UPDATE 2-Illinois House passes sweeping pension fix in close vote

Thu May 2, 2013 7:15pm EDT

By JoAnne von Alroth

SPRINGFIELD, Ill., May 2, (Reuters) - The Illinois House of Representatives in a 62 to 51 vote on Thursday passed a comprehensive bill aimed at addressing the nation's most under funded state pension plan, a major step after weeks of legislative maneuvering had made pensions the dominant political issue in the financially strapped state.

The bill, introduced only two days ago by the powerful Democratic House Speaker Michael Madigan, now goes to the state Senate. That chamber's president is preparing a competing plan that is viewed as more favorable to the state's public-employee labor unions.

The Madigan bill, which is designed to eliminate a $96.8 billion funding shortfall over 30 years, relies on changes to retirement benefits that unions say are a violation of the state constitution. Union leaders have said they will challenge the measure in court if it becomes law, and Madigan acknowledged during floor debate Thursday that implementation likely would not move forward until courts rule on the constitutional issue.

"In my judgment, this is a critical action that must be taken now. Must be taken for future budget making. Must be taken for the fiscal well-being and reputation of the state of Illinois," Madigan said during a floor debate prior to the bill's passage. Madigan won the votes of two-thirds of the Democrats, with 40 of them voting for it and 28 against, while Republicans split nearly evenly, 22 for and 23 against.

No actuarial analysis of Madigan's measure has yet emerged, but the speaker said it would fully fund the pension system by 2044 and reduce the state's pension payment by $1.5 billion in fiscal 2015.

Several law makers acknowledged struggling with how to cast their vote. "This state is in crisis," said Republican State Representative Dwight Kay. "What we're doing today is not an easy move."

The measure now moves to the state's upper chamber, where Senate President John Cullerton, a Democrat, is circulating a union-backed plan. Cullerton has not yet released details of the new plan, which he described as being "credible and constitutional" after emerging from a closed-door meeting with union leaders on Wednesday.

A spokeswoman for Cullerton said the Senate President plans to discuss both measures with his Democratic caucus on Tuesday. Still, Madigan was optimistic his plan would pass the Senate.

"We've taken that first step in the House. My expectation is that the Senate will approve this bill," Madigan told reporters after the vote.

The state's constitution prohibits any diminishment of benefits to current and retired workers, and Cullerton has stated he believes the union plan will meet any constitutional test. Cullerton previously said he does not believe Madigan's plan can survive a constitutional challenge.

The Senate's Republican Leader Christine Radogno said "a significant number" of lawmakers from her caucus were expected to support Madigan's bill.

Madigan's measure affects four of the state's five pension funds. The speaker said the bill exempts the judges' pension fund to eliminate conflicts of interest for judges who would hear likely legal challenges to the bill should it become law.

The Madigan measure sets a cap on salaries used to determine pensions, limits cost-of living adjustments on pensions for future retirees, increases retirement ages and hikes worker pension contributions. It introduces changes to calculating the state's annual pension contributions that are designed to come closer to the actual future cost, and also exempts pension changes from collective bargaining.

After the vote, a coalition of public labor unions blasted the bill as being unfair to workers who have paid into their pension funds while the state has skipped or skimped on its payments.

"On top of that, it is blatantly unconstitutional and thus saves nothing. It simply exacerbates Illinois' fiscal problems," said a statement from We Are One Illinois. The group added that it was continuing talks with Cullerton.

Illinois lawmakers, who are in the final weeks of their spring legislative session, are under pressure to deal with the worst-funded state pension system. Pension payments are squeezing out funding for core services, while the state's backlog of overdue bills has topped $9 billion.

Credit rating agencies, meanwhile have downgraded Illinois' debt rating to the lowest level among states, and a government watchdog group has reported that pension payments along with debt service on outstanding pension bonds will amount to almost 25 percent of the state's upcoming general fund budget.

Madigan's bill contains elements similar to those in another comprehensive bill that failed to pass out of the Senate in March.

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

Residents of bankrupt California city launch council recall

Thu May 2, 2013 7:33pm EDT

* Council member says move "ill-advised"

* Court ruling on bankruptcy several months off

By Tim Reid

LOS ANGELES, May 2 (Reuters) - Up in arms against the leadership it blames for San Bernardino's bankruptcy, a group of business people and residents on Thursday launched a campaign to recall the California city's council, mayor and city attorney.

