By Glen Carey
Sept. 14 (Bloomberg) -- Etihad Airways, the national carrier of the United Arab Emirates, has ``no firm talks'' planned to partner another carrier after media reports said the airline opened discussions on a merger with BMI of the U.K.
``Etihad Airways, which has a commercial mandate to break even by 2010 and which is the focus within our business, has no firm talks planned with any airline or any proposals in the pipeline with any new possible partner,'' the Abu Dhabi-based airline's spokesman Thomas Clarke said today in an e-mailed statement.
Etihad has opened discussions on a merger with BMI that may value the U.K. airline at as much as 600 million pounds ($1.1 billion), the Sunday Times reported today, citing unidentified people in the Persian Gulf familiar with the situation.
Buying BMI, which owns 11 percent of the take-off and landing slots at Heathrow, would give Etihad the second- strongest position at the London airport, the newspaper said.
To contact the reporter on this story: Glen Carey in Dubai at gcarey8@bloomberg.net.
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Sunday, September 14, 2008
Istithmar Suspends Vice Chairman, CFO Amid Embezzlement Probe
By Glen Carey
Sept. 14 (Bloomberg) -- Istithmar World, the Dubai investment company that manages more than $10 billion, suspended its vice chairman and chief financial officer after Dubai police detained them last month for alleged embezzlement at their previous jobs.
``Istithmar World confirms that Adel Al Shirawi has been suspended from the position of vice chairman of Istithmar World and Feras Kalthoum has been suspended from the position of chief financial officer of Istithmar World,'' the company said today in an e-mailed statement.
Al Shirawi, a national of the United Arab Emirates, is being investigated for alleged embezzlement and mistrust while employed as the chief executive of Tamweel PJSC, the U.A.E.'s biggest mortgage provider, Saleh Hamed, head of Bur Dubai police, said Aug. 14. Kalthoum, who was also detained on embezzlement charges, was Tamweel's former head of investments.
Al Shirawi has also been removed as a board director of Istithmar World, according to the statement.
To contact the reporter on this story: Glen Carey in Dubai at gcarey8@bloomberg.net.
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Sept. 14 (Bloomberg) -- Istithmar World, the Dubai investment company that manages more than $10 billion, suspended its vice chairman and chief financial officer after Dubai police detained them last month for alleged embezzlement at their previous jobs.
``Istithmar World confirms that Adel Al Shirawi has been suspended from the position of vice chairman of Istithmar World and Feras Kalthoum has been suspended from the position of chief financial officer of Istithmar World,'' the company said today in an e-mailed statement.
Al Shirawi, a national of the United Arab Emirates, is being investigated for alleged embezzlement and mistrust while employed as the chief executive of Tamweel PJSC, the U.A.E.'s biggest mortgage provider, Saleh Hamed, head of Bur Dubai police, said Aug. 14. Kalthoum, who was also detained on embezzlement charges, was Tamweel's former head of investments.
Al Shirawi has also been removed as a board director of Istithmar World, according to the statement.
To contact the reporter on this story: Glen Carey in Dubai at gcarey8@bloomberg.net.
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Dubai Group Acquires 20% Stake in Mazaya's Saudi Property Unit
By Ayesha Daya
Sept. 14 (Bloomberg) -- Dubai Group, which manages more than $40 billion on behalf of Dubai's ruler, paid 500 million dirhams ($136 million) for a 20 percent stake in the Saudi Arabian property unit of Al Mazaya Holding Co.
Dubai Group became a founding shareholder of Mazaya Saudi for Commercial Investment Co. after completing the transaction through its unit Dubai Capital Group, the company said today in an e-mailed statement. Mazaya Saudi has a paid up capital of 2.45 billion dirhams.
To contact the reporter on this story: Ayesha Daya in Dubai adaya1@bloomberg.net
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Sept. 14 (Bloomberg) -- Dubai Group, which manages more than $40 billion on behalf of Dubai's ruler, paid 500 million dirhams ($136 million) for a 20 percent stake in the Saudi Arabian property unit of Al Mazaya Holding Co.
Dubai Group became a founding shareholder of Mazaya Saudi for Commercial Investment Co. after completing the transaction through its unit Dubai Capital Group, the company said today in an e-mailed statement. Mazaya Saudi has a paid up capital of 2.45 billion dirhams.
To contact the reporter on this story: Ayesha Daya in Dubai adaya1@bloomberg.net
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Qtel Second-Quarter Net Rises 59% on New Customers
By Haris Anwar and Arif Sharif
Sept. 14 (Bloomberg) -- Qatar Telecom QSC, which provides phone services in 16 countries, said second-quarter profit surged 59 percent as it added customers in Iraq, Oman and Algeria, while performance in its home market was ``solid.''
Net income increased to 654.5 million riyals ($180 million), or 5.95 riyals a share, from 412.1 million riyals, or 3.75 riyals, in the year-earlier period, the company said today in an e-mailed statement. ING Bank NV analysts estimated profit would rise 28 percent in the quarter to 529 million riyals. Revenue surged 78 percent to 4.56 billion riyals.
Phone companies in the Persian Gulf are expanding abroad to boost sales as domestic markets mature and competition grows. Qtel bought 41 percent of PT Indosat, Indonesia's second-biggest mobile phone operator, in June for $1.8 billion.
``The addition of Indosat to the group means that Qtel now has an international consolidated customer base of over 51 million,'' Mohammed Bin Saud Al-Thani, chairman of Qtel, said. ``From the third-quarter onward, Indosat's share of contribution to the group's revenue will be significant.''
Acquisitions
Last year, Qtel agreed to pay $3.72 billion for a 51 percent stake in Kuwait's National Mobile Telecommunications Co. KSC, or Wataniya Telecom. That helped it add operations in Kuwait, Tunisia, Algeria, Saudi Arabia and the Maldives.
From the second-quarter, Qtel added earnings of Iraq's Asia Cell for Communication LLC, of which it owns 30 percent. AsiaCell's Iraq operations contributed 15 percent of its revenue in the first-half.
Qtel said it recorded an EBITDA, or operating profit margin, of 49 percent in the second quarter compared with 50 percent a year earlier. EBITDA is earnings before interest, tax, depreciation and amortization.
Qatar, Qtel's home market, contributed 32 percent of its revenue in the first half and grew 21 percent, with the number of mobile subscribers increasing to 1.4 million, it said.
Qtel shares fell 1.9 percent to 155 riyals on the Doha Securities Market at 10:45 a.m. local time, valuing the company at 22.7 billion riyals. The shares have dropped 20 percent this year.
To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.netArif Sharif in Dubai at asharif2@bloomberg.net
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Sept. 14 (Bloomberg) -- Qatar Telecom QSC, which provides phone services in 16 countries, said second-quarter profit surged 59 percent as it added customers in Iraq, Oman and Algeria, while performance in its home market was ``solid.''
Net income increased to 654.5 million riyals ($180 million), or 5.95 riyals a share, from 412.1 million riyals, or 3.75 riyals, in the year-earlier period, the company said today in an e-mailed statement. ING Bank NV analysts estimated profit would rise 28 percent in the quarter to 529 million riyals. Revenue surged 78 percent to 4.56 billion riyals.
Phone companies in the Persian Gulf are expanding abroad to boost sales as domestic markets mature and competition grows. Qtel bought 41 percent of PT Indosat, Indonesia's second-biggest mobile phone operator, in June for $1.8 billion.
``The addition of Indosat to the group means that Qtel now has an international consolidated customer base of over 51 million,'' Mohammed Bin Saud Al-Thani, chairman of Qtel, said. ``From the third-quarter onward, Indosat's share of contribution to the group's revenue will be significant.''
Acquisitions
Last year, Qtel agreed to pay $3.72 billion for a 51 percent stake in Kuwait's National Mobile Telecommunications Co. KSC, or Wataniya Telecom. That helped it add operations in Kuwait, Tunisia, Algeria, Saudi Arabia and the Maldives.
From the second-quarter, Qtel added earnings of Iraq's Asia Cell for Communication LLC, of which it owns 30 percent. AsiaCell's Iraq operations contributed 15 percent of its revenue in the first-half.
Qtel said it recorded an EBITDA, or operating profit margin, of 49 percent in the second quarter compared with 50 percent a year earlier. EBITDA is earnings before interest, tax, depreciation and amortization.
Qatar, Qtel's home market, contributed 32 percent of its revenue in the first half and grew 21 percent, with the number of mobile subscribers increasing to 1.4 million, it said.
Qtel shares fell 1.9 percent to 155 riyals on the Doha Securities Market at 10:45 a.m. local time, valuing the company at 22.7 billion riyals. The shares have dropped 20 percent this year.
To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.netArif Sharif in Dubai at asharif2@bloomberg.net
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Qatar Telecom Says Wins Challenge to Ownership of Indosat Stake
By Arif Sharif
Sept. 14 (Bloomberg) -- Qatar Telecom QSC, which paid $1.8 billion in June to buy a 40.8 percent stake in Indonesia's PT Indosat, said the Indonesian Supreme Court had thrown out the legal challenge to its ownership of the stake.
``The Supreme Court's decision today removes the District Court's order, and allows us to keep the shares we acquired in June'' in Indonesia's second-biggest mobile phone operator, Qtel Chairman Sheikh Abdullah bin Mohammed Bin Saud Al-Thani, said in a statement posted on the Doha bourse Web site today.
Qatar Telecom is in the process of starting a tender to buy more Indosat shares, the statement added.
To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net
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Sept. 14 (Bloomberg) -- Qatar Telecom QSC, which paid $1.8 billion in June to buy a 40.8 percent stake in Indonesia's PT Indosat, said the Indonesian Supreme Court had thrown out the legal challenge to its ownership of the stake.
``The Supreme Court's decision today removes the District Court's order, and allows us to keep the shares we acquired in June'' in Indonesia's second-biggest mobile phone operator, Qtel Chairman Sheikh Abdullah bin Mohammed Bin Saud Al-Thani, said in a statement posted on the Doha bourse Web site today.
Qatar Telecom is in the process of starting a tender to buy more Indosat shares, the statement added.
To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net
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Persian Gulf Shares Drop, Led by Financials; DIB, Aldar Retreat
By Glen Carey
Sept. 14 (Bloomberg) -- Persian Gulf shares declined, led by banks and real-estate companies as international investors exited the region's markets.
Dubai Islamic Bank PJSC dropped to the lowest since April 2007, while Abu Dhabi Commercial Bank PJSC fell after it announced the appointment of a new chairman. Aldar Properties PJSC dropped the most in a week. Qatar Telecom QSC slumped to a 2004 low as it said it is seeking more shares in Indoesia's PT Indosat after the Asian country's Supreme Court threw out a legal challenge.
