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Senin, 07 Oktober 2019

GE to freeze pension plans for about 20,000 U.S. workers to cut debt - Financial Post

General Electric Co. took a step to cut the worst pension deficit in corporate America, freezing benefits for more than 20,000 employees.

The ailing manufacturer also plans to contribute as much as $5 billion to cover its estimated pension funding requirements through 2022, according to a statement Monday. The moves will help trim the shortfall by as much as US$8 billion.

GE’s stubborn pension deficit, with added pressure from falling interest rates, has complicated Chief Executive Officer Larry Culp’s efforts to put the Boston-based company on more stable ground. The CEO, who took the helm a year ago, has said debt remains one of the company’s thorniest problems, alongside a slumping power business and lingering insurance liabilities.

The efforts to reduce debt are encouraging, though a pension freeze is likely to damage employee morale, Barclays analyst Julian Mitchell said in a note. “In a situation of ‘corporate battlefield surgery’, this tends to be a typical, if unfortunate, casualty.”

The pension changes, which will reduce GE’s industrial net debt by as much as US$6 billion, follow similar moves by large companies including Boeing Co. and Lockheed Martin Corp. as 401(k) retirement plans have gained favour. Meanwhile, companies such as FedEx Corp. have turned to offloading pension liabilities to insurers, including MetLife Inc.

GE’s US$22.4 billion in underfunded pension liabilities at the end of last year — including the main and supplemental plans — represented the largest shortfall of firms in the Russell 1000 Index of large U.S. companies, according to a Bloomberg review of the data.

While GE’s deficit has come down in recent years, the company faces a challenge from falling interest rates, which increase the funding gap by shrinking expected investment returns. Culp said last month at an industry conference that interest rates could create a US$7-billion headwind for the pension this year.

The shares fell less than 1 per cent to US$8.55 at 10:24 a.m. in New York. GE advanced 18 per cent this year through Friday, matching the S&P 500 Index.

GE’s bonds gained on Monday’s news. The risk premium on the company’s 3.373 per cent bonds due 2025 tightened nearly 8 basis points to 145.6 basis points, according to Trace bond price data. The cost to protect its debt against default for five years fell 9 basis points to 131.8 basis points, according to ICE Data Services.

Beginning in 2021, about 20,000 employees in GE’s main U.S. pension plan will stop accruing new benefits, under the plans GE unveiled Monday. About 700 employees in a supplementary plan will also be affected. At that time, GE will contribute 3 per cent of eligible compensation to a 401(k) plan and will provide matching contributions of 50 per cent on as much as 8 per cent of eligible compensation.

The company, which closed its pension plan to new entrants in 2012, said retirees already drawing pension benefits won’t be affected. GE will offer a lump-sum payment to 100,000 eligible former employees who haven’t started receiving their monthly pension payments.

“Returning GE to a position of strength has required us to make several difficult decisions, and today’s decision to freeze the pension is no exception,” GE’s chief human resources officer, Kevin Cox, said in the statement. GE had 283,000 employees worldwide at the end of last year, including about 97,000 in the U.S.

GE aims to reduce the net debt of its industrial businesses by US$25 billion, and Culp has said he wants to reduce GE’s debt-to-earnings ratio to 2.5 times by the end of next year. The pension changes come several weeks after the company announced a US$5-billion debt tender.

Since taking the helm in October 2018, Culp has been aggressive in his effort to fix the ailing company. He sold GE’s biopharmaceutical business to Danaher Corp. for US$21.4 billion, divested a jet-leasing unit and unloaded part of GE’s stake in Baker Hughes, easing investors’ liquidity concerns.

The portfolio changes have helped bring in about US$38 billion in new cash, giving the company funds for the pension moves. GE said it expects to take a non-cash, pretax charge against its fourth-quarter earnings.

–With assistance from Frank Connelly, Molly Smith and Katherine Chiglinsky.

Bloomberg.com

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October 07, 2019 at 10:16PM

Norwegian fund excludes four Canadian firms as it exits oilsands investments - Global News

By Staff The Canadian Press

Posted October 7, 2019 2:06 pm

The largest pension fund in Norway has removed four Canadian energy names from its investment list and says it will no longer put money in companies that derive more than five per cent of their revenue from the oilsands.

