Friday, June 13th, 2008
Global Investing Roundups
Lehman Replaces CFO and COO; Thompson Mortgage Posts Enormous 1Q Loss; South Africa Raises Interest Rates Again; OGX Petroleo Opens with $3.58 Billion IPO; Citi Closes Old Lane; Corn Hits Sixth Straight Record High; Competition for Esmark Heats Up; China’s Inflation Eases
- Troubled financial juggernaut Lehman Brothers Holdings Inc. (LEH) demoted two top officials - Chief Financial Officer, Erin Callan, and Chief Operating Officer, Joseph Gregory - after the company said it expects to post a $2.8 billion quarterly loss. Their respective replacements will be Ian Lowitt and Herbert McDade, who will also serve as company president, the company said in a statement.
- Thompson Mortgage posted a gigantic first quarter loss yesterday (Thursday), losing $3.31 billion, or a staggering $20.64 per share before dividends, for the quarter. In March, the Sante Fe, N.M.-based jumbo-loan specialist almost declared bankruptcy, Reuters reported.
- Struggling to contain inflation, South Africa’s central bank raised its benchmark interest rate for the sixth time this year, this time by a half percentage point to a five-year high of 12%. “The inflation outlook is bleak,” Rudolf Gouws, chief economist of Rand Merchant Bank in Johannesburg, told Bloomberg. “It was the correct decision. If oil prices go up more, if electricity tariffs go up more, they will have to hike interest rates more.”
- Brazilian oil company, OGX Petroleo e Gas SA, raised 5.87 billion reais ($3.58 billion) in its initial public offering. That figure could be 6.71 billion reais if banks exercise options to buy an addition 741,800 shares, making it the largest IPO in the country’s history. It’s already the country’s second-largest oil company, despite not yet having drilled a well, Bloomberg reported.
- Citigroup Inc. (C) is closing Old Lane, a hedge fund co-founded by Chief Executive Vikram Pandit and purchased by Citi just 11 months ago for more than $800 million, the Wall Street Journal reported. Battered by the collapse of the housing market and credit crunch, Citi has reported losses of nearly $15 billion for the past two quarters and been forced into making layoffs and other cutbacks.
- Corn prices hit another record high for the sixth time in as many days yesterday (Thursday) as flooding in the Midwest continued to damage crops. Corn for July delivery rose 8.25 cents to $7.115 a bushel on the Chicago Board of Trade, after earlier rising to a new all-time high of 7.18 a bushel, the Associated Press reported. Corn prices have jumped 20% this month alone, and are up over 80% from a year ago.
- Steel producer and distributor Esmark Inc. (ESMK) rejected a $670 million takeover offer from Russia’s OAO Severstal yesterday (Thursday), calling the bid inadequate and inferior, according the Associated Press. Esmark’s announcement came 24 hours after India’s Essar Steel Holdings Ltd. sweetened its offer for the West Virginia company by $80 million, raising its bid to $19 per share, or $750 million.
- China’s inflation eased in May, as food prices receded, Xinhua reported. The consumer price index the main gauge of inflation, rose 7.7% last month, a drop from 8.5Retail Sales in April and a 12-year high of 8.7% in February, according to China’s National Bureau of Statistics.