Circuit City files bankruptcy; Bunge ends wait for Corn Products; JDA needs more time for i2 merger

By Cristal Cody

New York, Nov. 10 - Circuit City Stores Inc. opened Monday with a filing for Chapter 11 bankruptcy protection, while the U.S. government said it plans to give another $40 billion to American International Group Inc.

Also on Monday, Bunge Ltd. officially broke it off with Corn Products International Inc.

Separately, NRG Energy Inc. chief executive officer David Crane spent the day defending the decision to rebuff Exelon Corp.'s takeover bid.

Meanwhile, Scottsdale, Ariz.-based JDA Software Group Inc. said in a regulatory filing Monday that it needs additional time to secure debt financing to complete the $346 million cash merger with i2 Technologies Inc., but the closing would be delayed no later than Jan. 9.

Shares of Circuit City, the nation's No. 2 consumer electronics retailer, plummeted 60% to close Monday at 10 cents a share. Circuit City's stock already was nearing single cents before Monday, with shares down from a 52-week high of $8.24.

Last week, the Richmond, Va.-based retailer said it would close 155 stores and lay off 17% of its U.S. workforce.

For the AIG tab, the government will take partial ownership by buying preferred shares of AIG stock with the recently enacted $700 billion financial bailout package, the Federal Reserve and the U.S. Treasury Department announced.

The latest boost gives AIG a total bailout package of about $150 billion.

AIG shares rose 8.06% to close at $2.28.

Meanwhile, market indexes fell Monday.

The Dow Jones Industrial Average fell 73.27, or 0.82%, to 8,870.54. The Standard & Poor's 500 fell 11.78, or 1.27%, to 919.21, and the Nasdaq Composite index fell 30.66, or 1.86%, to 1,616.74.

Corn Products ends deal

Bunge shares closed unchanged at $44.22 after its deal with Corn Products was terminated. Corn Products' stock fell 1.3% to close Monday at $24.32.

"It was a foregone conclusion about a week or so ago," Kenneth Zaslow, an analyst with BMO Capital Markets, said of the deal's fallout. "Neither one is really moving on it."

Corn Products must pay Bunge $10 million for costs and expenses under the merger agreement.

The two hooked up June 21, but Corn Products took off the rosy glasses when the all-stock deal's value fell to $1.72 billion from $4.4 billion on a drop in Bunge's shares.

Westchester, Ill.-based Corn Products' board of directors said last week that it had withdrawn its recommendation of support for the merger.

White Plains, N.Y.-based Bunge does not want to pursue the transaction without the approval from Corn Products' board, but it will continue to look elsewhere for deals.

"Moving forward, Bunge will continue to pursue its strategy of investing for growth in its core businesses and in complementary value chains," Alberto Weisser, Bunge chairman and chief executive officer, said in a statement.

NRG to keep looking

NRG Energy's stock fell 5.45% to close at $22.56 a share Monday after the company rejected a $6.1 billion merger offer from rival Exelon. Shares are well off the 52-week high of $45.78.

NRG Energy chief executive officer David Crane said Monday in a conference call with analysts that the deal would have included extra debt servicing costs of up to $300 million a year, synergy problems and a drop in equity value.

Exelon has not received committed financing for a deal, and the company's credit rating has been downgraded by Standard & Poor's to BBB.

NRG rejected Exelon's offer on Sunday. Exelon offered 0.485 of a share of Exelon for each of their 233 million shares outstanding, a value of $26.10 a share based on Friday's market close.

The acquisition would have made Chicago-based Exelon the largest U.S. power producer.

"There are a lot of discussions, both on the selling and buying side," Crane said. "We have a duty to shareholders to look and see where value can be created. Any combination in the sector is a very, very complicated thing that needs to be done in a cooperative way ... and negotiated in a private way."

JDA needs more time for i2 deal

JDA Software Group said in a regulatory filing Monday that it needs additional time to secure debt financing to complete the $346 million cash merger with i2 Technologies, but the closing would be delayed no later than Jan. 9.

Dallas-based i2 Technologies stockholders approved the merger with JDA Software on Thursday, and the board rejected a lower offer made by JDA after the meeting.

The deal was originally scheduled to close Monday.

Questions continue on whether the deal will make it to the finish line and the long-term value of JDA's stock.

"I'm recommending JDA as a short for the most part," said Jeff Embersits, an analyst with Shareholder Value Management, who puts the stock in the low $20-a-share range.

JDA shares fell 1.22% to close Monday at $12.11, down from the $17.91 price at which the shares closed before the merger was announced Aug. 10. Shares of i2 dropped 6.19% to close Monday at $8.34., well off the $14.16 trading price before the merger was announced.

BCE buyout on track

The private buyout of BCE Inc. is on track to close Dec. 11 after the Saskatchewan Court of Queen's Bench in Canada on Monday struck the claim to an injunction that sought to stop the $28.3 billion buyout.

BCE, Canada's biggest communications company with shares listed in Canada and the United States, and subsidiary Bell Canada also on Monday began the cash tender offers through Dec. 10 for about $1.95 billion of outstanding debt.

The tender offers are part of the buyout of BCE by an investor group led by the Ontario Teachers' Pension Plan and affiliates of Providence Equity Partners Inc., Madison Dearborn Partners LLC and Merrill Lynch Global Private Equity.

The tender offers include the 7.35% series C notes due Oct. 30, 2009 from BCE and the 6.15% series M2 debentures due June 15, 2009 and 5.5% series M-16 debentures due Aug. 12, 2010 from Bell Canada.

Shares closed up 0.19% to $31.70 in NYSE trading.

Mentioned in this article:

American International Group Inc. NYSE: AIG

Bunge Ltd. NYSE: BG

BCE Inc. NYSE: BCE

Corn Products International Inc. NYSE: CPO

Circuit City Stores Inc. NYSE: CC

i2 Technologies Inc. Nasdaq: ITWO

JDA Software Group Inc. Nasdaq: JDAS

NRG Energy Inc. NYSE: NRG

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