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Bosma takes the Firestone reins

First production, and a loss, for Northern Vertex in…

Profit Loss

31 MAY 2018

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Uber seeks to cut pricing on $1.13 billion term loan

NEW YORK (LPC) – Ride-hailing service Uber Technologies Inc is asking lenders to lower pricing on its $1.13 billion term loan due in 2023, sources said.

FILE PHOTO: The logo of Uber is seen on an iPad, during a news conference to announce Uber resumes ride-hailing service, in Taipei, Taiwan April 13, 2017. REUTERS/Tyrone Siu/File Photo

Strong demand for the company’s debt has kept bids for the loan above 100 in the secondary market since September 2017, according to LPC data. The loan had an average bid of 100.7 at the start of the week, which typically allows issuers to lower pricing as investors are more eager to hold onto the paper at a lower interest rate than allow it to be refinanced and handed over to someone else.

Uber is tapping its original lenders to cut the interest rate on the loan after deciding to privately place a separate $1.5 billion term loan with investors in March – an unusual move in the leveraged loan market, which typically relies on investment banks to arrange syndicated deals.

The privately held company has generated huge interest among loan investors due to its massive valuation, which currently stands at US$62bn based on proposed terms from a secondary stock sale announced last week, as well as the fact that so many people use the service.

A lenders call is scheduled for May 31 at noon. Morgan Stanley is leading with Bank of America Merrill Lynch, Barclays, Citibank, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Royal Bank of Canada and SunTrust.

Uber made waves in the leveraged loan market in 2016 when it arranged the loan and priced the debt at 400bp over Libor despite generating negative Ebitda. The leveraged loan market typically requires companies to be generating profits before investors are willing to lend.

As reported by Reuters, Uber lost $312 million during the first quarter of 2018, less than half of the $775 million loss posted during the fourth quarter of 2017 and substantially less than the US$598m loss reported during the same quarter a year ago.

Investors were eager to buy the loan when it came to the market due to the buzz generated by the popular startup, allowing the company to increase the size to $1.15 billion from $1 billion during syndication. The loan was later criticized by federal regulators, as reported.

Federal banking regulators implemented Leveraged Lending Guidance in 2013 that more closely examined loans with leverage of greater than 6.0 times debt to Ebitda and required banks to make sure issuers can pay down all senior debt, or at least half of all debt, within five to seven years.

Comptroller of the Currency Joseph Otting, one of the heads of the regulators responsible for overseeing the guidelines, said last week that banks have the flexibility to underwrite loans outside those parameters if they do it in a “safe and sound manner.”

After banks were criticized for the original loan, Uber privately placed the separate US$1.5bn seven-year term loan with investors in March using Cortland Capital Market Services as the administrative agent in an effort to evade more scrutiny from banking regulators.

The company increased the size of that loan to $1.5 billion from $1.25 billion and lowered pricing to the same rate of 400bp over Libor from initial guidance in the 425bp-450bp over Libor range.

The loan placed directly is also currently seeing a bid of 100.7, according to LPC data.

Reporting by Jonathan Schwarzberg; Editing by Michelle Sierra and Lynn Adler

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Canada’s Freeland: Will ‘respond appropriately’ to any U.S. steel tariffs

OTTAWA (Reuters) – Canada will “respond appropriately” to any U.S. steel and aluminum tariffs, Foreign Affairs Minister Chrystia Freeland said on Wednesday, with a temporary exemption set to expire at the end of the week.

FILE PHOTO: Canadian Foreign Minister Chrystia Freeland speaks to reporters after talks with senior U.S. legislators on Capitol Hill in Washington, DC, U.S., May 10, 2018. REUTERS/David Ljunggren

Freeland reiterated Canada’s position that talks on renegotiating the North American Free Trade Agreement (NAFTA) and possible U.S. steel and aluminum tariffs are separate.

Reporting by Leah Schnurr; Editing by Dan Grebler

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Wall Street climbs as worries over Italy’s politics ease

(Reuters) – U.S. stocks advanced on Wednesday, with gains in energy and banking shares aiding the recovery from a steep selloff in the previous session due to concerns over Italy’s political crisis.

