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2011-04-19 00:00:00 UTC

Murray & Roberts Drops to Lowest in Month on Antitrust Breaches

http://www.bloomberg.com/news/2011-04-19/murray-roberts-drops-to-lowest-in-month-on-antitrust-breaches.html

B y S i k o n a t h i M a n t s h a n t s h a

Murray & Roberts Holdings Ltd. (MUR) , a construction company, extended declines to the lowest intraday level in a month after saying it may have transgressed South Africa ’s antitrust laws. The shares slipped 44 cents, or 1.7 percent to 24.84 rand at 9:29 a.m. in Johannesburg. That is the lowest level since March 17 and follows yesterday’s 4.4 percent loss. Murray & Roberts identified a “relatively small number” of projects in which its executives transgressed the Competition Act, necessitating an application for leniency with the Competition Commission of South Africa, the company said yesterday in a regulatory statement. The commission may levy fines equivalent to a maximum 10 percent of the revenue in the offending business unit. To contact the reporter on this story: Sikonathi Mantshantsha in Johannesburg at [email protected] To contact the editor responsible for this story: Gavin Serkin at [email protected]

2011-04-19 00:00:00 UTC

State Street Operating Income Rises With Markets to $439 Million

http://www.bloomberg.com/news/2011-04-19/state-street-operating-income-advances-19-amid-market-rally-acquisitions.html

B y C h r i s t o p h e r C o n d o n

State Street Corp. (STT) , the third- largest custody bank, said first-quarter net income on an operating basis climbed 19 percent, as rising markets and acquisitions increased the assets it oversees for clients. Profit rose to $439 million, or 88 cents a share, from $369 million, or 75 cents, a year earlier, the Boston-based company said today in statement. Operating profit beat the 86-cent average estimate of 22 analysts surveyed by Bloomberg. “The main driver is the rebound in the markets,” Marty Mosby , a Nashville, Tennessee-based analyst for Guggenheim Securities LLC, said in an interview before results were announced. “Markets activity is rising to more normal levels and valuations are moving higher.” The average value of the Standard & Poor’s 500 Index in the three months ended March 31 rose 16 percent from the first quarter of 2010. Revenue increased 2.8 percent to $2.36 billion. State Street raised its quarterly dividend to 18 cents a share on March 18 and said it would buy back as much as $675 million in common stock this year, a step toward restoring the way it used free cash flow before the financial crisis. The company slashed its dividend from 24 cents a share to 1 cent on Feb. 5, 2009, in an effort to preserve capital as client assets shrank and its own investments plunged in value. Stock Performance Results were announced before the start of regular U.S. trading. State Street has declined 3.6 percent this year. The Standard & Poor’s 17-member index of asset managers and custody banks was little changed. Bank of New York Mellon Corp. and JPMorgan Chase & Co., both based in New York, are the two biggest custody banks. Custody banks keep records, track performance and lend securities for institutional investors including mutual funds, pension funds and hedge funds . State Street also manages investments for individuals and institutions. (State Street is scheduled to hold a conference call for investors at 9:00 a.m. New York time. The call can be accessed at http://www.statestreet.com/stockholder and by telephone at 1-706-679-5594 or +1-888-391-4233 (Conference ID # 36962726).) To contact the reporter on this story: Christopher Condon in Boston at [email protected] To contact the editor responsible for this story: Christian Baumgaertel at [email protected]

2011-04-19 00:00:00 UTC

Rodent Droppings ‘Too Numerous to Count’ Found on Delta Jet

http://www.bloomberg.com/news/2011-04-19/fda-discovers-rodent-excrement-during-delta-jet-inspection-1-.html

B y M a r y J a n e C r e d e u r

Rodent droppings “too numerous to count” were found by U.S. health inspectors near a Delta Air Lines Inc. (DAL) jet’s galley where food and drink are stored. The excrement and mammalian urine turned up in inspections from Jan. 26 through Feb. 2 at a Delta hangar at its Atlanta headquarters, the Food and Drug Administration said in an April 13 letter to the airline. Delta said today the plane was cleaned and returned to service within days. Mechanical traps probably would be preferable to chemicals in trying to end a rodent infestation on a plane, said Chad Artimovich, who is the president of pest-control company Atlanta Wildlife Solutions LLC and has exterminated rats in recreational vehicles, mobile homes and a hot tub. “You don’t want to use poison because then you have to go through the process of tracking it down and finding it and maybe tearing the whole airplane apart,” Artimovich said in an interview. “A dead rat stinks to high heaven.” Delta took the rodent case “very seriously” and resolved the issue by temporarily parking the jet and “humanely catching the animal,” said Ashley Black, a spokeswoman for the Atlanta- based carrier. International Plane Black declined to specify the type of plane involved, other than that it was used on international flights. It was returned to service within days after the rodent’s removal, she said. “We believe this was an isolated incident and we cooperated with the FDA immediately to resolve it earlier this year,” Black said. “The health and safety of Delta’s customers and employees are Delta’s top priority.” The FDA said rodent excrement was discovered above the right and left forward galleys and mammalian urine was detected in six areas on ceiling panels over a galley. Delta’s response to the agency didn’t include steps to prevent a recurrence, which is “likely” unless such measures are taken, the FDA said. Federal regulations for transportation companies require that “all places where food is prepared, served, or stored shall be constructed and maintained as to be clean and free from flies, rodents and other vermin,” the FDA said. The animal most likely to be involved in an airplane infestation is a roof rat, a species prevalent in Atlanta, Artimovich said. Those rodents leave as many as 50 droppings a day, and a jetliner provides “everything a rat needs” with spilled nuts and pretzel crumbs and sources of water, he said. “Once it gets in there and gets established, there’s no reason to leave,” he said. “The real concern is if a rat started chewing on wires. Almost every house I go into where there are rats, they’ve chewed on wood and wiring and ornaments. Their teeth are harder than iron and they have to keep them gnawed down.” To contact the reporter on this story: Mary Jane Credeur in Atlanta at [email protected] . To contact the editor responsible for this story: Ed Dufner at [email protected] .

2011-04-19 00:00:00 UTC

Kazakhstan Urges Russia, Belarus to Coordinate Currency Policies

http://www.bloomberg.com/news/2011-04-19/kazakhstan-urges-russia-belarus-to-coordinate-currency-policies.html

B y N a r i m a n G i z i t d i n o v

Kazakhstan urged Russia and Belarus to align currency policies between the three members of a customs union and avoid “sharp, unilateral” devaluations. “If we move toward a joint economic space with Russia and Belarus, we need to form coherent currency policies,” Kazakh central bank Governor Grigori Marchenko told reporters in Almaty today. The central Asian nation was forced to weaken the tenge twice in the past 16 years “not for domestic reasons but as a result of sharp devaluations in neighboring countries.” The three former Soviet republics entered a customs union in July and plan to form common economic space by next year. The adoption of a joint currency would be the “next logical step” after creating a common market, Igor Shuvalov, a Russian first deputy prime minister, said last year. Belarus today abolished restrictions on trading the ruble between banks as it seeks to stem the slide in the nation’s foreign-currency reserves. The decision is “equivalent to a devaluation,” Barbara Nestor , an emerging-markets strategist at Commerzbank AG in London , said by e-mail. The former Soviet republic, which devalued its currency by about a fifth in January 2009, may need to reduce the ruble’s value by as much as 30 percent, Herbert Stepic, chief executive officer of Raiffeisen Bank International AG (RBI) , said on April 11. The comments were echoed in an April 15 interview by German Gref , chief executive officer of OAO Sberbank, Russia’s biggest lender, who predicted the “government won’t be able to avoid a devaluation.” ‘Rather Complicated’ The customs union will delay steps to synchronize currency policies until Belarus “resolves” its “rather complicated situation,” Marchenko said. The three partners have agreed to work toward integrating currency policies in the union, he said. The National Bank of Kazakhstan devalued the tenge by 63 percent in 1999 and 25 percent in 2009, according to Marchenko. Russia’s central bank drained more than $200 billion, or about a third of its reserves, in the six months through January 2009 as it managed a 35 percent devaluation of the ruble to the dollar. The government defaulted on $40 billion of domestic debt and devalued the ruble in 1998. Marchenko also urged the customs union to coordinate fiscal programs to avoid the euro region’s mismatch between uniform monetary policies and diverse approaches to spending among governments in the currency bloc. To contact the reporters on this story: Nariman Gizitdinov in Almaty at [email protected] To contact the editors responsible for this story: Steve Voss at [email protected] .

2011-04-19 00:00:00 UTC

Rupiah Drops to Two-Week Low on U.S., European Debt Concern

http://www.bloomberg.com/news/2011-04-19/rupiah-drops-to-two-week-low-on-u-s-european-debt-concern.html

B y S u r y a n i O m a r

Indonesia ’s rupiah fell to a two- week low after Standard & Poor’s cut the U.S. long-term credit outlook, sapping demand for emerging-market assets. Benchmark bonds declined. The currency weakened for a second day as the MSCI Asia Pacific Index of regional stocks dropped 1.4 percent. New York- based S&P said there’s a one-in-three chance the AAA credit rating of the U.S. government might be cut within two years unless policy makers agree on a plan to reduce budget deficits and the national debt. The yield on Greece ’s two-year bonds rose to more than 20 percent. “Overnight we had a couple of pieces of bad news; the U.S rating outlook downgrade and ongoing concern about the Greek debt crisis,” said Joanna Tan, a Singapore-based economist at Forecast Singapore Pte. “That led to overall risk aversion in Asia, including Indonesia. Asia is still very much looking toward the major economies for cues.” The rupiah declined 0.2 percent to 8,688 per dollar as of 4:16 p.m. in Jakarta, according to data compiled by Bloomberg. It fell to 8,693 earlier, the weakest level since April 1. The currency has advanced 3.3 percent this year. The U.S. was the second largest buyer of Indonesia’s non- oil exports in February, after Japan , according to data from the statistics department. Indonesia’s 10-year government bonds declined for a fourth day. The yield on the 8.25 percent note due July 2021 climbed one basis point to 7.86 percent, according to closing prices from the Inter-Dealer Market Association. The government sold 6.6 trillion rupiah of bonds and bills in an auction today, less than the target of 7 trillion rupiah, the Ministry of Finance’s debt management office said in an e- mailed statement. The sale drew bids of 14.841 trillion rupiah, according to the statement. To contact the reporters on this story: Suryani Omar in Jakarta at [email protected] ; To contact the editor responsible for this story: Sandy Hendry at [email protected] .

2011-04-19 00:00:00 UTC

Obama Embarks on Tour to Sell Debt Plan, Not Dwell on S&P's U.S. Outlook

http://www.bloomberg.com/news/2011-04-19/obama-embarks-on-tour-to-sell-debt-plan-not-dwell-on-s-p-report.html

B y M i k e D o r n i n g a n d J u l i e H i r s c h f e l d D a v i s

President Barack Obama began a tour promoting his proposal to cut long-term budget deficits with a new urgency after Standard & Poor’s said the nation’s AAA credit rating is in peril. The divide between Republicans and Democrats in Congress over combating the nation’s debt was spotlighted by Standard & Poor’s lowering of the long-term U.S. credit outlook to “negative,” with each side saying the alert bolsters their competing arguments. At a town hall-style meeting today in Annandale, Virginia, Obama said the nation’s mounting debt posed a threat to the strength of the economic recovery. “Now that the economy has begun to grow again, if we keep on spending more than we take in, it’s going to cause serious damage to our economy,” Obama said at a gymnasium filled with students and faculty at Northern Virginia Community College. Obama’s cross-country campaign-style swing is billed in part as an effort to build support for cuts in popular programs and he didn’t mention yesterday’s S&P report. Administration officials said they don’t expect him to refer to it unless he is asked. Chris Lehane , a Democratic strategist who worked on Al Gore’s 2000 presidential campaign, said any president would prefer to minimize attention to an unfavorable assessment of the nation’s creditworthiness. ‘Political Paralysis’ Local newspapers and television stations would be likely to report “Wall Street questions U.S. long-term credit because of political paralysis in Washington,” Lehane said. “That’s not the headline you want when you’re looking at re-election.” Obama is scheduled to spend three days traveling through states crucial to his 2012 re-election campaign to publicize his plan to reduce cumulative deficits by $4 trillion over 12 years. The plan includes spending cuts on defense and domestic programs and calls for raising taxes on the wealthy. In Virginia , he said he was optimistic the White House could overcome differences with congressional Republicans to reach an agreement on the deficit, citing deals the two parties struck on tax cuts last December and government funding in April. “I believe that Democrats and Republicans can come together to get this done,” Obama said. “Both sides have come together before. I believe we can do it again.” Town-Hall Meetings He will also hold forums on the deficit-reduction plan later this week at Facebook Inc.’s headquarters in Palo Alto , California , and in Reno, Nevada . Democrats say New York-based S&P’s revision in the U.S.’s long-term credit outlook helps make the case for a broad agreement based on the debt-cutting plan Obama outlined last week. Republicans say the ratings firm’s report reinforces their call for deeper spending cuts than the president and other Democrats have been willing to consider. S&P said the government risks losing its AAA credit rating unless policy makers agree on a plan by 2013 to reduce budget deficits and the national debt. The company maintained its top rating on U.S. long-term debt while lowering the outlook to “negative” for the first time. Negative Outlook The White House downplayed the negative outlook, saying it was based on a faulty appraisal of the political climate. Austan Goolsbee , chairman of Obama’s Council of Economic Advisers, said yesterday that the outlook was based on a “political judgment” of prospects for a deficit-reduction agreement that doesn’t deserve “too much weight.” Charles Schumer of New York , the Senate’s third-ranking Democrat, said bipartisan agreement exists on the need to reduce the debt by $4 trillion over roughly the next decade. “Now we just need to resolve how to do it,” Schumer, who is traveling in Asia during a two-week congressional break, said in a statement. Obama’s “balanced plan which relies on shared sacrifice, as opposed to simply ending Medicare makes a long-term deal highly possible,” the senator said. Republicans have proposed scaling back entitlement programs such as Medicare and reject Obama’s push for tax increases to help reduce debt. ‘Wake-up Call’ House Majority Leader Eric Cantor, a Virginia Republican, called the S&P revision “a wake-up call for those in Washington asking Congress to blindly increase the debt limit” without significant spending cuts. The negative outlook on long-term U.S. debt issued by S&P “makes clear that the debt-limit increase proposed by the Obama administration must be accompanied by meaningful fiscal reforms that immediately reduce federal spending and stop our nation from digging itself further into debt,” Cantor said. Congress is facing a vote as early as next month on raising the government’s $14.29 trillion legal debt limit. The Treasury Department projects that it will hit the cap on May 16, though it could use emergency measures to avoid default until about July 8. Obama and members of his economic team have said that failure to approve an increase could have catastrophic consequences for the U.S. economy and financial markets. Reliability Questioned S&P revised the U.S. government’s long-term outlook to negative on concern the White House and Congress will fail to reach agreement on cutting medium- and long-term debt. Some of Obama’s Democratic allies questioned S&P’s reliability, citing the top rating it gave to mortgage-backed securities that later crashed in value and contributed to the 2008 financial crisis. “Given that the Financial Crisis Inquiry Commission called the credit rating companies ‘key enablers of the financial meltdown,’ it’s difficult to know how much credibility S&P should be given,” said Paul Begala, a Democratic strategist who helped to run Bill Clinton ’s first presidential campaign in 1992 and served in the Clinton White House as a political adviser. Members of the so-called Gang of Six, a group of six Democratic and Republican senators who are seeking to negotiate a compromise deficit-reduction plan, said the S&P move shows the markets are watching for signs that policy makers will confront the debt. “If we fail to take this seriously, and if our deficit and debt discussions turn into just another game of political brinksmanship, this could result in the most predictable economic crisis in our history,” Senator Mark Warner of Virginia, the Democratic leader of the group, said in a statement. ‘Debt Crisis’ Senator Tom Coburn of Oklahoma , a Republican member of the group, said the S&P’s change should create a sense of urgency for tackling “our debt crisis.” The White House said yesterday that Vice President Joe Biden will open a round of negotiations with members of Congress on long-term deficit reduction with a meeting at Blair House on May 5. The Obama administration has been bracing for the change in outlook for about two months as S&P reviewed its assessment of U.S. debt. During the period, David Beers, the head of the company’s public finance unit, was in touch with Mary Miller, the assistant Treasury secretary for financial markets, according to a person familiar with the discussions. Deficit Plan About 10 days ago, Treasury Department officials gained a stronger sense that S&P would issue a negative outlook, the person said. That was shortly before the April 13 speech in which Obama presented his deficit plan. While Treasury officials sought to persuade the company that Congress and the administration were determined to reduce the deficit, S&P told the Treasury Department of its final outlook on the afternoon of April 15 and of its plan to make an announcement yesterday. White House and Treasury officials prepared their response over the weekend, seeking to convey a message of optimism without appearing to be in denial about the challenges of reaching an agreement on long-term deficits, said the person familiar with the discussions. Less than half an hour after the S&P announcement, Miller released a statement saying the outlook “underestimates the ability of America’s leaders to come together.” First Since 1996 The announcement was the first time the U.S. credit outlook has been questioned since 1995 and 1996, when a dispute between Clinton and House Speaker Newt Gingrich, a Georgia Republican, led to two government shutdowns. Fitch Ratings put U.S. debt on a “negative ratings watch” in November 1995 until spring 1996, and Moody’s Investors Service put some U.S. government bonds on review for a possible downgrade in January 1996. The S&P 500 Index (SPX) rose 0.1 percent to 1,306.46 at 12:29 p.m., after falling 1.1 percent yesterday. The Dow Jones Industrial Average rose 0.2 percent to 12,222.29, after a 1.1 percent decline yesterday. The yield on the benchmark 10-year Treasury note jumped as high as 3.45 percent yesterday in the minutes after the S&P report, then fell back to 3.37 percent as investors focused on speculation that Greece will be unable to avoid a default, driving them to the relative safety of U.S. debt. In trading today, 10-year yields fell 2 basis points, or 0.02 percentage point, to 3.35 percent at 12:35 p.m. in New York, according to Bloomberg Bond Trader prices. A gauge of the dollar yesterday advanced the most since November against the currencies of major trading partners on increased demand for a refuge as Europe ’s debt crisis outweighed the negative S&P U.S. credit-rating outlook. IntercontinentalExchange’s Dollar Index increased 0.9 percent to 75.508 at 5 p.m. in New York yesterday, from 74.832 on April 15. The gauge tracks the dollar against the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona. The index fell 0.5 percent today to 75.115. The euro rose 0.6 percent to $1.4319 as of 12:38 p.m. Yesterday, the dollar appreciated 1.4 percent to $1.4235 per euro in New York from $1.4430 on April 15. To contact the reporters on this story: Mike Dorning in Washington at [email protected] ; Julie Hirschfeld Davis in Washington at [email protected] To contact the editor responsible for this story: Mark Silva at [email protected]

2011-04-19 00:00:00 UTC

Reliance Fuel Exports Rise 6% on Singapore Gasoline Cargoes

http://www.bloomberg.com/news/2011-04-19/reliance-fuel-exports-rise-6-on-gasoline-shipments-to-singapore.html

B y P r a t i s h N a r a y a n a n

Reliance Industries Ltd. (RIL) , India’s largest listed company, raised fuel exports from the world’s biggest refining complex by 6 percent in the first half of April as demand from Southeast Asia boosted shipments to Singapore. The Mumbai-based company, controlled by billionaire Mukesh Ambani , increased shipments of fuel products from its Jamnagar facility to at least 800,000 metric tons from 755,000 tons in the first 15 days of March, according to ship-tracking data compiled by Bloomberg and vessel fixtures from Clarkson Research Services Ltd. Reliance is exporting more as state-owned rivals such as Indian Oil Corp. and Bharat Petroleum Corp. sell more fuel domestically at government-capped prices while refinery outages in Asia boost demand. Exxon Mobil Corp., the biggest U.S. oil company, shut parts of its Singapore refining complex for nine weeks starting March 9 for maintenance and upgrades, while PT Pertamina stopped fuel production at its Cilacap, Central Java refinery from April 2 to April 8 after a fire broke out at a storage tank. “We are currently in the refinery maintenance season in this region,” said Praveen Kumar , Singapore-based head of South Asia oil and gas at FACTS Global Energy, an industry consultant. “Reliance can bring its products to Singapore, store them and then reship cargoes to other places.” Manoj Warrier, a spokesman for Reliance in Mumbai, didn’t respond to an e-mail seeking comment. Gasoline Shipments Reliance exported at least 540,000 tons of gasoline from Jamnagar in western India during the first 15 days this month, compared with 195,000 tons in the first half of March, according to transmissions captured by AISLive on Bloomberg and data from Clarkson Research, a unit of the world’s biggest shipbroker. At least 42 percent of this month’s gasoline shipments went to Singapore, while at least two cargoes went to the U.S. Gasoline demand in the world’s biggest economy typically peaks in the so-called summer driving season, which lasts from the Memorial Day weekend in late May to the Labor Day holiday in early September. The Stena Paris was hired by Mercuria to transport 35,000 tons of gasoline to Singapore from the port of Sikka near Jamnagar, the Clarkson data show. The vessel sailed from near Sikka in early April and was last tracked off the coast of Singapore, according to ship transmissions captured by Bloomberg. Benchmark 92-RON gasoline declined 2.3 percent to $124.95 a barrel on yesterday, Bloomberg data showed. Nord Observer Gasoil, or diesel, shipments dropped 66 percent to at least 168,060 tons. Reliance doubled fuel exports in the first half of March as the European winter boosted demand for diesel. Destinations for diesel cargoes in April included the Middle East and Africa , the data show. The company also shipped 35,000 tons of naphtha to Japan and 57,000 tons of jet fuel to Europe . The Nord Observer sailed from Sikka to the Saudi Arabian port of Jizan earlier this month, according to ship transmissions. The vessel was hired by Cargill Inc. to transport 40,000 tons of gasoil to the Middle East, the Clarkson data show. The tanker was last tracked heading back to Sikka from Jizan. Gasoil with 0.5 percent sulfur fell 1.5 percent to $135.75 a barrel yesterday, according to data compiled by Bloomberg. All figures from Clarkson are for single-voyage bookings and exclude long-term charters. Shipbrokers aren’t obliged to report charters so the scope of data capture can vary from month to month. Reliance runs two refineries in the western Indian state of Gujarat, which are capable of processing heavier grades of crude. They have a processing capacity of 1.24 million barrels a day, and account for about 1.6 percent of global refining capacity, according to the company’s website . To contact the reporter on this story: Pratish Narayanan in Mumbai at [email protected] To contact the editor responsible for this story: Clyde Russell at [email protected]

2011-04-19 00:00:00 UTC

PNB Bank and OBC Bank CDs Issued:India Money Market

http://www.bloomberg.com/news/2011-04-19/pnb-bank-and-obc-bank-cds-issued-india-money-market.html

B y S h r a d d h a K o t h a r i

Following is a table showing certificate of deposits issued by Indian banks.The data has been provided by Trust Financial Consultancy Services,NVS Brokerage Ltd,Derivium Tradition Securities(India)Pvt MATA Securities and SPA Securities Ltd Generated by Bloomberg Publisher WEB Service Provider ID: 340cfa20e4a44bc0afe90f874550e1a2 -0- Apr/19/2011 13:09 GMT

2011-04-19 00:00:00 UTC

‘Runaway CEO Pay’ Could Support 102,000 Jobs, AFL-CIO Says

http://www.bloomberg.com/news/2011-04-19/-runaway-ceo-pay-could-support-102-000-u-s-jobs-afl-cio-says.html

B y S t e p h a n i e A r m o u r

Chief executive officers at 299 U.S. companies had combined compensation of $3.4 billion in 2010, enough to pay more than 102,000 workers, the AFL-CIO labor federation reported in a study. CEOs at companies including Viacom Inc. (VIA/B) and Oracle Corp. (ORCL) averaged $11.4 million in total compensation in 2010, according to the report, which used data from website salary.com. Viacom’s CEO Philippe P. Dauman earned $84.5 million last year, the highest among the executives, according to the report . “The disparity between CEO and workers’ pay has continued to grow to levels that are completely stunning,” union President Richard Trumka said today at a Washington news conference. He said the U.S. is facing “runaway CEO pay.” The AFL-CIO, with 12.2 million members, has led U.S. labor unions in criticizing the compensation of executives. Trumka was at the head of a march on Wall Street last year to demand taxes on the bonuses of executives at banks including Goldman Sachs Group Inc. (GS) , the fifth-biggest U.S. bank. Trumka, 61, had total compensation of $283,340, including $246,827 in salary, according to a 2010 union filing with the Labor Department. Service Employees International Union President Mary Kay Henry had compensation of $253,660, including $213,801 in salary, according to a separate filing. Trumka said since 1959, labor leaders have had information about their pay available. “My ratio to employees here, it’s 4- to-1,” he said. “That’s not bad.” ‘Say on Pay’ Pay for corporate executives may face limits this year because the law overhauling financial regulations gave shareholders a “say on pay” vote on the amount given to top company management, according to the AFL-CIO report. While the votes aren’t binding, they will encourage boards to enact compensation reforms, it said. The 2010 Dodd-Frank Act requires the compensation committees of a company’s board be composed of independent directors, and the AFL-CIO report said shareholders must be given an advisory vote on the payments made to executives when they are fired or resign. Trumka urged lawmakers to resist Republican efforts aimed at weakening or repealing the law’s pay-disclosure requirements. A Republican proposal would strip a provision that requires publicly traded companies to report the ratio of pay between the CEO and the median pay of their employees. ‘Business As Usual’ Critics are “trying to do everything they can to dilute the law and go back to business as usual for Wall Street ,” he said. The average pay for CEOs of companies in the Standard & Poor’s 500 Index is enough to cover the salaries of 28 U.S. presidents or more than 700 minimum-wage workers, according to the report. The combined compensation would support 102,325 jobs paying the median wage of all workers, the group said. The AFL-CIO took aim at payments for departing executives called golden parachutes, corporate jet travel, preferential pensions and perks unrelated to performance. Dauman, 54, more than doubled his compensation from $34 million in 2009, based on U.S. Securities and Exchange Commission rules, according to a regulatory filing. The company’s brands include MTV Networks and Paramount Pictures . Occidental Petroleum Corp. (OXY) CEO Ray R. Irani, 76, received compensation valued at $76 million in 2010, followed by Oracle Corp. CEO Lawrence Ellison, 66, who received $70 million. Occidental is an oil and gas exploration and production company, and Oracle provides integrated business software and hardware systems. The union’s website links to a database, letting visitors search for a CEO’s total compensation and compare it to their earnings. The union is urging visitors to write lawmakers in opposition to revising the Dodd-Frank law. To contact the reporter on this story: Stephanie Armour in Washington at [email protected] To contact the editor responsible for this story: Larry Liebert at [email protected]

2011-04-19 00:00:00 UTC

Gold Erases Earlier Drop, Advances to $1,496.88 an Ounce in London Trading

http://www.bloomberg.com/news/2011-04-19/gold-erases-earlier-drop-advances-to-1-496-88-an-ounce-in-london-trading.html

B y M a r i a K o l e s n i k o v a

Gold for immediate delivery gained $1.57, or 0.1 percent, to $1,496.88 an ounce at 10:07 a.m. in London , after falling as much as 0.5 percent in earlier trading. To contact the editor responsible for this story: Maria Kolesnikova at [email protected]

2011-04-19 00:00:00 UTC

Berkshire, Buffett Sued by Shareholder Over Sokol's Lubrizol Trading Gains

http://www.bloomberg.com/news/2011-04-19/berkshire-hathaway-buffett-sokol-sued-over-lubrizol-profits.html

B y P h i l M i l f o r d

Berkshire Hathaway Inc. (BRK/A) and Chief Executive Officer Warren Buffett were sued by a shareholder over trades in Lubrizol Corp. (LZ) by former Berkshire manager David Sokol. Berkshire investor Mason Kirby, suing to recover damages for the company, contends that Sokol, also a defendant, hurt the firm by taking a stake in Lubrizol before recommending to Buffett that Berkshire buy the company, according to papers made public today in Delaware Chancery Court in Wilmington. “Sokol knew that Buffett would closely consider and likely take his recommendation,” Kirby said. “As a result of Sokol’s unethical behavior, Berkshire suffered significant reputational losses and other damages.” Sokol bought 96,060 shares of Lubrizol in early January before recommending that Omaha, Nebraska-based Berkshire acquire the company, Buffett said in a March statement announcing Sokol’s resignation. Buffett didn’t immediately respond to a request for comment e-mailed to his assistant, Carrie Kizer . Ann Thelen, a spokeswoman for Berkshire’s MidAmerican Energy Holdings Co., where Sokol remains chairman until April 21, didn’t immediately return a call seeking comment from Sokol. Kirby alleges that Buffett and Sokol, “working in concert,” violated duties to shareholders “and put the company at risk for a potential adverse SEC action and negative credit rating.” The case is Kirby v. Sokol, CA6392, Delaware Chancery Court (Wilmington). To contact the reporter on this story: Phil Milford in Wilmington, Delaware, at [email protected] To contact the editor responsible for this story: Michael Hytha at [email protected] .

2011-04-19 00:00:00 UTC

Congolese Opposition Party Changes Leadership Before Elections

http://www.bloomberg.com/news/2011-04-19/congolese-opposition-party-changes-leadership-before-elections.html

B y M i c h a e l J . K a v a n a g h

The political party led by former Democratic Republic of Congo presidential candidate Jean-Pierre Bemba, who is under indictment at the International Criminal Court , changed its leadership ahead of elections this year. Thomas Luhaka, a lawmaker, took over as secretary-general of the Movement for the Liberation of Congo, or MLC, from Francois Mwamba, who ran the party after Bemba’s transfer to The Hague, Luhaka said in a phone interview today. “We need to restructure the party before the upcoming deadlines for the elections,” Luhaka said from Kinshasa, the capital. The MLC hasn’t yet decided whether it will nominate its own presidential candidate or support one from another party in a vote currently scheduled for November, he said. Bemba was runner-up to Joseph Kabila in Congo’s 2006 presidential elections, the country’s first in more than four decades. Supporters of the former rebel leader clashed with Kabila’s soldiers in the streets of Kinshasa in 2007, leaving hundreds dead. Bemba is facing charges at the ICC of leading militias who murdered and raped civilians in neighboring Central African Republic in 2002 and 2003. He has pleaded not guilty. The MLC informed Bemba of the leadership change “and he is in agreement,” Luhaka said. To contact the reporter on this story: Michael J. Kavanagh in Kinshasa at [email protected] . To contact the editor responsible for this story: Antony Sguazzin at [email protected] .

2011-04-19 00:00:00 UTC

Oilseed Output to Rise 1.2% as Farmers Seed More, Oil World Says

http://www.bloomberg.com/news/2011-04-19/oilseed-output-to-rise-1-2-as-farmers-seed-more-oil-world-says.html

B y T o n y C . D r e i b u s

Global oilseed production will rise 1.2 percent this year after farmers expanded planting, mostly in South America , the U.S. and India , on higher prices, according to Oil World, a researcher based in Hamburg. Output of soybeans, cottonseed, ground nuts, sunflower seed, rapeseed, palm kernels and copra from coconuts will total 438.3 million metric tons, Oil World said in a report today. That’s up from 433 million tons a year earlier and last month’s estimate of 435.3 million tons, it said. Soybean output will rise 0.6 percent to a record 261.3 million tons, Oil World said. “Farmers sizably expanded the area under oilseeds,” Oil World said. “Most of the upward revision from our previous estimates occurred in soybeans, primarily in South America.” Soybean futures have gained 37 percent in the past year, partly because of increased demand from China , the biggest consumer of the oilseed. Soybean production in Brazil , the world’s third-biggest shipper behind the U.S. and Argentina , will rise 4.8 percent to 72 million tons in 2011, Oil World said. Southern Hemisphere output will increase 2.2 percent from last month’s estimate to 134.3 million tons, according to the report. Wet Weather Some U.S. farmers who planned to seed more corn after prices more than doubled in the past year rather than soybeans may be hindered by weather, Oil World said. Wet weather in the northern Plains may prevent growers from seeding corn who will then switch to soybeans that can be planted later, it said. “It is now considered possible that farmers will try to plant a larger than intended area with corn at the expense of soybeans,” Oil World said. “This will only be possible if weather conditions improve in the main U.S. growing areas. It was too cold and wet in the first half of April, delaying fieldwork and corn plantings.” Global soybean stockpiles will gain 3.3 percent to 68.6 million tons, Oil World said. Soybean crush, or processing into meal and oil, will surge 9.1 percent to 226.3 million tons through August, according to the report. “World soybean crushings will show an extraordinary increase,” Oil World said. “It should be noted, however, that most of this already occurred in the first half of the season owing to insufficient supplies of other oilseeds and products as well as strong demand.” To contact the reporter on this story: Tony C. Dreibus in London at [email protected] . To contact the editor responsible for this story: Claudia Carpenter at [email protected] .

2011-04-19 00:00:00 UTC

Nestle Timeline on L’Oreal May Concern Investors, Analyst Says

http://www.bloomberg.com/news/2011-04-19/nestle-timeline-on-l-oreal-may-concern-investors-analyst-says.html

B y T o m M u l i e r

Nestle SA (NESN) ’s intention to wait until 2014 before deciding the future of its L’Oreal SA (OR) stake may cause investors in the world’s largest food company to worry that it will acquire the cosmetics maker, an analyst at Sanford C. Bernstein said. Nestle said April 14 it will decide what to do with its 30 percent L’Oreal stake in 2014, the year that restrictions on selling the holding to a third party are lifted. Andrew Wood , an analyst at Sanford C. Bernstein, said that makes him “slightly more wary” that Nestle may bid for the remainder, in a note to clients dated yesterday. “The prospect of a value-destroying, risky, strategically inconsistent deal, made against the wishes of most investors, within three years, is hardly going to be forgotten in the meantime,” the New York-based analyst wrote. Nestle Chairman Peter Brabeck-Letmathe said taking three years to decide will give the company time to reflect on its strategy. “Everyone can relax,” Roddy Child-Villiers, head of investor relations at the Vevey, Switzerland-based company, said on April 15. Nestle bought a stake in Paris-based L’Oreal in 1974 from the Bettencourt family, which still owns about 31 percent. The maker of KitKat bars has agreed with L’Oreal’s 88-year-old main shareholder, Liliane Bettencourt, not to raise the stake until six months after her death. L’Oreal has a market value of about 50 billion euros ($71 billion), compared with 181.9 billion Swiss francs ($203 billion) for Nestle. Nestle and the Bettencourt family gave each other a right of first refusal over their stakes that runs through April 29, 2014, according to their agreement. After that, Nestle would be able to sell its stake to a third party without offering it to the Bettencourt family. The food company is probably considering selling the stake or holding it, David Hayes , an analyst at Nomura, wrote in an April 15 note to investors. To contact the reporter on this story: Tom Mulier in Geneva at [email protected] . To contact the editor responsible for this story: Celeste Perri at [email protected] .

