FT : SoftBank plans to merge satellite groups OneWeb and Intelsat

SoftBank plans to merge satellite groups OneWeb and Intelsat
Tie-up involves a capital injection of $1.7bn in cash from Japanese group

SoftBank plans to invest $1.7bn to drive consolidation in the space technology sector with the merger of OneWeb, the US satellite start-up it backs, and Intelsat, the heavily indebted commercial satellite operator.

The Japanese technology group said on Tuesday it expected to acquire a 40 per cent voting stake in the combined entity through a purchase of common and preferred shares, which will help to reduce Intelsat’s debt by $3.6bn. But the deal is conditional on bondholders agreeing to the debt exchange offers over the next 90 days.

Intelsat’s debt maturing in 2023 whipsawed after news of the deal leaked, rising from 43 cents on the dollar to a high of 62 cents before paring some of its advance. The group’s 2024 maturing bonds jumped 14 cents on the dollar to 80 cents.

Its share price in New York gained 25 per cent on Monday, reaching $5.87 and giving the company an equity value of $661m. However, after SoftBank said it plans offer $5 per share in cash for shares it will purchase in the combined group, Intelsat’s shares retreated in pre-market trading.

“We are in the midst of a technological revolution . . . provided we receive the necessary co-operation from Intelsat bondholders,” said Masayoshi Son, the billionaire founder of SoftBank.

Intelsat has laboured under a debt load of more than $15bn after its 2008 leveraged buyout by private equity groups BC Partners and Silver Lake. The company has completed distressed debt exchanges to reduce liquidity strains, moves that rating agency S&P Global has said constitutes default.

The Luxembourg-based company has struggled to increase revenues since its buyout, with sales sliding in each of the past three years. Jacques Kerrest, Intelsat’s chief financial officer, told analysts on a conference call in October that the company’s priority last year was to “raise liquidity” through the debt exchanges.

The move by SoftBank came just two months after OneWeb raised $1.2bn from the Japanese group and other investors.

OneWeb, which competes with Elon Musk’s SpaceX, has said it would use fresh capital from its latest funding round in December to launch a satellite network to provide affordable internet access to remote parts of the world. In addition to SoftBank, the US venture is also backed by US chipmaker Qualcomm, the European aerospace group Airbus, Sir Richard Branson’s Virgin, and Bharti, the Indian conglomerate.

OneWeb already has existing ties with Intelsat, which invested $25m in the venture in 2015.

“As an early equity investor in OneWeb, we recognised a network that was . . . a fit with our long-term strategy,” said Stephen Spengler, Intelsat’s chief executive.

Noting that the two companies’ technologies are complementary, with a shared goal of applying satellites to bridge the digital divide, Jefferies analyst Giles Thorne said: “We’d therefore suggest that SoftBank’s intent is to back an operator with the asset mix to be structurally relevant long-term in the big data verticals of tomorrow, such as the connected car.”


SoftBank’s involvement in the shake-up of the satellite industry comes as Mr Son is also preparing to consolidate the US telecoms industry. Mr Son has recently said he is open to all options for Sprint, the US wireless carrier SoftBank owns, including a merger with rival T-Mobile USA or other companies. 

Mr Son’s deal activity has accelerated after SoftBank spent $32bn to acquire UK chip designer Arm last year. Most recently, the company positioned itself in the world of private equity and hedge funds with a $3.3bn acquisition of US alternative asset manager Fortress Investment Group. 

More acquisitions are expected as SoftBank emerges as one of the world’s largest investors with the imminent launch of its record-setting $100bn technology fund.

SoftBank said it expects to approach the Vision Fund and may transfer its shares in the OneWeb/Intelsat deal pending regulatory and investor approval.

