News Archive

RadioShack goes to auction to test hedge fund $200 mln deal

WILMINGTON, Del. (Reuters) – RadioShack Corp RSHCQ.PK got approval on Wednesday from a U.S. Bankruptcy Court judge to auction about 2,000 stores with an initial $200 million bid from the Standard General hedge fund.

The electronics retailer also received approval to borrow up to $285 million. However, the judge hearing the case, Brendan Shannon in Wilmington, Delaware, said the associated fees for the loan had to be cut, calling it “money for nothing.”

Only about $35 million of the loan is new liquidity, with the rest refinancing previous loans.

Shannon scheduled the auction for March 23 if competing bids are received.

Wednesday’s hearing was the first time the bankrupt company has put an estimated value on the sale agreement with Standard General, which will keep about half of RadioShack’s stores open and operate them under an agreement with Sprint Corp (S.N).

At the same hearing, RadioShack lawyers said the company had received bids for leases to 205 of the 1,100 locations it plans to close this month, including interest from a unit of the GameStop Corp (GME.N) retail chain.

The lawyers also said the company’s name and intellectual property would be auctioned separately and that Standard General agreed to an initial bid of at least $20 million.

Shannon denied a request by the official committee of unsecured creditors to force Standard General to bid in cash, but said he needed to know more details about the exact value of their bid.

Standard General is planning what is known as a “credit bid,” using the $55 million it is owed on RadioShack loans to help pay for the stores.

In addition, Standard General plans to offer loans held by other hedge funds, which could bring its credit bid to $130 million.

RadioShack’s financial advisor, David Kurtz, the head of restructuring at Lazard Ltd, said Standard General would bid $75 million in cash.

While Wednesday’s hearing was under way, RadioShack was simultaneously holding an auction for the leases to the 1,100 stores it will close this month.

RadioShack lawyer Tom Howley said GameStop’s Spring Communications was interested in some locations and called this a “significant development” without elaborating.

GameStop has been aggressively expanding its Spring Mobile business, which sells ATT cellphones.

RadioShack filed for bankruptcy earlier this month after struggling for years against online competitors.

The case is In re RadioShack Corp, U.S. Bankruptcy Court, District of Delaware, No. 15-10197.

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Lisa Von Ahn and David Gregorio)

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Takata to save faulty air-bag inflators for litigation, U.S. probe

WASHINGTON/DETROIT (Reuters) – A U.S. safety regulator on Wednesday ordered Takata Corp (7312.T) to preserve all air-bag inflators removed through a recall process as evidence for both a federal investigation and private litigation cases.

The move marked the first time that the National Highway Traffic Safety Administration, an agency of the U.S. Department of Transportation, has ordered a company to preserve evidence for private litigation, said Gordon Trowbridge, a spokesman for NHTSA.

The directive from U.S. Secretary of Transportation Anthony Foxx also prohibits Takata from destroying or damaging any air-bag inflators except those necessary for testing. Takata is required to set aside 10 percent of recalled air-bag inflators and make them available for testing by private plaintiffs.

The defective parts, which activate the air bags in case of collision, – have been linked to at least six deaths and dozens of injuries, and have resulted in several lawsuits.

NHTSA on Friday slapped a $14,000-a-day fine on Takata for failing to fully cooperate with the government’s probe. Since 2008, about 17 million vehicles with Takata air bags have been recalled. They can rupture, spraying metal fragments at occupants.

Foxx also said NHTSA would upgrade its Takata investigation to an engineering analysis, a formal step in the agency’s defect investigation process.

Takata officials could not immediately be reached for comment.

(Reporting by Eric Beech in Washington and Bernie Woodall in Detroit; editing by Peter Cooney and Matthew Lewis)

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S&P, edge down with Apple; Dow ends at record high

NEW YORK (Reuters) – The SP 500 closed down and the Nasdaq snapped a 10-session winning streak on Wednesday as investors took profits in Apple shares, while the Dow eked out another record high close.

Boosting the Dow were consumer discretionary shares including McDonald’s, up 3.9 percent at 98.66, which also helped to limit losses on the SP 500.

The SP 500 consumer discretionary index added 0.8 percent, with shares of TJX up 3.3 percent at $69.38 after results. Target edged up 0.3 percent to $77.15 after a stronger-than-expected jump in same-store sales and profits for the fourth quarter.

Federal Reserve Chair Janet Yellen’s testimony to a House of Representatives committee provided few new clues for investors on the timing of an interest rate hike.

