Tuesday August 2nd, 2005

President Bush signs CAFTA...Another Enron settlement announced...Dynegy sells natural gas processing business to Targa Resources...

President Bush has signed the Central American Free Trade Agreement, saying it will "advance peace and prosperity throughout the region.'' The president won Congressional passage last week by just two votes in the GOP-controlled House. Opponents of the accord called it a job-killer. But at an East Room signing ceremony, Bush said it'll actually boost U. S. jobs--since American companies have long faced trade barriers in Central America, while that region exported freely to America. Plus Bush says CAFTA is "more than a trade bill.'' He says it'll strengthen fragile democracies in Latin America--and show those countries the United States is standing with them.


The biggest settlement yet is being announced today over the Enron collapse. The latest agreement with Canadian Imperial Bank of Commerce will bring the total settlements so far to about $7 billion, according to William Lerach, a class-action lawyer representing the University of California. The Toronto-based bank is paying nearly $2.5 billion to settle claims it helped Enron hide losses through a massive accounting fraud. Other major defendants that have yet to settle include Barclays, Credit Suisse First Boston, Merrill Lynch, Toronto Dominion Bank, Royal Bank of Canada, Deutsche Bank and the Royal Bank of Scotland. J. P. Morgan Chase and Citigroup have already come to an agreement with about 50,000 holders of Enron stocks and bonds who filed claims in the class-action lawsuit. Those companies settled for a combined $4.2 billion--without acknowledging any wrongdoing.


Dynegy today announced plans to sell its natural gas processing business to Houston neighbor Targa Resources for $2.5 billion in cash. The sale has been approved by directors at both companies. It would position Dynegy as solely a power generator primed for consolidation with other energy companies. Dynegy says it expects the deal to close in the fourth quarter this year. Nearly 800 Dynegy employees will join Targa. The business has operations in west Texas and southwest Louisiana with more than 2,000 miles of pipeline and five gas plants. Targa Resources is an independent company affiliated with private equity investor Warburg Pincus. Under the deal, it also would acquire Dynegy's fractionation, storage, transportation, distribution and marketing assets. Dynegy says it'll will realize a return of $125 million in cash collateral and eliminate $75 million in letters of credit for the midstream business. Dynegy announced in May its intention to sell essentially half its business.


Houston-based pipeline operator Kinder Morgan announced a bid to tap into western Canada's oil reserves by buying British Columbia-based rival Terasen Incorporated. The price is about $3.1 billion in cash and stock. Kinder Morgan's agreed to assume about $2.5 billion of Terasen debt. Terasen shareholders can choose to receive all cash, all stock or a combination. The transaction has been unanimously approved by each company's board, and by a special committee of independent directors created by Terasen. The deal is expected to close by the end of 2005, subject to Terasen shareholder and regulatory approvals. Kinder Morgan believes Terasen's pipelines are well-located to ship growing production from oil fields in northern Alberta, where Shell and others are active in extracting thick bitumen crude. High oil prices have made bitumen production more attractive.


Some western banks have asked a U. S. court to force Russia's Yukos Oil Company to repay a $482 million loan. Yukos spokeswoman Claire Davidson said that the banks, led by France's Societe Generale, have asked the court to enforce the loan. She says that the company, which has had all its Russian assets frozen by authorities, is prepared to liquidate the assets to raise funds. The Texas appeal comes after the banks won rulings in June from London's high court, which found that Yukos had defaulted. Yukos is fighting to stay afloat despite frozen assets amid ongoing efforts by tax authorities to claim billions in back taxes. The company's biggest fields were transferred to the government last December, and company founder Mikhail Khodorkovsky was sentenced to nine years in prison on tax evasion and fraud charges in May. Yukos in March dropped its bankruptcy filing in Houston, saying it had no reasonable prospect of obtaining relief under U. S. bankruptcy law.


Toyota hasn't finished building its huge San Antonio truck plant--and it's already expanding projected production there. The Japanese carmaker's North American division announced today that it'll invest $50 million more in the plant. It says that'll allow for a 50,000-vehicle-a-year increase in its overall production capacity. That brings total investment in Toyota Motor Manufacturing, Texas, to $850 million and its overall production capacity to 200,000 vehicles per year. Toyota's Tundra full-size pickup trucks are expected to begin rolling off the assembly line there by the end of next year. No decision's been made yet as to whether to increase initial employment beyond the 2,000 announced in 2003. Governor Rick Perry called the announcement "great news for our state.'' Toyota says the capacity increase would allow it to respond quickly to market changes should demand for the already popular Tundras continue to grow.


Houston's retail real estate market reports notable growth in the first half of 2005, according to the Houston Business Journal. A review of market conditions by Weitzman Group and Cencor Realty Services indicates the city's retail occupancy rate is at about 87 percent--up slightly from 86.9 percent at the end of 2004. Wal-Mart Supercenter has four new stores under construction for 2006 openings, and Target is opening four new stores through 2006. Home Depot has four stores under construction in the Houston area.

