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Planning for 2009:  Major Trends in M&A 2008
The legal market’s M&A crystal ball for 2009 is unusually hazy.  However, looking at certain trends and lessons from 2008 certainly helps.  With such a momentous year just now behind us, it’s impossible to summarize it all – so we at Westlaw Business have picked out certain highlights and trends, some of them undetected and possibly more interesting.  Bad economies drive consolidation, and with government funding and active encouragement so actively behind it, one thing is for sure: M&A will be a major source of legal activity in 2009. Read more

Looking Forward to 2009: Major Trends in Capital Markets 2008
What sort of Capital Markets will we see in 2009?  Hopefully more active ones than 2008.  A nod in that direction may be the surprisingly active markets we’ve seen during the last 2 months of the year.  Though markets are not at their boom time levels, there has been real activity, “real” being a relative term, consisting of both debt and equity offerings, and even a few IPOs.  Factors driving this include market conditions, regulatory factors and a seemingly omnipresent government.  If this continues into 2009, we should be in for an interesting year.  Read more

Mind the Gap:  Risks Bridged by Contingent Value Rights
M&A is being hit from all sides by these uncertain times.  In this type of downturn, buyers look for firesale prices, while cash-hungry sellers want the greater payout (and affirmation) that a higher price conveys.  Like the hesitant heir forced to pawn his grandmother’s jewels, this puts the seller in an awkward position. It also creates difficult-to-bridge gaps with the buyer, who has little motivation to offer a higher price.  This can lead to a prolonged freeze in the markets, until one side or the other blinks, thereby slowing asset purchases and M&A in general.  To the rescue rides the prosaic yet road-tested device, the Contingent Value Right (CVR).  Read more

Significant Events Briefing: For the In the Know Lawyer 
As 2008 comes to a close, market activity continued at a level not usual for a holiday week. New M&A filings had a particularly global take and the SEC issued important guidelines and orders. For more specifics on the information affecting the business law environment, see the Related Resources. Read more

Driving to the Rescue:  GMAC Gets Fed Oversight and Funding
In the last week GMAC has become a bank holding company, recipient of Troubled Asset Relief Program (TARP) funds and new equity from its holders.
 Read more

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Accredited Investors, Attention: Madoff Shows Your Weakness
Is the market about to go deeper into its freeze, courtesy of not one, but two scandals? With supposedly sophisticated investors twice-burned by recent events, they seem to be short on legal protection, as well as confidence (and possibly cash, too).  While certain legal statuses presume them “sophisticated,” events may have exposed how little these “emperors” are clothed and how the legal status itself may be inadequate.  Both regulators and investors will react – leading one toward the risk of over-regulation and the other toward the opposite risk of complete avoidance of investments. These may seem extreme, but so are the times. What remains to be seen is whether exposed investors grow merely shy or downright phobic. Read more

Beware Activist Shareholders: Taking Over Companies
Current conditions encourage activist shareholders to get a lot more active. This is true for those who are suitors, hostile and otherwise, emboldened by our equity-weakening markets.  It’s also true for those who are already shareholders, encouraged to become suddenly more vocal by our management-battering recession.  These shareholders are doing so through several separate initiatives, with dry-sounding names like “special shareholder meetings” and “cumulative voting standards.” In fact they are anything but dry, geared to prying company control away from management. Read more

Internet at Risk: Preparing for President Obama
The Obama campaign promised to focus on many issues that matter to your deals and/or disclosures. We at Westlaw Business see it as our job to focus on these along with you.  Previously, we’ve covered issues such as auto industry regulation and credit market regulation (see Related Resources).  This is the final article in the Preparing for Obama series. Read more

Significant Events Briefing: For the In the Know Lawyer
The penultimate week of 2008 saw a few interesting events.  Notable bankruptcy proceedings, the change of heart of a CPP participant, and the termination of a deal involving Warren Buffett. For more specifics on the deals affecting the business law environment please, see Related Resources.  Read more

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Madoff Made-Off: Waiting for the U.S. Company Shoe to Drop?
With the Madoff Securities $50 billion Ponzi scheme touching so many investors, we at Westlaw Business remain shocked. Not for the reason everyone else is, though – our shock derives from the seeming insulation of U.S. financial institutions and operating businesses from all this.  Not a single U.S. bank or public company has (yet) disclosed any exposure to Madoff directly or to affiliated funds.  Did prudence suddenly grip this group, the same group with self-destructive penchants for complex securitizations and credit default swaps? Read more

Lots of Fiduciary Risk: Overleveraged Private Equity Deals Sour
“Private equity-led LBO” might seem the catchphrase of a bygone era, spoken in the cold, whispered tones used only by historians and obituary writers. However, their issues are actually hot … some might even stay steaming.  Private equity funds and their portfolio companies are in a tight squeeze, pinned between the triple pincers of conflict-ridden governance duties, overleveraged capital structures and cash-depleting recessionary conditions. In sum, they are in for a bumpy and litigation-driven ride. Read more

M&A to Drop?: Antitrust Policy and Pres. Obama
Westlaw Business’s Presidential Preparation series moves onto another high profile issue on the incoming administration’s agenda – antitrust. This is issue six of a recurring series intended to keep you up to date and informed on the new legal environment and related disclosure needs likely to unfold under President-Elect Obama. Make sure to view our earlier editions on: climate change, the auto crisis, health care, labor relations and credit market regulation. Read more

Vacating a Tax Haven: Bermuda Triangle, No More
Are Caribbean-based American companies at long last vacating their tax haven base?  Some are, but not to bring their profits back Stateside. Instead, they seem intent on moving them even further abroad, all the way to that paradigm of havens, Switzerland.  In a series of moves, several company boards have recently approved re-incorporations from Bermuda or the Cayman Islands to Switzerland.  These seem to be driven not only by year-end pressures, but the loftier issues of presidential politics. How this plays in Peoria (or other places about to be populated by those from Illinois) remains to be seen. Read more

