RTC Director

Renesas shares up 5% on $2.2bn bailout report

Shares of Japanese chipmaker Renesas have risen 5% after a report said that shareholders have accepted a bailout from a government-backed fund.

The Nikkei Daily said the the fund will buy two-thirds of the struggling company for 180bn yen ($2.2bn; £1.4bn).

Renesas will also get an additional 1bn yen from major shareholders Hitachi and NEC Corp, the newspaper said.

Renesas, which makes chips for Apple and Nintendo, has seen demand decline in recent months

by RTC Director

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Germany's upper house of parliament has rejected a deal with Switzerland to tax German assets held in Swiss bank accounts.

The deal would have allowed Germans with undeclared assets in Switzerland to avoid punishment by making a one-off payment of between 21% and 41% of the value of their assets.

The deal had been negotiated in April and was due to take effect in January.

But it needed to be ratified by both parliaments.

The rejection by the German upper house, the Bundesrat, prolongs the dispute between the two countries over how to deal with the estimated 180-200bn euros (£145-160bn) of German assets hidden in Switzerland.

German Finance Minister Wolfgang Schaeuble had called for support for the deal, saying: "The agreement tries to find a better solution for a situation which is unsatisfactory."

But Norbert Walter-Borjans, of the main opposition Social Democrats, told the Bundesrat it was a deal which made "honest taxpayers feel like fools".

Swiss Finance Minister Eveline Widmer-Schlumpf said her government remained "committed to a successful ratification".

And the Swiss Bankers Association said in a statement: "The German upper house has missed a major opportunity to reach a fair, optimum and sustainable solution for all parties to definitively settle the bilateral tax issues."

by RTC Director

Aston Martin owner denies receiving two offers for firm

The owner of Aston Martin, Kuwait's Investment Dar, has denied reports it has received competing bids for a 50% stake in the luxury British car brand.

Italian private equity fund Investindustrial is widely reported to have made an offer of nearly £250m ($400m) for Aston Martin.

India's Mahindra and Mahindra is understood to have made a higher offer.

But in an interview with Kuwait's Al Watan newspaper Investment Dar chairman Adnan Al Musallam denied the story.

Earlier this month, Investment Dar dismissed a Bloomberg story which said it was looking to sell its stake in the British car maker as having "no truth to it".

At the time, the investment house said it had "a long-term plan and commitment with Aston Martin and has no plans to sell its stake in Aston Martin in the short term".

Despite that statement on 12 November though, reports of a bidding war between Investindustrial and Mahindra and Mahindra have become more widespread.

Mahindra and Mahindra declined to comment, while Investindustrial could not be reached.

Aston Martin, based in Gaydon, Warwickshire, will celebrate its 100th anniversary next year.

Its cars have been immortalised in James Bond films over the last few decades.

The company was sold in 2007 by Ford for £479m to a consortium of Investment Dar and another Kuwaiti investment fund, Adeem Investment.

The consortium was fronted by Dave Richards, former Formula One Benetton and BAR boss, who remains as chairman of Aston Martin.

The new owners targeted higher sales in China, but sales in the UK and North America have been hit in the financial crisis.

by RTC Director

Gas tanker Ob River attempts first winter Arctic crossing

A large tanker carrying liquified natural gas (LNG) is set to become the first ship of its type to sail across the Arctic.

The carrier, Ob River, left Norway in November and has sailed north of Russia on its way to Japan.

The specially equipped tanker is due to arrive in early December and will shave 20 days off the regular journey.

The owners say that changing climate conditions and a volatile gas market make the Arctic transit profitable.

Long-term preparation

Built in 2007 with a strengthened hull, the Ob River can carry up to 150,000 cubic metres of gas. The tanker was loaded with LNG at Hammerfest in the north of Norway on 7 November and set sail across the Barents Sea. It has been accompanied by a Russian nuclear-powered icebreaker for much of its voyage.

The ship, with an international crew of 40, has been chartered from its Greek owners Dynagas by the Russian Gazprom energy giant. It says it has been preparing for the trip for over a year.

"It's an extraordinarily interesting adventure," Tony Lauritzen, commercial director at Dynagas, told BBC News.

"The people on board have been seeing polar bears on the route. We've had the plans for a long time and everything has gone well."

Mr Lauritzen says that a key factor in the decision to use the northern route was the recent scientific record on melting in the Arctic.

"We have studied lots of observation data - there is an observable trend that the ice conditions are becoming more and more favourable for transiting this route. You are able to reach a highly profitable market by saving 40% of the distance, that's 40% less fuel used as well."

The Norwegian LNG plant at Hammerfest was developed with exports to the US in mind. But the rapid uptake of shale in America has curbed the demand for imported gas.

Meanwhile in Japan, in the wake of the Fukushima nuclear disaster, there has been a growing interest in alternative power sources, especially gas.

"The major point about gas is that it now goes east and not west," says Gunnar Sander, senior adviser at the Norwegian Polar Institute and an expert on how climate change impacts economic activity in the Arctic.

"The shale gas revolution has turned the market upside down; that plus the rapid melting of the polar ice."

He stresses that the changes in climate are less important than the growing demand for oil and gas.

"The major driver is the export of resources from the Arctic region, not the fact that you can transit across the Arctic sea."

