Barrons : Judge Pauses Albertsons’ $4 Billion Special Dividend Payout

Judge Pauses Albertsons’ $4 Billion Special Dividend Payout

A Washington judge has blocked Albertsons Cos. ACI +1.63% from paying out $4 billion in dividends while regulators review its proposed merger with Kroger. KR –1.74%

King County Superior Court Commissioner Henry Judson approved a motion on Thursday issuing a nationwide temporary restraining order on Albertsons ‘ special dividend payment. The $4 billion payout is a term of Albertsons’ (ticker: ACI ) intended $24.6 billion merger with Kroger ( KR ), and was scheduled for Nov. 7.

The motion was part of a lawsuit filed by Washington Attorney General Bob Ferguson. The suit argues that the dividend “risks severely undercutting the grocery giant’s ability to compete” while government regulators scrutinize the merger. In short, the company will have fewer resources to invest in stores, restock shelves, adjust to supply shortages, and “otherwise compete aggressively for customers,” the lawsuit argues.

“If the dividend goes forward, it will leave Albertsons in a weakened competitive position relative to other supermarkets,” the suit adds. “It will prevent the State from assessing (and addressing) the true market positions of the merging parties. And it will leave consumers to shop at two of Washington’s largest supermarket chains that no longer compete for their business in any meaningful way.”

The restraining order blocks Albertsons from paying the dividend until Nov. 10. Ferguson said he would be seeking an injunction to extend the pause while the suit winds its way through the courts.

A similar lawsuit was filed by Attorneys General from California, Illinois, and the District of Columbia.

In a statement on Thursday, Albertsons said it intended to seek to overturn the restraint “as quickly as possible,” adding that the temporary order was based on the “incorrect assertion” that paying the dividend would hurt the company’s ability to compete.

“Albertsons Cos. is well-capitalized, with limited debt and significant free cash flow and is in a strong position financially,” the company said in a statement. “The size of the dividend reflects the Company’s strength, rather than the illogical and damaging accusation that it is an attempt to weaken the Company.”

Albertsons estimates it will have approximately $3 billion of liquidity following the payout of the dividend, including approximately $500 million in cash.

Shares of Albertsons rose 2.6% to $21.46 in premarket trading. Kroger inched up 0.6% to $47.50.

>>> Weekly Market Update

Weekly Market Update: November starts with ‘reality check’ on inflation and rate policy

Monday saw the Dow Jones Industrial average finish out October with the best monthly gain since 1976, with a 14% rise. Strong overseas trading, helped in large part by speculation China’s government could signal its willingness to begin shifting away from some ‘zero Covid’ measures, foreshadowed a theme that would remain prevalent as the week progressed. Sellers re-emerged after Tuesday’s JOLTS data surged by 1M more than consensus expectations. Wednesdays ADP employment was also stronger than expected which further dampened investor enthusiasm ahead of the FOMC announcement. Quarterly earnings reports were also bit more alarming overall, suggesting the consumer is starting to feel the headwinds induced by central bank tightening. US rates remained elevated as key portions of the US Treasury curve stayed stubbornly inverted as Fed officials gathered.

On Wednesday, the FOMC raised rates 75bps, but also as speculated, hinted they would consider adjusting the speed at which they will be hiking them further in the future. Initially stocks rose and yields dipped before Chairman Powell delivered the real news at his press conference. By emphasizing it was very premature to think about pausing rate hikes and that ultimately rates will likely have to move higher than most Fed officials thought just six weeks earlier, the Chairman deliberately pushed up market expectations for the terminal fed funds rate. The US 2-year yield climbed above 4.7% while futures markets quickly priced in the funds rate topping out north of 5.15% by next summer. Alternatively, the message from the Bank of England on Thursday was decidedly different: After hiking by 75 bps, too, BOE Governor Bailey noted that rates will likely rise by less than markets were currently projecting. Cable slumped more than 1.5% amid continued broad dollar strength in the wake of the Fed decision.

Economic data releases did little to push back on the post-Fed press conference narrative. Preliminary Q3 productivity data disappointed markets again, weekly jobless claims unexpectedly fell, while October ISM topped expectations and included a m/m rise in prices paid. Friday’s October jobs report cemented the ‘higher for longer’ mantra. Nonfarm payroll growth continued to roll along at a rate higher than the demographic trend, though the household survey data did offer a more mixed take. The report didn’t appear to change the Fed outlook greatly, and that notion was reinforced by several Fed speakers following the release. Imperatively, the labor market remains too strong to ease the upward pressure on prices. Nevertheless, US indices opened higher on Friday on the back of significant overseas strength in the wake of recirculating speculation that China will signal a shift in its draconian Covid policies. German Chancellor Scholz visiting China revealed that Beijing agreed to approve BioNTech SE's Covid-19 vaccine for foreign residents in what would mark the first approval of an mRNA vaccine for use in China. Crude prices jumped 4% amid broad commodity strength while the US dollar came under pressure. For the week, the S&P sank 3.3%, the DJIA was down 1.4%, and the Nasdaq tumbled 5.7%.

