HOSTILE TAKEOVER: Activist investor Carl Icahn’s offer to buy Lions Gate Entertainment was rejected by the company’s board, setting off a ping-pong match of letters to shareholders. The board called Icahn’s offer of $6 per share “financially inadequate and coercive.” Chairman Jon Feltheimer said the proposal “stands in stark contrast to our patient, disciplined strategy of building a strong and diversified company.” Ichan’s letter responded that Feltheimer’s leadership has caused the stock to stagnate for years. Icahn’s offer to buy the Santa Monica film studio expires April 30.
INTERNET: Los Angeles Mayor Antonio Villaraigosa signed an ordinance to create a lower tax category for Internet companies. For years, Internet companies in Los Angeles filed their taxes as multi-media companies, which pay taxes of $1.01 per $1,000 in gross receipts, a rate designed to attract multimedia entertainment companies to Hollywood. But since many Internet companies don’t produce media, the city re-classified them last year as professional service firms, which pay $5 per $1,000 of gross receipts – nearly five times higher than the previous rate. The new ordinance taxes all Internet companies at the $1.01 rate.
PETROLEUM: The City of Hermosa Beach has petitioned the California Supreme Court to end a legal battle with an oil company that could mushroom into a $700 million dispute. The 11-year fight with Macpherson Oil Co. hit a turning point last month when an appeals court ruled that the City Council had discretionary power to deny a drilling permit to Macpherson if it found the project posed community health and safety risks, but that the case should be returned to a jury to decide whether this particular project posed such a risk. The court also ruled that Macpherson could sue the city for $700 million in potential lost revenue. Hermosa Beach Mayor Michael DiVirgilio said in a statement that such a huge judgment – more than 20 times the city’s annual budget – would force the government to declare bankruptcy.
BEVERAGE BUYOUT: Ginger ale maker Reed’s Inc. announced that a competitive rival bid has surfaced in its planned acquisition of Jones Soda in Seattle. The Los Angeles-based Reed’s had signed a letter of intent to buy Jones for $9.8 million. Jones, a maker of both sodas and energy drinks, would give Reed’s a broader product line. But on March 19, Jones told Reed’s it had received an unsolicited proposal that it will pursue while continuing discussions with Reed’s. The identity of the rival bidder and the terms of the proposed bid were not disclosed.
LABOR MARKET: UCLA Anderson Forecast predicted California employers will shed another 90,000 jobs this year and job growth will remain slow. The unemployment rate is expected to drop slightly from the current 12.5 percent, but still average about 12 percent for all of 2010. Personal income is forecast to grow a meager 1.3 percent in 2010. While that’s better than the negative rates of 2008 and 2009, it’s not robust enough to drive an expansion in the job base. That won’t happen until 2011, when the forecast pegs personal income growth at 3.7 percent.
HOSPITALITY: Nazarian Enterprises and SBE announced that their SLS Hotel at Beverly Hills has refinanced its $70 million mortgage, which came due in November. The new deal will extend the loan until 2013 while requiring the hotel to funnel all profits for the next three years into paying down debt. The negotiations involved seven groups of lenders, including Credit Suisse and Los Angeles-based Lowe Enterprises.
CONSTRUCTION: A JPMorgan analyst upgraded Jacobs Engineering Group in Pasadena on the prediction that it will be among the first construction companies to rebound from the sector’s current slowdown. Analyst Scott Levine changed his rating to “overweight” from “neutral” and raised his earnings forecasts for 2010 and 2011. Also, analyst Debra Coy at Janney Montgomery Scott upgraded Tetra Tech in Pasadena to “buy,” based on the engineering firm’s growing pipeline of projects, including the $285 million Seattle seawall.
PLASTICS: Cereplast, a manufacturer of biologically made plastics in El Segundo, has signed a distribution agreement to supply resins to customers in Chile and Peru. Cereplast’s products will allow the country’s manufacturers to fulfill their need for more environmentally friendly materials. The agreement is with ATSA Chile LE in Santiago, a distributor of industrial chemicals.
ACQUISITION: Electro Rent Corp. won an auction to acquire the assets of Telogy LLC, a reseller of electronic test equipment that filed for bankruptcy earlier this year. The purchase price was $26.7 million, subject to adjustment based on inventory. The company plans to move Telogy’s assets from Union City to Electro Rent headquarters in Van Nuys.
BOND ISSUE: Medical imaging clinic chain RadNet Inc. plans to sell $210 million in bonds to pay for previously announced acquisitions. In its most recent quarterly filing, Radnet disclosed three acquisitions. The principal amount of the senior notes will come due in 2018. Radnet will offer the bonds to qualified institutional buyers in a private placement.
SALE: Shenzhen New World Group, a Chinese development company, has purchased the Los Angeles Marriott Downtown Hotel, which had filed for bankruptcy last year. The hotel was sold for $63 million by Leeward Strategic Properties, which took ownership of the hotel after it was foreclosed on. The previous owner, local financier Ezri Namvar, had purchased the hotel for $109 million in 2007 and owned it until it was foreclosed on in August. Shenzhen plans to invest $12 million to $13 million for renovations and upgrades.
EARNINGS: Maguire Properties Inc. reported a loss of $299 million, compared with a loss of $96 million a year ago. Revenue dropped 4 percent to $119 million… Long Beach logistics company UTi Worldwide reported net income of $1.5 million, compared with a loss of $89.8 million a year ago. Revenue increased 11 percent to $991 million… KB Home reported a loss of $54.7 million for the first quarter compared with a loss of $58.1 million the previous year. Revenue dropped 14 percent to $264 million.
