Business and Finance

Alberici Corp. said today it has bought a Topeka, Kan.-based company that specializes in building water treatment facilities using the design-build method.

Terms of Alberici’s deal to buy CAS Construction LLC were not released. Mike Burke, executive vice president of Alberici, said in a statement the acquisition provides Alberici with additional design-build capabilities and the ability to reach new customers and markets.

Alberici and CAS began working together three years ago, when they teamed with engineering firm Burns & McDonnell on the $73 million aquifer recharge system for the city of Wichita, Kan.

Mike Hafling, president of CAS, and other senior managers will remain with the company, which has been renamed CAS Constructors. LLC. Charles A. Stryker founded the company in 1985 and managed the business until his death in 2006.

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Mexico

Should Republican presidential candidate Mitt Romney choose to release his tax returns, it likely will spur yet more debate about how much the rich should pay in taxes.

In particular, a lot of scrutiny may be given to how much tax Romney paid on the money he has made from Bain Capital, an investment firm he founded in 1984 and left in 1999.

That’s because the U.S. tax code lets fund managers of some investment firms pay a far lower tax rate on much of their compensation than they would if that money were treated as a salary or bonus.

The rule applies to managers of venture capital funds and private equity funds, both of which Bain runs.

The firm, which is a privately held investment partnership, uses money from outside investors to either invest in start-ups, buy out public companies, or invest capital in private ones, all in an attempt to boost their value and sell them at a profit.

Compensation for general partners — as Romney was at Bain — is typically based in part on the profits made on winning investments.

The partnership will set a minimum rate of return that the fund must achieve when it sells an asset, say 8%. And the general partners then get 20% of any profits above that. That compensation is called "carried interest."

Fact or fiction? Romney’s private equity past

But rather than being taxed as regular income — rates on which go as high as 35% - carried interest is taxed at the much lower capital gains rate of 15%.

The case made for applying the capital gains rate is to encourage investment. But general partners are entitled to carried interest even if they have not invested their own money in the fund (although most do invest some).

That’s why many — including President Obama — have called for carried interest to be taxed as regular income that is paid in exchange for investment services.

General partners are also paid a fixed management fee, which is taxed as ordinary income. Typically that fee is worth about 2% of the fund’s assets.

Since 1999, Romney - whose personal fortune is estimated to be as high as $264 million — has continued to profit from Bain’s work thanks to the terms of his retirement package.

Those who support taxing carried interest as a capital gain make a few arguments.

First, they say, the "sweat equity" of the general partner is as valuable as the financial equity of fund investors.

Second, the partner gets paid carried interest only if the fund does well. And it’s potentially subject to a clawback if other asset sales don’t meet their minimum "hurdle" rates.

Last, they contend, if rates did go up, it would discourage investment and risk-taking.

Gingrich’s ‘Bain bomb’ fizzles

"Carried interest is an important aspect of the capital gains tax system that is based on the uniquely American principle that we reward those who take entrepreneurial risk, whether that risk involves investing capital or other aspects of ownership that require years of time, effort, and vision," said Ken Spain, a spokesman for the Private Equity Growth Capital Council.

Others aren’t convinced.

"It’s not going to change how people do business," said Victor Fleischer, an associate professor of law specializing in venture capital and private equity taxation at the University of Colorado. That’s because the tax increase would only affect general partners, not the people who invest the bulk of money in private equity funds, he said.

Moreover, just because carried interest is dependent on good performance and may be clawed back isn’t reason to tax it more lightly than other income, Fleischer added.

"The fact that compensation is risky and not guaranteed doesn’t justify treating it as a capital gain."

Since 2007, measures to tax carried interest as ordinary income have been included in various bills, often to help pay for the cost of other tax cuts or spending increases. Should the change ever pass, it’s not expected to swell federal coffers, raising less than $20 billion over 10 years. 

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In a Dec. 30 story about iceberg lettuce being removed from grocery stores after salmonella was found in an Arizona field adjacent to the grower’s property, The Associated Press, relying on information from Kroger and its affiliated Smith’s Food and Drug, erroneously reported the lettuce had been removed from stores in North Carolina, among at least six other states. Kroger said Saturday the product never made it to its North Carolina stores.