In corporate news this week, earnings season continued apace. AMD missed on profit and guided below expectations amid weak PC sales, but results in all four of its business segments were better than had been forecast back in October. Logistics giant Maersk posted strong results though warned of ‘dark clouds’ on the horizon for the world economy, cutting its FY22 global container demand view. Qualcomm stock fell to its lowest level in two years as it forecast smartphone market shortfalls carrying over into 2023.

Starbucks shares rose after the coffee purveyor brewed up record sales while cafe upgrades and higher employee wages weighed down profits. Kellogg raised forecasts and said it has seen consumers accept higher prices for their staple foods, as the CEO scoffed at the notion that current inflation was every considered ‘transitory.’

J&J announced it would acquire heart-pump manufacturer Abiomed for $17B in an effort to improve growth in its medical devices division. CVS, Walmart, and Walgreens confirmed a tentative agreement to pay $13.8B to settle thousands of local and state opioid claims in the US.



SUN 10/30
(BR) BRAZIL PRESIDENTIAL ELECTION RESULTS: Lula elected with 50.8% of the vote - Electoral Court
(HK) Chinese residents can apply for electronic travel permits to Macau from Nov 1st; China notes it will adjust border restrictions with Macau based off of the situation
*(CN) CHINA OCT MANUFACTURING PMI (GOVT OFFICIAL): 49.2 V 49.8E (moves back into contraction)
2317.TW Reportedly may see up to 30% of Nov iPhone shipments at Zehngzhou plant [its largest with ~300K workers] impacted due to coronavirus restrictions - press
MON 10/31
(HK) Hong Kong Q3 Advance GDP Q/Q: -2.6% v +1.3%e; Y/Y: -4.5% v -0.8%e
*(IT) ITALY Q3 PRELIMINARY GDP Q/Q: 0.5% V 0.0%E; Y/Y: 2.6% V 2.0%E
*(EU) EURO ZONE OCT CPI ESTIMATE Y/Y: 10.7% V 10.3%E; CPI CORE Y/Y: 5.0% V 5.0%E
*(EU) EURO ZONE Q3 ADVANCE GDP Q/Q: 0.2% V 0.1%E; Y/Y: 2.1% V 2.1%E
(RU) Russian missile shot down by Ukrainian air defences reportedly fell on the territory of a village in northern Moldova; No casualties reported - press
(DE) German Gas Commission: Next 2-3 winters could be critical but high gas prices also expected beyond that
ON Reports Q3 $1.45 v $1.31e, Rev $2.19B v $2.12Be
*(US) OCT CHICAGO PURCHASE MANAGER’S INDEX (PMI): 45.2 V 47.0E
*(US) OCT DALLAS FED MANUFACTURING ACTIVITY -19.4 V -18.5E
(US) Reportedly President Biden to float windfall tax on energy producers - press
(US) Treasury quarterly financing estimates: to borrow $550B in Oct-Dec quarter v $525Be (vs prior $400B estimate)
2330.TW Said to have cut up to 50% of some procurement orders with certain suppliers; Partially related to canceled order for 3nm chips by undisclosed top client, which also was a reason for FY22 Capex cut in Oct - Taiwan press
*(AU) RESERVE BANK OF AUSTRALIA (RBA) RAISES CASH RATE TARGET BY 25BPS TO 2.85%; AS EXPECTED
TUES 11/1
(HK) Macau Oct Casino Rev (MOP) 3.90B v 3.0B prior; Y/Y: -10.7% v -49.6% prior
(RU) Russia Pres Putin: To conclude a peace deal with Ukraine, we must first start negotiations; Now Ukraine has forbidden itself to negotiate with us, so we will wait for the conditions to change; Our goodwill is known
ARAMCO.SA Reports Q3 (SAR) Net 159.1B v 114.1B y/y, Op 300.2B v 295.7Be, Rev 543.7B v 359.1B y/y; To pay $18.8B in dividends in Q4
6758.JP Reports H1 Net ¥482.2B v ¥424.9B y/y, Op ¥651.0B v ¥598.5B y/y, Pretax ¥637.1B v ¥566.3B y/y, Rev ¥5.06T v ¥4.63T y/y
(CN) Traders circulating unverified chatter that Chinese 'Reopening Committee' has been formed, led by Wang Huning, Politburo Standing Member. The Committee is reviewing COVID data from US/HK/SG to assess various reopening scenarios; Reportedly target for 'conditional reopening plan' is Mar 2023
BP.UK Reports Q3 adj Net $8.15B v $3.32B y/y, Rev $57.8B v $57.5Be; To buy back additional $2.5B in shares (1.9% of market cap); Raises FY22 production and Capex outlook
*(UK) OCT NATIONWIDE HOUSE PRICE INDEX M/M: -0.9% V -0.3%E; Y/Y: 7.2% V 8.2%E (1st monthly fall since July 2021 and 4th straight decline in annual pace)
(US) US and UAE said to invest $100B to produce 100GW in clean energy projects by 2035 - press
