July 13, 2004
Leucadia to Seek Approval to Buy Control of MCI
Investment company Leucadia
National Corp. plans to seek approval to buy at least half of MCI Inc.,
marking the first potential takeover interest in the telephone company
since it emerged from bankruptcy, MCI said on Monday, Reuters reported.
Leucadia's move does not commit it to buy any shares and does not
guarantee that MCI, formerly known as WorldCom, would be taken over. At
current market prices, MCI would be worth about $5 billion. WorldCom was
worth $121 billion at its peak in 1999, before it unraveled two years
later in an $11 billion accounting scandal and became the world's
largest corporate bankruptcy in 2002, the newswire reported.
Verizon Wireless Wins NextWave New York License
U.S. mobile network operator
Verizon Wireless has announced that it has won the New York metropolitan
area spectrum license auctioned by NextWave Telecom, Telecomworldwire
reported. The 10 MHz licence in the 1.9 GHz PCS frequency covers 20.1
million people and cost Verizon Wireless $930 million. The new license
will give Verizon Wireless access to the New York Basic Trading Area,
which covers New York City and northern and central New Jersey, as well
as Westchester and Rockland counties. The Federal Bankruptcy Court, the
Federal Communications Commission and an antitrust regulatory review
must approve the transaction, reported Cellular News.
Delta Air Will Take Charges of $1.65 Billion
in 2nd Quarter
Delta Air
Lines Inc. will book a second-quarter charge
of $1.65 billion for deferred income taxes and for its pilots' pension
plan, the Wall Street Journal
reported. The carrier added it won't recognize income-tax benefits for
the foreseeable future because it is unclear when the company can
generate sufficient taxable income to use its deferred income-tax
assets. Wall Street expects Delta's second-quarter losses to narrow to
$1.52 a share from $1.95 a share a year ago. Delta will also take a $117
million charge related to the company's defined benefit pension plan for
pilots as a result of higher-than-average pilot retirements, the online
newspaper reported.
MissChem Gets DIP Financing
Debtor-in-possession financing
worth $182.5 million has been secured by Mississippi Chemical (MissChem)
from Perry Capital and Citigroup, including $22.5 million of revolving
credit, Asia Intelligence Wire reported. The agreement replaces all of
MissChem's secured debt. MissChem filed for chapter 11 bankruptcy during
2003.
size='3'>Riverlake Partners Closes $26 Million Private Equity Fund
Riverlake Partners LLC, a
private equity firm, announced yesterday final closing of Riverlake
Equity Partners L.P. The fund closed with $26.1 million, exceeding its
original target of $25 million.
'We've already begun making
investments and remain optimistic about opportunities ahead. Debt
financing markets are attractive and deal flow is excellent. As a new
fund, we have a virgin network of prospects to pursue,' said Krieger,
managing member of Riverlake Partners.
Bankrupt United Airlines
Taking Steps to Cut Costs
United Airlines is taking steps
to save money by improving its airport operations, aircraft maintenance
and cost of sales, the bankrupt airline's chief operating officer said
on Monday, Reuters reported. UAL Corp., parent of the carrier, has been
in chapter 11 since December 2002. It was rejected for a $1.1 billion
federal loan guarantee last month and has been working to raise funds to
exit bankruptcy. CEO Glenn Tilton has said repeatedly the carrier must
slash costs further to ensure its long-term survival. COO Pete McDonald,
in a message to employees that he and Tilton recorded, said a recently
completed study of cost management and revenue production revealed
United did not operate as efficiently as competitors in those three key
areas, the newswire reported.
An Early Push on Fall Sales by
Airlines
An aggressive and unusually
early round of fare sales by the low-cost carriers is threatening to
wipe out any chance of profits for the airline industry in the autumn,
the New York Times reported. Jet Blue Airways plans to announce
today that it will cut its prices by as much as half on one million
seats from Sept. 7 to mid-December, with one-way fares of $29 to $99 if
tickets are bought by July 29. The period around Thanksgiving is
excluded.
The major airlines once hoped
that 2004 might return them to profitability. Instead, they face
potential combined losses of $3 billion or more this year, analysts
estimate, because of high fuel prices and competition from discount
airlines. United, Delta and US Airways are all pushing their unions to
agree to deep new cuts in wages and benefits. United, which failed to
win federal loan guarantees last month after three attempts, is now
trying to line up investors to help it emerge from chapter 11
bankruptcy, a fate that Delta and US Airways are trying to avoid, the
newspaper reported.
Ex-Officer's Wife Begins
Prison Term in Enron Case
Lea Fastow, the wife of Enron's
former CFO, began a one-year prison term yesterday for her role in the
accounting fraud that forced the company to seek bankruptcy protection
in 2001, Bloomberg News reported. She pleaded guilty in May to not
reporting some income that her husband, Andrew Fastow, had earned as a
result of his participation in an accounting fraud, the newswire
reported.
She admitted in January that
she had failed to report $47,800 in income on her 2000 personal tax
return. This sum is part of $204,444 in undeclared income that she
realized from 1997 to 2000 from off-the-books partnerships that her
husband used to hide Enron debt. Fastow earned $60 million from such
partnerships, an Enron bankruptcy examiner found.