Landmark San Francisco Project Sold at Loss by Chinese Developer

Landmark San Francisco Project Sold at Loss by Chinese Developer(Bloomberg) -- China’s Oceanwide Holdings Co. has sold its San Francisco property project for about $1 billion, taking a loss on an ambitious development that was expected to include the city’s second-tallest office tower but has lain idle for months.The Oceanwide Center site, which includes offices, upscale condos and a Waldorf Astoria hotel, faced “huge challenges” on construction and cost controls, the company said in a filing to the Shenzhen stock exchange late Wednesday.It expects to take a loss of about $276 million on the project, it said. The buyer was named as a unit of SPF Capital International Ltd., but no further details were given.Work on one of the San Francisco towers was halted in October. Oceanwide is also struggling to complete a project in Los Angeles that has been plagued by lawsuits from subcontractors and as the Chinese government cracks down on capital leaving the country.The disposal of the troubled project is Oceanwide’s first retreat from the U.S. since it hit financial challenges in mid-2018, caused in part by $1.1 billion of acquisitions during an overseas buying spree by Chinese firms.Still, the sale will “substantially improve” cashflow and alleviate overseas’ business risks, Oceanwide said in the filing. The developer is set to get 4.4 billion yuan ($635 million) in the short term and more in future instalments, it said.Oceanwide also has projects in New York and Hawaii. The developer bought 80 South Street in lower Manhattan in 2015 for $390 million and planned to build a mixed-use high-end condominium and hotel. Progress stalled after there were problems with plans to demolish some existing buildings.Outside real estate, Oceanwide is still in a prolonged process of buying U.S. insurer Genworth Financial Inc.To contact Bloomberg News staff for this story: Noah Buhayar in Seattle at [email protected];Emma Dong in Shanghai at [email protected] contact the editors responsible for this story: Craig Giammona at [email protected], ;Katrina Nicholas at [email protected], Peter VercoeFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

PG&E Wins Support From Key Bondholders for Restructuring Plan

PG&E Wins Support From Key Bondholders for Restructuring Plan(Bloomberg) -- After spending almost a year at war with some of the biggest names in the financial world, bankrupt utility giant PG&E Corp. has finally got them on its side. Now it just needs to win over California‘s governor.On late Wednesday, California power giant PG&E reached a settlement with a group of noteholders led by bond giant Pacific Investment Management Co. and activist investor Elliott Management Corp., who had repeatedly sought to derail the company’s $46 billion restructuring plan. The deal turns some of PG&E’s most formidable adversaries into backers of its turnaround proposal, bringing the company closer to gaining approval by a state deadline of June 30 and emerging from the biggest utility bankruptcy in U.S. history.There’s just one problem: Governor Gavin Newsom, whose backing is crucial to PG&E’s restructuring, is still trying to block its plan. He rejected the proposal last month, raising concerns about its financing and governance. And the company has “yet to make a single modification” to ease them since, the governor said in a court filing that hit less than two hours before PG&E announced the deal with bondholders.California’s largest utility declared bankruptcy almost a year ago after its equipment was blamed for a series of catastrophic wildfires that killed more than 100 people and saddled the company with $30 billion in liabilities. It has since struck deals with almost every major stakeholder group, including the victims of the blazes it caused and their insurers. Shares, which have lost almost half of their value since the start of 2019, gained as much as 9% in after-markets trading on news of the settlement with creditors.Elected OfficialsPG&E Chief Executive Officer Bill Johnson said in a statement that the company remains “focused on working with key stakeholders, including elected officials and our state regulator, on how PG&E will look, act, and be held accountable as we emerge from Chapter 11.”Meanwhile, Newsom said in his filing Wednesday that the company’s plan, as it stands, still doesn’t comply with state law. He went on to accuse PG&E of trying to take advantage of the Chapter 11 process and to force state officials into approving a “sub-optimal” plan.What Bloomberg Intelligence Says“Settling more than $5 billion in make-whole claims may make even more sense for bondholders, given the likely minimal impact that ongoing appeals may have on PG&E’s ability to exit bankruptcy. A noteholder loss at the bankruptcy court would likely significantly reduce the noteholders’ leverage even though they can appeal.”\-- Negisa Balluku, litigation analystClick here to read the report.Newsom said the company’s plan would pay $1 billion in financing fees and continues to depend on substantial debt and short-term bridge financing that would leave the utility without the resources it needs to invest billions of dollars in safety upgrades. He has also pressed for language that would allow the state to take it over should it fail to meet future safety standards -- a provision that emerged as a major point of contention between the governor’s office and PG&E in negotiations.PG&E said it was aware of Newsom’s concerns and that additional changes to its plan were forthcoming. The company suggested in a filing with state utility regulators last week that it may make “material” changes to the non-financial terms of its bankruptcy exit plan, including governance, as a result of talks with the governor’s office.$1 Billion SavedAs part of its deal with bondholders, PG&E said it would save about $1 billion by refinancing higher-interest debt. Bonds paying lower interest rates would be reinstated and paid as normal. The new mix of debt will “reduce the weighted average coupon of PG&E’s debt, the company said, consistent with the guidance given to the California Public Utilities Commission.”The agreement also gives the noteholders the chance to participate in any subsequent backstop equity commitments of up to $2 billion under certain circumstances.Following the announcement of the bondholders’ deal, Newsom’s office said the governor continues to object to PG&E’s plan.The bankruptcy case is PG&E Corp. 19-bk-30088, U.S. Bankruptcy Court, Northern District of California (San Francisco)(Adds comments from Newsom in fourth paragraph)\--With assistance from Lynn Doan, Rick Green and Scott Deveau.To contact the reporters on this story: Mark Chediak in San Francisco at [email protected];Steven Church in Wilmington, Delaware at [email protected] contact the editors responsible for this story: Lynn Doan at [email protected], ;Rick Green at [email protected], Kara WetzelFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

