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Jun 30, 2016

DealBook Today's Top Headlines - June 30, 2016: Puerto Rico Relief Measure Clears Senate | Nearly All U.S. Banks Pass Fed Stress Test | Lionsgate Is Said to Be Near Deal to Buy Starz


THURSDAY, JUNE 30, 2016
TODAY'S TOP HEADLINES
TOP STORY
PUERTO RICO RELIEF MEASURE CLEARS SENATE The Senate passed and sent to the White House a relief measure to help Puerto Rico surmount its fiscal crisis, just two days before the territory planned to default on a large debt payment, Jackie Calmes reports in The New York Times. President Obama will sign the measure, which his Treasury secretary, Jacob J. Lew, negotiated and lobbied for.

The rescue package will not prevent Puerto Rico from missing the $2 billion debt payment due on on Friday, but the legislation would allow the island's government to restructure its $72 billion total debt so that it can manage payments and create a bipartisan oversight board to guide the recovery process.

The bill would also bar lawsuits by creditors for nonpayment retroactive to December - an important provision in light of the imminent missed debt payment.

Final Senate approval had been thrown into doubt in recent days because the House passed the bill last week and then left for its holiday. Any changes the Senate made would have forced the bill's return to the House, delaying action until House members returned.

Several senators did demand changes. Coal-state senators from Ohio and West Virginia wanted an unrelated amendment to protect miners' pensions and health benefits.

Senator Robert Menendez, Democrat of New Jersey, opposed much of the Puerto Rico bill, while other Democrats found fault with different provisions. Some criticized the oversight board as unrepresentative of Puerto Rican-Americans and Senator Bernie Sanders, Democrat of Vermont, compared the board to "a colonial master" for the island.

Compromises were worked out, but the bill hung in the balance on Tuesday. Mr. Lew warned that the bill's loss could lead to a "descent into chaos."

On the final vote, dissenters included both liberal and conservative senators.
NEARLY ALL U.S. BANKS PASS FED STRESS TEST All but one of the nation's largest banks earned an unconditional passing grade from federal regulators in annual stress tests, which measure their preparedness to weather a financial crisis, Nathaniel Popper and Michael Corkery report in DealBook.

Morgan Stanley was the only American-based institution not to pass unconditionally - regulators raised concerns over the company's internal controls and processes.

The Federal Reserve gave failing grades to the American subsidiaries of two European banks, Deutsche Bank and Santander, which both failed in previous years.

The passing grades will allow the big banks to pay dividends and buy back stock from shareholders.

The stress tests compel each institution to run a simulation of how it would deal with catastrophic conditions, like an abrupt rise in interest rates or unemployment, or a big crash in equity markets. Last week, the Fed said that all the big banks would be able to make it through a recession and still maintain adequate financial buffers.

A Fed official said on Wednesday that even with the concerns raised, the stress test results suggest that banks would be able to withstand an event like Britain's exit from the European Union, which has rocked bank stocks over the last week.

The stress test results announced Wednesday are no doubt a welcome relief, in particular, to Bank of America and Citigroup, which have had difficulty passing the test unconditionally in past years.

The three banks that were called out by the Fed had big enough financial buffers. The criticism focused more on how they operate internally.

The results are an unhappy hiccup for Morgan Stanley, which has been struggling to raise its profits and is in the middle of a significant cost-cutting campaign. Deutsche Bank and Santander now have to face concerns about their ability to satisfy American regulators.
ON THE AGENDA James Bullard, the chief executive of the Federal Reserve Bank of St. Louis, will speak at the annual dinner of the Society of Business Economists in London at 1:30 p.m. Yahoo's annual meeting of shareholders starts at 5 p.m.
LIONSGATE IS SAID TO BE NEAR DEAL TO BUY STARZLionsgate is near a deal that could unite the film studio behind "The Hunger Games" with Starz, the home of the "Outlander" television series,Michael J. de la Merced reports in DealBook.

A deal could be announced as soon as Thursday, although the details were still being ironed out, a person briefed on the matter said on Wednesday.

Lionsgate would pay a premium to the Starz's closing stock price on Wednesday of $28.25, which valued the channel operator at about $2.8 billion. Lionsgate closed on Wednesday with a market value of $3 billion.

Bloomberg, which earlier reported the talks, said that the deal would value Starz at more than $30 a share. But it said the negotiations had been held up by disagreements over price and voting shares, citing people with knowledge of the matter.

