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UPDATE 1-Hostess liquidation draws scores of potential bidders

Written By Unknown on Jumat, 30 November 2012 | 16.47

Thu Nov 29, 2012 3:40pm EST

By Tom Hals

Nov 29 (Reuters) - Hostess Brands Inc, the bankrupt maker of Twinkies snack cakes, received court permission to wind down its 82-year-old business on Thursday but revealed "furious" interest in its iconic brands from potential buyers.

New York Bankruptcy Court Judge Robert Drain approved the final orders that cleared the way for the company to begin selling its assets, everything from brands such as Ding Dongs and Twinkies to baking equipment and real estate.

"It's undisputed they will be worth more moving down this path," Drain said of the wind-down plan.

Around 110 potential bidders have contacted the company about bidding for at least part of its business, and 70 had enough interest to sign confidentiality agreements, Hostess' banker told the hearing in White Plains, New York.

Joshua Scherer of Perella Weinberg, who was hired by Hostess to sell its assets, said that six potential bidders have hired large investment banks to help them.

"It's very significant because it indicates to me that not only are these buyers serious, but they are expecting to spend substantial sums," said Scherer. He said the liquidation could raise $1 billion.

Scherer described the level of incoming calls from potential bidders as "fast and furious." Interested parties include large national retailers and overseas buyers that wanted to bring Hostess brands to India, he said.

By early January, the company expects to have initial bids for its various brands, which will then be put to auction.

Money raised from the sale of assets will help Hostess repay its creditors. It has about $900 million of secured debt and faces up to about $150 million of administrative claims.

Scherer said last week that Hostess could be worth $2.3 billion to $2.4 billion in a normal bankruptcy, an amount equal to its annual revenue.

Hostess abandoned its initial plan to reorganize as an ongoing business and decided to liquidate on Nov. 16, saying it was losing about $1 million per day after the Bakery, Confectionery, Tobacco and Grain Millers Union, representing close to one-third of its workers, went on strike a week earlier.

Drain expressed frustration with the bakers' union earlier this month for striking. The union walked out after Drain authorized Hostess to impose pay and benefit cuts, which the International Brotherhood of Teamsters, Hostess' largest union, had accepted.

His frustration burst into the open again on Thursday and he briefly shouted at the bakers' attorney, Ancela Nastasi, after he questioned her approach in questioning witnesses.

"I have to wonder, again ... what your clients' basis is for whatever they are doing here. I just don't get it," he said.

The case is In re: Hostess Brands Inc et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-22052.

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Fisker idles Karma production while waiting for A123 auction

Thu Nov 29, 2012 7:16pm EST

* Battery supplier A123 filed for bankruptcy in October

* Fisker has batteries if owners need replacements

Nov 29 (Reuters) - Fisker Automotive Inc said on Thursday that it has temporarily idled production of its Karma plug-in hybrid after its lithium-ion battery supplier A123 Systems Inc cut its output.

A123, which is the sole battery supplier for the Karma, slowed production after filing for Chapter 11 bankruptcy protection in October, Fisker spokesman Roger Ormisher said.

Fisker has enough lithium-ion batteries on hand in case an owner needs a replacement, Ormisher said. The company expects to have clarity on its battery inventory after Dec. 6, when an auction to sell A123 is scheduled.

Auto parts suppliers Johnson Controls Inc and China's Wanxiang Group Corp are among the potential buyers who will square off to buy A123. Other companies that have expressed interest in A123 include NEC Corp of Japan and Siemens AG of Germany.

The U.S. government said this week that A123 could not be sold without its consent. Fisker and A123 have both received funding under a federal program designed to create an advanced vehicle manufacturing base in the United States.

Bloomberg reported news of the idled production earlier Thursday.

Fisker has faced a series of setbacks this year, including a recall of batteries made by A123 and the U.S. Department of Energy's decision to block Fisker from accessing a portion of its $529 million loan.

On Wednesday, the company pushed back its China launch for the $100,000-plus Karma to the first quarter of next year from the end of 2012.

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UPDATE 1-China approves Wanxiang plan to buy U.S. battery maker A123

Thu Nov 29, 2012 10:48pm EST

* Wanxiang gets Beijing backing to acquire U.S. battery maker

* A123 takeover hinges on U.S. government approval

SHANGHAI Nov 30 (Reuters) - China's government has approved a plan by Wanxiang Group Corp, a major Chinese auto parts maker, to acquire bankrupt U.S. battery maker A123 Systems Inc , although a deal still hinges on the outcome of an auction next month and U.S. government approval.

A123, a maker of lithium ion batteries for electric cars, filed for Chapter 11 bankruptcy protection in October with a plan to sell its battery business to Milwaukee-based Johnson Controls for $125 million.

The planned sale will depend on whether better bids are received at next month's auction. Wanxiang has said it intends to make a bid.

China's National Development and Reform Commission, whose approval is required for major overseas acquisitions by Chinese companies, said in a statement posted on its website on Friday that it had approved Wanxiang's plans for a bid.

Any deal for A123 must receive the blessing of the U.S. government, however, as the company has received a $249 million grant from the Energy Department.

Republican Senators John Thune and Chuck Grassley have raised concerns about Wanxiang's attempt to acquire A123's battery business, saying military and taxpayer-funded technology should not be allowed to fall into foreign hands.

The Energy Department has stressed that none of the government's grant would be allowed to fund facilities abroad.