California governor aims to block PG&E's bankruptcy plan

California governor aims to block PG&E's bankruptcy planCalifornia Gov. Gavin Newsom is urging a federal judge to reject Pacific Gas and Electric's blueprint for getting out of bankruptcy and renewing his threat to lead a bid to turn the beleaguered utility into a government-run operation. In a court filing Wednesday, Newsom's lawyers gave a sternly worded rebuke of PG&E's plan, escalating the intrigue in the year-old case that will determine the fate of the nation's largest utility. PG&E is trying to dig out of a financial hole created by more than $50 billion in claims stemming from a series of catastrophic wildfires that have been blamed on the San Francisco company.

Texas Instruments Points to Signs of Chip Industry Revival

Texas Instruments Points to Signs of Chip Industry Revival(Bloomberg) -- Texas Instruments Inc. gave a quarterly sales and profit forecast that was in line with estimates, indicating that demand from electronics makers is poised to improve amid progress resolving the China-U.S. trade dispute.First-quarter earnings will be 96 cents a share to $1.14 a share, on revenue of $3.12 billion to $3.38 billion, the Dallas-based company said Wednesday in a statement. On average, analysts predicted profit of $1.04 a share and sales of $3.2 billion, according to data compiled by Bloomberg.Texas Instruments has the biggest customer list and widest product range in the semiconductor industry, making its earnings an indicator of demand across the economy. The company has told investors the electronics business is in the middle of a typical cyclical decline after companies ordered too many parts last year. Such gluts typically last five quarters. In Wednesday’s report, which also included fourth-quarter results, Texas Instruments posted its fifth consecutive period of year-over-year revenue declines.“Most markets showed signs of stabilizing,” the company said in the statement.The company’s forecast for the first quarter was held back by the outlook for the communications equipment industry, which is “going down hard,” Chief Financial Officer Rafael Lizardi said during a conference call. Texas Instruments’ key industrial and automotive markets are close to returning to growth, he said.Shares fell about 1% in extended trading after closing at $133.34 in New York. Despite the revenue declines, the stock has posted a 38% gain in the past 12 months.Three months ago, Texas Instruments said that the U.S. trade dispute with China, the world’s largest market for semiconductors, was adding to customer caution. Since then the countries have signed the first part of what’s promised to be a comprehensive set of trade agreements.Like other chipmakers, the company has raised to the U.S. government the risks to the industry from the trade fight with China and the action taken against Huawei Technologies Co., the Chinese telecommunications equipment giant. The Trump administration has barred U.S. companies from doing business in many cases with Huawei, citing national security concerns.Texas Instruments generated 3% to 4% of its annual revenue in 2019 and 2018 from Huawei, one of the biggest buyers of semiconductors, the company said.On Wednesday, Texas Instruments reported fourth-quarter net income fell to $1.07 billion, or $1.12 per share, from $1.24 billion, or $1.27, in the same period a year earlier. Revenue dropped almost 10% to $3.35 billion. Analysts had estimated a profit of $1.01 a share on sales of $3.21 billion.The company’s chips perform basic functions in everything from factory machinery to mobile phones. Texas Instruments gets the biggest portion of its revenue from the industrial market and is also a major supplier to automakers and telecommunications equipment producers.(Updates with comment from CFO in the fifth paragraph.)To contact the reporter on this story: Ian King in San Francisco at [email protected] contact the editors responsible for this story: Jillian Ward at [email protected], Andrew PollackFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.