src='/AM/Images/headlines/headline.gif' />
July 19, 2005
Bankruptcy Court Denies INTERMET’s Financing Commitment
Proposal
INTERMET Corporation, a diversified manufacturer of cast-metal
components, announced in a press release yesterday that its motion to
enter into an equity financing commitment letter, and to pay the fees
and expenses and to furnish related indemnities provided for in the
commitment letter, was denied by the bankruptcy court, with the right to
resubmit the motion at a later time. The court reiterated that the
disclosure statement hearing would go forward as scheduled on Aug. 9,
2005. INTERMET continues to work toward confirmation of its
reorganization plan that will permit the company to exit from chapter
11.
Stelco’s Bankruptcy Protection Extended
An Ontario judge has granted Stelco Inc. an extension on its
bankruptcy protection until September, the Canadian Press
reported yesterday. The Hamilton-based steelmaker now has until Sept. 9
to complete its restructuring plan. Both the union and Stelco’s
salaried pensioners have voiced opposition to the company’s
strategy. Under Stelco’s plan, current stockholders would end up
owning less than two percent of the company, but would receive warrants
to buy a further 10 percent of Stelco’s equity and could buy more
shares in a $100-million rights offering. The plan also aims to retire
Stelco’s $1.3-billion pension plan solvency deficiency by 2015,
with an upfront contribution of $200 million followed by annual
contributions of $98 million adding up to $900 million by 2012. Stelco
has been operating under court protection from creditors since January
2004.
American Airlines Says it Won’t be Beaten by Low-cost
Rivals
U.S. aviation has lost $32 billion in four years, and is on course to
lose another $5 billion-plus this year, Times Online reported on Sunday.
Of the 12 airlines that have credit ratings, 11 are deemed junk. United
Airlines, one of the industry’s pillars, is in chapter 11. Airline
analysts say two other big names, Delta and Continental, may go the same
way. Even American Airlines, the world’s biggest carrier and long
the U.S. industry’s financial powerhouse, has encountered
financial difficulties.
href='http://www.timesonline.co.uk/article/0,,2095-1696513,00.html'>Read
the full article.
Collins & Aikman Bankruptcy Filing Tells Secrets
Corporate bankruptcies are always great drama if for no other reason
than a lot of details become public that never would otherwise, a
Detroit Free Press financial columnist said yesterday. The
huge, messy bankruptcy of Troy, Mich.–based auto-parts supplier
Collins & Aikman Corp. is no different. Buried amid the thousands of
pages of court documents are subplots ranging from automakers giving
millions of dollars to a company that threatens to shut them down to
discussions of weak accounting systems overseen by a former U.S. budget
director. If Collins & Aikman were to collapse completely—as
it apparently came close to doing in mid-May—or opt to stop
shipping parts to automakers as some of its creditors have urged, this
maker of everything from door trim to instrument panels to minivan
floors could grind most assembly plants across North America to a halt.
href='http://www.freep.com/money/autonews/aikman18e_20050718.htm'>Read
the entire analysis.
Church’s Work Isn’t Complete in Abuse Case
The Roman Catholic Diocese of Tucson is the first in the country to
emerge from chapter 11 bankruptcy in a case that centers on the sexual
abuse of children by priests, reports the Arizona Daily
Star. Although the financial part of the case is now finished,
with 54 claimants receiving payments of $15,000 to $600,000, the damage
wrought by the clergy abuse is not over.
href='http://www.dailystar.com/dailystar/printDS/84458.php'>Read the
entire story.
40 Companies Sitting on Pension Time Bombs
United Airlines’ struggles have put a new focus on a pension
guaranty system that is near collapse. Reform could take a huge chunk
out of the bottom line on big offenders, according to an article in
MSN’s Money Central. Thanks to robust stock returns since the lows
of mid-2002, a serious problem weighing on many companies has simply
vanished from public debate: Their massively underfunded pension plans.
