April 6, 2004
Pension Bill Backers Seek To Corral Democratic
Votes In Senate
Businesses that would benefit from the $80 billion in
pension payment breaks included in House-passed legislation are aiming
to add enough Senate Democrats to send the pension bill to the president
this week, CongressDaily reported.
American Benefits Council President James Klein said backers of the bill
are 'cautiously optimistic' that the Senate will clear the bill, despite
resistance from some Democrats. Senate Majority Leader Bill Frist
(R-Tenn.) said yesterday he wanted to put the bill on the floor this
week. However, Minority Leader Tom Daschle (D-S.D.) has not yet
formulated a strategy on the pension bill and plans to talk to
colleagues during a Wednesday caucus, a spokesman said. Klein, whose
organization represents mostly traditional 'single-employer' plans, said
he thinks enough Democratic senators are concerned about the impact if
Congress fails to pass legislation to make the strategy viable, the
newswire reported. Businesses have been furiously lobbying for the bill,
contending if it does not pass by the April 15 deadline, many companies
will freeze or discontinue their pension plans. Although the $80 billion
in relief for traditional plans has broad bipartisan support, Democrats
objected last week to the paring back of Senate provisions that would
benefit multi-employer plans. Some Democrats say they will block the
bill over the multi-employer provisions.
The bill would change the formula that companies use
to calculate their pension payments so they can assume a higher rate of
return on pension investments. That would allow businesses to make
smaller payments and still meet projected obligations to retirees. The
bill also includes an additional $1.6 billion in relief to steelmakers
and airlines, two industries that have been hit hard by the economic
downturn. The dispute centers on payment relief for multi-employer
plans, which Republicans say are in better financial shape than their
single-employer counterparts. They contend that giving those plans a
bigger break would jeopardize retiree benefits, while Democrats say many
of those plans should get the same breaks that the bill gives
single-employers, CongressDaily
reported. Provisions in the bill would help about 4 percent of
multi-employer plans, according to estimates.
Shelby Shares 'Grave Concerns' About GSE
Legislation
Senate Banking Chairman Richard Shelby (R-Ala.) was
not taken aback by the news that the Bush administration now opposes his
legislation creating a new regulator for the housing
government-sponsored enterprises, in light of a controversial amendment
adopted at the committee markup last week, CongressDaily reported. 'It's not surprising for him at
all,' the spokesman said, noting that Shelby had raised 'grave concerns'
about the amendment to the bill's receivership provision but supported
it during last week's markup in the interest of moving the bill forward,
the newswire reported. 'The future of the legislation is uncertain, but
he'll continue to work to pass the bill based upon the principles
outlined in his original proposal,' Shelby's spokesman said,
CongressDaily reported. Treasury
Secretary John Snow and HUD Secretary Alphonso Jackson issued a joint
statement Friday saying that the administration opposes the bill in its
current form. Shelby's bill would eliminate the Federal Housing Finance
Board and HUD's Office of Federal Housing Enterprise Oversight (OFHEO),
while creating a new, independent agency to oversee Fannie Mae, Freddie
Mac and the Federal Home Loan Banks. The bill also would authorize the
agency's director to place any of those GSEs in either a conservatorship
or receivership in the event of a financial crisis. Current law allows
the Federal Housing Finance Board to place the Federal Home Loan Banks
in receivership, but OFHEO, which oversees Fannie Mae and Freddie Mac,
only has conservator powers. The receivership amendment, sponsored by
Financial Institutions Subcommittee Chairman Robert Bennett (R-Utah),
would give Congress 30 days to intervene in any attempt by the new
regulator to place a GSE into receivership. Bennett said his amendment
would prevent regulators from moving too aggressively to appoint a
receiver to a troubled GSE.
Snow and Jackson said Shelby's bill, as introduced,
would have been a 'substantial step forward' in strengthening the
oversight of the GSEs. 'However, an amendment adopted by the
committee...would significantly weaken one of the core powers needed for
a
strong regulator,' Snow and Jackson said. 'The amendment could reinforce
a false impression that the American taxpayer provides an implicit
guarantee to these entities.' Shelby, like the administration, opposes
the amendment and hopes to remove it as the bill moves through the
Senate, according to Shelby's spokesman.
