TheChek News Flow

Batista deal slashes value of holdings

Shares of the oil flagship of Eike Batista, the former Brazilian billionaire, soared on Thursday after the company announced an unexpectedly quick debt restructuring deal with creditors. The $5.8bn agreement with creditors that was announced late on Christmas Eve sent stock of Óleo e Gás Participações, formerly known as OGX, up as much as 31.6 per cent before moderating their gains to about 21 per cent in late trade to finish at R$0.23 per share. The rise in the share price followed a Christmas day announcement by OSX, Mr Batista’s oil services company and a key creditor of the former OGX with $1.5bn in claims from cancelled contracts, saying it would also abide by the restructuring. "If the [restructuring] is implemented in the form contemplated, OSX will retain . . . about 7 per cent of the share capital of the restructured company," OSX said in its statement. The debt for shares exchange with creditors marks a final blow for Mr Batista, who will be forced to hand over control of the company he once styled as the private sector answer to Petrobras, the state oil company that has a near monopoly over Brazil’s fossil fuel industry. The restructuring of OGX will reduce Mr Batista’s direct stake in the former keystone company of his oil, mining, energy and logistics empire from about 50 per cent presently to 10 per cent. With a market capitalisation, based on the latest prices, of R$776.64m, according to Bloomberg data, that means Mr Batista’s direct stake in the company will be worth only about R$78m after the deal. This represents a spectacular fall from three years ago when the stock was priced at nearly R$21 per share. Even in January this year it was priced at up to R$5.36, at which level Mr Batista’s direct stake would have been worth about R$9bn based on his current shareholding. The company’s implosion led to his ejection this year from the Forbes’ billionaires list. He was once Brazil’s richest man with a fortune of more than $30bn. Shares of OSX also soared on Thursday, rising 32.6 per cent to R$0.61 per share on hopes that the restructuring deal will mean it will survive as a going concern. The news of the quick resolution with OGX creditors – which will be formally sealed with bondholders on January 24 – came as unexpected to those observers who had expected a drawn-out battle in Brazil’s often Byzantine court system. The settlement of the creditor problems at OGX and OSX will make it easier for Mr Batista, who has also sold off most of his significant interests in the other listed companies in his empire, to attempt a return to the business world. However, bankers say he will continue to struggle with debts at the unlisted parent company level of the group. Eike Batista was leveraged "up to the 21st floor", said one banker in São Paulo.

After Hours Summary: ANIP +5.1% (acquires 31 generic drug products from Teva)

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: none of significance.

Companies trading higher in after hours in reaction to news: - WPCS +19.2% (announces public beta release of BTX Bitcoin trading platform), - ANIP +5.1% (acquires 31 generic drug products from Teva Pharmaceuticals for $12.5 mln in cash and a % of future gross profits).

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: none of significance.

Companies trading lower in after hours in reaction to news: none of significance.

Closing Market Summary: S&P 500 Logs Fourth Consecutive Gain

Not much stood in the way of the major averages on Thursday as they continued their year-end rally. The Dow Jones Industrial Average (+0.8%) logged its sixth consecutive gain while the S&P 500 (+0.5%) posted its fourth advance in a row. However, both ended the session at fresh record highs.

Despite the steady, day-long rally in the Dow and S&P, the Nasdaq (+0.3%) spent the entire session inside of a ten-point range, and settled essentially where it started the day. The tech-heavy Nasdaq saw its rally attempts short-circuited by its top component, Apple (AAPL 563.90, -3.77), which fell 0.7%. Meanwhile, the S&P technology sector inched higher throughout the day and settled with a modest gain of 0.3%. Outside of technology, the financial sector (+0.2%) was the only cyclical group that could not keep pace with the broader market. The remaining four cyclical sectors—consumer discretionary (+0.6%), energy (+0.9%), industrials (+0.7%), and materials (+0.6%)—all finished ahead of the S&P.

