Volkswagen pumps 2 billion euros into China electric vehicle bet

BEIJING/HONG KONG (Reuters) – Volkswagen AG (VOWG_p.DE) plans to boost its electric push in China, the world’s biggest auto market, by pumping 2.1 billion euros in two Chinese electric vehicle players.

The deals come as global rivals such as General Motors (GM.N), Toyota (7203.T) and Tesla Inc (TSLA.O) seek to expand electric sales in the Chinese car market.

Volkswagen said it will invest 1 billion euros to take a 50% stake in the state-owned parent of Anhui Jianghuai Automobile Group (JAC Motors) (600418.SS), also taking full management control of the its existing electric vehicle joint venture with JAC by raising its stake to 75% from 50%.

Volkswagen’s China chief Stephan Woellenstein told reporters on Friday the venture planned to revamp one existing JAC plant and launch its first electric model based on its MEB platform, an architecture enabling efficient production of various EV models, in 2023.

The joint venture will launch five more electric models by 2025, when the German giant aims to sell 1.5 million new energy vehicles (NEV) – including battery electric cars as well as plug-in hybrid and hydrogen fuel-cell vehicles – a year in China.

In a separate transaction, Volkswagen will pay 1.1 billion euros to acquire 26.5% of Guoxuan High-tech Co Ltd (002074.SZ), a maker of electric vehicle batteries, becoming its biggest shareholder. Volkswagen said Guoxuan, based in Hefei like JAC, will supply batteries to its EV models in China.

Woellenstein said Anhui province, where Hefei is located, will be Volkswagen’s EV manufacturing hub in China. The Wolfsburg-based automaker has not changed its EV strategy in China after the global gasoline market tumbled, he said.

He added China’s overall auto sales in the second half of this year will be level with same period last year. Volkswagen China’s full-year sales will be lower than last year due to the sales loss in the first months.

Reuters exclusively reported on Wednesday that VW was in final talks to invest in the two companies.

China has set a target of 25% of 2025 annual vehicle sales to be made up of NEVs. More than 25 million vehicles were sold in China last year.

Friday’s moves also make Volkswagen the latest foreign automaker to increase ownership of operations in China since the government started to relax rules in 2018, with German peer BMW AG (BMWG.DE) quick to take control of its main local venture.

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  • Volkswagen says it will have full control of JAC-VW Chinese venture

Tesla last year became the first foreign automaker to wholly own a car plant in China.

Volkswagen also has ventures with state-owned China FAW Group Corp Ltd [SASACJ.UL] and SAIC Motor Corp Ltd (600104.SS).

Shares in both JAC and Guoxuan climbed their maximum daily limit of 10% on Friday morning. Volkswagen’s shares fell 3%.

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LATAM's bankruptcy filing to delay its Brazil bailout to at least July: sources

RIO DE JANEIRO (Reuters) – LATAM Airlines Group’s (LTM.SN) U.S. bankruptcy filing this week will delay its potential bailout in Brazil to at least July and also push back aid to its rivals at least through the end of June, two sources said on Thursday.

The delays will add further strain to Brazil’s airlines, which were already in weak shape before the pandemic. Rivals Azul SA (AZUL.N) and Gol Linhas Aereas Inteligentes SA (GOLL4.SA) are also negotiating bailouts.

“The bailout will happen; what could happen is that it may be staggered due to LATAM’s situation,” said one source.

Neither LATAM nor Brazil’s state development bank, BNDES, which is coordinating the bailout, had an immediate comment.

LATAM’s bankruptcy filing this week has caused private banks to worry about the viability of Brazil’s airlines after the pandemic, the sources said.

LATAM’s Brazil subsidiary is not part of the U.S. bankruptcy, although executives acknowledge it is possible it might also go through a court restructuring.

Government and private banks are also worried layoffs will be unavoidable, which could have negative political implications, the sources said.

LATAM does not dispute it will lay off workers. LATAM’s Brazil CEO, Jerome Cadier, told Reuters this week the company will undergo downsizing and that layoffs are not prohibited under the government’s current draft of bailout conditions.

He added that if layoffs were banned, the rescue program would have to be much bigger. Currently, the bailout is valued at 6 billion reais.

LATAM’s bankruptcy has also raised questions about the collateral on any bailout loans.

