UPDATE 2-Bankrupt Stockton, California says has deals with key creditors

Fri Sep 27, 2013 11:42pm EDT

By Jim Christie

SAN FRANCISCO, Sept 27 (Reuters) - Stockton, California said on Friday it had struck tentative deals opening the door to settlements with two major creditors, and putting the city at the "beginning of the end" of its bankruptcy case.

The deals also could avert a major court fight promised by the creditors, bond insurers that led opposition to Stockton's bankruptcy and who had threatened to drag the state pension fund Calpers into their fight with the city.

In a draft of its plan for exiting bankruptcy, Stockton said it had the "outlines of a negotiated settlement" with bond insurer Assured Guaranty over $124.3 million in outstanding pension obligation bonds the city had targeted for losses.

The draft plan also disclosed a preliminary deal with bond insurer National Public Finance Guarantee over $45.1 million in outstanding lease revenue bonds for the city's arena that had been in dispute.

The draft plan provided no details on the potential settlement with Assured and a spokesman for the bond insurer declined to comment. The draft said Assured executive management had not yet reviewed the deal.

"As this document was being finalized, the City was in negotiations with this creditor and had developed the outlines of a negotiated settlement," the draft said.

It also said a preliminary term sheet agreement had been reached with National, along with agreements on other bonds insured by it relating to parking garages and a city building.

National spokesman Kevin Brown confirmed the deal to Reuters: "We're pleased to have reached a settlement agreement with the City of Stockton that should expedite its exit from bankruptcy."

The draft said Stockton is near the "final chapter" of bankruptcy, noting that "while we expect further intense negotiations and court hearings, with perhaps a set back here and there before this is over, this at least is the beginning of the end."

National and Assured led efforts by Stockton's so-called capital markets creditors to block the city's bankruptcy case from moving forward, and they had insisted city pensions managed by Calpers be treated like other debt the city wanted to impair.

The U.S. municipal bond market has been watching Stockton's bankruptcy case closely for more than a year as the city in California's Central Valley had been aiming to force bondholders to swallow losses while leaving pensions untouched.

Alabama's Jefferson County in its bankruptcy restructuring plan in June proposed losses for bondholders, becoming the first local government to do so since the 1930s.

Pension costs are a growing concern for the $3.7 trillion municipal debt market and National and Assured contested Stockton's maintaining payments to Calpers, the California Public Employees' Retirement System.

U.S. Bankruptcy Judge Christopher Klein in April found Stockton eligible for bankruptcy protection and said the showdown the insurers sought over payments to Calpers would have to wait until the city filed its plan for adjusting its debt to exit from bankruptcy.

Calpers, had been sidelined in Stockton's bankruptcy proceedings but was ready to help defend its pension payments.

A spokeswoman for the $269 billion pension fund released a statement hinting at a truce with Stockton's capital market creditors. "We are hopeful this proposed plan of adjustment will allow Stockton to regain its footing and continue to provide the essential services to its citizens," the statement said.

Stockton's draft plan said the city would keep paying into Calpers, noting it would "reform and reduce the costs of its pension program along with other post-employment benefits, but retain the basic Calpers pension which is crucial to the City's ability to recruit and retain a quality workforce."

Dale Ginter, a lawyer for Vallejo, California's, retired employees in that city's bankruptcy, said he sensed exhaustion on the part of Stockton's bond insurers: "People are probably tired. They've spent a lot of money on attorneys fees".

Ginter also believes the bond insurers saw they may be better off cutting deals than continuing to contest pension payments in court when city employees and retirees had given up so much in concessions to help the city fix its finances.

"The employees and the retirees are taking a very big reduction in benefits," said Ginter after reading through Stockton's draft plan.

It projected Stockton's general fund through fiscal 2049-2050 would save $659 million from pension reforms while ending medical benefits for retirees would save $812 million over the same period.

The timing for a clash with Stockton over its plan for adjusting its debt to exit bankruptcy also would have been problematic for the bond insurers.

Stockton's city council recently put a measure to increase the city's sales tax on the November ballot to in part help the city exit bankruptcy following its austerity measures.

With revenue tumbling as its housing market crashed, Stockton cut $90 million in spending from 2008 through last year to balance its budgets and slashed it work force. But early last year Stockton's city council rejected deeper cuts due to concerns about public safety amid a spike in violent crime and it approved declaring bankruptcy.

Stockton's city council will take up the draft on Oct. 3 and the city could file a final plan with Klein early next month. With about 300,000 residents, Stockton was the most populous U.S. city to file for bankruptcy until Detroit filed in July.

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Brazil OGX, OSX to file for bankruptcy protection - report

RIO DE JANEIRO, Sept 28 | Sat Sep 28, 2013 5:29pm EDT

RIO DE JANEIRO, Sept 28 (Reuters) - OGX Petróleo e Gás SA and OSX Brasil SA, the oil company and the shipbuilder controlled by Brazilian tycoon Eike Batista, will seek court protection within a couple of weeks, Veja magazine reported on Saturday without saying how it obtained the information.

Efforts to reach spokeswomen at OGX and EBX, the parent company of Batista's crumbling empire, were unsuccessful. A spokeswoman at OSX did not have an immediate comment on the report.

Shares of OGX and OSX sank to their lowest level on Friday as the company, unable to produce as much oil as initially forecast, rapidly burns cash.

Investors fear that OGX will fail to pay OSX for the use of a vessel that guarantees a OSX bond. If OGX defaults, OSX creditors might be forced to seize the vessel to recoup their money.

OGX owes $3.6 billion to foreign bondholders and $900 million to OSX. In a separate report on Saturday, Folha de S.Paulo newspaper said the company has already decided not to pay $45 million in debt interest due next week.

The plunge in the share prices of Batista's companies has caused his fortune, once Brazil's largest, to shrink dramatically, limiting his ability to keep financing OGX, a startup with more investment expenses than revenue. (Reporting by Walter Brandimarte and Guillermo Parra-Bernal; editing by Gunna Dickson)

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Bahrain's Arcapita eyes new investments after first Gulf Chapter 11

Sun Sep 29, 2013 10:23am EDT

* New Arcapita entity eyes new deals after Chap. 11 - CEO

* Firm split in two after restructuring - one holds existing assets

* Other to manage asset sale process, complete new deals

* Targeting health, edu, logistics sectors; assets yielding 8 pct

* Brand still carries credibility with investors

* First Gulf firm to use Chap. 11 process

By David French

DUBAI, Sept 29 (Reuters) - Bahrain-based Arcapita is aiming to build a new asset management firm with a debut local deal in the logistics, education or healthcare sector as the company recovers from the first Chapter 11 bankruptcy process undertaken by a Gulf Arab entity.

The Islamic investment firm emerged from Chapter 11 on Sept. 17 after seeking court protection in March 2012 under hedge fund pressure ahead of the repayment of a $1.1 billion Islamic loan.

Under the court-approved restructuring plan, Arcapita is to be split into two entities: one which will hold the existing company assets as they are sold down to pay creditors, with a second in charge of the process' management.

It is the latter which is hoping to rebuild itself going forward, said Atif Abdulmalik, chief executive of Arcapita, with the entity aiming to raise $100 million of new equity from original Arcapita investors by January to help fund dealmaking.

"Our name still carries credibility and integrity as we kept on facing our investors and shareholders even during the darkest days of Chapter 11, telling them that what happened has happened but we're not going to let you lose here," Abdulmalik told Reuters in an interview in Dubai.

"The interest is there, from the same old board members and investors. They're interested to roll the dice again."

Abdulmalik said it was looking for investments that would yield in the region of 8 percent, although this would depend on the transaction, with logistics, education or healthcare the likely areas from which a first deal would emerge.

It had no deal currently lined up, he said.

New investments would be made utilising investor funds and pre-placements with investors as this would be less risky for the company, although some debt may be used to fund acquisitions, Abdulmalik said, adding debt at the company level would be much less than before the crisis.

"To mortgage your future on leverage is a very dangerous game as a mismatch could happen at any time," Abdulmalik said, adding the company had banking relationships it could use to raise finance when it needed it.

OLD ARCAPITA

Like many Gulf private equity and asset managers, Arcapita was hit hard by the financial crisis as the debt used to fund acquisitions made at a time of peak valuations could not be refinanced, with asset sales in a depressed market not viable.

The Chapter 11 process, also the first to use a debtor-in possession financing which complied with Islamic finance principles such as a ban on interest, ensured Arcapita's existing portfolio could be sold without a firesale.

