Business and Finance

Lee Enterprises shareholders approved a proposal Tuesday that gives authority to the board of directors to implement a reverse stock split.

Lee, parent of the Post-Dispatch and 48 other daily newspapers, wants the ability to convert between five and 10 shares into a single share if the board believes that is what is needed.

Mary Junck, Lee’s chairman and chief executive officer, said at the annual meeting in Davenport, Iowa, that while the vote allows the board to do a reverse stock split, that does not necessarily mean it will take place.

Lee previously said a reverse stock split would "improve the perception" of its stock on the New York Stock Exchange and make the stock "appeal to a broader range of investors guaranteed payday loans."
Lee stock currently complies with NYSE listing rules after the exchange temporarily suspended the $1 minimum price rule and lowered the market capitalization requirement to $15 million. Lee’s total market capitalization stands at $19.4 million, according to Bloomberg.

Trading on the NYSE, Lee shares finished Tuesday at $0.30, up 3 cents, or 11 percent.

— QUAD-CITY TIMES AND STAFF REPORTS

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Exxon Mobil Corp is in constant dialogue with Baghdad to create the investment climate that would allow it to become a significant player in Iraq’s energy sector, Exxon’s chief executive said on Monday.

The world’s largest publicly traded company is in the race for contracts to work on Iraq’s biggest oilfields.

Iraq, which sits on the world’s third-largest oil reserves, needs billions of dollars of foreign investment to overhaul its oil sector and boost output after years of sanctions and war.

“I hope Iraq creates the conditions that will allow a company like Exxon Mobil to be a participant in a significant way,” Chief Executive Rex Tillerson told Reuters in an interview ahead of an energy conference in Qatar.

“That’s the dialogue we are having with them to make them understand what conditions will be necessary for us… to take risk with our capital and have the opportunity to be successful over the long term.”

Iraq is drawing up the contract terms for a bidding round for six giant fields, which together hold more than a third of its reserves. The country has sweetened the terms for deals on offer but international oil firms remain concerned they will be taking on huge risk for little reward.

Tillerson pointed to Qatar as an investment model that attracts international oil companies. Exxon is the largest foreign investor in the Gulf Arab state and projects due to start there make up the bulk of the company’s global production growth in 2009 payday loan no faxing.

Exxon has stakes in projects that are set to double Qatar’s production capacity of liquefied natural gas (LNG) in 2009 to 62 million tonnes. Qatar is already the world’s largest producer of the gas cooled to liquid form for export.

Despite the huge volume of new production capacity, Qatar as a cheap producer was well placed to adapt to an LNG market suffering as the economic downturn eats into demand, Tillerson said.

“Today the LNG market is relatively balanced, but I think it is going to be soft. It is going to be a bit challenging in the next year or so,” he said.

“But Qatar can deliver LNG at a cost of supply below any other LNG source in the world. So their ability to withstand downward pressure on prices is much greater than other sources of LNG.”

SPENDING, PROJECTS

Low oil and energy prices had not impacted Exxon’s spending plans as the company takes investment decisions with a long-term perspective rather than based on short-term oil price swings, he said.

“We stay within a range looking at the future and therefore we don’t make investments that require a real high price to be successful,” Tillerson said.

“We don’t invest outside of the range when it is high, and we don’t worry about it when it gets too low.” 

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The jump in the U.S. unemployment rate to the highest level in a quarter century last month suggests the recession is deeper than the Obama administration forecasts and additional measures may be needed to restart growth.

The jobless rate rose to 8.1 percent in February as employers reduced payrolls by 651,000, the Labor Department said yesterday in Washington. Losses have now exceeded 600,000 for three straight months, the first time that’s happened since the data began in 1939.

Unemployment has already reached the average rate the White House projected for the whole year. The administration needs to keep its focus on repairing the banking system and implementing the stimulus, rather than get diverted by other goals such as healthcare changes, said John Ryding, chief economist at RDQ Economics LLC in New York.

“They should be focused on stabilization” of financial firms “and stimulus — and that should not only be ‘Job 1,’ that should be the only job right now,” Ryding said in an interview with Bloomberg Television. “The question is, is it recession or is it something worse than recession” the economy is facing, he said.

