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November
21, 2007
Mortgage
Lending
name='1'>Treasury Secretary
Seeks Broad Moves by Mortgage Lenders
U.S. Treasury Secretary
Henry Paulson,
concerned that millions of homeowners aren't being helped quickly
enough, is pressing the
mortgage-service industry to help broad swaths of borrowers qualify for
better loans instead
of dealing with mortgage problems on a case-by-case basis, the
Wall Street Journal
size='3'>reported today. Paulson
said that the number of potential home-loan defaults 'will be
significantly bigger' in 2008
than in 2007. He said that he is 'aggressively encouraging' the
mortgage-service industry to
develop criteria that would enable large groups of borrowers who might
default on their
payments to qualify for loans with better terms. The momentum for a new
approach received a
boost yesterday when four major mortgage-loan servicers, including
Countrywide Financial
Corp. and California Gov. Arnold Schwarzenegger agreed to endorse a plan
for temporarily
freezing interest rates to help borrowers in good standing from facing
foreclosure when
their loans reset to higher interest rates.
href='http://online.wsj.com/article/SB119560994442300035.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
name='2'>Subprime Lender Able
to Restructure without Bankruptcy
Able to avoid the fate of
many of its rivals,
subprime mortgage lender C-Bass LLC reached a $3.8 billion restructuring
deal without having
to file for bankruptcy,
size='3'>Bankruptcy
Law360 reported yesterday. The out-of-court
reorganization plan
includes the restructuring of about $3.2 billion in secured debt and
repurchase obligations
and $610 million in unsecured debt. In total, C-Bass managed to lower
its debt from the $4.2
billion it listed at the beginning of the process by selling assets. By
financing as much as
50 percent of its assets through a bank line facility, C-Bass instead
managed to use its
existing cash flows and the value of its portfolio to avoid a
foreclosure blitz when it
realized it could not pay all its margin calls for July, the company
said.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=40553'>Read
more. (Registration required.)
name='3'>Auto Workers Seek
Information on GM’s Ties to Mortgage Risk
Ron Gettelfinger, president of
the United
Automobile Workers union, said yesterday that he was concerned by
General Motors’
exposure to the mortgage lending arm of its former finance unit, GMAC
Financial Services,
and would seek a meeting with executives at the automaker for more
information, Reuters
reported today. GM shares closed down almost 8.5 percent on the New York
Stock Exchange on
Monday amid investor concern over the automaker’s exposure to the
subprime market
through GMAC, in which it retains a 49 percent stake. GMAC’s
residential mortgage
unit, ResCap, lost $2.26 billion in the third quarter. ResCap bonds also
plunged on Monday,
and the cost to insure GMAC bonds rose. Investors said that ResCap might
need an injection
of capital to avoid violating loan agreements.
href='http://www.nytimes.com/2007/11/21/business/21motors.html?ref=business&pagewanted=p
rint'>Read more.
Deepen
The Federal Reserve
expects economic growth
to slow sharply next year, and policy makers there are worried that even
this forecast may
prove too optimistic, the
size='3'>New York
Times reported today. The Fed yesterday
released a detailed
forecast that summarized the predictions of the Fed governors and
regional bank presidents.
It also reported their disagreements, which almost all centered on how
much the broad
economy is likely to be damaged by the surge in oil prices and the tight
credit markets
brought on by the recent severe problems in housing and mortgage
lending. At the same time,
Fed officials expect unemployment to rise only slightly and inflation to
edge down. In a
shift from three weeks ago, the officials said they agreed that recent
evidence of slowing
inflation was more than a temporary blip and would “likely be
href='http://www.nytimes.com/2007/11/21/business/21fed.html?_r=1&oref=slogin&ref=bus
iness&pagewanted=print'>Read more.
name='5'>Solutia’s
Bankruptcy Exit Approved
Bankruptcy Judge
Prudence Carter Beatty
size='3'>cleared the way for
Solutia Inc. to borrow up to $2 billion to finance the chemical maker's
exit from bankruptcy
after almost four years, Dow Jones Newswires reported yesterday. Judge
Beatty authorized
Solutia to proceed with a deal with Citigroup Inc., Goldman Sachs and
Deutsche Bank
Securities Inc. that would finance the St. Louis-based company's exit
from bankruptcy.
Solutia's exit-financing package includes a $400 million senior secured
asset-based
revolving loan, a $1.2 billion senior secured term loan and a $400
million senior unsecured
bridge loan.
href='http://www.bnd.com/business/story/184173.html'>Read
more.
