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November 25, 2002
Senator McCain Announces Tentative Committee Agenda
Sen. John McCain (R-Ariz.) announced in a press release last week
initiatives the Committee on Commerce, Science and Transportation is
planning for the 108th Congress. Items on the agenda the committee plans
to examine in communications include the financial crisis in the
industry, spectrum policies, Federal Communications Commission
reauthorization, media consolidation, cable rates, broadband deployment
and local competition, the transition to digital television, online and
offline consumer privacy, ownership diversification and consumer uses of
digital content.
SpectraSite Reorganization Plan Gets Rapid Approval
A bankruptcy court has approved the reorganization plan for Cary,
N.C.-based SpectraSite Holdings Inc., Dow Jones reported. The Thursday
order from the U.S. Bankruptcy Court in Raleigh, N.C., clears the way
for SpectraSite Holdings' creditors to vote on the plan. The company
filed its voluntary chapter 11 petition on Nov. 15, listing assets of
$742 million and $1.8 million in debts.
Under the plan, about $1.8 billion in senior note debt is eliminated,
the newswire reported. SpectraSite Holdings will receive $73.5 million
in net proceeds from the sale of communications towers to Cingular
Wireless and the plan also eliminates a commitment to buy about 300
communications towers from SBC Communications Inc., according to Dow
Jones. The plan calls for 100 percent of the company's general unsecured
claims to be exchanged for new common stock. Under the plan, priority
tax claims, priority claims, senior secured guaranty claims, secured
claims and holders of allowed unsecured claims of less than $25,000 will
be paid in full.
Kaiser Aluminum Files Motion With Bankruptcy Court
Kaiser Aluminum Corp. plans to sell its interest in the Kaiser Center
office complex in Oakland, Calif., to Summit Commercial Properties Inc.
for $65.6 million in cash, Dow Jones reported. In a press release
Friday, the aluminum company said it filed a motion to gain bankruptcy
court approval for the deal. The company, which hasn't occupied
significant space in the Kaiser Center since the early 1990s, believes
the sale will add to its liquidity and let it focus on core operations,
according to the newswire.
Subject to court approval, Kaiser will also solicit competing bids
for its interests in the Kaiser Center. If Kaiser receives no
competitive bids by Feb. 17, then the court should rule at the regularly
scheduled hearing on Feb. 24, and the company expects that the proposed
transaction will close in the second quarter. Kaiser and its advisers
have developed a preliminary timeline that may allow it to emerge from
bankruptcy protection in 2004.
WorldCom, SEC Near Deal That May Not Carry Fine
WorldCom Inc. is close to a settlement with the Securities and Exchange
Commission that may not carry a fine, Bloomberg News reported. Last
week, the Wall Street Journal reported that the SEC and WorldCom
were working toward a settlement that could be completed as early as
this week. The SEC brought fraud charges against WorldCom following
several disclosures of billions of dollars in misstated income. The
accounting scandal catapulted the company, the world's second largest
long-distance carrier, into bankruptcy protection in July.
PSC Files for Bankruptcy, Gets $20 Million in Financing
Portland, Ore.-based PSC Inc., a loss-making software and equipment
supplier for retail applications, said on Friday it filed for chapter 11
bankruptcy protection in New York, but intends to keep operating,
Reuters reported. The company said it lined up $20 million in
debtor-in-possession financing from Littlejohn & Co., a Greenwich,
Conn.-based private equity fund, as part of its prepackaged bankruptcy
plan, the newswire reported. The reorganization plan, which must be
approved by a bankruptcy court, will cancel all of PSC's common and
preferred stock and convert it to a private company under Littlejohn
control, according to Reuters. PSC also said Littlejohn purchased all of
PSC's senior and subordinated debt of $124 million with the intention of
converting 'a significant portion' of this debt into equity during its
restructuring. The company said international operations are excluded
from the bankruptcy filing.
ENRON
EOG Resources Says Enron Sold Last 11.5 Million Shares
EOG Resources Inc. said former parent Enron Corp. sold its remaining
stake in the oil and natural-gas producer as part of a plan by Enron to
raise cash and repay creditors, reported Bloomberg News. Enron, which
filed for bankruptcy last year, sold 11.5
million shares to Goldman Sachs Group Inc., EOG Resources spokeswoman
Elizabeth Ivers said, reported the newswire. EOG acquired 1 million
shares for $38.75 each from Goldman. Enron founded EOG in 1987 and had
reduced its controlling stake by the late 1990s, Bloomberg reported. A
bankruptcy judge ordered the sale of Enron's EOG shares in June. Goldman
sold the remaining 10.5 million shares, previously held by an Enron
affiliate, in blocks to other investors, who were barred from buying
more than 2.9 million shares, Ivers said.
