(Bloomberg) -- Aluminum Corp. of China, the nation’s biggest aluminum producer, may take a smaller stake in Rio Tinto Group to win approval for its $19.5 billion investment, the Sydney Morning Herald said, citing people close to the company.
Chinalco is open to letting Rio sell convertible bonds to other shareholders, reducing its planned stake to 15 percent, the Herald said. That may allow the state-owned entity to avoid breaching foreign ownership rules and placate investors concerned at not being offered stock on the same terms.
Rio has agreed to sell $7.2 billion of convertible debt and $12.3 billion worth of stakes in its mines to Chinalco and use the funds to pay debt. The mooted changes don’t remove concerns that an arm of China’s communist government will gain too much control over Rio and its Australian assets, said Senator Barnaby Joyce, who is leading a campaign against the deal.
“There is one thing they want and that is a meaningful interest in the company,” said Ric Ronge, who helps manage the equivalent of $775 million, including Rio shares, at Pengana Capital Ltd. in Melbourne. “Everything will be done to ensure that the deal does go through.”
Rio rose 2.4 percent in Sydney trading to A$66.32 at 11:51 a.m. after gaining 4.3 percent in London yesterday. Under the existing proposal, Chinalco’s stake in Rio Tinto may double to 18 percent should it convert all the debt.
Chinalco Vice President Lu Youqing couldn’t be immediately reached for comment. Rio’s Melbourne-based spokeswoman Amanda Buckley declined to comment.
“We still have the same problem that the resource in situ, in the ground, is owned by another nation’s government,” Senator Joyce today told Bloomberg Television.
Read more here
Wednesday, May 20, 2009
Tuesday, May 19, 2009
Facebook CEO says IPO a few years out
(Reuters) - Facebook CEO Mark Zuckerberg hopes to eventually take his company public but said it won't be for a few years, and stressed that the world's largest online social network is in no immediate need of capital.
The 25-year-old co-founder of Facebook said he is always open to partnerships and investments, but stressed that Facebook can achieve its business goals with its current financial base -- despite numerous media reports that it has had talks on a new round of funding with various investors.
"If there's an investment to be done on very good terms, we will consider it if for no other reason than to have more buffer if we want to do something in the future," Zuckerberg told the Reuters Global Technology Summit.
"Some of the rumblings that people are reporting on, are just different conversations that have happened, but there's really nothing new to talk about there," he added in a telephone interview from Palo Alto, California.
The TechCrunch blog said earlier on Tuesday that Facebook had turned down a $200 million funding offer, which valued the company at $8 billion. Earlier this week, VentureBeat reported that Facebook was in discussions for $150 million in funding.
Zuckerberg declined to confirm these reports.
Facebook has more than 200 million active users, double the number it had last August. The company also ranks as one of the top photo-sharing websites, with more than 15 billion pictures uploaded onto its service.
In 2007, Microsoft Corp invested $240 million in Facebook in exchange for a 1.6 percent stake in the company, giving the social network a $15 billion valuation.
Zuckerberg said on Tuesday that Facebook was not rushing to go public.
"I know for a lot of companies the IPO is the endpoint or the goal," Zuckerberg said. "For us it will be an event on the path to where want to get eventually."
Asked when the time would be right to float shares to the public, he said the 5-year-old company was still "a few years out from that."
Zuckerberg said advertising remains the core revenue source for the company, with Facebook on track to increase sales 70 percent this year and be cash flow positive next year. He declined to specify how much revenue Facebook expects to generate this year.
Facebook works with more than 70 percent of the top 100 largest advertisers in the United States, Zuckerberg said, and the company was also seeing fast growth in international markets, where it has begun to create a direct sales staff.
And with Facebook increasingly taking steps to make aspects of the service available on other websites, like its recent Facebook Connect feature, Zuckerberg said the company could eventually develop a type of online advertising network.
"You can see over time us wanting to offer more ways for people to monetize their site and help out with that, and it could be a pretty natural extension for us to do something with ads or a number of other things that we've considered," he said.
Read more here
The 25-year-old co-founder of Facebook said he is always open to partnerships and investments, but stressed that Facebook can achieve its business goals with its current financial base -- despite numerous media reports that it has had talks on a new round of funding with various investors.
"If there's an investment to be done on very good terms, we will consider it if for no other reason than to have more buffer if we want to do something in the future," Zuckerberg told the Reuters Global Technology Summit.
"Some of the rumblings that people are reporting on, are just different conversations that have happened, but there's really nothing new to talk about there," he added in a telephone interview from Palo Alto, California.
The TechCrunch blog said earlier on Tuesday that Facebook had turned down a $200 million funding offer, which valued the company at $8 billion. Earlier this week, VentureBeat reported that Facebook was in discussions for $150 million in funding.
Zuckerberg declined to confirm these reports.
Facebook has more than 200 million active users, double the number it had last August. The company also ranks as one of the top photo-sharing websites, with more than 15 billion pictures uploaded onto its service.
In 2007, Microsoft Corp invested $240 million in Facebook in exchange for a 1.6 percent stake in the company, giving the social network a $15 billion valuation.
Zuckerberg said on Tuesday that Facebook was not rushing to go public.
"I know for a lot of companies the IPO is the endpoint or the goal," Zuckerberg said. "For us it will be an event on the path to where want to get eventually."
Asked when the time would be right to float shares to the public, he said the 5-year-old company was still "a few years out from that."
Zuckerberg said advertising remains the core revenue source for the company, with Facebook on track to increase sales 70 percent this year and be cash flow positive next year. He declined to specify how much revenue Facebook expects to generate this year.
Facebook works with more than 70 percent of the top 100 largest advertisers in the United States, Zuckerberg said, and the company was also seeing fast growth in international markets, where it has begun to create a direct sales staff.
And with Facebook increasingly taking steps to make aspects of the service available on other websites, like its recent Facebook Connect feature, Zuckerberg said the company could eventually develop a type of online advertising network.
"You can see over time us wanting to offer more ways for people to monetize their site and help out with that, and it could be a pretty natural extension for us to do something with ads or a number of other things that we've considered," he said.
Read more here
Sunday, May 17, 2009
U.S. budget chief says signs of economic free-fall over
(Reuters) - The Obama administration's budget chief said on Sunday there are signs that the free-fall in the economy seems to have halted.
"There are some glimmers of sun shining through the trees, but we're not out of the woods yet," White House budget director Peter Orszag said on CNN's State of the Union.
U.S. economic data have shown evidence that the recession's worst phase may be over, with April consumer prices unchanged and industrial output declining at a slower pace than in March.
Federal Reserve Chairman Ben Bernanke has also suggested that the recession should end this year as long as there is no reemergence of the credit crunch.
Read more here
"There are some glimmers of sun shining through the trees, but we're not out of the woods yet," White House budget director Peter Orszag said on CNN's State of the Union.
U.S. economic data have shown evidence that the recession's worst phase may be over, with April consumer prices unchanged and industrial output declining at a slower pace than in March.
Federal Reserve Chairman Ben Bernanke has also suggested that the recession should end this year as long as there is no reemergence of the credit crunch.
Read more here
Thursday, May 14, 2009
Nike slashes 5 percent of global jobs in largest cut
(Reuters) - Nike Inc, the world's largest maker of athletic shoes and apparel, will slash 5 percent of its 35,000-strong global workforce, or 1,750 jobs, in the largest headcount reduction in the company's history.
The sweeping overhaul to boost competitiveness and clamp down on costs for the owner of the famous "swoosh" logo will include about 500 positions at Nike's Beaverton, Oregon, headquarters, the company said on Thursday.
Nike said it employs about 6,800 workers at its headquarters.
The sports-gear brand first said in February that a review of its sprawling worldwide operations would likely result in a 4 percent staff reduction, or about 1,400 jobs.
Nike has already choked off production at factories in China and Vietnam, trimmed marketing spending, and reorganized its global business into six geographical groups, making China its own region.
While trying to weather a downturn in consumer spending by streamlining its global supply chain and flattening management, Nike has remained relatively resilient during the slump.
Still, shares have lost nearly a quarter of their value in the last year.
The company has banked on the cachet associated with its brand and a diversified portfolio to help it stay on course even as rivals Adidas and Puma have stumbled.
"We recognize the allure of Nike's best of breed status, robust cash flow ... and U.S. share gains, but believe there are meaningful headwinds that will pressure sales, margins and earnings," Sterne Agee analysts said in a May 12 report.
The company's sales declined in its most recent quarter, especially in Europe. Quarterly margins are also under pressure, but the company's selling, general and administrative costs fell nearly 4 percent in its most recent third quarter.
Nike said it hoped to complete most of the layoffs over the coming weeks.
The company's shares held steady in after-hours trading.
"Our new structure sharpens our consumer focus globally to drive continued growth," CEO and President Mark Parker said in a statement. "The decision to reduce our workforce has been a difficult and challenging one.
Besides layoffs, the company has been adjusting its supply chain to cut costs. In March, Nike said it would halt production at three of its Chinese factories and one in Vietnam, which use contract workers not directly employed by the company.
Nike is also cutting back on its marketing spending, which spiked last year in advance of the Beijing Olympics.
