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Sumitomo Bank Ltd <SUMI.T> is certain to
lose its status as Japan's most profitable bank as a result of
its merger with the Heiwa Sogo Bank, financial analysts said.
Osaka-based Sumitomo, with desposits of around 23.9
trillion yen, merged with Heiwa Sogo, a small, struggling bank
with an estimated 1.29 billion dlrs in unrecoverable loans, in
October.
But despite the link-up, Sumitomo President Koh Komatsu
told Reuters he is confident his bank can quickly regain its
position.
"We'll be back in position in first place within three
years," Komatsu said in an interview.
He said that while the merger will initially reduce
Sumitomo's profitability and efficiency, it will vastly expand
Sumitomo's branch network in the Tokyo metropolitan area where
it has been relatively weak.
But financial analysts are divided on whether and how
quickly the gamble will pay off.
Some said Sumitomo may have paid too much for Heiwa Sogo in
view of the smaller bank's large debts. Others argue the merger
was more cost effective than creating a comparable branch
network from scratch.
The analysts agreed the bank was aggressive. It has
expanded overseas, entered the lucrative securities business
and geared up for domestic competition, but they questioned the
wisdom of some of those moves.
"They've made bold moves to put everything in place. Now
it's largely out of their hands," said Kleinwort Benson Ltd
financial analyst Simon Smithson.
Among Sumitomo's problems are limits placed on its move to
enter U.S. Securities business by taking a share in American
investment bank Goldman, Sachs and Co.
Sumitomo last August agreed to pay 500 mln dlrs for a 12.5
pct limited partnership in the bank, but for the time being at
least, the Federal Reserve Board has forbidden them to exchange
personnel, or increase the business they do with each other.
"The tie-up is widely looked on as a lame duck because the
Fed was stricter than Sumitomo expected," said one analyst.
But Komatsu said the move will pay off in time.
"U.S. Regulations will change in the near future and if so,
we can do various things. We only have to wait two or three
years, not until the 21st century," Komatsu said.
Komatsu is also willing to be patient about possible routes
into the securities business at home.
Article 65 of the Securities and Exchange Act, Japan's
version of the U.S. Glass-Steagall Act, separates commercial
from investment banking.
But the walls between the two are crumbling and Komatsu
said he hopes further deregulation will create new
opportunities.
"We need to find new business chances," Komatsu said. "In some
cases these will be securities related, in some cases trust
bank related. That's the kind of deregulation we want."
Until such changes occur, Sumitomo will focus on such
domestic securities business as profitable government bond
dealing and strengthening relations with Meiko Securities Co
Ltd, in which it holds a five pct share, Komatsu said.
He said Sumitomo is cautiously optimistic about entering
the securities business here through its Swiss universal bank
subsidiary, Banca del Gottardo.
The Finance Ministry is expected to grant licences to
securities subsidiaries of U.S. Commercial banks soon,
following a similar decision for subsidiaries of European
universal banks in which the parent holds a less than 50 pct.
But Komatsu is reluctant to push hard for a similar
decision on a Gottardo subsidiary.
"We don't want to make waves. We expect this will be allowed
in two or three years," he said.
Like other city banks, Sumitomo is also pushing to expand
lending to individuals and small and medium businesses to
replace disappearing demand from big business, he added.
The analysts said Sumitomo will have to devote a lot of
time to digesting its most recent initiatives, including the
merger with ailing Heiwa Sogo.
"It's (Sumitomo) been bold in its strategies," said
Kleinwort's Smithson.
"After that, it's a question of absorbing and juggling
around. It will be the next decade before we see if the
strategy is right or wrong."
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The Bundesbank accepted bids for 6.1
billion marks at today's tender for a 28-day securities
repurchase pact at a fixed rate of 3.80 pct, a central bank
spokesman said.
Banks, which bid for a total 12.2 billion marks liquidity,
will be credited with the funds allocated today and must buy
back securities pledged on May 6.
Some 14.9 billion marks will drain from the market today as
an earlier pact expires, so the Bundesbank is effectively
withdrawing a net 8.1 billion marks from the market with
today's allocation.
A Bundesbank spokesman said in answer to enquiries that the
withdrawal of funds did not reflect a tightening of credit
policy, but was to be seen in the context of plentiful
liquidity in the banking system.
Banks held an average 59.3 billion marks at the Bundesbank
over the first six days of the month, well clear of the likely
April minimum reserve requirement of 51 billion marks.
The Bundesbank spokesman noted that by bidding only 12.2
billion marks, below the outgoing 14.9 billion, banks
themselves had shown they felt they had plenty of liquidity.
Dealers said the Bundesbank is keen to prevent too much
liquidity accruing in the market, as that would blunt the
effectiveness of the security repurchase agreement, its main
open-market instrument for steering market interest rates. Two
further pacts are likely this month over the next two weeks.
The Bundesbank is currently steering call money between 3.6
and 3.8 pct, although short-term fluctuations outside that
range are possible, dealers said.
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Bond Corp Holdings Ltd <BONA.S> and Atlas
Consolidated Mining and Development Corp <ATLC.MN> are still
holding talks on a bail-out package for the troubled mining
firm, an Atlas statement said.
Atlas, the Philippines' biggest copper producer, said it
had been hit by depressed world copper prices. It reported a
net loss of 976.38 mln pesos in the year ending December 1986,
compared with a net loss of 1.53 billion in 1985.
The company said it had been able to cut its losses because
its scaled-down copper operations in the central island of Cebu
started in the second half of 1986.
Atlas said negotiations were continuing on the acquisition
by Bond of the company's existing bank loans and their
restructuring into a gold loan.
A memorandum of understanding signed by the two sides in
October last year said Bond would acquire Atlas' total loans of
275 mln dlrs, to be repaid by the mining company in gold.
Atlas said the two sides were also discussing equity
infusion into Atlas and the creation of a development fund for
further exploration and development of the company's gold
properties in the central province of Masbate.
Wilson Banks, general manager of <Bond Corp International
Ltd> in Hong Kong, told Reuters the Atlas statement on the
negotiations was "reasonably accurate."
Banks said Bond Corp was seriously considering several
investments in the Philippines but did not give details.
In its statement, Atlas said development of the pre-World
War Two underground mines in Masbate had been accelerated and
the ore tonnage had increased, extending the operation's life
at least until 1993.
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Japan's Agriculture Ministry, angered by
U.S. Demands that Japan open its farm products market, will
tell U.S. Officials at talks later this month that
liberalisation would harm existing U.S. Farm exports to Japan,
a senior ministry official said.
"Imports from the U.S. Would drop due to active sales drives
by other suppliers," the official, who declined to be named,
said. "Japan is the largest customer for U.S. Farm products and
it is not reasonable for the U.S. To demand Japan liberalise
its farm import market," he said.
Agriculture Minister Mutsuki Kato has said if the U.S.
Insists Japan open its protected rice market it will also open
its wheat market, where volume and origin are regulated to
protect local farmers.
Australia and Canada could then increase their wheat
exports as they are more competitive than the U.S., He said.
End-users would also buy other origins, grain traders said.
U.S. Agriculture Secretary Richard Lyng, who is due to
visit Japan for talks between April 16-27, has said he will ask
Japan to offer a share of its rice market to U.S. Suppliers and
remove quotas on U.S. Beef and citrus imports.
Other countries are already cutting into the U.S. Market
share here. Australia, the largest beef supplier to Japan, has
been trying to boost exports prior to the expiry of a four-year
beef accord next March 31.
Imports of U.S. Corn have fallen due to increased sales
from China and South America, while Japanese soybean imports
from Brazil are expected to rise sharply this year, although
the U.S. Will remain the largest supplier.
U.S. Feedgrain sales will also drop if Japan opens up its
beef imports, since Japan depends almost entirely on feedgrain
imports, mainly from the U.S., Japanese officials said.
An indication of the U.S. Position came last December when
Under Secretary of Agriculture Daniel Amstutz said Japan has
the potential to provide one of the largest boosts to U.S.
Agricultural exports, with the beef market alone representing
some one billion dlrs in new business.
The U.S. Has also asked the General Agreement on Tariffs
and Trade to investigate the legality of Japanese import
controls on 12 other farm products, including fruit juices,
purees and pulp, tomato juice, ketchup and sauce, peanuts,
prepared beef products and miscellaneous beans.
To help calm heated trade relations with the U.S., Japan's
top business group Keidanren has urged the government to remove
residual import restrictions on agricultural products.
But Agriculture Minister Kato has ruled out any emotional
reaction, and the senior ministry official said the farm issue
should not become a scapegoat for trade pressure in the
industrial sector.
"Japan is the largest buyer of U.S. Farm products, and these
issues should not be discussed on the same table," the official
said.
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Amatil Ltd <AMAA.S> said it proposes to
make a two-for-five bonus issue out of its revaluation reserve
to shareholders registered May 26.
Shareholders will be asked to approve the issue and an
increase in authorised capital to 175 mln shares from 125 mln
at a general meeting on May 1, it said in a statement.
The new shares will rank for dividends declared after
October 31. Amatil, in which B.A.T. Industries Plc <BTI.L>
holds a 41 pct stake, said it does not expect to maintain its
latest annual dividend rate of 29 cents a share on the enlarged
capital.
