Safe you Finance

It’s rare for Anheuser-Busch to sell one of its company-owned beer distributorships. It’s rarer still for the company to sell to an outsider, someone who is not already involved in carrying A-B’s beer.

But sell it will. The St. Louis-based unit of Belgian brewer Anheuser-Busch InBev will sell its Western Beverage Co., a huge wholesale operation based in Eugene, Ore., to Todd Epsten.

Epsten is the CEO of Major Brands Inc., a massive Missouri wine and liquor operation based near the Maplewood exit off Interstate 44.

Now, Epsten is forming a new company called Major Eagle Inc. to buy Western Beverage, which churns out an estimated 6 million to 7 million case equivalents per year and reportedly ranks among A-B’s top 25 distributorships.

Major Eagle will purchase A-B’s 56 percent stake in Western Beverage as well as the 44 percent stake held by other shareholders. The deal is expected to close by the end of the year. Financial terms were not disclosed.

Epsten said he was excited about the prospect of being "in the beer business in an even larger way, and being part of the A-B network no fax pay day loans."

Anheuser-Busch has traditionally liked to own a few distributorships to give the company a better sense of how things are going in the market.

In a statement, Tony Short, Anheuser-Busch’s vice president of business and wholesaler development, stressed that the transaction "was under consideration for several months prior to the close of the A-B InBev merger."

RELATED LINKS

 Get more business news, blogs and opinion

Source

Automakers may be pushing forward on plans to introduce plug-in vehicles within the next few years, but the drive toward electric transportation could hit a yellow light if the grid isn’t prepared to handle the extra load. And it’s not just about having enough power generation to support the charging of hundreds of thousands of cars plugged into a wall socket.

David O’Brien, president and chief executive officer of Toronto Hydro Corp., said the wires in distribution networks can behave in strange ways when major changes are introduced to the system.

"I’m going to be the first guy in line to buy an electric car, and by God it’s about time," he said. "But people forget that our electricity system is designed around what we do today. It’s not a forward-thinking grid."

For example, during the hottest days of the summer, power lines can overheat and short out unless they get a chance in the evening to cool down, which tends to be the case overnight when there’s a smaller load on the system.

"If we start plugging in a bunch of cars overnight then you don’t let the system cool down enough," O’Brien said. He added that the overnight load will get even greater as the province moves to time-of-use power pricing and more people have an incentive to run power-hungry appliances at night.

It’s not a showstopper, he said, but an example of what needs to be considered as we move toward electric transportation. Companies such as General Motors, Toyota, Nissan and Ford have all announced plans to come out with plug-in cars within the next few years.

"We’ve got a couple of years now to get the industries together and start talking about how we’re going to make it work."

Included in this discussion should be ways to allow more small-scale renewable energy, such as solar and wind, onto a grid that was designed to push electricity to consumers – not take it from them, O’Brien said payday loans online. "We have to rethink our whole transmission and distribution systems," he said.

Even before these trends take hold, Toronto Hydro has been seeing an increase in the frequency and duration of outages in pockets of its network, mostly in Scarborough, Etobicoke and North York.

O’Brien said 35 per cent of the utility’s network is "beyond its life expectancy."

A $1.3 billion, 10-year rebuilding plan approved by the Ontario Energy Board will bring that figure down to only 25 per cent. Getting it to 10 per cent will take several billions of dollars, he added.

Alongside this renewal, Toronto Hydro is also preparing its customers for the introduction of time-of-use pricing in 2009, when electricity use during peak times will cost a premium and off-peak use will be rewarded with a discount.

The idea is to encourage people to shift electricity use from peak to off-peak times so overall demand is more evenly distributed throughout the day and the grid operates more efficiently. The utility has so far installed 550,000 "smart meters" and is reading information from about 400,000 of them.

A year from now all 670,000 meters will be installed and operational. Some customers are already being directed to a website that lets them get a sense of what their hydro bill will look like once time-of-use rates are formally introduced.

"I think 2009 will be a very interesting year," O’Brien said. "We’ll do a pilot project starting with 10,000 customers and over a period of time transition them (to time-of-use pricing). It will be an evolutionary process, but I see next year as the big start."

