Business & Finance
New concerns arose about the reliability of US oil imports from Venezuela, amid published reports that leftist President Hugo Chávez wants to sell his government's stake in refineries operated by Citgo in Louisiana and Texas. Citgo, while based in Houston, is owned by Venezuela's state oil company, PDVSA. Venezuela is the fourth-largest supplier of crude to the US, which buys half of what it sells annually. But relations between Chávez and the Bush administration are poor and, according to The Wall Street Journal, the oil policy of the Caracas government vis-à-vis the US "is moving away from pragmatic accommodation and toward open hostility." Chávez in recent weeks has been pursuing a closer supply relationship with China. Meanwhile, Valerio Energy Corp. of San Antonio, Texas, the largest independent refiner in the US, told The New York Times it would be interested in buying Citgo's assets, which it easily could refit to process crude from suppliers such as Saudi Arabia and Kuwait.
The automotive world was waiting to see what would happen next after the deadline for mediation efforts between General Motors and Fiat SpA of Italy expired with the two sides remaining deadlocked. Fiat shares fell 6 percent in early trading Wednesday as the money-losing company delayed in announcing whether it will try to force a takeover by GM under a clause in their five-year-old partnership deal. Such an attempt could lead to a protracted legal battle, some analysts said, although others expected the companies to agree on a cash settlement that would avoid a fight. Fiat issued a statement maintaining that its "put option" - the technical term for the buyout clause - now is in effect and is valid through July 24, 2010. GM countered, repeating its contention that Fiat voided the deal two years ago by selling off shares that reduced the US automaker's stake from 20 percent to 10 percent.
Tower Automotive, Inc., which makes frames and other parts for GM, Ford, and DaimlerChrysler, filed for bankruptcy to address liquidity needs and facilitate debt restructuring. The company has annual revenues of about $3 billion but is struggling to cope with reduced vehicle production and soaring prices of raw materials. Tower is based in Novi, Mich., and employs 12,000 people.
One day after agreeing to buy AT&T, its former parent, SBC Communications told investors it will eliminate 13,000 jobs, mainly through attrition. The cuts will be in addition to 12,000 SBC announced before the deal was reached. AT&T also was planning significant reductions to its workforce prior to the $16 billion merger.