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2The Daily Tar HeelFriday, December 2, 1988
World and : Nation
uSd vows to reduce federal deficit
From Associated Press reports
. elect George Bush told the new
Democratic leader of the Senate
. ' Thursday that he will take the lead
in proposing ways to pare the huge
7 federal budget deficit.
Faced with calls from Senate
! Majority Leader George Mitchell and
,v" . other top Democrats to make the first
move on deficit reduction, Bush said,
"That is exactly what I intend to do"
once he becomes president.
"I am confident that we can work
,.. together," Bush said as he and
Mitchell faced reporters on the White
' House driveway after breakfast
together, the latest in a series of
Y-culinary goodwill gestures toward
Tm not naive about it, nor is he,
and there will be different approaches
; 'on some of these major problems
facing this country," said the vice
From Associated Press reports
!, NEW YORK One of history's
. .biggest corporate breakups loomed
3 over RJR Nabisco Inc. on Thursday
' after Kohlberg Kravis Roberts & Co.
...seemingly bagged the cigarette-and-
.food company for a record $24.53
j billion, but the buyout specialist said
it saw no urgent need to sell anything.
Meanwhile, a rival bidding group
., .hinted it might reopen the struggle,
RJR's debt ratings sank, and one
disgruntled big RJR bondholder that
already had sued RJR said it might
; sue Kohlberg too.
; After an exhaustive bidding free
; for-all overseen by a special RJR
directors committee, Kohlberg tri
umphed over an RJR management
group led by chief executive F. Ross
; Johnson late Wednesday. Kohlberg's
; package of cash and securities was
valued at $109 a share for each of
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president. He said he will take the
lead on the deficit "and then there
will be, I'm sure, active discussion and
negotiation with whoever he desig
nates to try to solve these problems."
Bush also said he won't be rushed
into making Cabinet appointments
despite persistent news media spec
ulation that may be troubling to
prospects such as John Tower, the
former Texas senator keeping a long
vigil for the Pentagon opening.
"We're trying to be prudent and
do the proper work required to back
up appointments at all levels," Bush
Asked about reports of internal
strife within his camp over whether
to give the Pentagon post to Tower,
a former Senate Armed Services
Committee chairman and now a paid
consultant to several major defense
contractors, Bush said, "Any time
there seems to be stories that may
apparent winner in RJR buyout
RJR's 225 million shares, the biggest
takeover agreement in history.
RJR's directors accepted the bid
over an apparently higher offer from
Johnson's group valued at $112 a
share or $25.2 billion. They said both
offers were nearly the same but
Kohlberg's offer would give share
holders a 25 percent stake in the
acquired company, compared with a
15 percent stake offered by Johnson.
Securities analysts surveying the
aftermath of the chaotic takeover
auction for the Atlanta-based RJR
said they were awaiting more details
of the securities portion of Kohlberg's
bid to emerge before making any
Nevertheless, many said it was
certain Kohlberg would have to sell
at least part of RJR's wide-ranging
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be hurtful to somebody, it concerns
me no matter who it is. Senator
Tower's a friend of mine, but he
knows that the process takes a while
to go forward."
Mitchell said he and Bush did not
discuss taxes or any budget-cutting
specifics, but he called the vice
president "keenly aware of the
seriousness of the (deficit) situation."
The senator called the discussion
"cordial and productive. He under
stands that it is his responsibility to
proceed first and he will do so." He
said Bush deserves time to get his
economic team in place and settle
upon a deficit-reduction strategy.
The vice president had lunch with
President Reagan and joined him at
a meeting with Trade Representative
Clayton Yeutter to discuss next
week's General Agreement on Tariffs
and Trade talks in Montreal.
Bush and Reagan were both speak
food operations to service the enor
mous debt acquired to engineer the
"I'd be totally amazed if there
wasn't some stuff sold off," said Neal
Kaplan, who follows RJR for
Interstate-Johnson Lane Securities in
Charlotte, N.C. "I can't conceive of
them keeping it intact."
But Kohlberg principal Henry
Kravis told a few selected financial
journalists in New York he foresaw
no urgent reason to sell any of RJR's
operations, people familiar with his
Kohlbetg is the undisputed leader
in leveraged buyouts, in which it puts
up a small amount of money and
borrows the rest, repaying the debt
with the acquired company's earn-
ings, assets or both. Fost-buyout
companies often have debt-to-equity
i j -ji r : '
Supreme Soviet approves Gorbachev plain
From Associated Press reports
MOSCOW President Mikhail
Gorbachev won nearly unanimous
approval Thursday of a more
dynamic political structure from a
parliament that voted its traditionally
docile form out of existence.
In a speech to the 1,500-member
Supreme Soviet, Gorbachev also
accepted blame for the lack of
explanations that led to a remarkable ,
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ing Thursday night at a testimonial
dinner for retiring Rep. Jack Kemp
of New York, one of the foes Bush
vanquished for the GOP nomination.
Bush brushed aside a question
about whether he would give Kemp
the appointment Kemp wants to the
National Economic Commission to
fight any proposals to raise taxes.
Kemp had said before the election the
panel's work should be "routinely
passed into the dustbin of history."
