Pacific Northwest Washington Mutual shareholders Tuesday approved the final step in a $7.2 billion bailout package that puts more than 50...
Washington Mutual shareholders Tuesday approved the final step in a $7.2 billion bailout package that puts more than 50 percent of the company in the hands of an investor group led by private equity firm TPG.
The deal’s structure gave stockholders little choice — had they not given their approval, WaMu faced paying the group a $792 million dividend, with higher payments down the road.
More than 94 percent of shareholders approved the plan, Seattle-based Washington Mutual said Tuesday in a statement. The first part of the $7 billion package went through in April, when TPG bought 176 million shares at $8.75 apiece, a 33 percent discount at the time.
Outside WaMu’s headquarters Tuesday, protesters organized by the Service Employees International Union dressed in hazmat suits to criticize what they called a “toxic deal.”
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The union says it is concerned that private equity firms seeking quick profits from struggling lenders will “squeeze these returns from troubled banks through higher fees for bank customers, unfair lending practices and exorbitant interest rates on credit cards and other consumer products.”
Boeing to change workers’ pensions
Boeing said it’s changing its retirement program for new, nonunion workers by replacing its traditional pension plan with one that’s similar to a 401(k) plan.
The new program, to be introduced Jan. 1, includes an automatic company contribution as well as a match for funds put in by employees, Boeing said Tuesday in a statement.
Boeing aims to put newly hired union machinists in a 401(k)-style plan as well to ease a pension liability it estimates at $46 billion. It’s one of the proposals under discussion in negotiations that began May 9 for a new contract to start Sept. 4. The International Association of Machinists, is against the idea because it doesn’t want different benefits for different groups of employees.
Starwood sets plan for hotel complex
Starwood Capital Group announced plans Tuesday for a luxury hotel-condominium complex that will be part of a golf resort at Ucluelet on the west coast of Vancouver Island.
The project will be called the 1 Hotel & Residences Vancouver Island at Wyndansea. It will include 180 “condo hotel” suites and 95 beach and golf villas, according to Starwood and its development partner, Marine Drive Properties of Ucluelet.
Kent Station to get a new building
Developer Tarragon broke ground Tuesday on an 80,000-square-foot mixed-use building at its ambitious Kent Station development in downtown Kent.
The four-story building will include ground-floor retail, office space and two floors of classrooms for Green River Community College, tripling the size of the school’s branch campus at Kent Station.
Tarragon said the new building should be finished next June.
Kent Station is a 470,000-square-foot project that Tarragon calls an “open-air urban village.” About 240,000 square feet, including shops, restaurants and movie theaters, already has been built.
Boeing-Lockheed contest to go ahead
A competition between Boeing and Lockheed Martin worth as much as $9 billion for a new military-communications satellite can proceed, the Pentagon said.
The Air Force this month received permission from acquisition undersecretary John Young to award a contract as soon as September to develop and build for launch by 2018 the first of five satellites that move data over laser beams instead of radio frequencies, according to a statement.
Boeing and Lockheed, along with Lockheed subcontractor Northrop Grumman, have design contracts to show that the technology is feasible and will now vie to build the first satellite.
Young had put the 4-year-old program on hold earlier this year to assess whether it should survive, undergo a major reorganization or be terminated because of concerns over cost and technology.
Nation and World
1st-quarter profit beats estimates
Kroger, the biggest U.S. grocery chain, increased first-quarter profit more than analysts estimated by cutting prices and said full-year sales will exceed its previous forecast.
Sales at stores open at least 15 months may climb as much as 5.5 percent, excluding fuel, this year, higher than its previous projection, Kroger said Tuesday.
Consumers bought more store-branded products after gasoline surged to more than $4 a gallon and food costs soared. Kroger offered discounts on Ragu pasta sauce and Hellmann’s mayonnaise to compete with Wal-Mart and Safeway, and gave shoppers who converted tax-rebate checks into store gift cards a bonus of as much as $120.
Kroger, with 2,474 locations under brands including QFC and Fred Meyer, rose $1.82, or 7 percent, to close at $27.82 Tuesday, the biggest gain since September 2007. The shares have climbed 4.2 percent this year, beating the 6.6 percent decline by the Standard & Poor’s 500 Consumer Staples Index.
Pilots agree on joint contract
Delta and Northwest pilot negotiators say they have a tentative agreement with Delta management on a joint contract to cover both pilot groups when the companies combine later this year.
Delta’s pilots union said Tuesday that the agreement is between the two pilot groups and Delta management. Terms were not disclosed.
Next the two pilot groups will try to reach an agreement on a merged seniority list.
The joint contract agreement, which covers roughly 12,000 pilots from both airlines, still needs rank-and-file approval and to be reviewed by the governing bodies of the two unions. Both unions’ executive committees are scheduled to meet separately later this week.
Delta pilots already have their own deal with management, including pay raises and equity in the combined company. That move angered Northwest pilots, who felt left out by their fellow members of the Air Line Pilots Association (ALPA).
Wi-Fi testing planned for today
American Airlines is preparing a “dress rehearsal” of its new in-flight Internet service today, with Wi-Fi connections being offered to passengers on some transcontinental routes.
The in-flight service, dubbed “Gogo,” was developed by AirCell and installed on 15 of American’s Boeing 767-200 jets. It will be available today to customers flying from John F. Kennedy Airport in New York to Los Angeles, San Francisco and Miami.
The service will be available for free today. Shortly after, American will begin a broader test offering of the service, which will priced at $12.95 for flights longer than three hours, and $9.95 for shorter flights.
AirCell and American will share the revenue from the fees. AirCell is also developing Gogo for Virgin America, which will start the service later this year.
The system works through a network of 92 cellphone towers nationwide that beam the Internet signal into the skies.
Pier 1 / Cost Plus
Pier 1 withdraws offer to buy rival
Retailer Pier 1 Imports said Tuesday it is withdrawing its offer to buy rival Cost Plus for $88 million.
Pier One said it was unlikely it would be able to buy the company at a price that would make sense for its shareholders.
Pier 1 offered to buy Cost Plus earlier this month in a stock-swap transaction. In the proposal, Pier 1 said it would issue 0.6 shares of its common stock for each share of Cost Plus common stock, implying a value of $4 per share.
Meeting to assess state of economy
Fed Chairman Ben Bernanke and his colleagues opened a two-day meeting Tuesday afternoon, where they will put together their most up-to-date assessment of the economy’s outlook and decide the best course on interest rates.
At 11:15 a.m. Pacific time today, the Fed will announce any change to interest rates and probably weigh in on inflation. The Fed is almost certain to hold its key interest rate steady at 2 percent when it wraps up its session today.
Compiled from Seattle Times staff, Bloomberg News, The Associated Press and McClatchy Newspapers