The Standard & Poor’s 500 Stock Index slumped 7 percent this week, bringing the drop since President Barack Obama took office on Jan. 20 to 20 percent. Benchmark 10-year Treasury yields rose to 2.88 percent yesterday from 2.81 percent the previous day amid concern the government will need to sell more debt.

Obama’s Aim

While the president’s $787 billion stimulus plan aims at creating or saving 3.5 million jobs, the U.S. has already lost 4.4 million since the recession began in December 2007, with more declines coming. Tumbling global demand is prompting companies from General Motors Corp. to Sears Holdings Corp. to step up firings.

“You may need more fiscal stimulus in 2010,” Jan Hatzius, chief U.S. economist for Goldman Sachs Group Inc., said in a Bloomberg Television interview. The impact of the package already passed will start fading by early next year, he said.

Obama said yesterday that the “astounding” job losses show “bold action and big ideas” are needed to revive the economy. “We have a responsibility to act, and that’s what I intend to do,” he told a group of Ohio police recruits aided by his stimulus package.

Revisions to January and December statistics lopped an additional 161,000 jobs from previous estimates, the Labor Department’s figures showed.

Economists’ Forecasts

Payrolls were forecast to drop by 650,000, according to the median of 80 economists surveyed by Bloomberg News. The jobless rate was projected to jump to 7.9 percent.

“We’re going to have to have a lot more jobs than 3 free credit reports.5 million” generated to get a “serious recovery” in the economy, Harvard University professor Robert Barro said in a Bloomberg Television interview. Barro calculated a 30 percent chance the U.S. will slide into a depression, which he characterized as at least a 10 percent drop in gross domestic product.

Factory payrolls fell by 168,000 after declining 257,000 in the prior month. Economists forecast a drop of 200,000. The decrease included 25,300 jobs in producers of machinery and 27,500 in makers of fabricated metal products.

Automakers, at the heart of the manufacturing slump, continued to slash jobs and trim costs to stay in business. General Motors last month said it would cut 47,000 more positions globally while Chrysler LLC announced 3,000 more layoffs.

Auto Industry

Auto-parts makers are also suffering. Canton, Ohio-based Timken Co., the supplier of bearings to the world’s top five carmakers, said March 2 it would eliminate as many as 400 salaried jobs this year.

Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 375,000 workers after cutting 276,000. Financial firms cut 44,000 positions after a 52,000 decline the prior month. Retail payrolls decreased by 39,500 after a 38,500 drop.

Sears last week said it would shutter 24 stores, on top of eight closings announced earlier.

Government payrolls increased by 9,000 after a gain of 31,000 the prior month, one of the few areas still hiring. Another 26,000 jobs were added by education and health-care providers.

Employers are holding the line on hours. The average work week held at 33.3 hours in February. Average weekly hours worked by factory workers dropped to 39.6 hours from 39.8 hours, while overtime also decreased to 2.6 hours from 2.8 hours. That brought average weekly earnings up by $1 to $615.05.

Bankruptcy Filings

Slumping sales have caused recent Chapter 11 filings by retailers such as Everything But Water LLC, the largest U.S. retailer of women’s swimwear, and Ritz Camera Centers Inc., the largest chain of camera stores.

Economists polled by Bloomberg last month forecast consumer spending will contract through the first six months of this year after sliding in the last half of 2008. Purchases have not contracted for four consecutive quarters since records began in 1947.

If the recession persists through the first half of this year, it would the longest since the Great Depression. The economy shrank at a 6.2 percent pace in the fourth quarter of 2008, the weakest performance since 1982.

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Leaning against a counter in the golf shop at Lake Forest Country Club, 24-year member Mike Carter talks about the changes he has seen at the club.

There’s the expanded golf course, much of which is viewable through the glistening wall of windows behind him. The refurbished dining room, now with a polished granite-topped bar.

But recently, Carter, a certified public accountant, says there’s been a more disconcerting development.

"We’ve had members who have had financial reversals and resigned," he said.

And Lake Forest is not alone.

Some of the St. Louis area’s ritziest clubs — boasting championship golf courses, elegant dining, and stately ambiance — are now marketing toward an unusual set of potential members: bargain hunters.

At least a few of the area’s roughly 25 country clubs are advertising special deals on historically exclusive memberships in attempts to attract new members and weather the recession. Memberships are still far from cheap, but some of the prices have dropped considerably.

