fortune--2020-04-01--‘I am pretty pessimistic’: Small business owners worry coronavirus relief may come too late

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The economic peril from the coronavirus is growing more stark every day, and the $2 trillion stimulus may not deliver a rescue in time for the many small businesses and families who lack the cash to stay afloat for more than a week or two.
Many businesses shut their doors either for a lack of customers or on orders from state or local governments as emergency declarations began rolling across the country in mid-March,. Yet it could be weeks more before the business loans, bigger unemployment checks and direct payments to individuals from the stimulus plan flow into the economy.
Read more: SBA small-business loans: 8 things to know about the Paycheck Protection Program
And there is no quick escape. President Donald Trump announced on Sunday that guidelines to maintain social distancing would remain in place at least until the end of April.
Small businesses account for almost half of U.S. private employment. A complete collapse of even some of those enterprises not only would dash the dreams of entrepreneurs and threaten the livelihoods of many, it risks sapping the power of an eventual economic rebound as the financial distress ripples through to landlords, vendors and lenders.
Time’s running out
Greg Jones, 36, said he and his wife, Angela, who own the Synergy Fitness gym in Amherst, New York, near Buffalo, already have had to dip into their retirement savings. He isn’t holding out much hope for the relief package.
“I am pretty pessimistic on it actually benefiting us,” Jones said. “In my opinion, it’s going to be too late.”
Even after laying off all seven of his employees, Jones figures he has at most a month left before he won’t have enough capital to restart his business, after meeting his family’s personal expenses and the business’s rent, utilities, and equipment loan payments.
Already, 50,000 retail stores have shut in just over a week across the country, putting more than 600,000 workers on furlough, according to data compiled by Bloomberg.
Read more: Everything you need to know about furloughs—and what they mean for workers during the coronavirus pandemic
Last week, the Labor Department reported a record 3.3 million people filed unemployment insurance claims in the previous week, and economists forecast that will be topped by 3.5 million more making claims when new data is released on Thursday.
Andrew Metrick, a Yale University finance professor, said quickly distributing the relief in the coronavirus aid package to get money in the hands of small businesses in time to keep them viable will be a challenge for the system.
“There’s a fair amount of money,” Metrick added. “But ultimately we have capacity problems getting the money into the hands of the small businesses fast enough, without fraud or bad actors effectively figuring out how to siphon money off.”
The White House is dispatching staff to the Small Business Administration as that agency struggles with a flood of requests for financial aid, according to people familiar with the matter. So many people tried to access one SBA loan program last week that the agency’s website failed repeatedly.
Treasury Secretary Steven Mnuchin vowed to have the $349 billion small business loan program funded by the coronavirus legislation “up and running” by the end of the week. Yet it may take longer for firms across the country to document they meet requirements and get money from authorized lenders.
Expanded unemployment benefits and direct checks to low- and middle-income families may take longer. Trump indicated the direct checks would go out by April 6, according to Senate Democratic leader Chuck Schumer. But during the last recession, it took about two months for those to go out.
Read more: Everything you need to know about stimulus checks being sent to Americans as part of the coronavirus relief bill
Almost half of U.S. small businesses don’t have enough liquid reserves to handle two weeks’ expenses, according to a 2019 JPMorgan Chase & Co. Institute study. Four in 10 Americans can’t cover a $400 financial emergency, according to the Federal Reserve.
Rob Snow, president and chief credit officer for Blue Bridge Financial, which services an $85 million portfolio of 1,900 small business loans, said the phones have been “ringing off the hook” with requests for payment deferments.
“The calls we’re getting, they’ve already laid off their staff and they have no reserves left,” Snow said. “These were often our more responsible customers.”
The SBA released a sample form and rules for applying on Tuesday,
The National Federation of Independent Business, had a record 13,000 people register for a webinar it hosted Monday on the stimulus plan and financial resources. The small-business advocacy group’s webinars typically draw 300-500 viewers, according to Elizabeth Milito, the organization’s senior executive counsel.
After the webinar ended, more than 900 emails flooded in, she said, with business owners asking: “Am I going to have anything left? Will I be evicted? Will I have to file for bankruptcy? Will I be able to reopen?”
“The emails almost make me want to cry,” Milito added. “What I’m hearing from members is fear, uncertainty and almost heartbreak.”
Even small business owners with longer lifelines find themselves up against a wall.
“Like most retailers, we pay the bills we got today with the revenue we got yesterday,” said Jerry Akers, who co-owns 27 Great Clips hair salons in Iowa and Nebraska. “It’s a very narrow window for us and we’re stronger than most small businesses.”
His revenue fell between 50-70% in the weeks leading up to the closing of all the shops about two weeks ago, he said: “We actually ate up much of our cash reserves during that lessening of the revenue cycle a couple of weeks prior to the shutdown.
“This last week we’ve been working diligently with our banker to keep every single cash reserve dollar we’ve got to take care of things we absolutely have to pay until some of these loan programs become available and we can get cash out of them,” he said. “I’m not a big government-subsidy guy by nature, but right now, that’s our lifeline.”
More coronavirus coverage from Fortune:
—USPS might have to shutter by June as stimulus package provides no funding
—Everything you need to know about the coronavirus stimulus checks
—Everything you need to know about furloughs—and what they mean for workers
—Political activists make sure Americans register to vote—from a distance
—During the coronavirus crisis, equal pay is more important than ever
—Coronavirus fight could prove fatal for addressing climate change
—PODCAST: Two health care CEOs on why coronavirus tests and vaccines are the ammunition needed to fight COVID-19
—VIDEO: World leaders and health experts on how to stop the spread of COVID-19
Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.


fortune--2020-04-01--Trump allies warn against feud with swing state governor amid pandemic and 2020 race

Coronavirus in prison : 146,000 federal inmates will be locked in their cells for 14 days to slow spread

President Donald Trump’s allies are trying to contain a politically risky election year fight with Michigan Gov. Gretchen Whitmer as he struggles to balance presidential politics with a global pandemic in one of the nation’s most important swing states.
Both sides have tried to de-escalate the feud this week, although Trump’s supporters in particular sought to downplay tensions that ratcheted up over the weekend when the Republican president unleashed a social media broadside against Whitmer, a Democrat who had been critical of the federal government’s response to the coronavirus outbreak. Trump has clashed with other Democratic governors as well, but he saved his most aggressive insults for the first-term female governor, who is considered a leading vice presidential prospect for his opponent.
“Everyone should be shedding the partisanship and coming together,” Republican National Committee Chairwoman Ronna McDaniel said in an interview when asked about Trump’s attacks, suggesting that some of his criticism had been mischaracterized.
“I am rooting for Gov. Whitmer,” said McDaniel, who lives in Michigan. “I think she’s done good things. … I just didn’t like her trying to lay every problem at the president’s feet.”
The backpedaling underscores the nature of the dispute, which comes seven months before Election Day in a state that could make or break Trump’s reelection bid. Michigan is an elite presidential battleground that has historically celebrated bipartisanship and pragmatism while rewarding candidates who rally behind key institutions in crisis. Four years ago, Trump eked out a win by about 11,000 votes out of more than 4.5 million cast in the state.
Mitt Romney, the 2012 Republican presidential nominee and McDaniel’s uncle, lost his home state of Michigan in 2012 after opposing federal efforts to rescue the automotive industry. And Trump, by unleashing a personal attack against the state’s governor in the midst of a pandemic, has sparked new fears that he, too, may be hurting himself and his party on the eve of the next election.
Michigan Rep. Paul Mitchell, a Republican, said he raised concerns about Trump’s political attack with the administration directly.
“I did relay to the administration that I didn’t think it was helpful and why play that game,” Mitchell said in an interview. “These are times when the American people look for leaders. Leaders don’t whine. Leaders don’t blame.”
He said he raised similar concerns with Whitmer’s office, suggesting that her criticisms about the federal response have not necessarily been accurate.
“This is not the time where we need more drama in this country,” Mitchell said.
While political fights are common for Trump, Whitmer’s rise in Democratic politics has been defined by her decision usually not to attack the president.
Whitmer, a 48-year-old longtime state legislator and attorney, ran for governor as a pragmatic liberal, emphasizing her bipartisan work while pledging to fix Michigan’s crumbling roads. She rarely talked about Trump before the election or after.
But as a frequent guest on national media in recent weeks, Whitmer has criticized the federal response while pleading for ventilators, personal protection equipment and test kits as Michigan has emerged as one of the hardest-hit states. Republicans were especially upset after she implied during a Friday radio interview that the Trump administration was intentionally withholding medical supplies from Michigan.
In a weekend tweet storm as the coronavirus death toll surged, Trump called her “Gretchen ‘Half’ Whitmer,” charging that she was “way over her head” and “doesn’t have a clue” about how to handle the health crisis. Two days earlier, Trump said publicly that he had instructed Vice President Mike Pence, the leader of the White House’s pandemic response, not to call “the woman in Michigan.”
Trump has since deleted the tweet. And in a press briefing on Tuesday, he said he had a productive conversation with Whitmer earlier in the day.
The governor, too, has backed away from the feud this week as the state grapples with the escalating crisis. Michigan reported more than 7,600 cases of coronavirus and 259 deaths as of Tuesday.
In a statement, Whitmer declared that her “No. 1 priority is protecting Michigan families from the spread of COVID-19.”
“I don’t care about partisan fights or getting nicknames from the president,” she said.
Yet Trump’s initial fiery response — and the scramble to contain it — is nothing if not consistent. The former New York real estate magnate has showed he cannot help but respond with force when criticized. As first lady Melania Trump noted almost exactly four years ago, “When you attack him he will punch back 10 times harder.”
In this case, however, allies quietly note that he did not consider the likely political ramifications in a state he badly needs to win in November.
“Anyone with half a brain can see that attacking an incredibly popular governor who’s showing real leadership during a crisis is not a net plus,” said John Anzalone, whose firm handles polling for Whitmer and former Vice President Joe Biden’s presidential campaign.
Biden has stood up for Whitmer repeatedly in recent days. On Tuesday evening, Biden’s senior adviser Anita Dunn reinforced Biden’s support for the governor, who she said “is fighting hard for her state and setting an example for leaders across the nation.”
“Joe Biden prays that Donald Trump can find the strength to live up to her example,” Dunn said.
Meanwhile, it was difficult to find a Michigan Republican willing to defend Trump’s behavior.
A spokeswoman for Republican state Senate Majority Leader Mike Shirkey had this to say when asked about Trump’s declaration that Pence should not call Whitmer: “The Senate majority leader believes everyone is coping with an unusual amount of stress during this time.”
The clash was particularly sensitive because of the evolving nature of gender politics in the Trump era. Suburban women, including many Republicans, have increasingly fled Trump’s GOP, enabling major Democratic victories across the country in 2018 and 2019.
His decision to single out Whitmer came the same week he attacked another high-profile Michigan woman, General Motors CEO Mary Barra, whom he jabbed for not working fast enough to help the government produce ventilators.
“Always a mess with Mary B,” Trump tweeted.
Trump’s team hopes to repair the relationship with suburban women before Election Day, at least somewhat, in a state that matters more than most. Democrats will not make it easy.
“It’s sad but not shocking that President Trump has attacked Gov. Whitmer for doing her job. He clearly has a problem with strong, competent women,” said Stephanie Schriock, president of the group EMILY’S List, which helps elect women who support abortion rights.
Meanwhile, Republican Bill Schuette, whom Whitmer defeated in 2018, praised Trump’s leadership managing the pandemic but also said “we need to lay down the politics” in response to questions about the president’s divisive comments and her performance during the crisis.
“This is not a time for partisanship,” Schuette said. “This is a time of working together in an open, honest fashion. That’s what people expect and deserve, particularly in a time of crisis.”
More must-read politics coverage from Fortune:
—Coronavirus could put 47 million people out of work, says the Fed
—USPS warns might have to shutter because stimulus package provides no funding
—Political activists make sure Americans register to vote—from a distance
—Why cruise companies don’t qualify for coronavirus stimulus
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: U.S. tax deadline moved from April 15 to July 15
Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.


