WSJ : VW Should Keep Truckin' Alone

VW Should Keep Truckin' Alone
Paccar May Fit With Volkswagen's Ambitions But This Isn't the Right Time for a Deal

You have to wonder about your arch-rival's motives when he starts playing deal maker on your behalf.

The chief executive of Daimler's DAI.XE -0.06% trucks business told a gathering of analysts this week that "serious, multiple sources" had suggested rival Volkswagen VOW3.XE -0.13% was interested in buying Paccar. PCAR +5.44% VW quickly denied interest in the $24 billion market capitalization U.S. truck maker, which makes the Kenworth and DAF brands.

Buying Paccar would fit with VW's undoubted global ambitions in trucks. But shareholders must hope that the German company keeps a cool head when considering such heavy-duty deals.

VW has big plans when it comes to trucks. It has taken control of Germany's MAN and more recently the Swedish truck maker Scania to build a business that made more than 200,000 trucks last year. Buying premium truck maker Paccar would add another 137,000 in unit sales, further narrowing the gap with Daimler's larger volumes. It would also give VW's Europe-weighted trucks business exposure to the U.S. and Canadian heavy trucks market where Paccar has a 28% share.

But beyond empire-building, Paccar would be an odd choice for VW right now. For starters, Paccar's shares trade on 18.5 times forecast 2014 earnings, a huge premium to VW on just 8.8 times based on FactSet estimates. VW would also have to pay a premium. But synergies in the trucks business can take more than a decade to materialize at the best of times. Savings may be even tougher to extract between U.S. and European manufacturers, which use different engine technology.

Funding the deal also looks a stretch for VW. It has historically raised equity to do deals rather than dig into its cash pile, which it claims it needs to protect its all-important credit rating. But VW just asked preference shareholders for €2 billion ($2.7 billion) in fresh equity and sold a €3 billion hybrid bond to fund its buyout of minority investors in Scania.

It would need to tap preference shareholders again for Paccar. In theory, VW could raise up to €18 billion in new preference shares at the current share price, according to ISI Group. But it can't issue more ordinary shares unless the state of Lower Saxony, which can't be diluted below 20%, pitches in.

Whatever its rivals say, now doesn't look the time for VW to back up the truck for a big deal.

Telegraph : British jihadi: I won't return to UK until black flag flies over Buc

British jihadi: I won't return to UK until black flag flies over Buckingham Palace
Jihadist says he doesn't want to come back to what he has left behind in Britain because it is 'just pure evil', says Abu Osama who is fighting with jihadists in Syria

A British man who claims he is fighting with jihadists in Syria has said he would not return to the UK until "the black flag of Islam" flies over Buckingham Palace and Downing Street.
The man, who called himself Abu Osama, said he had received military training, including how to build bombs and shoot weapons, during his time in Syria.
Speaking with a West Yorkshire accent in an interview with BBC Radio 5 Live, he described the 7/7 London bombers as “heroic lions”, claiming "there is nothing in Britain - it is just pure evil".
Osama said he was fighting with the extremist Al-Nusra Front, linked to Al-Qaeda. However the BBC said his claims had not been “officially verified”.
The man told presenter Nicky Campbell: "I have no intention of coming back to Britain, because I have come to revive the Islamic Khilafah [the Arabic term for the creation of a caliphate].

"I don't want to come back to what I have left behind.
"If and when I come back to Britain it will be when this Khilafah - this Islamic state - comes to conquer Britain and I come to raise the black flag of Islam over Downing Street, over Buckingham Palace, over Tower Bridge and over Big Ben."
His comments come after more than 100 imams, from different parts of the faith, urged British Muslims not to go to Syria or Iraq, and to offer assistance from the UK.
In the letter, the imams wrote: “Ramadan, the month of mercy, teaches us the value of unity and perseverance and we urge the British Muslim communities to continue the generous and tireless efforts to support all of those affected by the crisis in Syria and unfolding events in Iraq, but to do so from the UK in a safe and responsible way.”
One of the signatories of the letter, Imam Qari Muhammad Asim, told BBC Radio 4's Today programme more than 100 imams across Britain would urge members of their congregation not to go to Syria in Friday prayers.
He condemned the comments made by Osama and said the man had been “completely hijacked”.
The imam at Makkah Mosque said: “Radicalisation doesn’t take place overnight – Islam has been hijacked. Social media and the internet plays a huge part in radicalisation and brainwashing.”
But he added a lot of work had to be done and it was not only the responsibility of the Muslim community and imams, but law enforcement as well.
The man speaking to the BBC said his family initially found it hard to accept his decision “because no mother wants to lose her son” but his family now “understands that this is a good cause I am in”.
He added: “"They are a bit scared but I tell them we will meet in the afterlife. This is just a temporary separation.
"They said, 'We understand now what you are doing', and my mother said, 'I have sold you to Allah. I don't want to see you again in this world'."

