Month: September 2017

29 Sep 2017
Investment Grade Weekly, Weekly Insights Kathryn Bailey 0 comment

CAM Investment Grade Weekly Insights

Fund Flows & Issuance: According to Wells Fargo, IG fund flows decelerated on the week, but were still positive at $2.3bln. This brings the YTD total to +$241.961bln in total inflows into the investment grade markets. According to Bloomberg, investment grade corporate issuance for the week was $20.725bln, and YTD total corporate bond issuance was $1.06t. Investment grade corporate bond issuance thus far in 2017 is down 5% y/y when compared to 2016.

(Bloomberg, El Mostrador) Albemarle Said to Be Interested in Potash’s SQM Stake: Mostrador

  • Lithium-producer Albemarle is among the companies interested in acquiring Potash Corp.’s 32% stake in Soc. Quimica y Minera de Chile, says El Mostrador, citing unidentified sources with knowledge of the situation.
    • There’s also interest from Chinese, European and South Korean companies, news website says
    • Albemarle and SQM are the only two lithium producers in Chile
    • Acquisition of a stake in a company that has an ongoing dispute with the Chilean state would complicate Albemarle’s lithium operations in the country, sources tell Mostrador
    • Process is in a preliminary phase and would start formally in October after Potash receives at least two bids; process would last about four months, Mostrador says
  • The decision by the main shareholder of SQM to put on sale the 32% that controls in the nonmetallic mining leaves Corfo in a complicated situation. If successful, the purchase would leave the US giant with a dominant position in the lithium business in Chile, something that would be politically unviable for the government, sources close to the operation say. Lawyers who know the industry indicate that blocking the operation would be possible for the State of Chile, but it would not be an easy process or free of controversy.

(Bloomberg) FTC Approves Abbott’s Acquisition of Alere

  • The FTC on Thursday approved pharmaceutical company Abbott Laboratories’ bid to purchase Alere , a manufacturer of rapid point-of-care diagnostic tests, on the condition that Abbott sells two point-of-care medical testing units.
  • The deal, first proposed in February 2016, hit several snags on its route to approval over issues regarding the Alere’s accounting and sales practices. Abbott was able to reach a deal to buy Alere in April for around $5.3 billion, below its initial $5.8 billion offer.
    • The transaction establishes Abbott as the global leader in point of care testing – the fastest-growing segment of the $50 billion in vitro diagnostics market – and further strengthens the company’s diagnostics presence. The addition of this business aligns with Abbott’s long-standing strategy of shaping the company for growth and complements the leadership positions it has built across its other businesses, which include medical devices, nutritionals and established pharmaceuticals.

(Bloomberg) Chubb to Face Up to $1.3 Billion in Losses From Harvey, Irma

  • Chubb Ltd. said losses from Hurricanes Harvey and Irma could total as much as $1.3 billion after taxes.
  • Harvey, which hit Texas in August and caused flooding in Houston, will cost the insurer about $520 million, the company said Wednesday in astatement. Claims expenses from Irma, the storm that slammed southern Florida earlier this month, could be $640 million to $760 million. Those figures dwarf the $107 million in after-tax catastrophe losses the insurer took during the third quarter of 2016.
  • “For Chubb, these large losses should be manageable within the context of its earnings, capital position and ratings,” David Havens, an analyst at Imperial Capital, said Wednesday in a note. “But this is a big number.”
  • “It’s a little on the high side for storm losses,” Paul Newsome, an analyst at Sandler O’Neill & Partners, said by phone. “They’re real losses and affect the book value, but most investors will normalize for these large events because they are very episodic.”

(Bloomberg) A $6.4 Billion Windfall Awaits Big U.S. Banks in Trump’s Tax Cut

  • The six largest U.S. banks could see net income rise $6.4 billion, or 7 percent, if President Donald Trump and Republicans in Congress can push through their proposed corporate tax rate cut.
  • Banks stand to benefit more than other industries because they typically have fewer deductions. The top six firms — JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley — paid an average of 26 percent in federal taxes last year, almost twice the average for nonfinancial companies, according to data compiled by Bloomberg. The Republican framework released Wednesday calls for lowering the corporate rate to 20 percent from 35 percent.
  • The estimates for the tax savings are based on the firms paying a 20 percent effective U.S. federal rate, assuming current deductions are no longer allowed. While earlier versions of Republican tax proposals have talked about eliminating some deductions, the latest plan has scant information on such changes. If some deductions are kept, banks would end up with a lower effective tax rate and their savings would be even greater.

