01 March 2007| Big in Texas: Energy Company Agrees to a Record Buyout | |
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They are offering to buy all shares in TXU and take the company private. That means it would stop trading on a public stock exchange.
A leverage buyout depends heavily on borrowed money, often for the purpose of selling the company later. This leveraged buyout would be the biggest yet -- an estimated value of around forty-five billion dollars, including debt.
KKR and Texas Pacific Group would take responsibility for more than twelve billion dollars owed by TXU. They would add twenty-four billion dollars in new debt through borrowing to finance the sale.
The proposal calls for them to each pay two billion dollars in cash. Investment banks would provide an additional three billion. And banks would also provide a one billion dollar unsecured loan known as an "equity bridge."
One of the unusual things about this proposal is that utilities are not a traditional target of leveraged buyouts. Utilities provide public services like power and water.
TXU just reported two and one-half billion dollars in profits last year, up fifty percent from the year before. But utilities often have a lot of debt because of high operating costs. At the same time, states may limit rates if prices rise too high.
Most unusual about the deal, however, are the promises made by KKR and Texas Pacific. These buyout specialist groups say they will cut electricity prices ten percent and offer "price protection" through September of two thousand eight.
Also, to reduce carbon emissions linked to climate change, they promise to build fewer power stations that burn coal than TXU had planned. And they promise to explore greater use of alternative and renewable fuels. Two activist groups, Environmental Defense and the Natural Resources Defense Council, supported the deal.
Critics, however, say TXU may be worth more than what is being offered. Shareholders cannot vote on the proposal before April sixteenth. For now, the company may consider any competing offers.
And that's the VOA Special English Economics Report. This week, the top story in financial markets was the sudden flight from risk. A full report -- tomorrow on the program IN THE NEWS. I'm Mario Ritter.
01 March 2007| 'Everything Is Big in Texas.' Building a Case for an Expression | |
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DownloadWelcome to AMERICAN MOSAIC, in VOA Special English.
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I'm Doug Johnson. On our show this week:
We answer a question about the state of Texas …
Play some music by world famous musician Yo-Yo Ma …
And report about the successful coffee stores called Starbucks.
Starbucks
Starbucks coffee shops can be found all over America and in more than thirty countries around the world. Many people think they are great places to enjoy a hot cup of coffee or tea. But others criticize the company. Faith Lapidus has more.
FAITH LAPIDUS:
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Sales last year were almost eight billion dollars. The company believes in opening many stores in busy areas of cities. For example, there are about thirty Starbucks stores in downtown Seattle. Recently, three Starbucks opened in the area near VOA headquarters in Washington, D.C.
Starbucks sells more than just plain coffee. It started a whole coffee culture with its own special language and coffee workers called baristas. It sells many kinds of hot and cold coffee drinks, like White Chocolate Mocha and Frappuccino. It also sells music albums, coffee makers, food, and even books. But most of all, it sells the idea of being a warm and friendly place for people to sit, read or talk.
Starbucks is a great success story. Buyers are willing to pay as much as five dollars for a coffee drink. People we talked to said they go to Starbucks because they can depend on it to have exactly what they want and to be nearby.
However, some people do not like the company’s aggressive expansion. Owners of independent coffee stores cannot compete with Starbucks. One small coffee seller is taking the company to court. She says the way the company does business is illegal because it stops property owners from leasing stores to other coffee companies. She sees Starbucks as controlling the market and forcing out competition.
Nicolas O’Connell works for La Colombe, a coffee roasting company based in Philadelphia, Pennsylvania. He says Starbucks has helped to educate people about coffee from many countries. But he criticizes the company for using machines more than people to make the coffee. Mister O’Connell points out that the coffee culture is all about a handmade product and interaction between people.
Bigger in Texas?
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| Barack Obama, a candidate for the 2008 Democratic presidential nomination, was handed a cowboy hat after a rally last month in Austin, Texas |
We do not know where that saying came from. But it fits the southwestern state well. Texas is the biggest state by area in the continental United States. It is almost seven hundred thousand square kilometers. Only Alaska is bigger. Texas is also the second biggest state in population, after California. More than twenty-three million people live in the state.
Texas got even bigger in two thousand five after Hurricane Katrina hit several southeastern states. It received and sheltered almost two hundred thousand people from the affected states, Louisiana, Mississippi and Alabama.
Texas is the home of the big oil companies. It is also a leader in other industries, including biomedical research and information technology. The city of Houston is especially famous for its big aerospace industry and the NASA space center there.
And, Texas has grown big with powerful and profitable companies. Last year, Texas had the largest number of Fortune Five Hundred companies headquartered in the state -- fifty-six.
Texas is also home to big cattle ranches. Cattle is a major state industry. Texas also leads the states in international trade exports.
With all this, the Texas economy is very big. The value of its total goods and services has grown to almost one trillion dollars a year.
Visitors find that even normally small things are often big in Texas. Like hats, for example. Texans describe their big cowboy hats as "ten gallon." And, Texan women are said to like "big hair." These hairstyles are often layered high on the head and very full around the face.
Texans are often thought of as Americans with big personalities, big voices and big opinions. And, most Texans are proud of those descriptions.
As you probably know, the current American President, George Bush, is a Texan. He was not born in the state but moved there with his parents when he was two years old. He was governor of the state for six years and still owns a home in Crawford where he spends many of his vacations.
Yo-Yo Ma
Yo-Yo Ma is one of the finest and most popular cello players in the world. He was born in nineteen fifty-five to Chinese parents in Paris, France. His family later moved to New York City. He has been playing the cello since he was four years old. Now Yo-Yo Ma has a new album called "Appassionato." Shirley Griffith tells us about it.
SHIRLEY GRIFFITH:
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The music on "Appassionato" is by many different composers, from Felix Mendelssohn to George Gershwin. Yo-Yo Ma says he chose the music for "Appassionato" to represent different kinds of love. Nine different musicians play the piano on the CD. Ma says "Appassionato" also represents his love for performing music with friends. Here is Yo-Yo Ma playing "Going to School," composed by his friend John Williams. It is from the recent movie "Memoirs of a Geisha." Ma says this music is about innocent love.
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Ennio Morricone is another modern composer best known for his music for films. Two of his pieces are included in the album. Yo-Yo Ma says "Gabriel's Oboe" is one of the most romantic pieces of music. He says it has layers and layers of emotion.
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We leave you now with one of the songs recorded especially for Yo-Yo Ma's new CD "Appassionato." It is "Song Without Words" by Felix Mendelssohn.
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HOST:
I'm Doug Johnson. I hope you enjoyed our program today.
It was written by Dana Demange, Shelley Gollust and Caty Weaver, who also was our producer. To read the text of this program and download audio, go to our Web site, voaspecialenglish.com.
Join us again next week for AMERICAN MOSAIC, VOA’s radio magazine in Special English.
