ГОЛОВНЕ

Warren Buffett’s Berkshire Hathaway Inc committed $10 billion on Tuesday to Occidental Petroleum Corp’s $38 billion cash-and-stock bid for Anadarko Petroleum Corp, boosting its chances of snatching a deal from Chevron Corp.

Occidental and Chevron are locked in the biggest oil-industry takeover battle in years as they eye Anadarko’s prized assets in West Texas’ huge Permian shale oil field.

Anadarko on Monday agreed to start negotiations with Occidental, saying its bid could potentially be superior to Chevron’s existing deal to buy Anadarko for $33 billion in cash and stock.

Berkshire’s cash provides Occidental with flexibility to fund and even increase its proposal. Anadarko has previously expressed reservations about the risk of Occidental having to get any deal voted through by its own shareholders. Occidental could now use the majority of the Berkshire investment to add cash to its bid and remove the requirement for a vote, if it so chooses.

The Berkshire investment, contingent on Occidental completing its proposed acquisition of Anadarko, could also repay some of the debt being taken on to finance the deal’s cash portion, or cover the $10 billion to $15 billion of proceeds from asset sales which Occidental plans in the two years after closing the acquisition.

Analysts said Buffett’s endorsement supports Occidental’s push to get the deal done but comes at a high cost.

Berkshire Hathaway will get 100,000 preferred shares and a warrant to purchase up to 80 million shares of Occidental at $62.50 apiece in a private offering, a statement from Occidental said.

The preferred stock will accrue dividends at 8 percent per annum, compared with about 5 percent yield on common equity and 4 percent on term debt, Tudor Pickering Holt analyst Matthew Portillo said.

“For Occidental shareholders, our view is this is a fairly expensive cost of financing for the transaction even though it carries a kind of nice headline of having Berkshire Hathaway participate in the potential financing here.”

It is rare for Buffett to participate in a bidding war for a company. The last time he did this was in 2016, supporting a consortium including Quicken Loans Inc founder Dan Gilbert that tried unsuccessfully to buy Yahoo Inc’s internet assets.

Shares of Occidental were down 2.1 percent at $58.89 at midday Eastern time, while those in Anadarko were down about 0.3 percent at $72.69. Chevron shares were up 2.7 percent at $120.88.

A Chevron spokesman reiterated that the San Roman, California-based company believes its “signed agreement with Anadarko provides the best value and the most certainty to Anadarko’s shareholders.”

Occidental and Chevron, two of the largest oil and gas producers in the Permian by production volumes, argue they can best squeeze more oil from Anadarko’s 240,000 acres (97,120 hectares)in the area.

The two companies control land adjacent to Anadarko’s properties and expect a deal will add deposits that can produce supplies for decades using low-cost drilling techniques.
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The Trump administration is ready to provide more federal aid to farmers if required, a White House adviser said on Monday, after rolling out up to $12 billion since last year to offset agricultural losses from the trade dispute with China.

“We have allocated $12 billion, some such, to farm assistance. And we stand ready to do more if necessary,” White House economic adviser Larry Kudlow told reporters.

The U.S. Department of Agriculture had previously ruled out a new round of aid for 2019. As of March, more than $8 billion was paid out as part of last year’s program. On Monday, the department said it had extended the deadline to apply to May 17.

A constituency that helped carry Republican President Donald Trump to victory in 2016, U.S. farmers have been among the hardest hit from his trade policies that led to tariffs with key trading partners such as China, Canada and Mexico.

While farmers have largely remained supportive of Trump, many have called for an imminent end to the trade dispute, which propelled farm debt to the highest levels in decades and worsened the credit conditions for the rural economy.

Beijing imposed tariffs last year on imports of U.S. agricultural goods, including soybeans, grain sorghum and pork as retribution for U.S. levies. Soybean exports to China have plummeted over 90 percent and sales of U.S. soybeans elsewhere failed to make up for the loss.

Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer were scheduled to travel to Beijing on Monday for the latest negotiations in what could be the trade talks’ endgame.

Both sides have cited progress on issues including intellectual property and forced technology transfer to help end a conflict marked by tit-for-tat tariffs that have cost the world’s two largest economies billions of dollars, disrupted supply chains and rattled financial markets.
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Mexican President Andres Manuel Lopez Obrador on Monday symbolically launched work on a new airport for Mexico City to replace the nearly half-built $13 billion project he cancelled upon taking office.

 

Lopez Obrador promised the new Felipe Angeles airport northeast of the capital won’t exceed its budget and will save the government money even with the cancellation of the partially built airport.

 

“It’s going to resolve the problem of saturation at the current Mexico City airport, but also be an example of how you can carry out a rational, austere policy based on honesty that needs to establish itself as the way to live and the way to govern in our country,” Lopez Obrador said.

 

The new airport — named for a general allied with revolutionary icon Pancho Villa — is at the Santa Lucia military air base and the army is in charge of getting it built for $4.1 billion.

 

It is supposed to begin operating in mid-2021, though construction has not yet begun.

 

Two new runways would be added to its existing one and the commercial airport would share the space with the military.

