Bank of America: Investors extract a record payout
In the largest settlement over soured mortgage securities, Bank of America agreed to pay $8.5 billion to settle claims by a prominent group of investors that includes Pimco and BlackRock. The agreement covers 530 mortgage trusts originally valued at $424 billion. Investors alleged that Countrywide Financial, which Bank of America bought in 2008, misrepresented the quality of the underlying mortgages that it bundled into securities to sell on Wall Street. They also claimed the bank mishandled the paperwork when home-owners fell behind on payments. The bank projects a second-quarter loss from $8.6 billion to $9.1 billion in part because of the settlement, which still requires court approval.
Dodgers: A strikeout for a fabled franchise
The Los Angeles Dodgers filed for bankruptcy on June 27 to seek protection from creditors should it not make payroll and other bills. The move came after Major League Baseball rejected the team’s deal to sell TV rights to Fox Sports, saying it is not in the Dodgers’ long-term interest. The team has since secured an interim loan to cover expenses.
Carrefour: Power struggle over Brazilian merger
French retailer Carrefour is considering merging its Brazilian operations with those of Pão de Açúcar, the largest retailer in the country. The combined 2011 revenue of the retailers would be more than $42 billion. French retailer Casino Guichard Perrachon, which also operates in Brazil, has called the proposed deal “illegal” and “hostile.” Casino owns 37 percent of Pão de Açúcar and was set to take full control of the company in 2012, according to a 2005 agreement. Any deal would undergo an antitrust review by local regulators.
Legg Mason: Flagship fund dumps Kodak
Bill Miller, chief investment officer at Legg Mason, sold off all his Value Trust fund’s 18.2 million shares of Eastman Kodak after sticking with the imaging company for more than a decade. Miller bought Kodak at around $56 in 2000, expecting the shares nearly to double. By 2005, his firm owned a quarter of the company. Kodak’s value has fallen with the growth of digital photography, so Miller started selling shares in late 2010 for an average of $3.89. Kodak says Legg Mason is still its top investor, though in different funds.
Renault: Revving up a Soviet classic
The Russian owner of Lada, the iconic Soviet car, plans to invest $5.4 billion over the next three years to develop seven models, including replacements for several cars introduced in 1982. Renault, which owns a quarter of Lada’s parent and is in talks to acquire control, will provide the underpinnings for some new designs, such as a minivan. Although Ladas account for 24 percent of the autos sold in Russia, GM, Volkswagen and Ford are all looking to gain traction in what is soon to be Europe’s largest car market.