Major International Business Headlines Brief::: 18 May 2020

Mon May 18 08:52:46 CAT 2020

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Major International Business Headlines Brief::: 18 May 2020

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ü  Egypt to loan EgyptAir $127 mln to help it through coronavirus crisis

ü  Tanzania lowers 2020 growth projection amid coronavirus outbreak

ü  South African energy regulator allows Eskom to claw back $718 mln in tariffs

ü  Sudan's annual inflation rate rises to 98.81% in April - stats agency

ü  Kenya eschews G20 debt relief initiative over restrictive terms

ü  SAA has spent $539 mln since filing for bankruptcy protection -practitioners

ü  Bank of Ghana holds key rate, surprises with bonds purchase

ü  Uganda's reserves will decline sharply without external help - IMF

ü  Kenya's East African Breweries says COVID-19 may slash profit by 25%

ü  Japan's economy falls into recession as virus takes its toll

ü  Fed chairman Powell warns downturn 'may last until late 2021'

ü  Ryanair profits top €1bn but outlook 'difficult'

ü  'I'm living on cards': The firms waiting for emergency loans

ü  JC Penney: US department store files for bankruptcy

ü  US targets Huawei with tighter chip export rules

ü  The man who bought 60,000 oil and gas wells

 <mailto:info at bulls.co.zw> 

Egypt to loan EgyptAir $127 mln to help it through coronavirus crisis

CAIRO (Reuters) - Egypt’s government will lend EgyptAir 2 billion Egyptian pounds ($127.39 million) due to the impact of the coronavirus on its operations, the finance ministry said.

A member of the Star Alliance led by Germany’s Lufthansa, EgyptAir halted regular international flights on March 19 when the government closed the country’s airports to combat the spread of the virus.

The government will support state-owned EgyptAir until it returns to 80% of its 2019 operations, the ministry said in a statement on Saturday.

EgyptAir has continued flying some domestic routes and repatriation flights for citizens stranded abroad.

Egypt is allowing hotels to reopen for domestic tourists on condition they operate at no more than 25% capacity until the end of May.

>From June 1, hotels will be allowed to work at up to 50% capacity.

The virus has shut down Egypt’s tourist sector, which accounts for 12%-15% of gross domestic product, leading to losses estimated at $1 billion per month.

($1 = 15.7000 Egyptian pounds)

 <mailto:info at bulls.co.zw> 

Tanzania lowers 2020 growth projection amid coronavirus outbreak

DAR ES SALAAM (Reuters) - Tanzania’s economy is expected to expand by 4 percent in 2020, less than an earlier projection of 6.9% due to the impact of the coronavirus, the finance minister said.

The outbreak has had a particularly big impact on the country’s tourism industry, a major source of revenues and employment.

The minister, Philip Mpango, told parliament on Friday the government had revised its growth projection downwards “due to the impact of the coronavirus on the different sectors,” without going into further details.

Tanzania, which has not imposed a widespread lockdown, has reported 544 infections and 21 related deaths as of Saturday.

South African energy regulator allows Eskom to claw back $718 mln in tariffs

JOHANNESBURG (Reuters) - South African energy regulator Nersa said on Friday it will allow utility Eskom to recover 13.3 billion rand ($718 million) from customers for electricity supplied in the 2018/19 financial year, lower than what the state-owned power utility had applied for.

Nersa said in a statement it will give its reasons for the decision once certain requirements have been finalised and will draw up an implementation plan for recovering the tariffs within a reasonable period of time.

Cash-strapped Eskom applied in August 2019 to Nersa to claw back 27.3 billion rand from electricity customers through power tariffs, saying it needed to cover costs incurred for the financial year 2018/19.

Eskom was not immediately available for comment on Friday.

Eskom supplies more than 90% of South Africa’s electricity but is struggling with high debts and faulty power stations which prompted it to impose several rounds of severe power cuts last year, hurting the country’s economy.

Eskom is dependent on government bailouts to stay solvent and the perilous state of its finances is one of the biggest risks to South Africa maintaining its investment-grade credit rating.

($1 = 18.5241 rand)

Sudan's annual inflation rate rises to 98.81% in April - stats agency

KHARTOUM (Reuters) - Sudan’s annual inflation rate rose to 98.81% in April, up from 81.64% in March, due to rising prices of food, drink and fuel, the state Central Bureau of Statistics said on Saturday.

