Companies in Brief
Colony Capital: A Tug-of-War Over a White Elephant
An investor group led by Colony Capital lost control of the $2 billion Meadowlands shopping mall to creditors. Designed to include an indoor ski slope and a Ferris wheel, the New Jersey mall sits unfinished after Colony took over the project from the developer, which ran out of money. Frustrated by ongoing delays, the lenders—which include Credit Suisse (CS) and Capmark—elbowed Colony and its partners out. The banks are seeking an operator that will rebrand the complex and complete it before the 2014 Super Bowl at the New Meadowlands Sports Stadium.
AIG: Another Sale, Another Loss
American International Group (AIG) will book a $1.9 billion pretax loss from the sale of a majority stake in its consumer lending division to Fortress Investment Group (FIG). American General Finance, which the New York-based insurer had valued at $2.4 billion, has posted about $1.7 billion in operating losses since 2008 and racked up more than $17 billion in debt. AIG's move to divest the unit is part of a broader financial industry trend that has seen Wells Fargo (WFC) and Citigroup (C), among others, pare back consumer loan operations.
Netflix: Putting More Money Behind On-Demand
Netflix's (NFLX) library of on-demand movies is about to get a lot bigger as of Sept. 1. The movie-rental service has inked a five-year, $900 million deal with Viacom's (VIA) pay-television channel Epix that will give Netflix access to films from Paramount Pictures, Lionsgate (LFG), and MGM. Netflix, which built its business on sending DVDs through the mail, says 61 percent of its 15 million subscribers now use the online viewing service.
Toyota: Test Show Drivers at Fault in Many Crashes
A new report from the National Highway Traffic Safety Administration shows that Toyota (TM) drivers failed to apply the brakes in 35 of 58 crashes tied to unintended acceleration. The agency also found no evidence of electronics-related causes for the accidents in reviewing the vehicle recorders, known as black boxes. The Japanese automaker says that its tests have revealed no flaws in the electronic controls on its vehicles and that the crashes were caused by motorists who confused the accelerator with the brake pedal. Toyota is facing a shareholder lawsuit accusing the company of failing to disclose defects related to unintended acceleration. A final verdict from the NHTSA won't come until the agency finishes conducting its review.
KKR: The Buyout Firm Is Not Selling
Private equity firm KKR shelved plans to raise $500 million from a sale of its shares, citing unfavorable market conditions. The New York buyout firm founded by Henry Kravis and George Roberts in 1976 transferred its listing to the New York Stock Exchange (NYX) from Amsterdam last month. KKR reported a 29 percent drop in net income for the second quarter because of lower income from investments.
Skype: Will Investors Pay for Something That's Free?
Skype, the Luxembourg-based company that provides software that lets users make telephone and video calls over the Internet for free, filed to sell $100 million of shares in an initial public offering in the U.S. The company, whose investors include eBay (EBAY) and private equity firm Silver Lake, has lost money in four of the last five years. It had 560 million registered users as of the end of June, but only 1.4 percent are paying customers. To remedy that, Skype is developing premium services such as group video calling and pursuing corporate accounts. Separately, satellite TV service BSkyB, which is part owned by News Corp. (NWS), says Skype should not be allowed to trademark its name because it's confusingly similar to the Sky brand.