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UPDATE 1-U.S. says A123 sale requires its consent

Written By Unknown on Kamis, 29 November 2012 | 16.47

Wed Nov 28, 2012 9:05pm EST

* Battery maker filed for bankruptcy in Delaware

* U.S. objects to terms of proposed sale order

* Retired military leaders oppose sale to Wanxiang

By Tom Hals

Nov 28 (Reuters) - The U.S. government said bankrupt A123 Systems Inc cannot be sold without its consent because the battery maker received a $249 million grant from the Energy Department, according to court documents.

Johnson Controls Inc of Milwaukee and China's Wanxiang Group Corp are battling over who will buy A123, a maker of lithium ion batteries for electric cars. The prospect of a U.S. government-financed company being sold to a Chinese rival has drawn opposition from some politicians, who say technology underwritten by U.S. taxpayers should not fall into foreign hands.

The government objected on Tuesday to the terms of the company's proposed sale order, saying in a court filing that its approval was needed before the government's clean energy grant could be assigned to a buyer. A123 can still draw $120 million under various government grants, according to court records.

The government also said the terms of the sale must include its right to demand compensation for the sale of assets such as equipment or property that were financed with the clean energy grant.

In the filing by Stuart Delery, a principal deputy assistant attorney general, the government did not indicate whether it supports or opposes any specific buyer for the company. Other parties that have expressed an interest in A123 include NEC Corp of Japan and Siemens AG of Germany.

A spokesman for A123 declined to comment.

A123 filed for Chapter 11 bankruptcy protection in October with a plan to sell its battery business to Milwaukee-based Johnson Controls for $125 million. The planned sale is subject to better bids at an auction next month. Wanxiang, an auto parts supplier, has said it intends to make a bid.

The money from the auction will go toward paying off A123's creditors.

Also on Tuesday, a group of retired military leaders and industrial consultants urged the Committee on Foreign Investment in the United States to block the possible sale to Wanxiang.

"This transaction would no doubt result in the loss of American jobs and the transfer of technologies critical to our nation's infrastructure and military hardware to China," said the letter from the Strategic Materials Advisory Council. Among those who signed the letter were Barry Costello, a retired vice admiral, and two retired major generals from the U.S. Air Force, Robert Latiff and Jeffrey Reimer.

Several Michigan lawmakers from both parties, including Democratic senators Debbie Stabenow and Carl Levin, also asked the committee to turn Wanxiang down, citing concerns about the company's opaque structure and possible ties to the Chinese government.

"In light of existing A123 contracts with the U.S. Department of Defense, we are concerned that the acquisition of A123 by Wanxiang might constitute a potential threat to U.S. national security," the letter said.

Two Republican U.S. senators, John Thune of South Dakota and Chuck Grassley of Iowa, warned earlier this month that Wanxiang could gain access to A123's military contracts if it were allowed to buy the company.

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Key bondholder group says AMR board should be replaced

Wed Nov 28, 2012 9:12pm EST

* Group to only fund bankruptcy exit plan if board replaced

* AMR wants to exit bankruptcy as independent firm

* US Airways making aggressive takeover push

* US Airways has support from AMR unions

By Nick Brown

NEW YORK, Nov 28 (Reuters) - A group of some of bankrupt American Airlines' most significant bondholders said it will not support a standalone restructuring unless a new board is brought in, suggesting there is even less support for current management than first thought.

The 12-member bondholder group, which includes JPMorgan Chase & Co, Pentwater Capital Management and York Capital Management, is the primary well-organised group to have expressed an interest in funding an independent exit for the airline's parent company AMR Corp.

AMR filed for bankruptcy in November 2011, seeking to reduce labor costs. Its current management team, led by Chief Executive Tom Horton, has lost the confidence of the company's unions, which support a takeover bid by smaller competitor US Airways Group.

The bondholder group, which holds more than $700 million in AMR debt, said in a letter to Keith Wilson, president of American's pilots' union, that its support for an independent exit is "conditioned, among other things, on that plan providing for the naming of a new board of directors."

The letter, sent on Nov. 15, was not public, but the Allied Pilots' Association made it available to its 8,000 members on Wednesday and a copy was obtained by Reuters.

"The board will ... be responsible for selecting a management team," the bondholders said in the letter. "We expect the board to share our view that an important criteria for selecting the leader of that team will be a demonstrated ability to maximize shareholder value."

A spokesman for AMR declined to comment on Wednesday.

EQUITY STAKE

The circulation of the letter may also signal an attempt by the union to nudge its members toward ratifying a new labor contract proposed by AMR.

Resolving the bitter, years-long labor dispute between AMR and its pilots is a top priority for the company and its creditors, as AMR tries to convince investors of its long-term stability.

The contract would give the pilots a 13.5 percent equity stake in the company. The bondholders said in their letter that they would work cooperatively with AMR's shareholders in selecting a new board.

"This commitment by the (bondholders)... shows that APA's 13.5 percent equity claim is of critical importance in shaping what the new American Airlines will look like and who will lead it," the union said in a statement circulated to its members along with the letter.

A vote on the proposed contract is set for Dec. 7.

The case is In re AMR Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 11-15463.

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UPDATE 1-Key bondholder group says AMR board should be replaced

Thu Nov 29, 2012 1:53am EST

* Group to only fund bankruptcy exit plan if board replaced

* US Airways making aggressive takeover push

* US Airways has support from AMR unions

By Nick Brown

NEW YORK, Nov 28 (Reuters) - A group of some of bankrupt American Airlines' most significant bondholders said it will not support a standalone restructuring unless a new board is brought in, a move that may increase hurdles for Chief Executive Tom Horton and his team.

