Business

SEOUL, South Korea (AP) — South Korea says it plans to challenge a World Bank tribunal’s order to pay $216.5 million plus interest to Texas-based Lone Star Funds following a decade-long dispute over the private equity firm’s sale of the Korea Exchange Bank.

South Korean Justice Minister Han Dong-hoon said Wednesday that his government finds the ruling unacceptable because there is no fault in the way financial authorities handled the 2012 sale. He said the ministry is considering seeking an annulment of the order and other steps so that “not a penny of our nation’s blood-like taxpayer money is spilt.”

Han spoke hours after the Seoul government received the ruling from the World Bank’s International Center for Settlement of Investment Disputes. The payment ordered by the tribunal represented only 4.6% of $4.68 billion Lone Star had demanded, according to Han’s ministry, which represents the government in legal cases.

Lone Star initiated the arbitration in 2012, claiming that South Korea’s financial regulator unfairly delayed its review process over the sale of KEB and effectively forced the buyout firm to sell the bank at a lower price.

Lone Star acquired a controlling stake in the KEB in 2003, when South Korea was slowly wiggling out of the shock unleashed by the 1997-98 Asian financial crisis.

Lone Star had initially planned to sell its stakes to HSBC, but the British bank dropped its $6 billion bid in 2008, after South Korean authorities delayed their approval of the transaction. They cited legal concerns after a former Lone Star executive was found guilty of manipulating the stock price of a KEB credit-card unit.

Lone Star eventually sold its stake to South Korea’s Hana Financial Group for 3.9 trillion won ($2.9 billion) in 2012.

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NEW YORK (AP) — Shares of Bed Bath & Beyond plunged in premarket trading after the struggling home goods retailer announced a restructuring that includes store closures, layoffs and a stock offering.

The company said it has obtained more than $500 million of new financing and was reducing 20% of its workforce. It also plans to close about 150 namesake stores but will keep its buybuy Baby chain.

The retailer said Wednesday in the Securities and Exchange Commission filing that it may offer, issue and sell shares of its common stock from time to time. It plans to use the proceeds to pay down its debt, among other uses.

Bed Bath & Beyond, based in Union, New Jersey, has been facing lots of turbulence recently. In mid-August, shareholder activist Ryan Cohen, the billionaire co-founder of online pet-products retailer Chewy Inc., sold his entire stake in Bed Bath & Beyond after buying a big stake just months before and pledging to make big changes.

In June, Bed Bath & Beyond’s CEO was ousted amid slumping sales and supply chain issues.

Board member Sue Gove took over as interim CEO, replacing Mark Tritton. Bed Bath & Beyond hired Tritton in late 2019. He’d previously been the chief merchandising officer at Target where the more than 30 new brands he introduced were key in that company’s revitalization.

The company said that it is still searching for a permanent CEO. Chief Operating Office John Hartmann is leaving the company, and it’s eliminating that position.

Shares fell more than 19%, or $2.37 to $9.74 in premarket trading on Wednesday, after closing down more than 9%, or $1.24 to $12.11 in regular markets Tuesday.

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By Uditha Jayasinghe

COLOMBO (Reuters) – Crisis-hit Sri Lanka has reached a preliminary agreement with the International Monetary Fund (IMF) for a bailout, four sources with direct knowledge of the plan have told Reuters.

The debt-laden country has been seeking up to $3 billion from the global lender in a bid to escape its worst economic crisis since independence from Britain in 1948.

Sri Lankans have faced acute shortages of fuel and other basic goods for months, leaving it in political turmoil and inflation which is now soaring at almost 65%.

The sources, who declined to be named ahead of an official announcement planned for Thursday, did not say how much money Sri Lanka might get but optimism around the news sent the country’s bonds to their highest level in two months.

The IMF said its team, that has been in the country for a week, had extended its stay by a day and that a news conference would be at the Sri Lankan central bank on Thursday.

“The IMF Mission in Colombo has been extended by one day because discussions are still ongoing with the authorities,” the IMF said in statement.

The government did not respond to requests for comment, although Sri Lanka’s new President Ranil Wickremesinghe had told its parliament during a budget presentation on Tuesday that talks with the IMF had reached the final stage.

Staff-level IMF agreements, as they are known, need to get formal approval of its management and executive board before recipient nations get any funding.

The IMF team held talks with government officials, including the treasury secretary, late into the night on Tuesday to address concerns on the political front, the sources said.

Many of the more technical issues had been agreed to beforehand they added, although political analysts and investors expect the IMF will now also need to see signs that India, China and Japan that have lent to Sri Lanka remain supportive.

Colombo’s main share index jumped 2.6% on news of the preliminary loan pact, continuing its best month since January last year.

