Cupcake Shop Crumbs Shuttering All Its Stores

rumbs says it is shuttering all its stores, a week after the struggling cupcake shop operator was delisted from the Nasdaq.

The New York City-based company said all employees were notified of the closures Monday. A representative for Crumbs could not immediately say how many workers were affected or how many stores it had remaining on its last day.

"Regrettably Crumbs has been forced to cease operations and is immediately attending to the dislocation of its employees while it evaluates its limited remaining options," the company said in an emailed statement. That will include filing for Chapter 7 bankruptcy liquidation.

A press release from its website in March listed 65 locations in 12 states and Washington, D.C. The website had not been updated with notification of the closures late Monday.

Crumbs was founded in 2003 and went public in 2011, selling giant cupcakes in flavors including Cookie Dough and Girl Scouts Thin Mints. More recently, however, it had been suffering from a steep decline in sales. For the three months ending March 31, Crumbs Bake Shop Inc. reported a loss of $3.8 million, steeper than the loss of $2 million from the same period a year ago.

The company had warned in a filing with the Securities and Exchange Commission this past May that it "may be forced to curtail or cease its activities" if its operations didn't generate enough cash flow.

As of the end of last year, Crumbs listed about 165 full-time employees and about 655 part-time hourly employees working in its stores.

Source:

abcnews.go.com

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American Apparel Adopts Rights Plan to Thwart Ousted CEO

Dov Charney, former chief executive officer of American Apparel Inc. The company investigated Charney’s actions this year and found a history of misconduct, a person familiar with the matter said. Charney is contesting the firing. Photographer: Keith Bedford/Bloomberg

American Apparel Inc. (APP:US), the retailer whose shares have dropped 52 percent in the past year, adopted a one-year shareholder rights plan to keep ousted Chief Executive Officer Dov Charney from taking control of the company.

A special committee of the board made the decision after a filing to the U.S. Securities and Exchange Commission by Charney, “in which he expressed an intent to acquire control or influence over the company” and “reports of rapid accumulations of the company’s outstanding common stock,” American Apparel said in a statement today.

Charney, who already owned 27.2 percent of the troubled retailer, yesterday entered into a loan agreement with Standard General LP to help increase his stake as he contests his firing. American Apparel said last week it replaced Charney after it investigated his actions. The Los Angeles-based company found a history of misconduct that ranged from sexual harassment and retaliation to misallocation of corporate funds, a person familiar with the matter has said.

VIDEO: American Apparel CEO Fights Back Against Ousting

“This plan is an important tool to ensure that all American Apparel stockholders are treated fairly,” the company said today. “It is intended to provide the board of directors and stockholders with time to make informed judgments.”

The rights will be “attached to all shares of common stock,” and each right entitles the holder to purchase one ten-thousandth of a share of preferred stock at an exercise price of $2.75, according to the statement.

15 Percent

The rights may separate “upon the occurrence of certain events,” the company said. The plan allows investors to accumulate as much as 15 percent of common stock and has no impact on a takeover proposal that is acceptable to a majority of investors, American Apparel said.

VIDEO: He's Not Leaving: American Apparel CEO Fights Back

If a person or group already beneficially owns 15 percent or more of the common stock, the person won’t be deemed a so-called acquiring person unless an additional 1 percent of the company’s shares is purchased, American Apparel said.

Under the plan, Charney doesn’t beneficially own any of the American Apparel stock owned by Standard General “solely by reason of the letter agreement dated June 25,” the company said.

Standard General will loan Charney funds to buy at least 10 percent of outstanding shares, according to the SEC filing yesterday. The loan carries a five-year term and will use Charney’s stock as collateral.

STORY: American Apparel Has Finally Had Enough of CEO Dov Charney

“The rights plan is designed to limit the ability of any person or group, including Dov Charney, to seize control of the company without appropriately compensating all American Apparel stockholders,” the company said.

Net Losses

The retail chain, which started out selling U.S.-made T-shirts and became a byword for hip fashion, has racked up about $270 million in net losses since the beginning of 2010. The company avoided a cash crunch this year by selling stock.

Lion Capital LLP, a creditor to the chain, won’t grant a waiver request from the retailer to keep its $10 million loan from going into default and is demanding full repayment, according to two people familiar with the matter.

STORY: American Apparel Founder Dov Charney Finally Gets Fired

That decision threatens to trigger a default on a $50 million credit line with Capital One Financial Corp., under which $30 million is drawn, because of cross-default provisions in the agreements. A default also means American Apparel would lose access to $20 million available under that pact.

Capital One is holding its own talks with the company’s management and working to get Lion back on board with granting a waiver, according to one of the people.

American Apparel shares jumped 30 percent to 97 cents at the close in New York yesterday, giving the retailer a market value of about $169.3 million, and slid 7.2 percent to 90 cents in extended trading.

