News and Events

March 8th, 2010

American International Group Inc. said Monday that it will sell its American Life Insurance Co. division for $15.5 billion to MetLife Inc. The government-approved deal, AIG's second big asset sale in two weeks, will give the insurer more cash to repay the billions of bailout dollars it still owes the government.

CHARLOTTE, N.C. -- American International Group Inc. said Monday that it will sell its American Life Insurance Co. division for $15.5 billion to MetLife Inc. The government-approved deal, AIG's second big asset sale in two weeks, will give the insurer more cash to repay the billions of bailout dollars it still owes the government.

The purchase expands MetLife's presence in Japan and high-growth markets in Europe, the Middle East and Latin America. American Life Insurance, known as Alico, operates in more than 50 countries. MetLife currently offers services in 17 countries.

It also moves AIG closer to repaying taxpayers. As of Dec. 31, the company owed the Treasury and the Federal Reserve Bank of New York nearly $130 billion. AIG's bailout package was originally worth up to $182.5 billion.

On March 1, AIG agreed to sell Asia-based life insurer, AIA Group, to Britain's Prudential PLC for $35.5 billion. The two units, while selling similar products, don't operate in the same markets in Asia.

Investors were pleased with the Alico deal, and bid AIG's shares up 3.6 percent, or $1.02, to $29.10. MetLife shares rose $1.98, or 5.1 percent, to $40.90.

MetLife will pay $6.8 billion in cash for Alico. The rest of the purchase price will be paid in stock and what are called equity units, which are eventually convertible to common stock and preferred securities

AIG will initially hold an 8 percent stake in MetLife. Its stake will reach 14 percent in early 2011 after some MetLife preferred shares are converted into common shares. The stake could reach up to 20 percent, after the insurer receives $3 billion in equity units.

"Rarely does one come across a deal that has such a strong strategic fit," MetLife CEO Robert Henrikson said in an interview with The Associated Press.

Henrikson said MetLife has been in the market for various domestic and overseas acquisitions over the past five years. He said he began discussing a possible Alico deal with AIG in December 2008, three months after the government bailout.

AIG and MetLife are based in New York. Robert H. Benmosche, the former head of MetLife, became AIG's CEO in August. Benmosche wasn't involved in the deal discussions, Henrikson said. All talks were handled by a special committee within AIG, he said.

The Alico deal, while good for MetLife, carries some risk, said Aite Group senior analyst Clark Troy.

"Japan is an aging society and MetLife may face challenges growing revenue," Troy said. "However, MetLife does have the ways and means and experience to make the deal work, as they will be building on one of their stronger franchises."

MetLife currently has a successful variable annuity business in Japan.

MetLife's international business grew significantly in 2005 when the company acquired most of Citigroup's international insurance businesses, adding Japan, Australia and Britain to its portfolio. Before then, MetLife already had operations in South Korea, Chile and in Mexico, where it is the largest life insurer.

Henrikson said he didn't consider a purchase of AIA Group because "it didn't fit MetLife's growth plans."

As the largest recipient of taxpayer bailout dollars, AIG remains under the supervision of Treasury and the New York Fed. All negotiations around Alico and AIA were monitored actively by representatives from Treasury and the New York Fed, officials from both agencies said.

Each agency has participated in every key call and meeting between directors about the deals, and discussed the available options with AIG's executives, according to officials familiar with the process. They spoke on condition of anonymity because they were not authorized to publicly discuss the negotiations.

With the latest sale, AIG will be able to slash its outstanding government debt of $129.3 billion by about $51 billion, or 39 percent, to about $78 billion. The cash portion of the Alico and AIA deals will be used immediately to pay down an investment in AIG by the Federal Reserve Bank of New York. The equity portion of the deals will be sold over time to help further repay that debt.

The government will also be selling shares it holds in AIG to recoup some of its investment.

However, it is not yet clear whether the government will be able to recover all of its investment. It's too early to tell how much the proceeds from any of the stock sales will be.