2011-04-19 00:00:00 UTC

Record Streak for S&P 500 Earnings May Rest With Momentum Kings Apple, GE

http://www.bloomberg.com/news/2011-04-19/record-streak-for-s-p-500-earnings-may-rest-with-momentum-kings-apple-ge.html

B y I n y o u n g H w a n g

Investors counting on a record streak of higher-than-forecast profits to keep driving share prices may get clues from 79 companies reporting this week with the best history of earnings surprises. Apple Inc. (AAPL) , maker of the iPhone, and General Electric Co. (GE) , the world’s biggest builder of jet engines , are among companies that have topped analysts’ projections in the last four quarters and had estimates boosted since February, according to data compiled by Bloomberg. Standard & Poor’s 500 Index companies will probably report average net income growth of 10 percent in the period, data compiled by Bloomberg show. “You can call it momentum, progress or improvement, but there’s always interest in companies that can do better and better each quarter, come up with something new, pull a rabbit out of the hat,” said John Carey , a Boston-based money manager at Pioneer Investments, which oversees about $250 billion. “At the same time, there were some unusual, striking events in the first quarter that upset and distracted investors.” Companies in the S&P 500 have beaten analyst earnings estimates for eight straight quarters, the most since at least 2006, helping propel the index as much as 99 percent from the market bottom on March 9, 2009, data compiled by Bloomberg show. The benchmark gauge for U.S. stocks has risen 3.8 percent since it fell to its low this year of 1,256.88 on March 16, following Japan ’s biggest earthquake on record and higher oil prices spurred by unrest in Middle East and northern Africa . ‘Challenging’ Earnings Season The 20 companies in the S&P 500 that have reported since April 11 have seen earnings-per-share growth of 11 percent, according to data compiled by Bloomberg. They have beaten analyst predictions by 0.7 percent, with 75 percent of the companies announcing positive surprises. Seventy-nine U.S. companies have exceeded estimates for four quarters and had forecasts revised upward, according to data compiled by Bloomberg. They all have a market value of greater than $100 million, including restaurant chain Chipotle Mexican Grill Inc. (CMG) , chemical maker DuPont Co. and private-equity firm Blackstone Group LP. (BX) A basket of stocks in the S&P 500 that have met the criteria gained almost twice as much as the benchmark equity measure in the past year, data compiled by Bloomberg show. Denver-based Chipotle, Wilmington, Delaware-based DuPont and Blackstone, which is based in New York, have all outperformed the S&P 500 by at least 12 percentage points in the past year. Apple Profits Apple’s profit in the quarter ended Dec. 25 jumped 78 percent, as sales increased 71 percent to a record $26.7 billion. Analysts estimate Cupertino, California-based Apple will have adjusted second-quarter profit of $5.39 a share on sales of $23.4 billion when it reports tomorrow, according to data compiled by Bloomberg. Profit at GE in Fairfield, Connecticut , rose 5.6 percent to $11.64 billion from $11.03 billion last year. Eleven analysts surveyed by Bloomberg forecast earnings for the first quarter, which ended March 11, will be 28 cents a share on average, compared with a 21-cent profit in the year-ago period. GE reports earnings on April 21. First-quarter earnings may be “challenging” because of rising commodity prices and slowing economic growth, said Michael Holland , who oversees more than $4 billion as chairman of Holland & Co. in New York. Crude oil settled at $112.79 a barrel, a 30-month high, on April 8. Gold rose to a record $1,498.60 an ounce after Standard & Poor’s revised its U.S. credit outlook to negative yesterday. The International Monetary Fund lowered its U.S. growth forecast for 2011 last week to 2.8 percent from 3 percent, citing higher commodity prices and sluggish jobs growth, and downgraded its outlook for Japan. Signals From Alcoa Alcoa Inc. (AA) ’s April 11 quarterly report signaled gains would be harder to come by this year, according to Bespoke Investment Group LLC. Alcoa tumbled 6 percent and the benchmark measure of U.S. shares lost 0.8 percent the day after the biggest U.S. aluminum producer estimated sales that trailed estimates. The S&P 500 has lost an average of 5.1 percent since 2001 over the remainder of earnings seasons when Alcoa slumped 5 percent or more, and the benchmark gauge for U.S. stocks dropped at least 0.5 percent on the same day, according to Harrison, New York-based research firm Bespoke in a report last week. Alcoa, the first company in the Dow Jones Industrial Average to publish quarterly results, beat earnings projections for four quarters and had estimates revised higher by analysts before it announced results last week. While the Pittsburgh- based company reported adjusted per-share profit that exceeded predictions for the fifth straight quarter, the stock slumped after sales missed estimates. Metrics “People had their metrics lined up and the company underperformed,” Holland said. “It isn’t simply the earnings- per-share numbers. It’s revenue and guidance too. To a nervous market, if a company underperforms in any of these categories, you see what happens with Alcoa.” The S&P 500 rallied 5.8 percent in the six weeks after Alcoa’s fourth-quarter profit report topped projections, data compiled by Bloomberg show. More than 67 percent of companies in the gauge exceeded estimates in the period, the eighth straight quarter of positive surprises. “There’s no question that in the short-term, current expectations are instrumental in pushing a stock up or down,” said Holland, who oversees more than $4 billion in New York . “If a company exceeds expectations, near-term traders trade off that.” To contact the reporter on this story: Inyoung Hwang at [email protected] . To contact the editor responsible for this story: Nick Baker at [email protected] .

2011-04-19 00:00:00 UTC

Northern Irish Tax Cut Would Help Beat Terrorism, Paterson Says

http://www.bloomberg.com/news/2011-04-19/northern-irish-tax-cut-would-help-beat-terrorism-paterson-says.html

B y C o l m H e a t l e y

Northern Ireland is counting on reducing its company tax rate to the same level as its southern neighbor to help boost the flagging economy and stifle a recurrence of terrorist activity in the province. Cutting the rate to the Republic of Ireland’s 12.5 percent from the U.K.-wide 28 percent is among measures put forward in a consultation paper by Owen Paterson, the secretary of state in the British government who is responsible for Northern Ireland. “We need to do something really radical to help revive the economy,” Paterson said in a telephone interview. Better economic prospects would “take away any incentive for people to join” dissidents, he said. Northern Ireland holds elections on May 5 for its power- sharing assembly after the economy shrank by 5 percent over the past three years and unemployment doubled. Voting takes place amid a growing threat from dissident republicans still using terrorism to push for a united Ireland six years after the Irish Republic Army gave up their weapons. Members of one group killed a policeman, Ronan Kerr, in a car bomb on April 2. Yesterday, police said a bomb left in a wooded area of south Belfast was an attempt to kill officers lured to the area with a hoax call. The device didn’t explode. “Stability will keep them in check but there will always be poor young people,” Peter Shirlow , a politics lecturer at Queen’s University in Belfast , said in an interview. “Reviving the economy shouldn’t be overstated. The dissidents are ideologues, militarists. Their goal is about keeping the flame of republicanism, as they see it, alive.” Northern Squeeze The province is being squeezed by government budget cuts in the rest of the U.K. to the east and the collapse of Ireland’s economy to the south. Northern Ireland is more dependent on public jobs than anywhere else in the U.K., and Paterson said 77.6 percent of spending is derived from the state. “The economy survives here on public spending,” Paterson said on April 13. “That is simply unsustainable.” Last month, Patterson opened a public consultation on reducing company tax further than the U.K. Treasury is currently proposing. It would allow the assembly in Belfast to decide on the level rather than the government in London . “The choice of setting the rate would be in local hands,” Patterson said. The consultation period ends in June and the U.K. government will discuss it afterwards, he said. More Autonomy The U.K.’s corporate tax rate will fall to 26 percent this month and by one percentage point every year for the next three years, Chancellor of the Exchequer George Osborne told parliament in his budget speech on March 23. The Scottish National Party wants to lower Scotland ’s company tax rate further to make the country more competitive, First Minister Alex Salmond said in an interview last month. The SNP runs the devolved government in Edinburgh and is seeking re- election on May 5 to push for more autonomy. “I support Northern Ireland getting control of corporation tax ,” Salmond said at the SNP headquarters in Edinburgh. “Once the principle is conceded of differential rates then it’s very difficult” to say no to Scotland. “If we win the election then this will happen,” he said. Northern Ireland’s assembly was revived in 2007 after the IRA decommissioned its weapons. It is headed by the pro-U.K. Democratic Unionist Party and pro-united Ireland Sinn Fein party, one-time allies of the IRA. Top Priorities First Minister Peter Robinson said boosting the economy and defeating the dissidents are his top priorities. They are trying to reignite a conflict that claimed 3,500 lives before largely ending in 1998 with a peace deal. Terrorists have killed two British soldiers and two policemen since ramping up their campaign in 2009. A week after the murder of policeman Kerr, dissidents left a 500-pound bomb on the border with Ireland. Activity by armed dissident groups soared by 60 percent in 2010 from a year earlier, according to Justice Minister David Ford. They are funded by alcohol and cigarette smuggling, drugs and racketeering, Paterson said. “We are in a very different place from where we were 30 or 40 years ago,” said Patterson. “But we need to rebalance the economy and that will take a generation.” To contact the reporter on this story: Colm Heatley in Belfast at [email protected] To contact the editor responsible for this story: Rodney Jefferson at [email protected]

2011-04-19 00:00:00 UTC

Udvar-Hazy's Air Lease Raises $802.5 Million in Jet Industry's Biggest IPO

http://www.bloomberg.com/news/2011-04-19/udvar-hazy-s-air-lease-raises-802-5-million-in-jet-industry-s-biggest-ipo.html

B y S u s a n n a R a y

Air Lease Corp., the jet-leasing company led by Steven Udvar-Hazy, raised $802.5 million in the industry’s largest U.S. initial public offering after increasing the number of shares 21 percent. The Los Angeles-based company sold 30.3 million shares at $26.50 each yesterday, according to data compiled by Bloomberg. It had offered 25 million shares at $25 to $28, according to a filing with the U.S. Securities and Exchange Commission. The underwriters may exercise an overallotment option to buy as many as 4.54 million additional shares, Bloomberg data show, compared with the 3.75 million listed in the prospectus. Udvar-Hazy, 65, is drawing on four decades of relationships with airlines, planemakers and bankers to recreate some of what he walked away from in 2010 when he left American International Group Inc. (AIG) As chairman and chief executive officer of Air Lease, he has built a fleet of 49 aircraft, with orders for more than 150 additional planes since founding the company 14 months ago. Air Lease’s fleet doesn’t have the “legacy challenges” that saddle competitors, Udvar-Hazy said in a presentation broadcast online by RetailRoadshow. The company’s jets have a weighted average age of 3.5 years, compared with 5.4 years for competitor AerCap Holding NV’s 350 planes, 8.1 years for Fly Leasing Ltd. (FLY) ’s 59 and 11 years for Aircastle Ltd. (AYR) ’s 136 aircraft, according to company filings. Air Lease doesn’t plan to pay a dividend, according to its prospectus, while Aircastle and Fly do. Industry Growth Aircraft leasing is growing in popularity as airlines seek flexibility within the cyclical air-travel industry as well as a way to avoid burdening their balance sheets with the billions of dollars required to fund plane purchases. In 1990, about 10 percent of the world’s commercial planes were leased, and by 2015 that proportion will reach 35 percent, according to estimates by industry-data providers Ascend and Avitas cited by Air Lease. Still, the three aircraft lessors that went public in the two years before the recession hit AerCap, Aircastle and Fly all were trading at least 37 percent below their $23 initial share price as of April 15. The shares, trading on the New York Stock Exchange under the symbol AL, climbed $1.03, or 3.9 percent, to $27.53, at 10:03 a.m. in New York Stock Exchange composite trading. JPMorgan Chase & Co., Credit Suisse AG, Barclays Plc, FBR Capital Markets, RBC Capital Markets and Wells Fargo & Co . led the offering. To contact the reporter on this story: Susanna Ray in Seattle at [email protected] To contact the editor responsible for this story: Jennifer Sondag at [email protected] .

2011-04-19 00:00:00 UTC

U.S. Natural Gas Stockpiles Probably Rose 3.2% on Warmer Weather

http://www.bloomberg.com/news/2011-04-19/u-s-natural-gas-stockpiles-probably-rose-3-2-on-warmer-weather.html

B y G e n e L a v e r t y

U.S. natural-gas supplies probably rose 3.2 percent last week as heater use in the North and air conditioning in the South spurred demand, according to analyst estimates compiled by Bloomberg before a government report on April 21. Inventories rose 52 billion cubic feet to 1.659 trillion in the week ended April 15, according to the median of seven estimates. The five-year average stockpile change for the week is an increase of 34 billion. Supplies jumped 75 billion cubic feet a year earlier. A storm system that swept across the U.S. North last week brought snow to the Great Plains while temperatures rose in Southern states. The range of temperatures was enough to support prices, said Kyle Cooper , director of research at IAF Advisors in Houston who expects an increase of 52 billion cubic feet. “The overall temperature profile has been relatively bullish,” Cooper said. “From that perspective, I think the prices would have been quite a bit lower if it weren’t for Mother Nature. As long as Mother Nature stays bullish we’ll probably find some support.” The stockpile estimates ranged from increases of 47 billion to 65 billion cubic feet. The Energy Department is scheduled to release its weekly report on gas in storage April 21 at 10:30 a.m. in Washington . Cooling degree days in South Atlantic states in the week ended April 14 were more than double normal levels, according to the National Oceanic and Atmospheric Administration . Degree days are used as a measure of demand for power. Temperatures in Houston reached 88 degrees Fahrenheit (31 Celsius) on April 11, 10 degrees higher than normal, according to State College , Pennsylvania-based AccuWeather Inc. Supplies Last Week Stockpiles rose 28 billion cubic feet to 1.607 trillion in the week ended April 8, last week’s report showed. Analysts expected an increase of 35 billion. Gas on the New York Mercantile Exchange rose 1.7 percent to $4.212 per million British thermal units on April 14, after last week’s report was released. Prices have risen 1.7 percent since then, gaining 12.4 cents, or 3 percent, to $4.262 today. The number of rigs drilling for natural gas in the U.S. slipped four to 885 last week, according to Houston-based Baker Hughes Inc. The gas rig count has slipped 11 percent since touching 992 in the week ended Aug. 13. A decrease in imports of liquefied natural gas and higher exports to Mexico may pare additions to inventories, said Stephen Smith , an energy analyst and president of Stephen Smith Energy Associates in Natchez, Mississippi , who estimates that stockpiles grew by 47 billion cubic feet last week. “ Japan is sucking up any spare LNG that’s sitting around,” Smith said. “Mexico is also reducing LNG imports while increasing imports of cheaper U.S. pipeline gas.” To contact the reporter on this story: Gene Laverty in Calgary at [email protected] . To contact the editor responsible for this story: Dan Stets at [email protected] .

2011-04-19 00:00:00 UTC

U.S. Stock Futures Erase Losses; Texas Instruments Decreases on Forecast

http://www.bloomberg.com/news/2011-04-19/u-s-stock-futures-erase-losses-texas-instruments-decreases-on-forecast.html

B y W i l l H a d f i e l d

U.S. stock futures pared their losses as investors awaited a report that may show housing starts climbed in March, offsetting Texas Instruments Inc.’s forecast that fell short of some analysts’ estimates. Texas Instruments, the second-biggest U.S. chipmaker, lost 2.3 percent in early New York trading. Exxon Mobil Corp. and ConocoPhillips declined in Germany as crude oil retreated for a second day. Standard & Poor’s 500 Index futures expiring in June rose less than 0.1 percent to 1,301.2 at 10:58 a.m. in London , after the benchmark gauge dropped 1.1 percent yesterday. Dow Jones Industrial Average futures climbed 0.1 percent to 12,148 today, while Nasdaq-100 Index futures advanced less than 0.1 percent to 2,290.75. To contact the editor responsible for this story: Will Hadfield at [email protected]

2011-04-19 00:00:00 UTC

EDF Energies Nouvelles, Esker, L’Oreal: French Equity Preview

http://www.bloomberg.com/news/2011-04-19/edf-energies-nouvelles-esker-l-oreal-french-equity-preview.html

B y R u d y R u i t e n b e r g

The following is a list of companies whose shares may have unusual price changes in Paris. Stock symbols are in parentheses after company names. Share prices are from the last close. France ’s CAC 40 Index (CAC) gained 0.7 percent to 3,908.58 in Paris. The SBF 120 Index (SBF120) also rose 0.7 percent. Aufeminin.com SA (FEM) : The operator of websites targeted at women said first-quarter sales rose 11 percent to 9 million euros and net income advanced 1.7 percent to 1.9 million euros. The shares rose 2.1 percent to 19.59 euros. EDF Energies Nouvelles SA (EEN) : The power-generation company said its Mexican unit agreed to buy two wind-energy projects with a capacity of 324 megawatts. The shares slipped less than 0.1 percent to 40.17 euros. Esker SA (ALESK) The provider of business software to manage electronic documents said first-quarter sales rose 13 percent to 8.39 million euros. The shares declined 1.2 percent to 6.74 euros. HF Co. (HF) : The maker of television receivers and Internet-access equipment said first-quarter sales rose 0.3 percent to 36 million euros. The shares fell 6.7 percent to 15.54 euros. Linedata Services (LIN) : France’s largest maker of financial software for leasing and credit companies said first- quarter sales fell 7.5 percent to 31.7 million euros. The shares rose 0.7 percent to 12.70 euros. L’Oreal SA (OR) : The world’s largest cosmetics maker, reported first-quarter sales rose 9.3 percent to 5.16 billion euros, beating analysts’ estimates as customers bought more Maybelline makeup and Ralph Lauren fragrances. The shares rose 1.8 percent to 83.20 euros. PCAS SA (PCA FP): The chemical maker said first-quarter sales climbed 6.3 percent to 44.05 million euros. The shares fell 0.4 percent to 2.63 euros. Spir Communication (SPI) : The publisher of free weekly newspapers and real estate magazines said first-quarter sales rose 3.9 percent to 146.7 million euros. The shares gained 0.6 percent to 40.51 euros. Virbac SA (VIRP) : The maker of veterinary vaccines and drugs said first-quarter sales rose 18 percent to 159.9 million euros. The shares rose 1 percent to 117.30 euros. To contact the reporter on this story: Rudy Ruitenberg in Paris at [email protected] . To contact the editor responsible for this story: Vidya Root at [email protected]

2011-04-19 00:00:00 UTC

Allstate Says Wilson’s Pay Is Justified as Insurer Prepares for Proxy Vote

http://www.bloomberg.com/news/2011-04-19/allstate-says-wilson-s-pay-is-justified-as-insurer-prepares-for-proxy-vote.html

B y A n d r e w F r y e

Allstate Corp. (ALL) , the biggest publicly traded U.S. home and auto insurer, told a proxy advisory firm that Chief Executive Officer Thomas Wilson ’s pay last year was justified as it braced for a vote on compensation. “Our compensation program is overseen by our independent board members and should be supported,” Northbrook, Illinois- based Allstate said in a letter to Institutional Shareholder Services Inc., disclosed today in a regulatory filing. The methodology used by ISS to value Wilson’s stock options “undermines the credibility of its analysis and vote recommendations and is potentially misleading to investors.” Allstate is giving shareholders a non-binding vote on executive compensation. The company said it followed accounting guidelines of the Securities and Exchange Commission when disclosing Wilson’s pay for last year at $9.3 million, a 12 percent decline from 2009. According to the ISS methodology, his compensation rose 45 percent to $11.9 million, Allstate said. Financial companies are giving shareholders a greater voice in executive compensation after the Dodd-Frank Wall Street reform act became law last year. Proxy advisory firms like ISS monitor corporate governance at public companies and make recommendations on how shareholders should vote. “Investors that rely upon ISS may mistakenly believe an increase occurred in our chief executive officer’s compensation when, in fact, it decreased,” Allstate said. Ted Allen, a spokesman for ISS, said that the proxy- advisory service was reviewing the letter and that it would consider Allstate’s concerns when producing its final report. “As a matter of courtesy to any S&P 500 company that wants to review our analysis before it goes out, we will provide them that opportunity,” Allen said in a phone interview. “We generally do this as a means of ensuring factual accuracy.” Allstate is among several companies that requested to see the analysis in advance of publication, he said. To contact the reporters on this story: Andrew Frye in New York at [email protected] . To contact the editor responsible for this story: Dan Kraut at [email protected]

2011-04-19 00:00:00 UTC

Cerberus's NewPage Said to Work With Restructuring Firms as Apollo Circles

http://www.bloomberg.com/news/2011-04-19/cerberus-s-newpage-said-to-work-with-lazard-fti-dewey-on-restructuring.html

B y J o n a t h a n K e e h n e r , K r i s t a G i o v a c c o a n d C r i s t i n a A l e s c i

NewPage Corp. is working with advisers to help restructure its debt as owner Cerberus Capital Management LP seeks to fend off distressed investors, including Apollo Global Management LLC. Lazard Ltd. (LAZ) , FTI Consulting Inc. (FCN) and law firm Dewey & LeBoeuf LLP are advising Miamisburg, Ohio-based NewPage, according to three people with knowledge of the matter, who declined to be identified because the talks are private. Leon Black ’s Apollo and Avenue Capital Group, run by Marc Lasry , hold more than $400 million of NewPage’s $806 million of second-lien bonds, which may be converted to equity if the company can’t meet debt payments, two of the people said. NewPage is attempting to cut costs and reduce debt by selling assets after demand for coated-paper declined since 2008. “The second-liens are definitely in distressed territory and indicate a restructuring needs to happen,” said Rahul Gandhi , an analyst at debt-research firm CreditSights Inc. Amber Garwood, a spokeswoman for NewPage, and representatives for Cerberus, Apollo, Avenue, Lazard, FTI and Dewey & LeBoeuf declined to comment. NewPage’s 10 percent second-lien notes due May 2012 fell 0.8 cent to 57.4 cents on the dollar as of 9:55 a.m. in New York , according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt has declined 3.6 cents since April 15 when NewPage said it was replacing its chief financial officer. The securities are down from 70 cents in March, Trace data show. Paper Demand The company’s $1.77 billion of 11.375 percent bonds due in December 2014 dropped to 99.4 cents from 100.75 cents on the dollar since NewPage announced the management change, Trace data show. Volatility will continue in the bonds until Apollo “gets its chance to force” NewPage “into a restructuring and gain control of the equity through the process,” London-based Gandhi wrote in an April 19 report. NewPage’s capital structure is “stressed” and about $1 billion over-levered, said Ed Sustar, a credit analyst for Moody’s Investors Service. “The issue is that overall demand for paper dropped in 2008 and there continues to be a long-term sector decline with the migration from print to digital,” said Sustar, who is based in Toronto. “Companies are shutting down mills to keep supply and demand in balance, but prices are not yet at levels to allow them to generate enough money to make a profit.” Cerberus took control of NewPage in 2005 when it bought MeadWestvaco Corp.’s paper business for $2.3 billion. An affiliate of Cerberus provided $415 million to NewPage, according to a statement at the time. “Cerberus may try to preserve value and appease Apollo and Avenue through a rights offering for the second-lien,” said Amer Tiwana, an analyst at CRT Capital Group LLC in Stamford , Connecticut . “Given that their equity is relatively worthless, Cerberus’s only way of keeping control may be through ownership of the second-lien which could be converted into new equity.” To contact the reporters on this story: Jonathan Keehner in New York at [email protected] ; Krista Giovacco in New York at [email protected] ; Cristina Alesci in New York at [email protected] To contact the editors responsible for this story: David Scheer at [email protected] ; Faris Khan at [email protected]

2011-04-19 00:00:00 UTC

News Corp. Said to Consider Bid for Formula One Grand Prix Racing Series

http://www.bloomberg.com/news/2011-04-19/news-corp-said-to-consider-bid-with-partners-for-formula-1-racing-series.html

B y R o n a l d G r o v e r

News Corp. (NWSA) , the media company controlled by Rupert Murdoch, is considering a bid for the Formula One race car series, according to a person with knowledge the situation. News Corp., owner of cable-television channels including Speed, would only bid for Formula One with partners, said the person, who wasn’t authorized to speak publicly. The New York- based company has held talks with people associated with Formula One car manufacturers, and with Mexican billionaire Carlos Slim, Sky News reported earlier. Formula One racing includes Grand Prix races in Monaco and Bahrain. News Corp.’s interest is in the early stages and the company has yet to contact Formula One’s owner, the London-based private equity firm CVC Capital Partners , the person said. Julie Henderson , a spokeswoman for News Corp., declined to comment, as did Arturo Elias, a spokesman for Slim. News Corp. declined 11 cents to $16.87 in Nasdaq composite trading today. The class A shares have gained 16 percent this year. To contact the reporter on this story: Ronald Grover in Los Angeles at [email protected] To contact the editor responsible for this story: Anthony Palazzo at [email protected]

2011-04-19 00:00:00 UTC

Royal-Wedding Protest Bid Is Lodged by Muslim Anti-War Group

http://www.bloomberg.com/news/2011-04-19/royal-wedding-protest-bid-is-lodged-by-muslim-anti-war-group.html

B y K i t t y D o n a l d s o n

A Muslim group that campaigns against British military involvement in Afghanistan applied for permission to protest outside Westminster Abbey when Prince William gets married there on April 29, London’s police said. “One of the biggest advocates of British imperialism, Flight Lieutenant Prince William, wishes to enjoy an extravagant wedding ceremony, ironically at the expense of the taxpayer,” Muslims Against Crusades said on its website. “His direct involvement with the murderous British military and eagerness to inherit the reins of a kingdom built on blood and colonialism clearly demonstrate what type of legacy he wishes to leave.” Prince William, the second-in-line to the British throne, will marry Kate Middleton next week in a ceremony that will attract thousands of spectators in the streets between the Abbey and Buckingham Palace , along which the newly-weds will drive in a horse-drawn carriage. The U.K. government says it expects 2 billion people around the world to watch on television. The police are in discussions about preventing demonstrations in London on the day, a spokesman who declined to be identified in line with the force’s rules said by telephone today. All protests along the route of the wedding are banned. The English Defence League , which campaigns against radical Islamism in the U.K., also applied to protest against the Muslim group, the police said. The Metropolitan force said 5,000 officers will be on duty on the day of the royal wedding, the Press Association news wire reported. To contact the reporter on the story: Kitty Donaldson in London at [email protected] To contact the editor responsible for this story: James Hertling at [email protected]

2011-04-19 00:00:00 UTC

Grete Waitz, Norway’s Nine-Time Winner of New York Marathon, Dies Aged 57

http://www.bloomberg.com/news/2011-04-19/norwegian-marathon-record-setter-grete-waitz-dies-at-57-after-long-illness.html

B y M a r i a n n e S t i g s e t a n d O s h r a t C a r m i e l

Grete Waitz, the record nine-time winner of the New York City Marathon , died after a six-year struggle with cancer. She was 57. She died at Oslo’s Ullevaal Hospital at 4:10 a.m. today with her husband, Jack, at her side, said Helle Aanesen, who co- founded Active Against Cancer with Waitz in 2007. Aanesen declined to specify what type of cancer the athlete had died from, as she had chosen not to disclose it to the public. “Grete was a fantastic athlete and someone who paved the way for female runners,” Aanesen said by phone. “She had a will, a talent and led a life that was simply extraordinary. She’ll go down in the history books as one of the greats.” Waitz ran, and won, her first New York City Marathon in 1978, invited by Fred Lebow, then president of the New York Road Runners Club and the founder of the city’s marathon, which runs through all five boroughs and last year attracted more than 45,000 runners from around the world. As she returned to win the New York race eight more times, Waitz and Lebow became friends. Waitz ran her final marathon in 1992 alongside Lebow, who had been diagnosed two years earlier with brain cancer . They crossed the finish line together with their clasped hands held high, registering a time of 5 hours, 32 minutes, 35 seconds. ‘Most Emotional’ Race “It was the most emotional race of my life,” Waitz told the New York Daily News in 2008. “We both ran the last two miles crying.” Lebow, whose cancer had been in remission long enough for him to train for and run the race he created, died in 1994. Waitz, who was born in Oslo as Grete Andersen on Oct. 1, 1953, rose to prominence in her teenage years with national junior titles in the 400 meters and 800 meters, and a European junior record in the 1,500 meters. She set her first of two world records in the 3,000-meters in 1975. Her biggest achievements came in the marathon, including the nine New York wins, from 1978 to 1988, and becoming the first woman to finish in less than 2 1/2 hours. She also took the gold medal at the World Championships in Helsinki in 1983 and an Olympic silver in Los Angeles in 1984. ‘Fairy Tale’ “For a shy Norwegian schoolteacher to grow up and become one of the iconic New York City sports stars is a fairy tale,” said Richard Finn, a spokesman for New York Road Runners . “She was as much New York and synonymous with the marathon as the marathon was synonymous with her,” Finn said. Each October the New York Road Runners hosts a 13.1 mile race around Central Park called “Grete’s Great Gallop,” where Waitz would appear and high-five runners. Waitz attended the 2010 race. “If Grete had to go, it is somehow fitting that she lived until the day after one of the greatest weekends in the sport of marathon running,” Mary Wittenberg, president and chief executive officer of the New York Road Runners, said in a statement, referring to yesterday’s Boston Marathon and the London Marathon on April 17. Cyclist Lance Armstrong , who overcame testicular cancer to win the Tour de France seven times, said he was “sad to hear” of Waitz’s passing, referring to her as a “good friend and an incredible athlete,” in a Twitter posting. ‘Amazing Champion’ “Sad, sad news today as Grete Waitz passed away,” Paula Radcliffe, the fastest women’s marathon runner in history, tweeted. “She was an amazing champion and more amazing person.” Waitz came to New York in 1978 to celebrate her retirement and prepare to have children and a teaching career, Waitz said in a 2008 interview on the New York Road Runner’s website. “But, instead, I quit my job teaching and never had kids. I always got excited when I came to New York for the marathon,” she said. Waitz was appointed a Knight 1st Class of the Royal Norwegian Order of St. Olav in 2008 by King Harald V. She also stands as a statue in front of Oslo’s Bislett Stadium and was pictured on Norwegian stamps in 1997. In 1984, she started the annual Grete Waitz run for women in Oslo, which went on until 2003. Waitz’s funeral is expected to be held next week and will be a small private arrangement, according to the wishes of the athlete, Aanesen said. ‘Brightest Flames’ “One of the brightest flames of the modern athletics era has been extinguished,” International Association of Athletics Federations President Lamine Diack said in a statement. “The dedication, perseverance and fortitude with which Grete carved out her athletics career on the track, across the country and on the road is an example to us all, as is the positive way she tackled the illness that beset her life in recent years.” The family of Samuel Rudin, whose name adorns the winners’ trophies at the New York City Marathon, said that it was unlikely that anyone would surpass Waitz’s nine victories in the event. “While she may have been from Norway , Grete Waitz possessed the true New Yorker’s spirit and determination,” the family said today in an e-mailed statement. “She will be greatly missed.” To contact the reporters on this story: Marianne Stigset at [email protected] Oshrat Carmiel in New York at [email protected] . To contact the editor responsible for this story: Will Kennedy at [email protected]

2011-04-19 00:00:00 UTC

Canadian Inflation Accelerates to Highest Rate in Two Years on Jump in Oil

http://www.bloomberg.com/news/2011-04-19/canadian-inflation-accelerates-to-highest-rate-in-two-years-on-jump-in-oil.html

B y G r e g Q u i n n

Canada ’s inflation rate accelerated in March to the fastest in 2 1/2 years, exceeding all economist forecasts, adding pressure on the Bank of Canada to increase its policy interest rate in the next three months. Consumer prices rose 3.3 percent from a year earlier after a 2.2 percent gain in February, Statistics Canada said today in Ottawa. Prices were up 1.1 percent on a monthly basis, the fastest since January 1991 when a new federal sales tax was introduced. The gains exceeded all forecasts in Bloomberg surveys of 25 economists, which had median estimates of 2.8 percent for annual inflation and 0.6 percent on a monthly basis. The annual report also exceeded the Bank of Canada ’s April 13 forecast that inflation would reach 3 percent by June, driven by temporary factors such as energy costs and higher provincial sales taxes. The two-year government bond yield jumped the most since December after the report and the Canadian dollar rose the most in seven weeks. “It definitely puts the pressure back on the Bank of Canada to raise interest rates ,” said Sheryl King, head of Canada economics at Bank of America Merrill Lynch in Toronto. “It’s not going to be the end” for inflation pressures, she said, adding the economy may already be operating at full capacity, while the central bank predicted last week the economy wouldn’t be running flat out until the middle of next year. Dollar Jumps The Canadian dollar advanced 0.9 percent to 95.56 cents per U.S. dollar at 10:36 a.m. in Toronto, from 96.42 yesterday. One Canadian dollar buys $1.0465. Yields on the two-year Government of Canada bond jumped 9 basis points to 1.78 percent, the biggest one-day gain since Sept. 8. The odds of an increase at the next decision May 31 increased to 14.6 percent, according to a Credit Suisse calculation, from 11 percent yesterday and 9 percent on Apr. 15. “May is still a bit of a stretch” for a move, said David Tulk , chief Canada macro strategist at Toronto-Dominion Bank’s TD Securities unit. “They will need to use that communique to shade the market’s perspective towards a hike in July.” The core inflation rate, which excludes eight volatile items such as gasoline, accelerated to 1.7 percent from a year earlier, from February’s record low 0.9 percent. Monthly core prices accelerated to 0.7 percent from 0.2 percent in February. Economists forecast a core inflation rate of 1.2 percent annually and 0.2 percent on a monthly basis. Core Inflation Bank of Canada Governor Mark Carney said that “underlying inflation is subdued” at an April 13 press conference , and that core inflation would remain below 2 percent until mid-2012 because of slack in the economy and “modest” wage gains. He also said risks to the inflation outlook were “roughly balanced.” Energy prices rose 13 percent in March from a year earlier, and the cost of fuel oil and other fuels jumped 31 percent, Statistics Canada said today. “In the immediate short term, our top priority is the rising commodity landscape,” Jerry Fowden, chief executive officer of beverage maker Cott Corp. (BCB) said on a March 24 earnings call. “This scale of commodity run up, at the same time as a broadly weak economy, is almost unprecedented.” High gasoline prices were mentioned several times at a French-language leadership debate last week in the campaign for a May 2 election. The average Canadian price of unleaded gasoline was C$1.25 ($1.30) per liter the week of April 8, up 20 percent from three months earlier. Prime Minister Stephen Harper said his government’s cut to the federal sales tax has helped consumers cope with higher gasoline prices, while Bloc Quebecois leader Gilles Duceppe called for tougher enforcement of competition laws. Widespread Increases Today’s report showed price gains accelerated in every major category except for alcohol and tobacco. Clothing and footwear prices rose 0.9 percent in March from a year earlier, the first annual increase since November 2009, as stores offered fewer discounts. Food prices rose 3.3 percent after February’s 2.1 percent gain as poor weather in the U.S. and Mexico cut supplies of fresh vegetables. The central bank sets interest rates to keep inflation at the 2 percent midpoint of a 1 percent to 3 percent target range. Its quarterly survey of businesses published April 4 found the share of executives who predicted inflation would advance by more than 3 percent over the next two years had increased to 15 percent from 3 percent. Statistics Canada also reported today that wholesale sales fell in February for the first time in seven months and growth in the agency’s index of leading economic indicators slowed in March. To contact the reporter on this story: Greg Quinn in Ottawa at [email protected] . To contact the editors responsible for this story: David Scanlan at [email protected] ; Christopher Wellisz at [email protected] .

