June 132003

Submitted by webadmin on Fri, 2003-06-13 00:00

June 13, 2003

Retail Sales Offer Some Hope for Recovery

Consumers provided a modest boost to retail sales in May, a somewhat
hopeful sign for the economy's revival, the Associated Press reported.
The Commerce Department reported yesterday that sales at retailers edged
up 0.1 percent from the previous month, after a decline of 0.3 percent
in April. 'It appears the consumers have begun to bounce back from
Iraq-induced doldrums,' said Rosalind Wells, chief economist at the
National Retail Federation.

Shoppers actually showed a stronger inclination to spend in May than
suggested by the 0.1 percent rise. A 4.3 percent drop in revenue at
gasoline stations reflected lower pump prices and restrained the overall
growth in retail sales. Excluding gas station revenue, retail sales rose
by a solid 0.4 percent. Consumers increased their purchases of
furniture, electronics and appliances, and clothing. There was more
revenue, as well, at restaurants and bars, reported the newswire.

Hatch Insisting On Asbestos Litigation Markup Next Week

Senate Judiciary Chairman Orrin Hatch (R-Utah) yesterday vowed to forge
ahead with his legislation aimed at reforming the asbestos litigation
system, saying a markup planned for next week will come off even if
concerns over the controversial bill are not assuaged,
CongressDaily reported. 'I'm looking forward to voting on it,'
Hatch said during a session of the Judiciary Committee today in which he
reaffirmed his decision to hold the markup next week 'in any event.'
Some key Democrats have withheld support for the bill, which creates a
separate court system and a $108 billion trust fund to compensate
victims of asbestos-related illnesses.

Meanwhile, Sen. Ben Nelson (D-Neb.), the measure's Democratic
cosponsor, said he was working on three possible solutions to one of the
biggest Democratic complaints about the bill -- that it does not include
a mechanism to ensure that the trust fund will not run dry, reported the
newswire. Hatch previously opposed the use of a federally funded
'backstop,' but Nelson indicated that using public funds was not
completely off the table. Hatch said he would work with Senate
colleagues to address their concerns ahead of the markup. 'We're coming
very close to be able to satisfy [concerns] or at least get the parties
together,' reported the newswire.

Consumer Groups Resist Calls To Renew Credit Reporting Law

Consumer and privacy groups yesterday continued their uphill campaign
against a law governing credit reporting that is set to expire at the
end of the year, urging Congress to rebuff the business community's
united demands to renew the law, CongressDaily reported. Travis
Plunkett, legislative director of the Consumer Federation of America,
told the House Financial Services Financial Institutions and Consumer
Credit Subcommittee that Congress should let the 1996 federal
pre-emptions to state law in the Fair Credit Reporting Act expire.

Representatives from the Mortgage Bankers Association, Wells Fargo,
the National Association of Mortgage Brokers and the credit bureau
TransUnion urged renewal of those pre-emptions. 'If Congress allows it
to expire, the outcome will increase risk and have a detrimental impact
on a consumer's access to mortgages,' said mortgage broker A.W. Pickel,
reported the newswire.

House GOP Pushes Through Class Action Reform Bill

The House on Thursday approved moving virtually all national class
action lawsuits from state courts into federal courts, a move supporters
hope will curb frivolous lawsuits, but opponents fear will allow big
businesses to escape multimillion-dollar verdicts for misdeeds, reported
CongressDaily. Pushing the bill through on a 253-170 vote,
majority Republicans argued that trial lawyers increasingly abuse such
lawsuits to profit from multimillion-dollar settlements. Victims, on the
other hand, often get virtually worthless coupons, GOP lawmakers
maintain. Democrats called the bill corporate welfare to help out big
businesses that abuse the public. The House, on a voice vote, changed
their legislation to make it similar to a version being considered by
the Senate, reported the newswire.

