Category: Arkansas

by Arkansas Business Staff  on Monday, Mar. 4, 2019 12:00 am   1 min read

Nathaniel Izard (Jason Masters)

WASHINGTON — Federal Reserve Chairman Jerome Powell says the U.S. economy should keep expanding at a solid, though somewhat slower pace this year. But he warns of growing risks, including a global slowdown, volatile financial markets and uncertainty about U.S. trade policy.

In delivering the Fed’s semiannual monetary report to Congress, Powell says the Fed will be “patient” in determining when to boost its benchmark policy rate in light of the various “crosscurrents and conflicting signals.” He says the Fed’s rate decisions will be “data dependent” as the economic outlook evolves.

The Fed in December indicated it could hike rates two times this year. But many private economists believe the Fed will keep rates unchanged until late this year and may not hike at all.

Powell said that the economy grew at a strong pace last year, with employment and inflation remaining close to the Fed’s goals. He said it appeared that overall growth was slightly below 3 percent in 2018. The Fed expects 2019 growth to slow somewhat.

He said that while the 35-day partial government shutdown “created significant hardship for government workers and many others, the negative effects on the economy are expected to be fairly modest and to largely unwind over the next several months.”

Powell cited a number of factors that could slow growth have emerged in recent months.

“Financial markets became more volatile toward year-end, and financial conditions are now less supportive of growth than they were earlier last year,” Powell said.

He noted that growth has slowed in major foreign economies, including China and Europe, and “uncertainty is elevated” around major policy issues such as Brexit, Britain’s proposed exit from the European Union, and ongoing U.S. trade negotiations with various countries.

Powell’s testimony Tuesday before the Senate Banking Committee will be followed by testimony on Wednesday before the House Financial Services Committee.

Some private analysts are forecasting that the Fed’s next move could be a rate cut in 2020 as the central bank confronts a slowing economy.

At its last meeting in January, the Fed left rates unchanged at a level of 2.25 percent to 2.5 percent and signaled a major pivot away from steadily raising rates by declaring that it intended to be “patient” in determining when to move rates again.

The Fed’s decision triggered a big rally in stock prices as investors grew less concerned that the Fed could over-do its tightening cycle and push the country into a recession.

The Fed raised rates four times in 2018. Its December rate hike, along with a forecast of two more hikes in 2019, sent the market down sharply as investors worried that the central bank was in danger of over-doing its credit tightening and could end up sending the country into a recession.

As the stock market began tumbling last October, President Donald Trump increased his attacks on the central bank, calling the Fed’s rate hikes his biggest threat and saying that the central bank should not be raising rates at all because there was no threat of inflation.

(All contents © copyright 2019 Associated Press. All rights reserved.)

by Arkansas Business Staff  on Monday, Feb. 25, 2019 4:55 pm   1 min read

Sales at Dillard’s stores open at least a year improved in the retailer’s most recent fiscal year. (Stephanie Dunn)

Windstream Holdings Inc. of Little Rock filed Chapter 11 bankruptcy on Monday, less than two weeks after a federal court judge found that the 2015 spinoff of its fiber and copper assets into a separate company ran afoul of bond requirements, exposing the company to a $310 million judgment.

In a news release, the firm called the filing “a necessary step to address the financial impact” of the judge’s decision and “the impact it would have on consumers and businesses across the states in which we operate.” 

“Taking this proactive step will ensure that Windstream has access to the capital and resources we need to continue building on Windstream’s strong operational momentum while we engage in constructive discussions with our creditors regarding the terms of a consensual plan of reorganization,” CEO Tony Thomas said. “We acted decisively to secure the long-term financial stability of Windstream, and we are confident that, upon completion of the reorganization process, we will be even better positioned to invest in our business, expand our speed and capabilities for our customers and compete for the long term.”

The firm said it would have more information on a website it set up for the restructing.

More: See Windstream’s Chapter 11 bankruptcy filing.

Shares of Windstream (Nasdaq: WIN), which had already declined since the judge’s ruling, were down about 25 percent Monday to about 65 cents per share.

