May 25, 2004
Democrats Aim to Deny
Frist's Bid for Cloture on Class Action
Most Senate Democrats are likely to oppose Majority Leader Bill Frist's
(R-Tenn.) plan to suspend consideration of the FY05 defense
authorization bill next week to take up class action legislation,
CongressDaily reported. 'We just don't think it's
appropriate to move off of the defense bill when we're at war with
Iraq,' said a spokesman for Sen. Thomas Carper (D-Del.), a co-sponsor of
the class action bill who plans to vote against cloture on a motion to
proceed with that legislation next week.
Frist filed cloture on Friday
on a motion to proceed with the class action bill, which he plans to
move to the floor next Tuesday, when the Senate returns from its
Memorial Day recess. Frist said the class action bill has strong
bipartisan support, and predicted the Senate would complete its work on
that bill in a 'reasonable period of time.' The bill would transfer many
class action lawsuits from state courts to federal courts, where more
stringent rules would govern the lawsuits. A previous version of the
class action bill fell one vote short last October of the 60 needed to
break a Democratic filibuster, the newswire reported.
California Senate
Passes PG&E Refinancing Bill
California's state Senate
yesterday passed a bill that will allow cheaper refinancing of
utility Pacific Gas & Electric's debts and save its customers an
estimated $1 billion, Reuters reported. Senate Bill 772, which has now
cleared both chambers of the state legislature, passed on a 33-0 vote
and will now be sent to Gov. Arnold Schwarzenegger. He has 12 days to
sign or veto the bill. The bill is backed by state regulators and a
leading consumer group, as well as the utility.
Former Chief of
WorldCom Indicted Again
Federal prosecutors in Manhattan announced yesterday a
new indictment against Bernard J. Ebbers, the former chief executive of
WorldCom Inc., the New York Times reported. The new indictment adds six
charges of securities fraud. The government is contending that an
illegal accounting scheme described in the original indictment in March
resulted in six false filings with the Securities and Exchange
Commission. Those filings -- the quarterly and annual statements of
WorldCom -- were each signed by Ebbers in his capacity as CEO, the
newswire reported.
Spiegel To Sell Namesake
Catalog To Pangea
Catalog retailer The Spiegel Group, which is operating
under bankruptcy protection, on Monday said it agreed to sell its
namesake catalog business to investment firm Pangea Holdings Limited for
about $31 million, including the assumption of liabilities, Reuters
reported. Spiegel, which also operates the Eddie Bauer catalog business,
won court approval this month to sell its Newport
News women's fashion catalog operation to Pangea for $28.6
million. Spiegel filed for chapter 11 bankruptcy protection in
March 2003, but has failed to reach a deal with creditors to restructure
the company. Eddie Bauer is also up for sale and could be worth up to
$800 million, industry bankers have said, the newswire
reported.
Kmart Investors Want More
Detail at Annual Meeting
Kmart hosts its first annual meeting in three years on
Tuesday with its stock at a post-bankruptcy high, but analysts and
investors want details on how the company plans to compete with Wal-Mart
and Target, Reuters reported. The Troy, Mich.-based company has two
quarters of strong profits and cash to help it survive in a discount
segment dominated by Wal-Mart Stores Inc. and Target Corp., but analysts
wonder what Kmart can do to reverse years of declining sales.
Kmart has driven a return to profitability by cutting
back on items such as payroll, advertising and inventory, but sales have
decreased. In the recently ended fiscal first quarter, sales at stores
open at least 13 months dropped 12.9 percent. 'If you look at
Kmart's (same-store) sales, that has to raise a red flag and make anyone
wonder what they are going to do to get sales moving in the right
direction,' said Darrell Rigby, head of Bain & Co.'s global retail
consulting practice, the newswire reported.
US Airways Flight Attendants
Weigh New Givebacks
US Airways flight attendants on
Friday said they will hire a financial consultant to review the
company's proposal for $116 million in new annual givebacks to help the
airline avoid a second bankruptcy filing, Reuters reported. 'Before the
flight attendants can even consider moving forward with a third round of
concessionary negotiations, we need to feel confident that management
has a viable blueprint to turn this airline around,' said Perry Hayes,
president of the Association of Flight Attendants' US Airways
chapter.
