Compiled by Julie Leupold
TOP STORIES
Defunct subprime mortgage lender New Century Financial Corp. won bankruptcy court approval for a liquidation plan that should provide unsecured creditors about $194 million. Creditors will recover between 2% and 17% of their claims under the plan, according to U.S. Bankruptcy Court Judge Kevin Carey. Irvine-based New Century, once the country’s second-largest subprime lender, filed for bankruptcy protection in 2007. The company’s creditors claim they are owed as much as $35 billion, a figure that’s expected to be lowered by the court.
Broadcom Corp. cofounder and former chief executive Henry Nicholas is set to stand trial for charges related to stock options backdating next April and on drug charges later in 2009, a federal judge said last week. Former finance chief Bill Ruehle is set to go to trial in April on options charges. Both have pleaded not guilty.
TECHNOLOGY
Lantronix Inc., a struggling Irvine maker of networking gear, said it’s set to start an overhaul of its business, including job cuts. The company plans cut 10 jobs from its sales, marketing, operations and engineering groups. The move is set to save the company $2 million a year and make its reporting structure more efficient. Lantronix expects to take charges of $700,000 to $800,000 for severance packages and other costs in the fourth quarter. Lantronix makes small electronic devices that allow vending machines, thermostats, retail terminals, ATMs and others to be accessed via the Internet or other computer networks.
HEALTHCARE
A Delaware judge cleared Newport Beach-based healthcare software maker TriZetto Group Inc. to hold a July 14 shareholder vote on its acquisition by a private equity firm. The move came after TriZetto made a filing with the Securities and Exchange Commission that details the deal’s financial interests of UBS AG, which is serving as TriZetto’s adviser and has prior investment banking deals with the company. UBS could see about $14 million from the deal related to warrants that convert to TriZetto stock, according to the SEC filing. A judge previously delayed a shareholder vote amid investor lawsuits that raised issue with UBS’ role. In April, TriZetto said it was being bought and taken private by New York-based private equity firm Apax Partners Inc. in a deal valued at $1.4 billion. The deal could close by the end of July.
Ahmed Hussein, an activist director of Irvine medical software maker Quality Systems Inc., plans to nominate six candidates to the company’s board. Hussein, an Egyptian businessman, owns about 4.7 million shares, or 17% of Quality. Hussein’s slate is made up of himself, fellow incumbents Ibrahim Fawzy and Edwin Hoffman and three new nominees. They are Murray Brennan, chairman emeritus of the Memorial Sloan-Kettering Cancer Center’s surgery department; Thomas DiBenedetto, president of Boston International Group Inc., an investment management firm; and Joseph Stilwell, a private investment manager. A “more independent” Quality board would enhance investors’ confidence in the stock, Hussein said. Hussein’s board push comes a few weeks after Quality Chief Executive Lou Silverman said he was resigning from his post in August. In 2005, Hussein sparked a fight over corporate governance issues that led to a settlement with Quality.
State regulators sued Prime Healthcare Services Inc. of Victorville, which runs four Orange County hospitals, over billing issues. The Department of Managed Health Care is seeking to bar Prime Healthcare from billing insured patients for unpaid medical bills the hospital chain contends it is owed from insurers and is seeking from patients as a last resort. Insurers contend Prime inflates what it charges them for patients treated in its hospitals. Prime runs West Anaheim Medical Center, Huntington Beach Hospital, La Palma Intercommunity Hospital and Garden Grove Hospital and Medical Center, which it acquired from Tenet Healthcare Corp. last week.
Anaheim General Hospital could lose government funding after a surprise inspection found serious threats to patient safety including medicines stored at improper temperatures, a lack of drugs to treat a potentially fatal reaction to anesthesia and not enough food or water on hand in case of an emergency. The hospital has put forward a plan of correction but still must pass another unannounced inspection before Aug. 9 to avoid losing funding. The 143-bed Anaheim General is owned by Pacific Health Corp. of Tustin.
APPAREL
Irvine’s Billabong USA bought Sector 9 Inc., a San Diego maker of skateboards and related clothing (see related story, page 1). Terms of the buy weren’t disclosed. Sector 9’s skateboards are a new line of business for Billabong, which to date has focused on swimsuits, clothes and accessories inspired by surfing and skateboarding. Sector 9’s cofounders and owners Steve Lake, Dennis Telfer and Dave Klimkiewicz are set to remain with the company.
FINANCE
Newport Beach-based Downey Financial Corp. said President Frederic McGill left after eight months with the savings and loan operator. McGill was Downey’s third president in less than four years. Downey, which doesn’t hold conference calls or offer other insights into its inner workings, appeared to have been grooming McGill as a potential successor to Chief Executive Dan Rosenthal. In recent months, McGill, not Rosenthal, had been providing comments for Downey’s quarterly financial results. The company didn’t say why McGill left. Bad home loans made by Downey have led to its stock dropping more than 90% in the past year. It holds a recent market value of $75 million with assets of about $13 billion.
OTHER NEWS
Placentia-based Sunrise Growers Inc., a seller of fresh and frozen strawberries, traded hands among private equity firms. Boca Raton, Fla.-based Sun Capital Partners Inc. acquired Sunrise Growers for undisclosed terms from Heritage Partners Inc., another private equity firm based in Boston. Sunrise sells strawberries and related frozen products under its own brands, including Frozsun Foods. The company says it has the largest share of frozen strawberries in the country.
