A company that creates and sells toys for Disney movies, including Frozen and Mulan, as well as new releases like the Chocolate poo maker play in the bathroom, got $ 6.2 million from the U.S. government’s coronavirus relief program for small businesses despite grossing $ 600 million last year.

Jakks Pacific of Santa Monica, Calif., Announced its Paycheck Protection Program loan in a regulatory filing Last week. Shares of the publicly traded company – which also has $ 66 million in cash in the bank, according to FactSet data – have traded pennies for much of the past year, but peaked on the day Jakks disclosed its PPP loan. The share price is now around 90 cents, valuing Jakks at around $ 32 million.

Jakks qualifies for government assistance relief because it has 480 employees, which puts it under the program’s limit of 500 workers for borrowers to be eligible. It is one of 57 state-owned companies that have revealed they have received a total of $ 102 million in P3 funds since May 14, according to public record data compiled by Good Jobs First, a nonprofit focused on government responsibility. This is the deadline set by the Treasury Department for companies with access to capital elsewhere to repay their low-interest loans without penalty.

None of the loans appear to be illegal or violate PPP rules. Still, the deals fuel the question of whether the government’s coronavirus aid has been spent wisely.

The Paycheck Protection Program, run by the US Small Business Administration, is intended to help small employers survive the crushing impact of the coronavirus pandemic through a total of $ 660 billion in subsidized loans charging only 1% interest. The deadline for submitting applications is June 30.


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The PPP has drawn criticism for allowing large companies, including state-owned enterprises, to use the initiative for funding while many other small businesses were initially excluded. Indeed, Treasury officials issued guidelines in April that most state-owned enterprises would not qualify for “good faith” PPP assistance because they typically have access to capital that traditional small businesses do not have. almost never.

The Treasury released its forecast this spring after it turned out that dozens of state-owned enterprises had used the loan program. Some of the borrowers had stock values ​​of hundreds of millions of dollars. Others were raise funds from investors after obtaining a loan under the program.

Loans “riddled with problems from the start”

In one report Released Thursday, the Government Accountability Office criticized the Paycheck program for having “limited guarantees,” saying government officials never took the necessary steps to put in place proper oversight of the program.

“The administration does not have a good track record of monitoring its own programs,” observed Kyle Herrig, head of the government watchdog group Accountable.us, who tracks PPP loans on its site. “The program has been riddled with problems from the start.”

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A Donald Trump Cabbage Patch Kid, circa 2004, from toy manufacturer and seller Jakks Pacific.

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Jakks CEO Stephen Berman founded the company in 1995. Jakks bought the famous doll brand Cabbage Patch and other toy franchises as part of a deal in 2004. Later that year, the company released a Donald Trump Cabbage Patch Kid, with proceeds from doll sales reportedly donated to charity. Jakks sold the Cabbage Patch brand in 2014.

More recently, Jakks has focused on toys related to movies and TV series, as well as a few of his own original creations, including play toilets, which Jakks says are “the only kit to be found. ‘food activities that allow children to make their own poo chocolate! “

Jakks, who lost $ 55 million last year on sales of around $ 600 million, revealed last month that Berman could make up to $ 11.3 million in 2020, including a salary of base of $ 1.7 million and a guaranteed restricted stock award valued at a minimum of $ 3.5 million. In 2019, he made $ 3.9 million, compared to an average salary of $ 74,000 for all workers in Jakks last year.

Jakks did not return a request for comment from CBS MoneyWatch for this story.

Other loans, other stories

Another PPP beneficiary who disclosed its loan last week is Trinity Biotech, which said it had secured a $ 4.5 million government loan. This funding came on top of money the drugmaker received from the Irish government, where the company is based. Trinity has 334 employees in the United States and a turnover of $ 90 million. Trinity did not return a request for comment from CBS MoneyWatch for this story.

Also benefiting from PPP money: Christopher & Banks, who borrowed $ 10 million, about 100 times the average amount of all loans in the program. The womenswear retailer was struggling even before the pandemic. Its shares are trading at just 20 cents, giving the company a market value of $ 9.5 million, about $ 500,000 less than what it was able to borrow from the Small Business Relief Fund. .


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Christopher & Banks has 3,500 employees, of which just over 1,000 are full-time. Congress said the paycheck protection program is for companies with 500 or fewer employees.

In a recent Press release, however, the retailer said it qualified for PPP funds under what is known as the Small Business Administration’s “alternative size standard”. Under this standard, a business may be eligible for a loan as long as it has earned less than $ 5 million in the past two years and is worth less than $ 15 million.

Christopher & Banks certainly fills that bill: he’s lost $ 50 million in the past two years. At the end of February, the company had a book value – all of its assets minus all of its liabilities – of just $ 9 million. A spokesperson for Christopher & Banks said the company only applied for a PPP loan after “going through other avenues but not qualifying.”

Cannabis clause

KushCo, a $ 100 million company that claims to derive most of its revenue from the sale of vaping products and other accessories for the “medical and recreational cannabis” market, also used the aid fund. government emergency for small businesses. The company announced this month that it had secured a PPP loan of $ 1.9 million.

Businesses that sell marijuana, even legally, are excluded from the small business program. But a number of companies that sell marijuana-related accessories have raised funds through PPP.

And despite getting a loan from the government, KushCo doesn’t seem to have any problems raising funds: it raised $ 20 million under a structured finance deal at the end of April. KushCo did not return CBS MoneyWatch’s request for comment.


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In its previous guidelines, the Treasury Department said companies that can raise funds through other means, such as investors, would generally not be eligible for a PPP loan.

Treasury Secretary Steven Mnuchin said in late April that the government would audit PPP loans over $ 2 million when borrowers apply for loan forgiveness. Yet loans of this size are only a small fraction of the more than 4.5 million loans under the program. And not all of those borrowers will ask for their loans to be canceled – they will only pay 1% interest.

More recently, as congressional criticism of the program’s oversight grew, the Treasury Department said it would release the names of all companies that have borrowed more than $ 150,000 from the $ 650 billion PPP fund. . This is only about 25% of all PPP borrowers.

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