Archive: August, 2010
Joseph N. DiStefano
The Pennsylvania Department of Transportation has demanded that the Pennsylvania Turnpike Commission pay PennDOT $118 million by Sept. 18, or it will force the commission to require "a unanimous vote of all Commissioners" for any action it takes, which would have the effect of giving PennDOT secretary Allen D. Biehler, an appointee of Gov. Rendell's, veto power over the Turnpike's future decisions.
The letters were disclosed in a supplement, filed yesterday, to the Turnpike Commission's planned $273.5 million bond issue prospectus from last month.
According to the supplement, the turnpike made PennDOT a payment of $112.5 million last month for state road, bridge and transit work, as required by the state's Act 44 transporation subsidy law. But PennDOT, in letters Aug. 4 and Aug. 16, says the Turnpike owes another $118 million, under that same Act 44.
The Turnpike disputes PennDOT's interpretation, but tells potential bondholders that, under the Act 44 funding agreement, PennDOT says it will invoke its veto rights, and also seek additional, unspecified "remedies", if it doesn't get the money by the September 18 deadline.
Turnpike spokesman Carl DeFebo says the Commission doesn't believe it owes what PennDOT demands. PennDOT declined to comment. UPDATE: Harrisburg Patriot-News says Gov. Rendell doesn't support PennDOT's action. Previous proposals to raise transportation funds by leasing the Turnpike to private owners (Rendell) or raising tolls on I-80 (the Turnpike's idea) have been shot down. So where's road, bridge, and transit-fixing money supposed to come from?
Joseph N. DiStefano
Skinny Water doesn’t make you thinner. Can it make its Philadelphia creators rich?
Skinny Nutritional Corp. of Bala Cynwyd, which distributes brightly-colored, fruit-flavored “zero calorie, zero sugar, zero guilt” Skinny Water at discounters and drug stores and supermarkets, is an over-the-counter penny stock, trading recently at 6 cents a share, down from highs of 14 cents last year and 45 cents the year before.
Boosted by promotions from country singer Brad Paisley and former Sixers front man Pat Croce, Skinny sales topped $2.2 million for the three months ended June 30, from $1.8 million in the first quarter and $1.2 million a year ago. But losses are growing, too, in a tough market dominated by by Coca-Cola and Pepsico.
After raising $1.4 million from wealthy investors in private placements last year, Skinny last week reported it had just $60,000 in cash left as of June 30, plus a credit line from United Capital Funding Corp. That money “will only be sufficient to fund our anticipated levels of operations for a minimal period,” the company said in a Securities and Exchange Commission filing last week. (Revised)
How can Skinny Water survive, let alone get to the $25 million a year sales (at $1.49 a bottle, retail) that chief financial officer Donald McDonald figures is its break-even point? “The company is raising additional capital,” asking more private investors to fund deals with new distributors, chief executive Michael Salaman told me yesterday. Skinny is also extending its reach by signing up distributors for No. 3 soft drink maker Dr. Pepper Snapple Group, including Philadelphia-based Honickman Affiliates Ltd. and other soda-movers in New England and the West Coast, McDonald says.
Dr. Pepper sometimes signs up brands its contract distributors like, including Big Red and Fiji Water, to its own larger distribution system, giving them potentially much higher sales, Dr. Pepper spokesman Chris Barnes told me. No decision has been made in Skinny’s case.
Michael Zuckerman, whose family was partners with the Honickman family in a King of Prussia-based soda-bottle business, sits on Skinny Water’s board, along with some other prominent Philadelphians.
Those include William R. Sasso, chairman of the Stradley Ronon Stevens & Young law firm, who told me he’s known McDonald since they were Catholic school kids up at Broad and Duncannon; John J. Hewes, the Norwood, Delaware County native who’s a top executive at student lender Sallie Mae Corp. in Wilmington; retired Susquehanna International Group trading chief Francis W. Kelly, a longtime friend of Hewes, according to McDonald; and Ronald Wilson, a former head of Philadelphia Coca-Cola Bottling Co., who served as Skinny’s president last year, and remains a consultant, according to Salaman.
Salaman and McDonald have long business resumes. McDonald, a Villanova graduate and the oldest son of a prominent Philadelphia doctor, worked for infomercial maker National Media Corp. in the 1980s and early 1990s, and was also head of direct marketing at nude-movie distributor Spice Direct Entertainment Co., among other jobs. In 1982, he was convicted of bank fraud against another former employer, Beneficial Savings Bank, and spent three years in the federal prison in Allenwood, Pa. Federal securities law doesn’t require him to list that on company filings because it’s been more than 10 years. “It was a long time ago,” McDonald told me. Sasso’s firm represented the bank at the trial.