Source

Gasoline prices extended their slide, dropping more than 4 cents a gallon and coming within 25 cents of breaching the $3 level, according to a daily survey of credit card swipes releases Sunday.

The average price of unleaded regular fell to $3.247 a gallon nationwide, down 4.4 cents from $3.291, according to the Daily Fuel Gauge Report issued by motorist group AAA. That brings the two-day total decline to 10.3 cents.

The decline comes as hurricane season winds down and oil prices drop because demand is likely to weaken as the economy slows.

Gas prices dropped a record amount in the last two weeks, falling by more than 35 cents a gallon, the publisher of a separate survey said Sunday.

Trilby Lundberg, publisher of the nationwide Lundberg Survey of gasoline prices, said the average price for self-serve unleaded across the United States dropped to $3.31 a gallon - the largest decline in the six-decade history of the survey.

"This could be one the largest drops in history," Lundberg said.

Lundberg’s survey looks at about 5,000 gas stations around the nation, tallying an average gas price for regular-grade unleaded gasoline.

Before the latest survey, the record drop tallied by surveyors came after Hurricane Katrina in October 2005, when national gas prices dropped 25 cents a gallon, Lundberg said.

The price has now tumbled nearly 87 cents, or 21%, below the record $4 cheap payday advance.114 set July 17. And it’s down about 43 cents from a month ago, but still remains some 49 cents, or 19%, higher from a year ago.

The average price has dropped below $3 a gallon in six states: Iowa, Kansas, Minnesota, Missouri, Ohio and Oklahoma, where gas was selling for $2.83 a gallon, on average.

Gasoline is highest in Alaska, at $4.133 a gallon, with Hawaii - at $4.079 - the only other state above $4 a gallon.

Gasoline prices had surged during the highly traveled summer season and as a series of hurricanes battered oil refineries in the Gulf of Mexico. But with hurricane season nearly over, prices began their slide.

Oil prices also have been moving sharply lower amid fears that the economic crisis, which has deepened globally, will have a severely adverse effect on demand.

Crude plunged to a 13-month low on Friday, ending down $8.89 to $77.49 a barrel. That’s a far cry from the $147.27 a barrel seen in July.

And since oil prices make up about half of the price of gasoline, the slide in crude S good news for drivers.

The survey is conducted for AAA by Oil Price Information Service from credit card swipes at more than 85,000 service stations nationwide.  

Source

U.S. agricultural income is the highest in three decades after corn and soybeans rose to records. The risk for farmers is that costs are rising even faster, increasing concern of a profit squeeze.

A U.S. Department of Agriculture report tomorrow may show costs are accelerating as revenue growth slows, similar to a pattern that led to a 1980s farm crisis that was the worst since the Great Depression, said Gary Schnitkey, a University of Illinois farm economist. Corn, wheat and soybean prices are all at least 18 percent below their peaks.

Fertilizer costs doubled from a year ago, while fuel increased 62 percent, USDA data show. Expenses probably will surpass the $279.2 billion that the USDA estimated in February, eroding net income the government pegged at a record $92.3 billion for 2008, farmers and economists said.

“Income peaked this year,'' said Kurt Line, who owns or manages more than 6,800 acres of farmland near Momence, Illinois. “We should see a significant drop in 2009. For the number of dollars we will be risking the next two years, profit margins are not going to be robust.''

The department's first forecast of farm income for 2009 will be made in November.

While income is up from last year, the price rally that began in 2006 for the nation's biggest crops has sputtered since late June and early July, on signs that Midwest flooding may have caused less damage to corn and soybean plants than analysts had predicted.

Fertilizer, Oil

Corn, the most-valuable U.S. crop at a record $52.1 billion last year, dropped 26 percent from its June 27 peak of $7.9925 a bushel on the Chicago Board of Trade. Soybeans, after jumping 78 percent in 2007, plunged 18 percent from a high of $16.3675 a bushel on July 3. Wheat, up 77 percent in 2007, slumped 37 percent from its record $13.4925 a bushel March 12.

Growers will probably spend one-third more to plant their fields next year, Schnitkey estimated.

Fertilizer, the second-biggest expense for corn and soybean farmers after land, is tied to spiraling energy costs, said Bob Young, chief economist for the American Farm Bureau Federation.

