Business Controversial “Dividend Recapitalizations” Gaining Popularity with Private-Equity Firms by Catherine Quinlan from online.wsj.com Firms such as Leonard Green & Partners LP, Bain Capital LLC, and Carlyle Group LP are engaging in dividend recapitalization deals. A practice that was popular before the financial crisis, recapitalization deals aim to increase profits for the companies. In dividend recapitalization, companies that are owned by private-equity firms issue debt to get money to pay to private investors or shareholders in the form of a special dividend. With extremely low interest rates from the financial crisis, investors’ desires for high-yielding debt have enhanced the presence of this tactic. What can make these practices particularly perilous is the “payment in kind toggle” or PIK-toggle bonds that some of these deals entail. The PIKtoggle bond is a risky type of debt that allows companies to defer interest payments or dividends to their investors, paying the interest and dividends with either more debt or equity instead of cash. The potential increase in taxes on proceeds next year may be one reason that firms are so eager to garner the dividends now and burden themselves with debt.
Doctors: Girl shot by Taliban able to stand, communicate Weak Earnings from Big Companies
by Elisa Weiss from cbsnews.com and worldnews.nbcnews.com
15-year-old Pakistani girl who was shot in the head by members of the Taliban for advocating education for girls, is now able to stand with help and communicate. After the incident – a point blank shot that hit her left brow and traveled underneath her skin eventually landing above her left shoulde blade – Yousufzai was flown from Pakistan to Birmingham’s Queen Elizabeth Hospital in the United Kingdom. Although the shot did not pierce her skull, it did leave an infection behind in the track of the bullet. Yousufazi is currently in the process of recovery from this infection. While the attack horrified people across the country, it has also sparked hope that the Pakistani government will intensify its fight against the Tailban.
Doctors say Malala Yousufzai, the
By Taylor Haugarth from cnn.com Last Friday all three indexes fell by nearly 2%. This pessimistic view came from a large number of disappointing quarter results from high profile and generally reliable companies. Among these companies were two technology giants, Microsoft and Google. Microsoft saw that sales flattened, partly due to the shift from PC’s to tablets and smart phones. Google’s stock dropped nearly 9% after they missed their sales and profit margins. McDonald’s and their spinoff Chipotle also surprised investors with their quarterly earnings, indicating that fast food sales may be slowing down. Shares of Chipotle dropped 15% on Friday before they made some recovery. To put the index drops in perspective, last Friday was also the 25th anniversary of “Black Monday,” the largest stock plunge in history where the Dow fell by 22.6%.
Armstrong Steps Down as Livestrong Chairman, Dropped by Sponsors
that all of his Tour-de-France titles be taken away. Although Armstrong will no longer be the chairman of Livestrong, he will continue to play a visible leadership role in the cancer organization.
by Eddie Hartman from sportsillustrated.com Due to the overwhelming evidence found by the U.S. Anti-Doping Agency tying Lance Armstrong to performance enhancing druguse, the cyclist has decided to step down from his role as chairman of the cancer foundation, Livestrong. Shortly afterwards, Nike dropped its sponsorship of Armstrong stating that the company “does not condone the use of illegal performance enhancing drugs in any manner.” Anheuser-Busch also decided to sever ties with Armstrong by stating they will not renew his sponsorship contract at the end of 2012. Armstrong has been banned from professional cycling for life and the USADA has ordered
Image courtesy of thehindu.com
Published on Nov 8, 2012