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Tag: Financing Agreements

  • Debt-ridden Rite Aid files for bankruptcy, will close more stores

    Debt-ridden Rite Aid files for bankruptcy, will close more stores

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    Drugstore chain Rite Aid Corp. filed for bankruptcy Sunday, as it faces billions of dollars of debt related to opioid lawsuits.

    In a statement Sunday night, Rite Aid
    RAD,
    -16.81%
    said it will close some “underperforming” stores and announced Jeffrey Stein as its new chief executive and chief restructuring officer. Interim CEO Elizabeth Burr will remain on the company’s board.

    The bankruptcy filing had been expected for months, and the Wall Street Journal reported in August that Rite Aid was more than $3.3 billion in debt, due largely to hundreds of lawsuits related to its distribution of opioid painkillers. The bankruptcy filing stays pending litigation against the company.

    Earlier this month, the New York Stock Exchange warned Rite Aid that it was “no longer in compliance” with the exchange’s minimum pricing and valuation standards, and gave it six months for the stock to regain compliance. Rite Aid shares have plunged about 80% year to date.

    Rite Aid said Sunday that lenders will provide $3.45 billion in financing for the chain to continue operating through the chapter 11 bankruptcy process.

    “With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives and accelerating the execution of our turnaround strategy,” Stein said in a statement. “In doing so, we will be even better able to deliver the healthcare products and services our customers and their families rely on — now and into the future.”

    Rite Aid said it would work to minimize the effect of store closures on its customers so there is no disruption of services, and will transfer affected workers to different locations when possible.

    Rite Aid has about 2,100 stores and employs around 47,000 people. It has closed more than 200 stores in the past couple of years.

    Rite Aid also said it had reached a deal for pharmacy benefit-solutions company MedImpact Healthcare Systems Inc. to acquire its Elixer Solutions business. A price for the transaction was not disclosed.

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  • Debt-ridden Rite Aid files for bankruptcy, will close more stores

    Debt-ridden Rite Aid files for bankruptcy, will close more stores

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    Drugstore chain Rite Aid Corp. filed for bankruptcy Sunday, as it faces billions of dollars of debt related to opioid lawsuits.

    In a statement Sunday night, Rite Aid
    RAD,
    -16.81%
    said it will close some “underperforming” stores and announced Jeffrey Stein as its new chief executive and chief restructuring officer. Interim CEO Elizabeth Burr will remain on the company’s board.

    The bankruptcy filing had been expected for months, and the Wall Street Journal reported in August that Rite Aid was more than $3.3 billion in debt, due largely to hundreds of lawsuits related to its distribution of opioid painkillers. The bankruptcy filing stays pending litigation against the company.

    Earlier this month, the New York Stock Exchange warned Rite Aid that it was “no longer in compliance” with the exchange’s minimum pricing and valuation standards, and gave it six months for the stock to regain compliance. Rite Aid shares have plunged about 80% year to date.

    Rite Aid said Sunday that lenders will provide $3.45 billion in financing for the chain to continue operating through the chapter 11 bankruptcy process.

    “With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives and accelerating the execution of our turnaround strategy,” Stein said in a statement. “In doing so, we will be even better able to deliver the healthcare products and services our customers and their families rely on — now and into the future.”

    Rite Aid said it would work to minimize the effect of store closures on its customers so there is no disruption of services, and will transfer affected workers to different locations when possible.

    Rite Aid has about 2,100 stores and employs around 47,000 people. It has closed more than 200 stores in the past couple of years.

    Rite Aid also said it had reached a deal for pharmacy benefit-solutions company MedImpact Healthcare Systems Inc. to acquire its Elixer Solutions business. A price for the transaction was not disclosed.

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  • Tupperware stock soars 90% after debt restructuring agreement

    Tupperware stock soars 90% after debt restructuring agreement

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    Tupperware Brands Corp.’s stock climbed more than 90% in extended trading Thursday after the beleaguered maker of iconic food containers announced a debt restructuring agreement.