(WSJ) U.S. Seeks to Undo Parker Hannifin’s Clarcor Deal on Antitrust Grounds

  • The Justice Department on Tuesday filed an antitrust lawsuit challenging Parker Hannifin Corp.’s $4.3 billion acquisition of Clarcor Inc., alleging the deal created an unlawful monopoly.
  • The department, in a legal challenge filed in a Delaware federal court, argued that Parker Hannifin’s acquisition, completed in February, had eliminated the company’s only competitor in the market for products that filter fuel for airplanes. Aircraft fuel must be filtered to remove particles that could cause engine failure.
  • The case marks the first merger challenge brought by the Justice Department under the Trump administration. The lawsuit asks a federal judge to order Parker Hannifin to sell off either its own aviation fuel filtration business or Clarcor’s to restore the previous competition in the market.
  • “Parker Hannifin’s acquisition of its only U.S. rival for these types of aviation fuel filtration products has effectively created a monopoly in these critical safety products, depriving their customers of the benefits of competition,” said Andrew Finch, the acting head of the Justice Department’s Antitrust Division.
  • The lawsuit alleged the company and Clarcor competed vigorously before the merger, resulting in better prices and more innovation for customers. Now, Parker Hannifin has “the power to raise prices without fear of losing a significant amount of sales,” the lawsuit said.
  • The department also alleged Parker Hannifin didn’t provide significant documents or data to the Justice Department while it was investigating the transaction.
  • The lawsuit comes at a time of transition for antitrust enforcement, as Republican officials begin to take over from Democrats who served during the Obama administration.
  • Antitrust enforcement often isn’t considered a partisan exercise, but Republicans have tended to take a more free-market approach. Whether the Trump administration will continue on that path is unclear. , given that President Donald Trump has at times embraced a populist sentiment that can be suspicious of big businesses growing more powerful.
  • Mr. Trump’s nominee to lead the department’s antitrust enforcement efforts, Makan Delrahim, hasn’t yet been confirmed by the Senate, but political deputies selected by Mr. Delrahim are already in place and conducting Justice Department business.
29 Sep 2017
High Yield Weekly, Weekly Insights CAM 0 comment

CAM High Yield Weekly Insights

Fund Flows & Issuance: According to a Wells Fargo report, flows week to date were $0.4 billion and year to date flows stand at -$7.6 billion. New issuance for the week was $8.0 billion and year to date HY is at $204 billion.

(Oil and Gas Journal) US rig count drops for sixth time in 8 weeks

  • Baker Hughes’ overall tally of active rigs in the US edged down a unit to 935, down 23 units since a peak of the drilling rebound on July 28. The count is still up 531 units from a modern-day bottom in Baker Hughes data during the weeks ended May 20-27, 2016.
  • US oil-directed rigs dropped by 5 to 744, down 22 units since Aug. 11 and up 428 units since May 27, 2016. That loss was mostly offset by a 4-unit gain in gas-directed rigs to 190, their second-highest total since 2015. The highest occurred on July 28. One rig considered unclassified remains drilling.
  • Two onshore rigs went offline, with rigs engaged in horizontal drilling losing 5 units to 790, down 20 units since July 28 and up 476 since May 27, 2016. Rigs drilling directionally increased 3 units to 77.
  • The count of rigs drilling in inland waters dropped by 1 to 3. Two rigs started work offshore Louisiana, bringing the overall US offshore count to 19.
  • The offshore gain propelled Louisiana to No. 1 among the major oil- and gas-producing states in increases. Up 3 units this week, Louisiana now has 65 rigs working.