Government bonds, which are now in default, jumped as much 3.7 cents on the dollar too although most remain at just a third of their face value and have yields of around 50% on expectations that much of the money will have to be written off.

Sri Lanka’s debt crisis https://fingfx.thomsonreuters.com/gfx/mkt/znvnewdjbpl/Pasted%20image%201661948557583.png

CRISIS

Sri Lanka was plunged into full-blown crisis last month when then-president Gotabaya Rajapaksa fled amid a popular uprising against its economic collapse.

Rajapaksa was replaced by Prime Minister Wickremesinghe, who also heads the finance department and has held several rounds of talks with the IMF team.

The country also needs to restructure nearly $30 billion of debt. Japan has offered to lead talks with the other main creditors including India and China.

It will also need to strike a deal with international banks and asset managers that hold the majority of its $19 billion worth of sovereign bonds, that are now classed as in default.

“I think there will be quite a few prior actions that will be necessary (before the IMF’s money is disbursed),” said Carlos de Sousa at Vontobel Asset Management, one of the funds that bought Sri Lankan bonds.

He cited progress such as plans for an immediate VAT increase but cautioned that the IMF would also want to see greater independence given to Sri Lanka’s central bank, as well as progress on the India, China and Japan issue.

“That will probably take a bit longer,” de Sousa added. “We are not there yet.”

Sri Lanka’s debt had soared to unsustainable levels in the run up to the crisis. Years of populist tax cuts had depleted finances. The COVID-19 pandemic then hammered its tourism sector and slashed remittances from workers overseas.

The damage was compounded further by a ban of fertilisers that hit the farming industry and then over the last year by soaring oil and food prices.

Mark Bohlund, senior analyst at Redd Intelligence, said the agreement puts pressure on the main creditors to come up with financing assurances so the IMF can approve the program and funds can be disbursed.

“I’m optimistic that the financing assurances can be found relatively quickly,” he said, noting Sri Lanka’s geopolitical importance for the creditors.

Sri Lanka’s depleted reserves https://fingfx.thomsonreuters.com/gfx/mkt/mopanemymva/Pasted%20image%201661948160452.png

(Reporting by Uditha Jayasinghe; Additional reporting by Chris Thomas in Bengaluru and Marc Jones and Jorgelina do Rosario in London; Writing by Krishna N. Das; Editing by Raju Gopalakrishnan, Himani Sarkar and Angus MacSwan)

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NEW YORK (AP) — Online pet retailer Chewy Inc. on Tuesday reported a sales shortfall for its fiscal second quarter, a sign that even spending on dog treats and other pet accessories has fallen victim to inflation.

The company based in Dania Beach, Florida, also issued sales forecasts for its current quarter and fiscal year that fell below what Wall Street had been looking for. Chewy’s stock tumbled more than 9% in after-market trading.

Chewy’s disappointing sales results underscore how shoppers are cutting back on discretionary items — even pet products that were once considered recession-proof. The shortfall comes after pet-supply retailers enjoyed strong sales during the height of the pandemic, partly driven by people who acquired pets to keep them company during lockdowns.

But apparently, pet owners are also getting sticker shock from rising prices.

“Across the pet category, pricing escalated throughout the second quarter,” Chewy CEO Sumit Singh told industry analysts Tuesday. ”Consumers in the pet category responded to growing economic uncertainty by curtailing some of their purchase activity, leading to industrywide declines in unit volume.”

Singh said that even as consumers pull back in some areas, Chewy outperformed broader industry trends in essentials like food and healthcare.

Chewy reported second-quarter net income of $22.3 million, or 5 cents a share, in the quarter that ended July 31 after reporting a loss in the same period a year earlier.

The results surpassed Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for a loss of 12 cents per share.

The online pet store posted revenue of $2.43 billion, a 13% increase from the year-ago period. However, the results came in below Wall Street forecasts. Eight analysts surveyed by Zacks expected $2.45 billion.

For the current quarter ending in October, Chewy said it expects revenue in the range of $2.44 billion to $2.46 billion. Analysts were expecting $2.57 billion, according to FactSet.

The company said it expects full-year revenue in the range of $9.9 billion to $10 billion. That’s also below estimates for $10.25 billion, according to FactSet.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on CHWY at https://www.zacks.com/ap/CHWY

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(Reuters) -Snap Inc said on Tuesday its two senior advertising executives have exited the company, hours after a report disclosed the Snapchat parent was planning to cut about 20% of its workforce.

The executives Jeremi Gorman, chief business officer, and Peter Naylor, vice president of ad sales for the Americas, will join Netflix Inc, the streaming major said.

Snap shares fell 4% in extended trading as Wall Street turns wary of the future of its advertising business, which brings in a large chunk of its revenue.

