April 18, 2000
Interest Rates Climb Back to 1998 Levels
Consumers will likely feel the bite of
rising interest rates on short-term loans and credit cards as the year
progresses, The Wall Street Journal reported. Since the beginning
of the year, interest rates on car loans, home-equity loans and credit
cards have bounced back up to 1998 levels, although long-term mortgage
rates have slowly gone down. The rise has been attributed to the Federal
Reserve's two quarter-point increases in short-term interest rates this
year. In addition, 'there's also an inflation premium that's being
priced into the market,' said Keith Leggett, senior economist at the
American Bankers Association. The rates on variable-rate credit cards
have already gone up about a quarter of a percentage point since
January. 'The Federal Reserve's latest increase will start showing up in
consumers' credit-card bills in the next month or two,' said Robert
McKinley, president of CardWeb.com, estimating that the increase will
cost consumers $1.2 billion. However, Legget said that ' overall rate
increases are still relatively small…they shouldn't have that big
of an impact on consumers.'
New Study Finds Many E-retailers Thriving
Despite Predictions
Despite the recent reports that many Internet retailers many soon go
under, a new study shows that 38 percent of e-retailers are making
money, although the stock market has been trashing Internet retail
stocks, according to The Wall Street Journal. In addition, 72
percent of catalog companies are operating in the black. 'The issue
around a lack of profitability and the number of online retailers that
will die has been grossly overstated,' said James Vogtle, research
director with Boston Consulting Group, which conducted the study in
conjunction with shop.org, an Internet retail trade group. The report
follows a study recently released by Forrester Research Inc., Cambridge,
Mass., that predicted that most online retailers would be driven out of
business by 2001. While Forrester's report said it doesn't believe that
e-retailing will become extinct, it does hold that a number of companies
will have to pare down operations to stay competitive, and that many
will be squeezed out as a result. Boston Consulting conceded that this
will happen, but says that the shakedown will simply mean that the
survivors will come out stronger. David Pecaut, senior vice president at
Boston Consulting, said, 'It's washing away a lot of the people who had
no sustainable business model and just had me-too concepts.'
Corning to Write Down Investment in
Pittsburgh Corning
Fiber optics maker Corning Inc., New York, said yesterday it will
take a $35 million charge in the first quarter to write down its
investment in Pittsburgh Corning, which filed chapter 11, according to
Reuters. Pittsburgh Corning is an equally owned equity investment of
Corning and glass products maker PPG Industries Inc., which previously
said it also would take a $35 million charge to write off its Pittsburgh
Corning investment. Corning said it 'understands and supports Pittsburgh
Corning's decision to seek the protection of the court so that it may
continue to conduct its business and address the resolution of pending
asbestos litigation in a rational and organized manner.' Corning will
post first-quarter earnings on April 24.
ADVA International Signs Letter of Intent to
Acquire Global Information Group Shares
ADVA International Inc., Columbia, S.C., announced yesterday it has
signed a letter of intent to acquire all of the shares of Global
Information Group USA Inc. in exchange for 12,468,750 common shares of
ADVA International Inc., or approximately 95 percent of the total stock
to be outstanding after the transaction, according to a newswire report.
ADVA International Inc. was previously Advanced Medical Products Inc.,
which sold its assets pursuant to 11 U.S.C. §363 of the Bankruptcy
Code in mid-1999. The U.S. Bankruptcy Court for the District of South
Carolina is to decide on the issuance of the order by May 5. Global
develops and markets applications software for the LINUX operating
system.
TV Filme Inc. Reports Reorganization Plan
Confirmation
TV Filme Inc., Brasilia, Brazil, said yesterday that on April 10 the
U.S. Bankruptcy Court for the District of Delaware confirmed TV Filme
Inc.'s first amended reorganization plan dated Feb. 29, filed in TV
Filme's pending chapter 11 bankruptcy case, according to a newswire
report. The company's restructuring represents a consensual arrangement
with the holders of more than 65 percent of the company's outstanding
senior notes, who will receive a $25 million cash payment. The effective
date of the plan is contingent upon obtaining the approval of Agencia
Nacional de Telecomunicacoes, the Brazilian government agency that
regulates telecommunications services in Brazil, and the Central Bank of
Brazil.
Since the restructuring is being implemented at
the U.S. holding company level, the company said it will not affect the
its operations in Brazil. TV Filme Inc. is a leading provider of
subscription television, data and internet services in mid-sized markets
in Brazil and has wireless cable operating systems in Brasilia, Goiania,
Belem and Campina Grande.
Grand Court Lifestyles Inc. Common Stock
Delisted
Grand Court Lifestyles Inc., Boca Raton, Fla., a developer of
retirement and long-term care residences, announced yesterday that it
had been informed by The Nasdaq-Amex Market Group that it had determined
to delist the company's common stock from the Nasdaq National Market,
effective today, according to a newswire report. Nasdaq had based its
determination on the company's March 20 chapter 11 filing, the fact that
the market value of the company's common stock in the public float was
less than the required $5,000,000, and that the bid price for the
company's common stock was less than the required $1.00 per
share.
First Alliance to Be Delisted
First Alliance Corp., a nationwide lender specializing in
home-equity loans to clients with poor credit, said yesterday that its
stock will be delisted by Nasdaq at the market open on Thursday,
according to Reuters. The Irvine, Calif.-based company filed for chapter
11 last month, closing its retail branches and laying off 85 percent of
its work force. The company then said that it faced a host of lawsuits
accusing it of deceptive sales practices and blamed the bankruptcy
filing on pending legislation in several states that would cap its loan
fees. Nasdaq notified the company that its stock was being delisted due
to uncertainty about the bankruptcy reorganization, failure to satisfy
listing requirements and concerns regarding the residual equity interest
of existing securities holders.
CLARK Material Handling Files Chapter 11
CLARK Material Handling Co., Lexington, Ky., announced yesterday
that it and certain of its U.S.-based subsidiaries have filed voluntary
chapter 11 petitions in the District of Delaware due to the ongoing
adverse impact of the company's high cost structure and leveraged
capital position on its operations, according to a newswire report.
CLARK also announced that it is shifting production and assembly of its
forklift trucks from its Lexington plant to its facilities in Korea,
Germany and Alabama in order to consolidate its manufacturing
operations. Dr. Martin M. Dorio Jr., Chairman and Chief Executive
Officer stated, 'CLARK will continue to provide high quality products,
parts and services to its dealers and customers…The decision to
close our Lexington facility, where we have deep roots and so many
valued employees, is exceedingly painful. It is, however, absolutely
necessary in light of our current over-capacity, which translates into
an unprofitably high cost structure. We simply could not continue
operating as we have been.' CLARK said it has received commitments for
debtor-in-possession financing of up to $45 million. The U.S. operating
subsidiaries included under the filing are Blue Giant Corp. and
Hydrolectric Lift Trucks Inc.
Family Golf Centers May Seek Bankruptcy
Protection
If a waiver is not extended on its credit facility or its covenants
aren't amended before May 5, Family Golf Centers, Melville, N.Y., said
it may seek bankruptcy protection, The Wall Street Journal
reported. Standard & Poor's had lowered the company's
corporate-credit and bank-loan ratings yesterday as a result of the
company's failure to meet its April 15 interest payment, and the
company's stock fell 38 percent. Family Golf, which owns and operates
golf centers throughout North America, reported on Friday a net loss of
$76.1 million for the fourth quarter, compared with a net income of
$776,000 a year earlier.