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Global stock markets were mixed Friday on 2011’s last trading day and turned in heavy losses for the year after Europe’s debt crisis and natural disasters battered a struggling global economy. Japan’s benchmark hit its lowest close in three decades.

Benchmark oil hovered below $100 per barrel and the dollar weakened against the yen but rose against the euro.

Asian traders recorded gains for the day Friday but markets in Tokyo, Shanghai and Hong Kong ended the year with double-digit losses.

Japan’s Nikkei 225 index, after three straight days of losses, rose 0.4 percent to 8,429.45, but it was the lowest closing since 1982. China’s benchmark gained 1.2 percent to close at 2,199.42 _ still, a 20 percent loss for the year.

European shares were steady or slightly down in early trading. Britain’s FTSE 100 lost 0.2 percent at 5,555.92. Germany’s DAX was marginally down at 5,846.35 and France’s CAC-40 was nearly unchanged at 3,127.34.

Wall Street appeared headed for a lower closing, with Dow Jones industrial futures down 0.2 percent at 12,194 and S&P 500 futures slipping 0.2 percent to 1,255.40.

Hong Kong’s Hang Seng Index gained 0.2 percent to close at 18,434.39.

Australia’s benchmark S&P ASX 200 ended the year at 4,140.4 _ down 0.4 percent on the day and 14.5 percent lower for 2011. A day earlier, South Korea’s benchmark Kospi closed at 1,825.74 on Thursday _ 11 percent down on its last trading session of the year Thursday.

Analysts said global stocks tumbled in lockstep, suffering from the effects of natural disasters, a wobbly recovery in the U.S. _ and an escalating European debt crisis that has resisted repeated measures taken by the region’s governments and financial institutions.

“The big reason is Europe. Europe tried to muddle through without a real solution. They can save a small country like Greece, but they cannot save a big country like Italy. Two trillion euros in foreign debt _ nobody in the world has that kind of money,” said Francis Lun, managing director of Lyncean Holdings in Hong Kong.

“Europe will enter a lost decade, a decade of no solutions and no growth,” he said. “Maybe except in Germany, their machinery is still selling.”

Japan’s benchmark plunged after the March 11 tsunami and earthquake disaster that destroyed huge chunks of the island nation’s northeastern region, left 20,000 people dead or missing and set off the world’s worst nuclear crisis since Chernobyl.

Disaster damage extended to key suppliers for major companies like Toyota Motor Corp. and Sony Corp., which suffered production disruptions. The Thai flooding that followed caused similar problems for automakers, including Honda Motor Co., but on a smaller scale.

The Tokyo market also saw two big-name brands lose much of their value.

One was Tokyo Electric Power Co., the utility that runs Fukushima Dai-ichi nuclear power plant, where at least three reactors went into meltdown after tsunami destroyed backup generators to keep power going at the plant.

Some officials say TEPCO may have to be nationalized because of ballooning losses and the costs to bring the reactors under control and compensate victims.

Another was camera and medical equipment maker Olympus Corp., whose offices have been raided by criminal investigators after fabricated accounting to cover up massive investment losses came to light no fax payday loans.

A British executive, who has since resigned from the board, was first to draw attention to the dubious investments, and has become a celebrity figure raising questions about old-style Japanese management.

Across the board, Japanese companies have been slammed by the rising value of the yen, which erodes the value of revenue from exports.

The Nikkei lost nearly a fifth of its value over the past year. It nose-dived right after the disaster, recouped some of those losses in July, but then started a decline that has the benchmark hovering at below the March value.

China’s benchmark Shanghai Composite Index lost 21 percent in 2011 as the impact of Beijing’s multibillion-dollar stimulus faded and the government tightened curbs on lending and investment to cool blistering economic growth.

The flood of state spending and bank lending after the 2008 crisis fueled a surge in real estate and stock prices. In 2010, Beijing responded by clamping down on credit and real estate speculation to cool inflation and soaring housing prices.