Enron Profited From Bogus Power Orders, FERC Report
Concludes
Enron Corp. used its Portland General Electric utility in Oregon to make
bogus orders
for power in California that helped run up costs for consumers and
violated market rules, a federal regulator concluded, Bloomberg News
reported. Enron and Portland General traders misled the operator of
California's electricity market and rival companies into believing power
lines would be overloaded so that Enron would be paid for relieving the
congestion, according to a staff report filed last week with the Federal
Energy Regulatory Commission. The report cites transactions in April and
June 2000, before power prices in California surged tenfold and the
state's largest utilities became insolvent buying power. The commission
has been investigating allegations of market manipulation by Enron after
the now-bankrupt energy trader disclosed some of its methods.
Bethlehem May Have Spoken Too Soon on Pension Fund
Takeover
Bethlehem Steel Corp. Chief Executive Robert Miller may have spoken too
soon when he
said earlier this month that the U.S. government will take over the
bankrupt steelmaker's $6 billion pension plan, Bloomberg News reported.
'I would say that Mr. Miller's 'will' phrasing is an overstatement of
the situation,'' said Randy Clerihue, a spokesman
for the Pension Benefit Guaranty Corp. (PBGC), the federal agency that
ensures pension payments when companies can't. Bethlehem won't be able
to meet a July deadline for a $190 million payment to its pension plan
and probably will miss a $1 billion payment in 2004, Miller said in an
interview. The PBGC can take over the plan if it stays underfunded and
use company assets to help make payments to workers. A takeover of
Bethlehem's pensions, which are underfunded by $3.2 billion, would be
the largest in PBGC history, Clerihue said.
Peregrine Official Pleads Guilty in Federal Probe of
Company
A former Peregrine Systems Inc. official pleaded guilty on Friday to
conspiracy to commit bank fraud, the first conviction in a federal
criminal investigation of the bankrupt software maker, the Wall
Street Journal reported. Ilse Cappel, who worked as an assistant
treasurer at the San Diego company admitted she and other Peregrine
Systems officials conspired to commit bank fraud to disguise the firm's
financial condition to securities analysts and investors, according to
San Diego U.S. Attorney Carol Lam. Cappel admitted she and others
conspired to sell false and uncollectable receivables to Wells Fargo
HSBC Trade Bank to improve the company's outlook, Ms. Lam said.
Peregrine Systems shares peaked at nearly $80 in 2000, but the company
filed for chapter 11 bankruptcy in September after a series of
disclosures revealing accounting errors. The company has sued its former
auditor, Arthur Andersen, blaming it for the financial plunge.
Court Grants Stay in PG&E Utility Filed-Rate-Doctrine
Suit
A California appeals court this week issued a temporary stay of a lower
court ruling that would allow Pacific Gas & Electric Co. to raise
retail rates by more than $9 billion, the California Public Utilities
Commission (CPUC) said in a press release on Friday, Dow Jones reported.
In the 'filed rate doctrine' lawsuit at issue, the PG&E Corp utility
seeks to require the CPUC to raise rates so it can recoup wholesale
power costs incurred during the state's 2000-2001 power crisis. The
utility racked up more than $9 billion in costs that it couldn't pass
along to customers whose rates were frozen, and filed for chapter 11
bankruptcy protection in April 2001.The CPUC's motion to dismiss the
lawsuit was denied by a federal district court, so the commission
appealed to the U.S. Ninth Circuit Court of Appeals. The Ninth Circuit
on Thursday granted the CPUC's request to stay the district court
proceedings until it rules on the merits of the commission's appeal, the
release said.
NRG Energy: Involuntary Chapter 11 Filed
Xcel Energy's NRG Energy Inc. unit intends to conduct business as usual
despite the filing of an involuntary chapter 11 petition against the
company on Friday by five former NRG executives over back pay, Dow Jones
reported. In a press release on Sunday, NRG, which had hoped to announce
a prepackaged bankruptcy deal by next month, said talks will continue
with its banks and bondholders, none of whom have signed the involuntary
petition.The company owes about $10 billion to its banks and to various
bondholders and Xcel recently offered to transfer the unit to those
creditors, along with $300 million in cash. NRG is currently considering
its options and said it may seek to have the petition dismissed, or
converted to a voluntary bankruptcy under chapter 11. Xcel wrote off
$2.9 billion in value at NRG during the third quarter, and said earlier
this month there is a substantial likelihood that NRG will be the
subject of a bankruptcy proceeding in some form, according to a recent
Securities and Exchange Commission filing.
Agency Seeks Control Of Ex-Global Crossing Unit Pension
The federal agency that insures corporate pension plans will ask a New
York court today for the right to take over a former Global Crossing
Ltd. unit's pension plan, Dow Jones reported. The unit was sold last
year to Citizens Communications Co. of Middletown, N.Y. The Pension
Benefit Guaranty Corp. (PBGC) said it will ask the U.S. District Court
for the Southern District of New York to terminate the Global Crossing
North America Inc. Frozen Pension Plan as of Dec. 3, and appoint PBGC
its trustee.
In its bankruptcy proceedings, Global Crossing has proposed a plan of
reorganization that includes transfer of the pension plan to a
liquidating trust. The reorganization plan could be approved at a Dec. 4
court hearing. If the PBGC doesn't act before then, the agency will be
unable to recover anything from the trust to cover the plan's unfunded
liabilities, the agency said.
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