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Fed Makes Unusual Pledge To Keep Interest Rates Low
The Federal Reserve kept its interest-rate target at a 45-year low of 1
percent, while making an unusually explicit commitment to keep it close
to that level for some time, the Wall Street Journal reported.
The unanimous decision by the central bank's policy-making committee to
retain the current target on the federal-funds rate was widely expected.
Also, as expected, it said risks to growth in the next few quarters are
balanced, but the risk that inflation would go 'undesirably low' was
greater than the risk of it rising. The risk of falling inflation would
be the central bank's 'predominant concern,' it said, echoing what it
said after its June 25 policy meeting, reported the newspaper.
But unlike in June, the Fed also said, 'policy accommodation can be
maintained for a considerable period,' in effect a promise to keep rates
low, perhaps at 1 percent, for many more quarters. This appears to be
the first time the Fed, since it began issuing statements after its
policy meetings in 1994, has gone beyond stating its outlook for the
economy and linked that outlook to the likely path of interest rates
beyond the next month or two, reported the Journal.
ADELPHIA
Adelphia Sues Preferred Shareholders Over Board
Appointments
Adelphia Communications Corp. sued preferred shareholders to block them
from appointing directors to the company's board, Bloomberg News
reported. Adelphia, which has $18 billion in debt, asked U.S. Bankruptcy
Judge Robert Gerber to block preferred shareholders from trying to
expand the company's nine-member board. Two investors, Talton Embry and
Arthur Amron, say they deserve board seats. The suit against Embry,
Amron and companies affiliated with them said their demands will cause
'an immediate and irreparable disruption'' to Adelphia's bid to create
an independent board and emerge from bankruptcy. 'The preferred
shareholders have not established that they have any legitimate basis to
participate in the corporate governance of Adelphia at this stage of the
proceedings,'' said the suit, filed yesterday in federal bankruptcy
court in New York, reported the newswire.
Adelphia Business Solutions Hires Grant Thornton As Accountant
Adelphia Business Solutions Inc. on Aug. 5 hired Grant Thornton
LLP as its new independent accountant, according to a filing with the
Securities and Exchange Commission. The Form 8-K filing from Monday
didn't include further information on the hiring. Adelphia Business
Solutions, which has been in chapter 11 since March 2002, once provided
communications services in 80 markets. The number had been reduced to 50
markets as of Dec. 31, 2001, as a result of economic downturn and a lack
of access to the capital market.
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WORLDCOM
WorldCom Investigators at FBI Appeal for Leads From the
Public
The Federal Bureau of Investigation, which is probing allegations that
WorldCom Inc. improperly evaded network access fees, has appealed to the
public for leads, Bloomberg News reported. 'The FBI has conducted
numerous interviews regarding these allegations, and additional
information is sought from individuals and corporate entities,'' the
agency said in a three-paragraph press release yesterday. Lawyer Marc
Harris, who's not involved in the case, said the FBI's notice is unusual
for white-collar matters, though he said it doesn't mean the FBI is
struggling to build a case against WorldCom. WorldCom spokeswoman Claire
Hassett said the company has previously launched an internal
investigation and will 'continue to cooperate fully'' with federal
investigators.
WorldCom Appoints Roscitt as President
WorldCom Inc. appointed a former AT&T Corp. executive as its new
president and chief operating officer to oversee the embattled
telecommunications company's sales, product development and network
operations, the Washington Post reported. WorldCom officials said
Richard R. Roscitt will start on Sept. 1 and split most of the duty of
running the Ashburn-based firm's operations with chairman and chief
executive Michael D. Capellas, who is ceding the president's title to
Roscitt. All of WorldCom's business units, including business, consumer,
international and network operations, will report to Roscitt, reported
the Post.
MCI Used 'Pseudo' Numbers, Verizon Claims in FCC
Filing
MCI employees discussed the use of 'pseudo' phone numbers that may have
helped the long-distance carrier to avoid paying fees to local phone
companies for completing calls, according to internal MCI e-mails
included in a filing that rival Verizon Communications Inc. handed over
to the Federal Communications Commission on Tuesday, the Wall Street
Journal reported. MCI competitors such as Verizon and AT&T Corp.
have charged that the company directed a conspiracy to systematically
avoid access fees paid to local phone companies for use of their
networks. They allege that MCI, with the aid of third parties, stripped
call-routing data and inserted false data to make calls appear as if
they were local, and therefore less expensive to MCI, reported the
Journal.
Global Crossing Forms Partnership With Unit of IDT Corp.
Global Crossing Ltd. said it formed a partnership with a unit of IDT
Corp., a company that had unsuccessfully tried to gain control of Global
Crossing, Bloomberg News reported. The U.S. telecommunications companies
said they agreed to jointly sell their services to businesses in 22 U.S.
cities.