Trendspotting: Activist Shareholders and Other Timely Disclosures
Activist Shareholders: Love Thy Enemy…or Hold Your Enemy Close
Corporate Governance: Tighter Shareholder Proposal Rules
Unwinding Private Equity: Paying Shareholders at BCE
Dour Times: Belt Tightening at U.S. Icons
Executive Compensation: Talented Leaders for Tough Times  Read more

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Loan Terms Today: Covenants, Defaults, and the Tribune's Lessons
If loan spigots at banks were opened wide today, would borrowers be ready.... or are they already drowning? With all eyes on the revival of the banking markets, the shape in which corporate borrowers find themselves seems to escape everyone's gaze. However, borrowers today, the now-bankrupt Tribune Co. not least among them, provide a cautionary tale, and lenders avert eyes at their own risk. This is ever-more important as, even in this environment, companies are still managing to arrange new loans; though savvy lenders are certainly exacting higher prices, both financial and contractual. Read more

Blank Check Preferred: A Risky Trap, Laid by TARP?
Put yourself in the shoes of Treasury: concerns of imminent collapse swirl around the global financial system, a war chest of $700 billion, and a mandate to salvage the system by handing the cash over to banks with immense urgency. How to do all of this in less time than it typically takes to get a bank loan approved? Siemens-style handovers of cash briefcases are out of the question, as is Soviet-style forced-medicine-taking. To your rescue comes the imperfect workhorse of the corporate lawyer, blank check preferred stock. However, it too has its own issues in tow making CPPs full impact still unclear. Read more

IPOs and Other Offerings: A Northern Tale
Hockey Night in Canada may seem an all-too tempting distraction from the financial tempest outside, but the spectacle off the ice is more interesting than you might think.  For some time, Canadian capital markets have sent signals of the slowing state of the Canadian financial industry.  The Bank of Canada’s recent declaration of a Canadian recession provides a bracing reminder of this. However, the markets also show surprising levels of activity; while the markets are slower, they are far from stopped. Read more

Significant Events Briefing: For the In the Know Lawyer
With only two weeks left to go in the year, you might have expected to see a decline in significant events, but apparently the law takes no holidays. Nonetheless, we wish we had some better news to give you, but it was a tough week. It came replete with defunct M&A, fraud and bankruptcy. For more specifics on the deals affecting the business law environment please, see Related Resources. Read more

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Counterparty Risk: Lost in the Fog of Bankruptcy
By the time companies end up in bankruptcy, any pretense of orderliness has dissipated and the school cafeteria free-for-all begins. Counterparty bankruptcy has always been a theoretical business risk, but today's realities have brought the free-for-all to life. Dressed up in its best legal robes, the process appears orderly, with courts trying to impose what structure they can.  However, companies are now openly worried about counterparty bankruptcy, for good reason - and the Lehman bankruptcy provides some telling lessons. Read more

Lawyers Start Your Engines: M&A in the Auto Industry
The Big 3 auto companies are in for a wild ride... and riding "shotgun" will come the assortment of companies that surrounds them. Among these are their dealerships, parts suppliers and finance companies. Look for them to enter a process that smacks of restructuring or even bankruptcy, complete with asset sales, terminations and debt restructurings. Guided by experiences of crises past, lawyers should be able to help and guide amidst the car-nage (apologies, we couldn't resist). Each of the auto-parts, dealers and finance companies will react differently... but react they must. Read more

Trendspotting: Debt Forbearance, Total Return Swaps and other Timely Disclosures
Forbearance, a sign of the Times: Simmons buys some Rest
Corporate Governance: Shareholder Proposal at Becton Dickinson & Co.
Total Return Swaps: Legg Mason shifts Risk
TARP Executive Compensation: Greene County Bancorp
Reviving Securitization?:  Subprime auto notes from AFS Sensub Read more

Global Finance, Meet your Regulators: Hedge Funds, Short Sales, and Markets
The International Financial Crisis of 2008 will remain the matter of debate for years. However, the international regulatory community is not sitting still and is now looking to get ahead of the crisis by renewing the regulatory environment. In recognition of the international nature of these transactions and the global scope of the players, global regulators are now banding together. This led to a recent conference of these regulators under the aegis of the International Organization of Securities Commissions (IOSCO), the worldwide financial market regulatory consortium. Read more

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Offerings Create Law Firm Opportunity: Capital Markets Surge
Securities markets were busier in November than they have been for some time. In fact, while securities markets are reputed to be on life support, they appear to have made a pretty robust recovery. With all of this activity, there must be busy lawyers somewhere. We at Westlaw Business set out to take a look at who’s doing the work and what’s driving the once dormant capital markets back to life. Read more

Debt Restructuring: Litigation Risk and Loan Modification
Does an old-fashioned contractual promise still count when the U.S economy rests on undoing it? While the law would normally hold contractual rights to be sacrosanct, when it comes to rescuing us all from financial mayhem, settled law becomes suddenly unsettled. The problem? Unsustainable mortgage loan terms need restructuring, but those attempting to undo these mortgages don't appear to own them. These attempts to alter someone else's contract rights call into question some rather fundamental questions of property law, potentially affecting a broad range of debt contracts, not only mortgage related.  Read more

