NYSE executive says exchanges inching closer to ‘kill switch’

WASHINGTON, Tue Dec 18, 2012 — U.S. regulators and exchanges are getting closer to a framework for a “kill switch” that could be used to shut down trading before software glitches get out of control and wreak havoc on markets, a top exchange official said on Tuesday.

“We have all engaged in a much more detailed assessment of how a kill switch could work,” Joe Mecane, an executive vice president at the New York Stock Exchange, said in testimony before a U.S. Senate Banking panel on Tuesday.

“I think we are hopeful to have something to report in the first quarter of next year,” he said.

Exchanges, brokerages and the U.S. Securities and Exchange Commission have been trying to come up with the right regulatory response after a series of high-profile glitches this year shook markets, from Nasdaq’s botched handling of the Facebook  initial public offering to Knight Capital’s $440 million in losses due to a software error.

In October, the SEC held a roundtable with market participants to explore in detail how a kill switch, one of the leading options, might work.

Senator Jack Reed, who chaired Tuesday’s subcommittee hearing, has also pledged to hold a series of hearings to explore what, if any, new market structure rules are needed to reduce systemic risk to the marketplace.

The hearing on Tuesday featured testimony from Mecane as well as top officials from Nasdaq, Credit Suisse and agency broker ITG, and explored a variety of market structure issues, including whether the SEC should enact rules to shed more light on “dark pools” — venues that allow investors to anonymously trade larger blocks of stock without tipping their hand to the wider market.

Clearwire, Sprint set up $120 million breakup fee

OVERLAND PARK, Kan., Tue Dec 18, 2012 — Sprint Corp. promised to pay Clearwire Corp. a $120 million breakup fee if its $2.2 billion purchase of roughly half of the smaller wireless service provider does not go ahead.

At the same time, Clearwire said on Tuesday it agreed to a “no-shop” provision, meaning it cannot seek other offers but could consider unsolicited offers.

Clearwire and Sprint, its majority owner, announced details of their merger agreement in a regulatory filing the day after Sprint agreed buy out the rest of Clearwire for $2.97 per share.

Clearwire shares traded below the offer price at $2.86, down 5 cents or 1.7 percent on the Nasdaq. Sprint was off 9 cents, or 1.6 percent, at $5.47 on the New York Stock Exchange.

Some shareholders said they were disappointed by the price, which requires approval from a majority of Clearwire’s minority shareholders. While one shareholder is looking for support for a class action lawsuit against the deal, another held out hope for a higher bid.

Clearwire’s chief executive said Monday that Sprint’s offer was its best option, and that Clearwire could face a risk of bankruptcy if that deal is not approved.

The filing said Clearwire would be restricted from providing information to or engaging in discussions or negotiations with third parties regarding an acquisition proposal, subject to certain exceptions.

It did not disclose the exceptions in the filing.

The Clearwire deal is conditional on the sale of a 70 percent stake in Sprint to Japan’s Softbank Corp. for $20 billion. That deal is expected to close around mid-2013.

Sprint would have to pay the breakup fee if the Softbank deal does not happen, if it or Clearwire terminates the agreement, or if their deal has not been consummated on or before Oct. 15, 2013, according to the filing.

Stifel Nicolaus analyst Christopher King said the decline in Clearwire’s shares did not appear to indicate the deal was in any danger of being blocked.

“It’s pretty much a done deal,” King said.

So far, Sprint has support for the deal from Softbank and from at least three Clearwire shareholders owning 13 percent of the company — Intel Corp., Comcast Corp. and cable company Bright House.

Nielsen to buy radio ratings firm Arbitron for $1.26 billion

NEW YORK, Tue Dec 18, 2012 — Nielsen Holdings NV, known for its television viewership ratings, agreed to pay $1.26 billion to acquire its radio counterpart, Arbitron Inc.

The $48-per-share purchase price represents a 26 percent premium to Arbitron’s Monday closing price on the New York Stock Exchange. The shares were trading just below the offer price in premarket trading Tuesday when the deal was announced.

Ratings — Nielsen’s in TV and Arbitron’s in radio — determine how much advertisers are charged to run commercials during TV programs and radio listening hours. The higher the rating — the more people watching or listening — the more expensive the commercial spot.