"All the Gulf should have an equivalent of Chapter 11, where you bring creditors and owners and tell them 'this is a good business, the past is the past, is there a deal to be done going forward'," Abdulmalik said.

Gulf bankruptcy law is known for being untested, with creditors finding it difficult to secure enforcement action against assets in states with strict foreign ownership controls.

This has lead to many restructurings, such as the $25 billion Dubai World deal, to be agreements where obligations are extended to allow for businesses and asset values to recover.

Arcapita could use the Chapter 11 framework because it had assets in the United States.

The new Arcapita's assets under management, through its contract with the old firm, was $3 billion, Abdulmalik said, with around 35 businesses in the portfolio including private equity, real estate and infrastructure.

The recovery in values meant some U.S.-based assets would be sold in the near future, he said, without giving specifics.

There were no targets in terms of raising revenue from asset sales but, under the management contract, the new Arcapita would receive incentive fees, with levels depending on the rate of return achieved on the investment, Abdulmalik said.

(Reporting by David French; Editing by David Cowell)

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UPDATE 1-Bankrupt Stockton, California discloses deals with bond insurers

Fri Sep 27, 2013 10:02pm EDT

By Jim Christie

SAN FRANCISCO, Sept 27 (Reuters) - Stockton, California said on Friday it had reached tentative deals with the two creditors that led opposition to its bankruptcy, bond insurers that had threatened to drag the state pension fund Calpers into their fight with the city.

In a draft of its plan for exiting bankruptcy, Stockton said it had the "outlines of a negotiated settlement" with bond insurer Assured Guaranty over $124.3 million in outstanding pension obligation bonds the city had targeted for losses.

The draft plan also disclosed a preliminary deal with bond insurer National Public Finance Guarantee over $45.1 million in outstanding lease revenue bonds for the city's arena that had been in dispute.

The draft plan provided no details on the potential settlement with Assured and a spokesman for the bond insurer declined to comment.

The draft said Assured executive management had not yet reviewed the deal.

"As this document was being finalized, the City was in negotiations with this creditor and had developed the outlines of a negotiated settlement," the draft said.

It also said a preliminary term sheet agreement had been reached with National, along with agreements on other bonds insured by it relating to parking garages and a city building.

National spokesman Kevin Brown confirmed the deal, telling Reuters: "We're pleased to have reached a settlement agreement with the City of Stockton that should expedite its exit from bankruptcy."

National and Assured led efforts by Stockton's so-called capital markets creditors to block the city's bankruptcy case from moving forward, and they had insisted city pensions managed by Calpers be treated like other debt the city wanted to impair.

The U.S. municipal bond market has been watching Stockton's bankruptcy case closely for more than a year as the city had been aiming to force bondholders to swallow losses while leaving pensions untouched.

Alabama's Jefferson County in its bankruptcy restructuring plan in June proposed losses for bondholders, becoming the first local government to do so since the 1930s.

Pension costs are a growing concern for the $3.7 trillion municipal debt market and National and Assured contested Stockton's maintaining payments to Calpers, the California Public Employees' Retirement System.

U.S. Bankruptcy Judge Christopher Klein in April found Stockton eligible for bankruptcy protection and said the showdown the bond insurers sought over payments to Calpers would have to wait until the city filed its plan for adjusting its debt to exit from bankruptcy.

Calpers, had been sidelined in Stockton's bankruptcy proceedings but was prepared to help the city defend its pension payments.

A spokeswoman for the $269 billion pension fund released a statement hinting at a truce with Stockton's capital market creditors.

"We are hopeful this proposed plan of adjustment will allow Stockton to regain its footing and continue to provide the essential services to its citizens," the statement said.

Stockton's draft plan said the city would keep paying into Calpers, noting it would "reform and reduce the costs of its pension program along with other post-employment benefits, but retain the basic Calpers pension which is crucial to the City's ability to recruit and retain a quality workforce."

Stockton's city council will take up the draft on Oct. 3 and the city could file a final plan with Klein early next month. With about 300,000 residents, Stockton was the most populous U.S. city to file for bankruptcy until Detroit filed in July.

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UPDATE 2-Bankrupt Stockton, California says has deals with key creditors

Fri Sep 27, 2013 11:42pm EDT

By Jim Christie

SAN FRANCISCO, Sept 27 (Reuters) - Stockton, California said on Friday it had struck tentative deals opening the door to settlements with two major creditors, and putting the city at the "beginning of the end" of its bankruptcy case.

The deals also could avert a major court fight promised by the creditors, bond insurers that led opposition to Stockton's bankruptcy and who had threatened to drag the state pension fund Calpers into their fight with the city.

In a draft of its plan for exiting bankruptcy, Stockton said it had the "outlines of a negotiated settlement" with bond insurer Assured Guaranty over $124.3 million in outstanding pension obligation bonds the city had targeted for losses.

The draft plan also disclosed a preliminary deal with bond insurer National Public Finance Guarantee over $45.1 million in outstanding lease revenue bonds for the city's arena that had been in dispute.

The draft plan provided no details on the potential settlement with Assured and a spokesman for the bond insurer declined to comment. The draft said Assured executive management had not yet reviewed the deal.

"As this document was being finalized, the City was in negotiations with this creditor and had developed the outlines of a negotiated settlement," the draft said.

It also said a preliminary term sheet agreement had been reached with National, along with agreements on other bonds insured by it relating to parking garages and a city building.

National spokesman Kevin Brown confirmed the deal to Reuters: "We're pleased to have reached a settlement agreement with the City of Stockton that should expedite its exit from bankruptcy."

The draft said Stockton is near the "final chapter" of bankruptcy, noting that "while we expect further intense negotiations and court hearings, with perhaps a set back here and there before this is over, this at least is the beginning of the end."

National and Assured led efforts by Stockton's so-called capital markets creditors to block the city's bankruptcy case from moving forward, and they had insisted city pensions managed by Calpers be treated like other debt the city wanted to impair.

The U.S. municipal bond market has been watching Stockton's bankruptcy case closely for more than a year as the city in California's Central Valley had been aiming to force bondholders to swallow losses while leaving pensions untouched.

Alabama's Jefferson County in its bankruptcy restructuring plan in June proposed losses for bondholders, becoming the first local government to do so since the 1930s.

Pension costs are a growing concern for the $3.7 trillion municipal debt market and National and Assured contested Stockton's maintaining payments to Calpers, the California Public Employees' Retirement System.

U.S. Bankruptcy Judge Christopher Klein in April found Stockton eligible for bankruptcy protection and said the showdown the insurers sought over payments to Calpers would have to wait until the city filed its plan for adjusting its debt to exit from bankruptcy.

Calpers, had been sidelined in Stockton's bankruptcy proceedings but was ready to help defend its pension payments.

A spokeswoman for the $269 billion pension fund released a statement hinting at a truce with Stockton's capital market creditors. "We are hopeful this proposed plan of adjustment will allow Stockton to regain its footing and continue to provide the essential services to its citizens," the statement said.

Stockton's draft plan said the city would keep paying into Calpers, noting it would "reform and reduce the costs of its pension program along with other post-employment benefits, but retain the basic Calpers pension which is crucial to the City's ability to recruit and retain a quality workforce."

Dale Ginter, a lawyer for Vallejo, California's, retired employees in that city's bankruptcy, said he sensed exhaustion on the part of Stockton's bond insurers: "People are probably tired. They've spent a lot of money on attorneys fees".

Ginter also believes the bond insurers saw they may be better off cutting deals than continuing to contest pension payments in court when city employees and retirees had given up so much in concessions to help the city fix its finances.

"The employees and the retirees are taking a very big reduction in benefits," said Ginter after reading through Stockton's draft plan.

It projected Stockton's general fund through fiscal 2049-2050 would save $659 million from pension reforms while ending medical benefits for retirees would save $812 million over the same period.

The timing for a clash with Stockton over its plan for adjusting its debt to exit bankruptcy also would have been problematic for the bond insurers.

Stockton's city council recently put a measure to increase the city's sales tax on the November ballot to in part help the city exit bankruptcy following its austerity measures.

With revenue tumbling as its housing market crashed, Stockton cut $90 million in spending from 2008 through last year to balance its budgets and slashed it work force. But early last year Stockton's city council rejected deeper cuts due to concerns about public safety amid a spike in violent crime and it approved declaring bankruptcy.

