Wednesday, November 19, 2008

Chrysler Considered, Abandoned, Bankruptcy Before Seeking Aid

By Jeff Green

Nov. 19 (Bloomberg) -- Chrysler LLC Chief Executive Officer Robert Nardelli said his company studied a prearranged bankruptcy before dismissing the idea as unworkable and approaching the U.S. government for money to survive. Nardelli and General Motors Corp. CEO Rick Wagoner, who has repeatedly ruled out bankruptcy, told senators yesterday that a failure will lead to an economic ``catastrophe'' much costlier than the $25 billion in aid being proposed by Democrats. GM has said it may run out of operating cash this year.

``We did look at prepackaged,'' Nardelli testified in Washington. ``We looked at pre-negotiated. We've looked at almost every alternative within Chrysler as a privately held company before we came here and ask for support to -- to provide a bridge, if you will, through this economic trough.'' His comments highlighted U.S. automakers' objections to so- called prepackaged bankruptcies, as advocated by some Republican lawmakers. While proponents say a filing with financing in hand would let GM, Chrysler and Ford Motor Co. survive, the automakers say going to court would end in their liquidation. Wagoner, Nardelli and Ford CEO Alan Mulally returned to Capitol Hill today for a House committee hearing as they seek an industry bailout before Congress's lame-duck session ends this week. Opposition from President George W. Bush and Republicans threatens to scuttle Democrats' bid to tap the $700 billion bank-rescue plan for automaker loans. A defeat may push consideration of any new aid into 2009, because House Speaker Nancy Pelosi said yesterday she doesn't intend to reconvene in December.

`Fresh Capital'

``Without fresh capital, we project that GM may not have sufficient liquidity to make it to year end,'' Deutsche Bank AG analysts including Rod Lache in New York wrote in a note to investors today. A GM bankruptcy is the ``only way'' for the biggest U.S. automaker to end union costs that make it uncompetitive, Republican Senator James DeMint of South Carolina said in an interview on Bloomberg Radio. Nardelli, who said Chrysler is down to $6.1 billion in cash and burning about $1 billion more each month, told senators yesterday that bankruptcy would take too much time.

``To a certain degree, all of these take an extensive amount of time,'' he said of the options for arranging a filing for court protection. Auburn Hills, Michigan-based Chrysler would need support from ``all the players, all of the suppliers, all of the vendors, all of the labor,'' he said.

`Very Fragile'

``In fact, we are in a very fragile position,'' he said of Chrysler, whose 26 percent U.S. sales decline this year through October is the most among major automakers. The median time for a prepackaged bankruptcy is 45 days, according to Lynn LoPucki, who teaches bankruptcy law at Harvard University and the University of California at Los Angeles. The median time for an ordinary bankruptcy is about 1 1/2 years, or more than 10 times as long, he said. For GM, a prepackaged bankruptcy plan with federal assistance would involve fewer taxpayer dollars than a bailout done outside of court, said Mark Bane, a bankruptcy lawyer at Ropes & Gray in New York. He isn't involved in GM's case. The Detroit-based automaker could use court protection to reduce debt, reject unfavorable contracts and minimize the risk that it would need a future bailout, Bane said in an interview. ``It creates the environment to deal with GM's problems, but limits government financial commitment,'' he said.

No `Stigma'

``I don't understand the stigma that would come with prepackaged bankruptcy,'' with the benefit of government funds to the industry, Tennessee Republican Senator Bob Corker said yesterday. ``I don't know how that could possibly be detrimental.'' Mulally, who said Dearborn, Michigan-based Ford isn't yet running out of money, said he expects that the bankruptcy of one automaker may lead to the failure of the others. The failure of GM would cost the government as much as $200 billion should the biggest U.S. automaker be forced to liquidate, Nariman Behravesh, chief economist at IHS Global Insight Inc. in Lexington, Massachusetts, estimates. A GM collapse would mean ``more aid to specific states like Michigan, Ohio, and Indiana, and more money into unemployment and extended benefits,'' he said Nov. 15. Aid will likely be delayed until Congress attaches more conditions, JPMorgan Chase & Co. analyst Himanshu Patel in New York wrote in a report today. ``The tone of the hearing conducted on behalf of the Senate Banking, Housing and Urban Affairs Committee and the direction of questioning did not change our view that federal aid is more likely than not,'' Patel wrote. ``However, we feel it is clearer now that the timing of any such aid is not imminent as key differences remain amongst influential power-brokers.''

