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Report on Manufacturing Drives Up Dow Jones
Optimistic reports on manufacturing yesterday temporarily drove the Dow
Jones Industrial Average above the 9,000 level for the first time since
December, although spending on construction projects slowed to the
lowest level in four months, according to CongressDaily. The
Institute for Supply Management reported that its manufacturing index
rose to 49.4 in May from 45.4 in April, an increase that boosted stocks,
although any reading below 50 indicates manufacturing is slow. At 2:30
p.m., the DJIA had risen 140.83 points to 8,991.09. The Commerce
Department reported yesterday that the value of construction projects
dipped by 0.3 percent in April from March to a seasonally adjusted
annual rate of $862.6 billion, marking the third straight month that
construction spending went down, the newswire reported. The weakness in
April was broad with builders reporting less spending on everything from
single-family homes to commercial ventures, including office buildings
and industrial complexes.
Slater Steel, U.S. Unit Seek Protection From Creditors
Slater Steel Inc., a Canadian specialty steel products maker, and its
Slater Steel U.S. unit sought protection from creditors after failing to
comply with loan agreements, Bloomberg News reported. Fort Wayne,
Ind.-based Slater Steel U.S. filed papers yesterday in the U.S.
Bankruptcy Court in Delaware, listing more than $100 million in debts
and less than $50 million in assets. The Mississauga, Ontario-based
parent company also filed for protection from creditors in Canada.
Increasing imports, higher costs and lower prices hurt the company,
Slater Steel U.S. Vice President Paul Davis said in court papers. Dozens
of U.S. steel companies, including Bethlehem Steel Corp., have sought
bankruptcy protection since 1997, when Asian financial troubles lowered
the price of steel imports. Slater said in October it was experiencing
declining demand for stainless steel bars, couldn't meet credit
requirements and was negotiating with Toronto-Dominion Bank, Bank of
Nova Scotia and Bank One Corp. to restructure terms, reported the
newswire.
Osteotech Settles Patent Suit with Bankrupt GenSci for $7.5
Million
GenSci Regeneration Sciences Inc., forced into bankruptcy after a jury
ordered it to pay $14.5 million to bigger rival Osteotech Inc. for
infringing patents for surgical bone repair, settled its patent suit for
$7.5 million, Bloomberg News reported. GenSci will pay $1 million upon
approval of a federal judge in Santa Ana, Calif., and the rest in 20
quarterly installments of $325,000 plus interest, Eatontown, N. J.-based
Osteotech said. Irvine, Calif. based GenSci filed for bankruptcy
protection in December 2001 following the jury award and replaced its
entire line of products for bone- and tissue-replacement treatments. The
agreement ensures Osteotech gets some of the jury award and lets GenSci
sell its newest products without fear of more lawsuits, reported the
newswire.
Air Canada Stock Soars After 11th-hour Pilots Deal
Air Canada stock rose almost 20 percent on Monday after the carrier
reached an 11th-hour cost-cutting deal with its pilots union, Reuters
reported. 'It doesn't change anything about what's going to happen to
the equity holders. The stock will still go down probably close to zero
when it's all said and done,' said Cameron Doerksen, aviation analyst
for brokerage house Dlouhy Merchant. That is because Air Canada will be
seeking to pay out as little cash as possible to its creditors, offering
them shares in the airline instead, and further diluting already low
shareholder value, analysts said. Air Canada owes about C$13 billion
($9.5 billion) in debt and aircraft leases, reported the newswire.
Neenah, Bondholders Agree on Reorganization
Neenah Foundry Co., a Wisconsin maker of iron castings and steel
forgings, said on Monday it expects to seek bondholder approval for
reorganization through a prepackaged chapter 11 bankruptcy filing, after
creditors agreed to new terms for refinancing Neenah's debts, Reuters
reported. The Neenah, Wis.-based company said investors holding a
majority of its 11-1/8 percent subordinated notes due 2007 approved new
terms to be implemented by Sept. 30, the newswire reported. The new
terms, amending an agreement announced on May 1, would erase most of
Neenah's debt, reduce interest expenses and strengthen Neenah's balance
sheet. The company's bank lenders agreed to extend a forbearance
agreement under an existing credit facility. The company also said it
would refinance this credit with a new $95 million senior,
secured-credit facility arranged by Fleet Capital, reported the
newswire.
Gasel Files for Bankruptcy to Protect Revenue Assets, Continue
Growth
Gasel Transportation Lines Inc. filed for chapter 11 protection on May
19 with the U.S. Bankruptcy Court in Columbus, Ohio, to seek asset
protection from the recent demands of some of its equipment-based
lenders and to enable it to continue to execute its aggressive growth
strategy, the company announced in a press release distributed by Prime
Zone Media Network. The trucking industry has experienced extremely
adverse conditions since the beginning of the general economic downturn
in 2000. Gasel has been operating at a deficit during the past three
years. Although the company was continuing to work with the majority of
its lenders to rectify the situation, a few equipment lenders recently
issued loan defaults to Gasel. The defaults plus a significant lump sum
payment demanded by one lender precipitated the need to seek protection
under chapter 11 to retain the use of revenue generating equipment and
reorganize the company's current debt structure to facilitate growth and
profitability, reported the newswire.
