February 18,
2004
Reports Stir Hopes of U.S. Factory Revival
U.S. manufacturing showed signs of revival on Tuesday, as reports
from the Federal Reserve and one of its regional banks showed gains in
January and early February, Reuters reported. The Federal Reserve said
its gauge of activity at American factories, mines and utilities rose
0.8 percent in January, led by a weather-related gain in utilities use.
Factory output -- more than four-fifths of total production -- rose 0.3
percent, its fifth straight monthly rise. In a separate report, the
Federal Reserve Bank of New York said its two-year-old Empire
Manufacturing Survey's business conditions index rose to a record 42.05
in early February from a revised 38.85 in January. The two reports may
help ease worries over the U.S. factory sector, which has yet to recover
from the 2001 recession. Manufacturers have cut payrolls for 42 straight
months, with about 2.8 million factory jobs lost since January 2001,
reported the newswire.
Economist Panel Raises U.S. Growth Forecasts
The U.S. economy should expand a solid 4.6 percent in 2004, helped
by a surge in exports driven by the weaker dollar, and the job market
should start to improve, a panel of business economists said on Tuesday,
Reuters reported. The National Association for Business Economics (NABE)
panel of 32 professional forecasters predicted in its latest survey that
U.S. payrolls should expand by 1.1 percent this year, or an average of
150,000 jobs a month. The panel expects the unemployment rate --
currently at 5.6 percent -- to stand at 5.6 percent at the end of 2004,
then fall to 5.3 percent at the end of 2005. 'The NABE panel
overwhelmingly felt that the job market outlook would improve this year,
with 31 percent saying it was already improving substantially and 59
percent saying it was on the verge of improvement,' NABE said in
releasing its February outlook survey. The economists raised their
outlook for this year's growth in U.S. gross domestic product to 4.6
percent from a November forecast for an advance of 4.5 percent. The U.S.
economy grew 3.1 percent last year, according to government data,
Reuters reported.
Seniors See Credit-card Debt Grow
Older Americans who borrow on credit cards are taking on more debt,
suggesting that growing numbers of seniors are struggling to pay monthly
bills, according to a new study by a New York public-policy group, the
Wall Street Journal reported. Demos, a nonpartisan group that
studies election overhauls and economic security, says its study also
suggests that the economic gaps among senior citizens are widening, with
lower-income seniors taking on more debt, while higher-income seniors
are reducing their debt burden.
The study, 'Retiring in the Red,' expected to be released today,
analyzes data collected from roughly 4,000 households in 1992 and 2001
as part of the Federal Reserve's triannual Survey of Consumer Finances.
Demos found that seniors remain less likely to borrow than other
Americans. But those who are borrowing are borrowing a lot more. Among
people over 65 with monthly credit-card balances, the average
self-reported balance rose 89 percent to $4,041, in 2001. For all
indebted credit-card holders, the average monthly balance increased 38
percent to $4,126, reported the online newspaper. The biggest increases
came among those aged 65 to 69. Their average monthly balances more than
tripled to $5,844 in 2001, from $1,842 in 1992, according to the study.
Read the full article at www.wsj.com
(subscription required).
RCN Corp. to Seek Chapter 11 Protection
Cable company RCN Corp. said it will file for bankruptcy as part of a
strategy to attract new investors and stay in the business of bundling
cable television, Internet and telephone service, the Associated Press
reported. 'We anticipate filing chapter 11 in order to consummate a
deal,' Barak Bar-Cohen, an RCN spokesman, said yesterday. Managers of
RCN hope to swap $1.7 billion in debt for a share in the company,
Bar-Cohen said. He said the company is negotiating with several
potential investors and hopes to finalize an equity-for-debt deal before
March 1. RCN stock, which had reached $75 a share in early 2000, was
down 28 cents or 36 percent to 52 cents a share in afternoon trading on
the Nasdaq stock market.
Evergreen Solar Files Objections With AstroPower Bankruptcy
Court
Evergreen Solar Inc., a developer, marketer and manufacturer of
photovoltaic (solar power) products for the worldwide market, yesterday
announced in a press release that it filed objections with the U.S.
Bankruptcy Court in Delaware regarding the pending sale of the assets of
AstroPower Inc. Richard M. Feldt, president and CEO of Evergreen Solar,
said, 'We have a potential interest in acquiring selected assets of
AstroPower that will complement our String Ribbon technology. Although
no decision has been made whether to bid for any assets, we want to
ensure that, if we submit a bid, we will do so on a level playing
field.'
Seven Arrested, As Parmalat Probe Deepens
The scandal engulfing Parmalat widened on Tuesday as police arrested
seven people, including the son, daughter and brother of jailed company
founder Calisto Tanzi, and placed another suspect under house arrest,
the Associated Press reported. The latest round of arrests highlights
the fall from grace of a family that was once held up as a model of
Italy's capitalism.
