May 27, 2004

Study Sees Possible Demise of
Traditional Pension Plans

An organization representing
Fortune 500 companies warned yesterday that traditional pension plans
are facing extinction unless Congress takes action soon,
CongressDaily reported. The 
href='http://www.americanbenefitscouncil.org/'>report, from the
American Benefits Council, which represents firms with retirement and
health plans covering about 100 million Americans, said traditional
'defined benefit' plans 'face an unprecedented series of policy and
legal threats that endanger their continued existence.' Defined pension
plans insured by the Pension Benefit Guaranty Corporation have decreased
from 114,396 in 1985 to 32,321 in 2002, according to the report. Other
types of plans have been on the rise, such as 401(k) policies and
'hybrid' combination pension and cash balance plans. 'If prompt action
is not taken to provide appropriate policy solutions and a more
supportive policy environment, the erosion in defined benefit plan
sponsorship witnessed in recent years will accelerate and we will
continue to move inexorably toward and over the precipice of pension
extinction,' the report said, the newswire reported.

NextWave Bankruptcy Judge
Approves FCC Settlement

Greenwich, Conn.-based NextWave
Telecom Inc. won approval of a settlement with U.S. regulators that
resolves a six-year dispute over a $4.3 billion debt for airwave
licenses purchased at government auctions, Bloomberg News reported. The
FCC has said it expects a total of $1.6 billion in cash from NextWave,
including a $500 million down payment from 1998 and the $714 million
from Cingular, leaving $386 million to be paid. NextWave can keep a
maximum of 10 percent of the airwaves and may reorganize using those
licenses, including one that would allow it to provide service in New
York City. NextWave is also keeping licenses in 24 metropolitan areas,
the newswire reported.

RCN Files for Chapter 11



RCN Corp. filed for chapter 11
bankruptcy protection as part of a restructuring agreement with its
creditors, the Wall Street Journal
reported. The company expects the plan to reduce its debt to $480
million from $1.7 billion by giving RCN's bondholders most of the equity
in the company. The company said today it agreed on terms of a new
credit package with Deutsche Bank Securities Inc., which will provide
RCN financing once the restructuring has begun. The package will include
a $285 million term-loan facility and a $25 million letter-of-credit
facility, the online newspaper reported.

Bell Canada Buys
360networks’ Fiber Assets

BCE Inc. unit Bell Canada
agreed on Wednesday to buy the Canadian assets of fiber-optic data
network carrier 360networks for C$275 million ($202 million), Reuters
reported. The purchase includes 360networks' subsidiary, GT Group
Telecom Services. The asset sale marks another step in the
transformation of Vancouver-based 360networks, which restructured its
finances while under court protection from creditors from June 2001 to
April 2002. The closely held concern acquired GT Telecom last year, the
newswire reported.

Government Says Rigases Owed
Adelphia $3.2 Billion

The Rigas family owed Adelphia
Communications Corp. $3.23 billion at the end of April 2002, according
to a chart jurors reviewed after prosecutors called their last witness
on Wednesday in the trial of John Rigas, two of his sons and a fourth
former executive, the Associated Press reported. Company founder John
Rigas, his sons and former assistant treasurer Michael Mulcahey are on
trial in Manhattan on charges of improperly withdrawing Adelphia funds
for Rigas family use and misleading investors and the public about the
company's finances. They have pleaded not guilty.

United Airlines Boosts Fuel
Surcharge

United Airlines raised the fuel
surcharge that it adds to tickets by $10 per round trip Wednesday to a
total of $30 on all North American flights, the Associated Press
reported. The move came just days after United said in a U.S. Bankruptcy
Court filing that it expects its fuel costs for 2004 to run $750 million
higher than it estimated six months ago. 'Fuel costs have reached
historical highs,' said John Tague, United's executive vice president
for marketing, sales and revenue. 'Through a disciplined process, United
has made remarkable progress in reducing its overall cost structure. Now
we are being equally disciplined and responsive in making every
reasonable effort to mitigate today's challenging fuel environment.' The
fast-rising fuel costs are an additional challenge for United, which has
been restructuring in chapter 11 bankruptcy since December 2002 and is
trying to emerge this summer, the newswire reported.

