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March 29, 2007
name='1'>Executive Compensation Bill Clears House
Committee
The House Financial
Services Committee, responding to complaints about what some investors
call excessive executive pay, voted to give shareholders a nonbinding
vote on compensation to top public-company executives, the
Wall Street Journal
reported today. The 'say on pay' measure was approved
37-29, mostly along party lines. Under H.R. 1257, sponsored by Rep.
Barney Frank (D-Mass.),
w:st='on'>
size='3'>U.S.
size='3'>public companies would be required to give shareholders a
nonbinding, advisory vote on the pay granted to top executives under
rules to be developed by the Securities and Exchange Commission. Some
investors say that an advisory vote would pressure corporate boards to
take shareholder interests into account and encourage more dialogue
between boards and investors. Executives and some sympathizers in
Congress say that such a vote would take away time that should be spent
managing a company and discourage some of the best executives from
working at public companies. The prospects for passage of the bill are
uncertain, especially since the Senate Banking Committee's chairman,
Christopher Dodd (D-Conn.), hasn't indicated plans to push a similar
measure through his panel.
href='http://online.wsj.com/article/SB117513141499752677.html?mod=us_business_whats_news'>Read
more . (Registration required.)
href='http://www.house.gov/apps/list/press/financialsvcs_dem/press032807.shtml'>Click
here to read the House Financial Services Committee release on
its approval of H.R. 1257.
w:st='on'>
name='2'>Portland
face='Times




& #13;
New



Roman'
size='3'> Archdiocese Clears Another Bankruptcy
Hurdle
U.S. District Judge Robert E.
Jones said that the one remaining claim against the Archdiocese of
Portland would cost $100,000 to settle, well below the $13.7 million set
aside for unsettled claims under its chapter 11 plan and possibly
setting the stage for a bankruptcy judge to approve the reorganization
plan next month, the Associated Press reported today. Judge Jones had to
decide if a $13.7 million fund was sufficient to cover possible jury
awards for about 20 unsettled claims against the archdiocese, most for
child sex abuse by priests. The answer, which would be gathered from a
series of mini-trials starting in mid-March, was pivotal for the
church's plan to reorganize its finances without having to sell church
properties to do it. However, all but one claim ended up being privately
settled after the mini-trials started, Judge Jones said in a ruling
Wednesday.
href='http://www.oregonlive.com/newsflash/regional/index.ssf?/base/news-18/1175156869261150.xml&storylist=orlocal'>Read
more.
Autos
name='3'>Tower Automotive to Sell Assets to
Cerberus
Cerberus Capital
Management agreed yesterday to buy most of auto-parts
w:st='on'>
size='3'>maker
face='Times New Roman' size='3'>Tower
Automotive's assets for about $1 billion, the
size='3'>Wall Street Journal reported today.
Tower said the deal will help it emerge from bankruptcy protection.
Cerberus has emerged rapidly as a power in the auto industry. Last year,
the firm acquired a 51 percent stake in GMAC, formerly General Motors
Acceptance Corp., the huge consumer-finance arm of General Motors Corp.
Cerberus is leading a group of investors negotiating to acquire
big
face='Times New Roman'
size='3'>U.S.
size='3'>auto-parts maker Delphi Corp., which also is in chapter 11
proceedings. Cerberus previously acquired GDX Automotive, a
size='3'>Michigan
with operations in North America, Europe and
w:st='on'>
size='3'>China
size='3'>.
href='http://online.wsj.com/article/SB117511572635452301.html?mod=home_whats_news_us'>Read
more . (Registration required.)
name='4'>Chief Warns Automakers that UAW Won’t Budge on Health
Care or Jobs Bank
United Automobile
Workers’ president Ron Gettelfinger said on Wednesday that he saw
no reason to accept any deal that requires workers to pay more of their
health care costs or that eliminates the jobs bank, which allows
laid-off workers to continue collecting most of their pay and benefits,
the New York
Times reported today. Executives at General
Motors, Ford Motor and the Chrysler Group of DaimlerChrysler have
complained that rising health care costs and the jobs bank hinder their
ability to compete with foreign-based rivals like
w:st='on'>
size='3'>Toyota
However, Gettelfinger said that the union had already done its part to
help curb health care costs when it struck deals to let GM and Ford
charge hourly workers for a part of their benefits. (The union later
refused to grant similar concessions to Chrysler, saying its finances
were better.) The jobs bank was a nonissue, Gettelfinger said, because
most workers assigned to it left voluntarily during the recent
buyout.
href='http://www.nytimes.com/2007/03/29/business/29uaw.html?pagewanted=print'>Read
more .
