May 28, 2004
Spending Growth Comes in on
Forecast
U.S. consumer spending rose as
expected in April, government data showed today, Reuters reported.
Personal spending was up 0.3 percent in April, the Commerce Department
said, matching Wall Street forecasts. March's gain was revised to 0.5
percent from 0.4 percent, which was initially reported. The
government said on Thursday spending rose 3.9 percent in the first
quarter as households underpinned America's strong economic recovery.
But analysts expect consumption to moderate as Americans adjust to
21-year high oil prices and escalating debt payments as market interest
rates advance, the newswire reported.
Senate May Be Stymied By
Vote On Class Action Measure
The Senate next week will
consider again class action legislation, with a cloture vote expected on
Tuesday, CongressDaily reported. If the motion passes, which
continues to appear unlikely at this point, the chamber could devote
most of the week to working on the bill. If Senate Majority Leader Bill
Frist's (R-Tenn.) cloture motion fails, the chamber will likely resume
work on the FY05 defense authorization bill, although if enough votes
can be found to pass the FY05 budget resolution conference report,
leadership could move to that measure, a Frist aide said, the newswire
reported.
Fed Assesses Citigroup
Unit $70 Million in Loan Abuse
The Federal Reserve said yesterday that it had ordered
a unit of Citigroup to pay $70
million for abuses in personal and mortgage loans to low-income and
high-risk borrowers nationwide, the New
York Times reported. The Federal Reserve said CitiFinancial engaged
in 'unsafe and unsound' practices by converting personal loans into home
equity loans without adequately assessing borrowers' ability to repay.
The activity did not focus on any particular region of the country, the
newspaper reported.
New Judge to Oversee Owens Corning Case
John P. Fullam, a senior judge of the U.S. District
Court for the Eastern District of Pennsylvania, was named on Thursday to
take over the chapter 11 bankruptcy case of Owens Corning, a case in
which the original judge was ousted, the Associated Press reported.
Chief Judge Anthony J. Scirica of the U.S. Court of Appeals for the
Third Circuit assigned Fullam to the case. Fullam takes over for U.S.
District Judge Alfred Wolin, who was ordered off the Owens Corning case
and two other asbestos-related chapter 11 cases after an appellate panel
voted 2-1 that dual roles played by some of Wolin's advisers could make
him appear biased, the newswire reported.
Creditors Confirm Enron
Chapter 11 Plan
Enron Corp. said on Thursday it
had enough votes from its creditors to confirm its reorganization plan,
Reuters reported. Of the creditor classes that voted on the plan, 104
accepted it and seven rejected it, the company said. Enron filed the
certification of the vote with the U.S. Bankruptcy Court. All seven of
the classes that rejected the plan were unsecured creditor classes.
Enron said it will try to work out a solution with the dissenting
classes by its June 3 confirmation hearing, the newswire
reported.
Adelphia Kept Records of Deals With Rigases, Witness
Says
The Adelphia
Communications Corporation kept records of all transactions it
conducted with business entities operated by its founder, John Rigas,
and two of his sons, a consultant to the company testified yesterday in
the trial of the three men, Bloomberg News reported. The consultant,
Robert DiBella, was called by the prosecution to summarize evidence that
it says supports criminal charges that the Rigases hid $2.3 billion in
debt and stole $100 million before Adelphia sought bankruptcy protection
in June 2002. Under cross-examination by Ben Preziosi, a lawyer for John
Rigas, Mr. DiBella acknowledged that the records he needed to review
Adelphia's finances were readily available, the newswire
reported.
Trump Hotels Unit Avoids
Default
Trump Hotels & Casino
Resorts yesterday said its Atlantic City Associates unit made the May
interest payment on a $1.3 billion debt issue, in a move that avoids a
default by the company, Reuters reported. The $73 million
interest was due on May 1, but Trump had a 30-day grace period to make
the payment. Missing the deadline would have given noteholders the right
to declare a default and demand immediate payment of their principal,
potentially pushing the company into bankruptcy. The casino company of
Donald Trump has been negotiating with bondholders in an attempt to
restructure its $1.8 billion of debt and cut interest costs. Credit
Suisse First Boston affiliate DLJ Merchant Banking Partners has agreed
to invest $400 million in the company in return for a majority stake,
the newswire reported.
