TheChek News Flow

Q: Can you explain Saudi Arabia's strategy in terms of not cutting oil production?

A: Saudi Arabia and all of the countries were caught off guard. No one anticipated it was going to happen. Anyone who says they anticipated this 50% drop (in price) is not saying the truth.

Because the minister of oil in Saudi Arabia just in July publicly said $100 is a good price for consumers and producers. And less than six months later, the price of oil collapses 50%.

Having said that, the decision to not reduce production was prudent, smart and shrewd. Because had Saudi Arabia cut its production by 1 or 2 million barrels, that 1 or 2 million would have been produced by others. Which means Saudi Arabia would have had two negatives, less oil produced, and lower prices. So, at least you got slammed and slapped on the face from one angle, which is the reduction of the price of oil, but not the reduction of production.

Q: So this is about not losing market share?

A: Yes. Although I am in full disagreement with the Saudi government, and the minister of oil, and the minister of finance on most aspects, on this particular incident I agree with the Saudi government of keeping production where it is.

Q: What is moving prices? Is this a supply or a demand story? Some say there's too much oil in the world, and that is pressuring prices. But others say the global economy is slow, so it's weak demand.

A: It is both. We have an oversupply. Iraq right now is producing very much. Even in Libya, where they have civil war, they are still producing. The U.S. is now producing shale oil and gas. So, there's oversupply in the market. But also demand is weak. We all know Japan is hovering around 0% growth. China said that they'll grow 6% or 7%. India's growth has been cut in half. Germany acknowledged just two months ago they will cut the growth potential from 2% to 1%. There's less demand, and there's oversupply. And both are recipes for a crash in oil. And that's what happened. It's a no-brainer.

Q: Will prices continue to fall?

A: If supply stays where it is, and demand remains weak, you better believe it is gonna go down more. But if some supply is taken off the market, and there's some growth in demand, prices may go up. But I'm sure we're never going to see $100 anymore. I said a year ago, the price of oil above $100 is artificial. It's not correct.

Q: Wow. And you said you are in agreement with the Saudi government to not give up market share?

A: This is the only point I'm agreeing with the Saudi Arabian government on oil. That's the only point, yes.

Q: Should the Saudis cut production if they get an agreement with other oil producing countries to take oil off the market?

A: Frankly speaking, to get all OPEC countries to approve and accept it, including Russia and Iran, and everybody else, is almost impossible You can never have an agreement whereby everybody cuts production. We can't trust all OPEC countries. And can't trust the non-OPEC countries. So it's not on the table because the others will cheat. The past has proven that. When Saudi Arabia cut production in the '80s and '90s, everybody cheated and took market share from us. Plus, remember there is an agenda here also. Although Saudi Arabia and OPEC countries did not engineer the reduction in the price of oil, there's a positive side effect, whereby at a certain price, we will see how many shale oil production companies run out of business. So although we are caught off guard by this, we are capitalizing on this matter whereby we'll live with $50 temporarily, to see how much new supply there will be, because this will render many new projects economically unfeasible.

Q: What about the theory of the pressure on the Russians? There's a theory that the U.S. and the Saudis have agreed to keep prices low to pressure Russia because of what Putin has done in Ukraine.

A: Two words: baloney and rubbish. I'm telling you, there's no way Saudis will do this. Because Saudi Arabia is hurting as much as Russia, period. Now, we don't show it because of our big reserves. But I'll tell you Saudi Arabia and Russia are in bed together here. And both are being hurt simultaneously. And there's no political conspiracy whatsoever against Russia. Because we are shooting ourselves in the foot if we do that.

Q: You said the price of oil will dampen the shale revolution in America. How?

A: Shale oil and shale gas, these are new products in the market. And we see big ranges. no one knows for sure what price is the breaking point for shale. Wells have a higher production cost. And very clearly these will run out of business, or at least not be economical. At $50, will it still be economically feasible? Unclear. This is a very much developing story.

Q: Some people believe this crash in oil will create a lot of new mergers in the energy industry. Do you agree?

A: No doubt about that. For sure there'll be a lot of consolidation in the market. Because many small and medium-sized companies can't afford this. Because they are very much dependent on the price of oil. Big companies like Exxon and Chevron are weathering the oil market crash because they are integrated vertically. But no doubt there'll be some mergers and acquisitions coming in one to two years.

Q: Let me switch to the terrorism in Paris. Terrorists killed the cartoonist who joked about the prophet Mohammed. What is your opinion on this?