Stockton's city council will take up the draft on Oct. 3 and the city could file a final plan with Klein early next month. With about 300,000 residents, Stockton was the most populous U.S. city to file for bankruptcy until Detroit filed in July.

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Brazil OGX, OSX to file for bankruptcy protection - report

RIO DE JANEIRO, Sept 28 | Sat Sep 28, 2013 5:29pm EDT

RIO DE JANEIRO, Sept 28 (Reuters) - OGX Petróleo e Gás SA and OSX Brasil SA, the oil company and the shipbuilder controlled by Brazilian tycoon Eike Batista, will seek court protection within a couple of weeks, Veja magazine reported on Saturday without saying how it obtained the information.

Efforts to reach spokeswomen at OGX and EBX, the parent company of Batista's crumbling empire, were unsuccessful. A spokeswoman at OSX did not have an immediate comment on the report.

Shares of OGX and OSX sank to their lowest level on Friday as the company, unable to produce as much oil as initially forecast, rapidly burns cash.

Investors fear that OGX will fail to pay OSX for the use of a vessel that guarantees a OSX bond. If OGX defaults, OSX creditors might be forced to seize the vessel to recoup their money.

OGX owes $3.6 billion to foreign bondholders and $900 million to OSX. In a separate report on Saturday, Folha de S.Paulo newspaper said the company has already decided not to pay $45 million in debt interest due next week.

The plunge in the share prices of Batista's companies has caused his fortune, once Brazil's largest, to shrink dramatically, limiting his ability to keep financing OGX, a startup with more investment expenses than revenue. (Reporting by Walter Brandimarte and Guillermo Parra-Bernal; editing by Gunna Dickson)

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Judge denies former New Orleans mayor's bid to delay trial

By Kathy Finn

NEW ORLEANS, Sept 27 | Fri Sep 27, 2013 9:08pm EDT

NEW ORLEANS, Sept 27 (Reuters) - A judge on Friday denied an effort by former New Orleans Mayor Ray Nagin to postpone his corruption trial, which he said had been compromised by inflammatory comments posted online by prosecutors.

Nagin's argument for a delay stemmed from online postings that recently prompted a federal judge to order a new trial in a murder case involving five New Orleans policemen convicted in connection with the shooting deaths of two unarmed people at Danziger Bridge after Hurricane Katrina.

Nagin said he had been the target of online postings "of the same ilk and the same pejorative nature," which affected his ability to get a fair trial, his attorneys argued.

U.S. District Judge Helen Ginger Berrigan in an order filed on Friday called the postings "utterly juvenile," but said, "The jury, and only the jury, will decide whether the defendant is proven guilty beyond a reasonable doubt."

Nagin's trial is scheduled to begin on Oct. 28.

The extensive postings were made under aliases by three U.S. Justice Department lawyers on a New Orleans newspaper website before and during the officers' 2011 trial.

Nagin, who was mayor during Hurricane Katrina in 2005, is accused of receiving kickbacks in exchange for city contracts, and wire fraud, conspiracy and money laundering.

In the postings, Nagin and two other former New Orleans mayors were called the "three stooges" and referred to as incompetent.

Several businessmen linked with Nagin have reached deals with prosecutors to provide evidence against him. (Editing by Ellen Wulfhorst and Peter Cooney)

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UPDATE 1-Bankrupt Stockton, California discloses deals with bond insurers

Fri Sep 27, 2013 10:02pm EDT

By Jim Christie

SAN FRANCISCO, Sept 27 (Reuters) - Stockton, California said on Friday it had reached tentative deals with the two creditors that led opposition to its bankruptcy, bond insurers that had threatened to drag the state pension fund Calpers into their fight with the city.

In a draft of its plan for exiting bankruptcy, Stockton said it had the "outlines of a negotiated settlement" with bond insurer Assured Guaranty over $124.3 million in outstanding pension obligation bonds the city had targeted for losses.

The draft plan also disclosed a preliminary deal with bond insurer National Public Finance Guarantee over $45.1 million in outstanding lease revenue bonds for the city's arena that had been in dispute.

The draft plan provided no details on the potential settlement with Assured and a spokesman for the bond insurer declined to comment.

The draft said Assured executive management had not yet reviewed the deal.

"As this document was being finalized, the City was in negotiations with this creditor and had developed the outlines of a negotiated settlement," the draft said.

It also said a preliminary term sheet agreement had been reached with National, along with agreements on other bonds insured by it relating to parking garages and a city building.

National spokesman Kevin Brown confirmed the deal, telling Reuters: "We're pleased to have reached a settlement agreement with the City of Stockton that should expedite its exit from bankruptcy."

National and Assured led efforts by Stockton's so-called capital markets creditors to block the city's bankruptcy case from moving forward, and they had insisted city pensions managed by Calpers be treated like other debt the city wanted to impair.

The U.S. municipal bond market has been watching Stockton's bankruptcy case closely for more than a year as the city had been aiming to force bondholders to swallow losses while leaving pensions untouched.

Alabama's Jefferson County in its bankruptcy restructuring plan in June proposed losses for bondholders, becoming the first local government to do so since the 1930s.

Pension costs are a growing concern for the $3.7 trillion municipal debt market and National and Assured contested Stockton's maintaining payments to Calpers, the California Public Employees' Retirement System.

U.S. Bankruptcy Judge Christopher Klein in April found Stockton eligible for bankruptcy protection and said the showdown the bond insurers sought over payments to Calpers would have to wait until the city filed its plan for adjusting its debt to exit from bankruptcy.

Calpers, had been sidelined in Stockton's bankruptcy proceedings but was prepared to help the city defend its pension payments.

A spokeswoman for the $269 billion pension fund released a statement hinting at a truce with Stockton's capital market creditors.

"We are hopeful this proposed plan of adjustment will allow Stockton to regain its footing and continue to provide the essential services to its citizens," the statement said.

Stockton's draft plan said the city would keep paying into Calpers, noting it would "reform and reduce the costs of its pension program along with other post-employment benefits, but retain the basic Calpers pension which is crucial to the City's ability to recruit and retain a quality workforce."

Stockton's city council will take up the draft on Oct. 3 and the city could file a final plan with Klein early next month. With about 300,000 residents, Stockton was the most populous U.S. city to file for bankruptcy until Detroit filed in July.

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UPDATE 2-Bankrupt Stockton, California says has deals with key creditors

Fri Sep 27, 2013 11:42pm EDT

By Jim Christie

SAN FRANCISCO, Sept 27 (Reuters) - Stockton, California said on Friday it had struck tentative deals opening the door to settlements with two major creditors, and putting the city at the "beginning of the end" of its bankruptcy case.

The deals also could avert a major court fight promised by the creditors, bond insurers that led opposition to Stockton's bankruptcy and who had threatened to drag the state pension fund Calpers into their fight with the city.

In a draft of its plan for exiting bankruptcy, Stockton said it had the "outlines of a negotiated settlement" with bond insurer Assured Guaranty over $124.3 million in outstanding pension obligation bonds the city had targeted for losses.

The draft plan also disclosed a preliminary deal with bond insurer National Public Finance Guarantee over $45.1 million in outstanding lease revenue bonds for the city's arena that had been in dispute.

The draft plan provided no details on the potential settlement with Assured and a spokesman for the bond insurer declined to comment. The draft said Assured executive management had not yet reviewed the deal.

"As this document was being finalized, the City was in negotiations with this creditor and had developed the outlines of a negotiated settlement," the draft said.

It also said a preliminary term sheet agreement had been reached with National, along with agreements on other bonds insured by it relating to parking garages and a city building.

National spokesman Kevin Brown confirmed the deal to Reuters: "We're pleased to have reached a settlement agreement with the City of Stockton that should expedite its exit from bankruptcy."

The draft said Stockton is near the "final chapter" of bankruptcy, noting that "while we expect further intense negotiations and court hearings, with perhaps a set back here and there before this is over, this at least is the beginning of the end."

National and Assured led efforts by Stockton's so-called capital markets creditors to block the city's bankruptcy case from moving forward, and they had insisted city pensions managed by Calpers be treated like other debt the city wanted to impair.

The U.S. municipal bond market has been watching Stockton's bankruptcy case closely for more than a year as the city in California's Central Valley had been aiming to force bondholders to swallow losses while leaving pensions untouched.

Alabama's Jefferson County in its bankruptcy restructuring plan in June proposed losses for bondholders, becoming the first local government to do so since the 1930s.

