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March 9, 2007
Mortgages
name='1'>Fed Report: Mortgage Debt Increased in Last Quarter of
2006
The Federal Reserve
reported yesterday that homeowners increased their mortgage borrowing by
almost $600 billion in the last quarter of 2006, an annual pace of 6.4
percent, significantly faster than the rise in housing prices,
the New York
Times reported today.
face='Times New Roman' size='3'>Mortgage debt climbed more slowly in the
fourth quarter than in the third quarter, though, reflecting the
slowdown in home sales. Owners’ equity as a share of the total
value of their property edged down to 53.1 percent at the end of 2006,
from 54.4 percent in the fourth quarter of 2005. Homeowner equity was
almost 58 percent of housing value in 2000, and nearly 70 percent in the
href='http://www.nytimes.com/2007/03/09/business/09debt.html?pagewanted=print'>Read
more.
name='2'>Lender Stops Accepting Mortgage
Applications
New Century Financial,
the troubled subprime mortgage company, said yesterday it had stopped
accepting new loan applications as it tries to negotiate terms with
banks that had cut off its access to billions of dollars in funds,
the New York
Times reported today. However, New Century
said that a lender had provided $265 million to finance loans and cover
other obligations and $710 million to replace a credit line. The company
did not identify the lender, but people involved with New
Century’s problems say Morgan Stanley provided the loan, which is
secured by New Century’s loan portfolio. Even with the new funds,
the company said that it could finance only a portion of its loans this
week because its banks, which also include UBS, Barclays Bank, Citigroup
and Bank of America, would not let it have access to credit lines. The
company issued $3.7 billion in loans in February, down 7.5 percent from
the same month in 2006.
href='http://www.nytimes.com/2007/03/09/business/09lend.html?ref=business&pagewanted=print'>Read
more.
face='Times New Roman' size='3'>
name='3'>Delphi
Offering
Delphi Corp. filed a
registration statement with the U.S. Securities and Exchange
Commission to raise nearly
$2 billion from current stockholders in order to help fund the bankrupt
auto parts maker’s reorganization plan,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday.
size='3'>The filing details an offer of 56,700,000 shares of common
stock at $35 per share as part of a $3.4 billion bailout plan reached
between
size='3'>Delphi
January. Any shares remaining after the offering will be bought by the
investors. The company said that filing is preliminary and the date when
the offer will go forward has not yet been determined. The financing
plan, which also needs court approval, is contingent on
size='3'>Delphi
supply agreements with major unions and General Motors Corp.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=20080'>Read
more. (Registration required.)
Rejects San Diego Diocese Request to Seal Abuse Records
The Roman Catholic
Diocese of San Diego lost a bid to seal any documents that would detail
sex abuse allegations against priests, but Bankruptcy Judge
Louise DeCarl Adler
ruled that the accusers' names can be kept secret, the
Associated Press reported today. The Associated Press and Copley Press
Inc., publisher of The
size='3'>San Diego Union-Tribune, challenged
the diocese's request to seal financial disclosures and 'pleadings,
reports and other documents' if they identified victims. Judge Adler
ordered the diocese and attorneys representing more than 140 plaintiffs
who filed abuse claims to agree on a method to redact names of alleged
victims who wish to be anonymous. Any documents listing names or
addresses of accusers can be kept under seal until April 11 to give
plaintiffs time to respond.
href='http://www.mercurynews.com/news/ci_5387240'>Read
more.
name='5'>Trading Halted For 35 Firms over Penny Stock
E-Mails
Securities regulators
yesterday halted trading in nearly three dozen companies representing
the initial salvo in 'Operation Spamalot,' a campaign to block e-mails
promoting stocks to unsuspecting investors, the
face='Times New Roman' size='3'>Washington Post
size='3'>reported today. The crackdown against investment spam amounts
to the biggest such action in the history of the Securities and Exchange
Commission. Shareholders lost tens of millions of dollars over the past
year by biting on fraudulent Internet offers to 'ride the bull' or win
'fast money' by buying thinly traded stocks, agency officials said. They
continue to investigate whether the spam emanated from third-party stock
promoters, corporate insiders or both. Some of the hyped messages found
their way to the e-mail accounts of SEC enforcement lawyers, and they
spent weeks tracing the alleged scams and their origins. Authorities
said the decision to halt trading at 35 penny-stock companies, including
a
size='3'>California
size='3'>business that provides computer security services, is merely
the first step in a systematic effort to root out the people who sent
misleading stock promotions and others who profited from them.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/03/08/AR2007030802092.html'>Read
more.