WSJ : American Apparel Unlikely to Meet Lion Capital Repayment Request

American Apparel Unlikely to Meet Lion Capital Repayment Request
FiveT Capital Holdings, Large Shareholder in Company, Pared its Stake

American Apparel Inc. APP +4.82% is unlikely to meet lender Lion Capital's demand to repay a $10 million loan by Friday, a person familiar with the matter said, deepening a standoff among the fashion chain and a number of its big investors.

The terms of the loan gave Lion Capital the right to call it in if the company changed its leadership, a provision that was triggered by the board's move last month to remove founder Dov Charney as chairman and CEO.

The situation is fluid, and the companies' positions could change. If American Apparel doesn't pay, Lion Capital would have to decide whether to formally accelerate the loan, a legal matter which could force the company to pay, another person familiar with the matter said. A default on the Lion loan could trigger a cross-default on a $50 million credit line extended by Capital One.

American Apparel has said it has the money to repay the Lion loan, but is withholding payment while it completes the terms, including exactly how much is owed, a person familiar with the situation said.

The moves highlight the tricky position the maker of T-shirts and leggings finds itself in after moving to fire its chief executive over allegations of misconduct.

At the center of the negotiations about the company's future is Standard General, an investment firm that effectively controls more than 40% of American Apparel's outstanding stock through an arrangement it struck with Mr. Charney. Standard General has told its investors that it wants to add new directors to American Apparel's board who have a strong background in retailing and install a new management team, according to a copy of a letter that was reviewed by The Wall Street Journal.

In the letter sent to investors, Standard General said it is unclear what role, if any, Mr. Charney will play at the company until the results of an investigation into his conduct being conducted by FTI Consulting are known. American Apparel's board alleges Mr. Charney misused company funds and failed to stop the publication of nude photos of a former employee who had sued him for sexual harassment, among other allegations.

Mr. Charney's lawyer has called the company's allegations baseless and has filed an arbitration petition to block his dismissal.

Bondholders are watching the situation closely to see whether the company will have the cash to meet interest payments that come due in October.

FiveT Capital Holdings, a large American Apparel shareholder, pared its stake to 3.2% from 12% on June 24, according to a regulatory filing.

"There is a lot of confusion around what will happen now," said Johannes Minho Roth, FiveT's founding partner. "If we see the company is moving in the right direction, we would have no problem building up our stake again."

American Apparel has hired bankers at Peter J. Solomon to explore possible financing options.

(BFW) Petropavlovsk Says Received Indications Banks to Waive Covenants


Petropavlovsk Says Received Indications Banks to Waive Covenants
2014-07-04 07:22:05.332 GMT


By Tim Barwell
     July 4 (Bloomberg) -- Comments in presentation on company
website.
  * Says it’s in a dialogue with senior lenders, has received
    non-binding indications that the required waivers and
    extensions will be granted as part of a refinancing
  * Main lenders are Sberbank, VTB
  * Key financial covenants are net debt/Ebitda, Ebitda/interest
    cover; will breach these in Dec. 2014 without successful
    refinancing
  * Also needs to repay $310.5m of a guaranteed convertible bond
    issue, due Feb. 15; co. repeats that it’s in talks to extend
    this

For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Tim Barwell in London at +44-20-7073-3512 or
tbarwell@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net

(BFW) Aveva May Be Attractive M&A Target, SocGen Says; Rates New Buy


Aveva May Be Attractive M&A Target, SocGen Says; Rates New Buy
2014-07-04 07:01:26.849 GMT


