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Turkey"s standoff with Greece over Aegean
oil rights appeared at an end after the government said it had
been assured Athens would not start prospecting in disputed
waters.
A Foreign Ministry statement last night hinted Turkey was
claiming victory. A Greek-based international consortium, North
Aegean Petroleum Co., Had given up plans to start searching for
oil in international waters east of Thasos island, it said.
"In the same way it has been understood that Greece will
also not undertake oil activities outside its territorial
waters," the statement added.
An Ankara Radio report monitored in London said Foreign
Minister Vahit Halefolu had called on Greece to engage in
dialogue over the dispute. It was impossible to resolve the
dispute by crises, he was quoted as saying.
"We call on Greece to come and engage in a dialogue with us
- let us find a solution as two neighbours and allies should,"
he said.
The radio said Halefoglu had briefed the leaders of a
number of the country"s political parties on the latest
developments.
Turkey sent the survey ship Sismik 1 into the Aegean
yesterday, flanked by warships, to press its case but having
earlier said it would go into disputed waters, declared the
vessel would stay in Turkish areas.
Prime Minister Turgut Ozal, in London on his way home after
heart surgery in the United States, is expected to receive an
ecstatic welcome from thousands of Turks when he returns today.
He was in defiant mood last night, telling Turkish radio:
"We can never accept that Greece should confine us to the
Anatolian continent. If there are riches under the sea, they
are for mankind."
Despite the end of the crisis, Turkish officials
acknowledged that the underlying dispute over delimiting the
continental shelf in the Aegean remained unsolved.
Turkey alleged that the consortium"s plans would have
infringed the 1976 Berne agreement between the two countries,
which called for a moratorium on any activities until the
delimitation was agreed. Greece earlier this month declared it
considers the accord inoperative.
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The Emirates Industrial Bank has
predicted a modest economic recovery in the Gulf Arab states
following higher oil revenues.
A bank study, carried by the Emirates news agency WAM, said
total oil revenues of the six Gulf Cooperation Council (GCC)
countries were likely to reach 39 billion dlrs this year from
33.5 billion in 1986.
The GCC groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia
and the United Arab Emirates (UAE).
The bank said the improvement would result from higher oil
prices made possible by last December's OPEC accord to restrain
overall group production.
These curbs have pushed up oil prices from around eight
dollars a barrel in mid-1986 to around 18 dlrs.
"All signs point to the possibility of a modest recovery in
the economies of these (GCC) countries, although this expected
growth will not be similar to that of the (1970s) boom years,"
the study said.
It added, however, that GCC states would experience higher
budget deficits this year because of needs arising from past
recession and the difficulty of making fresh spending cuts.
The study said the combined GCC bugdet deficits would rise
to 23.2 billion dlrs from 17.9 billion last year.
It said lower oil exports cut the GCC states' combined
trade surplus to 18 billion dlrs in 1986 from 21.5 billion in
1985.
The UAE suffered a 19.5 pct drop in gross domestic product
to 77.6 billion dirhams last year from 96.4 billion in 1985, it
added.
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Gulf Arab states must coordinate
economic policies more closely before moving towards their goal
of a unified currency system, the President of the Arab Bankers
Association said.
Hikmat Nashashibi told a news conference at the end of an
Arab currency traders meeting: "We have to start with
coordination of fiscal policies as a prerequisite for a common
system of currencies ... There is quite a substantial way to go
yet."
He said only then would a unified Gulf currency system be a
plausible project.
The six nations of the Gulf Cooperation Council -- Saudi
Arabia, Kuwait, Bahrain, Oman, Qatar and the United Arab
Emirates -- have held a series of meetings this year to
examine linking their currencies to a single peg in a system
which bankers say could be modelled on the European Monetary
System (EMS).
At present, five currencies are linked either officially or
in practice to the U.S. Dollar, while the Kuwaiti dinar is
pegged to a trade-weighted basket of currencies.
A common currency system or EMS-style "grid" would, in
theory, foster regional trade by providing a basis for stable
exchange rates, but Nashashibi said inter-Arab trade is at a
very low ebb and capital flows between Gulf states remain
small. "Capital markets in the Arab world are still in their
infancy," he said.
Nashashibi said lack of experience among Arab banks, a
paucity of financial instruments and a legal framework that
often does not recognise the western banking concept of
interest have hampered the growth of Arab markets.
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Italy is to modify restrictions limiting
the amount of lira cash that can be brought in and out of the
country, the Foreign Trade Ministry said.
A statement said Foreign Trade Minister Rino Formica has
signed a measure lifting currency regulations that currently
impose a 400,000 lire limit on the value of lira bank notes
that can be brought into Italy. It did not say when the new
measure would come into force.
In future, there will be no limit to the amount of lira
bank notes both residents and non-residents can bring into
Italy.
The statement said the 400,000 lire limit would remain for
Italian residents wishing to take cash out of the country, but
non-residents could re-export lira cash if they made
appropriate declarations at customs points.
It said the lifting of the restrictions "reinforces the
international status of the lira and meets the requirements
expressed several times by foreign exchange dealers."
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The Inter-Arab Cambist Association
(ICA) elected Abdullah al-Dakhil of Kuwait's Burgan Bank its
new chairman, succeeding Hani Ramadan of Beirut Riyad Bank for
a three-year term, ICA officials said
The annual meeting elected three Vice-Chairmen -- Ezzedine
Saidane of Banque Internationale Arabe de Tunis, Mohammed Osman
of Societe Bancaire du Liban and Walid Nasouli of Morgan
Guaranty Trust Co of New York.
Ibrahim Buhindi of the Saudi National Commercial Bank in
Bahrain and Imad Bata of Finance and Credit Corp of Jordan were
elected Secretary and Treasurer, respectively.
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Turkey pulled warships back from close
escort of its Sismik 1 survey ship as the threat of conflict
with Greece over oil rights in the Aegean Sea abated.
The semi-official Anatolian Agency said naval vessels ended
their close protection of the ship as it continued work in
Turkish waters but were following it at a distance.
Popular newspapers headlined what they saw as Turkish
resolve and international pressure forcing Greece to pull back
from planned exploration in disputed international waters.
"Intense United States and NATO efforts bore fruit: Greece
will stay in its national waters," said the daily Gunes. The
top-selling Hurriyet topped its front page with: "Our resolute
stand made Greece see reason."
But two newspapers, Cumhuriyet and Milliyet, noted in
identical headlines -- "Crisis Frozen" -- that the basic
disagreement over exploration rights remained unsolved.
The confrontation eased after the Turkish government said
it had been assured Athens would not begin prospecting in
disputed waters.
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Japan is seeking to prevent its computer
chips dispute with the U.S. From erupting into a full-scale
trade war, government officials said.
"We hope that the dispute on this specific issue won't have
an adverse effect on our overall relationship with the United
States," a Ministry of International Trade and Industry (MITI)
official said.
On Friday, Washington announced plans for as much as 300
mln dlrs in tariffs on Japanese electronic goods for Tokyo's
alleged failure to live up to a bilateral computer chip pact.
That agreement, reached last year after heated
negotiations, called on Japan to stop selling cut-price chips
in world markets and to buy more American-made semiconductors.
Foreign Ministry officials immediately tried to isolate the
fall-out from the dispute by seeking to separate it from Prime
Minister Yasuhiro Nakasone's planned trip to Washington at the
end of April.
While Japan has already done about all it can to make sure
the chip pact is working, the government is studying measures
it can take in other fields to defuse American anger and ensure
the trip's success, they said.
"The perception of Japan in the (U.S.) Congress is very bad,"
one official told Reuters. "We would very much like to do
something to respond to that."
In an apparent effort to prevent the chip dispute from
spreading to other areas, MITI officials sought to depict the
U.S. Action as a severe warning to Japanese semiconductor
makers, not to the government.
Faced with a belligerent domestic chip industry and an
angry American Congress, the Japanese government has been
forced to walk an increasingly fine line in the semiconductor
dispute, trade analysts said.
They said that it was an open secret that Japan's largest
chip maker, NEC Corp, was not happy with what it viewed as the
draconian measures MITI was taking to implement the pact,
included enforced production cuts.
The angry response of Japanese chip makers yesterday to the
announcement of the U.S. Tariffs highlighted the difficulties
the government faces in taking further action.
"Japanese semiconductor manufacturers have complied with the
U.S./Japan agreement," said Shoichi Saba, Chairman of the
Electronic Industries Association of Japan.
He accused the U.S. Of being "irrational." He said the U.S.
Action had made the bilateral chip pact "meaningless."
Saba's comments contrasted with those of Prime Minister
Yasuhiro Nakasone, who said Tokyo wanted to solve the dispute
through consultations.
Japan is expected to send a high-level official to
Washington early next month to try to convince the U.S. Not to
go ahead with the tariffs on April 17.
Trade analysts say Tokyo is likely to outline industry
plans to step up purchases of U.S. Chips and to propose a joint
investigation into Washington's allegations of chip dumping.
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The U.S. Expects more harmonious
talks than usual during French Prime Minister Jacques Chirac's
first official visit this week as frequently rancorous disputes
between the two countries begin to fade.
"The Libyan bombing is a thing of the past, the trade war
didn't happen and we have reached reasonably good cooperation
on terrorism," one U.S. Official told Reuters.
"It looks like a reasonably harmonious visit in prospect,
more harmonious than usual."
Since taking office a year ago, Chirac has been obliged to
deal with a series of potentially serious disputes with the
United States.
During the U.S. Bombing of alleged terrorist targets in
Libya last April, France refused to allow British-based U.S.
Planes to overfly its territory, forcing them to take a
circuitous route. That angered Washington.
The U.S. Officials, who asked not to be identified, said a
year ago Washington felt the French were not taking strong
enough action against terrorism. "Now they are. We're pleased
and they are pleased that we are pleased," one said.
More recently, a dispute over U.S. Access to the grain
markets of Spain and Portugal after they joined the European
Community threatened to become a trade war.
In retaliation for what Washington saw as deliberate
Community moves to exclude U.S. Grain, the United States was
poised to impose swingeing tariffs on European Community food
imports and a major trade war was averted at the last minute.
Last week, the forces of President Hissene Habre of Chad,
supported, trained and armed by Paris and Washington, scored a
major success by pushing Libyan troops out of their last bases
in northern Chad.
A French official added: "There is also a common interest in
getting Japan to cut its trade surplus with the rest of the
world by opening up its markets."
Although relations have improved markedly between the two
countries, many irritants remain. At the top of the list is the
Community's common agricultural policy (CAP).
To Washington, as one official put it, "CAP is the root of
all evil" in international food trade because it subsidises
farmers and sells vast amounts of excess produce at below world
prices, thereby eating into U.S. Markets.
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Year ended December 31, 1986.
Group net profit 30 mln marks vs 35 mln.
Balance sheet total 61.50 billion marks vs 63.67 billion.
Credit volume 42.00 billion marks vs 43.15 billion.
Parent bank net profit 20 mln marks vs 20 mln.
Transfer to trades union holding co 80 mln marks vs 80 mln.
Payment to open reserves 20 mln marks vs 20 mln.
Balance sheet total 48.67 billion marks vs 49.01 billion.
Partial operating profit 182.6 mln marks vs 313.7 mln.
Interest surplus 897.9 mln marks vs 981.1 mln.
Surplus on commission 208.8 mln marks 188.1 mln.
Ordinary expenditure 969.7 mln marks vs 909.7 mln.
Earnings from subsidiaries through profit transfer
agreements 494.2 mln marks vs 54.2 mln.
Earnings from writing back provisions 326.5 mln marks vs
65.6 mln.
Published risk provisions 736.3 mln marks vs 224.0 mln.
