Business Briefs for June 16

VIRGINIA

Subsidiary of Colfax opens office in Bahrain

WASHINGTON -- Allweiler AG, a subsidiary of Colfax Corp., the Richmond-based maker of industrial pumps and valves, opened an office in Bahrain to better serve and support Middle East clients.

"While Colfax has worked for years in the region on hundreds of oil and gas, power generation and industrial installations, we wanted to increase our commitment to current and prospective Middle East customers," said John A. Young, president and CEO of Colfax.

Uncollectible card loans up, Capital One reports

Capital One Financial, one of the Richmond area's largest private employers, said uncollectible U.S. card loans rose in May.

Capital One wrote off 9.4 percent of U.S. card loans on an annualized basis, compared with 8.56 percent reported for April, the McLean-based bank said. Loans 30 days or more overdue declined to 4.9 percent from 5.04 percent.

Defaults historically rise and fall with the U.S. unemployment rate.

Alcoa Howmet planning expansion in Hampton

Alcoa Inc.'s Alcoa Howmet unit is expanding its Hampton operations to increase production and capacity in a $25 million expansion. The Hampton plant opened in 1974 and produces investment castings for industrial gas turbines.

The Virginia Investment Partnership is providing a $500,000 performance-based grant.

THE NATION

Exxon ordered to pay $507.5 million for spill

Exxon Mobil Corp. has been ordered to pay $507.5 million in punitive damages to Alaska natives, fishermen, business owners and others harmed by the massive 1989 oil spill off Alaska.

The ruling by 9th U.S. Circuit Court of Appeals in San Francisco yesterday affirms the figure set by the U.S. Supreme Court last year. It also awards interest payments at 5.9 percent to plaintiffs from the date of the original judgment in 1996. The plaintiffs originally were awarded $5 billion, but that amount was cut in subsequent appeals by Exxon.

Oil-tanker tax in Valdez struck down by court

Yesterday, the Supreme Court:

• Struck down as unconstitutional a tax that Valdez, Alaska, imposed on oil tankers that use its port at the southern end of the trans-Alaska oil pipeline.

• Agreed to decide whether student loans can be dismissed through bankruptcy without proving that paying the money back would cause an "undue hardship."

• Turned away a challenge by Los Angeles, Dubuque, Iowa, and other local governments to Federal Communications Commission rules that make it easier for new cable-TV competitors to gain local franchises.

• Said it would referee a dispute between Shell Oil Co. and gas station operators who claim the oil company tried to drive them out of business.

  Extended Stay Hotels files for bankruptcy

Extended Stay Hotels filed for Chapter 11 bankruptcy protection yesterday, citing massive debt stemming from its 2007 acquisition by the Lightstone Group and a sharp drop in business travel due to the recession.

The Spartanburg, S.C.-based company, which is privately held, owns more than 680 hotels in the U.S. and Canada catering to long-term business travelers. It has five hotels in the Richmond area.

In June 2007, the Lightstone Group, one of the country's largest private real estate investors, bought Extended Stay from private equity firm Blackstone Group LP. Lightstone financed the purchase with about $7.4 billion in loans.

Auction rate falls on Treasury bills

WASHINGTON -- The Treasury Department yesterday auctioned $30 billion in six-month bills at a discount rate of 0.290 percent, down from 0.345 percent last week. An additional $31 billion in three-month bills was auctioned at a discount rate of 0.160 percent, down from 0.190 percent last week.

The six-month rate was the lowest since they sold for 0.250 percent on Dec. 29, 2008. The three-month rate was the lowest since the bills sold for 0.150 percent on June 1.

The Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, rose to 0.56 percent last week from 0.50 percent the previous week.

Elsewhere

• SunTrust Banks Inc. scaled back its plan to purchase outstanding preferred shares by 25 percent. SunTrust decreased the maximum tender amount to $750 million from $1 billion.

• Maurice "Hank" Greenberg, the former top executive of American International Group Inc., improperly took $4.3 billion in stock from the company in 2005 after he was ousted by the company amid investigations of accounting irregularities, a lawyer told jurors at the start of a civil trial yesterday.

Discount retailer Syms Corp. and Vornado Realty Trust won an auction in bankruptcy court for the discount chain Filene's Basement. The price was $62.4 million. Earlier in the auction process, Men's Wearhouse was announced as the buyer. But other bidders objected to the result last week and accused Men's Wearhouse of failing to meet the auction requirements. -- From Staff and Wire Reports