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Shr 27.7p vs 20.7p
Div 6.0p vs 5.5p making 10.0p vs 9.25p
Turnover 1.34 billion stg vs 1.29 billion
Pretax profit 48.0 mln vs 32.4 mln
Tax 14.4 mln vs 6.9 mln
Company name is Bowater Industries Plc <BWTR.L>
Trading profit 63.4 mln vs 45.1 mln
Trading profit includes -
Packaging and associated products 23.2 mln vs 14.2 mln
Merchanting and services 18.4 mln vs 9.6 mln
Tissue and timber products 9.0 mln vs 5.8 mln
Interest debit 15.4 mln vs 12.7 mln
Minority interests 7.0 mln debit vs 6.2 mln debit
Extraordinary items 15.4 mln credit vs 11.9 mln debit
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The Bank of England said it forecast a
shortage of around 250 mln stg in the money market today.
Among the main factors affecting liquidity, bills maturing
in official hands and the take-up of treasury bills will drain
some 505 mln stg, while bills for repurchase by the market will
remove around 194 mln. In addition, a rise in note circulation
and bankers' balances below target will each drain around 110
mln stg.
Partly offsetting these outflows, exchequer transactions
will add some 690 mln stg to the system today.
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South Korea's trade surplus is growing too
fast and the government has started taking steps to slow it
down, Deputy Prime Minister Kim Mahn-je said.
He told a press conference the government planned to
increase investment, speed up the opening of the local market
to foreign imports and gradually adjust its currency to hold
the surplus "at a proper level."
But he said the government would not allow the won to
appreciate too much in a short period of time. South Korea has
been under pressure from Washington to revalue the won.
The U.S. Wants South Korea to cut its trade surplus with
the U.S., Which rose to 7.4 billion dlrs in 1986 from 4.3
billion dlrs in 1985.
Kim, who is also economic planning minister, said prospects
were bright for the South Korean economy, but the government
would try to hold the current account surplus to around five
billion dlrs a year for the next five years.
"Our government projections of eight pct GNP growth, five
billion dlrs of (current account) surplus and 12 pct growth in
exports all seemed to be reasonable early this year. But now
the surplus is growing faster than we expected," he said.
Trade ministry officials said South Korea's exports rose 35
pct to 9.34 billion dlrs in the first three months of this
year, while imports rose only 8.5 pct to 8.2 billion dlrs.
Kim said the swing of South Korea's current account to a
surplus of 4.65 billion dlrs in 1986 from an 890 mln dlr
deficit in 1985 was very significant. The surplus enabled the
country to reduce its foreign debt last year for the first
time.
South Korea's foreign debt, which fell to 44.5 billion dlrs
in 1986 from 46.8 billion in 1985, is still among the largest
in Asia.
"This huge amount of our foreign debt has been one of the
major constraints on our development... Last year was a major
turning point for the Korean economy," Kim said.
Kim said his government plannned to reduce the ratio of
foreign debt to the country's GNP to about 20 pct in 1991, from
about 50 pct in 1986.
"The government, however, does not want to accelerate
reducing the debt by making an excessive trade surplus," he
said.
Kim said a sudden rise in the surplus would cause inflation
and lead to trade friction with Seoul's major trading partners,
particularly the United States.
"We need a surplus because we have to reduce our debt, but
we are taking measures to hold the size of the surplus at a
proper level," Kim said.
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<Whim Creek Consolidated NL> said the
consortium it is leading will pay 76.55 mln dlrs for the
acquisition of CRA Ltd's <CRAA.S> <Forrest Gold Pty Ltd> unit,
reported yesterday.
CRA and Whim Creek did not disclose the price yesterday.
Whim Creek will hold 44 pct of the consortium, while
<Austwhim Resources NL> will hold 27 pct and <Croesus Mining
NL> 29 pct, it said in a statement.
As reported, Forrest Gold owns two mines in Western
Australia producing a combined 37,000 ounces of gold a year. It
also owns an undeveloped gold project.
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Bowater Industries Plc <BWTR.L> 1986
pretax profits of 48.0 mln stg exceeded market expectations of
around 40 mln and pushed the company's shares up sharply to a
high of 491p from 468p last night, dealers said.
The shares later eased back to 481p. Bowater reported a
32.4 mln stg profit in 1985.
The company said in a statement accompanying the results
that the underlying trend showed improvement and it intended to
expand further by developing existing businesses and seeking
new opportunities.
It added that it had appointed David Lyon, currently
managing director of Redland Plc <RDLD.L> as its new chief
executive.
Analysts noted that Bowater's profits of 18.9 mln stg from
13.2 mln previously had been given a boost by pension benefits
of 4.5 mln stg.
Profit from Australia and the Far East showed the greatest
percentage rise, jumping 55.0 pct to 15.5 mln from 10.0 mln,
while the profit from U.K. Operations rose 30.7 pct to 24.7
mln, and Europe, 42.9 pct to 11.0 mln.
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Citibank A/S <CCI.N>, the Norwegian
subsidiary of the U.S.-based bank, said it made a net loss of
just over six mln crowns in 1986 -- although foreign bankers
said they expect it to show 1987 profits after two lean years.
Citibank's Oslo treasury head Bjoern Sejerstad told
Reuters, Citibank, one of seven foreign bank subsidiaries
operating in Norway, lost money because of restructuring for
investment banking away from commercial banking and an economic
slump in Norway following last year's plunge in oil prices.
Foreign banks have been allowed to operate susbidiaries in
Norway since 1985.
Foreign banking analysts in Oslo said access to Norway's
second-hand securities and equities markets, to be approved
later this spring, and lower primary reserve requirements would
make profit this year.
Citibank lost 490,000 crowns in Norway in 1985, but
Sejerstad said a profit was likely this year because of planned
liberalisation and better economic performance, helped by a
steadier oil price of around 18 dlrs a barrel.
Earlier this year, Chase Manhattan Bank's <CMB.N>
subsidiary decided to stop foreign exchange trading after heavy
losses and focus instead on fee-based merchant banking.
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A sharp fall in the dollar price of
zinc and the depreciation of the U.S. Currency created
unfavourable economic conditions for Vieille Montagne SA
<VMNB.BR> in 1986.
It said in a statement that the two factors led to a
squeeze on refining margins and an 18.24 pct fall in sales and
services income despite an unchanged level of activity.
Vieille Montagne, which is actively pursuing a
restructuring program, reported a 198 mln franc net loss, after
187 mln francs in provisions for the closure of an electrolysis
plant, compared with a 250 mln franc net profit in 1985.
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1986 Year
Net loss after exceptional charges 198 mln francs vs profit
250 mln
Exceptional provisions for closure of Viviez electrolysis
Plant 187 mln francs vs exceptional gain 22 mln
Sales and services 16.51 billion francs vs 20.20 billion
Proposed net dividend on ordinary shares nil vs 110 francs
Company's full name is Vieille Montagne SA <VMNB.BR>.
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A top U.S. Official said Japan has little
chance of convincing the U.S. To drop threatened trade
sanctions, despite the efforts of a Japanese team that left for
Washington today.
Michael Armacost, Under Secretary of State for Political
Affairs, was asked at a press conference whether Japan's moves
to boost its domestic economy and open its markets could
persuade the U.S. Not to impose tariffs on Japanese imports
said, and replied: "...It is probably too early for the figures
to demonstrate that the situation has turned around and to
permit the result you have described."
Armacost said the U.S. Hopes Japan will take steps to lift
its domestic economy and reduce dependence on exports, remove
barriers to imports and settle outstanding trade issues.
"There are obvious problems at the moment in the trade area,
but we do not wish those problems to divert attention from
important areas of cooperation that continue to exist on
security and political issues," he said.
"The question is whether through cooperative actions between
our governments we can reduce the (trade) imbalance or whether
Congress takes action to reduce it through protectionist
legislation," he said.
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Anheuser-Busch Companies Inc <BUD.N> has
joined several other foreign bidders for sequestered shares of
the Philippines' largest food and beverage maker San Miguel
Corp <SANM.MN>, the head of a government panel which controls
the shares told Reuters.
Ramon Diaz, Secretary of the Presidential Commission on
Good Government (PCGG), said Anheuser-Busch had told the
government it was interested in buying 14 mln "B" shares of San
Miguel. He did not disclose the offered price.
Diaz said Australian brewer Alan Bond's Bond Corp Holdings
Ltd had offered 150 pesos per share for the "B" shares.
Diaz said New York investment bank Allen and Co Inc had
earlier said it was interested in buying all 38.1 mln
sequestered shares. He told Reuters last month Elders IXL Ltd
<ELXA.S>, the Melbourne-based brewing company, had also bid for
the "B" shares.
The Hong Kong Economic Journal last month quoted a
spokesman of Australian stock broker Jacksons Ltd as saying
that <Barwon Farmlands Ltd>, an Australian firm owned 30 pct by
<Ariadne Australia Ltd>, was planning a Filipino branch in
order to buy the entire block of 38.1 mln shares.
Anheuser-Busch last year made a 150 mln dlr bid to buy <San
Miguel Brewery Ltd>, a Hong Kong listed company which is 69.65
pct owned by <Neptunia Corp Ltd>, a San Miguel Corp subsidiary.