ABMD To be acquired by JNJ for $380/shr cash in $16.6B deal; Abiomed shareholders will also get non-tradeable CVR to receive up to $35.00/shr in cash
PFE Reports Q3 $1.78 v $1.47e, Rev $22.6B v $21.0Be; Raises mid-points of FY22 outlook
AGCO Reports Q3 $3.18 v $3.12e, Rev $3.12B v $3.28Be; Continue to expect strong demand in Q4
TDY FLIR Defense launches MUVE R430 drone remote Radiation detection sensor
(UR) US military personnel said to be on ground in Ukraine to track weapons and equipment - NBC
*(US) OCT ISM MANUFACTURING: 50.2 V 50.0E (lowest since May 2020); PRICES PAID: 46.6 V 53.0E (lowest since May 2020)
*(US) SEPT JOLTS JOB OPENINGS: 10.717M V 9.750ME
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -3.9% v -4.6% prior
(US) Atlanta Fed GDPNow: Cuts Q4 GDP forecast to 2.6% from 3.1%
DVN Reports Q3 $2.18 (ex-items) v $2.13e, Rev $5.43B v $4.91Be
AMD Reports Q3 $0.67 v $0.67e, Rev $5.57B v $5.58Be; Cuts FY22 outlook; Notes softening PC market and substantial inventory reduction actions across the PC supply chain
WEDS 11/2
MAERSKB.DK Reports Q3 underlying Net $8.82B v $8.00Be, EBITDA $10.9B v $6.94B y/y, Rev $22.8B v $16.6B y/y; Affirms FY22 financial outlook, but cuts FY22 global container demand view
GSK.UK Reports Q3 Adj EPS 46.9p v 37.4p y/y, Rev £7.83B v £6.67Be
MAERSKB.DK CEO: Clearly global trade volumes are down; See Europe in recession soon, hard to be optimistic in Europe right now - post earnings comments
FUN Reports Q3 Net $333.0M v $148.0M y/y, Rev $843M v $856Me; Notes pace through Oct supports expectations to achieve new all-time highs for Rev and adj EBITDA in 2022
*(IT) ITALY OCT MANUFACTURING PMI: 46.5 V 46.9E (4th straight contraction and lowest since May 2020)
*(DE) GERMANY OCT NET UNEMPLOYMENT CHANGE: +8.0K V +12.5KE; UNEMPLOYMENT CLAIMS RATE: 5.5% V 5.5%E
(RU) Reportedly some senior Russian military leaders in mid-Oct had conversations to discuss when and how Russia might use a tactical nuclear weapon in Ukraine; Pres Putin said to have not participated in such discussions - NYT
(TR) Turkey President Erdogan: Russia told us that grain corridor will continue
CVS Confirms agreement in principle to pay $5B for global opioid settlement; Payments to be made over the next ten years beginning in 2023
WBA Confirms to pay ~$4.8B over 15 years to resolve a substantial majority of opioids-related lawsuits filed against the Company by the attorneys general of participating states and political subdivisions and litigation brought by counsel for tribes - filing
ATI Reports Q3 $0.53 adj v $0.52e, Rev $1.03B v $898Me
*(US) OCT ADP EMPLOYMENT CHANGE: +239K V +185KE; Seeing early signs of Fed-driven demand destruction; Notes hiring was not broad-based; Pay growth eased again in Oct
(US) Treasury quarterly refunding: To sell $40 3-year notes, $35B 10-year notes, $21B 30-year bonds
(CN) China National Health Commission (NHC) reiterates adherence to 'COVID zero' policy - press
(US) Association of American Railroads weekly rail traffic report for week ending Oct 29th: 514K total units, +0.8% y/y
*(US) FOMC RAISES TARGET RANGE BY 75BPS TO 3.75-4.00%; AS EXPECTED; NEED ONGOING HIKES UNTIL RATES ARE SUFFICIENTLY RESTRICTIVE; PREPARED TO ADJUST POLICY AS APPROPRIATE; WILL TAKE CUMULATIVE TIGHTENING AND POLICY LAGS INTO ACCOUNT
(US) Fed Chair Powell: Need to see inflation coming down decisively but do not need inflation to come down to slow pace of increases; Policy stance must be sufficiently restrictive - post decision Q&A
QCOM Reports Q4 $3.13 v $3.15e, Rev $11.4B v $11.4Be
COST Reports Oct total SSS +6.7% (ex-gas and FX)
LUMN Reports Q3 $0.14 v $0.36e, Rev $4.39B v $4.41Be; Board elimates annual $1.00/shr dividend going forward, authorized an up to $1.5B, two-year share repurchase program
ALB Reports Q3 $7.50 v $6.84e, Rev $2.10B v $2.12Be
2282.HK Reports Q3 (HK$) adj EBITDA -353.5M v +100.5M y/y; Rev 686.6M v 2.25B y/y
*(CN) CHINA OCT CAIXIN PMI SERVICES: 48.4 V 49.0E (2nd straight contraction, lowest reading since May)
THURS 11/3
(SI) ECB's Kazaks (Slovenia): Reiterates Council stance that inflation is very high in the region; Rates need to go much higher; No need for pause at turn of the year