Inflation in the country has risen in recent years, driven by food, beverages and a black market for U.S. dollars. On Thursday, the finance minister laid out a system of money transfers to the poor in a step towards removing costly fuel subsidies to combat an economic crisis.

Kenya eschews G20 debt relief initiative over restrictive terms

NAIROBI (Reuters) - Kenya will not seek a suspension of debt payments under a G20 initiative aimed at helping poor countries weather the COVID-19 pandemic, its finance minister said on Friday, saying the terms of the deal were too restrictive.

Minister Ukur Yatani told Reuters in an interview he was also concerned about the impact that debt relief might have on Kenya’s credit rating.

The Group of 20 major economies last month agreed to suspend payment obligations on bilateral debt owed by their least developed counterparts through the end of the year. The goal was to free up more than $20 billion that poor governments could use to buttress their health services.

But Yatani said he was concerned that terms of the deal limiting countries’ access to international capital markets during the standstill could hinder Kenya’s ability to finance its deficit later in the year.

“We fear we might unnecessarily create a crisis,” he said.

The East African nation is instead engaging creditor countries including Germany, Sweden, Japan, China and France individually with the goal of securing moratoriums on debt service payments lasting around a year.

“We have not concluded (negotiations), but it is progressing well,” he said.

The G20 initiative only covers official bilateral debt, though it calls for the voluntary participation of private lenders on comparable terms.

A third of Kenya’s 3 trillion shilling ($28 billion) external debt is owed to private creditors including holders of the country’s two Eurobonds

“The G20 debt relief initiative does not offer optimal benefit given the structure of Kenya’s debt portfolio,” he said. “Every country adapts to the situation based on its own circumstances.”

The pandemic has caused the government’s budget deficit to swell to 8.2% of GDP in the financial year to the end of June, from an initial forecast of under 7%, mainly due to reduced tax collection and foregone revenue in the form of VAT and income tax cuts.

But the deficit is projected to narrow to 7.3% - equivalent to 823.2 billion shillings - in the 2020/21 fiscal year and to 4.2% of GDP by 2023/24, Yatani said.

“Kenya is taking a cautious approach of seeking debt relief from bilateral creditors to safeguard its sovereign credit rating,” he said.

Moody’s downgraded Kenya’s outlook to negative from stable on May 7 citing the shock caused by the COVID-19 pandemic to its tourism industry and farm exports.

On Tuesday, the IMF raised it’s risk of debt distress to high from moderate.

The minister sought to assure investors, saying: “We have adequate reserves to manage our payments for the next one year.”

The government has included a 55 billion shillings stimulus package aimed at preserving employment and consumer demand in the budget for the next fiscal year, which will be presented to parliament on June 11.

The cash will go towards grants for small businesses such as hotels and nature conservancies hard hit by the collapse of tourism.

The economy is projected to grow by 3% this year, falling to 2.5% if the crisis worsens, down from an initial forecast of more than 6%, Yatani said.

He attributed the forecast, which is higher than that of the IMF and the World Bank, to adequate rainfall across the country which will boost food production.

($1 = 107 Kenyan shillings)

SAA has spent $539 mln since filing for bankruptcy protection -practitioners

CAPE TOWN (Reuters) - South African Airways (SAA) has spent just under 10 billion rand ($540 million) since it entered a form of bankruptcy protection, business rescue practitioners said on Friday as they flagged a structured wind-down process as their preferred option for the carrier.

A South African Airways (SAA) plane is towed at O.R. Tambo International Airport in Johannesburg, South Africa, January 18, 2020. REUTERS/Rogan Ward/File Photo

The troubled state-owned airline, which has not made a profit since 2011 has been burning cash and is dependent on government bailouts to remain solvent. It entered business rescue in December in a last-ditch bid to save the company.

“In terms of the amount of money that has been utilized... by the airline from the fifth of December to the end of April we indicate that the total spend was 9.9 billion rand,” Siviwe Dongwana, joint business rescue practitioner appointed to turn around SAA, told lawmakers on Friday.

A fifth of the money was spent on aviation fuel and 16% went on salaries and allowances, he said, referring to some of the major expenses incurred during this time.

Administrators at SAA said in the absence of extra funding the best way forward might be to run a structured wind-down of the business rather than liquidation, which opposition parties have called for.