Of those four outperformers, energy and industrials provided leadership from the opening bell. The energy sector maintained its relative strength into the close while crude oil was limited to an increase of 0.4% (to $99.59/bbl). Top-weighted components, Chevron (CVX 124.81, +1.30) and ExxonMobil (XOM 100.90, +1.68) underpinned the growth-sensitive sector and their strength also factored into the outperformance of the Dow. The price-weighted Dow also drew strength from 3M (MMM 138.29, +1.30) and Boeing (BA 138.27, +1.44), both of which helped the industrial sector (+0.7%) end not far behind energy. Over on the countercyclical side, the third-largest S&P sector, health care (+0.7%), outperformed while consumer staples (+0.4%) and utilities (-0.4%) lagged. For its part, the telecom services sector (+0.5%) finished in-line with the broader market. In part, the underperformance of utilities was rooted in the continued rise in yields. The 10-yr note slipped as its yield tested 3.000% before settling at 2.990%. Since the tapering announcement, the benchmark yield has added almost 11 basis points. Participation was well, well, well-below average as only 410 million shares (versus an average of 726 million) changed hands on the floor of the New York Stock Exchange. Did we mention that today's participation was on the light side? Although the broader market did not see much volume, Twitter (TWTR 73.21, +3.35) maintained its torrid pace on heaviest volume (82.5 million) since its market debut. The stock surged 4.8%, extending its December gain to 76.4%. Today's economic data was limited to weekly initial claims, which dropped to 338,000 from an upwardly revised rate of 380,000 (from 379,000) while the consensus expected a decline to 350,000. Seasonal adjustment issues have been a recurring theme in claims data for the past few months, and the trend continued in today's report.

There is no economic data of note on tomorrow's schedule.

o Nasdaq +38.0% YTD o Russell 2000 +36.9% YTD o S&P 500 +29.2% YTD o DJIA +25.8% YTD

PE firms may pay more than $1B in collusion case

It’s going to cost the world’s largest private-equity firms — including KKR and Blackstone — more than $1 billion to settle the bombshell collusion case slowly winding its way through a Boston federal court, The Post has learned. While no deal has been offered, shareholders in eight companies have indicated any future settlement would have to be north of $1 billion, a source close to the situation said. "I think there was a time the plaintiffs would have settled for $1 billion, but that time has passed," a source said. The value of the eight buyouts is $170 billion. Defendants are not ready to settle, sources said. The shareholders in 2007 sued KKR, Bain Capital, Silver Lake Partners, Blackstone Group, Carlyle Group, TPG Capital and Goldman Sachs Capital Partners and accused them of defrauding shareholders out of billions of dollars by colluding to keep prices artificially low when buying their companies. The firms agreed from 2004 through 2008 not to jump each other’s signed deals, it is alleged. Settlement talks could begin in earnest in coming months after a Nov. 3, 2014, trial date was set during a court hearing last week, two sources close to the situation said. The PE firms have tried 10 times since the 2007 case was filed to get it tossed. Each effort failed. Judge William Young, at a court hearing last week, said the court could offer the parties "alternative dispute resolution" by providing a mediator. The parties told the judge, several sources said, they already had a private mediator and had spoken several times. Neither side is satisfied with the numbers being bandied about, the source added. In March, the plaintiffs are expected to seek class-action status. Last month, Judge Young certified a class of Nexium drug buyers in a case brought by some of the same lawyers against AstraZeneca for blocking a generic version of a heartburn drug. The private-equity firms have joint responsibility in the suit, so if any of the defendants settled on their own it could put whatever firm or firms remained at great risk for financial loss. Much of the plaintiffs’ case rests on emails between top executives at the giant firms. This includes Blackstone’s Tony James writing to KKR’s George Roberts after one deal: "Together we can be unstoppable but in opposition we can cost each other a lot of money." "Agreed," Roberts answered, court papers said. The PE firms say there is no evidence of a master plan.

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BFW 12/26 17:02 French Nov. Number of Jobseekers Rise 17.8k BN 12/26 17:00 *FRENCH NOV. NUMBER OF JOBSEEKERS RISE 17.8 THOUSANDS

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French Number of Jobseekers Rose in November to 3.293 Million 2013-12-26 17:04:12.633 GMT

By Vidya Root Dec. 26 (Bloomberg) -- French jobless claims rose in November in a challenge to President Francois Hollande, who has pledged to reverse a rise in unemployment before year end. The number of people actively looking for work in France increased by 17,800, or 0.5 percent, to 3.293 million in November, the labor ministry said today in an e-mailed statement. Claimants peaked at a record 3.296 million in September, the result of a rise in joblessness that began in May 2011 and lasted for 27 consecutive months as Europe’s sovereign debt crisis plunged the region into recession.

