Sunday, November 30, 2008

Trouble Again for Donald Trump and Trump Entertainment

Citing competition and the recent economic meltdown, Trump Entertainment will miss it's $53.1 million scheduled payment on it's 8.5% senior secured notes scheduled due 2015 in order to maintain required liquidity.

Donald Trump is the non-executive chairman and the largest shareholder of Trump Entertainment. Trump Entertainment owns and operates three Atlantic Casinos, The Trump Marina, Trump Taj Mahal and the Trump Plaza on the Boardwalk.

The company has about $1.25 billion in notes currently outstanding. In a statement Friday, Trump Entertainment said, "that it has a 30-day grace period to pay up and will meanwhile seek talks with its lenders to revamp its capital structure and improve its liquidity."

If they fail to make the payment in within the 30 day grace period, holders of a quarter of the notes and lenders could accelerate the maturities of those obligations.

If things looked like they couldn't get worse for the Donald, he is being sued by Deutsche Bank in a New York court for a $40-million personal guarantee he made to help get financing for the 92-story Chicago high-rise that is currently in development.

Deutsche filed the suit Friday, charging that Trump defaulted on the loan earlier this month by not paying off $334.2 million due to Deutsche Bank.

This after Trump filed suit accusing Deutsche Bank of denying extension of a Nov. 7 maturity date for a $640-million loan.

Trump is claiming the lenders are harming condo-hotel unit sales and that a "force majeure" clause in the loan agreement applies, since the world financial crisis is an extraordinary event that permits a loan extension.

Oh boy...

Friday, November 28, 2008

Airlines Have Nice Day on Wall Street as Crude Oil Drops 5%

It was a good day for the airline industry on Wall Street as crude oil dropped 5% due to speculation the Organization of Petroleum Exporting Countries could wait until December before slowing down production.

The AMEX Airline Index climbed up 3.2% to 20.54 points. 12 of the 13 companies listed in the AMEX Airline Index were up on the day.

The big winners were Brazil's Gol Linhas up 11% to $3.92, and Delta Air up 4.6% to $8.81.

The Markets closed early today at 1 p.m. E.T.

Thursday, November 27, 2008

President Bartlet calls the Butterball Hotline

Happy Thanksgiving Everyone!!

Former UBS Executives Give Back $58 Million in Bonuses

A Statement was released today by Chairman Peter Kurer during a UBS shareholders meeting to vote on the bank's plan to accept government aid. In his statement Kurer said, "I would very much like to see more bonuses waived or returned in the interest of the bank. I am therefore continuing to hold discussions on the topic."

The exec's who have refused or returned bonuses is former CEO Peter Wuffli (12 Million Franc), the ex-chairman Marcel Ospel and former board members Stephan Haeringer and Marco Suter, have either returned or refused an additional 33 million francs.

Other former executives not mentioned have given up a further 22 million francs, Kurer said in his statement.

In a concession to shareholders Kurer also said the bank will allow another investigation into its losses and the role of former executives, including whether it should take legal action against any individuals.

Earlier reports from both UBS and the Swiss Federal Banking Commission found no evidence of individual breaches of duty by any current or previous senior executives, Kurer added.

"There is currently no actual or legal evidence that would lead one to believe a lawsuit regarding responsibility would be successful against former or present senior executives," he said.

Shares of UBS rose 3% in midday trading.

Wednesday, November 26, 2008

Borders' shares down 40% to 68 cents - Management Not Going to Sell to Eager Buyers

It was not a good day for Borders Group Bookstores. After reported massive losses and dwindling sales the company learned they would be kicked out of the S&P MidCap 400. After all this, they announced they are not even contemplating a sale offer from Pershing Square Capital Management.

After the close of the market Borders announced a third quarter loss of $172.2 million, which equates to $2.85 a share. This time last year they were reporting a loss of $40 million, or 68 cents a share.

Standard & Poor's announced that since Borders' market capitalization had fallen to around a tenth of its requirement, the company will be replaced by precision instrument maker Mettler-Toledo International.

Borders' also announced that it has updated its "strategic alternatives process" which have included the sale of company and/or certain arms such as Paperchase Products. But according to Borders' the sale is now off the table. And this was Borders' decision not Pershings evidently.

The company said in a statement, "With respect to the sale of the company, management is no longer contemplating a transaction."

I guess this is why I am a blogger that has a following of 6 people and not the CEO of a major market Bookseller. But I would be at least entertaining the idea of selling my sinking ship to enthusiastic private equity bidders.

