July 14, 2008
Tyson Backs Syntroleum Corp
Tulsa-based Syntroleum Corp. said in a regulatory filing that it has reached an agreement with Tyson Foods Inc. to have the opportunity to receive credit support for Syntroleum's share of Dynamic Fuels LLC.
Syntroleum and Tyson each own 50 percent of Dynamic Fuels, a venture which plans to convert low-grade inedible fats and greases into renewable synthetic diesel, jet and military fuel.Dynamic Fuels recently received approval from the Louisiana State Bond Commission for $100 million in tax-exempt Gulf Opportunity Zone bonds to fund the building of the company's first renewable synthetic fuels facility in Geismar.
The bonds are expected to be issued in the third quarter of 2008, and will require a $100 million letter of credit to guarantee Dynamic Fuels' obligations, Syntroleum stated in the filing.
Syntroleum officials said the company is in discussions with third parties to obtain credit support for its 50 percent share of the letter of credit. Tyson has agreed to provide credit support for any portion of Syntroleum's share that its partner is otherwise unable to obtain, according to the filing.
Under the deal, Tyson would receive warrants to purchase Syntroleum common stock at 0.16 shares for each dollar of credit support provided. The exercise price would be 1 cent per share. The warrants will expire four years from issuance.
The Dynamic Fuels venture calls for building and operating multiple renewable synthetic fuel facilities, with production on the first site beginning in 2010.
AirTran to cut 480 pilots, attendants
Discount carrier AirTran Airways is cutting 480 jobs, or more than 5 percent of its work force, amid difficult financial times due largely to soaring fuel prices, a company executive said Monday.
The Orlando, Fla.-based airline told employees that 180 pilot jobs and 300 flight attendant jobs will be eliminated effective Sept. 6, according to Kevin Healy, senior vice president of marketing and planning for AirTran Holdings Inc. Flights also will be reduced in September, Healy said.
AirTran is offering an early-out voluntary program for employees with at least five years of service. Eligible employees who are accepted for the program will receive six to 12 months of medical benefits and six to 12 months of flight privileges, Healy said.
AirTran has about 8,900 employees, including 1,450 pilots and 2,000 flight attendants.
On Wednesday, AirTran told employees it is seeking to cut its overall employee pay by about 10 percent.
Procter & Gamble to raise prices
Procter & Gamble Co., the maker of Tide laundry detergent and Head & Shoulders shampoo, will raise prices as much as 16 percent because of higher costs for plastic, energy and paper.
The increases are the Cincinnati-based company's steepest in at least 18 months. Procter & Gamble is betting that customers will continue to buy its Gillette shaving cream and Ivory soap rather than switching to store brands with lower prices promoted by Kroger Co. and Wal-Mart Stores Inc.
"Consumers are conditioned to expect that price increases are here to stay, and they are going to see that across the board," said Peter Sorrentino, who helps oversee assets of $16.7 billion at Huntington Asset Advisors. "They will try the store brands, but if the product performance isn't there, they will switch back." His firm owns P&G shares.
United seeks Moscow delay
United Airlines is moving to postpone the debut of its flights between the United States and Moscow until next year because of the unprecedented rise in fuel prices.
The nation's second-largest airline blames the softening of the economy as well as oil prices. Crude oil has jumped more than 20 percent since the unit of UAL Corp. applied for the route between Washington-Dulles airport and Moscow.
United asked the Department of Transportation in a filing last Wednesday to defer the flight service from October until March 29, when demand should be higher. It says operating costs were going to be significantly higher as a result of the oil price rise.
Refiners eligible for tax credit
U.S. oil refiners will be eligible for a 50 percent tax credit starting July 9 if they agree to expand plant capacity, said U.S. Sen. Kay Bailey Hutchison, R-Texas.
Hutchison said the provision she pushed for in 2005 energy legislation offers the credit to refiners that agree to increase daily processing capacity by at least 5 percent.
"Expanding refining capacity will alleviate prices at the pump by increasing our fuel supply," Hutchison said Monday.
The U.S. Treasury Department issued temporary regulations late last week to implement the tax incentives. The temporary rules take effect July 9, when they are published in the government's Federal Register, Hutchison said.
The new tax rules "could make a difference as far as additional supply in three to four years," Charles Drevna, president of the National Petrochemical & Refiners Association, said in a telephone interview.
Report says $200 barrel oil unlikely
Oil is "unlikely" to rise above $200 a barrel within the next six months, while an increase above $150 is "possible," Merrill Lynch & Co. said today.
A $200 oil price would cause energy's share of global gross domestic product to rise to 18 percent from about 10 percent now, according to London-based analysts including Francisco Blanch. The current figure is on par with one during the 1979 energy crisis, the analysts said in a note Monday.
Such a move would "start biting hard across a broad range of economic sectors," the analysts said.
Because of this, oil could hit $200 a barrel in the next nine months to a year only "if monetary policy around the world remains extremely lax" and inflates global GDP in dollar terms, the report said.
Originally published by Bloomberg, AP, and staff reports.
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