February 20, 2004
U.S. Housing Starts Fall, Store Sales Up
U.S. housing starts in a snowy January fell a sharper-than-expected 7.9
percent to their lowest since August, but chain store sales and mortgage
applications rose last week, reports showed on Wednesday, Reuters
reported. Residential construction starts decreased last month to a
seasonally adjusted annual rate of 1.903 million from a downwardly
revised 2.067 million rate in December, the Commerce Department said.
December housing starts had been at the highest level since February
1984. Analysts polled by Reuters were expecting starts to decrease to a
2.0 million rate in January. Permits, an indicator of builder
confidence, declined 2.8 percent to 1.899 million units from a 1.953
million rate in December. The drop was in line with analyst
expectations.
In the retail sector, spring promotions and Valentine's Day shopping
bolstered U.S. chain store sales in the latest week, Redbook said in a
report on Wednesday, reported the newswire. The rate of sales at major
retailers grew by 5.2 percent on a year-over-year basis for the week
ended Feb. 14, up from the preceding week's 4.4 percent rate, the report
said. Sales in February so far were up 0.8 percent compared with
January.
United Unveils New Look For Planes, New China Route
UAL Corp.'s United Airlines yesterday said it was unveiling a new
branding campaign, including a new look for its airplanes, and also
adding a daily nonstop route from San Francisco to Beijing, Reuters
reported. To accommodate the new route, United said it would discontinue
its Tokyo-Beijing service on June 12. The Elk Grove Village, Ill.-based
airline has been operating in chapter 11 bankruptcy protection for 13
months. Shares of United, which trade on the over-the-counter bulletin
board and are expected to be worthless at the end of the chapter 11
process, were up 3 cents to $1.73, reported the newswire.
Ex-Enron Chief Surrenders to Authorities in Houston
Jeffrey Skilling, the former Enron Corp. CEO surrendered today to face
expected criminal charges related to the company's collapse, the
Associated Press reported. Flanked by a pair of attorneys, Skilling
turned himself in at the Houston FBI offices. He was expected to appear
later in the day before a federal judge on charges related to Enron's
collapse, according to two sources close to the investigation. Barring
any last minute delays, Skilling would be the highest-profile former
Enron executive to date to face criminal charges. He would be the 28th
individual to be charged and one of the most anticipated in the Justice
Department's investigation. Skilling's former boss, Enron founder and
former chairman Kenneth Lay, hasn't been charged, and the sources said
it wasn't clear if he would become a defendant. Both men, through their
lawyers, have maintained their innocence of any wrongdoing related to
Enron's failure, reported the newswire.
Federal-Mogul Posts Loss, Takes Charges
Auto parts maker Federal-Mogul Corp., which is reorganizing under
bankruptcy court protection, yesterday reported a quarterly loss after
asset impairment and asbestos settlement charges, Reuters reported.
Federal-Mogul reported a fourth-quarter net loss of $120.7 million, or
$1.39 a share, compared with a net loss of $112.5 million, or $1.33 a
share, a year earlier. The quarterly loss from continuing operations was
$186 million, compared with a loss of $201 million a year earlier.
Charges of $102 million for asset write-downs and $39 million for an
insurance settlement related to an asbestos claim hurt results in the
quarter. Southfield, Mich.-based Federal-Mogul filed for chapter 11
protection in October 2001 after being swamped by asbestos lawsuits. It
inherited the liability when it bought British piston maker T&N LLC
in 1998. Federal-Mogul expects to emerge from bankruptcy this year under
a reorganization plan that includes a trust to pay existing and future
asbestos claims, reported the newswire.
International Steel to Buy Weirton for $180 Million
International Steel Group Inc. (ISG) agreed to buy Weirton Steel Corp.
for $180 million, the Wall Street Journal reported. The
acquisition, approved by Weirton and ISG, would solidify Richfield,
Ohio-based ISG as the No. 2 domestic integrated steelmaker in terms of
sales behind Pittsburgh-based U.S. Steel Corp. Weirton, currently
operating under bankruptcy-court protection, represents ISG's fourth
acquisition since the company was created in 2002 by New York financier
Wilbur L. Ross to buy the remaining assets of LTV Corp., Bethlehem Steel
and Acme Metals out of bankruptcy. Whether ISG ultimately eliminates
capacity could affect prices paid by steel-consuming companies.
