Inovio Shares Jump on COVID-19 Data

Inovio’s COVID-19 vaccine INO-4800 generates antibodies and immune responses

Inovio (INO) announced the publication of the preclinical study data for IN0-4800, its COVID-19 DNA vaccine, demonstrating “robust” neutralizing antibody and T cell immune responses against coronavirus SARS-CoV-2.

Inovio reports promising data, Stockwinners

The study was published in the peer-reviewed journal Nature Communications by INOVIO scientists and collaborators from The Wistar Institute, the University of Texas, Public Health England, Fudan University, and Advaccine. Kate Broderick, Inovio’s Senior VP of R&D and Team Lead for COVID-19 vaccine development, said, “These positive preclinical results from our COVID-19 DNA vaccine not only highlight the potency of our DNA medicines platform, but also build on our previously reported positive Phase 1/2a data from our vaccine against the coronavirus that causes MERS, which demonstrated near-100% seroconversion and neutralization from a similarly designed vaccine INO-4700.

Inovio hopes its work would lead to a vaccine, Stockwinners

The potent neutralizing antibody and T cell immune responses generated in multiple animal models are supportive of our currently on-going INO-4800 clinical trials.

” The studies demonstrated that vaccination with INO-4800 generated “robust” binding and neutralizing antibody as well as T cell responses in mice and guinea pigs.

The authors demonstrated virus neutralizing activity using three separate neutralization assays testing the vaccine’s ability to generate antibodies which can block virus infection.

Study authors also detected these antibodies in the lungs of the vaccinated animals which could be important in providing protection from SARS-CoV-2.

In addition, high levels of Spike-specific T cell responses were observed with INO-4800 vaccination, which could be important in mediating protection from the virus infection.

A Phase 2/3 efficacy trial is planned to start in July/August pending regulatory approval.

PIPER Comments:

Piper Sandler analyst Christopher Raymond noted that Inovio shares are up by a double digit percentage on the Nature Communications publication of preclinical data on the company’s CoV-19 DNA vaccine INO-4800, but he said “this isn’t new news.” The market currently has a “buy-first-ask-questions-later mentality on all things COVID,” but most of the data in this paper has been available since the pre-print in early March, said Raymond.

Additionally, while an ability to generate T-cell responses and functional neutralizing antibodies in mice and guinea pigs is important, the preclinical picture remains incomplete without non-human primate data and viral challenge data, which is needed to fully understand the potential, the analyst tells investors. Raymond, who thinks it is more prudent to reserve judgment until initial human data slated for the end of June is available, keeps a Neutral rating on Inovio shares.

INO closed at $14.50, last traded at $17.00

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Several retailers grab their shopping bags and file for bankruptcy

As JC Penney’s files for bankruptcy, others line up to do the same

Retailers have long been suffering from a tough retail environment due to competition from online retailers such as Amazon, Etsy and eBay; it seems like COVID-19 fired the kill shot.

J.C. Penney

J.C. Penney announced that it has received approvals from the U.S. Bankruptcy Court for the Southern District of Texas, in Corpus Christi, TX for the “First Day” motions related to the company’s voluntary Chapter 11 petitions filed on May 15, 2020, including approval for the company to access and use its approximately $500M in cash collateral.

The 118 year old retailer files for Chapter 11 bankruptcy, Stockwinners

J.C. Penney entered into a restructuring support agreement with lenders holding approximately 70% of J.C. Penney’s first lien debt to reduce the company’s outstanding indebtedness and strengthen its financial position. J.C. Penney has approximately $500M in cash on hand as of the Chapter 11 filing date.

James Cash Penney started the company in 1902

JCP Gets Delisted

The New York Stock Exchange announced that the staff of NYSE Regulation has determined to commence proceedings to delist the common stock of J.C. Penney Company – ticker symbol JCP – from the NYSE. NYSE Regulation reached its decision that the company is no longer suitable for listing after the company’s May 15, 2020 disclosure that the company filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

Recent Retail Bankruptcies

On May 4th, J.Crew Group announced it has reached an agreement with its lenders holding approximately 71% of its Term Loan and approximately 78% of its IPCo Notes, as well as with its financial sponsors, under which the company will restructure its debt and deleverage its balance sheet, positioning J.Crew and Madewell for long-term success.

Houston-based Stage Stores Inc. filed for chapter 11 bankruptcy in Texas last week.

GNC Holdings (GNC), the nutritional supplement retailer, avoided bankruptcy by reaching a last-minute deal with creditors that allows it to avoid bankruptcy for at least 30 days but no more than 90 days under a deal announced Friday.

