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Bush Administration Supports Extension of FCRA
Treasury Secretary John Snow on Monday said the Bush administration
supports a permanent extension of the Fair Credit Reporting Act (FCRA)
under which the law's pre-emption of state regulations would be coupled
with a variety of measures designed to protect against identity theft,
CongressDaily reported. The
administration's position parallels proposals made last week by House
Financial Services Committee leaders, which include requirements that
credit bureaus block the release of prejudicial information deemed
fraudulent. Snow also called for consumers to be able to obtain a free
annual credit report, and said, 'Every consumer should be able to know
what the credit score is, and to be able to review credit reports for
accuracy and for completeness.' Snow also praised the role of national
standards governing credit information in the economy at large, and said
that one study found that lenders' use of credit scores boosted minority
borrower approval rates by 29 percent, reported the newswire.
Crown Pacific Partners LP Seeks Chapter 11 Bankruptcy
Protection
Crown Pacific Partners LP, a lumber maker and owner of timberland, said
it filed for bankruptcy protection after failing to reach an agreement
with lenders on financing, Bloomberg News reported. The Portland,
Ore.-based company said in a statement distributed by PR Newswire that
it sought chapter 11 bankruptcy protection in Phoenix, reported the
newswire.
The company had for several months been in recapitalization talks
with its bank lenders and bondholders as sales fell. The forest products
industry has struggled for more than two years as the sluggish global
economy contributed to falling prices and lagging demand, Reuters
reported. Crown Pacific and five affiliates filed for protection from
creditors on Sunday at the U.S. Bankruptcy Court in Phoenix. The
entities listed a combined $715 million of assets and $610 million of
debts, reported the newswire.
DIVA Systems Receives $39.5 Million Settlement From Gemstar-TV
Guide
One year after Gemstar-TV Guide International Inc. agreed to pay $40
million for DIVA Systems Corp.'s assets and intellectual property, the
company paid $39.5 million in full and complete settlement of all claims
against Gemstar-TV Guide--while forfeiting all rights to any of DIVA's
property, the company announced yesterday in a press release.
Under an agreement approved by the Judge Dennis Montali of the U.S.
Bankruptcy Court for the Northern District of California on May 30,
2003, Gemstar was required to pay 21 days later the full amount, in
cash, to DIVA's bankruptcy trustee. DIVA's estate received the $39.5
million payment on June 20, 2003.
Fleming Sells 17 Discount Grocery Stores to Grocery Outlet
Fleming Cos., which filed for bankruptcy in April, sold 17 discount
supermarkets in
Texas and Louisiana to closely held Grocery Outlet Inc. as it pares
operations, Bloomberg News reported. Berkeley, Calif.-based Grocery
Outlet will acquire the leases and assets of the stores, and reopen them
under its own brand name by late summer, Grocery Outlet said in a
statement. Fleming last week agreed to sell its main
grocery-distribution business to closely held C&S Wholesale Grocers
Inc. for an undisclosed price. The company also is trying to sell its
Core-Mark convenience-store supply business, reported the newswire.
Champion Replaces CEO With Turnaround Specialist
Champion Enterprises Inc., the largest U.S. builder of prefabricated
homes, said on Monday it replaced its chief executive with a turnaround
specialist to try to speed up a return to profitability, Reuters
reported. The decision to name Al Koch, a former chief financial officer
of Kmart, to replace Chairman and CEO Walter Young, comes after Champion
had reported six consecutive quarterly losses. Shares of the Auburn
Hills, Mich.-based company rose nearly 15 percent on the move and news
that a new lender, U.S. Bancorp, plans to offer financing to buyers of
manufactured homes after several companies exited that arena. Champion,
like others in its sector, has seen revenue plummet as lenders have been
less willing to loan money to buyers of manufactured houses in a weak
economy. These borrowers are seen as a higher credit risk than owners of
traditional homes, reported the newswire.
Air Canada Pilots Vote in Favor of Cost-cutting Plan
Air Canada pilots agreed to C$251 million ($186 million) of concessions
such as pay cuts, clearing the way for the insolvent airline to shift
from cutting labor expenses to reducing its lease costs, Bloomberg News
reported. The pilots, the last of Air Canada's nine unions to ratify a
new cost-cutting contract, voted 87 percent in favor of the six-year
accord, the 3,200-member union said. Air Canada has won C$1.1 billion in
total labor-cost savings from its unions.