MCI

MCI Creditors Hire Lawyer Daniel Webb to Fight WorldCom
Plan

Some creditors to WorldCom Inc.'s MCI unit hired former U.S. prosecutor
Daniel Webb to help them challenge the telephone company's bankruptcy
restructuring plan, which denies them a payout, a lawyer for the group
said, Bloomberg News reported. The hiring of Webb escalates the battle
by MCI securities holders to recover some of their investment in
Ashburn, Va.-based WorldCom as it tries to exit the largest U.S.
bankruptcy, said Thomas Mayer, the attorney for the owners of MCI's
cumulative

quarterly income preferred securities (Quips).

Webb could help derail WorldCom's restructuring plan, which goes
before a judge in August. He'll argue that holders of Quips, who receive
nothing under the current

plan, are creditors to the most profitable unit of WorldCom and should
receive payment ahead of creditors to other units. 'Having a
well-respected criminal lawyer as part of your team is very important,''
said Rick Tilton of Greenacre Asset Advisors, which advises creditors of
bankrupt companies. 'The preferred holders raise very important
questions of law and fact that threaten the whole plan of
reorganization,'' reported the newswire.

U.S. Bankruptcy Judge Arthur Gonzalez has previously denied attempts by
the Quips holders to be treated separately. He is scheduled to begin
hearings to weigh WorldCom's reorganization plan on Aug. 25. CEO Michael
Capellas wants

the company to emerge from bankruptcy by October, Bloomberg
reported.

U.S. May Suspend Its Work With MCI

A top official of the government's contracting arm recommended that the
agency consider suspending business with MCI amid government concerns
that its accounting scandal made it unfit for federal work, the Wall
Street Journal reported.

The recommendation, by the inspector general of the General Services
Administration (GSA), threatens the embattled telecommunications
company's lucrative federal contracts. It also comes as the company
struggles to emerge from bankruptcy-court protection and the aftershocks
of the largest financial scandal uncovered in U.S. corporate
history.

If accepted by the GSA's compliance officer, the recommendation would
be a serious blow to MCI, formerly known as WorldCom Inc., reported the
Journal. The company's extensive voice and data contracts with
the government -- including a 10-year data contract with the Pentagon --
bring in more than $1 billion a year in revenue, according to people
familiar with the matter. It recently received a federal contract to
build a wireless network in Iraq.

Midwest Express May Seek Bankruptcy if Cost-cutting Plan
Fails

Midwest Express Holdings Inc., which operates Milwaukee-based Midwest
Airlines, may seek bankruptcy protection if a plan to lower labor costs
and plane payments isn't

achieved in the third quarter or earlier, the company said, Bloomberg
News reported.

The company is considering a chapter 11 filing, which would shield it
from creditors while it reorganizes its debts, said spokesman Dennis
O'Reilly. Midwest Express is trying to cut costs by renegotiating labor
contracts with its pilots and flight-attendants unions, and by lowering
plane lease and debt payments. 'If the company is not successful as to
each component by mid-summer, it will consider restructuring with
judicial assistance,'' the company said in a release yesterday, reported
Bloomberg.

Trump Must Sell Stake in GM Tower to Conseco, N.Y. Judge
Says

A New York judge today upheld an arbitration panel's ruling ordering
real estate executive Donald Trump to sell his stake in Manhattan's
General Motors building to

Conseco Inc. for $15.6 million, Bloomberg News reported. Conseco, which
filed the third-largest U.S. bankruptcy in December, is seeking a buyer
for the 50-story building who'll pay $500 million and assume the $700
million mortgage.

Trump claimed his previous offer to buy the building for $295
million, plus assumption of the mortgage, was disrupted by the Sept. 11,
2001, terrorist attacks that destroyed the World Trade Center. Trump had
until Sept. 15, 2001 to complete the proposed $1 billion sale, though he
claims his bankers at Deutsche Bank AG had their New York offices
destroyed and couldn't finish the deal on time, reported the
newswire.

MUSIC Semiconductors Emerges Intact From Chapter 11

On June 11, the U.S. Bankruptcy Court for the Northern District of
California, declared that MUSIC Semiconductors Inc., a subsidiary of
Philippine-listed company, Music Corporation, has satisfied the
conditions for dismissal of bankruptcy status under chapter 11,
CCNMatthews reported. The court confirmed that creditors have voted in
favor of the company's plan of reorganization, which meets the
requirements of Section 1129(b) of the Bankruptcy Code. MUSIC has
endured the overall slump in the semiconductor industry emerging smaller
and focused on binary CAM's, a still profitable niche market with sound
gross margins.