“It will take $5 corn next year just to break even,'' said Young, who represents the largest U.S. farmer group. “People think they're standing at the edge of a chasm.''

Corn futures for December delivery closed at $5.94 a bushel on Aug. 26 on the CBOT, and the price of grain for delivery a year later fetched $6.31.

Tractor Prices

The lower price outlook may trim funds available for purchasing new farm equipment, threatening a two-year jump in sales for agricultural manufacturers, Young said freecreditreport.

Moline, Illinois-based Deere, the largest U.S. maker of farm equipment, said Aug. 13 agricultural sales in the U.S. and Canada will rise up to 25 percent this year. No. 2 supplier Agco Corp., based in Duluth, Georgia, said July 29 that second- quarter North American machinery sales increased 36 percent.

Deere said it will raise prices for large, wheeled tractors by as much as 7 percent and combines by as much as 10.5 percent next year to cover rising materials costs. Spokesman Kenneth Golden declined to comment further.

Diesel fuel is up 46 percent in the past year at $4.283 a gallon on Aug. 25, according to the American Automobile Association.

Decade of Woe

Ammonium used as fertilizer sold out at $750 a ton for the rest of this year is now being sold at $1,000 a ton next year, said John Lipinski, chief executive officer of CVR Energy Inc., an oil refiner and fertilizer company based in Sugar Land, Texas, during a conference call with investors Aug. 13.

Falling crop prices coupled with higher costs would create a situation similar to 1980, when expenses fell 1 percent while income fell 9.2 percent, Agriculture Secretary Ed Schafer said Aug. 6. Adjusted for inflation, farm profits fell 46 percent, beginning a decade in which annual agricultural net income averaged less than half what it was in the previous 10 years, according to USDA data.

“We don't want to get into a situation in which farmers are squeezed,'' Schafer said.

Less Debt

What may help this time around is that many farmers have less debt than they did three decades ago, the American Farm Bureau's Young said.

Farmer debt-to-equity and debt-to-asset ratios are both at their lowest levels since statistics began being kept in 1960, although the data doesn't adequately reflect the finances of farmers who rent land, Young said.

For Line, the 34-year-old Illinois grower, the possible decline of the farm boom means tougher times may lie ahead.

“2008 is going to be a windfall profit if you bought your inputs ahead and made some forward sales to lock in high prices,'' Line said. “2009 should be back into fair profits with the cost surge, and if commodities prices stay high. But 2010 will be the year of survival.''

Source

Apparel retailer Gap Inc. said Thursday that its second-quarter profit rose 51%, despite a sales decline, helped by cost cutting and tight control on inventory.

The San Francisco-based company said profit for the 3 months ended Aug. 2 rose 51% to $229 million, or 32 cents per share, from $152 million, or 19 cents per share, a year earlier.

Analysts polled by Thomson Reuters predicted a profit of 30 cents per share, and the company had forecast earnings of 30 cents to 31 cents per share.

Revenue fell 5% to $3.5 billion from $3.69 billion last year; analysts had expected revenue of $3.52 billion.

Sales in stores open at least 1 year - a key retail metric known as same-store sales - fell 10%. In North America, same-store sales declined by 6% at both Gap and Banana Republic, and fell 16% at Old Navy. International same-store sales also fell 6% free credit report instantly.

Inventory per square foot fell 17% year-over-year.

Gap (GPS, Fortune 500) reaffirmed earnings guidance of $1.30 to $1.35 per share for the year, while analysts expect a profit of $1.34 per share.

The company said it will open 15 fewer stores, mainly Banana Republic stores, than previously expected during the year, and now expects to open a total of 100 stores.

Earlier on Thursday, Gap named Tom Wyatt, a 30-year retail veteran, as president of its struggling Old Navy chain.

Wyatt, 53, had served as acting president of Old Navy since February, when Dawn Robertson stepped down after struggling for 16 months to turn the division around. 

Source

Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz) increased its previously reported second-quarter loss to $9.11 billion to cover costs to settle a probe of auction-rate securities sales, and said it will cut more jobs as the housing market deteriorates.

The fourth-largest U.S. bank is now reporting a loss of $4.31 per share, up from the $8.86 billion, or $4.20 a share, it reported on July 22, according to its quarterly report filed on Monday with the U.S. Securities and Exchange Commission.