AMR filed for bankruptcy in November 2011, seeking to reduce labor costs.

Entities that gain a controlling equity stake in a company through bankruptcy routinely appoint new boards, and those boards do not necessarily oust the company's incumbent managers.

But AMR's current management team, led by Horton who is also chairman of the board, has lost the confidence of the company's unions, which support a takeover bid by smaller competitor US Airways Group.

The bondholders, who hold more than $700 million in AMR debt, said in the letter to Keith Wilson, president of American's pilots' union, its support for an independent exit was "conditioned, among other things, on that plan providing for the naming of a new board of directors."

It added that the new board would be selected with input from other shareholders.

That could include the pilots' union if the union votes to ratify a proposed labor contract offering it a 13.5 percent equity stake in the company, which means Horton's future at the company could depend on his ability to convince other shareholders of his team's leadership credentials.

The letter, sent on Nov. 15, was not public, but the Allied Pilots' Association made it available to its 8,000 members on Wednesday and a copy was obtained by Reuters.

A spokesman for AMR declined to comment on Wednesday.

The circulation of the letter may also signal an attempt by the union to nudge its members toward ratifying the new labor contract proposed by AMR.

Resolving the bitter, years-long labor dispute between AMR and its pilots is a top priority for the company and its creditors, as AMR tries to convince investors of its long-term stability.

The bondholders' commitment to work cooperatively with shareholders "shows that APA's 13.5 percent equity claim is of critical importance in shaping what the new American Airlines will look like and who will lead it," the union said in a statement circulated to its members along with the letter.

A vote on the proposed contract is set for Dec. 7.

The case is In re AMR Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 11-15463.

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BRIEF-Patriot Coal bankruptcy moved to court in Missouri

Written By Unknown on Rabu, 28 November 2012 | 16.47

Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

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UPDATE 2-Patriot Coal bankruptcy moved to court in Missouri

Tue Nov 27, 2012 5:12pm EST

* Judge says Patriot attempted to manufacture venue

* Union's bid to move case to West Virginia is denied

* Mine workers' union, Patriot at odds over benefits

By Nick Brown

NEW YORK, Nov 27 (Reuters) - Patriot Coal on Tuesday lost a bid to keep its bankruptcy case in New York, after the United Mine Workers of America argued that the proceedings should be transferred to a venue closer to the company's operations.

U.S. Bankruptcy Judge Shelley Chapman in Manhattan moved the case to St. Louis, Missouri, where the company is based. As part of the bankruptcy, Patriot is expected to seek significant cu ts in ret iree pen sion and health benefits.

Patriot, the judge said in her ruling , incorporated two units in New York in the weeks leading up to its bankruptcy, essentially for the purpose of establishing venue there - a move that, while technically legal, was "simply not fair."

Patriot filed for bankruptcy in July , five years after being spun off by Peabody Energy < BTU.N> and Arch Coal < ACI.N>. [I D:nL2E8I9CIE]

The union had wanted the case transferred to West Virginia, the hub of most of the company's operations but said it was satisfied with St. Louis.

"Nobody has ever mined one ounce of coal in Manhattan," the union said in a statement on Tuesday. "This decision brings the case to the heart of the Illinois coal basin, home to many of our active and retired members and their families."

Patriot had sought to keep the case in New York, a major site for corporate bankruptcies and the home of most of Patriot's lawyers and bankers. The company sa id it respected Chapman's decision.

"We remain focused on using the reorganization process to ensure the company's future viability as a competitor and employer in a challenging market environment," it said i n a statement.

Chapman also criticized the union in her 62-page ruling , which she s aid aimed to define "the meaning of justice."

The union wanted to move the case to a West Virginia court where it f elt judges would be more sympathetic to its cause, Chapman said.

"It is not in the interest of justice merely to swap one party's perceived home field advantage for another," the judge said, citing court hearings in which union lawyers expressed a desire for judges who "understand" and "worship" coal miners.

In court papers, Patriot has said its current labor obligations are " unsustainable" w ithout c utt ing s ome benefits as it re structures .

The Mine Workers union has more than 10,000 retiree members whose pension and health obligations a re a d ministered by Patriot, though many never worked for Patriot and retired be fore th e Peabody spin-of f .

The union has vowed to protect its benefits through the b ankruptcy, and has also sued Peabody Energy, saying it should cover benefits if Patriot cannot [ID :nL 1E8LOOXT].

Chapman chose St. Louis, she said, because Patriot and many of its officers are based there. She added that she was influenced by hundreds of "compelling" letters from retirees, widows and families who wish to participate in the case.

"While St. Louis may not be as convenient as Charleston for some employees and retirees, it is by no means remote from coal country," the judge said.

The case is In Re Patriot Coal Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-12900.

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Bakers' union seeks Chapter 11 trustee for Hostess liquidation

NEW YORK | Tue Nov 27, 2012 8:32pm EST

NEW YORK Nov 27 (Reuters) - The bakers' union of Hostess Brands Inc asked the judge overseeing the company's bankruptcy on Tuesday to appoint a Chapter 11 trustee to ensure an orderly wind-down.

In a filing in the U.S. Bankruptcy Court in White Plains, N.Y., lawyers for the union and a related pension fund said they objected to allowing "incumbent management" to supervise the company's liquidation.

