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August 17, 2005
Economy Shows Signs of Strain from Oil Prices
Inflation surged last month, the government reported yesterday, as
the long rise in energy prices finally seemed to be pinching the
American economy, the New York Times reported today. After
absorbing the burden of oil at $40 a barrel, then at $50 and beyond,
consumers have started to react as prices have risen above $60 in recent
weeks. Wal-Mart blamed high oil prices yesterday as it reported that in
the recent quarter its profits rose at their slowest rate in four years.
The chief executive, H. Lee Scott Jr., told investors that expensive oil
was worrying him because it seemed to be erasing recent income gains for
many customers. Airlines have already felt the sting of increasing jet
fuel costs. Last week, Delta, United and Continental raised domestic
fares in their latest attempt to stem losses; Delta is struggling to
avoid bankruptcy. United Parcel Service recently reminded its drivers
not to leave truck engines running while they deliver packages. Across
the country, families are trying to figure out where to cut corners so
they can afford gas that now averages $2.55 a gallon nationwide after
posting the biggest weekly jump in at least 15 years, according to the
latest government statistics.
href='http://www.nytimes.com/2005/08/17/business/17oil.html?ex=1281931200&en=…'>Read
the full story.
Able Laboratories to Liquidate
Drugmaker Able Laboratories Inc., which last month filed to
reorganize under chapter 11, said that it will instead sell its business
and assets, Reuters reported yesterday. Able said that the FDA turned
down its proposal to revalidate its product development data, which
would have allowed the company to relaunch its products.
Ruling Could Delay Owens Corning Reorganization Plans
A federal appeals court ruling in Philadelphia may
href='http://www.miami.com/mld/miamiherald/business/national/12396726.htm'>further
delay Fiberglass maker Owens Corning’s plan to emerge from
bankruptcy protection, the Miami Herald reported yesterday.
The 3rd U.S. Circuit Court of Appeals on Monday overturned a key
provision of the company’s plan. The court said that a U.S.
District judge erred last October when he ruled that assets of company
subsidiaries should be combined with those of Owens Corning. Banks said
the assets should be treated separately.
href='http://www.miami.com/mld/miamiherald/business/national/12396726.htm'>Read
the full story.
Delta Bankruptcy Looms
Delta Air Lines’ shares soared on hopes that the sale of one of
its regional carriers will bring the airline some much-needed cash, but
bankruptcy remains a major risk, analysts said yesterday, according to
Reuters. In a filing with the Securities and Exchange Commission late
Monday, the No. 3 U.S. airline said it would
href='http://today.reuters.com/investing/financeArticle.aspx?type=hotStocksNe…'>sell
Atlantic Southeast Airlines Inc. to Skywest Inc. for $425 million.
In its filing, Delta said that despite the sale of ASA and other
financing deals it is trying to work out, it could still be forced into
bankruptcy.
href='http://today.reuters.com/investing/financeArticle.aspx?type=hotStocksNe…'>Read
the full story.
Forbes Predicts Airline Mergers
href='http://www.forbes.com/business/2005/08/16/airlines-bankruptcy-delta-cz_…'>A
filing by Delta Air Lines seems imminent, with Northwest Airlines
taxiing not far behind, Forbes said yesterday. US
Airways Group has filed for bankruptcy protection twice. UAL has been
stuck in chapter 11 for nearly three years. If US Air gets out, it will
because of the agreement from America West Holdings to buy the carrier.
Economics in the airline industry have changed, and banks and the U.S.
government are now more reticent to save flagging carriers. Together,
these factors will produce a wave of consolidation. Forbes.com polled a
host of experts, including money managers, analysts and former
executives, asking them which combinations make sense.
href='http://www.forbes.com/business/2005/08/16/airlines-bankruptcy-delta-cz_…'>Read
the full story.
Nearly $13 Million in Midway Assets Sold
About $13
million of Midway Airlines’ assets have been sold, nearly two
years after the airline was ordered liquidated, but the trustee said
that most of the remaining $140 million in creditors’ claims
won’t be paid, the Associated Press reported yesterday. U.S.
Bankruptcy Judge A. Thomas Small ordered Midway’s assets to
be liquidated in October 2003, after the airline gave up a 26-month
struggle to reorganize. Since then, Midway’s eight regional jets,
leases and parts have been sold for $12.9 million. Combined with funds
on hand and other fees that were recovered, $20.59 million has been
raised to repay creditors, a July 25 court report showed.
href='http://www.miami.com/mld/miamiherald/12396967.htm'>Read the full
story.
