20 August 2010;dailypioneer.com:New Delhi:Vedanta Group, pursuing a $9.6 billion takeover of Cairn India, will get an estimated windfall of Rs 500 crore if the target firm's Scottish promoters fail to get shareholders' nod for the deal or solicit a rival bid. NRI billionaire Anil Agarwal-run Vedanta Group has reached a deal with Cairn Energy to acquire up to 60 per cent stake in the Edinburgh-based firm's Indian unit Cairn India and the deal requires approval from the shareholders of all the entities involved including the seller Cairn Energy. As per the terms of the deal, "if Cairn Energy's shareholders do not approve the transaction of it the sellers breach their non-solicit obligations, the sellers are required to pay a break fee of 1 per cent of Cairn Energy's market capitalisation to the acquirer." The deal terms also bar Cairn from soliciting any rival offer before the meeting of Cairn Energy's shareholders for considering approval for the transaction. "Prior to the meeting of shareholders of Cairn Energy, the sellers are prohibited from soliciting any person to make competing proposal," as per the Share Purchase Deed between Cairn Energy and Vedanta Group. The agreement also requires a shareholder meeting to be convened on or before October 30. Considering the current market valuation of Cairn Energy, the break fee comes at 66.9 million pounds (about Rs 500 crore). At present share price, Cairn Energy is valued worth 6.69 billion pounds. Cairn Energy is listed on the London Stock Exchange (LSE) and in the early trade the stock was quoting at 4.78 pounds. Vedanta Group, through its India-listed group firm Sesa Goa, has already made an open offer for a 20 per cent stake in Cairn India and the offer begins on October 11. The Rs 13,631 crore offer closes on October 30. Under the agreement, London-based Vedanta plans to acquire 51-60 per cent stake in Cairn India through purchase of Cairn Energy Plc's stake and through open offer. Sesa Goa is offering a price of Rs 355 per equity to the public shareholders of Cairn India, the owner of the India's largest onland oilfield.
20 August 2010;economictimes.indiatimes.com:WASHINGTON: The company that owned the oil rig that exploded in the Gulf of Mexico is accusing BP of withholding critical evidence needed to investigate the cause of the worst offshore oil spill in US history, according to a confidential document obtained by The Associated Press. The new complaint by Transocean follows similar complaints by US lawmakers about difficulties obtaining necessary information from BP in their investigations. In a sternly worded letter to BP's attorneys, Transocean said the oil giant has in its sole possession information key to identifying the cause ``of the tragic loss of eleven lives and the pollution in the Gulf of Mexico.'' BP's refusal to turn over the documents has hampered Transocean's investigation and hindered what it has been able to tell families of the dead and state and federal investigators about the accident, the letter said. BP and Transocean appear likely to face off in court over how much each should pay out for the tragedy. Transocean owned the Deepwater Horizon, the rig that exploded and sank, killing 11 workers and unleashing millions of gallons (liters) of oil. BP was the operator and majority owner of the well. BP owout preventer, is a prime source of interest for investigators. BP senior vice Kent Wells said the company will preserve it intact so it can be analyzed by the government. ``Clearly, I think all of us want to absolutely understand what the root causes are of this,'' Wells said. A new scientific study provided the first conclusive evidence of an underwater plume from the BP spill, and researchers said it could take months for the oil to break down. In the dispute over documents, Transocean said that BP released limited records only after the company agreed to sign a confidentiality agreement at BP's request. ``This is troubling, both in light of BP's frequently stated public commitment to openness and a fair investigation, and because it appears that BP is withholding evidence in an attempt to prevent any entity other than BP from investigating the cause of the April 20 incident and the resulting spill,'' the letter said. Copies of the letter were also sent to government agencies, commissions and lawmakers investigating the spill's cause. Aides for some of those lawmakers told the AP on Thursday that they, too, have had trouble obtaining information from BP. The Senate Energy and Natural Resources Committee had a ``stare down'' with BP over some of the data it was seeking, said Bill Wicker, a spokesman for committee chairman Jeff Bingaman, a Democrat. BP requested that congressional staffers sign a nondisclosure agreement. The committee refused, telling the company that it would send all BP's information back. Since then, BP has been forthcoming with data, Wicker said.
