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September 28
Outlook Dims for Asbestos Reform in Senate
The outlook dimmed for establishing a fund to compensate asbestos
victims this year after the Senate majority leader on Monday left it off
a list of priorities for the few days left in the legislative period,
Reuters reported. Senate Majority Leader Bill Frist (R-Tenn.) said he
had not given up on the legislation. But he wants the Senate to finish
work by Oct. 8, so lawmakers will have time to campaign for Nov. 2
elections. His priorities for the eight or nine remaining legislative
working days are intelligence reform, spending bills and other bills
already at the “conference” level of negotiations between
the Senate and House, Frist told journalists. He said he and Senate
Democratic Leader Tom Daschle had made “huge progress” on
the issue and he was working on a response to Daschle’s latest bid
that accepted Frist’s proposal to cap the fund at $140 billion.
Time constraints and continued disagreement among lawmakers have left
observers doubtful a bill can be passed this year, the newswire
reported.
MCI
Leucadia Sells Its MCI Stake
Investment company Leucadia National Corp. has sold its 4.96 percent
stake in MCI Inc. for a gain of $20 million, according to a filing with
U.S. market regulators on Monday, Reuters reported. Leucadia, which had
sought government approval to buy up to half of MCI, said the sale
should not be interpreted to mean it is not interested in taking control
of MCI. The telecommunications firm, which emerged from the largest
bankruptcy in history in April, has begun searching for a buyer.
Court Says EU Regulators Wrongly Blocked MCI Deal
The European Union’s second-highest court today handed MCI Inc.
a victory by ruling that EU antitrust regulators wrongly blocked MCI
WorldCom’s bid to buy Sprint Corp. in 2000, the Wall Street
Journal reported. The Luxembourg-based Court of First Instance
said it could do nothing to reverse the earlier decision, but the
victory eases MCI’s ability to make future deals by voiding the EU
regulators’ finding that MCI had a dominant position in networks
for Internet traffic, the newspaper reported.
Kaiser Aluminum Gets Extra Month for Reorganization Plan
Kaiser Aluminum Corp. on Monday said a bankruptcy judge granted it an
extension through October 25 of its exclusive right to file a
reorganization plan, Reuters reported. The Houston-based company said
the U.S. bankruptcy court in Delaware approved the extension at the
company’s regular monthly hearing, and that the extension applies
to all Kaiser debtor entities. Kaiser has been selling some of its
businesses to speed a financial turnaround. It filed for Chapter 11
bankruptcy protection in February 2002, and has had numerous extensions
to its initial 120-day exclusivity agreement.
Air Canada Orders New Jets for New Business Plan
Air Canada’s plan to emerge from 18 months of bankruptcy
protection includes an $821 million order to buy 30 regional jets from
Bombardier Inc. the airline said on Monday, Reuters reported.
Montreal-based Air Canada will order 15 of Bombardier’s 70-seat
CRJ700 series jets for delivery starting next year. It ordered 15 of its
50-seat CRJ200s, with those deliveries slated to begin this year.
Another 15 conditional orders of the 50-seaters may be canceled without
penalty in a plan that appears to fall short of a $1.2 billion plan Air
Canada unveiled in December for 45 Bombardier jets, the newswire
reported.
Enron
Fastow Helped Craft Merrill Barge Deal—Former Aide
Enron Corp. former Chief Financial Officer Andy Fastow helped cook up
a deal with Merrill Lynch to sell and buy back Nigerian power barges to
inflate Enron’s earnings, a former top Fastow aide said on
Monday, Reuters reported. Michael Kopper, a one-time Fastow aide, was
the first former Enron executive to testify in court in the nearly three
years since the former power trading giant collapsed into bankruptcy in
a huge financial scandal in 2001. On trial are two former mid-level
Enron executives and four Merrill Lynch bankers accused of arranging in
1999 for Merrill to buy the three barges with an oral guarantee from
Fastow they would be bought back within six months, the newswire
reported.
UK Bankers’ Enron Extradition Hearing Begins Today
The United States will attempt on Tuesday to extradite three former
senior NatWest bankers to America to stand trial over an elaborate fraud
scheme involving Enron Corp., Reuters reported. The three British men,
Gary Mulgrew, Giles Darby and David Bermingham are accused of conspiracy
to defraud after they each allegedly pocketed $2.4 million in the sale
of a stake in an Enron business in 2000.
U.S. prosecutors said the men sold an interest in a company called
LJM Swap Sub on behalf of their employer, NatWest’s Greenwich,
Conn.-based investment banking division. The Royal Bank of Scotland
acquired NatWest later that year. The bankers had formed a partnership
with Andrew Fastow, the convicted finance chief of Enron, through which
they were able to offload the stake at a price below its actual value
and keep the difference, the U.S. Department of Justice said, the
newswire reported.
Dealing With the Pension Bomb
Earlier this year, Judge G. Patrick Murphy of the U.S. District Court
for the Southern District of Illinois ruled that a revised pension plan
adopted by IBM Corp. five years ago violated federal employment law,
The Deal reported. The class action against Big Blue was
brought on behalf of roughly 130,000 current and past employees who
allege that the company violated the age discrimination prohibitions of
ERISA by converting its old defined-benefit pension plan to a
cash-balance plan in July 1999. Read the full article at
href='http://www.law.com/jsp/article.jsp?id=1095434485577'>www.law.com/jsp/article.jsp?id=1095434485577.
Time Warner and Comcast Discuss Bid for Adelphia
The Comcast Corporation said yesterday that it was in talks with Time
Warner Inc. to make a joint bid for Adelphia Communications, which has
been operating under bankruptcy protection, the New York
Times reported. The move by the nation’s two largest cable
operators was not unexpected, because the two companies are among the
most financially capable of buying Adelphia, which is said to be seeking
$18 billion to $19 billion for its national network, which serves 5.4
million subscribers, the newspaper reported.
Delta Expected to Announce More Moves to Reduce Costs
Delta Air Lines, which is striving to avoid a bankruptcy filing, is
expected to announce more internal cost cuts, including changes to
employee benefits, as soon as today, the New York Times
reported. Also today, the airline will find out the results of voting by
its pilots on a plan to avoid staff shortages that could be caused by an
unusually high number of early retirements. Delta has warned that it
could join United and US Airways in bankruptcy court unless it can
reduce its costs, fix its balance sheet and win $1 billion in wage and
benefit cuts from the pilots, its only unionized group, the newspaper
reported.
Euro Disney, Lenders Reach Accord on Debt Restructuring
Euro Disney SCA has reached an agreement with its lenders on a
crucial debt restructuring, saving the theme-park operator from a
possible bankruptcy filing, according to a source close to the
negotiations, the Wall Street Journal reported.
Euro Disney, which manages the Disneyland Paris theme park and the
adjacent Disney Studios park, was expected to announce later Tuesday
that it has concluded talks with banks, hedge funds and other investors
over its €2.4 billion ($2.9 billion) in debt, the online newspaper
reported.
Banks Come Under Scrutiny for Role in Parmalat Scandal
In the wake of Parmalat’s meltdown late last year in one of
Europe’s largest-ever corporate scandals, Parmalat’s
dealings over the past decade with major international banks are coming
under intense scrutiny, the Wall Street Journal reported.
Italian prosecutors and Parmalat’s new management are looking at
the role Citigroup, Bank of America Corp. and the Credit Suisse First
Boston unit of Credit Suisse Group AG, among others, may have played in
the disaster. Parmalat was forced to seek bankruptcy protection in
December amid allegations that a decade-long fraud had looted the
company of billions of dollars, the newspaper reported.