Apple takes steps for first debt sale; Judge considers Empire State Building REIT

April 29, 2013
TECHNOLOGY
Apple takes steps
for first debt sale

Apple took initial steps Monday for what would be its first debt sale ever, as the U.S. computer giant lays the groundwork for what would be one of the most anticipated bond sales of the year.

The company was to begin investor calls Monday led by Deutsche Bank and Goldman Sachs, a source familiar with the situation told IFR, and filed SEC paperwork for a debt offering.

The only major tech company without a penny of debt on its books, Apple stunned the markets last week by announcing it could sell debt for the first time to help fund a $100 billion capital return program for shareholders.

Any bond offer from the makers of the iconic iPhone and iPad would be highly sought after by investors, and it is believed the company could raise funds at a cheaper rate than even AAA-rated Microsoft.

Apple was not immediately available for comment. It was not known if the company would look to issue debt in dollars, sterling, euros or some mix of currencies.

As it unveiled its first quarterly profit decline in more than a decade last week, Apple said it plans to buy back some $60 billion of shares over the next three years.

According to analyst estimates, Apple has $145 billion of cash, but only $45 billion on hand in the United States, and thus not enough to fully fund the share buy-back program.

Research firm CreditSights said this meant that Apple would likely have to issue about $15 billion to $20 billion of debt for the next three years.

— Reuters

LEGAL
Judge considering Empire State REIT

A New York judge signaled Monday that he would probably allow the group that controls the Empire State Building to proceed with a plan to sell off the fabled New York landmark as part of a public stock offering despite the objections of dissident investors.

Malkin Holdings wants to roll the 102-story tower in midtown Manhattan into a real estate investment trust with 18 other properties and launch shares on the New York Stock Exchange through an IPO that could generate $1 billion depending upon demand for the shares at the time of the offering.

A small group of investors are seeking to stop Malkin, but on Monday they received a clear indication they were heading for defeat.

“My tentative view is that this matter is pretty straightforward,” said New York State Supreme Court Justice O. Peter Sherwood, noting that he was leaning toward giving the green light to the Malkin plan. He said he would issue his written decision by the end of Tuesday at the latest.

The building, which ranked as the world’s tallest for four decades after its completion in 1931, is one of the most recognizable features of the New York skyline.

The plan could bring a windfall to the Malkin family, which has ownership stakes in all the properties proposed for the REIT. Its stake could be valued as much as $714 million after the REIT goes public.

The Leona Helmsley estate, a major investor in the company that sublets and manages the Empire State Building and other properties in the REIT, could see its stake valued at about $1.03 billion, according to an filing with the Securities and Exchange Commission.

— Reuters

Also in Business

l  Eastman Kodak, the bankrupt photography pioneer, will spin off imaging businesses to its U.K. pension plan in a deal that settles $2.8 billion in claims against the company. Kodak’s personalized- and document-imaging businesses will be spun off for $650 million to the pension plan, Kodak’s largest creditor in the bankruptcy case, the company said Monday. Kodak, based in Rochester, N.Y., said it plans to file its plan Tuesday to reorganize and exit court protection.

l  Nissan Motor is recalling more than 123,000 Altima sedans in the United States to adjust the inflation of the spare tires, which could be over- or under-inflated. About 123,308 Altimas from model year 2013 are affected by the recall, according to documents filed the National Highway Traffic Safety Administration.

l  Honda Motor is recalling almost 46,000 Fit small cars in the United States and Canada to fix a problem with the electronic stability control system software. The recall affects 2012 and 2013 model year Fit Sport cars.

l  JPMorgan Chase named Matt Zames sole chief operating officer as Frank Bisignano departed to become chief executive of First Data. Bisignano’s exit buttresses Zames’s stature as a potential successor to chief executive Jamie Dimon, 57. Zames, 42, was promoted twice within 100 days last year as he helped Dimon regain control of a U.K. unit’s wayward bets on credit derivatives that cost the bank more than $6.2 billion. Zames, who began last year as co-head of the fixed-income business, was named chief investment officer in May and co-COO in July.

l  Sprint Nextel said SoftBank is allowing it to seek more information from Dish Network related to its rival bid for the third-largest U.S. cellphone company. Overland Park, Kan.-based Sprint has agreed to sell 70 percent of itself to Japan’s Softbank for $20.1 billion. But it recently got a competing $25.5 billion offer from Dish Network for the whole company.

— From news services

Coming Today

l  9 a.m.: S&P/Case-Shiller home-price index released.

l  10 a.m.: Consumer confidence index released.

l  Earnings: Aetna, BP, Pfizer.

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