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February 13,
2008
Autos
face='Times New Roman' size='3'>
name='1'>Delphi
size='3'>'s Bankruptcy Exit Hits a Snag
The $6.1 billion plan to
pull auto-parts supplier Delphi Corp. out of bankruptcy protection was
in jeopardy yesterday as bank lenders tried to cope with credit markets
that remain virtually shut, the
size='3'>Wall Street Journal reported
today.
size='3'>Delphi
Morgan Chase & Co. and Citigroup Inc.'s Citigroup Global Markets,
are having difficulties syndicating the loan to other lenders. Hedge
funds and other investors are also balking at the terms, saying that
they aren't priced appropriately for the risk involved.
size='3'>Delphi
General Motors Corp., may have to step in and provide financing to fill
the gap, according to experts. GM Chief Financial Officer Fritz
Henderson said that the auto maker is exploring options in the
event
size='3'>Delphi
chapter 11 exit financing as planned.
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name='2'>Huge Loss Dents GM's Hopes for a
Turnaround
In a fresh sign that its
turnaround plan is sputtering, General Motors Corp. yesterday reported a
$722 million fourth-quarter loss to end the year at $38.7 billion in the
red -- believed to be the largest annual loss ever by an auto maker,
the Wall Street
Journal reported today. Over the past
three years, the company has lost nearly $50 billion - more than all the
profit it made in the preceding decade. GM's latest quarterly loss came
even though the company is showing signs of progress in certain areas.
Fixed costs in 2007 were $9 billion lower than in 2005. Those
improvements, however, are being wiped out by other factors such as a
softer
face='Times New Roman'
size='3'>U.S.
market and higher material costs.
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name='3'>Earlier Subprime Rescue Plan Faltering
As the Bush
administration announced a fresh plan to aid homeowners overburdened by
their mortgages, initial figures suggest that much-touted earlier
efforts have done little to help most troubled borrowers, the
Wall Street Journal
reported today. The earlier plan, brokered in December by
the Treasury Department, called for the mortgage industry to freeze
interest rates or expedite refinancing for potentially hundreds of
thousands of subprime borrowers, so long as they were current on their
payments. In a companion move, the administration announced a toll-free
number for homeowners, but the hotline has provided counseling to just
36,000 borrowers in the past two months, and representatives have
suggested loan workouts for fewer than 10,000 of them -- a small
fraction of the borrowers in need. Continuing concerns about the impact
on the
face='Times New Roman'
size='3'>U.S.
size='3'>economy prompted six major mortgage companies and the Bush
administration yesterday to renew their efforts. They announced 'Project
Lifeline,' a new program to help deeply troubled borrowers who are more
than 90 days behind in their mortgage payments and face the imminent
loss of their homes.
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name='4'>Credit Woes Hit Funding for Loans to
Students
The credit crunch that
has so far caused more than $100 billion of losses for big Wall Street
investment firms now extends to students in Michigan, and it could soon
hit many other borrowers, the
size='3'>Wall Street Journal reported today.
In the past few days, problems have mounted for many borrowers in
auction-rate securities as the market for such securities has frozen.
Borrowers ranging from student-loan authorities to municipalities to big
bond funds depend on this market to raise money for making loans and
funding projects. They do so by selling securities whose interest rates
are reset every week as they change hands in auctions arranged by Wall
Street firms like Goldman Sachs Group Inc., Citigroup Inc. and J.P.
Morgan Chase & Co. Moody's Investors Service estimates the size of
this market to be between $325 billion and $360 billion.
Yesterday, the Michigan Higher Education Student Loan Authority, a state
agency, said on its Web site that 'due to the current and unprecedented
capital-markets disruption,' it will stop making loans under the state's
Michigan Alternative Student Loan, or MI-Loan, program. More than
100
size='3'>colleges and universities participate in the program.
