Financial life in a big town

Investors are bracing for Facebook’s Wall Street debut on Friday after the pioneering online social network raised about $16 billion in one of the biggest initial public offerings in U.S. history.

More: Why you should resist buying Facebook on its first day of trading

More: Facebook IPO: How long will the euphoria last?

To rapturous applause from employees, Facebook Chief Executive Mark Zuckerberg rang the bell to kick off trading on the Nasdaq market at the company’s Silicon Valley headquarters at 6:30 a paydayloans.m. Pacific time.

Shares in Facebook begin publicly trading on the Nasdaq stock exchange for the first time Friday at 11:00 a.m., at an opening price of $38 US. Follow our live blog as The Star covers the social networking giant’s historic first trading day, including analysis and reaction.

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Energy developer Tenaska Inc. has worked since 2007 to win legislative backing for a next-generation coal-fueled power plant southeast of Springfield. A key selling point was that the project would give a lift to the downstate coal-mining industry.

But Tenaska has failed to get a bill pushed through the General Assembly in the face of opposition from a coalition of business and environmental interests.

Now, with the clock ticking on another legislative session, the company is taking a new tack: It’s proposing to proposing to ditch coal for natural gas.

The new strategy, which has yet to be formalized, is part concession to political reality and part acknowledgement of the U.S. shale gas revolution that’s upended energy markets.

“We thought about it a long time and made a proposal that meets all of the objections that have been raised,” said Bart Ford, a Tenaska vice president.

As originally envisioned, the project would have transformed Illinois coal into a synthetic gas and burned that gas to produce electricity. The technology would allow much of the carbon dioxide and other pollutants from coal to be stripped out before combustion.

Under the new proposal, hatched during a meeting in Springfield earlier this week, Tenaska would move ahead only with the part of the plant that would burn natural gas for electricity. It could seek to add the coal-gasification unit later if market conditions warrant, Ford said.

Whatever the outcome in Springfield, Tenaska’s strategy shift is the latest evidence of the seismic shift taking place in energy markets.

Horizontal drilling and hydraulic fracturing technologies that opened up more of the country to natural gas drilling and vastly expanded domestic natural gas production has had a huge impact on the price of the fuel, which remains at around $2.50 per thousand cubic feet — the lowest level since 2002.

The drop in gas prices has led utilities to increasingly embrace natural gas at the expense of coal and made projects to convert coal into gas, which were already a tough sell to policy makers and lenders, practically impossible.

With natural gas at $2.50, “coal gasification doesn’t make sense,” said Ed Rubin, a professor in engineering and public policy department at Carnegie Mellon University in Pittsburgh. For the foreseeable future, “gas is going to the fuel of choice”

Tenaska’s proposed modification would shave off about two thirds of the project’s original $3.5 billion price tag. That would limit the impact on average residential utility customers to about 60 cents a month.

The proposal being floated in Springfield would also cap rate increases for commercial utility customers at one-tenth cent per kilowatt-hour. Previously filed legislation to advance Tenaska’s coal-gasification plant offered no such guarantees.

Tenaska says the project would not only create thousands of jobs, it would help offset what are projected to be significant electricity price increases in coming years.

There’s already evidence that electricity prices in northern Illinois will jump considerably beginning in 2014 as older, less efficient coal plants are mothballed because they can’t compete economically in an era of cheap natural gas and tougher environmental regulations.

But despite an outlook for higher power prices, Tenaska says it still needs legislation that would require utilities to buy the plant’s output for the next 30 years. That’s because Wall Street otherwise won’t finance a large new power plant in a deregulated state like Illinois unless it has a long-term agreement to sell the output. And such agreements aren’t possible with Illinois’ power procurement rules.

The Citizens Utility Board, a Chicago-based consumer group, supported previous legislation to advance the coal gasification plant because it capped maximum rate increases for residential customers and small businesses.

