>>> Ackman Bets on a Pandemic Bond Wipeout—Again

Ackman Bets on a Pandemic Bond Wipeout—Again
His new bearish investment is similar to the one in March that earned him a $2.6 billion jackpot.

Bill Ackman was right before. Maybe the hedge fund impresario will be right again in his latest pessimistic bet on how the economy and the markets will handle the new explosion in coronavirus infections.

Ackman’s latest move is reminiscent of his lucrative maneuver in March. To safeguard his portfolio against the epidemic’s economic impact, his firm Pershing Square paid some $27 million for credit protection on investment-grade and high-yield indexes. The hedges, in the form of credit default swaps, netted him a $2.6 billion bonanza.

The new tactic is less ambitious than the one eight months ago, he told a Financial Times forum—he’s only laying out a little less than a third the money he wagered then. The investment is the same, though, resting on the expectation of corporate defaults and declining credit quality.

“We’re in a treacherous time generally,” he said, “and what’s fascinating is the same bet we put on eight months ago is available on the same terms as if there had never been a fire, and on the probability that the world is going to be fine.”

Long term, Ackman said he’s sanguine about the US economy’s prospects. But the next few months, which appear to be headed for yet more virus cases, is the problem that he seeks to exploit.


In a seeming paradox, he made the new bearish investment the very day that Pfizer and partner BioNTech announced positive early trials that showed a 90% effectiveness rate of their COVID-19 vaccine.

But Ackman greeted that news by saying it was “actually bearish for the next few months.” His reasoning: People will become complacent and not take safety measures such as wearing masks. Plus, assuming the Pfizer vaccine receives regulatory approval, it will be a while until it is available for much of the population.

This year, Pershing is up 44%, despite a 7% dip before Ackman’s prescient late-winter hedge, according to a company release. Part of that is his decision to deploy his winnings in stocks that have gone on to soar since the March market nadir, such as Berkshire Hathaway, Lowe’s, and Starbucks.

Business Of Fashion : Olding Is the New Blanding: Luxury Brands Look Back to Get

Business Of Fashion : Olding Is the New Blanding: Luxury Brands Look Back to Get

WSJ : Revlon Reaches Deal to Avoid Bankruptcy

Revlon Reaches Deal to Avoid Bankruptcy
Billionaire Ron Perelman’s cosmetics company succeeded in persuading enough bondholders to extend maturing debt

Revlon Inc. said it has obtained adequate support from bondholders to avert a bankruptcy filing.

The New York-based cosmetics company said on Thursday that it has determined that close to 70% of the holders of a bond nearing maturity agreed to a debt-swap deal, gaining Revlon more time to pay off its loans.

Revlon, backed by billionaire Ron Perelman’s MacAndrews & Forbes Inc. and run by his daughter Debra Perelman, has been struggling with a heavy debt load, heightened competition, and changing consumer tastes. These struggles intensified with the onset of the coronavirus pandemic, which hit Revlon’s sales of lipstick and makeup as Americans used masks and spent more time at home.

Revlon has a $343 million bond which comes due on Feb.15. However, its debt agreements contain a requirement that this bond be refinanced at least three months before maturity, on Nov. 15, or it would trigger over $1 billion of senior loans to come due immediately. Since Revlon had less than $350 million of liquidity as of last month, the company wouldn’t be able to repay that amount and would have to seek bankruptcy protection.

The bond had been trading at heavily distressed levels of roughly 20 and 30 cents on the dollar for much of the past few months, as investors expected the company to seek bankruptcy protection.

Revlon, in July, launched an offer to buy the bonds back from the holders at a steep discount, though the company would pay cash for them.

The bond exchange garnered little support at first, and Revlon ended up repeatedly extending the deadline, and changing the financial terms. Ultimately the company offered to pay bondholders either 32.5 cents on the dollar in cash, or a mixture of cash and new debt.

The company said Thursday it reached a sufficient level of support from existing bondholders. The remaining $107 million of bonds that didn’t enter into the exchange will be paid out in full, at 100 cents on the dollar.

Billionaire Carl Icahn, who like Mr. Perelman, became famous on Wall Street as a corporate raider in the 1980s, had accumulated a sizable position in the bonds. At first, Mr. Icahn resisted participating in the exchange, concerned that too many other bondholders were refusing to enter the deal. However, after Revlon got traction in getting other investors to commit, Mr. Icahn recently tendered some or all of his bonds, the people said.

Revlon, faced with the prospect of bankruptcy, in recent weeks hired the restructuring firm Alvarez & Marsal to prepare a contingency plan for a potential chapter 11 filing, according to the people familiar with the matter.

