Switzerland and France back on track over tax
Switzerland has reached agreement with France over the fate of stolen bank client data, and is ready to proceed with a stalled double taxation agreement.
The Swiss finance ministry said on Friday that France will not request administrative assistance in obtaining information about suspected tax evaders whose details were contained in data stolen from the Geneva branch of the British HSBC and handed to the French tax authorities at the end of last year.
Furthermore, although France will pass on to other countries information obtained from the stolen data, it will keep Switzerland informed about this.
The ministry said that this agreement, reached in an exchange of letters, had ended the tax quarrel with France. The ratification process for a new double taxation accord, which had been put on ice as a result of the dispute over the stolen data, can now continue.
The accord, making it easier for the two countries to exchange bank customer information, was signed in August. However, it still has to be ratified by parliament.
The ministry said the Senate committee could resume the approval process when it meets again on February 17.
The accord was one of 12 that Switzerland had to sign to get itself removed from a “grey list” of tax havens drawn up in April by the Organisation for Economic Co-operation and Development.
Global iron ore price revolution
Matt Chambers and Peter Alford - The Australian
The global iron ore pricing system is headed for the biggest shake-up in its 40-year history after Brazil's Vale, the world's biggest iron ore miner, backed BHP Billiton's quest to kill off the annual price-setting process.
If successful, the switch to spot prices could help double Australia's export revenue from its current level of $34 billion and dramatically increase investment in the resources industry.
The benchmark price is about $US60 a tonne while the spot price is hovering at $US125 a tonne.
Vale's push came as Rio Tinto, Australia's biggest producer, said changes to the pricing system were not occurring fast enough. The three mining giants, which control 70 per cent of the seaborne market, are now all agitating for change.
"If our customers want to keep a benchmark, they have to accept something . . . that is closer to the level of spot prices and that keeps the flexibility in the pricing system," Vale iron ore boss Jose Carlos Martins said yesterday in Brazil. If customers were not prepared to accept this, Vale was prepared to move to the spot market, Mr Martins said.
The huge increase in the size of the spot market -- it now comprises almost 50 per cent of the seaborne iron ore trade -- meant that the spot price should be seen as the market price, he said.
The move is an about turn for Vale, which was previously a steadfast defender of the current benchmark system, partly due to the freight advantage it gives the miner over Australian producers.
Vale's suggestion that any contract settlement price needed to be near current spot prices was in line with statements from BHP chief executive Marius Kloppers two days earlier.
The aggressive stance from both miners prompted analysts to issue reports saying that previous forecasts of a 40 per cent contract price rise in this year's talks were starting to look conservative.
Under the current benchmark system, which evolved in the late 1960s, prices for the Japanese financial year (starting April 1) are set through often terse annual negotiations.
They do not include freight. Thus Vale, which is further away from Asian markets, can get the same price as BHP and Rio.
Mr Kloppers has led the charge to end the benchmark pricing system, previously declaring BHP would not sign any new volumes to contracts set through annually produced pricing.
After Rio's full-year profit report on Thursday night, Rio chief executive Tom Albanese also expressed dissatisfaction with the current system. "There needs to be some changes to the system and it needs to be improved," he said.
For the benchmark system to survive it has to evolve. It is not evolving fast enough."
The statements from Vale, and to a lesser extent Rio, are expected to accelerate the demise of the current pricing system, under which Australia reaped $34bn of export revenue last financial year.
"Vale has certainly put the boot into the benchmark pricing system," Ausbil Dexia fund manager Adam Dixon said.
"Vale has never made any murmurs along this line and with the big producers now singing from the same songbook, it is going to be problematic for the steelmakers to keep the benchmark system."
It was positive for Australian iron ore producers and the prices they could achieve, he said.
The benchmark pricing system has yielded mixed results in the past year. No official settlement was reached with China last year and the previous year, BHP and Rio secured an allowance for cheaper freight costs.
In 2008, Rio started to sell as much of its iron ore on to the surging spot market as it could, in a move that BHP and steelmakers described as "not in the spirit of the contracts."
Mr Martins said the company would fulfil its contract obligations for a while, but customers needed to understand the difference between spot and contract prices could not be sustained.
Although Japanese steelmakers are hunkered down to fight any fundamental change to the annual contract system, the companies yesterday refused to comment specifically on Vale's apparent change of approach.
However, any push by the Australian miners during this year's contract talks for a more flexible pricing system will be seized upon by the Japanese mills to support their stand against the BHP-Rio production joint venture.
