March 11, 2004
Thomas: Differences May Endanger Pension Bill
House Ways and Means Chairman William Thomas (R-Calif.) warned yesterday
that differences among pension bill conferees might cause a conference
report to be delayed, endangering the legislation itself and a rider
that provides funding for a Maine fishery rebuilding plan,
CongressDaily reported. The rider, by Sen. Susan Collins
(R-Maine) eliminates a funding restriction that would have blocked funds
to implement the rebuilding plan. Collins 'decided to put it on the
[pension] bill because she thought it was a fast track to the
president's desk,' Thomas said. 'But to the extent that we get bogged
down -- it might not be a fast track,' he said, reported the newswire.
He added that if senators insist on retaining Senate-passed provisions
not included in the House pension bill, the bill might not pass by the
May 1 deadline for enacting the new fishery plan.
Retail Sales See Largest Increase Since November
America's shoppers showed more energy in February and boosted sales at
the nation's retailers by 0.6 percent, a hopeful sign for healthy
economic growth in the current quarter, the Associated Press reported.
The increase reported by the Commerce Department today came after sales
rose by a revised 0.2 percent gain in January, typically a slow month
for retailers. The 0.6 percent increase in sales for February, which
matched economists' expectations, represented the largest increase since
November. February's gain was led by a 2.7 percent jump in automobile
sales, the biggest increase in nearly a year.
Consumer spending accounts for roughly two-thirds of all economic
activity in the United States. Thus, the spending habits of consumers
play an important role in shaping the economy. They have been keeping
the economy going through the 2001 recession and the recovery, as low
borrowing costs, extra cash from a wave of refinancing and tax cuts
helped to support spending, AP reported.
Global Crossing Profits from Bankruptcy
Telecommunications company Global Crossing Ltd. on Wednesday posted
a quarterly profit of nearly $25 billion, the largest on record for a
publicly traded company, entirely due to gains from its emergence from
bankruptcy, Reuters reported. None of the gains came from its
operations, and Global Crossing shares fell 30 percent on concerns that
the company, which operates an undersea fiber-optic network, would not
turn a profit any time soon or get the financing it needs. 'I've been
skeptical for a while and remain skeptical now,' said Romeo Reyes, an
analyst with Jefferies & Co., who said he doubted Global Crossing's
business could become profitable. Global Crossing CEO John Legere said
on a conference call with analysts that the company was confident it
could soon raise the $100 million in financing it is seeking. He said
Singapore Technologies Telemedia, which holds a 61.5 percent stake in
the company, would provide the funds this year if Global Crossing could
not raise the money on its own, the newswire reported.
Global Crossing posted a fourth-quarter net profit of $24.88 billion
thanks to gains from its reorganization under chapter 11 of the U.S.
Bankruptcy Code. The gains included $16 billion to account for its new
debt and equity structure, and an $8 billion write-down of liabilities
that preceded its bankruptcy filing, Reuters reported.
SEC Approves Enron's Reorganization Plan
The Securities and Exchange Commission (SEC) has approved Enron Corp.'s
plan to emerge from bankruptcy, the company said on Wednesday, the
Associated Press reported. Under the plan, which was announced a year
ago, Enron would emerge from chapter 11 as two independent companies
with different names. The domestic company, CrossCountry Energy Corp.,
will comprise Enron's whole or part interest in three North American
natural gas pipelines. The second, Prisma Energy International Inc.,
will comprise Enron's interests in international pipeline and power
operations, most of which are in Latin America. The SEC approval
authorizes Enron to continue making necessary transactions to finalize
the formation of the new companies. A hearing for U.S. Bankruptcy Judge
Arthur Gonzalez to confirm the plan is scheduled for April 20 in New
York, AP reported.
Institutional Shareholder Services Recommends Corrpro Shareholders
Vote in Favor of Corrpro Refinancing and Recapitalization Plan
Corrpro Companies Inc. announced in a press release yesterday that
Institutional Shareholder Services (ISS) has issued a formal
recommendation to its institutional clients holding shares in Corrpro to
vote in favor of the proposals of management relating to Corrpro's plan
of refinancing and recapitalization. ISS is the leading provider of
proxy voting and corporate governance services for institutional and
corporate clients worldwide.
The proposed refinancing and recapitalization plan is being submitted to
Corrpro's shareholders for approval at a March 16, 2004 special
shareholders' meeting. It consists of a number of interdependent
proposals, including approval of a $13 million cash investment by an
entity controlled by Wingate Partners III L.P. in return for the
issuance of $13 million of a new issue of preferred stock, together with
the issuance of warrants to the Wingate affiliate to acquire 40 percent
of the fully diluted common stock of the company at a nominal exercise
price. As part of the refinancing plan, once approved, CapitalSource
Finance LLC, a subsidiary of CapitalSource Inc., has agreed to provide
to the company a $40 million senior secured credit facility, subject to
the satisfaction of certain customary closing conditions, consisting of
a revolving credit line, a term loan with a five-year maturity and a
letter of credit sub-facility, according to the press release.
