMBC) got its hand slapped by the court when it attempted to seize the collateral of its now-bankrupt counterparty. The court affirmed that even in today’s era of unprecedented markets, the bankruptcy automatic stay remains in effect to protect the bankrupt’s estate.
18 Nov 2008
Are Canadian credit conditions in a thaw? Fast moving credit markets had impacted Canadian financial service firms, hampering them in parallel with their U.S. counterparts. However, Canadian public and private sector officials have not remained inactive. While much of the world’s attention is focused on Washington and Wall Street, there’s been significant movement in Ottawa and on Bay Street, as well.
18 Nov 2008
Tumultuous market conditions and unprecedented events have continued to unfold since our last deals briefing. The following represents the most piquant and pressing of the deals emerging in the economy. Further insight to each deal is provided by the links to recent disclosures and filings in the Related Resources Bar.
18 Nov 2008
Might GM be the next Lehman Brothers, with the massive legal and bankruptcy issues that implies? Auto industry executives are now facing a crisis that must make them almost envy the financial institutions (and there aren’t many companies that would say that). Interestingly, they are confronted with a structural crisis that’s as much regulatory as it is financial, mandating solutions on both these sides as well.
13 Nov 2008
Is the next wave of the Credit Crisis about to roll in, around student loan finance? We wouldn't state things that strongly, but this form of lending suffers from many of the ills of the mortgage industry. Among them: predatory practices, conflict-ridden relationships and dubious marketing techniques, all topped, until recently, with a healthy dollop of securitization as a primary financing route. A mini-mortgage mess in the waiting?
13 Nov 2008
Is the SEC as we know it about to disappear? There are two layers to this question. The SEC is about to go through the sort of leadership switch characteristic of a change of administration. The recently announced departure of John White (Director of Corporate Finance) and the inevitable departure of Chairman Chris Cox are emblematic. More fundamentally, though, is the SEC at the end of its glory days?
13 Nov 2008
Is the stampeding herd running toward bank holding company status escaping danger, or simply running headlong into its next set of problems? Pardon our mixing of metaphors, but otherwise stated, is being a Bank Holding Company (BHC) the cure-all it’s positioned as? Bank holding company (BHC) status does promise greater access to funding, better capitalization and tighter regulation.
11 Nov 2008
With Treasury now intent on spending our way out of the financial crisis, law firms stand at the ready to help. Several prominent law firms have already signed on. Their goal: assisting the financial community out of its morass and into a better-funded future. Treasury’s program has an application deadline of Nov. 14th (for public banks) and an as-yet unannounced deadline for private banks.
11 Nov 2008
Is I.P. uncertainty ramping up, just as credit market uncertainty is abating? For the many companies with proprietary business methods, the answer may be “Yes”. If the patent community chatter is any indication, a recent decision regarding...
11 Nov 2008
In an environment rife with concern over litigation, does mark-to-market accounting work? This question matters greatly to the “credit crisis,” as financial pictures based on mark-to-market standards drive much of the turmoil (as well as M&A and equity investments) currently underway. Further, complex mark-to-market accounting has oft-hidden impacts.
11 Nov 2008
Tumultuous market conditions and unprecedented events have continued to unfold since our last deals briefing. The following represents the most piquant and pressing of the deals emerging in the economy. Further insight to each deal is provided by the links to recent disclosures and filings in the Related Resources Bar.
11 Nov 2008
The Obama campaign promised to focus on many issues that matter to your deals and/or disclosures. We at Westlaw Business see it as our job to focus on these along with you. Thus, we are launching a series of weekly Presidential Preparation briefings, each focused on current trends around an issue of concern. This week: Climate Change.
6 Nov 2008
Are contractual “out clauses” being used…or abused? The level of terminated M&A activity may provide some clue. There have been approximately 134 mergers withdrawn in October alone, some with merger agreements actually signed. In many cases, the deal never got that far and was terminated mid-negotiation (or mid-hostile process). The withdrawals seem due to terrible market conditions. However, with “market outs” and “credit outs” not to be found in every agreement, these conditions are not always the stated reason for the termination.
6 Nov 2008
With the recent election of President-Elect Barack Obama and a strengthened Democratic presence in Congress along with that, we at Westlaw Business expect to see certain trends manifest. In fact, these are not completely new. Several of them are an acceleration of trends already underway, as seen from recent disclosures.
6 Nov 2008
How ironclad are bank funding commitment letters, and what may a bank do (or assert) to get out of them? These issues lay at the heart of a series of attempted “do-overs” by banks of deals they had committed to during the go-go days of early 2007.
6 Nov 2008
How do you deal with tough employment issues during an economic downturn? Recent disclosures provide a clue. Some companies are positioning themselves for the downturn by insulating their operations, restructuring, and entering into mergers, each typically accompanied by agreements with employee retention plans and renegotiated employment agreements with key executives and officers.
4 Nov 2008
Are credit default swaps (CDS) about to move to center stage for corporations? This issue is not a theoretical one, as use of CDS and related pricing has spread to unforeseen corners, even in seemingly “vanilla” contracts. This emerging trend has seen CDSs used both for risk pricing (e.g., interest rates) and its better-known cousin, risk mitigation (aka hedging). Its use could even spread to other contracts as the markets thaw.
4 Nov 2008
What terms and conditions should a $130 billion recapitalization (and counting) get? As the nation’s leading financial institutions take in unprecedented financing from the U.S. Treasury, this seems a narrow question, limited to the financial service sector…but it’s not. These agreements matter to the economy overall, both in terms of those things included in the agreements and those explicitly not included.
4 Nov 2008
What do you do when a big customer goes bankrupt? It’s a question much on the mind of businesses these days. While they themselves may not be at risk, many a company does worry as to whether they must face bankruptcy-related problems from their customers. Lehman Brothers may serve as the archetype of bankrupt customer, but they are far from the only company whose vendors have begun to worry.
4 Nov 2008
Is reliance on credit ratings due to become one of the casualties of the financial market crisis? That is a stretch. However, it’s no longer unthinkable, given the central role played by Credit Ratings Agencies during recent frothy markets. These agencies had a central role, not well publicized, in the creation and marketing of many of the most controversial instruments and entities.
4 Nov 2008
Barclays/Sovereign Investments
CPP Participants
PNC Financial Services/ National City
Embarq Corp/ Centurytel, Inc.