|
Economic Growth Still Subdued, Fed Says
The U.S. economy's slow growth has continued into the new year, the
Federal Reserve's latest survey of economic conditions found, the
Washington Post reported. But few analysts or investors expect
Fed officials to cut interest rates again when they meet in a
policy-making session late this month. The survey released yesterday,
conducted by the Fed's 12 regional banks, found 'subdued growth' in
economic activity from mid-November through early January. The weakest
report came from the Dallas Federal Reserve Bank, where regional growth
'remained anemic.' 'Reports on consumer spending were consistently weak'
across the country, the report said, with holiday sales mostly at or
below last year's levels.
New Valley to Pay $55 Million for Control of Globalstar
New Valley Corp., a real estate company led by financier Bennett LeBow,
will
invest $55 million in Globalstar LP as part of a plan to gain control of
the bankrupt satellite-telephone company, Bloomberg News reported. The
financing will give Miami-based New Valley majority ownership in the
reorganized company, Globalstar said in court papers. Creditors
including Loral Space & Communications Ltd. and
Qualcomm Inc. will own the rest. New Valley's investment is subject to a
bankruptcy judge's approval. Globalstar listed $573.4 million in assets
and $3.34 billion in debts when it filed for chapter 11 protection in
February. The company failed to attract enough customers for its
satellite-phone service, which lets users make and receive calls from
almost anywhere in the world, according to Bloomberg. Globalstar needs
'financing immediately or runs the risk of administrative insolvency,''
company officials said in papers filed in the U.S. Bankruptcy Court in
Wilmington, Del., reported the newswire.
ENRON
Ex-Enron CFO Andrew Fastow Wins Delay in Asset Seizure
Fight
Former Enron Corp. Chief Financial Officer Andrew Fastow won
postponement of the U.S. government's bid to seize his bank accounts,
after arguing that the seizure might force him to reveal evidence that
would aid in his prosecution, Bloomberg News reported. Fastow and his
wife Lea asked that the forfeiture proceedings be put on hold until his
criminal case is resolved. Fastow, who pleaded innocent on Nov. 6 to 78
counts of fraud, money laundering and other charges, is accused of being
the mastermind of the fraud that led to the energy trader's collapse.
U.S. District Judge Melinda Harmon signed an order in Houston halting
the asset forfeiture proceedings, reported the newswire.
Bankruptcy Tangles Enron Contract Disputes
As many of Enron Corp.'s trading partners have recently found out, the
company's bankruptcy-protection filing has greatly complicated a kind of
contractual dispute that could normally be settled outside court, Dow
Jones reported. Over the past two months, a spate of Enron's former
business partners, such as Dynegy Inc. and AES Corp., have sued to have
the underlying contract controversy referred for arbitration.
For Enron, which wants the issues to stay in the bankruptcy court, more
than $6 billion could be at stake, as the company is party to thousands
of commodities contracts that have arbitration terms. That represents
'either the largest or one of the largest remaining assets' of the
company's property, Enron's lawyers wrote in a November suit against
Dynegy, according to Dow Jones. Dynegy and AES are scheduled to testify
on Thursday before U.S. Bankruptcy Judge Arthur Gonzalez in New
York, reported the newswire.
Enron/Contract Disputes: More Suits Filed
Following the action against Dynegy, Enron has filed suits against
Select Energy Inc., a unit of Northeast Utilities, Old Dominion Electric
Cooperative, Smurfit-Stone Container Corp., AES Corp., American Coal Co.
and Noble Gas Marketing Inc. Though the suits concern different
underlying contracts, they all involve the issue of the enforceability
of arbitration in the event of bankruptcy, Dow Jones reported.
Grand Jury Probe Examines J.P. Morgan's Links to
Enron
J.P. Morgan Chase & Co. earlier this month settled a lawsuit with
insurers over its dealings with Enron Corp. But the bank's Enron-related
problems may be heating up again, the Wall Street Journal
reported. In the past several weeks, J.P. Morgan Chase officers involved
in the bank's dealings with the fallen energy firm have appeared before
a Manhattan grand jury and have been interviewed by officials from the
Manhattan district attorney's office, according to people familiar with
the inquiry, reported the newswire. The grand jury's investigation is
part of a long-running probe by Manhattan District Attorney Robert
Morgenthau into J.P. Morgan and Enron , in particular the bank's role in
allegedly helping Enron hide debt through a series of natural-gas trades
with an offshore company called Mahonia Ltd., reported the
Journal. To read the full article, point your browser to
href='http://www.wsj.com'>www.wsj.com (subscription required).
