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As Congress prepares to restock a depleted small-business loan fund, complaints are mounting about the publicly traded companies that sucked up hundreds of millions of dollars from the fund’s initial distributions.As Congress prepares to restock a depleted small-business loan fund, complaints are mounting about the publicly traded companies that sucked up hundreds of millions of dollars from the fund’s initial distributions.
At least 94 public companies obtained $365 million in forgivable loans from the taxpayer-backed Paycheck Protection Program, an Associated Press analysis found. The recipients included Potbelly Sandwich Shop, a chain of 400 restaurants; Hallador Energy, a coal company; and Quantum Corporation, a data storage company, according to regulatory filings. Each received $10 million from the program’s $349 billion fund. (The restaurant chain Shake Shack returned its $10 million loan.)At least 94 public companies obtained $365 million in forgivable loans from the taxpayer-backed Paycheck Protection Program, an Associated Press analysis found. The recipients included Potbelly Sandwich Shop, a chain of 400 restaurants; Hallador Energy, a coal company; and Quantum Corporation, a data storage company, according to regulatory filings. Each received $10 million from the program’s $349 billion fund. (The restaurant chain Shake Shack returned its $10 million loan.)
Hotels and luxury resorts that funnel money back to a single company have secured about $40 million in small-business program funding, the latest evidence that large sums of money flowing from the government’s relief program are in some cases helping big businesses.Hotels and luxury resorts that funnel money back to a single company have secured about $40 million in small-business program funding, the latest evidence that large sums of money flowing from the government’s relief program are in some cases helping big businesses.
Ashford Inc., an asset management firm based in Dallas, makes money partly by advising two real estate investment trusts: Ashford Hospitality Trust and Braemar Hotels & Resorts, which together own more than 100 properties. Those companies reported that their hotel properties had received millions in forgivable loans through a government program meant to help small businesses.Ashford Inc., an asset management firm based in Dallas, makes money partly by advising two real estate investment trusts: Ashford Hospitality Trust and Braemar Hotels & Resorts, which together own more than 100 properties. Those companies reported that their hotel properties had received millions in forgivable loans through a government program meant to help small businesses.
The federal government usually considers a business “small” only when it has fewer than 500 workers, but an exception in the loan program allowed some companies to qualify based on the number of workers they have at each location. That made many chain restaurants eligible for loans. Other exceptions allowed business in certain industries, including mining, to qualify with larger workforces.The federal government usually considers a business “small” only when it has fewer than 500 workers, but an exception in the loan program allowed some companies to qualify based on the number of workers they have at each location. That made many chain restaurants eligible for loans. Other exceptions allowed business in certain industries, including mining, to qualify with larger workforces.
JPMorgan Chase was by far the largest lender to public companies, loaning them $93 million, according to research by Morgan Stanley.JPMorgan Chase was by far the largest lender to public companies, loaning them $93 million, according to research by Morgan Stanley.
Treasury Secretary Steven Mnuchin said his department would be issuing new guidelines on Wednesday that would tighten the rules for which types of companies could get forgivable loans, potentially restricting publicly trade companies from accessing the relief funds.Treasury Secretary Steven Mnuchin said his department would be issuing new guidelines on Wednesday that would tighten the rules for which types of companies could get forgivable loans, potentially restricting publicly trade companies from accessing the relief funds.
Mr. Mnuchin, who said this week that the program was not intended to aid big companies that have access to capital, urged firms that received loans to return the money if they did not meet the eligibility requirements. If they did not, he said, the loan would not be forgiven and those firms could face “severe consequences.”Mr. Mnuchin, who said this week that the program was not intended to aid big companies that have access to capital, urged firms that received loans to return the money if they did not meet the eligibility requirements. If they did not, he said, the loan would not be forgiven and those firms could face “severe consequences.”
“If they pay the money back quickly, there will be no liability to Treasury and the S.B.A.,” he said. “If they don’t, they could be subject to investigation.”“If they pay the money back quickly, there will be no liability to Treasury and the S.B.A.,” he said. “If they don’t, they could be subject to investigation.”
