Sunday, April 18, 2010
Wednesday, May 20, 2009
Three bidders for Opel, Chrysler sets new chairman
(Reuters) - The pursuit of German carmaker Opel has narrowed to a three-way race between Italy's Fiat, Canadian-Austrian car parts group Magna and investment firm RHJ International.
In North America, bankrupt U.S. auto parts maker Chrysler won court approval for financing and other requests to help move it quickly through a sale to a group led by Fiat and also named a chairman for the merged company.
Meanwhile, GM Canada planned to tell dealerships on Wednesday which of the country's roughly 700 dealers likely will close under a plan to slash the network by about 42 percent.
The German government had set a Wednesday deadline for bids on the unit of struggling U.S. automaker General Motors Corp, which is hurtling toward a June 1 U.S. government deadline to complete restructuring talks with stakeholders.
Fiat submitted an offer for GM's Opel and British brand Vauxhall, while a financial source told Reuters that RHJ had put in a bid and that Magna also was expected to.
A spokesman for GM Europe confirmed the automaker had received three bids on the Opel unit. GM has said a bankruptcy filing is probable and industry analysts and experts believe it could come within weeks.
Both GM and Germany, where Opel has four plants that employ some 25,000 staff, are in a race against time to finalize a sale of the group based in Ruesselsheim, western Germany.
GM will decide which investor gets Opel, but the German government will also play a big role because it would likely provide billions of euros in financing to help any buyer.
How far Berlin should go to prop up Opel, which traces its roots back to the 19th century, has become a topic of fierce debate ahead of a federal election in September.
Read more here
In North America, bankrupt U.S. auto parts maker Chrysler won court approval for financing and other requests to help move it quickly through a sale to a group led by Fiat and also named a chairman for the merged company.
Meanwhile, GM Canada planned to tell dealerships on Wednesday which of the country's roughly 700 dealers likely will close under a plan to slash the network by about 42 percent.
The German government had set a Wednesday deadline for bids on the unit of struggling U.S. automaker General Motors Corp, which is hurtling toward a June 1 U.S. government deadline to complete restructuring talks with stakeholders.
Fiat submitted an offer for GM's Opel and British brand Vauxhall, while a financial source told Reuters that RHJ had put in a bid and that Magna also was expected to.
A spokesman for GM Europe confirmed the automaker had received three bids on the Opel unit. GM has said a bankruptcy filing is probable and industry analysts and experts believe it could come within weeks.
Both GM and Germany, where Opel has four plants that employ some 25,000 staff, are in a race against time to finalize a sale of the group based in Ruesselsheim, western Germany.
GM will decide which investor gets Opel, but the German government will also play a big role because it would likely provide billions of euros in financing to help any buyer.
How far Berlin should go to prop up Opel, which traces its roots back to the 19th century, has become a topic of fierce debate ahead of a federal election in September.
Read more here
Tuesday, May 19, 2009
World Bank Says China Recovery Hopes May Be Premature
(Bloomberg) -- Enthusiasm about an economic recovery in China may be “premature” as private investment lags behind government spending, the World Bank said.
“Until we see a recovery in private investment, it’s hard to get too excited about the future,” David Dollar, country director for China, said at a forum in Beijing today.
The Shanghai Composite Index has climbed 47 percent this year on optimism that a 4 trillion yuan ($586 billion) stimulus package will revive growth after exports collapsed because of the global recession. The world’s third-biggest economy is “struggling” and may fall short of the government’s target of an 8 percent expansion this year, Oppenheimer & Co. said this week.
Private investment, the main driver of growth, was “way down” in the first quarter, Dollar said, without citing a figure. Manufacturers have excess capacity and “a lot of the real-estate sector is over-built,” he said.
Shanghai’s stock index fell 0.1 percent as of the break in trading at 11:30 a.m. local time.
While China is the only one of the world’s five biggest economies that is still expanding, growth slowed to 6.1 percent in the first quarter, the weakest pace since at least 1999.
