NATIONAL BRIEFING

Tuesday, November 25, 2008

INVESTING

Mutual Fund Backing Extended

The Treasury Department said it is extending a program to bolster the money-market mutual fund industry until April 30 "to support ongoing stability in this market." The temporary program had been slated to expire on Dec. 18.

Treasury set up the program in September, a period of intense financial market turmoil that led many investors to withdraw money from the popular investment vehicles. The government is tapping a $50 billion Depression-era fund to provide the guarantees. Mutual funds pay a fee to participate in the program.

Treasury last week agreed to be a buyer of last resort to assist in the liquidation of the Reserve Fund's U.S. Government Fund due to "unique and extraordinary circumstances."

DEFENSE

Boeing Probing Foreign Debris

Boeing said production of CH-47 Chinook helicopters and V-22 Osprey tiltrotor planes remains halted at a Pennsylvania plant as the Defense Department investigates foreign debris found in aircraft built at the site.

Employees continue to report for shifts even though production has been stopped at the Ridley Park plant outside of Philadelphia, Boeing spokesman John Williamson said.

The plant received a corrective-action request from the U.S. Defense Contract Management Agency that halted government acceptance of any aircraft from the site after a foreign object was discovered in a V-22 in production, Williamson said.

MERGERS & ACQUISITIONS

Alpharma Accepts Buyout Offer

Alpharma agreed to King Pharmaceuticals' $1.6 billion cash takeover offer, ending the drugmakers' months-long battle. King said it will pay $37 per share for Alpharma, representing a 54 percent premium to Alpharma's stock price on Aug. 21, the last trading day before King's initial, $33-per-share bid.

Both companies' boards have unanimously approved the deal.

INSURANCE

Greenberg Settlement Derailed

A settlement between former American International Group chief executive Maurice R. "Hank" Greenberg and New York state officials suing him for accounting fraud was derailed when the company collapsed. David Ellenhorn, an assistant New York attorney general, said the state had reached a verbal agreement with Greenberg and former AIG finance chief Howard Smith in September, before the insurer was bailed out by the federal government.

Ellenhorn declined to provide details of the proposed settlement, or why AIG's collapse scuttled it. Greenberg and Smith are accused by state officials of using sham transactions to hide losses and inflate reserves at AIG.

AIRLINES

Northwest Attendants Sue Delta

The union that represents Northwest Airlines flight attendants is suing Delta Air Lines to block the world's biggest carrier from starting the process to integrate the two carriers' seniority lists until the combined group is given the opportunity to vote on union representation.

Northwest's 8,000 flight attendants are represented by the Association of Flight Attendants-CWA, while Delta's 14,000 flight attendants are not part of a union. Delta bought Northwest for $2.8 billion in stock on Oct. 29.

Federal rules allow for a post-merger union election involving workers from two airlines if, among other things, it is determined that a single carrier exists. But in its suit filed in U.S. District Court in Washington, the AFA-CWA said it has not yet filed its application with the National Mediation Board seeking a single-carrier determination that would prompt a union representation vote.

EARNINGS

Hewlett-Packard said its fourth-quarter profit slipped 2 percent, to $2.11 billion, but the results edged past Wall Street's forecast as strong laptop sales offset falling printer orders. Sales rose 19 percent, to $33.6 billion. For the year, profit rose 15 percent, to $8.33 billion. Revenue rose 13 percent, to $118.36 billion.

TREASURY BILLS

T-bill rates were mixed. The discount rate on three-month Treasury bills auctioned yesterday was unchanged from a week ago, at 0.15 percent. Rates on six-month bills fell to 0.49 percent from 0.84 percent, setting new all-time lows as investors continue to flock to the safety of Treasury securities. The annualized return to investors is 0.152 percent for three-month bills, with a $10,000 bill selling for $9,996.25, and 0.498 percent for a six-month bill selling for $9,975.36. Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, fell to 0.96 percent last week from 1.12 percent two weeks ago.

Compiled from reports by Washington Post staff writers, the Associated Press and Bloomberg News.