Adnan Khashoggi: Saudi billionaire arms dealer dies aged 82

Adnan Khashoggi, with wife Lamia

Saudi arms dealer Adnan Khashoggi, a billionaire businessman known for his lavish lifestyle, has died in London at the age of 82.

His family said in statement that he died peacefully while being treated for Parkinson’s disease.

Mr Khashoggi became one of the world’s richest men in the 1970s and ’80s by brokering international arms deals.

His parties were legendary, often lasting for days, but there was also controversy about his business.

A statement from the family on Tuesday said: “He lived his last days surrounded by his devoted family, children and grandchildren, with the same elegance, strength and dignity that characterised his remarkable life. He is survived by his wife Lamia.

“AK was a pioneer who achieved global recognition in a golden age through his extraordinary business achievements and renowned generosity. Our father understood the art of bringing people together better than anyone.

“He combined commercial acumen with an over-riding loyalty to his country, the Kingdom of Saudi Arabia. His work always furthered the interests of his country.”

He most famously brokered arms deals between US firms and Saudi Arabia in the 1960s and 70s, when he worked closely with the Lockheed Corporation, now Lockheed Martin.

Later, Mr Khashoggi represented France in its race against the UK to secure the highly controversial $20bn al-Yamamah arms deal with the Saudis.

He spent time in a Swiss prison in the 1980s – where he reportedly dined on gourmet food from the Schweizerhof Hotel – fighting extradition to the US after being accused of helping to conceal funds on behalf of former Philippines president Ferdinand Marcos and his shoe-loving wife, Imelda.

The charges were reduced, and he and Mrs Marcos were eventually acquitted.

Mr Khashoggi once owned one of the world’s largest yachts, the 86-metre Nabila which appeared in the James Bond film, Never Say Never Again.

When his business empire ran into financial difficulty, he handed the yacht to the Sultan of Brunei who sold it on to Donald Trump, now president of the US, for a reported $29m in the 1980s.

In 1997, a Paris court ordered him to pay a $1.6m fine for smuggling 37 paintings into France in 1986, bought in from the US on his private jet.

And in 1998, the casino at London’s Ritz Hotel settled out of court its lawsuit against Mr Khashoggi for £8m of gambling debts.

The businessman, whose late sister Samira was married to former Harrods chief Mohamed Al Fayed, was an uncle of Princess Diana’s final love, Dodi Fayed.

Covisint to be acquired by Canadian software company for $103 million

Canadian software company OpenText said it is acquiring Covisint Corp. — an information technology supplier with deep automotive roots — in a transaction valued at $103 million.

The deal comes after a year of speculation Covisint was an acquisition target and pressure from institutional shareholders to sell the company, whose share price has lagged.

OpenText, based in Waterloo, Ont. (Nasdaq: OTEX), said Covisint’s Internet of Things platform will help OpenText expand in the automotive industry.

Covisint shareholders will receive $2.45 per share in cash for each outstanding share of common stock held, representing a 23-percent premium to the prior closing price on June 2, according to a news release issued Monday.

The transaction is expected to close in the third quarter.

For the fiscal year ending March 31, Covisint reported total revenue of $70.2 million, down 8 percent from $76 million last year. Its subscription revenue was down 4 percent and services revenue down 25 percent from last year.

Covisint, now based in suburban Detroit, was founded in 2000 as an online marketplace by Ford Motor Co., General Motors and then-DaimlerChrysler. It struggled to generate revenue and was sold to Compuware in 2004. Compuware spun off the company again through an initial public offering in 2013.

The company came under pressure last year from institutional investors to sell itself as its share price has lagged. One of them, San Francisco-based Vector Capital offered to buy the company. Another, Roumell Asset Management LLC, threatened a proxy battle over its demand that the company hire an investment banker and consider going private through a sale.

The company now markets itself as a provider of cloud-based services to companies in the hot space known as the Internet of Things, where sensors connect people with their devices, machines and appliances. A big part of the Internet of Things is connected cars.

“There is no better place for the Covisint Platform, the Covisint team members and our customers at this time in our evolution,” Sam Inman, the company’s CEO, said in a statement.

Covisint has seen its share price lag and began exploring possible sale options last year.