    The surge sent the stock hurtling toward a nine-month high. In a statement released after market close, Tupperware
    TUP,
    -4.09%
    said that it has finalized an agreement with its lenders to restructure its existing debt obligations. The agreement will improve the company’s overall financial position by amending certain credit obligations and extending the maturity of certain debt facilities to allow it to continue with its turnaround efforts, Tupperware said.

    The agreement provides for the reduction/reallocation of $150 million in interest and fees, and an extension of the stated maturity of approximately $348 million of principal and reallocated interest and fees to fiscal year 2027 with payment-in-kind, or PIK, interest.

    Related: Tupperware and Yellow have skyrocketed, but don’t confuse them with meme stocks

    Tupperware also announced the reduction of amortization payments required to be paid through fiscal year 2025 by approximately $55 million, and immediate access to a revolving borrowing capacity of approximately $21 million.

    “I am confident that this agreement provides us with the financial flexibility to continue executing on our near-term turnaround efforts as well as our long-term strategy to create a global omni-channel consumer brand,” Tupperware CFO Mariela Matute said in the statement. “We are committed to making ongoing progress in improving liquidity and strengthening our capital structure. We appreciate the support of our lenders, who share in our strategy, as we move forward.”

    Related: How ‘left-for-dead’ Tupperware became a buzzy trading play

    In April, Tupperware issued a going-concern warning, essentially cautioning that it could go bust. The beleaguered company also announced the hiring of financial advisers to help it navigate its near-term challenges. On July 7, Tupperware said that it had entered a waiver agreement with some of its creditors.

    Also on Thursday, Tupperware said that its second-quarter earnings report will be filed late. In an SEC filing, Tupperware explained that it is unable to file its report for the quarter ended July 1 by the prescribed due date. Tupperware cited “the time and effort” required to complete its consolidated financial statements for its Form 10-K annual report for the fiscal year ended Dec. 31, 2022 and the Form 10-Q for the quarter ended April 1, 2023. “The company will be unable, without unreasonable effort or expense, to complete and file the Q2 Form 10-Q within the prescribed time period,” it said. “As previously disclosed on its Form 8-K on April 7, 2023, the Company is continuing its restatement of previously issued financial statements and the financial statement close process for the year ended December 31, 2022.”

    Since the 8-K filing, Tupperware has “identified additional prior period misstatements and additional material weaknesses in internal control over financial reporting,” the company said. The April 7 8-K filing also disclosed the company’s “substantial doubt” about Tupperware’s ability to continue as a going concern. “While the Company is still completing its second-quarter 2023 financial close process, it expects that its Q2 Form 10-Q will reflect a material decline in revenues for the quarter ended July 1, 2023 as compared to the quarter ended June 25, 2022,” Tupperware said in the filing. “The Company believes that its preliminary estimated revenue results for the quarter ended July 1, 2023 will be within the range of $260-$270 million.”

    Related: Tupperware stock skyrockets to a record 434% gain in July

    Tupperware’s stock has skyrocketed recently, despite a dearth of fresh news. Nonetheless, Tupperware should not be confused with a meme stock, according to Samantha LaDuc, founder of LaDucTrading.com. Tupperware’s recent trading activity is also reminiscent of spikes in other names also recently seen as “left for dead,” as  LaDuc put it to MarketWatch last week.

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  • Ford Venture Gets Record $9.2 Billion Government Loan for EV Batteries

    Ford Venture Gets Record $9.2 Billion Government Loan for EV Batteries

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    Ford Venture Gets Record $9.2 Billion Government Loan for EV Batteries

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  • UBS inks pact with Swiss government as Credit Suisse deal may close next week

    UBS inks pact with Swiss government as Credit Suisse deal may close next week

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    UBS said Friday that it’s signed a loss protection agreement with the Swiss government covering up to 9 billion francs ($10 billion) of losses once the takeover of Credit Suisse is completed.

    The finalized deal sets the stage for the merger of the Swiss banks to be completed as early as June 12.

    Terms call for the guarantee to only be implemented if UBS takes 5 billion francs of losses from what are called non-core assets of Credit Suisse.

