June 62003

Submitted by webadmin on Fri, 2003-06-06 00:00

June 6, 2003

U.S. Initial Jobless Claims Rose Last Week to 442,000

U.S. initial filings for state unemployment benefits unexpectedly rose
last week to the highest since the end of April as companies trimmed
payrolls to hold down costs, government figures showed, Bloomberg News
reported. States received a seasonally adjusted 442,000 new applications
for jobless insurance in the week that ended

Saturday, up from a revised 426,000 in the prior week, the Labor
Department said. The government attributed part of the rise to its
seasonal adjustment process for the Memorial Day holiday. 'Claims do
little to inspire confidence in the economy,'' said Chris Low, chief
economist at FTN Financial in New York. Last week's number was the
highest since 453,000 in the week ended April 26 and some economists
consider claims above 400,000 a sign of a weak labor market, reported
the newswire.

Weak Spending Environment Hinders Retail Sales Growth

Stores continued to muddle along in May, posting generally tepid sales
increases as major retailers tried to clear out overstocked goods and
hesitant shoppers gravitated toward bargains, the Wall Street
Journal reported. 'Same-store sales in May were a triumph of weak
results beating even lower expectations,' said Patrick McKeigue, a
retail analyst at Independence Investments LLC, an affiliate of John
Hancock Financial Services Inc. The Goldman Sachs composite index of
same-store sales rose 1.5 percent in May, compared with a 2.4 percent
gain in April and a 2.4 percent increase in May 2002, the online
newspaper reported.

Though the same-store sales gains were small at the large discount
chains, they generally outpaced department stores, where sales continued
to deteriorate as customers gravitated toward the convenient and
value-oriented discount outlets, according to the Journal. Sears,
Roebuck & Co., Federated Department Stores Inc. and May Department
Stores Co. all reported declines in same-store sales. But a couple of
department-store chains that are mounting comeback efforts saw
improvements: Same-store sales increased 3.2 percent at J.C. Penney Co.
and 3.4 percent at Nordstrom Inc. Some industry analysts predicted that
the worst could be over for retailers. 'Moving forward, the comparisons
get easer; consumer confidence is coming back; gas prices have dropped;
prices overall are stable or slightly declining; the tax bill has been
signed; and we probably have another rate cut on the way,' said
McKeigue, reported the Journal.

AIG's Greenberg Doubts Asbestos Proposal Will Pass

American International Group Inc. Chairman Maurice 'Hank'' Greenberg
said divisions among insurers will hamper congressional efforts to
create a $108 billion industry-financed trust fund for asbestos victims,
Bloomberg News reported. The comment by Greenberg, who heads the world's
largest insurer, contrasts with his earlier optimism when he said his
hopes for legislative relief from asbestos costs had never been

higher. Yesterday, he said insurers slated to contribute $45 billion to
the fund disagree on how much each should pay. 'The design seems to
benefit some companies who would actually get a credit to their reserves
and some of those companies probably have the highest exposure to
asbestos,'' Greenberg told investors at a New York conference sponsored
by Sanford C. Bernstein & Co. 'And they would try to pass the rest
of that on to companies with lesser actual exposure,'' reported the
newswire.

Rivals to N.Y.-based American International, including Travelers
Property Casualty Corp., Ace Ltd., St. Paul Cos., CAN Financial Corp.
and Hartford Financial Services Group Inc., have added billions of
dollars to reserves to pay asbestos claims. AIG hasn't because it didn't
sell as much insurance in the decades before asbestos was found to cause
cancer, Bloomberg reported. Greenberg's doubts add to threats from
Democrats and organized labor to derail the proposal, drafted by
Republican Senator Orrin Hatch (R-Utah) last month. Hatch said he would
push for a Senate Judiciary Committee vote this month while seeking to
resolve objections to the proposal.

Pacific Crossing Assets Sale Approved by Judge

Pacific Crossing Ltd. won a federal judge's approval for the $63 million
sale of all of its assets to a unit of closely held Pivotal Private
Equity, Bloomberg News reported. U.S. Bankruptcy Judge Peter J. Walsh in
Wilmington, Del., approved the sale on Tuesday, according to court
papers. The sale is expected to close by the end of the year,
Phoenix-based Pivotal Private Equity said today in a statement. Pacific
Crossing runs an undersea fiber-optic telephone and data network between
the United States and Japan that was completed in 2000 at a cost of more
than $1.35 billion, Pivotal said.

