1. DemocratandChronicle.com Friday, May 31, 2013 Page 5B
Valeant to raise $7.5 billion
in debt for B+L purchase
Valeant Pharmaceuticals Interna-
tional Inc. will finance its purchase of
Bausch + Lomb Inc. with about $7.5
billion in debt.
Valeant, Canada’s largest drug-
maker, will raise a $4.3 billion term
loan and sell $3.225 billion in senior
unsecured bonds, the company dis-
closed today in a regulatory filing.
Valeant will also seek $1.75 billion in
equity.
Proceeds will support the $8.7 bil-
lion acquisition and repay about $4.2
billion of Warburg Pincus LLC-owned
B+L borrowings leaving leverage, a
measure of debt to earnings, before
taxes, depreciation and amortization
at 4.6 times, according to the filing.
Goldman Sachs Group Inc. is ar-
ranging the financing, the Montreal-
based Valeant and B+L said in a state-
ment on Monday. The transaction is
expected to close in the third quarter.
Moody’s downgrades
Carestream Health
Carestream Health Inc., a provider
of medical and dental imaging equip-
ment and supplies, was downgraded
in view of a refinancing to be used in
part for a $750 million dividend to the
owner Onex Corp.
Moody’s Investors Service lowered
the corporate rating one grade yester-
day to B2.
Rather than repaying debt,
Moody’s expects the Rochester-based
company will use a “substantial por-
tion of excess free cash flow toward
paying dividends.”
Expert: Consumers talk
themselves out of refinancing
Despite historically low interest
rates on mortgages, many consumers
talk themselves out of seeking refi-
nancing at the new low rates, said a
mortgage expert at Credit Sesame.
An analysis conducted by the mort-
gage and credit advisory service
found that many consumers could
save more than $5,000 a year by refi-
nancing now.
But consumers are passing on such
savings because they mistakenly
think they’ll be turned down for a new
mortgage, said Tony Wahl, mortgage
expert for Credit Sesame.
Other reasons include fears from
credit history and the abundant
amount of paperwork needed to ob-
tain a new loan, Wahl said.
For the most part, “lender docu-
mentation requirements haven't
changed all that much in the past 10
years,” he added.
—Staff and wire reports
At a glance
DOW
15,324.53
+21.73
1
S&P 500
1,654.41
+6.05
1
NASDAQ
3,491.30
+23.78
1
Stocks of local interest, 6B
Market Watch
Virginia-based military contractor
ITT Exelis Inc. is freezing its salaried
pension and Excess Pension plans.
The company said the end of accru-
al of benefits will take place as of the
end of 2016, meaning the pensions
won’t reflect any pay raises or other
changes that happen after that point.
Exelis employs 1,200 locally in its
Rochester-based geospatial systems
division. Exelis shares closed Thurs-
day at $12.23, up a penny or a fraction
of a percent.
— Matthew Daneman, staff writer
Local stock highlight
News Tips
Call (585) 258-2416 or (800) 767-7539 from
outside Monroe County.
2 T-note, 10-year yield, 2.11%, down 0.01.
1 Euro vs. dollar, up 0.0109 to $1.3043.
1 Gold, up $20.20 to $1411.50.
1 Oil, light, sweet crude for July delivery, up 48 cents
to $93.61.
Key Indicators
Prime rate 3.25%
Discount rate primary 0.75%
3-mo. Treasury bills 0.045%
1-year Treasury bills 0.12%
30-yr. Treasury bonds 3.28%
Money Rates
Len LaCara Business Editor (585) 258-2416
llacara@democratandchronicle.com
Len LaCara
As Eastman Kodak Co. works its way
through 2013 and presumably the wan-
ing months of its Chapter11bankruptcy,
its U.S. operations have, at least by one
metric, become consistently profitable.
The Rochester-based printing and
imaging company filed its April operat-
ing report on Thursday, and the num-
bers show a company that has slashed
massive amounts from its monthly ex-
penses and that is fairly regularly show-
ing a gross profit.
For April, Kodak had revenue of
$127.8 million — roughly in line with its
results in January and February. March
showed revenue of nearly $170 million,
which the company did not explain in
the filing.
And for April, Kodak has a gross
profit of $9.1 million, as it has every
month so far in 2013. That’s a major
change from the months of gross losses
immediately after January 2012, when
Kodak’s U.S. operations filed for Chap-
ter 11 bankruptcy protection. In April
2012, for example, the monthly report
showed a gross loss of $11.7 million.
Gross profits, however, don’t count a
variety of expenses such as administra-
tive costs, R&D, and reorganization and
restructuring costs. Count those in and
Kodak for April lost $46.3 million. More
than $11 million of that loss came from
costs associated directly with bankrupt-
cy itself, such as spending on all the var-
ious attorneys and accountants re-
quired.
Compared to April 2012, Kodak is a
considerably slimmer company. Its U.S.
operations in April 2013 spent $26.7 mil-
lion on administrative, selling and gen-
eral costs, vs. $34.9 million one year ear-
lier.
Kodak’s U.S. operations in April 2012
had a bottom-line loss of $91.3 million.
The monthly reports only give a par-
tialpictureofhowthecompanyisdoing,
as they only include the U.S. operations
and not its international businesses.
The company, which employs about
3,500 locally, has repeatedly indicated it
hopes to emerge from bankruptcy
sometime in the third quarter of this
year. It is in the midst of selling such
lines of business as its photographic
film and paper and document scanner
operations to a United Kingdom pension
fund to settle its sizable debt to that
fund.Kodak’spost-bankruptcybusiness
plan revolves around equipment, sup-
plies and services for the commercial
printing industry.
