In 2003, a group of scientists and executives from the National Institutes of Health, the Food and Drug Administration, the drug and medical-imaging industries, universities and nonprofit groups joined in a project that experts say had no precedent: a collaborative effort to find the biological markers that show the progression of Alzheimer’s disease in the human brain.
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Michael Temchine for The New York Times
Neil Buckholtz, chief of the Dementias of Aging Branch at the National Institute of Aging, in the National Institutes of Health.
Backstory with the Times's Gina Kolota
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Now, the effort is bearing fruit with a wealth of recent scientific papers on the early diagnosis of Alzheimer’s using methods like PET scans and tests of spinal fluid. More than 100 studies are under way to test drugs that might slow or stop the disease.
And the collaboration is already serving as a model for similar efforts against Parkinson’s disease. A $40 million project to look for biomarkers for Parkinson’s, sponsored by the Michael J. Fox Foundation, plans to enroll 600 study subjects in the United States and Europe.
The work on Alzheimer’s “is the precedent,” said Holly Barkhymer, a spokeswoman for the foundation. “We’re really excited.”
The key to the Alzheimer’s project was an agreement as ambitious as its goal: not just to raise money, not just to do research on a vast scale, but also to share all the data, making every single finding public immediately, available to anyone with a computer anywhere in the world.
No one would own the data. No one could submit patent applications, though private companies would ultimately profit from any drugs or imaging tests developed as a result of the effort.
“It was unbelievable,” said Dr. John Q. Trojanowski, an Alzheimer’s researcher at the University of Pennsylvania. “It’s not science the way most of us have practiced it in our careers. But we all realized that we would never get biomarkers unless all of us parked our egos and intellectual-property noses outside the door and agreed that all of our data would be public immediately.”
Biomarkers are not necessarily definitive. It remains to be seen how many people who have them actually get the disease. But that is part of the research project.
The idea for the collaboration, known as ADNI, for Alzheimer’s Disease Neuroimaging Initiative, emerged about 10 years ago during a casual conversation in a car.
Neil S. Buckholtz, chief of the Dementias of Aging Branch at the National Institute on Aging, was in Indianapolis, and Dr. William Potter, a neuroscientist at Eli Lilly and his longtime friend, was driving him to the airport.
Dr. Potter had recently left the National Institutes of Health and he had been thinking about how to speed the glacial progress of Alzheimer’s drug research.
“We wanted to get out of what I called 19th-century drug development — give a drug and hope it does something,” Dr. Potter recalled in an interview on Thursday. “What was needed was to find some way of seeing what was happening in the brain as Alzheimer’s progressed and asking if experimental drugs could alter that progression.”
Scientists were looking for biomarkers, but they were not getting very far.
“The problem in the field was that you had many different scientists in many different universities doing their own research with their own patients and with their own methods,” said Dr. Michael W. Weiner of the San Francisco Department of Veterans Affairs, who directs ADNI. “Different people using different methods on different subjects in different places were getting different results, which is not surprising. What was needed was to get everyone together and to get a common data set.”
But that would require a huge effort. No company could do it alone, and neither could individual researchers. The project would require 800 subjects, some with normal memories, some with memory impairment, some with Alzheimer’s, who would be tested for possible biomarkers and followed for years to see whether these markers signaled the disease’s progression.
Suddenly, in the car as he drove Dr. Buckholtz to the airport, “everything just jelled,” Dr. Potter said, adding, “Maybe this was important enough to get people to work together and coordinate in a way that hadn’t been possible before.”
The idea, Dr. Buckholtz said, was that the government’s National Institutes of Health “could serve as an honest broker between the pharmaceutical industry and academia.”
Soon, Dr. Richard J. Hodes, the director of the National Institute on Aging, was on the phone with Dr. Steven M. Paul, a former scientific director at the National Institute of Mental Health who had recently left to head central-nervous-system research at Eli Lilly. Dr. Paul offered to ask other drug companies to raise money.
It turned out to be relatively easy to get companies to agree, Dr. Paul said. It had become clear that the problem of finding good diagnostic tools was huge and complex. “We were better off working together than individually,” he said.
A critical aspect of the project was the Foundation for the National Institutes of Health, which was set up by Congress to raise private funds on behalf of the institutes. Dr. Paul was on its board.
Thursday, August 12, 2010
High flyers face delivery pang as market plays safe
MUMBAI: Some of the high momentum stocks, which have consistently been scaling new highs in the current market, have seen a decline in delivery-based volumes over the past few days.
