Eastern German savings banks write down LBB stake to 1 euro

BERLIN Sat Dec 7, 2013 5:46am EST

BERLIN Dec 7 (Reuters) - Eastern Germany's savings banks have written down their stake in stricken Landesbank Berlin (LBB) to 1 euro, the head of the association representing them said.

"We have drawn a line under it in the hope that we're through now," OSV President Michael Ermrich told Reuters, adding that he did not expect a dividend from LBB in the next two to three years.

On Friday, sources had told Reuters that Germany's savings banks would have to shoulder as much as 1.2 billion euros ($1.6 billion) in further writedowns on LBB, which is being dismantled into a savings bank and a real estate business.

About 400 German savings banks bought LBB for more than 5.5 billion euros ($7.5 billion) in 2007. They had already booked 2.2 billion in writedowns already in previous years, about 40 percent of the original purchase price.

Germany's landesbanks, which belong to state governments and whose main purpose is to support their regional economies, lost billions of euros on risky investments in the financial crisis. ($1 = 0.7308 euros) ($1 = 0.7308 euros) (Reporting by Klaus Lauer; editing by Jane Baird)

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Group asks Supreme Court to stay US Airways-American merger

WASHINGTON Sat Dec 7, 2013 7:52pm EST

WASHINGTON Dec 7 (Reuters) - A group of consumers and travel agents filed a last-ditch petition on Saturday to the U.S. Supreme Court to stop American Airlines and US Airways from merging, a move they fear would drive air travel prices up and service down and make planes more crowded.

The combination of American's parent, AMR Corp, and US Airways Group would create the world's largest carrier and follow last month's resolution of antitrust objections by the U.S. Department of Justice.

In their appeal to the Supreme Court, plaintiffs led by California resident Carolyn Fjord warned that "irreparable injury" could be caused to the domestic airline industry if the deal goes ahead as planned.

The merger is expected to be consummated before the opening of U.S. securities markets on Monday.

"The question of the legality of the proposed merger ... following on the whirlwind of mammoth mergers in the airline industry in the last five years, is serious enough to warrant a stay of the orders which permit the consummation of the merger, pending an appeal," the plaintiffs said in a 28-page filing.

A federal judge on Friday rejected the previous attempt by the group to stop the merger.

The case is Fjord v. AMR Corp et al, U.S. Supreme Court, No. 11-15463-SHL. The main bankruptcy case is in U.S. Bankruptcy Court, Southern District of New York, re: AMR Corp et al, 11-15463.

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UPDATE 1-Supreme Court justice denies stay in airline merger

Sun Dec 8, 2013 12:15am EST

By Lawrence Hurley

WASHINGTON Dec 7 (Reuters) - A U.S. Supreme Court justice on Saturday night denied a last-ditch effort by a group of consumers and travel agents to stop the merger of American Airlines and US Airways.

The application was denied by Justice Ruth Bader Ginsburg, the court's public information office said.

The combination of American's parent, AMR Corp, and US Airways Group would create the world's largest carrier and follow last month's resolution of antitrust objections by the U.S. Department of Justice.

In their appeal to the Supreme Court, plaintiffs led by California resident Carolyn Fjord warned that "irreparable injury" could be caused to the domestic airline industry if the deal goes ahead as planned. They fear the merger will drive air travel prices up and service down and make planes more crowded.

The merger is expected to be consummated before the opening of U.S. securities markets on Monday.

A federal judge on Friday rejected the previous attempt by the group to stop the merger.

If one high court justice denies a stay request, the same application can be made to another justice but such moves are rarely successful. Usually, if a request is made to a second justice it will be referred to the full court.

The case is Fjord v. AMR Corp et al, U.S. Supreme Court, No. 11-15463-SHL. The main bankruptcy case is in U.S. Bankruptcy Court, Southern District of New York, re: AMR Corp et al, 11-15463.

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Eastern German savings banks write down LBB stake to 1 euro

BERLIN Sat Dec 7, 2013 5:46am EST

BERLIN Dec 7 (Reuters) - Eastern Germany's savings banks have written down their stake in stricken Landesbank Berlin (LBB) to 1 euro, the head of the association representing them said.

"We have drawn a line under it in the hope that we're through now," OSV President Michael Ermrich told Reuters, adding that he did not expect a dividend from LBB in the next two to three years.

