The Miami Herald from Miami, Florida • 294

NYSE6C AMEXNASDAQ8C 0TC0PTI0NS9C Friday April 10 1987 The Miami Herald 4C Eastern Delta scheduling criticized Business TJorld Major airlines hike one-way fares purchase The increases take effect Saturday Because the discount fares are figured against coach fares the increase would affect those prices too The new fare increases applied to one-way tickets are: $15 for first class $10 for coach $5 for military personnel and $10 for discount unrestricted fares available at off-peak hours United instituted the fare hikes to recover rising costs especially for fuel said Dan Sheehy a United spokesman in Chicago Associated Press Major US air carriers following the lead of second-ranked United Airlines are raising their one-way fares on first-class and coach tickets the airlines said Thursday Some observers view the fare increases which range from $5 on a military personnel ticket to $15 for first class as a move by the airlines to recoup losses they sustained from the MaxSaver super discount fares introduced in late January Those fares give discounts of as much as 80 percent from regular coach fares and require only a two-day advance "While some of these discrepancies may be attributable to weather and other unpredictable factors" she said am concerned that Delta and Eastern Airlines may be engaging in unrealistic scheduling practices which violate the Federal Aviation Act" Dole said an investigation discovered a number of Delta and Eastern flights were at least 15 minutes late in arriving to and from Atlanta more than 70 percent of the time even during good weather conditions Eastern denied the allegations Delta had no immediate comment certainly deny that our scheduling practices are unfair and deceptive" Eastern spokesman James Ash-lock said from the Miami headquarters certainly tried to work with the FAA in good faith going to have to start addressing the root cause of the problem the air traffic control system bring it into the 1980s with computer support hire more HCA reports getting 85 billion buyout bid From Herald Staff and Wire Reports Hospital Corp of America the nation's biggest hospital management concern said Thursday that three investors have proposed acquiring the company in a deal that it estimated would cost them about $5 billion The company said the group proposed in a letter to pay $47 in cash for all of common stock The company has about 82 million shares of common stock outstanding That would make the proposed stock acquisition worth about $385 billion In addition the company has about $12 billion in outstanding debt HCA said its management not believe that this proposal is in the best interests of the HCA shareholders but intends to discuss the proposal with the HCA board of directors and respond in due course" In composite trading on the New York Stock Exchange HCA fell $1 a share to $381254 Herald Staff and Wire Reports WASHINGTON Delta and Eastern Airlines may be engaging in unfair and deceptive scheduling practices at Atlanta Hartsfield International Airport and could face stiff fines Transportation Secretary Elizabeth Dole said Thursday Dole said the department tentatively has concluded that both airlines may be practicing unrealistic scheduling that results in frequent flight delays The department issued an order asking for public comment on whether and scheduling practices should be referred to enforcement action If convicted each airline could face penalties of $1000 for every day it committed a violation After the comment period ends May 11 the department will decide whether to refer the matter to its enforcement staff for formal proceedings Dole also disclosed the department has widened its investigation into airline scheduling practices and flight delays at Boston's Logan and Dallas-Fort Worth's airports investigation of scheduling practices at Atlanta has uncovered significant discrepancies between air line schedules that are advertised to the public and the actual on-time performance of those Dole said The probe covered a period between May 1986 and January 1987 Trends Markets buy agreement Accord prop stocks dollar A NARROW measure of the money supply fell $2 billion in the latest week The narrow measure of the basic money supply known as Ml fell $2 billion in the latest week the Federal Reserve Board reported Thursday The decline was slightly higher than market expectations Ml which is cash checking accounts and NOW accounts money that is available for immediate spending was a seasonally adjusted average of $7389 billion in the week ended March 30 compared with a revised $7409 billion the previous week originally reported at $741 billion WORLD ECONOMIES will get worse before they get better the IMF predicted In the United States and other industrial countries the average growth should be a meager 23 percent this year down from 24 in 1986 the IMF said The year 1988 looks not much better with a projected growth of only 28 percent Among the industrialized countries the prediction for Japan is the most optimistic: 27 percent growth this year and 33 percent in' 1988 compared with 23 and 31 percent for the United States West Germany lags behind with only 19 and 2 percent THE EEC is moving against US and Japanese chip makers The European Community Commission said it will adopt anti-dumping measures against certain varieties of both Japanese and US semiconductors flooding the European market Officials said Common Market countries could not look idly on as the United States and Japan arbitrarily fixed prices between them which he said was possible under an agreement they reached last July RICK McCAWLEY Miami Herald Staff Dwight McKey marks price quotes on the tally board which shows how much interest banks and are willing to pay for $100000 certificates of deposit Broker goes into rescue business Big CD firm now