Tue, Nov 25, 2014 - Page 15 News List

World Business Quick Take

Agencies

MEDIA

ABC to lay off over 400

More than 400 jobs could be lost at the Australian Broadcasting Corp (ABC), the head of the organization said yesterday, after the government cut funding. Canberra last week announced the public broadcaster’s budget would be cut by A$254 million (US$221 million) over the next five years, prompting thousands to protest in Sydney and Melbourne during the weekend. ABC managing director Mark Scott yesterday said the cuts meant hundreds of jobs could be lost, while television sports broadcasts would be scaled back. “We anticipate that more than 400 people — close to 10 percent of our ongoing workforce — face potential redundancy as we adjust our activities over coming months,” he said. Scott said that ABC would also review its property holdings, with one Sydney site to be sold, while an Adelaide television production studio and five regional radio stations face closure.

MINING

BHP to cut capital spending

BHP Billiton Ltd, the world’s biggest mining company, plans to take a scalpel to capital expenditure and costs to bolster cash flows as iron ore and crude oil prices plunge. Capital expenditure will be cut to US$14.2 billion in the 12 months to June, from a previous estimate of US$14.8 billion, dropping again to US$13 billion in 2016, the producer said yesterday in a statement. The tumbling prices mean investors are seeking assurances over dividend payments and the prospect for additional returns, Sydney-based UBS AG analyst Glyn Lawcock said. The producer is targeting productivity gains of US$4 billion through June 2017, an increase of US$500 million on a previous target, Melbourne-based BHP said yesterday.

INSURANCE

Aviva buying Friends Life

Aviva’s potential £5.6 billion (US$8.8 billion) purchase of Friends Life reflects a need to consolidate and cut costs in Britain’s insurance industry, fund managers said. The two companies said on Friday that they had agreed on terms of a possible all-share deal at a 15 percent premium to Friends Life’s closing price, offering Friends Life shareholders a 26 percent stake in the new company. The proposed transaction shows how insurers are having to rethink they way they do business after the British government changed rules covering annuities, which provide retirement income, causing a slide in annuity sales. Some investors were surprised at the timing of the deal given both companies are in turnaround mode. “Consolidation per se in UK life insurance is not a surprise and is necessary,” said David Moss, head of European equities at F&C, which has Aviva shares, according to Thomson Reuters data.

FINANCE

EU plans risk-sharing fund

The EU is planning a 21 billion euro (US$26 billion) fund to share the risks of new projects with private investors, two EU officials said. The new entity is designed to have an impact of about 15 times its size, making it the anchor of the EU’s 300 billion euro investment program, said the officials, who asked not to be named because the plans are not final. European Commission President Jean-Claude Juncker is due to announce the three-year initiative this week. The commission will pledge as much as 16 billion euros in guarantees for the vehicle, which will also include 5 billion euros from the European Investment Bank, the officials said. Loans, lending guarantees and stakes in equity and debt will be part of its toolbox, with the goal to jumpstart private risk-taking so that stalled projects can get off the ground.

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