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Three brothers break up their N.Y. real estate development business

New York's Elghanayan brothers have completed the breakup of their multibillion-dollar real estate development business, formed in 1970, the New York Times reported in its "City Room" blog:

Word of the split first surfaced in April, but the brothers have spent months carving up an empire of 6,000 apartments, vacant land and 10 office buildings, in New York and Washington.

The oldest brother, H. Henry Elghanayan, keeps the company name, Rockrose Development (after the street in Queens where the siblings grew up), and 2,634 apartments, the report noted:

Mr. Elghanayan, the only brother with a son, Justin, in the family business, initiated the split. He and his son, he said, wanted to go out on their own to develop some land that they had acquired over the years.

His younger brothers, Thomas and Frederick Elghanayan, will operate as TF Cornerstone, with 3,200 apartments and seven office towers. All the brothers will share ownership of four other office buildings and two residential buildings.

Their company had relatively little debt, according to the report. One commenter on the blog post noted that this fact "certainly enabled this split." (Source: New York Times "City Room" blog, Sept. 29, 2009.)


Founder’s death raises questions at Hovnanian

The Sept. 24 death of Kevork Hovnanian, the 86-year-old co-founder and chairman of home builder Hovnanian Enterprises Inc., raises questions about "when a new chairman will be named or how the death might affect the family's controlling stake in the company," the Wall Street Journal reported.

Mr. Hovnanian founded the company along with three brothers in 1959. His son, Ara, 52, has been CEO since 1997.

Hovnanian Enterprises, which "took on more debt and made more acquisitions near the top of the housing bubble than most big rivals," has offered to repurchase up to $759 million of debt, which it will likely finance by issuing new bonds, the Journal reported. Its competitors, meanwhile, are buying land at discounted rates. (Source: Wall Street Journal, Sept. 28, 2009.)


Johnson Publishing seeking ‘range of options’ for Ebony

Johnson Publishing Co., while denying a report in Newsweek that the company has discussed a sale or partnership with Time Inc. or Viacom, did not deny that the company is seeking a buyer or investor for its flagship publication, Ebony, the Chicago Sun-Times noted.

A statement issued by a spokeswoman for Johnson Publishing -- founded in Chicago in 1942 by the late John H. Johnson and now run by his daughter, Linda Johnson Rice -- said, "As we've indicated previously, we are exploring a range of options to support our core media business," the Sun-Times article reported.

Johnson, which also publishes Jet, canceled its 51-year-old Ebony Fashion Fair -- launched by John Johnson's wife, Eunice -- owing to lack of sponsorship.

Citing an anonymous source, the Newsweek article said:

... Rice, given the magazine's historical significance and its deep roots in her family, hopes to remain an integral part of it. This suggests she prefers to woo a partner rather than sell the magazine outright.

Newsweek reported that Ebony's advertising declined 35% in the first half of 2009 and Jet's advertising declined about 40%, compared with an average 28% decline for the 243 magazines tracked by the Publishers Information Bureau. (Sources: Chicago Sun-Times, Sept. 29, 2009; Newsweek, Sept. 25, 2009.)


Spanish retailer reports first sales decline in 70 years

El Corte Ingles, a family-owned Spanish retailer with more than $25 billion in annual sales, experienced a 3.5% sales decline for the year ending in February, the first drop in its 70-year history, The Economist reported:

Worse, El Corte Ingles has had to resort to heavy discounts and generous dollops of interest-free credit to lure customers.... Competing mainly on price is not something the company is used to. Instead, El Corte Ingles prides itself on offering better choice and service than rivals, even if it comes with slightly higher prices.... Each year, each of its 10.8 million cardholders receives a birthday card from Isidoro Alvarez, the company's chairman....

Alvarez, who took over in 1989 and led an expansion within Spain and Portugal that's still ongoing, advocates sticking with the company's current business model, according to the report.

Meanwhile, cracks are showing in its shareholder base. About a quarter of the company's shares are now in the hands of the third or fourth generation, straining any sense of solidarity. Family members representing about 7% of the shares have recently sold their stakes. But others are embroiled in a legal battle with the firm over the value of their shares.

The Economist noted that listing on the stock exchange "would be ... a natural step for a family-owned firm of this size," but El Corte Ingles has low debt and does not need the cash. Further, the article said, "the company is unaccustomed to outside scrutiny." (Source: The Economist, Sept. 24, 2009.)



Family-owned company closes sugar plant after 119 years

Gay & Robinson Inc., a family-owned sugar producer based on the Hawaiian island of Kauai, will process its final sugar cane harvest in late October and exit the sugar business after 119 years, the Associated Press reported.