Read more here
The sweeping overhaul to boost competitiveness and clamp down on costs for the owner of the famous "swoosh" logo will include about 500 positions at Nike's Beaverton, Oregon, headquarters, the company said on Thursday.
Nike said it employs about 6,800 workers at its headquarters.
The sports-gear brand first said in February that a review of its sprawling worldwide operations would likely result in a 4 percent staff reduction, or about 1,400 jobs.
Nike has already choked off production at factories in China and Vietnam, trimmed marketing spending, and reorganized its global business into six geographical groups, making China its own region.
While trying to weather a downturn in consumer spending by streamlining its global supply chain and flattening management, Nike has remained relatively resilient during the slump.
Still, shares have lost nearly a quarter of their value in the last year.
The company has banked on the cachet associated with its brand and a diversified portfolio to help it stay on course even as rivals Adidas and Puma have stumbled.
"We recognize the allure of Nike's best of breed status, robust cash flow ... and U.S. share gains, but believe there are meaningful headwinds that will pressure sales, margins and earnings," Sterne Agee analysts said in a May 12 report.
The company's sales declined in its most recent quarter, especially in Europe. Quarterly margins are also under pressure, but the company's selling, general and administrative costs fell nearly 4 percent in its most recent third quarter.
Nike said it hoped to complete most of the layoffs over the coming weeks.
The company's shares held steady in after-hours trading.
"Our new structure sharpens our consumer focus globally to drive continued growth," CEO and President Mark Parker said in a statement. "The decision to reduce our workforce has been a difficult and challenging one.
Besides layoffs, the company has been adjusting its supply chain to cut costs. In March, Nike said it would halt production at three of its Chinese factories and one in Vietnam, which use contract workers not directly employed by the company.
Nike is also cutting back on its marketing spending, which spiked last year in advance of the Beijing Olympics.
Read more here
Wednesday, May 13, 2009
Miller Wrestles Whitney in Showdown Over Bank Stocks
(Bloomberg) -- The returns on Legg Mason’s Value Trust mutual fund depend on Bill Miller being right about bank stocks and Meredith Whitney being wrong.
Miller, who beat the Standard & Poor’s 500 Index for a record 15 straight years before stumbling in 2006, says financial companies are his favorite investment for the rest of the decade. Whitney, the former Oppenheimer & Co. stock analyst who became one of Wall Street’s first bears when credit markets started to freeze in 2007, said banks are “grossly overvalued” after government evaluations of their financial health.
The stakes are greater for Miller, 59, who lost more money in the past three years than 99 percent of rival managers by owning Bear Stearns Cos., Freddie Mac and American International Group Inc., according to data compiled by Bloomberg and Morningstar Inc. Whitney, 39, proved prescient by telling her clients to avoid Citigroup Inc., Wachovia Corp. and UBS AG, which lost at least two-thirds of their value last year.
“It could be Bill is right and the vast majority of banks will earn their way out of this,” said William Stone, chief investment strategist at PNC Financial Services Group Inc.’s wealth management unit, which oversees $96 billion in Philadelphia. “But if the economy takes another nosedive and the adverse feedback loop begins again with a vengeance, then maybe it’s Meredith.”
Miller declined to comment, while Whitney didn’t return phone calls or an e-mail message seeking comment.
Bad Bets
Miller, a so-called value investor who seeks the cheapest companies relative to earnings or assets, posted the worst returns within his fund’s category in the past three years, data compiled by Chicago-based research firm Morningstar show.
The fund lost 55.1 percent in 2008 after Miller underestimated the magnitude of the worst financial crisis since the Great Depression. In April last year, a month after Bear Stearns collapsed and was taken over by JPMorgan Chase & Co., he wrote in a letter to fund shareholders that “we have seen the bottom in financials.”
The S&P 500 has tumbled 36 percent since then, with a measure of banks plummeting 56 percent. Today, the S&P 500 fell 2.7 percent to 883.92. Financial stocks dropped 5.2 percent, the biggest decline of 10 industry groups in the broader index.
Miller boosted his stake in McLean, Virginia-based Freddie Mac, once the second-largest U.S. mortgage-finance company, to 17.7 million shares from 5.9 million shares in the first half of 2008, Securities and Exchange Commission filings show.
Most Upside
Miller’s holdings in New York-based AIG, once the world’s biggest insurer, also increased to 9.68 million shares from 8.45 million shares at the end of 2007. Both companies were taken over by the government in September.
“He’s made massive bets in institutions that were wiped off the face of the exchange,” said Frederic Dickson, who helps oversee $20 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.
This year, Miller’s fund has gained 8.1 percent, putting him among the top 10 percent in his category, according to data compiled by Morningstar.
“Financials have the biggest potential to outperform,” he said last week, naming his favorite picks as San Francisco-based Wells Fargo & Co., Capital One Financial Corp. in McLean, Virginia, and New York-based American Express Co.
Home Prices
Miller’s bets hinge on U.S. home prices stabilizing this year and an economy that performs better than projections from the Federal Reserve. The central bank said in January that gross domestic product will shrink by 0.5 percent to 1.3 percent in 2009. Miller projects U.S. equity markets will rise 20 percent to 30 percent in 2009.
More than 19 percent of the Value Trust was invested in financial stocks at the end of the first quarter, according to Legg Mason Inc.’s Web site, greater than their 12.8 percent share of the S&P 500 now.
In the first three months of 2009, Miller bought about 3.77 million shares of Wells Fargo, the largest U.S. mortgage originator, and almost quadrupled his position in credit-card company Capital One, according to data compiled by Bloomberg and Legg Mason’s Web site. Miller also increased his stake in American Express, the biggest U.S. credit-card company by purchases, by about 22 percent, the data show.
Since March 31, Wells Fargo has gained 70 percent. Capital One rose 96 percent, while American Express added 77 percent.
Survival of the Fittest
Today, Wells Fargo lost 5.8 percent, while Capital One slipped 6 percent and American Express decreased 5.3 percent.
Financial companies in the S&P 500 have increased 87 percent since falling to a 17-year low on March 6 as concern waned that more banks, brokerages and insurance companies will fail during the longest U.S. recession since World War II.
Financial stocks in the S&P 500 traded at 20.45 times estimated 2009 earnings yesterday, the lowest since Bear Stearns’s collapse in March last year.
“When you get past the two-to-three-year horizon where they work through their problems, the valuations today are exceptionally cheap,” said Scott Minerd, chief investment officer at Guggenheim Partners Asset Management, which manages $30 billion. “Survival for banks is not a question anymore.”
While Miller is beating the S&P 500 for the year, anyone who bought shares of the Value Trust between July 1997 and October 2008 and never sold them has lost money, according to monthly data compiled by Bloomberg and Morningstar. During that period, the index returned more than 20 percent, including dividends. The fund has given up about $17.7 billion of its assets under management since May 2007, or 82 percent.
Read more here
Miller, who beat the Standard & Poor’s 500 Index for a record 15 straight years before stumbling in 2006, says financial companies are his favorite investment for the rest of the decade. Whitney, the former Oppenheimer & Co. stock analyst who became one of Wall Street’s first bears when credit markets started to freeze in 2007, said banks are “grossly overvalued” after government evaluations of their financial health.
The stakes are greater for Miller, 59, who lost more money in the past three years than 99 percent of rival managers by owning Bear Stearns Cos., Freddie Mac and American International Group Inc., according to data compiled by Bloomberg and Morningstar Inc. Whitney, 39, proved prescient by telling her clients to avoid Citigroup Inc., Wachovia Corp. and UBS AG, which lost at least two-thirds of their value last year.
“It could be Bill is right and the vast majority of banks will earn their way out of this,” said William Stone, chief investment strategist at PNC Financial Services Group Inc.’s wealth management unit, which oversees $96 billion in Philadelphia. “But if the economy takes another nosedive and the adverse feedback loop begins again with a vengeance, then maybe it’s Meredith.”
Miller declined to comment, while Whitney didn’t return phone calls or an e-mail message seeking comment.
Bad Bets
Miller, a so-called value investor who seeks the cheapest companies relative to earnings or assets, posted the worst returns within his fund’s category in the past three years, data compiled by Chicago-based research firm Morningstar show.
The fund lost 55.1 percent in 2008 after Miller underestimated the magnitude of the worst financial crisis since the Great Depression. In April last year, a month after Bear Stearns collapsed and was taken over by JPMorgan Chase & Co., he wrote in a letter to fund shareholders that “we have seen the bottom in financials.”
The S&P 500 has tumbled 36 percent since then, with a measure of banks plummeting 56 percent. Today, the S&P 500 fell 2.7 percent to 883.92. Financial stocks dropped 5.2 percent, the biggest decline of 10 industry groups in the broader index.
Miller boosted his stake in McLean, Virginia-based Freddie Mac, once the second-largest U.S. mortgage-finance company, to 17.7 million shares from 5.9 million shares in the first half of 2008, Securities and Exchange Commission filings show.
Most Upside
Miller’s holdings in New York-based AIG, once the world’s biggest insurer, also increased to 9.68 million shares from 8.45 million shares at the end of 2007. Both companies were taken over by the government in September.