Windstream, itself a spinoff of the old Alltel Corp. of Little Rock, reported $5.8 billion in revenue in 2017. It employs about 13,000 companywide, including about 1,200 at Arkansas.

U.S. District Court Southern District Judge Jesse Furman’s Feb. 15 ruling came in lawsuit brought by Aurelius Capital Management of New York, which alleged that Windstream’s 2015 spinoff of its copper and fiber assets into a real estate investment trust violated the terms of some of its outstanding bonds.

The spinoff is publicly traded Uniti Group Inc. of Little Rock, led by CEO Kenny Gunderman and originally called Communication Sales & Leasing Inc. Shares of Uniti (Nasdaq: UNIT) were down about 2 percent Monday to $9.05 per share.

Windstream executives had expressed confidence amid the legal wrangling, but also warned that, should the court find it in technical default on the bonds, it could be on the hook to repay bondholders immediately or forced into bankruptcy.

In its legal filings, Windstream alleged that “Aurelius acquired its position” as bondholders “for the sole purpose of seeking to manufacture this alleged default, and declare that a credit event has occurred or is occurring, in order to collect a credit default swap payoff.”

In comments after the ruling, Thomas said the company was “disappointed” and “frankly surprised” and said executives would pursue “all available options, including post-trial motions and an appeal. He said the firm would also work with creditors on the next course of action. 

Aurelius posted its own response to the ruling, saying the company could have “easily” averted the outcome “first by not playing fast and loose with its noteholders in 2015” and “second by settling. 

“Instead, Windstream wasted an exorbitant amount — more than would have been needed to settle with us at the time — on an ineffective exchange offer and then on litigation,” Aurelius said. “In our view, a management and a board with an extreme and unwarranted assessment of Windstream’s legal case chose to bet the company. The company lost.”

Last week, in light of the court ruling, Windstream postponed its fourth-quarter and full-year 2018 financial results, originally scheduled for Feb. 21. It now says it will release results “no later than March 18.”

Thomas, who has led the company since 2014, talked about the Uniti spinoff during an address to the Little Rock Rotary Club in 2016, as Windstream marked its 10th anniversary. He said the spinoff allowed Windstream to pay off $800 million in debt and improve its infrastructure.

“The idea sounds a little crazy the first 12 times you hear it, but once you hear it the 13th, it’s a compelling way to create value for our shareholders but also our customers,” Thomas said. 

by Sarah Campbell-Miller  on Monday, Feb. 25, 2019 11:59 am   1 min read

Windstream CEO Tony Thomas

Windstream Holdings Inc. of Little Rock has extended the contract of its CEO, Tony Thomas, to 2024.

The publicly traded telecommunications firm announced the extension in filing Friday with U.S. Securities and Exchange Commission.

“Thomas’ continued leadership and performance are critical to the success of Windstream and provide the continuity and stability needed for the company to focus on serving customers and all other stakeholders while the board of directors and management evaluate Windstream’s options,” the company said in the filing.

Under the deal, Thomas will be paid an annual base salary of at least $1 million. He also received a one-time, time-based cash award of $2 million that will vest in full in three years.

More: See Thomas’ employment agreement with Windstream.

The announcement comes as Windstream grapples with a $310 million judgment in federal court stemming from the 2015 spinoff of its fiber and copper assets into a separate company. Windstream said its board directors were finalizing the agreement with Thomas when the ruling came down.

U.S. District Court Southern District Judge Jesse Furman ruled Feb. 15 in favor of hedge fund Aurelius Capital Management of New York, which alleged that Windstream’s spinoff violated the terms of some of its outstanding bonds. 

Windstream executives had expressed confidence amid the legal wrangling, but also warned that, should the court find it in technical default on the bonds, it could be on the hook to repay bondholders immediately or forced into bankruptcy.

On Monday, the Wall Street Journal and Bloomberg reported that Windstream could filing bankruptcy protection as early as today.

Thomas’ total compensation increased by $1 million to $5.4 million in 2017 from $4.4 million in 2016, according to last year’s preliminary annual proxy statement.

by Arkansas Business Staff  on Monday, Feb. 25, 2019 12:00 am   1 min read

Olivia Farrell is taking her dogs and going home.