Salaman, a Temple graduate, is a son of Abraham Salaman, a veteran Philadelphia investor in troubled companies who was twice barred from the securities business for his involvement in questionable deals involving Magic Marker and other companies. He later endowed a building at his alma mater, Philadelphia University, where he told his son he scrimmaged against future NBA star Wilt Chamberlain.
The younger Salaman worked with McDonald at National Media and then at Web TV develoepr American Interactive Media Inc., before buying control of Skinny Water’s corporate predecessor and steering it into the water business "because," he told me, "there's this convergence between the water trend, and the health trend."
“We’re definitely in the right place,” McDonald told me. “We’re a virtual company, we don’t own a bottler... We’re two guys from Philadelphia who are taking on the Cokes and Pepsis of the world. That’s our challenge, to be one of the major beverage companies, in this enhanced-water category, which is where the market has moved.”
Joseph N. DiStefano
ING Direct Bank, the $90 billion-asset, Dutch-owned, Wilmington-based consumer deposit and loan bank headed by ex-finance professor Arkadi Kuhlmann, says a survey of 1,000 Americans shows a wide gender gap on attitudes about money and debt.
More than six in 10 men ING surveyed agreed a "frugal" blind date would be both "smart" and "sexy." Only a little over four in 10 women agreed; women were more likely to equate money-saving with "stingy" and "boring" partners.
Two-thirds agreed women were better at paying bills. But six in ten said men were better at investing. Women, unlike men, were more worried about "gaining weight" than "accumulating debt." Survey summary here.
ING's trying to figure out how Americans borrow, spend and repay as it tries to recover from losses in 2008 and 2009. The bank turned a profit and started growing again in the first quarter of 2010, but has yet to recover its rapid expansion from earlier in the decade, when depositors were sending an average $1 billion a month to the branchless lender's electronic vaults.
Joseph N. DiStefano
Joel Naroff, the longtime Philadelphia bank economist whose horses (employers) kept getting shot under him (sold to other banks), has kept his dark sense of humor through the collapse of the real estate market. Read his pungent comments in Al Heavens' Inquirer story here. Plus, from Naroff's statement today:
- "With new home sales at a record low [less than 1,000 a day in July], it might be easier to list the names of the buyers than the number of homes sold."
- "Builders have replaced the Maytag salesmen as the loneliest people around."
- "Like the Chinese traffic jam, we are going nowhere slowly."
- "I cannot conclude this sector is a wipeout. Okay, it is."
And, not so funny: "People who want to move... cannot afford a down payment... They are stuck... With credit standards back to where they should be, many of them will not qualify... If you cannot sell your home then you cannot buy another home and that creates gridlock... "
Things will get better... they can't get much worse... maybe by Thanksgiving, Naroff concludes.
Joseph N. DiStefano
"Dozens of potential suppliers" met with Fisker Automotive chief operating officer Bernard Koehler, manufacturing vice president Frank Faga, and other Fisker bosses "this morning at the DuPont Country Club" north of Wilmington, Fisker spokeswoman Helen Wie said in a statement.
Fisker, the California-based electric car maker, says it's on track to start building $40,000+ electric cars at the former General Motors plant west of Wilmington, in the autumn of 2012. The $175 million plant upgrade will be funded with proceeds of a $500 million-plus US loan.
Delaware Gov. Jack Markell, who's worked with Vice President Joe Biden and other Delaware politicians to lure and subsidize the Fisker plant, hopes the company will re-hire some of the 2,000+ former GM and Chrysler autoworkers and dozens of contracting firms left unemployed when automakers shut their Delaware plants two years ago. More at www.fiskerautomotive.com
Joseph N. DiStefano
Brandywine Realty Trust has invested $25 million for a 25% interest in grey-stone-faced Commerce Square, twin 41-story towers totalling 1.9 million square feet of Class A office space in the 2000 block of Market Street in Center City.
UPDATED: The deal values the buildings' equity at $100 million, or around $53 a square foot. Brandywine boss Gerard Sweeney notes that a buyer would also have to finance the building's debt of $238 million, or $125 a square foot. That sets the building's total value at around $178 a square foot on a debt + equity basis. Still less than half the cost of new construction.