KLP says it sold US$58 million worth of stocks and bonds as it reduces its tolerance threshold for companies with interests in the oilsands from 30 per cent to five per cent, matching its limit for coal investments.

The fund says it will now exclude Calgary-based Cenovus Energy Inc., Suncor Energy Inc., Imperial Oil Ltd. and Husky Energy Inc. from investment consideration, along with Russia-based Tatneft PAO.

Shares in all four companies have fallen since a year ago as growth outstripped pipeline capacity, leading to steep price discounts and legislated production curtailments in Alberta.

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Keith Stewart, senior energy strategist with Greenpeace Canada, says in an email institutional investors are continuing to abandon high-carbon investments because they “can see where the puck is heading.”

In a news release, the Norwegian fund which administers more than US$81 billion in assets says a full exit from the oilsands is “great news” for customers because that activity is not aligned with a two-degree Celsius global warming target.

“By going coal and oilsands free, we are sending a strong message on the urgency of shifting from fossil to renewable energy,” said KLP CEO Sverre Thornes in a statement.

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October 08, 2019 at 01:06AM

President’s Choice Lower Iron milk based powdered infant formula recalled - CityNews

Loblaw Companies Ltd, is recalling its President’s Choice brand Lower Iron milk-based powdered infant formula due to possible contamination by Cronobacter bacteria.

The Canadian Food Inspection Agency says the product was sold in stores across the country in 900 gram packages with a best before date of Aug. 29, 2021.

The agency says no illnesses have been linked to the product.

It notes that while Cronobacter is not commonly linked to human illness, in rare cases it can cause serious or even fatal infections.

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October 07, 2019 at 05:07PM

China narrows scope for trade deal with US ahead of talks - BNNBloomberg.ca

Chinese officials are signaling they’re increasingly reluctant to agree to a broad trade deal pursued by President Donald Trump, ahead of negotiations this week that have raised hopes of a potential truce.

In meetings with U.S. visitors to Beijing in recent weeks, senior Chinese officials have indicated the range of topics they’re willing to discuss has narrowed considerably, according to people familiar with the discussions.

Vice Premier Liu He, who will lead the Chinese contingent in high-level talks that begin Thursday, told visiting dignitaries he would bring an offer to Washington that won’t include commitments on reforming Chinese industrial policy or the government subsidies that have been the target of longstanding U.S. complaints, one of the people said.

That offer would take one of the Trump administration’s core demands off the table. It’s emblematic of what analysts see as China’s strengthening hand as the Trump administration faces an impeachment crisis -- which has recently drawn in China -- and a slowing economy blamed by businesses on the disruption caused by the president’s trade wars.

People close to the Trump administration say the impeachment inquiry isn’t affecting trade talks with China. Any attempt to portray anything different is an attempt to weaken the U.S. hand at the negotiating table and, they argue, would be a miscalculation by the Chinese.

China’s foreign and commerce ministries in Beijing didn’t immediately respond to faxed requests for comments Monday. The Chinese government was expected to resume normal work Tuesday after a weeklong National Day holiday.

U.S. stock futures fell, the yen edged up and the yuan slipped Monday after the report. Treasuries climbed.

China -- beset by its own escalating political crisis in Hong Kong -- was drawn into the Washington furor after Trump last week called for a Chinese investigation into his Democratic rival Joe Biden and the former vice president’s son, moments after threatening another escalation in the trade spat.

Trump insisted on Friday that there’s no linkage. Yet the president’s latest comments suggest why Chinese leaders, already frustrated with what they see as the president’s impetuous conduct in the trade talks, may see room to take advantage.

China’s leadership “are interpreting the impeachment discussion as a weakening of Trump’s position, or certainly a distraction,” said Jude Blanchette, an expert on China’s elite politics at the Center for Strategic and International Studies.

“Their calculation is that Trump needs a win” and is willing to make compromises on substance as a result, he said.

‘Very Tough Deal’

Trump has said repeatedly he would entertain only an all-encompassing deal with China. People close to him say he remains firm in that view.

“We’ve had good moments with China. We’ve had bad moments with China. Right now, we’re in a very important stage in terms of possibly making a deal,” Trump told reporters on Friday. “But what we’re doing is we’re negotiating a very tough deal. If the deal is not going to be 100% for us, then we’re not going to make it.”

