U.S. charges suspected hacker, traders over SEC database hack

(Reuters) – U.S. authorities on Tuesday charged a suspected Ukrainian computer hacker and several traders with involvement in a scheme to trade on market-moving corporate earnings news stolen from a U.S. Securities and Exchange Commission database.

FILE PHOTO: Jay Clayton, Chairman of the Securities and Exchange Commission, listens during an interview with CNBC at the Sandler O’Neill + Partners Global Exchange and Brokerage Conference in New York, U.S., June 6, 2018. REUTERS/Brendan McDermid/File Photo

The charges against 10 defendants, including two charged criminally, relate to a suspected 2016 hacking into Edgar, the SEC’s corporate filing system used by public companies and money managers, that led to $4.14 million of illegal trading profit.

SEC Chairman Jay Clayton said the case illustrates the “significant” threats that cyber crime poses to U.S. markets, including from outside the country’s borders, and that his agency is not immune despite efforts to bolster its cyber defenses.

Authorities said Oleksandr Ieremenko, 27, of Kiev, hacked into Edgar through a Lithuanian server to obtain thousands of “test filings,” including roughly 157 earnings announcements, and shared what he found with traders.

The U.S. Department of Justice said Ieremenko and Artem Radchenko, also from Ukraine, schemed to send fake emails to SEC employees that appeared to be from other employees, enabling them to install malware on SEC computers and steal the filings.

Ieremenko and Radchenko, were charged in a 16-count indictment with computer fraud, wire fraud and conspiracy.

The SEC filed related civil charges accusing eight individuals and companies in the United States, Russia and Ukraine of reaping the $4.14 million of gains from May to October 2016, with some profits kicked back to Ieremenko.

Two Los Angeles residents, Sungjin Cho and David Kwon, are among the defendants in the SEC case, which seeks to impose fines and recoup illegal gains. Ieremenko was also charged.

None of the defendants could immediately be reached for comment, and their lawyers could not immediately be identified.

Companies sometimes submit test filings to ensure their actual SEC filings will be processed correctly.

Test filings are not typically supposed to contain sensitive nonpublic data, but the SEC said some do.

Ieremenko has been at large since being criminally charged in 2015 over the theft of more than 150,000 corporate press releases from Berkshire Hathaway Inc’s (BRKa.N) Business Wire, West Corp’s Marketwired and Cision Ltd’s CISN.N PR Newswire.

Authorities criminally or civilly charged more than 40 defendants over that scheme, which they said generated more than $100 million of trading profit over 5-1/2 years.

The SEC said Ieremenko turned his attention to Edgar after the newswire scheme ended.

The cases are U.S. v. Radchenko, U.S. District Court, District of New Jersey; and SEC v Ieremenko et al in the same court, No. 19-00505.

Reporting by Jonathan Stempel in New York; Editing by Jeffrey Benkoe and Jonathan Oatis

Living the tech dream, thanks to a novel apprenticeship program

NEW YORK (Reuters) – While growing up in Seattle, Enrique Rico’s mom cleaned the posh homes of Microsoft employees. When Rico tagged along on sick days from school, he dreamed of having the life of a technology worker.

Enrique Rico, 26, a developer at Avvo, an online marketplace for legal services, is seen in Seattle, Washington, U.S., in this March 2018 picture released to Reuters on January 14, 2019. Courtesy Enrique Rico/Handout via REUTERS

Now, at 26, with no college degree or background in STEM, Rico is working a developer at Avvo, an online marketplace for legal services.

He is a graduate of a program called Apprenti that provides education and on-the-job training for tech jobs to non-traditional recruits.

“I never really thought I could do it. But once I dug deep, I gave it my all,” said Rico.

The Apprenti program is run by the Washington Technology Industry Association in partnership with the U.S. Department of Labor. It operates at around 50 companies nationwide with major employers including Microsoft (MSFT.O), Amazon.com (AMZN.O) and JPMorgan Chase (JPM.N).