Credit volume 32.63 billion marks vs 33.51 billion.
Group figures for 1986 exclude <BSV Bank fueer Sparanlagen
und Vermoegensbildung AG> which no longer consolidated.
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Bank fuer Gemeinwirtschaft AG
<BKFG.F>, BfG, partial operating profits fell to 182.6 mln
marks in 1986 from 313.7 mln in 1985, new majority shareholder
Aachener und Muenchener Beteiligungs-AG <AMVG.F>, AMB, said.
But total operating and extraordinary profits, including
earnings from currency and securities trading on the bank's own
account and earnings from the sale of holdings in other firms,
were more than double the previous year's level, AMB said.
BfG's 1986 accounts were included in a prospectus for AMB's
capital increase, which is to finance the insurance company's
acquisition of 50 pct plus one share of BfG.
Despite the fall in partial operating profits, BfG paid an
unchanged 20 mln marks into open reserves and transferred an
unchanged 80 mln marks to its trade union holding company,
<Beteiligungsgesellschaft fuer Gemeinwirtschaft AG>, from which
AMB has acquired the majority stake.
The bank has said its business last year suffered from the
turbulence around the troubled trade-union-owned housing
concern Neue Heimat.
AMB said the 500 mln mark drop in BfG's business volume to
50.1 billion marks affected the interest surplus.
The interest surplus, which fell to 897.9 mln marks from
981.1 mln, was also depressed by the 0.1 point fall in the
interest margin to 1.9 pct.
A rise in the surplus on commission to 208.8 mln marks from
188.1 mln was not enough to compensate for this.
The rise in total operating profits enabled BfG to step up
risk provisions, with country risks particularly emphasised
because of the continuing difficulties of some countries.
Disclosed risk provisions, which under West German
accounting rules do not necessarily reflect the full amount,
rose to 736.3 mln marks from 224.0 mln.
BfG's parent credit volume eased to 32.63 billion marks in
1986 from 33.51 billion. Foreign debtors accounted for 24 pct
of this credit volume, and Latin American debtors accounted for
14.7 pct of total lending to foreigners.
BfG posted extraordinary earnings from the sale of 25.01
pct of <Volksfuersorge Deutsche Lebensversicherung AG>, 74.9
pct of <BSV Bank fuer Sparanlagen und Vermoegensbildung AG> and
five pct of <Allgemeine Hypothekenbank AG>. The sale was linked
to AMB's acquisition of a majority of BfG.
These sales show up as 494.2 mln marks from profit transfer
agreements and 326.5 mln from writing back risk provisions.
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The Bank of Japan has already purchased
more than one billion dlrs in intervention since the opening
and continues to buy the U.S. Currency, dealers said.
The central bank was supporting the dollar against the yen
amid heavy selling pressure from investment trusts and
securities houses which had pushed the dollar as low as 144.75
yen earlier this morning, they said.
The dollar recovered slightly from the intervention and was
trading around 145.00, they added.
It had opened in Tokyo at 145.80 yen.
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Bank of Japan governor Satoshi Sumita
said he does not expect the dollar to remain unstable and fall
further.
He told a Lower House Budget Committee in Parliament that
the Bank of Japan would continue to cooperate closely with
other major nations to stabilize exchange rates.
The central bank has been keeping extremely careful watch
on exchange rate movements since last week, he said.
He said the dollar would not continue to fall because of
underlying market concern about the rapid rise of the yen.
Sumita said the currency market has been reacting to
overseas statements and to trade tension between Japan and the
U.S. Over semiconductors.
The yen's tendency to rise will prevent Japan from
expanding domestic demand and undertaking necessary economic
restructuring, he said.
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Finance Minister Kiichi Miyazawa said
that the dollar's drop today to 145 yen is partly attributable
to the perception inside and outside Japan that the country has
failed to fulfill its promise to expand domestic demand.
He told a Lower House budget committee in Parliament that
it was natural for other nations to think that Japan is not
doing enough because of the delay in the passage of the 1987/88
budget.
The budget has been delayed by opposition boycotts of
Parliament to protest government plans for a new sales tax.
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Bank of Japan governor Satoshi Sumita
said the central bank will carefully consider its monetary
policy in light of the recent sharp fall of the dollar.
Asked if the Bank of Japan will consider a further cut in
its discount rate, he said he now thinks the bank will have to
carefully consider its future money policy.
He told a Lower House Budget Committee in Parliament that
credit conditions have been eased by the five discount rate
cuts by Japan since the beginning of last year.
Japan must now be especially careful about a flare-up in
inflation, with money supply growth accelerating, he said.
Sumita said the central bank would continue to make a
judgement on monetary policies while watching consumer prices,
exchange rates and economic and financial conditions both in
and outside Japan.
Asked if the September 1985 Plaza agreement was a failure
because the dollar had fallen too far, Sumita said he still
thought the pact was a good one in the sense that it had
corrected the overvaluation of the dollar. But the Plaza accord
did not set any target for the dollar's fall, he said.
The dollar's steep fall stems from the market's belief that
the trade imbalance will continue to expand, he said.
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The United States and Japan will
soon settle their trade dispute over semiconductors, U.S.
Commerce secretary Malcolm Baldrige said on television.
Baldrige, referring to the U.S.-Japan trade agreement on
semiconductors, said: "Their government wants to live up to it.
Their industries haven't been doing it, and I think we'll have
a good settlement to spare both sides."
"I think the Japanese understand full well that they haven't
lived up to this commitment," he said.
He added: "I do not think there will be a trade war at all."
On Friday, Washington announced plans to put as much as 300
mln dlrs in tariffs on Japanese electronic goods from April 17,
because of Tokyo's failure to observe the agreement.
The officials said the tariffs would be ended as soon as
Japan started adhering to the agreement. But they said there
was little chance Japan could react quickly enough to avert the
higher tariffs.
Baldrige said the Reagan administration hoped the strong
U.S. Action against Japan would convince Congress to tone down
protectionist trade legislation now being drafted.
He denied the action had been taken for that reason.
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IRAQ SAYS IRANIAN OIL NETWORK ATTACKED
BAGHDAD, MarcKraq said its warplanes attacked the pipeline
network through which oil is pumped to Iran's main oil terminal
at Kharg Island in the northern Gulf.
"Large numbers of our warplanes attacked the installations
where the pipelines .... Pump oil from Ganaveh to Kharg island,
turning them into rubble and setting them ablaze ...," a
military spokesman said.
He did not give the exact location of the area attacked but
Ganaveh terminal is on the Iranian Gulf coast some 30 miles
northeast of Kharg Island, which itself has been attacked at
least 135 times since August 1985.
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<BTR Nylex Ltd> said it will increase
its takeover offer for Borg-Warner Corp's <BOR> listed unit,
<Borg-Warner (Australia) Ltd> (BWA) to five dlrs each from four
dlrs for all issued ordinary and preference shares.
The new offer values the diversified auto parts
manufacturer's 27.22 mln ordinary shares and 13.22 mln first
participating preference shares at 202.2 mln dlrs.
Formal documents will be sent to shareholders as soon as
possible, it said in a brief statement.
BTR Nylex, which manufactures rubber and plastic products,
first bid for BWA in late January.
As previously reported, Borg-Warner Corp, which owns 65 pct
of BWA's ordinary shares and 100 pct of the preferences,
advised a month ago that it would not accept the offer.
This meant BTR Nylex's 50.1 pct acceptance condition could
not be met, BWA said in a statement reporting its parent's
decision.
BWA advised shareholders to ignore the offer and said other
parties had expressed interest in bidding for it.
But no other bid has yet emerged.
BTR Nylex is a 59.5 pct-owned listed subsidiary of
Britain's BTR Plc <BTRX.LON>.
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An investor group trying to acquire
GenCorp Inc said it would move to unseat the board of directors
and take other action if GenCorp refuses to discuss a 2.3
billion dlr takeover bid.
General Acquisition Co, a partnership of Wagner and Brown
and AFG Industries Inc <AFG>, reiterated in a statement sent to
GenCorp on Friday that it was willing to negotiate its earlier
offer of 100 dlrs a share for the tire, broadcasting, plastics
and aerospace conglomerate.
Analysts have speculated GenCorp could fetch at least 110
to 120 dlrs per share if broken up.
GenCorp officials declined to comment on the statement, but
a spokesman reiterated a request to shareholders to wait until
the board renders an opinion before making a decision on the
offer. GenCorp has said a statement would be made on or before
the company's annual meeting on Tuesday.
General Acquisition said the board could not carry out its
duties to shareholders and make an informed decision until it
has, "... Explored with us the ways in which our offer can be
revised to provide greater value to your shareholders."
General Acquisition added it was aware the board may be
reviewing alternative transactions, which might provide GenCorp
shareholders with a payment other than cash.
"If that is the case, you should recognise that our
additional equity capital may very well enable us to offer cash
and securities having greater value than GenCorp could provide
in any similarly structured transaction," it said.
It added GenCorp's board had an obligation to present any
alternative proposal to shareholders in a way that allowed
competing offers.
General Acquisition requested it be given a chance to bid
on a competitive and fair basis before any final decision was
made on any other buyout proposal.
The statement repeated the request GenCorp remove a "poison
pill" preferred share purchase rights to shareholders, making
any takeover more expensive.
It said it might take legal action, or seek the support of
shareholders in calling a special meeting to replace the board
and consider other proposals.
GenCorp should not accept any other proposal containing
defensive features, it said.
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Prime Minister Yasuhiro Nakasone said
that Japan and other industrialized nations committed
themselves in Paris last month to stabilize the dollar above
150 yen.
He told a Lower House Budget Committee in Parliament that
the six nations have taken measures, including market
intervention, to support the dollar above that level.
Finance Minister Kiichi Miyazawa told the same committee
that the six - Britain, Canada, France, Japan, the U.S. And
West Germany - had intervened aggressively since the dollar
fell below 150 yen.
Miyazawa said major nations are trying hard to stabilize
exchange rates.
Asked if there had been any change in the fundamentals of
each nation since the February 22 Paris accord, he said he did
not think the fundamentals themselves had changed
substantially.
But he said the market is sensitively looking at what is
happening in major nations. He did not elaborate.
Miyazawa added that it was difficult to say why there has
been such speculative dollar selling in the market.
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Year to December 31.
World group pre-tax profit 2.63 billion marks vs 3.04
billion.
World group turnover 40.47 billion vs 44.38 billion.
World group investment in fixed assets 2.66 billion vs 2.46
billion.
Parent company pre-tax profit 1.97 billion vs 1.91 billion.
Parent turnover 18.72 billion vs 20.46 billion.
Parent domestic turnover 7.10 billion vs 8.14 billion.
Parent foreign turnover 11.62 billion vs 12.32 billion.
Parent investment in fixed assets 1.14 billion vs 884 mln.
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Japan is becoming dangerously isolated
again as the U.S. And Europe feel they have been cheated by
Japanese promises to switch from export to domestic-led growth,
officials and businessmen from around the world said.
As the dollar today slipped to a record low below 145 yen,
making Japanese exporters and holders of dollar investments
grit their teeth harder, Finance Minister Kiichi Miyazawa said
there was a perception Japan had reneged on its promise.
The problem goes deep and centres on misunderstandings by
both sides over the key Maekawa report of April, last year.
The document was prepared by a private committee formed by
Prime Minister Yasuhiro Nakasone and led by former Bank of
Japan head Haruo Maekawa. It recommended that to stop friction
due to its large trade surpluses, Japan must "make a historical
transformation in its traditional policies on economic
management and the nation's lifestyle. There can be no further
development for Japan without this transformation."