2011-04-19 00:00:00 UTC

SABMiller Fourth-Quarter ‘Organic’ Lager Volume Rises 3%, Beats Estimates

http://www.bloomberg.com/news/2011-04-19/sabmiller-fourth-quarter-organic-lager-volume-rises-3-beats-estimates.html

B y C l e m e n t i n e F l e t c h e r

SABMiller Plc (SAB) , the world’s second- largest brewer by volume, reported fourth-quarter beer sales that beat analysts’ estimates, led by growth in Africa and Peru . So-called organic beer volume, which excludes acquisitions and disposals, rose 3 percent, compared with the 1.5 percent median estimate of seven analysts surveyed by Bloomberg News. Full-year growth on the same basis was 2 percent, the maker of Grolsch and Peroni said today in a statement. “The main area of outperformance is Africa,” Jason Derise, an analyst at UBS AG in London, said today. “They didn’t give the fourth-quarter figure, but it’s pretty big.” SABMiller, which got its start selling beer to gold prospectors in 1895, is among brewers looking to emerging economies to drive growth as sales stagnate in Europe and the U.S. The London-based company reported full-year volume growth of 13 percent in Africa, helped by a “strong final quarter” as sales were boosted by new breweries in Tanzania and Mozambique . Lager volumes in Latin America, where the company gets the largest share of revenue, increased 1 percent even after a Colombian tax increase in February 2010 continued to restrict sales and wet weather stymied growth. Analysts had estimated a 1.5 percent decline. Peru had 10 percent growth for the year. Shares Climb The shares gained as much as 38.5 pence, or 1.8 percent, to 2,229 pence, and traded up 1.4 percent at 2,221.5 pence as of 9:47 a.m. in London , giving the company a market value of about 35.3 billion pounds ($57 billion). Revenue for the year through March 31 rose 5 percent, at constant exchange rates and excluding acquisitions, the company said. Raw-material costs were “marginally lower,” although they increased “moderately” in the second half. Brewers are facing increasing prices for the ingredients to make their beer, including malting barley. SABMiller had said in November that it would benefit from lower raw-material costs this year, albeit at a “more moderate” rate in the second half compared with the first half of the year. Sales in Europe, SABMiller’s second-largest region, rose 2 percent in the fourth quarter, beating estimates for a 1 percent increase. Volume benefited from a “weak comparative period due to prior-year excise increases in Russia and the Czech Republic ,” the company said. Sales jumped 17 percent in Russia in the quarter after a 200 percent tax increase in January 2010 hurt beer sales during the same period a year earlier. South Africa The amount of beer sold in South Africa, including the Castle Lite and Hansa Pilsener brands, was “level” with the year earlier, the company said. SABMiller competes with Brandhouse Ltd., a joint venture between Heineken NV and Diageo Plc, which “continues to make life difficult for SAB in its home market,” analysts including Andy Smith at MF Global wrote in a note yesterday. Brandhouse said yesterday it controls about 14 percent of the beer market in South Africa . SABMiller has apportioned a larger share of its marketing budget to the country, where it has held an average market share of more than 88 percent over the last year, according to company spokesman Nigel Fairbrass , who cited internal estimates including sales in bars, taverns and pubs. The brewer’s sales in South Africa during the same period last year rose 8 percent as consumers bought more beer due to the earlier timing of Easter compared with this year. Sales in Asia rose 8 percent in the fourth quarter, aided by share gains in China , the company said. China represents 20 percent of volume and 2 percent of profit, according to UBS AG. Sales to U.S. retailers by MillerCoors LLC, the company’s joint venture with Molson Coors Brewing Co., slid 1.4 percent “in a market which remains challenging,” the company said. To contact the reporter on this story: Clementine Fletcher in London at [email protected] To contact the editor responsible for this story: Celeste Perri at [email protected]

2011-04-19 00:00:00 UTC

Madoff Trustee Seeks $43.2 Million for Four Months of Liquidation Services

http://www.bloomberg.com/news/2011-04-19/madoff-trustee-seeks-43-2-million-for-four-months-of-liquidation-services.html

B y L i n d a S a n d l e r

The trustee liquidating Bernard L. Madoff’s defunct investment firm asked a judge to pay him and his law firm $43.2 million for four months’ work, bringing total fees sought in the case to $175.5 million since Madoff’s arrest. Expenses of $1.1 million were claimed by trustee Irving Picard and Baker & Hostetler LLP from Oct. 1 to Jan. 31, according to a U.S. Bankruptcy Court filing in New York yesterday. The Madoff case took almost 955 hours of Picard’s time during the period, charged at $748 an hour, and 116,399 hours of his firm’s time at $371 an hour, according to the filing. High fees in the liquidations of the jailed Ponzi-scheme operator’s firm and the Lehman Brothers Holdings Inc. brokerage might deplete the $2.5 billion fund of the Securities Investor Protection Corp., according to a March 30 audit report by the Office of the Inspector General at the Securities and Exchange Commission. The SEC watchdog recommended “systematic” inspections of SIPC by the SEC to ensure cost-effective processing of brokerage customer claims and liquidations. Amanda Remus, a Picard spokeswoman, declined to comment on the report. In the filing, Picard said he and his lawyers bill the Madoff estate, not tapping the fund of customer property. “The payment of fees and expenses to the trustee and any of his counsel has absolutely no impact on recoveries” by Madoff investors, he said. 1,000 Lawsuits Picard, who has filed more than 1,000 suits seeking money for the con man’s investors, has recovered more than $7.6 billion, out of about $17 billion in principal lost, according to his latest calculations. By next month, the trustee will have determined almost every one of 16,518 claims filed in the case, according to the filing. Baker & Hostetler said it spent 7,086 hours on investigations at a cost of $3.1 million in the latest four months. Administration consumed 7,033 hours, and cost $2.1 million. The trustee’s case against JPMorgan Chase & Co. (JPM) took 1,971 hours, while the Mets owners required 1,660 hours and customer claims took 4,837 hours. The biggest single expense was $248,944 for translation costs in the period. Picard has 81 potential international lawsuits and 232 domestic suits, according to the filing. Online research cost $166,611 and out-of-town travel cost $202,468, the law firm reported. Deferred Fees In addition to current fees, Picard asked the judge for permission to claim about $5.5 million in fees deferred since Madoff’s arrest in December 2008. Total deferred fees for Picard and his firm since exceed $23 million, according to the filing. The trustee asked the judge to reduce deferrals to 10 percent, from 15 percent, citing “results achieved for the victims of Madoff’s fraud.” Prior applications for fees since 2008 totaled $132.3 million for Picard and his firm, according to the filing. The main case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-ap-1789, U.S. Bankruptcy Court , Southern District of New York ( Manhattan ). To contact the reporter on this story: Linda Sandler in New York at [email protected] To contact the editor responsible for this story: John Pickering at [email protected]

2011-04-19 00:00:00 UTC

Cairn India Has 14.8% of Equity Change Hands in 3 Transactions

http://www.bloomberg.com/news/2011-04-19/cairn-india-has-14-8-of-equity-change-hands-in-3-transactions.html

B y R a k t e e m K a t a k e y

Cairn India Ltd. (CAIR) , the operator of the nation’s biggest oil field on land, had about 282.3 million shares, or 14.8 percent of its equity, change hands in three transactions on the Bombay Stock Exchange. A total of 277.27 million shares were traded at 331 rupees ($7.41) apiece in two block deals and 5.07 million changed hands at 335 rupees each, according to data compiled by Bloomberg. Cairn India rose as much as 3 percent to 346.15 rupees and were at 343.40 rupees at 9:46 a.m. in Mumbai trading. The stock has increased 3.1 percent this year compared with a 6.9 percent decline in the benchmark Sensitive Index. Sesa Goa Ltd. (SESA) , a unit of London-listed Vedanta Resources Plc, started an open offer to Cairn India ’s minority shareholders on April 11, as part of a plan by the mining company to buy a majority stake in Cairn India. The deal is awaiting approval from the Indian government. Petroliam Nasional Bhd., Malaysia’s state oil and gas producer, also known as Petronas, owns 14.9 percent in Cairn India. Petronas may sell its entire holding in the open market, Bloomberg UTV reported April 11, citing unidentified people. Azman Ibrahim, a spokesman for Petronas, and Cairn India spokesman Manu Kapoor declined to comment on the transactions. The buyers and sellers in the block deals weren’t immediately known. To contact the reporter on this story: Rakteem Katakey in New Delhi at [email protected] To contact the editor responsible for this story: Amit Prakash at [email protected]

2011-04-19 00:00:00 UTC

Eastern Europe Day-Ahead Power Falls Amid Increased Production

http://www.bloomberg.com/news/2011-04-19/eastern-europe-day-ahead-power-falls-amid-increased-production.html

B y M a r e k S t r z e l e c k i

Day-ahead power prices in eastern Europe decreased as output rose in the Czech Republic and exports from Poland were less profitable. Polish electricity for tomorrow fell 1.7 percent to 219 zloty ($78.66) a megawatt-hour, according to Polish power exchange data compiled by Bloomberg. Czech day-ahead power decreased 3.5 percent to 55 euros ($78.59) a megawatt-hour, according to broker data compiled by Bloomberg, as output increased from the nuclear plant Dukovany which restarted two units after an outage. As result, imports of electricity from Poland were set to drop, data from the power grid showed. Hungarian electricity, traded on the Budapest-based power exchange, lost 2.8 percent to 56.45 euros, according to the bourse’s website. The Czech Republic has 17,625 megawatts of capacity installed, according to Bloomberg data. The country exported 2,246 megawatts of power to Germany from 12 p.m. to 1 p.m. local time today, according to Entsoe , the European Transmission System Operators transparency platform. Domestic demand at that time was nearly 8,500 megawatts, while about 1,400 megawatts of solar electricity was generated, according to CEPS AS, the Czech power transmission system operator. Bloomberg tracks power prices from brokers including GFI Group Inc., ICAP Plc, Spectron Group Ltd., Tradition and Tullett Prebon Plc. Brokers handle the majority of trading in Europe’s electricity markets. To contact the reporter on this story: Marek Strzelecki in Warsaw at [email protected] To contact the editor responsible for this story: Steve Voss at [email protected]

2011-04-19 00:00:00 UTC

U.S. 30-Year Yields Decrease to Almost 4-Week Low on Austerity Prospects

http://www.bloomberg.com/news/2011-04-19/u-s-30-year-yields-decline-to-almost-4-week-low-on-slow-growth-prospects.html

B y S u s a n n e W a l k e r a n d C o r d e l l E d d i n g s

Treasuries rose, pushing the 30- year bond yield to the lowest level in almost four weeks, on speculation any agreement in Congress to curb the nation’s budget deficit may impede economic growth. Ten-year yields reached a three-week low as Greek bond yields reached euro-era records amid growing speculation the country will need to restructure its debt. Treasury Secretary Timothy F. Geithner said he’s confident U.S. political leaders will bridge differences on spending. Standard & Poor’s yesterday lowered the U.S. credit-rating outlook, citing fiscal pressures. “People are thinking about the potential for austerity, the impact on growth and the possibility of weaker-than- previously-expected growth numbers in the second half of the year,” said Dan Mulholland, a Treasury trader in New York at Royal Bank of Canada, one of 20 primary dealers that trade with the Federal Reserve . Thirty-year bond yields decreased three basis points, or 0.03 percentage point, to 4.43 percent at 5:01 p.m. in New York, according to Bloomberg Bond Trader prices. They touched 4.42 percent, the lowest level since March 23, after rising to as high as 4.49 percent. The price of the 4.75 percent security maturing in February 2041 gained 14/32, or $4.38 per $1,000 face amount, to 105 1/4. Ten-year yields fell one basis point to 3.36 percent. They touched 3.34 percent, the lowest since March 24, after earlier rising to 3.41 percent. Treasuries fell earlier as stocks gained after U.S. housing starts increased 7.2 percent in March, Commerce Department data showed. The Standard & Poor’s 500 Index ended the day up 0.6 percent after declining 0.1 percent earlier. Fed Purchase U.S. debt has returned 0.65 percent this month, after losing 0.14 percent in the first quarter, according to Bank of America Merrill Lynch indexes. They gained 5.9 percent in 2010. Treasury yields have fallen on speculation government budget cuts will slow the economy and encourage the central bank to avoid raising borrowing costs, said Mohamed El-Erian, chief executive officer at Pacific Investment Management Co. “Fiscal austerity in the short term damps growth,” El- Erian said in a radio interview on “Bloomberg Surveillance” with Tom Keene . “The market is pricing in what policy makers are going to do. The more fiscal austerity you get, the more likely the Fed will stay on hold.” The central bank has kept the benchmark interest rate at zero to 0.25 percent since December 2008 to support the economy. ‘Wake-Up Call’ “People are viewing the outlook change by S&P as a wake-up call,” said Jason Rogan, director of U.S. government trading at Guggenheim Partners LLC, a New York-based brokerage for institutional investors. “You can’t play political games when it comes to the strength of the economy. It’s too fragile.” Treasuries also rose as Greece ’s fiscal crisis pushed yields on its two-year notes up to a record 20.7 percent today. German Finance Minister Wolfgang Schaeuble ’s comments on April 14 that Greece may need to restructure its debt sent bonds tumbling in Europe ’s debt-strapped nations. “The market is benefiting more from a safety bid because of what’s going on in Europe,” said Martin Mitchell , head government bond trader at the Baltimore unit of Stifel Nicolaus & Co., a St. Louis-based brokerage firm. “It’s the European peripherals.” The Fed bought $6.68 billion of Treasuries maturing from January 2014 to February 2015 as part of its program to acquire $600 billion of U.S. debt through June to spur economic growth. It will purchase $1 billion to $2 billion of Treasury Inflation Protected Securities tomorrow maturing from April 2013 to February 2041. Still Attractive U.S. two-year notes rose earlier as Japanese Finance Minister Yoshihiko Noda said in Tokyo U.S. debt remains “attractive” even after S&P lowered the country’s credit outlook. The rating company, citing rising U.S. budget deficits and debt, said yesterday there’s “a material risk that U.S. policy makers might not reach an agreement on how to address medium-and long-term budgetary challenges by 2013.” “Equities aren’t doing well today, and people don’t want to make big moves given the shortened week, so Treasuries have remained bid,” said Paul Horrmann, a broker in New York at Tradition Asiel Securities Inc., an interdealer broker. “The market is more worried about equities than Treasuries after the S&P announcement.” The Securities Industry and Financial Markets Association recommends that trading in U.S., U.K. and Japanese financial markets cease at 2 p.m. New York time on April 21 and remain closed the following day for the Easter holiday weekend. Volume Slides About $241 billion of Treasuries were traded today as of 5:01 p.m., the least since April 11, according to Icap Plc, the world’s largest interdealer broker. About $347 billion changed hands yesterday. The full-day average this year is $330 billion. Geithner said he “absolutely” didn’t have to reassure overseas buyers of U.S. debt after S&P’s statement yesterday. President Barack Obama began a tour promoting his proposal to cut long-term budget deficits. “We have an opportunity now over the next two months to make some real progress,” Geithner said in an interview on Bloomberg Television today. “What we agree on is putting in place strong targets for savings, deficit reduction over a specific time frame with enforceable limits,” he said. A gauge of inflation expectations that the Fed uses to help determine monetary policy, the five-year, five-year forward break-even rate, was at 3.13 percentage points, compared with 3.28 percentage points on Dec. 15, a 10-month high. The average for the past five years is 2.78 percentage points. To contact the reporters on this story: Susanne Walker in New York at [email protected] ; Cordell Eddings in New York at [email protected] To contact the editor responsible for this story: Robert Burgess at [email protected]

2011-04-19 00:00:00 UTC

Treasury Yields Fall on Austerity View, Pimco's El-Erian Says: Tom Keene

http://www.bloomberg.com/news/2011-04-19/treasury-yields-fall-on-austerity-view-pimco-s-el-erian-says-tom-keene.html

B y S u s a n n e W a l k e r a n d T o m K e e n e

Treasury yields are at the lowest level in almost a month on speculation government budget cuts will slow the economy and encourage the Federal Reserve to avoid raising borrowing costs, according to Mohamed El-Erian, chief executive officer at Pacific Investment Management Co. “Fiscal austerity in the short term damps growth,” El-Erian said in a radio interview on “Bloomberg Surveillance” with Tom Keene. “The market is pricing in what policy makers are going to do. The more fiscal austerity you get, the more likely the Fed will stay on hold.” Standard & Poor’s has put the U.S. government on notice that it risks losing its AAA credit rating unless politicians agree on a plan by 2013 to reduce budget deficits and the national debt. S&P said yesterday there’s a one-in-three chance the rating may be cut within two years and that its “baseline assumption” is that Congress and President Barack Obama will agree on a plan to contain deficits. “It’s unthinkable that the U.S. triple-A rating could be put on negative outlook,” said El-Erian, 52, whose company in Newport Beach , California, manages the world’s largest bond fund. “It’s putting a lot of focus on the need to start moving on a medium-term fiscal package.” The International Monetary Fund lowered on April 11 its forecast for U.S. growth this year to 2.8 percent from the 3 percent expansion projected in January, reflecting a gain in oil prices and the pace of job gains. Treasury Yields Yields on two- and 10-year U.S. Treasuries fell today to the lowest levels since March 24 on speculation the European sovereign-debt crisis will get worse. Pimco isn’t interested in buying two-year Greek debt even at a record yield of more than 20 percent because it does not offer value, El-Erian said. “This is not yet the time to buy Greece ,” El-Erian said. “You don’t solve a solvency problem with liquidity. That’s what Europe has been doing. That just piles new debt on top of old, and it doesn’t address the issue.” Pimco prefers debt from Brazil and Norway because it continues to have value, El-Erian said. The company eliminated U.S. government-related debt including Treasuries from its Total Return Fund in February. The fund is still not buying Treasuries, El-Erian said today. The $236 billion Total Return Fund has handed investors a gain of about 7.2 percent in the past year, beating more than 80 percent of its peers, according to data compiled by Bloomberg. Treasuries have returned 4.8 percent during that period, according to Bank of America Merrill Lynch indexes. To contact the reporters on this story: Susanne Walker in New York at [email protected] ; Tom Keene in New York at [email protected] To contact the editor responsible for this story: Robert Burgess at [email protected]

2011-04-19 00:00:00 UTC

Sartorius First-Quarter Profit Advances to EU10.1 Million

http://www.bloomberg.com/news/2011-04-19/sartorius-q1-unadjusted-consolidated-net-eu10-1-mln-correct-.html

B y O l i v e r S u e s s

Sartorius AG (SRT) , a German maker of laboratory scales and filtering equipment, said first-quarter unadjusted consolidated net profit after minority interests rose to 10.1 million euros ($14.5 million) from 5.1 million euros. The company confirmed in a statement today its full-year targets for the fiscal year 2011, and said sales are expected to grow 6 percent to 8 percent in constant currencies. The operating earnings margin is expected to rise to about 14 percent, Sartorius said. To contact the reporter on this story: Oliver Suess in Munich at [email protected] To contact the editors responsible for this story: Frank Connelly at [email protected] Edward Evans at [email protected]

2011-04-19 00:00:00 UTC

DirecTV Starts Premium Film Rentals at $29.99 for 48 Hours

http://www.bloomberg.com/news/2011-04-19/directv-starts-premium-rental-service-on-april-21-with-sony-film.html

B y A n d y F i x m e r

DirecTV, the largest satellite-TV operator, will offer a 48-hour rental of Sony Corp. (6758) ’s “Just Go With It” for $29.99 just 10 weeks after the movie’s theatrical release in the first such service on pay television. Universal Pictures, Warner Bros. and Twentieth Century Fox will also supply films to the service two months after their theatrical release, Jade Ekstedt, a spokeswoman for El Segundo, California-based DirecTV said today in an interview. Studios, which are looking to pay-TV to find new ways to sell movies and counter shrinking DVD sales, risk alienating cinema operators such as AMC Entertainment Inc. that have criticized plans to offer new films so quickly in homes. Regency Theatres, based in Calabasas, California , will pull “Just Go With It” from its second-run theaters, where it was among the top two titles last weekend, said President Lyndon Golin. “We don’t want to show movies that are on TV,” Golin said in a telephone interview. “We want to protect the movie-going experience.” DirecTV (DTV) customers, the first to gain access to the premium offering, will have two weeks to order the movie before it’s replaced by another title, Ekstedt said. “Just Go With It” was still in 326 theaters last weekend, according to Box Office Mojo, an industry website. “Working on an earlier delivery window at a premium price makes sense” Rich Greenfield , an analyst at BTIG LLC in New York , said in an interview. The $30 price may be too high, he said, calling the effort a worthwhile risk in spite of angering some cinema operators. Maximizing Profit “The studios are looking to maximize profitability, not keeping all their friends happy all the time,” Greenfield said. Sun Dee Larson, a spokeswoman for Kansas City , Missouri- based AMC, didn’t respond to an e-mail seeking comment. Regal Entertainment Group (RGC) , the largest exhibitor, also didn’t respond. “Just Go With It,” a comedy featuring Adam Sandler and Jennifer Aniston, was released on Feb. 11 and has taken in $102.3 million in U.S. theaters, according to Box Office Mojo . Regency, which operates in Southern California and Las Vegas , started showing the movie in second-run locations last weekend, Golin said. He said his company, part of the National Association of theater owners, hasn’t spoken directly with Sony. “It’s very substantial for us,” Golin said. “Will our little company make a difference to Sony? Probably not.” AMC, the second-largest exhibitor behind Knoxville, Tennessee-based Regal, is seeking a bigger share of the box- office split with studios to compensate for the expected loss of sales, said David Joyce, an analyst at Miller Tabak & Co. in New York. Cannibalization Fears “It remains to be seen whether there would be cannibalization of the initial box office releases,” Joyce said in an e-mail. “There would be plenty of ripple effects. Studios get paid from the premium movie channels typically based on box office performance.” DirecTV gained 25 cents to $46.10 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have gained 15 percent this year. U.S. shares of Tokyo-based Sony rose 46 cents to $29.71 on the New York Stock Exchange. In the next few months, DirecTV will offer “The Adjustment Bureau” from Comcast Corp. (CMCSA) ’s Universal Pictures, “Cedar Rapids” from News Corp. (NWSA) ’s Twentieth Century Fox and “Hall Pass” from Time Warner Inc. (TWX) ’s Warner Bros., Ekstedt said. All three are still in cinemas, according to Box Office Mojo. The service will be available only to DirecTV customers with high-definition tuners equipped with digital video recorders, Ekstedt said. Once purchased, the films will begin playing immediately in full HD and surround sound. To contact the reporter on this story: Andy Fixmer in Los Angeles at [email protected] To contact the editor responsible for this story: Anthony Palazzo at [email protected]

2011-04-19 00:00:00 UTC

China Stocks: Anhui Conch, Merchants Securities, Shuanghui, ZTE

http://www.bloomberg.com/news/2011-04-19/china-stocks-henan-shuanghui-merchants-securities-zte.html

B y B l o o m b e r g N e w s

Shares of the following companies had unusual moves in China trading. Stock symbols are in parentheses as of 3 p.m. close. The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, fell 58.29 points, or 1.9 percent, to 2,999.04. The CSI 300 Index (SHSZ300) declined 1.9 percent to 3,295.81. Cement stocks: Anhui Conch Cement Co. (600585 CH), China’s biggest cement maker, dropped 1.6 percent to 38.87 yuan. Gansu Qilianshan Cement Group Co. (600720 CH) lost 3.2 percent to 20.12 yuan. Huaxin Cement Co. (600801 CH), the Chinese affiliate of Holcim Ltd., slid 3.2 percent to 48.80 yuan. “There’s concern that the current cement prices won’t be sustained after the off-peak season for cement consumption arrives in the summer,” Zhu Jixiang, an analyst at Capital Securities Corp., said in a phone interview today. China Merchant Securities Co. (600999 CH) slipped 1.9 percent to 19.15 yuan, the most since March 15. The brokerage said net income fell 13.4 percent from a year earlier to 3.23 billion yuan ($494.5 million) last year. COFCO Tunhe Co. (600737 CH), a producer of ketchup and beverages, dropped 2.1 percent to 11.43 yuan, the lowest since April 6. The company reported a net loss of 55.1 million yuan last year, compared with net income of 268 million yuan in 2009. Henan Shuanghui Investment & Development Co. (000895 CH), China’s biggest meat processing company,, plunged the 10 percent daily limit to 70.15 yuan as the stock resumed trading after a monthlong suspension. The company yesterday confirmed a China Central Television report that an affiliate bought pigs fed with a banned additive to induce the growth of lean meat. Jinduicheng Molybdenum Co. (601958 CH), Asia ’s largest producer of the metal used to harden steel, lost 5.8 percent to 23.47 yuan after saying net income for the first quarter fell 30 percent from the same period last year to 172.6 million yuan. Shenzhen Airport Co. (000089) (000089 CH) slid 2.6 percent to 6.04 yuan, the most since Feb 22. The company said first-quarter net income fell 6.4 percent from a year earlier to 173 million yuan. Youngor Group Co. (600177 CH), a shirts and suits manufacturer, dropped 2.3 percent to 12.26 yuan, the most this month. The company said net income last year fell 18 percent from the year earlier to 2.67 billion yuan. ZTE Corp. (000063) (000063 CH), the second-biggest phone-equipment maker, dropped 2 percent to 28.39 yuan after the company had the recommendation on its Hong Kong-listed shares cut to “hold” from “buy” at BNP Paribas, which cited the prospect of slower profit growth. Zhang Shidong. Editor: Richard Frost To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at +86-21-6104-3040 or [email protected] To contact the editor responsible for this story: Darren Boey at [email protected]

2011-04-19 00:00:00 UTC

Jinan Iron, Laiwu Surge by Daily Limit for Fifth Straight Day

http://www.bloomberg.com/news/2011-04-19/jinan-iron-laiwu-surge-by-daily-limit-for-fifth-straight-day.html

B y B l o o m b e r g N e w s

Jinan Iron and Steel Co. and Laiwu Steel Corp. (600102) rose by the 10 percent daily limit in Shanghai for a fifth consecutive trading day after the companies announced an amended merger plan. Jinan Iron rose to 5.80 yuan and Laiwu to gained to 12.19 yuan as of 1:31 p.m. local time in Shanghai trading. China’s benchmark Shanghai Composite Index fell 1.5 percent. The merger plan announced last week is the third attempt by Jinan Steel to merge with sister company Laiwu Steel after shareholders blocked the previous plans. Jinan Steel and Laiwu Steel’s parents were merged to form Shandong Iron & Steel in March 2008 amid a government push to consolidate steelmakers to help them compete globally and boost their bargaining power for raw materials, including iron ore . Penny Peng. Editor: John Liu To contact Bloomberg News Staff for this story: Penny Peng in Beijing at +86-10-6649-7577 or [email protected] To contact the editor responsible for this story: John Liu at [email protected]

2011-04-19 00:00:00 UTC

Royal Wedding Spoof Photos, Lehman’s Last Paintings on Sale

http://www.bloomberg.com/news/2011-04-19/royal-wedding-spoof-photos-lehman-s-last-paintings-up-for-sale-art-buzz.html

B y S c o t t R e y b u r n

London art dealer Ben Brown puts photos of the Royal Wedding up for sale today. In one, Prince William is leading a conga dance, followed by his bride Kate and Elton John . In another, the happy couple cut the cake while Corgi dogs forage for food and Queen Elizabeth looks bored. The spoofs of the April 29 wedding feature lookalikes photographed by Alison Jackson , who has fooled many people with her paparazzi-style photos of celebrity doppelgangers, often in compromising situations. “This is a last-minute pop-up event,” gallery director Brown said. “It’s poignant to exhibit these before the wedding.” Large photographs, from editions of three, will be priced at 15,000 pounds ($24,480). Smaller images, issued in editions of five, will start at 2,500 pounds. The “Up the Aisle” show runs through May 7 at Ben Brown Fine Arts, 12 Brook’s Mews, London W1K 4DG. Information: +44-20- 7734-8888 or http://www.benbrownfinearts.com/ Lehman Art Those looking for souvenirs of the global financial crisis today got one more chance to buy artworks from the corporate collection of Lehman Brothers Holdings Inc. (LEHMQ) Edinburgh auction house Lyon & Turnbull offered 22 contemporary pieces from the bankrupt bank’s European offices with a total estimate of as much as 47,000 pounds at hammer prices. The sale raised 45,425 pounds with fees. Six of the lots failed to sell. Many of the works on offer were large scale, Nick Curnow, Lyon & Turnbull’s managing director, said. Estimates ranged from 300 pounds to 8,000 pounds. The top lot was the 2006 photographic piece, “Picture Made by Hand With the Assistance of Light,” by the U.K.-born artist Walead Beshty , who now lives in Los Angeles . This sold for 18,750 pounds, beating a high estimate of 8,000 pounds. The work, which is 6 feet (1.8 meters) high, was made by bending photographic paper into a sculpture and then exposing it to light. A 2001 watercolor of a landscape seen through prison bars by the German painter Guenther Foerg sold for 1,875 pounds, below an estimate of 3,000 pounds. Once the world’s fourth-biggest investment bank, New York- based Lehman filed the biggest bankruptcy in U.S. history on Sept. 15, 2008, with assets of $639 billion. More than $830 billion in claims have been filed against Lehman, which has said many are duplicates. Sales at Freeman’s Auctioneers in Philadelphia, Sotheby’s (BID) in New York and Christie’s International in London raised $1.35 million, $12.3 million and 1.6 million pounds, respectively, for creditors in 2009 and 2010. Pearson Family Paintings and antiques belonging to members of the family that founded media group Pearson Plc (PSON) are expected to fetch at least 10 million pounds in auctions this summer. Lord Cowdray will be offering five British portraits at Christie’s International’s July 5 London auction of Old Master paintings. Thomas Gainsborough’s “Portrait of Miss Read, Later Mrs. William Villebois,” is estimated at a record 4 million pounds to 6 million pounds. A further 1,000 lots including pieces from Dunecht , the Scottish home of Lord Cowdray’s brother, Charles Pearson will be auctioned at Cowdray Park, West Sussex, on Sept. 13-15, the London-based auction house said today in an e-mailed statement. A 1611 portrait of the Countess of Hertford may fetch 1.5 million pounds. Lord Cowdray will also be selling silver valued at more than 1 million pounds at Christie’s London on July 7. Cowdray Park , which is now itself up for sale for 25 million pounds, was acquired by Weetman Dickinson Pearson, the first Lord Cowdray, a Yorkshire-born engineer and oil magnate, in 1908. The present family is moving to a more manageable house on the estate, said Christie’s. “This is the most important group of British portraits to come on the market for 50 years,” the London-based dealer Mark Weiss said. “The collection was put together in the 1920s and ’30s when a lot of country houses were being sold and the rich were able to Hoover up the best things.” (Scott Reyburn writes about the art market for Muse, the arts and culture section of Bloomberg News. Opinions expressed are his own.) To contact the writer on the story: Scott Reyburn in London at [email protected] . To contact the editor responsible for this story: Mark Beech at [email protected] .