“There is no question of doubt in my mind that a liquidation process would materially erode value and the net recovery for creditors could be an absolute disaster,” said Les Matuson, joint business rescue practitioner at SAA, when answering questions from lawmakers.

Early this month South Africa’s Labour Court ordered a halt to layoffs at the ailing airline, siding with two trade unions who had argued that the airline’s administrators had acted unfairly.

On Wednesday, the administrators, who have no previous aviation experience and are under pressure to produce a restructuring plan after being in the job for five months, said they would not sell assets for an interim period without involving the government.

SAA has received bailouts worth more than 20 billion rand over the past three years.

It is running low on cash after the coronavirus pandemic forced it to halt all commercial passenger flights and the government told the administrators it would not provide further funding.

($1 = 18.5207 rand)

Bank of Ghana holds key rate, surprises with bonds purchase

ACCRA (Reuters) - Ghana’s central bank left its key interest rate unchanged at 14.5% on Friday and said it had concluded a $1 billion repo facility with the U.S. Federal Reserve to improve the country’s foreign exchange liquidity.

The bank said it expected Ghana’s economy to grow despite the new coronavirus, with preliminary estimates showing economic growth in 2020 was likely to be 2% to 2.5%. Forecasts had been for gross domestic product to grow 6.8% in 2020.

Ghana’s budget deficit widened in the first quarter compared with 2019, to 3.4% of GDP compared with a target of 1.04%, mostly due to a shortfall in revenues, Ernest Addison, the governor of the Bank of Ghana, said at a news conference.

Addison said now expected a downturn in economic growth, while the COVID-19 pandemic had put additional strain on the budget.

The shortfall in oil and other tax revenues due to plunging crude prices had left the country with a large financing gap, he said.

“Current market conditions in the wake of the pandemic would not allow the financing of the gap from the domestic capital markets without significantly increasing interest rates,” Addison said.

The bank had triggered an emergency financing provision allowing it to increase purchases of government securities, he said, and it had purchased 5.5 billion cedis ($958 million) of the government’s COVID-19 relief bond.

He said the bank stood ready to continue the assets purchase programme of up to 10 billion cedis.

“To further boost foreign exchange liquidity, the Bank of Ghana has concluded a $1 billion repurchase agreement, repo facility, with the U.S. Federal reserve under its repo facility for foreign and international monetary authorities.” Addison said.

Standard Chartered Bank’s Razia Khan said the repo facility would provide additional reassurance on Ghana’s external liquidity. She added that the bank surprised markets by announcing it had triggered an emergency measure that would allow it to buy government bonds.

“This is to help with the estimated increase in Ghana government’s financing gap, as a result of the COVID-19 crisis,” Khan said.

($1 = 5.7400 Ghanaian cedi)

Uganda's reserves will decline sharply without external help - IMF

NAIROBI (Reuters) - Without external help, Uganda’s foreign exchange reserves will fall to under 2 months of import cover in 2020/21 and leave the country in a vulnerable position, the International Monetary Fund said in a statement issued on Friday.

“Absent external support, the expected deterioration in the current, capital and financial accounts would result in a sharp decline of the Bank of Uganda’s (BoU) reserve buffer,” the IMF said.

“This would be below the adequate level of reserves for Uganda, and would leave the country in a vulnerable position,” it added.

Kenya's East African Breweries says COVID-19 may slash profit by 25%

NAIROBI (Reuters) - Kenya’s East African Breweries Limited (EABL) has said its profit after tax for the year ending June is likely to decline by 25% compared to the previous period, hurt by the coronavirus pandemic.

“The COVID-19 global pandemic and the subsequent response measures taken across the region have impacted our business negatively,” the company said in a statement published on Saturday.

It added that its “current performance forecast indicates a decline in profit after tax of approximately 25% for the financial year ending 30th June 2020 versus prior year”.

EABL, which is controlled by British drinks group Diageo, is the biggest alcoholic beverages company in Kenya. Its competitors include Heineken and smaller, home-grown companies such as Keroche Breweries.

The company reported 11.52 billion shillings ($107.66 million) in profit after tax for the year ended June 2019.

EABL also operates in neighbouring Uganda and Tanzania.