On Friday, sources had told Reuters that Germany's savings banks would have to shoulder as much as 1.2 billion euros ($1.6 billion) in further writedowns on LBB, which is being dismantled into a savings bank and a real estate business.

About 400 German savings banks bought LBB for more than 5.5 billion euros ($7.5 billion) in 2007. They had already booked 2.2 billion in writedowns already in previous years, about 40 percent of the original purchase price.

Germany's landesbanks, which belong to state governments and whose main purpose is to support their regional economies, lost billions of euros on risky investments in the financial crisis. ($1 = 0.7308 euros) ($1 = 0.7308 euros) (Reporting by Klaus Lauer; editing by Jane Baird)

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Group asks Supreme Court to stay US Airways-American merger

WASHINGTON Sat Dec 7, 2013 7:52pm EST

WASHINGTON Dec 7 (Reuters) - A group of consumers and travel agents filed a last-ditch petition on Saturday to the U.S. Supreme Court to stop American Airlines and US Airways from merging, a move they fear would drive air travel prices up and service down and make planes more crowded.

The combination of American's parent, AMR Corp, and US Airways Group would create the world's largest carrier and follow last month's resolution of antitrust objections by the U.S. Department of Justice.

In their appeal to the Supreme Court, plaintiffs led by California resident Carolyn Fjord warned that "irreparable injury" could be caused to the domestic airline industry if the deal goes ahead as planned.

The merger is expected to be consummated before the opening of U.S. securities markets on Monday.

"The question of the legality of the proposed merger ... following on the whirlwind of mammoth mergers in the airline industry in the last five years, is serious enough to warrant a stay of the orders which permit the consummation of the merger, pending an appeal," the plaintiffs said in a 28-page filing.

A federal judge on Friday rejected the previous attempt by the group to stop the merger.

The case is Fjord v. AMR Corp et al, U.S. Supreme Court, No. 11-15463-SHL. The main bankruptcy case is in U.S. Bankruptcy Court, Southern District of New York, re: AMR Corp et al, 11-15463.

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UPDATE 1-Supreme Court justice denies stay in airline merger

Sun Dec 8, 2013 12:15am EST

By Lawrence Hurley

WASHINGTON Dec 7 (Reuters) - A U.S. Supreme Court justice on Saturday night denied a last-ditch effort by a group of consumers and travel agents to stop the merger of American Airlines and US Airways.

The application was denied by Justice Ruth Bader Ginsburg, the court's public information office said.

The combination of American's parent, AMR Corp, and US Airways Group would create the world's largest carrier and follow last month's resolution of antitrust objections by the U.S. Department of Justice.

In their appeal to the Supreme Court, plaintiffs led by California resident Carolyn Fjord warned that "irreparable injury" could be caused to the domestic airline industry if the deal goes ahead as planned. They fear the merger will drive air travel prices up and service down and make planes more crowded.

The merger is expected to be consummated before the opening of U.S. securities markets on Monday.

A federal judge on Friday rejected the previous attempt by the group to stop the merger.

If one high court justice denies a stay request, the same application can be made to another justice but such moves are rarely successful. Usually, if a request is made to a second justice it will be referred to the full court.

The case is Fjord v. AMR Corp et al, U.S. Supreme Court, No. 11-15463-SHL. The main bankruptcy case is in U.S. Bankruptcy Court, Southern District of New York, re: AMR Corp et al, 11-15463.

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U.S. court upholds trial plan over defunct Nortel's $7.5 bln cash

By Tom Hals

Fri Dec 6, 2013 4:08pm EST

Dec 6 (Reuters) - The fight over defunct Nortel Networks' $7.5 billion in cash will be decided in joint U.S.-Canadian court hearings and not in arbitration, a U.S. appeals court ruled on Friday.

The U.S. Court of Appeals for the Third Circuit in Philadelphia upheld a bankruptcy court ruling in March that there was never an agreement to use arbitration to divide the pile of cash among various Nortel estates around the world.

Nortel sought protection from creditors in courts around the world in 2009 and its businesses were quickly sold, reducing a once-global corporate giant to little more than a pile of cash. But it was never decided how to allocate the money raised between different insolvency and bankruptcy proceedings in different countries.

An agreement governing the money refers to undefined "dispute resolvers" that Nortel's European estates argued was arbitration. The U.S. Bankruptcy Court in Wilmington, Delaware disagreed, and the Court of Appeals affirmed that ruling.