2011-04-19 00:00:00 UTC

Taiwan’s Dollar Retreats After S&P Cuts U.S. Credit Outlook

http://www.bloomberg.com/news/2011-04-19/taiwan-s-dollar-retreats-after-s-p-cuts-u-s-credit-outlook.html

B y A n d r e a W o n g

Taiwan ’s dollar dropped for a third day after Standard & Poor’s cut the long-term credit-rating outlook for the U.S., sapping demand for emerging-market assets. The island’s Taiex index of shares declined 0.9 percent after New York-based S&P said there’s a one-in-three chance the AAA credit rating of the U.S. government might be cut within two years unless policy makers agree on a plan to reduce budget deficits and the national debt. “The cut in the U.S. credit rating is quite worrying and has damped risk-taking,” said Ivy Leung, a Taipei-based fixed- income trader at Polaris Securities Co. Taiwan’s dollar weakened 0.1 percent to NT$29.125 against its U.S. counterpart as of the 4 p.m. close, according to Taipei Forex Inc. It earlier touched NT$29.171, the weakest level since April 13. The local dollar has rallied 6.1 percent over the past six months, the best performance among the 10 most-traded Asian currencies. The yield on the 1 percent bond due January 2016, the most- active government security, was little changed at 1.073 percent, according to Gretai Securities Market, the island’s biggest exchange for bonds. To contact the reporter on this story: Andrea Wong in Taipei at [email protected] To contact the editor responsible for this story: Sandy Hendry at [email protected]

2011-04-19 00:00:00 UTC

Southern Copper to Appeal Peru Rejection of Tia Maria Mine

http://www.bloomberg.com/news/2011-04-19/southern-copper-to-appeal-peru-rejection-of-tia-maria-mine-1-.html

B y A l e x E m e r y

Southern Copper Corp. (SCCO) , said it will appeal the Peruvian government’s rejection of its $900 million Tia Maria copper project as it seeks to boost output. The company will seek talks with Peru’s next president when the person takes office July 28 about the project, Chief Executive Officer Oscar Gonzalez Rocha said on a conference call today with analysts. The government rejected an environmental study for Tia Maria April 8, saying it was “unviable.” “We’re going to insist with the new government as soon as it takes its place,” Gonzalez said. “In case we can’t get the Tia Maria project underway, we’ll have $350 million worth of equipment to be used in different areas of Mexico and Peru .” Southern Copper is counting on its Tia Maria mine to help double the company’s annual output to as much as 1 million metric tons within five years. Peru’s Energy & Mines Ministry canceled the project after farmers’ protests left three dead in the southern Andes earlier this montb. Presidential candidates Ollanta Humala and Keiko Fujimori face each other in a June 5 runoff. Southern Copper rose 0.4 percent to $35.885 at 1:40 p.m. in New York Stock Exchange composite trading. The stock has dropped 27 percent this year. To contact the reporter on this story: Alex Emery in Lima at [email protected] To contact the editor responsible for this story: Dale Crofts at [email protected]

2011-04-19 00:00:00 UTC

Fiat, Ford Lead European Car Sales Drop as Consumers Hold Back on Buying

http://www.bloomberg.com/news/2011-04-19/fiat-ford-lead-european-car-sales-drop-as-consumers-hold-back-on-purchase.html

B y T o m m a s o E b h a r d t

Fiat SpA (F) , Ford Motor Co. (F) and Renault SA (RNO) led a drop in European car sales for the 11th time in the last 12 months as consumers shunned buying vehicles. Registrations in the region fell 4.7 percent in March to 1.6 million vehicles, the European Automobile Manufacturers’ Association said today in a statement. Fiat sales plunged 20 percent, Ford dropped 16 percent and Renault shed 14 percent. “Fiat, Ford and Renault are suffering most from the end of government incentives, whose major effects ended in March,” said Gian Primo Quagliano, president of Centro Studi Promotor GL Events SpA research group in Bologna, Italy . “We expect the trend to reverse from April.” European car deliveries have declined every month except one in the last year after the expiration of government cash- for-clunker programs damped demand. Consumers are also holding back spending as Europe battles a debt crisis. Portuguese and Greek government bonds slumped yesterday, pushing two- and 10- year yields to euro-era records. Auto registrations fell last month by 28 percent in Italy, 29 percent in Spain and 7.9 percent in the U.K., the Brussels- based manufacturers’ association, or ACEA, said . Demand increased 11 percent in Germany and 6.1 percent in France . Growth at Volkswagen Volkswagen AG (VOW) , Europe’s biggest carmaker, benefited from the sales rebound in its German home market as the region’s largest economy grows. The VW group recorded a 4 percent European sales increase last month to 346,817 vehicles. VW’s market share increased to 21.6 percent from 19.8 percent a year earlier. Fiat, which also runs Chrysler Group LLC, continued to shed market share, falling to 6.7 percent from 7.9 percent. Chief Executive Officer Sergio Marchionne said earlier this month he needs to give more attention to Turin, Italy-based Fiat’s European operations, which he acknowledged have suffered while the Chrysler integration has consumed so much time. Marchionne postponed model introductions, including an updated Panda compact, until the second half, when he expects a recovery of Europe’s car market. Fiat will offer a total of five new cars this year, compared with nine in 2012 and 11 in 2013. European sales by Dearborn, Michigan-based Ford dropped 16 percent last month to 142,789 vehicles. Renault, based in Boulogne-Billancourt, France, lost 14 percent to 141,711 cars. Its French peer PSA Peugeot Citroen, Europe’s second-largest automaker, sold 204,347 vehicles, 6.9 percent fewer than a year earlier. Luxury Brands’ Targets Luxury carmakers, including Volkswagen’s Audi division, Bayerische Motoren Werke AG (BMW) and Daimler AG (DAI) ’s Mercedes-Benz brand, which didn’t benefit as much from incentives targeted at smaller and more fuel-efficient cars, are aiming for record global sales this year. European registrations by Audi rose 7.4 percent last month and BMW excluding the Mini marque gained 3.5 percent. Sales by Mercedes-Benz fell 0.6 percent. Industrywide sales have declined in the region for the last three years, dropping to 13.8 million vehicles in 2010 from 16 million in 2007, the last year that deliveries gained, according to ACEA figures. To contact the reporter on this story: Tommaso Ebhardt in Milan at [email protected] To contact the editor responsible for this story: Chad Thomas at [email protected] .

2011-04-19 00:00:00 UTC

Cricket Governing Body May Scrap Plan to Cut Teams for 2015 World Cup

http://www.bloomberg.com/news/2011-04-19/cricket-governing-body-may-scrap-plan-to-cut-teams-for-2015-world-cup.html

B y T a r i q P a n j a

Cricket’s governing body will consider reversing its decision to limit participants for the 2015 World Cup to its 10 full members after complaints from national associations. The International Cricket Council’s executive board voted earlier this month to reduce the event’s participants to only the 10 Test-playing members. The 2011 World Cup, won by India on April 2, had the 10 teams and four lower-ranked squads that don’t play the longer form of the game. While none of the lower-ranked nations made it to the quarterfinals, Ireland had one of the biggest upsets in World Cup history. It beat England after chasing down a record victory target of 327. The other second-tier members at the tournament were Canada, Kenya and the Netherlands. “I have given this matter further serious thought and will request the board consider this topic once more,” ICC President Sharad Pawar said in a statement. “I can understand the views of the associates and affiliates and ICC will seek to deal with this issue in the best way possible.” The ICC said a final decision about the composition of the teams for the tournament in Australia will be taken at its annual conference in Hong Kong in June. It also agreed to have a 10-team competition at the 2019 World Cup in England, although it’s unclear whether that will change. The ICC had said participants for that event would be determined through the results of qualification matches. To contact the reporter on this story: Tariq Panja in London on at [email protected] To contact the editor responsible for this story: Christopher Elser at [email protected]

2011-04-19 00:00:00 UTC

Hamas Kills Suspect Wanted After Murder of Italian Hostage

http://www.bloomberg.com/news/2011-04-19/hamas-kills-suspect-wanted-after-murder-of-italian-hostage.html

B y S a u d A b u R a m a d a n

Hamas security forces in the Gaza Strip said a member of an al-Qaeda inspired group died and two others were injured as they attempted to arrest them for allegedly abducting and killing an Italian activist, the Hamas- controlled interior ministry said. Vittorio Arrigoni, an activist from the pro-Palestinian International Solidarity Movement, was found dead in the northern Gaza Strip on April 15. The search for his killers is over, the ministry said in a statement sent by text message. “Abdel Rahman al-Brizar, who holds the Jordanian nationality, threw a bomb at his two colleagues and then he shot himself dead,” it said. “One of his colleagues was seriously injured and the other was lightly injured,” it said. Hamas security forces had surrounded the three members of the Islamist Salafist group Al-Jihad Wal-Tawhid in a house in Nuseirat refuge camp in the central part of the Gaza Strip, it said. Three security officers and one child were injured in the exchange of fire, while the owner of the house was detained by Hamas, the statement said. Arrigoni had been active in the Palestinian cause for almost 10 years and stayed on in Gaza after participating in one of the aid flotillas trying to break Israel ’s embargo a year ago, Anna Stevens, a colleague, said by phone from the group’s office in Ramallah, on April 15. A video posted on YouTube on April 14 showed a blindfolded man and a leaflet from a group identifying itself as a Jihadi Salafi movement, demanding that Hamas release members held in Gaza jails in return for the activist. It also said it would execute the hostage if its demands were not met within 30 hours. The authenticity of the video couldn’t be confirmed. Hamas fought with members of Jihadi Salafi, which says it was inspired by al-Qaeda, in 2009 and 22 people were killed in the clashes. Hamas has run the Gaza Strip since 2007 when it seized control of the territory, ending a partnership government with Palestinian Authority President Mahmoud Abbas , after winning parliamentary elections the previous year. To contact the reporter on this story: Saud Abu Ramadan in Jerusalem at [email protected] To contact the editor responsible for this story: Andrew J. Barden at [email protected]

2011-04-19 00:00:00 UTC

Lufthansa to Start Trading EU Emission Permits on European Energy Exchange

http://www.bloomberg.com/news/2011-04-19/lufthansa-to-start-trading-eu-emission-permits-on-european-energy-exchange.html

B y E w a K r u k o w s k a

Deutsche Lufthansa AG (LHA) , Europe ’s second-biggest airline, will begin trading emission rights on the European Energy Exchange AG as it prepares to join the world’s largest greenhouse gases cap-and-trade program. EEX, continental Europe’s biggest energy trading platform, said in a statement today that it admitted Lufthansa as the first airline to trade European Union carbon-dioxide permits directly on the spot and derivatives market on the exchange. “Lufthansa’s admission to exchange trading on EEX shows that the company is well prepared for this,” Oliver Maibaum, managing director of the Leipzig, Germany-based exchange, said in the statement. Airlines will be the second-largest sector in the EU emissions-trading system, after power generators. Aviation joins next year with a carbon-dioxide limit of 213 million metric tons, falling to 208.5 million tons in 2013. The EU emissions program, including more than 11,000 utilities and manufacturers, requires companies that exceed their CO2 quotas to buy spare permits from businesses that emit less or pay a fine. EU permits for delivery in December dropped 0.5 percent to 16.58 euros as of 12:01 p.m. in London and were 16 percent up this year. The EU emissions trading system is known as the ETS. Discharges Doubled The EU decided in 2008 that flights to and from the bloc’s airports should be added to the ETS after airline discharges in Europe doubled over two decades. Under the legislation, 82 percent of the emission allowances making up the airline- industry cap will be allocated for free, and 15 percent will be auctioned. The remaining 3 percent will be put into a special reserve for later distribution to fast-growing airlines and new entrants to the system. Permits for this decade will be handed out based on the efficiency of carriers in 2010, a year when fuel prices surged and Icelandic volcano ash, freezing weather and labor strikes disrupted travel. The EU said it has no plans to change the benchmarking year, a step that would require amending the law. The EU will decide by Sept. 30 on the number of allowances to be auctioned, to be distributed for free and to be allocated to the special reserve. Member states should use the revenues from the auctions of permits to tackle climate change . Roundtrip air fares within Europe may rise from 1.80 euros to 9 euros as a result of the new restrictions, the EU said last month. A roundtrip flight from Brussels to New York at current carbon prices of around 15 euros could cost an additional 12 euros, it estimated. To contact the reporters responsible for this story: Ewa Krukowska in Warsaw at [email protected] To contact the editor responsible for this story: Stephen Voss at [email protected]

2011-04-19 00:00:00 UTC

Obama Tells Backers He’s Committed to Immigration Overhaul

http://www.bloomberg.com/news/2011-04-19/obama-to-meet-with-bloomberg-schwarzenegger-on-immigration-laws.html

B y N i c h o l a s J o h n s t o n

President Barack Obama today told supporters of an overhaul of U.S. immigration laws that he remains committed to their goals, according to participants in a meeting on the issue. “He will not let this issue go away,” Eric Garcetti, president of the Los Angeles City Council, said after attending the meeting. Obama met for about an hour at the White House with business, political, religious and law enforcement officials to discuss ways to revamp immigration laws. The president “reiterated his commitment to comprehensive immigration reform that both strengthens security at our borders while restoring accountability to the broken immigration system,” according to a White House statement. New York Mayor Michael Bloomberg and former California Governor Arnold Schwarzenegger , along with Garcetti, were among public officials invited. Bloomberg is the majority owner of Bloomberg LP, the parent of Bloomberg News. Others invited included Cargill Inc. Chief Executive Officer Greg Page, Facebook Inc. Chief Operating Officer Sheryl Sandberg, AFL-CIO President Richard Trumka , and former Florida Republican Senator Mel Martinez, who works at JPMorgan Chase & Co. (JPM) , according to a White House statement. Obama was a supporter of an overhaul of U.S. immigration laws when he was a U.S. senator, and he has continued to push for new legislation as president. Obama’s Approach The president backs an approach that includes new efforts to secure the nation’s borders, hold businesses accountable for employing illegal workers and create a way for immigrants in the country illegally to gain legal status while also allowing new workers to come to the U.S., according to the White House statement. The White House said Obama urged participants at the meeting to take a public role advocating for new immigration legislation and “lead a constructive and civil debate on the need to fix the broken immigration system.” “Immigration reform is something America needs,” the Reverend Al Sharpton, president of the New York-based National Action Network civil rights group and a meeting participant, said after the session. To contact the reporter on this story: Nicholas Johnston in Washington at [email protected] To contact the editor responsible for this story: Mark Silva at [email protected]

2011-04-19 00:00:00 UTC

ECB Must Avoid Falling Behind the Curve, Wellink Tells FTD

http://www.bloomberg.com/news/2011-04-19/ecb-must-avoid-falling-behind-the-curve-wellink-tells-ftd.html

B y R a i n e r B u e r g i n

European Central Bank Governing Council Member Nout Wellink said policy makers must stay “very alert” to avoid being “behind the curve,” Financial Times Deutschland reported, citing an interview. “We’re not behind the curve yet, but we’re also not much ahead,” the newspaper quoted Wellink as saying. “There are many reasons to monitor the situation closely and act immediately if necessary.” Wellink also said debt sustainability analyses for Greece show that the country can restore its public finances without a restructuring. Countries such as Greece made mistakes in the past and owe it to themselves to solve their problems, he said. To contact the reporter on this story: Rainer Buergin in Berlin at [email protected] To contact the editor responsible for this story: James Hertling at [email protected]

2011-04-19 00:00:00 UTC

EDF’s Nuclear Power Wholesale Price Set at $60 a Megawatt-Hour From 2012

http://www.bloomberg.com/news/2011-04-19/edf-s-nuclear-power-wholesale-price-set-at-60-a-megawatt-hour-from-2012.html

B y T a r a P a t e l

Electricite de France SA will be able to sell nuclear power to competitors at a wholesale price of 42 euros ($59.8) a megawatt-hour starting Jan. 1, 2012, Industry Minister Eric Besson said, matching the price the company had sought. The price, fixed by the government under a law aimed at overhauling the French power market, Europe ’s second-biggest after Germany , is higher than a rate of 35 euros a megawatt-hour backed by GDF Suez SA, the atomic utility’s biggest rival. “This is not about favoring EDF or penalizing GDF,” Besson said in an interview on Europe 1 radio. “It’s about securing supplies for the French and easing things for EDF, which is a major company for French electricity, and takes into account preemptively the work EDF will need to undertake following Fukushima.” The power law, known as Nome and passed by French parliament last year, aims to open up the electricity market by forcing EDF, operator of the country’s 58 reactors and dominant supplier, to sell as much as a quarter of its output to competitors such as GDF Suez. (GSZ) The wholesale price will determine whether rivals can compete in France’s regulated market. The law is due to take effect July 1, when EDF can charge rivals 40 euros a megawatt-hour, before it’s raised to 42 euros. The legislation was aimed at avoiding European Commission sanctions that could have resulted in fines for EDF. EDF shares rose as much as 4.3 percent in Paris trading. They were 3.8 percent higher at 27.65 euros as of 9:07 a.m. Champsaur Report The French government asked for a report by Paul Champsaur, architect of the overhaul, to determine how to set the wholesale price. The Champsaur report had recommended a range of between 38 euros and 40 euros a megawatt-hour. EDF Chief Executive Officer Henri Proglio has said the company’s production costs are 45 euros a megawatt-hour and the utility based 2011 financial targets on obtaining government approval to sell wholesale nuclear power at 42 euros a megawatt- hour. The country’s energy regulator said at the start of the year the price could range from 38.50 euros a megawatt-hour to more than 42 euros. Proglio has repeatedly warned that a price lower than 42 euros a megawatt-hour would amount to a “fire sale” and the “pillage” of EDF. GDF Suez Chief Executive Officer Gerard Mestrallet has said this level would open France up to sanctions from the European Commission. EDF’s share price fell to a two-year low this month following a government announcement to cap electricity price increases and uncertainty about the planned market overhaul. The utility’s shares have also been hurt by the possibility that the Japanese nuclear disaster at the Fukushima Dai-Ichi nuclear plant will hurt the expansion worldwide of the energy and force EDF to make expensive safety modifications on existing reactors. To contact the reporter on this story: Tara Patel in Paris at [email protected] To contact the editor responsible for this story: Will Kennedy at [email protected]

2011-04-19 00:00:00 UTC

Chicago Gasoline Gains After Exxon Joliet Refinery Unit Trips

http://www.bloomberg.com/news/2011-04-19/chicago-gasoline-gains-after-exxon-joliet-refinery-unit-trips.html

B y P a u l B u r k h a r d t

Chicago gasoline strengthened after Exxon Mobil Corp. had an upset associated with a fluid catalytic cracker at its Joliet refinery in Illinois. The unit tripped yesterday because of a mechanical failure, according to a filing with the Illinois Emergency Management Agency. “It was the FCC that was involved in the operational upset,” said Kevin Allexon, an Exxon spokesman. The discount for conventional, 87-octane gasoline in Chicago narrowed 1.5 cents to 3.75 cents a gallon versus futures traded on the New York Mercantile Exchange at 12:50 p.m., according to data compiled by Bloomberg. Prompt delivery fell 1.39 cents to $3.1864 a gallon. Marathon Oil Corp. (MRO) reported a unit upset yesterday at its Robinson refinery in Illinois , according to a filing with state regulators. Conventional, 87-octane gasoline in the Midwest, or Group 3, narrowed its discount 0.63 cent to 9 cents a gallon. The discount for conventional, 87-octane gasoline in the Gulf Coast widened 1 cent to 13.5 cents a gallon. Prompt delivery fell 3.33 cents to $3.0945 a gallon. The discount for the same fuel in New York Harbor increased 0.5 cent to 9.75 cents a gallon. To contact the reporter on this story: Paul Burkhardt in New York at [email protected] . To contact the editor responsible for this story: Dan Stets at [email protected] .

2011-04-19 00:00:00 UTC

Transneft Says Higher Dividends Would Deprive Orphans, Sick

http://www.bloomberg.com/news/2011-04-19/transneft-says-increased-dividends-would-deprive-orphans-sick.html

B y J a s o n C o r c o r a n a n d H e n r y M e y e r

OAO Transneft, Russia ’s monopoly pipeline operator, says paying more dividends would curtail aid to orphans and other charity work. Transneft made 3.2 billion rubles ($112 million) of charitable contributions in 2009, 7.8 times more than the dividends it paid to private investors, according to the company’s financial reports. That spurred preferred shareholders such as Prosperity Capital Management Ltd. and East Capital to demand more information as they seek a larger slice of profit. Higher dividends would reduce money destined for “the sick, supporting sport, renovating churches and monasteries,” Moscow-based Transneft said in a document dated March 16 and filed as part of the company’s appeal against a ruling requiring it to release board minutes. Alexey Navalny, a shareholder activist who filed the suit to uncover details of the state-owned company’s philanthropy, put the appeal on his website today. Russian President Dmitry Medvedev seeks to improve safeguards for minority shareholders to lure foreign capital and plans to set up a $10 billion fund to co-finance international investment in Russian companies. “It’s a nice piece of Soviet propaganda,” said Alexander Branis, chief investment officer at Stockholm-based Prosperity, which manages about $5.6 billion of assets. “But its charter says the company’s main aim is to make money for its shareholders, not raise money for worthy causes.” Cutting Dividends Transneft cut dividends to private shareholders by 75 percent from 2003 to 2009 at a time when net income increased fourfold to 121.8 billion rubles, according to the company’s financial statements. “I understand the desire of all shareholders to get more dividends,” Igor Dyomin, a Transneft spokesman, said in an April 15 phone interview. “I don’t know if holders of preferred stock will get major dividends if we stop helping orphaned or sick children.” Transneft’s preferred shares trade at 2.01 times last year’s earnings per share, according to Bloomberg data. The shares trade on the ruble-denominated Micex Index, where the average is 9.2 times earnings. The shares gained 24 percent in the past 12 months compared with 30 percent for the index. “One of the flagship Russian state companies says in all seriousness, ‘Why should it pay foreigners dividends?” Navalny said in an interview. “How can they talk about improving the investment climate and creating an international financial center in Moscow after that?” 16 Orphanages Moscow’s Ninth Arbitration Appeal Court is scheduled to hear Transneft’s appeal tomorrow. The court’s press service said the filing will be made public during the hearing. Dyomin said he couldn’t confirm the authenticity of the document released by Navalny because he isn’t involved in the lawsuit. He didn’t respond to a request to release the company’s court filing. Transneft finances 16 orphanages in Moscow alone, Dyomin said. The court filing didn’t provide further details of the charitable work, and Dyomin didn’t respond to a request for more information on these activities. Prime Minister Vladimir Putin called on Dec. 29 for an investigation into allegations of a $4 billion fraud during construction of an oil pipeline across eastern Siberia involving Transneft. The claims were published by Navalny, a Moscow-based lawyer who owns stock in the monopoly and about 20 other blue- chip stocks to give him standing to campaign for improved corporate governance. Transneft denied any wrongdoing. German Gref , chief executive officer of state-controlled OAO Sberbank, is seeking to double the proportion of profit paid to shareholders in Russia’s largest lender to as much as 25 percent over the next several years, the Wall Street Journal reported April 15, citing an interview. Sberbank, VTB State-controlled VTB Group paid dividends of 6.07 billion rubles on 2009 earnings, or 25 percent of profit. The supervisory board of Russia’s second-largest bank may recommend more than 6 billion rubles in 2010 dividends, Interfax reported April 18, citing an unidentified person close to the board. “The trend at state-controlled companies, as evidenced by Sberbank and VTB, is for higher dividends because all shareholders, including the government, want to get returns in the form of dividends,” Branis said. Pipeline operators typically pay small dividends, Dyomin said. “We pay regular dividends, but they aren’t very high,” he said. “Look at other companies.” Transneft has a 12-month dividend yield of 0.62 percent, according to data compiled by Bloomberg. Calgary-based Pembina Pipeline Corp., which operates oil and gas pipelines in western Canada , pays 6.81 percent, and San Antonio-based NuStar Energy LP, with 8,417 miles of pipelines, pays 6.49 percent. ‘Proper Company’ Jacob Grapengiesser, a fund manager at Stockholm-based East Capital, and Per Brilioth, a managing director at Vostok Nafta, also based in the Swedish capital, didn’t return calls and e- mails seeking comment. Prosperity and East Capital, the two largest Russia mutual fund managers, and commodity investment manager Vostok Nafta wrote to Putin in August asking him to sell 25 percent of Transneft’s common stock, all of which is held by the state. The preferred shares carry no voting rights . Giving investors a say would make Transneft a “proper company” with shareholder meetings and analyst calls, and improve its price-earnings ratio, according to Prosperity. To contact the reporters on this story: Jason Corcoran at [email protected] Henry Meyer in Moscow at [email protected]

2011-04-19 00:00:00 UTC

Ecolab’s Bearish Options Trades Soar to Record Before Earnings

http://www.bloomberg.com/news/2011-04-19/ecolab-s-bearish-options-trades-soar-to-record-before-earnings.html

B y J e f f K e a r n s

Ecolab Inc. (ECL) ’s bearish options trading rose to a record and was more than 538 times the four- week average after a single transaction before the maker of cleaning chemicals for restaurants reports results April 26. Almost 39,400 puts to sell the stock changed hands as of 3:35 p.m. in New York, compared with 150 calls to buy. An investor bought 19,000 May $50 puts while selling the same number of May $45 puts in a strategy known as a put spread, which cuts the cost of the trade by capping potential gains. The shares rose 1.3 percent to $51.39. “The investors are likely concerned about raw-material cost pressure into earnings,” according to a report from Susquehanna Financial Group LLLP. “To put this trade in perspective, this investor would be able to sell 1.9 million shares if share prices fell between $50 and $45 heading into May expiration, which represents over 0.8 percent of shares outstanding.” To contact the reporter on this story: Jeff Kearns in New York at [email protected] . To contact the editor responsible for this story: Nick Baker at [email protected] .

2011-04-19 00:00:00 UTC

Cebu, Hyundai, LG Chem, Samsung, TSMC, ZTE: Asia Ex-Japan Equity Preview

http://www.bloomberg.com/news/2011-04-19/cebu-hyundai-samsung-tsmc-zte-asia-ex-japan-equity-preview.html

B y B e r n i M o e s t a f a

The following companies may have unusual price changes today in Asian trading, excluding Japan . Stock symbols are in parentheses, and share prices are from the previous close, unless noted otherwise. Cebu Air Inc. (CEB) : The Philippine budget carrier flew 2.8 million passengers, an increase of 12 percent, in the first quarter, putting it on track with a target of 12 million travelers this year, the company said in a statement. The first- quarter growth was driven by international traffic, which rose 32 percent, it said. Cebu Air gained 1 percent to 77.70 pesos. Hyundai Motor Co. (005380) (005380 KS): The Beijing venture of South Korea’s largest automaker is studying whether to build a fourth plant in the Chinese capital, Noh Jae Man, president of the venture, said at the Shanghai Auto Show. Hyundai Motor slid 0.2 percent to 225,500 won. LG Chem Ltd. (051910) (051910 KS): South Korea’s biggest chemicals maker posted a 27 percent gain in first-quarter profit to 656.6 billion won ($601 million), beating estimates, as economic recovery in Asia and an earthquake in Japan boosted demand. The company is also preparing to move into the polysilicon business, Chief Executive Officer Kim Bahn Suk told investors in Seoul . The stock gained 1.4 percent to 520,000 won. LG Electronics Inc. (066570) (066570 KS): The company’s home- appliance division is seeking to diversify its chip suppliers as the March 11 earthquake in Japan may make supplies unstable, the South Korean company said in an e-mailed statement, confirming a Wall Street Journal report. The division depends on Japanese makers for 70 percent to 80 percent of its chips, LG said. LG Electronics rose 4.5 percent to 105,000 won. Manila Mining Corp. (MA) : The Philippine company’s talks with Philex Mining Corp. (PX) for a venture on the Kalayaan mine project is “progressing well” and an agreement may be concluded “soon,” Manila Mining Chairman Felipe Yap told shareholders. Manila Mining Class A shares, which are reserved for Filipinos, rose 2.9 percent to 3.5 centavos. Manila Mining Class B shares (MAB PM), which have no ownership restrictions, increased 5.7 percent to 3.7 centavos. Philex, the nation’s biggest metals producer, gained 3.5 percent to 17.06 pesos. Samsung Electronics Co. (005930 KS): Seagate Technology Plc will buy Samsung’s computer hard-disk drive business in a cash and stock deal valued at $1.38 billion as part of an alliance between the two companies. Samsung and Seagate will enter into supply and cross-licensing agreements, the two companies said in a joint statement. Samsung, the world’s largest maker of televisions and flat screens, rose 0.9 percent to 875,000 won. SM Prime Holdings Inc. (SMPH) : The largest Philippine mall developer said first-quarter profit increased 12 percent to 2.12 billion pesos ($48.9 million) from a year earlier. The stock was unchanged at 11.70 pesos. Taiwan Semiconductor Manufacturing Co. (2330 TT): The world’s largest contract chipmaker bought NT$2.91 billion of equipment from three suppliers, TSMC said in statements to the exchange. The company purchased NT$503.7 million of gear from EZ Semiconductor Inc., NT$913.3 million from Lam Research International Sarl and NT$1.49 billion from Applied Materials South East Asia Pacific Ltd., the Hsinchu Taiwan-based company said. TMSC retreated 1.3 percent to NT$68.10. ZTE Corp. (000063) (000063 CH): The company’s first-quarter net income rose 15.9 percent from a year earlier to 127.3 million yuan ($19.5 million), according to a statement on the Shenzhen Stock Exchange website. ZTE, China ’s second-biggest phone equipment maker, fell 2 percent to 28.39 yuan. To contact the reporter on this story: Berni Moestafa in Jakarta at [email protected] To contact the editor responsible for this story: Darren Boey at [email protected]

2011-04-19 00:00:00 UTC

India Solar Projects Face Rising Costs, Deadline Crunch, Moser Baer Says

http://www.bloomberg.com/news/2011-04-19/india-solar-projects-face-rising-costs-deadline-crunch-moser-baer-says.html

B y N a t a l i e O b i k o P e a r s o n

Some companies may miss deadlines to build India ’s first solar power plants this year while others face rising costs as they compete for contractors and labor, the second-biggest solar-cell maker in India said. Developers are having trouble obtaining financing from banks wary of lending to the new sector, which delays them from starting on their projects, K.N. Subramaniam, chief executive officer of the solar systems division of Moser Baer India Ltd. (MBI) , said in an interview. “If everybody is going to compete at the same time for resources, for contractors, for mechanical fabrication or labor, the cost is bound to go up,” said Subramaniam, who heads the engineering, procurement and construction activities of Moser Baer’s solar unit. “They may not be available for completion in time.” India, which averages 300 sunny days a year, has awarded licenses to build 1,579 megawatts of capacity under two solar programs that aim to create one of the world’s biggest markets for producing electricity from the sun. Most of that capacity needs to be completed this year or developers risk fines. Developers need to select contractors by May 31 if they’re to complete their projects on time, he said. Moser Baer is in talks for some of those contracts, he said, declining to elaborate. The central government awarded licenses in December for 620 megawatts to be built under its national Solar Mission program, which calls for 20,000 megawatts of solar power capacity by 2022. Gujarat, under its own state-level program, has awarded an additional 959 megawatts of capacity. India’s currently has less than 18 megawatts of grid- connected solar power, according to the Ministry of New and Renewable Energy . To contact the reporter on this story: Natalie Obiko Pearson in Mumbai at [email protected] . To contact the editor responsible for this story: Reed Landberg at [email protected] .

2011-04-19 00:00:00 UTC

GREATER CHINA DAYBOOK: Banks Told to Examine Property Loans, Vanke Profit

http://www.bloomberg.com/news/2011-04-19/greater-china-daybook-banks-told-to-conduct-new-stress-tests.html

B y B l o o m b e r g N e w s

China ’s banking regulator Liu Mingkang told the nation’s commercial banks to start a new round of stress tests on their property loans. Banks should strengthen the management of property lending and credit to local government financing vehicles, Liu said after a meeting of th China Banking Regulatory Commission, according to a statement posted on the agency’s website. Yuan forwards strengthened the most in a week after People’s Bank of China adviser Xia Bin said China will not rule out a one-off revaluation of the currency. In an interview published on the Sina.com website, Xia also said China should widen the yuan’s trading band. China Vanke Co., the country’s biggest developer by market value, said its first-quarter net income rose 7 percent from a year earlier to 1.21 billion yuan ($185 million). The impact of the government’s curbs on the real-estate industry is “clear” as transactions in the market have slowed, the company said in a statement to the Shenzhen stock exchange. To contact the editor responsible for this story: Nerys Avery at [email protected]

2011-04-19 00:00:00 UTC

China Vanke’s First-Quarter Profit Increases 7% on Sales in Smaller Cities

http://www.bloomberg.com/news/2011-04-19/china-vanke-s-first-quarter-profit-increases-7-on-sales-in-smaller-cities.html

B y B l o o m b e r g N e w s

China Vanke Co., the country’s biggest developer by market value, said first-quarter profit rose 7 percent as it sold more homes in smaller cities that were shielded from the effects of government curbs. Net income climbed to 1.21 billion yuan ($185 million), or 0.11 yuan a share, from 1.13 billion yuan and 0.1 yuan a year ago, the company said in a filing at Shenzhen stock exchange today. Revenue gained 6.2 percent from a year earlier to 7.97 billion yuan. “Against the background of property curbs, the whole sector will be affected, but Vanke will do better than its competitors because they have better exposure in third-tier cities,” said Du Jinsong , a Hong Kong-based analyst for Credit Suisse Group AG, who rates the stock “outperform.” Vanke’s earnings increased as China’s property curbs were aimed at speculators who mainly invest in first-tier cities such as Beijing and Shanghai. In the past three months, the government intensified measures to rein in prices, raising the minimum down payment for second-home purchases and levying taxes on residences in Shanghai and Chongqing. Beijing and Guangzhou imposed restrictions on home buying in February and the central bank raised interest rates twice this year. “Vanke will focus on new-home sales and maintain the pace of sales,” Board Secretary Tan Huajie said in an e-mailed statement. “The impact of the property curbs is clear in the market as transactions have slowed down.” Sales Double The company’s contracted sales, based on bookings of apartments before they are built, more than doubled to 35.5 billion yuan in the first three months from a year earlier. Developers typically sell their homes before construction begins and book earnings from the sales progressively. Vanke fell 2 percent to 8.78 yuan at the close of trading in Shenzhen today before the results were released. The stock has gained 6.8 percent this year, compared with a 5.4 percent gain in the broader CSI 300 Index and a 15 percent advance in the gauge of property stocks on the benchmark Shanghai Composite Index. Bonnie Cao. Editors: Linus Chua, Nerys Avery To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at +86-21-6104-3035 or [email protected] To contact the editor responsible for this story: Andreea Papuc at [email protected]

2011-04-19 00:00:00 UTC

U.K. Gas Rises as North Sea Field Shuts, Dutch Pipe Flows Drop

http://www.bloomberg.com/news/2011-04-19/u-k-gas-rises-as-north-sea-field-shuts-dutch-pipe-flows-drop.html

B y B e n F a r e y

U.K. natural gas for May rose as Royal Dutch Shell Plc shut a North Sea field and flows from a liquefied gas terminal and a pipeline from the Netherlands fell. “There is planned maintenance at Shearwater,” Kirsten Smart, a Shell spokeswoman in London, said today by e-mail. She didn’t give any details on the duration of the work. Deliveries to the Bacton Seal terminal in eastern England , where gas from the Shearwater field arrives, began falling at about 6 p.m. yesterday, National Grid Plc data show. They dropped about 7 million cubic meters, or 37 percent, to a rate of 12 million cubic meters today. Gas for May rose as much as 1.3 percent to 58.45 pence a therm. It was at 58.15 pence as of 4:15 p.m. in London, according to broker data compiled by Bloomberg. That’s equal to $9.48 a million British thermal units. A therm is 100,000 Btu. Deliveries into Britain through the BBL pipeline from the Netherlands dropped by almost 90 percent to a rate of about 2 million cubic meters a day, the National Grid data show. Flows from the Isle of Grain terminal fell as much as 50 percent. Baseload power for next month rose 25 pence to 51.25 pounds a megawatt-hour. Baseload is delivered around the clock. National Grid, the network manager, forecast gas demand at 270 million cubic meters in the day through 6 a.m. London time tomorrow, 33 million less than normal for the time of year. Prices at the National Balancing Point, Britain’s gas hub, for delivery this summer may drop because of lower demand, a surplus of Russian supplies and no need to divert LNG to Japan after the March 11 earthquake, Societe Generale SA said in a report today. Delivery of the summer gas contract began April 1. ‘Cartel-Like Way’ “Current NBP gas prices are much too high,” Thierry Bros, a Paris-based analyst at the bank, said in the report. “We see a decline in gas demand in 2011.” Russia, Norway and Qatar, countries with “a major influence” on U.K. gas prices, shouldn’t collude to keep gas out of the European market as they risk damaging their long-term positions, Bros said. Falling prices are in the interest of producers and consumers, he said. “The mitigation of climate change and improved energy security could lead European governments that are phasing out nuclear to revisit their options if gas producers behave in a cartel-like way this summer,” Societe Generale said. Maximum London temperatures may rise to 24 degrees Celsius (75 Fahrenheit) on April 23. That’s 7 degrees more than the five-year average, according to CustomWeather Inc. data. Milder weather cuts heating demand. Winter gas, to be delivered in the six months from October, declined 0.4 percent to 71.25 pence a therm. Power for winter fell 30 pence, or 0.5 percent, to 58.95 pounds a megawatt-hour. The pipeline between Britain and Belgium was exporting gas to the continent at a rate of about 51 million cubic meters a day, according to a website run by Interconnector (U.K.) Ltd., owner of the link. The link exported a record volume of about 60 million on April 8. Same-day gas rose 1.55 pence to 56.8 pence a therm. That’s the first gain in four days. Power for tomorrow fell 2.2 percent to 49.80 pounds a megawatt-hour. To contact the reporter on this story: Ben Farey in London at [email protected] To contact the editor responsible for this story: Stephen Voss at [email protected]