The Dubai Financial Market General Index fell for the third day, losing 3.2 percent to 4,122.34 at 1:37 p.m. local time, heading for its lowest close since August 2007. The Abu Dhabi Securities Exchange General Index lost 1.9 percent to 3,956.51. Qatar's Doha Securities Market Index dropped the most since Jan. 22, retreating 6.2 percent.
``We are still seeing large selling pressure on the market by international investors,'' Nadim Abou Jalad, a trader at Naeem Shares & Bonds in Dubai, said in a telephone interview. ``There is a lot of bad news about the real-estate sector, including all the corruption cases.''
Foreign investors were net sellers of 715 million dirhams ($194.8 million) of securities in the week ended Sept. 11 on the Dubai Financial Market, the bourse said yesterday.
Dubai Islamic
Morgan Stanley in August forecast a decline in Dubai real- estate prices. Dubai Islamic Bank, Tamweel PJSC, the United Arab Emirate's second-biggest mortgage lender by market value, and Deyaar Development PJSC, a real-estate company, have former employees under investigation by authorities for embezzlement.
Dubai Islamic Bank fell 7.8 percent to 5.9 dirhams, bringing the four-day slump to 15 percent. The bank said Sept. 11 that it had taken over land belonging to Plantation Projects to recover funds it lent to the company.
Tamweel dropped a sixth day, retreating 5.6 percent to 4.42 dirhams, and Deyaar lost 5.5 percent to 1.55 dirhams. Aldar, Abu Dhabi's biggest developer, lost 7.6 percent to 7.2 dirhams.
Abu Dhabi Commercial Bank tumbled 9.6 percent to 3.5 dirhams. The third-biggest bank in the U.A.E. appointed Eissa al-Suwaidi chairman, replacing Saeed al-Hajeri.
Qatar Telecom QSC slumped 7.5 percent to 146.2 riyals, its lowest close since June 2004. The company, which paid $1.8 billion in June to buy a 40.8 percent stake in PT Indosat, said the Indonesian Supreme Court had thrown out the legal challenge to its ownership of the stake. Qatar Telecom is in the process of starting a tender to buy more Indosat shares.
Al Mazaya Holding Co. fell 5 percent to 760 fils. The Kuwait property developer sold a 20 percent stake in its Saudi Arabian real-estate unit to Dubai Group.
Oman's Muscat Securities Market 30 Index decreased 0.2 percent. The Kuwait Stock Exchange Index lost 2.1 percent. Saudi Arabia's Tadawul All-Share Index dropped 2.8 percent, while the Bahrain All Share Index retreated 2.3 percent.
To contact the reporter on this story: Glen Carey in Dubai at gcarey8@bloomberg.net.
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Sept. 14 (Bloomberg) -- Persian Gulf shares declined, led by banks and real-estate companies as international investors exited the region's markets.
Dubai Islamic Bank PJSC dropped to the lowest since April 2007, while Abu Dhabi Commercial Bank PJSC fell after it announced the appointment of a new chairman. Aldar Properties PJSC dropped the most in a week. Qatar Telecom QSC slumped to a 2004 low as it said it is seeking more shares in Indoesia's PT Indosat after the Asian country's Supreme Court threw out a legal challenge.
The Dubai Financial Market General Index fell for the third day, losing 3.2 percent to 4,122.34 at 1:37 p.m. local time, heading for its lowest close since August 2007. The Abu Dhabi Securities Exchange General Index lost 1.9 percent to 3,956.51. Qatar's Doha Securities Market Index dropped the most since Jan. 22, retreating 6.2 percent.
``We are still seeing large selling pressure on the market by international investors,'' Nadim Abou Jalad, a trader at Naeem Shares & Bonds in Dubai, said in a telephone interview. ``There is a lot of bad news about the real-estate sector, including all the corruption cases.''
Foreign investors were net sellers of 715 million dirhams ($194.8 million) of securities in the week ended Sept. 11 on the Dubai Financial Market, the bourse said yesterday.
Dubai Islamic
Morgan Stanley in August forecast a decline in Dubai real- estate prices. Dubai Islamic Bank, Tamweel PJSC, the United Arab Emirate's second-biggest mortgage lender by market value, and Deyaar Development PJSC, a real-estate company, have former employees under investigation by authorities for embezzlement.
Dubai Islamic Bank fell 7.8 percent to 5.9 dirhams, bringing the four-day slump to 15 percent. The bank said Sept. 11 that it had taken over land belonging to Plantation Projects to recover funds it lent to the company.
Tamweel dropped a sixth day, retreating 5.6 percent to 4.42 dirhams, and Deyaar lost 5.5 percent to 1.55 dirhams. Aldar, Abu Dhabi's biggest developer, lost 7.6 percent to 7.2 dirhams.
Abu Dhabi Commercial Bank tumbled 9.6 percent to 3.5 dirhams. The third-biggest bank in the U.A.E. appointed Eissa al-Suwaidi chairman, replacing Saeed al-Hajeri.
Qatar Telecom QSC slumped 7.5 percent to 146.2 riyals, its lowest close since June 2004. The company, which paid $1.8 billion in June to buy a 40.8 percent stake in PT Indosat, said the Indonesian Supreme Court had thrown out the legal challenge to its ownership of the stake. Qatar Telecom is in the process of starting a tender to buy more Indosat shares.
Al Mazaya Holding Co. fell 5 percent to 760 fils. The Kuwait property developer sold a 20 percent stake in its Saudi Arabian real-estate unit to Dubai Group.
Oman's Muscat Securities Market 30 Index decreased 0.2 percent. The Kuwait Stock Exchange Index lost 2.1 percent. Saudi Arabia's Tadawul All-Share Index dropped 2.8 percent, while the Bahrain All Share Index retreated 2.3 percent.
To contact the reporter on this story: Glen Carey in Dubai at gcarey8@bloomberg.net.
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Indian Police Question Blast Suspects, Put Toll at 20
By Jay Shankar and Sumit Sharma
Sept. 14 (Bloomberg) -- Indian police are questioning several people suspected of involvement in yesterday's blasts in the capital New Delhi that killed at least 20 and injured 98, the worst terrorist attack in the country since 50 were killed in the city of Ahmedabad in July.
``We have some vital clues and hope to solve the case very soon,'' police spokesman Rajan Bhagat said in a telephone interview from New Delhi. ``The police are questioning several suspects and no arrests have been made so far.''
Indian Mujahideen, which had claimed responsibility for recent terrorist attacks in the states of Gujarat and Rajasthan, said it was behind the blasts, in an e-mail that was sent to several news organizations.
The police also defused three bombs late yesterday, Bhagat said. ``Two bombs were defused in the Connaught Place area and another one near India Gate.''
The attacks take the toll of people killed in India in terrorist attacks in the past year to more than 200. Terrorists have placed bombs on bicycles, under theater seats and near markets, timing them to go off during the evening rush hour.
The home ministry yesterday asked all states and union territories to step up security.
Mumbai, the commercial hub of the country and capital of Maharashtra state, is on high alert for today's ritual immersion of idols of the elephant god Ganesha, also known as Ganpati, the Times of India said. Three telephone bomb threat calls were received, warning of blasts in the city today, the paper reported, citing R.R. Patil, state deputy chief minister.
Mumbai Immersion Ceremony
Traffic is traditionally halted in the city as people take to the streets in processions to seaside immersion sites. The 10-day-long festivities culminate in the main immersion ceremony at Chowpatty beach on the city's Marine Drive. Similar immersions will take place elsewhere in India as well.
Home MinisterShivraj Patil, who said the five blasts took place within 45 minutes, starting at about 6 p.m. yesterday, condemned the attacks. ``I am confident that security agencies will soon be able to get to the bottom of these incidents and the culprits brought to book.''
Two of the blasts took place in the central Connaught Place area and two at a market in the upscale Greater Kailash area, Delhi Police chief Y.S. Dadwal said. One blast took place at Ghaffar Market in the Karol Bagh area, he said.
Bomb Material
``I am not in a position right now to give you the exact details of the nature of the bombs used in the blasts,'' Bhagat said. ``We may issue a statement later today on that.''
Preliminary investigations indicated ammonium nitrate was used in the bombs, the Hindustan Times reported.
The Indian Mujahideen e-mail originated from Mumbai and may have been sent from a hacked wireless Internet account, the CNN- IBN television channel reported. Previous e-mails sent by the group haven't been traced.
Police personnel were conducting investigations at some of the blast sites today, while the usually busy Karol Bagh market area was cordoned off, creating traffic jams along one of the capital's busiest thoroughfares.
The attacks come about three years after 59 people were killed and 224 injured in New Delhi when three explosions took place in two crowded markets and on a public bus. The blasts of Oct. 29, 2005, took place as people shopped for the main Hindu festival of Diwali and the Muslim festival of Eid.
Festival Season
Yesterday's bomb attack happened at a time when India is preparing for next month's festival season, which includes Diwali, the country's biggest, and mid-way through the Muslim holy month of Ramadan, which started at the beginning of September.
President Pratibha Patil, Prime MinisterManmohan Singh and Sonia Gandhi, president of the ruling Congress party, all condemned the attacks.
U.S. Ambassador to India David C. Mulford extended his government's sympathies to the victims and their families.
The government has previously blamed terrorist attacks on organizations linked to foreign powers, without offering evidence or making arrests. Local media often blame the attacks on groups backed by Pakistan or Bangladesh, without identifying the security officials who provided the information.
Sixteen bombs exploded in Ahmedabad within 20 minutes late on July 26, a day after seven bombs tore through India's technology hub of Bangalore, killing two. At least 20 devices hidden in cars and garbage cans were discovered and defused in the Gujarat city of Surat, days after the Ahmedabad blasts.
Indian Mujahideen had claimed responsibility for the Ahmedabad and Jaipur blasts and threatened more attacks. The group has claimed previously that the attack was in revenge for violence in Gujarat between Hindus and Muslims in 2002, in which almost 2,000 people were killed.
To contact the reporters on this story: Jay Shankar in Bangalore at jshankar1@bloomberg.net; Sumit Sharma in Mumbai at sumitsharma@bloomberg.net.
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Sept. 14 (Bloomberg) -- Indian police are questioning several people suspected of involvement in yesterday's blasts in the capital New Delhi that killed at least 20 and injured 98, the worst terrorist attack in the country since 50 were killed in the city of Ahmedabad in July.
