Sunday, April 18, 2010
Wednesday, May 20, 2009
Banks expect fee bonanza from stock sales spree
(Reuters) - JPMorgan Chase & Co and Morgan Stanley are emerging as the top beneficiaries of the biggest boom in U.S. secondary offering activity, stoked by banks' rush to sell stock after government "stress tests."
May saw the biggest ever U.S. follow-on activity, based on proceeds, with $39.2 billion so far this month across all industries, based on Thomson Reuters data. The second largest was in October last year with $26.1 billion.
Banks collected $1 billion of fees from underwriting U.S. equity issues in the first two weeks of May alone, compared with $1.2 billion for the entire first four months of the year, according to the data.
"Obviously this is going to be one of the best quarters in history because of the amount of capital raises in the past 10 to 12 days," said Richard Bove, an analyst at Rochdale Securities.
JPMorgan came in as the top bookrunner to U.S. equity and equity-related offerings for the year-to-date period with $326.8 million in fees from 74 issues, the data showed, and stayed on top even as the pace of offerings sped up in the first two weeks of May.
Morgan Stanley followed with $291.7 million from 55 equity issuances, Bank of America Corp with $261.4 million from 66 issues and Goldman Sachs Group Inc with $220.5 million with 39 issues.
Proceeds from U.S. secondary share sales have totaled $67.84 billion so far this year, compared with $47.47 billion for the same period a year earlier.
"If this is the biggest month in the history of the industry in capital raises, then the profits that Morgan (Stanley), Goldman, JPMorgan, Citigroup, Bank of America and to a lesser extent Wells Fargo makes from this business is simply going to be mind-blowing," Bove said.
U.S. banks are driving the issuance, with many being forced by the U.S. government to raise equity capital following stress tests by regulators to see how they would cope with a worsening economy, including a further surge in the jobless rate and further declines in home prices.
Of the 19 U.S. banks to undergo stress tests, 10 were told to raise a combined $74.6 billion.
Treasury Secretary Timothy Geithner told the Senate Banking Committee the 19 banks have raised or set plans to raise more than $56 billion, including $34 billion of equity capital.
Earlier this month Wells Fargo & Co sold $8.6 billion of stock, while Morgan Stanley sold $4.6 billion.
Bank of America topped them all, issuing $13.5 billion through a share sale in a series of transactions, culminating in an offering that raised more than $8 billion on Tuesday.
JPMorgan benefited from acting as joint bookrunner with Wachovia Securities for Wells Fargo's offering. JPMorgan is arranging the offerings for Regions Financial Corp and BB&T Corp, among others.
Goldman and Morgan Stanley have also been major beneficiaries of the surge, having underwritten or agreed to underwrite $1 billion or larger stock offerings by financial companies such as State Street Corp, U.S. Bancorp and Bank of New York Mellon Corp and nonfinancial companies like automaker Ford Motor Co.
Read more here
May saw the biggest ever U.S. follow-on activity, based on proceeds, with $39.2 billion so far this month across all industries, based on Thomson Reuters data. The second largest was in October last year with $26.1 billion.
Banks collected $1 billion of fees from underwriting U.S. equity issues in the first two weeks of May alone, compared with $1.2 billion for the entire first four months of the year, according to the data.
"Obviously this is going to be one of the best quarters in history because of the amount of capital raises in the past 10 to 12 days," said Richard Bove, an analyst at Rochdale Securities.
JPMorgan came in as the top bookrunner to U.S. equity and equity-related offerings for the year-to-date period with $326.8 million in fees from 74 issues, the data showed, and stayed on top even as the pace of offerings sped up in the first two weeks of May.
Morgan Stanley followed with $291.7 million from 55 equity issuances, Bank of America Corp with $261.4 million from 66 issues and Goldman Sachs Group Inc with $220.5 million with 39 issues.
Proceeds from U.S. secondary share sales have totaled $67.84 billion so far this year, compared with $47.47 billion for the same period a year earlier.
"If this is the biggest month in the history of the industry in capital raises, then the profits that Morgan (Stanley), Goldman, JPMorgan, Citigroup, Bank of America and to a lesser extent Wells Fargo makes from this business is simply going to be mind-blowing," Bove said.
U.S. banks are driving the issuance, with many being forced by the U.S. government to raise equity capital following stress tests by regulators to see how they would cope with a worsening economy, including a further surge in the jobless rate and further declines in home prices.