($1 = 107.0000 Kenyan shillings)

Japan's economy falls into recession as virus takes its toll

Japan has fallen into recession as the financial toll of the coronavirus continues to escalate.

The world's third biggest economy shrank 3.4% in the first three months of 2020 compared to a year ago, its biggest slump since 2015.

The coronavirus is wreaking havoc on the global economy with an estimated cost of up to $8.8tn (£7.1tn).

Last week, Germany slipped into recession as more major economies face the impact of sustained lockdowns.

Japan didn't go into full national lockdown but issued a state of emergency in April severely affecting supply chains and businesses in the trade-reliant nation.

The 3.4% fall in growth domestic product (GDP) for the first three months of 2020, follows a 6.4% decline during the last quarter of 2019, pushing Japan into a technical recession.

More financial stimulus to come

Consumers have been hit by the dual impact of the coronavirus and a sales tax hike to 10% from 8% in October.

While Japan has lifted the state of emergency in 39 out of its 47 prefectures, the economic outlook for this current quarter is equally gloomy.

Analysts polled by Reuters expect the country's economy to shrink 22% during April to June, which would be its biggest decline on record.

The Japanese government has already announced a record $1 trillion stimulus package, and the Bank of Japan expanded its stimulus measures for the second straight month in April.

Prime minister Shinzo Abe has pledged a second budget later this month to fund fresh spending measures to cushion the economic blow of the pandemic.

How can Japan turn things around?

Japan faces a unique challenge as its economy has been stagnant for decades, compared to the more buoyant economies of rivals the US and China.

Japan also relies heavily on exporting its goods and has little control over consumer demand in other countries which have been severely impacted by coronavirus lockdowns. Many of its biggest brands, like car firms Toyota and Honda, have seen sales slump across the world.

Tourism, which has long been a boost to the Japanese economy, has also been hit hard as the pandemic keeps foreign visitors away. Japan has had more than 16,000 confirmed coronavirus cases and around 740 deaths.

How does it compare to other major economies?

Things look bleak for the Japanese economy in the short term, along with other major economies around the world. But despite being the first of the world's top three economies to officially fall into recession, the country actually appears to be doing better, or less badly, than other major economies.

While economists predict Japan's economy will shrink by 22% this current quarter, they also predict that the US could contract by more than 25%. The 3.4% decline also compares favourably to the 4.8% the US suffered in the first three months of this year.

This was the sharpest decline for the US economy, the world's biggest, since the Great Depression of the 1930s.

China, the world's second largest economy, saw economic growth shrink 6.8% in the first three months of the year, its first quarterly contraction since records began.

Both of those economies haven't yet been confirmed as having fallen into a technical recession, which is defined as two consecutive quarters of negative growth, but most economists expect them to in the coming months.--BBC

Fed chairman Powell warns downturn 'may last until late 2021'

The chairman of the Federal Reserve says the US economy could "easily" contract by 20-30% amid the pandemic.

Jerome Powell added in a CBS interview that the economic downturn might last until late 2021, and a full rebound may not be happen until a vaccine is found.

However, he expressed confidence the economy would recover, and said he would never bet against the US economy.

Earlier this week, Mr Powell had called on US lawmakers to pass more economic stimulus and relief aid.

More than 36 million Americans have filed for unemployment benefits since mid-March.

How worried should we be?

In an interview with CBS' 60 minutes, Mr Power said: "This is a time of great suffering and difficulty... you can't really put into words the pain people are feeling.

"This economy will recover. It may take a while," he said. "It could stretch through the end of next year. We really don't know."

Unemployment could potentially peak at 25%, and "the lowest paid people" - particularly women - were being hurt worst by the downturn, he added.

However, he said he believed the US could avoid a depression - a sustained economic downturn - because the financial system itself was healthy, and the coronavirus pandemic was "an outside event" the economy could recover from.

While the economy could "easily" contract 20-30% this quarter, he expected the economy to "recover steadily through the second half of this year", as long as the country could avoid "a second wave of the coronavirus".

"It's very important to avoid that... that would be quite damaging to the economy and also to public confidence."

The interview, which was recorded on 13 May, aired on Sunday evening.

The US has already approved nearly $3 trillion (£2.5tn) in new stimulus spending - packages worth an estimated 14% of the country's economy. The Fed has also taken radical steps to shore up the economy, pumping trillions of dollars into the financial system.

