Evergrande sells a $1.5 billion stake in a bank to help settle debts.
A Chinese state-owned enterprise is buying the stake, worth around 20 percent in Shengjing Bank.
Evergrande is racing to find ways to repay its debts as payments come due.Credit…Tyrone Siu/Reuters
Evergrande, the embattled Chinese real estate developer, said Wednesday that it was selling a stake it held in Shengjing Bank for about $1.5 billion, with the proceeds going toward paying down its debts.
A Chinese state-owned enterprise is buying the stake, worth around 20 percent in the commercial bank.
The move comes as Evergrande, which has unpaid bills totaling more than $300 billion, missed an interest payment on a U.S. dollar bond last week. It has another $45 million payment on an international bond due Wednesday.
Evergrande has yet to address either payment publicly, and it has a 30-day grace period before a missed payment results in a default. Investors have been looking for signs that the Chinese government might step in to bail out the company.
In its filing announcing the Shengjing Bank stake sale, which was signed on Tuesday, Evergrande said that its own liquidity problems had “adversely affected” the bank. Transferring ownership of the stake would help stabilize the bank, which would support the value of a stake of nearly 15 percent that Evergrande will keep.
And as a condition of the sale, Shengjing Bank said that Evergrande would use all of the proceeds to settle its “relevant financial liabilities” with the bank. This flow of funds and the involvement of state-owned entities in the deal may indicate China’s willingness to limit the damage from Evergrande’s cash crunch.
“We believe the Chinese government is involved in some capacity to help resolve the situation,” Adrian Cheng, a director at Fitch Ratings, said on a call with reporters on Wednesday. The credit ratings agency downgraded Evergrande and some of its subsidiaries to “C” on Tuesday, which means that “a default or default-like process has begun.”
“We believe they are prioritizing homebuyers and ensuring the products get delivered,” Mr. Cheng said. Repaying suppliers would come next, followed by domestic bondholders and foreign bondholders.
Alexandra Stevenson contributed reporting
YouTube said on Wednesday that it was banning several prominent anti-vaccine activists from its platform, including the accounts of Joseph Mercola and Robert F. Kennedy Jr., as part of an effort to remove all content that falsely claims that approved vaccines are dangerous.
In a blog post, YouTube said that it would remove videos claiming that vaccines do not reduce transmission or contraction of disease, and content that includes misinformation on the contents of the vaccines. Claims that approved vaccines cause autism, cancer or infertility, or that the vaccines contain trackers will also be removed.
The platform, which is owned by Google, has had a similar ban on misinformation about the Covid-19 vaccines. But the new policy expands the rules to misleading claims about approved vaccines such as those against measles and hepatitis B, as well as to falsehoods about vaccines in general, YouTube said. Personal testimonies relating to vaccines, content about vaccine policies and new vaccine trials, and historical videos about vaccine successes or failures will be allowed to remain on the site.
“Today’s policy update is an important step to address vaccine and health misinformation on our platform, and we’ll continue to invest across the board” in policies that bring its users high-quality information, the company said in its announcement.
Misinformation researchers have for years pointed to the proliferation of anti-vaccine content on social networks as a factor in vaccine hesitation — including slowing rates of Covid-19 vaccine adoption in more conservative states. Reporting has shown that YouTube videos often act as the source of content that subsequently goes viral on platforms like Facebook and Twitter, sometimes racking up tens of millions of views.
YouTube said that in the past year it had removed over 130,000 videos for violating its COVID-19 vaccine policies. But this did not include what the video platform called “borderline videos” that discussed vaccine skepticism on the site. In the past, the company simply removed such videos from search results and recommendations, while promoting videos from experts and public health institutions.
This is a developing story. Check back for updates.
The embattled digital media company Ozy lost one of its biggest stars on Wednesday, when Katty Kay, a former BBC anchor, announced on Twitter that she had resigned.
Ms. Kay said in her post that she had handed in her resignation Tuesday morning.
“I had recently joined the company after my long career at the BBC, excited to explore opportunities in the digital space,” she wrote. “I support the mission to bring diverse stories and voices to the public conversation. But the allegations in The New York Times, which caught me be surprise, are serious and deeply troubling and I had no choice but to end my relationship with the company.”
Ms. Kay’s announcement came a day after Ozy’s board said it had hired a law firm to investigate its “business activities” after a New York Times report raised questions about the company’s business practices.
The Times’s media columnist, Ben Smith, reported on Sunday that an Ozy executive had apparently impersonated a YouTube executive during a conference call in February with Goldman Sachs. The bank was considering investing $40 million in the company, a deal that did not come to fruition.