The group, looking for a "clean sweep" inside crisis-hit San Bernardino, presented its initiative on the steps of City Hall before a crowd of residents and local media.

San Bernardino, a city of 210,000 about 65 miles east of Los Angeles, filed for bankruptcy in August 2012 citing a cash-flow crisis and a budget deficit of $45 million for the current fiscal year.

While any court decision on bankruptcy protection for San Bernardino looks several months off, Stockton, another California city that declared bankruptcy last summer, was awarded Chapter 9 protection by a judge last month.

Both cities are considered test cases in the battle over whether municipal bondholders or pensioners should absorb most of the pain when a local government goes broke. Battle lines have been drawn in the two cases between Calpers, the state pension fund, and Wall Street bondholders over how they will be treated as creditors.

San Bernardino passed a new budget last week that calls for it to resume payments to Calpers in July - after a year of non-payments - but not to many other creditors, including holders and insurers of its $50 million in pension bonds.

The Stockton bankruptcy has progressed more quickly and the city appears more organized to deal with proceedings than does San Bernardino, where the case has become bogged down in procedural issues involving financial evidence. The city and its creditors are due to meet again in court next week.

The group of San Bernardino business people and residents seeking to eject the city's current leadership needs to collect enough signatures by July 30, and find viable candidates, to challenge the seven council members, the mayor and city attorney in November's election.

The group, San Bernardino Residents for Responsible Government, is led by local businessmen Scott Beard and Tom Brickley. Beard says there are "10 core members" of the group and they have been planning the recall drive for nearly a year.

"We are very frustrated with the performance of our council and we have to take some action," Beard said in a telephone interview.

"We just feel the only way to correct that problem is to change the entire leadership."

Beard said the group already had four people willing to stand as council candidates, but he declined to provide their names. He said the group is talking to others so the entire council will be challenged in November.

Recall elections are difficult to execute. In San Bernardino's case, the group must collect signatures of 25 percent of registered voters in each of the city's seven wards to bring a recall election against each council member, and 15 percent of the city's registered voters to challenge the mayor and city attorney.

If the group obtains enough signatures in each council district and across the city, it will force all seven council members, plus the mayor and city attorney, onto November's ballot, with a challenger for each. Otherwise, only three of the council's members would be on the ballot in November.

That process could cost at least $200,000, the city says. Beard says the group has already raised $80,000 and has pledges for at least $100,000 more.

Beard said it was worth spending the money, and replacing the current council, which has been riven by infighting and dissent. A new one could "work together, create jobs, protect residents and come up with a viable long-term plan for the city," he said.

After the procedural hurdles have been navigated, voters must then be convinced to vote for the challengers and kick the incumbents out.

Fred Shorrett, a council member, said the move was "ill-advised," adding, "I certainly understand the frustrations of the community. But this is throwing the baby out with the bath water. This is not good for the community in light of the bankruptcy proceedings."

James Penman, long the city's attorney and a particular target of the recall advocates, wrote in the San Bernardino Sun newspaper that the move was irresponsible.

He said the city had made significant progress in the bankruptcy proceedings, citing last week's new budget. "What San Bernardino needs most today is unity and continuity," Penman wrote.

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

PHILIPPINES PRESS-Shareholders move to stop Exportbank's liquidation - Inquirer

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.

16.47 | 0 komentar | Read More

Australian tycoon Tinkler faces legal action for insolvent trading

MELBOURNE | Thu May 2, 2013 3:24am EDT

MELBOURNE May 2 (Reuters) - Liquidators of one of Australian coal magnate Nathan Tinkler's private companies have launched a legal action against the struggling tycoon and fellow directors for insolvent trading, one of his creditors, Blackwood Corp Ltd, said on Thursday.

"If the court finds the directors and officers liable for insolvent trading, it may make compensation orders against them personally for which they will be jointly and severally liable," Blackwood said in a statement emailed to Reuters.

A spokesman for Tinkler did not immediately respond to requests for comment.

Insolvent trading is when a company carries on with its business despite it not having the funds to meet all of its obligations. (Reporting by Sonali Paul; Editing by Matt Driskill)

16.47 | 0 komentar | Read More

Austria's RHI settles last U.S. asbestos claims

VIENNA | Thu May 2, 2013 3:36am EDT

VIENNA May 2 (Reuters) - Austrian fireproof materials maker RHI said it had settled the last of the asbestos claims it was facing in the United States 11 years after deconsolidating its U.S. business.

