As predicted in this earlier post, it didn’t take long for English and German soccer fans to begin bashing each other amidst the World Cup matches. And this was before England’s 1-0 victory over Paraguay today. By the way, the Chronicle’s John Lopez is filing a series of interesting reports from the World Cup matches.
This Reuters article reports this morning that Madrid-based Banco Bilbao Vizcaya Argentaria SA (“BBVA”) is considering an acquisition of McAllen, Texas-based Texas Regional Bancshares Inc., a holding company with with a market capitalization of $1.87 billion that is in the retail banking business under the name of Texas State Bank.
BBVA is Spain’s second-largest bank that has traditionally focused on the remittance market in the U.S. where it facilitates the transfer of funds by immigrants to their home countries. Lately, BBVA has been expanding its U.S.-Mexican business operations — its Bancomer unit is already Mexico’s largest bank and it recently purchased Laredo National Bancshares for $850 million, so the possible acquisition of Texas State Bank’s owner would constitute a further expansion of BBVA’s U.S. business operations. BBVA is a big outfit, with a market cap of over $66 billion, net income of over $3.8 billion last year and over 90,000 people employees worldwide.
Texas Regional Bancshares is a regional bank located in Texas’ Rio Grande Valley (wonderfully depicted in the movies Lonesome Dove and Lone Star) that has about 75 branches and $6.5 billion in assets based primarily in south Texas. In 2002, Texas Regional commenced an expansion plan in which it has bought small banks in the Houston, Corpus Christi and Dallas areas, which likely makes the bank even more attractive to BBVA. With the large immigrant populations in both Houston and Corpus, BBVA could use the Texas State Banks as the foundation of a substantial increase in its remittance business in Texas while also expanding its traditional banking operations in the state.
Get used to it because the ripples from the Jason Grimsley Affair are already starting and may turn into pretty tasty waves soon.
It looks as if Grimsely has fingered Chris Mihlfeld, a Kansas City-based ìstrength and conditioning guruî (and the former Strength And Conditioning Coordinator for the Kansas City Royals baseball club) as referring Grimsley to a source from whom Grimsley obtained “amphetamines, anabolic steroids and human growth hormone.” Mihlfeld has been Cardinals star Albert Pujolsí personal trainer since before Pujols was drafted by the Cardinals in the 13th round of the 1999 draft.
Meanwhile, as speculated in this previous post from over a year ago, this NY Times article reports that the perjury investigation into Barry Bonds is continuing to fester.
This is going to get very ugly. Quickly.
Update: Mihlfeld is denying that his name is connected to the drug probe that has ensnared Grimsley or that Pujols was involved in taking performance-enhancing drugs.
Although somewhat lower on the radar screen than General Motors’ more well-publicized troubles, Ford Motor Co. is reeling today after Fitch Ratings downgraded the company’s credit rating (see also here) two notches to the highly-speculative single-B-plus level while analyzing how creditors might fare in a corporate reorganization of Ford under chapter 11. Despite the downgrade, Ford’s rating is still higher than GM’s credit rating, which is B3 by Moody’s Investors Service and single-B by Standard & Poor’s and Fitch.
Inasmuch as Ford (as with GM) continues to have a strong liquidity position (about $24 billion in cash and securities as of the end of the first quarter), a bankruptcy filing is probably not imminent even though Ford estimates that it will burn through about $5-6 billion of that cash in 2006. At the close of yesterday’s New York Stock Exchange composite trading, Ford shares were down 2% to $6.66 while on the debt side, Ford’s 7.45% bonds due in 2031 fell 3.5% to about 70 cents on the dollar, which translates into a yield of 11% that is slightly below the yield on GM’s 8.375% bonds that mature in 2033.
In its analysis, Fitch reminds investors that companies with a single-B-plus rating end up in bankruptcy about 24% of the time within five years. In a hypothetical Ford bankruptcy case, Fitch estimated debt holders would get back 50% to 70% of their investment from Ford and 70% to 90% of their investment in Ford Credit Company.
Professor Ribstein — who was prescient in predicting the outcome of the corporate case of the decade — can rest easy.
