As the economy continues to throttle more and more
financially borderline corporations, troubled companies
and their advisers are increasingly turning to what is
known as the “363 sale” to engineer their way out of
bankruptcy and liquidation. General Motors did it;
Chrysler did it; the Chicago Cubs did. Companies as
diverse as publisher Freedom Communications and
government information technology contractor
BearingPoint are turning to 363 sales to secure a future
for their businesses.

Often negotiated as part of a pre-negotiated or prepackaged
Chapter 11, the 363 sale, named after the section of
the Bankruptcy Code in which it is found, allows debtors
to sell assets “free and clear” of all liens, claims and
encumbrances. It also provides a controlled process for
entertaining and evaluating bids and completing the sale
process expeditiously.

But while the 363 process may be straight forward and
relatively swift, the potential for disrupting the business
is not. From the time the possibility of a sale process is
announced to the time it is completed may mean
serious distraction to the debtor’s ongoing business, as
employees, customers and vendors, in particular,
ponder the future of their jobs, their business relationships
and the products they purchase. And those
imponderables surely impact a business’ performance
during this time and have a direct impact on how it is
valued during the process.

Read the full story.

Marketing and public relations experts say what the company does in coming days will be key to preserving its image.

Glenn Bunting, managing director for the Los Angeles-based crisis management firm Sitrick and Co. said SeaWorld needs to respond promptly and proactively.

“They need to review every safety precaution,” he said. “They need to explain how it happened, why it happened and make sure it doesn’t happen again to reassure the public.”

Read the full story.

According to a recent poll, the former presidential candidate is now historically disfavored. After taking the opinions of 678 North Carolina Voters, Public Policy Polling announced on Jan. 19 that with a 15% approval rate, Edwards was the most unpopular person it had ever polled — and this is from the state that gave us Jesse Helms. Another poll named him the most disappointing person of 2009. Yes, Edwards has come a long way from those blissful days when all most people hated him for was his $400 haircuts.

Image consultants and PR managers, who are professionally optimistic, say it’s possible for him to rehabilitate his public image, but not easy. First up, he has to come totally clean and he has to do so in front of a camera. On Jan. 21, just shy of Quinn Hunter’s second birthday, Edwards issued a statement that finally copped to him being her father. “It was wrong for me ever to deny she was my daughter and hopefully one day, when she understands, she will forgive me,” the press release said. Nuh-uh. For a doozy like that, you have to front up personally, say the experts. “I can’t emphasize enough — the tone of voice is the most important element,” says Mike Sitrick of the PR firm Sitrick and Company. “This is an art, not a science.”

Read the full story.

(Click image for full story)

AM says the reorganizations will have no impact on the daily operations of MediaNews’ collection of 54 dailies, including the Denver Post and San Jose Mercury News, and more than 100 non-dailies in a dozen states.

The move reduces the amount of AM debt by $930M to the $165M.

Singleton and his management team will be okayed to own a 20 percent stake in the revamped company.

He says the restructuring will provide the company with one of the strongest balance sheets in the business and give it “breathing space to create a new model for the newspapers we publish.”

– From O’Dwyer’s Public Relations News

Sitrick and Co., a Los Angeles-based public relations firm whose client roster ranges from Paris Hilton to Patricia Dunn, opened a San Francisco office.

The firm, founded in 1989 by Michael Sitrick, was recently acquired by Resources Connection Inc., which also purchased turnaround adviser Brincko Associates Inc. to form a corporate advisory and restructuring unit.

Sitrick follows a well worn path into San Francisco, where crisis communications firms have established offices. Sard Verbinnen & Co. arrived in San Francisco in 2005, Abernathy MacGregor Group in 2006, and the Brunswick Group of London in 2007.

One of the Bay Area’s big draws is the number of large companies based in the region.

“There’s a huge opportunity in San Francisco. I see our San Francisco office one day rivaling our New York office,” said Michael Sitrick, chairman and CEO of the Los Angeles-based firm. A dozen people from the firm’s work force of 60 work in New York.

The new office, located on the 13th floor of 90 New Montgomery, houses three professionals.

Those based in San Francisco include Glenn Bunting, managing director of the Bay Area, Miami and Orange County offices. The former head of the investigative unit at the Los Angeles Times has represented home builder Lennar in the Bay Area.

