ZONE CHANGE: The Los Angeles City Council has approved controversial new zoning guidelines for Sunset Boulevard and neighboring streets in the Hollywood area that will make it easier for developers to build taller and larger buildings. The revised zoning is designed to encourage higher-density residential development near subway stations and bus routes. Higher density along Sunset would be offset by limits on additional development in single-family residential areas and historic neighborhoods, especially in the Hollywood Hills. Critics, who say the new growth will spoil scenic views and increase traffic congestion, plan to sue the city for failing to conduct an adequate environmental review.
IMPASSE: Jakks Pacific Inc. said in a regulatory filing that Oaktree Capital Management LP has ended discussions about standstill and confidentiality agreements that would have enabled negotiations to commence over a potential $250 million takeover of the Malibu toymaker. In a letter to the company, Oaktree said Jakks demanded certain terms in the agreements that Oaktree considered unacceptable, but did not provide specifics. Jakks in October rejected a $20-a-share offer from the downtown L.A. private-equity firm, but agreed in April to talk with Oaktree.
CONVICTION: Timothy S. Durham, the former chief executive of West Hollywood’s National Lampoon Inc., has been found guilty of defrauding investors in an investment company he partially controlled. A federal jury convicted Durham on 10 counts of wire fraud, one count of securities fraud and one count of conspiracy. Durham was chief executive of Obsidian Enterprises Inc., an Indianapolis buyout firm. He and two partners were indicted last year on charges of defrauding 5,000 investors in a $200 million Ponzi scheme involving the sale of interest-bearing notes by the now-defunct Fair Finance Co. of Akron, Ohio. Durham resigned from National Lampoon earlier this year.
NEW NAME: Loews Hotels & Resorts has completed its purchase of the Renaissance Hotel and Spa at Hollywood & Highland Center. The 632-room facility has been rebranded Loews Hollywood Hotel. The New York hotel owner and operator did not disclose details of its purchase from Hollywood & Highland owner CIM Group, though media reports estimate the value of the deal at about $165 million. The hotel will undergo a $26 million renovation, expected to be completed by next summer. The remodel will be done in phases to minimize guest disruptions, Loews said.
FORECAST: L.A.’s economy will continue its frustratingly slow recovery for the next two years, with the local unemployment rate remaining in double digits through 2015, according to a forecast from Beacon Economics. Los Angeles County will add about 60,000 payroll jobs this year – a relatively meager growth rate of 1.5 percent – according to the forecast. Next year, the county is expected to add about 80,000 jobs for a growth rate of 2 percent. The county’s unemployment rate – now 11.4 percent – is not forecast to dip back into single digits until late 2015 or early 2016.
PROXY VOTE: Qualstar Corp. said preliminary results of a shareholder meeting last week indicate that dissident investor BKF Capital Group failed to replace the current board with its own slate of directors. BKF, of Boca Raton, Fla., controls about 19 percent of Qualstar and is the second largest shareholder. It has been engaged in a bitter proxy war with management and the board over strategic direction and corporate governance at the Simi Valley company, which specializes in data storage and power supplies.
ACQUISITION: Ryland Group Inc. has signed an agreement to acquire the operations and assets of Timberstone Homes in Charlotte and Raleigh, N.C. The acquisition gives the Westlake Village company 870 additional lots and homes for future sales, 154 homes currently sold or under construction, and 17 model homes. Most of Timberstone’s work force would be offered the opportunity to continue their employment. Existing Timberstone customers will have their customer service and warranty obligations handled by Ryland under an agreement with Timberstone.
STOCK SALE: HCP Inc. said it would sell 7.8 million shares of its common stock in a public offering. If the Long Beach real estate investment trust’s shares had sold at the June 18 closing price of $43.62 before the announcement, the offering would have raised about $340 million or up to $391 million including the underwriter’s overallotment option. HCP now has more than 419 million shares outstanding. HCP said it would use net proceeds from the offering to repay indebtedness, including about $250 million in 6.45 percent senior notes.
MANAGEMENT SHIFT: Molina Healthcare Inc. said that Craig Bass, the head of its Michigan health plan, has been named president of its struggling Texas unit. The Long Beach Medicaid managed care provider also announced Stephen Harris, formerly president of Molina Healthcare of Wisconsin, will succeed Bass as president of Molina Healthcare of Michigan. Shares of Molina Healthcare plunged earlier this month after the company withdrew its full-year earnings forecast because costs in its large Texas market were exceeding premiums. (See page 1.)
HONORED: Ernst & Young LLP honored L.A. developer Rick Caruso and eight other business executives at its annual Entrepreneur of the Year event for Greater Los Angeles. Caruso, founder and chief executive of shopping center developer Caruso Affiliated, received the Master Entrepreneur of the Year Award. Receiving Entrepreneur of the Year awards were: Jeffrey Clark, president and chief executive of Anthony International of Sylmar; David Overton, chairman and chief executive of Cheesecake Factory Inc. of Calabasas; Jon Kirchner, chairman and chief executive of DTS Inc. of Calabasas; executives Simon Bax and Bill Tillson of Encompass Digital Media Inc. of Los Angeles; Sunnie Kim, president and chief executive of Hana Financial Inc. of Los Angeles; Bob Brisco, chief executive of Internet Brands Inc. of El Segundo; and Peter Dameris, president and chief executive of On Assignment Inc. of Calabasas. The regional honors lead up to national awards in November.
