TEXT-S&P keeps HKT on watch negative
— PCCW , the parent of HKT, proposes to deleverage its balance
sheet via the spin-off and trust listing of its telecommunication assets.— Uncertainties remain over the outcome, structure, timing, and the
proceeds received from this process.— We are keeping the ‘BBB’ rating on HKT and its guaranteed notes, and
the ‘cnA-’ Greater China scale rating on HKT on CreditWatch with negative
implications.Standard & Poor’s Ratings Services said today it kept the ‘BBB’ long-term
corporate credit rating and the ‘cnA-’ Greater China credit scale rating on Hong
Kong Telecommunications Ltd. (HKT) on CreditWatch. We also maintained the
CreditWatch status for the ‘BBB’ issue ratings and ‘cnA-’ Greater China credit
scale rating on HKT’s outstanding notes. We initially placed all the ratings on
CreditWatch with negative implications on March 25, 2011.The CreditWatch status reflects the continued uncertainties associated with
the proposed deleveraging plans that HKT’s parent, PCCW Ltd. (not rated),
announced on March 21, 2011. PCCW proposes to spin off and list as a trust its
telecommunications assets. PCCW is making progress toward the trust
listing—receiving approval from about 99% of shareholders on Oct. 12,
2011—but the deal is still subject to market conditions and pricing.”The timing, quantity of stapled units in the listing, and amount of net
proceeds and debt reduction associated with this process remain uncertain,”
said Standard & Poor’s credit analyst JunHong Park. “We currently expect the
transaction to be finalized by November 2011. We will continue to take a
consolidated view of the PCCW group when analyzing HKT’s credit profile.”In our view, the company’s debt remains high for the ‘BBB’ rating. PCCW’s
ratio of adjusted total debt to EBITDA was 4.6x on Dec. 31, 2010 (excluding
notes issued in August 2010). However, if PCCW completes the spin-off and
trust listing, rating stability would largely depend on the amount of the
group’s debt repayment. PCCW has announced that it will prioritize the use of
up to Hong Kong dollar 7.8 billion of its initial net proceeds to reduce
indebtedness. It remains to be seen, however, whether the company will be able
to raise sufficient net proceeds.”We aim to resolve the CreditWatch when we have certainty about the group’s
deleveraging plan. We will assess the implications of the spin-off and trust
listing on HKT’s financial flexibility and our expectations for HKT at the
‘BBB’ rating. This would include an assessment of the distribution policies of
the trust, ongoing access to capital, and the growth strategies and financial
policies of both HKT and PCCW,” said Mr. Park.If PCCW fails to deleverage its balance sheet to levels more consistent with
the current rating on HKT, we will likely lower the rating by one notch.
Conversely, we could revise the outlook to stable if: (1) PCCW significantly
deleverages its balance sheet through the trust listing, such that its
adjusted ratio of debt to EBITDA is less than 3.5x by the end of 2011, and (2)
we further expect PCCW to comfortably manage to deleverage below this level
thereafter.RELATED CRITERIA AND RESEARCH— Hong Kong Telecommunications Ltd. ‘BBB’ Rating Remains On CreditWatch
Negative Reflecting Uncertainties On Deleveraging, July 11, 2011— Hong Kong Telecommunications (HKT) Ltd. ‘BBB’ Rating Placed On Watch
Negative On Slower-Than-Expected Deleveraging, March 25, 2011— Corporate Ratings Criteria 2008, April 15, 2008
UPDATE 1-Nighthawk plans fundraising for Jolly Ranch revamp
* Shares down 7 pctOct 14 (Reuters) - U.S.-focused oil explorer Nighthawk
Energy , whose efforts to buy the Jolly Ranch project in
Colorado were dampened by weak market conditions, said it would
raise money through a share sale to fund a new work programme
there.Nighthawk, which was in talks to buy out operator and
50-percent stakeholder Running Foxes Petroleum’s stake in the
project, now plans to raise 5 million euros ($6.9 million)
through a placing and open offer to finance the work programme.”The current overall market conditions have determined that
the acquisition cannot be executed,” the company said in a
statement on Friday.”The company is proposing to push ahead with the first steps
in the new work programme, undertaking improvements to existing
wells and drilling a number of new wells, commencing in early
2012.”In April, the explorer said a study conducted at its Jolly
Ranch project in Colorado estimated probable and proved reserves
(2P) of 55,000 barrels of oil, which was lower than what
investors had hoped for.Last year, Nighthawk had said it would abandon its other
projects and concentrate solely on the Jolly Ranch project, one
of the initiatives that Chief Executive Tim Heeley started after
taking over.Nighthawk’s shares, which have lost more than a quarter of
their value over the past month, were down 7 percent at 3.1
pence at 0724 GMT on Friday on the London Stock Exchange.
Wait, now the right hates General Electric?
By James Ledbetter
The opinions expressed are his own.
For many years, the River Café, an elegant restaurant that sits just below the Brooklyn Bridge, had a plaque on its wall declaring, in effect, ÂIf you work for General Electric, go eat somewhere else.Â
This unusual exclusion policy had a simple explanation: for three decades, two GE plants in upstate New York dumped as much as 1.3 million pounds of polychlorinated biphenyls (PCBs) into the Hudson River, poisoning the fish supply that River Café depends on. The effect that this contamination had on wildlifeÂand on anyone who ate too much fish caught in the HudsonÂwas severe enough to create one of the largest Superfund projects in the history of the Environmental Protection Agency.