Stocks rallied on Wednesday and oil prices reversed some of their tremendous losses as investors regrouped after two days of turmoil in financial markets.Stocks rallied on Wednesday and oil prices reversed some of their tremendous losses as investors regrouped after two days of turmoil in financial markets.
The S&P 500 climbed more than 2 percent, and shares in Europe were also higher. The benchmark for American crude — which had been hammered out of concern that a glut in supply would soon overwhelm storage facilities — bounced back more than 20 percent.The S&P 500 climbed more than 2 percent, and shares in Europe were also higher. The benchmark for American crude — which had been hammered out of concern that a glut in supply would soon overwhelm storage facilities — bounced back more than 20 percent.
Investors also rallied behind a handful of earnings updates that showed companies had not done as poorly in the first three months of the year as some had expected. After Snap, the owner of Snapchat, reported a surge in revenue and user growth, its shares rallied along with those of Twitter and Facebook.Investors also rallied behind a handful of earnings updates that showed companies had not done as poorly in the first three months of the year as some had expected. After Snap, the owner of Snapchat, reported a surge in revenue and user growth, its shares rallied along with those of Twitter and Facebook.
Similarly, shares of some restaurant chains jumped after Chipotle Mexican Grill said on Tuesday that digital and delivery sales driven by the coronavirus crisis soared. Executives at Chipotle also said the company was preparing to reopen stores, as states lift stay-at-home restrictions. Chipotle, which agreed on Tuesday to pay $25 million to resolve criminal charges accusing the fast food company of serving tainted food from 2015 to 2018, was the best performer in the S&P 500 on Wednesday, with a gain of 14 percent.Similarly, shares of some restaurant chains jumped after Chipotle Mexican Grill said on Tuesday that digital and delivery sales driven by the coronavirus crisis soared. Executives at Chipotle also said the company was preparing to reopen stores, as states lift stay-at-home restrictions. Chipotle, which agreed on Tuesday to pay $25 million to resolve criminal charges accusing the fast food company of serving tainted food from 2015 to 2018, was the best performer in the S&P 500 on Wednesday, with a gain of 14 percent.
Investors had other news to consider. The Senate on Tuesday passed a bipartisan $484 billion coronavirus relief package that would replenish a depleted loan program for distressed small businesses and provide funds for hospitals, states and coronavirus testing.Investors had other news to consider. The Senate on Tuesday passed a bipartisan $484 billion coronavirus relief package that would replenish a depleted loan program for distressed small businesses and provide funds for hospitals, states and coronavirus testing.
The gains came after the S&P 500 had fallen 3 percent on Tuesday, its sharpest decline in three weeks in a drop that had suggested a marked shift in sentiment among investors who had otherwise been buying stocks with every sign of progress in the fight against the coronavirus, effort to reopen the economy or indication that Washington would spend more to help. That optimism was briefly shattered on Monday when oil prices collapsed as energy traders panicked about disappearing demand for petroleum and the fact that there were few places left to store all the crude still being pumped.The gains came after the S&P 500 had fallen 3 percent on Tuesday, its sharpest decline in three weeks in a drop that had suggested a marked shift in sentiment among investors who had otherwise been buying stocks with every sign of progress in the fight against the coronavirus, effort to reopen the economy or indication that Washington would spend more to help. That optimism was briefly shattered on Monday when oil prices collapsed as energy traders panicked about disappearing demand for petroleum and the fact that there were few places left to store all the crude still being pumped.
But on Wednesday, some stability returned to the energy market, with the price of both West Texas Intermediate crude, the American benchmark. Shares of companies in the energy industry also rallied.But on Wednesday, some stability returned to the energy market, with the price of both West Texas Intermediate crude, the American benchmark. Shares of companies in the energy industry also rallied.