Stimulus spending has “stabilized” the Chinese economy, Dollar said, adding that it can’t be the source of long-term sustainable growth and the country needs to do more to increase consumption.
“Until we see a recovery in private investment, it’s hard to get too excited about the future,” David Dollar, country director for China, said at a forum in Beijing today.
The Shanghai Composite Index has climbed 47 percent this year on optimism that a 4 trillion yuan ($586 billion) stimulus package will revive growth after exports collapsed because of the global recession. The world’s third-biggest economy is “struggling” and may fall short of the government’s target of an 8 percent expansion this year, Oppenheimer & Co. said this week.
Private investment, the main driver of growth, was “way down” in the first quarter, Dollar said, without citing a figure. Manufacturers have excess capacity and “a lot of the real-estate sector is over-built,” he said.
Shanghai’s stock index fell 0.1 percent as of the break in trading at 11:30 a.m. local time.
While China is the only one of the world’s five biggest economies that is still expanding, growth slowed to 6.1 percent in the first quarter, the weakest pace since at least 1999.
Stimulus spending has “stabilized” the Chinese economy, Dollar said, adding that it can’t be the source of long-term sustainable growth and the country needs to do more to increase consumption.
Sunday, May 17, 2009
One-time N.Y. Pension Overseer McCall in Cuomo Probe
(Bloomberg) -- Former New York state Comptroller H. Carl McCall, once chief fiduciary of the third-largest public- employee pension fund, said a deal he made three years after leaving office has involved him in a widening investigation of so-called placement agents.
McCall, state comptroller from 1993 to 2002, preceded Alan Hevesi, whose administration is the focus of a probe by New York Attorney General Andrew Cuomo that has produced four criminal charges, two guilty pleas and investigations from New York to California. At issue are the middlemen who secure for investment firms millions of dollars in pension business. Last week, McCall, 63, received a Cuomo subpoena.
Three years after he left office, Manhattan-based Steinberg Asset Management LLC paid him $48,000 for helping it obtain $25 million to invest for the state pension, McCall said in a telephone interview. David Loglisci, Hevesi’s chief investment officer, told him the fund needed a “small-to-mid-cap firm to manage a portfolio.”
“I was in a unique position of having this knowledge that they were looking for such a firm, and I knew a lot about this firm, so I made the referral,” McCall said.
Hevesi resigned Dec. 22, 2006 after pleading guilty to charges he used state-paid drivers as his wife’s chauffeurs. Loglisci now faces Cuomo’s 13-count indictment.
Cuomo’s Charges
Cuomo has charged Henry “Hank” Morris, 55, with orchestrating kickbacks by exploiting work he did to advance Hevesi’s political career; Loglisci, 39, for facilitating and benefiting from the arrangement; former state Liberal Party chairman Raymond Harding, 74, for pocketing illicit payments, and Saul Meyer, 38, a Dallas money manager for Aldus Equity Partners, for paying kickbacks.
Barrett Wissman, 46, a Dallas, Texas hedge fund manager, and Julio Ramirez Jr., 48, a former Blackstone Group LP employee, have pleaded guilty to charges stemming from the probe.
McCall received one of about 100 subpoenas Cuomo earlier this month seeking information about transactions in which individuals acted as “pension placement agents,” linking private equity and hedge firms with public pensions.
The last time McCall and Cuomo were at odds was in 2002, when Cuomo opposed McCall for, and later quit, the race for the Democratic gubernatorial nomination. McCall said he doesn’t resent Cuomo’s subpoena.
Understanding Subpoena
“If I had been the only person subpoenaed then I could question it, but the fact that some 100 people were subpoenaed, I could understand it,” he said in the interview.
“As far as the investigation is concerned, I think it’s a very troubling thing to have emerged, and I commend the attorney general for persisting and trying to get to the bottom of this, because the integrity of the pension fund is very important,” McCall said.
As comptroller, McCall was solely responsible for all state pension investment decisions. Politically influential acquaintances and friends approached him with deals that would benefit them and their clients, McCall said.
