April 5, 2004
Pension Bill Passes House, But Senate Opposition
Looms
A conference agreement on pension legislation passed
the House on a 336-69 vote on Friday, but faces an uncertain fate in the
Senate, where Democrats are threatening to kill it because it falls
short of what they say multi-employer pension plans need,
face='Times New Roman'>CongressDaily reported. A spokeswoman for
Senate Majority Leader Bill Frist (R-Tenn.) said a vote on the pension
conference report has not yet been set for this week -- although a vote
is expected either Wednesday or Thursday, the only two days the Senate
will be in session. Quick passage of the measure is unlikely because
Democrats are expected to filibuster the conference report, meaning GOP
leadership will need to muster 60 votes to get the bill through the
Senate. A spokesman for Senate Health, Education, Labor and Pensions
ranking member Edward Kennedy (D-Mass.) Thursday said the senator
expects Democrats to 'stand together,' despite fierce lobbying from
businesses that want relief from pension payments, the newswire
reported. 'I will tell you what I am hearing from Democrats -- it will
not get through the Senate, but I haven't had any head count,' Finance
Chairman Charles Grassley (R-Iowa) said Thursday, the newswire
reported. A spokeswoman for Sen. Tom Daschle
(D-S.D.) said
Democrats would determine their strategy during a Wednesday Caucus
meeting.
Although Friday’s House vote was not as lopsided
as the overwhelming 397-2 vote by which the bill first passed the House,
it did pass with relative ease despite Democratic concerns. Two of the
three House Democratic conferees -- Education and the Workforce ranking
member George Miller of
Andrews of
refused to sign the conference report, although they had voted for the
original House bill. The third House Democratic conferee, Ways and Means
ranking member Charles Rangel of
York
69 votes against the bill, 61 came from Democrats. In conference,
negotiators added some Senate-passed provisions helping multi-employer
pension plans, but the aid provided was much less than Democrats had
sought. The underlying bill would reset the formula companies use to
calculate the contributions they must make to their pension coffers. The
change would save companies an estimated $80 billion over two
years.
Judge Declares Mistrial in Case of Ex-Tyco
Executives
A mistrial was declared Friday in the six-month
corporate theft trial of two former top executives of
href='http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=TYC'>
face='Times New Roman' size='3'>Tyco International, with the
judge attributing his decision to outside pressure on a juror, the
face='Times New Roman'>New York Times reported. There was no
immediate indication of whether the prosecution would seek to retry the
two executives, L. Dennis Kozlowski and Mark H. Swartz, though Swartz's
lawyer told reporters afterward that he expected a retrial, the
newspaper reported. The state's indictment accused Kozlowski, a former
chief executive of Tyco, and Swartz, a former chief financial officer,
of stealing $170 million from Tyco itself and reaping $430 million more
by covertly selling company shares while 'artificially inflating' the
value of the stock, which plummeted after it became known in mid-2002
that the government was investigating Tyco executives.
Wire Maker for Cars and Computers Seeks
Bankruptcy
St. Louis-based International Wire Group, a producer
of wire used by makers of automobiles and computers, filed for
bankruptcy protection to permit it to reorganize, the New York Times reported. In
papers filed late Wednesday in the U.S. Bankruptcy Court in
Wire said a ''meteoric rise'' in the price of copper had eroded its
liquidity and forced it to seek court protection from creditors.
International Wire has been in talks with holders of 11.75 percent bonds
due 2005 to grant them ownership of 96 percent of the equity in the
company through a restructuring plan, David J. Webster, the chief
restructuring officer, said in the court papers, the Times
reported.
Short on Cash, ICG Says Drastic Measures
Possible
ICG Communications said in its annual report that it
may have to sell itself or seek bankruptcy protection again unless a
capital infusion can be arranged by the third quarter, the
face='Times New Roman'>Denver Post reported. The telecom is in a
cash crunch exacerbated by the sale of revenue-generating business lines
and bad conditions in the communications industry. ICG on Thursday
announced the sale of part of its revenue-generating dial-up Internet
businesses to peer Level 3 Communications for $35 million, the online
newspaper reported. ICG emerged from a two-year bankruptcy in October
2002. The company employs 890 people, 577 in
conceded in its filing that operating cash may not be available on
reasonable terms.
