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February 5, 2007
Creditors Approve Exit Financing
Delta Air Lines
Inc.’s creditors have approved the terms of the $2.5 billion in
financing that Delta secured to emerge from bankruptcy
protection, Bankruptcy
Law360 reported on Friday. The exit facility
will be co-led by six financial institutions –
JPMorgan,Goldman
Sachs & Co., Merrill Lynch, Lehman Brothers, UBS and Barclays
Capital – and will consist of a $1 billion first-lien revolving
credit facility, a $500 million first-lien Term Loan A, and a $1 billion
second-lien Term Loan B, the airline said. The facility will be secured
by substantially all of the first-priority collateral in the existing
debtor-in-possession facilities, according to Delta. Proceeds from the
facility will be used by Delta to repay its $2.1 billion
debtor-in-possession credit facilities led by GE Capital and American
Express, to make other payments required upon exit from bankruptcy, and
to increase its already-strong cash balance.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=17890'>Read
more. (Registration required.)
w:st='on'>
id='2'>Spokane
size='3'> Diocese Files Reorganization Plan
The Catholic Diocese of
Spokane filed its reorganization plan on Friday, calling for nearly half
of a proposed $48 million settlement to go to victims of clergy sexual
abuse while the rest would pay their legal fees in the proceeding,
according to the
size='3'>Oregonian on Saturday. The diocese's
92-page disclosure statement in U.S. Bankruptcy Court said bankruptcy
lawyers are owed about $7 million, leaving a $41 million pool to pay
victims and their lawyers. The court documents show that 208 individual
sex abuse claims were filed against the diocese, but 24 of those were
duplicates or disallowed by the court.
size='3'> The diocese has reached
settlements with 36 victims and one claim was filed for potential
victims who make claims in the future. The disclosure statement said $1
million is set aside for future claims.
size='3'> A hearing on the disclosure
statement is the subject of a March 8 hearing, while Judge
Patricia Williams
has scheduled an April 24-25 hearing to confirm the
diocese's reorganization plan.
href='http://www.oregonlive.com/news/oregonian/index.ssf?/base/news/1170480329146750.xml&coll=7'>Read
more.
Approves $1.3 Million DIP Loan for Air
w:st='on'>
w:st='on'>America
Judge
face='Times New Roman' size='3'>Robert D. Drain
size='3'>of the
w:st='on'>
size='3'>U.S.
size='3'>Bankruptcy Court in the SouthernDistrict of New York approved an additional
$1.3 million in financing for Air America Radio, which is part of the
$3.3 million the firm is eligible for under its debtor-in-possession
loan, Bankruptcy
Law360 reported on Friday. Air America Radio,
which lost $41 million and went bankrupt after only two-and-a-half years
on the air, said that it would sell its assets to Stephen L. Green, the
chairman of SL Green Realty Corp. Green, the brother of former
size='3'>New York City
size='3'>mayoral candidate Mark Green, said he is planning on turning
the station into a profitable entity.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=17889'>Read
more. (Registration required.)
id='4'>Adelphia Seeks Answers in Lucent’s $44 Million
Claim
Adelphia Communication Corp.
has asked the court overseeing its bankruptcy to force
face='Times New Roman'>Lucent Technologies Inc. to
produce a witness to testify regarding allegations that Adelphia is
responsible for a $44 million debt its subsidiary incurred,
Bankruptcy Law360
reported on Friday. In court documents filed last
Thursday, Adelphia said Lucent had refused to designate a witness to
testify on its behalf and that the company’s willful disregard of
discovery rules should not be countenanced. The controversy between the
telecommunications companies began in the U.S. Bankruptcy Court for the
Southern District of New York when Lucent requested that Adelphia pay
off the $44 million debt that an Adelphia subsidiary, Devon
Communications LP, had incurred.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=17838'>Read
more. (Registration required.)
GM
May Have “Overcorrected” on Discounts
General Motors
Corp.’s
size='3'>North America
Clarke said that the company may have 'overcorrected' in its effort to
cut discounts in January, leading to softer retail sales than company
officials had planned, the
size='3'>Wall Street Journal reported today.
Clarke also said GM plans to cut sales to fleets in
w:st='on'>North
America
this year and 100,000 vehicles next year. By 2008, he said, GM North
America fleet sales should be down 270,000 vehicles from 2005 levels to
about 700,000 vehicles a year.
size='3'>GM reduced incentives to the lowest point since April 2002,
consumer-research company Edmunds.com reported in a news release
Thursday. Edmunds said GM spent 17 percent less in January per vehicle
sold than it did in January of 2006.
href='http://online.wsj.com/article/SB117063341860997709.html?mod=us_business_whats_news'>Read
more. (Registration required.)
id='6'>Michigan Plastics Company Files for Bankruptcy
Pine River Plastics Inc.
of
Clair
w:st='on'>
size='3'>Mich.
on Thursday in the U.S. Bankruptcy Court for the Eastern District of
Michigan in
size='3'>Detroit
w:st='on'>Port
Huron
w:st='on'>
size='3'>Mich.
Herald reported yesterday. The company intends
to sell its assets to Whitebox Advisors LLC of Minneapolis within two to
three months pending court approval. While it has had contracts with
Motorola and La-Z-Boy, the majority of its business is making decorative
components for automobile interiors. The company lost $3 million, he
said, mostly as a result of its customers filing for bankruptcy.
href='http://www.thetimesherald.com/apps/pbcs.dll/article?AID=/20070203/NEWS01/702030302'>Read
more.
