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October 3, 2003
Jobless, Factory Data Show Wobbly Economy
The number of Americans claiming jobless benefits rose last week,
while manufacturers' new orders fell sharply in August, the government
said on Thursday in reports showing a slow U.S. economic recovery,
Reuters reported. The Labor Department said filings for state jobless
benefits rose by 13,000 to 399,000 in the week ending Sept. 27. The
level was slightly above the expectations of Wall Street analysts. The
increase was partially attributed to the effects of Hurricane Isabel,
which caused many claims processing offices to close the previous week,
preventing people from filing.
In a separate report, the Commerce Department said factory orders
dropped a larger-than-expected 0.8 percent in August, led by a 2.3
percent drop in transportation-related orders. Orders for durable goods
were revised to a 1.1 percent decline from the 0.9 percent drop reported
last week. Commenting on the claims report, Scott Anderson, senior
economist with Wells Fargo in Minneapolis, said jobs are still being cut
'in a lot of sectors.' 'The longer we have job cuts, the longer we'll be
in a hold pattern,' he said, reported the newswire.
Senate to Push for Passage of Bill Designed to Promote Jobs
Senate GOP leaders yesterday officially unveiled a collection of
bills they say are designed to promote jobs, vowing to pass them before
the end of the session next year, CongressDaily reported. 'We are
taking new actions,' said Senate Majority Leader Bill Frist (R-Tenn.),
as he pointed to a package that includes the energy bill, a highway
bill, class action reform and asbestos reform, among other items, that
have been on his agenda for months.
But Democrats continued to criticize the package as old news, saying
they are leftover agenda items and that there are better ways to create
jobs. 'If this is such a great agenda for the Republican Party, how come
they haven't gotten it done?' asked one Senate Democratic aide. House
Minority Leader Nancy Pelosi (D-Calif.) dismissed Senate Republicans'
rollout of their jobs and growth package as 'warmed over stew.' She
added: 'Once again the American people are looking for work and
congressional Republicans are presenting a political agenda. They're
trying to label their political agenda with the title 'jobs and
growth,'' reported the newswire.
Students Get Carried Away in Debt
With advertisements and applications flooding mailboxes and covering
campuses, more and more college students across the nation are turning
to credit cards as a means to finance the costs of higher education, the
Daily Barometer reported. According to student loan agency Nellie Mae,
in the year 2000, 78 percent of college students had credit cards. A
study conducted by State Public Interest Research Groups that year found
that undergraduates with credit cards carried an average balance of
$3,071. In 1999, 100,000 people under the age of 25 filed for
bankruptcy.
The State Public Interest Research Groups accuse credit card companies
of aggressive marketing. Much of the advertising is directed at
students, because studies have shown that students remain loyal to their
first credit cards throughout their adult lives. Students are also
valuable to credit card companies because their low income limits their
ability to pay off their balances, leading to higher profits from
interest. To read the full article, point your browser to
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Insurers Offer $45 Billion for U.S. Asbestos Fund
U.S. insurers have united around a common position on asbestos reform,
saying their contribution to a proposed fund for asbestos victims cannot
be greater than $45 billion, an industry spokeswoman said on Thursday,
Reuters reported. The insurers' offer is less than the minimum of $52
billion that they would be asked to pay to an asbestos fund if a bill by
Sen. Orrin Hatch (R-Utah) becomes law. But the Hatch bill, which was
approved by the Judiciary Committee in July, is stalled in the Senate,
with Republican support eroding partly because of the unhappiness of
insurers who think it asks them to pay too much.
The insurance contribution to the fund would be accomplished with an
upfront payment of $28 billion, which would grow to $45 billion over the
life of the fund, Julie Rochman, spokeswoman for the American Insurance
Association, said. The asbestos fund in Hatch's bill is projected to pay
out claims for a quarter-century. 'The industry is united. We have
communicated our position to the rest of the business community and
Capitol Hill, and organized labor,' Rochman told Reuters.
U.S. Airport Sector Still In Trouble
The credit environment for the U.S. airport sector remains uncertain,
despite stabilizing signs such as increasing passenger traffic, Moody's
Investors Service analysts said today, Reuters reported. 'Recovery from
the shocks of the past two years has been slow and fitful,' said Senior
Vice President Maria Matesanz. 'Although there has been progress with
the number of passengers traveling, factors such as continued airline
financial distress, the weak economy and its depressing effect on
business travel, and impediments like the Iraq war and SARS continue to
impact airline credit,' said Vice President Kevin Carney, the rating
agency's lead airports analyst. The most significant events shaping
airport credit quality include airline liquidity and bankruptcies, the
continuation of major capital improvement programs, evolving airline
operating strategies, and a retrenchment to fortress hubs, many of which
are experiencing difficulties.
Hawaiian Holdings Discloses Formal SEC Probe
Hawaiian Holdings Inc., the parent of Hawaiian Airlines, on Thursday
said the Securities and Exchange Commission (SEC) has opened a formal
investigation into the company and several officers involving a May 2002
tender offer, Reuters reported. The company disclosed in a regulatory
filing with the SEC that it received a notice from the securities
regulator on Sept. 22, adding it intends to cooperate fully with the
investigation. On May 31, 2002, the company commenced a tender offer to
buy 5.88 million shares of its own stock at $4.25 per share and paid $25
million on July 8, 2002, for the shares. Seattle-based Boeing Capital
Corp. later took issue with the move, saying in a statement that the
tender offer was a 'reward' to shareholders, and management and their
affiliates had received more than 69 percent of the payout, while the
airline's financial condition was declining, reported the newswire.