>>> Us Gapping down



Gapping down
In reaction to disappointing earnings/guidance:

  • FRGI -14.6%, (also provides strategic update), ESND -14.4%
  • I -13.6%, (confirms it will merge w/ OneWeb in a share-for-share transaction; also confirms a definitive share purchase agreement pursuant to which SoftBank (SFTBY) will invest $1.7 bln in newly issued common and preferred shares of the combined co)
  • TGT -13.2%, CEMP -11.9%
  • PRGO -11.4%, (also announces the resignation of CFO Judy Brown effective April 1, 2017; Ron Winowiecki appointed CFO effective immediately; to divest Tysabri royalty stream for up to $2.85 billion )
  • THC -11.3%, KONA -9.9%, NVAX -9.8%, OPHT -7.9%, SPNS -7.3%, FTR -7%, AAC -6.5%, KRA -5.9%, WDAY -5.3%, ZTO -4.5%, EXEL -4.3%
  • IPWR -4.2%, (enters into a definitive securities purchase agreement with various investors to raise gross proceeds of approx. $15 mln in a private placement of common stock and warrants to purchase common stock)
  • CPE -4.2%, VRX -4.2%, KTOS -3%, DS -2.3%, ENDP -2%, LNG -1.9%, GPL -1.6%, OKS -1.5%, KITE -1.5%, APLE -1.2%, AZO -0.9%

Other news:

  • NVAX -9.8% (pulling back after closing near highs with notable afternoon move to highs)
  • OWCP -9.3% (after closing approx 30% higher on Monday)
  • TTNP -7.9% (receives FDA communication on ropinirole implant Investigational New Drug Application; FDA indicated that it will require final release test data)
  • PULM -7.2% (continued strength)
  • HTGM -7.2% (modestly pulling back following 154% gain yesterday)
  • ORA -4.2% (provides response to reports about potential transaction)
  • TCAP -3.6% (announces the commencement of a public offering of 7,000,000 shares of common stock ), O -2.5% (upsizes offering by by 2.05 mln shares and prices 10.85 mln shares shares of common stock at $62.00)
  • KR -1.8% (in sympathy with TGT results)
  • TZOO -1.6% (following PCLN results)
  • SQ -1.3% (commences $350 mln offering of convertible senior notes due in 2022)
  • WMT -1.2% (in sympathy with TGT results)
  • JPM -0.9% (hosts Investor Day, provides Q1 outlook)

Analyst comments:

  • CENX -3.8% (downgraded to Sell from Hold at Deutsche Bank)
  • FSLR -3.4% (initiated with a Sell at Axiom Capital)
  • TRIP -1.4% (downgraded to Underperform from Hold at Needham)

>>> US. Gapping up



Gapping up
In reaction to strong earnings/guidance:

  • NTRI +19.4%, PAH +5.6%, KND +5.1%, BWXT +5%, FRO +4.8%, USCR +4.7%, IONS +4.5%, GOGL +4.4%, TCMD +4.3%
  • PCLN +4.2%, NRG +4.2%, AMRN +4.1%, ICD +3.7%, ANTH +3%, ESV +2.8%, DPZ +2.7%, HTZ +2%, WUBA +2%, HSKA +1.9%
  • NLNK +1.9%, EOG +1.6%, ALB +1.5%, GAIA +1.2%, SGMO +1%

M&A news:

  • SBY +17.9% (Silver Bay Realty Trust agrees to be acquired for $21.50 per share in cash) 

Select metals/mining stocks trading higher:

  • SBGL +2.1%, GOLD +1.7%, GFI +1.7%, AKS +1.2%, AU +1%, GDX +1%, NEM +0.9%

Other news:

  • ROX +45.2% (announces an agreement to supply Goslings Stormy Ginger Beer and Goslings Stormy Diet Ginger Beer to all U.S. Walmart (WMT) stores)
  • NSPR +15.4% (continued strength), INUV +13.5% (Inuvo's Vertro and Google entered into a Google Services Agreement)
  • LIFE +10.1% (announces that its product candidate Resolaris was granted Orphan Drug Designation by the FDA for the treatment of limb girdle muscular dystrophy patients)
  • DRYS +8.6% (to initiate a new dividend policy; will pay a regular fixed quarterly dividend of $2.5 million to the holders of common stock)
  • CANF +7.7% (announces new data that 'show its liver disease drug candidate Namodenoson (CF102) prevented liver (hepatic) fibrosis progression in preclinical studies)
  • AMD +1.1% (continued strength)

Analyst comments:

  • DRRX +2.9% (resumed with a Buy at H.C. Wainwright)
  • X +2.8% (upgraded to Outperform from Market Perform at Cowen)
  • CSX +1.7% (upgraded to Buy from Hold at Deutsche Bank)
  • AYR +1.3% (upgraded to Neutral from Underperform at BofA/Merrill)