People familiar with the state of play say contacts that resumed over the summer after a breakdown in May have focused on how to resume negotiations and avoid further escalating the tariff wars that have unnerved financial markets.

Yet those talks have centered more on a timeline for implementing a limited deal rather than the substance of provisions where the two sides are at odds.

Discussions have focused on what U.S. administration officials view as a three-phase process, people familiar with the talks said. The sequence would involve large-scale purchases of U.S. agricultural and energy exports by China, implementing intellectual-property commitments China made in a draft agreement this year and, finally, a partial rollback of U.S. tariffs.

Bloomberg News reported in September that Trump’s team was discussing a potential limited agreement that includes those elements. That could clear the way for broader negotiations next year. Yet if China insists it will not engage in any discussions on industrial policy, those plans could be scuttled.

Fundamental Conflict

Hopes have always been limited that China would agree to give up its economic model in a trade deal with the U.S. A draft agreement reached in April before talks broke down included few substantive commitments from China to abandon the sort of industrial policies the Trump administration and others before it have complained about, according to people familiar with the talks.

That draft focused on securing more transparency from China on the extent of its subsidies. It included a commitment essentially to disavow Made in China 2025, Xi Jinping’s plan for Chinese domination of key 21st century industry such as artificial intelligence, robotics and electric vehicles, though it lacked a schedule for removing Chinese government subsidies that fuel the plan.

One reason for that is U.S. Trade Representative Robert Lighthizer’s focus on what he views as pragmatic demands for Chinese change, rather than shriller calls for a wholesale abandonment of Beijing’s industrial policy some hawks believe should be required of Beijing.

Lighthizer declined to comment on the state of negotiations through an aide. While he’s unlikely to accept any Chinese offer that doesn’t address industrial subsidies or policy, people close to him say he may be willing to embrace “sequencing” a deal and an “early-harvest” agreement as long as broader talks continue.

Still, people close to the administration say Trump’s trade chief probably would need some kind of commitment resembling a concession on subsidies and industrial policy to sell the agreement at home.

Japan-U.S. Deal

A possible model is last month’s U.S. deal with Japan on agriculture, digital trade and a limited number of industrial tariffs, which was presented as the first phase of a longer negotiation.

Any such deal would leave the fate of a major Trump administration demand hanging in the wind, putting the president on the defensive at home ahead of the 2020 election.

Addressing issues such as industrial subsidies “were the whole reason this case started in the first place,” said Rufus Yerxa, a former U.S. trade official who heads the National Foreign Trade Council, a lobby group that’s critical of Trump’s trade wars. “At a minimum the administration will have a lot of explaining to do if those drop off the table.”

David Dollar, a former U.S. Treasury representative in China now at the Brookings Institution, says China’s push to narrow the discussions is more evidence that both sides are hardening their positions on a broader deal.

The U.S. and China increasingly have reasons to strike a “mini deal” and avoid an escalation, he said. China needs agricultural products such as pork that Trump wants it to buy so he can placate American farmers. And even people in the White House concede there’s a U.S. incentive to hold off on further tariffs to avoid a worsening economic slowdown going into 2020.

“It’s a funny kind of negotiation where both sides’ so-called concession is something that they need,” Dollar said.

--With assistance from Dandan Li.

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October 07, 2019 at 03:22AM

The TSX 30 Effect: Pot Stocks Bounce Ahead of Cannabis 2.0 - The Motley Fool Canada

The TSX 30 made its inaugural announcement September 26, recognizing the 30 best-performing stocks on the TSX in terms of share price appreciation over the last three years. The dominant performance of key pot stocks on the list led to a midweek bounce in the Canadian cannabis market combined with underlying bullishness in anticipation of the legalization of additional product classes.

The immediate effect of the TSX 30 was mixed

While pundits had been quick to seize on the fact that cannabis producers fared extremely well in the inaugural announcement, it took the market itself a few days to catch up. The TSX 30 seemed to have a mixed effect initially, likely combining with increasing market uncertainty to signal some investors to sell rapidly maturing assets. However, the general effect proved positive by the end of this week, with notable producers bouncing.

A case in point is Canopy Growth, the most likely frontrunner in the race to leadership in a stabilized cannabis market. The announcement that it had topped the list of fastest-maturing stocks, racing ahead with a massive 1,823% rise over the past three-year period, may not have helped initially.