By Claudia Rach
     July 4 (Bloomberg) -- Aveva may be attractive both for
larger PLM peers, capital goods majors due to its strong
position in a niche industry with limited competition, high
growth, SocGen says in note.
  * Rates stock new buy; PT GBp2,650
    * Says hasn’t included M&A premium into TP; says 30% M&A
      premium from current share price could add 100p to it
  * NOTE: Aveva is cited in bid speculation in today’s FT
    (subscription required)
  * Next catalyst: Co. scheduled to hold AGM on July 14
  * NOTE: Stock down 2.5% YTD vs SX8P down 0.5%
  * NOTE: 17 analyst ratings 53% buy, 47% hold, 0% sell; avg PT
    GBp2,480: Bloomberg data

For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Claudia Rach in Berlin at +49-30-70010-6219 or
crach1@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net

(The Economist) The tragedy of the Arabs

The tragedy of the Arabs
A civilisation that used to lead the world is in ruins—and only the locals can rebuild it

A THOUSAND years ago, the great cities of Baghdad, Damascus and Cairo took turns to race ahead of the Western world. Islam and innovation were twins. The various Arab caliphates were dynamic superpowers—beacons of learning, tolerance and trade. Yet today the Arabs are in a wretched state. Even as Asia, Latin America and Africa advance, the Middle East is held back by despotism and convulsed by war.
Hopes soared three years ago, when a wave of unrest across the region led to the overthrow of four dictators—in Tunisia, Egypt, Libya and Yemen—and to a clamour for change elsewhere, notably in Syria. But the Arab spring’s fruit has rotted into renewed autocracy and war. Both engender misery and fanaticism that today threaten the wider world.

Why Arab countries have so miserably failed to create democracy, happiness or (aside from the windfall of oil) wealth for their 350m people is one of the great questions of our time. What makes Arab society susceptible to vile regimes and fanatics bent on destroying them (and their perceived allies in the West)? No one suggests that the Arabs as a people lack talent or suffer from some pathological antipathy to democracy. But for the Arabs to wake from their nightmare, and for the world to feel safe, a great deal needs to change.
The blame game
One problem is that the Arab countries’ troubles run so wide. Indeed, Syria and Iraq can nowadays barely be called countries at all. This week a brutal band of jihadists declared their boundaries void, heralding instead a new Islamic caliphate to embrace Iraq and Greater Syria (including Israel-Palestine, Lebanon, Jordan and bits of Turkey) and—in due course—the whole world. Its leaders seek to kill non-Muslims not just in the Middle East but also in the streets of New York, London and Paris. Egypt is back under military rule. Libya, following the violent demise of Muammar Qaddafi, is at the mercy of unruly militias. Yemen is beset by insurrection, infighting and al-Qaeda. Palestine is still far from true statehood and peace: the murders of three young Israelis and ensuing reprisals threaten to set off yet another cycle of violence (see article). Even countries such as Saudi Arabia and Algeria, whose regimes are cushioned by wealth from oil and gas and propped up by an iron-fisted apparatus of state security, are more fragile than they look. Only Tunisia, which opened the Arabs’ bid for freedom three years ago, has the makings of a real democracy.
Islam, or at least modern reinterpretations of it, is at the core of some of the Arabs’ deep troubles. The faith’s claim, promoted by many of its leading lights, to combine spiritual and earthly authority, with no separation of mosque and state, has stunted the development of independent political institutions. A militant minority of Muslims are caught up in a search for legitimacy through ever more fanatical interpretations of the Koran. Other Muslims, threatened by militia violence and civil war, have sought refuge in their sect. In Iraq and Syria plenty of Shias and Sunnis used to marry each other; too often today they resort to maiming each other. And this violent perversion of Islam has spread to places as distant as northern Nigeria and northern England.
But religious extremism is a conduit for misery, not its fundamental cause (see article). While Islamic democracies elsewhere (such as Indonesia—see article) are doing fine, in the Arab world the very fabric of the state is weak. Few Arab countries have been nations for long. The dead hand of the Turks’ declining Ottoman empire was followed after the first world war by the humiliation of British and French rule. In much of the Arab world the colonial powers continued to control or influence events until the 1960s. Arab countries have not yet succeeded in fostering the institutional prerequisites of democracy—the give-and-take of parliamentary discourse, protection for minorities, the emancipation of women, a free press, independent courts and universities and trade unions.
The absence of a liberal state has been matched by the absence of a liberal economy. After independence, the prevailing orthodoxy was central planning, often Soviet-inspired. Anti-market, anti-trade, pro-subsidy and pro-regulation, Arab governments strangled their economies. The state pulled the levers of economic power—especially where oil was involved. Where the constraints of post-colonial socialism were lifted, capitalism of the crony, rent-seeking kind took hold, as it did in the later years of Egypt’s Hosni Mubarak. Privatisation was for pals of the government. Virtually no markets were free, barely any world-class companies developed, and clever Arabs who wanted to excel in business or scholarship had to go to America or Europe to do so.
Economic stagnation bred dissatisfaction. Monarchs and presidents-for-life defended themselves with secret police and goons. The mosque became a source of public services and one of the few places where people could gather and hear speeches. Islam was radicalised and the angry men who loathed their rulers came to hate the Western states that backed them. Meanwhile a vast number of the young grew restless because of unemployment. Thanks to the electronic media, they were increasingly aware that the prospects of their cohort outside the Middle East were far more hopeful. The wonder is not that they took to the streets in the Arab spring, but that they did not do so sooner.
A lot of ruin
These wrongs cannot easily or rapidly be put right. Outsiders, who have often been drawn to the region as invaders and occupiers, cannot simply stamp out the jihadist cause or impose prosperity and democracy. That much, at least, should be clear after the disastrous invasion and occupation of Iraq in 2003. Military support—the supply of drones and of a small number of special forces—may help keep the jihadists in Iraq at bay. That help may have to be on permanent call. Even if the new caliphate is unlikely to become a recognisable state, it could for many years produce jihadists able to export terrorism.
But only the Arabs can reverse their civilisational decline, and right now there is little hope of that happening. The extremists offer none. The mantra of the monarchs and the military men is “stability”. In a time of chaos, its appeal is understandable, but repression and stagnation are not the solution. They did not work before; indeed they were at the root of the problem. Even if the Arab awakening is over for the moment, the powerful forces that gave rise to it are still present. The social media which stirred up a revolution in attitudes cannot be uninvented. The men in their palaces and their Western backers need to understand that stability requires reform.
Is that a vain hope? Today the outlook is bloody. But ultimately fanatics devour themselves. Meanwhile, wherever possible, the moderate, secular Sunnis who comprise the majority of Arab Muslims need to make their voices heard. And when their moment comes, they need to cast their minds back to the values that once made the Arab world great. Education underpinned its primacy in medicine, mathematics, architecture and astronomy. Trade paid for its fabulous metropolises and their spices and silks. And, at its best, the Arab world was a cosmopolitan haven for Jews, Christians and Muslims of many sects, where tolerance fostered creativity and invention.
Pluralism, education, open markets: these were once Arab values and they could be so again. Today, as Sunnis and Shias tear out each others’ throats in Iraq and Syria and a former general settles onto his new throne in Egypt, they are tragically distant prospects. But for a people for whom so much has gone so wrong, such values still make up a vision of a better future.