>>> US Early premarket gappers

Early premarket gappers

Gapping up: NTRI +20.4%, SBY +16.7%, NSPR +15.4%, INUV +13.5%, DRYS +11.2%, AMRN +7%, FRO +5.2%, KND +5.1%, BWXT +5%, TCMD +4.3%, GOGL +4.3%, NRG +4.2%, PCLN +3.8%, ENDP +3.8%, ICD +3.7%, ESV +2.8%, HTZ +2.7%, HTZ +2.7%, X +2.6%, WUBA +2.5%, SBGL +2.4%, EOG +2.4%, IONS +2.3%, GOLD +2.1%, AMD +2%, LXU +1.8%, GFI +1.7%, HMY +1.6%, ALB +1.5%, PAH +1.5%, RRC +1.4%, AU +1.3%, DB +1.2%, GAIA +1.2%, AKS +1.1%, GDX +1.1%, NEM +1%, SGMO +1%

Gapping down: FRGI -15.8%, ESND -14.4%, THC -12.3%, TGT -11.9%, PRGO -11.7%, KONA -9.9%, FTR -9.1%, CEMP -8.3%, NVAX -8%, NVAX -8%, TTNP -7.9%, HTGM -7.2%, OPHT -7.2%, AAC -6.5%, EXEL -5.6%, WDAY -5.1%, WDAY -5.1%, KRA -5%, KTOS -4.9%, ZTO -4.3%, ORA -4.2%, IPWR -4.2%, CPE -4.2%, TCAP -3.8%, VRX -3.1%, PULM -2.8%, FSLR -2.6%, O -2.5%, TRIP -2.3%, GPL -2.1%, STM -2%, SQ -1.8%, BHP -1.8%, ASML -1.8%, TZOO -1.6%, ING -1.5%, KR -1.5%, I -1.4%, APLE -1.2%, WMT -1.1%, JPM -1.1%, HPP -1%, RDS.A -1%, C -0.9%, RIO -0.9%

>>> Intrepid Potash misses by $0.07, beats on revs

Intrepid Potash misses by $0.07, beats on revs
  • Reports Q4 (Dec) loss of $0.19 per share, excluding non-recurring items, $0.07 worse than the Capital IQ Consensus of ($0.12); revenues fell 1.4% year/year to $42.2 mln vs the $28.54 mln two analyst estimate.
  • "As we look into 2017, we expect to see the full benefit of recent potash price increases and the margin benefit of solar potash tons. We have placed Trio tons in strategic locations both domestically and abroad and believe we are well-positioned to capitalize on a strong spring season. Moving forward, we remain focused on selectively selling potash into high-margin opportunities, expanding our global presence for Trio, improving our overall cost profile, and optimizing our asset portfolio.