2011-04-19 00:00:00 UTC

RBS CEO Hester Says U.K. Commission’s Proposals Won’t Make Banks Any Safer

http://www.bloomberg.com/news/2011-04-19/rbs-says-commission-report-will-increase-costs-for-shareholders.html

B y G a v i n F i n c h a n d J o n M e n o n

Royal Bank of Scotland Group Plc (RBS) , Britain’s biggest government-controlled bank, said the Independent Commission on Banking’s plan to create fire breaks around lenders’ retail units won’t make them safer. The proposal, known as subsidiarization, “doesn’t make banks safer,” Chief Executive Officer Stephen Hester said in a brief interview at the lender’s annual shareholder meeting in Edinburgh today. “It’s not obvious to us that subsidiarization is the right answer.” The government-sponsored commission last week recommended the U.K.’s biggest banks should boost capital, implement plans for an orderly bankruptcy and erect fire breaks around their consumer units to boost the stability of the financial system. “The best way to make sure the banks are safe for the future is the global Basel III reforms,” said Hester. It is “not clear to me that the U.K. on its own needs a special extra something.” The Basel Committee on Banking Supervision said last year that all banks had to maintain a Core Tier 1 capital ratio, a measure of financial strength, of at least 7 percent. The largest U.K. consumer banks would need to hold at least 10 percent under the commission’s proposals. “We will have to work hard to mitigate the impact of additional costs arising from the ICB changes,” RBS Chairman Philip Hampton said in a statement. “It seems inevitable that customers and shareholders will be impacted by additional costs.” Recovery ‘Under Way’ RBS, 83 percent government-owned, will return to profit this year after three years of losses, Hester said in February. The government may plan to start selling its stake next year, people with knowledge of the situation said last month. The bank’s recovery is “clearly under way,” Hampton said today. Separately, RBS will subsume “a substantial part” of its RBS NV unit, which includes parts of the former ABN Amro of the Netherlands. The transfer will “reduce risk, cost and complexity,” the bank said. U.K. Financial Investments Ltd., which manages the government’s stakes in banks, said it voted in favor of all resolutions at the meeting, including those on executive pay. The bank last month awarded Hester and eight top executives about 28 million pounds ($46 million) in shares. Hester will get about 6.5 million pounds in stock vesting from 2012 to 2014. He receives 1.2 million pounds in salary. Banker compensation is “hard to justify objectively,” Hampton told shareholders today. Levels of pay at RBS are “relatively low” compared with other banks, though must be competitive to retain employees, he said. To contact the reporters on this story: Gavin Finch in London at [email protected] Jon Menon in London at [email protected] ; To contact the editor responsible for this story: Edward Evans at [email protected] ;

2011-04-19 00:00:00 UTC

Audi Targets ‘Suburban Mommies’ in Compact SUV Race With BMW

http://www.bloomberg.com/news/2011-04-19/audi-targets-suburban-mommies-in-compact-suv-race-with-bmw.html

B y A n d r e a s C r e m e r a n d C h r i s R e i t e r

Audi AG will pit the Q3 compact sport-utility vehicle against Bayerische Motoren Werke AG (BMW) ’s X1 as the two luxury-car makers vie to tap demand for SUVs geared to urban areas. “We’re paying heed to a fast-growing segment,” Michael Dick, Audi’s development chief, said in an interview at the Shanghai auto show. “There’s a strong appetite for mobility in expanding urban centers. The Q3 will be most appealing to that end, especially for female drivers.” Volkswagen AG (VOW) ’s luxury brand, which will begin selling the Q3 in June at a starting price of 29,900 euros ($42,700), plans to produce 100,000 Q3s a year, Chief Executive Officer Rupert Stadler said in Shanghai, where Audi premiered the vehicle. The Q3 is 24 centimeters (9.5 inches) shorter and nearly 7,000 euros cheaper than the mid-sized Q5. Audi, based in Ingolstadt, Germany , aims to challenge BMW’s leading position in the segment, which the world’s largest luxury car-maker created with the X1’s introduction in late 2009. BMW delivered nearly 100,000 X1s in 2010, accounting for 8.2 percent of overall sales. The model is part of Audi’s strategy to topple BMW as the global luxury-car leader by 2015. High-end carmakers are expanding their lineups of small cars to attract urban drivers and meet tighter environmental regulations. Daimler AG (DAI) ’s Mercedes-Benz is also planning a compact SUV. Mercedes will begin rolling out an expanded range of four compacts with an overhauled B-Class later this year. Fiat SpA (F) ’s Alfa Romeo is planning a small SUV as part of its return to the U.S. Kid Hauler “It’s a vehicle that suburban mommies will use to haul their kids around,” said Christoph Stuermer, a Frankfurt-based analyst with IHS Automotive. “It’s a niche alternative for big urban areas in Europe , China and Japan .” BMW sells the X1, the company’s second-best selling SUV after the X5, in all markets outside North America . The model helped the brand extend its lead over Audi in the first quarter, with sales rising 21 percent to 321,175 vehicles, compared to Audi’s 18 percent advance to 312,600. The Munich-based carmaker, which installed cleaner engines in the top-of-the-line X1 this year, intends to defend its position. “We are aware that the Q3 is coming,” said Andreas Lampka, a BMW spokesman. “The X1 is the leader in its segment, and we intend to keep it that way.” SUV Battle The Q3 intensifies the two carmakers' SUV battle. BMW revamped the X3 mid-sized model and moved production to its U.S. factory in South Carolina late last year in a bid to cut into North American demand for Audi’s Q5. Audi responded by adding a fuel-efficient four-cylinder engine to the Q5’s range. A hybrid version of the Q5 is planned for later this year. Audi’s Q3, based on the same technology platform as the VW Tiguan, starts at 2,300 euros more than the X1. VW announced plans yesterday to expand daily production of the Tiguan to 1,000 SUVs from the current 700 to keep up with rising demand. The Q3 will initially be available with three four-cylinder engines delivering as much as 211 horsepower. The top engine model has a maximum speed of 230 kilometers (143 miles) per hour and accelerates to 100 kilometers per hour in 6.9 seconds. The Q3, Audi’s third SUV, will be built at a plant in Martorell near Barcelona , helping VW’s struggling Seat unit fill assembly lines. Production may be expanded to China , the world’s biggest car market. BMW is also considering such a move. “We used to think that China is no real market for SUVs, but the success of the Q5 and Q7 have been proving us wrong,” Dietmar Voggenreiter, head of Audi’s China operations, said in Shanghai. “The Q3 will be our entry model to that segment, a city-urban car.” To contact the reporters on this story: Andreas Cremer in Berlin at [email protected] ; Chris Reiter in Berlin at [email protected] To contact the editor responsible for this story: Chad Thomas at [email protected]

2011-04-19 00:00:00 UTC

Public-Worker Retirements Surge as States Cut Benefits to Shrink Deficits

http://www.bloomberg.com/news/2011-04-19/public-retirees-surge-as-states-cut-benefits-to-shrink-deficits.html

B y S i m o n e B a r i b e a u

Teri Essex retired a year earlier than planned when she was offered $56,000 to leave her elementary-school teaching job in Elk Grove, California . Instead of accepting a salary cut, larger classes and less money for supplies from spending reductions made last year by California lawmakers closing a $19 billion budget deficit , Essex, 60, took the money over nine years to retire in 2010 after 21 years of teaching. “The financial buyout was a no-brainer,” said Essex, whose school was 15 miles (24 kilometers) outside Sacramento . Even though she’ll give up about $300 monthly by quitting early, she said, “Once you start thinking about retiring, it was like, ‘Oh yeah, I want to do this.’” California, Florida and Texas are seeing more retirements as rising benefit costs, pay cuts and looming furloughs prompt workers to leave. Inducements to quit early also boosted departures in New York as U.S. states tackled budget gaps totaling more than $540 billion since fiscal 2009, according to the Center on Budget and Policy Priorities. In New Jersey, Wisconsin and Ohio, added motivation came from attacks on unions over costs that strained budgets. “These are people electing to retire because they’re worried,” Jeffrey Keefe, who teaches labor and employment relations at Rutgers University in New Brunswick, New Jersey, said in a telephone interview. “They are demoralized by the current public-employee condemnations.” Potential Brain Drain One-third of state and local workers with special skills, such as teachers, nurses, legal staff, engineers and managers, will be eligible to retire within five years, said Elizabeth Kellar , president of the Washington-based Center for State and Local Government Excellence, a nonprofit research organization. Retirements delayed by the recession and an increase in eligible workers contributed to the recent increases. That may exacerbate a brain drain at states and municipalities, where employment has fallen by 2.5 percent since its peak in August 2008, according to U.S. Bureau of Labor Statistics data. Since 1995, the number of state employees outside education is little changed. New Jersey Governor Chris Christie likened the teacher’s union in his state to “political thugs” in an April ABC interview with Diane Sawyer. He said on NBC’s Today Show in February that benefits were “out of control.” When a teacher at a public event last May complained about the salary at her job, Christie told her, “you don’t have to do it.” May Spike Again Retirement applicants in New Jersey rose 60 percent in 2010 from 2009. Applications to retire in the first seven months of this year fell 16 percent and may “spike” again if lawmakers pass a measure to increase employee contributions to health insurance, said Andrew Pratt, a state Treasury Department spokesman. Christie has proposed workers pay 30 percent of their health care. In Wisconsin , retirement applications jumped 79 percent in the three months that ended in March from the period last year, according to the pension system . Governor Scott Walker has signed a law limiting unions’ collective-bargaining rights, requiring workers to contribute 5.8 percent of salaries to pensions and pay 12.6 percent of health-insurance costs. The law faces a court challenge. Ohio saw a 27 percent annual rise in retirement filings and inquiries in March, Julie Graham-Price, a pension-system spokeswoman, said in an e-mail. Legislators last month passed a law limiting union bargaining rights, restricting local- government pension contributions and requiring workers to pay at least 15 percent of their health-care costs. ‘Dramatic Reductions’ Mona Hauenstein, a 30-year state employee, quit in 2009 as a secretary at the Emergency Management Agency after hearing about a proposal to reduce employer pension contributions, which would have likely led to “dramatic benefit reductions,” according to the pension system’s annual report. “I was going to be a big loser if I didn’t, I felt, because of the reforms that were going to come,” Hauenstein, 50, said in a telephone interview from Lima , Ohio . California teacher retirements rose 20 percent in fiscal 2010 from a year earlier to 15,621, Patrick Hill, a spokesman for the California State Teachers’ Retirement System , said in an e-mail. Other state and local retirements jumped almost 23 percent to 30,119 in 2010, according to the California Public Employees’ Retirement System . $15 Billion Gap The number is likely to grow again this year as lawmakers consider pay and benefit reductions, said Brad W. Pacheco, a Calpers spokesman, to cope with a projected $15 billion 2012 budget gap. “We expect to see an increase in retirements because of pension reforms,” he said in a telephone interview, “and the continued threat of furloughs and pay cuts.” Mike Dennis, 61, who teaches in Willows , 140 miles north of San Francisco , will retire in June from what he said was “the greatest calling I ever had.” Growing class sizes, cuts to student programs and “combative” salary and benefits negotiations are reasons, he said in a telephone interview. “It’s the political environment,” said Dennis, a 16-year first-grade teacher and former police officer. “I don’t even know that I’m considered a valuable person anymore.” The Employees Retirement System of Texas expects about 5,400 retirements in the fiscal year ending Aug. 31, up from 3,500 in a typical year, said Mary Jane Wardlow, a spokeswoman. Insurance Premiums Texas legislators may require employees to pay for 10 percent of their health-insurance premiums to help narrow the state’s budget deficit, Ann Fuelberg, executive director of the retirement system, said at an April 5 legislative hearing. In Florida, retirees entering the pension system rose to 14,306 in the first seven months of fiscal 2011 from 11,639 in all of fiscal 2010 , Kris Purcell, a spokesman for the state’s Department of Management Services, said in an e-mail. Governor Rick Scott , facing a $3.8 billion deficit, wants workers to pay 5 percent of their salaries to their pensions and to lower the portion of state-paid health-insurance premiums. The number of New York public employees who retired in 2010 grew 65 percent to 12,281, after a program that ended Dec. 31 allowed some to leave with full benefits after 25 years rather than 30, said Eric Sumberg, a spokesman for Comptroller Thomas DiNapoli. Iowa , Michigan , Minnesota , Oklahoma also offered early- retirement enticements in 2010, according to a Nov. 23 report of the Denver-based National Conference of State Legislatures. Fiscal Health Most such incentives are unlikely to have a “significant impact” on pension systems’ fiscal health because costs tend to be spread over time, Bill Hallmark, chairman of the Washington- based American Academy of Actuaries public plans subcommittee, said in a telephone interview from Portland , Oregon . State pensions have $479.6 billion of liabilities not covered by assets, according to data compiled by Bloomberg from the latest available filings. The assets covered an average of about 77 percent of liabilities, less than the 80 percent actuaries consider adequate. Illinois is the worst-funded system, according to data compiled by Bloomberg in September, with assets to cover 50.6 percent of liabilities. In that state, 2,600 employees are expected to retire in 2011, up 27 percent from two years ago, because of legislative proposals to cut their benefits, said Tim Blair, executive secretary of the State Retirement Systems. “We’re going to see over the next several years more people retiring at any given age,” he said in a telephone interview. It’s going to be “a steady stream of folks going out the door.” To contact the reporter on this story: Simone Baribeau in Miami at [email protected] . To contact the editor responsible for this story: Mark Tannenbaum at [email protected] .

2011-04-19 00:00:00 UTC

Mersch Says Unfair to Presume Restructuring, FAZ Says

http://www.bloomberg.com/news/2011-04-19/mersch-says-unfair-to-presume-restructuring-faz-says-correct-.html

B y G a b i T h e s i n g

(Corrects comment in fourth paragraph to say Spain has lower public debt than others instead of deficit.) European Central Bank Governing Council member Yves Mersch said presuming countries like Greece will not honor their debt obligations is an “unfair” assumption, Frankfurter Allgemeine Zeitung reported, citing an interview. Countries receiving aid “have parliamentary resolutions to stick to the program,” Mersch was cited as saying when asked about Greek debt restructuring speculation. “To deny these democracies the will to honor their obligation is an unfair and blanket assumption.” Asked if the Greek troubles would derail the ECB’s timeline for interest-rate increases, Mersch said the central bank has a “mandate to secure price stability over the medium term and there are no ifs and buts about it,” according to the newspaper. Mersch also said that Spain is “different” to Greece , Portugal and Ireland and has lower public debt, FAZ said. To contact the editor responsible for this story: Gabi Thesing at [email protected]

2011-04-19 00:00:00 UTC

Agrokor Increases Offer for Slovenia’s Mercator, Tportal Says

http://www.bloomberg.com/news/2011-04-19/agrokor-increases-offer-for-slovenia-s-mercator-tportal-says.html

B y B o r i s C e r n i

Agrokor d.d. increased the offer for a 23 percent stake in Slovenian retailer Mercator Poslovni Sistem (MELR) d.d. to 221 euros ($316) per share, Tportal reported, citing the Croatian company’s President Ivica Todoric. “This is the final offer,” Todoric was quoted as saying by the Croatian news website. The previous offer for Mercator was 206 euros a share, according to Tportal. Pivovarna Lasko (PILR) d.d., which is selling the Mercator holding, said on April 15 bidders have extended offers to buy the stake in the Slovenian company. To contact the reporter on this story: Boris Cerni in Ljubljana, Slovenia, at [email protected] To contact the editor responsible for this story: James Gomez at [email protected]

2011-04-19 00:00:00 UTC

Cinema City, Kety, Mol, Trakcja: Central Europe Equity Preview

http://www.bloomberg.com/news/2011-04-19/mol-gornictwo-trakcja-polska-central-europe-equity-preview.html

B y M a c i e j M a r t e w i c z a n d P a w e l K o z l o w s k i

The following is a list of companies whose shares may have unusual price changes in central European markets. Stock symbols are in parentheses after company names. Share prices are from the last close. Poland ’s WIG20 Index gained 0.5 percent, the Czech PX Index rose 0.8 percent and Hungary ’s BUX Index increased 1.4 percent. Cinema City International NV (CCI) : Central Europe’s largest movie-theater operator was cut to “hold” from “buy” at UniCredit SpA. Its shares climbed 2.2 percent to 38.29 zloty. Grupa Kety SA (KTY) : Poland’s largest aluminum products maker said first-quarter net income rose 25 percent to 18.8 million zloty ($6.8 million) as sales increased to 322.6 million zloty. That compares with a March 30 forecast of 15 million zloty to 17 million zloty on sales of 300 million zloty to 310 million zloty. Kety shares were unchanged at 130.5 zloty. Mol Nyrt. (MOL HB): Hungary’s largest oil refiner said it signed concession agreements with the Romanian National Agency for Mineral Resources for three exploration blocks. Mol fell less than 0.1 percent to 23,900 forint. Polskie Gornictwo Naftowe i Gazownictwo SA (PGN) : The shareholders of Poland’s dominant gas company meet to vote on the company’s dividend for 2010. Gornictwo was unchanged at 3.79 zloty. Trakcja Polska SA (TRK) : The Polish railway builder completed a purchase of Tiltra Group, Lithuania ’s largest construction company, after saying April 1 that the deal had expired. The 777.5 million zloty price in the agreement may be adjusted based on Tiltra’s earnings. Trakcja gained 0.6 percent to 3.63 zloty. To contact the reporters on this story: Maciej Martewicz in Warsaw at [email protected] ; To contact the editor responsible for this story: Gavin Serkin at [email protected]

2011-04-19 00:00:00 UTC

Argentine Stocks: Galicia and Siderar Advance; Edenor Falls

http://www.bloomberg.com/news/2011-04-19/argentine-stocks-ledesma-and-siderar-advance-edenor-falls.html

B y E d u a r d o T h o m s o n

The following companies had unusual price changes in Argentine trading. Stock symbols are in parentheses and share prices are as of 4 p.m. New York time. The Merval Index rose 0.9 percent to 3,332.27. Empresa Distribuidora y Comercializadora Norte (EDN) SA fell 0.9 percent to 2.13 pesos. The Argentine power distributor plans to sell $300 million of additional 9.75 percent bonds. Grupo Financiero Galicia SA (GGAL) rose 3.1 percent to 5.60 pesos, the steepest increase in two weeks. Argentina ’s largest consumer lender led gains among members of the Merval index, in line with global equity markets which rose on positive housing data and earnings news from the U.S. and Europe . Siderar SAIC (ERAR) gained 1.2 percent to 30.3 pesos. Argentina’s largest steel producer is seeking an injunction on the decree that increases the state pension agency’s voting powers in companies in which it holds stakes. To contact the reporter on this story: Eduardo Thomson in Santiago at [email protected] To contact the editor responsible for this story: David Papadopoulos at [email protected]

2011-04-19 00:00:00 UTC

Kenny Says Ireland Seeks Lower Bailout Rates (Transcript)

http://www.bloomberg.com/news/2011-04-19/kenny-says-ireland-seeks-lower-bailout-rates-transcript-.html