``We have some vital clues and hope to solve the case very soon,'' police spokesman Rajan Bhagat said in a telephone interview from New Delhi. ``The police are questioning several suspects and no arrests have been made so far.''
Indian Mujahideen, which had claimed responsibility for recent terrorist attacks in the states of Gujarat and Rajasthan, said it was behind the blasts, in an e-mail that was sent to several news organizations.
The police also defused three bombs late yesterday, Bhagat said. ``Two bombs were defused in the Connaught Place area and another one near India Gate.''
The attacks take the toll of people killed in India in terrorist attacks in the past year to more than 200. Terrorists have placed bombs on bicycles, under theater seats and near markets, timing them to go off during the evening rush hour.
The home ministry yesterday asked all states and union territories to step up security.
Mumbai, the commercial hub of the country and capital of Maharashtra state, is on high alert for today's ritual immersion of idols of the elephant god Ganesha, also known as Ganpati, the Times of India said. Three telephone bomb threat calls were received, warning of blasts in the city today, the paper reported, citing R.R. Patil, state deputy chief minister.
Mumbai Immersion Ceremony
Traffic is traditionally halted in the city as people take to the streets in processions to seaside immersion sites. The 10-day-long festivities culminate in the main immersion ceremony at Chowpatty beach on the city's Marine Drive. Similar immersions will take place elsewhere in India as well.
Home MinisterShivraj Patil, who said the five blasts took place within 45 minutes, starting at about 6 p.m. yesterday, condemned the attacks. ``I am confident that security agencies will soon be able to get to the bottom of these incidents and the culprits brought to book.''
Two of the blasts took place in the central Connaught Place area and two at a market in the upscale Greater Kailash area, Delhi Police chief Y.S. Dadwal said. One blast took place at Ghaffar Market in the Karol Bagh area, he said.
Bomb Material
``I am not in a position right now to give you the exact details of the nature of the bombs used in the blasts,'' Bhagat said. ``We may issue a statement later today on that.''
Preliminary investigations indicated ammonium nitrate was used in the bombs, the Hindustan Times reported.
The Indian Mujahideen e-mail originated from Mumbai and may have been sent from a hacked wireless Internet account, the CNN- IBN television channel reported. Previous e-mails sent by the group haven't been traced.
Police personnel were conducting investigations at some of the blast sites today, while the usually busy Karol Bagh market area was cordoned off, creating traffic jams along one of the capital's busiest thoroughfares.
The attacks come about three years after 59 people were killed and 224 injured in New Delhi when three explosions took place in two crowded markets and on a public bus. The blasts of Oct. 29, 2005, took place as people shopped for the main Hindu festival of Diwali and the Muslim festival of Eid.
Festival Season
Yesterday's bomb attack happened at a time when India is preparing for next month's festival season, which includes Diwali, the country's biggest, and mid-way through the Muslim holy month of Ramadan, which started at the beginning of September.
President Pratibha Patil, Prime MinisterManmohan Singh and Sonia Gandhi, president of the ruling Congress party, all condemned the attacks.
U.S. Ambassador to India David C. Mulford extended his government's sympathies to the victims and their families.
The government has previously blamed terrorist attacks on organizations linked to foreign powers, without offering evidence or making arrests. Local media often blame the attacks on groups backed by Pakistan or Bangladesh, without identifying the security officials who provided the information.
Sixteen bombs exploded in Ahmedabad within 20 minutes late on July 26, a day after seven bombs tore through India's technology hub of Bangalore, killing two. At least 20 devices hidden in cars and garbage cans were discovered and defused in the Gujarat city of Surat, days after the Ahmedabad blasts.
Indian Mujahideen had claimed responsibility for the Ahmedabad and Jaipur blasts and threatened more attacks. The group has claimed previously that the attack was in revenge for violence in Gujarat between Hindus and Muslims in 2002, in which almost 2,000 people were killed.
To contact the reporters on this story: Jay Shankar in Bangalore at jshankar1@bloomberg.net; Sumit Sharma in Mumbai at sumitsharma@bloomberg.net.
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Emaar Drops to Three-Year Low as Investors Doubt Share Buyback
By Matthew Brown and Glen Carey
Sept. 14 (Bloomberg) -- Emaar Properties PJSC dropped to the lowest since April 2005 as investors doubted the Middle East's largest real-estate developer will follow through with a plan to buy back 10 percent of its shares.
``The market doesn't seem convinced that Emaar will complete the 10 percent share buyback,'' Ali Khan, head of equity trading at Arqaam Capital Ltd. in Dubai, said in a telephone interview.
Emaar lost 3 percent to close at 7.34 dirhams. The shares earlier surged as much as 6.1 percent.
The Dubai-based company yesterday said it plans to begin the buyback from the beginning of October because the shares, down more than 50 percent this year, are undervalued. Emaar received regulatory approval in December to buy back 10 percent of its stock. In the United Arab Emirates companies have one year to complete buybacks once they have been approved, giving Emaar a little more than three months to purchase the shares.
Emaar bought only around 3 percent of its stock after announcing in May 2006 that it planned to buyback 10 percent, said Zahed Chowdhury, head of research for Deutsche Bank AG in the Middle East, in a telephone interview from Dubai.
``They have announced the intention to buyback shares; if they don't go ahead with it, then it's not going to be seen positively by the market,'' said Chowdhury. He has a ``buy'' recommendation on the shares and a price estimate of 16.50 dirhams.
The Dubai Financial Market Real Estate Index has fallen 45 percent this year on concern that property growth in the emirate may slow and after arrests at some of Dubai's largest property companies, including Deyaar Development PJSC and Tamweel PJSC, the U.A.E.'s second-largest home finance provider. Emaar has not been implicated in any of the investigations.
To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net; Glen Carey in Dubai at gcarey8@bloomberg.net.
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Sept. 14 (Bloomberg) -- Emaar Properties PJSC dropped to the lowest since April 2005 as investors doubted the Middle East's largest real-estate developer will follow through with a plan to buy back 10 percent of its shares.
``The market doesn't seem convinced that Emaar will complete the 10 percent share buyback,'' Ali Khan, head of equity trading at Arqaam Capital Ltd. in Dubai, said in a telephone interview.
Emaar lost 3 percent to close at 7.34 dirhams. The shares earlier surged as much as 6.1 percent.
The Dubai-based company yesterday said it plans to begin the buyback from the beginning of October because the shares, down more than 50 percent this year, are undervalued. Emaar received regulatory approval in December to buy back 10 percent of its stock. In the United Arab Emirates companies have one year to complete buybacks once they have been approved, giving Emaar a little more than three months to purchase the shares.
Emaar bought only around 3 percent of its stock after announcing in May 2006 that it planned to buyback 10 percent, said Zahed Chowdhury, head of research for Deutsche Bank AG in the Middle East, in a telephone interview from Dubai.
``They have announced the intention to buyback shares; if they don't go ahead with it, then it's not going to be seen positively by the market,'' said Chowdhury. He has a ``buy'' recommendation on the shares and a price estimate of 16.50 dirhams.
The Dubai Financial Market Real Estate Index has fallen 45 percent this year on concern that property growth in the emirate may slow and after arrests at some of Dubai's largest property companies, including Deyaar Development PJSC and Tamweel PJSC, the U.A.E.'s second-largest home finance provider. Emaar has not been implicated in any of the investigations.
To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net; Glen Carey in Dubai at gcarey8@bloomberg.net.
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World War II Spitfire Sells for $1.9 Million in New Zealand
By Gavin Evans
Sept. 14 (Bloomberg) -- A World War II Spitfire fighter, one of fewer than 60 still flying worldwide, sold for NZ$2.8 million ($1.9 million) at an auction in Nelson, New Zealand today.
The aircraft, a 1945 Mk. XVI variant of the fighter made famous during the Battle of Britain, was bought by North China Shipping Holdings Co. Chairman Yan-Ming Gao at the sale at Nelson's museum of Wearable Art & Classic Cars. He plans to donate the fighter to the China Aviation Museum in Beijing.
Demand from collectors keen to own a flying piece of aviation history is sustaining a global industry of amateur archeologists and engineers scouring museums and crash sites for parts to restore and include in rebuilt planes. Provenance Fighter Sales, a specialist aircraft broker based in Murietta, California, sold 13 aircraft in 2007, including three Spitfires.
``I don't want to see the Spitfire go,'' Don Subritzky, an Auckland engineer whose family has restored the aircraft the past 11 years, said before the sale. ``Basically, we need to get some money in to fund the completion of a few of the other aircraft we've got here.''
Subritzky has nearly completed a 1936 Hawker Hind biplane. Other airframes waiting to be restored include a rare Vickers Vildebeest biplane, a twin-engined Airspeed Oxford and a Gloster Meteor jet.
The Spitfire sold today started life with Britain's Royal Air Force in June, 1945. After postwar service with the nation's air force reserve it was donated to the U.S. Air Force Museum at Dayton, Ohio. It was sold to private collectors in 1996.
`Spitfires in Particular'
``Spitfires are a very well-known fighter of the Second World War,'' said Gao, who has an interest in military history. ``It made a great contribution to the winning of the Second World War,'' he said through an interpreter.
The plane was the main attraction among 15 vintage and racing cars offered by Bonhams & Goodman, the Australian unit of London-based Bonhams. It is believed to be the first Spitfire sold at auction since the 1960s, Bonhams & Goodman Chief Executive Officer Tim Goodman said.
``Warbirds in general and Spitfires in particular only ever seem to go up in value,'' said Steve Vizard, managing director of U.K.-based Airframe Assemblies Ltd., which is currently restoring six Spitfires. ``Despite the so-called global economic crisis and the credit crunch and all that, it would seem that people who can afford to have this as their hobby, or their passion, can still afford them.''
Rebuilding a Spitfire, regardless of condition, takes about three years and costs about 1 million pounds ($1.8 million), Vizard said. Once flying, a later mark would typically sell for about $3.5 million, while an early model, with proven history in the Battle of Britain, might fetch twice as much, he said.
Including commission, Gao will pay just under NZ$3.2 million for the aircraft. He also bought a 1914 Daimler Tourer, a 1930 Rolls Royce Sedanca De Ville, and a 1898 De Dion Bouton today.
To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net
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Sept. 14 (Bloomberg) -- A World War II Spitfire fighter, one of fewer than 60 still flying worldwide, sold for NZ$2.8 million ($1.9 million) at an auction in Nelson, New Zealand today.
The aircraft, a 1945 Mk. XVI variant of the fighter made famous during the Battle of Britain, was bought by North China Shipping Holdings Co. Chairman Yan-Ming Gao at the sale at Nelson's museum of Wearable Art & Classic Cars. He plans to donate the fighter to the China Aviation Museum in Beijing.
