October 102003

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October 10, 2003

Ex-Enron Exec Settles SEC Fraud Case

The U.S. Securities and Exchange Commission (SEC) said on Thursday that
it charged the former chief accounting officer of Enron North America
with securities fraud and he has agreed to pay $500,000 in a settlement,
Reuters reported. Wesley Colwell, without admitting or denying
wrongdoing, agreed to be barred from serving as officer or director of a
public company and to pay $200,000 in penalties and $300,000 in
disgorgement, the SEC said. 'As part of this settlement, Colwell will
continue to cooperate with on-going investigations into Enron Corp. by
the SEC and the U.S. Department of Justice Enron Task Force,' the SEC
said. The SEC accused Colwell and others of taking part in 'a wide
ranging scheme to defraud by manipulating Enron's publicly reported
earnings through a variety of devices designed to produce materially
false and misleading financial results,' reported the newswire.

United Asks IRS for Delay on Pension Payments

Bankrupt United Airlines on Thursday said that it will ask the U.S.
Internal Revenue Service for permission to delay by up to five years
required payments into four U.S. pension plans, Reuters reported. United
filed the largest-ever aviation bankruptcy last December and must
address its underfunded pensions to obtain financing needed to exit
protection next year.

'Our ultimate goal is to put all of our finances in order so that United
can obtain the exit financing needed to successfully exit from chapter
11 as a financially stable company which will be able to provide pension
benefits to its employees for many years to come,' United said. United
will seek waivers from the IRS to delay the payments. The waivers would
not affect the amount or timing of pension payments to workers, Elk
Grove Village, Ill.-based United said, reported the newswire.

Bankrupt DVI Says Recovery Best Through Lenders

DVI Inc., a bankrupt medical equipment finance company, said on Thursday
it decided it was best for its creditors to get their money back by
working with its debtor-in-possession lenders, Reuters reported. The
company made that conclusion after it completed an auction of assets on
Wednesday. 'Now that we have conducted the auction process, the key
constituents and the company believe that the best way to maximize
creditor recovery may be through other means,' DVI Chief Executive Mark
Toney said in a statement. The company warned that its stockholders are
'highly unlikely' to get any money back and holders of its unsecured
debt may not get much of the money owed them. Last month DVI received
approval from the U.S. Bankruptcy Court to receive up to $148 million in
DIP financing from Ableco Finance LLC and Goldman Sachs Credit Partners,
reported the newswire.

U.S. Justice Department Won't Stop Farmland Unit Buy

The U.S. Justice Department on Thursday said it would not block the
purchase of Farmland Industries Inc.'s pork operations by either
Smithfield Foods Inc. or Cargill Inc., Reuters reported. Farm state
lawmakers had asked antitrust regulators to closely examine the proposed
sale of Farmland's pork unit, fearing it would cause further
concentration in the meatpacking sector. A Justice Department
spokeswoman said neither Smithfield nor Cargill would hold more than 30
percent of the pork market if it purchased the Farmland operation,
called Farmland Foods.

Farmland's pork unit was expected to be auctioned off on Monday. Last
month, privately held Cargill offered $385 million for the business,
topping an earlier Smithfield bid by $21.5 million. The Justice
Department said at least six companies would still remain in the states
where Farmland operates, to compete with either Smithfield or Cargill.
Senate Finance Committee Chairman Charles Grassley (R-Iowa) said the
Justice Department decision not to interfere was disheartening. 'The
continued trend in agriculture works against the family farmer, and
today's news is very bad for Iowa's independent pork producers,' he
said, reported the newswire.

HALLIBURTON

Halliburton Misses Target, Cites Lawsuits

Halliburton Co. on Thursday warned it will report lower-than-expected
third-quarter results, citing a significant increase in legal fees and
lower operating results from joint ventures, Reuters reported. The
Houston-based company said it expects to post third-quarter earnings per
share from continuing operations of at least 27 cents a share, down from
its previous forecast of at least 32 cents a share. A spokeswoman for
Halliburton declined to comment on the cause of the higher legal fees or
identify the joint ventures. But Deutsche Bank analyst Michael Urban
said the shortfall most likely stems from Halliburton's Subsea 7 joint
venture with Norway's DSND. 'It's the only joint venture that's big
enough to have an impact,' Urban said, reported the newswire.

Higher legal fees, analysts said, are probably attributable to
Halliburton's massive class-action litigation filed by people who
claimed exposure to asbestos and silica. Halliburton in August announced
that the number of asbestos and silica claims surged 22 percent to
425,000 since the end of December 2002. Recently the company said the
cost of a settlement could exceed $4.5 billion in cash and stock,
Reuters reported.

