By Manya Saini, Niket Nishant and Koh Gui Qing

(Reuters) -Hindenburg Research, the short investor whose reports on companies have erased a big chunk of their value, criticized Icahn Enterprises LP (IEP) on Tuesday over the reporting of its finances, leading to a 20% drop in the shares of activist investor Carl Icahn’s firm.

The development represents a rare challenge for Icahn who is accustomed, as one of the pioneers of shareholder activism, to dressing down companies over their governance and transparency, but has not had to field such criticism himself.

In a report published on Tuesday, Hindenburg accused IEP of overvaluing its holdings and relying on a “Ponzi-like” structure to pay dividends. The subsequent plunge in IEP shares wiped $2.9 billion off Icahn’s net worth, leaving him with an estimated $14.7 billion, according to Forbes.

Icahn said in an IEP statement that Hindenburg’s “self-serving” report was aimed at generating profits at the expense of IEP’s long-term shareholders.

“We stand by our public disclosures and we believe that IEP’s performance will speak for itself over the long term as it always has,” Icahn said.

Icahn’s Sunny Isles Beach, Florida-based company hold his various investments in the energy, automotive, food packaging, real estate and other industries. He is IEP’s controlling shareholder with an 85% stake.

Hindenburg said IEP’s units are overvalued by more than 75% and that “IEP trades at a 218% premium to its last reported net asset value (NAV), vastly higher than all comparables.”

IEP’s peers on the other hand, such as Dan Loeb’s Third Point Investors Ltd and Bill Ackman’s Pershing Square Holdings Ltd, trade at a discount to their respective NAVs, Hindenburg said. NAV is a key gauge of a fund’s performance, measuring the market value of securities held by the fund.

Driving the frothiness in IEP’s stock, Hindenburg argued, is its dividend yield of 15.8%, the highest of any U.S. large cap company by far. Hindenburg accused Icahn of inflating the dividend yield by receiving his own dividend in stock rather than cash and making IEP sell new stock so it can meet the shareholder payouts.

“Icahn has been using money taken in from new investors to pay out dividends to old investors,” said Hindenburg.

Hindenburg also offered examples it said showed IEP itself was valuing its holdings way above their market value. IEP recorded its 90% stake in meat-packaging business Viskase Companies Inc at $243 million at year-end when its market value at the time, based on how its shares were trading, was just $89 million, Hindenburg said, citing IEP’s filings.

Viskase’s shares trade as a pink-sheet. In a filing, IEP attributed the valuation mark-up to “market comparables due to lack of material trading volume.”

In another instance, IEP marked its automotive parts division at $381 million in December 2022, one month before a key subsidiary of that division filed for bankruptcy a month later.

A representative for Grant Thornton LLP, which has served as IEP’s auditor since 2004, declined to comment.

Hindenburg also took aim at the close relationship between investment bank Jefferies Inc and Icahn. The short seller noted that Jefferies, the only major brokerage to cover IEP, assumes in its equity research that Icahn’s dividends will be paid in perpetuity even in a worst-case scenario, while at the same time profiting from arranging IEP’s stock sales.

Jefferies did not immediately respond to a request for comment.

STRING OF BIG TARGETS

IEP is the latest high-profile target of Hindenburg, which is run by Nathan Anderson and earlier this year went after India’s Adani Group, knocking more than $100 billion in value off the conglomerate’s shares. Last month, the short-seller took aim at Jack Dorsey-led Block Inc. Its previous targets have included electric car maker Nikola Corp.

Icahn, 87, has pressed for changes at a number of companies over the years including Southwest Gas Holdings Inc and Xerox Holdings Corp. In August, fast-food giant McDonald’s Corp amended its board and replaced a director targeted by Icahn.

Most recently, Icahn has been involved in a proxy fight with Illumina Inc to push the U.S. life sciences firm to unwind its 2021 buyout of Grail.

(Reporting by Manya Saini and Niket Nishant in Bengaluru; additional reporting by Svea Herbst Bayliss in New York; Editing by Savio D’Souza, Shinjini Ganguli, David Gaffen and Richard Chang)

By Chris Thomas, Dhanya Skariachan and Tanvi Mehta

BENGALURU (Reuters) -Cash-strapped Indian airline Go First filed for bankruptcy on Tuesday, blaming “faulty” Pratt & Whitney engines for the grounding of about half its fleet.

The move marks the first major airline collapse in India since Jet Airways filed for bankruptcy in 2019, and underscores the fierce competition in a sector dominated by IndiGo and the recent merger of Air India and Vistara under the Tata conglomerate.

