size='5'>March 30, 2004
Confidence Report May Pull Down Stocks
Stocks are set to open lower today ahead of a Conference Board report
that may show that U.S. consumer confidence fell to its lowest level
since October amid concerns about the job market, the Associated Press
reported. The Conference Board is set to release its March consumer
confidence numbers this morning. Economists are looking for a reading of
86 for the month, slightly less than the 87.3 reading set in February,
the newswire reported.
Class Action Expected On Senate Floor In April
Senate Majority Leader Bill Frist (R-Tenn.) expects to move compromise
class action legislation to the floor after the April recess, a Frist
spokeswoman said yesterday, CongressDaily reported.The bill has
been awaiting a Senate floor vote since last October, when it fell one
vote short of the 60 needed to break a Democratic filibuster. Supporters
say they now expect a new version of the legislation to pass, based on a
compromise reached in November with three Senate Democrats who had
previously voted to block action on the measure. The House approved its
version of the bill last June.
Business groups have lauded the compromise and have made class action
overhaul a top legislative priority, arguing the current class action
system is unfair to defendant companies and consumers and primarily
benefits trial lawyers. But more than 70 consumer, environmental and
civil rights groups oppose the class action measure, arguing the
compromise would protect corporations engaging in conduct harmful to
employees, customers or the environment, the newswire reported.
Bond Market Association Urges Federal Anti-predatory Law
The Bond Market Association issued a
href='http://www.bondmarkets.com/legislative/Subprime_Lending_Whitepaper_0329…'>white
paper yesterday, urging lawmakers to craft federal anti-predatory
lending legislation to 'clarify the patchwork' of more than 40 state and
local laws, CongressDaily reported. The association is prepared
to work with Congress on legislation establishing 'clear and objective
standards' to address abuses in the sub-prime lending market, said
Michael Williams, the group's vice president, the newswire reported.
'The new law should assign liability to the secondary market only for
those lending violations that can be detected in a review of regular
loan documents,' Williams said.
The white paper includes examples of language that the group said
would combat predatory lending without damaging the sub-prime market,
which is the subject of a hearing today before the House Financial
Services Committee. The group said laws in North Carolina and Georgia,
for example, provide clear explanations of prohibited activities with
respect to interest rates in the event of a borrower default, according
to CongressDaily.
Weirton Steel's Union Approves ISG Labor Contract
The union that represents steelworkers at bankrupt Weirton Steel
Corp. said on Monday that its members approved a labor contract with
International Steel Group (ISG), an important step in solidifying ISG's
proposed acquisition of Weirton, Reuters reported. The Independent
Steelworkers Union said 90 percent of the more than 2,300 workers who
voted on the pact backed the ISG labor deal. In February, International
Steel agreed to buy most of Weirton's assets for $158 million in cash
plus assumed debt. The union has said the labor agreement should help
ISG through the bankruptcy auction process. The court-set deadline for
rivals to submit bids for Weirton Steel is April 6. In March, a group of
Weirton's senior debtholders said they expect to submit a competing bid
for the company, the newswire reported.
Air Canada Protection Extended to April 15
The Ontario Superior Court on Monday extended Air Canada's bankruptcy
protection until April 15, when a decision will be made by the airline's
key equity investor on whether to proceed or abandon its proposed
investment, Reuters reported. Air Canada asked the court for an
extension to sort out pension issues with its unions and Hong Kong
businessman Victor Li, who has threatened to walk away from investing
C$650 million ($489 million) in the carrier if the issues are not
resolved, the newswire reported. If the deal goes through, Li, through
his Trinity Time Investments unit, will take up to a 31 percent stake in
the restructured version of the airline, the world's 11th largest.
Over the weekend, Li and Air Canada CEO Robert Milton met to try to
solve the impasse over proposed changes to the airline's pension plan,
and are continuing to talk, Reuters reported. Milton is also expected to
present a revised business plan to Li and to Air Canada's board of
directors today.