provides funds to ailing thrifts National By DAVID SATTERFIELD Herald Business Writer Three years ago federal banking regulators tried to shut down Miami-based First Atlantic Investment Corp the largest broker of certificates of deposit Today those same regulators are using FAIC to help keep the sickest savings and loan associations i allThe Federal Sav- jf IVAN BOESKY APPEARS $3 million in debt the Wall Street Journal said Financial statements prepared for Ivan Boesky indicate that insider-trading penalties have eradicated the former stock fortune and put him $3 million in debt the newspaper said Thursday However the newspaper quoting from what it called a confidential financial document circulated among lawyers recently said the figure was computed from a narrow interpretation of holdings including only those in his name ance Corp which customers Within the next 45 days the company expects to sell a secured commodities-based mutual fund to offshore investors a certain contraction in the market so people are willing to take bigger risks" said Jorge Coloma FAIC president FAIC is owned by Coloma and the Fanjuls the Palm Beach sugar baron family Founded in 1980 when interest rates were soaring the firm grew quickly by brokering $100000 CDs between financial institutions According to Coloma the firm has placed more than $30 billion in CDs in the banks It currently has $7 billion in CDs earning interest in the financial institutions Headquartered in the Terremark building at 2600 SW 3rd Ave in Miami the company employs about 100 people Its corporate philosophy is to sell investments in which the principal investment is guaranteed In 1984 the two chief bank regulatory agencies the Federal Home Loan Bank Board and Federal Deposit and Loan Insurance Corp passed a rule that would end federal insurance on brokered deposits Regulators worried that too many institutions were using brokered CDs to grow quickly causing many to fail And firms such as FAIC were taking $1 million deposits breaking them into $100000 blocks and placing them as insured deposits in thrift institutions FAIC immediately sued over the ruling It won my problem" Coloma said was like selling someone a gun and they went out and killed somebody so they blame When Coloma heard the agencies recently were seeking brokered CDs to prop up some failing thrifts he rushed to Washington DC to garner a share of the business Regulators estimate the ailing alone will need $20 billion to $25 billion in funds to remain liquid Coloma said lower interest rates have prompted some financial institutions to shift investments from CDs to higher-yielding instruments For that reason FAIC last fall began selling mutual funds to its institutional clients All of the funds managed by firms such as Dreyfus and Van Kampen invest solely in government securities such as Treasury bills notes and bonds and government-backed mortgage investments "Our client base was looking for additional product from the same source" said Felix Granados FAIC senior vice president wanted an alternative to their other The company said it is slightly ahead of budget in selling mutual funds Meanwhile institutional customers are investing in longer-term deposits with the average CD placed for nine months rather than six months Granados said Business is strong enough that the company is considering a move to larger offices Even though interest rates are lower Coloma said the CD business continues to grow but not as quickly as it might have if rates had stayed at double-digit levels NEW YORK (AP) The financial markets took a quick look Thursday at the Group of currency agreement and found it lacking The dollar sunk to a 40-year record low against the Japanese yen bond prices tumbled and the stock market moved broadly lower just one day after the United States and its major trading partners agreed to rally their support behind the weakening US currency "Our opinion was that unless there was something concrete (from the currency talks the market was going to take the dollar said David Rolley of Wharton Economics The trading alliance's commitment to breaking the fall of the dollar was apparently not enough to satisfy the markets The Dow Jones average of 30 industrial stocks closed at 233920 down 3296 points from Wednesday Earlier in the session it had been down more than 46 points Declining issues outpaced advancers by more than 7-to-2 In the bond selloff the 30-year bond plunged more than 2 points or more than $20 for each $1000 in face amount Its yield jumped to 807 percent compared with 790 percent late Wednesday It was the first time the yield on the bellwether issue finished above 8 percent since last March analysts said In the foreign exchange market the dollar fell to a record low of 14425 against the yen in late New York trading down from 14615 Wednesday Gold prices skyrocketed in response to the slump Republic National Bank of New York quoted gold bullion at $43150 a troy ounce up from $420 late Wednesday Most of the financial attention was focused on the Group of Seven accord reached Wednesday night in Washington Finance ministers and central bank leaders of the United States Japan West Germany Britain France Canada and Italy referred to as the Group of Seven issued a statement reaffirming their desire to stabilize currency exchange rates The financial markets however: remained unconvinced that talking up the dollar would help steady the currency Analysts said the markets were still fearful that the dollar would continue to fall heat up inflation and pressure the Federal Reserve to tighten credit: Companies insures the 3000 thrift institu- tions is using FAIC to provide funds to ailing that raise deposits easily At a time when low interest rates are contracting the market for conservative low-paying investments like bank CDs expansion into the thrift-rescue business is