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Consumer Confidence Climbs, Existing Home Sales Rise
The housing market rebounded in April and consumer confidence rose to
its highest level in six months in May, providing new hope that U.S.
consumers will keep spending heavily despite a weak job market, the
Wall Street Journal reported. In one of two reports released on
Tuesday about the U.S. housing market, the National Association of
Realtors said that sales of pre-existing homes rose 5.6 percent in April
to a seasonally adjusted annual rate of 5.84 million units, the
fifth-highest level on record. Meanwhile, the U.S. Commerce Department
said sales of new homes increased 1.7 percent in April to a seasonally
adjusted annual rate of 1.028 million homes. Separately on Tuesday, the
Conference Board said that its monthly index of consumer confidence rose
for the second consecutive month to 83.8 in May from 81.0 in April. The
May increase followed a huge jump in consumer confidence in April with
the conclusion of the war in Iraq, reported the Journal.
XO Communications President and Chief Operating Officer
Resigns
XO Communications Inc. President and CEO Nate Davis resigned and will be
replaced by Chief Executive Carl Grivner, Bloomberg News reported.
Davis, who joined Reston, Va.-based XO in January 2000, helped the
company expand the services it offers to businesses and reduce operating
expenses, the company said in a statement distributed by Business Wire.
He's leaving to pursue other business interests, the statement said. His
departure comes five months after Daniel Akerson resigned as chairman
and chief executive of the closely held company, which sells business
telephone and Internet services. Grivner, who was most recently chief
operating officer at Global Crossing Ltd., became XO's chief executive
on May 15. XO emerged from bankruptcy in January. It shed $4.6 billion
in debt and sold control to financier Carl Icahn, who retains an 80
percent stake in the business, reported Bloomberg.
Air Canada Jazz Reaches Accord With Flight Attendants
Air Canada's Jazz unit, which runs short-haul flights in North America,
said 600 flight attendants agreed to concessions aimed at helping the
parent company emerge
from bankruptcy, Bloomberg News reported. The flight attendants are the
fourth and last Jazz union group to agree to new labor contracts,
following the Canadian Auto
Workers and pilots and dispatchers. The company will release details
later today, Jazz spokeswoman Debra Williams said in an interview.
Montreal-based Air Canada is cutting costs after filing for protection
from creditors on April 1. The airline is seeking C$770 million ($561
million), or about 25 percent of current labor costs, in permanent
concessions from unionized workers, reported the newswire.
Adelphia Restates Its Subscriber Counts for 2002 After
Review
Adelphia Communications Corp. restated the number of its basic cable,
digital cable and high-speed Internet subscribers reported last year
after a review of company accounting practices, Bloomberg News reported.
Adelphia lowered subscriber counts in each of the first three quarters
of 2002, according to a filing with the U.S. Securities and Exchange
Commission. It last reported subscriber figures in a regulatory filing
in October. Adelphia earlier disclosed that it overstated revenue and
cash flow over a two-year period.
Under new management after ousting founder John Rigas and his family,
Adelphia is trying to emerge from an accounting scandal that led it to
file for bankruptcy protection in June. The restatements disclosed
yesterday stem from changes that the company
said it made to comply with more commonly accepted practices in the
industry. 'It's a move toward a more conservative set of accounting
practices,'' Adelphia spokesman Eric Andrus said, Bloomberg
reported.
NRG Gets FERC Extension to Defend Canceling Contract
NRG Energy Inc., which wants to cancel a power contract with a Northeast
Utilities' unit, now has until June 4 to make its case to federal
regulators, Bloomberg News reported. The Federal Energy Regulatory
Commission in Washington, D.C., approved the extension late on Friday
'to ensure that NRG has a meaningful opportunity to respond,'' according
to a notice on the commission web site. The commission had earlier
ordered NRG, a unit of Xcel Energy Inc. that is in chapter 11
bankruptcy, to continue supplying low-cost electricity to Connecticut
Light & Power Co. under a four-year contract that expires at the end
of 2003. NRG had hoped to terminate the contract on May 19. Connecticut
Attorney General Richard Blumenthal said terminating the contract would
force Connecticut Light & Power to buy replacement power at higher
prices, costing consumers more than $200 million, reported the
newswire.
St. Louis-based Thermadyne Holdings Emerges from
Bankruptcy
The St. Louis Business Journal reports that Thermadyne Holdings
Corp. has emerged from chapter 11 bankruptcy protection and reduced its
debt to about $230 million from $800 million. The St. Louis-based
company filed for bankruptcy in November 2001. Under the reorganization
plan, Thermadyne issued 13.3 million shares of new common stock, of
which 94.5 percent will be held by its senior secured lenders, the
online newspaper reported. The remaining 5.5 percent is held by a group
of bondholders. Preferred and common stock held prior to the bankruptcy
filing has been canceled.
Wichita-based Amarillo Grill Files for Bankruptcy
Citing increased chain competition and debt issues, Wichita, Kan.-based
Amarillo Mesquite Grill Inc. has filed for bankruptcy protection,
reports the Wichita Business Journal. The company announced on
Tuesday that it is filing chapter 11 and will try to reorganize. The
bankruptcy papers show that the company lists $4.3 million in assets and
$6.8 million in liabilities, according to the online newspaper. The
documents show $5.9 million owed to secured creditors, more than
$156,000 in unsecured priority claims and more than $802,000 in
unsecured nonpriority claims. According to a news release, the increase
of chain restaurant competition, the increased expense of company audit
and Securities and Exchange Commission requirements and the inability to
amortize debt led to the bankruptcy filing.