GM shareholders reject Greenlight stock split

DETROIT — Greenlight Capital Inc.’s proposal to split General Motors’ stock was overwhelmingly rejected by the automaker’s shareholders.

Based on preliminary results, GM on Tuesday reported Greenlight’s dual-class common stock proposal was defeated with more than 91 percent of the votes cast against the proposal, or 96 percent excluding Greenlight’s shares.

The hedge fund wanted GM to create a new class of dividend-paying stock for yield-oriented investors. The other class would have been aimed at investors seeking value and growth investment opportunities.

Greenlight Capital’s three nominees for the company’s board also failed to garner enough votes. All of the GM board’s director nominees were elected by wide margins, with each one winning by a range of 84 to 99 percent of the votes cast, the company said.

Following the announcements, GM shares fell 22 cents to $34.24 per share. The stock closed Monday up less than 1 percent to $34.46.

The vote ends months of campaigning by Greenlight founder David Einhorn, who did not attend the meeting, to split the stock. His firm — GM’s fifth largest shareholder with a 3.6 percent stake — insisted that the split would lower the company’s cost of capital and unlock between $13 billion and $38 billion of shareholder value.

Greenlight Capital, according to GM, was represented at the meeting. However, no one commented or made a statement during the meeting.

GM has adamantly opposed the proposal since it became public in March. It has encouraged shareholders to do the same.

“After careful consideration, we determined that Greenlight’s proposal is not in the best interest of our shareholders,” GM CEO and Chairman Mary Barra told media prior to the annual meeting starting.

The automaker has argued the split would create an unacceptable level of risk and would not serve the best interests of GM shareholders. “We believe that Greenlight’s flawed, high-risk proposal will not create additional value,” according to a statement on the company’s proxy website.

Several analysts as well as Moody’s and S&P have publicly sided with GM on the matter.

“While we believe that Greenlight’s frustration with GM’s sluggish stock is understandable given the company’s impressive execution since emerging from bankruptcy, we believe that the proposed share division would not ultimately achieve outsized incremental returns,” wrote Bank of America Merrill Lynch research analyst John Murphy in a March note to investors.

The catalyst for Greenlight’s proposal was frustration with the stock performance of GM, which has lagged the performance of the S&P 500 since the IPO in 2010. GM is one of several automakers to face mounting pressure from Wall Street, which has more recently favored high-tech disruptors such as Tesla Motors Inc.

Ford Motor Co. last month replaced CEO Mark Fields with Jim Hackett largely due to Fields not being able to move the company’s stock.

When asked whether GM needed to take drastic actions to convince Wall Street that its stock is undervalued, Barra said officials continue to right-size the business and invest in emerging technologies that it anticipates will lead to long-term growth and increased shareholder value.

“We are going to continue to look to differentiate ourselves,” she said. “Not only in our performance and the fact that we want to make sure we outperform throughout the cycle … but also making sure people understand all the assets that we have and we bring to the future of personal mobility.”

Barra touted the the company’s Bolt electric vehicle, acquisition of autonomous driving startup Cruise Automation as well as recent decisions to exit underperforming countries as moves that the company hopes will pay dividends on Wall Street.

Greenlight’s three candidates for the board of directors were Leo Hindery Jr., a veteran telecommunications industry executive; Greenlight executive Vinit Sethi; and William N. Thorndike Jr., managing director of Housatonic Partners, a private equity firm.

GM had opposed the board appointments and urged shareholders to vote for the board’s recommended nominees.

Nine of 11 directors in the GM board are independent, plus Barra and former UAW Vice President Joseph Ashton, appointed by the UAW Trust.

Other approved proposals at the annual meeting included officer compensation, 2017 short- and long-term incentive plans as well as the selection of Deloitte & Touche as GM’s independent registered public accounting firm. A shareholder proposal to request an independent board chairman was rejected.

China’s HNA: The biggest company you’ve never heard of

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HNA boss Adam Tan is eyeing continued global growth

China’s HNA Group is quickly becoming one of the world’s biggest companies, but the chances are you will have never heard of it.

It has gone on a multi-billion dollar spending spree in recent years, snapping up dozens of businesses as well as major stakes in , hotel chain and skyscrapers in London.