FT : BNP Paribas faces anti-corruption questions over Deutsche prime brokerage d

BNP Paribas faces anti-corruption questions over Deutsche prime brokerage deal
French watchdog queried payment made to business of ex-Goldman Sachs dealmaker

BNP Paribas has faced questions from France’s anti-corruption regulator over its use of an introducer as part of a deal to buy Deutsche Bank’s prime brokerage business last year.

The Agence française anti-corruption (AFA) queried a payment made to a business of a former Goldman Sachs dealmaker that amounted to hundreds of thousands of pounds, according to people briefed on the probe.

The payment was spotted as part of a routine audit by the AFA, details of which were first reported by Bloomberg. The UK’s Financial Conduct Authority has also been made aware of the payment but it has not yet decided whether to start a formal investigation.

BNP executives carried out their own inquiry into the payment to Barbon Advisors, an FCA-regulated business that is run by former Goldman Sachs banker Simon Lloyd, due to its ad hoc nature. But they concluded there was nothing suspicious about the relationship, according to people with knowledge of the matter.

BNP agreed to buy Deutsche Bank’s prime brokerage unit last year as the French lender set about trying to become a global player in servicing hedge funds clients. In June, BNP executives told the Financial Times about its ambitions to displace Goldman Sachs as one of the top three prime brokers globally.

When all client transfers from Deutsche Bank are completed early next year, BNP’s prime brokerage business is expected to have more than $300bn of assets, as much as $200bn of that coming from Deutsche Bank, and revenue in the hundreds of millions a year. Up to 800 staff are expected to move from Deutsche Bank to BNP as part of the deal.

Citigroup was initially the frontrunner to acquire Deutsche Bank’s prime brokerage business after the German lender’s chief executive, Christian Sewing, set about trying to leave the business from equities trading.

But after talks with Citi collapsed, Mr Lloyd tipped off BNP and acted as an introducer to Deutsche Bank. Bardon later received a one-off introduction fee from BNP.

The Paris lender set up a special committee to scrutinise the payment, as it does for all third-party service payments.

The AFA quizzed BNP about its relationship with Barbon after becoming aware of the payments through a routine audit of the bank.

BNP, Deutsche Bank and the FCA declined to comment. The AFA and Mr Lloyd did not immediately respond to requests for comment.

KPN says no comment on possible takeover interest from EQT - Reuters

KPN says no comment on possible takeover interest from EQT - Reuters
12-Nov-2020 15:40:18

AMSTERDAM, Nov 12 (Reuters) - KPN, the largest Dutch telecommunications company, on Thursday declined to comment on a Bloomberg report that it has been approached by private equity firm EQT about a possible $13 billion takeover.

Spokeswoman Victorina de Boer said the Bloomberg story was based on anonymous sources and KPN would not comment on rumours.

KPN shares rose 9% to 2.70 euros after the story was published. EQT could not immediately be reached for comment.

FT : Burberry: in the trenches

Burberry: in the trenches
The luxury retailer is reducing markdowns and banking on ‘new and younger consumers’ to pay full price

Burberry, purveyor of trench coats and pricey handbags, is taking the counterintuitive step of reducing markdowns. This is an odd response to straitened times. The UK-listed luxury retailer reported a one-third fall in revenues to £878m at constant exchange rates for the half year. Adjusted operating profit of £51m fell three-quarters year on year.

Minimising the discount racks is easier for lower-ticket stores — think ABF’s Primark — but Burberry may be on to something. The numbers hide vastly different performances. Second-quarter sales rose 10 per cent in Asia, led by double digit jumps in South Korea and China. Europe slumped 39 per cent.

Some of this is simply shopper reshoring. Chinese tourists who might have picked up their purchases in Paris or London are now doing so at home. But Burberry also continues to reduce its reliance on wholesalers, who have a nasty habit of discounting, giving it more control over pricing.

Most cheeringly, Burberry sees recovery under way. Comparable store sales fell just 6 per cent in the second quarter — after a 45 per cent slide in the first three months of the financial year — and posted growth in October.

Burberry is banking on “new and younger consumers” to pay full price. It is going all out to woo them with celebrity ambassadors from UK footballer-turned-welfare-champion Marcus Rashford to model Kendall Jenner. It has also availed itself of the myriad online channels to Chinese customers, still responsible for 40 per cent of sales. Backing a store in Shenzhen Bay, a pet project of the Chinese government, looks politically astute.

Is it enough to woo back investors as well as fashionistas? Burberry shares trade at a discount to most of its peers, on a forward price/earnings multiple of 33 times, according to S&P capital numbers. Shares have bounced back from the Covid-19 lows but remain roughly two-thirds of their January peak. Burberry is still in turnround mode. Further markdowns in the share price would make it worth stocking up.