March 22, 2004
Conferees to Meet on Pension Legislation
Conferees negotiating differences between the House and Senate versions
of pension legislation plan to meet on Tuesday, CongressDaily
reported. House Republicans have resisted the aid to multi-employer
plans, which cover employees under collective bargaining agreements
including more than one company. Senate negotiators, however, have
insisted the provisions remain in the final bill. Conferees hope to
complete their work before April 15, when the first pension plan
payments of the year are due.
WorldCom Must Withhold Pay to KPMG
A U.S. Bankruptcy Judge directed WorldCom Inc. to stop paying its
external auditor, KPMG LLP, temporarily, following a request by 14 state
governments to disqualify the accounting firm from performing any
further work for the telecommunications company, the Wall Street
Journal reported. The directive by U.S. Bankruptcy Judge Arthur
Gonzalez came on Friday during a teleconference with parties to the
company's chapter 11 bankruptcy proceedings. The judge hasn't yet ruled
on the merits of the states' request. A court hearing on the matter is
set for April 13, the newspaper reported.
Global Crossing SEC Deal Is Expected
A $325 million securities class-action settlement for former
shareholders and employees of Global Crossing Ltd. helps pave the way
for a settlement deal between the telecom company and the Securities and
Exchange Commission (SEC) over alleged accounting fraud, the Wall
Street Journal reported. The SEC and Justice Department began
investigating alleged accounting misdeeds at the fiber-optic company
more than two years ago, after accusations from a former finance
executive became public. People familiar with the matter say that
criminal charges are not expected, but that some kind of deal will be
reached with securities regulators, the Journal reported.
Under the settlement announced Friday, shareholders and employees who
lost billions in the telecommunications company will receive $325
million from Global Crossing's former officers, directors and outside
lawyers. Company founder and former Chairman Gary Winnick will pay a
total of $55 million, while insurance companies for former officers and
directors agreed to pay roughly $280 million, the newspaper
reported.
U.S. Seeks Airlines' Loan-guarantee Data
Several of the nation's largest airlines have been ordered by the
Treasury Department to turn over e-mails and other correspondence with
the former executive director of the federal board overseeing airline
loan guarantees, the Washington Post reported. The investigation
dealt with 'personnel and management' issues and did not affect the
current board's administration, a source on the Air Transportation
Stabilization Board (ATSB) said. Another source familiar with the
investigation said the department was looking into whether the ATSB's
former executive director, Daniel G. Montgomery, obtained travel,
entertainment and other favors from the airlines. Read the full article
at www.washingtonpost.com.
Aurora Foods Exits Chapter 11, Renamed Pinnacle
Aurora Foods Inc. on Friday said it emerged from chapter 11 bankruptcy
protection and has been renamed Pinnacle Foods Group Inc., Reuters
reported. As part of its reorganization, the company merged with
Pinnacle Foods Holding Corp., a company owned by J.P. Morgan Chase &
Co.'s J.P. Morgan Partners buyout arm. In a statement, Dale Morrison,
Aurora's interim CEO, said the restructuring 'maximized value for our
stakeholders and produced a strong branded food company that is
re-energized and well positioned for future growth,' the newswire
reported.
Under the reorganization plan, J.P. Morgan Partners and buyout firm J.W.
Childs Equity Partners LP agreed to invest $83.7 million for a
controlling stake in Aurora. J.P. Morgan Partners had bought Pinnacle
for $485 million in August from private equity firm Hicks, Muse, Tate
& Furst, Reuters reported.
Last Group of Women Drop Appeal of Dow Corning Breast Implant
Settlement Plan
A major obstacle to Dow Corning Corp.'s plan to settle with women who
claim silicone breast implants made them sick was removed on Friday when
the last group of women dropped their appeal, the Associated Press
reported. A lawyer involved in the settlement said the move paves the
way for U.S. District Judge Denise Page Hood to set a date for payments
to start.
Dow Corning, a joint venture of Midland-based Dow Chemical and Corning,
N.Y.-based Corning Inc., was forced into bankruptcy in 1995 after
thousands of women filed claims that implants made by the company
damaged their health. As part of the company's reorganization plan, it
set aside a fund currently worth $2.35 billion to pay implant claimants.
Most plaintiffs agreed to the settlement, which stipulated that Dow
Chemical cannot be sued, but a group of 48 Nevada women appealed. Their
lawyers cited a Nevada court ruling upholding damages against Dow
Chemical in a breast implant case as a justification to reject the
settlement plan. Under the plan, individuals can receive from several
thousand dollars up to $200,000 if they agree to the settlement. About
$400 million from the fund is set aside for litigation, Knowles said,
according to the newswire.