Tuesday, November 25, 2008

Feds Unveil Yet Another Super Cool Plan

This morning Treasury Secretary Henry Paulson introduced a pair of new programs that will give $800 Billion to help unfreeze the consumer debt market. Mr. Paulson calls this "vital to supporting the economy."

Paulson said in a statement this morning that consumer debt such as credit cards, auto loans and student loans essentially came to a halt in October. These new programs are aimed to get lending back to more normal levels.

Paulson said all the government programs have been aimed at supporting the lending that is vital to the economy.

This whole situation reminds me of the Thanksgiving Day pick-up football games we used to play back when I was a kid. My older brother who played all-time quarterback would bring us into a tight huddle and detail out this genius play which we were going to execute with fine precision. I would cut right, then left, then run for 20 yards, button-hook back and he would provide with a perfect pass right on the numbers. Without fail, my brother would call hike and then immediately abandon the long thought out plan and just run with the ball.

Mr. Paulson is just running with the ball.

Monday, November 24, 2008

Government Agrees to Become CitiGroup's Largest Shareholder

Citigroup shares have soured this morning to more than 60% after federal officials agreed to a $326 billion rescue. The government will invest $20 billion directly to Citigroup and will guarantee up to $306 billion of Citi's troubled assets. The deal will give the government control over dividend limits and executive bonuses.

This is the first time the government has absorbed bad assets rather than inject money directly into financials.

This also makes the US government the largest shareholder of the failing bank at a 7.8% stake, just behind Saudi Prince Alwaleed bin Talal at 5% and the government of Abu Dhabi at 4.9%

It's crazy to think that at this exact time a year ago, the stock market valued Citi at $180 billion. Today its market capitalization stands at $20 billion and its share price has shriveled to just $3.75, a 16-year low.

This rushed design was put together this weekend with intensive negotiations involving the Treasury, the Federal Reserve and the Federal Deposit Insurance Corp.

Sunday, November 23, 2008

GM and Ford To Get Rid of Some Private Planes They Don't Like Totally Need...Maybe

Even though GM CEO Rick Wagoner and Ford CEO Alan Mulally are required by their companies to fly by private aircraft for security reasons, they think they may be able to part with their private jets.

Of course this has nothing to do with their recent excursion to Washington to beg for money. Wilkinson said the decision to return the leased corporate jets was made before this week's hearings and that the company in September returned two other of the seven jets it had at the beginning of the year.

It's interesting Wilkinson would not have mentioned this when he was being battered around during the hearing held by the U.S. House Financial Services Committee.

According to Ford's proxy, Mulally was required to use Ford aircraft for all business and personal air travel in 2007 for "security reasons" and his family and guests were allowed to accompany him.

The arrangement also covers travel by Mulally's wife, children and guests on company aircraft for personal reasons without him at company expense upon his request to "ease the burden" of moving to Michigan and away from family in Seattle, according to the proxy.

Saturday, November 22, 2008

The 20th, 21st and 22nd Banks This Year to Fail Amid the Ongoing Financial Crisis

The FDIC said Friday evening that U.S. Bank (USB - 22.53, +0.41, +1.9%) , located in Minneapolis, has acquired the banking operations of Downey Savings and Loan Association, F.A., Newport Beach, Calif., and PFF Bank & Trust, Pomona, Calif.

Downey Savings currently has assets totaling $12.8 billion and total deposits of $9.7 billion. PFF Bank has assets of $3.7 billion and $2.4 billion in total deposits, according to the FDIC.

The 213 branches of Downey Savings and Loan and PFF Bank & Trust will reopen as branches of U.S. Bank.

Downey Savings and PFF are the 21st and 22nd banks to fail in the U.S. this year alone.

In addition Downey Savings and PFF Bank closures, the FDIC and Georgia regulators announced the seizure of Loganville, Ga.-based The Community Bank on Friday. It was the 20th bank failure this year amid the ongoing financial crisis.

The Community Bank's branches will reopen Monday as Bank of Essex, as deposits have been already transferred.

The Community Bank had total assets of $681 million and total deposits of $611.4 million as of Oct. 17.

GM Not About to Rule Out Bankruptcy

The Wall Street Journal Online has reported that GM's board has come to the conclusion that seeking government funding is the company's top priority but is not dismissing the possibility of a bankruptcy filing.