The Japan Iron and Steel Federation will argue to the Japanese Fair Trade Commission and to European Union anti-trust regulators that production-sharing will increase the Australian miners' leverage to force disadvantageous pricing arrangements on to steel producers.
Euro Falls for Fifth Week Versus Dollar on Greece, Growth
Ben Levison - Businessweek
The euro slid for a fifth week versus the dollar amid concern European Union efforts to avoid default by Greece will undermine the currency region and a report showed the EU’s economic recovery almost stalled.
The dollar rallied versus the yen after Federal Reserve Chairman Ben S. Bernanke said the central bank may raise the discount rate “before long” as economic stimulus measures are unwound. The euro yesterday touched an eight-month low versus the greenback as investors wait for the outcome of a Feb. 15-16 meeting of EU finance ministers that may provide details of a Greece bailout.
“It’s a very volatile process,” said Ron Leven, currency strategist at Morgan Stanley in New York. “No matter how this gets worked out, you will see more fiscal tightening, economic weakness and a European Central Bank that will be delayed in hiking rates. We are bearish on the euro.”
The euro dropped 0.3 percent to $1.3632 last week from $1.3678 on Feb. 5 for a fifth weekly decline, the longest streak in over a year. The 16-nation shared currency reached $1.3532 yesterday, the lowest since May 20. Against the yen, the euro rose 0.4 percent to 122.62, ending its four-week losing streak. The dollar rose 0.8 percent to 89.96 yen, from 89.25 last week.
The euro has fallen 4.8 percent against the dollar this year and 7.9 percent against the yen.
Futures traders this week increased bets to a record level that the euro will decline against the U.S. dollar.
Less Than Forecast
The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain, the net position, was 57,152 on Feb. 9, compared with 43,741 a week earlier, figures from the Washington-based Commodity Futures Trading Commission show.
The euro declined versus the dollar after the EU’s statistics office in Luxembourg yesterday said the region’s economy grew 0.1 percent in the fourth quarter, compared with economists’ forecasts for a 0.3 percent gain. It rose 0.4 percent in the third quarter.
The 16-nation common currency dropped on Feb. 11 as a statement issued by European leaders offered few details on how they would help Greece weather its debt crisis. Traders questioned how the EU would respond to a fresh wave of speculative attacks against Greece or countries such as Spain and Portugal, which are also struggling to cut their budget deficits.
‘Inevitable Break-Up’
The EU plan, brokered by German Chancellor Angela Merkel, Greek Prime Minister George Papandreou and European Central Bank President Jean-Claude Trichet, called for closer monitoring of the Greek economy.
“The statement bought the euro zone some time but unless something is done soon, downside pressure on the euro will persist,” said Geoffrey Yu, a currency strategist at UBS AG in London. The economic data will “give euro zone leaders an even greater incentive to get Greece sorted,” he said.
Southern European countries are trapped in an overvalued currency and suffocated by low competitiveness, a situation that will lead to the break-up of the euro bloc, according to Societe Generale SA strategist Albert Edwards.
The problem for countries including Portugal, Spain and Greece “is that years of inappropriately low interest rates resulted in overheating and rapid inflation,” London-based Edwards wrote in a report yesterday. “Any help given to Greece merely delays the inevitable break-up of the euro zone.”
Greece, representing 2.7 percent of the trading bloc’s $13 trillion economy, posted a budget deficit of 12.7 percent of gross domestic product in 2009, more than four times the EU’s 3 percent limit.
Real Fall
The dollar on Feb. 10 rose against the yen after Bernanke, in testimony prepared for the House Financial Services Committee, said the central bank may soon raise the discount rate as part of the “normalization” of Fed lending. He said a move in the discount rate won’t signal any change in the outlook for monetary policy.
“The Fed has been laying the ground work for how they will remove the monetary stimulus from the system,” said Andrew Busch, a global currency strategist at Bank of Montreal in Chicago. “It’s all baby steps in this path to normal monetary conditions.”
Futures trading in Chicago yesterday showed a 49 percent chance that the Fed will raise its target lending rate by at least a quarter-percentage point by its September meeting, up from 43 percent a week ago.
Brazil’s real fell yesterday as much as 1.6 percent to 1.8732 against the dollar, the biggest decline since Feb. 4, after China ordered banks to set aside more deposits as reserves for the second time in a month as part of an effort to cool growth in the world’s fastest-growing economy.
