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Home Foreclosures Hit Record High
U.S. mortgages in foreclosure climbed to a record high in the first
three months of 2003 as job losses and personal bankruptcies forced more
people out of their homes, a mortgage industry group said on Friday,
Reuters reported. Home loans in the process of foreclosure climbed to
1.2 percent of all mortgages in the first quarter, beating the previous
high of 1.18 percent set in the fourth quarter of 2002, the Mortgage
Bankers Association of America said. Mortgages entering the foreclosure
process rose in the quarter to 0.37 percent from 0.35 percent in the
fourth quarter.
The housing market has been a pillar of strength for the sluggish U.S.
economy. Ultra-low interest rates have fueled record home sales and an
unprecedented mortgage refinancing boom that has freed up billions of
dollars in cash for consumers to pay down debt, save or spend. While
benefiting from the lowest borrowing costs in more than four decades,
Americans have been straining to meet their mortgage payments and credit
card bills, reported the newswire.
Congress to Hold Two FCRA Hearings This Week
The congressional focus on the Fair Credit Reporting Act (FCRA)
continues this week with two hearings, CongressDaily reported.
The House Financial Services Financial Institutions and Community
Opportunity Subcommittee will hold a Tuesday hearing on FCRA's role in
fighting identity theft. And the Senate Banking panel on Thursday has
scheduled a hearing on the information-sharing practices among corporate
affiliates and their relationship to FCRA, the newswire reported.
FCRA federal pre-emption provisions -- which preclude states from
regulating credit reporting -- expire at the end of this year. While the
Bush administration has yet to take a formal position, Assistant
Treasury Secretary For Financial Institutions Wayne Abernathy appeared
to bring the administration closer to supporting the pre-emption -- if
such a move helps to ease the identity theft problem.
Senate to Continues Markup of Asbestos Bill
The Senate Judiciary Committee is expected to continue its markup of the
asbestos-litigation reform bill on Tuesday, after a session last
Thursday ended due to a lack of quorum, CongressDaily reported.
Committee leaders did reach agreement on banning asbestos in most
consumer products, but a number of serious roadblocks lie ahead for the
bill -- which would create a $108 billion fund to compensate victims of
asbestos-related illness. Senate Judiciary Chairman Orrin Hatch (R-Utah)
plans to press ahead with the markup and vote this week -- despite
requests from Democrats for more time to iron out differences among
stakeholders.
PG&E Utility Settlement Is Opposed by Governor, Consumer
Groups
PG&E Corp.'s plan to bring its Pacific Gas & Electric utility
out of bankruptcy by using $2.2 billion in customer money is facing
opposition from California's governor and consumer groups, Bloomberg
News reported. California Governor Gray Davis said the proposed
settlement between PG&E and the California Public Utilities
Commission
announced on Thursday in San Francisco 'is too expensive for the
ratepayers,'' the newswire reported. The agreement also proposes that $8
billion in bond sales and $4 billion in company reserves be used to
satisfy the company's debts. Pacific Gas filed for bankruptcy in April
2001 after it accumulated debt buying power during California's energy
crisis. The company owes lenders, vendors and other creditors $13
billion.
'The fact that the company is willing to settle is a step forward,''
said Ed Paik, whose $450 million Liberty Utilities fund owns more than 1
million PG&E shares. 'It gives a framework for the investment
community to get a fair rate of return.'' Lawyers for the San
Francisco-based company and the PUC, who negotiated for two months, said
the deal was fair to consumers and to the company's shareholders. The
company will restore dividend payments as early as the middle of next
year, regulators and the company said, reported Bloomberg.
Mirant Asks Banks to Approve Pre-packaged Chapter 11
U.S. power company Mirant Corp., frustrated in its bid to refinance $5.3
billion in debt, on Friday said it was asking bank lenders to approve a
pre-packaged bankruptcy plan, Reuters reported. The Atlanta, Ga.-based
company, which would prefer to avoid bankruptcy and restructure its debt
through an exchange offer, has already asked bondholders to approve the
bankruptcy plan, which it said carries substantially the same terms as
the exchange offer, the newswire reported.
Without more details, experts were unsure whether the move means Mirant,
burdened with $8.9 billion in total debt, is closer to scrapping the
exchange offer in favor of a pre-packaged chapter 11 bankruptcy filing.
'You don't know whether they are just giving the banks the same thing
they are giving the bondholders, the right to say yes or no to the
prepack,' said Denise Furey, a senior director at Fitch Ratings. 'The
initial read is kind of neutral -- we don't know what is going on behind
closed doors with the banks.' A Mirant spokesman denied the company was
paving the way for a bankruptcy filing and said it still hopes to
refinance its debt out of bankruptcy court, reported the newswire.
