By Molly Smith/Bloomberg for Fin24 

One hundred and forty-three days. That’s how much time Elon Musk has till the big bills start coming due in the debt market.

That, in truth, wouldn’t be considered a ton of time in most circumstances. But in 2018, with capital markets still minting bonds and loans by the trillions, it’s still relatively comfortable runway for a company like Tesla to secure a financial reprieve.

So, despite all the hand-wringing over the manufacturing setbacks and the perplexing Musk tweets and the run-ins with regulators, Tesla’s stock still trades at astronomical valuations and its bonds show almost no concern of a default in the near term.

For now, at least. The question is whether Musk can use these 143 days to appease the Securities and Exchange Commission with changes to Tesla’s board – including his own removal as chairperson – and then start producing electric cars fast enough to generate the cash needed to either start paying back those debts outright or convince creditors to roll them over.

Third-quarter production numbers were solid, with Tesla hitting its target for its crucial Model 3 sedan, but that growth needs to be sustained in the months ahead.

“The market isn’t indicating there’s any imminent danger, they have time,” said Chris Hartman, a senior portfolio manager at Aegon Asset Management. “It’s only five months, but as long as there isn’t some global liquidity crisis, they should be able to access the capital markets, albeit at a much higher rate, to keep the story alive.”

Representatives for Palo Alto, California-based Tesla didn’t respond to requests for comment.

More than $1.5bn out of Tesla’s total debt of $11.5bn is coming due in the next 13 months. Some of the first maturities actually fall over the next few weeks but the first payment of real consequence comes due on March 1: a $920m convertible bond with an equity-conversion price set at $360.

With the stock trading now at a mere $262, it seems unlikely that investors will be able to swap into the shares, meaning that Tesla will be on the hook to pay the money back.

With the stock trading now at a mere $262.80, it seems unlikely that investors will be able to swap into the shares, meaning that Tesla will be on the hook to pay the money back.

Credit markets, for now, are taking that in stride. Tesla’s 5.3% bonds due 2025 are now yielding more than 8%, in line with other debt with similar CCC ratings, according to Bloomberg Barclays index data.

But there are signs of doubt: More creditors are hedging their bets in the derivatives market. It now costs almost $2m upfront to insure $10m of Tesla bonds from default over five years in the credit derivatives market. Just two months ago, the upfront cost was less than $1.3m.

Tesla has put its investors through the wringer with a series of high-profile departures, persistent operational challenges, and most recently, a lawsuit from the SEC that threatened to remove Musk, the visionary who has become synonymous with the Tesla name, from the company entirely.

He settled that case late last month by agreeing to pay a $20m fine, appoint a new chairperson to the board and add two independent directors.

To the relief of investors, he was allowed to stay on as CEO. (Days afterward, Musk unnerved investors again by expressing his frustration with the settlement – which isn’t final yet – in a tweet that mocked the SEC.)

Expensive financing

Musk has said that Tesla won’t need to raise more money as it will generate positive free cash flow in the second half of this year and crank out sustainable profits for the first time in its 15-year history.

In any event, there are no good financing options right now anyways. The most likely, according to Bloomberg Intelligence analyst Joel Levington, would be the sale of another convertible bond or a capital raise in the equity markets.

The sale of collateralised debt – typically a cheaper form of financing – would be possible too, but such a transaction would likely rattle existing bondholders because the new creditors would jump ahead of them in the repayment line, Levington said.

All of which just underscores the urgency of Musk’s efforts to sell more cars and start generating steady profits before the first of those big bills comes due.

Facebook is hit by a new viral hoax message

By Harry Pettit for Daily Mail 

Facebook officials have warned of a new viral hoax message that is fooling users into thinking there is a problem with their account.

The fake message claims your account has been cloned – meaning someone has created a new account using your name, photos and other information to impersonate you on Facebook.

It encourages you to forward the message to your Facebook friends to warn them of the mimic account.

The scam message reads: ‘Hi….I actually got another friend request from you yesterday…which I ignored so you may want to check your account.

‘Hold your finger on the message until the forward button appears…then hit forward and all the people you want to forward too….I had to do the people individually. Good Luck!’