One source said the Brazilian government is still figuring out how best to lend to LATAM considering its parent company is in bankruptcy protection. Usually the development bank asks for collateral from parent companies.

“What we would want is for that collateral to have priority over the rest of the company’s debts,” the source said.

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Masks, cleaning, filtration better than blocking middle seats: United CEO

(Reuters) – United Airlines Holdings Inc (UAL.O) Chief Executive Scott Kirby said on Thursday that facial masks, aircraft cleaning and air filtration systems are better measures for preventing the spread of the coronavirus on airplanes than trying to social distance.

“You can’t be 6 feet (1.83 meters) apart on an airplane, middle seat or not,” Kirby said at a conference.

While some rivals are capping the number of seats sold on an aircraft, United is giving passengers the option to re-book if their flight is full or nearly full.

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Sellers beware: Price collapse triggers bartering over oil and gas deals

LONDON (Reuters) – The collapse in oil prices to 21-year lows has led potential buyers of oil and gas fields to try and renegotiate deals already agreed at higher prices, with the first examples emerging of sellers having their hand forced.

At a time when most oil companies are slashing budgets, dividends and headcounts to preserve cash, sellers are facing a difficult choice between sweetening the deal or risking losing it altogether.

Premier Oil’s (PMO.L) CEO said he is seeking a cheaper price for North Sea assets it agreed to buy from BP (BP.L) for $625 million and Energean (ENOG.L) is doing the same with a $700 million purchase from Edison (EDNn.MI).

“The oil industry is revisiting its ‘before coronavirus’ (BC) bids, and we envisage announcements from other firms as they re-price or repackage previously announced deals,” said Royal Bank of Canada oil and gas equity analyst Al Stanton.

Total (TOTF.PA) this month decided to walk away from its purchase of Occidental Petroleum’s (OXY.N) assets in Ghana, which hit a glitch over part of the French firm’s wider deal with U.S. Occidental.

“Given the extraordinary market environment and the lack of visibility that the group faces… Total has decided not to pursue the completion of the purchase of the Ghana assets,” Total said in a statement.

Among deals currently on the table, private equity group Blackstone (BX.N) with its North Sea vehicle Siccar Point, was already disagreeing with another private equity firm, Chrysaor, over price even before the slump in March, sources said.

However, privately held Hilcorp Energy and private-equity firm HitecVision have successfully renegotiated deals with energy majors BP (BP.L) and Total (TOTF.PA), respectively, during the current oil price meltdown.

“Sellers, especially the majors, have certainly been very constructive,” said one industry banker.

Hilcorp’s new agreement retains the original sale price but provides for vendor financing, smaller payments in 2020 and for cash-flow sharing in the near term, BP said. The terms may lead to BP receiving less cash at the end of the day.

Total on Wednesday said it agreed to restructure a deal, initially set at $635 million, to sell North Sea oilfields to HitecVision’s NEO unit to reflect “current market conditions while retaining the majority of the value of the transaction.” This included lending money to the buyer.

“It is my view that all deals… in general will be a mixture of initial payments that are suitable for the current market and earn out or commodity price payments that allow sellers to get good deals as the volatility subsides,” HitecVision Senior Partner John Knight said.

“Vendor finance with junior (debt) facilities, working capital and marketing and hedging arrangements and in some cases tax transfers and allocations and decommissioning security arrangements will all be tools all sellers and buyers will use in markets like this.”

Earn-out or upside sharing means the seller will only be paid once the oil price exceeds a certain limit.

HitecVision said it is on the prowl for more acquisitions in the British North Sea. In Norway, Aker BP (AKERBP.OL) and Lundin LUNE.ST may be on the lookout for cheap assets, while OKEA (OKEA.OL) and DNO (DNO.OL), which took control of UK’s Faroe Petroleum last year, are also looking to grow.

For some producers, like North Africa and gas-focused SDX (SDX.L), current oil prices do represent a “catalyst for opportunities”, but Chief Executive Mark Reid said vendor financing, such as becoming the sellers’ debtor, is a double-edged sword.

“It’s clearly something that helps to sell the asset and put it into the hands of a smaller company… It is an interesting dynamic that the majors are able to use their balance sheet to facilitate (mergers and acquisitions),” he said.

