DealZone

Deals du Jour

Wall Street banks and lawyers could collect nearly $1 billion in fees from the Federal Reserve Bank of New York and American International Group to help manage and break apart the insurer, the Wall Street Journal said, citing its own analysis.

The following M&A related stories were reported by Reuters and other media on Thursday:

Jewelry retailer Finlay Enterprises filed for Chapter 11 protection and said it would sell its assets in an auction supervised by the bankruptcy court. The company listed assets and debt in the range of $500 million to $1 billion in its filing, Reuters reported.

Indian cellular firm Aircel, 74 percent owned by Malaysia’s Maxis, has shortlisted four firms including American Tower and Bharti Infratel to conduct due diligence as it looks to sell all or part of its tower operations, Reuters said.

China South City Holdings, an operator of a wholesale and logistics centre in Shenzhen, is expected to revive its Hong Kong listing plan next month, raising $500 million for expansion, the South China Morning Post said.

Deals du Jour

Despite the sluggish performance of the stock markets recently, there is no shortage of deals to report.

Some corporate finance stories in the newspapers include:

* AIG (AIG.N) has resumed talks to sell its American Life Insurance Co unit to MetLife Inc (MET.N) in a deal that could help the stricken insurer raise more than $15 billion, according to the Financial Times.

* Datang Telecom (600198.SS) is in talks to sell a 20 percent stake to China’s national pension fund worth as much as 3 billion yuan ($428.6 million), China Daily reported.

AIG investor questions PwC fees

PWCAt AIG’s annual meeting, one upset shareholder pointed out how much PwC, the insurer’s independent auditor, had been paid over the past two years. AIG paid PwC a total of $131 million in audit and other fees in 2008 and $119.5 million in 2007. ”I want to know what these fees were paid for,” shareholder Kenneth Steiner of Great Neck, New York said. “Why didn’t anybody know what was going on? What were the accountants doing? Were they sleeping?”The fees look large but are not unheard of.  GE, for instance, paid KPMG $133 million in 2008 and $122.5 million in 2007.Still, Microsoft paid its auditor, Deloitte & Touche, a fraction of that — only $27.9 million in 2008 and $23.5 million in 2007.AIG CEO Edward Liddy defended PwC, saying the auditor had raised early concerns about controls at the division blamed for AIG’s near collapse — AIG Financial Products. ”PricewaterhouseCoopers conducted itself well over the last couple of years,” Liddy said. “They put a material weakness on the company with respect to its controls around FP (AIG Financial Products).”

DB pulls off surprise

AIADeutsche Bank, the underdog in the race to run the IPO of a large AIG unit, has come out on top.

The German bank has been chosen as one of two global coordinators to run the IPO of American International Assurance (AIA), beating out Goldman Sachs and Citigroup, which ran the aborted auction of the Asian life insurer earlier this year.

Morgan Stanley, the other global coordinator, is no surprise. The bank has been advising the Fed since the September implosion of AIG, and on top of its own expertise, regulators wanted it in.

Deals du Jour

British department stores group Debenhams Chief Executive Rob Templeman told Reuters the company will price its 323 million pound rights issue at a modest discount, while Chinese state-owned metals firm Chinalco may revise its planned $19.5 billion investment in miner Rio Tinto before a June 14 deadline, according to two sources close to the deal we talked to.

In the U.S., American International Group (AIG) is in talks with three bidding groups for International Lease Finance Corp., but a sale is complex as the parties have to deal with the aircraft leasing unit’s mountain of debt and funding needs, Reuters heard late on Wednesday.

And in the newspapers:

* State-run Rosneft, Russia’s largest oil firm, will take over private bank Trust in exchange for writing off debts, Kommersant business daily reported.

Deals du Jour

China’s Sichuan Tengzhon Heavy Industrial Machinery Co became the surprise buyer for General Motor’s Hummer brand while insurer AIG — another U.S. giant in trouble — cut the asking price for its Taiwan insurance unit. For the day’s top headlines, click here.

