Boeing Co. announced it has won a $1.5 billion contract from the U.S. Air Force to overhaul the cockpits and electronics systems of the widely used C-130 Hercules military cargo aircraft.
Boeing officials said $485 million will be spent researching and developing new avionics for the C-130 Hercules, much of which will take place at Boeing’s military aircraft operations in Long Beach. The contract could mean several hundred new jobs at Boeing’s sprawling Long Beach complex. About 14,000 Boeing engineers, machinists and assemblers currently do commercial and military work there.
Boeing beat out rival Lockheed Martin Corp. for the contract in a heated competition. Lockheed has been manufacturing the C-130 since the company developed the aircraft in the 1950s and was expected to take the lead role in upgrading the aging avionics.
Under the six-year, $485-million contract, Boeing will develop advanced all-glass cockpit panels and the latest avionics to replace aging and somewhat unreliable equipment on 519 of the C-130s. The engineering and manufacturing development of the avionics would take place in Long Beach. Los Angeles-based Northrop Grumman Corp. is one of the key suppliers under the new contract, Boeing said.
Boeing also was awarded a 12-year, $1-billion contract to make the modifications, replacing the old equipment with the new ones at its facilities in San Antonio, Texas.
Writers Approve Contract
Members of the Writers Guild of America overwhelmingly approved a new three-year deal reached by union negotiators and Hollywood studios.
More than 92 percent of the 4,128 television and film writers casting ballots opted to accept the deal, which improves their share of some residuals and increases compensation for pay TV and cable programs, but fails to achieve other concessions sought by the union during bargaining.
Although voting members amounted to only 37.5 percent of the guild’s total membership, the turnout was a record. Ratification had been considered a virtual certainty since the two sides reached a tentative agreement May 4.
The studios have turned their attention to negotiating a new contract with Hollywood actors, whose current contract expires June 30.
Study Sees Entertainment Growth
The long-awaited explosion in broadband Internet systems and growth in Latin American markets will keep U.S. entertainment and media industries expanding at a fast clip, according to a report by Pricewaterhouse-Coopers.
The report projects a 7.2 percent annual pace of growth through 2005, pushing industry worldwide revenues past $1 trillion annually for the first time ever.
Other factors cited in the report include the rapid growth of cable television and wireless, as well as the proliferation of movie theaters and theme parks. The single biggest factor cited, however, was the potential for a major increase in revenues from Latin America.
Despite Hollywood’s slowness to embrace digital distribution, the report optimistically predicts that online copyright and piracy issues soon can be resolved, and that the entertainment industry will develop Internet subscription-based services to generate revenue.
Occidental Invests in Saudi Arabia
Occidental Petroleum Corp. of Los Angeles is one of nine international oil companies to sign natural gas exploration and infrastructure contracts with Saudi Arabia, the first significant foreign investments in the country’s energy sector since it was nationalized by the government in 1975.
The deals are expected to be worth more than $25 billion and involve the development of three natural gas fields in the kingdom and a number of related power plants, transmission pipelines and water desalinization projects.
The Western companies will help Saudi Arabia convert its utilities from oil-burning to natural gas, which would free up more of the kingdom’s crude oil for export, officials said.
Saudi Arabia’s state-owned energy company, Saudi Aramco, will be an equity owner in the projects. If the companies discover oil, they will be compensated and the fields will be repossessed by Saudi Arabia.
Exxon Mobil Corp. and Royal Dutch/Shell will play the primary roles in the biggest projects.
Bank Plus Agrees to Buyout
Bank Plus Corp. of Los Angeles has agreed to be purchased by Oak Park, Ill.-based FBOP Corp. in a deal worth an estimated $150 million.
Closely held FBOP will pay $7.25 in cash for each share of Bank Plus, which is the parent company of 30-branch Fidelity Federal Bank.
Bank Plus rebounded last year after a costly venture in credit card lending led to losses of more than $190 million in the late 1990s.
The buyout deal is expected to close by the end of the year, if approved by Bank Plus shareholders and regulators. Bank Plus shares rose 31 percent on news of the deal to close at around $7 per share.