But better than letting the towers run down. "This is a good sign for those buildings. They were out of cash, and this stabilizes them," says Robert Fahey, executive vice president at building broker CB Richard Ellis Inc.
EARLIER: Brandywine will own the buildings as minority partner with previous Commerce owner Thomas Properties Group of Los Angeles remaining in control. Brandywine's money - $5 million at closing, $20 million by the end of 2012 - "will provide substantial capital to improve these premier properties and maintain their position among the highest-quality buildings in Center City," Thomas boss James A. Thomas said in a statement. Thomas will "oversee" the investment, Brandywine boss Gerard H. Sweeney said.
The Henry Cobb-designed towers, built in 1987 and 1992 with an enclosed garden and a few postmodern angular stone flourishes, are 89% leased; tenants include Delaware Investments, Ernst & Young, Grant Thornton, and Wolters Kluwer, among others.
Joseph N. DiStefano
Penn State has won $130 million in federal support for an "energy innovation" center at the old Philadelphia Navy Yard to develop "green" energy and drainage technologies for homes and commercial buildings. Department of Energy statement here. Inquirer story here.
The Philadelphia proposal beat a New York "consortium of more than 100 education, nonprofit, government and industry groups," which had claimed the project will create 76,000 jobs at the University of Syracuse and across depressed upstate NY, Crain's New York Business says here.
Crain's adds: "U.S. Energy Secretary Steven Chu said a team led by The Pennsylvania State University will receive $122 million to establish an energy innovation hub at the Philadelphia Navy Yard Clean Energy campus... Up to $8 million in additional funds will come from the Department of Commerce and the Small Business Administration. Funding for the project, which will be spread out over five years, will go towards improving the efficiency of both commercial and residential buildings."
From US DOE statement: "The Energy-Efficient Building Systems Design Hub (will) research, develop and demonstrate highly efficient building components, systems, and models which are applicable to both retrofit and new construction. The Hub team will pursue a research, development and demonstration program targeting technologies for single buildings and district-wide systems.
Joseph N. DiStefano
First Round Capital, the West Conshohocken firm run by Infonautics/Half.com(eBay)/ TurnTide(Symantec) millionaire Josh Kopelman, his Half.com comrade Chris Fralic, and their (mostly NY- and Silicon Valley-oriented) partners, ranked #3, by number of deals, among US venture capital firms from mid-2009 to mid-2010, according to CB Insights.
CB is Chubby Brain, the New York State-backed data group run by ex-American Express-venture-capitalists Anand Sanwal and Jonathan Sherry. Fralic's tweet here.
List link here. With 48 deals in the past year, CB ranks First Round close behind New Enterprise and Kleiner Perkins, and ahead of Sequoia, Benchmark, and other better-known firms. First Round's local deals include joining Comcast in the $81 million sale of Penn-founded Invite Media to Google.
|#1||New Enterprise Associates||59|
|#2||Kleiner Perkins Caufield & Byers||52|
|#3||First Round Capital||48|
|#4||Polaris Venture Partners||37|
|#9||North Bridge Venture Partners||29|
NEW: First Round does small deals. Measuring just the VALUE of the deals, First Round ranked 67th in the US, at $60 million, according to detailed data covering the same period from PricewaterhouseCoopers' Money Tree report. (Money Tree, like CB, also ranks First Round #3 for deal volume. Thanks to Emily Mendell from National Venture Capital Assocation for passing this along.)
Philadelphia-area venture dealmakers in 2009-10, and their equity investments, from Money Tree:
Quaker BioVentures Inc.: 15 deals with 14 companies, for $66 million (57th in U.S. by value)
First Round Capital: 65 deals with 53 companies, $60 million (67th in U.S. by value)
SAP Ventures: 6 deals with 5 companies, $34 million
Osage Partners LLC, 16 deals with 15 companies, $26 million
SCP Private Equity Partners: 3 deals with 2 companies, $25 million
Comcast Interactive Capital: 10 deals, $24 million
NewSpring Capital: 7 deals, $24 million
LLR Partners Inc.: 1 deal, $23 million
Safeguard Scientifics: 7 deals with 5 companies, $21 million
EnerTech Capital: 7 deals with 6 companies, $16 million
Novitas Capital (formerly PA Early Stage): 5 deals with 4 companies, $10 million
Ben Franklin Technology Partenrs of SE PA: 29 deals with 27 companies, $7 million
TL Ventures: 10 deals with 9 companies, $8 million