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Jobless Benefit Rolls Reach 20-Year High
The number of Americans claiming jobless benefits late last month
reached its highest point in more than 20 years, the government said on
Thursday in a report underscoring the persistent weakness of the U.S.
labor market, Reuters reported. The number of idled workers on the
benefit rolls jumped by 87,000 in the week ended June 28 to 3.82
million, the highest level since February 1983, the Labor Department
said. It also said first-time claims for unemployment insurance rose by
5,000 to a seasonally adjusted 439,000 last week from 434,000 a week
earlier, surprising economists on Wall Street who had expected claims to
edge down a bit. 'It was a holiday week, so we don't take it too
seriously,' said David Wyss, chief economist at Standard & Poor's
Rating Service in New York. Still, he said it was not good news for the
economy. 'It's a continued jobless recovery,' reported the newswire.
Other reports on Thursday offered mixed readings on the manufacturing
sector and a rise in U.S. import prices, while top U.S. retailers
reported June sales dampened by wet weather, Reuters reported.
Major Asbestos Compensation Bill Clears Senate Judiciary
Committee
The Senate Judiciary Committee on Thursday night approved a privately
financed fund to pay billions of dollars to asbestos victims,
CongressDaily reported. The legislation (S. 1125) cleared the
Senate Judiciary Committee on a 10-8 vote with Sen. Dianne Feinstein
(D-Calif.), the only Democrat to support the measure. The bill bans
asbestos in most consumer products and sets up a fund financed by the
insurance industry and businesses that could amount to $153 billion to
pay workers who have developed cancer or other illnesses caused by
asbestos. At the same time, the bill takes nearly 300,000 pending
asbestos cases out of courts. The asbestos victims then would apply to
the federally administered fund for compensation that could range up to
$1 million for the most serious cancer victims. Judiciary Chairman Orrin
Hatch (R-Utah) told reporters after the 12-hour markup session he
expected to win Senate approval even though only one Democrat voted for
the final version out of his committee, reported the newswire.
A spokeswoman for the insurance industry told reporters the industry
no longer could support the bill because it shifted the way the money is
raised during the amendment process to add at least $7 billion more from
the insurance industry and another $7 billion from businesses. Judiciary
ranking member Patrick Leahy (D-Vt.), who voted against the bill, warned
earlier on Tuesday that 'a party-line vote would be a setback,' reported
the newswire.
Enron Files Plan to Pay Creditors, Exit Bankruptcy
Enron Corp. filed a plan that would give cash and new stock to creditors
and allow the
scaled-down energy company to exit chapter 11 protection, Bloomberg News
reported. The chapter 11 reorganization plan, filed today in U.S.
Bankruptcy Court in Manhattan, gives creditors new shares in Enron's
pipeline and power-plant businesses, as well as billions of dollars in
cash raised through asset sales and the wind-down of thousands of
commodity trades. Enron has said its business operations are valued at
almost $11 billion.
Under the plan, Enron would transfer some major assets to a new
company called CrossCountry Energy Corp., which would hold stakes in
9,900 miles of North American natural-gas gas pipelines. Overseas assets
would go into a separate company. The plan also provides for creditors
to get shares in Portland General Electric.The plan divides creditors
into more than 350 classes, paying them a fraction of what they're owed.
A detailed description of the plan must be submitted to creditors for a
vote before the proposal can go to U.S. Bankruptcy Judge Arthur Gonzalez
for final approval, reported the newswire.
FTC Chairman Urges More Consumer Protections In FCRA
FTC Chairman Timothy Muris yesterday reiterated his support for adding
new consumer protections to the credit reporting law that Congress is
considering extending, National Journal's Technology Daily
reported. Muris repeated his support for legislation to renew federal
pre-emptions of states' ability to regulate credit reporting. He also
said that consumers should have the ability to obtain free credit
reports and scores, and the ability to obtain notice when they are
offered credit at higher-than-normal rates. In a House Financial
Services Committee hearing on Wednesday, Muris supported the bill
introduced by Rep. Spencer Bachus (R-Ala.). Questioned yesterday by
Senate Banking Committee Republicans and Democrats, Muris said consumers
should have the ability to see copies of credit scores as well as their
credit reports, reported the newswire.