Wednesday, November 5, 2008

Molson Coors Rises on Sales Gains, Quicker Savings

By Allison Abell Schwartz (Bloomberg)

Molson Coors Brewing Co., the third- largest U.S. beer maker, rose 8.3 percent in New York trading because of market-share gains in Canada and the U.K. and after the company said it expects to achieve total cost savings from its joint U.S. venture with SABMiller Plc six months early. Sales to retailers in Canada climbed 3.7 percent, led by “double-digit growth“ of Coors Light, Carling and Rickard’s, the company said today. Those sales gained 0.7 percent in the U.S. In the U.K., the brewer grew market share amid a slowing economy and fewer pub visits because of a smoking ban there. An increase in sales to retailers in the U.S. and Canada and Molson Coors’s cost savings announcement helped send the shares higher in New York trading today, Brian Yarbrough, an analyst at Ed Edward Jones in St. Louis, said in a telephone interview. “We are in probably the healthiest position we could wish to be in,” Chief Executive Officer Peter Swinburn said today in a telephone interview. Molson Coors, based in Denver and Montreal, climbed $3.20 to $41.78 at 4:12 p.m. in New York Stock Exchange composite trading. The shares have lost 19 percent this year. Net income jumped 29 percent to $173.2 million, or 94 cents a share, Molson Coors said in a statement. Profit excluding some one-time costs and gains was unchanged at 95 cents from a year earlier, 2 cents lower than the average estimate of 11 analysts surveyed by Bloomberg. Revenue after excise taxes dropped 45 percent to $921.1 mi million from $1.69 billion in the three months ended Sept. 28 as Molson Coors separated its U.S. operations into the MillerCoors venture. Including the U.S. business, its worldwide beer volume rose less than 1 percent to 12 million barrels.

Canadian Sales

Beer discounts and commodity inflation hurt earnings in Canada, where sales grew by a “high-single-digit” percentage, the brewer said. Profit in the country fell 8.1 percent to $151 million before taxes as the cost of goods sold rose 7 percent because of higher material, packaging material and fuel prices. Earnings in the U.K. climbed 19 percent before taxes, helped by new contracts with suppliers and lower pension costs. Sales volume declined and a 7 percent drop in the pound against the dollar trimmed profit, Molson Coors said. As commodity costs begin to slow, Molson Coors may be well positioned to boost profit, said Yarbrough, who recommends investors buy the shares.

MillerCoors Venture

Earlier today, MillerCoors reported third-quarter profit increased 15 percent to $168.2 million on sales gains of 1.9 percent, helped by purchases of Coors Light. It was the first period of joint operations. MillerCoors will cut “a lot” of jobs in the coming weeks, the unit’s executives said on a Webcast discussing earnings. The venture is the second-biggest U.S. beer company behind Anheuser- Busch Cos. and holds 30 percent of the country’s beer market. In June, Molson Coors and SABMiller joined their U.S. divisions and said they expect to save $500 million over three years from the combination. The brewer said today it anticipates accelerating by six months that savings plan, with the first $50 million by June 30 and $350 million in the second year of the venture. A year earlier, Molson Coors earned $134.7 million, or 74 cents a share.

Outsource Your Collections


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Senior Journalist Casper Nightingale contributed to this article

Obama Is Elected President as Racial Barrier Falls


By ADAM NAGOURNEY (NYTimes)

Barack Hussein Obama was elected the 44th president of the United States on Tuesday, sweeping away the last racial barrier in American politics with ease as the country chose him as its first black chief executive. The election of Mr. Obama amounted to a national catharsis — a repudiation of a historically unpopular Republican president and his economic and foreign policies, and an embrace of Mr. Obama’s call for a change in the direction and the tone of the country. But it was just as much a strikingly symbolic moment in the evolution of the nation’s fraught racial history, a breakthrough that would have seemed unthinkable just two years ago. Mr. Obama, 47, a first-term senator from Illinois, defeated Senator John McCain of Arizona, 72, a former prisoner of war who was making his second bid for the presidency.