(Bloomberg) Home Prices in 20 U.S. Cities Increase More Than Forecast

  • Home prices in 20 U.S. cities climbed more than forecast in July, reflecting solid demand against a backdrop of modest listings of properties, figures from S&P CoreLogic Case-Shiller showed Tuesday.
  • Buyers are competing for a limited number of for-sale homes, allowing sellers to boost asking prices. Property values are consistently outpacing wage growth, helping explain why the share of first-time buyers of previously owned homes in August was at a one-year low. At the same time, owners’ equity as a share of total real-estate holdings climbed in the second quarter to the highest level in 11 years.
  • Home prices may also get a boost in coming months after hurricanes Harvey and Irma reduced housing supply in parts of Texas and Florida. Affordability may remain challenging, as both sales and construction are interrupted by clean-up efforts. At the same time, a strong labor market and low-borrowing costs continue to encourage hopeful homebuyers.
  • While home prices continued to advance strongly along the northwest part of the country, values were also picking up in Denver, Dallas and Las Vegas — underscoring a broadening of appreciation throughout the U.S. Las Vegas, one of the hardest-hit cities during the housing collapse, registered the third-largest year-over-year advance in July.
  • “While the gains in home prices in recent months have been in the Pacific Northwest, the leadership continues to shift among regions and cities across the country,” David Blitzer, chairman of the S&P index committee, said in a statement. “Rebuilding following hurricanes across Texas, Florida and other parts of the south will lead to further supply pressures.”

(Modern Healthcare) Senate Republicans pull plug for now on repeal bill

  • There will be no Senate vote this week on the Graham-Cassidy bill to repeal and replace the Affordable Care Act, Senate GOP leaders announced Tuesday.
  • That reportedly was a joint decision by Senate Majority Leader Mitch McConnell and the bill’s two chief sponsors, South Carolina’s Lindsay Graham and Louisiana’s Bill Cassidy. They pulled the bill because they lacked enough votes to pass it.
  • “We haven’t given up on changing the healthcare system, we just can’t do it this week,” McConnell said at a news conference with Graham, Cassidy and two of the bill’s other co-sponsors. Senate Republicans now will take up a tax reform bill, with markups next week, he added.
  • “I hope Republican leaders will let us get back to work on lowering premiums and stabilizing the marketplace,” Washington Sen. Patty Murray, the senior Democrat on the Senate health committee, said at a news conference Tuesday. “I’m ready to go.”

(Reuters) Seagate to give up to $1.25 billion of $18 billion deal to buy Toshiba chip unit

  • Seagate Technology PLC said on it would contribute up to $1.25 billion towards the purchase of Toshiba Corp’s chip unit by a consortium led by Bain Capital LP.
  • Toshiba said earlier in the day it had signed an $18 billion deal to sell the unit to the group, overcoming a key – albeit not its last – hurdle as it scrambles for funds to stave off a potential delisting.
  • Seagate also said it expects to enter into a long-term supply agreement with the unit, Toshiba Memory Corp.
  • Besides Seagate, Bain’s consortium includes Apple Inc , South Korean chipmaker SK Hynix, Dell Inc and Kingston Technology.
22 Sep 2017
Investment Grade Weekly, Weekly Insights CAM Bond Funds 0 comment

CAM Investment Grade Weekly Insights

Fund Flows & Issuance: According to Wells Fargo, IG fund flows for the week were $3.5bln. This brings the YTD total to +$239.6bln in total inflows. According to Bloomberg, investment grade corporate issuance for the week was $15.845bln, and YTD total corporate bond issuance was $1.04t. Investment grade corporate bond issuance thus far in 2017 is down 4% y/y when compared to 2016.

(Bloomberg) China’s Credit Rating Cut as S&P Cites Risk From Debt Growth

  • S&P Global Ratings cut China’s sovereign credit rating for the first time since 1999, citing the risks from soaring debt, and revised its outlook to stable from negative.
  • The sovereign rating was cut by one step, to A+ from AA-, the company said in a statement late Thursday. The analysts also lowered their rating on three foreign banks that primarily operate in China, saying HSBC China, Hang Seng China and DBS Bank China Ltd. would be unlikely to avoid default should the nation default on its sovereign debt.
  • “China’s prolonged period of strong credit growth has increased its economic and financial risks,” S&P said. “Although this credit growth had contributed to strong real gross domestic product growth and higher asset prices, we believe it has also diminished financial stability to some extent.”

