November 25, 2003
Landrieu Predicts Class Action Deal Before 2003
Adjournment
Four Senate Democrats who last month joined most of their Democratic
colleagues to vote against floor consideration of the bipartisan class
action reform bill are in the 'final stages' of negotiating a compromise
measure with Majority Leader Bill Frist (R-Tenn.), Sen. Mary Landrieu
(D-La.) said on Monday, CongressDaily reported. The 'Class Action
Fairness Act' fell one vote short of the 60 votes needed to break a
filibuster by Democratic opponents of the measure. But Landrieu said she
and her fellow Democratic senators now are 'very close' to striking a
compromise with Frist that they could support. 'I think there's a very
good chance that we can get a class action bill with additional
Democrats on board,' Landrieu said. She added that the lawmakers 'could
potentially' reach a deal before Congress adjourns.
Investigator Says Lay, Skilling Liable
Former Enron Corp. Chairman Kenneth Lay and former CEO Jeffrey Skilling
'are included within a circle of responsibility for the company's
financial demise' whether or not they are legally culpable, the
bankruptcy court-appointed examiner concluded, the Associated Press
reported. The fourth and final report released on Monday said sufficient
evidence exists to prove that Lay and Skilling failed to adequately
oversee Enron's use of financing methods to hide debt and inflate
profits. 'They failed to respond appropriately to the existence of red
flags 'indicating that certain senior officers' were misusing such
transactions to disseminate inaccurate financial statements, the
1,334-page report said, reported the newswire. The report by bankruptcy
examiner Neal Batson, which also found former directors, accountants and
outside attorneys responsible, comes nearly two years after Enron
collapsed in scandal, AP reported.
The report also noted that Lay and Skilling neglected to sufficiently
examine deals that involved partnerships once run by former Enron
finance chief Andrew Fastow, who faces 98 charges of money laundering,
fraud, insider trading and other counts. Fastow has pleaded innocent and
is scheduled for trial in April next year, reported the newswire.
Sprint to Cut 2,000 Jobs to Cut Costs
Telephone company Sprint Corp. said on Monday said it would cut about
2,000 jobs, or about 3 percent of its workforce, as it cuts costs to
offset shrinking revenues and weak demand, Reuters reported. The company
said it would take charges in the fourth quarter, primarily due to
severance benefits. The company, which employs about 68,000 people, said
the cuts will affect workers across the company, from the local and
wireless units to technology and corporate support staffs. The Overland
Park, Kan.-based company previously said it aimed to reduce operating
expenses by 5 percent to 7 percent over the next three years, for more
than $1 billion in annual savings. It plans to automate some network
functions and move more services and operations online. 'Certainly
there's going to be pressure in both their long-distance and wireless
businesses next year,' said Guzman & Co. analyst Patrick Comack, who
has 'perform in-line' ratings on Sprint, reported the newswire.
CTC Communications Reorganization Plan Confirmed
CTC Communications Group Inc. announced yesterday in a press release
that the U.S. Bankruptcy Court for the District of Delaware has
confirmed the company's second amended joint plan of reorganization.
This decision paves the way for CTC's emergence from chapter 11 upon
consummation of its investment agreement with Columbia Ventures
Broadband LLC, a subsidiary of Vancouver, Wash.-based Columbia Ventures
Corporation (CVC), and satisfaction of other conditions. The plan of
reorganization was accepted by an overwhelming majority of its voting
creditors. The plan was supported by a majority of CTC's secured
lenders, its unsecured creditors' committee, Cisco Systems Inc. and
other important creditor groups.
Horsehead Industries Receives Court Approval for Bid Procedures with
Sun Capital as Stalking Horse
Horsehead Industries Inc. (HII) announced yesterday in a press release
that the bankruptcy court approved Sun Capital as its stalking horse
bidder for the sale of substantially all of its assets. The court set
December 8 as the final sale hearing date with competing bids due by the
morning of December 5. An auction will follow that same afternoon.'We
are extremely pleased to receive court approval to move forward in the
sale process and to finally come to resolution on terms with our major
secured creditors and a potential buyer,' said Dave Carpenter, Chairman
and CEO. 'I want to thank our customers and suppliers for their patience
and support through this difficult period and look forward to their
continued support as we complete our emergence from bankruptcy.'
S&P Affirms Pepco Holdings Corporate Credit Ratings
Standard & Poor's Ratings Services said yesterday in a statement
that it affirmed its 'BBB+' long-term corporate credit ratings on PEPCO
Holdings Inc. (PHI) and its utility subsidiaries, and removed the
ratings from CreditWatch with negative implications following the U.S.
Bankruptcy Court's approval of the transitional power agreement
settlement between Potomac Electric Power Co. (Pepco) and Mirant Corp.
Under the terms of the settlement agreement, Pepco will continue to
purchase from Mirant its standard offer service power for Maryland and
Washington, D.C., customers at prices that allow Pepco to earn margins
that are two-thirds lower than under original contract terms.
Washington, D.C.-based PHI had $6.1 billion in debt as of Sept. 30,
2003. 'Despite the overall strength of PHI's underlying utility
businesses and the recent Mirant settlement agreement, PHI is
operationally weakened by the company's ongoing relationship with
bankrupt Mirant,' said Standard & Poor's credit analyst Michael
Messer.