Before it nearly collapsed during the 2008 financial crisis, AIG was the world's largest insurer. It sold a variety of insurance products around the world and operated a lending and aircraft leasing businesses. It also had a financial products division that sold complex securities called credit default swaps. When the financial crisis sent billions of dollars of mortgages and bonds into default, credit default swaps undermined AIG and forced the government to rescue the company. In return, the government took a nearly 80 percent stake in AIG.

AIG has been working for the past year and a half to sell assets and streamline operations to repay its debt. Since receiving government bailout funds, AIG has 21 unit sales or asset transactions, including the Alico and AIA deals. AIG's next key sale could be Nan Shan, a Taiwanese company, analysts have said.



 

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March 8th, 2010

Potentially millions of dollars are riding on the lawsuit since most of the plant material grown in the two states is exported to markets in the south, east and Midwest.

Nurseries in Oregon and California teamed up to file a lawsuit in U.S. District Court Monday, seeking to overturn a new regulation they say unfairly blocks shipments of their plants to South Carolina.

Potentially millions of dollars are riding on the lawsuit since most of the plant material grown in the two states is exported to markets in the south, east and Midwest.

"For us, the problem is much bigger than just South Carolina,'' said John Aguirre, executive director of the Oregon Association of Nurseries. "If other states think this will go unchallenged, there's every likelihood that they will start doing just what South Carolina has done and begin barring large amounts of Oregon-grown plant materials from entering their state."

The federal government already maintains strict regulations to limit the interstate spread of plant diseases such as Phytophthora ramorum, or sudden oak death, Aguirre said. He added that nurseries in Oregon and California have outstanding records in complying with these rules.

Last year, however, the South Carolina Assembly approved a law limiting Oregon and California nursery operators from shipping to that state unless they comply with additional inspection, documentation and advance notice requirements.

Gaining such approval requires individual Oregon nurseries to get on-site inspections and certificates of compliance from a state Agriculture Department inspector. During the height of shipping season, that can present logistical problems, as evidenced by South Carolina's refusal to accept one full shipment of plant material from Oregon recently that did not have the needed certificate.

In cash-strapped California, Aguirre said, it can be almost impossible to arrange for inspectors to visit affected nurseries on a timely basis.

"We are disappointed that we were forced to take this action,'' said Robert Dolezal, executive vice president of the California Association of Nurseries and Garden Centers, referring to the lawsuit. "But the impact on our members' businesses left us no choice.

Together, the two states export upwards of 75 percent of all their nursery and greenhouse products.

The Oregon nursery association, based in Wilsonville, represents more than 1,300 wholesale growers, retailers, landscapers and suppliers. Oregon's ornamental horticulture industry is the state's largest agricultural sector, with annual sales of $820 million.

-- Dana Tims

 

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March 8th, 2010

The contract is expected to be the first of several to replace hundreds of Air Force planes that date back to the 1950s.

WASHINGTON -- Northrop Grumman Corp. announced today that it won't compete against Boeing for a $35 billion contract to build refueling tankers for the Air Force because Northrop doesn't think it can win.

The decision puts the Pentagon on a path to doing something President Barack Obama said shouldn't happen any more: paying large amounts of money to a major defense contractor without undergoing any competition.

The decision also will probably knock out a major international competitor from gaining a foothold in the U.S. market. EADS, the European Aeronautic Defence and Space Co., had partnered with Northrop Grumman to vie for the tanker but was not expected to be able to compete against Boeing on its own.

Northrop Chief Executive Officer and President Wes Bush said in a statement that the Pentagon's guidelines for the program "clearly favors Boeing's smaller refueling tanker" but that the company would not file a formal protest.

"We have a fiduciary responsibility to our shareholders to prudently invest our corporate resources, as do our more than 200 tanker team suppliers across the United States," Bush said. "Investing further resources to submit a bid would not be acting responsibly."

The Pentagon defended the program as fair and said both companies could compete effectively. Defense Department spokesman Bryan Whitman said the program would not be reworked just to ensure a competition.