In a ruling issued yesterday afternoon, the Delaware Supreme Court upheld the Delaware Chancellory Court’s decision dismissing the civil lawsuit brought by certain Disney shareholders against the board of Walt Disney Co. for approving the rather generous $140 million severance package paid to former Disney executive Michael Ovitz after Ovitz was effectively fired by his longtime friend and former Disney CEO Michael Eisner for essentially doing nothing during Ovitz’s year as president Disney. A copy of the decision is here, and here are initial comments from corporate law scholars Professor Ribstein, Professor Bainbridge and Professor Smith.
Steven Schulman, the former Milberg Weiss partner who has bigger problems now than the loss in the Disney-Ovitz case, pursued the case on behalf of certain Disney shareholders and contended that the Disney board’s decision-making process amounted to a series of sham “jam sessions” in which the board abrogated its responsibilities to Disney shareholders by rubberstamping the Eisner-supported severance deal for Ovitz. However, the Delaware Supreme Court upheld the Chancellory Court’s decision that was critical of the Disney board, but concluded that Eisner and the other Disney directors acted in good faith in approving Ovitz’s termination without cause and thus, were immunized from liability to shareholders regardless of whether approving the generous severance may have been a bad decision.
On the heels of the Fifth Circuit ordering the release from prison yesterday of two other business executives who have been subjected to the Justice Department’s demonization of business in the post-Enron era, U.S. District Judge Sim Lake will conduct a scheduling conference this afternoon in Houston in the sad case of Jamie Olis in an effort to kick-start the resentencing of Olis that the Fifth Circuit ordered seven months ago after throwing out Judge Lake’s original 24-year sentence of Olis.
Judge Lake, who has been preoccupied with a rather long trial in another case over the past several months, is not the type of judge to allow pending matters to linger on his docket, so expect him to use today’s hearing to schedule a final resentencing hearing in the near future. The key issue in the resentencing is the amount of market loss attributable to the transaction on which Olis’ conviction is based, and the prosecution has been dragging its feet since the resentencing was ordered in an apparent effort to buttress its untenable market loss theory upon which Judge Lake based the original sentence of Olis. Judge Lake has not yet tipped his hand on how he intends to view the market loss issue on the resentencing of Olis, so today’s hearing may provide a forum for the judge to give the parties some direction for preparing the evidence on that key issue for the final resentencing hearing.
As I anticipated, the Fifth Circuit Court of Appeals this morning ordered the release of former Merrill Lynch executives Daniel Bayly and Robert Furst pending disposition of the appeal of their controversial convictions in the Enron-related Nigerian Barge case.
Another former Merrill executive convicted in the case — William Fuhs — was previously ordered released from prison by the Fifth Circuit on March 30.
The fourth Merrill executive convicted in the barge case — James Brown — had his renewed motion for release pending appeal curiously denied summarily by the Fifth Circuit.
Daniel Boyle, Enron’s former vice president of global finance, was also convicted in the case and is serving a 46 month sentence, which he is not appealing.
Former Enron in-house accountant, Sheila Kahanek, was the only defendant acquitted in the trial of the case.
As noted in many previous posts on this blog, the plight of Bayly and Furst in the Nigerian Barge case is a prime example of the appalling cost of the government’s criminalization of business in the post-Enron era.
In the Nigerian Barge case, the Enron Task Force took a relatively small transaction under which Merrill Lynch bought a stream of dividend payments from an Enron affiliate and criminalized it through a brazen web of distortion, suppression of key testimony, inadmissible hearsay, opposition to the defense’s jury instruction on the key issue in the case and prosecutorial misconduct.
The Task Force effectively prosecuted the Merrill Four for doing their jobs in connection with Enron’s sale of an asset for which Enron may have improperly accounted, although even that issue was never proven at trial.
In reality, the Merrill Four were convicted for having the misfortune of being involved in a legitimate transaction with the social pariah Enron. Kudos to the Fifth Circuit for beginning to correct this monstrous wrong.
Bayly is represented on his appeal by a team of lawyers, including his lead trial counsel, Tom Hagemann and Marla Thompson Poirot of Gardere Wynne and Sewell in Houston, appellate specialists Lawrence S. Robbins, Gregory L. Poe and Alice W. Yao of Robbins, Russell, Englert, Orseck & Untereiner LLP in Washington, D.C., and Richard J. Schaeffer, Peter J. Venaglia, and Brian Rafferty of Dornbush Schaeffer Strongin & Weinstein, LLP in New York City. Furst is represented on appeal by John W. Nields, Jr. William L. Webber, Kyle S. Cohen and Sowmia Nair of Howrey, LLP’s Washington, D.C. office.
