What We’re Reading This Week [March 24, 2023]
On March 15th, CNN Business reported that the Federal Reserve has created a new rescue plan to prevent another SVB-like collapse from occurring. The new plan, titled the Bank Term Lending Program (BTLP), allows financial institutions to borrow cash from the Federal Reserve for up to one year backed by bonds, mortgage-backed securities, and other similar types of bonds. Under the program, these bonds will be valued at par thereby allowing banks to access greater amounts of liquidity than selling such bonds in the open market would provide (given the interest rate environment and the population of bonds tied to fixed interest rates). The BTLP program will be backed by $25 billion from the US Treasury, with the hope of instilling confidence in the US banking system. Premarket stocks: The forgotten rescue plan that could prevent another SVB-like collapse | CNN Business
On March 17th, Reuters reported that WeWork had struck deals to cut its debt by roughly $1.5 billion and to extend certain maturity dates. WeWork offers private workspaces to companies and individuals, and has enjoyed some post-pandemic success as people look to alternatives to traditional offices. However, WeWork has struggled recently, cutting 300 jobs and exiting 40 underperforming U.S. locations. Under the new deals, over $1 billion of WeWork’s outstanding unsecured notes will be converted to equity. This will result in about $1.9 billion of pro-forma debt maturing in 2027. WeWork reaches deals to cut debt, extend maturities | Reuters
On March 22nd, The Wall Street Journal reported that Johnson & Johnson will seek the Supreme Court’s review after the Third Circuit declined to reconsider its priori dismissal of Johnson & Johnson subsidiary LTL Management’s chapter 11 case. J&J created LTL in 2021 as a strategy to address increasing talc-injury lawsuits. If its chapter 11 case is not revived, J&J faces the prospect of defending a significant number of individual personal injury claims, which are based on allegations that its talc products contain asbestos and caused cancer. J&J has publicly denied that its talc products are unsafe, and the company has spent roughly $4.5 billion in recent years defending and settling similar claims related. J&J Fails to Win Rehearing of Talc Unit’s Bankruptcy Case (wsj.com)
On March 23rd, Reuters reported that bankrupt cryptocurrency exchange FTX would be selling its stake in startup company Mysten Labs. Mysten Labs focuses on Web3, a decentralized version of the internet that operates on blockchain technology. The news comes as FTX’s new management attempts to sell assets to pay off its liabilities. FTX paid nearly $101 million for preferred shares of Mysten Labs last year, and it plans on selling its current stake at $95 million. FTX to sell stake in Web3-focused Mysten Labs in push to shore up funds | Reuters