"To suggest that the department should conduct a competition that would result in DOD paying a much higher price for capabilities that are not needed simply isn't effective," Whitman said.

The political fallout was swift. Alabama Gov. Bob Riley, where Northrop would have assembled the planes and created thousands of new jobs, called the program a "charade" and said the Pentagon made it "impossible" for Northrop to compete.

Sen. Jeff Sessions, R-Ala., called the development "tragic" and a "dark day for the American warfighter." Added fellow Alabama Republican Sen. Richard Shelby, "The Air Force's refusal to make substantive changes to level the playing field shows that once again politics trumps the needs of our military."

A year ago, Obama said these kinds of no-bid contracts aren't a good deal for the taxpayer and vowed to change the way government agencies do business. With the support of Sen. John McCain, R-Ariz., his campaign rival in 2008, Obama ordered his senior advisers to come up with ways to encourage competition.

"The days of giving defense contractors a blank check are over," Obama declared.

Today, McCain spokeswoman Brooke Buchanan said that the senator regrets Northrop's decision and would continue to call for an "open and fair process to ensure the best deal for the American taxpayer."

The tanker program is considered one of the biggest blunders in defense contracting history. The Pentagon has tried twice -- and failed twice -- to award a contract to buy tankers since 2003.

Most recently, a deal awarded to Northrop Grumman was overturned on appeal. Before that, a Boeing victory was nixed after an ethics scandal resulted in prison terms for a former company executive and a former Air Force official.

Industry insiders say that the latest move by Northrop wasn't surprising.

"When all was said and done, Northrop saw a lot of risk and not a lot of profit," whereas EADS was focused primarily on gaining entry into the U.S. market, said Loren Thompson, head of the Lexington Institute. "At the end of the day, the interest of the two teams diverged."

Boeing's supporters shrugged off concerns that Northrop's decision would mean higher program costs because Boeing would still have to meet requirements laid out by the Pentagon. Ultimately, they said it was good news that some of the work wouldn't go overseas to EADS.

"This will be an American company with American workers," said Democratic Rep. Norm Dicks of Washington state, where Boeing plans to build its tankers.

Boeing announced last week that it would offer a military version of its 767 passenger jet for a fleet of 179 new planes. The contract is expected to be the first of several to replace many Air Force planes that date back to the 1950s. Boeing said it will submit its formal bid by May 10.

A final contract is to be awarded in September.

-- The Associated Press



 

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March 8th, 2010

The small business agency is gearing up for a new crop of leaders for its Emerging 200 initiative, a free training program.

 The Small Business Administration's Portland office is stepping up outreach for its Emerging 200 initiative, with particular emphasis on attracting Native American entrepreneurs to the free program.

The executive training program focuses on small businesses in urban areas, helping them create jobs, attract investment and forge a more sustainable economic base.

"This initiative is designed to accelerate the growth of companies that are poised for sustained expansion," Harry DeWolf, director of SBA Portland, said in a statement Monday.

The nine-month program, which involves about 100 hours of classroom time, has produced about 400 graduates nationwide since its 2008 launch. Grads, on average, report a 50 percent jump in revenue, the agency said, and nearly two-thirds of them have added jobs.

The Portland district had 16 graduates in 2009, the first year e200 was available here.

Instruction begins April 22 for the class of 2010; 16 spots are available. For letters of interest, applicants in Oregon and Southwest Washington should contact SBA Portland at 503-326-2682 or else e-mail sylvia.gercke@sba.gov or barbara.allen@sba.gov.
--Robbie DiMesio

 

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March 8th, 2010

Sen. Ron Wyden writes a letter that not only is Newport a better option for NOAA to relocate its marine operations center and four research ships, but the runner-up in Bellingham, Wash. has far too many environmental problems to be a legitimate alternative.

