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Vehicle Sales, Personal Spending Slow in February
U.S. consumer borrowing through credit cards and auto loans rose at a
slower pace in
February as vehicle sales fell and personal spending stalled, economists
said, Bloomberg News reported. Americans probably took out $3 billion
more in loans in February after January credit rose $13.2 billion, a
Bloomberg survey of economists found. The January increase was the
largest since a gain of $18 billion in November 2001, when auto
manufacturers offered zero-interest loans. The figures exclude
mortgages. 'Consumers are growing cautious because of the weak labor
market,'' said Richard Yamarone, chief economist at Argus Research Corp.
in New York. 'Consumers are probably going to be more prudent in the
months ahead,'' reported the newswire.
Labor, Industry Negotiating Asbestos Exposure Criteria
Key labor and industry officials on Friday were trying to reach
agreement over how to ensure victims of asbestos poisoning are
adequately compensated under a litigation reform bill being drafted by
the Senate Judiciary Committee, CongressDaily reported. Observers
agree that a consensus between business and labor will be a crucial
ingredient for success in the closely divided Senate, where Judiciary
Chairman Orrin Hatch (R-Utah) has given the interested parties until
next Thursday to make their legislative suggestions known.
Meanwhile, industry executives, intent on securing predictability and
certainty in their asbestos liability obligations, this week settled on
an overall figure -- $108 billion over 20 years -- as the starting point
for the discussion, a figure that labor already has rejected as too low,
reported the newswire. Hatch is drafting a bill premised on the creation
of a specialized adjudicated system that uses medical criteria to
determine eligibility and draws against a defined contribution plan. The
Senate Judiciary Committee is slated to mark up class action reform
legislation on Thursday, reported the newswire.
Consolidated Freight Seeks to Raise $400 Million in Terminal
Sales
Consolidated Freightways Corp. wants to raise as much as $400 million by
auctioning 220 terminals in cities such as Indianapolis next week,
Bloomberg News reported. The company is liquidating assets after filing
for bankruptcy protection, according to a Business Wire statement. The
company had liabilities of $791.3 million, according to its last
quarterly Securities and Exchange Commission filing, reported the
newswire.
WORLDCOM
Silver Lake Partners Invests $175 Million in WorldCom
Bonds
Silver Lake Partners LP, a buyout firm specializing in technology
investments, has bought $175 million of bonds of WorldCom Inc., betting
the telephone company can get out of bankruptcy and become profitable,
Bloomberg News reported. Silver Lake is working with WorldCom Chief
Executive Officer Michael Capellas and other creditors on a
reorganization plan due April 15, the firm said in a letter to its
limited partner investors obtained by Bloomberg News. WorldCom, which
filed for bankruptcy in July with more than $40 billion in liabilities,
can fix its balance sheet, the letter said, reported the newswire.
WorldCom's Embratel Extends Payment Terms on $861 Million of
Loans
Embratel Participacoes SA, Brazil's biggest long-distance telephone
company, said it reached agreement with creditors to extend payment on
$861 million of debt due this year and the first half of 2004, Bloomberg
News reported. The company, a unit of WorldCom Inc., will extend
payments on $758 million of the total amount over two years after first
repaying 20 percent of the amount when it matures, the company said in a
news release distributed by PRNewswire. Embratel, which has been in
talks with banks since October, said the refinancing agreement with 25
creditors would free up cash to invest in its networks and pay down
debt, reported the newswire.
ALTRIA
Altria Bonds, Shares Decline After Illinois Rejects Bonding
Cap
Altria Group Inc.'s bonds and shares fell on concerns that the company's
Philip Morris USA unit likelihood of seeking bankruptcy protection
increased after Illinois lawmakers rejected a bill to limit the amount
of money tobacco companies must deposit to appeal legal judgments,
Bloomberg News reported. Philip Morris must come up with $12 billion by
April 21 to appeal a $10.1 billion lawsuit it lost about misleading
advertising. Philip Morris said it will continue to work with lawmakers
for a resolution, reported the newswire.