Facebook said there is no virus attached to the message, and advised users to simply delete it if they receive it.

A spokesperson said: ‘We’ve heard that some people are seeing posts or messages about accounts being cloned on Facebook.

‘It takes the form of a “chain mail” type of notice.

‘We haven’t seen an increase in incoming reports of impersonation (cloned accounts).

‘The volume of these types of posts isn’t a good measure for how often impersonation is actually happening.’

Facebook cloning is when someone creates an account and steals your photos and personal information.

They then send out friend requests to your existing friend list to gather more personal information, or to send out scam messages from the faked account.

If you think you’re a victim of cloning, you should check and see if there is a duplicate of your account.

You can flag cloned accounts to Facebook via the ‘report’ feature.

Reminder: shop-sa AGM

The Chairman of shop-sa, Hans Servas, and fellow members of the board cordially invite you to attend the annual shop-sa breakfast AGM at Killarney Country Club.

Date: Thursday 25 October 2018
Time: 08:00 for 08:30
Venue: Killarney Country Club
Address: 60 5th Street
Houghton Estate
Johannesburg
2198
Join us for a delicious breakfast as we review the year that has been and what the future holds for shop-sa.

RSVP to Wendy on 012 548 0046 or wendy@shop-sa.co.za.

By Sam Mkokeli, Mike Cohen, Paul Vecchiatto and Amogelang Mbatha for Fin24/Bloomberg 

South African President Cyril Ramaphosa appointed former central bank Governor Tito Mboweni as his finance minister on Tuesday, replacing Nhlanhla Nene, who lied about his meetings with the Guptas.

Mboweni, the nation’s fifth finance chief in less than three years, will have to oversee an economy that’s fallen into recession and help Ramaphosa rebuild confidence battered by almost nine years of mismanagement under former President Jacob Zuma. He must also reassure investors and credit-rating companies of credible plans to stabilise debt and revive growth in the mid-term budget on October 24.

“In the wake of Mr. Nene’s resignation, I have decided to appoint Mr. Tito Mboweni as minister of finance with immediate effect,” Ramaphosa said. “Mr. Mboweni takes on this responsibility at a very critical time for our economy.”

Mboweni, who trained as an economist, served as head of the South African Reserve Bank for a decade until 2009 and for four years as labor minister in former President Nelson Mandela’s cabinet. His major achievement at the central bank was building the nation’s foreign-exchange reserves to almost $40 billion from less than $10 billion.

The rand gained 0.6% to R14.76/$ by 16:51 in Johannesburg, reversing an earlier decline of as much as 1.4%. Yields on benchmark 2026 government bonds fell six basis points to 9.22%.

By Luke Daniel for The South African 

Government departments and state owned enterprises (SOE) have accumulated irregular expenditure exceeding R72.6-billion.

This is according to an analysis undertaken by the official opposition party, the Democratic Alliance (DA), which has since been reported on by Fin24. The party held a media briefing on Sunday, citing the 2017/18 annual financial reports released by government departments and SOEs.

What is irregular expenditure?
Simply put, irregular expenditure is a term used to describe the gross mismanagement of funds, particularly within the realm of governmental departments and state entities.

Technically, any costs involving state funds which fall outside the parameters of the Public Finance Management Act can be described as irregular expenditure. This wanton wastage of funds is a particularly painful thorn in the side of South Africa’s already uneasy economy, further embittering taxpayers as their hard-earned cash, effectively, goes to waste.

DA says total irregular expenditure could be much more
Natasha Mazzone, the DA’s Shadow Minister of Public Enterprises, addressed the media briefing, adding that not all government departments and SOEs had finalised their financial reports, meaning that the actual amount of irregular expenditure could be much higher.

The official opposition party pointed out that irregular expenditure stood at R42.8 billion last year. This year, that amount has increased by 70%.

Mazzone bemoaned the unsustainability of SOEs, adding that despite revitalisation strategies, most companies still remain wholly incompetent and reliant on government bailouts, saying:

“SOEs are going from one bailout to the next, one disaster to the next. It’s got to a point where it doesn’t matter who you put in the boards because the entities are so broken, it is almost impossible to fix.”

