Monday, 27 February 2012

BP oil spill trial delayed for settlement talks

By Tom Bergin and Jonathan Stempel

LONDON/NEW ORLEANS | Mon Feb 27, 2012 1:57am EST

A BP petrol station sign pictured in west London, April 25 2010-Reuters/Toby Melville
(Reuters) - The trial to decide who should pay for the 2010 Gulf of Mexico oil spill has been delayed by a week, to allow BP Plc to try to cut a deal with tens of thousands of businesses and individuals affected by the disaster.

Less than 24 hours before the case was set to start in a New Orleans federal court, U.S. District Judge Carl Barbier pushed back the date to March 5 from February 27.

The delay allows further talks between BP and the Plaintiffs' Steering Committee (PSC), which represents condominium owners, fishermen, hoteliers, restaurateurs and others who say their livelihoods were damaged by the April 20, 2010, explosion of the Deepwater Horizon drilling rig and subsequent oil spill.

Eleven people were killed, and 4.9 million barrels of oil spewed from the mile-deep Macondo oil well, in by far the worst offshore U.S. oil spill.

"BP and the PSC are working to reach agreement to fairly compensate people and businesses affected by the Deepwater Horizon accident and oil spill," BP said in a statement.

The London-based oil company said there was no assurance that the talks would lead to a settlement.

Bloomberg news agency reported on Monday that BP and the plaintiffs were discussing a $14 billion settlement that was nearing completion. It cited three people familiar with the talks.

A settlement between BP and the businesses would remove a significant portion of the complex litigation, the trial of which was expected to take nearly a year. It could also be a key step toward reaching a global settlement with its drilling partners, and with federal and state governments.

Much work would remain. The U.S. government has sued BP and others for violating the Clean Water Act and other laws, which could result in fines totaling tens of billions of dollars. Gulf states are also seeking compensation for their losses. BP is also suing and being sued by its drilling partners.

"Before today, I had almost given up on the possibility of a global settlement before a trial began," said Edward Sherman, a professor at Tulane University Law School and specialist in complex litigation. "Now, with an extra week, it seems to improve the chances."

Barbier, meanwhile, has kept the highly complex case moving forward, and had not changed the trial date since it was first set more than a year ago.

"Judge Barbier would not have delayed (the) trial unless (a) settlement was within reach," said David Uhlmann, a University of Michigan law professor and former chief of the Justice Department's environmental crimes section, in an email.

In an order dated Sunday, Barbier said the delay made sense "for reasons of judicial efficiency and to allow the parties to make further progress in their settlement discussions." He did not specify which parties he was referring to.


Apart from BP, which owned 65 percent of the Macondo well, the main corporate defendants are Vernier, Switzerland-based Transocean Ltd, which owned the Deepwater Horizon rig, and Houston-based Halliburton Co, which provided cementing services for the well. They are also suing each other. Several other companies are also involved in the trial.

A BP spokeswoman declined to comment further on the talks.

Transocean spokesman Lou Colasuonno said BP's talks with the PSC "doesn't change the facts of the case," and that Transocean remains prepared for trial.

A spokeswoman for the U.S. Department of Justice declined to comment. The offices of Alabama Attorney General Luther Strange and Louisiana Attorney General James "Buddy" Caldwell, which are coordinating the states' case, did not immediately respond to requests for comment. Halliburton also did not immediately respond to a request for comment.

BP has accepted responsibility for the disaster, and estimated its legal and cleanup costs for the spill will total $43 billion. Some analysts have said that figure could top $60 billion, especially if there were a finding that its activities at the project were "grossly negligent."

Earlier this month, BP said it had set aside $6.1 billion to cover claims by businesses. Lawyers for those plaintiffs said the amount was too low, and that BP should also award punitive damages, which the oil company says are not warranted.

Many industry analysts and experts say a quick settlement is in BP's best interest.

Chief Executive Robert Dudley has said BP is willing to settle for reasonable terms, and on Sunday told The Sunday Telegraph in an interview that he hoped to reach "some agreements" and perhaps avoid litigation.

Other companies in the case are Anadarko Petroleum Corp, which owned 25 percent of the well; Mitsui & Co's MOEX USA unit, which owned 10 percent of the well; Cameron International Corp, which made a blowout preventer, and Schlumberger NV's M-I Swaco venture, which provided mud services. All have settled with BP. MOEX has settled with the government.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

(Reporting by Tom Bergin in London and Jonathan Stempel in New Orleans; Additional reporting by Chris Baltimore in Houston, Ransdell Pierson in New York and Jeremy Pelofsky in Washington, D.C.; Editing by Marguerita Choy and Elizabeth Piper)

Friday, 17 February 2012

Advent and Goldman to Buy TransUnion in $3 Billion Deal

February 17, 2012, 9:36 am

TransUnion, one of the nation's three largest consumer credit reporting companies, produce on-demand reports with a person's borrowing history


TransUnion, one of the nation’s three largest consumer credit reporting companies, agreed on Friday to sell itself to a pair of private equity funds, including an arm of Goldman Sachs

Advent International and GS Capital Partners, the Goldman Sachs unit, will buy the company from Madison Dearborn Partners and the Pritzker family, the prominent Chicago billionaires. The deal, which values TransUnion at more than $3 billion, is one of the largest private equity transactions of the year.

The sale is the latest shakeup for TransUnion, which was controlled by the Pritzkers until 2010. When the Pritzkers sold their controlling interest to Madison Dearborn Partners, one of Chicago’s largest private equity shops, the company was worth $2 billion.

The deal announced on Friday will not prompt changes to the company’s management team, TransUnion said in a statement. The companies did not announce the full terms of the takeover on Friday.

