Also today: China stockpiles grain to ensure food security; Dubai World to ask banks to rollover debt; Toyoda meets Japanese PM over Toyota woes; Kraft shutting Cadbury factory it said would stay open; Former boss’s spat with Fujitsu sinks shares; Oil majors look to buy Australian coal-seam gas firm.
Sarkozy makes strongest rescue commitment to Greece yet
The eurozone is ready to rescue Greece if its government can’t fund its budget deficit, says French President Nicolas Sarkozy. He reckons the country is being attacked by currency speculators, saying that although the Greeks don’t yet need assistance, the EU will stand behind them. Sarkozy’s comments are among the strongest so far on what the EU will do to help Greece. His mother’s family came from Greece, so it’s something of a personal thing for him. Earlier the French and Germans said they’d buy some $40 billion of Greek bonds to help it remedy an annual budget deficit running at 12.7%, more than four times the EU limit of 3%. Despite promises of deep cuts in Greek spending, the euro’s been pummelled by uncertainty about $270 billion in Greek debt. Since Sarkozy’s remarks, the euro has strengthened on positive responses in Asian, US and European markets. The yen and the dollar fell against a basket of higher-yielding currencies as perceived risk of debt defaults throughout Europe fell. Portugal, Italy, Spain and Ireland also have appreciable deficits that put the eurozone at risk. Photo: Reuters.
China stockpiles grain to ensure food security
China will keep between 150 million and 200 million tons of grain stockpiles to ensure food security and might have to increase imports of soybeans, Bloomberg says. The hungry country of more than a billion people has a history of famine, until recent decades, so is careful to control the balance between supply and demand relative to distribution infrastructure. The country consumes some 500 million tons of grains a year, with stockpiles of about 40% of demand to protect food supplies and help control prices. China’s self-sufficient in wheat, corn and rice, and is trying to raise production of those along with oilseeds, cotton and sugar.
Dubai World to ask banks to rollover debt
Dubai World, the state-owned infrastructure development company that set world markets aflutter last year after it said it wanted a hold on $26 billion of debt, will now ask banks to rollover loans years into the future. Unless global banks agree, they’re likely to lose money. This way, they might also get a guarantee from the Dubai government. The once-flourishing emirate has about $90 billion debt in total. Dubai World’s share of that is about $60 billion, including all liabilities. The cost of insuring Dubai’s debt is currently a roller-coaster, shooting up and down with the gyrations of markets, and reliant on a specific timeframe over repayments. No details of Dubai World’s repayment terms have yet been made public, so until they are, markets will continue to punish them.
Toyoda meets Japanese PM over Toyota woes
Toyota president Akio Toyoda briefed Japan’s Prime Minister Yukio Hatoyama on the firm’s plans to improve quality control after a massive global vehicle recall. He’s also meeting with the country’s transport, trade and consumer ministers, weeks after testifying before US lawmakers in Washington and travelling to China to assuage the fallout over the company’s unintended acceleration problems and steering defects on some models. Toyoda’s already apologised to the public in the US, Japan and China – the firm’s three biggest markets – to try to regain consumers’ confidence. Toyota also says it’ll demonstrate during a Webcast that its electronic throttle control isn’t responsible for the sudden acceleration of its cars, saying such tests conducted in the US can easily be reproduced on a range of vehicles made by other vehicle manufacturers.
Kraft shutting Cadbury factory it said would stay open
US candy maker Kraft may have bamboozled Cadbury’s investors and workers after saying that a factory that it now intends to close, could be saved. British regulators are now looking into Kraft’s claims that a plant near Bristol in England would stay open if the US firm’s buyout of Cadbury was successful. It was, but after the deal was completed, Kraft said the factory would close by 2011, costing 500 jobs. Cadbury, which was sold for $17.3 billion, had already planned to shut the plant, but Cadbury workers and UK business secretary Lord Mandelson want to know why Kraft apparently reneged on its pledge.
Former boss’s spat with Fujitsu sinks shares
Fujitsu’s dispute with its former president over the reason for his resignation last year after only 15 months on the job, has caused the computer maker’s shares to slump. The manufacturer of precision electronics said Kuniaki Nozoe stood down because of illness, but now says his association with another firm was the actual cause for his leaving. Nozoe’s lawyer says his client was forced out of his job for false reasons, and was subsequently also dismissed as an advisor to Fujitsu. Nozoe now wants his resignation nullified to restore his honour. Fujitsu hasn’t named the “other” company, but the saga has the Tokyo Stock Exchange interested, and it’s checking with Fujitsu on the reason why it changed its story. Honour’s a big deal in Japan, so Nozoe won’t be giving up easily.
Oil majors look to buy Australian coal-seam gas firm
Oil majors Royal Dutch Shell and PetroChina have bid jointly for Australia’s Arrow Energy, a first for the Chinese company as it seeks to enter Australia’s booming coal-seam gas sector. Coal-seam gas is largely methane gas which is trapped in the molecular structure of coal seams, rather than in between rock formations. The seams contain several times more of the gas than is found in conventional reservoirs. It’s a lucrative business, as the gas has become a big energy source in the US, with Australia getting into the market only in 2008. Other energy majors have invested some $18 billion into the Australian resource, aiming to convert coal-seam gas into higher-value liquid natural gas for export to Asia. Arrow Energy’s shares leapt 47% on the Australian stock market. The firm claims to have the largest reserves of natural gas in the state of Queensland.