%1

A federal probe into why General Motors Co. took nearly 10 years to recall cars with a potentially deadly defect heated up yesterday as safety regulators demanded the auto maker answer 107 questions on its handling of a faulty ignition switch, the Wall Street Journal reported today. Separately, an outside law firm retained by GM has begun questioning employees as part of its internal investigation. Chief Executive Mary Barra pledged in a letter to employees on Tuesday to get an "unvarnished report on what happened." The company didn't identify the law firm. The National Highway Traffic Safety Administration directed GM to answer a list of questions regarding its February recall of 1.6 million vehicles for faulty ignition switches. The safety agency told GM to respond by April 3 or face as much as $7,000 a day in penalties.

Puerto Rico's Government Development Bank (GDB) has hired a restructuring expert to evaluate potential funding sources and financial proposals for the bank and commonwealth, it said yesterday, less than a week before the commonwealth's expected multi-billion dollar municipal bond offering, Reuters reported yesterday. The GDB, which acts as the territory's central bank, said that the hiring of Millco Advisors LP, a Washington, D.C.-based affiliate of Millstein & Co LP, should not raise fears of default. "We can say clearly, we have not hired anyone to advise on restructuring. Millco is simply acting as a financial adviser and has been very helpful with various aspects of the fiscal plan," said GDB spokeswoman Betsy Nazario. As a territory, Puerto Rico cannot file for protection under chapter 9 of the Bankruptcy Code.

RadioShack Corp., after reporting a much wider than expected fourth-quarter loss, said on a conference call yesterday that it's not considering "prepackaged bankruptcy" because it has "sufficient" liquidity to meet its obligations, MarketWatch.com reported yesterday. The company, which plans to shut up to 1,100 stores, made that comment after a question on whether it would follow a prepackage strategy to get out of store leases quicker. Chief Executive Joseph Magnacca admitted that the company was partly to blame for the disappointing results despite a challenging retail environment. He added the most recent quarter's results didn't reflect the turnaround progress the company has made.

Puerto Rico still has the capacity to issue more than $3 billion in new debt, senior officials said on Tuesday, adding that they hoped to tap the credit markets in March despite concern about whether the commonwealth can sustain its current large debt load, the New York Times DealBook blog reported yesterday. Officials said on Tuesday that the Puerto Rican legislature had proposed raising the commonwealth’s legal debt limit and proposed creating an independent authority, Cofim, that would issue secured debt on behalf of Puerto Rico’s municipalities. Puerto Rico had already created one such debt-issuing authority, Cofina, to help it through a financial crisis in 2006. But Cofina has used up its entire capacity and was downgraded recently. Officials said that the borrowing in March would consist of general-obligation debt, which is given a special, top-priority status by Puerto Rico’s Constitution. Much of the proceeds will be used to refinance existing debt, including $330 million owed to Barclays. The proceeds are also to be used to terminate interest-rate swaps, fill a $245 million hole in the current fiscal year’s budget and bolster the liquidity of Puerto Rico’s Government Development Bank, which orchestrates the commonwealth’s borrowing and tracks the complex payment schedules and cash flows of different branches of its government. Given its status as a U.S. territory, Puerto Rico is not eligible to file for chapter 9 protection.

LightSquared Inc. and its various creditors are in talks to devise a consensual plan to restructure the wireless company's assets and end its bankruptcy, Reuters reported on Friday. LightSquared, owned by Phil Falcone's Harbinger Capital Partners, is trying to bridge disagreements among proponents of three separate reorganization proposals currently on the table, according to Paul Basta, a lawyer for a special committee overseeing the company's restructuring. The talks so far do not include representatives for Dish Network Corp Chairman Charles Ergen, whose debt holdings make him LightSquared's largest single creditor. LightSquared has accused Ergen of surreptitiously buying the debt to effect a takeover of LightSquared by Dish, a key competitor. A trial on that dispute remains ongoing.

A private-equity firm backed out of a deal to acquire LightSquared Inc., the telecommunications firm in bankruptcy proceedings, amid uncertainty over when federal regulators would clear the way for the company to build out its wireless network, the Wall Street Journal reported today. Centerbridge Partners LP abandoned the deal "for economic and noneconomic reasons," a LightSquared lawyer said yesterday during a bankruptcy court hearing. Centerbridge worried that LightSquared would burn hefty amounts of cash while waiting for approval from regulators, including those at the Federal Communications Commission, to pursue a so-called spectrum swap that would allow the company to build out its network. With no assurances that a decision from the agency would come soon, Centerbridge decided against investing money in LightSquared.

