Unstructured Finance

The long wait for Icahn’s blog is nearly over

icahn.jpgEvery day we hit the refresh button, full of hope that billionaire investor Carl Icahn’s blog will finally arrive despite long odds and uncooperative lawyers. Looks like we’re almost there.

Icahn told Reuters on Wednesday that The Icahn Report is finally going live — “in a week or two” — with its founder’s famously strong opinions about corporate governance and the individual companies that fail to live up to his standards.

“I think the time has finally come when people are starting to focus on the many abuses in a number of companies in corporate America and the damage they do,” the 71-year-old financier and hedge fund operator said.

The blog will arrive in the wake of Icahn’s successful, highly publicized demands for change in companies including Motorola Inc and Time Warner Inc , both of which ultimately gave in to his demands that they change leadership and spin off major divisions. He also was instrumental in clearing roadblocks in Oracle Corp’s $8.5 billion bid to acquire BEA Systems.

Not all of Icahn’s investments work out, however, notably real estate developer WCI Communities Inc , whose shares have collapsed over the past year as the high-end condominium market dried up. Icahn is WCI’s largest shareholder, with 4.8 million shares, according to regulatory filings.

Layoff letters go out to Bear Stearns staff

ax.jpgThe other shoe — or is it an ax — is finally dropping for staff at Bear Stearns, with letters going out this week telling them whether they’ll keep their jobs when JPMorgan’s acquisition is complete.

One Bear employee who works in the emerging markets business in London has received confirmation he will be laid off, he told Reuters on Wednesday. Another in the same department said he was expecting to hear later in the day that he would be retained.

“Some individuals and some businesses are beginning to hear what their status is,” added a source close to the bank.

Plotlines: Gold falls vs oil, a murky inflation signal


Gold’s oil-buying power is at its lowest in three years. (The chart shows the price of oil rising relative to the price of gold.) Hedge funds and other traders who play the gold/oil spread could be taking profits. Otherwise, this is hard to explain, since gold is considered a leading indicator of inflation.

In the past two weeks, crude oil prices rose to a record near $120 a barrel, while the spot price of gold fell from around $950 to $870 an ounce. Today an ounce of gold buys 7.65 barrels of oil. When gold was near $1,000 an ounce earlier this year, an ounce bought more than 10 barrels of oil. Gold’s weakest point relative to oil was in 2005 around 6 barrels.

Is the underperformance signalling that inflation expectations are overblown? Perhaps the Fed knows something … it cut a key interest rate another quarter percentage point on Wednesday and said it expected inflation to moderate in coming quarters, as energy and commodity prices level out. “I am still not getting why gold is trading down here and crude is up there. So something’s gotta give,” said Jonathan Jossen, an independent floor trader on the COMEX gold floor.

Check Out Line: The consumer products earnings parade

cheese.jpgCheck out consumer product powerhouses including Procter & Gamble, Kraft and Colgate, inundating Wall Street with quarterly reports on Wednesday.

The reports largely showed that the companies are finding successful ways to navigate the consumer spending slowdown and the commodity price surge that has raised their cost of doing business.

P & G, world’s largest consumer products maker, with brands ranging from Pampers diapers to Olay skin-care products, posted higher quarterly profit. It said cost controls helped offset soaring prices for oil and other commodities.

Just enough for the Citi

citigroup.jpgCitigroup‘s $3 billion $4.5 billion stock offering didn’t exactly dazzle one of its most well-known critics, as Oppenheimer analyst Meredith Whitney said the company will need to raise an additional $10 billion to $15 billion or sell assets worth billions to truly shore up its capital position. “The fact that Citi raised capital at this time did not come as a surprise to us, but the fact that the company raised such a small amount of capital at this time confounds us,” said Whitney, who correctly predicted last year that the company would have to cut its dividend.

Time Warner is kissing its majority-owned cable division goodbye, part of CEO Jeffrey Bewkes’s attempt to revamp the company and lift its sluggish stock price. Details on how the transaction will be structured were scarce, but analysts have speculated that the separately listed unit could be spun off to shareholders.

UK gas producer BG Group has made a $12 billion bid approach to Origin Energy, seeking to bolster its position in the fast-growing Asia-Pacific gas market by securing the Australian utility’s gas reserves. The companies said BG, valued at around $85 billion, had approached Origin with a proposal of A$14.70 per share in cash — a 40 percent premium to Origin’s close of A$10.47 on Tuesday.