This could be an indication of a slowdown in genuine fund-based activity, as they reach their peak. The trend is also evident even among a few blue chips, which, till a few days ago, were trading with a healthy delivery ratio on the back of a major institutional buying. Prospective investors are expected to take a cautious view of this trading pattern and wait for share prices to correct before re-entering the counters, according to brokers.
Delivery-based volumes are the quantity of traded shares which actually change hands and are not squared off on the same day. The delivery ratio is calculated as a percentage of the number of shares actually delivered in the market in relation to the total number of shares traded on a particular day.
According to ST Gerela, CEO, Satco Securities and Financial Services, if there is a fall in delivery ratio in high momentum shares of a fundamentally strong company, it could mean that investors are staying away from trading for some time due to the high price. They, however, are likely to make a comeback later to gain from the company’s growth story. However, one has to be cautious about fundamentally weak companies where delivery ratio has continuously been low. “If shares of such companies have been on a rise on low delivery ratio, that may be because of insider activity which is not in the interest of retail investors,” he said.
A lot of stock-specific activity is seen in the market, even though broader indices have not moved much, according to Rajesh Baheti, managing director, Crossseas Capital Services. There could be the possibility of speculative interests driving some stocks due to lack of wider participation of investors in their trading, he added.
Also Read
→ Indian markets will remain vulnerable to weak sentiments abroad: Deepesh Pandey
→ Fed's limited measures weigh on world markets
→ Recovery woes weigh on Asian markets
→ Key Asia property markets may face slower H2
→ Indian market not going to fall apart: Samir Arora
State Bank of India, which touched a new high on Thursday, recorded delivery-based volumes of 19.3% on the day and 9.5% on Wednesday, compared to 25% and 31% on the two previous days. Only 9.5% of the total traded volumes in WABCO-TVS resulted in deliveries on Wednesday, when the stock hit a new high of `1,058. The ratio was much lower than 34% and 43%, respectively, during the previous two days. It, however, bounced back to 26% on Thursday. Shriram Transport Finance is another notable case, where the ratio slipped 12.3% on Wednesday from 56% and 43% during the previous two days. It, however, rose substantially to 32% on Thursday, when the stock hit a new high of `761 during intra-day trading.
There has been a slowdown in fund-based buying during the past few days, impacting delivery-based trading on bourses. According to data available with the BSE, foreign institutional investors were net-sellers for `86 crore while domestic institutional investors made small purchases worth `24 crore on Wednesday.
This could be an indication of a slowdown in genuine fund-based activity, as they reach their peak. The trend is also evident even among a few blue chips, which, till a few days ago, were trading with a healthy delivery ratio on the back of a major institutional buying. Prospective investors are expected to take a cautious view of this trading pattern and wait for share prices to correct before re-entering the counters, according to brokers.
Delivery-based volumes are the quantity of traded shares which actually change hands and are not squared off on the same day. The delivery ratio is calculated as a percentage of the number of shares actually delivered in the market in relation to the total number of shares traded on a particular day.
According to ST Gerela, CEO, Satco Securities and Financial Services, if there is a fall in delivery ratio in high momentum shares of a fundamentally strong company, it could mean that investors are staying away from trading for some time due to the high price. They, however, are likely to make a comeback later to gain from the company’s growth story. However, one has to be cautious about fundamentally weak companies where delivery ratio has continuously been low. “If shares of such companies have been on a rise on low delivery ratio, that may be because of insider activity which is not in the interest of retail investors,” he said.
A lot of stock-specific activity is seen in the market, even though broader indices have not moved much, according to Rajesh Baheti, managing director, Crossseas Capital Services. There could be the possibility of speculative interests driving some stocks due to lack of wider participation of investors in their trading, he added.
Also Read
→ Indian markets will remain vulnerable to weak sentiments abroad: Deepesh Pandey
→ Fed's limited measures weigh on world markets
→ Recovery woes weigh on Asian markets
→ Key Asia property markets may face slower H2
→ Indian market not going to fall apart: Samir Arora
State Bank of India, which touched a new high on Thursday, recorded delivery-based volumes of 19.3% on the day and 9.5% on Wednesday, compared to 25% and 31% on the two previous days. Only 9.5% of the total traded volumes in WABCO-TVS resulted in deliveries on Wednesday, when the stock hit a new high of `1,058. The ratio was much lower than 34% and 43%, respectively, during the previous two days. It, however, bounced back to 26% on Thursday. Shriram Transport Finance is another notable case, where the ratio slipped 12.3% on Wednesday from 56% and 43% during the previous two days. It, however, rose substantially to 32% on Thursday, when the stock hit a new high of `761 during intra-day trading.