(Bloomberg) Teva Pharmaceutical Downgraded to ‘BBB-‘ From ‘BBB’ By S&P

  • Teva announced that it had obtained amendments to restrictive financial covenants under its credit facilities, S&P Global Ratings says.
    • Although the amendments enable the company to more easily satisfy its leverage covenant requirement, it also leads S&P to reexamine its previous view that Teva will be able to reduce leverage to below 4x by 2018
    • In light of the revised covenants, S&P revised its forecast for 2017 and 2018
      • “While we continue to recognize the company’s commitment to reducing leverage, we believe it will take longer than previously expected due to ongoing pricing pressures in the generics industry that we project will continue well into 2018. We now expect 2018 leverage of about 4.6x, in contrast to our prior expectation that it would decline below 4x next year”
    • S&P cut all of its ratings on the company, including corporate credit rating to ’BBB-’ from ’BBB’. The outlook is stable.
    • The stable outlook reflects S&P’s expectation the company will reduce leverage more slowly than previously anticipated, with adjusted leverage of well over 4x over the next two years given continued generic pricing pressure and the introduction of generic competition to Copaxone in 2018.

(Reuters) Teva sells rest of women’s health business for $1.4 billion

  • Teva Pharmaceuticals said on Monday it would sell the remaining assets in its specialty women’s health business for $1.38 billion in two separate transactions.
  • The company, Israel’s biggest and the world’s largest maker of generic drugs, said it would use proceeds from the sales, along with those from its recently announced sale of contraceptive brand Paragard, to repay debt.
  • Monday’s announcement, coupled with Teva’s announcement last week that it would sell Paragard to a unit of Cooper Companies for $1.1 billion, demonstrates the company’s commitment to delivering on its promise to generate net proceeds of at least $2 billion from the divestitures, Teva acting CEO Yitzhak Peterburg said. “With these initial divestitures we have exceeded expectations,” he added.
  • Teva last week poached Lundbeck’s Kare Schultz as its new CEO, handing the industry veteran the urgent task of convincing investors of the struggling Israeli firm’s future.
  • Teva has said it plans to pay down $5 billion of debt by year-end and is selling off businesses such as its women’s health business and European oncology and pain unit.

(Bloomberg) Clicks Likely Derail Bricks That Fail to Evolve

  • Retailers focusing on a fast flow of goods and unpredictable inventory finds at lower prices are taking share from traditional stores.
  • The rise of online shopping, information sharing and social media have created transparency in the retail marketplace. This has consumers opting for treasure hunts and values, in-store and online, and forgoing browsing stores.
  • TJX, Ross, Burlington Stores, Costco, Wayfair, Overstock.com, Hayneedle and Zulily are sellers that use treasure hunts and value in their business model.
15 Sep 2017
High Yield Weekly, Weekly Insights Kathryn Bailey 0 comment

CAM High Yield Weekly Insights

Fund Flows & Issuance: According to a Wells Fargo report, flows week to date were -$0.8 billion and year to date flows stand at -$9.0 billion. New issuance for the week was $15.2 billion and year to date HY is at $188 billion.

(Bloomberg) Saudi Arabia Says It’s Open to Another OPEC Cuts Extension

  • Saudi Arabian Energy Minister Khalid Al-Falih agreed with his Venezuelan, Kazakh and U.A.E. counterparts to keep all options open in their push to re-balance world oil markets, including the possible extension of output cuts beyond next March.
  • Al-Falih agreed in separate talks with the ministers in the Kazakh capital Astana that steps taken by OPEC and other major crude producers such as Kazakhstan have contributed to better market stability, according to three emailed statements from the Saudi energy ministry.
  • Saudi Arabia and Venezuela, both members of the Organization of Petroleum Exporting Countries, agreed to consider prolonging production cuts “beyond the first quarter of 2018, if needed,” the Saudi ministry said in one of the statements. The kingdom and Kazakhstan said such an extension “would be considered in due course as market fundamentals may dictate,” according to a separate Saudi statement.
  • OPEC and other producers including Russia pledged to reduce output by about 1.8 million barrels a day through March to trim global oil inventories and buttress prices. The producers are seeking to strengthen compliance with the cuts accord they reached last year.