The Hudson pollution was not unique; the bend of the Housatonic River in Connecticut where I grew up was frequently unswimmable, because of PCBs floating down from a GE plant in Pittsfield, Massachusetts. Another aqueous assault, another massive taxpayer-funded cleanup.
Thus, you didnÂt have to own a fish restaurant to have a negative opinion of General Electric. Indeed, on the American left in the 1980s, GE was about as comprehensive a corporate bogeyman as could be imagined, and was the target of one of the few anti-corporate documentaries to win an Academy Award. In addition to its overt environmental sins, the company made nuclear power plants. It made nuclear weapons. It was one of the largest military contractors in the country, which made its ownership of a major broadcast network seem disturbing. It paid so little in corporate tax in the 1980s that it apparently offended Ronald ReaganÂs sensibilitiesÂand heÂd been a GE spokesman!
So it was jarring to read in the Wall Street Journal this week that GE is now a punching bag for the political right. Sarah Palin has charged on her Facebook page that GE has become Âthe poster child of corporate welfare and crony capitalism. When Newt Gingrich attacked GE for paying no taxes during the Tea Party-sponsored presidential debate last month, the audience applaudedÂtwice.
What is going on here? How did a venerable left-wing target become an apparently convenient right-wing target?
There are three political aspects of the rightÂs attack on GE which, while a little sudden and certainly open to charges of hypocrisy, are easy to explain. First, in many cases, the attackers try to establish an explicit link between GE and the Solyndra affair, hoping to whip up voter anger over the idea that government in general, and the Obama administration in particular, is throwing money at companies and thereby reviving that scary industrial-policy no-no of picking winners and losers. The logic here is questionableÂwith $12.6 billion in profits last year, GE is no SolyndraÂbut the issue of how much money the federal government should invest in private companies is certainly open to debate.
A second political motivation has to do with whoÂs inside the GE charm circle and whoÂs outside. GE CEO Jeffrey Immelt may not have calculated just how much political capital he was investing when he decided to become the Obama administrationÂs Âjob czar last JanuaryÂor exactly what the return on that investment would look like. On top of ImmeltÂs coziness with Obama, there has been a modest but significant shift in how GE spends its political dollars. While GE continues to give large sums to both parties, according to figures compiled by the Center for Responsive Politics, it gave more to the GOP in every political cycle from 1996 to 2006, but switched in the 2008 cycle to modestly favor Democrats. (Interestingly, one of the top recipients of GE money in the current cycle is Mitt Romney, whoÂs made a lot less noise about GEÂs Âcrony capitalism than some of his opponents.)
Finally, remember the all-important independent voter. ThereÂs long been a small overlap between left-leaning populists and right-leaning independent voters (think Ralph Nader), and right-leaning populists and left-leaning independent voters (think Ron PaulÂyouÂll see more than a few ÂEnd the Fed T-shirts and drug-legalization sympathizers at the Occupy Wall Street camp). These may not be viable long-term strategies, but if youÂre Newt Gingrich at this stage in the GOP contest, you get your votes by any means necessary.
Beyond the political hall of mirrors, itÂs worth pointing out that GE is in crucial respects a different company than it was when the left was pillorying it in the Â80s and Â90s. Gone is the conflict of interest of owning a majority of NBC (Comcast now does). Gone, mostly, is the involvement with nuclear weapons (that business got sold to the company that merged to become what is still a left-wing target: Lockheed Martin). On the current list of the largest military contractors in the U.S., GE doesnÂt even make the top 20.
GEÂs meager tax bill remains an issue; perhaps it should be considered progress that the right has now joined the left in thundering over it. The issue of Âcrony capitalism, however, is loaded in a way that makes political consensus seem unlikely. Back in the days when the Pentagon was signing GEÂs checks, there were few cries from the right about anything improper. Surely believers in the free market donÂt expect the federal government to build its own nuclear weapons, and since only a handful of companies can do that anyway, well, cronyism seems like a necessary byproduct.
Today, though, GEÂs relationship to government is different. As three Harvard Business professors point out in their new book Capitalism at Risk, GE experienced a somewhat unexpected bonanza following the financial meltdown of 2008. That is: from Beijing to Washington, stimulus programs were earmarked for projects that could be accomplished in the most environmentally friendly ways practical: clean-coal demonstration projects, electric-grid modernization, etc. Âthe very technologies that GE has been pushing over the past decade.
That, you see, is the connection the Tea Party is making to Solyndra. They donÂt think there should be government stimulus, they *certainly* donÂt think stimulus should have green earmarks, and they feel betrayed that GE is now in the vanguard of both. Such positions may be harder to maintain if the GOP ends up back in the White House, but for now, itÂs apparently good Republican politics to bash GE.
Oh, by the way: the River Café tells me theyÂve taken down that plaque.
PHOTO: U.S. President Barack Obama (R) talks with council chairman, General Electric CEO Jeffrey Immelt (L), after a meeting of the Presidentâs Council on Jobs and Competitiveness at the International Brotherhood Of Electrical Workers Local Union #5 Training Center in Pittsburgh, Pennsylvania October 11, 2011.
U.S. eyes size threshold when picking systemic firms
FSOC, the panel of U.S. financial regulators created by
last year’s Dodd-Frank financial oversight law, said it will
apply the threshold across industries.Insurers, hedge funds and mutual funds have been nervous
that they will be deemed systemically important financial
institutions, or SIFIs, and therefore be subjected to strict
regulatory oversight.Beyond the quantitative threshold, regulators will also
review a firm’s potential impact on the health of financial
markets, and will collect data from the firm itself, FSOC staff
said at a public meeting on Tuesday.