Bayou Steel Receives Extension of Exclusive Periods
Bayou Steel Corporation announced in a press release distributed by
Business Wire that that on May 27, 2003, the U.S. Bankruptcy Court for
the Northern District of Texas approved the company's request for an
extension of the exclusive periods during which only Bayou may file a
plan of reorganization and solicit acceptances for that plan. These
exclusivity periods, which had been scheduled to expire on May 21, 2003
and July 20, 2003, have now been extended to October 1, 2003 and January
15, 2004, respectively. Bayou's request to extend the exclusive periods
was endorsed by representatives of Bayou's major creditor
constituencies.
Burlington Seeks More Time To Stitch Together Chapter 11 Plan
Burlington Industries Inc. has made progress in its chapter 11 case, but
the clothing company still needs more time to stitch together a modified
reorganization plan.
Burlington Industries said it wants to prevent other parties from filing
competing plans for its reorganization until Sept. 30 and has asked to
have until Nov. 30 to solicit votes for its plan, according to court
papers. The exclusive period to file a plan ended Saturday, but the
company filed its motion seeking more time on May 30, automatically
extending the period. Burlington has already filed a chapter 11 plan,
but will need to modify it based on the results of an auction of its
assets, court papers said.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Adelphia Communications: Rigases Have No Basis To Recover
Records
Adelphia Communications Corp. said that founder John Rigas and his sons
didn't establish a legitimate basis for their request to force the
company to return original business records, according to court papers.
The company filed a response with the bankruptcy court on Thursday that
said the documents in question were 'rightfully obtained from their
former Adelphia offices in response to subpoenas issued' by the
Securities and Exchange Commission and information requests from the
U.S. Attorney's Office. The subpoenas and information requests, from
June 2002, sought documents related to transactions between Adelphia
Communications and the Rigases, the response said. The SEC said it would
accept copies, but may request the original documents in the future. As
a result, the company said, it's 'obligated to maintain the
originals.'
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Mirant Warns of Bankruptcy Unless Debt Plan Is Approved
Electricity generator Mirant Corp. put forward a plan to refinance a
significant portion of its debt and warned that if creditors drag their
feet in granting approval, it may seek bankruptcy-court approval of an
identical plan, the Wall Street Journal reported. The company
said it is asking bondholders to surrender by June 27 three series of
unsecured notes, totaling $1.45 billion, which mature in the next three
years. In exchange, bondholders would be given secured bonds of equal
value that would mature in 2008. The exchange offer has no impact on
nearly $3 billion in bond debt that matures after 2006. Mirant also said
it is in talks with bank lenders about nearly $3.5 billion in loans that
come due in the next three years. It would like to extend those
repayment deadlines by several years, as well. The company expects to
pledge all remaining assets to roll over its debt, reported the
Journal.
Contract Sanctity Challenged in NRG Bankruptcy
The principle that long-term power contracts are inviolable has come
under fire from a bankruptcy bid by Xcel Energy Inc. unit NRG Energy
Inc. to cancel millions of dollars in deals it signed with a Connecticut
utility, experts in the field say, Reuters reported. Judge Prudence
Beatty, overseeing the case for the U.S. Bankruptcy Court for the
Southern District of New York, ruled on Monday that NRG Energy could
terminate its contracts with Connecticut Light and Power, leaving the
utility searching for power for nearly half of its 1.1 million
customers. The ruling goes against the Federal Energy Regulatory
Commission (FERC), which earlier ordered NRG to uphold its
three-year-old contract with CL&P, a unit of Northeast Utilities Co.
Beatty said she was 'not willing' to get involved in the FERC order,
saying federal regulatory matters fall outside her jurisdiction.
But industry analysts warn the decision could spur similar attempts
by other distressed firms in the energy sector, already financially
strapped following federal probes of several companies for alleged
market manipulation. 'So now you have these power marketers who can
probably run into the bankruptcy court and take these under-market
contracts and get rid of them,' said Darrell Clark, an attorney with
Stinson Morrison Hecker LLP, reported the newswire.
Northwest Expects to Furlough 150 More Pilots
Northwest Airlines Corp. said on Monday that it expects to furlough 150
pilots from late 2003 to early 2004 and will cut back use of some older
747s because of reduced demand, Reuters reported. The airline is still
being hurt by a drop in demand related to SARS and the changes are
intended to match capacity with passenger demand, a Northwest spokesman
said. The Air Line Pilots Association unit at Northwest said the
furloughs were set as 50 per month in November, December and January and
would raise the total number of pilots on furlough to 1,093. The air
carrier has about 5,600 active pilots. Northwest reported a loss of $396
million in the first quarter and has sought to cut labor costs by about
$950 million per year to match competitors that have slashed costs in
and outside of bankruptcy, reported the newswire.
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