The Chinese conglomerate now employs more than 400,000 people worldwide and has ambitions to grow even more.

HNA chief executive Adam Tan told the BBC it had “full confidence” in its approach, despite threats of tighter spending controls on Chinese businesses and the prospect of Brexit in the UK.

The company’s strategy involves buying businesses all along the supply chain.

That means when you travel, for example, your luggage might be handled by one of its firms, you could eat aeroplane food from its , or stay in one of its hotels.

“That’s our business, from the airlines business, airport business, shopping business and travel agent business,” Mr Tan says.

As well as the travel industry, HNA also has a sprawling property portfolio.

One of its major deals last year was to acquire two large buildings in London’s Canary Wharf.

That deal was shortly before the Brexit vote, but Mr Tan says he continues to see strengths in the UK economy.

“Before I bought the two buildings in Canary Wharf, we had full confidence in London and the UK.

“I’ve still got huge confidence. The UK inside the EU or outside the EU, [the] UK is [the] UK,” he says.

HNA, which is led by Chinese billionaire Chen Feng, was founded in 1993 and made its name in shipping and aviation.

It has achieved its breakneck growth without the help of Chinese government money, Mr Tan says.

For that reason, he is sanguine about plans by Beijing to tighten restrictions on Chinese businesses spending money abroad.

He says HNA will still get support from Chinese banks, and can count on international banks as well because of its large presence outside of China.

With the support of banks such as JP Morgan and Goldman Sachs, it can continue to fund its future growth, he says.

“We don’t feel so much pressure on that,” he adds.

  • Biggest shareholder in Deutsche Bank
  • A 25% stake in hotel group Hilton
  • Airport luggage handler Swissport Group
  • Carlson Hotels, which runs the Radisson hotel chain
  • Airline catering firm Gate Gourmet
  • Irish aircraft leasing firm Avolon Holdings

GMC launches ad campaign with ‘Like a Pro’ tag line

DETROIT — GMC is trying to make more of an emotional appeal to consumers by launching an ad campaign that focuses on its buyers’ lives with their vehicles and informalizes the brand’s long-running “We Are Professional Grade” tag line into “Like a Pro.”

The commercials, scheduled to begin airing today, don’t highlight the utility or amenities of GMC pickups, SUVs and crossovers. The first spot introduces the campaign by asking if people want to have merely adequate lives before asserting that GMC owners prefer to live “like a boss, like a rebel, like a standard-bearer, like a pro.”

Another one, called “Dad Like a Pro,” shows a young boy mimicking his father, who brings home a ride-on toy version of his Sierra Denali crew cab. The spot, scheduled to debut on Father’s Day during the final round of the U.S. Open golf tournament, casts a real-life father and son, GMC said.

Future commercials will follow a similar formula, such as using the phrase “Third Row Like a Pro” to demonstrate the Acadia large crossover’s seven-person capacity.

“‘We Are Professional Grade’ has really been a foundation of GMC for almost 20 years now,” GMC’s marketing director, Rich Latek, told Automotive News. “This enables us to add some humanity into our ads and into the brand and drive an emotional connection.”

The campaign arrives amid stagnant retail sales for GMC, though total sales including fleet deliveries are on pace to have their best year since 2004. The brand is preparing to launch a redesigned version of its Terrain compact crossover this summer.

Actor Will Arnett continues his role as GMC’s voice in the commercials. The ads, which still include the line “We Are Professional Grade,” also will appear in other types of media and in dealership showrooms.

Carvana: Cars in vending machines, a fading IPO and an ex-con behind them

Who wants to buy a used car from a vending machine?

Investors will get some answers to that question after the market closes, when a young company called Carvana Co. releases its first earnings report since going public in April with underwriters that included Wells Fargo & Co., Bank of America Corp.’s Merrill Lynch, Deutsche Bank AG and Citigroup Inc.

The vending machines — multistory glass structures that dispense certified used cars in four cities in Texas as well as Nashville, Tennessee — aren’t all that’s noteworthy about the upstart that’s been called the “Amazon of used cars.” Carvana’s burning cash at a pace that recalls the boom and bust. It has agreed to pass along most of any tax benefit generated in its initial public offering, estimated at the time of the listing at $1 billion, to early investors, including Carvana’s largest shareholder, Ernest Garcia II.