(Broadcasting and Cable) CenturyLink Extends Level 3 Deal Closure Date

  • CenturyLink said it expects its deal to buy Level 3 Communications will close by mid-to-late October, which will require approval by the FCC and Justice as well as remaining state sign-offs.
  • That is actually a slight delay in the original projected closing, which had been the end of this month. California won’t vote on its state approval until Oct. 12, but CenturyLink pointed out that a California ALJ has deemed the deal in the public interest and recommended the California PUC approve it at that Oct. 12 meeting.
  • CenturyLink CEO Glen Post said the company views the “slight delay” as manageable and is ready to begin integrating Level 3 into the fold as soon as the deal is closed.
  • He also said that the company wanted to give the regulators time to complete their review. The company will have to, since the deal cannot close until and if the FCC and DOJ approve it, though the company is working with regulators throughout to provide info and input, so the announcement is a good sign the deal will not be blocked.

(Real Deal) Despite rising demand, multifamily construction is slowing down

  • Construction of multifamily buildings is slowing down across the country, even though there’s rising demand for rental units.
  • More than half of metro areas across the country are expected to see more multifamily housing built this year than what was seen between 1980 and 2016, the Wall Street Journal reported, citing Trulia data. However, that construction — the driver of the last construction boom — is on the cusp of slowing down. If the construction of single-family homes doesn’t increase to fill its place, according to the newspaper, the country’s economy could be adversely affected.
  • According to Commerce Department data released on Wednesday, overall U.S. housing starts dropped for the fourth time in five months in July. For single-family construction, starts decreased by 0.5 percent. However, they dropped a massive 17 percent for construction on buildings with five or more units.
  • “I’m optimistic that single-family will catch up,” Ralph McLaughlin, the chief economist at Trulia. “It’s not going to happen this year and it’s probably not going to happen next year.”
  • Apartment construction is slowing because of the massive increase in apartment inventory. In New York City, excess supply has led to landlords offering concession to renters and brokers. In July, concessions at residential rental buildings in Brooklyn were the highest they have been in the seven years that they’ve been tracked.

(Kansas City Business Journal) AMC completes $130M sale-leaseback deal

  • AMC Entertainment Holdings Inc. is making progress with monetizing assets and announced it completed the sale-leaseback of seven U.S theaters. The $130-million deal involves an unnamed U.S. buyer and will lead to about $128 million in cash after closing costs and a deferred gain on sale of about $80 million.
  • “AMC’s $130 million sale leaseback transaction is the second action step we have consummated since the announcement last month to realize monies from assets which were not vital for us to own,” AMC CEO Adam Aron said in a release. “Combined with the sale of our 50 percent interest in Open Road Films, which was sold last month with an $18 million pre-tax gain, AMC has generated more than $140 million of cash. This is beneficial in enabling AMC to pursue our plan to strengthen our balance sheet even as we pursue dynamic growth.”
  • The announcement is part of AMC’s effort to sell $400 million in assets to strengthen its overall liquidity position and help finance buying back AMC shares and paying down debt.
08 Sep 2017
High Yield Weekly, Weekly Insights Kathryn Bailey 0 comment

CAM High Yield Weekly Insights

Fund Flows & Issuance: According to a Wells Fargo report, flows week to date were $1.0 billion and year to date flows stand at -$8.1 billion. New issuance for the week was $1.3 billion and year to date HY is at $173 billion.

(Reuters) Bankers work on US$70bn debt for Altice Charter tie-up

  • Bankers are working on debt financings of around US$70bn backing a potential offer by Netherlands-based telecom conglomerate Altice NV and its US cable unit for US cable operator Charter Communications Inc, banking sources said on Wednesday.
  • A debt deal would be one of the largest acquisition financing packages to date and one of the largest leveraged acquisition financings, the sources said.
  • “Even on a conservative level, the debt backing Altice’s Charter bid would be the largest-ever leveraged financing,” a senior banker said.
  • Bankers are unwilling to risk missing out on a deal of this size and are actively pitching financing proposals to Altice to back any potential bid, bankers said.
  • “The financing would be sizeable so every big bank is around it in some shape or form – all the guys that have led Altice deals in the past,” a second senior banker said.
  • “Any bank with any appetite will be in there pitching. No one wants to miss out on the trade,” a third senior banker said.

