Volvo gears up for its first bond issue
Volvo is preparing to issue bonds for the first time as a standalone carmaker as the Swedish company enters the next phase of its turnround having recently developed a new manufacturing platform and launched upmarket models.
A move into the capital markets by the Gothenburg-based company, which has been owned by Zhejiang Geely Holding of China since 2010, could be a prelude to a stock market debut, say people close to the carmaker.
“What’s important for us is, I think, is that we have to improve the company and run it as if it was listed,” said Hakan Samuelsson, chief executive. “That is very healthy for the company and that is what we are doing.”
Volvo has been engaged in an ambitious and expensive overhaul that began when Ford sold the company to Geely in 2010.
Mr Samuelsson told the Financial Times: “We have to be ready to go out on the bond market . . . as part of [acting] as a listed company with all the transparency and reporting that is required. So I wouldn’t exclude that we would go out on the bond market [in 2016].”
The Swedish brand has built an $11bn platform for a new range of large cars, beginning with the XC90 sport utility vehicle that launched last year as the first car produced under Geely. It was followed this month by the newly unveiled S90 saloon.
By 2019, the XC90 will be the oldest car in the company’s revamped nine-model line-up and, at that stage, Volvo aims to be selling almost 800,000 cars a year — versus 466,000 in 2014.
To finance its growth ambitions, Volvo relies on cash flow and several loans from the China Development Bank, including an $800m loan sealed in 2013. Earlier this year it paid $260m to take control of three Chinese factories, which was funded by loans from the parent company.
Raising money on the bond market would mark a further step towards Volvo operating in effect as an independent entity. But the underlying profitability of the business remains weak, with first-half operating margins at 2.2 per cent.
Mr Samuelsson said the company had no issues with its existing financing and played down any suggestion that Volvo needed external sources of money to fund growth.
He also cautioned that any stock market flotation was a matter for the owner. Zhejiang Geely Holding said there were no “immediate” plans for Volvo to be listed or to access the bond markets.
But a person close to the company said: “The idea of a Chinese-owned premium player with high volumes and factories on three continents . . . that’s a compelling story. Why behave like a listed company if you don’t want to be a listed company?”
The last time the carmaker issued a bond was as part of Volvo AB, its former Swedish parent that makes trucks, buses and construction equipment.
Reports FY15 Irish airports traffic growth rise 3.3M to 29.8M
- Delivered 13.1M customers though Irish airports (44% of total)
- elivered 2.2M (70%) of this 3.3m traffic increase
Les dix records d'œuvres d'art aux enchères en 2015
Quelques minutes après Nu couché de Modigliani, le portrait de cette femme blonde semblant tout droit sortie d'une bande dessinée, réalisé en 1964, pulvérisait le précédent record pour le maître du Pop art américain.
5- Mark Rothko, No. 10 (1958), 81,92 M$, chez Christie's le 13 mai à New York
RÉTROSPECTIVE - Le site d'info sur le monde de la culture, Blouinartinfo.com, a publié le classement des pièces les plus chèrement acquises en ventes publiques ces douze derniers mois. Pablo Picasso est l'artiste roi de l'année, suivi d' Amedeo Modigliani et d'Alberto Giacometti.
Qui sont les artistes les plus chers du monde? Alors que le monde de l'art mondial sacrifie à la tradition de la trêve des confiseurs, et prépare ses rendez-vous de 2016, le site spécialisé sur le monde de l'art et de la culture,Blouinartinfo.com, a jeté un coup d'œil dans le rétro des douze derniers mois dans les salles de ventes.
Le résultat global des enchères internationales donne le vertige: 1,48 milliard de dollars. Ce sommet culmine à New York, où ont été réalisées les dix plus hautes ventes. Les deux rivales historiques anglo-saxonnes, Christie's et Sotheby's, se partagent les dix premières places, au bénéfice de l'anglaise.
Les dix suivantes, listées par Blouinartinfo, sont occupées par les maisons Phillips et Bonhams, pour des enchères frappées à New York, mais aussi Londres, Hongkong et Los Angeles. Quatorze peintres, sculpteurs se partagent l'affiche des vingt plus belles enchères. Tous les lauréats sont de type «mâle, caucasien» note Artinfo. Aucune femme, cette année, ne figure donc au palmarès. Et toutes les plus «belles» ventes ont été réalisées à New York.