GNC avoids bankruptcy for 90 days

True Religion

Even before COVID-19 forced True Religion to close its 87 stores, the denim specialist’s sales were in decline and its profits were negative. After shuttering its footprint in response to the pandemic, 80% of its sales disappeared, according to the company. 

Others on the list

According to Law.com, both Macy’s (M) and Neiman Marcus have hired bankruptcy law firm Kirkland, and Wachtell. Neiman filed for Chapter 11 last week. Macy’s should be forthcoming.

Pier 1 Imports (PIR) filed for bankruptcy protection this month. It would only make sense if it’s competitors follow the same path.

Nashville-based retailer, Kirkland’s, Inc. operates as a specialty retailer of home décor in the United States. The company’s stores provide various merchandise, including holiday décor, furniture, ornamental wall décor, decorative accessories, art, textiles, mirrors, fragrance and accessories, lamps, artificial floral products, housewares, outdoor living items,

Kirkland’s has avoided Chapter 11, Stockwinners

In 2019, seventeen major retailers filed for bankruptcy. For some of them it was their second trip to the alter including Payless, Gymboree, and Charming Charlie.

Some of the retailers that filed for bankruptcy in the past 18 months. Stockwinners

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In the market for a used car? You are in luck

A Hertz bankruptcy will flood the market with used vehicles

If you are in the market for a used car, you are in luck. That is, if you have a place to drive to!

According to the Detroit Press, used car prices fell 34.4 percent in April alone. The paper offers solace to it’s readers by mentioning that  used car prices could go up soon due to a shortage of new cars caused by plant closures. The paper however, failed to mention the nearly half a million cars currently sitting ideal on Hertz car lots. With practically no one traveling these days, the need for rental cars has evaporated. Hertz (HTZ) and Avis-Budget (CAR) have suffered the most. Hertz has bigger problems than COVID-19 and that is it’s balance sheet.

There are several stories suggesting a Hertz bankruptcy is around the corner.

Hertz is near bankruptcy

According to Bloomberg, Hertz’s situation is a three-way standoff between Holders of Hertz’s asset-backed securities. They could delay pressuring Hertz to sell down its fleet for a short period of time, but they will need Hertz’s banks to promise to make them whole. The banks, in turn, may not want to take on such a risk, which requires them to bet that either the rental car business or used car prices return to some normal operating level.

A 2-year price chart of Hertz (HTZ), Stockwinners

Meanwhile, controlling shareholder Carl Icahn (IEP) holds a 39% equity stake in the rental company. Bloomberg says that he could put in more money to keep Hertz afloat, but this once again is dependent on a belief that the rental car business will recover to some extent in the very near future.

Carl Icahn

In a bankruptcy, Bloomberg notes, equity holders’ claims would be behind those of creditors, which is not an incentive for Icahn to put in more money at the moment.

Used car prices have fallen sharply due to Covid-19

A Hertz bankruptcy could flood the used car market with several hundred thousand cars, whose value is likely to take a substantial hit at a time when used car lots are already quite full and demand is low.

Companies now deliver used cars to your home for test drives

Bloomberg notes that used car prices dropped 11.4% from March to April, while sales were merely a quarter of pre-outbreak levels.

Meanwhile Hertz has started discounting its cars on its used car lots and Hertz Car Sales. In fact, you can pick up a car, and they will deliver it to your house for a test drive. We have seen discounts as high as 25% on some models.  The company carries brands like Ford, Chevrolet, Toyota and Nissan, to some luxury brands like Audi, Jaguar and Mercedes-Benz.

Cars are discounted by Hertz

One more footnote to this story: auto dealerships usually set their used car prices as a function of new car prices. With most of the domestic auto plants closed, price of new cars (2021 model year) will not be known anytime soon.

Companies in the space include: Copart (CPRT), CarMax (KMX), Carvana (CVNA), CarGurus (CARG), Penske (PAG). AutoNation (AN). 

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Chesapeake Energy may file for bankruptcy

Chesapeake Energy slides as company considers bankruptcy, strategic alternatives

Shares of Chesapeake Energy (CHK) are tumbling after the company warned that it might not be able to stay in business amid low commodity prices caused by a global price war and depressed demand due to the COVID-19 pandemic.

Chesapeake is near bankruptcy

EVALUATING STRATEGIC ALTERNATIVES:

On Monday, Chesapeake Energy announced that it filed its Form 10-Q for the three-month period ended March 31, 2020 and, in light of the unprecedented market environment, has withdrawn the financial outlook it previously provided on February 26, 2020.