During the first year of the program in 2017, 76 candidates went through the training, which includes about 400 to 780 classroom hours on the front end, compressed into 12 weeks.

After a year of on-the-job training, the program will finish 2018 with 330 graduates placed into full-time jobs. The class of 2019 is on track to produce more than 700 graduates.

Amazon expects its apprenticeship cohort to grow from 150 to 1,000 workers in the next few years, said Tammy Thieman, a senior program manager at the ecommerce giant.

The tech industry had 2.8 million openings last year, with 50 percent of them middle-level jobs that do not necessarily require a college degree, according to Jennifer Carlson, executive director of Apprenti.

The pace of hiring is lagging, however, because companies cannot find properly trained workers, she said.

“This industry needed technical competency at the start – that’s a paradigm shift from traditional apprenticeships,” Carlson added.

Apprenti focuses on veterans, women and under-represented minorities, screening about 2,000 candidates to find 700 candidates for 2019.

Amazon teamed up with Apprenti after its CEO Jeff Bezos made a commitment in 2016 to hire 25,000 veterans and military spouses by 2021. But the apprenticeship program quickly broadened to find qualified workers for a vast swath of open jobs that required specific credentials.

“It is not at all unrealistic that freshman going to college today come out already behind,” said Amazon’s Thieman. “An apprenticeship offers a model to do the learning in a compressed way and then learn the skills on the job.

While veterans often have valuable skills, they usually do not have a conventional resume or workplace experience. That is why the biggest challenge currently for veterans is being underemployed when they leave the armed forces, said Chris Newsome, vice president of candidate aggregation at RecruitMilitary.

“A lot of these men and women are able to find jobs, but not necessarily careers,” Newsome said.

New college graduates often will need to complete a program like Apprenti to be job-ready because programming languages and platforms change so quickly.

Training at universities or even specialty classes at community colleges also do not quite stack up when it comes to hiring for a role such as cloud administrators which require specific certificates, Apprenti’s Carlson said.

Even boot camps for coding do not necessarily do the trick. Rico tried that route first, quitting his $16.50-an-hour job as a salesperson at an Apple Store to go into a coding program.

But without a college degree, he did not stand much of a chance against the automated interfaces most big tech companies use to sort through applicants when hiring.

DIVERSITY BOOST

For smaller companies like Avvo, Apprenti is more of a mission.

“The executives saw the value of a program that gets you talented engineers and does a social good,” said Hunter Davis, director of engineering at Avvo.

The company has about 25-30 developers currently on staff, with about 15 percent of them coming through Apprenti.

“They are awesome and full of grit and willing to learn,” Davis said.

The leg up for Apprenti grads starts right away. Like Rico, many were previously working minimum wage jobs, with a median income of $28,000 and most without benefits. The starting salary in the Apprenti program is $45,000 during training.

At six months when candidates begin their on-the-job training, the salary rises $51,000. If they get hired full-time – and almost all of them do – Apprenti grads make at least $75,000.

That is a life-changing salary for most of the participants.

“I have an apartment and a dog and a cat,” said Rico, who is still dreaming. “I’d love to get married and have kids and buy a house. I want to be my own boss. I would love to start my own company.”

Editing by Lauren Young and G Crosse

No clear path for California as massive PG&E utility nears bankruptcy

SACRAMENTO, Calif. (Reuters) – PG&E Corp’s announcement that it will file for bankruptcy, citing massive potential liability from deadly wildfires, puts California politicians in quandary, whether to offer a bailout or risk allowing the state’s largest private utility to fail.

Pacific Gas and Electric (PG&E) trucks are seen parked on a road between homes destroyed by the Tubbs Fire in Santa Rosa, California, U.S., October 11, 2017. Picture taken October 11, 2017. REUTERS/Stephen Lam

Governor Gavin Newsom, a Democrat, told reporters late on Monday his team was discussing the possibility of helping PG&E (PCG.N) stay solvent, but no decisions had been made.