In preparation for the next weekend’s U.S. Open at venerable Winged Foot Golf Club in New York, Golf Digest’s Bill Fields weighs in with this entertaining article on former Winged Foot head pro and former Houstonian, the late Claude Harmon (pictured on the left with his old friend, Ben Hogan). Claude — who was a formidable PGA Tour player and teaching professional during his life — was the father of the famous quartet of Harmon brother teaching professionals, Butch, Craig, Dick (see here also) and Billy. In addition to Claude, both Butch and the late Dick Harmon lived in Houston for a substantial part of their lives, and each of the Harmon brothers has been regularly rated among the best golf instructors in the U.S.
For the final decade of his life, Claude was the pro emeritus at Houston’s Lochinvar Golf Club, where Claude’s green jacket from winning the 1948 Master’s Golf Tournament is still displayed prominently in the clubhouse’s trophy case. As noted in Fields’ article, Claude was an extraordinary golf talent who regularly beat Hogan in their daily games during the winter months in Florida and who tied for 3rd in the 1959 U.S. Open at Winged Foot, the best finish by a club pro in the U.S. Open other than Horace Rawlins’ victory in the first U.S. Open in 1895.
Well-known Houston plaintiff’s attorney, Carlene Rhodes Lewis, died on Monday at M.D. Anderson Hospital in Houston from the effects of ovarian cancer. The Houston Chronicle obituary on Ms. Lewis’ life is here.
Ms. Lewis specialized in products liability cases, and she was at the forefront of developing the Vioxx cases against Merck. Ms. Lewis began investigating the cases against Vioxx in 2000 and, in August 2005, she was part of a team of three lawyers that won a $253.5 million jury verdict against Merck in Brazoria County district court, just south of the Houston metro area. Over 20 million people took Vioxx before Merck took it off the market in September 2004, and the company is now facing around 11,500 lawsuits by about 23,000 plaintiffs. So far, the plaintiffs and Merck have split the six cases that have gone to trial, and about a dozen other cases are scheduled for trial before the end of this year.
Ms. Lewis moved to Houston after finishing law school in 1984 and joined Sewell & Riggs, where she specialized in the defending product liability lawsuits. About five years later, she and her former Sewell & Riggs colleague, Houston attorney Daniel Goforth, formed their own firm and began pursuing plaintiff’s cases. Over the past 17 years, Ms. Lewis was a respected and well-liked member of the formidable Houston plaintiff’s bar.
A memorial service for Ms. Lewis will be held Friday, June 9, at 3:00 pm at Chapelwood United Methodist Church in Houston. The eulogy will be given by her long-time friend and colleague in various plaintiff’s cases, Mark Lanier.
This NY Times article reports on the criminal investigation into alleged illegal use of steroids and human growth hormone by journeyman Major League Baseball pitcher Jason Grimsley, who retired from the Arizona Diamondbacks yesterday after the media reported on the search of his home by federal authorities. Here is a pdf file of Special Agent Jeff Novitzky’s affidavit (redacted of names of other MLB players involved) in support of the search warrant on Grimsley’s home, and here is an NY Times profile on Grimsley. Novitzky has also been involved in the investigation of Barry Bonds’ use of steroids and other related performance-enhancing drugs.
Prior to this latest development, Grimsley was most well-known in MLB circles for slithering through a ceiling to retrieve his Cleveland Indians teammate Albert Belle’s corked bat from the umpires’ room at Chicago’s Comiskey Park after the umps had confiscated it during a 1994 game. However, Grimsley has apparently been the focus of the investigation for some time and, as noted in this earlier article of unverified allegations, the investigation could very well lead to the Stros clubhouse, as well as the clubhouses of most other MLB teams.
Grimsley has apparently made a statement to investigators in which he has named over 20 teams and team-related drug sources, and the contents of that statement will almost certainly be leaked in the upcoming days. Within MLB, the crossword puzzle of identifying the redacted names in Novitzky’s affidavit is already going full blast, not only because many of the names are easily connected to Grimsley, but also because some are big MLB stars. As a result, the Grimsley Affair — even more than the situation involving Bonds — has the potential to blow the lid off MLB’s ongoing public relations nightmare involving use of performance-enhancing drugs by its players.