DHL Delivers in Asia; Airbus Throttles Back on Iberia Bid; Quebecor Won't Print Dividends; Areva to Power China's Nuclear Power Program
- DHL Worldwide Express Inc., a division of Deutsche Post AG Bonn (DPSTF), said yesterday (Monday) that it plans to invest $175 million in a new North Asia cargo hub at Shanghai's Pudong International Airport. The new facility is scheduled to start operations in early 2008. This operation will further contribute to the company's goal of doubling its cargo handling capacity, from 2.2 million tons last year to 4.2 million tons a year by 2010, according to officials in Shanghai. The 592,000-square-foot hub will handle as many as 20,000 parcels and 20,000 documents an hour, according to company officials. DHL has been aggressively expanding in China. "China remains the most important player in the global logistics chain in North Asia," said Dan McHugh, chief executive officer of DHL Express for Asia-Pacific. DHL Worldwide has invested $618 million in China and has about one-third of that nation's cargo business. Shanghai is the sixth-largest cargo hub in the world, an improvement from the 17th spot in 2003.
- British Airways PLC (BAIRY) dropped plans to bid for Spanish carrier Iberia Lineas Aereas de Espana SA (IBRLF). Europe's third-largest airline already owns a 10% stake in Iberia and said in a statement yesterday (Monday) that it wouldn't exercise its preemption rights to acquire shares being sold by local investors to Caja Madrid. British Airways said Nov. 2 that it and U.S. buyout firm TPG Inc. planned to bid for Madrid-based Iberia within weeks. Three days after British Airways made those comments, a Spanish group made a $5.5 billion (3.7 billion euros) bid. Then, last week, Spanish savings bank Caja de Ahorros y Monte de Piedad de Madrid, also known as Caja Madrid said it would raise its Iberia stake from 10% to 24% by buying shares from Banco Bilbao Vizcaya Argentaria SA (BBV) and Compania de Distribucion Integral Logista SA. "The Spanish have circled the wagons around this national asset," Douglas McNeill, an analyst at Blue Oar Securities in London, told Bloomberg News. "This is the end of the road for the TPG- and British Airways-led bid," said Keith Williams, the chief financial officer of British Airways, who also reiterated that British Airways would like to maintain its working relationship with Iberia. In a statement released Monday, Williams said that British Airways' position as Iberia's key industrial partner remains important, and is not dependent on an increase in shareholding.
- Montreal-based commercial printer Quebecor World Inc. (IQW) announced yesterday (Monday) that it is suspending dividends on its series 3 and series 5 preferred shares. The move comes less than a week after the company cancelled its refinancing plans. While the company has the funds available to pay such dividends, it has been advised against it because it may not satisfy the applicable capital adequacy test contained in the Canada Business Corporations Act. In order to rectify this situation, the company will propose a reduction of stated capital as permitted under the CBCA to shareholders to "allow the company to resume paying dividends, including accrued, unpaid dividends," the company said in a prepared statement. The unpaid dividends on the shares are cumulative and will be paid once the company is allowed to make dividend payments again. The company had planned to sell $500 million in bonds and raise an additional $250 million in the equity markets but withdrew the offerings, citing difficult market conditions.
- France's Areva SA, the state nuclear engineering firm, announced yesterday (Monday) that it reached an $11.9 billion deal with China to deliver a pair of third-generation nuclear reactors to the energy-hungry nation. "It's a record. In the history of the civilian nuclear industry, there's never been a deal of this magnitude. China is one of the most exciting markets. China is accelerating its nuclear development, and it's important to be part of this competition," Areva CEO Anne Lauvergeon said. The deal ends months of expectations that China would buy two European pressurized water nuclear reactors from Areva. The two reactors will be delivered, one by the end of 2013 and the other by the end of 2015. In a separate contract that runs through 2026, Areva and China will set up a company to run the two reactors. As China continues to grow at a rapid pace, the need for energy is growing as well and China is rapidly adding capacity, primarily nuclear. Earlier this year, it had contracted with U.S.-based Westinghouse Electric Company LLC for four nuclear energy plants.