Americans and Europeans took the report to heart and have
looked in vain for clear signs of this historic change. But the
Japanese remain doubtful about the short, or even medium term
prospects of totally transforming their economic habits.
The bubble of frustration against what appears as Japanese
prevarication burst last week. The U.S. Said it intended to
raise tariffs of as much as 300 mln dlrs on Japanese exports to
the U.S. On the grounds Japan had abrogated a bilateral
semiconductor pact.
British Prime Minister Margaret Thatcher threatened to
block Japanese financial firms from London after the Japanese
placed what the British say are restrictive conditions on a bid
by British firm Cable and Wireless to join a domestic
telecommunications joint venture.
On Friday, European currency dealers said European central
banks, annoyed at restrictive Japanese trade practises, might
leave Japan alone to intervene to staunch the rise of the yen.
Eishiro Saito, head of top Japanese business group
Keidanren, spotted the dangers inherent in such contradictory
views last November when he visited the European Community.
"Related to this matter of (trade) imbalance, the point that I
found to be of great cause for alarm during this trip to Europe
was the excessive degree of hope placed by the Europeans in the
results of the Maekawa report," he said.
"We explained that the process of restructuring the economy
away from its dependence on exports toward a balance between
domestic and external demand...Would take time," Saito said.
Saito's words were ignored. In February, EC Industrial
Policy Director Heinrich von Moltke came to Japan and said "I
only know that your government, under the leadership of
Maekawa, points to restructuring your economy into a less
outward looking, more inward looking one. It is the Maekawa
report which has attracted the most attention in Europe."
And Europeans and Americans want quick action. "A far better
answer than protectionism would be structural change within the
Japanese economy, the kind suggested by the Maekawa report. And
we hope to see changes occur in the near future," visiting
Chairman of General Motors Roger Smith said in March.
Such expectations are now ingrained, which was partly the
fault of Nakasone, who heralded Maekawa's report as a sea of
change in Japanese affairs, said U.S. Officials.
Months before the report was issued, U.S. And EC business
leaders met their Japanese colleagues to discuss the trade
problem.
"We are more anxious than ever that the new approach of the
Maekawa committee does lead to speedy and effective action,"
said EC Industrial Union leader Lord Ray Pennock.
"The important implication of the Maekawa report is that it
is finally looking to let Japanese enjoy the fruits of their
labour," said Philip Caldwell, Senior Managing Director of
Shearson Lehman Brothers.
Contents of the report were leaded well ahead of issuance.
Japanese officials say they are implementing the report as
fast as they can, said a European ambassador who has travelled
the country asking about this issue.
He said People mentioned many things in line with the
spirit of the report, including restructuring of the coal and
steel industries.
A major misunderstanding is that the private report was
government policy. Europeans are confused about this,
underlined by von Moltke's reference to the "leadership" of the
Maekawa report. Even so, Japanese officials point to last
September's government programme of new economic measures.
"Without endorsing the report as policy, officials point out
that the government has put its signature to a programme
designed to implement the report," the ambassador said.
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Indonesia has minimised the economic
impact of falling oil prices, kept inflation within limits and
boosted exports, Finance Minister Radius Prawiro said.
Indonesia was badly hit by last year's steep plunge in
crude prices, which cut revenue from oil exports by half.
But Prawiro was quoted by Indonesian newspapers as telling
President Suharto that inflation was kept to around nine pct in
the financial year ending tomorrow, against around 4.3 pct the
previous year.
Exports were estimated to have risen by seven pct, he said,
although he did not give complete figures.
The depressed economy forms the main backdrop to general
elections next month in Indonesia, a major producer of rubber,
palm oil, tin, timber and coffee.
Prawiro said 1986/87 had also been difficult because of the
appreciation of currencies like the yen and the mark against
the dollar, which increased Indonesia's debt repayments.
He said the economy would have suffered more from the world
economic recession if the government had not devalued the
rupiah by 31 pct last September.
In an editorial on the economic outlook, the Jakarta Post
said the government must press ahead with measures to
deregulate the economy to help boost non-oil exports.
The English-language daily said bigger export earnings were
needed to finance not only imports but also the country's
growing foreign debt, estimated at around 37 billion dlrs.
"About 50 pct of our foreign debt obligations fall due
within the next three to five years and will steadily increase
the debt servicing burden," the paper said.
However, end-investors were seen bargain hunting in
expectation of a further yen interest rate decline, dealers
said.
Most dealers were cautious in the face of the dollar's
nosedive today and the possibility of a U.S. Interest rate
rebound to halt further dollar depreciation.
A 4.7 pct coupon and volume of 1,400 billion yen for the
April 10-year bond proposed by the Finance Ministry this
afternoon were taken favourably by the market.
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Woolworth Holdings Plc <WLUK.L> said it
would make a 244 mln stg agreed bid for <Superdrug Stores Plc>
valuing the company's shares at about 696p each.
The offer would be made on the basis of 17 new Woolworth
ordinary shares for every 20 in Superdrug.
Woolworth said it had received acceptances from the holders
of 61 pct of Superdrug shares.
The bid is Woolworth's second attempt in recent months to
acquire a retail chemist chain. Earlier this year it negotiated
a possible bid for <Underwoods Plc> buit the talks were broken
off two weeks ago.
Full acceptance of the offer would involve the issue of
about 29.8 mln new Woolworth shares, or 14 pct of the enlarged
share capital. A cash alternative would offer 646p for each
share in Superdrug. Members of the Goldstein family have
accepted the offer for 11.7 mln shares, which have not been
underwritten.
Another major shareholder, Rite Aid Corp's Rite Investments
Corp unit, had accepted the offer for 9.9 mln shares, and would
take the cash alternative for 9.0 mln of these.
In the year to end-January, Woolworth reported pretax
profits sharply higher at 115.3 mln stg after 81.3 mln
previously.
In the year to end-February, Superdrug reported pretax
profits of 12.26 mln after 10.36 mln previously on turnover
that rose to 202.9 mln from 164.3 mln. Superdrug shares firmed
to 670p from 480p on Friday. Woolworth eased to 813p from 830p.
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The Japanese government appears to have
little new to offer to settle a dispute with the U.S. Over
computer chips, trade analysts and government officials said.
The U.S. Has threatened to impose tariffs worth up to 300
mln dlrs on Japanese electronics exports to the U.S., In
retaliation for Japan's alleged failure to keep a pact on the
microchip trade signed last September.
A Foreign Ministry official told Reuters "Japan has done
what it can, and now we must persuade the United States to wait
for those steps to take effect."
The U.S. Alleges that, in defiance of the September
agreement, Japan is still selling microchips at below cost in
non-U.S. Markets and refusing to open Japan further to U.S.
Chip sales. U.S. Tariffs are due to take effect on April 17.
Analysts noted Japan's Ministry of International Trade and
Industry (MITI) has already ordered chipmakers to cut
production in order to dry up the source of cheap chips sold in
third countries at non-regulated prices.
"I'm not sure MITI can do much more than it has," said
Jardine Fleming (Securities) Ltd analyst Nick Edwards.
A MITI official said the Ministry was not planning to call
for production cuts beyond those already sought, although it
would continue to press chip users to buy more foreign goods.
Spokesmen for some Japanese electronics firms said they
would consider buying more U.S. Chips. But a Matsushita
Electric Industrial Co spokesman said a rapid increase in
imports was not likely.
Most analysts said Japanese exporters would be hard hit if
the United States did implement the tariffs, which would be
levied on consumer electronics products rather than on
microchips themselves.
"If the tariffs remain in place for any length of time,
there will be complete erosion of exports to the United States,"
said Tom Murtha, analyst at James Capel and Co.
"The Japanese electronics industry is too powerful to be
stopped altogether, but recovery for the industry will be
delayed for another year," he said.
Some analysts said tariffs would also harm U.S. Industry by
stepping up offshore production and by reducing demand in Japan
for semiconductors U.S. Firms are trying to sell here.
"The American approach is full of contradictions," Jardine
Fleming's Edwards said.
"If they want to expand (U.S.) exports, the last thing they
want to do is hit the makers of the final products because that
hurts the final market," Edwards said.
But other analysts said the dispute reflects not just U.S.
Concern over what it sees as a strategic industry, but also
frustration with Japan's vast trade surplus. Some analysts
argued that to solve the semiconductor problem Japan may have
to take action beyond that pledged in the semiconductor pact.
Carole Ryavec, an analyst at Salomon Brothers Asia Ltd,
said "The major overall issue is to stimulate the domestic
economy and move away from an export-dependent economy."
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Remarks by Japan's Prime Minister
Yasuhiro Nakasone that last month's G-6 meeting agreed to
stabilize the dollar above 150 yen have come too late to
influence currency trading, dealers said.
After Nakasone's statement the dollar rose to 146.40/50 yen
from an initial low of 144.20/40 and New York's Friday finish
of 147.15/25. But the rebound was largely on short-covering,
they said.
"I think (Nakasone's) desperate," said a U.S. Bank foreign
exchange manager.
Nakasone told a Lower House Budget Committee in Parliament
that Japan and other industrialized nations committed
themselves in Paris last month to stabilize the dollar above
150 yen.
Finance Minister Kiichi Miyazawa told the same committee
that the six - Britain, Canada, France, Japan, the U.S. And
West Germany - had intervened aggressively since the dollar
fell below 150 yen.
"His (Nakasone) remarks should have been made and should
have had a bigger influence when the dollar was still above 150
yen," said P.S. Tam of Morgan Guaranty Trust.
Tam said the dollar has hit short-term chart targets and
is likely to rebound. But he warned of another dip to below 145
yen.
Dealers said the worsening trade relations between the U.S.
And Japan will continue to depress the dollar.
The trade issue has now become a political issue since the
Reagan Administration is facing uproar in Congress over
th3pYgks in cutting the country's 169.8 billion dlr trade
deficit, they said.
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Net profit 890 mln Luxembourg francs
vs 1.12 billion.
Turnover 57.8 billion francs vs 65.3 billion.
Cash flow 5.72 billion francs vs 6.70 billion.
Steel production 3.74 mln tonnes, down seven pct.
Board will decide on April 24 whether to pay a dividend. No
dividend has been paid since 1984.
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Japanese feed and starch makers actively
bought U.S. Corn last week, C and F basis, for July/September
shipment in view of bullish freight rates following active
inquiries by the Soviet Union, trade sources said.
Some said the makers were seen buying some 30 pct of their
requirements, estimated at about three mln tonnes for the
three-month shipment period.
"Belief is growing that freight rates will not decline
sharply from current high levels even in the usually sluggish
summer season because the Soviet Union's chartering is seen
continuing five to seven months from April," one source said.
The sources said Japanese trading houses were seen covering
a total of 500,000 tonnes of Chinese corn for shipment in May
to October. But they are believed to have not yet sold most of
the corn to end-users in anticipation of further corn price
rises in the world market.
Supply from Argentina and South Africa for July/September
is still uncertain. But the sources forecast supplies from
Argentina may fall to 400,000 to 500,000 tonnes from an
anticipated 800,000 in calendar 1987 and from South Africa to
700,000 to 800,000 tonnes from an estimated one mln in light of
tighter export availability.
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The recent deterioration in the
steel market makes it important for Arbed SA <ARBB.BR> to
maintain efforts to reduce costs, the company said in a
statement.
It reported that its competitive position had weakened
considerably in the second half of 1986, leading to a seven pct
cut in steel output over the whole of the year to 3.74 mln
tonnes.
Arbed had managed to make a 890 mln franc net profit,
slightly down from the 1.12 billion profit in 1985, thanks to
lower raw material costs and prudent management, the company
said.
Arbed said the early months of 1987 had seen the market
deteriorate further, but the decision of the European Community
to maintain anti-crisis measures, at least provisionally,
should under normal circumstances have a beneficial effect.