Apple shares dropped 2.6 percent to $128.79, retracing recent gains. The stock is still up 16.6 percent for the year so far.

“It’s a big hedge fund stock, and there’s always the potential for some profit-taking among some shorter-term players,” especially after the stock’s big run-up, said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

The Dow Jones industrial average rose 15.38 points, or 0.08 percent, to 18,224.57, a record close. The SP 500 lost 1.62 points, or 0.08 percent, to 2,113.86 and the Nasdaq Composite dropped 0.99 points, or 0.02 percent, to 4,967.14.

Energy shares climbed with sharp gains in oil prices. The SP energy index was up 0.4 percent, while U.S. crude oil prices rose 3.5 percent to $50.99.

Also lending support, data showed single-family home sales in January fell less than expected and supply rose to its highest level since 2010.

Hewlett-Packard shares tumbled 9.9 percent to $34.67 as the worst performer on the SP 500. The world’s No. 2 PC maker reported flat or lower quarterly revenue in all of its operating units and forecast full-year earnings well below analysts’ expectations.

About 6.2 billion shares changed hands on U.S. exchanges, below the 6.8 billion average for the month to date, according to BATS Global Markets.

Advancing issues outnumbered declining ones on the NYSE by 1,697 to 1,359, for a 1.25-to-1 ratio on the upside; on the Nasdaq, 1,473 issues rose and 1,233 fell, for a 1.19-to-1 ratio favoring advancers.

The SP 500 posted 59 new 52-week highs and no new lows; the Nasdaq Composite recorded 120 new highs and 23 new lows.

(Editing by Chizu Nomiyama and Nick Zieminski)

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U.S. new home sales steady near multi-year highs; supply up

WASHINGTON (Reuters) – New U.S. single-family home sales fell only slightly in January despite big declines in the snow-battered Northeast while supply rose to its highest level since 2010, hopeful signs for a sluggish housing market.

The Commerce Department said on Wednesday that sales dipped 0.2 percent to a seasonally adjusted annual rate of 481,000 units. December’s sales pace was revised up to 482,000 units, the highest level since June 2008, from 481,000 units.

“We are still taking sort of a meandering, bumpy path towards recovery. We expect housing will improve later this year due to the improvement in the labor market and credit conditions,” said Stephanie Karol, a U.S. economist at IHS Global Insight in Lexington, Massachusetts.

Sales were likely held back by snow storms in the Northeast, where sales recorded their biggest drop since June 2012.

Economists had forecast new home sales, which account for about 9.1 percent of the housing market, falling to a 470,000-unit pace last month. Compared to January of 2014, sales were up 5.3 percent.

The housing index .HGX rose marginally, outperforming a broadly flat U.S. stock market. Shares in Lowe’s Cos Inc (LOW.N), the No. 2 U.S. home improvement chain, fell 0.64 percent despite reporting same-store sales well above analysts’ estimates.

Increased spending on home renovations also helped larger rival Home Depot (HD.N) post better-than-expected sales and profit on Tuesday.

Housing activity has remained lackluster since hitting a speed bump in the second half of 2013, as tight home inventories and higher prices sideline first-time buyers and tepid wage growth also constrains buying.

The housing sector has lagged the overall economy, even though mortgage rates have declined substantially from their 2013 peak. Recent data showed a plunge in home resales in January and softer single-family housing starts and permits.

Federal Reserve Chair Janet Yellen told U.S. lawmakers on Tuesday that housing had not “recovered in the way that I would have anticipated.”


In a separate report, the Mortgage Bankers Association said its measure of loan requests for home purchases, a leading indicator of home sales, increased 4.6 percent last week, rising for the first time in six weeks.

There is more reason to be optimistic on housing. The labor market is gaining steam and housing activity should be boosted as more people get a paycheck.

In addition, home prices are showing signs of reaccelerating after slowing for much of 2014. That should lift more homeowners out of “underwater mortgages,” giving them more equity in their properties and allowing some to put their houses on the market.

“Housing sales may be going nowhere, but with prices rising it looks like the deceleration in prices that had occurred for most of 2014 is largely over,” said Joel Naroff, chief economist at Naroff Economic Advisers in Holland, Pennsylvania.

“That is important as the sector is suffering from a shortage of inventory, which may be due, at least in part, to a lack of equity. The better the price gains, the more homes that can be brought to market.”    