Wachovia also now plans to cut 6,950 jobs, 600 more than it had disclosed, with the additional cuts coming from mortgage operations, spokeswoman Christy Phillips-Brown said. The cuts affect about 5.8 percent of Wachovia’s 120,000-person workforce. Wachovia also is also eliminating 4,400 open positions.

Separately, Wachovia said the SEC may recommend civil charges against its main banking unit in connection with municipal derivatives transactions. It also said various state attorneys general have issued subpoenas over that matter. The bank said it was cooperating with the probes. Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz) reported receiving its own subpoenas last week.

The quarter marks the second in a row when Charlotte, North Carolina-based Wachovia revised results to increase the size of its reported loss payday advance lenders. Wachovia increased its first-quarter loss to $708 million from an original $393 million because of a write-down tied to life insurance policies.

Auction-rate debt has interest rates that reset through periodic auctions, typically held every seven, 28 or 35 days. Once thought safe, much of the market has been frozen since brokerages in February stopped supporting the debt.

Wachovia said it added $500 million to legal reserves to cover a possible settlement. It is in talks with regulators to resolve matters related to auction-rate debt, after regulatory settlements last week by Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) and UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz). Missouri is leading the multi-state probe. Wachovia’s brokerage unit, Wachovia Securities, is based in St. Louis.

The bank has been among the lenders hardest hit by the U.S. housing crisis, following its $24.2 billion purchase of California mortgage specialist Golden West Financial Corp in October 2006, just as the mortgage market was peaking. 

Read more

The Senate's top banking legislators told the Federal Reserve and Securities and Exchange Commission to hold off on enacting a deal to oversee Wall Street, concerned that regulators are proceeding without consulting Congress.

Democrat Christopher Dodd and Republican Richard Shelby, the Senate Banking Committee's top lawmakers, delivered their warning in a letter yesterday as Bernanke and Cox met to wrap up a memorandum of understanding. The SEC plans to provide information on securities firms' trading positions, capital and leverage, according to two government officials.

“Congress wants to have its say,'' said David Becker, a former SEC general counsel now in private practice at Cleary Gottlieb Steen & Hamilton LLP in Washington. “Reshuffling who has information could have a significant impact on the distribution of regulatory influence.''

Congress is asserting its primacy over how financial markets should be regulated as federal supervisors wrestle with the yearlong credit rout. Regulators are debating how to strengthen oversight of investment banks after the Fed started emergency lending to securities firms in March.

“We ask that no action'' be taken before legislators can decide it's in the economy's “best interests,'' Dodd, the Connecticut senator who chairs the banking panel, and Shelby of Alabama said in the letter. It was addressed to Bernanke, Cox and Treasury Secretary Henry Paulson.

Sharing Data

The Fed will share data with the SEC on repurchase agreements, which are short-term loans provided by commercial banks that clear trades and hold collateral for securities firms, said the officials, who declined to be identified because the agreement isn't final.

Cox offered to brief Dodd and Shelby on the SEC's talks with the Fed. The memorandum is “intended to facilitate our agencies' ongoing, day-to-day cooperation,'' he said in a letter responding to the two. “It is the role of Congress to decide whether, and if so how, to alter the existing regulatory structure.''

Fed officials in March rescued Bear Stearns Cos. from bankruptcy with $30 billion of financing to secure its takeover by JPMorgan Chase & Co. They also introduced the Primary Dealer Credit Facility, giving securities firms access to loans from the central bank at the same rate as commercial banks. It was intended to last “at least six months,'' the Fed said March 16.

Some officials have expressed concern about any perception that the Fed's actions would only spur greater risk taking.

Treasury's Ryan

“We don't want to encourage dependence upon the Federal Reserve as a backstop,'' Assistant U.S. Treasury Secretary Anthony Ryan said in a June 24 interview with Bloomberg Television.

Dodd and Shelby flagged in their letter that Congress hasn't given the Fed permanent authority to lend to securities dealers first cash advance.

The information sharing between the Fed and SEC will continue even if the central bank stops providing the financing, officials said, citing the draft memorandum. Securities dealers are currently overseen by the SEC. The Fed has introduced its own supervisors at the firms since it started lending to them.