Go First’s total debt to financial creditors was 65.21 billion rupees as of April 28, it said in a bankruptcy filing with the National Company Law Tribunal.

The company had not defaulted on any of those dues as of April 30, but had defaulted on payments to operational creditors, including 12.02 billion rupees to vendors and 26.60 billion rupees to aircraft lessors, it said in the filing.

In a statement, Go First said its filing followed a refusal by Pratt & Whitney, the exclusive engine supplier for the airline’s Airbus A320neo aircraft fleet, to comply with an arbitration order to release spare leased engines that would have allowed the airline to return to full operations.

Grounded aircraft “due to Pratt & Whitney’s faulty engines” ballooned from 7% of its fleet in December 2019 to 50% in December 2022, the airline said, costing it 108 billion rupees ($1.32 billion) in lost revenues and additional expenses.

Pratt & Whitney said in a statement to Reuters that it was “committed to the success of our airline customers, and we continue to prioritize delivery schedules for all customers.”

“P&W is complying with the March 2023 arbitration ruling related to Go First. As this is now a matter of litigation, we will not comment further,” it added.

In February, the boss of Raytheon Technologies, which owns Pratt & Whitney, acknowledged that its GTF engines had had reliability issues.

Pratt & Whitney has also been quoted in Indian media as saying it was affected by industry-wide supply chain pressures and that it expects those to ease later this year, which would support increased output of new and overhauled engines.

Analysts have said bigger rival IndiGo has been able to withstand the impact better, thanks to its larger fleet and a deeper pocket.

Go First, owned by the Wadia Group and formerly known as GoAir, said on its website that it had cancelled flights scheduled for May 3 to May 5 due to “operational reasons”.

“The government of India has been assisting the airline in every possible manner,” India’s Civil Aviation Minister Jyotiraditya Scindia said in a statement. “The issue has also been taken up with the stakeholders involved.”

The collapse could boost rival airlines as the industry tries to meet a surge in post-pandemic air travel.

“The sudden disruption in operations is likely to benefit other players and increase airfares due to supply constraint,” wrote Jinesh Joshi, a research analyst with Prabhudas Lilladher.

SURPRISE MOVE

The move took Go First’s lenders by surprise, two bankers aware of the matter told Reuters.

The lenders met Go First’s management a few weeks ago, but no intimation was given, one of the bankers said. Lenders will meet soon to assess the situation and decide on a future course of action, they said.

“I am a little stunned to hear of them file for bankruptcy,” said Mark Martin, CEO at aviation consulting firm Martin Consulting LLC. “I still feel that this might not be the end of Go First. This must be a vehicle and a means for somebody new to take over.”

Go First’s problems, which forced it to delay its planned $440 million IPO in 2021, led to an erosion in its market share to 6.9% in March from 8.4% in January, latest data from the Indian aviation regulator showed.

The Wadia Group had been reported to be in talks to either sell its majority stake or completely exit its shareholding. Wadia Group did not respond to an email seeking comment.

Go First said the groundings had driven some lessors to “repossess aircraft, draw down letters of credit and notify further withdrawal of aircraft.”

Employees were caught unaware as they heard about the halt in daily operations first from local media, according to three pilots who did not want to be named. They have been receiving their salaries with a delay for the past few months, the pilots added.

“We understand that this news is likely to be distressing, and we remain committed to offer our support to all of you during this difficult time,” Go First later said in a email to employees.

($1 = 81.7420 Indian rupees)

(Reporting by Dhanya Skariachan, Chris Thomas and Varun Vyas in Bengaluru, Tanvi Mehta and Arpan Chaturvedi in New Delhi, Siddhi Nayak in Mumbai. Additional reporting by Abhijith GanapavaramEditing by Saumyadeb Chakrabarty, Mark Potter and Rosalba O’Brien)

(Reuters) – Twitter chief Elon Musk has “threatened” to reassign National Public Radio’s Twitter account to another company, the U.S.-based broadcaster said on Tuesday.

Musk suggested that he would reassign the network’s main account, under the @NPR handle, to another organization or person, NPR said.

NPR stopped posting content to its 52 official Twitter feeds last month in protest against a Twitter designation that implied government involvement in its editorial content.

Musk, in an email to an NPR reporter, asked about its engagement with Twitter, the public broadcaster said.

“So is NPR going to start posting on Twitter again, or should we reassign @NPR to another company?” NPR quoted Musk as saying.

“Our policy is to recycle handles that are definitively dormant,” he said in another email. “Same policy applies to all accounts. No special treatment for NPR.”

NPR and Twitter did not immediately respond to a request from Reuters for comment.

