1. UPDATE 7-RIM scrambles to end global BlackBerry outage


    * Finds no evidence of hacking or system breach* Outage could escalate pressure for sweeping changes* Shares close down 3.5 pct in Toronto, 2.2 pct on NasdaqBy Alastair Sharp and Georgina ProdhanTORONTO/LONDON, Oct 12 (Reuters) - The company that makes the BlackBerry smartphone is working frantically to end a three-day global service disruption that has frustrated millions of its customers and pumped up pressure on its management to make sweeping changes.Research In Motion , in a hastily announced conference call on Wednesday, vowed to eventually deliver all delayed email and instant messages to customers in five continents affected by the outage.It later told some of its corporate clients that it may not clear the huge backlog of messages until Thursday morning on the U.S. East Coast and it apologized to customers in a statement on its Website and on its Facebook page.”Youve depended on us for reliable, real-time communications, and right now were letting you down,” it said, noting that email services were operating and it was clearing the backlog of messages.The outage - and RIM’s sluggish communications with its customers - have fanned rising dissatisfaction with its co-chief executives, Mike Lazaridis and Jim Balsillie.Critics have called for a shake-up, saying the top managers have let the company fall too far behind Apple and other rivals in a rapidly changing market.”The board clearly needs to take decisive action now - they need to draw a line in the sand,” said Richard Levick, who runs a consultancy that specializes in crisis management.”RIM needs to change its DNA entirely - they need to start thinking like a startup again, instead of a former market leader,” he said.Though RIM’s stock dropped modestly on Wednesday, its shares have already tumbled more than 50 percent this year on a series of profit warnings and product missteps - a sharp reversal of fortune for a company that once dominated the smartphone market.This week’s disruption - the worst since an outage swept North America two years ago - may have damaged RIM’s once-sterling reputation for secure and reliable message delivery - perhaps its No. 1 selling feature.RIM is unique among handset makers, as it compresses and encrypts data before pushing it to BlackBerry devices via carrier networks. Apple and others rely on the carrier networks to handle all routing and delivery of content.Even before this week’s disruptions, many companies had started to balk at paying a premium to be locked into RIM’s service. Some are now allowing employees to use alternative smartphones, particularly Apple’s iPhone, for corporate mail, and the outage could accelerate the trend.”One possibility could be that it encourages client companies to look more at other options such as allowing users to connect their own devices to the corporate server and save themselves the cost of buying everyone a BlackBerry,” said Richard Windsor, global technology specialist at Nomura.DLA Piper, a law firm with 4,200 attorneys worldwide, is a prime example. It is accelerating discussions about switching to iPhones and Android devices, Don Jaycox, its chief information officer, said on Wednesday.”This has brought it to the front-burner,” Jaycox said. “It will cause more people to opt for other choices.”UNIQUE SYSTEMThe corporate defections are making a big software transition even more crucial to RIM. The company is getting ready to shift its line of BlackBerry smartphones to the new central operating system first used in the poorly received PlayBook tablet.Without a successful shift, RIM may never regain market share lost to the iPhone and devices powered by Google’s Android, analysts say.”It’s a blow upon a bruise. It comes at a bad time,” Nomura’s Windsor said, referring to Wednesday’s service disruption.While corporate customers were weighing their options, BlackBerry users were venting their frustration at the company and what they said was its failure to keep its customers informed.”Totally appalled at the lack of communication from RIM,” wrote Lynn Murdoch on RIM’s BlackBerry Facebook page. “Love my Berry, but furious at the fact that no one can actually give a time frame of how long its going to take to fix. Utterly disappointed!”“I’m right at the edge where I might be saying goodbye to my BlackBerry,” said Tony Vitali, a BlackBerry user in New York. “The device freezes twice a day. … It’s a very frustrating device.”BAD TIMINGFrom a marketing standpoint, the timing of the service glitch could hardly have been worse for RIM.Apple on Wednesday launched a major upgrade to its iOS operating system that includes iMessage, an instant messaging service for users of Apple’s iPhones, iPads and some iPods. It is a direct competitor to RIM’s BlackBerry Messenger, or BBM.The RIM service, which allows BlackBerry users to send free text messages to other BlackBerry users, has made the devices a popular choice with young consumers. That has partially compensated for its losses in the corporate market in North America and Western Europe.On Wednesday RIM’s shares closed down 3.46 percent at C$24.27 on the Toronto Stock Exchange and down 2.17 percent at $23.88 on the Nasdaq.