Of the 19 U.S. banks to undergo stress tests, 10 were told to raise a combined $74.6 billion.
Treasury Secretary Timothy Geithner told the Senate Banking Committee the 19 banks have raised or set plans to raise more than $56 billion, including $34 billion of equity capital.
Earlier this month Wells Fargo & Co sold $8.6 billion of stock, while Morgan Stanley sold $4.6 billion.
Bank of America topped them all, issuing $13.5 billion through a share sale in a series of transactions, culminating in an offering that raised more than $8 billion on Tuesday.
JPMorgan benefited from acting as joint bookrunner with Wachovia Securities for Wells Fargo's offering. JPMorgan is arranging the offerings for Regions Financial Corp and BB&T Corp, among others.
Goldman and Morgan Stanley have also been major beneficiaries of the surge, having underwritten or agreed to underwrite $1 billion or larger stock offerings by financial companies such as State Street Corp, U.S. Bancorp and Bank of New York Mellon Corp and nonfinancial companies like automaker Ford Motor Co.
Read more here
Tuesday, May 19, 2009
U.S. Needs More Inflation to Speed Recovery, Say Mankiw, Rogoff
(Bloomberg) -- What the U.S. economy may need is a dose of good old-fashioned inflation.
So say economists including Gregory Mankiw, former White House adviser, and Kenneth Rogoff, who was chief economist at the International Monetary Fund. They argue that a looser rein on inflation would make it easier for debt-strapped consumers and governments to meet their obligations. It might also help the economy by encouraging Americans to spend now rather than later when prices go up.
“I’m advocating 6 percent inflation for at least a couple of years,” says Rogoff, 56, who’s now a professor at Harvard University. “It would ameliorate the debt bomb and help us work through the deleveraging process.”
Such a strategy would be risky. An outlook for higher prices could spook foreign investors and send the dollar careening lower. The challenge would be to prevent inflation from returning to the above-10-percent levels that prevailed in the 1970s and took almost a decade and a recession to cure.
“Anybody who has been a central banker wouldn’t want to see inflation expectations become unhinged,” says Marvin Goodfriend, a former official at the Federal Reserve Bank of Richmond. “The Fed would have to create a recession to get its credibility back,” adds Goodfriend, now a professor at Carnegie Mellon University’s Tepper School of Business in Pittsburgh.
Preventing Deflation
For the moment, the Fed’s focus is on preventing deflation -- a potentially debilitating drop in prices and wages that makes debts harder to repay and encourages the postponement of purchases. The Labor Department reported May 15 that consumer prices were unchanged in April from the previous month and were down 0.7 percent from a year earlier.
“We are currently being very aggressive because we are trying to avoid” deflation, Fed Chairman Ben S. Bernanke told an Atlanta Fed conference on May 11.
The central bank has cut short-term interest rates effectively to zero and engaged in what Bernanke calls “credit easing” to spur lending to consumers, small businesses and homebuyers.
Bernanke, 55, said the risk of deflation was receding and that the Fed was ready to reverse course when needed to maintain stable prices and prevent an outbreak of undesired inflation. The Fed has implicitly defined price stability as annual inflation of 1.5 percent to 2 percent, as measured by a price index based on personal consumption expenditures.
Lifting Prices, Wages
Even after all the Fed has done to stimulate the economy, some economists argue that it needs to do more and deliberately aim for much faster inflation that would also lift wages.
With unemployment at a 25-year high of 8.9 percent, workers are being squeezed. Wages and salaries rose 0.3 percent in the first quarter, the least on record, according to the Labor Department, as companies including Memphis, Tennessee-based based package-delivery company FedEx Corp. and newspaper publisher Gannett Co. of McLean, Virginia slashed pay.
Given the Fed’s inability to cut rates further, Mankiw says the central bank should pledge to produce “significant” inflation. That would put the real, inflation-adjusted interest rate -- the cost of borrowing minus the rate of inflation -- deep into negative territory, even though the nominal rate would still be zero.
If Americans were convinced of the Fed’s commitment, they’d buy and borrow more now, he says.
Mankiw, currently a Harvard professor, declines to put a number on what inflation rate the Fed should shoot for, saying that the central bank has computer models that would be useful for determining that.