fortune--2020-04-01--Safari browser users report trouble filling out 2020 Census

Some people hoping to fill out the 2020 Census using Apple’s Safari browser have been having a hard time this year.
An apparent bug in the system is resulting in some Safari users being sent to the beginning of the questionnaire and incapable of submitting their replies. Users have been reporting the issue for days, and it was still active as of Wednesday morning.
The Census Bureau says it is aware of the glitch and recommends anyone who encounters it use a different browser. Chrome users, for example, have not experienced any issues with the form.
“To protect the integrity of the 2020 Census, the Census Bureau is using industry leading artificial intelligence services to protect responses. We are continuously monitoring and refining these security measures in order to enable all legitimate responses while maintaining security,” the Census Bureau said in a March 20 statement.
Officials also reminded users who prefer not to use a different browser that responses can also be made via mail or over the phone by calling 844-330-2020. Field operations have been suspended because of the ongoing COVID-19 coronavirus pandemic, though the majority of door-to-door visits weren’t expected to begin until May.
The 2020 Census will help determine how many congressional seats each state gets and the distribution of $1.5 trillion in federal spending.
More must-read tech coverage from Fortune :
—How the coronavirus stimulus package would change gig worker benefits
—Inside the global push to 3D-print masks and ventilator parts
—Apple focuses on what’s next amid coronavirus outbreak
—A startup is building computer chips using human neurons
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: Best earbuds in 2020: Apple AirPods Pro Vs. Sony WF-1000XM3
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-04-01--Canadian rail blockades could have a lasting effect on U.S.-Canada trade, setting the stage for even

Canadian rail blockades could have a lasting effect on U.S.-Canada trade, setting the stage for even greater fallout from coronavirus

This article is part of a Fortune Special Report: Business in the Coronavirus Economy—a look at the impact of the pandemic on more than 50 industries.
It was only a matter of days after protest blockades died down, rail lines rehired employees they had laid off, and Canada’s federal government reached a tentative agreement with the Wet’suwet’en First Nation that the country went into lockdown in response to the spread of the coronavirus.
The start of February saw rail blockades pop up across Canada in solidarity with the Wet’suwet’en—the indigenous First Nation in British Columbia opposed to the construction of multibillion-dollar natural-gas pipeline Coastal GasLink through its territory. By early March, tensions had calmed, and Ottawa was showing signs of progress in its bid to end the protests—before the threat of COVID-19 stirred the country back into panic and put all talks on hold.
Much to the dismay of the First Nation and local health care officials, workers are still out constructing bits of the pipeline across B.C., despite much of the country going into lockdown. Critics say this flies in the face of any reconciliatory efforts the government began with the Wet’suwet’en prior to the spread of the coronavirus throughout Canada.
For close to a month, the rail blockades all but shut down the movement of goods within and around Canada. An estimated 1,400 freight and passenger trains were sidelined by national rail line CN Rail alone over the course of a few weeks, while an estimated $435 million worth of Canadian goods were left stranded every day. Communities across Canada faced shortages of propane, fresh food, clean drinking water, and personal hygiene products as a result of the protests.
All the while, Canada’s business community was focused on reducing the long-term consequences of the protests, starting with its largest trading partner: the U.S.
Though economic fallout from the coronavirus currently poses an unprecedented threat to all facets of the global economy, experts fear past disruption to the flow of goods between the U.S. and Canada could have lasting impacts on the countries’ trade relationship, setting the stage for even greater fallout from COVID-19.
Exact volumes of goods held up between the two countries have proven difficult to quantify—but data from the Association of American Railroads found North American rail travel had fallen 8.3% by the week of Feb. 29. Honourable Perrin Beatty, president and chief executive officer of the Canadian Chamber of Commerce, estimates that the impact of the blockades on the national economy is immense.
“It’s definitely hundreds of millions of dollars, billions of dollars at this point,” Beatty says.
This is due in part to U.S. companies suspending activity in Canada. On Feb. 19, Atlantic Container Line (ACL), a major U.S. shipping line, announced its decision to temporarily reroute its vessels away from the Port of Halifax in favor of alternatives in Baltimore and New York.
The move was a tough blow for the Port of Halifax: ACL was its longest-standing shipping client, having sent boats to the Maritime port twice a week every week for the last 50 years. Though ACL president and CEO Andrew Abbott says Halifax was the company’s “gateway port for North America,” after weeks of blockades, he felt his hands were tied.
“For two weeks now, it’s come to a grinding halt, so a lot of our customers now are just fed up,” Abbott told CTV News on Feb. 19.
“It’s commercial damage to Canadian manufacturers. It’s financial damage to the guys who are bringing in French wine and cheese or Walkers butter cookies, because they’re not going on the shelves,” Abbott said. “Everybody’s paying a piece.”
ACL’s reroute has potential to cause a ripple effect globally. The same day, German-headquartered Hapag-Lloyd told its customers it was considering diverting its ships away from the Canadian port as well.
According to Lane Farguson, manager of communications at the Halifax Port Authority, bottlenecking at the port could cause shortages of goods in central Canada and the U.S. Midwest. About 60% of the goods that move through Halifax are “loaded directly onto rail and then shipped to inland markets,” he says.
“What the rail blockade has done is made it difficult to get goods by rail to those inland markets,” Farguson says. “The import cargo is now starting to sit on the docks. And so that’s having some impact.”
While Farguson says it’s hard to specify what categories of goods are most at risk of shortage in either midland Canada or the American Midwest, he says the blockades pose a threat to the port’s long-term reputation as a stable trading hub.
The port of Halifax markets itself as a data-driven port with short dwell times, strong customer service, and an economic output of $1.97 billion. For staff at the port authority, repairing any damage to this reputation is of top concern.
“The longer this carries on, the more that reputation is being eroded,” Farguson says. “That is certainly something that we’re going to work to rebuild just as soon as the rail starts to move again.”
The port also generates an estimated 15,000 Canadian jobs and attracts over 1.3 million tourists every year. As a major contributor to Atlantic Canada’s economy, delays to Halifax’s port will have lasting effects on the region’s financial wellbeing, according to Atif Kubursi, professor emeritus of economics at McMaster University.
“One of the major contributors to the vitality of Nova Scotia is the port—the port has been a major economic node,” Kubursi adds. “Any hiccup, difficulty, any contraction is going to affect all this progress.”
Kubursi notes that ACL’s relocation to ports in the U.S. causes a “major disruption” to supply chains, predicting that trade of auto parts, agriculture, and oil will likely see the greatest long-term hits from the blockades. Of the three with the most immediate consumer impact, he says holdups of seasonal produce shipped from Mexico and California will directly and immediately affect shoppers.
“A province like Ontario, it literally imports 50% of its agricultural products, and…there is no counterpart production in Canada vegetables in the winter,” he says. “The impact is immediately felt. It takes a bite from consumer budgets…prices start shooting up, people are not going to be able to afford it. They might really start thinking of alternatives.”
Bernardo Blum, associate professor of economic analysis and policy at the University of Toronto’s Rotman School of Management, also predicts an impact on the trade of auto parts between countries. But he sees this effect being felt most directly by businesses, rather than consumers.
“I don’t worry too much about cars being shipped to factories and dealers, because if you don’t get your car this week, you’ll get it next week,” Blum says. “That’s not the big thing. The big thing is factories that need parts and need input, otherwise their production processes will have to stop.”
And blockades of commuter routes have also posed a threat to business travel and tourism. Protests near the U.S.-Canadian border in the Niagara region of Ontario and along a regional commuter rail line between Hamilton, Ontario, and Chicago kept international travelers from moving between countries for a short period last month.
While the Tourism Industry Association of Ontario says none of its member organizations reported feeling immediate impact from the blockades, damage to travel and tourism remains on the radar for the Canadian Chamber of Commerce. The Chicago Business Travel Association did not immediately reply to Fortune’s request for comment.
“I think the tourism sector would certainly have seen some impact [from the protests],” Beatty says, noting that this impact is currently difficult to quantify but could be felt in the future. “Obviously, it causes people to reexamine whether or not they should have reservations and attempt to go on a vacation or take other trips [in Canada].”
But as tensions calm across the country, experts are looking ahead, fearing long-term damage to Canada’s economy should U.S. companies and investors opt to stay away for good.
“We know that uncertainty creates a major cost,” Blum says. “I think the worry here is not the blockades per se, but if this is perceived by U.S. companies as kind of a Canadian risk…People look ahead and they think that this kind of event may [happen again]. If companies think that [the protests] would become more of a regular thing, I can see them leaving.”
And while he predicts that overall impact of the blockades won’t be much of a hit to the U.S. economy, Blum says Canada’s loss could be the United States’ gain.
“[Any risk Canada poses globally] makes the U.S. more attractive a place to make new investments, put a factory—so I think if there is an impact, it’s likely to be positive,” he says.
But the Canadian Chamber of Commerce says its current priority is ensuring that this doesn’t happen.
“All of this obviously affects business confidence and people’s longer-term planning and in terms of whether they can supply from Canada or what investment decisions they make in this country,” Beatty says.
“The first thing [to do] is give people the assurance that the system is functioning, and that it’s reliable, and that this is a good place to do business with.”
The U.S. Chamber of Commerce declined Fortune’s request for comment.
More must-read stories from Fortune:
—What the world’s biggest economies are doing to fight coronavirus and recession
—Will donors of color invest in white presidential candidates?
—Big business rallies behind Joe Biden
—How swing state economies have performed since the 2016 election
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: What happens to leftover campaign funds once a candidate drops out?
Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.


