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April 4, 2006
id='1'>Proxim Seeks More Time for Chapter 11 Plan
Seeking more time to iron
out its negotiations with creditors, wireless equipment maker Proxim
Corp. has asked a federal court for a 60-day extension of its
reorganization plan,
size='3'>Portfolio Media reported yesterday.
Proxim, based in
face='Times New Roman' size='3'>San Jose
size='3'>,
size='3'>Calif.
requested an extension of its exclusivity period to develop a chapter 11
plan through June 8, according to a court filing Thursday. The company
has also asked for more time to persuade creditors to accept the plan
until Aug. 5. Its current exclusivity period to develop a plan ends
Sunday, but will continue until an April 11 hearing in the U.S.
Bankruptcy Court in
w:st='on'>
size='3'>Wilmington
w:st='on'>
size='3'>Del.
for chapter 11 protection on June 11 with assets of
$55.4million
and debts of $101.8 million. The immediate case is
face='Times New Roman' size='3'>In re Proxim Corp.
size='3'>, case no. 1-05-BK-11639, in the U.S. Bankruptcy Court for the
District of Delaware.
id='2'>Critical Two-Week Period for Delta as Pilots Consider
Strike
The union representing
Delta Air Lines pilots is scheduled today to announce results of a
strike-authorization vote, kicking off what is likely to be the most
grueling two weeks since the Atlanta-based carrier filed for
bankruptcy-court protection in September, USA
Today reported today. Delta's pilots union
will announce whether members have voted to strike if Delta scraps their
labor contract with the OK of the bankruptcy court. More than 90 percent
of flight attendants at Delta's Cincinnati-based regional carrier,
Comair, already voted to strike that carrier if their contract is thrown
out. Court decisions on both labor contracts are expected within two
weeks, making it a pivotal period in Delta's six-month-old bankruptcy. A
judge could rule on the Comair contract this week.
face='Times New Roman' size='3'>
href='http://news.yahoo.com/s/usatoday/20060404/bs_usatoday/deltaheadsintokey…'>Read
more .
In related news, Delta
has reached an amended financing deal with lender General Electric
Corp., Portfolio
Media reported yesterday. Delta revised its
aircraft and engine parts financing deal, granting GE the right to a put
on leases for up to 15 regional jets. This grants GE the ability to
lease Delta the additional planes, but does not make the lease
mandatory. As part of the amended agreement, Delta will pay $215 million
to lease 15 jets over a 172-month period. GE will have until March 2007
to exercise its put rights.
size='3'>GE has already exercised its put rights for three planes. In
exchange, GE amended the collateral requirements used to secure part of
Delta’s fleet.
Autos
id='3'>Meridian Files Reorganization Plan
Taking the next step in
its chapter 11 proceedings, beleaguered Meridian Automotive Systems Inc.
this week filed a reorganization plan that proposes giving pre-petition
first-lien debtholders—Camulos Master Fund LP, DK Acquisition
Partners LP and Stanfield Capital Partners LLC—an 88 percent
recovery in cash,
size='3'>Portfolio Media reported yesterday.
The auto parts supplier’s debtholders have yet to approve the
plan. If they vote not to approve it, they will receive a 30 percent
cash recovery and new notes.
w:st='on'>
size='3'>Meridian
second-lien debtholders, however, will receive new equity for their
claims and possibly the right to participate in an offering of new
convertible preferred stock. The company’s plan was filed without
a disclosure statement. Last week,
face='Times New Roman' size='3'>Meridian
size='3'>asked Chief Judge Mary F. Walrath of the U.S.
Bankruptcy Court for the District of Delaware in
w:st='on'>
size='3'>Wilmington
allow an additional 30 days to file the statement. A hearing on that
motion is set for May 9. The case is Meridian
Automotive Systems-Composites Operations, Inc
size='3'>., case no. 05-11168, in the
w:st='on'>
size='3'>U.S.
size='3'>Bankruptcy Court for the District of
Delaware.
id='4'>Delphi CEO Sees Recovery of
w:st='on'>
size='3'>U.S.