Altria Presses Illinois Court To Waive Bond
Requirement
Altria Group Inc.'s Philip Morris USA division, running out of options
to avoid posting a $12 billion court-ordered bond, may need to cut an
expensive deal with plaintiffs' lawyers in an Illinois lawsuit,
tobacco-litigation experts said, the Wall Street Journal
reported. On Friday, the cigarette unit of Altria Group pressed Illinois
courts to reduce the bond, needed to appeal a $10.1 billion verdict
against it for deceiving smokers that light cigarettes are less harmful
than regular cigarettes. If Philip Morris can't persuade the courts to
reduce the bond requirement, it may have to pursue a deal similar to one
it reached in 2001 with plaintiffs' lawyers in Florida, reported the
Journal. To appeal a $144.8 billion verdict against tobacco companies,
Philip Morris struck an unusual deal with anti-tobacco lawyers,
forfeiting $500 million in exchange for their pledge to forgo bonding
for the full amount of damages.
Armstrong Wins Court Approval to Settle 360 Asbestos Claims
Armstrong World Industries Inc. won court approval to pay $2 million to
settle 360 asbestos claims by property owners, Bloomberg News reported.
U.S. Bankruptcy Judge Randall Newsome approved the accord at a
hearing in Wilmington, Del. The property owners sued to recover damages
caused by the presence or removal of Armstrong building materials that
contained asbestos. 'There is no question that $2 million to settle this
many claims is an extraordinary result,'' Newsome said on Friday,
reported the newswire. Armstrong sought bankruptcy protection in
December 2000 amid an onslaught of asbestos suits alleging health
problems and property damage. Similar suits have forced more than 60
companies into bankruptcy since 1982.
Kraft Borrows From Credit Facilities After Ratings
Downgrades
Kraft Foods Inc. has begun to borrow against its credit facilities to
pay for business needs, Bloomberg News reported. The company turned to
the facilities after recent downgrades of its debt eliminated access to
the commercial paper market, Northfield, Ill.-based Kraft said in a
statement distributed by Business Wire.
Fleming Wins Approval of $50 Million Bankruptcy Financing
Package
Fleming Cos. won a bankruptcy judge's approval of $50 million in
financing designed to allow the company to pay suppliers while it
restructures, Bloomberg News reported.
U.S. Bankruptcy Judge Mary Walrath in Wilmington, Del., approved the
interim debtor-in-possession loan provided by a group led by Deutsche
Bank AG and J.P. Morgan Chase & Co. after Fleming said it needed
immediate financing to keep customers' shelves stocked. Talks are
continuing with the banks over a $150 million financing package,
Flemings' lawyers told the judge on Thursday, reported the newswire. The
Lewisville, Texas-based company filed for bankruptcy protection on
Tuesday after failing to recover from the loss of its largest customer,
Kmart Corp., and a Securities and Exchange Commission accounting
probe.
Bronner Named US Airways Board Chairman
As expected, US Airways Group Inc. named David G. Bronner, head of
Alabama's state pension fund, as nonexecutive chairman, Dow Jones
reported. Retirement Systems of Alabama (RSA) now owns about 37 percent
of the airline and controls a majority of the board seats at the
carrier, which emerged from bankruptcy protection this week. Last month,
the company submitted a plan to emerge from bankruptcy that gave eight
of its 15 board seats to representatives of RSA. The pension plan, which
provided US Airways with interim financing in chapter 11 and pledged to
invest $240 million, indicated at the time that Bronner would eventually
take over as chairman. He replaces Stephen M. Wolf, who once was chief
executive of United Airlines parent UAL Corp., reported the
newswire.
Court OKs Settlement Between Asia Global, Global Crossing
A bankruptcy court has approved Asia Global Crossing Ltd.'s settlement
with Global Crossing Ltd. that resolves all claims between the two
firms, Dow Jones reported. Asia Global Crossing said in its motion from
March 7 that the settlement is in its best interest because of the
potential cost of litigation against Global Crossing. The deal was also
necessary for Asia Global Crossing to close the recent sale of its
assets, according to court papers recently obtained by Dow Jones
Newswires. The entity engaged in the bankruptcy proceedings is still
known as Asia Global Crossing after a sale of the company's assets,
reported the newswire. Judge Robert E. Gerber of the U.S.
Bankruptcy Court in Manhattan signed an order approving the settlement
on Monday.