fortune--2020-04-01--Coronavirus has killed the audacious Xerox-HP deal

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Printing specialist Xerox has cancelled its hostile takeover bid for rival HP Inc., citing the coronavirus pandemic and ensuing market turmoil.
It marks the end to a bumpy multi-month saga, during which Xerox argued a combination would create cost savings in a declining print market—and HP countered repeatedly, arguing such a deal undervalued itself and would result in an overly risky merged company.
After all, Xerox, valued at $8 billion when its plans were first made public, had offered to finance a $34 billion cash-and-stock acquisition while in debt—about $24 billion of it. HP was valued at $31 billion.
Though I say it’s the end … it’s more of an extreme turn in the story. The trends that sparked talks of a merger, namely the falling demand for print, will persist with or without coronavirus. And even as he rebuffed Xerox, HP CEO Enrique Lores told the Financial Times in early March that he was “constantly analyzing” potential M&A deals.
And with a global recession underway, HP looks to be in a somewhat better position than its smaller peer. HP’s market cap has fallen roughly a fifth to $25 billion amid the market rout. Xerox’s? By about a half, to $4 billion. And if that’s the case—then could coronavirus set a stage for HP to become the acquirer?
An HP acquisition could result in a company that is far less debt laden and significantly more cash rich.
Still, turning a tense relationship into a friendly one is no easy task.
For an in-depth read on the takeover and its twists, read my colleague Shawn Tully’s feature here.
Tinder during coronavirus: In a bid to get information from the coronavirus centers, including censor-covered China, people are using Tinder.
“We heard from some users that they were Passporting into regions hardest hit by the pandemic to get insights about the on-the-ground situation first-hand, to listen, and to offer emotional support,” Match.com CEO Shar Dubey wrote in a letter.
While messaging volume has risen on the platform however, new user signups especially in coronavirus-hit areas have fallen. The group is predicting first quarter revenue to come in at the “low-end” of its previously predicted range.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Akouos, Inc., a Boston, Mass.-based precision genetic medicine company seeking to restore or preserve hearing, raised $105 million in Series B funding. Pivotal bioVenture Partners led the round, and was joined by investors including Cormorant Asset Management, Cowen Healthcare Investments, EcoR1 Capital, Fidelity Management & Research Company, Polaris Founders Fund, Pagsgroup, Surveyor Capital (a Citadel company), Wu Capital and others.
- Axonius, a New York-based cybersecurity asset management company, raised $58 in Series C funding. Lightspeed Venture Partners led the round, and was joined by investors including existing investors OpenView, Bessemer Venture Partners, YL Ventures, Vertex, and WTI.
- Seegrid, a Pittsburgh, Pa.-based maker of vision-guided, self-driving vehicles for industrial purposes, raised $25 million in funding from G2VP.
- Juspay, an Indian payments company, raised $21.6 million in Series B funding. Vostok Emerging Finance led the round, and was joined by investors including Wellington Management and Accel.
- Vericool, a Livermore, Calif.-based manufacturer of environmentally-friendly packaging solutions, raised $19.1 million in Series A funding. Radicle Impact Partners, The Ecosystem Integrity Fund, ID8 Investments, and AiiM Partners were the investors.
- AristaMD, a San Diego, Calif.-based emedicine company, raised $18 million in Series B funding. Cigna Ventures and MemorialCare Innovation Fund led the round, and was joined by investors including Avalon Ventures, CU Healthcare Innovation Fund and Stanford Health Care.
- Slync.io, a San Francisco-based operating system for global logistics, raised $11 million in Series A funding. Blumberg Capital led the round, and was joined by investors including Correlation Ventures and existing investors including 235 Capital Partners.
- Anagog, a Tel Aviv, Israel-based provider of AI solutions, has raised $10 million in Series C funding. IN Venture and MizMaa. Continental also participated.
- PatientPay, a Raleigh-Durham, N.C.-based patient payments solution, raised $6.2 million in funding. Mosaik Partners led the round along with an unnamed existing investor.
- Lingumi, a London-based learning platform for toddlers, raised £4million ($5 million). North Summit Capital led the round, and was joined by investors including LocalGlobe, ADV, and Entrepreneur First.
- Upcounsel, a San Francisco-based lawyer marketplace, was acquired by Enduring Ventures. Financial terms weren't disclosed.
PRIVATE EQUITY
- Bain Capital and Boyu Capital are reportedly bidding for SML Group, a Hong Kong-based garment label, per Bloomberg citing sources. Read more.
- The Bakery Companies, backed by Arbor Investments, acquired Steck Wholesale Foods, a North Sioux City, S.D.-based maker or baked goods.
- New Capital Partners invested in TeleHealth Solution, a Charlotte, N.C.-based provider of virtual medical support for patients in hospitals and senior living facilities.
- Charlesbank Capital Partners agreed to acquire New Corp's News America Marketing business for about $235 million in cash.
- Bridgepoint acquired a 28% stake in Cyrus, a Paris-based asset manager, read more.
OTHERS
- Apple acquired Dark Sky, a Boston-based weather app. Financial terms weren't disclosed. Read more.
- Dean Foods will sell $433 million worth of assets including assets, rights, interests, and properties, to Dairy Farmers of America as part of its Chapter 11 bankruptcy process. Read more.
- Palo Alto Networks (NYSE: PANW) agreed to acquire CloudGenix, Inc., a San Jose, Calif.-based cloud-delivered SD-WAN provider, for about $420 million in cash. Read more.
- MRI Software acquired Orchard Information Systems, a London-based provider of software solutions for the U.K. housing sector. Financial terms weren't disclosed.
- SendBird, acquired the core technology and key engineering talent of Roundee.io, a Seoul, South Korea-based enterprise video conferencing platform. Financial terms weren't disclosed.
- Acuant acquired IdentityMind, a Palo Alto-based KYC-AML platform. Financial terms weren't disclosed.
- Tencent Music Entertainment Group (NYSE: TME) via a consortium led by Tencent Holdings Limited (00700.HK) acquired a 10% equity stake in Universal Music Group from Vivendi SE (VIV.PA). The deal assumed an enterprise value of EUR30 billion ($33.1 billion) for 100% of UMG’s share capital.
IPOs
-Farasis Energy, a Chinese electric vehicles battery maker, has received regulatory approval to raise around 3.4 billion yuan ($479 million) in an IPO on the Shanghai STAR board. Read more.
- Keros Therapeutics, a Lexington, Mass.-based biotech developing treatments for hematological and musculoskeletal disorders, plans to raise $75 million in an IPO on 5 million shares priced between $14 to $16 apiece. Pontifax (32.6% pre-offering), Arkin Bio Ventures (14.4%), and Foresite Capital Fund (9.9%) back the firm. It plans to list on the Nasdaq as “KROS.” Read more.
EXITS
- The Nasdaq (Nasdaq: NDAQ) acquired Solovis, a Dallas-based multi-asset class portfolio management platform, from Edison Partners. Financial terms weren't disclosed.
- Thoma Bravo agreed to acquire Command Alkon, a Birmingham, Ala.-based collaboration platform for construction, from Quilvest Capital Partners. Financial terms weren't disclosed.
- Kudu Investment Management made a strategic investment in Creation Investments Capital Management, a Chicago-based private equity firm specializing in impact investments.
- EQT is deferring the sale of IFS, a portfolio company and software maker, Bloomberg reports citing sources. Initial bids valued the firm at 3 billion euros ($3.3 billion). Read more.
- Bridgepoint is deferring the sale of Rovensa, an Iberian agrochemical business, Bloomberg reports citing sources. The deal was expected to fetch 1.2 billion euros. Read more.
F + FS
- Seidler Equity Partners raised $800 million for its seventh fund. Read more.
- Gemspring Capital raised $750 million for its second fund, Gemspring Capital Fund II.
- Ampersand Capital Partners raised $690 million for Ampersand 2020.
- Baird Capital raised $215 million for Fund V. Read more.
PEOPLE
- SoftBank promoted Raisel Rehman to Managing Partner. The firm also promoted Carolina Brochado and Ramzi Ramsey to partners.
- Ardian named Daniel Graf von der Schulenburg as a managing director and head of infrastructure Germany.