"Clubs are a luxury, and they often are one of the first things to go when people are cutting costs," said Katie Dooley, membership director at Norwood Hills Country Club in north St. Louis County.

As the economy shows no signs of a quick turnaround, country clubs should expect revenue to drop by as much as 20 percent this year, said Jim Singerling, CEO of Club Managers Association of America, a network that includes managers of 3,000 clubs across the country.

Singerling said club managers are considering cutting staffs by 20 percent this spring, which would result in the loss of about 58,000 jobs nationwide.

Norwood Hills, which has about 900 members, has seen more members than usual leave during the past year, Dooley said, though she declined to offer specifics. And while the weather is warming up and prime golf season is approaching, the lackluster economy has club officials a little worried about making up the loss.

So this year, Norwood Hills is offering a "No Commitment" program that Dooley said is aimed at attracting those who are uneasy about their employment situation, whether they worry they will be laid off or forced to move.

The plan allows new members to spread their initiation fee — about $10,000 — over 48 months. Traditionally, members have paid the entire initiation fee when they signed up. Then they pay monthly fees, which can range from hundreds to thousands of dollars.

"For the average American these days, it’s all about what will it cost me monthly," Dooley said.

In the past, the initiation fees that cost thousands of dollars, along with the typical requirement that new members be recommended by current ones, have kept most country clubs exclusive free 3-in-1 credit report. But the recession has forced them to seek out somewhat less affluent clientele.

That means, in some cases, waiving those initiation fees — which can cost as much as $100,000. And for those members who already paid? Well, club officials hope that gives members the incentive to stick around.

"You think long and hard before you forfeit that," said William McMahon Sr., founder of the McMahon Group, a St. Louis-based firm that does consultation for 1,200 clubs across the country.

At Lake Forest, general manager Scott Winn said he was reluctant to get rid of the fee for fear of affecting the value of membership in the long term.

Regardless, Lake Forest has essentially waved the fee for anyone who signs up before April. The club is cutting its $3,500 initiation payment to $1,200 and then crediting that amount to a member’s personal account during their first year.

Winn said the discounts "scare me to death," but added that market research has shown clubs will have to slash prices to keep afloat. Lake Forest lost about 15 of its 350 members this winter.

Nationwide, McMahon said he estimates twice as many members left clubs in the past year than would be typical. That could mean a loss of 10 or 12 percent at most places, he said. And considering the economic slump, he said it’s probably not realistic to expect high recruitment levels this year.

"The biggest challenge for all clubs right now is retaining the members they have," he said.

While country clubs have historically served rich men with an enthusiasm for golf, McMahon said that model is changing rapidly to one concentrated on entire families. It’s harder to give up a membership the whole family enjoys, he said.

McMahon said he’s advising clubs to take advantage of the "staycation" trend, as more families avoid traveling and instead look for entertainment closer to home.

"The family activity is actually more important than the golf today," he said.

At Lake Forest, Winn said he’s been taking that message to heart. On Friday afternoon, he was preparing an "American Idol"-themed competition later that night for the children of club members.

As a disc jockey in the party room loudly tested his speakers with a Justin Timberlake song, Winn stressed the need to keep adapting — in good times and bad.

"The days of having a good old boys country club are past," he said.

jcrawford@post-dispatch.com

314-340-8349

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Bank of Japan board member Miyako Suda said the central bank should signal that it’s prepared to take “bold” measures to counter the deepening recession.

“When uncertainty is high, it’s important to gain the trust of markets by strongly pledging a readiness to take bold policy steps that may even stray from conventional rules,” Suda said today in a speech in Kyoto, western Japan. “Japan’s economy has fallen from a cliff into a deep, foggy valley.”

At the same time, Suda said she opposed the central bank’s decision last month to buy corporate bonds from lenders because the market hasn’t worsened enough to warrant taking on the risk of holding the securities. With the key interest rate near zero, economists say the bank may expand its asset purchases to help companies get access to funds as credit becomes more scarce.

“The BOJ appears to be ready to gear up, but only at a gradual pace,” said Jan Lambregts, head of Asian research at Rabobank International in Hong Kong. “The problem is not so much the framework itself, but the limited size of these measures.”

