Showing posts with label Mondelez Makes Takeover Bid for Hershey. Show all posts
Showing posts with label Mondelez Makes Takeover Bid for Hershey. Show all posts

Friday, July 1, 2016

Claiming America"s Wilderness


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May 27, 2016 3:11 p.m. ET

A map of North America drawn in the first years of the 19th century offers an illuminating guide to the geopolitics of the time. The young nation, comprising 16 states east of the Mississippi and south of the Ohio, is well-charted, crisscrossed by rivers and roads and spotted with hamlets and burgeoning towns. The Northwest Territory, stretching from the Ohio River to the Great Lakes, is more tentatively drawn, with only the main trade routes along the rivers properly marked. To the west of the Mississippi the map is empty. A few rivers are traced hesitantly westward across this blankness, but they all peter out somewhere before the Continental Divide.

This blank space on the map was no void, but a highly contested area where the great European powers of Britain, France and Spain and the new United States of America competed for control. At the center of this strife was the great artery of the Mississippi, the vital trading port of New Orleans and the uncharted Louisiana Territory, so vast that no one knew its boundaries.

This is how Thomas Jefferson, viewed the West and the Deep South in 1803: as a map. And according to Julie M. Fensters riveting Jeffersons America, the nations third presidents main goal was acquisition. His feat in purchasing the Louisiana Territory from Napoleon in 1803 was a combination of timing, diplomatic skill and enormous luck. Although the purchase doubled the size of the nation, and the price per acre was a pittance, the new president came under severe criticism from the Federalists in the Senate for his reckless use of government money. Ms. Fensters forceful account, peppered with succinct formulations and wry wit, shows how Jefferson launched expeditions to stake his claim to this wilderness and its people.

Jeffersons explorers were tasked with demarcating the borders of the Louisiana Territory and exploring the regions main waterwaysthe Mississippi and Missouri rivers and the Red River, which today separates the states of Oklahoma and Arkansas from Texas. But the lands to be explored were already another old world. Far from venturing into an empty unknown, Jeffersons explorers, who paddled up the rivers and pushed through the snow, discovered a land that had been inhabited for millennia and defined by established and interconnected trade routes and kinships. Powerful chiefs controlled the access to these territories from great villages, some of which were twice the size of contemporary American towns like St. Louis.

Indian allies were crucial to the European powers competing for the West, and the explorers relied on diplomatic skills and gifts to win their help. By this time, Europeans had traded and hunted in the West for more than half a century. The fur-trading companies in the north were well-established. On reaching the Pacific Coast, one of Jeffersons expeditions would come across a Chinook man wearing a British sailors jacket and found the nations along the Columbia River trading teapots and top hats and using English expressions such as damned rascal.

Who were the explorers who could pass in the field as scientists rather than spies and were recruited personally by Jefferson because their curiosity overcame any sense of complacency? Ms. Fenster calls them Jeffersons other army, whose scientific skills were essential for the expeditions primary purpose of marking borders and claiming new land. Wherever he sent them, the American flag followed.

Dr. George Hunter, born in Edinburgh, was a prominent Philadelphia chemist in his late 40s when Jefferson commissioned him to explore the Ouachita, an alligator-infested, lumber-clogged river in the parched Southwest. He was joined by another Scotsman, William Dunbar, the suave son of a Highland baronet and a self-taught scientist who had reinvented himself as a ruthless slave-owner on a cotton plantation near Natchez in the Mississippi Territory.

Its difficult to say exactly what Hunter and Dunbar contributed to Jeffersons ambitions, since most of the territory they covered (in what is now Arkansas and Oklahoma) had already been explored. Nor was their journey especially successful. Their vessel, a Chinese junk full of brandy, gin and Madeira, got stuck in the mud. Then Hunter, who hadnt handled a military weapon since Washington crossed the Delaware, nearly shot himself in the head while cleaning his gun. Dunbar, exasperated by his partners incompetence, lost himself in naturalist pursuits and the measuring of very small things. (Classification, Ms. Fenster wryly proposes, is the nearly invisible weapon of the British aristocracy.) Still, they made it back to Jefferson alive and in as gentlemanly a manner as could be expected of two middle-aged Scottish explorers on a Chinese junk full of drink.

Meantime, the young, evocatively named Zebulon Pike was commissioned to find the source of the Mississippi. Pike was average or worse in many of the individual facets of exploration, Ms. Fenster writes, but he was second to no one in determination, a half-mad sense of imperative that he deftly inspired in his men. As winter closed in over the upper Mississippi, Pike pushed toward Leech Lake (in present-day Minnesota) through knee-deep snow with one companion and a severe case of trench foot.

