Tag Archive: gnom


Dewey to consider bankruptcy filing: source

Filed Under: Insurance News
May.19, 2012

By Nick Brown and Nate Raymond | NEWS.GNOM.ES – 

NEW YORK (NEWS.GNOM.ES) – Ailing law firm Dewey & LeBoeuf is considering a bankruptcy filing as new debtholders take a more aggressive track, shifting away from earlier attempts at an out-of-court liquidation, a person familiar with the matter said on Friday.

The majority of Dewey‘s partners have quit as a result of concerns about compensation, and $225 million in bank loans and bond debt.

Buyers of distressed debt who have acquired Dewey’s debt at a discount on the secondary market are more open to seeing the firm wound down in bankruptcy court rather than out of it, said the person, who requested anonymity because the information was not public.

With the emergence of new creditors, Dewey on Tuesday replaced restructuring adviser Development Specialists Inc. (DSI) with competitor Zolfo Cooper. Joff Mitchell, a senior managing director at Zolfo, is now Dewey’s chief restructuring officer, two people familiar with the situation said.

Bill Brandt, chief executive of DSI, confirmed that his firm’s involvement in the matter was coming to an end.

“Our firm is transitioning out,” Brandt said. “We’ve been replaced by Zolfo at the insistence of the debt holders. It now becomes a creditor-driven case.”

A bankruptcy filing is not certain, and the timing of any potential filing remains unclear. The firm has been consulting with restructuring lawyers since April at the latest, and has retained bankruptcy attorney Albert Togut of law firm Togut Segal & Segal.

Neither Stephen Horvath III, Dewey’s executive partner, nor Janis Meyer, its general counsel, responded to requests for comment. Mitchell and a spokesperson for Zolfo also did not respond to requests for comment.

Togut did not respond to a request for comment on Friday.

A spokesman for the firm’s primary bank lender, JPMorgan Chase & Co, declined to comment late on Friday.

Once one of the largest law firms in the United States, Dewey & LeBoeuf has lost all but a handful of the 300 partners with which it opened 2012. It has laid off 433 of 533 employees in New York, according to the New York State Labor Department.

Dewey’s debtholders have been selling their stakes during the firm’s downfall. As of May 3, bankruptcy analyst Kevin Starke of CRT Capital Group said Dewey’s $150 million in notes privately placed following a 2010 bond offering were trading at between 45 cents and 55 cents on the dollar on the secondary market.

The shift toward a possible bankruptcy filing would be a major change in direction. As recently as March 12, Martin Bienenstock, formerly a top bankruptcy partner at Dewey and an outgoing member of the firm’s office of the chairman, told the Wall Street Journal that the firm had “no plan to file a Chapter 11 bankruptcy.”

“We’ve had a completely non-adversarial relationship with our lenders, and right now the cash we’re using is the lender’s collateral,” he said at the time.

Bienenstock did not respond to a request for comment late on Friday. He was one of four members of Dewey’s top management team, the office of the chairman, to decamp to other firms in recent days, joining Proskauer Rose. The last member of that office, Washington, D.C., lobbyist L. Charles Landgraf, said he had joined Arnold & Porter on Wednesday.

Lawsuits are mounting against Dewey. The U.S. Pension Benefit Guaranty Corporation sued the firm Monday in Manhattan federal district court in order to take control of three of the firm’s pension plans, which the agency said were underfunded by $80 million.

Bankruptcies are often driven by creditors. On Wednesday, Annette Jarvis of Dorsey & Whitney, a bankruptcy lawyer who represents a group of 51 retired pension partners at Dewey predecessor LeBoeuf Lamb Greene & MacRae, said that in her view the firm “has to be put into a bankruptcy.”

Jarvis did not respond to a request for comment on Friday.

(Reporting By Nate Raymond and Nick Brown; Editing by Daniel Magnowski)

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Manulife, Metlife submit bids for ING Asia sale: sources

Filed Under: Insurance News
May.19, 2012

By Denny Thomas | NEWS.GNOM.ES – 

HONG KONG (NEWS.GNOM.ES) – Manulife Financial Corp and Metlife are among the companies that have submitted first round bids for ING‘s entire Asia life insurance business, sources said on Saturday, in what could be the largest Asia M&A insurance deal ever.

ING’s long awaited sale of Asian life insurance and the asset management units will help the Dutch bancassurer to partly repay the 3 billion euros ($3.81 billion) of state aid plus the 50 percent premium it still owes the Dutch government.

The bids were submitted late on Friday and the indicative offers ranged between 6-7 billion euros ($7.6-$8.9 billion), according to one source with knowledge of the matter. Of the eight to 10 companies that sent offers, a shortlist will emerge by the end of May, the source said, adding that five bidders expressed interest for the whole Asia division while the rest sought parts of the business.

Still, some suitors have developed cold feet, as demonstrated by Samsung Life Insurance’s decision on Thursday to pull out of the race at the last minute. South Korea‘s Kyobo Life has also dropped out, and it was also unclear whether Prudential Financial Corp

took part in the first round.

