SoftBank Promises Investment In WeWork; Saudi Arabia Attack; OxyContin Maker Files Bankruptcy

by 10 months ago

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THE HEADLINES

 

CAN’T STOP, WON’T STOP

The We Co. had itself a week (… and I mean that in the worst way possible) culminating in its selection of Nasdaq to list the company.

The office-space rental and real estate company was expected to be an IPO darling this year, but similar to the likes of Uber, Lyft, Slack, and most recently, Smile Direct Club, sh*t has hit the fan. How bad is it? We’s valuation is expected to drop from $47B closer to the $15B to $20B range.

Along with its Nasdaq listing, it officially announced through an S-1 filing with the SEC that it would calm investors’ concerns by limiting CEO Adam Neumann’s control over the future of the company. Given his history of being more sketchy than Travis Kalanick, this is probably not a bad idea.

Let’s break this down, shall we?

First and foremost, We committed to hiring an independent governance director and adding another director within a year. The preferred workspace of the next Elizabeth Holmes will also allow its board to choose Neumann’s successor, not its succession team … which included Neumann’s wife. SMH.

The new documentation also reduces the CEOs voting rights from 20 votes per share to 10, and drops to 1 vote if he becomes incapacitated or dies. Because of course Adam Neumann will be able to make our lives miserable from beyond the grave …

Can’t teach an old dog new tricks

Apparently Masa Son is the guy who goes for it in Madden on 4th and 36.

You may remember that Japan’s SoftBank has already thrown Scrooge McDuck amount’s of cash at We. And despite the litany of bad news, Masa is ride or die. SoftBank announced it would purchase up to $750M worth of shares via the public offering in hopes of buoying investor sentiment.

The bottom line …

We Company is forging ahead with its IPO despite tepid interest from investors. The company hopes that the restrictions on the CEO’s power and other governance measures will get investors back on board. Unfortunately, none of these changes address the company being unprofitable …

 

BURNING BRIDGES

Drone strikes shut down half of Saudi Arabia’s oil production on Saturday. Houthi rebels based in Yemen, who are known to be backed by Iran, took credit for the attacks.

But US and Saudi officials aren’t quite so sure. Secretary of State Mike Pompeo blamed Iran for the attacks, while US and Saudi officials are looking into the possibility of cruise missiles that originated in Iraq or Iran.

Repeat offenders

It wouldn’t be the first time Saudi oil fields have been the target of Houthi drone strikes. As recently as August, one of Saudi Arabia’s largest oil fields, Shabaya, was the target of 10 drones.

While that attack didn’t disrupt petroleum production, this one did. Saudi Arabia confirmed that it had shut down production operations amounting to a loss of more than 5.7B barrels per day, or around 5% of the world’s crude oil production.

That’s not good

Astute observation, Sherlock. However, the Saudi government says that black gold production will be back up and running at full capacity as soon as today. If for some reason that doesn’t happen, have no fear, the western world has oil reserves that it’s sitting on for moments just like these.

The bottom line …

Well, a shutdown of this scale hasn’t happened since 1990, when Iraq invaded Kuwait, so if the Saudis can’t get their sh*t together today, oil prices could rise anywhere from $5 to $10 per barrel. Increased fuel prices could also mean rising gas and heating bills as we head into the fall.

And income taken out of the honest workin’ man’s pockets could hurt the US economy, which has been bolstered by consumer spending …

 


IN OTHER NEWS

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  • The Sacklers might need a little something to take the edge off. Purdue Pharma has officially filed for bankruptcy, a move that was widely expected. If approved by a bankruptcy judge, the Sacklers would hand over control of the company to a trust controlled by states and municipalities which have brought more than 2k lawsuits against the OxyContin maker.

 

  • Now walk it out. The United Auto Workers union called for a strike at GM US factories, demanding that the Detroit car company reopen idle plants that were closed last fall and increase its wages and benefits for rank-and-file members. B-Rabbit and the boys voted yesterday morning to authorize the nationwide walkout, instructing 46k workers at 31 plants to either walk off the job or stay home, which would cost the auto-maker a lot of dough considering a plant shutdown equated to a $1.3M loss … per hour.

 

  • Trendsetters. 5 months after hinting that it might be in for a shakeup, J Crew made it official, announcing that it will spin off its Madewell Denim company into a separate public company. The number of shares to be offered or price range for the IPO have not been determined. Chinos Holdings, the parent company of J Crew, will be renamed ‘Madewell Group’ before the IPO, and use proceeds to pay down debt.

 

  • In a move that should surprise absolutely no-one, MoviePass announced Friday that it was shutting down the service for good on September 14th due to its unsuccessful efforts to recapitalize the movie subscription service. The stock, which was already trading at fractions of a penny, dropped over 80% on the day, ending at 0.0018 (buy the f*cking dip). Parent company Helios and Matheson Analytics have several options to consider, such as the sale of the entire company, selling off its assets (such as MoviePass or Moviefone), reorganizing the company, or just saying f*ck it and calling it quits altogether.

 

  • Arrowgrass Capital Partners, a hedge fund founded by former Deutsche Bank traders, plans to shut its doors after investors requested a withdrawal of $1B from its fund. Like father, like son, amirite? Arrowgrass’s assets were dwindling ahead of the announcement, having been cut in half from the $6.4B managed in 2017. This is the latest pullback in the hedge fund world, as more hedge funds have closed than started in each of the past three years, due largely to the lack of performance which does not justify their higher costs.

 

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