Stefano and Francesca Tanzi, Calisto's adult children, were picked up
Tuesday in their homes in Parma, the northern city near the company's
headquarters, and taken to the city's prison. The two are suspected of
fraudulent bankruptcy and criminal association, said Maurizio Raponi of
the tax police division in nearby Bologna. They have both denied any
wrongdoing. On Dec 19, Parmalat had acknowledged that it didn't have $5
billion it had claimed was in a Bank of America account. Soon after,
Parmalat went into bankruptcy protection. An audit, which was ordered
after the scandal broke, recently put the company's debt at about $18
billion -- eight times more than Parmalat had claimed in September,
reported the newswire.
French Court Orders Liquidation of Bankrupt Air Littoral
A French court ordered the liquidation of Air Littoral on Tuesday, after
a property and textile company withdrew its rescue package for the
bankrupt regional airline, the Associated Press reported. Air Littoral
filed for bankruptcy in August 2003. The airline's 17 planes were
grounded on Friday after transport regulators refused to renew the
carrier's license on safety grounds, saying Alain Dumenil group, the
company behind the rescue bid, had not given sufficient guarantees. Air
Littoral announced on Monday that Alain Dumenil group had withdrawn its
bid, AP reported.
National Benevolent Association to Complete Restructuring Through
Chapter 11 Filing
National Benevolent Association ('NBA'), which manages more than 70
facilities financed by the Department of Housing and Urban Development
(HUD) and owns and operates 18 other facilities, said yesterday in a
press release that, in order to facilitate the completion of its
restructuring plan and assure the continuation of its mission, it and 25
of its affiliates have filed petitions under chapter 11 of the
Bankruptcy Code. The filings, which occurred upon the approval of the
NBA's National Board of Trustees, took place in the U.S. Bankruptcy
Court for the Western District of Texas at San Antonio. The HUD
facilities were not included in the filing.
'This is an extremely difficult step, but the Board felt it had no
choice but to move forward to complete the debt restructuring and
minimize the uncertainty for the residents of NBA's senior living
communities, people with disabilities and at-risk children and
families,' said Rev. David Mindel, chair of the NBA Board of Trustees,
the association announced in the press release.
Broadband Wireless Announces Definitive Settlement Agreement
Reached on Last Pending Bankruptcy Claim
Broadband Wireless International Corporation announced yesterday in a
press release that a definitive settlement agreement has been reached on
the last pending claim before the U.S. Bankruptcy Court for the Western
District of Oklahoma in its chapter 11 case, (Broadband Wireless
International Corporation vs. William R. Miertschin).
Hawaiian Air To File Its Own Reorganization Plan
Hawaiian Holdings Inc., parent of Hawaiian Airlines, said yesterday it
could file its own reorganization plan with the bankruptcy court as
early as this week, Reuters reported. Boeing Capital Corp., the
financing arm of airplane manufacturer Boeing Co. and one of the
airline's largest creditors, is seeking bankruptcy court approval of its
own reorganization plan for Hawaiian Airlines. Its proposal would
restore one of the carrier's former chief executives and bring in $30
million of new equity capital. Hawaiian Holdings said in a regulatory
filing on Friday that it intended to form its own reorganization plan
for Hawaiian Airlines 'that will provide for a more equitable treatment
of all constituencies involved in the reorganization,' including
existing holders of its common stock, reported the newswire. Hawaiian
Airlines filed for chapter 11 bankruptcy protection nearly a year
ago.
Discount Airlines Gain on Cost Front (Wall Street
Journal)
Consumers are increasingly choosing low-cost carriers and bypassing the
big traditional airlines. Last year, six low-cost carriers grew by
almost exactly the same amount of traffic that the seven network
airlines lost, the Wall Street Journal reported. Together, the
six low-cost carriers now control nearly one-quarter of domestic air
travel. They also earned $730 million in net income, while the seven
higher-cost carriers posted total net losses of $3 billion. Read the
full article at www.wsj.com
(subscription required).
Weirton Steel Accepts Buyout From International Steel
Bankrupt Weirton Steel Corp. has accepted a $255 million buyout offer
from Ohio's International Steel Group Inc. (ISG), the Associated Press
reported. If approved, the long-anticipated purchase would expand the
nation's No. 2 integrated steelmaker to include Weirton's tin mill, one
of the largest in the nation. The deal also would end a labor legacy at
the West Virginia plant, once the largest American company owned 100
percent by its workers. Still, Weirton CEO D. Leonard Wise called the
merger good news for the company, its customers and the community. 'Our
goal has been to secure the best possible solution for all of our
stakeholders and to maintain a steel operation in Weirton,' Wise said
today. 'We believe ISG provides the answer.' The $255 million offer
included cash and the assumption of Weirton Steel's liabilities. Weirton
Steel sought chapter 11 protection in May 2003 after losing money for
five years, reported the newswire.
SEC Asks American Airlines' Union for Information
The union representing pilots at American Airlines said on Tuesday that
the U.S. Securities and Exchange Commission (SEC) has asked the labor
group for a list of people who had access to the airline's books last
year, Reuters reported. The Allied Pilots Association said it received a
letter earlier this month from the SEC asking for a list of union
leadership who signed a confidentiality agreement with American last
year when the airline opened its books to its three main unions during
talks to save the carrier from bankruptcy, Reuters reported.
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