There has been a slowdown in fund-based buying during the past few days, impacting delivery-based trading on bourses. According to data available with the BSE, foreign institutional investors were net-sellers for `86 crore while domestic institutional investors made small purchases worth `24 crore on Wednesday.
Zardari makes first visit to flood victims
Asif Ali Zardari, Pakistan’s president, paid his first visit to victims of the country’s floods on Thursday, seeking to defuse widespread anger at his decision to visit France and the UK at the start of the crisis.
The disaster has sparked an outpouring of criticism of the government’s response. An estimated 14m people have been affected by the floods, with at least 1.8m made homeless and many left in need of emergency food aid and medical care.
EDITOR’S CHOICE
Widening flood disaster dwarfs aid efforts - Aug-11
Audio slideshow: Pakistan’s devastating floods - Aug-12
In pictures: Pakistan floods spread - Aug-04
Opinion: Stable Pakistan is crucial - Aug-09
Zardari to face anger of flood victims - Aug-09
UN says up to 6m affected by Pakistan floods - Aug-08
Pakistani television showed Mr Zardari walking along a mile-long barrage that is holding back the swollen Indus River at the town of Sukkur, before comforting several flood victims gathered at a nearby camp.
A senior government official acknowledged that Mr Zardari’s standing had suffered from his decision to go ahead with his foreign trips last week. “There is a build-up of criticism of the president,” the official said. “It may be too late to overcome the damage done to his credentials.”
Mr Zardari argued that he was taking Pakistan’s long-term interests into account by pushing ahead with a trip vital to bolstering his country’s European ties.
The military – which remains Pakistan’s most powerful institution, having ruled the country for decades – has taken the lead in the state’s response to the floods, which began in late July.
Audio slideshow: Pakistan’s devastating floods
Matthew Green reports from Pakistan, having just visited a makeshift camp for flood victims in Nowshera, one of the worst-affected areas in the north-west of the country
In Nowshera, a town north-west of Islamabad, flood victims said they had yet to receive state assistance.
“There is an overwhelming problem on the ground and inadequate efforts by the government to assist the people,” said Maimoona Jan, a widow and mother of five children waiting outside a doctor’s clinic. “Even the army’s work done by the helicopters is like a few drops in a river.”
The UN has appealed for $459m to fund a massive expansion of relief efforts to prevent disease and malnutrition claiming more than the estimated 1,600 lives already lost in the crisis.
The international response to the disaster intensified on Thursday as the US military deployed the first two of an additional 19 helicopters it plans to send to assist. Six US army helicopters diverted from Afghanistan last week have already begun delivering food in the Swat valley, a former stronghold of Taliban insurgents.
The UN says it is working to reach an estimated 6m people in need food aid, and hopes to reach 2m people in the most urgent need in about a week. Donations by Pakistani charities and state help is reaching some of the victims, but many more are still waiting for assistance.
The disaster has sparked an outpouring of criticism of the government’s response. An estimated 14m people have been affected by the floods, with at least 1.8m made homeless and many left in need of emergency food aid and medical care.
EDITOR’S CHOICE
Widening flood disaster dwarfs aid efforts - Aug-11
Audio slideshow: Pakistan’s devastating floods - Aug-12
In pictures: Pakistan floods spread - Aug-04
Opinion: Stable Pakistan is crucial - Aug-09
Zardari to face anger of flood victims - Aug-09
UN says up to 6m affected by Pakistan floods - Aug-08
Pakistani television showed Mr Zardari walking along a mile-long barrage that is holding back the swollen Indus River at the town of Sukkur, before comforting several flood victims gathered at a nearby camp.
A senior government official acknowledged that Mr Zardari’s standing had suffered from his decision to go ahead with his foreign trips last week. “There is a build-up of criticism of the president,” the official said. “It may be too late to overcome the damage done to his credentials.”
Mr Zardari argued that he was taking Pakistan’s long-term interests into account by pushing ahead with a trip vital to bolstering his country’s European ties.
The military – which remains Pakistan’s most powerful institution, having ruled the country for decades – has taken the lead in the state’s response to the floods, which began in late July.
Audio slideshow: Pakistan’s devastating floods
Matthew Green reports from Pakistan, having just visited a makeshift camp for flood victims in Nowshera, one of the worst-affected areas in the north-west of the country
In Nowshera, a town north-west of Islamabad, flood victims said they had yet to receive state assistance.