To the very end, Mr. McCain’s campaign was eclipsed by an opponent who was nothing short of a phenomenon, drawing huge crowds epitomized by the tens of thousands of people who turned out to hear Mr. Obama’s victory speech in Grant Park in Chicago. Mr. McCain also fought the headwinds of a relentlessly hostile political environment, weighted down with the baggage left to him by President Bush and an economic collapse that took place in the middle of the general election campaign.“If there is anyone out there who still doubts that America is a place where all things are possible, who still wonders if the dream of our founders is alive in our time, who still questions the power of our democracy, tonight is your answer,” said Mr. Obama, standing before a huge wooden lectern with a row of American flags at his back, casting his eyes to a crowd that stretched far into the Chicago night.

“It’s been a long time coming,” the president-elect added, “but tonight, because of what we did on this date in this election at this defining moment, change has come to America.” The focus shifted quickly on Wednesday to the daunting challenges facing the president-elect, with his supporters offering sober reflections of what lies ahead. “We’re in deep trouble,” said Rep. John Lewis, a Georgia Democrat and leader in the civil rights movement, on the Today show on NBC.

“We’ve got to get our economy out of the ditch, end the war in Iraq and bring our young men and women home, provide health care for all our citizens,” Mr. Lewis said. “And he’s going to call on us, I believe, to sacrifice. We all must give up something.” Mr. McCain delivered his concession speech under clear skies on the lush lawn of the Arizona Biltmore, in Phoenix, where he and his wife had held their wedding reception. The crowd reacted with scattered boos as he offered his congratulations to Mr. Obama and saluted the historical significance of the moment.

“This is a historic election, and I recognize the significance it has for African-Americans and for the special pride that must be theirs tonight,” Mr. McCain said, adding, “We both realize that we have come a long way from the injustices that once stained our nation’s reputation.” Not only did Mr. Obama capture the presidency, but he led his party to sharp gains in Congress. This puts Democrats in control of the House, the Senate and the White House for the first time since 1995, when Bill Clinton was in office.The day shimmered with history as voters began lining up before dawn, hours before polls opened, to take part in the culmination of a campaign that over the course of two years commanded an extraordinary amount of attention from the American public. As the returns became known, and Mr. Obama passed milestone after milestone —Ohio, Florida, Virginia, Pennsylvania, New Hampshire, Iowa and New Mexico — people rolled spontaneously into the streets to celebrate what many described, with perhaps overstated if understandable exhilaration, a new era in a country where just 143 years ago, Mr. Obama, as a black man, could have been owned as a slave.

For Republicans, especially the conservatives who have dominated the party for nearly three decades, the night represented a bitter setback and left them contemplating where they now stand in American politics. Republican leaders began on Wednesday what will likely be a lengthy re-examination of their brand, as Democrats hope to shape a permanent re-alignment of the electoral map. “Certainly, we have to examine this,” said Rep. Kay Bailey Hutchinson, a Texas Republican, on CNN on Wednesday. “We have to listen to what the people are saying if we’re going to be a forceful voice.” Mr. Obama and his expanded Democratic majority on Capitol Hill now face the task of governing the country through a difficult period: the likelihood of a deep and prolonged recession, and two wars. He took note of those circumstances in a speech that was notable for its sobriety and its absence of the triumphalism that he might understandably have displayed on a night when he won an Electoral College landslide.

“The road ahead will be long, our climb will be steep,” said Mr. Obama, his audience hushed and attentive, with some, including the Rev. Jesse Jackson, wiping tears from their eyes. “We may not get there in one year or even one term, but America, I have never been more hopeful than I am tonight that we will get there. I promise you, we as a people will get there.” The roster of defeated Republicans included some notable party moderates, like Senator John E. Sununu of New Hampshire and Representative Christopher Shays of Connecticut, and signaled that the Republican conference convening early next year in Washington will be not only smaller but more conservative. Mr. Obama will come into office after an election in which he laid out a number of clear promises: to cut taxes for most Americans, to get the United States out of Iraq in a fast and orderly fashion, and to expand health care. In a recognition of the difficult transition he faces, given the economic crisis, Mr. Obama is expected to begin filling White House jobs as early as this week.