Hostess won permission from Judge Robert Drain last week to begin closing down, although it has expressed hope that many of its widely known brands, including Twinkies and Wonder Bread, would survive in the hands of new owners.

The liquidation began after the judge failed in a last-ditch effort to resolve the dispute between Hostess and the striking Bakery, Confectionery, Tobacco and Grain Millers Union, which had refused to accept new wage and benefit cuts after earlier give-backs.

The union asked Drain to rule on its request for a trustee at the next court hearing on Thursday.

In papers filed opposing the request for an expedited decision, lawyers for Hostess said they believed there were "serious legal deficiencies" in the union's motion for a trustee.

Drain has already rejected a request to convert the case into a Chapter 7 liquidation that would be overseen by a trustee, calling it a "disaster" because of the potential delay in selling the company's assets.

Hostess decided to liquidate on Nov. 16, saying it was losing about $1 million per day after the union, representing close to one-third of its workers, went on strike a week earlier.

The 82-year-old company filed for Chapter 11 protection on Jan. 11, its second bankruptcy filing in less than three years.

The case is In re: Hostess Brands Inc et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-22052.

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Bankrupt San Bernardino to halt payments to Calpers, bondholders

Written By Unknown on Selasa, 27 November 2012 | 16.47

Mon Nov 26, 2012 9:11pm EST

* Plan to be filed in bankruptcy court on Friday

* Seeks to balance budget over next 19 months

* Key is deferring payment to Calpers, bondholders

By Tim Reid and Jim Christie

SAN BERNARDINO, Calif., Nov 26 (Reuters) - Bankrupt San Bernardino, California, voted on Monday to present a plan to a bankruptcy judge that seeks to balance its budget through deferring payments to the state's public employee pension fund and to the city's bondholders.

San Bernardino's council passed the plan after the judge overseeing its request for bankruptcy protection demanded an orderly budget be filed in court by Friday, Nov. 30.

San Bernardino's "pendency plan," intended as the city's operating budget as it works its way through bankruptcy, is aimed at closing a nearly $46 million budget deficit for the current fiscal year. It also seeks savings through cuts in jobs, pensions and overtime payments.

The plan runs to just 12 pages, in stark contrast to the pendency plan approved in June by Stockton, another California city seeking bankruptcy protection.

Stockton - a city of 292,000 85 miles east of San Francisco - produced a restructuring plan that ran to 790 pages. It came after over 90 days of mediation with the city's creditors.

San Bernardino, a city of 210,000 about 60 miles east of Los Angeles, avoided any discussions with creditors by declaring a fiscal emergency in July.

Its 19-month pendency plan calls for about $26 million in salary and benefit cuts. Another $35 million in savings would come from the deferral and renegotiation of payments to creditors, particularly the powerful state pension fund and holders of nearly $50 million in pension obligation bonds.

San Bernardino has already halted its biweekly $1.2 million payment to the California Public Employees' Retirement System (Calpers) since it filed for bankruptcy protection on Aug. 1.

The city calls the halted payments "deferrals," but under the pendency plan it would not resume any payments to Calpers until the 2013-2014 fiscal year. It also wants to negotiate its debt to Calpers so it can be repaid over 30 years.

Calpers, America's biggest pension fund which serves many cities and counties in California, is San Bernardino's biggest creditor. The city lists its unfunded pension obligations to Calpers at $143.3 million. Calpers says if the city halted its relationship with the fund immediately the debt would be $319.5 million.

Calpers has already formally objected to San Bernardino's bankruptcy filing. While it says it wants to negotiate with the city, it has also said it will ultimately take legal action to recoup any unpaid pension payments.

San Bernardino's move to defer and negotiate payments to Calpers is in stark contrast to Stockton and Vallejo, another California city which emerged from bankruptcy in 2011. Both cities decided to keep current on all payments to the pension fund.

San Bernardino's case sets up a showdown between Calpers and other creditors, particularly Wall Street bondholders and insurers, over how they will be treated in the bankruptcy.

Calpers has long argued that pension contributions cannot be touched, even in bankruptcy. Wall Street has signaled that it intends to fight Calpers' historical primacy as a creditor in the San Bernardino case.

Such a fight could have far-reaching implications for Calpers and other creditors in future municipal bankruptcy proceedings.

Of most immediate concern to the city was getting a budget plan before the bankruptcy judge. She had indicated a frustration with the city's inability to produce a plan to balance its budget, which is why she set Friday's deadline.

Some council members, who object to cuts such as the elimination of 18 vacant positions in the police department, said they did not like the plan but feared that without it the judge might throw out the city's bankruptcy request.

"It's not a perfect plan," said councilman Robert Jenkins, who is affiliated with the city's unions. "But San Bernardino has to get past this next hurdle."

The plan also seeks to cut firefighter overtime payments and to reduce employee pension payments currently paid by the city.

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UPDATE 2-MF Global customers to seek subpoenas for Corzine, others

Mon Nov 26, 2012 9:22pm EST

* Customer group wants to question MF executives under oath

* Judge denied similar request in February

* MF Chief Operating Officer Bradley Abelow resigning

By Nick Brown

NEW YORK, Nov 26 (Reuters) - A group of former MF Global customers on Monday asked a court for permission to subpoena the commodities broker's executives, including former CEO Jon Corzine, who was blamed in a congressional report this month for MF Global's collapse.