Starz became one of the country's top premium TV networks with hits like "Outlander" and "Power," and has been the subject of merger speculation for three years. The cable channel would give Lionsgate both an outlet for its television productions and scale as the media and telecommunications industry consolidates.
DEAL NOTES
Dr. Simon Ramo.
Simon Ramo, Who Helped Develop ICBMs in the Cold War, Dies at 103 Dr. Ramo advised presidents on science and technology, and was a postwar force in the aerospace and electronics industries.
Ronald O. Perelman last year.
Ronald Perelman Donates $75 Million for Arts Complex at World Trade Center Site The long-stalled performing arts center, which will sit on an emotionally resonant and highly visited spot in the city, will be named for Mr. Perelman.
Jerome Fisher, who helped found the Nine West shoe company.
Jerome Fisher, a Founder of Nine West, Dies at 85Mr. Fisher and Vince Camuto produced fashionable shoes at reasonable prices.
MERGERS & ACQUISITIONS »
George Pyne, the founder of Bruin Sports Capital, which announced on Thursday that it was acquiring deltatre, a specialist in helping broadcast soccer games and other sports events.
Sports Investor Buying Specialist in Broadcasts George Pyne's Bruin Sports Capital is acquiring Deltatre, which helps broadcast soccer and other sporting events.
A tractor spreading pesticides on a field in Germany. European Union competition authorities said they would examine any deal to merge Bayer and Monsanto.
A Bayer Deal for Monsanto Would Get E.U. Regulatory Scrutiny European Union competition authorities said they would examine concerns raised about the potential effect of a merger of Bayer and Monsanto.
Sandwich Chain to Hit the Auction Block Jimmy John's Franchise, the gourmet sandwich chain that explored an initial public offering last year, is now seeking to sell a major equity stake in a deal that it hopes will value it at more than $2.3 billion, Reuters reports, citing people familiar with the matter.
Carmike Said to Call Off Shareholder Vote on Purchase by AMCCarmike Cinemas plans to call off a shareholder vote on its proposed $1.1 billion sale to AMC Entertainment Holdings, Bloomberg reports, citing people with knowledge of the matter.
INVESTMENT BANKING »
Credit Suisse Plans on Raising Stake in Chinese Joint VentureCredit Suisse is planning to increase its stake in its Chinese securities joint venture to the maximum permissible 49 percent, making it the first foreign bank to take advantage of relaxed Chinese investment rules, Reuters reports, citing people with knowledge of the matter.
I.M.F. Steps Up Call for German Bank Reforms The International Monetary Fund has warned that ultra-low interest rates pose a threat to the profitability of Germany's financial sector, as it steps up its call for the country's banks and insurance groups to restructure.
Société Générale Declares Commitment to Britain Société Générale, Europe's sixth-largest bank by assets, said that Britain's departure from the European Union would bring challenges and uncertainty but London would remain one of the world's big financial hubs.
For the latest updates, go to NYTimes.com/DealBook
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HEDGE FUNDS »
GAM Buys Hedge Fund Manager The asset management firm GAM is buying the $4 billion hedge fund manager Cantab Capital, billing the deal as the "cornerstone" for a new quantitative investing unit.
I.P.O./OFFERINGS »
Sungevity, a Solar Panel Provider, to Go Public in Merger A planned merger with Easterly Acquisition, an asset management firm, would give Sungevity easier access to financing to help expand its business.
VENTURE CAPITAL »
Kleiner Perkins Raises $1.4 Billion With Two Funds The venture capital firm joins a list of peers that have recently raised more than a billion dollars, despite talk of a Silicon Valley lull.
Google Capital Ventures Into Public Companies With Care.comThe Alphabet investment unit has invested $46.35 million in Care.com, a publicly traded company that helps connect families and caregivers.
LEGAL/REGULATORY »
General Electric Wins Approval to Shed 'Too Big to Fail' Label The announcement comes after an aggressive campaign by General Electric to sell off billions of dollars worth of assets in its GE Capital division.
Shedding 'Too Big to Fail' Label Was Worth $50 Billion to G.E.Since G.E. announced its plans to offload almost all of GE Capital's assets, its stock has added about $50 billion in overall market capitalization, Rob Cox writes in Breakingviews.
An Index of Uncertainty Surges After 'Brexit'Quantifying the tremors that the British vote has spread, not just in Britain but across the Atlantic.
Google's European headquarters in central Dublin, Ireland. The trans-Atlantic data agreement allows companies to transfer digital information about people's social media posts and online search queries across the Atlantic.
Europe Is Expected to Approve E.U.-U.S. Data Transfer Pact The decision is based on renewed assurances by United States officials that Europeans' data will be sufficiently protected when it is transferred.
Corporate Fraud Demands Criminal Time Volkswagen cheated on emissions tests because the chances of getting caught were low. Let's change the calculus of corporate crime, Robert H. Tillman and Henry N. Pontell write in an op-ed for The New York Times.
A container ship tied up at a Chinese-financed port in Sri Lanka. Millions of jobs in China and across the region rely on the willingness of the United States to buy imports from China.
In Trade Stances Toward China, Clinton and Trump Both Signal a Chill The candidates, grappling with economic populism and increasing concern over China's military posture, could follow through on campaign pledges to toughen trade policy.
The gateway to a facility that houses machines built to mine new Bitcoins in Guizhou, a province in southeastern China. The country has become the biggest market for Bitcoin.
How China Took Center Stage in Bitcoin's Civil WarThrough vast server farms and canny investments, Chinese companies have effectively centralized control over a currency designed to be borderless.
From left, Lu Wei, the gatekeeper of China's internet; Xi Jinping, China's president; and Mark Zuckerberg, the chief executive of Facebook, during a meeting last year at Microsoft's main campus in Redmond, Washington.
China's Internet Czar Will Step Down From Post Given the opacity of the Chinese government, it was not clear whether the official, Lu Wei, was in trouble or in line for a promotion.
SoftBank Said to Face S.E.C. Inquiry Regulators are examining SoftBank Group over accusations about the activities of Nikesh Arora before he resigned as president last week, Bloomberg reports, citing people familiar with the matter.