Gold Standard
In advocating that the Fed commit itself to generating some inflation, Mankiw, 51, likens such a step to the U.S. decision to abandon the gold standard in 1933, which freed policy makers to fight the Depression.
Faster inflation might be preferable to increased unemployment, or to further budget stimulus packages that push up the national debt, says Mankiw, who was chairman of the Council of Economic Advisors under President George W. Bush.
The White House has forecast that the budget deficit will hit $1.84 trillion this fiscal year, or 12.9 percent of gross domestic product. Rogoff doubts that politicians will be willing to reduce that shortfall by raising taxes as much as needed. Instead, he sees them pressing the Fed to accept faster inflation as a way of easing the burden of reducing the deficit.
Read more here
So say economists including Gregory Mankiw, former White House adviser, and Kenneth Rogoff, who was chief economist at the International Monetary Fund. They argue that a looser rein on inflation would make it easier for debt-strapped consumers and governments to meet their obligations. It might also help the economy by encouraging Americans to spend now rather than later when prices go up.
“I’m advocating 6 percent inflation for at least a couple of years,” says Rogoff, 56, who’s now a professor at Harvard University. “It would ameliorate the debt bomb and help us work through the deleveraging process.”
Such a strategy would be risky. An outlook for higher prices could spook foreign investors and send the dollar careening lower. The challenge would be to prevent inflation from returning to the above-10-percent levels that prevailed in the 1970s and took almost a decade and a recession to cure.
“Anybody who has been a central banker wouldn’t want to see inflation expectations become unhinged,” says Marvin Goodfriend, a former official at the Federal Reserve Bank of Richmond. “The Fed would have to create a recession to get its credibility back,” adds Goodfriend, now a professor at Carnegie Mellon University’s Tepper School of Business in Pittsburgh.
Preventing Deflation
For the moment, the Fed’s focus is on preventing deflation -- a potentially debilitating drop in prices and wages that makes debts harder to repay and encourages the postponement of purchases. The Labor Department reported May 15 that consumer prices were unchanged in April from the previous month and were down 0.7 percent from a year earlier.
“We are currently being very aggressive because we are trying to avoid” deflation, Fed Chairman Ben S. Bernanke told an Atlanta Fed conference on May 11.
The central bank has cut short-term interest rates effectively to zero and engaged in what Bernanke calls “credit easing” to spur lending to consumers, small businesses and homebuyers.
Bernanke, 55, said the risk of deflation was receding and that the Fed was ready to reverse course when needed to maintain stable prices and prevent an outbreak of undesired inflation. The Fed has implicitly defined price stability as annual inflation of 1.5 percent to 2 percent, as measured by a price index based on personal consumption expenditures.
Lifting Prices, Wages
Even after all the Fed has done to stimulate the economy, some economists argue that it needs to do more and deliberately aim for much faster inflation that would also lift wages.
With unemployment at a 25-year high of 8.9 percent, workers are being squeezed. Wages and salaries rose 0.3 percent in the first quarter, the least on record, according to the Labor Department, as companies including Memphis, Tennessee-based based package-delivery company FedEx Corp. and newspaper publisher Gannett Co. of McLean, Virginia slashed pay.
Given the Fed’s inability to cut rates further, Mankiw says the central bank should pledge to produce “significant” inflation. That would put the real, inflation-adjusted interest rate -- the cost of borrowing minus the rate of inflation -- deep into negative territory, even though the nominal rate would still be zero.
If Americans were convinced of the Fed’s commitment, they’d buy and borrow more now, he says.
Mankiw, currently a Harvard professor, declines to put a number on what inflation rate the Fed should shoot for, saying that the central bank has computer models that would be useful for determining that.
Gold Standard
In advocating that the Fed commit itself to generating some inflation, Mankiw, 51, likens such a step to the U.S. decision to abandon the gold standard in 1933, which freed policy makers to fight the Depression.
Faster inflation might be preferable to increased unemployment, or to further budget stimulus packages that push up the national debt, says Mankiw, who was chairman of the Council of Economic Advisors under President George W. Bush.
The White House has forecast that the budget deficit will hit $1.84 trillion this fiscal year, or 12.9 percent of gross domestic product. Rogoff doubts that politicians will be willing to reduce that shortfall by raising taxes as much as needed. Instead, he sees them pressing the Fed to accept faster inflation as a way of easing the burden of reducing the deficit.
