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March 28, 2007
Airlines
name='1'>Delta on Track to Emerge from Bankruptcy in
May
Delta Air Lines
Inc.’s CFO, Ed Bastian, said yesterday that the carrier is on
track to emerge from bankruptcy on May 1 and issue new shares in the
airline in the first week of May, the Wall Street
Journal reported today. The airline also said
Tuesday that it expects to turn a profit in 2007, with pretax income of
$816 million, excluding special and reorganization items. Revenue from
international business this year has been stronger than expected,
Bastian said, which gives Delta the opportunity to generate
better-than-expected passenger revenue this year. As it emerges from
bankruptcy, Delta expects to reduce its adjusted net debt to $7.6
billion in 2007 from $17 billion in 2005.
href='http://online.wsj.com/article/SB117499534779450274.html?mod=us_business_whats_news'>Read
more .
name='2'>Court Approves Northwest Disclosure
Statement
Northwest Airlines is one
step closer to emerging from chapter 11 protection, after a bankruptcy
judge approved the airline’s disclosure statement,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. Judge Alan Gropper
size='3'>approved the statement on Monday, requesting only minor
revisions in the carrier’s reorganization plan, including its
worker compensation policy. Specifically, Northwest must include
information about a $275 million agreement reached between the carrier
and workers who were awarded company stock in 1993. Revisions also
include the removal of a management compensation claim, as well as an
agreement to pay non-union workers $77.4 million after the company
emerges from bankruptcy.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=21377'>Read
more . (Registration required.)
In related news,
Northwest announced Monday that it has cut more than $50 million from a
claim by non-union workers for lost wages and benefits as part of its
reorganization plan,
size='3'>Bankruptcy Law360 reported yesterday.
The bankrupt carrier announced it had withdrawn the original $129
million compensation offer to 5,200 salaried employees previously filed
with the
face='Times New Roman' size='3'>Manhattan
bankruptcy court, replacing it with $77.4 million in cash
and restricted stock. The package was initially designed to reimburse
the workers for concessions they gave Northwest to keep their jobs as
the airline slashed costs by $1.4 billion in its restructuring bid.
However, the claim was reduced in order to maximize available jobs and
retain a team of experienced employees, according to the
airline.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=21359'>Read
more . (Registration required.)
Subprime
Mortgages
name='3'>Regulators Examining Subprime Loan
Standards
Federal bank regulators
are summoning Wall Street firms and other mortgage-market players to
discuss whether high investor demand for subprime mortgages led to
excessive lending and some of this market's problems, the
Wall Street Journal
reported today. The April 16 meeting will look at Wall
Street's effect on both easier access to credit and lower underwriting
standards, Federal Deposit Insurance Corp. Chairman Sheila Bair said.
Critics allege that these trends have fueled rising foreclosure rates on
certain high-risk, high-cost home loans. Regulators have begun cracking
down on banks, which originate many of these loans. Bair and others have
said policymakers should also study the impact that Wall Street had on
the problem because of its high appetite for risk.
href='http://online.wsj.com/article/SB117504426372651216.html?mod=home_whats_news_us'>Read
more. (Registration required.)
name='4'>New Century Likely to File for Bankruptcy
Soon
New Century Financial,
the troubled subprime mortgage company, could file for bankruptcy
protection as early as the end of this week, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. The company, which stopped making loans this
month after federal prosecutors and regulators began investigating it,
is trying to tie up financing that would allow it to reorganize or sell
itself through a prepackaged bankruptcy, rather than be forced to
liquidate itself. New Century is still hoping to find a buyer for the
company, but the chances for such a deal appear to be dimming.
The
face='Times New Roman' size='3'>Irvine
size='3'>,
size='3'>Calif.
company has to move quickly because it had less than $60 million in
cash earlier this month, according to a securities filing, and its banks
have started foreclosing on their credit lines.
href='http://www.nytimes.com/2007/03/28/business/28lend.html?ref=business&pagewanted=print'>Read
more.
name='5'>Commentary: Beyond the Subprime Debacle
The subprime industry
trouble has the potential to affect the real estate and lending
industries as a whole if corrections are not made, according to a
commentary today in the
size='3'>Washington Post. Some of the
potential effects for the real estate market include the housing slump
worsening, more foreclosures putting even more homes on the market and
tighter lending standards shrinking the number of buyers. A drop of 20
percent over a decade is possible, Yale economist Robert Shiller tells
Barron's. Shaken homeowners feel poorer and spend less. Subprime losses
also might foreshadow losses on other new securities. Some of these
bundle other loans, such as auto loans, credit card loans, business
loans. In 2006, issuance of all these 'asset-backed securities' totaled
$748 billion, says Moody's Investors Service. Other securities perform
more exotic tasks, such as 'credit default swaps,' which provide
insurance against losses on loans.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/03/27/AR2007032701721.html'>Read
more.
