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KEEPING UP WITH CONFLICT ANADOLU VIA ASSOCIATED PRESS An image from aircraft cockpit video released by Turkey’s state-run agency in July of what it said was Turkish warplanes striking Islamic State group targets in Syria.

U.S. arms makers strain to meet demand as Mideast conlicts rage BY ANDREA SHALAL Reuters

WASHINGTON • Top U.S. arms makers are straining to meet surging demand for precision missiles and other weapons being used in the U.S.-led fight against Islamic State and other conflicts in the Middle East, according to senior U.S. officials and industry executives. Global demand for U.S.-made missiles and so-called smart bombs has grown steadily since their use in the first Gulf War. But the United States and a host of allies are now rushing to ensure a stable supply of such weapons for what is expected to be a long fight against Islamic State, whose rise has fueled conflict in Syria and across a swathe of the Middle East. U.S. officials say arms makers have added shifts and hired workers, but they are bumping up against capacity constraints and may need to expand plants or even open new ones to keep weapons flowing. That could create further logjams at a time when U.S. allies are voicing growing concern that Washington’s processing of arms sales orders is too slow. Islamic State’s deadly attacks in Paris last month have added urgency to the U.S.-led bombing campaign against the group in Iraq and Syria. The campaign had resulted in 8,605 strikes at an estimated cost of about $5.2 bil-

lion as of Dec. 2. Meanwhile, a Saudi-led coalition including Bahrain and the United Arab Emirates and backed by Washington has been is carrying out a nine-month military campaign against Iran-backed rebels in Yemen. Persian Gulf states are also supplying U.S.made arms to rebels fighting Syria’s government in that country’s four-year war. “It’s a huge growth area for us,” said one executive with a U.S. weapons maker, who was not authorized to speak publicly. “Everyone in the region is talking about building up supplies for five to ten years. This is going to be a long fight” against Islamic State. The impact is palpable in Troy, Ala., where Lockheed Martin Corp. builds its 100-pound Hellfire air-to-ground missiles at a 3,863-acre highly secured facility surrounded by woods and horse pastures. Realtors are adding staff in anticipation of new hiring at the plant, and the large grocery chain Publix is opening a store soon. “What’s good for Lockheed is good for Troy,” said Kathleen Sauer, president of the Pike County Chamber of Commerce, adding that the expansion was helping a local economy where unemployment rates are already among the lowest in the state. “Look at our downtown,” she said. “Almost all the stores are open and we have more coming


Boeing’s Joint Direct Attack Munition kits converts bombs into “smart” weapons. More than two dozen countries use the weapons.

in.” Lockheed has added a third shift at its plant, which employed 325 workers as of February, and is now at “maximum capacity,” said one executive familiar with the issue. The company announced in February that it would add 240 workers by 2020 and expand the facility, which also produces a 2,000-pound air-to-surface stealthy missile. Frank Kendall, the Pentagon’s chief arms buyer, said this week that there had been particularly strong demand for the Hellfire missiles. At $60,000 to $100,000 apiece they are inexpensive compared with many missiles and can be launched from everything from aircraft and helicopters and ships to destroy armored vehicles or punch into buildings. Kendall and other senior U.S. officials said they were working with Lockheed, Raytheon Co. and Boeing Co. to ramp up production of precision munitions

Ameren hits pause on 1-70 solar farm Utility says start of construction is undergoing a ‘temporary delay’ BY JACOB BARKER St. Louis Post-Dispatch