Court To OK Bid Rules For Rouge Industries Auction
U.S. Bankruptcy Chief Judge Mary F. Walrath said on Monday that she
would approve bid rules for a Dec. 19 auction of Rouge Industries Inc.
The rules safeguard Russian steel maker Severstal's opening offer of
$215 million with $4.5 million in bid protections in the form of a
breakup fee and expense reimbursement. By Dec. 17, Severstal must
disclose to other potential bidders whether it has reached agreement
with the United Auto Workers over terms for taking on the union's
contract.
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Judge Hopes To Decide On Pacific Gas Plan Before Dec. 18
A bankruptcy court judge Monday said he hoped to decide before Dec. 18
whether Pacific Gas & Electric Co.'s plan for how to reorganize from
chapter 11 can be confirmed, said Ron Low, spokesman for the PG&E
Corp. utility. Judge Dennis Montali heard closing arguments Monday on
the plan, which reflects a settlement agreement between Pacific Gas and
staff of the California Public Utilities Commission. The commission,
which must approve the settlement by year's end for it to remain valid,
is slated to vote on it at a Dec. 18 meeting.
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Oakwood Homes to be Bought by Berkshire's Clayton
Oakwood Homes Corp., a manufactured homes maker, said on Tuesday it has
agreed to be acquired out of bankruptcy by Berkshire Hathaway Inc.'s
Clayton Homes unit for about $373 million, Reuters reported. The deal,
which will be presented as an amendment to the company's bankruptcy
reorganization plan, is subject to approval by the company's creditors
and the bankruptcy court. Oakwood said its unsecured creditors'
committee supported the proposed sale. The purchase will close by March
31, 2004, subject to court approval.
Air Canada Suitors Court Its Chief with Bonuses
The two suitors courting Air Canada both offer hefty bonuses to the
insolvent airline's top executive and his restructuring chief to steer
its eventual emergence from bankruptcy protection, according to court
documents, Reuters reported. A report released by the airline late on
Monday said equity proposals from New York's Cerberus Capital Management
and Hong Kong-based businessman Victor Li both required that Robert
Milton, president and CEO, and Calin Rovinescu, head of corporate
development, remain with the airline.
Through his Trinity Investments unit, Li offered Milton and Rovinescu
one percent each of the equity in a restructured Air Canada. Depending
on the new airline's fortunes, those stakes could be worth at least C$21
million ($16 million) to each of the men, according to analysts'
calculations. Unions representing workers who gave Air Canada C$1.1
billion of concessions earlier this year have complained about the bonus
plan.
Cara Operations Cancels Vote on Going Private
Cara Operations Ltd., owner of the Swiss Chalet and Harvey's restaurant
chains, said on Monday it canceled a Dec. 15 special meeting to vote on
a bid by its parent company to take it private, Reuters reported. The
move comes after Cara warned earlier this month that its biggest
customer, Air Canada, which is currently under bankruptcy protection,
may cancel its catering contract. Cara Holdings, the parent company,
said Air Canada's 'repudiation' could undermine its plans to take the
caterer and restaurant owner private. 'Holdings has advised Cara that it
is continuing its reevaluation of the proposed transaction pending final
resolution of the issue of the Air Canada contract,' the company said in
a statement on Monday, reported the newswire.
Judge Approves NRG Plan of Reorganization
A judge on Monday approved NRG Energy Inc.'s plan of reorganization
paving the way for the U.S. power company to emerge from bankruptcy,
Reuters reported. Judge Prudence Carter Beatty approved the plan
of reorganization that was filed by the energy trading unit of U.S.
power company Xcel Energy Inc. with the U.S. Bankruptcy Court for the
Southern District of New York. Minneapolis-based NRG said it expects to
emerge from bankruptcy as an independent company by the end of the year.
It expects its power marketing unit, NRG-Power Marketing Inc., to emerge
from chapter 11 at the same time.
That timetable would enable Xcel to pay its delayed October quarterly
dividend before the end of this year and resume its normal dividend
schedule. Dick Kelly, Xcel's president and COO, said the company is
working to pay the dividend 'as quickly as we can,' reported the
newswire.
UniSource Bought by Private Equity Groups
A group of investors led by financial buyout firm Kohlberg Kravis
Roberts (KKR) on Monday agreed to take Arizona electric and gas utility
UniSource Energy Corp. private by buying it for $853 million, Reuters
reported. The deal, which underlines the growing attraction of utilities
assets to private equity investors, will see the buyers taking on a
little over $2.0 billion of UniSource's debt, valuing the whole
transaction at $3.0 billion. This deal comes after last week's deal by
Texas Pacific Group, a KKR rival, to buy Portland General Electric from
Enron Corp. for $1.25 billion. The bid for UniSource is being made by an
affiliate of investor group Saguaro Utility Group L.P. in which Sage
Mountain L.L.C is a general partner and KKR and the private equity arms
of J.P. Morgan Chase & Co. and Wachovia Corp. are the limited
partners, reported the newswire.
