April 20, 2004

Leahy Prepares Asbestos
Alternative To Hatch-Frist Proposal

Senate Judiciary ranking member Patrick Leahy (D-Vt.) is readying
asbestos legislation as an alternative to legislation expected on the
floor this week sponsored by Senate Majority Leader Bill Frist (R-Tenn.)

and Judiciary Chairman Orrin Hatch (R-Utah),
CongressDaily reported. Sources said the bill, if
introduced, would create a trust fund possibly larger than $150 billion,

compared to the Frist-Hatch version's $124 billion fund.

Labor unions and others have contended that the Hatch-Frist bill does
not provide enough money to compensate victims of asbestos-related
illnesses.

Separately, the administration
this past weekend voiced its support for the Hatch-Frist bill, saying in

a Statement of Administration Policy it would help victims and 'preserve

American jobs,' the newswire reported.

US Airways' Siegel Quits After 2 Years As
Chief Executive

David Siegel, CEO of US

Airways Group Inc., resigned unexpectedly yesterday after
antagonizing the unions and failing to turn around the nation's No. 7
airline after two years, the Wall Street

Journal reported. The airline's largest investor, Retirement Systems

of Alabama, named one of its eight US Airways board representatives,
Bruce R. Lakefield, to succeed Siegel as CEO. 
Lakefield was chairman and CEO of Lehman Brothers International from
1995 to 1999, when he retired, the Journal

reported.

MCI

MCI Emerges from
Bankruptcy

Long-distance phone major MCI
plans to emerge from bankruptcy today after 21 months, having shed $36
billion in debt, Reuters reported. The reorganized MCI will have a new
board of directors, 20 million customers and a healthy balance sheet.
But it will jump back into a market that has grown more competitive
since WorldCom declared bankruptcy in July 2002, with more competitors
chasing fewer dollars. 'They've done a reasonably good job of not
completely collapsing,' said Yankee Group analyst Bryan Van Dussen. 'The

bigger question is in the context of this industry continuing to see
revenues fall, what's going to happen to MCI in the next six to 12 to 18

months.'

SEC Brief in WorldCom Case Cites
Analysts' Influence

The Securities and Exchange
Commission is aiding investors in the WorldCom securities class action
case, the New York Times reported. In an unusual brief filed in
support of the lead plaintiff in the case, commission lawyers argue that

analysts like Jack B. Grubman do affect the price of a company's stock
and bonds and may be held accountable for misrepresentations they may
make. Citigroup, the parent of his employer, is contending that
Grubman's enthusiasm for WorldCom securities had no impact and therefore

investors were not harmed when they relied on his reports.

MCI Rescinds Deal With
Investors After Criticism

MCI, the long-distance phone
company scheduled to emerge from bankruptcy this week, has canceled a
confidential arrangement it struck with two of its largest investors
after other investors called the deal unfair. A judge criticized the
company's handling of the arrangement with the two investors, who until
last week were expected to join the company's board.



The deal, which had been struck in January, called for the two
investment firms, MatlinPatterson Asset Management and Silver Lake
Partners, to swap all of their old MCI bonds for new MCI bonds, instead
of the mix of new stocks and bonds that many other creditors will
receive. MCI said the arrangement was intended to preserve a tax benefit

for the company potentially valued at as much as $500
million.

But when other creditors learned of the confidential arrangement,
some of them objected, arguing that it would have given the two large
investors a richer deal than was available to other investors holding
the same defaulted bonds. In recent months, as questions mounted about
MCI's future, MCI's stock, which has been trading on a when-issued
basis, has fallen in value, while the bonds have held up. Moreover, the
bonds will be easier to sell in quantity than the new stock, investors
said.

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Embratel Gets New Offer For
Assets From Calais Group

Brazil's top three phone
companies have made a third offer for MCI unit Embratel Participacoes as

they try to thwart Embratel's seemingly imminent sale to Mexican giant
Telefonos de Mexico SA, or Telmex, said people familiar with the matter.

The new offer by Calais -- a consortium comprised of Tele Norte Leste
Participacoes, or Telemar; Brasil Telecom Participacoes; and the
Brazilian unit of Spain's Telefonica SA -- raised the amount MCI would
receive immediately, although it kept the final price tag unchanged at
$550 million. Calais now is offering to pay $396 million upon signing of

the deal and a further $154 million when Anatel, the Brazilian
telecommunications regulatory body, approves the transaction, the
sources said.

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Mirant Reports Wider
2003 Loss

Bankrupt energy merchant Mirant

Corp. on Monday reported a wider loss in 2003 than 2002, after taking
asset impairments and restructuring charges, Reuters reported.
The   company reported a net loss of $3.8 billion, or $9.47
per share, for the year, compared with a loss of $2.4 billion, or $6.06
per share, in 2002. Mirant said it expects a net cash outflow over the
next six months, mostly for the payment of bankruptcy-related fees and
obligations from its agreements with Pepco Holdings Inc. Nevertheless,
the company said it expects to have sufficient funding to operate during

bankruptcy proceedings. As of April 2, it had $1.5 billion in total cash

and cash equivalents. Mirant will not hold an annual meeting this year,
saying it is in the best interest of its shareholders to spend its money

on its financial restructuring and emergence from chapter 11 instead of
an annual meeting, the newswire reported.

S&P May Raise Conseco
And Units Ratings

Standard & Poor's Ratings
Services said yesterday that it placed its 'B-' counterparty credit,
'B-' senior debt, and 'CCC-' preferred stock ratings on Conseco Inc. on
CreditWatch with positive implications, Reuters reported. 'The
CreditWatch reflects the expected issuance by Conseco Inc. of $1 billion

of new common equity by early May 2004,' said Standard & Poor's
credit analyst Jon Reichert. Not affected by this CreditWatch action are

the ratings on Conseco Senior Health Insurance Co., which remain on
CreditWatch negative where they were placed Nov. 19, 2003, the newswire
reported.

Kmart's Property-Tax Lawsuits Dismissed by
Bankruptcy Judge

A federal bankruptcy-court judge
dismissed a property-tax lawsuit filed by Kmart against hundreds of
local governments, saying the retailer failed to demonstrate why he
should hear the case, the Wall Street
Journal reported. In Chicago bankruptcy court yesterday, Judge Jack
B. Schmetterer said Kmart didn't establish that the bankruptcy court has

jurisdiction in the tax disputes. 'A sweeping allegation of jurisdiction

is no good,' he said, the newspaper reported.

FERC Judge OKs Duke Deal To
Settle Ca. Power Case

A Federal Energy Regulatory
Commission (FERC) judge on Monday approved a plan for Duke Energy Corp.
to pay $550,000 to settle charges the energy company tried to manipulate

electricity prices during California's 2000-01 energy crisis, Reuters
reported. FERC Judge Carmen Cintron approved a deal that Charlotte,
N.C.-based Duke reached with agency staff to settle allegations it
double-sold about 6,600 megawatts of electricity in 2000, a charge the
company denies. Duke may have to pay an additional $1.5 million in the
settlement if the agency finds it guilty of other deceptive trading
practices, Cintron said, the newswire reported.