Lance Ignon, head of the San Francisco office, previously worked for Tenet Healthcare and VaxGen, as well as the Los Angeles Times and Investor’s Business Daily. Dave Satterfield, former managing editor at the San Jose Mercury News, focuses on the firm’s Silicon Valley clients.

The “Made in China” label has been rocked by product safety scandals and quality concerns. Who is most affected and how do companies respond when their brand name is on the line?

November 30, 2009 – By JASMINE AKO

With US$338 billion of goods imported from China in 2008, the United States hopes it is getting its money’s worth. A three-year spat of consumer safety controversies, however, continues to leave buyers wondering.

In the past few years, the “Made in China” label has taken a serious hit, with the most notorious recalls hitting close to the American home. In March 2007, Menu Foods, a Canadian pet foods company, recalled over 60 million cans of pet food contaminated with the plastic additive melamine, added to raise measured protein levels. Two months later, Foreign Tire Sales Inc. was ordered to recall 450,000 faulty tires imported from a Hangzhou company. And in August, Mattel recalled around 21 million lead-tainted toys in a span of five weeks.

From Barbie dreamhouses to off-road vehicles, consumers and businesses alike are rightfully concerned.

“What I saw was a deliberate attempt to bamboozle Western customers about where products were actually made by setting up ‘five star’ and ’shadow’ factories,” says Alexandra Harney, author of The China Price: The True Cost of Chinese Competitive Advantage. “These five star factories are essentially Potemkin plants maintained to give Western buyers the impression that their goods were made under safe, healthy, legal conditions that conformed to the buyers’ codes of conduct.”

These “for show-only” plants are the ones that Western companies see, while the actual production of goods is made in what Harney describes as shadow factories.

“In these factories, workers are not paid the legal wage, they have no insurance, and they work far longer hours than China’s law or the companies’ codes of conduct mandate,” Harney explains. “Because the buyers never see the shadow factories, they have no idea whether substandard materials or ingredients are being used on the production lines there.”

Paul Midler, author of Poorly Made in China, encountered similar situations in China as a supply-chain management expert for American and European companies.

“In China, factory workers often are not very open with what they’re making,” Midler says. “What you’ll see is that factories will make changes to specifications unilaterally without checking with their customers…until factory owners can stop doing this out of habit, then the risk of product failures is still there.” BusinessWeek reported a similar trend in 2006, noting that factory owners are increasingly adept at concealing violations.

While Americans have fretted about sub-par goods, it is Chinese consumers that have experienced the most ill effects. In September 2008, a large Chinese dairy company, the Sanlu Group, was found to be the central culprit in one of the country’s largest consumer safety scandals. Six infant deaths in eastern China and Gansu province were linked to tainted baby formula containing the melamine additive. Another 860 infants were hospitalized, and 300,000 other Chinese were sickened after drinking milk products.

Adding to the controversy was speculation that the scandal had been covered up to prevent bad media coverage in the run up to the 2008 Olympic Games in Beijing. According to some sources, Sanlu began receiving complaints as early as December 2007, yet held off on reporting problems to authorities. In September 2008, the New Zealand government went public with news of the tainted formula, information it received from the domestically based dairy company Fonterra, a partner of Sanlu. The Chinese company quickly took a nosedive in public opinion, and after months of legal skirmishes and prison sentences for several top executives, the company went bankrupt in December 2008.

Midler has worked with dozens of manufacturers with China-based production lines. In his book, he attributes the many cases of product defects he saw to “quality fade,” or “the deliberate and secret habit of widening profit margins through a reduction in the quality of materials.”

“Very often in China, quality is not seen as something that can help a company build up its reputation and expand market share,” Midler says. “Very often quality is seen as a barrier to profitability. A lot of times when importers are pushing for higher quality, sometimes, bad things happen.”

Chinese manufacturers, however, are not solely to blame. “In China’s case, you have additional problems: farmers in particular are often poorly educated; there are hundreds of thousands of companies in any industry; class action lawsuits against companies are extremely difficult; and there is very little investigative reporting to expose wrongdoing by companies,” Harney adds.

American companies doing business in China should be aware of these problems, but also must take the initiative to ensure their products are being made safely.

“For American companies that do business in China, it’s a complex place,” adds Seth Faison, who reported from China for the New York Times. Now the deputy head of Sitrick and Company, a global strategic communications firm, Faison sees certain cultural barriers as adding to the problem. “They need to understand the historical mindset of Chinese businessmen and officials that they are dealing with.”

