The Globe and Mail - 19.10.2019

B18 | REPORTONBUSINESS O THEGLOBEANDMAIL| SATURDAY, OCTOBER 19, 2019

China’s third-quarter economic
growth slowed more than ex-
pected and to its weakest pace in
almost three decades as the
bruising U.S. trade war hit factory
production, boosting the case for
Beijing to roll out fresh support.
Gross domestic product rose
just 6.0 per cent year on year,
marking a further loss of mo-
mentum for the economy from
the second quarter’s 6.2-per-cent
growth.
China’s trading partners and
investors are closely watching
the health of the world’s second-
largest economy as the trade war
with the United States fuels fears
about a global recession.
Asian stocks stumbled after
the data, reversing gains made
on the United Kingdom and Eu-
ropean Union striking a long-
awaited Brexit deal.
Downbeat Chinese data in re-
cent months have highlighted
weaker demand at home and
abroad. Still, most analysts say
the scope for aggressive stimulus
is limited in an economy already
saddled with piles of debt after
previous easing cycles, which
have sent housing prices sharply
higher.
Nie Wen, a Shanghai-based

economist at Hwabao Trust,

pinned the worse-than-expected

GDP growth mainly to weakness

in export-related industries,

especially the manufacturing

sector.

“Given exports are unlikely to

stage a comeback and a possible

slowdown in the property sector,

the downward pressure on Chi-

na’s economy is likely to contin-

ue, with fourth-quarter econom-

ic growth expected to slip to 5.9

per cent,” Mr. Nie said.

The third-quarter GDP growth

was the slowest since the first

quarter of 1992, the earliest quar-

terly data on record, and missed

forecasts for 6.1-per-cent growth

in a Reuters poll of analysts. It

was also at the bottom end of the

government’s full-year target

range of 6.0 per cent to 6.5 per

cent.

In a briefing after the GDP da-

ta release, Mao Shengyong, a

spokesman for China’s statistics

bureau, announced Beijing’s

plans to bring forward some

2020 special localgovernment

bond issuance to this year, in a

move to spur regional infrastruc-

ture investment.

Even recent signs of break-

through in the protracted trade

war between Beijing and Wash-

ington are unlikely to change the

economic outlook any time

soon.

U.S. President Donald Trump

said last week the two sides had

reached agreement on the first

phase of a deal and suspended a

tariff hike, but officials warn

much work still needed to be

done.

A slide in China’s exports ac-

celerated in September, while

imports contracted for a fifth

straight month.

The drags on demand, both

domestic and global, have hit

several key parts of the economy

with weakness seen in freight

shipments, factory power gener-

ation, employment and enter-

tainment spending. In Septem-

ber, factory gate prices fell at

their fastest pace in three years.

Mr. Mao said there was ample

room to change monetary policy,

as rising consumer inflation has

been mainly driven by volatile

food prices.

The International Monetary

Fund has warned the U.S.-China

trade war will cut 2019 global

growth to its slowest pace since

the 2008-09 financial crisis, but

said output would rebound if

their duelling tariffs were re-

moved.

Beijing has relied on a combi-

nation of fiscal stimulus and

monetary easing to weather the

current slowdown, including tril-

lions of yuan in tax cuts and local

government bonds to fund in-

frastructure projects and efforts

to spur bank lending.

But the economy has been

slow to respond with business

confidence shaky and local gov-

ernments facing increasing

strains as tax cuts hit revenues,

weighing on investment.

In contrast to the disappoint-

ing headline GDP number, Chi-

na’s industrial output grew a bet-

ter-than-expected 5.8 per cent in

September, faster than the 17-

year low posted in August.

The uptick was in line with

signs of increased domestic or-

ders, though overall demand re-

mains at historically weak levels.

REUTERS

Chinagrowthhitsslowest

paceindecadesas

tariffsaffectproduction

Expertsbelievepressure

oncountry’seconomy

islikelytocontinueas

exportsremainweak,

propertysectorshows

signsofslowdown

KEVIN YAO
GABRIELCROSSLEYBEIJING

U.S. retailerSears Holdings Corp.has borrowed about

US$150-million from lenders, including its billionaire owner

Eddie Lampert, as it racks up losses less than a year after it

emerged from bankruptcy protection, people familiar with

the matter said.

