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September 17, 2004
House Committee to Mark Up Legislation Including Netting
Provision
The House Financial Services Committee plans to mark up legislation
Sept. 29 in response to the 9/11 Commission’s recommendations, a
spokeswoman for Financial Services Chairman Michael Oxley (R-Ohio) said
yesterday, CongressDaily reported. The legislation will
include a netting provision that aims to promote stability in the
financial markets by allowing a quick resolution to complex derivative
contracts in the event that a firm goes bankrupt, according to
Oxley’s spokeswoman, the newswire reported.
Frist Reviews Asbestos Proposal
Senate Majority Leader Bill Frist (R-Tenn.) is reviewing the proposal
on asbestos legislation that he received on Wednesday from Minority
Leader Tom Daschle (D-S.D.), but he likely will not comment on it until
next week, a spokeswoman said, CongressDaily reported.
Daschle agreed to Frist’s suggestion to create a $140 billion
trust fund to compensate victims of asbestos-related illnesses. His
proposal also makes further concessions to Frist, who wants the trust
fund to pre-empt all existing asbestos cases. Daschle’s plan
narrows the types of cases that would be allowed to proceed under the
regular court system once the trust fund is established. Although the
leaders now agree on an overall size for a potential trust fund, Frist
has indicated there are a number of other issues dividing the two
leaders on the contentious and long-stalled asbestos bill.
Daschle’s plan has the backing of the Democratic Caucus, but labor
unions said on Wednesday that $140 billion is not enough to compensate
asbestos victims, the newswire reported.
Budget Use of Pensions Sows Trouble in San Diego
San Diego is facing the possibility of a bankruptcy filing, largely
because of a $1.2 billion shortfall in its pension fund for municipal
workers, the New York Times reported. For years the city
has spent money from illusory pension fund earnings, according to the
authors of a new report released yesterday. Yet the practice, which the
authors called dangerous, is sanctioned by law in California and other
places and is commonplace among cities that offer pensions to their
workers. The findings raise the possibility that other communities will
face similar financial disasters, the newspaper reported.
United Airlines CEO Sees Significant Job Losses
The head of United Airlines parent UAL Corp. said on Thursday the
airline’s restructuring plan would lead to a significant number of
job losses, but it was not yet clear how many, Reuters reported. CEO
Glenn Tilton said the cuts would be part of a $655 million cost-cutting
program the company is currently working on, which focuses on its
maintenance, airport operations and distribution businesses. He said,
however, it was too early to say how many jobs would be lost and
declined to confirm reports of 6,000 job cuts. This would equal about 10
percent of the airline’s workforce, the newswire reported.
MCI Says SEC Probing Bankruptcy Committee Member
MCI Inc. said on Thursday a federal probe into the WorldCom
bankruptcy was focused on one former member of the creditors’
committee that oversaw the company's emergence from bankruptcy, Reuters
reported. MCI comments in a court filing came in response to a motion by
11 creditors for MCI to pay their legal costs stemming from the U.S.
Securities and Exchange Commission (SEC) investigation. The creditors
had said the SEC demanded thousands of documents from the
creditors’ committee as part of its investigation. The SEC’s
investigation is focusing in particular on the actions of one WorldCom
creditor, a New York investment firm named Blue River Capital, the
newswire reported.
Farmland Dairies Gets Court Nod to Sell Affiliate
Farmland Dairies LLC said on Thursday a bankruptcy court had given it
approval for the sale of its Milk Products of Alabama LLC affiliate,
Reuters reported. New Jersey-based Farmland said the unit will be sold
for $21.7 million. Farmland owns 80 percent of the Alabama firm, with
the other 20 percent held by a minority shareholder.
Boeing Restructures Plane Deals with Hawaiian Air
Boeing Co.’s financing arm has agreed to restructure Hawaiian
Airlines’s long-term leases on 14 Boeing airliners, the companies
said on Thursday, Reuters reported. The agreement means the airline,
which has been in bankruptcy since March 2003, will continue to operate
all of the Boeing-owned aircraft in its fleet at affordable lease rates,
Hawaiian Airlines trustee Joshua Gotbaum said. Terms of the
restructuring were not disclosed, the newswire reported.
S&P Cuts Delta Air Lines Rating, Outlook Negative
Standard & Poor’s Ratings Services (S&P) said on
Thursday it cut Delta Air Lines Inc.’s corporate credit rating
following the launch of an exchange offer for unsecured bonds and some
aircraft debt, Reuters reported. S&P cut the corporate credit rating
to “CC” from “CCC.” The outlook is negative, the
rating agency said.
Williams Ends Bid to Sell Power Business
Williams Cos. Inc. has decided not to sell its power business as the
depressed wholesale market has damaged prospects for selling the unit,
the natural gas company said on Thursday, Reuters reported. The Tulsa,
Okla.-based company had said several times this year that it was
pessimistic about its ability to exit the power business, given current
market conditions. Williams, which is seeking a return to its core
business as a natural gas producer and pipeline operator, said retaining
the power business will provide a natural hedge for the gas
business.
Mirant Conducting Search for a New Chief, May Replace
Fuller
Mirant Corp., an Atlanta-based power producer that is in bankruptcy,
said its board of directors is conducting a search for a new CEO who
might replace Marce Fuller, Bloomberg News reported. The search began
early this year and was confidential until today, Mirant spokesman James
Peters said in an interview. He declined to say whether the board has
decided to fire Fuller or whether she plans to step down. The board is
looking at internal and external candidates.
Skilling, Lay Cases Build on Plea Deals
For months, corporate crime experts have warned that the
government’s prosecution of former Enron Corp. leaders Jeffrey K.
Skilling and Kenneth L. Lay faced long odds, the Washington
Post reported. But legal experts said a recent flurry of guilty
pleas by senior executives, including the former head of Enron’s
high-speed Internet unit and its former investor relations chief, has
advanced the conspiracy and fraud case against Enron’s top
executives. Read the full text of the article at
href='http://www.washingtonpost.com/wp-dyn/articles/A27292-2004Sep16.html'>www.washingtonpost.com/wp-dyn/articles/A27292-2004Sep16.html.
Consumers Play Key Role in Rates
An article in the Wall Street Journal discusses the role
consumer spending plays in supporting economic expansion. Read the
article at http://www.wsj.com
(subscription required).
Hawaiian Airlines, Boeing Unit Reach Agreement on Lease
Terms
Hawaiian Airlines and Boeing Co.’s financing subsidiary said
they agreed on new lease terms covering the 11 Boeing 717s and three
767s in the airline’s fleet, and on the amount of Boeing Capital
Corp.’s unsecured claim arising from the carrier’s
bankruptcy-court proceedings, the Wall Street Journal
reported. The new arrangement, subject to court approval, lets Hawaiian
Air continue using all the Boeing-owned planes in its fleet on long-term
lease, but at rates it can better afford, the newspaper reported.