May 11, 2004
Miller Says Outlook
Improving for Pension Legislation
House Education and the Workforce ranking member George Miller
(D-Calif.) said efforts to overhaul pension policies may benefit from a
bipartisan spirit to carry the legislation,
CongressDaily reported. Given the difficulty of passing even
a short-term, narrow fix, some observers questioned whether lawmakers
could find common ground for a long-term response. 'Whether or not it's
going to be a bipartisan bill isn't clear,' Miller said. 'But we've
talked about it, and right now, we're trying to get the best information
we can find about the issue.'
Miller also plans to hold a
meeting this week with Senate Labor-HHS Appropriations Subcommittee
ranking member Tom Harkin (D-Iowa) and pension stakeholder groups to
discuss regulations the Treasury Department soon will issue on
cash-balance pension plans. Miller said he fears the rules will allow
companies switching their traditional system to a cash-balance plan to
avoid lawsuits stemming from a reduction in the value of some workers'
accounts. 'People should be held harmless during transitions to
cash-balance accounts,' Miller said, the newswire reported.
class='style91'>Delta Air May Seek Bankruptcy If It Can't Cut
Costs
Delta Air Lines Inc. said it may be forced to seek
chapter 11 bankruptcy protection unless the company is able to reduce
costs, stem losses and raise capital, Bloomberg News reported. The
company has been trying to persuade its pilots union to agree to reduced
pay to lower Atlanta-based Delta's labor costs. Last week, US Airways
Group Inc. said it may need a second bankruptcy filing unless its unions
agree to more concessions. Labor is the airlines' biggest
expense.
Delta and US Airways have been unable to stem losses
as low-fare carriers such as Southwest Airlines Co., JetBlue Airways
Corp. and AirTran Holdings Inc. step up competition. Delta is ``raising
the possibility of bankruptcy to help persuade their pilots to entertain
financial concessions,'' said Standard & Poor's analyst Philip
Baggaley, the newswire reported.
Separately, Delta Air Lines on Monday said it did not
expect the recall of as many as 1,000 pilots to affect its 2004
financial results, Reuters reported. The Atlanta-based airline said
earlier on Monday it would begin recalling the furloughed pilots after
data showed air traffic had rebounded to levels not seen since the Sept.
11 attacks. An arbitration ruling on the furloughs provided for the
recalls when traffic reached certain levels, and they had been expected
since late April, the newswire reported.
MCI Reports $388 Million
First-quarter Loss, to Cut 7,500 Jobs
MCI Inc. on Monday reported a $388 million loss for
the first quarter as sales and prices of its core long-distance
telephone services fell, Reuters reported. MCI said in a regulatory
filing that it lost $388 million, or $1.19 a share, compared with a
profit of $52 million in the same quarter a year earlier. Revenues fell
12.9 percent to $6.3 billion. Excluding its stake in Brazilian network
operator Embratel, which it agreed to sell last month, MCI's revenues
fell 17.7 percent to $5.4 billion. Last month MCI forecast a difficult
2004, projecting a net loss as its core markets shrink under
competition, the newswire reported.
The company also announced that it would cut 7,500
jobs in an effort to restore profits in the second half of 2004. The job
cuts, equal to roughly 15 percent of MCI's current workforce, come on
top of 5,700 job cuts announced earlier this year, the newswire
reported.
Citigroup's WorldCom Pact May
Force Banks' Hands
Citigroup Inc.'s decision to settle lawsuits involving
WorldCom Inc. and set aside $6.7 billion for pending legal bills may
force other banks to take similar actions, hurting profit, analysts
said, Reuters reported. Without admitting wrongdoing, Citigroup said on
Monday it agreed to pay $2.65 billion, or $1.64 billion after-tax, to
settle claims it hid risks from WorldCom's stock and bond investors.