It could be years before airlines fully recover from the pandemic, but some industry executives are starting to ask what it will take to bring passengers back.It could be years before airlines fully recover from the pandemic, but some industry executives are starting to ask what it will take to bring passengers back.
Delta Air Lines, American Airlines, United Airlines and Southwest Airlines have already aggressively advertised the precautions they are taking, from fogging cabins with disinfectant to restricting food service to blocking out middle seats.Delta Air Lines, American Airlines, United Airlines and Southwest Airlines have already aggressively advertised the precautions they are taking, from fogging cabins with disinfectant to restricting food service to blocking out middle seats.
The chief executive of Delta, Ed Bastian, told financial analysts on Wednesday his company was prepared to “make whatever changes to the business model that will be necessary.” That could mean federally administered “immunity passports” or spacing out seats or running flights with fewer passengers.The chief executive of Delta, Ed Bastian, told financial analysts on Wednesday his company was prepared to “make whatever changes to the business model that will be necessary.” That could mean federally administered “immunity passports” or spacing out seats or running flights with fewer passengers.
“This recovery is going to take several years,” Mr. Bastian said. “It’s going to be multi-phased, it’s going to be choppy along the way. We’ll have opportunities to test all those theses and see what it takes.”“This recovery is going to take several years,” Mr. Bastian said. “It’s going to be multi-phased, it’s going to be choppy along the way. We’ll have opportunities to test all those theses and see what it takes.”
But what works for some airlines may not work for others. Michael O’Leary, the chief executive of low-cost carrier Ryanair, told The Financial Times on Wednesday that the airline would not return to flying with middle seats empty.But what works for some airlines may not work for others. Michael O’Leary, the chief executive of low-cost carrier Ryanair, told The Financial Times on Wednesday that the airline would not return to flying with middle seats empty.
Whatever the airlines do, passengers are not likely to come rushing back. In a recent survey conducted by the International Air Transport Association, 40 percent of recent travelers said that even after the outbreak was contained, they were likely to wait six months or more before returning to the skies.Whatever the airlines do, passengers are not likely to come rushing back. In a recent survey conducted by the International Air Transport Association, 40 percent of recent travelers said that even after the outbreak was contained, they were likely to wait six months or more before returning to the skies.
Volkswagen said on Wednesday it has called employees back to work at its plant in Chattanooga, Tenn., on May 3, making the company one of the first major automakers to resume manufacturing since much of the industry shut down because of the coronavirus pandemic.Volkswagen said on Wednesday it has called employees back to work at its plant in Chattanooga, Tenn., on May 3, making the company one of the first major automakers to resume manufacturing since much of the industry shut down because of the coronavirus pandemic.
The company said it had spent several weeks putting in place health and safety measures to protect the 3,800 people who work at the plant, which makes the Atlas sport-utility vehicle. Volkswagen stopped production at the plant on March 21 after state and local officials issued stay-at-home orders. Gov. Bill Lee of Tennessee said on Monday he would let his order for people to stay home expire on April 30.The company said it had spent several weeks putting in place health and safety measures to protect the 3,800 people who work at the plant, which makes the Atlas sport-utility vehicle. Volkswagen stopped production at the plant on March 21 after state and local officials issued stay-at-home orders. Gov. Bill Lee of Tennessee said on Monday he would let his order for people to stay home expire on April 30.
“After assessing the current situation, we’ve decided to resume production under clear safety measures and with the health of our employees as our highest priority,” Tom du Plessis, the Volkswagen plant’s president and chief executive, said in a statement.“After assessing the current situation, we’ve decided to resume production under clear safety measures and with the health of our employees as our highest priority,” Tom du Plessis, the Volkswagen plant’s president and chief executive, said in a statement.
The company has paid workers three weeks of compensation since the plant was idled, and maintained health care benefits and coverage of premium as well.The company has paid workers three weeks of compensation since the plant was idled, and maintained health care benefits and coverage of premium as well.