Over the past two years, pension portfolios inside companies have risen
sharply along with the market, sweeping under the rug concerns about
looming retirement-plan shortfalls. But severe turbulence in the airline
sector may soon change all that, moving the menace of bankrupt pension
plans squarely back into the spotlight.
href='http://moneycentral.msn.com/content/P87329.asp'>Read the entire
article.
Northwest Could Lose Its Lucrative Pact with KLM
Northwest Airlines, already in financial trouble, is threatened with
losing its long-standing and lucrative link with KLM Royal Dutch
Airlines—unless the U.S. government grants Northwest’s plea
for antitrust immunity to coordinate international pricing with
KLM’s new owner, Air France, the Wall Street Journal
reported yesterday. The plea comes as Northwest faces a possible strike
by its mechanics and considers filing for bankruptcy protection if
Congress doesn’t legislate pension relief. The U.S. Department of
Transportation’s response, expected before year’s end, also
will have implications for other U.S. and foreign carriers that want to
work together more closely, in partnerships or within the three global
airline marketing alliances that have developed in recent years.
Able Labs Files for Bankruptcy Protection
U.S. generic drug manufacturer Able Laboratories filed for chapter 11
bankruptcy yesterday, In-Pharma Technologist.com reported. Able has not
been generating income or revenue for some weeks after it was forced to
suspend all manufacturing operations and recall its products because of
quality control issues at its New Jersey manufacturing plant. The
ultimate aim, according to Able, remains to improve the quality of its
systems and controls and, subject to FDA authorization, reintroduce
products to the market. The filing contains a request to retain a chief
restructuring officer and a director of restructuring at the company,
which has seen the departure of two chief executives since May 23, when
manufacturing ceased
Munich Re Boosts American Re Reserves by $1.6 Billion
Munich Re, the world’s largest reinsurance company, will boost
reserves at its American Re unit by $1.6 billion to cover casualty and
asbestos claims in the United States. The increase will cut
second-quarter profit by €400 million ($480 million), Munich Re
Chief Executive Nikolaus von Bomhard said on a conference call
yesterday, Bloomberg reported. The shares posted the biggest gain in six
weeks after von Bomhard said he’s sure the “reserve issue at
American Re has been dealt with” following the increase. Munich Re
has added about $5 billion to American Re’s reserves in the past
five years, more than it paid to buy the Princeton, N.J.–based
company in 1996. The stock rose as much as 2.9 percent, and was up 2.07
euros, or 2.3 percent, to 91.37 euros at 10:32 a.m. in Frankfurt. The
shares have risen 1.1 percent this year, valuing the Munich-based
company at 21 billion euros.
href='http://www.in-pharmatechnologist.com/news/printNewsBis.asp?id=61379'>Read
the entire story.
Interest Rates, Bankruptcies Cut into Citigroup’s Profit
Citigroup Inc. reported second-quarter profit yesterday that missed
analyst forecasts, as fixed-income trading revenue plunged and higher
U.S. bankruptcies hurt credit cards, sending the company’s shares
down more than 2 percent, Reuters reported today. The world’s
largest financial services company said revenue from the trading of debt
and derivatives declined as the gap between short- and long-term
interest rates shrank. Citigroup also said North American credit card
revenue decreased 3 percent as more customers filed for bankruptcy
protection ahead of changes in U.S. bankruptcy legislation. The 2004
quarter included legal costs related to WorldCom Inc., Enron Corp. and
other corporate scandals, and a gain from selling a stake in a Saudi
Arabia bank. Excluding these items, profit fell 5 percent.
Conseco Shareholders Lose Lawsuit
A federal judge in Indianapolis dismissed a shareholder lawsuit
against former executives of Conseco Inc., a Carmel-based insurer,
according to a report in the Indianapolis Star. U.S.
District Court Judge David F. Hamilton ruled late Friday that the former
Conseco shareholders had failed to prove that they suffered investment
losses due to statements by Gary Wendt, William Shea, Charles Chokel and
James Adams. The stock became worthless during Conseco’s
bankruptcy reorganization, which began in December 2002. Conseco emerged
from bankruptcy in September 2003 as a different legal entity and issued
new stock.