A little relief: Not that anyone is going to notice, but oil prices slipped a couple of bucks this morning, to below $136 a barrel. The Dow is up about 80 points in early trading. (AP)
IRS going after Anschutz: The billionaire investor behind Staples Center and a bunch of downtown properties owes $143.6 million in back taxes. The dispute centers on the way Anschutz used transactions to defer paying capital gains taxes. He contends the deals technically weren't completed sales for tax purposes, and thus didn't trigger tax obligations. From the WSJ:
Mr. Anschutz -- an oil, railroad and media investor identified as the 41st-richest man in the U.S. by Forbes -- isn't the only person to use such an arrangement. Executives at companies including Starbucks Corp., Costco Wholesale Corp., Tyson Foods Inc., IAC/InterActive Corp., Cablevision Systems Corp. and Apollo Group Inc. have all used similar "variable prepaid forward contracts" to cash in shares in these companies and related entities, according to securities filings.
In transactions like the one used by Mr. Anschutz, an executive agrees to turn over his shares to an investment bank on a specific date in the future, and meanwhile loans the bank the same amount of stock. The bank gives the executive cash up front, generally equal to as much as 80% of the shares' fair market value. Investors argue they don't owe taxes until they conclude the transaction fully, by delivering the shares for good. Several tax experts disagree.
Newhall investor files for bankruptcy: LandSource Communities Development is a partnership whose main investor is the California Public Employees' Retirement System. The venture had been running low on cash and received a default notice from creditors on April 16. There’s a $135 million revolving credit line to pay expenses, so this would appear to be a financial restructuring. Its primary investment is Newhall Land and Farming, which owns 15,000 acres of land. From the WSJ:
The bankruptcy filing in federal court in Delaware means Calpers could lose much of its $970 million investment in the venture, which it made through an investment vehicle in February 2007, only months before land values plunged. At the time, the venture's assets were appraised at about $2.6 billion. Earlier this year, the value had shrunk to $1.8 billion. "It's not a surprise that LandSource has been affected by changes in the housing market," Calpers spokeswoman Pat Macht said in an interview Sunday night. "This will allow LandSource to modify its debt and continue to operate." Ms. Macht declined to comment on whether Calpers expects to recoup its investment during the venture's reorganization. "We just have to wait and see what happens."
Bill tailored for developer: MWH Development wants to construct 229 homes to replace the 63-acre golf course in Tujunga. Assemblyman Felipe Fuentes, D-Sylmar, has received campaign contributions from the head of MWH, Mark Handler. Presto, Fuentes has introduced legislation, in collaboration with MWH, that would stymie an effort by the city of L.A. to block the project. From the LAT:
The bill has outraged members of the City Council and the Los Angeles County Board of Supervisors, who have voted to oppose the legislation and have asked their Sacramento lobbyists to try to kill the measure. "I was disgusted," said Councilwoman Wendy Greuel. "We believe Sacramento should not be trying to dictate land-use policy on city matters. We also don't believe legislation should be designed to benefit one developer." Fuentes said one of his priorities as a lawmaker is to address the Los Angeles housing crisis.
Jobs takes the stage: The Apple CEO delivers his keynote later this morning at the company's annual developer conference. He's expected to announce a new, 3G version of the iPhone, among other new products. "We also expect Jobs to unleash some sales milestones," writes Dan Frommer at Silicon Alley Insider. "To some extent, his keynotes are like mini earnings calls."
L.A. slips:For what it's worth, a survey of cities by Mastercard has Los Angeles dropping to 17th from 10th. Other cities around the globe apparently picked up the pace (if you believe stuff like this). Within North America, L.A. is behind NY, Chicago and Toronto. Here's the press release.
Trouble with tomatoes: The salmonella outbreak that's being linked to raw tomatoes seems to be spreading. The culprits are red plum, red Roma or round red tomatoes. They've been tied to the 145 infections reported since mid-April (cherry and grape tomatoes appear to be all right). (Bloomberg)
AC/DC at Wal-Mart: It's another one of those exclusive arrangements that the retail giant has been experimenting with, and it comes at a time when Wal-Mart, like other merchants, are stocking fewer CDs. Similar strategies have been used with the Eagles and Journey. From the WSJ:
Such deals exemplify the kind of special treatment Wal-Mart increasingly seeks -- and receives -- from artists and record labels alike. These constituencies are willing to risk their relationships with competing retailers to keep Wal-Mart happy. Unlike the Eagles or Journey, AC/DC is under contract to a major record label, Sony BMG's Columbia Records, which brokered the pact with Wal-Mart and will also benefit from sales there. Columbia's decision to sell a major new release at only one chain has the potential to alienate retailers left out.