News Archive


GE to sell Europe private equity unit to Japan’s SMBC for $2.2 billion


General Electric Co (GE.N) said it would sell its European private equity financing business to a unit of Japan’s Sumitomo Mitsui Banking Corp (SMBC) for $2.2 billion.

GE Capital will retain its $1 billion investment in the European Senior Secured Loan Program and European Loan Program, both joint ventures between affiliates of GE Capital and affiliates of Ares Capital, GE said on Tuesday.

The deal is part of the U.S. conglomerates plan to shed its financial assets and concentrate on its industrial businesses.

(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Savio D’Souza)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/-7WiSfm4mVM/story01.htm

Delaware judge dismisses shareholder lawsuit over GM recall


General Motors Co (GM.N) said a judge in Delaware has dismissed a lawsuit by shareholders who wished to recoup losses stemming from the recall of millions of vehicles with an ignition switch defect linked to several deaths.

The judge’s ruling on Monday said that the shareholders have not shown any proof that the company’s directors acted in bad faith and dismissed the case.

The shareholders alleged that the directors breached their duties by failing to oversee the operations of the company.

The news comes a month after a U.S. bankruptcy judge put on hold dozens of lawsuits accusing the company of concealing an ignition-switch defect while the plaintiffs in those cases appeal an earlier ruling that found their cases were barred.

There are three other shareholder derivative actions, one in Wayne County, Michigan and two in Federal District Court for the Eastern District of Michigan that have been put on hold pending the outcome in Delaware.

GM said it was pleased the Delaware court dismissed the complaint and hopes the other pending cases are also dismissed, the company said in a statement.

GM shares closed down 3 percent at $33.23 on the New York Stock Exchange on Monday.

(Reporting by Rosmi Shaji in Bengaluru; Editing by Lisa Shumaker)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/-nEDWM1r8O8/story01.htm

Asian shares tentative, euro sags as markets eye Greece


TOKYO Asian shares edged up and the euro sagged in early Asian trading on Tuesday as Greece lurched toward defaulting on a looming debt payment, raising the likelihood of the cash-strapped nation’s exit from the euro zone.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.1 percent, while Japan’s Nikkei stock index .N225 added 0.2 percent.

“All in all many in the market had already factored in the likelihood of Greece defaulting. But there is no guarantee the stability will last. What is worrying is the volatility in the risk asset markets, which could impact currencies,” said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo.

Greece will not pay a 1.6 billon euro loan installment due the International Monetary Fund on Tuesday, a Greek government official told Reuters, after talks between Athens and its creditors broke down over the weekend when Prime Minister Alexis Tsipras called a surprise referendum on the austerity plan.

Asian investors were also nervously awaiting the reopening of China’s markets after stocks plunged further on Monday, taking losses to more than 20 percent since their mid-June highs.

Fears about the fallout of the Greek crisis have roiled global markets. The CBOE Volatility “fear” index .VIX, a measure of the premium traders are willing to pay for protection against a drop in the SP 500, jumped more than 30 percent to a nearly five-month high.

“The Greek government’s willingness to walk into the fire is a dangerous proposition for Europe and the global markets,” Kathy Lien, managing director of FX strategy for BK Asset Management in New York, said in a note to clients.

Ratings agency Standard and Poor’s cut Greece’s sovereign debt rating one notch further into junk levels to CCC-, saying there was a 50 percent probability it would leave the euro zone.

U.S. stock futures were up about 0.2 percent ESc1 in Asia, suggesting that a semblance of stability could return to markets after steep losses in the previous session.

In overnight trading on Wall Street, all three major stock indices tumbled, with the Dow Jones industrial average .DJI shedding 1.95 percent, the SP 500 .SPX losing 2.09 percent and the Nasdaq Composite .IXIC dropping 2.4 percent.

The euro fell to a one-month low of $1.0955 EUR=EBS on the EBS trading platform on Monday and then reversed direction in North American trade as investors exited their euro-short positions, pushing the common currency as high as $1.1279. It was last down about 0.3 percent on the day at $1.1206.