FILE PHOTO: Traders work at the Citadel Securities post on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 18, 2016. REUTERS/Brendan McDermid/File Photo

Italy’s two anti-establishment parties- the 5-Star Movement and League – renewed efforts to form a government, raising hopes that Europe’s third largest economy could avoid a new election.

The news restored some calm to the U.S. equity markets, which saw steepest one-day percentage decline in a month on Tuesday on worries about the stability of the euro zone.

“It’s a rebound from yesterday on hopes that there may be some agreement on forming a government. But these kind of perceptions are going to bounce back and forth,” said Scott Brown, chief economist at Raymond James in St. Petersburg.

Crude oil prices rose more than 2 percent, supported by tight supplies and forecast of lower U.S. inventories despite expectations OPEC and its allies will pump more in the second half of 2018. [O/R]

The SP energy index .SPNY jumped 2.7 percent, providing the biggest boost to the SP 500.

At 11:30 a.m. EDT the Dow Jones Industrial Average .DJI was up 188.89 points, or 0.78 percent, at 24,550.34, the SP 500 .SPX was up 25.41 points, or 0.94 percent, at 2,715.27 and the Nasdaq Composite .IXIC was up 59.59 points, or 0.81 percent, at 7,456.18.

Latest data showed U.S. economic growth in the first quarter slowed slightly more than initially thought amid downward revisions, but a robust labor market and income tax cuts are likely to boost activity this year.

Another data showed that private employers maintained a steady pace of hiring this month.

“The reality is the underlying economic data is good enough to grind the market higher,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management in New York.

“This isn’t a 20 percent year on the SP 500, but it certainly is a year where we could see a 6-8 percent rate of return because the data is strong enough and the valuations are now cheap enough to get the market higher.”

Bank stocks, which were the worst hit on Tuesday, recovered with the SP financial index .SPSY rising 1.2 percent.

Cloud-based business software maker (CRM.N) rose 2.3 percent, while computer and printer maker HP Inc (HPQ.N) jumped 3.5 percent after raising full-year profit forecasts.

Investors also kept a wary eye on the developments around tariffs and trade. In an unexpected change in tone, the United States said late on Tuesday it could still impose tariffs on $50 billion of imports from China unless it addressed the issue of theft of American intellectual property.

China said on Wednesday it was ready to fight back if Washington was looking for a trade war, days ahead of a planned visit by U.S. Commerce Secretary Wilbur Ross.

Advancing issues outnumbered decliners by a 4.05-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 3.29-to-1 ratio on the Nasdaq.

The SP index recorded 23 new 52-week highs and one new low, while the Nasdaq recorded 156 new highs and 15 new lows.

Reporting by Medha Singh in Bengaluru; Editing by Arun Koyyur

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Exxon shareholders reject proposal to split CEO, chair roles

DALLAS (Reuters) – Exxon Mobil Corp shareholders rejected a proposal on Wednesday that would have split the roles of chairman and chief executive, securing CEO Darren Woods’s role as he looks to improve results at the world’s largest publicly traded oil producer.

FILE PHOTO: A logo of Exxon Mobil is displayed on a monitor above the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., December 5, 2017. REUTERS/Lucas Jackson

Woods, who became chairman and CEO in January 2017, has struggled to recover from failed bets taken by his predecessor Rex Tillerson, the former U.S. secretary of state, that resulted in billions of dollars in write-downs and a stock price that has lagged peers.

Exxon under Woods has moved aggressively to launch major expansion programs to find and produce new reserves of oil and natural gas, as well as expand the company’s refining and chemical footprint.

Woods in March told Wall Street investors that the expansions should help double Exxon’s earnings by 2025 to about $31 billion.

Still, Exxon’s first-quarter earnings fell short of expectations as weakness in its chemical and refining operations offset a boost from higher crude prices.

By voting to keep the roles combined, shareholders effectively gave support to Woods to lead the board and employees as they jointly try to meet those goals.

“No one in our industry can match our opportunity set today,” Woods told fellow shareholders at the company’s annual meeting in Dallas.

Shares of Exxon rose 3.4 percent to $81.13 on Wednesday after an analyst upgraded the company’s stock, saying its low valuation relative to peers presented a buying opportunity.


Woods vowed that he would continue to work to address climate change, especially through biofuels research.

But outside the Dallas meeting, about 30 people gathered to protest what they said was Exxon’s lack of accountability for its impact on global climate change.

