US markets will be affected by ‘leap second’

By Ed Zwirn

Originally published on June 28, 2015 in the New York Post.

US markets will be affected by ‘leap second’

If it seems like summer days are lasting longer than ever, it may not be your imagination. The last day of this month will last exactly one second longer, a fact that has sent financial markets and software developers in general into a mad rush to slow down. Continue reading

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Dodd-Frank’s Next Act: Executive Pay

The SEC’s proposed disclosure rules have drawn criticism from proponents and opponents alike.

 

By Ed Zwirn (CFO Magazine July 2015)

Nearly five years after the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was signed into law, the Securities and Exchange Commission has entered the final stretch of the rulemaking required of it under the act.

The agency is drafting new provisions regarding executive compensation disclosure, and like previously implemented Dodd-Frank rules — such as those involving whistleblowers, derivatives, conflict minerals, and proprietary trading by banks — the new provisions have generated much controversy.

According to a proposal released by the SEC for comment in April, companies will be required to disclose the relationship between executive pay and performance, starting with 2016 annual schedule 14A and schedule 14C proxy and solicitation statements issued prior to shareholder meetings… Continue reading

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New York yacht sales finally set to rebound after Hurricane Sandy

New York yacht sales finally set to rebound after Hurricane Sandy

By Ed Zwirn

(Originally published on June 14, 2015 in the NY Post.)

New York’s local waterways may be clogged this boating season as local yacht sales cruise higher.

Stock portfolios and real estate values have been rising over the past few years, and sales of recreational boats of all sizes increased 7.3 percent in New York state in 2014, bucking a national trend of sinking sales, according to a National Marine Manufacturers Association report.

After years of floundering US sales as a result of the economic maelstrom that was 2007 to 2010, in which the industry saw a peak to trough decline of  60 percent decline nationwide for recreational boat sales, says Gerrick Johnson of BMO Capital Markets. Johnson adds that last year saw a rise of 8 percent in sales nationally.

A large part of the NY metro-area rebound, aside from the general economic recovery, is that local boat sellers are getting a boost as storm-ravaged property owners get around to replacing some of the 65,000 or so boats destroyed by Hurricane Sandy in 2012. Continue reading

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PE doesn’t hobble bankrupt firms: Moody’s

By Ed Zwirn

Originally published on Nov. 14, 2010 in the New York Post.

As the MGM bankruptcy makes its way through court, equity holders in the fabled film studio may be taking a hit, but investors who provided debt financing when the company was taken over in a 2005 private-equity deal are apparently sitting somewhere over the proverbial rainbow.

The studio, which has given us movie icons from Dorothy to James Bond, has been struggling under the weight of massive debt even as its sole business, the making of feature films, suffers due to declining DVD sales and a broader weak economy.

But contrary to the widespread perception that private-equity takeovers bleed their target companies dry, the evidence seems to be that these deals have weathered the storms of the past few years as well as their public counterparts.

“Private-equity firms have managed the defaults of sponsored companies to generate average firm-wide recoveries in the upper 50% range, in line with recoveries for companies without private-equity backing,” writes Moody’s Investors’ David Keisman.

Keisman, who analyzed private-equity deals from 2008 through the end of October, says that the swapping of distressed debt and the use of bank debt have been “key supports” for recoveries in defaults of PE-backed companies. “These firms have weathered the storm as well as those lacking private-equity involvement.”

This appears to be the deal in the case of MGM.

The studio, which filed for Chapter 11 protection earlier this month, has said in its public filings that it expects to emerge from bankruptcy by the end of the year.

It is also not without valuable assets, having a 4,000-title film and television library including “The Wizard of Oz” and “Gone With the Wind,” which should continue to bring in revenue over the years.

The studio is due to appear Dec. 2 in US Bankruptcy Court, Southern District of New York, where it hopes to obtain approval of its plan to restructure some $3.5 billion of debt. This debt is to be converted into equity, giving holders most, or all, of the equity in the reorganized company, according to the plan.

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