September 292004

September 29, 2004

Consumer Confidence Drops Again in September

U.S. consumer confidence edged lower again in September after falling
in August, as worries about the job market weighed on confidence, a
report on Tuesday said, Reuters reported. The Conference Board, a
private forecasting group, said its index of the mood of U.S. consumers
fell to 96.8 from a revised 98.7 in August. Economists polled by Reuters
had forecast a rise to 99.0. Consumer worries about the labor market
have clouded the outlook for consumer spending, which powers two-thirds
of the U.S. economy. Soaring oil prices pose another threat to economic
growth, the newswire reported.

U.S. Economic Slowdown Was Less Abrupt

A slowdown in U.S. economic growth during the second quarter of the
year was not as sharp as previously thought, the Commerce Department
reported today, partly because businesses built up inventories at the
strongest rate in four years, Reuters reported. U.S. gross domestic
product expanded at a revised 3.3 percent annual rate in the April-June
second quarter. That was up from a 2.8 percent rate the government
estimated a month ago but still the slowest rate of GDP advance since
the first quarter of 2003.

Care Concepts Buys Stake in Penthouse Publisher

Media holding company Care Concepts said on Tuesday it had agreed to
buy about 48 percent of the non-voting common stock of General Media,
publisher of Penthouse, from affiliates of financier Marc Bell, Reuters
reported. General Media is expected to emerge from chapter 11 bankruptcy
protection in early October and will be renamed Penthouse Media Group,
Inc., Pompano Beach, Fla.-based Care Concepts said.

Euro Disney Wins Agreement on Debt Restructuring

French theme park operator Euro Disney on Tuesday said it had won the
unanimous agreement of its creditors to a modified debt restructuring
plan designed to save it from bankruptcy, Reuters reported. The company,
struggling under a 2.2 billion euro ($2.71 billion) debt, said all its
creditors had agreed to a plan hammered out in July between it and its
principle lenders, though it incorporates a handful of changes, the
newswire reported.

Delta to Cut Employee Pay 10 Percent

Delta Air Lines Inc. on Tuesday said it will reduce executive and
employee pay by 10 percent starting in January and its CEO will go
unpaid for the rest of the year as it tries to cut costs to avert
bankruptcy, Reuters reported. Separately, Delta pilots on Tuesday
ratified an agreement that will allow the carrier to use retired pilots
if staffing levels fall low. CEO Gerald Grinstein, in a memo to
employees, said Delta also will increase the shared cost of employee
health care and offer two voluntary exit packages to employees.
Grinstein said the changes, in addition to the $1 billion in annual
savings the company is seeking from pilots, are essential to
Delta’s survival, the newswire reported.

Asbestos-related Shares Fall on Dim Fund Prospects

Shares of companies facing asbestos claims fell Tuesday after
prospects dimmed for establishing a victims’ compensation fund
this year, Reuters reported. Senate Majority Leader Bill Frist (R-tenn.)
left the fund off a list of priorities for the few days left in the
legislative period, which will end Oct. 8. Shares of chemical producer
W.R. Grace and Co. fell 36 cents, or $3.78, to $9.17, and the stock of
car parts company Federal-Mogul Corp., slid nearly 3 percent to 19
cents. Both companies have filed for bankruptcy. “We… expect
ongoing headline risk relating to this issue until Congress adjourns for
the session,” said Crystal Mingione, analyst with Susquehanna
Financial Group, the newswire reported.

SEC Approves Dynegy Sale of Illinois Power to Ameren

Dynegy Inc. on Tuesday said the Securities and Exchange Commission
approved the sale of its Illinois Power Company to Ameren Corp., the
final approval needed for the deal to close, Reuters reported. St.
Louis-based Ameren said Illinois state regulators approved its purchase
of Decatur-based Illinois Power last week. Ameren said the transaction
is valued at $2.3 billion and includes Illinois Power, which serves
about 600,000 electric and 415,000 natural gas customers. Included is
also Dynegy’s 20-percent interest in Electric Energy, Inc., owner
of a coal-fired power plant. The deal increases Ameren stake in the
1,086-megawatt plant to 80 percent.

Fannie Mae Crisis Raises Concerns on Leadership

Testifying two years ago about the debacle at Enron, Franklin D.
Raines, the chairman and CEO of Fannie Mae, told lawmakers that one of
the biggest lessons he had learned was that it was unacceptable to hide
behind claims of ignorance, the New York Times
reported.

“It is wholly irresponsible and unacceptable for corporate
leaders to say they did not know—or suggest it is not their duty
to know—about the operations and activities of their company,
particularly when it comes to risks that threaten the fundamental
viability of their company,” Raines told a House panel as it
prepared landmark revisions to the nation’s corporate laws. Read
the article at
href='http://www.nytimes.com/'>www.nytimes.com.

A Bad August Worsens Airline Financial Woes

The nation’s airlines are losing hope of a decent fall season,
the New York Times reported. Record oil prices, on top of
four hurricanes in the Florida market, and a stream of bad financial
news are prompting trade groups and analysts to predict that industry
losses will approach $5 billion this year. That would extend a series of
losses that began in 2000 and was amplified by the terrorist attacks of
September 2001, reaching $30 billion by the end of 2003. And it is
further bad news for an industry that once expected that 2004 could be a
break-even year. Read the article at
href='http://www.nytimes.com/'>www.nytimes.com.

New Cuts by Airlines Target Executives

US Airways Group Inc. intends to slash its executive payroll by 20
percent, reducing the pay and benefits for its 3,000 managers and
eliminating some positions, sources familiar with the plan said
yesterday, the Washington Post reported. The airline is
expected to announce details of the plan in coming days as it prepares
for a bankruptcy hearing next Thursday. In a memo to employees, Gerald
Grinstein, Delta’s CEO, also outlined plans to increase the shared
costs of health-care coverage and cut the amount of vacation to five
weeks a year from six, the newspaper reported.

Trump Casinos Aim to Set Restructuring Course Soon

Donald Trump’s casino company expects to decide in the next
couple of weeks whether it can reach a new debt restructuring deal with
bond holders, sell assets or whether Trump will take the company
private, executive vice president Scott Butera said on Tuesday, Reuters
reported. Trump had planned to take the casino company into bankruptcy
in a deal approved by some bond holders, but the deal fell apart on
Sept. 22 and Butera said the new plan would determine whether the
company would again head to voluntary bankruptcy.

Global Crossing Wins Nasdaq Extension to Oct. 8

Global Crossing Ltd. said on Tuesday that the Nasdaq exchange had
agreed to extend to Oct. 8 a deadline for the company to comply with
Nasdaq rules, Reuters reported. Global Crossing has yet to file
financial results from this year or update the outlook it gave in March,
and said it was restating 2003 results and reissuing 2001 and 2002 audit
reports due to an accounting error.