A: What took place is a horrendous crime that no one can permit and accept. And unfortunately these small minority people are ruining the name of Islam. Now the whole world — Muslims, Christians, Jews, Hindus, Buddhists, atheists — have to come together and be united, and be sure to eliminate those minority of the Muslim community. Those that hijacked our religion and try to eliminate them not only militarily. That's happening right now against ISIS (the Islamic State) by the Americans and their allies. But also mentally, educationally and culturally, also. This is a disease we are getting at now. This really will put us in the Middle Ages unfortunately. It feels like the Middle Ages right now. But I think that the world is united. I just heard, for example, (U.S. Secretary of State) John Kerry giving a speech in French, which was very nice of him to do. It was a calming process for the French people. My foundation is in communication with the presidential palace in France and the French government, to see what we can do to ... (support) these families and these victims, innocent victims that were under attack. And then we have to show that Islam really is united with Christianity, and Judaism, and other religions in the world to limit this disease from from Earth.

Q: Back to finance. Interest rates have gone down. The 10-year yield dropped below 2%. The Federal Reserve ended quantitative easing. But markets seem to be thinking the other way, that rates are going lower.

A: You are talking about the last two weeks. And remember, the last two weeks were a Saudi panic situation, price of oil collapsing. The stock market collapsing. So don't use this as the barometer indicator, the last two weeks. This was a panic situation. The Fed is navigating rates higher slowly.

Q: The stock market started the year off with heavy selling. What about some of your other investments, in media, banking and in technology? Such as Twitter or jd.com. Would you put new money to work in this market today?

A: Clearly the year began with a sell-off because there are so many events that came together. People are taking profits because 2014 was very good. And also, they had this oil crisis, whereby everyone was caught off guard by this major crash in the price of oil. But I think the U.S. economy is doing really very well. Especially relative to the rest of the world. The big question right now is what happens to Germany. Because Germany really is the anchor of all Europe. Also, Japan, and India, and China. These are the three major countries that the world depends on. So, there are opportunities. But also many risks here. If Japan, China, India and Germany improve 1% or 2%, this would be a major improvement for growth globally.

Q: Do you think the European Central Bank should come up with stimulus?

A: There's a struggle right now between ECB President Mario Draghi, who is pushing for a stimulus, and Angela Merkel of Germany, who is worried about having inflation. We're seeing a clash over there between these two ideas. But I think that Draghi is preparing the market for a stimulus. Yes.

As part of the implementation of its share buyback programme, VINCI signed a share purchase agreement with an investment services provider on 9 January 2015.

Two consortiums funds and industrial cement industry remain in contention.

Lafarge and Holcim's assets generate the rush of investors

The circle tightens around the cement plant of Lafarge and Holcim. The two giants, who have achieved mid-December the green light from Brussels for their proposed merger to $ 39.5 billion, await second-round bids for the purchase of their assets in France, Germany, Great Britain , Canada, Austria, Hungary and Serbia, the Philippines and Brazil. A set weighing nearly 5 billion euros of turnover for an expected price of 5 to 7.5 billion euros.

A third defection

Four consortia fund of US private equity firms and industrial manifested themselves at the opening of the auction. But on the eve of entering the decisive stage that forces to submit binding offers, a third defection took place - after the German HeidelbergCement in November and Bath duo Onex next month - according to several sources : that the consortium formed by the Advent fund, BC Partners and Temasek. Global competition is very tight, the verification procedures open to candidates constraints and expectations very high sellers. The expected valuation range is at least eight times Ebitda of the assets sold (between 600 and 700 million per year). A requirement which would be based on the expectation of doubling within two years of the EBITDA margin of all that is now down cycle.

That leaves two consortia: the CVC with two sovereign wealth funds (Singapore's GIC and Adia, the Abu Dhabi Fund) and that formed by Blackstone, Cinven and Canadian MPC. These defections does not necessarily place them in a strong position to negotiate prices down. Industrial positioned themselves on pieces of the perimeter. The names of the Irish cement manufacturer CRH associated to the Mexican Cemex were cited, as well as the Turkish Sabanci, Brazilian Votorantim Cimentos and Indian UltraTech Cement and Birla. Or "a puzzle to 5 or 7 pieces to give the whole thing is very simple, if industrial property value the assets," says a source

Deux consortiums de fonds et des industriels du secteur du ciment restent en lice.