“He’s made massive bets in institutions that were wiped off the face of the exchange,” said Frederic Dickson, who helps oversee $20 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.
This year, Miller’s fund has gained 8.1 percent, putting him among the top 10 percent in his category, according to data compiled by Morningstar.
“Financials have the biggest potential to outperform,” he said last week, naming his favorite picks as San Francisco-based Wells Fargo & Co., Capital One Financial Corp. in McLean, Virginia, and New York-based American Express Co.
Home Prices
Miller’s bets hinge on U.S. home prices stabilizing this year and an economy that performs better than projections from the Federal Reserve. The central bank said in January that gross domestic product will shrink by 0.5 percent to 1.3 percent in 2009. Miller projects U.S. equity markets will rise 20 percent to 30 percent in 2009.
More than 19 percent of the Value Trust was invested in financial stocks at the end of the first quarter, according to Legg Mason Inc.’s Web site, greater than their 12.8 percent share of the S&P 500 now.
In the first three months of 2009, Miller bought about 3.77 million shares of Wells Fargo, the largest U.S. mortgage originator, and almost quadrupled his position in credit-card company Capital One, according to data compiled by Bloomberg and Legg Mason’s Web site. Miller also increased his stake in American Express, the biggest U.S. credit-card company by purchases, by about 22 percent, the data show.
Since March 31, Wells Fargo has gained 70 percent. Capital One rose 96 percent, while American Express added 77 percent.
Survival of the Fittest
Today, Wells Fargo lost 5.8 percent, while Capital One slipped 6 percent and American Express decreased 5.3 percent.
Financial companies in the S&P 500 have increased 87 percent since falling to a 17-year low on March 6 as concern waned that more banks, brokerages and insurance companies will fail during the longest U.S. recession since World War II.
Financial stocks in the S&P 500 traded at 20.45 times estimated 2009 earnings yesterday, the lowest since Bear Stearns’s collapse in March last year.
“When you get past the two-to-three-year horizon where they work through their problems, the valuations today are exceptionally cheap,” said Scott Minerd, chief investment officer at Guggenheim Partners Asset Management, which manages $30 billion. “Survival for banks is not a question anymore.”
While Miller is beating the S&P 500 for the year, anyone who bought shares of the Value Trust between July 1997 and October 2008 and never sold them has lost money, according to monthly data compiled by Bloomberg and Morningstar. During that period, the index returned more than 20 percent, including dividends. The fund has given up about $17.7 billion of its assets under management since May 2007, or 82 percent.
Read more here
Tuesday, May 12, 2009
Nina Wang’s $4.2 Billion Fortune Lands Back in Court
(Bloomberg) -- It’s a tale of love, murder, feng shui and $4.2 billion.
For the second time in a decade, the wealth amassed by property tycoon Teddy Wang has ended up in Hong Kong’s high court, which began a trial yesterday to decide whether the fortune should go to the family run company Wang built or to a 50-year-old feng shui master called Tony Chan.
The court will judge which is the real will of Nina Wang, Teddy’s wife, who herself had to wrest control of the inheritance in 1999 after her kidnapped husband was declared legally dead, though his body was never found.
At stake is the wealth of Asia’s richest woman when she died in 2007, according to Forbes magazine, including control of Chinachem Group, the company she built with Teddy, which owns some 200 buildings in Hong Kong and millions of square feet of development land.
“The estate battle is just like a soap opera,” said Kenny Tang, Hong Kong-based executive director of Redford Securities Co. “The details are too absurd even for a movie.”
The dispute is a further twist in the fate of a fortune Teddy Wang built up over three decades, turning his father’s Shanghai paint and chemical business into one of Hong Kong’s biggest closely held real estate developers. His wife only gained control of his estate years after Teddy had been kidnapped and presumed dead.
‘Little Sweetie’
Dubbed “Little Sweetie” by the Hong Kong media for her pigtails and traditional Chinese dresses, Nina Wang died of cancer on April 3, 2007, at the age of 69. The Shanghai native, born Nina Kung, was a childhood friend of Teddy, whom she married in 1955. They had no children.
Chan will present the famous pigtails at the trial as evidence of their intimate relationship, the Standard newspaper reported yesterday, citing an unidentified spokesman for Chan.
Denis Chang, a lawyer for the Chinachem foundation, told the court that Nina Wang gave Chan three payments totaling HK$2.06 billion ($265.8 million), the Standard reported today.
Wang left her estate to Chan because he understood her personal and business philosophy, Jonathan Midgley, a lawyer at Haldanes, the firm representing Chan, told reporters on April 20, 2007, 13 days after she died. Four days later, Chinachem filed a writ asking the court to decide which will is valid.
‘Nina’s Lover’
In November 2008, Midgley said Chan, who is married with three children, had been Nina’s “lover,” and that the two had a “long, close and affectionate relationship” for about 15 years. Chan later released photographs showing them together, with his hand on her shoulder. Midgley didn’t answer calls to his mobile phone or an e-mail seeking comment. Calls to his office were answered by his secretary, who said he was unavailable.
Chan has business interests in property development and practices feng shui as a hobby, Midgley said in 2007. The High Court appointed accountants from Deloitte Touche Tohmatsu in December 2007 to oversee Chinachem pending the trial.
Feng shui, which means “wind-water,” is a Chinese geomantic practice in which a site is chosen or a building configured in harmony with spiritual energy.
“I can say that in all 27 years I’ve known Nina, I never heard of, nor met, Tony Chan,” Ringo Wong, managing director of Chinachem Entertainment Ltd. and Wang’s former personal assistant, told reporters on April 27. He declined to comment on the trial.
Read more here
For the second time in a decade, the wealth amassed by property tycoon Teddy Wang has ended up in Hong Kong’s high court, which began a trial yesterday to decide whether the fortune should go to the family run company Wang built or to a 50-year-old feng shui master called Tony Chan.
The court will judge which is the real will of Nina Wang, Teddy’s wife, who herself had to wrest control of the inheritance in 1999 after her kidnapped husband was declared legally dead, though his body was never found.
At stake is the wealth of Asia’s richest woman when she died in 2007, according to Forbes magazine, including control of Chinachem Group, the company she built with Teddy, which owns some 200 buildings in Hong Kong and millions of square feet of development land.
“The estate battle is just like a soap opera,” said Kenny Tang, Hong Kong-based executive director of Redford Securities Co. “The details are too absurd even for a movie.”
The dispute is a further twist in the fate of a fortune Teddy Wang built up over three decades, turning his father’s Shanghai paint and chemical business into one of Hong Kong’s biggest closely held real estate developers. His wife only gained control of his estate years after Teddy had been kidnapped and presumed dead.
‘Little Sweetie’
Dubbed “Little Sweetie” by the Hong Kong media for her pigtails and traditional Chinese dresses, Nina Wang died of cancer on April 3, 2007, at the age of 69. The Shanghai native, born Nina Kung, was a childhood friend of Teddy, whom she married in 1955. They had no children.
Chan will present the famous pigtails at the trial as evidence of their intimate relationship, the Standard newspaper reported yesterday, citing an unidentified spokesman for Chan.
Denis Chang, a lawyer for the Chinachem foundation, told the court that Nina Wang gave Chan three payments totaling HK$2.06 billion ($265.8 million), the Standard reported today.
Wang left her estate to Chan because he understood her personal and business philosophy, Jonathan Midgley, a lawyer at Haldanes, the firm representing Chan, told reporters on April 20, 2007, 13 days after she died. Four days later, Chinachem filed a writ asking the court to decide which will is valid.
‘Nina’s Lover’
In November 2008, Midgley said Chan, who is married with three children, had been Nina’s “lover,” and that the two had a “long, close and affectionate relationship” for about 15 years. Chan later released photographs showing them together, with his hand on her shoulder. Midgley didn’t answer calls to his mobile phone or an e-mail seeking comment. Calls to his office were answered by his secretary, who said he was unavailable.
Chan has business interests in property development and practices feng shui as a hobby, Midgley said in 2007. The High Court appointed accountants from Deloitte Touche Tohmatsu in December 2007 to oversee Chinachem pending the trial.
Feng shui, which means “wind-water,” is a Chinese geomantic practice in which a site is chosen or a building configured in harmony with spiritual energy.
“I can say that in all 27 years I’ve known Nina, I never heard of, nor met, Tony Chan,” Ringo Wong, managing director of Chinachem Entertainment Ltd. and Wang’s former personal assistant, told reporters on April 27. He declined to comment on the trial.
Read more here
Monday, May 11, 2009
AIG CEO to fight criticism of employees: report
(Reuters) - American International Group Chief Executive Edward Liddy will speak out against criticism of the insurer's employees on Wednesday and talk about the company's future plans, the Wall Street Journal said.
Liddy will speak to a U.S. House oversight committee and ask for a better partnership with the government, according to the paper.
"Rampant, unwarranted criticism of AIG serves only to diminish the value of our businesses around the world," the paper quoted Liddy's prepared testimony.