According to Twitter’s policy, users should log in to their account at least once every 30 days to avoid permanent removal due to prolonged inactivity.

PBS and the Canadian Broadcasting Corporation followed NPR and stopped posting on Twitter following similar labeling.

Twitter later dropped the labels but the outlets that were targeted have not resumed activity, their profiles showed on Tuesday.

(Reporting by Shivani Tanna in Bengaluru; Editing by Robert Birsel)

(This April 27 story has been corrected to clarify that the statement is attributed to FMC commissioner, not the Commission, in paragraph 15)

By Francesco Guarascio and Khanh Vu

HANOI (Reuters) – Tighter U.S. rules to ban imports from China’s Xinjiang are compounding pressure on Vietnam’s apparel and footwear makers, hitting a sector that has already shed nearly 90,000 jobs since October in the global manufacturing hub as demand slowed.

Among garment exporters, Vietnam has faced the worst hit from the Uyghur Forced Labor Protection Act (UFLPA), a Reuters review of official U.S. data showed. The law, in place since June, requires companies to prove that they do not use raw material or components produced with Xinjiang’s forced labor.

The U.S. clampdown hurts as it comes on top of a drop in clothing demand from richer nations that has already dented industrial output and exports from the Southeast Asian manufacturing powerhouse, a major supplier to big brands such as Gap, Nike and Adidas.

Of the $15 million worth of apparel and footwear shipments held up for UFLPA checks more than 80% were from Vietnam, and only 13% of its cargoes were cleared for entry, U.S. customs data up to April 3 showed.

GRAPHIC: Frozen trade https://www.reuters.com/graphics/VIETNAM-CHINA/akpeqxebepr/chart.png

Many U.S. importers are still sanguine, but their supply chains could still be disrupted as Vietnam’s apparel makers depend on China for about half of their input materials, according to the country’s industry association.

Vietnamese manufacturers, trade associations and the industry ministry did not reply to Reuters questions about the impact of UFLPA.

The value of shipments from Vietnam that have been denied entry to the U.S. exceeded $2 million, three times more than those from China – with the sanctions having increased exponentially in the first months of this year.   

While U.S. controls have been far more frequent for the electronics industry, especially for solar panels which could be made with polysilicon from Xinjiang, only 1% of electronics cargoes checked were denied entry, as opposed to 43% of apparel and footwear shipments.

In total, customs checked nearly 3,600 shipments worth more than $1 billion from a range of countries to ascertain they did not carry goods with input from forced labor in Xinjiang, U.S. customs data showed.

XINJIANG LINKS   

While the halted shipments represent a tiny portion of the $27 billion worth of garments and footwear Vietnam exported to the U.S. last year, compliance risks may lead to more painful adjustments for Vietnam.

That, in turn, will hit U.S. consumers as Vietnam is their main source of cotton apparel, according to the U.S. Department of Commerce.

“Vietnam’s heavy reliance on cotton textile materials from China poses a significant risk of containing Xinjiang cotton, as the province produces over 90% of China’s cotton,” Sheng Lu, Director at the Department of Fashion and Apparel Studies at the University of Delaware, told Reuters.   

He said it was unlikely Vietnam could drastically reduce this dependence, also because many manufacturers there are owned by Chinese investors. 

An industry and a government official familiar with the matter confirmed that some Vietnamese suppliers may find it hard to comply with the new rules, either because they import cotton from Xinjiang or because they are unable to prove they do not.

Carl Bentzel, a commissioner at the Federal Maritime Commission, the U.S. agency responsible for international ocean transportation, warned earlier this month of potential supply chain disruptions caused by UFLPA checks according to a statement published on the website of the Commission.   

In a survey last year, nearly 60% of U.S. fashion industry managers said they were exploring countries outside Asia for their supplies as a reaction to the forced labor law.   

Sheng Lu said it would be hard for U.S. firms to rapidly find alternative suppliers, therefore more checks on Vietnamese cargoes are to be expected.

Western companies should “make more significant efforts to map their supply chain, figure out where production at each stage happens and demonstrate adequate due diligence”, he said.    

SHEDDING JOBS

Weaker demand has forced the industry, Vietnam’s biggest employer after agriculture, to shed nearly 3% of its 3.4 million workers since October, and contributed to an 11.9% drop in the country’s exports and a 2.3% decline in output in the first quarter of this year from a year earlier, slowing growth.

    Roughly one in every three pairs of shoes that Nike and Adidas sell globally and 26% and 17% of their clothing, respectively, is made in Vietnam.   