RHI said late on Wednesday it would receive a payment of $40 million from the former owner of one of its U.S. companies, after a U.S. district court confirmed a settlement with all the insurance companies concerned.

The Austrian company divested all its U.S. companies in 2001 due to soaring asbestos claims against its U.S. refractory companies that included Narco and the GIT group with Harbison-Walker and A.P. Green.

The claims, risk provisions and restructuring costs pushed the company into a loss of 856 million euros ($1.13 billion) in 2001 from a profit of 31 million a year earlier.

RHI said it had now completed the Chapter 11 proceedings of the deconsolidated companies. ($1 = 0.7580 euros) (Reporting by Georgina Prodhan; Editing by David Cowell)

16.47 | 0 komentar | Read More

UPDATE 1-Australian tycoon Tinkler faces legal action for insolvent trading

Thu May 2, 2013 4:10am EDT

* Tinkler denies allegations of insolvent trading

* Blackwood seeks to recover A$28 million

* Whitehaven shares hit four-year low (Adds Mulsanne directors' comment,)

MELBOURNE, May 2 (Reuters) - Liquidators of one of Australian coal magnate Nathan Tinkler's companies have launched a lawsuit against the struggling tycoon and fellow directors for insolvent trading, one of his creditors, Blackwood Corp Ltd , said on Thursday.

If the court finds Tinkler's privately owned Mulsanne Resources was conducting business while not having funds to meet all its obligations, Tinkler could face penalties that might force him to sell down his 19 percent stake in Whitehaven Coal Ltd, now worth A$357 million ($367 million).

"The directors of Mulsanne strongly deny allegations of trading while insolvent and will strongly defend any legal action instigated by the liquidators," Tinkler's spokesman said in a statement emailed to Reuters.

Liquidators were brought in after Mulsanne failed to follow through on an agreement to buy a one-third stake in Blackwood Corp Ltd for A$28.4 million last year.

"If the court finds the directors and officers liable for insolvent trading, it may make compensation orders against them personally for which they will be jointly and severally liable," Blackwood said in a statement emailed to Reuters.

At hearings in March, Tinkler said he thought he was going to have funds to pay for the Blackwood shares from a deal he had proposed to Hong Kong-based trading firm Noble Group Ltd The deal with Noble did not go ahead and he admitted there had never been any written agreement with Noble.

"I got left holding the can," he told the court.

Whitehaven shares sank to a four-year low of A$1.775 on Thursday and closed down 3.7 percent at $1.83. Blackwood shares have not traded since April 24.

($1 = 0.9720 Australian dollars)

(Reporting by Sonali Paul; Editing by Matt Driskill)

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

Liquidators cleared to sue Australian mining tycoon Tinkler

MELBOURNE | Tue Apr 30, 2013 10:39pm EDT

MELBOURNE May 1 (Reuters) - Liquidators of Nathan Tinkler's Mulsanne Resources were given the go-ahead by the court to sue the struggling Australian tycoon for allegedly letting Mulsanne trade while insolvent, said one of Tinkler's creditors, Blackwood Corp.

Blackwood is trying to recover A$28.4 million ($29.5 million) that Tinkler's private company Mulsanne agreed to pay last year for a one-third stake in the coal explorer. As a result of the claim, a court late last year appointed liquidators to wind up Mulsanne.

The process is being closely watched as Tinkler may be forced to sell down his 19 percent stake in Whitehaven Coal Ltd , now worth A$367 million, to cover his debts and potential penalties.

The Supreme Court of New South Wales ruled on Tuesday that liquidators Ferrier Hodgson would be allowed to ask Blackwood to fund proceedings against Mulsanne.

"On 30 April 2013, the court approved a funding agreement that will allow for the liquidator to commence proceedings against the officers and former officers of Mulsanne Resources," Blackwood said in its quarterly report on Wednesday.

The liquidators now have to decide whether to launch a case against Tinkler, a former mine electrician who made billions of dollars from aggressive bets on coal tenements.

"Blackwood will continue to monitor the recoverability of the monies owed to the company under the Share Purchase Agreement and will keep the market updated on further developments," Blackwood said.

At hearings in March, Tinkler said he thought he was going to have funds to pay for the Blackwood shares from a deal he had proposed to Hong Kong-based trading firm Noble Group Ltd . The deal with Noble did not go ahead and he admitted there had never been any written agreement with Noble. ($1 = 0.9633 Australian dollars) (Reporting by Sonali Paul; Editing by Stephen Coates)

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

UPDATE 1-Kodak expects to exit bankruptcy as soon as July

Tue Apr 30, 2013 11:20pm EDT

By Tom Hals

April 30 (Reuters) - Eastman Kodak Co said on Tuesday it expects to emerge from bankruptcy as soon as July as a commercial imaging business under the control of its creditors.