“We continue to talk to our contacts at BP, and other majors. (But) most importantly, (we plan) so that the company doesn’t find itself drowned in debt.”

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Denver weather: Temperatures approach 90 degrees Monday

Colorado faces warm, dry weather this week with metro Denver temperatures approaching 90 degrees Monday and Tuesday and no sudden freezes in the forecast, according to the National Weather Service.

The heat combined with wind gusts up to 45 miles per hour and humidity less than 10% means fire risks will increase. Expect red flag warnings around southwestern Colorado where conditions are especially dry. Mountain snowpack measured well

below normal for this time of year in southern parts of the state.

On Wednesday, cooler temperatures around 84 degrees and breezes are expected, National Weather Service meteorologist Frank Cooper said. Night temperatures were expected to drop into the 50s.

“It’s been fairly cool up to this point,” Cooper said. “We’re into a warming period for the next week.”

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France says coronavirus death toll rises to 27,625

PARIS (Reuters) – French health authorities reported 96 new coronavirus deaths on Saturday, as the country eases from a two month lockdown.

In a statement, the health ministry said the figure had fallen slightly from 104 fatalities on Friday. This brings France’s total to 27,625, the fourth-highest tally in the world, after the United States, Britain, and Italy, and just ahead of Spain.

The ministry said the number of people in hospital fell to 19,432 from 19,861 on Friday and the number of people in intensive care dropped to 2,132 from 2,203 on Friday.

Both numbers – key indicators for the French health system’s ability to cope with the epidemic – have been on a downtrend for four to five weeks and peaked at over 32,000 and over 7,000 respectively in early to mid-April.

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Brexit block: Lord Adonis sparks backlash after demanding delay – ‘17.4million disagree!’

In a post on Twitter, Lord Adonis indicated the whole nation wanted the UK to extend the negotiating period beyond December 31 – however, the ardent Remainer was quickly reminded that this was not the case by furious Brexiteers. The Labour Life Peer wrote on Twitter: “The Brexit transition period should obviously be extended. No-one serious thinks otherwise.”

The comments made by the 57-year-old sparked outrage amongst Brexiteers, who insisted 17.4 million people voted for Britain to leave the bloc back in the historic 2016 EU referendum.

One user said: “17.4 million citizens are serious, and they disagree.”

A second said: “No chance. Delayed by Remainers for far too long already.

“I voted Conservative for first time ever to escape FOM [freedom of movement]. Delay is not acceptable.”

A third user said: “What a shame then that our government appear to think differently.”

A fourth said: ”You are clearly hard of hearing so let me spell it out for you: There will be NO extension to the transition period. Hope that helps.”

Britain officially left the European Union in January, however, both sides have until December 31 to negotiate its future trading relationship.

A more critical deadline is fast approaching as the UK and the EU have until June to decide whether the negotiating period should be extended for up to two years.

Downing Street has constantly insisted the UK would not ask for an extension despite the current global coronavirus crisis and calls from EU leaders to do so.

Lord Adonis has been a constant advocate for Britain remaining part of the European Union and insisted the coronavirus crisis has made it even more important that the UK has close ties with Brussels.

Earlier this month, he wrote in The New European: “Europe’s challenges today are in many ways as great as 1945 and 1989.

“The European Union remains indispensable and Boris Johnson’s intention to crash out looks worse with each passing week.

“For more than anything, the coronavirus pandemic exposes the existential threat to our whole way of life of Xi’s China, Putin’s Russia and Trump’s America.

“Europe’s health, trade, democracy and security are all at stake. The EU will be central to Europe’s recovery and international clout once the lockdown is lifted, country by country.”

This afternoon at PMQs Prime Minister Boris Johnson shut down any talk of an extension and insisted the British people want Brexit over with.

In the House of Commons, the SNP’s Stewart Hosie said: “Both COVID and Brexit is suppressing trade, damaging jobs and the economy and while we hope, as COVID ends, global trade will bounce back, there is no guarantee that will happen quickly.


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“The Prime Minister, though, could mitigate some of this damage by seeking an extension to the Brexit transitional period.

“Can he explain to the House why he is being so negligent in not seeking that transitional extension now?”

Mr Johnson replied: “I think a lot of people in this country don’t want to see the Brexit argument reopened.

“They want to see it settled, they want to see it done, and that is what this Government intends to do.”