Demand from collectors keen to own a flying piece of aviation history is sustaining a global industry of amateur archeologists and engineers scouring museums and crash sites for parts to restore and include in rebuilt planes. Provenance Fighter Sales, a specialist aircraft broker based in Murietta, California, sold 13 aircraft in 2007, including three Spitfires.
``I don't want to see the Spitfire go,'' Don Subritzky, an Auckland engineer whose family has restored the aircraft the past 11 years, said before the sale. ``Basically, we need to get some money in to fund the completion of a few of the other aircraft we've got here.''
Subritzky has nearly completed a 1936 Hawker Hind biplane. Other airframes waiting to be restored include a rare Vickers Vildebeest biplane, a twin-engined Airspeed Oxford and a Gloster Meteor jet.
The Spitfire sold today started life with Britain's Royal Air Force in June, 1945. After postwar service with the nation's air force reserve it was donated to the U.S. Air Force Museum at Dayton, Ohio. It was sold to private collectors in 1996.
`Spitfires in Particular'
``Spitfires are a very well-known fighter of the Second World War,'' said Gao, who has an interest in military history. ``It made a great contribution to the winning of the Second World War,'' he said through an interpreter.
The plane was the main attraction among 15 vintage and racing cars offered by Bonhams & Goodman, the Australian unit of London-based Bonhams. It is believed to be the first Spitfire sold at auction since the 1960s, Bonhams & Goodman Chief Executive Officer Tim Goodman said.
``Warbirds in general and Spitfires in particular only ever seem to go up in value,'' said Steve Vizard, managing director of U.K.-based Airframe Assemblies Ltd., which is currently restoring six Spitfires. ``Despite the so-called global economic crisis and the credit crunch and all that, it would seem that people who can afford to have this as their hobby, or their passion, can still afford them.''
Rebuilding a Spitfire, regardless of condition, takes about three years and costs about 1 million pounds ($1.8 million), Vizard said. Once flying, a later mark would typically sell for about $3.5 million, while an early model, with proven history in the Battle of Britain, might fetch twice as much, he said.
Including commission, Gao will pay just under NZ$3.2 million for the aircraft. He also bought a 1914 Daimler Tourer, a 1930 Rolls Royce Sedanca De Ville, and a 1898 De Dion Bouton today.
To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net
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Liberal Party Wins Government in Western Australia
By Robert Fenner
Sept. 14 (Bloomberg) -- Colin Barnett will become the next premier of Western Australia after his Liberal Party won National Party support for a coalition government, opening the way for uranium mining and genetically modified crops in the state.
The National Party received ``very good'' proposals from the Liberals and incumbent Labor Party before making its decision, Nationals Leader Brendon Grylls told reporters in Perth today. The Liberals won 24 seats in the 59-seat lower house and will form a government with the support of four Nationals and two independent members, ending a week of uncertainty after the Sept. 6 poll left no party with a majority.
Barnett, who promised to open up uranium mines and allow genetically modified crops, will head a state that accounts for a third of the nation's exports with 10 percent of its population.
``Those key policies of uranium and genetically modified crops will come through very quickly,'' said Peter Van Onselen, associate professor in political science at Perth's Edith Cowan University. ``Between them they also control the upper house.''
Nationals lawmakers will reserve the right to vote against government policy, unlike traditional Liberal-National coalition governments which present united policies.
``We took this very seriously,'' Grylls said today. ``We are not prepared to go into a traditional coalition, so we'll be accepting ministries based on being independent ministers.''
Current Premier Alan Carpenter called the election on Aug. 6, two days after Barnett's predecessor Troy Buswell quit as leader after admitting he snapped a staffer's bra strap and sniffed the chair of a female colleague. Labor had promised to maintain its ban on uranium in a state that holds as much as 10 percent of the world's reserves. Carpenter today resigned as Labor leader.
Monopoly Broken
Carpenter, who became premier in January 2006, called the election five months before it was due, the earliest in Western Australia in 100 years. Labor has been in power in the state since February 2001 and forms government in all states and territories, as well as at the federal level.
Barnett, who led the Liberals to defeat in 2005, was set to retire from politics before replacing Buswell as party leader.
The Liberal Party has said it will increase mining royalties if BHP Billiton Ltd.'s hostile takeover bid for smaller rival Rio Tinto Group succeeds. The Liberals want to introduce trials of genetically-modified cotton and canola in the state and overturn a band on uranium mining.
Barnett's minority government will be the first in Western Australian history and the nation's first since Nick Greiner needed the support of independent lawmakers in 1991 to retain power in New South Wales, Australia's most populous state.
The Nationals, who gain most of their electoral support from rural and regional areas, are seeking to use their numbers in the lower house to push their ``Royalties for Regions'' agenda. The plan would see a quarter of royalty payments from mining projects invested in local, rural projects such as improvement to roads and new schools.
``We're the Nationals, we're from the country, and I'd expect to be driving a hard deal every time I'm at the table,'' Grylls said.
To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net
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Sept. 14 (Bloomberg) -- Colin Barnett will become the next premier of Western Australia after his Liberal Party won National Party support for a coalition government, opening the way for uranium mining and genetically modified crops in the state.
The National Party received ``very good'' proposals from the Liberals and incumbent Labor Party before making its decision, Nationals Leader Brendon Grylls told reporters in Perth today. The Liberals won 24 seats in the 59-seat lower house and will form a government with the support of four Nationals and two independent members, ending a week of uncertainty after the Sept. 6 poll left no party with a majority.
Barnett, who promised to open up uranium mines and allow genetically modified crops, will head a state that accounts for a third of the nation's exports with 10 percent of its population.
``Those key policies of uranium and genetically modified crops will come through very quickly,'' said Peter Van Onselen, associate professor in political science at Perth's Edith Cowan University. ``Between them they also control the upper house.''
Nationals lawmakers will reserve the right to vote against government policy, unlike traditional Liberal-National coalition governments which present united policies.
``We took this very seriously,'' Grylls said today. ``We are not prepared to go into a traditional coalition, so we'll be accepting ministries based on being independent ministers.''
Current Premier Alan Carpenter called the election on Aug. 6, two days after Barnett's predecessor Troy Buswell quit as leader after admitting he snapped a staffer's bra strap and sniffed the chair of a female colleague. Labor had promised to maintain its ban on uranium in a state that holds as much as 10 percent of the world's reserves. Carpenter today resigned as Labor leader.
Monopoly Broken
Carpenter, who became premier in January 2006, called the election five months before it was due, the earliest in Western Australia in 100 years. Labor has been in power in the state since February 2001 and forms government in all states and territories, as well as at the federal level.
Barnett, who led the Liberals to defeat in 2005, was set to retire from politics before replacing Buswell as party leader.
The Liberal Party has said it will increase mining royalties if BHP Billiton Ltd.'s hostile takeover bid for smaller rival Rio Tinto Group succeeds. The Liberals want to introduce trials of genetically-modified cotton and canola in the state and overturn a band on uranium mining.
Barnett's minority government will be the first in Western Australian history and the nation's first since Nick Greiner needed the support of independent lawmakers in 1991 to retain power in New South Wales, Australia's most populous state.
The Nationals, who gain most of their electoral support from rural and regional areas, are seeking to use their numbers in the lower house to push their ``Royalties for Regions'' agenda. The plan would see a quarter of royalty payments from mining projects invested in local, rural projects such as improvement to roads and new schools.
``We're the Nationals, we're from the country, and I'd expect to be driving a hard deal every time I'm at the table,'' Grylls said.
To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net
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Prices Probably Decrease as Growth Slows: U.S. Economy Preview
By Timothy R. Homan
Sept. 14 (Bloomberg) -- Americans paid less for goods and services in August, manufacturing slumped and homebuilding sank deeper into a recession, signaling slower growth is taming inflation, economists said before reports this week.
Consumer prices probably fell 0.1 percent last month, the first drop since October 2005, according to the median estimate in a Bloomberg News survey. Builders broke ground on the fewest houses in 17 years and industrial production fell, other reports are also projected to show.
Some companies are cutting prices to revive demand as mounting job losses and the collapse in credit and home values cause consumers to retrench. At their meeting this week, Federal Reserve policy makers may signal that the benchmark interest rate will remain at 2 percent in coming months as the threat of inflation recedes and the economy weakens.
``Slowing growth helps put a cap on commodity and energy prices, so price pressures are likely to decelerate,'' said Maxwell Clarke, chief U.S. economist at IDEAGlobal Inc. in New York. ``It allows the Fed to put fears of inflation on the back burner. Growth will become the greater concern.''
The Labor Department's report on consumer prices is due Sept. 16. The retreat in energy prices and discounts by automakers and retailers to clear out unwanted stockpiles probably restrained the cost of living last month, economists said.
The average price of gasoline fell 7.8 percent last month compared with July, according to AAA.
Core prices, which exclude food and energy, rose 0.2 percent last month after a 0.3 percent gain, according to the survey median.
Sales Drop
Sales at U.S. retailers dropped in August for a second straight month and July inventories at American businesses increased the most in four years, Commerce Department reports showed last week.
J.C. Penney Co. and American Eagle Outfitters Inc. promoted discounts on clothes to attract more shoppers during August to counter what may be the worst back-to-school season in seven years.
General Motors Corp. offered all customers the same prices paid by employees, helping boost sales in the second half of the month. GM this month said it will extend the incentive through September and has offered 72-month, no-interest financing on some vehicles since late June.
Less Construction
The worst housing recession in a quarter-century is also weighing on consumers. New-home starts in August dropped to a 950,000 annual pace, the lowest level since March 1991, the Commerce Department is forecast to report Sept. 17.
Builders scaled back to offset a record number of foreclosures that added to an inventory glut, economists said. Starts have fallen 30 percent in the past year.
Confidence among homebuilders this month probably edged up from August's 23-year low, economists said before the release of the National Association of Home Builders/Wells Fargo index, set for Sept. 16. The measure dates back to 1985.
Production at factories, mines and utilities dropped 0.3 percent in August following a 0.2 percent gain in July, economists forecast a Fed report tomorrow will show. Automakers probably led the decline as sales over the last three months plunged to the lowest level since 1993.
A report from the New York Fed the same day may show manufacturing in that state grew at a slower pace this month as domestic demand weakened and economies in Europe and Japan faltered. A similar report from the Philadelphia Fed on Sept. 18 may show regional activity shrank for a 10th straight month.
