June 242004

Submitted by webadmin on Thu, 2004-06-24 00:00

June 24, 2004

Class Action Bill Now In
Senate Line After Defense Approps

The Senate agreed yesterday to take up a bipartisan bill overhauling the
rules for class action lawsuits, immediately after the chamber completes
its work on the FY05 defense appropriations bill,
CongressDaily reported. Senate sources said Majority
Leader Bill Frist (R-Tenn.) initially had sought a more flexible deal on
the timing of the class action deliberations, but decided to place that
bill next in line after the defense spending bill, at the request of
Sen. Thomas Carper (D-Del.). In announcing the deal, Frist said it
was 'vitally important' to proceed to the defense appropriations bill
this week to ensure no disruption in funds for U.S. troops in Iraq.
Minority Leader Tom Daschle (D-S.D.) welcomed Wednesday's agreement,
emphasizing that while he does not support the class action bill, he has
assured its Democratic co-sponsors 'they would have a chance to have
this legislation brought before the Senate and have the appropriate
amendments,' he said, the newswire reported.

Baker Seeks to Protect
Investors from Subprime Liability

House Financial Services Capital Markets Subcommittee Chairman Richard
Baker (R-La.) said yesterday he plans to introduce legislation this week
to provide liability protection for investors who inadvertently buy
subprime loans that violate anti-predatory lending laws,
CongressDaily reported. Speaking at a joint Financial
Services Subcommittee hearing on subprime lending, Baker said recent
state and local efforts to impose 'assignee liability' on loan
purchasers would burden the secondary mortgage market and disrupt the
flow of credit to potential homeowners in many underserved communities.
'The consequences of assignee liability would cause potential buyers to
forego purchasing subprime or high-cost mortgage loans,' Baker said.
That would undermine legitimate lenders' ability to offer subprime
mortgages to low- and moderate-income customers whose credit is less
than perfect, he added. House Financial Services Housing Subcommittee
Chairman Bob Ney (R-Ohio) said states and cities already have begun
passing assignee liability laws that 'dramatically affect' the
availability of funds for subprime lenders, the newswire
reported.

SEC: Funds Must Have Independent Chairmen

The chairman of a mutual fund board must be
'independent' of the company managing the fund's portfolio, the U.S.
Securities and Exchange Commission (SEC) ordered on Wednesday in a
contentious, 3-2 decision, Reuters reported. Amid scandals rocking the
$7.4 trillion fund industry, a deeply divided SEC voted to adopt the
rule prohibiting ties between a chairman and a fund's managers with the
aim of reducing conflicts of interest at the top of fund management. The
SEC also ordered that 75 percent of fund directors must be independent,
up from an existing 50-percent rule, and that fund directors must be
free to hire staff if they wish. The SEC ruling will force governance
changes at most mutual funds, the newswire reported. About 80 percent of
mutual funds today have board chairmen who are also employees of the
investment advisory companies under contract to manage the funds'
assets.

Senator Asks Treasury
To Probe If Roseboro Pressured On UAL

Sen. Peter Fitzgerald (R-Ill.)
has asked the U.S. Treasury's Office of Inspector General (ATSB) to look
into whether Brian Roseboro, Treasury's representative on the Air
Transportation Stabilization Board, is being pressured to change his
vote on UAL Corp. 'I am writing to you to ask that you investigate
whether any inappropriate political pressure or intimidation has been or
is being applied to Roseboro to change his vote,' Fitzgerald wrote in a
letter to Dennis Schindel, Treasury's acting inspector general. The ATSB
voted 2-1 last week to deny UAL Corp.'s bid for a $1.6 billion federal
loan guarantee for United Airlines. It is the second time the ATSB has
rejected UAL Corp.'s request for a loan guarantee.

Roseboro, Treasury
undersecretary for domestic finance, and Federal Reserve Governor Edward
Gramlich voted to deny UAL Corp.'s application. Undersecretary of
Transportation Jeffrey Shane voted to defer the decision for one week
pending further discussions with UAL Corp.

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Southern Union, GE Unit
Offer To Buy Enron Pipeline Assets

CCE Holdings LLC submitted an
offer to buy Enron Corp.'s pipeline assets for about $2.3 billion,
trumping an existing offer by NuCoastal LLC. CCE Holdings, a joint
venture between Southern Union Co. and General Electric Co.'s GE
Commercial Finance Energy Financial Services unit, said the purchase
price includes the assumption of about $461 million in debt. Earlier
Tuesday, the committee representing Enron's unsecured creditors said the
energy company should reject NuCoastal's proposal to buy its
CrossCountry Energy LLC pipeline business. The committee cited a second
proposal from an unnamed bidder that exceeded NuCoastal's offer by $55
million.