“There is an overwhelming problem on the ground and inadequate efforts by the government to assist the people,” said Maimoona Jan, a widow and mother of five children waiting outside a doctor’s clinic. “Even the army’s work done by the helicopters is like a few drops in a river.”
The UN has appealed for $459m to fund a massive expansion of relief efforts to prevent disease and malnutrition claiming more than the estimated 1,600 lives already lost in the crisis.
The international response to the disaster intensified on Thursday as the US military deployed the first two of an additional 19 helicopters it plans to send to assist. Six US army helicopters diverted from Afghanistan last week have already begun delivering food in the Swat valley, a former stronghold of Taliban insurgents.
The UN says it is working to reach an estimated 6m people in need food aid, and hopes to reach 2m people in the most urgent need in about a week. Donations by Pakistani charities and state help is reaching some of the victims, but many more are still waiting for assistance.
Wednesday, August 11, 2010
Debts Rise, and Go Unpaid, as Bust Erodes Home Equity
PHOENIX — During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back.
The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association.
Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared.
The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up.
“When houses were doubling in value, mom and pop making $80,000 a year were taking out $300,000 home equity loans for new cars and boats,” said Christopher A. Combs, a real estate lawyer here, where the problem is especially pronounced. “Their chances are pretty good of walking away and not having the bank collect.”
Lenders wrote off as uncollectible $11.1 billion in home equity loans and $19.9 billion in home equity lines of credit in 2009, more than they wrote off on primary mortgages, government data shows. So far this year, the trend is the same, with combined write-offs of $7.88 billion in the first quarter.
Even when a lender forces a borrower to settle through legal action, it can rarely extract more than 10 cents on the dollar. “People got 90 cents for free,” Mr. Combs said. “It rewards immorality, to some extent.”
Utah Loan Servicing is a debt collector that buys home equity loans from lenders. Clark Terry, the chief executive, says he does not pay more than $500 for a loan, regardless of how big it is.
“Anything over $15,000 to $20,000 is not collectible,” Mr. Terry said. “Americans seem to believe that anything they can get away with is O.K.”
But the borrowers argue that they are simply rebuilding their ravaged lives. Many also say that the banks were predatory, or at least indiscriminate, in making loans, and nevertheless were bailed out by the federal government. Finally, they point to their trump card: they say will declare bankruptcy if a settlement is not on favorable terms.
“I am not going to be a slave to the bank,” said Shawn Schlegel, a real estate agent who is in default on a $94,873 home equity loan. His lender obtained a court order garnishing his wages, but that was 18 months ago. Mr. Schlegel, 38, has not heard from the lender since. “The case is sitting stagnant,” he said. “Maybe it will just go away.”
Mr. Schlegel’s tale is similar to many others who got caught up in the boom: He came to Arizona in 2003 and quickly accumulated three houses and some land. Each deal financed the next. “I was taught in real estate that you use your leverage to grow. I never dreamed the properties would go from $265,000 to $65,000.”
Apparently neither did one of his lenders, the Desert Schools Federal Credit Union, which gave him a home equity loan secured by, the contract states, the “security interest in your dwelling or other real property.”
Desert Schools, the largest credit union in Arizona, increased its allowance for loan losses of all types by 926 percent in the last two years. It declined to comment.
The amount of bad home equity loan business during the boom is incalculable and in retrospect inexplicable, housing experts say. Most of the debt is still on the books of the lenders, which include Bank of America, Citigroup and JPMorgan Chase.
“No one had ever seen a national real estate bubble,” said Keith Leggett, a senior economist with the American Bankers Association. “We would love to change history so more conservative underwriting practices were put in place.”
The delinquency rate on home equity loans was 4.12 percent in the first quarter, down slightly from the fourth quarter of 2009, when it was the highest in 26 years of such record keeping. Borrowers who default can expect damage to their creditworthiness and in some cases tax consequences.
Nevertheless, Mr. Leggett said, “more than a sliver” of the debt will never be repaid.
Eric Hairston plans to be among this group. During the boom, he bought as an investment a three-apartment property in Hoboken, N.J. At the peak, when the building was worth as much as $1.5 million, he took out a $190,000 home equity loan.
Mr. Hairston, who worked in the technology department of the investment bank Lehman Brothers, invested in a Northern California pizza catering company. When real estate cratered, Mr. Hairston went into default.
The building was sold this spring for $750,000. Only a small slice went to the home equity lender, which reserved the right to come after Mr. Hairston for the rest of what it was owed.