Jim Chilsen, a CUB spokesman, said the group is still reviewing Tenaska’s modified proposal, and that its support generally hinges on a cap on any rate increases.

The STOP Coalition — a group that includes power generator Exelon Corp., business and environmental interests that galvanized to fight the Taylorville project legislation — issued a statement indicating it hasn’t yet formed a position on Tenaska’s new proposal.

“When details of the proposal emerge, we will look at it with the goal of ensuring customers aren’t subject to unnecessary rate increases,” the group said.

Ford doesn’t necessarily believe opponents will change their stance. But he said it’s important to show legislators that the company responded to all of the objections in an effort to form consensus.

He also said it’s important for Tenaska to get the legislation approved before the legislative session ends on May 31. The company is close to an agreement needed to interconnect with the power grid and already has an air permit needed to move forward.

“The clock is ticking,” he said.

Only a few years ago, Illinois was positioned for the first wave of coal gasification plants, including Tenaska’s Taylorville Energy Center.

Peabody Energy Corp., the world’s largest private-sector coal producer, announced efforts in 2005 to pursue a coal-gasification project in Illinois with ArcLight Capital Partners in response to what it deemed “scarce U.S. natural gas” supplies.

The Department of Energy-sponsored FutureGen project was proposed by President George W. Bush.

But “none of them have come to fruition,” said Phil Gonet, head of the Illinois Coal Association.

Gonet said Tenaska’s plan to move ahead with only part of the Taylorville project “reflects the reality” that cheap natural gas is hurting the coal industry. But he’d rather see part of the Taylorville plant built — and perhaps converted later to run on Illinois coal — than for the plant to not get built at all.

“Is it a setback for coal? yeah. But I wouldn’t call it a major setback,” Gonet said.

St. Louis-based Peabody said it still sees coal-to-gas technology as viable longer term in the U.S., but wouldn’t move any such projects to the “front burner” until natural gas move higher. The company is also optimistic about the potential to convert its coal reserves into transportation fuels, spokesman Vic Svec said.

Rubin said it remains to be seen whether the energy industry’s bet on cheap natural gas is a smart one. The country leaned heavily on natural gas a decade ago, and the plan backfired.

Meanwhile, development of technology to convert coal to gas is still advancing in other parts of the world. 

“China is where the action is,” he said.

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Watson Pharmaceuticals Inc. is buying another generic drugmaker, Switzerland’s Actavis Group, for about $5.6 billion in a move that will make Watson in the world’s third-biggest generic drugmaker.

Watson, which has seen its profits surge since it started selling an authorized generic version of cholesterol blockbuster Lipitor in December, is now No. 4 globally. It had expected around $5.4 billion in revenue this year. It plans to pay for Actavis with term loan borrowings and the sale of new debt.

Privately held Actavis operates in more than 40 countries and sells more than 1,000 products. The companies said its revenue totaled $2.5 billion in 2011. Watson said the purchase should close during the fourth quarter of 2012, pending approval from regulators. If Actavis meets performance goals in 2012, its shareholders could get up to 5.5 million shares of Watson.

Watson CEO Paul Bisaro said in a statement that the deal will boost its position in Russia and Central and Eastern Europe, and complement its products in the U.S. After the deal is complete, more than 40 percent of Watson’s generic drug revenue will come from outside the U.S., and Watson said it believes it will be able to reduce its annual costs by $300 million the three years after the deal closes.

Watson reported $4.58 billion in revenue in 2011, up 29 percent from the previous year, on sales of generic versions of drugs like Lipitor, the pain drug Kadian and attention deficit hyperactivity disorder treatment Concerta. It also expanded its business by buying generics maker Specifar Pharmaceuticals of Greece in May guaranteed unsecured personal loan. That deal was valued at $563.1 million.

Watson also makes brand-name products like the enlarged-prostate drug Rapaflo. In December, Watson announced it is partnering with Amgen Inc., the world’s biggest biotechnology company, to create “biosimilar” versions of several biologic medicines for cancer. Those drugs would be sold under a joint Amgen/Watson brand.