The company also reinstated a “going concern” warning. “Fluctuations in oil and natural gas prices have a material impact on our financial position, results of operations, cash flows and quantities of oil, natural gas and NGL reserves that may be economically produced.

Historically, oil and natural gas prices have been volatile; however, the volatility in the prices for these commodities has substantially increased as a result of COVID-19 and the OPEC+ decisions […]

Historical oil prices represented in 2020 dollar, Stockwinners

If the current depressed prices persist, combined with the scheduled reductions in the leverage ratio covenant and an expected significant reduction in our borrowing base in our scheduled determination, then our liquidity and our ability to comply with our financial covenants during the next 12 months will be adversely affected,” Chesapeake said in the filing.

Boom to bust for CHK

“Based on our current forecast, we do not expect to be in compliance with our financial covenants beginning in the fourth quarter of 2020. Failure to comply with these covenants, if not waived, would result in an event of default under our revolving credit facility, the potential acceleration of outstanding debt thereunder and the potential foreclosure on the collateral securing such debt, and could cause a cross-default under our other outstanding indebtedness.

As a result of the impacts to the company’s financial position resulting from declining industry conditions and in consideration of the substantial amount of long-term debt outstanding, the company has engaged advisors to assist with the evaluation of strategic alternatives, which may include, but not be limited to, seeking a restructuring, amendment or refinancing of existing debt through a private restructuring or reorganization under Chapter 11 of the Bankruptcy Code.

However, there can be no assurances that the company will be able to successfully restructure its indebtedness, improve its financial position or complete any strategic transactions. As a result of these uncertainties and the likelihood of a restructuring or reorganization, management has concluded that there is substantial doubt about the company’s ability to continue as a going concern.”

REVERSE STOCK SPLITs NEVER WORK:

Chesapeake stock has lost about 50% of it’s value since a 1-for-200 reverse stock split took effect after the close of trading on April 14, 2020.

The company had implemented the reverse split to raise its share price enough to regain compliance with listing standards, but it was viewed as validation of investor concerns as the company struggled with falling commodities prices, high debt levels and the effects of the COVID-19 pandemic, the author added.

The company lost its way after Aubrey McClendon, a founder and former chief executive of Chesapeake Energy, died in a fiery car crash in 2016, a day after he was charged with conspiring to rig bids for oil and natural gas leases. Many believe he committed suicide.

Aubrey McClendon

McClendon — a key player in the U.S. shale boom — co-founded Chesapeake in 1989 and stepped down from the company in 2013. Chesapeake used to be the second-largest natural gas producer in the United States.

PRICE ACTION: In afternoon trading on Tuesday, shares of Chesapeake have dropped almost 22% to $10.13.

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Uber in talks to acquire GrubHub

Uber made all-stock offer to acquire GrubHub, WSJ reports

Shares of food delivery company GrubHub are sharply higher after the Wall Street Journal reported that Uber Technologies (UBER) approached GrubHub (GRUB) earlier this year with a takeover offer and the parent company of Uber Eats and its rival service operator continue to discuss a possible combination.

Uber may buy GrubHub, Stockwinners

Uber is seeking to acquire GrubHub in an all-stock deal that would reshape the meal-delivery business, but “it’s far from guaranteed the talks will produce a deal,” according to the report.

UberEats has 25% of the food delivery market, Stockwinners

Bloomberg’s Ed Hammond has separately reported this morning that Uber has made an offer to acquire GrubHub.

The companies are in talks about a deal and could reach an agreement as soon as this month, sources told Bloomberg. 

“While our Rides business has been hit hard by the ongoing pandemic, we have taken quick action to preserve the strength of our balance sheet, focus additional resources on Uber Eats, and prepare us for any recovery scenario,” said Uber CEO Dara Khosrowshahi.

Uber has a market cap of $57B

Uber Eats is a direct competitor to Grubhub, with Grubhub controlling  26.7% of the market while Uber holds a 25.2% market share. 

Grubhub has a market cap of more than $5.3 billion. Uber has a market cap of $57 billion.

GrubHub (GRUB) is seeking 2.15 Uber (UBER) share in exchange for each of its own shares in a potential takeover and Uber’s board is expected to review the latest GrubHub counter proposal, according to The Wall Street Journal, citing sources.

NEEDHAM

After Bloomberg reported that Uber (UBER) has approached GrubHub (GRUB) with a takeover offer, Needham analyst Brad Erickson said such a deal would be consistent with his bullish thesis that Uber Eats could eliminate as much as $500M of its roughly $1.2B in losses last year through such a GrubHub acquisition.

