Jefferson County, Ala., reached an agreement to refinance most of the debt at the heart of its financial breakdown, taking a big step toward resolving its bankruptcy, Mary Williams Walsh reports in DealBook. “The deal, according to the people briefed on the negotiations, covers about $2.4 billion of Jefferson County’s total $3.078 billion in sewer debt, which was issued to pay for significant repairs needed to bring the county into compliance with federal clean water laws.â€
The refinancing would position the county, which includes Birmingham, to emerge from bankruptcy in a matter of months, according to people briefed on the negotiations, though the terms must still be approved by a federal judge. The county must also clear other hurdles. The county’s bankruptcy, which came in 2011 after the interest due on the sewer debt shot up as a result of the financial turmoil of 2008, is the biggest municipal bankruptcy in United States history.
“The refinancing agreement covers debt held by creditors that include JPMorgan Chase, which holds about $1.22 billion of the sewer debt, the biggest block; three bond insurers; and seven hedge funds, according to a term sheet circulated in a meeting of the county commission on Tuesday. The terms call for these creditors to receive about $1.84 billion for the $2.4 billion of debt they now hold. The concessions were weighted most heavily toward JPMorgan, the term sheet said, ‘to increase the recovery of other sewer creditors.’ The bank is giving up $842 million, or about 70 percent, of the face value of its debt, according to people briefed on the negotiations.†Some former officials of JPMorgan were found to have been involved in improprieties in connection with a county debt refinancing in 2002 and 2003.
S.E.C. TO VOTE ON MONEY FUND PROPOSAL  | After a long effort to revamp the money market fund industry, regulators are preparing for an important vote on Wednesday morning. The five members of the Securities and Exchange Commission are scheduled to vote on a proposal that could eventually do away with the stable dollar-a-share value that has long defined money market funds, according to people briefed on the proposal, Nathaniel Popper reports in DealBook. “The proposal suggests that it may be necessary to eliminate the fixed share value only on money funds used by big institutional investors, not those used by small investors, and only on so-called prime money funds that invest in corporate debt, not on money funds that invest in government and municipal debt. The affected funds are the ones that were hit the hardest during the financial crisisin 2008.â€
F.B.I. NOMINEE COULD OFFER PEEK AT BRIDGEWATER Â |Â
It is not unusual for a government official to come from a hedge fund. But in the case of President Obama’s planned F.B.I. nominee, James B. Comey, the hedge fund in question, Bridgewater Associates, may raise some eyebrows, Steven M. Davidoff writes in the Deal Professor column. Bridgewater, the largest hedge fund in the world, is known for a 123-page manifesto by its founder, Ray Dalio, containing principles that could easily be seen as a “latter-day model of EST or another 1970s personal discovery group,†Mr. Davidoff writes. At the same time, Mr. Dalio is often hailed as a genius.
“Mr. Comey’s reasons for going to Bridgewater and what he thought of the culture there are only speculation at this point. If he is nominated, though, Mr. Comey may want to go before the Senate and let the public know what he thinks of the hedge fund and why he worked there.â€
ON THE AGENDA  | The Federal Reserve’s so-called beige book about the economy is out at 2 p.m. Rue21, which agreed to sell itself to Apax Partners, reports earnings after the market closes. Simon Johnson, a professor at the M.I.T. Sloan School of Management, is on Bloomberg TV at 7 a.m. Matthew Layton, the global head of mergers and acquisitions at Clifford Chance, is on CNBC at 4:30 p.m.
AN EXCHANGE FOR PATENT RIGHTS Â |Â Patent rights, which are usually bought and sold in private transactions, are set to be publicly traded on a new exchange that plans to announce its first offering on Wednesday. The Intellectual Property Exchange International, which is based in Chicago and says it is the first of its kind, has attracted a handful of blue-chip companies and prominent universities as its initial members. One of those companies, Royal Philips Electronics, is set to begin marketing the rights to a portfolio of more than 600 patent assets.
Separately, President Obama took direct aim on Tuesday at shell companies known as patent trolls, which exist to pursue patent infringement claims, Edward Wyatt reports in The New York Times. The president announced several executive orders “to protect innovators from frivolous litigation†by patent trolls.