Few Americans Saving Enough for
Retirement
Too many American workers are not saving at all or at
least not at the levels needed for a comfortable retirement because of
unrealistic expectations, according to the 2004 Retirement Confidence
Survey released today by the Employment Benefit Research Institute
(EBRI), American Savings Education Council and Mathew Greenwald &
Associates, CongressDaily reported.
'We think one of the biggest challenges is getting the savings message
to people in a society that spends more of its time telling people to
spend, and borrow to do it,' said EBRI President Dallas Salisbury. This
year, 58 percent of Americans say they are saving for retirement, a
percentage that has remained stagnant since 2001 despite a recovering
economy and education efforts stressing the importance of planning and
saving for retirement. The survey found that workers think they can work
long past the normal retirement age, have low expectations of how much
they will need to live in retirement and do not expect their standard of
living to change in retirement. About 33 percent of workers aged 55 and
older say they have less than $25,000 in savings and retirement,
excluding the value of their home, and 25 percent of this age group say
they have $100,000 or more, the newswire reported.
Chief Executives’ Confidence Rises in
First Quarter
The confidence of chief executives in the U.S. economy
surged in the first quarter to the highest level in 20 years, according
to the Conference Board. The quarterly index of business confidence rose
to 73 in the first quarter, a substantial increase from 66 in the final
quarter of 2003, the Board reported. A reading above 50 reflects more
positive than negative responses from more than 100 chief executives
from various industries.
Scrushy Challenges Sarbanes-Oxley
The Wall Street Journal reported that lawyers
for HealthSouth Corp. founder Richard M. Scrushy filed one of the first
legal challenges to the Sarbanes-Oxley corporate-crime law, calling it
unconstitutional and overly vague. Congress passed the law in 2002 in
response to a wave of corporate scandals. Scrushy, who was ousted in
March 2003 as HealthSouth's chairman and chief executive, became the
first CEO of a major company to be charged with violating the
Sarbanes-Oxley Act; federal prosecutors contend he falsely certified the
accuracy of HealthSouth's financial statements to securities regulators
in August 2002. Scrushy’s legal team, led by Abbe Lowell and
Thomas Sjoblom of Chadbourne & Parke, filed motions with the U.S.
District Court in Birmingham asserting that the Sarbanes-Oxley Act is
unconstitutional because it improperly makes certification of an SEC
filing a possible felony and because the language of the law 'is so
vague as to defy comprehension,' the newspaper reported. To read the
full article, point your browser to
href='http://online.wsj.com/'>
size='3'>http://online.wsj.com (subscription
required).
U.S. Bankruptcy Court Approves Titan Settlement
with SureBeam Trustee
The San Diego-based Titan Corporation announced in a
press release yesterday that the U.S. Bankruptcy Court for the Southern
District of California approved the settlement agreement the company had
entered into with the bankruptcy trustee of SureBeam Corporation and SB
Operating Co LLC. This settlement provides for Titan to have immediate
access to, and can take legal title to, all of the SureBeam assets, with
the exception of a few selected assets that will remain in the
bankruptcy estate. These assets include all equipment and inventory,
patents, intellectual property, certain customer receivables, and leased
and subleased properties. The excluded items are cash and two customer
receivables.
Titanas the senior secured creditorintends
to
sell or otherwise dispose of the assets that it chooses to take title
to, which is expected to partially satisfy the $25 million senior
secured note owed to Titan by SureBeam, and Titan's guarantees of
SureBeam facilities leases. The court-approved settlement agreement
grants access to Titan of substantially all of SureBeam's assets, which
is consistent with the assumption used in the related after-tax
impairment charge of up to $10 million previously announced by Titan.
The Titan Corporation is a leading provider of comprehensive information
and communications systems solutions and services to the Department of
Defense, intelligence agencies and other federal government customers.
As a provider of national security solutions, the company has
approximately 12,000 employees and current annualized sales of
approximately $2.0 billion.
Dow Corning to Cut 250 Jobs
Dow Corning Corp., a global leader in silicon-based
technology, plans to eliminate 250 jobs, or 3 percent of its workforce,
around the world, the Associated Press reported. Spokeswoman Amy
Rosborough said Monday that most of the cuts would be in the United
States but none would involve union jobs. Rosborough said the Midland,
Mich.-based company, which employs about 8,200 people worldwide, began
informing workers of layoffs on Monday, the newswire
reported.