With Uber having exited India and seven other unprofitable markets, Erickson thinks investors would “further recognize a dramatically clearer picture towards food delivery profitability” if a GrubHub deal were to occur, he added. Erickson reiterates a Buy rating and $42 target on Uber shares.

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Amazon may buy AMC Movie Theatres

As AMC considers bankruptcy, Amazon may snap up the company

Amazon.com (AMZN) has held talks to acquire the troubled movie chain AMC Entertainment Holdings (AMC), but it is unclear if the discussions are still active, Jamie Nimmo of Daily Mail reports, citing sources.

The companies are thought to have held talks about a potential takeover of AMC by Amazon, the sources said.

Amazon may buy AMC

Buying a cinema chain would enable Amazon to control the screening of films, giving it greater dominance of the industry. Amazon’s interest in cinemas is not new. 

In 2018, Amazon looked at buying American arthouse cinema chain Landmark Theatres, but lost out to the eventual buyer, Cohen Media Group. Netflix was also reportedly in the running to buy Landmark.

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Amazon.com is in talks to buy AMC, Stockwinners

However, a takeover of AMC would be on a different scale as Landmark only had about 250 screens in the US, while AMC has about 1,000 around the world.

Amazon certainly has the means to buy AMC, whose stock market value has collapsed in recent years to just $420million.

In a sign of bad times in the movie business, earlier this month AMC Theatres (AMC) sent a letter to Universal Studios (CMCSA) chairman Donna Langley, saying that, going forward, AMC will not license any Universal films in any of its 1,000 globally effective immediately.

Amazon bought supermarket chain Whole Foods Market in 2017 in a sign that the company was willing to spend money buying non-web-based companies. 

Stockwinners offers stocks to buy, stocks to watch, upgrades, stock downgrades, earnings, Stocks to Avoid
Amazon bought Wholefoods in 2017

AMC was bought by Chinese conglomerate Dalian Wanda for $2.6 billion in 2012, but it bought back $600 million worth of shares in 2018 after Beijing cracked down on overseas investments by Chinese companies.

Under Wanda, AMC launched a major expansion plan, and in 2016 bought Odeon in the UK for £920 million from British financier Guy Hands’ private equity firm, Terra Firma, and US group Carmike Cinemas for $1.1 billion.

The deals turned AMC into the world’s largest cinema company, with 1,000 outlets and 10,000 screens around the world.

However, the expansion plan backfired and left AMC saddled with debts that are now close to $ 5billion. Last month, AMC raised $500 million from bond investors in an effort to stay afloat during the crisis. 

However, investors still questioned whether AMC could avoid bankruptcy, given its parlous financial state.

A group of AMC’s lenders reportedly hired lawyers to advise on restructuring options last month, underlining AMC’s financial strife. 

In Monday’s pre-market trading, AMC shares are up 70% to $7.00. AMZN closed at $2379.61.

Read our blog about AMC.

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Tesla sues Fremont and Alameda county

Tesla to move HQ and future plants to Texas and Nevada

Tesla (TSLA) said that, “Contrary to the Governor’s recent guidance and support from the City of Fremont, Alameda County is insisting we should not resume operations.

This is not for lack of trying or transparency since we have met with and collaborated on our restart plans with the Alameda County Health Care Services Agency.

Unfortunately, the County Public Health Officer who is making these decisions has not returned our calls or emails. […] the County’s position left us no choice but to take legal action to ensure that Tesla and its employees can get back to work.

Tesla’s only U.S. manufacturing plant is located in California

We filed a lawsuit on May 9 asking the court to invalidate the County Orders, to the extent the County claims they prevent Tesla from resuming operations.

Tesla’s Alameda County Plant, Stockwinners

Meanwhile, CEO Elon Musk said in a series of tweets that, “Tesla is filing a lawsuit against Alameda County immediately. The unelected & ignorant “Interim Health Officer” of Alameda is acting contrary to the Governor, the President, our Constitutional freedoms & just plain common sense! […] Frankly, this is the final straw.

Musk plans to move Tesla out of California

Tesla will now move its HQ and future programs to Texas/Nevada immediately.

If we even retain Fremont manufacturing activity at all, it will be dependent on how Tesla is treated in the future. Tesla is the last carmaker left in CA.

In March, Musk clashed with California officials over whether his company had to halt production in Fremont – home to Tesla’s only U.S. vehicle factory.