“It’s a huge deal for Nielsen,” said Edward Atorino, an analyst with Benchmark Co. “It adds radio, which is a huge market.”

Nielsen said that with Arbitron it plans to expand its “Watch” measurement that keeps tabs on consumer viewing and listening habits across multiple screens such as TV, computers and mobile devices.

Icahn’s American Railcar offers to buy Greenbrier for $543 million

ST. CHARLES, Mo., Tue Dec 18, 2012 — American Railcar Industries Inc., controlled by activist investor Carl Icahn, offered to buy rival railcar maker Greenbrier Co.s Inc. for about $543 million, reviving a nearly five-year old plan to combine the companies.

American Railcar’s offer of $20 per share represents a premium of 5.4 percent to Greenbrier’s Monday close of $18.97 on the New York Stock Exchange. The shares were up 3 percent at $19.50 before the bell on Tuesday.

Greenbrier’s shares have risen 36 percent since Icahn reported a 9.99 percent stake in the company last month that made him its largest shareholder.

However, the offer price is still at a discount to the $30-range the Greenbrier stock was trading at when Icahn attempted to merge the companies in 2008. He dropped the bid later that year, saying a combination was not possible due to “unresolved issues”.

American Railcar’s offer is also below Greenbrier’s intrinsic value of $28.56 as measured by Thomson Reuters StarMine.

Cerberus to sell gunmaker Freedom Group after shootings

NEW YORK, Tue Dec 18, 2012 — U.S. private equity firm Cerberus Capital Management said on Tuesday it will immediately begin selling its investment in gunmaker Freedom Group in light of last week’s school shooting in Connecticut.

Pressure mounted on Cerberus as the California State Teachers’ Retirement System said on Monday it was reviewing its investment with the private equity firm after the Connecticut school shooting.

CalSTRS had invested $751.4 million with Cerberus by the end of March 2012, according to its website.

Cerberus acquired firearms maker Bushmaster in 2006 and later merged it with other gun companies to create Freedom Group, which reported net sales of $677.3 million for the nine months ending September 2012, up from $564.6 million in the same period a year ago.

Bushmaster is the manufacturer of the AR 15 rifle used by the shooter in the Newtown, Connecticut killings that claimed 27 lives, including 20 school children.

The private equity firm said it will retain a financial adviser to sell its interests in Freedom Group, and will then return that capital to investors.

Founded in 1992 by Stephen Feinberg and William Richter, New York-based Cerberus has more than $20 billion under management invested and shares its name with a mythical three-headed dog that in Greek mythology guards the entrance to the underworld.

Chevy says 2014 Corvette will debut in January

DETROIT, Thu Oct 18, 2012 – An all-new 2014 Chevrolet Corvette, the seventh generation of the uniquely American sports car in six decades, will make its debut Jan. 13 on the eve of the North American International Auto Show, General Motors’ Chevrolet brand said on Thursday.

Eagerly awaited by auto enthusiasts, the new Corvette – dubbed C7 by the faithful but known to GM and its suppliers by the development code Y1X – is widely expected to have a radically restyled exterior, a more upscale interior, a lighter chassis, and a more efficient engine and transmission.

There will be a 6-month gap between the 2014 Corvette new C7 and the current C6 version, a Chevrolet spokesman said in an email. GM will stop building the 2013 model in early February, and is due to start producing the 2014 model in volume in July.

The first of the new C7 Corvettes is expected to roll off the line in Bowling Green on June 30 – 60 years to the day that the first 1953 model was produced, according to two suppliers familiar with the automaker’s plans but are not authorized to speak on behalf of GM.

The C7′s formal unveiling in mid-January also marks the anniversary of the Corvette’s debut in January 1953 as a GM Motorama “dream car” concept in New York. Since then, GM has built and sold more than 1.5 million Corvettes, although annual sales have slowed in recent years as higher vehicle prices, rising fuel and insurance costs, and growing competition from Europe and Asia have eroded its once fiercely loyal owner base.