Mr. Hairston, who now works for the pizza company, has not heard again from his lender.
Since the lender made a bad loan, Mr. Hairston argues, a 10 percent settlement would be reasonable. “It’s not the homeowner’s fault that the value of the collateral drops,” he said.
Marc McCain, a Phoenix lawyer, has been retained by about 300 new clients in the last year, many of whom were planning to walk away from properties they could afford but wanted to be rid of — strategic defaulters. On top of their unpaid mortgage obligations, they had home equity loans of $50,000 to $150,000.
Fewer than 5 percent of these clients said they would continue paying their home equity loan no matter what. Ten percent intend to negotiate a short sale on their house, where the holders of the primary mortgage and the home equity loan agree to accept less than what they are owed. In such deals primary mortgage holders get paid first.
The other 85 percent said they would default and worry about the debt only if and when they were forced to, Mr. McCain said.
“People want to have some green pastures in front of them,” said Mr. McCain, who recently negotiated a couple’s $75,000 home equity debt into a $3,500 settlement. “It’s come to the point where morality is no longer an issue.”
Darin Bolton, a software engineer, defaulted on the loans for his house in a Chicago suburb last year because “we felt we were just tossing our money into a hole.” This spring, he moved into a rental a few blocks away.
“I’m kind of banking on there being too many of us for the lenders to pursue,” he said. “There is strength in numbers.”
The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association.
Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared.
The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up.
“When houses were doubling in value, mom and pop making $80,000 a year were taking out $300,000 home equity loans for new cars and boats,” said Christopher A. Combs, a real estate lawyer here, where the problem is especially pronounced. “Their chances are pretty good of walking away and not having the bank collect.”
Lenders wrote off as uncollectible $11.1 billion in home equity loans and $19.9 billion in home equity lines of credit in 2009, more than they wrote off on primary mortgages, government data shows. So far this year, the trend is the same, with combined write-offs of $7.88 billion in the first quarter.
Even when a lender forces a borrower to settle through legal action, it can rarely extract more than 10 cents on the dollar. “People got 90 cents for free,” Mr. Combs said. “It rewards immorality, to some extent.”
Utah Loan Servicing is a debt collector that buys home equity loans from lenders. Clark Terry, the chief executive, says he does not pay more than $500 for a loan, regardless of how big it is.
“Anything over $15,000 to $20,000 is not collectible,” Mr. Terry said. “Americans seem to believe that anything they can get away with is O.K.”
But the borrowers argue that they are simply rebuilding their ravaged lives. Many also say that the banks were predatory, or at least indiscriminate, in making loans, and nevertheless were bailed out by the federal government. Finally, they point to their trump card: they say will declare bankruptcy if a settlement is not on favorable terms.
“I am not going to be a slave to the bank,” said Shawn Schlegel, a real estate agent who is in default on a $94,873 home equity loan. His lender obtained a court order garnishing his wages, but that was 18 months ago. Mr. Schlegel, 38, has not heard from the lender since. “The case is sitting stagnant,” he said. “Maybe it will just go away.”
Mr. Schlegel’s tale is similar to many others who got caught up in the boom: He came to Arizona in 2003 and quickly accumulated three houses and some land. Each deal financed the next. “I was taught in real estate that you use your leverage to grow. I never dreamed the properties would go from $265,000 to $65,000.”
Apparently neither did one of his lenders, the Desert Schools Federal Credit Union, which gave him a home equity loan secured by, the contract states, the “security interest in your dwelling or other real property.”
Desert Schools, the largest credit union in Arizona, increased its allowance for loan losses of all types by 926 percent in the last two years. It declined to comment.
The amount of bad home equity loan business during the boom is incalculable and in retrospect inexplicable, housing experts say. Most of the debt is still on the books of the lenders, which include Bank of America, Citigroup and JPMorgan Chase.
“No one had ever seen a national real estate bubble,” said Keith Leggett, a senior economist with the American Bankers Association. “We would love to change history so more conservative underwriting practices were put in place.”
The delinquency rate on home equity loans was 4.12 percent in the first quarter, down slightly from the fourth quarter of 2009, when it was the highest in 26 years of such record keeping. Borrowers who default can expect damage to their creditworthiness and in some cases tax consequences.
Nevertheless, Mr. Leggett said, “more than a sliver” of the debt will never be repaid.
Eric Hairston plans to be among this group. During the boom, he bought as an investment a three-apartment property in Hoboken, N.J. At the peak, when the building was worth as much as $1.5 million, he took out a $190,000 home equity loan.