However Nike has significantly reduced its output of apparel and footwear in Vietnam despite the country remaining its main manufacturing hub, according to its latest annual report updated to May 2022. It did not reply to questions about UFLPA.    

Adidas did not comment on UFLPA either, but said downsizing at its Vietnamese suppliers would respect local law.

“Vietnam continues to be among our major sourcing countries,” an Adidas spokesperson said.    

Gap said it had no shipments detained.    

Two officials from U.S. footwear and apparel industry trade associations said the new rules have had no major impact so far on Vietnam and blamed recent job cuts on lower global demand.   

Major job cuts in Vietnam were under way at Pou Chen, a major supplier to Nike and Adidas, Reuters reported in February, at a time when it is planning a big manufacturing investment in India.

People were fired at a contractor of U.S. sportswear company Under Armour, and workers had their hours slashed at Regina Miracle International, a supplier of U.S. lingerie giant Victoria’s Secret, workers and executives told Reuters.   

Those companies did not reply to Reuters’ questions.   

“Normally, firms recruit new workers after Tet (Lunar New Year), but this year everything has gone the opposite,” said Nguyen Thi Huong, 45, who worked for Pou Chen for ten years and recently lost her job.

(Reporting by Khanh Vu and Francesco Guarascio; Additional reporting by Kate Masters, Casey Hall and Phuong Nguyen; Editing by Miyoung Kim and Sonali Paul)

By Lisandra Paraguassu

BRASILIA (Reuters) -Brazil offered on Tuesday to help cash-strapped Argentina and provide support to Brazilian exporters so that they can continue to sell to the neighboring country, their main exporting market for manufactured goods.

“We are not discussing just helping Argentina. We need to help Brazilian businesses that export to Argentina, like China helps Chinese exporters,” President Luis Inacio Lula da Silva said at a joint news conference with Argentina’s Alberto Fernandez.

Brazil’s Finance Minister Fernando Haddad said earlier that the Brazilian government is working on a solution to ensure that Brazilian exporters are paid for sales to Argentina, which is currently facing a severe economic crisis and a shortage of U.S. dollars.

More than 200 Brazilian companies have stopped exporting to Argentina or are not receiving payments due to the lack of foreign currency there, he said.

Haddad emphasized that Brazil does not want to lose its export market share to Argentina, which is Brazil’s third-largest trading partner after China and the United States.

He said a solution “necessarily” involved granting collateral guarantees by Argentina that are being studied.

Lula said he would ask Haddad to ask the International Monetary Fund (IMF) to help Argentina.

He also said the BRICS group of leading emerging nations should change its rules so it can help non-member countries. Brazil will propose the group, through its New Development Bank, create a fund to provide the guarantees needed by Argentina, he added.

Despite the scenario, Brazilian exports to Argentina surged 38% in April and 26% year to date, government data showed on Tuesday.

Herlon Brandao, the director of Foreign Trade Intelligence and Statistics, highlighted that Argentina is a major soy producer but has been importing the product from Brazil to supply its processing plants for biofuel production.

He also noted the growth in exports of auto parts and vehicles. Given that the two countries’ automotive industries are integrated, “there is an effort by businessmen to maintain the markets, wait to receive exported value, and also intra-company trade, which ends up being strong.”

In January, the two countries announced their intention to advance discussions on a common South American currency to be used in clearing houses to execute trade payments between the two countries, helping in part to trim reliance on the dollar.

Brazil also decided to recently simplify procedures of the local currency payment system (SML), an infrastructure that brings together the central banks of Brazil, Argentina, Paraguay and Uruguay.

(Reporting by Lisandra Paraguassu and Marcela Ayres; Editing by Stephen Coates)

By Jonathan Stempel

NEW YORK (Reuters) – A U.S. judge on Tuesday refused to let Peloton Interactive Inc customers pursue a class action accusing the bike and treadmill maker of misleading them about the “ever-growing” size of its library of on-demand fitness classes.

In a 74-page decision, U.S. District Judge Lewis Liman in Manhattan said individual issues predominated over common issues affecting the many thousands of customers in the proposed class, and therefore the customers could not sue as a group.

The decision is a victory for New York-based Peloton, because class actions can allow for greater recoveries at lower cost than when plaintiffs sue individually.

Lawyers for the customers had no immediate comment.

Peloton had been accused of enticing people to buy its products based on its improper commitment to provide an “ever-growing” or “growing” library of on-demand classes.

Customers sued after Peloton decided in March 2019 to purge more than half of its estimated 12,000 classes, following litigation by music publishers that accused the company of streaming songs without proper licensing.