Teva Pharmaceutical Industries Ltd. of Israel is the world’s largest generic drugmaker, with $13 billion in generic drug revenue in 2011. Sandoz, a unit of Swiss drugmaker Novartis AG, was No. 2 with $10.7 billion. Mylan Inc. of Pittsburgh had around $8 billion in sales for the year.

Actavis is headquartered in Zug, Switzerland. It has around 10,000 employees to Watson’s 6,700. Watson is based in Parsippany, N.J.

Watson shares climbed $4.01, or 5.8 percent, to $73.70 in aftermarket trading. The stock is up 19.1 percent since March 21, when it was first reported that Watson was in talks to buy Actavis.

After the deal was announced, Moody’s Investors Service backed its credit ratings on Watson but lowered its outlook to stable from positive. Fitch Ratings said it will downgrade Watson if the deal proceeds as planned because the deal would increase Watson’s debt to $6.8 billion from $1.1 billion.

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Less than a decade ago, Argentina was an exporter of oil and natural gas. Now the government has to spend billions of dollars to import fuel.

This dramatic reversal of fortune is why Argentina, already a global financial rogue after its historic debt default, is willing to risk becoming even more of a pariah by seizing control of its leading oil company from Spanish hands, analysts say. President Cristina Fernandez infuriated Spain, its largest foreign investor, but elated many Argentines by expropriating Repsol YPF SA’s majority stake in Argentina’s formerly state-owned YPF energy company.

Only two months earlier, Repsol YPF had upped its estimate for the shale oil and gas it found in Argentina to nearly 23 billion barrels, enough to double the country’s output in a decade .But the Spanish company said it would cost $25 billion a year to develop, and warned that Argentina would need to overhaul its energy policy to attract the necessary investment.

Instead, Fernandez simply seized the company, giving her government access to billions of dollars’ worth of cash, enough energy to answer domestic demand in the short term, and potentially even solving Argentina’s chronic money woes in the future.

She accused Repos of draining YPF since gaining control in the 1990s, underinvesting in its oil and gas fields and failing to keep pace with the needs of Argentina’s growing economy even as it paid huge dividends to shareholders.

Repos blames Argentina’s ever-changing mix of subsidies, price caps and export taxes for depressing production as the country’s demand for energy soared since 2003, when her husband, President Nestor Kirchner, came to power.

Both are partly right, says Eduardo Fernandez, an independent consultant and former fuels director in Argentina’s energy ministry.

The problem was a government approved practice of allowing Repos to use profits to pay shareholder dividends rather than invest that money in the company’s future. “That led to a lack of reinvestment in utilities, little exploration and dwindling reserves, as oil fields dried up and productivity fell,” Fernandez said.

Argentine oil production plunged 22 percent from 2000 to 2010, even as demand surged more than 40 percent, according to data from the Argentine Oil and Gas Institute and the Energy Ministry compiled by a former energy secretary, Emilio Apud.

Argentina’s production has fallen so low that the government now spends billions of dollars a year on expensive imported fuels that it provides at a loss to companies and consumers.

Cheap energy helped Argentines rebuild after a world-record debt default and devaluation in 2002 left the economy in ruins. It makes less sense now, after nearly a decade of growth, but letting consumer energy prices rise too quickly could cause already high inflation to spiral, and provoke popular discontent in a country where pot-banging street protests have driven other presidents from office.

The energy subsidies spiked by 63 percent in 2010 to $5.6 billion, according to a former energy secretary, Alieto Guadagni. At the time, oil traded at about $80 a barrel internationally. With oil now going for more than $100 a barrel, this year’s bill could be nearly $10 billion, even as the economy cools with less demand from China and Brazil.

Fernandez squarely blamed a Repose’s lack of investment for a $3 billion energy deficit when she announced the takeover.