BMW.DE Reports Q3 EBIT €3.68B v €3.52Be, Rev €37.2B v €35.5Be; Expects deliveries to increase significantly in Q4 q/q, but warns rising inflation and interest rates would start to weigh on sales in the coming months
SBRY.UK Reports H1 Rev £16.4B v £15.9Be; Notes trading momentum has remained strong in the first few weeks of H2; Expects to deliver over £1.3B in cost savings in three years to FY24
STLA Reports Q3 Rev €42.1B v €32.6B y/y
*(NO) NORWAY CENTRAL BANK (NORGES) RAISES DEPOSIT RATE BY 25BPS TO 2.50%; LESS-THAN-EXPECTED; Says rate will most likely be raised further in Dec 2022
*(EU) EURO ZONE SEPT UNEMPLOYMENT RATE: 6.6% V 6.6%E
CI Reports Q3 $6.04 v $5.70e, Rev $45.3B v $44.9Be; Raises FY22 outlook
ABC Reports Q4 $2.60 v $2.58e, Rev $61.2B v $60.3Be; Raises Quarterly dividend 5.4% to $0.485 from $0.46 (indicated yield 1.25%)
IRM Reports AFFO Q3 $0.98 v $0.96e, Rev $1.29B v $1.32Be
*(UK) BANK OF ENGLAND (BOE) RAISES BANK RATE BY 75BPS TO 3.00%; AS EXPECTED (biggest hike in 33 years); Says further increases in Bank Rate may be required for a sustainable return of inflation to target, albeit to a peak lower than priced into financial markets
*(UK) BOE VOTED 7-2 TO RAISE BANK RATE BY 75BPS; Tenreyro voted for 25bps hike, Dhingra for 50bps hike as 'UK economy was probably already in recession'
K Reports Q3 $1.01 v $0.97e, Rev $3.95B v $3.78Be; Raises FY outlook
ARW Reports Q3 $5.45 v $5.36e, Rev $9.27B v $9.20Be; Guides Q4 strong; Notes supply is improving modestly
(UR) Russia-installed official of occupied Kherson city: Russian units will likely withdraw from West bank of Dnipro river
(US) October preliminary NA Class 8 Net Orders 43.2K, -23% m/m, +77% y/y - FTRintel.com
*(CZ) CZECH CENTRAL BANK (CNB) LEAVES 2-WEEK REPURCHASE RATE UNCHANGED AT 7.00%; AS EXPECTED
*(US) OCT FINAL S&P/MARKIT SERVICES PMI: 47.8 V 46.6E
*(US) OCT ISM SERVICES INDEX: 54.4 V 55.3E
(US) Atlanta Fed GDPNow: Raises Q4 GDP forecast to 3.6% from 2.6%
SBUX Reports Q4 $0.81 v $0.73e, Rev $8.41B v $8.43Be
FRI 11/4
(CN) US Auditors said to have finished on site China inspections early - press
(CN) More unverified chatters in Chinese social networks that China's COVID policy may soon see a substantial change; Reportedly China National Health Commission's former CDC Chief Scientist Zeng Guang said domestic economic development will be prioritized over COVID prevention
(CN) China said to be working on a plan to scrap COVID flight suspensions in order to normalize air travel - press
(CN) China Health Authorities said to host press conference on 'Targeted Covid Prevention' on Nov 5th at 03:00 ET (07:00GMT); China's Center for Disease Control and Prevention officials and experts will introduce measures for epidemic control
(DE) German Chancellor Scholz: China will allow BioNTech vaccine for expatriates in China, discussed broader approval; China must exert influence on Russia to end Ukraine war; Xi and me have same opinion that nuclear threats are unacceptable - comments after meeting China Pres Xi
AIR.FR Formally signs $17B deal for 140 jets with China as a part of China's order for 292 jets announced in July 2022 - press
HUN Reports Q3 $0.50 v $0.71e, Rev $2.01B v $2.04Be; Notes it reduced production rates to reflect this new reality of slower European demand and higher costs
(IR) Reportedly Iran was asking Russia for help in acquiring additional nuclear materials and with nuclear fuel fabrication; Russia's response on any help in this field said to be unclear - CNN
CAH Reports Q1 $1.20 v $0.96e, Rev $49.6B v $46.9Be
FAST Reports Oct net sales $603.7M +13.6% y/y
(CN) China President Xi: Reiterates stance that global economic recovery momentum is insufficient; country to pursue win-win cooperation as it continues to open up
*(US) OCT CHANGE IN NONFARM PAYROLLS: +261K V +195KE (above all analysts' expectations); Birth-Death Adjustment (unadj): +455K v -172K prior
*(CA) CANADA OCT NET CHANGE IN EMPLOYMENT: +108.3K V +10.0KE; UNEMPLOYMENT RATE: 5.2% V 5.3%E
*(US) OCT UNEMPLOYMENT RATE: 3.7% V 3.6%E
*(US) OCT AVERAGE HOURLY EARNINGS M/M: 0.4% V 0.3%E; Y/Y: 4.7% V 4.7%E