Negative Signal
A closely watched gauge of the economy's course dropped in August for a third straight month, economists project a report on Sept. 18 will show. The New York-based Conference Board's index of leading economic indicators probably fell 0.2 percent after decreasing 0.7 percent in July.
The Fed last month kept the benchmark U.S. interest rate at 2 percent for a second consecutive meeting. There is a one-in- four chance the central bank will lower the borrowing cost by its Oct. 29 meeting, according to futures trading. The odds of a cut improve to about 40 percent by their last meeting of the year on Dec. 16.
``The inflation outlook is now much less of a concern,'' said Paul Ashworth, international economist at Capital Economics Ltd. in London. At the same time, ``the weakness in the real economy is intensifying.''
Bloomberg Survey
================================================================
Release Period Prior Median
Indicator Date Value Forecast
================================================================
Empire Manu. Index 9/15 Sept. 2.8 1.0
Ind. Prod. MOM% 9/15 Aug. 0.2% -0.3%
Cap. Util. % 9/15 Aug. 79.9% 79.6%
CPI MOM% 9/16 Aug. 0.8% -0.1%
Core CPI MOM% 9/16 Aug. 0.3% 0.2%
CPI YOY% 9/16 Aug. 5.6% 5.5%
Core CPI YOY% 9/16 Aug. 2.5% 2.6%
Core CPI SA Index 9/16 Aug. 216.230 n/a
CPI NSA Index 9/16 Aug. 219.964 219.340
Net Long Term TICS $ Bl 9/16 July 53.4 55.0
Total TICS $ Blns 9/16 July 51.1 40.0
NAHB Housing Index 9/16 Sept. 16 17
ABC Conf Index 9/16 Sept. 15 -47 -43
Housing Starts ,000's 9/17 Aug. 965 950
Building Permits ,000's 9/17 Aug. 937 925
Current Account $ Blns 9/17 2Q -176.4 -180.0
Initial Claims ,000's 9/18 Sept. 6 445 440
Cont. Claims ,000's 9/18 Aug. 30 3525 3528
Philly Fed Index 9/18 Sept. -12.7 -10.0
LEI MOM% 9/18 Aug. -0.7% -0.2%
=============================================================================
To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
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Hurricane Ike's Toll in Texas May Cost Insurers $18 Billion
By Erik Holm
Sept. 14 (Bloomberg) -- Hurricane Ike, the storm that came ashore in Texas yesterday, may cost insurers $6 billion to $18 billion, according to firms that specialize in gauging the effects of disasters.
The highest estimate came from Oakland, California-based Eqecat Inc. as Ike drove the Gulf of Mexico's waters into Galveston Island, blew out office windows and left at least 4.5 million people around Houston without power. AIR Worldwide, based in Boston, said Ike may have caused as much as $12 billion of insured losses on land, with a likely loss of $10 billion. Offshore losses may range from $600 million to $1.5 billion and probably totaled $1 billion, AIR said.
AIR and Eqecat agreed that $8 billion was the minimum toll, making Ike at least the fourth most-expensive storm in U.S. history. Ike was the first hurricane to hit a major U.S. metropolitan area since Katrina devastated New Orleans in 2005, costing insurers $41.1 billion. Ike made landfall in Galveston with winds as high as 110 miles an hour (175 kilometers an hour).
``The damage won't be confined to the coast,'' Peter Dailey, director of atmospheric science at AIR, said in an interview. ``Damage from hurricane-force winds will extend well inland, maybe as much as 200 miles.''
A third firm, Risk Management Solutions Inc. of Newark, California, said total insured damage on land and offshore ranged from $6 billion to $16 billion.
Early damage reports indicated that several buildings lining Galveston's seawall were destroyed, and unchecked fires were burning in that city, AIR said. President George W. Bush cleared the way for Texas to receive federal disaster aid.
Storm Surge
Ike had been downgraded to a tropical storm at 1 p.m. local time, as sustained winds decreased to about 60 mph, the National Hurricane Center said.
The storm was strengthening until the moment it reached shore and rivaled Katrina in size, if not intensity, said Tom Larsen, a senior vice president at Eqecat.
Ike's width ``is a big part of why we think the damage will be what it is,'' Larsen said. The storm was blowing as high as 125 miles from the storm's center, leaving property ``exposed to hurricane-force winds for hours and hours as the storm passes over,'' he said.
Flagstone Reinsurance Holdings Ltd., the Bermuda-based insurer, predicted damage of $10 billion to $16 billion industrywide. Deloitte Touche Tohmatsu said earlier this week that the storm might cost $25 billion, an estimate that the firm's Lis Gibson repeated after Ike hit.
String of Storms
``It stayed on course and pretty much made landfall where it was expected,'' she said. ``It's hard to know an exact number, but it's certainly in that order of magnitude. It's a big loss. There's a significant amount of property that was hit by the storm.''
Ike follows Hurricane Gustav, which struck Louisiana on Sept. 1, and Hanna, the tropical storm that made its way up the Eastern seaboard on Sept. 6. The storms may reduce profits for insurers, including Allstate Corp. and Travelers Cos., which benefited from calmer weather in 2007 and 2006 after Katrina contributed to a record storm season in 2005.
The spate of natural disasters is testing insurers' efforts to limit losses after the 2005 season. Companies bought added protection from reinsurers, sought price increases from regulators and reduced the amount of coverage in catastrophe- prone regions to reduce their potential claims from the next big storm.
`Pretty Scary'
In Texas, Allstate stopped offering residential coverage for windstorm damage to new customers in 14 counties that face the Gulf of Mexico, passing that part of the policies to a state-run pool. It also instituted a new deductible of at least 2 percent of an insured house's value that new customers must pay before coverage kicks in after a hurricane.
Allstate, the largest publicly traded U.S. home and auto insurer, also sold $250 million in catastrophe bonds to fixed- income investors who bet against the occurrence of natural disasters in the state.
George Ruebenson, the head of Northbrook, Illinois-based Allstate's home and auto units, told investors in New York this week that Ike appeared to be ``pretty scary'' as it approached the Gulf of Mexico. He made no estimate of potential damages.
Data on insured losses understate actual damage because the figures don't include uninsured property or destruction caused by actions excluded from some policies, such as residential flooding.
To contact the reporter on this story: Erik Holm in New York at eholm2@bloomberg.net.
Read more...
Sept. 14 (Bloomberg) -- Hurricane Ike, the storm that came ashore in Texas yesterday, may cost insurers $6 billion to $18 billion, according to firms that specialize in gauging the effects of disasters.
The highest estimate came from Oakland, California-based Eqecat Inc. as Ike drove the Gulf of Mexico's waters into Galveston Island, blew out office windows and left at least 4.5 million people around Houston without power. AIR Worldwide, based in Boston, said Ike may have caused as much as $12 billion of insured losses on land, with a likely loss of $10 billion. Offshore losses may range from $600 million to $1.5 billion and probably totaled $1 billion, AIR said.
AIR and Eqecat agreed that $8 billion was the minimum toll, making Ike at least the fourth most-expensive storm in U.S. history. Ike was the first hurricane to hit a major U.S. metropolitan area since Katrina devastated New Orleans in 2005, costing insurers $41.1 billion. Ike made landfall in Galveston with winds as high as 110 miles an hour (175 kilometers an hour).
``The damage won't be confined to the coast,'' Peter Dailey, director of atmospheric science at AIR, said in an interview. ``Damage from hurricane-force winds will extend well inland, maybe as much as 200 miles.''
A third firm, Risk Management Solutions Inc. of Newark, California, said total insured damage on land and offshore ranged from $6 billion to $16 billion.
Early damage reports indicated that several buildings lining Galveston's seawall were destroyed, and unchecked fires were burning in that city, AIR said. President George W. Bush cleared the way for Texas to receive federal disaster aid.
Storm Surge
Ike had been downgraded to a tropical storm at 1 p.m. local time, as sustained winds decreased to about 60 mph, the National Hurricane Center said.
The storm was strengthening until the moment it reached shore and rivaled Katrina in size, if not intensity, said Tom Larsen, a senior vice president at Eqecat.
Ike's width ``is a big part of why we think the damage will be what it is,'' Larsen said. The storm was blowing as high as 125 miles from the storm's center, leaving property ``exposed to hurricane-force winds for hours and hours as the storm passes over,'' he said.
Flagstone Reinsurance Holdings Ltd., the Bermuda-based insurer, predicted damage of $10 billion to $16 billion industrywide. Deloitte Touche Tohmatsu said earlier this week that the storm might cost $25 billion, an estimate that the firm's Lis Gibson repeated after Ike hit.
String of Storms
``It stayed on course and pretty much made landfall where it was expected,'' she said. ``It's hard to know an exact number, but it's certainly in that order of magnitude. It's a big loss. There's a significant amount of property that was hit by the storm.''
Ike follows Hurricane Gustav, which struck Louisiana on Sept. 1, and Hanna, the tropical storm that made its way up the Eastern seaboard on Sept. 6. The storms may reduce profits for insurers, including Allstate Corp. and Travelers Cos., which benefited from calmer weather in 2007 and 2006 after Katrina contributed to a record storm season in 2005.
The spate of natural disasters is testing insurers' efforts to limit losses after the 2005 season. Companies bought added protection from reinsurers, sought price increases from regulators and reduced the amount of coverage in catastrophe- prone regions to reduce their potential claims from the next big storm.
`Pretty Scary'
In Texas, Allstate stopped offering residential coverage for windstorm damage to new customers in 14 counties that face the Gulf of Mexico, passing that part of the policies to a state-run pool. It also instituted a new deductible of at least 2 percent of an insured house's value that new customers must pay before coverage kicks in after a hurricane.
Allstate, the largest publicly traded U.S. home and auto insurer, also sold $250 million in catastrophe bonds to fixed- income investors who bet against the occurrence of natural disasters in the state.
George Ruebenson, the head of Northbrook, Illinois-based Allstate's home and auto units, told investors in New York this week that Ike appeared to be ``pretty scary'' as it approached the Gulf of Mexico. He made no estimate of potential damages.
Data on insured losses understate actual damage because the figures don't include uninsured property or destruction caused by actions excluded from some policies, such as residential flooding.
To contact the reporter on this story: Erik Holm in New York at eholm2@bloomberg.net.
Read more...
Asahi Glass Will Further Cut North America Output, Nikkei Says
By Masaki Kondo
Sept. 14 (Bloomberg) -- Asahi Glass Co. will trim production in North America by 25 percent in October as car sales slow, the Nikkei newspaper reported.
Asahi Glass, which earlier cut North American output by 10 percent, plans to hold production at the lower level through the end of this year, Nikkei reported today, without saying where it obtained the information. The company has plants in Kentucky and Ohio with capacity to turn out glass for 4 million cars annually, the newspaper said.