Until volatility spiked due to developments in the Greek crisis, investors had used the euro to fund carry trades – a strategy of borrowing in a low-yielding currency to buy higher-yielding assets.

The dollar JPY=EBS was flat on the day at 122.50 yen after falling to a one-month low of 122.10 yen on Monday, with market participants citing options-related support at 122.

In commodities trading, U.S. crude oil futures extended their fall after skidding more than 2 percent on Monday to three-week lows. U.S. crude CLc1 was down about 0.1 percent at $58.26 a barrel.

(Additional reporting by Shinichi Saoshiro in Tokyo; Editing by Shri Navaratnam)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/xT65mgAlerI/story01.htm

Exclusive: Amazon looks to offer loans to sellers in China, seven other countries


CHICAGO Amazon.com Inc (AMZN.O) will start a business loan program for small sellers in the United Kingdom on Tuesday and is looking to launch it this year in seven more countries including China.

Until now, the e-retailer has offered the service only in the United States and Japan. Amazon Lending, founded in 2012, plans to offer short-term working capital loans in other countries where it operates a third-party, seller-run marketplace business, the head of Amazon Marketplace, Peter Faricy, told Reuters.

The countries are Canada, France, Germany, India, Italy, Spain and China, where credit is becoming a key factor in competing for new vendors and grabbing market share.

The service is on an invite-only basis and is not open to all sellers on Amazon’s platform.

Other large retailers including eBay Inc’s (EBAY.O) PayPal and Alibaba Group (BABA.K) which run third-party marketplaces, are also turning to credit to boost their vendor base.

Some lending industry officials who help lenders assess credit risk say these retailers are taking on risky loans because they do not know the credit markets in which the sellers are operating.

Small businesses have high failure rates, especially in China and India, added William Black, a former U.S. banking regulator and professor at the University of Missouri.

Amazon said it can safely offer loans based on internal data and because it takes loan payments out of the sales proceeds it pays sellers.

Amazon offers three- to six-month loans of $1,000 to $600,000 to help merchants buy inventory. It makes money on interest and takes a cut of all sales on its marketplace, which now account for about 40 percent of total Amazon site sales.

Amazon said it has offered hundreds of millions of dollars in loans since 2012, with more than half of its sellers opting for a repeat loan. The company declined to provide specific figures and also did not say how much it plans to lend this year.

Amazon’s Faricy said the company has become better at understanding the inflection points in a small or medium business where capital can make a difference.

“We know a lot about our sellers’ business and invite only those who we think are in the best position to take capital and grow,” he said.

In China, where Alibaba lends to small businesses, offering such loans is more of a business requirement, analysts said.

“Amazon has very little share in China and they haven’t been able to break out of that, so this is a very important necessary step for them to be able to grow,” said Gil Luria, analyst with Wedbush Securities in Los Angeles.

In other countries including India, where there is a scramble to expand the online shopping market, small business loans could offer a distinct competitive advantage, Luria said.

   

MITIGATING RISK

Online lending accounts form about 3 percent of the roughly $1 trillion of outstanding personal and small business loans in the United States.

The default rate for small businesses with credit under a $1 million stood at 1 percent in 2014 but is seen rising to 1.6 percent in 2015, as new lenders with varying ability to assess risk increase lending, according to small business credit ratings provider PayNet.

Retailers like Amazon do not have data from sellers about some markets in which they operate, and relying on internal seller company data is not enough, said William Phelan, president of PayNet.

Sellers interviewed by Reuters and writing on Amazon forums cited interest rates on Amazon loans ranging from 6 percent to 14 percent, in line with loans from banks and business credit cards.

Stephan Aarstol, chief executive of Tower Paddle Boards, an Amazon seller, said he has taken four loans from the company starting in March 2014 because of the speed and simplicity of the process. It took him five days to get his first loan.

“The problem for a small business owner is not the interest rate, it’s the availability of credit … I can’t grow fast enough,” he said.

