Halliburton has made a conditional bid of $3.36 billion for Expro International Group PLC, the British oil services firm said Friday.
Halliburton’s all-cash proposal of $30.14 per share is richer than the $28.36 per share offer made in April by a consortium led by Candover Partners Limited, valuing the company at $3.16 billion.
An Expro statement said the Halliburton Co. proposal "does not yet constitute a firm intention to make an offer" and was subject to preconditions.
Halliburton (HAL, Fortune 500), which provides services and equipment to oil and natural gas companies, said it considers Expro’s sub-sea and flow management sector to be an area of potential expansion easy payday loan. Expro’s primary focus is providing services and products to measure and control the flow of oil and gas from wells.
Expro (EXPRF) shares rose 0.4% to $30.57.
Closing the biggest leveraged buyout ever just got a little more complicated.
The banks providing financing in the takeover of Bell Canada parent BCE (BCE), are reportedly seeking to renegotiate terms of that deal. Providence Equity Partners, Ontario Teachers’ Pension Plan and Madison Dearborn are seeking to take BCE private for roughly $51 billion.
The reason for the financing snafu? Banks are feeling squeezed because of losses from the subprime crisis, and their stomach for financing leveraged buyouts has diminished from even a year ago, when the Bell Canada sale was brokered.
In the end, the BCE buyout will likely happen - but the giant telco may need to take a haircut on its record-setting pricetag.
The banks’ maneuvering is similar to how lenders recently held up closing of the $18 billion buyout of Clear Channel Communications (CCU, Fortune 500). But in the Clear Channel deal, the lenders reportedly worried that the private equity buyers acquiring the company weren’t completely committed to the deal.
In the case of Bell Canada, the buyers - including Providence Equity Partners, Ontario Teachers’ Pension Plan, and Madison Dearborn - are, by all accounts, eager to close payday loan cash advance loan. Indeed, Providence CEO Jonathan Nelson said as much in a recent Fortune profile. And Ontario Teachers’ is one of the largest shareholders of BCE stock, and as such stands to benefit from the buyout moving ahead at its original price.
Chances are the deal will move ahead, but at a lower price. The lenders surely will push for it as a way of reducing their risk, and BCE may have little choice but to comply. Why? There aren’t a lot of other would be buyers out there: Private equity firms would be hard-pressed to find financing in the current credit environment. And because local law requires BCE to be majority-owned by Canadians, there aren’t a whole lot of strategic buyers to be found. (Ontario Teachers’ fulfills the Canadian ownership requirement in the pending deal.)
Just how much of a haircut would BCE have to take? Investors are betting it could be more than a trim: BCE shares Monday closed down nearly 6%.
A mountain of cash sits on the edge of financial markets, waiting to tip in when confidence is restored in riskier assets. For investors, this is both an opportunity and a problem.
While it brings hope to those banking on a sharp reversal in investments later this year — those looking for a V-shaped economic and market recovery — it is also causing difficulties because money is not being put to work.
“Basically, what we are seeing is hoarding of liquidity,” said John Stopford, head of fixed income at Investec Asset Management. “It’s distorting pricing. It’s a problem.”
Plenty of evidence exists to show investors stocking up on huge levels of safe-haven cash in the face of credit market gyrations, a worsening global economic outlook and volatile financial markets.
The latest Reuters asset allocation polls, for example, show leading international investment firms holding some 5.9 percent of their mixed-asset portfolios in cash no checking account payday advance. It compares with a long-term average of 4.5 percent.
A steady move into cash is also seen in Merrill Lynch’s monthly poll of fund managers. Some 51 percent were overweight in cash in March, compared with 48 percent in February and 43 percent in January.
Flow data from fund researcher EPFR Global quantifies the trend. It shows a net $140.9 billion flowing into money market funds in the first quarter. To put this in context, developed market equities saw outflows of $69 billion.
Speakers at this week’s Reuters Hedge Funds and Private Equity Summit went further, indicating that the cash hoarding may be far more widespread than just in traditional fund management firms.
Banks and opportunity funds are hunting for bargains among cut-price European Commercial Mortgage-Backed Securities (CMBS), raising hopes the debt market deep-freeze may be about to thaw.
Growing appetite for European CMBS could provide a breakthrough for banks desperate to free up loan book capacity by issuing new CMBS, which many see as a vital first step back towards cheaper and more flexible lending.
“CMBS is fantastically cheap. We see this as a once in a lifetime buying opportunity to pick up AAA-rated paper at amazing spreads,” said Caroline Philips, Eurohypo’s managing director of securitization in Europe.
The once-thriving CMBS market has been comatose since last summer’s credit crunch triggered a collapse in demand and enormous slack in spreads.
