News Archive

Ford agrees to $299.1 million U.S. Takata ‘economic loss’ settlement

WASHINGTON (Reuters) – Ford Motor Co (F.N) agreed to a $299.1 million so-called economic loss settlement covering at least 6 million U.S. vehicles with potentially faulty Takata air bag inflators, court documents filed in a federal court in Miami on Monday show.

The Ford logo is pictured on the company’s stand during the 88th Geneva International Motor Show in Geneva, Switzerland, March 7, 2018. REUTERS/Denis Balibouse

The settlement covers several forms of economic damages linked to the inflators, including claims that vehicles were inaccurately represented to be safe, and that buyers had overpaid for cars with defective or substandard air bags. Previously, six automakers to date have agreed to similar settlements collectively worth more than $1.2 billion including Honda Motor Co (7267.T), Toyota Motor Corp (7203.T), Nissan Motor Co (7201.T), Mazda Motor Corp (7261.T), Subaru Corp (7270.T) and BMW AG (BMWG.DE).

Reporting by David Shepardson; editing by Diane Craft

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Brent oil falls 4 percent to three-month low as supply outage concerns ease

NEW YORK (Reuters) – Oil prices slumped more than 4 percent on Monday, with Brent reaching a three-month low, as Libyan ports reopened and traders eyed potential supply increases by Russia and other producers.

FILE PHOTO: A pump jack lifts oil out of a well, during a sandstorm in Midland, Texas, U.S., April 13, 2018. REUTERS/Ann Saphir/File Photo

Brent crude LCOc1 futures fell $3.49 to settle at $71.84 a barrel, a 4.63 percent loss, while U.S. West Texas Intermediate (WTI) crude CLc1 futures fell $2.95 to settle at $68.06 a barrel, a 4.15 percent loss.

Brent’s dive pushed it to a session low of $71.52 during the session, its lowest since mid-April.

Falling prices offset gains late last week caused by supply outages in Libya, a labor dispute in Norway and unrest in Iraq.

Russia and other oil producers could raise output by 1 million barrels per day (bpd) or more if shortages hit the market, Russian Energy Minister Alexander Novak told reporters on Friday.

Also weighing on futures were reports the United States could tap its Strategic Petroleum Reserve, which would add supply to the market.

Concerns over China’s second-quarter GDP growth also was negative for prices during Monday’s session. The country’s economy expanded at a slower pace as Beijing’s efforts to contain debt hurt activity, while June factory output growth weakened to a two-year low in a worrying sign for investment and exporters as a trade war with the United States intensified.

“The GDP missing a little bit psychologically was a warning sign that China is doing OK now, but not quite as strong as expected,” said Phil Flynn, analyst at Price Futures Group in Chicago.


Production in Libya remained under threat. While its ports are reopening, output at Libya’s Sharara oilfield was expected to fall by at least 160,000 bpd after two workers were abducted by an unknown group, the National Oil Corporation said on Saturday.

On July 11, the NOC said four export terminals were being reopened after eastern factions handed over the ports, while a lengthy shutdown at El Feel oilfield in the southwest also ended. Two days later, output at the nearby 300,000 bpd Sharara was slashed.

In Norway, a strike by offshore oil and gas workers accelerated on Monday when hundreds more walked out in a dispute over pay and pensions after employers failed to respond to union demands for a new offer.

Two protesters in Iraq died on Sunday in clashes with security forces in the town of Samawa amid anger in southern cities over public services and corruption. Demonstrations have yet to affect crude production.

U.S. Treasury Secretary Steven Mnuchin said Monday the United States’ aim was to squeeze Iranian oil exports “to zero.”

Mnuchin said Washington wanted to avoid disrupting markets and would in some cases consider waivers, but it had been made clear to allies it expects them to enforce sanctions against Iran.

Mnuchin is expected to head to India to discuss sanctions; the country is a prominent importer of Iranian crude, but officials there have said it will reduce those purchases.

Reporting by Stephanie Kelly in New York, Jane Chung in Seoul and Christopher Johnson in London; Editing by Chris Reese and Lis aShumaker

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S&P 500 slips with energy shares, but financials bounce

NEW YORK (Reuters) – U.S. stocks mostly edged lower on Monday following a drop in oil prices CLc1 LCOc1 that weighed on energy shares and offset a jump in financials as Bank of America’s (BAC.N) results reinforced expectations of a strong U.S. earnings season.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 13, 2018. REUTERS/Brendan McDermid

The Dow Jones Industrial Average .DJI rose 44.95 points, or 0.18 percent, to 25,064.36, the SP 500 .SPX lost 2.87 points, or 0.10 percent, to 2,798.44 and the Nasdaq Composite .IXIC dropped 20.26 points, or 0.26 percent, to 7,805.72.