EC ministers have agreed to extend a quota production
system while discussions continue on an industry plan for
capacity reductions.
Arbed said in current conditions, cost cutting efforts
remain necessary to avoid any weakening of resources which have
been built up over the last three years.
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BASF AG said
the volatile currency situation last year, particularly the
fall of the dollar, led to sharp drops in turnover denominated
in marks and to price reductions for exports from domestic
production.
But in a statement accompanying year-end figures, the group
said it expected satisfactory business development over the
next months. "At the moment we do not expect any extraordinary
influences such as there were last year," it said. Orders in
hand and incoming orders were steady at a high level.
BASF reported 13.6 pct lower 1986 world group pre-tax
profit at 2.63 billion marks compared to 1985.
The unusual situation on the crude oil market last year
also produced a clear sales slide in the oil and gas sector and
forced price declines for petrochemical products, BASF said.
The fall in pre-tax profit corresponded to the losses on
stocks in the oil and gas sector at the beginning of 1986. In
the parent company, the positive earnings development
continued, it said, where pre-tax profit rose by 3.2 pct to
1.97 billion marks. The decline in parent company turnover was
balanced out by increased capacity use and price declines in
raw materials.
In 1986, world group turnover was off 8.8 pct at 40.47
billion marks compared to 1985, BASF said. Parent turnover fell
8.5 pct to 18.72 billion.
Turnover increases, with the exceptions of the sectors fine
chemicals and informations systems, had only been achieved in
those areas widened last year through acquisition in 1985.
Results from these had been taken only partly into the
fourth quarter of that year but fully included in 1986 data.
So far in the current year, the investment volume of the
parent company and the world group is exceeding that in 1986,
BASF said, without giving concrete figures.
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Bahrain is introducing a new domestic
money market regime to provide dinar liquidity aid centred on
the island's newly launched treasury bill programme.
The Bahrain Monetary Agency has issued a circular to all
commercial banks outlining a new policy from April 1 which
gives liquidity aid through sale and repurchase agreements in
treasury bills, or through discounting them.
The circular, released officially to Reuters, said current
arrangements for providing liquidity aid will no longer be
valid except "in quite exceptional circumstances."
Under the current system, the agency provides the island's
20 commercial banks with dinar liquidity by means of short-term
swaps against U.S. Dollars and, less frequently, by short-term
loans secured against government development bonds.
"The agency considers that it is now appropriate to replace
these operations with short-term assistance based on Government
of Bahrain treasury bills," the circular to banks states.
The agency said it will repurchase treasury bills with a
simultaneous agreement to resell them to the same bank at a
higher price which will reflect an interest charge.
The agency said it envisages the repurchase agreements will
normally be for a period of seven days.
Bahrain launched a weekly tender for two mln dinars of
91-day treasury bills in mid-December last year and has since
raised a total of 26 mln dinars through the programme.
Bahrain's commercial banks are currently liquid and have
been making little use of the traditional dollar swaps offered
by the agency. But banking sources said the new regime from
April 1 will mean banks cannot afford not to hold treasury
bills in case they need funds from the central bank.
Banking sources said more than half of the 20 banks hold
treasury bills, although the need by others to take up paper
could increase demand at weekly tenders and push down allotted
yields slightly.
Last week's yield was six pct, although the programme had
started at the end of last year with rates as low as 5.60 pct.
Banking sources said the cost of liquidity through
repurchase accords will not differ much from that on dollar
swaps. But a bank using dollars to obtain liquidity would
foresake interest on the U.S. Currency while the underlying
treasury bill investment is unaffected in a repurchase accord.
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The Bank of England said it forecast a
liquidity surplus of around 100 mln stg in the money market
today.
Among the main factors affecting liquidity, exchequer
transactions will add some 985 mln stg to the system today
while a fall in note circulation and bankers' balances above
target will add around 360 mln stg and 110 mln stg
respectively.
Partly offsetting these inflows, bills for repurchase by
the market will drain some 785 mln stg while bills maturing in
official hands and the treasury bill take-up will remove about
546 mln stg.
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Tesco Plc <TSCO.L> said <County Bank
Ltd> had bought 165,000 shares in <Hillards Plc> on its behalf,
increasing its stake to 5.4 pct. The shares were bought at
313.25p each.
Tesco is making an opposed 151 mln stg bid for Hillards.
Hillards shares at 0900 GMT were quoted one penny firmer at
317p while Tesco was one penny easier at 479p.
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Non-consolidated net profit 3.435
billion francs vs 2.330 billion.
Turnover 39.3 billion francs (no direct comparison)
Own funds 20 billion francs vs 9.2 billion after transfer
of 1.28 billion francs from profits and 8.5 billion from sale
of securities.
Note - company said the figure is slightly lower because
French branches have become group subsidiaries).
Proposed net dividend on ordinary shares 100 francs,
including 20 franc supplement due to the exceptional character
of results, vs 71.9 francs.
Note - Company was created in May 1986 by the merger of
(Royale Belge Vie-Accidents) and (Royale Belge
Incendie-Reassurance).
Vie-Accidents shareholders received eight new shares and
Incendie-Reassurance shareholders six for every share held in
the old companies.
Comparisons are therefore company calculations.
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Japan's ailing shipyards have won
approval from the Fair Trade Commission to form a cartel to
slash production to about half of total capacity for one year,
effective April 1, industry sources said.
The approval follows an act of parliament passed last week
designed to help the industry regroup and shed 20 pct of
capacity by March 31, 1988, Transport Ministry officials said.
The cartel, comprising 33 yards capable of constructing
ships of more than 10,000 gross tonnes, will limit newbuilding
output to a maximum of three mln compensated gross registered
tonnes in 1987/88, the Shipbuilders Association of Japan said.
Industry sources said the 33 will seek to renew the cartel
in 1988/89 in the belief demand will remain sluggish.
Last week's temporary act of parliament also allows
shipbuilders to receive favourable taxation terms plus up to 50
billion yen in compensation for liabilities incurred through
job losses and the sale of excess capacity.
Up to 30 billion yen has been allocated for purchasing
redundant land and equipment from shipbuilders.
The Ministry will start drawing up its restructuring
guidelines from April 1 and the yards will implement the
guidelines from September, industry sources said.
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The Indonesian rupiah has held steady
since its 31 pct devaluation against the dollar six months ago,
but has slipped against the mark and to a lesser extent against
the yen, according to central bank figures.
In the past month, the rupiah has fallen five pct against
the yen. Today's middle rate per 100 yen was 1,129.78 against
1,075.20 at end-February and 1,058.6 at devaluation in
September.
Bank Indonesia's quoted rate for the dollar, the main
currency for Indonesia's oil and gas exports, was 1,644.0
today, the same rate fixed at the time of devaluation.
The rate for the West German mark was 913.28 today, a sharp
drop from September when it was 786.06.
The British pound has risen to 2,657.93 against 2,429.83.
The value of the rupiah is set daily against a basket of
currencies by the central bank.
The rise in the value of the mark and the yen has hit
Indonesia by increasing its debt servicing levels. Its total
disbursed foreign debt is estimated by the World Bank at 37
billion dlrs.
Japan is one of Indonesia's key trading partners, taking
half its oil exports.
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Sweden's Wallenberg group said it
raised its holding in telecommunications maker Telefon AB L.M.
Ericsson <eric.St.> to 37.5 of the voting rights from 28.9 pct.
The move by the Knut and Alice Wallenberg Foundation, one
of the institutions at the core of the group of companies
formed by the late industrialist Marcus Wallenberg, further
consolidated group control over one of its key firms, analysts
said.
The foundation now controls 14.1 pct of Ericsson's voting
rights with 22.3 pct held by the group's investment companies
<AB Investor> and <Forvaltnings AB Providentia>.
The move comes after the Wallenberg group fought off a
hostile takeover bid earlier this month for match and packaging
conglomerate Swedish Match AB <smbs.St> from arms and chemical
concern Nobel Industrier AB <NOBL.ST> by increasing its stake
in Swedish Match to 85 pct from 33 pct.
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The Philadelphia Stock Exchange (PHLX),
a leading trader of currency options, plans to extend its
trading hours to serve Australasian and Far Eastern markets,
exchange president Nicholas Giordano said.
He told reporters the PHLX will open a new session between
1900 and 2300 hours U.S. EST from the beginning of the third
quarter this year.
The PHLX is also opening an office in Hong Kong to serve
clients in the region and educate financial markets about the
advantages of currency options, Giordano said.
Giordano was in Sydney to start an Asian-Pacific tour by
exchange executives promoting the hedging benefits of the
exchange-trade currency option market against existing
over-the-counter option trading during the local working day.
Currency options pioneered by the PHLX in 1982 had become
an accepted means of hedging against foreign exchange risk and
had grown in popularity, he said.
The PHLX now offered options in eight currencies, including
a new Australian dollar option, and traded an average 42,000
contracts daily with underlying open interest of more than 30
billion U.S. Dlrs.
Giordano said the exchange had been impressed with the
performance of its Australian dollar contract, which since its
introduction last year had regularly topped the French franc as
the third most popular traded option, with up to 8,000
contracts traded daily.
Having the Philadelphia exchange open during the
Asia-Pacific market day would open new hedging opportunities,
set a truer level for over-the-counter option trading, increase
arbitraging opportunities and give corporations and treasuries
access to a currency option market of much greater depth and
liquidity with the security of a clearing house, he said.
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Japanese Finance Minister Kiichi Miyazawa
expects the dollar to rebound soon, a Ministry spokesman said.
He quoted Miyazawa as telling Japanese reporters that major
industrial nations are aggressively intervening in currency
markets worldwide to prevent a dollar free-fall.
The minister believes that market forces will push the
dollar back up from its record low of 144.70 yen today,
according to the spokesman.
Miyazawa told the Japanese reporters the U.S. Unit fell
because Japanese investors sold dollars to hedge currency risks
before the close of the 1986/87 fiscal year on March 31.
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Slough Estates Plc <SLOU.L> said it
views the prospects during 1987 with confidence.
In a statement accompanying its 1986 results, it reported a
rise of over 10 mln stg in 1986 pretax profit to 49.6 mln stg
and said there are signs that the existing threat of excess
supply may be lessened in 1987. There has also been a return of
interest in industrial investment.
An external appraisal of the group's investment properties
was carried out last year which found their gross value to be
851.3 mln stg as at Dec 31.
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Rugby Portland Cement Plc <RBYL.L> said
it was well placed to operate in the new circumstances
following the ending in February of the 53-year old cement
manufacturers common price and marketing arrangements.
In a statement following the release of its 1986 results,
IT stated that the current year had started well. It reported
that pretax profits in the year rose to 35.46 mln stg from
21.84 mln previously on turnover higher at 313.3 mln after
252.2 mln.
The strong recovery of the first six months continued into
the second half, although U.K. Cement demand rose only
modestly. Results benefitted from cost cutting and higher
volumes.
The decision by the Cement Makers Federation to end the
pricing agreement reflected pressure from higher competition
due to growing imports and the possibility that the system
would be taken to the Restrictive Practices Court by the U.K.
Government. It stated that its John Carr unit benefitted from
strong organic growth, although overseas its Cockburn operation
had a difficult period with high maintenance costs and
increased depreciation charges.
The company is proposing to change its name at the next
annual meeting to <Rugby Group Plc>.
Rugby said it spent 27 mln stg on acquisitions in 1986. It
noted that its Western Australia hotels company had agreed to
sell the Parmelia hotel for 31.5 mln Australian dlrs, some
seven mln stg above end-1986 book value.
The results were largely in line with forecasts and Rugby
shares were little changed at 242p after 241 at Friday's close.