There is an expectation that because of changing climactic conditions, sea traffic across the northern sea route will increase rapidly. 2012 has been a record year both for the length of the sailing season and also for the amount of cargo that has been shipped.

-BBC

by RTC Director

Argentina debt showdown - NY judge: The court will be obeyed

Argentina has finally run out of wiggle room in a billion-dollar showdown over foreign debts unpaid since the country's world-record default a decade ago, and the stakes couldn't be higher for President Cristina Fernandez.

A US federal judge in New York late Wednesday ordered Argentina to pay immediately and in full everything it owes to what Fernandez calls "vulture funds" that she blames for much of her country's troubles.

That adds up to US$1.3 billion, due by December 15.

The judge also barred Argentina from paying other bondholders until it satisfies this judgment, putting the president's back against the wall: If she doesn't reverse her long-standing position and pay up, she risks triggering another historic Argentine debt default, this time totalling more than US$20 billion.

"It is hardly an injustice to have legal rulings which, at long last, mean that Argentina must pay the debts which it owes. After 10 years of litigation, this is a just result," US District Judge Thomas Griesa concluded.

Argentine Economy Minister Hernan Lorenzino responded to the judge Thursday by pledging to battle "judicial colonialism."

Lorenzino said Argentina would defend its stance using all legal means and would take the ruling to the US 2nd Circuit Court of Appeals on Monday.

"Paying the vultures is not only unfair, but illegal following our internal rules," Lorenzino told reporters, referring to Argentina's "ley cerrojo," or "lock law," which bans the reopening of debt restructuring.

"We'll fight all decisions that are against the interests of our country," Lorenzino said, adding that Argentina is also ready to appeal to the US Supreme Court and take its case before any international body.

"We still believe the US justice system will fix this in a way that won't affect Argentina, its legitimate creditors and, in an international context where the importance of these decisions is patent ... in terms of the financial international architecture," he said.

Argentina's president had insisted earlier this week that her administration wouldn't pay a single dollar to the plaintiffs.

No room for evasion

But the judge gave Fernandez no room to manoeuvre meanwhile, lifting his stay and ordering that the money be put in an escrow account for the plaintiffs to collect.

"These threats of defiance cannot go by unheeded," the judge wrote. "The less time Argentina is given to devise means for evasion, the more assurance there is against such evasion."

If Fernandez refuses, the judge said that the Bank of New York, which processes Argentina's bond payments, will find itself in violation if it doesn't hold up payments to all other bondholders.

"It's a mess. This does not help Argentina. Default could happen," Goldman Sachs analyst Alberto Ramos in New York said Thursday. "The markets will react negatively to this."

The remedy also sent jitters through the legal departments of the most powerful financial institutions in the United States.

The US Federal Reserve and the Clearing House, a trade group representing the world's largest commercial banks, told the judge to make sure his order won't affect the US funds-transfer system, which automatically moves an average of US$2.6 trillion a day in a half-million transfers between more than 7,000 banks.

The entire system depends on transfers being "immediate, final and irrevocable" when processed. Requiring intermediaries to identify, stop and divert payments according to court orders "would impede the use of rapid electronic funds transfers in commerce by causing delays and driving up costs."

The judge dismissed these concerns Wednesday night, saying among other things that "if Argentina complies with the rulings of the Court of Appeals, there will be no problem."

As with so many other things involving Argentina, this case is rooted in the bloody dictatorship that ruled in 1976-1983.

The military junta more than tripled the country's foreign debts. By 2001, the burden had become unsustainable and the economy collapsed.

Argentina's US$95 billion default still stands as a world record.

Sovereign debt is supposed to be paid no matter who runs a country, but Fernandez has always considered this defaulted debt to be illegitimate, forced onto the Argentines by dictators acting in concert with international financial speculators.

She and her late husband and predecessor as president, Nestor Kirchner, who took office in 2003, have never made any payments on the defaulted bonds.

Instead, they offered new bonds paying less than 30 cents for each dollar owed in default, and by 2010, some 93 per cent of the original bondholders agreed to the swaps.

The debt relief granted by these "exchange bondholders" enabled Argentina to climb out of a deep economic crisis, and many analysts have described it as a model for Greece and other debt-burdened countries to consider.

Holdouts led by NML Capital Ltd, an investment fund owned by US billionaire Paul Singer, refused the swaps, insisting on payment in full plus interest.

Seeking assets

Singer's lawyers have travelled the world since then seeking to embargo Argentine assets, even getting its naval training ship Libertad seized in Ghana as collateral. But they have never collected.

The judge's solution to all this is to force Argentina to pay the holdouts an equal amount each time it makes a payment to the exchange bondholders.

And since the latter group is due to get US$3.3 billion on December 15, the judge said the holdouts must get their entire US$1.3 billion by then as well.

Exchange bondholders who collectively own US$20 billion in the restructured Argentine debt had argued that they "already suffered tens of billions of dollars in losses" and that it was not fair to harm their already diminished returns so that a few holdouts can earn up to 200 per cent on debt they bought for pennies on the dollar after Argentina's collapse.

If allowed to stand, this kind of remedy will make it impossible for other countries to get critical debt relief, they argued.

But the judge said his remedy was fair.

"The exchange bondholders bargained for certainty and the avoidance of the burden and risk of litigating," while the holdouts spent years unsuccessfully trying to make Argentina pay, he wrote.

- AP

by RTC Director