Finance Blog number 1

Executives of Hawaiian Airlines and Aloha Airlines met until early Sunday trying to come up with a way to save Aloha, but couldn't work out a deal.

A person familiar with the negotiations told Pacific Business News that a deal with Hawaiian was seen as a "last resort" by Aloha executives, who have been trying to find a buyer for the debt-ridden airline since it declared bankruptcy on March 20.

Under the deal, Hawaiian would have acquired Aloha and kept the smaller airline operating inter-island and possibly on some Mainland routes and would have continued the Aloha brand for at least several years.

But the deal broke down over money, with Hawaiian willing to put up only about $5 million in cash, the source told PBN. Aloha has been losing about $5 million a month over the past year.

A spokesman for Hawaiian, Patrick Dugan, declined to comment.

The person familiar with the negotiations also said another potential buyer is expected to emerge for Aloha's profitable cargo operation. Last Thursday, Saltchuk Respurces Inc. of Seattle said it made an offer to buy Aloha Air Cargo but didn't say how much it would pay.

Saltchuk has been doing business in Hawaii since 2000 when it bought Young Brothers and Hawaiian Tug & Barge. It also owns Hawaii Fuel Network, Maui Petroleum and Minit Stop Stores.

Aloha's ground services operations are also for sale.

In 2002, with both Hawaiian and Aloha reeling from the fallout of the Sept payday loans. 11, 2001 attacks, the airlines announced their intent to merge. But executives of the airlines couldn't reach a final agreement and growing opposition from the public to an inter-island "monopoly" helped scuttle the deal.

But business didn't get better for either the publicly held Hawaiian (Amex: HA) or privately owned Aloha.

Hawaiian, which had survived bankruptcy in the early 1990s, again sought bankruptcy protection in 2003 and emerged after trimming costs and reorganizing its debts in 2005. Since then, Hawaiian has been the stronger of the two, putting new planes into service, announcing plans to expand service to the Mainland and Asia and, most important, turning a profit even as fuel prices increased.

Aloha went into bankruptcy in late 2004 and emerged in early 2006 with new owners and financing, but months later go! kicked off its $39 inter-island fare war. A review of passenger traffic figures by PBN in late 2006 found that Aloha had taken the biggest hit since go! entered the market, with Hawaiian's traffic level staying about the same.

Among local airlines, Hawaiian dominates the long-haul market, moving 2.4 million passengers to and from Hawaii in 2006, second only to United Airlines. Aloha ranked ninth, with about 550,000 passengers.

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Legacy Partners has purchased the 500,000-square-foot Ygnacio Center at North Main Street and North California Boulevard in downtown Walnut Creek.

The purchase price was not disclosed. Eastdil Secured helped Legacy arrange financing.

Calls to Legacy and Eastdil were not immediately returned.

The seller was Fidelity Investments, whose Pembroke Real Estate division developed the property.

The three-building complex includes One Ygnacio Center, a 156,002-square-foot high-rise at 1990 N. California Blvd., built in 1971 with a two-story annex added in 1980, as well as Two Ygnacio Center, a 180,410-square-foot high-rise built in 1985 at 2033 N. Main St. Three Ygnacio Center, which totals 162,863 square feet at 2001 N instant payday loan. Main St., was built in 2001.

Ygnacio Center is adjacent to the Walnut Creek BART station and close to Interstate 680 and Highway 24. It has both underground parking and a parking garage on-site, as well as a fitness center, a Starbucks coffee shop and two restaurants, according to a Legacy news release.

Legacy Partners of Foster City is a real estate investment company with a 16.5 million square foot commercial portfolio valued at $4.1 billion.

jsaunders@bizjournals.com | 925-598-1427

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Workers’ compensation insurers in California don’t need a mid-year rate change, according to the organization that advises state regulators on the workers’ comp insurance market.

The governing committee of the Workers’ Compensation Insurance Rating Bureau decided Wednesday that it will not propose a mid-year change in pure premium rates to Insurance Commissioner Steve Poizner.

The Rating Bureau will wait until August to make its annual rate recommendation to take effect with new and renewing policies beginning Jan. 1.