Autos
name='6'>Auto Union Head Vows Hard Line against
Concessions
Ron Gettelfinger, the
head of the United Automobile Workers union, made it clear Tuesday that
workers are done making sacrifices to wage and benefit cuts, even if it
meant calling a strike, the
size='3'>New York Times reported today.
Gettelfinger assured workers that agreements with General Motors and the
Ford Motor Company that required them to pay a part of health care
coverage did not mean he would be timid in his approach to contract
negotiations this summer with all three
w:st='on'>
size='3'>Detroit
size='3'>automakers. Gettelfinger also said that the union was done
“playing around” with the Delphi Corporation, the parts
supplier operating in bankruptcy protection. He said the union would
strike if
size='3'>Delphi
retention bonuses to executives, cancels its labor agreements and cuts
hourly wages. The bankruptcy court approved the executive bonuses last
week.
href='http://www.nytimes.com/2007/03/28/business/28uaw.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='7'>Report: GM Acquisition of Chrysler Might Face Antitrust
Issues
An acquisition of
DaimlerChrysler AG's Chrysler Group by General Motors Corp. would
probably face difficulty gaining approval from antitrust authorities,
according to a Bear Stearns & Co. report yesterday, because it would
give the combined entity a highly concentrated position in light trucks,
the Wall Street
Journal reported today. DaimlerChrysler is
looking to sell its ailing
w:st='on'>
size='3'>U.S.
size='3'>arm, and GM has considered possibly buying its cross-town
rival. 'A unified company would probably have to divest some [or all] of
Chrysler's truck assets for anti-trust reasons' because trucks generate
substantial profits for the
w:st='on'>
size='3'>Detroit
makers, the report said.
href='http://online.wsj.com/article/SB117499863879050290.html?mod=us_business_whats_news'>Read
more. (Registration required.)
name='8'>Former President of Mortgage Lenders Network Looks to Avoid
Charges
The former president of
bankrupt subprime lender Mortgage Lenders Network USA Inc. filed a
motion Tuesday to escape criminal prosecution by the state of
size='3'>Connecticut
failing to pay about $3 million in commissions owed employees,
Bankruptcy Law360
reported yesterday. The Connecticut Department of Labor
Monday applied for an arrest warrant in Middlesex Superior Court
in
size='3'>Middletown
Mitchell Heffernan on 61 counts of failure to pay wages. In his motion,
Heffernan said he had no control over payments to any of Mortgage
Lender’s creditors, including employee commissions, from
mid-December 2006 through the company’s bankruptcy filing on Feb.
5. He said the company’s largest secured creditor, Residential
Funding Company LLC, and restructuring consultants Navigant Capital
Advisors LLC and Scouler Andrews LLC took over the company’s cash
management during that time.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=21373'>Read
more . (Registration required.)
International
name='9'>Hemosol Granted Fourth Stay Extension
PricewaterhouseCoopers,
the interim receiver of biopharmaceutical company Hemosol Corp.’s
assets and property, said that the Ontario Superior Court of Justice
granted a further extension of the stay of proceedings, originally set
to expire on March 23,
size='3'>Bankruptcy Law360 reported yesterday.
PricewaterhouseCoopers said that the current stay of proceedings will
now expire on April 27. The receiver also revealed that the court on
Friday ratified and approved the execution by PricewaterhouseCoopers of
a super-priority revolving financing facility term sheet with Hemosol's
existing primary secured creditor, Catalyst Fund Limited Partnership II.
