March 10, 2004
Pension Conferees Meet And Are Split On Senate Provisions
House-Senate conferees on pension legislation met for the first time
yesterday, with most senators saying they will hold on provisions in the
bill that would give additional pension breaks to airlines, steelmakers
and 'multiemployer' pension plans commonly found in the trucking and
construction industries, CongressDaily reported. House Education
and the Workforce Chairman John Boehner (R-Ohio), who is chairing the
conference, said he wants staffers to 'sort out as much as possible'
this week, with another conferee meeting possible Thursday. House and
Senate negotiators of both parties agreed that they should act quickly,
before the April 15 deadline that some companies face for making the
first pension payments of the year. Beyond that consensus, House and
Senate conferees split over whether the final bill should include the
extra Senate provisions, the newswire reported. White House officials,
including three Cabinet secretaries, have said they will recommend a
presidential veto if the bill includes some Senate provisions.
Consumer Confidence Falls Again in March
Confidence in the U.S. economy slipped again in March after yet another
disappointing jobs report, a survey showed today, Reuters reported.
Investor's Business Daily and TechnoMetrica Market Intelligence
said their economic optimism index fell to 54.5 in March from 56.5 in
February and a 22-month peak of 60.6 in January. The gauge is based on
over 900 interviews and predicts with 90 percent reliability the
University of Michigan and Conference Board consumer sentiment surveys.
The index garnered much attention last month as its sharp 4.1-point fall
correctly foreshadowed slides in the other two reports. 'There's no
denying that the bad news on jobs is depressing public optimism,' said
Terry Jones, associate editor of Investor's Business Daily.
The six-month economic outlook component, a measure of how consumers
feel about the economy's potential in the next half year, dipped 2.2
points to 53.6. The federal economic policies component dropped 3.0
points to 47.5 and the personal financial outlook, which measures how
respondents feel about their own finances six months hence, slipped 1.1
points to 62.3, reported the newswire.
Discontented Consumers Still Shopping
Disappointing jobs growth darkened U.S. consumers' view of the economy
in March, but it did not stop them from shopping, reports released
yesterday showed, Reuters reported. Chain store sales for the week
through March 6 rose 7.0 percent compared with the same week a year ago,
the International Council of Shopping Centers and UBS said in a joint
report, slightly down from the preceding week's 7.9 percent rise. A
separate report from the industry research group Redbook showed retail
sales were up 5.1 percent in the week ended March 6 compared with a year
ago. 'Sales slipped a tad for the week, but remained strong on a
year-over-year basis,' said Michael Niemira, ICSC's chief economist and
director of research.
As views on the economy keep worsening due to weak job gains, analysts
wonder if that will affect spending patterns. 'Better weather and larger
tax refunds are fighting with slow growth in jobs and wage income to
determine the strength of consumer spending,' said Steven Wood, an
economist at Insight Economics, the newswire reported. 'Right now, it's
about a tie.'
Kmart Waits To See: Will Martha Stewart's Troubles Hurt Its Own
Fortunes?
Kmart's brand is one of the few things the retailer has going for it as
it struggles to compete with Wal-Mart Stores Inc. and Target Corp., the
Associated Press reported. Kmart pointed out its exclusive rights to
Martha Stewart Everyday housewares and other products as key to its
recovery since emerging from chapter 11 last year. 'Other than Martha
Stewart and her daughter, nobody was more upset Friday afternoon than
executives at Kmart,' said Seth Siegel, co-founder of The Beanstalk
Group, a trademark licensing agency. Kmart has been silent on the future
of its relationship with Martha Stewart Living Omnimedia since she was
found guilty Friday of lying to government investigators about her sale
of stock in a biotechnology company.
Still, analysts said Kmart is unlikely to abandon Stewart. Sales of her
products at Kmart were $1.5 billion US in 2002, about five percent of
Kmart's total sales. The actual value of the brand could be even
greater. Shoppers often are lured into Kmart by the Martha Stewart name
and then make other purchases, analysts noted. 'The brand Martha Stewart
was probably more favorably looked at than Kmart itself,' said Gary
Ruffing, a retail consultant with BBK Ltd. and a former Kmart executive,
AP reported. 'It would be very tough for them to walk away.'
Creditors Object To Owens Corning's Staff Retention Plan
The committee representing unsecured creditors in Owens Corning's
chapter 11 case objected to a request to renew a bonus plan aimed at
keeping top employees at the company during its bankruptcy proceedings.