Beijing is trying to steer growth to a more sustainable level after 2010’s explosive 10.3 percent expansion. Growth eased to 9.1 percent in the three months ending in September, down from 9.5 percent the previous quarter.

Chinese leaders have promised to ease credit to help exporters and smaller companies cope with falling global demand and weaker domestic growth. But they say most controls will remain in place. That has disappointed stock traders who are hoping for interest rate cuts and looser controls on bank lending. They have responded in recent weeks by dumping stocks and moving some money to U.S. and European markets.

The benchmark Hang Seng Index slipped in the second half of the year as concerns over Europe accelerated, sending it to a 2011 low in early October before bouncing slightly to end the year at a 20 percent loss.

Hong Kong is Chinese territory, but its financial markets are open to foreign companies and investors, which made it a popular destination this year for foreign companies looking to go public, drawn by the prospect of raising their brand profiles with China’s newly wealthy as growth flags in their home markets.

Italian fashion house Prada was one of the biggest names to list in Hong Kong, with an initial public offering in June that raised $2.5 billion, making it the sixth-biggest IPO globally this year, according to deal tracking service Dealogic.

Other foreign companies that took out primary or secondary listings in Hong Kong include MGM China Holdings Ltd., the Macau casino arm of MGM Resorts International, luggage maker Samsonite S.A. and U.S. luxury handbag maker Coach Inc. However, the slumping market means share prices for many companies that went public are ending the year lower than IPO price.

Benchmark crude for February delivery fell 28 cents to $99.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 29 cents to settle at $99.65 in New York on Thursday.

In currency trading, the dollar fell to 77.58 yen from 77.65 yen late Thursday in New York. The euro fell to $1.2913 from $1.2939.

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Chicago was shaped in part by commodities exchanges where contracts representing corn, wheat and hogs have changed hands for more than a century.

But two prominent exchanges are threatening to leave the state if Illinois doesn’t change the way it taxes their trading.

State lawmakers are expected to convene Tuesday and to discuss a deal that would appease the CME Group Inc. and CBOE Holdings Inc., while meeting demands made by another Illinois mainstay, Sears.

Those who back the tax breaks say they’ll help keep jobs in a state whose unemployment rate hangs just above 10 percent payday advance lender.

Opponents say the state simply can’t afford to make such deals and question whether the companies would make good on their threats or whether they’re simply exploiting the state’s weak bargaining position.

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MetLife Inc. says its net income increased tenfold in the third quarter, boosted largely by its acquisition of Alico last year.

The nation’s biggest life insurer says it earned $3.55 billion, or $3.33 per share, in the three months ended Sept. 30. That’s compared with $286 million, or 32 cents per share, in the year-ago period.

Excluding one-time items, the company earned $1.11 per share. Analysts had forecast a profit of $1.05 per share, according to FactSet.

The New York company said total international sales more than doubled as a result of its acquisition of American Life Insurance, or Alico, from American International Group Inc. last year.

Alico operates in more than 50 countries and was expected to help MetLife expand in Japan, Europe and Latin America.

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Man Dip has a six-month lease on life.

That’s about how long local grocery stores will give the spicy sausage and cheese dip, a new product from an unknown local entrepreneur, before they decide whether to keep it or dump it. But that’s a lot farther than most other food startups make it in the highly competitive race for grocery shelf space.

If it were up to Dr. Ted Mimlitz, the man behind Man Dip, the concoction he’s been whipping up for 15 years might have remained just a party favorite and inside joke among his circle of friends.

But about four years ago, Andy Wolf, a serial entrepreneur who has brought to market a number of items including a deer sled for hunters, took a bite of Mimlitz’s dip at a school-related event for their children.

“I said right there, ‘Have you ever thought about bringing this out commercially?’” Wolf said. “I pestered him for three months. Then he called me one December night and said, ‘Do you really think we can do this?’ I said, ‘Absolutely.’

That confidence belies the difficulty in bringing a product to market from scratch. Lots of folks flirt with the idea of branding and selling their homemade creations. But few people pursue it beyond their daydreams.