UNITED AIRLINES
UAL May Exit Bankruptcy as Early as Fourth Quarter, Lawyer
Says
A lawyer for United Airlines parent UAL Corp. said the company expects
to exit bankruptcy protection as early as the fourth quarter, Bloomberg
News reported. James Sprayregen told U.S. Bankruptcy Judge
Eugene Wedoff in Chicago on Friday that the company's management has
begun meeting with creditors and other interested parties to outline a
preliminary plan for reorganizing the world's second largest airline.
That could lead to getting out of bankruptcy before the end of this year
or in the first quarter of 2004, he said. When the company filed for
bankruptcy in December, CEO Glenn Tilton predicted UAL would exit
bankruptcy in 18 months, reported the newswire.
UAL CFO Sees Uptick In Revenue; Some Court Issues
Postponed
UAL Corp.'s chief financial officer on Friday said bookings have been
good for the past month or so, and he believes emerging from bankruptcy
court protection either later this year or early next year is
achievable. Jake Brace told reporters after a short court hearing that
both domestic and international bookings are improving, particularly to
the Pacific region. 'There's definitely an uptick in revenue,' he
said.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Judge OKs $20.2 Million Sale of Corel Centre
A judge approved the sale of the Corel Centre to billionaire Eugene
Melnyk for $20.2 million on Friday, clearing the way for him to complete
his purchase of the Ottawa Senators, the Associated Press reported.
Justice James Chadwick made his decision three days after he told
several creditors who thought the price was too low he would
hear their objections to the sale. The NHL Board of Governors
unanimously approved the purchase by Melnyk on Tuesday. No sale price
was announced, but a court-appointed monitor representing the creditors
recommended last month that the sale of
the team for $71.8 million be approved, reported the newswire.
The Senators declared bankruptcy on Jan. 9 with debt of more than
$160 million, but still posted the NHL's best regular-season record and
pushed the Eastern Conference playoff finals to a seventh game before
losing to New Jersey.
Pillowtex to Cut Retiree Medical Plans
Struggling textile company Pillowtex says it will cut costs by canceling
retiree medical benefits at the end of this month, affecting about 3,700
of the company's 25,000 retired workers, the Associated Press reported.
Separately, a newspaper report said Pillowtex is in talks about the
possibility of being acquired by British textile firm Homestead
Fabrics Ltd. for $300 million. The Charlotte Observer said a
Homestead deal, which still faces hurdles, probably would not save all
7,850 jobs at the 116-year-old towel, sheet and bedding maker. But it
would stave off immediate plant closings, an unidentified official told
the newspaper. Pillowtex emerged from bankruptcy court protection 13
months ago. State and local officials are concerned that the company
might lay off thousands of employees even if a buyer is found, reported
the newswire.
U-Haul Parent Amerco Files for Bankruptcy Protection
Amerco Inc. filed for bankruptcy to cope with off-books accounting
troubles and more
than $1.5 billion in debt, Bloomberg News reported. Amerco had tried to
arrange $865.8 million in new financing to avoid bankruptcy. The Reno,
Nev.-based company has been negotiating with lenders since missing a
$100 million principal payment last October, triggering a default on
more than $1.17 billion in bonds.
Amerco said in May that the U.S. Securities and Exchange Commission is
investigating the company's accounting as Amerco re-audited two years of
financial statements. It said the regulatory probe may stem from
off-books units such as SAC created on the
advice of former auditor PricewaterhouseCoopers, reported the
newswire.
Laidlaw Completes $1.2 Billion Financing, Drives To Exit Chapter
11 Monday
Laidlaw Inc., operator of North America's biggest fleet of school buses
and the Greyhound intercity bus line, intends to leave chapter 11
bankruptcy protection next week after finalizing its financing.
According to a Canadian Press article, the company, formerly based in
Burlington, Ont., said Thursday it will emerge on Monday as a
Delaware-registered U.S. corporation headquartered in the Chicago suburb
of Naperville, Ill.