Bank of Japan Governor Masaaki Shirakawa said yesterday that the bank’s purchases of corporate bonds and commercial paper are an “exceptional step” to make it easier for companies to borrow as credit markets dry up and banks grow reluctant to lend. The country’s stock market slump is depleting the value of banks’ share holdings, reducing their ability to meet an increase in demand for loans.

Market Tensions

“Should stocks decline further, we could see market tensions increase toward the end of the fiscal year,” said Suda, 60, the longest-serving board member.

The Nikkei 225 Stock Average rose 0.9 percent today, after earlier sliding as much as 1.7 percent. The Nikkei has lost 18 percent this year, a drop that Finance Minister Kaoru Yosano said the government can’t ignore.

Last week Yosano ordered a study into supporting stocks, including whether the government could buy shares directly from the market, a move that Suda cautioned against.

“I don’t know if directly interfering would be effective and I’m concerned that that could even cause some irregularities” in the stock market, she told reporters after the speech. Suda declined to comment on whether the bank would cooperate with the government on stock-market policies if asked.

Worst Recession

Shirakawa said yesterday that the world’s second-largest economy is worsening faster than the bank expected and the policy board will keep looking for ways to counter the slump car loans for people with bad credit. Reports last week showed output and exports plunged at a record pace in January, adding to evidence that Japan is heading for its worst recession in 60 years.

Still, Suda said “slight positive signs” are emerging in the global economy that support the central bank’s prediction that Japan will start to recover in the last quarter of 2009. She cited an increase in China’s purchasing managers index and U.S. manufacturing reports for January and February.

The central bank today offered to buy 150 billion yen ($1.5 billion) in corporate bonds from lenders as part of a program unveiled last month to purchase 1 trillion yen of securities that mature in a year or less. Suda was the only member to oppose the move.

‘Limited Effect’

“I don’t think the state of the corporate bond market fulfills conditions that warrant bond purchases,” she said today, adding that purchasing debt of up to one year of maturity will only have a “limited effect on smoothing out corporate financing.”

Companies can raise funds by selling commercial paper instead of bonds, Suda said. Policy makers need to be mindful about the amount of risk they are shouldering by buying such assets, the former economics professor said, adding that excessive intervention in markets by central banks could distort the allocation of resources in the economy.

The central bank last month extended programs to buy commercial paper and provide unlimited collateral-backed loans to financial institutions. It also said it will start purchasing shares owned by banks.

“The BOJ must be thinking hard on the next easing move,” said Takuji Okubo, a senior economist at Merrill Lynch & Co. in Tokyo. The policy board is likely to “modestly expand the scope of its private credit purchase program,” he said.

Okubo said the bank may increase its monthly purchases of government bonds and buy a wider range of commercial paper and corporate bonds.

When asked whether the Bank of Japan would consider cutting rates from 0.1 percent to zero and reviving a quantitative-easing policy of flooding the banking system with cash, Suda said current conditions didn’t require it.

“I don’t have such policies in mind now, though it’s not good to exclude any options,” Suda said. “At this time, the side effects of such policies would outweigh the benefits.”

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The White House hopes that allowing bankruptcy judges to modify mortgage terms will help keep individuals in their homes. But lawyers and bankers say the move could have serious unintended consequences — including higher mortgage rates and more Chapter 13 filings.

The Helping Families Save their Homes in Bankruptcy Act of 2009, approved by a U.S. House committee on Feb. 24, is headed to the full House for consideration.

The bill would allow bankruptcy judges to order banks to reduce mortgage principal amounts or restructure terms — a practice known as a “cramdown” — for homeowners that file for Chapter 13 bankruptcy protection. President Obama expressed support for the plan when he signed a $75 billion foreclosure relief package in Arizona last month.

But opponents say it could lead to higher mortgage rates because lenders would charge more to protect themselves in case of default.

About 350,000 additional U.S. households likely would file for Chapter 13 in the 10 years after the measure becomes law, according to estimates published Feb. 23 by the Congressional Budget Office. Even without the change, the office expects Chapter 13 filings to rise 13 percent this year to nearly 400,000.

