Archive for December, 2008

Dow and Rohm shares fall on concern over deal (Reuters)

Monday, December 29th, 2008 | Finance News

NEW YORK (Reuters) –
Shares of Dow Chemical and Rohm & Haas plunged by more than 20 percent on Monday, after Kuwait scrapped a $17.4 billion joint venture with Dow, potentially upsetting its plans to buy rival Rohm & Haas.

Dow, the largest U.S. chemical company, could be hurt even if it completes its Rohm & Haas bid, as the company would be saddled with a large debt load from the deal.

It had planned to use the proceeds from the joint venture with Kuwait's state-run Petrochemical Industries Co to repay a large part of the debt financing for the $15.3 billion acquisition.

Analysts said Dow would be under pressure to renegotiate its bid for Rohm & Haas or, if possible, walk away from the deal.

The Midland, Michigan, chemicals maker agreed to buy Rohm & Haas at a 74 percent premium in July to broaden its specialty product offerings, in a deal that carried a termination fee of $750 million for Dow.

HSBC analyst Hassan Ahmed said that Dow should be looking for ways to extricate itself from its bid for Rohm & Haas.

Without the Kuwaiti joint venture, Dow would have to tap into difficult credit markets to be able to shoulder the deal, he said.

Ahmed said the company's transformation plan was built on two legs: the Kuwaiti joint venture and the Rohm & Haas deal.

"When one leg of the two-leg story has fallen off, how can they stand on just the Rohm & Haas deal?" he said.

Dow did not comment on whether the joint venture's collapse would affect its plan to buy Rohm & Haas.

Rohm & Haas said in a statement on Sunday that the completion of Dow's joint venture was not a condition for the closing of its takeover. It said it was working to complete the deal early next year.

Shares of Dow fell $3.85 or 20.4 percent to $15.07, and Rohm & Haas fell $13.84 or 21.8 percent to $49.72 on Monday morning on the New York Stock Exchange.

If the acquisition does fall through, it would join a long list of deals withdrawn in 2008 amid a lack of available credit and plunging stock markets.

More deals were canceled this year than ever before, with the total value of withdrawn deals valued at nearly $800 billion.

Dow and other chemical companies are struggling because of recessions in most developed countries and a sharp slowdown in emerging economies. The company earlier this month said it would close 20 facilities, divest several businesses and cut 5,000 jobs to cope with the slump.

(Editing by Steve Orlofsky and Matthew Lewis)


Lehman bankruptcy filing wiped out billions: report (Reuters)

Monday, December 29th, 2008 | Finance News

NEW YORK (Reuters) –
Lehman Brothers Holdings Inc's emergency bankruptcy filing wiped out as much as $75 billion of potential value for creditors, The Wall Street Journal reported on Monday, citing an analysis by the bank's restructuring advisers.

A more planned and orderly filing would have allowed Lehman to sell some assets outside of bankruptcy court protection and would have given it time to unwind derivatives positions, according to the analysis by Alvarez & Marsal.

The Journal said it was too early to say how much money Lehman creditors would recover; it said unsecured creditors have asserted they are owed $200 billion.

Lehman filed for bankruptcy protection in September after the U.S. government declined to bail it out and a frantic weekend of negotiations to save the investment bank failed.

The Lehman meltdown touched of a stock market panic and credit crisis and was quickly followed by a government rescue of American International Group Inc, once the world's largest insurer.

Lehman's demise also ignited a wave of fire sales of other giant financial groups such as Wachovia Corp and Merrill Lynch & Co Inc.

Lehman executives were not immediately available to comment on the Journal report.

(Reporting by Juan Lagorio, editing by John Wallace)


Clothing company goes into bankruptcy protection (AP)

Monday, December 29th, 2008 | Finance News

LONDON – British clothing company USC filed for a form of bankruptcy protection Monday, as the economic downturn claimed another major UK retailer.

Edinburgh, Scotland-based USC, a retailer that sells clothing brands such as Diesel, Lacoste and Ted Baker in Britain, went into administration, said PKF, the company's administrator.

Meanwhile, British children's clothing retailer Adams Childrenswear Ltd. is seeking bankruptcy protection. The 75-year-old central England-based concern was expected to be placed in the hands of administrators at PricewaterhouseCoopers later Monday, spokeswoman Ginette Gisborne said. PricewaterhouseCoopers declined to comment.

USC and Adams are the latest in a series of big British retail brands to be hit by the economic turmoil — 99-year-old general store Woolworths, tea and coffee merchant Whittard of Chelsea and music chain Zavvi, have already been forced to file for administration.

About 200 Woolworths stores closed Saturday and the remainder are expected to close over the next week unless a buyer is found. Whittard has been sold.

USC's administrator Bryan Jackson said he had already secured the sale of 43 of the retailer's 58 stores to Dundonald Holdings Ltd., saving 1,127 jobs. But, he said, the remaining 15 stores had not yet been able to secure a deal, putting around 300 jobs at risk. Those stores will be temporarily kept open.

The picture at Adams is less clear. Gisborne said the company was not yet in administration and that the company did not yet know if the stores would remain open, close or be sold.

Adams employs around 2,000 people, has 260 stores in Britain and over 100 international outlets in the Middle East and Europe. It is owned by Northern Ireland businessman John Shannon, who bought it out of administration less than two years ago.

It supplies clothes for the retail chain Boots and sells clothes through its own outlets.

The news that USC is in administration and Adams is on the brink of collapse comes after insolvency specialist Begbies Traynor predicted last week that as many as 15 "major" British household-name retailers could fail by the middle of January.

In total, 356 British retail companies collapsed during the third quarter of 2008 — 39 percent more than the same period last year — according to The Insolvency Service.