Pension costs are a growing concern for the $3.7 trillion municipal debt market and National and Assured contested Stockton's maintaining payments to Calpers, the California Public Employees' Retirement System.

U.S. Bankruptcy Judge Christopher Klein in April found Stockton eligible for bankruptcy protection and said the showdown the insurers sought over payments to Calpers would have to wait until the city filed its plan for adjusting its debt to exit from bankruptcy.

Calpers, had been sidelined in Stockton's bankruptcy proceedings but was ready to help defend its pension payments.

A spokeswoman for the $269 billion pension fund released a statement hinting at a truce with Stockton's capital market creditors. "We are hopeful this proposed plan of adjustment will allow Stockton to regain its footing and continue to provide the essential services to its citizens," the statement said.

Stockton's draft plan said the city would keep paying into Calpers, noting it would "reform and reduce the costs of its pension program along with other post-employment benefits, but retain the basic Calpers pension which is crucial to the City's ability to recruit and retain a quality workforce."

Dale Ginter, a lawyer for Vallejo, California's, retired employees in that city's bankruptcy, said he sensed exhaustion on the part of Stockton's bond insurers: "People are probably tired. They've spent a lot of money on attorneys fees".

Ginter also believes the bond insurers saw they may be better off cutting deals than continuing to contest pension payments in court when city employees and retirees had given up so much in concessions to help the city fix its finances.

"The employees and the retirees are taking a very big reduction in benefits," said Ginter after reading through Stockton's draft plan.

It projected Stockton's general fund through fiscal 2049-2050 would save $659 million from pension reforms while ending medical benefits for retirees would save $812 million over the same period.

The timing for a clash with Stockton over its plan for adjusting its debt to exit bankruptcy also would have been problematic for the bond insurers.

Stockton's city council recently put a measure to increase the city's sales tax on the November ballot to in part help the city exit bankruptcy following its austerity measures.

With revenue tumbling as its housing market crashed, Stockton cut $90 million in spending from 2008 through last year to balance its budgets and slashed it work force. But early last year Stockton's city council rejected deeper cuts due to concerns about public safety amid a spike in violent crime and it approved declaring bankruptcy.

Stockton's city council will take up the draft on Oct. 3 and the city could file a final plan with Klein early next month. With about 300,000 residents, Stockton was the most populous U.S. city to file for bankruptcy until Detroit filed in July.

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PRESS DIGEST-Hong Kong - Sept 25

HONG KONG, Sept 25 | Tue Sep 24, 2013 10:20pm EDT

HONG KONG, Sept 25 (Reuters) - These are some of the leading stories in Hong Kong newspapers on Wednesday. Reuters has not verified these stories and does not vouch for their accuracy.

SOUTH CHINA MORNING POST

-- Alibaba Group would cut the number of partners the firm has and bind them to a three-year share sale ban if Hong Kong regulators accept a controversial management structure that is blocking its potential HK$100 billion ($12.90 billion) initial public offering, a source close to the listing authorities said. (link.reuters.com/nef43v)

-- Chinese state-owned agricultural group Cofco is injecting mainland property assets valued at HK$14.17 billion into its Hong Kong-listed property unit, Hong Kong Parkview Group , in a back-door listing. (link.reuters.com/pef43v)

-- The Chinese Gold & Silver Exchange Society accepted its first overseas member, Swiss firm Finemetal Asia, in its 103-year history as part of its plan to go international. Exchange president Haywood Cheung said he planned to recruit four more overseas members by the end of the first quarter of next year. (link.reuters.com/qef43v)

HONG KONG ECONOMIC JOURNAL

-- Bank of East Asia Ltd has applied for the High Court to declare former chief secretary Rafael Hui bankrupt.

HONG KONG ECONOMIC TIMES

-- The initial public offering of webgame developer Forgame Holdings was oversubscribed 113 times, locking up HK$19.5 billion in margin orders, according to market sources.

THE STANDARD

-- Chief Executive Leung Chun-ying stressed the Hong Kong dollar is the statutory currency according to the Basic Law, in response to a mainland professor's idea of scrapping it and using the yuan. (link.reuters.com/ref43v)

-- Health Secretary Ko Wing-man said the two-can export limit on formula milk could be lifted if measures to be tried next month prove satisfactory. (link.reuters.com/buf43v)

MING PAO DAILY NEWS

-- The Hong Kong government is studying the feasibility to build a large public housing zone in Yuen Long, providing 17,000 units that are equal to the total amount of public housing production in a year.

-- Bank of East Asia Ltd forecasts Hong Kong property prices will have to drop 22 percent in the next three years in order to return to normal affordability levels for ordinary buyers.

TA KUNG PAO

-- Chinese developer Agile Property Holdings Ltd said it has acquired a residential land in Changsha City for 300 million yuan ($49.01 million).

For Chinese newspapers, see............... ($1 = 7.7538 Hong Kong dollars) ($1 = 6.1210 Chinese yuan) (Compiled by Twinnie Siu; Editing by Supriya Kurane)

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STXNEWS LATAM-Bermuda court rules for liquidation of Brazil's Laep

Wed Sep 25, 2013 9:09am EDT

Bermuda's Supreme Court ruled for the liquidation of Brazilian private-equity firm Laep Investments Ltd, in response to a reuqest by an investment fund, according to a securities filing on Wednesday. Laep, which is based in Bermuda but mostly operated from its offices in São Paulo, has been under strain in recent years after some of its main investments - including milk producer LBR Lácteos do Brasil SA and high-end luxury retailer Daslú - failed to produce the expected returns.

According to the filing, GLG fund executives Michael Morrison and Charles Tresh will take over control of Laep and soon name their representatives in Brazil.

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PRESS DIGEST-New York Times business news - Sept 26

Sept 26 | Thu Sep 26, 2013 12:39am EDT

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

* Detroit's municipal pension fund made payments for decades to retirees, active workers and others above and beyond normal benefits, costing the struggling city billions of dollars and helping push it into bankruptcy, according to people who have reviewed the payments. ()

* A group of Stanford researchers has moved a step closer to answering the question of what happens when silicon, the standard material in today's microelectronic circuits, reaches its fundamental limits for use in increasingly small transistors. In a paper in the journal Nature on Wednesday, the researchers reported that they had successfully built a working computer - albeit an extremely simple one - entirely from transistors fashioned from carbon nanotubes. ()

* No business represents the rapid rise of the Internet in China quite like Alibaba, a company that is part eBay, part Google and part PayPal. Alibaba is now moving forward with plans for one of the biggest initial public offerings since Facebook's Inc rocky debut last year - but in New York and not in its home market. ()

* The upstart stock exchange SecondMarket has made a name for itself allowing investors to buy shares of hot private companies like Twitter. Now that those companies are going public, SecondMarket is turning its attention to the next new thing - bitcoin. On Thursday, SecondMarket is expected to begin raising money for an investment fund - the first of its kind in the United States - that will hold only bitcoins, giving wealthy investors exposure to the trendy but controversial virtual currency. ()

* The Treasury has handed Congress an urgent deadline: Oct. 17. On that day, unless Congress were to raise the debt ceiling, the Treasury would have only $30 billion cash on hand, putting the United States on the precipice of an unprecedented default, the department said on Wednesday. ()

* Only one in three Americans has confidence in the Federal Reserve's ability to promote economic growth, while little more than a third think the Fed is spinning its wheels, according to a New York Times/CBS News poll. The remaining respondents said they did not know enough to answer. ()

* American and British authorities moved a step further on Wednesday in their investigation into the manipulation of the benchmark interest rate known as Libor, fining the British financial firm ICAP Plc a combined $87 million for its role. ()

* The management of the ailing smartphone maker BlackBerry Ltd canceled a conference call scheduled for Friday to discuss the company's quarterly financial results. While BlackBerry said on Wednesday evening that those results would still be released, it added that the call with analysts and investors was called off because of a conditional and tentative bid for the company announced by its largest shareholder, Fairfax Financial Holdings Ltd. ()

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UPDATE 1-Bankrupt Stockton, California to present adjustment plan Friday

Tue Sep 24, 2013 5:53pm EDT

SACRAMENTO, Calif., Sept 24 (Reuters) - The bankrupt city of Stockton, California will present a draft plan to adjust its debt on Friday and its city council will review it next week, a lawyer for the city told Reuters on Tuesday.

