Home / 2011 / August (page 77)

Monthly Archives: August 2011

Kodak’s management votes on “poison pill”

Pardon me, but the fact that they’re hanging out in the dirt cheap territory and can’t seem to get it together probably means they should be more concerned with turning over the reins, and less concerned with protecting their turf.

NEW YORK (Reuters) – Eastman Kodak (NYSE:EK – News) adopted a poison pill on Monday to reduce a tax hit it would take from a sale of its valuable intellectual property portfolio that it has been shopping around in recent weeks.

A poison pill, or shareholder rights plan, is also used to protect the company from an unwanted takeover. Under the poison pill, if any person or group tried to acquire 4.9 percent or more of Kodak’s outstanding shares, Kodak could issue more shares to dilute its ownership.

The American icon, which coined the once-ubiquitous “it’s a Kodak moment” catchphrase, has labored for years to convince Wall Street it can turn a profit as it shifts toward digital technology and away from its ailing film business.

Many investors now see Kodak’s value in its lucrative portfolio of intellectual property.

Kodak stock, which hovered in the $90 range in 1997, currently trades at about $2.42, a 40 percent drop over the past 12 months.

Kodak shares were down 0.8 percent at $2.38 on Monday, after rising as much as 3.8 percent earlier in the session.

A poison pill also discourages unwanted takeover activity.

The company said its tax assets were valued at about $2.9 billion as of December 31, 2010. Kodak’s ability to pay lower taxes would be “substantially limited if there were an ownership change,” Kodak said in a statement.

An ownership change would occur if a Kodak shareholder who owns 5 percent of shares collectively increased ownership in Kodak by more than 50 percentage points over a three-year period.

The announcement comes about two weeks after Kodak said it was shopping around its patents for digital imaging, which represents about 10 percent of its U.S. patent portfolio. Analysts have estimated the entire value of its portfolio at $2 billion.

A Kodak spokesman on Monday said the company has not made any progress with a patent sale yet.

“As for the patents, we are early on in the process and there is nothing new to report at this time. When there is something to report we will update the market accordingly,” Kodak spokesman Gerard Meuchner said.

Any money Kodak makes from the sale of its patents could be taxed if Kodak did not preserve its net operating loss through this plan, said Rafferty Capital analyst Mark Kaufman.

“There’s a big tax burden on the sale of these patents. One of the values of Kodak is that you can sell these assets and not have to pay taxes on gains,” Kaufman said.

Kaufman added that the plan could be used as a poison pill against a hostile takeover or a party taking a large stake in the company becoming an activist investor. An ownership change would limit Kodak’s ability to be taxed less.

“What this does is deter activist shareholders from gaining a large stake in the company and it discourages a potential hostile takeover,” Kaufman said.

Meuchner, the Kodak spokesman, told Reuters that “we are not aware of any interest to acquire the company at this time.”

Private equity firm Kohlberg Kravis Roberts has a $400 million investment in the company as well as two seats on Kodak’s board.

Wachtell, Lipton, Rosen & Katz is acting as Kodak’s legal counsel while Lazard Ltd (NYSE:LAZ – News), its adviser on its patent sale, will be its financial adviser, Kodak said.

Comments »

Connecticut desperate for U.S. debt deal

NEW YORK (Reuters) – Connecticut’s financial outlook “could be significantly compromised” even if Congress approves a last-minute compromise plan raising the federal debt ceiling, a state official said on Monday.

Local politicians around the nation said even a compromise debt cap plan to avoid the first-ever U.S. default poses a potential hazard: the loss of billions of dollars of aid for states, counties, cities and towns.

“Dollars that we depend on year after year could suddenly disappear if federal spending cutbacks result in drastic funding cuts to Connecticut,” Democratic state Comptroller Kevin Lembo said in a statement.

“One year’s federal stimulus money could become another year’s devastating federal cutbacks,” he added.

Like New York and New Jersey, Connecticut has gotten the benefit of Wall Street’s recovery but this bounty is limited to the tri-state’s commuting suburbs. That has left a number of old industrial cities, from Camden, New Jersey, to Bridgeport, Connecticut, out in the cold.

Many states opted to slash spending and layoff workers or negotiate savings with them to balance their latest budgets in the face of strong anti-tax hike sentiments and the expiration of the stimulus plan. The plan attempted to lift the nation out of the worst recession since the 1930s by giving states extra funds for education, healthcare and the like.

With the federal government now promising to slash its deficit, as states and local governments already have done, the task of spurring the economy and adding jobs falls to companies. Private employers in turn are fearful consumers have shut their wallets, squeezing demand for services and products.

Connecticut was one of 24 states that lost payroll jobs in June, Lembo said, predicting that at the current rate of job growth it will take more than a decade for the state to win back the over 100,000 jobs lost due the recession.

The still-weak real estate market also could hobble the recovery. In Connecticut, for example, home prices slid 9.9 percent in the first quarter of 2011 compared to 2010, Lembo said.

Connecticut has a surplus of just under $160 million but those funds have already been earmarked to pay off debt and future liabilities, Lembo said. He called on state politicians to replenish the rainy day fund and boost its cap.

