Archive for February, 2009

Beijing Auto denies in talks to buy Chrysler assets (Reuters)

Sunday, February 22nd, 2009 | Finance News

SHANGHAI (Reuters) –
Chinese automaker Beijing Automotive Industry Co said on Monday it has not had talks with Chrysler LLC about buying assets or technology from the U.S. company, denying a domestic media report.

The Chinese Business News, citing an unnamed executive at Beijing Auto, reported on Monday that it had initial talks with Chrysler on buying assets and technology as it seeks to expand globally via acquisitions.

Beijing Auto, parent of truck maker Beiqi Foton Motor Co (600166.SS), is interested in buying some of Chrysler's vehicle and engine manufacturing facilities as well as technology to help boost its development of its own brand of automobiles, the report said.

Beijing Auto would be likely to get financial support from the Beijing city government for an acquisition, it added, although it gave no figure for the potential size of a deal.

"We have not held discussions with Chrysler on asset purchases," the Beijing Auto spokesman said.

A Chrysler representative could not be immediately reached for comment.

Chrysler has been granted $4 billion in U.S. loans and is seeking an additional $5 billion as it struggles to stave off bankruptcy.

Chrysler pulled out of a car venture between Beijing Auto and Daimler AG (DAIGn.DE) soon after Daimler sold control of the Detroit automaker to Cerberus Capital Management (CBS.UL) in 2007, although Chrysler's 300C sedan is still made at the venture.

Beijing Auto also runs a car venture with Hyundai Motor Co (005380.KS). It agreed recently to extend its ties with Daimler into the medium- and heavy-duty truck sector.

(Reporting by Fang Yan; Editing by Edmund Klamann)


Nationalized UK bank to expand mortgage book (AP)

Sunday, February 22nd, 2009 | Finance News

LONDON – Britain's government is throwing nationalized lender Northern Rock back into the home loan business in a bid to spur the market for mortgages, a government official said Sunday.

The official said Northern Rock, whose liabilities were taken on by the taxpayer after it fell victim to the credit crunch last year, was ready to make as much as 14 billion pounds ($20 billion) available to homeowners over the next two years. He spoke on condition of anonymity because an official announcement was not due out until Monday.

The move is a reversal for the British government, which had originally sought to scrap the bank's home loan operation.

But with British banks still reluctant to lend to homebuyers and many still refusing to pass on the central bank's interest rate cuts in full, Prime Minister Gordon Brown is under pressure to make mortgages available through banks which the government controls — like Northern Rock or Bradford & Bingley — or has a strong stake in, such as the Royal Bank of Scotland Group PLC.

Investment analyst Justin Urquhart Stewart, of Seven Investment Management, told the BBC he welcomed the government's move, saying it would "provide more capacity into the system so money starts being lent again and that's what the British economy needs desperately."

Mortgage lending remains low: Net lending was 1.9 billion pounds in December, the last month for which figures are available, according to the Bank of England. The year before, the same figure stood at 7.7 billion pounds.


Delphi salaried retirees fight benefit cuts (AP)

Sunday, February 22nd, 2009 | Finance News

NEW YORK – Nancy Shade's father and grandparents had enjoyed the security of General Motors' benefits before they helped draw her to a job there, too. Now, the five-year breast cancer survivor is wondering how she'll afford her own health coverage if GM's spun-off parts maker, Delphi, terminates medical and life insurance benefits for salaried retirees.

Delphi Corp., which has been under bankruptcy protection since 2005, has asked a judge to allow it to cancel the benefits as soon as April 1, so the Troy, Mich., company can save more than $70 million a year and take more than $1.1 billion in liabilities off its balance sheet.

More than 75 Delphi Corp. retirees like Shade have written directly to U.S. Bankruptcy Judge Robert Drain, begging him to keep them from joining the ranks of the uninsured. Attorneys representing at least three groups of retirees have filed formal objections to the plan.

A hearing on Delphi's motion is scheduled for Tuesday in New York.

About 15,000 of Delphi's salaried retirees and their surviving spouses rely on the company's medical coverage until they can qualify for Medicare at age 65.

Delphi has recognized that the cuts are painful but says in court filings that they are needed if the company ever wants to emerge from Chapter 11 protection. Previous reorganization plans didn't account for the steep drop in vehicle sales late last year that has slashed demand for auto parts.

Jim Conger, who spent 35 years with General Motors Corp. and Delphi as a maintenance supervisor in Saginaw, Mich., is part of a group that has hired a Chicago-based law firm to challenge Delphi's request. He also set up a contact e-mail address for other retirees to get involved.

"The thing that has scared me as I'm sitting here and watching the e-mails float in, are the horror stories of the mothers, daughters, fathers and sons that have preexisting conditions and don't stand a chance of having another carrier pick them up," Conger said. "If they don't stay with Delphi, they're in deep trouble."

Douglas Bernstein, managing partner of law firm Plunkett Cooney's Banking, Bankruptcy and Creditors' Rights Practice Group, said the complete elimination of retire benefits is an exceptionally drastic move.

"If this cost is such a drag that the company won't survive unless you eliminate it, it's pretty serious," he said. "It's not a position that you're going to see very frequently taken and it puts a judge in a tough spot."

But companies usually try to negotiate such concessions with the affected workers, Bernstein said, and that's what the retirees' attorneys are asking for in their court filings.

Delphi spokesman Lindsey Williams said the company doesn't comment on legal actions as a matter of policy.

Conger said that if Delphi discontinues the benefits, retirees will have to buy their insurance through the company at costs that could reach up to $1,400 per month for a couple, or they'll be forced to find new insurance from another source, something easier said than done for many older people with pre-existing conditions.

Shade, a lab technician who retired in 2000 with more than 30 years of service at Delphi and GM, said salaried retirees are taking a tougher hit than those who held unionized jobs.

"Nothing in life is fair, we all know that fact," Shade, now 59, said in her letter to the judge. "But I want you to look me in the eyes and tell me that you feel it fair to take away health care from the salaried group and allow the union members to retain coverage."

Harlan Platt, a professor of finance and corporate renewal at Northeastern University, said bankruptcy law requires all stakeholders to share in the pain, but Delphi's unions already made significant wage and benefit concessions in their 2007 contracts.

Platt said Delphi's request to cut retiree benefits is a "sign of absolute desperation" on the part of the auto supplier, which has struggled to find the financing it needs to emerge from bankruptcy. He expected the judge to approve the change.

Despite what could be long odds, retirees in Kokomo, Ind., have started a legal defense fund to pay for a San Francisco-based law firm to represent them, said group member Milton Beach, a former Delphi spokesman who officially retires March 1.

Beach, who has prostate cancer and diabetes, said he expects his medical conditions will make it tough for him to find affordable insurance without going back to work.

"When the job market opens up I'm going to be out there banging on doors, and I don't think my case is much different than most people's," Beach said.