(Editing by Matthew Lewis and Cynthia Osterman)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/DugQTxZ_ntc/story01.htm

Puerto Rico governor calls for bankruptcy; adviser says island ‘insolvent’


NEW YORK Puerto Rico’s governor on Monday called for the commonwealth to be allowed to restructure its debts under U.S. bankruptcy code, while a newly appointed adviser to the U.S. territory said it is “insolvent” and will soon run out of cash.

Governor Alejandro Garcia Padilla, in a televised address, said sacrifice must be shared by bondholders, as he called for Washington to allow a bankruptcy debt restructuring.

The Caribbean island is struggling to relieve a $73 billion debt burden. It came to a crunch point on Monday – ironically at the same time as did debt-laden Greece – after a dire report on its stability by former International Monetary Fund economists was released ahead of key deadlines on Wednesday to repay debt.

Steven Rhodes, the retired U.S. bankruptcy judge who oversaw Detroit’s historic bankruptcy and has now been retained by Puerto Rico to help solve its problems, gave a blunt assessment on Monday.

Puerto Rico “urgently needs our help,” Rhodes said. “It can no longer pay its debts, it will soon run out of cash to operate, its residents and businesses will suffer,” he added.

Puerto Rico’s bonds skidded on Monday as investors sought greater compensation amid the heightened risk.

Puerto Rico is not eligible for debt restructuring under the U.S. bankruptcy code because it is not a municipality.

Rhodes said the island’s future hinges on gaining eligibility for debt restructuring, while stressing that bankruptcy would not be a “bailout.”

Garcia Padilla called for Washington to grant the U.S. territory the ability to file for bankruptcy in a televised address, as he said that his goal is to come up with a negotiated moratorium with bondholders to postpone debt payments for a number of years.

“Puerto Rico needs a complete restructuring and development plan, comprehensive and inclusive, that takes care of the immense problem we face today, not on a short but on a long-term and definitive basis,” Garcia Padilla said. “The alternative would be … halting of payments with all the negative consequences that this implies.”

Garcia Padilla said the next step must be to get creditors to agree to more favorable payment terms. He is establishing a working group to examine restructuring public debt, with a deadline to have a plan by Aug. 30. The legislature is required to approve the plan.

Garcia Padilla also said that citizens may face cuts in services as the government reduces spending.

“The situation is dire, and I mean really dire,” said former IMF economist Anne Krueger, co-author of the report commissioned by the U.S. territory, which recommended debt restructuring, tax hikes and spending cuts. “The needed measures may face political resistance but failure to address the issues would affect even more the people of Puerto Rico.”

Citizens of Puerto Rico could face tough measures such as fewer teachers, higher property taxes and suspension of the minimum wage, if Puerto Rico follows the report’s recommendations of debt restructuring and austerity measures. Garcia Padilla said he would not support cuts to the minimum wage.

The report, made available late Sunday, said Puerto Rico’s fiscal problems are much worse than assumed and that the island needs to restructure its debts because tax rises and spending cuts alone would not be enough of a fix.

Bondholders, even those who own government debt that is generally regarded as sacrosanct, would have to take a hit under the report’s recommendations. The report recommended a debt restructure via a voluntary exchange of existing bonds for new ones with a longer or lower debt service profile.

U.S. GOVERNMENT INVOLVEMENT UNLIKELY

The U.S. government seems unlikely to get involved despite months of talks between Puerto Rico and the U.S. Treasury about options to seek financial help, according to a source familiar with the situation on Friday.

“There’s no one in the administration or in D.C. that’s contemplating a federal bailout of Puerto Rico,” a White House spokesman said on Monday.

The prospect of a debt restructuring spooked investors and sent the price of Puerto Rico’s benchmark general obligation bonds that carry an 8 percent coupon and mature in 2035 74514LE86=MSRB down nearly 10 percent to a record average low of 69.510 cents on the dollar. Shares of monoline bond insurers with exposure to Puerto Rico’s securities fell sharply. Assured Guaranty (AGO.N) shares fell 13.3 percent while MBIA Inc (MBI.N) dropped 23.4 percent.