Meriwether Lewis and William Clark, perhaps the best known of Jeffersons explorers, crossed the Rockies with a corps of young recruits to reach the Pacific Ocean. Though they seemed to personify the spirit that had birthed America as a free nation, their expedition was not as glamorous as the myth suggests. In late November 1805, when they finally arrived in sight of the Pacific, they were stuck on the northern bank of the Columbia River for 11 days in pouring rain while a freezing tide swamped their belongings, in a spot that is still called the Dismal Nitch.

While Lewis and Clark made their way back from the Pacific, Jefferson sent the Irishman and veteran surveyor Thomas Freeman to explore the Red River. Freeman may have had humble connections, but Ms. Fenster portrays him as the noblest of Jeffersons explorers, a man who seized this chance to prove himself. When the Spanish army, sent to apprehend the expedition, tried to cross to the American side of the Red River, Freeman stood his ground and stared down the Spanish officer. Thus was the boundary drawn without bloodshed.

But for all the derring-do of the explorers, this is the story of Jefferson and his tireless efforts to stretch the borders of the nation molded out of the British colonies. The Jefferson who emerges from this great narrative is not an enlightened man of science, culture and knowledge but a shrewd politician and a rather distant man. While the scandal of the Burr-Hamilton duel festered in Washington, Jefferson retreated to Monticello to plant 4,000 hedge seedlings. In Ms. Fensters characteristically surgical phrasing, the duel was like a three-way collision at an intersection, in which two vehicles are mangled and one keeps going, untouched.

Her story reads at times like a tall tale, and its certainly a mans tale. (There are few women in this history, and none was particularly fortunate.) The author takes narrative license, at times telling us what the explorers are thinking or feeling, but this strategy allows her to do what the best popular history should do: offer fresh insights into the minds of these 19th-century men, carrying you deeply, irresistibly, into a distant landscape. The explorers met with varying destinies, but for Jefferson the scheme to explore the West paid off. The nation was changed for the efforts of less than a hundred crewmen and their six primary leaders, Ms. Fenster writes. The Louisiana Territory belonged to Americansnot because money had been exchanged, but because those hundred men had gone a long way, so near to their own limits, in order to bring it home.

In the end, this book celebrates these values: single-mindedness, the capacity to proceed, to stick or go through (as Thomas Freeman put it), and above all the stubborn arrogance and wide-eyed curiosity of men determined to regard the world as new.

Source: http://www.wsj.com/articles/claiming-americas-wilderness-1464376314

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Thursday, June 30, 2016

Peabody Energy Files for Chapter 11 Bankruptcy Protection


Hershey shares surge on report of Mondelez bid
Updated April 14, 2016 6:37 p.m. ET

Coals slow collapse pushed the largest U.S. miner to declare bankruptcy Wednesday, marking the end of an era for big publicly traded companies that have fueled American industry for more than a century.

The bankruptcy of St. Louis-based Peabody Energy Corp. came after similar filings by Arch Coal Inc., Alpha Natural Resources Inc., Patriot Coal Corp. and Walter Energy Inc., WLTGQ -9.09 % all of which have recently sought chapter 11 protection.

Those companies have lost a combined $30 billion in stock-market value since 2010, and the coal sector has shed 31,000 jobs since 2009, according to the Mine Safety and Health Administration.

No large publicly listed U.S. coal miner has been spared by the forces crushing the coal industry, which include the decline in steel production, the conversion of coal-fired power plants to natural gas, which has become a cheap and abundant thanks to the shale boom, and new environmental regulations.

But despite miners struggles, coal has continued to fuel roughly one-third of the U.S. electric grid. Americans will get 33% of their electricity from gas in 2016, and 32% from coal, according to the Energy Information Administration. As recently as 2008, coal fueled half of U.S. power consumption. Coal prices have fallen by more than 60% since 2011, and 15% in the past 12 months.

Peabody Chief Executive Glenn Kellow called the current market historically challenged and said the bankruptcy filing was an in-court solution to Peabodys substantial debt burden.

Peabodys move sets the stage for a potentially bitter fight among creditors for its assets, which include massive open-pit complexes in Wyoming and Australia and underground mines in Illinois.

America may never again see a coal company as big as Peabody. Founded in 1883 by Francis Peabody with $100, a wagon and two mules, according to the companys corporate history, Peabody grew into a juggernaut, producing coal for customers in 25 countries and employing 7,600 people.