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Mannesmann AG <MMWG.F> said it has
reached a series of agreements giving it an indirect majority
stake in the <Fichtel und Sachs AG> car parts group.
The takeover is contingent on approval from the Federal
Cartel Office in West Berlin, a spokesman said, adding that
Mannesmann was confident the authorities would not block the
purchase.
Mannesmann is buying 75 pct of <MEC Sachs
Vermoegensholding> which owns 37.5 pct of Sachs AG, which in
turn holds 96.5 pct of Fichtel und Sachs. The MEC shares will
be bought from the granddaughters of the firm's founder.
Mannesmann is also purchasing a 25.01 pct stake in Fichtel
und Sachs from Commerzbank AG <CBKG.F> and has an option to buy
the bank's remaining 10 pct stake, a company statement said.
In addition to these firm agreements, Mannesmann is also
talking with the state-owned steel group Salzgitter AG
<SALG.H> on buying its 24.98 pct stake in Fichtel und Sachs.
This would give Mannesmann around 75 pct of Fichtel und Sachs.
Salzgitter said it decided to give up its own original
plans to seek a majority stake in Sachs after holding talks
with the government in Bonn.
Earlier this month Mannesmann disclosed that it might want
a majority stake in Sachs after previously saying it was
seeking to buy only a minority holding in the company, which
has annual turnover of 2.2 billion marks and employs 17,000.
The acquisition is part of Mannesmann's efforts to
diversify into high-technology areas and away from its previous
reliance on steel and pipe-making. More
A spokesman for the Federal Statistics Office later said
the anti-cartel authorities would probably rule on the takeover
in the new few weeks.
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British and Commonwealth Shipping Co Plc
<BCOM.L> said that it would reorganise its commercial and
service operations into a single public grouping with
autonomous management.
The group has expanded rapidly in the past year through the
672.5 mln stg acquisition of <Exco International Plc> and 90
mln bid for <Steel Brothers Holdings Plc>.
It noted that its operations were now divided between
financial services, including money broking, investment
management and forfaiting, and more traditional areas such as
aviation, hotels, commodity trading and office equipment.
It said that each sector had exciting prospects but
required different methods of management and financing.
B and C planned to form a new public company to hold the
commercial operations and envisaged it operating with a capital
of between 400 mln and 600 mln stg.
It has retained Barclays de Zoete Wedd to advise on the
introduction of independent investors to subscribe for
additional capital, and believes that the proportion of equity
capital held by outside investors would not exceed 20 pct of
the total.
The statement said that with the continued support of B and
C, together with outside capital, the new grouping would emerge
as a major group in its own right with the ability to take
advantages of opportunities as they arose. However, the group
would not seek a listing for the time being.
B and C also said that its chairman, Lord Cayzer, planned
to retire in June. The company proposed that he be appointed
life president and that current chief executive John Gunn
should take over as chairman.
B and C shares eased 11p to 459p at 1040 GMT.
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A Finance Ministry official said the
ministry has recently conducted a survey on foreign exchange
transactions by institutional investors but declined to say if
it was aimed at moderating their dollar sales.
However, financial market sources said they had heard the
ministry has asked life insurance and securities firms to
refrain from selling dollars, but they were unable to confirm
this directly.
Dealers said life insurance firms were not major sellers of
dollars in recent trading sessions because they had already
sold them to hedge risks.
Dealers said securities houses and trust banks on the other
hand have aggressively sold the dollar.
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The British Petroleum Co PLC (BP.L) oil
refinery at Grangemouth, closed after an explosion and fire
eight days ago, is expected to partially reopen next week, a
refinery spokesman said.
He said the entire 178,500 bpd refinery has been shut since
the accident which killed one person and damaged the site's
hydrocracker. The main units will resume operation next week
but the hydrocracker will be closed for an unspecified period.
The spokesman said the refinery had been operating at about
half its capacity since end-January due to overhaul work on
part of the complex. The overhaul is expected to end by late
April.
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The Bundesbank did not intervene as
the dollar was fixed lower at 1.8063 marks after 1.8231 on
Friday, dealers said.
Business calmed down after a hectic start, with European
operators sidelined because of uncertainty about the short-term
direction of the dollar, dealers said. "At the moment, all the
action is taking place in New York and Tokyo," one said.
The U.S. Currency traded within a 145 basis point range in
Europe, touching a low of 1.7940 and a high of 1.8085 marks.
But it remained within a narrow 40 basis point span around
1.8050 marks after the first hour of European trading.
Comments by Japanese officials and Bank of Japan dollar
support had pushed it above 145 yen and 1.80 marks after
falling as low as 144.50 and 1.7860 respectively in Tokyo.
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The Bank of England said it had not
operated in the money market during the morning session.
Earlier, the Bank revised its forecast of the liquidity
position to flat from its original estimate of a 100 mln stg
surplus.
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The gross size of the Asian dollar
market contracted to 197.2 billion U.S. Dlrs in January, down
3.4 billion dlrs from December, reflecting a decline in
interbank activity, the Monetary Authority of Singapore (MAS)
said in its latest monthly bulletin.
The assets stood at 151.7 billion dlrs in January last
year.
MAS said interbank lending fell in January to 140.9 billion
dlrs from 146.6 billion in December but rose from 102.0 billion
in january 1986 and interbank deposits to 154.0 billion against
159.4 and 117.1 billion, respectively.
Loans to non-bank customers increased to 40.1 billion dlrs
in January from 38.7 billion in December and 36.9 billion in
January, 1986.
Deposits of non-bank customers also increased in January to
34.9 billion from 33.8 billion a month ago and 27.7 billion a
year ago. REUTER
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Prime Minister Yasuhiro Nakasone said
that Japan and other industrialized nations committed
themselves in Paris last month to stabilize the dollar above
150 yen.
He told a Lower House Budget Committee in Parliament that
the six nations have taken measures, including market
intervention, to support the dollar above that level.
Finance Minister Kiichi Miyazawa told the same committee
that the six - Britain, Canada, France, Japan, the U.S. And
West Germany - had intervened aggressively since the dollar
fell below 150 yen.
Miyazawa said major nations are trying hard to stabilize
exchange rates.
Asked if there had been any change in the fundamentals of
each nation since the February 22 Paris accord, he said he did
not think the fundamentals themselves had changed
substantially.
But he said the market is sensitively looking at what is
happening in major nations. He did not elaborate.
Miyazawa added that it was difficult to say why there has
been such speculative dollar selling in the market.
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Japanese Finance Minister Kiichi Miyazawa
expects the dollar to rebound soon, a Ministry spokesman said.
He quoted Miyazawa as telling Japanese reporters that major
industrial nations are aggressively intervening in currency
markets worldwide to prevent a dollar free-fall.
The minister believes that market forces will push the
dollar back up from its record low of 144.70 yen today,
according to the spokesman.
Miyazawa told the Japanese reporters the U.S. Unit fell
because Japanese investors sold dollars to hedge currency risks
before the close of the 1986/87 fiscal year on March 31.
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Prime Minister Yasuhiro Nakasone sounded
a conciliatory note in Japan's increasingly bitter row with the
United States over trade in computer microchips.
"Japan wants to resolve the issue through consultations by
explaining its stance thoroughly and correcting the points that
need to be corrected," he was quoted by Kyodo News Service as
saying.
While expressing regret over America's decision to impose
tariffs on imports of Japanese electrical goods, Nakasone said
Tokyo was willing to send a high-level official to Washington
to help settle the dispute.
Government officials said Japan would make a formal request
next week for emergency talks and that the two sides would
probably meet the week after, just days before the April 17
deadline set by Washington for the tariffs to take effect.
Tokyo is expected to propose a joint U.S./Japan
investigation of American claims that Japanese companies are
dumping cut-price chips in Asian markets.
On Friday, Washington announced plans to put as much as 300
mln dlrs in tariffs on imports of certain Japanese electronic
goods in retaliation for what it sees as Tokyo's failure to
live up to their bilateral chip pact.
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Belgian starch manufacturer <Amylum NV>
is surprised and disappointed that its 675 mln dlr offer for
the European business of CPC International Inc <CPC.N> was
apparently rejected in favour of a lower 630 mln dlr bid by
Italy's <Gruppo Ferruzzi>, chairman Pierre Callebaut said.
Callebaut told Reuters that Amylum, a leading starch and
isoglucose manufacturer in which Britain's Tate and Lyle Plc
<TATL.L> holds a 33.3 pct stake, had made an undisclosed
initial takeover offer for CPC's European corn wet milling
business by the close of CPC's tender on March 17.
The offer was raised on March 24 to a final 675 mln dlrs in
cash after CPC told Amylum its initial bid was below Ferruzzi's
630 mln stg offer, Callebaut said.
On the same day, CPC announced it had agreed in principle
to sell its European business to Ferruzzi in a 630 mln dlr
deal.
Noting that Ferruzzi was studying a public offering of
shares in its unit <European Sugar (France)> to fund the CPC
takeover, Callebaut said Amylum may still succeed in its bid.
"For the time being we just await developments. But I note
that whereas our higher offer was in cash, Ferruzzi apparently
is still organising finance," Callebaut said.
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Bank of Japan governor Satoshi Sumita
said he does not expect the dollar to remain unstable and fall
further.
He told a Lower House Budget Committee in Parliament that
the Bank of Japan would continue to cooperate closely with
other major nations to stabilize exchange rates.
The central bank has been keeping extremely careful watch
on exchange rate movements since last week, he said.
He said the dollar would not continue to fall because of
underlying market concern about the rapid rise of the yen.
Sumita said the currency market has been reacting to
overseas statements and to trade tension between Japan and the
U.S. over semiconductors.
The yen's tendency to rise will prevent Japan from
expanding domestic demand and undertaking necessary economic
restructuring, he said.
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Finance Minister Kiichi Miyazawa said
that the dollar's drop today to 145 yen is partly attributable
to the perception inside and outside Japan that the country has
failed to fulfill its promise to expand domestic demand.
He told a Lower House budget committee in Parliament that
it was natural for other nations to think that Japan is not
doing enough because of the delay in the passage of the 1987/88
budget.
The budget has been delayed by opposition boycotts of
Parliament to protest government plans for a new sales tax.
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Japan is becoming dangerously isolated
again as the U.S. And Europe feel they have been cheated by
Japanese promises to switch from export to domestic-led growth,
officials and businessmen from around the world said.
As the dollar today slipped to a record low below 145 yen,
making Japanese exporters and holders of dollar investments
grit their teeth harder, Finance Minister Kiichi Miyazawa said
there was a perception Japan had reneged on its promise.
The problem goes deep and centres on misunderstandings by
both sides over the key Maekawa report of April, last year.
The document was prepared by a private committee formed by
Prime Minister Yasuhiro Nakasone and led by former Bank of
Japan head Haruo Maekawa. It recommended that to stop friction
due to its large trade surpluses, Japan must "make a historical
transformation in its traditional policies on economic
management and the nation's lifestyle. There can be no further
development for Japan without this transformation."
Americans and Europeans took the report to heart and have
looked in vain for clear signs of this historic change. But the
Japanese remain doubtful about the short, or even medium term
prospects of totally transforming their economic habits.
The bubble of frustration against what appears as Japanese
prevarication burst last week. The U.S. Said it intended to
raise tariffs of as much as 300 mln dlrs on Japanese exports to
the U.S. On the grounds Japan had abrogated a bilateral
semiconductor pact.
British Prime Minister Margaret Thatcher threatened to
block Japanese financial firms from London after the Japanese
placed what the British say are restrictive conditions on a bid
by British firm Cable and Wireless to join a domestic
telecommunications joint venture.