“The worst thing is that if we don’t do this, we’ll turn into an unsustainable country, because of its business policies and not because of a lack of resources,” she said, noting that Argentina holds the world’s third largest reserves of shale oil and gas, after China and the United States _ a resource that remains entirely untapped.

“Our model is one of recovering our sovereignty,” she added, noting that the company will not be state-owned, but run as a mixed entity, able to bring in new private shareholders.

But rather than raise fuel prices that are now about five times lower than in Brazil and Uruguay, her expropriation measure insists that oil companies must serve Argentines first, even if it means selling the energy they produce at a loss.

In the lead up to the nationalization, as prospects for quick returns diminished in Argentina, Repos YPF sought to protect its shareholders by diversifying and making long-term investments elsewhere in Latin America.

Other oil companies did the same. With oil capped at $55 a barrel in Argentina while trading above $100 on the world market, they followed the money, Eduardo Fernandez said.

“So there’s no interest in making investments in Argentina when in other countries they’re paying in full. So Repos went to Brazil, Trinidad and Tobago, Bolivia. All of this provoked the disinvestment,” he said.

Repos President Antonio Bureau said Repsol invested billions of dollars in Argentina, and tried to head off the expropriation with promises to spend more. But by then, the Argentines were already determined to regain control. All Brufau could do in the end was demand $10.5 billion, which he said was the market price of the shares Argentina seized.

Deputy Economy Minister Axel Keillor accused Repos of hiding the true value of its Argentine unit, and said a thorough review of its books now that he’s in control of the company’s offices in Buenos Aires will affect whatever compensation is eventually paid.

“These morons think that the government is stupid enough to buy everything” that Repsol demands, the 40-year-old Kicillof said, sporting an open shirt and long, Elvis-like sideburns in a heated senate session this week.

Latin America’s third-biggest economy hasn’t been able to tap international debt markets since its default, but has been able to manage with dollars rolling in from taxes on grains, nationalizing private pension funds and the flagship airline, and by tapping central bank reserves.

By re-nationalizing YPF _ and not paying Repsol until international courts resolve the case years from now, if then _ Argentina can reinvest profits to develop new reserves and use the fuel Repsol was exporting to save consumers from price shocks as it weans them off the subsidies.

The shale deposits trapped deep under the “Vaca Muerta” (”Dead Cow”) basin of Neuquén province could increase Argentina’s oil reserves by at least 750 million barrels, and probably three times that much, said Michael Lynch, president of Strategic Energy and Economic Research.

Strategic partners will be key, and the Argentines aren’t waiting for them to come knocking. Planning Minister Julio de Vido assured Brazilian officials Friday that Argentine assets of their state-run oil giant Petrobras would not be expropriated, and secured a promise to increase their Argentine market share from 8 percent to 15 percent this year. Brazilian Energy Minister Edison Lobao called Petrobras’s current investment of $500 million in Argentina “good business.”

De Vido also secured promises of increased natural gas production from French-owned Total Austral, and planned meetings Monday with executives from Chevron and Exxon.

He said he had not heard from China’s No. 2 Sinopec oil company, “but that doesn’t mean that we won’t have contacts in the future.”

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The parent of American Airlines, which went into bankruptcy last year, announced a quarterly net loss of $1.7 billion on Thursday, slammed by reorganization costs and rising fuel prices.

The loss was more than quadruple the carrier’s loss from a year earlier, when AMR Corp. reported a net loss of $405 million in the first quarter of 2011.

AMR said the part of the loss stemmed from $1.4 billion in reorganization costs in the latest quarter. The company said the costs were related to its bankruptcy filing from last Nov. 29.

The largest chunk of those costs — some $1 billion - is related to the rejection of eight aircraft leases and eight aircraft engine leases, and the modification of 158 aircraft leases, the airline said.

Merger hangover continues to pain United

American was also hit by rising fuel prices poor credit personal loans. The company said that it paid $3.24 per gallon of jet fuel in the first quarter of 2012, a 17% increase from $2.76 in the year-earlier quarter. The airline said this equated to an increase in costs of $325 million.