Prudential Financial was seen as one of the strongest contenders to buy the whole Asian unit, and its absence from the process could be a setback to competitive dynamics of the auction, sources said.

A sale topping $7 billion would rank as Asia’s top insurance M&A deal and add to a flurry of financial institutions deals being launched in Asia this year.

After receiving a government bailout in 2008, ING has sold 15.2 billion euros worth of assets across the world. The Asian sales would figure among the top two deals from ING’s stable.

Asian insurer AIA Group Ltd and Korea’s KB Financial Group also submitted first round bids, sources said. Korea Life Insurance Co , Canada’s Sun Life Financial Inc , and Switzerland’s Zurich Insurance Group , were also expected to submit offers.

U.S. private equity fund J.C. Flowers & Co, TPG and Carlyle Group are among the buyout shops that have expressed interest, though they are expected to team up with a bidder to buy the Japanese business rather than bid on their own, sources said.

The sources declined to be identified because details of the auction process remain confidential. ING declined to comment.

Companies mentioned in this report either could not be reached for comment, or declined to comment.

As part of the Asian divestment, ING received about 10 initial bids for its Asian asset management business this week. The asset management business, expected to fetch between $500 million and $600 million, is being sold separately.

ING had sent out more than a dozen information memorandums for its insurance business, which spans southeast Asia and includes operations in Japan and South Korea. A winning bid by a larger insurer could introduce more competition into Asia’s rapidly growing life insurance market, currently dominated by AIA Group Ltd and British insurer Prudential plc

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RARE ASSET

ING’s Asian operations offer a platform for insurers keen to expand their Asian footprint and tap into the region’s rapid premium growth. Life insurance premiums in emerging Asia are forecast to grow at 9.5 percent this year and 8.7 percent next year, nearly three times the world average, according to Swiss Re estimates.

“This is a once-in-a-lifetime opportunity which many CEOs will find hard to let go,” said one banker who is advising a potential buyer.

ING CEO Jan Hommen said last week that the Asian divestments would probably fetch less than 8 billion euros ($10.2 billion).

A deal would need to surpass $7.06 billion to become Asia’s biggest insurance deal and overtake Australian fund manager AMP’s 2011 purchase of AXA’s Australian unit, Thomson NEWS.GNOM.ES data shows.

Most buyers are likely to place aggressive bids in the first round in order to advance to the second round. But the deal has its own challenges and not all bidders are keen to lay their hands on the entire Asian pie.

Potential buyers are most wary of ING’s Japan insurance business due to uncertainty over liabilities arising from variable annuity products on its books there.

ING’s Southeast Asian operations are the most sought after, sources said. ING has indicated that it prefers bids for the whole Asian business, though it is allowing offers for three geographic regions: Southeast Asia, South Korea and Japan.

ING has prohibited bidders from forming consortiums in the first round though those who move into the second round could join hands and break up the asset.

ING’s decision to invite bids for geographic portions as well as its entire Asia operations is designed to enhance bid competition and maximise sale value, sources said.

ING plans to hold management presentations for the shortlisted bidder by mid-June sources added.

The sources were not authorized to speak to the media.

All companies mentioned in this report either declined to comment or could not be reached for comment.

BANKERS’ PAY DAY

ING operates across seven Asian centres. Profits from its Asia-Pacific insurance operations rose 39 percent in the first quarter of 2012 from a year ago to 218 million euros ($282.2 million), according to the latest company filings.

South Korea and Japan accounted for 77 percent of the profits while Malaysia accounted for 10 percent. Japan accounted for about 45 percent of Asia-Pacific’s underlying profit before tax, followed by South Korea and Malaysia.

For investment banks starved of IPOs and M&A deals, ING’s Asian divestment could provide a much needed boost. Bankers and lawyers stand to earn about $100 million in fees if the deal is completed, some sources said.

By winning the sell-side mandate, Goldman Sachs and J.P. Morgan are best-placed to earn a slice of the fee pool. Their final payout will hinge on the structure of the deal and the final price among other factors.

Freeman & Co estimates banks could make $60 million to $70 million in advisory fees, excluding financing, hedging and other revenue streams. The calculation does not include lawyers’ fees.

The M&A advisory fees will be the most significant but there could be additional money made on forex and interest hedging given the cross-border nature of the transaction.

($1 = 0.7869 euros)

(Additional reporting by Clare Baldwin and Miyoung Kim; Editing by Mark Bendeich, Michael Flaherty and Daniel Magnowski)

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RBC, Credit Suisse eyes BofA’s non-U.S. wealth arm: sources

Filed Under: Insurance News
May.17, 2012

NEWS.GNOM.ES – 

SINGAPORE/HONG KONG (NEWS.GNOM.ES) – Royal Bank of Canada and Credit Suisse are among the suitors seeking to bid for the non-U.S. wealth management businesses of Bank of America Merrill Lynch , sources told NEWS.GNOM.ES, in a deal that could be worth around $2 billion.