The Commodity Customer Coalition, an advocate for trader customers who lost money when MF Global went under, is seeking to subpoena Corzine, Chief Financial Officer Henri Steenkamp, Chief Operating Officer Bradley Abelow and others, according to court papers filed in the U.S. Bankruptcy Court in Manhattan.

While Corzine has stepped down, some executives remain at the company, assisting in its wind-down. Abelow, the highest-ranking executive still at the firm, just last week gave his notice and is leaving at the end of the week, a person familiar with the matter told Reuters on Monday.

MF Global went bankrupt in October 2011 after its heavy exposure to European sovereign debt spooked investors. The case has become a political firestorm as investigators in Congress and elsewhere try to identify the source of an estimated $1.6 billion hole in customer trading accounts.

Corzine's role has been unclear. James Giddens, the trustee liquidating MF's broker-dealer unit, said in a June report that Corzine failed to address growing liquidity needs as he built the firm into a global investment powerhouse.

Giddens said MF Global used customer funds to cover liquidity gaps as the firm teetered on the brink.

More recently, the Republican-controlled House Financial Services Committee put the blame squarely on Corzine, saying in a Nov. 15 report that he failed to maintain the controls necessary to protect customer funds.

Corzine, a former co-chairman of Goldman Sachs who also served as a Democratic U.S. senator and governor of New Jersey, has denied any wrongdoing.

Reuters reported in September that prosecutors are close to wrapping up a criminal inquiry and are unlikely to file criminal charges.

Some customers have sued Corzine for civil charges, including breaching fiduciary duty.

The coalition is also seeking to subpoena MF Global General Counsel Laurie Ferber and former Treasurer Edith O'Brien, as well as Christine Serwinski, former finance chief at MF's North American brokerage.

An attorney for O'Brien declined to comment. Lawyers for the other parties did not respond to requests for comment.

James Koutoulas, a fund manager who leads the coalition, on Monday told Reuters that Corzine should be forced to face questions from customers under oath.

A spokesman for Corzine declined to comment.

Judge Martin Glenn, who is overseeing MF Global's liquidation, in February denied a similar subpoena request from another former MF Global customer, saying it would impede ongoing investigations by authorities.

Many officials, including Giddens, the Department of Justice and the FBI, have been investigating the case and have spoken to MF Global executives.

Giddens' role -- to return as much money as possible to former customers -- raises questions as to whether granting the coalition subpoena power could be redundant.

Giddens has already returned to customers about 80 percent of the money in their accounts, which were frozen when the company went bankrupt. He has said he will try to recover much of the roughly $1.6 billion gap in those accounts through litigation or settlements with MF Global affiliates, regulators and counterparties.

Giddens has also joined forces with plaintiffs who have sued Corzine for alleged civil infractions.

Still, Koutoulas says customers should be able to take matters into their own hands and ask Corzine and fellow brass detailed questions about the firm's collapse.

"This case needs another kick in the butt," Koutoulas said. "It's almost like the courts are treating Corzine as a sacred cow that can't be touched."

Kent Jarrell, a spokesman for Giddens, declined to comment on the coalition's subpoena efforts. He said Giddens "stands by" his June report and will continue to cooperate with plaintiffs in civil lawsuits against Corzine.

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PRESS DIGEST-New York Times business news - Nov 27

Tue Nov 27, 2012 1:43am EST

Nov 27 (Reuters) - The following are the top stories on the New York Times business pages on Tuesday. Reuters has not verified these stories and does not vouch for their accuracy.

* The Lehman estate agreed on Monday to sell Archstone, a sprawling apartment complex company, to its two biggest real estate rivals - Equity Residential, a company run by the investor Samuel Zell, and AvalonBay Communities - for about $6.5 billion in cash and stock.

* In a surprising departure from convention, the British government on Monday selected Mark Carney, the head of the Canadian central bank, to succeed Mervyn King as the next governor of the Bank of England. ()

* Britain's Financial Services Authority fined UBS 29.7 million pounds ($47.59 million) on Monday for failing to prevent a $2.3 billion loss caused by a former trader. ()

* The decision to step down by Mary Schapiro, who overhauled the Securities and Exchange Commission after the financial crisis, follows a bruising tenure. Schapiro spent four years at the SEC trying to shake the regulator's past. ()

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CORRECTED-Fortune favours the brave in financials market

Written By Unknown on Senin, 26 November 2012 | 16.47

Fri Nov 23, 2012 10:30am EST

(Corrects to show that Cairn has no exposure to peripheral credits in 14th paragraph)

* Subordinated debt rallies despite negative events

* 2012 performance difficult to match

By Helene Durand

LONDON, Nov 23 (IFR) - Investors willing to stick their necks out and buy financial institutions' paper in the dark days of 2011 have been rewarded with handsome returns over the last year, but the sector's phenomenal rally is likely to make the hunt for yield more challenging in 2013.

With Italian 10-year yields approaching 7.75% and Spain's hovering above 6.7%, the prospect of a sovereign default loomed over the entire European banking system. Synthetic credit reflected the market's fears with Markit's Senior Financials index at 353bp and the Subordinated at almost 590bp.

For those who believed that policymakers would not let the euro fail, however, rewards have been handsome. One year on and the iTraxx Senior stands at 170bp with the Subordinated at 295bp, while Italian and Spanish 10-year yields are below 5% and 6% respectively.

The chances of widespread bank failures due to a lack of liquidity were taken off the table when the European Central Bank announced unlimited funds to European banks through the Long Term Refinancing Operation (LTRO).