The company, which came to financial grief with an aggressive 1990s
expansion into American waste management, ambulances and emergency-room
services, said a $625 million term loan confirmed by banks on Thursday
completed the $1.225-billion exit financing required by its plan of
reorganization.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Global Crossing Hits Roadblock As Creditors Try to Block
Deal
Global Crossing Ltd.'s bankruptcy reorganization plan was thrown into
disarray on Friday after a group of creditor banks filed objections to
an effort to preserve exclusive takeover rights for investor Singapore
Technologies Telemedia Pte. Ltd., the Wall Street Journal
reported. In papers filed in the U.S. Bankruptcy Court in Manhattan, the
banks said there were too many unknowns about ST Telemedia's $250
million plan for 61.5 percent ownership of the reorganized company.
Chief among those concerns was whether the U.S. government would grant
national-security approvals to ST Telemedia, which is owned by the
Singapore government. The objections might clear the way for a new
bidding process for the once-highflying telecom company, which filed for
bankruptcy protection in January 2002 amid the industry's downturn,
reported the Journal.
Bankruptcy-Court Survivors Pique Interest of Investors
With Kmart out of bankruptcy court last month and WorldCom set to emerge
in the fall, there is growing investor interest in such formerly ailing
companies on Wall Street, Barron's reported. Bulls are betting
that the new shares of companies successfully reorganized under chapter
11 of the bankruptcy law, now sporting greatly improved balance sheets,
will prove winners in coming years. To read the full article, point your
browser to www.wsj.com (subscription
required).
Starwood Venture Is Chosen To Purchase Aladdin Casino
A federal judge selected a joint venture involving Planet Hollywood's
co-founder and the Starwood hotel chain to buy the bankrupt Aladdin
hotel-casino on the Las Vegas Strip, the Associated Press reported. U.S.
Bankruptcy Judge Robert C. Jones on Friday chose OpBiz, a partnership
that includes Starwood Hotels & Resorts, Bay Harbour Management and
Planet Hollywood CEO Robert Earl, because the group had the backing of
secured and unsecured creditors. The judge's decision ended an 18-month
process that included a frenzy of last-minute negotiations between
bidders and creditors during a standing-room only purchasing hearing in
bankruptcy court, reported the newswire.
Wilbur Ross Sees Deals for International Steel
Wilbur Ross says he has more deals to make in the steel industry,
dismissing industry observers who believe he wants to make a fast profit
and get out, Reuters reported. ISG's acquisition of Bethlehem Steel
earlier this year 'is not necessarily our last transaction,' Ross said
this week in an interview. 'We think that as we get organized and
rationalized there will be further things that come.' Ross, credited by
many industry watchers as a primary force behind the industry's recent
U.S. consolidation, believes global consolidation won't follow far
behind.
'I think you're going to have true multinational steel companies before
long,' said Ross. ISG, one of the largest U.S. steelmakers, is 'now a
pretty big company with 16 million tons (of steelmaking capacity
annually), but I think you're going to see 110 to 150 million-ton
companies in the next 10 years,' reported the newswire.
Paragon Says Judge Denies Weyerhaeuser Motion
A bankruptcy judge in Atlanta, Ga., has ruled in favor of Paragon Trade
Brands Inc., allowing it to proceed with a trial against Weyerhaeuser
Co. to recover damages Paragon puts at more than $400 million, attorneys
for Paragon said on Friday, Reuters reported. Judge Margaret Murphy
denied a motion filed by Weyerhaeuser to reconsider a summary judgment
issued in favor of former subsidiary Paragon last October, said
Paragon's lawyers in a statement. In a statement, Weyerhaeuser said it
would seek an immediate review of Murphy's decision. The trial is set
for October 2003, according to the newswire.
Air Canada Machinists Ratify Cost-cutting Deal
Air Canada's 12,000 machinists have reluctantly approved a job and pay
cut agreement with the airline aimed at helping it avoid bankruptcy, the
union said on Friday, Reuters reported. The airline, which is losing C$5
million ($3.6 million) a day, is racing against the clock to reduce its
operating costs by C$2.1 billion to avoid bankruptcy. The six-year
agreement, endorsed by 64 percent of the machinists, will help the
airline save C$185 million to C$200 million per year, the Canadian
president of the International Association of Machinists, Jean Jallet,
told Reuters. 'There is a strong discontent among our members.
Unfortunately, we didn't have any choice,' Jallet said, reported the
newswire.
Air Canada's 7,000 sales clerk voted 71 percent in favor of their
cost-cut agreement last week. That deal included 800 layoffs and a
three-year pay freeze. The airline's 3,400 main line pilots are expected
to complete their ratification vote by June 30, while a vote by 8,300
flight attendants is expected for June 25. Air Canada said it needs to
get C$1.1 billion in labor-costs savings before emerging from bankruptcy
protection, which was obtained on April 1, Reuters reported.
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