Archive: December, 2009
When you owe $100,000, you have a problem. When you owe $100 million, your bank has a problem.
Builder Brian O'Neill owes Citizens Bank of Pennsylvania $61 million for office construction at his Uptown Worthington development out in Frazer, and they're fighting about it, as Phila Business Journal's Natalie Kostelni documented here last week. Follows VWR Corp.'s decision to not put its headquarters at Worthington after all, as my colleague Diane Mastrull wrote here.
I asked O'Neill where that's headed: The bank is taking over the office part of the project? "No way." So what is this, renegotiation by other means? "I like that. That's exactly what it is. Renegotiation by other means. Can I use that?"
Republic First Bank, Philadelphia, and Metro Bank, Harrisburg, have again extended their mid-2008 merger agreement, which has been stalled while they wait for regulators to say Yes, until next March, or maybe June. They've hired, they've put up new signs (the whole 45 branches and $3 billion in loans and investments will be called Metro Bank), but they're still not united. Announcement here.
Today's Senate vote on a nearly $1 trillion health-care "includes a 10 percent levy on indoor tanning salons, which replaced a previously proposed tax on cosmetic surgery," Bloomberg reports here.
"There are 18,000 to 20,000 places with tanning equipment in the U.S... The tax will probably help drive more salons -- already hurt by declines in consumer spending -- into bankruptcy."
Why? Because plastic surgeons have a stronger lobby, of course. Plus look at the constituents: People who can pay for tummy tucks have more clout than people who can't afford Caribbean vacations.
"Wastewater treatment in the Marcellus Shale alone will likely exceed $3 billion/year in less than ten years as drilling in this massive (natural gas field) accelerates," Boenning & Scattergood water-stock analysts Ryan M. Connors told clients in a report today, citing a study by Penn State..
It takes up to six million gallons of water to use hydraulic fracturing ("fracking") to drive natural gas into production from a single well in the Marcellus rock formation in Pennsylvania and nearby states. Drillers contemplate tens of thousands of wells; Boenning expects 3,300 Marcellus wells by 2020, pumping water at 14 cents a gallon.
"Most of this water returns to the surface in the form of a contaminated liquid," containing "chlorides and sulfates as well as heavy metals," and other caustic compounds, " the disposal of which presents yet-to-be-fully resolved challenges for gas companies," Connors writes.
Exxon is so afraid stricter water-quality legislation could derail shale-gas drilling that the company "inserted a protection clause allowing it to walk away should new laws restrict the company from fracking" in its $41 billion deal to buy Marcellus driller XTO Energy earlier this month.
What to do with all the contaminant? In Texas and Louisiana shale fields, where water-quality laws are relatively lax compared to Pennsylvania, West Virginia and other Eastern states, drillers just truck it across the plains and dump it down thousands of dry oil wells; their big concern is water supply and recycling. But in upstate PA, where water laws are stronger and roads are mountainous, wastewater disposal is expensive.
Some frackers send the water to municipal treatment facilities, but those "are designed to treat biological, not chemical, wastewater."
Tasty Baking is ahead of schedule in turning its 15 baking lines at its old Hunting Park Ave. bakery in North Philadelphia into seven more-automated lines at its new Navy Yard plant in South Philly, which means the transition could be complete by April instead of June, reports Janney Capital Markets analyst Mitchell B. Pinheiro in a report today.
Cupcakes, cookie bars and pies are now baking downtown, with other lines scheduled to move in the weeks after New Year's. The transition to fewer production lines means Tasty needs fewer workers. ADD: "Tasty's original estimate called for a headcount reduction of 215 or about 40% of the Hunting Park workforce," Pinheiro reminded me in an e-mail.
In his report, Pinheiro told clients that the "ultimate earnings power of the new bakery" should be clear by late next year. That translates into job cuts, also "new product capabilities:" We hope that means something our doctors let us eat, and maybe more Tastykake jobs down the road, to repay the private and public investment.
Among the business put aside by the Senate as it's been focused on healthcare reform is the national inheritance tax on dead people's estates, which will otherwise expire for a year on Jan. 1 - and then return, bigger and broader, in 2011.
A Bush-era law temporarily repeals the tax, which currently clips 45 percent of everything you're left above $3.5 million, for all of 2010. That makes next year a convenient time for Uncle Moneybags to die.
But without a new tax law, the tax is scheduled to return in 2011, at around 55 percent - after the first $1 million.
Joseph F. Delaney III graduated from Villanova back in 1985 (post-Bishop McDevitt), picked up a couple of brainy business-oriented masters' degrees (UChicago, London School of Economics), then headed for Wall Street to make his fortune as a trader.
Now he's back, just down the road from alma mater, as president of Radnor-based Waterville Capital and its month-old, $50 million-asset Waterville Large Cap Value Fund, which he runs with partner Sean Bonner, a Radnor High and U of Delaware grad, former Philadelphia Stock Exchange firm owner and Deutsche Bank derivatives trader.
The fund opened long hospital stocks (Coventry Health Care, Humana) and "consumer discretionary" (Meredith Corp.), while avoiding financials and other companies with high financial leverage. "Health care's a value play that we thought was overly beaten up" due to other investors' fears over the new US healthcare proposals, Delaney told me. "The odds were in our favor that we'd get a snapback in value."
Bonner lives in Ardmore, Delaney in Princeton. They met on the years-long Acela rides back and forth to New York. Their commutes are shorter now. "I always wanted to get into equities," Delaney told me, "but there were no jobs in equities right after the 1987 stock market crash. So I got into commodities, and stayed 20 years" - the first 17 at Morgan Stanley, then with a group of Morgan Stanley veterans at Old Lane Capital Management LP.
Omaha investor Warren Buffett's Berkshire Hathaway Corp. has named Comcast Cable Communications president Stephen B. Burke as its newest director, Berkshire says here.
On the Berkshire board, Burke will serve alongside Thomas Murphy, who used to run Capital Cities/ABC with Burke's father, Daniel, when Buffett was a major investor in the company; also Microsoft Chairman Bill Gates; Allen & Co. boss Donald Keough; and others listed here.
Burke, 51, who joined Comcast in 1998 from Disney, is also a member of JPMorgan Chase & Co.'s board, where his peers include: William C. Weldon, head of Johnson & Johnson, where Burke's uncle James E. Burke was once chief executive; Philadelphia congressman-turned-Washington lobbyist Bill Gray, whose clients include Comcast; and others listed here.
Burke's power in US media is expected to grow with Comcast's planned takeover of NBC Universal. Besides his corporate posts, he's also served as trustee chairman of the Children's Hospital of Philadelphia.
Pennsylvania will pay $62 per prisoner per day to send 1,000 surplus inmates to the Muskegon Correctional Facility in Michigan, and another 1,000 to Green Rock Correctional Center in Chatham, Va., to relieve prison overcrowding, state corrections spokeswoman Susan McNaughton told me.
The price pays for security, medical care and transportation. Who's going? Mostly, medium-security inmates "who receive few if any visits; who have no medical or mental health issues; all male; and have at least three years on their sentences," so they can return to Pennsylvania for "re-entry programming," she said. "Capital inmates, lifers, are not eligible." Pennsylvania will send a state employee to each prison.
The Muskegeon prison had been scheduled to close. State officials there and in Virginia had no immediate comment on whether they were keeping unused prisons open just to preserve jobs during a recession.