A $500 Billion “Hitch” Emerges In The Saudi Aramco IPO

As Saudi Arabia's deputy crown prince pushes his nation's Vision 2030 economic overhaul and crows of the $2 trillion Saudi Aramco valuation (ahead of its potential IPO), WSJ reports that officials at the state-owned oil company are using internal value estimates to $1.3 to $1.5 trillion, calling bin Salman's estimate "unrealistic and mind blowing."

Since deputy crown prince Mohammed bin Salman announced the stock-offering plan and his $2 trillion estimate early last year, insiders and outsiders have questioned how he arrived at that number.

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About two dozen employees have been working since last year to try and figure how to take Aramco public, and have been working with Western consultants to explore ways to restructure Aramco to maximize its value, say people familiar with the process. The team has determined several variables – or what some call “levers” – likely to affect the price investors will pay for shares of the world’s largest oil producer, according to internal documents reviewed by The Wall Street Journal and people familiar with the process.

But, as The Wall Street Journal reports, no matter how they pull those levers, which include the price of oil and Saudi tax policy, Aramco’s projected value tops out at about $1.5 trillion, these people say.

One such lever was a major tax reduction (but even then it didn't add up to bin Salman's $2 trillion guess…

The Saudi government last month said it is reducing Aramco’s tax rate to 50% from 85%, bringing its tax rate closer to the level of the world’s biggest oil companies such as Exxon Mobil and Royal Dutch Shell.

 

That move would result in higher dividends for potential shareholders, and it brought Aramco’s internal value estimates to $1.3 trillion to $1.5 trillion from about half a trillion dollars, say people involved in the process.

By selling up to 5% of shares in an initial public offering targeted for next year, the government plans to raise billions of dollars that it can use to invest in other industries as part of a plan to reduce its heavy dependence on oil. The valuation discrepancy raises new challenges for a deal that is already fraught with complexity and facing opposition within the ranks of the kingdom’s government bureaucracy, according to people familiar with the matter.

One Aramco official called the figure “unrealistic and mind blowing.”

Questions about Aramco’s valuation surfaced earlier this year when a report for potential investors prepared by oil-industry consultant Wood Mackenzie Ltd. put Aramco’s value at around $400 billion, according to a client who attended a private Wood Mackenzie briefing. Saudi government officials say Aramco’s high reserves and low costs should make the company attractive to investors.

“Our profitability is higher than others and the interest we have received so far is huge,” said one official who defended the $2 trillion number.

Some officials inside the company and in government have privately suggested reevaluating the listing, say people familiar with the matter, and perhaps reducing its size or delaying it. So far,  Prince Mohammed and his staff seem unlikely to do so, say people familiar with the matter.

“This IPO will happen regardless of the valuation they may receive,” according to the government official who called the $2-trillion-dollar number “mind-blowing.”


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We’re Seeing a Healthy Pause Now, Higher Markets Later This Year

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Recently, markets have been taking a breather. Are they signaling a temporary stall or something more worrisome? And what comes next? This time on Financial Sense, we spoke with Tom McClellan, editor of McClellan Financial Publications…

 

Vía Financial Sense http://ift.tt/2ptMfPk

Trump Announces 20% Tariff On Canadian Softwood Lumber Imports

Speaking during a first of its kind meeting dedicated only to members of the U.S. conservative media, including Breitbart News, OANN and Daily Caller, President Trump told reporters to expect a 20% tariff on softwood lumber coming into Canada.

“We’re going to be putting a 20 per cent tax on softwood lumber coming in — tariff on softwood coming into the United States from Canada,”  tweeted Charlie Spiering of Breitbart Media.

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According to Trey Yingst of OANN, Trump explained that “Canada has treated us very unfairly” and also threatened a tax on Canada’s dairy industry.

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According to preliminary headlines from Dow Jones, Commerce Secretary Wilbur Ross informed Canadians of the planned tariff on Monday, and added that the proposed lumber tariff would be retroactive 90 days.

The tariffs have been anticipated since last week when Trump launched a barrage of criticism against Canada’s dairy, energy and lumber sectors. As Global News adds, the expected announcement from the U.S. Commerce Department on countervailing duties, a type of import tax meant to counter a subsidized export, is just the latest in the ongoing Canada-U.S. softwood row, which stretches back to the 1980s.

Previously, President Trump said the Canadian system of protectionist dairy quotas is harming U.S. farmers, and that he’ll press Canada for changes to its dairy system as part of North American Free Trade Agreement talks.

Last week, Prime Minister Justin Trudeau said the U.S. has a $400m dairy surplus with Canada adding “it’s not Canada that’s the challenge here.”