Swiss bank Julius Baer is also looking to bid for part of the BofA wealth businesses on sale, the sources said. NEWS.GNOM.ES reported last month that BofA put its non-U.S. wealth division up for sale, a deal that includes units in Asia excluding Japan, Europe and the Middle East and Latin America.

The auction is another case of consolidation in the wealth management industry and comes as BofA is trying to re-focus the bank after its plunge in value following the financial crisis.

Bank of America, which sources say has received non-binding bids for the units, is selling the wealth division because it is too small and has failed to produce significant profits. The non-U.S. business manages about $90 billion of an estimated $2 trillion that the BofA wealth division oversees globally.

The BofA auction is the biggest deal in the wealth management industry since ING Group sold off its private banking assets in Europe and Asia in 2010 for about $1.9 billion.

Some earlier estimates had put the BofA deal value at as much as $3 billion, though sources said this week that a $1.5 billion-$2 billion price tag may be more realistic.

The first round bids closed earlier this month and Bank of America is in the process of notifying the shortlisted bidders, one of the sources said.

The sources declined to be identified because the bidding process is not public. Spokespeople for Julius Baer, Credit Suisse and Royal Bank of Canada declined to comment.

Bank of America also declined comment.

(Reporting by Saeed Azhar in SINGAPORE, Denny Thomas in HONG KONG; Additional reporting by Katharina Bart in ZURICH, John O’Callaghan in SINGAPORE and Cameron French in TORONTO; Editing by Michael Flaherty and Jeremy Laurence)

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Global shares recover a bit, though fear on Greece remains

Filed Under: Insurance News
May.17, 2012

By Chikako Mogi | NEWS.GNOM.ES – 

TOKYO (NEWS.GNOM.ES) – Asian shares on Thursday recovered a bit of the ground lost in the previous day’s sell-off, but investors found no reason to bet on risk amid deepening turmoil in Greece and fears of contagion to other stressed euro zone economies.

MSCI’s broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> rose 0.5 percent on short covering, after sliding more than 3 percent – its biggest one-day drop in six months – on Wednesday.

The index hit a new 4-month low on Wednesday, and has shed 9.6 percent since May 2.

Gold and the euro recovered from Wednesday’s lows as a recovery in shares helped improve sentiment slightly.

Bucking the general trend of recovery in Asia-Pacific, Australian shares <.axjo> bucked the general recovery, falling 0.6 percent to a four-month low, with banks easing on more signs of pressure on margins.

Japan’s Nikkei stock average <.n225> was flat. <.t/>

News on Wednesday that some Greek banks face emergency funding needs dealt a further blow to risk sentiment, already beaten down by worries about much slower economic growth in China, a fragile U.S. jobs market and the huge trading loss at JPMorgan Chase & Co, widely perceived to be excellent at risk management.

“May is typically a bear month for markets as players often look to take advantage of the saying, ‘sell in May and go away,’ but all the negative factors compounded to give momentum to sell risk assets indiscriminately,” said Bob Takai, general manager of Sumitomo Corp’s energy division.

“Pressures to shed financial premiums will likely persist for the next two to three quarters,” he said.

The European Central Bank said it has stopped providing liquidity to some Greek banks that have not been successfully recapitalized, highlighting the weak state of the banking sector in the indebted country.

Greece on Wednesday put a senior judge in charge of an emergency government to lead the nation to its second election in just over a month on June 17. The vote will likely determine whether Greece remains in the common currency area.

The head of the World Bank warned on Wednesday that a decision by Greece to leave Europe’s common currency zone would raise big questions about the impact on Spain, Italy and other euro zone countries with big debt loads that are undergoing structural reforms.

ANZ of Australia said in a research note that its baseline scenario was a 70 percent probability of the euro zone staying intact and a 50 percent probability of a policy shift to growth over austerity, giving some support to risk assets and the euro.

It put the chance of a disorderly exit at 4 percent and the likelihood of a total break-up of the euro zone at just 1 percent.

Stress levels eased slightly but remained high in Asian credit markets, with the spread on the iTraxx Asia ex-Japan investment-grade index narrowing 4 basis points to hover just below its widest since mid-January.

The euro added 0.2 percent at $1.2743, off a four-month low of $1.26811 reached on Wednesday, and the Australian dollar, typically linked to risk appetite, also rose 0.2 percent to $0.9936, having hit a five-month low of $0.9870 on Wednesday.

The dollar index <.dxy> measured against key currencies remained near a four-month high reached on Wednesday, as investors favored safe havens.

Uncertainty about Greece’s future in the euro nudged some indicators of money market stress higher on Wednesday, but they were still well below last year’s levels given a banking system awash with central bank cash.

Three month euro/dollar cross currency basis swaps, which show funding stress when investors compete for dollars, widened to minus 54 basis points from around minus 46 bps in early May. It marked minus 167.5 in November when investors feared another credit crunch.

