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Consumers Curb Spending; Jobs Weak
U.S. consumers kept a tight hold on their wallets during the holiday
season as the economy inched out of a soft patch and while the labor
market outlook looked bleak, reports on Thursday showed, Reuters
reported. Key U.S. retailers on Thursday confirmed that last year's
holiday shopping season, overshadowed by economic uncertainty and a
shortened Thanksgiving-to-Christmas shopping period, was disappointing
and could see the smallest gain in sales in three decades, reported the
newswire. Wal-Mart, the world's biggest retailer managed to meet its
lower December sales target, but others ranging from toy seller Toys R
Us Inc. to department store chain Kohls Corp. missed their marks,
according to Reuters. 'The Christmas selling season proved disappointing
even relative to our own cautious expectations,' said Martin Bukol,
retail analyst with Northern Trust's asset management arm, reported the
newswire.
At the same time, the labor market has improved very little, according
to the government's latest report, Reuters reported. A separate
government report showed stocks on U.S. wholesalers' shelves rose as
expected in November, suggesting manufacturers may be cautiously gearing
up for better economic times. Wholesale inventories rose 0.2 percent
November after sliding 0.5 percent in October, the Commerce Department
said, reported the newswire. The increase was completely in line with
Wall Street expectations, but inventories were down 1.7 percent from
November a year ago, according to the newswire.
Adelphia Trial Date Is Set; Shareholders File Lawsuit
Adelphia Communications Corp.'s founder John Rigas and two of his sons
will go to trial next January to defend themselves against government
charges that they defrauded the sixth-largest U.S. cable television
operator, a federal judge ruled on Thursday, the Wall Street
Journal reported. U.S. District Judge Leonard Sand set the trial for
Jan. 5, 2004, after the Rigases' attorneys said they couldn't be ready
for the trial in September-a date proposed by the government-citing the
large amount of documents they have to review to prepare for the trial,
reported the Journal. Adelphia's ex-vice president, James Brown,
has pleaded guilty to conspiring to misstate the company's revenue and
earnings. Coudersport, Pa.-based Adelphia filed for bankruptcy-court
protection in New York in June, listing about $20 billion in debt.
Separately, the committee representing equity holders in the chapter 11
bankruptcy proceedings of Adelphia filed a lawsuit on Thursday to force
the company to hold a shareholders' meeting to elect new directors. The
lawsuit states that the move is necessary to enable Adelphia to make a
'clean break' from past failures of oversight and governance that
allegedly allowed members of the founding Rigas family to 'loot billions
of dollars from the company,' the Journal reported.
Ottawa Senators Get Bankruptcy Protection in Canada
The Ottawa Senators, who have the National Hockey League's best winning
percentage this season, filed for bankruptcy protection after the club's
owner couldn't pay players' salaries, Bloomberg News reported. Judge
James Chadwick of the Ontario Superior Court of Justice in Ottawa
granted the team protection from creditors until Feb. 10, when he
scheduled another hearing. He named PricewaterhouseCoopers LLP to
monitor the club's affairs.
The Senators are the first North American professional sports franchise
to declare insolvency since the Pittsburgh Penguins last sought court
protection in 1998. Managing partner Rod Bryden ran short of cash and
couldn't pay players on Jan. 1, after prospective lenders balked at a
$127 million financing plan a day earlier, reported the newswire.
U.S. Steel, National Steel Agreed to $750 Million Deal
U.S. Steel Corp. has reached agreement to purchase assets of bankrupt
National Steel for $950 million in cash, stock and assumption of debt,
with the notable exception of legacy costs, in a deal that would
increase its production capacity by as much as 40 percent, the Wall
Street Journal reported. For the deal to go through, U.S. Steel
needs a new pact with the United Steelworkers of America, which is
already negotiating less generous contracts to facilitate buyouts of
other troubled steelmakers to save jobs. The union contract expires in
2004, and the union had opposed a government takeover of National
Steel's pension plan, saying the company could emerge from chapter 11
bankruptcy and handle its own obligations, reported the Journal.
Pension and health care costs for former employees at bankrupt steel
companies have stalled industry consolidation efforts.
Airlines Ask U.S. Congress for Tax Cuts, Security Costs
The nation's major airlines asked Congress to cut airline-ticket taxes
and provide more money for the additional security costs imposed on them
since the Sept. 11 terrorist attacks, Dow Jones reported. The continued
call for more government help was made Thursday during a Senate Commerce
Committee hearing on the future of the airline industry where the heads
of AMR Corp.'s American Air unit and Northwest Airlines Corp. testified.
Six of the nation's largest airlines have lost billions since 2001,
while many smaller low-cost carriers such as Southwest Airlines Co. have
made money. U.S. Airways Group Inc. and UAL Corp.'s United Airlines unit
are currently operating under bankruptcy protection. Incoming Senate
Commerce Committee Chairman John McCain (R-Ariz.) made no promises other
than to say he would hold more hearings to explore ways to keep the
airline industry viable, reported the newswire.