“This is what I struggled with in terms of people who made referrals,” he said. “Was somebody simply bringing something to you because they expected you to give them money, because you knew them? Or, were they really making recommendations that added some value? You don’t want to tell them don’t bring anything in, because something might be good.”
Selecting Investments
His office tried to focus on the merits of the deal, not the identity of the placement agent, McCall said. “We looked at it very carefully to determine whether or not this was something that made sense for us as an investment,” he said.
Restrictions on middlemen instituted by the current state Comptroller Thomas DiNapoli and city Comptroller William Thompson in the past month make sense, McCall said, in light of the abuses uncovered by Cuomo’s investigation.
McCall endorsed a code of conduct proposed by Cuomo and agreed to yesterday by the Washington-based Carlyle Group, the second-largest private equity firm. The code would ban investment firms from using placement agents or other third parties to negotiate with public pension funds. It prohibits investment firms from doing business with pension funds for two years if the firm made a campaign contribution to a public official who can influence fund investment decisions.
Read more here
McCall, state comptroller from 1993 to 2002, preceded Alan Hevesi, whose administration is the focus of a probe by New York Attorney General Andrew Cuomo that has produced four criminal charges, two guilty pleas and investigations from New York to California. At issue are the middlemen who secure for investment firms millions of dollars in pension business. Last week, McCall, 63, received a Cuomo subpoena.
Three years after he left office, Manhattan-based Steinberg Asset Management LLC paid him $48,000 for helping it obtain $25 million to invest for the state pension, McCall said in a telephone interview. David Loglisci, Hevesi’s chief investment officer, told him the fund needed a “small-to-mid-cap firm to manage a portfolio.”
“I was in a unique position of having this knowledge that they were looking for such a firm, and I knew a lot about this firm, so I made the referral,” McCall said.
Hevesi resigned Dec. 22, 2006 after pleading guilty to charges he used state-paid drivers as his wife’s chauffeurs. Loglisci now faces Cuomo’s 13-count indictment.
Cuomo’s Charges
Cuomo has charged Henry “Hank” Morris, 55, with orchestrating kickbacks by exploiting work he did to advance Hevesi’s political career; Loglisci, 39, for facilitating and benefiting from the arrangement; former state Liberal Party chairman Raymond Harding, 74, for pocketing illicit payments, and Saul Meyer, 38, a Dallas money manager for Aldus Equity Partners, for paying kickbacks.
Barrett Wissman, 46, a Dallas, Texas hedge fund manager, and Julio Ramirez Jr., 48, a former Blackstone Group LP employee, have pleaded guilty to charges stemming from the probe.
McCall received one of about 100 subpoenas Cuomo earlier this month seeking information about transactions in which individuals acted as “pension placement agents,” linking private equity and hedge firms with public pensions.
The last time McCall and Cuomo were at odds was in 2002, when Cuomo opposed McCall for, and later quit, the race for the Democratic gubernatorial nomination. McCall said he doesn’t resent Cuomo’s subpoena.
Understanding Subpoena
“If I had been the only person subpoenaed then I could question it, but the fact that some 100 people were subpoenaed, I could understand it,” he said in the interview.
“As far as the investigation is concerned, I think it’s a very troubling thing to have emerged, and I commend the attorney general for persisting and trying to get to the bottom of this, because the integrity of the pension fund is very important,” McCall said.
As comptroller, McCall was solely responsible for all state pension investment decisions. Politically influential acquaintances and friends approached him with deals that would benefit them and their clients, McCall said.
“This is what I struggled with in terms of people who made referrals,” he said. “Was somebody simply bringing something to you because they expected you to give them money, because you knew them? Or, were they really making recommendations that added some value? You don’t want to tell them don’t bring anything in, because something might be good.”
Selecting Investments
His office tried to focus on the merits of the deal, not the identity of the placement agent, McCall said. “We looked at it very carefully to determine whether or not this was something that made sense for us as an investment,” he said.
Restrictions on middlemen instituted by the current state Comptroller Thomas DiNapoli and city Comptroller William Thompson in the past month make sense, McCall said, in light of the abuses uncovered by Cuomo’s investigation.