SkyWest to Buy Atlantic Southeast from Delta
href='http://kutv.com/local/local_story_228102926.html'>SkyWest’s
agreement to acquire Atlantic Southeast Airlines from Delta Air Lines
will forge a stronger relationship between the carrier and Delta,
and offer it an opportunity to add quality and cost competitiveness,
KUTV in Salt Lake City reported yesterday. The $425 million sale,
pending regulatory approvals, is expected to close in September. The
deal announced Monday provides for payment of $350 million in cash at
closing, representing $330 million of the purchase price and $20 million
relating to certain aircraft financing deposits.
href='http://kutv.com/local/local_story_228102926.html'>Read the full
story.
Glendora, Calif. Facing Possible Bankruptcy
City Manager Eric Ziegler says the
href='http://www.whittierdailynews.com/Stories/0,1413,207~12026~3013353,00.ht…'>City
Council has some tough financial choices to make if it wants to keep
Glendora from potential bankruptcy as early as 2007, the Whittier
Daily News reported today. Ziegler warns the city needs to beef
up its savings. Some council members agree that city coffers are
dwindling, but the mayor sees a rosy future for Glendora.
href='http://www.whittierdailynews.com/Stories/0,1413,207~12026~3013353,00.ht…'>Read
the full story.
Calif. Reaches $450 Million Energy-Scam Settlement with Reliant
California Attorney General Bill Lockyer announced a
href='http://www.law.com/jsp/article.jsp?id=1124183109167'>settlement
Monday between power users and energy company Reliant, the
Recorder reported today. If approved by state and federal
regulators, the deal would resolve claims for refunds pending before the
Federal Energy Regulatory Commission, along with an antitrust suit filed
by Lockyer. The settlement is the fifth between California and
out-of-state energy companies accused of inflating prices in 2000 and
2001, and is the second largest after the $750 million Mirant agreed to
pay earlier this year.
href='http://www.law.com/jsp/article.jsp?id=1124183109167'>Read the full
story.
Shenzhen Warns Shareholders on Bankruptcy
China’s biggest bicycle exporter, Shenzhen China Bicycle Co.,
has warned its shareholders that it may be delisted because it is facing
bankruptcy proceedings, the Associated Press reported today. If a
bankruptcy application by its controlling shareholder, Huarong Asset
Management Corp., is approved by the Shenzhen Intermediate
People’s Court, the company’s shares will be delisted from
the Shenzhen Stock Exchange, China Bicycle said in a statement posted on
the exchange’s web site. However, the company said that it was
seeking a resolution that would enable it to continue operations.
Credit Report Firm Settles FTC Charges
Experian North America Inc., one of the three large companies that
verify consumer credit, will
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/08/16/AR20050…'>pay
$950,000 as part of a settlement with the federal government over
charges that it deceived consumers who sought free credit reports, the
Washington Post reported today. Under an agreement
announced yesterday by the Federal Trade Commission, Experian also will
change how it markets credit reports, and offer refunds to qualifying
consumers who were misled.
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/08/16/AR20050…'>Read
the full story.
NWA Shares Surge on Analyst Upgrade
Northwest Airlines Corp. shares soared Tuesday after research firm
Morgan Stanley upgraded the company’s stock to
“overweight” from “equal-weight,” the
Minneapolis/St. Paul Business Journal reported yesterday.
And as Northwest continues to negotiate with its mechanics union, Morgan
Stanley said it believes that Northwest can sustain a mechanics strike
without significant harm to operations. A strike could begin as soon as
Aug. 19 at 11:01 p.m., when a federally mandated 30-day cooling-off
period ends. Meanwhile, the Independent Pilots Association, a
Louisville, Ky.–based union that represents United Parcel Service
Inc. pilots, has told Atlanta-based UPS that they will not fly Northwest
Airlines cargo during a mechanics strike.
WCI Steel Inc. Files Plan of Reorganization
WCI Steel Inc. announced yesterday that a reorganization plan
approved by the company’s independent board of directors has been
filed in the U.S. Bankruptcy Court for the Northern District of Ohio,
Eastern Division, PR Newswire reported. The reorganization plan,
sponsored by WCI’s ultimate parent, The Renco Group Inc., is
subject to approval by the bankruptcy court and a vote of creditors and
other stakeholders. WCI filed a voluntary petition for protection under
chapter 11 on Sept. 16, 2003. WCI is an integrated steelmaker producing
more than 185 grades of custom and commodity flat-rolled steel at its
Warren, Ohio facility. The company has approximately 1,650
employees.