Founded in 2013 and led by the former MSNBC anchor Carlos Watson, Ozy has a general interest news site, publishes a raft of newsletters and produces interview programs and documentaries, some of which appear on YouTube.
This is a breaking news story. Check back for updates.
United Airlines is terminating about 600 employees for refusing to comply with its vaccination requirement, the company said in a memo sent to staff on Tuesday.
“This was an incredibly difficult decision but keeping our team safe has always been our first priority,” the airline said in the memo.
The company said on Wednesday that it had already begun its termination process for its U.S.-based employees. Workers losing their jobs because of noncompliance with the mandate make up less than 1 percent of the airline’s U.S. work force of 67,000.
“We will work with folks if during that process they decide to get vaccinated,” said a spokeswoman at United Airlines, which did not give a timeline for the termination process.
In early August, the airline announced that all employees would be required to provide proof of vaccination within five weeks of a vaccine’s full approval by the Food and Drug Administration or by Oct. 25, whichever came first. The F.D.A. in late August granted full approval to Pfizer-BioNTech’s coronavirus vaccine for people 16 and older. United had also said it would fire employees who did not follow the new policy.
Other airlines have taken different measures to encourage employees to get inoculated. Delta Air Lines announced last month that it was adding a $200 monthly surcharge on its health care plan for employees who were not vaccinated. The company has also said that it requires new employees to be vaccinated, but that existing employees are exempt. American Airlines said it was “not putting mandates in place” for employees or customers.
Warby Parker is set to go public on Wednesday in a direct listing that could value the trendy eyewear retailer at about $5 billion. (It was valued at $3 billion in the private market just over a year ago.)
Warby is one of a number of direct-to-consumer brands, like AllBirds and Fabletics, set to make market debuts in the coming months. The companies aim to take advantage of sky-high valuations for tech companies and strong interest in consumer names. Neil Blumenthal and Dave Gilboa, Warby’s co-founders and chief executives, spoke about how the brand got here and what comes next, the DealBook newsletter reports.
On growth during a pandemic.
Warby’s sales grew 6 percent in 2020, beating rivals like the parent of Ray-Ban, EssilorLuxottica, whose sales fell by double digits over the same period. Warby’s mix of online and in-store sales “enabled us to take market share, even during the year that we were hobbled,” Mr. Blumenthal said. But that came at a cost: The company’s marketing spend jumped to 19 percent of sales in 2020 from 13 percent the previous year.
On marrying a digital business with a growing physical presence.
Warby was one of the first brands born online that sought to combine the brand awareness that comes from stores with the reach of digital sales. (It was founded in 2010, opened its first dedicated store in 2013 and now has 145 retail outlets, with plans to open more.) Warby generated about two-thirds of its revenue in stores before the pandemic, but the mix of in-person and online sales is now closer to 50-50 because of various restrictions. As for the ideal mix, the company is “channel agnostic,” Mr. Gilboa said.
On the flurry of direct-to-consumer brands going public.
“Clearly, a lot of companies that have raised money are looking to access a broader investor base,” Mr. Blumenthal said, seeking to distinguish Warby — whose direct listing won’t raise new funds — from others. So far this year, 12 internet retail companies have gone public, compared with nine last year, according to Renaissance Capital. Performance of these and related retail names has been mixed: Shares of Honest Company, Jessica Alba’s wellness brand, are down 53 percent since listing, while Figs, the upmarket scrubs company, is up 29 percent.
Hundreds of millions of Chinese play video games each day. Minors still find ways around government blocks. Chinese tech companies, like Tencent, are cornerstones of the global gaming industry. The country has also been quick to embrace competitive gaming, building e-sports stadiums and enabling college students to major in the topic.
Yet China’s relationship with games is decidedly complex. A major source of entertainment in the country, games offer a social outlet and an easily accessible hobby in a country where booming economic growth has disrupted social networks and driven long work hours. The multiplayer mobile game Honor of Kings, for example, has more than 100 million players a day.
For years, though, officials — and many parents — have worried about the potential downsides, like addiction and distraction, Paul Mozur and Elsie Chen report for The New York Times.
As a more paternalistic government under the Chinese leader Xi Jinping has turned to direct interventions to mold how people live and what they do for fun, gaining control over video games has been high on the priority list. In addition to other pursuits, like celebrity fan clubs, Mr. Xi’s government has increasingly deemed games a superfluous distraction at best — and at worst, a societal ill that threatens the cultural and moral guidance of the Chinese Communist Party.
Stocks rebounded on Wednesday as government bond yields drifted lower.
The S&P 500 rose about 0.2 percent in early trading, after dropping 2 percent on Tuesday, the most since May. An increase in bond yields had incited a sell-off in technology stocks, which dragged markets down.The yield on 10-year Treasury notes climbed above 1.5 percent on Tuesday for the first time since June.