Government irregular expenditure: the main culprits
The DA made its report on the government’s irregular expenditure public, listing, in order, the entities which have recorded the greatest losses.

Here are the top wasters of public funds:

  • Eskom – 19.6 billion
  • South African National Roads Agency (SANRAL) – R10.5 billion
  • Transnet – R8.1 billion
  • Department of Water and Sanitation – R6.2 billion
  • South African Broadcasting Corporation (SABC) – R5 billion
  • Water Trading Entity – R4.9 billion
  • Department of Correctional Services – R3.2 billion
  • Property Trading Management Entity (PTME) – R2.3 billion
  • Department of Basic Education – R1.7 billion
  • Department of Defence – R1.7 billion
  • Department of International Relations and Cooperation (DIRCO) – R1.2 billion
  • South African Social Security Agency (SASSA) – R1.7 billion
  • South African Post Office (SAPO) – R1 billion

By Jean le Roux for Fake News Exposed

Some of South Africa’s biggest banks, insurance companies and car manufacturers have been caught advertising on fake news websites.

A News24 investigation of three months has found that big brands like Absa, Coronation, Cell C, Capitec, Mercedes Benz, Takealot and OUTsurance, who spend millions of rands promoting and marketing the credibility and integrity of their brands, have indirectly contributed to the fake news industry by buying programmatic advertising that landed up on dodgy websites.

Some of these websites, like HINNews – a Nigeria-based site that publishes a mix of fabricated stories and real news – have run stories about EFF leader Julius Malema dying of listeriosis and a new kidnapping ring “ripping” unborn babies from their mothers.

As the world is grappling with the scourge of fake news in the wake of President Donald Trump’s election in the United States and the support he received from Russian-run fake news operations to target potential Republican voters, South Africa has not been spared from the phenomenon.

“At Africa Check, we’ve seen false news stories stoke retribution, cause panic and misinform people about their health, which can have deadly consequences. It’s a real shame that reputable news brands aid the existence of these outlets, even if inadvertently. The sooner this gap is plugged, the better for society,” says Anim van Wyk, chief editor at Africa Check.

Association by advertising

Ismail Jooma, Head of Strategy at VML South Africa told News24 the creators of disinformation and fake news use rhetoric as a tool to divide.

“‘Disinformation’ websites are the modern era’s galvaniser of marginalised rhetoric, more often than not these websites pursue an agenda of racism, sexism and intolerance. If we had to remove the lens of moral subjectivity, purveyors of fake news aim to disunite at the very least.

A number of fake news sites that specialise in publishing fabricated news about South Africa make money through selling programmatic advertising spots to Google and other service providers.

News24 is publishing the results of our investigation into this phenomenon, including a blacklist of fake news websites, on a dedicated website titled Fake News Exposed.

Websites like HINNews are among several similar sites known for their clickbait headlines and fabricated stories, which are either copied from other online news sources or made up from scratch. Their articles show a fondness for the macabre and racially charged stories and are often widely shared on social media.

Companies whose brands appeared on these websites say they were unaware that they were inadvertently funding fake news and have instead blamed Google for allowing these sites to operate.

Google enables programmatic advertising, which is based on users’ browsing patterns on the internet. Advertising agencies buy adverts on behalf of clients and Google allocates these ads through a platform called Google Adsense, that uses algorithms to place adverts on websites. Website owners are then paid by Google Adsense.

In countries like Macedonia, running fake news websites that publish fabricated stories have become a full-scale industry and source of revenue for unemployed youngsters.

Companies condemn disinformation

Capitec, one of the local brands who’s advertising was found on a fake news website, condemned the phenomenon through their spokesperson Charl Nel. This sentiment was echoed by representatives from OUTsurance and Coronation. The full responses of companies caught on fake news websites by News24 can be found here.

These companies say they were unaware that a part of their advertising spend was finding its way to the owners of fake news site, while Google removed HINNews from its advertising network on September 21 after receiving queries from News24.

