Added contracts from Valeant Pharmaceuticals and Retrophin, including agreements involving Martin Shkreli.
Author: Ken Chan
Last week, GT Advanced Technologies Inc., a company formerly known as GT Solar International, Inc., filed for bankruptcy under Chapter 11 of the US bankruptcy code. The company is seeking a reorganization and will continue to operate their business.
On October 31, 2013, GTAT Corporation had entered into a prepayment agreement with Apple Inc. Under the agreement, Apple had agreed to make a prepayment of $578 million in advance for the purchase of sapphire goods under the Master Development and Supply Agreement and the Statement of Work. GTAT had already received three installments of $440 million so far.
Pursuant to paragraph 6 of the prepayment agreement, Apple may demand repayment of the entire prepayment balance if GTAT is subject to an insolvency proceeding. This will be stayed as a result of the bankruptcy filing.
Earlier this week, General Mills, Inc. signed a merger agreement to acquire Annie’s, Inc., a Berkeley, California natural and organic food company. General Mills offered $46.00 per share of common stock. BNNY had closed at $33.53 the previous day.
Weibo Corporation IPO
I was looking through Weibo Corporation’s Form F-1 Registration Statement and reading the risk factors. The F-1 raises some interesting issues that you may not see in other registration statements.
We have limited business insurance coverage. The insurance industry in China is still young and the business insurance products offered in China are limited. We do not have any business liability or disruption insurance coverage for our operations. Any business disruption, litigation or natural disaster may cause us to incur substantial costs and divert our resources.
Not just underinsured, but uninsured.
If the chops of our PRC subsidiary, the VIE and the VIE’s subsidiary are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.
Theft or misuse of a company chop? Perhaps a uniquely Chinese problem.
Regulation and censorship of information disseminated over the internet in China may adversely affect our business and subject us to liability for information displayed on our platform.
The detailed explanation includes the usual suspects: “internet content providers and internet publishers are prohibited from posting or displaying over the internet content that impairs the national dignity of China, is reactionary, obscene, superstitious, fraudulent or defamatory, or otherwise violates PRC laws and regulations.” The F-1 also includes an opaque reference to an incident that affected the company.
In March 2012, we had to disable the Comment feature on our platform for three days to clean up feeds related to certain rumors.
I like how the F-1 provided a specific date, but only cited “certain rumors.” While the F-1 does not discuss the nature of the rumors, but a quick Google search uncovers the details.
We are required to verify the identities of all of our users who post on Weibo, but have not been able to do so, and our noncompliance exposes us to potentially severe penalty by the Chinese government.
Sounds more like a confession than a disclosure of risk factors. According to the detailed explanation, Weibo has to verify the identity of its users against a Chinese government database. One of the problems that Weibo has encountered in the verification process is “existing user behaviors.” Is this a polite way of saying that its users are submitting false or incomplete information?
We may have to register our encryption software with Chinese regulatory authorities, and if they request that we change our encryption software, our business operations could be disrupted as we develop or license replacement software.
According to the detailed explanation, “foreign and domestic companies operating in China are required to seek approval from the Office of the State for Cipher Code Administration, the Chinese encryption regulatory authority, for the commercial encryption products they use. Companies operating in China are allowed to use only commercial cipher code products approved by this authority and are prohibited to use self-developed or imported cipher code products without approval.” I bet the NSA wishes that American companies could only use NSA-approved encryption products.
Weibo Corp. contracts
Coupons.com Inc. IPO
Coupons.com Incorporated filed a Form S-1 Registration Statement in preparation for its initial public offering. Not that long ago, I got all my coupons from the Sunday newspaper. Actually, I clipped the coupons, filed them in an envelope, and never brought them with me when I went to the store. However, my reading and shopping habits have changed.
I canceled my newspaper subscription after one too many missed deliveries. I also realized that I had already read most of the stories that appeared in the newspaper. What was being printed was no longer news, but old wire stories. As for the coupons, Coupons.com is where you can find many of the same bargains that appeared in the Sunday paper, but now on your computer. I can see checking this site before heading to Target.