"In context, the words 'dispute resolver(s)' indicate that the parties allowed themselves latitude to select courts or arbitrators or others to adjudicate the parties' disputes," wrote Judge Julio Fuentes in a 17-page opinion. "To respect that contractual latitude, we reject the idea that the parties must arbitrate disputes over asset allocation."

He was joined by Judges Maryanne Trump Barry and Morton Greenberg.

Derek Adler, an attorney with Hughes Hubbard & Reed in New York, who represents Nortel's European estates, did not immediately respond to a request for comment.

Creditors of Nortel, once a telecoms giant with a $250 billion market value and 93,000 employees, cannot be paid until the estates in Canada, the United States and Europe know how much money they will have to distribute.

Kevin Gross, a bankruptcy judge in Wilmington, and Ontario Superior Court Justice Geoffrey Morawetz in Toronto have scheduled a joint trial for next year to decide the dispute. The two have been holding joint hearings linked by video since Nortel sought creditor protection four years ago.

An administrator for the European estates has said the unusual trial arrangement would lead to "chaos" in part because there is no appeals court that binds both courts.

The European estates also wanted the appeals court to weigh in on whether the joint trial was appropriate, but Fuentes said that challenge should be taken after the trial.

The case is In re Nortel Networks Inc, U.S. Court of Appeals for the Third Circuit, No. 13-2739. The bankruptcy case is In re Nortel Networks Inc, U.S. Bankruptcy Court for the District of Delaware, No. 09-10138.

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Judge approves plan to fix Detroit street lights

DETROIT Fri Dec 6, 2013 4:19pm EST

DETROIT Dec 6 (Reuters) - The U.S. judge managing Detroit's bankruptcy on Friday gave the city the go-ahead to move forward with a financing plan to mend broken street lights.

Judge Steven Rhodes put off a decision on the matter last week after he was made aware of a potential conflict of interest centered around law firm Miller Canfield, which represents Detroit on certain bankruptcy matters as well as the Public Lighting Authority, created by a bill passed by the Michigan Legislature late last year.

The city and the authority did not see the dual representation as a conflict, but the authority said in a brief filed with the court this week that another firm, The Allen Law Group, was its primary legal counsel. Miller Canfield, it said, only represents the lighting authority on bond issues.

Detroit's plan is to use $12.5 million in annual utility tax revenue to back $153 million of bonds that will be issued by the Public Lighting Authority through a Michigan agency to finance improvements to the city's dilapidated public lighting infrastructure.

Kevyn Orr, the city's emergency manager who filed the historic bankruptcy in July, has said one of his top priorities is to improve Detroit city services. About 40 percent of street lights in the city do not work.

The authority also plans to secure a short-term $60 million loan before the bonds are sold.

Some Detroit bond holders, bond insurers, unions and retirees objected to the transaction, arguing that the deal will leave the city with less cash to pay its creditors.

Rhodes on Tuesday formally declared Detroit bankrupt.

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UPDATE 2-Judge rejects consumers' bid to block American-US Airways merger

Fri Dec 6, 2013 6:47pm EST

By Nate Raymond and Jonathan Stempel

NEW YORK Dec 6 (Reuters) - A federal judge on Friday rejected a last-ditch effort by consumers and travel agents to stop American Airlines and US Airways from merging next week, a move they fear would drive prices up and service down and make planes more crowded.

The combination of American's parent AMR Corp and US Airways Group Inc would create the world's largest carrier and would follow last month's resolution of antitrust objections by the U.S. Department of Justice.

That settlement requires the airlines to shed some landing slots and gates at several airports, including in New York and Washington, D.C., and had won approval on Nov. 27 from U.S. Bankruptcy Judge Sean Lane, who oversees AMR's Chapter 11 case.

AMR has said it hoped to complete the merger on Dec. 9.

"We look forward to closing our merger with US Airways on Monday," American Airlines spokesman Mike Trevino said in a statement.

In their appeal in the U.S. District Court in Manhattan, plaintiffs led by California resident Carolyn Fjord urged that Lane's order be put on hold, saying they would face irreparable harm if the "anticompetitive" merger went forward.

According to a Wednesday court filing, the consumers and travel agents said combining the carriers could result in fewer flights and available seats, higher fares, poorer service and lower competition, and would be hard to undo once completed.

At a Friday hearing, Chief Judge Loretta Preska of the U.S. District Court in Manhattan said the plaintiffs had failed to shown irreparable harm.

"I adopt Judge Lane's rendition of the law in all respects," she said.

