August 13, 2004
>With
Negotiations Stalled, Asbestos Compromise Floated
Sen. Dianne Feinstein (D-Calif.) is circulating draft legislation
aimed
at finding middle ground on some of the most contentious issues holding
up asbestos legislation, CongressDaily reported. According
to the 'discussion draft,' the bill would establish a trust fund as
large as $144 billion to compensate victims of asbestos-related
illnesses. That figure is between competing plans offered by Senate
Majority Leader Bill Frist (R-Tenn.) and Minority Leader Tom Daschle
(D-S.D.) The Feinstein bill would require asbestos victims with pending
court cases to be funneled into the proposed trust fund. Under her bill,
only victims with court verdicts would get compensated outside the
fund.
Earlier this month, Frist and
Daschle disagreed over pending cases, with Daschle suggesting that all
pending claims -- even cases that have not begun -- remain in the
regular court system. Frist, however, insisted that businesses with
asbestos liabilities, as well as insurers -- whose contributions would
fund the new system -- would not put up funds without assurance that no
cases would move through the regular court system, the newswire
reported.
Economists Slash Forecast
for GDP, But Remain Optimistic
Economists slashed their
forecasts for third-quarter growth, but they see the weakness as
short-lived and anticipate job growth ahead, according to the latest
Wall Street Journal online economic-forecasting survey.
About four out of five economists surveyed cut their forecasts for
growth in the nation's gross domestic product (GDP) for the third
quarter. The last time the survey showed such a dramatic drop in GDP
estimates was less than two weeks before the start of the
Iraq
war.
Still, half of the 55
economists queried said they expect the 'soft patch,' as characterized
by Federal Reserve Chairman Alan Greenspan in congressional testimony
last month, to end in three months or less. Among the other respondents,
19 percent said the slowdown is already over and another 19 percent said
it will last three to six months, the newspaper reported.
US Airways Could Fail Next
Month
US Airways
faces a possible second bankruptcy filing next month and even
liquidation if it fails to reach a new agreement with its unions,
according to a report by a consultancy firm that advised the airline's
pilots union, the Washington Post reported. The report,
prepared
by Glanzer & Co., said the Arlington, Va.-based carrier will 'fail
within the immediately foreseeable future' and set out the few choices
left for the company's employees as they face an additional $800 million
in cuts the company is seeking. Other analysts have said US Airways is
headed toward bankruptcy, but not as soon as the Glanzer report
predicts.
Pilots must either agree to a
lower compensation package or be prepared to accept possibly worse terms
imposed by a bankruptcy judge or, more likely, the company's
liquidation, according to the report. The chances of the airline going
out of business are higher now than during the previous bankruptcy
because creditors have found ways to place claims on the carrier's cash
to lower their risk, the newspaper reported.
MCI
MCI Directors to Buy
Company Shares
MCI Directors to Buy
Company Shares
MCI Inc. on Thursday said a
quarter of the fees it pays to directors would be invested in shares of
the company, Reuters reported. The move is one of the corporate
governance guidelines MCI adopted as part of its emergence from
bankruptcy. MCI said the shares would be held by the individual
directors, who could sell the shares after an unspecified period of
time.
Leucadia-MCI Deal Passes
Antitrust Milestone
U.S. antitrust
authorities have allowed a key deadline to expire, an indication that
they will not oppose a possible bid by investment company Leucadia
National Corp. to buy at least half of MCI Inc., Reuters reported.
Officials announced no action ahead of the Aug. 9 deadline for
completion of the antitrust investigation of an acquisition.
On July 8, Leucadia formally
sought permission from antitrust authorities to buy a stake in MCI.
Under federal law, authorities have 30 days to decide whether to let
such a transaction proceed or launch a large-scale antitrust
investigation. MCI emerged from bankruptcy in April. Leucadia has
holdings ranging from telecommunications and health care firms to
cinemas and wineries, the newswire reported.
Exide Posts Profit After
Emerging from Bankruptcy
Exide Technologies, which makes
lead-acid batteries, said on Thursday that sales rose in the first
quarter and it posted a profit, Reuters reported. The Lawrenceville,
N.J.-based company, which emerged from bankruptcy protection in May,
said that net income for the first fiscal quarter was $1.78 billion,
after a $1.56 billion extraordinary gain from the discharge of
liabilities and other items. It said net sales rose nearly 5 percent to
$612.5 million from $584.6 million a year earlier, helped by currency
and higher selling prices.
Air Canada Selects
Board Members for New Company
Air
Canada said
on Thursday that it had selected board members for the new holding
company under which the airline will operate once it emerges from
bankruptcy protection in October, Reuters reported. Air Canada President
and CEO Robert Milton will remain as a board member, along with
former Quebec premier Pierre Marc Johnson and former Bombardier Inc.
head Robert Brown. Brown, president and CEO of CAE Inc. and also
director of Nortel Networks Corp., will leave his role as Air
Canada
chairman. The board will elect a new chairman when it takes office on
Oct. 1, Air
Canada
said, the newswire reported.