On Friday, European currency dealers said European central
banks, annoyed at restrictive Japanese trade practises, might
leave Japan alone to intervene to staunch the rise of the yen.
Eishiro Saito, head of top Japanese business group
Keidanren, spotted the dangers inherent in such contradictory
views last November when he visited the European Community.
"Related to this matter of (trade) imbalance, the point that I
found to be of great cause for alarm during this trip to Europe
was the excessive degree of hope placed by the Europeans in the
results of the Maekawa report," he said.
"We explained that the process of restructuring the economy
away from its dependence on exports toward a balance between
domestic and external demand...Would take time," Saito said.
Saito's words were ignored. In February, EC Industrial
Policy Director Heinrich von Moltke came to Japan and said "I
only know that your government, under the leadership of
Maekawa, points to restructuring your economy into a less
outward looking, more inward looking one. It is the Maekawa
report which has attracted the most attention in Europe."
And Europeans and Americans want quick action. "A far better
answer than protectionism would be structural change within the
Japanese economy, the kind suggested by the Maekawa report. And
we hope to see changes occur in the near future," visiting
Chairman of General Motors Roger Smith said in March.
Such expectations are now ingrained, which was partly the
fault of Nakasone, who heralded Maekawa's report as a sea of
change in Japanese affairs, said U.S. Officials.
Months before the report was issued, U.S. And EC business
leaders met their Japanese colleagues to discuss the trade
problem.
"We are more anxious than ever that the new approach of the
Maekawa committee does lead to speedy and effective action,"
said EC Industrial Union leader Lord Ray Pennock.
"The important implication of the Maekawa report is that it
is finally looking to let Japanese enjoy the fruits of their
labour," said Philip Caldwell, Senior Managing Director of
Shearson Lehman Brothers.
Contents of the report were leaded well ahead of issuance.
Japanese officials say they are implementing the report as
fast as they can, said a European ambassador who has travelled
the country asking about this issue.
He said People mentioned many things in line with the
spirit of the report, including restructuring of the coal and
steel industries.
A major misunderstanding is that the private report was
government policy. Europeans are confused about this,
underlined by von Moltke's reference to the "leadership" of the
Maekawa report. Even so, Japanese officials point to last
September's government programme of new economic measures.
"Without endorsing the report as policy, officials point out
that the government has put its signature to a programme
designed to implement the report," the ambassador said.
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The Philadelphia Stock Exchange (PHLX),
a leading trader of currency options, plans to extend its
trading hours to serve Australasian and Far Eastern markets,
exchange president Nicholas Giordano said.
He told reporters the PHLX will open a new session between
1900 and 2300 hours U.S. EST from the beginning of the third
quarter this year.
The PHLX is also opening an office in Hong Kong to serve
clients in the region and educate financial markets about the
advantages of currency options, Giordano said.
Giordano was in Sydney to start an Asian-Pacific tour by
exchange executives promoting the hedging benefits of the
exchange-trade currency option market against existing
over-the-counter option trading during the local working day.
Currency options pioneered by the PHLX in 1982 had become
an accepted means of hedging against foreign exchange risk and
had grown in popularity, he said.
The PHLX now offered options in eight currencies, including
a new Australian dollar option, and traded an average 42,000
contracts daily with underlying open interest of more than 30
billion U.S. Dlrs.
Giordano said the exchange had been impressed with the
performance of its Australian dollar contract, which since its
introduction last year had regularly topped the French franc as
the third most popular traded option, with up to 8,000
contracts traded daily.
Having the Philadelphia exchange open during the
Asia-Pacific market day would open new hedging opportunities,
set a truer level for over-the-counter option trading, increase
arbitraging opportunities and give corporations and treasuries
access to a currency option market of much greater depth and
liquidity with the security of a clearing house, he said.
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Bank of Japan governor Satoshi Sumita
said the central bank will carefully consider its monetary
policy in light of the recent sharp fall of the dollar.
Asked if the Bank of Japan will consider a further cut in
its discount rate, he said he now thinks the bank will have to
carefully consider its future money policy.
He told a Lower House Budget Committee in Parliament that
credit conditions have been eased by the five discount rate
cuts by Japan since the beginning of last year.
Japan must now be especially careful about a flare-up in
inflation, with money supply growth accelerating, he said.
Sumita said the central bank would continue to make a
judgement on monetary policies while watching consumer prices,
exchange rates and economic and financial conditions both in
and outside Japan.
Asked if the September 1985 Plaza agreement was a failure
because the dollar had fallen too far, Sumita said he still
thought the pact was a good one in the sense that it had
corrected the overvaluation of the dollar. But the Plaza accord
did not set any target for the dollar's fall, he said.
The dollar's steep fall stems from the market's belief that
the trade imbalance will continue to expand, he said.
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Japan is seeking to prevent its computer
chips dispute with the U.S. From erupting into a full-scale
trade war, government officials said.
"We hope that the dispute on this specific issue won't have
an adverse effect on our overall relationship with the United
States," a Ministry of International Trade and Industry (MITI)
official said.
On Friday, Washington announced plans for as much as 300
mln dlrs in tariffs on Japanese electronic goods for Tokyo's
alleged failure to live up to a bilateral computer chip pact.
That agreement, reached last year after heated
negotiations, called on Japan to stop selling cut-price chips
in world markets and to buy more American-made semiconductors.
Foreign Ministry officials immediately tried to isolate the
fall-out from the dispute by seeking to separate it from Prime
Minister Yasuhiro Nakasone's planned trip to Washington at the
end of April.
While Japan has already done about all it can to make sure
the chip pact is working, the government is studying measures
it can take in other fields to defuse American anger and ensure
the trip's success, they said.
"The perception of Japan in the (U.S.) Congress is very bad,"
one official told Reuters. "We would very much like to do
something to respond to that."
In an apparent effort to prevent the chip dispute from
spreading to other areas, MITI officials sought to depict the
U.S. Action as a severe warning to Japanese semiconductor
makers, not to the government.
Faced with a belligerent domestic chip industry and an
angry American Congress, the Japanese government has been
forced to walk an increasingly fine line in the semiconductor
dispute, trade analysts said.
They said that it was an open secret that Japan's largest
chip maker, NEC Corp, was not happy with what it viewed as the
draconian measures MITI was taking to implement the pact,
included enforced production cuts.
The angry response of Japanese chip makers yesterday to the
announcement of the U.S. Tariffs highlighted the difficulties
the government faces in taking further action.
"Japanese semiconductor manufacturers have complied with the
U.S./Japan agreement," said Shoichi Saba, Chairman of the
Electronic Industries Association of Japan.
He accused the U.S. of being "irrational." He said the U.S.
action had made the bilateral chip pact "meaningless."
Saba's comments contrasted with those of Prime Minister
Yasuhiro Nakasone, who said Tokyo wanted to solve the dispute
through consultations.
Japan is expected to send a high-level official to
Washington early next month to try to convince the U.S. Not to
go ahead with the tariffs on April 17.
Trade analysts say Tokyo is likely to outline industry
plans to step up purchases of U.S. chips and to propose a joint
investigation into U.S. allegations of chip dumping.
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In a bid to hasten Japan's promise
to speed up its economic growth and open markets to foreign
trade, top U.S. officials appear once again to have signaled
their tolerance of a lower dollar.
Treasury Secretary James Baker and one of his top aides,
Assistant Secretary David Mulford, said last week there was no
target for the dollar, a statement that sent the yen soaring
against the dollar, despite massive central bank intervention.
"That was no slip of the tongue," said one western monetary
official, who asked not to be identified.
For now, the strategy appears to be working. Japanese
officials said late last week a package to bolster domestic
demand will be ready in early April. Until last week, there
were few indications the package would be ready anytime soon.
The Reagan administration, facing an uproar in Congress
over the apparent lack of progress in cutting the 169.8 billion
dlr trade deficit, is learning now that to extract results from
Japan, dramatic action is required.
Last week the White House imposed unprecedented tariffs on
certain Japanese electronic goods after Tokyo failed to adhere
to a semi-conductor pricing accord between the two countries.
The shift in U.S. strategy, in part designed to appease
mounting Congressional anger over Japanese policies, comes just
two weeks before industrial nations reconvene here to review
the Paris agreement to stabilize currencies.
And news that Japan earned a record 18 billion dlr trade
surplus in the first two months this year just underscored the
need for urgent action, in the view of U.S. officials.
Nonetheless, U.S. officials see signs of improvement in the
deficit. "I'd be stunned if we were not going to derive some
benefits (from the lower dollar) soon," said one.
In Paris, leading industrial nations agreed to cooperate
closely to foster currency stability within ranges reflecting
"underlying economic fundamentals" or economic reality.
The agreement envisages those fundamentals to include Japan
and West Germany stimulating their economies and the United
States cutting its budget deficit.
The three nations, joined by France, Britain and Canada,
agree these policies are essential to redress huge global trade
imbalances.
But analysts say markets have signalled the underlying
fundamentals imply a lower dollar, rather than a stable one.
Markets, in effect, are less confident than governments
that these measures -- including U.S. budget deficit cuts
agreed by Congress and the White House --will be carried out.
Nonetheless, the dollar's sharp fall has not undermined
cooperation. A U.S. economic policymaker said the accord was on
track and Tokyo and Bonn seem "to want more stimulative measures
which is what the Paris accord calls for."
International monetary sources said exchange market
developments generally have not unsettled policymakers,
although Japan is an obvious exception. "Everybody feels it can
still be managed," one source said of market developments.
But last week, the Bank of Japan spent an estimated five
billion dlrs intervening to halt the rise in the yen, and other
central banks about one billion dlrs.
Another monetary source said Japan was upset with America's
half-hearted attempt to halt the falling dollar, flouting the
Paris accord outright.
The source, close to the top levels of Japanese economic
policymaking, said Japan's understanding of the accord was that
the yen would be kept at around 154 to the dollar, the level it
stood at when the accord was struck.
The source said Tokyo was extremely worried by Washington's
use of the exchange rate to change Japanese policies. It was a
"pointed reminder" to Japan to do something about the trade
issues, the source said of the dollar's fall against the yen.
By departing last Sunday from the language of the Paris
accord -- that nations agreed to foster currency stability
around current levels -- Baker triggered a run on the dollar.
Later in the week, Mulford too said there was no target for
the dollar and called on Japan and West Germany to live up to
their international responsibilities and stimulate growth.
But U.S. officials said recent market developments will not
unravel the spirit of the Paris agreement.
"There's a realisation now that you cannot leave things
alone, everyone agrees that the external (trade) imbalances
ought to be adjusted," one official said.
"While no-one is going to cede national sovereignty, we
certainly seem to be moving towards much closer co-operation,"
another U.S. official said.
The officials said the meeting here, where the six will be
joined by Italy, will be a status report.
"Japan will have to explain what the state of their program
is and Germany will report on its plans. Maybe there's a need
to move faster," one source said.
Mulford told Congress last week the Paris accord called, in
effect, for currency stability for several months. This would
buy time for Japan and West Germany to speed up their economic
growth and help bring down the U.S. trade deficit.
His comments appeared to serve notice on other major
nations that Washington cannot wait too long for action to
reduce the gap between the Japanese and German trade surpluses
and the U.S. trade deficit.
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The United States and Japan will
soon settle their trade dispute over semiconductors, U.S.
Commerce secretary Malcolm Baldrige said on television.
Baldrige, referring to the U.S.-Japan trade agreement on
semiconductors, said: "Their government wants to live up to it.
Their industries haven't been doing it, and I think we'll have
a good settlement to spare both sides."
"I think the Japanese understand full well that they haven't
lived up to this commitment," he said.
He added: "I do not think there will be a trade war at all."