Citigroup will also take an after-tax $4.95 billion second-quarter
after-tax charge to increase reserves by $6.7 billion for pending
lawsuits involving energy trader Enron Corp., alleged biased stock
research, initial public offerings and other matters. The large sums
also raise the possibility that J.P. Morgan Chase & Co., Bank of
America Corp. and others facing assorted lawsuits from investors might
need to prepare for similar large settlements, the newswire
reported.
Williams Sets Terms For $1.1
Billion Debt Buyback
Williams Cos. on Monday set terms for a $1.1 billion
debt buyback as part of the company's effort to cut debt and return to
its core business, Reuters reported. Williams last week said it aims to
cut its $11.3 billion debt load by $4 billion to $4.5 billion by early
2006. The cost of insuring Williams’ debt against default in the
credit derivatives market fell after Monday's announcement, suggesting
that the news is a positive in the near term. 'Buying back debt is
always a positive. I'm happy to see they have enough money to do it,'
said Jon Cartright, head of institutional research at BOSC Inc. in
Clearwater, Fla., the newswire reported.
size='3'>Return of Movie Chains
Amid a wave of consolidation,
movie theaters are once again generating cash flow thanks to factors
including fancier seating, more concession stands and on-screen
advertising, CBS MarketWatch reported. They've also been helped
by two good years at the box office -- momentum that the industry hopes
it can keep up with this summer. Read the
href='http://cbs.marketwatch.com/news/story.asp?g=F150B65213C64396BA9C7F4A4C2…'>full
article (registration required).
Pasta Maker Files for
Bankruptcy
New World Pasta Co. on Monday filed for bankruptcy
protection, Reuters reported. The Harrisburg, Penn.-based pasta maker,
which is more than 80 percent-owned by JLL Partners of New York, said it
had roughly $450 million in debts in filing for protection under chapter
11 of the Bankruptcy Code in the U.S. Bankruptcy Court in Harrisburg. 'I
would stress this is a voluntary filing that will enable us to
reorganize, strengthen our financial position and emerge from chapter 11
... as quickly as we can,' company General Counsel and Vice President
Cary Metz said, the newswire reported.
The popularity of low-carbohydrate diets such as the
Atkins diet led to a 7 percent drop in pasta sales so far this year, on
top of a 5 percent decline in the fourth quarter of 2003. Last week,
Krispy Kreme Doughnuts cut its earnings forecast, the latest food
company hurt by the low-carbohydrate diet popularity, the newswire
reported.
Mexico's TMM Extends Debt
Restructuring Deadline
Mexican transport company Grupo
TMM said on Monday more bondholders had agreed to a proposed $377
million debt restructuring, but that it was extending the date it had
set to close the offer, Reuters reported. Grupo TMM said it had reached
an agreement with holders of 69 percent of $177 million in senior notes
due 2003 and $200 million of senior notes due 2006 to extend the
deadline to complete the offer, the newswire reported.
Allegheny Posts
First-quarter Profit
Allegheny Energy Inc., a U.S.
power company that narrowly averted bankruptcy last year, on Monday
reported a quarterly profit as reduced losses in its power generation
and marketing business helped reverse a year-earlier loss, Reuters
reported. The Hagerstown, Md.-based company reported first-quarter
earnings of $33.3 million, or 25 cents a share, compared with a loss of
$58.8 million, or 46 cents a share, a year earlier, Reuters
reported.
Witness Tells of Adelphia Family Dynamics
John Rigas, Adelphia’s founder, made deceptive
remarks about his pay and stock holdings after the company disclosed on
March 27, 2002, that it had backed $2.3 billion in family loans, a
former finance vice president, James R. Brown, testified yesterday.
Adelphia's stock price plummeted after that disclosure, and it hired
investment bankers to avoid a collapse, Brown said. At a meeting with
the bankers, John Rigas gave a short speech saying that he did not draw
a big salary, receive stock options or sell shares. Brown and other
witnesses said earlier that John Rigas had drawn $1 million a month in
cash advances that were not disclosed, the newswire reported.
