EWS AT A GLANCE
Citi negotiates offloading $12 billion in loans
Citigroup is reportedly close to selling $12 billion of leveraged loans and bonds for below face value to a group of private equity firms. The firms, including Apollo Group, Blackstone Group, and TPG, would pay a little below 90 cents on the dollar for the hard-to-sell assets. (Reuters) If the deal goes through, Citigroup “won’t have to worry about more mark-to-market writedowns on these loans,” said William Smith at Smith Asset Management. “There’s now a consortium of private-equity firms saying what they’re worth.” (Bloomberg) Washington Mutual said it got a $7 billion investment from TPG and other investors. (MarketWatch)
American grounds flights, warns of more cancelations
American Airlines said it would cancel an unknown number of flights today, after grounding 500 flights yesterday due to federal concerns about wiring in 300 of its aircraft. The airline had inspected the same planes, MD-80s, two weeks ago, but repairs had failed to meet FAA standards. (AP in Yahoo! Finance) In other aviation news, Chinese discount carrier Oasis Hong Kong Airlines ceased operations, ending a 17-month challenge to Cathay Pacific, amid high fuel costs and steep airport fees at its Hong Kong hub. It is the fourth airline to shut down in a week. (Bloomberg) Separately, U.S. conglomerate Honeywell won a $23 billion jet-engine contract from Brazil’s Embraer. (Reuters)
UPS lowers earning outlook
UPS, the world’s largest package-delivery company, said its first-quarter profits would come in lower than expected due to high fuel costs, the weak U.S. economy, and the resulting slowdown in domestic shipping. The news sent its shares down about 4 percent in extended trading. (AP in Yahoo! Finance) UPS said its earnings per share would come in at 86 cents to 87 cents, compared with analysts’ forecasts of 94 cents. “This is the vice grip of fuel and the decelerating economy,” said analyst Dan Ortwerth at Edward Jones & Co. (Bloomberg) The profit warning exacerbated fears about the state of the U.S. economy. (MarketWatch)
The strong pull of an old tractor
Old tractors are receiving new interest, and escalating bids at auction. Agrarian collectors flush with cash from record-high crop prices are bidding against wealthy urban and suburban enthusiasts, as well as a growing number of Europeans who bid in Midwestern auctions over the Internet. Century-old tractors that sold for $10,000 a decade ago can now fetch $100,000 or more, with rare makes drawing even higher prices. Like vintage cars, the tractors are worth more when they are closer to factory condition. Some collectors use their tractors in the field, but most don’t. “I don’t run them in the dirt anymore,” says financial planner Dave Anton. (The Wall Street Journal)
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