Oil regained ground, with U.S. crude futures up 0.5 percent at $93.24 a barrel, after settling down more than $1 on Wednesday. Brent futures, however, fell 0.3 percent to $109.46 a barrel on Thursday.

Spot gold also recovered from Wednesday’s 4-1/2 month low of $1,527 an ounce to trade up 0.6 percent at $1,547.40 as bargain hunting set in.

Some positive economic news emerged from Japan, the world’s third-largest economy, helping to sooth sentiment.

Japan’s economy bounced back from a year-end lull in the first quarter, powering ahead of other major industrial nations, growing 1.0 percent in the January-March quarter, while growth in the final three months of 2011 was revised to flat from a 0.2 percent contraction, data showed on Thursday.

But overnight, minutes for the Federal Reserve’s April meeting showed several members of the U.S. central bank’s policy-setting committee had indicated that additional monetary policy accommodation could still be necessary given downside risks to a moderately expanding economy.

(Editing by Richard Borsuk)

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Sony, Panasonic in talks to make OLED TVs: sources

Filed Under: Car Insurance, Insurance News, Insurance Tips
May.15, 2012

By Reiji Murai and Mari Saito | NEWS.GNOM.ES – 

TOKYO (NEWS.GNOM.ES) – Sony Corp and Panasonic Corp are in talks to develop the technology to mass produce next-generation OLED televisions, sources close to the matter said on Tuesday, but may already be running to catch up with South Korean rivals in a technology widely seen replacing current LCD TVs.

Samsung Electronics and LG Electronics plan to sell 55-inch OLED televisions, which are as slim as 4 millimetres and consume less power and offer sharper images than liquid crystal display sets, by the year-end.

Sony pioneered the technology with the world’s first OLED TV in 2007, but halted production of the $2,000 screens three years later because of the global downturn. Sony still makes OLED screens costing as much as $26,000 for high-end customers.

Japanese firms that dominated the global TV market in the 1980s and 1990s have been battered by their aggressive Korean rivals, along with weak demand for the TVs they make and a stronger yen that makes their exports more expensive. Sony, Panasonic and Sharp Corp reported a combined net loss of more than $20 billion in the year to end-March.

Those Japanese woes coincide with a battle in the TV market between credit-card-thin organic light emitting diode (OLED) and ultra-high definition sets. Shipments of OLED TVs may grow to 2.1 million sets in 2015 from just 34,000 this year, according to research firm IHS Inc.

Mass producing affordable OLED TV screens – the technology is used on smaller smartphones and tablets – will be key to future growth, and already the Japanese may be late to the game.

“Overseas competitors have gotten a head start in this area and I feel like they’re stepping into this too late,” said Masayuki Otani, chief market analyst at Securities Japan. “There’s no question OLED TVs are going to be the mainstream. The issue is price and size of the displays.”

“Japanese makers haven’t been able to produce OLED TVs that are as large as Samsung’s … I think there’s an element of Japanese pride to this – the fact that Panasonic and Sony will work together to produce OLEDs to beat their Asian rivals. But I do have serious doubts on whether they can catch up,” he said.

Shares in Sony, which makes Bravia TVs, and Panasonic, which sells TVs under the Viera brand, fell sharply on Tuesday – with Sony down as much as 3.3 percent and Panasonic off 4 percent – continuing a slide that has seen both drop to their lowest levels in more than three decades as investors doubt they have the strategy to turn around their loss-making TV businesses.

“Both Sony and Panasonic would not be successful if they were to develop and sell OLED televisions alone. They have no choice but to find a partner,” said Makoto Kikuchi, chief executive officer at Myojo Asset Management. “It (tie-up) is a plus, but their earnings wouldn’t be rosy in the short-term because of this.”

TALKING WITH TAIWAN

As a way to spread development costs, Sony has been in talks with Taiwan’s AU Optronics Corp on a possible tie-up to produce OLED televisions, an industry source said last month.

“I think the (Sony-Panasonic) tie-up is to make sure they can stay ahead of the Korean rivals in terms of technology because Samsung and LG have expanded very quickly and have the capacity ready. AUO is also under financial pressure and a technological bottleneck in OLED,” said H.P. Chang, head of research at Taiwan-based LCD industry research company Witview.

“If Sony and Panasonic need to have a partner to enlarge production scale, AU is likely their only choice,” he added.

Panasonic plans to invest about 30 billion yen in its Himeji plant in western Japan for a test production line of OLED panels, the industry source said, and outgoing Panasonic President Fumio Ohtsubo said last week the company was unlikely to do all necessary investment in OLED panels on its own.

“It’s important to reduce investment risk by finding the best partner,” he told a news conference after releasing full-year results.

The Nikkei business daily reported earlier on Tuesday that Sony and Panasonic were in talks on OLED technology development.

