September 232003

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September 23, 2003

Grassley To Push for Senate Action on Bankruptcy, Asbestos Bills;
Sees Class Action Reform Delayed Until October

Senate Finance Chairman Charles Grassley (R-Iowa) said that the Senate
must 'get its act together' on bankruptcy reform, which Congress has
tried to enact several times in recent years, CongressDaily
reported. The House passed its version of the bill in March, and the
Senate bill is awaiting floor action. 'We've got the votes to get it
passed if we can get around the Schumer amendment,' Grassley said,
referring to language by Sen. Charles Schumer (D-N.Y.) that would
prohibit abortion protesters from filing for bankruptcy to avoid paying
fines for disruptive activity at clinics.

Grassley added that he is also pushing for Senate action this year on
asbestos litigation reform. 'I understand that Sen. [Orrin] Hatch
[R-Utah.] is working to get this bill to the floor and to address
concerns that have been raised with the bill as it came out of
committee,' Grassley said. He predicted that if the Senate fails to vote
on the asbestos or bankruptcy bill -- or both -- before recessing for
the year, Hatch will insist the Senate reconvene during the first week
in January to complete action on them, rather than waiting until after
President Bush's State of the Union address, reported the newswire.

On the class-action reform bill, Grassley said that although Senate GOP
leaders had hoped to schedule floor action on a bipartisan bill sometime
this month, the bill now appears unlikely to move to the floor until
October. 'It looks to me now like it won't come up now until after the
recess that we have [beginning] the week of Oct. 6,' Grassley, who is
the chief sponsor of the 'Class Action Fairness Act,' said during a
summit sponsored by the U.S. Chamber Institute for Legal Reform,
CongressDaily reported.

Economy Improving, Rates to Stay Low

The risks to the U.S. economic recovery are fading, but the Federal
Reserve will be able to keep official interest rates low even as growth
accelerates, central bank officials said on Monday, Reuters reported. In
separate speeches, Fed Governor Ben Bernanke and Atlanta Fed President
Jack Guynn sounded more optimistic about the economy after a recent
report about stronger-than-expected economic data, which has pushed
forecasts for growth to at least 4 percent for the second half of the
year. But in comments that reinforced the Fed's pledge not to move
quickly in the face of recovery, Bernanke stressed that even with
stronger growth, official rates will not be raised because inflation is
so low and could slip a bit further. 'The Fed may not have to respond by
tightening with the same speed as it has in past episodes precisely
because inflation is low and is not as likely to respond so quickly ...
as it has in past episodes,' he said in a speech in Washington, D.C.,
reported the newswire.

Halliburton Solicits Votes for Asbestos Settlement

Halliburton Co. is soliciting votes from asbestos and silica claimants
to approve the reorganization of DII Industries, Kellogg Brown &
Root and other units as part

of a $4 billion settlement, Bloomberg News reported. The units may file
for bankruptcy in November after approval of the chapter 11 plan and
trust-distribution procedures,

outlined in a disclosure statement, Houston-based Halliburton said.
Commitment letters for financing relating to the proposed settlement and
chapter 11 filing have been completed and signed, Halliburton said in a
statement. Citigroup Global Markets Inc.

and J.P. Morgan Securities Inc. lead the financing, reported the
newswire.

FTI Consulting Lowers Its Forecast for 3rd-Qtr Profit, Sales

FTI Consulting Inc. reduced its forecast for third-quarter profit
and sales because of a drop in demand for the company's restructuring
services, Bloomberg News reported. The company said it expects to earn
35 cents to 37 cents a share on revenue of $82 million to $84 million.
Annapolis, Md.-based FTI earned 24 cents a share on sales of

$55.9 million in the year-earlier quarter, according to a press release
distributed by PR Newswire.

Judge Rules Enron Employees Can Seek Millions

Enron Corp. employees will be able to seek about $53 million that was
paid to some executives just before the energy trading company filed for
bankruptcy, a U.S. Bankruptcy Judge ruled on Monday, Reuters reported.
Judge Arthur Gonzalez authorized a committee of employees to collect
some so-called deferred compensation payments that were made to certain
staff. Kronish Lieb Weiner & Hellman, the law firm representing the
committee of employees, said the payments could total about $53
million.