There were no climate-related proposals for Exxon’s shareholders to consider at this year’s meeting after one was approved last year requiring an annual carbon report. Protesters on Wednesday said they were biding their time this year.

“There’s not a lot of optimism they’ll (Exxon executives) will make good on it, but if they don’t, we’ll be back next year with an even stronger shareholder proposal,” said Molly Rooke, a former Exxon employee who now volunteers with the environmental group

Rooke’s fellow protesters held a bevy of signs outside the meeting emblazoned with such slogans as “Exxon Mobil, Climate Criminal” and “Arrest Exxon.”

Shareholders also rejected a proposal that would have forced Exxon to provide greater disclosure on its lobbying expenditures and change its bylaws to how special meetings are called.

Shareholders approved a full slate of 10 nominees to the company’s board of directors.

Reporting by Ernest Scheyder; Editing by Marguerita Choy

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Consumer Reports now recommends Tesla’s Model 3

(Reuters) – Consumer Reports said on Wednesday it now recommends Tesla Inc’s (TSLA.O) Model 3, after the influential U.S. magazine’s testers found that a recent over-the-air update improved the car’s braking distance by nearly 20 feet.

FILE PHOTO: A man cleans a Tesla Model 3 car during a media preview at the Auto China 2018 motor show in Beijing, China April 25, 2018. REUTERS/Jason Lee/File Photo

An initial review by the magazine a week back said that despite many positives, Model 3 had “big flaws,” including braking slower than a full-sized pickup truck.

Reporting by Sonam Rai in Bengaluru; Editing by Maju Samuel

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U.S. first-quarter growth trimmed on weak consumer spending

WASHINGTON (Reuters) – U.S. economic growth slowed slightly more than initially thought in the first quarter as consumer spending rose at its weakest pace in nearly five years, but activity is already picking up against the backdrop of a tightening labor market and tax cuts.

Shoppers look at washers and dryers at a Home Depot store in New York, July 29, 2010. REUTERS/Shannon Stapleton

Gross domestic product increased at a 2.2 percent annual rate, the Commerce Department said on Wednesday in its second estimate of first-quarter GDP, instead of the previously reported 2.3 percent pace. While business spending was stronger than initially estimated, inventory investment was far smaller than the government reported last month.

The economy grew at a 2.9 percent rate in the fourth quarter. Economists expect a $1.5 trillion income tax cut package, which came into effect in January, will spur faster economic growth this year and lift annual GDP growth close to the Trump administration’s 3 percent target.

Growth is also expected to get a boost from increased government spending. April data including retail sales, trade and industrial production suggest the economy regained speed early in the second quarter. Growth estimates for the second quarter are above a 3 percent rate.

Economists had expected first-quarter GDP growth would be unrevised at a 2.3 percent pace.

“Growth is set to rev up soon given the deficit-financed tax cuts and a big increase in federal government spending,” said Scott Hoyt, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

An alternative measure of economic growth, gross domestic income (GDI) increased at a 2.8 percent rate in the January-March quarter, the fastest since the third quarter of 2016. GDI rose at a 1.0 percent pace in the fourth quarter.

The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic activity, increased at a 2.5 percent rate in the first quarter. That followed a 2.0 percent rate of growth in the prior period.

The income side of the growth ledger was boosted by after-tax corporate profits, which surged at a 5.9 percent rate last quarter after rising at a 1.7 percent pace in the fourth quarter. The government slashed the corporate tax rate to 21 percent from 35 percent effective January.

Wages and salaries also got a lift from lower tax rates, increasing $119.5 billion in the first quarter, an upward revision of $3.1 billion from earlier estimates.


Separately, the ADP national employment report on Wednesday showed private sector payrolls increased by 178,000 jobs in May after rising 163,000 in April. The data was released ahead of the government’s more comprehensive employment report on Friday.

According to a Reuters survey of economists, nonfarm payrolls likely increased by 188,000 jobs this month after gaining 164,000 in April. The unemployment rate is forecast unchanged at a near 17-1/2-year low of 3.9 percent.

“Job growth is still strong for this stage of the expansion but slowing as businesses are having a difficult time finding qualified workers to fill open positions,” said Scott Anderson, chief economist at Bank of the West in San Francisco.