And lawmakers in the state legislature, who last year approved a bill making it easier for PG&E to bill ratepayers for the costs of wildfires sparked by its equipment in 2017, said that there was less support this year for extending additional financial assistance to the company.

“We would like to see it (bankruptcy) avoided, but we are not naive,” Newsom said. “I’m cognizant of the taxpayers, and I’m cognizant of the ratepayers, and I’m absolutely cognizant of those who lost everything.”

PG&E’s announcement on Monday that it intends to file for Chapter 11 bankruptcy protection as early as this month, citing potential liability exceeding $30 billion due to wildfires, came a day after its chief executive officer, Geisha Williams, was ousted from her post.

PG&E, which ranks as the largest U.S. power utility by number of customers, supplies electricity to 40 percent of Californians. The state, Newsom said, is determined to keep service running to those customers.

But the utility’s power equipment has been linked to the ignition of more than a dozen wildfires in the past two years, and is a suspected cause of the deadliest fire in state history, which swept through the town of Paradise in November, killing 86 people and destroying 90 percent of homes and businesses there.

Mark Toney, executive director of consumer advocate group the Utility Reform Network, said the atmosphere had cooled considerably toward PG&E in recent months, making a bailout politically more difficult for lawmakers.

“PG&E is going to have a much harder time because it doesn’t appear that they’ve learned any lessons,” Toney said.

MIXED SIGNALS

The legislature and the governor could decide to allow PG&E to pass along the costs associated with victim lawsuits and other fire losses to ratepayers, as they did last year for a series of deadly northern California blazes in 2017.

Such legislation would also let utilities shift some future fire-related costs to consumers so long as regulators find no negligence on the companies’ part.

But state lawmakers have given mixed signals about what they might do about liability stemming from the deadly Camp Fire of November 2018 that incinerated most of Paradise.

Legislators representing areas devastated by wildfires have opposed any bailout for PG&E, saying its investors should absorb the costs – even if that means the company is bankrupted.

PG&E’s safety record has come under sharp scrutiny before.

State Senator Jerry Hill, whose district includes the site of the deadly 2010 San Bruno gas pipeline explosion determined to have been caused by PG&E’s criminal negligence said support for the utility was softer this year.

“I think there’s less chance, less thought of a bailout this year than we saw last year, certainly,” said Hill, who has the names of the nine people killed in the San Bruno blast framed in his office.

Reporting by Sharon Bernstein in Sacramento, Calif.; Editing by Steve Gorman and Clarence Fernandez

Volkswagen to invest $800 million, build new electric vehicle in U.S

DETROIT (Reuters) – Volkswagen AG (VOWG_p.DE) said on Monday it was investing $800 million to build a new electric vehicle at its plant in Chattanooga, Tennessee, and scheduled a briefing with Ford Motor Co (F.N) for Tuesday on their efforts to forge a global alliance.

Dr. Herbert Diess, CEO, Volkswagen AG, speaks in front of an image of a van concept vehicle during the company’s presentation at the North American International Auto Show in Detroit, Michigan, U.S., January 14, 2019. REUTERS/Jonathan Ernst

The German automaker said in an announcement at the Detroit Auto Show that it was adding 1,000 jobs at the Chattanooga plant and that electric vehicle production there would begin in 2022.

Volkswagen Chief Executive Herbert Diess said the company was considering building luxury Audi vehicles in the United States but that no decisions had been made.

German automakers have been under pressure from U.S. President Donald Trump to increase their investments in the United States. Diess and counterparts from German automakers BMW AG (BMWG.DE) and Daimler AG (DAIGn.DE) met with Trump at the White House in December to urge the administration not to go through with a threat to slap tariffs on European cars.

The Tennessee investment “is a signal to the government that we are really committed to the United States,” Diess told reporters at the auto show.