If Stockton's city council approves the draft, it could be filed as the final plan with the U.S. Bankruptcy Court in Sacramento on or shortly after October 4, attorney Marc Levinson said.

Stockton's city council will be able to revise the draft plan, Levinson later told U.S. Bankruptcy Judge Christopher Klein during a hearing on Stockton's Chapter 9 municipal bankruptcy case.

A city of nearly 300,000 in California's Central Valley, Stockton filed for municipal bankruptcy last year and was the biggest U.S. city to do so until Detroit filed for protection from creditors this summer.

Klein in April approved Stockton's petition for bankruptcy, a setback for the city's capital markets creditors, which had contested the city's bid for bankruptcy eligibility. They object to Stockton's keeping up its payments to the state pension fund while targeting bondholders for losses to help restructure its finances.

Alabama's Jefferson County in its bankruptcy restructuring plan in June also proposed losses for bondholders, becoming the first local government to do so since the 1930s.

Levinson told Klein he was hopeful ongoing confidential talks with Stockton's capital markets creditors will lead to agreements with them.

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UPDATE 2-Bankrupt California city to unveil adjustment plan Friday

Tue Sep 24, 2013 7:49pm EDT

* Stockton city council will review draft plan next week

* Final plan could be filed as soon as Oct. 4

* City and bondholders still in negotiations

By Jim Christie

SACRAMENTO, Calif., Sept 24 (Reuters) - The bankrupt city of Stockton, California, will present a draft plan on Friday to adjust its debt while it keeps negotiating with bondholders, a lawyer for the city told Reuters on Tuesday.

Stockton's city council will review the draft next week and a final version could be filed with the U.S. Bankruptcy Court in Sacramento on or shortly after Oct. 4, marking a milestone in the city's efforts to put its finances in order, attorney Marc Levinson said.

Levinson later told U.S. Bankruptcy Judge Christopher Klein during a hearing on Stockton's Chapter 9 municipal bankruptcy case that it was not clear whether agreements with bondholders would be part of the plan. But Levinson added he was hopeful ongoing confidential talks with Stockton's capital markets creditors will lead to agreements with them.

"Mediation is moving the ball forward," Levinson said.

In August Levinson said Stockton was preparing a "cramdown" plan to file with Klein despite creditors' objections.

After Stockton files its plan, bond insurers and bondholders will vote on the city's plan to exit from bankruptcy along with other creditors. A majority of creditors and holders of two-thirds of claims must vote to approve it.

A city of nearly 300,000 in California's Central Valley, Stockton filed for municipal bankruptcy last year and was the biggest U.S. city to do so until Detroit filed for protection from creditors this summer.

Klein in April approved Stockton's petition for bankruptcy, a setback for the city's capital markets creditors, which had contested the city's bid for bankruptcy eligibility.

The creditors, led by bond insurers Assured Guaranty and National Public Finance Guarantee, object to Stockton's keeping up its payments to the state pension fund while targeting bondholders for losses to help restructure its finances.

Alabama's Jefferson County in its bankruptcy restructuring plan in June also proposed losses for bondholders, becoming the first local government to do so since the 1930s.

At the hearing on Tuesday, Klein said he is prepared to hear arguments over Stockton's decision to keep whole its payments to the California Public Employees' Retirement System and not to bond holders. Klein will ultimately decide if the plan meets other bankruptcy law requirements to go into effect.

Stockton says it is maintaining pensions payments to retain and recruit employees, adding that its workers have suffered pay and job cuts from austerity measures in recent years and have agreed to concessions to help repair the city's finances.

Stockton cut $90 million in spending from 2008 to last year in response to a plunge in revenue triggered by the collapse of its once red-hot housing market, and since filing for bankruptcy the city has scrapped its costly program for about 1,100 retired employees.

In addition to cutting costs, Stockton aims to raise revenue to exit bankruptcy. A measure that would increase the city's sales tax will appear on the November ballot. Revenue raised by the measure would also be used to increase spending on public safety.

After Tuesday's hearing, Stockton said in a statement that it had reached a tentative agreement with the local ice hockey team, Stockton Thunder, that would raise revenue for the city and reduce its payments for arena operations by approximately $200,000 a year. The agreement will be included in the city's debt plan.

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PRESS DIGEST-Hong Kong - Sept 25

HONG KONG, Sept 25 | Tue Sep 24, 2013 10:20pm EDT

HONG KONG, Sept 25 (Reuters) - These are some of the leading stories in Hong Kong newspapers on Wednesday. Reuters has not verified these stories and does not vouch for their accuracy.

SOUTH CHINA MORNING POST

-- Alibaba Group would cut the number of partners the firm has and bind them to a three-year share sale ban if Hong Kong regulators accept a controversial management structure that is blocking its potential HK$100 billion ($12.90 billion) initial public offering, a source close to the listing authorities said. (link.reuters.com/nef43v)

-- Chinese state-owned agricultural group Cofco is injecting mainland property assets valued at HK$14.17 billion into its Hong Kong-listed property unit, Hong Kong Parkview Group , in a back-door listing. (link.reuters.com/pef43v)

-- The Chinese Gold & Silver Exchange Society accepted its first overseas member, Swiss firm Finemetal Asia, in its 103-year history as part of its plan to go international. Exchange president Haywood Cheung said he planned to recruit four more overseas members by the end of the first quarter of next year. (link.reuters.com/qef43v)

HONG KONG ECONOMIC JOURNAL

-- Bank of East Asia Ltd has applied for the High Court to declare former chief secretary Rafael Hui bankrupt.

HONG KONG ECONOMIC TIMES

-- The initial public offering of webgame developer Forgame Holdings was oversubscribed 113 times, locking up HK$19.5 billion in margin orders, according to market sources.

THE STANDARD

-- Chief Executive Leung Chun-ying stressed the Hong Kong dollar is the statutory currency according to the Basic Law, in response to a mainland professor's idea of scrapping it and using the yuan. (link.reuters.com/ref43v)

-- Health Secretary Ko Wing-man said the two-can export limit on formula milk could be lifted if measures to be tried next month prove satisfactory. (link.reuters.com/buf43v)

MING PAO DAILY NEWS

-- The Hong Kong government is studying the feasibility to build a large public housing zone in Yuen Long, providing 17,000 units that are equal to the total amount of public housing production in a year.

-- Bank of East Asia Ltd forecasts Hong Kong property prices will have to drop 22 percent in the next three years in order to return to normal affordability levels for ordinary buyers.

TA KUNG PAO

-- Chinese developer Agile Property Holdings Ltd said it has acquired a residential land in Changsha City for 300 million yuan ($49.01 million).

For Chinese newspapers, see............... ($1 = 7.7538 Hong Kong dollars) ($1 = 6.1210 Chinese yuan) (Compiled by Twinnie Siu; Editing by Supriya Kurane)

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Peabody says settlement offer for Patriot Coal retirees rejected

Sept 23 | Mon Sep 23, 2013 8:58pm EDT

Sept 23 (Reuters) - Peabody Energy Corp, which created now-bankrupt Patriot Coal through a spin-off, said an offer to settle claims relating to healthcare benefits for Patriot Coal retirees had been rejected by the United Mine Workers of America.

Peabody and Patriot have been fighting over the funding of benefits for about 3,100 retirees that Peabody agreed to continue covering after the October 2007 spin-off of Patriot.

Peabody said in a statement that its mid-August offer to settle all claims with the UMWA could have been used to provide the retirees with lifetime healthcare benefits comparable to those of Peabody's active corporate employees.

"The UMWA retirees who have been traveling to St. Louis to rally for healthcare benefits have a right to know that a good faith settlement offer was on the table, and that union leadership rejected it," Vic Svec, a senior vice president of global investor and corporate relations, said in the statement.

Representatives for the United Mine Workers of America and Patriot Coal could not be immediately contacted for comment outside of regular U.S. business hours.

Earlier this month, Peabody said it had no obligation to fund health and pension benefits for Patriot retirees affected by the company's insolvency, arguing that new labor deals between Patriot and the UMWA effectively relieved it of any funding obligations.

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UPDATE 4-Fiat rethinks alliance with Chrysler after IPO filing

Mon Sep 23, 2013 11:25pm EDT

* Fiat wants to buy UAW trust's 41.5 pct stake

* IPO may delay CEO's goal of merging Fiat, Chrysler

* JPMorgan is underwriter for IPO

By Deepa Seetharaman and Bernie Woodall

DETROIT, Sept 23 (Reuters) - Chrysler Group LLC was forced to file paperwork for an IPO by its second-biggest shareholder on Monday, escalating a spat with main owner Fiat SpA which said it could scale back its commitment to the U.S. automaker.

