Monday AM April 2nd, 2007

State regulators consider larger role in reviewing TXU buyout bid...Madagascar Oil opens Houston administrative office...Port of Houston Authority's port commission approves nearly $5 million in security improvements...

Texas regulators are considering changing their rules to give themselves a bigger role in reviewing a buyout bid for Dallas-based TXU Corporation. That could complicate the proposed $32 billion sale of the state's largest electric utility to private investors. The Public Utility Commission voted to publish proposed rule changes that include requiring companies to get PUC approval to transfer their certification to new owners. They also would be required to tell the PUC of changes in majority ownership six months before a sale. Currently, notification must be made within 30 days after the sale. Last month, investors led by the New York-based firm Kohlberg Kravis Roberts and Fort Worth-based Texas Pacific Group proposed buying TXU. They also proposed assuming $13 billion in TXU debt in the largest private buyout ever. The firms have maintained all along that they don't need PUC approval under state law. But PUC member Paul Hudson said during a meeting that "perhaps our rules have been cast in new light by some of the things we've seen unfold.''

Madagascar Oil is opening a new corporate office in Houston. The London-based firm is incorporated in Bermuda and holds the largest onshore license acreage in Madagascar. The company will bring 15 employees to Houston this year from London, with plans for 20 more workers in 2008.

The government says personal income rose less last month than in January, but twice as much as expected. The Commerce Department reports that spending also rose twice as much as expected. The new data show personal incomes and spending each rose six-tenths of a percent in February. Economists had expected to see both rise by three-tenths of a percent. In January, personal incomes rose by a full one percent, the fastest rate in a year, boosted by bonus payments to high-income executives and pay raises for federal workers. And spending surged one-half of one percent. A price index for personal consumption expenditures, excluding food and energy, rose three-tenths of a percent in February, compared with two-tenths of a percent in January. The Federal Reserve watches the core PCE Price Index closely for signs of problematic inflation.

Manufacturing has rebounded sharply in the midwest. The National Association of Purchasing Management-Chicago says its Index of Manufacturing Activity jumped to 61.7 from 47.9 in February. It's the biggest one-month movement in the history of the index, which is now at the highest level in two years. In a news release, NAPM-Chicago says "the magnitude of the jump provided evidence that the decline since early 2005 may be at its end.'' The regional index is seen as a precursor to the national report on manufacturing to be released on Monday by the Institute for Supply Management.

The Commerce Department says construction spending in February rose by the largest amount in 11 months. That should dispel some of the concerns about the health of the economy. The government report shows construction spending rose by three-tenths of a percent last month, the best showing since a one-percent jump last March. Until the February increase, construction had either fallen or been flat since the big rise a year ago. Strong gains in construction of hotels, shopping centers and state and local government projects offset the 11th consecutive decline in residential construction.

The Port of Houston Authority's port commission has approved nearly $5 million in security improvements, as it works to be in compliance with the requirements of the Maritime Transportation Security Act. Up to $100,000 was approved for Transportation Worker Identification Credential enrollment fees, for a system that will be used for all personnel requiring unescorted access to secure areas of facilities. Also, a $2.3 million construction contract for Stafford-based Jerdon Enterprise was approved for Cargo Bay Road gate and $2.4 million for the Texas Department of Transportation for construction of the secured truck entrance at Cargo Bay Road.

The parent of American Airlines reports it's paid off a $285 million debt. Fort Worth-based AMR expects to complete refinancing another $350 million in debt by mid-April. AMR says the $285 million principal balance was on a senior secured line of credit that had been fully drawn since being opened in late 2004. AMR says the credit facility could be redrawn depending on economic and industry conditions and the company's financial condition. The company also says its American Eagle subsidiary recently prepaid $79 million in aircraft debt. AMR says that together, the moves should reduced annual net interest expenses $15 million. AMR expects to end the March quarter with $5.8 billion in cash and short-term investments.

The Bush administration is imposing economic sanctions against China in a dispute over government subsidies. The move announced by Commerce Secretary Carlos Gutierrez opens a new area for American companies to seek protection from a flood of Chinese imports, and reverses U.S. trade policy that has been in effect for 23 years. For two decades, the U.S. government has held that American companies don't have a right to challenge government subsidies granted to their foreign competitors if those companies are in "nonmarket economies'' such as China. But the Bush administration is under heavy pressure to deal with soaring trade deficits and sees China's subsidies as an obstacle. The action means China's imports of glossy paper will be subjected to tariffs ranging from 10.9 percent up to 20.4 percent as a penalty for subsidies that the Chinese government is providing for its own companies.

The government says between demand for ethanol and strong exports, this will be the biggest year for corn planting in the U.S. since the 1940's. The Agriculture Department says corn planting will rise 15 percent this year over last to more than 90 million acres. The USDA says farmers are switching over from soybeans, cotton and rice. The figures are based on inquiries regarding planting intentions made of more than 86,000 farmers during the first two weeks of March.

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