On Friday, Democrats in the House of Representatives passed an additional $3tn coronavirus relief package. However, it is not expected to pass the Republican-majority Senate, where leader Mitch McConnell has argued there is "no urgency" to act.

'We've got to get this economy open'

Meanwhile, US Health and Human Services Secretary Alex Azar has defended the decision by most states to begin lifting the lockdown measures.

He told CNN on Sunday that the decisions should be made by local leaders, because "in almost half of our reporting counties, we have had not a single death", and over 50% of cases came from just 2% of those counties.

Only 14 US states have met the federal recommended guidelines for reopening - which suggest a decline in new cases daily for two weeks - according to a study by Reuters.

Mr Azar said he disagreed with White House trade adviser Peter Navarro, who said earlier on Sunday that the Centers for Disease Control and Prevention (CDC) "really let the country down with the testing".

"I don't believe the CDC let this country down," Mr Azar responded. "I believe the CDC serves an important public health role and what was always critical was to get the private sector to the table."

Test kits sent out to states by the CDC in February were found to be faulty, leading to criticism of the CDC's role in the crisis.

Will this crisis make us more generous tippers?

'I got a life-changing opportunity in lockdown'

Mr Azar added that he was not concerned by images of people in bars not practicing social distancing.

"I think in any individual instance you are going to see people doing things that are irresponsible," he said. "We've got to get this economy open and our people out and about, working and going to school again."

What is the current death toll?

There are more than 1.4 million cases of Covid-19 in the US, and 89,000 deaths, according to Johns Hopkins University.

On Saturday, Texas reported its largest one-day spike in new cases since the pandemic began, with 1,801 new infections.

It comes after the governor allowed all retail businesses to reopen on 1 May, but with restrictions on capacity.

Thirty-three more people died on Saturday, bringing the state-wide death toll to 1,305.--BBC

Ryanair profits top €1bn but outlook 'difficult'

Ryanair has announced profits of just over €1bn (£894bn) for the year to the end of March, saying it will weather the coronavirus pandemic and emerge stronger.

The airline's profit was 13% up on the previous year's figure of €885m.

Ryanair is set to cut 3,000 jobs - 15% of its workforce - as it restructures to cope with the coronavirus crisis.

Ryanair said 2021 would be a "difficult" year as it worked hard to return to scheduled flying.

But it said its balance sheet was one of the strongest in the industry, with cash reserves of more than €4bn.

"Unlike many flag carrier competitors, Ryanair will not request or receive state aid," it added.--BBC

'I'm living on cards': The firms waiting for emergency loans

Businesses are still struggling to access government-backed loans from their banks.

Hina Solanki says she has had a nightmare trying to get support from her bank for her tattoo business to get through the lockdown.

"I can't pay anything. I'm living on cards. It's extremely stressful", she says.

For the last fortnight she has been trying to apply for a £50,000 Bounce Back Loan from her bank.

"But I just get error messages," she says. "They seem to have a technical fault."

She's not alone, even though it is nearly two weeks since the launch of the Bounce Back Loan Scheme (BBLS) to prop up stricken small businesses.

Hundreds of thousands of applications have been approved, but BBC News has seen a string of complaints about leading banks, including Santander, HSBC and Barclays, from customers who have been unable to get any money.

Ms Solanki has built a reputation providing cosmetic tattooing, for people whose appearance is affected by surgery or conditions such as alopecia.

'Overloaded'

But in March she had to shut her clinic in Finchley in North London, furloughing her four staff.

She used the government grant for 80% of their wages but topped them up to 100%, which has added to the cost of keeping the business alive. So she applied for the loan through Barclays.

"Barclays seem overloaded," she says, "They have just not been able to deliver."

Ms Solanki tried to have her overdraft expanded, but that failed. She tried to get a Coronavirus Business Interruption Loan from the bank, but that did not come through.

Now Bounce Back Loans - interest free for a year - seem to be out of her reach as well, even though they are fully backed by the government, so the bank cannot lose.

Barclays customers have told BBC News that they have had to wait hours on the phone to the bank trying to get applications started.

Some have been told, incorrectly, that their personal details were wrongly entered. Others that having two signatories on their business account is a problem.

Barclays told the BBC that 95% of customers who have applied have received their funds and that it was working hard to help customers who have fallen through the cracks.

