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February 1, 2007
Air Creditors Reject US Airways Takeover Bid
Delta’s unsecured
creditors’ committee rejected US Airways' $10 billion offer and
formally endorsed the
w:st='on'>
size='3'>Atlanta
plan to exit bankruptcy this spring as an independent company,
the Wall Street
Journal reported today. Delta management cited
a drop in oil prices from last year's highs, as well as planes
continuing to operate nearly full industrywide, as factors that could
tamp down the attraction for immediate consolidation. Delta also argued
that its lowered cost structure positioned the airline to emerge from
chapter 11 protection as a healthy, competitive player in the industry.
The committee determined that backing Delta's reorganization plan, which
has the airline exiting court protection in the spring, posed less risk
than extending Delta's stay in bankruptcy while a merger underwent
federal antitrust review.
href='http://online.wsj.com/article/SB117026169612993794.html?mod=us_business_whats_news'>Read
more. (Registration required.)
2
Senators Renew Attacks on SEC Hedge Fund Investigation
Sens. Arlen Specter
(R-Pa.) and Charles E. Grassley (R-Iowa) renewed their criticism
yesterday of the way the Securities and Exchange Commission carried out
its investigation into a major hedge fund, Pequot Capital Management,
the New York
Times reported today. The senators said the
SEC, which filed no charges against Pequot, had failed to aggressively
follow up on investigative leads developed by the lawyer who led the
inquiry, Gary J. Aguirre. The hedge fund came under regulatory scrutiny
in late 2004 when Aguirre began investigating several profitable trades
made by Pequot in advance of mergers or other market-moving news. The
Pequot trades were flagged by stock exchange surveillance teams and
forwarded to the commission. The SEC fired Aguirre in September 2005
after he complained that his investigation had been derailed by outside
political influence. Both senators said their statements reflected the
findings of an interim report, which is expected to be released today,
on their investigation of the SEC’s conduct in the case.
href='http://www.nytimes.com/2007/02/01/business/01hedge.html?ref=business&pagewanted=print'>Read
more.
Bush
Urges Change in Enforcement of Sarbanes-Oxley Law
President Bush called for changes in the way the Sarbanes-Oxley Act is
enforced, acknowledging growing corporate complaints about the burden of
complying with the corporate governance measure,
face='Times New Roman' size='3'>CongressDaily
size='3'>reported yesterday. 'The principles of Sarbanes-Oxley are as
important today as when they were passed, yet complying with certain
aspects of the law, such as Section 404, has been costly for businesses
and may be discouraging companies from listing on our stock exchanges,'
Bush said. However, Bush balanced this with a demand that company boards
'pay attention' to the executive compensation packages they approve.
'Governments should not decide the compensation for
w:st='on'>
size='3'>America
size='3'>'s corporate executives, but the salaries and bonuses of CEOs
should be based on their success and improving their companies and
bringing value to their shareholders,' Bush said. The Senate might move
this week to rein in a benefit for executives. A tax offset in the
Senate minimum wage increase bill would limit a legal practice that
allows the postponement of tax payments on executive pay by deferring
compensation. The bill's provision would permit companies to defer
paying taxes on a maximum of $1 million of compensation per individual
per year.
Autos
name='4'>Big Investors Breathing New Life into Auto Parts
Industry
In the last few months,
private equity firms have been pouring billions of dollars into
struggling auto suppliers with visions of rebuilding them back into the
lucrative enterprises they once were, the New York
Times reported yesterday. Analysts say the
troubled suppliers have become attractive investments because they can
be bought cheaply, demand for parts is growing as vehicle sales increase
globally and low interest rates are making capital widely available for
high-risk deals. Most notably, an investor group led by Appaloosa
Management and Cerberus Capital Management is offering to invest $3.4
billion in the Delphi Corporation, the nation’s biggest parts
supplier, to help bring it out of bankruptcy. Meanwhile, another
billionaire investor, Carl C. Icahn, recently spent $200 million to take
a 13 percent stake in the Lear Corporation, a parts supplier based
in
size='3'>Mich.
href='http://www.nytimes.com/2007/01/31/business/31place.html?pagewanted=print'>
face='Times New Roman' size='3'>Read more.
