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U.S. Consumer Borrowing Up $3.5 Billion in December
U.S. consumer borrowing rose by $3.5 billion in December, completing the
slowest quarter for borrowing in more than a decade, economists said in
advance of a government report, Bloomberg News reported. Borrowing
through credit cards and other loans, excluding mortgages, fell by $2.2
billion in November after rising $1.5 billion in October. In the
previous three months, consumer credit increased $15.1 billion.
'Consumers have a lot of debt, and they're going to clean up their
balance sheets,'' said Joshua Shapiro, chief economist at Maria Fiorini
Ramirez Inc. in New York. 'That, combined with some other things, means
that consumer spending is likely to grow slowly this year,' reported the
newswire. According to Bloomberg, Americans had a record $1.72 trillion
in nonmortgage debt at the end of the 2002 third quarter, following a
decade in which credit card companies extended loans to more people.
Turnaround Firm Faces Range Of Challenges
According to a Dow Jones article, relying on the usual set of
investment-bank advisers isn't enough for stumbling companies looking
for ways to regain their balance. Often these companies also need
outside specialists to help run their daily operations, reported Dow
Jones. 'We're very hands-on,' said ABI President-elect Bettina
Whyte, of AlixPartners LLC. 'We help identify problems, implement
solutions and move companies into a right direction relatively quickly.'
To read the article, point your browser to
href='http://www.wsj.com'>www.wsj.com (subscription required).
American Classic Wins Court Approval of Plan to Pay
Creditors
American Classic Voyages Co., a defunct cruise ship line run by
billionaire Sam
Zell, won bankruptcy court approval for its plan to pay creditors,
Bloomberg News reported. Since filing for bankruptcy, Chicago-based
American Classic has sold most of its assets, including its Mississippi
Queen riverboat, for $80.9 million in cash and assumed liabilities. U.S.
Bankruptcy Judge Jerry Venters in Wilmington, Del., approved the plan
yesterday. American Classic sought bankruptcy protection and began
shutting down operations in October 2001, after customers canceled trips
following the Sept. 11 terrorist attacks. Other cruise operators
including Carnival Corp., the world's largest cruise line, reported as
much as 60 percent drops in bookings, reported the newswire.
Kentucky Electric Steel Files for Bankruptcy Court
Protection
Kentucky Electric Steel Inc. said it filed for bankruptcy protection
after the U.S.
economic slowdown and competition from foreign steel producers left it
facing mounting debts and losses, Bloomberg News reported. Officials of
the Ashland, Ky.-based steel producer said last month the company had
defaulted on $30 million in notes and loans and expected to file for
chapter 11 protection. It also closed its remaining steel-making plant
in Kentucky and fired 326 workers.
AK STEEL
AK Steel Is Lead Bidder for National Steel Assets, Judge
Rules
AK Steel Holding Corp. beat out rival U.S. Steel Corp. with a $1.13
billion offer to become the lead bidder for the assets of National Steel
Corp., a bankruptcy judge ruled, Bloomberg News reported. Any rival
would have to top AK Steel's offer by $17 million at an upcoming
auction, which includes a $15 million breakup fee to be paid to AK
Steel. The company has to negotiate a labor contract with the United
Steelworkers of America by March 17 to meet the terms of its purchase
agreement with National Steel. Middletown, Ohio-based AK Steel, the
biggest U.S. maker of automotive steel, would more than double its
production capacity with the asset purchase, reported the newswire.
AK Steel Goes to Court To Cut Shipments to GM
AK Steel Corp. is asking an Ohio court judge to allow it to cut steel
shipments to General Motors Corp., its biggest customer, over a contract
dispute, the Wall Street Journal reported. AK Steel is accusing
GM of failing to pay it for late changes GM ordered in the making of
steel products. The steelmaker is charging 'breach of contract' and says
in court papers that it has 'suffered in excess of $25,000' to implement
the changes ordered by GM, reported the Journal.
Integrated Telecom Gets Approval for Liquidation Plan
Integrated Telecom Express Inc., which designs high-speed telephone data
circuits, won a bankruptcy judge's preliminary approval for a plan to
liquidate the company, Bloomberg News reported. Under the plan, the
company would sell its technical assets for $1.5 million to Real
Communications Inc., formed by directors including Chairman Daniel Chen,
according to court documents. The company was hurt by a slump in the
micro circuitry market. It sought chapter 11 protection from creditors
in October in the U.S. Bankruptcy Court in Wilmington, Del., listing
$116 million in assets and $4.3 million in debts, reported the
newswire.
Bethlehem to Sell Assets To International Steel
Bethlehem Steel Corp. has agreed to sell its assets to International
Steel Group for around $1.5 billion in cash and debt, in a deal that
would create the nation's largest steelmaker, the Associated Press
reported. After reviewing International Steel's offer for a month,
Bethlehem Chief Executive Robert Miller said management had concluded
that the offer provided the best value achievable, while allowing
Bethlehem's 'well-maintained facilities to remain in operation, thereby
preserving thousands of jobs.' The Pennsylvania steelmaker has been
operating under bankruptcy-court protection for over a year, reported
the newswire.