  2. FACTBOX-List of Wall Street protesters’ complaints


    * “We are the 99 percent” is the rallying cry of protesters, who believe the top 1 percent of Americans hold too much of the country’s wealth and should face higher taxes.The top 1 percent of the population held 35.6 percent of the nation’s wealth in 2009, according to a study released in March by the liberal-leaning Economic Policy Institute. The same report showed that more than a decade earlier, in 1998, the top 1 percent held more than 38 percent of the wealth — a few percentage points more.A similar study by the nonpartisan Levy Institute of Economics at Bard College found the wealthiest 1 percent of Americans held 34.6 percent of the wealth in 2007.* There is too much income inequality in the United States, dividing the country into a small number of haves and many have nots.The gap between rich and poor has been gradually widening for decades. The top five percent of families by income accounted for 21.7 percent of total aggregate income in 2009, according to the U.S. Census Bureau. The top 20 percent of families accounted for 50.3 percent of total income. Whereas in 1970, the top five percent held 16.6 percent of income, and the top 20 percent held 43.3 percent of income.The bottom 20 percent of households by income accounted for 3.4 percent of income in 2009, down from 4.1 percent in 1970.A United Nations report showed income inequality was greater in the United States than in some other major developed economies such as Japan and Germany, but inequality was not as great as in some less-developed countries such as Brazil.The percentage of Americans living in poverty reached 15.1 percent in 2010, up from 14.3 percent in 2009, the fourth consecutive annual increase and the largest number in the 52 years that estimates have been published.* Too many people are out of work and even well-trained people are unable to find jobs.The national unemployment rate was 9.1 percent in September, according to the U.S. Bureau of Labor Statistics. As late as April 2008 the unemployment rate was only 4.9 percent, but after the financial crisis it quickly doubled to a peak of 10.1 percent in October 2009. It has held near double digits ever since.The United States lost 8 million jobs during the 2007-2009 recession and only about 1.4 million of those have been regained.The lack of jobs is particularly acute among young people, with the unemployment rate for ages 20-24 at 14.7 percent in September. The unemployment rate also is higher for minorities such as Hispanics and African Americans, and for military personnel returning from wars in Afghanistan and Iraq.Unemployment also is higher for less-skilled workers than for those with a college degree.The unemployment figures compiled by the government do not include people who have become discouraged and have stopped looking for work.* Banks caused the global financial crisis and were bailed out by the U.S. government. Now they are making huge profits and are back to getting fat bonuses.The U.S. government spent $413 billion on its bank bailout fund, called TARP, after the 2008 crisis, of which $314 billion has been recovered by taxpayers, according to the U.S. Treasury Department. The government spent another $245 billion investing in 700 troubled financial institutions to prop them up and received $256 billion back, so it made a profit on that program.Bank profits were $28.8 billion in the second quarter of 2011 at FDIC-insured banks, up 37.9 percent from the previous year and the eighth consecutive quarter that industry profits improved year-over-year, according to the FDIC.Profits are expected to be up about 2 percent in the third quarter compared with a year earlier, according to Thomson Reuters Proprietary Research. Banks begin reporting quarterly results on Thursday.Cash bonuses paid to Wall Street employees for work done in 2010 declined 7.5 percent to $20.8 billion, according to a report released by the New York State Comptroller on Tuesday. Bonuses for work done in 2011 are expected to fall again, according to the report.SOURCES: U.S. Census Bureau, Bureau of Labor Statistics, U.S. Treasury Department, Federal Deposit Insurance Corporation (FDIC), Levy Institute of Economics, Economic Policy Institute, United Nations, Thomson Reuters Proprietary Research, New York State Comptroller.