An Ameren Missouri solar array that would have stretched for more than half a mile along Interstate 70 in Montgomery County has been put on hold. The utility told the Missouri Public Service Commission in October that it no longer needed regulatory approval for the 15-megawatt solar farm it planned to build between High Hill and New Florence, about 70 miles west of St. Louis. In an Oct. 2 filing with the PSC, Ameren said it still intended to build the Montgomery County solar array but that the time frame for construction had changed. When it filed for approval of the project in June, Ameren said it planned to begin construction in October. In a statement Friday, Ameren Missouri President Michael Moehn said the Environmental Protection Agency regulations on

carbon dioxide emissions, known as the Clean Power Plan, played a role in the decision. He said the decision would only “temporarily delay” the start of construction. The final Clean Power Plan, released in August, extended from 2020 to 2022 initial compliance deadlines to cut carbon emissions. Utilities will have to reduce carbon emissions from coal power plants and generate more electricity from natural gas, which emits less carbon than coal, or carbon-free sources such as solar and wind power. The rules also included an incentive program that awards bonus compliance credits to utilities that build renewable energy prior to the 2022 deadline. But to be eligible, those projects have to begin construction after the state submits a final plan for carbon cuts to the EPA, something Missouri probably won’t do until the second half of 2018. The PSC had scheduled hearings on the case for late January,

and several parties may have contested the project. It was unclear whether Ameren changed its construction schedule to ensure it can receive bonus credits under the EPA program or because the case was contested. When asked whether the Clean Energy Incentive Program played a role in the decision, an Ameren spokesman said that there was no timeline for construction and that the company had no further comment. Ameren said it had already acquired the land, performed preliminary engineering work and designed the project. It had projected finishing the solar array late next year and estimated it would provide enough power for nearly 1,600 homes annually. That would be nearly three times as much power as Ameren’s first utility-scale solar array, completed a year ago in O’Fallon, Mo.

Foresight may have to rebuy $600 million in bonds BY JACOB BARKER St. Louis Post-Dispatch

Foresight Energy said Friday that it had been notified of an “adverse opinion” in a lawsuit from bondholders who claimed Murray Energy’s purchase of a large stake in Foresight triggered a buyback provision on its debt. In a news release Friday, Foresight said only that it had been notified of the “adverse opinion” and that it was “evaluating its options.” A Murray Energy spokesman said the company had no further comment. St. Louis-based Foresight Energy, which operates some of the country’s most productive coal mines in Southern Illinois, disclosed to investors this year that the trustee for the bondholders of its 2021 senior notes filed suit against it in May. The lawsuit, filed in the Dela-

ware Court of Chancery, alleged that Ohio-based Murray Energy’s April deal to buy a major stake in Foresight’s general partner triggered a “change of control” provision in the bond requirements. As part of the deal, Murray bought a 34 percent stake in Foresight’s general partner and retained an option to purchase another 46 percent. The change in control provision would have required Foresight to make an offer to repurchase the 2021 bonds at 101 percent of the principal amount plus any unpaid interest. The company issued $600 million in bonds at 7.875 percent in 2013. As of Sept. 30, there was $596.5 million outstanding on the debt. The Delaware Court’s opinion was not immediately available. Oral arguments were scheduled to begin in November, Foresight

said in regulatory filings. When Murray initially sought to put together a financing package to take a stake of Foresight, it appeared to tweak the deal in an attempt to avoid triggering the change of control provisions. Murray’s option to buy a larger stake was also conditioned on renegotiating Foresight’s debt to eliminate the “change of control” provision. Foresight’s shares dropped 79 cents, or 22 percent, to close Friday at $2.85. Friday’s news is the second blow to the company this week. Fo re s i g h t re p o r te d l a te Wednesday afternoon that it had to evacuate staf from a mine near Hillsboro, Ill., because of elevated carbon monoxide readings. Jacob Barker • 314-340-8291 @jacobbarker on Twitter jbarker@post-dispatch.com

and potentially add new capacity. “We are watching that closely. We are looking at the need to increase capacity,” Kendall said.