B y

Irish Prime Minister Enda Kenny gives a speech about the country’s economy, housing market and the terms of its loan from the European Union and International Monetary Fund . Bloomberg Dublin bureau chief Dara Doyle moderates a question and answer session following the speech yesterday at Bloomberg’s European headquarters in London. (Source: Bloomberg) (This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.) ENDA KENNY, PRIME MINISTER OF IRELAND: I’m glad to be here in Bloomberg and have this opportunity to say a few words to you about our situation. I want to give you a flavor of what the new Irish government, Irish, how we intend to continue our progress of acting decisively to help engineer a recovery in our country as quickly as possible. The purpose of my visit to London today is threefold. Firstly, earlier this morning I met with representatives of the Irish community in Britain. Obviously you would be aware of the very long traditional ties between Ireland and Britain in the context of business, and work and employment and trade, social activities, over very many years. And I wanted on my first official visit to London as Taoiseach to recognize the contribution that local authorities make here, that the British government make here and that the organizations which are funded by the Irish state through our diplomat services make in respect of our citizens who live here in Britain. That contribution is oftentimes not recognized as wisely as it should be, both in Britain and at home in Ireland and it was important for me as somebody who has a deep understanding of this and the long history associated with it that I should do that on one of my first official engagements this morning. Secondly, I want to communicate widely through the media and through this particular event with key opinion formers and the broader business community what the new government is actually doing to address Ireland’s economic challenge. So I am grateful to Bloomberg for hosting us today and to all of you for coming along to both listen and to participate. I had some interaction with Bloomberg in Washington when I was there recently for the St. Patrick’s Day festivities. And, finally, later this afternoon I am going down to Downing Street to meet with Prime Minister Cameron and we will discuss a range of issues there of mutual interest between Ireland and Britain. We met at a number of recent European Council meetings, but this afternoon’s meeting will focus primarily on the unique bilateral relationship between our two countries, Britain and Ireland. And that relationship is one of mutual respect, one of trust and one of opportunity. It is one of friendship and support, including financial support in these more difficult times. As Taoiseach and as leader of the Irish people it is a friendship that I value, that I prioritize and that I intend to develop. This friendship has been achieved through decades of working together towards the goal of peace in Northern Ireland . Many of you, if you have taken any passing interest in that complex problem over 40 years, will understand and appreciate the degree to which all parties and politicians of all parties have put their minds and their intent on bringing about a lasting solution to this which is now in place and being implemented through the Good Friday agreement. As we speak here the election campaign is underway for election to the Northern Ireland Assembly. That Assembly has just completed the first full term of power sharing government ever in Northern Ireland after decades, indeed centuries of division and violence. So that’s a powerful symbol of what Democratic politics can achieve when everybody actually applies their minds to it. It demonstrates to us all that in politics there is no problem, political, economic or social that cannot be resolved. The historic process of peace and reconciliation will be underscored, as John has pointed out, by the historic visit next month of Queen Elizabeth to Ireland, the first such visit of a reigning monarch in 100 years and since independence. It is an event of truly historic importance and it will demonstrate how both nations have come to terms with a difficult past, but it is also a visit that looks forward and shows how two neighboring islands intend to cooperate together for an even stronger future. You will also be aware that the visit of the Queen will be followed a few days later by a visit by the President of the United States, President Obama. That visit will also reflect the unique and the historic ties that exist between Ireland and the United States and that visit will reflect the unique and historic ties that exist in so many ways over so many centuries. And taken together I believe that these two events in this place of one week will provide a springboard for our people to look forward with hope and with confidence to a brighter future. I also believe that they show that whatever else people say about Ireland the Irish we are no ordinary country and we are no ordinary people. We have seen dark days before, very dark days indeed. We have dealt with and overcome adversity in the past. We will do so again with the creativity and the imagination of our people alike to the help of our friends and partners in Britain, in Europe and in the wider world. It’s my belief that we will emerge from our current challenges as stronger than before. And to lead that comeback is the fundamental challenge of the government that I now lead. And I have no illusions, none, about the scale of the challenge that we face. As John pointed out, no government in the history of our state has faced the scale of economic challenge that our government now faces. Well, equally so, no government in the history of our state has been given the strength of democratic mandate that the government I lead now has. I know that this audience is well informed on these matters and you will have your own views on Ireland’s prospects for economic recovery, so I am not here to promise the unachievable or to offer quick and easy solutions when there are none. Nor am I here to ask skeptics to change their minds overnight. I am here to say a few words about how I believe that Ireland will actually recover. And all I ask of this audience with a wide and diverse set of opinions is to listen carefully and to think maybe to think again about the future of our country. For the first time in several years there is a real debate about Ireland’s genuine prospects for export-led recovery and I invite you to debate with us and to participate in that debate in the months ahead. And as we debate that future I am reminded of the old joke that equity markets have predicted ten out of the last five recessions. And I am also told that according to IMF research the bond markets, the bond markets have managed to predict 36 of the last seven defaults. Think about that. We have predicted 36 of the last seven. Unfortunately, I didn’t bring the statistics for politicians predicting a better future. That might be the other way. Ultimately, I recognize of course that economic outcomes will speak for themselves. I know that we will be judged by our results, not our rhetoric, and it results and not rhetoric that actually interest me. I lead a government, as I said, with an overwhelming mandate from the people to do what is necessary, to do what is necessary, to bring about economic recovery and to sort out our own problems. Our people are very pragmatic. They want to know what the scale of the problem is. They want to know the range of options and solutions that have been put forward and they want clarity, and decisiveness and leadership from their government to end the days of uncertainty and confusion and bring about clarity of decision so that people can say I can now plan for the future and for the future of our children. The mandate I’ve been given, the largest in the history of the state, gives my government the authority to make the changes that count. And that gives us the opportunity to give clear leadership and to take hard and tough decisions. And we will make those both with courage and with fairness. The task that I set for the new government which I lead is to carefully formulate and then to implement decisively the policies that are required to address all of our problems. Now after five weeks in office, having inherited a particular legacy and having looked at the scale of that we have already made some significant progress. We have commenced an intensive engagement with all our international partners and that includes discussions I have had already with my fellow members of the European Council on a number of occasions, as well as with the Troika of the EU, the ECB and the IMF. Among the leaders that I have had discussions with and talked with already have been Chancellor Merkel , President Sarkozy, Prime Minister Cameron, the Presidents of the European Council, the European Commission, the European Central Bank , President Obama and US Treasury Secretary Geithner. My ministerial colleagues have been engaged in intensive contacts with their counterparts in the finance ministries and the foreign ministries of Europe. We have made major decisions on the future of our banking system in response to the most severe and the most transparent stress tests carried out with the assistance of highly reputable international experts. We have committed in our program for government to meet the fiscal consolidation targets that have been agreed in the EUR, IMF program and we are on target to do that. In our first five weeks in office we have initiated a far reaching, comprehensive spending review that will be completed in September and that will form a solid base for deficit reduction in the years ahead. For those of you who might not appreciate what’s involved here, for years in our country the Ministry for Finance did the bilateral arrangements with all of the different ministries, money allocated by vote of Cabinet to those departments, but there was never the capacity to actually determine how effectively that money was being spent, what value was achieved, being achieved for that money, of where duplication or waste occurred. We have split that department into two separate departments, one which is the Department of Finance for that bigger picture, but the second in respect of senior ministry dealing with the area of public service reform and public expenditure. And this comprehensive review will go into every element of every vote of every department to see how that money is being spent, how it’s being used, where that program should be abolished, where the program should be limited or where the program should be enhanced. And that process will be completed by September, which will allow for the first time a really true and accurate picture of the Irish internal budgetary situation as we prepare a program for the 2012 budget which will be introduced later in the year. Last week we concluded successfully, I might add, the first review of the EU’s ECB, IMF Troika team in Dublin. The Troika agreed that Ireland is fully compliant in respect of the conditionality set out on the EU, IMF program to the end of the first quarter. It expressed the strong support for the actions adopted by the new government in relation to bank restructuring and bank recapitalization. We agreed to change some aspects of the program that were concluded with the previous government and to replace those with proposals that we included in our own new program for our government. These include changes in the minimum wage with a compensatory adjustment on employers’ social insurance and a new fiscally neutral jobs initiative which will be announced in the Irish Parliament in May. There was also an important agreement that a transfer of loans with a value below EUR20 million to the National Management Agency will not proceed. Instead, the banks will manage down their exposure to these loans themselves in line with the government’s new policy. While our problems lie predominantly in the world of banking and economics, I also believe that part of the solution lies in the world of politics and political reform. The new government program actually contains the most far reaching political reforms since independence. These reforms will be vigorously and swiftly implemented. I can speak with some authority and experience in this regard as I happen to be the longest serving member of the Irish Parliament. In that sense I know the perception and the frustration that citizens have when they see a never ending series of circles about how government does its business in its broadest sense and we intend to change that. We have taken clear action to reduce pay and perks for politicians and to change how we appoint persons to serve on state boards and in the senior public service. As you would be aware, there are already have been significant changes in the leadership of our central bank and financial regulator, as well as in the management of the banks, more to follow. We have reorganized the machinery of government to give the highest priority to public service reform and to job creation , while we are bringing new methods and new expertise in key areas such as banking policy to give an injection of competence and managerial experience from the outside to the public service. We are also planning a series of important national referenda to modernize our Constitution. It is my intention that the pace and the quality of that reform will be maintained and indeed enhanced over the next number of months. I believe that just as Ireland had seen the worst of many aspects of the global economic crisis we can now show the way to new ways of doing business that become a model for other countries for the future. Of course, I fully acknowledge that there is a long and difficult road ahead to get to that destination. Politics was never meant to be a bed of roses. The challenge facing me, and my government and the government I lead are unappreciated in that regard. There are questions we have to answer on that route about our banking system, about our fiscal sustainability and about our prospects for economic growth. I would like to offer a few observations on these issue if I may, which are the key dimensions of our economic equation. On banking the key objective for my government is to strengthen fiscal sustainability by separating bank risk from that of the sovereign. Clearly this will only be achieved by returning the banking system to health. The recent capital and liquidity assessment exercises, the so-called PCAR and PLAR exercises by the Irish Central Bank have achieved considerable attention. They have been extremely thorough and transparent. The input of the respected international consultants, including Blackrock, ensured a really high degree of external valuation. The process was also subject to close scrutiny by the IMF, by the European Commission and by the ECB. It has set the bar very high indeed in respect to the standards now expected of both Irish and foreign banks by Irish regulators. A radical reorganization of the banking sector in Ireland is now underway. The banks will be required to unwind EUR77 billion of non-core assets so that they refocus on the core business of supporting real economic activity in Ireland and in Northern Ireland. There will be major consolidation within the sector. We will move to two pillar banks of roughly equal size, along with competition from foreign banks already in the market. The analysis suggests that a capital injection of EUR24 billion is required. This figure was calculated to absorb shocks of exceptionally higher levels to the banking system over the next three years. It should be noted that EUR5.3 billion of this represents a buffer over and above what was required to meet the requirements of the stress tests. Moreover, EUR3 billion of this figure will represent contingent capital. We also expect that the institutions will raise a not insignificant proportion of this capital by themselves. Accordingly, therefore as losses emerge over the next few years’ capital level will remain high by international standards, even under a distressed highly and likely scenario. The reaction to the stress tests from the markets and others has been very encouraging. It reinforces our belief that the tests were extremely credible and robust. The EUR24 billion required by the banks for capital purposes is within the funding element available for this purpose from the EU, IMF program. We will also seek direct contributions by requiring further significant contributions from subordinated debt holders, by the sale of assets to generate capital, and where possible, by seeking private sector investors. We will make our banks smaller, more focused, better funded and better capitalized. We will transform our banking system to effectively serve our economy and to contribute to full recovery. On the public finances there are some positive signs in relation to Ireland’s fiscal position, although there are undoubtedly, undoubtedly serious challenges as well if the economy does not perform as well we expect. 2010 was a year of stabilization. The overall Exchequer position was in line with the Department of Finance estimates set in December 29 with tax revenues finishing the year above target. The underlying general of the government deficit, that is the deficit excluding the capital support committed to some of our financial institutions, is also expected to have met the target set in December 2009. The Exchequer returns of revenue and spending for the first quarter of this year, 2011, were also broadly consistent with expectations with tax revenues, despite being a little behind target, up almost four percent in the first quarter of 2010. In the past two weeks you may have noticed there have a number of announcements from the various credit rating agencies regarding Ireland’s sovereign rating. The news has been mixed, but it is important to state that all of our ratings remain within the investment grade band. Our external partners have acknowledged that Ireland is making, as they say, good progress in overcoming the crisis. We have reached our targets up to the end of March by a comfortable margin, as they point out. This reflects our seriousness, our absolute seriousness in doing what is necessary. Our balance of payments, current account, is expected to move into surplus this year. This is an important indicator of the long-term sustainability of the Irish economy. We have recovered from a higher level of debt interest burden in the past, achieving a dramatic turnaround through fiscal discipline and high levels of growth. This can and will be achieved again. As a member of a monetary union we also rely on the support and the solidarity of other members and we are grateful for that. And we will continue to engage with our European partners to ensure that the program delivers the outcome, which is in all our interests, Ireland’s interests and Europe’s interests. I am confident that Ireland will meet our obligations under the program. We will also continue to make the strong case for a reduction in the interest rate payable for funds under the program. It should not be dependent on Ireland making a concession that will threaten the economy’s growth potential. That would be awfully self-defeating. That is why we simply could not accept any adjustment in the Irish corporation tax rate as it would damage the prospects for our recovery. That is not to say that the new government will not take tough or unpopular decisions. We fully recognize that confidence and recovery depend upon stabilizing the public finances. So the new government is determined to continue the program of fiscal consolidation, including by legislating for an increase in the pension age, a reduction in the size of the public workforce by 12 percent from its peak, and establishing a new fiscal council and enacting groundbreaking fiscal responsibility legislation. By 2014 Ireland will have delivered a financial consolidation equivalent to 20 percent, 20 percent of GDP, most of which has already been secured. The Irish people are determined to pick ourselves up, to pay our own way and to contribute to the future progress of the European Union. And I believe our partners will continue to support us and work with us to ensure that the program facilitates an early return to the markets. We require greater flexibility, not more money, to enable us to do so. On economic growth the underlying reason for confidence is the medium-term growth potential of the Irish economy. As you know, Ireland is one of the world’s most open economies and our exports our performing very strongly. Right now we export 80 percent of what we produce. In 2010 our exports grew by 9.5 percent. By the end of 2011 we expect our exports to exceed our record pre-recession level. This shows the economy rebalancing towards exports. We also continue to attract significant levels of inward investment, despite the turbulent global economy in which, according to the OECD, foreign direct investment declined, declined by eight percent. Our inward investment agency, the Industrial Development Authority of Ireland, secured 126 investments in 2010 and its’ client companies created almost 11,000 new jobs. From that perspective there has never been a better time to invest in Ireland. Intel, Google, eBay, Facebook, Citigroup, Boston Scientific are just some of the world-class global companies that expanded operations or increased their R&D in Ireland in the last 12 months. These companies know our country and they see a bright future there. We remain, according to independent international studies, fourth in the world for availability of skilled labor, fourth for being open to new ideas, sixth for labor productivity and seventh for the flexibility and the adaptability of our people. We will maintain Ireland’s 12.5 percent corporation tax, which is a longstanding and necessary part of our enterprise strategy. One of the positive outcomes of our recent difficulties is that our cost competitiveness has improved significantly. And one of the challenges for us is to explain that in the context of where competition lies for us around the world. Our unit labor costs have fallen significantly. The European Commission forecasts an improvement of 14 percent relative to the euro area by 2012. Consumer price inflation has been below that of the rest of the euro area since the beginning of 2009, which delivered substantial reductions in relative costs. We are implementing structure reforms to put more downward pressure on costs. In other words, we are delivering a real exchange devaluation within the monetary union. These cost reductions are already translating into substantial trade and employment benefits in an open business- friendly economy like Ireland now has. While all of the rating agencies have recognized the recent weaknesses evident in the Irish economy, they have also pointed to the underlying strengths in order to leave a flexible open economy and that the ongoing recovery in export growth will drive a rising trade and current accounts surplus. The general view contained within these assessments is that the economy is stabilizing and that our long-term growth potential remains high. In this regard, the agencies all point to our social stability and strong political commitment to fiscal consolidation as being a key support to Ireland’s credit rating. The importance of those factors, especially following the recent general election decision, should never be underestimated. Last week the Irish Central Bank projected 0.9 percent growth in 2011. And most other forecasters expect a modest return to GDP growth this year. The government will publish our own revised forecasts later this month. The key element, therefore, of our economic recovery strategy is to develop policies that would allow job growth and sustainable enterprise to flourish. To this end, we will deliver a jobs initiative next month which will, among other things, reduce the lower rate of VAT, have the lower rate of employer social insurance contributions, enhance our labor market policies and accelerate labor-intensive capital projects. This initiative aims to underpin domestic confidence and therefore help reduce precautionary savings which are currently at very elevated levels. Our strategy for growth is to play to our considerable strengths, while taking swift and decisive action to comprehensively address our weaknesses. We are convinced that growth is the key and that it can and will be achieved. So, in conclusion, my key message is to you here in Bloomberg today are as follows. We are meeting our targets under the IMF, EU program of support. We are getting on top of our banking crisis. We have taken decisive action to restructure and recapitalize our banking system, which will be finished by July, at costs that are within the envelope provided for the, provided for by the IMF, EU program. The costs will also be offset by measures involving subordinated bond holders, asset sales and private finance. We are beginning to get our public finances in order. We are working with our regional partners to make sure the program operates in a way that facilitates early return to the markets, including the level of interest rate charged. We have taken dramatic action to reduce our fiscal deficit and we will continue on this path to make the target of a three percent deficit by 2015. And nothing will deviate us from that plan. Economic growth is the key factor in debt sustainability. We are taking early policy decisions to accelerate growth in job creation and the economy will return to growth this year. We have made significant improvements in competitiveness, including an estimated 14 percent improvement in unit labor costs relative to the euro area by 2012. Our balance of payments current account is due to go positive this year, which is an important indication of sustainability. We remain a magnet for foreign investment by providing a competitive business-friendly environment and a skilled, imaginative and creative workforce. We will retain our rate of corporation tax, a longstanding part of our enterprise strategy. We are also working very hard to rebuild Ireland’s reputation, both inside the European Union and beyond, but ensuring the progress that we are making is communicated effectively and by assuring other governments of our seriousness of intent in this matter. As we speak, all of the ambassadors of the European Union are being called today to our Department of Foreign Affairs , are being spoken to by the Tanaiste or deputy, a deputy head of government in respect of the program that we adopt and what we are about. We intend to recall all our own ambassadors from around the world, our enterprise people, our industrial development authority people to talk to them about their mission, about the program we have in mind for them and how important it is to let the word there that this new government has a different sense of priority, a different sense of commitment, a different level of seriousness in sorting out our fundamental problems at home so that we can play our part, pay our way and be responsible and central for the continued progress of the European Union and rebuild our reputation beyond the borders of the Union. To that extent I intend to travel again to the States early in May to meet with business interests, banking people and the political forces in New York . So this is a work in progress with the emphasis on the world progress. We have proven before how a small and regional economy can grow at a fast rate over a sustained period. And we can do so again. My belief as somebody who meets people constantly, both in business and who would like to be in business, that the frustration that has been endemic in our people and our economy for quite some time has been released in part by the evidence that this government is now taking decisions that are in our country’s interests. And I believe that when we fix the parts of our economic engine that have not been working in the way they should the fuel of confidence that we can supply to our people will bring about a resurgence of growth, a resurgence of spending capacity, a resurgence of interest in employment, in job creation, career opportunities which will be the driving force to restore Ireland’s good fortunes. So I thank you for listening and will take whatever questions you have to ask in, over the next few minutes. Thank you very much indeed. UNIDENTIFIED SPEAKER: Thank you very much, Taoiseach, for that comprehensive overview. So without further ado I will pass you over to Dara Doyle, our Dublin Bureau Chief, who will moderate the Q&A session. DARA DOYLE, BLOOMBERG NEWS: Thanks very much, John. First of all, thank you to the Taoiseach for coming into the bear pit that is Bloomberg at times, much appreciate it. We have, unfortunately, not much time for questions, 13 minutes to be precise, so I am going to have some quite strict ground rules with questions, if that’s okay. It’s one question per person and if you could state your name and the organization you are from. And what we are going to do is to include the questions in three and the Taoiseach can take them in the order they are looking first. Okay, who would like to open the opening question, the fine here? Yes, say something. QUESTION: Hi. I’m Thomas Costrick (ph) from (inaudible) Bank. Mr. Prime Minister, your government seems to have backtracked on the minimum wage. How should we interpret this in the framework of your strategy of an export-led recovery? Thank you. DOYLE: Okay. Second question? EDA CARANY: (OFF-MIKE) DOYLE: You see. It’s away from the mic (inaudible) EDA CARANY: Eda Carany, GIG Partners. You have made reference numerous times throughout the speech about Ireland’s willingness to pay your way independently and I would to get a bit more clear about obviously in respect to the banking sector you have tiered the banks, two core banks, Anglo Irish and other banks, and what’s your sort of strategy going forward for these banks? DOYLE: And one last question please, so the gentlemen here at the back and thank you. DERRICK HALFPENNY: Derrick Halfpenny from the Bank of Tokyo Mitsubishi. Taoiseach, you mentioned the fact that Ireland in the past has managed to get out of economic problems like we have at the moment. Of course back then though, historical examples, we had our own currency and our own monetary policy. In that regard, does it not concern you that the financial markets are currently pricing in about 100 basis points of monetary tightening over the next 12 months, which is resulting in a very strong gain for the euro against both the pound and the dollar? DOYLE: Okay. So, Taoiseach, that first that’s questions there, the euro, the minimum wage and banking strategies he said there. KENNY: Well, first of all, in respect of the question with backtracking on the minimum wage, in fact it’s the other way around. Prior to the general election we agreed that we would restore the minimum wage to what it was. And the Troika last weekend agreed with that. I met with the Troika as leader of the Party in opposition before Christmas, before the election. And we discussed a range of issues with the Troika. And while the agreement had been put together by the previous government the Troika agreed that sectors of that agreement within the overall conditions could be transposed one with the other. And from that point of view we set out that we would restore the minimum wage to what it was. It affects two percent of our workforce. Obviously we didn’t want to have a situation where you had a free for all in terms of the labor market. And there are other issues that have already been agreed about arrangements where there are obstacles to labor employment, and to employer positions dealing with overtime, and joint labor agreements and so on that are going to be a part of a separate package which will compensate on the other hand in respect of the minimum wage. So it’s not a case of backtracking. It’s a case of actually having agreement from the Troika in implementing what is part of our program for government. In respect of the banking position, obviously we had six dysfunctional banks and the problem with the Irish economy, if you like, as a patient staggering along, but unable to contribute. So our government looked at this and we took a series of serious decisions about it. So we are going to have two core pillar banks, the Bank of Ireland and Allied Irish Bank. Anglo Irish Bank is a bank being wound down and obviously has been central to the catastrophe that affected so many people, as a consequence of the Irish economic crisis. So our two pillar banks are going to be the Bank of Ireland and AIB, together with the EBS. And we expect that the deleveraging that will take place now will provide a core element of at least EUR10 billion in credit for lending over each of the next three years. And these banks have been required now by law this position to core and non-core elements, core is with Ireland, to Northern Ireland, and non-core is beyond that. So in addition to that, in respect to the jobs initiative which we will introduce in May, there will be an insurance, a credit insurance team drafted there because one of the problems for the real economy and real business is that they can’t get credit from the banks. Overdrafts have been cut and people who wanted to change direction or diversify simply haven’t been able to get credit. So where you have talk of credit being lent it didn’t actually apply. So from that point of view an element of our jobs initiative will be in respect of a credit insurance scheme which will lessen the risk for the banks, provide greater flexibility, and therefore allow for that sense of confidence to come back into the market, which we believe our people have always been really practical about and interested in. And I expect a strong resurgence there. I might say that in visiting loads of firms over the last six weeks before the election many of them said, you know, we had 50 employed or 100 employed. We are now less than half that or a third of it. I would like to get back again to the point where we can have that measure of confidence. In respect of the charge in respect of the interest rates , at the meeting in Brussels of the heads of government we didn’t actually make a decision in respect of Ireland in that because the reason was that I spoke to President Van Rompuy the difficult stress tests were not completed in respect of Ireland and we agreed that that would be better left to the ministers of finance who have carried that on. That wasn’t dealt with in Budapest, which was an informal meeting. The Portuguese government have applied for assistance under the bailout fund. IMF officials are there at the moment. But it did - the meeting in Brussels did say that it would be - it was agreed that countries participating in the bailout package under the EFSF program should have their interest rates, interest rate reductions applied. Now Greece got a 100 percent, a one percent reduction, 100 basis points, but they are not in that package. And they got also an extension of the period involved there. So interest is not due, in respect of Ireland’s case, until October, November, as we have got time now to reassure our European colleagues of how serious we are about this. The IMF have recently said that an interest rate reduction should apply in the case of Ireland. We believe that our economic growth projections will allow us to meet our requirements in this matter. And hopefully when we can bring about a reduction of interest rate and that would be to our advantage also. DOYLE: Okay. Two more questions please, surely, period. And the gentleman here? QUESTION: Ofanga Pickly, Reg Group (ph). Around the 70 percent of the mortgages are already in arrears now. Most of them are a variable rate. The ECB is hiking. Is that the next big challenge for the government? If so, what have you got up your sleeves to tackle that problem? Thank you. DOYLE: Second question from some? QUESTION: Tshock James McGrain (ph) with the London Irish Graduate Network, and my question is regarding graduates. Very recently we have noticed a huge significance, a significant increase in the mass exodus of graduates from Ireland. These are graduates that the governments have invested huge, vast sums of money in and they are very important to the development to the economy in the future. I would just like to know what the policies are for this government to retain these graduates or what policies they have to bring them back into the country. Thank you. QUESTION: (inaudible) and BBC . We - this morning we had another round of rumor and counter rumor in the markets. FT was saying that the Greeks had started a new, renegotiating or in extending their schedule of payments, rescheduling them. This kind of rumor and counter rumor, surely that needs to - that’s not going to stop before some sort of grand bargain involving some sort of rescheduling of debt for all three countries is sorted, or the rates come cascading down to pre-recessionary levels. DOYLE: Graduates. KENNY: Well, obviously the question about mortgage arrears is obviously one of serious concern for us. Some people have been in the negative actually for quite some time. Others have had some difficulty in meeting their mortgage arrears and as a consequence of the latest increases others will have difficulty from here on. Obviously a moratorium has been introduced. There are a number of issues that the Minister of Finance will present to the Irish Parliament to the Dail in the near future dealing with distressed mortgages, which is of a daily concern to so many people. It’s a serious issue for us and government are going to focus on that with a series of announcements, some of which have already been made, over the next couple of weeks. With respect to the graduates, I was at a conference in Dublin Castle on, today’s Monday, on Friday. And one of the points being made by international experts was you ask a class of leaving certificate students in Ireland how many are going to form their own business the average response is about 20 to 25 percent, as against places in the United States where it would be 80 or 90 percent. Well, the thing is to get a sense of, on the one hand, of the stream of education does, but on the other to have a culture that’s far stronger in the context of business. And we don’t want to see graduates having to go to Vancouver , or Seattle , or Australia or wherever unless they want to go by choice. And that’s why in the context of the comprehensive spending review we want to see that the Irish taxpayers’ gets the best impact of what it should be at. And I don’t see any reason why we get the fundamental problems sorted out here that we can’t have real growth in the Irish economy where that level of creativity and ingenuity, which is now being exported and drifting abroad, cannot stay at home. In fact, I don’t see why many companies who have received substantial assistance from the IDA don’t continue their programs of graduate employment and graduate training, take them on. So as part of our own jobs initiative we will free up that labor market for the graduate employment. And I might say, as you well know in an organization like Bloomberg, the next decade will see massive changes with the information in genetics, and biotech, and robotics and nanotechnology. And our colleges of technology, our universities, we need to gear up for those changes and those challenges. I might say that the evidence from over the years is that our young people they can measure up to the scale of challenge and competition from their peers around the world. And our education system has got to redirect itself to deal with that opportunity. So while some would obviously go because they want to go, we want to provide a situation whereby serious government decisions you create a country where people who want to stay, where it’s attractive for them to stay, where they are not taxed out of existence and where the opportunity exists to give them, give vent to their flare and their ability. I have read the - heard Joe there, have read about the report about the Greek government renegotiating their position. Obviously there are some serious challenges here for a number of countries. We are focusing on ours and our problems, we believe, are surmountable and that’s why, that’s why the mandate given to me and the government is to sort this problem out and deal with the fundamental issues that have been around for a long time now. I spoke to Mr. Papandreou prior to the last meeting in Brussels. He was happy at that time to have a reduction of one percent given to him and a longer period. So, and from our perspective the issues that relate to our economy and its potential to growth are surmountable. That’s where we are focused, and as I say, we want to get back to a position as quickly as possible where we can goodbye to the IMF and the EU in terms of this particular deal, and get back to the bond markets and be in charge again of our economic destiny. That’s the big challenge. And as I say, we are not looking to get into a program. We are in a program. And the IMF and the EU are now assessing every issue that Ireland has to deal with, so within those constraints we want to give freedom to our people to grow and have growth in our economy and get back to a point where we can restore our reputation nationally, internationally and prove our point. So that’s the challenge of politics. Nobody before me who sits in the Office of the Taoiseach has had to deal with the scale of the challenge. Equally so, nobody before me has had the mandate from the people to sort it out. They expect action. They expect change. They expect decisiveness and that’s what they are going to get. DOYLE: Okay. So this is a good point to wrap it up. Unfortunately, we don’t have any time for any more questions, but just to let you know that the Taoiseach has graciously agreed to do a Bloomberg interview later on, so that will be aired this afternoon and there will be many more questions asked there. And just to wrap up I would like to thank some people. First of all, I would like to thank all the clients for attending today, much appreciate your interest obviously. And second of all, I would like to thank Florence for organizing this fantastic event and third, and most importantly, I would like to thank the Taoiseach for agreeing to - KENNY: Well, I would like to thank all the people here for taking the time to come along, and listen to us and participate here. And I hope you get a flavor of the seriousness of intent that we have got here. I believe our country is going to come through this stronger, with a better sense of values, will have a much stronger element in which to build the future. And I look forward to your participation in that. Thanks very much. ***END OF TRANSCRIPT*** THIS TRANSCRIPT MAY NOT BE 100% ACCURATE AND MAY CONTAIN MISSPELLINGS AND OTHER INACCURACIES. THIS TRANSCRIPT IS PROVIDED “AS IS,” WITHOUT EXPRESS OR IMPLIED WARRANTIES OF ANY KIND. BLOOMBERG RETAINS ALL RIGHTS TO THIS TRANSCRIPT AND PROVIDES IT SOLELY FOR YOUR PERSONAL, NON- COMMERCIAL USE. BLOOMBERG, ITS SUPPLIERS AND THIRD-PARTY AGENTS SHALL HAVE NO LIABILITY FOR ERRORS IN THIS TRANSCRIPT OR FOR LOST PROFITS, LOSSES OR DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THE FURNISHING, PERFORMANCE, OR USE OF SUCH TRANSCRIPT. NEITHER THE INFORMATION NOR ANY OPINION EXPRESSED IN THIS TRANSCRIPT CONSTITUTES A SOLICITATION OF THE PURCHASE OR SALE OF SECURITIES OR COMMODITIES. ANY OPINION EXPRESSED IN THE TRANSCRIPT DOES NOT NECESSARILY REFLECT THE VIEWS OF BLOOMBERG LP. #<186166.5610485.2.1.87.23378.25># -0- Apr/19/2011 07:32 GMT

2011-04-19 00:00:00 UTC

Emanuel Said to Select Lois Scott to Be Chicago's Chief Financial Officer

http://www.bloomberg.com/news/2011-04-19/emanuel-said-to-select-lois-scott-to-be-chicago-s-chief-financial-officer.html

B y D a r r e l l P r e s t o n a n d J o h n M c C o r m i c k

Rahm Emanuel , Chicago ’s mayor- elect, will announce that he has chosen Lois Scott as chief financial officer for the third most-populous U.S. city, a person familiar with the decision said. Scott, president of the Chicago financial advisory firm Scott Balice Strategies, will be named to the post tomorrow, according to the person, who wasn’t authorized to speak publicly about the selection. The Bond Buyer reported earlier that she was being considered for the post. Scott, who co-founded Scott Balice in 2003 after 20 years in public finance and government, didn’t immediately respond to a telephone call and e-mail seeking comment. She would replace Gene Saffold, a former managing director for national accounts at New York-based JPMorgan Chase & Co. (JPM) who Mayor Richard M. Daley appointed to the post in March 2009. Emanuel, 51, elected mayor on Feb. 22, will be sworn in on May 16, succeeding Daley, who is retiring after 22 years. Emanuel said before the election that the city needs a spending freeze and $75 million of immediate budget cuts to tackle the financial challenges it faces. He will enter office facing a declining population, a 2012 budget deficit forecast at more than $600 million and shortfalls in the pension funds for city workers. Emanuel has pledged to maintain a defined-benefit pension system for city workers, while calling for sacrifices from all. He has said he will forgo a pension as mayor. Repeated use of reserve funds to balance the city’s budgets led Standard & Poor’s to cut Chicago’s credit rating on Nov. 5 by one level to A+, the fifth-highest grade. To contact the reporters on this story: Darrell Preston in Dallas at [email protected] ; John McCormick in Chicago at [email protected] . To contact the editor responsible for this story: Mark Tannenbaum at [email protected]

2011-04-19 00:00:00 UTC

Canada March Consumer Price Index Report (Text)

http://www.bloomberg.com/news/2011-04-19/canada-march-consumer-price-index-report-text-.html

B y I l a n K o l e t

The following is the text of Canada's consumer price index report for March released by Statistics Canada . Consumer prices rose 3.3% in the 12 months to March, the largest year-over-year increase since September 2008. This advance follows a 2.2% increase in the 12 months to February. Energy prices increased 12.8% during the 12 months to March, following a 10.6% advance in February. Gasoline prices increased 18.9% in March, following a 15.7% gain in the 12 months to February. Prices for fuel oil and other fuels increased 31.3%, while electricity prices rose 4.3%. Excluding energy, the Consumer Price Index (CPI) rose 2.4% in the 12 months to March, following a 1.4% increase in February. Prices for food purchased from stores rose 3.7% in March, the largest year-over-year advance since August 2009. This increase follows a 2.0% gain in February. Other items that contributed significantly to the pickup in prices were travel services, clothing, and the purchase of passenger vehicles. Seasonally adjusted monthly CPI increases On a seasonally adjusted monthly basis, consumer prices rose 0.8% from February to March, the largest increase since October 2010. The food index, which was up for the fourth consecutive month, rose 1.6% in March. The transportation index, which includes gasoline, advanced 0.6% in March, following a 0.3% increase in February and continuing its string of increases since July 2010. Seasonally adjusted, the clothing and footwear index posted a monthly increase of 2.1% in March, after remaining unchanged in February. The recreation, education and reading index, which includes travel services, increased 0.5% in March, following a 0.2% advance in February. This marks the seventh straight monthly increase for this index. 12-month change: Prices increase in all eight major components On a year-over-year basis, prices increased in all major components of the CPI in March. Except for alcoholic beverages and tobacco products, prices rose at a faster rate in March than in February. The largest increase occurred in the transportation component, where prices rose 6.6% in the 12 months to March, after advancing 5.1% in February. In addition to higher gasoline prices, consumers paid more for passenger vehicle insurance premiums and for air transportation. Prices for the purchase of passenger vehicles rose 0.2% in the 12 months to March, following a 0.9% decrease in February. Food prices rose 3.3% in the 12 months to March, following a 2.1% rise in February. Prices for fresh vegetables rose 18.6%, as bad weather in Mexico and the southern United States reduced supply. The cost of meat rose 5.0% in March, as beef and pork prices increased. Higher prices were also recorded for bakery and cereal products as well as for dairy products. Shelter costs rose 2.4% in March, after increasing 2.2% in February. In addition to higher prices for fuel oil and other fuels, as well as for electricity, homeowners' replacement cost increased 3.2% in the 12 months to March. However, mortgage interest cost, which measures the change in the interest portion of payments on outstanding mortgage debt, and natural gas prices continued to decline. The recreation, education and reading price index increased 2.3% in the 12 months to March, after decreasing 0.3% in February. The difference can be mainly explained by traveller accommodation prices, which increased 1.7% in March compared with the same month last year, after posting a 10.7% decline in February. The price decline in February was more the result of higher prices for hotel rooms in February 2010 during the Winter Olympics in Vancouver rather than recent price decreases. Prices for household operations, furnishings and equipment advanced 1.9% between March 2010 and March 2011. Within this component, higher prices were recorded for child care and domestic services. The health and personal care price index rose 2.6% in March, following a 2.0% increase in February. Consumers paid more for non-prescribed medicines, but less for prescribed medicines. For alcoholic beverages and tobacco products, prices rose 2.5% in March with cigarette prices increasing 5.7%. Prices for clothing and footwear rose 0.9% in the 12 months to March, the first year-over-year increase since November 2009. The advance follows a 2.0% decline in February. This year in March, fewer clothing items were on discount compared to the same month last year. The provinces Consumer prices rose at a faster rate in every province in March compared with February, year over year. Gasoline continued to be a major factor contributing to the increase in consumer prices in all provinces. In the 12 months to March, Nova Scotia (+3.9%) posted the largest increase in consumer prices. In Ontario, consumer prices rose 3.6% in the 12 months to March, after advancing 2.5% in February. Gasoline prices in Ontario rose 20.4% in March, following an 18.3% increase in February. Prices for food purchased from stores increased 3.6% in March, after advancing 1.8% in February. Higher prices were observed for fresh vegetables as well as for bakery products. Consumer prices in Quebec increased 3.3% in the 12 months to March, following a 2.2% advance in February. Prices for gasoline rose 18.5% in March. Consumers paid 4.6% more for food purchased from stores in March, after paying 1.7% more in February. Prices rose for fresh vegetables, meat and dairy products. Prices in British Columbia went up 3.1% in the 12 months to March, following a 1.8% increase in February. Much of the difference can be attributed to traveller accommodation, where prices decreased at a much slower rate in March (-3.1%) than they did in February (-38.1%), from a year earlier. Drivers in British Columbia paid 16.3% more for gasoline in March compared with the same month in 2010. This rise follows a 12.6% increase in February. Consumers also paid more for food purchased from restaurants and electricity. The Bank of Canada 's core index The Bank of Canada's core index advanced 1.7% in the 12 months to March, following a 0.9% rise in February. The higher increase in March was mainly a result of larger price increases for travel services, clothing, and the purchase of passenger vehicles. The seasonally adjusted monthly core index increased 0.5% in March, the largest increase since November 2008. The March increase follows a 0.1% decline in February. Note to readers The Bank of Canada's core index excludes eight of the Consumer Price Index's most volatile components (fruit, fruit preparations and nuts; vegetables and vegetable preparations; mortgage interest cost; natural gas; heating oil and other fuels; gasoline; inter-city transportation; and tobacco products and smokers' supplies) as well as the effects of changes in indirect taxes on the remaining components. To contact the reporter on this story: Ilan Kolet in Ottawa at [email protected] To contact the editor responsible for this story: Marco Babic at [email protected]

2011-04-19 00:00:00 UTC

U.S. Repo Close: Current Five-Year Note at Lowest, Minus 0.15%

http://www.bloomberg.com/news/2011-04-19/u-s-repo-close-current-five-year-note-at-lowest-minus-0-15-.html

B y C o r d e l l E d d i n g s

The following is a summary of closing rates in the market for U.S. repurchase agreements, or repos, in New York . All repo rates are for overnight transactions at the bid side of the market as reported by GovPX Inc., a unit of ICAP Plc, the world’s largest inter-dealer broker. Lowest Repo Rate as of 10 a.m. New York time: The current 5-year note closed at the lowest repo rate: negative 0.15 percent, up from negative 0.4 percent. Other Rates: Old 2-year note: 0.1 percent, unchanged. Current 2-year note: 0.1 percent, unchanged. Old 3-year note: 0.1 percent, up from 0.05 percent. Current 3-year note: 0.15 percent, unchanged. Old 5-year note: 0.1 percent, down from 0.15 percent. Old 7-year note: 0.15 percent, unchanged. Current 7-year note: 0.15 percent, unchanged. Old 10-year note: 0.15 percent, unchanged. Current 10-year note: 0.15 percent, unchanged. Old 30-year bond: 0.15 percent, unchanged. Current 30-year bond: 0.15 percent, unchanged. The bid for a security is the price that is quoted and available for immediate sale of an asset. The offer is the price available for immediate purchase of an asset. Current issues are the most recently issued securities, and old issues are those sold previously with the same maturity. Specific Treasury securities in the greatest demand are considered to be “on special.” Firms that want to borrow them are willing to lend money overnight at rates below those on general collateral or other Treasuries in exchange for them. Behind the Numbers Securities firms use repos to borrow money to finance positions in Treasury, corporate and mortgage-backed securities. They also borrow securities on reverse repos to make deliveries of sales of securities the dealers don’t own, and engage in speculative repo trading based on expectations for the future direction of interest rates . Current 5- and 10-year notes often trade at the lowest repo rates because they are widely used as hedges against positions in corporate, mortgage and global debt. General Collateral Delivery repos: 0.17 percent, up from 0.16 percent. The collateral is sent to an investor’s bank against receipt of funds. Triparty repos: 0.2 percent, up from 0.19 percent. A clearing bank acts as a third party to make sure there’s adequate collateral behind the repo and that it conforms throughout the life of the transaction to the investor’s requirements, providing the customer with an additional layer of safety. Securities firms are willing to pay higher rates to borrow money through triparty repos because they can allocate leftover collateral remaining at their clearing bank late in the day as backing for the transactions, saving on delivery costs. Rates on general repos, or those backed by non-specific collateral, are usually set slightly below federal funds levels. Treasury Bills The three- and six-month Treasury bills closed at 0.15 percent, unchanged. Federal Funds Federal funds, the overnight interbank lending rate, was at 0.1 percent, within the Federal Reserve ’s target range of zero to 0.25 percent, according to ICAP. To contact the reporter on this story: Cordell Eddings in New York at [email protected] To contact the editor responsible for this story: Robert Burgess at [email protected]

2011-04-19 00:00:00 UTC

Cuban Puts Landmark Theatres, Magnolia Pictures Up for Sale

http://www.bloomberg.com/news/2011-04-19/cuban-puts-landmark-theatres-magnolia-pictures-up-for-sale-1-.html

B y A n d y F i x m e r a n d J o n E r l i c h m a n

Billionaire Mark Cuban has put his Landmark Theatres and Magnolia Pictures up for sale, saying entertainment companies are attracting “huge valuations.” Cuban, 52, is “just testing the waters,” he said yesterday in an e-mail in response to a question from Bloomberg News. “We won’t sell unless the offer is very, very compelling.” Moelis & Co., a New York-based investment bank, is handling the auction, according to a person familiar with the situation. Bidders are expected to file their offers next week, said the person, who wasn’t authorized to speak publicly. Landmark Theatres , founded in 1974, operates 55 cinemas with 245 screens in 21 cities, including New York , Los Angeles and Chicago. The decision to put it on the block comes as U.S. box-office sales have declined 20 percent this year, according to Hollywood.com Box-Office. Magnolia Pictures distributes independent films in theaters and for home entertainment. Both are part of 2929 Entertainment , a holding company for Cuban and business partner Todd Wagner’s media assets that also includes the HDNet cable channel and HDNet Movies. With Magnolia, known for films such as “Man on Wire” and “The Girlfriend Experience,” Cuban and Wagner have experimented with releasing movies simultaneously across theatrical, television and home-video platforms. Andrea Hurst, a spokeswoman for Moelis in New York, declined to comment. In addition to the box-office slump, cinema chains face demands from studios to shorten movies’ exclusive theatrical runs. The industry is also investing in digital projection systems to upgrade facilities and offer premium enhancements such as 3-D showings. AMC Entertainment Group Inc., the second-largest U.S. movie-theater owner, purchased 93 Kerasotes Showplace Theatres for $275 million last year. Walt Disney Co. (DIS) sold its Miramax Films in December to investors led by Ron Tutor and Colony Capital LLC for $663 million. To contact the reporters on this story: Andy Fixmer in Los Angeles at [email protected] ; Jonathan Erlichman in New York at [email protected] To contact the editor responsible for this story: Anthony Palazzo at [email protected]

2011-04-19 00:00:00 UTC

Blackboard Hires Barclays to Evaluate Offers; Shares Surge

http://www.bloomberg.com/news/2011-04-19/blackboard-reports-unsolicited-buyout-offers-hires-barclays.html

B y D o u g l a s M a c M i l l a n

Blackboard Inc. (BBBB) , a maker of online educational courseware, said it hired Barclays Capital as its financial adviser after receiving unsolicited buyout offers. The shares surged 29 percent, the biggest gain since June 2004. The sources of the buyout offers weren’t disclosed. Blackboard is evaluating the bids as well as interest from other potential acquirers, the company said in a statement. “Our board is committed to fulfilling its fiduciary duties to act in the best interests of shareholders,” said Chief Executive Officer Michael Chasen in the statement. “We remain focused on our company’s strategic plan and are committed to delivering the highest quality products and sustained client satisfaction.” Blackboard makes software that lets teachers post course materials, conduct discussions and make assignments online. Its customers include California State University, Chico , and the University of Arkansas at Little Rock. In January, Pearson Plc (PSON) paid $127 million to boost its stake in test-preparation service TutorVista, based in India. Last November, News Corp. paid $360 million for closely held Wireless Generation, a maker of Web-based tools for the classroom. Blackboard, based in Washington, rose $10.75 to $47.91 at 4 p.m. New York time on the Nasdaq Stock Market. The gain was the stock’s biggest since June 18, 2004, the day the shares began trading after an initial public offering. To contact the reporter on this story: Douglas MacMillan in San Francisco at [email protected] . To contact the editor responsible for this story: Tom Giles at [email protected] .