The talks broke down last June after the two sides said
they could not agree on the terms of the sale.
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Australian markets are booming as foreign
fund managers redirect capital away from the United States and
other traditional markets, analysts said.
High short-term interest rates, a bullish stock market and
an increasingly stable currency reflect a massive inflow of
fresh funds in the last two months, largely from Japanese and
U.S. Investors, analysts polled by Reuters said.
Fund managers want quality markets to park their cash in
and have settled on Australia, Britain and Canada as they
diversify from volatile U.S. Dollar instruments, they said.
A one percentage point fall in key 10-year bonds rates in
the past month, record share prices and a 10-month high for the
currency of 0.71 U.S. Dlrs all illustrated the inflow.
Official figures on the latest inflow of investment capital
are not available, but brokers said they received almost daily
inquiries from Japan and the United States.
"These people have got trillions of dollars sloshing about
and they don't know what to do with it. Some of that is ending
up here with the attraction of high interest rates and
reasonable currency stability," National Australia Bank Ltd
economist Brian Hamley said.
"There is a 'flight to quality'," Hamley said. "Australia may
not be in the best (economic) position, but there aren't too
many other countries where you'd want to put your money."
The stronger Australian dollar was also attracting
investors taking advantage of an appreciating currency against
the volatility of the U.S. Unit, analysts said.
"We're looking a more favoured market than perhaps the U.S.
Where some people would be concerned about the value of the
U.S. Dollar," Lloyds Bank NZA Ltd chief economist Will Buttrose
said. "Why not put the money in Australia where entry is cheap
and the currency looks stable?"
But turning that capital into more permanent productive
investment depends on government economic policy, he said.
"It will only disappear if people lose confidence in the
direction in the economy," Buttrose said, adding that offshore
investors would carefully watch the government's promised tough
economic statement on May 14.
While happy to invest in bonds and other vehicles yielding
interest unobtainable elsewhere, fund managers could just as
easily reverse the flow -- particularly the Japanese, who were
badly hurt in the past by rapid falls in the Australian dollar
and hefty jumps in bond rates, analysts said.
"It will remain very edgy money. If something was not to be
delivered, if the statement wasn't considered tough enough, one
might see a substantial outflow," Buttrose said.
Offshore investors are eager to see Australia take tough
economic decisions to curb its 100 billion dlr foreign debt and
stubborn current account deficit, analysts said.
"They are giving us the benefit of the doubt and I think
they would like to leave the money here," Buttrose said.
Reserve Bank policy has also reflected the increased
interest in investment in Australia and the need to shield
Japanese investors from rapid currency fluctuations.
Reserve Governor Bob Johnston last week acknowledged an
element of targeting the rate against the yen in currency
policy when he said authorities could not take their "eyes off
the yen" because of the crucial role of Japanese investors.
Analysts said they believed the Reserve Bank had worked
successfully in recent months to keep the Australian dollar
within the range of 100 to 103 yen.
Apart from its recovery against a weak U.S. Dollar, the
Australian dollar has also risen almost three pct on a
trade-weighted basis in the last three weeks.
Offshore buying has also played a role in the booming
Australian share market. It has followed Wall Street and other
markets, but is also setting its own trend in response to the
weight of both domestic and offshore funds pouring into
equities, particularly in the gold sector.
The key all ordinaries index rose to a record 1,758.3
today, nearly 20 pct above its level at the end of 1986, while
the gold index has nearly doubled to a record 3,081.0 in the
same period.
The property sector is also sought after, with Japanese
companies that have invested heavily in the United States in
recent years turning their attention to undervalued real
estate, particularly in the tourism field.
Analysts pointed to the recent sale of Sydney's five-star
Regent Hotel to Japanese interests for more than 145 mln dlrs
as indicative of the type of property being sought.
"They think they find good value real estate here which,
with long term and fixed capital investment, is the kind of
investment Australia needs," Buttrose added.
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Diversified building materials group
Monier Ltd <MNRA.S> said talks are taking place which may lead
to Britain's Redland Plc <RDLD.L> making an offer for the
Monier shares it does not already hold, chairman Bill Locke
said.
Redland already holds about 49 pct of Monier's 156.28 mln
issued shares, he said in a brief notice to the Australian
Stock Exchange.
Locke said shareholders would be advised as soon as the
discussions progressed and recommended that they keep their
shares.
Monier shares were trading at a 1987 high of 3.10 dlrs
today, up from the previous peak of 2.80 at yesterday's close,
and well above the 1987 low of 2.18 dlrs.
Monier is the largest concrete roof tile manufacturer in
Australia, the U.S. And New Zealand and the world's largest
marketer of fly ash, according to its annual report for 1985/86
ended June 30.
It recently reported first-half 1986/87 net fell to 15.02
mln dlrs from 17.09 mln a year earlier due to the Australian
housing downturn, although foreign earnings rose.
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Isuzu Motor Ltd <ISUM.T> will pay no
dividend for the first half year ending April 30, 1987, as the
company is expected to mark a 12 billion yen parent company
current loss in the first half due to slow exports caused by
the yen's appreciation, a company spokesman said.
The company has paid no dividend since the year ended
October 31, 1983, when it paid five yen.
It had a 4.44 billion yen current profit in the first half
of 1985/86.
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Ministry of International Trade and
Industry (MITI) Vice Minister Makoto Kuroda leaves for
Washington today with data he hopes will refute U.S. Charges
Japan has violated a pact on microchip trade.
A three-man Japanese trade team is already in Washington
laying the groundwork for talks between Kuroda and Deputy U.S.
Trade Representative Michael Smith aimed at persuading the U.S.
Not to impose tariffs on certain Japanese products.
But Kuroda said he is taking no new proposals. "I have
nothing in my briefcase except an explanation of the current
situation," Kuroda told the daily newspaper Asahi Shimbun.
Kuroda said the U.S. Decision was based on incorrect data
and an exaggerated sense of MITI's power to control market
forces. "The U.S. Has excessive expectations. To stabilise
supply-demand relations which have been disrupted by excess
inventories since 1985 will take some time," he said.
Kuroda also laid part of the blame for low U.S. Chip sales
in Japan on a lack of effort by American firms here.
He said if he fails in talks tomorrow and Friday to
forestall sanctions, he will seek further talks with U.S. Trade
Representative Clayton Yeutter. U.S. Officials said this week's
talks are unlikely to delay imposition of tariffs.
REUTER
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The Bell Group Ltd <BLLA.S> said it now
holds 14.9 pct of the issued capital of Standard Chartered Plc
<STCH.L> after acquiring further shares.
The one-sentence statement from Bell's headquarters
confirmed what its brokers Warburg Securities told Reuters in
London yesterday.
Bell previously held 10 pct of Standard.
Bell chairman Robert Holmes a Court, who is also a director
of Standard, was not available for comment on his company's
intentions in boosting its holding and other company officials
contacted here by Reuters declined to comment.
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Nippon Steel Corp <NSTC.T> denied local
newspaper reports that China has been seeking to buy steel
plants from Japanese firms which plan to suspend output under
the recently announced rationalisation program.
The Mainichi Shimbun quoted Nippon Steel as saying that
China's State Planning Commission and some Chinese firms have
asked Japanese makers to sell them steel works and rolling
mills to expand steelmaking cheaply. It named no sources.
A Nippon Steel spokesman told Reuters that China has made
no such official request, and the company was not considering
such sales at the moment.
But Mainichi quoted Nippon Steel officials as saying if
prices are reasonable, they would export their used mills to
China.
The paper said China's crude steel output totalled 52 mln
tonnes in calendar 1986 and that it plans to increase to 80 mln
by 1996.
Japan's steel industry rationalisation plan is aimed at
cutting production capacity sharply over the next few years.
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Jardine Matheson Holdings Ltd
<JARD.HK> said it will withdraw the previously announced
four-for-one bonus issue of "B" shares and replace it by a
two-for-five bonus issue of ordinary shares.
A statement said the firm expects to pay total dividends
for 1987 of not less than 40 cents a share on the expanded
capital.
Jardine Matheson decided to withdraw its issue because of a
joint announcement earlier today by Ronald Li, chairman of the
Stock Exchange of Hong Kong, and Securities Commissioner Ray
Astin, that the listings of new "B" shares would be barred.
The official announcement said this will include the
proposal by Jardine Matheson.
But the Jardine statement quoted chairman Simon Keswick as
saying: "We continue to believe that the issuing of "B" shares
would benefit shareholders, and regret that they will not be
given the opportunity to vote on the matter at this stage."
Keswick said the "B" share issue will benefit Jardine
Matheson's shareholders by giving the firm flexibility to issue
ordinary shares for expansion in future without diluting
existing shareholders' voting rights.
However, he added: "We certainly welcome (the Secretary for
Monetary Affairs) David Nendick's referral of this very
important matter to the Standing Committee on Company Law
Reform and are hopeful that the process will lead to the
development of general principles which can be embraced by all
constituents of the Hong Kong market."
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A top U.S. Official said Japan has little
chance of persuading the U.S. to drop threatened trade
sanctions, despite the efforts of a Japanese team that left for
Washington today.