'This acquisition is key to our strategy of investing in undervalued
telecom assets,'' Pivotal Private Equity CEO Jahm Najafi said in a
statement. 'The network is currently underutilized, a condition that we
will be working vigorously to change.'' Dallas-based Pacific Crossing in
July joined more than a dozen fiber-optic networks in seeking bankruptcy
protection after a glut of phone and Internet capacity and slumping
demand left them saddled with debt, reported the newswire.

Ontzinc Corp. Expects Approval of U.S. Zinc Mine Purchase

Canada's Ontzinc Corp. said on Thursday it expects to get approval next
week to buy bankrupt Zinc Corp. of America's Balmat mine in northern New
York state, where it would restart zinc production, Reuters reported.
Ontzinc signed a deal on May 2 to buy the mine, a 5,000 short
ton-per-day concentrator and 56,000 acres of mineral leases for $20
million from ZCA Mines Inc. Zinc Corp. of America is a wholly-owned
subsidiary of Horsehead Industries Inc., which filed for bankruptcy
protection in Aug. 2002 to reorganize its debt.

The Balmat sale is scheduled for June 30, subject to U.S. Bankruptcy
Court approval on June 10, according to Ontzinc. 'We are just waiting
for the drop date next week, whereby the bankruptcy court gives
permission for the acquisition to take place. No other bidders have
stepped forth,' said spokesman Keith Bullen, reported the newswire.

Lack of Arena Support Troubles Lemieux

Mario Lemieux, the Pittsburgh Penguins' owner and star, expressed
pessimism on Thursday about the team's future in the city if it can't
secure financial backing for a new $270 million arena, the Associated
Press reported. Lemieux said he feels 'betrayed' by the lack of support
city and county leaders have given efforts to build an arena to replace
42-year-old Mellon Arena, the oldest and second-smallest venue in the
National Hockey League.

Raising the specter of the team leaving Pittsburgh, he said the targeted
2006 opening for a new arena is 'pretty much gone unless something
happens in the next 30 to 60 days.' In response to Lemieux's comments,
Pittsburgh Mayor Tom Murphy's office issued a statement saying the mayor
has worked hard to keep the Penguins in the city but that there is no
tax money available for financing a new arena. Lemieux said that
promises that the city and county governments would help develop
financing for a new arena played a significant role in his decision to
purchase the franchise out of bankruptcy in 1999, reported the
newswire.

United Airlines Launches New Advertisement Campaign

United Airlines has launched an advertising campaign in an attempt to
lure back more business travellers while it overhauls its operations in
bankruptcy, the Associated Press reported. The airline has launched a
special promotion offering four trips for the price of three, which is
being covered in full-page advertisements in national newspapers and
other newspapers in key markets through the summer travel season. Under
the promotion, members of the airline's frequent-flyer program will earn
a free round trip flight after completing three eligible round trips by
Sept. 30, 2003. The free flight covers travel in the 48 contiguous
states between Sept. 2 and Dec. 31, 2003.

Judge Backs Out As Mediator in Enron Case

The federal judge assigned as mediator by two judges overseeing civil
and bankruptcy proceedings involving Enron Corp. bowed out before the
process began, according to court papers, the Associated Press reported.
Manhattan federal District Judge Kevin T. Duffy had been appointed to
help Enron, shareholders who've sued the energy company and financial
institutions Enron says gave it bad advice settle their differences.

Judge Arthur J. Gonzalez, who is handling Enron's bankruptcy case in
Manhattan, and Houston federal District Judge Melinda Harmon, who is
overseeing suits brought by shareholders and others, named Duffy to the
role in an unusual joint hearing on May 28.

'Any delay is a slight setback, but we know they'll get someone else,'
said Brian Rosen, a lawyer representing Enron in bankruptcy proceedings.
The order from Harmon and Gonzalez said a new mediator will be named
soon. Rosen added Enron hasn't been advised of any time frame more
specific than that, reported the newswire.