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

To contact the editor responsible for this story: Vidya Root at +33-1-5365-5018 or vroot@bloomberg.net

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Deutsche Telekom Hasn’t Decided If It Wants to Sell TMUS: CNBC 2013-12-26 14:58:54.558 GMT

By Joshua Fineman Dec. 26 (Bloomberg) -- Deutsche Telekom hasn’t made decision on selling T-Mobile US, not sure it wants to take on potential regulatory risk, CNBC’s David Faber said. * Softbank has been in talks with Deutsche Telekom on and off; talks have increased beyond “social niceties” as of late * Possible deal would be in 2014 * NOTE: Dec. 16, Faber says TMUS, Sprint not having talks * NOTE: Dec. 26, Nikkei said SoftBank to raise funds for TMUS purchase in U.S. * NOTE: Dec. 23, Oppenheimer said TMUS/S deal approval odds raised to two-thirds from 50/50

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

--Editor: Joanna Ossinger

To contact the reporter on this story: Joshua Fineman in New York at +1-212-617-8953 or jfineman@bloomberg.net

To contact the editor responsible for this story: Joanna Ossinger at +1-212-617-7789 or jossinger@bloomberg.net

US Market Update: Markets quiet following reopening of US equity trade

***Economic Data*** - (RU) Russia Gold and Forex Reserve w/e Dec 20th: $508.5B v $512.7B prior - (US) Initial Jobless Claims: 338K v 347Ke; Continuing Claims: 2.923M v 2.82Me - (MX) Mexico Nov Preliminary Trade Balance: +$339M v -$742.0Me

Fixed Income: - None Seen

Holiday season trade remained light in the early going with both Europe and Canada closed. US equities are broadly higher following the the DJIA and S&P 500 indices recording high closes on Christmas eve. Nasdaq +0.2%, DJIA +0.34%, and the S&P 500 +0.2%.

Initial jobless claims showed a better than expected result as well as the largest decline week over week seen since Nov of 2012. The volatility can be explained by the usual difficulty the labor department has in accounting for seasonal hiring. Following the open of pit trade the metals rose across the board, with Gold +0.8%, Silver, +2.25%, and Copper +0.4%. Crude is marginally higher (+0.2%) despite reports that Iran lawmakers planned to introduce an uranium-enrichment bill which would force the Govt to increase uranium enrichment to 60% if new sanctions are imposed.

Amazon and Mastercard's SpendingPulse both issued holiday season reports which showed year over year improvement in sales metrics. Amazon indicated that it was a 'record setting' holiday season for the Amazon "Prime" service, while SpendingPulse disclosed larger retailers were benefitting more so than smaller retailers during the holiday season; holiday sales +2.3% y/y. Twitter (TWTR) shares continued their recent volatility seen in recent days, again setting all-time highs (since its IPO in November). Shares throughout the early morning have traded within a 5 point range. Shares of Textura (TXTR) have come under attack from a Citron Research report, now down 9% on the day.

- Most FX price action was muted as expected in the session as year-end conditions affected interest. USD saw little reaction but was overall a bit weaker against the crosses despite a better-than-expected weekly claims data. USD/JPY has yet to break above the 105 handle but was hovering around 5-year highs. -The TRY currency (Lira) hit a fresh record low as pair tested above the 2.10 level earlier today. Turkey Econ Min Caglayan speculated that he saw an attempt to create chaos within the country by using the FX rate.

**Looking Ahead*** All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent) - 12:00 (FR) France Nov Net Change in Jobseekers: -5.0Ke v -20.5K prior; Total Jobseekers: 3.27Me v 3.275M prior - 14:00 (AR) Argentina Nov Supermarket Sales Y/Y: No est v 18.4% prior; Shop Center Sales Y/Y: No est v 20.4% prior - 16:00 (KR) South Korea Jan Manufacturing Business Survey: No est v 78 prior; Non-Manufacturing Survey: No est v 72 prior - 18:15 (JP) Japan Dec Markit/JMMA Manufacturing PMI: No est v 55.1 prior - 18:30 (JP) Japan Nov Jobless Rate: 3.9%e v 4.0% prior; Job-to-Applicant Ratio 3.9%e v 4.0% prior - 18:30 (JP) Japan Nov National CPI Y/Y: 1.5%e v 1.1% prior; CPI Ex Fresh Food Y/Y: 1.1%e v 0.9% prior; CPI Ex Food, Energy Y/Y: 0.5%e v 0.3% prior - 18:30 (JP) Japan Nov Tokyo CPI Y/Y: 0.9%e v 0.9% prior; CPI Ex Fresh Food Y/Y: 0.7%e v 0.6% prior; CPI Ex Food, Energy Y/Y: 0.3%e v 0.2% prior - 18:50 (JP) Japan Nov Preliminary Industrial Production M/M: 0.4%ev 1.0% prior; Y/Y: 5.4%e v 5.4% prior - 18:50 (JP) Japan Nov Retail Trade M/M: +1.0%e v -1.0% prior; Y/Y: 3.0%e v 2.3% prior - 20:00 (PH) Philippines Oct Trade Balance: -$700Me v -$666M prior; Imports: No est v $5.7B prior; Imports Y/Y: 8.0%e v 7.2% prior - 20:30 (CN) China Nov YTD Industrial Profits Y/Y: No est v 13.7% prior