Mid-year filings usually are "limited to instances of major changes in loss experience, legislation or regulation," the Rating Bureau said in a news release. Insurers’ year-end loss experience for their California operations "suggests a modest increase of as much as 4.2 percent" is warranted payday loan. But the Rating Bureau will continue to track insurers’ experience, and wait to propose any change to take effect starting Jan. 1.

The San Francisco-based trade group makes its rate recommendation to the insurance commissioner twice a year. Insurers use the advisory rate as a benchmark. The commissioner does not have the power to set the rates charged to employers.

Pure premium rates reflect only the estimated cost of benefits and insurer loss adjustment expenses. They don’t account for other carrier expenses.

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Honolulu's Varsity Theatre, which closed last year before being sold to Kamehameha Schools, will soon be just a memory.

Workers on Monday began demolition of the 69-year-old freestanding theater.

Hawaii's largest private landowner acquired the Varsity Theatre site in June 2007 in a land exchange that gave Los Angeles-based Robertson Properties Group the trust's old Kamehameha Drive-In property in Aiea. Robertson Properties Group is owned by Pacific Theatres' parent, Decurion. Pacific Theatres owns Consolidated Theatres, which owned the Varsity Theatre.

Built by Consolidated Amusements in 1939 as a single-screen theater, the Varsity Theatre was one of Hawaii's last freestanding movie theaters. In the 1960s and 1970s, before it was converted to a twin theater, the University of Hawaii used the theater during mornings as a lecture hall fast cash now.

The 1.7-acre Varsity property on University Avenue includes the Varsity Office Building and a parking lot.

Kamehameha Schools is working on a master development plan for the Varsity and its other Moiliili properties, which include Puck's Alley on the opposite side of University Avenue, which it acquired in 2006.

Kamehameha Schools spokesman Kekoa Paulsen said the property will become a parking lot as an interim use for the next three to five years. Diamond Parking, which operates the existing lot behind the theatre building site, will operate the new lot, according to building permit data.

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Sales of existing houses in the U.S. probably fell in February to the lowest level in at least nine years, economists said ahead of a private report today.

Purchases dropped 0.8 percent to an annual rate of 4.85 million, according to the median of 63 forecasts in a Bloomberg News survey. That would be the fewest since the National Association of Realtors began keeping records in 1999.

The real estate slump will persist as a glut of houses on the market depresses property values and lenders toughen mortgage requirements to stem credit losses. The Federal Reserve last week said the outlook had worsened and pledged to do whatever was needed to keep the economy growing.

“We expect both purchasing activity and pricing to fall for the remainder of the year,'' said Joseph Brusuelas, chief U.S. economist at IDEAglobal Inc. in New York.

The National Association of Realtors is scheduled to issue its report at 10 a.m. in Washington. Estimates in the Bloomberg News survey showed sales rates ranging from 4.69 million to 4.9 million.

The “deepening of the housing contraction'' was one factor Fed policy makers last week said was likely to hurt growth in coming months. On March 18, the central bank cut its main lending rate by three-quarters of a percentage point to 2.25 percent and said recent reports have shown the outlook for the economy has “weakened further.''

Fed Action

The Fed has cut its benchmark interest rate by 3 percentage points since September and enacted other measures to try to keep the economy afloat. On March 16, it reduced the rate on direct loans to banks and said it will provide up to $30 billion to JPMorgan Chase & Co $1500 payday loan. to help finance the purchase of Bear Stearns Cos. after a run on that securities firm.

Other government agencies are also struggling to limit the damage in housing. The Office of Federal Housing Oversight lowered the capital requirement on Fannie Mae and Freddie Mac to 20 percent from 30 percent last week. The initiative may immediately pump $200 billion into the mortgage market.

The goal is to “help restart the housing engine that powers our economy,'' Fannie Mae Chief Executive Officer Daniel Mudd said at a March 19 news conference in Washington.

Housing has been a drag on growth for the past two years and the fallout has spread throughout the economy. Payrolls at U.S. employers last month fell by the most in five years, consumer spending has stalled and manufacturing has contracted.

Recession Call

Harvard University economist Martin Feldstein said this month that he believed a recession was under way and it could be the most severe since World War II. Feldstein is a member of the National Bureau of Economic Research's committee that officially declares when a recession has started.