Michael Armacost, Under Secretary of State for Political
Affairs, was asked at a press conference whether Japan's moves
to boost its domestic economy and open its markets could
persuade the U.S. Not to impose tariffs on Japanese imports
said, and replied: "...It is probably too early for the figures
to demonstrate that the situation has turned around and to
permit the result you have described."
Armacost said the U.S. Hopes Japan will take steps to lift
its domestic economy and reduce dependence on exports, remove
barriers to imports and settle outstanding trade issues.
"There are obvious problems at the moment in the trade area,
but we do not wish those problems to divert attention from
important areas of cooperation that continue to exist on
security and political issues," he said.
"The question is whether through cooperative actions between
our governments we can reduce the (trade) imbalance or whether
Congress takes action to reduce it through protectionist
legislation," he said.
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The Bank of Japan bought a small amount of
dollars shortly after the opening at around 145.30 yen, dealers
said.
The central bank intervened as a medium-sized trading house
sold dollars, putting pressure on the U.S. Currency, they said.
The dollar was also supported by a major electrical
consumer goods company, which was a speculative dollar buyer at
around 145.25 yen, they added.
The dollar opened at 145.33 yen against 145.60/70 in New
York and 145.25 at the close here yesterday.
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The Bank of England said it provided the
money market with 53 mln stg assistance in the morning session.
This compares with the bank's estimate of a shortage in the
system of around 300 mln stg which it earlier revised up from
250 mln.
The central bank made outright purchases of bank bills
comprising 46 mln stg in band three at 9-3/4 pct and seven mln
stg in band four at 9-11/16 pct.
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A bid by San Miguel Corp (SMC) <SANM.MN>
to buy back 38.1 mln sequestered shares from United Coconut
Planters Bank (UCPB) has been hit by two new lawsuits, sources
in the Philippine food and brewery company said.
A Manila court yesterday issued an injunction barring UCPB
from selling the shares, which represent 31 pct of SMC's
outstanding capital stock of 121 mln shares, until hearings on
April 21 on a petition filed by Eduardo Cojuangco, a former
chairman of both SMC and UCPB.
Cojuangco said the Coconut Industry Investment Fund (CIIF)
and 1.4 mln farmers were the rightful owners of the shares.
Cojuangco said the shares were held in trust by UCPB and
represented a blue chip investment. His petition said UCPB's
plans to sell the shares to SMC were "a serious breach of
fiduciary duties."
The SMC sources said the proposed share sale could also be
held up by a second derivative suit filed before the Securities
and Exchange Commission (SEC) by Eduardo de los Angeles, a
government nominee on the company's board.
De los Angeles, who represents SMC's minority stockholders,
asked the SEC to block the transaction, approved last week by
the company's board.
On April 2 the board sanctioned the repurchase of the
sequestered shares for 4.79 billion pesos at 126 pesos per
share. De los Angeles told the SEC the company's retained
earnings of 1.33 billion pesos would be wiped out by the
purchase of the shares and would prevent the declaration of
dividends.
De los Angeles said the share purchase would also violate
an SMC agreement with its creditors to maintain a 2.2-to-1 debt
to equity ratio. He quoted SMC's chief financial director Ramon
del Rosario as telling the board that the transaction would
boost the ratio to 2.5-to-1.
In petitioning the SEC, de los Angeles amended an earlier
suit two weeks ago in which he charged SMC Chairman Andres
Soriano III and nine other directors of violating their duties.
De los Angeles' earlier complaint related to SMC assuming
last December a 26.5 mln dlr loan contracted by SMC's Hong Kong
subsidiary <Neptunia Corp> for a down payment on the shares.
The loan assumption was again ratified by last week's board
meeting.
An arbitration panel set up by President Corazon Aquino to
resolve the ownership issue is expected to submit its report by
April 15.
"The amended suit filed by Eduardo de los Angeles is part of
a continuing attempt by certain elements, in complete disregard
of the facts and with questionable motives, to delay an early
disposition of the sequestered shares," San Miguel Corp said in
a statement.
"Coming as it does, when San Miguel Corp and UCPB have
reached agreement on the price of the shares and the method of
payment, this suit is in direct contravention of the
government's expressed desire to reach an amicable settlement
of the controversy by April 15," the statement added.
A San Miguel spokesman said he had no comment on
Cojuangco's court petition, adding: "Any statement coming from
us might be interpreted as adversarial."
Meanwhile, Ramon Diaz, the head of a government panel which
sequestered the shares last year, said Soriano was not eligible
to buy the major portion of the shares because he was a United
States citizen.
The sequestered shares are split into 24 mln "A" shares,
which can only be owned by Filipinos, and 14 mln "B" shares which
are available to foreign buyers.
SMC sources said Soriano personally was not among
prospective buyers. They said the shares would be purchased by
the <A.Soriano> group of companies, SMC, Neptunia and unnamed
institutional investors. Soriano was named as one of the buyers
in a bid in March 1986 for 33 mln shares controlled by UCPB.
The sale was aborted when Diaz's Presidential Commission on
Good Government sequestered the shares on suspicion they were
owned by Cojuangco, a close associate of former President
Ferdinand Marcos. Cojuangco lives in self-imposed exile in the
U.S.. The shares grew to 38.1 mln after a 15 pct stock dividend
announced last June.
"We have no objection to Soriano buying the "B" shares," Diaz
told Reuters. "But everything is on hold now."
The SMC spokesman said he did not know if the controversy
would be resolved before the company's annual stockholders'
meeting, scheduled for May 14.
San Miguel Corp reported sales revenue of 12.2 billion
pesos in 1986, 11 pct above its 10.9 billion peso sales in
1985. It said unaudited net profit was in the neighbourhood of
700 mln pesos, an increase of about 50 pct over 1985.
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Italian insurer La Fondiaria Spa <LFDI.MI>
said it expects to report consolidated group profit in 1986
significantly higher than the 60 billion lire reported in 1985.
The company said in a statement that parent company net
profit last year will rise from the 72 billion lire reported in
1985. Consolidated group premiums totaled 1,700 billion lire in
1986 compared with 1,490 billion the previous year.
Iniziativa Meta <INZI.MI>, the financial services unit of
Montedison Spa <MONI.MI>, controls the largest single stake in
Florence-based Fondiaria with 49.9 pct.
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The fully state-owned Dutch
chemical firm NV DSM <DSMN.AS> said its 1986 net profit rose to
412 mln guilders from 402 mln in 1985, while turnover fell to
17.7 billion guilders in 1986 from 24.1 billion in 1985.
The company said 1986 dividend, which will be paid to the
Dutch state in its capacity of the firm's sole shareholder,
would be raised to 98 mln guilders from 70 mln guilders in
1985.
In an initial comment on its 1986 results, DSM said the
drop in 1986 turnover had been caused mainly by losses in the
company's fertilizer division.
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Bundesbank President Karl Otto Poehl
said a weaker dollar would be risky and a further appreciation
of the mark would damage prospects for sustained West German
economic growth.
In a speech to the Institute of Contempory German Affairs
here, Poehl said "It would be an extremely risky policy to aim
for a further substantial decline in the value of the dollar to
correct the trade deficit."
He said the United States could face a vicious circle of
depreciation, inflation and more depreciation if it took that
route.
Poehl noted West Germany had already taken steps to meet
U.S. Demands for greater stimulation of its domestic economy,
accelerating tax cuts, cutting interest rates and tolerating
above-target money supply growth.
He said he would have been happy to have brought forward
five billion marks of tax cuts now planned for January 1988 to
the beginning of this year, but he said the government faced
political constraints getting such measures through the upper
house of the West German parliament.
But there were also limits to the impact West Germany could
accept on exports from a rising mark, he said.
Poehl said West Germany relied on exports for about
one-third of its gross national product, so a substantial
erosion of export markets could not be offset by increasing
demand at home.
"A further appreciation of the mark could even be an
obstacle to further growth," he said.
Poehl said the Bundesbank had tolerated rapid money supply
growth last year because the country enjoyed low inflation and
because external factors, including low oil prices and
favourable terms of trade, had given some extra leeway.
But Poehl said West Germany now faced a difficult dilemma
over monetary policy.
The underlying rate of inflation was now two pct, not the
reported negative inflation rates last year, and West Germany
was affected more than before by exchange rate developments.
"For the time being, we will have to focus our policy more
on the external side, and we can live with a more expansionary
money supply. But we must be very careful," he said.
He said he shared some of the U.S. Concern about Japan's
trade surpluses, which affected European countries as well as
the United States.
Poehl welcomed the so-called Louvre accord of monetary
officials of major industrialized countries, saying the
importance of the February 22 agreement to stabilize exchange
rates had been underestimated.
All partners had agreed that the dollar was at about the
right level, and that further changes would damage growth, he
said.
"This was a remarkable change in attitude, especially on the
part of our American colleagues," he said.
But he said there was still a danger that the correction of
the dollar's value could overshoot.
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Cincinnati Bell Inc said it has started
its previously-announced 15.75 dlr per share tender offer for
all shares of Auxton Computer Enterprises Inc.
In a newspaper advertisement, the company said the tender
and withdrawal rights will expire May Five unless extended. The
offer, which has been approved by the Auxton board and is to be
followed by a merger at the same price, is conditioned on
receipt of a majority of Auxton's voting stock on a fully
diluted basis.