Nel said it was difficult for the bank to ascertain which news sites are fake and that it targets a market based on its readership. “We utilise various software for delivery of programmatic ads which are globally recognised (and) which optimises and creates lists as a brand watch. Capitec and our advertising partners also review websites on a monthly basis, however, it is very hard to decipher which websites are not legitimate as we target based on users.”

Nel condemned the use of fake news but repeated that it is hard to determine which sites are real and which are fake. “We are working hard to ensure these sites are blacklisted.”

OUTsurance’s head of client relations, Natasha Kawulesar, also denied the insurer’s knowledge or support of adverts on fake news websites and said the fake news website where it advertised was part of the Google Display Network (GDN), Google’s network of Adsense-approved websites. Google bans pornography, illegal downloads and similar websites from the GDN.

“We do not have the knowledge or capability to handle this function [digital advertising] ourselves and currently rely on our media and technology partners to handle this on their side,” said Kawulesar. “We place our trust in the publishers and media partners we deal with. We also have service level agreements in place to protect our brand and reputation. We confirm once again that we do not condone fake news or misinformation in any way, form or scale.”

Thato Mntambo, Manager: Corporate Communications at Mercedes-Benz South Africa also told News24 that the placement of their adverts was in the hands of Google.

“The unintended consequence of the pervasiveness of GDN [Google Display Network] is the difficulty to monitor the number of websites where our advertisements are displayed. We are conscious of the potential of incorrect placements and ameliorate the effects thereof through continuous monitoring of keywords and, in some cases, blacklisting keywords.”

Coronation Fund Managers, responding through their representative Tanya Schreuder of Dentsu Aegis Network, told News24 that the website on which their branding was found formed part of Google’s GDN list of websites.

“Under no circumstances would the Dentsu Aegis Network, as custodians of our clients’ brands, consciously support sites which are illegal, undesirable or dubious in any form. We take brand safety incredibly seriously and on behalf of all of our clients we undertake every effort to ensure that any online inventory we deploy is legitimate and of a quality that is contextually suitable.”

Google’s response

Google declined to comment on HINNews’s listing on the Google Display Network.

A spokesperson said: “Our publisher policies govern where Google ads may be placed. We don’t comment on individual sites but we enforce these policies vigorously and regularly review sites to ensure compliance. We also encourage people to let us know when they see sites that they have concerns about that may be in violation of our policies.”

Source: IOL/Bloomberg

The business cycle in South Africa, where the economy entered its first recession in almost a decade in the second quarter, is in its longest downward phase since records started in 1945.

It entered a 58th straight month of declines in September, central bank data showed Tuesday.

The regulator monitors about 200 indicators representing economic processes such as production, sales, employment and prices to determine the direction of the trend.

By Ivan Israelstam, chief executive of Labour Law Management Consulting

Employers are entitled to use confessions as evidence in disciplinary hearings.

However, just because an employee makes a confession this does not allow the employer to fire the employee on the spot.

This is because:

• Even where the employee does confess s/he is still entitled to a proper hearing

• The confession may have been coerced

• The employee may not have understood what he was doing when he/she signed the confession

• The act to which the employee confessed may not amount to misconduct serious enough infringement to merit dismissal.

• The CCMA might find, for technical reasons, that the confession was invalid.

We need to look at each of these factors more closely:

Even where the employee does confess he/she is still entitled to proper procedure

The Labour Relations Act (LRA) gives employees the unassailable right to a hearing and not even a confession of murder will allow the employer to deviate from this principle.

Even where the employee properly confesses to an act of misconduct it may not be a serious enough infringement to merit dismissal

Dismissal would be unfair where the employee admits to having arrived half an hour late for work especially if this is a first or second offence because dismissal must be reserved for repeated offences or for gross misconduct.

The CCMA might find, for technical reasons, that the confession was invalid

For example, in the case of FAWU obo Sotyato vs JH Group Retail Trust (2001, 8, BALR 864) the employee signed a confession that he had stolen two bottles of beer. However, the CCMA ruled out this confession on the grounds that it had not been sworn before a commissioner of oaths.