Les actifs de Lafarge et Holcim suscitent la ruée des investisseurs

Le cercle se resserre autour des cimenteries de Lafarge et Holcim. Les deux géants, qui ont obtenu mi-décembre le feu vert de Bruxelles pour leur projet de fusion à 39,5 milliards de dollars, attendent les offres de second tour concernant le rachat de leurs actifs en France, en Allemagne, en Grande-Bretagne, au Canada, en Autriche, en Hongrie et en Serbie ainsi qu'aux Philippines et au Brésil. Un ensemble pesant près de 5 milliards d'euros de chiffre d'affaires pour un prix attendu de 5 à 7,5 milliards d'euros.

Une troisième défection

Quatre consortiums de fonds, des firmes de capital-investissement américaines et des industriels s'étaient manifestés à l'ouverture des enchères. Mais à la veille d'entrer dans l'étape décisive qui contraint à déposer des offres fermes, une troisième défection a eu lieu - après celle de l'allemand HeidelbergCement en novembre et du duo Bain et Onex le mois suivant -, selon plusieurs sources : celle du consortium formé par le fonds Advent, BC Partners et Temasek. La compétition mondiale est très serrée, les procédures de vérification ouvertes aux candidats très contraintes et les attentes des vendeurs élevées. La fourchette de valorisation espérée représente au moins huit fois l'Ebitda des actifs vendus (entre 600 et 700 millions d'euros par an). Une exigence qui reposerait sur l'anticipation d'une multiplication par deux d'ici à deux ans de la marge d'Ebitda de l'ensemble qui est aujourd'hui en bas de cycle.

Resteraient donc deux consortiums : celui de CVC avec deux fonds souverains (le singapourien GIC et Adia, le fonds d'Abou Dhabi), ainsi que celui formé par Blackstone, Cinven et le canadien CPP. Ces défections ne les placeraient cependant pas forcément en position de force pour négocier un prix à la baisse. Des industriels se sont positionnés sur des morceaux du périmètre. Les noms du cimentier irlandais CRH associé au mexicain Cemex ont été cités, ainsi que celui du turc Sabanci, du brésilien Votorantim Cimentos et des indiens UltraTech Cement et Birla. Or « un puzzle à 5 ou 7 pièces pour céder le tout est très simple, si les industriels valorisent bien les actifs », affirme une source

The primary driver is that our ally, Saudi Arabia, has declared war on the booming American shale and energy exploration industry.

Yes, America, we are in an all-out energy war against the Middle East’s oil heavyweight champions.

The Saudis’ latest move tips their hand to a price war.

While oil inventories are already sky-high, and US exploration and production is at a 25-year high, why would our “friends” the Saudis announce this week that they will raise the price of oil for

Asia and other buyers but cut the price for oil it sells here in America?

It’s simple — they are trying to break the backs of the American energy production companies.

The Saudis are losing market share to the US startups and — you guessed it — they’re not happy about it.

So they are willing to start an oil price war by flooding the market with gobs of excess crude just to wash away the entrepreneurial upstart Americans.

In the years between 2001 and 2011, the weekly US field production of crude oil measured in the first week of December steadily averaged 5.5 million barrels per week.

As of the first week of December 2014, the US is now producing 9.1 million barrels per week.

The International Energy Agency estimates that if the boom continues, it will make the US the world’s largest producer by 2015, five years earlier than originally forecast.

That is, if it is not derailed by Saudi aggression in the oil market.

It’s really quite simple to see what’s going on here. The Saudis would like nothing more than for a whole bunch of US shale and oil producers to fold.

That already began when Austin, Texas-based WBH Energy filed for bankruptcy on Jan. 4.

The shame of it is there are a lot of well-paying US jobs and small businesses that will become the casualties of the Saudi aggression. It’s a war over oil all right — a price war.

Talks between Loral and the Ontario Teachers’ Pension Plan, which were active in the fall, have ended, two sources close to the situation said.

In late October, Loral shares began a 15 percent rise, to $78.14, after reports had Ontario close to buying Loral from Rachesky’s MHR Fund Management.

Loral shares closed Friday at $78.32, up marginally.

Ontario had a handshake deal to buy Loral for roughly $85 a share, sources said, and the plan was to complete the deal once Loral settled a suit with Via­Sat Inc. over patent infringement.

Loral on Dec. 2 announced a $45 million settlement.

Then Rachesky, a former protégé of Carl Icahn, failed to reach a deal with Ontario on who would pay the costs.

At the same time, Ontario found it was more expensive to raise financing for the deal to buy Rachesky’s 38 percent stake in Loral than it would have been in the fall.

“When the leveraged financing market stabilizes, the sides will be back putting it together,” a source said.

The pension is “so fed up with Rachesky they can’t see straight,” another source who believed it might take much longer for the sides to ever get back together said. Rachesky declined comment. Ontario did not return calls.