“The content of the report is not announced by Panasonic, said Kyoko Ishii, senior coordinator of global corporate PR for Panasonic. “Panasonic will continue its development and verification of OLED based on the result of research the company has been doing at its laboratories. The timing of the commercialization of OLED has not been decided yet.”

Sony declined comment on Tuesday.

The cost of insuring Sony’s debt against default has more than doubled in the past two months. Five-year credit default swaps have widened by more than 180 basis points to around 340 basis points – meaning it costs upwards of $340,000 a year for five years to insure $10 million of Sony’s debt. Sony has around $5.5 billion of bonds outstanding, Thomson NEWS.GNOM.ES data show.

($1 = 79.8150 Japanese yen)

(Additional reporting by Ayai Tomisawa in TOKYO and Clare Jim in TAIPEI; Writing by Linda Sieg; Editing by Ryan Woo and Ian Geoghegan)

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Analysis: Sharks circle McClendon’s Chesapeake

Filed Under: Car Insurance, Insurance News, Insurance Tips
May.14, 2012

By Anna Driver and Carrick Mollenkamp | NEWS.GNOM.ES – 

HOUSTON/NEW YORK (NEWS.GNOM.ES) – Chesapeake Energy Corp‘s increasing shift from bank loans to costly funding is raising fresh questions about how long the spigot of cash will remain open and whether the company can sell enough assets quickly enough to pay for day-to-day operations.

The company’s problems were brought into sharp focus Monday when CEO Aubrey McClendon, who has a reputation for scrambling to close financing deals, told skeptical stock and bond holders how his company will use a loan from Jefferies & Co. and Goldman Sachs to pay down a $4 billion loan commitment from banks.

While McClendon expressed confidence Chesapeake can find buyers for assets, the $3 billion loan announced on Friday evening was a sign that potential bidders were taking advantage of the company’s weakening liquidity and offering low-ball bids for assets.

“The way I look at is, I know they have some desirable assets,” Phil Weiss, analyst at Argus Research, said. “At some point, doesn’t the buyer on the other side of the table say ‘this company is in trouble, I’m going to hold out for better?’”

The company’s shares fell nearly 14 percent on Friday after Chesapeake said in a quarterly filing it would delay or cancel a production deal on oil-rich acreage in South Texas, a transaction that would have brought in $1 billion for the cash-starved company.

Seeking to reassure investors, the Oklahoma City, Oklahoma company said on Monday it is on track to close deals that will bring up to $11.5 billion this year, funds that are essential to closing a gap of around $9 billion. Shares closed up nearly 5 percent on Monday, but are down over 30 percent for the year.

While the loan provides some short-term relief, worries remain. Bond investors are nervous not only about future asset sales, which are effectively required by the new loan, but also about other new loans that may become secured ahead of the bonds, according to Alexander Diaz-Matos of New York credit-research firm Covenant Review LLC.

“I see this term loan today and I worry what is the next step,” said Diaz-Matos, a lawyer and expert in bond covenants. “The loan has a blanket protection against future secured debt,” Diaz-Matos said, noting that is the “top-line concern” for bond investors, “who don’t have meaningful protection against secured loans.”

“After reviewing Friday’s 10-Q, we believe the company’s financial footing has further deteriorated,” Sterne Agee analyst Tim Rezvan told his clients on Monday, noting the 5-year loan’s pricey 8.75 percent interest rate signaled desperation for cash.

Trading in Chesapeake debt securities was active with bonds maturing in 2020 being quoted around 91.50 cents and 92.50 cents on the dollar. On Friday, those bonds closed at 93.50 cents on the dollar, but not before starting the day around 97 cents on the dollar.

Investors increasingly are betting that Chesapeake’s stock will fall. Those investors, known as short sellers, seek to profit when they borrow shares and then sell them in the hope of buying them back at a lower price for a profit.

The percentage of shares outstanding on loan, which indicates the shares are being loaned to short sellers, has risen to 12.5 percent of shares outstanding from 3.3 percent at the beginning of the year, according to Markit Group.

Another indicator is the cost of insuring Chesapeake’s debt against potential default, which rose to its highest level in more than a year. Five-year credit default swaps widened by 52 basis points to about 804 basis points. That means it costs $804,000 a year for five years to insure $10 million of debt.

CDS prices have climbed more than 45 percent in the past 50 days, signaling sharply rising concerns about the company’s ability to service its debt.

Still, some noted McClendon’s past fund-raising prowess. “About the only thing you can say about Aubrey is he really knows how to raise money,” Mike Breard, oil analyst with Hodges Capital in Dallas, said.

TAPPED OUT?

Chesapeake’s recent misfortunes, which include NEWS.GNOM.ES’ revelation that McClendon has arranged to borrow more than $1 billion against well interests granted to him as a company perk and resulting regulatory probes, may give buyers an upper hand, analysts and investment bankers said.

The company’s major asset currently on the market is its 1.5 million acres of lease holdings in the oil-rich Permian basin, which has become one of the hottest exploration regions in North America in recent years.

