|
December 26, 2002
Slow Business Spending, Threat of War Slowing U.S. Economy
Still hung over from the excesses of the 1990s, the U.S. economy is
expected to turn in a lackluster performance in 2003, the Associated
Press reported. After a year in which the economy struggled for
momentum, it could be thrown back into recession next year if there was
a prolonged war in Iraq or another serious terrorist attack, business
economists say. 'We're looking at a very moderate economic recovery'
from the 2001 recession, said Sung Won Sohn, chief economist for Wells
Fargo & Co. 'That assumes that Iraq will not be a major problem.'
Most economists expect the economy to grow about 3 percent to 3.4
percent in 2003, slightly above the estimated 2.7 percent growth in 2002
and 0.1 percent of the 2001 recession year, reported the newswire.
Mortgage Applications Fall
U.S. mortgage applications fell 7.8 percent last week, even after rates
touched record low levels, suggesting that demand for home loans may be
slowing, Reuters reported. Housing and mortgage demand are widely
expected to plateau next year, because rates are not likely to drop much
further, and the pool of consumers still looking to buy homes or
refinance is shrinking, economists said. 'The best for housing is
probably behind us,' Sung Won Sohn, chief economist at Wells Fargo &
Co. in Minneapolis, said earlier this week, reported the newswire. The
housing sector has helped spur U.S. economic growth this year, but the
economy will likely have to find new sources of growth next year,
analysts said, reported the newswire.
Antitrust's Real Legacy
A commentary in the Wall Street Journal by Peter Huber, a senior
fellow at the Manhattan Institute, examines the role of regulatory
commissions and antitrust courts in shaping the competitive structures
of capital-intensive industries such as telecom, electric power and air
transport. To read the article, point your browser to
href='http://online.wsj.com/article/0,,SB104086307049835393-search,00.html?co…'>
color='#000080'>http://online.wsj.com/article/0,,SB104086307049835393-search,00.html?co…%
3E%28article%2Dbody%29 (subscription required).
Federal Prosecutors Close Global Crossing Probe
Federal prosecutors have decided not to file criminal charges against
Global Crossing Ltd. Chairman Gary Winnick or any of the company's other
executives over aggressive accounting practices, the Associated Press
reported. The U.S. attorney's office in Los Angeles lacked enough
evidence to show that executives at the telecommunications company had
misallocated costs or had obstructed justice by shredding sensitive
documents, according to the Los Angeles Times. The newspaper
quoted anonymous sources close to the investigation. 'While there was a
great deal of smoke, prosecutors obviously concluded the evidence was
not sufficient to bring a case,' said Robert Mintz, a former federal
prosecutor in Newark, N.J., who has tracked the Global Crossing
situation, reported the newswire.
Level 3-Genuity Transaction Gets Federal Antitrust OK
Level 3 Communications INc. received approval from the U.S. Justice
Department and the Federal Trade Commission on its proposed $242 million
acquisition of most of the assets of Genuity Inc., Dow Jones reported.
The parties announced the deal in late November. Around that time,
Mass.-based communications-service provider Genuity also filed for
bankruptcy protection to facilitate the sale of its assets. In a press
release on Tuesday, Level 3, a communications and information services
company, said the purchase price may be adjusted at the time of the
closing, anticipated in the first quarter of 2003 and subject to closing
conditions including bankruptcy court and regulatory approvals, reported
the newswire.
Amylin Pharmaceuticals Acquires Rights to Medical Program
Amylin Pharmaceuticals Inc. signed a definitive agreement to acquire
rights to a Phase II glucagon-like peptide program for cardiovascular
indication from Restoragen Inc., Dow Jones reported. Amylin will pay
privately held Restoragen about $4 million, plus contingent milestone
payments and royalties on product sales. Amylin said GLP-1 is targeted
for the treatment of congestive heart failure in patients ineligible for
transplant. Amylin will also acquire rights to various GLP-1 related
patents as part of this transaction. On Dec. 17, Restoragen, formerly
BioNebraska Inc., filed for reorganization under chapter 11. The
transaction is subject to certain conditions, including bankruptcy court
approval, reported the newswire.
