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(Bloomberg) -- Emaar Properties PJSC, Dubai’s largest publicly-traded developer, cut executive and staff salaries across its businesses as the coronavirus pandemic halts projects and weighs on revenue from malls and hotels.The changes took effect on April 1 for all of Emaar’s Dubai businesses and will continue until further notice, according to a letter sent by Chairman Mohamed Alabbar to employees and seen by Bloomberg.The pay cuts include:Chairman’s salary: 100% reductionSenior management: 50% reductionMiddle management: 40% reductionJunior staff: 30% reductionThere will be no pay cut for support staff working full time; staff not currently operating/on leave will receive full accommodation and healthcare as well as 15% of their cash salaryOther businesses to receive 60% of full salaryA representative for Emaar didn’t immediately respond to calls and an email seeking comment.Emaar was up 4.7% as of 11:48 a.m. in Dubai. The stock is down 44% this year, exceeding the 38% decline of the Dubai Financial Market General Index. Emaar has the third-highest weighting in the 37-member index.Emaar is among the developers in the Middle East’s business and logistics hub being forced to rethink projects as the pandemic and the oil-price collapse squeeze finances. The coronavirus is aggravating a long property slump in Dubai, where oversupply and economic uncertainty have pushed down prices for years.The developer of the world’s tallest tower built a large portfolio of cash-generating assets such as hotels and malls to carry it through tough times for property sales. Now that revenue is drying up as strict social distancing rules implemented to curb the virus’s spread closes its malls and empties its hotels.Emaar has already suspended the construction of parts of its Dubai Creek Harbour project and said three of its listed companies will not pay dividend for 2019 in “view of the current circumstances.”Meanwhile, Emaar sold 80% of its Downtown Dubai district cooling business to Tabreed for $675 million. Tabreed’s biggest shareholder is French utility Engie SA.(Updates with share price in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- India’s government told all major ports that the coronavirus fight is a valid reason to halt some port operations, leaving traders confused over which goods will continue to flow in and out of the world’s seventh-biggest economy.Ports were advised by India’s Ministry of Shipping that they may consider the Covid-19 pandemic as grounds for invoking force majeure, a clause absolving companies from meeting their contractual commitments for reasons beyond their control, according to a letter Tuesday seen by Bloomberg. Several ports and terminals have done so already, while also saying they aim to maintain operations as the government deemed shipping an “essential service.”Importers of liquefied natural gas into India, which over the past couple of months have been actively seeking cargoes to take advantage of a collapse in spot prices, declared force majeure on some prompt shipments.The move follows Prime Minister Narendra Modi’s three-week lockdown on India’s 1.3 billion people, the most far-reaching measure by any government amid the pandemic. The declarations set off a wave of confusion, with traders and shipbrokers trying to assess whether the measures would halt operations at ports, which include some of the country’s biggest handlers of oil, LNG and shipping containers.About $829 billion of goods traveled through India’s ports in 2018, according to data compiled by Bloomberg, the 13th most in the world. The country is also the third-biggest importer of crude oil and fourth-biggest of LNG, as well as a major buyer of coal and palm oil and an exporter of sugar. India’s lockdown will mean a “substantial loss of demand” for oil, Vitol Group Chief Executive Office Russell Hardy said earlier Wednesday in a Bloomberg TV interview. Brent crude prices have already fallen 60 percent so far this year.‘Doing Our Best’“It doesn’t mean our operations are going to stop. All it does is free us from the commercial liabilities that arise out of disruptions caused by the coronavirus,” said P.L. Haranadh, deputy chairman at Visakhapatnam Port Trust, a government-owned port. “Operations have slowed because several staff may be reluctant to come to work fearing health issues. With limited resources, we’re doing our best to ensure that supplies of essential commodities, such as coal, crude oil and containers are maintained.”Read More: When God Appears in Contracts, That’s ‘Force Majeure’: QuickTakeAdani Group, a massive private conglomerate, declared force majeure at all of its 10 ports and terminals as of March 22, Pranav Choudhary, the chief executive officer of Adani’s Dahej and Hazira ports, said by phone. The measures will stay in place until further notice from the government, he said.India’s lockdown is constraining the movement of people and materials to and from the country’s ports, the group said in a letter to shippers that was