Last month, new home sales in the Northeast plunged 51.6 percent to a record low. Sales in the South rose 2.2 percent to their highest level since May 2008, and surged 19.2 percent in the Midwest. Sales in the West, however, slipped 0.8 percent.

The stock of new houses available on the market rose 1.4 percent last month to 218,000, the highest level since March 2010. Inventories still remain at less than half of what they were at the height of the housing boom.

At January’s sales pace it would take 5.4 months to clear the supply of houses on the market, unchanged from December.

The median new home price rose 9.1 percent from a year ago to $294,300, confirming an accelerating trend evident in recent house price data.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

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Google to combine European units amid tougher rules: FT

(Reuters) – Google Inc (GOOGL.O) is combining its two European arms to meet the challenges of a more combative regulatory landscape on the continent, the Financial Times said.

Matt Brittin, who previously led Google’s northern and western European division, will take over the day-to-day running of the new business, FT said. (

Google was not immediately available to comment.

(Reporting By Subrat Patnaik in Bengaluru)

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Brent crude up 5 percent as Saudi sees improved demand for oil

NEW YORK (Reuters) – Brent crude oil futures surged 5 percent on Wednesday, after Saudi Arabia’s oil minister said oil demand was growing and data showed Chinese factories were producing more than expected.

Falling refined products inventories reported by the government helped lift U.S. crude and countered data showing a larger-than-expected U.S. crude inventory build.

Brent April crude LCOc1 rose $2.97 to settle at $61.63 a barrel. U.S. April crude CLc1 rose $1.71 to settle at $50.99.

“The report is relatively bullish, despite the large crude oil inventory build,” said John Kilduff, partner at Again Capital LLC.

“The draw downs in the refined product categories represent an offset and are supportive,” Kilduff added.

U.S. crude stocks rose 8.4 million barrels last week to a record 434.07 million, the Energy Information Administration (EIA) said on Wednesday, adding 2.4 million barrels at Cushing, Oklahoma, delivery point for the U.S. crude contract. [EIA/S]

The relatively small gain at Cushing may have helped widen the spread between Brent and U.S. crude CL-LCO1=R to its widest since January 2014, with Brent’s premium nearing $11 a barrel.

U.S. gasoline stocks fell by 3.1 million barrels, the EIA said, more than analysts surveyed by Reuters expected, while distillate stocks – including diesel and heating oil – fell by 2.7 million barrels, a smaller dip than expected.

With March contract expirations slated on Friday, U.S. March RBOB gasoline RBH5 surged 9.85 cents to settle at $1.7187 a gallon and March ultra-low sulfur diesel HOH5 rose 7.47 cents to $2.1036 a gallon.

In early trading, oil got a boost from data showing China’s factory sector expanded this month, according to the flash HSBC/Markit Purchasing Managers’ Index.

As the world’s second largest oil consumer behind the United States, even small changes in Chinese demand can move oil prices.

Oil received a lift from comments by Saudi oil minister Ali al-Naimi, who spoke to reporters in the port city of Jizan, Saudi Arabia.

“Markets are calm now … demand is growing,” said Naimi, who drove a change in the strategy of the Organization of the Petroleum Exporting Countries last year, when it decided not to adjust production despite a sharp fall in oil prices.

“They want to find out where the floor price is. I think they are indicating that we are not that far off the floor in the current price,” said Simon Wardell, oil analyst at Global Insight.

(Additional reporting by Alexis Akwagyiram in London and Jane Xie in Singapore; Editing by Chizu Nomiyama and Alden Bentley)

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Deutsche Bank hires Urwin from JPMorgan for investment bank

NEW YORK (Reuters) – Deutsche Bank AG (DBKGn.DE) said on Wednesday that it has hired JPMorgan Chase Co (JPM.N) executive Jeff Urwin to be co-head of corporate banking and securities and head of corporate finance.

Urwin, 59, had been co-head of global banking at JPMorgan, which he joined in 2008 with the bank’s acquisition of Bear Stearns, according to a statement from Deutsche Bank.

Urwin will lead Deutsche Bank’s investment banking division together with Colin Fan and will report to Anshu Jain, co-chief executive of the company, the statement said. Urwin succeeds Robert Rankin, who left Deutsche Bank earlier this year.

In response to Urwin’s departure, Daniel Pinto, chief executive of JPMorgan’s corporate and investment bank, said in a memo that Carlos Hernandez will become sole head of global banking, with direct oversight of investment banking, corporate banking and treasury services. Hernandez had been co-head of global banking with Urwin. He has been with JPMorgan for 30 years.