McCall endorsed a code of conduct proposed by Cuomo and agreed to yesterday by the Washington-based Carlyle Group, the second-largest private equity firm. The code would ban investment firms from using placement agents or other third parties to negotiate with public pension funds. It prohibits investment firms from doing business with pension funds for two years if the firm made a campaign contribution to a public official who can influence fund investment decisions.
Read more here
Thursday, May 14, 2009
Rio Tinto Shares Gain After Reaffirming Chinalco Deal
(Bloomberg) -- Rio Tinto Group rose the most in almost four months in Sydney trading after the world’s third- largest mining company said it will proceed with plans to raise $19.5 billion from Aluminum Corp. of China.
Rio climbed 8.2 percent to A$62.31 as of 1 p.m. Sydney time, the biggest gain since Jan. 27. Speculation that Rio would scrap the deal with Chinalco, as the state-owned entity is known, and pursue a rights offer instead pushed the London-based company down 20 percent in the first four days of this week.
“The company remains committed to delivering this strategic partnership,” Rio said today in a statement. Chinalco hasn’t received any request to revise the plan, Chinalco Vice President Lu Youqing said today by phone from Beijing.
Rio is trying to convince investors and regulators that the accord signed in February with Chinalco is the best way to slash the company’s $38.9 billion of debt. Rio may drop the deal in favor of a five billion pound ($7.6 billion) rights issue, the Telegraph newspaper said this week.
Any possible share sale is “potentially a lot further down the track than what the market may have been anticipating here in recent days,” said Jamie Spiteri, head dealer at Shaw Stockbroking Ltd. “It just probably eliminates some of the added uncertainty, which had probably aided in a bit of a nervous sell-off in recent days.”
Shares of Aluminum Corp. of China Ltd., Chinalco’s Hong Kong-listed unit, gained 3.1 percent to HK$7.07.
‘Best Way Forward’
The Chinalco deal is “the best way forward” for Rio and Chairman Jan du Plessis is meeting investors in the U.K. this week to listen to their views, spokesman Nick Cobban said yesterday in London. The company has agreed to sell $7.2 billion of convertible bonds and stakes in projects worth $12.3 billion to Chinalco.
The probability of Chinalco completing the investment in Rio is below 50 percent, Liberum Capital Ltd. said last month, citing a rebound in financial and commodity markets.
“With changed market conditions, a rebound in metals prices, rebounding investor sentiment and a strong share price appreciation, it now gives them an opportunity to vary the deal,” said Shaun Giacomo, who helps manage $2.5 billion at SG Asset Management Pte. in Singapore including Rio stock. “Directors do have a fiduciary duty to respond to a changed investment climate.”
Read more here
Rio climbed 8.2 percent to A$62.31 as of 1 p.m. Sydney time, the biggest gain since Jan. 27. Speculation that Rio would scrap the deal with Chinalco, as the state-owned entity is known, and pursue a rights offer instead pushed the London-based company down 20 percent in the first four days of this week.
“The company remains committed to delivering this strategic partnership,” Rio said today in a statement. Chinalco hasn’t received any request to revise the plan, Chinalco Vice President Lu Youqing said today by phone from Beijing.
Rio is trying to convince investors and regulators that the accord signed in February with Chinalco is the best way to slash the company’s $38.9 billion of debt. Rio may drop the deal in favor of a five billion pound ($7.6 billion) rights issue, the Telegraph newspaper said this week.
Any possible share sale is “potentially a lot further down the track than what the market may have been anticipating here in recent days,” said Jamie Spiteri, head dealer at Shaw Stockbroking Ltd. “It just probably eliminates some of the added uncertainty, which had probably aided in a bit of a nervous sell-off in recent days.”
Shares of Aluminum Corp. of China Ltd., Chinalco’s Hong Kong-listed unit, gained 3.1 percent to HK$7.07.