Maria Ogden, who runs a vehicle hire company in Oswestry, in Shropshire, has also been waiting for one of the emergency loans, in her case from Santander.

"I've got vehicles on finance, insurance, rent - and people knocking on the door for payments," she says, "but we can't earn any money."

Ms Ogden's business is allowed to stay open during the pandemic but she has hardly any customers and has furloughed her staff.

Rent stress

She wants the maximum £50,000 Bounce Back Loan as well. But after she applied on 5th May, the day after the launch, she is still waiting to hear back.

"I've banked with them for years. What's the delay?" she asks.

Like Ms Solanki, Ms Ogden says she tried to get the Coronavirus Business Interruption Loan, then switched to the Bounce Back option because it was supposed to be easier and quicker.

"All my time this last week has been spent on the phone, on emails, trying to find out about this loan, instead of spending it working out how to help the business," Ms Ogden says. "Without it, I'm finished."

Santander told BBC News, "While most applications have been processed quickly and smoothly, some are more complicated and we are working through these as quickly as we can."

Many have been getting the loans, including Peter Amable who runs Storm Hair and Beauty in Shrewsbury.

"I'm elated. I can stop stressing about my rent," he says.

But he has had an anxious wait. The £4,000 he wanted from Barclays has only just gone into his account. He applied 11 days ago and expected the money the next day from what was billed as fast-track lending.

"I think it has only come because I have been constantly at them, going on and on," he says. "It shouldn't be like that. It is shocking."

Government figures earlier in the week showed the huge scale of the scheme.

'Unprecedented demand'

Nearly 270,000 Bounce Back Loans had already been approved for more than £8bn. However, a significant minority of applicants are finding that the funds are hard to get hold of.

A Treasury spokesman said: "Millions has already landed in people's accounts and lenders are working hard to process and approve all applications as quickly as possible.

"All lenders are welcome to apply to the scheme, and we are working closely with the banks to ensure firms get the finance they need."

At Barclays, it is clear that there are some applications which simply cannot get through the bank's online process, so a human has to step in to deal with discrepancies, or verify conflicting information.

A Barclays spokesperson said: "In the first week alone of this scheme being live, we approved almost 70,000 Bounce Back Loans worth more than £2.1bn, and 95% of customers who have applied since the launch of the BBLS have received their funds.

"Our colleagues are working extraordinarily hard to get these loans into the hands of customers as quickly as possible, with the number of loans approved in the first week of the scheme equivalent to the amount that we would normally approve over a three year period."

Santander said it had approved more than 70,000 online applications and paid out almost £1.3bn to business customers.

"We've seen unprecedented demand for Bounce Back Loans and have been working hard to get these much-needed loans to our customers as quickly as possible and we apologise for any inconvenience," HSBC said in a statement.--BBC

JC Penney: US department store files for bankruptcy

American department store JC Penney has filed for bankruptcy becoming the latest company to be hit by Covid-19.

The 118-year-old store sells clothing, cosmetics and jewellery at over 850 locations across the country. It employs more than 80,000 people.

It filed for Chapter 11 bankruptcy on Friday allowing it to restructure even though it can no longer pay its debts.

JC Penney's announcement comes after J Crew filed for bankruptcy last month.

There had been rumours of an impending bankruptcy after JC Penney missed interest payments in April.

A statement from the company said it has $500m (£400m) in cash and has received financing commitments of $900m from lenders.

It said some stores would close as a result.

J Crew files for bankruptcy protection

Fed warns of slow recovery without more virus aid

"The coronavirus pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country," chief executive officer Jill Soltau said in a statement.

JC Penney was founded in Wyoming by James Cash Penney in 1902. His belief was that prices should be low, set and marked - a move away from the haggling that was commonplace at the time.

It survived the Great Depression and grew during the 20th Century. But with the introduction of online shopping the company began to struggle.

It has closed hundreds of stores and thousands of jobs in recent years.

Last year it reported sales of $10.7bn, a decrease of more than $7bn in 10 years.

'Dreading this for years'

Many people have shared their memories of the store on social media.

Jade Jurek wrote on Twitter: "Be honest - JC Penney was already in trouble. That being said, I have been a big fan because I actually bought my wedding dress from the store in 1987."

Former employees and their relatives have also shared their memories of the store.