The new financing will help stock Sears’s store shelves for

the holiday shopping season as it struggles to become profit-

able. Mr. Lampert is no stranger to bankrolling Sears, having

extended loans through his hedge fund ESL Investments Inc.

to the department-store chain over the past decade until its

financial collapse last year.

The new financing is backed by assets that include Sears’s

real estate and intellectual property, the sources said. The

funds are less than the roughly US$200-million Sears origi-

nally sought, the sources added.

Sears was unable to borrow as much as it wanted because

lenders were concerned about the 126-year-old company’s

prospects and financial wherewithal, according to the

sources.

Among those that provided the financing was hedge fund

Cyrus Capital Partners LP, which extended a loan to the retail-

er while it navigated bankruptcy court last year, one of the

sources said. Sears is still hoping to negotiate with lenders

and secure the roughly US$200-million, one of the sources

said.

The sources requested anonymity because the matter is

confidential. A spokesman for Sears did not immediately re-

spond to a request for comment.

ESL and Cyrus declined to com-

ment.

Sears filed for bankruptcy pro-

tection in October, 2018, after los-

ing billions of dollars in the face of

competition from the likes of e-

commerce giant Amazon.com

Inc.

Mr. Lampert, formerly the

company’s chairman and chief

executive, had pledged to restore

Sears to its glory days, when it

owned the tallest building in the

world, and companies that in-

cluded a radio station and Allstate

insurance.

Sears dates back to the late 1880s when its mail-order cata-

logs with merchandise from toys, medicine and gramo-

phones to automobiles, kit houses and tombstones made it

the Amazon of its time.

Mr. Lampert combined Sears and rival chain Kmart more

than 15 years ago, heralding the formation of a retailer with

US$55-billion in annual sales. But revenues subsequently

plunged amid the rise of online shopping and large retailers

such as Walmart Inc. and Target Corp.

Sears has lost money almost every year over the past dec-

ade. Its stores deteriorated, even as Mr. Lampert bought the

company’s stock and lent it money.

It sold several assets, including its legendary Craftsman

tools brand.

Mr. Lampert made another go at the investment during a

bankruptcy auction earlier this year, purchasing about 425

Sears and Kmart stores and assuming liabilities for a collec-

tive US$5.2-billion deal.

The transaction closed in February, creating a smaller Sears

now operating under the moniker Transform Holdco LLC.

Sears is currently in the midst of closing additional stores

and has warned employees and vendors of significant busi-

ness challenges. It will have about 300 stores at the end of the

year, the sources said.

The company also plans to close its acquisition of Sears

Hometown and Outlet Stores Inc., a retailer of lawn and gar-

den equipment and appliances, as soon as next week, one of

the sources said.

Sears completed an US$800-million refinancing in April

that allowed the chain to lower its interest costs after it

emerged from bankruptcy, according to a letter viewed by

Reuters.

REUTERS

Searsownerhelps

bankrollstruggling

companyaswoes

persist,sourcessay

JESSICA DINAPOLI

MIKE SPECTOR

Sears filed for

bankruptcy

protection in

October, 2018, after

losing billions of

dollars in the face

of competition

from the likes of

e-commerce giant

Amazon.com Inc.

Oracle Corp.co-chief executive officer Mark Hurd has died,

the business software maker said Friday, an unexpected de-

velopment that raises pressure on co-CEO Safra Catz to lead

the company’s continuing transition to cloud computing.

Mr. Hurd, 62, went on medical leave last month, with Mr.

Catz and founder Larry Ellison taking over his responsibilities

during his absence. The company did not provide any further

details at the time.

Mr. Hurd and Mr. Catz were named co-CEOs in 2014, after

Mr. Ellison decided to step aside to focus on his role as chief

technology officer.

Under their tenure, Oracle has been aggressively pushing

into cloud computing to make up for a late entry into the fast-

growing business

Last month, the company missed revenue estimates, indi-

cating it was struggling to make inroads into the highly com-

petitive cloud market dominated by Microsoft Corp and Ama-

zon.com Inc.