UNITED AIRLINES
UAL DIP Syndication Oversubscribed After Terms Sweetened
Nearly two months after UAL Corp. filed for bankruptcy, banks providing
debtor-in-possession financing to the airlines have found enough
commitments from investors to unload about $400 million of the loan, Dow
Jones reported. As part of the revised terms on the 18-month secured
term loan, investors will be paid an interest rate of the London
Interbank Offered Rate, plus 6.5 percentage points, according to Dow
Jones. In addition, the loan now has an interest rate floor of Libor
plus 3 percent, up from 2 percent originally. Another incentive offered
investors is a discount price of 95 cents on the dollar for the loan,
essentially a 5 percent signup fee for investors, reported the
newswire.
UAL's United to Make Payments of $128 Million on 154
Aircraft
UAL Corp.'s United Airlines, the largest U.S. airline to file for
bankruptcy protection, said it will make $128 million in payments owed
on 154 aircraft that generally have maintained their market value,
Bloomberg News reported. The company's lawyers at a U.S. Bankruptcy
Court hearing in Chicago didn't disclose details about which aircraft
United will make payments on. United, which filed for bankruptcy
protection on Dec. 9, has said it's seeking to negotiate lower lease or
mortgage payments on the majority of the 567 planes in its operating
fleet in an effort to save $500 million annually. The Chicago-based
airline also has the option to reject the leases on some of those
aircraft or decide to abandon mortgaged planes, reported the
newswire.
Separately, Dow Jones reported that two motions UAL Corp. made in its
bankruptcy case were continued on Thursday to a hearing later this
month, according to court testimony. One motion asks to restrict the
trading of large blocks of UAL stock. The other is for UAL's proposed
pay package for its chief executive.
January Retail Sales at Low End of Forecasts
Retailers posted January sales today at the low end of expectations, but
some of the biggest names, including Wal-Mart Stores, nudged up profit
forecasts as they kept costs down, Reuters reported. January is
traditionally a lackluster month for retailers, which turn to clearance
sales to get rid of leftover holiday merchandise and to make room for
spring clothing. Over all, sales in January increased 1 percent,
Goldman, Sachs & Company reported, after a 0.9 percent increase in
December. The increase in January 2002 was 3.4 percent, reported the
newswire.
Kmart Ex-CEO Seeks To Tap Insurance For Defense Cost
Charles Conaway, the former chairman and chief executive who led Kmart
Corp. into bankruptcy last year, has asked a court to help him tap
proceeds from the company's director and officer liability insurance
policies, Dow Jones reported. In a filing with the U.S. Bankruptcy Court
in Chicago on Thursday, Conaway said the company's primary director and
officer liability insurance provider, National Union Fire Insurance Co.,
won't advance his defense costs unless the court finds the move doesn't
violate the Bankruptcy Code's automatic stay provision, reported the
newswire.
Court Gives Adelphia Communications OK To Consent To Sabres Sale
A bankruptcy court authorized Adelphia Communications Corp. on Wednesday
to consent to a future sale of the company that owns the Buffalo Sabres
hockey team franchise, Dow Jones reported. Adelphia Communications is
the largest creditor of the owner, Niagara Frontier Hockey L.P. Both
companies are under chapter 11 bankruptcy protection, Dow Jones
reported. An order by Judge Robert Gerber of the U.S. Bankruptcy
Court in Manhattan gives Adelphia Communications the green light to
consent to any sale of the Niagara assets that is approved by the court
handling the Niagara chapter 11 case, reported the newswire.
Bayou Steel Asks Court To OK $45 Million DIP Financing Pact
Bayou Steel Corp., which is under bankruptcy protection, has reached an
agreement for $45 million of debtor-in-possession financing that should
allow the company to continue operating its business, Dow Jones
reported. Without the credit available under the DIP pact with Congress
Financial Corp. and General Electric Capital Corp., the company said, it
would have little or no working capital to meet continuing obligations
or to obtain goods and services, according to a motion obtained on
Thursday by Dow Jones Newswires.
Southwest's Profit-sharing Flies High
Southwest Airlines Co., one of the few U.S. carriers that are still
profitable, has a 30-year-old profit-sharing plan that has helped
solidify employee loyalty and weather the industry's deepest-ever slump,
Dow Jones reported. The success of the plan and the prosperity of the
low-fare king makes a stark contrast with the employee stock ownership
plan that might have accelerated United Airlines parent UAL Corp.'s
descent into bankruptcy by intensifying the standoff between management
and labor. To read the full article, point your browser to
href='http://www.wsj.com'>www.wsj.com (subscription required).