Reporting by Caroline Valetkevitch; Editing by James Dalgleish

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FCC raises concerns about Sinclair-Tribune deal, shares fall

WASHINGTON (Reuters) – Federal Communications Commission Chairman Ajit Pai questioned Sinclair Broadcast Group Inc’s (SBGI.O) proposed $3.9 billion acquisition of Tribune Media Co (TRCO.N), in a surprise decision that could potentially scuttle the deal and sent shares of both companies tumbling.

FILE PHOTO: Chairman of the Federal Communications Commission Ajit Pai speaks at the Conservative Political Action Conference (CPAC) at National Harbor, Maryland, U.S., February 23, 2018. REUTERS/Joshua Roberts

Pai, a Republican, said evidence presented to the agency as part of the approval process suggested divestiture of certain television stations “would allow Sinclair to control those stations in practice, even if not in name, in violation of the law.”

Pai, whom Democrats have accused of making a string of decisions benefiting Sinclair, proposed referring the matter to an administrative law judge. The move could result in a lengthy delay and could effectively kill the deal, as in other mergers referred for administrative proceedings.

Tribune shares fell 16.8 percent to $32.10, while Sinclair dropped 10.6 percent to $29.45 after Pai said he had “serious concerns” about the deal.

Sinclair, the top U.S. television broadcast group, did not respond to numerous requests for comment. Tribune declined to comment. Pai and Sinclair have previously denied the Democrats’ accusations.

Sinclair, which owns 192 stations, said in May 2017 that it planned to acquire Chicago-based Tribune’s 42 TV stations in 33 markets.

In April, the company said it would sell 23 TV stations to obtain the necessary regulatory approvals. It needs FCC permission to own more than one station in some markets.

The transaction has come under harsh criticism from many Democrats and some state attorneys general because it would lead to significant TV station consolidation in the United States. Sinclair, based in Hunt Valley, Maryland, has said that if the deal was approved, it would reach nearly 59 percent of the nation’s television households.

Conservative news outlet Newsmax, which owns a cable TV channel, has also criticized the deal. But President Donald Trump has defended Sinclair, tweeting in April that the company was “far superior to CNN.” A majority of the FCC voted to approve the draft order circulated by Pai’s office to refer the transaction for a hearing, a person briefed on the matter said.”It’s widely recognized that when something is set for a hearing that the deal is not going to survive,” said Gigi Sohn, a top aide to former FCC Chairman Tom Wheeler.

FCC Commissioner Jessica Rosenworcel, a Democrat, said that after a string of policies “custom built” to support Sinclair, “the agency will finally take a hard look at its proposed merger with Tribune.” In the draft order, a part of which was seen by Reuters, Pai wrote that the deal raised an issue that “includes a potential element of misrepresentation or lack of candor” that must be resolved before the FCC gives it a go-ahead.

That could amount to “misconduct,” the order said.

The draft order raised questions about the divestiture of stations in Dallas and Houston as well as representations made by Sinclair about the divestiture of WGN-TV in Chicago. Two FCC officials briefed on the matter said the language in the order made it extremely unlikely that Sinclair would be able to proceed with the merger as planned.

The order “could also (put) pressure on them to divest more stations cleanly in the open market,” said Gene Kimmelman, president of the advocacy group Public Knowledge.

Reporting by David Shepardson and Diane Bartz; Editing by Chizu Nomiyama, Jeffrey Benkoe and Jonathan Oatis

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Exclusive: Brazil to delay auction for five of six Eletrobras distributors

MADRID (Reuters) – Brazil’s government will go ahead with the auction of one of state-owned utility Eletrobras’ power distributors planned for July 26, while delaying five others to Aug. 30, Planning Minister Esteves Colnago told Reuters on Monday.

A view of the headquarters of Brazil’s power company Eletrobras in downtown Rio de Janeiro August 20, 2014. REUTERS/Pilar Olivares

Cepisa, the utility’s energy distributor in the northeastern state of Piaui, has drawn the most interest and will be auctioned as planned despite recent legal challenges, Colnago said in an interview during a visit to Madrid.

There are “several groups” interested in Cepisa including potential Spanish buyers, Colnago said, without elaborating.

Centrais Eletricas Brasileiras, as Eletrobras is formally called, is seeking to offload the six heavily indebted distributors ahead of government plans to privatize the overall company.