The government has stepped forward three times as AIG's benefactor, committing some $180 billion in its efforts to rescue the insurer in exchange for an 80 percent stake. The government aid includes some $85 billion in loans that the insurer is trying to repay through divestitures.
Read more here
Liddy will speak to a U.S. House oversight committee and ask for a better partnership with the government, according to the paper.
"Rampant, unwarranted criticism of AIG serves only to diminish the value of our businesses around the world," the paper quoted Liddy's prepared testimony.
The government has stepped forward three times as AIG's benefactor, committing some $180 billion in its efforts to rescue the insurer in exchange for an 80 percent stake. The government aid includes some $85 billion in loans that the insurer is trying to repay through divestitures.
Read more here
Thursday, May 7, 2009
American Express files for permission to repay TARP
(Reuters) - American Express Co (AXP.N) asked on Thursday for permission to repay the $3.4 billion in TARP funds it received, after the U.S. government stress test showed the credit card firm is well capitalized.
According to bank regulators' guidance, American Express has to show it can issue long-term debt in the public markets that is not backed by government guarantees in order to repay the TARP funds, the fourth-largest U.S. credit card company said.
American Express became a bank last November as bond markets closed down and lenders outside the banking system began looking to fund themselves with deposits. Being a bank also helped American Express win access to capital from the government's Troubled Asset Relief Program.
"Since then, financial markets have become more stable, and American Express has made substantial progress in adapting to a very difficult economic environment," the company said in a statement.
The stress test estimated American Express had enough resources to remain profitable, even in a worst case scenario of 20 percent of credit card losses over 2009 and 2010.
Chief Financial Officer Daniel Henry told analysts on a conference call that American Express did not plan to raise common equity.
Read more here
According to bank regulators' guidance, American Express has to show it can issue long-term debt in the public markets that is not backed by government guarantees in order to repay the TARP funds, the fourth-largest U.S. credit card company said.
American Express became a bank last November as bond markets closed down and lenders outside the banking system began looking to fund themselves with deposits. Being a bank also helped American Express win access to capital from the government's Troubled Asset Relief Program.
"Since then, financial markets have become more stable, and American Express has made substantial progress in adapting to a very difficult economic environment," the company said in a statement.
The stress test estimated American Express had enough resources to remain profitable, even in a worst case scenario of 20 percent of credit card losses over 2009 and 2010.
Chief Financial Officer Daniel Henry told analysts on a conference call that American Express did not plan to raise common equity.
Read more here
Wednesday, May 6, 2009
iPhone app tracks stimulus spending
(CNNMoney.com) -- Arkansas said Wednesday it launched the first iPhone application to track state projects funded through the federal stimulus package.
The free application, Arkansas.gov Recovery Project Search, is available through the Apple iTunes Store and can be downloaded to an iPhone or iPod Touch
"We want transparency in the recovery process," said Chris Masingill of the Arkansas State Recovery Office. "This is taxpayers' money, so we want them to have the information and the tools to access it."
Users can search keywords to find Arkansas state project names and descriptions, including location, dollar allocation, start date and percentage completed.
The location lookup feature displays projects by city or county name, and the "Near Me" button uses an iPhone's Global Positioning System to find projects near the user's location.
Read more here
The free application, Arkansas.gov Recovery Project Search, is available through the Apple iTunes Store and can be downloaded to an iPhone or iPod Touch
"We want transparency in the recovery process," said Chris Masingill of the Arkansas State Recovery Office. "This is taxpayers' money, so we want them to have the information and the tools to access it."
Users can search keywords to find Arkansas state project names and descriptions, including location, dollar allocation, start date and percentage completed.
The location lookup feature displays projects by city or county name, and the "Near Me" button uses an iPhone's Global Positioning System to find projects near the user's location.
Read more here
Tuesday, May 5, 2009
Why stimulus money goes unspent
(CNNMoney.com) -- The federal government has made available more than $74 billion in stimulus funds, but the majority of that money has yet to hit the streets.
That's because states have to jump through hoops before they can claim the funds and put them to use. Some have to get approval from their legislatures before they can spend the money. Others must wait for municipalities and school districts to submit applications to state agencies before distributing the dollars.
These are some of the main reasons why states have drawn down only $15.6 billion of the $74 billion made available to them in the 11 weeks since President Obama signed the $787 billion recovery act. Nearly $14 million of that amount has gone to help states handle the crush of Medicaid expenses.
Still, many states are not waiting to get the checks in hand before putting the stimulus funds to use. They are reversing some of their deepest cuts to public services -- particularly for education and social services -- in anticipation of getting the funds.
States have a lot of money to spend. They, along with local governments, are charged with administering about $280 billion of stimulus funds over the next few years, according to the Government Accountability Office, which is tracking states' use of the money. About $49 billion will be doled out this fiscal year, which ends Sept. 30.
Of that amount, about 90% will be spent on health, transportation and education, primarily through the Medicaid, highway infrastructure and state fiscal stabilization for education programs.
Other than for Medicaid, however, the majority of the money has yet to leave Washington. States have spent only $7.9 million in highway funds, about 10% of what's been made available, according to a federal Department of Transportation report from April 24. And they haven't claimed any of the $5.4 billion in state stabilization funds for education, though eight states have had their applications approved over the past two weeks.
Of course, in some cases, federal agencies dole out the funds over time. For road projects, states request reimbursement from the federal government as they pay the bills. So spending will always lag behind the dollars committed.
"Some outlays happen over years," said Lana Hurdle, the federal Department of Transportation's acting assistant secretary for budget and programs. "It's not something that happens over weeks. There's more than just one single bill per project."
States have even more work to do before they can claim other funds. Some programs, such as energy efficiency and law enforcement, require the states to apply for dollars. For others, such as job training for youths, states have to receive proposals from companies or social service agencies before they can award the money.
Read more here
That's because states have to jump through hoops before they can claim the funds and put them to use. Some have to get approval from their legislatures before they can spend the money. Others must wait for municipalities and school districts to submit applications to state agencies before distributing the dollars.
These are some of the main reasons why states have drawn down only $15.6 billion of the $74 billion made available to them in the 11 weeks since President Obama signed the $787 billion recovery act. Nearly $14 million of that amount has gone to help states handle the crush of Medicaid expenses.
Still, many states are not waiting to get the checks in hand before putting the stimulus funds to use. They are reversing some of their deepest cuts to public services -- particularly for education and social services -- in anticipation of getting the funds.
States have a lot of money to spend. They, along with local governments, are charged with administering about $280 billion of stimulus funds over the next few years, according to the Government Accountability Office, which is tracking states' use of the money. About $49 billion will be doled out this fiscal year, which ends Sept. 30.
Of that amount, about 90% will be spent on health, transportation and education, primarily through the Medicaid, highway infrastructure and state fiscal stabilization for education programs.
Other than for Medicaid, however, the majority of the money has yet to leave Washington. States have spent only $7.9 million in highway funds, about 10% of what's been made available, according to a federal Department of Transportation report from April 24. And they haven't claimed any of the $5.4 billion in state stabilization funds for education, though eight states have had their applications approved over the past two weeks.
Of course, in some cases, federal agencies dole out the funds over time. For road projects, states request reimbursement from the federal government as they pay the bills. So spending will always lag behind the dollars committed.
"Some outlays happen over years," said Lana Hurdle, the federal Department of Transportation's acting assistant secretary for budget and programs. "It's not something that happens over weeks. There's more than just one single bill per project."
States have even more work to do before they can claim other funds. Some programs, such as energy efficiency and law enforcement, require the states to apply for dollars. For others, such as job training for youths, states have to receive proposals from companies or social service agencies before they can award the money.
Read more here
Monday, May 4, 2009
AIG nears $1B sale of Japanese HQ
(Reuters) -- American International Group Inc. is near a deal to sell its Japanese headquarters for about $1 billion in what would be one of its largest asset sales since a September rescue, a source familiar with the matter said Monday.
A Japanese insurance company is expected to buy the prized building in the Otemachi section of Tokyo, although at least two parties were looking at the property, the source said.
A deal for the building, which overlooks the Imperial Palace, is expected to be announced later this week, the source said.
AIG (AIG, Fortune 500) declined to comment on the news, which was first reported by the Wall Street Journal. The source did not want to be identified because the deal has not been announced yet.
The price for the building is in line with what was expected when it was put on the market in February.
Merrill Lynch (MWL) is running the auction for the Tokyo building.
Read more here
A Japanese insurance company is expected to buy the prized building in the Otemachi section of Tokyo, although at least two parties were looking at the property, the source said.
A deal for the building, which overlooks the Imperial Palace, is expected to be announced later this week, the source said.
AIG (AIG, Fortune 500) declined to comment on the news, which was first reported by the Wall Street Journal. The source did not want to be identified because the deal has not been announced yet.
The price for the building is in line with what was expected when it was put on the market in February.
Merrill Lynch (MWL) is running the auction for the Tokyo building.
Read more here
Sunday, May 3, 2009
World Bank Bonds Show What Happens in State Rescues
(Bloomberg) -- Federal guarantees by 13 countries on more than $400 billion of financial company bonds are punishing the AAA-rated World Bank Group with record borrowing costs -- an indication of what can go wrong when government gets in the way.
