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from Breakingviews:

How to go public and private all in one go

By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

A Brazilian company seems to have found a way to go public and private all in one go. Biosev, an ethanol producer, is preparing to sell new shares next month. As part of the deal, parent company Louis Dreyfus is offering to buy them back in 15 months. It’s essentially an initial public offering, convertible bond and potential buyout packaged together. And it’s an overly clever solution to a unique problem.

Under an existing agreement with minority holders, Biosev needs to launch an IPO before autumn next year. The company needs the capital, too. Unfortunately, the Brazilian capital markets have not been cooperative. The company had to pull an earlier attempt to float last year. This time round, the mood hardly seems better: the main stock index is down almost 10 percent.

Enter some clever financial engineering. Dreyfus is offering puts to buyers of the stock, allowing them to sell the shares back to Dreyfus for the offer price plus interest. That essentially turns the stock into a convertible bond, with upside potential and protection against losses. That could encourage buyers to take a punt on the stock at 15 reais a share, which would raise about $350 million - more if supplementary stock is issued. Moreover, the puts act to bump up the indicated price of the offering to ensure the shares aren’t priced at a discount to an earlier rights issue.

from Breakingviews:

U.S. oil billionaire’s divorce is no private affair

By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

American oil billionaire Harold Hamm’s impending divorce is not simply a private affair. Investors swiftly stripped half a billion dollars from the market value of Continental Resources on Thursday following news that founder and 68 percent owner Hamm and his wife are splitting. That may not do the threat justice. Any division of the tycoon’s $11 billion fortune leaves Continental exposed to hefty stock sales or a feud at the top.

from Breakingviews:

Cyprus will struggle to make gas math work

By Kevin Allison
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Cyprus’ latest ideas for wiggling out of its financial fix include bundling future gas revenues into a national “solidarity fund”. But Breakingviews calculations suggest the gas discovered to date isn’t worth enough to plug the country’s 5.8 billon euro ($7.5 billion) funding gap.

from Breakingviews:

Elusive future gas riches can’t help Cyprus now

By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

If there are any optimistic Cypriots left, it’s probably because of recent huge gas finds off the struggling Mediterranean island’s coast. But it’s too soon for Cyprus to put hard and credible numbers on its hoped-for resources boom. U.S. driller Noble Energy thinks it has found about 7 trillion cubic feet (tcf) of the fuel under deep water in Cyprus’ Aphrodite gas field.

from Breakingviews:

China’s solar bonds leave dim hope of payback

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Dim prospects for payback await bondholders in China’s Suntech Power Holdings. The stricken solar panel maker, unlikely to meet a $541 million bond payment due on March 15, has persuaded over half its foreign creditors to hold off for two months. On purely financial grounds, it’s hard to see how the bondholders could come away with anything in the event of a default. What value remains is a bet that China values foreign investors too much to snub them outright.

from The Great Debate:

California v. Texas in fight for the future

It is not a national election year, but the “red state versus blue state” wars continue. Texas Governor Rick Perry's recent foray into California, to lure away businesses and jobs, signals more than a rivalry between these two mega-states. The Texas-California competition represents the political, economic and cultural differences driving American politics today – and for the foreseeable future.

Texas and California are robust political and economic competitors. We don’t know which will be the template for the future. As California emerges from its economic and fiscal doldrums and some of Texas' vulnerabilities become evident, it is now far from certain that Texas will emerge the victor.

from Breakingviews:

U.S. buyout barons have new tax-dodge rivals: MLPs

By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

U.S. buyout barons have new tax-dodge rivals: master limited partnerships. The low tax rates on private equity bosses’ so-called carried interests save them $1.3 billion a year, according to the U.S Treasury, an advantage critics want wiped out. But new data show investors in energy partnerships are now costing Uncle Sam a similar amount thanks to an outdated Internal Revenue Service perk from the 1980s. Both loopholes should be closed.

from Breakingviews:

Apple and Exxon may not be so different, after all

By Christopher Swann and Robert Cyran
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Apple and Exxon Mobil may not be so different, after all. The two seemingly disparate companies share more than nearly identical U.S. market-leading values of about $400 billion. Both are threatened by shrinking margins and the struggle to replace their precious wares. Exxon in various iterations has survived four times longer than Apple, but is just as vulnerable.

from Breakingviews:

2012 may be as good as it gets for Exxon

By Christopher Swann

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

2012 may be as good as it gets for Exxon Mobil. America’s largest oil company pumped out a near-record profit and its best earnings per share ever. But Exxon, like Chevron, is spending huge sums – almost $40 billion last year - to find and extract reserves. Holding output steady is tough enough. Unless oil prices jump, Exxon may have peaked.

from Breakingviews:

Shell shows the flip side of shale nirvana

By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Royal Dutch Shell’s latest results show there is a flip side to shale nirvana. The combination of vast new supplies and a continuing lack of export capacity have kept oil and gas prices down in North America. The cost advantage for the region’s manufacturers might excite the Davos set, but the much-hyped shale revolution also creates relative losers.

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