The auctions hit a snag after a Supreme Court judge in June ruled that all privatizations must be approved by Congress moving forward, with a lower court stepping in to apply the decision to Eletrobras. The lower house of Congress gave its approval earlier this month to privatize the distributors, but the Senate has yet to vote on the matter.

The government initially said it would maintain the scheduled auctions of all the distributors set for July 26 as it appealed the decision, but Finance Minister Eduardo Guardia said earlier on Monday it was “no problem” to delay as legal issues are sorted out.

Reporting by Belén Carreño; Writing by Marcela Ayres and Jake Spring; Editing by Christian Plumband Leslie Adler

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Tesla shares fall 3.5 percent after CEO Musk abuses British diver

(Reuters) – Shares of Tesla Inc fell 3.5 percent on Monday after Chief Executive Elon Musk directed abuse on Twitter at one of the British cave divers involved in the rescue of 12 Thai children last week.

A number of analysts and investors, requesting anonymity, told Reuters that Musk’s comments are adding to their concerns that his public statements are distracting him from Tesla’s main business of producing electric cars. The share drop on Monday knocked almost $2 billion off the company’s market value.

James Anderson, a partner at Tesla’s fourth-largest shareholder, asset manager Baillie Gifford, called the weekend’s events “a regrettable instance” and said he had reiterated to the company the need for “peace and execution” of its core business.

The billionaire entrepreneur’s spat with British diver Vernon Unsworth started last week, after rescue teams rejected Musk’s offer of a mini-submarine created by his rocket company SpaceX to help rescue a 12-member soccer team and their coach trapped inside a flooded cave in the northern province of Chiang Rai.

“He can stick his submarine where it hurts,” CNN reported Unsworth as saying. “It just has absolutely no chance of working.”

FILE PHOTO: Elon Musk arrives to speak at Boring Company community meeting in Bel Air, Los Angeles, California, U.S. May 17, 2018. REUTERS/Lucy Nicholson/File Photo

Musk shot back on Sunday on Twitter: “We will make one (video) of the mini-sub/pod going all the way to Cave 5 no problemo. Sorry pedo guy, you really did ask for it.” The tweet was later deleted.

Tesla spokespeople and lawyers did not respond to emails and phone calls from Reuters requesting comment on Musk’s comments on Twitter.

Musk gave no evidence for alleging Unsworth was a pedophile. Unsworth said he would consider taking legal action against Musk over the remarks, in comments filmed in Chiang Rai on Monday by Australia’s 9News. Reuters could not reach Unsworth for comment.

Unsworth’s wife told Reuters on Monday that her husband was returning to Britain on July 19, where he will speak to lawyers.

Last week, Narongsak Osottanakorn, the leader of the rescue operation in Thailand, rejected Musk’s mini-submarine as not suitable for the task. Musk responded on Twitter on July 10, calling Osottanakorn “not the subject matter expert.”

Musk also regularly uses Twitter to criticize media reports on Tesla, which has struggled to meet its own production targets for its Model 3 sedan, which is seen as key to the company’s profitability.

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Reporting by Sonam Rai in Bengaluru; writing by Patrick Graham; Editing by Bill Rigby

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Thyssenkrupp in leadership turmoil as chairman quits

DUESSELDORF/FRANKFURT (Reuters) – The chairman of Germany’s Thyssenkrupp (TKAG.DE) has resigned, following the company’s chief executive under pressure from activist shareholders demanding a radical restructuring of the embattled industrial conglomerate.

FILE PHOTO: Thyssenkrupp’s logo is seen close to the elevator test tower in Rottweil, Germany, September 25, 2017. REUTERS/Michaela Rehle/File Photo

Ulrich Lehner’s departure on Monday deepens a leadership vacuum at the submarines-to-elevators group, with Guido Kerkhoff having barely settled in as acting CEO after Heinrich Hiesinger quit 10 days ago.

Lehner told the executive board that he would resign with effect from July 31 and that he would withdraw from the supervisory board, Thyssenkrupp said in a statement, adding that a successor would be selected soon.

The 72-year-old executive said he no longer enjoyed sufficient support to develop the company in the interest of its customers, employees and shareholders.

“I take this step consciously to enable a fundamental discussion with our shareholders on the future of Thyssenkrupp,” Lehner said in a statement.

“A break-up of the company and the related loss of many jobs is not an option.”

Hiesinger had championed a European merger of Thyssenkrupp’s steel interests with those of India’s Tata Steel (TISC.NS), sealed on June 30, as a key plank of his strategy to revive the company’s business fortunes and share price.