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Jetmaker Embraer focuses on future after Boeing divorce 'pain'

PARIS/SAO PAULO (Reuters) – The head of Embraer’s (EMBR3.SA) commercial aircraft unit defended the benefits of a $4.2 billion tie-up abandoned by Boeing Co (BA.N) last week, but said the Brazilian aerospace group was focusing on its future as a re-united company.

Commercial Aviation Chief Executive John Slattery said Embraer had incurred pain and costs in separating jetliners from defence and business-jet activities in preparation for the merger, including a loss of deliveries in January.

He declined to comment on an arbitration process Embraer launched after Boeing abruptly cancelled the deal on Saturday.

Speaking in a webinar hosted by Aviation Week, Slattery said he was convinced the commercial aerospace partnership with Boeing would have provided “extraordinary benefits” to airline customers who had expressed disappointment at its collapse.

Boeing has said Embraer failed to meet conditions for closing the deal.

Slattery said Embraer was burning cash but had capacity to raise more if needed. “I am not concerned about liquidity.”

It was the first public appearance by the company’s commercial boss since the deal collapsed in acrimony.

The breakdown, first reported by Reuters, has captured the attention of an industry already facing its worst crisis over the drop in travel caused by the coronavirus pandemic, with 2,000 people tuning into the previously arranged webinar.

Slattery quipped that the audience was dominated by lawyers from each side as the two companies head for what is widely expected to be a bitter divorce case.

Embraer carved out its commercial unit and shut activities for 40 days in preparation for folding it into a new venture to be 80% owned by Boeing.

It also invested $30 million on a new headquarters for the remaining core of the Brazilian aerospace champion.

Slattery said the carve-out had resulted in some duplication between core Embraer and its commercial spin-off, but that the world’s third largest plane-maker would rebound as “one Embraer”.


The arbitration is expected to involve fierce debate over Brazilian claims that a tie-up cost Embraer spin-off costs and lost sales for its E2 against the Airbus A220, a Canadian-designed jet acquired from Embraer’s historic rival, Bombardier.

Analysts say Boeing is expected to argue that Embraer needed to carry out reorganisation to prepare for potential alliances and that it failed to invest enough in the commercial arm.

Neither company agreed to comment on the case.

Slattery played up future demand for the E2, a regional jet sitting below the Boeing 737 MAX, as airlines turn post-crisis to smaller, less financially risky models.

Southeast Asia, one of the top markets for giants Boeing and Airbus, could see a move to such jets, he said.

Top aircraft buyers had backed the Boeing tie-up, saying Embraer lacked deep enough pockets to compete alone with Airbus, which can discount other jets to win A220 sales.

Brazil’s government, which used to own Embraer and is its top military client, has suggested China could be a potential new partner for Embraer, even though several senior Brazilian government figures have attacked Beijing over the pandemic.

Slattery said Embraer had not initiated talks with anyone, but that he could not “legislate for the inbound calls that could come”. The board will study next moves “in a very thoughtful way,” he added.

Tentative plans for a new regional turboprop to compete with Europe’s ATR (AIR.PA)(LDOF.MI), half-owned by Airbus, are no longer a priority because of the current crisis, Slattery said.

While the airliner’s business case looked strong, he said, “it is hard to consider a new programme in this environment”.

The prop plane joins other planemaker projects on the back-burner as the health crisis dents balance sheets.

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Afghan children ‘risk hunger as prices soar’

More than seven million children in Afghanistan are at risk of hunger as food prices soar due to the coronavirus pandemic, a report warns.

A Save the Children spokesman said the country faced a “perfect storm of hunger, disease and death” unless the international community took action.

The charity said a third of the population, which includes 7.3 million children, was facing food shortages.

The UN recently included Afghanistan in a list of countries at risk of famine.

The organisation’s World Food Programme (WFP) warned the world was facing a “hunger pandemic”.

Afghanistan has suffered almost two decades of war since US-led forces ousted the Taliban in 2001, leaving it with a fractured and impoverished healthcare system.

As cases of coronavirus spread, the government imposed a lockdown in the capital, Kabul, at the end of March and other provinces quickly followed. Movement other than shopping for basic necessities is severely restricted and travelling between cities is banned.

What does the report say?

