PRESS DIGEST- Financial Times - Sept 26
Sept 26 The following are the top stories in the Financial Times. Reuters has not verified these stories and does not vouch for their accuracy.
By Joseph Lichterman
DETROIT Nov 14 Detroit must disclose the fee structure of a $350 million debtor-in-possession financing agreement, a bankruptcy judge ruled on Thursday, turning back the city's efforts to keep secret the cost of a controversial loan package, and leading to a sharp exchange with one of the bankers involved in the deal.
The city and Barclays Capital had requested the fees be kept a secret because the details are commercially sensitive and might raise the price of the loan.
But U.S. Bankruptcy Judge Steven Rhodes said in his ruling that it was "really quite irrelevant" that Barclays did not want to disclose the fees. He noted that the fee letter is subject to Michigan's Freedom of Information Act.
"It's even irrelevant that the city may have agreed to have kept it confidential because there's nothing in the Freedom of Information Act that exempts material that is subject to a confidentiality agreement between a private party and a public institution like the City of Detroit, or permits enforcement of such a confidentiality agreement," Rhodes said.
James Saakvitne, managing director of Barclays municipal liquidity origination group, testified that the bank's competitors would benefit from knowing how much Barclays charges for DIP financing.
When he added: "It's very important to us to be there to help the city," Rhodes interrupted him, saying: "Hold on. What's very important to you is to make money."
Saakvitne later warned that, "if all fees are going to be made public, that might put a real chill in the market and (scare off) lenders from being willing to show their pricing model."
"So much for being willing to help the city, huh?" Rhodes responded.
Detroit reached the loan agreement with Barclays, a unit of Britain's Barclay's Plc, in October, but the deal still must be approved by Judge Rhodes. About $230 million of the proceeds would be used to end interest-rate swaps contracts that the city has with Bank of America Corp's Merrill Lynch Capital Services and UBS AG. The swaps were related to debt sold in an effort to help Detroit make payments into city pension funds.
About $120 million of the DIP financing would be used to improve city services. The financing would be largely secured with a pledge of Detroit's income tax and casino tax revenue. Bond insurers and others have objected to Detroit's proposal to pay off its swap counterparties ahead of other creditors.
Detroit's unions, pension systems, bond insurers and others also objected to the Barclays fee letter being filed under seal. Rhodes, who is overseeing the historic municipal bankruptcy case Detroit filed in July, has scheduled a hearing beginning Dec. 10 to decide whether or not to approve the loan.
Sept 26 The following are the top stories on the business pages of British newspapers. Reuters has not verified these stories and does not vouch for their accuracy.
TOKYO, Sept 26 Asian shares began the week under a cloud on Monday after losses on Wall Street, as investors' attention turned from central banks to American politics ahead of the first U.S. presidential debate.