United Pan-Europe Creditor Wants Chapter 11 Case Dismissed
A creditor of United Pan-Europe Communications has filed a motion
seeking to dismiss the company's chapter 11 bankruptcy case, saying U.S.
creditors wouldn't be treated the same as non-U.S. creditors as a result
of United Pan-Europe's Dutch insolvency proceedings, Dow Jones reported.
As an alternative to dismissing the case, creditor InterComm Holdings
LLC asked the bankruptcy court to suspend all proceedings in the case,
according to a motion filed last Wednesday. Amsterdam-based United
Pan-Europe, a subsidiary of UnitedGlobalCom Inc., filed for chapter 11
bankruptcy protection on Dec. 3. The U.S. Bankruptcy Court in Manhattan
will consider the creditor's motion at a hearing on Jan. 7, 2003.
Safety-Kleen Gets More Time to Seek OK for Turnaround Plan
A bankruptcy court has given Safety-Kleen Corp. an extension of the
company's right to lobby creditors to support a plan of reorganization,
Dow Jones reported. The Dec. 19 ruling from the U.S. Bankruptcy Court in
Wilmington, Del., gives the company to Feb 28, 2003, to gain creditor
approval for its plan that was filed on Nov. 27. On Dec. 20, the company
reached an agreement with its committee of unsecured creditors to
increase their distribution under the plan. Under the settlement,
creditors with a general unsecured claim against Safety-Kleen would
share a distribution of $29 million in Laidlaw Inc. stock once Laidlaw
emerges from its own chapter 11 bankruptcy case, said Susheel Kirpalani,
an attorney representing the creditor panel, reported the newswire.
Big City Radio Agrees to Sell Three Stations to Entravision
Big City Radio Inc. said it agreed to sell its three Los Angeles radio
stations to Entravision Communications Corp., a Spanish-language media
company, in a cash-and-stock deal valued at $139 million, the Wall
Street Journal reported. The deal comes more than a month after Big
City Radio, New York, announced plans to auction off its radio stations.
Big City Radio has been struggling to maintain its business, last month
saying it would consider a bankruptcy filing in the absence of
successful sales. The company has said it will use the proceeds to pay
principal and interest on its 11-1/4 percent senior discount notes due
in 2005 and other liabilities, reported the Journal.
Inquiry Now Examining Whether Enron's Assets Were Inflated
Broadening the inquiry into Enron's collapse, federal investigators who
have been examining the details of off-the-books partnership schemes are
now looking at such basics as whether the company misled investors about
the value of hard assets like pipelines and power plants, according to
people involved in the case, the New York Times reported. To read
the article, point your browser to
href='http://www.nytimes.com/2002/12/26/business/26ENRO.html'>
color='#000080'>http://www.nytimes.com/2002/12/26/business/26ENRO.html.
Running an Airline with Union Advice
Even as employee ownership at United Airlines is being assigned
substantial blame for the carrier's descent into bankruptcy, US Airways
is proposing to give its workers four board seats and nearly a third of
the company's stock whenever it emerges from its chapter 11 filing, the
New York Times reported. Yet rather than indicating a failure by
US Airways to learn from the ill-conceived experiments of the past,
experts say, the role for labor put forward by the airline may represent
a pragmatic approach in a struggling industry -- and a model for United,
as well. To read the article, point your browser to
href='http://www.nytimes.com/2002/12/26/business/26AIR.html'>
color='#000080'>http://www.nytimes.com/2002/12/26/business/26AIR.html.
New United Court Filing May Spur Labor Talks
United Airlines, which filed for chapter 11 bankruptcy protection two
weeks ago, is expected to file a court motion today that will launch it
into tough labor-management negotiations that could determine whether
the company lives or dies, reported the Washington Post. While
the new filing has been characterized by United as primarily procedural
and is customary in many corporate bankruptcies, it lays the groundwork
for terminating collective-bargaining agreements negotiated over decades
by workers and management. Work rules and layoffs are expected to be as
much of a focus in the deliberations as pay cuts and health care
reductions. The airline says it is losing $20 million a day. To read the
full article, point your browser to
href='http://www.washingtonpost.com/wp-dyn/articles/A37771-2002Dec25.html'>
color='#000080'>http://www.washingtonpost.com/wp-dyn/articles/A37771-2002Dec25.html.
Thanks for visiting Today's Bankruptcy Headlines. New articles
are posted here each business day.
|
