March 2009
Birthing A Junkyard Dog: Negotiating High-Yield Indentures
Apparently, this week has been designated "Let's feature articles that will confuse Toolbox" week. With a little sleight of hand and by use of some of the tools discussed in this week's first download, Toolbox has determined that an indenture is simply the formal agreement between bond issuer and bondholder. And high-yield is just lots of interest. Whew, Toolbox was worried it was going to find out something negative about Grandma Tool's fake teeth. Anyway, Gerald T. Nowak (Kirkland & Ellis LLP) knows from high-yield indentures, which he notes are an "integral part of the capital structure of many private equity sponsored portfolio companies." That's the opening line of this week's second download, The Gift That Keeps on Giving: Negotiating the High Yield Indenture (great title).
Continue reading "Birthing A Junkyard Dog: Negotiating High-Yield Indentures "
Mish-Mashup Is No Hodge Podge: Virtual Reference And The Law Firm Library
The first time someone asked Toolbox about mashups, all Toolbox could think of was potatoes. Though still not completely clear on the concept, Toolbox has come a long way toward understanding in light of this week's first download, Virtual Reference as a Marketing Tool, by Andrea Specchialo (SydneyPLUS). Perhaps Toolbox is so behind the curve because the last time it had to use a full-fledged law library, the place took up an entire floor, which consisted of 99.9% books and .1% computer terminal. Nowadays, Toolbox gathers that the virtual library occupies more and more space, with the physical occupying less—that brings Toolbox to Specchialo's piece, which she presents in the context of arguing for the future of the actual law library, or the Information Center, as it is now called.
Continue reading "Mish-Mashup Is No Hodge Podge: Virtual Reference And The Law Firm Library "
Sweet Sixteen—New FMLA Regs. And Revisions Take Effect
The Family and Medical Leave Act of 1993 (FMLA) turned 16 a few weeks back, and like most teenagers, it wanted some new clothes and a makeover to guide it into its future. The FMLA, which in essence assures long-term (12 months/1250 hours) employees of companies with more than 50 workers that they won't be dumped for taking leave to attend to family illness or birth, got those new duds on January 16, as new regulations and revisions went into effect. And while the FMLA statute remains the same, there have been many technical and organizational changes that provide better administrative tools to employers, all with an eye toward making leave under the FMLA less contentious.
Like any well-intentioned but complex law, FMLA implementation has provided mountains of questions, uncertainties and downright difficulty. Much of this surrounds one of the operative terms involved in the FMLA, which is the requirement of a "serious medical condition." (Leave for birth of a child seems plain enough to the CC; it's everything else that gets a little gray.) Anyway, the CC figures that before the FMLA is full grown, it may yet require more new clothes. But first, how can you get your clients accustomed to how FMLA looks in the 2009 threads?
Continue reading "Sweet Sixteen—New FMLA Regs. And Revisions Take Effect "
Marc H. Folladori: Reg. FD becoming more web(site) friendly, but it's got a ways to go
PLI:
Can you explain the SEC's Reg. FD-related Guidance on the Use of Company
Websites issued last summer?
MARC H. FOLLADORI: During 2008, the SEC's
Advisory Committee on Improvements to Financial Reporting recommended that the
SEC consider an update to its 2000 interpretive guidance for disclosures on
corporate websites ("Use of Electronic Media," SEC Release No. 33-7856 (April
28, 2000)), addressing whether companies can meet their obligations under
Regulation FD by posting information on their corporate websites and blogs. (The
Committee recommended that: "The SEC should issue a new comprehensive
interpretive release regarding the use of corporate websites for disclosures of
corporate information, which addresses issues such as liability for information
presented in a summary format, treatment of hyperlinked information from within
or outside a company's website, treatment of non-GAAP disclosures and GAAP
reconciliations, and clarification of the public availability of information
disclosed on a reporting company's website.") In August 2008, the SEC issued
such an update: "Commission Guidance on the Use of Company Websites," SEC
Release No. 34-58288 (Aug. 1, 2008).
Long-Term Restricted Stock
Long-Term Restricted Stock: Bonus compensation not prohibited by the American Recovery and Reinvestment Act for executives of companies that accept TARP money. The shares themselves are grants by a company to an employee that may not be acted upon (e.g. sold) by the employee until after a vesting period has passed.
