Hedge Fund News Wrap: Week Ending 07/10/15

I.R.S. Cracks Down on Hedge Fund Tax Strategy
(DealBook) – Hedge funds that used a strategy to claim billions of dollars in tax savings will face new scrutiny from the government, according to guidance issued by the Internal Revenue Service on Wednesday.

So-called basket options — complex financial structures that allowed hedge funds like Renaissance Technologies to bypass taxes on short-term trades — will now be labeled listed transactions, the I.R.S. said. This means that anyone using the options must declare them on their tax returns. They will be penalized if they fail to do so.

The new I.R.S. guidance will be retroactive, applying to all transactions as far back as Jan. 1, 2011.

Read the entire article at DealBook
More coverage: Reuters and Bloomberg

Samsung Clears Hurdle on Way to $8 Billion Shakeup as Court Rules against U.S. Fund

(Reuters) – A South Korean court on Tuesday denied an injunction request by a U.S. hedge fund trying to block builder Samsung C&T Corp from selling treasury shares to ally KCC Corp, clearing another hurdle for a proposed $8 billion merger of Samsung Group firms.

The ruling comes ahead of a July 17 Samsung C&T shareholder vote on an all-stock takeover offer from Cheil Industries Inc, the de facto holding company of Samsung Group. The verdict allows chemicals and construction materials firm KCC, Cheil’s second-biggest shareholder, to exercise voting rights for the treasury shares.

Explaining its ruling against the request from fund Elliott Associates, the Seoul Central District Court said Samsung C&T violated no laws in selling treasury shares to KCC. With a total of around 6 percent of C&T, including the 5.8 percent stake purchase approved by the court, KCC is the Samsung construction firm’s fourth-largest shareholder and will back the Cheil deal.

Read the entire article at Reuters
More coverage: The Wall Street Journal and Business Insider

Weight Watchers Soars On Reports of Activist Interest

(FINalternatives) – The shares of struggling diet company Weight Watchers International gained the most since 2011 on media reports that an unidentified hedge fund is considering a takeover offer for the company.

According to a report first published by the New York Post and picked up by a number of financial media outlets, an activist hedge fund has purchased the majority of the company’s remaining $144 million in senior loans due in April 2016, and has embarked on discussions with potential partners about making an offer to buy the company.

The senior debt position reportedly accumulated by the hedge fund puts it in the position of controlling the first lien on Weight Watchers assets, according to the report. This may become significant if Weight Watchers, which has only $130 million in the bank, is unable to meet the April 2016 maturity date, and could but the fund in the drivers’ seat for any restructuring.

Read the entire article at FINalternatives
More coverage: Bloomberg Business and BBC News