The Washington-based World Bank, founded in 1944 to rebuild economies after World War II, sold $6 billion of three-year notes March 26 priced to yield 30 basis points more than the benchmark for such borrowings. The so-called spread was the widest for a dollar-denominated bond offering by the supranational lender, said George Richardson, the institution’s head of capital markets, in an interview.
Just seven months ago, the World Bank paid a record low 35 basis points less than the midswap rate, a market measure for exchanging fixed- and floating-rate cash flows. The sudden rise in World Bank relative bond yields is an unintended consequence of sales of taxpayer-backed debt by more than 50 companies, including Goldman Sachs Group Inc., Bank of America Corp. and JPMorgan Chase & Co. While these special offerings were designed to bring stability to the credit markets after $1.4 trillion in losses and writedowns in the past 28 months, no one realized the World Bank would be depreciated by such government policies.
“Governments started announcing guarantees for their banks, and then the whole world changed,” said Richardson, a former Goldman Sachs banker.
Rising Sales
Rising risk premiums are also affecting the Washington- based Inter-American Development Bank, which lends to Latin American and Caribbean countries, and Germany’s state-owned Kreditanstalt fuer Wiederaufbau, whose credit supports housing, education and small business.
Banks and financial companies worldwide sold 320 billion euros ($424 billion) of state-guaranteed debt since October, denominated in euros, dollars and U.K. pounds, according to Leef Dierks, a fixed-income analyst at Barclays Capital in Frankfurt.
They may issue a total of 900 billion euros in bonds for all of 2009, Dierks said.
The total includes $235 billion of dollar-denominated debt in the U.S. with backing from the Federal Deposit Insurance Corp. as of yesterday, according to data compiled by Bloomberg.
Lenders backed by multiple governments, known as supranationals, have the flexibility to borrow billions in multiple currencies and at any part of the yield curve, making their bonds among the most liquid securities.
Read more here
The Washington-based World Bank, founded in 1944 to rebuild economies after World War II, sold $6 billion of three-year notes March 26 priced to yield 30 basis points more than the benchmark for such borrowings. The so-called spread was the widest for a dollar-denominated bond offering by the supranational lender, said George Richardson, the institution’s head of capital markets, in an interview.
Just seven months ago, the World Bank paid a record low 35 basis points less than the midswap rate, a market measure for exchanging fixed- and floating-rate cash flows. The sudden rise in World Bank relative bond yields is an unintended consequence of sales of taxpayer-backed debt by more than 50 companies, including Goldman Sachs Group Inc., Bank of America Corp. and JPMorgan Chase & Co. While these special offerings were designed to bring stability to the credit markets after $1.4 trillion in losses and writedowns in the past 28 months, no one realized the World Bank would be depreciated by such government policies.
“Governments started announcing guarantees for their banks, and then the whole world changed,” said Richardson, a former Goldman Sachs banker.
Rising Sales
Rising risk premiums are also affecting the Washington- based Inter-American Development Bank, which lends to Latin American and Caribbean countries, and Germany’s state-owned Kreditanstalt fuer Wiederaufbau, whose credit supports housing, education and small business.
Banks and financial companies worldwide sold 320 billion euros ($424 billion) of state-guaranteed debt since October, denominated in euros, dollars and U.K. pounds, according to Leef Dierks, a fixed-income analyst at Barclays Capital in Frankfurt.
They may issue a total of 900 billion euros in bonds for all of 2009, Dierks said.
The total includes $235 billion of dollar-denominated debt in the U.S. with backing from the Federal Deposit Insurance Corp. as of yesterday, according to data compiled by Bloomberg.
Lenders backed by multiple governments, known as supranationals, have the flexibility to borrow billions in multiple currencies and at any part of the yield curve, making their bonds among the most liquid securities.
Read more here
Tuesday, April 28, 2009
AIG: Doomed to fail?
(CNNMoney.com) -- Once a titan in the insurance world, AIG is a shadow of its former self, and experts say the company is likely doomed for failure.
That's partly because AIG (AIG, Fortune 500) is slowly getting rid of its strong, moneymaking businesses as it attempts to pay back the roughly $130 billion it has borrowed on its $182 billion government bailout.
The company had to give up more than it had anticipated to pay back taxpayers because of the horrid credit environment, and analysts believe AIG may be giving up too much for it to survive on its own. Not that there was much choice.
"The plan has been, since the first days of the bailout, to sell off the crown jewels including its investment arm and very strong insurance units, because that's all the market will accept now," said Julie Grandstaff, managing director of StanCorp Investment Advisers. "It was the only way to save the organization, but it's questionable if there will be a freestanding AIG in the end."
What AIG is losing: On March 2, AIG transferred its property and casualty businesses into a new, separate company called AIU Holdings. AIG did the same with its AIA Asian life insurance business and ALICO foreign life insurance unit.
The government will eventually take a stake in AIA and ALICO, and on April 22, AIG began the process of selling off a minority stake in AIU to investors. Eventually, all three companies will have their own boards, management and could even trade on the stock market separately from AIG.
AIG has also attempted to sell off many of its other subsidiaries, but those purchases have been small in number and value. The largest of the 10 sold-off units was AIG's car insurance unit, which the company earlier this month announced it would sell for $1.9 billion. The next largest unit was its Hartford Steam Boiler unit, which fetched $745 million.
Read more here
That's partly because AIG (AIG, Fortune 500) is slowly getting rid of its strong, moneymaking businesses as it attempts to pay back the roughly $130 billion it has borrowed on its $182 billion government bailout.
The company had to give up more than it had anticipated to pay back taxpayers because of the horrid credit environment, and analysts believe AIG may be giving up too much for it to survive on its own. Not that there was much choice.
"The plan has been, since the first days of the bailout, to sell off the crown jewels including its investment arm and very strong insurance units, because that's all the market will accept now," said Julie Grandstaff, managing director of StanCorp Investment Advisers. "It was the only way to save the organization, but it's questionable if there will be a freestanding AIG in the end."
What AIG is losing: On March 2, AIG transferred its property and casualty businesses into a new, separate company called AIU Holdings. AIG did the same with its AIA Asian life insurance business and ALICO foreign life insurance unit.
The government will eventually take a stake in AIA and ALICO, and on April 22, AIG began the process of selling off a minority stake in AIU to investors. Eventually, all three companies will have their own boards, management and could even trade on the stock market separately from AIG.
AIG has also attempted to sell off many of its other subsidiaries, but those purchases have been small in number and value. The largest of the 10 sold-off units was AIG's car insurance unit, which the company earlier this month announced it would sell for $1.9 billion. The next largest unit was its Hartford Steam Boiler unit, which fetched $745 million.
Read more here
Monday, April 27, 2009
Deutsche Bank Chief’s Contract Extended After Navigating Crisis
(Bloomberg) -- Josef Ackermann, who helped Deutsche Bank AG navigate the financial crisis, will have his contract as chief executive officer extended by three years.
Ackermann, 61, acceding to a supervisory board request, will remain CEO until the annual general meeting in 2013, Frankfurt-based Deutsche Bank said in a statement late yesterday. He was scheduled to step down in May of next year.
The Swiss-born CEO, who has been at the helm since 2002, helped Deutsche Bank skirt the worst of the U.S. subprime mortgage market crash and resist taking government aid. The German bank returned to profit in the first quarter, analyst estimates show, bouncing back from the first annual loss in more than 50 years in 2008.
“This is about continuity,” said Manfred Jakob, a Frankfurt-based analyst at SEB AG. “Ackermann has best exemplified the company’s strategy of both pursuing investment banking and expanding retail banking. Overall, it’s not a bad move.”
Deutsche Bank, which reports first-quarter earnings today, may post net income of 773 million euros ($1.02 billion), compared with a loss of 131 million euros a year earlier, according to the median estimate of 13 analysts surveyed by Bloomberg.
Ackermann “steered the bank safely through the crisis,” said supervisory board Chairman Clemens Boersig in the statement. “Our performance in the first quarter 2009 is impressive evidence of this.”
‘Secures’ Leadership
Deutsche Bank rose 55 percent so far this year in Frankfurt trading. The stock is the third-biggest gainer in the Bloomberg index of 65 European banks, following a 69 percent slump last year. The company has a market value of 26.9 billion euros.
Ackermann said on Feb. 5 at the annual earnings press conference in Frankfurt that he was sticking to his plan to step down in May 2010, when asked by Bloomberg News whether he’d consider extending his contract.
Deutsche Bank appointed four executives to its management board in March, stoking speculation one of them would be selected to succeed Ackermann. Investment banking co-heads Anshu Jain and Michael Cohrs were named to the board, as was Rainer Neske, the head of private and business clients, and regional management chief Juergen Fitschen.
The decision to extend the contract “secures leadership continuity for the bank,” Boersig said in the statement.
Read more here
Ackermann, 61, acceding to a supervisory board request, will remain CEO until the annual general meeting in 2013, Frankfurt-based Deutsche Bank said in a statement late yesterday. He was scheduled to step down in May of next year.