seen by Bloomberg. Adani declared the force majeure, saying it won’t be responsible for any charges related to vessel delays, though it also said it would try to continue operating its ports.Minimal WorkforceMost Indian ports are continuing to work with minimal workforce, a person with knowledge of the matter said, adding that only labor-intensive work is facing delays. Oil operations aren’t affected, according to two shipping company officials. R. Ramachandran, refinery director at Bharat Petroleum Corp. said the company does not foresee any problems importing and exporting petroleum products or berthing ships except for a few protocols that have to be followed.India’s Gail India Ltd., Gujarat State Petroleum Ltd. and Petronet LNG Ltd. declared force majeure on some prompt shipments of LNG.Gail and GSPC are requesting to cancel or delay deliveries due to staffing issues at terminals and lower downstream demand caused by a nationwide lock-down to combat the fast-spreading virus, according to people with knowledge of the matter.Petronet sent a force majeure notice to Qatargas and Exxon Mobil Corp., and plans to review 20 deliveries planned for April, Chief Executive Officer Prabhat Singh said by phone. Petronet has deferred one LNG cargo from Qatar for delivery in March and will take eight remaining cargoes scheduled for that month. The firm is not facing problems berthing vessels, and the force majeure was due to fall in demand because of virus outbreak.Gail and GSPC had no immediate comment. Traders will weigh an impact of the Indian buyers’ move on global flows of the fuel and prices.Low LNG Spot Prices Prop Up India Demand, But Risks Lurk: BNEF“India’s lockdown will have a direct impact on spot LNG,” said Julien Hoarau, gas market analyst at Engie SA’s EnergyScan.Shipping data is signaling that ports may already be backed up. The number of vessels anchored at sea off India has risen 22% to 78 from a week earlier, according to tracking data compiled by Bloomberg. Chemical and oil product tankers accounted for most of that increase.“Ports will need to apply their mind before wanting to invoke such clauses,” said Anil Devli, the chief executive officer of the Indian National Shipowners’ Association. “Any unilateral declaration of force majeure could have huge commercial repercussions for India and its trade, and that would be unhealthy.”(Updates with two additional LNG force majeure notices in 10th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Nothing says funding is not a problem during this crisis than a 10 billion-euro ($11 billion) debt issue. Spain, in a state of emergency because of the coronavirus, achieved this on Tuesday with a seven-year bond sale that attracted more than 36 billion euros of orders.The country was one of 11 high-grade borrowers testing the waters in what was the busiest day of the month for bond sales and the fourth-busiest of the year. This week’s volumes have already surpassed the total of the first three weeks of March, when the outbreak really suppressed supply. Wednesday is set to be even bigger.Raising such a jumbo deal did mean Spain had to offer a yield that was 18 basis points higher than an existing, slightly shorter seven-year bond. Its last syndicated issue, earlier this year, came with a lower yield than its existing debt. However, the world has changed profoundly and issuers have to be prepared to dangle a carrot to entice investor demand. In the circumstances, this wasn’t much of a premium for investors.A similar phenomenon was also evident for the European Investment Bank, whose three-year bond deal came at an 11 basis-point premium to its existing equivalent. Likewise, premiums were in evidence Monday for new deals from the German States of Bavaria and Saxony-Anhalt. Though, again, they weren’t huge, which shows how desperate investors are to find somewhere to put their money.Corporate deals are making a comeback too: Unilever NV and Engie SA last week followed the trend for higher yields. Company issuance has seen the biggest decline in the bond market this year, unsurprisingly give the business shutdowns, running nearly 20% behind last year's pace. Coca Cola European Partners, Sanofi and Nestle SA all came to the market with multi-tranche issues on Tuesday, illustrating the improvement in conditions. Heineken NV, Danaher Corp. and Carrefour SA were doing benchmark euro deals on Wednesday.The European Central Bank can breathe a bit easier as its 1 trillion euros of quantitative easing planned for the rest of this year is starting to take effect. As there will be considerable emphasis on its corporate sector purchasing program, many of the new investment grade deals should benefit from being scooped up by the ECB, if they’re from Europe-based issuing entities.Wednesday has also seen the return of major banks with Lloyds Banking Group Plc, HSBC Holdings Plc, and Goldman Sachs Group Inc. all bringing euro deals. Credit spreads (the yield on corporate debt relative to sovereign benchmarks) have ballooned since late February, offering better returns for investors than government bonds if they have cash to put to work. Those spreads will start to narrow, but the virus has created a new paradigm, whereby a decent new-issue premium is essential to a successful deal. Normality is returning to European debt capital markets, but the heady days of super-tight credit spreads and incredibly low non-core government bond yields look to be over.