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August 4, 2005
Advisory Committee Meets Again
The U.S. Judicial Conference Advisory Committee on Rules of
Bankruptcy Procedure will meet again today to discuss the proposed
interim rules, at 8:30 a.m. at the Thurgood Marshall Federal Judiciary
Building, Judicial Conference Center, One Columbus Circle, NE,
Washington, D.C. Contact: John Rabiej, 202-502-1820
Lawmakers Seek to Rein In Credit Fees, Predatory Loans
From predatory lending to rising credit-card fees, U.S. consumers
face a potential minefield whenever they initiate a financial
transaction, MarketWatch reported yesterday. But
href='http://www.marketwatch.com/news/story.asp?siteid=mktw&dist=moreover&gui…{7D860491-FB89-48BF-8875-21BC132970C8}'>some
on Capitol Hill are hoping to make the path safer and less
expensive, introducing a triptych of consumer-protection bills that
address a variety of issues. One bill targets the often-hidden tactics
employed by credit-card issuers, another seeks to rein in banks’
“bounce protection” products and a third focuses on
predatory lending. The three bills were introduced in the House
Financial Services Committee last week.
href='http://www.marketwatch.com/news/story.asp?siteid=mktw&dist=moreover&gui…{7D860491-FB89-48BF-8875-21BC132970C8}'>Read
the full story.
Northwest Bankruptcy Filing an “Increasing
Possibility”
Standard & Poor’s Equity Research downgraded Northwest
Airlines to “strong sell” from “sell,” saying a
chapter 11 bankruptcy filing “is an increasing possibility over
the next 12 months,” Forbes.com reported yesterday. The research
firm said that shares of Northwest, which are up nearly 36 percent from
their 52-week low, don’t appropriately reflect the risk of
bankruptcy. In addition, Standard and Poors Equity Research said that
Northwest has not made progress in securing cost cuts from mechanics and
flight attendants, and is facing a strike from mechanics. Northwest also
is likely to see significant cash burn in the second half. The research
firm reiterated a $3 target price on Northwest, which represents a
potential 41 percent downside from current levels. “We think the
risks are too high to hold the stock,” the research firm said.
Arthur Anderson Pays $25 Million Settlement
href='http://money.cnn.com/2005/08/03/news/midcaps/scandal_anderson.reut/inde…'>Arthur
Andersen LLP has agreed to pay $25 million to settle a lawsuit brought
by investors over its role in the collapse of telecommunications network
provider Global Crossing Ltd., lawyers for the plaintiffs said
yesterday. Meanwhile, the federal judge overseeing the Global Crossing
securities fraud class action has given approval to a $75 million
settlement from Citigroup for its role as financial adviser to Global
Crossing during the company’s fraud, law firm Grant &
Eisenhofer said in a statement, Reuters reported.
href='http://money.cnn.com/2005/08/03/news/midcaps/scandal_anderson.reut/inde…'>Read
the full story.
Ocean Jewel Owners File for Bankruptcy
After months of mishaps and controversy, the
href='http://www.sptimes.com/2005/08/01/news_pf/Tampabay/Ocean_Jewel_owners_f…'>owners
of the Ocean Jewel filed for chapter 11 bankruptcy protection
Monday, the St. Petersburg Times reported yesterday. The
move will allow the casino ship to continue to operate out of
John’s Pass while the company is restructured and creditors are
repaid. It also may make it more difficult for the city of St.
Petersburg, Fla. to collect the more than $72,000 the company owes, said
Chief Assistant City Attorney Mark Winn. Dennis Shepard, CEO of Titan
Cruises, which owns the 450-foot vessel, said he decided to file for
bankruptcy after a couple of smaller vendors threatened to file liens
against the ship. The 2,200-passenger Ocean Jewel, which anchors in
international waters where gambling is permitted, has been plagued by
problems since it began operating in October. Walt Miller, the
city’s port director, said the ship’s owners owe the city
about $72,000. But he noted the company paid a $108,000 deposit, which
could be used to defray costs.
href='http://www.sptimes.com/2005/08/01/news_pf/Tampabay/Ocean_Jewel_owners_f…'>Read
the full story.
