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October 17, 2003
Frist Declares a 'Final Offer' on Asbestos Trust Fund's
Size
The financing scheme for a proposed, $114 billion trust fund to
compensate victims of asbestos-related illnesses is essentially locked
in, leaving little chance that those pushing for a bigger fund will
succeed, Senate Majority Leader Bill Frist (R-Tenn.) said Thursday,
CongressDaily reported. Frist said little time remains to make
major changes to the asbestos legislation. 'I don't think it's going to
change very much,' he added. But Frist deflected criticism from labor
unions representing the interests of asbestos victims that they have
been shut out of the process of crafting a deal, the newswire
reported.
In a letter sent Thursday to senators, the AFL-CIO said the proposed
$114 billion is 'grossly inadequate' to pay victims. Frist met Thursday
with Democrats and union representatives, but held firm on the size of
the fund, CongressDaily reported. Frist said he sought an
agreement among insurers and defendant companies in asbestos lawsuits,
because those parties 'were the furthest apart' and had 'walked away'
from negotiations, the newswire reported. Both groups signed on to a
deal Wednesday in which insurers would pay $46 billion over the next 27
years, and defendant companies would kick in $57.5 billion.
Democrats, however, warned that union support is critical to winning
passage in the Senate. Sen. Thomas Carper (D-Del.) said unions —
as one of the major parties affected by the bill — would have to
assent before the bill could pass. 'They don't have to be in total
agreement on it.' Carper said. 'Just relatively comfortable.'
Manufacturing Turnaround Seen
National Association of Manufacturers President Jerry Jasinowski said
Thursday the long-suffering manufacturing sector is poised for a
turnaround, CongressDaily reported. 'All the evidence suggests
that all the forces are in place for a very strong recovery,' Jasinowksi
said. He credited lean inventories, tax cuts passed by Congress, Federal
Reserve policy, and a weaker dollar compared to other currencies,
particularly the Euro, the newswire reported. 'On the export side,
things are picking up,' Jasinowski said. However, he said 'structural
issues' remain, including high costs for manufacturers and strong
international competition, which has made it difficult for manufacturers
to raise or even keep prices stable, the newswire reported. He predicted
manufacturing employment, which is still experiencing losses, will
stabilize by the end of the year and that hiring will begin in 2004,
CongressDaily reported.
Consumer Prices Rose in September
The Labor Department yesterday reported that consumer prices rose by a
modest 0.3 percent in September for the second month in a row, a rise
due mostly to a boost in gas prices, CongressDaily reported.
Economists had been forecasting a more modest 0.2 percent increase in
the Consumer Price Index. Meanwhile, the Federal Reserve reported that
U.S. industrial production increased 0.4 percent in September, as
companies reported operating at 74.7 percent of capacity, the newswire
reported. It comes on the heels of a 0.1 percent decline in August. The
Commerce Department also reported today that business inventories
dropped 0.4 percent in August, a bigger-than-expected decline.
Solutia Talks With Bondholders to Ease $1.25 Billion
Debt
Solutia Inc., a maker of nylon-carpet fibers and plastics, said it has
begun talks with bondholders designed to reduce the $1.25 billion it
owes them, Bloomberg News reported. St. Louis-based Solutia said in a
news release that it has hired Todd Snyder of Rothschild Inc. and
Richard Cieri and Conor Reilly of Gibson Dunn & Crutcher to help
with bondholder talks that are focusing on ways to address the company's
“significant financial issues.” Less than two months ago,
Solutia agreed to pay more than $700 million to resolve lawsuits,
claiming that the former Monsanto unit dumped PCB-laced chemicals near
an Alabama town, the newswire reported. Solutia said earlier this year
that the suits were draining its cash reserves and the chemical maker
might have to seek bankruptcy protection.
WorldCom Ex-CEO Fights Company Plan to End His
Severance
Bernard Ebbers, forced out as WorldCom Inc.'s chief executive officer as
the company slid into the biggest U.S. bankruptcy last year, is fighting
its plan to retract his $1.5 million-a-year severance package, Bloomberg
News reported. Ebbers, who resigned in April 2002, breached his
separation agreement, Ashburn, Va.-based WorldCom said in a filing with
the federal bankruptcy court in Manhattan last month. Ebbers denied
violating the accord in a filing yesterday. WorldCom's filing didn't
explain how Ebbers breached the agreement. The accord called for Ebbers
to pay back $408 million he borrowed from WorldCom, which sought chapter
11 protection in July 2002 amid accounting errors that now total $11
billion. Ebbers missed the first scheduled $25 million payment on the
loan in April, the newswire reported.