1- Record absolu pour une vente aux enchères : Pablo Picasso, Femmes d'Alger, Version O, (1955), 179,36 millions de dollars chez Christie's, le 11 mai à New York. Cette toile faisait partie d'une série de quinze (avec chacune une lettre allant de A à O) réalisée par le maître espagnol en hommage à Henri Matisse, mort en novembre 1954. Picasso s'était inspiré du peintre français du XIXe siècle Eugène Delacroix.
2 - Record pour le peintre italien: Amedeo Modigliani, Nu Couché(1917-1918), 170, 40 millions de dollars (M$) chez Christie's, le 9 novembre à New York. Après neuf minutes enfiévrées d'enchères entre sept enchérisseurs, un chinois l'a emporté au téléphone.
3 - Alberto Giacometti, L'homme au doigt (1947), 141,28 M$ chez Christie's, le 11 mai à New York
4 - Roy Lichtenstein, Nurse (1964), 95,36 M$ chez Christie's le 9 novembre à New York.
Quelques minutes après Nu couché de Modigliani, le portrait de cette femme blonde semblant tout droit sortie d'une bande dessinée, réalisé en 1964, pulvérisait le précédent record pour le maître du Pop art américain.
5- Mark Rothko, No. 10 (1958), 81,92 M$, chez Christie's le 13 mai à New York
6- Cy Twombly, Untitled [New York City] (1968), 70,53 M$ chez Sotheby's, le 11 novembre à New York.
7- Pablo Picasso, La Gommeuse (1901), 67,45 M$ chez Sotheby's, le 5 novembre à New York
8- Vincent Van Gogh, L'Allée des Alyscamps (1888), 66,33 M$ chez Sotheby's, le 5 mai à New York
9 - Claude Monet, Nymphéas (1905), 54, 01 M$ chez Sotheby's, le 5 mai à New York
10- Vincent Van Gogh, Paysage sous un ciel mouvementé (1889), 54,01 M$ chez Sotheby's le 5 novembre à New York.
Tesla Ramps Up Hiring as Rivals Loom
Electric-car maker builds on CEO Elon Musk’s fame to recruit engineers through Twitter
A few weeks ago, Elon Musk put out a call on Twitter for “hard-core software engineers” to work on Tesla Motors Inc.’s autonomous car program. The company’s inbox was flooded.
While Mr. Musk was only looking for 100 prospects, he may want to keep the other applicants within ear shot. The electric-car company, which recently released its first sport-utility vehicle and will soon open a battery factory in Nevada, is looking to add thousands of employees in coming years just as an auto industry showdown for tech talent is brewing.
Tesla isn’t the only player in town. The 12-year-old company is tussling with a growing mass of auto makers crowding into California looking for people capable of helping develop software and other components needed to power electric or autonomous vehicles.
Several startups, including Chinese-backed Faraday Future Inc., Karma Automotive Inc. and Atieva Inc., have been luring people away from Tesla for their own electric-car ventures.
At the same time, established industry heavyweights are expanding offices in Silicon Valley, investing in new ventures to better combat Apple Inc. and Alphabet Inc.’s Google as those companies develop automobiles.
Ford Motor Co. and Toyota Motor Co. are among traditional auto makers placing big bets in Tesla’s backyard.
Palo Alto-based Tesla, which grew to 14,000 employees from just 899 at the end of 2010, plans to add 4,500 more workers in California alone during the next four years, according to terms of a $15 million tax credit awarded this year. Tesla currently has 1,600 open positions and is aggressively courting engineers for its autonomous car efforts, known as Autopilot.
Because the auto maker’s business model is built on explosive growth forecasts through the end of the decade, Mr. Musk needs to add head count faster than a typical auto maker with small volumes would.
Addressing his 3.1 million followers on Twitter, Mr. Musk said “no prior experience with cars required. Please include code sample or link to your work.” He then added, “I will be interviewing people personally and Autopilot reports directly to me. This is a super high priority.”
A Tesla spokeswoman said “we’re a career destination for extremely talented hard-core software engineers, and Elon’s tweet opened the gate to a new wave of exceptional candidates.”
Building on Mr. Musk’s fame may be a more cost-effective strategy than relying on outside firms. Fees paid to placement agencies for software engineers in the Bay Area have doubled to around $30,000 to $40,000 per employee in the past two years, said Paul Harty, president of Seven Step RPO, a recruiting outsourcing company.