Read more here
Sunday, May 17, 2009
Cuomo Treads Where SEC Failed on ‘Pay-to-Play’ Rules
(Bloomberg) -- New York Attorney General Andrew Cuomo raised the stakes in his attack on “pay-to-play” in the public pension-fund market as Carlyle Group agreed to a $20 million settlement that limits campaign contributions to officials who oversee state money.
Carlyle, the world’s second-largest private-equity firm, also agreed yesterday not to use placement agents to solicit investment business from public retirement plans nationwide. It is the first money manager to adopt Cuomo’s new “code of reform” for the municipal-pension market, though it probably won’t be the last, said Elizabeth Nowicki, a professor at Tulane University Law School in New Orleans.
While New York state has already banned the use of placement agents, Cuomo has gone a step further. The code he seeks to have adopted industrywide prohibits money managers from doing business anywhere in the country with a public pension plan for two years after making political donations to officials who can influence the fund’s investment decisions. The U.S. Securities and Exchange Commission proposed similar restrictions in 1999, though it backed off amid opposition from the investment industry and politicians.
“The onus is going to be on the private-equity firms to really market their results,” Nowicki said. “They need to go out and get business the old-fashioned way.”
Under the SEC’s 1999 proposal, investment advisers would have been barred from managing pension money for two years after making a political contribution. The measure also would have required money managers with government clients to keep records of their contributions. SEC Chairman Mary Schapiro said April 21 that the agency is re-evaluating those rules.
No Criminal Charges
Carlyle executives will not be subject to any criminal liability under the settlement, Cuomo said yesterday at a press conference. Founded by David Rubenstein with William Conway and Daniel D’Aniello in 1987, the firm manages about $85.5 billion in assets, second in the private-equity industry to Blackstone Group LP of New York.
Cuomo said yesterday he also is investigating Riverstone Holdings LLC, a New York-based private-equity firm that has a joint venture with Carlyle. Funds managed by Carlyle alone or with Riverstone received about $730 million in investment commitments from the New York fund. Riverstone declined to comment.
“This is a revolutionary agreement,” Cuomo, 51, said. “It ends pay-to-play. It bans the selling of access. It puts the political power brokers out of business.”
The Public Pension Fund Code of Conduct is the latest such rulebook developed by Cuomo’s office, which has also created codes of conduct for the student-loan, Web-access and health- insurance industries.
Cuomo’s Style
“A pattern is emerging where Cuomo gets a major player in an industry to agree to a settlement or a code of conduct and the rest of the industry tends to follow,” said Jacob Zamansky, principal of Zamansky and Associates, a securities law firm in New York. “It appears to be a successful strategy which will continue.”
Asked how soon to expect other settlements in the pension probe, Cuomo said he had brought “a number of criminal and civil cases and we will have more over the coming weeks.”
Cuomo typically also seeks legislation to help bring about reforms. In the case of the student-loan industry, New York passed a law aimed at ending the conflicts of interest. U.S. Congress passed a law modeled on New York’s.
Task Force
Cuomo began to investigate the $122 billion New York State Common Retirement Fund about two years ago. Since then, his probe has expanded beyond New York and a multistate task force was formed. His office and the SEC say they are investigating money managers and their placement agents who used ties to public officials and kickbacks to buy and sell access to the $2 trillion in U.S. public pension systems.
Quadrangle Group LLC and Odyssey Investment Partners are among the firms whose public investment contracts are being investigated by Cuomo and the SEC.
“These problems have existed for quite some time and they didn’t get the attention because the amounts of capital committed to private equity were relatively insignificant,” said David De Weese, a partner with private-equity firm Paul Capital Partners in New York. His firm manages about $7 billion in assets and doesn’t use placement agents.
“Talking directly to investors and building those relationships is a good thing,” he said.
Read more here
Carlyle, the world’s second-largest private-equity firm, also agreed yesterday not to use placement agents to solicit investment business from public retirement plans nationwide. It is the first money manager to adopt Cuomo’s new “code of reform” for the municipal-pension market, though it probably won’t be the last, said Elizabeth Nowicki, a professor at Tulane University Law School in New Orleans.
While New York state has already banned the use of placement agents, Cuomo has gone a step further. The code he seeks to have adopted industrywide prohibits money managers from doing business anywhere in the country with a public pension plan for two years after making political donations to officials who can influence the fund’s investment decisions. The U.S. Securities and Exchange Commission proposed similar restrictions in 1999, though it backed off amid opposition from the investment industry and politicians.
