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US Airways Seeks Approval to End Pilot Pension Plan
US Airways Group Inc., the seventh-largest U.S. carrier, is seeking
court approval to terminate its pilot pension plan covering 7,000 people
as it reorganizes to emerge from bankruptcy, Bloomberg News reported.
The company, which has said it can't make all of the $3.1 billion in
pension payments due over the next seven years, said it will ask a U.S.
Bankruptcy Court for permission to terminate the plan as of March 31.
The airline said it will commit $850 million over seven years to a
replacement plan, reported the newswire. Termination of the plan would
shift responsibility for the retirement payments to the Pension Benefit
Guaranty Corp. (PBGC), a government agency set up in 1974 to pay
retirement benefits when a plan fails. US Airways said the agency won't
oppose the termination. Payments through the PBGC would be lower than
provided by the airline, Bloomberg reported.
United Airlines Board Unanimously Supports Restructuring
Plan
UAL Corp., parent of United Airlines, the world's second-largest
airline, said its board
unanimously supported a restructuring plan designed to help the company
emerge from bankruptcy, Bloomberg News reported. United spokesman Joe
Hopkins declined to give any specifics of the plan, which he said will
be presented to the creditors' committee advisers tomorrow and to the
creditors' committee itself on Monday. Also tomorrow, Chicago-based UAL
is expected to report a fourth-quarter loss of $13.81 a share, the
average forecast in a Thomson First Call analyst poll, Bloomberg
reported.
PBGC Posts Record Shortfall
The government program protecting workers' retirement income earned in
private employer-sponsored pension plans posted a record $3.6 billion
shortfall in 2002 after burning through its entire $7.7 billion surplus
last year, the Associated Press reported. The Pension Benefit Guaranty
Corp. said today that the bulk of that $11.4 billion net loss last year
- also the largest in the agency's 28-year history - was from securing a
record number of underfunded pension plans at bankrupt and financially
troubled companies, particularly in the steel industry. Education and
the Workforce Chairman John Boehner (R-Ohio) and Education and the
Workforce Employer-Employee Relations Subcommittee Chairman Sam Johnson
(R-Texas) said a hearing will be held in the spring to examine the
financial troubles at the agency, reported CongressDaily.
Cannondale Seeks Bankruptcy Protection After Announcing
Sale
Cannondale Corp. on Wednesday filed for bankruptcy protection after
saying it would close its motorsports division and sell assets, a court
official said, reported Bloomberg News. The bicycle and motorcycle maker
said Monday that difficulties with its motorsports business made the
chapter 11 filing necessary. The asset sale to a Connecticut private
equity firm would be subject to bankruptcy court approval.
Enron Seeking to Move Out of Houston Headquarters to Cut
Costs
Enron Corp. is considering moving out of its headquarters in a Houston
skyscraper to cut costs, according to Bloomberg News. The bankrupt
energy company is scouting for 300,000 square feet of space in one of
eight downtown Houston buildings, said Eric Thode, a company spokesman,
reported Bloomberg. The newswire reported that Enron's current lease for
the entire 1.2 million square-foot building that serves as its
headquarters expires at the end of March. After job cuts, Enron's 1,700
Houston employees occupy only 26 out of the tower's 50 floors, Thode
said, reported Bloomberg. Lease proposals from the owners of the eight
buildings Enron is targeting are due back on Feb. 13, Thode said.
New Valley Terminates Plans to Gain Control of Globalstar
New Valley Corp. said it abandoned plans to gain control of Globalstar
LP because it couldn't reach a final agreement with the bankrupt
satellite telephone company's creditors' committee, reported Dow Jones.
New Valley, a real-estate company led by financier Bennett LeBow, had
offered to invest $55 million in Globalstar. The financing would have
given Miami-based New Valley a majority stake in the reorganized
company, with creditors including Loral Space & Communications Ltd.
and Qualcomm Inc. owning the rest, the newswire reported. Globalstar
filed for bankruptcy protection in February after spending more than $4
billion to build a satellite-telephone network.