It has also said it plans to find a joint venture partner in another liquids-rich region, the Mississippi Lime basin. It said it expects to close both deals in the third quarter.

“All of the divestitures are at risk,” said one investment banker who spoke on the condition of anonymity. “They’re all challenged. If you’re a buyer and you smell blood would you give full value?”

McClendon said in a conference call on Monday that the company opened its data room for the Permian basin acreage last week, and three possible buyers have already looked at the information. He said more than 10 companies have expressed interest in the assets.

Acreage in the Permian basin has become highly sought after in recent years, with deals bringing in as much as $17,000 an acre (0.4 hectare) for assets believed to be particularly oil heavy.

While Chesapeake has one of the largest land positions in the basin, bankers said some buyers were worried that the company’s lease holdings in the region are too gas heavy and spread out to fetch premium prices.

Chesapeake is hoping to bring in around $5 billion from the sale, according to two investment bankers working in the industry. But bankers said the company may have trouble reaching that number.

“It’s the most attractive asset on the face of it, and people are looking at it and saying, ‘We’re not sure how good it is, we’re not sure if we’re really interested,’” another banker said. “It will be a reasonable process. This is a core area for a lot of people. But if I were a buyer I’d be looking at it and saying this is a seller who needs to sell.”

Companies have not yet submitted bids for the assets. Still, given the price tag and that buyers may have to invest new capital in the properties to keep developing them, bids are likely to come from only large oil and gas companies, like Occidental Petroleum, Apache Corp and Marathon Oil.

Chesapeake has about 2 million acres in the Mississippi Line, a formation in northern Oklahoma and Kansas that contains natural gas and oil.

One challenge facing Chesapeake’s Mississippi Lime JV has been that some of its previous partnerships — especially in so-called dry gas regions — have turned sour.

For instance, Chesapeake signed a deal to sell 25 percent of its Fayetteville shale acreage to BP Plc in 2008. While Chesapeake later sold out of its side in the partnership, BP took a $393 million write down on the value of the assets in 2011.

“It’s been a pretty unsuccessful adventure for guys,” one investment banker said. “It accrues more value for Chesapeake than for its partners, so a lot of guys are reluctant to go into a JV with him.”

(Additional reporting by Michael Erman; Editing by Patricia Kranz and Leslie Gevirtz)

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Drop in jobless claims eases labor market fears

Filed Under: Insurance News
May.11, 2012

By Lucia Mutikani | NEWS.GNOM.ES – 

WASHINGTON (NEWS.GNOM.ES) – The number of Americans submitting new applications for jobless benefits edged down last week, easing concerns the labor market was deteriorating after surprisingly weak employment growth in April.

Another report on Thursday showed the U.S. trade deficit widened in March, with exports surging to a record high and a rise in imports highlighting the economy’s firming underlying demand.

Together, the reports indicated the economy remains on a moderate growth path, despite the softer jobs growth and signs the service sector slowed in April.

“The slowdown we have seen in economic activity and employment growth during in the past two months may be in the rear view mirror,” said Millan Mulraine, senior macro strategist at TD Securities in New York.

New claims for state unemployment benefits slipped 1,000 last week to a seasonally adjusted 367,000, the Labor Department said. Economists who had expected claims to rise to 369,000 said the decline suggested seasonal distortions that had led to a spike in applications last month was probably over.

The four-week moving average for new claims, considered a better measure of labor market trends, fell 5,250 to 379,000.

Separately, the trade gap widened 14.1 percent to $51.8 billion in March, the biggest jump in nearly a year, as a surge in imports swamped a rise in exports, which hit a record high.

Imports grew 5.2 percent, the biggest gain since January. That jump was consistent with a rise in consumer spending seen during the first quarter.

Exports had another good month, rising 2.9 percent, suggesting the global economy had not slowed as much as people had feared.

“With imports for everything surging, it is hard to argue that the economy is softening,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

While a widening trade deficit is a drag on gross domestic product, the details of the trade report were broadly in line with the government’s assumptions when it made its first GDP estimate last month.

Still, the government’s gauge of first-quarter GDP growth is expected to be lowered to an annual pace of about 1.9 percent from 2.2 percent because of a smaller-than-expected rise in wholesale inventories in March reported on Wednesday.

LABOR MARKET IMPROVING

The claims data and bargain-hunting after a weak stretch lifted U.S. stocks. Treasury debt prices fell, losing some of their safe-haven appeal. The dollar was little changed against a basket of currencies.

Following on the heels of April’s sluggish employment gains, the claims data calmed fears the labor market was stagnating. Companies added a meager 115,000 new jobs to their payrolls in April, the fewest in six months, the government said on Friday.

Most economists have viewed the pull-back in job creation as payback for stronger activity during the unusually warm winter and believe the underlying pace of payrolls growth is around 175,000 a month – its average for the past three months.