Backdating 2: Rethinking your Options
With equity prices depressed, how do companies ensure employee motivation yet avoid the backdating scandals of years past? Equity is a key component, but a ginger touch is needed - both with shareholders and with employees who have regarded stakes in their employers as a reservoir of value. Raising employee incentives during down times is the goal, ideally achieved in ways that don’t raise the lawsuit motivations of their shareholders (or the SEC).  What remains to be seen over the course of proxy season; can companies keep everyone happy. Read more

Credit Markets Regulation: Preparing for President Obama
It's not like the financial industry needs a new president to signal the need for regulatory changes - the need couldn’t be more glaring. Many areas are likely to be touched, including regulation of the overall financial system, the banking system, capital adequacy, credit ratings and credit default swaps – to name but a few. Some of the regulation has begun already in both the housing and financial markets.  Companies appear to be getting ready for all of this new regulation and have begun to warn their investors of the potential impacts in their disclosures. Read more

Significant Events Briefing: For the In-the-Know Lawyer
Tumultuous market conditions have continued to roil markets since our last deals briefing. The following represents the most piquant and pressing of the deals and events emerging from the previous week. Further insight to each deal is provided by the links to recent disclosures and filings in Related Resources.  Read more

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Surging Securities Markets: No More Singing the Blues?
Are the securities markets singing the blues or singing a different tune? Once you let the facts as to November offering activity speak (or sing) for themselves, things sound quite different. This would be noteworthy at any time, but considered in light of the simultaneous panic over Citigroup's near-demise, and the high note seems even higher.  Read more

Private Equity Fingers in TARP's Pie: GMAC the Bank
Are the Fed and Treasury ready to hand over piles of taxpayers' hard earned cash to private equity funds? While they're at it, are they also prepared to dole money out to industrial companies? GM Acceptance Corp (GMAC, GM's once-mighty financing arm) will provide quite the test of both points, as it recently announced an application for Bank Holding Company (BHC) status and a related move for Treasury's CPP funding.  Read more

Executive Compensation: Screws are Tightening
With the Teamsters riding at the government's side, do high levels of executive compensation at financial companies stand a chance? In what may be the beginning of the Revenge of the Little Guy (thinking of "Big Labor" as representatives of the little guy), executive compensation is under shareholder scrutiny as never before. In particular, the Teamsters have taken the issue of executive compensation at Treasury-funded banks even further than has the Treasury itself, insisting on greater comp controls at one of their portfolio banks. In light of policy indications from the incoming administration and traditional "say on pay" proposals making their way toward proxy season, we at Westlaw Business expect to see even more change to executive compensation at companies of all stripes. Read more

Trendspotting: Currency Risk, Social Responsiblity and other Timely Disclosures
Currency Exposure Disclosures: Swinging Dollar is the Latest Risk
Corporate Social Responsibility: Taking a Bite Out of Apple
New Executive Hires: Riding to the Rescue
New SEC Rule: Mutual Funds, Speaking in Plain English
Shareholder Proposal: Is Patriotism a Corporate Duty  Read more

Duty to Disclose: Airing your Subprime Litigation
There's nothing like a bloodbath (financial, that is) to encourage its victims to lay blame. Massive recriminations seem set to result from losses due to current market conditions. In the virtuous circle of recrimination and disclosure, those being blamed (if the blame is steep enough) must disclose this. Litigation disclosures seem set to follow. Read more

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Offering Risks: Paying for Material Mis-Statements
Do securities offerings impose great costs from risks of material mis-statement or is this fear just mis-stated? These risks are all too real, as indicated by recent filings that point to the difficult dance conducted by offerors (and their underwriters) in the course of any securities offering. On the one hand, the purveyors of securities feel they must offer warm, fuzzy, reassuring statements to investors in the course of their offerings. However, these often run headlong into securities laws specifically designed to protect investors from mis-leading statements and as securities plaintiffs sue around these issues, this dance is shown to be a difficult one indeed. Read more

Trendspotting: Top Timely Disclosures
This is a special Tuesday edition of Trendspotting because we missed the chance to update you due to the Thanksgiving holiday. To stay on top of the latest trends, look for our regular Trendspotting column each Thursday.  Read more

Significant Events Briefing: For the In-The-Know Lawyer
Though Thanksgiving fans may have expected a quieter environment over the holiday-shortened week in the U.S., it was anything but quiet.  The markets continued their wild ride since our last events briefing, and legal and regulatory issues drove several major events over this time period. Below are some of the more relevant happenings along with disclosures and filings in our Related Resources. Read more

Preparing for President Obama: Labor Relations
Westlaw Business’s Presidential Preparation series moves onto another high profile issue on the incoming administration’s agenda – labor relations. This is issue four of a recurring series intended to keep you up to date and informed on the new legal environment and related disclosure needs likely to unfold under President-Elect Obama. Make sure to view our earlier editions on: climate change, the auto crisis, and health care. Read more

Regulation Financial Services: New Market Watchdogs
What will the U.S. financial world’s future regulator look like?  A lot like the SEC, but a brighter, shinier version of it, if the vision of Chairman Cox is carried through.  As SEC Chairman Cox prepares to leave his post, he has weighed in more than once on this fundamental question, calling for a reinvigorated financial services regulator, based largely on the current SEC model.  However, he’s also called for at least 2 innovations: consolidation of the regulators that touch the financial markets and increased legislation to fill in the cracks in existing regulatory oversight. Read more

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Activist Shareholders: Change About to Sweep Proxy Season
Shareholder relations look set to get tougher in our reborn era of hostile M&A.  Between the rock-filled waters of the economic downturn, the shark-filled waters of collapsed equity markets, and the emerging hostile M&A activity, navigating shareholder/board relations has become far more fraught.  Board-driven bylaw changes abound, particularly highlighted in a rush of disclosures in recent days.  Two things seem to be driving this - recent case decisions and SEC rule changes.  All told their impact: tightening the screws on activist shareholders and making them ‘fess up to their motives. Read more