‘Best Way Forward’
The Chinalco deal is “the best way forward” for Rio and Chairman Jan du Plessis is meeting investors in the U.K. this week to listen to their views, spokesman Nick Cobban said yesterday in London. The company has agreed to sell $7.2 billion of convertible bonds and stakes in projects worth $12.3 billion to Chinalco.
The probability of Chinalco completing the investment in Rio is below 50 percent, Liberum Capital Ltd. said last month, citing a rebound in financial and commodity markets.
“With changed market conditions, a rebound in metals prices, rebounding investor sentiment and a strong share price appreciation, it now gives them an opportunity to vary the deal,” said Shaun Giacomo, who helps manage $2.5 billion at SG Asset Management Pte. in Singapore including Rio stock. “Directors do have a fiduciary duty to respond to a changed investment climate.”
Read more here
Wednesday, May 13, 2009
Yachts Land at Cannes Festival With Fewer Film Buyers
(Bloomberg) -- The Cannes Film Festival opening today looks less like “The Great Gatsby” and more like “Risky Business” as 4,000 independent movies vie for the attention of a shrinking cast of distributors.
Advance bookings suggest attendance at the world’s largest film festival will be down about 15 percent, complicating moviemakers’ efforts to find distributors. The number of films at Cannes, known for celebrity sightings and yacht parties, is roughly the same as a year ago, organizers say.
The number of films reflects production financing available in previous years. Now, a lack of capital is squeezing everyone from distributors like those looking to buy movies at Cannes to filmmakers including Steven Spielberg, who is trying to raise money for his newly independent DreamWorks studio.
“It’s very tough out there,” said Jerome Paillard, director of the Cannes Marche du Film, the independent film market that runs parallel to the festival. “The credit crunch is really a problem for distributors with no strong cash flow and who rely on credit lines to buy films.”
Time Warner Inc. said last month it had to absorb $120 million in costs because film finance partner Village Roadshow Pictures couldn’t obtain funds. Village Roadshow said this week it restructured a bank credit line, freeing money to cover its share of 2008 productions. In February, Lions Gate Entertainment Corp. said Pride Pictures LLC won’t participate in three films.
Heath Ledger Film
This year’s screenings include the late Heath Ledger’s final film, “The Imaginarium of Doctor Parnassus,” directed by Terry Gilliam, and Ken Loach’s “Looking for Eric,” which stars soccer legend Eric Cantona. Filmmakers Quentin Tarantino, Ang Lee and Pedro Almodovar are showing works.
Movies with early buzz include Jane Campion’s “Bright Star,” about the romance between 19th century poet John Keats and Fanny Brawne, said Michael Schaefer, senior vice president of acquisitions at Summit Entertainment, an independent producer and distributor based in Santa Monica, California.
The festival begins with “Up,” the 3-D feature from Walt Disney Co.’s Pixar, the first animated film to open Cannes.
With less money in the pockets of distributors, producers have lowered their budgets. The cost to make the average movie in the Marche du Film has declined about 20 percent to $5.2 million this year, Paillard said.
The falling costs also reflect the glut of movies now coming to market, said Stephen Margolis, the head of Future Films, a financier and producer based in London.
“Some films will not see the light of day,” Margolis said. “Banks are beginning to leave the sector.”
Film Budgets
Not everyone is coming with less money.
Revolver Entertainment, a London-based distributor, is holding its acquisition budget steady this year, said Managing Director Justin Marciano. The company has released movies including “Tell No One,” the French film featuring Francois Cluzet and Kristin Scott-Thomas, and Charlie Kaufman’s “Synecdoche, New York.”
“There will be some good films that don’t make it and from our buying perspective at the moment, the state of the economy obviously has an impact,” Marciano said. “It’s super tough for producers at the moment and there will be fewer films made.”
The backlog of movies “hurts the marketplace,” said Michael Cerenzie of Cerenzie-Peters Productions, an independent producer in Los Angeles. “We’re still another year away from getting through this saturation.”
Cerenzie’s production credits include “Before the Devil Knows You’re Dead,” starring Philip Seymour Hoffman, and “Den of Lions.”
