March 29, 2004
Pension Bill Negotiations Break Down
Negotiations to resolve differences between House and Senate versions of
pension legislation dissolved last Friday, but conferees hope to resume
talks this week, CongressDaily reported. Conferees split last
week over how much aid to give multi-employer pension plans, with House
Republicans offering a proposal that Democrats say would give relief to
as few as 7 percent of multi-employer plans. The Senate bill included
multi-employer provisions. But House Republicans, including the
conference chairman, Education and the Workforce Chairman John Boehner
(R-Ohio), have resisted including them. They say exempting
multi-employer plans from payments would jeopardize worker benefits, and
point to White House veto threats against the Senate-passed provisions.
Backers, however, say that multi-employer plans should get relief
similar to that which the underlying bill provides to more common
single-employer plans.
Negotiators had hoped to wrap up work on the final bill by next week,
when the House leaves for its spring recess. They also had aimed to
complete legislation before the April 15 deadline that many companies
face for making their first pension payments of the year, the newswire
reported.
Parmalat to Slash 15,000 Jobs
Parmalat will slash almost half its workforce as it sells or liquidates
units in 20 countries, a plan unveiled on Friday showed, Reuters
reported. At a first meeting with international creditors the
Italian-based firm's new managers asked banks and bondholders to work
together to keep the group going. Administrator Enrico Bondi told the
representatives of 30 banks and 20 bondholder groups that Parmalat was
in talks to sell U.S. dairy assets and it planned to pull out of much of
Latin America and Asia to focus on Europe, Canada and Australia, the
newswire reported.
Pacific Gas & Electric to Exit Chapter 11 on April 12
Pacific Gas and Electric Co., a unit of PG&E Corp., on Friday said
it plans to emerge from chapter 11 bankruptcy protection on April 12,
Reuters reported. Upon emerging from bankruptcy, the company will
generally pay bondholders accrued and unpaid interest, as well as 100
percent of their principal. The utility will also pay preferred
stockholders their unpaid dividends on April 13. The San Francisco
utility set a distribution record date of March 29 for determining the
holders of allowed claims who are entitled to receive payment under the
plan. Pacific Gas and Electric filed for bankruptcy in April 2001, a
casualty of California's flawed plan to deregulate its electric power
market.
Copa-Continental Partnership May Bid For Avianca
A partnership between Continental Airlines and Panama's Copa Airlines
may bid for Colombia's Avianca, lawyers in the case said on Friday,
raising the prospect of a bidding war for the bankrupt carrier, Reuters
reported. Last week, Brazil's Sinergy, controlled by oil industry
entrepreneur German Efromovich, proposed taking a 75 percent stake by
investing $64 million in capital and assuming Avianca's debt, which
totals about $300 million. But a lawyer for Avianca's creditors'
committee on Friday told the U.S. Bankruptcy Court in New York that
Sinergy was not the only party interested in bidding for the Colombian
airline, which filed for bankruptcy last year. 'There are people out
there that are prepared to offer more than published reports of Mr.
Efromovich's offer,' said Richard Miller, an attorney for the creditors'
committee. 'It's not a done deal,' Miller said of the offer from
Sinergy, the newswire reported.
Federal Judge Is Optimistic About Talks on Asbestos
Legislation
Though a major labor union just sent letters to U.S. senators urging
them not to vote for a bill to reform asbestos litigation, a federal
judge involved in negotiations is optimistic the affected parties will
agree to bill language in a week or two, Bestwire reported. Some complex
and divisive issues that have prevented insurers, business, labor and
trial attorneys from agreeing on language in a reform bill are on the
verge of being resolved, according to Chief Judge Emeritus Edward Becker
of the 3rd U.S. Circuit Court of Appeals.
In a letter to Sen. Arlen Specter (R-Pa.), Becker said the biggest issue
is the level of funding for a national asbestos trust fund. The fund is
supposed to provide money that asbestos injury claimants can collect
from, and thus take these cases out of the courts. A bill approved in a
Senate committee last summer calls for a $114 billion fund, but labor
has maintained all along that this figure is too low. The AFL-CIO sent
letters to senators as recently as March telling them not to vote for
the bill, citing the low funding level and other crucial 'inadequacies'
in the measure, the newswire reported. Becker said he believes labor
must come down 'considerably' from what it thinks the funding level
should be, and business must 'sweeten considerably' what it contributes
to the fund. 'If all the other issues can be worked out, perhaps the
Senate leadership can prevail on the stakeholders to reach agreement on
the projected dollars,' Becker wrote, according to Bestwire.
Conseco Executives Rewarded For Bringing Company Out Of
Bankruptcy
Top Conseco Inc. executives who helped the insurer emerge from
bankruptcy were rewarded with nearly $34 million in compensation last
year, the Associated Press reported. However, they won't realize much of
their gains for years because about two-thirds of the compensation is in
the form of restricted stock awards that vest over time. Papers filed
last week with the Securities and Exchange Commission show that nearly
half of last year's compensation -- $16.7 million -- went to William J.
Shea, who took over as Conseco's chief executive following the company's
chapter 11 filing in December 2002. Shea received $13.6 million in
restricted stock on top of $1 million in base salary and $2 million in
bonuses, the company's annual report stated. Shea also got $68,739 in
other compensation. Most of the compensation for Shea and other top
executives came in the form of stock awards for guiding Conseco through
chapter 11 reorganization, the newswire reported. Conseco entered
bankruptcy protection in December 2002 and emerged last September.