Dilutive Equity: Should Banks take Treasury Money?
Did the big banks make a big mistake by taking CPP funds? To judge from the protestations of banks opting out of the program, you would think so. At the same time, firms continue to line up for the (almost) free money from the US Treasury. Perhaps only time will tell who is making the right decision. Read more

Keeping Equities Ticking: Big Changes to Tickers Underway
Are the equity markets about to get a bit more confusing? It depends on your point of view. In the midst of the market turmoil, change has been the buzzword and as we all know it hasn’t always proven to be a good thing. Change to ticker symbols is coming from an unexpected quarter.  Earlier this month, the SEC approved a National Market System Plan for Selection and Reservation of Securities Symbols, which could prove to be a huge change in the way ticker symbols are assigned. Are we on the verge of seeing infamous tickers like Citi's C disappear? Probably not (assuming Citi survives), but the newest SEC rule will establish what they believe will be a more simplified process for reserving, selecting and allocating tickers.
 Read more

Significant Events Briefing: For the In-the-Know Lawyer
Since our last events briefing significant headwinds from the credit markets have reappeared throughout the economy.  Markets worldwide surged and plunged (mostly plunged it seemed) as bailouts were given to some and denied to others. The only sure thing: volatility and uncertainty have returned with a vengeance. The following is a breakdown and analysis of the week's most significant events. Read more

Preparing for President Obama: Health Care Primer
Are health care issues about to rise to the top of every company's list of risk factors? A survey by Westlaw Business of the issues facing the new Obama administration might make you answer that with a strong affirmative. Issues start with those affecting companies in general (who's going to pay what and how). Perhaps less obvious, they also include a range of issues facing those who supply or specialize in the health-related areas. Read more

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Sharks in the Water: Are Poison Pills Back in Vogue?
With stock prices so cheap, can companies withstand a feared rush of hostile M&A? A gleam in the eye during the frothy, high-priced days of yesteryear, hostile M&A is back, and so are the fears of it, in even bigger ways. To counter this, companies are rushing to acquire defensive-wear against these hostile attempts, including poison pills and staggered boards, among others. Read more

PE Funds on the hook: Are Funds at Risk Due to Troubled Holdings?
Are PE funds legally on the hook for portfolio companies they once coveted, bought and even guaranteed? This issue is coming before bankruptcy and other courts more frequently in the current environment.  It's likely to get even more “air time” before this round of recessionary activity is over.  Many suspect that we're only now seeing the tip of the iceberg on PE deals gone sour. Read more

Appeasing the Bankers: How Far Will Companies Go to Protect M&A Financing?
How far will LBO targets go to appease the banks funding their deals?  Quite far, to judging from the churn we’re seeing around several recent deals. Fear of bank withdrawal from funding commitments has led to surprising steps by all parties with inevitable conflicts with shareholder interests in the process.  While long term shareholder interest seems to require doing whatever it takes to get these deals done, issues swirl around the level of shareholder sacrifice in the interim. Read more

Trendspotting: Tough Times, Proxies, and Other Top Trends
Automakers at the Brink: Disclosures Reflect Magnitude of Problems
Sign of the Times: Pepsi Announces Restructuring Initiative
Sign of the Times: KLA-Tenecor Announces Job Eliminations
Anticipating Proxy Season: Companies Revise Rules for Shareholder Proposals
Avoiding a Leadership Void: Symantec Moves Quickly to Replace CEO Read more

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Counterparty Risk, No More: Regulating Credit Default Swaps
Is stifling regulation about to hit the Credit Default Swap (CDS) market? Stifling may be in the eye of the stifled, as any amount of structure and regulation might be considered overwhelming for a market that has gotten away with none for too long. Laser focus is now being applied to the systemic dangers presented by this market, due to the counterparty risk in its very fabric. Read more

Legal Lens on the Auto Crisis: Preparing for Pres. Obama
Might GM be the next Lehman Brothers, with the massive legal and bankruptcy issues that implies? Auto industry executives are now facing a crisis that must make them almost envy the financial institutions (and there aren’t many companies that would say that). Interestingly, they are confronted with a structural crisis that’s as much regulatory as it is financial, mandating solutions on both these sides as well. Read more

Litigating Mark-to-Market: $350 Million tiff, Sumitomo-Lehman
Does Mark to Market valuation hold up under litigation? Perhaps not, says the US Bankruptcy Court for the Southern District of New York. In a bold move relating to a $350 million contract with Lehman Brothers, Sumitomo Mitsui Banking Corporation (SMBC) got its hand slapped by the court when it attempted to seize the collateral of its now-bankrupt counterparty. The court affirmed that even in today’s era of unprecedented markets, the bankruptcy automatic stay remains in effect to protect the bankrupt’s estate. Read more

Significant Events Briefing: For the In-the-Know Lawyer
Tumultuous market conditions and unprecedented events have continued to unfold since our last deals briefing. The following represents the most piquant and pressing of the deals emerging in the economy. Further insight to each deal is provided by the links to recent disclosures and filings in the Related Resources Bar. Read more

Life and Debt: Manulife Unfreezes Credit in Canada
Are Canadian credit conditions in a thaw? Fast moving credit markets had impacted Canadian financial service firms, hampering them in parallel with their U.S. counterparts. However, Canadian public and private sector officials have not remained inactive. While much of the world’s attention is focused on Washington and Wall Street, there’s been significant movement in Ottawa and on Bay Street, as well. Read more

