Archive for February, 2010

Conn. governor calls for safety review after blast (AP)

Monday, February 8th, 2010 | Finance News

HARTFORD, Conn. – Connecticut's governor is calling for a review of state safety codes following a deadly explosion at a power plant in Middletown.

Rell announced Monday that she is creating two panels — one to identify the cause and origin of Sunday's explosion at the Kleen Energy Systems plant and any contributing factors, such as construction problems, worker safety issues and licensing or permitting matters.

The second panel of state agencies, local officials and experts will review the first panel's report and determine whether changes need to be made to Connecticut laws, state or local regulations, building or fire codes.

Rell did not give a timetable but says the reviews need to be "impartial and swift."

Five workers were killed in the blast at the nearly completed 620-megawatt plant.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

MIDDLETOWN, Conn. (AP) — Search-and-rescue crews declared a section of an exploded power plant too unstable to comb through Monday, a task that lost urgency when officials said everyone assigned to work at the plant the day of the blast had been accounted for and the death toll should stand at five.

Mayor Sebastian Guiliano sounded a note of caution Monday afternoon, however, saying rescue crews had been unable to get to all areas of the plant and he could not say for certain that no more victims would be found.

Deputy Fire Marshal Al Santostefano told The Associated Press that he didn't know when rescue crews would be able to search the small section of the plant that was unstable but said the fact that everyone had been accounted for was good news.

"We needed something to lift spirits around here, and that definitely did it," he said.

The blast in Middletown, about 20 miles south of Hartford, injured more than two dozen in addition to the five dead. It happened as workers were clearing gas lines of air, but the exact cause remained under investigation.

Welders and other workers were at the site Monday, preparing to make it safer for emergency workers, said Ed Reilly, president of the Greater Hartford-New Britain Building Trades Council. Piles of rubble stood 10 feet high in some places, and mounds of lay everywhere, Santostefano said.

Investigators from the town fire marshal's office returned to the scene Monday to try to begin determining the cause. Investigators from Occupational Safety and Health Administration were also at the site, which was closed to reporters.

"I lost a couple of good friends up there," Michael Rosario, a representative of the local Plumbers and Pipefitters union, said as he broke down crying Monday.

"We hug our families, kiss our children. ... We go to work and we want to come home at the end of the day, safe," he said. "That didn't happen for a few people yesterday."

The blast left huge pieces of metal that once encased the plant peeling off its sides. A large swath of the structure was blackened and surrounded by debris, but the building, its roof and its two smokestacks were still standing at the site, which is near Wesleyan University on a wooded and hilly 137-acre parcel of land overlooking the Connecticut River.

A team sent by the U.S. Chemical Safety Board, a federal agency that investigates industrial chemical accidents, arrived at the site Monday but was turned away by local police, said Daniel Horowitz, the agency's spokesman.

U.S. Rep. Joe Courtney, D-Conn., said he was told a judge signed a jurisdictional warrant giving the police and local fire department the right to control the property, and that members of the congressional delegation and the governor's office were working together to "navigate the jurisdictional lines" defining who can be at the site.

"We want to make sure all critical agencies get to do their job," said Courtney, who visited the site on Monday.

The nearly completed 620-megawatt plant is being built to produce energy primarily using natural gas, which accounts for about a fifth of the nation's electricity. Workers for the construction company, O&G Industries Inc., a Torringon-based general contractor for the Kleen Energy project, were purging a gas line, clearing it of air, when the explosion occurred around 11:15 a.m. Sunday, Santostefano said.

The explosion occurred just outside the building, between two of the generators, Giuliano said.

Santostefano said workers were at the site Sunday because they were trying to get the plant open on time — the opening was slated for sometime in the middle of 2010 — but added: "It wasn't like they were working in a frenzy."