It said in court documents filed with the U.S. bankruptcy court in Manhattan that it expects to issue new stock with the majority of it going to its second-lien note holders.

The holders of the second-lien notes include investment funds P. Schoenfeld Asset Management, D.E. Shaw Group and Bennett Management Corp.

A new board will be appointed and the company said the new directors will be identified later.

The company did not say how much it expects to pay its unsecured creditors, who are owed as much as $2.2 billion, but they would also receive some shares in the reconstituted Kodak.

Kodak's bankruptcy plan is subject to a vote of creditors and court approval. Kodak must first gain court approval for its disclosure statement which describes its bankruptcy plan and the risks associated with it and is meant to help guide creditors in their voting on the plan. A hearing on the disclosure statement is expected in June.

Kodak sought protection from creditors in January 2012 after it failed to embrace modern technology and became one of the biggest corporate casualties of the digital age. The company said it had $6.75 billion of liabilities when it entered Chapter 11 reorganization.

Kodak's bankruptcy exit plan comes a day after it clinched a key deal to sell its personalized imaging and document imaging businesses to its UK pension fund for $650 million. The pension fund also agreed to give up a $2.8 billion claim against Kodak, resolving the biggest unsecured claim in the bankruptcy.

Rochester, New York-based Kodak launched its first camera in 1888 and grew to dominate the market for photographic film. Although Kodak invented the digital camera, it put the project on the back-burner and spent years watching rivals stake a claim to the market while physical film sales plummeted.

The company hopes to put all that behind it once it exits bankruptcy and focuses on selling printing equipment and services to businesses. It said on Tuesday that it expects its earnings before interest, tax, depreciation and amortization to increase to $494 million in 2017 from an estimated $167 million this year.

It expects revenue to climb from an expected $2.5 billion this year to $3.2 billion in 2017, although that would still be below the level in 2011, its last full year before it filed for Chapter 11.

Prior to its bankruptcy filing, the company had not had a profitable year since 2007.

Kodak's pink-sheet shares fell 7 percent to 37 cents on Tuesday. Although the stock has risen from 30 cents per share on the day Kodak filed for bankruptcy, the company said shareholders will get nothing and their stock will be canceled when Kodak exits Chapter 11.

The bankruptcy case is In re: Eastman Kodak Co, U.S. Bankruptcy Court, Southern District of New York, No. 12-10202.

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

U.S. electric car maker Coda files for bankruptcy

By Nichola Groom

Wed May 1, 2013 3:16am EDT

May 1 - U.S. green car startup Coda Holdings Inc filed for Chapter 11 bankruptcy protection on Wednesday after selling just 100 of its all-electric sedans, another example of battery-powered vehicles' failure to break into the mass market.

The filing with U.S. Bankruptcy Court in Delaware will allow the Los Angeles company to exit the auto sector and refocus on energy storage, a far less capital-intensive business. The company uses the same technology it used in cars to build systems for utilities and building operators to store power.

A group of lenders led by Fortress Investment Group LLC plan to extend debtor-in-possession financing and will seek to acquire the company for $25 million through the bankruptcy process, Coda said in a statement.

Coda launched its five-passenger electric car in California a year ago, delivering a range of 125 miles (201 km) on a single charge. The $37,250 vehicle was criticized for its no-frills styling, and its short history also included a recall due to faulty airbags.

Consumers have been slow to gravitate toward electric vehicles (EVs) as a result of their high cost, and fears about their driving range.

Just three years ago Coda was one of an emerging crop of California startups including Fisker Automotive and Tesla Motors Inc seeking to build emission-free electric cars to appeal to mass-market consumers.

Investors poured money into the sector, and Coda raised $300 million in equity from backers including Aeris Capital, Limited Brands Chief Executive Les Wexner, and former U.S. Treasury Secretary Henry Paulson. The company, however, in 2012 withdrew its request for $334 million in federal loans like the ones Fisker and Tesla received.

As the allure of EVs faded, Coda struggled to secure new private funding. Last year, Coda sought to raise $150 million but clinched just $22 million, according to a filing with the U.S. Securities and Exchange Commission.