MCI
Davis Urges Defeat of MCI Amendment
House Government Reform Chairman Thomas Davis (R-Va.) has sent a letter
to lawmakers urging the defeat of an amendment that Rep. John Sweeney
(R-N.Y.) intends to offer when the Transportation-Treasury
Appropriations Subcommittee considers its FY04 funding bill today,
CongressDaily reported. Sweeney's amendment would prohibit MCI
from receiving new government contracts for one year. Sweeney said the
government is 'subsidizing bad corporate behavior' by doing business
with MCI. But Davis said the punishment is misguided. 'The facts are
clear: MCI has thrown out the rotten apples,' Davis said. 'The facts
also show that government agencies are choosing to continue working with
MCI because it provides superior service at competitive prices.' MCI
competitors Verizon Communications and AT&T have been lobbying for
the amendment, which the Bush administration opposes as being
potentially disruptive of government telecommunications services. But
Sweeney noted the amendment would not affect existing contracts,
reported the newswire.
Noteholders Of WorldCom Unit Seek To Quash Request For
Information
A committee of noteholders of a WorldCom Inc. subsidiary is seeking to
nullify a request from trade creditors to see information about the
noteholders' holdings and their trades. In a motion filed in bankruptcy
court on Wednesday, the noteholders of MCI Communications Corp. said
that requests made in a subpoena June 23 by an ad hoc committee of MCI
Communications trade creditors aren't relevant to confirmation of
WorldCom's chapter 11 reorganization plan. The noteholders said that the
trade creditors' requested discovery is 'a desperate attempt to create
as much trouble as possible' before the plan confirmation hearing. The
U.S. Bankruptcy Court in Manhattan is scheduled to consider confirmation
of the company's plan Aug. 25.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Mirant Shares Fall After Merrill Lynch Says Bankruptcy Is
Likely
Shares of Mirant Corp. had their biggest drop in three weeks after a
Merrill Lynch & Co. analyst said the company probably will declare
bankruptcy, Bloomberg News reported. The shares fell 25 cents, or 9.3
percent, to $2.45 at 9:38 a.m. in New York Stock Exchange composite
trading. 'We believe that the probability of achieving an out-of-court
debt restructuring by the July 14 midnight deadline has declined below
50 percent, maybe well below,'' Merrill Lynch analyst Elizabeth Parrella
wrote in a research report. She cut her rating on the stock to 'sell''
from 'neutral.''
Atlanta-based Mirant said in a regulatory filing late on Wednesday
that it would offer higher interest rates and other incentives to
encourage its banks to approve a reorganization plan administered by a
bankruptcy court. The company has a $1.125
billion loan payment due next Wednesday, according to Bloomberg data.
Among the banks involved in talks with Mirant are Citibank and Credit
Suisse First Boston (CSFB). 'While most of the bank deals in this sector
have gone down to the wire, or even been extended, they had all the lead
banks on board at this point,'' Parrella said. 'To our knowledge,
neither Citibank nor CSFB has yet agreed to support'' Mirant's plan,
reported the newswire.
FERC Says NRG Must Honor Connecticut Contract for Now
NRG Energy Inc. must continue electricity sales to Northeast Utilities'
Connecticut Light & Power under a disputed contract for lower-cost
power, federal regulators said, Bloomberg News reported. The Federal
Energy Regulatory Commission (FERC) rejected NRG Energy's request to
stay a June 25 order requiring the company to honor the contract until
the commission reviews the case, according to an order issued on
Wednesday. The commission has yet to conclude its review of the
contract, which obligates NRG to supply electricity to Connecticut Light
& Power at rates that are currently below market prices. NRG on
Monday filed a request for an emergency stay of FERC's June 25 ruling
with the U.S. Court of Appeals for the D.C. Circuit. NRG says it loses
at least $500,000 a day from the contract and has been buying rather
than generating the power. The company said in the appeals court filing
that the losses
will cause its power marketing unit, NRG Power Marketing Inc., 'to
continue bleeding cash at a rate that it cannot afford'' and potentially
push the unit into liquidation by the end of the month, reported the
newswire.
Federal-Mogul Promotes President McClure to Chief
Executive
Federal-Mogul Corp. promoted President Charles McClure to the additional
post of chief executive officer, Bloomberg News reported. McClure
replaces CEO Frank Macher, who remains as chairman, the Southfield,
Mich.-based company said in a
statement. The appointment is effective tomorrow. Federal-Mogul is
seeking final approval of its chapter 11 bankruptcy reorganization
plan.