UNITED AIRLINES
UAL Loan Decision Expected Soon Amid Fuel, Other
Worries
United Airlines hopes to hear soon whether it will
receive a $1.6 billion federal loan guarantee that is crucial to it
exiting bankruptcy, but soaring fuel costs and renewed concerns about
exposing taxpayers to struggling airlines have created new challenges,
Reuters reported. Current and former government and industry officials
who are familiar with United's bid and would only speak anonymously
declined to say that these hurdles are insurmountable, but say they
present problems that were not as apparent when the application was
first considered in 2002. However, one senior lawmaker believes UAL
Corp.'s United has positioned itself so well politically that
approval by the Air Transportation Stabilization Board is inevitable
despite the new developments and maneuvering by other airlines to derail
the loan guarantee, the newswire reported.
UAL Corp. Posts $137.3 Million Net Loss for
April
UAL Corp. reported a net loss for April of $137.3
million, which included $28 million in reorganization-related expenses,
according to a Form 8-K filed on Thursday with the Securities and
Exchange Commission. The company, which has been under chapter 11
bankruptcy protection since 2002, reported a net loss of $34 million in
March. UAL, the parent company of United Airlines, reported revenue of
$1.4 billion for April, compared with revenue of $1.5 billion in
March.
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Kaiser Aluminum Seeks to Reopen Auction of Alpart
Stake
As bidders continue to struggle for the right to purchase
its majority stake in a Jamaican alumina refinery, Kaiser Aluminum Corp.
now says it wants to reopen an auction for its share of the business to
ensure it receives the highest price. On Tuesday, Kaiser's partner in
the joint venture -- Aluminum Partners of Jamaica, or Alpart -- said it
will exercise a right to buy Kaiser's 65 percent stake in it for
$331.7 million. The partner, Hydro Aluminum Jamaica, an affiliate of
Norsk Hydro ASA, said it intends to sell the stake on to Glencore AG.
Glencore was previously the lead bidder for Kaiser's Alpart stake,
before it was supplanted by ZAO Russian Aluminum through a
court-supervised auction.
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Worthington To Sell Assets To Nucor For $82
Million
Worthington Industries Inc. yesterday said it would
sell its cold rolling operation in Decatur, Ala., to Nucor Corp. for $82
million in cash, as part of a plan to sell non-core assets, Reuters
reported. Columbus, Ohio-based Worthington said it will take an
after-tax charge of about $46 million, or 52 cents per share, in the
fourth quarter, primarily for the impairment of assets at the Decatur
facility. The deal is expected to close within the next 60 days. The
company also said it expects 'very strong' operating results for the
fourth quarter, as normal seasonal strength and improving economic and
industry trends have led to increased volumes and pricing, the newswire
reported.
California Regulators Back
PG&E Rate Settlement
California regulators on Thursday approved a
settlement that would fix most customer costs for electricity and gas
provided by utility Pacific Gas & Electric Co., Reuters reported.
The agreement will leave electricity rates charged by the San
Francisco-based utility unchanged while residential natural gas customer
would face an increase of around 1 to 2 percent based on Thursday's
ruling, according to the California Public Utilities Commission, the
newswire reported.
Rite Aid Ex-CEO Gets Eight
Years
The former chief executive of Rite Aid Corp. was
sentenced on Thursday to eight years in prison for his involvement in
one of the biggest fraud cases in corporate America that left the
drugstore chain on the verge of bankruptcy, Reuters reported. Martin
Grass was also sentenced to three years of supervised release following
his prison term, according to Thomas Marino, U.S. attorney for the
Middle District of Pennsylvania, the newswire reported.
Stelco Wins Extension Of
Bankruptcy Protection
Stelco Inc. said on Thursday an
Ontario court had extended its bankruptcy protection to Sept. 30,
Reuters reported. The Hamilton, Ontario-based company was granted court
protection from creditors in January, joining other domestic steel
producers that have succumbed to tough competition and decreasing
prices. Stelco said on Thursday the court has requested a progress
report by June 2 and approved the sale of certain assets of Stelco
subsidiary Welland Pipe Ltd. It said the buyer plans to move the assets
of its Spiral Pipe Mill in Welland, Ontario, to India, the newswire
reported.