The building products company's well-paid managers aren't likely to
leave during the company's reorganization even without the plan, the
creditors' committee said in a filing with the U.S. Bankruptcy Court in
Wilmington, Del., made on Friday. As reported, Owens Corning said in
February that it probably won't emerge from bankruptcy protection by the
end of the year and wants approval to begin a new bonus program to help
convince employees to stay. An existing retention plan covering 235
employees in four groups, or tiers, expired for some staff at the end of
2003 and doesn't offer a payout to others unless the company emerges
from chapter 11 by the end of 2004.
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Database Uses Chapter 11 Data To Lay Bare Fee, Venue
Differences
Professionals involved in shoe retailer Footstar Inc.'s recently
filed chapter 11 case likely will be awarded around $9.2 million in fees
by the court over the term of the case, which should last about 190
days. These predictions aren't divined from a crystal ball; rather they
are produced by a database built on the research of a law professor at
the University of California at Los Angeles. Prof. Lynn LoPucki's data
archive, called the Bankruptcy Research Database, contains information
from U.S. corporate bankruptcy cases dating back to 1980. The free
online version, called WebBRD, allows anyone to sort data from
bankruptcy cases using 19 different variables including asset size,
venue or the industry in which a company operates.
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Alstom Says New Charges Will Crimp Profitability
Alstom SA, the French company rescued from near bankruptcy by a
government bailout last year, on Wednesday warned that new charges and
restructuring costs would result in even lower profitability this year
than previously forecast, the online Wall Street Journal
reported. The Paris-based maker of power plants, ships and trains cut
its operating margin and free cash flow forecasts for the year to March
31 and warned that as a result it may have to renegotiate terms on some
of its €4.5 billion ($5.54 billion) in debt with its banks.
Madison Dearborn Nears Deal To Buy Cinemark for $1 Billion
Private-investment firm Madison Dearborn Partners LLC is near an
agreement to buy Cinemark USA Inc. for about $1 billion, plus the
assumption of $560 million in debt, according to people familiar with
the situation, the Wall Street Journal reported. A sale of the
nation's third-largest theater chain marks the latest sign that the
movie-theater business is recovering from a near-fatal spending spree
that forced some of the biggest players to file for bankruptcy
protection just a few years ago.
A few years ago, chains found themselves deep in debt after a massive
expansion to build expensive 'megaplex' theaters with stadium seating
that allowed better viewing. Some of the nation's biggest chains filed
for chapter 11 bankruptcy protection, allowing them to wipe out debt,
close theaters and revamp costly leases for unprofitable theaters, the
online newspaper reported.
US Airways Once Again Struggles to Survive
When US Airways Group emerged from bankruptcy-court protection nearly a
year ago, it was armed with $1.9 billion in annual cost savings and
$1.24 billion in new financing, the Wall Street Journal reported.
Today, the nation's seventh-largest airline is scrambling for its
survival again. The first of the big carriers to seek protection from
creditors following the 2001 terrorist attacks and the subsequent
industry nose dive, US Airways made assumptions about itself and the
industry that haven't materialized, according to the newspaper. It
counted on a modest industry rebound, a return to 80-cent-a-gallon fuel
and the failure of some of its larger competitors to match or beat the
cost savings it gained in bankruptcy. 'It became pretty obvious the
original plan wasn't going to work,' says David Bronner, CEO of the
airline's largest investor, Retirement Systems of Alabama, and
nonexecutive chairman of US Airways, the Journal reported.
Six Flags to Sell Some Assets, Cut Debt
Amusement park operator Six Flags Inc. said Wednesday it agreed to sell
its Six Flags Worlds of Adventure theme park to Cedar Fair LP for $145
million, and sell its European division to a private investment firm for
$200 million, Reuters reported.
It will use the proceeds to cut its debt and fund other investments in
its theme parks. It does not expect to sell any other parks.
The company said its Worlds of Adventure park in Cleveland had been its
most difficult market, and would take several years and meaningful
capital investment to improve. Meanwhile, the sale of the European
assets would allow it to focus on its U.S. business. Six Flags said it
would book a loss in the first quarter of about $70 million for the
Cleveland disposition, and about $220 million for the European
assets.
Pacific Gas And Electric Gets $2.9 Billion In Working Cap,
Financing
Pacific Gas & Electric Co. (PCG) received $2.9 billion in credit
facilities to meet its working capital requirements and refinance a
number of pollution control bonds, which will enable the troubled energy
company to emerge from bankruptcy, the online Wall Street Journal
reported.
In a press release on Tuesday, the utility company said its exit
financing structure was approved by the California Public Utilities
Commission Monday. The $2.9 billion is broken down into an $850 million
revolving credit facility, the sale of the company's accounts receivable
for up to $650 million, reimbursement of about $620 million in letters
of credit and two term loans of $345 million and $454 million.
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