February 6, 2004
January Payrolls Weaker Than Expected
The U.S. economy created just 112,000 new jobs in January, far fewer
than expected, government data showed on Friday, Reuters reported. The
fifth straight monthly gain in non-farm payrolls followed a revised
increase of 16,000 new jobs in December, the Labor Department said. The
unemployment decreased to 5.6 percent, the lowest since January 2002,
from 5.7 percent the previous month. Analysts had been expecting the
improving economy to create 150,000 new jobs in January. They were
looking for the unemployment rate to hold steady at 5.7 percent.
Many of the new jobs came from a 76,000 increase in the retail sector.
But analysts had said there would be a gain because retailers took on
fewer employees than expected in the holiday shopping months, which
would mean that, according to the seasonal adjustments in the report,
there would be fewer layoffs in January. The troubled manufacturing
sector cut jobs for the 42nd month in a row, despite some signs of a
revival in factories. Economists and policy-makers will be closely
looking at the report for evidence of an improvement in the labor
market, which is seen as the key to a sustained economic recovery. The
Federal Reserve is expected to keep interest rates on hold until signs
of this emerge, reported the newswire.
Filing for Bankruptcy Can Cause Other Problems
Many state courts, including those in Illinois, have ruled that IRA
accounts are safe from creditors in a bankruptcy, the Chicago Sun
Times reported. But bankruptcy professor Charles Tabb at the
University of Illinois College of Law in Champaign notes that assets in
a Roth IRA may not be protected. A Roth IRA does not have all the
characteristics of the traditional IRA, since there are no restrictions
on withdrawal of contributions. Read the
href='http://www.suntimes.com/output/savage/cst-fin-terry053.html'>full
article.
Loss Narrows at US Airways
US Airways Group narrowed its net loss in the fourth quarter, but warned
that it continues to suffer with higher costs amid increased competition
from low-fare carriers, the Wall Street Journal reported. The
carrier, which hasn't posted a profit since emerging from bankruptcy
protection nearly a year ago, reported today its loss narrowed to $98
million, or $1.82 cents a share, compared with a loss of $794 million,
or $11.67 a share, a year earlier. The most recent results include a
gain of $30 million from the sale of its stake in Hotwire, while the
year-earlier results include a charge of $496 million related to its
bankruptcy and restructuring. Throughout the year, we made progress in
reducing our losses, but regrettably, we are behind in our plan for
achieving sustained profitability,' said President and CEO David N.
Siegel, the online newspaper reported.
Adelphia Equity Group Demands Its Own Reorganization Plan
A committee of shareholders of Adelphia Communications Corp. yesterday
said it asked a U.S. Bankruptcy Court for permission to file its own
reorganization plan for the cable television company, Reuters reported.
The motion, filed in the U.S. Bankruptcy Court for the Southern District
of New York, would allow the official Adelphia Equity Committee 'to
propose its own chapter 11 plan providing for the auction and sale' of
the bankrupt cable company's operating assets, the committee said in a
statement.
Adelphia officials last month said their plan of reorganization
envisions no recovery for equity shareholders. Officials of the Adelphia
shareholders committee said they strongly disagreed with that proposed
plan.
Stelco Defends Move into Bankruptcy Protection
Thousands of jobs at Stelco Inc. would have been at greater risk if the
firm hadn't filed for bankruptcy-court protection, the insolvent
steelmaker said yesterday in defense of its decision to restructure its
finances, the Associated Press reported. Responding to a potential union
challenge next week of a court order that grants the company protection
from creditors under the federal Companies' Creditors Arrangement Act
(CCAA), Stelco issued a letter to employees telling them that workers
are not being singled out for its financial woes.
Union officials have accused the company of being misleading in its
calculation of pension costs and are concerned that, under CCAA
protection, Stelco is trying to put itself in a position to lay off
employees abruptly and with little concern for seniority rights. 'We've
stated that we need to review our entire cost structure during our
restructuring process,' Stelco CEO Courtney Pratt wrote in a letter to
8,400 employees, about 6,300 of whom are members of the United
Steelworkers union. 'We have not singled out and do not intend to single
out any one particular group to bear the entire burden of this exercise,
be it employees, bondholders, pensioners, trade creditors or others,' he
said, reported the newswire.
Stelco has said it faces a $1.25-billion deficit in its pension and some
$918 million in post-retirement pension benefits. Such 'legacy costs'
for its 11,000 retirees are the kind that have been largely reduced at
dozens of U.S. steel mills who have gone through similar court
restructurings in recent years, AP reported.
Parmalat Brasil Chief Says Survival Matter of Days
The Brazilian unit of Italian food group Parmalat has only days before
it will be forced to shut down operations unless it gets a cash
injection of $26 million, the head of Parmalat Brasil warned yesterday,
Reuters reported. 'The survival of Parmalat is a matter of days. We're
talking about days, not weeks,' said Ricardo Goncalves, president of
Parmalat Brasil Industria de Alimentos. 'The solution should be through
the negotiation of a purchase of the company, a part of it,' he told
reporters. His comments were the first time Goncalves had raised the
possibility that Parmalat Brasil may have to sell assets to stay up and
running. Already, it has had to stop production at a number of its eight
factories as it faces a shortage of raw materials. He said the
subsidiary needed fresh cash to keep operating and that companies had
already shown interest in buying all of Parmalat Brasil or just parts of
it, reported the newswire.