The company cited "mounting debt due to low sugar prices and high energy prices," according to the report. It plans to generate hydroelectricity and lease some of its 7,500 acres and facilities to Dow AgroSciences, according to the report. (Source: Associated Press, Sept. 24, 2009.)



Investor reduces stake in New York Times Co.

Harbinger Capital Co. has sold 5 million shares of New York Times Co., reducing its stake from 20% to 16.4% "at a significant loss," the Wall Street Journal reported.

Harbinger said it doesn't plan to sell its entire stake, the article said. The firm had pressured Times Co. to make changes and won two seats on an expanded board, the Journal reported.

Times Co. recently has taken several steps to shore up its finances, including accepting a $250 million loan from Mexican billionaire Carlos Slim. The loan made Mr. Slim Times Co.'s third-largest shareholder, behind the Ochs-Sulzberger family and Harbinger, which owned about 20% each.

The Sulzberger family controls the company through its super-voting shares. (Source: Wall Street Journal, Sept. 21, 2009.)


Boston Globe’s former family owners make bid to buy paper

Benjamin Taylor, the last member of his family to serve as publisher of the Boston Globe after the New York Times Co. bought the newspaper in 1993, has joined his cousin Stephen Taylor in a bid to buy back the paper, the Globe reported.

The Taylor group is bidding against Platinum Equity of Beverly Hills, Calif., which has acquired 100 companies since 1995, according to the report.

Since summer, when preliminary bids were submitted to the Times Co., questions have swirled around Stephen Taylor's ability to raise funds to get back into the struggling news business. While the Times Co. paid $1.1 billion for the Globe in 1993, large portions of the Taylor family's proceeds from the sale are in trusts that are restricted. Benjamin Taylor can bring more cash to the table because he was a significant shareholder in the company.

Benjamin Taylor ran the Globe from 1997 to 1999. He succeeded his second cousin William Taylor, who had been at the helm at the time of the sale to the Times Co. Arthur Sulzberger Jr., chairman of Times Co., fired Benjamin Taylor and replaced him with Times Co. executive Richard Gilman, who was publisher until 2007. Stephen Taylor was executive vice president of the Globe until 2001, the article said. (Source: Boston Globe, Sept. 19, 2009.)


Perot Systems to be acquired by Dell

Dell Inc. will acquire Perot Systems Corp. for about $3.9 billion, according to a Reuters report.

Perot Systems, a computer services company, was founded in 1988 by former U.S. presidential candidate Ross Perot. The company is expected to become Dell's services unit, Reuters reported. The article said Ross Perot Jr., chairman of Perot Systems, will be considered for appointment to the board of Dell. (Source: Reuters, Sept. 21, 2009.)


Merckle family takes steps to break up its empire

The Merckle family's holding company took its first steps toward selling Ratiopharm, the world's fourth-largest manufacturer of generic drugs, and is also seeking to sell up to 50% of HeidelbergCement, the Financial Times reported.

German entrepreneur Adolf Merckle committed suicide in January after suffering dramatic losses from a speculative investment. The FT report noted:

Merckle's banks have recently extended a debt moratorium on the family holding by 18 months, buying time for a sale of some of its assets to reduce debt.

If sales of Ratiopharm and the stake in HeidelbergCement are successful, the family may be able to keep Phoenix, a large wholesaler of pharmaceuticals, the article said. (Source: Financial Times, Sept. 17, 2009.)


Boscov’s exits Chapter 11 bankruptcy

Al Boscov, who repurchased his family's department store chain to rescue it from bankruptcy, appeared in U.S. Bankruptcy Court for the technical proceeding to mark the chain's exit from Chapter 11 -- one week before his 80th birthday -- even though it was unnecessary for him to be there, the Philadelphia Inquirer reported. According to the report:

He had a primal urge to see and hear from U.S. bankruptcy Judge Kevin Gross. He had to personally thank every lawyer. But most of all, Boscov had to witness for himself the ordeal that had broken his heart, almost left thousands unemployed, and nearly ruined the business his once-penniless immigrant father had started a century ago in Reading [Pa.].

Since Boscov bought the 39-store chain in December, it has been running as a new company, the Inquirer article said. At the hearing, the judge credited Boscov for his company's successful emergence from bankruptcy:

"It is the integrity that you brought to your work, the quality of your product, the way you treat your employees and your customers."

When the chain went bankrupt, Boscov had retired. His successor was his nephew Ken Lakin, who acquired ten new stores that ended up underperforming, the article said.