Bankrupt Grocer Reaches Financing Deal
The Penn Traffic Co. and its bankers have agreed on an amended extension
of a financing package, the Associated Press reported. The company's
current agreement is set to expire at the end of the month. The new deal
would extend financing through Feb. 25, 2005. The plan must be approved
by the U.S. Bankruptcy Court in White Plains, which is overseeing Penn
Traffic's reorganization under chapter 11. Penn Traffic has not set a
date to file its reorganization plan, but has until April 29. Since the
grocer filed for chapter 11 bankruptcy protection, Penn Traffic has lost
millions of dollars, cut thousands of jobs and closed its entire Big
Bear supermarket division in Ohio and West Virginia, the newswire
reported.
Hawaiian Reports Operating Profit
Bankrupt Hawaiian Airlines reported an operating profit of $77.5 million
last year, but after subtracting $115 million in 'reorganization items'
and other non-operating expenses, the profit turned into a net loss of
nearly $50 million, the Honolulu Advertiser reported. Last year's totals
compare to an operating loss of $55.2 million in 2002 and a net loss of
$57.4 million in the same year.
'It was an amazing year,' said Joshua Gotbaum, Hawaiian's
court-appointed trustee, in a statement, the newswire reported.
'Hawaiian's management and employees have done a spectacular job. They
have reformed almost every part of Hawaiian's operations.' The airline's
sales increased 12 percent to $706 million, up from $632 million the
previous year. Gotbaum said many positive changes contributed to
Hawaiian's operating success. Passenger revenue increased by $85
million, cargo revenue by $7 million. A new fleet of Boeing jets
produced a savings of $41 million in aircraft maintenance, while the
increased use of Hawaiian's web site and direct booking saved $10
million in distribution costs, the newspaper reported.
MCI
MCI to Cut 4,000 Jobs
Telecommunications company MCI said on Friday it is cutting
4,000 jobs, or more than 7 percent of its workforce, and closing three
call centers because of cost-cutting pressures and fallout from the
national 'do not call' registry, the Wall Street Journal
reported. The company said in January it was expecting to reduce overall
costs by 15 to 20 percent, but did not specify that jobs would be cut.
The centers being closed are located in Denver, Phoenix and Niles, Ohio.
Jobs also are being cut at MCI facilities in Alpharetta, Ga., Colorado
Springs, Colo. and Springfield, Mo. 'As a result of the impact of
federal and state 'do not call' laws, as well as ongoing telecom market
trends, we need to take this action in order to improve our overall cost
structure,' the company said, the newspaper reported. MCI hopes to
emerge from bankruptcy protection by the end of April.
MCI Challenges EU Decision from Dot-com Era
Only weeks after former WorldCom-MCI CEO Bernie Ebbers surrendered to
the FBI, his former company will tell a European Union court he should
have been allowed to acquire rival Sprint four years ago, Reuters
reported. The first hearing on its challenge of a European Commission
decision halting the $120 billion telecommunications deal will go ahead
on Tuesday before a court in Luxembourg. The hearing will focus on a
week in late June 2000 when Ebbers was moving to buy one company after
another, the newswire reported.
Horizon Natural Asks OK Of Fees On $300 Million Exit Loan
Horizon Natural Resources Co. said it plans to pay $9 million in
commitment fees to the lender of a proposed $300 million credit line to
finance the company's emergence from chapter 11 protection. The mining
company would pay $4.5 million to Stark & Roth Inc. once the U.S.
Bankruptcy Court in Ashland, Ky., grants approval of the deal and
another $4.5 million when the loan closes, according to the motion filed
with the court by Horizon Natural on Monday. Horizon Natural also wants
to reimburse expenses the lender incurred in preparing the offer. The
bankruptcy court must approve the planned payments.
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Shareholders Seek Official Panel In Onco Investment Chapter
11
Shareholders involved in Onco Investment Co.'s chapter 11 case are
requesting that an official committee be appointed to represent their
interests, according to court papers.
According to the request, filed Tuesday with the U.S. Bankruptcy Court
in Wilmington, Del., the shareholders want the court to direct Roberta
A. DeAngelis, the acting U.S. trustee overseeing the case, to appoint a
panel to represent the group. Court papers said shareholders filing the
request hold about 16 percent of the equity of Onco Investments parent
Oglebay Norton Co., which is also under chapter 11 protection in the
Wilmington court.
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Regulator Presses Air Canada on Pension Deficit
Canada's financial regulator pressed Air Canada on Friday to quickly
come up with a revised plan to rescue its underfunded pension plans, an
issue that threatens the airline's restructuring, Reuters reported. Air
Canada reached an agreement with its unions last month on a repayment
schedule for its C$1.3 billion ($1 billion) pension deficit, but the
regulator turned it down because the company was not putting enough
money back in the first years to the 10-year timetable. The Office of
the Superintendent of Financial Institutions also wants the carrier to
guarantee that part of the pension liabilities will rank ahead of other
creditor claims if the airline goes bankrupt. 'These are important
matters that should not be deferred as the last issues to be resolved,'
said Superintendent Nicholas Le Pan in a letter sent to Air Canada's
chief restructuring officer, Calin Rovinescu, the newswire reported.