2011-04-19 00:00:00 UTC

Sony Ericsson Posts Profit on Higher-Priced Handsets, Beating Estimates

http://www.bloomberg.com/news/2011-04-19/sony-ericsson-first-quarter-profit-falls-to-11-million-euros-margin-rises.html

B y D i a n a b e n - A a r o n

Sony Ericsson Mobile Communications AB, the mobile-phone venture of Sony Corp. (6758) and Ericsson AB, posted a first-quarter profit as it shipped more high-priced models, beating analyst estimates of a loss. Net income was 11 million euros ($15.7 million), the London-based company said in a statement today. Profit declined from 21 million euros a year earlier when the company had a tax benefit. Analysts had estimated a net loss of 27.1 million euros, according to the average of 10 estimates compiled by Bloomberg. Chief Executive Officer Bert Nordberg is working to accelerate product rollouts after slow updates of its smartphone models running Google Inc. (GOOG) ’s Android software hurt sales last quarter. His job is made tougher by the March 11 Japanese earthquake, which disrupted component supplies for new Android models. Its unit share of the global Android market is currently 11 percent, Nordberg said in an interview, adding that he isn’t happy with it. “We haven’t seen a clear sign from Sony Ericsson that makes us believe it will remain a top player,” Francisco Jeronimo, an analyst at IDC, said in an e-mailed report. “The risk of being a niche player and a second-tier supplier means its devices need to deliver better experience, better hardware and better services for a lower price, otherwise operators will prefer a first-tier supplier.” Gross Margin Average selling prices gained to 141 euros in the first quarter from 134 euros a year earlier as Sony Ericsson’s product mix tilted toward higher-priced smartphones and away from midrange feature phones. Sales slipped 19 percent to 1.15 billion euros, compared with the 1.26 billion euro average estimate of 16 analysts. “We managed to get out quite a few units of our new portfolio that made a jump in the gross margin and then we could report a profit,” Nordberg said. The earthquake has affected supplies of batteries, displays, printed circuit boards and connectors and the situation is stabilizing as alternative sources are found, he said. “We might not reach what we would like to have in the second quarter but at least the trend from the suppliers is in the right direction,” Nordberg said. “A lot of raw material is also coming from Japan into displays and other things, so even if you buy components outside Japan it doesn’t mean you aren’t hurt by this situation.” Changing Product Mix Sony Ericsson, the sixth-largest handset maker last year, shipped 8.1 million handsets in the first quarter, compared with 10.5 million a year earlier. Analysts had estimated 9.6 million units. The company estimated its market share at 5 percent in units and 3 percent in value for the quarter. The company announced its first high-end model in almost a year in January: the Xperia Arc, a slim touchscreen model with an 8-megapixel camera. It followed up with the Xperia Play, which has a slideout Sony PlayStation keyboard, and the Xperia Neo and keyboard-equipped Xperia Pro. Volumes of these models have been affected by the earthquake, and the broad rollout of the Neo has been pushed back to early in the third quarter, the company said April 8. Shipments of the Play to Verizon haven’t been affected by the earthquake, Nordberg said on a teleconference. The company has a second U.S. carrier lined up for the gaming handset, he said in the interview. Sony Ericsson aims to expand its global share of Android handsets to at least 25 percent from 14 percent at the beginning of this year, Nordberg said in March. To contact the reporter on this story: Diana ben-Aaron in Helsinki at [email protected] To contact the editor responsible for this story: Kenneth Wong in Berlin at [email protected]

2011-04-19 00:00:00 UTC

Hungary Government Drops Plan to Regulate Drug Prices, Napi Says

http://www.bloomberg.com/news/2011-04-19/hungary-government-drops-plan-to-regulate-drug-prices-napi-says.html

B y E d i t h B a l a z s

Hungary’s government dropped plans to control prices as part of a comprehensive bill to regulate the drug market, Napi Gazdasag reported, without saying how it obtained the information. The regulations will require new entrants to the generic drug market to apply prices 5 percent below the reference price, the newspaper said. The government is set to decide on the final measures next week, according Napi. To contact the reporters on this story: Edith Balazs in Budapest at [email protected] To contact the editor responsible for this story: James Gomez at [email protected]

2011-04-19 00:00:00 UTC

MALAYSIA DAYBOOK: Inflation Seen at 23-Month High; Roaming Pact

http://www.bloomberg.com/news/2011-04-19/malaysia-daybook-inflation-seen-at-23-month-high-roaming-pact.html

B y B a r r y P o r t e r

Consumer price inflation likely rose to a 23-month high of 3.1 percent in March, according to the median estimate of 16 economists surveyed by Bloomberg News. The government will announce the data at 5 p.m. WHAT TO WATCH: * Information Communication & Culture Minister Rais Yatim briefing on roaming costs between Malaysia and Singapore in Putrajaya at 2 p.m. * Deputy Finance Minister Donald Lim launches Property Market Report 2010 in Kuala Lumpur at 2.30 p.m. * Multimedia Development Corporation (MDeC) briefing on third phase plan in Kuala Lumpur at 10 a.m. * Media Prima Bhd. (MPR MK) briefing after annual meeting at 3 p.m. * Al-Hadharah Boustead REIT (BIRT MK) priced its placement units at 1.35 ringgit each, a 5.6% discount to recent market price. LBS Bina Group Bhd. * LBS Bina Group Bhd. (LBS MK) agreed to buy a 19 percent stake in Jatidiri Gigih Sdn. for 13.1 million ringgit. Jatidiri is a developer of 230 acres of land in Selangor state. MARKETS: * Malaysia’s FTSE Bursa Malaysia KLCI Index fell 0.4 percent. * The MSCI Asia Pacific Index dropped 1 percent. * The Dow Jones Industrial Average gained 0.5 percent. * Palm oil June-delivery futures advanced 0.3 percent to 3,255 ringgit a metric ton. BTV (KL Times): *7:10 a.m.: BlackRock Vice Chairman Robert Doll *7:20 a.m.: Second Curve Capital CEO/Founder Tom Brown *7:40 a.m.: HK Secretary for Financial Services KC Chan *8:40 a.m.: Samsung Securities Head of Internet Research Paul Wuh *9:10 a.m.: Advanced Research Japan MD Koji Endo *1 p.m.: Japan Economy Minister Kaoru Yosano *1:15 p.m.: Australian Foreign Affairs Minister Kevin Rudd To contact the editor responsible for this story: Barry Porter in Kuala Lumpur at [email protected]

2011-04-19 00:00:00 UTC

South Africa Reduces Corn Surplus After Attracting Indian, Chinese Buyers

http://www.bloomberg.com/news/2011-04-19/south-africa-no-longer-has-a-corn-surplus-problem-farming-minister-says.html

B y M i k e C o h e n a n d B r i a n L a t h a m

South Africa , the continent’s largest corn grower, has reduced its largest-ever corn surplus after attracting buyers from China , India and other developing countries, Agriculture Minister Tina Joemat-Pettersson said. “We have turned the crisis into a gain” for South Africa, she told reporters in Cape Town today. “The interest for our grain and the maize surplus has become absolutely phenomenal. We have traders from the East, the Middle East, the Far East.” South Africa’s accession to the BRIC group of nations, comprising of Brazil , Russia, India and China, had opened a huge new marketplace for its agricultural produce, helping to run down corn stocks, she said, without giving details. South Africa last year reaped its biggest corn crop since 1982, the result of favorable weather conditions and increased use of genetically modified seeds. Farmers say they’ve struggled to export the surplus because of dilapidated rail lines and a surging rand, which made local produce uncompetitive. South Africa currently has corn stocks of about 4.3 million metric tons, down from 6.1 million tons at the start of the year and more than 9.5 million tons at the end of August, according to data from the South African Grain Information Service , which monitors trade in the industry. Since the marketing season started on May 1, South Africa has sought new markets beyond its traditional African customers. For the first time in many years, the nation has shipped corn to Italy , South Korea , Kuwait, Japan , Taiwan and Spain , while last week it started exporting grain to Portugal . ‘Surplus With Traders’ South Africa hasn’t yet shipped corn to any of the BRIC nations, according to the Sagis data. This year, 34 percent of South Africa’s white corn has been shipped outside of mainland Africa, up from less than 1 percent last year, while exports of yellow corn beyond the region have jumped to 88 percent from 37 percent, the data shows. “There were importers from India who wanted to buy” corn from South Africa, said Langa Zita, director-general of the Department of Agriculture, in an interview in Cape Town today. “Our engagement with the industry indicates that the issue of the surplus now is with the traders.” Exports of white corn by South Africa this season to nearby countries has been limited by bumper harvests regionally. In much of Africa, white corn is used to make corn meal, while yellow corn is fed to animals. Grain SA , South Africa’s largest grain farmers group, said corn stocks are likely to remain at “healthy” levels. ‘Higher Tempo’ “We have healthy reserves, and with 10 million tons out there (in the ground), that’s going to continue,” said Chief Executive Officer Jannie de Villiers by phone today from Bothaville, in the Free State province. “We’ve been exporting at a higher tempo” recently, said Francois Strydom, managing director of Senwes Ltd., which controls more than a quarter of South Africa’s grain storage facilities. “We certainly haven’t drained our surplus, especially with the new harvest coming in,” he said by phone from Klerksdorp, in the country’s North West province. White corn for July delivery, the most-active contract on the South African Futures Exchange, gained 3 percent to close at 1,711 rand per ton, while yellow corn for delivery the same month also rose 3 percent to 1,748 rand per ton at the midday close of trading in Johannesburg. To contact the reporters on this story: Mike Cohen in Cape Town at [email protected] To contact the editor responsible for this story: Antony Sguazzin at [email protected]

2011-04-19 00:00:00 UTC

Fiscal Conservatives Dodge $10 Trillion Debt: Simon Johnson

http://www.bloomberg.com/news/2011-04-19/fiscal-conservatives-dodge-10-trillion-debt-simon-johnson.html

B y S i m o n J o h n s o n

Washington is filled with self- congratulation this week, with Republicans claiming that they have opened serious discussion of the U.S. budget deficit and President Barack Obama’s proponents arguing that his counterblast last Wednesday will win the day. The reality is that neither side has come to grips with the most basic of our harsh fiscal realities. Start with the facts as provided by the nonpartisan Congressional Budget Office . Compare the CBO’s budget forecast for January 2008, before the outbreak of serious financial crisis in the fall of that year, with its latest version from January 2011. The relevant line is “debt held by the public at the end of the year,” meaning net federal government debt held by the private sector, which excludes government agency holdings of government debt. In early 2008, the CBO projected that debt as a percent of gross domestic product would fall from 36.8 percent to 22.6 percent at the end of 2018. In contrast, the latest CBO forecast has debt soaring to 75.3 percent of GDP in 2018. What caused this stunning reversal, which in dollar terms works out to a $10 trillion swing for end-year 2018 debt, from $5.1 trillion to $15.8 trillion? Almost all of this increase is due to the severe recession that followed the financial crisis of late 2008. This lowered output and employment, and therefore reduced tax revenue . Revenue Drought For example, look at the tax revenue numbers for 2011, as a percent of GDP. The earlier expectation for 2011 was that the federal government would collect revenue equal to 19.3 percent of GDP. The forecast now is for revenue of 14.8 percent of GDP. Whatever you think about the fiscal stimulus of 2008 (at President George W. Bush ’s instigation) or 2009 (from Obama), those had relatively little impact compared with the automatic stabilizers, such as unemployment benefits , that are triggered by deep recession. Why did we have a severe recession with such a crippling fiscal consequences? On this issue, most politicians from both sides of the aisle fall silent. What isn’t in doubt is that this was a financial-sector crisis of classic proportions. In terms of the negative fiscal repercussion, it reads like an episode straight from Ken Rogoff and Carmen Reinhart ’s “ This Time Is Different ,” a history of financial crises. But the political elite that now profess to be bothered by the fiscal deficit made no serious effort to make the financial sector any safer after the events of September-October 2008. Three Responses When you press politicians and their advisers on this, you will hear three kinds of responses in candid moments. First is the notion that banking crises are rare. This is a favorite of the Treasury Department. Perhaps that was true in the past, but our big banks have become bigger, and too-big-to- fail banks have major incentives to take on very high levels of risk. After all, the downside isn’t their problem. Second is the idea that we fixed it with the Dodd-Frank Act, a line heard most often from Democrats on Capitol Hill . Almost no one holds to that view, including William Dudley , president of the New York Federal Reserve, and Sheila Bair , head of the Federal Deposit Insurance Corp. Both have expressed concerns that the roadmap for closing a large troubled bank remains elusive. And the idea that new international rules will force banks to increase their capital enough to reduce the risk of systemic crisis is regarded as ludicrous, at least by leading independent finance experts, such as Anat Admati of Stanford’s Graduate School of Business. Forcing banks to raise more equity in an appropriate way would lower risk, strengthening the financial system at little or no cost to the broader economy, according to Admati. ‘Markets Evolve’ Third, “Let the markets evolve the way the markets evolve.” This was a recent quote from Anthony Santomero, former president of the Philadelphia Fed and current Citigroup Inc. director. Citigroup has blown up repeatedly in the past 30 years, not surprising for a complex and unwieldy megabank with 260,000 employees worldwide. Each time, it was saved through some form of external assistance, usually from the government, in part because responsible policy makers feared what Citigroup’s collapse would do the broader economy. Do we really think that the next time a bank with 200 million clients worldwide gets in trouble that the U.S. will let it go bankrupt, regardless of the consequences? Is that what Vikram Pandit , the chief executive officer, or Timothy Geithner , the Treasury secretary, argued for in 2008 or will argue for next time? Right Way The right way to think about future budget deficits is in a probability-based fashion: What is the chance something bad will happen, and how bad will that be for debt levels? The odds of another major financial calamity next year are small, but the risk over a 10- to 20-year period is high. That’s the right time horizon to use in the coming budget debate. The impact of a new financial crisis on the U.S. public balance sheet would be huge. Anyone who wants to be taken seriously as a fiscal conservative must stop dodging this issue and start proposing solutions. ( Simon Johnson , co-author of “13 Bankers: The Wall Street Takeover and the Next Financial Meltdown” and a professor at MIT’s Sloan School of Management, is a Bloomberg News columnist. The opinions expressed are his own.) To contact the writer of this column: Simon Johnson at [email protected] To contact the editor responsible for this column: James Greiff at [email protected]

2011-04-19 00:00:00 UTC

Global Funds Buy Net 6.87 Billion Rupees of Indian Derivatives

http://www.bloomberg.com/news/2011-04-19/global-funds-buy-net-6-87-billion-rupees-of-indian-derivatives.html

B y P a r e s h J a t a k i a

Global investors bought a net 6.87 billion rupees ($155 million) of Indian equity derivatives yesterday, according to the National Stock Exchange. Open interest, or the number of contracts outstanding in value terms, rose 0.5 percent to 975 billion rupees, or 34 percent of the gross market position, according to the exchange’s website. Open interest reached a record 1.6 trillion rupees on Sept. 21. Foreign funds sold a net 9.82 billion rupees of shares in the cash segment yesterday, according to preliminary data given by the bourse. To contact the reporter on this story: Paresh Jatakia in Mumbai at [email protected] To contact the editor responsible for this story: Arijit Ghosh at [email protected]

2011-04-19 00:00:00 UTC

South African Companies Act to Be Effective May 1, Moneyweb Says

http://www.bloomberg.com/news/2011-04-19/south-african-companies-act-to-be-effective-may-1-moneyweb-says.html

B y A n a M o n t e i r o

South Africa ’s new Companies Act will be implemented on May 1 after missing an April 1 deadline, Johannesburg-based Moneyweb reported, citing Trade and Industry Minister Rob Davies. To contact the editor responsible for this story: Ana Monteiro at [email protected]

2011-04-19 00:00:00 UTC

Sri Lanka, Bangladesh Sign Agreements on Agriculture, Commerce

http://www.bloomberg.com/news/2011-04-19/sri-lanka-bangladesh-sign-agreements-on-agriculture-commerce.html

B y A n u s h a O n d a a t j i e

Sri Lanka and Bangladesh signed five agreements, including accords for cooperation in agriculture, livestock and commerce, the South Asian island’s government said on its website today. The agreements were signed during a visit by Sri Lankan President Mahinda Rajapaksa to Bangladesh, according to the website. To contact the reporter on this story: Anusha Ondaatjie in Colombo at [email protected] To contact the editor responsible for this story: Hari Govind at [email protected]

2011-04-19 00:00:00 UTC

Thailand Stocks: BTS Group, Kiatnakin Bank, PTTEP, Sri Trang

http://www.bloomberg.com/news/2011-04-19/bangkok-bank-kiatnakin-bank-tisco-thailand-equity-preview.html

B y T o n y J o r d a n

Shares of the following companies had unusual moves in Thailand trading. Stock symbols are in parentheses and prices are as of the 4:30 p.m. close in Bangkok. The SET Index rose 5.21, or 0.48 percent, to 1,095.88. BTS Group Holdings Pcl (BTS) , the operator of Bangkok’s elevated train system, rose 4 percent to 0.79 baht, its highest close since March 9. Ridership on BTS’s Bangkok train system reached a record high of 14.4 million trips in March, and will grow over the next two months, KGI Securities (Thailand) Pcl wrote in a note today. Kiatnakin Bank Pcl (KK) , a commercial lender, fell 3.4 percent to 36 baht, its biggest decline since March 11. First- quarter net income fell 26 percent to 605.2 million baht ($20.1 million), the bank said in a regulatory filing after the market closed yesterday. PTT Exploration & Production Pcl (PTTEP) , the nation’s only publicly traded oil explorer, fell 0.8 percent to 188 baht, its lowest close in more than two weeks. Crude oil futures dropped as much as 1 percent, extending yesterday’s 2.3 percent decline, after Standard & Poor’s Ratings Service cut the U.S. long-term credit outlook, fueling concern that a recovery in the global economy may slow. Sri Trang Agro-Industry Pcl (STA) , the largest rubber producer, fell 2.3 percent to 31.25 baht, its lowest close since April 4. Rubber futures declined for a sixth day in Tokyo , slumping as much as 5 percent. To contact the reporter on this story: Tony Jordan in Bangkok at [email protected] To contact the editor responsible for this story: Darren Boey at [email protected]

2011-04-19 00:00:00 UTC

AT&T Won’t Yet Release RIM Bridge E-Mail App for Playbook

http://www.bloomberg.com/news/2011-04-19/at-t-won-t-yet-release-rim-bridge-e-mail-app-for-playbook-1-.html

B y H u g o M i l l e r a n d G r e g B e n s i n g e r

AT&T Inc. (T) , the second-largest U.S. wireless carrier, said it won’t release software to customers that enables e-mail on Research In Motion Ltd. (RIM) ’s BlackBerry PlayBook that went on sale today until tests are complete. “We’ve only just received the app for testing, and we want to make sure it will deliver a quality experience before we make it available to our customers,” Mark Siegel , a spokesman for Dallas-based AT&T, said today in an e-mail message. RIM, the Waterloo, Ontario-based company that began selling the PlayBook in stores across Canada and the U.S. today, is battling mixed reviews from technology columnists who criticized the 7-inch tablet for lacking a built-in e-mail program and cited an inability to connect to mobile-phone networks. “This seems to be an execution stumble,” said Tero Kuittinen, an MKM Partners LLC analyst in Stamford , Connecticut . “We know they were rushing to get this product to market, but you’d think they could get it to people sooner for testing.” He has a “buy” rating on RIM. Marisa Conway, a spokesman for RIM, did not immediately return messages seeking comment. Jim Balsillie, RIM’s co-chief executive officer, said April 15 the criticism wasn’t fair and that it shouldn’t be a problem for customers who can pair their BlackBerrys to their PlayBooks to read e-mail, calendar and contacts database using software known as BlackBerry Bridge. Summer Release The company has said it plans to release an e-mail program for the Playbook this summer. RIM dropped $1.61, or 2.9 percent, to $53.22 in Nasdaq Stock Market trading at 4 p.m. New York time. The stock has lost 14 percent in the past month and declined in 12 of the last 15 trading days. Aside from critical reviews, RIM is competing with Apple Inc. (AAPL) ’s iPad, which has exceeded 15 million sales in the past year. Consumer demand for the PlayBook, which went on sale today at 20,000 stores across Canada and the U.S., appeared to be muted. The Staples Inc. (SPLS) store in Toronto’s business district opened an hour early and had no lines. Best Buy Inc.’s main store in downtown Toronto opened at 7 a.m., and had sold about 20 to 25 PlayBooks by 10 a.m, said Manish Nargas, a store manager. The ability to pre-order the device and the critical reviews may have contributed to a lack of foot traffic, he said. “We were expecting a lot more,” said Nargas. “It’s a little disappointing.” RIM is counting on its traditional base of business and government customers to embrace the PlayBook. The company is touting the device’s portability and support for Flash technology, used to play video on many websites. The iPad doesn’t play Flash content. Customers Looking Kevin Gopaul, chief investment officer of BMO Asset Management in Toronto, was one of two customers in the Best Buy store trying out the PlayBook at midmorning today. The device’s ability to run presentations on a larger screen using a cable while allowing the user to run separate programs on the PlayBook was compelling, said Gopaul, 35. “That’s perfect for me,” for client meetings, he said. Customers that don’t already have a BlackBerry smartphone to pair their phones and PlayBooks to read e-mail and connect to the Internet seemed less convinced. “Lack of e-mail, how can you not have that on the PlayBook,” said Eloi Fagundes, a 35-year-old nurse, as he browsed the selection of tablets at Best Buy in Toronto. To contact the reporters on this story: Hugo Miller in Toronto at [email protected] ; Greg Bensinger in New York at [email protected] To contact the editor responsible for this story: Peter Elstrom at [email protected]

2011-04-19 00:00:00 UTC

Greek Sovereign Debt Risk Rises to Record on Restructuring Bets

http://www.bloomberg.com/news/2011-04-19/sovereign-debt-risk-falls-as-investors-pare-restructuring-bets.html

B y A b i g a i l M o s e s

The cost of insuring Greek sovereign debt rose to a record as speculation increased the nation will be forced to restructure its debt. Credit-default swaps on Greece rose 7 basis points to 1,260, surpassing yesterday’s record closing level, according to CMA. Comments by unnamed officials that a restructuring is inevitable hold no validity, Greece’s government spokesman George Petalotis said today. Standard & Poor’s decision yesterday to assign a “negative” outlook to the AAA credit rating of the U.S. also weighed on sentiment. “We still think a default/restructuring is the most likely outcome for Greece, but it’s a question of timing,” said Harpreet Parhar, a strategist at Credit Agricole SA in London. “The story, though denied by the government, is gaining traction.” Swaps on other European governments fell for the first time in more than a week. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments declined 0.5 basis point to 189, after climbing to the highest since January yesterday. Contracts on Portugal dropped from a record, falling 3 basis points to 618. Ireland decreased 4 basis points to 603, Italy fell 5 to 155 and Spain was 5.5 lower at 249.5. A decline signals improvement in perceptions of credit quality . Financial Index The cost of insuring against losses on European bank bonds also fell. The Markit iTraxx Financial Index linked to the senior debt of 25 banks and insurers decreased 2 basis points to 137, and the subordinated index was down 2.5 at 240.5, according to JPMorgan Chase & Co. The Markit iTraxx Crossover Index of 40 companies with mostly high-yield credit ratings fell 6 basis points to 376. The Markit iTraxx Europe Index of 125 companies with investment- grade ratings fell 0.5 to 101.25. A basis point on a credit-default swap protecting 10 million euros ($14.3 million) of debt from default for five years is equivalent to 1,000 euros a year. Swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. To contact the reporter on this story: Abigail Moses in London at [email protected] To contact the editor responsible for this story: Paul Armstrong at [email protected]

2011-04-19 00:00:00 UTC

Nasdaq OMX Offers to Pay NYSE $350 Million Should Merger Fail

http://www.bloomberg.com/news/2011-04-19/nasdaq-omx-offers-to-pay-nyse-350-million-should-merger-fail.html

B y W h i t n e y K i s l i n g

Nasdaq OMX Group Inc. (NDAQ) and IntercontinentalExchange Inc. (ICE) said they are willing to pay NYSE Euronext $350 million if antitrust authorities block their proposed takeover, an offer they say is now based on “fully committed financing” of $3.8 billion. The statements were included in a letter to NYSE Euronext’s board, which on April 10 rejected the unsolicited $11.3 billion proposal and affirmed its February agreement to merge with Deutsche Boerse AG (DB1) for $9.5 billion in stock. The agreement with Deutsche Boerse AG includes a payout of 250 million euros ($357 million) should that deal fall apart. Nasdaq OMX and ICE said they received $3.8 billion in commitment letters from lenders. “NYSE shareholders are probably very concerned about antitrust issues, and here they’ve done a couple things to try to address their concerns,” said Ed Ditmire , a New York-based analyst at Macquarie Group Ltd. “That’s at the heart of what will decide their fate.” NYSE Euronext (NYX) ’s board said it favored the Deutsche Boerse merger because the Nasdaq OMX-ICE bid would lead to too much debt and had “unacceptable” risks, including antitrust review. Both sides have been meeting with NYSE Euronext shareholders to convince them their deal is superior and discuss further financial incentives. Director Support Greifeld and Sprecher said they are in discussions with the antitrust division of the U.S. Justice Department . The companies also plan to buy $66 million of NYSE Euronext stock with voting rights , an action that they said will trigger the Justice Department’s procedure for vetting antitrust concern. NYSE Euronext’s annual shareholder meeting is April 28, where owners will vote on board members and the right to call special meetings. “We view the addition of the reverse break-up fee in the event we fail to obtain antitrust or competition law approvals as being a significant improvement to your proposed Deutsche Boerse transaction, as well as demonstrating our confidence that we can address any antitrust or competition issues,” Robert Greifeld and Jeffrey Sprecher, chief executive officers at Nasdaq OMX and ICE, wrote in the letter. Rich Adamonis, a spokesman for NYSE Euronext, didn’t immediately return a phone call seeking comment. Bid Price While the reverse breakup fee may set shareholders at ease about antitrust barriers, Nasdaq OMX and ICE stopped short of raising the price of the offer, which includes $14.24 a share in cash. Last week, four people with direct knowledge of the matter said that NYSE Euronext and Deutsche Boerse are considering financial incentives to win support for their merger. At $42.67 a share as of 9:28 a.m. New York time, the unsolicited bid is 20 percent higher than Deutsche Boerse ’s $35.56, according to data compiled by Bloomberg. NYSE Euronext shares fell 1.8 percent to $38.32, curbing their advance since the April 1 Nasdaq OMX-ICE proposal to 9 percent. Nasdaq OMX is using stock and debt for its portion of the deal, with $2.1 billion from banks including Bank of America Corp., Nordea Bank AB in Stockholm and Skandinaviska Enskilda Bankeen AB and UBS AG. In addition to shares, ICE plans to offer $1.65 billion, financed by Wells Fargo & Co. and Bank of America, according to the statement today. Nasdaq OMX reiterated its commitment to maintaining an investment-grade rating. Antitrust Concern The so-called reverse breakup fee is designed to allay concerns that the U.S. government may reject a Nasdaq OMX-NYSE Euronext takeover because it would create a monopoly in stock listings. The Nasdaq OMX-ICE bid would break up NYSE Euronext, giving Atlanta-based ICE the Liffe derivatives markets and Nasdaq OMX, based in New York , the listings, equities and options businesses, saving costs on overlapping units and technologies. Agreeing to the Nasdaq OMX-ICE proposal would “require shareholders to shoulder unacceptable execution risk,” NYSE Euronext’s board said in an April 10 statement affirming its commitment to Deutsche Boerse. Directors also cited concern the offer would entail too much debt and destroy its “human capital,” a reference to the firings it said would occur in the merger. To contact the reporter on this story: Whitney Kisling in New York at [email protected] To contact the editor responsible for this story: Michael P. Regan at [email protected]

2011-04-19 00:00:00 UTC

Haniel Chief Kluge Says Celesio Needs Improvements, FAZ Reports

http://www.bloomberg.com/news/2011-04-19/haniel-chief-kluge-says-celesio-needs-improvements-faz-reports.html

B y O l i v e r S u e s s

Haniel & Cie. GmbH Chief Executive Officer Juergen Kluge said Celesio AG (CLS1) needs to improve its core business as a drug wholesaler, Frankfurter Allgemeine Zeitung reported, citing an interview. Haniel, which owns a majority stake in Celesio, won’t be able to finance “continuing” acquisitions of the Stuttgart- based company, the newspaper cited Kluge as saying. To contact the reporter on this story: Oliver Suess in Munich at [email protected] To contact the editors responsible for this story: Frank Connelly at [email protected] Edward Evans at [email protected]

2011-04-19 00:00:00 UTC

LVMH, Burberry Lead Luxury Stocks Gain as Sales Beat Estimates

http://www.bloomberg.com/news/2011-04-19/lvmh-burberry-lead-luxury-stocks-gain-as-sales-beat-estimates.html

B y A n d r e w R o b e r t s

LVMH Moet Hennessy Louis Vuitton SA (MC) and Burberry Group Plc (BRBY) led European luxury-goods stocks higher as both companies reported quarterly revenue gains that beat analysts’ estimates and eased concern over growth this year after last month’s earthquake in Japan . LVMH, the world’s largest maker of luxury goods, climbed as much as 6.3 euros, or 5.7 percent, in Paris trading, the biggest gain in almost a year. Burberry, the U.K.’s largest luxury retailer, rose as much as 8.6 percent to 1,245 pence in London , the highest since its July 2002 initial public offering. The sales reports point to continued appetite for leather handbags, champagne and trench coats and suggest Japan’s crisis won’t stall the industry’s global rebound. Burberry raised its earnings guidance and Chief Executive Officer Angela Ahrendts said she was “confident” the company would outperform peers. LVMH cited an “excellent start to the year.” “There ought to be some initial fears allayed over Japan,” said John Guy , an analyst at Royal Bank of Scotland Group in London. Demand for luxury goods has revived since the global recession of 2009 as wealthy consumers regained confidence and retailers replenished inventories. Analysts cut estimates for some companies last month after a March 11 earthquake and tsunami in Japan left almost 28,000 people dead or missing and triggered the world’s worst nuclear crisis in a quarter century. Japan is the world’s second-largest market for luxury goods after the U.S., accounting for 11 percent of the total, according to consulting firm Bain & Co. ‘Setting the Tone’ Revenue rose 17 percent to 5.25 billion euros ($7.5 billion) last quarter, Paris-based LVMH said in a statement yesterday. That compared with the 4.98 billion-euro average estimate of six analysts compiled by Bloomberg. Excluding acquisitions and currency shifts, sales climbed 14 percent. Japan accounts for about 8 percent of the luxury goods maker’s total sales and sales there fell 9 percent in the quarter. LVMH, which announced in March plans to acquire Bulgari SpA (BUL) , the world’s third-largest jeweler, aims “to increase once again in 2011, its leadership of the global high-quality products market,” the maker of Krug champagne said in the statement. Sales in the U.S., Europe and Asia showed “strong momentum,” the company said. LVMH traded 5.7 percent higher at 115.95 euros as of 3:37 p.m. in Paris. The Bloomberg index that tracks the performance of 12 European fashion retailers increased 4.7 percent. “LVMH numbers should set the tone and the bar for other luxury names reporting in coming weeks,” Rogerio Fujimori, an analyst at Credit Suisse in London, wrote in a note to clients. Global Challenge Burberry today said revenue in the quarter ended March 31 rose 32 percent to 390 million pounds ($635 million). The average estimate of three analysts compiled by Bloomberg was for sales of 351.3 million pounds. The quarterly revenue growth was driven by retail sales in China and the reported numbers exclude Spain , where London-based Burberry closed a warehouse and stopped making a local collection last year. The retailer, which gets less than two percent of sales in Japan, raised its annual earnings guidance. Chief Financial Officer Stacey Cartwright said adjusted pretax profit this year would be at the top end of estimates, between 279 million pounds and 300 million pounds. In January, she said the range was 250 million pounds to 290 million pounds. Burberry traded 7.2 percent higher at 1,228 pence as of 2:37 p.m. in London. “While the luxury industry faces global challenges in the year ahead, we remain confident in our team’s ability to outperform,” Burberry’sAhrendts said in the statement. To contact the reporters on this story: Andrew Roberts in Paris at [email protected] . To contact the editor responsible for this story: Celeste Perri at [email protected]

2011-04-19 00:00:00 UTC

Savola Quarterly Net Declines as Capital Gains Not Repeated

http://www.bloomberg.com/news/2011-04-19/savola-quarterly-net-declines-as-capital-gains-not-repeated-1-.html

B y G l e n C a r e y

Savola (SAVOLA) Azizia United Co., a Saudi Arabian food producer, said first-quarter profit declined 58 percent after a 2010 capital gain wasn’t repeated and global commodity prices hurt margins. Net income dropped to 165.2 million riyals ($44 million), or 0.33 riyal a share, from 394 million riyals, or 0.79 riyal a share, a year earlier, the company said in a statement to the Saudi bourse today . That fell short of the mean estimate of 186.3 million riyals by three analysts surveyed by Bloomberg. Jeddah-based Savola has expanded its retail business to meet rising demand in the Arab world’s biggest economy. Savola has 113 outlets in the kingdom and it also refines sugar in Egypt , the Arab world’s most populous nation. First-quarter profit retreated because of capital gains of 196 million riyals from the initial public offering of Herfy Food Services Co. (HERFY) during the first quarter of 2010, the company said in its statement, citing Managing Director Abdul Raouf Mannaa. First-quarter revenue increased 17 percent to 5.6 billion riyals from a year earlier, it said. Savola shares lost 2.2 percent, the biggest drop since March 15, to 26.7 riyals at 12:29 p.m. in Riyadh. Commodity Prices Higher global commodity prices have “impacted negatively on the margins,” Savola said in the statement. First-quarter operating profit fell 13 percent to 288.3 million riyals, the company said in the statement. This drop was “mainly due to the increase in selling, marketing and administrative expenses for the retail stores opened by the group during last 12 months,” the company said. The company will pay a dividend of 0.25 riyal a share, or 125 million riyals, for the first quarter. Savola forecasts net income before capital gain of 225 million riyals for the second quarter of 2011, according to the company statement. To contact the reporter on this story: Glen Carey in Riyadh at [email protected] To contact the editor responsible for this story: Shaji Mathew at [email protected]

2011-04-19 00:00:00 UTC

Serb Central Bank Says Inflation to Slow From Third Quarter

http://www.bloomberg.com/news/2011-04-19/serb-central-bank-says-inflation-to-slow-from-third-quarter.html

B y G o r d a n a F i l i p o v i c

Serbian inflation should start slowing in the third quarter, reaching the central bank’s target range in the first half of next year, policy makers said today. Food costs have fueled consumer prices, which rose at an annual rate of 14.1 percent in March, the biggest jump since June 2008, the Belgrade-based Narodna Banka Srbije said today in a letter to the government. Inflation has exceeded the central bank’s 3 percent to 6 percent target for six consecutive months. “The pace of bringing inflation down toward the target will largely depend on the success of the 2011-2012 farming season,” the central bank said in the letter on its website. The National Bank of Serbia raised its benchmark interest rate to 12.5 percent, the highest in Europe , from 8 percent over the past eight months to curb prices. The bank said it expects the rate increases to begin slowing inflation in coming months, and it will “assess in the coming period if any additional tightening is necessary.” The bank holds its next rate-setting meeting on May 12. To contact the reporter on this story: Gordana Filipovic in Belgrade at [email protected] To contact the editor responsible for this story: James M. Gomez at [email protected]

2011-04-19 00:00:00 UTC

Kenya Commercial Bank May Get Loan From World Bank, Business Daily Reports

http://www.bloomberg.com/news/2011-04-19/kenya-commercial-bank-may-get-loan-from-world-bank-business-daily-reports.html

B y E r i c O m b o k

Kenya Commercial Bank Ltd. (KNCB) is set receive a $105 million loan from the World Bank to support its regional mortgage business, the Business Daily reported on its website. The final details of the proposed credit line from the International Finance Corp., the World Bank’s private lending arm, will be discussed at a board meeting due on June 7, the newspaper said. To contact the reporter on this story: Eric Ombok in Nairobi at [email protected] To contact the editor responsible for this story: Victoria Batchelor at [email protected]

2011-04-19 00:00:00 UTC

Lamborghini’s China Sales May Outpace U.S. on Aventador

http://www.bloomberg.com/news/2011-04-19/lamborghini-s-china-sales-may-surpass-u-s-on-364-000-aventador.html

B y A n d r e a s C r e m e r

Automobili Lamborghini SpA will probably sell more supercars in China than in the U.S. for the first time this year, a sign of the Asian country’s growing importance to luxury-car makers. The Aventador LP 700-4, priced at 255,000 euros ($364,000) in Europe , has sold out the first 18 months of production, and China accounts for a fifth of buyers so far, Chief Executive Officer Stephan Winkelmann said in an interview today at the Shanghai auto show. Sales may grow further when deliveries start in the third quarter. “I believe that China will become our most important market this year,” Winkelmann said. “Customer feedback on the Aventador is sheerly incredible here. There’s more to come when the car visibly arrives.” Luxury-car makers, including Bayerische Motoren Werke AG (BMW) and Daimler AG (DAI) ’s Mercedes-Benz, are recording surging demand in the world’s largest car market, as growing wealth defies the government’s efforts to clamp down on conspicuous consumption. The U.S., traditionally the stronghold of luxury-auto demand, is suffering from the after effects of excessive spending during the real estate boom. “You’ve got a growing number of millionaires and billionaires that are prepared to show their wealth,” said Ian Fletcher , a London-based analyst with IHS Automotive. “It doesn’t help that the U.S. has become awash in $300,000 cars off the back of the bubble. Everyone who wanted a Lamborghini Gallardo has one by now, while in China it’s a new toy thing.” Luxury Demand Luxury-car sales in China may rise 20 percent this year, while the overall passenger-vehicle market’s growth could slow to about 12 percent, according to industry researcher J.D. Power & Associates. “The premium segment is probably going to grow faster than the overall volume sector” in China, BMW’s sales chief Ian Robertson said in Shanghai. “We expect strong double-digit growth for the full year.” The prospects have prompted expansion plans by high-end carmakers. Volvo Cars, the Swedish carmaker owned by Zhejiang Geely Holding Group Co., is considering building a second production plant in China to meet unexpected demand, Chief Executive Officer Stefan Jacoby said today in Shanghai. Mercedes aims to double car sales in China to 300,000 by 2015, Klaus Maier, the head of Mercedes’ operations in China, said today. Aventador Model The Aventador, replacing Lamborghini’s top-of-the-line Murcielago model, has a 700-horsepower V12 engine that surges to 100 kilometers (62 miles) per hour in 2.9 seconds. The Volkswagen AG (VOW) division, which competes with Fiat SpA (F) ’s Ferrari, wants to decide by the end of the year whether to add a third model to complement the Aventador and Gallardo lines. Sant’Agata Bolognese, Italy-based Lamborghini is counting on the Aventador to help capitalize on surging demand for luxury autos in the world’s largest auto market. The VW unit is aiming to more than double China-based dealerships to 20 this year from nine in 2009, the CEO said. Lamborghini wants to use a customer reception in Shanghai today to further stoke demand for the Aventador. The carmaker will use the event to present a special edition called the Gallardo LP 550-2 Tricolore, limited to 150 cars to mark the 150th anniversary of Italian unity, the CEO said. The Gallardo LP 550-2 will be mainly sold across Asia . Global sales at Lamborghini fell 14 percent last year to 1,302 autos as the carmaker ended production of the Murcielago in May 2010. Chinese deliveries more than doubled to 206 cars from 80 in 2009. To contact the reporter on this story: Andreas Cremer in Shanghai via [email protected] . To contact the editor responsible for this story: Chad Thomas at [email protected]

2011-04-19 00:00:00 UTC

Accused Payment Processor Pleads Not Guilty in New York in Web Poker Case

http://www.bloomberg.com/news/2011-04-19/accused-payment-processor-pleads-not-guilty-in-new-york-in-web-poker-case.html

B y C h r i s D o l m e t s c h

A Las Vegas man who allegedly acted as a payment processor for online poker companies pleaded not guilty in New York federal court to bank fraud and illegal gambling charges. Chad Elie, 31, entered the plea before U.S. Magistrate Judge Frank Maas to nine counts, including conspiracy to violate the Unlawful Internet Gambling Enforcement Act and conspiracy to commit bank fraud and wire fraud . Wire fraud alone carries a maximum sentence of 30 years in prison and a $1 million fine. “Client pleads not guilty, intends to aggressively defend,” his attorney, William Cowden of Mallon & McCool in Washington , told reporters after today’s proceeding. Asked why he surrendered Elie’s 500-gigabyte hard drive to prosecutors, Cowden replied, “Don’t want to waste any time with the government.” Elie was one of 11 people charged on April 15 in a revised indictment against the founders of PokerStars, Full Tilt Poker and Absolute Poker. Prosecutors allege that after the U.S. enacted a law in 2006 barring banks from processing payments to offshore gambling websites, the three companies worked around the ban to continue operating in the U.S. Elie is one of a group of people accused of serving as “payment processors” for the poker companies and lying to U.S. banks about the nature of the financial transactions they were processing, according to the indictment. He was released today on a $250,000 bond secured by $50,000 cash to be paid by three people, including his wife, Destiny Davis, who was in court today. He is scheduled for his next appearance before U.S. District Judge Lewis A. Kaplan on May 11. Elie married Davis, who was Playboy Magazine’s Miss January in 2005, at Little Church of the West in Las Vegas the day after his April 15 arrest, the Las Vegas Review-Journal reported. The case is U.S. v. Scheinberg, 10-cr-00336, U.S. District Court, Southern District of New York ( Manhattan ). To contact the reporter on this story: Chris Dolmetsch in New York at [email protected] To contact the editor responsible for this story: Michael Hytha at [email protected] .