Houston's industrial real estate market posted 6.1 million square feet of net absorption during the second quarter, according to Grubb & Ellis. That's the highest absorption total since 1998. Houston's industrial vacancy dropped to 6.5 percent in the second quarter, reaching its lowest level in six years.


Houston-based Morgan Group and Dallas-based Trammell Crow plan a mixed-use residential and retail development at a site that is currently the Houston Independent School District headquarters. Construction is set to begin in mid-2006 at the corner of Richmond and Weslayan.


Air Liquide is planning a fifth air separation plant in the Houston area to be built in mid-2006, although its location has not yet been determined. The French company also has 16 service plants along its 1,800-mile Gulf Coast pipeline. The plant will produce oxygen, nitrogen and associated liquid vapor products for the refining industry. Operations should begin in mid-2007.


Houston-based Copano Energy is buying ScissorTail energy for $495 million, according to the Houston Business Journal. ScissorTail is a Tulsa, Oklahoma-based provider of natural gas has 3,200 miles of gathering pipelines and three processing plants.


Tokyo-based Mizuho Corporate Bank Ltd. has opened a Houston office in the Galleria Financial Tower. The office will serve as the base for the bank's energy practices in the United States.


CSTV Online and ISP Sports are partnering to develop online programs for 14 universities in Division I athletic programs, including the University of Houston. Fans of the schools will be allowed access to the content through multimedia, including audio and video streaming, ticketing and online stores. New York-based CSTV Online will offer online audio and video distribution, sales, marketing and technology services for the official athletic Web sites.


Continental Airlines has modified its free checked-bags policy for international travel, reflecting new lower weight limits of 50 pounds each for up to two pieces beginning September 7th. The Houston-based air carrier is waiving excess weight charges up to 70 pounds each on international travel purchased through September 6th. Continental says the change is necessary to recoup increased handling and fuel costs from carrying heavier bags.

Continental Airlines reports a July load factor of 83.9 percent, which is 1.5 percent lower than July of last year. The airline recorded a 7.8 percent traffic increase and a capacity increase of 9.6 percent from the same month last year.


Texas wine grape producers are expecting the sweet taste of success this year. Texas Cooperative Extension today reports the dry summer has contributed to the crop's success. Experts say most of the state's producers grow classic European wine grapes. Paul Bonarrigo of Messina Hof Winery in College Station is predicting a record year for wine grape production. He said production is up 25 percent from last year due to few hail losses and no herbicide damage.


A former head of marketing today testified Merck does not "buy off scientists'' by giving grants for research or speeches that could favor its drugs. David Anstice, who's now head of Merck's Human Health Division, testified in a videotaped deposition in a civil trial in Angleton. The case involves the 2001 death of a Texan who had taken the painkiller Vioxx. The widow of Robert Ernst is suing the New Jersey-based company. Plaintiff's lawyer Mark Lanier questioned Anstice about the company's practice of offering grants. Anstice says such grants have specific medical and scientific purposes. Anstice also says Merck's objective was to bring doctors "to a balanced position.'' Merck contends the company acted responsibly, disclosed research and voluntarily swept Vioxx from the market last year when a long-term study questioned its safety.


Dallas-based hospital chain Tenet Healthcare posted a much slimmer second-quarter loss today. The company says a greater volume of surgeries and emergency room visits offset a decline in admissions to hospitals open at least a year. Losses narrowed by 95 percent from last year's second quarter to $21 million in the three months ended June 30th. Losses from continuing operations improved to $3 million--or breakeven on a per-share basis. Revenue slipped three percent to $2.42 billion. The breakeven operating earnings per share beat the operating loss of three cents per share expected by analysts surveyed by Thomson Financial. But sales fell short of the expected $2.48 billion.


The trial of a Texas lawsuit claiming Clayton Homes forged signatures that put up land as collateral--has now been delayed. Plaintiffs attorney David Rumley said jury selection was scheduled to begin yesterday, but now it's been delayed because of a murder case in the same courthouse in San Diego. Rumley said lawyers will meet with the judge to reschedule the case. Tennessee-based Clayton Homes denies wrongdoing in the case. Rumley says Clayton Homes has been unable to explain how a dead person could sign the documents. The plaintiffs are Vicente Saenz, Teodulo Saenz, Manuel Chapa, Wally Gonzalez and Imelda Gonzalez. The lawsuit claims agents of Clayton Homes forged the signatures of Vicente Saenz, Teodulo Saenz, Gloria Saenz Chapa and Agapita Saenz. The documents allegedly were signed in 2001. But two of those people, whose names are on the document, died in the 1990's.


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