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October 4, 2005
name='1'>Louisiana Governments Face Bankruptcy, Layoffs
Officials in New
Orleans
are considering laying off as many as 3,000 employees—nearly 40
percent
of city hall’s workforce—to balance the budget, the New
York Times
reported today. In nearby St. Bernard Parish, 120 municipal employees
have already
lost their jobs and the parish president is begging for federal
assistance to
make payroll. The proposed cutbacks and pleas for aid illustrate one
legacy
of the two hurricanes that lashed the Gulf Coast: with storm losses
crippling
the economy, municipal governments in southern Louisiana are quickly
running
out of money and are now seeking federal aid to avoid bankruptcy or
huge layoffs
and reductions in city services. Presidents of dozens of parishes hit
by Hurricanes
Katrina and Rita met with Gov. Kathleen Babineaux Blanco at the
capitol in Baton
Rouge yesterday to determine how much money would be needed to pay for
critical
services to repopulate areas devastated by the storms.
href='http://www.nytimes.com/2005/10/04/national/nationalspecial/04orleans.html'>Read
more.
id='2'>Parmalat
Sues Credit Suisse
Parmalat has sued
the investment-banking
arm of Credit Suisse for damages worth 7.1 billion euros, Reuters
reported today.
Parmalat had already sued Credit Suisse First Boston in August 2004,
filing
a revocatory claim for a total of 248.3 million euros, over a
convertible bond
it underwrote. In the document added to its relisting prospectus and
published
in newspapers today, Parmalat detailed the legal battle by its
administrators
against firms that they say helped precipitate the dairy giant’s
collapse—including
cases against creditor banks that are now its top shareholders.
id='3'>MCI
Settles Fraud Suits
MCI Inc. has agreed
to pay
$331 million to 16 states and the District of Columbia to settle
accusations
that it engaged in accounting fraud, the company and the Pennsylvania
Attorney
General’s Office said yesterday. The two settlements dealt with
MCI-WorldCom
tax filings from 1999-2002, in which state authorities alleged
transfers between
subsidiaries were illegally classified as a business expense exempt
from state
tax laws, the Associated Press reported today. One agreement will give
$315
million to 15 states and the District of Columbia, while North
Carolina negotiated
a separate agreement for $16 million, MCI said in a statement. The
Virginia-based
telecommunications giant said that it admitted no wrongdoing in either
href='http://www.boston.com/business/articles/2005/10/03/mci_settles_fraud_suits_with_16_states/'>Read
more.
id='4'>Composite
Technology Amends Financing Agreement
Composite
Technology Corp.
entered into an amendment yesterday to a previously announced
agreement to sell
$6 million principal amount of senior convertible notes, whereby the
parties
have extended the closing deadline to Oct. 13, 2005, removed the
restriction
on the use of proceeds, and have agreed to set the price of the
conversion by
4 p.m. on Oct. 7, 2005, PRNewswire reported today. The placement of
the Notes
and Warrants is subject to a hearing scheduled before U.S. Bankruptcy
Court
Judge John E. Ryan on Oct. 11, where the company is seeking approval
of this
financing.
href='http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/10-04-2005/0004159168&EDATE='>Read
more.
id='5'>Citigroup
Raises Probability of Delphi Bankruptcy
Citigroup has
raised the
probability that Delphi Corp. will go bankrupt to 60 percent from 40
percent,
given the lack of a restructuring plan from its biggest customer,
General Motors
(GM) and the United Auto Workers (UAW) union, Dow Jones Newswire
reported yesterday.
Analyst Jon Rogers cut his price target on Delphi shares to $2 from $4
and reiterated
his sell rating. He said that if Delphi is restructured through GM and
the UAW
concessions, the stock would be worth $6, but that if the company
files for
bankruptcy, the shares will have no value. The stock was last up 12
cents, or
4.3 percent, at $2.88. In other news, Delphi has hired a former
executive of
bankrupt auto-supplier Federal Mogul Corp. as its chief attorney, but
didn’t
indicate whether it is moving closer to its own bankruptcy filing, the
Associated
Press reported today. David Sherbin, 46, was named vice president and
general
counsel of Delphi, effective immediately.
Airlines
id='6'>ATA
Airlines Seeks Exit Financing
Bankrupt ATA
Airlines, a
unit of ATA Holdings Corp., has filed a reorganization plan with the
federal
bankruptcy court that hinges on attracting $130 million in exit
financing, Reuters
reported yesterday. The plan, filed on Friday, initiates the emergence
of the
Indianapolis-based low-cost carrier from chapter 11 protection from
creditors
after nearly a year. The Indianapolis-based company hopes to emerge
from bankruptcy
in the first quarter of 2006, said Sean Frick, ATA’s vice
president of strategic
planning and chief restructuring officer. The plan calls for
investments of
$30 million from Southwest Airlines, which committed the money in
December,
and $100 million by new investors. ATA is also planning a rights
offering to
raise cash.