UNITED AIRLINES
UAL CFO: Bookings Far Ahead of Last Year on Fare Sales
UAL Corp.'s United Airlines has experienced a boom in bookings thanks to
several fare sales the airline initiated since the start of the year,
UAL's chief financial officer said Wednesday, Dow Jones reported.
Speaking to reporters during a break in the company's bankruptcy
proceedings, Frederic Brace said that bookings have been 'very, very
good' and that load factors 'have stayed up there' so far this month.
Brace said later that the bookings were significantly ahead of last
year's levels, reported the newswire.
Several UAL Contested Items Moved To Later Hearings
Several high-profile items slated for UAL Corp.'s bankruptcy court
hearing on Wednesday, such as the pay package for its chief executive,
have been delayed for later hearings due to objections, Dow Jones
reported. The Association of Flight Attendants said in court papers
filed earlier this month that UAL's proposed employment agreement for
Glenn F. Tilton 'at this time is not in the best interests of the
estate,' reported the newswire. The flight attendants presented similar
objections to a UAL motion regarding the company's key employee
retention plan, saying it lacked sound business judgment and had
unreasonable terms. Both matters will be taken up at later hearings,
although a formal date has not yet been set, according to a preliminary
agenda released before Wednesday's meeting, Dow Jones reported.
Atlantic Coast Seeks Answers From United
Atlantic Coast Airlines Holdings Inc., the Dulles-based regional carrier
that relies on United Airlines for most of its business, asked a U.S.
Bankruptcy Court judge to force United to declare by Feb. 28 whether it
plans to continue using Atlantic Coast, the Washington Post
reported. United could reject or maintain its current affiliation
contract with Atlantic Coast, but under bankruptcy law United does not
have to make a decision for months into its 18-month planned
reorganization, reported the online newspaper. Atlantic Coast, however,
asked Judge Eugene R. Wedoff to force United to make a decision sooner.
Wedoff said he will rule on the petition at a Feb. 6 hearing if the
airlines do not reach an agreement by then. To read the full article,
point your browser to
href='http://www.washingtonpost.com/wp-dyn/articles/A63952-2003Jan16.html'>http://www.washingtonpost.com/wp-dyn/articles/A63952-2003Jan16.html.
KMART
IRT Property: Kmart Will Close One Location
IRT Property Co. said the latest round of store closings announced by
Troy, Mich.-based Kmart Corp. will affect only one of the six properties
the bankrupt retailer rents from the company, Dow Jones reported. The
real estate investment trust said in a press release on Wednesday that
rent from the Griffin, Ga., location that Kmart plans to close adds
about 1 cent a year to funds from operations. In 2001, IRT's funds from
operations totaled $1.25 a share.
On Tuesday, Kmart said it would close 326 stores and a distribution
center and slash about 37,000 jobs in a bid to emerge from chapter 11
bankruptcy protection by the end of April. The retailer, which filed for
bankruptcy in January 2001, expects to book about $1.7 billion in
restructuring charges as a result of the proposed closings, reported the
newswire.
Kmart Closings Will Hurt Some Suppliers More Than
Others
A second round of store closings announced on Tuesday by Kmart Corp.
isn't good news for any of the company's suppliers, but some will likely
be hurt more than others, Dow Jones reported. Analysts say that big
suppliers of consumer products like Procter & Gamble Co. or toy
manufacturers like Mattel Inc. will be able to shift sales lost from the
shuttering of 326 Kmart stores to other big retail chains like Wal-Mart
Stores Inc. and Target Corp. But there are other suppliers with close
ties to Kmart that will be burned in the wake of the Troy, Mich.-based
discount retailer's Tuesday announcement that it will close
underperforming stores by early April in a bid to emerge from chapter 11
bankruptcy by April 30, reported the newswire. Dallas-based Fleming
Cos., the nation's largest wholesale grocery distributor, derived 20
percent of its third-quarter revenue from Kmart, and will suffer
particularly from the closure of 60 -- or more than half -- of Kmart's
supercenters, which include full-line grocery stores. To read the full
article, point your browser to www.wsj.com
(subscription required).
Kmart Will Pay Less to Facilitate 2nd-Round Store
Closings
Kmart Corp. says that due to the success of its last round of store
closings, it will pay store closing agents less to run its new round of
closings and forgo performance guarantees, Dow Jones reported. 'Given
the recent experience of last year's store closing sales, the debtors'
business judgment supports dispensing with the guarantee of performance
in favor of a more cost-efficient compensation arrangement,' Kmart said
in a filing on Tuesday with the U.S. Bankruptcy Court in Chicago. The
company is again seeking to use Abacus Advisors Group LLC to manage the
new round of closings, according to the newswire.
