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January 18, 2005
Business Interests See Class Action Bill as an Early Victory
The U.S. Chamber of Commerce is urging Congress to complete action on
a bipartisan class action bill by mid-March as the business
community’s first step to reshape the judiciary,
CongressDaily reported. Stanton Anderson, the
Chamber’s executive vice president said on Friday all newly
elected GOP senators are likely to favor the class action bill. Senate
Finance Chairman Charles Grassley (R–Iowa) plans to reintroduce a
class action bill that mirrors last year’s Senate compromise, and
Majority Leader Bill Frist (R–Tenn.) has said he expects to move
it to the floor by early next month. But trial lawyers, and a coalition
of more than 90 consumer, environmental and civil rights groups, oppose
the class action bill. They argue that it would limit potential
plaintiffs’ ability to file legitimate claims against corporate
wrongdoers, the newswire reported.
U.S. Agency Prepares to Sound Social Security Alarm
The U.S. Social Security Administration is set to publicize its
financial problems and promote partial privatization of the government
pension system as part of a solution, despite the objections of many
agency employees, the New York Times reported on Saturday.
Social Security officials say the agency is carrying out its mission to
educate the public, including more than 47 million beneficiaries, the
newspaper reported. But many employees at the Social Security
Administration question the accuracy of recent statements by the agency
and say that money from the Social Security trust fund should not be
used for advocacy, the Times said.
Fraud Cases Focus on Top Executives
The trial of former WorldCom Inc. Chairman Bernard J. Ebbers gets
underway this week, beginning a new round of courtroom disputes, over
events that helped end last decade’s investment boom, the
Washington Post reported. WorldCom and Enron Corp. fell
apart and HealthSouth Corp.’s stock plunged after revelations of
fraud that had hidden fundamental weaknesses. Pensions, jobs and
billions of dollars in shareholder equity were lost in the wreckage. Now
the executives who led those companies are fighting to stay out of
prison. Opening statements in the trial of former HealthSouth chairman
Richard M. Scrushy begin next week, and Enron’s former chairman,
Kenneth L. Lay, is expected to face trial later this year. Read the full
href='http://www.washingtonpost.com/wp-dyn/articles/A16547-2005Jan17.html'>www.washingtonpost.com/wp-dyn/articles/A16547-2005Jan17.html.
US Airways
US Air Satisfies Terms of GE Financing Deal
US Airways has satisfied crucial terms of a new aircraft financing
agreement with its biggest creditor, General Electric Co., that will
boost the airline’s chances of surviving bankruptcy, both
companies said on Friday, Reuters reported. The agreement is a
cornerstone of US Airways’ reorganization under chapter 11 and its
plan to emerge as a leaner airline operating more like a low-cost
carrier. The deal requires US Airways to step out of court protection by
June 30, the newswire reported.
Last Stand Could Fell US Airways
US Airways machinists face a choice this week: They can approve the
carrier’s latest contract proposal and usher in the waves of steep
pay, benefit and job cuts that come with it. Or they can turn down the
contract and open the door to a walkout, the Washington
Post reported. Read the full article at
href='http://www.washingtonpost.com/'>www.washingtonpost.com.
Mirant Settles Calif. Energy Crisis Claims
Bankrupt energy company Mirant Corp. said on Friday it had settled
claims with California utilities and public agencies related to the
state’s energy crisis in 2000–2001, Reuters reported. The
California Public Utilities Commission, which regulates the
state’s utilities and approved the pact, in a separate statement
put the total value of the settlement to be received by the California
parties at $519 million to $559 million, the newswire reported.
McLeodUSA Puts Itself on the Block—Sources
McLeodUSA Inc. has put itself on the block in a move that could mean
a second big telecommunications write-off for its controlling
shareholder, Forstmann Little & Co., sources familiar with the
situation said, Reuters reported. Cedar Rapids, Iowa–based
McLeodUSA, has recently been shopping for an investment banker to help
with the sale, the sources said. Forstmann Little, a veteran New York
buyout firm, invested $1 billion into McLeodUSA for a 12 percent stake
in 1999. But like many telephone companies that emerged after industry
deregulation, McLeodUSA’s debt increased and growth fell, forcing
the company into chapter 11 bankruptcy in January 2002, the newswire
reported.
W.R. Grace Says Some Creditors Support Plan
Bankrupt specialty chemicals company W.R. Grace and Co. on Friday
said two groups of creditors have agreed to support a contested
reorganization plan but asbestos claimants still do not, Reuters
reported. The official committee of unsecured creditors and the official
committee of equity holders have agreed to be joint proponents of an
amended plan, which the company filed Jan. 13 in Delaware Bankruptcy
Court. But the committees representing asbestos claimants do not support
the plan, the newswire reported.
Calpine Considers Sale of British Energy Plant
U.S. power producer Calpine Corp. said on Thursday it is evaluating
the potential sale of a 1,200-megawatt power plant in Hull, Britain, and
had retained Credit Suisse First Boston as advisers, Reuters reported.
The San Jose, Calif.–based company said it was studying financial
alternatives for the Saltend Energy Centre, including a possible sale of
the plant it bought for about $800 million in late 2001. Net proceeds of
the sale would be used to redeem the company’s existing $360
million two-year redeemable preferred securities with any remaining
balance used in accordance with asset sale provisions of Calpine’s
existing bond indentures, the newswire reported.
Despite Early Signs of Victory, Discount Airlines Get Squeezed
For years, discount airline AirTran Airways competed with Delta Air
Lines by offering low fares its bigger rival struggled to match, the
Wall Street Journal reported. As Delta battled pilots over
contract terms, AirTran announced 2003 profit of $101 million, its
biggest ever. But last year AirTran, a unit of AirTran Holdings Inc.,
began to find itself in competition by even cheaper upstarts. Read the
full article at www.wsj.com
(subscription required).