fortune--2020-04-01--Cruise ships stuck at sea ‘indefinitely’ with sick onboard amid coronavirus pandemic, Coast Guard sa

Cruise ships stuck at sea ‘indefinitely’ with sick onboard amid coronavirus pandemic, Coast Guard says

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The U.S. Coast Guard has directed all cruise ships to remain at sea where they may be sequestered “indefinitely” during the coronavirus pandemic and be prepared to send any severely ill passengers to the countries where the vessels are registered.
For most of the South Florida’s cruise ships, that means the Bahamas, where people are still recovering from last year’s hurricanes.
The rules, which apply to any vessel carrying more than 50 people, were issued in a March 29 safety bulletin signed by Coast Guard Rear Admiral E.C. Jones, whose district includes Florida, Georgia, South Carolina and Puerto Rico.
More than two dozen cruise ships are either lined up at Port Miami and Port Everglades or waiting offshore, the Miami Herald reported. Most have only crew aboard, but several still carry passengers and are steaming toward South Florida ports. Carnival notified the SEC Tuesday that it has more than 6,000 passengers still at sea.
Federal, state and local officials have been negotiating over whether two Holland America cruise ships that had been stranded off the coast of Panama with sick and dead passengers would be allowed to dock at Port Everglades this week. More than 300 American citizens are on the two ships.
The Zaandam, which set sail in early March on a South American cruise, is carrying sick passengers and crew, while passengers not showing symptoms were transferred to a sister ship, the Rotterdam, sent to the region to help. Both ships cleared the Panama Canal and are sailing toward Florida. Two of four deaths on the Zaandam have been blamed on COVID-19 and nine people have tested positive for the novel coronavirus, the company said.
Florida Gov. Ron DeSantis said Tuesday that the state’s healthcare system is stretched too thin to take on the coronavirus caseload from the Zaandam. “Just to drop people off at the place where we’re having the highest number of cases right now just doesn’t make a whole lot of sense,” DeSantis said.
President Donald Trump said later that he would speak with his fellow Republican. “They’re dying on the ship,” Trump said. “I’m going to do what’s right. Not only for us, but for humanity.”
Under normal conditions, when a passenger or crew member become too ill for the ship’s medical team to care for, they call the Coast Guard to provide a medical evacuation to an onshore hospital. Under the new rules, sick passengers would be sequestered indefinitely on board.
“This is necessary as shore-side medical facilities may reach full capacity and lose the ability to accept and effectively treat additional critically-ill patients,” the memo said.
The document requires all ships in U.S. waters to report their numbers of sick and dead on board each day or face civil penalties or criminal prosecution.
Cruise ships with sick passengers must consult with the Coast Guard, which may now recommend keeping the sick person on board the ship. The Coast Guard will decide if a transfer is absolutely necessary, but the cruise line would be responsible for arranging on-shore transportation and hospital beds.
More must-read politics coverage from Fortune:
—Coronavirus could put 47 million people out of work, says the Fed
—USPS warns might have to shutter because stimulus package provides no funding
—Political activists make sure Americans register to vote—from a distance
—Why cruise companies don’t qualify for coronavirus stimulus
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: U.S. tax deadline moved from April 15 to July 15
Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.


fortune--2020-04-01--Europe turned to China for coronavirus testing help. Why some are now regretting it

As the coronavirus landed in Italy and began to sweep across the continent, European leaders turned to China for testing kits to quickly identify infection hot spots.
Some are already regretting it.
The 1.2 million Chinese antibody tests that the Slovak government bought from local middlemen for 15 million euros ($16 million) are inaccurate and unable to detect Covid-19 in its early stages, according to Prime Minister Igor Matovic, who only took office last month. “We have a ton and no use for them,” he said. They should “just be thrown straight into the Danube.”
Matovic may have an ax to grind as the testing kits were purchased by the previous government, of which he has been a fierce critic for many things, including its record on fighting corruption. Still, similar difficulties have cropped up from Madrid to Istanbul — complicating countries’ efforts to get a handle on the virus and re-open their economies, which are headed for recessions that could eclipse the fallout from the 2008 financial meltdown.
The issues aren’t just a problem for Europe. They risk derailing China’s own efforts to fill the void left as President Donald Trump steers the U.S. away from its traditional leadership role in times of global crisis. Beijing hopes to win favor through mass deliveries of medical aid to European nations — part of wider geopolitical ambitions in the region that go back years.
Regarding the virus-testing kits, China said Slovakia used them incorrectly, and cautioned against politicizing instances where equipment isn’t up to scratch — issues it said it experienced when receiving help from abroad during the initial emergence of the virus months ago in Wuhan.
“Problems should be properly solved based on facts, not political interpretations,” Foreign Ministry spokeswoman Hua Chunying said. “In fact, when we first began fighting Covid-19 at home, some of the assistance China received was defective, but we chose to believe and respect the kind intentions of these countries.”
Whatever the intention, complaints in Spanish media increased as it transpired last week that 50,000 quick-testing kits from China were faulty and had to be returned. Deaths in Spain have begun to match those in nearby Italy — currently the virus’s epicenter in Europe.
In fact, the sort of rapid coronavirus tests the countries bought are still unproven. If they can be shown to work, they offer the potential to vastly accelerate testing and get a better picture of how widely the disease has spread in society. But companies have only recently developed them and some experts warn governments to hold off on buying big supplies until it’s clearer which, if any, of the diagnostic tools work best.
Criticism of China from other countries has been muted, likely reflecting its growing economic and strategic heft. Under the banner of a trade and infrastructure initiative known as Belt and Road, Beijing has moved to increasingly knit the fortunes of other countries to itself. Indeed President Xi Jinping has described China’s mass deployment of medical assistance to countries including Italy, Greece and France as an effort to further a “Health Silk Road.”
In the Czech Republic, health-care authorities and some government members said the 300,000 quick tests purchased by the state only worked if patients had been infected for at least five days, while about a third were defective. President Milos Zeman, however, avoided mentioning the problems.
“I’d like to thank the Chinese People’s Republic for being the only country that helped us in supplying the material,” he said March 19. In doing so, he failed to acknowledge aid also being provided by the European Union.
In Turkey, which imported its first batch of “several thousand” kits in early March, officials determined an accuracy rate of less than 35%, according to a senior official with direct knowledge of the matter. Their use was immediately suspended and new tests sourced from a different Chinese supplier. They arrived last week and had an accuracy rate of about 90%, according to the Turkish official.
China is trumpeting a victory over the virus to mount a major diplomatic offensive with Western nations to varying degrees immobilized and distracted, according to Tim Huxley, executive director for Asia at the International Institute for Strategic Studies. Still, “their dissimulation over Covid numbers at home, the fact that much of the world continues to see China as the source of Covid, and tactical errors like providing shoddy test kits to some European countries means that their net diplomatic benefits may be limited,” he said.
China said it’s working to rectify the problems. From Wednesday, exporters of coronavirus test kits, medical masks, protective clothing, ventilators and infrared thermometers must show they’re certified in China and promise their products also meet the quality standards of the importing nation or region, according to a Ministry of Commerce statement.
The customs administration will only allow these goods to be exported if they’re approved by China’s regulators, the ministry said. The agency pledged Monday to improve supervision and crackdown on fake and poor quality medical exports.
China isn’t the only country to see some of its virus assistance backfire in Europe.
President Vladimir Putin dispatched protective masks, ventilators, testing equipment and even doctors to Italy this month, with deliveries carrying stickers saying “From Russia with Love.” A few days later, however, Italy’s La Stampa newspaper cited senior political sources as saying that about four-fifths of supplies were “useless” for the country.
Many interpreted Russia’s actions as an opportunist bid to win friends in Italy as the EU’s own virus response foundered. Similar accusations have been leveled against China.
Chinese telecommunications giant Huawei last week halted donations of face masks to countries including Italy, Ireland, Poland and the Netherlands following comments from EU foreign-policy chief Josep Borrell, who referred to a “global battle of narratives.”
“China is aggressively pushing the message that, unlike the U.S., it’s a responsible and reliable partner,” he wrote in a blog post. That, he said, meant a “politics of generosity” battle was unfolding.
More coronavirus coverage from Fortune:
—USPS might have to shutter by June as stimulus package provides no funding
—Everything you need to know about the coronavirus stimulus checks
—Everything you need to know about furloughs—and what they mean for workers
—Political activists make sure Americans register to vote—from a distance
—During the coronavirus crisis, equal pay is more important than ever
—Coronavirus fight could prove fatal for addressing climate change
—PODCAST: Two health care CEOs on why coronavirus tests and vaccines are the ammunition needed to fight COVID-19
—VIDEO: World leaders and health experts on how to stop the spread of COVID-19
Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.


fortune--2020-04-01--These 10 journalists have been wrongly punished for covering the coronavirus crisis and other import

These 10 journalists have been wrongly punished for covering the coronavirus crisis and other important topics