size='3'>Automobile Industry
The U.S. auto industry has
suffered painful losses, but remains far from dead and can recover just
as the U.S. steel industry has, Delphi Corp. CEO Steve Miller said,
Reuters reported yesterday. 'Don't go making the funeral arrangements
just yet for the American auto industry,' Miller said in a speech to the
Detroit Economic Club, adding there would be a promising future after
plenty of pain from the wrenching changes that will occur.
face='Times New Roman'>The steel industry in the
States
restructured and is now profitable after working through many of the
same issues that plague the auto industry, Miller
said.But to
match the steel industry, Delphi must cut hourly wages that are triple
those that other
w:st='on'>
size='3'>U.S.
size='3'>auto parts suppliers pay workers, and engineer a 'soft landing'
for thousands of hourly workers who are blameless for the company's
losses, Miller said.
href='http://go.reuters.com/newsArticle.jhtml?type=businessNews&storyID=11736…'>Read
more .
In related news, the real
purpose behind General Motors’s spin off its $30-billion
partsmaking business into Delphi Corp. to shareholders in 1999 was to
gradually withdraw its own purchasing favor from factories that
managerial negligence had allowed to become grossly cost-inefficient and
to impose a 'sink or swim' mandate on Delphi's management, according to
an op-ed in the Wall Street Journal today. Steve Miller,
Delphi's CEO, has a broad objective to shrink
w:st='on'>
size='3'>Delphi
policy GM itself should have been following in the 1980s and '90s. He
aims to shut down the plants that produce generic components like spark
plugs and brakes, leaving behind only business sectors like electronics,
climate control and engine management, where it has some sort of
proprietary edge.
href='http://online.wsj.com/article_print/SB114411618421616144.html'>Read
more . (Free registration required)
GM
Board Shows Support for Embattled CEO
The board of General Motors
expressed support Monday for Rick Wagoner, the company's embattled chief
executive, as GM announced a long-anticipated deal to sell a majority
stake in its financing arm, the General Motors Acceptance Corporation,
for $7.4 billion, the New York Times reported today. It marked
the board's first public comment on Wagoner since a spate of recent bad
news, but analysts said it did not indicate unconditional backing.
Indeed, accounting missteps prompted a board investigation two weeks ago
after one error forced GM to increase its losses in 2005 by $2 billion,
to $10.6 billion. In a statement announcing the GMAC sale, GM's lead
outside director, George M. C. Fisher, said that, 'While there is still
much work to be done, the GM board has great confidence in Rick Wagoner,
his management team and the plan they are implementing to restore the
company to profitability.'
href='http://www.nytimes.com/2006/04/04/business/04auto.html?pagewanted=print'>Read
more .
ABB
Unit Finalizes Plan for Asbestos Claims
A reorganization plan has
been finalized for the Swiss/Swedish technology group ABB Ltd. and
its
face='Times New Roman'
size='3'>U.S.
size='3'>unit Combustion Engineering Inc., concluding years of legal
wrangling involving asbestos-related charges, according to
Portfolio Media
yesterday. According to ABB, no party had filed any
appeals in the U.S. District Court for the District of Delaware opposing
the revised CE reorganization plan—paving the way for asbestos
claimants to receive payments from a designated trust fund once the plan
goes into effect.
size='3'>The court originally consented to the reorganization plan on
Feb. 28, but the decision couldn’t be finalized until a 30-day
appeals period had passed. ABB has an estimated $1.43 billion on hand to
pay settled asbestos claims against CE. The case is
face='Times New Roman' size='3'>In re Combustion Engineering,
Inc., case no. 1:06-mc-00021, in the U.S.
District Court for the District of Delaware.
id='7'>Calpine Seeks to Inject $35 Million into Insurance
Unit
Beleaguered power
producer Calpine Corp. has asked the bankruptcy court to authorize a
$35-million payment to CPN Insurance Corp., fearing that its internal
insurance company will slip into insolvency without the financial
boost, Portfolio
Media reported yesterday. Calpine filed the
request Friday in U.S. Bankruptcy Court in
w:st='on'>
size='3'>Manhattan
that the judge will allow it to help cover the insurer’s projected
capital deficit. CPN Insurance Corp. is a wholly owned unit of Calpine,
but was not part of the slew of subsidiaries that entered into chapter
11 proceedings after the company filed for bankruptcy protection in
December. Failure to pay the $35 million 'would render CPN Insurance
Corporation unable to pay pending claims, which would, in turn, cause
CPNIC to lose its license to act as an insurer under Hawaiian law and,
inevitably, to cease operating,” said the company in court
documents. The case is
size='3'>Calpine Corporation, bankruptcy
petition number 05-60200-brl, in the U.S. Bankruptcy Court for the
Southern District of New York.
