Daily Briefing

AUTOMOTIVE

GM: Parts maker should be dissolved

Blue Water Automotive Systems Inc., a bankrupt maker of plastic parts for U.S. automakers, has no hope of being sold as a going concern and should be taken over by a liquidation trustee, General Motors Corp. has told a judge. Blue Water’s plan to liquidate under Chapter 11 protection is unrealistic and fraught with costly and wasteful legal maneuvering, said GM, a customer and creditor. Converting the case to Chapter 7 would force the replacement of Blue Water’s management with a government-appointed trustee. Blue Water, based in Marysville, Mich., is seeking buyers for its plants after rejecting a $22.4 million offer for the entire business by parts maker Flex-N-Gate LLC.

Kia workers plan partial strikes

Kia Motors Corp. workers will hold partial strikes for three days to press the South Korean carmaker for higher pay and improved working conditions. Sporadic strikes since last month have cost Kia about 10,000 vehicles, the company says.

DEALS

Precision Drilling to buy Grey Wolf

Canada’s Precision Drilling will buy Grey Wolf in a cash-and-stock deal worth more than $2 billion, the companies said Monday, apparently ending an extended fight for control of the Houston-based gas driller. Grey Wolf shareholders recently spurned a rival offer from Basic Energy Services Inc., a well site services company in Texas. Under the new agreement, Precision will pay $1.12 billion in cash and 42 million shares valued at $896.7 million, based on Friday’s closing stock price. The new offer involves less cash but would give Grey Wolf shareholders a larger stake in the new company. Though the combined price comes out nearly a dollar less than the $10 per share that Precision offered, the deal gives Grey Wolf shareholders a 25 percent stake in the new company, which would be one of the biggest operators in North America. Precision gets access to land operations in virtually every oil and gas basin in the lower 48 United States and Canada.

Broadcom to buy unit of AMD

Sunnyvale, Calif. —- Advanced Micro Devices Inc. will sell its unit that makes chips for digital TV sets to fellow chip maker Broadcom Corp. for $192.8 million in cash, the companies announced Monday. AMD is selling the unit as part of a program to reduce debt and improve profitability, said Dirk Meyer, president and chief executive. The company is a distant second to Intel Corp. in its main market of computer processors, and competition has intensified. “AMD is executing a strategic plan to transform the company, becoming leaner and more focused while seeking to create a business model to deliver sustainable profitability,” Meyer said. The Sunnyvale-based company’s TV chips receive over-the-air broadcasts and process the signals to improve picture quality.

FINANCIAL

Rubin to reduce role at Citigroup

Citigroup Inc. said Monday that former U.S. Treasury Secretary Robert Rubin will give up the title of chairman of the board’s executive committee, while keeping his role as senior counselor. Rubin, who turns 70 this week, will remain a director, Citigroup said on its Web site. The New York-based company eliminated the executive committee and shifted its responsibilities to the nominating and governance committee led by Richard Parsons, chairman of Time Warner Inc. Rubin has been criticized by investors for collecting more than $150 million in pay in a decade while failing to avoid subprime mortgage write-downs that cost former CEO Chuck Prince his job and left the bank with $17.4 billion of net losses in the past three quarters.

Interest rates fall in Treasury auction

Washington —- Interest rates on short-term Treasury bills fell in Monday’s auction for the second consecutive week, with the rate on three-month bills declining to the lowest level in a month. The Treasury Department auctioned $28 billion in three-month bills at a discount rate of 1.71 percent, down from 1.85 percent last week. Another $27 billion in six-month bills was auctioned at a discount rate of 1.925 percent, down from 1.98 percent last week. Separately, the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, dropped to 2.12 percent last week from 2.18 percent the previous week.