As the coronavirus pandemic spreads worldwide, journalists are dedicated to covering the outbreak and and providing the public with important information.
However, some members of the press have been censored and condemned for their coronavirus reporting.
Freelance economic reporter Mohammad Mosaed of Iran, for example, warned about the pandemic and criticized the Iranian government for being unprepared to handle the coronavirus. Mosaed, who has since been arrested and is awaiting trial, can’t practice journalism, and all of his social media accounts have been suspended.
This also goes for Chinese video journalist Chen Qiushi, who disappeared more than six weeks ago and is still missing after reporting on the current global health crisis. In a Twitter update, Chen’s friends said they believe he is being held in residential surveillance.
Many other journalists around the globe have been punished for their reporting on topics and disciplines beyond the coronavirus outbreak. Cuban journalist Roberto Jesús Quiñones was covering a trial for CubaNet and apparently showed “resistance” to police in doing so. He has since spent more than six months behind bars—and even time in solitary confinement.
Award-winning reporter Azimjon Askarov has been held even longer. Askarov has served nine-plus years of a life sentence for reporting on human rights violations in Kyrgyzstan. He is preparing for a final appeal.
In conjunction with 36 other media organizations, Fortune is committed to helping journalists achieve justice and freedom by publishing a monthly list of the 10 Most Urgent press freedom cases (see below).
Compiled by the One Free Press Coalition (OFPC) in partnership with the Committee to Protect Journalists (CPJ) and the International Women’s Media Foundation (IWMF), the lists have brought awareness to the dangers journalists face. (You can read last month’s list here.)
Journalist who warned about pandemic, banned from work and social media.
Freelance economic reporter Mohammad Mosaed awaits a court date, after intelligence agents of the Islamic Revolutionary Guard Corps (IRGC) arrested and interrogated him in February regarding social media accounts critical of the government. The criticism included Iran’s lack of preparedness in tackling the coronavirus outbreak. Until trial, authorities bar him from practicing journalism and suspended his social media accounts. Last year he endured 16 days in Evin prison for his tweets and was released on bail.
Editor facing potential detention, arrested again March 28.
Rappler editor Maria Ressa is scheduled for trial April 24, expecting a verdict on a cyber-libel charge brought by local businessman Wilfredo Keng regarding a May 2012 story. The relevant law took effect four months after the story in question was published. Depending on how judges interpret the 2012 Cybercrime Prevention Act, Ressa could face six years in prison.
Family of jailed journalist protests prisons’ inaction in preventing COVID-19 threat.
While blogger Alaa Abdel Fattah is held in Cairo’s Tora prison, three of his family members face charges of unlawful protest, illegal assembly, and obstructing traffic in their call to protect prisoners from the spread of the coronavirus. They were released on bail exceeding $300 apiece. After reporting about politics and human rights violations, Abdel Fattah has endured threats and been told he will never go free if he speaks of guards’ abuse.
Journalist covering coronavirus disappeared more than six weeks ago.
Freelance video journalist Chen Qiushi has not been seen since Feb. 6, when he informed family of plans to report on a temporary hospital. In late January, he had traveled from Beijing to the city of Wuhan in Hubei province and began filming and reporting on the coronavirus health crisis, according to his posts on YouTube. Friends running his Twitter account believe he is likely held in residential surveillance.
Journalist fears for her life, amid government-orchestrated threats.
After 19 years of persecution and legal censorship, award-winning journalist Claudia Julieta Duque told IWMF that she learned on Feb. 29 about an ongoing criminal threat against her life. According to Duque, former agents of the state institution in charge of protecting human rights defenders and at-risk journalists, called the National Protection Unit (UNP), were reportedly ordered to carry out intelligence activities from February 2018 to July 2019 to infiltrate Duque’s security scheme and threaten her welfare.
Imprisoned publisher undertook hunger strike while awaiting appeal.
No date has been set, following postponement of a March 12 appeal in the case of Martin Inoua Doulguet, publisher of Salam Info. He was found guilty on criminal charges of defamation and conspiracy in September, and sentenced to three years in prison. The privately owned quarterly newspaper reports on crime and politics in Chad, and Doulguet’s penalty includes a $1,675 fine and paying part of the $33,514 in plaintiff damages.
Journalist serving life sentence prepares for final appeal.
On April 6, a Kyrgyz court is scheduled to hear the final appeal in the case of award-winning journalist Azimjon Askarov. The ethnic Uzbek, who reported on human rights, has spent more than nine years imprisoned on trumped-up charges that included incitement to ethnic hatred and complicity in the murder of a police officer. The decade-long case has drawn persistent international condemnation, and Kyrgyzstan’s only imprisoned journalist’s health deteriorates.
Journalist subject to inhumane prison conditions.
Cuban journalist Roberto Jesús Quiñones has spent more than six months behind bars, experiencing worsening treatment. Staff listen to all of his phone calls, have served him food containing worms, and upon learning of his secretly publishing from prison, suspended family visits and put him in solitary confinement. A municipal court in Guantánamo sentenced him to serve one year as a result of “resistance” and “disobedience” when police beat and detained him for covering a trial as a CubaNet contributor last April and his refusal to pay a fine imposed on him following this incident.
Reporter experiences repeated retaliation for his work.
On two different occasions last year, Benin courts delivered prison sentences to Ignace Sossou, a reporter for privately owned site Web TV. The first was a one-month imprisonment and fine of $850 for publishing “false information” about local business dealings. Then came an 18-month sentence and fine of $337 for defamation and disinformation in his reporting on public statements made by public prosecutor Mario Mètonou.
Turkish and U.S. leaders continue pressuring for justice in wake of journalist’s murder.
On March 25 Turkish officials indicted 20 Saudi nationals in the ongoing pursuit for answers surrounding Jamal Khashoggi’s brazen killing in Istanbul in 2018 and the Saudi crown prince’s role. That follows a March 3 news conference with U.S. Sen. Ron Wyden, Rep. Tom Malinowski, and the Washington Post columnist’s fiancée, Hatice Cengiz, announcing that they are invoking procedures within the Senate intelligence committee to provide a congressional release of information from intelligence agencies.
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fortune--2020-04-01--Google’s coronavirus relief program for businesses also helps Google

Google’s recent announcement of $340 million in ad credits to help small- and medium-size businesses amid the coronavirus pandemic could also help Google itself long after the health crisis has ended.
The move accomplishes two things: It provides modest relief to businesses that have taken big financial hits since the outbreak. And it also helps one of Google’s most important groups of customers survive so they can buy ads from Google down the road.
Small- and medium-size businesses account for about half of Google’s ad revenues, Michael Levine, an analyst at Pivotal Research, estimates. That would translate into more than $55 billion of Google’s $113 billion in ad revenue last year.
“If there’s anything keeping me up at night, it’s the amount of exposure Google has to SMBs,” he says, using shorthand for small and medium-size businesses. “If SMBs go bankrupt, that’s going to be a structural problem.”
The ad credits are a part of Google’s more than $800 million initiative to help businesses, health organizations, governments, and health workers during the pandemic. Google is offering $250 million in ad grants to the World Health Organization and government agencies to help them share important information about the virus. The company is also providing $20 million in Google Cloud credits to academic institutions working on combating the virus so they can crunch data, and financial support for safety gear and medical devices for the CDC Foundation, a nonprofit that supports the Centers for Disease Control and Prevention.
The ad credits come at a vital time for small- and medium-size businesses, many of which are shut down by local “shelter in place” orders or have already folded because of lost business. The federal government is trying to set up a small-business loan program to pair with the $2 trillion stimulus bill President Donald Trump approved last week. But aid from companies like Google could, in a limited number of circumstances, help bolster the assistance to small- and medium-size businesses.
To be eligible for the ad credits, businesses must have been actively using Google’s ad services since Jan. 1, 2019. The credit, available to businesses worldwide, is expected to be automatically applied to customers’ accounts in the “coming months.” Credits will expire on Dec. 31, 2020. Google did not provide information on how many credits each business can expect to receive or how many businesses are eligible for the credits.
Google isn’t the only company trying to aid vulnerable businesses during the outbreak.
Two weeks ago, Facebook announced similar aid to small- and medium-size businesses. The social network is setting aside $100 million for both ad credits and cash for 30,000 small businesses in more than 30 countries. Businesses aren’t required to have a previous affiliation with Facebook, such as being an ad customer, to be eligible for the funds. Facebook plans to announce more details about the aid in the coming weeks.
“We’ve heard loud and clear that financial support could enable them to keep the lights on and pay people who can’t come to work,” Sheryl Sandberg wrote in a Facebook post in announcing the new funds.
The ad credits won’t have any noticeable impact on the massive businesses offering them, Levine says. Last year, Google had $34.4 billion in profits, while Facebook had $7.3 billion. And each had more than $15 billion in cash and cash equivalents.
“They’ve got a massive cash position,” he notes. “Even if things were going poorly, they’re not going to lose money.”
In any case, the amount of money that companies stand to lose by giving away ad credits is debatable. There’s only an expense if the ads they give away displace ones that other advertisers would have paid for with real money.
But beyond the money, Levine says offering small- and medium-size businesses help during the global pandemic is just the right thing to do for massive companies like Google and Facebook.
“My overall mantra is to think of revenues as being secondary to thinking through long-term relationships with clients,” he says. “It’s smart and shows goodwill.”
More must-read tech coverage from Fortune:
—How the coronavirus stimulus package would change gig worker benefits
—Inside the global push to 3D-print masks and ventilator parts
—Apple focuses on what’s next amid coronavirus outbreak
—A startup is building computer chips using human neurons
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: Best earbuds in 2020: Apple AirPods Pro vs. the Sony WF-1000XM3
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-04-01--Her country’s approach to the coronavirus appears to be working