FT : Europe’s bank bosses push back against perceived ECB intrusion

Europe’s bank bosses push back against perceived ECB intrusion
SocGen chair emails regulator to question why its officials should feel need to be present at board meetings

European bank bosses are pushing back against what they see as increasingly intrusive behaviour from their regulator, the European Central Bank.

Chairs and senior executives have contacted the supervisor over its stance on a range of issues — from wanting to have a presence in bank boardrooms to increasing capital requirements and restricting shareholder returns — which bankers view as regulatory over-reach, according to people familiar with their thinking.

Lorenzo Bini Smaghi, chair of France’s Société Générale and a former ECB board member, wrote to the central bank in October questioning the need for its officials to be present at bank board meetings. He also called for a meeting between top bank chairs and Andrea Enria, the head of the financial supervision unit.

Bini Smaghi’s intervention comes as other banks have also become “more vocal . . . criticising our processes”, one person familiar with the ECB’s position acknowledged. Executives have increasingly taken issue with deeper questioning from the regulator over internal processes and decisions taken by managers on dividends and pay.

“To my knowledge, no other authority in the major advanced economies attends board meetings and committees in its supervisory activity,” Bini Smaghi wrote in an email, which was first reported by Bloomberg, and sent to Ramón Quintana, who supervises large international banks.

Supervisors had taken such measures in the past “with apparently very little benefit and serious concerns raised by the supervised entities”, he added.

The message was part of the bank’s ongoing dialogue with the ECB over its supervision.

Bini Smaghi and SocGen declined to comment.

Some officials at the ECB were surprised by Bini-Smaghi’s missive, saying their supervisors had been attending the board meetings of some banks for several years. Officials say the practice allows supervisors to check the quality of governance and they reject the idea that it allows them to influence a bank’s decisions. “What do they have to hide?” one official said.

The ECB declined to comment on the email.

But the pushback echoes growing frustration within some European lenders in recent years over the supervisor’s methods and what some perceive as its over-reach. That includes the ECB’s decision to ban banks from handing out dividends during the coronavirus pandemic in 2020 for fear they could be weakened during the health crisis.

Banks were likely to use an upcoming review of the single supervisory mechanism — launched in 2014 in the wake of the eurozone debt crisis — to argue for a change in approach, the person familiar with the ECB’s position said.

“We’re not denying there could be some areas of efficiency,” the person said, adding that the ECB’s supervisory arm has already convened a team of experts to evaluate its supervisory processes and given them a “clean sheet” to look at how it operates.

The ECB is “open to dialogue and discussion” on processes but not on becoming a “less demanding supervisor”, the person said.

One top executive at another European bank said the ECB was not intervening with requests to attend board meetings across the sector, but taking a more discretionary approach.