“Mark was my close and irreplaceable friend, and trusted

colleague,” Mr. Ellison wrote in an e-mail to Oracle employees.

“Oracle has lost a brilliant and beloved leader who person-

ally touched the lives of so many of us during his decade at

Oracle.”

Mr. Hurd joined Oracle as co-president in September, 2010,

a month after he was ousted in controversial fashion from

Hewlett-Packard Co., where he had been chief executive since

2005.

When Mr. Hurd andMr. Catz were named co-CEOs in 2014,

analysts were skeptical about the dual CEO structure. Howev-

er, cloud software giants such as Salesforce.com Inc have fol-

lowed suit with a similar structure.

Steve Koenig of Wedbush Securities said he does not see

any changes in how the company will be run.

“Safra and Larry have been long-time collaborators and

partners in leading Oracle, and the company has a deep bench

of sales talent.”

REUTERS

‘Brilliantandbeloved’

co-CEOofOraclediesat62

VIBHUTI SHARMA

Pieridae Energy moved closer to
building a liquefied natural gas
(LNG) export terminal on Cana-
da’s East Coast after taking own-
ership of fields from Royal Dutch
Shell that will feed gas into the
plant, the company said.
The LNG terminal in Goldboro,
N.S., would be the first in Atlantic
Canada, and compete with the
growing number of plants on the
U.S. Gulf Coast, hoping its shorter
distance to Europe and further
west will help sell its LNG by
cutting shipping costs.
Pieridae said in a statement
late on Thursday it had closed a
$190-million acquisition of
Shell’s gas assets in Alberta’s
Foothills region, giving it most of
the gas needed to supply the first
of two proposed plants at the
Goldboro terminal.
“We will now complete our ne-
gotiations with Kellogg Brown &
Root Ltd. for a fixed-price con-
tract to construct the Goldboro

LNG facility so that we can then

proceed to complete the project

financing and final equity raise

and make a final investment deci-

sion,” Pieridae chief executive

Alfred Sorensen said.

The Canadian LNG industry

has been slower than its U.S.

counterpart to take advantage of

soaring gas demand around the

world and build export plants, in

part owing to securing feedstock

supplies for the terminals.

This contrasts to the U.S. Gulf

Coast, where there is so much gas

being produced thanks to the

shale revolution, some producers

have had to pay buyers to take it

off their hands. This makes it eas-

ier for LNG projects there, which

tend to buy gas rather than own

gas assets. Five large LNG export

terminals operate in the United

States, including the 25-million-

tonne-a-year Sabine Pass termi-

nal, operated by Cheniere Energy.

By contrast, there are no operat-

ing LNG export facilities in Cana-

da although Shell has begun con-

structing a massive one on the

West Coast. Unusually for LNG

projects in the developed world,

Pieridae has a US$4.5-billion Ger-

man government guarantee and

has one German buyer, Uniper,

for all five million tonnes a year

produced by its first phase, a large

contract by industry standards.

Pieridae said the Shell deal al-

lows it to begin to leverage

US$1.5-billion of the German gov-

ernment guarantee for the up-

stream gas production part of its

project. The rest of the guarantee

applies to the construction of the

terminal itself.

Germany, as yet, has no facili-

ties to import LNG but three im-

port terminals have been pro-

posed, including in Wilhelmsha-

ven, a project owned by Uniper

Global Commodities.

Europe’s gas production is ex-

pected to fall in future years with

the shutdown of the huge Dutch

Groningen gas field and the grad-

ual depletion of reserves in the

North Sea.

REUTERS

AtlanticCanada’sfirstLNGexportterminalis

onestepcloserwithPieridae’sShellgasdeal

SABINA ZAWADZKILONDON

Aplacetogrow

TheEniBlueLoopAquarium,anindooraquaponicsfarmingfishtank,

isseeninRomeonSaturdayattheMakerFaire,thelargest

Europeaneventoninnovation

ANDREAS SOLARO/AFP VIA GETTY IMAGES

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