All Posts Tagged With: "government support"
AIG may actually be able to repay the government afterall?
Jennifer McClelland | RSS | Tue, Nov 10 2009 | 0 Comments
According to Moody’s Investors Service, AIG may actually be able to pay back its loans from the government. The company posted its second straight quarterly profit last week thanks to a recovery in the value of investments.
Moody’s said that as long as the operations of AIG and other markets continue to get better and stabilize, then they will likely be able to repay the government with heavy government support in its restructuring plan.
With the government now likely to recoup its investment, it has incentive to continue supporting AIG and its various creditors, Moody’s said. The agency affirmed AIG’s long-term rating of A3, the seventh-highest investment grade, with a negative outlook.
Credit spreads on AIG’s 8.25 percent notes due in 2018 tightened by 15 basis points on Tuesday to 751 basis points over U.S. Treasuries, according to MarketAxess.
Over the past year, AIG has taken more than $180 billion in financial aid from the government. Eighty percent is currently owned by taxpayers in the United States. While AIG is looking for someone to buy major assets, it is having a very difficult time finding anyone to buy from them.
I am actually surprised to see any company saying that AIG will be able to pay back the better part of $200 billion to anyone…especially from a company that went nearly bankrupt.
I don’t see why anyone would spend their time investing in a company like this. I sometimes wonder if the government knew what they were getting themselves into with AIG if they would have lent the money to them without and major consequences (remember executive retreats and those outrageous bonuses?).
Source
AIG will likely not be able to pay back all their loans
Tags: creditors, negative outlook, investors service
Major Trucking Company Will Not Apply for Bailouts
Michael Bowler | RSS | Fri, Jun 12 2009 | 0 Comments
YRC Worldwide, Inc., a major trucking company that operates as both “Yellow Transportation” and “Roadway,” said that they planned on asking for $1 billion in bailout funds from the government, known as TARP (Troubled Asset Relief Program). Last month, YRC CEO Bill Zollars told the Wall Street Journal that in applying for TARP, dialogue may begin with lawmakers about YRC’s pension obligations to long time employees and retirees.
The company’s pension obligations are roughly $2 billion, considerably more than many employers pay, not counting the heftier employers, such as automakers. Zollars claimed the pension obligations are unfair because YRC must now pay for employees who never worked for the company. Due to the multi-employer plans of which they are a part, they are actually paying pensions to other companies’ employees – some that never worked for YRC. Zollers made it clear that he thought this was extremely unfair and would like to address these obligations with lawmakers.
In a letter sent yesterday to employees, also for distribution to customers, YRC said it “has no current intentions of applying for TARP funds,” but that they “want to address the structural inequities created by multi-employer pension plans.” YRC sent a fact sheet with yesterday’s letter in which executives claim the company contributes about $540 million each year to 36 multi-employer pension plans “supporting hundreds of thousands of retirees who never worked for YRC or our subsidiaries.” Those retirees worked for companies that are now out of business, but due to the obligations in the multi-employer pension plans, they are stuck with pensions of retirees from those companies. “With the multi-employer pension plans, when one employer fails, the obligations shift to surviving union companies. It is the ultimate penalty for success,” that letter went on to say.
YRC also indicated a search for government support to address their concerns with the pension issue in the letter. YRC indicated ongoing discussions with its union pension plans, but that the issue is not with pension funds paid to its own employees and that it remains committed to funding those plans. So far, YRC has laid off thousands of workers, negotiated sizable pay cuts with remaining employees and drastically cut costs in other areas as the trucking industry, along with the rest of the economy and business in general, suffers from the worst drop in business and revenue earnings in decades.
YRC stock shares finished yesterday up 11 cents, or 4.5 percent, at $2.58. (Expect them to continue going up as they negotiate those pension plans and prove they really do not need TARP money.) So far, AP, Reuters, and other miscellaneous news reporting organizations have been attempting to get a further comment from a spokesperson at YRC but to no avail.
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Tags: trucking company, employer pension, government support