Jennifer Grimes wrote on the company's Facebook page: "Love you guys. You were my high school and college job. I just placed a huge towel and sheets order this week and then heard of the bankruptcy today. Please do all you can to stay in business. I'm so sorry how e-commerce has hurt you."

David Thomas said: "Personally sad for me and have been dreading this for years. My dad was a JCP store manager, retired in the late 90s, and this was a wonderful profession for him. Those were good times and I am sad for those who have lost jobs with this news."--BBC

US targets Huawei with tighter chip export rules

The US has announced new export controls aimed at limiting Chinese technology giant Huawei's access to semiconductor technology.

The new rule bars semiconductor-makers that use US technology and software in chip design from shipping to Huawei without US government permission.

It is the latest US action to target Huawei, which US officials view as a national security threat.

China threatened to retaliate against US tech firms.

The tightened controls come a year after the US moved to cut off Huawei, the world's second largest smart phone maker, from access to US-made semiconductor chips, which form the backbone of most computer and phone systems.

In response, the company and others in China accelerated efforts to manufacture such chips domestically.

Could blacklisting China's AI champions backfire?

US Commerce Department Secretary Wilbur Ross said that those efforts were "still dependent on US technologies", and accused Huawei of taking steps "to undermine" earlier export controls.

"This is not how a responsible corporate citizen behaves," Mr Ross said. "We must amend our rules exploited by Huawei... and prevent US technologies from enabling malign activities contrary to US national security and foreign policy interests."

The new US rule, to be published on Friday, applies to foreign-made items, using US technology. It exempts equipment or software made or shipped within the next 120 days - a move meant to limit economic harm.

In a background briefing for reporters, the US said officials would consider licence applications to do business with Huawei on a "case by case" basis.

"This is a licensing requirement. It does not necessarily mean that things are denied," a senior State Department official said. "We tend to approach Huawei with some concern but this is a measure that gives the US government visibility into what is moving."

Also on Friday, the US extended waivers that allow US companies, many of them rural internet providers, to use some kinds of Huawei technology for another 90 days.

'Cut off the relationship'

Donald Trump, who is campaigning for re-election in November, has stepped up his attacks on China in recent weeks, blaming it for the spread of Covid-19.

This week, he moved to restrict US government pension funds from investing in Chinese companies. He said on Wednesday he could "cut off the whole relationship".

The US has said Huawei's technology could be used for spying by the Chinese government.

It has pressured allies, including the UK and Germany, to bar Huawei from their networks and sued the company for technology theft and doing business with Iran, in violation of US sanctions.

Huawei has contested the US government's claims and said American efforts are likely to backfire, hurting the ability of US tech firms to do business.

China on Friday threatened to place US companies on an "unreliable entity list", according to a report in the country's Global Times.

Making life difficult

As well as putting pressure on its microchip business, the US trade blacklist has made life very difficult for Huawei's smartphone business.

The Wall Street Journal recently reported that Huawei's handset shipments outside of China had dropped by 35%, threatening its position as the world's second-biggest handset maker.

Its latest phones can no longer embed Google Mobile Services, which include important features such as maps and the Google Play app store.

Huawei has tried to work its way around this by providing its own Huawei Mobile Services. But its App Gallery is missing a majority of the most-popular apps found on Android in the UK and US.

Luckily, Huawei may have found a loophole.

It has been re-releasing some of its previous smartphones with ever-so-slightly updated hardware, complete with the Google Mobile Services.

Its latest is the P30 Pro New Edition. It looks almost just like the original P30 Pro, which was released before the US trade blacklist. But the New Edition has more memory and storage - and now comes in silver. And because it's technically a P30 Pro, rather than a P40 Pro, it also comes with the full suite of Google services.

Huawei says it will be released in the UK on 3 June. How long it can use that work-around remains to be seen.--BBC

The man who bought 60,000 oil and gas wells

The BBC's weekly The Boss series profiles different business leaders from around the world. This week we speak to Rusty Hutson Jr, founder and chief executive of US energy firm Diversified Gas & Oil (DGO).

In the end, Rusty Hutson Jr couldn't escape the calling of the family trade.

Born and raised in a blue-collar household in the oil and gas fields of West Virginia, his father, grandfather, and great-grandfather all earned their livings in the energy sector.

