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June Leading Economic Indicators Rise
The index of leading U.S. economic indicators rose 0.1 percent in June,
the third straight increase, reflecting higher stock prices, a rise in
the money supply and more permits for home construction, Bloomberg News
reported. The New York-based Conference Board's gauge of how the economy
will perform over the next three to six months increased 1.1 percent in
May and 0.1 percent in April. Thirteen interest rate cuts by Federal
Reserve policy-makers since the start of 2001 and some $330 billion in
tax cuts may
fuel the economy in the months ahead, economists said.
'The lower tax rates and interest rates will fuel business investment
in the second half,'' said Maria Forres, an economist at Griffin Kubik
Stephens & Thompson in Chicago. A government report on Friday may
show a 1.2 percent rise in June durable goods
orders, according to economists surveyed by Bloomberg News.
Grassley Seeks Finance Committee Review Of Asbestos Bill
Senate Finance Chairman Charles Grassley (R-Iowa) asked Majority Leader
Bill Frist (R-Tenn.) on Monday to refer controversial legislation
reforming the asbestos litigation system to his committee, citing
problems with the tax treatment of the money used to compensate asbestos
victims, CongressDaily reported. Grassley asked for an
opportunity to address the bill, adding that if the bill was not
referred to his panel, he would object to a floor vote. 'If not
remedied, there could be serious adverse tax consequences to the
companies, the asbestos fund and, most importantly, the beneficiaries,'
Grassley said. 'I believe that S. 1125 should be referred to the Finance
Committee, but in the event it is not, the bill should be held from the
floor until the Finance Committee can report a separate tax title for
floor consideration.' Grassley's objections represent another obstacle
for the bill, which already faces opposition from several industry
segments and, as written, has little Democratic support, reported the
newswire.
Votes in Congress Mostly Follow the Money
The Associated Press looked at six measures in the House - medical
malpractice, class-action lawsuits, overhauling bankruptcy laws, the
energy bill, gun-manufacturer lawsuits and overtime pay - and compared
lawmakers' votes with the financial backing they received from interest
groups supporting or opposing the legislation. In the vast majority of
cases, the biggest recipients of interest-group money voted the way
their donors wanted, according to the AP's computer-assisted analysis of
campaign-finance data from the nonpartisan Center for Responsive
Politics. Groups that outspent opponents got the bills they wanted in
five of the six cases examined by AP. The AP analysis also found that
backers of legislation making it harder for consumers to erase debts in
bankruptcy court received, on average, $2.13 from the credit-card and
finance industries for every $1 given to bill opponents. The industries
gave $2 million; consumer groups, $1,298. To read the full article,
point your browser to
href='http://archives.seattletimes.nwsource.com/cgi-bin/texis.cgi/web/vortex/…'>http://archives.seattletimes.nwsource.com/cgi-bin/texis.cgi/web/vortex/….
Adidas Makes Competing Bid to Acquire Spalding's Top-Flite
Unit
Adidas-Salomon AG offered $126 million to acquire Spalding Holdings
Corp.'s bankrupt Top-Flite Golf unit, outbidding Callaway Golf Co. by $1
million, court papers say, Bloomberg News reported. Adidas also asked a
U.S. Bankruptcy Judge in Wilmington, Del., to waive a $4.4 million
break-up fee it would owe Callaway if its bid is the winning one. U.S.
Bankruptcy Judge Mary Walrath scheduled a hearing on Wednesday to
consider bidding procedures for the Aug. 20 auction to sell Top-Flite.
'It is counterintuitive that the potential payment of a break-up fee to
one of several competitors will create a more competitive environment,''
Adidas said in court papers.
Callaway offered to buy Top-Flite last month when the Spalding unit
filed for bankruptcy protection. Callaway has said that acquiring
Top-Flite would give it access to the market for lower- and mid-price
clubs. Spalding agreed to sell its sporting goods business to Russell
Corp. for $65 million in April to focus on its golf line, reported the
newswire.
Atlantic Coast Airlines Reaches Agreement with United for
2003
Atlantic Coast Airlines Holdings Inc. agreed with UAL Corp.'s United
Airlines on rates United will pay this year, Bloomberg News reported.