    The protection applies to roughly 3% of the combined assets of the merged bank. UBS is paying the Swiss government an upfront fee of 40 million francs, as well as an annual maintenance fee of 0.4% and a risk premium depending on how much of the guarantee is used. UBS does have the right to terminate the guarantee at any time.

    The per-share value of the UBS offer
    UBS,
    -0.05%

    UBSG,
    -0.25%
    has climbed slightly since the deal was first announced, as it’s now worth 0.81 francs per share, valuing Credit Suisse at 3.2 billion francs, or $3.6 billion.

    UBS agreed to buy its rival for an initially announced 3 billion francs after Credit Suisse
    CS,
    +0.49%

    CSGN,
    -0.20%
    was unable to stem outflows from its wealthy clients.

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  • PacWest sells its real-estate lending business to Roc360

    PacWest sells its real-estate lending business to Roc360

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    PacWest Bancorp will sell its real-estate lending arm to Roc360, as the beleaguered regional bank moves to refocus on its core business.

    The deal, first reported late Tuesday by the Wall Street Journal, comes a day after Los Angeles-based PacWest
    PACW,
    +7.74%
    unveiled a plan to sell a $2.6 billion portfolio of real-estate construction loans.

    In a statement Tuesday night, Roc360 said it will buy PacWest’s Civic Financial Services unit for an undisclosed sum. Roc360 will take on the unit’s business operations, but not its previously extended loans or loan-servicing operations.

    “In the face of market difficulties, we continue to expand and develop more products and services for real-estate investors,” Roc360 Chief Executive Arvind Raghunathan said in a statement. “We believe that America’s housing stock is severely undersupplied, with more than 50% of homes in deferred maintenance, lacking the modern-day energy efficiencies that our clients install with each loan they take from us. We will continue to prudently expand and invest for long-term solutions to these structural problems.”

    New York-based Roc360 is a financial services platform for residential real-estate investors, and includes the brands Roc Capital, Finance of America Commercial, ElmSure, Wimba Title and Tamarisk Appraisals.

    On Tuesday, PacWest shares jumped 8% on news of Monday’s loan sale, which also fueled gains among other regional-bank stocks.

    PacWest shares have sunk nearly 70% year to date, amid a wider downturn by regional banks following the failures of Silicon Valley Bank, Signature Bank and First Republic Bank.

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  • PacWest’s stock jumps 5% premarket on news bank to sell real estate loans worth $2.6 billion

    PacWest’s stock jumps 5% premarket on news bank to sell real estate loans worth $2.6 billion

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    PacWest Bancorp.’s stock jumped 3% premarket Monday, after the bank announced asset sales that would allow it to focus on its core community banking business.

    The regional bank
    PACW,
    -1.88%
    said it has entered an agreement to sell a portfolio of 74 real estate construction loans with a principal balance of about $2.6 billion to a unit of real-estate investment company Kennedy Wilson Holdings.

    “Kennedy Wilson or its designees will also assume all remaining future funding obligations under the acquired loans of approximately $2.7 billion,” PacWest said in a regulatory filing.

    The bank has also agreed to sell an additional six real estate construction loans to Kennedy Wilson with a principal balance of about $363 million.

    The sale of the loans is subject to Kennedy Wilson’s satisfactory due diligence. The company will place $20 million into a third-party escrow account that will be refundable.

    The deal is expected to close in several tranches in the second and third quarters. “There can be no assurance that the transaction will be completed in part or at all,” said the filing.

    See also: FDIC set to levy big banks to pay for $15.8 billion bailout of Silicon Valley, Signature Banks

    PacWest shares are down 75% in the year to date, after being caught up in the regional-bank stock rout that followed the collapse of Silicon Valley Bank in March.

    The bank said it lost 9.5% of deposits during the week ending May 5 amid market volatility following JPMorgan’s
    JPM,
    -0.23%
    rescue of First Republic Bank.

    See: Here’s why people are still worried about regional banks and commercial real estate

    Other regional banks were also rising premarket. Western Alliance Bancorp. was up 0.4% and KeyCorp. was up 1.7%.

