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November 16,
2006
Pension
Deficit Narrows at
PBGC
The Pension Benefit Guaranty
Corp. (PBGC) said that it logged a deficit of $18.1 billion this year, a
big improvement from last year as a new law helped put the agency on
better financial footing, the Associated Press reported yesterday. The
deficit for the 2006 fiscal year reported yesterday was down from
a shortfall of $22.8 billion recorded in 2005 and a record $23.3 billion
in 2004. The agency disclosed in its annual report to Congress that as
of Sept. 30 it had assets of $60 billion to cover liabilities of $78.1
billion. The PBGC attributed its shrinking deficit mainly to a
provision in the new pension law that gives airlines that are in
bankruptcy protection and have frozen their pension plans extra time for
their pension plans to become financially whole. That led to a sharp
reduction in probable liabilities on the agency's balance sheet, the
agency said.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/11/15/AR2006111500570_pf.html'>Read
more .
Airlines
name='2'>Surprise Hostile Bid for Delta May Spur Airline Merger
Wave
face='Times New Roman' size='3'>US
size='3'>Airways Group Inc.'s $8.67 billion hostile takeover bid for
Delta Air Lines suggests that the long-predicted frenzy of consolidation
among
face='Times New Roman'
size='3'>U.S.
size='3'>airlines may have begun, the
size='3'>Wall Street Journal reported today.
The deal would create the biggest
w:st='on'>
size='3'>U.S.
size='3'>airline and bring Delta out of bankruptcy-court protection,
where it has been since September 2005. Many in the industry believe
airlines' financial recovery will be faster if there are fewer big
carriers. However, Delta Chief Executive Gerald Grinstein repeated
yesterday that Delta wants to emerge from bankruptcy proceedings by
itself. US Airways will need broad support from Delta creditors and the
approval of federal antitrust authorities, who may be concerned about
the two airlines' tight grip in markets up and down the East
Coast.
href='http://online.wsj.com/article/SB116364509916324683.html?mod=hpp_us_pageone'>Read
more . (Registration required.)
name='3'>Commentary: The Many Lives of US Airways
In the last four years,
US Airways has filed for bankruptcy twice, lost business to low-fare
airlines that moved aggressively into its backyard and entered a merger
that critics said would not work, yet the resilient airline was making
an $8 billion offer yesterday for a larger carrier, Delta Air Lines,
the New York
Times reported today. Four years ago, after US
Airways filed its first chapter 11 petition and kicked off a round of
downsizing that is still shuddering through the industry, many analysts
said it was entirely possible that US Airways would join Eastern, Pan Am
and TWA in the nation’s corporate graveyard. But US Airways shed
billions of dollars in costs, secured a $900 million lifeline from the
federal government and emerged from bankruptcy after just seven months.
A year and a half later, in September 2004, buffeted by soaring fuel
prices and unrelenting competition from low-fare airlines like JetBlue
that were thriving on its turf, US Airways sought bankruptcy protection
again.
href='http://www.nytimes.com/2006/11/16/business/16airways.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='4'>Dana's New Bonus Plan Triggers Both Anger and
Praise
A week after submitting a
revamped executive compensation plan, bankrupt auto supplier Dana Corp.
has found its proposal at the center of controversy in the bankruptcy
case, with the plan drawing both strong support and opposition from key
groups, Bankruptcy
Law360 reported yesterday. On Tuesday, two
unions, the UAW and the USW, filed an objection to Dana’s new plan
to pay Michael Burns, the company’s chief executive, as much as
$4.5 million during 2007 and as much as $2.25 million in 2008 in order
to retain the top executive. Dana Corp. has reduced the incentive
amounts offered to its top executives as part of a revised bonus plan
proposal that has recently come before the bankruptcy court. A vocal
opponent of the executive bonus plan, U.S. Trustee
face='Times New Roman' size='3'>Diana Adams
size='3'>backed the unions in their motion, urging the court to deny the
package and put the compensation issue to rest.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=13603'>Read
more . (Registration required.)
name='5'>Second Lien Group Takes Issue with Dura’s DIP
Loan
A committee of hedge
funds that owns the majority of Dura Automotive Systems Inc.’s
second lien obligations has objected to the auto parts maker’s
plan to finance its chapter 11 proceedings,
size='3'>Bankruptcy Law360 reported yesterday.