>>> What to look at today - 04/07/2014 (US Closed - Independance Day)

US Market closed higher on upbeat note thanks to June NFP Report, Consumer discretionary (+0.8%), financials (+0.8%), and industrials (+0.8%) paced the advance throughout the session and ended ahead of the remaining sectors, utilities sector (-1.1%) displayed relative weakness...low volume but on a half day trading..VIX @10.32 -4.62%...Following US markets The Asian bourses were mostly trading higher led by the Nikkei225 rising to a five month high The USD held steady in the lower 102 range against the yen in early trading holding on to gains from the prior session...In the Vienna nuclear talks, Iran was said to have ease its nuclear capacity demands by reducing the number of centrifuges it is seeking. Though no figure was specified, western powers want Iran to reduce the number of centrifuges from the current 19.0k+ to the low thousands. The current round of discussion will run until at least July 15... Nikkei +0.53% Hang Seng +0.10% Shanghai -0.30%


Eur$ 1.3608 S&P -0.05% EuroStoxx -0.12% FTSE +0.04% SMI -0.10% Dax -0.03%

- Fidelity’s Balk Says Stocks, Bonds May Have Risen Too Far: Echos {NSN N868UI6JTSEH <go>}
- Schaeuble Says German Economy Could Grow Faster Than Estimated
- CatalunyaCaixa Has Additional Shortfall of EU1.4B: Confidencial