Ford and VW confirmed on Monday they would hold a joint conference call on Tuesday “to provide an update on the companies’ ongoing discussions regarding a global alliance.”

Diess and Ford executives ducked questions about how broad their alliance could be, beyond previously disclosed plans to collaborate on commercial vehicles and potentially midsize pickup trucks. Ford and VW have been discussing collaboration on electric and autonomous vehicles.

Both Ford and VW face mounting costs for developing electric and autonomous vehicles. Diess told reporters that VW could shoulder its ambitious $91 billion electrification plan on its own but was open to partnerships to increase economies of scale.

VW will use a modular electric toolkit chassis (MEB) in Chattanooga. VW designed MEB to be the basic building block for its EVs and it is intended to consolidate all of the vehicle’s electronic controls and reduce the number of microprocessors.

Volkswagen is building the first dedicated EV production facility in Zwickau, Germany, starting MEB production by the end of 2019.

The company will add EV production at facilities in Anting and Foshan, in China, in 2020, and in the German cities of Emden and Hanover by 2022.

“We obviously think electric vehicles are going to play a more and more prominent role,” said Tennessee Governor Bill Haslam, who took part in the announcement.

The first VW EV will be imported and arrive in 2020 and be a series-production version of a concept SUV EV shown last year in Detroit. VW said the vehicle would have the interior space of a midsize sport utility vehicle in the footprint of a compact SUV.

VW Group plans to commit almost $50 billion (44 billion euros) through 2023 toward the development and production of electric vehicles and digital services. The VW brand plans to sell 150,000 EVs by 2020 worldwide, increasing that number to 1 million by 2025.

As part of VW’s more than $25 billion diesel emissions cheating settlement, it agreed to introduce three additional battery electric vehicle models, including the currently available e-Golf or its successor or replacement models through 2019.

Other automakers at the Detroit show are touting their EV efforts. General Motors Co (GM.N) showed off a rendering of a Cadillac EV after it confirmed that Cadillac would be the automaker’s lead electric vehicle brand.

Reporting by David Shepardson; Editing by Jeffrey Benkoe and Peter Cooney

Tech stocks pull Wall Street lower after China data

(Reuters) – Technology shares pulled Wall Street lower on Monday, after an unexpected drop in China’s exports in December reignited worries of a slowdown in global economic growth.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 10, 2019. REUTERS/Brendan McDermid

The China trade data reinforced concerns that U.S. tariffs on Chinese goods were taking a toll on the world’s second-largest economy, prompting companies such as Apple Inc (AAPL.O) to issue profit warning.

Chipmakers, which get a sizable portion of their revenue from China, took a hit, with the Philadelphia SE semiconductor index .SOX down 1.01 percent. Trade-sensitive Boeing Co (BA.N) and Caterpillar Inc (CAT.N) also declined.

Citigroup Inc (C.N) kicked off the fourth-quarter earnings season for large U.S. banks by beating Wall Street profit estimates on Monday as lower expenses offset a drop in quarterly revenue.

The bank’s shares, which opened lower, reversed course to trade up 4.2 percent after Chief Financial Officer John Gerspach said the slowdown in China was not particularly disruptive to its global operations.

“The theme we’re going to see in a lot of earnings is not what the fourth-quarter numbers are, but what we expect going forward,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

Gains in Citigroup shares helped bolster the S&P financial sector .SPSY, which rose 0.80 percent and was the only gainer among the 11 major S&P indexes.

JPMorgan Chase & Co (JPM.N) and Wells Fargo & Co (WFC.N) are set to report earnings on Tuesday.

The technology sector’s .SPLRCT 0.81 percent fall was the biggest drag on the S&P 500. Still, a recent rally in stocks, fueled by U.S.-China trade optimism and hopes of a slow pace of interest rate hikes, has driven a 10 percent gain in the S&P 500 .SPX from its Christmas Eve low.

The benchmark index is about 12 percent away from its Sept. 20 record close.