“The onus is going to be on the private-equity firms to really market their results,” Nowicki said. “They need to go out and get business the old-fashioned way.”
Under the SEC’s 1999 proposal, investment advisers would have been barred from managing pension money for two years after making a political contribution. The measure also would have required money managers with government clients to keep records of their contributions. SEC Chairman Mary Schapiro said April 21 that the agency is re-evaluating those rules.
No Criminal Charges
Carlyle executives will not be subject to any criminal liability under the settlement, Cuomo said yesterday at a press conference. Founded by David Rubenstein with William Conway and Daniel D’Aniello in 1987, the firm manages about $85.5 billion in assets, second in the private-equity industry to Blackstone Group LP of New York.
Cuomo said yesterday he also is investigating Riverstone Holdings LLC, a New York-based private-equity firm that has a joint venture with Carlyle. Funds managed by Carlyle alone or with Riverstone received about $730 million in investment commitments from the New York fund. Riverstone declined to comment.
“This is a revolutionary agreement,” Cuomo, 51, said. “It ends pay-to-play. It bans the selling of access. It puts the political power brokers out of business.”
The Public Pension Fund Code of Conduct is the latest such rulebook developed by Cuomo’s office, which has also created codes of conduct for the student-loan, Web-access and health- insurance industries.
Cuomo’s Style
“A pattern is emerging where Cuomo gets a major player in an industry to agree to a settlement or a code of conduct and the rest of the industry tends to follow,” said Jacob Zamansky, principal of Zamansky and Associates, a securities law firm in New York. “It appears to be a successful strategy which will continue.”
Asked how soon to expect other settlements in the pension probe, Cuomo said he had brought “a number of criminal and civil cases and we will have more over the coming weeks.”
Cuomo typically also seeks legislation to help bring about reforms. In the case of the student-loan industry, New York passed a law aimed at ending the conflicts of interest. U.S. Congress passed a law modeled on New York’s.
Task Force
Cuomo began to investigate the $122 billion New York State Common Retirement Fund about two years ago. Since then, his probe has expanded beyond New York and a multistate task force was formed. His office and the SEC say they are investigating money managers and their placement agents who used ties to public officials and kickbacks to buy and sell access to the $2 trillion in U.S. public pension systems.
Quadrangle Group LLC and Odyssey Investment Partners are among the firms whose public investment contracts are being investigated by Cuomo and the SEC.
“These problems have existed for quite some time and they didn’t get the attention because the amounts of capital committed to private equity were relatively insignificant,” said David De Weese, a partner with private-equity firm Paul Capital Partners in New York. His firm manages about $7 billion in assets and doesn’t use placement agents.
“Talking directly to investors and building those relationships is a good thing,” he said.
Read more here
Thursday, May 14, 2009
Kohl's and Nordstrom beat forecasts, raise 2009 views
(Reuters) - Kohl's Corp (KSS.N) and Nordstrom Inc (JWN.N) beat quarterly profit estimates and raised their 2009 earnings views, defying a still precarious environment for department stores in which both well-to-do and budget shoppers are paring back.
Their results, helped by tighter expense controls and leaner inventories, presented investors with a speck of good news about a struggling industry that has endured months of dismal sales amid the recession.
But Kohl's raised forecast was still below Wall Street estimates and its shares closed the regular session down 1.7 percent and held steady in after-hours trading. Nordstrom shares, which gained over 3 percent in regular trading, added another 3 percent after hours.
Despite a 32 percent drop in quarterly net profit, upscale chain Nordstrom cited lower costs, lean inventory and credit card revenue, tempered by increasing bad debt expenses, for its brighter 2009 earnings outlook.
Profit margins improved at Kohl's, a mid-price department store, and the company cited gains in market share as sales rose a meager 0.4 percent.
That outshone Nordstrom's 9.2 percent fall in sales and sharp revenue drops at rivals, all of which have struggled to entice consumers to spend in the face of fear of job losses, home foreclosures and tight access to credit.
Analysts cautioned the retail sector remained in the doldrums.
"It tells us it's tough out there. You'd better be managing your inventory with an iron fist and owning your credit card business has significant risk, perhaps greater risk than people realize," said Stifel Nicolaus analyst Richard Jaffe, who has a "hold" rating on both companies.