Scott Brown, chief economist at Raymond James in St. Petersburg, Florida, said the jobless claims figures had “simmered down after the noises we had earlier.”

“This shows we have moderate job growth. They’re consistent with monthly job payroll growing at 150,000 to 180,000,” he said.

Other data showed no sign of inflation pressures, with retreating crude oil prices pushing down the cost of imported goods in April by the most in 10 months.

That should help to lower the cost of living for many households and support economic growth.

“With external demand, particularly in Europe and oil prices having eased … import price pressures are likely to remain subdued in the coming months,” said Peter Newland, an economist at Barclays in New York.

(Additional reporting by Doug Palmer; Editing by Neil Stempleman and Andrew Hay)

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Dewey & LeBoeuf pension plans seized; faces lawsuit

Filed Under: Insurance News
May.11, 2012

By Nate Raymond | NEWS.GNOM.ES – 

NEW YORK (NEWS.GNOM.ES) – Regulators moved on Thursday to seize control of pension plans at Dewey & LeBoeuf, the latest sign of likely collapse at what was once a top U.S. law firm. Dewey also faced its first lawsuit over plans to fire hundreds of employees.

The Pension Benefit Guaranty Corporation said it would take responsibility for three pension plans covering 1,800 current and future retirees. The plans were underfunded by $80 million, it said.

Angelo Kakolyris, a spokesman for Dewey, declined to comment.

Dewey has been struggling for weeks with partner defections and debt. It has warned employees that it could close its doors and it has said that New York prosecutors are probing allegations of wrongdoing by its former chairman, Steven Davis. Davis has denied wrongdoing.

In its statement, the pensions regulator said it was stepping in to secure its ability “to collect against the firm’s affiliates that share funding responsibility for the pension plans.”

The announcement came the same day an employee sued Dewey for failing to provide adequate notice of layoffs. The firm is firing about 450 people in its New York office effective Friday, according to the lawsuit.

The lawsuit was filed by Vittoria Conn, a worker in Dewey’s document production department, who said the company owes her 60 days of pay because it failed to give adequate notice.

The lawsuit sought class-action status for others laid off by the company. Dewey “terminated approximately 450 employees at its (New York office) on or about May 7, 2012, effective on or about May 11,” the lawsuit said.

The action was brought in federal court in New York under federal and state laws that require employers to give 60 to 90 days’ notice before mass layoffs. Conn said she was notified Monday that her last day would be Friday.

While it was not known how many people Dewey employs in New York, the 450 layoffs would likely be a big chunk of its workforce in the city, and provided an indication of how fast the firm was unraveling. Spokespeople for the firm have declined to say how many employees will lose their jobs.

In 2011, Dewey employed 1,040 lawyers worldwide, according to an annual survey by the National Law Journal, a legal publication. More than 180 of its roughly 300 partners have announced they have left or will leave since the firm’s troubles began. On Wednesday, two of the firm’s top leaders, Jeffrey Kessler and Richard Shutran, said they would leave Dewey & LeBoeuf for other firms.

But it is employees and junior lawyers who face the toughest times in a job market still recovering from the recent U.S. recession, experts said.

“When it comes to associates and non attorney staff, those are the people I really feel for because they’re going to have a much harder time getting work,” said Kent Zimmermann, a legal consultant at the Zeughauser Group.

(Reporting by Nate Raymond; Editing by Richard Pullin)

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Deutsche Telekom U.S. customer exodus slows

Filed Under: Insurance News
May.10, 2012

FRANKFURT (NEWS.GNOM.ES) – Deutsche Telekom

reported better-than-expected quarterly core earnings on Thursday as it lost fewer customers in the United States and signaled a stabilization in its European business.

Deutsche Telekom had been struggling as its U.S. unit T-Mobile USA, which it tried to sell last year, hemorrhaged customers, while the European debt crisis hurt its business in that region.

“This was a very satisfying quarter for us,” Deutsche Telekom Chief Executive Rene Obermann said in a statement.

“We have made significant progress in many areas.”

First-quarter earnings before interest, tax, depreciation and amortization (EBITDA), excluding special items, were flat at 4.48 billion euros ($5.79 billion), at the top of analyst expectations of between 4.32 billion and 4.48 billion.

T-Mobile USA’s operating income rose 7.2 percent to $1.3 billion. It lost 248,000 contract customers, fewer than the 802,000 contract customers it lost in the previous quarter and the 382,000 in the same quarter last year.

The Bonn-based group expects 2012 underlying earnings excluding special items to ease to around 18 billion euros from 18.7 billion last year. The average in a NEWS.GNOM.ES poll is 18.1 billion.

Deutsche Telekom shares were up 3.5 percent by 5 a.m. EDT, outperforming a 0.4 percent stronger sector index <.sxkp> and the German blue chip DAX <.gdaxi>, which gained 0.1 percent.

“Core operating profit came in in-line with expectation,” said analyst Heino Ruland at Ruland Research. “Also it seems T-Mobile-USA did very well.”