STORY: American Apparel: Charney's Bad Behavior Was Very, Very Expensive

To contact the reporters on this story: Gabi Thesing in London at gthesing@bloomberg.net; Ben Livesey in San Francisco at blivesey@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net Kristen Hallam, Jennifer Joan Lee

Source:

www.businessweek.com

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Pershing proposes shuffling Allergan board

Allergan's co-founder and former chairman urged the company's directors to reject a buyout offer from Valeant Pharmaceuticals International Inc. and activist investor Bill Ackman, above. (Chris Goodney / Bloomberg)

Pershing Square Capital Management, Allergan Inc.'s biggest investor, is calling for a special shareholder meeting to remove most of the drugmaker's board in an effort to push forward a proposed acquisition by Valeant Pharmaceuticals International Inc.

A deal could be signed within a week if Allergan's board decides to negotiate, Pershing Square's Chief Executive Officer Bill Ackman said Monday. Under the latest offer, Allergan shareholders would get $72 a share in cash, up from $58.30 proposed May 28 when Valeant first raised the bid, along with 0.83 of a Valeant share, the Laval, Quebec-based company said in a May 30 statement.

Ackman's hedge fund, which has a 9.7 percent stake in Botox-maker Allergan, filed a preliminary proxy with the Securities and Exchange Commission today to start the process for the shareholder meeting, and Valeant is taking steps to launch an exchange offer. The company has raised its bid twice for Irvine, California-based Allergan. The cash-and-stock portion of the bid now stands at about $54.2 billion.

If Allergan's management and board of directors choose not to sit down to negotiate the deal, "a new board, appointed by shareholders, will negotiate a transaction," Ackman said.

Pershing plans to solicit for the special meeting starting June 30, expecting shareholders to consider the proxy for the meeting as early as August 7. Allergan would be able to delay the meeting until November.

Pershing would continue to forgo the cash portion of the offer, sweetening the incentive for other shareholders to accelerate closing the deal, Ackman said. He met on May 29 with six out of 10 of Allergan's largest shareholders, who "expressed disappointment about how Allergan has managed the transaction and the proposal," Ackman said.

"We believe that speed in concluding a transaction is in the best interest of both shareholders," said Michael Pearson, Valeant chief executive officer, on the call. "We will be patient, we will get this deal done."

Allergan did not immediately comment.

Source:

www.latimes.com

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Twitter plunges as share lockup expires

Twitter’s stocks dipped early Wednesday, April 30, 2014, following its first-quarter earnings report. A banner with its logo hangs on the facade of the New York Stock Exchange in New York after the company went public in November 2013. (Mark Lennihan, AP)

 

 

 

Investors continue to sour on Twitter.
The social network’s stock plummeted 11.8% in midday trading, as the company’s lockup of shares expires Tuesday.

Lock-up periods prevent company insiders from selling stock following an initial public offering. Once the lockup expires, 500 million shares of Twitter common stock will be up for sale. The end of the lockup frees up 470 million common shares for sale, reports Reuters.
As of noon ET, Twitter shares sat at $34.35, the lowest point the stock has been since its initial public offering launched last November.
In a filing with the Securities and Exchange Commission last month, Twitter confirmed co-founders Jack Dorsey and Evan Williams and CEO Dick Costolo have no plans to sell their shares.  Williams owns the largest stake of Twitter shares at 9.4%, followed by Dorsey at 4% and Costolo at 1.4%, according to the SEC filing.

Twitter’s IPO exploded on to the scene in November, jumping well above its $26 IPO price. However, shares have slumped as investors seek stronger growth in the company’s user base. After reaching a 2014 peak of $69, Twitter shares have lost nearly half their value.
During the first quarter, Twitter topped estimates with revenue of $250 million and a break-even earnings per share. But its monthly active user base of 255 million for the quarter fell short of the 262 million forecast by Wall Street.
Contributing: Associated Press

Source:
http://americasmarkets.usatoday.com

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Bank of America negotiating multibillion-dollar settlement with Justice Department

Chuck Burton/AP - Bank of America’s multibillion settlement could top the $13 billion agreement Justice reached with JPMorgan Chase.

Bank of America’s legal battles may be nearing an end as it negotiates a multibillion-dollar settlement with the Justice Department to cover a range of probes, a deal that may surpass the $13 billion that JPMorgan Chase paid to the government last year, people familiar with the talks said Friday.

The Justice Department made an initial offer of $20 billion to resolve several investigations, including allegations that Bank of America packaged and sold troubled mortgage securities to investors. The bank rejected that offer and has yet to counter, said the people, who were not authorized to speak publicly.

If the agreement lands close to the initial offer, it would easily trump the department’s landmark deal with JPMorgan over similar allegations. The deal could also go a long way to quell public criticism over the government’s struggle to hold Wall Street accountable for sins of the financial crisis.

It is unclear whether any Bank of America executives are at risk of criminal prosecution. People familiar with the talks say they are in the early stages and expect the sides to meet a few more times before a deal is reached.

Officials at Bank of America and Justice declined to comment.

A person familiar with the talks said the initial offer included money set aside for a settlement with the Federal Housing Finance Authority, which regulates Fannie Mae and Freddie Mac. The bank reached a $9.5 billion deal with the agency in March, which includes the repurchase of soured mortgage securities sold to the mortgage-finance twins.