WSJ Online on Friday reported that the company said its board had discussed bankruptcy but didn't see that as a "viable solution to the company's liquidity problems." A GM spokesman, Tony Cervone, told the newspaper that management is considering doing everything in its power to avoid a filing. Wagoner declined to be interviewed and several board members could not be reached for comment on Friday.

On Friday, General Motors shares closed at $3.06, up 18 cents, or 6.25%. Last year at this time, the stock was trading around $42.

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., sent a note to the 3 chief executives of the Detroit automakers that details what the lawmakers mean by "viability" for their firms and accountability to taxpayers.

The letter said the companies must lay-out their current operating cash positions, provide estimates of the terms of the loan requested, bar the payment of dividends and excessive executive compensation and demonstrate the companies' abilities to achieve strengthened fuel efficiency requirements.

Pelosi also denied Chapter 11 bankruptcy as an alternative for the Big 3. "I just think that would be digging a hole far too deep," she said, adding that such a scenario would prove devastating for workers, the economy and the U.S. manufacturing base.

Stocks to Watch for Monday

Hewlett Packard (HPQ - 34.64, +2.83, +8.9%) is said to be reporting fourth-quarter earnings of $1.01 a share in the fourth quarter, according to analysts.

Campbell Soup (CPB - 36.27, +0.85, +2.4%) should report first-quarter earnings of 77 cents a share, according to analysts.

Target Corp. (TGT - 28.08, +0.08, +0.3%) said it has rejected proposals by the hedge fund firm Pershing Square regarding its real estate portfolio. Ackman had proposed that Target spin off the land it owns into a real estate investment trust in hopes of improving the company's value.

Sprint Nextel Corp.'s (S - 1.71, +0.34, +24.8%) John Garcia, who has been overseeing Sprint's CDMA business, has announced he is leaving the company. The reasons for Garcia's departure are not clear, according to reports. Keith Cowan, president of strategy and corporate development will take over as an interim replacement while Sprint searches for a successor to oversee the unit which controls 70% of Sprint's customer base.

CBRL Group (CBRL -11.64, -0.13, -1.1%) is projected to announce earnings of 50 cents a share in the first quarter, says a FactSet Research survey.

US seeks $300bn in Gulf

A report from Kuwait's daily Al-Seyassah has mentioned that the United States has asked four Gulf states for about $300bn to help it curb the global financial meltdown, AFP has cited. The daily has quoted 'highly informed' sources that Washington has asked Saudi Arabia for $120bn, United Arab Emirates for $70bn, Qatar for $60bn and $40bn from Kuwait.

Obama outlines plan to create 2.5M jobs

New York (CNN) -- Saying that moving quickly is imperative, President-elect Barack Obama on Saturday offered an outline of his economic recovery plan to create 2.5 million jobs by 2011, saying American workers will rebuild the nation's roads and bridges, modernize its schools and create more sources of alternative energy.

"These aren't just steps to pull ourselves out of this immediate crisis," Obama said in the weekly Democratic address, posted on his Web site. "These are the long-term investments in our economic future that have been ignored for far too long."

Details of the plan are still being worked out by his economic team, Obama said, but he hopes to sign the two-year, nationwide plan shortly after taking office January 20.

He referred to figures out this week showing that new home purchases in October were the lowest in 50 years, and that 540,000 new unemployment claims had been filed -- the highest in 18 years.

"We must do more to put people back to work and get our economy moving again," he said. More than a million jobs have been lost this year, he said, and "if we don't act swiftly and boldly, most experts now believe that we could lose millions of jobs next year."

The plan will be aimed at jump-starting job creation, Obama said, and laying the foundation for a stronger economy.

"We'll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children and building wind farms and solar panels, fuel-efficient cars and the alternative energy technology that can free us from our dependence on foreign oil and keep our economy competitive in the years head," he said.

He noted he will need support from both Democrats and Republicans to pass such a plan, and said he welcomes suggestions from both sides of the aisle.

"But what is not negotiable is the need for immediate action," he said. "Right now, there are millions of mothers and fathers who are lying awake at night wondering if next week's paycheck will cover next month's bills. There are Americans showing up to work in the morning, only to have cleared out their desks by the afternoon. Retirees are watching their life savings disappear, and students are seeing their college dreams deferred. These Americans need help, and they need it now."

Throughout history, he said, Americans have been able to rise above their divisions to work together, he said.

"That is the chance our new beginning now offers us, and that is the challenge we must rise to in the days to come," Obama said. "It is time to act. As the next president of the United States, I will." To top of page