'The payments made to a select few individuals, when Enron was
insolvent, were preferential, improper and in violation of the
Bankruptcy Code,' Ronald Sussman, of Kronish Lieb Weiner & Hellman,
said in a statement, reported the newswire.

Loral, Insurers Face New Worry In Faulty Satellite

A short-circuit that knocked one of Loral Space & Communications
Ltd.'s satellites out of operation may complicate the company's bid to
emerge from bankruptcy-court protection, the Wall Street Journal
reported. The problem aboard Loral's Telstar 4 satellite, which went
dead on Friday morning, also is expected to roil a space-insurance
market already confronting damage claims in excess of $2 billion
stemming from previous malfunctions on satellites operated by other
companies, the Journal reported. Insurance officials complain that
nearly 25 percent of all the satellites in orbit have suffered
electric-power problems, though last week's episode is believed to be
the first time such a serious fault has afflicted a spacecraft built by
Lockheed Martin Corp. New York-based Loral said the malfunctioning
satellite is insured for $141 million. Loral also said that after the
satellite's primary power system shut down, it was able to transfer many
customers to two other of its satellites, the online newspaper
reported.

Cingular Alone in Bidding for NextWave Airwaves

Bankrupt NextWave Telecom Inc. said on Monday it received no qualified
competing bids for wireless licenses that Cingular Wireless LLC has
proposed buying for $1.4 billion in cash, bringing that deal a step
closer to completion, Reuters reported. Potential bidders had until
Sept. 15 to submit offers better than the bid by Cingular for the
licenses that cover 34 markets. An auction was to be held on Tuesday if
any were received. 'No qualified bids were submitted by the bid
deadline,' NextWave said in a bankruptcy court filing, according to the
newswire. 'As a result, no auction is going to be held.' A federal
bankruptcy court in White Plains, N.Y., which is overseeing NextWave's
bankruptcy proceedings, is slated to consider whether to approve
Cingular's proposal on Thursday, reported Reuters.

Hawthorne, N.Y.-based NextWave filed for bankruptcy in 1998 after paying
$500 million out of $4.7 billion it owed for licenses it won at auctions
held by the Federal Communications Commission.

AT&T to Buy Back $1.1 Billion of Debt

AT&T Corp. on Monday said it would repurchase $1.1 billion of debt
to strengthen its balance sheet and reduce its interest expenses,
Reuters reported. AT&T has been using its strong cash flow to reduce
debt from a peak of about $65 billion in 2000 to a target of less than
$10 billion by year's end. It will use cash for the latest debt
buyback.

AT&T has pared expenses by slashing jobs and corporate overhead to
help offset shrinking revenue and increased competition, Reuters
reported. It has suffered from weak customer demand, pricing pressures
and heightened competition as the Baby Bells have moved into the
long-distance market. The debt-reduction effort also comes as AT&T
prepares to battle rival MCI, which plans to emerge from bankruptcy
later this year with a fraction of its previous $41 billion debt load,
reported the newswire.

J.P. Morgan, Deloitte & Touche Accused of Fraud in ING
Lawsuit

ING Groep NV says in a lawsuit that it lost hundreds of millions of
dollars investing in bankrupt health-care financier National Century
Financial Enterprises Inc. (NCFE) and has sued J.P. Morgan Chase &
Co. and Deloitte & Touche LLP, Bloomberg News reported. According to
the suit, which was filed yesterday in Manhattan federal court, J.P.
Morgan served as trustee to a special purpose vehicle created by NCFE
and Deloitte was the auditor. 'Without their active participation, NCFE
could never have accomplished its massive fraud and ING Bank would never
have invested -- and lost -- hundreds of millions of dollars,'' the bank
says in its complaint, reported the newswire.