Unsecured creditors will be paid 6.5 cents to 15 cents for every dollar owed at the time bankruptcy was declared under the plan approved by the judge, the Inquirer reported. (Source: Philadelphia Inquirer, Sept. 18, 2009.)


Feud between two families affects lending in Gulf

A feud between the Algosaibi and al-Sanea families of Saudi Arabia has gone public and "curbed lending across the Gulf," according to a Bloomberg report.

Some members of the Algosaibi family have accused Maan al-Sanea in court filings of "siphoning off $10 billion in assets while he was running a money-management business for them," the article said.

The Saudi Arabian central bank froze al-Sanea's accounts, according to the report. "The Algosaibis then used a Cayman Islands court order to try to freeze $9.2 billion of his assets, court documents show." Al-Sanea's company denies the allegations.

Al-Sanea is married to a daughter of one of the three founding brothers of Ahmad Hamad Algosaibi & Brothers Co., a trading conglomerate.

He joined the Algosaibi family business and started Saad Group, which began building sewage and storm-water systems in Jeddah in western Saudi Arabia. He later expanded into real estate, health care and banking, including a stake in HSBC Holdings, Plc, Europe's largest bank.... Today the two families dominate the landscape of Al-Khobar, a city of about 165,000 people.

Both family businesses have defaulted on loans and owe at least $15.7 billion to 80 banks, the report noted. A Dubai observer told Bloomberg that the situation is "like a ‘black swan' event, something no one saw coming." Michael Field, author of The Merchants, a book about the Gulf's trading families, told Bloomberg, "The washing of dirty linen in public is very unusual."

Another observer said of the two families, "They're interconnected a lot, I don't see one coming out as a victor and one as a loser." Analysts say the banks erred by making loans based on the families' reputations. (Source:, Sept. 17, 2009.)



WWE CEO Linda McMahon quits; will run for Senate in Conn.

Linda McMahon, CEO of World Wrestling Entertainment Inc., is resigning her post to run for U.S. Senate in her home state of Connecticut, the Los Angeles Times reported. She will run as a Republican against Democratic Sen. Christopher Dodd in 2010.

Although not nearly as flamboyant as her husband, WWE Chairman and ringmaster Vince McMahon, Linda McMahon is considered the brains behind the brawn. She has been CEO of WWE since 1997 and before that served as president.

McMahon said she would fund her own campaign. Her opponents include former Rep. Rob Simmons and Tom Foley, a former ambassador to Ireland. McMahon told the LA Times:

"When you've grown a small, family-run company into a company traded on the New York Stock Exchange, you know about living on budgets and making payroll."

Her husband will assume the CEO title, and COO Donna Goldsmith will take on additional duties, the article said.

McMahon's son, Shane, is WWE's executive vice president, global media, and her daughter, Stephanie, is executive vice president, talent and creative writing. (Source: Los Angeles Times, Sept. 17, 2009.)



Grupo Televisa CEO ‘a Latin American Rupert Murdoch’

Emilio Azcarraga Jean became CEO of Mexican TV network Grupo Televisa at age 29 in 1997 upon the death of his father, Emilio Azcarraga Milmo, the Los Angeles Times reported. Grupo Televisa, part of the family's media empire, operated as a monopoly for decades until the debut of Mexico's second national network, the report noted.

[Azcarraga Jean] has been credited with bringing greater neutrality and professionalism to its news department, which under his father had been an unabashed cheerleader for Mexio's Institutional Revolutionary Party, which represented the country's political establishment for 70 years until 2000.

Azcarraga Jean has been called "a Latin American Rupert Murdoch" because Murdoch also took over his fathers media company at a young age, the LA Times article said.

Under Azcarraga Jean, Grupo Televisa increasingly has become a powerhouse of global television production, with partnerships in China, the United States, South America and other places.

Observers have speculated that Azcarraga Jean, like Murdoch, may apply for U.S. citizenship to get around the federal law that prohibits foreign investors from controlling more than 25% of a U.S. broadcaster, the article said. But Azcarraga Jean told the LA Times, "I never intended on changing my citizenship." (Source: Los Angeles Times, Sept. 14, 2009.)


Robert Toll sells stock, gains $50 million

Toll Brothers Inc. chairman and CEO Robert Toll has sold 2.8 million shares of stock in the company this year, the Wall Street Journal reported. Toll and his brother, Bruce, founded the company in 1967.


[Robert Toll] has reaped about $50 million from sales of stock in the luxury home builder this year, benefiting from a recent jump in the share price amid investor hopes for a recovery in the housing market.


Toll's sale of 791,000 shares in early September was "prompted by the exercising of stock options, awarded a decade ago, that are due to expire in December," the article said.