The Swiss-born CEO, who has been at the helm since 2002, helped Deutsche Bank skirt the worst of the U.S. subprime mortgage market crash and resist taking government aid. The German bank returned to profit in the first quarter, analyst estimates show, bouncing back from the first annual loss in more than 50 years in 2008.
“This is about continuity,” said Manfred Jakob, a Frankfurt-based analyst at SEB AG. “Ackermann has best exemplified the company’s strategy of both pursuing investment banking and expanding retail banking. Overall, it’s not a bad move.”
Deutsche Bank, which reports first-quarter earnings today, may post net income of 773 million euros ($1.02 billion), compared with a loss of 131 million euros a year earlier, according to the median estimate of 13 analysts surveyed by Bloomberg.
Ackermann “steered the bank safely through the crisis,” said supervisory board Chairman Clemens Boersig in the statement. “Our performance in the first quarter 2009 is impressive evidence of this.”
‘Secures’ Leadership
Deutsche Bank rose 55 percent so far this year in Frankfurt trading. The stock is the third-biggest gainer in the Bloomberg index of 65 European banks, following a 69 percent slump last year. The company has a market value of 26.9 billion euros.
Ackermann said on Feb. 5 at the annual earnings press conference in Frankfurt that he was sticking to his plan to step down in May 2010, when asked by Bloomberg News whether he’d consider extending his contract.
Deutsche Bank appointed four executives to its management board in March, stoking speculation one of them would be selected to succeed Ackermann. Investment banking co-heads Anshu Jain and Michael Cohrs were named to the board, as was Rainer Neske, the head of private and business clients, and regional management chief Juergen Fitschen.
The decision to extend the contract “secures leadership continuity for the bank,” Boersig said in the statement.
Read more here
Thursday, April 23, 2009
Retest coming?
(MarketWatch) -- New bull market, or bear market rally?
That's the big debate currently, of course -- with a lot apparently riding on the right answer. But what if it doesn't make that much of a difference?
I ask because new bull markets often retest the lows of the bear markets that preceded them. That means that, even if a new bull market is now underway, it is not necessarily essential that you immediately increase your equity exposure.
Consider what happened after the 2000-2002 bear market came to an end on Oct. 9, 2002, at the 7,286 level on the Dow Jones Industrial Average . Over the next 49 calendar days, the Dow turned in a 23% rally. That's remarkably similar to the current rally, which as of Thursday night is 45 days old and in which the Dow has risen 22%.
But, following that 49-day rally in 2002, the Dow declined for a few months, in the process setting up a retest of its Oct. 9 low. By the subsequent March 11, for example, the Dow stood at 7,524, just 3.3% above the bear market low.
If the 2002-2003 script were to be followed today, the Dow would fall back in coming weeks to the 6,763 level.
Read more here
That's the big debate currently, of course -- with a lot apparently riding on the right answer. But what if it doesn't make that much of a difference?
I ask because new bull markets often retest the lows of the bear markets that preceded them. That means that, even if a new bull market is now underway, it is not necessarily essential that you immediately increase your equity exposure.
Consider what happened after the 2000-2002 bear market came to an end on Oct. 9, 2002, at the 7,286 level on the Dow Jones Industrial Average . Over the next 49 calendar days, the Dow turned in a 23% rally. That's remarkably similar to the current rally, which as of Thursday night is 45 days old and in which the Dow has risen 22%.
But, following that 49-day rally in 2002, the Dow declined for a few months, in the process setting up a retest of its Oct. 9 low. By the subsequent March 11, for example, the Dow stood at 7,524, just 3.3% above the bear market low.
If the 2002-2003 script were to be followed today, the Dow would fall back in coming weeks to the 6,763 level.
Read more here
Wednesday, April 22, 2009
Treasury Said to Ask Chrysler Banks to Cut Debt to $1.5 Billion
(Bloomberg) -- The U.S. Treasury asked Chrysler LLC’s secured lenders to reduce their debt to $1.5 billion from $6.9 billion in exchange for a 5 percent equity stake in the automaker, a person familiar with the negotiations said.
The offer followed by a day a proposal by the lenders to reduce the debt to about $4.5 billion and take 40 percent equity. The person describing the Treasury offer asked not to be identified discussing the private talks.
Treasury and the lenders, made up of four banks and about 45 investment funds, are still far apart as a government deadline of April 30 approaches for Chrysler to cut most of its secured debt, reach cost-saving labor accords and forge an alliance with Fiat SpA. The government has been negotiating with the lenders on Chrysler’s behalf.
The proposal from the lenders also asked Fiat to make a cash contribution to its proposed Chrysler alliance, said people familiar with their offer.
Treasury submitted an initial offer to the lenders early this month to reduce their loan obligations to about $1 billion. The lenders rejected that request and crafted a counter-offer using new business assumptions for Chrysler based on a partnership with Fiat, the people said.
Treasury spokeswoman Jenni Engebretsen declined to comment. The Wall Street Journal reported the offer earlier.
Read more here
The offer followed by a day a proposal by the lenders to reduce the debt to about $4.5 billion and take 40 percent equity. The person describing the Treasury offer asked not to be identified discussing the private talks.
Treasury and the lenders, made up of four banks and about 45 investment funds, are still far apart as a government deadline of April 30 approaches for Chrysler to cut most of its secured debt, reach cost-saving labor accords and forge an alliance with Fiat SpA. The government has been negotiating with the lenders on Chrysler’s behalf.
The proposal from the lenders also asked Fiat to make a cash contribution to its proposed Chrysler alliance, said people familiar with their offer.
Treasury submitted an initial offer to the lenders early this month to reduce their loan obligations to about $1 billion. The lenders rejected that request and crafted a counter-offer using new business assumptions for Chrysler based on a partnership with Fiat, the people said.
Treasury spokeswoman Jenni Engebretsen declined to comment. The Wall Street Journal reported the offer earlier.
Read more here
Monday, April 20, 2009
Barendrechters Stand Up to Shell’s Plan to Bury CO2
(Bloomberg) -- The Dutch town of Barendrecht has a message for Royal Dutch Shell Plc: Not under my backyard.
The oil company and the Netherlands government intend to build the first of a new generation of carbon-dioxide storage facilities in two depleted natural-gas fields in Barendrecht. The plan is to capture emissions from a gasification hydrogen plant at Shell’s nearby Pernis refinery and then store the CO2 more than a mile below area homes, preventing the greenhouse gas from reaching the air and harming the environment.
“I don’t think this is the solution to the CO2 problem,” said 53-year-old resident Gerard van Gils. “Why do a project in a residential area and not offshore? The atomic bomb wasn’t tested under Manhattan. To me this means: Not under my backyard.”
Barendrechters like Van Gils say they’re concerned about safety and a possible drop in property values. Governments around the world want energy companies to store CO2 instead of releasing it, to combat global warming. The Netherlands aims to bury 30 million tons of CO2 by 2030 and is spending about 750 million euros ($980 million) in three years on CO2 reduction.
Carbon capture and storage, or CCS, involves extracting CO2 from power generation and industrial projects, compressing it and injecting it into depleted oil and gas fields or saline aquifers. The technology would allow prolonged use of coal for electricity generation while reducing greenhouse pollution.
“We are very confident about the safety of the project,” said Margriet Kuijper, CCS project manager at Shell. “Barendrecht is strategically important for Shell and for the Netherlands, as it is paving the way for the bigger projects.”
Environmental Assessment
An independent environmental assessment this month will determine whether the project at Barendrecht, on the outskirts of Rotterdam, addresses all concerns. The city council, which so far has opposed the plan, will deliver a final decision by June 29. That can still be overruled by the Dutch government, which commissioned the project.
In its preliminary finding, the council said public support was “lacking” and asked Environment Minister Jacqueline Cramer to halt the venture.
“This project is an experiment, and we don’t think that it is a good idea to have that in a densely populated area,” Simon Zuurbier, alderman of the city council, said in an interview. “It would be better to do it somewhere else.”
Negligible Risks
The Dutch Economic Affairs and Environment Ministries sought proposals for the project. Shell’s plan is to inject as much as 10 million tons of CO2 into the fields, the same amount of the gas created by heating one million modern houses over five years.
The fields are about 1,700 meters (5,577 feet) and 2,700 meters underground. Shell, Europe’s largest oil company, says the risks are negligible and within government standards.
The proximity of the refinery to the ageing gas fields and the existing pipelines make Barendrecht the ideal site for a trial project, The Hague-based Shell said.
Other countries are competing for European Union funding to support similar projects. BP Plc in 2007 scrapped a $1 billion carbon capture and storage power project in Scotland because possible U.K. government money would come too late.
Chancellor of the Exchequer Alistair Darling will introduce incentives this week for U.K. businesses to capture carbon dioxide and store it underground, two people familiar with the plans have said.
Read more here
The oil company and the Netherlands government intend to build the first of a new generation of carbon-dioxide storage facilities in two depleted natural-gas fields in Barendrecht. The plan is to capture emissions from a gasification hydrogen plant at Shell’s nearby Pernis refinery and then store the CO2 more than a mile below area homes, preventing the greenhouse gas from reaching the air and harming the environment.
