Archive for August, 2010

Candidate says Alaskans should invest in gas line (AP)

Friday, August 27th, 2010 | Finance News

ANCHORAGE, Alaska – The state's Democratic nominee for governor said Friday he wants to give residents the chance to invest in a proposed pipeline that could ship natural gas to Lower 48 states.

Ethan Berkowitz said he wants to create "Great Alaska Pipeline Inc.," a private-public partnership that could help overcome a hurdle for the proposed multibillion dollar project — financing.

"If we take advantage of this opportunity, we've got a greater chance of making the pipeline become real," he said at a news conference.

Tapping Alaska's vast natural gas resources and moving them to market has been a dream for state leaders for three decades or more.

About 90 percent of Alaska's general fund revenue budget is fueled by the petroleum industry. High prices have kept coffers filled, but the trans-Alaska oil pipeline now operates at about one-third of its capacity as reserves diminish.

Former Alaska Gov. Sarah Palin attempted to jump-start a natural gas pipeline project with passage of the Alaska Gasline Inducement Act. It promised $500 million in seed money to a pipeline company that met certain performance requirements.

In 2008, the Legislature awarded a license to TransCanada Corp., which is working with Exxon Mobil Corp. Two major Alaska producers, ConocoPhillips and BP PLC, have proposed their own pipeline.

The companies have estimated the cost at $35 billion or more.

Berkowitz said his plan for Alaskans owning a piece of a pipeline is not tied to a specific project.

He proposed letting Alaskans check off some or all of their Alaska Permanent Fund dividend checks to build up a fund that could jump-start financing for a pipeline. Qualified Alaskans receive a dividend each year from earnings on the $34.2 billion permanent fund, a state savings account created with oil revenue and now sustained largely with investments.

"If we have about 20 percent of Alaskans participate in this proposal, which is what our projections would be, we'll see the cumulative effect of about $800 million in investment," he said.

The percentage of ownership, he said, would depend on the overall cost of the pipeline and the level of participation by Alaskans.

"Our projections are that we would see somewhere between a 10 and 20 percent owner interest," he said.

He stressed that participation would be optional. Money would be placed in an interest-bearing escrow account and would be risk-free until construction began. If a pipeline was never built, he said, the money would be returned to investors.

If a line is built, the rate of return would depend on the profitability of the pipeline, Berkowitz said.

Michelle Toohey, campaign manager for Gov. Sean Parnell, the Republican gubernatorial nominee, said Alaskan ownership of a part of the pipeline has been discussed.

"There are a lot of unanswered questions about this proposal — not the least of which is whether or not Alaskans should spend billions and go into debt for billions more on a private sector project that is moving," Toohey said.

A "sense of Congress" measure in 2004 encouraged the state to set up a format for individuals, businesses and Alaska Native corporations to invest in a pipeline, Berkowitz said.

The plan would require legislation in the Alaska legislature and likely Congress. Berkowitz anticipates letting individuals invest more than their dividends and letting Alaska businesses add to the total.

Berkowitz, who on Tuesday defeated state Sen. Hollis French for the Democrat gubernatorial nomination, said the pipeline investment idea is the first phase of an overall "Alaska Ownership Stake" plan he will roll out as the campaign progresses.

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BofA loses bid to end investor lawsuits on Merrill (Reuters)

Friday, August 27th, 2010 | Finance News

NEW YORK (Reuters) – A Manhattan federal judge refused to dismiss shareholder lawsuits against Bank of America Corp (BAC.N) and various executives and directors over the purchase of Merrill Lynch & Co during the 2008 financial crisis and disclosures about Merrill's losses and bonus payouts.

U.S. District Judge P. Kevin Castel issued his 140-page ruling late on Friday afternoon. Nine days earlier, the largest U.S. bank and former Chief Executive Kenneth Lewis denied civil fraud charges made in a separate lawsuit by New York Attorney General Andrew Cuomo over the merger.

Bank of America spokeswoman Shirley Norton said the Charlotte, North Carolina-based lender was reviewing the ruling. Lawyers for bank shareholders in the lawsuits did not immediately return calls seeking comment.

Lewis had been hailed for saving Merrill from possible collapse when he agreed to buy it on September 15, 2008, the same day Lehman Brothers Holdings Inc (LEHMQ.PK) went bankrupt.

But problems at Merrill later forced Bank of America to get a second infusion of federal bailout money.

The bank was also criticized for not disclosing Merrill's soaring losses in a timely manner and for letting Merrill pay $3.6 billion of bonuses at the time. Merrill's losses reached $15.84 billion in the fourth quarter of 2008.

Some of the claims Castel declined to dismiss related to alleged material misstatements over Merrill's bonuses and the scope of Merrill's losses. Another claim related to whether the bank intentionally hid an agreement with regulators to obtain bailout money.

He dismissed claims over whether the bank should have conducted better due diligence, and should have revealed why it considered invoking a contractual clause to back out of the merger.

Bank of America earlier this year settled a U.S. Securities and Exchange Commission civil fraud case over the merger.

In a separate 45-page ruling, the judge dismissed a lawsuit by Bank of America employees over losses in retirement plans, where the bank's stock was an investment option.

Shares of Bank of America traded at $33.74 just before the Merrill merger, but fell as low as $2.53 in February 2009, little more than five months later. They closed Friday up 17 cents at $12.64 on the New York Stock Exchange.

The case is In re: Bank of America Corp Securities, Derivative and Employee Retirement Income Security Act (ERISA) Litigation, U.S. District Court, Southern District of New York, No. 09-2058.

(Reporting by Jonathan Stempel in New York, editing by Matthew Lewis, Gary Hill)

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Tribune files no new bankruptcy plan (Reuters)

Friday, August 27th, 2010 | Finance News

NEW YORK (Reuters) – Citing the "ongoing nature" of talks with creditors, Tribune Co announced on Friday it would not file amendments to its bankruptcy plan at the present.

Tribune, the owner of the Los Angeles Times, Chicago Tribune and more than 20 television stations, has been unable to garner broad creditor support for its restructuring plan.

The company had said it would put out a new plan on August 27. But the company decided against doing so, it said on Friday.

Tribune filed for bankruptcy in December of 2008, less than a year after real estate developer Sam Zell led a more than $8 billion leveraged buyout of the media company. Last month, a court examiner said in his report investigating the buyout that he thought it was likely a court would find fraud in the transaction.

That report caused a delay in the company's ability to emerge from bankruptcy, which had been set for the end of this month. It is now expected in October at the earliest.

Typically, a company's bankruptcy restructuring plan is built through a negotiating process that includes both the company and its senior creditors.

(Reporting by Caroline Humer and Dan Levine; editing by Andre Grenon)

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