“They used to handle all banks in the same way. Now they’re putting banks in different categories,” the executive said, adding that the supervisors were zooming in on some in particular.

The chief executive at a third European lender said relations with the ECB were likely to become more strained in the coming year.

“We are getting conflicting messages out of the ECB,” he said. “At the top level, we are told we should be pursuing consolidation. But two or three levels down, they are telling us we need to focus on balancing the books and being more conservative.

“The ECB is becoming much harder with everybody [and they] are likely to get tougher as we head into recession.”

WSJ : U.S., Allies Set Parameters for Price Cap on Russian Oil

U.S., Allies Set Parameters for Price Cap on Russian Oil
Cap will only apply to the first point of sale of Russian oil that takes place on land, U.S. and its allies have determined

WASHINGTON—The U.S. and its allies have agreed on which sales of Russian oil will be subject to a price cap, racing to flesh out the details of the major new sanctions program before it begins on Dec. 5.

Each load of seaborne Russian oil will only be subject to the price cap through its first sale to a buyer on land, the U.S. and its allies have determined, meaning resales of the same oil on land won’t have to fall under the cap, according to people familiar with the matter. The cost charged for transporting Russian oil also won’t be subject to the cap, the people familiar with the parameters of the plan said.

Intermediary trades of Russian oil that occur at sea must still fall under the cap, the people said. If a load of Russian oil has been refined into petroleum products such as gasoline, then it can again be traded at sea without being subject to the cap, the people said. If the Russian oil hasn’t been refined or significantly altered after it is unloaded onshore, then it would still be subject to the cap if it were again traded at sea, they said.

Under the price-cap plan, the Group of Seven advanced democracies and Australia are planning to bar firms in their countries from providing key maritime services—such as insurance—for the shipment of Russian oil unless the oil is sold below a set price. Because much of the world’s maritime services are based in G-7 countries and the European Union, the Western partners are aiming to effectively dictate the price at which Russia can sell some of its oil on global markets.

The U.S. and its allies have sought to squeeze Russia’s economy for its invasion of Ukraine without damaging the global economy. They have yet to set the actual price for the plan, and they are hoping to set a specific level in the coming weeks. Delays in finalizing the plan have left some oil-market participants concerned that shipments of Russian oil at sea on Dec. 5 could suddenly face new sanctions. To try to address those concerns, the Treasury Department earlier this week said that Russian oil shipped before Dec. 5 would be exempt from the cap if it is unloaded at its destination by Jan. 19.

Russian officials have threatened to cut their oil production in retaliation for the price cap, though U.S. officials say they believe Russia won’t risk damaging a critical industry.

Oil traders had been asking the Treasury Department about whether the price cap would only apply to the first sale of the oil, and the new parameters may make it easier for middlemen to buy Russian oil under the capped level before reselling it.

The U.S. has sought to make the price cap a relatively light burden on the banks, insurers, shippers and traders that help make Russian oil available on global markets. Beyond cutting into the profits Russia earns from its oil sales, the U.S. has hoped to keep global markets supplied with Russian oil to keep energy prices steady.

The foreign partners working with the U.S. on the plan are also still finalizing the details of how they will enforce the program. The U.K.’s Treasury introduced legislation on Thursday that sets the groundwork for the country to implement the price cap. London is a particularly important hub for global maritime insurance and reinsurance.

“This new measure continues to turn the screws on [Vladimir] Putin’s war machine, making it even tougher for him to profiteer from his illegal war,” Chancellor of the Exchequer Jeremy Hunt said in a statement Thursday.

The price cap for Russian crude will go into effect Dec. 5, while two separate price limits for refined Russian petroleum products will kick in on Feb. 5.

FT : Lukoil rejects US buyout group’s offer for Sicily refinery

Lukoil rejects US buyout group’s offer for Sicily refinery
Collapse of talks over deal backed by Vitol risks bankrupting Russian-owned facility

Russia’s Lukoil has turned down an offer to sell its Italian refinery to a US private equity group in a decision that risks bankrupting the Sicilian plant and costing thousands of jobs.

Commodity trader Vitol had offered financing to Crossbridge Energy Partners to help with the acquisition of the Priolo refinery after the Russian group raised concerns about the US buyout group’s ability to pay for the deal.

However, according to several people close to the talks, Lukoil remains reluctant to sell to the US buyout fund. Vitol was willing to extend credit to Crossbridge at a rate better than the US group could get from a traditional lender as it stood to benefit from supplying crude to the Italian refinery.