    The S&P 500
    SPX,
    -0.14%
    has gained 9% in the year to date.

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  • Jamie Dimon discourages use of term credit crunch on call with analysts

    Jamie Dimon discourages use of term credit crunch on call with analysts

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    “‘It’s not like a credit  crunch.’”


    — Jamie Dimon

    While it will be more expensive for banks to deploy capital this year, talk of a possible credit crunch tied to higher interest rates remains overblown, JPMorgan Chase & Co. CEO Jamie Dimon said Friday.

    Although Dimon acknowledged that more challenging lending conditions are already being seen in the real-estate sector, he said bank credit overall will continue to flow despite concerns about a credit crunch voiced by Chicago Fed President Austan Goolsbee on Friday.

    “Obviously, there’s going to be a little bit of tightening, and most of that will be around certain real-estate things,” Dimon said, according to a transcript of JPMorgan’s first-quarter earnings call with analysts. “You’ve heard it from real-estate investors already, so I just look at that as a kind of thumb on the scale. It just [means] the fast conditions will be a little bit tighter, [which] increases the odds of a recession. That’s what that is. It’s not like a credit crunch.”

    In real estate, banks have been hit both by a drop in mortgage demand due to higher interest rates as well as a looming wall of debt from office properties affected by slack demand for space. For its part, JPMorgan said Friday that its office-sector exposure is less than 10% of its portfolio and is focused in dense urban markets.

    Also read: JPMorgan Chase stock moves positive for the year after it blasts past earnings and revenue estimates

    On the call, analyst John McDonald of Autonomous Research asked, “There’s a narrative out there that the industry could see a credit crunch. Banks are going to stop lending, and even [Federal Reserve Chair] Jay Powell mentioned that as a risk.”

    Dimon responded: “Yeah, I wouldn’t use the word ‘credit crunch’ if I were you.”

    Dimon was also asked about the regulatory landscape for banks after the collapse of Silicon Valley Bank and Signature Bank in March.

    “Look, we’re hoping that everyone just takes a deep breath and looks at what happened and the breadth and depth of regulations already in place,” Dimon said. “Obviously, when something happens like this you should adjust, think about it.”

    Down the road, Dimon said, he could see potential limitations on held-to-maturity assets and perhaps more total loss-absorbing capacity for certain banks, as well as more scrutiny around interest-rate exposure.

    “It doesn’t have to be a revamp of the whole system — just recalibrating things the right way,” Dimon said. “The outcome you should want is very strong community and regional banks. And certain [drastic] actions … could actually make them weaker. So that’s all it is.”

    JPMorgan is also expecting to absorb higher capital requirements under the so-called Basel IV international banking measures, as well as an assessment to banks of the costs of the collapse of Silicon Valley Bank and Signature Bank by the Federal Deposit Insurance Corp., he said.

    Also read: JPMorgan Chase CEO Jamie Dimon says looser rules did not cause recent bank failures

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  • Fed’s Bullard doesn’t see a looming credit crunch that would push economy into a recession

    Fed’s Bullard doesn’t see a looming credit crunch that would push economy into a recession

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    In the wake of the collapse of Silicon Valley Bank, conventional wisdom has been that banks will cut lending, known as a credit crunch, that will damage the economy.

    On Thursday, St. Louis Federal Reserve President James Bullard said he was “less enamored’ with this forecast.

    “Only about 20% of lending is going through the banking system…

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  • Credit Suisse, UBS, First Republic, and More Stock Market Movers

    Credit Suisse, UBS, First Republic, and More Stock Market Movers

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    This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

    https://www.barrons.com/articles/stock-market-movers-a86267f

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  • What’s Going on With First Republic Bank?

    What’s Going on With First Republic Bank?

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    First Republic Bank shares have been hit hard over the past week following the failures of two large U.S. regional banks,

    Silicon Valley Bank and Signature Bank. On Thursday, shares of the bank and many other financial firms rallied after the biggest banks in the U.S. swooped in to rescue the San Francisco lender. Under the plan, 11 banks including JPMorgan Chase & Co. placed $30 billion in deposits at First Republic, using their own funds, confirming an earlier report by The Wall Street Journal. 