He quit after failing to win unanimous shareholder backing for the Tata deal, which was two years in the making and when finally signed proved to be less advantageous for Thyssenkrupp than some investors had hoped.

The leadership turmoil at Thyssenkrupp, which has a history stretching back over two centuries, has opened up more fundamental questions about a company that was long run not only for profit, but also with the aims of upholding the legacy of its founding family and preserving jobs for its 158,000 workers.

“I respect Lehner’s decision, but I regret it,” said Wilhelm Segerath, head of the Thyssenkrupp works council and a senior official in the IG Metall industrial trade union.

Segerath called on the main shareholders to work together to develop Thyssenkrupp.

“There can be no break-up of the business,” he told Reuters.


Lehner, who served on the supervisory board for a decade and became chairman in 2013, was a nominee of the Alfried Krupp von Bohlen und Halbach Foundation that is the company’s largest shareholder with a 21 percent stake.

The Krupp foundation was created in the 1960s on the initiative of Berthold Beitz, who as a manager was instrumental in the company’s postwar success and later a prime mover behind a 1999 merger that created Thyssenkrupp. He died in 2013.

The trustees of the foundation, which include North Rhine-Westphalia’s chief minister Armin Laschet, have faced criticism for failing to steady the ship after activist investors Cevian and Elliott demanded an across-the-board strategy review.

Sweden’s Cevian, which holds an 18 percent stake in Thyssenkrupp, and Elliott see the potential to unlock value with more far-reaching changes than Hiesinger was prepared to make. During the seven-year term of the former Siemens (SIEGn.DE) manager, the Thyssenkrupp share price declined by 28 percent.

One newspaper reported at the weekend that the chair of the Krupp foundation had held talks with the largest shareholder of Kone (KNEBV.HE) on a potential merger of the two companies’ elevator businesses.

The first conversations took place as early as two years ago but the idea was rebuffed by Hiesinger, who wanted to hold on to one of Thyssenkrupp’s most profitable divisions, Handelsblatt reported.

It wasn’t immediately clear whether the successive departures of Hiesinger and Lehner would open the way for more radical steps on strategy. Cevian and Elliott declined to comment, while the Krupp foundation could not be reached for comment.

“The executive board regrets the resignation of Ulrich Lehner and thanks him for the trustful collaboration,” acting CEO Kerkhoff said in the company’s statement.

“With his calm and reliable leadership of the supervisory board he reconciled the interests of shareholders and employees at all times.”

Editing by David Goodman

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Britain unveils fighter jet model to rival Franco-German program

FARNBOROUGH, England (Reuters) – Britain unveiled a model of a sleek proposed fighter jet named Tempest on Monday, raising questions about the future of European defense cooperation, given that Germany and France launched their own fighter jet program a year ago.

Britain’s defence minister, Gavin Wiliamson, unveils a model of a new jet fighter, called ‘Tempest’ at the Farnborough Airshow, in Farnborough, Britain July 16, 2018. REUTERS/Peter Nicholls

At the Farnborough Airshow, Defence Minister Gavin Williamson said 2 billion pounds ($2.7 billion) had been earmarked to finance the program out to 2025 and that Britain would seek international partners to provide additional funding.

The aircraft, meant to eventually replace the Eurofighter Typhoon jet, will be developed and built by BAE Systems Plc (BAES.L), Britain’s biggest defense company, alongside UK engine-maker Rolls-Royce Holdings Plc (RR.L), Italian defense firm Leonardo (LDOF.MI), and European missile maker MBDA.

Unveiled before visiting foreign military chiefs and industry executives at the BAE chalet, the new jet can be flown by a pilot or operated as a drone.

Germany and France are already working on a new jet, with the program led by France’s Airbus (AIR.PA), part of the Eurofighter consortium and Dassault Aviation SA (AVMD.PA), the maker of the Rafale.

Industry executives said the two programs could eventually be fused, once Britain and the European Union sorted out Britain’s departure from the economic bloc in nine months.

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Failure to unite around a single fighter program risked further fragmenting the European defense market, but the decision was up to government leaders, Airbus’s defense chief Dirk Hoke told Reuters.

“If the politicians decide differently, we’ll have to adapt, but in my opinion that would be bad for Europe,” he said.

Leonardo Chief Executive Alessandro Profumo also voiced hope that Europe would unite around one program. “It’s up to the governments, but Europe is moving more and more toward being unified. I have to be optimistic.”

Air Vice-Marshal Simon Rochelle from Britain’s Royal Air Force said Britain was having discussions with potential partner countries, including Sweden and Japan.

He said it was not clear if the UK project would eventually be merged with the Franco-German one, adding, “We are having a lot of conversations with a lot of countries.”