“Obviously the biggest concern is the China trade data and people are seeing it in terms of a global synchronized slowdown that is potentially picking up,” Abbasi said.

“We’re definitely in an area where it could be a combination of things including the fact that we have rallied really nicely off the bottom.”

At 12:51 p.m. ET, the Dow Jones Industrial Average .DJI was down 73.01 points, or 0.30 percent, at 23,922.94, the S&P 500 .SPX was down 11.65 points, or 0.45 percent, at 2,584.61 and the Nasdaq Composite .IXIC was down 45.61 points, or 0.65 percent, at 6,925.87.

Adding to the downbeat mood was a partial government shutdown, which entered its 24th day, making it the longest shuttering of federal agencies in U.S. history.

Analysts expect S&P 500 companies to post a 14.3 percent growth in fourth-quarter earnings, much lower than the 25 percent growth rate registered in the first three quarters of 2018, according to IBES data from Refinitiv.

Among other stocks, PG&E Corp (PCG.N) plunged 47.58 percent after the biggest U.S. power utility said it was preparing to file for Chapter 11 bankruptcy for all of its businesses.

Declining issues outnumbered advancers for a 1.32-to-1 ratio on the NYSE and for a 1.53-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and one new lows, while the Nasdaq recorded 14 new highs and 11 new lows.

Reporting by Medha Singh and Amy Caren Daniel in Bengaluru; Editing by Anil D’Silva

China trade shock hits global stocks, commodities

LONDON (Reuters) – Global stock markets and commodities took a hit on Monday after a shock contraction in Chinese trade pointed to deepening cracks in the world’s second-largest economy and sparked fears of a sharper slowdown in global growth.

FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville

Data from China showed imports fell 7.6 percent year-on-year in December while analysts had predicted a 5 percent rise. Exports dropped 4.4 percent, confounding expectations for a 3 percent gain.

For an interactive version of the following chart, click here tmsnrt.rs/2SRopIf.

The data reinforced fears U.S. tariffs on Chinese goods were starting to hit China’s cooling economy, while softening demand has been felt around the world with sales of goods ranging from iPhones to automobiles slowing, prompting profit warnings from Apple among others.

Adding to the gloom were weak industrial output numbers from the euro zone, which posted their largest fall in nearly three years.

The index of Europe’s leading 300 shares .FTEU3 fell 0.9 percent by noon in London. Germany’s DAX .GDAXI and France’s CAC .FCHI were down over half a percent and 0.9 percent respectively, with shares in European luxury goods companies and the automotive sector suffering some of the biggest declines.

The falls in Europe followed hefty declines in Asia where MSCI’s broadest index of Asia-Pacific ex-Japan shares lost around 1 percent from Friday’s 1-1/2 month high – its biggest single-day percentage drop since Jan. 2. Chinese .CSI300 and Hong Kong shares .HIS suffered the worst hits.

“December’s (China) trade data were soft, but the data for the preceding months were surprisingly strong and show exports to the US growing at a decent pace, which may reflect producers trying to front-run any future escalation in tariffs,” wrote Neil Shearing, group chief economist at Capital Economics in a note to clients.

U.S. futures showed no let-up on the horizon, with Nasdaq e-mini futures NQc1 pointing to falls over 1 percent for tech stocks while industrials YMc1 looked set to open 0.9 percent softer.

COMMODITIES SUFFER

The prospect of slowing global growth also roiled commodity markets, with oil prices slipping over 1 percent. Industrial metals copper CMCU3 and aluminum lost ground in London and Shanghai.

Safe-haven trades benefited from the equity pullback with U.S. 10-year Treasury yields falling to as low as 2.6690 percent – their lowest level in a week – while gold prices gained.

The world’s two largest economies have been in talks for months to try and resolve their bitter trade war, with no signs of substantial progress.

Some analysts expect China’s latest data to provide impetus to Beijing to resolve the trade dispute with Washington.

