daily briefing

daily briefing

November 01, 2008

CEG credit line is reduced, delayed

A $2 billion line of credit that Constellation Energy hoped would shore up its liquidity has been reduced to $1.25 billion at the most and might not be available until Nov. 26, the company said late yesterday. The cash-strapped Baltimore-based energy giant planned to close on the $2 billion deal no later than yesterday with RBS Securities and UBS Loan Finance. Now it says it expects to receive "total commitments from the banks of approximately $1.0 billion to $1.25 billion." Constellation said is seeking an additional $750 million from other parties, including MidAmerican Energy Holdings, the Warren Buffett-controlled company that has agreed to buy it for $4.7 billion. Buffett injected $1 billion into Constellation in mid-September as the company veered toward bankruptcy. But he insisted on being able to buy the whole company as part of the deal. Shareholders and the Public Service Commission still must approve the buyout.

Jay Hancock

Washington Post Co. profit falls 86 percent

WASHINGTON: The Washington Post Co. said yesterday its third-quarter profit tumbled 86 percent, primarily hurt by an accounting charge that reflects the declining value of its smaller newspapers. The Washington-based company, whose properties include its namesake newspaper, Newsweek magazine and the Kaplan academic testing service, said earnings slid to $10.1 million, or $1.08 per share, from $72.2 million, or $7.60 per share, in the year-ago quarter. Quarterly results included a $4.48-per-share goodwill impairment charge at its community newspapers and The Daily Herald of Everett, Wash., which have suffered - like all other papers across the country - from declining ad revenue because of the migration of readers of the Internet and a weakening economy that has depressed consumer and ad spending.

Associated Press

Mutual fund loosens access to cash

NEW YORK: A money-market mutual fund that "broke the buck" amid a rush of orders to pull out cash has begun returning an initial $26 billion to investors who had been unable to access their money for more than a month. The first in an unspecified number of distributions from the Reserve Primary Fund began with checks being mailed to retail-direct shareholders, Reserve Management Corp. said. Payments to all other shareholders were to be made yesterday. Each investor is getting about half their current account balance, the company said. The fund had total assets of about $51 billion as of Sept. 30. It held $64 billion in assets on Sept. 12, before a soured investment in Lehman Brothers debt triggered a rush of institutional investors pulling out cash. Among the investors whose funds were frozen were brokerage clients of Baltimore's Ferris Baker Watts, whose cash balances were automatically swept into the Reserve fund. Ferris has since replaced the Reserve fund with one offered by Federated Investors, and Ferris's parent company, Royal Bank of Canada, has offered to replace any investor losses.

Associated Press

Ex-health care chief found guilty of fraud

COLUMBUS, Ohio: A federal jury in Ohio has convicted a former health-care financing executive in a $1.9 billion fraud case likened to the Enron or WorldCom scandals. Lance Poulsen was found guilty yesterday on multiple fraud charges. Poulsen, 65, was the founder and former chief executive of National Century Financial Enterprises. Prosecutors say Poulsen fabricated data, moved money between accounts to hide shortfalls and misled the investors who funded his business model. Poulsen had testified he did nothing illegal and was guilty at most of overseeing a company that might have grown too fast. His attorneys plan an appeal.

Associated Press

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