Dow Corning, a joint venture of Dow Chemical and
Corning, N.Y.-based Corning Inc., was forced into bankruptcy in 1995
after thousands of women sued over implants they said made them sick.
Last week, a federal judge set a target date for the company to emerge
from bankruptcy protection, paving the way for thousands of people to
begin receiving settlement checks over silicone implants.
WEIRTON STEEL
Judge Refuses to
Delay Weirton Steel Sale
Judge L. Edward Friend said an auction set for April
12 in Pittsburgh will go on as scheduled, followed by an April 14
hearing in Wheeling, W.Va., to finalize the sale, the Associated Press
reported. The Informal Committee of Secured Noteholders, a group of
bondholders who are collectively owed $118 million, have been working on
a bid of their own for Weirton. They had objected to the fast track that
Friend set for the $255 million deal with ISG, arguing that it makes it
difficult for other potential buyers to compete. Friend has set a
Tuesday deadline to receive competing bids and required offers to be at
least $6.24 million more than ISG's, or a minimum bid of $261 million,
the newswire reported.
The bondholders had argued that ISG's bid, which
includes cash and the assumption of various liabilities, undervalues the
West Virginia mill. Late Friday, they filed a motion seeking to delay
the deadline for up to three weeks to allow them more time to submit a
counteroffer. They also contended Weirton Steel is not the same company
teetering on the edge of collapse it was a month ago because a worldwide
shortage of coke, an essential fuel in the manufacture of tin-plated
steel, has improved. Friend said he is happy that Weirton Steel's
financial position has grown stronger but that continued improvement is
uncertain in a volatile market, AP reported. Extending the deadline
would not give the bondholders enough time to forge a new labor
agreement with the Independent Steelworkers Union, nor could the union
complete a ratification vote on an offer within that time frame, Friend
said.
Weirton Steel Posts $700 Million Loss in
2003
Bankrupt steelmaker Weirton Steel Corp. on Monday
reported a wider full-year loss after struggling with high pension
costs, restructuring and severance charges, Reuters reported. The
company, which filed for bankruptcy in May last year, reported a 2003
loss of $700 million, or $16.64 a share, compared
with a loss of $117.4 million, or $2.80 a share, in 2002, according to
the newswire.
UAL Rejects Atlantic
Coast Contract
Atlantic Coast Airlines on Monday said bankrupt United
Airlines has rejected its contract to provide regional service under
United Express, and as a result it will begin operating as Independence
Air, Reuters reported. Atlantic said there will be a transition period
for the exit of its United Express aircraft, beginning on June 4 and
ending Aug. 5. Atlantic said its new low-fare airline, Independence Air,
will begin flying out of Washington's Dulles airport this summer. In a
separate statement, United, a unit of UAL Corp., said it will work with
a new group of regional air carriers to fly ongoing United Express
Service out of Washington Dulles and Chicago O'Hare. The group recently
announced Chautauqua Airlines, Republic Airlines and Shuttle America as
new partners in various United Express operations. Existing partners Air
Wisconsin, Trans States and Mesa Air Group will also continue to serve
O'Hare and Dulles, with SkyWest serving O'Hare as well. The end of the
agreement between Atlantic Coast and United is subject to bankruptcy
court approval. A hearing will be held on April 16.
Telecom Headed for Bankruptcy Reruns? (CNET
News.com)
The telecommunications industry has made substantial
progress in putting a disastrous string of bankruptcies behind it, but
analysts are warning of further trouble ahead, CNET News.com reports.
Industry watchers are closely eyeing MCI as it prepares to emerge from
chapter 11 bankruptcy protection later this month, an event that will
mark the end of the highest-profile reorganization to hit the sector in
recent years. However, the industry is bracing for yet another painful
round of consolidation. Since 2000, 68 publicly traded telecom carriers
have filed for chapter 11, according to
href='http://dw.com.com/redir?destUrl=http%3A%2F%2Fwww.bankruptcydata.com&siteId=3&oId=2100-1037-5185087&ontId=1035&lop=nl_ex'>
face='Times New Roman' size='3'>BankruptcyData.com. Most of
those carriers are still in business and manyincluding
href='http://news.com.com/2110-1033-270666.html?tag=nl'>
face='Times New Roman' size='3'>360networks, AboveNet
(formerly
href='http://news.com.com/2110-1033-918353.html?tag=nl'>
face='Times New Roman' size='3'>Metromedia Fiber Network),
href='http://news.com.com/2009-1033-839335.html?tag=nl'>
face='Times New Roman' size='3'>Global Crossing and XO
Communicationshave recently emerged from bankruptcy with greatly
reduced debt burdens and squeaky-clean balance sheets. While these
companies are starting over, the industry as a whole is still mired in
problems. Over the past three years, analysts say, the overall financial
fundamentals of the telecom industry haven't changed much. To read the
full article, point your browser to
href='http://news.com.com/2100-1037_3-5185087.html'>
size='3'>http://news.com.com/2100-1037_3-5185087.html
size='3'>.