"Our view at the end of last year was that there was less than a 5% chance of the euro breaking up and as soon as the first LTRO kicked in, we saw hybrid debt fly," said Alex Lasagna, COO and head of investor relations at Algebris.

"We were well positioned to benefit from that as we had bought before the rally. It was never a gamble. We always felt that the risk/rewards were extremely attractive."

Despite the December and February LTROs, investors had to endure a volatile ride until July, when Mario Draghi said he would do whatever it takes to save the euro. Although the ECB has not yet spent a single cent on the Outright Monetary Transactions (OMT) programme, the market has headed in one direction.

And for those positioned down the capital curve, the returns have been spectacular.

Cairn Capital, for example, that launched Cairn Subordinated Financials Fund in October 2011, recently said in a note to investors that the fund had delivered a net return of 30.4% in 2012 and 40.3% since launch.

The story is similar for other funds focused on subordinated financial debt. A CoCo fund launched by Algebris in March 2011 has delivered a 48% return year-to-date, while three Swisscanto CoCo funds show returns over the same period of more than 20%.

"Owning the market was the biggest factor for (performance in) bank capital last year," said Roberto Henriques, financials credit analyst at JP Morgan.

As the end of 2012 approaches, few expect performance in the coming year to be driven in quite the same way.

OLD OR NEW STYLE?

"The likelihood of achieving the same type of return is lower but we still have strong expectations in terms of achieving strong returns," Andrew Jackson, CIO at Cairn. "The universe of assets is shrinking which should help performance."

Jackson said that Cairn's approach would remain cautious, with no exposure to credits in the peripheral jurisdictions.

Algebris's Lasagna agreed, saying that while volatility had nearly halved since the LTROs, there were still some opportunities in the sector, especially if policy makers continued to muddle through.

"Banks will have to roll their old hybrids into new Basel 3 compliant instruments which will be complex. We love it because it's so difficult to price and gives plenty of opportunities."

Algebris's enthusiasm for new-style instruments is not shared by all, even though some banks, like Barclays for example, are keen to push the innovation agenda

Jackson explained that he didn't think investors are being compensated for the risk they are taking given that there is more investor-friendly paper available in the secondary market at attractive levels. "For choice, we would rather look at legacy instruments," he said.

ALPHA, NOT BETA

Last year's stellar returns came despite investors having to dodge issuers offering to buy back debt for as little at 25%-30% of face value, or deciding to break market convention, and the economics of ownership, by refusing to call bonds at their first call date .

If anything, the pace of such things happening is picking up, and then there is the increasing noise around burden-sharing in Spanish banks.

Another opportunity for investors to generate returns has been the downward direction of European bank credit ratings. In November, Moody's said it had downgraded around two-thirds of the senior unsecured ratings of non-peripheral euro-area banks over the 12 months ended 30 September 2012, and nearly 90% of banks in the euro area periphery.

"We like downgrades, we like the fact that it can cause forced sellers for those investors who follow the index," said Cairn's Jackson.

Lasagna said Algebris looks at each institution's balance sheet and decides where it wants to be in the capital structure.

Fear of systemic risk has resulted in high correlation in risk markets but the OMT has removed the so-called tail-risk.

"2012 has essentially been a 'beta' year. If we're right that correlations between asset classes decline, the benefits of alpha should be more apparent," said Stephen Dulake, head of credit research at JP Morgan. (Reporting by Helene Durand, Additional reporting by Alex Chambers, Editing by Julian Baker)

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RPT-UPDATE 1-Australian tax office to pursue coal baron Tinkler

Sun Nov 25, 2012 3:34pm EST

(Repeats story from late Friday with no change to text)

* Federal tax office has until Dec 10 to prepare case

* Irish stud farm owned by Dubai ruler subpoenas Tinkler

* Two Tinkler firms in liquidation this week

* Pressure rises on lenders to act on Whitehaven stake - analyst

By Jane Wardell

SYDNEY, Nov 23 (Reuters) - The Australian government was granted permission by a court on Friday to prepare legal action against coal baron Nathan Tinkler as creditors close in on the former billionaire, threatening to end a rags-to-riches story built on the nation's mining boom.

The New South Wales Supreme Court gave the Deputy Commissioner of Taxation leave to prepare a case against Tinkler's holding company, the latest of a series of legal actions over unpaid bills and commercial disputes.

Further adding to Tinkler's woes, court documents also showed an Irish racehorse stud owned by Sheikh Mohammed bin Rashid al-Maktoum, the ruler of Dubai, has subpoenaed Tinkler personally to provide information in an unrelated case.

The emergence of two new, powerful potential foes is likely to unsettle Tinkler's lenders and raises questions about the future of his main asset, a near one-fifth stake in Whitehaven Coal, Australia's largest independent coal miner.

"He's exposed to great liability," Marina Nehme, a senior law lecturer at the University of Western Sydney, told Reuters. "It's like a house of cards falling."

Tinkler, 36, enjoyed a heady rise from mining pit electrician to Australia's youngest billionaire in just a few short years, riding on the back of the country's once-in-a-century mining boom.

But a slide in coal prices has hit his net worth and a series of lawsuits have followed.

Liquidators were appointed this week to two firms of which he is director, Patinack Farm Administration Pty Ltd and Mulsanne Resources Ltd, over debts totalling more than A$28 million.

Tinkler paid creditors A$500,000 ($520,000) this week to stop wind-up petitions against Tinkler Group Holdings Administration Pty Ltd.