Though Citi analysts said even with the rising probability for both sides to reach an agreement, the tariff and trade disruption appears to have already rippled through the global economy.

“Regional trade growth appears to have slowed substantially after front-loading effect diminished,” they said.

In light of the trade dispute, China’s policymakers have already pledged to step up support this year, following a raft of measures in 2018 including fast tracking infrastructure projects and cuts in banks’ reserve requirements and taxes.

In currency markets, the yuan gave up some recent gains in both onshore CNY= and offshore CNH= trading. The Chinese currency had recorded its best week in more than a decade last week.

However, this could change, said Tim Graf, head of macro strategy EMEA at State Street.

“The weakness in the Chinese data is calling into question the recent strength of the renminbi,” said Graf. “The downside for dollar/Chinese yuan is limited and that has implications for the euro and the Aussie dollar.”

The dollar index as measured against a basket of currencies nudged 0.1 percent lower to 95.558. The Australian dollar AUD=D3 and New Zealand dollar NZD=d3 – both gauges of global risk appetite – were both last down 0.3 percent.

The euro was flat at $1.14710 EUR=.

Britain’s pound GBP=D3 hit a seven-week high as Prime Minister Theresa May made last-ditch efforts to garner lawmakers’ support for her Brexit divorce deal, which looks almost certain to fail when it is put to a vote on Tuesday.

FILE PHOTO: Containers and trucks are seen on a snowy day at an automated container terminal in Qingdao port, Shandong province, China December 10, 2018. REUTERS/Stringer

For the U.S. trading day, banks will be in sharp focus as they kick off the earnings season. Quarterly results from Citigroup (C.N) are due on Monday followed by JPMorgan Chase (JPM.N), Wells Fargo (WFC.N), Goldman Sachs (GS.N) and Morgan Stanley (MS.N) later this week.

Expectations are downbeat with profits for U.S. companies forecast to rise 6.4 percent, down from an Oct. 1 estimate of 10.2 percent and a big drop from 2018’s tax cut-fuelled gain of more than 20 percent.

Investor attention was also on the U.S. government shutdown, in its 24th day with no resolution in sight.

Reporting by Karin Strohecker, additional reporting by Swati Pandey in Sydney and Dhara Ranasinghe in London; Editing by Susan Fenton and John Stonestreet

Japan’s Okada asks Manila bourse to block listing of Universal’s unit

Universal Entertainment Corp’s founder Kazuo Okada attends a news conference at the Tokyo District Court in Tokyo, Japan September 14, 2017. REUTERS/Issei Kato

MANILA (Reuters) – Pachinko tycoon Kazuo Okada has asked the Philippine Stock Exchange (PSE) to block the proposed listing of Universal Entertainment Corp’s (6425.T) domestic unit, saying the Japanese gaming company has no authority to proceed with the plan.

Okada is engaged in a public spat with Universal, whose board ousted him as chairman in 2017 and accused him of misappropriating $20 million, which the billionaire denied.

Tiger Resort Asia Ltd, Universal’s subsidiary, agreed to acquire a majority stake in a Manila listed company in September, paving the way for its own backdoor listing. Tiger owns the operator of the $2.4 billion Okada Manila integrated casino-resort.

“The backdoor listing is not authorized and is opposed by the casino magnate, the true and legal beneficial owner of controlling shares, and Chairman or Sole Director, in all Okada Companies,” Okada’s lawyers said in a January 11 letter to the PSE, which was sent to the media.

The PSE should disallow the backdoor listing because “there exists, at bare minimum, a serious issue as to whether Fujimoto et. al. are legitimate directors/officers of Tiger, and the rest of the Okada Companies, that can act for and on behalf of said Companies,” the lawyers said, referring to Universal President Jun Fujimoto.

Officials of the stock exchange, Universal and Tiger were not immediately available for comment. It is a public holiday in Japan on Monday.

