Today In Finance

Time to Buy

2008-06-09T09:00:00Z

Tight credit markets plus a down economy add up to a buyer's market. Economic gloom abounds these days, but there is one ray of sunshine: the mergers-and-acquisitions market. Companies have more acquisition opportunities now than a year ago, when deep-pocketed private-equity firms dominated the scene and steep valuations kept many companies on the sidelines. "For a strategic buyer, this is the best time in two years to be buying," says Nick Chini, managing principal at Bainbridge, a...(read more)

Scrushy at Home on the Ranch

2008-06-06T17:00:00Z

The former HealthSouth CEO does not want to travel to Alabama to testify in a civil lawsuit because he enjoys the comforts of his white-collar prison. For Richard Scrushy, the imprisoned former CEO of HealthSouth, the grass is greener on his side of the fence. That's because his comfortable white collar federal prison in Beaumont, Texas does not actually have a fence. So Scrushy, who is serving time for fraud and bribery, wants to stay put in his prison rather than travel to Birmingham, Alabama...(read more)

Interim CFO of Mesa Air Quits

2008-06-06T16:00:02Z

The company's previous finance chief had been fired after a court found he had destroyed documents pertaining to a lawsuit against the carrier filed by Hawaiian Airlines. The struggling Mesa Air Group announced on Friday that it has accepted the resignation of its interim CFO, William Hoke, seven months after he replaced the company's previous finance chief. Hoke, who resigned on May 23 "to pursue another career opportunity," Mesa stated in an 8-K filing, joined the carrier in March...(read more)

Philly Papers Default on Debt Payment

2008-06-06T14:00:00Z

The flagging media company is showing signs of a cash flow problem. Philadelphia Media Holdings, publisher of the Philadelphia Inquirer and the Philadelphia Daily News , defaulted on a June interest payment and is looking for new ways to repay its loans, according to a report by credit ratings agency Standard & Poor's. The default was for the company's $85 million in mezzanine debt underwritten by the Royal Bank of Scotland. The struggling newspaper group was created in 2006 when Brian...(read more)

Hello, Goodbye

2008-06-06T14:00:00Z

After only three weeks on the job, BearingPoint's new CFO calls it quits. BearingPoint Inc.'s new CFO, Eileen Kamerick, has resigned after just three weeks on the job. According to a regulatory filing by the management and technology consulting company, Kamerick stepped down on June 2 "based on her discussions with the audit committee of the company's board of directors." A company spokesperson would not provide any further information on her departure, and Kamerick could not...(read more)

Flight Cutbacks to Whack T&E Budgets

2008-06-06T13:00:00Z

Less availability not only will cause fares to rise, it also will push more business travlers to book full-fare seats. The fares themselves won't go up that much, on average, because RASM takes into account the retrenchment in seats. And leisure travel is likely to feel more of the brunt than business travel, for which demand is comparatively inelastic. But Neidl said business fares will rise as well, and companies can be expected to reduce their overall amount of travel to some degree. Typical...(read more)

A Perceptive Postmortem

2008-06-06T12:00:00Z

UBS comes clean on the causes of its whopping write-downs. Although only time will tell if it remains at the top of the subprime-loss heap, UBS takes the prize for the most forthcoming mea culpa. In April it published a 50-page document titled "Shareholder Report on UBS's Write-Downs," in which it described how failures in its corporate governance, organizational structure, risk management, and other functions contributed to its losses. "UBS raised the bar in terms of transparency...(read more)

How Bad Will It Get?

