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November 26, 2004
Holiday Spirits Lifted by New Data
The economy entered the holiday-shopping season on a high note, as an
improving job market, strong consumer sentiment and gains in home sales
indicate that consumers are still willing and able to spend, the
Wall Street Journal reported. Economic conditions
“look extremely good going into the Christmas season,” says
Susan Sterne, president of Economic Analysis Associates in Greenwich,
Conn., which is forecasting a 7.5 percent rise in non-auto general
merchandise sales in the fourth quarter compared with a year earlier.
“There is every reason to believe that holiday sales will be
better than last year,” she said, the newspaper reported.
US Airways, GE in Aircraft Leasing, Finance Deal
US Airways Group Inc. today said it had struck a deal with GE
Electric Co. on aircraft leasing and financing that will give it access
to cash and 31 new jets over three years, Reuters reported. The carrier
said the deal would provide it with $140 million in interim liquidity,
savings of $80 million cash a year, and allow it to lease 31 new
aircraft over the next three years. The agreement with GE Capital
Aviation Services and GE Engine Services was filed with the U.S.
Bankruptcy Court of the Eastern District of Virginia on Friday and
requires court approval by Dec. 17, the newswire reported.
United Airlines Seeks to Reject Labor Contracts
The parent of United Airlines Inc. on Wednesday asked an Illinois
bankruptcy judge to let it reject its union labor contracts if it fails
by January to extract an additional $725 million of annual savings from
its employees, Reuters reported. The proposed cuts are on top of an
additional $2.56 billion of givebacks that the carriers’ unions
previously agreed to.
Toys R Us Will Try Prevent Piecemeal Sale
Toys R Us Inc., which is selling its toy business, will
“strongly discourage” suitors from trying to buy only the
choicest parts of the company when they submit a second round of bids
after the holidays, sources familiar with the situation said on
Wednesday, Reuters reported. The company, faced with competition from
discounters such as Wal-Mart Stores Inc. and Target Corp., has put its
toy operations on the auction block so it can focus on its
faster-growing Babies R Us unit, which sells clothes, linens and
furniture.
MCI
Court Halts MCI Chapter 11 Payments
A federal court on Wednesday barred long-distance carrier MCI Inc.
from making further payments to cover more than $25 million in
unauthorized expenses related to bankruptcy of predecessor WorldCom,
Reuters reported. Judge Jed Rakoff, of the Southern District of New
York, said the court had recently been informed of the WorldCom payments
and invoices, which violated budgetary procedures established for
chapter 11 cases.
Brussels will not appeal its loss in a European Union court in the
MCI–WorldCom case, a European Commission spokesman said on
Wednesday, Reuters reported. “Mr. (Mario) Monti decided last week
not to ask the president to appeal, and Mrs. (Neelie) Kroes has no
intention (of) taking a different line,” spokesman Jonathan Todd
told Reuters. Monti was competition commissioner until Sunday, and Kroes
took over the job on Monday.
Huffy Seeks Court Approval to Sell Assets
Bankrupt bicycle maker Huffy Corp. has asked the bankruptcy court for
approval to sell certain assets of its non-core businesses for more than
$1.6 million, the company said on Wednesday, Reuters reported. The
Miamisburg, Ohio–based company, which filed for chapter 11
bankruptcy protection in the U.S. Bankruptcy Court for the Southern
District of Ohio on Oct. 20, said it filed a motion to sell intangible
assets, including trademarks used in its hockey and in-line skates
businesses, for almost $1.62 million.
Chapter 11 Doesn’t Fly
There will be tremendous pressure on policy makers to address the
serious structural problems with the nation’s defined-benefit
pension system and the Pension Benefit Guaranty Corporation, the federal
agency that insures traditional private-sector pensions, according to a
commentary in today’s Wall Street Journal. Read the
full article at www.wsj.com
(subscription required).
Stelco, Deutsche Bank Reach New Deal
Stelco Inc. said on Wednesday it had forged a new bailout plan with
Deutsche Bank AG that does not require the insolvent steelmaker to have
a supply contract with General Motors Corp., Reuters reported. The
original C$900 million ($762 million) bailout plan from Deutsche Bank
crumbled earlier this week when Stelco failed to clinch a no-strike deal
with the United Steelworkers union that was satisfactory to GM, its
biggest customer.
Delta Shares Up on News of Debt Exchange
Delta Air Lines Inc. said on Wednesday enough investors have tendered
their short-term securities to allow the company to go ahead with a debt
exchange, which analysts said is another sign that a bankruptcy filing
is not imminent, Reuters reported. However Delta, whose shares rose
nearly 7 percent, said that the amount of intermediate- and long-term
securities fell short. “I think the broader market is just looking
at the fact that bankruptcy now looks like it’s avoided for the
foreseeable future,” said Ray Neidl, analyst at Calyon Securities,
the newswire reported.
Parmalat Creditors in U.S. Cry Foul over Spreading Litigation
The legal war accompanying the collapse of the bankrupt Italian food
giant Parmalat is being waged mainly in Italy. But litigation has spread
to American courts, and some U.S. creditors of Parmalat are complaining,
the New York Law Journal reported. An injunction based in
bankruptcy law bars the U.S. creditors from litigating in the United
States and it has prevented them from defending themselves in cases
Parmalat has filed against them in this country, they say. Read the full
article at www.law.com.