Champ’s New Business Plan Raises Awareness
In January 2004, team owners Kevin Kalkhoven, Gerald Forsythe and
Paul Gentilozzi bought the assets of the bankrupt Championship Auto
Racing Teams and announced to the world they were going to keep the
nearly moribund open-wheel series going. Last week, halfway through the
second year of the reborn series,
href='http://www.sanluisobispo.com/mld/sanluisobispo/sports/12294236.htm'>more
than 152,000 people showed up over three days for the inaugural San Jose
Grand Prix, run through the downtown streets of California’s
third-largest city, the Associated Press reported yesterday. A part of
Champ Car’s business plan is aimed at foreign audiences, with the
series adding an event in Seoul, South Korea, this year to races already
run in Australia, Mexico and Canada. Although it has not yet been
finalized, there is tentatively a race scheduled in 2006 in Beijing.
href='http://www.sanluisobispo.com/mld/sanluisobispo/sports/12294236.htm'>Read
the full story.
CIBC Stock Dives on Massive Enron Payout
Canadian Imperial Bank of Commerce shares plunged on Wednesday after
the company said it would
href='http://today.reuters.com/business/newsArticle.aspx?type=ousiv&storyID=2…'>pay
$2.4 billion to settle a lawsuit brought by investors in disgraced
energy trader Enron Corp., Reuters reported yesterday. But CIBC,
Canada’s fifth-largest bank, insisted it would maintain its
quarterly dividend at current levels and that its 10 percent earnings
per share growth target was still intact. The promise did nothing to
sway investors, who quickly rid themselves of CIBC’s stock as
analysts downgraded the shares and reduced their 12-month price targets.
CIBC said late on Tuesday it will take a C$2.5 billion ($2.1 billion)
third-quarter charge to pay for the settlement, the largest so far in a
massive class action suit led by the University of California. The size
of the charge eclipses the bank’s total profit of C$2 billion last
year.
href='http://today.reuters.com/business/newsArticle.aspx?type=ousiv&storyID=2…'>Read
the full article.
GE, Morgan Stanley and Marathon Asset Management Provide DIP
Financing to Allied Holdings
GE Commercial Finance Corporate Lending, along with Morgan Stanley
Senior Funding Inc. and Marathon Asset Management, announced yesterday
that it has provided a $230 million debtor-in-possession financing
facility for Allied Holdings Inc. in conjunction with its voluntary
filing for reorganization under chapter 11, BusinessWire reported. The
facility is structured as a $130 million revolving credit facility, $20
million term A loan and $80 million term B loan. GE’s
Restructuring Finance team is serving as sole administrative agent and
collateral agent for the revolving credit facility portion of the
financing. Allied Holdings will use the DIP financing to repay existing
senior indebtedness and to continue to fund its operations during the
restructuring process.
Munich Re’s Second Quarter Profit Plunges 74 Percent
Munich Re AG, the world’s biggest reinsurer, posted a 74
percent drop in second-quarter profit Thursday because of a charge it
took to increase reserves at its U.S. unit for claims on asbestos and
environmental policies, the Associated Press reported today. The company
earned €164 million ($202 million) in the quarter ended June 30,
compared with 628 million euros a year earlier.
Pacific Lumber Seeks Deal to Cut Debt
Citing a crushing debt load, Pacific Lumber Co. on Tuesday outlined a
plan to seek bankruptcy protection while turning over controlling
interest in its North Coast timberlands to anxious creditors,
pressdemocrat.com reported yesterday. The company wants to give up 90
percent interest in its 217,000 acres of redwoods in return for
bondholders agreeing to cut the current $705 million debt to $300
million. Tuesday’s developments are the most serious surrounding
the financial fate of Pacific Lumber since it was acquired in 1986 by
Texas financier Charles Hurwitz. The company controls the largest and
most valuable stands of redwoods in the world along a slice of coastal
Humboldt County, Calif., where timber and environmental interests have
clashed for two decades.