The reserve requirement will rise 50 basis points, or 0.5 percentage point, effective Feb. 25, the People’s Bank of China said on its Web site on Feb 11. The existing level is 16 percent for the biggest banks and 14 percent for smaller ones.
Obama to announce nuclear-plant loan deal
President Barack Obama next week will announce a loan guarantee to build the first nuclear power plant in the United States in almost three decades, an administration official said Friday.
The two Southern Co. reactors to be built in Burke, Ga., are part of a White House energy plan administration officials hope will draw Republican support. Obama's direct involvement in announcing the award underscores the political weight the White House is putting behind its effort to use nuclear power and alternative energy sources to lessen American dependence on foreign oil and reduce the use of other fossil fuels blamed for global warming.
Loan guarantees for other sites are expected to be announced in the coming months, the official said, speaking on the condition of anonymity because the decision had not yet been made public.
The federal guarantees are seen as essential for construction of any new reactor because of the huge expense involved. Critics call the guarantees a form of subsidy and say taxpayers will assume a huge risk, given the industry's record of cost overruns and loan defaults.
Even with next week's announcement, actual construction of the first reactor is still years away. The Southern Co. has applied to the Nuclear Regulatory Commission for a construction and operating license for the plant, one of 13 such applications the agency is considering. Commission spokesman Eliot Brenner said the earliest any of those could be approved would be late 2011 or early 2012.
The proposed new reactors would generate power for about 1.4 million people and employ about 850 people, the official said.
Windows closing for private equity
Martin Arnold, Maija Palmer and Kate Burgess - FT
Not all private equity-backed initial public offerings are created equal.
Blackstone was forced this week to postpone the planned listings of Travelport , the reservation services company, and Merlin , the theme-park operator, while Apax Partners and Permira delayed plans to float New Look , the fashion retailer.
Yet other private equity-backed companies are still pushing ahead with plans to join the stockmarket. Promethean, which specialises in electronic whiteboards, is expected to announce plans for a flotation on Monday, valuing it at £400m-£500m.
The Blackburn-based maker of digital classroom technology is confident that it has a good enough story to attract some of the investors who have turned their noses up to other private equity-backed listings.
Unlike Travelport and New Look, which had both aimed to use most of the proceeds from their flotations to reduce their heavy debt burdens, Promethean has no debt and its profits grew by 60 per cent last year.
"Promethean has no debt, strong growth, it is a global leader in an attractive market and is smaller than some of the other IPOs, so it is an entirely different story," said one person familiar with the company's plans.
If Promethean's IPO proposal is successful, it will be the first technology listing in the UK since 2007 and will underline how investors are becoming more picky about which companies they are prepared to buy from private equity. A top investor said: "Some of these companies that have been chewed up and spat out by private equity don't deserve to be listed."
In the opinion of another big investor: "The public markets are there to finance long-term investments with good growth prospects . . . [they are] not there to rescue private equity."
This could be bad news for Blackstone, BC Partners, Permira and other buy-out groups, which have made ambitious promises to their own investors about a string of companies they hoped to float this year.
Stephen Schwarzman, Blackstone's chief executive, has told investors that his group plans to float eight companies. In the UK, Permira has promised to return a "wall of cash" to investors by floating or selling a number of its portfolio companies.
Apart from the embarrassment of postponing the planned listings of their top-performing portfolio companies, the shutting of the IPO window could cause deeper problems for private equity groups.
"Private equity houses need some exits, as they must show returns to their investors," said Mario Levis, professor of finance at Cass Business School. "Otherwise it could be a vicious circle for some groups that want to raise more money soon."
David Rubenstein, co-founder of the Carlyle Group, told this week's Super Return conference in Berlin that distributions from private equity exits to investors had fallen from an average of $15bn (£9.6bn) per quarter in 2004-07 to about $3bn in recent years.
When a private equity company seeks to raise a new fund it often tries to sell some of its bestperforming assets to keep its backers happy.
Blackstone is already on the fundraising trail and BC Partners, Montagu and Permira are expected to join it soon.
Many of the biggest buy-outs completed during the credit bubble had hoped that by floating they could repay some of their massive debts that start to mature from 2012. The shutting of the IPO window could leave them with fewer options.
Bankers say the recent wobble in equity markets, combined with a pent-up demand for deals among many buy-out groups means that many of the 20 to 30 private equity-owned companies set for IPOs in Europe could be sold off instead of floated.
This has already happened to Pets at Home, the pet store chain bought by Kohlberg Kravis Roberts, and Unity Media, the German cable group sold to John Malone's Liberty Global late last year.