Steady growth and a robust labor market are seen encouraging the Federal Reserve to raise interest rates next month. The U.S. central bank increased borrowing costs in March and forecast at least two more rate hikes for this year.

U.S. financial markets were little moved by the data as investors keep a wary eye on political developments in Italy. The dollar fell against a basket of currencies and prices for U.S. Treasuries were trading lower. Stocks on Wall Street rose.

Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, braked to a 1.0 percent rate in the first quarter, rather than the previously reported 1.1 percent pace. It was the slowest pace since the second quarter of 2013 and followed the fourth quarter’s robust 4.0 percent rate.

Businesses accumulated inventories at a $20.2 billion rate, instead of the $33.1 billion pace estimated last month. Inventory investment contributed 0.13 percentage point to GDP growth instead of 0.43 percentage point. The smaller inventory build bodes well for second-quarter GDP growth.

The trade deficit in the first three months of the year was a bit bigger than initially thought and had no impact on the GDP growth rate. Trade was previously estimated to have added 0.20 percentage point to output.

It could contribute to GDP growth in the second quarter as another report from the Commerce Department showed the goods trade deficit falling 0.6 percent to $68.2 billion in April.

Business spending on equipment was revised up to a 5.5 percent growth rate in the January-March quarter from the 4.7 percent pace estimated last month. That was still a moderation in investment following double-digit growth in the second half of 2017. April durable goods data suggested business spending on equipment is likely to slow further in the second quarter.

Investment in homebuilding fell at a 2.0 percent rate in the first quarter instead of being unchanged as reported last month.

Reporting by Lucia Mutikani; Editing by Andrea Ricci

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Lithium now ‘top two’ resource globally

First production, and a loss, for Northern Vertex in…

Profit Loss

31 MAY 2018

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Mapbox partners Microsoft, Intel to provide self-driving car maps

(Reuters) – Mapping startup Mapbox Inc said on Wednesday it is teaming up with Microsoft Corp, Intel Corp and Softbank Group Corp’s ARM Holdings chip unit to deepen its push into providing maps for self-driving cars.

FILE PHOTO: Silhouettes of mobile users are seen next to a screen projection of Microsoft logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration

Mapbox does not make a mapping app itself. It instead competes against Alphabet Inc’s Google Maps and HERE Technologies, the map firm owned by a group of companies, to provide the underlying maps inside of other apps. Mapbox maps are found in Snap Inc’s messaging app and the Instacart grocery delivery app.

But the Washington, D.C.-founded startup, which has raised about $228 million from Softbank’s Vision Fund, DFJ Growth and others, has been pushing into providing tools for software developers who are making the software for self-driving cars.

“Our main focus has been in making maps for humans,” Chief Executive Officer Eric Gundersen told Reuters in an interview. But maps for self-driving cars are read by the cars’ computers and need more detailed data, he said.

At an event it held for software developers in San Francisco on Wednesday, Mapbox announced a handful of partnerships designed to make its technology more useful for self-driving cars.

FILE PHOTO: Intel logo is seen behind LED lights in this illustration taken January 5, 2018. REUTERS/Dado Ruvic/Illustration

One of Mapbox’s products is software that lets either a mobile phone or a car’s computer see the road as the car drives, picking out things like lanes or speed-limit signs. The company said it will weave that software together with an offering from Microsoft.

The combination will let drivers in the car see real-time events like speed limit changes but then split off some of the camera data and send it to Microsoft’s cloud computer service, Azure. Once there, the data can be processed later by powerful servers to help improve the algorithms that help self-driving cars navigate.

Separately, Mapbox is also working with chipmaker ARM to optimize its self-driving vision software so features detected by ARM’s chips can be recognized as lanes, pedestrians and road signs even faster. In one form or another, ARM’s chips power the majority of mobile phones, tablets and other mobile computers that are making their way into cars.

Mapbox is also pairing with Intel’s Mobileye self-driving unit, which the chipmaker purchased last year for $15.3 billion.

Mobileye is building its own detailed database of road features that is stored in the cloud. Mapbox has built software that will live in cars to beam down Mobileye’s data without hogging up mobile data bandwidth. Cars that use the system will get a constant map ahead of about 200 meters (660 ft), providing a key backup to the car’s onboard sensors, the companies said.

Reporting by Stephen Nellis; Editing by Marguerita Choy

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