Stocks didn’t completely recover their losses from earlier in the week. The Stoxx Europe 600 rose 0.7 percent after falling 2.2 percent the previous day.
Markets have been more volatile in recent weeks as investors prepare for the Federal Reserve to reduce stimulus, something policymakers have signaled will come this year. Traders are also adapting to the economic recovery from the pandemic, which includes an unusual combination of supply chain bottlenecks, labor shortages in some industries, higher unemployment and rising consumer prices.
In Washington, lawmakers remain deeply divided over spending and raising the nation’s debt limit. On Tuesday, Treasury Secretary Janet L. Yellen warned lawmakers of “catastrophic” consequences if Congress failed to raise or suspend the statutory debt limit.
A measure of stock market volatility rose sharply on Monday but was only the highest in about a week, as stocks have stumbled in September. Last week, traders were unnerved by potential fallout from a default of China’s Evergrande Group, a beleaguered residential developer with $300 billion in debt. The Chinese government has shifted away from the policies that have guided its economy in recent years, tightening regulation on online gaming, data sharing by tech companies, and property developers.
Despite a tentative recovery on Wednesday, stocks in the United States are still on track for a decline in September, which would end seven consecutive months of gains. The S&P 500 is down more than 3.5 percent this month. The Nasdaq composite rose 0.4 percent on Wednesday but the index closed 4.7 percent lower for the month on Tuesday.
A second major federal student loan servicer is calling it quits, a decision that will force the Education Department to transfer the accounts of millions of borrowers just as the government begins to resume collecting payments early next year.
Navient said on Tuesday that it wanted to end its contract with the federal government and offload its responsibilities to Maximus, another federal loan servicer. Navient services the accounts of around six million borrowers.
Jack Remondi, Navient’s chief executive, said the company wanted to “provide a smooth transition to borrowers” as it shifted its focus to businesses other than federal student loan servicing.
The Education Department “is reviewing documents and other information from Navient and Maximus to ensure that the proposal meets all legal requirements and properly protects borrowers and taxpayers,” Richard Cordray, the chief operating officer of the department’s Federal Student Aid office, said in statement.
Two months ago, another large federal servicer, FedLoan, said it, too, wanted out. The departures will leave the Education Department scrambling to move more than 15 million borrowers to new servicers — a process that has in the past been chaotic and error prone.
Nearly all federal student loan borrowers have been skipping their payments thanks to a moratorium on collections that the government imposed in March 2020 in response to the coronavirus pandemic. But those bills are about to return: The Biden administration has said it intends to restart collection on Jan. 31.
Navient won’t be entirely done with the federal student loan business if its request succeeds. The company is the subject of a lawsuit brought by the Consumer Financial Protection Bureau in 2017 over what the federal agency said was a pattern of misdeeds and mistakes that hindered borrowers trying to repay their loans.
“That case just continues to grind its way through the slow — very, very slow — court process,” Mr. Remondi told analysts on a recent earnings call. “We’re eager to have our day in court.”
The economy has begun to rebound from the coronavirus pandemic, but millions of people still haven’t returned to work. Some are looking but haven’t been able to find jobs. Others can’t work because of child care or other responsibilities. Still others say the pandemic led them to rethink how they prioritize their careers.
What is keeping you on the sidelines right now? How are you getting by financially without a steady paycheck? How has your time away from work changed your life, both now and in the future?
Erin Griffith (@eringriffith) and Erin Woo (@erinkwoo), two of our tech reporters, are covering the trial of Elizabeth Holmes, who dropped out of Stanford University to create the blood testing start-up Theranos at age 19 and built it to a $9 billion valuation and herself into the world’s youngest self-made female billionaire — only to flame out in disgrace after Theranos’s technology was revealed to have problems.
Follow along here or on Twitter as she is tried on 12 counts of wire fraud and conspiracy to commit wire fraud. The trial is generally held Tuesdays, Wednesdays and Fridays.
Rosendorff asked for a bathroom break, and we are instead ending for the day! Will pick back up at 9 a.m. Pacific Time tomorrow.
Important content: The custom-built laboratory information system was named Super Mario. (Other fun names: Jurassic Park = the lab with all of the standard machines, Normandy = the lab with Theranos machines.)
Cross examination has been much slower and calmer now that we’re back from break. Less pressing Rosendorff to answer specific questions and more jokes.
Wade is holding up a copy of the book and talking about the importance of its PR and marketing efforts, as well as its secrecy.
Rosendorff read Walter Isaacson’s Steve Jobs biography and liked the excitement of Silicon Valley, which helped lead him to Theranos. (That Steve Jobs biography was a favorite of Holmes’s, too.)