The deal would have helped avoid Italy nationalising the Sicilian plant, which is facing a cliff-edge in its crude supplies when EU sanctions targeting Russian seaborne oil exports come into full effect next month. 

Before the outbreak of the war in Ukraine the refinery sourced its crude from a variety of countries but lenders stopped providing financing after the EU imposed sanctions on Moscow, forcing the refinery to rely exclusively on its Russian parent company for crude.

A sale to non-Russian owners would allow the plant, which supplies 22 per cent of Italian road fuels, to seek alternative sources of oil.

Economic development minister Adolfo Urso said the government was working to avoid the plant’s shutdown, with nationalisation among the options on the table.

Italian officials close to the talks said the ISAB Lukoil refinery had asked a pool of banks for €700mn in financing as it was struggling to pay its energy bills; however, Italian banks are reluctant to take on such risk.

Publicly-backed lender SACE could back part of the loan to ISAB Lukoil, the people said. However, the banks are refusing to budge, according to two Italian officials, even after the Italian treasury’s director-general, Alessandro Rivera, sent them a “comfort letter” to confirm the company and its owners were not targets of EU sanctions.

“If the Russians don’t want to sell to the Americans and the banks refuse to reopen the credit lines, nationalisation is the only option left,” said one of the Italian officials.

Several European nations have opted to nationalise Russian-owned energy assets to keep prices down and save jobs. Italy has so far refused to explore a nationalisation of the Lukoil plant despite the threat to domestic jobs and fuel supplies.

The Sicilian plant employs more than 1,000 people in one of the poorest areas of the country and indirectly supports thousands of jobs in satellite activities in the area.

Diego Bivona, president of a Sicilian chapter of Italy’s national industry body Confindustria, told local media “nothing happened over these past months and it’s unclear how anyone wants to solve this problem which is not merely local but national and strategic.”

The Financial Times reported in September that Crossbridge had emerged as the frontrunner to acquire the refinery after spending 12 days carrying out due diligence at Lukoil’s ISAB facility.

The buyout firm had explored a joint bid with Vitol but at the time the US firm said it favoured buying the asset on its own.

Vitol and Crossbridge also held talks with members of the previous government led by prime minister Mario Draghi but failed to reach a breakthrough.

The last Russian crude oil order will be submitted on Monday, according to Italian media reports.

Vitol and SACE declined to comment. The Italian treasury did not immediately respond to a request for comment. ISAB Lukoil did not respond to a request for comment.

FT : Hunt to impose UK road tax on electric cars for first time

Hunt to impose UK road tax on electric cars for first time
Autumn Statement to address fall in revenue from vehicle levies triggered by switch to battery-powered models

Electric cars are to be subject to vehicle excise duty for the first time under measures to be introduced by Jeremy Hunt, the UK chancellor, in this month’s Autumn Statement.

People briefed on Hunt’s plans said that applying road tax to electric vehicles was the first sign of a chancellor “dipping a toe in the water” to address the fall in motoring tax revenues caused by the transition to battery-powered vehicles, as their owners also avoid paying fuel duty.

Last year the Treasury warned that “new sources of revenue” would be needed as the country switches to EVs. Fuel duty and VED raise about £35bn for the exchequer but the Office for Budget Responsibility has forecast that the growing share of electric car sales would cut motoring tax revenues by £2.1bn by 2026-27.

The introduction of excise duty, or VED, to electric cars could take effect from 2025-26, according to officials briefed on the plan, although the Treasury declined to comment on “speculation” ahead of the November 17 fiscal statement.

There are more than 1mn electric vehicles on UK roads, with annual sales rising exponentially. Around 15 per cent of the new vehicles sold so far this year run on batteries, according to the SMMT industry body. Current sales growth means there are likely to be several million battery cars on the road by the middle of the decade.

Owners of most petrol and diesel cars pay £165 a year in road tax and continuing the VED exemption for the growing fleet of electric vehicles could cost the exchequer around £1bn a year by the middle of the decade.

Although the sums involved are not huge at this stage, the introduction of road tax on EVs is seen by Treasury insiders as evidence of a “direction of travel”, with more taxes likely to be levied on them in years to come.

A Treasury review in October 2021 warned that reaching the UK’s 2050 net zero carbon target would lead to receipts drying up from five taxes: fuel duty, vehicle excise duty, landfill tax, the carbon price floor and the emissions trading scheme.

It said the transition to electric vehicles would create a temporary tax vacuum equivalent to 1.5 per cent of gross domestic product by the 2040s that could only be partially replaced by carbon taxes. The alternative to new taxes was more state borrowing, which would not be responsible, it concluded.