Volkswagen said production in Chattanooga would resume in phases. At first, the plant will operate eight hours a day, five days a week. The company said it would continue to follow the guidance issued by government and public health officials.Volkswagen said production in Chattanooga would resume in phases. At first, the plant will operate eight hours a day, five days a week. The company said it would continue to follow the guidance issued by government and public health officials.
General Motors, Ford Motor and Fiat Chrysler have not yet called factory workers back, and continue to negotiate with the United Automobile Workers union over safety measures.General Motors, Ford Motor and Fiat Chrysler have not yet called factory workers back, and continue to negotiate with the United Automobile Workers union over safety measures.
“If this is going to work, we need to do this right,” the U.A.W.’s president, Rory Gamble, said Tuesday. “The return to work date should be dictated by the science of the contagion curve, not economic factors. If we do this wrong, we all will only have a prolonged economic hardship.”“If this is going to work, we need to do this right,” the U.A.W.’s president, Rory Gamble, said Tuesday. “The return to work date should be dictated by the science of the contagion curve, not economic factors. If we do this wrong, we all will only have a prolonged economic hardship.”
Volkswagen, which uses nonunion workers in Chattanooga, said returning workers would be given personal protective equipment and would undergo temperature checks when they arrive each day. The company has also added barricades and floor markings to help keep workers at least six feet apart. Cleaners will disinfect work areas frequently, and the company will replace cafeteria meals with packed lunches.Volkswagen, which uses nonunion workers in Chattanooga, said returning workers would be given personal protective equipment and would undergo temperature checks when they arrive each day. The company has also added barricades and floor markings to help keep workers at least six feet apart. Cleaners will disinfect work areas frequently, and the company will replace cafeteria meals with packed lunches.
The private equity firm that agreed in February to buy Victoria’s Secret is trying to terminate the deal as the retail chain takes a hit from the coronavirus outbreak.The private equity firm that agreed in February to buy Victoria’s Secret is trying to terminate the deal as the retail chain takes a hit from the coronavirus outbreak.
Sycamore Partners had been planning to buy 55 percent of the lingerie chain in a deal with its parent company, L Brands, that was expected to close by July.Sycamore Partners had been planning to buy 55 percent of the lingerie chain in a deal with its parent company, L Brands, that was expected to close by July.
But in a Delaware court filing on Wednesday, Sycamore said that L Brands had breached certain aspects of the agreement and made representations that were now false with its response to the pandemic. L Brands shares plunged by about 20 percent.But in a Delaware court filing on Wednesday, Sycamore said that L Brands had breached certain aspects of the agreement and made representations that were now false with its response to the pandemic. L Brands shares plunged by about 20 percent.
The public health crisis, which has hit apparel chains especially hard, has forced nonessential retailers to close stores, cut corporate salaries and furlough staff. Sycamore pointed to such actions as evidence that L Brands violated the terms of its agreement, including the obligation to essentially conduct business as usual and to refrain from changing “any cash management policies, practices, principles or methodologies.”The public health crisis, which has hit apparel chains especially hard, has forced nonessential retailers to close stores, cut corporate salaries and furlough staff. Sycamore pointed to such actions as evidence that L Brands violated the terms of its agreement, including the obligation to essentially conduct business as usual and to refrain from changing “any cash management policies, practices, principles or methodologies.”
In the filing, Sycamore pointed to the temporary closure of nearly all Victoria’s Secret and Pink stores, its furlough of most employees, salary cuts for senior staff and its failure to pay rent on U.S. stores in April. The firm said that Victoria’s Secret was now “saddled” with merchandise of “greatly diminished value.”In the filing, Sycamore pointed to the temporary closure of nearly all Victoria’s Secret and Pink stores, its furlough of most employees, salary cuts for senior staff and its failure to pay rent on U.S. stores in April. The firm said that Victoria’s Secret was now “saddled” with merchandise of “greatly diminished value.”
