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CEO Daily Brief – Dec. 13, 2010

Obama to Hold CEO Summit President Barack Obama, still feeling the sting from the November electoral defeat for many members …

Obama to Hold CEO Summit

President Barack Obama, still feeling the sting from the November electoral defeat for many members of his own political party, is continuing to reach out to business leaders. In the latest twist, The Wall Street Journal reports that Obama will a hold a CEO summit on Wednesday. CEOs from Google Inc., Cisco Systems Inc., International Business Machines Corp., American Express Co., Dow Chemical Co. and Pepsico Inc. have been invited. On the table will be issues such as trade, taxes, regulations and the deficit.

The Journal says Obama wants businesses to use some of the money they are sitting on to hire new employees and to expand. But businesses are responding slowly in the face of mandates, such as health insurance, as well as regulations and taxes.

Businesses appear more receptive to Obama since his administration has increased support for the South Korea free-trade agreement and backed extending the Bush-era tax income cuts.

Businesses want to see more action by Obama. Trade agreements with Colombia and Panama are stalled. In addition, Mexico is charging tariffs on U.S. goods in response to a U.S. ban on Mexican trucks. The deficit is a top issue, and several companies want more pro-business research and development policies from the White House.

For more on the CEO summit, from The Wall Street Journal, please click here.

A&P Files for Bankruptcy Protection

A&P, known formally as the Great Atlantic & Pacific Tea Co., an American institution, has sought Chapter 11 bankruptcy protection, according to media reports. The kind of pressures facing A&P are similar to those facing many facing older, national retailers.

The move was blamed on continuing competition from wholesale clubs and drugstores, reports Bloomberg. In addition, A&P has 41,000 employees, 95 percent of whom are covered by union contracts. Pensions and health care obligations have put pressure on A&P. The company is also still paying $77 million in annual rent for retail locations it closed. They mostly sit vacant.

There has been a management shake-up. In July, A&P hired Sam Martin as its second CEO of the year. He replaced Ron Marshall, who was CEO from Feb. 8. Bobbie Gaunt resigned from the A&P board on Nov. 28. Frederic Brace, who was A&P’s chief administrative officer, is now chief restructuring officer. Brace helped UAL Corp., parent company of United Airlines, through restructuring.

A&P has about 400 supermarkets. They are known as: Waldbaum’s, The Food Emporium, Super Fresh, Food Basics and Pathmark. The company has tried to work things out short of Chapter 11. In July, the company said it would close 25 stores in five states. In September, A&P said it would sell seven stores in northern Connecticut. A&P, according to Bloomberg, wants to improve margins, remodel stores and increase cash flows.

However, debt totaling $165 million was coming due on June 15, 2011, and restructuring was needed. The company has an interest payment of $13.4 million due Dec. 15. A&P has assets that total $2.5 billion. It has $3.2 billion in debt. For more from Bloomberg, about A&P, please click here.

China Popular Place for IPOs

China sure looks like a capitalist economy, at least when it comes to Initial Public Offerings. The Financial Times reports that Chinese stock exchanges, including the Hong Kong bourse, have raised about triple the money raised by U.S. IPOs in 2010.

Hong Kong is the biggest center for new listings, raising $52.8 billion in IPOs in 2010. It also has attracted listings from companies based outside of China. Rusal, a Russian aluminum company, and L’Occitane, the French cosmetics chain, both listed on the Hong Kong Exchange in 2010. Prada, an Italian luxury goods company, is considering a listing on the Hong Kong Exchange, next year.

The numbers show the economic shift away from the United States and Europe to emerging markets such as China. China is very much focused on growth rather than bailing out struggling companies.

The outlook for new IPOs to opt for mainland China or Hong Kong continues to be relatively good. Stephen Jennings, chief executive of Russia’s Renaissance Capital, told the Financial Times that Hong Kong will likely benefit from increasing capital between emerging markets. It is likely that the capital may bypass London and New York, Jennings said.

Unless the United States and Europe can get their economies in order, the move toward emerging markets will likely continue.

For more about Chinese IPOs, as reported by the Financial Times, please click here.

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