Keep an eye on :
- ACX SM : UBS Offering Acerinox Shares at EU12.90 to Market, Terms Show (Del Pino family is selling 3%)
- AF FP : Credit Agricole Is Preparing to Reform Its Structure: Echos
- AIR FP :Airbus May Manufacture More in Asia, Lahoud Says: Tribune
- ALO FP : French State, Bouygues Acting in Concert Over Alstom, AMF Says
- BKIA SM : Bankia Aims to Pay Dividend in 2015, CEO Tells Expansion
- BMW GY : BMW Factory Network >120% Utilized, Eichiner Tells Handelsblatt
- BNP FP : JPMorgan Said to Have Unwittingly Helped BNP Hide Sudan Money
- EN FP : French State, Bouygues Acting in Concert Over Alstom, AMF Says
- CUF P : Club Med CEO Says Not Working With Fosun Would Be Error: Figaro
- ACA FP : Credit Agricole Is Preparing to Reform Its Structure: Echos
- DMGT LN : *UBS PLACING 1.85M DAILY MAIL SHARES AT 840P TO MARKET: TERMS
- DOU GR : Douglas Holding hires JPMorgan to sell Christ; will also sell Thalia, then list
- EDF FP : EDF to Send Retrospective Bills Averaging EU30: Le Parisien
- IMP LN : Reynolds Said to Aim for Lorillard Buyout Deal by Late July
- LHA GY : Lufthansa CEO Spohr Says Price Drop Could Wipe Out Profit Target
- NXI FP : Nexity Sells 80% of Asset Mgmt Unit to Former CFO Diot
- NOBN SW : Nobel Biocare Cuts Exec Committee, Says Ritter, Rumpf to Leave
- PTC PL : Portugal Telecom Says PT, Oi, GES Will Be Able to Find Solution
- STAN LN : StanChart Still Investigating Exposure to Qingdao, Bindra Says
- TEC FP : Awarded large contract for subsea development in West Shetlands, UK; terms undisclosed.
- TNTE NA : UPS won't renew bid for TNT Express
- WPL AU : Woodside Takes Initial 25% Stake in Morocco Offshore Permits

>>> Brokers Upgrades & Downgrades

>>> Up
*ALPHA BANK RAISED TO HOLD VS SELL AT RENAISSANCE
*ANTOFAGASTA RAISED TO EQUALWEIGHT AT MORGAN STANLEY
*FORTUM CUT TO STRONG SELL FROM SELL AT NORDEA
*GTC RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
*HISCOX RAISED TO HOLD VS SELL AT BERENBERG
*ITV RAISED TO BUY VS NEUTRAL AT UBS
*LUNDIN PETROLEUM RAISED TO NEUTRAL VS SELL AT UBS
*MEDIASET ESPANA RAISED TO NEUTRAL VS UNDERWEIGHT AT HSBC
*NATIONAL BANK OF GREECE RAISED TO BUY VS SELL AT RENAISSANCE

>>> Down
*BALFOUR BEATTY CUT TO SECTOR PERFORM VS OUTPERFORM AT RBC
*BARRY CALLEBAUT CUT TO NEUTRAL VS BUY AT UBS
*BNP PARIBAS CUT TO NEUTRAL AT MACQUARIE
*ERSTE CUT TO NEUTRAL AT JPMORGAN
*ERSTE CUT TO HOLD AT SOCIETE GENERALE
*FORTUM CUT TO STRONG SELL FROM SELL AT NORDEA
*STANCHART CUT TO HOLD VS BUY AT MAYBANK KIM ENG; PT HK$163.50

>>> PT Change
* Enel PT Raised to EU4.6 at Morgan Stanley; Kept at Overweight
* UNIPOL-SAI PT CUT TO EU2.93 VS EU3.06 AT GOLDMAN; KEPT AT BUY
* Unipol Ord. Shrs PT Cut to EU6.87 vs EU7.17 at Goldman

>>> Initiation
*SAGA PLC RATED NEW NEUTRAL AT JPMORGAN
*SAGA RATED NEW NEUTRAL AT CREDIT SUISSE; PT 198P

>>> Call
>> Stock
*ANTOFAGASTA EXITS LEAST PREFERRED MINERS AT UBS
*BNP PARIBAS REMOVED FROM MACQUARIE MARQUEE IDEAS LIST
*VODAFONE ADDED TO CITI FOCUS LIST EUROPE