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February 17,
2010
Commercial Real Estate Delinquencies
Increased in January
Fitch Ratings reported yesterday that delinquencies for collateralized
debt obligations (CDOs) made up of U.S. commercial real estate loans
(CREL) rose in January due to continuing troubles at a major
New York apartment complex, Dow Jones Daily Bankruptcy Review
reported today. Among such loans covered by Fitch, the delinquency rate
rose to 13 percent in January from 12.3 percent in December. All of that
was due to five mezzanine loans backed by interests in New York's
11,000-unit Stuyvesant Town and Peter Cooper Village apartment complex
being added to the delinquencies list. Tishman Speyer Properties and its
primary partner, BlackRock Inc., last month decided to turn over the
sprawling complex to creditors rather than pursue other options,
including potentially putting it into bankruptcy. The move came after
the venture was unable to restructure the $4.4 billion in debt used to
help finance its 2006 top-of-the-market purchase of the property. All 35
Fitch-rated CREL CDOs, which include 1,100 loans and 350 rated
securities/assets with a balance of $23.8 billion, reported
delinquencies in January for the third straight month.
Court Clears Spansion's Exit Financing
Package
Computer flash memory maker Spansion Inc. is set to fund its
emergence from bankruptcy with more than $559 million in financing, the
Deal Pipeline reported yesterday. Bankruptcy Judge Kevin
Carey on Feb. 12 gave the Sunnyvale, Calif.-based company approval
of an exit financing package that includes a $450 million term loan from
a group of lenders led by Barclays Bank plc and Morgan Stanley Senior
Funding Inc. as well as a $109.38 million rights offering backstopped by
technology investment firm Silver Lake Sumeru. An ad hoc noteholders'
committee had previously argued that their proposal of a $112.38
million fully subscribed rights offering was superior to the Silver Lake
deal. However, Judge Carey overruled the committee's objection.
href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005390693'>Read
more. (Subscription required.)
General Growth
Simon Properties Group Inc., already the nation's
largest shopping-mall owner, made a $10 billion bid to acquire rival
General Growth Properties Inc., which is seeking to emerge from
bankruptcy proceedings, the Wall Street Journal reported today.
If its bid is successful, Simon, which started in 1960 with a single
property in Bloomington, Ind., would sit atop an empire of 550 malls
that comprise at least a third of the U.S. market. More important, it
would own nearly half of the country's 319 best-performing malls in
terms of sales, giving it unmatched power over retailers. Simon on
Monday won a key ally when General Growth's unsecured creditors'
committee endorsed its bid, though any deal would also require the
approval of General Growth's board and the judge overseeing its
bankruptcy case.
href='http://online.wsj.com/article/SB10001424052748704804204575069081644845898.html?mod=WSJ_hps_sections_business'>Read
more. (Subscription required.)
Labor Unions Object to
Visteon's $35.4 Million Bonus Plan
Labor unions representing Visteon Corp.'s rank-and-file workers are
balking at the auto-parts maker's request to pay up to $35.4 million in
bonuses to salaried employees even as the company seeks to cut benefits
for its union retirees, Dow Jones Daily Bankruptcy Review
reported today. the United Auto Workers union and the company's
unsecured creditors joined the Electronics Workers union in protesting
Visteon's plan to offer incentives to 1,300 employees, including
granting up to $5.9 million in bonuses 12 company insiders, a group of
the Visteon's top-ranking leaders. Visteon said that the bonus program
is similar to incentive plans it offered before it sought chapter 11
protection in May 2009.
Lyondell Settlement Paves
Way for Bankruptcy Exit
LyondellBasell said yesterday that it had reached a
settlement with creditors over a lawsuit stemming from its 2007
leveraged buyout, paving the way for the chemical maker to get out of
bankruptcy, Reuters reported yesterday. Lyondell, which was forced into
bankruptcy just over a year ago amid a cash crisis, has been sparring
with creditors for months over a $22 billion lawsuit the creditors
brought against the banks, advisers and executives who put together
Lyondell's leveraged buyout by Basell in 2007. The creditors claimed the
buyout set the company up to fail by loading it up with too much debt,
and disputed the validity of a $300 million settlement agreement of the
lawsuit that Lyondell said it reached in December. Lyondell said
yesterday that it now has support from unsecured creditors for a $450
million settlement that will let it come up with a reorganization plan
and emerge from chapter 11.
href='http://www.reuters.com/article/idUSN1624804820100216'>Read
more.