Credit Suisse data from March 27 showed European CMBS cash spreads were 240 basis points over the London Interbank Offer Rate (LIBOR) at AAA level and 750 basis points over at BBB, which Philips said was basically pre-credit crunch prices “with a zero on the end”.
Philips said Eurohypo, which is better known for its CMBS issuance activities, was in the middle of an acquisition spree motivated by “no-brainer” AAA CMBS pricing.
“We have bought around 100 million pounds worth of CMBS in recent months but we want to do more,” she said, adding that the bonds were bought with a view to holding to maturity because potential returns on equity were “enormous”.
Spreads at their current magnitude could indicate huge problems with the underlying credit but some investors say the CMBS sector has been hit too harshly by fallout from the U.S payday loans. subprime residential mortgage crisis and the long-anticipated end of a European property market boom.
A fire sale of Bear Stearns Cos Inc stunned Wall Street and pummeled global financial stocks on the eve of an expected U.S. interest rate cut aimed at preventing a meltdown of the financial system.
On a day marked by gut-wrenching drops of financial shares such as Lehman Brothers, U.S. stocks almost ventured into bear market territory — a drop of 20 percent from the October high.
The market staged a late partial recovery as optimism set in over an expected decision by the U.S. Federal Reserve to slash rates by as much as 1 percentage point on Tuesday to jump-start financial markets and prevent a recession. The cut would be the latest in a series that has brought down borrowing costs but hammered the U.S. dollar to record lows.
“They have spent some bullets. The Fed has a lot more bullets than we’ve seen so far,” said Brian Edmonds, managing director of fixed income at Cantor Fitzgerald in New York.
Things looked bleak on Monday morning.
Staff at Bear Stearns’ Manhattan headquarters were welcomed to work by a two-dollar bill stuck to the revolving doors — a spoof on the rock-bottom price of $2 a share that JPMorgan Chase is paying for the firm pay day loan. A hopeful Coldwell Banker real estate agent was hawking cheap apartments to employees who saw the value of their stock options go up in smoke.
The combination of Bear’s swift bailout and the Fed’s offer on Sunday to extend direct lending to securities firms for the first time since the Great Depression highlighted just how hard the credit crisis has hit Wall Street.
And it scared market players worldwide.
It’s tough to hold a standardbred horse race with the lights off, but officials at Woodbine Racetrack are looking at how to play their part during Earth Hour without putting the safety of patrons, jockeys and horses at risk.
"It’s on our radar," said Jane Holmes, vice-president of corporate affairs at Woodbine Entertainment Group, which runs the tracks at Woodbine and Mohawk. "We’re working with operations to see what we can do."
Expect a symbolic gesture – perhaps just a slight dimming of some lights – rather than darkness when the horses are called to the starting gates on the evening of March 29. But Holmes, recognizing the importance of Earth Hour and the awareness it will create, said Woodbine considers the reduction of its ecological footprint a year-round effort.
In the last two years alone, Canada’s premier horse-racing track, which opened in 1956 and draws seven million visitors annually, has spent roughly $5 million on an energy retrofit that has slashed the track’s energy bill by $500,000 a year.
It’s a big bill. Woodbine, located at the corner of Rexdale Blvd. and Highway 427, spent $3.2 million last year on electricity and natural gas. It used just over 27 million kilowatt-hours of electricity, enough to power more than 2,300 homes for a year. The gas it consumed was enough to heat and supply hot water to more than 700 homes.
Anchoring the track’s effort is a new building automation system installed by Direct Energy that lets John Marhong, director of facility services, monitor and control energy use throughout Woodbine, whether inside the building or on the track.
Sitting in front of his office computer in the basement, he pulls up a screen.
"I can control all of this from anywhere in the world," said Marhong. "Every minute, every hour that we can shave off using a piece of mechanical equipment saves us energy." Occupancy sensors, for example, will turn off lights in certain parts of the building if no movement is detected. Energy-efficient LED lights are used in all exit signs.
In the slot machine rooms, which are open 24 hours a day and are always bustling, carbon dioxide sensors are set up as part of a demand-control ventilation system. The more people in the room playing the slots, the greater the amount of CO2 released into the air. If the sensors detect an increase, they can speed up ventilation fans accordingly, keeping the air fresh and at a more consistent, comfortable temperature.
"It makes perfect sense," said Frank Cammalleri, manager of energy engineering services at Direct Energy. "At night there are three people to one slot machine. In the day it’s one-to-one. So the whole ventilation requirements change dramatically through that 24-hour period."
He says by far the most dramatic impact on Woodbine’s energy bill has been the installation of five new boilers – two for hot water that are about the size of a household refrigerator and three larger units for space heating instant payday loan. They replaced the facility’s 52-year-old steam boilers, massive dinosaurs of another age, which required four engineers to run them 24 hours a day.