But what happens when the damage is already done? Prevention is the ultimate goal, but when the leaded dolls and protein-maximized milk hit the streets, American and Chinese companies must deal with the ensuing tidal wave of bad public relations.

“My advice, having been through several situations like that, is tell the truth,” Faison explains. “If you have bad news that you have to put out, put it out quickly and completely, because hiding bad news always looks worse if the bad stuff comes out later.”

One international public relations professional, who asked to remain anonymous, offers similar advice, suggesting that companies dealing with product safety issues act quickly and publicly, immediately recall the tainted or altered product to deal with the crisis, and emphasize the importance of their customers’ welfare through vigorous public response.

He also noted that most Chinese manufacturing firms seek to control lines of communication rather than engage customers, seeking to steer any negative coverage through personal relationships rather than an established PR crisis strategy.

“Figure out a way to tell your story in a way that ordinary people can understand,” Faison urges. “I can’t stress enough how important it is to be able to frame things in a way that’s understandable.”

While Chinese companies are quickly catching on to the importance of public relations, global PR firm Weber Shandwick reports that there are still false impressions in China about what public relations truly entails. “Public relations is synonymous with organizing events and entertainment and there is much to be done to change the image of the industry so the brightest university students see PR as a serious career.”

Midler adds that Chinese companies often do not experience the same repercussions as big-name American and international brands. “The reputational damage that you might like to see with a scandal really isn’t as applicable in China as it might be in some other environments,” he says. “Suppliers are usually hidden from the marketplace. Importers from the United States have brand names that are exported from small, medium-sized companies that don’t have brand names.”

Harney adds, “In the US, the threat of litigation or brand damage through media exposure puts pressure on companies to monitor product safety more closely. The vast number of companies makes it harder for the Chinese government to monitor them adequately. Farmers and businessmen may not always understand the consequences of the chemicals they are adding to their products to improve productivity or lower costs.”

Only a handful of Chinese brands garner the international recognition to feel lasting global ill will to their brands. As with with the Sanlu case, however, reputation within the Chinese marketplace clearly matters. And while American consumers have a bevy of consumer safety groups, the Chinese public is becoming its own product quality watchdog.

“While the traditional media is very heavily regulated by the government, the internet allows more freedom,” says Jeremy Goldkorn, founder of Danwei.org, a popular English-language blogs that operates in China. “This has become the place where scandals very often break.”

Although the Internet does provide a means for people in China to express their opinion, it is still heavily regulated. Danwei itself was blocked in July 2009. In response, Goldkorn wrote in an article for The Guardian, “Censorship contributes greatly to the crisis of trust that many complain of in China.” This lack of information only makes sensitive issues, such as product safety concerns, more controversial.

Due to factors such as censorship, Goldkorn sees China as an entirely different environment for PR work as opposed to the US. “It really depends on the industry, and also, things work very differently here than they do in the US,” he notes. “Now a lot of companies are trying to use social networks like Facebook and Twitter to do promotions, but those two companies are blocked in China. It could be pretty much everything you name in terms of how PR is done in the United States – it would be done differently here.”

Countering negative public opinion may take a different form in China, but U.S. and international companies appear to be learning some lessons: 2009 has seen far fewer major safety scandals than just two years prior.

Midler, however, notes that it is the hidden safety scandals that are a concern. “For every single major quality fiasco, the sort that would make the papers, there were probably hundreds of smaller disasters that never got any publicity at all,” Midler writes.

Large recalls persist – Toyota recently recalled nearly 700,000 made-in-China vehicles due to faulty electrical switches, while flawed tires and valve stems on some American cars have led to three fatalities. But building the adequate oversight and infrastructure to ameliorate these problems takes time.

“Product safety problems in China are not going to disappear, just as they haven’t disappeared in America or anywhere else,” Harney asserts. “Western buyers and governments are more aware of these issues than they were in the past. And quality control is certainly higher on the agenda of the Chinese government and many Chinese suppliers as a result of the scandals of 2007.”

American companies must work to build relationships with their Chinese suppliers that provide more open modes for communication, and come up with strong preventative measures to counter not only potential product defects but also public relations crises.

Faison offered his own take on what should be done to prevent future scandals.