The tentative accord resets the rates for all of this year, Atlantic
Coast spokesman Rick DeLisi said. The commuter airline will delay its
second-quarter financial results for a week until July 30 to reflect the
new fees, he said, reported the newswire.
The two airlines still are trying to reach a longer-term agreement.
Chicago-based UAL filed for bankruptcy in December and United has been
trying to reduce its commuter-carrier costs, reaching new accords with
other partners including SkyWest Inc. Dulles, Va.-based Atlantic Coast,
which got 82 percent of its revenue last year from UAL, has been
negotiating for months on an longer agreement, reported Bloomberg.
Bankruptcy Costs Drop by 57 Percent Since the 1980s, Study
Says
U.S. corporations are paying 57 percent less in bankruptcy fees than in
the 1980s, in part because they are reorganizing faster, a study by the
University of California at Los Angeles Law School says, Bloomberg News
reported. The study compared a company's assets at the time of
bankruptcy to the amount of fees and expenses awarded to lawyers,
accountants and workout firms who help a company restructure.
Researchers analyzed 48 bankruptcy cases resolved between 1998 and 2002,
comparing the fees and assets in those cases with similar data from 31
bankruptcy cases completed between 1980 and 1988.
The study found that the length of bankruptcies and the size of the
company seeking court protection had a direct effect on the amount of
fees and expenses paid by companies. 'The savings appears to come from a
shortening of time companies remain under court protection,'' UCLA
School of Law Professor Lynn M. LoPucki and Joseph W. Doherty, associate
director of the law school's Empirical Research Group, said in a
statement, reported the newswire.
Enron Reaches Settlement With Noteholders of Azurix Water
Unit
Enron Corp. said it settled a legal dispute with noteholders of an
off-the-books partnership created to finance a water-treatment unit,
Bloomberg News reported. Holders of Marlin Water Trust notes would get
about $127.5 million in cash, including collateral held by Bank of New
York as trustee for the noteholders and money the Azurix unit owes
Enron. Bank of New York will reduce its claim against Enron to $507.5
million from $1.1 billion. Enron, which owes creditors about $67
billion, said 69 percent of the Marlin noteholders and a panel of
Enron's unsecured creditors support the accord, reported the newswire.
U.S. Bankruptcy Judge Arthur Gonzalez in Manhattan is scheduled to
consider approval of the settlement on Aug. 7, court papers show,
reported the newswire.
Halliburton Gets More Time for Asbestos Settlement
Halliburton Co. won more time to complete a settlement of 200,000
asbestos-related claims by agreeing to pay $80 million to a former unit
now owned by Austria's RHI AG, Bloomberg News reported. Under the
agreement, with a committee representing claimants, Halliburton will
provide $30 million in financing to the unit, Harbison-Walker
Refractories Co., Houston-based Halliburton said in a statement.
Halliburton also will buy a $50 million insurance receivable from
Harbison-Walker, which is in bankruptcy, the company said, reported the
newswire.
Subject to bankruptcy court approval, the agreement extends an order
suspending asbestos lawsuits against Halliburton's DII Industries unit
to Sept. 30, Halliburton said. The company needed more time to arrange
the pre-packaged bankruptcies of DII and another unit, Kellogg Brown
& Root, Bloomberg reported.
Air Canada Renegotiates Contracts With International Lease on 12
Jets
Air Canada said it renegotiated leases on 12 jets with International
Lease Finance Corp., a unit of American International Group Inc.,
Bloomberg News reported. The company has now renegotiated leases on 121
of the jets in its 224-plane fleet, Air Canada spokeswoman Angela Mah
said.
W.L. Ross Teams with Mohawk in Bid for Burlington
W.L. Ross & Co. has submitted a bid to buy bankrupt textile company
Burlington Industries and will spin off its carpets division to Mohawk
Industries if the bid is successful, the companies said on Monday,
Reuters reported. W.L. Ross did not disclose what it had bid for
Greensboro, N.C.-based Burlington, which filed for bankruptcy in
November 2001. Ross was instrumental in fending off a $579 million cash
bid by investor Warren Buffett's Berkshire Hathaway Inc. in February,
saying the bid was too low. An auction of Burlington's assets is
scheduled for July 28 in bankruptcy court in Delaware.