The carrier, which won protection from creditors on April 1, can now
focus on reducing aircraft costs in talks with lessors such as General
Electric Co.'s GE Capital Aviation Services Inc. The Montreal-based
airline is trying to cut lease costs by half to C$720 million as part of
a restructuring plan to cut annual expenses by a fifth, or C$2.1
billion, reported the newswire.
American Airlines Can Furlough 1,800 Ex-TWA Flight Attendants
AMR Corp., American Airlines' parent, can go ahead with planned
furloughs of more than 3,100 flight attendants on Wednesday, including
almost 1,800 former employees of Trans World Airlines Inc., which
American acquired, a judge said, Bloomberg News reported. U.S. District
Judge Carol Amon turned aside a request by former TWA flight attendants
for an injunction to block the indefinite furloughs, saying that AMR
might be driven into bankruptcy if the furloughs don't go ahead as
scheduled.
'If bankruptcy ensues, many more employees face furlough or termination
and plaintiffs will be in no appreciably better situation than they are
in now,'' Amon wrote in a 40-page ruling, following three days of
hearings in New York last week. AMR, which lost $5.3 billion in the past
two years, in May began implementing $1.8 billion a year in job, wage
and benefit cuts negotiated with workers in an effort to avoid filing
for bankruptcy protection. Those savings are part of the company's plan
to reduce annual expenses by $4 billion, reported the newswire.
Malden Mills to Emerge from Bankruptcy
Polartec maker Malden Mills Industries Inc. on Monday said it expects to
emerge successfully from bankruptcy-court protection on Aug. 26 after
nearly two years of restructuring, Reuters reported. Malden Mills'
chapter 11 reorganization plan has the support of a creditor group led
by General Electric Co.'s finance arm, GE Capital. A confirmation
hearing on the plan is set for Aug. 14. The plan is expected to take
effect on Aug. 26, Malden Mills spokesman David Costello said.
A fire in 1995 led to the company's bankruptcy filing in Nov. 2001 as
higher debt and a sales shortfall limited its cash flow. Insurance did
not cover the entire cost of building a $400 million plant in Lawrence,
Mass., leaving the company with about 25 percent of the bill, reported
the newswire.
ENRON
Enron Reaches Tentative Deal With Creditors Over Its
Assets
Enron Corp. reached a tentative agreement with creditors, the Wall
Street Journal reported. Enron's reorganization plan, when it is
finalized, is likely to specify targeted levels of recovery for
creditors. The targeted recoveries are likely to total less than 20
cents per dollar of debt for the vast majority of creditors, people
familiar with the negotiations say, according to the online
newspaper.
Enron, which has been operating under chapter 11 bankruptcy
protection since December 2001, was joined by its creditors on Friday in
seeking bankruptcy-court approval to extend its deadline to July 11 for
filing a reorganization plan. It said in a court filing the additional
time was needed to finalize a 'tentative agreement in principle' with
unsecured creditors and creditors of its Enron North America Corp.
affiliate, the newswire reported. The reorganization plan is expected to
call for those creditors to divide proceeds from sales of numerous Enron
assets and the settlement of certain energy-trading contracts. Those
sales and settlements have generated nearly $5 billion for the
bankruptcy estate. In addition, creditors are expected to receive
ownership stakes in the planned successor companies to Enron's
scaled-down operations focusing on its pipelines, electric utility and
international assets, reported the Journal.
Enron Can Delay Recovery Plan Filing, Bankruptcy Judge
Decides
Enron Corp. won a federal judge's approval to wait until July 11 to file
a plan for apportioning assets to creditors owed more than $50 billion,
Bloomberg News reported. U.S. Bankruptcy Judge Arthur J. Gonzalez in New
York agreed to the extension, giving the company more time to complete
an agreement with creditors of the company's Enron North America
unit.
EDS Says Payment from WorldCom Delayed
Computer services company Electronic Data Systems Corp. (EDS) said on
Monday it expects its second quarter free cash flow to be below its
target, because of a later-than-expected payment from bankrupt
telecommunications company WorldCom Inc., Reuters reported. EDS had
previously expected a $98 million payment from WorldCom for a
pre-bankruptcy receivable by the end of the current quarter. The company
now expects the payment later this year.