According to the customers, Peloton knew this could happen, yet kept charging full price for products containing copyrighted songs by Adele, Beyoncé, Luke Bryan, Drake, Ariana Grande, Madonna, Justin Timberlake, Jay Z and other artists.

Liman said the customers could not sue on a theory they were induced to pay premium prices because some might not have seen Peloton’s challenged statements. He also said the customers did not measure the damages attributable to those statements.

In opposing class certification, Peloton said its prices remained constant for more than a year after it removed classes, and that not everyone saw its “ever-growing” or “growing” claims because it did not advertise them widely.

Peloton settled the licensing lawsuit by the National Music Publishers’ Association and 14 members in February 2020.

The case is Passman et al v Peloton Interactive Inc, U.S. District Court, Southern District of New York, No. 19-11711.

(Reporting by Jonathan Stempel in New York; Editing by Himani Sarkar)

By Pete Schroeder

(Reuters) – The U.S. Senate Banking Committee said on Tuesday it would hear from former top officials at the failed Silicon Valley Bank and Signature Bank, as well as top U.S. banking regulators at separate hearings later this month.

Gregory Becker, the former CEO of Silicon Valley Bank, and Scott Shay and Eric Howell, former senior executives for Signature Bank, will appear on May 16. The hearing will mark the first time the former executives have spoken publicly since the March collapse of both firms, which helped set off broader turmoil in the banking sector. On Monday, regulators closed a third firm, First Republic, which then was sold to JP Morgan Chase.

In a separate hearing May 18, top regulators will testify, including Michael Barr, Vice Chair for Supervision at the Federal Reserve, and the Chairman of the Federal Deposit Insurance Corporation (FDIC) Martin Gruenberg, the committee said in a statement. The panel will also hear from top regulators for the states of New York and California, which helped oversee the two failed firms.

(Reporting by Pete Schroeder in Washington and Costas Pitas in Los Angeles; editing by Christian Schmollinger)

By David Shepardson

WASHINGTON (Reuters) -The Biden administration does not plan to extend a July 1 deadline for airlines to upgrade airplane altimeters, the measuring instruments that are crucial for bad-weather landings, to address potential interference from 5G wireless technology, Transportation Secretary Pete Buttigieg said.

Buttigieg in a call on Tuesday told airlines that the deadline will not be moved. He said airlines had made progress, but urged them to work aggressively to continue retrofitting airplanes, the Transportation Department said.

The Federal Aviation Administration (FAA) said last week it did not plan to extend the July 1 deadline before new rules take effect prohibiting certain landings in low-visibility conditions without upgraded altimeters.

Tuesday was the first time in recent months Buttigieg has weighed in on the July 1 date after some airlines pressed hard for a deadline extension.

The International Air Transport Association, which represents more than 100 carriers that fly to the United States, said on Tuesday, “Supply chain issues make it unlikely that all aircraft can be upgraded by the 1 July deadline, threatening operational disruptions during the peak northern summer travel season.”

Concerns that 5G service could interfere with airplane altimeters, which measure a plane’s height above the ground, led to brief disruptions at some U.S. airports last year as international carriers canceled some flights.

Last year, Verizon and AT&T voluntarily agreed to delay some C-Band 5G usage until July 1 as air carriers worked to retrofit airplane altimeters. IATA said Tuesday that “more is needed” and said many airlines will have to retrofit most of their aircraft twice in just five years.

On March 31, four major U.S. wireless carriers agreed to some voluntary actions to address aviation safety concerns and allow full use of the C-Band wireless spectrum for 5G use.

Acting FAA Administrator Billy Nolen said last week the FAA has “given airlines until July of this year to retrofit. Now upon we get to July 1st, if they haven’t retrofitted, meaning they will not be able to take advantage of lower visibility approaches that may result in a divert.” Nolen added that if airlines they have not retrofitted by next year “they will not be able to operate” in U.S. airspace.

The agreement with Verizon, AT&T, T-Mobile US and UScellular followed extensive discussions with the FAA, allowing carriers to increase power levels to get to full C-Band use by July 1.

Separately, the FAA on Tuesday proposed seven airworthiness directives for many Boeing aircraft due to the potential for 5G C-band interference.

The proposed directives impact 4,800 U.S. registered airplanes and 14,600 worldwide. They require revising aircraft flight manuals by June 30 to prohibit some landings and include specific operating procedures for calculating landing distances and certain approaches when in the presence of 5G C-band interference.

Boeing <BA.N> said Tuesday that it “continues to work with suppliers, regulators, the airlines and telecom companies to ensure long-term stability and help mitigate operational restrictions where possible.”

(Reporting by David Shepardson; Editing by Leslie Adler)