The Star Online: Business
The Star Online: Business |
- Judge okays Borders auction, liquidators open bid
- Gold rises after Bernanke tempers stimulus hopes
- EU hopes stress tests boost faith in banks
| Judge okays Borders auction, liquidators open bid Posted: 14 Jul 2011 05:07 PM PDT NEW YORK (AP) - Borders Group, the second largest U.S. book store chain that once operated over 1,000 stores, appears headed for liquidation after a judge on Thursday approved its motion to auction itself off with a team of liquidators as its opening bid. The move came after an offer made earlier this month from a private-equity investor disintegrated overnight. Borders said it will accept bids until 5 p.m. Sunday and will give notice by Monday if no other bidder emerges. Earlier this month private-equity investor from Phoenix offered $215 million for the company, plus the assumption of $220 million in debt. But on Wednesday, creditors objected, saying that the agreement would not prevent Najafi from taking possession of the company and liquidating it immediately for profit. Landlords also objected. Creditors said a bid from liquidators Hilco Merchant Resources and Gordon Brothers is stronger. They believe it would pay out between $252 million and $284 million in cash. Creditors said in a court filing that they were hopeful Najafi would submit a higher bid, but Najafi stood by its original offer. On Thursday, Borders said it wouldn't seek approval for Najafi's bid at a scheduled hearing in the U.S. Bankruptcy Court Southern District of New York and designated the liquidators as the primary, or "stalking horse" bid. Meanwhile, one analyst speculated that if Borders liquidates, that could spark a higher bid for its chief rival Barnes & Noble. Financier John Malone's Liberty Media made a $1 billion offer to buy Barnes & Noble in May. Liberty Media has said it values Barnes & Noble for both its Nook e-reader business and its retail stores, so a full liquidation of Borders would increase the value of the retail side of the business, Janney Capital Markets analyst David Strasser said. "This is perhaps an opportunity for a higher negotiated bid via Liberty or an entrance of another bidder," he wrote in a note. Borders Group Inc., based in Ann Arbor, Michigan, filed for bankruptcy protection in February. The company started with a single store in 1971, and helped pioneer the book superstore concept along with larger rival Barnes & Noble Inc. It was brought down by heightened competition by discounters and online booksellers, as well as the growth in popularity of electronic books. It currently operates about 400 stores, down from its peak in 2003 of 1,249 Borders and Waldenbooks, and has about 11,000 employees Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
| Gold rises after Bernanke tempers stimulus hopes Posted: 14 Jul 2011 05:06 PM PDT NEW YORK (AP) - Gold prices are climbing after Federal Reserve Chairman Ben Bernanke tempered hopes that a new stimulus package would be approved anytime soon. Gold rose $3.80 Thursday to settle at $1,589.30 an ounce. That's a record in dollar terms but below its peak in the early 1980s after accounting for inflation. Bernanke told Congress that the Fed wasn't taking immediate action to stimulate the economy. The comments came a day after he said they were looking at several measures that could aid economic growth if necessary. Investors also are buying gold because of concerns over Europe's financial debt crisis and ongoing U.S. debt limit negotiations. In other trading, oil and agricultural products are mostly lower. - AP Earlier report Gold record after Moody's warning LONDON: Gold prices hit record highs for a second day yesterday after hints of further policy easing from the Federal Reserve and a Moody's warning the United States may lose its top-notch credit rating hurt the dollar and sparked buying of safe-haven assets. Spot gold touched a record US$1,594.16, and was up 0.6% at US$1,590.66 an ounce at 1120 GMT. US gold futures for August delivery were up US$5.60 an ounce at US$1,591.30. Reuters The precious metal has risen more than 6% so far this month and is on track for its ninth straight daily rise, its longest run of gains since October 2006. - Reuters Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
| EU hopes stress tests boost faith in banks Posted: 14 Jul 2011 05:03 PM PDT FRANKFURT, Germany (AP) - European regulators will release potentially unsettling details on the finances of 90 banks on Friday to increase transparency and convince markets that the financial system as a whole could withstand big shocks, such as a Greek debt default. The publication of the results of the stress tests by the European Banking Authority is supposed to reduce the uncertainty hobbling bank's activities through disclosure of details including who holds how much in bonds issued by Greece and other shaky eurozone governments. While officials are downplaying the possibility of a Greek default, the idea of the exercise is to publicly identify weak banks so national regulators can push them to strengthen their finances. That in turn could help them absorb losses and limit the blow to the European economy if Greece eventually can't pay back all its bond debt. Banks are a key part of Europe's debt crisis because they hold billions in bonds from financially troubled governments. A default or other losses on those bonds could hurt banks and choke off credit to businesses, as happened after the 2008 collapse of U.S. investment bank Lehman Brothers. Estimates of the number of banks that might fail run as high as 15, compared to seven that flunked a version of the tests done last year. That exercise was widely regarded as a failure after Irish banks that passed had to be bailed out by the government only weeks later. This time, banking regulators have been trying to walk the fine line between being tough enough to be believable and not rattling nervous markets with more bad news. Banks must show they can maintain adequate resources to absorb unexpected losses even during an adverse scenario in which growth falls 4 percentage points short of European Union estimates in 2011 and 2012. That comes out to a fall in gross domestic product for the 17-member eurozone of 0.5 and 0.2 percent. The gloom and doom scenario also includes a fall in real estate, stocks and the U.S. dollar. One key new measure will be detailed information on how much each bank holds of shaky government bonds from Greece, Portugal and Ireland - by country, amount and bond. The big question is whether governments and banks act on the results in coming months by taking painful steps such as raising capital. Asking private investors for more money can dilute shareholdings, and therefore can weigh on stock prices; banks that can't get new capital from markets may have to turn to governments. "What we would hope is that governments come forward with clear plans to aid failing banks, or banks that are nearly failing, and so far we haven't heard much about that," said Marie Diron, senior economic advisor for Ernst & Young. She said estimates that around 15 banks could flunk sounded right. "Most of these would be in Spain, Greece and the countries under highest pressure, but some, I would think, as well in some of the core eurozone countries and that is where governments are least ready to tackle the issue." For the weaker banks, the test could be the occasion for governments to decide to recapitalize them, either by pushing them to ask shareholders for more money or by using taxpayer funds. That would include banks that are being kept alive by emergency credit from the European Central Banks - according to the IMF, many of the banks in Greece, Ireland and Portugal as well as some Spanish savings banks. Healthier banks would reduce the chances of a mushrooming disaster if Greece defaults. "Really, the necessary condition for that is that governments go ahead and deal with banks that are shown to be failing this test or are nearly failing this test," said Diron. "The publication alone is not enough." To pass, banks must show they can maintain a reserve cushion of high-quality capital - dubbed Core Tier 1 capital - of at least 5 percent of their loans and bond and securities holdings. The current test includes far more data than last year's - some 3,000 pieces of information, as opposed to 149 - but has raised questions about its toughness in part because its worst-case scenario did not explicitly include a Greek debt default. The agency finessed the default issue by asking banks to set aside reserves to cover risks on troubled government bonds but isn't outright calling it a default scenario. Results were to cover 91 banks, but on Wednesday Helaba, a German bank, said it had been told by the EBA that its results would not be released since they included a form of capital not approved by the EBA. Helaba said it and its owners, which include the German state of Hesse, had taken steps to convert the state's stake, known as a silent participation, to a form that met the EBA's requirements. It was told, however, that there wasn't time to review it to make sure the change complied. The EBA didn't respond to reporter calls and emails on the matter. Helaba said that if the silent participations - a form of non-voting stake - had been allowed it would have passed with a 6.8 percent core Tier 1 ratio. Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
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