NYT : Business Giants to Announce Creation of a Computing System Based on Ethere

Business Giants to Announce Creation of a Computing System Based on Ethereum

SAN FRANCISCO — Microsoft, JPMorgan Chase and other corporate giants are joining forces to create a new kind of computing system based on the virtual currency network Ethereum.
Some 30 companies are set to announce on Tuesday the formation of the Enterprise Ethereum Alliance, which will create a standard version of the Ethereum software that businesses around the world can use to track data and financial contracts.
The new organization, a nonprofit, is part of a broader movement to harness the technological concept known as the blockchain, which was introduced to the world by Bitcoin.
Blockchains offer a way for unrelated computers and companies to simultaneously collect and store information without relying on a central authority, similar to the way that Wikipedia is written and maintained by a group of writers and editors rather than a single author.
The technology is viewed as being harder to corrupt or hack because of its reliance on many people rather than a single authority.
Many big corporations have been looking for ways to use blockchain technology to keep track of information created by unrelated companies, like stock and bond trading transactions.
IBM has made a particularly big push into the blockchain business, and it has been leading a separate collaborative project, known as the Hyperledger Foundation.
The new Ethereum alliance has been described by some of its backers as a way to ensure that the IBM-led blockchain effort is not the only option for businesses looking to use the technology. Other companies like R3 and Chain have also been developing alternative blockchains.
“We are pretty equally spending our time across the different chains,” said Alex Batlin, the global head of blockchain at Bank of New York Mellon, which is joining the Ethereum alliance.
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Ethereum was introduced in 2013 by a developer named Vitalik Buterin, then 19, who had previously worked on Bitcoin. Since its official release in 2015, the Ethereum network has been the target of hackers and theft.
Yet it has also won a large following among programmers who view it as a new and sophisticated way for groups of people and companies to initiate and track transactions and contracts of all sorts.
That has led some companies to bet that Ethereum will win the race to become the standard blockchain for future business operations.
“In every industry that we come across, Ethereum is usually the first platform that people go to,” said Marley Gray, the principal blockchain architect at Microsoft.
The creation of the Ethereum alliance shows a continuing commitment among big companies to making the technology work, in large part because it promises to create much more streamlined databases that require less back-office maintenance.
Accenture released a report last month arguing that blockchain technology could save the 10 largest banks $8 billion to $12 billion a year in infrastructure costs — or 30 percent of their total costs in that area. Accenture is one of 11 companies on the governing board of the Ethereum alliance.
The current Ethereum network has an internal virtual currency known as Ether, the value of which has risen and fallen over the last two years. On Monday, a single Ether was worth around $15, and all the outstanding Ether were worth around $1.3 billion.
Ethereum, however, is much more than just a system for tracking currency. It also allows people to write what are known as smart contracts into the Ethereum blockchain. Two companies could, for instance, create a contract that would automatically send money to one of them if a particular news authority reported that the Chicago Cubs won the World Series or that “La La Land” won the Oscar for best picture. (As the latter example shows, what would happen if the authority was wrong is a more difficult question.)
Because of its capacity for smart contracts — and other complicated computing capacities — Ethereum is viewed as more agile and adaptable than Bitcoin.
As with Bitcoin, however, anyone can join the Ethereum network and see all the activity on the Ethereum blockchain.
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The companies working on the Enterprise Ethereum Alliance want to create a private version of Ethereum that can be rolled out for specific purposes and be open only to certified participants. Banks could create one blockchain for themselves, and shipping companies could create another for their own purposes.
The purpose of the alliance is to create a standard, open-source version of Ethereum that can provide a foundation for any specific use case.
The private systems are not likely to require an Ether virtual currency, although the companies are hoping to create modules that will allow users to put in and take out individual elements of Ethereum as they choose.
Many companies have already been working to create their own versions of Ethereum for specific purposes.
JPMorgan, for instance, has created a version of Ethereum known as Quorum that the bank has been using in tests to move money between JPMorgan branches in different countries. Quorum will become a part of the new version of Ethereum being developed by the alliance.
Some of the companies working in the new alliance hope that the private Ethereum blockchains will, at some point, be able to connect to the public Ethereum blockchain, creating a standard for information storage and movement around the world.
“Even if you create private networks, if you can anchor them to public networks, you get an extremely strong set of links together,” Mr. Batlin, of BNY Mellon, said.
The work on Ethereum has continued despite an attack on an Ethereum project last year in which a hacker gained control of more than $50 million worth of Ether.
Mr. Batlin and others involved in the Ethereum Alliance said the way the Ethereum developers had handled that attack convinced them of the maturity of the technology.
Today, Ethereum has a larger community of volunteer developers, and more computers on its network than Bitcoin. And the members of the new alliance — which include Banco Santander, BBVA, Credit Suisse, ING, Intel, Thomson Reuters and UBS — say the real-world testing of Ethereum makes it stronger than the alternatives.
“Ethereum has this massive advantage of having the public network that has been tested for two years,” Mr. Gray, of Microsoft, said.

FT : Greeks resume pulling cash from banks; deposits slump to lowest since 2011

Greeks resume pulling cash from banks; deposits slump to lowest since 2011


Oh no. The Greek bank deposit flight chart is back.

Mounting concerns over the state of Greece’s bailout programme are hurting the country’s banking system, which logged its second consecutive month of deposit outflows in January.

Greek businesses and household pulled €1.63bn of deposits from banks in January compared to December, pushing the financial system’s total deposits to the lowest since 2001 at €119.75bn, according to figures from the Bank of Greece.

The resumption of cash withdrawals reverses a steady rise in deposits seen after Athens agreed a new three-year bailout programme that bought it back from the brink of default in the summer in 2015.

But conflict between Greece’s creditors in the EU and IMF have marred a tentative economic recovery, with the jitters also being felt in the banking system.

Greece’s economy contracted by 0.4 per cent in the last three months of 2016 – a period which coincided with a setback in its rescue programme after prime minister Alexis Tsipras made a series of unannounced government spending plans that irked creditors led by Germany.

