Updated at 1:32 p.m., Monday, April 2, 2007
Business highlights: Court rulings, manufacturing, oil
Associated PressNEW CENTURY FINANCIAL CORP. FILES FOR BANKRUPTCY
LOS ANGELES New Century Financial Corp., once the nation's second-largest provider of home loans to high-risk borrowers, filed for bankruptcy protection Monday, the victim of its own financial missteps as well as pressures felt by its rival lenders.
New Century immediately fired 3,200 workers more than half its workforce and said it intends to sell off its major assets.
The company made the move after exploring a variety of possible ways to stay in business, he said.
New Century was the latest so-called subprime lender to fall on hard times amid a spike in mortgage defaults caused by borrowers unable to make payments. More than two dozen subprime lenders have shut down in recent months and others are scrambling to stay in business.
Subprime loans target borrowers with low credit scores. The mortgages carry relatively high interest rates but can also offer low initial payments.
FIRST DATA CORP. SOUGHT IN $27B DEAL
DENVER Credit card transaction processor First Data Corp. said Monday that it is being acquired by an affiliate of private equity firm Kohlberg Kravis Roberts & Co. for about $27 billion, which would be among the richest ever private takeover offers in the U.S.
The proposed deal comes amid a flurry of activity by buyout groups to take public companies private.
It would rank behind a proposed $32 billion buyout of the Texas utility TXU Corp. by a group including KKR and Texas Pacific Group. If that deal is completed, it would be the largest private takeover in U.S. corporate history.
KKR has offered $34 a share for First Data, a premium of about 26 percent over First Data's closing price on Friday.
First Data shares rose $5.55, or 21 percent, to close at $32.45 Monday on the New York Stock Exchange after briefly rising to a 52-week high of $32.90.
Under terms of the agreement, First Data can solicit third party proposals over the next 50 days and the company said it plans to actively do so.
HIGH COURT RULING REACHED ON CLIMATE CHANGE
WASHINGTON The Supreme Court rebuked the Bush administration Monday for its inaction on global warming in a decision that could lead to more fuel-efficient cars as early as next year.
The court, in a 5-4 ruling in its first case on climate change, declared that carbon dioxide and other greenhouse gases are air pollutants under the Clean Air Act.
The Environmental Protection Agency has the authority to regulate those emissions from new cars and trucks under the landmark environment law, and the "laundry list" of reasons it has given for declining to do so are insufficient, the court said.
The politics of global warming have changed dramatically since the court agreed last year to hear its first case on the subject, with many Republicans as well as Democrats now pressing for action. However, the administration has argued for a voluntary approach rather than new regulation.
UTILITY INDUSTRY DEALT LEGAL SETBACK
WASHINGTON The Supreme Court dealt a setback to the utility industry Monday, supporting a federal clean air initiative aimed at forcing power companies to install pollution control equipment on aging coal-fired power plants.
In a unanimous decision, the justices ruled against Duke Energy Corp. in a lawsuit originally brought by the Clinton administration, part of a massive enforcement effort targeting more than a dozen utilities.
Most companies settled with the government, but several Clinton-era cases involving more than two dozen power plants in the South and the Midwest are still pending. The remaining suits demand fines for past pollution that, if levied in full, would run into billions of dollars.
The justices ruled that the 4th U.S. Circuit Court of Appeals in Richmond, Va., overstepped its authority by implicitly invalidating 1980 Environmental Protection Agency regulations, interpreting them in a way that favored Duke Energy. The appeals court's decision "seems to us too far a stretch," Justice David Souter wrote.
MANUFACTURING INDEX DIPS IN MARCH
NEW YORK In yet another sign that U.S. economic growth may be slowing, manufacturing companies reported Monday that business expanded at a lower-than-expected pace in March even as prices surged for raw materials.
The Institute for Supply Management, a trade group of corporate purchasing executives, said its manufacturing index registered 50.9 in March, below the February reading of 52.3 and Wall Street's expectation of 51.
A reading above 50 indicates growth for the sector, while a reading below 50 indicates contraction.
Despite the sluggish growth, prices appeared to be surging for certain commodities, including aluminum, cobalt, copper, corn, corrugated containers, diesel fuel, natural gas and steel, as demand increased around the world. The ISM's price index shot up to 65.5 in March from 59 in February, causing unease among analysts and investors.
Employment and manufacturers' inventory levels also declined.
STANDOFF IN IRAN RESULTS IN HIGHER OIL PRICES
NEW YORK Oil prices rose slightly Monday, after reports of a U.S. citizen missing in Iran added to fears that the standoff between Iran and the West could escalate into a conflict that would disrupt crude supplies.
However, they finished below $66 a barrel, slipping from earlier highs after Iran's chief international negotiator called for an end to "the language of force" in the dispute over the 15 British sailors and marines captured in contested waters of the Persian Gulf, and said there was no need to put the crew which has been held captive for 11 days on trial.
Crude oil futures on the New York Mercantile Exchange are nearly 7 percent higher than they were on March 22, right before the British sailors were captured.
Iran is located along the Strait of Hormuz, through which tankers ship about 17 million barrels of crude oil a day, according to the U.S. Energy Information Administration. That accounts for two-fifths of the world's crude oil traded by tanker, and about one-fifth of total oil production.