The Verge earlier in the day reported Snap’s hardware division, responsible for Spectacles and the Pixy camera drone, its team working to help developers build mini apps and games inside Snapchat and social mapping app Zenly, will be hit by the lay-offs. (https://bit.ly/3CDfrIu)

The social media firm declined to comment on the report.

Technology companies, crypto exchanges and financial firms have cut jobs and slowed hiring as global economic growth weakens due to higher interest rates, red-hot inflation and an energy crisis in Europe.

Last month, Snap said some advertisers continue to face supply-chain disruptions and labor shortages, and many others are contending with rising costs amid record inflation, which have led to cutbacks in spending on advertising.

The company’s shares have lost nearly 39% since it posted results on July 21, contributing to an 80% decline this year.

Gorman will join Netflix as president of worldwide sales, while Naylor will be vice president of advertising sales starting September, Netflix said in a statement.

(Reporting by Eva Mathews in Bengaluru;Editing by Vinay Dwivedi)

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By Dawn Chmielewski and Sheila Dang

bu(Reuters) – Netflix Inc lured two of Snap Inc’s top executives to lead its advertising sales team, the company announced Tuesday, poaching two people that lent the social media company credibility with brand marketers.

Netflix confirmed it hired Snap’s chief business officer, Jeremi Gorman, as its new president of worldwide advertising. It also brought in Snap’s vice president of ad sales, Peter Naylor, in the same role at the streaming service.

The hiring of these two veterans signals Netflix’s commitment to building an ad-supported version of the company’s streaming service, which is expected to launch next year.

“You have two executives that are incredibly well positioned to help Netflix move quickly,” said LightShed Partners partner Rich Greenfield. “They have incredible relationships with brands and advertisers who will want to advertise on Netflix.”

Gorman is a well-respected executive who previously spent six years at Amazon.com. She arrived at Snap in 2018, at a time when the service was losing executives. Her arrival was seen as bringing credibility to Snap’s ad-sales business.

Naylor served as Hulu’s senior vice president of ad sales for six years before joining Snap in 2020. He attempted to help Snap capture more television ad dollars.

Snap confirmed the executive departures but declined to comment further.

Netflix has been assembling the pieces to launch a less-expensive version of its streaming service with commercials. In July, it announced a partnership with Microsoft Corp to provide ad technology. The new executives will bring established relationships with advertisers looking to advertise on Netflix.

“It sends a message that Netflix is really serious about building an ad business quickly,” Greenfield said.

(Reporting by Eva Mathews in Bengaluru, Dawn Chmielewski in Los Angeles and Sheila Dang in Dallas; Editing by Devika Syamnath and Josie Kao)

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By Foo Yun Chee

BRUSSELS (Reuters) – Amazon and Alphabet unit Google criticised Microsoft’s cloud computing changes on Tuesday, saying they limit competition and discourage customers from switching to rival cloud service providers.

The U.S. software giant on Monday announced amended licensing deals and other changes that will take effect on Oct. 1 and which they say will make it easier for cloud service providers to compete.

Amazon, Google, Alibaba and Microsoft’s own cloud services will be excluded from the deals.

Microsoft’s move came after smaller European Union competitors took their grievances about its cloud service practices to EU antitrust regulators, which subsequently quizzed market players on the issue and what impact they have experienced.

Amazon, the leading cloud service provider trailed by Microsoft and Google, was scathing in its critiques.

“Microsoft is now doubling-down on the same harmful practices by implementing even more restrictions in an unfair attempt to limit the competition it faces – rather than listening to its customers and restoring fair software licensing in the cloud for everyone,” a spokesperson for its cloud service unit AWS said in an email.

Google’s vice president for government affairs and policy Google Cloud Marcus Jadotte was equally critical.

“The promise of the cloud is flexible, elastic computing without contractual lock-ins,” he said in a tweet.

“Customers should be able to move freely across platforms and choose the technology that works best for them, rather than what works best for Microsoft,” Jadotte said.

(Reporting by Foo Yun Chee; Editing by Josie Kao)

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SACRAMENTO, Calif. (AP) — California could soon become the seventh state to make sure people won’t lose their jobs if they smoke marijuana when they are off the clock.

State lawmakers on Tuesday passed a bill that would stop companies from punishing workers who fail a certain type of drug test that detects not whether a person is high, but whether the person has used marijuana at all in recent days.

These tests, which rely on urine or hair samples, look for a substance that the body makes when it breaks down THC, the main psychoactive compound in marijuana. But that substance, called metabolites, can remain in a person’s body for weeks after using marijuana, according to the Mayo Clinic, meaning people can fail a drug test even though they are not impaired.