View full sizeThomas Boyd/The OregonianThe fishing boat "Corsair" heads out of Yaquina Bay for dungeness crab at sunrise in Newport. Newport is currently in a battle to become the new home to NOAA's Pacific Fleet. Sen. Ron Wyden, D-Ore., today opened a new front in the squabble with Washington state over plans to move four federal research ships to Newport, saying that any issues with Oregon’s site pale in comparison to the environmental and health hazards affecting Washington’s runner-up site.

In a letter (noaa.pdf) sent today to U.S. Commerce Sec. Gary Locke, Wyden says that the Port of Bellingham “has an extraordinary amount of hazards to deal with” near the site where it proposed housing the National Oceanic and Atmospheric Administration's marine operations center.

Wyden noted 12 ecological cleanup sites on Bellingham Bay, two industrial properties contaminated with toxic chemicals and a SuperFund parcel in the area around Bellingham's proposed site. Clean-up is yet to begin in some cases, and the environmental problems would “compromise the health and safety” of NOAA employees, Wyden wrote. 

The letter reflects the growing rancor between the Oregon and Washington delegations over NOAA’s decision in August to move the ships out of Washington, where they are based in Seattle, to Newport. The move of the four ships, 60 shore-side personnel and 110 crew members is expected to bring $19 million a year in economic activity to the area.
 
The selection was considered an upset as most observers believed the ships would remain in Seattle or moved to Bellingham or Port Angeles.

After Port of Bellingham appealed NOAA’s decision, the General Accountability Office ordered the agency to review its decision with regards to concerns that the operations center would sit in a designated floodplain. That review is expected to be completed by May 28.

In addition, Washington Sen. Maria Cantwell, D-Wash., on Wednesday had called for the Inspector General of the Commerce Department to investigate, saying the process was flawed.

Locke has said little about the protests, but in a brief interview with The Oregonian last month he said he was confident the process was fair and that all questions will be addressed.

Even so, there are many crosscurrents. Locke is the former governor of Washington. Jane Lubchenco is a former Oregon State professor who now works for Locke and directs NOAA as undersecretary for oceans and atmosphere.

Cantwell, meanwhile, is able to keep pressure on NOAA and the Obama administration as chair of the Commerce Subcommittee on Oceans. That subcommittee monitors NOAA's budget and policy priorities.

At a March 3 hearing Cantwell expressed her displeasure with Newport's selection. ``What I am hearing from my constituents on this issue is clear: they do not understand or trust NOAA’s decision. And neither do I,'' Cantwell said.

``The burden is on NOAA and the Department of Commerce to demonstrate that their choices on (Newport's selection) are the right ones – and I have yet to be convinced.''
 
-- Helen Jung and Charles Pope

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March 8th, 2010

The ever-growing recall list includes everything from bouillon to dips to pre-packaged meat containing hydrolyzed vegetable protein made by Basic Food Flavors of Las Vegas.

More products containing seasoning that could be contaminated with salmonella were recalled today as authorities track a web of sales across the country.

The ever-growing recall list includes everything from bouillon to dips to pre-packaged meat to soup.

Kroger, which owns Fred Meyer, is one of the latest companies to join the recall by pulling  dips sold under the Dean's brand sold in Oregon and other states.

All of the recalled products contain hydrolyzed vegetable protein made by Basic Food Flavors of Las Vegas. The seasoning, which is used add a savory taste to everything from soup to dips to hot dogs and frozen dinners, tested positive for salmonella.

Reser's Fine Foods in Beaverton is among the companies included in the recall.

No illnesses have been reported.

The Food and Drug Administration has set up a Web page, allowing consumers to keep abreast of the recalled products.

The seasoning is used in thousands of products but only those that do not have a so-called kill step to eliminate pathogens after it was added are being pulled.

-- Lynne Terry



 

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March 8th, 2010

IT'S ONLY MONEY BLOG: A day after Oregon Treasurer Ben Westlund dies, college investors get notices in the mail of their share of a $20 million settlement he pursued.

A day after Oregon Treasurer Ben Westlund died, many Oregon College Savings Plan investors began receiving letters in the mail today detailing their specific loss and refund amounts from the state's settlement with OppenheimerFunds Inc.

