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January 10, 2007
name='1'>Mills’ Debt Could Lead to Bankruptcy
Filing
The Mills Corp. warned
Tuesday that a heavy debt load could force the mall developer into
bankruptcy if it is unable to follow through with its plans to sell all
or part of the company, the Associated Press reported
yesterday. The warning came in a Securities
and Exchange Commission filing that also detailed the results of an
internal audit showing accounting errors and possible executive
misconduct. The Chevy Chase, Md.-based company
size='3'>said it may not have enough cash to continue operating beyond
March 31 and that it would be forced to sell all or part of the company
to pay off a $1 billion loan that is due on that date. Mills is looking
for a buyer while it works to restate its earnings due to accounting
errors.
href='http://biz.yahoo.com/ap/070109/mills_audit.html?.v=6'>Read
more.
Airlines
Airways Increases Offer to Buy Delta Air Lines
US Airways Group Inc.
raised its offer to buy rival Delta Air Lines Inc. to $10.2 billion from
$8 billion by increasing both the cash and stock portions of the offer,
the Wall Street
Journal reported today.
w:st='on'>
size='3'>US
size='3'>Airways is now offering $5 billion in cash and 89.5 million
shares worth $5.18 billion based on Tuesday's closing price. The
company's original bid in November was for $4 billion and 78.5 million
shares.
face='Times New Roman'
size='3'>US
size='3'>Airways said that using the same valuation methodology and
assumptions as described in Delta's disclosure statement with U.S.
Bankruptcy Court, US Airways' advisor Citigroup Inc. estimates the
boosted offer will provide between $12.7 billion and $15.4 billion in
value to Delta's unsecured creditors. That compares with the $9.4
billion to $12 billion valuation Delta has for the company under its
reorganization plan.
href='http://online.wsj.com/article/SB116842964790072513.html?mod=home_whats_news_us'>Read
more. (Registration required.)
In related news, the
Senate Committee on Commerce, Science and Transportation scheduled a
Jan. 24 hearing on the potential impact of widespread consolidation in
the airline industry in response to US Airways Group Inc.'s bid to
acquire Delta Air Lines Inc., the
size='3'>Wall Street Journal reported today.
The hearing comes after an aggressive campaign by Delta executives to
generate political opposition in
w:st='on'>
size='3'>Washington
proposed merger. Delta next hopes to gain court approval on Feb. 7 to
begin asking creditors to formally approve its own reorganization plan,
which would effectively kill the merger and permit the Atlanta airline
to exit bankruptcy protection as an independent company, possibly as
soon as April.
href='http://online.wsj.com/article/SB116838939476672065.html?mod=us_business_whats_news'>Read
more.
name='3'>Northwest to File Reorganization Plan by Next
Week
Bankrupt Northwest
Airlines Corp. intends to file its reorganization plan with a
size='3'>U.S.
size='3'>bankruptcy court by early next week, Reuters reported
yesterday. The airline, which has been operating under bankruptcy
protection since September 2005, has until Jan. 16 to exclusively file a
reorganization plan with the court. The No. 5 U.S. carrier has said it
plans to come out of bankruptcy in the first half of this year.
href='http://www.nytimes.com/reuters/business/business-northwest-bankruptcy.html?pagewanted=print'>Read
more.
In related news,
Northwest Airline Corp. regional operator Pinnacle Airlines Corp. agreed
to assign $355 million of its $377.5 million in unsecured claims against
the bankrupt airline to third parties for $288 million, Pinnacle said in
a U.S. Securities and Exchange Commission filing Tuesday,
Bankruptcy Law360
reported yesterday. Northwest’s debtors filed a
motion at the end of December asking the bankruptcy court overseeing the
airline’s chapter 11 proceedings to approve an amended airline
services agreement (ASA) and claim resolution agreement with Pinnacle.