Continue reading "Long-Term Restricted Stock "
Masters Of The Universe No More: Bank Holding Company Act Restrictions
Depending on how this whole economic thing turns out, Toolbox wishes it could be in a history classroom 100 years or so from now to see how this period is taught. Researchers will turn up stuff that we can't fathom (and half of it will be wrong), but no doubt someone will hail The Bonfire of the Vanities, the fictional work of Thomas Wolfe, as having been a marker of the beginning of the end of the rise and fall of the investment banker. (And if it takes the historians as long to read that book as it did Toolbox, the history might not be written for 200 years.) So we still have investment banks, but the titans, Goldman Sachs and Morgan Stanley (along with American Express), have voluntarily given up Masters of the Universe status in order to retain masters of their domain status, opting toward the end of last year to be regulated under the Bank Holding Company Act (BHCA). And the moves seem to have worked out for them thus far. But what does this really mean for these entities now that their Master is the Federal Reserve?
Continue reading "Masters Of The Universe No More: Bank Holding Company Act Restrictions "
Buildings Are People, Too: Buying Distressed Real Estate
Distressed real estate, like sick-building syndrome before it, is another apparently necessary anthropomorphizing of bricks and mortar. Distressed real estate makes Toolbox think of office building, apartments and houses with mild-to-severe cases of depression seeking out therapeutic help. "If only we'd known 555 Main Street was so unhappy, but it never expressed itself" as if there were a Zoloft for commercial realty. It's not the buildings that are distressed (although if they are abandoned, they can get to look pretty shabby); rather it's the people and entities that cannot pay the variety of amounts that make up the monthly debt service. With that caveat, Toolbox is more than happy to go along with the moniker. Of course, there's an entire industry operating under the radar in good times that springs to life in tough times to take distressed realty out of its misery, often by relieving the debtors of their ownership interests. But buying such real estate isn't as simple as opening a wallet because a new buyer can become just as distressed as the original buyer, leaving a particular property as a two-time loser.
Continue reading "Buildings Are People, Too: Buying Distressed Real Estate "
If You Can't Beat 'Em, Don't Join 'Em—FCPA Compliance In High-Risk Jurisdictions
The following Warren Buffet quote is getting a lot of play as corruption in financial markets continues to be revealed: “Only when the tide goes out do you discover who’s been swimming naked.” Particularly when it comes to doing business in a variety of jurisdictions around the world, it should be assumed that everyone is swimming naked. And when that is the case, remember, it is not the swimmers' ruin that is lamentable, but that of everyone with whom they come into contact. Perhaps that is the reason the CC spends so many issues on the Foreign Corrupt Practices Act. In an economy that requires business to scour ever further from home for success, the swimming attire of the locals threatens to shame the formerly virtuous.
While we have our scoundrels stateside, their relative scarcity allows us to get to know them by name. In China, on the other hand, the years between 2002 and 2005 saw an average of 42,000 investigations of officials and 30,000 annual criminal prosecutions. And even with all that, there were 62 countries considered more corrupt—or "high risk." Not that the CC wants to single out China, but because it has become a driving economic force, the costs of that corruption become ever more important—to China and to your clients. (The cost to Chinese GDP in 2005 is estimated to be between .5% and 13.2%. Wow.) So let's assume that every country has swimmers who prefer the buff, wading around, able to drown the work of otherwise legitimate business—how do your clients float above the surface when they're swimming in such polluted waters?
Continue reading "If You Can't Beat 'Em, Don't Join 'Em—FCPA Compliance In High-Risk Jurisdictions "
Debt-Service Coverage Ratio
Debt-Service Coverage Ratio: Measurement of a business's ability to pay its debt service, equal to net
operating income divided by total debt service.
Continue reading "Debt-Service Coverage Ratio "
ROY BIV Is Going To Start Feeling Neglected Soon: Green IT And Outsourcing
Here's a St. Patrick's Day conundrum, brought to you by O'Toolbox (yeah, there are some Irish implements in the family): if you're at any of today's parades, how do you know which of the green-hued marchers are pumping Celtic pride and which are promoting a cleaner environment? Even though it's just a once a year clash, as green becomes the color of business and society, in general, you wonder if the Irish might trade in the emerald for a hue of scarlet or something. O'Toolbox only brings this up because now your clients' IT departments and outsourcing deals are going green, sometimes in tandem. There are estimates that IT departments use as much 15% of the nation's electricity, which is about the amount of electricity all of Argentina uses. (Hey, don't cry for me, O'Toolbox, but if employers would stop using so much energy blocking employees from accessing Facebook, that number might drop a point or two.) But just when you think, "There's no way around energy consumption and IT," someone gets a bright idea.
Continue reading "ROY BIV Is Going To Start Feeling Neglected Soon: Green IT And Outsourcing "
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