As it stands, Athens is waiting for creditors to sign off on its bailout progress in order to unlock its latest round of bailout cash, estimated at around €6bn. The country will need the cash to make a series of debt repayments due in July.

Bailout monitors from the EU and IMF have returned to the country this week to begin their assessment of the reforms demanded as part of the €86bn programe (read more from the FT’s Jim Brunsden here).

But the major divisions are between the Brussels and the IMF rather than with the left-wing Syriza government. The Washington-based Fund wants EU creditors to grant Greece bolder debt relief in order to facilitate its return to the international bond markets after its bailout ends in 2018.

Greece’s banking system still labours under the capital controls the government was forced to impose in the summer of 2015 to staunch cash flows from banks.

>>> Target sinks 10% in response to disappointing earnings/guidance, currently t

\Target sinks 10% in response to disappointing earnings/guidance, currently trading around the $60 level in pre-market (66.91)
  • Co cited a rapidly-changing consumer behavior with very strong digital growth but unexpected softness in physical stores. Co noted that guidance reflects the impact of the Company's transition to a new financial model, which will be covered in the Company's meeting with the financial community later today.
  • Related stocks: Walmart (WMT), Kohl's (KSS), J.C. Penney (JCP), Sears Holdings (SHLD), Best Buy (BBY), Bed Bath & Beyond (BBBY), SPDR S&P Retail ETF (XRT)

>>> Target misses by $0.06, reports revs in-line; guides Q1 and FY18 EPS well be

--> -10% pre open

Target misses by $0.06, reports revs in-line; guides Q1 and FY18 EPS well below consensus (66.91)
  • Reports Q4 (Jan) earnings of $1.45 per share, excluding non-recurring items, $0.06 worse than the Capital IQ Consensus of $1.51; revenues fell 4.3% year/year to $20.69 bln vs the $20.69 bln Capital IQ Consensus, reflecting a 1.5 percent decline in comparable sales combined with the removal of pharmacy and clinic sales from this year's results.
    • Comparable digital channel sales grew 34 percent and contributed 1.8 percentage points of comparable sales growth.
    • Segment earnings before interest expense and income taxes (EBIT), which is Target's measure of segment profit, were $1,344 million in fourth quarter 2016, a decrease of 13.5 percent from $1,554 million in 2015. Fourth quarter EBITDA and EBIT margin rates were 9.5 percent and 6.5 percent, respectively, compared with 9.8 percent and 7.2 percent, respectively, in 2015.
    • Fourth quarter gross margin rate was 26.9 percent, compared with 27.9 percent in 2015, reflecting markdown pressure from promotional and clearance activity and costs associated with the mix shift between the Company's store and digital channels, partially offset by the benefit of the sale of the Company's pharmacy and clinic businesses, a favorable merchandise mix, and cost of goods savings.
  • Warned: Co guided Q4 EPS $1.45-1.55 vs. $1.65 consensus; comps (1.5)-(1%) on Jan 18.
  • Co issues downside guidance for Q1, sees EPS of $0.80-1.00, excluding non-recurring items, vs. $1.33 Capital IQ Consensus Estimate.
  • Co issues downside guidance for FY18, sees EPS of $3.80-4.20, excluding non-recurring items, vs. $5.33 Capital IQ Consensus Estimate.
  • Target's 2017 guidance reflects the impact of the Company's transition to a new financial model, which will be covered in the Company's meeting with the financial community later today.
  • Under the current program, the Company invested $264 million in the fourth quarter, leaving ~$4.7 billion remaining under the current program at the end of the quarter.
  • "Our fourth quarter results reflect the impact of rapidly-changing consumer behavior, which drove very strong digital growth but unexpected softness in our stores," said Brian Cornell, chairman and CEO of Target. "At our meeting with the financial community this morning, we will provide detail on the meaningful investments we're making in our business and financial model which will position Target for long-term, sustainable growth in this new era in retail. We will accelerate our investments in a smart network of physical and digital assets as well as our exclusive and differentiated assortment, including the launch of more than 12 new brands, representing more than $10 billion of our sales, over the next two years. In addition, we will invest in lower gross margins to ensure we are clearly and competitively priced every day. While the transition to this new model will present headwinds to our sales and profit performance in the short term, we are confident that these changes will best-position Target for continued success over the long term."