“Whether it is an American company that is sourcing products that are manufactured in China, or if it is a Chinese company exporting to the United States, they need to find a way that can underscore safety records, the consistent ability to produce reliable consumer goods that are not tainted in any way, and to show that when [unsafe] products come up they are usually restricted to a small number percentage wise of total exports in China.”

The U.S. remains incredibly reliant on China for manufacturing its goods. In terms of toys alone, 80% of those in the U.S. are made in China. As long as country’s labor force keeps churning out goods and U.S.-Sino trade relations remain open, there will be little slowdown.

“Barring a wave of protectionism, it is highly unlikely that the tide of globalization will reverse,” Harney says. “China is a player in all major global supply chains today, from vitamin C to airplane parts, and its role will only get bigger.”

IRVINE, Calif., Nov. 23 /PRNewswire-FirstCall/ — Resources Connection, Inc., (Nasdaq: RECN), today announced the completion of the acquisition of the business of Sitrick And Company, Inc., one of the nation’s leading strategic communications firms and Brincko Associates, Inc., a widely-respected corporate advisory and restructuring firm and the formation of a Corporate Advisory and Restructuring subsidiary.

The acquisitions, which include the purchase of certain assets of both Sitrick And Company and Brincko Associates, and the personal goodwill of Michael Sitrick, CEO of Sitrick And Company, were made for aggregate initial consideration of approximately $44.7 million, comprising $28.6 million in cash and approximately 822,000 shares of restricted stock, plus an earn-out based on the achievement of certain adjusted earnings before interest, income taxes, depreciation and amortization (“EBITDA”) levels over a period of four years from the date of closing. The principal acquisition agreement provides that the employees of the new subsidiary would share in up to 20 percent of the earn-out based upon the achievement of certain growth targets.

The new Resources subsidiary is called Sitrick Brincko Group, LLC. Michael Sitrick is Chairman and CEO of the new subsidiary and reports directly to Donald B. Murray, Chairman and CEO of Resources. John Brincko is President and COO of the new subsidiary.

Sitrick And Company, with headquarters in Los Angeles and offices in New York, San Francisco and Miami, specializes in corporate, financial, transactional and crisis communications. It was founded in 1989. Headquartered in Southern California, Brincko Associates is an international management consulting firm established in 1979.

For the twelve months ended December 31, 2008 and the six months ended June 30, 2009, Sitrick And Company and Brincko Associates had combined revenue of approximately $24.4 million and $14.4 million, respectively, and adjusted EBITDA of $10.5 million and $6.6 million, respectively. Adjusted EBITDA represents EBITDA adjusted for certain expenses which are not anticipated to recur post-closing.

In connection with the acquisition, at the closing, Michael Sitrick and John Brincko entered into a 54-month employment contract with the Resources subsidiary.

ABOUT RESOURCES GLOBAL PROFESSIONALS

Resources Global Professionals, the operating subsidiary of Resources Connection, Inc. (NASDAQ: RECN), is a multinational professional services firm that helps business leaders execute internal initiatives. Partnering with business leaders, Resources Global Professionals drives internal change across all parts of a global enterprise – finance and accounting, information management, internal audit, human capital, legal services and supply chain management.

Resources Global was founded in 1996 within a Big Four accounting firm. Today, it is a publicly traded company with over 2,700 professionals, from 82 practice offices, annually serving 2,100 clients around the world. Its professionals have an average of 18-years of experience in fields such as finance and accounting, human capital, information management, internal audit, legal and supply chain.

Headquartered in Irvine, California, Resources Global has served 84 of the Fortune 100 companies.

The Company is listed on the NASDAQ Global Select Market, the exchange’s highest tier by listing standards. More information about Resources Global is available at http://www.resourcesglobal.com.

Certain statements in this press release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by words such as “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other comparable terminology. Such statements and all phases of Resources Connection’s operations are subject to known and unknown risks, uncertainties and other factors, including seasonality, overall economic conditions and other factors and uncertainties as are identified in our most recent Annual Report on Form 10-K and our other public filings made with the Securities and Exchange Commission (File No. 0-32113). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Resources Connection’s, and its industry’s, actual results, levels of activity, performance or achievements may be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. The Company undertakes no obligation to update the forward-looking statements in this press release.

SOURCE Resources Connection, Inc.

ROMANS: Sarah Palin back in the monologues and headlines. Her new book, “Going Rogue,” is out today. She was on “Oprah,” sat down with Barbara Walters as well.