Bondholders of Eike Batista’s shipbuilder OSX Brasil SA hired AlixPartners LLP to advise on the possible restructuring of $500 million in bonds, Bloomberg News reported yesterday. AlixPartners, which advised General Motors Co. on its restructuring when the automotive giant filed for chapter 11 protection in 2009, will advise a group representing holders of OSX’s dollar-denominated notes due 2015. The New York-based financial consulting firm will work with Bingham McCutchen LLP, the law firm advising OSX creditors.

A massive aluminum smelter on the banks of the Ohio River is in bankruptcy, but its owners say it could be saved from permanent closure if it gets a lifeline — from Ohio residents, the Wall Street Journal reported yesterday. On Friday, Ormet Corp., the smelter's operator, said it would temporarily close the smelter, which employs 670 in and around Hannibal, Ohio, unless Ohio regulators agree to further cut its power bill. Regulators earlier in the week offered Ormet a 20 percent cut in the cap on electricity prices, as well as $42 million in additional discounts for 2013-14. In total, state officials say they have already approved $346 million in financial support for Ormet in the last four years. Any shortfall would have to be made up by American Electric Power Co.'s other ratepayers, likely adding a few dollars each month to residents' utilities bills. Ormet said it plans to close the smelter immediately and reopen only if it obtained "a long-term economical power supply" and if aluminum prices improve. The Ohio Public Utilities Commission's battle with Ormet mirrors fights across the country, where aluminum producers are struggling to stay viable. The makers are threatening to close smelters — putting hundreds of people out of work — if they can't get better electricity rates.

A U.S. bankruptcy court judge yesterday approved a $3 million loan from Camden National Bank that will allow the Montreal, Maine and Atlantic Railway to continue operating with two-man crews running the trains, the Bangor (Maine) Daily News reported yesterday. Canadian authorities in August had ordered the railroad to use two-man crews for all hazardous material transportation in response to the July 6 Lac-Megantic disaster, which killed 47 people. The loan is structured as a revolving line of credit up to $3 million and may be used only as working capital, according to court documents. It will be secured by the property and tracks the railroad owns in the U.S. and Canada. “The loan will ensure that the [MMA] and MMA Canada have adequate working capital to continue operating pending a sale of their assets,” bankruptcy trustee Robert Keach wrote in his motion seeking approval of the loan. Without it, the railway would have run out of operating cash by the end of October, Keach said. Eight potential suitors have expressed interest in purchasing MMA’s assets, and seven have signed nondisclosure agreements, Keach confirmed Wednesday. Gordian Group, a New York-based investment bank Keach has secured to handle the sale of MMA’s assets, is speaking with the suitors this week, according to Keach, who hopes to begin the auction by the end of November. The railway sought bankruptcy protection a month after one of its trains rolled driverless down a hill before derailing in the middle of the town of Lac-Megantic, causing the fiery explosion that killed 47 people and destroyed the village’s central business district.

For much of the last decade, Metro-Goldwyn-Mayer has been troubled by financial turmoil and infuriating production stops and starts, it appears that the studio finally has its act together, according to a New York Times analysis today. Shares of MGM Holdings’ thinly traded over-the-counter stock have risen 50 percent since April, to about $58.50. Revenue almost tripled in the last quarter, to $339 million, according to the company. Helped by repeated Standard & Poor’s upgrades over the last three years, MGM now has access to revolving lines of credit totaling $750 million. “The company was on death’s doorstep and now has effectively no debt and is generating a ton of cash,” said Kevin Ulrich, co-founder of Anchorage Capital Group, a New York investment firm that is MGM’s largest single owner, with a 30 percent stake. Many initially bought MGM debt, which was converted to equity in 2010 as part of a pre-packaged bankruptcy. If hedge funds are willing to stick with MGM, it would underscore an important shift on Wall Street regarding Hollywood. A few years ago, when the DVD business collapsed and DVRs changed the habits of television viewers, many analysts and investors soured on filmed entertainment. But lately that opinion has shifted. Movies and TV shows are becoming more valuable again because of box office growth overseas and the eagerness of streaming services like Netflix and Amazon to acquire content.