Tokyo-based Asahi Glass sells two-thirds of its auto glass made in North America to Japanese car manufacturers, with the rest going to U.S. automakers including General Motors Corp., the report said.
A telephone call to Asahi Glass wasn't answered.
To contact the reporters on this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net
Read more...
Sept. 14 (Bloomberg) -- Asahi Glass Co. will trim production in North America by 25 percent in October as car sales slow, the Nikkei newspaper reported.
Asahi Glass, which earlier cut North American output by 10 percent, plans to hold production at the lower level through the end of this year, Nikkei reported today, without saying where it obtained the information. The company has plants in Kentucky and Ohio with capacity to turn out glass for 4 million cars annually, the newspaper said.
Tokyo-based Asahi Glass sells two-thirds of its auto glass made in North America to Japanese car manufacturers, with the rest going to U.S. automakers including General Motors Corp., the report said.
A telephone call to Asahi Glass wasn't answered.
To contact the reporters on this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net
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Indian Police Question Suspects in Delhi Blasts, Put Toll at 20
By Jay Shankar and Pratik Parija
Sept. 14 (Bloomberg) -- Indian police are questioning several people suspected of involvement in yesterday's blasts in the capital New Delhi that killed at least 20 and injured 98, the worst terrorist attack in the country since 50 were killed in the city of Ahmedabad in July.
``We have some vital clues and hope to solve the case very soon,'' police spokesman Rajan Bhagat said in a telephone interview from New Delhi. ``The police are questioning several suspects and no arrests have been made so far.''
Indian Mujahideen, which had claimed responsibility for recent terrorist attacks in the states of Gujarat and Rajasthan, said it was behind the blasts, Press Trust of India said.
The police also defused three bombs late yesterday, Bhagat said. ``Two bombs were defused in the Connaught Place area and another one near India Gate.''
The attacks take the toll of people killed in India in terrorist attacks in the past year to more than 200. Terrorists have placed bombs on bicycles, under theater seats and near markets, timing them to go off during the evening rush hour.
Home MinisterShivraj Patil, who said the five blasts took place within 45 minutes, starting at about 6 p.m., condemned the attacks. ``I am confident that security agencies will soon be able to get to the bottom of these incidents and the culprits brought to book.''
Two of the blasts took place in the central Connaught Place area and two at a market in the upscale Greater Kailash area, Delhi Police chief Y.S. Dadwal said. One blast took place at Ghaffar Market in the Karol Bagh area, he said.
Debris, Blood
One of the blast sites in the Connaught Place area, outside the Barakhamba Road Delhi Metro Rail Corp. station entrance, was strewn with debris from the blast minutes after a bomb went off in or near a dustbin. Pools of blood could also be seen.
The attacks come about three years after 59 people were killed and 224 injured in New Delhi when three explosions took place in two crowded markets and on a public bus. The blasts of Oct. 29, 2005, took place as people shopped for the main Hindu festival of Diwali and the Muslim festival of Eid.
Yesterday's bomb attack happened at a time when India is preparing for next month's festival season, which includes Diwali, the country's biggest, and mid-way through the Muslim holy month of Ramadan, which started at the beginning of September.
President Pratibha Patil, Prime MinisterManmohan Singh and Sonia Gandhi, president of the ruling Congress party, all condemned the attacks.
U.S. Ambassador to India David C. Mulford extended his government's sympathies to the victims and their families.
Foreign Hand
The government has previously blamed terrorist attacks on organizations linked to foreign powers, without offering evidence or making arrests. Local media often blame the attacks on groups backed by Pakistan or Bangladesh, without identifying the security officials who provided the information.
Sixteen bombs exploded in Ahmedabad within 20 minutes late on July 26, a day after seven bombs tore through India's technology hub of Bangalore, killing two. At least 20 devices hidden in cars and garbage cans were discovered and defused in the Gujarat city of Surat, days after the Ahmedabad blasts.
Indian Mujahideen had claimed responsibility for the Ahmedabad and Jaipur blasts and threatened more attacks. The group has claimed previously that the attack was in revenge for violence in Gujarat between Hindus and Muslims in 2002, in which almost 2,000 people were killed.
To contact the reporters on this story: Jay Shankar in Bangalore at jshankar1@bloomberg.netPratik Parija in New Delhi at pparija@bloomberg.net.
Read more...
Sept. 14 (Bloomberg) -- Indian police are questioning several people suspected of involvement in yesterday's blasts in the capital New Delhi that killed at least 20 and injured 98, the worst terrorist attack in the country since 50 were killed in the city of Ahmedabad in July.
``We have some vital clues and hope to solve the case very soon,'' police spokesman Rajan Bhagat said in a telephone interview from New Delhi. ``The police are questioning several suspects and no arrests have been made so far.''
Indian Mujahideen, which had claimed responsibility for recent terrorist attacks in the states of Gujarat and Rajasthan, said it was behind the blasts, Press Trust of India said.
The police also defused three bombs late yesterday, Bhagat said. ``Two bombs were defused in the Connaught Place area and another one near India Gate.''
The attacks take the toll of people killed in India in terrorist attacks in the past year to more than 200. Terrorists have placed bombs on bicycles, under theater seats and near markets, timing them to go off during the evening rush hour.
Home MinisterShivraj Patil, who said the five blasts took place within 45 minutes, starting at about 6 p.m., condemned the attacks. ``I am confident that security agencies will soon be able to get to the bottom of these incidents and the culprits brought to book.''
Two of the blasts took place in the central Connaught Place area and two at a market in the upscale Greater Kailash area, Delhi Police chief Y.S. Dadwal said. One blast took place at Ghaffar Market in the Karol Bagh area, he said.
Debris, Blood
One of the blast sites in the Connaught Place area, outside the Barakhamba Road Delhi Metro Rail Corp. station entrance, was strewn with debris from the blast minutes after a bomb went off in or near a dustbin. Pools of blood could also be seen.
The attacks come about three years after 59 people were killed and 224 injured in New Delhi when three explosions took place in two crowded markets and on a public bus. The blasts of Oct. 29, 2005, took place as people shopped for the main Hindu festival of Diwali and the Muslim festival of Eid.
Yesterday's bomb attack happened at a time when India is preparing for next month's festival season, which includes Diwali, the country's biggest, and mid-way through the Muslim holy month of Ramadan, which started at the beginning of September.
President Pratibha Patil, Prime MinisterManmohan Singh and Sonia Gandhi, president of the ruling Congress party, all condemned the attacks.
U.S. Ambassador to India David C. Mulford extended his government's sympathies to the victims and their families.
Foreign Hand
The government has previously blamed terrorist attacks on organizations linked to foreign powers, without offering evidence or making arrests. Local media often blame the attacks on groups backed by Pakistan or Bangladesh, without identifying the security officials who provided the information.
Sixteen bombs exploded in Ahmedabad within 20 minutes late on July 26, a day after seven bombs tore through India's technology hub of Bangalore, killing two. At least 20 devices hidden in cars and garbage cans were discovered and defused in the Gujarat city of Surat, days after the Ahmedabad blasts.
Indian Mujahideen had claimed responsibility for the Ahmedabad and Jaipur blasts and threatened more attacks. The group has claimed previously that the attack was in revenge for violence in Gujarat between Hindus and Muslims in 2002, in which almost 2,000 people were killed.
To contact the reporters on this story: Jay Shankar in Bangalore at jshankar1@bloomberg.netPratik Parija in New Delhi at pparija@bloomberg.net.
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China Approves Anti-Monopoly Working Rules, Xinhua Reports
Sept. 14 (Bloomberg) -- China's anti-monopoly agency, led by Vice Premier Wang Qishan, approved working rules for the newly established government body at its first meeting recently, the official Xinhua News Agency reported.
The China Anti-Monopoly Commission plans to issue appraisal reports on overall competitive conditions, publish guidelines and standards for various industries, and establish a database to reflect the state of different markets, the report said.
China's anti-monopoly law took effect on Aug. 1.
For Related News: Top currency news: TOP FRX News on China's currency: NSE YUAN IN HEADLINE Stories on China economy: NSE CHINA ECONOMY IN WIRE: BN
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The China Anti-Monopoly Commission plans to issue appraisal reports on overall competitive conditions, publish guidelines and standards for various industries, and establish a database to reflect the state of different markets, the report said.
China's anti-monopoly law took effect on Aug. 1.
For Related News: Top currency news: TOP FRX
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All Nippon Cancels Flights on Check-in System Problem
By Masaki Kondo
Sept. 14 (Bloomberg) -- All Nippon Airways Co., Japan's second-largest carrier, canceled 33 domestic flights because of a malfunction of its automated check-in system.
About 4,300 passengers were affected as of 1:30 p.m., the Tokyo-based airline said in a faxed statement.
``Some of our check-in terminals aren't working,'' said Kunio Shibata, a spokesman for All Nippon. ``We're investigating and don't have any details yet.''
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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Sept. 14 (Bloomberg) -- All Nippon Airways Co., Japan's second-largest carrier, canceled 33 domestic flights because of a malfunction of its automated check-in system.
About 4,300 passengers were affected as of 1:30 p.m., the Tokyo-based airline said in a faxed statement.
``Some of our check-in terminals aren't working,'' said Kunio Shibata, a spokesman for All Nippon. ``We're investigating and don't have any details yet.''
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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Origin Energy to Release Report Used to Defend Hostile BG Bid
By Robert Fenner
Sept. 14 (Bloomberg) -- Origin Energy Ltd., Australia's biggest producer of coal-seam gas, will release the full report it used to defend against BG Group Plc's lapsed A$13.5 billion ($10.9 billion) hostile takeover offer.
The report, which Origin commissioned from Grant Samuel & Associates Pty, valued the Sydney-based company at between A$28.55 and A$30.71 a share. Reading, England-based BG had offered A$15.37 a share. Origin shares closed Friday at A$17.01.
``The valuation is quite consistent with our own internal view,'' Origin Chief Executive Officer Grant King told the Australian Broadcasting Corp. ``Therefore, from a management perspective that's what we think the company is worth.''
BG, the U.K.'s third-biggest oil and gas company, let its offer lapse last week after the Australian company attracted an investment of as much as $8 billion from ConocoPhillips for a liquefied natural gas joint venture.
The agreement for Houston-based ConocoPhillips to acquire a 50 percent stake in Origin's coal-seam gas unit needs approval from Australia's Foreign Investment Review Board and may be completed in late October, Origin said Sept. 8.