Fitch Reports On U.S. Manufactured Housing Sector
A few positive developments have emerged that may help the U.S.
manufactured housing sector begin to improve, according to a new report
by Fitch Ratings, Reuters reported. The purchases of Clayton Homes and
Conseco Finance Corp. (CFC) by Berkshire Hathaway and CFN Investment
Holdings LLC, respectively, coupled with Fannie Mae's manufactured
housing loan program indicate renewed market interest and are viewed by
Fitch as encouraging signs for a sector that has been fraught with
bankruptcy. The long-term benefits, however, remain to be seen and Fitch
expects that manufactured housing will continue to perform poorly in
2004.
'Despite CFC's emergence from chapter 11, it will take time to determine
the level of stabilization of the servicing platform, while the benefits
of Berkshire Hathaway's purchase of Clayton and pending purchase of
Oakwood Homes have yet to be recognized beyond the initial infusion of
capital,' said Jenine Fitter, senior director, Fitch Ratings, the
newswire reported. 'Further, re-establishment of a full servicing
operation for these new entities needs to be consistent for a longer
period before its impact on performance can be judged appropriately,'
she added.
Wickes Inc. Receives Final Bankruptcy Court Approval of
Debtor-in-possession Financing
Wickes Inc. reported in a press release yesterday that it has received
final bankruptcy court approval of a $115 million debtor-in-possession
(DIP) credit facility that is being provided by a group of banks led by
Merrill Lynch capital. On January 20, 2004, Wickes filed a voluntary
petition for reorganization under chapter 11 of the U.S. Bankruptcy
Code. On January 21, 2004, the court granted interim approval of a $100
million DIP credit facility. The final $115 million DIP facility that
was approved by the court consists of a $77,625,000 revolving loan
commitment and two term loans of $37,375,000. This facility will provide
the company with liquidity to maintain its operations, pay employees and
purchase goods and services.
Ex-Rigas Accountant Tells of Intimidation
A former personal accountant for Adelphia founder John Rigas told a jury
on Monday that the then-CEO intimidated him into arranging fraudulent
cash transfers from the company to cover his own personal expenses,
Reuters reported. Christopher Thurner said he told Rigas he was
uncomfortable classifying $250,000 of Rigas' personal expenses --
including exercise equipment, a personal trainer and masseuse -- as
business expenses for Adelphia, the newswire reported. Thurner's
testimony came in the fifth week of the trial against Adelphia
Communications Corp. founder John Rigas, his two sons, Timothy and
Michael, and former company executive Michael Mulcahey. The four men are
charged with 24 counts of conspiracy and wire, bank and securities fraud
in connection with the collapse of Adelphia into bankruptcy in 2002. All
have pleaded not guilty, the newswire reported.
Oakwood Homes Pushing For Chapter 11 Plan Confirmation
Oakwood Homes Corp. planned to put the final version of its chapter
11 exit
strategy before a bankruptcy court yesterday, hoping for a confirmation
order
that would clear the way for a sale to Berkshire Hathaway Inc., company
lawyers
have said. Lawyers for the maker of manufactured housing said last week
they need to
get a judge's signature Monday to meet deadlines in the planned
transaction,
which will transfer Oakwood Homes' operating assets to Warren
Buffett's
investing firm for about $373 million. Besides being a maker of
manufactured housing, Oakwood Homes was involved in mortgage financing
transactions, complicating the task of putting its affairs in order so a
chapter 11 exit plan could be confirmed.
Provided by Daily Bankruptcy Review
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HealthSouth Seeks to Prevent Acceleration of Bond Payments
HealthSouth Corp. goes to court in Alabama today to stop an attempt by
bondholders to seek the right to speed up the payment of $2.6 billion in
debt, a move that could return the company to the brink of bankruptcy,
the Wall Street Journal reported. HealthSouth has offered to pay
its bondholders $26 million in exchange for the bondholders waiving
defaults the company has triggered. Some of the company's bondholders
want 10 times that amount and perhaps more, according to the company's
court filings.
HealthSouth today plans to ask a Jefferson County court in
Birmingham, Ala., for a preliminary injunction to prevent HealthSouth's
bondholders from having the right to accelerate the payment of the
company's debt. Earlier this month, the company won a reprieve when the
court issued a temporary restraining order preventing the acceleration
of the debt, the newspaper reported.