The legislation would prevent workers from being punished from failing these types of drug tests. Companies could still punish employees for failing other types of tests that use saliva and are better at determining if a person is currently high.

The bill now goes to the desk of Democratic Gov. Gavin Newsom, who has until the end of September to decide whether to sign it into law. It would take effect on Jan. 1, 2024.

“Nothing in this bill would allow someone to come (to work) high,” said Assemblymember Bill Quirk, a Democrat from Hayward and the author of the bill.

California was the first state to legalize medical marijuana in 1996, and it was one of the first states to legalize recreational marijuana in 2016. But the state has been slow to pass laws protecting workers who use marijuana on their own time.

Six other states — Nevada, New York, New Jersey, Connecticut, Montana and Rhode Island — have laws protecting workers’ rights to use recreational marijuana, according to the National Organization for the Reform of Marijuana Laws. Twenty-one states have laws protecting workers who use medical marijuana from discrimination.

Labor unions argue it isn’t fair to punish employees for doing something that is legal outside of their job and doesn’t interfere with their responsibilities at work.

“Using outdated cannabis tests only causes employees to feel unsafe and harassed at work, it does not increase workplace safety,” said Matt Bell, secretary-treasurer for the United Food and Commercial Workers Local 324.

The bill includes a number of exceptions to protect employers. It does not apply to companies that must perform drug testing to receive federal funding or comply with federal contracts. It also doesn’t apply to anyone working in the building and construction trades, an industry that benefits from lots of federal funding.

Still, the California Chamber of Commerce opposed the legislation because it would “create a protected status for marijuana use” in state law that bans discrimination in the workplace.

“Put simply: marijuana use is not the same as protecting workers against discrimination based on race or national origin,” the chamber wrote in a letter to lawmakers.

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(Reuters) – U.S. stock index futures rose on Tuesday after a rough start to the week on fears of aggressive rate hikes by the Federal Reserve, with investors looking ahead to consumer confidence and jobs data later in the day.

The benchmark S&P 500 index has fallen nearly 4% since Fed Chair Jerome Powell’s Jackson Hole speech last week that reaffirmed the central bank’s determination to aggressively raise interest rates to fight inflation despite a slowing economy.

Rate-sensitive banks rose, with Morgan Stanley and Bank of America up more than 1.5% each in trading before the bell.

The benchmark 10-year Treasury yield settled down to 3.07% on Tuesday after two straight sessions of gains.

Megacap growth and technology stocks such as Nvidia Corp and Tesla Inc, which came under pressure as yields surged, added 1.9% each.

Investors awaited U.S. consumer confidence data, due at 10:00 a.m. ET, which is expected to show the gauge to have risen to 97.9 points in August from a 95.7 in July.

The Job Openings and Labor Turnover Survey, or JOLTS report, is expected to show job openings likely fell to 10.475 million in July from 10.698 million in June.

At 04:46 a.m. ET, Dow e-minis were up 211 points, or 0.66%, S&P 500 e-minis were up 34 points, or 0.84%, and Nasdaq 100 e-minis were up 145.5 points, or 1.16%.

The CBOE Volatility index, also known as Wall Street’s fear gauge, slipped to 25.33 points after touching an over six-week closing high in the previous session.

Best Buy Co edged up 0.4% ahead of the electronics retailer’s quarterly results due before the bell.

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Saumyadeb Chakrabarty)

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(Reuters) – SolarEdge Technologies Inc’s solar power optimizers and inverters could face an import ban, as the U.S. International Trade Commission (ITC) said on Monday it would investigate a few products after a smaller rival alleged patent infringement.

In its complaint on July 28, Ampt LLC requested the U.S. ITC to ban imports of SolarEdge power systems and components that allegedly infringe two of its patents.

The U.S. ITC said it will set a target date to complete the probe within 45 days after initating the investigation.

Ampt is also seeking a ban on the sale of these products in the United States after they are imported.

“We appreciate the Commission’s decision to investigate SolarEdge’s unlawful use of our proprietary technology without asking our permission or compensating us,” Ampt Chief Executive Officer Levent Gun said in a statement.

Israel-based SolarEdge, whose shares fell 2.94% on Monday, said both the companies have been litigating a dispute involving patents before the U.S. Patent and Trademark Office (USPTO), which has awarded SolarEdge the priority of invention.

“It appears that having lost before the USPTO, AMPT is now shopping around its claims to other courts. SolarEdge anticipates a vigorous defense of these new cases,” SolarEdge said.

(Reporting by Jahnavi Nidumolu and Jaiveer Singh Shekhawat in Bengaluru; Editing by Sherry Jacob-Phillips and Krishna Chandra Eluri)

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