City must pick up the bill for FSA's regulatory crackdown
Watchdog says most firms will pay less – with burden falling on financial giants
James Moore - The Independent
The City watchdog yesterday told financial companies they face a 10 per cent increase in the fees they must pay to finance it as regulation of the City is stepped up.
However, the Financial Services Authority (FSA) said 60 per cent of firms would pay less because the rises would fall most heavily on the biggest and most risky institutions that will be subject to its new "intensive scrutiny".
The FSA will spend £454.7m supervising Britain's financial services industry in the 2010/11 financial year, up from £413.8m in 2009/10. The watchdog said the costs of 280 extra staff taken on during the past year to grapple with the continuing effects of the financial crisis would, on their own, push up overall fees by 4 per cent.
Smaller financial advisers will see their fees reduced, with many likely to pay a new minimum fee of £1,000 compared with £1,850 previously. There will be no additional minimum fees for firms trading across several business areas, reducing costs on, for example, advisers who sell life insurance, mortgages and general insurance. But standalone mortgage brokers and general insurance brokers will see minimum fees rising sharply. They had previously paid minimums of £745 and £450 respectively.
Companies requiring more intensive supervision will pay much more than that, with general insurers particularly hard hit – their fees will go up 45 per cent. Banks have already faced substantial rises but will have to pay yet more. Deposit-takers, for example, face a 12 per cent rise.
The fee packages are, however, headline numbers and do not include discounts as a result of the regulator's rapidly increasing income from fines. This will knock 7 per cent off financial companies' regulation costs for the next financial year. More heavy fines are expected, particularly among mortgage lenders, which the FSA is investigating. But financial companies have been told they face a crackdown so that miscreants will subsidise compliant firms through a sharp increase in penalties.
"We recognise any increase in the industry's costs is unwelcome at a time when margins are under pressure," said Hector Sants, the FSA's chief executive, who revealed this week that he will stand down in the summer. "However, the overall increases are necessary to deliver our new intensive supervisory approach."
Simon Morris, a partner at City law firm Cameron McKenna, said: "The FSA is showing it means business and is acquiring both budget and manpower to continue its aggressive approach to enforcement. All firms should heed this latest warning and redouble their efforts to ensure their systems and controls are adequate."
Lloyds targets sales from £70bn Cummings property empire
Helen Power and Rebecca O’Connor - The Times
Lloyds Banking Group is combing through the failing £70 billion property empire amassed by Peter Cummings, the disgraced HBOS corporate chief, to identify major assets it can sell or spin off.
The review process, which is in its very early stages, is designed to reduce the amount of regulatory capital tied up in keeping these assets on Lloyds’ balance sheet, The Times has learnt. Lloyds is expected to finalise its strategy by Easter.
The bank, which bailed out HBOS in a disastrous takeover in 2008, is also looking at ways of ring-fencing Mr Cummings’s toxic loans — including billions of pounds advanced to take private Crest Nicholson, the housebuilder, and McCarthy & Stone, the retirement home chain — while still retaining the assets, perhaps with outside expertise brought in to manage them.
The other key option being considered is whether to transfer parcels of loans worth hundreds of millions of pounds into joint ventures with outside property or private equity investors.
Lloyds declined to comment, but it is understood that the bank has spoken to advisers about the strategy.
The move comes as Lloyds steps up the sale of the other part of Mr Cummings’s former empire — HBOS Integrated Finance, an investment business with stakes in about 60 companies.
The Times has learnt that the bank’s decision to press ahead with plans to spin off Integrated Finance came after early-stage talks about a sale of it to Graeme Shankland, Mr Cummings’s right-hand man and the former managing director of Integrated.
It is believed that Mr Shankland approached Lloyds with a plan to buy Integrated Finance earlier this year, but was rebuffed because of perceived political difficulties in selling it to a man so closely linked to the Cummings regime. It is understood that Lloyds is concerned that if Mr Shankland was seen to make a profit from such a transaction, it would cause a political storm for the bank, which is 40 per cent owned by the taxpayer. Lloyds and Mr Shankland declined to comment, although another person familiar with the discussions insisted that Mr Shankland had never put a fully funded bid on the table.
Bidders in the running to buy Integrated Finance include Coller Capital and Lexington Capital, which would bring in Bridgepoint, the private equity house, to manage the assets. UBS has been trying to sell Integrated Finance for nearly a year, but a person close to the process insisted that Lloyds would not sell the division on the cheap.