And then there’s something investors didn’t learn from the prospectus for the New York Stock Exchange share offering: Garcia — who owns a controlling stake in Carvana and whose 34-year-old son Ernie III is its CEO — has a criminal conviction tied to the savings-and-loan scandal that erupted in the early 1990s.

“A controlling shareholder having a fraud conviction is of interest to other shareholders,” said John Coffee, a professor of corporate law at Columbia University. While it may not be a legal requirement to do so, he added, “I think a company doing a public offering should disclose this factor.”

Ernie Garcia III declined to comment through Carvana in advance of the company’s earnings release. Ernest Garcia II declined to comment.

Carvana, whose shares have fallen 40 percent since its IPO on April 27, is pulling into the used-car business at a challenging time. An abundance of supply is pushing down car values. Loan delinquencies are rising. A Carvana rival, Beepi, wound down earlier this year after raising $150 million in venture funding.

Phoenix-based Carvana, which operates in 27 cities, was spun off in 2014 from DriveTime Automotive Group Inc., a privately owned operator of brick-and-mortar used-car dealerships. The elder Garcia is DriveTime’s chairman and controls almost all of its shares. His longtime partner Raymond Fidel is DriveTime’s CEO. DriveTime and Fidel declined to comment.

Garcia pleaded guilty to bank fraud and Fidel to securities fraud in the early 1990s for their bit roles in the demise of California thrift Lincoln Savings and Loan Association, which sparked a national political scandal. Five U.S. senators came under a cloud for accepting campaign contributions from Lincoln’s boss, Charles Keating, and intervening on his behalf.

Testimony against Keating

Garcia, a Lincoln borrower, and Fidel, a bank president, avoided prison time by testifying for federal prosecutors against Keating. Each received three years of probation and has since had his civil rights restored, according to DriveTime filings. Garcia was barred from the financial industry for at least three years.

The company’s recent IPO prospectus doesn’t mention Garcia’s past. He isn’t an officer or director of Carvana. But he and his son held 97 percent of Carvana’s voting shares through various entities at the time of the offering, and have control over matters requiring shareholder approval, like selecting directors. The prospectus also describes a spaghetti pile of ties between Carvana, DriveTime and other Garcia-controlled companies. Carvana leases dealership space and corporate aircraft from DriveTime, licenses some of its intellectual property and uses it for loan servicing and collections.

There’s no question that Carvana reaps significant benefits from piggybacking on DriveTime’s facilities — so much so that some investors were spooked by the prospectus’s mention that DriveTime’s owners are considering selling it, says Ali Faghri, a senior analyst at Susquehanna Financial Group, who rates the stock a hold.

“We benefit a ton from the infrastructure that DriveTime brings to the table,” the younger Garcia told Bloomberg Television in July 2014. “It’s been a great partnership.”

Giant coin

To stand out from rivals including CarMax and eBay Motors, Carvana’s goal is to build a large distribution network and deliver used vehicles to customers around the country who buy, finance and obtain warranties on its website. By lowering interest rates and eliminating the cost of dealerships and add-on fees, the company says it can deliver used vehicles for hundreds or thousands of dollars below recommended Kelley Blue Book prices.

Customers who browse the 7,000-plus vehicle inventory can have cars delivered to their homes, with a seven-day money back guarantee. Or they can travel to a Carvana used-car vending machine, insert a giant coin and have their vehicles pop out a bay door. The vending machines help distinguish Carvana from Shift Technologies Inc. and Vroom Inc., two other venture capital-backed upstarts that boast web-based used-car shopping with lean distribution chains.

The elder Garcia laid the groundwork for DriveTime in 1990, when he bought a rental-car company called Ugly Duckling out of bankruptcy. Merging that operation with a financing company, he built a vendor and financier of used cars for subprime borrowers. Fidel, a fellow Phoenix-area businessman, came on in 2001.

By this decade, according to Carvana, DriveTime became one of the five biggest used-car dealers in the U.S. Garcia bought a New York apartment in Trump Tower, the president’s permanent residence.