Asset Mix Took Toll on United's Pension
Fund
United Airlines, which appears
likely to default on its pension plans in the coming months, invested a
larger-than-average share of its $6.6 billion pension portfolio in
illiquid investments, while also investing liberally in junk bonds,
technology and pharmaceutical start-ups, the New York
Times reported. While United's investment results were not far
out of step with other pension funds, the losses had a far more
devastating effect on the fund because they coincided with United's own
business troubles. Cash-rich companies that suffered pension losses
during the bear market have been able to pump new money into their
plans. But United, a unit of the UAL Corporation, is in bankruptcy, and
it has no spare cash with which to replace the pension money lost in the
stock market, the newspaper reported.
Continental to Recall
Pilots
Continental Airlines said
yesterday that it would recall at least 240 pilots from furlough
by the middle of next spring, in a move to support next year's
flight schedule, Reuters reported. Currently 436 pilots represented by
the Air Line Pilots Association are on furlough at Continental. About 30
pilots a month are expected to be recalled, the maximum possible given
the available training facilities. Continental recently reported that
the percentage of its planes filled in July was at a record 86.1
percent, the newswire reported.
Conseco's CEO
Departs
In an abrupt management change,
Conseco Inc. said its president and CEO, William J. Shea, departed and
that a lawyer and director will assume the top executive duties, the
Wall Street Journal reported. The Carmel, Ind.-based
insurance company named as his successor William S. Kirsch, managing
partner at the Chicago law
firm of Kirkland & Ellis. The company also said that R. Glenn
Hilliard, an insurance executive for many years and chairman of
Conseco's board, would become executive chairman. It said he would work
closely with Kirsch 'in setting and overseeing execution of the
strategic plan for Conseco,' the newspaper reported.
Unions Disappointed by
T & N Pension Fund Offer
Trade unions lobbying to save
benefits in the pension fund of Britain's Turner and Newall said they
are disappointed the firm's creditors have not improved on a $130
million offer to shore up the deficit-laden plan, Reuters reported.
Unions fear pension benefits could be cut sharply for 40,000 members of
the scheme, which has a shortfall estimated at 875 million pounds ($1.60
billion), and that it could be wound up. T&N's U.S.-based parent,
auto parts maker Federal-Mogul, is restructuring its business under
chapter 11 bankruptcy protection relating to asbestos-related
compensation claims it faces after acquiring the British materials firm
in 1998, the newswire reported.
Japan Bankruptcies
Fall for 19th Month in July
The number of Japanese firms
that tipped over into bankruptcy in July fell for the 19th straight
month on a yearly basis, a research firm said today, as a recovering
economy helped the corporate sector back to health, Reuters reported.
Teikoku Databank said bankruptcies in July fell 16.8 percent from a year
earlier to 1,151, while the debt of failed firms was down 13.6 percent
at 605.34 billion yen ($5.46 billion), below 1 trillion yen for the
fourth straight month.
With Japan's
economy recovering thanks to strong exports and rising domestic demand,
the number of corporate bankruptcies was likely to fall further this
year, economists said, the newswire reported.
Retail REIT Could Make a
Play for Toys R Us
A handful of real estate
investment trusts with retail roots may be considering buying retailer
Toys R Us Inc., looking for a deal for the valuable property the company
occupies, a Wall Street analyst speculated, Reuters reported. 'After
several REITs tried and failed to acquire Mervyn's two weeks ago, we
believe that the same crew will once again be in the hunt,' Lehman
Brothers analyst David Shulman wrote in a research note. On Wednesday,
Toys R Us said it may sell its toy business and focus on its
fast-growing Babies R Us unit.
Creditors Want To Submit Own Plans For Some
Kaiser Units
The committee representing Kaiser Aluminum Corp.'s
unsecured creditors and U.S. Bank N.A., the trustee for about $400
million in Kaiser notes, objected to the company's request for more time
to file a turnaround plan for certain units. In its objection, the
creditors committee said Kaiser should have the sole right to file plans
for its Alpart Jamaica Inc., Kaiser Jamaica Corp., Kaiser Bauxite Corp.,
Kaiser Finance Corp. and Kaiser Alumina Australia Corp. affiliate only
through Sept. 30. After that, the creditors committee should be allowed
to file its own reorganization plans for those units, the objection
filed with the U.S. Bankruptcy Court in Wilmington, Del., on Monday
said. U.S. Bank filed a 'joinder' stating its opposition on the same
grounds as the creditors committee.
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Court Won't Rescind Maxim Crane DIP Loan
Approval
A bankruptcy court rejected a request to reconsider
its approval of a $70 million debtor-in-possession loan for Maxim Crane
Works LLC from the company's founder and former owner. Judge M. Bruce
McCullough of the U.S. Bankruptcy Court in Pittsburgh signed the order
Tuesday, denying the request by minority holder Ray Anthony that he
reconsider approval of the DIP loan and give all the parties in the case
a chance to investigate and challenge the claims asserted by senior
lenders. Led by Fleet National Bank and Goldman Sachs Credit L.P., the
lenders are providing the DIP loan and allowing the company to use cash
securing pre-chapter 11 loans totaling about $480 million. The crane
rental and sales company filed for chapter 11 protection in
June.
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