The confession may not have been made willingly

If the confession was made under duress it will not qualify as a confession at all. At best it will constitute a meaningless statement coerced out of the employee; and at worst it will act as proof that the employer was seeking a scapegoat or was trying to concoct a false case against the employee as a means of getting rid of him/her for unacceptable reasons.

The employee may not have understood what he was doing when s/he signed the confession

The employee may be asked to sign a confession document but may, for example, think he/she is signing acknowledgement of receipt of a notice of a disciplinary hearing. Should this be proven the confession will become invalid.

Confessions that are properly made and wisely used can be valuable at disciplinary hearings. The challenge for the employer is therefore to obtain the expertise necessary to ensure that once a confession is made that it sticks and is appropriately used.

By Jack Morse for Mashable 

A million hacked Facebook accounts isn’t cool. You know what’s even less cool? Fifty million hacked Facebook accounts.

A Friday morning press release from our connect-people-at-any-cost friends in Menlo Park detailed a potentially horrifying situation for the billions of people who use the social media service: Their accounts might have been hacked. Well, at least 50 million of them were “directly affected,” anyway.

The so-called “security update” is light on specifics, but what it does include is extremely troubling.

“We did see this attack being used at a fairly large scale.”

“On the afternoon of Tuesday, September 25, our engineering team discovered a security issue affecting almost 50 million accounts,” reads the statement. “[It’s] clear that attackers exploited a vulnerability in Facebook’s code that impacted ‘View As’, a feature that lets people see what their own profile looks like to someone else. This allowed them to steal Facebook access tokens which they could then use to take over people’s accounts.”

That’s right, almost 50 million accounts were vulnerable to this attack. As for how many were actually exploited?

“Fifty million accounts were directly affected,” explained Facebook VP of product management Guy Rosen on a Friday morning press call, “and we know the vulnerability was used against them.”

“We did see this attack being used at a fairly large scale,” added Rosen. “The attackers could use the account as if they are the account holder.”

The statement itself didn’t provide much additional insight.

“Since we’ve only just started our investigation, we have yet to determine whether these accounts were misused or any information accessed,” continues the statement. “We also don’t know who’s behind these attacks or where they’re based.”

Facebook says it’s fixed the vulnerability, and that 90 million people may suddenly find themselves logged out of their accounts or various Facebooks apps as a result.

The disclosure is a reminder about the dangers posed when a small number of companies like Facebook or the credit bureau Equifax are able to accumulate so much personal data about individual Americans without adequate security measures.

So, yeah, this is big.

“Security is an arms race,” Facebook CEO Mark Zuckerberg dryly noted on the press call.

Facebook is working with law enforcement, and, at least for now, says you don’t need to change your password. But maybe go ahead and log out of your account, everywhere, just to be safe.

“[If] anyone wants to take the precautionary action of logging out of Facebook, they should visit the ‘Security and Login’ section in settings,” advises the warning. “It lists the places people are logged into Facebook with a one-click option to log out of them all.”

So yeah, click through that link and log out of your account on all webpages and apps at once. After that, maybe think long and hard about whether it’s even worth logging back in.

Google turns 20

By Mikelle Leow for Design Taxi

On 27 September, Google turned 20 years old. It’s difficult to remember a world without the convenience of looking things up on the Internet; for many young adults, the scenario would seem impossible.

“When Google started 20 years ago, our mission was to organize the world’s information and make it universally accessible and useful,” the company wrote in a blog post.

“That seemed like an incredibly ambitious mission at the time—even considering that in 1998 the web consisted of just 25-million pages (roughly the equivalent of books in a small library).”

The tool hides an interesting Easter egg that takes you back to its early days. A simple search of, “Google in 1998,” brings up the company’s old logo and web designs that are telling of how much the internet has progressed since then.

Notably, Google’s brand name was stylized with an exclamation mark, which is not unlike the current Yahoo logo.

It also had a newsletter that would send you monthly updates of outstanding websites. Imagine if you received those emails today.

It’s good to know that, in spite of its considerable progress, the essence of the old Google still remains. For instance, the company has retained its color palette and its ‘I’m feeling lucky’ option.

What’s surprising is the site’s linkback to other search engines. Aside from Amazon and Yahoo, several of the other sites are no longer in existence.

 

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