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Saving the Big Banks: Amex, Goldman and Bank Holdco Conversions
Is the stampeding herd running toward bank holding company status escaping danger, or simply running headlong into its next set of problems? Pardon our mixing of metaphors, but otherwise stated, is being a Bank Holding Company (BHC) the cure-all it’s positioned as? Bank holding company (BHC) status does promise greater access to funding, better capitalization and tighter regulation. Read more

Trendspotting: Shareholders, Governance and Other Top Trends
Shareholder Access Changes: Host Hotels leads a Host of Companies
DIPping into Finance: Circuit City Accesses Funds
Government Funding, Redux: GE Accesses New Government Guarantees
Corporate Governance Advanced: Boeing Director Ejects
Executive Compensation: Easton Bell Exercises its Rights to New Hires Read more

Credit Crisis, Round 2: Student Finance Debacle
Is the next wave of the Credit Crisis about to roll in, around student loan finance? We wouldn't state things that strongly, but this form of lending suffers from many of the ills of the mortgage industry. Among them: predatory practices, conflict-ridden relationships and dubious marketing techniques, all topped, until recently, with a healthy dollop of securitization as a primary financing route. A mini-mortgage mess in the waiting? Read more

Shrinking the SEC?:  Departing Leaders, Disappearing Jurisdiction
Is the SEC as we know it about to disappear? There are two layers to this question. The SEC is about to go through the sort of leadership switch characteristic of a change of administration. The recently announced departure of John White (Director of Corporate Finance) and the inevitable departure of Chairman Chris Cox are emblematic. More fundamentally, though, is the SEC at the end of its glory days? Read more

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Lemonade out of Lemons: Law Firms helping TARP
With Treasury now intent on spending our way out of the financial crisis, law firms stand at the ready to help. Several prominent law firms have already signed on. Their goal: assisting the financial community out of its morass and into a better-funded future. Treasury’s program has an application deadline of Nov. 14th (for public banks) and an as-yet unannounced deadline for private banks. Read more

Litigation Risk: Impacts of Mark to Market
In an environment rife with concern over litigation, does mark-to-market accounting work? This question matters greatly to the “credit crisis,” as financial pictures based on mark-to-market standards drive much of the turmoil (as well as M&A and equity investments) currently underway. Further, complex mark-to-market accounting has oft-hidden impacts. Read more

Preparing for Pres.Obama: Your Climate Change Primer
The Obama campaign promised to focus on many issues that matter to your deals and/or disclosures. We at Westlaw Business see it as our job to focus on these along with you. Thus, we are launching a series of weekly Presidential Preparation briefings, each focused on current trends around an issue of concern. This week: Climate Change. Read more

Disclose your Eroding I.P.: Process Patents No More?
Is I.P. uncertainty ramping up, just as credit market uncertainty is abating? For the many companies with proprietary business methods, the answer may be “Yes”. If the patent community chatter is any indication, a recent decision regarding “Business Method” patents (aka Process Patents), seems set to impact a wide range of industries. This likely requires adjustments to core business strategy…and timely disclosure. Read more

Significant Events Briefing: Lawyers in the Know
Tumultuous market conditions and unprecedented events have continued to unfold since our last deals briefing. The following represents the most piquant and pressing of the deals emerging in the economy. Further insight to each deal is provided by the links to recent disclosures and filings in the Related Resources Bar. Read more

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Funding Risk: Making Bank Commitments Stick
How ironclad are bank funding commitment letters, and what may a bank do (or assert) to get out of them? These issues lay at the heart of a series of attempted “do-overs” by banks of deals they had committed to during the go-go days of early 2007. These, too, have been affected by the credit freeze, as banks in capital conservation mode look to end commitments still sitting in queue. Implications stretch far beyond private equity-led LBOs and mandate careful attention to closing conditions and contractual “outs” in whatever financings are arranged today. Read more

Out Clauses: M&A Going Defunct
Are contractual “out clauses” being used…or abused? The level of terminated M&A activity may provide some clue. There have been approximately 134 mergers withdrawn in October alone, some with merger agreements actually signed. In many cases, the deal never got that far and was terminated mid-negotiation (or mid-hostile process). The withdrawals seem due to terrible market conditions. However, with “market outs” and “credit outs” not to be found in every agreement, these conditions are not always the stated reason for the termination. Read more

Trendspotting: Post-Election, Top 5 Disclosures
With the recent election of President-Elect Barack Obama and a strengthened Democratic presence in Congress along with that, we at Westlaw Business expect to see certain trends manifest. In fact, these are not completely new. Several of them are an acceleration of trends already underway, as seen from recent disclosures. Read more

Layoffs and Retention: Downmarket Employment
How do you deal with tough employment issues during an economic downturn? Recent disclosures provide a clue. Some companies are positioning themselves for the downturn by insulating their operations, restructuring, and entering into mergers, each typically accompanied by agreements with employee retention plans and renegotiated employment agreements with key executives and officers. Read more

In case you missed it…
The November 4th edition of Westlaw Business Currents Extra covered important industry issues such as pricing risk, market standards, credit rating reform and customer bankruptcy. In case you missed any of these articles, simply click on the title below.