“I don’t think this is the solution to the CO2 problem,” said 53-year-old resident Gerard van Gils. “Why do a project in a residential area and not offshore? The atomic bomb wasn’t tested under Manhattan. To me this means: Not under my backyard.”
Barendrechters like Van Gils say they’re concerned about safety and a possible drop in property values. Governments around the world want energy companies to store CO2 instead of releasing it, to combat global warming. The Netherlands aims to bury 30 million tons of CO2 by 2030 and is spending about 750 million euros ($980 million) in three years on CO2 reduction.
Carbon capture and storage, or CCS, involves extracting CO2 from power generation and industrial projects, compressing it and injecting it into depleted oil and gas fields or saline aquifers. The technology would allow prolonged use of coal for electricity generation while reducing greenhouse pollution.
“We are very confident about the safety of the project,” said Margriet Kuijper, CCS project manager at Shell. “Barendrecht is strategically important for Shell and for the Netherlands, as it is paving the way for the bigger projects.”
Environmental Assessment
An independent environmental assessment this month will determine whether the project at Barendrecht, on the outskirts of Rotterdam, addresses all concerns. The city council, which so far has opposed the plan, will deliver a final decision by June 29. That can still be overruled by the Dutch government, which commissioned the project.
In its preliminary finding, the council said public support was “lacking” and asked Environment Minister Jacqueline Cramer to halt the venture.
“This project is an experiment, and we don’t think that it is a good idea to have that in a densely populated area,” Simon Zuurbier, alderman of the city council, said in an interview. “It would be better to do it somewhere else.”
Negligible Risks
The Dutch Economic Affairs and Environment Ministries sought proposals for the project. Shell’s plan is to inject as much as 10 million tons of CO2 into the fields, the same amount of the gas created by heating one million modern houses over five years.
The fields are about 1,700 meters (5,577 feet) and 2,700 meters underground. Shell, Europe’s largest oil company, says the risks are negligible and within government standards.
The proximity of the refinery to the ageing gas fields and the existing pipelines make Barendrecht the ideal site for a trial project, The Hague-based Shell said.
Other countries are competing for European Union funding to support similar projects. BP Plc in 2007 scrapped a $1 billion carbon capture and storage power project in Scotland because possible U.K. government money would come too late.
Chancellor of the Exchequer Alistair Darling will introduce incentives this week for U.K. businesses to capture carbon dioxide and store it underground, two people familiar with the plans have said.
Read more here
Thursday, April 16, 2009
Asian Shares Rise Before Weekend; Tech Stocks Solid
(MarketWatch) -- Asian shares were higher Friday, led by technology stocks after their U.S. peers gained on hopes for better demand and some stability in the economy there.
Japan's Nikkei 225 was up 2.2% with Australia's S&P/ASX 200 up 1.5% and South Korea's Kospi Composite up 0.7%. Hong Kong's Hang Seng Index was up 1.9% with Taiwan's main index up 0.7% but the Shanghai Composite Index down 1.9%.
"It's all reasonably positive at the moment," with U.S. bank earnings so far not a major cause for concern, said MF Global senior trader Anthony Anderson in Australia.
All eyes though were on Citigroup's report, due later Friday. "If it doesn't throw up too many surprises we're probably going to test high levels," Anderson said.
Wall Street gained Thursday amid hopes for an economic bottom in the U.S., though U.S. stock futures were mildly lower in screen trade as the weekend drew near.
Google shares erased an initial late-session gain to be down 0.1%, despite news its first-quarter net income rose 8.9% on higher revenue and U.S. paid clicks for Internet searches, with the results topping Wall Street's estimates.
And Federal Reserve Bank of San Francisco President Janet Yellen sounded a note of caution on the U.S. outlook. "The global nature of the downturn raises the odds that the recession will be prolonged, since neither we nor our trade partners can look to a boost from foreign demand."
Barclays Capital analysts said sentiment had improved dramatically over the past month, with risky assets rallying. "The verdict is still out on whether this is just another bear market correction or a sign of better times to come."
In Asia, Toshiba was up 4.1% after the company said it likely sustained a group operating loss of around Y250 billion for the year ended last month, a narrowing from its existing estimate of a Y280 billion loss, helped by output cuts by chipmakers
Asian tech shares generally were finding buyers with Samsung Electronics up 2.9%, LG Electronics up 4.3% and Hynix up 8.3%. Sony added 4.9% in Japan with TDK up 5.8% and Elpida up 6.7%.
Taiwan's Nanya Technology was up 3.1% with Inotera Memories up 6.7%, helped by a recent rise in DRAM prices. Nanya said Thursday it planned to raise contract chip prices 10% in the latter part of April; "contract prices will likely remain strong throughout this year amid an expected supply shortage although demand won't likely to pick up any time soon," said Kim Gee-soo at Goodmorning Shinhan Securities.
LG Display added 4.2% in Seoul. It posted its second-straight quarterly net loss in the three months ended March 31, but the flat-panel maker signaled better results in the current quarter.
Financial stocks were gaining across Asia with National Australia Bank up 2.0% and Commonwealth Bank of Australia rising 2.0%, too. Korea's KB Financial was up 1.8%, with bank stocks helped by Thursday's rise in JPMorgan Chase shares in the U.S. after its results.
Tourism stocks gained in Taiwan before cross-strait trade negotiations, with Formosa International Hotel up 3.4% and China Airlines higher by 0.7%.
Cathay Pacific Airways was up 0.7% in Hong Kong, even as it said it was reducing its passenger and cargo capacity and would ask some staff to take unpaid leave over the next 12 months.
Hong Kong developer stocks were higher, helped by brisk sales at Cheung Kong's new project Central Park Towers II, with Cheung Kong up 1.7% and Sino Land up 4.6%.
Read more here
Japan's Nikkei 225 was up 2.2% with Australia's S&P/ASX 200 up 1.5% and South Korea's Kospi Composite up 0.7%. Hong Kong's Hang Seng Index was up 1.9% with Taiwan's main index up 0.7% but the Shanghai Composite Index down 1.9%.
"It's all reasonably positive at the moment," with U.S. bank earnings so far not a major cause for concern, said MF Global senior trader Anthony Anderson in Australia.
All eyes though were on Citigroup's report, due later Friday. "If it doesn't throw up too many surprises we're probably going to test high levels," Anderson said.
Wall Street gained Thursday amid hopes for an economic bottom in the U.S., though U.S. stock futures were mildly lower in screen trade as the weekend drew near.
Google shares erased an initial late-session gain to be down 0.1%, despite news its first-quarter net income rose 8.9% on higher revenue and U.S. paid clicks for Internet searches, with the results topping Wall Street's estimates.
And Federal Reserve Bank of San Francisco President Janet Yellen sounded a note of caution on the U.S. outlook. "The global nature of the downturn raises the odds that the recession will be prolonged, since neither we nor our trade partners can look to a boost from foreign demand."
Barclays Capital analysts said sentiment had improved dramatically over the past month, with risky assets rallying. "The verdict is still out on whether this is just another bear market correction or a sign of better times to come."
In Asia, Toshiba was up 4.1% after the company said it likely sustained a group operating loss of around Y250 billion for the year ended last month, a narrowing from its existing estimate of a Y280 billion loss, helped by output cuts by chipmakers
Asian tech shares generally were finding buyers with Samsung Electronics up 2.9%, LG Electronics up 4.3% and Hynix up 8.3%. Sony added 4.9% in Japan with TDK up 5.8% and Elpida up 6.7%.
Taiwan's Nanya Technology was up 3.1% with Inotera Memories up 6.7%, helped by a recent rise in DRAM prices. Nanya said Thursday it planned to raise contract chip prices 10% in the latter part of April; "contract prices will likely remain strong throughout this year amid an expected supply shortage although demand won't likely to pick up any time soon," said Kim Gee-soo at Goodmorning Shinhan Securities.
LG Display added 4.2% in Seoul. It posted its second-straight quarterly net loss in the three months ended March 31, but the flat-panel maker signaled better results in the current quarter.
Financial stocks were gaining across Asia with National Australia Bank up 2.0% and Commonwealth Bank of Australia rising 2.0%, too. Korea's KB Financial was up 1.8%, with bank stocks helped by Thursday's rise in JPMorgan Chase shares in the U.S. after its results.
Tourism stocks gained in Taiwan before cross-strait trade negotiations, with Formosa International Hotel up 3.4% and China Airlines higher by 0.7%.
Cathay Pacific Airways was up 0.7% in Hong Kong, even as it said it was reducing its passenger and cargo capacity and would ask some staff to take unpaid leave over the next 12 months.
Hong Kong developer stocks were higher, helped by brisk sales at Cheung Kong's new project Central Park Towers II, with Cheung Kong up 1.7% and Sino Land up 4.6%.
Read more here
Wednesday, April 15, 2009
Economy still worsening across U.S.: Beige Book
(MarketWatch) - The economy continued to worsen across the United States in March and early April, amid scattered signs that the pace of the decline was lessening in some regions, the Federal Reserve reported Wednesday in its Beige Book account of the economy.
"Overall economic activity contracted further or remained weak," the Fed said, based on reports from thousands of business sources across the country. "However, five of the 12 districts noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level."