Consequently, the company expects to miss its $75 million to $125
million target in the second quarter for free cash flow, which the
company defines as net cash from operating activities minus capital
expenditures, according to Reuters. Spokesman Tom Mattia said, however,
the payment would boost its second half free cash flow above its
guidance of $200 million to $350 million, reported the newswire.
Kmart Seeks to Recover $49 Million
Music and video distributor Handleman Co. on Monday said discount
retailer Kmart Holding Corp. was seeking to recover $49 million it paid
Handleman while under bankruptcy court protection, Reuters reported.
Handleman said Kmart filed a complaint with the U.S. Bankruptcy Court in
Chicago seeking repayment of the money it gave Handleman last year, but
Handleman said it still had a strong relationship with the discount
retailer. Kmart had paid more than $300 million to key suppliers deemed
so important that their pre-bankruptcy bills must be paid off right
away. A district judge in Chicago ruled earlier this year that Kmart's
payments should not have been allowed. Kmart is appealing that decision,
however, it is continuing to seek the money while awaiting the appellate
court's decision, reported the newswire.
GLOBAL CROSSING
XO Owns $790 Million of Global Crossing Bank Debt
Carl Icahn's XO Communications Inc. said it bought about $790 million
worth of Global Crossing Ltd. bank debt as part of plans to acquire the
bankrupt fiber-optic network operator, Bloomberg News reported. Reston,
Va.-based XO said it bought $495 million principal amount of the $2.21
billion in outstanding loans in a tender offer, adding to the $294
million that XO already owned.
Icahn last month announced a bid for Global Crossing, seeking to
combine the companies' high-speed telecommunications networks. XO's
proposal, which Icahn values at almost $900 million, rivals a separate
offer from Singapore Technologies Telemedia Pte. for a 61.5 percent
share of the Global Crossing. Global Crossing and its bondholders have
agreed to sell to ST Telemedia and are now seeking U.S. government
approval of the transaction, reported the newswire.
Global Crossing Has $86 Million May Loss as Revenue
Rises
Global Crossing Ltd. said its net loss widened to $86 million in May
from a month
earlier, and revenue rose 2.5 percent to $247 million, Bloomberg News
reported. The company had a net loss of $75 million in April, according
to a statement distributed by PR Newswire. Revenue was $241 million in
April.
Global Crossing sought protection from creditors in January 2002 as
prices plunged for network use amid a glut in fiber-optic capacity.
Global Crossing, which is selling a majority stake to Singapore
Technologies Telemedia Pte, said its consolidated cash
balance was about $537 million as of May 31. Earnings before interest,
taxes, depreciation and amortization broke even, from an Ebitda loss of
$10 million in April, reported the newswire.
Spalding Holdings Files for Chapter 11 Bankruptcy
Protection
Spalding Holdings Corp., maker of Top-Flite golf balls, filed for
bankruptcy protection, Bloomberg News reported. The company agreed in
April to sell its sporting goods business to Russell Corp. to focus on
its golf line. The Chicopee, Mass.-based company filed for chapter 11
protection in U.S. Bankruptcy Court in Wilmington, Del. Spalding is
owned by Kohlberg Kravis Roberts & Co., reported the newswire.
Top-Flite Golf Files for Bankruptcy, Plans Sale to Club Maker
Callaway
The Top-Flite Golf Co., the world's largest golf ball producer, is
filing for bankruptcy and plans to sell its assets to club maker
Callaway Golf, the Boston Globe reported. Top-Flite CEO Jim
Craigie said on Monday the company's $250 million in sales in 2002 were
being crushed by its $530 million debt in a market that was too
competitive, the online newspaper reported. Under the deal, which needs
government approval, Callaway would buy Top-Flite for $125 million, free
and clear of debt. Craigie said he doesn't expect any interruption in
supply, production or distribution of Top-Flite golf products. He said
Carlsbad, Calif.-based Callaway plans to continue making Top-Flite, Ben
Hogan and Strata golf products, which account for about 70 percent of
Top-Flite's sales, the Globe reported. He said no decisions about
layoffs will be made until the sale is finalized, probably within the
next three months.
HealthSouth Investors to Get Company Business Plan
HealthSouth Corp. said it will tell investors and creditors about its
business plan and give financial projections next week, Bloomberg News
reported. Forensic auditors from PricewaterhouseCoopers LLP have been
combing accounts at the company. HealthSouth will hold a July 7 meeting
and conference call, it said in a news release. Auditors expect to
finish their work in the third quarter, company spokesman Andy Brimmer
said, Bloomberg reported.