Bank of America Rejects Accusations In Parmalat Case
Bank of America has denied responsibility in the near-collapse of
Parmalat, saying an indictment request made by prosecutors investigating
the scandal and targeting Bank of America is not supported by facts, the
Associated Press reported. Prosecutors in Milan allege that the bank
must have been aware of the real state of Parmalat's finances well
before the scandal late last year. On Thursday, they asked a judge to
put Bank of America itself and three former employees on trial. 'We do
not believe that the proposed charges against our company are supported
by the facts, and we will defend ourselves vigorously,' said a statement
released on Thursday by the bank.
Bank of America said it was informed about the request deposited at the
Milan courthouse on Thursday. It said the prosecution request cited
'administrative liability arising out of the actions of former employees
who allegedly committed illegal acts,' the newswire reported.
Hawaiian Shareholders Seek Representation
A group of minority shareholders of Hawaiian Holdings Inc., the parent
company of Hawaiian Airlines, wants better representation in the
carrier's bankruptcy case so that its members don't end up losing their
investment, the Honolulu Advertiser reported. The group filed a
motion on Tuesday with the bankruptcy court to form a committee to
represent their interest in the year-old bankruptcy case. In their
filing, the minority shareholders claim they should get something for
their stock because the airline has few debts and is earning a profit.
Hawaiian filed for bankruptcy in March 2003 after John Adams, the CEO at
the time, was unable to reach an agreement with Boeing to reduce leases
on Hawaiian's fleet. Three reorganization plans have been filed to take
over Hawaiian Airlines, the newspaper reported.
Air Canada Increases All Fare Prices To Cover Increased Jet Fuel
Costs
Air Canada said on Friday that escalating jet fuel prices are compelling
the airline to increase fare prices, the Associated Press reported. The
increase applies to all fare types for travel on Air Canada, Air Canada
Jazz, ZIP and code-share flights, the Montreal-based company said in a
release.
The increases takes effect on tickets issued beginning March 24 for all
domestic Canada travel and March 20 for U.S. trans-border travel. The
cost of fuel is the second-largest operating expense for airlines, after
labor, and Air Canada says fuel represented about 13 percent of its
operating costs in 2002. Air Canada has been operating under
bankruptcy-court protection since last April 1.
Leeds Saved From Bankruptcy After Being Bought By
Consortium
Debt-ridden Leeds United was saved from bankruptcy on Friday thanks to a
30-million-pound (US$54.90 million) takeover by a local consortium, the
Associated Press reported. Local businessman Gerald Krasner heads the
six-man group that bought the Premier League club following seven weeks
of negotiations. He now becomes chairman, with former star player Peter
Lorimer also on the board.
'The consortium has done its job, Leeds United is saved for the
supporters,' Krasner said. The takeover means Leeds has avoided becoming
the first Premier League club to go into administration. While the
financial future of Leeds is now secure, the club's place in the Premier
League is still in doubt. It's last in the 20-team league and faces
likely demotion to division one.
UNITED AIRLINES
United Airlines, Flight Attendants Spar
United Airlines is facing worsened relations with its flight attendants
after a bankruptcy court-appointed examiner found in its favor in a
dispute over its decision to cut retiree health care benefits, the
Associated Press reported. Independent examiner Ross Silverman said in
the 40-page report that despite conflicting accounts about the airline's
comments on the matter during union negotiations a year ago, United did
not mislead employees about its plans in order to get flight attendants
to retire early last summer.
Silverman said United made the decision to reduce benefits no earlier
than Dec. 15, after it discovered a $456 million budget gap due to
updated projections of 2004 operating expenses. He said there also was
no evidence that the airline had a financial incentive to induce flight
attendants to retire. The report was filed with the court on Thursday
and scheduled to be formally presented to Bankruptcy Judge Eugene
Wedoff at United's monthly bankruptcy court hearing on Friday. The
airline praised the ruling, but union officials said it may only make
the relationship between the two sides more contentious, the newswire
reported.
United Focused on Government Approval for Loan
A United Airlines executive on Friday said the company is focused on
winning government approval for a big loan as the way to get out of
bankruptcy, Reuters reported. On two recent occasions, United Airlines
executives were asked if they have an alternate plan to exit chapter 11
protection if they do not get U.S. government backing for $1.6 billion
of a $2.0 billion loan arranged by J.P. Morgan Chase and Citigroup.
Twice, different executives replied they are totally focused on the
government loan, Reuters reported.
United's amended loan guarantee application and revised business plan
have been before the Air Transportation Stabilization Board for a few
months, but as some issues such as pension funding relief and aircraft
litigation remain unresolved, no decision has been made. As a result,
United has delayed its timing for bankruptcy exit to some time this
summer, rather than by the end of the first half of the year, the
newswire reported.
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