Macy's Inc (M.N) posted a 9.5 percent drop in first-quarter sales on Wednesday and stuck to its forecast for sales to fall for the full year.
DISCOUNTERS OUTPERFORM?
When they do spend, consumers have sought deep discounts -- a trend likely to persist and help Kohl's, said Liz Dunn, a Thomas Weisel analyst.
"A more value-conscious consumer is likely to persist for some time, so Kohl's will continue to be well-positioned from that standpoint," Dunn said.
The world's largest retailer, Wal-Mart Stores Inc (WMT.N), whose low prices have attracted shoppers during the economic slump, posted a roughly flat quarterly profit.
Kohl's beat Wall Street estimates by a penny, according to Reuters Estimates. Net profit fell to $137 million, or 45 cents per share, from $153 million, or 49 cents per share, a year earlier.
Better controlled inventory led to less discounted merchandise in stores, the company said.
Read more here
Their results, helped by tighter expense controls and leaner inventories, presented investors with a speck of good news about a struggling industry that has endured months of dismal sales amid the recession.
But Kohl's raised forecast was still below Wall Street estimates and its shares closed the regular session down 1.7 percent and held steady in after-hours trading. Nordstrom shares, which gained over 3 percent in regular trading, added another 3 percent after hours.
Despite a 32 percent drop in quarterly net profit, upscale chain Nordstrom cited lower costs, lean inventory and credit card revenue, tempered by increasing bad debt expenses, for its brighter 2009 earnings outlook.
Profit margins improved at Kohl's, a mid-price department store, and the company cited gains in market share as sales rose a meager 0.4 percent.
That outshone Nordstrom's 9.2 percent fall in sales and sharp revenue drops at rivals, all of which have struggled to entice consumers to spend in the face of fear of job losses, home foreclosures and tight access to credit.
Analysts cautioned the retail sector remained in the doldrums.
"It tells us it's tough out there. You'd better be managing your inventory with an iron fist and owning your credit card business has significant risk, perhaps greater risk than people realize," said Stifel Nicolaus analyst Richard Jaffe, who has a "hold" rating on both companies.
Macy's Inc (M.N) posted a 9.5 percent drop in first-quarter sales on Wednesday and stuck to its forecast for sales to fall for the full year.
DISCOUNTERS OUTPERFORM?
When they do spend, consumers have sought deep discounts -- a trend likely to persist and help Kohl's, said Liz Dunn, a Thomas Weisel analyst.
"A more value-conscious consumer is likely to persist for some time, so Kohl's will continue to be well-positioned from that standpoint," Dunn said.
The world's largest retailer, Wal-Mart Stores Inc (WMT.N), whose low prices have attracted shoppers during the economic slump, posted a roughly flat quarterly profit.
Kohl's beat Wall Street estimates by a penny, according to Reuters Estimates. Net profit fell to $137 million, or 45 cents per share, from $153 million, or 49 cents per share, a year earlier.
Better controlled inventory led to less discounted merchandise in stores, the company said.
Read more here
U.S. trucker YRC to seek $1 billion in bailout funds
(Reuters) - YRC Worldwide Inc (YRCW.O) plans to apply for $1 billion in federal bailout money, the Wall Street Journal reported, citing the trucking company's chief executive William Zollars.
The company wants the funds to help cover the cost of its estimated $2 billion pension obligation over the next four years, the paper cited Zollars as saying.
About half of YRC's contributions to a multi-employer union pension fund cover the costs of retirees who never worked for the company, according to the paper.
Zollars told the paper that by applying to the U.S. Treasury for money under the Troubled Asset Relief Program, he hopes to "get the conversation started" with federal authorities about reducing the company's pension obligations.
YRC will submit an application to the Treasury as early as Friday, Zollars told the paper.
Read more here
The company wants the funds to help cover the cost of its estimated $2 billion pension obligation over the next four years, the paper cited Zollars as saying.
About half of YRC's contributions to a multi-employer union pension fund cover the costs of retirees who never worked for the company, according to the paper.
Zollars told the paper that by applying to the U.S. Treasury for money under the Troubled Asset Relief Program, he hopes to "get the conversation started" with federal authorities about reducing the company's pension obligations.
YRC will submit an application to the Treasury as early as Friday, Zollars told the paper.
