Cendant Corp., the world's largest hotel franchiser and owner of the Avis and Budget car-rental chains, said it will spin off the PHH Corp., a noncore mortgage business valued at about $1 billion. The unit's stock will be distributed to shareholders, Cendant said Tuesday. The announcement ends speculation about a potential sale of PHH, which also manages 1 million vehicles for corporate clients and governmental motor pools. In August, Cendant ended talks with a potential buyer without identifying the other party.
AmSouth Bancorp. and its main subsidiary, AmSouth Bank, major financial services institutions in the Southeast, will pay $50 million in fines for lax oversight related to a fraud investigation. The parent company, based in Birmingham, Ala., will pay the federal goverment $40 million in lieu of prosecution for failing to report suspicious financial activity, the Birmingham Business Journal reported. The settlement also includes a $10 million civil penalty.
Money-losing retail giant KarstadtQuelle AG said it must have a deal on job cuts and longer working hours with unions representing its employees if creditors are to help finance a necessary reorganization. The company hopes to persuade its lenders to put up more than $610 million for the effort, but a spokesman said, "We'll have a problem" if an agreement isn't reached by week's end. One union negotiator, however, characterized the positions of the two sides as "extremely far apart." KarstadtQuelle has lost more than half its market value since February and is about $4 billion in debt. Earlier this month, it announced plans to sell 77 of its 181 stores, but rather than eliminate sales jobs it will lay off up to 3,000 people in "administrative areas," a senior executive told the financial journal Capital. KarstadtQuelle is the result of a merger between the nation's largest department store group and its top mail-order company.