A Philippine court earlier this month ordered the arrest of Okada, who is facing fraud charges. In August, he was arrested in Hong Kong because of multiple corruption-related charges and is currently on bail.

Reporting by Neil Jerome Morales; Additional reporting by Elaine Lies in Tokyo; Editing by Muralikumar Anantharaman

Exclusive: PG&E talking to banks on multibillion dollar bankruptcy financing – sources

(Reuters) – PG&E Corp (PCG.N) is in discussions with investment banks about a multibillion-dollar financing package to help navigate bankruptcy proceedings, a sign that Chapter 11 filing preparations are intensifying in the wake of potentially staggering liabilities from deadly wildfires, sources said on Sunday.

The California utility owner is in touch with large banks about so-called debtor-in-possession financing that could total between $3 billion and $5 billion, though the exact figure remains in flux and could end up being higher, said the sources, who are familiar with the matter.

PG&E Corp declined to comment.

The company may alert employees as soon as Monday about its preparations for a potential bankruptcy filing in compliance with a state law about providing notice at least 15 days before such an event, one of the people said.

The plans have not been finalized and the communication could come later, the source said. Bloomberg first reported that the notice could come as soon as Monday.

Companies negotiate debtor-in-possession loans, often with existing lenders, when they are seriously considering bankruptcy protection so they can continue operations while working through court proceedings.

PG&E’s existing lenders include Citigroup Inc (C.N), JPMorgan Chase & Co (JPM.N) and Bank of America Corp (BAC.N).

A bankruptcy filing is not assured, the sources said. PG&E’s discussions with banks about financing are in the early stages and part of contingency planning if other efforts to address woes from last year’s wildfire fail, they said.

A bankruptcy filing would represent a last resort if the company is unable to get government relief that would allow it to pass on liabilities to customers, a maneuver enacted into law to help the company grapple with 2017 fires, the sources added.

Slideshow (3 Images)

If it seeks bankruptcy protection, the new money could prove critical for PG&E, which spends roughly $6 billion annually serving millions of electric and natural gas customers in California.

PG&E, which carries a hefty debt load of more than $18 billion, is expected to soon disclose a large financial charge related to liabilities resulting from catastrophic November blazes. One, the Camp Fire, swept through the mountain community of Paradise and killed at least 86 people, the deadliest and most destructive blaze in state history.

PG&E faces widespread lawsuits from that fire and one in 2017. In November, the company warned it could face “significant liability” in excess of its insurance coverage it its equipment was found to have caused last year’s blazes.

Reporting by Mike Spector and Liana B. Baker in New York; Additional reporting by Jessica Dinapoli; Editing by Jeffrey Benkoe

U.S. warns German companies of possible sanctions over Russian pipeline

BERLIN (Reuters) – The United States has warned German companies involved in the Russian-led Nord Stream 2 gas pipeline that they could face sanctions if they stick with the project.

FILE PHOTO: U.S. Ambassador to Germany Richard Grenell arrives for a ceremony in Berlin, Germany, November 9, 2018. REUTERS/Fabrizio Bensch/File Photo

U.S. President Donald Trump has accused Germany of being a “captive” of Moscow because of its reliance on Russian energy and urged it to halt work on the $11 billion gas pipeline.

The pipeline, which would carry gas straight to Germany under the Baltic Sea, has also been criticized in some quarters because it would deprive Ukraine of lucrative gas transit fees, potentially making Kiev more vulnerable in the future.

U.S. Ambassador Richard Grenell addressed the issue in a letter sent to several companies, the U.S. Embassy said on Sunday.

“The letter reminds that any company operating in the Russian energy export pipeline sector is in danger under CAATSA of U.S. sanctions,” the embassy spokesman said, adding that other European states also opposed the planned pipeline.

Germany and European allies accuse Washington of using its Countering America’s Adversaries Through Sanctions Act (CAATSA) to meddle in their foreign and energy policies.