just part of the growth beyond its traditional CD market Six months ago the company began selling mutual funds to its clients which are mostly banks credit unions and Recently the firm began marketing mutual funds to retail Channel 6 four other stations sold THE ROY Disney family made a bid to buy Holly Sugar The Disney Shamrock Holdings of California Inc said it submitted the bid on April 8 to Salomon Brothers Inc investment banker for Holly Sugar the largest independently owned sugar grower and manufacturer The offer was to pay for each share of Holly Sugar common stock outstanding: $45 in cash preferred stock or debt securities with a face value of $70 and a payment that could pay its holder as much as $70 more in cash over a 20-year period TEXACO IS plotting strategy for a bond hearing Top executives attorneys and investment bankers for Texaco gathered in Houston to plot strategy for a Monday court hearing but no talks are scheduled with Pennzoil Co to reach a settlement in their multibillion-dollar legal battle A Texas appeals court that upheld a $103 billion judgment against Texaco earlier this year will hear arguments Monday on the amount of bond Texaco may have to post while continuing appeals of the decision MELLON BANK halved its executive bonuses Mellon which has said it had its first-ever net loss during the first quarter has cut in half the annual bonuses for Chairman David Barnes and other executives 1986 bonus was cut to $125000 from $300000 in 1985 and his total salary dropped to $724000 from nearly $817000 The base salary rose from $440000 to $511000 and his profit sharing payments rose from nearly $77000 to $88000 but the increases were offset by the bonus reduction By JOAN CHRISSOS Herald Business Writer Five months after announcing the deal a Virginia company Thursday purchased Miami's WCIX-Channel 6 and four other independent television stations from Taft Broadcasting for $240 million TVX Broadcast Group and its banker Salomon Brothers in New York postponed last scheduled closing leading industry analysts to speculate that the two companies were having WDCA-TV Washington WCIX-TV Miami KTXA-TV Dallas and KTXH-TV Houston Analysts generally applauded the sale saying TVX would bring some promotional strengths to the stations and possibly change the programming mix may see a little more promotion and for WCIX you may see a little more crossover to try to appeal to the second generation of said Bruce Bishop Cheen an analyst with Paul Kagan Associates trouble raising the $240 million TVX officials would not comment Thursday about the financing The sale was announced last November But a proxy statement issued last month outlined the financing terms According to the proxy TVX would raise $50 million through the sale of stock $205 million through bonds and $80 million through revolving bank credit line TVX is expected to use the additional $95 million to upgrade the five stations WTAF-TV Philadelphia SunTrust First Union earnings increase The Money Line Florida Prime Rate 775 Florida Fixed Mortgage Rate 927 13-week T-bills 553 26-week T-bills 563 Money-Market Fund 7-day Avg 544 Fla Avg Money Market Account 530 The Bottom Line rates on their loans but haven't reduced the rates on deposits as sharply Tax changes also have reduced interest income At First Union net interest margin dropped from 522 percent in late 1986 to 487 percent in the recent quarter At SunTrust the margin fell from 543 percent to 516 percent gotten off to a good start in 1987 although interest margins continue to said Robert Strickland chairman at SunTrust which controls Florida-based Sun Banks loan demand has remained quite strong we are placing increased emphasis on those financial services which produce fee or 54 cents per share in the first quarter compared with $64 million or 49 cents per share the previous year During the first quarter SunTrust placed $418 million in foreign loans on a cash basis costing the company about $900000 in profits Although profits increased more than 10 percent for both banks each company said its net interest margins declined in the quarter Net interest margin traditionally the chief source of profit for a bank is the difference between what a bank earns on its loans and investments and what it must pay for deposits and borrowings As interest rates have declined banks have had to reduce To boost its quarterly earnings First Union dipped into its reservoir of valuable securities and sold enough investments to earn about $77 million By selling securities First Union increased its per share earnings in the quarter by about seven cents The investment portfolio still is worth $375 million more than the company paid for it With the recent results First Union and SunTrust remain among the most profitable banks in the country First return on equity a measure of profitability increased to 1935 percent while return hit 1868 percent Most analysts consider 15 percent to be an excellent return on equity By DAVID SATTERFIELD Herald Business Writer Two of the Southeast's biggest banking companies posted higher first-quarter earnings Thursday despite reduced income from lending operations North Carolina-based First Union Corp said it earned $785 million or 71 cents per share in the three months ended March 31 a 22 percent increase from the $646 million or 61 cents per share earned in the same period a year ago First Union has the sixth largest banking operation in Florida SunTrust Banks the Atlanta-based giant reported profits of $702 million British Airways reluctantly suspended sale in the United States of its promotion on Us" for travel from the United States following disapproval by the US Department of Transportation of British Airways' filing Interest rates on 52-week Treasury bills rose to 592 percent a nine-month high and up from 568 percent at the last auction on March 12.