U.S. Court Approves ABB's Asbestos Settlement
A U.S court on Thursday approved Swiss engineering firm ABB's proposed
$1.3 billion settlement of its asbestos claims, paving the way for a key
asset sale needed under a deal hammered out with creditors, Reuters
reported. The settlement, involving ABB's Combustion Engineering (CE)
unit, is seen as the turning point in ABB's battle for survival. The
company has been eager to close the settlement in order to allay
lingering fears about possible spiraling liabilities. CE, which made
industrial boilers insulated with asbestos, filed for bankruptcy on Feb.
17, along with a pre-negotiated reorganization plan to deal with
asbestos-related personal injury claims, reported the newswire.
PanGeo Pharma Files for Bankruptcy Protection
PanGeo Pharma, a Canadian drugmaker, on Thursday said it was insolvent
and has filed for bankruptcy protection to give itself room to
restructure, Reuters reported. PanGeo said it will sell some of its
units and assets to raise money to pay back its primary lender. Last
month, the company said it has been in default on the terms of its
financing agreement with lender National Bank of Canada since last
January. 'As a result of a cash flow crisis resulting from PanGeo
Pharma's rapid expansion over the course of the last two years...and
certain financial defaults under its operating facility with National
Bank, PanGeo Pharma is currently insolvent,' PanGeo said in a statement
on Thursday. Company officials were not immediately available for
comment. The drug maker also cited year-end results that were 'less
favorable than anticipated' and the resignation of its auditors as
reasons for seeking protection from creditors, reported the
newswire.
Action on STT-Global Crossing Deal Will Come Soon, Evans
Says
The U.S. government will likely soon announce its decision on whether to
allow Global Crossing Ltd. to sell a majority stake to a company owned
by the Singapore government, U.S. Commerce Secretary Donald Evans said
on Thursday, Reuters reported. U.S. economic and security officials have
been divided over whether to allow Singapore Technologies Telemedia to
acquire a 61.5 percent stake in the bankrupt telecommunications company
that operates a high-speed network in 27 countries.
A memorandum opposing the deal is circulating at the Pentagon, although
a Defense Department spokesman, Lt. Col. Dan Stoneking, said on Thursday
a final decision has not been made. Additionally, the Department of
Homeland Security has reservations about the deal, an agency official
has said. We 'haven't made a final decision on it yet,' Evans told
Reuters in an interview. 'But it's been very actively discussed and it
continues to be and we'll be making an announcement on that I'm sure in
the next several days,' reported the newswire.
Leggett & Platt Buys RHC Spacemaster for $46 Million
Leggett & Platt Inc. said it acquired bankrupt RHC Spacemaster for
about $46 million, Bloomberg News reported. RHC, which makes metal and
wood store fixtures, filed for chapter 11 protection in February.
Carthage, Mo.-based Leggett will close some of RHC's 13 plants and cut
an undisclosed number of jobs, said David DeSonier, vice president of
investor relations.
Leggett & Platt is taking advantage of the store-fixtures market
after four of the top 10 companies in the industry declared bankruptcy
in the past two years as companies scaled back spending, it said. RHC's
customers included Kmart Corp., which filed for chapter 11 bankruptcy
protection in January 2002. 'There was a temporary dwindle when the
economy went uncertain,'' DeSonier said in an interview. RHC's 'top
customers cut back on spending and Kmart's bankruptcy took its toll'' on
the company, reported the newswire.
HealthSouth Probe Extends to Former UBS Analyst
U.S. lawmakers probing allegations of $2.5 billion in accounting fraud
at HealthSouth Corp. asked former UBS AG analyst Howard Capek for
documents related to his coverage of the company, Bloomberg News
reported. Members of the House Energy and Commerce Committee sent a
letter to Capek, who kept a 'buy'' rating on HealthSouth even after the
hospital operator was accused of fraud. Capek resigned last week after
UBS said he broke a rule prohibiting bank employees from discussing the
stock. Capek told an institutional investor in an e-mail that he 'would
not own a share'' of HealthSouth after UBS started investment banking
work for the company between June and September 1999, bank spokesman
Mark Arena said last week. That note and other e-mails 'raise questions
about the extent to which you truly believed that HealthSouth was a
`strong buy' and the reasons you continued to represent that opinion to
the investing public,'' the committee said in its letter, which was
e-mailed to news organizations, reported the newswire.