The Weirton offer includes $180 million plus the assumption of Weirton's
estimated $75 million in liabilities. The sale could take as many as 45
days to be finalized, as a bankruptcy-court judge solicits other bids
and ISG negotiates a new labor contract with Weirton's independent labor
union, reported the online newspaper.
Restructured NTL Set For Return To High-yield Market
British cable operator NTL Inc. is set to make a return to the
high-yield market a year after emerging from bankruptcy following a
near-$11 billion debt restructuring, Reuters reported. The company has
mandated banks to manage a high-yield bond worth around 1.0 billion
sterling equivalent, a banker said on Wednesday. The bond is part of a
wider refinancing of around 3.5 billion sterling equivalent, which will
also include new bank loans and will improve NTL's debt profile and
extend the maturity of its debt.
NTL, which previously borrowed billions of dollars to fund an
acquisition spree at the height of the 1990s telecoms boom, fell from
grace in the bond markets when it became Europe's largest corporate bond
defaulter. The company restructured nearly $11 billion of corporate
bonds into equity, handing control to its former bondholders. The
company emerged from chapter 11 bankruptcy in January 2003, reported the
newswire.
Maker of AstroTurf Files For Bankruptcy
The maker of AstroTurf has filed for bankruptcy protection and is going
out of business, the Associated Press reported. Southwest Recreational
Industries Inc. plans to sell two small divisions that make portable
sports flooring and equipment for volleyball, gymnastics and basketball.
But the company's best-known products, football fields and running
tracks, will be discontinued. 'This is something that's being assessed
right now, which projects we're going to be able to complete versus
which projects we're not,' Matthew Levin, the company's bankruptcy
attorney, said Tuesday, reported the newswire. Southwest Recreational is
the only maker of the AstroTurf brand of artificial grass, but
competitors manufacture other types of turf for sports facilities.
Ohio Manufacturer Gets Bankruptcy Court Approval to Keep
Operating
Van Wert, Ohio firm that produces tool storage cabinets for commercial
use won permission to pay employee wages, to maintain bank accounts, and
to carry on business during a hearing yesterday in U.S. Bankruptcy Court
in Toledo, the Knight-Ridder reported. The order, by Judge
Richard J. Speer, was issued six days after Kennedy Manufacturing Co.
and three subsidiaries filed for chapter 11 protection from creditors.
The firm employs 217 people at offices, two factories, and a used
equipment retail outlet in Van Wert, which is 95 miles southwest of
Toledo. The firm lost $527,113 on sales of $28 million last year,
according to bankruptcy filings.
It was thrust into crisis in late January when Bank One NA, which is
owed $7.6 million, closed three accounts and refused to honor checks
written on them, according to court filings. The firm, which said it has
$16.8 million in assets and $18.1 million in debts, has been given until
June 11 to file a repayment proposal.
ABB: Restructuring Paying Off As Losses Narrow
Swiss-Swedish engineering company ABB Ltd. said today that its
fourth-quarter net loss narrowed to US$387 million from US$828 million a
year ago, as it started to feel the benefits of restructuring, the
Associated Press reported. The full-year net loss for 2003 was US$767
million compared with a record US$783 million in 2002. ABB's money
problems stem largely from asbestos litigation in the United States.
Last year, ABB announced a massive restructuring program, saying it
wanted to concentrate on its core divisions -- power technologies and
automation. It subsequently reached deals to sell its reinsurance
business and part of its oil and gas division. Juergen Dormann, ABB's
chairman and CEO, said strong performance in its main businesses was now
driving the company's recovery. 'The core divisions turned in another
strong performance in mixed markets,' he said, reported the
newswire.
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