Kellwood Agrees to Buy Kasper for $163.6 Million

Kellwood Co., the maker of Sag Harbor clothing, agreed to buy bankrupt
Kasper A.S.L. Ltd. For $163.6 million to gain the Anne Klein brand and
expand its women's business in department stores, Bloomberg News
reported. The purchase consists of $111 million in cash, $40 million in
Kellwood stock and assumption of $12.6 million in prepaid royalties,
Secaucus, N.J.-based Kasper said in a statement. Kellwood also will
assume certain other liabilities. The agreement is subject to
bankruptcy-court approval.

Kellwood would become a 'dominant'' women's suit provider through the
Kasper line while the Anne Klein collection helps the company increase
sales at upscale department stores such as Neiman Marcus Group Inc.,
Kellwood said. Kellwood, which earlier this year purchased women's
clothing maker Briggs New York, has been buying and licensing brands to
diversify its business. 'The acquisition is a great fit for Kellwood
since Kasper's brands are vibrant and profitable,'' Lazard Freres &
Co. analyst Todd Slater wrote in a report. The purchase could add as
much as 50 cents to Kellwood's per-share profit next year, he wrote,
reported the newswire.

Kasper, which filed for chapter 11 bankruptcy protection in February
2002 after losing money in the previous two years, had sales last year
of about $350 million. It also owns brands including Albert Nipon and Le
Suit. Kellwood, which also owns the Koret brand, had sales of $2.2
billion in 2002, Bloomberg reported.

Lucent Tech., AT&T Oppose Leap Wireless Int'l Disclosure
Statement

Lucent Technologies Inc. objected to Leap Wireless International
Inc.'s reorganization plan disclosure statement, saying the company
failed to provide enough information about its financial condition.
Lucent provided credit lines to Leap Wireless unit Cricket
Communications Inc. before they both filed for bankruptcy protection in
April.

In an objection filed with the court recently, Lucent said Leap Wireless
failed to provide information about its current and projected financial
condition as well as the feasibility of the proposed plan.

XO Details Offer for Global Crossing

Regional phone company XO Communications Inc. on Thursday sweetened its
bid to acquire Global Crossing Ltd. and said it is willing to bid for
either the debt or the assets to take control of the bankrupt high-speed
communications network operator, Reuters reported. Singapore
Technologies Telemedia already has an agreement to pay $250 million for
a 61.5-percent stake in Global Crossing, which filed for bankruptcy
protection in January 2002 under a massive debt load, a glut of
high-speed network capacity, and slim demand.

XO, controlled by billionaire investor Carl Icahn, on May 30 offered
more than $700 million for Global Crossing, or $250 million in cash and
the rest in debt, stock and warrants. Icahn, who controls more than 80
percent of XO's stock, said he would offer more $700 million wholly in
cash for Global Crossings assets, which includes a high-speed network
reaching 27 countries, reported the newswire.

Baltimore Marine Industries Files for Bankruptcy, Lays off 200

Baltimore Marine Industries, the company that in 1997 rose from the
ashes of Bethlehem Steel Corp.'s failed Sparrows Point shipyard
business, has filed for chapter 11 bankruptcy protection and laid off
all 200 of its employees, the company said Thursday, the Baltimore
Business Journal reported. A company executive said the sluggish economy
necessitated the move. BMI plans to bring back its employees following
June 13 hearings in the U.S. Bankruptcy Court to finish a shipbuilding
contract with the U.S. Navy, as well as a separate ship scrapping
contract, the Journal reported. BMI is hoping for a surge in business
over the next year to 18 months as ships, deployed for military efforts
in Iraq, return to U.S. ports. Baltimore Marine Industries' 200
employees had an annual payroll of up to $90 million, and the company
pays more than $8.4 million in taxes, executives said.

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