WorldCom May Write Off 'Material' Part of Equipment
Bankrupt WorldCom Inc. may write off a 'material' part of its $32
billion in property and equipment, after waning demand reduced the value
of communications networks, Bloomberg News reported. Clinton,
Miss.-based WorldCom also said in a statement it had a net loss from
continuing operations of $194 million in November, narrower than $205
million in October, the newswire reported. It had $2.2 billion in sales,
down from $2.3 billion, and boosted cash by $200 million to $2.3
billion. New Chief Executive Officer Michael Capellas plans $9 billion
of accounting restatements and to emerge from bankruptcy by the third
quarter. WorldCom, built by former CEO Bernard Ebbers into the No. 2
U.S. long-distance carrier through acquisitions, filed for chapter 11 in
July after disclosing it treated $3.85 billion in costs in 2001 and 2002
as capital investments, masking losses.
Kmart Will Offer Coupons to Lure Customers to Remaining
Stores
Troy, Mich.-based Kmart Corp., the discount retailer planning to exit
bankruptcy by the end of April, will offer $5 coupons for Martha Stewart
comforters and other incentives to keep shoppers from going to rivals as
it closes as many as 318 stores, Bloomberg News reported. Customers at
stores being shut down will get maps directing them to the nearest
remaining Kmart, said Barbara Firment, senior vice president of
advertising, sales and in-store promotions, the newswire reported. Those
who buy at least $10 in merchandise will receive a coupon for as much as
$12 off a future purchase of $100. Shoppers at all stores will get books
with $150 in coupons redeemable at stores staying open. The promotion
will remind customers that Kmart isn't closing all of its stores,
Firment said. Kmart will have about 1,500 locations once the closings
are completed in about two months, Bloomberg reported.
Cadiz Unit Sun World International Files For Chapter 11
Bankruptcy
Cadiz Inc.'s Sun World International Inc. unit filed for chapter 11
bankruptcy protection so it can access a financing package of up to $40
million for working capital needs through the 2003/2004 'growing
seasons,' reported Dow Jones Newswires. The news sent Cadiz's shares
tumbling almost 47 percent to 34 cents, despite the fact that Cadiz
itself isn't part of the filing. In a press release Thursday, Cadiz said
it has historically supplemented Sun World's annual working capital
requirements, the newswire reported. However, Cadiz previously announced
it wouldn't be able to supplement the unit's revolving credit facility,
which forced Sun World to access a larger facility than in the past,
according to Dow Jones.
Sun World was able to obtain the larger facility, but the new loan
was conditioned on reaching an arrangement with the holders of its
Series B first mortgage notes, according to the newswire. Dow Jones
reported that Sun World was ultimately unable to get the financing with
the consent of all parties. Therefore, the only way to complete the new
financing on a timely basis was to seek debtor-in-possession funding
through a chapter 11 filing, according to the newswire.
FAO Still Negotiating Extension Of Cash Collateral Use
FAO Inc. said Thursday it is still negotiating an extension of its
authority to use its secured lenders' cash collateral to fund
operations, Dow Jones reported. The toy retailer, operating under
chapter 11 bankruptcy protection, needs the funds to purchase
merchandise for its stores, pay its employees and cover other operating
costs, the newswire reported. The company spent most of Wednesday
negotiating the terms of the extension with its lenders. The company
hoped to strike a deal by Thursday evening, according to a source close
to the matter, reported Dow Jones. If an agreement is reached, FAO will
notify Judge Lloyd King of the U.S. Bankruptcy Court in Wilmington,
Del., who can sign an order approving the extension without further need
of a hearing, according to Dow Jones. If a deal can't be reached, a
contested hearing may be held today, the newswire reported. FAO filed
for chapter 11 bankruptcy protection on Jan. 13. It listed assets of
$257 million and liabilities of $238 million in its chapter 11
petition.