Mr. Obama defeated Mr. McCain in Ohio, a central battleground in American politics, despite a huge effort that brought Mr. McCain and his running mate, Gov. Sarah Palin of Alaska, back there repeatedly. Mr. Obama had lost the state decisively to Senator Hillary Rodham Clinton of New York in the Democratic primary.

Mr. McCain failed to take from Mr. Obama the two Democratic states that were at the top of his target list: New Hampshire and Pennsylvania. Mr. Obama also held on to Minnesota, the state that played host to the convention that nominated Mr. McCain; Wisconsin; and Michigan, a state Mr. McCain once had in his sights. The apparent breadth of Mr. Obama’s sweep left Republicans sobered, and his showing in states like Ohio and Pennsylvania stood out because officials in both parties had said that his struggles there in the primary campaign reflected the resistance of blue-collar voters to supporting a black candidate. “I always thought there was a potential prejudice factor in the state,” Senator Bob Casey, a Democrat of Pennsylvania who was an early Obama supporter, told reporters in Chicago. “I hope this means we washed that away.” Mr. McCain called Mr. Obama at 10 p.m., Central time, to offer his congratulations. In the call, Mr. Obama said he was eager to sit down and talk; in his concession speech, Mr. McCain said he was ready to help Mr. Obama work through difficult times. “I need your help,” Mr. Obama told his rival, according to an Obama adviser, Robert Gibbs. “You’re a leader on so many important issues.” Mr. Bush called Mr. Obama shortly after 10 p.m. to congratulate him on his victory. “I promise to make this a smooth transition,” the president said to Mr. Obama, according to a transcript provided by the White House .”You are about to go on one of the great journeys of life. Congratulations, and go enjoy yourself.” For most Americans, the news of Mr. Obama’s election came at 11 p.m., Eastern time, when the networks, waiting for the close of polls in California, declared him the victor. A roar sounded from the 125,000 people gathered in Hutchison Field in Grant Park at the moment that they learned Mr. Obama had been projected the winner.

The scene in Phoenix was decidedly more sour. At several points, Mr. McCain, unsmiling, had to motion his crowd to quiet down — he held out both hands, palms down — when they responded to his words of tribute to Mr. Obama with boos. Mr. Obama, who watched Mr. McCain’s speech from his hotel room in Chicago, offered a hand to voters who had not supported him in this election, when he took the stage 15 minutes later. “To those Americans whose support I have yet to earn,” he said, “I may not have won your vote, but I hear your voices, I need your help, and I will be your president, too.” Initial signs were that Mr. Obama benefited from a huge turnout of voters, but particularly among blacks. That group made up 13 percent of the electorate, according to surveys of people leaving the polls, compared with 11 percent in 2006.

In North Carolina, Republicans said that the huge surge of African-Americans was one of the big factors that led to Senator Elizabeth Dole, a Republican, losing her re-election bid. Mr. Obama also did strikingly well among Hispanic voters; Mr. McCain did worse among those voters than Mr. Bush did in 2004. That suggests the damage the Republican Party has suffered among those voters over four years in which Republicans have been at the forefront on the effort to crack down on illegal immigrants. The election ended what by any definition was one of the most remarkable contests in American political history, drawing what was by every appearance unparalleled public interest. Throughout the day, people lined up at the polls for hours — some showing up before dawn — to cast their votes. Aides to both campaigns said that anecdotal evidence suggested record-high voter turnout.

Reflecting the intensity of the two candidates, Mr. McCain and Mr. Obama took a page from what Mr. Bush did in 2004 and continued to campaign after the polls opened. Mr. McCain left his home in Arizona after voting early Tuesday to fly to Colorado and New Mexico, two states where Mr. Bush won four years ago but where Mr. Obama waged a spirited battle. These were symbolically appropriate final campaign stops for Mr. McCain, reflecting the imperative he felt of trying to defend Republican states against a challenge from Mr. Obama. “Get out there and vote,” Mr. McCain said in Grand Junction, Colo. “I need your help. Volunteer, knock on doors, get your neighbors to the polls, drag them there if you need to.” By contrast, Mr. Obama flew from his home in Chicago to Indiana, a state that in many ways came to epitomize the audacity of his effort this year. Indiana has not voted for a Democrat since President Lyndon B. Johnson’s landslide victory in 1964, and Mr. Obama made an intense bid for support there. He later returned home to Chicago play basketball, his election-day ritual.