Grant Samuel valued Origin's coal-seam gas unit alone at between A$18.70 and A$19.49 a share, more than BG offered for all of the company, which is also Australia's second-biggest electricity and gas retailer.
ConocoPhillips, the second-biggest U.S. oil refiner, will make an initial $5 billion payment to buy into the venture, which will process coal-seam gas into LNG for export to Asia.
The venture plans to initially build two liquefied natural gas production units, each with a capacity of 3.5 million metric tons a year, with deliveries scheduled to start by 2014.
No decision has been made on where to put the plant, and Origin may pool its facilities with other LNG exporters into a joint site, King said today.
``There clearly will be economics of co-operation there,'' King said.
To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net
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Sept. 14 (Bloomberg) -- Origin Energy Ltd., Australia's biggest producer of coal-seam gas, will release the full report it used to defend against BG Group Plc's lapsed A$13.5 billion ($10.9 billion) hostile takeover offer.
The report, which Origin commissioned from Grant Samuel & Associates Pty, valued the Sydney-based company at between A$28.55 and A$30.71 a share. Reading, England-based BG had offered A$15.37 a share. Origin shares closed Friday at A$17.01.
``The valuation is quite consistent with our own internal view,'' Origin Chief Executive Officer Grant King told the Australian Broadcasting Corp. ``Therefore, from a management perspective that's what we think the company is worth.''
BG, the U.K.'s third-biggest oil and gas company, let its offer lapse last week after the Australian company attracted an investment of as much as $8 billion from ConocoPhillips for a liquefied natural gas joint venture.
The agreement for Houston-based ConocoPhillips to acquire a 50 percent stake in Origin's coal-seam gas unit needs approval from Australia's Foreign Investment Review Board and may be completed in late October, Origin said Sept. 8.
Grant Samuel valued Origin's coal-seam gas unit alone at between A$18.70 and A$19.49 a share, more than BG offered for all of the company, which is also Australia's second-biggest electricity and gas retailer.
ConocoPhillips, the second-biggest U.S. oil refiner, will make an initial $5 billion payment to buy into the venture, which will process coal-seam gas into LNG for export to Asia.
The venture plans to initially build two liquefied natural gas production units, each with a capacity of 3.5 million metric tons a year, with deliveries scheduled to start by 2014.
No decision has been made on where to put the plant, and Origin may pool its facilities with other LNG exporters into a joint site, King said today.
``There clearly will be economics of co-operation there,'' King said.
To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net
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Barclays Considers Bid for Lehman as Government Seeks Solution
By Ben Livesey and Yalman Onaran
Sept. 14 (Bloomberg) -- Barclays Plc, the U.K.'s third- biggest bank, moved closer to making a bid for Lehman Brothers Holdings Inc. as the U.S. government raced to find a solution for the faltering investment bank, two people familiar with the situation said.
Barclays's takeover approach depends on whether losses from Lehman's mortgage-related holdings can be sealed off, said the people, who declined to be identified because no formal offer has been made. Bank of America Corp., the biggest U.S. consumer bank, also is among the potential bidders for New York-based Lehman, which has lost 94 percent of its market value this year after record losses from investments tied to mortgages.
``The solution is to force the merger of Lehman now, this weekend, with a big commercial bank,'' said Richard Bove, a Lutz, Florida-based analyst at Ladenburg Thalmann & Co.
Lehman, led by Chief Executive Officer Richard Fuld, may be forced to liquidate unless buyers step up for all or part of the 158-year-old company, U.S. Treasury Secretary Henry Paulson and New York Federal Reserve Bank President Timothy Geithner told the heads of Wall Street's biggest firms at a meeting Sept. 12. Paulson has said he's reluctant to use government money to rescue Lehman. Talks with the banks continued yesterday without producing an agreement.
``Senior representatives of major financial institutions reconvened on Saturday with U.S. officials at the New York Fed. Discussions are expected to continue tomorrow,'' a New York Fed spokesman said.
Bad Bank
With backing from the company's board, Barclays President Robert Diamond, 57, is leading a team to review Lehman's books and gauge the level of guarantees the bank would need to cover potential losses, the people said. Peter Truell, a Barclays spokesman, declined to comment.
``Acquisitions are difficult for Barclays because of capital constraints,'' said Simon Willis, an analyst at NCB Stockbrokers Ltd. in London, who has a ``reduce'' rating on the London-based banks. Barclays raised 4.5 billion pounds ($8 billion) in a share sale in June to shore up capital depleted by credit losses and increase its securities trading and fund management units in the U.S.
Geithner, 47, and Paulson, 62, are pushing Wall Street to contribute money to a so-called bad bank that would assume Lehman's $50 billion of devalued real estate assets. That would make it easier for a buyer to take over the rest of the company while the assets are sold off.
The approach is similar to one Lehman presented to investors last week, which the company said would cost $5 billion to $7 billion.
Echoes of LTCM
Such an arrangement would be reminiscent of the rescue of hedge fund Long-Term Capital Management LP, which failed in 1998 as Russia defaulted on its debt, roiling global markets. Spurred by the New York Fed, Wall Street firms including Lehman contributed cash to prop up LTCM.
Lehman CEO Fuld, who participated in the LTCM talks and built Lehman into the biggest U.S. underwriter of mortgage securities during his four decades at the investment bank, was pushed toward a forced sale this past week after talks about a cash infusion from Korea Development Bank ended, eroding investor confidence and the company's market value.
Citigroup Inc.'s Vikram Pandit, JPMorgan Chase & Co.'s Jamie Dimon, Morgan Stanley's John Mack, Goldman Sachs Group Inc.'s Lloyd Blankfein, Merrill Lynch & Co.'s John Thain and Credit Suisse Group AG's Brady Dougan were among the CEOs at the meeting with government officials, according to the people, who asked not to be identified because the gathering was private.
HSBC, Goldman
Robert Kelly, CEO of Bank of New York Mellon Corp., Robert Wolf, chairman of UBS AG in the Americas, and Christopher Cox, chairman of the U.S. Securities and Exchange Commission, also participated, the people said, who asked not to be identified because the meeting wasn't public. Bank of America CEO Kenneth Lewis didn't attend because his company is a potential bidder for Lehman, one person said.
Helping lead the discussion was Kendrick Wilson, a former Goldman executive whom Paulson tapped last month as an adviser.
HSBC Holdings Plc, Europe's largest bank by market value, is also considering a bid for Lehman, the Wall Street Journal reported yesterday, without saying where it got the information. Goldman, the largest securities firm, is interested in Lehman's real-estate portfolio, the Journal said.
HSBC spokesman Richard Lindsay said the company doesn't comment on market speculation. Goldman spokesman Lucas van Praag also declined to comment.
Paulson, the former chairman of Goldman, doesn't want to put up money to help fund any Lehman acquisition, a person familiar with his thinking said Sept. 12.
`Mexican Standoff'
Unlike when the Fed committed $29 billion to help JPMorgan take over Bear Stearns Cos. in March, Lehman has access to a lending facility for brokers that would permit an orderly process for unwinding the firm, the person said.
Paulson stepped in last week to guarantee the debt and mortgage-backed securities of home-loan financing companies Fannie Mae and Freddie Mac.
If the government's resistance to fund the purchase lowers the price offered for Lehman, Fuld could balk as well, said Brad Hintz, an analyst at Sanford C. Bernstein & Co.
``We might have a Mexican standoff, with two guys holding guns to each others' heads but nobody firing,'' Hintz said.
Lehman hired the New York law firm Weil, Gotshal & Manges LLP to advise the company on a potential bankruptcy filing, the Journal reported yesterday, without saying where it got the information.
AIG, WaMu
The government is pushing for a quick resolution because Paulson is concerned panic may spread to other financial institutions, Ladenburg Thalmann's Bove said. American International Group Inc., the largest U.S. insurer, and Seattle- based lender Washington Mutual Inc. each plummeted in New York trading last week on speculation about their financial health.
AIG may move up plans to raise capital or sell assets after the shares plunged 46 percent, according to a person familiar with the company. WaMu, which fell 36 percent, may sell parts of its nationwide bank-branch network to raise cash, according L. William Seidman, a former chairman of the Federal Deposit Insurance Corp.
A Lehman sale may be possible without government backing, an analysis of Lehman's distressed mortgage assets shows. In a worst-case scenario -- with the assets discounted more deeply than in recent distressed sales -- a buyer could write off almost half of Lehman's mortgage holdings and still have $7 billion of equity left in company, based on figures the investment bank disclosed when it reported third-quarter financial results last week.
`Massive Discount'
``The firm should be worth something even after the troubled assets are taken out at a massive discount because Lehman has a good franchise,'' said Corne Biemans, a Boston- based senior portfolio manager at Fortis Investments, which oversees about $200 billion. ``There are distressed asset buyers who should be interested in this stuff at such serious haircuts.''
Lehman's mortgage-related assets have been marked down to between 29 cents and 85 cents on the dollar. Reducing valuations further to between 5 cents on the dollar for collateralized debt obligations and 35 cents for European mortgages would result in $21 billion of further writedowns. Shareholders' equity was $28 billion at the end of firm's fiscal quarter in August.
To contact the reporters on this story: Ben Livesey in London blivesey@bloomberg.net; Yalman Onaran in New York at yonaran@bloomberg.net.
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Sept. 14 (Bloomberg) -- Barclays Plc, the U.K.'s third- biggest bank, moved closer to making a bid for Lehman Brothers Holdings Inc. as the U.S. government raced to find a solution for the faltering investment bank, two people familiar with the situation said.
Barclays's takeover approach depends on whether losses from Lehman's mortgage-related holdings can be sealed off, said the people, who declined to be identified because no formal offer has been made. Bank of America Corp., the biggest U.S. consumer bank, also is among the potential bidders for New York-based Lehman, which has lost 94 percent of its market value this year after record losses from investments tied to mortgages.
``The solution is to force the merger of Lehman now, this weekend, with a big commercial bank,'' said Richard Bove, a Lutz, Florida-based analyst at Ladenburg Thalmann & Co.
Lehman, led by Chief Executive Officer Richard Fuld, may be forced to liquidate unless buyers step up for all or part of the 158-year-old company, U.S. Treasury Secretary Henry Paulson and New York Federal Reserve Bank President Timothy Geithner told the heads of Wall Street's biggest firms at a meeting Sept. 12. Paulson has said he's reluctant to use government money to rescue Lehman. Talks with the banks continued yesterday without producing an agreement.
``Senior representatives of major financial institutions reconvened on Saturday with U.S. officials at the New York Fed. Discussions are expected to continue tomorrow,'' a New York Fed spokesman said.