“I wish the TransUnion management team and all the associates the very best in this next, and very exciting, stage in the evolution of the company,” Penny Pritzker, one of more than 10 heirs to the Prizker family fortune and the chairwoman of TransUnion’s board of directors, said in a statement.

The deal comes as the credit reporting industry faces broad federal oversight for the first time. The Consumer Financial Protection Bureau, the nation’s federal consumer watchdog, unveiled a plan on Thursday to keep a closer eye on credit reporting companies and debt collectors, two industries that have largely flown under the government’s radar. The proposal would ensnare the industry’s 30 largest companies, including TransUnion and its two biggest competitors, Experian and Equifax.

Credit agencies, which produce on-demand reports featuring a consumer’s credit score and a detailed snapshot of a person’s borrowing history, are essential for obtaining a car, a home mortgage or even a cellphone. But the companies have also drawn criticism for producing the occasional error-riddled report and for deferring to creditors at the expense of consumers.

The TransUnion deal is expected to close by early in the second quarter.

“TransUnion has demonstrated strong growth under the support and guidance that Penny Pritzker has provided as our chairman, and we have benefited greatly from the resources, network and expertise of Madison Dearborn Partners,” Bobby Mehta, TransUnion’s president and chief executive, said in a statement. “We look forward to working closely with the Advent and Goldman Sachs teams to continue executing against our strategic blueprint by remaining focused on providing our clients with highly attentive service and the very best information and risk management products.”

TransUnion was advised by Bank of America and Deutsche Bank and the law firm Latham & Watkins. Evercore advised Advent and Goldman Sachs.

Tuesday, 14 February 2012

Obama’s budget shows he’s no Keynesian

Commentary: He links fast growth with fiscal contraction in Washington

By MarketWatch

WASHINGTON (MarketWatch) — In his 2013 budget proposal released on Monday, President Barack Obama has now fully embraced austerity as the recipe for economic success.

Obama is no longer a Keynesian.

Although the economy remains weak and unemployment is still elevated, Obama proposes the sharpest contraction in fiscal policy in more than 40 years. And, in the midst of those tax increases and spending reductions, he’s predicting a booming economy growing well above the economy’s long-run potential for the next six years — averaging an incredible 3.6%. Read our news coverage of the White House budget plan.

In short, Obama is agreeing with his Republican critics who say that what the economy really needs right now is a rapid move toward balanced budgets. By contrast, Keynesian economists would say that reducing budget deficits now, when we still have so much slack in the economy, would slow growth. They recommend running high deficits until the economy is stronger, and then moving to balance.

Next year, the Obama budget proposal sees federal tax receipts increasing by 2 percentage points of gross domestic product, and federal outlays falling by 1.1 percentage points of GDP. The total drag from fiscal policy would total 3.1% of GDP.

The last time the government tightened fiscal policy that much was in 1969, when a 10% income tax surcharge was implemented to pay for the Vietnam War. The immediate results were terrific in one sense: the federal budget was balanced in 1969, the only time it was balanced between 1960 and 1998.

Unfortunately, the balanced budget was a major cause of the recession that began in December 1969. All too often over the past 90 years, attempts to reduce deficits or increases surplus have contributed to ensuing recessions.

A recession is what the Congressional Budget Office thinks might happen next year if the government goes ahead with deficit-reduction measures already baked into federal law, including the sunsetting of the Bush-era tax cuts and the automatic budget cuts agreed to last year when Obama and Congress settled the debt-ceiling standoff.

For 2013, the CBO projects growth of just 1% (as opposed to 3% in the White House budget), largely because of austerity measures. According to the CBO, growth could be as high as 4.1% next year if the government delayed its plans to reduce the deficits.

It’s hard to fathom how the economy will be able to grow at such a rapid pace over the next three years if fiscal policy is exerting such a powerful drag.

—Rex Nutting

Friday, 3 February 2012

Shilling Strengthens against other currencies

The Kenyan currency continues to hold its own against major currencies after rebounding from its lowest point ever in October 2011. It hit its nadir on October 22nd when it exchanged at Kshs 107 to the greenback.
It then recovered to hit 100 to the US dollar and measured 91.45 against a basket case of 4 major currencies. This basket case is a measure of the units of Kenya's major partners and contains the US dollar, the Sterling pound, the euro and the yen weighting according to trading importance.
The shilling measured 86.53 against the same currencies in September.
On October 26th, a basket case of regional currencies read 8.68 as compared to 8.36 hit on September 22nd. This case holds the South African Rand, the United Arab Emirates' dirham and the 2 East African currencies, the Ugandan and Tanzanian shillings.
The Kenya shilling read 76.27 against the regional currencies on 25th January 2011. These represent a gain of 16.6% and 14.5% respectively on the 2 basket cases.
This has in turn been a result of the treasury's intervention in the markets raising interest rates and also hounding out key players in the banking sector accused of hoarding foreign currencies. These include Equity Bank,Kenya Commercial Bank, Barclays Bank of Kenya, Standard Chartered Bank and Family Bank.

Forex: EUR/USD steadies above 1.3100

Fri, Feb 03 2012, 16:16 GMT (Córdoba) - As the dust settles after the surprisingly positive US payrolls report, EUR/USD consolidates above the 1.3100 mark. The pair bottomed at 1.3065 following the data and managed to bounce up although the 1.3130 area capped the recovery confining EUR/USD to sideways consolidation within the last hours.

At time of writing, EUR/USD is quoting around 1.3110, still down 0.3% on the day. The Euro is on track to close the week with modest losses, as despite several attempts to break and hold above 1.3200 within the last days, it has been constantly rejected from those levels.

In terms of technical levels, immediate supports are seen at 1.3070, 1.3020 and 1.2980, while next resistances could be found at 1.3140, 1.3185 and the 1.3200/10 area.