Archive: August, 2012
As Federal Reserve chairman Ben Bernanke and his cronies posture for the news media out at the Kansas City Fed's annual gathering in Jackson Hole, Wyoming, veteran bank analyst Richard X. Bove' says the circus is beside the point, in a note to clients of Rochdale Securities. Highlights:
"The Federal Reserve has a minimal impact on economic activity and that the government’s tax policies neither drive nor hinder the economy. In a capitalist economy it is all about the actions in the private sector.
"Over the past 25 years the economy has grown faster when there are tax increases than when there are tax cuts. Check the numbers...
"Presidents George H.W. Bush and William Clinton both raised taxes and the economy grew.
The Delaware Supreme Court has voted 4-1 to approve a $304 million lower-court fee award to Wilmington law firm Prickett, Jones & Elliott and Radnor's Kessler, Topaz, Meltzer & Check for their work in gaining a $2 billion judgement against Grupo Mexico SAB by shareholders of SAB affiliate Southern Copper Co., who felt they'd been ripped off in an SAB acquisition deal.
In the case affirmed this week, Grupo Mexico SAB was found to have directed a company it controlled – Southern Copper Co. – to acquire a third mining company for an over-inflated price, prompting other shareholders of Southern Copper to sue.
Writes the Wilmington News-Journal here: "The 108-page majority [Supreme Court] opinion, written by Justice Randy Holland, concluded that the award to Southern Copper shareholders by Chancellor Leo Strine was correct and reasonable. In her two-page dissent, [Justice Carolyn] Berger agreed with the $2 billion judgment but disagreed on the $304 million in attorneys’ fees...
Carlyle Group, the big Washington corporate-buyout firm, says it agreed to pay $4.9 billion for DuPont Co.'s Wilmington-based vehicle and industrial "performance coatings" business and its worldwide network of plants and customers, which employs 11,000. Statement here.
DuPont has been selling older, commodity-oriented and slower-growing chemical businesses to concentrate on newly developed pesticides and seeds, and other growing markets.
DuPont says the plants it will sell Carlyle, which supply new-auto paint to Ford Motor Co. among othe products and customers, sell around $4 billion a year and earn around $500 million in profits before tax and financing costs.
"Google Inc. wants to sell the unit within Motorola Mobility that provides set-top boxes and other equipment to cable providers and has hired Barclays Plc to seek buyers," Bloomberg LP says here, citing unnamed sources.
"We don't comment on rumor and speculation," Google spokesman Jim Prosser told me.
The Motorola Home unit, based in Horsham, used to employ around 1,000 engineers, salespeople and management staff at its state-financed headquarters, where it developed and built video equipment for Comcast and other customers. Google, which bought the business when it acquired Motorola's mobile phone unit, won't say how many are left. Analysts have estimated Motorola Home's value at around $2 billion.
"No matter who is elected, they will be forced to deal with the United States' excess-debt situation," says Jason Pride, the MIT-educated director of investment stratetgy (corrected) at the Pew-founded, Center City-based Glenmede Trust Co., which invests $21 billion. The federal government owes too much and is spending a lot more than it's bringing in. If this keeps up, the economists tell us, the value of the dollar will fall, interest rates will rise, American consumers will get squeezed even more, the service economy as we know it will grind down, the slump could last for years.
The federal government owes too much and is spending a lot more than it's bringing in. If this keeps up, the economists tell us, the value of the dollar will fall, interest rates will rise, American consumers will get squeezed even more, the service economy as we know it will grind down, the slump could last for years.
What to do? You can choose, come November: "The (Obama) administration prefers to have a larger percentage of gross domestic product collected and spent by the government. Romney and Ryan prefer to limit the size of government," Pride says. It's a choice between "increasing taxes, or spending cuts."
Girard Estate, the city-controlled charity that operates the free, residential, K-12 Girard College on Girard Ave. in North Philadelphia, has paid off $47.5 million in debt, including both its 1998 bonds, and its 6.78% mortgage loan from JPMorgan Chase & Co. on the Aramark tower.
The money was paid with income from real estate rents, hard-coal sales, and other Girard assets, plus a new $20 million, 3.95% loan from SunLife of Canada, Joseph Martz, executive director of the Board of City Trusts, told me. The board oversees the legacy estate of immigrant Philadelphia trader-financier-industrialist Stephen Girard, along with Wills Eye Hospital and other city charitable assets.
The Girard refinancing, noted by Moody's Investors Service as it withdrew the bonds' former A3 credit rating, frees $750,000 in yearly cash that was formerly paid Wall Street bankers and bondholders, Martz said.
(Girard had planned a new, cheaper bond financing two years ago, but that was derailed, first by volatile markets, then by a lawsuit by Cumberland County, Pa., challenging Girard's tax-free status, based on a position the school's lawyers had taken in a 1950s desegregation case but later repudiated. That case is awaiting a decision by the PA Supreme Court.)
Prime Healthcare Services, the California-based, for-profit chain of 18 mostly West Coast hospitals and which recently acquired Roxborough Memorial Hospital, says it also plans to acquire 156-bed Lower Bucks Hospital in Bristol.
Prime will spend "at a minimum" $10 million for "needed capital improvements," company spokesman Edward Barrera told me, correcting the company's earlier statement that it would invest "up to" $10 million.
Prime, owned by chief executive Dr. Prem Reddy, has also made $3 million in working capital finance available to Lower Bucks, and will "honor all contracts, liabilities, and union agreements," which cover nurses and maintenance workers. Total staff includes 400 doctors and 1,400 "employees and volunteers."
Pepper Hamilton LLP, Philadelphia, says it is adding former FBI boss Louis J. Freeh's law firm, Freeh Sporkin & Sullivan, LLP, and its investigative affiliate Freeh Group International Solutions, LLC. Financial terms not disclosed.
Pepper chairman Nina Gussack said in this statement: “The Freeh Group will deepen and broaden Pepper’s already substantial corporate investigations, white-collar advocacy and enforcement practice in key markets.
The firms have worked together in "white collar, pharmaceutical/medical device, education, and financial services, both in the U.S. and globally,” Freeh said in the statement. “This transaction will allow us to do a lot more than conduct investigations and uncover problems,” he added. “We will now have the depth to react quickly to sophisticated, complex issues anywhere in the world" and "give our clients real solutions, not merely determine facts, and then work with all parties to implement those solutions. That’s what clients want."