Bad Bank
With backing from the company's board, Barclays President Robert Diamond, 57, is leading a team to review Lehman's books and gauge the level of guarantees the bank would need to cover potential losses, the people said. Peter Truell, a Barclays spokesman, declined to comment.
``Acquisitions are difficult for Barclays because of capital constraints,'' said Simon Willis, an analyst at NCB Stockbrokers Ltd. in London, who has a ``reduce'' rating on the London-based banks. Barclays raised 4.5 billion pounds ($8 billion) in a share sale in June to shore up capital depleted by credit losses and increase its securities trading and fund management units in the U.S.
Geithner, 47, and Paulson, 62, are pushing Wall Street to contribute money to a so-called bad bank that would assume Lehman's $50 billion of devalued real estate assets. That would make it easier for a buyer to take over the rest of the company while the assets are sold off.
The approach is similar to one Lehman presented to investors last week, which the company said would cost $5 billion to $7 billion.
Echoes of LTCM
Such an arrangement would be reminiscent of the rescue of hedge fund Long-Term Capital Management LP, which failed in 1998 as Russia defaulted on its debt, roiling global markets. Spurred by the New York Fed, Wall Street firms including Lehman contributed cash to prop up LTCM.
Lehman CEO Fuld, who participated in the LTCM talks and built Lehman into the biggest U.S. underwriter of mortgage securities during his four decades at the investment bank, was pushed toward a forced sale this past week after talks about a cash infusion from Korea Development Bank ended, eroding investor confidence and the company's market value.
Citigroup Inc.'s Vikram Pandit, JPMorgan Chase & Co.'s Jamie Dimon, Morgan Stanley's John Mack, Goldman Sachs Group Inc.'s Lloyd Blankfein, Merrill Lynch & Co.'s John Thain and Credit Suisse Group AG's Brady Dougan were among the CEOs at the meeting with government officials, according to the people, who asked not to be identified because the gathering was private.
HSBC, Goldman
Robert Kelly, CEO of Bank of New York Mellon Corp., Robert Wolf, chairman of UBS AG in the Americas, and Christopher Cox, chairman of the U.S. Securities and Exchange Commission, also participated, the people said, who asked not to be identified because the meeting wasn't public. Bank of America CEO Kenneth Lewis didn't attend because his company is a potential bidder for Lehman, one person said.
Helping lead the discussion was Kendrick Wilson, a former Goldman executive whom Paulson tapped last month as an adviser.
HSBC Holdings Plc, Europe's largest bank by market value, is also considering a bid for Lehman, the Wall Street Journal reported yesterday, without saying where it got the information. Goldman, the largest securities firm, is interested in Lehman's real-estate portfolio, the Journal said.
HSBC spokesman Richard Lindsay said the company doesn't comment on market speculation. Goldman spokesman Lucas van Praag also declined to comment.
Paulson, the former chairman of Goldman, doesn't want to put up money to help fund any Lehman acquisition, a person familiar with his thinking said Sept. 12.
`Mexican Standoff'
Unlike when the Fed committed $29 billion to help JPMorgan take over Bear Stearns Cos. in March, Lehman has access to a lending facility for brokers that would permit an orderly process for unwinding the firm, the person said.
Paulson stepped in last week to guarantee the debt and mortgage-backed securities of home-loan financing companies Fannie Mae and Freddie Mac.
If the government's resistance to fund the purchase lowers the price offered for Lehman, Fuld could balk as well, said Brad Hintz, an analyst at Sanford C. Bernstein & Co.
``We might have a Mexican standoff, with two guys holding guns to each others' heads but nobody firing,'' Hintz said.
Lehman hired the New York law firm Weil, Gotshal & Manges LLP to advise the company on a potential bankruptcy filing, the Journal reported yesterday, without saying where it got the information.
AIG, WaMu
The government is pushing for a quick resolution because Paulson is concerned panic may spread to other financial institutions, Ladenburg Thalmann's Bove said. American International Group Inc., the largest U.S. insurer, and Seattle- based lender Washington Mutual Inc. each plummeted in New York trading last week on speculation about their financial health.
AIG may move up plans to raise capital or sell assets after the shares plunged 46 percent, according to a person familiar with the company. WaMu, which fell 36 percent, may sell parts of its nationwide bank-branch network to raise cash, according L. William Seidman, a former chairman of the Federal Deposit Insurance Corp.
A Lehman sale may be possible without government backing, an analysis of Lehman's distressed mortgage assets shows. In a worst-case scenario -- with the assets discounted more deeply than in recent distressed sales -- a buyer could write off almost half of Lehman's mortgage holdings and still have $7 billion of equity left in company, based on figures the investment bank disclosed when it reported third-quarter financial results last week.
`Massive Discount'
``The firm should be worth something even after the troubled assets are taken out at a massive discount because Lehman has a good franchise,'' said Corne Biemans, a Boston- based senior portfolio manager at Fortis Investments, which oversees about $200 billion. ``There are distressed asset buyers who should be interested in this stuff at such serious haircuts.''
Lehman's mortgage-related assets have been marked down to between 29 cents and 85 cents on the dollar. Reducing valuations further to between 5 cents on the dollar for collateralized debt obligations and 35 cents for European mortgages would result in $21 billion of further writedowns. Shareholders' equity was $28 billion at the end of firm's fiscal quarter in August.
To contact the reporters on this story: Ben Livesey in London blivesey@bloomberg.net; Yalman Onaran in New York at yonaran@bloomberg.net.
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Gulf Central Bankers May Adopt Monetary Union Draft: Week Ahead
By Matthew Brown
Sept. 14 (Bloomberg) -- Central bank governors of five Gulf states will probably approve a new draft accord for monetary union at a meeting in Jeddah, Saudi Arabia, this week, the latest step toward a single currency for the region.
Gulf finance ministers will discuss the draft at the same meeting, scheduled for Sept. 15 and 16. Heads of state may give final approval at a meeting in Muscat, Oman, before the end of the year, said Salim Al Gudhea, head of the monetary union unit at the Gulf Cooperation Council Secretariat General, in an interview.
Progress toward a single currency eases pressure on Saudi Arabia, the United Arab Emirates, Qatar, Kuwait and Bahrain to revalue their currencies or drop pegs to the dollar after inflation accelerated. The five agreed in 2001 to form a European Union-style monetary union by 2010 to boost regional trade.
Central bankers ``are expected to pass the draft and that is a positive step,'' said Monica Malik, Dubai-based chief economist at EFG-Hermes Holding SAE, Egypt's largest investment bank. This week is ``the easy part. The stages after that will be tricky.''
Contracts to buy dirhams in a year have fallen 3.1 percent since a March 18 high. Saudi riyal forwards dropped 2.2 percent in the same period.
The five states are pushing ahead with monetary union after Oman, the sixth Gulf Arab state, pulled out last year. The agreement allows for the creation of a monetary council, a precursor to the Gulf central bank, the location of which will be decided at the meeting this week.
`Difficult Bit'
The council will be responsible for deciding the level at which the Gulf currency is pegged to the dollar, aligning interest rates, monetary tools and goals.
``Technical issues won't be tackled until the monetary council is set up, and that may be a long way into 2009, depending on how quickly it is ratified by national parliaments,'' said Malik. ``That's going to be the difficult bit and is likely to result in much-greater delays.''
The central bank governors will also vote on whether to create the monetary council after three or five countries have ratified the agreement, Naser Al-Kaud, deputy assistant general for economic affairs at the GCC Secretariat, said by phone yesterday.
``We are suggesting it; I am not sure if they will agree,'' said Al-Kaud. ``It may help start the council sooner.''
Last week, the seven Persian Gulf benchmarks tracked by Bloomberg declined last week. The Dubai Financial Market General Index slumped 9.2 percent. Oman's Muscat Securities Market 30 Index declined 7 percent and Saudi Arabia's Tadawul All-Share Index fell 4.4 percent.
Tamweel PJSC, the U.A.E.'s second-biggest mortgage lender by market value, tumbled 14 percent following the arrest of the company's deputy chief executive officer.
To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net
Read more...
Sept. 14 (Bloomberg) -- Central bank governors of five Gulf states will probably approve a new draft accord for monetary union at a meeting in Jeddah, Saudi Arabia, this week, the latest step toward a single currency for the region.
Gulf finance ministers will discuss the draft at the same meeting, scheduled for Sept. 15 and 16. Heads of state may give final approval at a meeting in Muscat, Oman, before the end of the year, said Salim Al Gudhea, head of the monetary union unit at the Gulf Cooperation Council Secretariat General, in an interview.
Progress toward a single currency eases pressure on Saudi Arabia, the United Arab Emirates, Qatar, Kuwait and Bahrain to revalue their currencies or drop pegs to the dollar after inflation accelerated. The five agreed in 2001 to form a European Union-style monetary union by 2010 to boost regional trade.
Central bankers ``are expected to pass the draft and that is a positive step,'' said Monica Malik, Dubai-based chief economist at EFG-Hermes Holding SAE, Egypt's largest investment bank. This week is ``the easy part. The stages after that will be tricky.''
Contracts to buy dirhams in a year have fallen 3.1 percent since a March 18 high. Saudi riyal forwards dropped 2.2 percent in the same period.
The five states are pushing ahead with monetary union after Oman, the sixth Gulf Arab state, pulled out last year. The agreement allows for the creation of a monetary council, a precursor to the Gulf central bank, the location of which will be decided at the meeting this week.
`Difficult Bit'
The council will be responsible for deciding the level at which the Gulf currency is pegged to the dollar, aligning interest rates, monetary tools and goals.
``Technical issues won't be tackled until the monetary council is set up, and that may be a long way into 2009, depending on how quickly it is ratified by national parliaments,'' said Malik. ``That's going to be the difficult bit and is likely to result in much-greater delays.''
The central bank governors will also vote on whether to create the monetary council after three or five countries have ratified the agreement, Naser Al-Kaud, deputy assistant general for economic affairs at the GCC Secretariat, said by phone yesterday.
``We are suggesting it; I am not sure if they will agree,'' said Al-Kaud. ``It may help start the council sooner.''
Last week, the seven Persian Gulf benchmarks tracked by Bloomberg declined last week. The Dubai Financial Market General Index slumped 9.2 percent. Oman's Muscat Securities Market 30 Index declined 7 percent and Saudi Arabia's Tadawul All-Share Index fell 4.4 percent.
Tamweel PJSC, the U.A.E.'s second-biggest mortgage lender by market value, tumbled 14 percent following the arrest of the company's deputy chief executive officer.
To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net
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