The review of Mr Cummings’s former division is the latest attempt by Lloyds to grapple with the multibillion-pound commercial property loanbook that it inherited from HBOS.
When Lloyds reported its half-year results last summer, it wrote down £13.4 billion of bad debts, £9.7 billion of them amassed by Mr Cummings’s division. It reports again later this month, with further writedowns expected.
Mr Cummings, a Glaswegian who joined Bank of Scotland at 16 and rose to one of the highest positions in the bank, controversially retired last year on a £352,000 a year pension.
In his glory days, Mr Cummings lent to and was friends with Britain’s most high-profile property and retail entrepreneurs including Sir Philip Green, the Bhs owner, and Robbie Tchenguiz, the property entrepreneur. Mr Cummings has not spoken publicly since leaving HBOS in disgrace.
The merged bank now has an estimated £100 billion of loans outstanding against shops, offices, warehouses and residential developments in the UK, which suffered an average fall in value of 45 per cent from peak to trough, and significant loans abroad.
With Casinos Set to Open, Singapore Rolls The Dice
Neel Chowdhury - Time
When Las Vegas Sands threw a party last year to celebrate a milestone in the construction of its gambling resort on the shores of Singapore's Marina Bay, it was a lavish affair. A large white tent was erected on the site, where hundreds of reporters gathered to watch CEO Sheldon Adelson celebrate the roof being laid on the resort's three interlinked towers. As bongo drums pounded, Adelson, 76, turned to the architect of the project to thank him, but not before joking, "Couldn't you have designed it to look as good without the cost?"
Just how much money has been poured in — and how daunting the challenge of recouping that money will be — are becoming clear as the first of Singapore's long-awaited casinos prepares to throw open its doors this month. Citigroup estimates that Resorts World Sentosa, slated to open in mid-February and which will include six hotels and a Universal Studios theme park, will have run a construction tab of roughly $4.5 billion. Adelson says his showpiece project on Marina Bay, boasting Singapore's largest hotel and one of Asia's biggest convention spaces, will cost roughly $5.5 billion by the time it's expected to open around April. (Read about Singapore's turning point in the global recession.)
Even by the opulent standards of the gaming world, analysts say these are giant sums. "The Singapore casinos are by far the most expensive ones in the region," says Gabriel Chan, head of Asian gaming research for Credit Suisse, who points out that an average casino in Macau costs roughly half as much. The Venetian in Las Vegas, completed by Adelson more than a decade ago, cost roughly $1.5 billion — less than a third of his current Singapore project.
Keen to repeat the success of Macau, which over the last decade has transformed itself from a sleepy gambling backwater into an entertainment destination, the Singapore government awarded the bids to build the two casino resorts to Las Vegas Sands and Genting in 2006. The hefty $10-billion price tag for the two developments underscore the vast ambitions of Singapore's leaders seeking to similarly transform the island's image from that of a staid, buttoned-up society into a fun, adventurous city. And while that may be fine for foreign tourists, analysts say the high fee to be imposed on Singaporeans who visit the casinos reflects the city-state's underlying unease at the thought of its conservative citizens turning into hard-partying gamblers — and making it difficult for operators to start profiting off their massive investments. (See pictures of hard times in Las Vegas.)
For Genting, operator of Resorts World Sentosa, recouping its $4.5 billion investment won't be easy. Even though it will be one of two exclusive casino operators, unlike Macau or Las Vegas, where there is fierce competition within a much larger pool, analysts and investors have set their initial expectations for Sentosa's gaming revenues "far too high," says Citigroup analyst Dominic Noel-Johnson. To meet Citigroup's relatively conservative 2011 gaming revenue estimate of $1.2 billion for Resorts World Sentosa — more than a third less than the consensus of other brokerage houses — every single foreign tourist expected to come to the island that year would have to visit either one of Singapore's two integrated resorts. In addition to that unlikely scenario, every adult 21 and over in Singaporean would have to go to one of the casinos five times a year, and every adult resident of neighboring Malaysian state Johor would have to go twice every year.
Is all that likely? No, Noel-Johnson says, even though such robust expectations are clearly reflected in the high price of Genting Singapore's stock, currently the most expensive gaming stock in the world. According to Noel-Johnson, Genting Singapore is trading at an estimated price-to-earnings ratio of over 60 for the current fiscal year. Even though he believes Resorts World Sentosa has the potential to be "a long-term success," Citigroup has slapped a "sell" rating on the stock.
