Observer & Busness 24 Jun 2012 - Oman Observer

MUSCAT — Predicted to
drum-up enthusiasm in Oman's
automobile market, two Special
Edition Kia models have
been launched. Not only are
Sorento Stylo and Cerato Star
feature-packed and stylish,
they are also available at affordable
price points, making
them the right choice.
At a special event graced
by the presence of Il Won,
DGM-Sales, KMC, Middle
East and Africa D S Chung,
GM — Service, Kia Motors,
Middle East and Africa Region
and distinguished guests, two
sparklingly new Kia models
'Sorento Stylo' and 'Cerato
Star' were launched in Oman.
Re-designed with standout
styling, the new models
convey a sense of solidity and
maturity. With distinctive exterior,
sophisticated interior and
numerous advanced comfort/
safety features, the new models
enhance Kia’s reputation
for delivering great value.
Presenting the new Kia
models to the audience, Won
remarked, “We are proud to
introduce the Cerato Star and
Sorento Stylo, two Special
Editions exclusively for the
Oman market. True to our
brand slogan ‘The Power to
Surprise’ the Special Edition
models have features that will
delight the customers.”
“Sorento Stylo comes
equipped with Panoramic
Sunroof, rear-view camera
and back warning sensors,
power driver seat, side-step
board, chrome-package, dual
front auto and rear A/C, multi-control
steering and more.
The new Cerato Star comes
equipped with daytime running
lights, 15" alloy wheels,
Bluetooth, rear-view camera
and back-warning sensors,
amongst many others,” he added,
“I hope your first impression
of the Sorento Stylo and
Cerato Star is a pleasant one.”
Following Won's speech, a
senior spokesperson from Reliable
International Automo-
23
OMAN/INTERNATIONAL SUNDAY, JUNE 24, 2012
Grand entry of Kia’s new ‘Special Editions’
Carlyle in talks to refinance
$1.9bn Coates Hire debt
HONG KONG — US private
equity fund Carlyle Group
is in talks with banks to refinance
A$1.9 billion ($1.9
billion) in loans used to buy
out Australian equipment hire
company Coates Hire Ltd,
two sources familiar with the
matter said.
Carlyle borrowed the money
in 2008 to fund its A$1.7
billion buyout of Coates, its
first leveraged acquisition in
Australia, said the sources,
who declined to be named as
LONDON — Hedge fund
investors have voiced their
concerns about complex funds
designed to protect against major
market meltdowns, just as
fears of a break-up of the euro
zone have spurred huge interest
in these products.
So-called "tail risk" funds,
also known as "black swan"
strategies after the popular
book by Nassim Nicholas
Taleb, are supposed to hedge
against rare but dangerous
events, such as the market selloff
following Lehman Brothers'
demise.
But the GAIM 2012 hedge
fund conference last week in
Monaco revealed widespread
doubts about whether such
funds can perform as they are
expected to, leaving investors
dangerously exposed to a
deepening global debt crisis.
"You guys better figure out
how, while hedging tail risk,
you're not letting liquidity
risk sneak in the back door ...
you don't know how to get out
and we've just had a liquidity
event not so long ago," one in-
they were not authorised to
speak to the media.
Carlyle is among a number
of private equity funds in the
Asia Pacific that have been in
talks to refinance debt, as frozen
IPO markets and a lack of
strategic buyers have left the
funds holding assets longer
than the usual three to five
years.
The cost of leveraged debt
has risen in recent years —
for new leveraged buyouts,
margins can be twice as high
vestor told a panel of managers
discussing their funds on
Wednesday.
He accused firms who offer
the strategies of not knowing
how to exit their positions,
particularly if markets seize
up and liquidity in the derivatives
markets these funds trade
evaporates.
Tail risk is defined as the
probability of rare events.
Pension funds and family
offices, still smarting from the
huge losses they suffered in the
2008-2009 financial crisis and
fearing another blow-up is just
around the corner, are handing
over billions of dollars to bank
and fund providers promising
protection — many without really
knowing if the funds will
pay out when they need them
to.
Dozens of different strategies
can carry the tail-risk tag,
many of them using complex
mathematics which leave investors
puzzled about how
they work.
In their most simple form,
the funds buy "put" options
— and refinancing of existing
loans at higher interest rates
will add to the debt burden of
the companies and squeeze returns
of private equity funds,
sources say.
The fact that Carlyle is
looking for three-year money
indicates the firm is protecting
itself against an even
longer wait for an exit, said
one of the sources. KKR has
previously been in talks to refinance
debt at Bis Industries
in Australia. — Reuters
— contracts which give them
the right to sell an underlying
stock or security on expectations
of a drop in price.
Under the terms of the contract,
the seller of the put —
such as an investment bank —
is obliged to buy the asset from
biles shared his views, stating,
“As a brand, Kia is the fastest
growing in the world — with
a commanding global presence.
It has 12 manufacturing/
assembly plants in 9 countries
and specialised R&D/Design
Centres in Japan, US and Germany.
Kia's extensive network
of distributors/dealers in 172
countries reaches Kia quality
to the farthest corners of the
globe.”
Praising Kia's master designer,
Peter Schreyer, he
added, “Leading German car
designer of international fame
spearheads the designing of
new Kia vehicles. All our
models offer quality excellence
and have won numerous
awards worldwide. This means
better resale value as the brand
grows further. In the near future,
we hope to reach 3.5 million
sales by 2016, be a top tier
automotive brand and global
brand, continue to be an early
adopter of upcoming technology,
always be at the forefront
in delivering stylish cars with
unmatched features at reasonable
cost of ownership.”
