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Sturdy U.S. Consumers Support Asset Bonds
More Americans are struggling to find jobs and repay debt, but that is
not deterring investment in asset-backed securities supported by U.S.
credit cards bills and car and home equity loans, Reuters reported.
According to the newswire, analysts and investors are unfazed by rising
loan defaults and delinquencies because the absolute levels are low by
historical standards. 'Asset-backed securities have held up extremely
well in the consumer sector,' said Zeid Ayer, senior ABS analyst at
Principal Global Investors in Des Moines, Iowa, which manages $95
billion in assets. Asset-backed securities earned a return of 3.13
percent through July 8, lagging the 6.46 percent for corporate bonds,
but beating other major bond types like Treasuries and mortgage-backed
securities, according to Lehman Brothers, reported the newswire. Banks
and consumer finance companies issued $275 billion in new asset-backed
securities in the first six months of 2003, up 18 percent from the same
period last year, according to financial data firm Thomson Financial,
reported Reuters.
Retail Sales up Solid 0.5 Percent in June
America's shoppers emerged from a lull in June, driving up sales at the
nation's retailers by 0.5 percent, the best showing in three months, the
Associated Press reported. The increase, reported by the Commerce
Department on Tuesday, came after retail sales were flat in May,
according to revised figures. May's performance was slightly weaker than
the tiny 0.1 percent gain the government estimated a month ago. The 0.5
percent increase in retail sales in June was the biggest advance since
March and marked a slightly stronger performance than the 0.4 percent
gain that economists were forecasting, reported the newswire.
Mirant Can't Refinance Debt, Files for Bankruptcy
Mirant Corp. filed one of the largest bankruptcies in U.S. history after
slumping power prices and higher costs left it unable to refinance $4.9
billion in bank and bond debt, Bloomberg News reported. Mirant was hurt
by the evaporation of energy trading, accounting changes and government
investigations of its accounting in the aftermath of Enron Corp.'s
collapse. Higher borrowing costs and increased prices for natural gas,
which fuels some Mirant power plants, contributed to its losses, which
totaled about $2.4 billion last year.
The filing is the largest since WorldCom Inc. declared bankruptcy a
year ago and the 11th biggest in U.S. history by assets, court filings
show. Atlanta-based Mirant is the third major energy producer to file
for bankruptcy in the past two months, joining Xcel Energy Inc.'s NRG
Energy unit and PG&E Corp.'s National Energy Group unit. 'There was
an unprecedented amount of expansion in the energy sector in the 1990s
with a vision of future deregulation,'' said Bill Brandt,
president of Development Specialists Inc., a turnaround-consulting firm.
'It didn't turn out the way people thought it would,'' reported the
newswire.
Mirant listed $20.6 billion of assets and $11.4 billions in debt in
chapter 11 papers filed in the U.S. Bankruptcy Court in Fort Worth,
Texas. The company said it has arranged $500 million in loans to help
finance operations as it reorganizes. The bankruptcy will block a $1.13
billion loan payment Mirant had been obligated to pay today. Mirant had
tried to refinance $950 million of bond debt coming due next year.
United Airlines Mechanics, Cleaners Vote to Switch to New
Union
UAL Corp.'s United Airlines mechanics and cleaning-crew workers voted to
join the Aircraft Mechanics Fraternal Association (AMFA), rejecting
their current union, the
International Association of Machinists (IAM), Reuters reported. The
workers voted 64 percent in favor of joining the AMFA, casting 5,234
votes for that union and 2,994 for the Machinists, said O.V.
Delle-Femine, who leads AMFA, reported the newswire.
Reuters reported that AMFA has courted mechanics at United for years,
including filing an organizing petition in 2000. It will more than
double its membership by adding the more than 13,000 mechanics and other
workers from United. The IAM still represents another 26,000 United
employees that were not part of the election, including ramp workers,
baggage handlers, ticket agents and customer service representatives.
The IAM represented more than 100,000 workers in the aerospace area
before the election, reported Reuters.
GLOBAL CROSSING
Creditors Draw Up a Plan For SK Global Receivership
The 12-member steering committee for domestic creditors of SK Global Co.
unanimously adopted a court-receivership plan to reorganize the trading
unit of South Korea's third-largest conglomerate, SK Group, the Wall
Street Journal reported. A final decision will be made at a general
meeting of creditors within Korea next week in Seoul. Court receivership
would take the restructuring of the distressed company out of the hands
of creditors and put it under the supervision of the bankruptcy division
of the Suwon district court outside Seoul. 'We've come to this decision
because dialogue with foreign creditors was not successful,' said Yoon
Kyo Joong, senior deputy president of Hana Bank, the lead South Korean
creditor. 'These kinds of decisions are difficult and complicated, but
in this situation, it was the only route left,' reported the
Journal.