NRG Power Contract Could Affect Other Bankrupt Firms
If regulators allow bankrupt NRG Energy Inc. to walk away from its
electricity supply contract with Connecticut Light & Power, other
U.S. power companies will also try to get out of money-losing contracts,
state officials said, Reuters reported.
Connecticut Attorney General Richard Blumenthal and NRG, a unit of Xcel
Energy Inc., are debating with the Federal Energy Regulatory Commission
(FERC) over whether NRG can cancel a four-year supply contract with
Connecticut Light & Power because NRG is losing $500,000 a day on
the deal. In June, a bankruptcy court overseeing NRG's chapter 11
proceedings said NRG could drop the contract. However, FERC ordered NRG
to continue delivering power to Connecticut Light & Power until the
agency issues a formal ruling.
FERC's decision may affect U.S. electricity deregulation, Connecticut
officials said. Allowing NRG to cancel 'would likely encourage other
wholesale electric suppliers to follow its lead, thereby undercutting
the stability of wholesale electrical markets, the future of electric
deregulation,' Blumenthal said, reported the newswire.
WorldCom to Pay Verizon $60 Million to Settle Some Disputes
WorldCom Inc. will pay $60 million to settle disputes with Verizon
Communications Inc., Bloomberg News reported. Verizon said it will
support WorldCom's reorganization plan. Before filing for chapter 11,
WorldCom owed more than $790 million to Verizon for services including
use of its local-phone network, Verizon has said. WorldCom has said
Verizon owed it $843 million for services, including bill collection.
The agreement was disclosed in a Friday bankruptcy court filing by
WorldCom.
If the court approves the agreement by Aug. 5, Verizon won't object
to WorldCom's
reorganization plan. Verizon had opposed the plan, which would wipe out
more than $30 billion of debt, saying WorldCom should be liquidated.
WorldCom competes
with New York-based Verizon in local- and long-distance calling,
reported the newswire. The $60 million payment would be made when
Ashburn, Va.-based WorldCom emerges from bankruptcy protection or the
New York judge overseeing its reorganization approves the payment to
Verizon, whichever is later, reported the newswire.
Underfunded Pension? Don't Panic
As companies struggle with widening pension deficits, they're also under
pressure to provide employees with more information, the Associated
Press reported. Although most employees today have 401(k) and other
defined-contribution plans, those with defined-benefit plans should pay
careful attention to their pension reports.
Firms are already required to tell workers when their pensions are
underfunded or when a change in the plan reduces benefits. And more
information could soon be coming. Provisions in President Bush's pension
reform plan would also require firms to annually disclose the value of
their pension assets and liabilities, calculated by their worth if the
plan were to be terminated. To read the full article, point your browser
to
href='http://www.cbsnews.com/stories/2003/07/21/national/main564240.shtml'>http://www.cbsnews.com/stories/2003/07/21/national/main564240.shtml.
Seitel Files Plan, Seeks to Become Unit of Berkshire
Hathaway
Seitel Inc., which collects and sells seismic data to oil and gas
companies, said it filed a plan to reorganize with the bankruptcy court,
Bloomberg News reported. Berkshire Hathaway Inc. will finance the
reorganization plan and Houston-based Seitel will be become a subsidiary
of Berkshire, according to a release distributed by PR Newswire.
Kmart Lawyers Ask to See Government E-Mail
Lawyers for two former Kmart Corp. vice presidents facing federal
securities fraud charges have asked a judge to give them a government
e-mail that raised questions about the strength of the case, the
Associated Press reported. Enio A. 'Tony' Montini Jr. and Joseph
Hofmeister were charged in February with securities fraud, making false
statements to the U.S. Securities and Exchange Commission and conspiracy
to commit those offenses. They are accused of inflating the company's
earnings for part of the year before the discount retailer's January
2002 bankruptcy.
Separately, a court filing by the U.S. Attorney's Office on Friday
disclosed the names of six people who are expected to be witnesses in
the trial of Montini and Hofmeister. Kmart closed nearly 600 stores and
terminated 57,000 employees as part of its more than 15-month
reorganization. It emerged from bankruptcy in May and has said it plans
to return to profitability in 2004, reported the newswire.
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