Like others in the used-car business, DriveTime has hit some legal potholes. In 2014, it agreed to pay $8 million to settle Consumer Financial Protection Bureau claims that its hundreds of collection agents used abusive tactics with the 46 percent of company loan customers who were delinquent. The company neither admitted or denied wrongdoing and agreed to make changes in its operations.

Valley swagger

Garcia’s son, Ernie III, joined DriveTime in 2007 after earning an engineering degree from Stanford. He helped the company develop tools to assess consumer credit, set vehicle prices and structure deals, a Carvana biography says. Named CEO at Carvana’s founding in 2012, while he was still in his 20s, Ernie III brought a Silicon Valley swagger to the business, which boasts its customers can buy vehicles “in as little as 10 minutes.”

Carvana has burned through cash as part of its rapid expansion. It raised $460 million in funding prior to going public and was down to its last $39 million in cash earlier this year, company filings show. Its rapid revenue growth — 180 percent in 2016 — so far hasn’t been enough to make up for the burn, and Tuesday’s earnings will show whether it’s making progress in closing the gap.

Carvana’s public offering brought in $211 million in much-needed funding and bolstered the company’s board with figures including former Vice President Dan Quayle. The IPO was something of a coup for the elder Garcia, turning his son into the boss of a NYSE-listed company. The $15 offering price also valued Garcia’s 71 percent stake at $1.5 billion, rendering him a certifiable billionaire.

The ten-figure status proved short-lived, however. The value of Garcia’s holdings in Carvana dropped more than 25 percent during its first day of trading and the shares have since drifted to around $9.

While investors have been cautious, analysts see room to grow. Merrill Lynch’s Nat Schindler set his initial target price at $25, saying Carvana’s package of vehicles, financing and warranties would bring “e-commerce disruption” to the used-car market.

Nine of 10 Wall Street analysts covering the company rate it a “buy.” Eight of those nine bulls work for banks that underwrote the offering, including the four largest — Merrill Lynch, as well as Citigroup, Deutsche Bank and Wells Fargo. Representatives for those banks declined to comment on the offering or their analysts’ research.

Lyft, Nutonomy partner to offer autonomous rides in Boston

Ride-hailing company Lyft will soon begin picking up customers in self-driving cars in Boston, when it begins working through a research partnership with autonomous vehicle startup NuTonomy.

The companies said on Tuesday that they will collaborate to study human interactions with self-driving cars. NuTonomy is already testing autonomous electric vehicles in certain neighborhoods in Boston, the company’s hometown.

“The first stage of the partnership is focused on research and development on passenger experience,” said Lyft CEO Logan Green during a call with reporters on Monday. “The next stages could lead to thousands of NuTonomy cars on the Lyft platform.”

Green said the pilot will begin in “coming months,” and the companies are in discussions with Boston regulators to set a date.

NuTonomy does not build cars. Instead, it is developing self-driving software for use in autonomous vehicle fleets. Karl Iagnemma, the company’s CEO, said the pilot will use Renault Zoe electric vehicles integrated with NuTonomy’s platform and Lyft’s network.

NuTonomy has also been testing self-driving cars and a ride-hailing pilot in Singapore, with the goal of introducing an autonomous taxi service in 2018.

The partnership with NuTonomy follows reports of Lyft’s deal with Waymo — which began offering rides in its self-driving cars to Arizona residents in April — to collaborate on product development and other projects. Lyft is also working with General Motors to deploy a fleet of autonomous electric vehicles in 2018.

Green said each of Lyft’s partnerships is “unique and different” and that the company’s work with NuTonomy will not affect previous agreements.

Lyft competitor Uber has been performing public tests of its internally developed self-driving technology since September, picking up customers in autonomous prototypes in Pittsburgh and Arizona.

Rangers fraud trial: Craig Whyte found not guilty

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Craig Whyte says he is “delighted with the outcome” of the trial

Former Rangers owner Craig Whyte has been cleared of taking over the Glasgow football club by fraud in May 2011.

He was acquitted by a jury following a seven-week trial at the High Court in Glasgow.

The 46-year-old was also found not guilty of a second charge under the Companies Act.

The jury of eight men and seven women took just two hours of deliberations to return not guilty verdicts on both charges.