Toll now holds 15.9 million shares, or nearly 10%, down from 18 million, or 11%, in January, the Journal reported. The company's CFO attributed the move to Toll's desire to diversify his personal investments. (Source: Wall Street Journal, Sept. 14, 2009.)


Founder’s daughter, 27, named CEO of Indian tech holding company

Roshni Nadar, the 27-year-old daughter of Indian technology mogul Shiv Nadar, was named in April as chief executive of HCL, the holding company that has stakes in HCL Technologies, India's fourth-largest software firm, and hardware unit HCL Infosystems, according to

The new CEO, who earned an MBA from Northwestern University's Kellogg School of Management just a year before her appointment, is not currently taking an operational role, according to the report. Nadar, who is engaged to be married, will oversee the education initiatives of the family's Shiv Nadar Foundation. Since returning to the family business last year, "I've been involved with the holding company's treasury operations, in brand-building and in our social initiatives," she told Forbes. "My dad had already made me part of the strategic decision-making process relating to the family portfolio."

She told Forbes she is not involved in the tech firms because "My contribution in the tech companies would have been incremental, as I have so much still to learn." (Source:, Aug. 23, 2009.)

Debt from Miami’s Fontainebleau compounds problems for Soffer family

The Soffer family of South Florida, whose Fontainebleau casino-hotel in Las Vegas filed for Chapter 11 bankruptcy protection in June, also has debt-related problems at the original Fontainebleau hotel in Miami, the Wall Street Journal reported.

The Soffers, who have a $7 billion real estate empire, bought the 55-year-old Miami Fontainebleau in 2005 and began $500 million worth of renovations, the article said.


Lenders, led by Bank of America, could declare a default on a $670 million construction loan for various reasons, including Fontainebleau's failure to keep reserves to cover more than $60 million in contested liens against the property by contractors who have not been paid....


Fontainebleau executives issued a statement saying the hotel is "engaged in constructive negotiations with our lenders," the Journal article said. The hotel has not missed a debt payment, the report noted.


The Miami troubles mark the latest setback in the Soffers' recent push into big hotel projects, spearheaded by 41-year-old Jeffrey Soffer, the son of founder Donald Soffer. Known for racing cars, sailing on his 257-foot yacht and dating supermodel Elle MacPherson, Jeffrey Soffer extended the family's luxury-property holdings with the Fontainebleau projects and the $130 million renovation of he 392-room Fairmont Turnberry Isle Resort in Aventura, Fla.


According to the report, Jerry Soffer signed $220 million in personal guarantees to secure financing for the Fontainebleau Las Vegas, which filed for Chapter 11 after lenders refused to provide it funds to complete the project. He has put his yacht on the market for $175 million.

Donald Soffer, 76, founded the business in 1967, when he bought swampland in northern Dade County to develop Aventura, which consists of country clubs, condominiums and office buildings and office buildings, the Journal reported. (Source: Wall Street Journal, Sept. 4, 2009.)


Papa John’s founder reunited with Camaro he sold to save family business

John Schnatter, founder of the Papa John's pizza chain, has been reunited with the gold-and-black 1971 Chevrolet Camaro Z28 he sold in 1983 for $2,800 to help save his father's tavern in Jeffersonville, Ind., the New York Times reported. Schnatter used the rest to start the pizza business that grew into the global Papa John's chain, the article said.

But he still missed his beloved Camaro and spent years searching for it. He created a Web site on the search, held promotional appearances and eventually offered $250,000 to whoever found it.

The car, which had only changed hands twice from the original buyers, was owned by Jeffery Robinson in Flatwoods, Ky., about 165 miles east of Loisville, where the Papa John's chain is based, the Times reported. The original buyers of the car, who saw Schnatter discussing the search on TV, tracked down Robinson, who had bought the car about five years ago for $4,000, delivered it to Schnatter and received the $250,000 reward. The original buyers will get $25,000.

The car will be displayed at the company headquarters in Louisville, replacing a replica Schnatter commissioned while he searched for his original car.

In celebration, Papa John's offered a free pizza to all Camaro owners on Aug. 26, the article said. (Source: New York Times, Aug. 25, 2009.)


Patriarch back at helm of Carolina Panthers after sons’ resignations

Bank of America Stadium president Jon Richardson and Carolina Panthers team president Mark Richardson have resigned from the Carolina Panthers football team and their father, team owner Jerry Richardson, is back at the helm, according to a report in the Triangle Business Journal.