Following the presentation,
thrilling films showcasing the
models were presented at the
the fund at a pre-determined
price, earning the fund a profit
if prices have slumped below
that level.
Other funds, however, bundle
these traditional tail-risk
hedges with bets on indexes
that track volatility rather than
end of which a dramatic unveiling
revealed the sparkling new
stars in all their glory. Such
was the effect that many eager
guests could be seen milling
around the new models.
Later, new customers were
symbolically handed over the
keys to their new Kia cars. “It
has awesome styling, is safe;
easy to handle and so comfortable!
For the price tag it
comes with, it really offers
phenomenal value,” said one
of the early-bird owners of the
new Cerato Star. Similar views
were expressed by the proud
owner of the Sorento Stylo.
Thanking the audience for
their presence at the launch
event, a Kia spokesperson
drew the curtains on the ceremony
by inviting the audience
get a closer look at the new
models.
Reliable International Automotive,
the distributor for Kia
in Oman provides a rewarding
ownership experience for
customers. Excellent product
attributes and an unmatched
after sales support of 18 sales
outlets, 19 service centres and
easily accessible 28 parts outlets
ensure their absolute satisfaction,
every mile of the way.
Adidas eyes Crossfit workout for Reebok
WARSAW — Adidas will
use a tough keep-fit trend and
retro products to grow sales at
Reebok to 3 billion euros ($3.8
billion) by 2015, after the unit
was hit by a fraud scandal in
India and the loss of its NFL
American football contract, its
CEO said.
With Reebok's sales down 7
per cent in the first quarter and
annual sales expected to fall
from 2011's 1.96 billion euros,
its performance contrasts
sharply with the rest of the
Adidas group, which expects
overall sales to rise nearly 10
per cent in 2012.
"We want to increase Reebok
sales in 2013. Anything
else will be a disappointment,"
Herbert Hainer, CEO
of the world's second largest
sportswear group behind Nike
(NKE.N), told journalists in
Warsaw.
Along with the NFL contract
loss, a rush for its Easytone
toning shoes, favoured by
women looking to tone their
legs, has petered out as the
market became flooded with
rivals and US authorities challenged
the health benefits.
Hainer said that Adidas did
not want Reebok to be seen as
Investors cast doubt on ‘end of world’ hedge strategies
protection from falling prices.
Another worried investor at
the conference said managers
were getting confused in their
terminology and execution, increasing
their exposure to risk
instead of minimising it.
"You can have a market fall-
a women-only brand, and that
a tie-up with gruelling armydeveloped
Crossfit, a fitness
regime currently sweeping
the US, along with more retro
Classics products should help
regain it some lustre. Hainer
added the group should be in
a position to give an update on
the fraud case in India, which
it estimates will cost it almost
200 million euros, with quarterly
results in August.
For now, Hainer is confident
the sporting goods industry
will continue to be shielded
from the economic misery
sweeping Europe, saying that
ing very slowly by 1 per cent
a week for 36 weeks, then up
1 per cent a week for another
36 weeks, and you will have a
tail event but you'll lose money
like hell being long volatility
on a variance swap," he said.
"You guys should figure out
its products were still selling
well in debt-ridden countries
like Spain. "Our products are
not so expensive that people
can't afford them and the children
always seem to have the
money for iPhones or soccer
jerseys or both," he said.
His comments came after
Adidas lifted its outlook for
soccer sales this year, driven
by the Euro 2012 soccer tournament
taking place in Poland
and the Ukraine.
"All in all, I'm very happy
with the business in 2012, and
we expect to meet our group
targets," he said.
the difference between volatility
and tail risk, which you
tend to put together."
A variance swap is a product
that lets the owner hedge
the risk of volatility of an underlying
security or index.
With so many different
strategies on offer, it is difficult
to estimate just how much
investors have riding on these
models.
But JP Morgan Chase &
Co's global asset allocation
group estimates assets in tailrisk
hedge funds ballooned to
about $38 billion in April last
year from less than $500 million
prior to the Lehman collapse.
As demand for tail-risk type
derivatives has soared, so have
their prices. Some fund managers
said they were now actively
betting against these tailrisk
trades, believing investors
wowed by these products have
created a bubble in prices. Jane
ANALYSIS
Adidas also hit the headlines
this week after pulling a
controversial shackled sneaker
and with a New York man
claiming he was duped about
the potential fitness benefits
of a line of shoes designed to
mimic the effect of running
barefoot.
Hainer shrugged off the
suit, saying that such complaints
were common. "But
this does illustrate why we
want to ensure our products
with a performance element are
sold only by specialist retailers
with the necessary training and
knowledge." — Reuters
Buchan, CEO of fund of funds
house PAAMCO, is investing
in managers that are selling
puts, often on US equities.
"There is tremendous fear
and risk aversion in the market
right now. It's pushing rates
down, it's also pushing the
price of puts very, very high. If
you are willing to invest for the
long term and not just worry
about the short-term fear, you
can actually make some really
good money," she said.
Roberto Giuffrida, head of
global business development
at asset manager Permal, also
highlighted the cost of such
funds. "We are certainly getting
inquiries for tail-risk type
strategies ... but we advise clients
to combine pure optionbased
strategies with macro
funds so that they can mitigate
against the very expensive carry
(of tail-risk investments)."
— Reuters