Japanese Banks Retreat from U.S. Buy-Outs

The Japanese retreat was sparked when Japan’s banks got embroiled in their first major U.S. bankruptcy-law case, last winter’s filings by two Campeau Corp. subsidiaries, Allied Stores and Federated Department Stores. Many Japanese banks are becoming more selective in pursuing the fat fees and prestige associated with funding leveraged buy-outs. Oddly enough, the plunging Japanese stock market also is at the root of the banks’ new-found reluctance. The stock swoon in Tokyo is eroding the capital base of the banks, by cutting the value of their stockholdings in other Japanese companies. And this is happening just as the banks are striving to meet tightened international standards for bank capital. Banks in the major industrial countries doing cross-border business must have capital equal to at least 8% of their assets by 1993. Under the new rules, some of which take effect next year, Japan’s banks can count as part of their capital 45% of the paper gains on their Japanese stockholdings. But with Japanese stock prices down more than 35% this year and the banks’ stock portfolios shriveling in value, several banks are believed to be close to, if not below, the 8% ratio.
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Sesit, Michael R

Full text: [Wall Street Journal] Sep 5, 1990

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DWG Will Add Three Independent Directors to Board

Granada, a New York-based investment firm, sued DWG’s board in April 1989, charging, among other things, that DWG’s directors shirked their fiduciary responsibility by not seriously considering a $22-a-share, or $572 million, offer that Granada had made for DWG in March 1989. The suit also attacked the high salary and other perquisites of DWG Chairman Victor Posner. DWG, in a countersuit, claimed that Granada’s bid was never a serious offer, but rather a scheme intended to manipulate the market for DWG shares and allow Granada to benefit from the increase in the stock’s price when the company was in play.
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Brannigan, Martha

Full text: [Wall Street Journal] Sep 5, 1990

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Tokyo prices fall Oil price rise sparks profit-taking

Stock prices in Taiwan rebounded slightly as selling pressure eased. The weighted index gained 25.86 points to finish at 3,600.75.
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Full text: [The Globe and Mail] Sep 5, 1990

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Profits fail to add up in stock price of local banks

Earnings reports for the first half of this year show a clouded outlook for some banks. Net income Net income Assets Annual Construc- (loss) through (loss) through Percent as of return tion loans, Bank June 30, 1990 June 30, 1989 Change June 30, 1990 Assets March 31 San Diego Trust & Savings $6.4 mil. $6.3 mil. +2.2% $1.6 bil. 0.80% 7.6% First National 2.9 mil. 2.4 mil. +20 540 mil. 1.11 13.7 La Jolla Bancorp 2.6 mil. 1.9 mil. +37 519.1 mil. 1.0 19 BSD Bancorp 2.3 mil. 1.5 mil. +53 444 mil. 1.0 28.8 Grossmont Bank 2.1 mil. 2.9 mil. -27 338.1 mil. 1.2 26.5 Peninsula Bank of San Diego 1.0 mil. 970,102 +3.1 188.7 mil. 1.1 14 San Diego Nat’l Bank 786,000 725,000 +8 164 mil. 0.95 22 North County Bank 766,000 826,000 -7.3 162.1 mil. 0.94 22 Bank of Southern Calif. 548,000 539,000 +1.7 157.3 mil. 0.69 10 Rancho Santa Fe Nat’l 792,000 729,000 +8.6 148.5 mil. 1.1 32 Escondido Nat’l 547,621 502,723 +8.9 141 mil. 0.78 26 Scripps Bank 390,000 435,000 -10 97.8 mil. 0.80 27 First Calif. Bank 532,000 615,000 -13.5 130.6 mil. 0.81 62 Bank of Commerce 1.2 mil. 1.18 mil. -3.3 106.5 mil. 2.7 19 San Marcos Nat’l 382,457 343,299 +11.4 78.6 mil. 0.97 45 San Dieguito Nat’l 267,000 294,000 -9.2 76.7 mil. 0.69 48 First Nat’l Bank of North County 336,644 622,500 -45.9 73.8 mil. 0.91 39 Valle de Oro Nat’l 306,000 195,000 +57 67.1 mil. 0.91 11 Bank of Rancho Bernardo n/a n/a n/a n/ a n/a 33 Fallbrook Nat’l 352,000 263,000 +3.4 53.4 mil. 1.3 41 Rancho Vista Nat’l 316,000 152,000 +107 55.4 mil. 1.98 22 Pacific Commerce Bank 308,389 326,136 +5.4 43.2 mil. 1.4 6 Cuyamaca Bank 78,000 127,000 -39 41.2 mil. 0.38 17 Citizens Western Bank 20,574 27,957 -26 31.1 mil. 0.13 1/8 .9 Bank of Coronado 37,000 123,000 – 70 25.9 mil. 0.28 28 Capital Bank of Carlsbad (56,000) (18,000) – 211 21.7 mil. -0.51 16 Total $25.2 mil. $23.9 mil. +5.8% $5.3 bil. 0.95% 25% Sheshunoff Information Services data Merged with Security Pacific Corp. Parent of American Valley Bank (El Cajon), Bank of San Diego and Bank of La Costa Formerly First La Mesa Bank Compiled by San Diego Tribune from bank earnings data
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Terry Sacks