(Nashville Post) Moody’s cuts Community Health Systems rating

  • A Moody’s Investors Service analyst on Tuesday downgraded the debt rating of Community Health Systems, saying the company is unlikely to lower its high debt ratios over the next year and a half despite selling dozens of its hospitals.
  • The debt ratings agency said Franklin-based CHS, along with its hospital company peers, faces “operating headwinds” that will keep its ratio of debt to earnings before interest, taxes, depreciation and amortization around 7:1. Moody’s analysts have cut their group rating for CHS as well as its senior unsecured notes, among other things, but have a stable outlook for the company. They say they’ll consider an upgrade if the company’s debt-to-EBITDA ratio climbs to 6:1.
  • CHS executives in May renegotiated their main credit agreement to give them more time to lower the company’s debt ratios. In the past year, they have sold or signed agreements to sell 30 hospitals and last month said more deals are likely coming in 2018.

(Industrial Distribution) U.S. Rig Count Snaps 4-Week Slide, Harvey Drives Oil Back Above $48

  • The U.S. combined active oil and gas rig count posted its first increase for the first time in five weeks with a modest gain, while the price of oil jumped essentially $2 from the midpoint of last Friday to Tuesday morning.
  • Friday’s count provided by oilfield services provider Baker Hughes (Sept. 1) was up by three, snapping a four-week streak of declines. The count hadn’t increased in six of the previous seven weeks. Friday’s total of 943 was up by 89.7 percent year-over-year
  • Oil rigs comprised 80.5 percent of Friday’s total.
  • The U.S. oil rig count held steady last week at 759. Its count is up 86.5 percent year-over-year and up 140.2 percent since bottoming out at 316 on May 27, 2016.
  • The U.S. added three gas rigs last week, moving its current mark to 183. The active gas rig count is up 108.0 percent year-over-year and up by 125.9 percent since bottoming out at 81 on Aug. 5 and Aug. 26, 2016.

(PR Newswire) Steel Dynamics Announces Offering of Notes

  • Steel Dynamics, Inc. announced that it plans to sell approximately $350 million aggregate principal amount of debt securities in a transaction exempt from the registration requirements of the Securities Act of 1933, subject to market and other conditions. The Company intends to use the net proceeds of the offering, along with cash on hand, to purchase any and all of its 6.375% Senior Notes due 2022 that are validly tendered in a tender offer commenced on September 6, 2017, and to redeem, repurchase or satisfy and discharge any 2022 Notes not purchased in the Tender Offer, and to pay related fees and expenses.

Additionally, Steel Dynamics was upgraded by Moody’s to a Ba1 credit rating.

(Bloomberg) Distressed Supply Increases in August, Led by Communications

  • Distressed supply increased for the third month in a row, raising the question whether another distressed cycle is upon the credit market. In strong credit markets, distressed inventory tends to decline or meander in a trough. The distressed ratio increased to 6% from 5%, as the communications and energy sectors added distressed supply.
  • The face value of bonds in the BofA Merrill Lynch U.S. Distressed Index rose $16 billion to $84 billion in August, the third straight gain. Having fallen to $53 billion in February from a $377 billion peak a year earlier, the question is whether supply is set to reverse and increase.
01 Sep 2017
High Yield Weekly, Weekly Insights Kathryn Bailey 0 comment

CAM High Yield Weekly Insights

Fund Flows & Issuance: According to a Wells Fargo report, flows week to date were $0.08 billion and year to date flows stand at -$9.2 billion. New issuance for the week was $0.0 billion and year to date HY is at $172 billion. This past week was very much a typical late summer lull.