IRS
Looks to Tax Lawyers to Help Write Rules
The Internal Revenue
Service is asking tax lawyers and accountants to help take the lead in
writing some of its new tax rules, the
size='3'>New York Times reported today. The
pilot project represents a further expansion of the increasingly common
federal government practice of asking outsiders to do more of its work,
prompting academics and other critics to complain that the government is
going too far. They worry that having private lawyers and accountants
draft tax rules could allow them to subtly skew them in favor of their
clients. IRS general counsel Donald L. Korb defended the plan, saying
that the agency was still receiving comments and would continue to
conduct hearings on the proposed rules. The IRS staff has been
cut by a fifth in the last decade, even as Congress has made the tax
code vastly more complex. The agency, in a formal notice, said it lacked
the resources to issue as much guidance as taxpayers are
seeking.
href='http://www.nytimes.com/2007/03/09/business/09tax.html?ref=business&pagewanted=print'>Read
more.
name='7'>Prominent Attorney Returns to Bankruptcy
Practice
Bankruptcy lawyer Harvey
Miller has left investment bank Greenhill & Company to return to
Weil, Gotshal & Manges, the
w:st='on'>
size='3'>Manhattan
where he practiced for 32 years, the
size='3'>New York Times reported today. At
Greenhill, where he performed advisory work, rather than legal work,
said that “while I learned a lot while I was here, over the last
year, I was involved in matters that had more legal aspects, which
activated something inside me that said, ‘I miss that
practice.’ ” Over three decades, Miller helped make Weil,
Gotshal a powerhouse in bankruptcy law helping guide the firm’s
work on such high-profile bankruptcies as Texaco, Drexel Burnham
Lambert, Continental Airlines, R. H. Macy, WorldCom, Global Crossing and
Enron. More recently, Weil, Gotshal was involved in US Airways’
offer for Delta Air Lines and the bankruptcy of the auto parts
maker
href='http://www.nytimes.com/2007/03/09/business/09law.html?pagewanted=print'>Read
more.
International
name='8'>Professional Fees in Eurotunnel Bankruptcy Reach £89
Million
Eurotunnel has paid an
estimated £89 million to the lawyers and other professionals who
have guided it through its bankruptcy proceedings that have lasted
nearly two years,
size='3'>Bankruptcy Law360 reported yesterday.
Eurotunnel reported a net loss of £143 million for the last fiscal
year. Despite the overall loss, Chairman and Chief Executive Jacque
Gounon pointed to some encouraging signs for Eurotunnel, including a
rise in
size='3'>trading profit by 42 percent and a corresponding profitability
for activities of 59 percent (operating margin/revenue), a four-point
increase since 2005. The
w:st='on'>
size='3'>Paris Commercial Court
size='3'>approved Eurotunnel’s restructuring plan in mid-January,
removing one of the last obstacles for the Channel operator to emerge
from bankruptcy.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=20077'>Read
more. (Registration required.)
name='9'>Japanese Lenders Reject More Borrowers in Order to Cut
Defaults
Aiful Corp.,
size='3'>Japan's
biggest consumer lender, and its two closest rivals rejected more than
half of loan applicants in January as they seek to trim costs by weeding
out borrowers who may default, Bloomberg News reported yesterday. Aiful
cut approvals by half, granting unsecured personal loans to 36 percent
of applicants in January, compared with 72 percent in February 2006,
according to data on its Web site. Acom Co., the second-biggest lender,
cut approvals by a third to 47 percent in the same period. Promise Co.
ratified 40 percent. Bad-loan costs have mounted in the $170 billion
consumer finance industry since
w:st='on'>
size='3'>Japan's
courts last year opened the door for borrowers to claim refunds of
interest and regulators reined in collection tactics. The three biggest
lenders forecast a combined $5 billion loss in the year to March 31 and
may struggle to return to profit as a new law caps their charges at the
same level as banks.
href='http://www.bloomberg.com/apps/news?pid=20601101&sid=arX72ZuXKXc0'>Read
more.
name='10'>TROUBLED COMPANIES IN THE NEWS
1000’s of companies lose
money or experience some form of difficulty each
quarter.