Melissa Brady, a spokeswoman for Middlesex Hospital, said it treated 26 patients, 21 of whom were released Sunday. Three were admitted to Middlesex and two with severe injuries were transferred, one to Yale-New Haven Hospital and one to Hartford Hospital. She said most had injuries characteristic of being thrown or in an explosion, such as broken bones and bruises.

They were all expected to survive, she said, and most of the injuries were to extremities.

Kleen Energy Systems LLC began construction on the plant in February 2008. It had signed a deal with Connecticut Light and Power for the electricity produced by the plant, and would be one of the biggest built in New England in the last few years.

The company is run by former City Councilman William Corvo. Messages left at Corvo's home were not returned. Calls to Gordon Holk, general manager of Power Plant Management Services, which has a contract to manage the plant, also weren't returned.

OSHA records show there was a planned inspection on July 28, 2009, for work being performed by O&G Industries. There was one violation, listed as "other," relating to recordkeeping and reporting. John Chavez, an OSHA spokesman, says records show O&G settled the matter informally by paying the $1,000 fine.

"Relatively speaking, they do appear to have a pretty clean record," Chavez said.

Energy Investors Funds, a private equity fund that indirectly owns a majority share in the power plant, said it was cooperating with authorities.

Safety board investigators have done extensive work on the issue of gas line purging since an explosion last year at a Slim Jim factory in North Carolina killed four people. They've identified other explosions caused by workers who were unsafely venting gas lines inside buildings.


Transformers drive Hasbro 4Q profit increase (AP)

Monday, February 8th, 2010 | Finance News

NEW YORK – Strength in its boys' brands like Transformers and Nerf, along with its core game brands including Scrabble and Monopoly, should boost Hasbro's results in 2010, the company said Monday.

The owner of the G.I. Joe, Tonka and Playskool brands also said it expects sales and earnings per share to grow this year, although it didn't offer specifics.

Combined with strong fourth-quarter earnings, the positive news sent Hasbro shares up 12 percent, and they briefly touched a 52-week high. Hasbro has seen earnings-per-share grow for nine years straight and revenue for five.

The quarter's big sellers for boys — Transformers, G.I. Joe, Nerf, Play-Doh and Tonka — helped sales climb 12 percent to $1.38 billion, from $1.23 billion a year earlier.

"Overall in 2009, the global economic environment did not improve significantly, but it also did not deteriorate further," CEO Brian Goldner said.

The fourth quarter is key for toy makers because it contains the holiday period and can produce up to half of their annual sales.

Transformers — boosted by the movie "Transformers: Revenge of the Fallen" in June — produced $592 million in revenue in 2009, a 23 percent increase over 2007, when the original "Transformers" movie debuted.

Revenue for G.I. Joe, also boosted by a summer blockbuster in 2009, totaled more than $125 million. Nerf, Play-Doh and Tonka grew 25 percent during the year.

Goldner said momentum was continuing in boys' brands.

The company's girls' brands were weaker. PlaySkool and Furreal Friends sales were hurt by higher-price items in those lines in 2008 that were taken out of the line in 2009.

Fourth-quarter profit rose 77 percent to $165.6 million, or $1.09 per share, from $93.6 million, or 62 cents per share, last year. That surpassed the 81 cents per share analysts polled by Thomson Reuters expected.

Sales climbed 12 percent to $1.38 billion from $1.23 billion, topping Wall Street's estimate of $1.34 billion.

"Overall fourth quarter was very good and was much better than we envisioned," said Wells Fargo Securities analyst Tim Conder.

Last month Barbie maker Mattel Inc., Hasbro's chief rival, said its fourth-quarter profit rose 86 percent, helped by cost cutting, while sales edged up 1 percent to $1.96 billion.

For the year, Hasbro's earnings grew 22 percent to $374.9 million, or $2.48 per share, compared with $306.8 million, or $2 per share, in 2008. Annual sales improved to $4.07 billion from $4.02 billion.