“The only reason for the Fed'' to “have an interest in how investment banks are doing is if it intends to step in and provide access to the discount window in more normal times,'' said Peter Wallison, a former Treasury general counsel. “Once that idea gets established then market discipline essentially disappears.''

Hearings Planned

Congress plans to start hold hearings on financial regulation next month.

“We look forward to continuing to work with Congress on these important issues,'' said Fed spokeswoman Michelle Smith in Washington.

Cox urged his staff June 23 to not “engage in turf wars among federal regulators,'' according to an e-mail the SEC provided to Bloomberg News. He added it's “inconceivable to me'' that under any overhaul approved by the Congress, “the role of the SEC will not be strengthened and expanded.''

Central bankers are debating whether to extend the PDCF beyond September, amid signs of continued stress in financial markets. They may make a decision before their Sept. 16 meeting, when traders anticipate they will announce the first interest- rate increase since 2006.

Concern about rising loan losses has sent the Standard & Poor's 500 Banks Index into a 22 percent dive this month, putting it on course for its worst monthly return in almost a decade.

Fed Vice Chairman Donald Kohn told lawmakers June 19 that policy makers are “studying a range of options'' for the PDCF. Fed governors and district-bank presidents June 25 heard from supervisors working with investment banks.

Clear Rules

Philadelphia Fed President Charles Plosser and Richmond Fed chief Jeffrey Lacker have urged setting clear ground rules for access to central bank funds. They also warned this month that the lending risks provoking future crises by causing moral hazard, or encouraging firms to take on more risk in the anticipation of Fed aid in case their bets go wrong.

“We are in a transitional regime,'' said Laurence Meyer, vice chairman at Macroeconomic Advisers LLC and a former Fed governor. Shelby and Dodd “are saying the situation on the ground has changed, the regulatory framework is already evolving, and we haven't been involved.''

Source

Top hedge fund bosses will debate whether an upturn in distressed investing or profitable macro strategies offer 2008’s blockbuster trade, just as short subprime was in 2007, when they meet in Monaco this week.

GAIM International 2008, held from June 17-19 in the Mediterranean resort for the super-rich, comes as the $2.6 trillion industry faces up to poor returns and investor outflows and searches for a follow-up to betting on falling subprime assets last year.

Such a strategy helped hedge fund manager John Paulson, who will deliver his views on the credit crisis to the conference, earn $3.7 billion in 2007, according to Alpha Magazine.

Global macro funds, which retuned 17.36 percent in 2007 and 5.19 percent in the first four months of 2008, according to Credit Suisse/Tremont, have been a popular choice with investors recently as other strategies have struggled.

However, not everyone is convinced such strategies, which bet on the likes of global equity markets, world currencies, sovereign debt and commodities and typically benefit from increased volatility, will continue to deliver.

“The market is saying go long macro, short event-driven instant payday advance. That was last year’s trade,” Francois Barthelemy, partner and fund manager at F&C Partners.

“Everyone is piling into macro and it’s going to be a disaster. No-one knows where the dollar is going to go, where oil is going to go, where interest rates are going to go.”

He prefers out-of-favor event-driven strategies, which bet on M&A (merger and acquisition) and other corporate activity, as he believes stocks are cheap and companies’ boards are now more open to listening to shareholders. 

Read more

The global credit crunch is not expected to have an impact on the sale of Rio Tinto’s U.S. coal unit, with heavy interest shown both in the United States and abroad, a company official said.

Rio has already contacted potential bidders for Rio Tinto Energy America, and the sale is still on track to be completed in the third or fourth quarters, Mining Executive Jim Berson of the firm’s Energy and Minerals unit told Reuters.

“We began contacting potential bidders in mid May, and significant interest in acquiring the assets has been expressed by both domestic and multinational players,” he said in an email response to questions late on Thursday.

Energy America, second-largest U.S. coal producer by tonnage, was estimated to be worth about $4 billion by an analyst when the sale of the unit was announced in November.

Since then, coal prices have soared on supply problems, and this week JPMorgan raised its 2009 forecast for internationally traded thermal coal by 50 percent to $150 per tonne., while benchmark U.S quick payday loan. coals have doubled in the past year to more than $100 a ton.