Pricing Risk in Contracts: Credit Default Swamps…More Central?
Market Standards for Recapitalizations?: U.S. Banks get Funded
Credit Rating Reform: Is Reliance Ending in North America?
Key Customer Bankruptcy: Vendors Pursue Lehman Brothers
Significant Deals Briefing: Lawyers In the Know

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Pricing Risk in Contracts: Credit Default Swamps…More Central?
Are credit default swaps (CDS) about to move to center stage for corporations? This issue is not a theoretical one, as use of CDS and related pricing has spread to unforeseen corners, even in seemingly “vanilla” contracts. This emerging trend has seen CDSs used both for risk pricing (e.g., interest rates) and its better-known cousin, risk mitigation (aka hedging). Its use could even spread to other contracts as the markets thaw. Read more

Market Standards for Recapitalizations?: U.S. Banks get Funded
What terms and conditions should a $130 billion recapitalization (and counting) get? As the nation’s leading financial institutions take in unprecedented financing from the U.S. Treasury, this seems a narrow question, limited to the financial service sector…but it’s not. These agreements matter to the economy overall, both in terms of those things included in the agreements and those explicitly not included. Read more

Credit Rating Reform: Is Reliance Ending in North America?
Is reliance on credit ratings due to become one of the casualties of the financial market crisis? That is a stretch. However, it’s no longer unthinkable, given the central role played by Credit Ratings Agencies during recent frothy markets. These agencies had a central role, not well publicized, in the creation and marketing of many of the most controversial instruments and entities. Read more

Key Customer Bankruptcy: Vendors Pursue Lehman Brothers
What do you do when a big customer goes bankrupt? It’s a question much on the mind of businesses these days. While they themselves may not be at risk, many a company does worry as to whether they must face bankruptcy-related problems from their customers. Lehman Brothers may serve as the archetype of bankrupt customer, but they are far from the only company whose vendors have begun to worry. Read more

Significant Deals Briefing: Lawyers In the Know
Barclays/Sovereign Investments
CPP Participants
PNC Financial Services/ National City
Embarq Corp/ Centurytel, Inc. Read more

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Westlaw Business Currents Extra is publishing this Special Report to provide insight into the recent disclosure of the Securities Purchase Agreements entered into between the United States Treasury Department and nine of the largest financial institutions.

Market Standards for Recapitalizations?: U.S. Banks get Funded
What terms and conditions should a $130 billion recapitalization (and counting) get? As the nation’s leading financial institutions take in unprecedented financing from the U.S. Treasury, this seems a narrow question, limited to the financial service sector…but it’s not. These agreements matter to the economy overall, both in terms of those things included in the agreements and those explicitly not included. Read more

In case you missed it…
The October 30th edition of Westlaw Business Currents Extra covered such hot issues as hedge funds, shareholder lawsuits, big M&A and executive compensation, as well as the crisis scorecard and the top 5 timely disclosures. In case you missed any of these articles, simply click on the title below.

Up-ending Big M&A: Shareholder Risk to Wachovia and Merrill Deals
Fraudulent Misrepresentation: Hedge Funds Beware
Self-Dealing during the Crisis: On the Fly Changes Cause Regulator Scramble
Activist Shareholders: You Have Friends in North Dakota
Trendspotting: Top 5 Timely Disclosures
October Scorecard: Credit Crisis Updates

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Up-ending Big M&A: Shareholder Risk to Wachovia and Merrill Deals
It’s often said that it isn’t wise to second-guess a decision that you’ve already made. Tell that to the shareholders of Wachovia and Merrill Lynch who may be questioning the wisdom of the planned mergers with Wells Fargo and Bank of America. Shareholder questions percolate around both transactions, with 2 common themes: (a) was the Board’s fiduciary duty fulfilled? and (b) are these deals good for shareholders in light of the government’s bailout financing plans, a subsequent event of not small consequence? Given that, in deals of this type, shareholders can always take a “belt and suspenders” approach to these questions – shareholder litigation and shareholder approval, aka sue and vote –both routes need to be considered. Read more

Fraudulent Misrepresentation: Hedge Funds Beware
Are hedge funds really unregulated or do they just think they are? The SEC certainly doesn’t think they’re above the law, especially when it comes to the fundraising (and investor retention) efforts that are the fundamental of all funds. The importance of this question has only grown. Read more

Self-Dealing during the Crisis: On the Fly Changes Cause Regulator Scramble
In the rush to unfreeze credit markets, are the Federal Reserve and Treasury Department creating the institutional and legal battles of the future? The federal regulatory agencies reacting to market turmoil, sometimes issue regulations counter to existing regulations at other agencies. Some companies, finding themselves caught at the intersection of these contradictory regulations, must seek exemptive relief. In other cases, the regulators must issue temporary regulations in rushed conditions. Read more

Activist Shareholders: You Have Friends in North Dakota
Is North Dakota the new Delaware? A particularly shareholder-friendly environment has bloomed amidst the plains of North Dakota. While Delaware takes a characteristically business-friendly approach, thus encouraging incorporations within its jurisdiction, North Dakota has gone to another extreme. The state is looking to woo shareholders (activist and otherwise) to set up or move their portfolio businesses to the shareholder-friendly environs of the Midwest. Read more

Trendspotting: Top 5 Timely Disclosures
Credit and Commodity Crises: Steel Polished or Rusted?
Executive Compensation Structure: Aligning Company Interests
Dour Times: Luxury Retailers Not Immune
Capital Purchase Program: Reviving the Banks
Commercial Paper Unfreeze: Alternative Energy gets a jolt Read more

October Scorecard: Credit Crisis Updates
   •  Tax experts speculate that PNC stands to gain billions in tax relief from their
      merger with National City due to a September tax benefit ruling by the IRS.
      (October 30)
   •  Financial data shows the US economy shrank at a rate of 0.3% during the third
      quarter. (October 30) Read more

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Credit Default Swaps and Risk: Cracking the CDS Market
Congressional hearings are now underway on Capital Hill and finger-pointing has become the sport of the week. In the midst of these games, one of the hotly debated questions is the financial market’s need for reform, particularly that of the credit default swap (CDS). This market is often described as “unregulated” and implied to be a wild west. However, was the CDS market, with its inherent counterparty risk, really as unknown and its impact as unpredictable as all the public denials might indicate? Read more