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Wanted: Knowledgeable and experienced CEO, preferably female, to take over the running of a $42 billion utility from a knowledgeable and experienced CEO, also female. No strategic shift necessary — the last CEO got things broadly right. Close ties with Emmanuel Macron a plus.That may well be the kind of job ad France’s Engie SA has in mind as it begins the search for a candidate to replace Isabelle Kocher, the only female chief executive officer in the CAC 40 blue-chip index. Her firing, barely four years into the job, says a lot about the consequences of trying to turn a fossil fuel-dependent energy utility into a greener, pro-renewables ally of sustainable, inclusive capitalism. Kocher’s strategy was broadly on target, but she ended up paying the price for the political, governance and financial problems that ensued. It’s a warning for her successor, and the industry.The seeds of Kocher’s downfall were probably sown early in her tenure. Her appointment in 2016 was a landmark for several reasons: She was the first woman to run a CAC 40 company; she was pledging to sell 15 billion euros ($16.5 billion) of Engie assets and to exit coal and oil; and she was the first serious counterweight to the power of Gerard Mestrallet, who after more than two decades in Engie’s driving seat became chairman. Thus began a series of struggles between the two over strategy, management and style that never really subsided. (Mestrallet was replaced as chairman by Jean-Pierre Clamadieu in 2018, but the latter’s relationship with Kocher deteriorated too).It’s always hard to make friends inside a company as you set about shrinking it. But Kocher’s revolution seems to have made enemies everywhere. Resentment built up among top managers, and she reacted by wielding the ax. Mestrallet, meanwhile, despite having groomed the CEO for the role, was reluctant to give her breathing space. In a clear example of “one rule for the boys,” she failed in her bid to take a joint chairman and CEO role — a position Mestrallet enjoyed for years. While Kocher’s style sometimes rubbed people the wrong way, Mestrallet’s sprawling Engie empire wasn’t easy to revamp. On the financial front, analysts endorsed Kocher’s plan to push deeper into renewables and services, reducing the risk of being lumbered with “stranded” fossil fuel assets. But the trade-offs of this kind of approach can be brutal in the short term. They mean selling unloved assets that still generate lots of cash, and buying pricey assets that don’t. Engie’s cash flow from operations has fallen from 9.8 billion euros in 2015 to 7.3 billion euros in 2018; Ebitda has fallen from 11.3 billion euros to 9.2 billion euros. Its shares have performed worse than its peers.Yet brighter days might not have been far off for Kocher and the company. Analyst estimates compiled by Bloomberg suggest that Engie increased revenue and operating profit in 2019, and that its shares are about 7% below their 12-month potential. Engie’s board is reportedly mulling a spin-off of its regulated gas assets, which could bring in about 10 billion euros at market prices, according to UBS analysts.Unfortunately, nobody was prepared to wait and see. Politics proved to be the final decider on Kocher: The French state owns 24% of Engie, and the rift at the top was starting to make things awkward for President Emmanuel Macron. The government’s Engie stake has been marked for sale as a potential source of renewable energy funding; selling at an underwhelming price would be bad for taxpayers. Worse, Kocher’s allies in Paris — including Socialist Mayor Anne Hidalgo and several pro-environment politicians — launched a very public lobbying campaign to keep her in the job, which probably ended up hastening her demise.Before making the final decision to oust Kocher, French Economy Minister Bruno Le Maire declared earlier this week that the state would use only “economic criteria” when settling her fate. That’s hard to believe, given that the clashes were mostly about personality and governance — and whoever replaces her will probably stick to the same strategy. Nevertheless, Kocher’s case does show the difficulty of mixing shareholder capitalism and the pursuit of purposeful profit.To contact the author of this story: Lionel Laurent at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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(Bloomberg) -- Starbucks Corp. won a court fight and a Fiat Chrysler Automobiles NV unit lost one over European Union tax orders in decisions that left lawyers puzzling over the impact on Apple Inc.’s chances of toppling a record 13 billion-euro ($14.3 billion) bill.Even though the amounts at stake in Tuesday’s rulings -- about 30 million euros each for Starbucks and Fiat -- aren’t huge, lawyers are now poring over the judgments ahead of multiple appeals as companies, including the iPhone maker, counter EU Competition Commissioner Margrethe Vestager’s five-year crackdown on allegedly unfair tax deals.While Vestager generally came out of the latest rulings on top, “what this bodes for the eventual decision in the Apple case is still not clear,” said Howard Liebman, a tax partner at Jones Day, a Brussels law firm. He isn’t involved in the disputes. “There will be no ‘cookie cutter’ decisions relying on broad or sweeping generalizations about paying one’s ‘fair share’ of tax,” he said.The EU General Court in Luxembourg said Tuesday that the EU failed to show that coffee giant Starbucks obtained an unfair tax deal by the Netherlands. The judges threw out a similar challenge by Fiat over its fiscal arrangements in Luxembourg.“The principles laid down in these judgments provide some ammunition for both the taxpayers and the commission in the ongoing investigations,” said Natura Gracia, a lawyer with Linklaters in London.Tax AgreementsChallenges have been piling up at the EU courts since state-aid investigators started work in 2013 to unearth what they deemed to be the most problematic examples of otherwise legal individual tax agreements, known as tax rulings, doled out to companies by member countries.Luxembourg’s finance ministry said it would “analyze the judgment” and pointed out that the government “in the past few years has done numerous reforms to find against fiscal fraud and tax evasion.”The Dutch finance ministry is “glad there is clarity” following the court ruling, deputy finance minister Menno Snel said in an emailed statement. The judgment “means that the tax authorities have not treated Starbucks better or differently than other companies,” he said.Fiat said in an emailed statement that while it’s disappointed with the ruling and considering its next steps, the decision isn’t material to the group.No ‘Special’ TreatmentStarbucks said in a statement that it pays its taxes wherever they are due and that the ruling in its challenge “makes clear” that it “did not receive any special tax treatment from the Netherlands.”The decisions, which can be appealed to the EU Court of Justice, “give important guidance” to the commission on how to apply EU state aid rules in tax cases, and the regulator will study them before deciding on the next steps, according to a statement by Vestager.She said they “confirmed the commission’s approach to assess whether a measure is selective and if transactions between group companies give rise to an advantage under EU state-aid rules based on the so-called ‘arm’s length principle’.”Vestager, who’s set to take on another five-year stint as competition commissioner, said she’ll continue to look at “aggressive tax planning measures under EU state aid.” Ultimately, the goal is that all companies “pay their fair share of tax,” she said.In the Apple case, the EU said Ireland illegally reduced the company’s tax bill, a finding Apple and Irish officials don’t accept.Apple declined to comment Tuesday beyond pointing to its remarks in a hearing in its own appeal at the same court last week. It told judges it’s “now paying around 20 billion euros in tax in the U.S. on the very same profits that the Commission says should also have been taxed in Ireland.”The guidance from judges on the European Commission’s use of state aid law could also have an impact on Vestager’s tax probes, now centering on fiscal deals done by Alphabet Inc. and Ikea.Starbucks and Fiat were targeted on the same day in 2015 by a similar EU order to pay back 30 million euros each over their tax arrangements in the Netherlands and Luxembourg respectively.The EU said at the time the companies did this by setting prices for products and services sold between units -- called transfer prices -- that didn’t reflect market conditions.“These two judgments prove that the court will look at the precise facts of each state aids case brought before it and judge each on their individual merits,” Liebman said in an email.Finding itself at the receiving end of most of the EU’s decisions since then, Luxembourg was ordered to recoup 250 million euros from Amazon.com Inc. in 2017 and 120 million euros in back taxes from energy utility Engie SA, France’s former natural-gas monopoly, previously known as GDF Suez, last year.The cases are: T-636/16 - Starbucks and Starbucks Manufacturing Emea v. Commission, T-755/15 - Luxembourg v. Commission, T-759/15 - Fiat Chrysler Finance Europe v. Commission, T-760/15 - Netherlands v. Commission.\--With assistance from Ruben Munsterman and Tommaso Ebhardt.To contact the reporter on this story: Stephanie Bodoni in Luxembourg at email@example.comTo contact the editors responsible for this story: Anthony Aarons at firstname.lastname@example.org, Peter Chapman, Paul SillitoeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.