Tesla has put thousands of cars on the road, but Fisker is considering a bankruptcy filing. Fisker's lithium-ion battery maker, A123 Systems Inc, filed for bankruptcy late last year.

General Motors and Nissan Motor Co also invested heavily in electric vehicles, but sales have lagged hopes.

Coda has about 40 active employees and expects to recall 50 furloughed workers. Emerald Capital Advisors is advising Coda on its restructuring, and Houlihan Lokey is its investment banker.

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

UniCredit Tier 2 buoys bank capital revival

Fri Apr 26, 2013 8:37am EDT

* UniCredit Reg S Tier 2 hailed as watershed moment

* Regulatory clarity to drive banks into sub market

* BBVA goes a step further with first Additional Tier 1

By Aimee Donnellan

LONDON, April 26 (IFR) - UniCredit's well-received subordinated bond has delivered a vital shot of confidence to the market, and could be the push that peripheral banks need to finally pull the trigger on capital deals that have been waiting in the wings for months.

The Italian borrower's USD750m 10-year non-call five-year, which priced on Wednesday with a 6.375% yield, had been in the works since February. It coincided with a strong peripheral rally over the past week that helped secure an order book in excess of USD3bn.

"Every bank in Europe is looking at raising capital this year, and the success of a deal from UniCredit, with a callable structure, will certainly inspire others," said Antoine Loudenot, head of capital structuring at Societe Generale.

The new Tier 2 bond, led by BNP Paribas, Citi and UniCredit, is trading marginally tighter in the secondary market on Friday, quoted at 549bp over mid-swaps from its plus 551bp equivalent pricing level.

On the back of the deal's success, BBVA went a step further on Friday with the announcement of an even more ground-breaking structure. It is planning to sell an Additional Tier 1 security which complies with the region's new Capital Requirements Regulation (CRR) - the first deal of its kind to be marketed.

The perpetual Reg S bond will have a 7% Common Equity Tier 1 conversion trigger and will be marketed next week in Asia, the UK and Switzerland by joint bookrunners BBVA, Bank of America Merrill Lynch, Goldman Sachs and UBS.

UniCredit said AT1 is also on its radar.

"Everyone is looking at Additional Tier 1 because they know they have to fill the 1.5% bucket, so we certainly won't be the first out in this space," said Waleed El-Amir, senior vice-president of UniCredit's strategic funding and investments business.

CAPITAL RACE COMMENCES

The majority of European banks have so far abstained from issuing Tier 2 capital this year, with only Standard Chartered and Nationwide braving the market to sell a combined EUR2.75bn-equivalent in January and March.

But that all looks set to change with the European Parliament's adoption of CRD IV last week, offering clarity to banks that were unsure about how Tier 2 instruments would be treated in a recovery situation.

BBVA, Santander and Intesa have capital levels of between 12% and 13%. Although this meets regulatory requirements, they are trailing behind Nordic and Swiss peers that have increased total capital to at least 18%.

According to Waleed El-Amir, this clarity, as well as a supportive market backdrop, encouraged UniCredit into the market.

"We felt that the implications of CRR had already been laid out with situations like Anglo Irish, SNS and Cyprus that offer a very clear idea of how the resolution regime will be implemented," he said.

"Point of non viability and loss given default look relatively straight forward, so I think it makes sense to issue Tier 2 now."

PERFECT TIMING

The strong market backdrop is setting the perfect tone for capital deals.

Italian 10-year yields fell to 3.93% at one point on Tuesday - the first time they have broken below 4% since September 2010 - after President Giorgio Napolitano gained a second term, reducing the threat of another election.

The upbeat conditions were a key factor in investors' willingness to buy a callable bond, particularly after Intesa Sanpaolo changed the call policy on some of its subordinated bonds last year.

"The callable structure is definitely a harder sell to investors but we thought it was important to show that Italian banks are able to place these kinds of structures with investors," said El-Amir.

"We think it has given a massive boost to the bank capital sector."

Although UniCredit is known to have met the 9% Core Tier 1 ratio as stated in the EBA's December 2011 recommendations, market observers were still pleasantly surprised by its success.

"This was an excellent deal with the right price that has clearly proved attractive to a lot of investors that are desperate for yield," said a syndicate banker.

"The issuer clearly made the most of a supportive market and regulatory backdrop." (Reporting by Aimee Donnellan; Editing by Natalie Harrison, Philip Wright, Julian Baker)

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More