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
PUERTO RICO RELIEF MEASURE CLEARS SENATEThe 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 TESTAll 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 AGENDAJames 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.
Ronald Perelman Donates $75 Million for Arts Complex at World Trade Center SiteThe 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.
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.
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.
Sungevity, a Solar Panel Provider, to Go Public in MergerA planned merger with Easterly Acquisition, an asset management firm, would give Sungevity easier access to financing to help expand its business.
General Electric Wins Approval to Shed 'Too Big to Fail' LabelThe 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.
Europe Is Expected to Approve E.U.-U.S. Data Transfer PactThe 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 TimeVolkswagen 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.
In Trade Stances Toward China, Clinton and Trump Both Signal a ChillThe candidates, grappling with economic populism and increasing concern over China's military posture, could follow through on campaign pledges to toughen trade policy.
SoftBank Said to Face S.E.C. InquiryRegulators 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.