Read more here
Wednesday, May 13, 2009
Fiat Said to Study Use of Designs From GM’s Opel for Chrysler
(Bloomberg) -- Fiat SpA may use designs or technology from General Motors Corp.’s Opel in future Chrysler LLC models as part of a global auto alliance, people familiar with the discussions said.
The talks involve folding GM and Fiat’s European and Latin American operations into a new company, said the people, who asked not to be identified because details aren’t public. GM wants 40 percent of the new company, while Turin, Italy-based Fiat’s preference is to give 30 percent, two people said.
Adapting Opel designs for Chrysler vehicles would form a tight link between GM and the Fiat-Chrysler venture, spreading costs among more models to save money. Global sales for GM, Fiat and Chrysler were about 12.4 million in 2008, topping the 8.97 million of Toyota Motor Corp., the world’s largest automaker.
GM needs a partner to run Germany’s Opel, maker of the compact Astra and midsize Insignia sedan, before June 1 to keep the unit from running out of cash. June 1 is also the deadline by which Detroit-based GM may file for bankruptcy in the U.S.
Bids are due next week for Opel, said John F. Smith, GM’s group vice president for product planning. Fiat has been asked to use that schedule for any offer, whether it’s just for Opel assets in Europe, including the Vauxhall brand in the U.K., or other regions, said Smith, who wouldn’t identify other bidders.
Gualberto Ranieri, a Fiat spokesman, declined to comment on talks with GM, the largest U.S. automaker.
Sharing Technology
The possibility of a GM-Fiat-Chrysler connection via Opel stems from GM’s plan to keep a technology-sharing arrangement that includes using designs from the German unit across models such as the Chevrolet Malibu and the new Buick LaCrosse.
GM is trying to cut $1.2 billion in costs and win 3.3 billion euros ($4.5 billion) in European aid to keep Opel operating independently of U.S. operations. Russelsheim, Germany-based Opel began as a manufacturer of sewing machines in 1862 and became a carmaker before GM bought it in 1929.
Fiat, which plans to take a 20 percent stake in bankrupt Chrysler, is studying whether to use Opel designs to help rejuvenate the U.S. automaker after it leaves court protection, the people said. GM assessed sharing car designs during merger talks with Auburn Hills, Michigan-based Chrysler last year, another person said.
Read more here
The talks involve folding GM and Fiat’s European and Latin American operations into a new company, said the people, who asked not to be identified because details aren’t public. GM wants 40 percent of the new company, while Turin, Italy-based Fiat’s preference is to give 30 percent, two people said.
Adapting Opel designs for Chrysler vehicles would form a tight link between GM and the Fiat-Chrysler venture, spreading costs among more models to save money. Global sales for GM, Fiat and Chrysler were about 12.4 million in 2008, topping the 8.97 million of Toyota Motor Corp., the world’s largest automaker.
GM needs a partner to run Germany’s Opel, maker of the compact Astra and midsize Insignia sedan, before June 1 to keep the unit from running out of cash. June 1 is also the deadline by which Detroit-based GM may file for bankruptcy in the U.S.
Bids are due next week for Opel, said John F. Smith, GM’s group vice president for product planning. Fiat has been asked to use that schedule for any offer, whether it’s just for Opel assets in Europe, including the Vauxhall brand in the U.K., or other regions, said Smith, who wouldn’t identify other bidders.
Gualberto Ranieri, a Fiat spokesman, declined to comment on talks with GM, the largest U.S. automaker.
Sharing Technology
The possibility of a GM-Fiat-Chrysler connection via Opel stems from GM’s plan to keep a technology-sharing arrangement that includes using designs from the German unit across models such as the Chevrolet Malibu and the new Buick LaCrosse.
GM is trying to cut $1.2 billion in costs and win 3.3 billion euros ($4.5 billion) in European aid to keep Opel operating independently of U.S. operations. Russelsheim, Germany-based Opel began as a manufacturer of sewing machines in 1862 and became a carmaker before GM bought it in 1929.
Fiat, which plans to take a 20 percent stake in bankrupt Chrysler, is studying whether to use Opel designs to help rejuvenate the U.S. automaker after it leaves court protection, the people said. GM assessed sharing car designs during merger talks with Auburn Hills, Michigan-based Chrysler last year, another person said.
Read more here
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