20 August 2010;business-standard.com:London/mumbai: Lower gains on the value of its fuel inventories and weaker refining profits led London Stock Exchange-listed Essar Energy Plc to post a 28 per cent drop in its half-yearly profits. Essar, which raised $1.85 billion through its LSE listing this May, said the profit fell to Rs 519.7 crore from Rs 722.2 crore during the first half of 2009-10. “Inventory gains led to lower profits. However, revenues were up for the six-month period due to increase in volume and higher prices in the refinery business,” CEO Naresh Nayyar told reporters in London. The company reported an increase of 65.8 per cent in its revenues, at Rs 476.4 crore against Rs 287.2 crore during the first half of 2010-11. In the next four years, Essar plans to increase its power generation capacity to 11,500 Mw from the present 1,220 Mw. Vice chairman Prashant Ruia said with an exception of one power project, Mahan 1, all its oil and power projects were on track in terms of time and cost. Mahan 1, is facing minor delays in the transmission lines, but it will be sorted without any financial damage he said. Within a four-year time frame, the company is implementing 16 power and oil projects in the country, with a total capital outlay of around $10 billion, with an estimated $8 billion going into power sector and the balance $2 billion in fresh oil refining capacities. Of the projects, seven are new ones and the others are expansion of existing capacities in both sectors. Expanded capacities will stand at 11,470 Mw of power by 2014 and 18 million tonnes of refining capacity by 2012, against 1220 Mw of power and 14 mt of refining capacity today. Ruia said that though no definite plans exist for ‘green energy’, the company hopes to get into the sector by setting up wind energy farms, as well as setting up hydel projects in the country. It will also continue to scout for coal, oil and gas assets within and outside the country. “Talks with Royal Dutch Shell Plc to buy refineries in Europe are ongoing,” Ruia said. Essar has been in talks with Royal Dutch Shell to buy three refineries, two in Germany and one in the UK, for almost a year. The company will also look for retail oil assets (network of gas stations) outside India, he said. “By next year, we will start exporting oil,” he said. By the end of this financial year, the company hopes to have 1,700 retail outlets and 3,000 by end-March 2012. The company said that P Sampath, will be joining the company as its new chief financial officer, replacing Gerry Bacon from September this year. Bacon had joined Essar Energy in January this year and said he was leaving the company to pursue academic interests.
BSY doles out goodies for MPs: Free petrol to go up from 300 litres to 500 litres
19 August 2010;deccanherald.com:Bangalore: Inaugurating the newly constructed Karnataka Bhavan annexe building here on Thursday, the chief minister said the State government would provide 500 litres of petrol per month for each MP as against the existing 300 litres. Apart from this, the chief minister announced the construction of a new guest house in Bangalore to provide transit accommodation for state MPs. Many MPs are forced to stay in hotels when they visit the state capital as they do not have their own residence in Bangalore. The guest house will help them to overcome this problem, Yeddyurappa said. The MPs, mostly from the BJP, who were present at the function, welcomed the announcement with a big applause. Now, each MP is entitled to have a car, an office in the district headquarters, a driver and first and second division clerks at the cost of the State government exchequer. Besides, the State government also provides cars for them to travel in and around Delhi. This is apart from what the MPs are getting from the Central government as salary or perks and other facilities. Interestingly, most of the leaders from opposition parties stayed away from the inaugural function. Though Opposition leader in the Karnataka Legislative Assembly Siddaramaiah was in Karnataka Bhavan, he did not turn up for the function. Prior to the function, MPs met the chief minister and requested him to hike their fuel quota as well to resolve their accommodation problems in Bangalore. A couple of days ago, when there was a proposal to hike the basic salary of MPs from Rs 16,000 to Rs 60,000 per month, the decision was deferred in the backdrop of the flood and drought situation in several parts of the country. However, MPs led by Rashtriya Janata Dal chief Lalu Prasad heatedly argued in the Lok Sabha that the Centre should immediately hike their salary over and above a Central cadre secretary’s salary, which is around Rs 80,000 per month.