State officials said about 56,800 accounts will receive some share of the $20 million settlement with OppenheimerFunds. Westlund and Oregon Attorney General John Kroger forged the deal last year after college investors lost an estimated $36 million. OppenheimerFunds managed more than 63,000 accounts for the state.

Also, TIAA-CREF officially replaces OppenheimerFunds Inc on March 22. Oregon529network.com Oregoncollegesavings.com will offer more details Tuesday about the plan's upcoming switch over to a new manager, state officials said.

 Westlund took over the state's 529 college savings network after OppenheimerFund's Core Bond fund price dropped from $10.15 in May 2008 to $5.22 in November. The fund was a key holding in the network's most conservative investment options.

Refunds will range from thousands of dollars to a couple of bucks, department spokesman James Sinks said. They vary greatly depending on the amount and timing of investments.

What do you think?

How much was your refund? Was it more or less than you thought you'd get?

How do you feel about Mr. Westlund's efforts?

Weigh in below.





 

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March 8th, 2010

Affiliated Computer Systems hired 100 in October and now has enough more work to add more to its payroll.

 
Affiliated Computer Services, Inc. announced it is hiring 190 agents, supervisors and managers at its Tualatin.

The Dallas, Tex.-based company is expanding to meet new business demands from an existing client, said Chris Gilligan, a company spokesman. He declined to name the client but said it is in the communications industry.

ACS employs about 1,900 people in Oregon, including 1,200 in Portland. Xerox Corp. bought ACS in a transaction that closed last month.

Gilligan did not disclose a starting wage but said it would be above the state's minimum of $8.40. In 2008, the nearly 11,000 call-center jobs in Oregon paid an average annual wage of about $27,000 a year, according to Oregon Employment Department figures. The sector's employment fell, however, below 9,750 last fall.

In October, ACS announced the hiring of 100 people at the same center, 18277 SW Boones Ferry Road.

For more information, visit acs-inc.com or call 503-567-3910.

-- Brent Hunsberger
 

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March 8th, 2010

Gramor Development is still seeking money for the project, but the company needs more time.

BEAVERTON -- One-half of the proposed Progress Ridge development in Southwest Beaverton is still on hold.

Gramor Development has asked Beaverton development officials for at least another year to securing financing for the highly anticipated project, which would include a New Seasons Market and Cinetopia movie theater.

"Same place we were about a year ago," Matt Grady, a Gramor senior project manager, said Monday.

The hold up, he said, is finding up-front capital to satisfy lenders.

"We're optimistic things are going to happen this summer," Grady said, while acknowledging that earlier expectations haven't panned out.  


Without a time extension from the city, conceptual approvals for the project will expire May 30 and July 7. One extension would be good until July 2011, the other until May 2012.

Written comments regarding the extension will be accepted by the city through March 31.

Meanwhile, construction at the other half of Progress Ridge continues. The family that owns Big Al's bowling is developing that project, which is expected to open later this year.

-- Brad Schmidt

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March 8th, 2010

The Oregon Justice Department received more than 20 complaints Monday from people who say the caller asks them to verify their bank account numbers.

Scammers claiming to be from The Bank of the Cascades are trying to raid people's bank accounts.

They are calling individual consumers in Central Oregon and warning them their bank records have been compromised, according to the Oregon Justice Department. The department received more than 20 complaints Monday from people who say the caller asks them to verify their bank account numbers.

At least one consumer was duped into giving up their account number. Within minutes, the victim told state officials, $515 had been emptied out of his account and wired to Guadalajara, Mexico.

"This is a phishing scam," the department warned. "Never provide your bank account number over the phone or by email. No legitimate financial institution will call you and ask you for your bank account number or other sensitive financial information."

Anyone who believes they have been approached by a scammer should contact the Oregon Department of Justice Consumer Hotline at 1-877-877-9392 or www.oregonattorneygeneral.gov.

-- Jeff Manning



 

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