Hearings in the Manhattan court on the company’s reorganization
ended yesterday, and Judge Arthur Gonzalez is preparing to rule on
WorldCom's plan. He also will resolve the severance dispute. Oklahoma
prosecutors in August charged WorldCom and Ebbers with criminal fraud
related to the company's accounting. Ebbers pleaded not guilty. Federal
prosecutors haven't charged Ebbers.
Burlington Industries Faces Objections To Chapter 11 Plan
OK
El Paso Natural Gas Co. filed an objection to confirmation of Burlington
Industries Inc.'s chapter 11 plan, saying the plan would improperly
discharge a $7.8 million claim that El Paso filed for environmental
cleanup at a site in North Carolina for which the companies share
responsibility. According to the objections, in 1997 El Paso and
Burlington Industries entered into a consent decree with the federal
government related to a contaminated site in Statesville, N.C. Under the
settlement they agreed to perform work at the site that El Paso
estimated will cost $12 million, with Burlington Industries owing $7.8
million, the objection filed with the U.S. Bankruptcy Court in
Wilmington, Del. said. Burlington Industries' reorganization plan, filed
in August, provides for the discharge, to the fullest extent allowed, of
all environmental claims made before the company filed for bankruptcy
protection, El Paso said.
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XO Communications Rights Offering Begins
Reston, Va.-based XO Communications Inc. has launched the first stage of
a two-stage rights offering of between 40,000,000 and 43,333,333 shares
of its new common stock at $5.00 per share, according to the business
wire. The first-stage rights will be non-transferable, and will be
issued exclusively to XO's pre-bankruptcy unsecured creditors and equity
holders of record as of Nov. 15, 2002. The first-stage rights will
expire on Nov. 14, 2003. If and to the extent that fewer than 40,000,000
shares are subscribed for in the first stage of the rights offering,
second-stage transferable rights, also exercisable at $5.00 per share,
will be issued to secured XO creditors as of Nov. 15, 2002, and will
expire 30 days after they are issued. The rights offering is being made
pursuant to the company's chapter 11 reorganization that was confirmed
by the bankruptcy court on Nov. 15, 2002.
Foundry's Restructuring Approved
A bankruptcy court has approved a refinancing and restructuring plan for
Neenah, Wis.-based Neenah Foundry, PrimeZone reported. The plan was
approved by company officials, the business's noteholders and the court,
said CEO William Barrett. In August, the company announced that its bank
lenders and debt noteholders approved Neenah Foundry's reorganization
plan under chapter 11 of the Bankruptcy Code, allowing it to file a
'prepackaged' bankruptcy plan with the court. Earlier, the company had
said it would file for bankruptcy unless it couldn't get 95 percent of
the holders of its senior subordinated notes to exchange them for cash
or for a combination of debt securities and equity. Neenah Foundry
manufactures and markets a wide range of iron castings and steel
forgings for the heavy municipal market and selected segments of the
industrial market.
Georgetown Steel Workers Reject Pay Cut; Company Faces
Bankruptcy
Georgetown Steel workers have rejected a plan to cut their pay ten
percent, despite a bankruptcy filing threat from the Georgetown,
S.C.-based mill's owner, the Associated Press reported. The 60-day pay
cut was part of the rescue plan laid out by the mill's owner, Daniel
Thorne. He told the union before the vote he would file for bankruptcy
if workers didn't agree to the pay concession. Members of United
Steelworkers Local 7898 voted 205 to 1217 against the pay cut. Shop
steward Devin Martin says he's waiting to see what Thorne will do, the
newswire reported.
The mill has struggled to find money and customers since the
bankruptcy of its former parent, GS Industries, last year. Georgetown
Steel announced the layoff of 110 workers in June. The rejection of the
pay cut also jeopardizes a short-term financial incentives package by
Santee Cooper, which would give credit worth about $1 million to the
mill, and others, like Midcoast Industries, which will invest an equal
amount and provide a loan. Non-union management workers already agreed
to the pay cut.
Daewoo Motor America Inc. Confirms Reorganization
Plan
Daewoo Motor America Inc. (DMA) announced in a press release that it has
confirmed its plan of reorganization, which became effective yesterday.
DMA filed for protection under chapter 11 of the Bankruptcy Code on May
16, 2002. Judge Sheri Bluebond of the U.S. Bankruptcy Court for the
Central District of California, Los Angeles Division, presided over the
bankruptcy proceedings. The order confirming the plan was entered after
more than a year of negotiations with creditors, dealers and other
parties in interest and after a comprehensive, two-day confirmation
hearing in which the plan was confirmed over the objection of DMA's
parent company, Daewoo Motor Company Ltd. The Compton, Calif.-based
company is the only automobile distributor to file for bankruptcy
protection in recent memory, AP reported.