That move will provide additional financing of up to $1 million for
Hemosol's proceedings under the current Companies' Creditors Arrangement
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=21369'>Read
more . (Registration required.)
name='10'>Mexico
face='Times New Roman' size='3'> Congress Approves Pension Bill to
Lower Costs
w:st='on'>
size='3'>Mexico's
Congress approved a bill yesterday to lower the cost of a
government-worker pension system, Bloomberg News reported yesterday. The
bill, which was approved last week in the lower house, increases the age
for retirement and sets up individual accounts for pensioners. The bill
will reduce a deficit in the pension system that reached 130 billion
pesos ($11.9 billion) in the six years ending in 2006. The deficit is
projected to grow to 309 billion pesos during the next six years and to
531 billion pesos by 2018, according the government.
href='http://www.bloomberg.com/apps/news?pid=20601086&sid=aFqzZU0sIRuM&refer=latin_america'>Read
more .
name='11'>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
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each morning, email
face='Times New Roman' color='#0000ff'
size='3'>steve@creditnews.comyour 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
size='3'>U.S.
size='3'>companies for only $99! Indicate “ABI CODE 27” in
your email.
size='3'>American Airlines’ pilots are
up in arms over $21 million in stock payouts to the carrier’s top
five executives even as the pilots accepted pay concessions four years
ago when American slashed costs. American currently faces talks with its
two other big unions, for flight attendants and transport workers, and
wants to try to reduce its high labor costs. The Texas-based
carrier has relatively high labor costs because, unlike some of its
competitors, American did not file for bankruptcy and therefore had a
harder time pushing for labor concessions.
size='3'>Chiquita Brands International Inc.,
the
size='3'>Cincinnati
fruit company, has a public-relations fiasco on its hands, which is also
costing it money, as a result of payments to right-wing and left-wing
paramilitary groups in
w:st='on'>
size='3'>Colombia
size='3'>. The company said that the payments, which included some $1.7
million to a right-wing group, said that the payments were simply the
cost of doing business in the area. The firm admitted that between
1997 and 2004 it made more than a hundred “security”
payments, supposedly to assure its workers’ safety at its banana
operations in
w:st='on'>
size='3'>Colombia
size='3'>. Chiquita has agreed to pay a $25 million fine for knowingly
paying terrorists.
size='3'>DaimlerChrysler AG, which has three
possible bidders for its Chrysler unit and which was allegedly hoping to
report its first quarter results by the time it held its annual
shareholders meeting on 4/4, now expects those results to be available
on 5/15. The delay is a result of the company switching over to
international financial reporting standards. Daimler also expects
to report its 2006 consolidated statements by 4/26.
size='3'>ITT Corp., the White Plains, N.Y.
diversified industrial manufacturer, has agreed to pay a $100 million
fine for illegally exporting defensive products, used by the U.S.
military, without the proper licensing
size='3'>Lennar Corp., the
w:st='on'>
size='3'>Miami
homebuilder, reported its first quarter net declined 73%–to $68.6
million. Revenue declined 14%–to nearly $2.8 billion. The
earnings decline included a pretax gain of $176 million as well as
pretax charges of nearly $92 million.
size='3'>Lodgian Inc., an
w:st='on'>
size='3'>Atlanta
w:st='on'>
size='3'>Ga.
company, reported a fiscal net loss of $15.2 million, including a
$758,000 asset-impairment charge. Revenue increased 18%–to $262
million.
size='3'>Siboney Corp., a
w:st='on'>
Louis
w:st='on'>
size='3'>Mo.
educational software, reported a narrowed $1 million loss in 2006, down
from a $1.2 million loss in the previous year. Revenue in the recent
year came in at $6.3 million, compared to $7.5 million in
2005.
size='3'>XM Satellite Radio Holdings Inc.
size='3'>of
face='Times New Roman' size='3'>Washington
size='3'>,
size='3'>D.C.
two lawsuits, one over patents and the other over music rights.
The National Music Publishers’ Association sued XM for allegedly
not acknowledging the rights of music publishers and songwriters who own
songs that are distributed through XM’s downloading service. In
the other lawsuit, Keystone Autonics of Austin, Tx. sued XM for alleged
patent infringement on a data-management product. The lawsuits could put
a further snag into XM’s plans to merge with its rival,
Sirius Satellite Radio
Inc. of
w:st='on'>
size='3'>Manhattan
w:st='on'>
size='3'>N.Y.