While American Airlines didn’t specifically mention job cuts in its quarterly report, the carrier said in February that it was cutting 13,000 positions from its overall staff of 88,000. Layoffs, especially when they happen en masse, typically cost a lot of money for the company that’s handing out the severance packages.

American is one of the largest U.S. carriers, competing with Delta Air Lines (, Fortune 500) and United Continental Holdings (, Fortune 500). 

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President Barack Obama says his call for raising taxes on millionaires is not a redistribution of wealth, but a way to free up money for crucial investments in the U.S. economy.

Pitching the so-called Buffett rule for the second straight day, Obama dismissed the notion that the plan is a gimmick. He says it is necessary in order to tackle the country’s massive deficits.

The rule is named after billionaire investor Warren Buffett, who says he pays a lower tax rate than his secretary. Obama was flanked during his remarks at the White House Wednesday by several business executives and their assistants who he says agree with the principles in the Buffett rule.

The Senate will vote on the plan next week, though it has little chance of passing Congress.

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Union contracts for thousands of AT&T workers expired at midnight but officials said early Sunday that talks were continuing.

The passage of the deadline left the Communications Workers of America free to call a strike, but spokeswoman Candice Johnson says employees would report for work without a contract. She says that could change at any time.

Two separate contracts in eastern areas covering 10,000 workers expired at midnight, while talks were still going on for 33,000 other workers as midnight deadlines approached in the Midwest and West Coast.

The workers are on the shrinking local-phone and long-haul data side of the business, and located mainly in the Midwest and California cash advance payday loan.

When the last big batch of contracts was negotiated three years ago, the parties kept talking past the contract expiration, and reached agreements without a strike.

Dallas-based AT&T Inc. is the country’s largest employer of unionized workers. About 140,000 of its 256,000 employees are union members.

At issue in the negotiations are job protection clauses and health care premiums and co-payments.

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The Federal Reserve is holding off on increasing monetary accommodation unless the U.S. economic expansion falters or prices rise at a rate slower than its 2 per cent target.

Oil prices are climbing near $108 per barrel as optimism grows about a strengthening global economy.

A private survey of the U.S. homebuilding industry on Monday found that companies are increasingly hopeful that home sales will rise in coming months. International Monetary Fund Managing Director Christine Lagarde also said over the weekend that the global economy has “stepped back from the brink.”

The rise in oil also follows last week’s rally on Wall Street.

Benchmark U.S. crude added 56 cents to $107.62 per barrel in New York while Brent crude fell by 17 cents to $125.63 per barrel in London.

Meanwhile, retail gasoline increased more than a penny over the weekend to $3.842 per gallon.

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As spring approaches, Occupy Wall Street protesters who mostly hibernated all winter are beginning to stir with plans for renewed demonstrations six months after the movement was born.

The global protests against corporate excess and economic inequality are generally thought to have begun Sept. 17 when tents sprang up in a small granite plaza in lower Manhattan. The movement has lost steam in recent months, with media attention and donations dropping off as Occupy encampments across the country were dismantled, some by force.

On March 7, the finance accounting group in New York City reported that just about $119,000 remained in Occupy’s bank account _ the equivalent of about two weeks’ worth of expenses.

The Occupy movement has influenced the national dialogue about economic equality, with the word “occupy” itself becoming part of the public lexicon. In his third State of the Union address, President Barack Obama issued a populist call for income equality that echoed the movement’s message. But has anything really changed in the past six months?

Some achievements that can be connected to the efforts of the Occupy movement, and some plans for the near future:

WHAT GOT DONE

In Albany, N.Y., Occupy protesters dubbed Democratic Gov. Andrew Cuomo “Gov. 1 Percent” for his refusal since the 2010 campaign to agree to a millionaire tax, and because his major campaign financial support comes from corporate executives.