She’ll walk out of Arkansas Business Publishing Group in Little Rock this week for the last time as CEO and principal owner, selling the media and marketing company she built over 35 years to the man who led them to their greatest success, Mitch Bettis.

That’s the news, but the story is deeper when you’re part of it.

Losing an inspiring and popular boss like Farrell is poignant, but in an age of media contraction, ABPG workers were relieved that the company is staying in trusted, local hands.

Farrell blazed a four-decade trail for Arkansas women, helping build the Arkansas Times and then ABPG into two of the state’s biggest independent multimedia firms. She took a few niche publications — Arkansas Business, Arkansas Bride and Little Rock Family — in her 1995 corporate “divorce” from Arkansas Times Publisher Alan Leveritt, and over the past 25 years added successful titles like Little Rock Soirée, Arkansas Next and Arkansas 250 to the stable. Flex 360, a full-service web design and digital marketing agency launched under Farrell, has grown to include staff and clients across the U.S.

Farrell also championed women in all fields, founding the Arkansas Women’s Foundation with Pat Lile and creating a pet- and parent-friendly space at her own shop. She hired Bettis in 2013 as general manager and publisher, and they meshed. She made him president in 2014.

On Feb. 28, Farrell will retire and Bettis will realize his lifelong dream of owning a publishing company. Bettis, 51 and an Arkadelphia native, will also be CEO of ABPG, which Farrell started in 1995 as a separate home for Arkansas Business and its sister publications.

The company is now a 21st-century media outlier — a mature, locally owned venture built on print but with more paying subscribers and revenue than ever, as well as a significant digital marketing operation. Bettis named ABPG’s new parent company Five Legged Stool LLC for a business philosophy he got from Farrell, based on serving five groups of company stakeholders. The legs of the stool are service to readers, advertisers, employees, vendors and investors.

“I’m really lucky that Mitch was able to make this purchase,” Farrell said, breaking the news to employees last Monday. “It couldn’t have been nicer, because it’s a seamless transition … He’s been running the company for five years.”

American newspapers operate with about a third of the staffing they had in 1990, so ABPG’s 65 workers were reassured to learn their jobs are safe. ABPG’s 26 investors also got a solid payday.

“Were any financial details of the deal released?” this employee asked.

“Who would have thought that a business reporter would ask that?” Bettis joked. “But no … I will say that the stockholders, and Olivia especially, were very accommodating in how we’ve pulled this deal together. It’s no small transaction.”

One investor who put in $10,000 in 1984 got a six-figure return, Bettis said.

Five Legged Stool now owns everything, Bettis said, from the ABPG name and all its publications to “this desk, that chair, that coffee pot, that web address, that social media account. That’s the beauty of this, that it avoids the kind of disruption that you can go through.”

The sole-ownership deal would have been out of reach had ABPG not run up five straight years of record revenue and/or profit, Bettis said. He said he’d considered recruiting investors during seven months of dealmaking, but saw a complication. “Potential investors were also the people we cover, so I was cautious,” he told employees. “But we’ve worked ourselves into a financial position to be able to do this, to cash-flow this extra expense. We could not have done this three years, five years, seven years ago.”

He gave a pep talk in a conference room filled with laughter and warmth. “We’re in a great place because every one of you is doing great work, giving readers great content that they can only get from us, taking great care of customers, providing the real service our advertisers need, taking care of subscribers.”

For Farrell and a core of longtime employees, reality was setting in. “I’m feeling sort of vulnerable,” she confided.

“My son, when I talked to him about this back in July, said now was the time to start thinking about what you’re going to be doing with yourself, which I have not done,” Farrell said. “The only plan I have is to be a volunteer in public schools and teach elementary kids reading.” She’ll also be giving Bettis regular advice.