face='Times New Roman' size='3'>
name='5'>Delphi
size='3'> Still Wants Consensual Deal with
Unions
Delphi Corp. has
reiterated its commitment to reaching a consensual agreement with its
labor unions following reports that the United Auto Workers rejected a
wage and benefit offer the bankrupt auto parts supplier made on March
21, Bankruptcy
Law360 reported yesterday.
w:st='on'>
size='3'>Delphi
the bankruptcy court overseeing its chapter 11 proceedings for
permission to void its collective bargaining pacts with organized labor,
but those proceedings remain in a holding pattern as the parties try to
come to terms. The impasse between
face='Times New
Roman'
size='3'>Delphi
endanger the company’s $3.4 bailout plan that Delphi Corp.
is counting on to help it emerge from bankruptcy
protection.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=21480'>Read
more . (Registration required.)
Bonuses for Top GM Executives
General Motors, which
significantly improved its financial performance in 2006 yet did not
earn a profit, said on Wednesday that for a second consecutive year, it
would not pay cash bonuses to top executives, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. Full details on executives’ compensation
will be released next month when the company files its annual proxy
statement. Last week, some UAW members expressed anger after GM
disclosed in regulatory filings that Mr. Wagoner and other top
executives would receive bonuses in the form of restricted stock
options. GM had not awarded stock options since 2003.
href='http://www.nytimes.com/2007/03/29/business/businessspecial/29gmpay.html?pagewanted=print'>Read
more.
Subprime
Mortgages
name='7'>ResCap to Reduce Subprime Lending
General Motors Acceptance
Corp. said Wednesday that it intends to 'sharply' cut the volume of
subprime mortgages originated by its Residential Capital LLC unit for
2007, amid continued pressure from housing prices and the nonprime
mortgage market, the
size='3'>Wall Street Journal reported today.
The financing company reiterated that its highest priority is to
implement changes at ResCap, including maximizing earnings from other
ResCap businesses, according to the presentation filed with the
Securities and Exchange Commission. In its 2006 annual report filed
earlier this month, ResCap said that as of Dec. 31, nonprime mortgage
loans were 75 percent of its mortgage loans held for investment and 32
percent of its mortgage loans held for sale.
href='http://online.wsj.com/article/SB117509248277051825-search.html?KEYWORDS=bankruptcy&;COLLECTION=wsjie/6month'>Read
more. (Registration required.)
name='8'>Home Builders Weigh In on Subprime
Lending
The head of the National
Association of Home Builders (NAHB) said Wednesday that his group would
help play an active role in both solving mounting problems in the
subprime lending market and the insurance crisis along the
size='3'>Coast
cautioned that policymakers should not place further restrictions on his
industry,
size='3'>CongressDaily reported today. NAHB
CEO Jerry Howard said lawmakers should revamp the Federal Housing
Administration (FHA) mortgage insurance program to help subprime
borrowers who are reeling from a bearish mortgage market. Many subprime
borrowers are locked into mortgages they cannot pay and are facing
foreclosure. The defaults have forced some subprime lenders into
bankruptcy and others unable to tap credit lines from banks. Howard said
the problem was the result of lax lending standards during a red-hot
housing market, and that the industry is already taking self-correcting
steps.
name='9'>Airline Industry May Still Experience Financial
Turbulence
Though Delta Airlines Inc. is
set to emerge from bankruptcy next month and Northwest
face='Times New Roman'>
size='3'>Airlines Corp. won approval for its chapter 11 plan this week,
experts warn that the airline industry may still face a bumpy ride
ahead,
size='3'>Bankruptcy Law360 reported yesterday.
“Essentially, what you’re seeing is the end of a cycle that
started just before 9/11, and which 9/11 accelerated,” said
Jim Feltman, senior managing director of Mesirow
Financial Consulting LLC, who advised both Delta and United
Airlines’ unsecured creditors' committees. Thanks to a stronger
economy, sinking fuel prices, large cutbacks on unnecessary locations,
and the renegotiation of union contracts, “there has been a
dramatic improvement in profitability that has helped airlines get back
into the black again,” Feltman said. However, Peter
Fitzsimmons , co-president of restructuring consulting firm
AlixPartners LLP, warned that it might not be only smooth sailing from
here on out. For instance, despite the massive slashing of services from
domestic hubs—particularly to many destinations in the
size='3'>Midwest
cautioned that there was still overcapacity. “I’m not
predicting that [the airlines] are going to go back into bankruptcy, but
there will need to be more consolidation, Fitzsimmons said.
“There’s more capacity, currently, in the industry than
there should be.”