International
id='7'>Asarco Filing May Bolster Critics of Grupo
w:st='on'>Mexico
In a move that critics of
mining company Grupo Mexico SA say bolsters their case, bankruptcy
lawyers for its former Asarco Inc. unit accused the parent company of
fraudulently shifting Asarco's stake in Peruvian copper mines to another
company it controlled, the
size='3'>Wall Street Journal reported today.
According to papers filed in bankruptcy court Friday in
w:st='on'>Corpus
Christi,
w:st='on'>
size='3'>Texas
size='3'>Mexico
54.2 percent stake in New York Stock Exchange-listed Southern Copper
Corp. four years ago to a different Grupo
w:st='on'>
size='3'>Mexico
size='3'>unit at a price that undervalued the stake by almost $500
million. The move effectively stripped the
w:st='on'>
size='3'>U.S.
size='3'>entity of its most profitable division at a time when Asarco
was beset with billions of dollars in environmental- and
asbestos-liability claims, including potentially costly mine
cleanups.
href='http://online.wsj.com/article/SB117063837343797829-search.html?KEYWORDS=bankruptcy&COLLECTION=wsjie/6month'>Read
more. (Registration required.)
id='8'>Khodorkovsky Charged with Money Laundering
Russian prosecutors on Monday
brought money laundering charges against oil tycoon Mikhail
Khodorkovsky, who is already serving a prison term for fraud and tax
evasion, Reuters reported today. Khodorkovsky, founder of the YUKOS oil
conglomerate, and his associate Platon Lebedev were each sentenced in
2005 to eight years in prison in a trial seen by many as a Kremlin
campaign to punish the tycoon for his political ambitions.
face='Times New Roman'>YUKOS, once
w:st='on'>
size='3'>Russia
biggest and most profitable oil company, had been driven to bankruptcy
by back-tax claims.
href='http://today.reuters.co.uk/news/articlenews.aspx?type=worldNews&storyid=2007-02-05T120414Z_01_L05545847_RTRUKOC_0_UK-RUSSIA-KHODORKOVSKY.xml'>Read
more.
id='9'>TROUBLED COMPANIES IN THE NEWS
1000’s of companies
lose money or experience some form of difficulty each
quarter.
The business news
articles below are taken from the
size='3'>Daily Summary of Troubled & Fast Growing U.S. Companies and
Other Business News published by Bastien
Financial Publications.
To begin receiving the COMPLETE
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size='3'>steve@creditnews.comyour
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Dell
Inc. has another headache, with a class-action
lawsuit on behalf of shareholders accusing the Round Rock,
size='3'>Texas
computers of improper accounting with regard to its partnership with
chip manufacturer Intel Corp. The suit charges that Dell's profits
were inflated by hundreds of millions of dollars through quarterly
rebates that were improperly accounted for. Supposedly, Dell was
raking in up to $1 billion a year in what the lawsuit called 'secret and
likely illegal' kickbacks from Intel, which allegedly told Dell not to
buy chips from any other companies. Neither Dell nor its accounting
firm,
size='3'>PricewaterhouseCoopers LLP, which is
also a defendant in the litigation, responded to the
lawsuit.
size='3'>Gap Inc. booted out the president of
its Gap brand, Cynthia Harriss, in an ongoing management shakeup, only a
week after the
face='Times New Roman' size='3'>San
Francisco
retailer forced out Gap Inc. CEO Paul Pressler. Ms. Harriss will
be replaced by the current president of Gap's Banana Republic unit,
Marka Hansen. The realignment at the top is the latest indication
that Gap is looking to undertake a major overhaul of its Gap
brand. Gap, which has faced sinking sales, also operates the Old
Navy retail chain.
size='3'>General Motors Corp.,
size='3'>Detroit
w:st='on'>
size='3'>Mich.
sales in January fell 17%, partly because of large cuts in its
low-margin sales to rental companies. GM is reducing fleet sales
to such companies partly in an effort to strengthen its pricing and to
reduce the need for rebates and other incentives.
face='Times New Roman' size='3'>Ford Motor Co.
size='3'>, which has announced a similar program, said that its sales
fell 19% last month.
size='3'>Innovative Solutions & Support Inc.
size='3'>, an Exton,
w:st='on'>
size='3'>Pa.
of display systems, data equipment and other products, reported a first
quarter loss of $1.1 million on a 37% drop in revenue--to $3.4
million. The firm has been shifting its business focus from
selling various aircraft equipment to aircraft flat panel
displays.
size='3'>NMS Communications Corp., a
size='3'>Framingham
w:st='on'>
size='3'>Mass.
telecommunications products, reported a fourth quarter net loss of $8.9
million. Revenue declined 32%--to $21.7 million. For the year, it lost
$15.8 million on a 9% revenue decline--to $99.6 million. The quarter and
year included restructuring charges of more than $4.1 million and $5.4
million respectively.
size='3'>Pixelworks Inc., a Tualatin,
size='3'>Ore.
display chips, warned that sales in its first quarter will continue
dropping, to no more than about $25 million, compared to sales of $29.8
million in the fourth quarter, which is already down from $43.3 million
in the year-ago fourth quarter. The firm added that since operating
expenses will be in the same range the company will likely operate in
the red in the first quarter. Recently, Pixelworks reported a loss
for 2006 of more than $200 million on a 22% sales decline--to $134
million. The company continues restructuring with a goal of reducing
operating expenses.
size='3'>Ultratech Inc., a
w:st='on'>
Jose
face='Times New Roman' size='3'>Calif.
provider of photolithography systems, reported a fourth
quarter net loss of $6.8 million. Revenue declined 30%--to $24.7
million. For the year, it lost $9 million on a 2% revenue decline--to
$120 million.