"It’s a real winner," said Cammalleri. "You don’t need staff anymore to operate them." And natural gas savings alone amount to about $250,000 a year.
Outside, a new weather station sits on the inside of the track. Sensors monitor temperature, wind speed, particulate levels, ground-level ozone, and even how quickly moisture is leaving the track.
In the past, grounds workers had to guess when to water the track, resulting in the unnecessary use of water.
To further reduce the need for municipal water, storm drain water is collected in ponds and used for track watering.
Recycling doesn’t end there. The facility recycles most of its cardboard, glass, kitchen waste, grease, and up to 70 per cent of plastic. Betting tickets usually thrown onto the ground after each race are swept up and recycled. Even the horse manure is collected and sold to a farm that uses it to grow mushrooms.
Peter Love, Ontario’s chief energy conservation officer, said it’s important for high-profile destinations like Woodbine and the Rogers Centre, which recently completed its own energy retrofit, to take leadership roles on energy efficiency.
"A real challenge with a lot of this stuff is that it’s invisible," he said. "So it’s important to provide profile to these energy-efficient activities and these leaders."
Woodbine’s efforts are ongoing. Marhong is exploring the idea of installing solar-thermal panels on the facility’s rooftop for heating hot water. Direct Energy is also in the process of installing daylight harvesting sensors near windows that will shut off indoor lights if the ambient outdoor light is bright enough to do the job.
Outside, where 700 lights are used for evening racing, the potential for power reduction is huge. Each light is 2,000 watts, or 20 times more powerful than a household light bulb. Each minute they’re on costs the track $2.50. At the moment, lights can be turned off manually between races, but it’s an imperfect system that’s throwing money out the window.
"Manual control means the lights are on 30 minutes too much every day," said Marhong, who wants to move to a dimmable system that automatically turns down the lights during the 25 minutes between races. "We might be able to dim by 60 per cent."
It’s a good bet.
Express Scripts Inc., of north St. Louis County, said it expects another year of increased profits in 2008. The company reported fourth-quarter and 2007 earnings on Thursday.
Express Scripts, one of the nation’s largest pharmacy benefit managers, estimates its 2008 earnings per share between $2.92 and $3 a share. Express Scripts had previously expected 2008 earnings per share of $2.80 to $2.87.
The company said lower drug purchasing costs, greater generic utilization and lower interest costs each contributed about equally to the increased guidance fast cash now.
Express Scripts said its 2007 fourth-quarter income fell because of charges related to the impending sale of the company’s infusion division.
— MARY JO FELDSTEIN
"Tall" and pricey is becoming "short" and cheap at the world’s largest gourmet coffee chain as it grapples with a cost-conscious consumer and competition from fast-food outlets.
Starbucks Corp. confirmed yesterday it is test marketing a smaller, cheaper $1 (U.S.) cup of coffee, as well as free refills, at some U.S. stores.
The chain that made millions selling high-priced designer brew said the new "short" coffee comes in an eight-ounce cup and is available at some Seattle outlets.
No decision has been made yet about bringing the product to Canada, a spokesperson for the company said yesterday.
Starbucks also said it frequently tests new products, but doesn’t comment on the results until it makes a final decision. The move is not indicative of any new business strategy, the company added.
However, it comes amid increased competition from low-priced fast-food outlets and signs that financially strapped U.S. consumers are "trading down" to cheaper retail outlets.
The gourmet chain grew to 15,000 stores worldwide mainly on the strength of large, customized brews that are priced accordingly.
But now cheaper chains, such as McDonald’s, have moved more aggressively into the category.
McDonald’s has plans to add coffee counters to as many as 14,000 U.S. locations.
The suggested retail price in the United States for a slightly larger 10-ounce cup of premium roast coffee at McDonald’s and Dunkin’ Donuts is $1.07 (U.S.) and $1.39, respectively, those companies said yesterday.
Shares in Starbucks lost nearly half their value last year as problems in the U.S payday loans. mortgage and credit markets dampened consumer spending.
The company also shuffled its senior management team, bringing back chair Howard Schultz as chief executive officer, and vowing to close underperforming stores and boost international expansion. Two-third of its outlets are in the United States.
In New York yesterday, the price of coffee fell on the futures market as many traders sold on fears the global economy is headed for a recession.
"Large hedge funds are saying, `Everything is going down – get me into cash,’" said Jaime Menahem, a broker with Alaron Trading Corp. in Miami. "There’s no confidence in the economy."
Coffee for March delivery fell 3.7 cents, or 2.7 per cent, to $1.313 a pound on ICE Futures U.S., formerly known as the New York Board of Trade. The price for coffee has dropped 3.6 per cent this month.
With files from the Star’s wire services
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