Safety-Kleen Wants More Time To Persuade Creditors
Safety-Kleen Corp. is asking the bankruptcy court handling its chapter
11 proceedings to extend the company's exclusive period to gain creditor
approval for its plan of reorganization, Dow Jones reported. According
to court papers obtained on Thursday by Dow Jones Newswires, the company
said that it filed a reorganization plan on Nov. 27. Safety-Kleen's
solicitation period is set to expire on Feb. 28, and the company wants a
90-day extension up to May 30, Dow Jones reported. A hearing on the
issue has been scheduled for Feb. 21 in the U.S. Bankruptcy Court in
Wilmington, Del.
Hayes Lemmerz Hearing To Reconvene In Two Weeks
The committee of unsecured creditors of Hayes Lemmerz International Inc.
has been given an additional two weeks to consider the automotive
supplier's proposed chapter 11 disclosure statement, which was recently
amended, Dow Jones reported. Judge Mary F. Walrath of the U.S.
Bankruptcy Court in Wilmington, Del., will reconvene the hearing for the
disclosure statement on Feb. 20. The creditor panel also wants to review
a tentative deal struck between Hayes Lemmerz, its secured lenders and
Apollo Management V L.P., the holder of more than 40 percent of the
debtor company's notes, reported the newswire.
ENRON
Five Indirect Enron Units File For Chapter 11 Protection
Five indirect subsidiaries of Enron Corp. have filed chapter 11
bankruptcy petitions with the U.S. Bankruptcy Court in Manhattan,
according to court documents obtained on Thursday by Dow Jones
Newswires. EGS New Ventures Corp., which is a unit of Enron subsidiary
Enron North America Corp., filed its petition late on Wednesday. Four
subsidiaries of EGS New Ventures --Louisiana Gas Marketing Co.,
Louisiana Resources Co., LGMI Inc. and LRCI Inc. -- also filed
petitions, reported the newswire.
Enron $29 Million Bonus Plan Will Get Judge's Approval
Enron Corp., the bankrupt former energy trader, will receive approval to
pay $29 million in bonuses to as many as 900 employees that the company
considers essential to its chapter 11 reorganization, a judge said,
Bloomberg News reported. U.S. Bankruptcy Judge Arthur Gonzalez
said the employee-retention program will help the energy company emerge
more quickly from bankruptcy. Gonzalez said he would approve the bonus
plan over objections by some creditors and the Texas attorney general's
office.
Lumenon Considers Bankruptcy
Lumenon Innovative Lightwave Technology Inc. received a default notice
from each holder of its convertible notes and said it is considering
filing for bankruptcy protection, Dow Jones reported. In a press release
on Thursday, the optical components maker said the notices request the
immediate repayment of the convertible notes. Under the terms of the
convertible notes, the outstanding principal and accrued interest, which
is about $8.4 million, must be paid to the noteholders within five
trading days of such date, Dow Jones reported. Montreal-based Lumenon
said it doesn't currently have sufficient resources to pay all amounts
owed under the convertible notes. Accordingly, the company is currently
considering its alternatives, including the possibility of seeking
protection from its creditors, including the noteholders, under U.S.
bankruptcy law, reported the newswire.
Qwest Judge Denies Request Of Holders to Freeze Assets
A judge on Thursday denied a request by shareholders of Qwest
Communications Inc. to freeze $400 million in proceeds from the sale of
the company's directory business, the Associated Press reported. The
shareholders had sued Qwest , alleging they were misled and have lost
$16.1 billion in value since Qwest merged with US West in June 2000
until last year. U.S. District Judge Robert E. Blackburn ruled the
plaintiffs failed to prove a freeze would benefit the public interest.
He also said a freeze could drive Qwest into bankruptcy, reported the
newswire.
Creditors Accept Bid For Ottawa Senators
Former majority owner Rod Bryden's bid for the Ottawa Senators has been
accepted by the NHL club's major creditors, the Globe and Mail
reported today, according to the Associated Press. Details of the bid
are expected to be announced today after lawyers sign final documents,
sources familiar with the talks told the newspaper on Thursday night.
The deal, which also includes the Corel Centre, is reportedly worth more
than $85 million and is backed by a New York company run by billionaire
Nelson Peltz. It's expected that the sale, if it meets various
conditions, would have to be completed by May.
Conseco Investor Group To Fight Bankruptcy Reorganization Plan
A holdout group of investors plans to fight the bankruptcy
reorganization plan that Conseco Inc. agreed on with banks and
bondholders, who have the biggest say in the chapter 11 case, the
Associated Press reported. A lawyer for owners of preferred securities
said on Thursday that the plan does not give his clients a fair chance
of recovering the $1.9 billion in debt they are owed by Conseco, which
on Dec. 17 became the third-largest U.S. company to file for bankruptcy,
reported the newswire.
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