Local products face stiff competition from large food manufacturers with established brands, bulk negotiating power and money for extensive product and marketing research. Most local food products that have found success at area grocery stores are affiliated with local restaurants or well-known landmarks such as the Hill. Think Imo’s salad dressing, Zia’s pasta sauce and Fitz’s root beer.

“When people see that on your shelves, there’s that connection right away,” said Rich Wallace, Dierbergs’ director of procurement.

Another local example

General Motors Co. and the United Auto Workers have reached an agreement on a new contract.

The UAW announced the agreement just after 11 p.m. EDT Friday after several weeks of bargaining. No contract details were released.

The contract covers 48,500 GM workers in the U.S. GM was the first of the Detroit Three to reach an agreement with the UAW. Chrysler Group and Ford Motor Co. are still negotiating.

The UAW says the contract improves health-care benefits for workers and also protects their retirement benefits. It also says there is an improved profit-sharing plan.

Workers must vote on the plan before it will take effect. GM says a vote is expected in the next week to 10 days.

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Six oil workers who were rescued alive after floating for three days in the Gulf of Mexico are stable and conscious, though suffering from bumps and bruises and sunburnt after weathering a tropical storm, a doctor overseeing their treatment said Monday.

All were transferred from a hospital run by Mexico’s state oil company, Petroleos Mexicanos, or Pemex, to a private clinic, according to Dr. Liliana Santana.

One survivor transferred in a wheelchair was asked how he was feeling, and he responded, “Good.”

A Pemex official also said Bangladeshi oil worker Kham Nadimuzzaman died in the hospital after being rescued. Two other workers were found dead, and rescue crews continued the search for the last of the 10 workers.

The official could not be named because he was not authorized to speak to the news media. Authorities have not given a cause of death or identified the bodies.

Nadimuzzaman was among 10 missing oil workers who evacuated their disabled rig Thursday in a tropical storm and escaped in an enclosed life raft. Seven of them were found alive Sunday.

Pemex identified the survivors as two U.S. citizens, Jeremy Parfait and Ted Derise, Jr., both of Louisiana; and Mexicans Ruben Martinez Velasquez, Eleaquin Lopez, Luis Escobar and Ruben Lopez Villalobos.

Martinez, who was a cook on the boat, was still nervous, unable to sleep and with trembling hands, said his uncle, Roman Cruz, 51, a bricklayer from the port city of Ciudad del Carmen. Cruz said his nephew was rescued from the water, hanging onto a raft.

“He was worried about sharks,” said Cruz, who added that none appeared.

Eleaquin Lopez’s brother, Edy, would only say, “Thank God he’s healthy.”

The workers were found 50 miles (80 kilometers) off the coast of the Gulf state of Campeche by the ship Bourbon Artavaze and taken by helicopter to Ciudad del Carmen, where they were admitted to a Pemex regional hospital.

The fate of the other two Americans, identified previously as Louisiana residents Craig Myers and Nick Reed, was still not clear Monday.

The Mexican navy said four survivors and one of the dead were found in a boat, while three other survivors and a body were found in the water.

All were working for Houston-based Geokinetics Inc. on a liftboat owned by Trinity Liftboat Services based in New Iberia, Louisiana. All four U.S. citizens were from the New Iberia area, including Reed, who is the son of liftboat company owner Randy Reed.

The oil workers called for help Thursday afternoon in the middle of Tropical Storm Nate, which disabled their vessel, the Trinity II, a 94-foot (29-meter), 185-ton liftboat, that can lower legs to the sea floor and then elevate itself above the water level. It was being used as a recording vessel and housing for the crew, and it was in waters about 25 feet (8 meters) deep.

They abandoned the liftboat about eight miles (13 kilometers) offshore of the port of Frontera in the southeastern Mexican state of Tabasco.

Pemex and the Mexican navy led the search by air and sea, which intensified Saturday as the storm moved west toward the coast of Veracruz state. A dozen fishermen also disappeared aboard two shrimp boats in the Gulf during the storm Friday.

Pemex said the search for the oil workers continued with four boats, four Pemex helicopters and two airplanes making overflights.

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Associated Press Writer Antonio Villegas contributed to this report.

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