On Friday, Washington announced plans to put as much as 300
mln dlrs in tariffs on Japanese electronic goods from April 17,
because of Tokyo's failure to observe the agreement.
The officials said the tariffs would be ended as soon as
Japan started adhering to the agreement. But they said there
was little chance Japan could react quickly enough to avert the
higher tariffs.
Baldrige said the Reagan administration hoped the strong
U.S. Action against Japan would convince Congress to tone down
protectionist trade legislation now being drafted.
He denied the action had been taken for that reason.
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A leading U.S. Banker said the dollar
was likely to fall another five to 10 pct this year and an
improvement in the huge American trade deficit would be only
temporary at current world exchange rate levels.
Kurt Viermetz, worldwide treasurer of Morgan Guaranty Trust
Co, told Arab currency traders meeting here that the steady
depreciation of the dollar had not gone far enough to rein in
U.S. deficits on a lasting basis.
Reuter
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An investor partnership, seeking to
acquire GenCorp Inc, said it would attempt to unseat the
company's board of directors and take other hostile actions if
the firm refuses to discuss its 2.3 billion dlr takeover bid.
General Acquisition Co, comprising investors Wagner and
Brown and glass-maker AFG Industries, also reiterated its
willingness to negotiate with Gencorp.
The partnership has earlier offered 100 dlrs per share for
GenCorp -- a tire, broadcasting, plastics and aerospace
conglommerate.
Analysts have speculated that GenCorp, on a break-up basis,
could fetch more than 110 to 120 dlrs per share.
GenCorp officials had no comment on General Acquisition's
statement but a spokesman reiterated an earlier request to
shareholders to wait until its board renders an opinion before
making a decision on the General Acquisition tender.
Gencorp said its statement would be made on or before the
company's annual meeting, scheduled for Tuesday.
General Acquisition made its statement in a letter sent to
the GenCorp board on Friday.
The partnership said it was willing to negotiate all points
of its offer, including price.
The group the board cannot fully carry out its fiduciary
duties to GenCorp shareholders and make a fully informed
decision about its offer until it has "thoroughly explored with
us the ways in which our offer can be revised to provide
greater value to your shareholders."
General Acquisition said it is aware the board may be
reviewing alternative transactions which might provide GenCorp
shareholders with a payment other than cash.
"If that is the case, you should recognize that our
additional equity capital may very well enable us to offer cash
and securities having greater value than GenCorp could provide
in any similarly structured transaction," the partnership said.
General Acquisition also said it believes that GenCorp's
board has an obligation to present any alternative transaction
it may propose to shareholders in a manner that would allow for
competing offers.
The partnership requested that if any other proposal is
under consideration that it be given the same information
available to GenCorp's managers and advisers in constructing a
proposal.
General Acquisition said that if GenCorp agrees to accept
another buyout proposal that it also be given an opportunity to
bid on a competitive and fair basis before any final decision
is made.
General Acquisition repeated its request that GenCorp
remove its "poison pill" or shareholders rights plan.
General Acquisition said if GenCorp does not allow an
"environment for fair competition," it will take all steps
necessary to create such an enviroment.
It said it may take legal action or seek the support of
shareholders in calling a special meeting to replace the board
and to consider other proposals it might develop.
General Acquisition also said if the board decides to
accept an alternate proposal it asked that it not accept a plan
that would include defensive features.
Reuter
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United Banks of Colorado Inc said it has
received Federal Reserve Board approval to acquire IntraWest
Financial Corp <INTW> in an exhcnmage of 0.7234 United share
for each IntraWest share.
The company said the acquisition is still subject to 30-day
review by the U.S. Justice Department and is expected to be
completed in the second quarter.
Reuter
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Suffield Financial Corp said it
has received approvcal from the Maine Bureau of Banking for its
proposed acquisition of Coastal Bancorp of Portland, Maine, and
the acquisition is expected to close around April One.
The approval was the last regulatory clearance required for
the transaction.
Reuter
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Marketing Systems of America Inc
said it has retained Richter, Cohen and Co to assist in efforts
to redirect its business through merger or acquisition.
The company said as consideration for services to be
renedered, it has agreed to grant Richter five-year warrants to
buy 231,000 common shares at 32 cts each, exercisable starting
in March 1988, and a negotiated fee on completion of any
transaction. It said it has the right to cancel the warrants
after one year if no transaction has been completed.
Reuter
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Oracle Systems Corp said it has
filed for an offering of 2,300,000 common shares, after
adjustment for a recent two-for-one stock split, including
800,000 to be sold by shareholders.
The company said lead underwriters are Alex. Brown and Sons
Inc <ABSB> and <Donaldson, Lufkin and Jenrette Securities
Corp>. The offering is expected to be made in early April,
with company proceeds used to repay all short-term debt, for
working capital and for possible acquisitions.
Oracle said after the offering it will have about 28.5 mln
shares outstanding.
Reuter
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Swedish construction and real estate
company Skanska AB <skbs.St.> said it will sell its 49 pct
holding in Canadian building firm <Canadian Foundation Company
Ltd> to rival <Banister Continental Ltd>.
A company spokeswoman told Reuters Skanska will receive
Banister shares as payment, giving the Swedish group 15 pct of
the stock in the expanded Banister firm.
She said Skanska will also be appointing two board members
to the Canadian company.
REUTER
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The Bank of England said it had provided
the money market with assistance worth 129 mln stg in the
afternoon session. This compares with the Bank's forecast of a
shortage in the system today of around 100 mln stg.
The central bank purchased 129 mln stg bank bills in band
one at 9-7/8 pct.
REUTER
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Prime Minister Andreas Papandreou has
withdrawn a request to Washington to suspend operations at an
American army base near Athens as a Greek-Turkish row over oil
rights in the Aegean eased.
A Turkish research ship which Greece had threatened to
tackle if it sailed into disputed waters in the Aegean Sea kept
to Turkish territorial waters yesterday, avoiding a potential
clash.
Papandreou expressed qualified optimism after briefing
opposition leaders on Aegean developments early yesterday.
The Greek government later withdrew Friday's request to
Washington to close down its telecommunications base at Nea
Makri, north of Athens, saying that the reasons which had
prompted it to make the request were no longer valid.
Under the terms of the U.S.-Greek bases accord, Greece has
the right to ask for suspension of operations at times when its
national interests are threatened.
The row in the Aegean erupted after Turkey said it would
search for oil round three Greek islands off its coast
following an announcement from Greece that it planned to drill
east of Thassos island after taking control of a Canadian-led
oil consortium operating in the northern Aegean.
Turkey accused Greece of breaching the 1976 Berne Agreement
under which both sides agreed to preserve the status quo in the
Aegean until their continental shelf dispute was settled.
Athens says it considers the accord inactive.
The Turkish Foreign Ministry said in a statement it had
received an assurance from Greece that it would not carry out
oil activities outside its territorial waters. Greece declined
comment on the statement.
Papandreou repeated an invitation to Turkey to take the
long-standing continental shelf dispute to the International
Court of Justice at The Hague.
Conservative opposition leader Constantine Mitsotakis said
he had urged Papandreou to accept an offer from NATO General
Secretary Lord Carrington to help resolve the row.
REUTER
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The Panamanian motor vessel Northern 1,
4,217 dwt, was safely towed into Greenock over the weekend
after having its crankshaft broken off the Scottish coast
during severe weather, Lloyds Shipping Intelligence said.
Northern 1 was loaded with 3,000 tons of sugar from
Demerara.
Reuter
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The government is determined to ride out
the latest sharp rise of the yen without taking panic measures
because it expects the currency's appreciation to prove
temporary, senior officials said.
"The market has already located a ceiling (for the yen) and
market forces are pushing the dollar back up a bit," one senior
Finance Ministry official said.
He attributed the dollar's fall in recent days to special
factors, in particular, selling by Japanese investors ahead of
the March 31 end to their fiscal year.
That selling largely came to an end this morning after
about one hour of trading here, the senior official said. "They
(the investors) became more or less quiet after 10 o'clock
(0100 GMT)," he said.
After falling to a record low of 144.70 yen this morning,
the dollar edged back up in late trading to end at 146.20.
Dealers attributed the late rise to remarks by Prime Minister
Yasuhiro Nakasone that major nations had agreed to stabilise
the dollar above 150 yen.
Several officials said they did not see any fundamental
reason for the dollar's recent sharp fall.
One official even called the market's recent actions
irrational. If anything, the U.S. Decision to slap tariffs on
Japanese electronics goods should support the dollar against
the yen because it will cut Japanese exports to the U.S., He
said.
As a result, several officials said they saw no reason to
alter the broad thrust of government policy agreed to at last
month's meeting of major nations in Paris.
"We don't see any substantial reason to change our policy
stance," one senior official said.
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Sage Analytics International Inc
said its board has declared a three-for-two stock split,
payable June 22 to holders of record on June Eight.
The company also said it will redeem warrants till
outstanding on June Two at 10 cts each. Each two warrants
allow the purchase of one common share at six dlrs through June
One. There are presently 800,000 warrants outstanding.
Reuter
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Remarks by Japan's Prime Minister
Yasuhiro Nakasone that last month's G-6 meeting agreed to
stabilize the dollar above 150 yen have come too late to
influence currency trading, dealers said.
After Nakasone's statement the dollar rose to 146.40/50 yen
from an initial low of 144.20/40 and New York's Friday finish
of 147.15/25. But the rebound was largely on short-covering,
they said.
"I think (Nakasone's) desperate," said a U.S. Bank foreign
exchange manager.
Nakasone told a Lower House Budget Committee in Parliament
that Japan and other industrialized nations committed
themselves in Paris last month to stabilize the dollar above
150 yen.
Finance Minister Kiichi Miyazawa told the same committee
that the six - Britain, Canada, France, Japan, the U.S. And
West Germany - had intervened aggressively since the dollar
fell below 150 yen.
"His (Nakasone) remarks should have been made and should
have had a bigger influence when the dollar was still above 150
yen," said P.S. Tam of Morgan Guaranty Trust.
Tam said the dollar has hit short-term chart targets and
is likely to rebound. But he warned of another dip to below 145
yen.
Dealers said the worsening trade relations between the U.S.
And Japan will continue to depress the dollar.
The trade issue has now become a political issue since the
Reagan Administration is facing uproar in Congress over
th3pYgks in cutting the country's 169.8 billion dlr trade
deficit, they said.
REUTER
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A Finance Ministry official said the
ministry has recently conducted a survey on foreign exchange
transactions by institutional investors but declined to say if
it was aimed at moderating their dollar sales.
However, financial market sources said they had heard the
ministry has asked life insurance and securities firms to
refrain from selling dollars, but they were unable to confirm
this directly.
Dealers said life insurance firms were not major sellers of
dollars in recent trading sessions because they had already
sold them to hedge risks.
Dealers said securities houses and trust banks on the other
hand have aggressively sold the dollar.
REUTER
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The dollar's tumble to a record low of
144.70 yen in Tokyo today motivated some major Japanese
investors to lighten their U.S. Bond inventory further and is
expected to spur diversification into investment assets
including foreign and domestic shares, dealers said.
The key U.S. 7-1/2 pct Treasury bond due 2016 fell to a low
of 96.08-12 in early Tokyo trade against the 98.05-06 New York
finish, then recovered to 96.20-22.
Some trust bank pension fund acccounts and investment
trusts were seen selling several hundred million dollars on the
foreign exchange market here today, accentuating the unit's
tumble, securities house dealers said.
They seem undecided on what to do with the fresh yen cash
positions resulting from their dollar sales today, and are
sidelined until the currency market stabilises and the interest
rates outlook clarifies, a Nikko Securities Co Ltd currency
trader said.