  3. HeidelbergCement opens new Swiss HY market


    The Ba2/BB rated transaction, which is guaranteed by HeidelbergCement AG, Hanson Limited priced at the tight end of a 7.25%-7.5% coupon range and was the first non-Swiss high-yield issue to surface in the Helvetian market in years, maybe ever. It represented the highest coupon for a public bond in well over a decade.”It will mainly be placed in the local market,” said one European syndicate banker close to the transaction. “There’s a micro market in Switzerland with demand from Swiss institutions and private banks who are looking for exposure to European corporates. Since Heidelberg is a big brand name, it can access the liquidity there, but it’s a relatively small size.”Thomas Gessner, at Deutsche Bank’s Swiss franc new issue syndicate in Frankfurt, said: “It was a hell of a deal, opening a new sector in an interesting market. It worked well, hitting the window perfectly with a good name, and providing an excellent outcome for both issuer and investors.”The deal follows investment-grade names such as GDF Suez, France Telecom, Daimler and BMW that have tapped the Swiss market in recent weeks as funding in euro-denominated primary markets has remained volatile. The market could be receptive to other high-yield issuers, but limited to well-known brand names, rated double B, the pan-European high-yield specialist said.ATTRACTIVE FUNDINGCompanies can also raise funds more cheaply. “What’s attractive about the Swiss market is the lower cost of financing,” the banker said. “Swap rates are lower than in euros by more than 100bp.”The bulk of Heidelberg’s outstanding EUR6.3bn euro-denominated bonds carry coupons of 6%-8%, according to Tradeweb. The German company was last in the market in late September with a EUR300m seven-year which yielded 9.625% with a 9.5% coupon, or roughly 730bp over swaps, for a one year longer deal. The nearest liquid comparable would be the EUR1bn 8% January 2018 which is quoted on Tradeweb at a Z-Spread of plus 658/633.At the tight end of the guidance, 7.25%, the deal came at roughly 625bp over mid-swaps, which puts it broadly in line with secondaries. At that level, it provided some arbitrage opportunity to the issuer, which would probably have had to pay a larger new issue premium in the euromarket, while still looking like decent value to Swiss investors.Coming hot on the heels of the aborted Air France deal from the previous week, which was scuppered by negative headlines surrounding the industry after AA flirted with bankruptcy as well as a decidedly negative tone to the wider market, some investors saw the HeidelbergCement issue as a bit of a gutsy move.However, the company is in a totally different and significantly more stable industry and is a well known name in Switzerland with an obvious local comparable in Holcim, which priced a SFr425m 10-year in May this year at swaps plus 115bp with a 3.375% coupon, commensurate with its Triple B rating.Heidelberg waited a bit after their euro deal to monitor its progress, and seeing that it had gone well, commenced discussions with Deutsche Bank about a Swiss bond, presounding a few select accounts late in the week before launch. The market showed a window of opportunity on Monday, and books were opened for a CHF150m no-grow amount with guidance in the 7.25%-7.5% area.The size was set by the company as a solid print in the market and an almost certain guarantee of good demand. Things went well, and the deal was priced before lunchtime, books having closed as soon after they became oversubscribed, with a very granular 65 accounts represented, having placed orders ranging from CHF10k to CHF25m.As expected for the tenor and coupon, private banks and retail took a hefty chunk, with 46%. Asset managers followed with 27%, hedge funds 15%, banks 9%, insurers 3% and pension funds 1%. Geographically, 91% went to Swiss accounts, split 68% to Zurich, 13% Geneva, 8% Lugano and 1% Basle, while outside of the mountainous borders, German accounts took some 6%, the UK 1%, Liechtenstein 1% and others 1%, mostly from private banks.The deal performed well in the aftermarket, trading up to 101.50 offered late in the day of launch, and settling at 100.50-100.80 by late Tuesday.Other bankers echoed the lead’s sentiments, saying that it was a “good trade, people want yield, and HC is one of the best known high yield names with retail”. Others said that “with good name recognition and a fair price, follow up trades could be seen [in the high yield market]”, and “Absolutely. Lower-rated credits will become more common in the months to come.”