“That these actions were taken as a result of or in response to the Covid-19 pandemic is no defense to L Brands’ clear breaches of the transaction agreement,” the firm said.“That these actions were taken as a result of or in response to the Covid-19 pandemic is no defense to L Brands’ clear breaches of the transaction agreement,” the firm said.
L Brands, which also owns Bath & Body Works, said in a Wednesday statement that it believed Sycamore’s attempt to terminate the acquisition was “invalid,” and that it planned to “vigorously defend the lawsuit” and work toward a close of the deal.L Brands, which also owns Bath & Body Works, said in a Wednesday statement that it believed Sycamore’s attempt to terminate the acquisition was “invalid,” and that it planned to “vigorously defend the lawsuit” and work toward a close of the deal.
The European Central Bank said Wednesday it would lower its lending standards to allow commercial banks in the eurozone to post junk bonds as collateral for cheap loans, in an effort to prevent a credit crunch.
The extraordinary action by the central bank was a reaction to fears that hundreds of billions of euros in corporate bonds were on the verge of being downgraded to junk status, because the companies that issued the debt may not be able to repay it.
The mass downgrades could cause severe financial turmoil because, under the old rules, banks that hold the debt could no longer use it as collateral to borrow from the central bank.
Eurozone banks can borrow as much money as they want from the European Central Bank, but must post collateral. Previously the central bank did not accept junk bonds, but it said Wednesday it would allow the debt as collateral as long as it was still rated investment grade on April 7.
The central bank said in a statement that an ample supply of collateral “is crucial for banks to provide funding to firms and households during the current challenging times.”
Tyson Foods said on Wednesday that it would close its largest pork processing facility, the latest in a string of plant closings that has put a strain on the nation’s meat supply.Tyson Foods said on Wednesday that it would close its largest pork processing facility, the latest in a string of plant closings that has put a strain on the nation’s meat supply.
The plant in Waterloo, Iowa, had been running at reduced levels in recent days because workers were staying home, the company said.The plant in Waterloo, Iowa, had been running at reduced levels in recent days because workers were staying home, the company said.
Over the last few weeks, meat plants have become major “hot spots” for the coronavirus pandemic, with some reporting widespread illnesses among workers, posing a serious challenge to meat production. Other major meatpackers like Smithfield, JBS and Hormel have also closed plants in recent days.Over the last few weeks, meat plants have become major “hot spots” for the coronavirus pandemic, with some reporting widespread illnesses among workers, posing a serious challenge to meat production. Other major meatpackers like Smithfield, JBS and Hormel have also closed plants in recent days.
Tyson said it would invite the Waterloo plant’s 2,800 workers to be tested for the coronavirus at the facility later this week.Tyson said it would invite the Waterloo plant’s 2,800 workers to be tested for the coronavirus at the facility later this week.
“The closure has significant ramifications beyond our company, since the plant is part of a larger supply chain that includes hundreds of independent farmers, truckers, distributors and customers, including grocers,” the head of Tyson’s fresh meats division, Steve Stouffer, said in a statement.“The closure has significant ramifications beyond our company, since the plant is part of a larger supply chain that includes hundreds of independent farmers, truckers, distributors and customers, including grocers,” the head of Tyson’s fresh meats division, Steve Stouffer, said in a statement.
Alcoa said Wednesday that it would stop production at its Intalco smelter in Ferndale, Wash., and lay off employees because of declining demand for its products. The aluminum maker had already cut production at that plant and others, and it said that about 30 percent of its global smelting capacity was now idle.Alcoa said Wednesday that it would stop production at its Intalco smelter in Ferndale, Wash., and lay off employees because of declining demand for its products. The aluminum maker had already cut production at that plant and others, and it said that about 30 percent of its global smelting capacity was now idle.
Kraft Heinz will continue to offer manufacturing employees a $100 bonus for the next two weeks, a company spokesman said on Wednesday. After two employees at a food production plant in Holland, Mich., tested positive for the coronavirus, Kraft Heinz closed the facility on Sunday for a deep cleaning and reopened it on Monday.Kraft Heinz will continue to offer manufacturing employees a $100 bonus for the next two weeks, a company spokesman said on Wednesday. After two employees at a food production plant in Holland, Mich., tested positive for the coronavirus, Kraft Heinz closed the facility on Sunday for a deep cleaning and reopened it on Monday.