But its decline has been precipitous. In 2011, Peabodys value on the stock market briefly touched $20 billion. It is now worth $38 million. Many of its mines are still profitable, but not profitable enough to take care of the debt it has run up.

About half of U.S. coal is now being produced by bankrupt companies, which will be broken up to compensate private creditors. The producer of 2020 is going to look different than the producer of 2010, says James Stevenson of IHS Energy. Were going back to a model of predominantly private ownership.

The industrys setbacks have been damaging well beyond Wall Street, especially in the coal strongholds of Wyoming and Appalachia, wiping out tens of thousands of jobs and denting tax revenues.

Peabody estimates its future cleanup costs and other environmental obligations at $723 million, a concern for environmental activists. The miner shouldnt be allowed to walk away from the billions of dollars in damages to landscapes, wildlife, and crucial water supplies that are part of coals legacy, said Theo Spencer of the Natural Resources Defense Council.

Coal isnt the only commodity getting hammered by the weaker global economy. Prices for copper, steel, aluminum and other industrial goods have fallen steeply this decade as demand has weakened around the world, especially in China.

Peabodys move raises the default rate for U.S. metals and mining companies in the past 12 months to 29% from 25%, according to a report released Wednesday by Fitch Ratings.

Peabody expects a bankruptcy-court fight between lenders and bondholders over which of its mines secured lenders can lay claim to, according to people familiar with the matter.

Bondholders including Elliott Management Corp. and Aurelius Capital Management LP are expected to argue that Peabodys debt agreements significantly reduce lenders claims on mines and other assets, leaving more value for bondholders, the people said.

The firms are known for investing in distressed debt and a willingness to engage in legal battles to protect their investments. Elliott and Aurelius, which were founded respectively by billionaire Paul Singer and former Elliott Management portfolio manager Mark Brodsky, are poised to make big profits on a decade-plus legal fight with Argentina over defaulted sovereign bonds.

Many of the creditors expected to vie for control of Peabodys assets bought their debt at steep discounts, according to people familiar with the matter.

The companys bonds and loans have tumbled in recent years along with coal prices. A $1 billion series of bonds Peabody sold just in March 2015 recently traded for 7 cents on the dollar, according to MarketAxess.

Peabody said Wednesday it had obtained $800 million in emergency financing, arranged by Citigroup Inc., and has enough cash to keep running mines and delivering coal to customers. Citigroup declined to comment. Peabody last month said it had delayed interest-rate payments on two loans and warned it may not have sufficient liquidity to sustain operations, warning of a possible chapter 11 filing.

Peabody has now lost money in nine straight quarters and in 2015 posted a $2 billion deficit. The company has also been weighed down by its ill-timed acquisition of Australias Macarthur Coal Ltd. for $5.1 billion in 2011. Prices have been declining ever since.

As of the end of 2015, Peabody carried assets worth about $11 billion, and liabilities over $10 billion. That includes $4.3 billion of secured loans and bonds and $4.5 billion of unsecured bonds.

Peabody executives insist they believe the companys mines have a future. They cite the Environmental Protection Agencys estimates that as much as 802 million tons of coal will be burned in the U.S. in 2050, roughly the same as last year. Coal use is expected to decline to 680 million tons this year.

Peabody filed for chapter 11 protection for most of its U.S. entities in the bankruptcy court for the Eastern District of Missouri. All mines and offices are continuing to operate during this process, the company said, adding that none of its Australian operations is included in the filings.

The coal producer said it has also dropped plans to sell mines in New Mexico and Colorado.

Because many of Peabodys mines are still individually profitable, the filing feels mostly like a balance-sheet restructuring exercise more than an eliminating mines exercise, said Mark Levin, a BB&T Capital Markets managing director. However, he said that didnt eliminate the possibility that Peabody may take the opportunity to shed less profitable mines.

Write to John W. Miller at john.miller@wsj.com and Matt Jarzemsky at matthew.jarzemsky@wsj.com

Corrections & Amplifications: Citigroup declined to comment Thursday on $800 million in emergency financing it provided for Peabody Energy Corp., which filed for bankruptcy protection on Wednesday. The bank was not contacted for comment Wednesday. An earlier version of this article incorrectly said Citigroup didnt respond to a request for comment. (April 14, 2016)

Source: http://www.wsj.com/articles/peabody-energy-files-for-chapter-11-protection-from-creditors-1460533760

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