But the relief was short-lived when the Australian tax office stepped in to take over the action as a potential creditor. Senior deputy court registrar Rebel Kenna gave the tax office until Dec. 10 to prepare a case against the company.

The Australian Taxation Office declined to provide any further details on the case.

Andrew Korbel, a partner at Corrs Chambers Westgarth, who represented Tinkler Group Holdings Administration on Friday declined to comment outside court. Tim Allerton, a Sydney-based spokesman for Tinkler, also declined to comment.

HORSE PLAY

Court documents show the Kildangan Stud Unlimited subpoena is to be heard by another New South Wales state court next week.

Kildangan is part of Darley, the global breeding operation owned by Sheikh Mohammed, a keen equestrian and breeder with horse studs around the world.

Located in County Kildare, Ireland, the Kildangan Stud is home to eight stallions, including Sharmadal, the sire of two winning mares, Marquardt and Happy Hippy, bought by Tinkler's Patinack Farm.

"This is a commercial matter between Kildangan Stud and Mr Tinkler relating to thoroughbred stallion nominations and we have no further comment on the matter," Darley's managing director Joe Osborne told Reuters in an email.

Stallion nominations involve fees for broodmares to mate with selected stallions.

Tinkler spent millions of dollars building Patinack into Australia's largest thoroughbred racing and stud operation.

He built his empire spanning horse racing, sports clubs and coal on debt, scraping together A$1 million from lenders for an underrated coal deposit that quickly soared in value.

He then leveraged his gains in a series of bold moves, culminating in the $5 billion merger of his companies Aston Resources and Boardwalk Resources with Whitehaven this year.

But Nehme said the combined legal actions raise the spectre of several unpleasant scenarios for Tinkler, including civil and criminal charges if he is found to have been operating the liquidated companies while they were insolvent.

The value of Tinkler's holding in Whitehaven has shrunk below A$600 million from A$1.1 billion at its peak as Chinese demand for coal cooled.

Sources previously told Reuters the stake is heavily leveraged. His main backer, U.S. hedge fund manager Farallon Capital Management LLC's asset manager Noonday, has been looking at options including pressing for the sale of shares or converting some of the loans into equity.

"Additional pressure from entities including the Australian Taxation Office puts pressure on Noonday and Farallon to do something about Tinkler's stake," said Matthew Trivett, a coal and speciality metals analyst at Patersons Securities.

Noonday and Farallon could call in the loans to ensure the transfer of ownership of the stake before other creditors begin chasing the stake, Trivett said.

They would likely take a hit, but might decide to "book the loss to take the assets away from Tinkler," Trivett said. ($1 = 0.9623 Australian dollars) (Editing by Lincoln Feast and Paul Tait)

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PRESS DIGEST-New York Times business news - Nov 26

Mon Nov 26, 2012 2:01am EST

Nov 26 (Reuters) - The following are the top stories on the New York Times business pages on Monday. Reuters has not verified these stories and does not vouch for their accuracy.

* Autonomy's founder, Mike Lynch, says he was blindsided by a public relations onslaught from Hewlett-Packard, little of which had to do with the substance of HP's fraud claims about his company. ()

* Judges and lawmakers across the country are wrangling over whether and when law enforcement authorities can search suspects' cellphones without a warrant, and interpretations range widely. ()

* As many as 10,000 Twitter users reportedly face the threat of legal action because of comments posted on the Internet or forwarded to others in which they referred to a BBC report wrongly linking a former Conservative Party official to the sexual abuse of a child. The official, Alistair McAlpine, was not named in the Nov. 2 BBC report, but enough clues were provided that Twitter users were able to identify him - which they did, in great numbers. ()

* Trying to bolster her media empire, Oprah Winfrey has been seeking to attract younger audiences to her magazine, which has experienced a decline in advertising revenue since her talk show ended. ()

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Bank of Ireland in talks with sub debt holders

Written By Unknown on Minggu, 25 November 2012 | 16.47

Fri Nov 23, 2012 6:10am EST

By Chris Spink

LONDON, Nov 23 (IFR) - Former subordinated bondholders in Bank of Ireland and Allied Irish Banks are seeking recompense for being forced to take just one cent for every EUR1,000 of such bonds they held.

This follows hedge fund Assenagon's successful suit in the English High Court against Anglo Irish Bank in July for executing similar coercive actions.

All three of Ireland's major lenders carried out below par tender offers for their junior debt as a way of bolstering their capital as part of a state-backed recapitalisation process between 2009 and 2011, using so-called exit consents from 2010 onwards.

This ended with Anglo Irish wholly nationalised and 99% of Allied Irish Banks' equity in state hands, too. However, a last-minute EUR1.1bn investment by US investors, led by Fairfax Financial, WL Ross, Capital Research and Fidelity, restricted the state's stake in Bank of Ireland to 15%.

A group of such bondholders holding Bank of Ireland debt are now in discussions with the institution. "A standstill agreement has been reached between Bank of Ireland and the bondholders to allow them to talk and reach a settlement. This agreement is indefinite," said an legal source with knowledge of the situation.

The group has also lodged letters with the Irish Ministry of Finance, alongside a number of bondholders in Allied Irish. The latter are at an earlier stage of proceedings and have yet to engage fully with the bank. The Ministry did not immediately respond to a request for comment.

Separately the Irish Bank Resolution Corp, which now manages Anglo Irish and Ireland's other nationalised financial institution Nationwide Building Society, has confirmed to IFR that it is appealing July's High Court decision in London concerning Assenagon.