Immune Response Corporation Appoints John N. Bonfiglio CEO
Immune Response Corp. named John Bonfiglio chief executive, ending a
four-month search, Dow Jones reported. In September, Chief Executive
Dennis Carlo resigned as the company began a restructuring plan that
involved laying off half of the workers at its headquarters and
narrowing its focus to the development of its Remune HIV therapeutic
vaccine. In a press release on Thursday, Immune Response said Bonfiglio
was most recently the chief operating officer and executive vice
president of Cypress Bioscience Inc. Bonfiglio said he is seeking new
sources of financing for the company, which warned in November that it
would likely file for bankruptcy if it didn't receive financing. The
company completed an $8.4 million private offering of stock in December,
reported the newswire.
United Begins Search for Executive Vice President
UAL Corp. has hired executive search firm Heidrick & Struggles to
find candidates for executive vice president, who will handle the
challenge of promoting the United Airlines brand as the company works
through chapter 11 bankruptcy reorganization, Dow Jones reported. In a
press release on Thursday, UAL Chairman and Chief Executive Glenn F.
Tilton said the new vice president 'will be charged with reaching both
existing and new customers with creative, highly compelling value
propositions as we transform this company for the long term,' reported
the newswire. United launched a management reorganization and has pushed
for union concessions since filing for bankruptcy on Dec. 10. With the
filing in the U.S. Bankruptcy Court in Chicago, UAL became the largest
airline and sixth-largest U.S. company by assets to file under chapter
11 of the U.S. Bankruptcy Code, Dow Jones reported.
U.S. Prosecutors Seek Hearing Delay for Ex-Enron Officer
U.S. prosecutors asked a federal judge to postpone a pretrial hearing
for former Enron Corp. Chief Financial Officer Andrew Fastow as they
prepare to file additional charges in the case against him, Bloomberg
News reported. Fastow, who pleaded innocent on Nov. 6 to 78 counts of
fraud, money laundering and other charges, is accused of being the
mastermind of the fraud that led to the energy trader's collapse. Enron
sought bankruptcy protection a year ago after restating more than $586
million in earnings. The Justice Department's Enron Task Force yesterday
asked U.S. District Judge Kenneth Hoyt in Houston to postpone Fastow's
status conference hearing from Jan. 13 to Feb. 10, reported the
newswire.
Edison Mission Says Plant Bankruptcy to Reduce Profit
Edison International's Edison Mission Energy unit said fourth-quarter
earnings will be reduced by $70 million because a U.K. power plant was
placed into receivership, equivalent to bankruptcy, Bloomberg News
reported. Lenders to Edison Mission's Lakeland Power Ltd. unit, owner of
a 220-megawatt generator in northern England, put the business into
receivership on Dec. 20, Edison said in a U.S. Securities and Exchange
Commission filing yesterday, according to the newswire. The
natural-gas-fired plant has been shut down and may be sold, the filing
said, reported the newswire. Edison Mission will write off $100 million
before taxes to account for asset impairment and bad debts at Lakeland,
the filing said. Lenders to the U.K. project have no recourse to Edison
Mission, and a default by Lakeland doesn't affect the company's other
debt, the company said, Bloomberg News reported.
Allegheny Nears Deal to Avoid Bankruptcy
Allegheny Energy Inc. is close to a debt-restructuring deal with
creditors that would allow the power company to avoid seeking bankruptcy
protection, people involved with the negotiations said, the Wall
Street Journal reported. In recent days, representatives of the
company and important creditor groups agreed on the framework for a deal
under which existing lenders and bondholders would inject about $470
million into the company, solving Allegheny's liquidity problems, these
people said, according to the Journal. In exchange, creditors
would receive collateral on about $1.7 billion of existing credit, which
is currently unsecured, reported the Journal. But the company and
its creditors haven't yet agreed on terms for the new financing, people
involved in the negotiations said. If final details can't be worked out,
they said, Allegheny and its unregulated subsidiary are likely to file
for protection under chapter 11 of the U.S. Bankruptcy Code, reported
the online newspaper.
California Court Dismisses PG&E Utility Claim Against State on
Rates
A California Superior Court has dismissed a breach-of-contract claim
filed by PG&E Corp. unit Pacific Gas & Electric Co. against the
state, utility spokesman Ron Low confirmed on Thursday, Dow Jones
reported. Pacific Gas & Electric had sought $4.1 billion in damages
from California for not allowing the utility to sell power from its
generation plants at federally-regulated rates. As reported, Sacramento
Superior Court Judge Joe S. Gray issued a tentative ruling on Wednesday
to dismiss the case. After hearing oral arguments in the case on
Thursday, he issued his final ruling from the bench to dismiss the
claim, Low said, reported the newswire.
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