Fiat, which owns 58.5 percent of Chrysler, wants to take full control and buy out the rest of the stock owned by the United Auto Workers trust fund, but has balked at the more $5 billion being demanded.

In response, the UAW trust exercised a right enshrined in Chrysler's 2009 government-financed bankruptcy to go forward with an initial public offering, stepping up pressure on Sergio Marchionne, chief executive of both automakers, to reach a deal.

Bankers and analysts view the filing as a move by the UAW trust to extract a better offer from Fiat and many wager an IPO will never take place.

Fiat responded angrily in the filing, which raises critical questions about when and even if Marchionne can merge the two companies to form the world's seventh-largest auto group. The Fiat-Chrysler alliance was one of the centerpieces of the Obama administration's 2009 restructuring of the U.S. auto industry.

"Fiat has informed us that it is reconsidering the benefits and costs of further expanding its relationship with us," Chrysler said in its S-1 filing with the U.S. Securities and Exchange Commission.

Chrysler added that Fiat is also reconsidering the terms on which the Italian automaker will continue to share its technology, vehicle platforms, engineering expertise and other resources with Chrysler.

"Fiat is saying that Chrysler is worth less if we don't get that full integration," said Richard Hilgert, an analyst with investment research firm Morningstar. "It's a shot across the bow of the UAW."

NO 'SUSTAINED PROFITS'

The IPO, which for the purposes of calculating the regulator's registration fee was estimated at up to $100 million, will be underwritten by JPMorgan. Marchionne said in mid-September that if an IPO happens, it is likely to take place in the first quarter of 2014.

Chrysler did not say how many shares will be offered in the sale. The UAW trust fund intends to use the proceeds to pay for medical benefits for blue-collar Chrysler retirees.

Under Marchionne, Chrysler has mounted an unlikely comeback that has pushed its valuation to around $10 billion, according to some analyst estimates. The U.S. automaker is now propping up Fiat's bottom line, rather than the other way around.

Chrysler's success has complicated Marchionne's efforts to buy out the fund. The more than $5 billion price tag pushed for by adviser Brock Fiduciary represents the highest possible payout under the terms of the bankruptcy agreement.

Last week, Marchionne hired former U.S. auto task force leader Ron Bloom, chief architect of Chrysler's 2009 bankruptcy restructuring, to advise Fiat in its negotiations.

Bloom was instrumental in convincing the UAW to accept a stake in Chrysler as part of the bailout package. He also is advising Detroit retirees in the Detroit municipal bankruptcy.

Chrysler and Fiat currently are forced to manage their finances separately, even though they are run by the same executive team. A full merger would make it easier - but not automatic - to combine the cash pools of the two companies, giving Fiat more funds to expand its product lineup.

Chrysler, based in suburban Detroit, had cash and cash equivalents of $12.2 billion as of June 30. Its net profit in the first half of the year fell 21 percent to $764 million from $966 million in the previous year.

Chrysler remains heavily reliant on North America, which accounted for 90 percent of vehicle sales in the first half of 2013. It added that its lineup of smaller, less expensive cars are not as competitive as its larger, more profitable vehicles.

"Despite our recent financial results, we have not yet reached a level of sustained profitability for our U.S. operations," Chrysler said in the S-1 filing.

AN UNUSUAL HISTORY

Monday's IPO filing reflects the unusual set of events that shaped the restructuring of the U.S. auto industry.

The UAW trust, a type known as a voluntary employee beneficiary association, or VEBA, was created in 2007 as a way for General Motors Co, Ford Motor Co and Chrysler to offload their obligation to pay retiree healthcare benefits.

The trust was initially supposed to be funded with cash. But as part of the 2009 financial crisis, it agreed to take stakes in GM and Chrysler in lieu of cash.

"The Chrysler IPO is a textbook example of the difficulties that can occur when debt is converted into an ownership stake, as it was during Chrysler's bankruptcy," said Jack Nerad, executive editorial director and market analyst of auto research firm Kelley Blue Book.

The IPO filing comes the same day GM bought back preferred shares held by the UAW trust for about $3.2 billion.

The trust is carved up into three separate accounts that pay for medical benefits for GM, Ford and Chrysler retirees. The trust is barred by law from using the assets of one account to defray costs of another.

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PRESS DIGEST-New York Times business news - Sept 24

Sept 24 | Tue Sep 24, 2013 1:29am EDT

Sept 24 (Reuters) - The following are the top stories on the New York Times business pages. Reuters has not verified these stories and does not vouch for their accuracy.

* JPMorgan Chase & Co paid $1 billion to resolve an array of government investigations last week. But its biggest battles with federal authorities may still lie ahead. The nation's largest bank is bracing for a lawsuit from federal prosecutors in California who suspect that the bank sold shoddy mortgage securities to investors in the run-up to the financial crisis, according to people briefed on the matter. ()

* Chrysler filed for a public stock offering on Monday, acting only under pressure from its second-largest shareholder, a trust set up to provide medical coverage for 115,000 retired autoworkers and their relatives. Ordinarily, Chrysler's plan would be cause to celebrate the automaker's comeback from its government bailout and bankruptcy in 2009. ()

* Detroit had a bit of rare good fortune as it hurtled toward bankruptcy last summer - a couple of banks were willing to let it out of some expensive financial contracts, called interest-rate swaps, without paying in full the usual steep termination fees. But since then, an insurance company, Syncora Guarantee, has been seeking to block the deal, lining up allies among Detroit's other creditors. ()

* While French fries are a staple of the fast-food burger business, they have long been vilified by nutrition experts as little more than vehicles for adding fat, salt and calories to diets. Now Burger King Worldwide Inc has come up with a fry that it says delivers about 40 percent less fat and 30 percent fewer calories than the fries sold by its archenemy McDonald's. ()

* Robert Cohen, the founder of the Hudson Media empire, whose last wishes are at the center of nasty legal battle, was either a gravely ill old man unable to speak in his final years, or an opinionated octogenarian who enjoyed attending family bar mitzvahs. Those were the clashing portraits presented in state court on Monday of the man, who died in 2012, leaving behind a fortune that is now the subject of a bitter fight that has drawn in some of the ultrawealthy of New York society. ()

* BlackBerry Ltd said on Monday that it had signed a letter of intent from a group led by Fairfax Financial Holdings Ltd, a Canadian insurance and investment company, to pay shareholders $9 a share in cash, pending a variety of conditions, taking the company private. The $4.7 billion offer from Fairfax, which already owns about 10 percent of BlackBerry, is a powerful symbol of the phone maker's decline. ()

* Weak reaction to important new Microsoft Corp products rarely discourages the company - instead, it usually tweaks the products over and over. So it goes with the Surface, Microsoft's poorly selling answer to the iPad. On Monday, Microsoft introduced a second generation of Surface tablets with only subtle adjustments from the originals, a sign that the company still believes in its vision of devices that blend the benefits of tablets and laptop computers. ()

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UPDATE 2-Slovenian finance minister sees limited trust in banking system

Fri Sep 20, 2013 9:35am EDT

* Slovenia banks hit by bad loans

* Could be next euro zone state to be bailed out

* Eurogroup chief to visit for talks

* Bad bank expected to issue 4 bln euros of bonds (Updates with governor quotes, details, background)

By Marja Novak

LJUBLJANA (Reuters) - Slovenia's banks are weak and trust in the system is limited, Finance Minister Uros Cufer told parliament on Friday, as expectations grew that the country may need financial help from abroad.

Slovenia's banks are crippled by at least 7.5 billion euros ($10 billion) of bad loans - more than a fifth of national output - with stress tests set to reveal in November how much help the sector will need.

Although it makes up only a tiny proportion of the euro zone's economy, a bailout for Slovenia would fray nerves across the continent with a reminder that the region's debt crisis was not yet conquered.

The head of euro zone's finance ministers, Jeroen Dijsselbloem, will visit the country on Sept. 30 for talks with top policymakers.

Earlier this month the Slovenian central bank began the controlled liquidation of two small private banks in which the state guaranteed all deposits in order to prevent a bank run.

"The decision for such a liquidation was right," said finance minister Cufer.

"Any uncontrolled bankruptcy ... would be playing with matches," he added. "The banking system in Slovenia is relatively weak, trust in it is limited."