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=21454'>Read
more . (Registration required.)
name='10'>Supreme Court Considers Limits to Investors' Complaints of
Fraud
Congress imposed a 'very
high burden' for shareholders to meet before they can sue companies they
suspect of fraud, the Bush administration told the Supreme Court
yesterday as justices considered the balance between deterring corporate
wrongdoing and discouraging speculative lawsuits, the
face='Times New Roman' size='3'>Washington Post
size='3'>reported today. Justices seemed sure that Congress meant for
securities fraud lawsuits to face a tougher road in federal courts, but
also were concerned that its actions created a confusing legal landscape
and a questionable barrier to cases that otherwise would be decided by a
jury.It is the
first time the court has considered the heart of a 1995 congressional
act that required plaintiffs' allegations to show 'particularity' and
detail, and said claims must give rise to a 'strong inference' that
company officials had the intent to do wrong. If not, the law said, the
suits 'shall be dismissed.' In the case before the court,
size='3'>Tellabs Inc. v. Makor Issues & Rights
size='3'>, investors allege that Richard Notebaert, then Tellabs' chief
executive, made false and misleading statements in an attempt to inflate
the stock price of the fiber-optic equipment manufacturer.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/03/28/AR2007032802206_pf.html'>Read
more .
name='11'>Judge Tosses Bid for New Enron Complaints
A group of gas companies
has lost its bid to add new claims to its complaint that bankrupt energy
giant Enron Corp. evaded certain underground natural gas contracts, with
a federal bankruptcy court on Tuesday denying the group's motion for
additional discovery, Bankruptcy Law360
reported yesterday. Judge Arthur J. Gonzalez of the U.S.
Bankruptcy Court for the Southern District of New York denied the
companies’ attempt to file a third complaint containing additional
factual allegations against Enron and to engage in additional discovery,
ruling that the motion was prejudiced and futile.
face='Times New Roman'>The three companies –
Houston Pipeline Co. LP, HPL Resources Co. LP and AEP Energy Services
Gas Holding
size='3'>Co. – had entered into
a contract to use underground natural gas owned by Enron and its
affiliates. However, after filing for bankruptcy in December 2001, Enron
sought to reject that right to use agreement, according to court
documents.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=21516'>Read
more. (Registration required.)
In related news,
securities regulators charged former Enron Corp. general counsel Jordan
Mintz and former associate general counsel Rex Rogers with securities
fraud and aiding and abetting fraud at the
w:st='on'>
size='3'>Houston
firm, the Wall Street Journal reported today. The Securities
and Exchange Commission civil lawsuit, filed in federal court in
size='3'>Houston
charged Mintz with lying to auditors and alleged that Rogers, a former
SEC enforcement lawyer, helped withhold details on sales of Enron stock
by Kenneth Lay, the company's chairman, in 2000 and 2001.
href='http://online.wsj.com/article/SB117513238242752745.html?mod=us_business_whats_news'>Re
ad more . (Registration required.)
name='12'>Goldman Sachs to Start Private-Equity Fund
Goldman Sachs Group, the
world's largest investment bank, plans to raise about $20 billion for a
new private-equity fund, the Associated Press reported yesterday.
Goldman Sachs Capital Partners, the company's private-equity unit, has
been closely watched on Wall Street as investment houses begin to
compete more directly with large private-equity firms. At stake is
potentially billions of dollars worth of deals during a period of
unprecedented acquisition activity. By raising $20 billion, Goldman
Sachs would control one of the world's largest private-equity funds --
topping the $18 billion controlled by Blackstone Group. Goldman has
about $180 billion of assets in its hedge fund and private-equity
businesses, which includes GS Capital Partners.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/03/27/AR2007032702034_pf.html'>Read
more.
Chief Sees Economy Managing Mortgage Lending
Threats
Federal Reserve Chair Ben
S. Bernanke said Wednesday that he did not expect the escalating
problems in the mortgage-lending business to spread to the rest of the
economy, but noted that the Fed had given itself the
“flexibility” to adjust interest rates should the outlook
change for better or for worse, the
size='3'>New York Times reported
today.“The
impact on the broader economy and financial markets of the problems in
the subprime market seems likely to be contained,” Bernanke said.
In his first remarks on the economy since the Fed decided last week to
leave interest rates unchanged, Bernanke did not stray far from the
monetary policy statement the central bank issued with its decision.
Inflation is still the predominant concern, and the economy does not
appear to be in danger of slowing too much, he said in testimony to the
Congressional Joint Economic Committee.
href='http://www.nytimes.com/2007/03/29/business/29fed.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='14'>TROUBLED COMPANIES IN THE NEWS
1000’s of companies lose
money or experience some form of difficulty each
quarter.
The business news
articles below are taken from the
size='3'>Daily Summary of Troubled & Fast Growing U.S. Companies and
Other Business News published by Bastien
Financial Publications.