'Early in the first quarter of 2004 we engaged
financial and legal advisers to assist us in exploring strategic
alternatives, including possible strategic alliances, business
combinations or the sale of ICG assets,' the report reads, the
face='Times New Roman'>Post reported. 'Such transactions may
involve a restructuring of ICG under the United States Bankruptcy Code.'
In the same report, auditor KPMG noted 'substantial doubt about [ICG's]
ability to continue as a going concern.' That warning comes roughly 18
months after ICG emerged from bankruptcy.
FiberMark Receives Court Approval of First-day
Motions
Brattleboro, Vt.,-based FiberMark Inc. announced on
Friday that Judge Colleen A. Brown of the U.S. Bankruptcy Court for the
District of Vermont has given interim approval for all of FiberMark's
first-day motions in connection with its previously announced chapter 11
filing on
2004
FiberMark to continue normal operations during the reorganization
process. Judge Brown's orders included interim approval, as requested,
of the debtor-in-possession (DIP) credit facility being provided to the
company by GE Commercial Finance. A hearing on final approval of the DIP
facility and of FiberMark's other first-day motions has been scheduled
for
2004
The company also announced that it has signed an
amended and restated $40 million revolving credit facility for its
German subsidiaries. Both credit facilities are supplied by GE
Commercial Finance, which was FiberMark's financial partner on the
credit facility that closed in November 2003.
MCI to Pay $27 Million
to Settle Billing Claims
MCI, the No. 2 long-distance telephone company, will
pay $27 million to settle charges that it overbilled the government for
telecommunications services, a source familiar with the matter said on
Friday, Reuters reported. MCI (WorldCom Inc.), which hopes to emerge
from bankruptcy protection later this month, earlier this year won a
one-year extension of a lucrative contract to provide services to
several federal agencies.
Timeline Set for Dow Corning Breast
Implant Settlements
Thousands of women who said Dow Corning silicone
breast implants made them sick could soon receive checks from a $2.35
billion settlement fund after a judge set a date Friday for the company
to emerge from bankruptcy, the Associated Press reported. The federal
judge's order came about two weeks after a
challenge that had held up payments for years. The payments could begin
on June 15, the newswire reported. Dow Corning was forced into
bankruptcy in 1995 after 170,000 women sued the company, saying its
implants damaged their health. In a settlement approved by a federal
judge, Dow Corning agreed to pay women $2,000 to $330,000 each. But
until two weeks ago, a group of 48
to the terms, holding out for an average of $200,000 per person. Dow
Corning spokeswoman Mary Lou Benecke said the company is scheduled to
emerge from bankruptcy on June 1, the newswire reported.
Alpine Confections to
Buy Some Fannie May Assets
Archibald Candy Corp. on Friday said it has agreed to
sell some assets of its Fannie May and Fanny Farmer candy assets to
Alpine Confections Inc. for $38.9 million cash, Reuters reported.
Archibald said the sale, conducted under the auspices of a bankruptcy
court proceeding, was expected to close in several weeks. Alpine will
acquire the brands, intellectual property and 31 company-owned retail
stores.
Delta Air Lines' Financial Condition Weakens;
Bankruptcy Rumors Circulate
There are growing rumors that a bankruptcy filing may
be in Delta Air Lines’ future, the Miami-Herald reported. Chief
Executive Gerald Grinstein tells workers he will 'fight like hell' to
avoid the 'B-word,' as he called it at a recent meeting with pilots, the
online newspaper reported. But at the same time he bluntly says
the
must bring down pilot wages and other costs or it cannot
survive.
Airline industry analysts have issued a flurry of
reports handicapping Delta's chapter 11 odds. Its stock has plunged to
lows not seen since last year, when American Airlines rattled the
industry by nearly landing in chapter 11 over similar labor cost issues.
No one is predicting a chapter 11 filing in the next few months. But,
barring signs of a turnaround, the issue could come to a boil by early
2005, analysts believe. They say a wide range of indicators, including
ongoing losses, depressed stock and bond prices, lowered debt ratings
and other factors point to a higher risk that Delta will default on its
bonds. 'They can continue for a while,' said Philip Baggaley, an analyst
with Standard & Poor's, which recently downgraded Delta's debt to
'B-,' deep into junk bond territory. He said Delta can probably muddle
along for another year or two, growing increasingly vulnerable to
competitors or unexpected events.
