QUOTE OF THE DAY
“Volkswagen will probably continue to grow more dynamically in China than GM. It’s going to remain neck and neck.” Frank Schwope, NordLB analyst Article, 1D
Sale hearing reset in Allens bankruptcy
Judge Ben Barry has changed the date of the sale hearing for bankrupt Allens Inc. to Feb. 11 at 9 a.m., a day later than initially planned.
On Tuesday, Barry established the sale’s timetable, setting a Jan. 27 deadline for bids, the auction for Feb. 3 and a sale hearing for Feb. 10. In a filing Friday afternoon, Barry changed the date for the sale hearing and a hearing on disputed claims made under the Perishable Agricultural Commodities Act to the later date.
In late October, Allens filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the Western District of Arkansas. Court filings show that Allens owes its primary lenders $114.36 million and its secondary lenders $65.6 million.
New York-based Seneca Foods made a $148 million offer to buy the frozen- and canned-food company last month, hoping to set the initial bid for the company’s assets, a role known as the stalking-horse bidder that Barry also approved earlier in the week. Other bidders may still buy some or all of the company’s assets, but if they do they will have to pay their portion of a $4.5 million breakup fee.
Allens employs nearly 1,200 people across all of its U.S.
operations, according to a court filing. In addition to its Siloam Springs plant and other Arkansas holdings, the company has operations in Georgia, North Carolina and Wisconsin.
YRC, Teamsters discuss pact changes
YRC and the Teamsters have been discussing modifications to an existing contract since October as the Kansas-based trucking firm works to pay off $1.4 billion in debt. Teamsters employees agreed six years ago, according to the union, to a 15 percent wage concession from the National Master Freight Agreement and a 75 percent reduction in pension contributions.
“Our members have sacrificed billions of dollars in wages and pension benefits over the past five years and yet the company has been unable to recover from the disastrous policies of the previous management,” Teamsters General President and co-Chairman Jim Hoffa said in a statement.
YRC, rated the nation’s fifth-largest for-hire carrier by Transport Topics, is among the chief rivals of Fort Smith-based ABF Freight System Inc., a subsidiary of Arkansas Best. A new five-year labor pact was ratified between the Teamsters and ABF in October after nearly a year of negotiations.
Arkansas Best, ranked No. 12 by Transport Topics, is expected to save between $55 million and $65 million annually during the course of the agreement, which expires in March 2018. Savings will be realized in a number of ways, including a 7 percent wage cut that will be recouped by employees by the final year of the contract.
YRC said in December that if its proposal failed to pass, the company could have difficulty restructuring or refinancing its debt.
Economy in Fort Smith area weakens
The Fort Smith regional economy showed signs of weakness in November, according to a report from the University of Arkansas at Fort Smith.
Kermit Kuehn, director of the school’s Center for Business Research and Economic Development, said in a news release that while the region saw slight improvement in retail sales and gains in autos sales and regional employment, the downturn in home sales was disappointing.
Home sales in the metropolitan statistical area were down 11.5 percent compared to the same period in 2012, breaking a streak of upward movement that began in July. Year-to-date sales for 2013 are still up 6.1 percent.
Kuehn said retail sales saw a 0.9 percent increase over October 2012. October figures were the most recent available.
New auto sales were a bright spot, seeing a 1.3 percent gain over November 2012, and year-to-date sales show a 9 percent increase in 2013.
The nonfarm payroll employment for the statistical area was 119,700, up 2,500 more jobs for the month when compared to November 2012. The unemployment rate was 6.9 percent, the lowest since 2008. Kuehn noted in the release the drop in the rate was because of the decline in the number of people looking for work and not an increase in employment.
The statistical area includes Sebastian, Crawford and Franklin counties, and Le Flore and Sequoyah counties in Oklahoma.
- John Magsam
Volkswagen favors U.S. for SUV plant
FRANKFURT, Germany - Volkswagen, Europe’s largest carmaker, will add a mid-size sport utility vehicle in the United States and probably will build the model at a factory in Chattanooga, Tenn., two people familiar with the matter said.
Chattanooga is favored over the automaker’s plant in Puebla, Mexico, to build the SUV for North American customers, said the people, who asked not to be identified prior to an official announcement. Any decision will be part of a wider move to sell the model in other markets, such as the Middle East or China, although the version sold in that country probably would be produced locally, one person said.
Volkswagon has expanded to become the world’s third-biggest auto manufacturer, ranking behind Toyota and General Motors, thanks to sales increases in countries such as China and Russia. Those gains contrast with a struggle to raise the Wolfsburg, Germany-based carmaker’s presence in the U.S., a market that’s crucial to the company’s goal of taking the global industry sales lead by 2018. Carsten Krebs, a spokesman for Volkswagon’s U.S. operations, declined to comment.
Piles of airline cash stuck in Venezuela
International airlines operating in Venezuela have $3.3 billion trapped in the South American country because of currency controls, according to the International Air Transport Association.
Valued at the official exchange rate of 6.3 bolivars per dollar, the amount of cash airlines have in Venezuela has risen 27 percent from $2.6 billion in November, Jason Sinclair, an International Air Transport Association spokesman. Companies including Brazil’s Gol Linhas Aereas Inteligentes SA and Panama’s Copa Holdings SA are among those affected by the restrictions.
“We are still operating, but it’s hard to get money out,” said Edmar Lopes Neto, Gol’s chief financial officer. “We’re all in the same boat.”
Airlines have to wait about 12 months for the government to convert their bolivar earnings into dollars, with the time lag growing, according to the Venezuela Airline Association. Madrid-based Air Europa said Wednesday it suspended ticket sales from Venezuela as its cash in the country totaled $100 million.
“We are looking for formulas to resolve these issues,” Tourism Minister Andres Izarra told reporters in Caracas.
“We will make announcements shortly.” - Bloomberg News
Business, Pages 28 on 01/11/2014