name='5'>Ford and GM Expect January Sales Drops
Sales by
size='3'>Detroit
two largest automakers are expected to be significantly lower in January
as they pulled back from deliveries to rental-car agencies to focus on
more profitable transactions at dealerships, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. Executives from the Ford Motor Company said
Wednesday that its sales in the
w:st='on'>
size='3'>United States
size='3'>dropped about 20 percent in January. Ford also said sales to
rental-car agencies each month this year should drop by double-digit
percentages, which would drag down overall sales. Ford expects to sell
slightly more than 700,000 vehicles to rental car companies this year,
down from 900,000 two years ago. General Motors also projected decreased
sales, although executives have not indicated how much; it planned to
sell 35,000 fewer vehicles to rental agencies in January and 120,000
fewer this year.
href='http://www.nytimes.com/2007/02/01/automobiles/01auto.html?pagewanted=print'>Read
more.
name='6'>Auto Transport Company Files for
Bankruptcy
Blue Thunder Auto
Transport Inc., a hauler of new vehicles for automakers in the
United States, filed for bankruptcy protection from
creditors after two years of losses, Bloomberg News reported yesterday.
The company, based in
w:st='on'>
size='3'>Duluth,
w:st='on'>
size='3'>Ga
and debt of less than $100 million, according to documents filed Jan.
30. The 20 largest unsecured creditors are owed $22.2 million. The
company has $45.2 million in funded debt. Blue Thunder had a net loss of
$2 million in 2005 and said the loss rose to $9 million in 2006,
according to court papers. The company blamed rising fuel costs, cuts in
automobile production and competition by independent owner-operators.
The case is In re Blue
Thunder Auto Transport Inc., 07- 61268, U.S.
Bankruptcy Court, Northern District of Georgia (
w:st='on'>
size='3'>Atlanta
href='http://quote.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=STA:US&sid=aP6jXyAepKhE'>Read
more.
Fed
Leaves Interest Rate at 5.25 Percent, Is Optimistic on
Inflation
The Federal Reserve left
interest rates unchanged on Wednesday, as it has since June, but it was
more optimistic than in the past that inflationary pressures were
ebbing, the New York
Times reported today. The central bank left
the federal funds rate on overnight loans between banks at 5.25 percent,
as investors had expected. It also repeated its caution that “some
inflation risks remain,” a sign that it is likely to keep the
benchmark rate at current levels for the foreseeable future. However,
the rate-setting Federal Open Market Committee expressed growing
confidence that inflation was running lower even as growth was slightly
stronger than officials had expected just a few months ago.
href='http://www.nytimes.com/2007/02/01/business/01fed.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='8'>Bankrupt Book Wholesaler Considering Three
Offers
Book wholesaler Advanced
Marketing Services is examining three offers to buy the bankrupt
company, Dow Jones Newswires reported yesterday. The San Diego-based
company filed for chapter 11 protection Dec. 29, surprising and angering
publishers who have turned up the pressure for the business to be
liquidated. Attorney
face='Times New Roman' size='3'>Mark Collins
size='3'>said yesterday that Advanced Marketing is hoping to close a
“stalking horse” deal quickly with one of the potential
buyers for its wholesale business, which shuttles books to membership
retailers such as Sam's Club and BJ's Wholesale Club. Collins said a
deal to buy Advanced Marketing would “complement” Perseus
Book Group's offer to buy Publishers Group West, an Advanced Marketing
affiliate.
href='http://www.signonsandiego.com/uniontrib/20070201/news_1b1ams.html'>Read
more.
name='9'>Maryland Taxi Company Files for Chapter 11
Kensington, Md.-based Barwood
Taxi, which has 400 drivers and handles about 4,000 trips daily, filed
for chapter 11 protection while it changes the structure of its
operations, Washington Business Journal reported yesterday.
Recent high insurance claims and other pressures on Barwood's bottom
line have forced some changes that should allow the company to bring in
more revenue while creating better opportunities for its drivers, says
Lee Barnes, Barwood's president and CEO. Barwood's drivers have
been working as independent contractors for the company;
they pay a daily fee to rent a vehicle and to use Barwood's
dispatch service and maintenance facilities. Barwood's plan is to
reorganize as a co-op, enabling drivers to buy one or more vehicles
from Barwood as well as their vehicle licenses, which can increase in
value over time.
href='http://washington.bizjournals.com/washington/stories/2007/01/29/daily34.html?jst=b_ln_hl'>Read
more.