Shares rose $3.81, or 12.4 percent, to $34.61 during afternoon trading, after earlier reaching a 52-week high of $34.19. The stock has traded between $21.14 and $32.75 over the past year.


Associated Press Reporter Michelle Chapman contributed to this report.


CIT names ex-Merrill CEO Thain as chairman, CEO (AP)

Monday, February 8th, 2010 | Finance News

NEW YORK – John Thain is getting a second chance.

CIT Group Inc. tapped the former Merrill Lynch CEO to become its chairman and chief executive.

Thain brokered Merrill's sale to Bank of America as the credit crisis peaked in the fall of 2008, but was forced to resign after the deal closed because of controversy over bonus payments and mounting losses at the investment bank.

CIT, one of the nation's largest lenders to small and mid-sized businesses, is betting Thain can repair his image and the company's after a difficult 2009. CIT went through bankruptcy reorganization late last year after it was unsuccessful in trying to restructure its debt.

Thain will try to revitalize a commercial lender that was among the hardest hit by the recession and credit crisis. CIT Group, which lends to more than 3,000 businesses including supermarkets and department stores, was forced into bankruptcy after failing to raise cash to pay off outstanding debt. The more than 100-year-old company also was hurt by mounting loan losses as more customers fell behind on repaying loans during the recession.

Thain, 54, took over Monday. He replaces interim CEO Peter Tobin, who will remain on CIT's board of directors. Tobin had been serving as CEO since Jeffrey Peek retired Jan. 15.

Investors reacted positively to the announcement of Thain's appointment. Its shares rose $1.03, or 3.4 percent, to $31.78 in morning trading.

New York-basd CIT will pay Thain an annual cash salary of $500,000. He will also receive $5.5 million in stock annually, of which $2.5 million will be subject to a one-year holding period. The remaining $3 million cannot be sold for three years.

Thain could also receive up to $1.5 million in bonuses based on the performance of the company. The board will determine whether to award the performance-based bonuses.

As chairman and CEO of Merrill Lynch, Thain's deal to sell Merrill was considered a lifesaving move for the company at the height of the financial crisis. But he was criticized for having paid out $3.6 billion in bonuses to Merrill employees just before the deal closed, and for spending more than $1 million to redecorate his office at Merrill, despite its massive losses.

Thain resigned as head of global wealth management of the combined company in January 2009, after news of the bonus payments first surfaced. Bank of America Corp. last week agreed to settle a case with the Securities and Exchange Commission over claims it misled shareholders about the bonuses and more than $15 billion in fourth-quarter losses at Merrill to ensure the deal would be approved.

New York Attorney General Andrew Cuomo filed civil fraud charges against Bank of America and its former CEO Ken Lewis on similar grounds. Joe Price, who at the time of the deal was Bank of America's chief financial officer but now heads consumer banking, was also charged.

Thain was not charged with any wrongdoing.

Thain inherits a company that in addition to its lending activities is the third-largest railcar leasing firm in the U.S. and the third-largest in airline financing globally, according to its Web site.

"Much has been accomplished in recent months to position CIT for renewed success," Thain said in a statement. "We will build upon this progress and work even harder to support small and mid-market businesses. CIT can and will serve an important role in the recovery of the U.S. economy and the creation of jobs."

CIT moved through bankruptcy in just six weeks because its key bondholders had already approved a reorganization plan. It was able to cut its total debt by $10.5 billion and deferred debt maturities for three years. The same month it emerged from Chapter 11 it made plans to start lending again, committing to fund $500 million in new government-guaranteed loans to small business customers in 2010.

Common stock holders and the government lost their investments when CIT filed for bankruptcy protection. The Treasury Department had given CIT $2.3 billion in loans as part of its $700 billion financial bailout plan.

The government declined to provide CIT with a second bailout when the company was trying to find new funding sources last summer before filing for bankruptcy protection.

Thain has also served as CEO of the New York Stock Exchange and as president and chief operating officer at Goldman Sachs Group Inc.