In the claim resolution agreement, Northwest agreed to give Pinnacle
$377.5 million for all claims filed by the regional carrier against its
bankrupt parent. Pinnacle said in the amended ASA it agreed to be a
long-term partner with Northwest until at least 2017.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=16078'>Read
more. (Registration required.)
name='4'>Mesaba Shareholders Attack Northwest
Offer
Two shareholders of
Mesaba Airlines’ parent company attacked Northwest’s
proposal to buy the bankrupt carrier, contending that the deal
significantly underestimates Mesaba’s true value,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. On Monday, Riley Investment Partners and
Thales Fund Management objected to the unsecured creditors’
committee’s bid to file a reorganization plan on behalf of Mesaba.
Bankrupt Northwest revealed last week that it had reached a deal with
Mesaba in which it would pay Mesaba's estate $145 million and provide
the feeder with $10 million in operating cash. Northwest Airlines owns
27.5 percent of Mesaba’s parent company, MAIR Holdings Inc. After
news of the potential sale surfaced, the unsecured creditors’
committee subsequently asked the court to grant the group authority to
submit a restructuring plan if the MAIR board does not endorse the
transaction.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=16080'>Read
more. (Registration required.)
name='5'>Publishers Want Bankrupt AMS to Return Books
Publishing giants are lining up
to get unsold books back from bankrupt book marketer
face='Times New Roman'>Advanced Marketing Services
Inc., Bankruptcy
Law360 reported yesterday. Advanced Marketing
suggested a process for reclamations in a motion filed Monday in U.S.
Bankruptcy Court for the District of Delaware following motions filed
Friday and Monday by Simon & Schuster Inc., Random House and Design
Eye Ltd. Advanced Marketing said in court documents that it has an
estimated $24.5 million in goods that may be subject to reclamation
claims. The company’s lawyers say that if vendors are allowed to
take the inventory back now, the business of Advanced Marketing
“will be severely disrupted.” Advanced Marketing also said
that the inventory is subject to a floating lien asserted by the senior
lenders, which would take priority over any reclamation claims.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=16083'>Read
more. (Registration required.)
name='6'>Allied Seeks Fifth Exclusivity Extension
Hoping for more time to
negotiate with the International Brotherhood of Teamsters union, Allied
Holdings Inc. asked for bankruptcy court approval of a fifth extension
of its exclusive period to file a chapter 11 plan,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. Allied asked to have until Feb. 23 to file
a chapter 11 reorganization plan, and until April 24 to solicit creditor
support. The current deadlines are set for Jan. 17 and March 21. Over
3,600 of Allied’s unionized workers are Teamsters A hearing on the
matter has been scheduled for Jan. 25.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=16133'>Read
more. (Registration required).
name='7'>Trustee Appointed to Investigate Potential Financial Fraud
in Le-Nature's Bankruptcy Case
size='3'>R. Todd Neilson of LECG was appointed
yesterday by U.S. Bankruptcy Court Chief Judge
face='Times New Roman' size='3'>M. Bruce McCullough
size='3'>to look into potential financial fraud claims in
LeNature’s bankruptcy case, the
size='3'>Pittsburgh Post-Gazette reported
today. Lenders who hold about 70 percent of Le-Nature's $285 million
secured debt have subpoenaed former officers and directors, Le-Nature's
accountants and Wachovia in order to determine what happened to their
money. Judge McCullough said yesterday that he would delay a decision on
whether to allow the subpoenas for three weeks in order to give Neilson
time to decide whether he will conduct the investigation or let
creditors proceed with their own probe.
href='http://www.post-gazette.com/pg/07010/752495-28.stm'>Read
more.
Says that Rate Freeze Could Precipitate Bankruptcy Filing
Commonwealth Edison
opposed a recently approved electricity rate freeze by taking it to
court and, if that doesn’t work, said that it will likely file for
bankruptcy, Bankruptcy Law360 reported
yesterday. The power company has argued that if the rate freeze is
enacted by the Illinois legislature, it will lose close to $4 million a
day, adding up to $1.4 billion a year, a scenario in which its corporate
parent, Exelon Corp., would not be able to provide any help. The
Illinois House of Representatives approved the new three-year rate
freeze, proposed by House Speaker Michael Madigan, which will extend the
current rate freeze by another three years, locking Illinois into 1997
retail power prices. The bill will now be considered by the Senate.