In some ways, the cramdown proposal is similar to what’s allowable under Chapter 12, a provision in the bankruptcy code that was created in 1986 to help family farmers. Back then, farmers who had used high-priced land as loan collateral during the 1970s risked losing their farms when exports and farmland prices suddenly dropped in the 1980s.

Chapter 12 “allowed basically this cramdown idea on real estate, where essentially what a debtor could do was file at the bottom of the recessionary cycle, and have the debtor’s farm valued at whatever the current value was regardless of what the mortgage amount was,” says Jim Burghardt, a Denver-based attorney who represented agricultural banks at the time auto loan interest rates. “The court would split the mortgage debt between secured — i.e. the current value of the ground — and unsecured claims for the remainder of the debt. Then the debtor could restructure the mortgage around the secured amount. So if you’re the lender, you get a reduction in the value of your collateral and a reamortization of the debt. Usually in these kinds of bankruptcies, the unsecured creditors are getting pennies on the dollar.”

The practical result of the change was that banks worked harder than ever to keep their farmer clients out of bankruptcy, Burghardt says. But he’s not sure it would work as well with consumer mortgage debt.

“These are small towns, primarily,” he says. “The people are local, and they’ve got to live with their banker and their neighbors every day. There are a lot of things that go on in that context that are very different to (what happens) here in the big city, when you’re talking about credit-card debt or a home mortgage to one of the megabanks.”

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I believed that Wells Fargo & Co. was recognized as a top bank. Why hasn’t its stock done better?

The possibility that every major bank might need additional money from the federal government if credit losses deepen during the recession is weighing heavily on the banking industry.

All banks with more than $100 billion in assets will be required under the Treasury’s financial stability plan to submit to a financial "stress test" to determine if they have enough capital to continue lending.

Wells Fargo shares are down more than 50 percent this year following a decline of 2 percent last year. The fear that shareholders could see their holdings diluted and dividends cut because of government bank-rescue efforts is a drag on Wells Fargo stock, as with many bank stocks.
Wells Fargo recorded a net loss of $2.55 billion in the fourth quarter when it added $5.6 billion to its reserves to cover future loan losses and prepare for its Wachovia Corp. acquisition completed at year’s end. The Wachovia deal made Wells Fargo the fourth-largest U.S. bank by assets.

Some investors are concerned that credit quality of Wachovia assets is much lower than expected. Upon the Wachovia deal’s completion, Moody’s Investors Service downgraded Wells Fargo’s senior debt rating by two notches, to Aa3, with a negative outlook, which means it could lower it again.

Still, according to Thomson Financial, analysts’ ratings on Wells Fargo shares consist of two "strong buys," seven "buys," eight "holds," one "underperform" and three "sells."

Can I expect better results from my shares of Ariel Focus Fund?

The large-cap fund with a concentrated portfolio of 23 stocks looks for enduring franchises that have strong cash flow and solid balance sheets.

It wants to buy those stocks on the cheap. Turnover is low, with stocks typically held three to seven years. But it isn’t operating in an upbeat environment for any stock strategy, and recent results have been painful.

The $25 million fund is down 40 percent over the past 12 months to rank around the midpoint of large value funds. The three-year annualized decline of 14 percent puts it in the lower one-third of its peers.

"We recommend this fund for the value niche in an individual’s portfolio," said Michael Breen, analyst with Morningstar Inc. in Chicago. "It has potential for short-term volatility, but we’re confident in the long-term results and stock-picking ability of its managers and analysts."

Portfolio managers Charles Bobrinskoy and Timothy Fidler have run this fund since its June 2005 inception. In the market downturn, they’ve especially been interested in dominant niche stocks such as Illinois Tool Works Inc. and fallen growth stocks such as eBay Inc., Tiffany & Co. and Dell Inc.

"If you’re looking for a broadly diversified, market-mirroring fund, this isn’t it," said Breen, who doesn’t recommend it as a core holding. "It is an active stock-picker’s fund that doesn’t have a lot of names."

The no-load (no sales charge) fund requires a $1,000 minimum initial investment and has an annual expense ratio of 1.25 percent.

If Southwest Airlines Co fast payday loans. is so great, why haven’t my shares done better?

The discount carrier lately has experienced some dubious firsts:

—"…It recorded its first quarterly net loss in 17 years in last year’s third quarter, followed by another net loss in the fourth quarter. Besides the lagging economy, its previously successful strategy of using futures contracts to hedge against rising fuel prices became a money-losing proposition when oil prices collapsed.