According to court documents filed Monday with the U.S. Bankruptcy Court
in
size='3'>, the committee of second lien lenders is worried that certain
provisions in Dura’s $300 million DIP loan will lower its
recovery. Overall, the first lien group is owed $124.4 million and the
second lien group is owed $225 million. Though the hedge funds said they
were not objecting to the entire DIP loan, they want to continue
receiving monthly interest payments and payment of bills for legal and
financial advisors.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=13633'>Read
more. (Registration required.)
face='Times New Roman' size='3'>Saint
Vincent
size='3'> Seeks Extension of Chapter 11 Plan
Saint Vincent Catholic
Medical Centers has asked a bankruptcy court to extend its exclusive
period for its chapter 11 plan for one month as it works to wrap up
sales of its various hospitals,
size='3'>Bankruptcy Law360 reported yesterday.
Saint Vincent, one of the largest health care providers in
size='3'>New York
filed its motion in the U.S. Bankruptcy Court for the Southern District
of New York on Tuesday, and requested that the court allow a 30-day
extension for its exclusive filing period through Dec. 20 and its
exclusive solicitation period through March 17. The health care provider
sought a short extension so that its negotiations with various creditors
can continue, with the hope of achieving an acceptable reorganization
plan.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=13612'>Read
more . (Registration required.)
name='7'>Monsanto Fires Back at Solutia Noteholders
Monsanto Co., the former
parent company of bankrupt Solutia Inc., filed court papers Tuesday
aimed at correcting “blatant untruths” in an objection
recently filed by Solutia’s ad hoc noteholders’ committee,
Bankruptcy Law360 reported yesterday. The noteholders voiced their
opposition to Solutia's ninth request to extend its exclusive right to
file a chapter 11 plan, accusing Solutia of failing to negotiate in good
faith, squandering the estate’s resources and taking a cavalier
attitude toward the reorganization process. Monsanto argued
that not only has it been willing to negotiate, but had made
“hundreds of millions of dollars” worth of concessions as
part of it’s efforts to reorganize Solutia as a viable business.
Even before Solutia filed for bankruptcy, Monsanto agreed to pick up the
tab for $550 million of a $600 million settlement of “PCB-related
tort claims” related to one of Solutia’s facilities
in
according to Monsanto’s reply.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=13613'>Read
more. (Registration required.)
name='8'>GM Moves Closer to GMAC
w:st='on'>
w:st='on'>Sale
General Motors Corp. has
moved a step toward closing the sale of a majority stake in its GMAC
Financial Services unit to Cerberus Capital Management LP and other
investors by the end of the year, securing cash for its turnaround
effort, the Wall Street
Journal reported today. Yesterday, the Federal
Deposit Insurance Corp. voted to allow GM to transfer the banking
charter for GMAC to the Cerberus group, clearing a major condition of
the $14 billion deal. Other conditions that still remain include
confirmation of credit ratings for GMAC and a residential-mortgage unit,
Residential Capital Corp., or ResCap, by the three major credit-rating
firms. Moody's Investors Service yesterday said that it expects to rate
GMAC and ResCap separately from GM. A number of other state and federal
regulatory issues also remain.
href='http://online.wsj.com/article/SB116364115364324607.html?mod=home_whats_news_us'>Read
more . (Registration required.)