Analysts see Sweden as a likely partner, although countries such as South Korea, Japan and Turkey, or Gulf arms-buying nations like Saudi Arabia, are also possibilities.

But experts say there is unlikely to be sufficient demand to support two separate European programs, particularly given the high cost of developing a cutting-edge new aircraft.

UK plans call for the new jet to be operational by 2035, in time to replace the Typhoon fleet when it ends service in 2040.

The jet is the centerpiece of a new UK combat air strategy that Prime Minister Theresa May said was aimed at “maintaining our world-class air power capabilities.”

France announced in June that it would take a leading role on a new fighter program that would start as a bilateral effort with Germany but could be expanded later.

The Typhoon, in contrast, was developed by the four-nation group of Germany, Spain, Britain and Italy in the 1980s.

A German defense ministry spokesman declined to comment on the UK program, but said the Franco-German project was open to additional partners.

Michael Christie, BAE Systems strategy director for air, said Britain had the capability to develop Tempest alone but that it made sense to develop it with a partner given the cost and a desire to lock in future sales.

However, he added that BAE wanted to “play a leading role in whatever partnership that we are involved in.”

Britain has not developed a fighter jet alone since the 1960s. However, it helped develop and build the most advanced stealth fighter in the UK fleet, the U.S.-made F-35, with BAE Systems carrying out about 15 percent of the work on each jet.

Reporting by Sarah Young; additional reporting by Andrea Shalal, Editing by Mark Potter and Lisa Shumaker

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Bank of America profit beats on consumer loan growth, lower expenses

(Reuters) – Bank of America Corp reported quarterly profit above analyst expectations on Monday as the second-largest U.S. lender cut expenses and benefited from growth in loans and deposits on the back of a strengthening economy.

Noninterest expense dropped 5 percent in the quarter from a year earlier as the bank trimmed headcount and worked on digitizing its retail operations to lower overhead.

Revenue rose in each of the bank’s segments with the exception of global banking, where lower investment banking fees dragged revenue down 2 percent.

The bank’s shares were up 2.4 percent to $29.24 in morning trading.

During his near-decade long tenure, Chief Executive Brian Moynihan has focused on making the bank’s sprawling operations more efficient. Two years ago, he pledged to cut expenses to $53 billion by the end of this year, and the bank confirmed it is on track to meet that goal and plans to hold expenses at that level through 2020.

Banks have been broadly expected to report higher investment banking fees this year as lower U.S. corporate tax rates and a friendlier regulatory environment encourage deal making.

Moynihan acknowledged on a call with analysts that the bank is underperforming peers when it comes to earning MA advisory fees.

“The team knows they can do a better job, and they’re after it,” he said.

The corporate tax cuts have helped boost Bank of America’s bottom line along with its Wall Street peers, while Federal Reserve interest rate hikes have padded net interest income.

Total loans increased 2 percent in the quarter for Bank of America, led by growth in its consumer banking and wealth management businesses.

Total loan growth continued to be weighed by its runoff portfolio of consumer real estate loans, while year-over-year growth in Bank of America’s business segments was 5 percent.

In comparison, JPMorgan Chase Co’s core loans, which exclude consumer credit and loans to the biggest corporations, rose 7 percent in the quarter. Citigroup Inc’s total loans rose 5 percent.

Loan growth combined with higher interest rates helped push net interest income up during the quarter, but rising interest rates also increased the price the bank pays for its deposits.

The bank has increased the rate it pays for deposits in its wealth management and global banking units, Chief Financial Officer Paul Donofrio said.

Overall, Bank of America’s net income applicable to common shareholders rose 36.3 percent to $6.47 billion in the second quarter.

Excluding items, it earned 64 cents per share compared with the average expectation of 57 cents per share, according to Thomson Reuters I/B/E/S.

Net interest income rose 6 percent as the bank’s large stock of deposits and rate-sensitive mortgage securities helped it take advantage of four interest rate hikes in the past year.

Revenue, net of interest expense, fell 1 percent to $22.76 billion. Revenue in the year earlier quarter included a $793 million pretax gain on the sale of the bank’s non-U.S. consumer card business. Analysts had expected revenue of $22.29 billion.

(This version of the story corrects the day of week in the first paragraph)

FILE PHOTO: A customer uses an ATM at a Bank of America branch in Boston, Massachusetts, U.S., October 11, 2017. REUTERS/Brian Snyder/File Photo

Reporting by Sweta Singh in Bengaluru and Imani Moise in New York; Editing by Meredith Mazzilli and Susan Thomas

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