Former Wall Street
Executives Favor More Regulation
Former Wall Street executives George Soros, Nicholas
F. Brady, John S. Reed, William H. Donaldson and John C. Bogle believe
that the financial regulatory system has gone badly awry and needs
massive reform, the New York Times reported today.
face='Verdana' size='2'>“If you are a
commercial bank,”
he said,
size='2'>“and you wish the government to
guarantee your deposits and bail you out if necessary, then you
can’t be involved in
speculative activity,”
said Nicholas Brady, who was chairman of the now extinct
Dillon Read & Company and a Treasury secretary in the late 1980s and
early 1990s. John S. Reed, a former Citigroup co-chairman, wonders if a
trading operation should even exist under the same roof as a standard
commercial bank. The traders make more in salary and bonuses than the
bank employees, and there are frictions.
size='2'>“The bank people say
lang='EN'>‘if the capital market guys take
big risks, why can’t
we do so too and earn the same bucks?
lang='EN'>’ ”
Reed said.
size='2'>“They start trying to do things
that make them look good, like making risky commercial loans and driving
href='http://www.nytimes.com/2010/02/17/business/17volcker.html?ref=business&pagewanted=print'>Read
more.
Rates Level Off
The percentage of Americans falling behind on credit
card bills stabilized in January, according to data from five lenders
yesterday, signaling that U.S. consumer credit woes may be leveling off,
Reuters reported yesterday. American Express Co., Bank of America Corp.,
Capital One Financial Corp., Discover Financial Services and JPMorgan
Chase & Co. all posted credit card loan delinquency rates for
January little changed from December. In January, write-offs were mixed.
Capital One and JPMorgan Chase wrote off a higher percentage of loans,
while American Express, Bank of America and Discover wrote off a lower
percentage.
href='http://www.reuters.com/article/idUSTRE61F4JB20100216'>Read
more.
Bondholders Say Six Flags
Weighing New Chapter 11 Plan Deal
Bondholders who have been battling Six Flags Inc. over the terms of its
chapter 11 restructuring said yesterday that they are getting close to a
deal that would head off a looming court fight and would ease the
amusement park company's exit from bankruptcy, Dow Jones Daily
Bankruptcy Review reported today. The basis of that deal would be a
$550 million capital raise and an additional $1.2 billion in new
financing, bondholders of the parent company said in papers filed
yesterday. Backing the offer are Stark Investments, Credit Suisse
Securities, CQS, Tricadia Capital Management and other funds that own a
total of $644 million worth of debt issued by the Six Flags parent
company, court papers say.
Freedom Communications Asks
Court to Approve Sale of Arizona Newspapers
Freedom Communications asked a bankruptcy judge
yesterday to approve the sale of the East Valley Tribune and
several other Phoenix-area publications for about $2 million, the
Associated Press reported yesterday. Irvine, Calif.-based Freedom
Communications Holdings Inc. put the Tribune up for sale shortly after
it filed for chapter 11 protection in September. The company said that
it planned to close the paper Dec. 31 if no buyer emerged and estimated
that shutting it down would cost $1.5 million. Thirteenth Street Media,
a Boulder, Colo.-based company owned by Randy Miller, made an offer for
the Tribune in November. Miller expanded his bid in January to include
the Daily News-Sun in Sun City, Ariz., the Ahwatukee Foothills
News, Glendale/Peoria Today, Surprise Today, and the
Clipper direct-mail coupon magazine.
href='http://www.washingtonpost.com/wp-dyn/content/article/2010/02/16/AR2010021604970_pf.html'>Read
more.
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