    But Friday, shares of First Republic dropped anew, sinking more than 30% and leaving analysts to wonder whether it has a future as a stand-alone bank.

    What's News

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  • SVB Financial bonds sink to 31 cents on the dollar after failure of Silicon Valley Bank

    SVB Financial bonds sink to 31 cents on the dollar after failure of Silicon Valley Bank

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    Heavy trading in SVB Financial Group’s
    SIVB,

    debt pulled its BBB-rated 10-year bonds as low as 31 cents on the dollar on Friday after subsidiary Silicon Valley Bank was closed by regulators, marking the biggest bank failure since the financial crisis.

    The Santa Clara, Calif.–based financial-services company has been reeling in recent days, with both its stock and bond prices hit hard, after it on Thursday disclosed a $1.8 billion loss from a sale of about $21 billion in securities.

    Its bond prices lost further ground Friday after the California Department of Financial Protection and Innovation closed Silicon Valley Bank, placing the Federal Deposit Insurance Corp. in control of its assets.

    Silicon Valley Bank had an estimated $209 billion in total assets and about $175.4 billion in deposits as of Dec. 31, according to the FDIC.

    SVB Financial’s 4.57% bonds due April 2023 traded as low as 31 cents on the dollar on Friday in heavy trading, according to BondCliq. Since the low, the debt traded up to 38.50 cents. A week ago it was fetching 90 cents. Prices on U.S. corporate bonds below 70 cents on the dollar are broadly considered distressed.

    Worries about distress at Silicon Valley Bank, and potential risks in the broader distress in the banking system, have weighed on shares and the debt of financial companies.

    Bonds in the financial sector were broadly under pressure Friday, including debt issued by Bank of America Corp.
    BAC,
    -0.97%    ,
    JPMorgan Chase and Co.
    JPM,
    +2.70%    ,
    Goldman Sachs Group Inc.
    GS,
    -3.69%    ,
    Morgan Stanley
    MS,
    -1.56%
    and other major banks, according to BondCliq.

    Shares of the Invesco KBW Bank ETF
    KBWB,
    -3.26%
    were down 16% on the week through midday Friday, with some investors expressing concern about potential cracks in the financial system following a year of aggressive interest-rate hikes by the Federal Reserve.

     Barclays analysts said Friday that they viewed the collapse of Silicon Valley Bank as an “isolated event, but that it still “raises risks of broader distress within the banking system” that could throw cold water on talk of a Fed interest-rate hike in March of 50 basis points vs. 25 basis points.

    “Indeed, the possibility of capital losses at other institutions cannot be completely dismissed, with rising policy rates raising banks’ funding costs, more elevated longer-term rates exerting pressure on asset valuations, and potential loan losses related to idiosyncratic credit exposures.”

    Shares of SBV Financial were halted Friday, but they are down about 54% on the year, according to FactSet. The S&P 500 index
    SPX,
    -1.11%
    was down about 1.2% Friday afternoon, while the Dow Jones Industrial Average
    DJIA,
    -0.82%
    fell 0.8% and the Nasdaq Composite
    COMP,
    -1.47%
    was 1.7% lower.

    Deep Dive: 10 banks that may face trouble in the wake of the SVB Financial Group debacle

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  • Bed Bath & Beyond to Shut Down Canadian Stores in Bankruptcy

    Bed Bath & Beyond to Shut Down Canadian Stores in Bankruptcy

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    Bed Bath & Beyond Inc.’s Canadian division will shut down its stores under court protection after the company received an unusual lifeline earlier this week to save its U.S. operations from bankruptcy.

    The troubled retailer filed its Canadian division for protection under the Companies’ Creditors Arrangement Act, Canada’s rough equivalent of chapter 11 bankruptcy. Bed Bath & Beyond has “reluctantly concluded” that even with the lifeline of its recent equity raise, there isn’t enough capital available both to restructure its U.S. business and bring the Canadian business to profitability, the company said in filings with an Ontario court.

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