Financing Advice: Can the Fed Unfreeze Commercial Paper?
Unfreezing iced-over credit conditions has led the government to step into many corners of once-sacred private sector credit markets. As is well-known, while financial service businesses were the earliest to suffer from the credit freeze, they were soon joined by non-financial businesses as well. Perhaps less well-known is that, with those same financial companies the early beneficiaries of government largesse, other, non-financial companies couldn’t be far behind. Apparently not, as one of the newest areas of government involvement is the commercial paper (CP) market. Read more

Events of Default: Is the Bankruptcy Provision Gutted?
What are bankruptcy-related Event of Default provisions (and related remedies) worth? Not much these days, to judge from the non-protection of multiple counterparties to Lehman Brothers entities in the aftermath of the Lehman bankruptcy. Looking at the unfolding of these events, it becomes clear that a counterparty may have to do an awful lot to get the benefit of provisions that are meant to address bankruptcy-related events of default. Read more

Significant Deals Briefing: Required Reading for the In-the-Know…
Revised M&A Deal: Lehman Sale of Neuberger Berman
Revised Equity Deal: Morgan Stanley/Mitsubishi UFJ Group
Investment Deal: GE/Berkshire Hathaway
Investment Deal: Bunco Santander/Sovereign Read more

SEC-CFTC Merger?
SEC Chairman Christopher Cox recently disclosed his strong support for merging the SEC and the Commodity Futures Trading Commission (CFTC). The CFTC is an independent agency that regulates US futures and options markets. Chairman Cox declared his support for regulatory consolidation at the October 23, 2008 hearing, “The Financial Crisis and the Role of Federal Regulators” held by the Congressional Committee on Oversight and Government Reform. Read more

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Counterparty Risk: Securities Lending Transactions
Like so many other lines of business, Securities Lending should no longer be seen as the innocent money-maker it was once seen as. Thanks to the Lehman bankruptcy and asset sale to Barclays for clarifying that. As of a recent filing with the Bankruptcy courts, a set of issues now ripples through the legal world focused on counterparty risk at the heart of securities lending. Read more

Ultimate Information Rights: The Investor’s Batphone
Warren Buffett’s Berkshire Hathaway seems to have lined up the ultimate information right in his recent investments into each of GE and Goldman Sachs. In particular, obscured by the euphoria around the mere fact of his investments, is what we might call Berkshire’s “batphone provision”. Read more

Trendspotting: Top 5 Timely Disclosures
Federal investigators have recently become quite busy investigating potential malfeasance during the recent financial boomtimes…but you wouldn’t necessarily know it from company disclosures. While the investigations were widely-reported, few filers have disclosed federal investigations related to their recent and sudden collapses. Read more

October Scorecard: Credit Crisis Updates

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Material Adverse Effect: How Material Adversity causes Material Changes in M&A
A set of plagues, almost Biblical in proportion, seems to have descended all at once: Market-level shocks, persistent fears of war and terrorism, industry slowdowns, frozen credit conditions, changing financial reporting standards… to name but a few. Read more

Duty to Disclose: How to talk about Risk without Spooking investors
Disclosure decisions are the purview of a Company’s Board of Directors, assisted by their executives. These decisions are often complex exercises of judgment, as directors walk a tightrope between alerting investors to risks, without spooking them right out of their shareholdings. Read more

Operating Companies and the Credit Crisis: Navigating the Cold, Dark Waters
The effects of the Credit Crisis on operating companies continue to manifest themselves in unexpected ways. Credit problems, once thought to afflict only banks and insurers, now leech into the “real economy.” Companies have implemented various coping strategies, including renegotiating terms on existing credit facilities and drawing down pre-existing revolvers. Read more

Disclosing the Perfect Storm in Commodities: Credit and Commodity Crises in Canada
Material Change has hit natural resource companies, at least if Canadian public company disclosures are any guide. A steady stream of Press Releases, recently filed under the SEDAR electronic filing system by Canadian mining and natural resources companies, portray trouble on two fronts: contracting credit markets and slumping commodities prices. Read more

Westlaw Business Currents Extra Reader Survey
In an effort to better ascertain what type of news is most valuable to you during the course of your business day, we have compiled a very brief survey focusing on Westlaw Business Currents Extra – The legal angle of the credit crisis. The survey is less than ten questions and should take no more than five minutes to complete. Participation in this survey will give you the unique opportunity to inform the future of this publication and its content. Read more

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Legal Risk in Banking Consolidation: Is Wells Fargo a Hero?
Wells Fargo is double dipping…and in so doing is driving up its risk profile. While its takeover of Wachovia is getting all the attention, it actually concurrently released news of 2 bank acquisitions: Wachovia and a small regional Texas bank, Century Bankshares. Both merger agreements were filed on October 10th. The mind reels at how busy all these legal teams have been…The common filing date invites comparison. Read more

A Bird-in-Hand: Morgan Stanley takes Mitsubishi’s Money
Morgan Stanley clearly subscribes to the bird-in-hand school of thought. Its financing from MUFG has gotten markedly more expensive in the longer term…but at least it’s still there. This has been the source of great relief to a market that had begun to fear the worst. MS is moving forward with this more expensive MUFG financing, even though the U.S. government has announced plans to invest $10 billion in Morgan Stanley (as part of its broader banking sector recapitalization), apparently at less expensive terms. Read more

October Scorecard: Credit Crisis Updates
•  EU and US leaders agree to meet over the weekend to begin planning for a global    summit to grapple with the financial crisis. (October 16)
•  Southeast Asian governments, with the support of $10 billion from the World Bank, agreed to help rescue struggling banks in the region. (October 15)
   Read More