Critics have argued that the new airport will have difficulty operating simultaneously with the existing airport, but in a report by the military, consultant Navblue said they could operate simultaneously in terms of air space.

 

One of the early hitches pointed out in the military’s environmental impact statement is a small mountain named “Paula” that sits beside one of the runways. It would be too close for commercial airliners to use that runway, so the report says it would be dedicated exclusively to military use.

 

But the biggest concern raised in the report has to do with water. The airport would consume an estimated 6 million liters (1.6 million gallons) per day from an already severely overtaxed aquifer that the capital depends on, and that’s not including consumption from hotels and other businesses that will spring up around it, the report said.

 

Three existing wells on the air base should provide enough water, but that is expected to lower the water table in the aquifer, so some wells could go dry.

 

The report says that could be mitigated by creating recharge zones in the area to put water back into the aquifer. Another possibility would be bringing water from another, less-stressed aquifer.

 

On Monday, the Zeferino Ladrillero Human Rights Center called on the government to consult with the more than 20 communities around the airport. The group warned that the water consumption would directly impact livestock and agriculture, and with it the livelihoods of thousands of families.

 

Lopez Obrador, though, said consultations had already taken place.

 

“I can tell you now that the consultation with the communities around Santa Lucia happened and what do you think? The people approved the project,” he said. There was no description of when or how those consultations were performed.

 

When the time the airport it begins to operate in mid-2021, it could handle nearly 20 million passengers.

 

One of the looming questions is how flights will be divided between the capital’s main airport, Benito Juarez International, and the new one at Santa Lucia. The environmental impact statement for the project mentions that initially two airlines will be operating there, but it does not say which.

 

The new airport would connect to the existing one via a 28-mile (46 kilometer) route with dedicated bus lanes to speed passengers to their connecting flights. About 5 miles of that route would actually be along a perimeter road built for the now-cancelled airport at Texcoco.

In October, before Lopez Obrador had taken office, he held an unofficial referendum on cancelling the $13 billion Texcoco project, which was already nearly half completed. He proposed converting the Santa Lucia air base and making improvements at Benito Juarez, which had been targeted for closure. The plan received 70% approval, though critics complained that fewer than 2 percent of Mexico’s registered voters took part.

Lopez Obrador complained the Texcoco project backed by the previous administration was drenched in corruption and faced environmental problems because it was being built on a former lakebed. Auditors said in February that they had found some $167 million in questionable costs.

 

The government says it will build a third terminal at Benito Juarez. That airport, surrounded by residential neighborhoods and with no possibility of adding an additional runway, is beyond capacity. More and more flights are parked on the tarmac with passengers shuttled to the overcrowded terminals on buses.

 

Arriving flights are increasingly delayed because they can’t get a landing slot.

 

The government announced last week that the nearly 31,000-acre (12,500 hectare site of the scrapped airport would be converted into a park.

The survival of Santa Lucia, which also had been set for closure under the Texcoco plan, is another victory for Mexico’s military, which has been tasked with running the project. It also has been given the lead in combating the country’s rampant fuel theft problem and a soon-to-retire general will head the newly created militarized police force, the National Guard.

 

The general in charge of airport construction said Friday that its design would be “austere,” in contrast with the elaborate Norman Foster-designed terminal for the now cancelled airport. The government says even factoring in the lost investment in the cancelled airport and the cost of converting Santa Lucia, the total expense will be only slightly more than a quarter of what the Texcoco airport would have cost.
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The International Monetary Fund is forecasting Iran’s economy to shrink by 6% this year as it faces pressure from U.S. sanctions.

In a report released Monday, the IMF said its estimates for Iran, which include the potential for inflation to top 40%, predate a U.S. decision to end waivers that have allowed some Iranian oil buyers to continue making their purchases despite new sanctions that went into effect last year.

The Trump administration is due to formally end the waivers on Thursday for some of Iran’s top crude purchasers, including China, India, Japan, Turkey and South Korea.

The United States says it wants to deprive Iran of $50 billion in annual oil revenues to pressure it to end its nuclear and missile programs. The White House says it is working with top oil exporters Saudi Arabia and the United Arab Emirates to ensure an adequate world oil supply.

Turkey and China have attacked the U.S. action, but it is not clear whether they will continue to buy Iranian oil.

Iranian Foreign Minister Mohammad Javad Zarif said an interview broadcast on the U.S. cable show Fox News Sunday accused the United States of trying to “bring Iran to its knees” and overthrow its government by seeking to thwart its international oil trade.

​He said U.S. officials are “wrong in their analysis. They are wrong in their hope and illusions.”

Zarif said the fact that Trump withdrew the United States from the 2015 international agreement to curtail Iran’s nuclear program “would not put the U.S. in the good list of law-abiding nations.” Iran state media reported that Zarif told Iranian reporters in New York that Tehran’s withdrawal from the pact is one of “many options” it is considering in the wake of the U.S. end to the waivers on sanctions for countries buying oil from Iran.

Zarif said a team of Israeli Prime Minister Benjamin Netanyahu, U.S. national security adviser John Bolton, and leaders in Saudi Arabia and the United Arab Emirates is trying to push U.S. President Donald Trump “into a confrontation he doesn’t want.”