name='10'>Chit Chat
w:st='on'>
size='3'>America
size='3'>Files for Chapter 11
Chit Chat America,
a Wichita, Kan.-based wireless phone reseller, filed for chapter 11
protection, saddled with more than $1 million in debt after expanding
too quickly, the Wichita
Eagle reported today. The problem, company
attorney Tom
Gilman said, was an aggressive cash flow-based
expansion plan that left the company unable to pay sales taxes in 11
states, including
face='Times New Roman'
size='3'>Kansas. Sales tax
debts for the company total nearly $450,000.
size='3'>Chit Chat hopes to gain reorganization approval and emerge from
bankruptcy in about six months, Gilman said.
href='http://www.kansas.com/mld/kansas/business/16592615.htm?source=rss&channel=kansas_business'>Read
more.
name='11'>Judge Throws Out a Conviction in Enron Case
A federal judge in
size='3'>Houston
Wednesday threw out the conviction of Kevin A. Howard, the former chief
financial officer for Enron’s Broadband unit, citing a ruling in a
similar case in which the jury’s verdict was vacated, the
New York Times
size='3'>reported today. The decision was based on a ruling in August by
the U.S. Court of Appeals for the Fifth Circuit in
w:st='on'>
Orleans
exonerates employees who provide 'honest services' while keeping with
corporate goals and do not rob their employers of any money. The first
trial against Howard lasted three months in 2005 and ended in a hung
jury. He was tried along with five other Broadband employees and his
conviction on five charges of conspiracy and fraud was handed down
during a retrial last year.
href='http://www.nytimes.com/2007/02/01/business/01enron.html?ref=business&pagewanted=print'>Read
more.
name='12'>TROUBLED COMPANIES IN THE NEWS
1000’s of companies lose
money or experience some form of difficulty each
quarter.
The business news
articles below are taken from the
size='3'>Daily Summary of Troubled & Fast Growing U.S. Companies and
Other Business News published by Bastien
Financial Publications.
To begin receiving the COMPLETE
Daily e-Summary, that emails you information on over 70 such companies
each morning, email
face='Times New Roman' color='#0000ff'
size='3'>steve@creditnews.com
size='3'>your name, company name, address, phone and fax.
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your email.
size='3'>Alberto-Culver Co., which recently
sold off a corporate jet for $25 million, has raised speculation that it
could be headed for the selling block. The sale of the jet will
save the
size='3'>Melrose Park
personal-care products $4 million a year, but observers believe that the
move may be part of a cost-cutting strategy to better position itself
for a potential sale.
size='3'>Motorola Inc.'s CEO, Ed Zander, now
has Carl Icahn breathing down his neck. The billionaire investor
has bought up about 1.4% if the
face='Times New Roman' size='3'>Schaumburg
size='3'>, Il. electronics company's stock and is reportedly seeking a
seat on Motorola's board. Mr. Icahn's move is in response to
Motorola's sliding stock price, which has slid 30% since the middle of
October. Also, Motorola's profit margins slipped in the fourth quarter
from 11.7% a year ago to 4.5%.
size='3'>Neoware Inc., a King of
Prussia,
face='Times New Roman' size='3'>Pa.
size='3'>maker of computers, reported its second quarter net income sank
77%--to $590,000. Revenue declined 19%--to $23.8
million.
size='3'>Pier 1 Imports Inc.'s stock price
bumped up 8% after the
w:st='on'>Fort
Worth
specialty retailer of household goods named Alex Smith, a retail
veteran, as its CEO and president, effective on the 19th of this
month. Most recently, Mr. Smith served as senior vice president at
discount retailer TJX Cos. He now faces the task of reviving
sagging sales and turning around losses at Pier 1, which has lost money
for seven straight-quarters. Its recent bad string was capped off by an
11% drop in same-store sales in December and a 15% drop in
November.
size='3'>Pixelworks Inc., a Tualatin, Ore.
maker of display chips, reported a fourth quarter net loss of $15.4
million. Revenue declined 31%--to $29.8 million. For the year, it lost
$204 million on a 22% decline in revenue--to $134 million. The quarter
and year included restructuring, impairment and writedown charges of
$12.7 million and $172 million respectively.
size='3'>Tufts Health Plan will trim its
payroll by 10% in an effort to rein in administrative costs as it
continues trying to reverse a long decline in its membership
rolls. The firm will lay off 100 employees and leave open some
seventy-five vacant positions.