ComEd has threatened that should the freezes go in place, it will be
forced into bankruptcy.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=16082'>Read
more.
IRS
Use of Private Debt Collectors Is Criticized
The national taxpayer
advocate called upon Congress yesterday to repeal the authority of the
Internal Revenue Service to use private debt collectors, the
New York Times
size='3'>reported today. In her annual
report, taxpayer advocate Nina E. Olson said that the private debt
collection program was economically inefficient and prone to abuse. In
particular, she faulted the IRS for not disclosing certain
“psychological techniques” used by the private contractors
to try to collect unpaid taxes. Olson’s office provided its most
extensive review yet of the private debt-collection program, which it
has been monitoring for two years since plans for it were announced.
Private debt collection has drawn criticism that it is not
cost-efficient and that some of the private firms hired by the IRS have
questionable business practices.
href='http://www.nytimes.com/2007/01/10/business/10tax.html?pagewanted=print'>Read
more.
International
name='10'>Canadian Board Game Company Files for
Bankruptcy
Headz Gamez International
has filed for bankruptcy, owing at least $5.7 million, CBC Canada
reported yesterday. Bankruptcy documents list 85 unsecured creditors,
including 13 employees in
w:st='on'>British
Columbia
shareholders who owed $2 million.The company's only asset,
valued at $2 million, is the intellectual property related to the idea
for the sports-themed board games.
href='http://ca.news.yahoo.com/s/09012007/3/canada-headz-gamez-files-bankruptcy.html'>Read
more.
name='11'>TROUBLED COMPANIES IN THE NEWS
1000’s of companies lose
money or experience some form of difficulty each
quarter.
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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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American Technology Corp.,
a
size='3'>San Diego,
w:st='on'>
size='3'>Calif.
size='3'>sound-technology company, reported a fiscal net loss of $7.7
million. Revenue declined 12%--to $8.9 million.
size='3'>Blockbuster Inc., the Dallas,
Texas-based chain of video-rental stores, reached a deal to sell its
Rhino Video Games chain of stores to GameStop Corp. for an undisclosed
amount. The transaction should be completed by the end of the month.
Rhino Video has seventy-two locations in the Southeast.
Texas-based GameStop, which two years ago bought Electronics Boutique,
has more than 4,600 retail stores around the world.
size='3'>Gap Inc., the
w:st='on'>
Francisco
w:st='on'>
size='3'>Calif.
retailer, is reportedly talking with Goldman Sachs Group Inc. regarding
strategic alternatives, including the possibility of putting itself up
for sale. Gap, which operates the Gap, Old Navy and Banana
Republic chains, has suffered weak sales and earnings in recent years
and most recently suffered a poor holiday season in 2006 amid a heavy
discounting strategy. The retailer, which is reviewing its units, has a
market value of about $16.4 billion. But the firm's low level of debt
could make the price relatively easy for buyout groups to deal
with.
size='3'>Intel Corp., the
w:st='on'>Santa
Clara
w:st='on'>
size='3'>Calif.
closing its research and development center in
w:st='on'>
size='3'>South Korea
size='3'>as part of an ongoing restructuring. The firm added that it
will continue shaking out its operations around the world over 2007's
first two quarters.
size='3'>VaxGen's president, CEO and chairman,
Lance Gordon, quit, amid troubled times at the vaccine maker.
The
Ca. biotech firm said it will slash its staff in half as it looks for
other ways to save money, which could ultimately call for a sale or
merger of the firm. VaxGen, which not long ago lost a nearly $880
million anthrax vaccine contract with the government, reportedly had
cash and equivalents of $96.6 million as of the end of last
year.
size='3'>Virage Logic Corp., a semiconductor
intellectual property company in the
w:st='on'>
Francisco
w:st='on'>
size='3'>Calif.
seen company cofounder Adam Kablanian resign from his positions as
president and CEO. The company expects to report a loss for its
first quarter on revenue of between $11 million and $12
million.