Tesla’s $30 billion stock market valuation reflects Wall Street’s optimism about its growth prospects, but the company walks a financial tightrope as it continues to lose money and burns cash on multiple future product programs.
The company isn’t only outgrowing its pocketbook. Tesla is sprawling over the Bay Area due to explosive employment growth and its Palo Alto headquarters is proving to be too small.
There is a valet to park employee cars as the small parking lot at the headquarters is always full.
These days, many of the office and engineering functions are performed in Fremont at its factory.
Large sections of the plant have been taken over by offices and the parking area at the plant, which was once co-owned by Toyota Corp. and General Motors Co., is completely full.
“I think we will be building a consolidated headquarters at some point in the future,” Mr. Musk said in September. He said the company would remain in California, but the location of a new headquarters hadn’t been determined.
In all, Tesla has spread over eight buildings in the Bay Area. Recently, it moved into a former solar panel manufacturing center formerly owned by Solyndra LLC, which fell into bankruptcy in 2011 after getting a U.S. Department of Energy loan.
Tesla held a party in the building to unveil its Model X sport-utility vehicle earlier this year.
Tesla’s employment relative to vehicle production is relatively high compared with other luxury car makers. Jaguar Land Rover, the luxury auto maker owned by Tata Motors Ltd., is on pace to sell about 500,000 vehicles in 2015 and has 36,000 employees, or 13.8 vehicles per employee.
Tesla is on pace for 52,000 sales with 14,000 workers, or about 3.7 cars per worker.
The lower ratio of employees to production is partially because the company is still scaling up and planning for a much higher volume, and because Tesla does many functions in-house.
For instance, Tesla recently replaced a seat supplier for the Model X with an in-house production staff, something that is exceptionally rare in the auto industry.
Key Funding Source for Miners Is Depleted
Companies that provide the majority of ‘streaming’ financing are running low on capital
For struggling mining companies, an important source of financing is growing scarce.
Contending with falling profits and hefty debt payments, mining firms such as Glencore PLC and Vale SA this year increasingly turned for cash to specialist lenders who pay large lump sums in exchange for metal deliveries.
But companies that provide the vast majority of this kind of financing through “streaming deals” are running low on capital after striking a record $4.07 billion worth of deals in 2015, nearly quintuple the level in 2014.
“We just don’t feel the pressure that we need to go out and duplicate our efforts that we did in 2015,” said Tony Jensen, chief executive of Denver-based Royal Gold Inc., one of the big streaming companies. He said the company has about $450 million available for new loans. That compares with about $1.3 billion for 2015, according to estimates by Canaccord Genuity, a financial-services firm.
Canadian streaming company Silver Wheaton Corp. in November paid Glencore $900 million in exchange for 33.5% of silver production from the Antamina copper mine in Peru. The cash infusion helped Glencore pay down its debt and stave off investor ire that had triggered big swings in the company’s share price.
Silver Wheaton, though, doesn’t currently have capacity for another blockbuster deal, said its chief executive, Randy Smallwood. The company has roughly $500 million left in its line of credit after doubling it to $2 billion earlier this year and is reluctant to sell stock or get deeper into debt, he said. Mr. Smallwood said he expects profits from operations to add an additional $500 million to Silver Wheaton’s arsenal by the end of 2016.
Silver Wheaton is studying sharing its deals with others in a process called syndication, but “we’re not quite convinced it’s the best thing for us yet,” Mr. Smallwood said.
Silver Wheaton, Royal Gold and Canada’s Franco-Nevada Corp. will start 2016 with an estimated $1.4 billion to deploy, according to an analysis of the companies’ financial statements by Canaccord Genuity analyst Peter Bures. That compares with an estimated $4.7 billion on hand in the first quarter of 2015. A representative of Franco-Nevada declined to comment. Mr. Bures said those three companies account for more than 80% of lending capacity.
“It’s not a bottomless pit, they’ve pretty much used up their capacity,” said John Bridges, mining analyst with J.P. Morgan Chase & Co.
The drop in lending capacity reduces mining companies’ lifelines as they contend with a protracted downturn. Tumbling metal prices and plentiful supply of everything from iron ore and copper to nickel and coal have reduced profits and mining companies’ ability to repay debts.
Meanwhile, traditional avenues for raising cash, like bond or stock sales, have essentially closed to all but the most well-capitalized mining firms.