Central bank Governor Bostjan Jazbec, who has said policymakers are reviewing the bailout option on a daily basis, told the same parliamentary session that no other banks were thought to be facing similar problems to the two being wound up.

He warned that Slovenia's taxpayers would face a bill of 15 billion euros if all the country's banks collapsed, but added there was no sign that this was about to happen.

The government at present has deposits of 3.6 billion euros in Slovenian banks and expects to spend a significant part of those for the necessary capital injections in local banks following the results of the external stress tests which are due by the end of November.

So far three largest Slovenian banks, all controlled by the state, said they needed capital injections in a joint amount of some 1 billion euros but the stress tests, which are being conducted in 8 banks, are expected to show higher capital needs.

A senior official from the European Bank of Reconstruction and Development encouraged Slovenia this week to seek help.

But Cufer told Reuters on Wednesday that Slovenia was still able to solve its problems by itself, without a bailout.

Slovenia plans to start transferring bad loans to the state-owned 'bad bank' later this year, after the stress tests are completed, with the bad bank issuing 4 billion euros of bonds that will be given to banks in exchange for those loans.

Slovenia was the fastest growing euro zone economy in 2007 until the global financial crisis crushed demand for its exports.

($1 = 0.7384 euros) (Reporting by Marja Novak; Editing by Ruth Pitchford)

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US Airways, American push back on Justice Dept merger lawsuit

WASHINGTON, Sept 20 | Fri Sep 20, 2013 2:32pm EDT

WASHINGTON, Sept 20 (Reuters) - US Airways and American Airlines, whose proposed merger has been stalled by U.S. government opposition, urged a court on Friday to require the Justice Department to turn over documents relating to its approval of four previous airline mergers.

The Justice Department filed a lawsuit on Aug. 13 to stop the planned merger of US Airways and American's parent, AMR Corp, arguing that the deal would lead to higher air fares and other fees. A judge will hear the case without a jury in November and decide whether the deal can go forward.

The airlines have said that the merger is needed to help them compete in a rapidly consolidating industry.

In their motion, US Airways and American asked for analyses, studies, forecasts and other documents relating to the Justice Department's approval of the four mergers completed over the past decade.

Delta Air Lines Inc acquired Northwest Airlines in 2008, United merged with Continental in 2010 and Southwest Airlines Co bought discount rival AirTran in 2011. US Airways bought America West in 2005.

The Justice Department declined to comment immediately on how it planned to handle the airlines' request.

The motion for the material, which could be quite extensive, will likely be granted, said Robert Skitol, an antitrust expert with Drinker Biddle & Reath LLP.

"There's no doubt about it being very burdensome," said Skitol. "This is very resource-intensive."

The airlines and the Justice Department could settle the antitrust lawsuit, which would likely require the companies to sell certain assets. Any divestitures would require approval from the judge overseeing American's emergence from bankruptcy.

The airlines themselves have defended the deal by arguing in court filings that it would create $500 million in savings to consumers annually by building a stronger competitor to Delta and United.

In its complaint, the Justice Department focused on Ronald Reagan National Airport, just outside Washington, D.C., where the two companies control a combined 69 percent of takeoff and landing slots. It also listed more than 1,000 routes between two cities where the two airlines dominate the market.

The case at the U.S. District Court for the District of Columbia is No. 1:13-cv-12346.

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UPDATE 1-US Airways, American push back on Justice Dept merger lawsuit

Fri Sep 20, 2013 5:47pm EDT

WASHINGTON, Sept 20 (Reuters) - US Airways and American Airlines, whose proposed merger has been stalled by U.S. government opposition, urged a court on Friday to require the Justice Department to turn over documents relating to its approval of four previous airline mergers.

The Justice Department filed a lawsuit on Aug. 13 to stop the planned merger of US Airways and American's parent, AMR Corp, arguing that the deal would lead to higher air fares and other fees. A judge will hear the case without a jury in November and decide whether the deal can go forward.

The airlines have said that the merger is needed to help them compete in a rapidly consolidating industry.

In their motion, US Airways and American asked for analyses, studies, forecasts and other documents relating to the Justice Department's approval of the four mergers completed over the past decade.

Delta Air Lines Inc acquired Northwest Airlines in 2008, United merged with Continental in 2010 and Southwest Airlines Co bought discount rival AirTran in 2011. US Airways bought America West in 2005.

Justice Department spokeswoman Gina Talamona said that the agency would reply formally to the motion next week.

The motion for the material, which could be quite extensive, will likely be granted, said Robert Skitol, an antitrust expert with Drinker Biddle & Reath LLP.

"There's no doubt about it being very burdensome," said Skitol. "This is very resource-intensive."

Previously, the government had said the request was too broad, and that data on previous mergers not relevant to this case.

The airlines and the Justice Department could settle the antitrust lawsuit, which would likely require the companies to sell certain assets. Any divestitures would require approval from the judge overseeing American's emergence from bankruptcy.

The airlines have defended the deal in court filings, saying it would create $500 million in savings to consumers annually by building a stronger competitor to Delta and United.

In its complaint, the Justice Department focused on Ronald Reagan National Airport, just outside Washington, D.C., where the two companies control a combined 69 percent of takeoff and landing slots. It also listed more than 1,000 routes between two cities where the two airlines dominate the market.

The case at the U.S. District Court for the District of Columbia is No. 1:13-cv-12346.

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UPDATE 2-Slovenian finance minister sees limited trust in banking system

Fri Sep 20, 2013 9:35am EDT

* Slovenia banks hit by bad loans

* Could be next euro zone state to be bailed out

* Eurogroup chief to visit for talks

* Bad bank expected to issue 4 bln euros of bonds (Updates with governor quotes, details, background)

By Marja Novak

LJUBLJANA (Reuters) - Slovenia's banks are weak and trust in the system is limited, Finance Minister Uros Cufer told parliament on Friday, as expectations grew that the country may need financial help from abroad.

Slovenia's banks are crippled by at least 7.5 billion euros ($10 billion) of bad loans - more than a fifth of national output - with stress tests set to reveal in November how much help the sector will need.

Although it makes up only a tiny proportion of the euro zone's economy, a bailout for Slovenia would fray nerves across the continent with a reminder that the region's debt crisis was not yet conquered.

The head of euro zone's finance ministers, Jeroen Dijsselbloem, will visit the country on Sept. 30 for talks with top policymakers.

Earlier this month the Slovenian central bank began the controlled liquidation of two small private banks in which the state guaranteed all deposits in order to prevent a bank run.

"The decision for such a liquidation was right," said finance minister Cufer.

"Any uncontrolled bankruptcy ... would be playing with matches," he added. "The banking system in Slovenia is relatively weak, trust in it is limited."

Central bank Governor Bostjan Jazbec, who has said policymakers are reviewing the bailout option on a daily basis, told the same parliamentary session that no other banks were thought to be facing similar problems to the two being wound up.

He warned that Slovenia's taxpayers would face a bill of 15 billion euros if all the country's banks collapsed, but added there was no sign that this was about to happen.

The government at present has deposits of 3.6 billion euros in Slovenian banks and expects to spend a significant part of those for the necessary capital injections in local banks following the results of the external stress tests which are due by the end of November.

So far three largest Slovenian banks, all controlled by the state, said they needed capital injections in a joint amount of some 1 billion euros but the stress tests, which are being conducted in 8 banks, are expected to show higher capital needs.

A senior official from the European Bank of Reconstruction and Development encouraged Slovenia this week to seek help.

But Cufer told Reuters on Wednesday that Slovenia was still able to solve its problems by itself, without a bailout.

Slovenia plans to start transferring bad loans to the state-owned 'bad bank' later this year, after the stress tests are completed, with the bad bank issuing 4 billion euros of bonds that will be given to banks in exchange for those loans.

Slovenia was the fastest growing euro zone economy in 2007 until the global financial crisis crushed demand for its exports.

($1 = 0.7384 euros) (Reporting by Marja Novak; Editing by Ruth Pitchford)

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US Airways, American push back on Justice Dept merger lawsuit

WASHINGTON, Sept 20 | Fri Sep 20, 2013 2:32pm EDT

WASHINGTON, Sept 20 (Reuters) - US Airways and American Airlines, whose proposed merger has been stalled by U.S. government opposition, urged a court on Friday to require the Justice Department to turn over documents relating to its approval of four previous airline mergers.