ST Telemedia Taps Aldridge for Global Crossing
Board
Singapore Technologies Telemedia Pte. plans to name former U.S. Defense
Undersecretary Pete Aldridge to the board of Global Crossing Ltd., the
bankrupt network operator it wants to buy, Bloomberg News reported.
Aldridge, who retired from government work in May, would be appointed to
a Global Crossing board panel responsible for ensuring the integrity of
the company's fiber-optic network, ST
Telemedia spokeswoman Melinda Tan said. The company plans to appoint
other directors with 'similar backgrounds,'' said William Maroni, a
U.S.-based spokesman for ST Telemedia, reported the newswire.
Air Canada Reorganizes Management, Cuts 300 More Jobs
Air Canada is reorganizing its executive management team and cutting an
additional 300 jobs as part of an effort to become profitable, Bloomberg
News reported. The latest job cuts will bring to 1,100 the total number
of management and non-union positions being eliminated by the end of the
year, the Montreal-based company said in a statement on Canada Newswire.
Air Canada obtained court protection from creditors in April after
failing to gain enough cost cuts from unions to cope with rising fuel
expenses and declining demand for travel.
Loral Space & Communications Files for Bankruptcy
Protection
Loral Space & Communications Ltd. filed for chapter 11 bankruptcy
protection, Bloomberg News reported. The filing was made today in the
U.S. Bankruptcy Court for the Southern District of New York, the company
said in a statement. Loral said it plans to sell six of its North
American satellites to Intelsat Ltd.
LaSalle Evicts Le Meridien as Operator of 407-room Dallas
Hotel
LaSalle Hotel Properties evicted Le Meridien Hotels as operator of a
Dallas hotel because it defaulted on the lease agreement, Bloomberg News
reported. The former Le Meridien Dallas has been renamed the Westin City
Center Dallas and will be managed by Starwood Hotels & Resorts
Worldwide Inc., LaSalle said in a statement. London-based Le Meridien,
operator of more than 130 hotels including London's Grosvenor House and
the Hotel Eden in Rome, is in talks to avoid bankruptcy after demand for
its rooms slumped. Stumbling economies, the U.S.-led war in Iraq and the
outbreak of a disease in the Far East prompted travelers to stay home,
reported the newswire.
Farmland Industries 3rd-Qtr Net Loss Narrowed to $47.2
Million
Farmland Industries Inc., which is seeking to reorganize under
bankruptcy protection, said its third-quarter loss narrowed to $47.2
million as beef and pork sales improved and prices rose for fertilizers,
Bloomberg News reported. The loss for the recent fiscal quarter compared
with a net loss of $189.5 million during the third quarter last year,
the Kansas City, Mo.-based company said in a statement distributed by PR
Newswire.
Andersen Worldwide to Pay $40 Million Over Enron, Court Papers
Say
The network of foreign accounting firms once linked to Arthur Andersen
LLP will pay $40 million to resolve lawsuits stemming from Enron Corp.'s
collapse two years ago, according to court papers, Bloomberg News
reported. Andersen Worldwide Societe Cooperative is seeking to wipe out
its liability in suits filed by Enron investors and workers over the
accounting firm's role in helping Enron hide more than $1 billion in
losses, court papers filed in Houston last week show. The settlement
doesn't cover Arthur Andersen LLP. Andersen Worldwide also has agreed to
pay $20 million to Enron's bankruptcy creditors, reported the
newswire.
Bryco Arms Files for Bankruptcy
Costa Mesa, Calif.-based Bryco Arms has filed for bankruptcy and may
shut down its operations, the Daily Pilot reported July 8. The
gunmaker was recently found liable in an unintentional shooting,
according to the newspaper. The company, which makes low-price handguns,
sought bankruptcy protection more than a month ago. 'Theoretically, they
could put together a plan and reorganize,' said Ned Nashban, Bryco's
bankruptcy lawyer. 'It's too early to tell.'
The Pilot reported that a few months ago, an Oakland, Calif.,
jury found Bryco Arms 10 percent liable and three gun distributors 35
percent liable in the 1994 unintentional shooting of Brandon Maxfield. A
friend of Maxfield's shot him in the jaw as he was trying to unload a
38-caliber Bryco handgun.
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