Mr. Hairston, who worked in the technology department of the investment bank Lehman Brothers, invested in a Northern California pizza catering company. When real estate cratered, Mr. Hairston went into default.
The building was sold this spring for $750,000. Only a small slice went to the home equity lender, which reserved the right to come after Mr. Hairston for the rest of what it was owed.
Mr. Hairston, who now works for the pizza company, has not heard again from his lender.
Since the lender made a bad loan, Mr. Hairston argues, a 10 percent settlement would be reasonable. “It’s not the homeowner’s fault that the value of the collateral drops,” he said.
Marc McCain, a Phoenix lawyer, has been retained by about 300 new clients in the last year, many of whom were planning to walk away from properties they could afford but wanted to be rid of — strategic defaulters. On top of their unpaid mortgage obligations, they had home equity loans of $50,000 to $150,000.
Fewer than 5 percent of these clients said they would continue paying their home equity loan no matter what. Ten percent intend to negotiate a short sale on their house, where the holders of the primary mortgage and the home equity loan agree to accept less than what they are owed. In such deals primary mortgage holders get paid first.
The other 85 percent said they would default and worry about the debt only if and when they were forced to, Mr. McCain said.
“People want to have some green pastures in front of them,” said Mr. McCain, who recently negotiated a couple’s $75,000 home equity debt into a $3,500 settlement. “It’s come to the point where morality is no longer an issue.”
Darin Bolton, a software engineer, defaulted on the loans for his house in a Chicago suburb last year because “we felt we were just tossing our money into a hole.” This spring, he moved into a rental a few blocks away.
“I’m kind of banking on there being too many of us for the lenders to pursue,” he said. “There is strength in numbers.”
General Motors Said to Aim for Up to $16 Billion in Stock Sale
Aug. 12 (Bloomberg) -- General Motors Co., the automaker 61 percent owned by the U.S., is seeking to raise $12 billion to $16 billion in an initial public offering, said a person familiar with the plan.
The more than 500-page document, called an S-1, is expected to be filed tomorrow, though it may not happen until Monday, said the person, who asked not to be named because the discussions are private. The exact value of the offering may not be fully detailed in the registration statement filed with the U.S. Securities and Exchange Commission, said the person.
The IPO would be the second-largest in U.S. history, behind Visa Inc.’s $19.7 billion initial offering in March 2008. The share sale is also the first step in freeing the Detroit-based automaker from government ownership, which Chief Executive Officer Ed Whitacre has pushed for after GM’s $50 billion taxpayer bailout in the wake of its bankruptcy in June 2009.
GM has secured a $5 billion revolving line of credit from a group of at least 15 banks as of last night New York time, said the person. More than half are named in the draft of the document as underwriters, including Morgan Stanley, JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Credit Suisse Group AG.
Selim Bingol, a GM spokesman, declined to comment on details of the IPO.
“We will do an IPO when conditions are right for the company and in the markets,” he said in an e-mail.
Treasury Selling
Most of the shares offered would come from the U.S. Treasury, the person said. The aim is to sell a fifth of the government’s 304 million shares, two people familiar with the plan said in June. That would reduce the Treasury’s holdings to less than 50 percent.
The automaker may sell a small number of new shares, the person familiar with the plans said yesterday. The Canadian government, the United Auto Workers union’s retiree medical trust and the estate of the bankrupt predecessor General Motors Corp. haven’t decided whether to participate in the IPO, the person said.
The document will describe the old GM, its restructuring in bankruptcy and liabilities facing the new company, the person said.
GM will report its second quarter profit today, and industry analysts are looking for strong results to set the stage for the IPO.
Many Takers
“There’s no doubt they’ll get a lot of takers” for the IPO, said Mike Wall, an analyst with IHS Automotive.
General Motors Corp. filed for Chapter 11 bankruptcy protection on June 1, 2009, after posting $88 billion of losses since 2004, the last year the company reported an annual profit. General Motors Co. emerged 39 days later.
The company reported $1.07 billion in first-quarter profit in May, compared with a $5.98 billion loss a year earlier.
As GM prepares to sell stock, investors had two main questions. First is when GM can expect to break even on its European business. The unit lost $506 million before interest and taxes in the first quarter and doesn’t expect to break even until at least 2011.
The next question is the company’s succession plan. The company has not said who will lead GM after Whitacre, 68, retires.
The more than 500-page document, called an S-1, is expected to be filed tomorrow, though it may not happen until Monday, said the person, who asked not to be named because the discussions are private. The exact value of the offering may not be fully detailed in the registration statement filed with the U.S. Securities and Exchange Commission, said the person.