"I can confirm that IBRC is currently appealing the London High Court decision to the Court of Appeal," said an IBRC spokesperson. The appeal, which is not expected to be heard before next March, will have an impact on the other cases against Irish banks if it is successful.

In July when the High Court decision was handed down, IBRC said that the liability management exercise that swept up Assenagon "was proportionate in the circumstances and was fair, transparent and all noteholders were provided with comprehensive notice in advance."

The institution added that "these [Anglo Irish] securities would have been valueless without the recapitalisation of the bank by the Irish state".

While Bank of Ireland is now the most robust of the institutions, it may be less likely to compensate investors since it did not ultimately make use of subordinated liability orders from the state to force tenders on hold-out investors in subordinated bank debt.

Indeed, the state could reactivate such SLOs to force Assenagon and other subordinated bondholders who manage to reinstate their holdings to tender those investments.

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REFILE-Gruner + Jahr shuts down Financial Times Deutschland

Fri Nov 23, 2012 8:22am EST

By Harro Ten Wolde

FRANKFURT Nov 23 (Reuters) - German business newspaper Financial Times Deutschland (FTD) will close after piling up millions of euros in losses during its 12 years of operation, publisher Gruner + Jahr said.

The paper, published in the salmon pink colour of its British namesake, is pulling the plug after accumulating what German media said were 250 million euros ($322.1 million) in losses since 2000.

The FTD, which has faced tough competition from a plethora of established national newspapers since its launch in 2000, has a circulation of about 100,000 but never made a profit.

Some 330 employees will lose their jobs, sources familiar with the publisher's decisions said.

The FTD was seen as a breath of fresh air in Germany with a modern design, international perspective and audacious journalism style.

It was alone, for instance, in criticising a long-standing German practice of allowing interviewees to "authorise" - or check - interview transcripts.

Industry analysts have been predicting the FTD's demise for years due to its lack of profitability. Losses in the last year were some 10 million euros, German media reports said.

"This is not a good day for financial journalism in Germany," said one journalist at the newspaper, which will publish its final edition on Dec. 7.

Germany is home to Europe's largest print media market and has proven relatively resilient to the technological, cultural and demographic forces that have shuttered newspapers in many other developed countries, but that is now changing.

The loyalty of German readers - who previously stuck to their favourite daily newspaper - has eroded in recent years as consumers get more of their news online.

Last week, the respected Frankfurter Rundschau filed for bankruptcy. The DAPD news agency, which had relied heavily on a newspaper client base, took a similar step a few weeks earlier.

Europe's largest economy is slowing as the three-year-old debt crisis ravaging much of the euro zone takes its toll, compounding the hit to advertising revenues and limiting the willingness of consumers to pay for newspapers they can read mostly for free online.

Advertising income for German newspapers is on the slide, falling 6 percent in the first 10 months of this year from 2011, data from Nielsen Media research showed.

G+J, controlled by German media conglomerate Bertelsmann , launched the FTD 12 years ago as a joint venture with Pearson, but the publisher of the Financial Times sold its 50 percent stake to its German partner in 2008.

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CORRECTED-Fortune favours the brave in financials market

Fri Nov 23, 2012 10:30am EST

(Corrects to show that Cairn has no exposure to peripheral credits in 14th paragraph)

* Subordinated debt rallies despite negative events

* 2012 performance difficult to match

By Helene Durand

"We were well positioned to benefit from that as we had bought before the rally. It was never a gamble. We always felt that the risk/rewards were extremely attractive."

And for those positioned down the capital curve, the returns have been spectacular.

"Owning the market was the biggest factor for (performance in) bank capital last year," said Roberto Henriques, financials credit analyst at JP Morgan.

As the end of 2012 approaches, few expect performance in the coming year to be driven in quite the same way.

OLD OR NEW STYLE?

Jackson said that Cairn's approach would remain cautious, with no exposure to credits in the peripheral jurisdictions.

Algebris's Lasagna agreed, saying that while volatility had nearly halved since the LTROs, there were still some opportunities in the sector, especially if policy makers continued to muddle through.

"Banks will have to roll their old hybrids into new Basel 3 compliant instruments which will be complex. We love it because it's so difficult to price and gives plenty of opportunities."

Algebris's enthusiasm for new-style instruments is not shared by all, even though some banks, like Barclays for example, are keen to push the innovation agenda

ALPHA, NOT BETA

If anything, the pace of such things happening is picking up, and then there is the increasing noise around burden-sharing in Spanish banks.

"We like downgrades, we like the fact that it can cause forced sellers for those investors who follow the index," said Cairn's Jackson.

Lasagna said Algebris looks at each institution's balance sheet and decides where it wants to be in the capital structure.

Fear of systemic risk has resulted in high correlation in risk markets but the OMT has removed the so-called tail-risk.

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Bank of Ireland in talks with sub debt holders

Written By Unknown on Sabtu, 24 November 2012 | 16.47

Fri Nov 23, 2012 6:10am EST

By Chris Spink

This follows hedge fund Assenagon's successful suit in the English High Court against Anglo Irish Bank in July for executing similar coercive actions.

The institution added that "these [Anglo Irish] securities would have been valueless without the recapitalisation of the bank by the Irish state".

Indeed, the state could reactivate such SLOs to force Assenagon and other subordinated bondholders who manage to reinstate their holdings to tender those investments.

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