2008-06-06T11:00:00Z

The subprime-mortgage meltdown is strikingly similar to major financial crises in other countries. Will the aftermath be as costly? Is the U.S. economy in a recession? By a well-known rule of thumb — two or more consecutive quarters of negative growth — no. Gross domestic product grew an estimated 0.6 percent in the first quarter of 2008, the same pace as in the fourth quarter of 2007. Many economists forecast more growth for the rest of the year, albeit small. But it certainly feels...(read more)

Status Cuomo

2008-06-06T11:00:00Z

The rating agencies have got off lightly from regulation—so far. IF CREDIT-RATING agencies evaluated themselves in secret, they might well be upgrading their own outlooks. For much of the past year they were numbered among those most vulnerable to punishment for their role in the credit crisis, largely thanks to the generous ratings they doled out on dubious mortgage-linked securities. The agencies' profits have been hit. Both Standard & Poor's (S&P), owned by McGraw-Hill, and...(read more)

Fed Official: More Bank Losses, Writedowns Loom

2008-06-05T17:00:02Z

Companies trying to obtain credit may soon find an even more unfriendly environment. A Federal Reserve official painted a bleak picture of the outlook for U.S. banks on Wednesday, saying he expects more losses and writedowns from financial institutions for coming quarters. That, combined with recent benchmarking data on middle-market loan portfolios, suggests the lending environment could get even more unfriendly for companies trying to obtain credit. In testimony before the Senate committee on Banking...(read more)

New FEI Group to Chime in on International Standards

2008-06-05T17:00:01Z

The object is to give executives from a range of companies a voice on issues growing out of reporting convergence. Seeking to give a voice to corporate executives in the drive toward reporting convergence, Financial Executives International created a group to study related issues and make recommendations as the replacement of generally accepted accounting principles draws closer. FEI designated the new body the Corporate Roundtable on International Financial Reporting (CRIFR), announcing it at the...(read more)

Rating-agency Reforms Are Hammered Out

2008-06-05T15:00:01Z

Moody's, S&P, and Fitch announce agreement with New York Attorney General Cuomo, boosting independence and transparency. The top three credit rating agencies, as expected, signed an agreement with New York Attorney General Andrew Cuomo that reforms their business by instilling greater independence from the entities they rate — and, it is hoped, introduces greater accuracy. The agreement will change the way Moody's Investors Service, Standard & Poor's, and Fitch Ratings are...(read more)

$60B Lifeline for Ailing Mortgage Lender

2008-06-05T14:00:02Z

A loss-plagued mortgage lender is being propped up by new bank facilities and new commitments from owners GMAC and Cerberus Capital Management. Staving off a potential bankruptcy of its troubled home-mortgage lender, Residential Capital LLC, GMAC Financial Services has completed a massive, $60 billion refinancing and funding package for the company. The series of transactions to prop up ResCap include an extension of key bank facilities, a renewal of credit lines, a previously announced distressed...(read more)

Bond Insurers Backing Down

2008-06-05T14:00:01Z

Embattled MBIA and Ambac are ready to concede that their credit ratings will drop. Bond insurers MBIA and Ambac Financial Group are dropping their resistance to ratings downgrades from Moody's Investors Service, reversing their position after the companies' earlier push-back. "You can't go to somebody to raise capital if you don't know what the rules for capital raising would be,'' MBIA CEO Jay Brown told Bloomberg News. "Goal posts move, targets change.''...(read more)

PwC Rivets Attention on IFRS Tax Issues

2008-06-05T13:00:02Z

A white paper from the accountancy cautions that corporate tax executives should be brought into convergence discussions right away. PricewaterhouseCoopers cautioned in a new report that serious tax issues stemming from a shift to international financial reporting standards make it vital for corporate tax executives to "be part of the IFRS conversion process at a very early stage." Titled "IFRS: The Right Move toward Convergence," the report does indeed promise that moving to...(read more)

Emap's Ian Griffiths

2008-06-05T12:00:02Z

Ian Griffiths helped oversee the break-up of media group Emap after too many years with a stationary share price. Here, the CFO talks about delivering deals in the middle of the credit crunch. Watching Emap's share price during recent years was the stockmarket equivalent of watching paint dry. Despite investing more than £800m (€1 billion) in acquisitions since 2003 and raising a similar amount through disposals, the UK media group's share price stuck stubbornly around £8...(read more)

Getting on Boards: Worth the Effort?

