Saturday, September 28, 2002

Business digest

Citigroup holds talks for settlement

        NEW YORK — Citigroup Inc. is in talks with regulators to settle conflict-of-interest probes by offering to pay a fine of hundreds of millions of dollars and separate research from investment banking, people familiar with the matter said.

        Regulators want the settlement to serve as a model for other securities firms under investigation, one of the people said.

        The biggest financial services company met to discuss the proposals with the Securities and Exchange Commission, NASD and New York Stock Exchange.

        State and federal regulators are examining whether about a dozen firms pursued investment banking business by writing favorable stock reports and handing out sought-after initial public offering shares to executives.

        Splitting underwriting and advisory work from research, used by many firms to attract banking business, would set a new standard on Wall Street.

Coffee organization to impose standards

        LONDON - Faced with a glut of coffee and a ruinous slide in prices, the International Coffee Organization is imposing the first-ever standards to improve the quality of beans that reach market and, it hopes, to boost the incomes of struggling farmers.

        The 63-nation organization argued Friday that standards for better quality would help to squeeze out the poorest beans that have flooded the market, driven down prices and contributed to one of the worst crises in the industry's history.

        Scaling back the surplus of beans also would require coffee farmers to diversify into other crops and commodities.

        However, delegates who met for four days at the group's London headquarters said diversification efforts have suffered from a lack of funds and from the trade barriers that rich countries impose on many exports from developing nations.

        The International Coffee Organization is an intergovernmental body of 45 exporting countries and 18 importing countries.

        Its influence has waned since 1993, when the United States, the world's biggest coffee consumer and a founder member of the group, withdrew from it after a dispute over quotas.

Government would back $165M loan

        INDIANAPOLIS - The federal government has agreed to guarantee most of a $165 million loan for Indianapolis-based American Trans Air.

        The Air Transportation Stabilization Board agreed to back a $148.5 million loan, should ATA default.

        The loan guarantee, approved late Thursday, is part of congressional action taken to help stabilize the airline industry after the Sept. 11 terrorist attacks.

        ATA had been profitable prior to the attacks. Since then, the company has lost money, culminating in a $58 million loss in the second quarter ending June 30.

Transportation firm to cut 2,000 jobs

        MONTREAL - Bombardier Aerospace said Friday it was cutting almost 2,000 jobs in Canada, the United States and the United Kingdom, but expects to meet its earnings target for the year.

        The cuts represent about 6.5 percent of its worldwide aerospace work force.

        The transportation giant, known for producing the Learjet and other aircraft, said the job cuts would include 1,280 in Canada; 240 in Belfast, Northern Ireland; 210 in Tucson, Ariz.; 50 in Wichita, Kan.; and 200 in other locations.

        Bombardier, which employed 31,000 people in its aerospace units worldwide before the cuts, also announced temporary halts in production of aircraft in Toronto and Montreal that would affect another 1,600 workers.

        Friday's moves “will enhance Bombardier's financial flexibility in the context of the uncertainties of this unpredictable economic environment,” such as a possible war with Iraq and financial trouble at the world's airlines.

Xerox reassigns company treasurer

        STAMFORD, Conn. — Xerox Corp. removed Gregory Tayler as treasurer of the world's largest copier company and reassigned him to an unspecified job in Canada as federal prosecutors start investigating the company's accounting.

        Chief financial officer Lawrence Zimmerman will act as treasurer until a successor is found, the Stamford, Conn.- based company said in a statement.

        Mr. Tayler's new assignment is effective immediately. Xerox shares fell as much as 7.8 percent.

        Mr. Tayler's knowledge of Canadian finance will help the transition to a new president and chief executive of the Canadian operation, Doug Lord, a spokeswoman said.

        Mr. Tayler was named in several shareholder lawsuits that allege accounting misconduct at Xerox, according to a filing with the Securities and Exchange Commission. He and other current and former executives may face civil charges, the Wall Street Journal reported Tuesday, citing people familiar with the inquiries.

3M grows from 6 to 7 businesses

        ST. PAUL, Minn. — 3M Co., the maker of products ranging from Post-it notes to medical inhalers, reorganized into seven businesses from six to give more focus to faster-growing markets such as health care, automotive and safety.

        The company's previous business divisions were transportation, graphics and safety; health care; industrial; consumer and office; electro and communications; and specialty materials.

        3M formed three new businesses from existing divisions: safety, security and protection services; display and graphics; and transportation.

        It will keep health care, industrial, consumer and office, and electro and communications.

        Specialty materials like Scotch Guard will become part of the consumer business, while products such as solvents will move to industrial, spokesman John Cornwell said.

        Chief Executive James McNerney, the former head of General Electric Aircraft Engines, is managing 2,500 cost-cutting projects, borrowing from methods he learned during his 18 years at GE.

        The new organization was developed by managers running the groups, Mr. Cornwell said.

        Three executives who are retiring helped create the new structure, he said.

Paper maker puts land up for sale

        STAMFORD, Conn. — MeadWestvaco Corp., which has been closing paper mills to cut costs, wants to sell 700,000 more acres of timberlands than previously planned because its remaining facilities won't need the wood.

        The second-biggest U.S. maker of coated paper used in magazines now has a third of its forests up for sale, the company said in a statement.

        It plans to sell the land within five years.

— From wire reports



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