Approves Remy
International Inc.'s Bankruptcy Plan
Remy International Inc.
yesterday won
approval of its chapter 11 plan designed to cut $360 million out of the
auto-parts
supplier's debt load, Dow Jones Newswires reported yesterday. Bankruptcy
Judge
size='3'>Kevin Carey also approved the sale of
Remy's M&M
Knopf Parts unit for $18.5 million. Exit financing consists of a $330
million loan from
Barclays Capital, the investment-banking division of Barclays Bank PLC,
and proceeds of the
sale of new preferred stock to bondholders. Only about $35.5 million of
the $85 million
worth of new preferred shares Remy offered were sold. However, Remy has
agreements with some
bondholders that call for them to buy the nearly $50 million of unsold
stock.
href='http://www2.indystar.com/articles/4/253485-1644-127.html'>Read
more.
name='7'>Calpine Cuts $900
Million from Its
face='Times New
Roman' size='3'>Enterprise
size='3'>Value
Power company Calpine Corp,
which is trying to
emerge from bankruptcy by Dec. 31, said yesterday that it was worth
about $900 million less
than previously estimated, sharply cutting into returns for
shareholders, Reuters reported
yesterday. The value of Calpine, whose shares dropped more than 50
percent, has been a
source of dispute between the company and its shareholders, and is seen
as one of the main
obstacles to its emergence from bankruptcy protection. Citing increased
market volatility
and falling values of its peers, Calpine now sees its total enterprise
value at $18.3
billion to $20.4 billion, with a midpoint of $19.35 billion. At the
midpoint of the new
valuation, shareholders could receive no recovery on their common stock,
the company said.
It previously had expected them to get a return of $1.94 per
share.
href='http://www.nytimes.com/reuters/business/business-calpine-valuation.html?pagewanted=pri
nt'>Read more.
Payout for Enron Suit
A
w:st='on'>
w:st='on'>San
Diego
law firm founded by trial lawyer William Lerach is
seeking nearly $700
million in legal fees for itself and other plaintiff lawyers for work on
the Enron Corp.
securities litigation, the
size='3'>Wall Street
Journal reported today. If approved, the fee
payout would be the
largest ever in a securities class action. The plaintiffs in the
Enron suit, which
was filed in 2001, have so far recovered $7.2 billion in settlements
from bankers,
accountants and lawyers alleged to have participated in a scheme to
defraud investors of
Enron. Coughlin Stoia Geller Rudman & Robbins LLP will seek a fee
equal to 9.5 percent
of the settlement, according to the court filing, which is the first to
specify the precise
href='http://online.wsj.com/article/SB119560428100999892.html?mod=us_business_whats_news'>Re
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w:st='on'>
face='Times New Roman' size='3'>
name='9'>Sale of $4
Billion in Chrysler Debt
Postponed
The $4 billion sale of
loans stemming from
Cerberus Capital Management's acquisition of Chrysler LLC has been
postponed indefinitely,
the Wall Street
Journal
size='3'>reported today.
size='3'>The debt, which
was to be sold to investors this week along with $3 billion of
additional loans attached to
Chrysler's Automotive unit, will stay on the books of the underwriters.
That means J.P.
Morgan Chase & Co., Citigroup Inc., Goldman Sachs Group Inc., Morgan
Stanley and Bear
Stearns Co. are looking at paper losses on the whole $7 billion of at
least $200 million
collectively. There isn't any timetable to try to resell the Chrysler
paper, which had to be
pulled off the market once before.
href='http://online.wsj.com/article/SB119561868954600310.html?mod=us_business_whats_news'>Re
ad more. (Registration required.)
name='10'>Bankrupt Wood Products
Company Organizes Asset sale
Pope & Talbot, a
bankrupt Portland, Ore.,
wood products company, will present a deal in Canadian court today that
would likely mean
the end of the 158-year-old pulp and lumber company, the
face='Times New
Roman' size='3'>Oregonian reported today. The
company's two
primary lenders agreed to provide $89 million more in credit lines. Pope
& Talbot needs
the money to keep its nine mills -- most of them in
w:st='on'>
w:st='on'>British
Columbia -- operating and
2,300 people working
through the holidays. In exchange, Pope
& Talbot executives
had to agree to sell all the company's assets by Feb. 15 to repay the
lenders, according to
court filings made late Monday in
w:st='on'>
face='Times New Roman'
size='3'>Delaware
href='http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/1195615582200840
.xml&coll=7'>Read more.
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