w:st='on'>
id='8'>Pennsylvania
face='Times New Roman' size='3'> Prison, Hospital Food Supplier
Files for Bankruptcy
W.S. Lee & Sons Inc.,
which supplies Pennsylvania prisons and hospitals with food, has filed
for bankruptcy, and neither company officials nor state administrators
say they know what will become of its state contract worth up to $250
million, the Associated Press reported yesterday. Robert Donaldson, CEO
of W.S. Lee & Sons, a 134-year-old company based in
size='3'>Altoona
Pa., said the state contract was not the reason for his company's
filing chapter 11 bankruptcy last month. The food contract is part of
Gov. Ed Rendell's plan to save taxpayers about $150 million annually by
purchasing products from companies contracted as single providers for
groups of products. A few months into the three-year contract, signed in
2005, state agencies began complaining that orders arrived late,
incomplete or containing unordered items. Curtis Topper, the General
Services deputy secretary for procurement, said the state's lack of
experience with using a single company to supply food to numerous
departments was responsible for the problems.
face='Times New Roman' size='3'>
href='http://www.phillyburbs.com/pb-dyn/news/103-04042006-636100.html'>Read
more .
Stage
is Set for Defense in Enron Trial
After 32 days of
testimony from 22 witnesses, prosecutors rested their case last week in
the criminal trial of Enron's former chief executives, setting the stage
for the defense to take over as of Monday, according to the
New York Times
size='3'>today. The critical moment of the
trial could be approaching with the testimony of Jeffrey K. Skilling and
Kenneth L. Lay. Skilling could take the stand as early as Wednesday. Lay
and Skilling face complex balancing acts in their testimony as jurors
will not be the only people listening to their testimony. If Skilling or
Lay presents a defense that strikes Judge Simeon T. Lake III, who is
hearing the case in Federal District Court, as simply not credible,
their decision to testify could result in longer sentences for
committing perjury if they are ultimately convicted.
href='http://www.nytimes.com/2006/04/04/business/04enron.html?_r=1&oref=slogi…'>Read
more .
id='10'>Ex-Westar Chief gets 18 years in Prison
A federal judge on Monday
sentenced David Wittig, the former chief executive of Westar Energy
Inc., to 18 years in prison for looting millions of dollars from the
Kansas utility, the Associated Press reported today. U.S. District Judge
Julie Robinson also sentenced a co-defendant, former Westar (Research)
executive vice president
w:st='on'>
size='3'>Douglas
face='Times New Roman'
size='3'>Lake
years and ordered each defendant to pay a $5 million fine. Wittig was
ordered to pay $14.5 million in restitution, while Lake will pay $2.79
million. Both former executives were convicted last September of
misusing Westar funds, bringing
w:st='on'>
size='3'>Kansas
electric utility to the brink of bankruptcy. Prosecutors accused the two
men of theft and fraud in looting more than $30 million from the
company, while leaving Westar with $3 billion of debt.
href='http://money.cnn.com/2006/04/04/news/newsmakers/westar.reut/index.htm'>Read
more .
International
id='11'>British Pension Deficits at Top Firms
Narrow
British pension fund deficits
of the top 100 listed companies fell sharply in March from January,
according to consulting and actuaries firm Deloitte, Reuters reported
yesterday.The
collective shortfall in schemes of FTSE 100 firms stood at £60
billion compared with a peak of £110 billion in the middle of
January, Deloitte said. Big deficits have prompted hundreds of
size='3'>U.K.
size='3'>firms to shut final-salary schemes to new staff and divert
billions of pounds from investments to their pension pots. Shortfalls
have also proven a potential stumbling block to buyers and sellers
of
face='Times New Roman'
size='3'>U.K.
size='3'>companies.
href='http://today.reuters.co.uk/news/newsArticle.aspx?type=businessNews&stor…'>Read
more .