MDANEMAN@DemocratandChronicle.com
Twitter.com/mdaneman
Facebook.com/mdanemanmedia
Signs of profitability appear at Kodak
Matthew Daneman
Staff writer
Anthony J. Costello’s handprints are
all over the Rochester region skyline,
from hangars and cargo buildings at the
Greater Rochester International Air-
port to a variety of Clinton Crossings
Medical Center buildings.
The developer is also in the midst of
building Reserve on the Erie Canal
housingdevelopment,withtheCityGate
commercial/residential/office develop-
ment to soon follow.
Now Costello is stepping aside as
head of portions of the family business.
Effective Saturday, son Brett Costello
will be CEO of Costello &
Son Development Proper-
ty Management and of
USAirports.
Anthony Costello,
meanwhile, will focus on
property development,
remaining as CEO of Cos-
tello & Son Development
and serving as CEO of the
Costello Group. The new-
ly formed Costello Group will focus on
real estate development projects, in-
cluding CityGate, Reserve on the Erie
Canal and the proposed Clinton Cross-
ings Corporate & Lifestyle Center in
Brighton.
Turning over the reins
of the property manage-
ment and airport opera-
tions “is probably long
overdue,” the elder Cos-
tello said. “It’s really
Brett’s time. I wanted to
give him the opportunity
to grow, to have his time.
WhatI’dlovetodoisstand
on the sidelines and see
him excel and do great things. He’s
earned this.”
The various Costello companies em-
ploy150 locally, as well as about 35 in At-
Costellos reshuffle titles
Son Brett takes larger role with father, Anthony
Matthew Daneman
Staff writer
Anthony
Costello
Brett A.
Costello
See COSTELLO, Page 6B
WASHINGTON — The U.S. economy
grewatamodest2.4percentannualrate
from January through March, slightly
slower than initially estimated. Con-
sumer spending was stronger than first
thought, but businesses restocked more
slowly and state and local government
spending cuts were deeper.
The Commerce Department said
Thursday that economic growth in the
first quarter was only marginally below
the 2.5 percent annual rate the govern-
ment had estimated last month. That’s
still much faster than the 0.4 percent
growth during the October-December
quarter.
Most economists think growth is
slowing to about a 2 percent annual rate
in the April-June quarter as the econo-
my adjusts to federal spending cuts,
higher taxes and further global weak-
ness.Still,manysaythedeclinemaynot
be as severe as once thought. That’s be-
cause solid hiring, surging home prices
and record stock gains should keep con-
sumers spending.
Jennifer Lee, senior economist at
BMOCapitalMarkets,saidthesmallre-
vision to first-quarter growth support-
ed her view that the economy will grow
a moderate 2.2 percent for the year, the
same as last year.
Still, Lee expects growth to improve
to 3.2 percent in 2014, as the job market
accelerates and consumers grow more
confident in the economy. Consumer
spendingaccountsfor70percentofeco-
nomicactivityasmeasuredbythegross
domestic product. GDP is the econo-
my’s total output of goods and services,
from haircuts and computers to trucks
and aircraft carriers.
The government’s second look at
first-quarter growth showed that con-
sumer spending roared ahead at a 3.4
percent annual rate. That’s the fastest
spendinggrowthinmorethantwoyears
and even stronger than the 3.2 percent
rate estimated last month.
Healthy consumer spending shows
many Americans are shrugging off an
increasethisyearinSocialSecuritytax-
Economy
grows
modestly
See ECONOMY, Page 6B
Growth was 2.4%
in the first quarter
Martin Crutsinger
Associated Press
P
a’s Backyard BBQ, of Ironde-
quoit, deals in offshore ac-
counts, though it may help if
you’re offshore yourself.
If you guessed that Pa’s is a water-
borne lunch wagon, claim your prize.
Pa’s, the brainchild of two old friends
and the latest in a growing trend, is a
20-foot pontoon boat designed to cook
and deliver hamburgers, dogs and ice
cream to boaters on Irondequoit Bay,
and to boaters who choose to stay teth-
ered to the docks at Sutter’s Marine.
It’s yet another wrinkle in the grow-
ing phenomenon of mobile food ser-
vice. Downtown hot dog carts are a fa-
miliar sight in Rochester, of course,
but food trucks, most with larger
menus than a hot dog vendor offers,
are coming to Rochester this summer,
having won tentative approval from
City Council.
The food boat is a version of that
change, geared to the summer con-
sumer, of course, but also to the occa-
sionally stranded or becalmed boater.
Therearefoodboatsallovertheworld,
and many, as with Pa’s, involve a flat-
bottomed pontoon vessel and the pli-
able waters of a lake or bay.
The entrepreneurs in the Irondequ-
oit Bay venture are Bob Saversky and
Steve Sercu, who met years ago when
both were in similar businesses and
would meet at trade shows and other
events. “We hit it off,” Saversky said.
Now the pair is at retirement age,
though Saversky still runs an electron-
ic recycling business in Macedon,
Wayne County. Sercu lives in a house
near Irondequoit Bay and knew that
boaters with pleasure craft tied up at
Sutters had no readily available fast-
food joint to satisfy a hunger or slake a
thirst.
It wasn’t an issue that mattered
Bob Saversky, left, and Steve Sercu of Pa’s Backyard BBQ will serve grilled food on
Irondequoit Bay from a pontoon boat. JAMIE GERMANO/ STAFF PHOTOGRAPHER
Grilling food
on the water
floats their boat
Tom Tobin
Staff writer
“But people can’t bring ice
cream because it melts. And
they don’t have hot food.”
BOB SAVERSKY
of Pa’s Backyard BBQ
See BOAT, Page 6B