The IPO would be the second-largest in U.S. history, behind Visa Inc.’s $19.7 billion initial offering in March 2008. The share sale is also the first step in freeing the Detroit-based automaker from government ownership, which Chief Executive Officer Ed Whitacre has pushed for after GM’s $50 billion taxpayer bailout in the wake of its bankruptcy in June 2009.
GM has secured a $5 billion revolving line of credit from a group of at least 15 banks as of last night New York time, said the person. More than half are named in the draft of the document as underwriters, including Morgan Stanley, JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Credit Suisse Group AG.
Selim Bingol, a GM spokesman, declined to comment on details of the IPO.
“We will do an IPO when conditions are right for the company and in the markets,” he said in an e-mail.
Treasury Selling
Most of the shares offered would come from the U.S. Treasury, the person said. The aim is to sell a fifth of the government’s 304 million shares, two people familiar with the plan said in June. That would reduce the Treasury’s holdings to less than 50 percent.
The automaker may sell a small number of new shares, the person familiar with the plans said yesterday. The Canadian government, the United Auto Workers union’s retiree medical trust and the estate of the bankrupt predecessor General Motors Corp. haven’t decided whether to participate in the IPO, the person said.
The document will describe the old GM, its restructuring in bankruptcy and liabilities facing the new company, the person said.
GM will report its second quarter profit today, and industry analysts are looking for strong results to set the stage for the IPO.
Many Takers
“There’s no doubt they’ll get a lot of takers” for the IPO, said Mike Wall, an analyst with IHS Automotive.
General Motors Corp. filed for Chapter 11 bankruptcy protection on June 1, 2009, after posting $88 billion of losses since 2004, the last year the company reported an annual profit. General Motors Co. emerged 39 days later.
The company reported $1.07 billion in first-quarter profit in May, compared with a $5.98 billion loss a year earlier.
As GM prepares to sell stock, investors had two main questions. First is when GM can expect to break even on its European business. The unit lost $506 million before interest and taxes in the first quarter and doesn’t expect to break even until at least 2011.
The next question is the company’s succession plan. The company has not said who will lead GM after Whitacre, 68, retires.
Indian officials in RIM ban talks
Indian government officials are expected to meet local telecommunications operators on Thursday to discuss their demands that Indian security agencies be given access to the contents of encrypted e-mail and messaging services sent via BlackBerry handsets.
The move, spearheaded by the Indian home ministry, comes as India prepares to ratchet up security ahead of the Commonwealth Games in the country in October. “If they cannot provide a solution, we’ll ask operators to stop that specific service,” said an Indian official quoted by Reuters news agency. “The service can be resumed when they give us the solution,” said the official who asked not to be named.
If a shutdown takes effect, the estimated 1m BlackBerry users in India would only be able to use the devices for phone calls and web browsing.
Research in Motion, the Canadian manufacturer of BlackBerry devices, already faces the threat of a ban on e-mail and messaging services in the United Arab Emirates from October 11 unless it meets similar demands from the UAE’s telecoms regulator.
There are signs that RIM and the three telecoms operators in Saudi Arabia may be edging towards an agreement that would avert the threat of a more limited ban there and meet the Saudis’ request for access to the BlackBerry-to-BlackBerry Messenger texting service widely used by youths in the kingdom.
RIM insists that it cannot give access to encrypted corporate e-mail and messaging traffic sent from BlackBerrys hooked up to corporate servers because it does not have the “keys” needed to decipher the data.
However, privately owned BlackBerrys do not use the same “strong” encryption and it might be possible for RIM and the Saudi telecom operators to provide access to Messenger traffic on the estimated 500,000 of the 700,000 BlackBerrys in the country owned by individuals. Some telecoms consultants in Saudi Arabia have suggested this might be done by setting up computer servers inside the telecoms operators.
“The agreement basically satisfies the government of Saudi Arabia which means information will be accessible upon request,” a consultant with knowledge of the Saudi negotiations said yesterday.
Some analysts believe an agreement on local servers might be used as a model elsewhere. “It is important because it is a prerequisite,” said Al Hilwa, IDC program director. “In order for any authorities to have the data, they have to have access. If RIM is going to end up playing internationally, this is what they’re going to have to do.”
But even if the Saudi Arabia arrangement is eventually confirmed, it is by no means clear that such an arrangement would satisfy other countries, including the UAE and India which are demanding much broader access to BlackBerry traffic including the ability to monitor encrypted corporate e-mail, Messenger and browser traffic.