Court OKs Roundy's Bid for Rainbow Foods

A bankruptcy court approved the bid of Wisconsin-based Roundy's Inc. to
purchase Rainbow Foods, the Twin Cities' No. 2 grocer, the Associated
Press reported. Roundy's agreed to pay $44 million in cash plus the cost
of inventory and the assumption of some leases, in a deal certified on
Wednesday by Judge Mary Walrath in Wilmington, Del. The bid involves the
purchase of 30 Rainbow stores in the Minneapolis-St. Paul area and one
near Schofield, Wis.

Many of the Rainbow stores have recently languished under the ownership
of Fleming Companies Inc., a Texas-based food wholesaler and retailer.
Fleming filed for bankruptcy protection on April 1. On Friday, Roundy's
will begin counting inventory and restocking shelves. Stores will be
closed in groups until the inventory process is completed, said Robert
Mariano, Roundy's chief executive, reported the newswire.

CONSOLIDATED FREIGHTWAYS

Consolidated Freightways Announces June 18 Sale of Macon Distribution
Facility

As part of the largest real estate sale in transportation history,
Consolidated Freightways (CF) announced in a press release distributed
by Business Wire that it is putting its Macon distribution facility up
for sale to the highest bidder, through an open auction process
scheduled for June 18, 2003.

The Macon property is a 10-door cross-dock distribution facility
situated on three acres and has been closed to operations since Sept. 3,
2002, when the 74-year-old company filed for bankruptcy protection.
Since then CF has been liquidating the assets of the corporation under
orders of the bankruptcy court. A contract price of $153,000 has been
established for the CF property. Interested parties who would like to
participate in the June 18 bankruptcy auction should submit the form
request to be designated a qualified bidder at auction.

Roadway Cuts Second-quarter Outlook in Half

Freight hauler Roadway Corp. said on Thursday that second-quarter
earnings would be half or less than what it had estimated because it cut
prices to combat both competition and an unexpected drop in shipping
volumes, triggering a big sell-off in trucker stocks, Reuters reported.
Roadway also said the boom in business it had received from the collapse
last year of Consolidated Freightways had given way to customers'
shopping for better deals amid a glut of capacity among carriers.

Akron, Ohio-based Roadway said the recovery it had seen in shipping
volumes at the end of March trailed off in the second quarter, forcing a
reduction in prices. Furthermore, customers scaled back on high-margin
express shipments and reduced shipment sizes and shipping distances.
Roadway and other trucking companies got a big windfall of business last
year when Consolidated Freightways declared bankruptcy and dissolved its
business. But Consolidated's collapse has now led to freight customers
hunting for bargains, reported the newswire.

Orion Refinery Wins Approval to Proceed With Auction of
Assets

Orion Refining Corp., the bankrupt owner of a Louisiana refinery, won
court permission to proceed with an auction to sell its assets, for
which Valero Energy Corp. has offered about $500 million, Bloomberg News
reported. U.S. Bankruptcy Judge Mary Walrath approved auction procedures
at a hearing yesterday in Wilmington, Del. Valero is entitled to a fee
of $15 million if it is outbid.

Orion filed for chapter 11 protection last month and announced plans
to sell its assets to Valero, pending court approval and higher offers.
Orion has spent more than $2 billion since 1995 upgrading and expanding
its refinery. The company was hurt by political and labor problems in
Venezuela, which supplies most of its oil, and a fire that shut down
some operations. 'All parties want to see this transaction move
forward,'' Robert Dehney, an attorney representing Orion, said during
the hearing, reported the newswire.

WorldCom Report Finds Ebbers Played Role in Inflating
Revenue

A long-awaited report on the accounting fraud at WorldCom Inc. will
conclude for the first time that former Chief Executive Bernard J.
Ebbers played a role in the company's effort to improperly boost revenue
to meet Wall Street expectations, according to people familiar with the
matter, the Wall Street Journal reported.

The report, to be released on Monday, is the product of an
independent investigation commissioned by the company and led by William
McLucas (Wilmer Cutler & Pickering). The report highlights questions
about the role of WorldCom's auditors, both internal and external, as
well as the board of directors and scores of employees who knew about
the fraud or helped carry it out. The company, now called MCI, plans to
emerge from bankruptcy-court protection this fall and is hoping that the
report will answer many of the questions that continue to create a cloud
of distrust. There hasn't been any decision thus far whether to bring a
civil or criminal case against Ebbers, reported the Journal.