Allou Health Fraud and Bribery Charges to Be Filed, U.S. Says
Federal prosecutors will charge eight people with fraud and bribery at
Allou Health Care Inc., a bankrupt health and beauty products
distributor, U.S. authorities said, Bloomberg News reported. The alleged
bribery scheme involved falsification of a report about arson at a
company warehouse, authorities said.
HealthSouth Pays $117 Million Payment for Interest Past Due
HealthSouth Corp. said it has paid $117 million in past-due interest
under various borrowing agreements, Bloomberg News reported. The
hospital operator has also initiated discussions over an exchange offer
for its 3.25 percent convertible subordinate debt, according to a
statement on PR Newswire.
ABA Votes to Let Lawyers Report Crime to Management
The American Bar Association (ABA) voted to permit lawyers with
corporate clients to report corporate wrongdoing to company management
and regulators, Bloomberg News reported. The ABA took the action at its
annual meeting in San Francisco to stop criminal activity at companies
before corporate scandals, such as those at Enron Corp. or WorldCom
Inc., can develop. The rule is voluntary and allows lawyers to disclose
wrongdoing within an organization or to regulators if management doesn't
take action, reported the newswire.
Enron Sues Louisiana-Pacific for $63.6 Million in Contract
Dispute
Enron Corp. filed a lawsuit claiming that Louisiana-Pacific Corp. owes
it $63.6 million under two energy-supply contracts, Bloomberg News
reported. Louisiana-Pacific, the biggest North American producer of
floor and roof paneling, signed power-purchase agreements with an Enron
unit in September 2000 and June 2001, according to the lawsuit filed in
the U.S. Bankruptcy Court in Manhattan. The deals let Louisiana-Pacific
lock in a set price for power over a fixed period. In January,
Louisiana-Pacific said the contracts were void because Enron manipulated
power prices, the suit said.
The outcome of the issues raised in the dispute may affect the
resolution of thousands of Enron contracts. Enron, which owes creditors
about $67 billion, has said it expects to recoup about $4.4 billion from
contracts for natural gas, power, coal, and other commodities, reported
the newswire.
General Media Files for Bankruptcy
General Media Inc. filed for bankruptcy after competition from the
Internet, retail video outlets and cable television, led it to miss
payments to bondholders, Bloomberg News reported. General Media is 85
percent owned by Bob Guccione and is a unit of Penthouse International
Inc. The company missed payments on $41.8 million of bonds in April. New
York-based General Media listed more than $100 million in assets and
more than $100 million in debts in chapter 11 papers filed in the U.S.
Bankruptcy Court in Manhattan.
Fife Latest Winery to File for Bankruptcy
The small, award-winning Fife Vineyards and winery in Mendocino County
has become the latest North Coast vintner to file chapter 11 bankruptcy,
the victim of a stalled economy and a grape glut that are hobbling the
wine industry, the Press Democrat reported. 'We're mortals and it
takes more than that to succeed in the wine business today,' Fife
Vineyards founder Dennis Fife said Monday. 'It takes more resources now
than it ever did before.'
Fife is the third North Coast winery in a year to file for chapter 11
bankruptcy, and the specter of at least two more years of a grape glut
due to overplanting means more failures across the industry could be on
the horizon unless business picks up. The 12-year-old Fife Vineyards
said it will cut its upcoming crush by a third, an indicator that the
impact of the bankruptcy will ripple through to other parts of the wine
business. Fife already has notified 30 growers that it plans to cut
purchases and to renegotiate prices, reported the newspaper.
Turnaround Specialist Getzler Henrich & Associates Completes
Engagement at Wire Rope
Getzler Henrich & Associates LLC announced in a press release
yesterday that it has completed its turnaround engagement with Wire Rope
Corporation of America (WRCA), a manufacturing company with $120 million
in revenues that is now profitable and emerging from chapter 11. The St.
Joseph, Miss.-based company is the largest producer of wire rope in
North America. It currently employs 900 people, and its products are
used in the construction and automotive industries and for appliances
and electrical power transmission.
Halliburton May Be Forced To Renegotiate Asbestos Deal
Halliburton Co. said rising asbestos claims may keep it from completing
a deal to settle its mounting asbestos litigation as negotiated in
December, the Wall Street Journal reported. The Houston-based
company said in a filing with the Securities and Exchange Commission
that it may have to renegotiate the deal because of a wave of complaints
that increased the total asbestos claims it is facing to 425,000 on June
30, from 347,000 in December. The December agreement with asbestos
lawyers calls for Halliburton to put its DII Inc. unit, including its
Kellogg Brown & Root Inc. construction business, into bankruptcy
proceedings, reported the online newspaper. Halliburton would pay $4
billion in cash and stock to a trust that would pay current and future
asbestos claims. Even if the deal goes forward, Halliburton said the
bankruptcy filing may not happen until 'very early' in the fourth
quarter. Just a few weeks ago, the company said it expected the filing
by the end of September, reported the Journal.
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