Parmalat Bondholders Enlist SEC in Fight Over
Bankruptcy Claims
Bondholders in Parmalat Finanziaria SpA, Italy's
biggest food company, have recruited U.S. regulators to press their
claims in an Italian bankruptcy process they call “nonsensical''
and “discriminatory,” Bloomberg reported. Advisors for 130
bondholders, including American International Group Inc., the world's
largest insurer, and TIAA- CREF, a $300 billion pension fund, asked the
Securities and Exchange Commission to intervene on their behalf, the SEC
said. The investors hold about $3 billion of Parmalat debt. “One
of our goals is to insure that all investors are treated fairly in the
Parmalat bankruptcy, including American investors,'' said Lawrence West,
the SEC official overseeing the agency's Parmalat case, the newswire
reported. “We are exploring ways to make that happen.'' The
bondholders have accused the company of trying to thwart their claims
for payment by making the process for filing claims impracticable.
Parmalat says the process is dictated by Italian law. Parmalat filed for
protection in December after saying a U.S. bank account worth 3.9
billion euros ($4.8 billion) didn't exist. Parmalat's new auditor,
PricewaterhouseCoopers LLP, said in January that Parmalat's debt reached
14.3 billion euros at the end of September, almost eight times the
amount reported by the company's former management.
Bankruptcies Among Elderly Americans
Rise
More and more elderly Americans are relying on plastic
to pay for their golden years, Knight-Ridder reported. People over 65
have substantially higher credit card debts than in prior years, on
average, and more of them are declaring bankruptcy. 'It's hugely
embarrassing to most of the elderly people we talk to,' said Susan Hunt,
regional counseling manager for Consumer Credit Counseling Service of
Greater Atlanta, the newswire reported. 'They've prided themselves their
whole lifetimes on working hard and taking care of themselves,' Hunt
said. 'Now they are not able to do that anymore, and they are
embarrassed.'
But they need not feel alone. The average credit card
debt of persons over 65 was $4,041 in 2001, according to a study from
Demos, a public policy group. In 1992, the average was $2,143. The
numbers are adjusted for inflation. Among those with incomes under
$50,000 -- a very large majority -- one in five families was in 'debt
hardship.' That means they spent more than 40 percent of their income on
debt payments, including mortgages. In 2001, 82,207 people 65 and older
filed for bankruptcy. That's 244 percent higher than the total for
1991.
Companies Anticipate SEC by Widening Shareholders'
Role in Picking Directors
While federal regulators wrestle with a proposal to
give stockholders a greater voice in the nomination of corporate
directors, several companies are already moving down that path,
Knight-Ridder reported. Shareholders are rising up in response to the
drumbeat of corporate scandals in recent years, and many have set their
sights on wielding more influence over who sits on company boards,
saying it's a key to improving corporate governance. The Securities and
Exchange Commission has adopted rules requiring companies to provide
more information about nominating committees and how they select
directors. The agency also wants firms to establish procedures to
enhance shareholder communications with their firms. On a far more
contentious front, the SEC is considering a proposal to give
stockholders, under limited circumstances, access to corporate proxies
to nominate board candidates for contested elections. The plan has drawn
protest from corporate
But a handful of firms are not waiting for the SEC to finish debating
that proposal, initiating similar procedures themselves; others are
working closely with shareholders to install candidates acceptable to
both sides. To read the full story, point your browser to
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Air
Unions Close Ranks
Air
unions closed ranks on Sunday against further labor cutbacks, leaving
little hope for the insolvent flagship airline to keep a C$650 million
($500 million) rescue deal from falling apart, Reuters reported. Air
five main labor unions met in
agreement to help steer the world's 11th largest airline out of
bankruptcy protection. Li's company, Trinity Time Investments, said the
unions' opposition to reductions in labor and pension costs is the main
reason for walking away from the struggling national carrier. Trinity
said it could reconsider its investment if the unions abandoned their
'confrontational' attitude on cost cuts, but the door seems to have been
slammed shut by union leaders. 'There are not going to be any more
concessions,' said Bill Trbovich, a spokesman for the International
Association of Machinists as leaders for Air
five main unions were coming out of a three-hour-long huddle. Officials
from Air
were not immediately available for comment.
The unions, which represent nearly three-quarters of
Air
33,000 employees, say they have already agreed to C$850 million in job
and pay cuts in return for a guarantee that their pension plans would
remain intact. The unions will be seeking to meet this week with the
bankruptcy judge overseeing Air
restructuring to prepare their own search for a new financial
partner.