(Reporting by Megan Davies in New York and a contributor in Puerto Rico; Additional reporting by Rodrigo Campos and Edward Krudy; Editing by Chizu Nomiyama and Leslie Adler)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/mSDLOuVFLPc/story01.htm

Lufthansa strikes postponed until mid-July, union says


FRANKFURT Talks to resolve a pay dispute at German airline Lufthansa (LHAG.DE) have made enough progress to lift the threat of any immediate work stoppages, flight attendants’ union UFO said early on Tuesday.

Lufthansa had faced a June 30 deadline to make concessions or be hit with one-day strikes by cabin crew workers over the busy summer holiday season.

Due to the progress in the latest talks, cabin crew union official Nicoley Baublies told Reuters the start of any possible industrial action had been pushed back to mid-July at the earliest.

Lufthansa has been in lengthy talks with various staff groups to try to cut costs to compete more effectively with low-cost airlines and Gulf airline rivals.

UFO said earlier on Monday its members were ready to talk and Lufthansa Chief Executive Carsten Spohr told journalists he was optimistic that a deal could be reached.

UFO said last week its members would strike on July 1 if Lufthansa did not put forward a much better offer on pay and pensions.

More one-day strikes would follow that could last until Sept. 16, disrupting travel over the lucrative peak summer season, the union said at the time.

Spohr said the airline needed 24 hours’ notice to change flight plans so it was crucial to come to an agreement on the negotiation process with unions by the morning of June 30 at the latest.

The dispute centers around the airline’s pension scheme.

Lufthansa has said that low interest rates mean it can no longer afford the retirement scheme it offers to cabin crew.

The costs of the scheme, which amounted to some 3.7 billion euros ($4.1 billion) last year, are of particular concern for the airline because cabin crew can take early retirement from the age of 55 due to the strains of frequent flying.

It wants employees to contribute more of their salary towards their pension. UFO wants to keep much of the current retirement scheme.

Spohr said the airline wanted to ensure that employees who had been with the company the longest would be least affected by the pension changes.

Lufthansa shares were down nearly two percent, while the German blue chip index .GDAXI, hit by the Greek debt crisis, was down 3.56 percent.

(Reporting by Peter Maushagen and Victoria Bryan; Writing by Harro ten Wolde; Editing by Jane Merriman and Tom Brown)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ner0darBRQE/story01.htm

U.S. stock futures up, euro sags as markets eye Greece


TOKYO U.S. stock futures edged up and the euro sagged in early Asian trading on Tuesday as Greece lurched toward defaulting on a debt payment due later in the session, raising the likelihood of the cash-strapped nation’s exit from the euro zone.

Greece will not pay a 1.6 billon euro loan installment due the International Monetary Fund on Tuesday, a Greek government official told Reuters, after talks between Athens and its creditors broke down over the weekend when Prime Minister Alexis Tsipras called a surprise referendum on the austerity plan.

“The Greek government’s willingness to walk into the fire is a dangerous proposition for Europe and the global markets,” Kathy Lien, managing director of FX strategy for BK Asset Management in New York, said in a note to clients.

Ratings agency Standard and Poor’s cut Greece’s sovereign debt rating one notch further into junk levels to CCC-, saying there was a 50 percent probability it would leave the euro zone.

U.S. stock futures were up about 0.2 percent ESc1 in Asia, suggesting that a semblance of stability could return to markets after steep losses in the previous session.

In overnight trading on Wall Street, all three major stock indices tumbled, with the Dow Jones industrial average .DJI shedding 1.95 percent, the SP 500 .SPX losing 2.09 percent and the Nasdaq Composite .IXIC dropping 2.4 percent.

The euro fell to a one-month low of $1.0955 EUR=EBS on the EBS trading platform on Monday and then reversed direction in North American trade as investors exited their euro-short positions, pushing the common currency as high as $1.1279. It was last down about 0.2 percent on the day at $1.1215.

Until volatility spiked due to developments in the Greek crisis, investors had used the euro to fund carry trades – a strategy of borrowing in a low-yielding currency to buy higher-yielding assets.