Prosecutors say the Rigases stole $100 million from
Adelphia, which filed for bankruptcy protection in June 2002. They also
say that the Rigases hid $2.3 billion in off-balance-sheet loans,
concealed the source of family loans to buy $1.6 billion in company
stock and debt and lied about revenue and operations, the newswire
reported.
Halliburton Expects $1.6 Billion Deal With
Insurers
Halliburton Corp. on Monday
said it expects its DII Industries unit to get $1.6 billion from
insurers to help settle claims from people who said asbestos made them
sick, Reuters reported. Halliburton announced the proposed deal
following a bankruptcy hearing Monday in Pittsburgh federal court
involving DII and engineering unit Kellogg Brown & Root (KBR). The
hearings had been scheduled to run through Wednesday.
DII and KBR filed for chapter 11 bankruptcy protection
in December 2003, as part of a $4.3 billion settlement over hundreds of
thousands of asbestos and silica claims against the company. The bulk of
the claims came from employees who worked on industrial furnaces made by
DII prior to Halliburton's purchase of the company. Under the latest
proposed deal, DII would receive about $1.6 billion in cash from
insurers to help fund the asbestos and silica settlement, the newswire
reported.
NRG Posts Profit After Bankruptcy
Emergence
Wholesale power generation company NRG Energy Inc. on
Monday reported a quarterly profit, as the absence of restructuring and
impairment charges helped reverse a loss in the year-earlier period,
Reuters reported. The company, which emerged from bankruptcy in
December, reported a first-quarter profit of $30.2 million, or 30 cents
a share, compared to a loss of $12.6 million in the year-earlier period.
The company also said it had begun settlement talks with the Commodity
Futures Trading Commission over the agency's probe into 'round trip'
trading by several power companies and the submission of false reports
to gas index publications to manipulate the index, the newswire
reported.
Retailer Boutiques Accepts
Buyout Offer From Investor Group
Retailer Boutiques San
Francisco, operating under court protection since December, said on
Monday it has accepted a recapitalization offer from a group of
investors led by its founder, Reuters reported. The Quebec-based
investor group, which includes company founder Paul Delage Roberge, made
one of seven offers for the Montreal-based retailer, Boutiques said in a
statement. The deal is subject to a number of conditions, including
court approval and an agreement over the Complexe Les Ailes mall in
downtown Montreal by May 27, Reuters reported.
DVI Creditors Can Probe
Case Against Executives, Board
The official creditors body in
DVI Inc.'s chapter 11 bankruptcy case got court approval Monday to
investigate and pursue lawsuits against the finance firm's officers and
directors. U.S. Bankruptcy Chief Judge Mary F. Walrath signed an order
allowing the official committee of DVI's unsecured creditors to join the
pursuit of claims on $10 million in director and officer liability
insurance. Some officers and directors of DVI have been named defendants
in two federal court lawsuits -- one of them a consolidated shareholders
class action, the other a lawsuit by Fleet National Bank, former leader
of DVI's lending group.
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More Parmalat USA
Creditors Seek Examiner In Chapter 11 Case
An examiner should be appointed
in the Parmalat USA Corp. chapter 11 case to investigate what effect
malfeasance at the company's corporate parent may have had on its
business and the potential recovery of its creditors, company creditors
said in a court filing. Friendship Dairies and Perry's Ice Cream Co.,
creditors of Parmalat USA, said in the motion filed last Thursday that
the examiner should investigate how the 'alleged decades-long fraud,
falsifications and cover-ups about the mushrooming financial disaster at
the (company's) Italian parent corporation' relate to Parmalat USA.
Friendship and Perry's said the examiner should investigate the Parmalat
collapse and whether there were any transactions designed to strip
assets from Parmalat USA, according to the motion filed with the U.S.
Bankruptcy Court in Manhattan.
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Reserved