JEF - Jefferies Group

[matjone]

My broker  says the last dividend was on 11/15 and no other dividends have been declared.  So they haven't declared one, but I don't know if that means they won't pay one.  If they stay on schedule they will pay one.  So the formula if you value crimson at BV is

 

LUk price-0.25-0.81 = (JEF price -.075)/.81

 

that's without doing any time discounting of course.

 

Is that how the rest of you have it figured?

 

The people who bought JEF at 11 after the MF global scandal certainly got LUK  cheap, assuming the deal goes through.

[ShahKhezri]

I'm assuming once the merger is closed 1Q13, the dividend will be .0625/quarter.  This will be the last 0.25 dividend. 

 

"Leucadia's Board of Directors has indicated its intention to continue to pay dividends at the annual rate of $0.25 per common share, but on a quarterly basis following the merger."

 

Sachin Shah

Analyst, Tullett Prebon Financial Services LLC Q

I just wanted to follow up on the dividend question, so you guys – just to be clear – you guys are going to be

continuing your dividend policy until the deal gets completed

 

Richard B. Handler

Chairman & Chief Executive Officer, Jefferies Group, Inc. A

Jefferies will continue its dividend policy and Jefferies' board will decide – and Leucadia's board will decide their

dividend policy, but we're giving guidance that we're thinking maintaining it at $0.25 on a quarterly basis.

 

I already owned LUK, post announcement I purchased JEF because if you assume that Crimson is spun off and there will be a large shareholder base that may sell the position, that should have some discount to it.  I have my doubts on how long Crimson stays public.

[matjone]

Ok thanks for posting that.  I just realized I wasn't very clear in my last post, but I was talking about the JEF dividend and not the LUK dividend.  Looks like buying JEF is the cheaper way to buy, but not by much.

 

[compoundinglife]

I already owned LUK, post announcement I purchased JEF because if you assume that Crimson is spun off and there will be a large shareholder base that may sell the position, that should have some discount to it.  I have my doubts on how long Crimson stays public.

 

I don't know much about wine other than reading about Crimson in the annual reports, but I have a friend who is a "Master of Wine" http://en.wikipedia.org/wiki/Master_of_Wine. I have some time scheduled with him to get his opinion on their products and their reputation. Will be interested to see how it trades.

[Shane]

It seems everyone is taking Crimson at book value, but I wonder if it is not reasonable to expect them to be spun off at a premium to BV  They will now be selling 200k cases of wine after their expansion.  I bought LUK but am of the same opinion of Shahkhezri.  I'll likely sell Crimson immediately and look to buy back if it becomes a value play.

 

FWIW: TWE sells at 2xBV

[biaggio]

http://business.financialpost.com/2012/11/28/inmet-rejects-first-quantum-bid/

 

Inmet rejects First Quantum takeover bid (at $70 per share)

 

LUK owns 5.6 million shares

[Parsad]

Knight deal could add to Jefferies windfall as lead rescuer.  Cheers!

 

http://blogs.wsj.com/deals/2012/11/28/knight-deal-could-add-to-jefferies-windfall-as-lead-rescuer/?mod=yahoo_hs

[biaggio]

More good news for LUK/JEF

 

http://blogs.wsj.com/deals/2012/11/28/knight-deal-could-add-to-jefferies-windfall-as-lead-rescuer/?mod=WSJBlog&mod=

 

Jefferies Group Inc. stands to collect a big return for its dual role as embattled Knight Capital Group Inc.’s lead rescuer and now financier to its possible new owner, Getco LLC.

 

 

Courtesy of Jefferies

The projected windfall, which could be about $184 million–including advisory fees Knight previously paid Jefferies–reflects mark-to-market gains from Jefferies’ initial $125 million investment in Knight more than three months ago.

 

Jefferies would also be providing about $950 million in financing to Getco in the Knight deal, according to people familiar with the situation.

[txlaw]

And I suppose the deal will close after the LUK/JEF transaction does, making the gains tax free?

[Sportgamma]

Inmet turns down First Quantum bid, adopts rights plan

* Inmet says offer values company at C$70 a share

 

* Inmet says First Quantum bid not in shareholders' best interests

 

* Inmet shares close up 17.65 percent at C$62 on TSX

 

http://www.reuters.com/article/2012/11/28/inmet-firstquantum-idUSL1E8MSBGS20121128?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews&rpc=43

 

 

[ShahKhezri]

So just this week the monetization of JEF's KCG and LUK's IMN will raise over ~$600MM, if both transactions close.  Pretty impressive.