The dispute largely stems from the fact most Canadian lumber is harvested on government-owned land while American lumber comes mainly from private land. The American lumber lobby has long accused Canadian governments of allowing companies to cut wood for less than market prices, which they say is an unfair subsidy.

The announcement is also the latest escalation in US trade wars under the new administration, and comes just hours after China warned it would retaliate if the US imposed tariffs on its steel imports.

In separate comments, Breitbart’s Charlie Spireling reports that when asked about Assad’s existing stockpile of chemical weapons, Trump responded “Wait and see if he uses them again, OK?”

Trump also discussed the North Korean situations, and said  “this should have been done by Obama and it should have been don by every president since, really, Clinton.” Asked about Kim Jong-un’s military capacity, Trump replies: “I’m not so sure he’s so strong like he says he is, I’m not so sure at all.”


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Washington D.C. To Hold Massive “Complex Coordinated Terror Attack” Drill

April 26th is shaping up to be a busy day.

As we reported on Friday, that’s when Operation Gotham Shield, an exercise involving FEMA, Homeland Security and a myriad of law enforcement and military agencies and which simulates a nuclear bomb blast over Manhattan, is set to conclude. Then, as we learned earlier, April 26 is also when the entire Senate will be briefed by Donald Trump and his four top defense and military officials on the situation in North Korea at the White House, an event which Reuters dubbed as “unusual.” April 26 is also when the USS Carl Vinson is expected to arrive off the coast of the Korean Penninsula.

Now, in a statement from the Metropolitan Washington Council of Governments, the regional association reportst that “law enforcement officials and other first responders will participate in a full-scale exercise on April 26 designed to prepare for the possibility of a complex coordinated terror attack in the National Capital Region.”

The statement adds that emergency managers who work together at the Metropolitan Washington Council of Governments (COG) planned the exercise to help protect residents by preparing for an attack involving multiple target locations and teams of perpetrators.

The exercise will be conducted across a widespread geographical area. According to the release, the regional exercise will be staged at six sites in the District of Columbia, suburban Maryland and Northern Virginia, and will involve hundreds of police, fire, and emergency medical service personnel and volunteer actors.

The locations include neighborhoods in the northeast and southeast quadrants of the District of Columbia, Prince George’s County, and Arlington and Fairfax Counties.  Residents in those neighborhoods will be notified ahead of time to expect the exercise.

According to Scott Boggs, Managing Director of Homeland Security and Public Safety at COG, “Law enforcement officials practice and exercise their skills on their own regularly because that’s the best way to ensure we are always ready to respond quickly and professionally. On April 26, we’ll go one step further and stage a very realistic emergency event involving multiple sites and actors posing as the casualties.  However, there is no reason for residents to be alarmed because the exercise will occur in a controlled environment.

The is scheduled to take place near or at George Mason University, and last from 8;30am until 4:30pm.

The statement also advises that the only media availability will be in a one hour block before the exercise, from 7:30am – 8:30am on April 26.

Full statement below (link).

Full-scale exercise focused on preparing for complex terror attacks to include National Capital Region first responders, emergency managers

 

Law enforcement officials and other first responders will participate in a full-scale exercise on April 26 designed to prepare for the possibility of a complex coordinated terror attack in the National Capital Region.

 

Emergency managers who work together at the Metropolitan Washington Council of Governments (COG) planned the exercise to help protect residents by preparing for an attack involving multiple target locations and teams of perpetrators.

 

The regional exercise will be staged at six sites in the District of Columbia, suburban Maryland and Northern Virginia, and will involve hundreds of police, fire, and emergency medical service personnel and volunteer actors. The locations include neighborhoods in the northeast and southeast quadrants of the District of Columbia, Prince George’s County, and Arlington and Fairfax Counties.  Residents in those neighborhoods will be notified ahead of time to expect the exercise.

 

“Law enforcement officials practice and exercise their skills on their own regularly because that’s the best way to ensure we are always ready to respond quickly and professionally,” said Scott Boggs, Managing Director of Homeland Security and Public Safety at COG. “On April 26, we’ll go one step further and stage a very realistic emergency event involving multiple sites and actors posing as the casualties.  However, there is no reason for residents to be alarmed because the exercise will occur in a controlled environment.”

 

MEDIA AVAILABILITY PRIOR TO EXERCISE ONLY (see details below)

 

WHEN: Wednesday April 26, 7:30 – 8:30 A.M.

 

WHERE: Maryland National Capital Park Police Headquarters, 8100 Corporate Drive, Hyattsville, MD 20785

 

Contact: Jeanne Saddler
Phone: (202) 962-3250
Email: jsaddler@mwcog.org

h/t: @stockboardasset


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