The dollar JPY=EBS was flat on the day at 122.54 yen after falling to a one-month low of 122.10 yen on Monday, with market participants citing options-related support at 122.

In commodities trading, U.S. crude oil futures extended their fall after skidding more than 2 percent on Monday to three-week lows. U.S. crude CLc1 was down 0.2 percent at $58.22 a barrel.

(Editing by Shri Navaratnam)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/BGKZiCcpdi8/story01.htm

Anti-austerity protests in Greece as bank shutdown bites


ATHENS Tens of thousands of Greeks rallied on Monday to back their leftwing government’s rejection of a tough international bailout after a clash with foreign lenders pushed Greece close to financial chaos and forced a shutdown of its banking system.

With a popular referendum on the bailout planned for Sunday, Prime Minister Alexis Tsipras put his own position on the line, saying he would respect the result of the vote but would not lead a government to administer “austerity in perpetuity.”

“If the Greek people want to have a humiliated prime minister, there are a lot of them out there. It won’t be me,” he said in an interview on Greek state television as one of the biggest rallies seen in Athens in years was taking place.

The show of defiance came at the end of a day that started with stunned Greeks waking up to face shuttered banks, long supermarket lines and overwhelming uncertainty over Greece’s future in the euro zone.

European leaders and policy makers, wrong-footed by Tsipras’ shock announcement of the referendum in the early hours of Saturday morning, warned that it would be a plebiscite on Greece’s future as a member of the single currency.

With Greece hours away from defaulting on a 1.6 billion euro loan from the International Monetary Fund, the crisis has escalated quickly.

Ratings agency Standard and Poor’s cut Greece’s sovereign debt rating one notch further into junk levels to CCC-, saying there was a 50 percent probability it would leave the euro zone.

Greeks – used to seeing lengthy talks with creditors end with an 11th-hour deal – were shocked by the turn of events. Queues snaked outside ATMs and inside supermarkets while fears of disruptions to fuel and medicine supplies grew.

Drugmakers said they would continue to ship medicines to Greece in coming weeks despite unpaid bills, but warned that supplies could soon be in jeopardy without emergency action.

The breakdown of talks has pushed the European Union and euro zone into uncharted terrain. The Athens stock exchange was closed like the banks, but other financial markets fell on fears that Greece could be heading out of the euro.

The blue-chip Euro STOXX 50 .STOXX50E index fell more than 4 percent, with bank shares down sharply [.EU] .SX7E. By midday, all three major U.S. stock indexes were down more than 1 percent. [.N]

“I can’t believe it,” said Athens resident Evgenia Gekou, 50, on her way to work. “I keep thinking we’ll wake up tomorrow and everything will be OK. I’m trying hard not to worry.”

After months of talks, Greece’s exasperated European partners have put the blame for the crisis squarely on Tsipras for rejecting a package they consider generous. The Greek side argues that pension cuts and tax hikes demanded of it would only deepen one of the worst economic crises of modern times in a country where a quarter of the workforce is already unemployed.

A snap Reuters poll of more than 70 economists and traders taken on Monday put the probability of Greece leaving the euro zone at 45 percent, up from 30 percent a week ago.

PERSONAL BETRAYAL

Emotions were unusually raw among Europe’s leaders. EU Commission President Jean-Claude Juncker said he felt personally betrayed and told Greeks a “No” vote would be seen as signaling an exit from the euro – a position that other European leaders lined up to echo.

“I will say to the Greeks, who I love deeply: you mustn’t commit suicide because you are afraid of death,” Juncker told a news conference.

Despite the acrimony over the weekend, the creditors said the door to negotiations remained open.

French President Francois Hollande appealed to Tsipras to return to the negotiating table and German Chancellor Angela Merkel said she was ready to restart talks with Athens after the referendum, including on how to ease its debt burden.

Hollande spoke to U.S. President Barack Obama, and Hollande’s aide said they had agreed to work together for a resumption of talks and a solution to the crisis to ensure Greece’s financial stability.