Globalstar Gets $55 Million Investment by Thermo Capital
Partners
Globalstar LP said Thermo Capital Partners LLC will invest $55 million
as it seeks control of a company that built a $4 billion worldwide phone
system, Bloomberg News reported. The financing will give New
Orleans-based Thermo Capital 67 percent of the reorganized company's
shares, Globalstar said in a statement. Creditors including bondholders,
Loral Space & Communications Ltd. and Qualcomm Inc. will get the
remaining shares. The Thermo Capital bid, which came as part of an
auction for Globalstar's assets, is subject to a judge's approval,
reported the newswire. 'The goal of this agreement is to move the
company toward emerging from chapter 11 later this year,'' said Mac
Jeffrey, Globalstar's spokesman, Bloomberg reported.
Court Confirms Thermadyne Reorganization
Thermadyne Holdings Corp.'s bankruptcy organization plan, which will
reduce the company's long-term debt to about $230 million from $800
million, was approved by the U.S. Bankruptcy Court, Dow Jones reported.
In a press release on Friday, the company said the plan has already been
approved by the company's senior secured lenders. The plan is expected
to be put into practice in May. The approved plan calls for the issuance
of 13.3 million common shares. Bondholders and noteholders that are
accredited will have the opportunity to purchase all of the company's
new stock issued to the lenders, for cash, provided they do so before
Thermadyne emerges from bankruptcy. The plan also provides for cash
distributions to the company's unsecured claims, reported the
newswire.
Magellan Health Gets Court OK To Pay Fees On Equity Deal
A bankruptcy court authorized Magellan Health Services Inc. to pay fees
to potential equity investors that agreed to buy up to $50 million in
stock in the restructured company, Dow Jones reported. The motion was
approved by the U.S. Bankruptcy Court in Manhattan despite two
objections, an attorney representing Magellan told Dow Jones Newswires
on Friday. As reported, the company intends to pay a $1 million breakup
fee, a $1.5 million commitment fee and up to $250,000 in expense
reimbursement on an equity financing deal with Amalgamated Gadget L.P.
and Pequot Capital Management Inc., reported the newswire.
Genuity Subsidiary Refiles Lawsuit Against Nortel Networks
A unit of Genuity Inc. refiled a lawsuit on Friday against Nortel
Networks Corp. alleging breach of contract as well as deceptive acts and
practices in connection with a service agreement, according to court
papers obtained by Dow Jones Newswires. Genuity Solutions Inc., a wholly
owned subsidiary of Genuity, filed an adversary proceeding on Friday
with the U.S. Bankruptcy Court in Manhattan, which is overseeing their
bankruptcy case. Genuity Solutions originally filed a complaint on Oct.
2, 2002, as a civil suit, before it and its parent company filed for
chapter 11 bankruptcy protection on Nov. 27, 2002. U.S. District Judge
Lewis A. in January ruled that the suit should be heard in bankruptcy
court because the claims asserted, as well as any counterclaims by
Nortel Networks, 'would have a clear and direct impact' on property of
Genuity's bankruptcy estate, reported the newswire.
Ntelos Seeks Court OK For $8.7 Million Cable TV Business Sale
Ntelos Inc. is seeking bankruptcy court permission to sell its cable
television business to Rapid Communications LLC for $8.7 million, Dow
Jones reported. The proposed sale is part of Ntelos' plan to shed
noncore assets and focus on its wireline and wireless telephony and
Internet access, the telecommunications company said in court papers
obtained on Wednesday. The U.S. Bankruptcy Court in Richmond has
scheduled a hearing on the matter for April 16. Waynesboro, Va.-based
Ntelos filed for chapter 11 bankruptcy on March 4, listing total assets
of $800 million and total liabilities of $785 million as of Dec. 31,
2002, reported the newswire.
Sonicblue Sells GoVideo Business to Opta Systems for $12.5
Million
Sonicblue Inc., a bankrupt maker of television recording devices, sold
its GoVideo
business to Opta Systems LLC for $12.5 million, Bloomberg News reported.
U.S. Bankruptcy Judge Marilyn Morgan on Friday approved the sale, which
was announced last month when Sonicblue filed for bankruptcy protection.
The sale of GoVideo, a line of integrated DVD and VCR players, was
brokered by former executives of Sensory Science Corp., which developed
GoVideo before Sonicblue purchased it in
June 2001 for $20.5 million, reported the newswire.