Examiner Considered for
Owens Corning

A bankruptcy judge said on
Monday she would take under advisement a request by creditors to have an
examiner appointed in the Owens Corning Corp. bankruptcy case, The
Deal reported. Visiting Judge Judith K. Fitzgerald in the
U.S. Bankruptcy Court for the District of Delaware did not give a time
frame for when she may rule, said Isaac Pachulski of Stutman, Treister
& Glatt PC. Meanwhile, Owens' commercial creditors’ committee,
consisting of banks and bondholders, wants a trustee appointed in the
case.

Fitzgerald has set a hearing on that issue for July
19. The creditors want an examiner to probe whether the company's
management breached its fiduciary duty during bankruptcy, the newspaper
reported.

Global Crossing Suit Allowed to Proceed

Gary Winnick, the founder and former chairman of
Global Crossing, must defend himself against claims that he and 22
former executives fraudulently misrepresented the company's finances, a
federal judge ruled yesterday, Bloomberg News reported. A group of
banks, led by J.P. Morgan Chase
& Company, sued Winnick in October for $1.7 billion, accusing him
and the other former executives of engaging in a 'massive scam' to
conceal Global Crossing's decline so it could borrow $2.25 billion two
months before seeking bankruptcy protection in 2002. Judge Gerard E.
Lynch of the Federal District Court in Manhattan denied the defendants'
request to dismiss the suit, saying it was not clear whether the banks
should have uncovered the suspected fraud, the newswire
reported.

Air Canada Gets Investment Deal with
Cerberus

Air Canada has struck a C$250
million ($183 million) investment deal with Cerberus Capital Management,
clearing another hurdle in the airline's attempt to emerge from
bankruptcy protection, Reuters reported The investment,
provided in convertible preference shares, along with C$850 million
raised through a rescue package with Deutsche Bank, brings the total
equity raised by the airline to C$1.1 billion. The deal marked the
second time the private New York investment firm has attempted to get a
stake in Air Canada, the newswire reported.

Connecticut Judge Dismisses
Some Charges Against Forstmann

A Connecticut state judge on Wednesday dismissed
several charges against Forstmann Little & Co. in the latest setback
for the state as it tries to prove it was misled by the New York private
equity firm, Reuters reported. But Superior Court Judge Samuel Sferrazza
left several charges pending, which are expected to go to a six-member
jury sitting in the town of Vernon, Conn. early next week. Connecticut
is seeking the return of some $125 million of its pension-fund money
that Forstmann Little invested in XO Communications and McLeodUSA before
those companies' bankruptcy filings in 2002. The Wall Street firm,
founded by buyout veteran Theodore Forstmann in 1978, argues it has wide
latitude in deciding how to invest pension-fund money and denies it
misled the state, the newswire reported.

American Italian Pasta Co. Cuts Jobs

Pasta maker American Italian Pasta Co. on Wednesday
said it would cut its workforce by 14 percent and stop production at
several plants as it struggles with the U.S. trend for low-carb diets,
Reuters reported. The maker of Mueller's pasta said its earnings for the
rest of 2004 will fall short of year-ago figures due to the diet craze.
In recent months, the low-carbohydrate diet trend has been cited for
profit shortfalls at a string of U.S. food companies, including doughnut
chain Krispy Kreme Doughnuts Inc. and Wonder Bread maker Interstate
Bakeries Corp. The popularity of the Atkins, South Beach and other low
carbohydrate diets was also a major factor in the May bankruptcy filing
of competitor New World Pasta Co., the newswire reported.

BMC Industries Files For Bankruptcy

BMC Industries Inc. on
Wednesday said it has filed for chapter 11 bankruptcy status and plans
to begin selling off assets, Reuters reported. The Ramsey, Minn.-based
optical products company said it has agreed to sell nearly all of its
Vision-Ease Lens Inc. subsidiary and all outstanding capital stock from
its Vision-Ease Foreign subsidiaries to a Texas limited partnership. BMC
said it will attempt to sell its other assets and has obtained a
debtor-in-possession financing facility pending court approval, the
newswire reported.

June 242004

Connecticut Judge Dismisses Some Charges Against Forstmann

Connecticut Judge Dismisses
Some Charges Against Forstmann