May 18, 2004
Current, Former Lucent Employees Charged By
SEC
Nine current and former employees of Lucent
Technologies Inc. and another individual yesterday were charged with
securities fraud for their roles in accounting problems at the
telecommunications equipment maker, Reuters reported. The civil case
dates back to the company's fiscal year 2000, during which the U.S.
Securities and Exchange Commission (SEC) charged Lucent with
fraudulently and improperly recognizing sales of $1.15 billion and $470
million in pretax income. Also on Monday, Lucent finalized a settlement
and will pay a $25 million civil penalty in the case for failure to
cooperate with government investigators, the newswire reported.
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Canada's Finance Minister to Rule on Air Canada
Pension Soon
Canadian Finance Minister Ralph Goodale said on Monday
that he plans to decide in a day or two on a regulator's recommendation
that Air Canada be granted 10 years to cover its pension deficit rather
than the usual five years. The federal cabinet must approve the
extension given last week by the Office of the Superintendent of
Financial Institutions. The extension is crucial for Air Canada to close
an $850 million ($612 million) restructuring deal with Deutsche Bank AG,
the newswire reported.
Separately, the Wall Street Journal reported
that after reaching wage-concession deals with all of its other
unions, Air Canada continued
talks yesterday with the Canadian Auto Workers union in an effort to
reach financing deals that would help the carrier exit bankruptcy
protection.
Federal Judge Removed from Some Asbestos Bankruptcy
Cases
A federal judge was removed from three of the five
bankruptcy cases he had been overseeing involving companies sued by
people exposed to asbestos, the Associated Press reported. U.S. District
Judge Alfred M. Wolin committed no wrongdoing and displayed no bias, but
his actions gave the appearance of prejudice, the 3rd U.S. Circuit Court
of Appeals in Philadelphia ruled in a 2-1 decision. Judge Wolin refused
to recuse himself last year after some of those involved claimed that
some of his advisers had conflicts of interest. They also charged that
private meetings the judge had with lawyers for various parties in the
five asbestos cases raised questions about his impartiality. 'We
emphasize that our review of the record has not revealed the slightest
hint of any actual bias or partisanship by Judge Wolin,' Circuit Judge
Leonard I. Garth wrote for himself and Circuit Judge D. Brooks Smith.
'But the test for disqualification ... is not actual bias; it is the
perception of bias,' the court ruled, the newswire reported.
Toys R US Stock Drops
Toys R Us Inc. yesterday posted a slightly wider
first-quarter loss as lagging sales of video games hurt results at its
U.S. toy stores, Reuters reported. The Wayne, N.J.-based company also
forecast continued weakness in video game sales and more pressure on
U.S. stores in the second and third quarters. Sales at U.S. stores open
at least a year fell 5.6 percent in the first quarter. Video game sales
were down 27 percent and were responsible for most of the decline, the
retailer said. 'The sales weakness is what matters much more (than
earnings weakness),' said Sean McGowan, an analyst with Harris Nesbitt
Gerard, the newswire reported.
Parmalat's U.S. Farmland Unit
Won't Be Sold
Farmland Dairies LLC, a U.S.
unit of insolvent Italian dairy group Parmalat, will not be sold as
originally planned and will be restructured instead, Parmalat said on
Monday, Reuters reported. Farmland's decision to develop a restructuring
plan had been backed by institutions involved in a chapter 11 bankruptcy
procedure 'and it has therefore been decided not to sell the main
activities of Farmland Dairies,' Parmalat said in a
statement.
Plea Dropped to Jail
Prudential's Indonesia Execs
A request has been withdrawn
for an Indonesian court to jail the directors of PT Prudential Life
Assurance, a local unit of Britain's second-biggest insurer, as part of
a bankruptcy development, a lawyer on the case said on Monday, Reuters
reported. The lawyer also said he would no longer represent the
plaintiff, a former consultant, in the case at the Supreme Court level
-- a move that could help Prudential's efforts to overturn a bankruptcy
ruling it says is unfair. The Commercial Court last month ruled that the
Prudential unit owed an ex-consultant $400,000 and put the firm into
bankruptcy, but Prudential PLC says its Indonesian operations are
financially strong and has appealed against the decision, the newswire
reported.
Court Approves Oglebay's $305 Million Debt Facility
Plan
A Delaware bankruptcy court approved a $305 million
second debtor-in-possession credit facility for Cleveland-based minerals
and aggregates company Oglebay Norton, Europe Intelligence Wire
reported. The company filed its plan of reorganization with the court
last week and now awaits approval of the document by certain creditors.
