Archive for December, 2008

Cencosud says it is ready to compete with Wal-Mart (Reuters)

Monday, December 22nd, 2008 | Finance News

SANTIAGO (Reuters) –
The owner of Chile-based Cencosud, a leading regional retailer, said on Monday his company was ready to compete with Wal-Mart, the world's largest retailer as it prepares to enter the Chilean market.

"Cencosud has always been up and ready. I've never seen Paulmann not ready for action," owner and controlling shareholder Horst Paulmann said of himself to reporters.

On Friday, Wal-Mart (WMT.N) reached an agreement with the controlling shareholders of D&S (DIS.SN) (DYS.N), Chile's largest supermarket operator, to launch an all-cash takeover valued at some $2.7 billion.

Analysts have speculated that Cencosud, which operates supermarkets, department stores and home improvement stores, stands to lose the most with Wal-Mart's arrival in Chile.

D&S dominates Chile's supermarket industry, with about a third of market share, while Cencosud runs a close second, with the two retailers controlling over half of Chile's supermarket sales.

Earlier this month, Cencosud said its Chief Executive Laurence Golborne would resign effective January 31, and that Paulmann's oldest son, Manfred, would become vice president of the board.

The action was viewed with some skepticism because Golborne was seen by the market as the driving force behind Cencosud's transformation from a local retailer into a regional powerhouse.

In January, Chile's anti-trust tribunal nixed the acquisition of D&S by Chilean diversified retailer Falabella (FAL.SN), saying the deal would hurt consumers.

(Reporting by Antonio de la Jara, Writing by Lisa Yulkowski, Editing by Toni Reinhold)


Judge OKs Lehman settlement (Reuters)

Monday, December 22nd, 2008 | Finance News

NEW YORK (Reuters) –
A U.S. bankruptcy judge approved a settlement calling for $1.27 billion in cash plus securities with a face value of $5.7 billion to be transferred to Barclays Plc (BARC.L) in connection with its purchase of the core U.S. brokerage business of Lehman Brothers Holdings Inc.

The settlement relates to fund transfers made the week of September 15 to keep Lehman's (LEHMQ.PK) brokerage business operating while the parent company filed for Chapter 11 bankruptcy.

U.S. Bankruptcy Judge James Peck approved the settlement on Monday and said the Lehman creditors committee could conduct further inquiries into the agreement if it chose.

"This settlement represents a significant benefit to (Lehman Brothers) and is the right thing to do," Peck said, citing representations made by lawyers for JPMorgan Chase & Co (JPM.N), Barclays, Lehman and the Federal Reserve Bank of New York in court on Monday.

The securities being transferred, many of them mortgage-backed securities, have declined substantially from their original value, lawyers for the various parties said in court. They declined to give the current value of the securities.

According to court papers, the $7 billion in cash and securities stemmed from a sum Barclay's had expected to receive after loaning $45 billion to the Lehman brokerage business on September 18, two days before the court approved its purchase of the unit.

The broker-dealer needed the funds to guarantee its short-term obligations. It had been given assistance earlier that week from the New York Fed, which made a short-term loan worth $46.22 billion to Lehman.

Barclays had expected $49.7 billion to be returned to it from Lehman as part of its loan, but only $42.7 billion could be transferred before the court ordered the liquidation of Lehman's brokerage business.

The securities and cash will come from Lehman Brothers Inc accounts at JPMorgan Chase & Co (JPM.N), according to court papers. JPMorgan has agreed to release liens it has on those accounts. Lehman Brothers Inc is the brokerage business that is being liquidated by a trustee to facilitate the transfer of customer accounts to Barclays and other parties.

Harvey Miller, a lawyer representing bankrupt Lehman Brothers Holdings, told the court that the brokerage's former parent company did not object to the settlement and that it would spare the company significant future litigation.