Cox scoops up Adify

adify.jpgCox Enterprises, the parent company of Cox Newspapers and cable company Cox Communications, is buying online advertising firm Adify for at least $300 million — not a bad multiple on revenues of $7 million in 2007 and an expected $35 million this year, according to paidContent.org.

“By any standards, it is a very rich deal,” paidContent’s Rafat Ali wrote. Adify creates custom online ad platforms for customers like the Guardian and Forbes. Reuters announced a deal with Adify in January to create an ad-supported network of small- to medium-sized publishers in areas like personal finance and football.

peHUB’s Dan Primack notes that it’s a “big day for Adify backer US Venture Partners, whose latest fundraising drive has been met with lukewarm enthusiasm.” Venture capital backers, which also included Venrock, NBC’s Peacock Equity fund and Time Warner, had invested about $27 million in Adify.

Check Out Line: The rebates are coming! The rebates are coming!

walmartt.jpgCheck out those federal rebate checks.
Tax rebates began arriving in U.S. consumers’ bank accounts this week as part of Washington’s $152 billion stimulus package.  (Direct deposits this week and paper checks next week.)

Retailers have various strategies for attracting those rebate dollars. Many of them are offering 10 percent bonuses when the checks are converted to store discounts.

Then there is Wal-Mart, which will cash the checks for free. That’s it. Cashing the checks for free. No bonus, like Kroger or Supervalu are offering. Just cashing the checks for free.

An open and shut case?

hammer.jpgClear Channel Communications says a Texas court has dismissed a request by a group of banks to delay a trial over the funding of the $20 billion buyout of the radio station operator. The banks asked to delay the June 2 trial until January, 2009, saying they needed more time to prepare, according to court documents obtained by Reuters. “Hopefully the banks are running out of delay tactics, and they will soon face a Texas jury who will make them take responsibility for their actions,” Clear Channel said in a statement. What could this defense be that requires another seven months to refine? Perhaps their lawyers are looking to twist the infamous Material Adverse Clause to protect lenders, not just borrowers.

Italian prime minister-elect Silvio Berlusconi threatened to re-nationalize Alitalia if the European Commission continued to “whine” about a government loan to keep the ailing airline afloat. With an overwhelming victory in national and city elections in his pocket, Berlusconi has attacked the European Commission for doubting whether the $467 million loan met European rules barring further state aid to the airline. The tycoon said a bid by a group of Italian businessmen remained the first choice for salvaging the carrier, but that EU trouble could prompt the state or its railways to buy the 50.1 percent of Alitalia that it does not already own.

Midwest Corp recommended a revised A$1.36 billion ($1.27 billion) offer from China’s Sinosteel, ending resource-hungry China’s first hostile foray into Australia’s mining sector. The A$6.38 per share offer falls short of the A$7 price target set by Midwest’s chief executive Bryan Oliver, but is still a 13.9 percent boost to Sinosteel’s previous offer. Midwest was last quoted at A$6.10 before trading in its shares was halted early on Tuesday. Sinosteel already owns 19.9 percent of Midwest. Meanwhile, Chinese Iron and Steel Group plans to lift its stake in Australian prospector Apollo Minerals to 19.9 percent, Apollo said.

Jet fuel dilemma: to merge or not to merge

cal.jpgWhile the skyrocketing cost of fuel is forcing U.S. airlines to consider cost-cutting measures — chief among them is consolidation — Continental Airlines has used the rising price of oil as one of the reasons to back out of advanced merger talks with United Airlines.

Continental Airlines on Sunday called off talks with United Airlines, citing the other carrier’s weak financial condition and the increasing cost of jet fuel prices, which have more than doubled since the start of last year.

That reason has left many sractching their heads — how does the rising cost of oil hinder the benefits of a merger? I suppose one could argue that United, with its extensive international network, could siphon too much money as fuel costs continue to rise — probably offsetting any cost benefits a merger could accomplish.

With the approval of the Lollypop Guild

wonka1.jpgThe convoluted history of attempted deals in the candy industry are enough to make an Oompa-Loompa’s head spin, but Mars’ $23 billion takeover of Wrigley may force rivals to reassess their options for consolidation, Bill Wrigley Jr said on Monday.

(The deal also proved that Warren Buffett “chews gum and identifies value at the same time,” as the FT’s Alphaville blog noted.)

“There have been lots of rumors in the confectionary space over the past few years, and very recently, and no one can say exactly what’s going to happen … but I think it’s likely that we’ll see more consolidation,” Wrigley said on a conference call. “The folks at Hershey, the folks at Cadbury, the folks maybe at Nestle have to think about what they want to do in this space and will evaluate their opportunities.”