The Justice Department filed a lawsuit on Aug. 13 to stop the planned merger of US Airways and American's parent, AMR Corp, arguing that the deal would lead to higher air fares and other fees. A judge will hear the case without a jury in November and decide whether the deal can go forward.

The airlines have said that the merger is needed to help them compete in a rapidly consolidating industry.

In their motion, US Airways and American asked for analyses, studies, forecasts and other documents relating to the Justice Department's approval of the four mergers completed over the past decade.

Delta Air Lines Inc acquired Northwest Airlines in 2008, United merged with Continental in 2010 and Southwest Airlines Co bought discount rival AirTran in 2011. US Airways bought America West in 2005.

The Justice Department declined to comment immediately on how it planned to handle the airlines' request.

The motion for the material, which could be quite extensive, will likely be granted, said Robert Skitol, an antitrust expert with Drinker Biddle & Reath LLP.

"There's no doubt about it being very burdensome," said Skitol. "This is very resource-intensive."

The airlines and the Justice Department could settle the antitrust lawsuit, which would likely require the companies to sell certain assets. Any divestitures would require approval from the judge overseeing American's emergence from bankruptcy.

The airlines themselves have defended the deal by arguing in court filings that it would create $500 million in savings to consumers annually by building a stronger competitor to Delta and United.

In its complaint, the Justice Department focused on Ronald Reagan National Airport, just outside Washington, D.C., where the two companies control a combined 69 percent of takeoff and landing slots. It also listed more than 1,000 routes between two cities where the two airlines dominate the market.

The case at the U.S. District Court for the District of Columbia is No. 1:13-cv-12346.

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UPDATE 1-US Airways, American push back on Justice Dept merger lawsuit

Fri Sep 20, 2013 5:47pm EDT

WASHINGTON, Sept 20 (Reuters) - US Airways and American Airlines, whose proposed merger has been stalled by U.S. government opposition, urged a court on Friday to require the Justice Department to turn over documents relating to its approval of four previous airline mergers.

The Justice Department filed a lawsuit on Aug. 13 to stop the planned merger of US Airways and American's parent, AMR Corp, arguing that the deal would lead to higher air fares and other fees. A judge will hear the case without a jury in November and decide whether the deal can go forward.

The airlines have said that the merger is needed to help them compete in a rapidly consolidating industry.

In their motion, US Airways and American asked for analyses, studies, forecasts and other documents relating to the Justice Department's approval of the four mergers completed over the past decade.

Delta Air Lines Inc acquired Northwest Airlines in 2008, United merged with Continental in 2010 and Southwest Airlines Co bought discount rival AirTran in 2011. US Airways bought America West in 2005.

Justice Department spokeswoman Gina Talamona said that the agency would reply formally to the motion next week.

The motion for the material, which could be quite extensive, will likely be granted, said Robert Skitol, an antitrust expert with Drinker Biddle & Reath LLP.

"There's no doubt about it being very burdensome," said Skitol. "This is very resource-intensive."

Previously, the government had said the request was too broad, and that data on previous mergers not relevant to this case.

The airlines and the Justice Department could settle the antitrust lawsuit, which would likely require the companies to sell certain assets. Any divestitures would require approval from the judge overseeing American's emergence from bankruptcy.

The airlines have defended the deal in court filings, saying it would create $500 million in savings to consumers annually by building a stronger competitor to Delta and United.

In its complaint, the Justice Department focused on Ronald Reagan National Airport, just outside Washington, D.C., where the two companies control a combined 69 percent of takeoff and landing slots. It also listed more than 1,000 routes between two cities where the two airlines dominate the market.

The case at the U.S. District Court for the District of Columbia is No. 1:13-cv-12346.

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UPDATE 2-Fitch expects Detroit to miss a bond payment due Oct. 1

Wed Sep 18, 2013 6:31pm EDT

Sept 18 (Reuters) - Fitch Ratings said on Wednesday it expects Detroit to miss payments due on the city's general obligation bonds on Oct. 1, an event that would prompt the credit agency to downgrade to D its ratings on Detroit's unlimited tax general obligation and limited tax obligation debt.

"Fitch believes GO debt will not be paid as due on Oct. 1," the ratings agency said in a statement. "If the Oct. 1st debt service payment is missed, Fitch will downgrade both the ULTGOs and LTGOs to 'D.'"

Bill Nowling, a spokesman for Detroit's emergency manager, Kevyn Orr, declined to comment on whether the city will miss the Oct. 1 payment other than to say, "Nothing has changed" since the city's mid-June report.

Orr said in June that most of the general obligation bonds are considered unsecured debt and would not be paid.

As for the city's general obligation debt rating possibly falling to D, Nowling said, "We don't comment on things before they happen."

Fitch, which said Detroit's landmark bankruptcy, if it goes ahead, might be rewriting basic expectations of creditors during a debt workout, cut its ratings in June on the city's certificates of participation to D after a missed debt service payment.

A decision by Detroit's emergency manager to treat unlimited tax general obligation (ULTGO)and limited tax obligation debt (LTGO) bonds and post-employment benefit payments as a single class of creditor was an unwelcome surprise, Fitch said.

"If the Detroit case signals a shift towards lumping these obligations together and not levying taxes to support the apparently affordable ULTGO debt already approved by taxpayers, the outcome will lead Fitch to reconsider the impact on ratings," Fitch managing director Amy Laskey said.

Fitch also said Michigan Act 436's strong oversight for struggling local governments in the state was being offset by the weak support for Detroit bondholders.

"The city's bankruptcy filing demonstrates that state intervention mechanisms do not preclude credit deterioration or default," Fitch said.

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UPDATE 2-American Airlines, US Airways unions rally for merger

Wed Sep 18, 2013 6:37pm EDT

By Diane Bartz

WASHINGTON, Sept 18 (Reuters) - Union members who work for American Airlines and US Airways Group rallied on Capitol Hill on Wednesday, urging the U.S. Justice Department to drop its opposition to a planned merger between the two airlines.

The rally by pilots, flight attendants, baggage handlers and others also attracted a handful of the 300 lawmakers that the union representatives are meeting this week in hopes of building support for the deal.

Representatives of the Association of Professional Flight Attendants, the Allied Pilots Association and US Airline Pilots Association and the Transport Workers Union also met on Wednesday with William Baer, the head of the Justice Department's Antitrust Division, to express displeasure over the lawsuit, a union source said.

The Justice Department filed a lawsuit on Aug. 13 to stop the planned merger between US Airways and American's parent, AMR Corp. The government argues it would violate antitrust laws because it would lead to higher airfares and other fees.

A judge will hear the case without a jury in November and decide whether the deal can go forward.

Representative Ed Pastor, a Democrat from Arizona, where US Airways is headquartered, said he was surprised that the Justice Department wanted to stop the deal after allowing other large airline mergers in recent years.

Delta Air Lines Inc acquired Northwest Airlines in 2008, United merged with Continental in 2010 and Southwest Airlines Co bought discount rival AirTran in 2011.

Without the planned deal between American and US Airways, "competition will be stifled and the stability that we want in the airline industry will be taken away," Pastor said.

Pilots attending the rally made similar points, with one saying that the Justice Department allowed other airline mergers "without a whimper."

"All of a sudden they're trying to stop this," said Jim Sgueglia, 55, who said he has been flying for US Airways for 26 years.

Seth Bloom, an antitrust expert formerly with the department and now in private practice, said the rally would likely have no effect on its views.

The merger is a critical piece in American's future plans. The company declared bankruptcy in 2011 and a judge approved its plan to emerge from bankruptcy that was centered on the deal with US Airways.

The airlines and the Justice Department could settle the antitrust lawsuit, which would likely require the companies to sell assets. Any such divestitures would require the bankruptcy judge's approval.

AMR shareholders, who stand to receive a 3.5 percent stake in the merged entity, would likely be wiped out under any plan other than a merger, experts say. Most of AMR's key creditors, including the unionized workers, support the tie-up.

The airlines themselves have defended the deal by arguing in court filings that it would create $500 million in savings to consumers annually by building a stronger competitor to Delta and United.

In its complaint, the Justice Department focused on Ronald Reagan National Airport, just outside Washington, D.C., where the two companies control a combined 69 percent of takeoff and landing slots. It also listed more than 1,000 routes between two cities where the two airlines dominate the market.

The case at the U.S. District Court for the District of Columbia is No. 1:13-cv-12346.

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