Greece’s banks were shut after the European Central Bank rejected its request for 6 billion euros of additional emergency funding on Sunday to cope with massive withdrawals, though the ECB is expected to allow Greek banks to keep using existing funds until the referendum, people with knowledge of the matter told Reuters.

On Monday, cash machines remained closed until midday, and then opened for withdrawals of no more than 60 euros a day.

“I’ve got five euros in my pocket, I thought I would try my luck here for some money. The queues in my neighborhood were too long yesterday,” said plumber Yannis Kalaizakis, 58, outside an empty cash machine in central Athens on Monday.

“I don’t know what else to say. It’s a mess.”

Businesses complained that they could not pay salaries or suppliers and had to halt imports, while agricultural production was also expected to be affected.

“The worst has been confirmed by the nightmarish developments,” said retail lobby chief Vassilis Korkidis.

The referendum poses a simple question: “Should the proposal which was submitted by the European Commission, the European Central Bank and the International Monetary Fund at the Eurogroup of June 25, 2015, which consists of two parts that together constitute their comprehensive proposal, be accepted?”

The “No” box appears as the first option, above the “Yes” box. The government says a “No” will strengthen its hand at the negotiating table, though other European leaders say it will instead push Greece out of the euro.

No public opinion polls were available, but the Economist Intelligence Unit said a “No” vote was more likely, raising the probability of Greece leaving the euro zone to 60 percent. ($1 = 0.9026 euros)

(Additional reporting by Deepa Babington, Lefteris Karagiannopoulos, Yannis Behrakis, Alkis Konstantinidis and Renee Maltezou; Writing by Deepa Babington and James Mackenzie; Editing by Anna Willard, Janet McBride, Toni Reinhold)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/M23fAL8-kIs/story01.htm

Microsoft hands display ads to AOL, maps to Uber


SEATTLE Microsoft Corp (MSFT.O) said on Monday it will hand over its display advertising business to AOL Inc and sell some map-generating technology to ride-hailing app company Uber, as it slims down its money-losing online operations.

The moves mean Microsoft will focus on its growing search advertising business based on its Bing search engine, and displaying maps on its Windows devices rather than generating the maps themselves.

Microsoft, which employs hundreds of people in its display ad business around the world, said those employees would be offered the chance to transfer to AOL and that it was not making any layoffs.

The world’s largest software company no longer breaks out results for its online operations, chiefly its MSN web portal and Bing, but they have lost more than $10 billion over the past five years. Chief Executive Satya Nadella has said Bing will turn a profit next fiscal year.

“Today’s news is evidence of Microsoft’s increased focus on our strengths: in this case, search and search advertising and building great content and consumer services,” said Microsoft in a statement.

Under a 10-year deal struck with AOL, now a unit of Verizon Communications Inc (VZ.N), AOL will sell display ads on MSN, Outlook.com, Xbox, Skype and in some apps in major countries. As part of the deal, Bing will become the search engine behind web searches on AOL starting next year.

Microsoft also struck a multi-year extension to its existing deal with AppNexus, which provides the tech platform for buyers to purchase online ads.

Microsoft and Uber did not disclose financial terms of their deal, under which Uber will take over the part of Microsoft’s mapping unit that works on imagery acquisition and map data processing. Uber will offer jobs to the 100 or so Microsoft employees working in that area, according to a source familiar with the deal.

Fast-growing Uber, which is shaking up established taxi services worldwide, already uses a combination of map services from Google Inc (GOOGL.O), Apple Inc (AAPL.O) and China’s Baidu (BIDU.O) and the source said it will continue to do so.

Although Microsoft will no longer collect mapping imagery itself, Microsoft said it will continue to work with imagery providers for underlying data on its own maps. Microsoft already gets much of its map data from Finland’s Nokia (NOK1V.HE).

(Additional reporting Lehar Maan in Bengaluru; Editing by Joyjeet Das, Steve Orlofsky and Andrew Hay)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/JWt4A7SwyE0/story01.htm