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name='5'>Solutia Seeks to Question Citigroup CEO
Solutia Inc. is seeking a court
order to force Citigroup Inc. Chief Executive Vikram Pandit to answer
questions about the decision to pull the plug on $2 billion worth of
promised chapter 11 exit financing, the Associated Press reported
yesterday. The bid to depose Citigroup's CEO comes as the specialty
chemical maker ramps up for the Feb. 21 trial of a lawsuit aimed at
forcing Citi, Deutsche Bank AG and Goldman Sachs Group Inc. to come
through with the bankruptcy-exit loans. Citigroup, Deutsche Bank and
Goldman Sachs cited changes in the market for syndicated corporate debt
as justification for their decision to back out of the Solutia
bankruptcy loans in January. They invoked a contract term that allowed
the banks to get out of the loan deal if there were material changes in
the market for loan syndications.
href='http://biz.yahoo.com/ap/080212/solutia_bankruptcy.html?.v=1'>Read
more.
name='6'>Asarco Receives Extension to File Reorganization
Plan
Bankruptcy Judge
Richard S. Schmidt
granted Asarco LLC's ninth request to extend its
exclusive control of its chapter reorganization,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday.
size='3'>Judge Schmidt on Friday signed off on an order extending
Asarco's exclusive right to file a restructuring plan through April 11
and the company's exclusive right to solicit support for the plan
through June 13. Majority bondholders on Thursday filed a limited
objection to Asarco's extension bid, asking that any exclusivity
extension be granted only on the condition that it was the final one in
the Asarco bankruptcy. If the debtors don't file a plan by April 11, the
bondholders said they'd file their own plan.
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Key
Energy Challenges UMMA's Bankruptcy Stay
Key Energy had filed a
motion Feb. 4 to lift the automatic stay on UMMA Resources LLC, noting
that a trial in state court had been set to start the day after UMMA
sought chapter 11 protection on Jan. 27,
size='3'>Bankruptcy Law360 reported yesterday.
Bankruptcy Judge Richard
S. Schmidt said Monday that he would consider
Key Energy's motion at a hearing on March 10. In the meantime, he said,
he would consult the presiding state court trial judge. The contractor's
motion argues that the lawsuit had been pending for three years before
UMMA filed for bankruptcy and that UMMA would not be prejudiced by
resolution of the case, since it chose the state venue. The adversary
case stems from an oral contract drawn up between the companies in April
2004, in which Key Energy agreed to provide UMMA with a rig and crew for
work on an oil well in
w:st='on'>McMullen
County
w:st='on'>
size='3'>Texas
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more. (Registration required.)
Deal
Reached in NYRA Bankruptcy
officials have agreed on the broad outlines of a deal over the future
of
size='3'>’s bankrupt thoroughbred horse-racing franchise,
the
size='3'>New York Times reported today. Under
the proposal, the New York Racing Association would continue to run the
tracks at Aqueduct,
size='3'>Saratoga Springs
while receiving $105 million in state money to help stabilize its
operations. That money would be recouped later through revenue from
video lottery terminals already approved for Aqueduct.
The association would give up its claim to the land under
the tracks, and the current board would appoint a majority of the
association’s next board.
href='http://www.nytimes.com/2008/02/13/nyregion/13nyra.html?sq=bankruptcy&st=nyt&scp=4&pagewanted=print'>Read
more.
name='9'>Billionaire Offers Aid to Bond Insurers at a Steep
Price
Warren Buffett yesterday
offered to shoulder some of the financial burdens of three bond
insurance companies whose plunging fortunes have become a threat to the
financial system, the
size='3'>New York Times reported today. The
companies — MBIA, the Ambac Financial Group and the Financial
Guaranty Insurance Company — guarantee interest and principal
payments on hundreds of billions of dollars of bonds sold by states and
municipalities, as well as complex mortgage investments. Investors fear
that the deepening problems of the bond insurers could unleash a chain
reaction of losses across financial industries. Buffett said that he
would reinsure policies that the three companies had written on $800
billion of municipal bonds, a move analysts called a shrewd attempt to
take advantage of the companies’ problems. His holding company,
Berkshire Hathaway, is willing to commit $5 billion, but said
it wants the insurers to pay it a steep premium.
href='http://www.nytimes.com/2008/02/13/business/13bond.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='10'>Delta CEO Would Waive Merger Compensation
Delta Air Lines Inc.
Chief Executive Officer Richard Anderson told the airline's board that
he will waive millions of dollars in compensation to which he would be
entitled in the event of a merger, the
size='3'>Wall Street Journal reported today.
The move is the latest signal of the seriousness of the airline's effort
to find a merger partner, most likely Northwest Airlines Corp. or United
Airlines parent UAL Corp. Under terms of
w:st='on'>
size='3'>Anderson
contract, he is eligible over several years for as much as $15 million
in Delta stock, performance-based initiatives and travel benefits. In
the case of a merger, much of that compensation would vest immediately,
even if Delta were the acquirer in the transaction, according to
securities filings.
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