AMR Workers to Get 15 Percent Profit-sharing, 25 Percent Equity
Stake in Plan
Fort Worth, Texas-based AMR Corp.'s American Airlines will set up a 15
percent profit-sharing plan and issue options for 25 percent of company
stock as part of proposals on labor savings negotiated with unions,
Bloomberg News reported. The company also will issue stock to aircraft
lessors, suppliers and other creditors in return for concessions still
being negotiated, according to the newswire. The labor agreements,
reached with leaders of American's three main unions on Monday, will cut
$1.8 billion from yearly costs if approved by union members. The amount
will be added to $2 billion in other savings to help the company avoid
bankruptcy and compete with growing low-cost rivals, Bloomberg
reported.
UNITED AIRLINES
UAL CEO Reduces Salary by Additional 14 Percent
UAL Corp. CEO Glenn Tilton cut his salary by an additional 14 percent,
bringing his total pay reduction for this year to 25 percent, Bloomberg
News reported. Tilton announced the additional cut one day after Delta
Air Lines Inc. CEO Leo Mullin gave up $9 million of his compensation.
Some members of Congress have criticized executive pay at U.S. airlines
as the industry asked for federal aid and some carriers sought
bankruptcy protection, reported the newswire.
UAL Attendants, Dispatchers Reach Tentative
Contracts
UAL Corp. reached tentative six-year agreements with two unions in its
effort to cut
costs to emerge from chapter 11 bankruptcy protection, Bloomberg News
reported. United reached agreements with the Association of Flight
Attendants (AFA) and the Professional Airline Flight Control
Association, the company said in a statement. Details, including
financial concessions from the employee groups, weren't disclosed. 'The
AFA's Master Executive Council will review and approve the tentative
agreement next week and more details will be released at that point,''
said Sara Dela Cruz, a spokeswoman for the flight attendants union,
reported the newswire.
FAO Receives Court Approval for Reorganization Plan
FAO Inc.won court approval for its recovery plan, clearing the way for
the company
to emerge from bankruptcy, Bloomberg News reported. Approval of the plan
on Friday by U.S. Bankruptcy Judge Lloyd King allowed the company to
meet a deadline imposed by creditors and lenders to avoid liquidation.
Now FAO's financing package requires the company to complete the plan by
April 18. FAO filed for bankruptcy protection in January in the face of
competition for educational toy sales by discounters such as Wal-Mart
Stores Inc. As part of its reorganization effort, FAO has closed some
stores and fired workers. It also plans to sell toys at 245 Saks Inc.
locations, reported the newswire.
Enron Judge Tells Bankruptcy Court to Scrutinize Asset
Sales
A federal judge told the bankruptcy judge presiding over Enron Corp.'s
reorganization to scrutinize more closely the way the energy company
uses money it receives from selling assets, Bloomberg News reported. Two
months after filing for bankruptcy protection, Enron sold its
wind-turbine manufacturing assets to General Electric Co. for $493
million in cash and assumed debt. Enron Wind Corp. was among the world's
largest operators of wind turbines. A bankruptcy judge accepted Enron's
plan for allocating the cash portion of the deal between Enron Wind's
insolvent domestic units and its solvent European ones. Creditors of the
U.S. units objected, saying more cash should go to the domestic arms.
U.S. District Judge Jed Rakoff said last week that the bankruptcy judge
hadn't sufficiently reviewed Enron's allocation plan and ordered a
hearing to ensure Enron wasn't 'self-dealing,'' reported the
newswire.
HealthSouth Asks Its Lenders For Month of Breathing Room
The board of HealthSouth Corp. is seeking an agreement with its key
creditors to refrain from forcing the health-care provider into
bankruptcy-court proceedings for one month while the company's new
leadership comes to grips with its tangled finances, according to people
familiar with the situation, the Wall Street Journal reported.
The company is in default to some bank and bondholder groups, giving
those creditors the legal right to try to force an involuntary chapter
11 filing. So far the creditors have agreed not to take any such action,
and the company would like that commitment extended for 30 days to get a
better handle on its financial condition, reported the
Journal.
Adelphia Communications Equity Panel Opposes Hiring Cable
Expert
The committee of equity holders in Adelphia Communications Corp.'s
bankruptcy proceedings said it opposes allowing the company to hire a
proposed expert witness in connection with a lawsuit that the committee
brought against the company, Dow Jones reported. The company is seeking
to deprive the equity holders of similar expert advice, the committee
said in an objection filed on Thursday. The U.S. Bankruptcy Court in
Manhattan, which is overseeing Adelphia Communications' case, has
scheduled a hearing for Monday to consider the matter, reported the
newswire.
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