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California Biotechnology
Inc said it expects to report a loss of 1,300,000 dlrs to
1,600,000 dlrs for the first quarter due to increased
investment in research and manufacturing and a scaleup of
production.
The company said research spending is running 50 to 60 pct
above a year ago as it tries to commercialize its products as
quickly as possible, and increased expenditures are expected to
continue for several more quarters. It said operating results
will fluctuate quarter to quarter, depending on the timing of
significant payments from commercial partners.
In the first three months of 1986, the company lost 150,000
dlrs. The company changed its fiscal year in 1986 to a
calendar year from a year ending November 30. For the first
quarter of last year, ended February 28, California Biotech
earned 114,000 dlrs.
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Qtly div 8-1/2 cts vs 8-1/2 cts prior
Pay May One
Record April 20
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Unilever Plc and NV <UN.AS> has issued a
prospectus through investment bankers Goldman Sachs and Co
seeking a buyer for <Stauffer Chemical Co> of the U.S., Which
it acquired with the recent takeover of <Chesebrough-Pond's
Inc>, a Unilever spokesman said.
He noted Unilever has been indicating plans to dispose of
Stauffer, plus some smaller assets of Chesebrough, since the
bid was made in December.
The Stauffer sale prospectus has been sent in recent weeks
to a number of companies expressing interest.
The Unilever spokesman declined to say how much the group
expected to receive for Stauffer.
Chesebrough's footwear and tennis racket businesses are
also likely to be disposed of, he added.
Immediately available financial information on Stauffer,
which is wholly-owned, was limited, he added. Nine month sales
to September 1986 were about 1.2 billion dlrs.
Unilever aquired Chesebrough for 3.2 billion dlrs in order
to benefit from its well-known toiletry brands and food
products.
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Conrac Corp sait has started
negotiations with several interested parties on its possible
acquisition.
It said there can be no assurance that any transaction will
result from the talks. It gave no further details.
Mark IV Industries Inc <IV> started tendering for all
Conrac shares at 25 dlrs each on March 24 and owned 9.9 pct of
Conrac before starting the bid.
Conrac is a producer and marketer of computer-related
information display and communications equipment which also
produces special purpose architectural and industrial products.
It owns Code-A-Phone Corp, a producer of telephone
answering machines.
For 1986, the company reported profits of 7.8 mln dlrs, or
1.16 dlrs a share, on sales of 153.9 mln dlrs. It has nearly
6.8 mln shares outstanding.
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Shr 14 cts vs nine cts
Net 217,572 vs 153,454
Revs 2,530,273 vs 2,558,924
1st half
Shr 19 cts vs 11 cts
Net 299,838 vs 174,739
Revs 4,865,249 vs 4,495,021
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Tug crews in New South Wales (NSW),
Victoria and Western Australia yesterday lifted their ban on
foreign-flag ships carrying containers but NSW ports are still
being disrupted by a separate dispute, shipping sources said.
The ban, imposed a week ago over a pay claim, had prevented
the movement in or out of port of nearly 20 vessels, they said.
The pay dispute went before a hearing of the Arbitration
Commission today.
Meanwhile, disruption began today to cargo handling in the
ports of Sydney, Newcastle and Port Kembla, they said.
The industrial action at the NSW ports is part of the week
of action called by the NSW Trades and Labour Council to
protest changes to the state's workers' compensation laws.
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The two sides in the Rotterdam port
general cargo dispute have agreed to appoint an independent
chairman, Han Lammers, to preside over future meetings,
employers' spokesman Gerard Zeebregts said.
Lammers, Queen's Commissioner for the province of
Flevoland, will not act as a mediator but will draw up an
agenda and procedures for meetings between the employers and
unions on a work-practice agreement and proposed redundancies.
Two months of strikes in the sector began on January 19 in
protest at employers' proposals for 350 redundancies from the
4,000-strong workforce this year.
The strikes were called off by the main port union FNV on
March 13 following an Amsterdam court's interim injunction
against the redundancies on procedural grounds.
The court is due to make a final ruling on May 7 but
Zeebregts said he expected the judgment to go against the
employers and they were therefore very likely to restart the
complicated legal redundancy procedures in the near future.
Meanwhile, the dispute over a new work-practice agreement
in the port's grain sector continued, with 30 maintenance
workers on strike, although loading was not affected, a
spokesman for Graan Elevator Mij, the largest employer in the
sector, said.
The employers have written to the union asking it to
reconsider its position and a meeting of union members has been
called for tomorrow.
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Shr 20 cts vs 32 cts
Net 1,358,000 vs 2,476,000
Revs 27.1 mln vs 26.2 mln
Avg shrs 6,852,000 vs 7,764,000
Nine mths
Shr 68 cts vs 1.05 dlrs
Net 4,957,000 vs 8,129,000
Revs 82.6 mln vs 78.8 mln
Avg shrs 7,316,000 vs 7,754,000
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Shr 28 cts vs 22 cts
Net 20.6 mln vs 16.1 mln
Sales 238.0 mln vs 188.8 mln
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Shr profit 13 cts vs loss 33 cts
Net profit 1,149,000 vs loss 2,833,000
Rev 51.8 mln vs 47.8 mln
Year
Shr profit 24 cts vs loss 18 cts
Net profit 2,050,000 vs loss 1,551,000
Rev 200.6 mln vs 180.1 mln
Reuter
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The Bank of England said it provided the
market with further help totalling 166 mln stg during the
afternoon.
In band one, it bought 31 mln stg of treasury bills and
three mln stg of bank bills at 9-7/8 pct, while in band two it
bought 69 mln stg of bank bills at 9-13/16 pct. In addition, it
bought 63 mln stg of band three bank bills at 9-3/4 pct.
This brings the total assistance by the Bank so far today
to 219 mln stg against a liquidity shortage it has estimated at
around 300 mln stg.
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Rubbermaid Inc said its incoming
order rates continue strong and it expects to continue
recording favorable year to year comparisons in each remaining
quarter of 1987.
Today the company reported first quarter earnings of 20.6
mln dlrs on sales of 238.0 mln dlrs, up from earnings of 16.1
mln dlrs on sales of 188.8 mln dlrs.
Reuter
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Shr 55 cts vs 41 cts
Net 494,000 vs 204,000
Avg shrs 896,655 vs 494,155
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Shr 33 cts vs not given
Net 642,484 vs 362,883
NOTE: Company went public in October 1986.
Net includes pretax loan loss provisions of 90,000 dlrs vs
56,250 dlrs and gain on sale of securities of 113,432 dlrs vs
88,946 dlrs.
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2nd qtr March 31
Shr 57 cts vs not given
Net 790,874 vs 628,020
1st half
Shr 1.15 dlrs vs not given
Net 1,588,985 vs 1,073,163
NOTE: Company recently went public.
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Shr 21 cts vs 20 cts
Net 596,000 vs 594,000
Revs 8,693,000 vs 8,164,000
Nine mths
Shr 61 cts vs 58 cts
Net 1,784,000 vs 1,653,000
Revs 26.3 mln vs 23.0 mln
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Compaq Computer Corp said it expects
sales and earnings for the first quarter of 1987 to be higher
than analysts expectations due to strong demand for its
products.
Rod Canion, president and chief executive officer of
Compaq, said he expects sales of over 200 mln dlrs for the
period ending March 31, above analysts' estimates of 165-185
mln dlrs. He added that earnings per share would exceed
analysts estimates of as high as 42 cts a share.
Compaq reported earnings of 8.3 mln dlrs, or 30 cts a
share, and sales of 144 mln dlrs for the first quarter 1986.
The company said demand for its DESKPRO 386, PORTABLE III
and the new COMPAQ DESKPRO 286 will contribute to the sales
increase.
"The initial demand for the recently introduced COMPAQ
PORTABLE III and the new models of the COMPAQ DESKPRO 286
exceeds that of any other Compaq personal computers," Canion
said. "We saw continued demand for our personal computers
across the quarter, with March (1987) being a particularly
strong month.
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I.U. International Co said it
reached a preliminary agreement to sell the Hawaiian Insurance
Cos to Hawaiian Electric Industries Inc. <HE>.
Terms of the transaction were not disclosed, the company
said.
The transaction is subject to the execution of definitive
agreements, certain governmental approvals and approvals by the
boards of directors involved, I.U. International said.
Hawaiian Electric said the planned purchase was part of its
strategy to increase the company's investment in selected
service industries in Hawaii, including financial services.
Reuter
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Shr nil vs nil
Net 215,000 vs 16,000
Revs 2,800,000 vs 1,100,000
Nine mths
Shr one ct vs nil
Net 620,000 vs 231,000
Revs 8,100,000 vs 2,100,000
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Senate Banking Committee Chairman
William Proxmire (D-Wis) said he planned to introduce
legislation shortly to require greater public disclosure of
corporate takeovers and fairer treatment for all shareholders.
Speaking to the National Association of Manufacturers,
Proxmire said recent insider trading stock scandals increased
the chance that Congress will act to curb abuses.
"We are proposing legislation that would provide for more
disclosure, would be fairer to all shareholders, and would
insure that takeovers are properly financed," he said.
Among the provisions, the bill would reduce the threshold
for notifying the Securities and Exchange Commission that a
investor or group has acquired a percentage of stock in a
company to three pct from the current five pct threshold within
10 days, Proxmire said.