Bethlehem Steel Gets Six-month Extension for Bankruptcy
Plan
Bankrupt Bethlehem Steel Corp., which is trying to sell mills and other
assets to International Steel Group Inc., got a judge's permission to
extend the period for negotiating a bankruptcy recovery plan without the
threat of rival proposals, reported Bloomberg News. According to the
newswire, U.S. Bankruptcy Judge Burton Lifland granted a
six-month extension to the steel maker over objections from the
unsecured creditors' committee, Bethlehem attorney George Davis said
yesterday. The company's 'exclusivity period,' which has been extended
twice, would have ended Jan. 31 without the extra six months, reported
the newswire. Bondholders and other creditors had sought court approval
to solicit competing offers, citing dissatisfaction with International
Steel's $1.5 billion bid, which gives them little or no recovery. The
company has sought a buyer or partner for more than a year. Potential
suitors have been deterred by Bethlehem's high labor and pension costs,
according to Bloomberg.
RoweCom Sues Divine In Connection With Pending Bankruptcy
Divine Inc., whose RoweCom unit filed for voluntary chapter 11
bankruptcy protection last Friday, said RoweCom filed a lawsuit against
it in connection with the bankruptcy, reported Dow Jones Newswires.
According to a Form 8-K filed Thursday with the Securities and Exchange
Commission, the lawsuit was filed Tuesday in the U.S. Bankruptcy Court
for the District of Massachusetts, Eastern Division. The newswire
reported that RoweCom alleges that Divine 'fraudulently and wrongfully'
transferred funds to itself from RoweCom in the 12 months prior to
RoweCom's chapter 11 filing. The transfers 'deepened RoweCom's
insolvency' and 'later bankrupted' RoweCom, the lawsuit said, reported
the newswire. RoweCom seeks voidance of the transfers and monetary
damages. According to the filing, Divine disagrees with RoweCom's claims
and intends to defend itself as the bankruptcy and potential sale of
RoweCom to Ebsco Industries Inc. are pursued, Dow Jones reported.
National Steel Seeks Preferred Status for AK Steel's Buyout
Bid
National Steel Corp., a bankrupt steelmaker that is up for sale, asked a
bankruptcy judge to designate AK Steel Holding Corp.'s $1.13 billion
offer the lead bid over rival U.S. Steel Corp., Bloomberg News reported.
AK Steel's offer includes $925 million in cash, which is $175 million
more in cash than U.S. Steel's $950 million bid, a National Steel
bankruptcy attorney said. Having the lead, or 'stalking-horse'' bid,
means Middletown, Ohio-based AK Steel would get a $15 million breakup
fee if it's unsuccessful. AK Steel, the biggest U.S. maker of automotive
steel, would more than double its production capacity with National
Steel's assets, reported the newswire.
Federal-Mogul to Buy Honeywell Business That Makes Brake
Pads
Federal-Mogul Corp., an auto-parts supplier operating under court
protection
from creditors, agreed to buy a Honeywell International Inc. business
that makes brake pads, Bloomberg News reported. The Bendix unit has
annual sales of about $700 million and about 5,600 employees, said
Honeywell spokesman Richard Silverman. The agreement hinges on a
bankruptcy judge agreeing to shield Morristown, N.J.-based Honeywell
from current and future asbestos liabilities resulting from Bendix,
Bloomberg reported.
FCC Votes To Give Satellite-phone Firms More Flexibility
The Federal Communications Commission yesterday voted to let providers
of satellite-based mobile-phone service like Globalstar
Telecommunications Ltd. use some of their spectrum to provide
terrestrial wireless service to improve coverage of their existing
service, Dow Jones reported. The agency left for another day the
decision about how the new terrestrial spectrum should be used. Nextel
Communications Inc. is hoping it can swap some of its existing airwaves,
which are compromised by interference problems with public-safety radio
services, for the new airwaves, according to the newswire.
The satellite telephone industry has had trouble getting off the ground,
with Globalstar reorganizing from bankruptcy, and the future of Craig
McCaw's ICO Global Telecommunications still uncertain.
Telecommunications analysts Rebecca Arbogast of Legg Mason Wood Walker
Inc. said the deal is a win for both the terrestrial and satellite
mobile phone industries, Dow Jones reported.
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