Comments »

Healthcare Stocks are Being Obliterated

No. Ticker % Change Sector
25 HLS -5.98

Comments »

Today’s Winners and Losers

No. Ticker % Change
1 GENE 29.08
2 TNCC 20.67
3 PAET 19.46
4 CHUX 16.42
5 HTM 15.66
6 TNGN 14.63
7 TLB 14.45
8 MRNA 14.33
9 OBCI 12.57
10 MCZ 12.07
11 ATAI 10.92
12 GAIA 10.88
13 SPAR 10.87
14 ADLR 10.81
15 LLNW 10.68
16 PATK 10.50
17 TGC 10.13
18 RDCM 10.00
19 FUEL 9.52
20 SIFY 9.39
21 INFN 9.18
22 ACMR 8.65
23 YAVY 8.60
24 FMAR 8.00
25 ONB 7.65
No. Ticker % Change
1 SUNH -52.57
2 SKH -43.18
3 KND -30.79
4 SBRA -25.12
5 ENSG -22.68
6 LIWA -19.26
7 MILL -16.33
8 LLEN -15.52
9 BORN -14.37
10 MSHL -13.82
11 GTIV -13.45
12 CYOU -12.77
13 OHI -12.58
14 HAE -12.56
15 WHRT -11.76
16 HCKT -11.10
17 CYDE -11.05
18 SOHU -10.91
19 DHX -10.73
20 AGP -10.35
21 CYH -10.10
22 UHS -9.91
23 VHS -9.46
24 FVE -9.29
25 ALU -9.01

Comments »

Excerpt from special report on Chinese fraud

The rest can be read here:

SHELL GAMES: A Reuters Investigation

By Nanette Byrnes and Lynnley Browning

NEW YORK – A spate of spectacular collapses of Chinese stocks listed on American exchanges has cost U.S. investors billions of dollars. The fiasco has sparked multiple investigations. Accusations are swirling in Washington and Beijing.

It all began with an email sent out of the blue a decade ago to a Texas businessman named Timothy Halter.

The email came from Shanghai native Zhihao “John” Zhang. The former medical student introduced himself and asked: Was Halter interested in helping bring Chinese companies to the U.S. stock market? Zhang proposed using a backdoor method that the Texan had mastered for American firms: buying dormant shell companies listed on U.S. exchanges. Soon, Halter and Zhang brought two Chinese firms to market in America: a manufacturer of power-steering systems and a maker of vitamins, weight-loss supplements and household cleaners.

The email led to a boom for a niche industry of advisers who specialize in a brand of deals, called the “reverse merger,” that use shell companies to give clients easy entry into U.S. capital markets. More than 400 Chinese companies seized the chance.

Leading the way was Halter, a slim, salt-and-pepper-haired man who played a direct or indirect part in 23 deals; staked his name on at least 20 other deals done by his Shanghai partner, Zhang; and paved the way, through conferences in China, for dozens of other deals.

It was a lucrative gambit: Halter lives with his family on a 50-acre ranch in Texas, where he breeds bass.

His firm, Halter Financial Group, threw splashy “summits” to promote the industry, including a gathering headlined by former President George W. Bush in 2010. Its website boasts: “Reverse Merger Experts!”

But deals birthed by Halter and his imitators are now blowing up.

Investors have alleged widespread accounting irregularities and other problems at dozens of the Chinese companies that reverse-listed in the U.S., causing share prices to nosedive. Since March, some 30 Chinese firms have seen their auditors resign and at least 25 have been delisted from U.S. exchanges.

Comments »

Lawmakers pushing last minute debt deal

Reuters: By Andy Sullivan and Laura MacInnis

WASHINGTON (Reuters) – Congressional leaders rushed to line up Republican and Democratic votes on Monday for a White House-backed deal to raise the U.S. borrowing limit and avert an unprecedented debt default.

With scars still fresh from the months-long brawl over increasing the $14.3 trillion debt ceiling, a new fight was shaping over the incendiary topic of taxes.

Global markets showed signs of relief that the United States appeared to be dodging default, but fears that the country might still lose its triple-A credit rating even with a debt deal contributed to a fizzle in a brief stocks rally.

“We avoided the possibility of a default, but now concerns are turning to a possible downgrade,” said Phil Streible, senior market strategist with futures broker Lind-Waldock in Chicago.

Votes were expected later in the day in the House of Representatives and Senate on a plan to cut at least $2.4 trillion over 10 years, form a powerful new congressional committee to recommend a deficit-reduction package by late November, and raise the U.S. borrowing limit through 2013.

The non-partisan Congressional Budget Office confirmed that the debt deal would reduce budget deficits by at least $2.1 trillion over 10 years.

U.S. lawmakers split into Democratic and Republicans camps to hear appeals from their party leaders to approve the deal which emerged from feverish negotiations as the clock ticked toward a Tuesday deadline. Party leaders are hoping for sizable majorities in order to give the deal credibility.

Comments »

Missouri American Water acquires $1.6 million in assets

From bizjournals:

Missouri American Water has acquired Roark Water & Sewer Inc. for approximately $1.6 million.

The move will add about 675 water customers and 635 wastewater customers to the company’s customer base. The Missouri Public Service Commission approved the application for ownership April 27, the company said.

Roark serves customers in Stone and Taney counties near Branson in southwest Missouri.

The acquisition allows Missouri American Water to expand its existing reach into southwest Missouri, Matthew Barnhart, the company’s southwest operations manager, said in a statement.

Comments »

European Markets Are Plunging

Euro Stoxx 50 Pr 2,603.12 -67.25 -2.52% 11:00
FTSE 100 INDEX 5,786.76 -28.43 -0.49% 11:00
CAC 40 INDEX 3,601.54 -71.23 -1.94% 10:59
DAX INDEX 7,010.79 -147.98 -2.07% 10:59
IBEX 35 INDEX 9,345.50 -285.20 -2.96% 10:59
FTSE MIB INDEX 17,743.10 -690.62 -3.75% 11:01
AEX-Index 325.65 -3.57 -1.08% 10:59
OMX STOCKHOLM 30 INDEX 1,040.17 -25.80 -2.42% 11:15

Comments »