Halliburton Sets Exchange Offer for $300 Million
Debt

Halliburton Co. on Friday said it has launched an exchange offer for
$300 million of debt issued by a subsidiary which may file for
bankruptcy because of asbestos claims, Reuters reported. The Houston
company said it has commenced an offer to issue new 7.6 percent
debentures due 2096 in exchange for the outstanding 7.6 percent
debentures due 2096 issued by DII Industries LLC. The principal amount
outstanding of the DII debt in the offer is $300 million. As part of the
offer, DII is seeking approval to amend some terms governing the notes
to eliminate bankruptcy-related events of default, Halliburton said in a
statement. DII may file for bankruptcy protection as early as next month
because of claims filed by people who were exposed to asbestos, a
cancer-causing material, reported the newswire.

September Tougher for Airlines, Delta CEO Says

Delta Air Lines Inc. Chief Executive Leo Mullin said on Thursday his
company and the industry experienced a small slowdown last month after a
relatively good summer, Reuters reported. The U.S. airline industry is
still trying to find its footing after huge losses incurred from a
drop-off in travel and the bankruptcy of two big carriers. Airlines
idled aircraft, laid off thousands of workers and slashed capacity to
cut costs. 'I think the situation is improving slowly. I think the
industry and Delta had a reasonably good summer,' Mullin told Reuters.
'I think for September, the traffic statistics have indicated a slightly
tougher month.' Mullin said he believed the airlines would bounce back
later this year, but continue to experience slow growth. It would be
2005 before the industry became fully profitable again, he said, Reuters
reported.

Mirant CFO Resigns After Less Than a Year on the Job

Bankrupt energy trader Mirant Corp. on Thursday said its chief financial
officer has resigned after less than a year in the job, Reuters
reported. The Atlanta-based company said Harvey Wagner will stay on in
an interim capacity until a replacement is hired. 'Harvey believes that
at this important time in Mirant's restructuring process, the company
deserves to have a CFO capable of making the necessary commitment to see
it emerge from chapter 11 as viable and strong,' President and Chief
Executive Marce Fuller said. Wagner in January replaced Ray Hill as CFO
of Mirant, which was heavily in debt and beaten down by lower
electricity prices. The company has since filed for chapter 11
bankruptcy protection, listing $20.6 billion in assets and $11.4 billion
in debt.

Onex Corporation: Bankruptcy Court Confirms Magellan's Plan of
Reorganization

Onex Corporation announced yesterday in a press release that Magellan's
plan of reorganization has been confirmed by the bankruptcy court. Under
this plan, Onex will be the lead equity investor in Magellan and is
expected to make an approximate US$103 million equity investment in the
reorganized Magellan. This reorganization plan has received overwhelming
support from Magellan's unsecured creditors and the court ruled
yesterday that Magellan had met all of the statutory requirements
necessary for confirmation of its plan. Magellan expects to complete the
reorganization, which requires customary regulatory approvals, during
the fourth quarter, the company said.

Accounting Firm Andersen Wants Conviction Overturned

Accounting firm Andersen on Thursday argued its Enron-related
obstruction of justice conviction should be overturned because the trial
judge wrongly let prosecutors introduce evidence of past trouble with
securities regulators, Reuters reported. Andersen lawyer Maureen Mahoney
also argued before two judges from the U.S. Fifth Circuit Court of
Appeals that Andersen was improperly barred from introducing evidence
that it had kept far more documents than it destroyed.

Andersen, whose downfall came from its work with client Enron Corp., was
convicted for obstruction of justice last year after a seven-week trial
in the Houston federal court of U.S. District Judge Melinda Harmon,
reported the newswire.

Court Approves Covanta Energy's Disclosure Statement To Plan

The bankruptcy court overseeing Covanta Energy Corp.'s case approved
the disclosure statement to the company's chapter 11 plan, setting the
stage for plan confirmation hearings in December. U.S. Bankruptcy Judge
Cornelius Blackshear signed an order last Friday that approved the power
generation firm's disclosure statement. Hearings to consider
confirmation of the plan are scheduled to begin Dec. 3 before the U.S.
Bankruptcy Court in Manhattan, according to the order. Creditors
eligible to vote on the plan must submit their ballots by Nov. 18 at 4
p.m. Eastern time. Nov. 18 is also the deadline for interested parties
to object to plan confirmation.

EchoStar Likely to Face Uphill Battle for Loral

EchoStar Communications Corp. faces an uphill battle if it is looking to
win control over bankrupt satellite operator Loral Space &
Communications Ltd., analysts said, Reuters reported. Loral late on
Wednesday said it rejected a $1.85 billion bid from satellite TV
broadcaster EchoStar to buy all of its assets because the offer was too
low. The New York-based company said it intended to proceed with the
proposed sale of its six North American satellites for about $1 billion
to Intelsat. While Echostar could still appeal to Loral creditors,
analysts said EchoStar will likely find it difficult to win a deal.

Loral in July filed for chapter 11 bankruptcy protection. It reached an
agreement to pay back secured creditors by selling its North American
assets to Intelsat. It plans to emerge from bankruptcy with the
non-North American satellite services business as well as its
manufacturing business, Reuters reported.

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