[rogermunibond]

 

Interesting take on LUK's petcoke to methanol project; however, the author doesnt add in the additional CO2 and H contracts with Denbury and BP.

 

INSIGHT: A new pitch in North American methanol

 

ICIS News : 19-Nov-12 15:00

 

 

HOUSTON (ICIS)--A new category has surfaced in North American methanol, that of an old idea which never quite arrived but is being pitched again. This is a project that never made it off the drawing board to commissioning, like a binder that is being dusted off once more.

 

A prime example occurred in late October with the announcement by US-based Lake Charles Clean Energy (LCCE) that it has lined up long-term contracts for a petroleum-coke-to-methanol project in Louisiana. Making methanol from petcoke is the idea being dusted off. The parent company of LCCE, Leucadia National, has three such projects in the works.

 

Petcoke is the sludgy, hydrocarbon residue left after crude oil has been cracked, and extracting methanol and other chemicals is done through gasification. Gasification projects for making other chemicals were more popular before the price of US natural gas plunged from the development of shale gas reserves.

 

US-based Eastman Chemical announced a gasification project in 2007 to be built in Beaumont, Texas, but abandoned it two years later, citing high capital costs, uncertain US regulations and the likely persistence of a smaller spread between prices for natural gas and oil and petroleum coke.

 

LCCE said its proposed $2.5bn ($1.95bn) plant in Lake Charles would be the first ever methanol-to-petcoke plant in the US, and the cost says a lot about the economics of making petcoke from methanol. The company says it has already covered about 75% of the plant construction cost with state and federal financing, with the largest portion from $1.5bn in tax-exempt bonds from the Louisiana State Bond Commission.

 

Add to that another $261m in grants from the US Department of Energy, and $128m in federal investment tax credits. That still leaves LCCE about $500m short, though. The company says it is still working on third-party financing and will not make a final decision until next year.

 

That project’s cost is a few multiples of what producers are spending in North America on restart plant projects. Methanex spent approximately $60m restarting Medicine Hat, OCI spent a similar amount restarting a plant in Beaumont Texas, and LyondellBasell plans on spending $150m to restart a unit near Houston.

 

The most expensive restart project is Methanex’s plan to ship one of its idle plants in Chile to Louisiana for $550m, and the company said recently that it may be able to ship another one - if and when that decision is made - for $450m. Celanese’s new plant in Clear Lake is the only start-from-scratch project that has been announced and will cost an estimated $500m-$1bn. The company has said it is looking for a partner to share the expense.

 

So Methanex could pack two of its 1m tonne/year plants in Chile, put them in crates, load them on ships and transport them from the tip of South America to the Gulf of Mexico for only 40% of the cost of building the first-ever petcoke-to-methanol plant in the US.

 

The reason why it would be the first is that, while the price of methanol may follow crude over the long run, producers prefer natural gas as a major feedstock because of its cost. Even when US natural gas prices shot up to $15/MMBtu in 2005, producers decided to close their US plants and move to where there was cheaper gas, in Trinidad and Venezuela and Africa, rather than shift to making methanol from oil.

 

Now that US natural gas is cheap again - or at least relatively cheap, below $4/MMBtu - producers are restarting some of those mothballed plants that were closed seven or eight years ago.

 

Methanol industry veterans cited similar gasification projects in California and Texas that failed because the favourable economics were not there. One source remembered the Lake Charles project as dating back almost a decade. He said he could not see how gasified coke could compete with natural gas, given the capital cost to gasify and the abundance of reasonably priced natural gas. Said another source: “It is a project for the future, the distant future.”

 

Industry veteran Deo Van Wijk, who put the deal together to restart the Eastman plant in Beaumont, said making methanol is technically feasible, but at a cost. “To me it looks like trying it the hard way versus natural gas or shale gas, both of which are abundantly available and the plant would be substantially cheaper,” Van Wijk said.

 

Another gasification project promoted by LCCE’s parent, Leucadia National, met firm political resistance earlier this year. The company wanted to build a coal and petcoke project on the southeast side of Chicago, but Illinois Governor Pat Quinn vetoed the project in August for financial reasons. Quinn also raised the spectre of cheaper shale gas when he explained his veto of a project that had been percolating for decades.