Good morning, Broadsheet readers! Lilly Ledbetter endorses Joe Biden, Idaho prevents transgender girls from playing girls’ sports, and we hear from a female(!) head of government about the coronavirus. Have a nice Wednesday.
– ‘The Danish way.’ The make-up of world leadership these days means that most of the voices we hear on the coronavirus crisis are men’s. Surely, you’ve heard plenty from President Donald Trump, U.K. Prime Minister Boris Johnson, and Canadian Prime Minister Justin Trudeau, to name a few. There are, of course, a dozen or so women leading nations through this unprecedented moment in history. And one of them says her nation’s approach appears to be effective.
“The Danish way of doing things is working,” Mette Frederiksen, the 42-year-old who became Denmark’s prime minister last June, said on Monday.
Denmark was one of the first countries to take action against the outbreak, closing schools, limiting social gatherings, and—in mid-March—shutting its borders entirely. Denmark is also guaranteeing 90% of workers’ salaries to prevent mass layoffs. It has just over 3,000 coronavirus cases, with 90 deaths.
It’s in no way out of the woods, but the measures have significantly reduced how many people are infected via each COVID-19-positive patient, experts say.
Frederiksen says citizens’ “joint efforts” deserve credit. In fact, Danes are adhering to the social restrictions so well and emergency calls have dropped off so dramatically that doctors had to urge people suffering from non-coronavirus ailments to continue to seek treatment.
Frederiksen now says Denmark might start to ease back into normal life after Easter, though she warned vulnerable populations—seniors, especially—that they may be subject to the measures longer than others. “We are asking the weakest to be the strongest right now,” she said. “And that is a tough request.”
Even with Frederiksen’s cautious optimism, her country’s progress on the matter represents a bright spot.
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Today’s Broadsheet was produced by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Equal pay endorsement. Just in time for yesterday's Equal Pay Day, Lilly Ledbetter, the woman for whom the Lilly Ledbetter Fair Pay Act is named, endorsed Joe Biden for president. The Fair Pay Act was the first that President Obama signed into law during his administration. Washington Post
- Hotel help. Amid France's coronavirus social restrictions, complaints of domestic violence have spiked by one-third, as women are trapped at home with their abusers. The government is taking action to address the problem, relocating women to hotels and employing a secret code word so victims can seek help at pharmacies. Vice
- Mary B speaks. Days after being called out by President Trump on Twitter, General Motors CEO Mary Barra writes about her company's partnership with Ventec to manufacture ventilators, as well as GM's plans to start making surgical masks. "Efforts by numerous industries to fill these urgent needs is striking a nerve because it’s about hope and support for each other during a time that can seem isolating and scary," she writes. LinkedIn
- Limiting laws. Idaho Governor Brad Little signed into law two bills that limit the rights of transgender people in the state. One prohibits transgender people from changing their gender on the state's birth certificates, while the other specifically prevents transgender girls from playing on girls' and women's sports teams. CNN
MOVERS AND SHAKERS: Brandless co-founder Tina Sharkey is joining the board of PBS. Sofinnova Investments promoted Maha Katabi to general partner and Sarah Bhagat to partner.
IN CASE YOU MISSED IT
- Decision time. Federal judges in Alabama, Ohio, and Texas blocked restrictions on abortion put into place during the coronavirus crisis; an appeals court in Texas then reversed that call in the state, allowing the restrictions to take effect. But Alabama's Judge Myron Thompson cited the state's already tight limits on abortion in his decision, saying that the usual time constraints mean coronavirus restrictions would prevent women from "exercising their right to obtain an abortion" at all. CNN
- Staying grounded. In an ongoing series, Fortune is talking to professionals in different industries about how the coronavirus crisis has changed their jobs. In this piece, lifestyle blogger Lindsay Silberman explains how to remain a travel influencer when you can't travel. Fortune
- Chanel's cartoons. If you follow activist and Know My Name author Chanel Miller on Instagram, you're probably familiar with her illustrations. Those cartoons now have a home in the New Yorker; this one is about having nothing to do during quarantine while your partner is busy working. The New Yorker
ON MY RADAR
Dolly Parton will read bedtime stories to kids online every week NPR
How am I supposed to focus on work right now? The Cut
Silicon Valley mom gets 7 months for $450,000 college scam Bloomberg
Selena forever! How family and fans are keeping the icon’s memory alive Zora
PARTING WORDS
"This is not a side issue. It goes to the heart of whether women and families are able to lead safe, healthy, fulfilling lives."
-Facebook COO Sheryl Sandberg on Equal Pay Day yesterday


fortune--2020-04-02--Restaurants and bars hope relaxed alcohol takeout regulations will help business during coronavirus

Restaurants and bars hope relaxed alcohol takeout regulations will help business during coronavirus shutdown

Are growth or value stocks performing better in this market ?
The answer may surprise you

This article is part of a Fortune Special Report: Business in the Coronavirus Economy—a look at the impact of the pandemic on more than 50 industries.
As more cities mandate the closure of restaurants and bars in response to the current coronavirus pandemic, the restaurant industry stands to lose $225 billion in sales over the next three months, according to the National Restaurant Association. However, many operators hope new relaxed laws around alcohol sales will provide a much-needed lifeline to their businesses.
In mid-March, local and state officials in California and New York announced restaurants and bars could start selling wine, beer, and cocktails for takeout and delivery. Businesses could deliver goods themselves, employ a third-party platform, or provide takeout for guests willing to pick it up. The new measure is meant to provide a bit of cushioning for these establishments as all seating and dining rooms have been forced to close. It was a rapid shift—and a giant learning curve—for many businesses that closed in-room operations in order to help “flatten the curve” of COVID-19.
However, the loosened regulations aren’t as simple as just adding a cocktail to a mobile app menu. Restrictions still vary by state, and operators find themselves combing through knotty sets of laws. Also, delivery services such as Grubhub, Seamless, and Uber Eats may not carry the proper license in certain states to deliver booze with a meal, compounding confusion for owners. Furthermore, although the visibility and convenience of being on a delivery platform may seem beneficial for some, the fees associated with the services render them ineffective for others.
Emily Everett, co-owner of Quaintrelle, in Portland, Ore., says people are slowly coming around to the idea of takeaway wine. Kathryn Elsesser
A day before the State of Oregon mandated a statewide restaurant closure, seasonally focused Quaintrelle, in Portland, decided to convert to takeaway, and immediately applied for an off-premise license, as well as a same-day delivery license. Emily Everett, co-owner of Quaintrelle, says they haven’t done much delivery—despite being on Caviar—and even though bottles are listed on their website, people are slowly coming around to the idea of takeaway wine.
“A lot of people are placing to-go [food] orders online,” Everett says. “When they get here, we let them look at the list and make a decision when they pick up their food. For phone orders, David, our general manager, talks to them and asks them if they would like a wine pairing suggestion.” At the moment, approximately half the orders placed include wine, but as awareness grows, Everett expects the number to increase.
Although beer dominates the menu, Harlem Hops, in N.Y.C., also serves wine and cocktails. Courtesy of Harlem Hops
At 37-year-old Backstreet Cafe in Houston, Sean Beck, the sommelier and beverage director for H-Town Restaurant Group (which owns Backstreet Cafe), quickly started promoting wine to-go when the state relaxed its complex laws. However, just offering the service wasn’t enough; he had to reconfigure pricing in order to stay competitive with bottle shops and grocery stores.
“We’re regarded as having one of the better-priced wine lists in Houston,” says Beck. “My typical markup would be 2.2 to 2.5 times [the wholesale cost]. So I’ve knocked it down where it’s much closer to retail. It’s essentially 40% off normal list prices. It’s obviously a lot less money you’re bringing in, but on the flip side, right now I have somewhat lower operating costs because I can’t do dining and service.” Beck is also leveraging relationships with customers to sell six-packs of beer and cases of wine. He’s focused on selling current inventory but is “judiciously restocking,” as he puts it, and taking it day by day.
In addition to offering food and cocktails to-go at Prairie, his San Francisco restaurant, chef and owner Anthony Strong turned the entire space into a general store. Edna Zhou
Cocktails are stirring up the most confusion with these new, relaxed laws. Beck notes that Texas law prohibits the sale of pre-batched cocktails, and limits the size of bottles that can be sold. He created some cocktail kits, but notes that fulfilling the 375-milliliter (or smaller) bottle size is challenging without ordering new product. In cities like New York and San Francisco, ready-to-drink cocktails are allowed, but need to be sold with food.
Despite restrictions, chef and owner Anthony Strong of San Francisco’s Prairie is embracing his customers’ desire for something fun with his pre-batched concoctions. He portions each order as two drinks, and “sends the garnishes separate and a couple of easy instructions,” he says. “For the Black Manhattan or the olive oil washed martini, there’s no shaking or stirring necessary; as long as they’re ice-cold, you just pop it to drink it. Others, like the Becky With the Good Hair—a sea buckthorn cocktail—we send with a bottle of sparkling water.” Strong adds that in the first two days of offering the drinks, he received approximately 20 to 30 orders per day, and when he starts delivery, he hopes the momentum will continue.
Kevin Bradford, Kim Harris, and Stacey Lee opened Harlem Hops in 2018. Courtesy of Harlem Hops
At Harlem Hops, a beer-centric bar in New York City that features products from African-American–owned businesses, brews provide a bright spot. Along with selling bottles of beer, the venue has always sold draft beer in crowlers—32-ounce cans that bars can seal shut—so the business was already modeled for takeaway. The bar team recently started delivering within a 10-block radius and is looking to expand.
Co-owner Kim Harris says the neighborhood is embracing the pivot; sales on Tuesday, March 24, were 25% higher than on a regular Tuesday, she estimates. Coupled with what Harris calls a simple business model with low overhead—“inventory is our most expensive thing,” notes Harris—they’ve been able to keep their staff employed. Their next endeavor is finding a way to support more local and black-owned purveyors, such as bringing in different food items to sell to their clientele.
For some, this policy change is making them consider alternative revenue streams. At seven-year-old Eastwood, a wine-and-beer bar and restaurant on Manhattan’s Lower East Side with a loyal following, co-owner Sivan Harlap said the new regulations have opened up opportunities for future business. They’ve always done a brisk takeout food business, but never capitalized on their ability to sell beer to-go, normally permitted by the New York State Liquor Authority. Once things return to normal, Harlap plans to continue to sell cans and bottles through delivery platforms.
Co-owner Noah Bernamoff opted to close his Brooklyn bar and restaurant, Grand Army, instead of converting to a delivery and takeout operation. Courtesy of Grand Army
However, not everyone feels the new options are worth the effort. Grand Army, a cocktail bar with a seafood-centric menu in Brooklyn, closed its doors for the near future. Co-owner Noah Bernamoff—who also owns the quick-service New York chain Black Seed Bagels—says a number of barriers prevent the conversion to takeaway from being profitable. Reassigning tasks and retraining a team to work in a completely foreign manner is the first big hurdle, he says.
While using an app is easy for the customer experience, “it gets pretty complicated on the restaurant side,” Bernamoff explains. “On our end, it means opening accounts, linking bank accounts and providing corporate documents.” And once you’re on the platform, there’s no guarantee people will want to order from a place where their previous experience is so rooted in the venue.
While the financial risks didn’t seem to pay off, Bernamoff’s biggest concern was preserving the integrity of the guest experience. “Grand Army really is a four-wall experience, as I like to call it; you need to be here to get Grand Army,” Bernamoff says. “You need to be in our space. You need to be with our people. You need to be interacting very intimately with our products for the whole package to come together.”
More coronavirus coverage from Fortune:
—How to get a refund on your Broadway tickets after the coronavirus shutdown
—The oil sector takes its next hit: The coronavirus on offshore rigs
—Some of the most extreme ways companies are combating the coronavirus
—How luxury designers in Italy’s fashion heartland are facing the coronavirus
—Amazon tells employees to work from home if they can. Warehouse workers can’t
—Why Dollar General thinks the coronavirus can help business
—The coronavirus may not be all bad for tech. Consider the “stay at home” stocks
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fortune--2020-04-02--CEOs are slashing their executive pay to make a ‘visible personal sacrifice’