The dollar's plunge and low yields on U.S. Bonds will
further promote diversification into other foreign investments,
as well as call back funds into the domestic bond and stock
markets from overseas bond markets, securities bond managers
said.
They said major Japanese investors in the past two years
are estimated to have held 50 to 80 pct of their foreign
portfolios in U.S. Bonds but many have lightened their U.S.
Bond inventory to as low as 40 pct.
Since late last year, Japanese investors, seeking
substantial liquidity and attractive yields, have used fresh
funds to buy mark and Canadian dollar bonds and, after the
Paris currency pact, actively bought French franc bonds and
gilts while gradually lightening U.S. Bond inventories, the
managers said.
Dealers said funds tied up in foreign assets had flowed
into local bond and stock markets as well.
The yield of the key 5.1 pct 89th bond dropped to a record
low of 4.080 pct today from the 4.140 Saturday finish and
compared with 4.25 pct on three-month certificates of deposit.
The key bond has fluctuated less than five basis points for
more than a month here, suggesting most dealers could not
satisfy their needs for capital gains, dealers said.
A market survey by Reuters showed some active accounts in
U.S. Treasuries are currently dealing on Tokyo's stock market.
The stock market's bullishness late last week was partly due to
funds transferred from U.S. Treasuries, dealers said.
Japanese net purchases of foreign securities in the first
half of March fell an estimated one billion dlrs compared with
average monthly net purchases of 7.7 billion for the whole of
1986, Finance Ministry sources said.
The steep fall is due to Japanese investors' cool attitude
towards U.S. Bonds, which had amounted to more than 80 pct of
total foreign securities purchased, securities houses managers
said.
Foreign stock buying in March is expected to exceed the
record high of 1.5 billion dlrs seen in December, they said.
"Diversification of foreign portfolios is underway and we
have bought bonds in currencies such as marks, the Canadian
dollar, the ECU and French franc," a fund manager at <Yasuda
Trust and Banking Co Ltd> said.
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<Canadian Worldwide Energy
Ltd> said it acquired Triton Energy Corp's wholly owned
Canadian subsidiary, Triton Petroleum Ltd, for the issue of
3.75 mln common shares of Canadian Worldwide, subject to
regulatory approvals.
The company said the transaction will increase Triton
Energy's holding in Canadian Worldwide to 13.25 mln shrs or a
60 pct fully diluted interest from 9.5 mln shares.
Triton Petroleum's assets consist of proven oil reserves of
1.3 mln barrels, exploratory acreage, and unspecified working
capital and a significant tax loss carryforward.
Canadian Worldwide said it is optimistic the Triton
Petroleum Ltd acquisition will strengthen its financial and
production base and permit acceleration of its conventional oil
exploration program.
Reuter
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Clabir Corp said it has
determined all dividends paid on its Class A common in 1986 are
not taxable as dividend income.
While this is a preliminary estimate, the company said, it
may be used by shareholders when preparing 1986 income tax
returns.
Reuter
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Lennar Corp chairman and president,
Leonard Miller, said the current backlog of orders and the
strong economy point to strong revenues and earnings for the
balance of fiscal 1987.
He said the company's backlog of sales deposits on Feb 28
was 2,416, an increase of 976 units over the previous year.
Lennar recorded net earnings for the first quarter 1987 of
4,403,000, or 51 cts per share, compared to 1,775,000, or 20
cts per share the prior first quarter. It recorded net earnings
of 12.5 mln dlrs, or 1.43 dlrs per share, for fiscal 1986.
The company also said that at its April 29 annual meeting,
shareholders will vote on increasing the company's authorized
common stock to 45 mln shares from 15 mln. This will include 30
mln shares of common stock and 15 mln shares of class B common
stock, it added.
Those shareholders who elect to convert their shares into
class B stock will be entitled to 10 votes per share while
other shareholders will retain one vote per share, Lennar said.
The company said if this is approved, it intneds to pay
holders of Class B stock a quarterly cash dividend of five cts
per share and holders of the other common stock a quarterly
cash dividend of six cts per share.
Reuter
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Yugoslav trade is declining rapidly
this year in hard currency terms, according to the latest
Federal Statistics Office (FSO) figures.
The FSO figures showed total exports from January 1 to
March 23 valued at 875.59 billion dinars, compared with 667.18
billion dinars in the same period last year.
These figures were down by 12.5 pct on last year in dollar
terms due to exchange rate fluctuations and changes in how the
figures were calculated, FSO sources said.
This year current exchange rates were used for the first
time instead of a fixed rate of 24.53 dinars to the dollar.
BELGRADE, March 30 - Yugoslav trade is declining rapidly
this year in hard currency terms, according to the latest
Federal Statistics Office (FSO) figures.
The FSO figures showed total exports from January 1 to
March 23 valued at 875.59 billion dinars, compared with 667.18
billion dinars in the same period last year.
These figures were down by 12.5 pct on last year in dollar
terms due to exchange rate fluctuations and changes in how the
figures were calculated, FSO sources said.
This year current exchange rates were used for the first
time instead of a fixed rate of 24.53 dinars to the dollar.
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Walbro Corp said it expects
its first-quarter results to reach "all-time highs."
It projected sales exceeding 32 mln dlrs, or up 21 pct from
the 26,488,000 dlrs reported for the 1986 first quarter. It
said the previous high for a single quarter was 27,179,000 dlrs
for the 1986 fourth quarter.
Walbro estimated income for the quarter will exceed
first-quarter 1986 income, which was 1,953,000 dlrs, or 66 cts
a share, by at least 40 pct. It said the first quarter of 1986
had been the previous income record for a single quarter.
Walbro cited strong demand for its fuel systems products,
especially automotive electronic fuel injection components and
carburetors for lawn and garden applications.
However, it said it is unlikely the company will sustain
the same record pace of sales and income throughout 1987, due
to an expected reduction in throttle body sales.
"It now appears likely that the company's throttle body
business with General Motors Corp <GM> will peak in the first
six months of 1987, continue at reduced levels to July 1988 and
suffer an interruption for the period from July 1988 to July
1989," Walbro added.
Reuter
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Sri Lanka has appealed to 24 countries
for emergency aid to help 2.4 mln villagers affected by the
country's worst drought in 36 years, government officials said.
Embassies received letters over the weekend outlining aid
needed for a sixth of Sri Lanka's population in 13 districts.
The letter said the government had to step in "to avert
serious economic hardship" and because the Social Services
Ministry had already used up its entire 1987 budget provision
of 23 mln rupees by distributing help to the worst hit areas.
The letter said 548.76 mln rupees were needed for a six
month period, at least until the May-September (Yala) rice crop
was harvested. Over 25,000 tonnes of wheat, rice, flour and
other cereals were required, it said, along with supplies of
sugar, lentils, dried or canned fish and milk.
In some of the most seriously affected districts, the Maha
(October 1986-April 1987) crop had been "almost completely
devastated," the letter said. Maha paddy output was now
estimated at 70 mln bushels, 20 mln less than originally
expected.
There were two scenarios for the Yala crop, with a high
forecast of around 40 mln bushels conditional on adequate
rainfall within the next three to four weeks.
"Should the present drought continue, however, production is
estimated at around 20 mln bushels," the letter added.
Total estimated paddy output for 1987 would be between 90
and 110 mln bushels, or 1.35 to 1.65 mln tonnes of rice. Last
year's output was 124 mln bushels, down from 127 mln in 1985.
The letter said villagers in most seriously affected
districts had been deprived of any means of subsistence because
subsidiary crops had also failed.
It said the government's current budget did not permit it
to provide sustained and adequate relief to those affected.
"Revenue has been adversely affected by depressed commodity
prices and slowing of the economy. Defence commitments continue
to exert pressure on the expenditure side."
The 548.76 mln cash would cover payments of 150 rupees per
month for each family, as well as handling, transport and
distribution of emergency food. But such an outlay of funds by
the government would not be possible without seriously
impairing development projects, or "greatly fuelling inflation"
in the economy, the letter said.
The letter said the Food Department would be able to
release wheat and rice from the buffer stock to meet the
immediate cereal requirements "provided such stocks are replaced
subsequently."
The Meteorological Department said the country was
experiencing its worst drought since 1951 and the four-month
dry spell prevailing in most of the areas would only break when
the monsoon rains fell in late May.
The letter said some areas had been experiencing the
drought since August, and in the rice growing district of
Kurunegala there had been no effective rainfall since June
1986.
Reuter
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Mobil Corp's <MOB> Mobil Oil Francaise
unit said it will take a stake of about 10 pct in the French
butane and propane gas distribution company <Primagaz> in
exchange for the transfer to Primagaz of Mobil's small and
medium bulk propane activity.
Small and medium bulk propane sales totalled 55,000 tonnes
in 1986 and the transfer will increase total business of
Primagaz by about 12 pct, equal to 32,000 extra customers.
A Primagas spokesman said Mobil will take the stake by
means of a capital increase, terms of which have not yet been
established.
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Metromail Corp said it expects
earnings for the year to be about flat due to higher expenses
caused by an expansion of data processing capabilities and
startup costs associated with new cooperative programs that
will continue into the fourth quarter.
The company today reported earnings for the nine months
ended March One of 7,214,900 dlrs, down from 7,752,800 dlrs a
year before. For all of last year it earned 10.9 mln dlrs.
Reuter
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Regency Cruises Inc said its earnings
per share for the year 1986 were 36 cts per share, not the 37
cts it reported on March 11.
The company lost 10 cts per share in 1985.
Reuter
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Morrison Inc, a diversified food
service company, said it acquired Custom Management Corp, based
in Kingston, Penn., for an undisclosed amount.
Custom manages some 215 food contract management operations
and about 65 environmental service accounts, producing about
100 mln dlrs in annual revenues.
Reuter
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Shr profit 80 cts vs loss 1.60 dlrs
Net profit 1,673,960 vs loss 3,292,663
NOTE: 1986 net includes gain on bond portfolio of 1,160,000
dlrs and 5,600,000 dlr provision for losses on discontinued
liability and multi-peril lines of reinsurance.
Reuter
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Shr loss 36 cts vs loss 36 cts
Net loss 20.1 mln vs loss 12.6 mln
Revs 12.5 mln vs 24.9 mln
Avg shrs 55.8 mln vs 34.7 mln
Year
Shr loss 1.11 dlrs vs loss 1.05 dlrs
Net loss 50.8 ln vs loss 31.9 mln
Revs 63.7 mln vs 106.9 mln
Avg shrs 45.8 mln vs 30.2 mln
NOTE: Net includes extraordinary gains of 247,0000 dlrs vs
nil in quarter and 809,000 dlrs vs 425,000 dlrs in year.
1985 year net includes 6,700,000 dlr credit for previous
overpayments of windfall profits taxes.
Reuter
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Scientific Micro Systems
Inc said it expects first quarter revenues to rise by about 60
pct to 24 mln dlrs, compared with the 15 mln reported for the
first quarter last year.
The company said it experienced revenue growth across all
product lines during the quarter.
It also said revenue growth should continue during the year
and the company should experience improved profitability in the
second half when acquisition and new product introduction costs
will not have a significant impact on earnings.
Reuter
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Bolt Beranek and Newman Inc said it
filed with the Securities and Exchange Commission a
registration statement covering a 75 mln dlr issue of
convertible subordinated debentures due 2012.
A portion of the proceeds will be used to acquire all of
the outstanding capital stock of Network Switching Systems Inc.
Another part will allow Bolt to exercise its option to
purchase all of the limited partnership interests in BBN
RS/Expert Limited Partnership, with the rest used for general
corporate purposes. The company named PaineWebber, Merrill
Lynch and Montgomery Securities as underwriters.
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