Read more here
Advance bookings suggest attendance at the world’s largest film festival will be down about 15 percent, complicating moviemakers’ efforts to find distributors. The number of films at Cannes, known for celebrity sightings and yacht parties, is roughly the same as a year ago, organizers say.
The number of films reflects production financing available in previous years. Now, a lack of capital is squeezing everyone from distributors like those looking to buy movies at Cannes to filmmakers including Steven Spielberg, who is trying to raise money for his newly independent DreamWorks studio.
“It’s very tough out there,” said Jerome Paillard, director of the Cannes Marche du Film, the independent film market that runs parallel to the festival. “The credit crunch is really a problem for distributors with no strong cash flow and who rely on credit lines to buy films.”
Time Warner Inc. said last month it had to absorb $120 million in costs because film finance partner Village Roadshow Pictures couldn’t obtain funds. Village Roadshow said this week it restructured a bank credit line, freeing money to cover its share of 2008 productions. In February, Lions Gate Entertainment Corp. said Pride Pictures LLC won’t participate in three films.
Heath Ledger Film
This year’s screenings include the late Heath Ledger’s final film, “The Imaginarium of Doctor Parnassus,” directed by Terry Gilliam, and Ken Loach’s “Looking for Eric,” which stars soccer legend Eric Cantona. Filmmakers Quentin Tarantino, Ang Lee and Pedro Almodovar are showing works.
Movies with early buzz include Jane Campion’s “Bright Star,” about the romance between 19th century poet John Keats and Fanny Brawne, said Michael Schaefer, senior vice president of acquisitions at Summit Entertainment, an independent producer and distributor based in Santa Monica, California.
The festival begins with “Up,” the 3-D feature from Walt Disney Co.’s Pixar, the first animated film to open Cannes.
With less money in the pockets of distributors, producers have lowered their budgets. The cost to make the average movie in the Marche du Film has declined about 20 percent to $5.2 million this year, Paillard said.
The falling costs also reflect the glut of movies now coming to market, said Stephen Margolis, the head of Future Films, a financier and producer based in London.
“Some films will not see the light of day,” Margolis said. “Banks are beginning to leave the sector.”
Film Budgets
Not everyone is coming with less money.
Revolver Entertainment, a London-based distributor, is holding its acquisition budget steady this year, said Managing Director Justin Marciano. The company has released movies including “Tell No One,” the French film featuring Francois Cluzet and Kristin Scott-Thomas, and Charlie Kaufman’s “Synecdoche, New York.”
“There will be some good films that don’t make it and from our buying perspective at the moment, the state of the economy obviously has an impact,” Marciano said. “It’s super tough for producers at the moment and there will be fewer films made.”
The backlog of movies “hurts the marketplace,” said Michael Cerenzie of Cerenzie-Peters Productions, an independent producer in Los Angeles. “We’re still another year away from getting through this saturation.”
Cerenzie’s production credits include “Before the Devil Knows You’re Dead,” starring Philip Seymour Hoffman, and “Den of Lions.”
Read more here
Tuesday, May 12, 2009
U.S. credit rating at risk: former agency chief
(Reuters) - The United States is at risk of losing its triple-A credit rating unless it starts putting its finances in order, a former head of the agency in charge of fiscal accountability said in the Financial Times on Wednesday.
David Walker, former director of the Government Accountability Office, cited a warning from Moody's Investors Service nearly two years ago about ballooning healthcare and social security costs.
"Signs are abound that we are in even worse shape now, and that confidence in America's ability to gain control of its finances is eroding," the former comptroller general and current chief executive of Peter G. Peterson Foundation, wrote to the FT.
Read more here
David Walker, former director of the Government Accountability Office, cited a warning from Moody's Investors Service nearly two years ago about ballooning healthcare and social security costs.
"Signs are abound that we are in even worse shape now, and that confidence in America's ability to gain control of its finances is eroding," the former comptroller general and current chief executive of Peter G. Peterson Foundation, wrote to the FT.
Read more here
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