LG Card Rescue Threatened after KEB Pulls Out
A $4.5 billion rescue plan for LG Card Co Ltd., South Korea's top credit
card company, started yesterday when Korea Exchange Bank (KEB) pulled
out of the bail-out and Hana Bank said it might follow suit, Reuters
reported. The rescue package, initially agreed in early January, had
helped LG Card narrowly avert bankruptcy and prevent a potentially wider
financial crisis. Another creditor, Koram Bank, said it would grant cash
already pledged, but would not join a debt-for-equity swap for loans
extended to LG Card, delivering a further blow to the overall rescue
plan. 'The bail-out program could be put at risk and the LG Card issue
will emerge again as a big threat to the financial sector and the
overall economy,' said Kwon Jae-min, an analyst at Goodmorning Shinhan
Securities. Analysts said the government, whose state-run Korea
Development Bank (KDB) has taken on management of LG Card, might step in
again to persuade creditors to stick with the plan, reported the
newswire.
Amerco Resumes Quarterly Preferred Share Dividend
Amerco, the holding company for U-Haul International that received court
approval to exit bankruptcy, said on Wednesday its board resumed the
payment of dividends on its preferred stock, Reuters reported. The
dividend of $0.53125 per share will be payable on March 1 to
shareholders of record on Feb. 16, the company said.
Allegheny Says Regulators Clear $1.6 Billion Debt Issue
U.S. power company Allegheny Energy Inc. on Wednesday said that the
Securities and Exchange Commission had approved its request to issue up
to $1.6 billion to refinance existing debt, Reuters reported. The
Hagerstown, Md.-based company said there was no assurance that it would
be able to complete a refinancing for the parent company and subsidiary
Allegheny Energy Supply Co. on acceptable terms. The SEC also approved
the company's request to issue guarantees that would allow it to use
about $76 million held in escrow in order to pay down debt.
Allegheny Energy, which narrowly averted bankruptcy last year and has
been hurt by the credit crunch in the power sector that followed Enron
Corp.'s collapse two years ago, said the SEC had also cleared plans for
it to issue up to $350 million in equity but said it had no immediate
plans to do so, reported the newswire.
Union May Have Buyer for Slater's Hamilton Site
A U.S. steelmaker has expressed interest in Slater Steel's Hamilton
Specialty Bar unit, which could rescue the facility from bankruptcy
protection, the United Steelworkers said on Wednesday, Reuters reported.
According to the Steelworkers, a group led by Pinnacle Steel have asked
Slater to extend the timeframe for the planned liquidation of Hamilton
Specialty bar. 'The request is so that the union and Pinnacle can work
out agreement on a plan to bring the specialty steelmaker out of
bankruptcy protection and result in its continuing to operate as a going
concern,' the union said in a release. Slater, which was granted
creditor protection in June, won court permission in early January to
liquidate its Hamilton Specialty Bar unit and Atlas Stainless Steels,
Reuters reported.
Kaiser Aluminum Moves Ahead with Union Deals
Bankrupt Kaiser Aluminum Corp. on Wednesday said a U.S. Bankruptcy Court
conditionally approved its agreements with two unions and a
court-appointed group representing salaried retirees regarding pension
and post-retirement benefits, Reuters reported. The agreements, which
are subject to various approvals, were struck with the United
Steelworkers of America, the International Association of Machinists and
the 1114 Committee that represents salaried retirees. The deals would
allow Kaiser to terminate existing retirement benefits, such as medical
coverage, and pension plans for current employees and retirees. Kaiser
had sought to terminate those benefits in order to emerge from chapter
11 bankruptcy. Separately, Kaiser said it continues to have discussions
with four additional unions concerning pension and post-retirement
benefits, the newswire reported.
UK Consumer Bankruptcies Surge to 11-year High
The number of Britons going bankrupt in the fourth quarter of 2003
surged to its highest level in nearly 11 years, raising concern about
the scale of consumer debt as interest rates head upwards, Reuters
reported. The Department of Trade and Industry said today that
individual insolvencies in England and Wales rose to 10,271 in the
fourth quarter, up 12.0 percent on the quarter and 28.9 percent on the
year. That was the highest figure since the record 11,000 bankruptcies
seen in the first quarter of 1993 when Britain was just coming out of
the slump. Bankruptcies in 2003 as a whole were up 19 percent on 2002,
with about 100 people a day declaring themselves insolvent.
Economists said the figures were even more alarming given that interest
rates were so low through 2003 and suggest the record rise in consumer
debt is already exacting its toll. 'This is just the tip of the iceberg.
The news for the consumer is getting worse,' said John Butler, UK
economist at HSBC bank, reported the newswire. 'Things couldn't have
been better for consumers, really low interest rates and low
unemployment but you still get figures like these.'
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