- Setback for WaMu bankruptcy exit. Washington Mutual encountered a setback yesterday in its ongoing efforts to exit bankruptcy, further delaying its reorganization timeline. WaMu was seeking approval for its disclosure statement, which requires clearance by a bankruptcy court, but the presiding judge refused to even hear arguments on the hundreds of objections to the disclosure statement. The judge ordered WaMu to report back on June 17 after discussing information requests with shareholders and bondholders who have been repeatedly rebuffed in their attempts to obtain documents and question witnesses.
- Confusion over shallow water drilling ban. The Interior Department denied that it had extended a six-month moratorium on deepwater drilling in the Gulf of Mexico to include shallow water drilling as well. The confusion began when a Minerals Management Service official sent out several emails earlier in the day, rescinding five shallow water permits, including two that had been issued only the day before. The MMS email said "until further notice we have been informed not to approve or allow any drilling not [sic] matter the water depth." The Interior Department subsequently said shallow water drilling could continue as long as operations "satisfy the environmental and safety requirements." This, too, caused confusion, as rig operators said the new regulations have not yet been issued and could still cause substantial delays, even without a formal moratorium. Shallow drillers fell sharply on the MMS news, but rebounded into the close: ESV -2.6%, HERO +11%, NBR +3.9%.
- BP waiting on capping results. After shearing away a broken pipe, BP (NYSE:BP) has lowered a capping device onto the leaking well in the Gulf of Mexico, and is now waiting to see whether the temporary fix has been successful. The potential progress came as both Fitch and Moody's downgraded the firm one notch and said further downgrades are possible over the company's rising liability from the Gulf spill. In an attempt to reassure investors, CEO Tony Hayward and chairman Carl-Henric Svanberg will hold a conference call today with shareholders and analysts. Premarket: BP +0.8% (7:00 ET).
- Regulators advance on global bank pact. International regulators are moving toward a pact that would require banks to raise vast sums of new funds as a cushion against future losses, but the rules may not go into effect for several years, a decision that marks a major concession to the banking industry and several countries. The overhaul is expected to be a key point on this weekend's G-20 agenda, with analysts warning the changes could lower industry profits by double-digit margins.
- Javelin sues Hospira over merger deal. Javelin Pharmaceuticals (JAV) filed suit against Hospira (NYSE:HSP), its intended acquirer, to compel the firm to follow through on its merger agreement, including the extension of a $2M loan to Javelin. Earlier in the day, Hospira had extended its tender offer of $2.20/share for a second time due to concerns about the state of Javelin's business. In yesterday's trading, JAV -12.5%, HSP +0.9%.
- RCM Technologies rejects CDI offer. CDI Corp. (NYSE:CDI) offered to acquire RCM Technologies (NASDAQ:RCMT) for $5.20/share in a letter sent to RCM's board on May 21 which was disclosed only yesterday. RCM rejected the proposal yesterday evening, saying it "would not be in the best interests of the company to pursue the transaction as presently structured," leaving open the possibility of a sweetened bid. In after hours trading, CDI was flat, RCMT +42.6% to $4.99.
- Investors want Elan to slow spin-off. Several large investors are pressing Elan (NYSE:ELN) to delay a planned spin-off of Elan Drug Technologies [EDT], its drug delivery business. Though most shareholders are in favor of separating the two businesses, some investors believe EDT may become more valuable if Elan slows down its timeline, holding on to the unit for 18 months or longer. CEO Kelly Martin had said last month that a spin-off would likely take place within the next 12 months. If, as many investors expect, the spin-off happens relatively soon, the transaction could net Elan between $1B-1.3B, a sum many feel underestimates the unit's value.
- Google starts data handoff. Within the next two days, Google (NASDAQ:GOOG) will start handing over to European regulators the private consumer data it accidentally collected through its Google Street View service. The information will initially be shared with authorities in Germany, France and Spain as Google tries to limit the fallout from its latest privacy misstep. Google will also publish the results of an external audit on the matter. Said CEO Eric Schmidt: "We screwed up. Let’s be very clear about that. [But] if you are honest about your mistakes it is the best defense for it not happening again.”
- AIA IPO not a done deal. AIG (NYSE:AIG) CEO Robert Benmosche has reportedly asked the company's board for time to explore non-IPO options for AIA, the company's Asian unit. After a sale to Prudential (NYSE:PUK) fell through, an IPO was widely seen as the most likely option for the unit, but Benmosche is said to be looking at several other possibilities, including selling parts of the business.
- Vale buys out Aquila's Belvedere stake. Vale (NYSE:VALE) will exercise its option to buy a 24.5% stake in Belvedere, an Australian hard coking coal project, from mining firm Aquila, lifting Vale's Belvedere stake to 100%. The price of the purchase has not yet been determined, but analysts estimate Aquila's stake could be worth as much as $900M.
- Swiss move closer to taxpayer disclosure. The Swiss Senate approved a law that moves the country one step closer to handing over the names of UBS (NYSE:UBS) clients who allegedly evaded U.S. taxes. The legislation, which has suffered several setbacks, must still be approved by the lower house before it goes into effect and may possibly be put to a popular referendum, while Swiss authorities are trying to get the law fully approved before an August deadline to hand over the data.
- U.S. bankruptcies near five-year high. The pace of U.S. bankruptcies in May reached the second-highest daily level since 2005, as an improving economy failed to significantly help Americans struggling with debt payments. May saw 133,459 bankruptcy petitions, a 10% rise from the year before. If there's any silver lining to be found, bankruptcies usually peak in an economic cycle between six and eighteen months after an economy bottoms out, so the high May figure could potentially signal the road to recovery.
- McDonald's recalls toxic glasses. McDonald's (NYSE:MCD) recalled 12M "Shrek"-themed drinking glasses after discovering the cups contain the toxic metal cadmium. Cadmium is a known carcinogen that can cause bone softening and severe kidney problems.
Earnings: Thursday After Close
- SAIC (SAI): Q1 EPS of $0.32 beats by $0.01. Revenue of $2.7B (+1.4%) in-line. Shares +0.1% AH. (PR)
- In Asia, Japan -0.1% to 9901. Hong Kong flat. China flat. India +0.6% to 17118.
- In Europe, at midday, London +0.1%. Paris -0.2%. Frankfurt +0.4%.
- Futures: Dow flat. S&P flat. Nasdaq flat. Crude +0.4% to $74.94. Gold -0.7% to $1201.
Friday's Economic Calendar
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.