AT&T Latin America's CEO Northland Steps Down
AT&T Latin America Corp. said Chief Executive Officer Patricio
Northland stepped down, Bloomberg News reported. AT&T Latin America
will be managed by an executive committee made up of CEO Marco
Northland, CFO Lawrence Young and Thomas Canfield, the company's general
counsel, the company said in an e-mailed statement. Northland's decision
to leave AT&T Latin America follows a ruling by the U.S. Bankruptcy
Court in Miami to approve a request by the company's creditors to reject
his employment agreement. AT&T Latin America said it has received
offers from more than 20 possible bidders for the 69 percent stake held
by parent AT&T, which agreed in January to sell its stake to
Southern Cross for $1,000, reported the newswire.
Fleming's Proposed Sale Of Wholesale Operations Calls For $12
Million Breakup Fee
Fleming Cos. is proposing to pay the initial bidder for its wholesale
grocery operations a $12 million breakup fee in the event the company
ultimately sells the assets to another party, according to court papers.
In a motion filed with the bankruptcy court overseeing its case, Fleming
said that its proposed bidding procedures for the wholesale grocery
business would increase the likelihood that Fleming would receive the
best possible offer for the assets. The company said that selling the
operations as a going concern is the best way to maximize the value of
its assets. As reported, C&S Wholesale Grocers Inc. has offered to
pay $400 million for the Fleming wholesale grocery assets, subject to
higher offers at a bankruptcy auction. Fleming signed an asset purchase
agreement with C&S Acquisition LLC, a unit of C&S Wholesale
Grocers.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Nike to Buy Converse For About $305 Million
Nike Inc. will pay about $305 million to acquire Converse Inc., the
Wall Street Journal reported. Nike will also assume some Converse
debt. Converse posted $205.3 million in sales in 2002. Over-ambitious
owners and a reliance on manufacturing mainly in the United States sent
Converse into bankruptcy court protection in 1991 and again in 2001. In
that latter year, the company, under a new management team, sold its
U.S. and Mexico factories and announced in late 2002 it was seeking to
raise $86.3 million in an initial public offering. Thomas Clarke, Nike's
president of new business ventures, said the company was buying Converse
to expand a brand portfolio that now includes a hockey company and a
surfwear label. Nike intends to leave Converse's current management,
headed by former The North Face Inc. executive Jack Boys, in place,
reported the Journal.
Midwest Express Skyway Pilots Union Agrees to Cuts
Pilots at Midwest Express Holdings Inc.'s Skyway Airlines regional
carrier have agreed tentatively to cost cuts intended to help the
airline avoid bankruptcy, the union for the group said on Thursday,
Reuters reported. Midwest Express said in June that a bankruptcy filing
by mid July was likely if workers, airplane financiers and lenders did
not agree to restructure deals to help restore profitability. 'We are
pleased to finally reach an agreement that addresses the needs of the
Skyway pilots while providing the necessary financial relief to our
airline,' Brian Belmonti, chairman of the Skyway unit of the Air Line
Pilots Association said. Pilots for Midwest Airlines previously agreed
to temporary pay cuts under the Midwest Express cost-cutting plan,
reported the newswire.
Polaroid Target of Employee Suit
Five former employees are suing Polaroid Corp. for firing them to stop
them from collecting long-term disability benefits, according to Dow
Jones Newswires, the Boston Business Journal reported. The
lawsuit, which was filed in U.S. District Court in Boston, also named
Bank One Corp.'s One Equity Partners unit as a defendant. Bank One
bought the bulk of Polaroid's assets last year for $455 million in cash
and the assumption of debt. In the court filings, the former employees
accuse One Equity of requiring that Polaroid fire all employees
receiving long-term disability payments.
The Waltham-based, privately held company sells instant photographic
cameras and films, digital imaging equipment, identification systems and
sunglasses. The former Polaroid Corp., which is now called Primary PDC
Inc., is winding its way through the chapter 11 bankruptcy process,
reported the Journal.
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