The deal marks FBOP’s continued expansion into Southern California. In addition to the five branches of Beverly Hills-based California National Bank, FBOP owns 15-branch San Diego National Bank and in December agreed to buy PBOC Holdings Inc. of Los Angeles, which owns the 24-branch People’s Bank of California.
Duke Energy Accused of Gouging
An out-of-state power wholesaler charged nearly $4,000 per megawatt-hour for electricity last winter a brazen action that demonstrates the major flaws in California’s deregulated energy market, officials said.
Duke Energy Corp. charged $3,880 per megawatt-hour during a brief period last winter, the highest price yet disclosed for emergency power and more than double the $1,900 that Gov. Gray Davis excoriated Texas wholesaler Reliant Energy Inc. for charging last month.
A spokesman for Gov. Gray Davis said the rates were “obscene,” but Charlotte, N.C.-based Duke said it hasn’t received any payment for the power and that it would waive the credit premiums that made up 80 percent of the $3,880, if it gets paid. Duke officials also said the company made the sales only because it was ordered to do so by the California Independent System Operator.
EarthLink Founder Weighs Plea
EarthLink Inc. co-founder Reed E. Slatkin signed a consent decree with securities regulators and is discussing a plea bargain with the U.S. Attorney’s Office over what authorities have called one of the largest alleged Ponzi schemes ever investigated.
Slatkin remains under criminal investigation by the FBI for investment fraud. The agency raided his Santa Barbara home and his offices in Goleta, Calif., and Santa Fe, N.M., last month.
Slatkin’s cooperation signals that he is trying to avoid a court showdown over an investment management business that took in hundreds of millions of dollars from wealthy investors. Some investors questioned the move, however, saying the plea negotiations could disrupt investigations and make it harder for them to find out what happened to their money.
Documents seized from Slatkin’s home and turned over by his attorneys last month list more than 750 investors in the alleged scheme, including Hollywood actors and producers, fellow EarthLink co-founder Sky Dayton and members of the Church of Scientology, of which Slatkin was an ordained minister.
Health Net Named in Lawsuit
Five health maintenance organizations, including Woodland Hills-based Health Net Inc., have been named in a lawsuit accusing the insurers of denying patients a treatment for prostate cancer.
The suit, filed in Los Angeles Superior Court by Cancer Victims for Quality Healthcare, accuses the companies of unlawfully denying coverage for proton beam radiation therapy, which costs between $35,000 and $50,000. The complaint was filed under the state’s unfair business practices law and seeks a court order to stop the HMOs from denying coverage of the treatment.
Other insurers named in the suit are PacifiCare Health Systems Inc., Blue Shield of California, Kaiser Health Plan Inc. and Cigna Corp.
Health Net officials said it has been three years since the company last denied a patient coverage for the treatment.
Maxicare Accepts State Takeover
Troubled health maintenance organization Maxicare Health Plans Inc. has agreed not to contest a state takeover.
The pact gives a state-appointed conservator oversight of the Los Angeles-based insurer’s finances and final word on any sale or transfer of its assets. Maxicare’s current management will continue to run day-to-day operations.
In May, regulators seized control of Maxicare, which has 254,000 enrollees, mostly in Southern California. Later, Maxicare sought federal bankruptcy protection from its creditors.
Artisan Sues Producer
Charging fraud and deceit, Artisan Entertainment Inc. is seeking $100 million in damages from a producer whose failed film-financing project allegedly caused the company to scrap plans for a first-time stock sale.
Artisan, which released the “Blair Witch” films, has sued financier and producer Peter Hoffman in Los Angeles Superior Court. Artisan claims a financing project back by insurance policies that Hoffman proposed fell apart, forcing the company to halt production on films and delaying the stock sale. Hoffman is chairman of Seven Arts Pictures.
Artisan’s complaint also names British insurers Royal & Sun Alliance, Heath Insurance Broking Ltd., ICE Media Ltd. and another producer as defendants.