On Friday, Bush will meet with
another former GOP presidential
candidate, Pat Robertson, in the
morning before putting out the
welcome mat at his home for Mas
sachusetts Gov. Michael Dukakis, the
defeated Democratic presidential
nominee, in the afternoon.
Later Friday, he will receive Argen
tine President Raul Alfonsin, whose
inauguration he attended five years
ratios of 10-to-l and sometimes more.
The RJR acquisition will more
than quadruple the company's exist
ing debt of $5 billion to $22.3 billion.
But the amount of equity in the
acquired company is estimated at
about $7.4 billion, for a debt-to-equity
ratio of 3-to-l. In terms of
leveraged buyouts, that is considered
Although Kravis said he consi
dered the fight for RJR over, Johnson
and his chief financial backer, Shear
son Lehman Hutton Inc., hinted
Thursday that they were not finished.
Shearson said in a statement:
"From what we know, our bid was
the best. We are mystified about the
process and the standards that the
board used to reach its decision. We
are going to continue to keep our
public debate over the reform he
considers crucial to his restructuring
Despite criticism from some of the
15 Soviet republics that the reforms
make Moscow too powerful, only five
deputies voted against it. Still, the
negative votes were a rarity in the
parliament that for years has unani
mously approved Kremlin directives.
The first "no" votes came just more
and much more...
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Election victory still unclear
in race for Israeli leadership
From Associated Press reports
JERUSALEM The left-of-center
Labor Party on Thursday
secured the backing of half the
Israeli Parliament, enough to
prevent a right-wing Likud
government from coming to
power but not enough to seat a
government of its own.
With the 120-member Knesset
split between the left and right
blocs, it remained unclear a full
month after the elections who will
govern for the next four years.
. In the Nov. 1 balloting, Likud
had a small edge over Labor, with
40 seats to Labor's 39. Each must
woo smaller parties to form a
majority, and Likud's Prime Min
ister Yitzhak Shamir planned to
do so with the backing of right
wing and Orthodox religious
But the defection of an ultra
Orthodox Likud ally to Labor's
ranks has thrown a monkey
wrench into the works. Now
Labor leader Shimon Peres has
the backing of 60 members, lim
iting the Likud bloc to 58.
The two-man Torah Flag Party
is undecided, possibly holding the
key to forming the next govern
, ment in its hands. If Torah Flag
throws its support behind Labor,
the bloc would have a majority for
a government, albeit a narrow one.
Mexican president inaugurated
MEXICO CITY President
Carlos Salinas de Gortari took
office Friday as opponents pro
tested in congress and in the
streets, and he promised to push
for political and economic
Salinas, a 40-year-old econo
mist, succeeds President Miguel de
la Madrid for a six-year term. He
than a month ago.
Gorbachev told deputies that
except for an emergency, "this line
up of the U.S.S.R. Supreme Soviet
is having its final session
Elections will be held March 26 for
a new 2,250-member Congress of
People's Deputies that will choose
from among its members a smaller,
more active Supreme Soviet.
' "We are creating a new, very
authoritative representative body of
power that will reflect all national,
territorial and social interests of
society," Gorbachev said.
The reform also creates a strong
presidency in place of the largely
ceremonial post Gorbachev assumed
Earlier in the week, he said that
without the political reform, "The
drive for perestroika inevitably will
begin to skid."
He said in a speech Thursday
concluding an extraordinary three
day session on his proposals to
restructure the government that the
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News in Brief
inherits an economy threatened by
both recession and inflation,
growth squeezed by a $102 billion
foreign debt and a population
impatient after six years of aus
terity that reduced earnings about
He said efforts to reduce Mex
ico's foreign debt would begin
About 140 delegates from the
National Democratic Frorit
walked out of the Legislative
Palace just before Salinas was
inaugurated, and members of the
National Action Party held up
signs declaring "Fraud." ;
Soviets clear their airwaves
BONN, West Germany -Radio
Liberty officials on Thurs
day rejoiced over an end to 35
years of Kremlin-ordered broad
cast jamming as they examined
how to take advantage of the
newly cleared airwaves to the
Robert Redlich, spokesman for
Radio Liberty and its sister station
Radio Free Europe, which beamjs
its signal to Eastern European
countries, said news that thp
jamming stopped was broadcast'tp
listeners in the Soviet Union.
The end of Soviet jamming
against Radio Liberty appears to
be part of the glasnost, or wopeV
ness," policy of President Mikhail
Gorbachev. The Soviets ceased
jamming of the U.S.-operated
Voice of America service mote
than a year ago, and some East
European countries dropped
efforts to block Radio Free
Europe broadcasts. -r
revised constitution was temporary,
and further changes would respond
to demands for expanded power !for
republic and local governments. '
But he emphasized the rest of ; his
reforms will be considered by the new
Gorbachev also told the deputies
that a storm of controversy over the
reform package including 250,000
letters to the' Kremlin could have
been reduced, and he took the blame.
"We did not care about explaining
the essence, the meaning" of -the
changes, Gorbachev said. "The center
was just following the old practice,
thinking, 'well, they would get used
"That is why I reiterate all of us
are now learning our lessons. All of
us are in a school of democracy, and
we should be good pupils in that
school," Gorbachev said. "V '
Newspapers first published the
draft language of the complex revi
sions in 1 17 articles of the constitution
and election law only five weeks ago.
(set of four)