Homebuilders have said they're still suffering. Hovnanian Enterprises Inc., New Jersey's biggest homebuilder, this month reached an agreement with banks on new lending terms after falling sales made it harder to generate cash. The company also reported its sixth straight quarterly loss.

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Tori Richard Ltd. will relaunch the famed men's aloha wear line Kahala with the opening of its first stand-alone boutique at Ala Moana Center May 15.

The Kahala store will be located on the second floor of the new Nordstrom-anchored wing. The approximately 800-square-foot store will be next to Lululemon Athletica and True Religion.

Kahala Sportswear was launched in 1936 as a traditional, classic Hawaiian menswear line paydayloan. Tori Richard Ltd., which bought the company from Local Motion in 2006, has been working to revamp the brand and logo, which features a silhouette of a canoe paddler.

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Hanes Park in Winston-Salem will host a block party April 6 to welcome the U.S. Davis Cup tennis team.

The day's events are to include a "QuickStart" tennis tournament for 10 and under and 8 and under age groups, a one-day adult doubles tournament, an on-court carnival area with a fast-serve station, on-court games and racket demos, food vendors and reps from tennis companies and local tennis associations cash advances.

The U.S. Davis Cup team will face France in a quarterfinal match April 11-13 at Lawrence Joel Veterans Memorial Coliseum.

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Xcel Energy Inc. said Monday it wants to raise electricity and natural gas rates for its Colorado customers.

The utility filed a request with the state's Public Utilities Commission to increase electricity bills by 15 percent during the second quarter.

Xcel made a separate filing to lower natural gas bills for April by 27 percent to 31 percent.

Minneapolis-based Xcel, the parent of Public Service Company of Colorado, said local wholesale natural gas prices have nearly quadrupled in the last six months. Increased pipeline capacity out of the region has largely eliminated lower-than-average prices for natural gas that benefited Colorado customers for most of 2007, the company said.

Xcel said the higher electric bills are a reflection of the increased prices for the natural gas and coal the company uses to generate electricity, as well as the increased costs to purchase electricity from independent power producers quick payday loan.

Xcel it needs to raise $86.5 million in the second quarter to cover the higher costs.

The electric bill for an average residential customer is expected to increase by $8.53 in April, to $65.02, and for a typical small-business customer by $13.96, to $104.26.

Although Xcel is proposing a 4 percent natural gas commodity price increase in April, due to the same market forces, overall bills are expected to drop as warmer weather prompts a decline in natural gas usage. Residential customers are forecast to use 32 percent less natural gas in April, causing a 27 percent drop in their bills, to $72.04.

Small-business customers are expected to use 35 percent less natural gas, which would decrease their bills by 31 percent, to $289.87.

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Treasury Secretary Henry Paulson, defending the bailout of Bear Stearns Cos., said policy makers will do whatever is needed to prevent disruptions in financial markets from hurting the economy.

“The government is prepared to do what it takes to maintain the stability of our financial system,'' Paulson told the “Fox News Sunday'' television program in Washington today. “Our focus, our No. 1 priority, is the stability of our financial system.''

Paulson, 61, spoke two days after the Federal Reserve rescued Bear Stearns, the fifth-largest U.S. securities firm, with an emergency loan. The move failed to avert a crisis of confidence among Bear Stearns customers and shareholders, who drove the stock down a record 47 percent.

In three appearances today, the former chairman of Goldman Sachs Group Inc. several times said the Fed made “the right decision'' and expressed “great confidence'' in its chairman, Ben S. Bernanke. Paulson said that in the case of Bear Stearns, the risk to financial stability outweighed his concern about so- called moral hazard, in which investors come to expect government rescues.

“I'm as aware as anyone is of moral hazard,'' he said in a CNN interview. “I'm also aware of the importance of keeping our economy strong, of orderly capital markets, of the stability of the financial system doing things that promote orderliness and minimize the disruption.''

Weekend Talks

Paulson said “conversations are going on over the weekend'' about Bear Stearns. “I'm very involved in those conversations.'' He declined to be specific about the future of the 85-year-old firm, the second-biggest underwriter of U.S. mortgage bonds, or to say whether any additional government steps are planned.