•It will not increase the size of its fleet this year, the first year it has not done so. Seating capacity is being reduced by 4 percent, and it sold some planes so it could lease them back and raise additional cash.

Shares are down 17 percent this year following declines of 29 percent last year and 20 percent in 2007.

However, Southwest features a good on-time-flight record, solid customer loyalty and one of the strongest financial positions in the airline industry.

Its average passenger revenue rose in January on reduced capacity. Lower fuel prices are advantageous longer-term, and some experts predict many airlines will make money in 2009.

Southwest recorded a net profit for 2008 and earnings are expected to increase 55 percent in 2009, compared with the 11 percent gain projected for the regional airline industry, according to Thomson.

What are prospects for shares of AIM Charter Fund?

Starting last year with 17 percent of its portfolio in cash helped it outperform most other large growth-and-value funds in a brutal year for stocks.

The $3.8 billion AIM Charter Fund is down 25 percent over the past 12 months and has a three-year annualized decline of 5 percent. Those results rank in the top 4 percent of its category.

"I recommend AIM Charter as a fund that can be a larger slice of your portfolio that you could be comfortable owning multiple years," said Ryan Leggio, analyst with Morningstar Inc. in Chicago. "Manager Ron Sloan is a good stock picker who has been investing a very long time and really thrives in down markets, though he doesn’t do as well in high-flying markets."

It remains to be seen whether contrarian portfolio holdings American Express Co. and Legg Mason Inc. will disappoint investors, Leggio said.

AIM Charter owns primarily large-cap stocks but also some mid-cap holdings. Nearly one-fifth of assets are in financial services, with health care and technology hardware other concentrations. The fund limits its largest holdings to 2.5 percent to 3 percent of assets to keep diversified. Largest holdings include Symantec Corp., Progressive Corp., Medtronic Inc., Berkshire Hathaway Inc., Microsoft Corp., 3M Co., Cadbury PLC, Comcast Corp., Wells Fargo & Co. and Automatic Data Processing Inc.

The 5.5 percent load fund requires a $1,000 minimum initial investment and has an annual expense ratio of 1.19 percent.

andrewinv@aol.com

2009, TRIBUNE MEDIA SERVICES INC.

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The shaky financial position of General Motors of Canada Ltd. and the underfunded status of its pension plan have prompted a group of retirees to organize in an attempt to protect their retirement benefits.

Brian Rutherford, president of the Genmo Salaried Pension Organization, said yesterday the group has already attracted more than 1,200 members and that, hopefully, will give it influence in the company’s current restructuring talks with the federal and Ontario governments.

The group incorporated itself earlier this year, organized meetings, set up a website, began signing up members for $50 each during the past two weeks and plans to formally approach GM officials next week.

"We want to participate and have a seat at the table just like all the other stakeholders," said Rutherford, a retired GM logistics manager. "We need to know what will be the conditions of the (government) loans and how that can affect us and what we can do about it."

A senior GM spokesperson suggested the company would be open to hearing from salaried retirees. The company has more than 8,000 salaried retirees and surviving spouses in Canada.

GM has asked Ottawa and the provincial government for more than $6 billion in loans in exchange for a plan that would make the company viable personal loans for bad credit.

That will mean sacrifices by employees, suppliers, lenders and other stakeholders.

GM’s defined pension plan for salaried retirees had enough funds to cover about 75 per cent of obligations in 2007 if the company wound up its operations, according to its last actuarial statement.

But Rutherford said estimates show the lack of adequate funding and the impact of crumbling stock markets on investment returns for pension plans could cut funding GM’s levels to 50 per cent in 2008 on a windup basis.

In the last year, GM’s salaried retirees have faced higher monthly payments for their benefits and there are fears of more much bigger reductions, the group says.

The group traces the pension plan’s troubles to an Ontario government move in 1992 that exempted big firms such as GM from obligations to keep pensions adequately funded so they could pay all benefits if there were failures.

That has now left GM’s salaried retirees in a situation in which the government could provide only a top-up for the first $1,000 in monthly pensions under the province’s own benefit guarantee fund if the company failed.

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