A county official on Friday said that its health department has had many discussions with Tesla and recommended it wait at least another week to monitor infection rates and discuss safe ways to resume production.

TSLA closed at $819.42.

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Rig Counts Collapse!

Baker Hughes reports U.S. rig count down 34 to 374 rigs

Baker Hughes (BKR) reports that the U.S. rig count is down 34 rigs from last week to 374, with oil rigs down 33 to 292, gas rigs down 1 to 80, and miscellaneous rigs unchanged at 2.

The international offshore rig count for April 2018 was 194. Stockwinners
The U.S. offshore rig count was 15.

The U.S. Rig Count is down 614 rigs from last year’s count of 988, with oil rigs down 513, gas rigs down 103, and miscellaneous rigs up 2 to 2.

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Rig Counts Fall – See Stockwinners.com Market Radar to read more

The U.S. Offshore Rig Count is down 1 rig from last week to 15 and down 5 year-over-year.

The Canada Rig Count is down 1 rig from last week to 26, with oil rigs unchanged at 7 and gas rigs down 1 to 19.

WTI in 2020 has traded widely, Stockwinners

The Canada Rig Count is down 37 rigs from last year’s count of 63, with oil rigs down 15 and gas rigs down 22.

Meanwhile WTI has traded in a wide range this year. Today the June contract is up 4.5% to $24.50 per barrel.

Brent crude for June delivery is up 4.8% to $30.85 per barrel.

A 70-year crude oil price chart in today’s dollar; Stockwinners

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Moderna shares jump on Fauci comments, possible COVID-19 vaccine

Moderna rises as Fauci comments on COVID vaccine potential highlighted

Shares of Moderna (MRNA) are trading higher, which is being attributed to comments made earlier this week by Dr. Anthony Fauci, the U.S. National Institute of Allergy and Infectious Diseases Director who has become one of the faces of the Trump administration’s COVID-19 response.

Fauci highlighted Moderna’s COVID-19 vaccine candidate, as well as another one in development at Oxford University, in an interview with National Geographic this week, telling the publication that he believes that the U.S. will have a vaccine ready for general use as soon as January “When we look at the immune response that you can induce with a modest dose – one that’s feasible to be translated into humans – and the amount of time it takes to get to that level of immunity, it is really quite impressive,” Fauci was quoted as saying when discussing both Moderna’s vaccine candidate and the one being developed at Oxford.

Modernal shares are higher on its vaccine potentail

“It is also really easy to scale up with these two, in the sense of making a lot of doses pretty quickly,” he reportedly added.

Dr. Fauci has been government’s leading Covid-19 expert

The interview, published two days ago, may be getting added attention after The Boston Business Journal published a recap with the headline “Fauci singles out Moderna’s coronavirus vaccine as reason for optimism” yesterday afternoon.

Moderna, Inc. (MRNA) is a clinical stage biotechnology company. It develops therapeutics and vaccines based on messenger RNA for the treatment of infectious diseases, immuno-oncology, rare diseases, and cardiovascular diseases.

Covid 19 has killed thousands of people worldwide

As of February 15, 2019 the company had 11 programs in clinical trials and a total of 20 development candidates in six modalities comprising prophylactic vaccines, cancer vaccines, intratumoral immuno-oncology, localized regenerative therapeutics, systemic secreted therapeutics, and systemic intracellular therapeutics. Moderna, Inc. also has a collaboration with Lonza Ltd. for the manufacture of mRNA-1273, a COVID-19 vaccine.

MRNA is up 9.5% to $53.50.

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Paypal is expected to report strong results

What to watch in PayPal earnings report

PayPal (PYPL) is scheduled to report results of its first fiscal quarter after market close on May 6, with a conference call scheduled for 5:00 pm EDT.

PayPal international business hurt by Covid -19

What to watch for:

1. OUTLOOK: On February 27, PayPal said that it had been “carefully assessing the effect of COVID-19 as conditions continue to evolve… PayPal’s business trends remain strong; however, international cross-border e-commerce activity has been negatively impacted by COVID-19.

We currently estimate the negative impact from COVID-19 to be an approximate one percentage point reduction, on both a spot and foreign currency-neutral basis, to PayPal’s year-over-year revenue growth for the first quarter, as compared to the revenue guidance provided on January 29, 2020.

PayPal domestic business remains strong, Stockwinners

Stronger performance quarter-to-date across our diversified business is partially offsetting this one percentage point negative impact. We now expect to report first quarter 2020 revenue toward the lower end of our previously guided range of $4.78B-$4.84B.”

The company also reaffirmed its Q1 GAAP and non-GAAP EPS guidance.