10-Year Treasury Yield Hits 3% Threshold May Signal New Baseline for Higher Interest Rates

U.S. Treasury bonds fell Thursday, pushing the yield on 10-year notes to 3%, a threshold that may signal a new baseline for higher interest rates that could send ripples through the U.S. economy and global financial markets. The benchmark 10-year Treasury note's yield was the highest level since September, marking the second time this year that the yield reached the 3% mark. The note's price was about 3/32 lower on Thursday, according to Tradeweb. Trading on Thrusday was thinner than normal due to the holiday week which could exaggerate bond price and yield moves, traders said. The 10-year Treasury yield is a key rate used as a reference point for the cost of borrowed money for U.S. consumers and businesses. It also serves as a rate used to set the terms for foreign governments and companies to sell bonds in U.S. dollars. The rise continues a trend that has set in place more than a year ago when the yield hit a record low of 1.38% in July 2012. The last time the 10-year yield persistently traded above 3% was in 2011. For most of this year, investors bought up Treasurys when prices fell and yields approached 3%, seeing the debt as a bargain at that level given patchy economic data releases for much of the year and uncertainty about the Federal Reserve's plans for pulling back its bond-buying stimulus. The Federal Reserve said in December it will begin at the start of next year to cut back its $85 billion a month bond-buying, citing a stronger job market and economic growth. A 10-year note yield of 3% or higher is a sign that traders believe the U.S. economy is steadily improving and the Fed will keep culling its stimulus, said analysts and traders. "Round numbers like 3% are important for psychological reasons and investors tend to watch those numbers with added interest,'' said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. in New York. He adds that if the yield rises above 3.05%, there could be "a significant and rapid move higher in yield" toward 3.25%.

Gapping up M&A related: TMUS +4.1% (following reports that Softbank may bid for TMUS), FNF +1.7% (Lender Processing receives all required regulatory approvals for previously announced acquisition by Fidelity National Financial).

Select social media related names showing strength: SINA +2.3%, TWTR +1.3% (extending its recent move to the upside, currently up ~1% just under $71 in the premarket), FB +0.8%, LNKD +0.3%, .

Other news: SPCB +19.9% (completed Smart ID acquisition, Forming a company with a combined 2012 pro-forma revenue of $26.2M and EPS of $0.88), WBAI +3.4% (NYSE cancelling all trades in WBAI executed at or above $33.52 between 9:30 a.m. and 9:31 a.m. today), ARIA +3.1% (still checking), DDD +2% (still checking), TSLA +1.8% (ChinaDaily discusses Tesla's plan to expand in first tier China cities), CBD +1.7% (still checking), HIMX +1.1% (continued strength), BAC +0.3% and JPM +0.3% (still checking).

Analyst comments: EROC +3.9% (Eagle Rock Energy upgraded to Market Perform from Underperform at Raymond James).

Gapping down Select Brazil related names showing early weakness on light volume: GOL -1.4%, PBR -0.9%, VALE -0.7%, BAK -0.6%.

General news: WMC -15.2% (trading ex dividend), ORMP -15% ( has entered into definitive agreements with investors to purchase an aggregate of 1.58 mln shares of common stock at a price of $10.00/share in a registered direct offering), IGLD -7.1% (thinly traded, still checking), TKC -3.5% (Turkcell disclosed announcement regarding the capital increase in subsidiaries), BBRY -1.7% ( Co-founder Michael Lazaridis discloses lowered stake in BBRY; currently shows a 4.99% stake in SC 13D), BP -1.2% (BP: US Court has rejected BP's request for businesses to provide proof of spill related losses, according to reports)