Abacus, which would select and supervise designated agents to conduct
the closings, had monitored Kmart's closing of 283 stores in the spring
of 2002. During the 2002 closings, Kmart was guaranteed a minimum
recovery from the sales, undertaking a 'substantial risk' that Kmart
compensated for by providing a 'sizable success fee in the event of a
superior recovery,' reported Dow Jones. For the new round of closings,
Kmart is proposing to pay its closing agents a base fee plus incentives
if there's a successful sale. But because the agent isn't guaranteeing
any particular performance, less compensation is warranted, Kmart said,
reported the newswire. A hearing on Kmart's request to conduct the
closing sales is scheduled for Jan. 28 before U.S. Bankruptcy Judge
Susan Pierson Sonderby.
Footstar Shares Surge on Kmart Store-Closing Effect
Footstar Inc. shares surged 32 percent after the operator of shoe
departments in Kmart Corp. stores said its business wouldn't be
'materially'' hurt as the discount retailer closes fewer outlets than
investors expected, Bloomberg News reported. The company's shares rose
$2.36 to $9.75 at 4 p.m. in New York Stock Exchange trading, their
biggest gain ever. The closing of 326 Kmart stores isn't expected to
have a 'materially negative effect'' on Footstar's operations or its
ability to meet the terms of a $325 million credit line, the company
said in a statement. Some investors had expected Kmart to close more
than 500 stores. The stores to be shuttered account for $193.8 million
of Footstar's $2.3 billion in sales last year, reported the
newswire.
Sleepmaster Panel Settles Lawsuits, Chapter 11 Plan
Objections
Sleepmaster LLC's committee of unsecured creditors on Wednesday reached
a settlement of two lawsuits and resolved all the objections to its
proposed reorganization plan, Dow Jones reported. The moves pave the way
for the creditor panel to win confirmation of its plan later this month.
The committee will file an amended plan to the U.S. Bankruptcy Court in
Wilmington, Del., by Jan. 23 that reflects the settlement and the
resolved objections, said Mark D. Silverschotz, an attorney representing
the creditors' committee, reported the newswire. U.S. Bankruptcy Judge
Mary F. Walrath can sign an order confirming the plan without further
need of a hearing, reported Dow Jones.
Orlando Predators Auditor Has Going Concern Doubt
Orlando Predators Entertainment Inc. auditor, AJ. Robbins PC, said there
is substantial doubt about the company's ability to continue as a going
concern, Dow Jones reported. In its annual report filed on Tuesday with
the Securities and Exchange Commission, the company said it has incurred
net losses from operations since inception, has an accumulated deficit
of $15.1 million through Sept. 30, 2002, a working capital deficit of
$3.3 million and continues to use significant amounts of cash in its
operations. Orlando Predators Entertainment owns and operates the
Orlando Predators, a professional arena football team, and is a member
of the Arena Football League. The company said it has decided to pursue
the sale of its teams for the company's best interest. If the company is
unable to successfully negotiate the sale, it might be necessary to seek
protection under bankruptcy laws, the filing said, reported the
newswire.
Regus, Units Seek Court OK of Employee-retention Plan
Regus PLC , which filed for chapter 11 bankruptcy late on Tuesday with
three subsidiaries, is asking a bankruptcy court to allow it to make
retention and severance payments to keep selected employees on board
while it reorganizes, Dow Jones reported. The company said the value of
its business 'cannot be preserved and maximized for the creditors'
benefit without the employees critical to the operation of those
businesses,' according to court papers Dow Jones Newswires obtained on
Wednesday. Regus and its subsidiaries operate business centers that
offer fully equipped and furnished offices and meeting rooms. The
company's U.S. headquarters is in Purchase, N.Y., and its European head
office is in Surrey, England.
US AIRWAYS
US Airways: Over $61 Billion in Claims Filed in Chapter
11
At today's hearing, US Airways will ask the court to approve alternative
dispute resolution (ADR) procedures for some disputed claims, Dow Jones
reported. In its request for approval of the procedures, US Airways said
about 4,500 claims seeking more than $61 billion were filed in the
company's chapter 11 case by the Nov. 4 general claims deadline. US
Airways, which listed $10.65 billion in liabilities in its chapter 11
filing, said it believes many of the claims are 'patently illegitimate,
duplicative, or otherwise grossly overstated in amount,' according to
the court filing. US Airways said that given the number, nature and
extent of the claims it disputes, use of the proposed ADR procedures
will help the parties resolve the claims in a quick and less costly
manner, reported the newswire.