 

“Current natural gas prices are at historic lows, and many indicators suggest prices will remain low for years to come,” Quinn said. “These new facts require further scrutiny, and a revisiting of the economics of this 30-year project.” 

 

One can see the economic conflict in Leucadia’s annual letter to shareholders, which also touched on the economics of natural gas posing a threat to the company’s petcoke projects, not just in Louisiana but also in Mississippi, Indiana and Illinois.

 

“Our ability to get these projects to the starting line is being slowed by the current low price of natural gas,” says the Leucadia letter, written in the easy-to-read style of Warren Buffett’s annual letter to shareholders of Berkshire Hathaway. The Leucadia letter even praises a Leucadia executive steering the projects “despite the challenges of the shale revolution.”

 

Whatever the chances of Leucadia’s Louisiana project, the company owns so many different businesses that making methanol from petcoke seems to be just one among many on its idea list. Last week, Leucadia bought the investment banking firm Jefferies Group for $2.8bn in stock, almost as much it will cost to build a petcoke plant in Louisiana. New stories on the deal called Leucadia a “baby Berkshire,” because of its similarity to the company operated by Buffett.

[Grenville]

New refreshed website. Nice update.

 

http://www.jefferies.com

[fareastwarriors]

http://www.bloomberg.com/news/2012-12-11/jefferies-vows-immediate-all-cash-bonuses-as-bigger-banks-defer.html

 

 

Jefferies Vows Immediate All-Cash Bonuses as Bigger Banks Defer

 

 

 

Jefferies Group Inc. (JEF), the investment bank that agreed to sell itself to Leucadia National Corp. (LUK), said it will pay year-end bonuses in immediately available cash, according to a memo to employees.

 

 

 

[zippy1]

http://www.bloomberg.com/news/2012-12-11/jefferies-vows-immediate-all-cash-bonuses-as-bigger-banks-defer.html

 

 

Jefferies Vows Immediate All-Cash Bonuses as Bigger Banks Defer

 

 

 

Jefferies Group Inc. (JEF), the investment bank that agreed to sell itself to Leucadia National Corp. (LUK), said it will pay year-end bonuses in immediately available cash, according to a memo to employees.

 

Is this the standard practice for this kind of situation?  Somehow this reminds me of BAC-ML case? Any comments from board members who work in this field?

[Parsad]

http://www.bloomberg.com/news/2012-12-11/jefferies-vows-immediate-all-cash-bonuses-as-bigger-banks-defer.html

 

 

Jefferies Vows Immediate All-Cash Bonuses as Bigger Banks Defer

 

 

 

Jefferies Group Inc. (JEF), the investment bank that agreed to sell itself to Leucadia National Corp. (LUK), said it will pay year-end bonuses in immediately available cash, according to a memo to employees.

 

Is this the standard practice for this kind of situation?  Somehow this reminds me of BAC-ML case? Any comments from board members who work in this field?

 

No, I think this more of quelling rumors among staff, that their bonuses would be deferred or paid out in the new year.  Sometimes during deals, the staff aren't always sure what is happening, and you start to get rumors flying about what is actually happening to the company, jobs, pensions, bonuses, etc. 

 

Also, while bigger institutions are tightening compensation policies, some of those key employees at top firms may be willing to jump ship to a smaller competitor, who has a ton of room to grow and is going to treat them better in terms of compensation.  Cheers! 

[ShahKhezri]

Depending on how they are structured even though it's "all cash", sometimes there are clawbacks. 

[zippy1]

ShahKhezri and Parsad,

 

        Thanks a lot for taking the time to explain this to me.     

[Kraven]

http://www.bloomberg.com/news/2012-12-11/jefferies-vows-immediate-all-cash-bonuses-as-bigger-banks-defer.html

 

 

Jefferies Vows Immediate All-Cash Bonuses as Bigger Banks Defer

 

 

 

Jefferies Group Inc. (JEF), the investment bank that agreed to sell itself to Leucadia National Corp. (LUK), said it will pay year-end bonuses in immediately available cash, according to a memo to employees.

 

Is this the standard practice for this kind of situation?  Somehow this reminds me of BAC-ML case? Any comments from board members who work in this field?

 

No, I think this more of quelling rumors among staff, that their bonuses would be deferred or paid out in the new year.  Sometimes during deals, the staff aren't always sure what is happening, and you start to get rumors flying about what is actually happening to the company, jobs, pensions, bonuses, etc. 