Mike Lazaridis, RIM’s co-chief executive, said last week that the company would respond to legal requests for access to BlackBerry data, but could only provide the “encrypted data stream”. Unless local security agencies can decipher such data, this would be unlikely to satisfy their requirements.
For example, in India the security agencies want RIM to provide access to encrypted messages in a readable format. Officials claim RIM has proposed helping India track e-mails without sharing encryption details, but insist that is not enough.
“The pressure on RIM is mounting and an increasing number of governments seem to be demanding access to data for national security and enforcement purposes,” said Al Hilwa of IDC.
“RIM’s approach to provide strong encryption and centralised data hosting is commendable for privacy reasons and provides many enterprise users a high degree of comfort about their trade secrets and communications, but it is clearly running into sovereignty and control issues with many international authorities.
He said there are two main issues: “One is the location of the servers and the data, which is a first step to giving a level of control to international governments, and the second is the level of encryption provided which may be too strong for governments to control effectively.”
“Likely more and more countries will require RIM to take action on both, and likely RIM will have to take a more universal and systematic approach to dealing with this as the problem appears to be mushrooming,” said Al Hilwa.
The move, spearheaded by the Indian home ministry, comes as India prepares to ratchet up security ahead of the Commonwealth Games in the country in October. “If they cannot provide a solution, we’ll ask operators to stop that specific service,” said an Indian official quoted by Reuters news agency. “The service can be resumed when they give us the solution,” said the official who asked not to be named.
If a shutdown takes effect, the estimated 1m BlackBerry users in India would only be able to use the devices for phone calls and web browsing.
Research in Motion, the Canadian manufacturer of BlackBerry devices, already faces the threat of a ban on e-mail and messaging services in the United Arab Emirates from October 11 unless it meets similar demands from the UAE’s telecoms regulator.
There are signs that RIM and the three telecoms operators in Saudi Arabia may be edging towards an agreement that would avert the threat of a more limited ban there and meet the Saudis’ request for access to the BlackBerry-to-BlackBerry Messenger texting service widely used by youths in the kingdom.
RIM insists that it cannot give access to encrypted corporate e-mail and messaging traffic sent from BlackBerrys hooked up to corporate servers because it does not have the “keys” needed to decipher the data.
However, privately owned BlackBerrys do not use the same “strong” encryption and it might be possible for RIM and the Saudi telecom operators to provide access to Messenger traffic on the estimated 500,000 of the 700,000 BlackBerrys in the country owned by individuals. Some telecoms consultants in Saudi Arabia have suggested this might be done by setting up computer servers inside the telecoms operators.
“The agreement basically satisfies the government of Saudi Arabia which means information will be accessible upon request,” a consultant with knowledge of the Saudi negotiations said yesterday.
Some analysts believe an agreement on local servers might be used as a model elsewhere. “It is important because it is a prerequisite,” said Al Hilwa, IDC program director. “In order for any authorities to have the data, they have to have access. If RIM is going to end up playing internationally, this is what they’re going to have to do.”
But even if the Saudi Arabia arrangement is eventually confirmed, it is by no means clear that such an arrangement would satisfy other countries, including the UAE and India which are demanding much broader access to BlackBerry traffic including the ability to monitor encrypted corporate e-mail, Messenger and browser traffic.
Mike Lazaridis, RIM’s co-chief executive, said last week that the company would respond to legal requests for access to BlackBerry data, but could only provide the “encrypted data stream”. Unless local security agencies can decipher such data, this would be unlikely to satisfy their requirements.
For example, in India the security agencies want RIM to provide access to encrypted messages in a readable format. Officials claim RIM has proposed helping India track e-mails without sharing encryption details, but insist that is not enough.
“The pressure on RIM is mounting and an increasing number of governments seem to be demanding access to data for national security and enforcement purposes,” said Al Hilwa of IDC.
“RIM’s approach to provide strong encryption and centralised data hosting is commendable for privacy reasons and provides many enterprise users a high degree of comfort about their trade secrets and communications, but it is clearly running into sovereignty and control issues with many international authorities.
He said there are two main issues: “One is the location of the servers and the data, which is a first step to giving a level of control to international governments, and the second is the level of encryption provided which may be too strong for governments to control effectively.”
“Likely more and more countries will require RIM to take action on both, and likely RIM will have to take a more universal and systematic approach to dealing with this as the problem appears to be mushrooming,” said Al Hilwa.
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