Green Mountain Coffee Roasters: Founder loses chairman role
Green Mountain Coffee Roasters stripped founder Robert Stiller of his chairman title after he broke company rules by selling shares to meet a margin call on loans secured by his stock in the company. Stiller, who served as chief executive officer until May 2007, sold $125.5 million of his Green Mountain shares on May 7 after the company’s stock fell 48 percent, prompting lenders to demand more collateral on outstanding loans. The single-cup coffee brewer is battling increased competition from Starbucks and other suppliers. Stiller told CNBC on May 8 that he didn’t break any regulations or laws and said he was “shocked and hurt” by the move.
Ally Financial: Approval for a unit’s bankruptcy
As the government seeks to recover bailout funds, the U.S. Treasury gave the go-ahead for Ally Financial, the auto lender majority-owned by taxpayers, to put its ResCap mortgage unit into bankruptcy, according to an Obama administration official, who asked for anonymity because the plans aren’t public. ResCap was one of the largest originators of subprime mortgages until record defaults led to billions in losses. Bondholders support the filing, said people with direct knowledge of the talks.
Abbott Laboratories: A side effect of off-label marketing
Abbott Laboratories agreed to pay $1.6 billion to settle federal and state claims that it promoted epilepsy medication Depakote for unauthorized, or off-label, uses. The fines include a $700 million criminal penalty and are the second-largest drug marketing settlement in U.S. history. Abbott admitted that from 1998 through 2006 it marketed the anti-seizure drug to help patients with dementia and other ailments. With the settlement behind them, Abbott executives are pushing ahead with plans to split the firm in two by yearend.
Barneys New York: Giving ownership to its creditors
To avert bankruptcy, Barneys New York is handing over management control to creditors Perry Capital and Ron Burkle’s Yucaipa in a debt-for-equity swap that reduces the luxury retailer’s loans by $540 million. Without the debt load, Barneys will be able to invest in its rebounding business, which has seen double-digit same-store sales growth. Perry is taking over majority control from Istithmar World, the Dubai-based private equity firm that bought the retailer in 2007. Istithmar and Yucaipa will have minority stakes.
Wynn Resorts: Billionaire folds on a Boston casino
Wynn Resorts dropped its bid to build a casino outside of Boston after political candidates opposing the project won a local election. The end of the $1 billion project clears the way for a rival gambling proposal from Caesars Entertainment at the Suffolk Downs horse racing track in East Boston. Massachusetts has authorized the building of three casinos. Shares of Wynn, which was going to build the project with New England Patriots owner Robert Kraft, fell 5.3 percent, to $118.51, on May 8 after the announcement.