Good morning.
This is Katherine, filling in for Alan from London.
Yesterday, my colleague Emma Hinchliffe wrote about CEOs slashing their pay—usually to zero—in the midst of the coronavirus crisis.
The CEOs that have gone first, she points out, are ones that lead companies that have taken a direct, and early, economic hit—businesses, like tourism and hospitality, that have had to lay off or furlough hundreds of thousands of employees. Marriott, for example, and Hyatt. (If you missed CEO Mark Hoplamazian speaking to Fortune‘s Susie Gharib about this earlier this week, that interview is here.)
But companies that rely on staff or contractors putting themselves at particular risk—Lyft, for example—or those that work in media and entertainment—like Disney—have also been early movers, as have those that may seek government help.
The question of whether it makes a difference is a thornier one. Most executive pay comes in the form of stock options, so dropping a base salary may not require an executive to take a lasting financial hit. And in most large companies, even the CEO’s salary won’t make much difference in plugging the gap caused by the fall-out from coronavirus.
But sometimes optics aren’t just, well, optics. Last year, I spoke to Paul Collier, a professor at Oxford and author of the book The Future of Capitalism: Facing the New Anxieties, for our series on the ideas that will shape the next decade. He warned of lagging trust in executives, and made the case that even in times of relative stability, true leadership by a CEO requires making a “visible personal sacrifice”—including taking a pay cut.
Or as Michael Useem, a professor of management at the Wharton School, told Emma:
“People have long memories when it comes to what you did in a crisis,” he said. “Did you step forward, or did you refuse to help out?”
More news below.
Katherine Dunn
katherine.dunn@fortune.com
@katherine_dunn
TOP NEWS
First shale bankruptcy
The shale sector has already seen its first major casualty of the coronavirus/price war double hit: Whiting Petroleum has filed for bankruptcy protection, the first large independent producer to do so. The company was facing a $262 million payment on a convertible bond, due on Wednesday. At current prices, Whiting is expected to be the first of many, with high debt levels leaving independent shale producers particularly vulnerable. FT
Remember WeWork?
SoftBank Group has scrapped a deal to spend $3 billion to buy WeWork stock from former CEO Adam Neumann and other shareholders in the coworking space company, which it had agreed to as a bailout package following the company's botched IPO attempt. SoftBank said it was dropping the deal because several conditions had not been met, despite legal threats from some board members. Bloomberg
Boeing buyouts
Boeing was already struggling. But as coronavirus has hit the airline industry, the company has begun offering early retirement and buyout packages to its workforce, following many of its airline customers who have been forced to lay off or furlough large numbers of staff. Despite suspending production of its 737 Max jet earlier this year, the Chicago-based plane maker hadn't previously announced layoffs. WSJ
Manufacturing contracts
March marked a clear contraction for American manufacturing—The Institute for Supply Management’s Purchasing Managers Index (PMI) came in at 49.1% in March, down from 50.1% in February. But it wasn't a one-off: manufacturing had already been in a lull: March marked the sixth month of contraction over the last 12 months, the worst stretch since 2009. Fortune
AROUND THE WATER COOLER
T-Mobil CEO speaks
Speaking after the successful $26 billion merger of T-Mobil and Sprint, Mike Sievert, the company's new CEO, spoke to Fortune's Aaron Pressman, and he talked a big game, saying the company has the potential to become "Number 1." Sievert will bring a different style to the role than his predecessor, notes Pressman, suggesting telecom watchers should expect more of a "suburban dad vibe." Fortune
Google helping Google
Lest Google's recent announcement of $340 million in ad credits to small and medium size businesses seem overly generous, remember: those same companies account for about half of Google's ad revenues—or the equivalent of $55 billion for the company last year. But the company is just one tech giant extending financial help that benefits customers it relies on. Fortune
'Hackers without conscience'
Healthcare providers and medical labs in U.S. and Europe are seeing a surge of cyberattacks, even as they struggle to cope with the spread of coronavirus. Many of those in Europe have been linked to an organized crime syndicate that uses the ransomware Maze, but cyber attacks overall have increased. Bloomberg
Food to order
To survive the shutdown of hotels and restaurants, some high-end food suppliers are turning to the consumer delivery market—for the first time. In Chesapeake Bay, Orchard Point Oyster Co. is offering harvested-to-order oysters; while Marx Foods started delivering ground bison and Iberico pork. They're hoping it'll help them survive—barely. One benefit: now, households are ordering in bulk. Fortune
This edition of CEO Daily was edited by Katherine Dunn


fortune--2020-04-02--Are growth or value stocks performing better in this market? The answer may surprise you

Restaurants and bars hope relaxed alcohol takeout regulations will help business during coronavirus shutdown

The stock market may have just had its worst quarter in 33 years, but that doesn’t mean there aren’t pockets of the market where investors can insulate themselves from all the damage.
The age-old debate between growth stocks and value stocks, for instance, is one area in which investors may be able to find some solace. According to equity investment firm Alger Management, the disparity between the two categories has grown markedly since the beginning of this year—with growth stocks coming out on top.
As Alger notes, the Russell 1000 growth index has outperformed both the Russell 1000 value index and the S&P 500 since the end of last year, with that divergence becoming more pronounced since the stock market began its coronavirus-related swan dive in mid-February. While having still fallen steeply, the growth index has lost only 18% this year to date, compared to a 31% drop in the value index and a 24% decline for the S&P 500.
The investment manager—which focuses its investment strategy on growth equities—points to a few factors behind the dichotomy. Those include the impact of lower interest rates on financial sector stocks, which are usually categorized as value stocks and tracked by value indexes. Alger also notes how a slowdown in global trade has hindered the “free flow of goods” and hurt value stocks, which “tend to deal more in tangible items, such as autos and equipment.” By contrast, more tech-oriented growth stocks “tend to operate in more of a digital economy.”
Alger adds that growth stocks tend to have healthier balance sheets, which are “critical to surviving economic tumult” and make them safer bets in recessionary conditions. According to the firm, while value stock earnings declined 40% on average in the previous two U.S. economic recessions, growth stock earnings “were relatively flat.”
Of course, some observers believe it is reductive to delineate simply between “growth” and “value” stocks when making investment decisions—and particularly so when considering indexes tracking both types of stocks.
As Charles Schwab chief investment strategist Liz Ann Sonders tells Fortune, it’s more about which sectors and industries have been outperforming the market as of late—with tech and health care stocks outstripping the likes of financials.
“I think the main reason growth stocks have been outperforming [value stocks] has had to do with which sectors have been outperforming,” Sonders says. “That’s tech and health care, and they happen to dominate the growth indexes—whereas the value indexes’ biggest weight is financials, and they’ve gotten crushed because of the environment.”
Sonders adds that in such volatile market conditions, it’s important for investors to be particular about the stocks they invest in, rather than fall back on the “labeling” ascribed to certain segments of the market that are deemed good bets.
“We’ve been telling investors that if you’re a stock picker, you want to look at stability and quality in earnings growth, but also have a value mindset,” she says. “This is an environment where being particular and taking an active, rather than passive, approach is important.”
More finance coverage from Fortune:
—Millions of Americans won’t be able to pay their bills this month. What financial experts advise
—Everything you need to know about the coronavirus stimulus checks
—Social distancing creates $8 trillion in economic benefits, study says
—Everything you need to know about furloughs—and what they mean for workers
—The lessons learned from the past 3 bear markets
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: U.S. tax deadline moved from April 15 to July 15
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-04-02--Boeing expected to announce voluntary buyouts in message to all 161,000 employees

Boeing Co. offered voluntary buyouts to eligible employees, in a bid to quickly shed costs and adjust its work force of 161,000 to a coronavirus crisis that’s quickly undermined the outlook for aircraft sales.
“When the world emerges from the pandemic, the size of the commercial market and the types of products and services our customers want and need will likely be different,” Chief Executive Officer David Calhoun said in a message to employees Thursday. “It’s important we start adjusting to our new reality now.”
The move will preserve much-needed cash at Boeing, which is facing a sharp contraction in demand along with its European archrival Airbus SE. Airline customers around the world have slashed schedules, with some parking their entire fleets as the coronavirus pandemic guts travel. About 44% of aircraft across the globe are in storage, according to an estimate by Cirium, and with virus cases approaching 1 million worldwide, there’s no telling when carriers will return to normal schedules, no less buying planes.
“With no cash coming in, you have to cut your fixed costs quickly,” said Nick Cunningham, an analyst at Agency Partners based in London, adding that salaries make up the biggest portion of the company’s fixed costs. “As painful as it is going to be, Boeing needs to reduce workers. If you don’t, you’ll destroy the company.”
Twin Crises
Boeing was already reeling from a prolonged grounding of its 737 Max when the coronavirus pandemic hit, with revenue and cash flow depleted. The disease has slowed work on recertifying the single-aisle workhorse, while clouding the outlook for sales once it returns.
The company is also facing a falloff in demand for twin-aisle aircraft like its 787 Dreamliner and the coming 777X, as long-distance travel has been hit harder than shorter hops. Wide-body jetliner production could tumble by 60% over the next three years, Jefferies analyst Sheila Kahyaoglu predicted in a March 31 report.
The need to downsize has created a dilemma for CEO Calhoun. Forced layoffs would give the company more control over where and how it cuts costs. But they would surely stir up a backlash that could complicate any effort by the manufacturer to access government aid.
While the company has told Congress that the industry needs some $60 billion, Calhoun has blanched at the strings that would potentially be attached, telling Fox News that the company has “other options.”
Voluntary buyouts keep the bailout option viable, should he ultimately choose to pursue it. Boeing is analyzing the funding options available, people familiar with its review said last week.
As it pares back its staff, another challenge for Boeing will be maintaining essential skills that will be needed when the market bounces back, Cunningham said. “But you have to actually survive as a company in order to come back again.”
More must-read stories from Fortune:
—Everything you need to know about the coronavirus stimulus checks
—How small-business owners and the self-employed can take advantage of the coronavirus stimulus package
—USPS warns might have to shutter because stimulus package provides no funding
—Whiskey makers bend the rules for barrel-aging, signaling a new wave for bourbon
—5 things to know about unemployment benefits in the COVID-19 stimulus package
—LISTEN: Two health care CEOs on why coronavirus tests and vaccines are the ammunition needed to fight COVID-19
—WATCH: The greatest designs of modern times
Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.