One thing Farrell will be pouring time, energy and money into is building a house: a new home for her big Labrador, Moose, and a Lab mix, Trojan, who so often trailed her into the pet-filled office.

by Marty Cook  on Monday, Feb. 25, 2019 12:00 am   2 min read

Cedar Corner Apartments at 944 N. Storer Ave. in Fayetteville (Mark Zweig Inc.)

by George Waldon  on Monday, Feb. 25, 2019 12:00 am   1 min read

Two Arkansas members of the public company club received recognition from Bank Director magazine for regional achievements.

Little Rock’s Bank OZK was given top nods for the South Region in three categories: Best Board, Best M&A Strategy and Best Technology Strategy.

Regarding the latter category Bank Director noted: “Its OZK Labs, which in July 2018 announced a partnership with Google around machine learning, was acquired through the bank’s acquisition of C1 Financial in 2016. Bank OZK launched a new online account-opening platform in 2018, too.”

Bank OZK tied for No. 1 regionally with South State Corp. of Columbia, South Carolina, in a fourth category: Best Core Deposit Strategy.

Conway’s Home BancShares Inc. was deemed to have the Best Small Business Strategy in the South. The trade publication reported “Home BancShares excelled for small business banking in the South, due in large part to a high level of small business loan growth (34 percent over two years). The bank offers online account opening for small-business deposit accounts and features a checking account tailored for troubled businesses ‘looking to re-establish a strong financial reputation.’”

Stephanie Shine is the vice president and director of Permanent Placement Services in Arkansas for Robert Half Finance & Accounting.

Shine manages a team of recruiting professionals and also provides strategic staffing advice to clients and job seekers regarding hiring and compensation trends in the market. She serves on the boards of the Rotary Club of West Little Rock, the Accounting & Finance Women’s Alliance and the Institute of Management Accountants.

Shine holds a Bachelor of Science from Southern Illinois University and a Master of Business Administration in management from Missouri State University. She is co-founder of the annual Arkansas Financial Leadership Summit.

What skills do employers want that they’re having a hard time finding in job candidates?
For accounting professionals to remain competitive in today’s strong hiring market, they’ll need to know more than how to crunch numbers, complete expense sheets and depreciate fixed assets. Aside from traditional accounting knowledge, they’ll want to make sure they have a strong set of soft skills to offer employers.

Soft skills have become increasingly important because those strong interpersonal skills can help one navigate today’s highly collaborative work environment. Many of these skills can be learned on the job or through networking and mentoring, and some of the most coveted skills include communication, leadership and critical thinking.

Over the last year or so, accounting automation has grown wildly popular at many organizations and accounting firms. And a lot of local finance leaders often admit that they’re have trouble hiring staff who bring enough technology skills to the job.

How do our current low unemployment rates affect the way you do your job?
Recruiting to fill job vacancies, particularly those with low unemployment rates, is becoming more of a challenge than in previous years. The skill sets that hiring managers seek continue to evolve, making it increasingly difficult to find professionals with the needed mix of specialized and soft expertise.

Often, I find myself coaching clients that aren’t finding the talent they need in today’s competitive job market to try new hiring approaches. For example, identify the must-have attributes for the position and then determine the nice-to-haves that can be developed through on-the-job training.

Robert Half was recently honored by Forbes as being among the “Best Employers for Diversity.” What’s a bottom-line argument for the benefits to a company of a diverse workforce?
I’ve seen firsthand the impact a diverse workforce can have on my team and our happiness at work. Diversity is part of our company culture and it’s important for organizations like ours to focus on building and maintaining those relationships. The different backgrounds and experiences of our recruiting team add value in finding qualified candidates to complement the complex and evolving needs of all our clients.

What strategies — other than the obvious, pay raises — are employers using to hold onto valued workers?
Once turnover starts, it’s often too late to stop it from happening. Companies should make sure they’re checking in regularly with their teams to evaluate performance and discuss career development before valuable talent walks out the door. Retention needs to be a top priority for hiring managers, particularly for accounting and finance professionals who can be difficult to replace on short notice.

A healthy work-life blend is essential, and employees need to know that their managers understand its importance. Now more than ever, employees want nonmonetary perks like more vacation time, telecommuting options and flexible schedules. Companies with successful retention strategies examine challenges from the employee’s point of view and realize that top talent wants to feel appreciated.