“There's always a decision to be made to say what's best for the stability of the marketplace, the orderliness of the marketplace,'' Paulson said. “I think we made the right decision.''

The Treasury chief refused to say what a growing number of economists have concluded — that the economy has entered a recession.

Economic Debate

“Economists are going to be debating that for months and months,'' he said. “It's much less important what you call it than what you're doing about it.''

The Standard & Poor's 500 Index is down 12.3 percent this year, while the dollar is down 5 percent against a basket of currencies of major U.S. trading partners. Home foreclosures in January and February were up 58 percent from the first two months of 2007.

“I've got great confidence in our financial markets and our financial institutions,'' Paulson said. “Our markets are resilient, are flexible. Our institutions — our banks and investment banks — are strong.''

Paulson repeated his support for a “strong dollar,'' and said the long-term strength of the U.S. economy would be reflected in the country's currency.

President George W credit report. Bush is scheduled to meet tomorrow with his Working Group on Financial Markets. Paulson chairs the group, which includes Bernanke and Securities and Exchange Commission Chairman Christopher Cox.

The Bush administration has resisted the use of government funds or guarantees to stem the surge in foreclosures. Paulson has brokered a series of voluntary accords among lenders to freeze interest rates on subprime loans and negotiated a one- month moratorium on foreclosures.

Plans in Congress

A credit crisis that began in August has left markets “more fragile than we would like right now,'' Paulson said in a separate interview on ABC News's “This Week'' program. “My concern is to minimize the impact on the broader economy.''

Paulson said the administration doesn't support measures in Congress to help struggling homeowners.

House Financial Services Committee Chairman Barney Frank and Senate Banking Committee Chairman Christopher Dodd offered a plan last week to let the Federal Housing Administration insure refinanced mortgages after lenders reduce principal to help struggling borrowers.

The two lawmakers are leading congressional efforts to tackle the surge in foreclosures, which reached record levels in the fourth quarter of 2007. Their plan goes beyond the Bush administration's approach that relies on voluntary agreements between lenders and loan servicers to modify mortgages for borrowers who can't make their monthly payments.

Weighing Response

“I'm looking very carefully at any proposal, but all the ones I've seen call for much more government intervention, raise more problems, do more harm than do good,'' Paulson said in the ABC interview.

In an interview on CNN, Paulson said there's “no silver bullet'' to prevent home prices from falling and foreclosures from rising.

Paulson last week proposed that U.S. regulators heighten their scrutiny of lenders, mortgage brokers and debt-rating firms to prevent a reoccurrence of the credit crisis roiling capital markets. Writedowns from subprime securities will probably rise to $285 billion, Standard & Poor's said in a report March 13.

Schumer Attacks

“This has become the Bush recession,'' Senator Charles Schumer, a New York Democrat, said on the Fox News program. “The president's hands-off attitude is reminiscent of Herbert Hoover,'' who led the country from 1929 to 1933.

Bush yesterday said he won't be stampeded into “bad policy decisions'' that might harm the economy.

“The market now is in the process of correcting itself, and delaying that correction would only prolong the problem,'' he said in his weekly radio address. “I believe the government can take sensible, focused action to help responsible homeowners weather this rough patch.''

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Matson Navigation Co.’s senior vice president, Gary North, will retire April 1.

Vic Angoco will succeed North as head of the company’s operations in Hawaii, Guam and Micronesia.

North, 63, who is based in Honolulu, is ending a four-decade maritime career that included 27 years with Matson, Hawaii’s top shipping carrier. He is known as the "face" of Matson in Hawaii, publicly representing the company in a variety of venues, from labor negotiations to testifying at the Legislature and advocating for improvements to Hawaii’s harbors free credit report.com.

Angoco, currently country manager on Guam, will also serve as executive vice president of Matson subsidiary Matson Terminals, Inc. He will be based in Honolulu.

North will continue to serve as chair of the Hawaii Harbors Users Group and serve as a consultant to Matson about its Pacific operations.

Matson is a subsidiary of Alexander & Baldwin (NASDAQ: ALEX).

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