SALES SURGING Defense shares have performed strongly in recent months on expectations of better results, and many soared after the attacks in Paris. Total U.S. foreign military sales approvals surged 36 percent to $46.6 billion in the year through September 2015 from about $34 billion a year earlier. Approved sales of missiles, smart bombs and other munitions to U.S. allies jumped to an estimated $6 billion in fiscal 2015 from $3.5 billion a year earlier. This year alone, the U.S. government has approved the sale of Hellfires to South Korea, Pakistan, Saudi Arabia, Lebanon, France, Italy and Britain. In June, the Army said it had asked Lockheed to boost production of the Hellfire to 650 per month by No-

vember from 500 per month. “There are essentially waiting lists for Hellfire. They can’t make them fast enough,” said one State Department official, who asked not to be identified. Lockheed declined to provide any details about how it was meeting increased demand for Hellfires and other munitions. In addition to approved foreign military sales, many munitions sales are overseen by the U.S. Commerce Department and negotiated directly between countries and companies. U.S. weapons makers do not routinely report such sales, and do not break down revenues by specific weapons. Also in high demand, Kendall said, are Boeing’s Joint Direct Attack Munition (JDAM) kits, which turn unguided munitions into smart bombs and have been used consistently to strike Islamic State targets in Iraq and Syria. Last month, the State Department approved a $1.29 billion deal with Saudi Arabia for more than 22,000 JDAMS and other types of precision-guided bombs. Boeing said it boosted the daily production rate of JDAMs at its facility in St. Charles by 80 percent in July to meet demand from the U.S. military and more than 25 other countries. Raytheon, one of the largest U.S. munitions makers, declined to comment on its missile production work. The company has a large missile production facility in Tucson, Ariz., which could potentially boost production, Kendall said.

Congress revives the Export-Import Bank Tea Party conservatives opposed it, saying large corporations beneit BY ERICA WERNER Associated Press

WASHINGTON • In a victory

for the business establishment over Tea Party conservatives, President Barack Obama signed legislation Friday reviving the federal Export-Import Bank five months after Congress allowed it to expire. The bank is a small federal agency that makes and guarantees loans to help foreign customers buy U.S. goods. A measure extending it through 2019 was included in a massive transportation bill that cleared the House and Senate late Thursday and was signed Friday by Obama. The development was cheered by business groups such as the U.S. Chamber of Commerce, which say the ExIm Bank is necessary for U.S. competitiveness since most overseas competitors rely on similar government help. But conservatives pushed by the billionaire GOP Koch Brothers decried the development, arguing that the bank amounts to government interference in the free market and many of its beneficiaries are large corporations that don’t really need the help. “The Export-Import Bank’s revival in this bill is especially offensive to taxpayers who want to end corporate welfare handouts and let the free market finance overseas investments by American companies,” said Sen. Marco Rubio, R-Fla. Rubio is among the GOP presidential candidates and other leading Republicans who have lined up against the bank, a once-obscure entity that’s become a cause celebre for conservatives. For decades it was renewed by biparti-

san agreement, with little or no debate and often not even a roll-call vote. But after the Koch Brothers and other conservative groups began to seize on the opportunity to kill off a federal agency, leading Republicans such as House Majority Leader Kevin McCarthy who once supported the bank, turned against it. Amid that pressure and with Tea Party lawmakers on the ascent on Capitol Hill, Congress failed to act when the bank’s charter was up for renewal June 30, allowing it to expire for the first time in its 81-year history. All along, though, a majority of lawmakers in the House and Senate, including Republicans and Democrats with major manufacturers such as General Electric, Caterpillar or Boeing in their districts, supported the bank. An unusual series of maneuvers and alliances followed, including a rarely used procedure in the House to force a floor vote on the bank over the objections of GOP leaders. The end result was that the measure ended up on the highway bill; and five months after expiring, the Ex-Im Bank is getting back in business. “We brought the Export-Import Bank back to life, so American manufacturers and workers can compete against our foreign competitors on a level playing field,” said GOP Sen. Mark Kirk of Illinois, who is facing a tough re-election fight and took the opportunity to issue a joint statement with leading CEOs. The bank says that last year it authorized $20 billion worth of transactions that supported $27.5 billion of U.S. exports and 164,000 U.S. jobs. Conservatives including the Koch Brothers said they would continue to fight.