They worked at the wells, and on the pipelines, putting in a hard shift of manual labour, day after day, year after year, to provide for their families.

During his summer holidays from high school and then college, Rusty would go to work with his dad.

But when he became the first Hutson to graduate from university, in 1991, he decided he wanted to do something completely different with his life.

"I decided that going into oil and gas was about the last thing I wanted to do," he says. "I didn't want a part of it when I got out. It's really hard work."

So armed with an accountancy degree from West Virginia's Fairmont State University he went off to have a successful banking career for the next decade, ending up in Birmingham, Alabama.

But as the years progressed, Rusty says it started to nag at him that he hadn't followed his dad into the family industry.

"West Virginia was a tough state when I was growing up. Still is," he says. "And there were two kinds of people - you either worked in coal, or you worked in oil and gas. It was a generational thing - if your dad and grandfather did it for a living, then you did it.

"And as the years progressed I increasingly felt drawn back to that world. I also had this desire to build something, to do something entrepreneurial."

So in 2001, aged 32, Rusty bought an old gas well back in West Virginia for $250,000 (£200,000). He raised the money by remortgaging his home.

"It was a small old well, it had been in production for years, but it was like gold to me," he says. "I spent the next four years still also working in the bank, but any spare time I had I'd fly up to West Virginia to work alongside the one well tender that I had back then."

Fast-forward to today, and Rusty's company, DGO, now owns more than 60,000 gas and oil wells across West Virginia, Pennsylvania, Ohio, Kentucky, Virginia and Tennessee, a region called the Appalachia. Employing 925 people it has annual revenues of more than $500m. Some 90% of its operation is natural gas, with 10% oil.

The company's business model is a very specific one - it doesn't do any drilling to find new oil and gas reserves. Instead it buys up old oil and gas wells that bigger producers no longer want, because the initial large flow levels have fallen to low volumes.

"They don't want these old wells, but the average remaining life on most of these wells is 50 years," he says. "So we can come in, run them very efficiently, and make money."

Rusty says that DGO has been greatly helped by the so-called "dash for shale" in the US over the past decade, whereby oil and gas firms gave up traditional oil and gas wells to switch to fracking instead.

In very simple terms, unlike traditional wells where oil and gas is sucked up, fracking involves first injecting a high pressure mixture of water, sand and chemicals into shale rock. This fractures the rock, and allows the removal of vast quantities of oil and gas that wasn't previously accessible.

Rusty says the industry-wide move to fracking, and its higher production volumes, meant that DGO has been able to buy thousands of old, but still productive, traditional wells cheaply, and rapidly expand the business.

To help raise funds for continuing expansion, in 2017 the company decided to go public and sell its shares on a stock exchange. In an unusual move for a US firm, Rusty chose the London Stock Exchange's (LSE's) Alternative Investment Market.

"We weren't big enough at the time to float in the US," he says. "And I didn't want to go down the private equity route because I didn't want to work for somebody else, and try to earn back some of the percentage."

DGO is now in the process of moving up to the Main Market of the LSE.

Energy sector analyst James McCormack of Cenkos Securities says that DGO's strategy of "acquiring low-cost, long-life, low-decline [oil and gas] production" is "a virtually unique proposition".

He adds: "Under Rusty's leadership, DGO has grown rapidly since its IPO (initial public offering) in February 2017, increasing production 20 times and reserves 23 times."

Fellow energy analyst Carlos Gomes of Edison says that DGO is now the largest conventional gas producer in the Appalachia region. "The company possesses long-life, low operational cost, mature producing assets that generate very stable cash flows," he adds.

The long-term plan at DGO is to keep buying wells to replace any that eventually come to the end of production, and Rusty says the firm is now looking to expand into other regions, such as down in Texas.

In the more immediate term, he says that he is relaxed about the big falls in oil and gas prices since the start of the coronavirus pandemic, both because he has long-term "hedges" or agreements in place on what price he sells his production for, and because his business operates more efficiently than its larger rivals.

He can also turn to his dad for help and advice. His father, Rusty Sr, is the supervisor for the company's northern West Virginia operation.

"He's 72 and he just absolutely loves it," says Rusty. "Does he try to tell me what to do? Oh, absolutely."--BBC

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

Companies under Cautionary

Bindura Nickel Corporation

Padenga Holdings

Delta Corporation

Meikles Limited

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