Glencore’s troubles this year have been emblematic. Glencore’s shares have plunged 66% in 2015 on worries about its credit rating and ability to service its debt. Glencore declined to comment. Glencore’s management has previously assured investors of the company’s ability to pay its debts and has put mines and other assets up for sale to reduce debt. It also has said it might do more streaming deals in 2015.
Vale in March sold 25% of the gold produced by its Salobo copper mine in Brazil to Silver Wheaton for $900 million, doubling the streaming company’s share of the mine’s gold output. The deal buttressed Vale’s balance sheet when the price of iron ore, the company’s main product, tumbled to decade lows. The streaming deal helped put a value on the gold in the copper mine that the market hadn’t previously recognized, said Vale spokeswoman Patricia Malavez.
Streaming companies use the proceeds from share sales and borrowings from bank credit lines to provide financing to mining firms. The streaming company pays the miner a large sum upfront. In exchange, the company receives the right to buy, at below-market prices, a portion of the precious metals that usually come out of the ground during the mining of industrial metals.
Streaming companies often have the right for the life of the mine, meaning that they continue to get deliveries of metals long after they have recouped their upfront payment.
Executives at streaming companies said they are reluctant to raise capital by selling shares, which have slid together with precious-metals prices, and they already have hefty debt loads themselves.
Other firms have started to test the market for streaming deals. Blackstone Group LP’s Blackstone Tactical Opportunities and Orion Mine Finance Group, an investment firm focused on the mining sector, have this year teamed up on two streaming-finance deals valued at a combined $790 million, according to company filings.
“We’re able to drive some spectacular deals,” said Douglas Silver, portfolio manager with Orion.
Still, the largest three companies are currently considered the dominant source of future streaming deals.
“Mining is a capital-intensive business and at this point in time the options for capital are scarce,” said Andrew Kaip, analyst with BMO Capital Markets.
What’s He Building in There? The Stealth Attempt to Defeat Aging at Google’s Calico.
Alphabet, Google’s newfangled conglomeration, arrived in August, but we will not see its first financial figures until January, when the company reports two sets of earnings — Google and the “other bets.” Each subsidiary will not break out its own performance, but the earnings reports will offer some view into their costs and output. Before then, Re/code is unpacking one Alphabet company a week*, presenting the facts, figures and, just maybe, the financials behind the silos of the world’s most ambitious company.
So far, we have:
* Nest
* Access and Energy
* Google Ventures
* Verily
* Google Capital.
Up next: Calico.
Talk about a headline that sings. “Google vs. Death.” The Time magazine cover story from September 2013 heralded the creation of California Life Company, or Calico, a new firm incubated by Google with the audacious aim to extend human lifespans.
Although Calico formed two years before Alphabet, it had many of the markers Google’s co-founders outlined as their rationale for the holding company. A startup staring down a moonshot issue? Check. A problem with a very long time horizon? Check. Google’s tech savvy applied to a market well outside its domain? Check. A venerated founder at its helm? Calico chief Arthur Levinson — former CEO and board chair of biotech firm Genentech, board chair of Apple — may be the biggest heavy-hitter among Alphabet’s execs.
Levinson did not speak to Time for its story. And he has said basically zilch publicly about his company since. Yet some of the hyperbole accompanying Calico (Google wants to disrupt death!) is just that. It is evident that Levinson’s secretive company is focused on medical solutions that fend off the illnesses that come with old age; it’s not trying to give us immortality.
Calico has announced six partnerships for research and drug development, linking arms with two universities, a nonprofit, a pharmaceutical company (AbbVie) and the genealogical data firm Ancestry. Like Verily, Alphabet’s other health unit, Calico seems to be operating as a high-tech research and development lab, creating medical products that its pharma partners will take to market.
So, one day you may be able to buy a pill that extends your life, dreamed up in a lab funded by a search engine. When and how those drugs will arrive — or be priced — remains unclear.
Unlike Verily, which is focused on various diseases, Calico has a singular mission: Extending life. Currently, the company has several research teams each experimenting with different avenues of longevity research, according to people who are as familiar with its operations as outsiders can be.
What Calico’s staff investigated before joining Calico gives us some glimpse into the black box of the company. (Calico never comments beyond pointing to its bare-bones website.) Several of its scientists have backgrounds in cellular biology and genetics. So they are equipped to identify and manipulate genes tied to animal (and maybe human) longevity, and work with massive datasets, like the one courtesy of the Ancestry deal. Newer Calico staff arrived with training in emerging, more experimental methods, such as synthetic biology and optogenetics.