Jobless claims hint labor market improving gradually

WASHINGTON, Thu Oct 18, 2012 – The number of Americans filing new claims for jobless benefits spiked last week, reversing a sharp decline in the prior week but still pointing to a labor market that is slowly healing.

Other data on Thursday showed a modest rebound in factory activity in the U.S. mid-Atlantic region.

Initial claims for state unemployment benefits rose 46,000 last week to a seasonally adjusted 388,000, the Labor Department said.

Despite the spike, a four-week moving average that smoothes out weekly volatility was down from a month earlier, suggesting the lackluster job market recovery remains on track.

“Improvement in the labor market will continue to be fitful and slow,” said Joseph Trevisani, a market strategist at Worldwide Markets in Woodcliff Lake, New Jersey.

The economy has recently shown signs of modest strength, with the unemployment rate falling to 7.8 percent in September and retail sales pointing to a pick-up in consumer spending.

A gauge of future economy activity rebounded in September to post its largest gain in seven months, the Conference Board said in a separate report.

U.S. charges South Korea’s Kolon with trade secrets theft

WASHINGTON, Thu Oct 18, 2012 – A U.S. grand jury charged South Korea-based Kolon Industries Inc. with criminal trade theft in a long-running dispute over how the company produced high-strength fiber, according to an indictment unsealed on Thursday.

Kolon and five individuals face charges that they stole trade secrets belonging to DuPont Co, maker of Kevlar fabric used in body armor and other products, and Teijin Ltd, maker of Twaron, the rival fabric.

The United States threatens to take at least $226 million in assets from Kolon, which represents the gross proceeds of the company’s sales of its fabric, Heracron, according to the indictment.

The indictment is dated Aug. 21 and was filed in U.S. District Court for the Eastern District of Virginia. DuPont developed Kevlar in Virginia, according to the indictment.

The company and the individuals also face a charge that they obstructed the U.S. government’s investigation.

In a 2011 civil lawsuit, a federal jury ordered Kolon to pay DuPont $920 million in damages based on similar accusations. In August, a judge barred Kolon from making its version of the synthetic fiber for 20 years.

Kolon did not immediately respond to a request for comment on Thursday.

A court hearing in the case has been scheduled for Dec. 11.

Hawker Beechcraft says talks with Chinese suitor fail

WICHITA, Kan., Thu Oct 18, 2012 – Aircraft maker Hawker Beechcraft Inc, owned by Goldman Sachs and Onex Corp., said it intends to emerge from bankruptcy as a standalone company after talks to sell itself to Chinese aerospace firm Superior Aviation Beijing Co failed.

The maker of business jets, general aviation turboprops and military aircraft, filed for bankruptcy protection in May, unable to support a $2.5 billion debt load.

Hawker said in July it was in exclusive talks with the little-known Chinese firm over the sale of the company for $1.79 billion.

The companies could not agree on the terms of a plan sponsorship agreement, Hawker said on Thursday.

The company that would emerge from bankruptcy, to be renamed Beechcraft Corp, would focus on turboprop, piston, special mission and trainer/attack aircraft, Hawker said.

The company said it was evaluating strategic options with creditors for its Hawker product lines, including the closure of its entire jet business, if it does not get a satisfactory bid.

Hawker, which will file an amended reorganization plan, said general unsecured claims will be canceled and holders will receive equity in the reorganized company.

Blackstone third-quarter profit up on strong fund performance

NEW YORK, Thu Oct 18, 2012 – Blackstone Group LP, the largest publicly listed alternative asset manager, said on Thursday third-quarter were its third best since going public in 2007 as its funds appreciated in value and performance fees soared.

Blackstone reported that third-quarter economic net income, a measure of its profitability using the mark-to-market valuation of its portfolio, rose to 55 cents per share from a loss of 34 cents per share a year earlier.

Blackstone, which has investments in The Weather Channel, Pinnacle Foods and SeaWorld Parks & Entertainment, said distributable earnings, reflecting actual cash available to pay dividends, rose to $189.6 million from $125.7 million a year ago.

Assets under management totaled $205 billion at the end of September, up 30 percent from a year earlier.

Blackstone declared a quarterly distribution of 10 cents per common unit.