Owens Corning Pushes Back Plan Disclosure Hearing To August

Faced with numerous objections from creditors, Owens Corning pushed
back a hearing on the disclosure statement outlining its chapter 11
plan, an attorney for the unsecured creditors' committee in the case
said. The approval hearing was adjourned until late August, Stephen
Case, an attorney with Davis Polk & Wardwell in New York, told the
Daily Bankruptcy Review on Thursday. The move gives Owens Corning
more time to circulate a draft of the disclosure statement and to fill
in some missing information, he said. Representatives from Owens Corning
weren't immediately available for comment.

Adelphia Communications Agent Opposes Hirings By Equity
Panel

Bank of America N.A. opposed a request by Adelphia Communications
Corp.'s equity committee to hire two parties to provide testimony,
saying the committee is seeking approval of the hirings before claims in
the chapter 11 case have been formalized.

Bank of America is the co-administrative agent under a credit agreement
with the cable company from 2000, according to court papers. The equity
committee is seeking bankruptcy court approval to hire O. Aarons &
Co. and Geoffrey P. Miller to provide expert analysis and testimony in
connection with the value of Adelphia Communications potential claims
against co-borrowing lenders and an existing lawsuit against Deloitte
& Touche LLP. Miller and O. Aarons & Co. would also assist the
committee's special conflict counsel, Bragar Wexler Eagel &
Morgenstern LLP.

NRG Seeks Prompt FERC Ruling on Connecticut Power Deal

Attorneys for bankrupt NRG Energy Inc. are asking federal regulators to
rule on whether NRG can drop a power supply contract in Connecticut
before the money-losing deal ruins the company's chance of
restructuring, Reuters reported. In a June 4 letter to the Federal
Energy Regulatory Commission (FERC), NRG counsel Neil Levy wrote that
the contract between NRG Energy Marketing Inc. and Connecticut Light and
Power (CL&P) is costing NRG approximately $500,000 a day. NRG Energy
Inc., a subsidiary of Xcel Energy Inc., sought chapter 11 federal
bankruptcy protection on May 14, citing a $9.2 billion debt run up in
its energy trading business.

On Monday, a judge in the U.S. Bankruptcy Court for the Southern
District of New York ruled that to protect NRG creditors and get on with
efforts to rebuild the company, it should be allowed to terminate the
CL&P contract. At the same time, however, the judge deferred to a
May 16 FERC order that NRG must uphold its contract with CL&P, which
relies on NRG for almost half the electricity delivered to 1.1 million
Connecticut customers, reported the newswire.

Williams Prices $800 Million in Unsecured Notes

Williams Cos. Inc. said on Thursday it priced $800 million in unsecured
notes due 2010, the proceeds of which will be used to pay down its debt
and for general corporate purposes, Reuters reported. The Tulsa,
Okla.-based power company said the size of the offering was increased
from a previously announced plan of $500 million. The notes, scheduled
to be delivered on June 10, were priced at par to yield 8.625 percent.
Like many firms in the merchant energy sector, Williams has suffered
from credit downgrades since the collapse of energy trader Enron Corp.
and has been forced to sell many of its assets at a loss to raise cash.
The natural gas and pipeline operator was near bankruptcy last year
before being bailed out by last-minute funding, reported the
newswire.

Longview Aluminum to Submit Reorganization Plan in July

Privately held Longview Aluminum said on Thursday it was granted until
the first week of July to submit its reorganization plan to the U.S.
court in Illinois that is overseeing its bankruptcy, Reuters reported.
Longview in March 2003 decided that filing for chapter 11 bankruptcy
protection and a reorganization would be its best path to guarding its
assets and restarting its idled aluminum smelter in Longview, Wash. 'We
are working on the reorganization plans now and when we present them to
the court, we will be talking about them publicly,' said a Longview
Aluminum spokeswoman, reported the newswire.

A judge at the U.S. Bankruptcy Court for the Northeastern District of
Illinois, Eastern Division, has set the deadline for July 2 for Longview
to present its plan. The Longview smelter, which has an annual
production capacity of 204,000 metric tons of metal, has been shut down
since February 2001 when Longview agreed to sell contracted power back
to a federal marketing agency amid a West Coast energy shortage, Reuters
reported.

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