2011-04-19 00:00:00 UTC

Brazil Reports 92,675 Registered Jobs Created in March

http://www.bloomberg.com/news/2011-04-19/brazil-reports-92-675-registered-jobs-created-in-march-correct-.html

B y I u r i D a n t a s

(Corrects revised jobs number in February in second paragraph.) Brazil ’s economy created 92,675 government-registered jobs in March, the Labor Ministry said. The figures compare with a revised 315,315 registered jobs created in February, the ministry said in a report distributed today in Brasilia. Government-registered job creation is a balance of posts created minus job eliminated. Registered jobs, so-called formal work, assure employees a range of benefits such as unemployment insurance, bonuses and retirement payments by the government. To contact the reporter on this story: Iuri Dantas in Brasilia at [email protected] To contact the editor responsible for this story: Harry Maurer at [email protected]

2011-04-19 00:00:00 UTC

NATO Sees Limit to Airstrikes’ Power to Stop Qaddafi Forces

http://www.bloomberg.com/news/2011-04-19/nato-sees-limit-to-airpower-s-ability-to-stop-qaddafi-attacks-on-misrata.html

B y P a t r i c k D o n a h u e a n d J e f f r e y D o n o v a n

A NATO commander said “there is a limit” to the alliance’s ability to stop the Libyan regime’s shelling of Misrata, as the U.K. sent a team of military advisers to assist rebels fighting to end Muammar Qaddafi’s 42- year rule. Qaddafi’s troops have been using artillery and rockets in Misrata, under siege for about 50 days, with rebels holding part of the city and the port area that is their only supply link. Unicef, the UN Children’s Fund, said a ship carrying first aid kits, drinking water and other supplies for up to 25,000 people was expected to reach the port today, and the World Health Organization described Misrata Hospital as “overwhelmed,” with 120 civilian patients in need of emergency evacuation. The North Atlantic Treaty Organization reported its warplanes hit a mobile rocket launcher, which was firing into the city, and a loyalist convoy of armored vehicles heading there. NATO Brigadier General Mark van Uhm said that Qaddafi’s forces fire “indiscriminately” and that allied airstrikes seek to protect civilians under the United Nations Security Council mandate. “But there is a limit to what can be accomplished by airpower to stop fighting in a city,” he said yesterday at a press conference at NATO headquarters in Brussels. NATO must limit strikes in urban areas to avoid inadvertently causing civilian casualties, he said. Oil Sales The Italian government is helping Libyan rebels sell oil from opposition-held parts of the country, Italian Foreign Minister Franco Frattini said at a press conference in Rome after meeting with the head of Libya’s rebel council, Mustafa Abdel Jalil. The rebels have agreed to honor existing treaties between Italy and Libya, Frattini said. Oil exports from Libya, which has Africa’s biggest oil reserves, dropped by about 1.3 million barrels a day to a “trickle,” the Paris-based International Energy Agency said last month. Oil rose for the fourth time in five days. Crude oil for May delivery rose $1.03, or 1 percent, to settle at $108.15 on the New York Mercantile Exchange . In other regional developments, Syria ’s cabinet endorsed a draft decree to lift a 48-year-old emergency law, the main demand of protesters challenging President Bashar al-Assad’s rule. Syrian activists said at least 18 protesters have died in clashes in the three days since Assad ordered the cabinet to make changes aimed at calming dissent. Regional Turmoil In Yemen, protesters were injured by gunfire and stones as clashes erupted between with police in the center of the Yemeni capital, Sana’a, during a crackdown on an anti-government demonstration, witnesses said in telephone interviews. In Bahrain, Foreign Minister Khalid Bin Ahmed Al-Khalifa said in a posting on Twitter that troops from Persian Gulf allies will remain in Bahrain to counter Iranian influence. Bahrain’s Sunni monarchy called in security forces from Saudi Arabia and other Sunni-led neighbors to forcefully suppress Shiite protests, which it blamed in part on Shiite Iran . The U.K is sending a contingent of “experienced British military officers” to help Libyan rebels organize communications and logistics, Foreign Secretary William Hague said in a statement from London . As many as 20 military personnel will be involved, the Associated Press said. “Developments change on the ground so what we have to do to implement the UN resolution does change over time,” Hague said in a Sky News television interview. “I expect other countries also to be involved in this but they must make their own announcements.” British Officers British officers won’t be involved in training or arming rebels or planning military operations, the government said. They will operate “within the legal authority” of the five- week-old United Nations mandate authorizing military action, Hague said on ITV. UN Security Council resolution permits “all necessary measures” to protect civilians “excluding a foreign occupation force of any form on any part of Libyan territory.” The U.S. supports the U.K. action, said State Department spokesman Mark Toner. “That doesn’t necessarily mean that we’re going to follow suit and bring our capabilities to bear in areas where they’re already bringing their capabilities to bear,” he told reporters. As the situation deteriorates in Misrata, the third largest city, the rebels are struggling to take and hold cities in Libya ’s central coastal areas, the focus of most of the fighting since the uprising began in mid-February. NATO has targeted tanks some 40 near Misrata alone which has prompted many Qaddafi forces to shift to pickup trucks , which are difficult to be targeted for airstrikes since they are similar to those used by the rebels. ‘Up and Down’ Situation “At the moment on the ground, I don’t know if it’s a stalemate; certainly it’s not necessarily moving forward,” Admiral Giampaolo di Paola, the chairman of NATO’s Military Committee, said yesterday in Rome. “The eastern front is constantly moving up and down.” NATO is seeking to reduce Qaddafi’s ability to sustain attacks by hitting supply lines and targets considered “command and control” locations, van Uhm said. Allied targets reported by NATO yesterday included the headquarters south of Tripoli of the elite 32nd brigade, which has been commanded by Muammar Qaddafi ’s youngest son, Khamis. That military force has spearheaded operations threatening civilians, NATO said. More Warplanes Five days after NATO Secretary General Anders Fogh Rasmussen told alliance foreign ministers in Berlin that commanders needed more ground-attacks jets, van Uhm said the alliance had more military assets than it did last week. He declined to say what the new assets were or which countries had supplied them. NATO aircraft flew 53 “strike” missions seeking to identify and engage ground targets on April 18, down from 60 a day earlier. The World Food Program said it moved wheat, flour and other food aid into western Libya for the first time since conflict erupted in February. The Rome-based UN agency said eight trucks crossed into Libya from Tunisia April 18 and that the Libyan Red Crescent will deliver the supplies to the “crisis-affected population, particularly women and children,” in Tripoli, Zintan, Yefrin, Nalut, Mezda, Al Reiba and Al Zawia. The trucks carried enough food to feed 50,000 people for 30 days, the WFP said yesterday. To contact the reporters on this story: Patrick Donahue in Berlin at [email protected] ; Jeffrey Donovan in Rome at [email protected] To contact the editor responsible for this story: Andrew J. Barden at [email protected]

2011-04-19 00:00:00 UTC

TMX Group Should Get More Board Seats in LSE Deal, Ontario Committee Says

http://www.bloomberg.com/news/2011-04-19/tmx-group-should-get-more-board-seats-in-lse-deal-ontario-committee-says.html

B y D o u g A l e x a n d e r

An Ontario government committee reviewing TMX Group Inc. (X) ’s sale to the London Stock Exchange Group Plc (LSE) recommended the Toronto bourse appoint more directors at the combined company. The committee report, submitted today in Ontario’s legislature, said the TMX Group and LSE should appoint an equal number of directors. Under the merger proposal, TMX would name only seven of 15 board members. The legislative group made nine recommendations on the C$3.2 billion ($3.4 billion) takeover. The committee said it has no power to impose its view on the sale, which requires approval from the federal government and the Ontario Securities Commission. The report “essentially says that if in fact the conditions that we’ve set out can be met, then we would support the proposed merger, but with very strong conditions,” Frank Klees, vice chairman of the committee, said in an interview in Toronto today. The recommendations include a commitment that jobs remain in Canada after the sale and that the OSC’s role not be diminished. The committee also recommended that the TMX, owner of the Toronto Stock Exchange, should have the right to control the LSE. “We now have a report that sends a strong signal that we will not and should not be compromising our regulatory sovereignty,” said Klees, a member of the opposition Progressive Conservative Party. Committee Hearings The nine-member committee held four days of hearings last month on the proposed sale of TMX to LSE Group, which included presentations by the chief executive officers of both companies, as well as industry groups, executives and Ontario regulators. Ontario Finance Minister Dwight Duncan has called the Toronto exchange a “strategic asset” and questioned the impact of the deal on the province and country. Duncan said today he’ll pass the committee’s recommendations on to the federal government for its review of the sale. “The committee takes no position on the transaction whether a transaction should be approved or not but focuses on some of the key concerns,” said Chairman Gerry Phillips. The LSE announced its offer Feb. 9. The London Stock Exchange owner agreed to buy TMX in an all-stock transaction that would give LSE shareholders 55 percent of the combined company. To contact the editors responsible for this story: David Scanlan at [email protected] ; Nick Baker at [email protected]

2011-04-19 00:00:00 UTC

EDF Can Sell Nuclear Power to Rivals at $60/MWH, Minister Besson Says

http://www.bloomberg.com/news/2011-04-19/edf-can-sell-nuclear-power-to-rivals-at-60-mwh-minister-besson-says.html

B y V i d y a R o o t

Electricite de France SA can sell nuclear power to rivals at 40 euros a megawatt-hour from July 1 and at 42 euros a megawatt-hour starting Jan. 1, 2012, Industry Minister Eric Besson said in an interview with Europe 1 radio station. To contact the editor responsible for this story: Vidya Root at [email protected]

2011-04-19 00:00:00 UTC

News Corp. In Talks With Bidding Group for Formula One, Sky Says

http://www.bloomberg.com/news/2011-04-19/news-corp-in-talks-with-bidding-group-for-formula-one-sky-says.html

B y B e n L i v e s e y

News Corp. is in talks about forming a bidding group for Formula One, Sky News reported, without citing a source for the information. News Corp. has been in early talks in recent weeks with people associated with Formula One car manufacturers, and with billionaire Carlos Slim , Sky reported. Click here for web link To contact the editor responsible for this story: Ben Livesey at [email protected]

2011-04-19 00:00:00 UTC

Obama Joins Energy Industry to Fight Climate Change Suits Challenging EPA

http://www.bloomberg.com/news/2011-04-19/white-house-joins-aep-to-fight-climate-lawsuits-with-epa-off-its-duff-.html

B y G r e g S t o h r

In 2004, eight states decided they wouldn’t wait for President George W. Bush to take steps against climate change. They sued to force five power companies to cut plant emissions. The Obama administration today will urge the U.S. Supreme Court to throw out the suit, arguing alongside American Electric Power Co., Xcel Energy Inc. (XEL) , Duke Energy Corp. (DUK) and Southern Co. (SO) The administration contends the Environmental Protection Agency is already taking steps against climate change. “In some respects, the case has already achieved its objective,” said Patrick Parenteau , a professor who specializes in climate-change law at Vermont Law School. “The whole point of filing this case back in the Bush administration was to get EPA off its duff to regulate greenhouse gases from coal-fired power plants , and they are.” The states, now numbering six including New York and California , aim to keep the suit alive. They say the EPA still hasn’t taken action to reduce carbon dioxide emissions from the plants that are the subject of the suit. “This case is all about the contribution of these five companies to the problem of global warming, and EPA is not addressing that contribution at all,” said Matthew Pawa, a lawyer representing three land trusts that also sued the power companies. The suits also name the Tennessee Valley Authority , the government-owned corporation that has 59 coal-burning units. Companies Involved Trade groups representing automakers, oil companies , farmers, mining companies, chemical companies and manufacturers all urge rejection of the suits, in some cases saying their members might face similar claims. DuPont Co. and oil companies led by Chevron USA Inc. also filed a brief backing the power companies. “The case will determine whether American energy policy, and to a great extent economic policy, is determined by juries in the context of the climate-change tort lawsuits, as opposed to the people’s elected representatives,” said Peter Glaser, a Washington lawyer who filed a brief on behalf of the American Farm Bureau Federation and the National Mining Association. The case marks the Supreme Court ’s second foray into the debate over climate change. In a 2007 case decided 5-4, the court ordered the EPA to consider regulating greenhouse-gas emissions. Nuisance Alleged The states and land trusts contend that carbon emissions are a “public nuisance,” a legal theory more typically used in cases of localized pollution. In letting the suits proceed, the New York-based 2nd U.S. Circuit Court of Appeals overturned a judge who concluded the dispute belonged in the political arena, not the courts. The suits are part of a multifaceted battle over climate change. Opponents including businesses, Republicans and some Democrats say the EPA’s new carbon emission limits will destroy jobs and increase electricity bills without any environmental benefit. The EPA began regulating greenhouse gases from vehicles and industrial polluters in January. The rules became President Barack Obama’s lever to limit carbon emissions after Congress failed to pass climate-change legislation last year. Earlier this month, the House of Representatives facing a threatened Obama veto voted to repeal the agency’s authority, while the Senate rejected an identical measure. Right to Sue The states said in their 2004 lawsuit that carbon dioxide from the utilities involved in the case represents about 25 percent of emissions from U.S. power plants and 10 percent from all domestic sources. Vermont, Rhode Island, Iowa, Connecticut and New York City are also plaintiffs. The companies say the states lacked the legal right, or standing, to sue because they can’t show that they were harmed by anything the utilities did or that they would benefit from a ruling against the power companies. State officials say they have standing because a reduction in carbon dioxide emissions from the plants would ease climate change . They point to the 2007 Supreme Court decision, which allowed a state suit that sought to make the EPA regulate auto emissions. In arguing for dismissal, the Obama administration is pointing to the EPA’s actions against climate change under the Clean Air Act. The government says those steps override the right of the states and land trusts to press a nuisance suit under federal law. Speaking Directly “EPA’s regulatory activities speak directly to the issue of greenhouse-gas emissions,” acting U.S. Solicitor General Neal Katyal argued. The states and land trusts counter that the agency has begun imposing limits only on new and modified plants, not on the existing ones at issue in the lawsuits. Although the EPA is working on rules to govern existing plants, the administration said in court papers that the agency won’t necessarily limit emissions from those plants. “They’ve promised to engage in a process that may come to something and may come to nothing,” Pawa said. “You can’t just assume that something is going to happen when this is an area that’s clearly in flux.” Justice Sonia Sotomayor , who heard arguments in the case as a judge on the 2nd Circuit, isn’t taking part in deciding it now. The court probably will rule by the end of June. The case is American Electric Power v. Connecticut, 10-174. To contact the reporter on this story: Greg Stohr in Washington at [email protected] . To contact the editor responsible for this story: Mark Silva at [email protected] .

2011-04-19 00:00:00 UTC

Canada February Wholesale Trade Report (Text)

http://www.bloomberg.com/news/2011-04-19/canada-february-wholesale-trade-report-text-.html

B y I l a n K o l e t

The following is the text of Canada 's wholesale trade report for February from Statistics Canada . Wholesale sales fell 0.6% in February to $46.9 billion, largely as a result of lower sales in the motor vehicle and parts and the miscellaneous subsectors. This decline followed six months of consecutive increases. In volume terms, wholesale sales declined 1.0% in February. Despite the decrease in February, wholesale sales were 16.8% higher than their most recent low in March 2009. Since then, wholesalers have increased in 18 of the past 23 months. Declines were observed in four of the seven subsectors in February, representing approximately half of the total sales. Motor vehicle sales post the largest decrease Sales in the motor vehicle and parts subsector fell 3.1% in February, owing to decreased sales in the motor vehicle industry. This industry registered a 4.3% decline, partially offsetting the strong growth in January. Sales in this industry have remained relatively stable since the end of 2009. Sales in the miscellaneous subsector were down 3.5%, reflecting lower sales in all of its component industries. The agricultural supplies industry led the decline, with a 5.6% decrease in sales. The other subsectors with lower sales included personal and household goods (-0.7%) and farm products (-3.2%). These decreases were partially offset by a 2.0% sales increase in the machinery, equipment and supplies subsector. Sales down in most provinces Sales fell in eight provinces in February, while sales edged up in Ontario and New Brunswick . Quebec wholesalers contributed the most to the decline, followed by wholesalers in Alberta and Saskatchewan. In Quebec, sales were down for the first time in five months, falling 1.7%. This decrease was largely a result of lower sales in the miscellaneous subsector and in the personal and household goods subsector. In Alberta, sales decreased for a second consecutive month. These declines followed a period of robust growth that began in late 2009, driven by strong sales in the machinery, equipment and supplies subsector. In Saskatchewan, the 2.5% decrease in February followed a strong sales increase in January. Inventories up slightly Inventories rose 0.3% in February to $54.3 billion. Wholesale inventories have been up since the start of 2010, after falling sharply in 2009. In February, increases were reported by wholesalers in 14 of the 25 industries, led by the metal service centres industry (+3.3%) and the motor vehicle industry (+2.2%). The inventory-to-sales ratio edged up from 1.15 in January to 1.16 in February. The inventory-to-sales ratio is a measure of the time in months required to exhaust inventories if sales were to remain at their current level. Note to readers All the data in this release are seasonally adjusted and in current dollars, unless otherwise noted. Unadjusted monthly data were revised back to January 2009, while seasonally adjusted data were revised back to January 2006. Factors influencing revisions include late receipt of respondent information, correction of information in the data provided, the replacement of estimated figures with actual values (once available), the reclassification of companies within, into and out of the wholesale trade industry and updates to seasonal factors. Data in volume terms have also been revised back to January 2004. Wholesale sales in volume terms are calculated by deflating current dollar values using import and industry product price indexes. Since many of the goods sold by wholesalers are imported, fluctuations in the value of the Canadian dollar can have an important influence on the prices of goods bought and sold by wholesalers. The wholesale sales series in chained (2002) dollars is a chained Fisher volume index with 2002 as the reference year. To contact the reporter on this story: Ilan Kolet in Ottawa at [email protected] To contact the editor responsible for this story: Marco Babic at [email protected]

2011-04-19 00:00:00 UTC

Houston Rockets Won’t Retain Rick Adelman as Coach for Next NBA Season

http://www.bloomberg.com/news/2011-04-19/houston-rockets-won-t-retain-rick-adelman-as-coach-for-next-nba-season.html

B y E r i k M a t u s z e w s k i

Rick Adelman won’t return as coach of the Houston Rockets next season, ending a four-year tenure during which he had the best winning percentage in franchise history. Rockets General Manager Daryl Morey said in a statement that the team and Adelman agreed to part ways after missing the National Basketball Association playoffs the past two seasons even though they had a winning record. “He is a Hall of Fame coach who earned the respect and admiration of our entire organization during his time here,” Morey said. “These situations are always difficult, but we would like to personally thank Rick and his staff for their efforts the past four seasons.” Adelman, 64, had a 193-135 record with Houston for a franchise-best .588 winning percentage. The Rockets’ lone playoff series victory during the past 14 years came under Adelman after the 2008-09 season, when they beat Portland in the first round before losing to the Los Angeles Lakers in the conference semifinals. All-Star center Yao Ming was injured in that playoff series and has played in five games over the past two NBA seasons. The Rockets have since transitioned from a team that was built around the 7-foot-6 Yao and fellow All-Star Tracy McGrady, who was traded in February 2010. Houston went 43-39 this season, finishing three games behind Memphis for the final playoff spot in the Western Conference. The Rockets are the first team to miss the playoffs in consecutive years with a winning record since the Phoenix Suns in 1971-72, the Houston Chronicle said. “We accomplished quite a bit, despite overcoming numerous obstacles during the past few years,” Adelman said in a statement. “I especially enjoyed coaching this group of players the past two seasons. Despite difficult circumstances, they never gave in and they never quit.” Adelman has a career coaching record of 945-616 and his win total ranks eighth in NBA history. He also coached the Portland Trail Blazers from 1988 to 1994, the Golden State Warriors from 1995 to 1997 and the Sacramento Kings from 1998 to 2006. To contact the reporter on this story: Erik Matuszewski in New York at [email protected] To contact the editor responsible for this story: Michael Sillup at [email protected]

2011-04-19 00:00:00 UTC

Colombian Peso Advances to Six-Month High on Higher FDI Flows

http://www.bloomberg.com/news/2011-04-19/colombian-peso-advances-to-six-month-high-on-higher-fdi-flows.html

B y A n d r e a J a r a m i l l o

Colombia’s peso climbed to a six- month high on increased foreign direct investment flows and speculation funds from abroad will continue to flow into the South American country. The peso rose 0.5 percent to 1,790.32 per U.S. dollar at 11:16 a.m. New York time, from 1,799.01 yesterday. Earlier it touched 1,788.84, the strongest level since Oct. 13. The currency has jumped 4.7 percent in the past month, the second- best performance after the Brazilian real among 25 emerging- market currencies tracked by Bloomberg. “Strong FDI flows have been coming in, especially in the last two to three weeks,” said Camilo Perez , head analyst at Banco de Bogota SA, the country’s second-biggest bank. The higher dollar inflows have increased the dollar cash positions of financial intermediaries, according to Perez. Colombian regulations don’t allow banks to have negative dollar positions. “You don’t have that technical constraint that was helping limit gains in the peso,” he said. The yield on the nation’s 10 percent bonds due July 2024 was little changed at 8.27 percent, according to Colombia ’s stock exchange. The bond’s price fell 0.035 centavo to 113.592 centavos per peso. To contact the reporter on this story: Andrea Jaramillo in Bogota at [email protected] To contact the editor responsible for this story: David Papadopoulos at [email protected]

2011-04-19 00:00:00 UTC

Apple Said to Add Foxconn’s Chimei as Supplier of Parts for IPad

http://www.bloomberg.com/news/2011-04-19/apple-said-to-add-foxconn-affiliate-chimei-as-supplier-of-parts-for-ipad.html

B y T i m C u l p a n a n d A d a m S a t a r i a n o

Apple Inc. (AAPL) has agreed to add Foxconn Technology Group affiliate Chimei Innolux Corp. (3481) as its third supplier of sensors for the iPad 2’s touch screen, two people familiar with the matter said. Chimei Innolux will begin supplying the components next month, said the people, who declined to be identified because the details aren’t public. Taiwan’s TPK Holding Corp. and Wintek Corp. (2384) remain Apple’s key suppliers of the sensors that help the iPad tablet computer recognize finger movements, the people said. The order may deepen Apple’s ties with billionaire tycoon Terry Gou’s Foxconn, the Taiwanese assembler of the iPad and iPhone. The iPad, the fastest-selling technology product in history as measured by revenue, will continue to dominate the global market for tablet computers, controlling more than three- fifths of the market next year, Gartner Inc. said this month. Carolyn Wu, a Beijing-based spokeswoman for Apple, declined to comment, while Ron Lee at Wintek and Freddie Liu at Taipei- based TPK declined to comment on specific products or customers. Chimei Innolux continues to develop its touch-screen product line and expects to offer it to major customers, spokesman Eddie Chen said, declining to comment on specific clients. Chimei Innolux shares had lost 24 percent this year as of yesterday amid falling prices for displays. The company was created last year through the merger of Foxconn’s Innolux Display Co., Chi Mei Optoelectronics Corp., and TPO Displays Corp. To contact the reporters on this story: Tim Culpan in Hong Kong at [email protected] ; Adam Satariano in San Francisco at [email protected] To contact the editors responsible for this story: Young-Sam Cho at [email protected] ; Tom Giles at [email protected]

2011-04-19 00:00:00 UTC

CEZ, Bank Pekao Shares May Move: Central European Stock Preview

http://www.bloomberg.com/news/2011-04-19/cez-bank-pekao-shares-may-move-central-european-stock-preview.html

B y P a w e l K o z l o w s k i

The following is a list of companies whose shares may have unusual price changes in central European markets. Stock symbols are in parentheses after company names. Share prices are from the last close. Poland ’s WIG20 Index fell 1.5 percent, the Czech PX Index lost 1.4 percent and Hungary ’s BUX Index slumped 3.8 percent. CEZ AS (CEZ) : The Czech Republic’s largest utility said unit 4 at its Dukovany nuclear plant is now at 75 percent of output while unit 2 has reached 90 percent of output. Unit 4 was unexpectedly shut down on April 14 and unit 2 is returning to full power after a planned service outage. CEZ shares declined 1.1 percent to 871 koruna. Bank Pekao SA (PEO) : Shareholders of Poland’s second- largest bank are scheduled to vote on a dividend payout from 2010 profit. Pekao shares declined 1.5 percent to 173.3 zloty. To contact the reporters on this story: Pawel Kozlowski in Warsaw [email protected] To contact the editor responsible for this story: Gavin Serkin at [email protected]

2011-04-19 00:00:00 UTC

Popolare di Milano May Join Intesa, Paschi in Selling Shares This Year

http://www.bloomberg.com/news/2011-04-19/popolare-di-milano-may-join-intesa-paschi-in-selling-shares-this-year.html

B y S o n i a S i r l e t t i

Banca Popolare di Milano Scrl, Italy ’s oldest cooperative bank, may join Intesa Sanpaolo SpA and Banca Monte dei Paschi di Siena SpA in selling new shares this year to boost capital. The board of the Milan-based lender will meet today to consider a rights offer after the Bank of Italy sent a letter asking it to reinforce its capital, two people familiar with the situation said April 14. Popolare Milano, which has to reimburse a 500 million-euro ($725 million) government bond by 2013, rejected two weeks ago a proposal to sell new shares to boost its capital ratios , according to the people. Bank of Italy Governor Mario Draghi in February urged the country’s lenders to use profits to strengthen their reserves and said he expects banks to raise money ahead of this year’s stress test, which should be completed by June. Popolare di Milano would be the fifth Italian lender to announce a capital increase. Banco Popolare SC concluded a 2 billion-euro share sale in February, while Unione di Banche Italiane SCPA in March asked investors to buy 1 billion euros of new shares. Intesa and Monte Paschi, the country’s No. 2 and No. 3 banks, have approved rights offer of 5 billion euros and 2 billion euros respectively. Basel Rules “Rights issues are unavoidable for Italian banks to have an adequate capital base to face new Basel rules,” said Angelo Manca, a portfolio manager at Ockham Capital Partners in London . “Recent decisions taken by banks traditionally seen as solid, such as UBI and Intesa, confirm that.” The Group of 20 nations last year endorsed rules proposed by the Basel Committee on Banking Supervision that would triple the highest-quality capital that lenders need to hold. The committee may also apply tougher rules to European banks considered “systemically important financial institutions.” UniCredit SpA, which raised 7 billion euros in the last three years through two capital increases, is the only bank among Italy’s top five lenders that hasn’t asked for money from its investors this year. Chief Executive Officer Federico Ghizzoni said April 2 that the capital of Italy’s biggest bank is sufficient and its ratios already meet the Basel III requirements. To contact the reporter on this story: Sonia Sirletti in Milan at [email protected] To contact the editor responsible for this story: Frank Connelly at [email protected]

2011-04-19 00:00:00 UTC

Gold Rises to Record $1,498.90 an Ounce as Weakening Dollar Stokes Demand

http://www.bloomberg.com/news/2011-04-19/gold-may-top-1-500-extending-rally-to-record-as-u-s-credit-outlook-cut.html

B y M a r i a K o l e s n i k o v a a n d K y o u n g w h a K i m

Gold extended gains to a record in New York as a drop in the dollar buoyed demand for the metal as an alternative investment. Futures surged yesterday after Standard & Poor’s revised its U.S. credit outlook to negative. Gold has jumped 5.3 percent this year as the dollar dropped 4.8 percent against a basket of six other currencies including the euro and British pound. Gold prices may keep rising for “some years into the future,” Blackrock Inc. (BLK) fund manager Evy Hambro said in an interview with Mark Barton on Bloomberg TV’s “On the Move.” Gold for June delivery rose $1.60, or 0.1 percent, to $1,494.60 an ounce by 8:20 a.m. in New York after earlier today climbing to $1,498.90. Immediate-delivery gold was little changed at $1,493.93 an ounce in London . The 14-day relative strength index of gold futures rose to 70.135, above the level of 70 that some analysts who study charts view as a sign that prices are poised to drop. “$1,500 is definitely a psychological level,” said Mark O’Byrne, executive director of brokerage GoldCore Ltd. in Dublin. “Any correction is likely to be short and shallow, given the very strong fundamentals.” At current prices, gold is still $900 below the inflation- adjusted level, GoldCore’s O’Byrne said, adding that gold may reach as much as $2,400 in the coming years. ‘Debt Issue’ “The focus has moved to the U.S. sovereign debt issue,” O’Byrne said. “There are very significant risks in the world, that’s why people are diversifying into gold. Before, the U.S. government debt was meant to be risk free. Now that is in question.” Gold has gained in the last 10 years on increased investment demand for commodities and on concern that currencies may be debased as central banks stimulate their economies. Unrest in the Middle East, sovereign-debt turmoil in Europe and Japan’s nuclear crisis have bolstered sales, propelling bullion 32 percent higher in the past year. Additional support for gold came from quickening inflation that has prompted policy makers across the globe to raise interest rates . Consumer prices in China rose at their quickest pace since 2008 in March, exceeding the government’s 2011 target for a third month. Inflation ‘Impetus’ Inflation in the 17-nation euro region quickened to 2.7 percent from 2.4 percent in February, the European Union’s statistics office said last week. U.S. wholesale costs rose 5.8 percent in March compared with a year earlier, and the government said that the cost of living rose for a ninth month. “Growing fears of rising inflation and a weak dollar continue to benefit gold and silver,” Marc Ground, an analyst at Standard Bank , wrote in a note. “Inflation-hedge buying is providing the main impetus.” Gold held in exchange-traded products rose 0.36 metric tons to 2,070.32 tons yesterday, the highest level since Jan. 24, data compiled by Bloomberg from 10 providers show. Silver for May delivery gained 0.7 percent to $43.275 an ounce. Palladium for June delivery was up 0.7 percent at $744.35 an ounce and platinum for July delivery rose 0.3 percent to $1,788.70 an ounce. With assistance from Chanyaporn Chanjaroen in Singapore. Editors: John Deane, Dan Weeks To contact the reporters on this story: Kyoungwha Kim in Singapore at [email protected] ; Maria Kolesnikova in Moscow at [email protected] To contact the editor responsible for this story: Claudia Carpenter at [email protected]