Whyte took over Sir David Murray’s majority shareholding for £1 in May 2011, while agreeing to take on obligations, which included paying an £18m bank debt and £5m for players.

He was charged with using the club’s own money for the deal while claiming the funds were his.

After the verdict, judge Lady Stacey told Whyte: “You have been acquitted and are free to leave the dock.”

He thanked the judge and jury before leaving the courtroom.

Questioned by reporters as he left the building, he said: “I’m just delighted with the outcome.”

During the trial, jurors at the High Court of Glasgow were told how Mr Whyte struck a £1 deal to purchase Sir David Murray’s controlling stake at Ibrox.

As well as the £18m bank debt and money for players, Whyte had agreed to provide £2.8m to settle a “small tax case” bill, £1.7m for stadium repairs, and £5m in working capital.

Prosecutors had alleged that Whyte pretended to Sir David, and others, that funds were available to make all required payments.

The jury were told Mr Whyte had only £4m available from two sources at the time, but took out a £24m loan from Ticketus against three years of future Rangers season ticket sales, before he owned the club.

The second charge under the Companies Act centred on the £18m payment between Mr Whyte’s Wavetower company and Rangers to clear a bank debt.

Mr Whyte had denied both the charges against him.

His defence QC, Donald Findlay, had earlier told the jury that Mr Whyte had been made to look like a “pantomime villain”.

He had said the Murray team had been “more focused” on securing a sale than on checking out the source of the money.

Mr Findlay said his client had met the conditions of the sale by paying the debt and investing in the club.

He blamed Sir David’s advisers, saying they “let him down very badly” in the deal and did not ask where the takeover money was coming from.

Summing up the defence case, Mr Findlay said: “They were not interested in where the money came from and we know this absolutely categorically.”

The defence QC had also pointed out that there had been “no loss” to Sir David Murray in the buyout.

South Africa falls into second recession in a decade

South Africa president Jacob Zuma

South Africa has fallen into recession for the first time in eight years after economic growth shrank by 0.7% between January and March.

The downturn, due to weak manufacturing and trade, follows a 0.3% fall in GDP in the final quarter last year.

It is the first time that economic has slowed for two consecutive quarters – the technical definition of a recession – since 2009.

The value of the rand fell by 1% on the currency markets.

Analysts had expected GDP to grow by 0.9% during the first quarter. However, Joe de Beer, deputy director general of Statistics South Africa, said: “We can now pronounce that the economy is in recession.”

He added: “The major industries that contracted in the economy were the trade and manufacturing sectors.”

Africa’s third-largest economy is under pressure after President Jacob Zuma fired its respected finance minister, Pravin Gordhan, earlier this year.

It prompted two credit rating agencies, Standard and Poor’s and Fitch, to downgrade South Africa’s credit worthiness to junk.

This means it is more expensive for South Africa to borrow money, because it is seen as having a higher risk defaulting on its debts.

Last week, S&P and Fitch pointed to further concerns about the South African economy, including uncertainty over who will succeed President Zuma as leader of the ruling African National Congress.

A successor is expected to be chosen in December, but Mr Zuma can remain as head of state until an election in 2019.

First cash Lifetime Isa launched

£20 note in a piggy bank

Savers will be able to save cash into the government’s new Lifetime Individual Savings Account (Isa) for the first time from Thursday.

Skipton Building Society is launching a product with an interest rate of 0.5%.

Currently only three providers are offering the Lifetime ISA, but those require investment in shares.

Money saved in a Lifetime Isa is designed for buying a first home, or for retirement. The government offers savers a 25% annual bonus.

Savers have to be under the age of 40.

Compared to other cash Isas, the Skipton’s interest rate is relatively low. Rival providers of instant access Isas offer returns of more than 1%.

“I would say it’s a disappointing rate, but they know there’s going to be a big inflow, because of the government top-up,” said Simon French, chief economist at Panmure Gordon.

As a result, those who save before the end of the tax year will get an effective rate of return of 25.5% on up to £4,000.

However there are heavy penalties for withdrawing money from a Lifetime Isa if you do not buy a property, or if you take the money out before the age of 60.

The Skipton said that anyone aged 25 who saved the maximum amount would have a pot worth £40,776 by the age of 33 – more than the average first-time buyer deposit.