The airline said this week it wants $800 million in
new labor concessions as part of its drive to cut costs by $1.5 billion
to stay competitive. So far its pilots have agreed to negotiate
givebacks while mechanics have refused to consider reopening their
contract. Workers gave up $1.2 billion in concessions as part of US
Airways' bankruptcy restructuring, the newswire reported.
Ex-Adelphia Executive Recalls Fake Payments
Michael Rigas, former operations vice president for
Adelphia Communications, knew about
fake circular transactions with two suppliers and did nothing to prevent
them, a former company executive testified yesterday, Reuters reported.
James Brown, the government's star witness at the fraud trial of
Adelphia's founder, John Rigas, and his sons, described 'wash'
transactions involving Motorola and
Scientific-Atlanta. Those transactions helped Adelphia mask the eroding
financial performance that led to its bankruptcy in June 2002, Brown
said, the newswire reported.
UNITED
AIRLINES
UAL Can't Rule Out
Furloughs
United Airlines COO Pete McDonald on Monday said
employee furloughs could not be ruled out given the high price of jet
fuel, Reuters reported. McDonald said the current jet fuel crisis was a
significant issue. United parent UAL Corp., in a court document on
Friday, said its fuel costs for 2004 would be about $750 million more
than originally planned. McDonald added that while the company was not
actively studying the furlough possibility, 'there's always that
potential,' he said, the newswire reported. United will continue to look
for ways to cut costs to offset its jet fuel expense, McDonald added.
Analysts have said that costly jet fuel has threatened the industry's
prospects for returning to profitability this year after several years
of heavy losses.
UAL Proposes New Retiree Medical Benefits
Plan
UAL Corp.'s United Airlines has
proposed a uniform medical benefits plan that would reduce expenses by
$145.4 million annually and save $57.1 million in cash annually from
2004 to 2010, the airline said in a filing with U.S. regulators, Reuters
reported. Under the new plan, current retirees would start to make
premium contributions, said the airline, which has been operating under
chapter 11 bankruptcy protection since December 2002. Current retirees
refer to those who retired before July 1, 2003, the newswire
reported.
El Paso Can't Block
Enron's Sale of CrossCountry Energy
El Paso Corp.'s right of first
refusal to buy Enron Corp.'s half of Citrus Corp. does not apply to the
sale of CrossCountry Energy, Enron's North American natural gas pipeline
business, an El Paso spokeswoman said on Monday. Enron announced on
Friday it had agreed to sell CrossCountry Energy to NuCoastal LLC, which
is owned by affiliates of Kelso & Company, ArcLight Capital Partners
LLC, Citigroup Inc. and Texas billionaire Oscar S. Wyatt, for $2.2
billion, including the assumption of $430 million in debt. CrossCountry
is a holding company comprised of the Transwestern Pipeline Co.,
Northern Plains Natural Gas Co. and Enron's 50 percent interest in
Citrus Corp. 'We have a right of first refusal on Citrus, but this
transaction doesn't directly involve the sale of Citrus,' said Kim
Wallace at El Paso. 'CrossCountry Energy owns half of Citrus, but Citrus
itself is not being sold. It's a parent company issue.'
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Deminor Named Lead Plaintiff
In U.S. Suit Against Parmalat
Deminor, a European investor
advisor and advocacy group, said Monday it has been appointed lead
plaintiff in a U.S. class action suit against Parmalat Finanziaria SpA,
its auditors and two of its banks. The case involves Parmalat
bondholders and is being heard in a Manhattan District Court, Umberto
Mosetti, Deminor's lead official in Italy, told Dow Jones Newswires.
U.K. pension fund Hermes has been named lead plaintiff in a parallel
case involving shareholders of the bankrupt Italian diary company, Il
Sole 24 Ore reported over the weekend.
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Reserved