Full text: [San Diego Tribune] Sep 5, 1990

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Stocks in Tokyo Plunge

Brokers bemoaned a complete absence of buying interest because of concern over future developments in the Middle East, which is being viewed in an increasingly pessimistic light. ”The market is basically discounting itself now for a war,” one trader said.
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Reuters

Full text: [New York Times] Sep 5, 1990

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Program Buying Trims Dow’s Loss to 0.99

The possibility of armed conflict continued to be ”the major uncertainty” in the Middle East, said Francis H. Schott, chief economist of the Equitable Life Assurance Society of the United States, although, he added, ”oil-price concerns seem to have abated a bit.” ”The overall political question,” he said, ”remains unresolved whether the Iraqis will be forced out of Kuwait without armed conflict and how it can be done.” At the same time, he said, ”There continues to be major concern about Federal Reserve policy because the conflict in the Middle East has interfered with the normal process of easing in which the Federal Reserve would normally be engaged.”
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COLE, ROBERT J.

Full text: [New York Times] Sep 5, 1990

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Gulf Crisis Makes Going Public Hard to Do, Firms Find

When Advanced Logic Research Inc., a rising star in the high-end personal computer market, made its initial public offering of stock in April at $13 a share, investors quickly embraced the issue. By June, the stock hit $19.25. But its staying power was soon tested. With Iraq’s invasion of Kuwait and the resulting oil price rise and growing recession fears, the world’s stock markets have tumbled. So has ALR’s stock price. It closed at $9.50 Tuesday, 27% below its issuing price and 51% below its yearly high. (excerpt)
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Lee, Christina

Full text: [Los Angeles Times] Sep 05, 1990

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Gulf Crisis Makes Going Public Hard to Do, Firms Find Market: Most Orange County companies find stock selling at or below offering prices.

Until the summer’s political and economic developments, the number of IPOs were running strong. There were 126 IPOs worth $8.17 billion during the first eight months of this year, compared to only 77 IPOs seeking a total of $8.18 billion in the same period last year, [Douglas Brengel] said. Although the overall IPO market is tougher now, “a good company can still find a window of opportunity,” said Michael Ferron, senior manager of the emerging business services department at Deloitte & Touche in Costa Mesa. Energy-related companies, as well as some retail and telecommunications firms that have found a niche for their products or services, have held up during the current market downturn, Brengel said. For example, Santa Fe Energy Resources Inc., a Houston-based energy services company, saw its stock rise from $18.25 a share in March to $20.75 at Tuesday’s close. The stock price of Oakland-based Safeway Inc. rose from its IPO price of $11.25 a share in April to $14. Seven Orange County companies have had initial public offerings (IPOs) of their stock this year. While several experienced early stock run-ups, the general decline in the stock markets-prompted by the Persian Gulf crisis and recession fears-has adversely affected their share price. Of the seven, four are now trading lower than their issuing price, two have shown no change and one rose slightly.
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CRISTINA LEE

Full text: [Los Angeles Times (pre-1997 Fulltext)] Sep 5, 1990

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STOCK PRICES CLOSE MIXED IN EXTREMELY LIGHT TRADING

Other figures registered a slight gain. The NYSE’s composite index of all its listed common stocks rose 0.16 to 177.13, Standard & Poor’s industrial index rose 0.82 to 382.85, and S&P’s 500-stock composite index rose 0.53 to 323.09. Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 114.44 million shares. Among most-active blue chip issues on the NYSE, Boeing rose 3/8 to 48 5/8, General Electric fell 3/4 to 61 1/4, Philip Morris was unchanged at 45 1/8 and IBM was up 5/8 at 102 1/2.
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Full text: [Journal Record] Sep 5, 1990