However, for essential staples, Costco offers most of what I need at a very competitive price. I’m sure I’m not alone, which probably explains why Cerberus will be acquiring Safeway, pending government approvals.
Coupons.com Incorporated contracts
Candy Crush Saga Risk Factors
King Digital Entertainment plc, the developer of the popular game Candy Crush Saga, booked $632 million in revenues and $149 million in income in Q4 2013. Pretty impressive considering that one product—Candy Crush Saga—accounted for 78% of the company’s gross revenues. Understandably, the company warns:
- A small number of games currently generate a substantial majority of our revenue.
- We must develop new games and enhance our existing games so that our players will continue to play our games and make purchases of virtual items within our games.
- Our free-to-play business model depends on purchases of virtual items within our games, and our business, financial condition and results of operations will be materially and adversely affected if we do not continue to successfully implement this model.
- A relatively small percentage of our player network accounts for a large portion of our revenue and if we are unable to continue to retain players or if they decrease their spending, our revenue could be harmed.
The big question will be whether Candy Crush is a one-hit wonder.
King Digital Entertainment PLC contracts.
Green Mountain Coffee Roasters recently entered into a Common Stock Purchase Agreement with a subsidiary of The Coca-Cola Company. Under this agreement, the subsidiary will purchase 16,684,139 newly-issued shares of Green Mountain Coffee Roasters for $74.98.
Both companies also announced that they have signed a “10-year agreement to collaborate on the development and introduction of The Coca-Cola Company’s global brand portfolio for use in GMCR’s frothing Keurig Cold™ at-home beverage system.”
Additional Resources: Green Mountain Coffee Roasters contracts
Twitter Offer Letters
Previously, I had mentioned that Twitter had filed a registration statement for its initial public offering. The initial batch of Twitter contracts was missing the offer letters. A subsequent filing included offer letters for Adam Bain, Ali Rowghani, Christopher Fry, Mike Gupta, Richard Costolo and Vijaya Gadde.
Cortina Systems Contracts
Cortina Systems Inc. had filed a Form S-1 Registration Statement back in March 2011. They withdrew their registration in September 2012. The Cortina Systems Inc. contracts included mostly offer letters.
500.com Ltd., an online sports lottery service provider in China, filed a Form F-1 Registration Statement in October 2013. I added their agreements to the website.
The Washington Post Company filed a Letter Agreement re: Proposed Sale of Post Business. Under this agreement between The Washington Post Company and Nash Holdings LLC, Nash will purchase “all of the issued and outstanding equity interests…of each of WP Company LLC, Express Publications Company, LLC, El Tiempo Latino, LLC, Robinson Terminal Warehouse, LLC, Greater Washington Publishing, LLC and Post-Newsweek Media, LLC” for $250 million in cash.
The media properties included in the sale are The Washington Post newspaper and the newspaper’s internet site washingtonpost.com; publishing Fashion Washington, Capital Business, the internet sites The Capitol Deal and Service Alley, Express (and its websites ExpressNightOut.com and ReadExpress.com), The Gazette Newspapers (and their website Gazette.net), Southern Maryland Newspapers (and their website SoMdNews.com), Fairfax County Times (and its website FairfaxTimes.com), military newspapers produced by Comprint Military Publications (and their websites DCMilitary.com and DCMilitaryFamLife.com), Apartment Showcase, New Homes Guide, New Condominium Guide, El Tiempo Latino and The Guide to Retirement Living Sourcebook; operating Washington Post Live and Washington Post News Media Services; operating a commercial printing and distribution business and a paper handling and storage business, including Comprint Printing; and the other operations conducted by the Seller and its subsidiaries within Post-Newsweek Media, LLC, Greater Washington Publishing, LLC and Robinson Terminal Warehouse, LLC.
The sale does not include Slate Magazine, Slate V, TheRoot.com and Foreign Policy (and the websites related to such publications and operating FP Events) and the other Excluded Assets, which consists of certain real estate, interests in Classified Ventures, LLC, assets not related to the Post Business, and Slate Group LLC assets and businesses.