To begin receiving the COMPLETE
Daily e-Summary, that emails you information on over 70 such companies
each morning, email
face='Times New Roman' color='#0000ff'
size='3'>steve@creditnews.com
size='3'>< font size='3'>your name, company name, address, phone
and fax. We’ll set you up within 24 hours.
Tax Time Special! Now
through April 15, you can receive an annual subscription to the U.S.
Business Journal¹s weekly summary of troubled
w:st='on'>
size='3'>U.S.
size='3'>companies for only $99! Indicate “ABI CODE 27” in
your email.
size='3'>Aptimus Inc., a
w:st='on'>
Francisco
network company, reported a fourth quarter net loss of $1.5 million.
Revenue increased 21%–to $4.5 million. For the year, it lost $3.8
million on a 4% revenue decline–to $15.2
million.
size='3'>Allied Defense Group,
size='3'>Vienna
w:st='on'>
size='3'>Va.
the Securities and Exchange Commission is looking into its recently
announced accounting difficulties. Allied earlier said it would restate
financial results for the third quarter of 2006 and for its nine months
ended last September due to errors in overstated inventory balance. The
company is also considering selling off some of its asset to reduce its
debt and improve its liquidity position.
size='3'>Beazer Homes USA Inc.’s stock
price plunged 17% on news that the
w:st='on'>
size='3'>Atlanta,
w:st='on'>
size='3'>Ga.
has become the target of a federal probe into allegations of fraud. The
company, which has incurred large losses amid the housing downturn,
would not confirm the investigation but did say that it would cooperate
with any potential federal probe. Recent reports have raised allegations
of questionable loans at Beazer and an unusually high rate of
foreclosures at one of its housing operations in
w:st='on'>
size='3'>North Carolina
size='3'>.
size='3'>Circuit City Stores Inc., the
size='3'>Richmond
w:st='on'>
size='3'>Va.
retailer, will replace 3,400 of its store-level workers with lower-paid
personnel and contract out more of its information-technology
operations. The firm added that it will consider business options,
including a potential sale of its international operations.
Recently,
face='Times New
Roman' size='3'>Circuit
w:st='on'>
size='3'>City
following lower-than-expected sales in January and February, reduced
expectations for both sales and earnings for fiscal
2007.
size='3'>Commonwealth Edison Corp.’s
senior unsecured debt was downgraded to junk status by Moody’s
Investors Service. The ratings company cited worries about state
lawmakers in
size='3'>Illinois
impose a rate freeze on the
w:st='on'>
size='3'>Chicago
w:st='on'>
size='3'>Il
electricity business.
size='3'>Gastar Exploration Ltd., a Mt.
Pleasant, Mi. natural gas exploration and production firm, reported a
fiscal net loss of $84.8 million, including $2.4 million in litigation
charges and impairment charges of $56.2 million. The results
compare with a 2005 fiscal loss of $25.6 million. Revenue declined
2.5%–to $26.7 million.
size='3'>Meredith Corp., a
w:st='on'>
Moines
w:st='on'>
size='3'>Ia.
publisher, is pulling the plug on the print publication of its Child
magazine, following large readership losses over the past year. The
move, which will leave Child’s Web publishing intact, is part of a
broader restructuring at Meredith, which has said it will cut sixty
jobs, half of them at the Child unit. Meredith will take $10 million in
charges related to severance and writing off assets.
size='3'>Natural Health Trends Corp., a
Dallas, Tx. provider of skincare and other products, reported a fourth
quarter net loss of $5 million. Revenue declined 37%–to $27.7
million. For the year, it lost $11.5 million on a 31% drop in
revenue–to $133 million.
size='3'>New Century Financial Corp., the
financially troubled
w:st='on'>
size='3'>Irvine
subprime lender, is reported to be considering filing for bankruptcy
protection by the end of this week. Earlier in March, New Century
stopped making loans amid federal investigations. The company, which is
also looking for possible suitors, said that it is looking into various
options for reorganizing, selling itself in a prepackaging filing or
possibly liquidating. Back in February, New Century said it would have
to restate financial results and now its best assets–its mortgage
loans–are committed as collateral to banks.
size='3'>Rex Stores Corp., a
w:st='on'>
size='3'>Dayton
consumer electronics and appliance retailer, reported its fourth quarter
net declined 46%–to $3.5 million on a 15% sales decline–to
$104 million. For the year, the company’s net fell
60%–$11.3 million on a 7% sales decline–to $347
million. The fiscal loss included a gain from the sale of certain
real estate of $2.2 million.
size='3'>Rocky Brands Inc., a Nelsonville, Oh.
maker of footwear, reported a fourth quarter loss of nearly $80,000.
Sales slipped 6%–to $70.6 million. For the full year, the
company’s net income dropped 63%–to $4.8 million, on an 11%
decline in sales–to $264 million.