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Counter-Party Risk: Paying the Price for Bank Failure
Derivatives transactions are at the heart of the current credit crisis – when banks fail, their counterparties are often left holding the bag. To examine this issue more finely, we at Westlaw Business have begun monitoring litigation trends, initially those involving Lehman Brothers. Read more

The SEC’s Big New Disclosure Initiative: The Beat of a Different Drum?
Place yourself in the shoes of the SEC and Chairman Cox. If you had an opportunity to assemble a group of leading lights on re-inventing disclosure today, would your focus be how disclosure connects to: (a) systemic risk and the derivatives market, (b) the credit crisis and financial regulatory reform or… (c) extensions to the data-tagging regime known as XBRL? Read more

De-regulating Legal Opinions: Are NYSEs Rules Meant to be Broken?
In an era dominated by cries for added regulation, it’s interesting to see the venerable New York Stock Exchange swinging the regulation needle ever so slightly in the other direction. Its impact is clear: it’s proposing making things somewhat easier to issue securities on the NYSE. Read more

Canada, Not as Distressed as the US.: Financing Markets Still Open
With Canada and the U.S. so close geographically and linked economically, one would expect their credit and M&A markets to move in close correlation. Surprisingly, the evidence of that is mixed. In particular, there are still signs of life in the Canadian M&A market and even in the related market for acquisition financing. Read more

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The Devil’s Due: The Government’s Equity Cut in the Bailout
It may be coming to a theatre near you. A modern adaptation of Devil and Daniel Webster; a dynamic legal team assists a besieged financial executive who made a deal with the Government. In the opening scene, the executive moans, “who will take my troubled assets?” The Government appears and whispers “I will, but I’ll want a bit of equity.” Read more

Credit Crisis Scorecard: 7th Inning Stretch or Bottom of the First?
The unprecedented cooperation of the central banks and regulatory intervention in response to the financial crisis unfolding across global markets demonstrates just how intertwined and complex this has become. Westlaw Business will continue to provide this updated re-cap of the major market events that are unfolding. Read more

Bailout 101: From the RTC to TARP
The Emergency Economic Stabilization Act of 2008 (EESA) moved through Congress in near record time. To celebrate, the legislative branch, similar to Ferris Bueller, is taking the rest of the year off, leaving the Treasury to make the bailout work. While we wait for the Treasury to fully establish the institutions and contracts needed to spend $700 billion, a historical review of the Resolution Trust Corporation (RTC) and its activities may provide some insight regarding what to expect. Read more

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Beware Securitization: the RTC’s role in today’s troubles
The Treasury is now racing to establish the institutions, infrastructure and contractor relationships needed to effect the bailout under the Emergency Economic Stabilization Act of 2008 (EESA). As it’s doing that, what bears reminder is the long-forgotten, or perhaps never widely known, role that the Resolution Trust Corporation (RTC) played in promoting the growth and function of the mortgage securitization market. Read more

Northern Exposure? Canadian Filers Mostly Mum on Lehman Issues
Canadian public companies seem remarkably unflappable (or at least, thus far, unflapped) despite the unprecedented turmoil playing out to their south. Judging from their public disclosures in securities filings, even the calamitous events surrounding the collapse of Lehman Brothers don’t seem to have raised great concerns or needs to disclose, other than where true exposure exists. Read more

Big Equity Offerings: Down but Not Out
Talk of calamity and complete shutdowns of capital markets is rampant. However, a close look at the last two weeks shows that the U.S. equity markets are actually witnessing a significant revival. In addition to once-unimaginable M&A transactions conducted at hyper-speed, we’re actually witnessing a series of very large equity offerings. Read more

Merrill Lynch Fiduciary Duty: Was the Thundering Herd too Quiet?
It was inevitable that there would be disgruntled shareholders around a shotgun wedding of the size and speed of the Merrill Lynch – Bank of America merger. No surprise, the September announcement that Merrill Lynch would be merging with Bank of America left some Merrill shareholders claiming that the firm’s shares were grossly undervalued. Read more

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TGIF: The Late Friday Afternoon Filing Rush
The expression TGIF may have taken on new meaning in the midst of the Wall Street earthquake underway. No more is it simply an allusion to the respite of the upcoming weekend. Instead, it may reflect gratitude for the “cover” of a late Friday, when submission of a key filing has become a seemingly common occurrence. Read more

Lehman Bankruptcy and B of A: Give us our $500 Million Back…
Lehman Brothers was (and id) rife with complexity. It is sure to help set new law as the bankruptcy unfolds…and Bank of America may be doing its part to help. This is the first in an occasional series on the litigations resulting from the Credit Crisis. Read more

Will Sunshine Burn the Banks: How Much Sunshine is too Much?
Do mark-to-market accounting and U.S.-style democratic openness play nicely together? We are about to find out. The Emergency Economic Stabilization Act (EESA) passed by Congress in early October was passed in days of financial gloom, and seeks to overcome that with two elements in short supply previously: cash and sunshine. Read more

Bailout Plan has Limited Say on Pay
Moral outrage over the then-proposed bailout boiled over around issues of executive compensation. The notion of paying executives large sums while taxpayers were funding bailouts of these same risk-taking organizations was too much for some to stomach. So, with the passage of the Emergency Economic Stabilization Act (EESA) came new limits on executive compensation for those organizations benefiting from the bailout. Read more

Asset Managers, Get Ready: New Treasury Rules for the Bailout
There will be two separate groups of asset managers, one for securities and the other for mortgage whole loans. The asset managers will be considered financial agents of the U.S. and not contractors. A public notice will be posted on the Treasury website soliciting prospective financial agents and set out the asset management services being sought. Read more

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Deleveraging Main Street: New Market Standards fo