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=243538%2B03-Oct-2005%2BRTRS&srch=bankruptcy'>Read
more.
id='7'> Unsecured
Creditors’
Committee Picked for Northwest; Subsidiary a Possibility
The Pension Benefit
Guaranty
Corp. and eight other creditors of Northwest Airlines were named on
Friday to
a committee representing them in the bankruptcy of the airline,
Reuters reported
yesterday. Along with the pensions bailout agency, the unsecured
creditors’
list includes HSBC Bank USA, Airbus affiliate AVSA S.A.R.L, Bombardier
Inc.,
unions the Air Line Pilots Association and the International
Association of
Machinists, General Electric Co., caterer Sky Chefs, Inc. and U.S.
Bank National
Association. In other news,
href='http://www.bizjournals.com/industries/travel/airlines_airports/2005/10/03/milwaukee_daily10.html'>Northwest
may create a subsidiary to fly regional jets as part of its plan
to restructure
under chapter 11 bankruptcy, the Minneapolis-St. Paul Business
Journal
reported yesterday. Officials were in New York on Friday to pitch a
restructuring
plan to creditors, included the subsidiary concept in their
presentation, CEO
Doug Steenland told news service reporters after the meeting. The move
could
set up a clash with Northwest’s pilot union: per their contract,
flights with
70 or more seats must be flown by higher-salary union pilots, rather
than lower-paid
regional pilots. Meanwhile, Northwest Airlines Corp. is close to
settling a
lawsuit with American Express Corp., lawyers for the airline told a
bankruptcy
judge yesterday. The Associated Press reported yesterday that
Northwest filed
a lawsuit last week against American Express, claiming that the
financial services
company’s travel business was withholding payments worth about
$63.4 million
for tickets on its flights—which could pose even greater
financial distress
for Northwest. Such an interruption of cash flow also could complicate
the company’s
reorganization. Also, several parties—including UBS AG, Stamford
Branch,
as Administrative Agent; Law Debenture Trust Company of New York, as
Successor
Indenture Trustee; and Northwest Airlines’ ad hoc committee of
aircraft-related
securities—filed separate objections with the U.S. Bankruptcy
Court to
the company’s motion seeking an order pursuant to
§§105, 362 and 541
of the Bankruptcy Code and Bankruptcy Rule 3001, establishing
notification and
hearing procedures for trading in claims and equity securities,
BankruptcyData.com
reported today.
id='8'>U.S. Cashes in
Stake
in US Airways for $115.8 Million
A U.S. government
agency
will cash in its stake in US Airways by selling its stock warrants in
the newly
merged company for $115.8 million, the Treasury Department and the
airline said
yesterday, according to Reuters reports. The Air Transportation
Stabilization
Board, the agency that continues to secure more than $1 billion in
private financing
for the carrier, holds about 7.7 million warrants, US Airways said.
The merger
of US Airways and America West lifted US Airways out of its second
trip through
bankruptcy in three years. The new company took off last week with
$2.5 billion
in cash, including unrestricted amounts.
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=190284%2B03-Oct-2005%2BRTRS&srch=bankruptcy'>Read
the full story.
id='9'>Stelco
Restructuring Ruling Expected Today
A Canadian judge
reserved
his decision yesterday on whether to approve Stelco Inc.’s
restructuring agreements
with the province of Ontario, the United Steelworkers and Tricap
Management
Ltd., Reuters reported yesterday. The judge’s written ruling is
expected today,
but Stelco will still have to hold discussions with its senior
debenture holders
who object to the deals. As it stands, the current arrangement
includes a deal
with Tricap to provide a C$350 million, secured, revolving-term loan.
There
is also a standby commitment to support a rights offering for secured
convertible
notes to be issued by Stelco that will generate C$75 million in
proceeds. The
offering could generate an additional C$25 million in proceeds if
Tricap exercises
its options to purchase additional secured convertible notes. Stelco
has also
arranged for a C$100 million loan from the province of Ontario that
will go
directly toward its C$400 million payment to reduce a $1.3 billion
pension solvency
deficiency. Stelco’s current stay period under the
Companies’ Creditors Arrangement
Act expires today.
id='10'>Federal-Mogul
Agreement Reached
Federal-Mogul
announced that
it has reached a settlement agreement with the plan proponents and the
U.K.
administrators, who would settle all outstanding matters in dispute
among them,
BankruptcyData.com reported today. The asbestos committee also agreed
that the
Asbestos Trust would satisfy indemnification obligations to the
company by delivering
a portion of the trust’s equity back to the company. The
asbestos committee
requested immediate liquidity. Company Chairman, President and CEO
Jose
Maria
Alapont said that the agreements represent one of the most significant
steps
toward emergence from chapter 11 in the United States and
administration in
the United Kingdom.