Cuomo tried to evict Occupy Albany from the park co-owned by the city and the state. But the Democratic mayor, Gerald Jennings, agreed to allow Occupy Albany to stay on the city-owned side. Local Democratic District Attorney David Soares also announced he wouldn’t prosecute anyone for disorderly conduct at Occupy Albany who might be arrested by state police _ who answer to Cuomo.

In a surprise, Cuomo reversed his position on the millionaire tax in December to avoid further cuts to schools and health care. Part of the $2 billion in revenue went to a modest but rare income tax cut of $200 to $400 for most middle class families. Cuomo refers to the millionaire tax as the biggest tax cut for the middle class in decades.

Democratic lawmakers attributed Cuomo’s move in part to the Occupy protesters who had targeted him across the street from the Capitol for months and had begun demonstrating just outside his office.

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An Atlanta pastor, whose church struggled to pay its bills after its building was struck by a 2008 tornado, credits Occupy Atlanta with helping it to avoid foreclosure. The Rev. Dexter Johnson’s church, the Higher Ground Empowerment Center, took out a loan to rebuild and has struggled to pay its mortgage in recent months.

Johnson said the bank had agreed to work with the church to help pay its mortgage after demonstrations by Occupy members. Demonstrators had set up a camp at the church in Atlanta’s Vine City neighborhood, just west of downtown.

In January, Johnson learned his congregation would be allowed to stay in the building.

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In Rhode Island, Occupy Providence pushed for _ and won _ a temporary day center to serve the homeless during the winter. Protesters made the center’s opening a condition of their departure from a public park downtown, where they had camped against the city’s wishes for more than three months.

While the city didn’t fund the center, officials pledged to help its operator, the Roman Catholic Diocese of Providence, find money for it.

“It shows that with pressure from people, a government can be made to move,” protester Robert Malin said at the time of the center’s opening.

The city had threatened legal action to remove the protesters and their tents from the park, but the two sides instead went into mediation before a judge.

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Also in Rhode Island, the state’s junior U.S. senator, Sheldon Whitehouse, introduced a bill in November to crack down on high credit card interest rates _ the same week he visited the Providence encampment. While there was no direct relationship between Occupy and the bill, Whitehouse spokesman Seth Larson said Thursday, the legislation no doubt resonated with the protesters.

“It was timely, and I’m sure the Occupy folks appreciated this bill,” Larson said.

Whitehouse had introduced similar legislation a year earlier.

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Occupy protesters helped save an Iraq war veteran’s home from foreclosure in Atlanta, the Huffington Post reported. “I strongly believe Occupy Atlanta accelerated the process and helped save my home,” Brigitte Walker, whose home activists began occupying Dec. 6, told the website. “If it had not been for them standing up, I probably wouldn’t be having this happy ending.” Walker had left Iraq in May 2004 when she was injured by the shock from mortar rounds, the Post reported.

Occupy Minneapolis also worked with community organizers to help a former Marine who faced eviction from his home strike a deal with his bank, the Post reported.

WHAT’S NEXT

Occupiers in New York City will commemorate the six-month mark with a rally Saturday in Zuccotti Park, where protesters camped out for months until the city ousted them in November.

Organizers are hoping donations will start to flow in as protests begin anew this spring, including a global day of “economic disruption” on May 1.

And in some states, Occupy supporters are making forays into politics. Asher Platts is running for the state senate in Maine as a “Clean Elections” candidate. Platts, an activist who attended the protests last fall, is running on an Occupy platform.

In suburban Philadelphia, Occupy protester Nathan I. Kleinman is running a write-in campaign for Congress against four-term Rep. Allyson Schwartz in the Democratic primary on April 24. The 29-year-old said he never would have mounted a run without his Occupy experience. Kleinman withdrew from the ballot after a court hearing in which Schwartz’s supporters questioned some of the 1,500 required signatures he had gathered to appear on the ballot.

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