  4. BHP Billiton approves $1.2 billion to start giant mine


    The funds will be used to buy trucks, build worker housing and for other items requiring lengthy lead times, it said.BHP said it will not make a final decision to go ahead until mid-2012, after it weighs up the 150 environmental conditions imposed on the project by the national and South Australia state governments this week.Once fully developed, Olympic Dam would almost be on par with the massive copper mines of South America, although it would take years before the mine came close to matching the output of BHP’s giant Escondida lode in Chile.”The Olympic Dam project team is completing studies to create one of the world’s largest open pit mines, with the potential to increase copper production from around 180,000 tonnes per annum to 750,000 tonnes per annum and beyond,” BHP Chief Executive Marius Kloppers said in a statement.BHP has not given a total cost estimate for the project but analysts say it will need $20 billion to $30 billion to fully develop the lode.ROYALTY PAYMENTIn a related development, BHP agreed to maintain a 5 percent royalty payment to the government of South Australia, home to the mine, for uranium and 3.5 percent for other metals after the expansion. The royalty rate is guaranteed for 45 years.”BHP have sought with great vigor to get a reduction in royalties,” South Australian minister Kevin Foley said in a statement.Based on today’s copper price, BHP would pay around $260 million a year in royalties on copper alone once the expansion is complete.The agreement was signed by Kloppers and South Australia leader Mike Rann in Melbourne on Wednesday and requires BHP’s board to give its final approval for the first phase within 12 months.Asked by reporters if the 12-month deadline was negotiable, Rann said it wasn’t, in order to ensure changing market conditions would not dampen BHP’s interest.Concerns are mounting that industrial growth in China, the world’s biggest consumer of copper was slowing down, cutting demand for the metal at a time when the global supply pool is increasing.Exchange-traded copper shed nearly 3 percent on Tuesday as worries about the sustainability of China’s economy compounded the Western world’s growth prospects.”That’s why we insisted on the 12-month sunset clause whether there is a global downturn or not,” Rann said.Most of the $1.2 billion is conditional on parliamentary approval of a binding agreement with the state government, with the state parliament expected to endorse it by December.Geologists estimate BHP Billiton will take four or five years to access the additional ore required for the expansion, after which the life of mine would be extended to more than 100 years from its current 20 years.BHP has agreed to set aside a chunk of land roughly the size of London as an environmental buffer zone and to monitor the mine’s impact on birds and fish inhabiting hundreds of kilometers around the mine site.It will also construct a desalination project and a 320 kilometer (200 miles) pipeline to bring saltwater to the site.The mine already uses 35 million liters of water daily, making it the largest industrial user of underground water in the southern hemisphere.The proposal is also subject to independent reviews by the Australian Radiation Protection and Nuclear Safety Agency, since an expansion would also lift annual uranium production to 19,000 tonnes from around 4,000 tonnes now.

  5. BHP Billiton approves $1.2 billion to start giant mine


    The funds will be used to buy trucks, build worker housing and for other items requiring lengthy lead times, it said.BHP said it will not make a final decision to go ahead until mid-2012, after it weighs up the 150 environmental conditions imposed on the project by the national and South Australia state governments this week.Once fully developed, Olympic Dam would almost be on par with the massive copper mines of South America, although it would take years before the mine came close to matching the output of BHP’s giant Escondida lode in Chile.”The Olympic Dam project team is completing studies to create one of the world’s largest open pit mines, with the potential to increase copper production from around 180,000 tonnes per annum to 750,000 tonnes per annum and beyond,” BHP Chief Executive Marius Kloppers said in a statement.BHP has not given a total cost estimate for the project but analysts say it will need $20 billion to $30 billion to fully develop the lode.ROYALTY PAYMENTIn a related development, BHP agreed to maintain a 5 percent royalty payment to the government of South Australia, home to the mine, for uranium and 3.5 percent for other metals after the expansion. The royalty rate is guaranteed for 45 years.”BHP have sought with great vigor to get a reduction in royalties,” South Australian minister Kevin Foley said in a statement.Based on today’s copper price, BHP would pay around $260 million a year in royalties on copper alone once the expansion is complete.The agreement was signed by Kloppers and South Australia leader Mike Rann in Melbourne on Wednesday and requires BHP’s board to give its final approval for the first phase within 12 months.Asked by reporters if the 12-month deadline was negotiable, Rann said it wasn’t, in order to ensure changing market conditions would not dampen BHP’s interest.Concerns are mounting that industrial growth in China, the world’s biggest consumer of copper was slowing down, cutting demand for the metal at a time when the global supply pool is increasing.Exchange-traded copper shed nearly 3 percent on Tuesday as worries about the sustainability of China’s economy compounded the Western world’s growth prospects.”That’s why we insisted on the 12-month sunset clause whether there is a global downturn or not,” Rann said.Most of the $1.2 billion is conditional on parliamentary approval of a binding agreement with the state government, with the state parliament expected to endorse it by December.Geologists estimate BHP Billiton will take four or five years to access the additional ore required for the expansion, after which the life of mine would be extended to more than 100 years from its current 20 years.BHP has agreed to set aside a chunk of land roughly the size of London as an environmental buffer zone and to monitor the mine’s impact on birds and fish inhabiting hundreds of kilometers around the mine site.It will also construct a desalination project and a 320 kilometer (200 miles) pipeline to bring saltwater to the site.The mine already uses 35 million liters of water daily, making it the largest industrial user of underground water in the southern hemisphere.The proposal is also subject to independent reviews by the Australian Radiation Protection and Nuclear Safety Agency, since an expansion would also lift annual uranium production to 19,000 tonnes from around 4,000 tonnes now.