 

Also, while bigger institutions are tightening compensation policies, some of those key employees at top firms may be willing to jump ship to a smaller competitor, who has a ton of room to grow and is going to treat them better in terms of compensation.  Cheers!

 

I would say that the "all cash" portion of this is unusual especially after the financial crisis.  Typically lots of stock involved.  I have no idea in this case what the exact ramifications of doing that would be given the LUK acquisition though.  Either way, JEF bankers will have a nice holiday and at the very least will have something to spend as opposed to deferred paper.

[OracleofCarolina]

First Quantum Increases Inmet Offer 2.9% to $5.18 Billion

 

First Quantum Minerals Ltd. (FM), a producer of copper in Africa, raised its bid for Inmet Mining Corp. (IMN) for a second time to about C$5.1 billion ($5.18 billion) as it seeks to gain control of the Cobre Panama project.

 

It’s offering C$72 in a mixture of stock and cash for each Inmet share, Vancouver-based First Quantum said in a statement today. That’s 36 percent more than Inmet’s share closing share price on Nov. 27, the day before the company said publicly that it had rejected two earlier, unsolicited offers from First Quantum. The latest bid is also 2.9 percent more than First Quantum’s previous offer of C$70 a share.

 

Cobre Panama is the second-largest undeveloped copper deposit, according to data compiled by Bloomberg. Toronto-based Inmet plans to spend $6.2 billion developing the mine to produce an average of 266,000 tons a year of the metal. Copper prices have more than quadrupled over the past 10 years as demand at times outpaced supply.

 

In addition to its project in Panama, Inmet operates mines in Finland, Spain and Turkey. Leucadia National Corp. (LUK), based in New York, owns 16 percent of Inmet and Temasek Holdings Pte Ltd., Singapore’s state investment company, has 11 percent, according to data compiled by Bloomberg.

 

The deal would create a metals producer “with leading growth in copper production and cash flow generation,” First Quantum Chairman and Chief Executive Officer Philip Pascall said in the statement. “We know that this vision is shared by key shareholders of Inmet.”

 

Flora Wood, a spokeswoman for Inmet, did not immediately respond to a request for comment.

 

Congo Assets

 

First Quantum, founded in 1996 by Pascall, operates the Kansanshi copper mine in Zambia, the Guelb Moghrein copper and gold mine in Mauritania and the Ravensthorpe nickel mine Australia.

 

In 2009, the Congolese government stripped First Quantum of rights to the Kolwezi copper project. London-based Eurasian Natural Resources Corp. bought rights to Kolwezi the following year and First Quantum began legal action against ENRC. The dispute was settled in 2012 when ENRC agreed to pay First Quantum $1.25 billion for First Quantum’s share of the Kolwezi and two other Congolese assets.

 

First Quantum is the world’s 13th-biggest copper producer and predicts it will become the sixth-biggest in 2016, it said in a February presentation.

 

To contact the reporter on this story: Simon Casey in New York at scasey4@bloomberg.net

 

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

 

Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/

 

 

Sent from my iPhone

[fareastwarriors]

First Quantum Increases Inmet Offer 2.9% to $5.18 Billion

 

First Quantum Minerals Ltd. (FM), a producer of copper in Africa, raised its bid for Inmet Mining Corp. (IMN) for a second time to about C$5.1 billion ($5.18 billion) as it seeks to gain control of the Cobre Panama project.

 

It’s offering C$72 in a mixture of stock and cash for each Inmet share, Vancouver-based First Quantum said in a statement today. That’s 36 percent more than Inmet’s share closing share price on Nov. 27, the day before the company said publicly that it had rejected two earlier, unsolicited offers from First Quantum. The latest bid is also 2.9 percent more than First Quantum’s previous offer of C$70 a share.

 

Cobre Panama is the second-largest undeveloped copper deposit, according to data compiled by Bloomberg. Toronto-based Inmet plans to spend $6.2 billion developing the mine to produce an average of 266,000 tons a year of the metal. Copper prices have more than quadrupled over the past 10 years as demand at times outpaced supply.

 

In addition to its project in Panama, Inmet operates mines in Finland, Spain and Turkey. Leucadia National Corp. (LUK), based in New York, owns 16 percent of Inmet and Temasek Holdings Pte Ltd., Singapore’s state investment company, has 11 percent, according to data compiled by Bloomberg.