During the company’s last earnings call in late January, PayPal said it expected Q1 adjusted EPS between 76c-78c, and FY20 adjusted EPS of $3.39-$3.46.

2. ‘RAPID ADOPTION INCREASE’: In a research note to investors last month, Deutsche Bank analyst Bryan #Keane raised the firm’s price target on #PayPal to $147 from $127, while keeping a Buy rating on the shares.

The analyst believes the Street is underappreciating the “rapid adoption increase” toward e-commerce in the new COVID-19 world, with PayPal as one of the main beneficiaries of this trend. The surge in new online shoppers should drive “strong” net new active customers for the company, he contended.

3. TO WAIVE CERTAIN FEES, DEFER PAYMENTS: PayPal announced on March 31 a set of relief measures to help its more than 24M merchants around the world impacted by the coronavirus.

e-Commerce continues to fuel Paypal’s growth, Stockwinners

The company said it was waiving certain fees and deferring repayments on business loans for some of its most affected small business customers.

4. LENDING TO SMALL BUSINESSES: PayPal, Square (SQ), and Intuit (INTU) started lending to small businesses that couldn’t get access to COVID-19 relief funds through large U.S. banks, Bloomberg’s Olivia Rockeman and Edward Ludlow reported last month.

Fintech companies have been pushing to provide emergency loans since mid-March, over a week before the passage of a federal bill that crated the Paycheck Protection Program, the authors noted.

“The PPP program has manual checks and processes that require time, and we’re doing the best we can despite having tech that can operate at scale and efficiency,” said Brian Peters, executive director of Financial Innovation Now, an industry group whose membership includes PayPal and Square.

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Norwegian Cruise Line shores up its balance sheet, raises $2B

NCL Corporation announces $400M investment by L Catterton

Norwegian Cruise proposes $650M note sale

Norwegian Cruise Line Holdings (NCLH) announced a private placement of up to $400 million in aggregate principal amount of exchangeable senior notes due 2026 to an affiliate of L Catterton.

Norwegian raises $2 billion to shore up its balance sheet

The Private Exchangeable Notes will be general senior unsecured obligations of NCLC, guaranteed by NCLH, and will be exchangeable at the holder’s option at any time prior to the close of business on the business day immediately preceding the maturity date into Series A Preference Shares of NCLC, which shall be automatically exchangeable into a number of ordinary shares of NCLH.

Material Terms: The Private Exchangeable Notes will accrue payment-in-kind interest at a rate of 7.0% per annum for the first year post-issuance, 4.5% per annum payment-in-kind interest plus 3.0% per annum cash interest for the following four years post issuance and 7.5% in cash for the final year prior to maturity; L Catterton will be entitled to nominate one member to the Company’s board of directors so long as a minimum ownership threshold is met, as well as one observer to the Company’s board of directors; The closing of the Private Exchangeable Notes is expected to occur upon the satisfaction of certain customary closing conditions, including a condition that the Company raises at least $1.0 billion in proceeds in the aggregate from other offerings; L Catterton will have certain registration rights in respect of the ordinary shares underlying the Private Exchangeable Notes and will be subject to certain customary transfer, voting and standstill restrictions, including a one-year lock-up agreement.

Share Offerings

Norwegian Cruise Line Holdings announced an underwritten public offering of $350 million of ordinary shares of the company.

The company intends to grant the underwriters an option to purchase up to $52.5 million of additional ordinary shares.

The company expects to use the net proceeds from the Offering for general corporate purposes. Goldman Sachs & Co. LLC, Barclays Capital Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Mizuho Securities USA LLC are acting as joint book-running managers for the Offering.

Goldman Sachs

Goldman Sachs analyst Stephen Grambling lowered the firm’s price target on Norwegian Cruise Line to $15 from $34 as he updated his estimates to reflect canceled itineraries through July, a sluggish recovery in 2020-2021 and capital markets activity over the past few weeks, but not the cruise operator’s just announced and pending transactions.

After the company announced plans to raise $600M of senior secured debt, $650M of exchangeable notes, and $350M in equity, and placed $400mn of exchangeable notes with Catterton Partners, Grambling said the added $2B in liquidity provides the company with runway of over 14 months at company estimated cash burn rates. He keeps a Neutral rating on Norwegian shares.

NCLH is down $2.80 to $11.65. We believe shares have found support at these levels.