Some Creditors Say US Airways Depriving Them Of Plan
Vote
A group of equipment trust certificate holders says US Airways Group
Inc. is seeking to deprive it of its right to vote on the airline's
proposed reorganization plan, Dow Jones reported. The public noteholder
group said in court papers filed on Tuesday and obtained by Dow Jones
Newswires that US Airways has proposed having the indenture trustee for
the notes vote one claim for the entire amount of debt. According to the
noteholders, US Airways has incorrectly characterized them as 'merely
creditors of creditors of the debtors,' who aren't entitled to vote on
the plan.
US Airways, which has been operating under chapter 11 since August, has
proposed a reorganization plan that provides for the Retirement Systems
of Alabama - one of its top creditors - to inject $240 million into the
reorganized company in exchange for a substantial equity stake. The
reorganized company, whose costs would be reduced by up to $1.6 billion,
would also obtain a government loan guarantee to back a $1 billion loan,
Dow Jones reported. A hearing on voting procedures and a disclosure
statement related to the plan is scheduled for today before Judge
Stephen Mitchell of the U.S. Bankruptcy Court in Alexandria, Va.
Magellan Health: FY02 Revenue $1.75 Billion
Magellan Health Services Inc. reported a net loss of $729.1 million, or
$21.07 a share, for its latest fiscal year ended Sept. 30, compared with
net income of $24.6 million, or 56 cents a diluted share, in fiscal
2001, Dow Jones reported. According to its annual report filed late on
Tuesday with the Securities and Exchange Commission, Magellan recorded
goodwill-impairment charges of $415.9 million related to an annual
impairment test during fiscal 2002, the newswire reported.
Also during fiscal 2002, the company recorded special charges of $15.7
million related to restructuring plans that have resulted in the
elimination of some positions and the closure of certain offices.
Magellan is seeking a financial restructuring of its $1 billion in debt
that could be conducted through chapter 11 bankruptcy protection,
reported the newswire. Magellan said in its annual report that unless
certain waivers under the company's credit agreement are extended beyond
Wednesday's expiration date, the company will be in default of its
agreement, which could result in acceleration of debt.
NHL Bankruptcies May Force Other Teams to Pay Back Some Debt
Bankruptcy filings by the Ottawa Senators and Buffalo Sabres may drag
other National Hockey League teams into financial trouble as lenders
consider whether to cut team values and force them to pay back part of
their debt, bankers said, Bloomberg News reported. J.P. Morgan Chase
& Co. and SG Cowen Securities Corp. are among the firms that have
written clauses into loans they've arranged or made to hockey teams
allowing the lenders to demand clubs reduce debt if the values of other
franchises fall. Such 'price-floor covenants'' typically limit debt to
half of a team's value. Under current economic conditions, many of the
league's teams would have a hard time coming up with the money to reduce
debt, and that could lead to more bankruptcies, said Sal Galatioto, head
of Lehman Brothers Inc.'s sports finance unit, reported the
newswire.
Kaiser Units File for Bankruptcy Protection
In a move Kaiser Aluminum says won't impact daily operations, nine of
the company's wholly owned subsidiaries joined it in chapter 11
bankruptcy to avoid liens related to pension liabilities, according to
the Houston Business Journal. The aluminum producer said Tuesday
that the additional filings in the U.S. Bankruptcy Court in Delaware
were a move to shield the subsidiaries' assets from possible liens that
could emerge from the Pension Benefit Guaranty Corp. if Kaiser doesn't
contribute $15 million to its salaried pension plan by Wednesday, the
online newspaper reported. The company had previously disclosed it
didn't plan to seek approval from the bankruptcy court to make that
payment. The company said possible liens would violate provisions
related to its debtor-in-possession credit agreement while in chapter
11. The Houston-based company and 16 other subsidiaries filed for
chapter 11 bankruptcy in Delaware in February of last year.
NTL's Share Settlement Dispute to Get Bankruptcy Court
Hearing
A U.S. bankruptcy judge will hold a hearing to decide whether the Nasdaq
Stock Market should adjust trades by investors who sold NTL Inc. shares
at a quarter of their current price because they didn't know the U.K.
cable-television company would issue fewer shares than planned,
Bloomberg News reported. NTL, which had Eur
|