Deutsche Telekom signaled a stabilization in its European business, with positive revenue trends in Romania and Greece, but also noted that economic circumstances remained difficult.

That echoed remarks by Telekom Austria AG , which marginally beat market expectations.

UGLY BABY

Net profit dropped 50 percent to 238 million euros, missing a consensus forecast of 502 million euros, due to another impairment for the T-Mobile USA business and losses in the group’s financial activities.

T-Mobile USA was a strong growth engine for Deutsche Telekom in its early days but is a rundown asset now.

Deutsche Telkom tried to sell the U.S. business to AT&T for $39 billion, but fierce regulatory opposition scuppered the deal, leaving Deutsche Telekom with a $6 billion breakup package.

Over the next two years, network investments at T-Mobile USA will increase by about $1.4 billion. Over time, T-Mobile USA will spend a total of $4 billion on upgrading its network for high-speed wireless services based on a technology known as Long Term Evolution (LTE).

On Wednesday, Bloomberg reported T-Mobile USA was discussing a merger with MetroPCS Communications Inc

.

The report sparked analysts at BernsteinResearch to say: “T-Mobile and MetroPCS: Oh my, what an ugly baby.”

A German fund manager, who asked not to be named, said the deal would make sense in terms of spectrum pooling, and the two companies could realize some operating and capital expenditure synergies.

“However, it doesn’t help T-Mobile USA in terms of its contract subscribers losses,” he said.

CEO Obermann on Thursday declined to comment.

Deutsche Telekom shares have lost about 2 percent so far this year, slightly ahead of the STOXX Europe 600 Telecommunications index <.sxkp>, which has lost 4 percent.

Its shares trade at 12.4 times 12-month forward earnings, about 7 percent below its 10-year average, but above peers such as France Telecom and Vodafone Group , which trade at multiples of 8 and 10.5 respectively. ($1 = 0.7733 euros)

(Additional reporting by Myria Mildenberger; Editing by Helen Massy-Beresford)

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Disney earnings rise despite "John Carter" loss

Filed Under: Car Insurance, Insurance News, Insurance Tips
May.09, 2012

By Lisa Richwine and Ronald Grover | NEWS.GNOM.ES – 

LOS ANGELES (NEWS.GNOM.ES) – Walt Disney Co‘s quarterly earnings beat Wall Street expectations as profit rose 21 percent despite a loss from the science fiction film bomb “John Carter.”

Strong attendance at theme parks and higher advertising revenue at cable networks, including sports powerhouse ESPN, helped drive quarterly growth.

The earnings report followed a massive opening weekend for “The Avengers,” a superhero movie that set an industry record with ticket sales of $207.4 million over its first weekend. An “Avengers” movie sequel is in the works, Chief Executive Bob Iger told analysts.

The company’s film studio needed a hit after “Carter,” a $250 million production that dragged the company’s studio unit to an operating loss of $84 million for the fiscal second quarter. Studio chief Rich Ross stepped down April 13 after the film flopped.

Despite the studio loss, Disney posted fiscal second quarter earnings of $1.1 billion and a 6 percent increase in revenue to $9.629 billion.

Adjusted earnings per share rose 18 percent to 58 cents. Analysts on average had expected 55 cents.

As in recent quarters, Disney’s earnings were boosted by its media unit, which includes ESPN and ABC. Operating earnings in that unit increased 13 percent to $1.7 billion in the latest quarter.

Visitors kept filling Disney theme parks, and the Disneyland resort in California set a second-quarter attendance record, Chief Financial Officer Jay Rasulo said. Earnings at the theme park unit rose 53 percent to $222 million.

“You’ve got a parks recovery that’s underway, and you have a cable network business that’s best in class. It showed good growth on the top-line,” said Janney Montgomery Scott analyst Tony Wible, who rates Disney a “buy” with a $49 price target.

At the ABC television network, ad rates rose 6 percent, Rasulo said. In the current quarter, ad pricing is running 20 percent higher than rates it got during the “upfront” selling season last spring, he said.

Looking ahead, Iger said he expected “a very strong upfront marketplace” after the network pitches its new shows to advertisers next week.

The quarterly results do not include the staggering results from “Avengers,” the Marvel superhero movie that has already pulled in $702.2 million around the globe. Since the opening, “Avengers” merchandise has flown off shelves at stores and Disney parks, CEO Bob Iger told analysts. Some products have sold out, and the company is working to meet demand, he said.

“Interest is clearly keen wherever our Marvel characters are touching the public,” he said.

Disney’s ABC News unit and Univision also said on May 7 that they would create an English language cable channel aimed at the booming Hispanic market, a bid to expand its news operation that it struggled for years to find.

Iger said Disney was “excited about the opportunity” to reach the growing Hispanic market. But he said the company made a “relatively modest” investment in the project that will yield a “relatively small” impact on the company’s overall business.

(Reporting By Lisa Richwine; Editing by Bernard Orr)

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