However, the blame for the deepening Canopy Growth sell-off at the start of the week doesn’t lie solely with its TSX 30 win. Investors had already been reacting negatively to the news of September 18 that GTEC, a B.C.-based cannabis company focusing on exotic cultivars, had cancelled the purchase of one of Canopy Growth’s cultivation facilities for $13 million. The news had led to a two-week slump.

Pot stocks eventually bounced on the good news

Eventually, the combined effect of a slow-burning boost from its TSX 30 win with a perceived value opportunity led to Canopy Growth’s share price ricocheting Friday: its stock was up 6% at the time of writing.

Aphria also began Friday on a positive note, bouncing by +4% after spending the week overall negative by more than 6% following the TSX 30 announcement which placed it sixth among the market’s best performers.

While pinpointing which stocks had matured fastest may have been a rash move in a market twanging with risk, the dampening effect was short-lived: Village Farms, slumping at the end of September, joined in the pot stock bounce this week, gaining +6% as it headed into the weekend, while Shopify was also up by more than 5%.

Shopify technically counts as a reduced-exposure play in the weed space due to its position as the state-chosen online point-of-sale system, while pot stock fans are probably well aware of Village Farms’s meteoric rise on the TSX.

Cannabis investors may have noted that all three of the top spots in the TSX 30 were held by actors in their favourite sector, with Shopify and Village Farms taking second and third place, respectively, behind Canopy Growth.

The bottom line

At the start of the week, it seemed the TSX 30 announcement was doing little to alleviate Canopy Growth’s woes. However, the positive news and a perception of deepening value saw Canopy Growth lead the delayed bounce in the cannabis sector that now looks set to continue into next week.

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October 07, 2019 at 12:23AM

GE to freeze pension plans for about 20,000 U.S. employees in bid to cut debt - The Globe and Mail

General Electric Co said on Monday it was freezing pension plans for about 20,000 U.S. employees with salaried benefits, as the industrial conglomerate makes another drastic move to cut debt and reduce its pension deficit by up to $8 billion.

Since taking over a year ago, chief executive officer Larry Culp has carved out a number of measures to streamline the company and raise cash to pare debt. He has also chopped the company’s dividend to a penny.

GE and its finance arm had total borrowings of about $105.8 billion as of June 30, with industrial net debt at $54.4 billion.

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The company said it will also freeze supplementary pension benefits for about 700 U.S. employees who became executives before 2011. GE’s pension plan has been closed to new entrants since 2012.

GE said the freeze is effective Jan. 1, 2021, and both moves are expected to help lower net debt between $4 billion and $6 billion.

Boston-based GE said there would be no change for retirees already collecting pension benefits.

“Returning GE to a position of strength has required us to make several difficult decisions, and today’s decision to freeze the pension is no exception,” Chief Human Resources Officer Kevin Cox said.

Shares rose 2.6% to $8.79 in premarket trading.

The company said it will offer a limited-time lump-sum payment option to about 100,000 former employees who have not yet started their monthly pension plan payments.

GE expects to record a non-cash pension settlement charge in the fourth quarter, but did not specify the amount.

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The company also said it would prefund about $4 billion to $5 billion of its requirements for 2021 and 2022 under the Employee Retirement Income Security Act by using a portion of the $38 billion cash it is collecting from the sale of its various businesses.

The company also said it was on track to achieve its leverage goal of less than 2.5 times net debt to EBITDA (earnings before interest, tax, depreciation and amortization) by the end of 2020.

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October 07, 2019 at 05:49PM

Infant formula recalled due to Cronobacter contamination - CBC.ca

In rare case Cronobacter can cause fatal infections. (CFIA)

Loblaws has recalled one of its President's Choice infant formula, following the discovery of Cronobacter by Canadian Food Inspection Agency testing.

No illnesses have been associated with this recall. But Cronobacter can cause fatal infections in rare cases, especially in newborns, says the CFIA. It can infect the blood, the nervous system, and the intestines.

The affected product is PC lower iron milk-based infant formula in the 900 gram size, UPC code 0 60383 69839 3, with an expiry date of Aug. 29, 2021. The formula was distributed all across Canada.

If you have this product, it should be thrown out or returned to the store where it was purchased.

CFIA is conducting an investigation that may lead to the recall of other products.

More from CBC News

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October 07, 2019 at 05:23PM