(Oil & Gas Journal) US rig count falls 6 units to 940

  • The overall US rig count has fallen again this week, marking the fourth straight week of declines. Baker Hughes’ calculation of active US rigs dropped 6 units during the week ended Aug. 25 to 940.
  • Rigs drilling for oil fell 4 units to 759 rigs working, while those rigs targeting natural gas also declined 2 units to 180 rigs. Rigs unclassified sat unchanged at 1 unit.
  • The US rig count is up 451 rigs from last year’s count of 489, with oil rigs up 353, gas rigs up 99, and unclassified rigs down 1 to 1.
  • Among the major oil and gas-producing states, Texas and Pennsylvania were down 3 rigs each to respective counts of 456 and 31. Oklahoma, Utah, and Alaska were down 1 rig each to respective counts of 130, 8, and 4.
  • In Canada, the overall rig count climbed 3 units this week to reach 217. Rigs drilling for oil fell 6 units to 115 and those targeting gas gained 9 units to 102. The total count is up 71 units from this time a year ago when 146 rigs were operating.

(Bloomberg) Altice to Buy Back Up to $1.2 Billion in Stock, Will Eye M&A

  • Billionaire Patrick Drahi’s Altice NV plans to buy back as much as 1 billion euros ($1.2 billion) of stock during the next 12 months, while continuing to look for potential acquisition targets.
  • The telecommunications company will buy A and B shares on the Amsterdam exchange, according to a statement Monday. “Going forward, Altice will continue to assess the use of excess cash for either significantly accretive M&A opportunities or further shareholder returns,” the company said.
  • Altice said the buyback reflects its confidence in achieving near-term financial targets, reiterating all its 2017 goals. An acquisition push in the U.S. has helped Drahi diversify Altice beyond a stagnant European telecommunications market, and the company has said its Altice USA unit is seeking to grow further through takeovers after its initial public offering in June.
  • The company is working on a potential offer to buy Charter Communications Inc., following other possible suitors including Japan’s SoftBank Group Corp. in targeting the U.S. cable carrier, people familiar with the matter said this month. Altice is also considering other potential acquisitions, one of the people said.

(CNN) U.S. company gives up control of world’s No. 2 copper mine

  • Freeport-McMoRan agreed Tuesday to give up its majority stake in the massive Grasberg gold and copper mine, ceding control to the Indonesian government in what is likely to be seen as a victory for President Joko Widodo.
  • The U.S. miner’s ownership stake will be reduced from 90% to 49%, Indonesia’s energy minister Ignasius Jonan said at a joint press conference with Freeport CEO Richard Adkerson. The exact time of the handover is under discussion, they said.
  • Freeport and its local subsidiary have conducted mining and exploration activities since 1988 at the 525,000-acre complex, which includes a massive open pit mine.
  • But many Indonesians objected to their country’s mineral resources being mined by a foreign corporation, and the project has long faced opposition — and even violent protests — from locals in the eastern province of Papua.
  • Jonan said Tuesday that the agreement wants to “prioritize the national interest” and the “importance of the people of Papua.” He said that control of the mine would also give Indonesia sovereignty over its natural resources.
  • Freeport has agreed to build a new processing and refining facility for the mine, and — if other conditions are met — it will be allowed to operate the project until 2041.

(Bloomberg) Largest U.S. Refiner Shuts as New Harvey Landfall Extends Damage

  • Harvey’s second landfall, hitting southwest Louisiana near the Texas border, expanded the growing list of damaged oil refineries, shutting down two key plants, including America’s largest.
  • The latest hit list potentially reduces U.S. fuel-making capacity to the lowest since 2008, following Hurricane Ike. Motiva Enterprises LLC’s Port Arthur facility in Texas, the biggest U.S. refinery, is shutting because of severe flooding, said a person with knowledge of the operations. Total SA’s refinery in Port Arthur is out with a power loss, a person familiar with that plant said. Those plants are located less than 50 miles (80 kilometers) from the tropical storm’s 4 a.m. Wednesday landfall just west of Cameron, Louisiana.
  • The two refineries join more than a dozen others with a combined ability to produce more than 4 million barrels a day, or about 23 percent of U.S. capacity, that are at least partially offline. Gasoline futures are at the highest in two years, and the fuel’s premium to crude is at a 16-month high.
  • “These closures are already impacting markets with crude prices lower on a perceived drop in demand and gasoline prices spiking in response to lower supply,” Sandy Fielden, director of research commodities and energy at Morningstar Commodities Research, said in an emailed note.
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