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Retail bankruptcy filings are coming

J. Crew files for bankruptcy; Madewell to remain part of J.Crew

J.Crew Group announced it has reached an agreement with its lenders holding approximately 71% of its Term Loan and approximately 78% of its IPCo Notes, as well as with its financial sponsors, under which the Company will restructure its debt and deleverage its balance sheet, positioning J.Crew and Madewell for long-term success.

Madewell to remain part of the J.Crew Company, Stockwinners

Under the terms of the Transaction Support Agreement, the Company’s lenders will convert approximately $1.65 billion of the Company’s debt into equity.

To facilitate the restructuring contemplated by the TSA, the parent company of J.Crew Group, Inc., Chinos Holdings, Inc. and certain affiliates, have filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Virginia.

The Company has secured commitments for a debtor-in-possession financing facility of $400 million and committed exit financing provided by existing lenders Anchorage Capital Group, L.L.C., GSO Capital Partners and Davidson Kempner Capital Management LP, among others.

Subject to Court approval, the DIP financing, combined with the Company’s projected cash flows, is expected to support its operations during the restructuring process.

As part of the TSA, Madewell will remain part of J.Crew Group, Inc.

Libby Wadle will continue in her role as CEO of Madewell.

J.Crew files for Chapter 11 bankruptcy protection, Stockwinners

“This agreement with our lenders represents a critical milestone in the ongoing process to transform our business with the goal of driving long-term, sustainable growth for J.Crew and further enhancing Madewell’s growth momentum,” said Jan Singer, CEO, J.Crew Group.

Neiman Marcus is expected to file for bankruptcy protection too

“Throughout this process, we will continue to provide our customers with the exceptional merchandise and service they expect from us, and we will continue all day-to-day operations, albeit under these extraordinary COVID-19-related circumstances.

Pier 1 Imports filed for bankruptcy protection

As we look to reopen our stores as quickly and safely as possible, this comprehensive financial restructuring should enable our business and brands to thrive for years to come.”

GNC is also expected to file for bankruptcy protection

The Company has filed a series of customary “first day” motions with the Bankruptcy Court seeking to maintain its operations during the restructuring process to help facilitate a smooth transition into Chapter 11.

JCP is inline for bankruptcy filing protection following weak sales

Note that in 2011, TPG Capital LP and Leonard Green & Partners LP privatized J.Crew in a $3 billion leveraged buyout.

Recent bankrupt retailers include Forever 21 and Pier 1 Imports.

Forever 21 filed for bankruptcy protection recently

Other retailers that may file for bankruptcy in the near future include: Neiman Marcus, JCP, GNC, and AEO. Note that Gaps (GPS) has been suffering from soft retail sales. Lands’ End (LE) is also suffering from soft sales.

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Loral Space in ‘advanced talks’ to combine with Telesat

Loral Space & Communications declares $5.50 per share special dividend

Loral Space & Communications (LORL) announced that its board of directors has declared a special dividend of $5.50 per share for an aggregate dividend of approximately $170.5M.

The dividend is payable on May 28 to holders of record of Loral voting and non-voting common stock as of the close of business on May 14.

Loral declares a one time $5.50 special dividend, Stockwinners

Michael Targoff, Vice Chairman of Loral’s Board of Directors, explained that, “in an effort to maximize shareholder value, we have for some time been exploring, and are now in advanced discussions with our Canadian co-owner in Telesat, Public Sector Pension Investment Board, regarding the combination of Loral and Telesat into one public company.

Telesat to combine with Loral Space, Stockwinners

“Given the advanced state of the discussions regarding the combination transaction, it is now appropriate to pay to our shareholders a significant portion of the $243M cash distribution that we previously received from Telesat.”

“It is our intention,” Mr. Targoff continued, “to request that the Board declare an additional distribution to our shareholders in coordination with signing definitive agreements for the combination transaction.”

The company added: “Notwithstanding the advanced state of the discussions regarding the potential combination transaction, there can be no assurance as to whether or when Loral will be able to conclude the ongoing negotiations, that Loral will enter into any agreement that provides for a strategic transaction involving Telesat or Loral’s interest therein, that any strategic transaction will occur, or that any particular economic, tax, structural or other objectives or benefits with respect to any strategic transaction will be achieved.”

Loral Space & Communications Inc. offers satellite-based communications services to the broadcast, telecom, corporate, and government customers worldwide.

Telesat, formerly Telesat Canada, is a Canadian satellite communications company.  The company is now the fourth-largest fixed satellite services provider in the world. It owns a fleet of satellites, with others under construction, and operates additional satellites for other entities.

LORL is up 31% to $23.10.

