June 192003

Submitted by webadmin on Thu, 2003-06-19 00:00

June 19, 2003

Fed Expected to Cut Rate Again

Federal Reserve officials, concerned there is still no sign of the solid
pickup in U.S. economic growth, appear certain to cut their target for
overnight interest rates next week, the Washington Post
reported.

There is broad agreement among investors and analysts that a rate cut is
coming, but there is disagreement about whether policy-makers will lower
their 1.25 percent target by a quarter-percentage point or by a
half-point. The latter seems to be more likely as a sort of exclamation
point to emphasize that the officials believe this will be the final
step that-- coupled with the income tax cut that will show up in
workers' take-home pay next month-- will put the economy on a strong,
sustainable growth path.

Fed Chairman Alan Greenspan, who gave the first hint that he was
contemplating another rate cut in testimony before a congressional
committee in May, said 'We believe that because in the current
environment the cost of taking out insurance against deflation is so
low, that we can aggressively attack some of the underlying forces,
which are essentially weak demand,' reported the Post.

Labor Votes 'No' As Asbestos Markup Starts

Labor groups are urging senators to vote against the asbestos reform
legislation slated for markup today in the Senate Judiciary Committee,
creating a difficult position for Democrats who sympathize with labor,
but have vowed to work with Republicans to find a way to overhaul the
litigation system for asbestos cases, CongressDaily reported. An
AFL-CIO spokeswoman said labor leaders believe the legislation cannot be
improved through amendments and are instead pressing to defeat it
outright. 'We need to go back to where we were before,' the spokeswoman
said, referring to the negotiations that led up to the introduction of
Judiciary Chairman Orrin Hatch's (R-Utah) bill. During today's markup
session, Hatch is expected to back some Democratic-supported changes,
possibly including a ban on the future use of asbestos and provisions
that expand compensation beyond those who were exposed on the job. The
markup is expected to last through today and continue next week,
reported the newswire.

WHX Steel Unit Wins Judge's Approval of Recovery Plan

Wheeling, W. Va.-based WHX Corp.'s Wheeling-Pittsburgh Steel unit won a
judge's approval of its recovery plan, allowing the sixth-largest U.S.
steelmaker to complete a 31-month bankruptcy reorganization and hand
ownership to creditors and employees, according to Bloomberg. U.S.
Bankruptcy Judge William Bodoh approved the company's chapter 11 plan,
which gives all of the company's new shares to employees and creditors
owed more than $1.12 billion. WHX, led by New York financier Ronald
LaBow, will lose its stake in the 151-year-old company, which it gained
when Wheeling-Pittsburgh came out of its first reorganization in January
1991, the newswire reported.

To come out of bankruptcy, the company still must reach an agreement
with the Pension Benefit Guaranty Corp., the federal entity that oversee
pensions. Upon exiting chapter 11, Wheeling-Pittsburgh will become the
first of 35 U.S. steelmakers that filed for bankruptcy in the past five
years to reorganize independently. It will also be one of the first to
use a government-backed loan to support post-bankruptcy operations. The
steelmaker sought bankruptcy protection in November 2000 to cope with
mounting debt, competition from imports, slowing demand, and falling
prices.

Merrill Lynch, Ebbers Face Trial in WorldCom Suit

Merrill Lynch & Co. and former WorldCom CEO Bernard Ebbers failed in
their bid to dismiss a suit filed by employees of the long-distance
company whose pension plans suffered after its stock collapsed,
Bloomberg News reported. Ebbers and Merrill Lynch, the world's largest
securities firm, must stand trial to defend their administration of the
plans, U.S. District Judge Denise Cote ruled in New York on Tuesday. The
employees charge that Merrill Lynch did not urge employees to sell
WorldCom stock held in their pension plans even though the Wall Street
firm should have known the shares were overvalued, the newswire
reported.

WorldCom, which misstated $11 billion in revenue and expenses
according to the U.S. Securities and Exchange Commission, filed the
largest bankruptcy in U.S. history last July. The defendants may have
violated their fiduciary duty to employees by keeping

WorldCom stock in company pension plans as the share value dropped, Cote
said, according to Bloomberg. Employees did not specify in their suit,
filed last year, how much they seek in damages. WorldCom lost $183.2
billion in value from its market high of $61.99 on June 21, 1999 until
the date of its bankruptcy filing last year.

Scrushy Offers Testimony for Immunity

Reuters reported that a lawyer for ousted HealthSouth Corp. CEO Richard
Scrushy has offered to have his client testify before Congress about the
scandal-plagued company he founded, as long as Scrushy receives
immunity. Congress last week demanded that Scrushy turn over by June 25
any records he might possess on the personnel, finances and accounting
of HealthSouth, an operator of physical therapy and surgery centers that
faces bankruptcy.

The House of Representatives Energy and Commerce Committee, which is
investigating the massive accounting fraud at the Birmingham, Ala.-based
company, has not subpoenaed Scrushy himself, the newswire reported. But
Scrushy attorney Jonathan Rose, in a June 16 letter to the same
committee that probed Enron Corp. and ImClone Systems Inc., said Scrushy
was eager to testify in exchange for 'use immunity,' according to
Reuters. Scrushy, accused by securities regulators of insider trading
and of deliberately inflating HealthSouth earnings by $1.4 billion since
1999, has not faced criminal charges. But he remains the central figure
in an investigation that has led to guilty pleas to fraud charges by 11
former HealthSouth executives, including all five ex-chief financial
officers.