Russian gas giant Gazprom (GAZP.MM) is implementing the project jointly with Western partners Uniper (UN01.DE), Wintershall (BASFn.DE), Engie (ENGIE.PA), OMV (OMVV.VI) and Shell (RDSa.AS).

The letter raised eyebrows within Chancellor Angela Merkel’s government.

One German diplomat said the ambassador’s approach did not follow common diplomatic practice and that Berlin would address the issue in direct talks with officials in Washington.

‘UNACCEPTABLE THREATS’

Juergen Hardt, foreign policy spokesman for Merkel’s conservatives in parliament, was scathing in his criticism of the U.S. move.

“That the U.S. ambassador is now turning to German companies with direct threats is a new and unacceptable one-sided tightening of the tone in the transatlantic relationship,” Hardt said.

“If the U.S. president thinks he has to publicly show he is getting tough on Russia in view of the many question marks regarding his relationship with Moscow, he should not thereby impair the relationship with his most important ally.”

There was no comment on Sunday from the German companies involved in the project. A Uniper spokesman declined to comment and Wintershall did respond immediately to a request for comment.

Germany and Russia have been at odds since Moscow annexed Crimea from Ukraine in 2014. However, both have a common interest in the Nord Stream 2 project, which is expected to double capacity of the existing Nord Stream 1 route.

German newspaper Bild am Sonntag, which was first to report news of the letter, said that Grenell was trying to blackmail German companies, drawing a sharp denial from the U.S. Embassy.

“The only thing that could be considered blackmail in this situation would be the Kremlin having leverage over future gas supplies,” the embassy spokesman said.

The letter was coordinated in Washington by several U.S. government agencies and “is not meant to be a threat but a clear message of U.S. policy”, the spokesman added.

German Foreign Minister Heiko Maas on Thursday said that any U.S. sanctions against Nord Stream 2 would be the wrong way to solve the dispute and that questions of European energy policy had to be decided in Europe, not in the United States.

Additional reporting by Christina Amann and Tom Kaeckenhoff; Editing by Mark Heinrich and David Goodman

Israel drone maker Aeronautics gets $232 million buyout offer

A Firefly drone by Rafael Advanced Defense Systems is on display during the Eurosatory International Defence Exhibition in Villepinte, north of Paris, France June 11, 2018. REUTERS/Gonzalo Fuentes

JERUSALEM (Reuters) – Israel’s state-owned Rafael Advanced Defense Systems and businessman Avihai Stolero have offered to buy unmanned aerial vehicle maker Aeronautics (ARCS.TA) for 850 million shekels ($232 million).

The news sent shares of Aeronautics up 37 percent in morning trade in Tel Aviv on Sunday. Aeronautics rejected a 430 million shekel offer from Rafael and Stolero last August.

Aeronautics, which had a market value of 507 million shekels on Jan. 10, said the latest offer for all its shares would be done as a reverse merger executed through a company jointly owned by Rafael and Stolero.

The company would become private and its shares delisted from the Tel Aviv Stock Exchange.

Aeronautics said it had agreed to hold talks with the potential buyers and committed to giving them exclusivity. Negotiations will take place until Feb. 15, during which time Rafael will conduct due diligence.

Earlier this month, state-owned Israel Aerospace Industries [ISRAI.UL] said it was in early talks to invest in Aeronautics.

In 2017, Aeronautics said the Defence Ministry had suspended the marketing and export license for one of the firm’s attack drones to a significant customer in a foreign country. The company denied any wrongdoing.

Israeli media reported at the time that the ministry had opened an investigation into Aeronautics over whether during a product demonstration in Azerbaijan one of its drones was used to attack a military position in the neighboring country of Armenia, and if so, who was at fault.

Aeronautics manufactures unmanned aerial vehicles for military surveillance and defense purposes, as well as for the commercial sector.

Reporting by Steven Scheer; Editing by Tova Cohen/Keith Weir