Glass Lewis Recommends Sprint Shareholders Abstain From Vote  | The proxy advisory firm Glass Lewis recommended that shareholders of Sprint Nextel not vote on the bid from SoftBank, as it was still reviewing a rival offer from Dish Network, Reuters reports. REUTERS
Former Barclays Executive Turns to Car Dealerships  | Roger Jenkins, a former executive chairman of Barclays’ investment banking business in the Middle East, “is buying up a string of luxury car dealerships†on the west coast of the United States, with plans to list the company in New York, The Telegraph reports. TELEGRAPH
After JPMorgan, Staley Sizes Up Banks for Hedge Funds  | James E. Staley, who left JPMorgan Chase this year to join the hedge fund BlueMountain Capital Management, said on a panel at the Bloomberg Hedge Funds Summit that the regulatory changes being developed could present an investment opportunity. DealBook »
Gleacher to Shut Its Investment Bank  | Gleacher & Company, the troubled boutique bank, is shutting down its investment banking business and has named a restructuring expert as its chief executive. DealBook »
Return of the Synthetic C.D.O.  | “Investors are once again clamoring for a risky investment blamed for helping unleash the financial crisis,†The Wall Street Journal writes. WALL STREET JOURNAL
Better Late Than Never on Deeming Nonbanks Too Big to Fail  | Still, in designating A.I.G. and GE Capital systemically important, regulators show they are stuck for the most part in the last crisis rather than looking out for the next one, Agnes T. Crane of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS
The Hurdles to Reviving an Investment Bank Partnership  | The activist investor Knight Vinke says UBS could adopt something like a partnership structure as part of its plan to split wealth management from investment banking. That is overambitious at the moment, Dominic Elliott of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS
Arinc, Owned by Carlyle, Is Said to Attract Interest  | Arinc, an aerospace communications firm owned by the Carlyle Group, “has drawn early takeover interest from industry conglomerates and private equity firms in an auction that may fetch between $1.3 billion and $1.4 billion, several people familiar with the matter said,†Reuters reports. REUTERS
Indonesian Billionaire Said to Be Buying Stake in Pay-TV Firm  | Reuters reports: “The Indonesian billionaire Chairul Tanjung has agreed to buy an 80 percent stake in the country’s second-biggest pay-TV operator, Telkomvision, heating up competition in the emerging pay television market currently controlled by another tycoon, Harry Tanoesoedibjo.†REUTERS
Quantitative Hedge Funds Hit With Losses on Bonds  | Big hedge funds that use computer models to trade on trends have experienced significant losses in the last two weeks after a sell-off in bonds, The Financial Times reports. AHL, part of the Man Group, lost more than 10 percent of its net asset value in the last two weeks, the newspaper reports, citing an investor. FINANCIAL TIMES
Hedge Fund Focused on Credit Turns to Equities  | The Financial Times reports: “CQS, Europe’s biggest credit hedge fund by assets under management, is planning to branch into equities, in a sign that top managers are diversifying in response to the high levels of capital flowing into the industry.†FINANCIAL TIMES
Empire State Building Nears I.P.O., But Risks Remain  | “As fine print goes, there are some pretty big risks, including the possibility that the whole public offering could be undone,†Julie Creswell writes in The New York Times. NEW YORK TIMES
Bloomberg L.P. Begins Fund to Invest in Start-Ups  | Bloomberg L.P., the parent of Bloomberg News, is creating Bloomberg Beta, a $75 million venture capital fund that has already begun using Bloomberg L.P.’s money to place bets on high-tech start-ups. DealBook »
A Tech Empire Built by Aping Apple  | “China is notorious for its knockoffs. But now comes a knockoff of one of the gods of American ingenuity: Steven P. Jobs,†David Barboza writes in The New York Times. NEW YORK TIMES
How to Foster Competition in Wireless Spectrum  | “As the government prepares to sell perhaps the last big chunk of valuable low-frequency spectrum that will be made available for wireless communications and mobile computing, pressure from Congress to raise as much money as possible threatens to get in the way of this objective,†Eduardo Porter writes in the Economic Scene column in The New York Times. NEW YORK TIMES
New York Sues HSBC Over Foreclosures  | The New York attorney general has sued HSBC, accusing it of ignoring a law intended to protect struggling homeowners from being thrown into foreclosure without getting a chance to renegotiate their mortgages. DealBook »
Brazil Cuts Financial Transactions Tax  | Brazil on Tuesday cut a tax on overseas investment in domestic bonds to zero from 6 percent, “in a move that signals its concern that Brazil’s currency, the real, is weakening too quickly against the dollar,†The Financial Times reports. FINANCIAL TIMES
Former Goldman Executive Loses Effort to Narrow Fraud Case  | Fabrice Tourre, a former Goldman Sachs vice president, lost an effort to limit the Securities and Exchange Commission’s fraud case. REUTERS
Apple Is Found to Violate Samsung Patent  | “A trade commission on Tuesday determined that the company had violated one of Samsung’s patents, and it ordered a ban on some older Apple devices,†The New York Times reports. “But the ban is unlikely to have an immediate impact on sales of those devices in the United States.†NEW YORK TIMES
European Tariff on Chinese Solar Panels Is Less Than Expected  | The New York Times reports: “The European Union’s trade chief on Tuesday carried out his threat to impose tariffs on solar panels from China. But in a significant concession to Chinese lobbying and after opposition from some European leaders and industry executives, he significantly watered down the penalties.†NEW YORK TIMES
KPMG Internal Review Finds Safeguards ‘Sound and Effective’  |Â
WALL STREET JOURNAL
Calculating Apple’s True U.S. Tax Rate  | Apple’s chief has said that the company paid about 30.5 percent in taxes on its profits. In the Standard Deduction column, Victor Fleischer examines cash tax payments to the Treasury Department and estimates that it is probably closer to 8.2 percent. DealBook »
Crunchtime for China’s High School Seniors  | Friday and Saturday will be momentous days for millions of Chinese families, but not because of the upcoming California summit meeting between President Obama and China’s new leader, Xi Jinping, writes Bill Bishop in the China Insider column. DealBook »