In addition, there would be a pre-notificaton requirement
that an investor intended to aquire three pct that would have
to filed with the SEC.
Proxmire said the pre-notification requirement was meant to
prevent arbitragers from having a jump on the general public in
knowing about coming takeover attempts.
Proxmire said he would call for extending the period that a
tender offer must be kept open under the Williams Act to 60
business days from the current 20 business days.
His bill would provide for private suits if the acquiring
company violated the time period on the tender offer.
To correct abuses in the financing of takeovers, Proxmire
said the legislation would aim at insuring current margin
requirments are properly enforced.
The Federal Reserve Board has a 50 pct margin requirement
for purchasing stock, but Proxmire said it is not generally
enforced in hostile takeovers.
Rather, the groups or individuals leading a takeover
declare that they can raise the capital for a takeover without
actually putting any of their own money, Proxmire said.
He said his bill would allow private suits for damages for
failure to meet the Federal Reserve's 50 pct margin
requirements.
The bill also would require more disclose when several
investors form an alliance in a hostile takeover.
"When Pickens and Icahn get together we want people to know
about it," Proxmire said.
Proxmire said he favored the approach used in Britain
towards two-tiered tender offers that insures that all
shareholders recieve equal treatment.
He said he expected amendments to the bill also would cover
defensive mechanisms such as green mail and poison pills.
Proxmire said he intended to introduce his bill later this
month and predicted the Senate committee would act this spring.
He said he was hopeful Congress could pass a bill this
year.
Reuter
| [
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Shr 17 cts vs 13 cts
Net 598,000 vs 392,000
Sales 10.2 mln vs 7,474,000
Avg shrs 3,432,000 vs 3,045,000
Year
Oper shr profit 1.05 dlrs vs loss 47 cts
Oper net profit 3,498,000 vs loss 1,427,000
Sales 52.2 mln vs 40.8 mln
Avg shrs 3,320,000 vs 3,060,000
NOTE: Latest year net excludes 782,000 dlr tax credit.
Reuter
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Bankers Trust New York Corp said it has
placed its approximately 540 mln dlrs of medium- and long-term
loans to Brazil on non-accrual status and that first-quarter
net income will be reduced by about seven mln dlrs as a result.
Brazil suspended interest payments on its 68 billion dlrs
of medium- and long-term debt on February 22.
U.S. banking regulations do not require banks to stop
accruing interest on loans until payments are 90 days overdue,
but Bankers Trust said it acted now because of "the high
potential of a continued suspension that would result in
reaching the 90-day limit in the second quarter of 1987."
Assuming no cash payments at current interest rates are
received for the rest of 1987, Bankers Trust estimated that
full-year net income would be reduced by about 30 mln dlrs.
Bankers Trust said it assumes that debt negotiations
between Brazil and its commercial bank lenders will lead to the
resumption of interest payments.
The negotiations resume in New York on Friday when central
bank governor Francisco Gros is expected to ask banks for a
90-day rollover of some 9.5 billion dlrs of term debt that
matures on April 15.
Reuter
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Shr profit 63 cts vs 22 cts
Net 775,868 vs 276,446
Revs 2,255,742 vs 706,130
Reuter
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West German Finance Minister Gerhard
Stoltenberg said today's meetings of major industrial countries
would look at ways of strengthening the Paris accord on
stabilizing foreign exchange rates.
Stoltenberg told journalists he saw no fundamental weakness
of the February 22 agreement of the Group of Five countries and
Canada to keep exchange rates near the then-current levels.
But he declined to say what measures would be discussed
ahead of a communique of the Group of Seven ministers later
today.
Stoltenberg and Bundesbank President Karl Otto Poehl said
the importance of the Paris agreement, also known as the Louvre
accord, had been underestimated.
Stoltenberg said there is greater agreement now among major
countries than six months ago, at the time of the annual
meeting of the International Monetary Fund and World Bank,
marked by sharp discord between the United States and its major
trading partners.
"There is no fundamental weakness of the Paris accord," he
said. "We will be looking at ways of strengthening it, but I do
not want to discuss that here.
Stoltenberg said the Louvre agreement was working despite a
"slight firming" of the yen against the dollar.
And Poehl noted that the dollar/mark parity was unchanged
since February 22 without the Bundesbank having had to sell
marks to support the dollar.
"The Louvre agreement has been honored by the market," he
said.
Poehl said West Germany had lived up to its side of the
bargain in Paris by preparing the way for tax cuts to be
accelerated as a way of stimulating growth.
Poehl said, however, that Japan had not yet fulfilled its
pledges for economic stimulation.
"And we will have to see if the United States is able to do
what they promised in Paris on reducing the budget deficit --
and get it through Congress," he added.
Stoltenberg reiterated West German concern about a further
fall in the dollar, noting that the mark was up 85 pct against
the dollar and nearly 20 pct on a trade-weighted basis.
"You cannot expect that to go unnoticed in an economy. And
it is not just a German problem, it is a European problem," he
said.
REUTER
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Mead Corp said the outlook for its
major paper markets looks strong for the second quarter and
augurs well for its earnings in 1987.
"The generally strong outlook bodes well for significantly
improved earnings this year," Burnell Roberts, chairman and
chief executive officer said.
Earlier, the company reported first quarter earnings of
34.2 mln dlrs, or 1.09 dlrs a share, versus 20.3 mln dlrs, or
65 cts a share, in last year's first quarter.
In 1986 the company reported earnings from continuing
operations of 109.3 mln dlrs, or 3.50 dlrs a share.
Mead said its first quarter benefitted from stronger market
conditions and improved operations.
"The combination of capital improvement programs and more
employee involvement has been paying off throughout our paper
operations," Roberts said.
He added that Mead's pulp and paperboard businesses are
operating well as prices have improved and strong demand has
placed most products in a sold-out position through the middle
of the year.
Mead said sales of its unbleached coated paperboard was
particularly strong, up 13 pct versus the first quarter 1986.
Reuter
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Shr profit 20 cts vs loss three cts
Net profit 849,299 vs loss 82,512
Revs 7,929,138 vs 3,849,224
Reuter
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Shr primary 78 cts vs 68 cts
Shr diluted 75 cts vs 68 cts
Qtrly div six cts vs five cts
Net 7,929,000 vs 6,569,000
Revs 78.7 mln vs 61.9 mln
NOTE: Pay date for the qtrly div is April 28 for
shareholders of record April 20.
Reuter
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4thh qtr Feb 28
Shr 46 cts vs 22 cts
Net 2,139,034 vs 854,182
Sales 30.8 mln vs 20.6 mln
Avg shrs 5,280,854 vs 4,559,646
Year
Shr 1.34 dlrs vs 1.15 dlrs
Net 5,935,117 vs 4,156,171
Sales 107.2 mln vs 71.6 mln
Avg shrs 5,281,387 vs 3,616,183
NOTE: Town and Country Jewelry Manufacturing Corp.
Reuter
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Paxar Corp said it has
acquired Thermo-Print GmbH of Lohn, West Germany, a distributor
of Paxar products, for undisclosed terms.
Reuter
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Shr 10 cts vs 32 cts
Net 975,000 vs 3,145,000
Sales 159.1 mln vs 147.3 mln
Reuter
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Canadian Bashaw Leduc Oil and
Gas Ltd said it agreed to merge with Erskine Resources Ltd.
Terms were not disclosed.
Ownership of the combined company with 18.8 pct for the
current shareholders of Canadian Bashaw and 81.2 pct to the
current shareholders of Erskine, the companies said.
Reuter
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Entourage International Inc said it had
a first quarter loss of 104,357 dlrs, after incurring 70,000
dlrs in costs for an internal audit, a report for shareholders
and proxy soliciation and 24,000 dlrs in startup expenses for
opening London offices.
The company went public during 1986.
Entourage also said it has started marketing a solid
perfume packaged in a lipstick tube called "Amadeus," retailing
at 15 dlrs.
The company also said it has acquired North Country Media
Group, a video productions company.
Reuter
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Shr 58 cts vs 29 cts
Net 3,141,000 vs 1,440,000
Sales 24.7 mln vs 13.0 mln
Reuter
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Qtly div 33 cts vs 28 cts prior
Pay June 1
Record May 1
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Volkswagen AG <VOWG.F>,
VW, is due to make a formal announcement about its 1986
dividend tomorrow after saying the 1985 level of 10 marks per
ordinary share would be held, despite massive losses because of
a suspected foreign currency fraud.
A spokesman said VW's supervisory board will meet tomorrow
to discuss the payout. A statement will be made afterwards.
VW has also said disclosed profits for 1986 will reach
their 1985 level, despite provisions of a possible 480 mln
marks linked to the currency affair. The figure is virtually
the same as the 477 mln mark 1985 parent company net profit.
When VW first confirmed the currency scandal on March 10 it
said the management board would propose an unchanged 10-mark
dividend to the supervisory board. A dividend of 11 marks would
be proposed for the company's new preference shares.
Share analysts said they saw supervisory board approval of
the management board proposal as virtually a formality.
"Anything else would be more than a surprise," one said.
Company sources said VW would have to dig into reserves to
maintain the disclosed profit. Parent company reserves stood at
around three billion marks at end-1985.