Joseph Alioto, a lawyer for the consumers and travel agents, indicated at the hearing he would seek an appeal. But Preska denied Alioto's request to suspend the effect of her ruling pending an appeal.

The case is Fjord v. AMR Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 13-ap-01392. The main bankruptcy case is In re: AMR Corp et al in the same court, No. 11-15463.

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Barclays unearths billions of euro AT1 demand

By Helene Durand

Thu Dec 5, 2013 12:03pm EST

LONDON, Dec 5 (IFR) - Barclays paved the way for other European banks looking to raise Additional Tier 1 in the single currency this week when it priced a heavily oversubscribed EUR1bn perpetual non-call seven-year issue.

Up until now, banks have relied heavily on the US dollar market to raise capital in this format, as it has offered the deepest pool of liquidity and question marks remained around how deep the demand would be in the euro market.

Banco Popular Espanol is the only issuer to have gone to euros, printing a EUR500m perpetual non-call five-year that attracted a book in excess of EUR1.5bn, although the issuer had to rely heavily on hedge funds to get the deal away.

For Barclays, however, the book on the trade reached EUR12bn, laying to rest any doubts about investor demand.

"We are seeing a gradual increase in the acceptance of this asset class across different investor types," said Daniel Fairclough, managing director, UK financial institutions, at Barclays.

"As is inevitable with any new product, this has taken time, but it's pleasing to see strong evidence of European real money involvement."

Fairclough added that being able to offer loss absorption through equity conversion had helped bring European investors to this market.

Barclays was keen to capitalise on the momentum of its USD2bn perpetual non-call five-year Additional Tier 1 trade priced in November.

"The success of the deal justifies our decision to tap into the momentum we had built during the extensive global roadshow completed for the dollar trade," said Steve Penketh, managing director, group treasury at Barclays.

Because it had explained all the various features of the deal for the dollar trade, Barclays was able to undertake the euro deal without having to conduct an extensive roadshow.

Having gone out at mid-to-low 8% area, guidance was refined to 8%-8.125%, for final pricing at 8%.

This was 25bp tighter that the dollar on a coupon basis, although this does not take into account the cross-currency swap and the fact that the dollar had performed very well in the secondary market. However, the call date on the euro transaction is two years later.

The strong performance of the new euro trade led market participants to say that Barclays had been very generous.

"They left a lot on the table and this traded up by three points, which tells you that it was cheap," said a banker.

Another said that while it was clear it was a strategic deal, the rally was substantial. "Having said that, it's a great deal for the market."

Barclays' Penketh said the bank's strategy had helped to support a still-developing and critical asset class for the European banking sector.

"Trying to shave an eighth off here or there on pricing misses the point. In a developing asset class, there is always an element of price discovery. Fair value is the target - the right calibrated balance for issuers and investors. Being too aggressive on pricing risks stifling the asset class before it gets off the ground."

Given that Barclays has said it needs to raise GBP6.6bn in the format, it is not surprising that it wanted to keep the investor base sweet.

This deal fulfils Barclays' objective of raising up to GBP2bn of CRDIV-qualifying Additional Tier 1 securities with a 7% fully loaded Core Equity Tier 1 ratio trigger, announced as part of its leverage plan on July 30 2013. The deal converts into equity if the bank breaches that ratio.

The 7% fully loaded trigger excludes Barclays' GBP7.6bn loss-absorbing cushion of goodwill capital. Just like Barclays' dollar Additional Tier 1 issue, coupons are non-cumulative, deferrable and there are no dividend pushers or stoppers.

The firm estimates that the capital cushion that protects investors from potentially having coupon payments suspended will shrink from GBP15bn in 2016 to GBP7bn in 2019 as higher capital requirements kick in.

This is because the level at which Barclays becomes subject to additional restrictions on making coupon payments will be raised from 7% CET1 to 9%.

Fund managers took 61%, hedge funds 21%, private banks 9%, insurance/pension funds 5%, banks 2% and others 2%.

The UK/Ireland accounted for 49%, the US 13%, Asia 11%, France/Benelux 8%, Switzerland 6%, Southern Europe 6%, the Nordics 5% and Germany/Austria 2%.

Barclays was sole bookrunner, while Bank of America Merrill Lynch, BNP Paribas, Commerzbank, Credit Agricole CIB, Credit Suisse and Morgan Stanley were joint leads. The transaction is rated B+/BB+ by S&P/Fitch.

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