LEGAL

R.J. Reynolds loses patent ruling

Shares of Star Scientific Inc. surged after a U.S. appeals court revived the company’s patent lawsuit against R.J. Reynolds Tobacco over a formula for reducing carcinogens in tobacco. The U.S. Court of Appeals for the Federal Circuit in Washington ruled Monday that a judge was wrong to find two of Star’s patents unenforceable and invalid, saying the decision was “based on factual findings that we deem clearly erroneous.” The panel sent the case back for review. Star, a developer of low-toxin tobacco products, sued Winston-Salem, N.C.-based Reynolds in 2001, demanding hundreds of millions of dollars as compensation for use of its inventions.

Restaurant firm files for bankruptcy

Southeast Waffles LLC, the franchisee of 113 Waffle House Inc. restaurants in the South, has sought bankruptcy court protection from creditors, blaming accounting anomalies discovered two weeks ago. The company, founded in 1999, discovered financial problems after the employee in charge of accounting abruptly resigned, according to court papers filed Monday in U.S. Bankruptcy Court in Nashville. “Since that time, the debtor has been investigating certain accounting irregularities related to its financial situation, but more time and effort will be required,” Chief Executive James Shaub II said in court papers. Southeast Waffles’ restaurants are in Tennessee, Alabama, Mississippi and Kentucky.

MEDIA

MGM studio says it’s not for sale

Metro-Goldwyn-Mayer Inc., a movie studio controlled by private equity firms, said its owners aren’t trying to sell the company. Goldman Sachs Group Inc. has been hired to explore ways to enhance the company’s long-term capital structure, the Los Angeles-based company said Monday in an e-mailed statement. The New York Post reported Sunday that MGM had hired Goldman for advice on financing or a possible sale.

REGULATORY

Postal Service expects losses

St. Louis —- The postmaster general says the Postal Service could lose about $2 billion this year, citing tough economic times. John Potter told the National Association of Postmasters of the United States at their convention that the Postal Service has to change to meet the demands of the American public. He said while little can be done about high gas prices, the Postal Service is working to control costs and increase business.

TRADE

Putin fires back on WTO issues

Moscow —- Russian Prime Minister Vladimir Putin backed proposals Monday allowing Moscow to back off some commitments —- particularly in agriculture —- that it has made during World Trade Organization accession talks, state-run media reported. Russia, the only major country still outside the WTO, still faces major barriers to membership even after 14 years of negotiations to join the 153-member body, which sets the rules on global trade. Accession has been held up over a number of issues, including farm subsidies, export taxes on wood and rules concerning Russian state monopolies such as OAO Gazprom. But now Western officials, including President Bush and Secretary of Commerce Carlos Gutierrez, say that Russia’s entry into the WTO could be jeopardized by its military actions in Georgia. Analysts said Russia’s toughened stance was a response to those warnings.

TRANSPORTATION

Fuel drives up international fares

International airfares reached the highest levels in at least nine years in the second quarter as carriers raised prices to blunt record fuel costs, American Express Business Travel said Monday. Average one-way tickets for overseas flights from North America rose 11 percent to $1,980 from a year earlier. That’s the top price since American Express began monitoring fares in 1999.

Midwest to add 11 seats per plane

Midwest Air Group Inc. is switching to a two-class cabin configuration for its entire Boeing Co. 717 fleet in an effort to boost revenue. Midwest Air is gaining 11 seats per jet by adding narrower seats in the back half of the plane. They have about 4 inches less legroom, the Oak Creek, Wis.-based carrier said Monday in an e-mailed statement. The 717 planes are currently configured to have 88 seats.

American cuts N.Y.-Atlanta service

American Airlines is discontinuing its four daily flights from New York’s LaGuardia Airport to Atlanta as it cuts capacity across its system. The change is effective Nov. 2.

UTILITIES / ENERGY

Gas prices down 10.5% from high

Consumers should feel less pain at the pump for the Labor Day weekend. Retail gas prices kept falling Monday, shedding almost a penny overnight to a national average of $3.681, according to auto club AAA, the Oil Price Information Service and Wright Express. That’s 10.5 percent lower than the record price of $4.114 a gallon set July 17 but still 33 percent higher than a year ago. Retail prices have dropped 15 cents a gallon in the last two weeks.