Reuter
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Shr 1.40 dlrs vs 1.16 dlrs
Net 5,776,000 vs 4,429,000
Avg shrs 4,132,828 vs 3,834,117
Reuter
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Southmark Corp said it acquired 28
long-term care facilities containing for approximately 70 mln
dlrs in cash.
It said the facilities, which contain approximately 2,500
beds in seven western states, were bought from Don Bybee and
Associates, of Salem,Ore.
The acquistion brings to 57 health care facilities acquired
in the last three months, the company said.
Reuter
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shr 1.22 dlrs vs 1.28 dlrs
net 226.4 mln vs 233.9 mln
assets 80.45 billion vs 70.23 billion
loans 35.16 billion vs 35.99 billion
deposits 45.22 billion vs 39.68 billion
return on assets 1.14 pct vs 1.35 pct
return on common equity 18.20 pct vs 22.08 pct
NOTE: 1987 qtr net was reduced by 20 mln dlrs because 1.3
billion dlrs of loans to Brazil were placed on non-accrual.
loan loss provision 35 mln dlrs vs 70 mln year earlier.
Reuter
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Shr 74 cts vs 67 cts
Net 8,067,000 vs 7,317,000
Reuter
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Qtr ends Feb 28
Shr Class A 61 cts vs 48 cts
Shr Class B 59 cts vs 46 cts
Net 2,358,000 vs 1,876,000
Revs 122,508,000 vs 105,871,000
Six mths
Shr Class A 1.15 dlrs vs 86 cts
Shr Class B 1.13 dlrs vs 84 cts
Net 4,485,000 vs 3,378,000
Revs 242,453,000 vs 210,117,000
NOTE: qtr and six mths prior figures reflect two-for-one
stock split in August 1986.
Reuter
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Hanover Insurance Co said its
stockholders approved a two-for-one stock split.
As a result of the split, Hanover said it increases the
number of authorized shares of capital stock from 10.4 mln,
having a par value of one dlr, to 20.9 mln, also having a par
value of one dlr.
The stock split is payable April 30 to stockholders of
record April 10, Hanover said.
Reuter
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National Guardian Corp said it
has acquired a number of security services companies recently,
with aggregate revenues of about 3,500,000 dlrs, for an
aggregate cost of about 2,700,000 dlrs.
It said it acquired guard service companies C.S.C. Security
Gaurd Service of Paramus, N.J., from Cartel Security
Consultants Inc, the Guard Services Division of Security
Services of America of Wayne, N.J., Capital Investigations and
Protective Agency of Hackensack, N.J., and Meyer Detective
Agency Inc of National Park, N.J.
The company said it bought alarm service operations
Certified Security Services Inc of Key West, Fla., Custom
Security Services of Myrtle Beach, S.C., A-T-E Security Group
Inc of Houston and the Louisville, Kent and Nashville, Tenn,
offices of Wells Fargo Alarm Services.
Reuter
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Qtly distribution 7-1/2 cts vs 7-1/2 cts prior (excluding
2-1/2 cts special)
Pay April 30
Record April 22
NOTE: Full name is Universal Medical Buildings L.P.
Reuter
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The Zambian government has no immediate
plans to follow last week's increase in the producer price of
maize with a hike in the retail price of maize meal, an
official of the ruling party said.
Last December, a 120 pct increase in the consumer price for
refined maize meal, a Zambian staple, led to food riots in
which at least 15 people died.
That price increase, which President Kenneth Kaunda later
revoked, followed pressure by the International Monetary Fund
(IMF) to reduce the government's subsidy bill.
However, if the producer price rise, from 6.10 dlrs to 8.67
dlrs per 90-kg bag, is not accompanied by a retail price
increase, the government will have to spend more on subsidies,
a practice discouraged by the IMF.
"There is no way out but to raise the subsidy levels of
meal. It (the government) would have to choose between the
demands of the IMF and those of the people," a Ministry of
Agriculture economist said.
Reuter
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Wedgestone Realty Investors Trust
said shareholkders have approved the acquisition of its
advisor, Wedgestone Advisory Corp, for 600,000 shares.
It said completion is expected to take place April 10.
Reuter
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Argentine grain producers adjusted
their yield estimates for the 1986/87 coarse grain crop
downward in the week to yesterday after the heavy rains at the
end of March and beginning of April, trade sources said.
They said sunflower, maize and sorghum production estimates
had been reduced despite some later warm, dry weather, which
has allowed a return to harvesting in some areas.
However, as showers fell intermittently after last weekend,
producers feared another spell of prolonged and intense rain
could cause more damage to crops already badly hit this season.
Rains in the middle of last week reached an average of 27
millimetres in parts of Buenos Aires province, 83 mm in
Cordoba, 41 in Santa Fe, 50 in Entre Rios and Misiones, 95 in
Corrientes, eight in Chaco and 35 in Formosa.
There was no rainfall in the same period in La Pampa.
Producers feared continued damp conditions could produce
rotting and lead to still lower yield estimates for all the
crops, including soybean.
However, as the lands began drying later in the week
harvesting advanced considerably, reaching between 36 and 40
pct of the area sown in the case of sunflower.
Deterioration of the sunflower crop evident in harvested
material in Cordoba, La Pampa and Buenos Aires forced yield
estimates per hectare to be adjusted down again.
The season's sunflowerseed production is now forecast at
2.1 mln to 2.3 mln tonnes, against 2.2 mln to 2.4 mln forecast
last week and down 43.9 to 48.8 pct on the 1985/86 record of
4.1 mln.
Area sown to sunflowers was two to 2.2 mln hectares, 29.9
to 36.3 pct below the record 3.14 mln hectares last season.
Maize harvesting has also reached 36 to 40 pct of the area
sown. It is near completion in Cordoba and Santa Fe and will
begin in La Pampa and southern Buenos Aires later in April.
Production estimates for maize were down from last week at
9.5 mln to 9.8 mln tonnes, against 9.6 mln to 9.9 mln estimated
previously.
This is 22.2 to 23.4 pct below the 12.4 mln to 12.6 mln
tonnes estimated by private sources for the 1985/86 crop and
21.9 to 25.8 pct down on the official figure of 12.8 mln
tonnes.
Maize was sown on 3.58 mln to 3.78 mln hectares, two to
seven pct down on last season's 3.85 mln.
Sorghum was harvested on 23 to 25 pct of the area sown in
Cordoba, Santa Fe and Chaco. Harvest will start in La Pampa and
Buenos Aires in mid-April.
The total area sown was 1.23 mln to 1.30 mln hectares, 10.3
to 15.2 pct down on the 1.45 mln sown last season.
The new forecast for the sorghum crop is 2.9 mln to 3.2 mln
tonnes compared with three mln to 3.3 mln forecast last week,
and is 23.8 to 29.3 pct down on last season's 4.1 mln to 4.2
mln tonne crop.
The soybean crop for this season was not adjusted,
remaining at a record 7.5 mln to 7.7 mln tonnes, up 4.2 to 5.5
pct on the 7.2 mln to 7.3 mln estimated by private sources for
1985/86 and 5.6 to 8.5 pct higher than the official figure of
7.1 mln.
The area sown to soybeans this season was a record 3.7 mln
to 3.8 mln hectares, 10.8 to 13.8 pct up on the record 3.34 mln
sown in 1985/86.
The soybean crop is showing excessive moisture in some
areas and producers fear they may discover more damage. Some
experimental harvesting was carried out in Santa Fe on areas
making up only about one pct of the total crop but details on
this were not available.
Preparation of the fields for the 1987/88 wheat crop, which
will be sown between May and August or September, has so far
not been as intense as in previous years.
Reuter
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HARTMARX CORP <HMX> BOOSTS DIVIDEND
CHICAGO, April 8
Qtly div 25 cts vs 23 cts prior qtr
Pay 15 May
Record 1 May

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Top officials of leading industrial
nations arrived at the U.S. Treasury main building to begin a
meeting of the Group of Five.
Officials seen arriving by Reuter correspondents included
West German Finance Minister Gerhard Stoltenberg and Bundesbank
President Karl Otto Poehl, French Finance Minister Edouard
Balladur and his central banker Jacques de Larosiere.
Also seen arriving were Japanese Finance Minister Kiichi
Miyazawa and Japan's central bank governor Satoshi Sumita and
British Chancellor of the Exchequer and central bank governor
Robin Leigh Pemberton.
There was no immediate sign of Italian or Canadian
officials. Monetary sources have said a fully blown meeting of
the Group of Seven is expected to begin around 3 p.m. local
time (1900 gmt) and last at least until 6 p.m. (2200 gmt), when
a communique is expected to be issued.
Italian sources said Italian acting Finance Minister
Giovanni Goria met Treasury Secretary James Baker last night.
At those talks Baker apparently convinced Goria, who
declined to attend the February meeting of the Group of Seven
in Paris, that Italy would participate fully in any meaningful
decisions.
Reuter
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The Federal Reserve is expected to
intervene in the government securities market to supply
temporary reserves indirectly via customer repurchase
agreements, economists said.
Economists expect the Fed to execute 2.0-2.5 billion dlrs
of customer repos to offset pressures from the end of the
two-week bank reserve maintenance period today. Some also look
for a permanent reserve injection to offset seasonal pressures
via an outright purchase of bills or coupons this afternoon.