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Bargain-Hunters Shove Dow Up 15

Iraq President Saddam Hussein renewed his call for an Islamic “”holy war” against the United States and its allies, and the news boosted oil prices and sent the widely watched Dow index down nearly 20 points. The Dow later recovered, but stock prices rose in the afternoon on the belief that weak economic figures, including tomorrow’s report on U.S. employment, would prompt the Federal Reserve to loosen credit to boost the flagging economy, analysts said. Investors remain wary about the economy’s prospects even though Treasury Secretary Nicholas Brady said he did not expect the higher oil prices to tip the U.S. economy into a recession. General Electric’s stock slumped 1 to 60 1/4. Shearson Lehman cut its estimate on GE and other electrical equipment firms, based on expectations that a softening U.S. economy will dampen consumer demand.
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Full text: [San Francisco Chronicle (pre-1997 Fulltext)] Sep 6, 1990

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Market Place; ‘Junk Bond’ Prices Hit Record Lows in August

The market is so weak that underwriters have put off several new issues. Executives at Merrill Lynch Capital Markets, for example, had planned to sell $200 million of junk bonds for the Stone Container Corporation after Labor Day but delayed the offering indefinitely because of the ”deteriorating market,” Thomas W. Davis, managing director and co-head of the Merrill’s High Yield Group, said yesterday. Stone Container had planned to use the proceeds to repay some of its bank debts. Mr. [John Lonski] of Moody’s said issuers of junk bonds now face their ”severest test.” If a recession takes place, he said, the size and number of defaults could outstrip those in the 1981 recession because today only 25 percent of the junk bond market consists of the highest-rated issues, compared with 42 percent in 1982. ”It’s riskier,” he said. ”Equity players refer to high-yield investors as dumb money,” said an executive at one Wall Street firm who insisted on not being identified. Interest from these investors ”never materialized,” he said, and with stock prices now under pressure, it is unlikely to happen soon.
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WALLACE, ANISE C.

Full text: [New York Times] Sep 6, 1990

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Dow Up 14,85 to 2,628.22, on Light Volume

”The market doesn’t like a standoff in the desert any more than those who have to be on duty in that environment,” said Robert H. Stovall, president of Stovall/Twenty-First Advisers. ”Aimless drifting on modest volume may be the market’s role until there’s a basic change in the investing environment.” ”We didn’t feel there was enough fundamental justification that these stocks could go up in a down market,” said Richard C. Billy, a Prudential-Bache electronics analyst. Predicting ”a softer economic environment, Shearson, Lehman Brothers’ electrical equipment analyst, Robert T. Cornell, cut his earnings estimates for General Electric, Emerson Electric, Maytag, Square D, Westinghouse and Whirlpool.
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COLE, ROBERT J.

Full text: [New York Times] Sep 6, 1990

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Asia: Piling on the Pain; Worse to Come?; Eye of the Storm

According to most brokers, Japan will set the tone for the region’s stock markets in the following months. The Bank of Japan has stopped engineering market rates higher, but it is expected to be forced to raise the rate again, which would force stock prices lower. Korea Stock Exchange’s Composite Index has fallen about 40% since peaking at 1,007 points in April 1989. Declining corporate earnings, a huge supply of new issues, and a disappearing international trade surplus have combined to weaken prices. The Taiwan Stock Exchange has been unusually volatile in reaction to events in the Middle East, but the stock market has also been in a downward track since the beginning of 1990. The existing problems for the Stock Exchange of Singapore and the Philippines were intensified after the invasion of Kuwait. With the exception of Taiwan, Asian investors in unit trusts have met the crash in the world stock market following the Mideast crisis with an equanimity that has surprised many unit trust managers.
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Taylor, Michael

Full text: [Far Eastern Economic Review] Sep 6, 1990

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Vicorp’s Earnings Stack Up to Record

