Roundup: Alcoa sets Nov. 1 date for breakup; Chesapeake receives subpoena on accounting practices; more
Alcoa sets Nov. 1 date for company's breakup
Alcoa Inc. has set a date for spinning off its struggling mining and smelting business from its fast-growing aerospace and automotive parts manufacturing operations.
The breakup of the 127-year-old company into two publicly traded entities will happen Nov. 1, Alcoa announced this week. The parts company will be renamed Arconic and will be led by CEO Klaus Kleinfeld, who has pushed for the separation to maximize the high-growth parts business and free it from being weighed down by the less-profitable commodities operation. The legacy business will retain the Alcoa name.
“Arconic will be a leading global provider of high-performance materials and engineered products to the aerospace, automotive and other growth industries, positioned for profitable growth,” the company said in a statement. “Alcoa Corporation will be a globally competitive industry leader in bauxite, alumina and aluminum products, positioned to succeed throughout the market cycle.”
Alcoa is asking shareholders to approve a reverse stock split aimed at raising the company's stock price before the change. Shareholders will vote on the proposal, which would convert three shares to one, at a special meeting Oct. 5 in New York.
Chesapeake subpoenaed for accounting practices
Chesapeake Energy Corp. said it's facing U.S. Justice Department scrutiny of how the natural gas explorer accounted for its assets.
The second-largest U.S. gas supplier said the subpoena sought “information on our accounting methodology for the acquisition and classification of oil and gas properties and related matters,” according to a regulatory filing Thursday.
Chesapeake has been at the center of antitrust probes of gas-lease auctions and government investigations into how it pays royalties to landowners. In Thursday's filing, the Oklahoma City-based company said it has been in discussions with federal and state agencies and continues to respond to demands for documents.
In early March, Chesapeake disclosed the company was cooperating in the federal prosecution of former CEO Aubrey McClendon for alleged bid rigging. Chesapeake received immunity under a Justice Department leniency program that shields companies from criminal charges if they are first to report antitrust violations. McClendon died in an Oklahoma City car crash on March 2.
Aluminum CEOs present caseagainst China subsidies to ITC
U.S. aluminum producers are clear that China is largely to blame for their woes. What they lack is consensus on what to do about it.
Alcoa Inc., the biggest U.S. producer, Century Aluminum Co., Novelis Inc. and other producers testified Thursday in front of the U.S. International Trade Commission. Several speakers said China is subsidizing its companies with tax breaks and loans, hurting U.S. makers of primary aluminum and downstream products.
The hearings are in response to a flood of aluminum exports from China that depressed international markets. China has set a priority of shuttering surplus industrial capacity as the country shifts from a capital-intensive to a consumption-led economy, and Chinese smelters pledged late last year to cut output as metal prices fell to the lowest in six years.
American Eagle names ex-Ralph Lauren exec CFO
American Eagle Outfitters said Thursday that it has hired a former Ralph Lauren Corp. executive to be its chief financial officer.
Bob Madore, a retail industry veteran, will oversee finance and merchandise planning among other duties at the South Side-based teen clothing retailer. He starts Oct. 28 and will replace Interim CFO Scott Hurd.
“I am excited to welcome Bob to American Eagle Outfitters and look forward to benefiting from his extensive financial and operational retail experience, global perspective and leadership as we execute our growth plan,” AEO Chief Executive Jay Schottenstein said in a statement.
Madore most recently was CFO at Ralph Lauren and has served in senior finance and retail roles at Nine West Group and New York & Co.
Hurd, who was elevated from chief accounting officer to acting CFO when Mary M. Boland retired earlier this year, will continue to have a senior role in finance, Schottenstein said.
Pending home sales slump
Fewer Americans signed contracts to buy homes in August, as a shortage of properties for sale is weighing on the market.
The National Association of Realtors said Thursday its seasonally adjusted pending home sales index fell 2.4 percent last month to 108.5, its lowest reading since January. The number of signed contracts slumped sharply in the South, the nation's largest housing market. But pending sales improved in the Northeast, Midwest and West.
Home purchases and prices have risen much of this year, but a slowdown surfaced in August as a lack of inventory has hurt the market. Would-be buyers are confronting increasingly limited choices and rising prices, offsetting the benefits of low mortgage rates.
Pending sales contracts are a barometer of future purchases — a sign that sales levels might fall in the coming months. A sale is typically completed a month or two after a contract is signed.
Peeps maker sues union over strike
The Pennsylvania company that makes marshmallow Peeps as well as Mike and Ike candies has filed a federal lawsuit claiming a workers' strike is illegal.
Bakery, Confectionary, Tobacco Workers and Grain Millers International Union Local 6 workers walked off the job Sept. 7.
The lawsuit filed Wednesday by Just Born Quality Confections says that violates a no-strike provision of a contract that expired June 18. The company says the no-strike clause was still in effect until Sept. 18 under a contract extension.
Ron Baker, the union's strategic campaign coordinator, said the lawsuit is frivolous and that the no-strike agreement expired with the contract.
The company said the strike was timed to hurt production of Peeps, which are made in the fall for the following Easter.
FCC delays vote on rules for cable boxes
Federal regulators have delayed a vote on requiring cable and satellite TV companies to make free apps to bypass the need for cable boxes.
Consumers could potentially save a few hundred dollars a year if they don't have to buy or rent a cable box and instead use apps for streaming gadgets they already have, such as Roku or Apple TV. The Federal Communications Commission also wanted to promote gadgets that would let people search easily for video from online services such as Netflix and YouTube, not just TV channels.
The plan has drawn criticism from the TV industry, Hollywood studios and dozens of lawmakers.
Volvo recalls 44K vehicles; leak can cause air bag problem
Volvo is recalling about 44,000 cars and SUVs in the United States because the air conditioning can leak water into the vehicles and cause air bags to malfunction.
The recall covers 2016 and 2017 XC90 SUVs and S90 sedans. Volvo says in documents filed with safety regulators that a drain hose may have been installed incorrectly at the factory.
The moisture may stop the air bags from deploying in a crash and may affect the engine management system. Volvo discovered the problem after getting reports from the field.
Dealers will inspect the drain hose and replace it if needed. Wiring may also need to be upgraded. The recall is expected to start Nov. 14.
Volvo plans to sell self-driving car in 5 years
Volvo Car Corp. plans to sell a self-driving vehicle to consumers in five years.
Volvo CEO Hakan Samuelsson said the car will have a steering wheel, but consumers can pay $10,000 extra for a full autopilot system that will let them relax while the car drives itself.
Samuelsson said Volvo is already making early versions of the vehicles. They'll be tested on public roads in Sweden next year and in London and China in 2018.
Volvo's consumer-focused strategy differs from rivals. Ford Motor Co. plans a self-driving car in five years, but it will go into car-sharing fleets.
— Staff and wire reports
