December 1, 2003
Optimism Rules As Holiday Selling Starts
Healthy sales on Friday, one of the biggest shopping days of the year,
left retailers feeling optimistic that they can achieve modest sales
increases for the holiday season this year, the Wall Street
Journal reported. Consumers charged a combined $3.4 billion at
retail stores on Friday and Saturday using their Visa cards, a 9 percent
increase over the same period a year earlier, according to Visa USA.
Chicago retail-data firm ShopperTrak estimated total retail sales for
Friday rose 4.8 percent over the same day a year ago to hit $7.2
billion. Other economists are looking for gains for the season in the
3.5 percent to 7 percent range.
Online sales for Friday totaled about $200 million, a 36 percent
increase over sales the same day a year ago, according to Internet
measurement firm ComScore Networks Inc. Movies, music and video games
were among the strongest categories on the Web last week, a trend that
could help online retailers such as Amazon.com Inc. Wal-Mart Stores Inc.
said Friday sales rose 6.3 percent to a single-day record of $1.52
billion, up from $1.43 billion a year ago. 'We see it as a solid start
to the holiday season,' said Karen Burk, a Wal-Mart spokeswoman,
reported the online newspaper.
Corporate Debt Growth Slows
Despite increasing corporate profits, the corporate debt picture hasn't
improved nearly as markedly, the Wall Street Journal reported.
But things are getting better. For the nonfinancial corporate sector,
the debt-service ratio has improved. Cash flows are strong and cash
positions have strengthened, the online newspaper reported. The
operating-earnings-to-interest-expense ratio bottomed out at three times
in the second quarter of 2001. It has steadily risen since and is now
close to 4.5 times, a reassuring number, according to Credit Suisse
Global Credit Strategist Krishna Memani. The average since 1990 is
around four times, he says. But Moody's projections are still
cautious--even as the aggregate numbers look a bit better, there still
are more nonfinancial companies facing a credit downgrade than an
upgrade.
While debt growth has slowed, it hasn't gone down. But fixed-income
specialists say that debt reduction in aggregate is a bad sign for the
economy, a sign of deflation and a lack of growth. Instead, companies
need to increase revenue faster than debt, in order to decrease
leverage, reported the online newspaper. To read the full article, point
your browser to www.wsj.com
(subscription required).
Enron Heat Descends On Smaller Players
A Wall Street Journal article notes that of the hundreds of
Wall Street bankers connected to the Enron Corp. fiasco, those facing
prosecution did little work for the energy company. Meanwhile, bankers
at several firms that Enron called its 'Tier 1' banks, who participated
in some of the most contentious -- and largest -- transactions with
Enron, may never be prosecuted. To read the article, point your browser
to www.wsj.com (subscription
required).
Hawaiian Trustee Sues Former CEO, Carrier's Parent
Hawaiian Airlines trustee Joshua Gotbaum filed a lawsuit on Friday
against John W. Adams, the carrier's former chairman and CEO, the
Associated Press reported. The suit, which seeks to recover $28 million
paid to Adams and other shareholders and insiders, also names Adams's
investment groups and the airline's parent firm, Hawaiian Holdings Inc.
Gotbaum said the money includes $25 million used for a stock buyback in
2002 that already has been criticized by the U.S. Bankruptcy Court.
Under the $25 million share repurchase, shortly before filing for
chapter 11 protection, Hawaiian bought back about 18 percent of its
common stock at a price that was a 31 percent premium to the
stock-market rate. Management and affiliates received 69 percent of the
proceeds at the time. Boeing Capital Corp., a Hawaiian Airlines
creditor, also had criticized the tender offer, contending it was
inappropriate for Hawaiian Holdings to pay $25 million for shares after
having received more than $30 million in federal aviation-stabilization
funds in the aftermath of the Sept. 11 terrorist attacks, reported the
newswire.
AMF Bowling to be Bought by Code Hennessy
AMF Bowling Worldwide Inc., the world's largest owner and operator of
bowling centers, agreed to be bought by an affiliate of private equity
firm Code Hennessy & Simmons LLC for at least $249 million in cash,
AMF said in a Friday securities filing, Reuters reported. AMF
shareholders will receive $25 for each of their shares. Richmond,
Va.-based AMF had 9,963,155 shares outstanding as of Nov. 14, according
to the merger agreement. The purchaser, Kingpin Holdings LLC, is also
assuming AMF's debt. AMF said it expects the purchase to close in the
first quarter of 2004, subject to shareholder approval and Chicago-based
Code Hennessy's obtaining sufficient financing. It said holders of 76
percent of AMF's shares have agreed to vote for the merger, the newswire
reported.
Ivaco Reports Loss, Sees Improving Steel Demand
Ivaco Inc. reported a third-quarter loss on Friday, but the steelmaker
said it sees brighter days ahead after entering bankruptcy protection
two months ago, Reuters reported. Montreal-based Ivaco said it has
stabilized its business since entering protection in September by
discontinuing its U.S. operations and cutting jobs. The company also
said the Ontario Superior court extended its court protection period
until Feb. 13. 'Recently, it has become apparent that product demand in
many of the company's key sectors is returning toward more normal levels
as general economic conditions continue to strengthen,' Ivaco said in a
release, reported the newswire.
Ontzinc Looking at Ways to Improve Pasminco Bid
Canada's Ontzinc Corp., whose A$1.7 billion ($1 billion) bid for
Australia's Pasminco was rejected by the firm's bankruptcy
administrator, said on Friday it was looking for ways to better its
initial offer, Reuters reported. 'Ontzinc intends to continue to further
define its options to improve the bid,' the company said in a statement.
Financing for the bid will be raised through equity and debt financing,
it said.
Doman Says Court to Hear Bid on Labor Pact
Doman Industries Ltd. said on Thursday a bankruptcy judge will consider
its bid to negotiate its own labor pact with workers on strike against
British Columbia's coastal lumber industry, Reuters reported. The forest
products company wants to pull out of the industry's bargaining agent,
Forest Industrial Relations, which it accuses of provoking the strike by
imposing a temporary contract that the Industrial, Wood and Allied
Workers union has said was unacceptable. Doman said in a news release
that a British Columbia Supreme Court judge had agreed to hear arguments
on the labor case as soon possible. The court, as expected, also
extended a stay in the company's reorganization proceedings until Dec.
18.