The unusually high $70 daily casino entrance fee, or $1400 for an annual pass, being imposed on local visitors will be one of the casinos biggest obstacles. "The entry levy is meant to signal that gambling is an expense, not a means to make a living," explains Lim Hock San, Chairman of the National Council on Problem Gambling. "It discourages impulse gambling." Though betting on horse races is allowed in Singapore, the government strictly controls other forms of gambling, one of the reasons it plans to allow only two casinos to operate on the small island. The families of gambling addicts can also apply for their loved ones to be excluded from the upcoming casinos, according to the National Council on Problem Gambling. The council, which will provide the casinos a list of those who are barred, has already excluded 29,000 people. Drawing on past government surveys, it estimates the size of probable "pathological" gamblers at about 1.1% to 2.2% of Singapore's adult population, similar to those found in Macau and Hong Kong. (Watch a video about gambling in Macau.)
Such fees may help discourage gambling addicts from throwing their salaries away. But they are also likely to be a hurdle in building up the number of local gamblers and will likely force casino operators to depend more on foreign "high-rollers" to turn a profit. That strategy has its risks, analysts say. Noel-Johnson, for instance, points out that 72% of visitors to Genting's resort in the Malaysian highlands are local "day-trippers," and more than half the visitors to Macau's casinos are gamblers from Hong Kong and Guangdong province who bet with limited cash. "If you look at the successful gaming markets in Asia, they have a dependable local mass market," he says. "If you are inhibiting Singaporeans from visiting the casinos, you are handicapping yourself."
Resorts World Sentosa executives, for their part, say they were aware of the local entrance fees before they bid for the casino. They counter that they have a diverse range of entertainment offerings, including the Universal Studios theme park as well as fine dining and hotels, and so are not solely reliant on gaming. (Local families who elect to only visit Universal Studios and not gamble, for instance, would not have to pay the casino entrance fee.) "Resorts World is on track to reach its target of 13 million visitors in its first year of operations," says Robin Goh, Assistant Director of Communications at Resorts World Sentosa. Executives from Adelson's Marina Bay Sands resort echo the sentiment. "While the casino is an important component of our integrated resort, our convention center, entertainment, celebrity chef restaurants and luxury shopping mall will bring tens of thousands of people daily," says Thomas Arasi, CEO of Marina Bay Sands. "Las Vegas Sands has opened and run integrated resorts in Las Vegas and Macau, and we think this is a successful business model that will also work in Singapore."
The two Singapore casinos, to be sure, have significant long-term advantages. Unlike the crowded gaming markets of Macau and Las Vegas, they will be operating as a duopoly with no immediate fear of further competition. The gambling tax rates will be significantly lower in Singapore than they are in Macau. And, most important, the casinos sit on perhaps two of the most coveted pieces of real estate in the country, enhancing their appeal to both locals and foreigners. Marina Bay Sands is minutes away from the city's downtown offices on a fringe of sea-facing land overlooking the ship-sprinkled waters of the Singapore Strait.
While the resorts may initially struggle to recoup their costs, Singapore, nevertheless, is likely to see the benefit sooner. Casinos will likely help create tens of thousands of new jobs for Singaporeans, as well as entice tourists from across Asia. "The Singapore government sees the casinos as a means to an end," explains Credit Suisse's Chan. "They want visitors to come to Singapore and spend money on entertainment and hotels and shopping, not purely on gambling." Citigroup expects the casinos to help push up visitor arrivals to 12.8 million by the end of 2011, roughly a third higher than where they stand today. Says Noel-Johnson, "The biggest winner will be the Singapore government because of the spillover effect on hotels and tourism." Even as the odds appear daunting for its casinos, like any prudent gambler, Singapore has carefully hedged its bets.
Paddy Power raises stake in Sportsbet to nearly 61pc
John Mulligan - Irish Independent
Paddy Power has spent €8.5m to snap up a further stake in Australian gambling outfit Sportsbet, bringing its current holding in the firm to nearly 61pc.
The Irish betting firm made its first foray into the Australian market last year when it paid €27.2m for a 51pc stake in Sportsbet, which was established back in the early 1990s, and provides online and telephone betting services. Paddy Power appointed four directors, including chief executive Patrick Kennedy, to the Sportsbet board when it acquired the holding.
In a statement to the stock exchange yesterday, Paddy Power said that it acquired the additional 9.8pc shareholding from a minority shareholder who had no executive involvement. It paid A$13m (€8.4m) in cash for the stake.