The Federal funds rate opened at 6-3/8 pct and remained at
that level, up from yesterday's 6.17 pct average.
Reuter
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<The Reader's Digest
Association Inc> said it sold its subsidiary, Source
Telecomputing Corp, to the venture capital firm of <Welsh,
Carson, Anderson and Stowe>.
The purchase price was not disclosed, Reader's Digest said.
It said it purchased an 80 pct stake in Source in 1980 and
earned an unspecified profit on 14 mln dlrs in revenues in
1986.
Reuter
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Shr 59 cts vs 51 cts
Net 18.0 mln vs 15.6 mln
Revs 278.6 mln vs 272.2 mln
Reuter
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Continental Bank of Canada said
shareholders approved a capital reorganization to allow an
initial payout by the end of May to common shareholders from
last year's 200 mln Canadian dlr sale of most Continental
assets to <Lloyds Bank PLC>'s Lloyds Bank Canada.
The bank said the initial distribution would take the form
of a stock dividend of cumulative redeemable retractable class
A series two preferred shares entitling holders to monthly
floating rate dividends at 72 pct of prime and to 12.75 dlrs a
share on retraction.
Continental said the initial payout was subject to Canadian
government approval.
The bank reiterated that total distributions to common
shareholders would range from 16.50 dlrs a share to 17.25 dlrs
including the initial stock dividend and a final distribution
in late 1988 or early 1989.
The payout of existing preferred shareholders will be
completed just before next month's initial distribution to
common shareholders, Continental added.
Reuter
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4th qtr
Shr loss 17 cts vs loss 22 cts
Net loss 14.5 mln vs loss 18.0 mln
Revs 27.3 mln vs 23.7 mln
Year
Shr 58 cts vs 1.01 dlrs
Net loss 48.3 mln vs loss 84.2 mln
Revs 111.7 mln vs 141.9 mln
NOTE: Atlas Consolidated Mining and Development Corp of
Manila.
Translated from Philippine pesos at 20.3489 pesos to dollar
vs 18.5571 in quarter and 20.2315 vs 18.2743 in year.
Reuter
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Sci-Med Life Systems Inc said
its directors approved a previously proposed agreement of
merger with Bristol-Myers Co.
The proposed transaction is subject to completion of a due
diligence investigation, including a review by Bristol-Myers of
a patent infringement suit served on Sci-Med by Advanced
Cardiovascular Systems Inc on March 31, 1987.
Bristol-Myers has the right to call off the agreement under
certain circumstances, it said.
Sci-Med said it continues to believe the patent suit is
without merit.
Reuter
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Fidelcor Inc said it has completed
the sale of its Industrial Valley Title Insurance Co subsidiary
to a group of investors including the unit's management for
undisclosed terms.
Industrial Valley has assets of about 37.6 mln dlrs and was
acquired last year along with IVB Financial Corp.
Reuter
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Shr 18 cts vs 13 cts
Net 575,000 vs 379,000
Sales 6,625,000 vs 4,537,000
Avg shrs 3,173,000 vs 2,977,000
Reuter
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Cheap oil feedstocks, the weakened U.S.
dollar and a plant utilization rate approaching 90 pct will
propel the streamlined U.S. petrochemical industry to record
profits this year, with growth expected through at least 1990,
major company executives predicted.
This bullish outlook for chemical manufacturing and an
industrywide move to shed unrelated businesses has prompted GAF
Corp <GAF>, privately-held Cain Chemical Inc, and other firms
to aggressively seek acquisitions of petrochemical plants.
Oil companies such as Ashland Oil Inc <ASH>, the
Kentucky-based oil refiner and marketer, are also shopping for
money-making petrochemical businesses to buy.
"I see us poised at the threshold of a golden period," said
Paul Oreffice, chairman of giant Dow Chemical Co <DOW>, adding,
"There's no major plant capacity being added around the world
now. The whole game is bringing out new products and improving
the old ones."
Analysts say the chemical industry's biggest customers,
automobile manufacturers and home builders that use a lot of
paints and plastics, are expected to buy quantities this year.
U.S. petrochemical plants are currently operating at about
90 pct capacity, reflecting tighter supply that could hike
product prices by 30 to 40 pct this year, said John Dosher,
managing director of Pace Consultants Inc of Houston. Demand
for some products such as styrene could push profit margins up
by as much as 300 pct, he said.
Oreffice, speaking at a meeting of chemical engineers in
Houston, said Dow would easily top the 741 mln dlrs it earned
last year and predicted it would have the best year in its
history.
In 1985, when oil prices were still above 25 dlrs a barrel
and chemical exports were adversely affected by the strong U.S.
dollar, Dow had profits of 58 mln dlrs. "I believe the entire
chemical industry is headed for a record year or close to it,"
Oreffice said.
GAF chairman Samuel Heyman estimated that the U.S. chemical
industry would report a 20 pct gain in profits during 1987.
Last year, the domestic industry earned a total of 13 billion
dlrs, a 54 pct leap from 1985.
The turn in the fortunes of the once-sickly chemical
industry has been brought about by a combination of luck and
planning, said Pace's John Dosher.
Dosher said last year's fall in oil prices made feedstocks
dramatically cheaper and at the same time the American dollar
was weakening against foreign currencies. That helped boost
U.S. chemical exports.
Also helping to bring supply and demand into balance has
been the gradual market absorption of the extra chemical
manufacturing capacity created by Middle Eastern oil producers
in the early 1980s.
Finally, virtually all major U.S. chemical manufacturers
have embarked on an extensive corporate restructuring program
to mothball inefficient plants, trim the payroll and eliminate
unrelated businesses. The restructuring touched off a flurry of
friendly and hostile takeover attempts.
GAF, which made an unsuccessful attempt in 1985 to acquire
Union Carbide Corp <UK>, recently offered three billion dlrs
for Borg Warner Corp <BOR>, a Chicago manufacturer of plastics
and chemicals. Another industry powerhouse, W.R. Grace <GRA>
has divested its retailing, restaurant and fertilizer
businesses to raise cash for chemical acquisitions.
But some experts worry that the chemical industry may be
headed for trouble if companies continue turning their back on
the manufacturing of staple petrochemical commodities, such as
ethylene, in favor of more profitable specialty chemicals that
are custom-designed for a small group of buyers.
"Companies like DuPont <DD> and Monsanto Co <MTC> spent the
past two or three years trying to get out of the commodity
chemical business in reaction to how badly the market had
deteriorated," Dosher said. "But I think they will eventually
kill the margins on the profitable chemicals in the niche
market." Some top chemical executives share the concern.
"The challenge for our industry is to keep from getting
carried away and repeating past mistakes," GAF's Heyman
cautioned. "The shift from commodity chemicals may be
ill-advised. Specialty businesses do not stay special long."
Houston-based Cain Chemical, created this month by the
Sterling investment banking group, believes it can generate 700
mln dlrs in annual sales by bucking the industry trend.
Chairman Gordon Cain, who previously led a leveraged buyout
of Dupont's Conoco Inc's chemical business, has spent 1.1
billion dlrs since January to buy seven petrochemical plants
along the Texas Gulf Coast.
The plants produce only basic commodity petrochemicals that
are the building blocks of specialty products.
"This kind of commodity chemical business will never be a
glamorous, high-margin business," Cain said, adding that demand
is expected to grow by about three pct annually.
Garo Armen, an analyst with Dean Witter Reynolds, said
chemical makers have also benefitted by increasing demand for
plastics as prices become more competitive with aluminum, wood
and steel products. Armen estimated the upturn in the chemical
business could last as long as four or five years, provided the
U.S. economy continues its modest rate of growth.
Reuter
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Shr loss two cts vs profit 38 cts
Net loss 90,000 vs profit 1,685,000
Revs 1,826,000 vs 29.3 mln
Year
Shr profit 3.37 dlrs vs profit 46 cts
Net profit 15.0 mln vs profit 2,047,000
Revs 26.2 mln vs 123.6 mln
NOTE: Net includes pretax securities sale gain 10,000 dlrs
vs loss 1,000 dlrs in quarter and gain 486,000 dlrs vs loss
112,000 dlrs in year.
Net includes pretax gains on sale of businesses of nil vs
4,656,000 dlrs in quarter and 26.0 mln dlrs vs 4,656,000 dlrs
in year.
Net includes pretax losses on disposition of product line
of nil vs 3,150,000 dlrs in quarter and 3,300,000 dlrs vs
3,150,000 dlrs in year.
Quarter net includes tax credits of 102,000 dlrs vs 736,000
dlrs.
Net includes reversal of tax loss carryforwards of 259,000
dlrs vs 264,000 dlrs in quarter and tax loss carryforwards of
8,635,000 dlrs vs 579,000 dlrs in year.
Reuter
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Oper shr 26 cts vs not given
Oper net 866,000 vs 480,000
NOTE: 1987 net excludes 157,000 dlr gain from termination
of pension plan.
Company went public in August 1986.
Reuter
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Qtly div 30 cts vs 30 cts prior
Pay June 8
Record May 18
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Qtly div 10 cts vs 10 cts previously
Pay April 20
Record April 10
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