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BORROWERS QUEUE FOR AID FROM U.K. AND EUROPEAN CENTRAL BANKS. Borrowers have claimed about €1.3 trillion, or $1.5 trillion, of the European Central Bank’s pool of loans available for economic recovery, a record amount.
At the same time, the Bank of England has added another £100 billion to its budget for buying government bonds, raising the total to £745 billion.
The two moves signal that Europe’s economy has not yet begun to rebound and any hopes for a V-shaped recovery are unrealistic.
HUNDREDS OF PPP LOANS FOUND TO HAVE BEEN MISDIRECTED. The Paycheck Protection Program, part of Congress’s economic rescue plan, set aside $349 billion as loans to be made to small businesses, defined as those with fewer than 500 workers, to keep workers on the payroll.
If at least 75 percent of the loaned funds are used to pay wages, the loans need not be repaid.
Several loans, however, have been made to companies with more than 500 employees, as well as to publicly-traded companies holding sizeable credit lines with major banks and shell companies trading on NASDAQ, according to an investigation by Wall Street on Parade.
When news reports showed large companies had asked for and gotten PPP loans, the Small Business Administration (SBA) overseeing the program issued the statement: “Borrowers must also take into account their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is considered unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith.”
Organizations that had grabbed PPP money early, ranging from the Shake Shack fast-food chain to the National Basketball League, were publicly shamed into returning the funds.
Other companies were less susceptible to shaming.
Retailer Christopher & Banks Corp. was granted a $10-million PPP loan despite having access to $60 million in credit from banks, placing it in violation of the SBA’s guidance. In its defense, the company noted it had pledged “substantially all of its assets” to secure the $60 million in credit. That means that taxpayers have no collateral for their loan.
Senseonics Holdings Inc., which makes glucose sensors for people with diabetes, has access to $20 million in commercial credit, according to its filings with the U.S. Securities and Exchange Commission (SEC). However, it also applied for, and was granted, $5.8 million in PPP funds.
At least 438 publicly-traded companies have thus far reported in SEC filings they have received PPP loans.
Despite promising to publicly release the names of businesses that receive PPP loans, treasury secretary Steve Mnuchin is now refusing to do so.
Treasury Department attorneys have advised him that the department is not required to give government oversight agencies information about businesses that have received PPP loans.
Although not required to keep the names secret, Mnuchin so far has decided to renege on his promise and cloak the identities of loan recipients, perhaps in an attempt to hide the program’s abject lack of responsible stewardship of $349 billion in taxpayer funds.
BRIGGS & STRATTON MISSES INTEREST PAYMENT, REWARDS EXECUTIVES. Briggs & Stratton (B&S), the 110-year-old Wisconsin company that is the world’s largest maker of small engines for lawnmowers and similar appliances, failed to make a $6.7-million interest payment due last week.
The company is unlikely to be able to make the payment within the 30-day grace period that began when the payment was missed, S&P Global Ratings said.
B&S is toting $600 million in debt, including $195 million in bonds that will come due later this year. Those bonds recently traded at about 30 cents on the dollar.
First-quarter sales dropped 18 percent year-on-year to $473 million, forcing the company to report a $144-million loss for the period, compared with $8 million in income a year earlier.
April sales were down about 30 percent year-on-year, in part because Sears stores have closed, CEO Todd Teske said. Sears was a major outlet for machinery equipped with B&S engines.
During the week in which the company skipped its interest payment, its board restored the salaries, reduced in April, of Teske and three other top executives. In addition, Teske was awarded a $1.2-million retention bonus. The other three executives will share retention bonuses totaling $3.9 million.
Retention bonuses often are awarded to executives just before a company declares bankruptcy. The bonuses, which, by law, cannot be awarded after bankruptcy is filed, are designed to keep leaders in place to guide a company as it negotiates with creditors and restructures its finances.

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