(Reporting by Emily Chasan; editing by John Wallace)


Wall St falls on corporate outlook, retail worries (Reuters)

Monday, December 22nd, 2008 | Finance News

NEW YORK (Reuters) –
Stocks slid on Monday on more evidence the year-long recession will keep eating into corporate profits, while retailers tumbled on worry the holiday shopping season could be the worst in nearly 40 years.

The news was gloomy right from the start. Top U.S. staffing company Manpower (MAN.N) scrapped its profit outlook and No. 1 drug store chain Walgreen Co (WAG.N) posted a weaker-than-expected profit and slowed its expansion plans.

The auto sector was again a main source of investor anxiety, cutting short the relief over last week's bailout deal for U.S. car makers.

Japan's Toyota Motor Co (7203.T)(TM.N) said it would post an operating loss for the first time in 71 years, knocking its U.S. shares more than 5 percent lower, while investors worried whether Washington's rescue package for General Motors would leave its shareholders out in the cold. GM plunged more than 20 percent.

"From Toyota to developers to pharmacies, obviously we're in quite a recession and it's pretty obvious there's more pain to come," said Warren Simpson, managing director at Stephens Capital Management in Little Rock, Arkansas.

Concerns over the outlook for retailers mounted just days before Christmas as investors worried that cash-strapped consumers had kept a lid on shopping despite deep discounts over the last weekend before the holiday.

The weak outlook for consumer spending and the economy dragged crude oil prices lower, again, taking oil producer shares down.

The Dow Jones industrial average (.DJI) fell 59.42 points, or 0.69 percent, to 8,519.69. The Standard & Poor's 500 Index (.SPX) was down 16.25 points, or 1.83 percent, at 871.63. The Nasdaq Composite Index (.IXIC) gave up 31.97 points, or 2.04 percent, at 1,532.35.

Indexes finished well off their session lows. Trading was thin for most of the session and was expected to be light throughout the holiday-shortened week.

With just six trading days remaining in the year, there is little hope the markets will avoid having their worst yearly performance since the 1930s. The S&P 500 is down about 40 percent for the year.

Caterpillar Inc (CAT.N) was among the Dow's biggest drags, falling 2.1 percent to $41.78 after the heavy equipment maker said it would cut white-collar pay by up to 50 percent and offer buyouts to some employees.

General Motors Corp (GM.N) sagged for the first time since the $17.4 billion lifeline from the U.S. government was announced.

A Credit Suisse analyst said the equity of GM may be wiped out as it complies with the restructuring targets laid out in the bailout. GM was down 21.6 percent at $3.52.

New York-listed shares of Toyota were down 5.4 percent at $60.88 after it said it was impossible to predict how severely the current "unprecedented emergency" would cut the global demand for cars next year. [ID:nT299128].

Energy and other resource companies slid as the price of oil dropped below $40 a barrel on signs the global economic downturn is further drying up fuel demand. Dow component Chevron (CVX.N) was down 2.1 percent at $69.39.

Walgreen said it was opening fewer stores than it previously planned as consumers curbed their spending, while rival CVS Caremark Corp (CVS.N) also said customers are cutting back. Walgreen fell 4.2 percent to $24.98 and CVS trimmed earlier losses to edge down 0.2 percent to $26.91.

Manpower withdrew its profit outlook, citing light demand for temporary workers due to the spreading global recession, sending its shares down 14.2 percent to $31.22.

Retailers buckled under dwindling consumer demand in what is usually the busiest shopping season. J.C. Penney Inc (JCP.N) shed 5.8 percent to $18.77, and Liz Claiborne Inc (LIZ.N) lost 7.2 percent to $2.98.

Trading was low on the New York Stock Exchange, with about 1.22 billion shares changing hands, below last year's estimated daily average of roughly 1.9 billion, while on Nasdaq about 1.66 billion shares traded, below last year's daily average of 2.17 billion.

Declining stocks outnumbered advancing ones on the NYSE by 2,141 to 979 while decliners beat advancers on the Nasdaq by about 1,873 to 911.

(Editing by Leslie Adler)