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Greece Extends Deadline for Debt Buyback by 2 Days

December 10, 2012 by Leave a Comment

LONDON — Greece, on the verge of completing a crucial plan to reduce its debt burden, on Monday extended for another two days the deadline for foreign investors and Greek banks to sell their deeply discounted bonds back to the government.

Announced a week ago, the deadline for taking part in the buyback was to have been last Friday. But even though Greek banks and hedge funds have offered close to €26 billion, or $33.6 billion, in bonds, that amount falls short of the goal of €30 billion that the government’s troika of international creditors have set as a minimum for the program to be considered successful.

The new deadline is noon in London on Tuesday.

Having borrowed €10 billion from a European bailout fund to buy back the debt, the goal is for net relief of €20 billion — an amount the International Monetary Fund has said Greece must retire if the institution is to continue lending to the country.

The I.M.F., along with the European Commission and the European Central Bank, make up the troika that has bailed out Greece twice.

Bankers close to the bond buyback program say that hedge funds, which for weeks have been coy about whether they might agree to sell at what would be an average price of around 33 cents per euro, have participated in larger-than-expected numbers. And the bankers say they still expect the buyback to be completed. But with Greek banks reluctant to sell all of their bonds back to the government, the buyback’s success remains dependent on foreign investors selling the majority of their holdings.

Greek banks are believed to own €17 billion worth of bonds. Unlike foreign investors, many of whom bought the securities at knockdown prices, the Greek banks will not reap big profits if they sold their bonds — which were restructured earlier this year — at around 33 cents per euro. Bankers estimate that foreign investors, which own about €24 billion worth of bonds, have offered between €15 billion and €17 billion in debt so far.

At a time when blue-chip collateral is hard to find in Europe, the restructured bonds are seen by the Greek banks as a premium asset that can be used to borrowing much-needed funds from the European Central Bank.

“If the foreigners do not come in we are toast,” said one banker who was involved in the transaction but requested anonymity because he was not authorized to speak publicly.

The head of the Greek debt management agency, Stelios Papadopoulos, in a statement on Monday, made it clear to reluctant investors that they might never get another chance to sell their debt at prices as high as the government is offering. “Investors should bear in mind that even if Greece accepts all bonds tendered in the invitation, it will continue to engage with its official sector creditors in considering further steps to put its debt on a sustainable path,” he said. “Future measures may not involve an opportunity to exit investments in designated securities at the levels offered for this buyback.”

Such measures might include a second buyback offer at a lower price, with the government invoking collective action clauses to force holdout investors to accept the terms. The government could also try to use provisions in the bond contracts that might allow Greece to keep paying its European creditors while forcing private-sector bondholders to take losses.

Such steps are aggressive, though, and would surely be challenged in courts by foreign investors. Given the recent successes that hedge funds have had in suing Argentina and Ireland with regard to past bond restructurings, Greece — and Europe — would think long and hard before taking this type of action.

Article source: http://www.nytimes.com/2012/12/11/business/global/greece-extends-deadline-for-debt-buyback.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Michael Woodford Would Like a Chance to Redeem Olympus

November 24, 2011 by Leave a Comment

Since then, Mr. Woodford has taken the decidedly non-Japanese step of publicly rebuking his employer and, by blowing the whistle on his own company, has done something rare for a chief executive anywhere in the world.

His allegations of billion-dollar malfeasance have set off investigations on three continents. Olympus has since acknowledged long-running efforts that it says were meant to hide steep financial losses. Now, Mr. Woodford is making his next unorthodox move.

On Friday he plans to return to Olympus headquarters for a board meeting, where he said he would demand that the entire board come clean on details of their actions and step down to take responsibility. (Because of a technicality, Mr. Woodford is still an Olympus director.)

He said he would offer to return to Olympus as president and lead a turnaround at the iconic Japanese company that some analysts and investors fear risks being delisted from the Tokyo Stock Exchange and could even be on the verge of collapse.

“I want to look them in the eye and talk to them directly,” Mr. Woodford said at an interview over dinner Wednesday in Tokyo, shortly after flying from London and being thronged by Japanese reporters eager to speak with the outsider who dared to speak up.

“I hope the company won’t be delisted, but I certainly wouldn’t compromise getting to the truth, because staying listed shouldn’t be the criteria,” he said.

Olympus’s taking Mr. Woodford up on his comeback offer might be a long shot. But hundreds of rank-and-file employees at Olympus have signed petitions urging the company’s top management to resign and calling for Mr. Woodford to return — a rare uprising in a nation that values company loyalty above all.

If he were reinstated, Mr. Woodford said, change at the company would be swift. And any housecleaning would include unwinding Olympus, a maker of medical imaging products and digital cameras, from the jumble of unrelated small businesses it acquired as part of the financial cover-up.

“The sooner you get out of the cat food and face cream and microwavable plates, the better,” he said. “Almost all of it, I would shut quickly.”