“They have tried to bring the U.S. into a war,” Zarif said, with the goal, “at least,” of Iranian regime change.

Bolton, appearing on the same Fox News program, said the U.S. goal is not regime change, but a change in behavior, specifically an end to Iran’s nuclear weapons program and ballistic missile testing.

“The Iranian people deserve a better government,” Bolton said.

He called Zarif’s accusations “completely ridiculous, an effort to sow disinformation.”
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While many people have office jobs, working inside an office is not for everybody. And these days in the U.S. more people are turning to gig work — temporary jobs that allow them to work from home, hold multiple jobs and have flexible hours. More gig workers are now using smartphone apps to find jobs that set them free of office work. VOA’s Mykhailo Komadovsky spent time with one gig worker in Washington.
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Wisconsin Gov. Tony Evers and Foxconn Technology Group officials are talking about making changes to the contract signed in 2017 that was based on constructing a larger display screen manufacturing facility than is now proposed. 

 

But neither side is giving details. So how might the deal be changed? And what’s at stake for each side? 

 

Here are five areas to watch as talks continue, based on interviews with people familiar with the Foxconn deal and others like it: 

 

Jobs: It makes sense that Foxconn would want to open up the deal because it appears unlikely to meet the original jobs targets, said Bob O’Brien, president of U.S.-based Display Supply Chain Consultants, which tracks the global flat-panel industry. 

 

Foxconn already came up well short of its first-year target of 260 jobs, costing it $9.5 million in tax credits. This year’s jobs goal has doubled to 520, and the 2020 goal — when Foxconn says production will begin — is nearly 2,000 jobs. 

 

Starting in 2027, it must have at least 10,400 workers to qualify. 

 

It makes sense that Foxconn would want to renegotiate to lower the threshold to qualify, O’Brien said. 

 

The current contract awards Foxconn up to $1.5 billion in tax credits if it hires 13,000 people by 2023 making an average salary of $53,875.  

  

Alan Yeung, Foxconn’s leader for strategy in the U.S., this week suggested there’s no way to predict whether Foxconn will meet the jobs target. 

 

“Who has the crystal ball to predict if 13,000 jobs will be created by the year 2032? Esp in April `19,” he tweeted. Yeung later told reporters Foxconn remained committed to hiring 13,000 people. 

 

“We’re not changing the deal … especially the 13,000 jobs,” he said.    

​Size of factory: Foxconn could get another $1.35 billion in tax credits if it spends $9 billion on capital investments, primarily building construction and the purchasing of machinery and equipment.  

  

The original contract has Foxconn building what’s called a Generation 10.5 facility. But Foxconn now plans to build a Generation 6 plant, which will make smaller display screens for cellphones and other devices. 

 

Opponents have said that wording referring to a Generation 10.5 plant puts the entire contract in jeopardy if Foxconn builds a different-sized factory. 

 

But Evers, in an interview, discounted that concern. 

 

“I think that we’re past that point and I don’t think anybody would have ever called them out and say we’re going to negate this deal because of that,” Evers said. 

 

Level of credits: While Foxconn may want to  lower minimum job-creation numbers to get credits, the state may want to make the benefits less generous. 

 

The credits for job creation and capital investment are much richer than for most economic development projects, a point that critics repeatedly point to as a fault with the contract.  

  

Foxconn is currently eligible for a 15% capital investment credit for expenditures on land and buildings, more than the typical 10%. It’s eligible for a 17% credit on wages, more than double the usual 7%.  

  

Wisconsin went with the larger incentive payments because of the enormous promised scale of the project, which was projected to have massive ripple effects across the state’s economy. President Donald Trump heralded it as the “eighth wonder of the world” and said it was a sign of a resurgence in American manufacturing. 

 

But with the scale of the project reduced, and hiring numbers in question, there will be pressure on the state to lower its commitment. 

 

Changes in leadership: The project has been in flux almost from the moment it began. The election of Foxconn critic Evers as governor, followed by the announcement earlier this month that Foxconn CEO Terry Gou plans to run for president of Taiwan, has added uncertainty. 

 

Gou was personally involved in the Wisconsin deal, traveling to the state multiple times to negotiate with then-Gov. Scott Walker and his administration and meet with Trump.  

  

There are more changes to come. In September, Evers will be able to appoint a new leader to the Wisconsin Economic Development Corp., which wrote the contract.  

  

New requirements: Renegotiating the contract would give Evers a chance to insert new environmental safeguards, but those would come at a cost that Foxconn would surely want to mitigate elsewhere. Evers could also attempt to put in place new requirements forcing Foxconn to do business with Wisconsin companies and hire workers from the state. The state may also want to include protections for local communities, which have already spent about $190 million on the project, O’Brien said. 

 

“To me it’s a partnership and we’re going to be working together to solve it,” Evers said. “I suppose at some point in time we might not agree and then it becomes somewhat of a negotiation. But I truly believe that the changes that are made will be reasonable to all sides. Of course, you go in knowing it might not be.”
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