fortune--2020-04-02--Investors nervously eye crucial U.S. jobless claims report as global markets tick higher

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Good morning, Bull Sheeters. Yesterday’s sell-off was no joke. But markets are bouncing back today. Let’s take a closer look.
Markets update
Asia is mixed. Japan’s Nikkei is down, but the Hang Sang and Shanghai Composite are both trading higher. The biggest news out of the region is China’s move to stockpile cheap crude, taking advantage of rock-bottom prices. The oil markets cheered. Brent futures climbed 12% on the news, Bloomberg reports.
***
Europe looks a little better at the open. The European bourses are clinging to early gains. Germany and Italy extended coronavirus lockdown measures yesterday. That’s amid signs that Italy is beginning to see evidence the outbreak numbers are stabilizing. It’s very likely today the pandemic death toll will top 50,000 worldwide.
As happened in the U.S. last week, Britons en masse filed for unemployment benefits at record numbers, yet another bleak sign for the global jobs situation. In the past two weeks, nearly 1 million filed for “universal credit” as they call it in the U.K.
***
As I type, the Dow and S&P 500 futures are in the green. Both indices look set to open up by nearly 2%. The markets are extremely volatile, however. It’s almost impossible to assess whether investors see this as a risk-on or risk-off day.
***
Elsewhere, the dollar is flat (though climbing against the euro), putting an end to a three-day winning streak. Gold is up, and oil is rebounding strongly on the China news. Even if Brent holds on to its impressive gains, it’ll still be down more than 50% YTD.
***
“Investor pessimism today is as bad as it has been,” Dennis DeBusschere of Evercore ISI told Bloomberg yesterday, during a rough day on the markets. “All estimates of when this will end are being pushed out, which means even harder hits to GDP/earnings.”
As the U.S. becomes the new epicenter for coronavirus, the markets will be glued to the daily infections-and-death numbers there. If Europe is any judge, the worst is yet to come. That’s foremost on the mind of investors, and it was reflected in yesterday’s brutal sell-off
***
April 1st was no joke
Gold, the dollar and crude climbed yesterday as investors ditched riskier equities. The fall in the S&P more than wiped out the Monday-Tuesday gains.
All eyes are on jobless claims later this morning, which are expected to hit 3.5 million. That would exceed last weeks’ record totals. A reported number that comes in on either side of that estimate could swing the markets in either direction today. The global markets appear to be holding fire until that news comes in.
Postscript
Today’s entry will be mostly visual.
Italy may lead the world in collections of ancient funerary art. (Sorry, the markets have put me into that kind of mood today.) In most every town and city you can find these massive marble slabs depicting humanity having truly bad days.
Struggling to pull your pal out of the water before he gets swallowed whole by a sea monster—that would be my definition of a bad day. Look at the character on the far right. He can barely watch!
I snapped this photo two years ago. It’s a panel from a Roman sarcophagus found at a church-turned-museum in Perugia. My sister-in-law, an art expert, tells me it dates back to mid-13th century, a period of brutal plagues and pandemics that forever transformed Europe.
So, just a reminder (to myself): it could be worse.
Have a good day, and stay safe. I’ll see you here tomorrow senza sea monsters.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
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Today's reads
Raiding your retirement fund. The penalty for withdrawing money from your 401(k) account has been waived under the coronavirus stimulus act passed last week. Investors of any age can now pull out as much as $100,000 (or up to 100% of the balance). But there's a lot of fine print. Fortune's Lee Clifford explains how to take advantage of this loophole without digging a deeper financial hole.
Shale shutters. With the price of crude dropping to multi-year lows, the markets have been bracing for a wave of bankruptcies on America's shale patch. Yesterday we saw the first U.S. shale producer to file for Chapter 11 protection, the Wall Street Journal reports, with more expected to come.
Walking away from WeWork. Japanese mega-investor SoftBank will abandon its plan to buy $3 billion worth of WeWork stock held by Adam Neumann, the shared-workspace's ousted CEO, and other shareholders, Bloomberg reports. This development had been hinted at for weeks, and is now expected to trigger a fierce legal battle.
Market candy
Deal of the day
If you find yourself in Switzerland, you can now quarantine in style at the Le Bijou luxury hotel chain. Get a load of this deal. Price: $800 to $2,000 per night, according to CNBC. "Facilities include food delivery and a personal chef, as well as a private gym, in-room spa treatments and a home office."


fortune--2020-04-02--SoftBank scraps $3 billion deal to buy WeWork stock from Adam Neumann and other shareholders

SoftBank Group Corp. scrapped an agreement to spend $3 billion to buy WeWork stock from former Chief Executive Officer Adam Neumann and other shareholders, despite threats of legal action from some members of the company’s board.
SoftBank had agreed to buy the shares from Neumann, Benchmark Capital and others as part of a bailout package last year, but notified stockholders in mid-March that conditions for the deal hadn’t been met. On Thursday, after the deal’s deadline passed, SoftBank confirmed it would end the offer, citing five conditions that were not satisfied by the closing date.
“SoftBank remains fully committed to the success of WeWork and has taken significant steps to strengthen the company since October, including newly committed capital, the development of a new strategic plan for WeWork and the hiring of a new, world-class management team,” said Rob Townsend, chief legal officer at the company. “The tender offer was an offer to buy shares directly from other major stockholders and its termination has no impact on WeWork’s operations or customers.”
SoftBank shares rose 2.5% while the broader Japan market fell.
A WeWork committee of two independent directors voiced disagreement over SoftBank’s decision and suggested there may be legal action.
“The Special Committee is surprised and disappointed at this development, and remains committed to reaching a resolution that is in the best interest of WeWork and its minority shareholders, including WeWork’s employees and former employees. The Special Committee will evaluate all of its legal options, including litigation,” the committee, made up of Benchmark’s Bruce Dunlevie and another director, Lew Frankfort, said in an emailed statement.
The share purchase was hammered out in October as part of SoftBank’s rescue of WeWork, after the co-working company’s failed initial public offering left it weeks away from running out of money. In the deal, the Japanese conglomerate would have taken a stake of almost 80% in the company and buy $3 billion in shares from investors as well as current and former employees. Neumann, ousted in the deal, was set to sell up to $970 million in shares. The generous exit package angered many of his employees, thousands of whom had their jobs eliminated in the following months as WeWork parent We Co. tried to cut its expenses.
WeWork signs long-term leases with landlords around the world and then rents that space to smaller companies and freelance workers, a business that has been particularly vulnerable to the coronavirus and economic slowdown. In a letter to bondholders, the company warned it didn’t expect to hit its financial targets for 2020.
“Given our fiduciary duty to our shareholders, it would be irresponsible of SoftBank to ignore the fact that the conditions were not satisfied and to nevertheless consummate the tender offer,” Townsend said.
In the past few weeks, the shareholder buyout deal has become increasingly contentious. SoftBank sent the letter to WeWork investors saying it could withdraw from the agreement if certain conditions weren’t met by the deadline. SoftBank cited regulatory concerns and a handful of government investigations into WeWork, including from the U.S. Securities and Exchange Commission and the Justice Department.
The two WeWork independent board directors responded, saying they would consider legal action if SoftBank pulled out. “Its excuses for not trying to close are inappropriate and dishonest,” a spokeswoman for the directors had said in a statement.
The latest deal is separate from SoftBank’s bailout of WeWork itself, a package that included $5 billion in new financing and the acceleration of an earlier $1.5 billion commitment. Most of the money would have gone to five shareholders, including Neumann and the venture capital firm Benchmark, which was looking to sell $600 million in shares, Bloomberg has reported. Less than 10% of the proceeds would have gone to current WeWork employees, SoftBank has said.
Still, the transaction has repercussions for WeWork. As part of the deal, the company would have gotten $1.1 billion in debt financing from SoftBank if the share purchase was completed. The Japanese company has decided it is not legally obligated to provide that capital, although it may yet do so, according to a person familiar with the matter.
SoftBank and its affiliates have committed more than $14.25 billion to WeWork to date, including $5.45 billion since October, the company said in its statement. WeWork had $4.4 billion in pro forma cash and cash commitments at the end of 2019, SoftBank said.
Separately, SoftBank said it completed the sale of its U.S. unit Sprint Corp. to T-Mobile US Inc. The deal removes about $40 billion in net debt from the Japanese conglomerate’s balance sheet.
More must-read finance coverage from Fortune:
—Everything you need to know about the coronavirus stimulus checks
—Social distancing creates $8 trillion in economic benefits, study says
—Everything you need to know about furloughs—and what they mean for workers
—The lessons learned from the past 3 bear markets
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: U.S. tax deadline moved from April 15 to July 15
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.