Calpine Chief Sees Power
Troubles for California



California faces tight electricity supplies if it does not add more
power plants as the state's economy improves, Calpine Corp. CEO Peter
Cartwright said yesterday, Reuters reported. Cartwright told
shareholders at the company's annual meeting that 'we have not built the
plants that we should have' in the wake of the state's energy crisis in
2000-01. 'If plants are not built as the state economy recovers, and if
we have hot summers and low hydroelectricity years, we will be in
trouble,' Cartwright said. Cartwright said, however, that he was
'optimistic that Gov. Schwarzenegger will get this program back on track
and build more plants.' Schwarzenegger unveiled a plan in April to push
California regulators into speedier approval of rules to encourage
utilities to sign long-term power purchase contracts to avoid another
energy emergency, the newswire reported.

In Connecticut, a Pension Fund
Trial Could Shake Wall Street

A six-member jury in
Connecticut will begin hearing a little-publicized case next week that
could have far reaching implications for Wall Street buyout firms and
the big-money investors and institutions that back them, the New York
Times reported. On Tuesday morning, financier Theodore J. Forstmann
and his private equity firm, Forstmann Little & Company, will go on
trial to face accusations from Connecticut's attorney general and state
treasurer that the firm improperly invested $125 million of the state's
pension fund money and subsequently lost it. Read the full article
at 
href='http://www.nytimes.com/2004/05/27/business/27private.html'>www.nytimes.com.

Enron Trials Will Challenge
Jurors

The first criminal trial of
former Enron Corp. executives, scheduled to start in a Houston courtroom
in a week and a half, will test jurors' reactions to more than two years
of negative publicity about the demise of the energy company, the
Washington Post reported. Lawyers inside and out of the case are
debating whether Houston-area jurors can hear the evidence with an open
mind when the company's bankruptcy in late 2001 cost thousands of area
residents their jobs and their retirement savings. Read the full article
at 
href='http://www.washingtonpost.com/wp-dyn/articles/A58786-2004May26.html'>www.washingtonpost.com.

Blackstone Hired By
Delta Air for Debt Talks

Delta Air Lines has hired
Blackstone Group in a restructuring advisory capacity, Blackstone's
Chairman Pete Peterson said on Wednesday at a New York conference,
Reuters reported. Delta Air
Lines, like the bankrupt carrier United Airlines, has been hit hard by
discounted airline travel and debt issues, which are forcing major
carriers to consider debt restructuring like chapter 11. Blackstone has
also advised Enron Corp., Global Crossing and other major companies in
distress, the newswire reported.



U.S. And European Banks' Loan Losses To
Fall 

U.S. and European banks'
earnings will be boosted this year as loan losses fall because of the
improving economic outlook, a study said today, Reuters reported. Bad
loans will drop to about $95 billion in 2004 from $110 billion last year
as economies recover and banks write back money set aside in 2002, the
worst year ever, the study by consultancy Mercer Oliver Wyman found.
Banks in Europe and the United States set aside a record $125 billion in
2002, the low point of the economic slowdown. The lenders were hit by
shocks such as corporate bankruptcies and Argentina's $88 billion debt
default, the newswire reported.

S&P Rates Dynegy's Bank
Debt 'BB-'

Standard & Poor's Ratings Services said today that it assigned
its 'BB-' rating to Dynegy Holdings Inc.'s (a subsidiary of Dynegy Inc.)
new $1.3 billion senior secured credit facility. Standard & Poor's
also assigned a recovery rating of '1' to the facility. The 'BB-' rating
is two notches higher than the 'B' corporate credit rating on the
company.  Standard & Poor's determines that the collateral
package indicates a strong likelihood of full recovery of principal in
the event of a default or bankruptcy. The analysis assumes a bankruptcy
court would accord priority to the senior lienholders in a bankruptcy.
Standard & Poor's senior unsecured debt rating for Dynegy remains
'CCC+'.

Spiegel Wins Approval To Auction Catalog
Business

Spiegel Inc. won court approval of rules for the
auction and sale of its catalog business, a move that will make it
easier to market its all-important Eddie Bauer unit for sale. Judge
Cornelius Blackshear of the U.S. Bankruptcy Court in Manhattan signed an
emergency order Monday, approving the bidding rules, as well as a
$250,000 expense reimbursement for stalking-horse bidder Pangea Holdings
Ltd. if it is outbid at auction. Pangea agreed Sunday to buy all assets
related to the catalog business and the 'Spiegel' name for $2 million in
cash, $22 million in inventory commitments and $29.4 million of assumed
liabilities, subject to adjustment and higher bids at
auction.

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