ANC Wins Court Approval to Proceed With Auction to Sell
Assets

ANC Rental Corp. won court approval to auction its assets and accept
Cerberus Capital Management LP's $230 million offer as the opening bid,
Bloomberg News reported. Cerberus also has agreed to assume $60 million
in non-vehicle debt and $2 billion in vehicle debt and provide $150
million in working capital. U.S. Bankruptcy

Judge Mary Walrath approved the procedures for the Aug. 2 auction at a
hearing yesterday in Wilmington, Del.

Fort Lauderdale, Fla.-based ANC, which filed for bankruptcy
protection in November 2001, has combined its Alamo and National rental
sites at U.S. airports to reduce costs. The company said it suffered
from the travel slump that followed the 2001 terrorist attacks. ANC
hired investment banker Lazard Freres & Co. in January to seek
buyers, reported the newswire.

Air Canada to Seek Extension of Protection From Creditors

Lawyers for Air Canada will ask on Monday the Ontario Superior Court to
give the company until at least Sept. 30 to negotiate debt restructuring
and leases with creditors, Bloomberg News reported. A court order giving
the Montreal-based airline protection

from bankruptcy is set to expire on June 30. The airline, which said it
had a 'revenue shortfall'' of C$200 million ($149.7 million) last month
from the same period a year ago, received 30- day extensions of the
original order at the end of April and May.

The airline is negotiating with aircraft lessors and bondholders to
cut debt and lease payments as it seeks to lower costs by at least C$2.1
billion. The company has concessions worth C$1.1 billion from its union
workforce and other employees, Bloomberg reported.

Spiegel Seeks Court Approval Of Employee Retention Plan

Spiegel Inc. is seeking a bankruptcy court's approval to implement
an employee retention plan for 225 key workers that could total about
$26.4 million, according to court papers. The U.S. Bankruptcy Court in
Manhattan, which is overseeing Spiegel's case, will consider the plan at
a hearing on Tuesday. Interested parties may file objections through
Friday. The retailer said in its motion, filed with the court on June
11, that the retention plan is designed to minimize turnover of
management and other key employees by providing incentives to continue
working for the company and 'to enhance employee morale and job
commitment.' Spiegel believes the plan is necessary to 'accomplish a
successful reorganization and to maximize recoveries' for creditors.

Court Denies Request For Equity Panel In Leap Wireless
Case

The judge overseeing Leap Wireless International Inc.'s bankruptcy case
denied a request by Gabelli Asset Management Inc. to appoint a committee
of equity holders, according to court papers. Judge Louise DeCarl Adler
of the U.S. Bankruptcy Court in San Diego issued a ruling Monday that
said Leap Wireless International appears to be insolvent. The judge said
shareholder committees should be appointed when equity holders show
there is a substantial likelihood that they will receive a meaningful
distribution and when an existing committee doesn't already represent
their interests.

U.S. Auto Makers' Troubles Deepen

The North American operations of Detroit's Big Three auto makers are
more efficient than ever, according to a new report released on
Wednesday. But they are still in big competitive trouble, the Wall
Street Journal reported. The report comes as General Motors Corp.,
Ford Motor Co. and DaimlerChrysler AG's Chrysler Group are gearing up to
begin next month the process of negotiating new master labor agreements
with the United Auto Workers, the union that represents about 277,000
employees at U.S. auto operations.

GM, Ford and DaimlerChrysler executives in recent days have dismissed
predictions from some Wall Street analysts that one of their number
could be forced into bankruptcy by the combination of pension and
health-care costs and competition, just as some big U.S. steelmakers and
airlines have sought refuge in chapter 11 reorganization, reported the
newspaper. The substantial cash reserves and borrowing flexibility of
the big auto makers make a near-term crisis unlikely, according to the
Journal. But the continuing erosion of market share and
profitability at the U.S. units of the Big Three, despite productivity
gains and massive investments in new models, is now an issue too big to
ignore, reported the online newspaper.

Key3Media Exits Bankruptcy And Is Now Called Medialive

The organizer of Comdex and other tech trade shows is emerging from
bankruptcy-court proceedings with a new name, a new chief executive and
a new attitude, the Wall Street Journal reported. Key3Media Group Inc.
is now Medialive International Inc., and its CEO, Robert Priest-Heck,
plans to move the company's headquarters to San Francisco from Los
Angeles and refashion Comdex, the online newspaper reported.

Key3Media filed for chapter 11 bankruptcy-court protection in February,
hurt by a technology slump and travel fears that kept people from trade
shows. Equally damaging were ownership changes in the 1990s that left
the firm saddled with nearly $500 million in debt. But that load has
been reduced by 87 percent, as part of a buyout by investment-banking
firm Thomas Weisel Partners LLC, which owns 90 percent of what has
become a closely held company, reported the newspaper.

3DO Hires Alliant Partners to Explore Asset Sale

Bankrupt video game publisher 3DO Co. on Wednesday said it had hired
Alliant Partners to advise it as it prepares to sell off its assets or
reorganize, Reuters reported. Redwood City, Calif.-based 3DO, which
filed for chapter 11 bankruptcy protection on May 28, said Alliant Chief
Executive Jim Kochman would handle the evaluation. Financial analysts
have ascribed little value to 3DO's assets, though the company has
received positive notices, in particular for the in-development game
'Four Horsemen of the Apocalypse,' reported the newswire.

EDS Says It Will Cut 2,700 Jobs

Electronic Data Systems Corp. on Wednesday said it will cut 2,700 jobs,
or 2 percent of its workforce, as new management returns the computer
services company to its 40-year-old roots of managing technology for
clients, Reuters reported. EDS shares rose nearly 8 percent as investors
took heart from newly appointed Chief Executive Michael Jordan's efforts
to tackle the company's woes. A sharp decline in new services contracts,
mounting debt and a Securities and Exchange Commission inquiry have
rattled investors for the past year. New Roman''>

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