Air Canada Unions Eye Greater Say On Seeking
Alternative
Air Canada stands to face greater involvement
from its unions in identifying a savior if Trinity Time Investments Ltd.
abandons its plan to help the airline emerge from bankruptcy protection.
Trinity, which is headed by Hong Kong businessman Victor Li, said Friday
that it wouldn't extend its agreement to invest C$650 million into the
airline and help the carrier stave off possible liquidation beyond the
April 30 deadline. For some, the announcement was a sign that Li, upset
over the unwillingness of Air Canada's unions to approve changes to
their pensions, was abandoning the deal, especially since he also gave
Air Canada permission to seek alternative partners.
Provided by Daily Bankruptcy Review (
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Copyright (c) 2003 Dow Jones & Company, Inc.
All Rights Reserved
Judge Backs Startec's Reorganization
Plan
A federal bankruptcy court judge approved Potomac,
Md.-based Startec Global Communications Corp.'s reorganization plan
yesterday after it spent more than two years in chapter 11, but the
company may have to address new allegations of fraud brought by one of
its creditors, the Washington Post
reported. Startec, a company that primarily sells local and
international long-distance phone service, filed for protection from
creditors in December 2001, after a protracted period of declining
revenue hindered its ability to pay its debt. In February, the company
received preliminary approval from the judge to proceed with its
emergence from bankruptcy. The case did not receive a final order
approving the plan because Christine Harris, a creditor and former
employee, filed an eleventh-hour objection. Judge Duncan W. Keir
yesterday denied Harris's request to stop confirmation of Startec's
reorganization, but he instructed Startec's attorneys to rewrite the
reorganization plan to allow Harris to pursue a lawsuit seeking payment
from Startec's liability insurance. The judge also said the court would
hold a hearing to estimate the value of Harris's claim, which Startec
officials say is vastly overstated at $6 million. Jeffrey Poersch,
general counsel for Startec, said he expects the company to emerge from
chapter 11 by the end of April.
Spiegel Plans to Seek Buyers for Its Eddie Bauer
Retail Unit
Downers Grove, Ill.-based Spiegel Inc. plans to seek
buyers for its Eddie Bauer Inc. apparel unit, after German billionaire
Michael Otto failed to strike a deal with creditor banks to retain
control of the catalog company, people involved in the matter say, the
Wall Street Journal reported. The
mail-order retailer has been operating under bankruptcy court protection
since March 2003, shortly after the Securities and Exchange Commission
brought a civil action in connection with Spiegel's failure to file
quarterly reports for more than a year. Otto, whose family owns 89
percent of Spiegel's shares, had been trying to negotiate a deal to
retain control of Spiegel and settle potential legal claims by paying
off creditors, the newspaper reported. But Otto balked at creditors'
demands for $1.3 billion, and the two sides have been unable to settle
on a lower price, people involved in the talks say.
Eddie Bauer, which offers outdoorsy clothing and home
furnishings through a catalog, 440 retail outlets and online, is
considered the most valuable of Spiegel's three units, and is expected
to draw interest. In 2003 it accounted for $1.3 billion of Spiegel's
$1.77 billion of sales. In addition, Spiegel is expected to sell its
Newport News Inc. subsidiary, a far smaller catalog unit that sells
women's apparel, people involved in the negotiations said, the
face='Times New Roman'>Journal reported. It isn't clear whether
the company will seek to sell its Spiegel catalog operations, which sell
women's apparel and home furnishings, these people said. 'We're
continuing to work on a plan of reorganization,' a spokeswoman for
Spiegel said late yesterday.