Malden Mills Can Leave Bankruptcy: Chapter 11 Could Close as
Early as Today
A federal bankruptcy judge has cleared the way for Lawrence-Mass.-based
Malden Mills Industries Inc. to exit bankruptcy protection as a
reorganized company, the Boston Herald reported. Malden, which has
pushed back its expected escape from bankruptcy for months due to legal
and financial hurdles with lenders and creditors, could make the move as
soon as today, a lawyer for the company said, according to the online
newspaper.
The textile maker will emerge under the control of a new,
seven-member board of directors — two picked by senior lenders,
two tapped by unsecured creditors, two independent members and Chairman
Aaron Feuerstein, the Herald reported. Feuerstein, will remain chairman
and president, but will give up the chief executive's post. He also will
control just 5 percent of the company's equity, the newspaper reported.
A new chief executive is expected to be named soon, said Malden
spokesman David Costello. Until then, the company will be run by the
interim Chief Operating Officer David Orlofsky, an executive with the
turnaround firm Kroll Zolfo-Cooper, which has been working with Malden
since it entered chapter 11 bankruptcy in November 2001, the Herald
reported.
Kmart Replaces Independent Auditor
Kmart Holding Corp. has dismissed PricewaterhouseCoopers LLP and hired
BDO Seidman LLP as its independent auditor, according to a document
filed Thursday with the Securities and Exchange Commission, the
Associated Press reported. The filing didn't include a reason for the
change. Kmart reported no disagreements with PricewaterhouseCoopers on
accounting principles or practices, the newswire reported. According to
the filing, in connection with its audit of Kmart's predecessor
company's financial statements for the year ended Jan. 29,
PricewaterhouseCoopers told the audit committee that a reportable
condition existed. PricewaterhouseCoopers said procedures related to
account reconciliation and monitoring activities should be enhanced
based on its observations of the company's real estate accounting area.
Kmart said it had previously identified the items, and financial
statement errors were appropriately corrected in the predecessor
company's amended annual report for the fiscal year ended Jan. 30, 2002,
the newswire reported. Kmart closed nearly 600 stores and shed 57,000
employees after filing for bankruptcy protection in January 2002. It
emerged from bankruptcy in May and company officials say the company
will return to profitability next year.
Echostar Files Bids for Loral Satellites
Echostar Communications Corp. submitted a $1.03 billion bid to acquire
six North American communications satellites from Loral Space &
Communication with the court overseeing Loral's bankruptcy
reorganization, the Associated Press reported. The bid, filed just in
time for an Oct. 15 deadline set by the bankruptcy court, came a week
after Loral rejected a new offer by Echostar to acquire all of Loral for
$1.85 billion, the newswire reported. Echostar, owner of the Dish
Network satellite TV service, had previously bid $1.45 billion.
In rejecting the takeover bid last week, Loral stood by a deal
announced in tandem with July's bankruptcy filing to sell the six North
American satellites to Intelsat Ltd. of Bermuda for about $1 billion.
Including breakup and legal fees owed to Intelsat if that deal falls
apart, the Echostar bid would exceed the Intelsat agreement by about $1
million, AP reported. As a result, Loral will likely conduct an auction
for the six satellites on Monday and then submit the winning bid for
court approval. The company said yesterday that it intends to
participate in that auction. Echostar said its separate offer to acquire
all of Loral remains on the table in addition to the bid for the six
satellites, one of which is jointly owned by the two companies. Loral
filed for bankruptcy last year.
Court Approves Kasper A.S.L. Ltd. Disclosure Statement, Sets
Confirmation Date
Kasper A.S.L. Ltd. reported in a press release that on Oct. 15, 2003,
the bankruptcy court approved its third amended and restated disclosure
statement. The court approval authorizes Kasper to distribute the
disclosure statement and solicit ballots for the acceptance of the
company's Oct. 10 reorganization plan. The company also announced that
objections to the confirmation of the plan must be served and filed on
or before Nov. 11, 2003. The voting deadline is Nov. 12, 2003, and the
bankruptcy court hearing on confirmation of the plan was set for Nov.
19, 2003. Kasper A.S.L., Ltd. is a leading marketer and manufacturer of
women's suits and sportswear. The company's brands include Albert Nipon,
Anne Klein, Kasper and Le Suit.
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