Calico has also hired several experts on cancer, one of its two stated targets, along with neurodegeneration or the loss of functioning neurons. This is familiar terrain for Levinson; Genentech’s largest sellers were cancer drugs, primarily Avastin, when it was acquired by Swiss pharma giant Roche in 2009, the year Levinson left. But Genentech was pushing treatment pills. It wasn’t tackling “one of life’s greatest mysteries,” as Calico’s slogan boldly declares.
As Time pointed out, most research in Calico’s orbit is within nonprofits; one for-profit that tried to market anti-aging drugs, Sirtris Pharmaceuticals, folded after failing to find a market. Calico does have some direct competitors, including Human Longevity Inc., a cell therapy firm backed by famed geneticist Craig Venter.
HLI announced a $70 million funding round in 2014. As of September, Google disclosed that it gave $240 million to Calico, in exchange for stock plus promised support of up $490 million should Calico need it.
Who to Know
Levinson was Genentech’s chief scientist, a veteran researcher with no business experience, when promoted to CEO in 1995 — a “nerd from central casting,” per an insightful 2000 New York Times article. He quickly proved his business chops. The biochemist helped steer Genentech out of financial entanglements with Roche, boosting its stock and moving several drugs to market. Sales grow from $918 million in the fourth quarter of 1995 to $2.45 billion in his final quarter as CEO.
Levinson also manages the astonishing feat of simultaneously being an executive within Google and an Apple board member. (He left Google’s board in 2009.)
His pick to build Calico’s bottom line is Jonathan Lewis, who spent ten years scaling up partnerships and investments for Genentech. After that, Lewis worked on mergers and acquisitions for Roche and business development for European pharma titan UCB.
David Botstein, Calico’s chief scientific officer, joined from Princeton with a curriculum vitae padded with awards. His colleague and fellow genetic researcher, Cynthia Kenyon, runs aging research for Calico. She’s credited with discovering a gene mutation in a roundworm that sparked the study of stretching our lives. From Calico’s website: “Her findings showed that, contrary to popular belief, aging does not ‘just happen’ in a completely haphazard way. Instead, the rate of aging is subject to genetic control.”
Off Kenyon and her cohort go, trying to turn that control into a biotechnology business. Somehow.
And here, from the inimitable Tom Waits, is the most appropriate soundtrack for the company cloaked in mystery.
*PBOC TO PREVENT SYSTEMIC RISKS
Today, workers began installing the first LinkNYC access points in New York. First announced in November 2014, the hubs are designed as an update to the standard phone booth, using upgraded infrastructure to provide gigabit Wi-Fi access points. This particular installation was spotted outside a small Starbucks at 15th St and 3rd Avenue, near Manhattan’s Union Square. 500 other hubs are set to be installed throughout the city by mid-July. LinkNYC anticipates one or two weeks of testing before New Yorkers will be able to use the hubs to get online.
The full network will install more than 7,500 public hubs throughout the city, each replacing a pre-existing phone booth. Once completed, the hubs will also include USB device charging ports, touchscreen web browsing, and two 55-inch advertising displays. The city estimates that ads served by the new hubs will generate more than $500 million in revenue over the next 12 years.
Emerging from the Reinvent Payphones design challenge under Mayor Bloomberg, the LinkNYC project has been the subject of significant controversy in recent months. Shortly after the initial buildout was announced, the Daily News reported that outer-borough hubs in Brooklyn and the Bronx were exhibiting speeds as much as ten times slower than equivalent hubs in Manhattan. One of the companies involved in the hubs, Titan, also drew controversy for implanting Bluetooth beacons in the test hubs, which could potentially have been used to track pedestrians and serve ads. The beacons were removed shortly after their existence was made public. This summer, Titan merged with Control Group to form a new company called Intersection, and Google's Sidewalk Labs purchased a non-controlling portion of the subsequent company.
When the project was announced in 2014, LinkNYC said it would begin construction "next year." This week's construction push allowed them make good on that promise just a few days before 2016. Other functionality may take longer to come online, particularly the built-in touchscreen-enabled tablet, designed for web browsing, maps, and free phone calls. On an accompanying pamphlet, those features are listed as "coming soon."