Lender GMAC Financial Services said Wednesday it will close all of its 200 retail offices and lay off about 5,000 employees as part of plan...
Lender GMAC Financial Services said Wednesday it will close all of its 200 retail offices and lay off about 5,000 employees as part of plan to reduce its mortgage lending and servicing because of the housing market downturn.
The majority of the layoffs are slated for GMAC’s mortgage lending division, Residential Capital LLC, known as ResCap, and will reduce work force at the unit by 60 percent, the company said.
In the first half of the year, ResCap’s U.S. mortgage loan production was valued at about $35.7 billion, down nearly 39 percent from the same period in 2007.
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Coke makes bid for China juice firm
Coca-Cola moved to expand its operations in the fast-growing Chinese market Wednesday with a $2.5 billion bid for major juicemaker China Huiyuan Juice Group.
Under the deal, Coca-Cola’s wholly-owned subsidiary Atlantic Industries would purchase the Chinese company’s shares for 12.20 Hong Kong dollars ($1.56) each, almost triple their last closing price, the companies said in a joint statement to the Hong Kong stock exchange. That would value the Beijing-based juice producer at around HK$17.9 billion ($2.3 billion).
Coca-Cola also offered to pay for all outstanding convertible bonds and options, bringing the total amount of the deal to as much as HK$19.6 billion (around $2.51 billion).
According to research firm Dealogic, it is the largest-ever deal in China’s food and beverage industry.
Not-guilty plea in securities case
A former Wall Street broker pleaded not guilty Wednesday to charges he and a colleague duped investors into purchasing more than $1 billion in high-risk securities by making it look as though the trades were protected by the federal government.
An indictment unsealed in federal court in Brooklyn said because the securities actually were tied to subprime mortgages, Eric Butler and Julian Tzolov stood to pocket higher commissions. The scheme was exposed when the subprime market collapsed.
If convicted, each faces up to 20 years in prison and a $5 million fine.
2008 airline losses may hit $5.2B
Airlines may report combined losses of about $5.2 billion this year, almost $3 billion higher than forecast in June, as economies slow and fuel costs erode earnings, the International Air Transport Association (IATA) reported Wednesday.
The net loss will fall short of the $6.1 billion worst-case-scenario the industry body envisaged in the last forecast because of a recent drop in oil prices, Chief Executive Officer Giovanni Bisignani said Wednesday in Montreal. Traffic growth will be lower than predicted as an economic slowdown spreads, he said.
IATA lifted the annual loss estimate for a fifth time in 12 months after passenger growth slumped to a five-year low in July and the number of carriers grounding planes or going bankrupt this year passed two dozen. Airlines had a profit of $5.6 billion in 2007, the first since the 2001 attacks on the U.S. The industry has lost more than $36 billion since 2001.
“We’re still in a perfect storm of rising costs and falling demand,” Bisignani said on a conference call. “When we made our last forecast we knew the situation was bad, but we didn’t know how bad it would get. Profitability deteriorated dramatically in the first half.”
World airline traffic this year is likely to increase only 2.8 percent, IATA said, compared with a previous forecast of 3.9 percent and growth of 5.3 percent in 2007 and 2006. Traffic rose 1.9 percent in July, the group said, the lowest monthly expansion since the 2003 SARS epidemic.
Compiled from The Associated Press and Bloomberg News