Deutsche Bank has made investment banking the center of its strategy. It is investing in its investment banking operations in the United States, where its client base is smaller than New York-based rivals, including JPMorgan and Goldman Sachs Group Inc (GS.N). About half of Deutsche Bank’s investment banking revenue comes from North America.

Deutsche had 4.66 percent of the global market for investment banking fees in 2014, more than every other European investment bank and just below the U.S. top five banks, according to Thomson Reuters data.

Urwin had become co-head of global banking at JPMorgan with Hernandez in April 2014. Earlier Urwin had been head of global investment banking and CEO for Asia Pacific at JPMorgan. Before his global roles, he was co-head of investment banking for North America.

(Reporting by David Henry in New York and Thomas Atkins in Frankfurt; Editing by Lisa Shumaker)

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Exclusive: Petrobras hires JPMorgan for $3 billion in asset sales

SAO PAULO/NEW YORK (Reuters) – Petróleo Brasileiro SA (PETR4.SA) has hired JPMorgan Chase Co to handle $3 billion in planned asset sales this year, as fallout from a corruption scandal has shut access to financing for Brazil’s state-controlled oil producer, two sources with direct knowledge of the situation said on Wednesday.

JPMorgan (JPM.N) will be tasked with luring the largest number of bidders possible for the assets and then structuring their sale, said a first source, who asked for anonymity since the process is private. Properties and drilling licenses are among assets that could be put on the block, the source added.

According to a second source, meetings are being scheduled in the coming weeks to further look at deal opportunities. Both Petrobras, as the company is commonly known, and JPMorgan declined to comment.

Asset sales have become imperative for Petrobras now that Moody’s Investors Service has stripped the company of its investment-grade rating and has warned that further cuts are possible. Worries over a looming cash crunch and the scandal were behind the downgrade, Moody’s said late on Tuesday.

In what is being called Brazil’s worst corruption scandal in history, prosecutors have alleged that allies of President Dilma Rousseff used Petrobras to skim billions of reais through overpriced contracts in political campaign kickbacks for over a decade.

The scandal has cut Petrobras’ access to bond markets after independent auditors, concerned over the need for potential asset impairments, refused to sign off on the company’s quarterly earnings reports.

Chief Executive Officer Aldemir Bendine, who took office a month ago, has made investment cuts and asset divestitures the cornerstone of his plan to restore confidence in the scandal-battered company. A reduction in the company’s five-year, $221 billion capital spending plan is also widely expected.

Moody’s was the first of the three major rating firms to put Petrobras ratings on so-called junk status. Fitch Ratings and Standard and Poor’s currently rate Petrobras at the lowest investment-grade ranking.

Last week, JPMorgan Securities analysts predicted that Moody’s would be first to announce a Petrobras downgrade. Moody’s Petrobras ratings cut was the largest corporate downgrade in terms of the amount of debt impacted in 10 years.

According to the first source, potential bidders could include Middle East investors, mainly sovereign wealth funds familiar with oil and gas projects.

Petrobras sold $10.7 billion worth of assets between October 2012 and December 2013, as part of a plan to exit non-core assets to fund its investment program.

(Additional reporting by Jeb Blount in Rio de Janeiro; Editing by Diane Craft)

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New Osram CEO has no plans for further job cuts: paper

BERLIN (Reuters) – The new boss of Germany’s Osram Licht (OSRn.DE) has no plans at present to cut more jobs at the lighting products maker, he was quoted as saying by the Frankfurter Allgemeine Zeitung newspaper on Wednesday.

Osram, the world’s second-biggest lighting firm after Dutch group Philips (PHG.AS), has cut thousands of jobs as it seeks to refocus its business on higher-margin LED lighting, where it is racing to stay ahead of Asian rivals.

“Staff cuts are not at stake, I am not at all thinking about that,” Olaf Berlien, who became the company’s chief executive last month, told the newspaper in an interview.

“We must try to find new business opportunities and to transfer employees from classic lighting operations to the new world,” the newspaper quoted Berlien as saying.

The CEO pledged earlier this month to speed up restructuring at Osram where adjusted core earnings before interest, tax and amortization (EBITA) rose to a more-than-expected 151 million euros ($171 million) in the first quarter.

(Reporting by Andreas Cremer; Editing by Mark Potter)

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