The report, written by the economics staff at the Dallas Fed, generally agrees with comments by top policymakers that there are some signs that the economy may be getting worse at a slower pace.
The economy declined at a 6.3% annual pace in the fourth quarter, and economists are forecasting a decline of 5% in the first quarter and about 2% in the current quarter.
Read more at MarketWatch
"Overall economic activity contracted further or remained weak," the Fed said, based on reports from thousands of business sources across the country. "However, five of the 12 districts noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level."
The report, written by the economics staff at the Dallas Fed, generally agrees with comments by top policymakers that there are some signs that the economy may be getting worse at a slower pace.
The economy declined at a 6.3% annual pace in the fourth quarter, and economists are forecasting a decline of 5% in the first quarter and about 2% in the current quarter.
Read more at MarketWatch
China's economy likely to show bottoming
(MarketWatch) -- Key Chinese economic data due out this week may mark the low point from which a recovery will follow, economists say.
"The worst of statistics in terms of GDP are probably behind us," said Credit Suisse's Chief Asian Economist Dong Tao in Hong Kong. "Either the fourth quarter of last year, or the first quarter of this year are probably the worst in terms of China's growth cycle."
China's gross domestic product growth likely slowed to 6% in the January-March quarter, according to the median forecast of 15 economists surveyed by Dow Jones Newswires, compared to a 6.8% expansion in the fourth quarter.
The first-quarter GDP figures are due to be released Thursday morning in Beijing, or 9 p.m. Eastern time Wednesday.
The big question in the minds of China watchers is whether the 4 trillion yuan ($586 billion) stimulus package -- along with other measures designed to kick start the economy -- are beginning to find traction.
For the most part, analysts were upbeat over the latest batch of data, released over the weekend, which showed efforts to inject cash into the economy appear to working.
Money supply, as measured by M2, expanded 25.5% in the first quarter from a year earlier. Meanwhile, banks extended 4.58 trillion yuan in new loans in the quarter, nearly as much as the 4.9 trillion yuan that was issued in all of 2008.
Those two figures prompted several analysts to say new bank-lending growth this year looks likely to top 8 trillion yuan, up from the government's earlier 5 trillion yuan target.
Read more at MarketWatch
"The worst of statistics in terms of GDP are probably behind us," said Credit Suisse's Chief Asian Economist Dong Tao in Hong Kong. "Either the fourth quarter of last year, or the first quarter of this year are probably the worst in terms of China's growth cycle."
China's gross domestic product growth likely slowed to 6% in the January-March quarter, according to the median forecast of 15 economists surveyed by Dow Jones Newswires, compared to a 6.8% expansion in the fourth quarter.
The first-quarter GDP figures are due to be released Thursday morning in Beijing, or 9 p.m. Eastern time Wednesday.
The big question in the minds of China watchers is whether the 4 trillion yuan ($586 billion) stimulus package -- along with other measures designed to kick start the economy -- are beginning to find traction.
For the most part, analysts were upbeat over the latest batch of data, released over the weekend, which showed efforts to inject cash into the economy appear to working.
Money supply, as measured by M2, expanded 25.5% in the first quarter from a year earlier. Meanwhile, banks extended 4.58 trillion yuan in new loans in the quarter, nearly as much as the 4.9 trillion yuan that was issued in all of 2008.
Those two figures prompted several analysts to say new bank-lending growth this year looks likely to top 8 trillion yuan, up from the government's earlier 5 trillion yuan target.
Read more at MarketWatch
Tuesday, April 14, 2009
Bono Plays Matchmaker as YouTube, Universal Create Music Site
(Bloomberg) -- Since MTV started in 1981 with “Video Killed the Radio Star,” record labels have treated videos as a marketing expense. Now, with album sales plummeting, music companies aim to make them a source of profit.
That’s the goal of Universal Music Group’s venture with Google Inc.’s YouTube. Vevo.com, a new site announced last week, will stream videos from artists such as U2, Beck and the Rolling Stones. YouTube will then split advertising revenue with Universal, the world’s largest music company.
The agreement is a sign of progress in the record industry’s efforts to make money from YouTube, the biggest online video service. Internet ads could help the labels rebound from a 45 percent plunge in U.S. album sales since 2000, according to Nielsen SoundScan. Working with YouTube also may let the industry rein in the wild-west nature of online music.
“As an industry or a company, we have to figure out how to derive some sort of revenue from the consumption of music, whether or not people buy it,” said Rio Caraeff, executive vice president of Universal Music’s ELabs, which handles its e- commerce strategy.
Over dinner earlier this year in Paris, U2 singer Bono urged Universal Music Chairman Doug Morris to get in touch with Google Chief Executive Officer Eric Schmidt about working together, according to a person with knowledge of the talks.
Giving Away
The revenue-sharing plan is a shift from the 1980s and 1990s, when videos from artists such as Bon Jovi, Madonna and ‘N Sync were given free to MTV for marketing purposes. With album sales falling, music stores closing and MTV moving to a reality-television format, videos need to start paying for themselves.
New York-based Universal, owned by France’s Vivendi SA, says its videos have been watched on YouTube more than 3.6 billion times.
“The video used to be just a cost center,” Jean-Bernard Levy, CEO of Vivendi, said in an interview last month. “We used to do lots of great artistic videos that we gave away to MTV and other people for free. We didn’t get paid. Now it’s becoming a profit center.”
Universal and Google executives are asking the other major record labels to join their partnership. That includes Sony Music Entertainment, EMI Group Ltd. and Warner Music Group Corp.
Jeanne Meyer, a spokeswoman for EMI, said talks with YouTube are at a “very early stage.” Warner Music’s Will Tanous declined to comment on the discussions. Claire von Schilling, a Sony spokeswoman, didn’t return a call seeking comment.
‘High Hopes’
YouTube also needs new ways to make money. The business will lose $470 million in 2009, according to Credit Suisse estimates. A deal with Universal could be a model for agreements with other content providers, allowing the Web site to charge premium ad rates for professionally made clips.
“We have high hopes we’re creating a sustainable, profitable business model,” David Eun, vice president of strategic partnerships at Mountain View, California-based Google, said on a conference call last week.
YouTube, famous for the low-budget videos posted by its users, is trying to add more premium content. Of the top 100 most-viewed video producers on YouTube, 39 are from musicians and labels, according to David Burch, a marketing manager with the video-tracking firm TubeMogul Inc. in Emeryville, California.
Read more at Bloomberg
That’s the goal of Universal Music Group’s venture with Google Inc.’s YouTube. Vevo.com, a new site announced last week, will stream videos from artists such as U2, Beck and the Rolling Stones. YouTube will then split advertising revenue with Universal, the world’s largest music company.
The agreement is a sign of progress in the record industry’s efforts to make money from YouTube, the biggest online video service. Internet ads could help the labels rebound from a 45 percent plunge in U.S. album sales since 2000, according to Nielsen SoundScan. Working with YouTube also may let the industry rein in the wild-west nature of online music.
“As an industry or a company, we have to figure out how to derive some sort of revenue from the consumption of music, whether or not people buy it,” said Rio Caraeff, executive vice president of Universal Music’s ELabs, which handles its e- commerce strategy.
Over dinner earlier this year in Paris, U2 singer Bono urged Universal Music Chairman Doug Morris to get in touch with Google Chief Executive Officer Eric Schmidt about working together, according to a person with knowledge of the talks.
Giving Away
The revenue-sharing plan is a shift from the 1980s and 1990s, when videos from artists such as Bon Jovi, Madonna and ‘N Sync were given free to MTV for marketing purposes. With album sales falling, music stores closing and MTV moving to a reality-television format, videos need to start paying for themselves.
New York-based Universal, owned by France’s Vivendi SA, says its videos have been watched on YouTube more than 3.6 billion times.
“The video used to be just a cost center,” Jean-Bernard Levy, CEO of Vivendi, said in an interview last month. “We used to do lots of great artistic videos that we gave away to MTV and other people for free. We didn’t get paid. Now it’s becoming a profit center.”
Universal and Google executives are asking the other major record labels to join their partnership. That includes Sony Music Entertainment, EMI Group Ltd. and Warner Music Group Corp.
Jeanne Meyer, a spokeswoman for EMI, said talks with YouTube are at a “very early stage.” Warner Music’s Will Tanous declined to comment on the discussions. Claire von Schilling, a Sony spokeswoman, didn’t return a call seeking comment.
‘High Hopes’
YouTube also needs new ways to make money. The business will lose $470 million in 2009, according to Credit Suisse estimates. A deal with Universal could be a model for agreements with other content providers, allowing the Web site to charge premium ad rates for professionally made clips.
“We have high hopes we’re creating a sustainable, profitable business model,” David Eun, vice president of strategic partnerships at Mountain View, California-based Google, said on a conference call last week.
YouTube, famous for the low-budget videos posted by its users, is trying to add more premium content. Of the top 100 most-viewed video producers on YouTube, 39 are from musicians and labels, according to David Burch, a marketing manager with the video-tracking firm TubeMogul Inc. in Emeryville, California.
Read more at Bloomberg
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