CEO Michael Lundin described the filing of the plan and the arrangement
of exit financing as “consistent with our intention to emerge from
chapter 11 on an expedited basis as a stronger company with
substantially reduced debt.”
In a statement, the company said it negotiated the
second DIP facility with a lending syndicate led by Silver Point Finance
before filing for chapter 11. It will use the second facility to repay
the $70 million first facility and the existing pre-petition bank credit
facility and to provide ongoing working capital, the newswire
reported.
class='style91'>Consumers Win Top Court Ruling on Bankruptcy Debt
Interest Rate
The U.S. Supreme Court gave consumers a victory in a
dispute over how much interest secured creditors can charge on debts in
some personal-bankruptcy cases, Bloomberg News reported. The court ruled
for an Indiana couple who claimed a lender shouldn't be allowed to
charge 21 percent interest on a truck loan as part of their chapter 13
debt-restructuring plan. The ruling lets the couple seek an interest
rate based on the prime lending rate, which was 8 percent at the time of
their bankruptcy case in 1999 and now is 4 percent.
US Airways Plans Staff Cut
To Avoid Another Bankruptcy
US Airways Group Inc., seeking to reduce costs to avoid a second
bankruptcy in two years, expects to lay off 200 airport customer-service
workers in September, the employees' union said,
BusinessTimes.com reported. The company will cut the jobs as
it installs more check-in kiosks at airports and machines that read
tickets at boarding gates, said Chris Fox, a Communications Workers of
America union leader in Pittsburgh. The changes are part of a new
business plan that may lead to more layoffs, the union said. US Airways,
which had 31,700 workers at the end of 2003, wants to reduce expenses so
the Arlington, Va.-based carrier can match the cheaper fares of
lower-cost rivals expanding in its main East Coast market,
BusinessTimes reported.
Kaiser Aluminum Unit
Gets Subpoenaed for Documents
In its annual report, Kaiser
Aluminum Corp. said its wholly owned Kaiser Aluminum &
Chemical Corp. unit was subpoenaed for documents and notified by federal
authorities of an investigation regarding environmental compliance
issues at the unit's mill in Trentwood, Wash. Kaiser Aluminum &
Chemical is conducting an internal investigation of the matter,
according to the filing. The company said its unit believes it is in
compliance with all applicable environmental laws and requirements at
the Trentwood mill and plans to defend any claims or charges that
result.
The company said it couldn't assess how the investigation might affect
its financial statements. Kaiser Aluminum reported a $64 million net
loss for the quarter ended March 31, slightly narrower than the $65.1
million the company reported for the same quarter last year. The company
reported an operating loss of $48.1 million for the quarter ended March
31, also slightly narrower than the $51 million operating loss the
company reported for the same quarter last year. Sales for the quarter
ended March 31 were $367.6 million, an improvement over the $339.4
million in sales reported for the same quarter last year.
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Kmart Says Meldisco
Units Had $186 Million In Sales In Latest Quarter
Kmart Holding Corp. said in the
quarterly report that the Meldisco units, which operate the company's
footwear department, had net sales of $186 million for the thirteen-week
period ended April 28. Kmart footwear departments are operated under a
license agreement with Footstar Inc. unit Meldisco. Kmart has a 49
percent interest in substantially all of the Meldisco units, with
Footstar owning the rest. Kmart Holding also said its equity income in
the Meldisco units was $3 million for the 13 weeks ended April
28.
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HealthSouth Trial
Delayed
A judge has delayed the fraud trial of Richard M.
Scrushy, the former CEO of the HealthSouth Corporation, the Associated
Press reported. The judge, Karon O. Bowdre of United States District
Court, in an order released late on Friday, rescheduled the case for
Sept. 27 or, if that date proves unworkable, Jan. 10. The trial was
scheduled for Aug. 23. Judge Bowdre said she would set a final trial
date by Aug. 16. Scrushy, who has pleaded not guilty, is free on
$10 million bond.
Spiegel Posts Loss, Sells Newport News
Business
Spiegel Inc., the catalog
retailer operating under chapter 11 bankruptcy protection, on Monday
said its first-quarter loss narrowed 12 percent, Reuters reported. The
Downers Grove, Ill.-based company, which operates Eddie Bauer stores as
well as its namesake catalog business, also won court approval to sell
its Newport News women's fashions business to investment firm Pangea
Holdings Ltd. for $28.6 million, a Friday court filing shows. Spiegel
said its net loss narrowed to $100.5 million, or 76 cents per share, in
the quarter ended April 3, from $114.2 million, or 87 cents per share, a
year earlier. Its loss from continuing operations narrowed 17 percent to
$35.3 million, the newswire reported.