Onex to Take Loews Cineplex Public as Trust
Onex Corp. plans to take its Loews Cineplex Entertainment Corp. movie
theater unit public as an income trust, Reuters reported. Onex, a
Toronto-based conglomerate whose holdings range from contract
electronics manufacturer Celestica Inc. to auto-parts makers, declined
to comment on the report. Onex was forced to postpone a planned initial
public offering of Loews Cineplex last year because of poor market
conditions. At the time, Loews filed with the U.S. Securities and
Exchange Commission to sell as much as $300 million of stock.
Onex had teamed up with Oaktree Capital Management, a Los Angeles-based
investment firm that specializes in distressed companies and securities,
to lead Loews out of bankruptcy last year. Onex Chief Executive Gerald
Schwartz told reporters after the company's annual meeting in May 2002
that his company first became interested in taking Loews Cineplex public
following the successful IPO by Regal Entertainment Group, reported the
newswire.
Ivaco Names Chief Executive and Chairman
Ivaco Inc., the steelmaker that has been in bankruptcy since
mid-September, said on Wednesday it named its chief restructuring
officer Gordon Silverman as president and chief executive, Reuters
reported. Silverman, who will continue to act as Ivaco's restructuring
officer until a replacement is found, succeeds Paul Ivanier as chief
executive. Silverman has worked for the company for 31 years and most
recently as the vice-president and general manager of Ivaco Rolling
Mills Limited Partnership, a Canadian subsidiary. Ivaco has appointed
Ivanier as its chairman of the board of directors, a newly created
position, reported the newswire.
The Montreal-based company was forced into bankruptcy protection on
Sept. 16 because of weak demand for steel products, stiff competition
from high levels of imports as well as higher energy and transportation
costs.
Japanese Agencies Want Loral To Decide On Satellite Contract
Two Japanese agencies that have a contract to buy a satellite system
from a unit of Loral Space & Communications Ltd. are asking a
bankruptcy court to force Loral to decide what to do with the contract.
According to court documents filed on Thursday, the two Japanese
agencies -- the Civil Aviation Bureau of Japan's Ministry of Land,
Infrastructure and Transport and the Japan Meteorological Agency -- have
a contract that requires Loral subsidiary Space Systems/Loral Inc. to
manufacture and deliver a replacement satellite to the agencies. The
satellite would be used mainly for weather observation and prediction
and also for air traffic control. The contract calls for a purchase
price of $136 million.
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NorthWestern Seeks Court OK Of Restructuring Chief's Contract
NorthWestern Corp. is seeking bankruptcy court approval of an
18-month contract and pay package for its William Austin, chief
restructuring officer. The energy company plans to pay Austin a salary
of $400,000 a year, according to a motion filed with the U.S. Bankruptcy
Court in Wilmington, Del. NorthWestern also would pay Austin additional
installments through March 2005 totaling another $400,000, and he could
get incentive bonuses totaling up to $800,000 based on the progress of
the reorganization, said the motion, filed Sept. 29.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
ENRON
Enron Unveils More Layoffs As It Wraps Up Contracts
More Enron Corp. employees are working themselves out of a job, as the
company continues to wrap up contracts and work toward emergence from
chapter 11, the Associated Press reported. Enron has notified employees
that about 200 of the 1,200 workers at the bankrupt parent and insolvent
subsidiaries will be laid off in December and February. 'As the
bankruptcy estate winds down, we require fewer and fewer people, and
this is an indication of that,' Enron spokesman Mark Palmer said on
Thursday.
Last month Enron updated its proposed reorganization plan, which is
slated to be presented to U.S. Bankruptcy Judge Arthur Gonzalez for
initial approval at a hearing on Oct. 29 in New York. Under the plan,
most of Enron's creditors would receive about one-fifth of the more than
$64 billion they are owed -- two-thirds in cash and the rest in stock in
the new companies, reported the newswire.
Judge Asked to Move Trial in Enron Case
The wife of a former Enron executive has asked that her criminal trial
be held outside Houston because a jury could be tainted by the extensive
news coverage of Enron and the presence of investors and former
employees who lost money, the Associated Press reported. Lea W. Fastow,
the wife of Andrew S. Fastow and a former Enron employee herself, has
pleaded not guilty to a six-count indictment charging her with
conspiracy to commit wire fraud, money laundering conspiracy and filing
false tax returns. Fastow, a former finance chief at Enron, has pleaded
not guilty to nearly 100 counts of fraud and other charges. He is
scheduled to be tried in April and is also expected to ask that his case
be moved.
Adelphia Executives Make Court Appearance
Adelphia Communications Corp. founder John Rigas and his two sons
appeared briefly in federal court on Wednesday, pleading innocent again
to charges that they looted the cable company, the Associated Press
reported. Adelphia filed for chapter 11 bankruptcy protection in June
2002 amid a widening federal criminal investigation into charges of
fraud and self-dealing by senior managers. The appearance was a
procedural necessity after prosecutors made some changes in the
indictment against Rigas and his sons. The indictment has one count of
conspiracy and 22 counts of securities fraud, wire fraud and bank fraud.
Also pleading innocent Wednesday in U.S. District Court in Manhattan was
Michael Mulcahey, former director of internal reporting for
Adelphia.
GGST Wins Pillowtex Auction with $128 Million Bid
Bankrupt towel and bedding manufacturer Pillowtex Corp. said on Thursday
GGST LLC had won an auction for its assets with a $128 million bid,
Reuters reported. Pillowtex, which filed for chapter 11 protection in
July, said the next-highest offer was a $127.5 million bid from a joint
venture of PT Partners LLC and The Petters Company Inc. GGST's offer to
buy substantially all of Pillowtex's remaining assets exceeded its
earlier offer of $56 million that was submitted in July, the company
said. Pillowtex said the sale was contingent upon approval from the
bankruptcy court in Delaware at a sale hearing scheduled for Oct. 7.
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