By challenging the Olympus board, Mr. Woodford — the first non-Japanese to lead Olympus in its 94-year history and one of few foreign chief executives in the country — will be confronting a closed, homogenous corporate culture that changed little through Japan’s freewheeling bubble economy of the late 1980s, the subsequent bubble-bursting in the ’90s and the national economic stagnation ever since.

Truly independent board members are rare in corporate Japan, and foreign ones are even rarer. Cozy cross-shareholding arrangements typically ensure compliant stockholders who tolerate mediocre management, or look the other way in cases of boardroom impropriety. And in a mixture of fact and myth, often lurking in the background of the Japanese business world are tales of corruption and rumored links to the country’s infamous organized crime syndicates, the yakuza.

In the case of Olympus, investigations by public officials in Japan and law enforcement agencies in the United States and Britain have focused on $687 million in advisory fees paid in 2008 to an obscure financial adviser for Olympus’s acquisition of the British medical equipment maker Gyrus — fees equal to roughly a third of the $2 billion acquisition price and more than 30 times the going rate. Olympus also acquired three small Japanese companies from 2006 to 2008 with little in common with its core business for a total of $773 million, only to write down most of the value of each within the same fiscal year it was acquired.

Article source: http://feeds.nytimes.com/click.phdo?i=b03eac5759354b3bd7d4605ba1ed536f

Filed Under: Business News Tagged With: , ,

Some Fed Officials Sought More Economic Stimulus

August 30, 2011 by Leave a Comment

Minutes of the Aug. 9 discussions show that Fed officials discussed a range of actions, including another round of Treasury bond purchases. Some Fed officials said a weaker economy called for such a step.

Fed officials in the end opted to keep rates low until at least mid-2013. They also added a second day to their September meeting. That raised speculation that the Fed would announce some further action after that meeting.

Three Fed members opposed any steps for fear they could ignite inflation. The 7-3 vote after the meeting marked the first time in nearly 20 years that at least three members dissented from a Fed statement.

The bond purchases are intended to keep long-term rates low and aid the economy. The second round, announced last year, sparked a 28 percent rally in the Dow Jones industrial average through April 29.

Investors had hoped that Fed Chairman Ben Bernanke would provide details of the Fed’s next moves during a highly anticipated speech in Jackson Hole, Wyo. But Bernanke offered no new steps. He did say the central bank would extend its September meeting to two days to allow for a fuller discussion. On Tuesday, the minutes show that the board had pushed for the longer meeting.

A turbulent summer has fueled fears that the U.S. is on the verge of another recession.

The economy grew at an annual rate of just 0.7 percent in the first six months of this year, the weakest performance since the recession ended two years ago. Europe’s debt crisis has intensified. U.S. lawmakers fought over increasing the nation’s debt limit, and only agreed to do so hours before a potential default. That prompted Standard Poor’s to lower its rating on U.S. long-term debt for the first time in history.

Stocks plunged in late July and early August. The Dow has lost nearly 11 percent of its value since July 21.

A handful of reports showed that growth picked up at the start of July-September quarter. In July, consumers spending rose by the most in five months, the economy created twice the number of jobs as in each of the previous two months, and a rebound in the auto sector drove factory production up by the most since the Japan crisis.

Still, consumer confidence in the economy plunged in August to a two-year low, according to a report Tuesday from the Conference Board. The downgrade in U.S. debt and the stock market plunge likely contributed to the decline.

A key question for the economy is whether consumers and business will continue to pull back on spending this fall.

Article source: http://feeds.nytimes.com/click.phdo?i=b802ac8aa6696e79c19e31cf07cafabc

Filed Under: Business News Tagged With: , ,

Jobless Claims Decline to 4-Month Low

August 12, 2011 by Leave a Comment

Initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 395,000, the Labor Department said, the lowest level since early April. Economists had expected a reading of 400,000.

“We are not necessarily on the verge of another dip in economic activity,” said Millan Mulraine, a senior macro strategist at TD Securities in New York.

“The level of claims at this point is more consistent with at least no deterioration in labor market conditions and at best an economy that is adding jobs at about 200,000” a month, Mr. Mulraine said.

But the optimism generated by the claims report was damped somewhat by a jump in the trade deficit to $53.1 billion in June, the largest since October 2008, from $50.8 billion in May.

As a result of the wider trade shortfall, economists estimated the government could lower the second-quarter’s already weak annual growth rate of 1.3 percent to 0.9 percent.

The government will release its second estimate for second-quarter gross domestic product on Aug. 26. The economy grew at a 0.4 percent rate in the first quarter.

The Federal Reserve said on Tuesday that economic growth was considerably weaker than expected and unemployment would fall only gradually.

Hiring accelerated in July after abruptly slowing in the previous two months. However, there are worries that a sharp sell-off in stocks and the fight between Democrats and Republicans over the government’s debt ceiling could curtail employers’ enthusiasm to hire new workers.