Mazda to recall about 290,000 cars in Europe, Australia
19 August 2010;deccanherald.com:Tokyo: Japanese carmaker Mazda Motor Corp is to recall some 288,000 vehicles over possible loss of power steering in major overseas markets including Europe and Australia, increasing the number of overseas recalls to 513,000, a company spokesman said on Thursday. The recall applies to 2007-09 model year versions of Mazda3 and Mazda5 vehicles manufactured from April 2007 through November 2008. The vehicles were produced in Japan and sold abroad. Mazda had already recalled 215,000 vehicles in the US this week over similar problems. Its joint venture in China also announced last week that it recalled 10,691 vehicles imported from Japan over similar problems. Tests on these vehicles suggested that rust in the hydraulic pumps for power steering could lead to a sudden loss of power steering while driving the vehicle, increasing the risk of a crash, Kyodo News reported Wednesday citing the US National Highway Traffic Safety Administration.
GM takes big step in shedding government ownership
19 August 2010;timesofindia.indiatimes.com:DETROIT: General Motors Co. on Wednesday filed the first batch of paperwork required to sell stock to the public, a significant step toward shedding government ownership. The 700-page filing with regulators begins a process that will lead to an initial public offering of GM's stock. The paperwork laid out reasons why GM would be attractive to investors, as well as the risks the company faces. GM didn't say how many shares would be sold or when, although experts say the IPO could come as early as October. It also didn't say how many shares GM's majority owner, the US government, plans to sell. Those sales would eventually lead to the government shrinking its big stake in the automaker, something GM is eager to see. The company's outgoing CEO, Ed Whitacre, has said government ownership has hurt GM's public image and sales. Under the plan filed on Thursday, GM said its stakeholders initially will sell common stock, while GM will sell preferred shares, which are like bonds and include dividend payments. GM said it will use proceeds from the preferred stock sale for general corporate purposes. It offered few other details. GM would have to bring in $70 billion just to pay back all of the automaker's stakeholders. That could come in several sales over months. The US government now owns about 61 percent of GM, which it got in exchange for giving the company $50 billion in survival aid last year. GM has repaid $6.7 billion, and the remaining $43.3 billion was converted to the ownership stake. Other stakeholders include a United Auto Workers health-care trust and the Canadian government. Demand for GM's new shares isn't known. In the coming weeks, the company will pitch itself to big investors such pension, mutual and hedge funds. Many of the shares will go to those larger investors, but small players will also get a chance to buy in. With so much taxpayer money at stake, there's interest in seeing GM's stock price rise. There are risks. The IPO market is weak. And GM, which lost about $100 billion in the five years leading up to last year's bankruptcy, is hardly a sure bet. Still, a quick run through bankruptcy court cleansed GM of burdensome debt. It closed 12 factories and its labor costs were cut dramatically through deals with the United Auto Workers union. Helped by those cost cuts, GM earned a healthy $2.2 billion in the first half of this year despite depressed US auto sales. It's set up to do better if sales rebound, especially in fast-growing countries like Brazil and China, where GM plans to launch nearly 20 vehicles in the next two years. The company gave investors a lengthy list of risks on Wednesday, including restructuring costs and concerns about the competitiveness of its vehicles. For example, the Chevrolet Volt, its highly anticipated electric car due for release this year, requires battery technology "that has not yet proven to be commercially viable. There can be no assurances that these advances will occur in a timely or feasible way." Even new executives were listed as risk factors. GM acknowledged that incoming CEO Daniel Akerson and Chief Financial Officer Chris Liddell have "no outside automotive industry experience" and said it was important for the management team to "quickly adapt and excel" in their new roles. Both, however, have extensive experience with successful companies. Akerson held top posts for telecommunications firms and Liddell served as CFO of Microsoft Corp. GM said the company was dependent upon global car and truck sales and said "there is no assurance that the global automobile market will recover in the near future or that it will not suffer a significant further downturn." The company said it had no plans to pay dividends on its common stock and future dividends would be determined by its board of directors. The company said it will trade on the New York Stock Exchange under the ticker "GM," the symbol under which it traded before it entered bankruptcy. Shares will also trade in Canada on the Toronto Stock Exchange, but the ticker symbol hasn't been determined. Francis Gaskins, president of IPOdesktop.com, said GM's decision to sell preferred shares rather than common stock is a sign that it is having trouble attracting interest from investors and felt the need to sweeten the offering with the preferred dividends. "Only a company that's not strong would do that," he said. "It's a tip-off that the investment community needs something special." The new preferred shares will be converted to an unknown number of common stock sometime in 2013, the filing said. GM also said in the filing that said outgoing CEO Ed Whitacre, who leaves September 1, will get a compensation package worth around $9 million. He gets a $1.7 million annual salary and the rest in stock.
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