July 2, 2004
ABI's headlines will not be published on Monday, July 4, because of
the holiday. New headlines will be published on Tuesday, July
5.
Economists Say Inflation, Rates Won't Curb Second-half
Growth
The U.S. economy will enjoy steady
expansion for the rest of this year, thanks in part to industrial
growth, with unemployment falling and the inflation rate abating,
according to a midyear survey of 55 forecasters by The Wall Street Journal. The
nation's gross domestic product is projected to grow at an annual rate
of 4.4 percent in both the second and third quarters, and 4.2 percent in
the fourth quarter. Those projections represent an increase from actual
growth of 3.9 percent in the first quarter. The economists forecast
slower growth of 3.7 percent during the first half of 2005, the
newspaper reported.
Air Canada Files Restructuring Plan
Air
Canada,seeking to emerge from bankruptcy-court
protection by the fall, filed a restructuring plan with an Ontario court
showing how it expects to operate profitably after eliminating most of
its unsecured debt, the Wall Street
Journal reported. Montreal-based Air Canada had nearly 13 billion
Canadian dollars (US$9.75 billion) of debt, most of which was unsecured,
when it entered bankruptcy protection in April 2003. The carrier said it
intends to revamp some of its operations and reduce labor and other
costs as part of a bankruptcy reorganization, the newspaper
reported.
Adelphia Gets Court OK for
$8.8 Billion Financing
Bankrupt cable company Adelphia
Communications Corp. said on Thursday it won court approval for an $8.8
billion financing package it will use to exit bankruptcy, Reuters
reported. Adelphia, whose former management is being prosecuted for
fraud, said it is 'vigorously pursuing' the sale of the company while
also preparing for emergence from chapter 11 bankruptcy. The
$8.8 billion exit financing package from JPMorgan Chase & Co.,
Credit Suisse First Boston, Citigroup Inc. and Deutsche Bank AG will be
used to finance the cash payments to be made under the company's
proposed reorganization plan. It includes a $750 million revolving
credit facility to be used by the company following its emergence from
bankruptcy, the newswire reported.
Investors Wonder How KMart
Will Spend $3 Billion
Kmart Holding Corp.'s agreement
to sell as many as 54 of its stores left investors wondering whether
Chairman Edward Lampert was planning an acquisition or perhaps something
more dramatic, Reuters reported. Wednesday's deal with Sears, Roebuck
and Co. will leave Kmart with cash approaching $3 billion. The company
gave no information about what it plans to do with the money, so
analysts and investors could only speculate on what Lampert may have in
mind for the long-struggling retailer. Some stock-watchers guessed that
Lampert might decide to pay a big dividend, buy another retailer or even
sell off the rest of the chain and turn Kmart into an investment
company, the newswire reported.
class='headline11'>Kicanas to Decide Tucson Diocese Bankruptcy
by Fall
B
class='storytext1'>ishop Gerald Kicanas said Wednesday he expects to
decide by mid-September whether the Roman Catholic Diocese of Tucson
will seek bankruptcy protection, the
class='byline1'>Tucson Citizen
reported. Kicanas said a civil lawsuit
seeking damages for alleged sexual abuse by a now-jailed priest is
set for Sept. 15. Kicanas said chapter 11 bankruptcy would impose order
on the 'chaotic' situation of the diocese, which continues to receive
allegations of sexual abuse by priests. Some of those cases are not
being litigated, he said, but are being handled
privately.
Federal Pension Agency
Opposes Releases For Enron
Federal regulators have moved
to cut off Enron Corp.'s attempt to use its chapter 11 plan to escape
lawsuits over pension liabilities. The federal Pension Benefit Guaranty
Corp., which has started to take over four of Enron's defined benefit
plans, filed papers Wednesday with the U.S. Bankruptcy Court in
Manhattan that is conducting hearings on the energy giant's plan of
reorganization. Regulators hope to protect benefits for participants in
the underfunded pension plans and have objected to Enron's alleged
failure to provide adequately for the pension funds in its chapter 11
proposal.
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Reserved
Cornerstone Propane
Creditors Get Court OK For Probe
Creditors of Cornerstone
Propane Partners L.P. obtained court permission to investigate potential
fraudulent conveyance and breach of duty claims against the propane
retailer, its financial adviser and a former lender. Bankruptcy Judge
Robert D. Drain signed an order June 24 forcing the parties --
Cornerstone, Greenhill & Co. and Credit Suisse First Boston -- to
comply with the request for discovery from the official committee of
unsecured creditors in Cornerstone's chapter 11 bankruptcy case. The
order, obtained Wednesday by Dow Jones Newswires, requires that the
parties turn the requested documents over to the committee by July 21
and submit to the committee's examinations by July 23 -- or, if the
parties agree, up to Aug. 31 at the latest.
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(c) 2004 Dow Jones & Company, Inc. All Rights
Reserved
Acclaim Entertainment
May Face Bankruptcy
Acclaim Entertainment Inc. may
be forced to seek bankruptcy protection or shut down if it cannot obtain
new bank financing, the video game publisher said today, Reuters
reported. The warning came as the Glen Cove, N.Y.-based
company reported a net loss of $25.4 million for the fiscal fourth
quarter ended March 31. Acclaim needs new cash to replace a financing
agreement with GMAC Commercial Finance that expires on Aug. 4. It said
it has signed a letter of intent with a different lender to borrow up to
$30 million, but the deal has not yet been completed, the newswire
reported.
Jury Finds Forstmann
Little Guilty
A Connecticut jury on Thursday
found New York buyout firm Forstmann Little & Co. guilty of all
charges in a breach of contract case brought by the State of
Connecticut, but assigned no damages for the violations, Reuters
reported. Industry watchers said the closely watched case would likely
lead private equity firms and their pension fund investors to better
outline their investment strategies to avoid litigation. After a civil
trial that began June 1, the six-member jury found Forstmann Little
guilty of two charges of breach of contract and one charge of breach of
fiduciary duties in a case related to its investment in two
telecommunications start-ups, Reuters reported. However, the jury,
sitting in Vernon, Conn., didn't require the buyout firm to pay back any
of the $125 million of the state's investment in XO Communications and
McLeodUSA, two telecom firms that filed for bankruptcy in
2002.
Delta Pilots Expect Formal
Contract Talks Soon
The pilots union at Delta Air
Lines said on Thursday it expects formal negotiations with the company
on changes to its contract to begin soon, Reuters reported. The union
said last week that its negotiators were trying to craft a new proposal
for management that would include additional concessions to reflect
Delta's worsening financial situation. The union has said any pilot
concessions must be contingent upon a larger restructuring plan
that includes all parts of the company. The Atlanta-based airline has
said it could be forced to file for bankruptcy if it cannot achieve
much-needed cost cuts, the newswire reported.
United's Pensions on Increasingly Shaky
Ground
size='3'>As United Airlines prepares to ask workers for a new round of
cutbacks, its pension plans look increasingly vulnerable, the New
York Times reported. The airline has four big plans, and
cutting any one could reduce debt with more than $1 billion. Such a step
could force other airlines to trim their pension plans as well, to keep
their labor costs competitive. The long-term prospect could be a series
of failed pension plans and lost benefits reminiscent of those in the
steel industry, a costly outcome for the government, the newspaper
reported.