Business Briefs for June 2

VIRGINIA

Foundation Coal settles ArcelorMittal lawsuit

WASHINGTON -- Foundation Coal Holdings said yesterday that it has settled a lawsuit against steelmaker ArcelorMittal over a $40 million coal-supply contract.

The suit accused ArcelorMittal, the world's largest steel producer, of reneging on a deal to buy more than 200,000 tons of coking coal to fire blast furnaces. Foundation said the settlement calls for ArcelorMittal to take "significant" volumes from its Kingston operation in southern West Virginia over several years, but the company offered no additional details.

Foundation agreed May 12 to a $1.4 billion takeover offer from rival Alpha Natural Resources, an Abingdon-based company that bills itself as the largest U.S. supplier and exporter of coking coal.

L.V. Stone, Va. settle alleged price-gouging

A Southwest Virginia gas station operator and the state have settled a price-gouging complaint.

Attorney General Bill Mims announced the settlement with L.V. Stone Inc. yesterday. The company operates service stations in Radford and Dublin.

According to the complaint, three of the company's Bucko's Pantry stores charged prices ranging from nearly $5 to nearly $6 a gallon for gasoline last Sept. 10, as Hurricane Ike approached the Gulf Coast.

The settlement requires Bucko's Pantry to set aside $400 for customer refunds and contribute $800 to the Red Cross Disaster Relief Fund. The company also will pay $2,800 to reimburse the state for the cost of its investigation.

THE NATION

Fed reveals rules for banks to repay bailouts

The Federal Reserve yesterday announced rules for banks to repay taxpayer bailout funds, clearing the way for the 19 largest financial institutions to wind down their reliance on government support.

Banks wanting to repay bailout money -- most of the 19 banks -- must show they can raise long-term debt without relying on the FDIC guarantee.

They also must persuade regulators that they will be able to continue lending to creditworthy borrowers; that they can maintain the minimum capital levels required under the stress tests; and that they will be able to meet funding obligations to business partners while "reducing reliance on government capital" and the FDIC guarantee.

SunTrust plans to sell stock in public offering

SunTrust Banks Inc. said yesterday that it plans to sell $1.4 billion of common stock in a public offering.

SunTrust is suspending an offering in which shares are sold in smaller batches after raising $260 million, or 21 percent of its goal, the Atlanta-based bank said yesterday in a regulatory filing. The lender also plans to buy back as much as $1 billion of preferred and hybrid securities to cut debt, offering 65 cents to 70 cents on the dollar through June 26.

SunTrust was ordered last month to fill a $2.2 billion capital gap after federal "stress tests." The bank reported a first-quarter loss of $815.2 million tied to writedowns on home mortgages and commercial real estate.

Elsewhere

• Deere & Co., the world's largest farm-equipment maker, yesterday named Samuel R. Allen to succeed Robert W. Lane as the company's chief executive. Allen, 55, becomes the ninth chief executive to lead the 172-year-old company. He will move into the job Aug. 1, when Lane, 59, steps down after nine years.

• Delphi Corp. said yesterday that it reached a deal to sell some of its assets to a private-equity firm and emerge from bankruptcy protection. Parnassus Holdings II LLC, an affiliate of Platinum Equity, will operate Delphi's businesses both in the U.S. and abroad with about $3.6 billion in emergence capital and capital commitments.

• Charles Conaway, the former head of Kmart Corp., was found liable yesterday for misleading investors about company finances before a bankruptcy filing in 2002. The Securities and Exchange Commission sued him in 2005, alleging he duped investors in a third-quarter 2001 securities filing and during a Nov. 27, 2001, conference call. The jury found that delaying payments to vendors was a "material liquidity deficiency" affecting Kmart's finances and should have been publicly reported. Conaway, 48, could be fined and banned from serving as an executive or director at a public company.

• General Electric Co. will build a new energy-efficient water heater in Louisville, Ky., adding about 400 jobs and marking the first new product line made at the company's operations there in 50 years. The jobs will be added when manufacturing begins in 2011.

• Playboy Enterprises Inc. yesterday named Scott N. Flanders as chief executive officer to replace Christie Hefner, who stepped down in January after two decades. Flanders, 52, was CEO of Freedom Communications Inc., the privately held owner of the Orange County Register newspaper and televisions stations, for three years.

• Oil prices yesterday pushed to new highs for the year on a weak dollar and new data suggesting that manufacturing in China has strengthened. Both of those factors helped send energy prices to record highs last summer. Benchmark crude for July delivery rose $2.27 to settle at $68.58 a barrel on the New York Mercantile Exchange, the highest close since early November.

• The California Supreme Court has unanimously tossed out a verdict that could have cost Bank of America nearly $1.6 billion. -- From Staff and Wire Reports