The business news
articles below are taken from the
size='3'>Daily Summary of Troubled & Fast Growing U.S. Companies and
Other Business News published by Bastien
Financial Publications.
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size='3'>Bausch & Lomb Inc., the
size='3'>Rochester
w:st='on'>N.Y.
maker of eyecare products, is recalling more than one
million bottles of its ReNu MultiPlus contact-lens solution that was
manufactured at its facility in
w:st='on'>
size='3'>Greenville
w:st='on'>
size='3'>S.C.
product can potentially cause discoloration and suffer from short shelf
life. The recall affects products distributed in the
size='3'>U.S.
size='3'>Canada
size='3'>Taiwan
size='3'>South Korea
size='3'>and
size='3'>Latin America
B&L had to recall its ReNu With MoistureLoc product which was made
at the same
face='Times New Roman' size='3'>South
Carolina
fungus infections.
size='3'>Friendly Ice Cream Corp., a
Wilbraham, Ma. restaurant operator, reported fiscal net income of nearly
$5 million, including a $2.3 million writedown and asset-disposal gain.
Sales were flat at $532 million. In addition, the company hired
Goldman Sachs & Co. as its financial adviser to help it explore
strategic possibilities, which could include putting itself up for
sale.
size='3'>DaimlerChrysler AG of
size='3'>Germany
General Motors Corp.
of
face='Times New Roman'
size='3'>Detroit
negotiating about sharing expenses for the development of future SUVs.
However, DaimlerChrysler’s CEO, Dieter Zetsche, and GM CEO Rick
Wagoner declined to comment on speculation about GM possibly making a
bid to acquire DaimlerChrysler’s Chrysler Group unit in the
size='3'>U.S.
size='3'> In other matters, Mr. Wagoner confirmed that his company
is in talks with Malaysian-based Proton Holdings Bhd. about possibly
collaborating. As for Chrysler Group, some realignment is
considered likely, as Mr. Zetsche recently commented that all options
are open for the
w:st='on'>
size='3'>U.S.
size='3'>subsidiary, including a possible sale. Whatever happens,
it’s thought that Chrysler Group will emerge as a much smaller
carmaker, although Mr. Zetsche believes that Chrysler Group is a highly
integrated company that, if sold, should remain intact. It’s
possible, however, that Chrysler Group could split off its finance unit
from the manufacturing business.
size='3'>Icad Inc., a
w:st='on'>
size='3'>Nashua
w:st='on'>
size='3'>N.H.
cancer-detection products, reported a fourth quarter net loss of $1.4
million. Revenue rose 5%–to $6.4 million. For the year, it lost
$6.6 million on flat revenue of $19.7 million.
size='3'>International Paper completed the
sale of its
face='Times New Roman'
size='3'>Jacksonville
Fl.-based Arizona Chemical unit to Rhone Capital III LP for $485
million. The sale is part of International Paper’s strategy to
focus on its uncoated papers and packaging operations.
size='3'>UnitedHealth Group Inc., the
giant
size='3'>Minnetonka, Mn.
health insurer, reported it is cleaning up its options backdating issues
by reducing earnings, over the last eleven years, by more than $1.1
billion.
size='3'>Westwood One Inc., the New York firm
which is one of the largest producers and distributors of radio
programming in the nation, reported a fourth quarter net loss of $488
million on an 11% revenue decline–to $130 million. For the
year, the company reported a net loss of $469 million on an 11% revenue
decline–to $494 million. Both the quarter and year included an
impairment charge of nearly $516 million.