Creditors Run Down YUKOS in the United States
YUKOS creditors, led by French Societe Generale SA (SG), went to the
Harris court, Texas last week to gain access to the company’s
accounts in the United States, Kommersant Daily reported
today. SG won the court injunction blocking YUKOS from disposing of $18
million kept on the accounts of the U.S. Bankruptcy Court. Sources with
YUKOS say that the company is ready to pay back the sum, the company has
called on the South District Court, Texas, to forward the banks’
claim to the U.S. Bankruptcy Court.
Delphi Seeks Aid from UAW, GM
Auto parts maker
href='http://www.detnews.com/2005/autosinsider/0508/04/C01-269357.htm'>Delphi
Corp. is seeking financial relief from former parent General Motors
Corp. and the United Auto Workers union, the Detroit
News reported today. Rodney O’Neal, Delphi president and
COO said the Troy, Mich.–based auto parts supplier is seeking
“solutions” from GM that could include altering business
ties and parts contracts. Delphi, which lost $409 million in the first
three months of the year, has been hit hard by production cuts at GM. It
is also hampered by uncompetitive U.S. wage rates and high retiree
benefit expenses. The company has posted losses in three of the last six
years and is scheduled to report second-quarter results on Monday.
Without an agreement with the union and GM, Delphi might need to seek
bankruptcy court protection, analysts say. If such a move happened
before September 2007, GM could be liable for up to $9 billion in
pension and retiree health care obligations at Delphi under terms of the
company’s 1999 separation from the automaker.
href='http://www.detnews.com/2005/autosinsider/0508/04/C01-269357.htm'>Read
the full story.
Air Canada’s Parent Firm Swings to Q2 Profit of $168 Million
After Year-earlier Loss
Air Canada’s parent company, ACE Aviation Holdings Inc., is
href='http://www.canada.com/travel/story.html?id=8708ebd2-31c7-4f74-b91a-4f5c…'>reporting
a second-quarter profit of $168 million, versus a year-earlier loss
of $510 million while the airline was operating under bankruptcy-court
protection, the Canadian Press reported today. Earnings for
the quarter ended June 30 amounted to $1.49 a share, diluted, compared
with a loss of $4.24 per share a year earlier, the Montreal-based firm
reported Thursday. Operating income of $177 million was up from $22
million a year ago. In addition, operating revenues rose 11 percent to
$237 million, while the system passenger load factor was up 2.4
percentage points at 80.2 percent, a record for the second quarter.
href='http://www.canada.com/travel/story.html?id=8708ebd2-31c7-4f74-b91a-4f5c…'>Read
the full article.
Mechanics Union Breaks Off Talks with Northwest
href='http://online.wsj.com/article/0,,SB112309982799104155,00-search.html?KE…'>Northwest
Airlines mechanics broke off contract negotiations with the carrier
yesterday, heightening the possibility that the workers will go on
strike Aug. 20, the first day they legally can withhold their services,
the Wall Street Journal reported. The airline, based in St.
Paul, Minn., said it remains ready to resume talks, but has made
contingency plans to maintain its full flight schedule with replacement
workers and outside vendors should its mechanics walk off the job. The
failure to reach a compromise led the National Mediation Board last
month to declare an impasse and start a 30-day “cooling off”
period after which AMFA can strike and the airline can lock the workers
out and bring in replacements. Nevertheless, the two sides resumed talks
Tuesday in Washington and were scheduled to meet for the rest of this
week under the observation of the mediation board, which oversees labor
relations in the airline industry.
href='http://online.wsj.com/article/0,,SB112309982799104155,00-search.html?KE…'>Read
the full story.
Utility Company Cuts Long-term Debt by $37.5 Million
NorthWestern Corp., which emerged from bankruptcy nine months ago,
has reported $6.4 million in income from continuing operations during
the second quarter of 2005, compared with a loss of $14.4 million by its
predecessor company during the same quarter a year ago, the Associated
Press reported yesterday. The utility company, headquartered in Sioux
Falls, Iowa, saw its credit rating improve and its long-term debt drop
by $37.5 million to just under $800 million, said Michael Hanson,
president and chief executive officer. NorthWestern also will receive $9
million from PPL Montana, one of its electricity suppliers, as part of
an agreement.