Earnings
The remaining 39.2pc of Sportsbet's shares remain subject to the transaction agreement drawn up last year. That includes a contingent A$10m consideration subject to Sportsbet's earnings before interest, tax, depreciation and amortisation exceeding A$26m, and Paddy Power's call option to acquire any minority shareholding, in either 2012 or 2013.
The implied enterprise valuation of Sportsbet, and its International All Sports subsidiary, as a result of yesterday's transaction, is A$185m. Shares in Paddy Power closed up 2.3pc in Dublin yesterday at €24. Shares in the company have more than doubled in the past 12 months.
Shorter working week better for 'sustainable future'
A major shift away from the UK's long working hours culture was "inevitable", according to a new report today which called for a radical rethink of arrangements.
The new economics foundation (nef) thinktank said many people were now working longer hours than 30 years ago even though unemployment stood at 2.5 million.
Forces pushing the UK towards a shorter working week included lasting damage to the economy caused by the banking crisis, an increasingly divided society with too much overwork alongside too much unemployment and an urgent need for deep cuts in environmentally damaging over-consumption.
"So many of us live to work, work to earn, and earn to consume, and our consumption habits are squandering the earth's natural resources", said Anna Coote, co-author of the report, 21 Hours.
"Spending less time in paid work could help us to break this pattern. We'd have more time to be better parents, better citizens, better carers and better neighbours.
"We could even become better employees - less stressed, more in control, happier in our jobs and more productive. It is time to break the power of the old industrial clock, take back our lives and work for a sustainable future."
Andrew Simms, nef policy director, said: "The last two years revealed many to be consuming well beyond our economic means and beyond the limits of the natural environment, yet in ways that also fail to improve our wellbeing.
"Meanwhile many others suffer poverty and hunger. Our research shows that moving to a shorter working week could be the only way left untried to square this seemingly impossible circle. A cultural shift will throw up real challenges, but there could also be massive benefits for our economy, our quality of life and our planet. After all, hands up who wouldn't like a four day weekend?"
British drilling for Falklands oil threatens Argentine relations
Hannah Strange, Frank Pope and Deborah Haynes - The Times
It is hoped that the Ocean Guardian oil rig, on its way
to Port
Stanley, will bring a black-gold rush to the islandsBritain’s relations with Argentina fell last night to their lowest point since the Falklands conflict in a row over an oil platform that is due to arrive north of Port Stanley next week.
The Ocean Guardian is expected to complete its journey to the disputed waters 100 miles off the Falklands coast from the Scottish Highlands as part of a campaign that Britain hopes will bring a black-gold rush to the windswept, sparsely populated islands.
But, almost three decades after Britain and Argentina fought a bloody 72-day conflict over the islands, its impending arrival has stoked fury in a country that is still intent on claiming the territory as its own.
Amid an intensifying war of words, Foreign Minister Jorge Taiana warned on Thursday night that his Government would take “all measures necessary to preserve our rights”.
He reiterated that Argentina had a “permanent claim” on the islands, saying Buenos Aires would complain to the UN over the oil project and might take the case to the International Court of Justice in The Hague.
Unconfirmed reports by the waiting crew claimed the platform had been shadowed by Argentine aircraft as it made its journey. The Ministry of Defence and the Foreign and Commonwealth Office said they were unable to confirm the reports. Desire Petroleum, the company heading the operations, and AGR Petroleum Services, which willl operate the platform, said they were not aware of any fly-over.
As Buenos Aires said it would take all necessary steps to prevent the “illegal” operations in Las Malvinas, as they are known in Argentina, the Falklands government warned against such sabre-rattling, pointing out the high level of military protection the islands enjoyed. Britain has more than 1,000 military personnel on land and more than 300 at sea in the region, as well as four Typhoon aircraft, one destroyer and one patrol boat.
“We’re very well defended,” said Phyllis Rendall, director of the islands’ Department of Mineral Resources. “We’ve got four of those Eurofighters. We certainly didn’t have that kind of protection in 1982. Back then we had only 50 Marines.”
The British Foreign Office denied that the oil operations were illegal. “We are absolutely clear this is legitimate business in Falkland Islands waters and we will continue to reiterate our position that we have no doubt about our sovereignty over the Falkland Islands and the surrounding maritime areas,” a spokesman said.