So, how much Sarah Palin is too much Sarah Palin?

Joining us now to talk about it, public relations consultant, Ken Sunshine from San Francisco; media strategist, Glenn Bunting.

Ken, let me ask you first. What’d you think about her performance yesterday?

KEN SUNSHINE, VETERAN PUBLIC RELATIONS CONSULTANT: It’s — she’s doing what she needs to do to sell books and appeal to her base. Look I work with a lot of people selling books. That’s what you do, go on Oprah, do Barbara Walters, you go to the people that are going to buy your book first and you — I don’t think there’s anything more. I don’t think she’s running for President by doing what she did, she might eventually. But has a long way to go to be taken seriously for candidate.

ROMANS: When she was a candidate for vice President, she had this famous interview with Katie Couric that many people said just stoked all of this, all of this concern among her base, but also derision among democrats that he didn’t know what she was talking about. Listen what she talked about that Katie Couric interview.

(BEGIN VIDEO CLIP)

SARAH PALIN, FORMER VICE PRESIDENTIAL CANDIDATE: My friend opens the curtain for me to get backstage and there’s the perky one again with the microphone and the cameras rolling. And I’m like, dang; just give me a couple minutes —

OPRAH WINFREY, HOST: The perky one, you mean Katie?

PALIN: With all due respect, yeah.

WINFREY: Because you’re pretty perky, too.

(END OF VIDEO CLIP)

ROMANS: Glenn, was that a dig and was that too much? What did you make of that?

BUNTING: Yes, I thought it was too much. You know, this is a chance for Sarah Palin to reintroduce herself to the American people. And she ought not to squander it by taking shots at Katie Couric or the media or these anonymous McCain campaign staffers. You know, I think that the Katie Couric interview was a bad one for her. She should be honest and humble about it and she should move on and talk about the things that she wants to talk about.

ROMANS: You say her original advice to her after the campaign would be to go back to Alaska, to get more experience, to think more about policy. She did go back to Alaska, but she resigned the governorship. Now what do you think she should be doing and what kind of a — what kind of image should she be cultivating?

BUNTING: Well, you know, it depends whether she wants to be a pundit or whether she in the back of her mind wants to run for President? If she wants to be a pundit, sex sales and she’s got a lot of salacious things she can talk about.

But if she wants to be taken seriously, I think it’s an opportunity for her to sit down, figure out what her core convictions are, and really demonstrate to the American people a level of sophistication and intelligence that’s kind of been lacking. I mean I think she’s widely seen as a lightweight and I think this is a chance — many people get the opportunity to kind of rewrite and to start over. And she has that chance right now. So she ought to be studying things about policies and things that she’s interested in that show a different Sarah Palin.

ROMANS: And you know what Ken, we don’t know what she wants to do. We don’t know if she wants to right books or she wants to be a pundit or a TV host as some has said or if she has a future in politics. She was asked about 2012, she said, all I know for sure, and she’s said this before. All I know for sure is that my son is going into kindergarten.

Meanwhile, a CNN opinion research poll shows that 28% of Americans polled think she’s qualified to be President, ranking her below Mike Huckabee, Mitt Romney, Hilary Clinton, and others. You can look at that poll a couple of ways. She’s not a candidate for office, you know, national office, yet 28% of the people think she is qualified, but a lot of other people think she isn’t. What’s next for Sarah Palin?

SUNSHINE: You know the fact that you’re guessing, publicly, and lots of other pundits are, makes her a winner here. You know, right now, I think she’s having a little fun zinging it to the people that she thinks didn’t serve her well. And also selling a lot of books and becoming a media darling. And she has become, in a weird way, a media darling.

I don’t think it’s conceivable she would ever become President, but she’s going to titillate everybody for a while and I think frankly she’s doing a masterful job.

ROMANS: Well she’s going to be a national figure, and so would you be recommending she do these sorts of things? That she does Oprah and Barbara Walters? Is she overexposed? Does she open herself to risk that there’s a gaffe or something?

SUNSHINE: To sell books, she’s doing exactly what she needs to do. To become President, she ought to — like Glenn said, she ought to study the issues and become a little more sophisticated. She’s not doing any of that.

ROMANS: OK, Ken Sunshine, public relations consultant. Thank you so much. And Glenn Bunting, media strategist, thanks you, both of you, Kiran.