“The key point here is that a clear downward trend in claims has emerged in recent weeks, even as the debt ceiling chaos reached its peak,” said Ian Shepherdson, chief United States economist at High Frequency Economics in Valhalla, N.Y.

“We still need to see how the drop in stocks might feed back into claims, but with consumers’ spending accelerating in recent weeks, why would firms fire more people?”

An increase in the volume of oil imports pushed the monthly oil import bill in June to its highest since August 2008. That and the second consecutive month of declines in exports contributed to the wider trade deficit in June, the government reported.

Imports from China also rose nearly 5 percent to $34.4 billion, lifting the closely watched trade gap with that country to $26.7 billion, the highest in 10 months.

United States exports fell for a second consecutive month to $170.9 billion, as shipments to Canada, Mexico, Brazil, Japan, France, China and Central America all declined.

“The sharp drop in exports is a major concern for the economic outlook as it is an indication that the pace of global activity may be slowing appreciably,” Mr. Mulraine at TD Securities said.

Data on Wednesday showed China’s exports hit a record high in July as shipments to Europe and the United States proved surprisingly buoyant. July exports rose 20.4 percent from a year ago, the strongest gain since April.

Article source: http://feeds.nytimes.com/click.phdo?i=bd92881723fd4b08d46862b2dae05596

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A Year After G.M. Unloaded It, Saab Is in Trouble Again

April 8, 2011 by Leave a Comment

Production has been halted since Tuesday at the Saab plant in Trollhattan, near Gothenburg, after several disruptions last week and amid disputes with suppliers over payments and contracts. Saab said Thursday that assembly lines would not resume until early next week as it scrambled to find money to pay its suppliers.

“Some components are not getting through, so we wanted to avoid stop-go production,” said Eric Geers, a Saab spokesman. He conceded the company faced a “tight cash situation,” but added that it was confident that it could agree on terms with suppliers this week for work to resume by Monday.

The disruptions punctuated weeks of uncertainty at Saab, which Spyker Cars, a little known maker of sports cars based in the Netherlands, bought from G.M. in 2010 for $74 million in cash and $326 million in preferred shares from a new Saab-Spyker entity.

Last month, Saab’s chief executive, Jan-Ake Jonsson, unexpectedly announced he would step down in May. Meanwhile, the Russian investor Vladimir Antonov — whom G.M. blocked from participating in the deal last year — has renewed his interest in a stake in Saab’s parent, but it is unclear whether he will be allowed in.

Spyker is hoping to make an announcement about financing for Saab on Friday, according to a person briefed on the plans who was not permitted to speak publicly. He declined to elaborate.

Spyker’s chief executive, Victor R. Muller, who is also in temporary control of Saab, insisted this week that Saab was not on the verge of collapse but was merely suffering from “a small glitch.” Those words have not reassured investors. The company’s shares fell 3.5 percent on Thursday, to 3.85 euros ($5.50), in Amsterdam, and are down 11 percent this year, giving it a market capitalization of 77 million euros ($110 million).

The problem threatens to exacerbate difficulties across a swath of Saab suppliers, which have delivered millions of dollars in parts but have yet to be paid, said Svenake Berglie, chief executive of FKG, a suppliers’ association.

Many are just now emerging from the global recession and have not been able to strengthen their balance sheets, he said. “This has to be solved by next week; otherwise it will be really troublesome for our members.”

Mr. Berglie described Saab as the lifeblood for local engineering jobs. “We need Saab in Scandinavia,” he said.

The Swedish automaker built up a strong brand reputation, particularly from the 1970s onward, for its stylish designs and powerful sedans, although the reliability of its cars was often questioned. It employs 3,800 people, mostly at the Trollhattan plant, in which G.M. invested 750 million euros, ($1.1 billion). Several thousand more supply jobs depend on Saab. Saabs are also produced at a G.M. plant in Mexico.

“The situation is certainly not very good,” said Peter Cooke, a professor at the Center for Automotive Management at the University of Buckingham in England. “My concern from day one was that Spyker might have bitten off more than it could chew.”

Spyker, which made only several dozen luxury cars in 2009, bought Saab in February 2010, after G.M. had threatened to shut it down as part of a restructuring.

Mr. Antonov, chairman of the Convers Group in Moscow, had owned a big stake in Spyker before the purchase, but G.M. compelled him to sell his holding before it would negotiate the sale because news reports had linked him to organized crime.

Spyker has recently applied to allow Mr. Antonov back as a shareholder, but the Swedish government has a potential veto because, as part of the original sale, it guaranteed a 400 million euro ($571 million) loan to Saab from the European Investment Bank. The Swedish authorities are investigating claims of impropriety involving Mr. Antonov, who has denied wrongdoing.

Andrew E. Kramer contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=1cb81afb8c9ce36537cb8f3db1574d0f

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