Analysts say that as many as 60 billion barrels of high-grade oil could be found in a 200 sq mile zone surrounding the islands, which is to be developed by Desire, AGR and Diamond Offshore Drilling. That could make the Falklands one of the world’s largest oil reserves, comparable with the North Sea, which so far has produced about 40 billion barrels.
The Falklands government noted that in 2007 Argentina tore up an agreement between Britain and Argentina to co-operate over hydrocarbon discoveries. “I don’t think they’re really willing to share at all,” Ms Rendall said. “They’re all about land-grabbing. It’s a matter of national pride.”
While the Falklands dispute is long settled in the British consciousness, in Argentina — where school textbooks show Las Malvinas as part of the national territory — it remains a thorny subject. The Argentine leader, Cristina Fernández de Kirchner, has made the country’s claim a key theme of her presidency, rousing nationalist sensibilities around a cause which has become even more significant with the approach of presidential elections next year.
On the last anniversary of the war, Mrs Kirchner insisted that the claim “would never be surrendered” and demanded Britain adhere to UN resolutions requiring dialogue.
In January Britain rejected Argentina’s latest claim to the territory occupied by the British in 1833, and wants to extend its rights to waters surrounding the islands and lock in a vast tract of seabed off the coast of Antarctica.
| Falklands campaign close to kick-off Press and Journal Energy Desire Petroleum has committed to a letter of intent with Diamond Offshore Drilling that should see the semi-submersible drilling rig, Ocean Guardian, leave the North Sea shortly and head for the South Atlantic to drill a minimum of four wells in the North Falkland Basin. The company has options to drill a further four wells for itself and or its partners. AGR Petroleum Services of Aberdeen will be managing the overall drilling programme. Rockhopper Exploration, which is a partner in a significant slice of North Falkland Basin acreage, has almost simultaneously signed a letter of intent with a so far undisclosed third party keen to farm into one of the licences. In both cases, the respective arrangements have to be confirmed, with discussions to conclude ongoing. In Desire’s case, the plan is that the Ocean Guardian will mobilise to Falkland Islands waters next month following a period of maintenance at Invergordon. Projected arrival is early-February 2010. The company is keen to maximise use of the rig while in Falklands waters and, to this end, is investigating with its advisers the best course of action to raise additional funds – speculated to be around £30million – prior to mobilisation to ensure that the sector is explored as widely as possible. Chairman Stephen Phipps said: “Subject to the anticipated timing, we will be commencing activity in early-2010, when we intend to explore as many play types as possible, thus maximising our chances of success.” At Rockhopper, not only has the company signed a letter of intent designed to bring extra financial firepower to bear in the upcoming Falklands campaign, its environmental impact statements, submitted in relation to the planned drilling, have been approved by the Falkland Islands government. However, this approval is subject to the further approval, by the mineral resources committee, of an operational addendum which will be submitted once the rig details and timing of drilling campaign are formally finalised. The farm-out, if completed, would entail the drilling of one well. Rockhopper currently has the only acreage in the Falklands with a recognised discovery, Johnson, which is a very large gas-bearing structure, possibly 250sq km in area. Sea Lion and Ernest are the company’s primary oil targets. Both have direct hydrocarbon indicators, Sea Lion in the form of AVO anomaly, Ernest in the form of a positive CSEM anomaly, and are clearly defined on seismic. A study commissioned by Rockhopper Exploration and published earlier this year shows just how tantalisingly close the late-1990s exploration drilling campaign to the north of the Falkland Islands came to success, especially one of the two operated by Shell.
All this acreage was eventually let go by the various consortia and later picked up by Desire Petroleum and Rockhopper. According to RPS, which carried out the analysis, well 14/5-1 encountered significant gas shows and kicks within the deeper drilled sections (3,500-4,525m). Energy’s parent, the Press and Journal, reported gas kicks at the time based on information leaked from the rig drilling the well. Shell was not at all forthcoming. Log analysis from the eventual Shell well report indicates that, within the deeper sand units, more than 165m of gas pay was present. Independent log analysis performed by Rockhopper indicates that 5-130m of gas pay was intersected by the well. For now, these volumes of gas – perhaps several trillion cu ft – have been classified as “contingent resources”. According to RPS, at least 5-8TCF would be needed to justify an on-site LNG plant. The decision on targets most likely to be chosen for drilling has not yet been made public, although RPS said in its report that it seemed certain that the Ann prospect would be drilled and would be followed up by the drilling of another called Liz. There will almost certainly be a strong opportunistic element to the campaign, which will be guided by the success/failure of the first couple of wells drilled. |
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