Medical Files for Bankruptcy
Curon Medical Inc., a
Fremont, Calif.-based life sciences company, has abruptly ceased
operations, dismissed its entire staff and decided to file for
bankruptcy, the Contra
Costa Times reported today. Curon stated in
its SEC filing that the Curon board met Monday and decided to file a
voluntary chapter 7 bankruptcy petition. 'Our board of directors further
determined to cease our operations on Nov. 15,' the SEC filing stated.
For the second quarter of 2006, Curon lost $280,000, compared with a
loss of $3.8 million the year before. Sales totaled $1.1 million, down
3.5 percent from the year before.
href='http://www.mercurynews.com/mld/mercurynews/news/breaking_news/16019857.htm'>Read
more.
name='10'>Credit Managers Daily Business News
Report
The following articles
are taken from the Daily Summary of Troubled & Fast Growing U.S.
Companies published by Bastien Financial Publications.
For more of the latest business news visit
http://dailybusiness.creditmanagers.biz. 
ABI Members receive a 50
percent discount when subscribing to the complete Daily Summary. Enter
“ABI Member” in the comments section when you fill out the
subscriber form.
size='3'>Clariant AG, a Swiss-based
manufacturer of specialty chemicals, announced a restructuring that
calls for reducing its range of products and slashing its 22,000-strong
workforce by about 10% in an effort to increase profits.
Most of the restructuring would likely come from closing
certain European sites and shifting more production to
w:st='on'>
size='3'>Asia.
size='3'>Clariant also has seventeen locations in the
size='3'>U.S.
size='3'>
size='3'>Concord Camera Inc., a
size='3'>Hollywood
w:st='on'>
size='3'>Fla.
maker, reported a first quarter net loss of $1.6 million on a 35% drop
in sales--to $28.8 million.
size='3'>Ford Motor Co. and General Motors Corp
size='3'>., continuing to wallow through serious financial challenges,
are both pledging some of their important assets, including factories
and equipment, as collateral in order to drum up new loans that the
carmakers seriously need. Both
size='3'>Michigan
size='3'>carmakers have been hurt by increasing losses and declines in
marketshare. Separately, Ford, Dearborn,
Mi., issued revised results, reporting a third quarter net loss of $5.2
billion. Its operating loss of $5.2 million
included pretax charges of almost $5.3 billion.
size='3'>Sales were down 8%--to $37.1 billion. While releasing the
revised results, Ford added that it might return to profitability by
2009. Meanwhile, GM also put out revised results, saying it lost $91
million in the third quarter, including extra items of $644
million. Revenue rose 4%--to $48.9
billion.
size='3'>Nash Finch Co., a Minneapolis, Minn.
wholesale distributor and supermarket operator, reported a third quarter
net loss of $4.6 million, including extra charges of more than $6.2
million. Sales slipped 3%--to $1.4
billion.
size='3'>Pier 1 Imports Inc.'s stock price
surged more than 20% after it was announced that Danish retail mogul and
Pier 1 shareholder Jakup a Dul Jacobsen is putting together a bid to
acquire the Fort Worth, Tx.-based specialty retailer of household
goods. Details haven't been revealed yet,
but back in the spring one of Mr. Jacobsen's companies acquired Pier 1's
British subsidiary for $15 million. Pier 1, battling declines in sales
for the past two years and operating in the red for the past year and a
half, over the summer sold its private-label credit-card operations to
JP Morgan Chase & Co. for $155 million.
size='3'>Pilgrim's Pride Corp., the
size='3'>Pittsburg
w:st='on'>
size='3'>Texas
processor, reported a fourth quarter net loss of $7.5 million, compared
to a profit of $74.7 million in the year-earlier period.
Revenue declined 10%--to $1.3 billion.
size='3'>For the year, it lost $34.2 million on an 8% sales decline--to
$5.2 billion.
size='3'>Salton Inc., the
w:st='on'>
Forest,
w:st='on'>
size='3'>Ill.
home appliances, reported a first quarter net loss of $10 million. Its
operating loss of $10 million included pretax restructuring charges of
$845,000. Sales fell 7%--to $138
million.