NRG Energy Reports 2003 Financial Results
NRG Energy Inc. announced in a press release financial and operating
results for fiscal year 2003, which encompasses both periods prior and
subsequent to its emergence from chapter 11 on December 5, 2003. 'Our
2003 operating results, stripped of all the bankruptcy adjustments,
indicate that we are on track,' said David Crane, NRG's new president
and CEO. 'Now we can continue our effort to position NRG to take
advantage of the fact that we are the first company in our sector to
address comprehensively our long-term balance sheet issues.'
NRG's 2003 financial results were significantly affected by the
implementation of the chapter 11 plan of reorganization on December 5,
2003. The plan has resulted in a new capital structure, satisfaction or
disposition of various types of pre-bankruptcy claims against NRG, and
rejection of some unfavorable contracts. Also, during the course of
NRG's reorganization, the company put in place a new management team and
a new board of directors, it announced in the press release.
SEC: Conseco Misstated 1999 Earnings
Top financial officers at insurance company Conseco Inc. schemed to
mislead investors and the government in 1999 as the firm skidded toward
bankruptcy, the Securities and Exchange Commission (SEC) has concluded,
the Associated Press reported. The SEC's findings were included in an
order issued on Wednesday demanding the firm end all ongoing or future
violations, part of a settlement between the agency and the Carmel-based
insurer. No fines or monetary penalties were imposed. As part of the
settlement, Conseco did not admit or deny the SEC's findings.
The federal agency found that Conseco and its onetime subsidiary,
Conseco Finance, 'made materially false and misleading statements' in
SEC filings and public earnings statements throughout fiscal 1999,
overstating results by hundreds of millions of dollars. The SEC said
that Conseco misrepresented the value of interest-only securities held
by its finance unit, formed through the 1998 purchase of mobile home
lender Green Tree Financial Corp.-- a deal that saddled Conseco with
much of the $6 billion in debt that forced it into bankruptcy. In
response, Conseco agreed to cease and desist from any such violations in
the future. In a statement released on Wednesday, Conseco said 'it was
pleased to have resolved this legacy issue,' AP reported.
Wisconsin Lawmakers Scramble to Give Tax Breaks to Two
Airlines
Wisconsin legislators scrambled yesterday to find a new way to give two
Wisconsin-based airlines $18 million in tax breaks since a subsidy
approved in 2001 was ruled unconstitutional by a Dane County judge, the
Knight-Ridder reported. A bill that was the focus of a public
hearing on Wednesday by the Legislature's Joint Finance Committee would
help Midwest Airlines and Air Wisconsin. Northwest Airlines would
consider filing suit if the legislature again subsidizes only
Wisconsin-based carriers, Stacy Smith, a Northwest lawyer told
legislators. The Dane County judge ruled the 2001 tax breaks were
illegal after Eagan, Minn.-based Northwest sued. That decision is being
appealed, the newswire reported.
American Airlines Faces New Hurdle: Union Elections
American Airlines Inc.'s effort to overcome years of distrust from its
labor leaders and employees has a new hurdle: union elections, the
Knight-Ridder reported. Since last summer, the Fort Worth-based carrier
has tried to improve its relations with its 79,000 employees. The
results have been slow to come. But players from each side say they've
built a framework where management will work with employees to help
shape the carrier's future. Having sacrificed $1.8 billion in annual
wages and benefits, employees say morale is low and the atmosphere at
the world's largest airline tense. The airline believes that
restructuring provides the opportunity to work with managers and
rank-and-file workers to evaluate the airline's shortcomings and propose
solutions.
United Airlines Flight Attendants Picket and Leaflet at Newark and
Three San Francisco-Area Airports
United Airlines flight attendants and retirees, represented by the
Association of Flight Attendants-CWA, AFL-CIO, will picket and leaflet
at Newark Airport on March 11 and San Francisco, Oakland and San Jose
airports on March 12 to protest United's plan to break its agreement
with flight attendant retirees and change their health benefits, the
association announced in a press release.
United management signed a letter of agreement in May 2003 to ensure
that flight attendants retiring before July 1, 2003 would have access to
health care benefits that were less costly and more comprehensive than
those that would be in place for those who retire after that date. Based
on that agreement, over 2,500 flight attendants retired before the July
1 deadline. The proposed changes will force retirees to pay hundreds of
dollars more per month of their pensions just to continue health
insurance. An examiner has been appointed by the bankruptcy court to
investigate United Airlines' plan. He will present his findings in
bankruptcy court in Chicago on March 19, according to the press
release.
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