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April 1, 2005
March Job Growth Plummets
Payroll growth across the country was sluggish in March as employers
added just 110,000, the smallest increase since July, the
Washington Post reported. Nevertheless, the labor market
accommodated enough people to drop the unemployment rate to 5.2 percent.
The new figures, released by the Labor Department today, offered another
mixed picture of America’s hiring climate. The job market has been
the sector of the economy that has been among the slowest to recover
from the last recession, the newspaper reported.
Qwest Makes New Bid For MCI
Qwest Communications yesterday made its third bid for MCI Inc.,
raising its offer to $27.50 a share in cash and stock, or $8.9 billion,
according to a filing with the Securities and Exchange Commission,
CBS MarketWatch reported. The bid includes $13.50 a share
in cash and $14 in stock. It includes a collar provision that protects
MCI shareholders should Qwest srock drop below $3.32 a share.
US Airways Gets More Time to Reorganize
A U.S. bankruptcy judge yesterday gave US Airways until May 31 to
file a reorganization plan without interference from creditors, the
Boston Globe reported. Judge Stephen Mitchell also approved
a $125 million investment in US Airways by regional aviation partner
Republic Airways Holding Inc. and its top investor, Wexford Capital LLC.
The deal is contingent on the seventh-largest domestic airline finding
another $100 million in cash.
Fitch: Short-Term Chargeoffs to Rise for U.S. Credit ABS from
Bankruptcy Reform
The expected passage of the bankruptcy reform by the U.S. Senate will
likely send financially stressed consumers scrambling to file personal
bankruptcies, which also means a short-term upward spike in chargeoff
rates for U.S. credit card asset-backed securities, Fitch Ratings
announced in a press release yesterday. But, according to Fitch Ratings
in the latest edition of “Credit Card Movers & Shakers,”
the legislation will be moderately positive over the long-term for
collateral performance and rating volatility for credit card ABS.
“While credit card assets are likely to be the ABS product most
directly affected by the bankruptcy legislation, these changes are not
expected to be large enough to have rating consequences,” said
Richard Drason, Director, Fitch Ratings.
Bankruptcy Court Approves Garden Ridge Emergence Plan
Garden Ridge announced on Wednesday that the Bankruptcy Court of
Delaware has approved the company’s plan to emerge from chapter
11, bizjournals.com reported. The bankruptcy court signed off on Garden
Ridge’s disclosure statement and the procedures that will govern
the voting process and confirmation schedule, the Houston-based company
said. The reorganization plan will provide, among other things, for the
distribution of preferred stock to general unsecured creditors and cash
distributions to other creditors. The plan is based upon a $25 million
equity infusion from Three Cities Research and contemplates $80 million
in exit financing.
Southern Co. Prepares to Battle Spin-Off Mirant
Bankrupt Mirant Corp. plans to sue its former parent company to get
back nearly $2 billion in transfers it believes it is owed,
bizjournals.com reported. But Southern Co., which spun off Mirant in
2001, yesterday said Mirant’s claims are without merit and it will
defend itself vigorously.
Judge Rejects Bankruptcy Suit by Former Testa Partners
A federal bankruptcy judge rejected an involuntary bankruptcy case
brought by eight former partners of Testa, Hurwitz & Thibeault LLP,
which frees the law firm to dissolve under its own plan, bizjournals.com
reported. In a 27-page memo supporting her order to abstain from hearing
the case, in effect dismissing its claims, Judge Joan N. Feeney wrote
that Testa’s wind-down is an “appropriate, efficient, and
economical means of concluding the affairs,” of the firm, and that
a bankruptcy would probably be economically detrimental to creditors by
delaying their payments and raising the administrative costs associated
with dissolving the firm.
Continental Pilots Ratify New 45-Month Contract
Continental Airlines’ pilots on Wednesday announced they have
ratified a new 45-month contract with the carrier, a crucial step that
will save more than $200 million a year and should help avoid a dramatic
restructuring, CBS MarketWatch reported.
Adelphia Attributes Slow Auction to Complexity
Adelphia Communications Corp. missed its goal of announcing the
winning bid for the company by the end of the first quarter, the
Wall Street Journal reported. But executives involved in
the process said the need for more time wasn’t a sign that the
auction for the cable operator was bogging down. Rather, they said it
was a sign of numerous complexities in auctioning the company, operating
under bankruptcy protection since 2002, the newspaper reported.
Kaiser Aluminum Loss Widens on Bankruptcy Costs
Kaiser Aluminum Corp., which is under bankruptcy protection, said
yesterday that its quarterly loss widened on charges related to its
chapter 11 proceedings, Reuters reported. The Foothill Ranch,
Calif.–based company also pushed back its target to emerge from
chapter 11, saying it now hoped to do so in the second half of this
year. Last November, Kaiser had said it expected to complete the
bankruptcy proceedings in the first half of 2005.
Airline Workers Face More Pain as Crisis Worsens
Pilots, flight attendants and mechanics who have already seen their
wages, benefits and pensions slashed by billions of dollars face even
more pain as struggling airlines plan to cut costs further, Reuters
reported. Northwest Airlines Corp. said this week it hopes to save $1.1
billion in labor costs a year, up from a previous target of $950
million. United Airlines has said it needs to win $725 million a year in
concessions to help it emerge from bankruptcy. American Airlines and
Delta Air Lines Inc., each facing about $1 billion in added fuel costs
this year, are also looking for additional cost savings, although
neither has yet sought new wage or pension cuts. “It’s a
race to the bottom,” said Patrick Murphy, a Washington-based
consultant. “The bar for where the cuts have to be keeps getting
set lower,” Reuters reported.