HealthSouth warned investors in March not to trust its books back to
1986 after the government said the company and former Chief Executive
Richard Scrushy inflated profits. The fraud may surpass $2.5 billion,
prosecutors said. Investors, some of whom
expect a bankruptcy filing, have been seeking financial details. 'The
consensus is still that it's going to be a reorganization,'' Leo
Dierckman, an analyst at HealthSouth
bondholder Conseco Capital Management Inc., said, Bloomberg
reported.
Asbestos Takes the Senate
In the 'Review and Outlook' column, a Wall Street Journal article
addresses the Senate asbestos litigation discussions. To read the
article, point your browser to www.wsj.com
(subscription required).
Nextel to Get WorldCom Wireless Assets
Nextel Communications Inc. has agreed to acquire the high-speed Internet
wireless assets of bankrupt WorldCom Inc. for $144 million in cash,
besting a bid by BellSouth Corp., according to a court filing made on
Monday, Reuters reported. WorldCom paid about $1 billion for the
wireless assets at the height of the Internet boom in 1999 through the
acquisition of other companies. WorldCom said it would file information
about the Nextel agreement by July 7 and the U.S. Bankruptcy Court for
the Southern District of New York will hold a hearing on July 8 to
consider the transaction, according to the filing with the court,
reported the newswire.
Neenah Foundry Gets $110 Million New Bondholder Funds
Neenah Foundry Co. said on Monday it received commitments for up to $110
million of new financing from bondholders and will ask these creditors
to approve a plan for restructuring through a prepackaged plan of
reorganization under chapter 11 bankruptcy rules, Reuters reported. The
company said most of the latest commitments are from holders of
outstanding 11-1/8 percent subordinated notes due in 2007. The funds
will back up Neenah's senior second-secured notes to be issued in
connection with its proposed financial restructuring.
The latest funds, together with $95 million of senior secured financing
from Fleet Capital Corp., mean Neenah can move forward with its
restructuring, the company said. Neenah said creditors extended
deadlines to give the company an additional 30 days to seek bondholder
approval for the prepackaged reorganization, reported the newswire.
Judge Won't Stay FERC's Order Against NRG
A federal judge on Monday denied a motion by NRG, the bankrupt unit of
Xcel Energy Inc., aimed at allowing it to stop supplying electricity to
utility Connecticut Light and Power, Reuters reported. In his ruling,
U.S. District Judge Richard Casey said he did not have jurisdiction to
stay an order by the Federal Energy Regulatory Commission (FERC) forcing
NRG to resume service to the Connecticut utility. He said FERC actions
are only reviewable by a federal court of appeals.
'Given the unique regulatory framework for the business of selling
electric energy and the pending FERC proceeding, the Court lacks
jurisdiction to grant (NRG's) requested relief,' Casey said in the
ruling issued late in the day, reported the newswire.
SEC Charges Peregrine With Fraud, OKs Settlement
Software company Peregrine Systems Inc., which is reorganizing under
bankruptcy protection, on Monday partially settled charges filed against
it in a lawsuit by securities regulators, Reuters reported. The
Securities and Exchange Commission said the San Diego-based company
agreed to a partial settlement without admitting or denying allegations
in a lawsuit filed in federal court in southern California. In a
statement, the SEC said Peregrine had agreed not to violate certain
securities laws and to disclose the condition of its internal controls
once its reorganization was approved by bankruptcy court. The company
also agreed to hire an internal auditor and compliance officer and to
begin training and education programs for its officers, reported the
newswire.
Magellan Says Onex to Increase Investment Size
Magellan Health Services Inc. said on Monday that Canadian conglomerate
Onex Corp. would increase the size of its previously announced
investment, Reuters reported. Columbia, Md.-based Magellan, which
manages mental-health benefits for health plans and employers, said the
price to be paid by Onex was based on a 'pre-money equity valuation' of
$285 million compared with $185 million under the original
commitment.
Toronto-based Onex said in May it would take a controlling interest and
invest up to C$275 million ($204 million) in Magellan, which filed for
chapter 11 bankruptcy protection earlier this year, reported the
newswire.
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