When Bank of America announced the deal, officials noted that it could face fines from Justice and several state attorneys general for mortgage matters. The bank also highlighted possible penalties from other members of the Obama administration’s mortgage task force — federal and state attorneys assembled in 2009 to go after crimes related to the financial crisis.

The task force launched a working group in January 2012 to investigate misconduct in the mortgage-backed-securities market. The group has filed cases against Citigroup and Credit Suisse for allegedly misleading investors about the quality of the securities they sold.

It has launched similar probes into seven other banks: Wells Fargo, Citigroup, Goldman Sachs, Morgan Stanley, Royal Bank of Scotland, UBS and Deutsche Bank. And the group was the driving force behind the landmark JPMorgan settlement.

A key figure in the JPMorgan deal, Associate Attorney General Tony West, is also taking the lead in hammering out an agreement with Bank of America, according to a person familiar with the talks. West and his team carved out billions of dollars of mortgage relief for struggling homeowners, as well as aid for investors in JPMorgan securities, a template that could be used in crafting the latest agreement.

In the case of Bank of America, much of the bank’s legal troubles are tied to its $2.5 billion purchase in 2008 of Countrywide Financial, once one of the nation’s largest home lenders. Bank officials have said the ailing lender has cost the bank $40 billion in mortgage litigation and repurchases of soured loans.

Since October, Bank of America has been fighting to have a judgment thrown out that found it liable for fraud over thousands of defective mortgages sold by Countrywide. U.S. District Judge Jed Rakoff must rule on the penalty, which could top $848.2 million.

Not all of Bank of America’s legal headaches are tied to Countrywide. This month, the bank agreed to pay nearly $800 million in penalties for deceiving millions of customers into buying costly and unneeded services when they signed up for credit cards. The Consumer Financial Protection Bureau said the bank and its telemarketers, in an aggressive push to sell credit card add-ons, glossed over the terms or enrolled unwitting customers.

Source:
www.washingtonpost.com

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Virtu IPO Poised to Make a (Multi-)Billionaire of Vinnie Viola

High-frequency trading could soon officially mint its first billionaire.

Vincent “Vinnie” Viola, the founder of Virtu Financial Inc., could have his stake valued at around $2 billion once the company sells shares to the public, according to two people familiar with the matter.

In a filing Monday, Virtu said it hoped to raise $100 million in an initial public offering, though that figure is just a placeholder that could change based on investor demand. The company will likely seek to raise between $200 million and $250 million, according to the people. At the high end of that range, Virtu would be valued at about $3 billion.

Mr. Viola owns almost 70% of the company.

Mr. Viola, a West Point graduate and owner of the Florida Panthers hockey team, is already wealthy, but the IPO would cement his status asone of the most successful figures within the high-speed trading industry.

Virtu is hoping that its stellar record – having just “one losing trading day” during a 1,238 trading-day period concluding at the end of December – will grab the interest of investors despite growing scrutiny of the high-frequency trading industry.

Virtu said in its prospectus that the U.S. Commodity Futures Trading Commission was “looking into our trading during the period from July 2011 to November 2013.”

The CFTC is examining Virtu’s “participation in certain incentive programs offered by exchanges or venues during that time period.” Virtu said it didn’t believe it violated any statute or regulatory provision.

The Securities and Exchange Commission has also said it is looking into the impact of high-frequency traders on market stability and fairness.

In addition, a French regulator, Autorité des Marchés Financiers, is examining the 2009 trading activities of a company that eventually became part of Virtu, the prospectus said.

Virtu declined to comment on the regulatory inquiries.

Virtu describes itself as an electronic market-maker and says its strategy of providing continuous quotes to buyers and sellers adds liquidity to the market. The company is “market netural,” meaning it is not dependent on the direction of the market and does not make speculative investments.

That strategy has paid off in a big way. The company earned $182.2 million in net income in 2013 on revenues of $664.5 million, an increase in profits of 108% over the year before, according to the filing.

The biggest chunk of trading income came from U.S. stocks, which accounted for 27% of trading income, followed by 23% from global commodities and 20% from global currencies, the company said.

The IPO process will also shed more light on the leadership style of Mr. Viola, who rose from a pit trader at the New York Mercantile Exchange to become chairman of the company.

Virtu’s board of directors includes former exchange heavyweights Dick Grasso, former chairman and chief executive of the New York Stock Exchange, and Jack Sandner, former chairman of the Chicago Mercantile Exchange. Retired Army Gen. John Abizaid, the former head of the U.S. Central Command, is also a member and advises the company on leadership.

An aficionado of military history, Mr. Viola has taken top executives on trips to the sites of the Battle of Little Big Horn in Montana and Pointe du Hoc, where Army rangers assaulted German positions on the coast of Normandy, France.

Mr. Viola gained attention last year after paying $240 million for control the Florida Panthers of the National Hockey League. He put his Manhattan mansion on the market for $114 million in December.

News Source: stream.wsj.com

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