Wednesday PM April 18th, 2007

Clear Channel agrees to $19.35 billion buyout...TXU proceeding with $32 billion sale to buyout firms Kohlberg Kravis Roberts and Texas Pacific Group...Ken Lay's widow files papers asserting ownership of assets the government is trying to seize...

At least one major Clear Channel Communications investor reportedly is unappeased by today's increased buyout offer. That's after the San Antonio-based radio and billboard giant agreed to a higher offer of $19.35 billion from the private equity group trying to buy it. The equity group is led by the firms Bain Capital Partners and Thomas H. Lee Partners. It had insisted for months that its previous bid of $37.60 per share--plus assumption of $8 billion in debt--was the best it would make. The offer of $39 per share plus assumption of $8 billion in debt raises the price by about $690 million. The offer comes a day before a vote was scheduled on a lower offer that faced strong resistance from several of Clear Channel's largest shareholders. Highfields Capital Management is one of the biggest investors in the radio and billboard firm. A person familiar with Highfields' position says the new offer doesn't change the fund's opposition to the deal and Highfields still intends to vote against it. The source spoke to the Associated Press on condition of anonymity because the deal was at a sensitive stage. Highfields holds about five percent of Clear Channel shares, making it the third-largest shareholder behind Fidelity Management and Research and Clear Channel Chairman Lowry Mays.


TXU Corporation is proceeding with its $32 billion sale to buyout firms Kohlberg Kravis Roberts and Texas Pacific Group. The Dallas-based electric utility says that's after it got no better offers during a solicitation period that ended this week. It says financial advisers Lazard Freres had solicited interest from more than 70 potential buyers—and provided confidential information to ten of those suitors. TXU is the largest power generator in Texas, hired Lazard to sift through other bids for several weeks, up until Monday. But it says no proposal came in that could be regarded as better than the $69.23 per share offered by New York-based KKR and Fort Worth-based Texas Pacific. The buyers would also assume more than $12 billion in TXU debt and would finance the purchase largely by borrowing almost $25 billion against TXU. The sale is subject to approval by regulators and TXU shareholders--but it's not contingent on financing.


Attorneys for families suing BP over the deadly 2005 blast at its Texas City refinery say BP sent monthly mailings to local residents in an effort to taint the jury pool. The attorneys told a Galveston judge that the mailings went out over a year leading up to what would have been the first civil trial from the blast. BP says the mailings were simply a part of normal communications the company has with the surrounding community to update it about operations at the plant. State District Judge Susan Criss said she'd hold a hearing in three weeks on whether to issue sanctions against the London-based energy giant for these mailings. In November, Criss scolded BP for an October 31st letter sent to 900 members of the Texas City Chamber of Commerce that highlighted the company's effort to improve safety in the last 18 months.


The widow of Enron's founder Ken Lay says she owns the assets the federal government is trying to seize. The assets are the target of a civil forfeiture action against her late husband's estate by the federal government. The government is trying to recover $12.7 million it claims were "proceeds of the fraud proven in the criminal case against Lay.'' Federal prosecutors were forced to file the civil action after Lay's convictions for his role in Enron's collapse were vacated following his death last year. In a court filing, his widow, Linda Lay, asserted she is the "rightful owner'' of the assets the government is trying to seize. Prosecutors are looking to take three things: $2.5 million of the value of the couple's condominium in one of Houston's most exclusive high-rises; $10.2 million from a partnership named for both the Lays; and nearly $23,000 in a bank account. Linda Lay's attorney says in the filing that Ken Lay's 50 percent share of both the condominium and the bank account were transferred to his client after the Enron founder's death. In his will, Ken Lay left all of his assets to his wife.


A review group says a proposal for a conservator at troubled Texas Southern University would put the school's accreditation at risk. Governor Rick Perry has suggested the TSU Board of Regents be dissolved as the Houston school faces administrative and financial problems. But that plan for the historically black university is raising doubts. The Southern Association of Colleges and Schools is an accrediting body for 780 colleges and universities in 11 southern states--including Texas. Association official Belle Wheelan said losing accreditation would degrade the value of TSU degrees, plus federal financial aid for students could be lost. Perry spokesman Robert Black says several other accreditation agencies say they'd welcome a strong, decisive action by the state. The head of the Texas Higher Education Coordinating Board says TSU could indeed lose its accreditation if the board is dissolved for a conservator. But Raymund Paredes says the state needs to move "aggressively and decisively to straighten things out at TSU.'' The Texas Legislative Black Caucus is seeking an alternative to conservatorship.


Blackberry service is said improving after an outage that began last night, leaving millions of users without mobile access to their e-mail on the popular wireless device. Research in Motion, the Canadian company that provides the devices and e-mail service, says the interruption began Tuesday night, affecting users in North America. RIM says the cause of the problems is still under review, but that service for most customers was restored overnight. The company serves about eight million subscribers, having added about a million of them in the last quarter alone.


Six more now-ex-workers arrested in a December raid at the Swift meatpacking plant in Cactus have pleaded guilty to charges. The former meatpacking plant employees entered pleas today in federal court in Amarillo. Prosecutors say the investigation focused on use of social security numbers by illegal immigrants to gain employment. Four defendants each pleaded guilty to one count of fraud in connection with an immigration document. Jesus Gutierrez-Ramos, Domingo Velasquez-Gutierrez, Manuel Castro-Pablo and Cristino Pablo-Alonzo each face up to ten years in prison and a $250,000 fine. Two pleaded guilty to misdemeanor unlawful entry by an illegal alien. Juan Tecum-Tecum and Antonio Hernandez-Mejia both face up to six months in prison and a 5,000-fine. The U.S. Attorney's Office says all 53 defendants charged in the Swift Cactus raid have now entered guilty pleas. No sentencing dates have been set.


The industrial chemical that led to a nationwide recall of more than 100 brands of cat and dog foods has been found to contaminate a second pet food ingredient. That is expanding the recall further. The Food and Drug Administration says melamine is believed to have contaminated rice protein concentrate used to make a variety of natural balance pet foods products for both dogs and cats. The chemical was earlier found to taint another ingredient, wheat gluten, used by at least six other pet food and treat manufacturers. Natural Balance says it is recalling all its venison and brown rice canned and bagged dog foods, its venison and brown rice dog treats and its venison and green pea dry cat food. The California-based company said recent lab tests showed the products contained melamine.


A flood of last-minute income tax returns is swamping the computer servers of a California software company. Taxpayers filing electronically have had to wait hours for confirmation that their forms have made it to the IRS. A spokesman for Intuit, the company that makes the popular Turbotax and ProSeries tax preparation software, says delays started early Tuesday and got worse as the midnight filing deadline approached. During peak demand, the company was processing 50 to 60 returns a second. Intuit has alerted the IRS to the backlog. The IRS says taxpayers who ran into problems electronically filing last-minute returns using intuit software won't be penalized for late filing. Those who had problems now get until Thursday night at midnight to file their returns. The company is urging users of its software to be patient and to try to get their returns done earlier next year.


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