Delta Air Lines reported a loss of $607 million for the first three months of the year, its first quarterly loss in five years, as the travel industry started to collapse in the wake of the pandemic.Delta Air Lines reported a loss of $607 million for the first three months of the year, its first quarterly loss in five years, as the travel industry started to collapse in the wake of the pandemic.
Rupert Murdoch’s Fox Corporation, the owner of Fox News and the Fox television network, announced pay cuts to its executive ranks that will affect 700 employees. Mr. Murdoch and his son, Lachlan, the company’s chief executive, will forgo their salaries through September, even though most of their compensation comes from stock awards and bonuses. Executives who report to Mr. Murdoch will see a 50 percent reduction in pay for the same period, and those working at the level of vice president will have their salaries reduced by 15 percent from May through July.Rupert Murdoch’s Fox Corporation, the owner of Fox News and the Fox television network, announced pay cuts to its executive ranks that will affect 700 employees. Mr. Murdoch and his son, Lachlan, the company’s chief executive, will forgo their salaries through September, even though most of their compensation comes from stock awards and bonuses. Executives who report to Mr. Murdoch will see a 50 percent reduction in pay for the same period, and those working at the level of vice president will have their salaries reduced by 15 percent from May through July.
The French carmaker Renault plans to begin limited production at a plant outside Paris on Monday, joining carmakers like Volkswagen and Daimler that are gradually emerging from lockdown. Renault resumed production last week at factories in Portugal and Spain that make engines and gearboxes. Renault’s plant in Flins, about 25 miles west of Paris, will be the first vehicle assembly plant in France to reopen. Initially only about one-quarter of the work force will report for duty to reduce the risk of infection, a spokeswoman said.The French carmaker Renault plans to begin limited production at a plant outside Paris on Monday, joining carmakers like Volkswagen and Daimler that are gradually emerging from lockdown. Renault resumed production last week at factories in Portugal and Spain that make engines and gearboxes. Renault’s plant in Flins, about 25 miles west of Paris, will be the first vehicle assembly plant in France to reopen. Initially only about one-quarter of the work force will report for duty to reduce the risk of infection, a spokeswoman said.
General Motors said on Tuesday that it was shutting down its four-year-old car-sharing service, Maven, the latest such venture to close its doors. Maven, which allows customers to rent cars by the hour, has struggled to build a substantial following. It was forced to suspend services in March because of the coronavirus outbreak.General Motors said on Tuesday that it was shutting down its four-year-old car-sharing service, Maven, the latest such venture to close its doors. Maven, which allows customers to rent cars by the hour, has struggled to build a substantial following. It was forced to suspend services in March because of the coronavirus outbreak.
Reporting was contributed by Isabella Kwai, Stacy Cowley, Noam Scheiber, Sapna Maheshwari, David Yaffe-Bellany, Niraj Chokshi, Rick Gladstone, Keith Bradsher, Edmund Lee, Clifford Krauss, Vindu Goel, Kate Conger, Neal E. Boudette, Jack Ewing, Mohammed Hadi, Alan Rappeport, Carlos Tejada, Mike Ives, Katie Robertson and Kevin Granville. Reporting was contributed by Jack Ewing, Jeanna Smialek, Isabella Kwai, Stacy Cowley, Noam Scheiber, Sapna Maheshwari, David Yaffe-Bellany, Niraj Chokshi, Rick Gladstone, Keith Bradsher, Edmund Lee, Clifford Krauss, Vindu Goel, Kate Conger, Neal E. Boudette, Jack Ewing, Mohammed Hadi, Alan Rappeport, Carlos Tejada, Mike Ives, Katie Robertson and Kevin Granville.