Aames’ Earnings Dive
After announcing that its earnings plunged by 97 percent in its first quarter, Los Angeles-based Aames Financial Corp. said it plans to stop selling its mortgage loans as securities.
Demand for mortgage-based securities has plummeted, with investors considering them too risky. Aames reported net income of $448,000 (1 cent a share) for the quarter ended Sept. 30, compared with $13.1 million (40 cents) for the like period a year earlier.
In light of the losses, Aames is eliminating its quarterly dividend. In a filing with the Securities and Exchange Commission, Aames disclosed that it also will stop the practice of securitizing its loans (bundling mortgages and selling stakes in those bundles on the stock market). Instead it will sell whole loans to other lenders.
Donaldson, Lufkin & Jenrette Securities Corp. is currently seeking a buyer or financial partner for Aames.
Hiring Trends
The L.A. area’s job market will remain robust at least through the first quarter of 1999, according to a quarterly survey of local employers by Manpower Inc., a staffing services firm.
Thirty-five percent of local employers said they plan to add to their payrolls this winter, while only 11 percent are preparing for staff cutbacks. “A year ago at this time, prospects were nearly as rosy, as 27 percent said they would hire and 7 percent anticipated reductions,” said Manpower spokesman Hank Hinse.
Local employment potential is greatest in durable goods manufacturing and public administration, while some cutbacks are expected in education.
Alatorre Deputy Defects
Richard Alatorre’s top field deputy joined the race to unseat him last week, one of six candidates trying to take the embattled Eastside politician’s job on the Los Angeles City Council.
Armando Hernandez quit his job with Alatorre’s staff after announcing his candidacy. Also last week, Deputy District Attorney Nick Pacheco entered the race for Alatorre’s seat.
They join Luis H. Cetina, Paul Melero, Alvin D. Parra and Juan Marcos Tirado as declared candidates.
Alatorre has been plagued by personal problems, including recent allegations of cocaine use, as well as an ongoing federal corruption investigation.
Livent Files for Bankruptcy
Livent Inc., the troubled live-theater producer led by former Hollywood agent Michael Ovitz and former investment banker Roy Furman, filed for protection from creditors in U.S. Bankruptcy Court. The filing came as the company announced it earned $61.7 million less than it had previously reported, and that it had fired its two top executives.
The Toronto-based company, known for “Ragtime,” “Showboat” and “Fosse,” also sued those two executives, Garth Drabinsky and Myron Gottlieb, for some $146 million, alleging widespread financial misconduct. Drabinsky and Gottlieb, in turn, announced they were suing Ovitz and Furman for about $130 million.
Livent filed for Chapter 11 protection at the U.S. Bankruptcy Court in New York to begin a comprehensive financial restructuring of the company. It is considering filing a similar action in Canada.
Concrete Firm to Be Acquired
CalMat Co., a Los Angeles asphalt and concrete producer, has agreed to be acquired by Birmingham, Ala.-based Vulcan Materials Co., the nation’s largest manufacturer of construction materials, for $760 million in cash.
If approved by shareholders, the combination of the two firms would create the nation’s largest company specializing in sand, gravel and crushed stone.
The merged company hopes to capitalize on demand for infrastructure projects, particularly new highways in the Western United States. The addition of CalMat would boost Vulcan’s estimated 1998 sales to $2.3 billion, and expand its operations to include 21 states.
As part of the deal, CalMat, which has 1,800 employees, would become a subsidiary of Vulcan. It would continue to be based in L.A. and retain its name. Because the two firms do not compete, no production facilities are expected to be closed.
Airbus Gets Jet Order
L.A.-based International Lease Finance Corp. has awarded a contract to Airbus Industrie for as many as 30 A-318 jets valued at $1.1 billion, allowing the European airplane manufacturer to begin making the 100-seat aircraft early next year.
The deal is a potential blow to Boeing Co., which is struggling to win orders for its own 100-seater, the 717. ILFC is the world’s second-largest lessor of airplanes. Tolouse, France-based Airbus announced in September that it would begin marketing the A-318 to challenge Boeing in the small-jet market.
CBS Agrees to Settlement
CBS Corp. has agreed to pay $9.5 million to settle government claims of ecological damage to Southern California’s sea life caused by discharge of toxic substances into the ocean off the Palos Verdes Peninsula.
The funds will be used by the U.S. Environmental Protection Agency and other federal and state agencies to help restore the polluted marine environment. The settlement ends the involvement of CBS which includes the former Westinghouse Electric Co. in the largest lawsuit seeking damages for harm to natural resources. Westinghouse operated a now-closed plant in Compton that cleaned transformers containing PCBs.
The case is still pending against six other companies.
Be a Star at Staples
The developers of L.A.’s new Staples Center announced the creation of a “Star Plaza” to be built in front of the arena, which would allow fans to purchase a $125, 8-inch porcelain tile to be laid in front of the facility.
For $3,000, bigger spenders can have their name or message embedded on a one-foot granite star.
Staples Center executives say they will use the proceeds from Star Plaza to fund two charitable donations: $1 million over five years to Inner-City Arts, a program for underprivileged elementary school students in the downtown area; and $1 million toward Walt Disney Concert Hall.
Actor and Lakers fan Jack Nicholson and entertainment reporter Mary Hart purchased the two inaugural stars.
Cable Firms Team Up
Telecommunctions Inc. and Century Communications Corp. have completed an agreement to pool their Southern California subscribers, in an effort to speed the offering of such new services as high-speed Internet access and telephone calling.
The deal makes Century a dominant player on the local scene, with some 300,000 subscribers in Los Angeles and 837,000 in Southern California. TCI will contribute nearly 250,000 subscribers in L.A. and Ventura counties, in return for 25 percent of the partnership.
The partnership says it will begin making high-speed Internet access available in 1999 and telephone service available in 2000.
Compiled by Larry Kanter