Earlier this year the OBR also noted that the exchequer faced looming challenges from the growth in electric car sales, as it forecast they would reach 59 per cent of total sales by 2027, up from 11.6 per cent last year.

While electric cars currently remain more expensive to buy outright, their lower running costs, which include savings on running and servicing costs, as well as zero VED, help motorists to bridge the price gap with petrol and diesel models.

Ministers have provided an array of financial incentives to encourage drivers to buy electric cars, ranging from purchase discounts and vehicle tax breaks, to generous treatment under company car schemes.

But as sales have taken off, incentives have been slowly unwound to prevent a drain on the public purse. Purchase grants that were once £5,000 have been whittled down to £1,500, and will disappear completely next spring.

Industry figures said the company car tax benefit remained the single largest incentive to buyers who are able to use such schemes, and that cutting those would have a much larger impact than applying VED. But they conceded that maintaining tax breaks for electric vehicle drivers would become increasingly unfair as they become more commonplace.

The price of electric cars is expected to fall during this decade as battery technology improves and mass production allows the industry to cut costs.

FT : Energy: UK should commit to nuclear to secure investment

Energy: UK should commit to nuclear to secure investment
The industry should be given enough project visibility to amass skills and optimise spending

Does the UK need new nuclear power? Backing for additional plants is hardly unanimous. Reactors are expensive. Waste storage is controversial. Renewable energy is getting cheaper. Long timeframes mean a consistent policy is vital.

On Friday, the government denied reports it might shelve plans for a new reactor at Sizewell. The future of UK nuclear power remains uncertain, all the same.

Current technology has reliability and cost issues. Construction at French utility EDF’s Flamanville 3 plant, using a pressurised water reactor, is more than a decade behind schedule. Costs for newbuilds spiral upwards. In May, EDF — also building the UK’s Hinkley Point C reactor — pegged the likely cost at £25bn-£26bn, up by nearly half from the approved 2016 estimate.

As a result, researchers seeking the cheapest net zero energy system tend to disqualify nuclear. ICIS, a consultancy, reckons the cost of nuclear today is about £126 per megawatt hour, falling to £96/MWh in 2040. The cost of offshore wind power, including the batteries for energy storage, should decline from £165/MWh today to £68/MWh by 2040.

X-link, an interconnector project, reckons it can deliver renewable power for roughly half the cost of Hinkley Point.

Spreadsheets have a poor record of forecasting the future. Reaching net zero with renewables alone would require flawless execution. As the current energy crisis suggests, diversification saves money in the long term. That is a very good reason for the UK to hang on to its nuclear power ambitions.

But if nuclear is to be a key part of the UK’s net zero strategy, it must be done correctly. The industry should be given enough project visibility to amass skills and optimise spending. Modular technology, such as Rolls-Royce’s, which relies on smaller reactors, is one way forward.

The UK should commit to nuclear as a baseload power generator. To harness private capital affordably, that commitment must extend way beyond the tenure of the current government.

SkyNews : Flutter investors brace for judge’s verdict on FanDuel stake sale

Flutter investors brace for judge’s verdict on FanDuel stake sale
Shareholders in the FTSE-100 owner of Paddy Power and Betfair will learn the outcome of an 18-month legal dispute between Flutter and Rupert Murdoch’s Fox on Friday evening, Sky News learns

Investors in Flutter Entertainment, the FTSE 100 gambling group, are poised to discover the outcome of a year-long legal dispute with Rupert Murdoch’s Fox Corporation over the value of FanDuel, the American sports betting platform.

Sky News understands that a New York court will deliver its verdict on the value at which Fox should be allowed to exercise an option over an 18.6% stake in FanDuel.

City sources said Flutter was expected to announce the outcome late on Friday evening, with one shareholder in the London-listed company suggesting they were confident of a positive outcome for the group.

Fox filed an arbitration claim against Flutter in April last year, arguing that the fair market value for it to acquire the FanDuel stake was the same price which Flutter itself had paid when it increased its shareholding in December 2020.

Flutter, which owns brands such as Paddy Power and Betfair, has argued that that valuation - roughly $11bn - is barely half the fair valuation that Fox should now be obliged to pay.

Given the size of the FanDuel stake at stake, the gulf between the two sides represents a potential additional windfall for Flutter of as much as $2bn.

Flutter now owns 95% of FanDuel, having acquired its most recent stake from a consortium backed by KKR, the private equity firm.

If the outcome of the arbitration is favourable to Flutter, analysts speculate that it would return part of the proceeds to investors in the event that Fox exercised its option to acquire the stake.

A spokesman for Flutter, which has a market capitalisation of almost £20bn, declined to comment.