Roundup: BNY Mellon loses $199M tax case; West Penn avoids debt default, more
BNY Mellon barred by court from $199M in tax credits
Bank of New York Mellon Corp. was barred by the U.S. Tax Court from claiming $199 million of foreign tax credits generated in a transaction arranged by Barclays Bank Plc and KPMG. The tax court said BNY Mellon couldn't claim the tax credits for 2001 and 2002 because the underlying transaction with London-based Barclays “lacked economic substance.” “U.S. tax laws and treaties do not recognize sham transactions or transactions that have no economic substance as valid for tax purposes,” Judge Diane Kroupa said in the ruling. “We will appeal the court's decision,” said Kevin Heine, a spokesman for New York-based BNY Mellon. “We continue to believe the tax treatment of the transaction was consistent with statutory and judicial authority existing at the time.”
West Penn deal avoids debt default
West Penn Allegheny Health System reached an agreement with its bondholders, who are owed $726 million, to keep the health system from defaulting on the debt. West Penn Allegheny said on Monday that the bondholders won't declare it in default, even though it missed a deadline to file an audited financial report for its fiscal year ended June 30. Spokeswoman Kelly Sorice said the health system continues to work with its outside auditing firm, KPMG, to finalize the financial report, but it is not complete. Bondholders previously agreed to a deal with Highmark Inc., which is trying to acquire West Penn Allegheny, to sell their bonds to Highmark at a discount of 87.5 cents on the dollar, or about $635 million.
Boeing conducts 2nd 787 flight test
Boeing conducted another 787 test flight on Monday as it tries to find out what caused battery problems that have knocked the plane out of service. The flight took off from Boeing Field in Seattle, according to flight-tracking service FlightAware. Federal officials grounded the 787 on Jan. 16 because of two battery incidents in less than two weeks, including a fire. The order barred Boeing test flights, too. Boeing won permission for test flights last week, and the first one was conducted on Saturday. Boeing said the flight had 13 flight test workers and pilots, and was uneventful.
Mylan names 2 to board, including president
Mylan Inc. said Monday that it has added two new members to its board of directors, expanding it to 13 members. The pharmaceutical company's board appointed Melina Higgins, a former partner at Goldman, Sachs & Co., and Rajiv Malik, Mylan's president, to the board. Higgins joined Goldman Sachs in 1989 and retired in 2010 after serving as a partner and in various leadership roles. Malik has held important leadership positions at Mylan since January 2007, when the company acquired a controlling stake in Matrix Laboratories Ltd., now Mylan Laboratories Ltd. Malik was the CEO of the active pharmaceutical ingredients supplier.
Mountain Dew to introduce breakfast drink
If you don't like coffee or tea, Mountain Dew has a new breakfast drink that might perk you up. PepsiCo Inc. is rolling out a new drink called Kickstart this month that has Mountain Dew flavor but is made with 5 percent juice and Vitamins B and C, along with an extra jolt of caffeine. The company, based in Purchase, N.Y., is hoping to boost sales by reaching Mountain Dew fans at a new time of day: morning.
PepsiCo said it doesn't consider Kickstart to be an energy drink, noting that it still has far less caffeine than drinks like Monster and Red Bull and none of the mysterious ingredients that have raised concerns among lawmakers and consumer advocates.
Finnish nuclear reactor delayed until 2016
Finnish utility TVO says the completion of the country's fifth nuclear reactor will be further delayed, and the company does not expect it to go online until 2016. TVO says “recent progress reports” from the Areva-Siemens consortium responsible for its construction indicate delays, including in the development of the plant's instrumentation and control systems. The 1,600-megawatt European Pressurized Reactor — one of the first of its kind — has been plagued by delays caused by faulty materials and planning problems since construction began in 2005. It was meant to begin providing electricity in 2009.
Other business news
• Excela Health hired four primary care physicians for its outpatient medical center in North Huntingdon, named Excela Square at Norwin. Greensburg-based Excela, which owns hospitals in Latrobe, Greensburg and Mt. Pleasant, said Kim Avolio, Rebecca Quel, Justin Wentworth and Mary Ann Zakutney joined the Excela Health Family Medicine practice at the center and began seeing patients last month.
• The average price of gasoline in the Pittsburgh region rose 5.6 cents a gallon in the past week, to $3.73 on Sunday, GasBuddy.com said. Prices have jumped more than 21 cents in the last month. The national average was $3.55 a gallon, up 5.7 cents in the past week.
— Staff and wire reports