When it is obvious that the goals cannot be reached, don’t adjust the goals, adjust the action steps.
- American Apparel War Escalates as Charney Boosts Stake (Bloomberg): Dov Charney, founder and former CEO of troubled retailer American Apparel, is not giving up without a fight. Following his ouster, Charney secured a loan from a hedge fund that allowed him to raise his ownership stake in the company he founded 16 years ago to 43 percent. If Charney is able to secure the support of outside shareholders with holdings of just over 7 percent of the company, he could succeed in reclaiming control of the company.
- High Yield Bond Issuance Hits Record In June (Forbes): With the central banks of developed countries continuing to pursue an ultra-low interest rate policy, high risk corporate borrowers are finding a warm reception in the debt markets. High-yield issuance in June topped $29 billion, with 60 issuers coming to market. Signs continue to point of excesses in the market, as PIK issuance increases, the share of deals intended for refinancing grows (nearly two thirds by total issuance in June), and the proportion of low-to-medium quality issuers creeps toward 50%.
- Investment banks jockey for Samsung restructuring bonanza (Reuters): Advisory firms are scrambling to secure assignments related to the looming restructuring of Samsung Group, a $400 billion network of companies. With the patriarch of the founding Lee family, Lee Kun-hee, having been hospitalized in May, and his heirs facing a potential $6 billion tax bill, it is clear to all market watchers that the time has come for the famously byzantine ownership structure of the Korean juggernaut to be streamlined.
- Quiznos Reorganization Plan Features Robust Growth (Restaurant Finance Monitor): Two trips through bankruptcy and a drop in restaurant locations from 4,636 in 2007 to under 1,200 today have not dampened the optimism of the team at Quiznos. The company is forecasting EBITDA to explode upward, from $13.1 million in 2014 to $86 million by 2019. With net debt of $202 million, such projections may have been the only hope for confirming a plan of reorganization, but starting life post-bankruptcy with 16.4x leverage and a dream is generally not a recipe for success.
- Missouri town picks solvency over flood fight as river rises (Reuters): The dilemma facing Clarksville, MO, which recently chose to avoid spending on emergency flood protections given its weak financial state, highlights once again the challenges of a growing number of municipalities in choosing between financial health and crucial constituent services.