04 Apr, 2011, 09:30 ET
CHICAGO, April 4, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: General Motors Co. (NYSE: GM), JP Morgan Chase (NYSE: JPM), Royal Dutch Shell plc (NYSE: RDS.A), BP plc (NYSE: BP) and Exxon Mobil Corp. (NYSE: XOM).
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Here are highlights from Friday's Analyst Blog:
GM Gets $3.8B from Delphi Sale
General Motors Co. (NYSE: GM) announced that it will receive $3.8 billion by selling its stake in auto parts maker Delphi Automotive. Delphi, which spun off from GM in 1999, completed its bankruptcy restructuring in four years till it was purchased by a group of 80 private investors in October 2009.
Elliott Management and Silver Point Capital bought a controlling interest in Delphi. Delphi paid for the deal with cash from a $3 billion credit facility from JP Morgan Chase (NYSE: JPM).
The deal would bolster GM's balance sheet and increase its appeal to investors. GM revealed it would report a gain of $1.6 billion in the first quarter related to the sale. The company also recorded a gain of $300 million for the quarter by selling preferred stock in its former financing arm, Ally Financial, in March for $1 billion through a public offering.
Delphi recorded revenues of $13.8 billion and earned $1.4 billion before interest, taxes, depreciation and amortization in 2010. Apart from GM, it also bought back $594 million worth of shares owned by Pension Benefit Guaranty Corp. ("PBGC").
PBGC obtained its interest as a partial settlement of its claims when Delphi terminated its pension plans in bankruptcy court. The PBGC has been paying pension benefits to 70,000 Delphi workers and retirees since 2009.
GM filed for bankruptcy in mid-2009. Post bankruptcy, GM was primarily owned by the U.S. government and Canada government, and by a trust fund providing medical benefits to United Auto Workers (UAW) retirees.
The U.S. government holds a 61% stake, the UAW union holds a 17.5% stake through its Retiree Medical Benefits Trust and the Canadian government holds 11.7%. The remaining shares went to the bondholders of the old company. After bankruptcy restructuring, GM's remaining assets were put into another entity called Motors Liquidation Company ("MLC").
Shell Trims Downstream Unit
Royal Dutch Shell plc (NYSE: RDS.A) has entered into an agreement with Chilean business conglomerate Quinenco for the sale of a majority of its downstream business located in that country. The total consideration of the deal has been settled at approximately $614 million. Both companies await the final approval for the completion of the proposed deal.
The assets to be disposed include Shell's existing Retail, Commercial Fuels, Bitumen and Chemicals businesses, along with related supply and distribution infrastructure in Chile. However, the retail network comprising 300 sites will retain the Shell brand via a trademark license agreement.
In addition to the above deal, Quinenco will act as a Macro Distributor and market, sell and supply Shell branded lubricants in Chile. The former will also operate as a delivery service provider, distributing Shell Marine Products to customers over there.
This divestment forms a part of Shell's strategy to narrow its downstream asset base and concentrate on the more cost effective and high return generating exploration and production end of the business.
The Hague, Netherlands-based Shell is a global energy company engaged in oil and gas exploration, production, refining and marketing with operations and assets across the globe. Given Shell's strong operational and production efficiency as well as contribution from numerous growth projects, we expect it to continue the revenue and earnings growth momentum over the next few quarters.
We expect the company to benefit from the rise in oil prices, operational and production efficiency as well as the strengthening economy in the near-to-medium term. We believe that Shell offers meaningful long-term upside potential and maintain an Outperform recommendation. Shell faces stiff competition from peers such as BP plc (NYSE: BP) and Exxon Mobil Corp. (NYSE: XOM).
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