A Panthers spokesman told the journal that no announcement on the brothers' successors is imminent. An investor in the team, real estate executive Johnny Harris, said Jerry Richardson announced the operations change at an investors' meeting but did not discuss the reason, the article said. Harris told the journal that the investors continued to have "positive feelings about our investment."

Jerry Richardson, 73, who once played for the Baltimore Colts and built his fortune in the fast-food industry, had a heart transplant in February, the report noted. Jon Richardson, 50, and Mark Richardson, 40, had worked in the team's front office since its founding in 1995.

Sports business consultant Terry Hanson questioned the timing of the move, 12 days before start of the team's season-opening game.


"I would like to know, why now?" Hanson says. "I don't think you would do this at the start of the season. It's a distraction -- not for the players but for [the front office]."


Hanson told the journal he didn't expect that the turnover would affect ticket sales, sponsorships or broadcast rights. (Source: Triangle Business Journal, Sept. 1, 2009.)


Mexican real estate family faces problems with move into U.S.

The Cababie family of Mexico's Grupo Gicsa real estate development company "is potentially on the hook for hundreds of millions of dollars as a result of personal guarantees they made on loans used to finance two major U.S. real estate investments," the Wall Street Journal reported.

After a foreclosure action in August, the family put its largest U.S. project, a condominium in Miami, into Chapter 11 bankruptcy, the article said. In March, the project defaulted on a $256 million construction loan that was guaranteed by Gicsa and, in part, by the family, according to the report,

The Cababies also personally guaranteed $300 million in loan payments to finance the $1.5 billion purchase in 2007 of 56 office buildings in Southern California, the Journal reported. "A Cababie entity surrendered that portfolio last year after it failed to make a loan payment," the article said.

"The challenges facing the two Cababie brothers, Abraham and Eilas, include poor timing, high leverage and the untimely death of their brother, Jacobo, who led their U.S. operations and died suddenly last year of a heart attack at age 39," the Journal reported.

The company, founded in 1989, is among the largest developers in Mexico, the report noted. It continued to expand U.S. operations while Florida's condo market started to fall.

"f creditors are successful, and the Cababies [don't] have available cash, the banks could move to put liens on buildings or other assets," the Journal article said. (Source: Wall Street Journal, Sept. 2, 2009.)

Francois-Henri Pinault undergoing ‘baptism by fire’

Francois-Henri Pinault, CEO of his family's luxury conglomerate PPR -- a publicly traded, $28 billion firm that owns Gucci and Yves Saint Laurent, among other brands -- is undergoing a "baptism by fire" as the luxury market takes a dive, noted a recent profile in Fortune. Pinault, originally Francois Jr., changed his name to Francois-Henri to avoid being confused with his father, company founder Francois Pinault, the article said.

The article noted that Pinault, who joined the family business in 1987 and became CEO in 2005, "pleasantly surprised Wall Street" with his cost-cutting and inventory-management measures in the first half of 2009.

"Those close to Pinault insist that he has gained markedly in self-confidence and stature with this crisis, and is well on his way to stepping out from under his father's shadow," Fortune reported.

The profile noted that Pinault, who is married to actress Salma Hayek, instructed company managers to account for an economic downturn in the fall of 2007, as they prepared their 2008 budgets. In July 2007, even though the slowdown had not yet hit the luxury markets, Pinault ordered all his divisions to reduce inventory and conserve cash.

"Such talk is markedly different from that of Bernard Arnault, CEO of PPR rival LVMH, who publicly declared in 2008 that his company was effectively ‘immune' to recessions -- before he, too, had to slash spending," the Fortune article said. (Source: Fortune, Sept. 14, 2009.)

Brazilian firm bidding for Pilgrim’s Pride

JBS SA, a giant Brazilian beef firm, is negotiating to buy Texas chicken company Pilgrim's Pride Corp. for about $2.5 billion in a deal that would take Pilgrim's Pride out of bankruptcy court, the Wall Street Journal reported.

"The deal would be notable, because Pilgrim's Pride's banks and bond holders will likely be paid in full -- a rarity in bankruptcy court...," the Journal article said.

"There will also likely be money for the company's shareholders -- another infrequent event in bankruptcy court, where shareholders are typically wiped out. That could salvage some of the fortune of the company's former chief executive, Lonnie ‘Bo' Pilgrim, who helped found the Pittsburg, Texas-based company with his brother out of a ramshackle animal feed shop in the 1940s."

If JBS succeeds in acquiring Pilgrim's Pride, the article said, it would create a new rival for the biggest U.S. meat company, Tyson Foods Inc., another family firm. Tyson produces beef, chicken and pork. (Source: Wall Street Journal, Sept. 3, 2009.)

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