Business briefs for May 16

VIRGINIA

Appalachian Power requests rate increase

ROANOKE -- Appalachian Power Co. wants to raise residential rates about 13 percent to recover the costs of fuel and equipment to reduce air emissions and improve reliability.

Appalachian filed a request yesterday with the State Corporation Commission seeking to impose a surcharge July 1 that would increase annual revenue by $141.7 million to cover fuel costs. The utility wants to impose another surcharge Jan. 1 to recover $41 million for equipment purchases in 2008.

If the SCC approves both requests, the monthly bill for a customer using 1,000 kilowatt-hours would go from $92.97 to $101.87 on July 1 and to $105.18 on Jan. 1.

Newspaper publisher to sell assets at auction

American Community Newspapers Inc., which operates smaller newspapers in Northern Virginia and three other major U.S. markets, won court approval to sell its assets at an auction in which the company's lenders will act as the lead bidder.

Existing lenders owed about $107 million agreed to buy the company for $32 million of the debt, court papers show. They would be able to bid their entire claim at the auction, scheduled for May 28. All other offers would have to exceed $32 million in cash.

Texas-based American Community publishes 86 community newspapers and 14 niche publications in Northern Virginia and in the Dallas, Minneapolis and Columbus, Ohio, areas.

In Virginia, it operates Leesburg Today, Loudoun Magazine, Loudoun Business, Arlington Sun Gazette, Great Falls/McLean/Oakton/Vienna Sun Gazette, Middleburg Life and Parent Life.

THE NATION

SunTrust plans stock sale and dividend cut

SunTrust Banks Inc., the Atlanta-based company ordered to raise capital after U.S. stress tests, will sell as much as $1.25 billion in common stock and slash the quarterly payout to a penny from 10 cents.

SunTrust may meet the federal goal of $2.2 billion in new common equity by swapping $3.3 billion of preferred and hybrid securities for common stock, SunTrust said. The plan may also raise $300 million through the sale of securities and other asset dispositions, the statement said.

Berkshire buys bank stocks, trims CarMax

Warren Buffett's company found more bargains among beaten-down marquee stocks during the first quarter as it added to its sizable investments in Wells Fargo & Co., U.S. Bancorp and Johnson & Johnson.

But his Berkshire Hathaway Inc. sold 5.6 million shares of automotive retailer CarMax Inc., leaving Berkshire with 12 million shares in the Goochland County-based chain.

Berkshire revealed those investments and several other changes to its roughly $41 billion U.S. stock portfolio in documents filed with the Securities and Exchange Commission yesterday. The filing offers a snapshot of Berkshire's holdings as of March 31.

Berkshire bought nearly 12.4 million shares of Wells Fargo during the quarter, giving it 302.6 million shares in the bank. It also added nearly 1.5 million shares of Minneapolis-based U.S. Bancorp, so now it owns 69 million shares.

Berkshire bought 3.9 million shares of Johnson & Johnson during the quarter, giving it 32.5 million shares.

U.S. will give bailout funds to six life insurers

The federal government has agreed to extend billions in bailout funds to six major life insurers, helping them shore up their capital positions in the wake of major investment losses.

The Hartford Financial Services Group Inc. said it had been notified by the Treasury Department that it was eligible for $3.4 billion from the Troubled Asset Relief Program, or TARP.

Lincoln National Corp., which goes by the name Lincoln Financial Group, said it has been initially cleared for a $2.5 billion injection from TARP's Capital Purchase Program.

Allstate Corp., Ameriprise Financial Inc., Principal Financial Group Inc. and Prudential Financial Inc. also are among insurers receiving preliminary investment approval, a Treasury spokesman confirmed.

The total capital injection into the six companies will be less than $22 billion.

Elsewhere

• Federal officials apparently are pressuring Bank of America to revamp its board and bring in directors with more banking experience. A Wall Street Journal article called the regulators' move "unusual" as the government does not own a stake in BofA, and most of its problems are the result of its purchase of Merrill Lynch, which was advised by regulators.

• GMAC Bank, the banking arm of auto finance firm GMAC Financial Services, has taken on a new name -- Ally Bank -- hoping to smooth its image and entice new customers.

• A federal judge has issued a pair of temporary restraining orders to halt what officials describe as a wave of "robo-calls" warning people their auto warranties are expiring and offering new service plans. Temporary restraining orders were issued against Transcontinental Warranty Inc. and Voice Touch Inc.

• The Tucson Citizen, Arizona's oldest continuously published daily newspaper, will publish its final print edition today after owner Gannett Co. failed to find a buyer. The closure makes Tucson the latest two-newspaper town to lose one of its dailies. The Citizen published in the afternoon while the Arizona Daily Star has appeared mornings. The Citizen will continue online with commentary and opinion but no news coverage.

Also, the Ann Arbor News in Michigan said its last day of publication will be July 23, to be replaced by an online-focused news operation with twice-weekly print editions.

Federal prosecutors and the FBI have been investigating possible illegal insider trading by two Securities and Exchange Commission enforcement attorneys who were in a position to receive sensitive information about agency probes of public companies. The SEC's inspector general found that the frequent stock trades over a two-year period by the pair raised suspicions of insider trading. -- From Staff and Wire Reports