Vicorp Restaurants Inc., the Denver-based operator and franchiser of Village Inn and Bakers Square restaurants, reported record third-quarter earnings of $4.3 million, or 41 cents a share, up a whopping 62 percent from the $2.6 million, or 25 cents a share, in the same quarter a year ago. Sales for the quarter ended Aug. 5 totaled $93.4 million, up 10.4 percent from the $84.6 million in the 1989 quarter. Vicorp operates and franchises about 400, midscale, family restaurants primarily in the Rocky Mountain region, the upper Midwest, California, Arizona and Florida. (excerpt)
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Leib, Jeffrey

Full text: [Denver Post] Sep 06, 1990

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Talk of a Fed credit move is tonic for stocks

Stock prices rose moderately Wednesday as investors searched for bargains amid fresh talk that the Federal Reserve Board will act soon to lower interest rates. The Dow Jones industrial average gained 14.85 points to close at 2628.22. Advancing shares led decliners 5 to 3. New York Stock Exchange volume was 120.6 million shares, up from 92.9 million Tuesday, the slowest trading day of the year. “The market’s just sifting sand,” said Robert Stovall, president of Stovall/21st Advisers. “We see a military standoff in the desert, and the market is grinding down to slow action on slow volume.”
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Chicago Tribune wires

Full text: [Chicago Tribune (pre-1997 Fulltext)] Sep 6, 1990

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Stocks Slide as Oil Prices Rise Sharply

Stock prices tumbled Sep 6, 1990 because of soaring oil prices and a growing expectation of a torrent of reduced corporate-earnings estimates. The Dow Jones Industrial Average dropped 31.93 points in light trading to 2596.29.
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Winans, Christopher

Full text: [Wall Street Journal] Sep 7, 1990

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Stocks Slide As Oil Prices Rise Sharply — Expectation of Cuts In Earnings Estimates Drives Down Shares

Stock prices tumbled because of soaring oil prices and the growing expectation among investors that analysts are about to unleash a torrent of reduced corporate-earnings estimates. The October futures contract for crude oil advanced $1.66 a barrel to close at $31.43. There were news reports of violence against Americans in Kuwait, which could spark a military confrontation. Oil’s climb helped drive the Dow Jones Industrial Average down 31.93 points in light trading to 2596.29. Although rising oil prices didn’t help, it was reports of analysts readying earnings-estimate cuts that sent shivers through the stock market. For example, Smith Barney downgraded its estimate for Motorola, and the stock plunged 7 5/8 to 61 1/2.
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By Christopher Winans

Full text: [Wall Street Journal] Sep 7, 1990

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Paramount Is Still Seeking a Media Firm — Davis Says Company Isn’t Designed to `Stay as Is’

Paramount has spent the last year in talks with a number of possible acquisition or merger candidates. And Mr. [Martin S.] Davis, chairman and chief executive officer of Paramount, says discussions with a number of prospects continue. “Maybe someone’s going to buy us,” he suggests. But so far, no deal has materialized, in part because prices of media and entertainment properties remain unrealistically high, Mr. Davis says. After spending the last several years whittling Paramount from a lumbering conglomerate to a streamlined entertainment and publishing company, “we are designed to merge or acquire, we’re not designed to stay as is,” says the 63-year-old Mr. Davis. Among the businesses he has looked at are recorded music, cable television, theme parks, newspaper publishing and programming. But finding the right match, he adds, “requires patience and a long-term investment view.” But Mr. Davis has his own stock price to worry about. Once a Wall Street favorite, Paramount has been trading near its 52-week low recently, and some once-bullish analysts have turned sour, concerned by mounting costs in its movie business and industrywide problems in publishing. Yesterday, Paramount stock closed at $34.875, down 62.5 cents, on news that the company expected earnings for fiscal 1990 to be “on target,” but “at the lower range” of earlier estimates of $2.10 to $2.60 a share.
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By Laura Landro

Full text: [Wall Street Journal] Sep 7, 1990

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New Lotus 1-2-3 May Revive Firm’s Sales

Lotus Development Corp is upgrading its 1-2-3 software, offering a program called 1-2-3 Release 3.1, which many analysts say is the product it should have intorduced 15 months ago. Lotus’s market share and stock price have dropped of late.
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Bulkeley, William M

Full text: [Wall Street Journal] Sep 7, 1990

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Tokyo Stocks Rebound

The 225-share Nikkei index closed up 150.16 points, or 0.63 percent, to 23,962.07. Traders said rumors of a change of Government in Iraq created an excuse to buy.
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Reuters

Full text: [New York Times] Sep 7, 1990

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