ENRON
Judge Sets April 5 Trial For Ex-Enron Broadband
Executives
A group of former executives for Enron Corp.'s broadband unit will not
face trial until at least next year, though that date's not as far away
as some of them wanted. U.S. District Judge Vanessa Gilmore set an April
5 trial date for seven Enron Broadband Services Inc. officers charged on
May 1 for securities fraud, wire fraud and money laundering Tuesday
morning in a pre-trial hearing. Per Ramfjord, attorney for former Enron
Broadband president and co-chief executive officer Joseph Hirko, asked
Judge Gilmore to set a trial date for fall 2004 due to the complexity of
the case, but the judge rebuffed the request.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Enron Weighs Suing Its Banks For Bad Advice They
Provided
The many claims and counterclaims facing Enron Corp. and its bankers is
about to get even more complicated, the Wall Street Journal
reported. The energy company is now considering bringing legal action
against its own bankers for giving the company bad financial advice that
helped lead to its downfall. The strategy is part of a new push under
Enron's CEO Stephen F. Cooper to settle all of the litigation involving
Enron and its bankers, shareholders and creditors, reported the
Journal. The latest twist, laid out in a pair of little-noticed
motions filed in federal bankruptcy court in Manhattan in April,
underscores how tough it has become for Enron's principal bankers,
including J.P. Morgan Chase & Co. and Citigroup Inc., to extricate
themselves from the debacle of Enron's collapse, reported the newspaper.
Both banks, along with numerous other Enron advisers, already have been
sued by the company's shareholders for allegedly helping the company
hide debt, and they face investigations from regulators over their
involvement. To read the full article, point your browser to
href='http://www.wsj.com/'>www.wsj.com (subscription required).
Court Permits UAL Airport Bond Trustees To Make Payments
A bankruptcy judge authorized trustees for bonds related to some UAL
Corp. airport facilities to make payments to bondholders from interest
and reserve funds, according to court papers. Judge Eugene R.
Wedoff of the U.S. Bankruptcy Court in Chicago signed an order on
Friday that allows trustee HSBC Bank USA to disburse up to $10.7 million
from a reserve account on behalf of $190.2 million of 1997 special
facilities revenue bonds for the Los Angeles International Airport
facilities of UAL's United Airlines. HSBC Bank USA, a unit of HSBC
Holdings PLC, also may distribute about $1 million that is held in a
fund for the Los Angeles airport bonds. In separate orders, Judge Wedoff
also authorized HSBC Bank USA to pay holders $9.7 million for bonds for
United Airlines facilities at San Francisco International Airport, $4.7
million on behalf of facilities bonds at Boston's Logan International
Airport, and $1.4 million for Chicago O'Hare International Airport
facilities bonds.
Provided by Daily Bankruptcy Review (
href='http://www.djnewsletters.com/dbr2.html'>www.djnewsletters.com/dbr2.html)
Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Delta Air Lines' Stock is Soaring, But It Needs Savings From
Pilots
The end of the war in Iraq and agreements to slash labor costs at the
biggest airlines have some investors wondering if the worst is over for
the long-suffering sector, the Wall Street Journal reported. As a
result, there was a robust rally in the beaten-down airline stocks in
recent weeks. But in the case of Delta Airlines, the takeoff could be
premature, reported the Journal. Unlike its rivals, AMR Corp.'s
American Airlines and UAL Corp.'s United Airlines, Delta has yet to
secure big cost savings from its pilots, the company's major unionized
group. Indeed, the 9,000 pilots at the third-largest airline still
haven't decided whether to reopen their lucrative labor agreement and
negotiate with Delta, reported the online newspaper.
Magellan Health Services Secures Improved Equity Investment
Commitment
Magellan Health Services Inc. today announced in a press release
distributed by Business Wire that it has secured a commitment from Onex
Corporation to provide Magellan with an equity investment of $150
million upon consummation of its chapter 11 reorganization. Upon
approval by the U.S. Bankruptcy Court for the Southern District of New
York, the new commitment will replace a previous $50 million equity
commitment from certain unsecured creditors, thereby providing
reorganized Magellan with a stronger balance sheet and greater financial
flexibility than it would have had under the prior equity
commitment.
Onex has further agreed to purchase an additional $50 million of equity
in reorganized Magellan to fund cash payments to holders of certain
general unsecured claims who elect to receive cash in lieu of a portion
of the common stock that they would otherwise receive under the
company's existing plan of reorganization. Magellan stated that, upon
approval of the Onex commitment by the Bankruptcy Court, it will amend
its plan of reorganization and disclosure statement to reflect the Onex
commitment, and it continues to believe that it will emerge from chapter
11 by the end of September 2003.
The Onex equity commitment has the support of the Official Committee of
Unsecured Creditors appointed in its chapter 11 case and Magellan's
largest customer, Aetna. Magellan stated that the other provisions of
its Plan will remain largely unchanged and that it continues to expect
that upon emergence from chapter 11, Magellan's more than $1 billion of
overall indebtedness will be reduced by approximately $500 million, the
company announced in the press release.
Hawaiian Airlines Clears Way for Trustee
Hawaiian Airlines won't appeal a bankruptcy court's decision to appoint
a trustee to oversee the carrier through its financial reorganization,
the company said on Tuesday, the Associated Press reported. In a
statement, Hawaiian Chairman and Chief Executive John W. Adams said that
while he and the board disagree with the decision, the company wants to
move its restructuring ahead 'in the most expedient manner possible and
without distraction from further court actions.' On March 16, U.S.
Bankruptcy Court Judge Robert J. Faris granted a motion by Hawaiian's
main creditor, Boeing Capital Corp., to appoint a trustee to oversee the
carrier's operations, reported the newswire.
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