NO CHILLING EFFECT

The global credit crisis that has squeezed availability of funds in some sectors was not expected to have any impact on the sale of Energy America, said U.S.-based Berson, who is leading the process.

“As evidenced in the coal equity markets, we don’t anticipate any chilling effect on the potential transaction from the current credit market conditions.” 

Read more

World food production must rise by 50% by 2030 to meet increasing demand, U.N. chief Ban Ki-moon told world leaders Tuesday at a summit grappling with hunger and civil unrest caused by food price hikes.

The secretary-general told the Rome summit that nations must minimize export restrictions and import tariffs during the food price crisis and quickly resolve world trade talks.

"The world needs to produce more food," Ban said.

The Rome-based U.N. Food and Agriculture Organization is hosting the three-day summit to try to solve the short-term emergency of increased hunger caused by soaring prices and to help poor countries grow enough food to feed their own.

In a message read to the delegates, Pope Benedict XVI said "hunger and malnutrition are unacceptable in a world which, in reality, has sufficient production levels, the resources, and the know-how to put an end to these tragedies and their consequences."

The Pope told the world leaders that millions of people at threat in countries with security concerns were looking to them for solutions.

Ban said a U.N. task force he set up to deal with the crisis is recommending the nations "improve vulnerable people’s access to food and take immediate steps to increase food availability in their communities."

That means increasing food aid, supplying small farmers with seed and fertilizer in time for this year’s planting seasons, and reducing trade restrictions to help the free flow of agricultural goods.

"Some countries have taken action by limiting exports or by imposing price controls," Ban said. "They only distort markets and force prices even higher."

The increasing diversion of food and animal feed to produce biofuel, and sharply higher fuel costs have also helped to shoot prices upward, experts say.

The United Nations is encouraging summit participants to start undoing a decades-long legacy of agricultural and trade policies that many blame for the failure of small farmers in poor countries to feed their own people.

Wealthy nations’ subsidizing their own farmers makes it harder for small farmers in poor countries to compete in global markets, critics of such subsidies say. Jim Butler, the FAO’s deputy director-general, said in an interview ahead of the gathering that a draft document that could be the basis for a final summit declaration doesn’t promise to overhaul subsidy policy.

Congress last month passed a five-year farm bill heavy on subsidies, bucking White House objections that such aid in the middle of a global food crisis wasn’t warranted.

The head of the summit’s U.S payday loans lenders. delegation, Agriculture Secretary Ed Schafer, insisted on Monday that biofuels will contribute only 2% or 3% to a predicted 43% rise in prices this year.

Figures by other international organizations, including the International Monetary Fund, show that the increased demand for biofuels is contributing by 15% to 30% to food price increases, said Frederic Mousseau, a policy adviser at Oxfam, a British aid group.

"Food stocks are at their lowest in 25 years, so the market is very vulnerable to any policy changes" such as U.S. or European Union subsidizing biofuels or mandating greater use of this energy source, Mousseau said.

Brazil is another large exporter of biofuels, and President Luiz Ignacio Lula da Silva was expected to defend biofuels at the summit.

Several participants won’t even be talking to each other at the summit.

Australia’s foreign minister decried as "obscene" Zimbabwean President Robert Mugabe’s participation in the summit. The longtime African leader has presided over the virtual transformation of his country from former breadbasket to agricultural basket case.

Zimbabweans increasingly are unable to afford food and other essentials with agriculture paralyzed by land reform and the world’s highest rate of inflation.

The Dutch ministry for overseas development pledged to "ignore" Mugabe during the summit.

EU sanctions against Mugabe because of Zimbabwe’s poor human rights record forbid him from setting foot in the bloc’s 27 nations, but those restrictions don’t apply to U.N. forums.

Jewish leaders and some Italian politicians were among those denouncing Iranian President Mahmoud Ahmadinejad’s attendance at the meeting. On Monday, Ahmadinejad repeated his call for the destruction of Israel, which is also participating in the summit.

Ahmadinejad was scheduled to give a summit news conference Tuesday afternoon.

Schafer, asked about the presence of the Zimbabwean and Iranian leaders, told reporters in Rome that the two were welcome to attend the summit, but that U.S. delegates would not be meeting with them. 

Source