And here is what we found of interest in the newspapers.

Global miner Rio Tinto may cut the size of its planned $7.2 billion issue of convertible bonds to China’s Chinalco and raise more equity via a rights issue, the Australian Financial Review reported.

Banks in Qatar, the world’s top exporter of liquefied natural gas, will get cash and bonds in exchange for selling their real estate investments to the government under a $4 billion programme unveiled last week, the daily Gulf Times cited sources as saying.

Deals du jour

A man rides past a newsstand with French daily newspapers in Nice, southeastern France, February 24, 2009.

AIG plans to float its Asian crown jewel, Volkswagen halts talks with Porsche, Nomura hires for a massive push in U.S. equities, and more. Here are the latest deal-related stories:

AIG to launch IPO for Asia crown jewel

Volkswagen halts tie-up talks with Porsche

Nomura hires for massive U.S. equity push

Cubs’ offer won’t be voted on next week: sources

Babcock & Brown infrastructure fund gets acquired

China pension fund plans foreign PE deals: sources

China government OKs Minmetals’ OZ Minerals deal

Daiwa SMBC to buy unit of Britain’s Close Brothers

Whitehaven says to drop merger deal with Gloucester

Metro to present Karstadt deal outline: sources

And in Europe’s morning papers:

* Hedge fund manager Noam Gottesman, co-chief executive of GLG Partners Inc (GLG.N), plans to move to New York from London to build up the fund’s U.S. assets, the Daily Telegraph said.

* Alan Miller, former fund manager at New Star, plans to launch two new funds in a joint venture with Alexander Spencer Churchill, the Daily Telegraph said.

Did you just feel a bottom?

USA-FED/BERNANKENow that the stress test results are in and green shoots of economic promise abound, a great gush of lending is going to come spilling out of banks’ lending spigots, right? Wrong.

As Kristina Cooke reports, “While banks may be less hesitant to lend to each other if they feel their rivals’ books have been credibly vetted, that does not translate into confidence to make new loans to small businesses and consumers.”

Worse, although money is cheap at the Fed – well, cheap in terms of interest, if not terms – banks may be the only businesses that enjoy any thaw in credit conditions. Michael Feroli, economist at JPMorgan, says the still sickly state of the economy means many borrowers’ creditworthiness has dropped, while demand for new loans has waned.

Uncertainty principles

DEALS/Faced with a $34 billion hole uncovered in the stress test, Bank of America might have little choice but to dump its investment in China Construction Bank, China’s second-largest bank. That would give it about a quarter of the $34 billion of additional capital we are told it needs to fill a yawning gap in its foundation. A lock-up on a portion of the stake ends tomorrow, and the opportunity may be too good for embattled CEO Ken Lewis to pass up, though the bank has plenty of incentive to hold onto the stake.

Citigroup’s Keith Horowitz raised his price target on the bank, citing the end of uncertainty. He also says the total need at the 19 stress-tested banks will be $75 billion, with Bank of America accounting for the lion’s share.

At this point, with hundreds of billions of public dollars having been heaved at the likes of AIG, Citi, Bank of America, automakers, auto suppliers, life insurers, etc. that number is hardly shocking. And with the S&P having recovered 25 percent of its recession-fueled losses, is it time to expect investors to become more aggressively exposed to the end of uncertainty?

After March Madness, a little May Rage

SOCCER-ENGLAND/With the end of the economic meltdown so tantalizingly close, and stock markets pricing in the spring thaw, The Consumerist’s annual Worst Company in America competition is just the tonic DealZone readers need to keep their prized sense of perspective appropriately tickled.

“It’s the bailouts versus the monopolies!” the Website’s news release rings out:

The annual 32-company battle royale has whittled itself down to the “final four”: Bank of America, Comcast, Ticketmaster and AIG. One of these disastrous companies will go on to join Halliburton (2006), RIAA (2007) and Countrywide (2008) as “The Worst Company in America.”