Save the Children said the price of food was rising just at the time when children needed adequate daily nutrition to help strengthen their immune systems.

Even before the pandemic it was estimated that more than five million Afghan children needed some form of humanitarian support. Latest UN surveys indicate that about two million children aged under five face extreme hunger.

Citing figures from the WFP, the report said the price of wheat flour and cooking oil in Afghanistan’s main city markets had risen by up to 23% in the past month as demand outstripped supply. The cost of rice, sugar and pulses had increased by between 7%-12%.

Coupled with rising prices, the wages of daily labourers are falling as the lockdown caused work to dry up.

“A large portion of the Afghan workforce relies on the informal sector, with no safety nets when work is scarce,” the report says.

With just 0.3 doctors per 1,000 people, Afghanistan’s sick and malnourished children are less likely to receive the life-saving treatment they need to survive, Save the Children warned.

Timothy Bishop, the charity’s country director in Afghanistan, said that for many Afghans the biggest impact of the pandemic would not be the virus itself, but the hunger caused by lockdown measures and a breakdown in supply lines.

“We are deeply concerned that this pandemic will lead to a perfect storm of hunger, disease and death in Afghanistan unless the world takes action now,” he said.

“We are facing the very real risk that children could die from starvation. What we need is for the international community to urgently fly in food supplies to be distributed to some of the most vulnerable communities in the country. We also urge the Afghan government to facilitate the rapid distribution of food, despite the nationwide lockdown.”

He added: “Afghan children have suffered enough. Most have known nothing but conflict in their lives. We cannot allow Covid-19 to further rob them of their futures.”

Afghanistan's healthcare resources

What is the situation in Afghanistan?

So far, Afghanistan has not been among countries most severely affected by the virus, reporting 2,171 cases and 64 deaths. However, it has limited access to testing and the true numbers are believed to be higher.

Experts warn that any sudden spike in infections would quickly overwhelm Afghanistan’s fragile health system.

Its porous borders have raised fears of an unchecked spread of the virus. In March, more than 150,000 Afghans spontaneously returned from Iran, one of the countries worst hit by the coronavirus, and tens of thousands have also recently returned from Pakistan.

The first confirmed case came at the end of February in Herat province, which borders Iran.

Earlier this month, dozens of members of staff working at Afghanistan’s presidential palace in Kabul reportedly tested positive for coronavirus.

The Afghan government did not comment on the reports and there was no suggestion that President Ashraf Ghani himself had been infected.

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Arab foreign ministers condemns Israeli plan to annex parts of occupied West Bank

CAIRO (Reuters) – Arab countries condemned Israel’s plan to de facto annex parts of the occupied West Bank as a “new war crime” against Palestinians, the Arab League said in a statement after a video conference of Arab foreign ministers on Thursday.

Israeli Prime Minister Benjamin Netanyahu, in announcing a deal to form a unity government, has said cabinet discussions will start on July 1 on extending Israeli sovereignty to Jewish settlements in the West Bank and annexing the area’s Jordan Valley outright.

Palestinians have expressed outrage at Israel’s plans to cement its hold further on land it seized in the 1967 Middle East war, territory they are seeking for a state.

Implementing such plans “represents a new war crime added to the Israeli record full of brutal crimes against the Palestinian people”, the Arab foreign ministers said in a statement after their emergency meeting, which was held online because of the coronavirus pandemic.

Arab League secretary general Ahmed Aboul Gheit accused Israel of “taking advantage of the global preoccupation with confronting the coronavirus epidemic to impose a new reality on the ground”.

“This step, if taken, would eliminate the possibility of embodying an independent, sovereign, geographically connected and viable Palestinian state. This step, if completed, would end the two-state solution,” Palestinian Foreign Minister Riyad al-Maliki said during the meeting.

Netanyahu said on April 26 that the United states would give Israel the nod within two months to move ahead with de facto annexation of parts of the occupied lands.

The Arab countries urged Washington to abide by U.N. resolutions and “withhold support for plans and maps of the Israeli occupation government woven under the cover of the so-called American-Israeli deal of the century,” the statement said.

Palestinians have flatly rejected the U.S. peace proposal announced by President Donald Trump in January, partly because it awards Israel most of what it has sought during decades of conflict, including nearly all the occupied land on which it has built settlements.

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