 

The deal would create a metals producer “with leading growth in copper production and cash flow generation,” First Quantum Chairman and Chief Executive Officer Philip Pascall said in the statement. “We know that this vision is shared by key shareholders of Inmet.”

 

Flora Wood, a spokeswoman for Inmet, did not immediately respond to a request for comment.

 

Congo Assets

 

First Quantum, founded in 1996 by Pascall, operates the Kansanshi copper mine in Zambia, the Guelb Moghrein copper and gold mine in Mauritania and the Ravensthorpe nickel mine Australia.

 

In 2009, the Congolese government stripped First Quantum of rights to the Kolwezi copper project. London-based Eurasian Natural Resources Corp. bought rights to Kolwezi the following year and First Quantum began legal action against ENRC. The dispute was settled in 2012 when ENRC agreed to pay First Quantum $1.25 billion for First Quantum’s share of the Kolwezi and two other Congolese assets.

 

First Quantum is the world’s 13th-biggest copper producer and predicts it will become the sixth-biggest in 2016, it said in a February presentation.

 

To contact the reporter on this story: Simon Casey in New York at scasey4@bloomberg.net

 

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

 

Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/

 

 

Sent from my iPhone

 

Sweet, more value for LUK's investment.

 

 

[Liberty]

http://financialpostbusiness.files.wordpress.com/2012/12/bz1217-inmet.jpg?w=620

 

Las Cruces. Just thought it was a nice photo.

[Liberty]

Analysts have noted that Inmet could be a tough company to acquire because it has a tight shareholding structure. Roughly 27% of the shares are held by just two investors: Leucadia National Corp. and Temasek Holdings Ltd., which is Singapore’s state-owned investment company.

 

First Quantum said it has received “a number of approaches” from Inmet’s key shareholders, who were excited about the proposal and would like to see a “constructive dialogue” between the two companies.

 

[...]

 

First Quantum is arranging a US$2.5-billion acquisition facility in order to make this offer. The company’s financial advisors are Goldman Sachs, Jefferies International and RBC Capital Markets.

 

Interesting that Jefferies is an advisor in that deal :)

[roundball100]

Analysts have noted that Inmet could be a tough company to acquire because it has a tight shareholding structure. Roughly 27% of the shares are held by just two investors: Leucadia National Corp. and Temasek Holdings Ltd., which is Singapore’s state-owned investment company.

 

First Quantum said it has received “a number of approaches” from Inmet’s key shareholders, who were excited about the proposal and would like to see a “constructive dialogue” between the two companies.

 

[...]

 

First Quantum is arranging a US$2.5-billion acquisition facility in order to make this offer. The company’s financial advisors are Goldman Sachs, Jefferies International and RBC Capital Markets.

 

Interesting that Jefferies is an advisor in that deal :)

 

Can Jefferies really advise on this, without a serious conflict of interest? 

[Parsad]

Analysts have noted that Inmet could be a tough company to acquire because it has a tight shareholding structure. Roughly 27% of the shares are held by just two investors: Leucadia National Corp. and Temasek Holdings Ltd., which is Singapore’s state-owned investment company.

 

First Quantum said it has received “a number of approaches” from Inmet’s key shareholders, who were excited about the proposal and would like to see a “constructive dialogue” between the two companies.

 

[...]

 

First Quantum is arranging a US$2.5-billion acquisition facility in order to make this offer. The company’s financial advisors are Goldman Sachs, Jefferies International and RBC Capital Markets.

 

Interesting that Jefferies is an advisor in that deal :)

 

Can Jefferies really advise on this, without a serious conflict of interest?

 

The same question is arising around the Knight Capital deal too.  I guess apparently Jefferies can advise, but some people are questioning it.  Cheers!

 

http://finance.yahoo.com/news/knight-capitals-board-said-split-053120065.html;_ylt=Ak_OgcZwHe0zGtfml3sll1OiuYdG;_ylu=X3oDMTRwOG8ycHBqBG1pdANGaW5hbmNlIEZQIFRvcCBTdG9yaWVzIG1peGVkIGxpc3QEcGtnAzNhMjVkNjU0LTM1OGItM2QxZS04MjA0LTRmMDg1MTc5NjM5YgRwb3MDMgRzZWMDTWVkaWFCTGlzdE1peGVkTFBDQVRlbXAEdmVyAzY2OThlOTIwLTQ4ZDQtMTFlMi1hZmMwLTc2ZmMzZWNmNjdlMQ--;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3