April 12, 2004
Kerry Uses 'Misery Index' to
Criticize Bush on Economy
Democratic presidential
candidate John Kerry on Sunday focused on President Bush's economic
record of 'middle class misery,' Reuters reported. In a new study for
release today, Kerry said a combination of rising college and health
care costs, together with sluggish incomes, have squeezed America's
working families since Bush took office and eliminated any financial
gain from the president's tax cuts. The report pointed to middle class
families struggling with 'the rising cost of health care, college
tuition and gasoline at the same time that wages and incomes are
stagnating and personal bankruptcies are at record levels.'
Between 2000 and 2003,
according to the 'Middle Class Misery Index,' compiled with data from
government and independent sources, wages dropped 0.2 percent while the
cost of tuition at public colleges and universities increased a record
13 percent. At the same time, health insurance premiums rose by 11
percent and gasoline prices were up 15 percent, according to the Kerry
campaign study. The index combined seven different indicators: median
family income, college tuition, health costs, gasoline cost,
bankruptcies, the homeownership rate, and private-sector job growth. The
study said six of the seven statistics worsened during Bush's term. Only
home ownership rates improved, the newswire reported.
U.S. Judge Denies Bid To Block PG&E
Bankruptcy Plan
A federal judge on Friday
denied a last-minute bid to block bankrupt utility Pacific Gas &
Electric Co.'s reorganization plan from going into effect, Reuters
reported. The decision by U.S. District Court Judge Vaughn Walker clears
the way for the PG&E Corp.-owned utility to emerge from its
three-year bankruptcy today. Two of the five members of the California
Public Utilities Commission -- Loretta Lynch and Carl Wood -- sought the
stay pending their appeal of a U.S. Bankruptcy Court's approval of the
reorganization. Lynch and Wood argued that the plan unlawfully locks in
steep power prices for customers and binds future members of the CPUC to
the plan's terms.
Pacific Gas & Electric said
a stay pending appeal 'could put the feasibility of the entire plan at
risk. The resulting harm to PG&E, its creditors and the public were
the current plan to fail and a return to the bankruptcy court be
required is incalculable.' Judge Walker agreed with PG&E in a
nine-page decision, the newswire reported.
Some Push Adelphia to Sell Assets While
Still in Bankruptcy Court
A growing number of investors
and partners in Adelphia
Communications are pushing
the company to sell some -- or all -- of its assets even before it
emerges from bankruptcy protection, the New York Times reported.
Last Monday, ML Media Partners, a co-owner with Adelphia of cable
systems in Puerto Rico, filed a motion in the U.S. Bankruptcy Court for
the Southern District of New York to compel Adelphia to provide data on
the systems to a prospective bidder. James Vaughn, a cable executive who
founded cable operator FrontierVision and sold it to Adelphia in
1999, together with
size='3'>WachoviaSecurities, has made a bid of $625 million for the
joint venture's 140,000 cable subscribers in Puerto Rico. ML Media
Partners signed a letter of intent with Vaughn on March 16 that would
give his team exclusive negotiating rights for 60 days, but those talks
cannot proceed unless Adelphia, which manages the systems, makes the
financial information available.
The current dispute is only the
latest in long-running litigation between the partners. Investors say
that Adelphia should be put up for sale now, before it comes out of
bankruptcy. One person close to the dispute said that Adelphia had hired
Lazard Asset Management to value the company and that some investors
thought the valuation of about $17 billion was much too low. Adelphia
said it was not ruling out the possibility. 'Our board and management
have said they would consider any offer,'' said James Zerefos, Adelphia
vice president for law and commercial relations. The company said it was
working toward making data available to Vaughn and any other potential
bidder willing to sign a confidentiality agreement, the newspaper
reported.
Spiegel Group Reports March
Total Sales at $130.2 Million
Spiegel Inc.'s March total sales
fell 17 percent to $130.2 million from $157.8 million, while same-store
sales at its Eddie Bauer unit remained flat compared with the year ago
figures. Earlier this week, the bankrupt specialty retailer said it
plans to sell its Eddie Bauer and Newport News units after failing to
reach a deal with its creditor banks. In a press release on Thursday,
Spiegel said sales for the 13 weeks ended April 3 declined 22 percent to
$322.4 million from $413.6 million last year. Eddie Bauer same-store
sales for the 13 weeks fell 2 percent from a year ago.
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WestPoint Stevens Gets Final Court OK To Sell Looms
A bankruptcy court signed off on WestPoint Stevens Inc.'s plan to sell
excess looms from one of its textile plants to a used equipment dealer.
Judge Robert Drain of the U.S. Bankruptcy Court in Manhattan signed the
order Wednesday, giving final approval to sell the 395 looms, formerly
used to make sheets at a plant in Valley, Ala., to Atkins Machinery Inc.
As reported, Atkins Machinery of Spartanburg, S.C., offered $4.07
million for the looms. The bid was subject to higher competing
offers.
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size='3'>Governance Issue Heats Up for
Nonprofits
size='3'>
Corporate
governance issues have moved into the nonprofit arena, the New York
Law Journal reported. Responding to
criticism that some of its activities departed from its true mission,
the Nature Conservancy is conducting an overhaul of its top governance.
With no shareholders or analysts to monitor their boards, Weil, Gotshal
& Manges senior partner Ira Millstein said, nonprofits are apt to be
more susceptible to wrongdoing or negligence. Read the article at
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size='3'>Fastow Fallout: Angry Husband, Low-income
Jury
While prosecutors maintain the failed plea
agreement with Lea Fastow doesn't affect the government's deal with her
husband, Andrew Fastow, the former Enron CFO, three criminal defense
lawyers in Texas say taking her to trial will inevitably change
Andrew Fastow's relationship with prosecutors, the Texas
Lawyer reported. Read the article at
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Moody's Downgrades US
Airways Aircraft-backed Debt
Citing weak financial
performance, Moody's Investors Service downgraded or withdrew about $3.2
billion in US Airways aircraft-backed debt on Friday in another sign
that as far as markets are concerned the jury is still out on the
airline's restructuring effort, Reuters reported. The action by Moody's
reflects ongoing concern about cash-flow at the carrier, which lost $98
million in the fourth quarter and is retooling its business plan a year
after exiting bankruptcy to meet stiffer competition from low-cost
carriers. Moody's said in a statement that the downgrades highlighted a
combination of continued weak financial performance, the need to further
cut costs and low aircraft values industrywide, which potentially
heighten risk for US Airways' debt holders.
Reliant Unit Execs Plead
Innocent
Four officers of a Reliant
Resources subsidiary pled not guilty on Friday in a San Francisco
federal courtroom to charges that they deliberately created an energy
shortage in California to drive up electricity prices, Reuters reported.
Reliant Energy Services, a unit of the Houston-based company, and the
four executives were charged with conspiracy to commit wire fraud and
commodities manipulation, wire fraud and manipulation and attempted
manipulation of the price of a commodity in interstate
commerce.
The criminal proceedings follow
an energy crisis in California that prompted local authorities to
institute rolling blackouts in 2000 and 2001 to conserve energy. The
crisis is blamed for the subsequent bankruptcy of Pacific Gas &
Electric Co., a unit of PG&E Corp., the newswire
reported.