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The real star war begins

AMC to no longer play Universal movies in its U.S. theaters

AMC Theatres (AMC) sent a letter to Universal Studios (CMCSA) chairman Donna Langley, saying that, going forward, AMC will not license any Universal films in any of its 1,000 globally effective immediately.

AMC will no longer play Universal movies, Stockwinners

“For much of the past four and a half years, I have been in direct dialogue with Jeff Shell and Peter Levinsohn of Universal about the importance of a robust theatrical window to the viability of the motion picture exhibition industry,” the letter reads.

“Throughout that time, AMC has expressed a willingness to consider alternatives to the current windowing strategy common in our industry, where the aim of such alternatives is to improve both studio profitability and theater operator profitability.

Universal stated it only pursued a direct-to-home entertainment release for “Trolls World Tour” because theaters were closed and Universal was committed to a lucrative toy licensing deal. We had our doubts that this was wholly Universal’s motivations, as it has been a longstanding desire by Universal to go to the home day and date.

Nonetheless, we accepted this action as an exception to our longstanding business practices in these unprecedented times.”

AMC noted that Shell was quoted in the Wall Street Journal saying that the success of “Trolls World Tour” demonstrated the viability of PVOD, and as soon as theaters reopen, the company expects to release movies on both theater and PVOD formats.

“Going forward, AMC will not license any Universal movies in any of our 1,000 theatres globally on these terms,” the letter said.

“Accordingly, we want to be absolutely clear, so that there is no ambiguity of any kind. AMC believes that with this proposed action to go to the home and theatres simultaneously, Universal is breaking the business model and dealings between our two companies.

Universal owns some blockbuster franchises, Stockwinners

It assumes that we will meekly accept a reshaped view of how studios and exhibitors should interact, with zero concern on Universal’s part as to how its actions affect us. It also presumes that Universal in fact can have its cake and eat it too, that Universal film product can be released to the home and theatres at the same time, without modification to the current economic arrangements between us. It is disappointing to us, but Jeff’s comments as to Universal’s unilateral actions and intentions have left us with no choice.

Therefore, effectively immediately AMC will no longer play any Universal movies in any of our theatres in the United States, Europe or the Middle East. This policy affects any and all Universal movies per se, goes into effect today and as our theatres reopen, and is not some hollow or ill-considered threat.

Incidentally, this policy is not aimed solely at Universal out of pique or to be punitive in any way, it also extends to any movie maker who unilaterally abandons current windowing practices absent good faith negotiations between us, so that they as distributor and we as exhibitor both benefit and neither are hurt from such changes.

Currently, with the press comment today, Universal is the only studio contemplating a wholesale change to the status quo. Hence, this immediate communication in response.”

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Smile Direct receives patent for its concept

SmileDirectClub granted patent for SmileShop retail concept

SmileDirectClub (SDC) announced it has been issued a patent for its SmileShop intellectual property from the United States Patent & Trademark Office.

SmileDirect receives patent for its concept, Stockwinners

The patent, U.S. Patent No. 10,636,522, further strengthens the telehealth dentistry pioneer’s efforts to bring affordable, accessible oral care to more people through its unique and innovative teledentistry platform and direct-to-consumer business model.

The patent ensures no clear aligner competitor will be able to duplicate SmileDirectClub’s unique model for 18 years.

The patent encompasses the unique SmileShop concept and process, including scheduling of an appointment at a SmileShop, sending the scheduling confirmation to the customer, conducting the intraoral scan, generating a treatment plan, receiving approval of the treatment plan by a licensed dentist or orthodontist, producing aligners in accordance with the treatment plan, and sending those aligners to the customer.

Smile Direct eliminates the middle man, Stockwinners

SmileDirectClub’s clear aligner therapy platform has helped more than 1,000,000 customers achieve a straighter and brighter smile.

Furthermore, the company announced it is making plans to slowly reopen its SmileShops beginning in May in the U.S., Canada, Germany, Australia, New Zealand, the UK and Ireland as local governments begin to lift business restrictions.

After its shops temporarily closed in March, SmileDirectClub, one of North America’s largest 3D printing manufacturers, dedicated some of its capacity to producing 3D printed personal protective equipment to help in the fight against COVID-19.

Smile Direct has an alliance with WalMart, Stockwinners

The company has shipped more than 40,000 face shields to medical organizations, elder care facilities, dentists and orthodontists during this time, and will supply all of its SmileShop team members with face shields and other PPE along with staggered appointment times, temperature scans and other social distancing measures to ensure a safe, sanitary experience upon reopening.

SDC closed at $5.39, it last traded at $7.20.

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