2008-06-05T11:00:01Z

Yes, there are all kinds of professional benefits. But do you have the time to reap them? Although money is probably not one of them, outside board service promises CFOs rich rewards: broadened professional horizons, top-flight networking opportunities, and an enhance résumé. On the one hand, a company directorship is no longer the sinecure it once was. It requires serious effort from people whose day jobs already demand daunting amounts of time, energy, and dedication. "CFOs interested...(read more)

Capex Caution

2008-06-05T09:00:00Z

Bracing for a recession, many companies are reining in capital spending. But some say they must forge ahead. Capital spending generally goes as the economy goes — which means it's currently in the doldrums. Growth of U.S. capital expenditures (capex) has slowed from a robust 21 percent in 2006 to 13 percent in 2007 to nominal growth projected for 2008, according to business consultancy The Hackett Group. According to finance chiefs (both here and abroad) polled in Duke University/ CFO magazine's...(read more)

Clawbacks Claw their Way into Corporate Strategy

2008-06-04T18:00:02Z

More companies are adopting provisions to recoup cash from executives involved in malfeasance. Companies are catching onto the idea of clawback contract provisions — some of which are designed to punish executives for faulty financial statements — according to a new report from The Corporate Library. Clawbacks came into fashion in the wake of corporate scandals earlier this decade, and were legalized as part of the Sarbanes-Oxley Act in 2002. That law established that CEOs and CFOs should...(read more)

Major Reforms Near for Ratings Industry

2008-06-04T18:00:02Z

A settlement is reported close in New York Attorney General Cuomo's probe of the business, while SEC homes in on debt-rating conflicts as well. Everybody, it seems, wants to turn the tables on the ratings agencies. On Tuesday, questions about reforming Moody's Investors Service, Standard & Poor's, and Fitch Ratings were high on the agenda for senators questioning three Securities and Exchange Commission nominees. After a discussion about the inequity of the agencies being paid by...(read more)

Ex-Senate Banking Committee Aide Picked for PCAOB

2008-06-04T16:00:01Z

Steven Harris helped draft the legislation that created the board he'll join on June 9. Former Senate Banking Committee staffer Steven B. Harris was named to the Public Company Accounting Oversight Board. Harris had helped draft the Sarbanes-Oxley Act that created the auditing industry watchdog board in 2002. Securities and Exchange Commission chairman Christopher Cox made the announcement of Harris's selection, saying that his leadership of the Senate committee staff under former chairman...(read more)

Stress Test

2008-06-04T14:00:01Z

In the aftermath of the subprime meltdown, how are property-sector CFOs coping? "We are in the eye of the storm," says Simon Melliss, the long-serving finance chief of Hammerson, one of the UK's largest property groups. This particular storm started last summer after the US's subprime mortgage meltdown, and is battering companies like Hammerson as property values plummet and funding, not to mention investor confidence, dry up. Hammerson's share price, like those of many of its...(read more)

E&Y Sees Initial Offerings Surging in the U.S.

2008-06-04T12:00:01Z

Lower interest rates will do their job, it says, and create the environment for 20-percent domestic IPO growth. Ernst & Young is forecasting a surprising 20-percent rise in U.S. initial public offerings this year, as lower interest rates and corporate recapitalizations help offset a weak economy and energize the stock market in general. "U.S. IPO markets remain resilient in the face of subprime turmoil," the auditing firm asserts in a new comprehensive report titled "Growth during...(read more)

E&Y Sees Initial Offerings Surging in the U.S.

2008-06-04T12:00:01Z

Say What? The Battle over Executive Comp

2008-06-04T11:00:01Z

Big investors and compensation consultants, both with much to gain and lose, dig in and defend their ground over "Say on Pay." For a measure that fewer than 10 of the 17,000 or so U.S. public companies have adopted, "Say on Pay" certainly has heated up a cauldron of strong feelings among many who have high stakes in executive-compensation matters. Aside from the executives want themselves, who presumably prefer their pay higher than lower and lucrative incentives, such interested...(read more)