NCFE, under CEO Lance Poulsen, bought medical bills from health care
providers and packaged them into bonds for investors that were paid out
in cash from medical-insurance reimbursements. Some were rated as high
as AAA before Moody's Investors Service cut them to junk status in
October when it learned a $325 million reserve created to protect
bondholders had been spent, Bloomberg reported.

MCI Filing to FCC Criticizes Its Rivals' Routing Practices

Telecom carrier MCI, under scrutiny from rivals for how it routes
telephone traffic, struck back at those rivals in a recent filing before
the Federal Communications Commission, the Wall Street Journal
reported. In a Sept. 9 letter to the FCC, an MCI outside attorney said
two wireless carriers, Verizon Wireless and Cingular, employed small
third-party companies to send calls using Internet-technology protocols.
The MCI letter accuses these 'least-cost routing' firms of transmitting
phone calls without the supporting data that determines whether a
long-distance or local fee will be paid to complete it. That leaves MCI
paying some of the costs for calls, the letter said, reported the online
newspaper.

Huarong Starts $3 Billion Bad Loan Sale in New York

Huarong Asset Management Corp., the biggest of four Chinese state-owned
liquidators of bad debt, begins investor presentations in New York this
week to sell bad loans with a face value of as much as $3 billion,
company President Yang Kaisheng said, Bloomberg News reported. Huarong,
which disposes of bad debt for the Industrial & Commercial Bank of
China, the nation's biggest lender, sold debt with a face value of $1.5
billion to groups led by Goldman Sachs Group Inc. and Morgan Stanley
earlier this year. In this round, Huarong is talking to Goldman and
Morgan Stanley about additional purchases of bad debt, Yang said,
reported the newswire.

Mirant Units Seek OK Of Pact With N.Y. Environmental Department

Mirant Corp. filed papers Monday asking the bankruptcy court
overseeing its case to approve an agreement between two of its
subsidiaries and the New York Environmental Conservation Department.
According to a motion filed in court Monday, Mirant Lovett LLC and
Mirant New York Inc. would agree to reduce some emissions at two New
York plants. The pact would require the companies to install some new
equipment and implement new technology. The Environmental Conservation
Department would agree not to take legal action on any matters contained
in the pact, the motion said. Mirant Lovett anticipated the proposed
pact would end in May 2009.

New AK Steel May Reach Labor Pact

New management at AK Steel Holding Corp. may be able to reach a
cost-saving labor deal, helping it compete in a rapidly consolidating
industry and making it a more alluring takeover target, analysts said,
Reuters reported. Labor issues have taken center stage for an industry
in which more than 30 steelmakers have filed for bankruptcy protection
since 1997. Many of the firm's competitors, including International
Steel Group and United States Steel Corp., have secured new contracts
with the United Steelworkers of America, lowering their labor costs as
well as retiree benefits, reported the newswire.

EU, France Reach Agreement on Alstom Rescue Plan

The French government and the European Union reached agreement on a new
refinancing plan for Alstom SA, the engineering company whose initial
7.1 billion-

euro ($8.1 billion) rescue was rejected last week by EU regulators,
Bloomberg News reported. 'The French authorities have agreed to change
their aid plan in such a way as to comply with state aid rules,'' said
European Competition Commissioner Mario Monti in a press conference.

Monti threw out the earlier package Sept. 17, saying it violated EU
rules on state aid. The French government, Alstom officials and
representatives of 32 lenders negotiated the new proposals over the
weekend, reported the newswire.

Argentina Offers New Bonds to Replace Defaulted Debt

Argentina offered holders of $95 billion of defaulted bonds new
securities that would enable investors to recoup a quarter of their
original investment, Bloomberg News reported. The government, whose 2001
debt default was the biggest ever, proposed three new bonds to replace
99 different securities, Argentina's Secretary of Finance Guillermo
Nielsen said at a press conference in Dubai. The government is pledging
to repay bondholders less than half of what Russia and Ecuador offered
on defaulted debt. 'It's an unacceptable proposal,'' said Mauro Sandri,
an Italian lawyer who helped set up the Argentine Creditors group in
Rome, which represents 50,000 individual investors. 'It's penalizing
bondholders,'' he said, reported the newswire.

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