Headlines Direct

December 8, 2005

Stelco Board Nixes Latest Bondholder Proposal

Stelco Inc. said yesterday that its board had rejected a proposal by its bondholders that would give them 100 percent recovery on their claims in the insolvent steelmaker’s restructuring plan, Reuters reported today. The board said in a release that the proposal presented earlier this week "would not garner the stakeholder support required to ensure an achievable plan that would lead to an effective restructuring of the company." Read more.

Refco Unit Discloses Asset Values

Customers at Refco Capital Markets Ltd., the unregulated brokerage unit of Refco Inc., are owed $3.7 billion compared with available assets of just $1.9 billion, according to data that company officials characterized as a rough financial snapshot, Dow Jones Newswires reported today. Refco posted that information on a Web site late Tuesday summarizing some 3,000 accounts and the value of assets on the offshore unit’s books and transferred among certain parts of the company. The disclosure was ordered by the bankruptcy court to help individual customers decide how to try to recoup their assets. But the data came with caveats aplenty: Refco representatives cautioned that they couldn’t vouch that the valuations listed in the disclosures were still accurate or that the balances collectable. Read more.

Iron City Beer Maker Files Chapter 11

The Pittsburgh Brewing Co., the longtime maker of Iron City beer, filed for chapter 11 bankruptcy protection yesterday in U.S. Bankruptcy Court for the Western District of Pennsylvania, the Pittsburgh Business Times reported yesterday. To date, only the initial papers have been filed with the court. The Lawrenville, Pa.-based brewery faces charges by the Pittsburgh Water and Sewer Authority that it owes more than $2 million in unpaid water bills dating back a few years. The filing in federal court in Pittsburgh shows Pittsburgh Brewing has estimated assets of less than $10 million and debts of less than $10 million. Read more.

Airlines

Delta Pilots Poised for Vote to Strike

Delta Air Lines Inc. pilots may consider a vote to strike if the bankrupt airline’s managers impose changes on their contract, a pilots union spokesman said yesterday, according to an Associated Press report. The airline has asked a bankruptcy judge to let it scrap its current contract with pilots, as part of its efforts to emerge from bankruptcy. Delta, besieged by rising fuel costs and stiffer competition, filed for bankruptcy protection on Sept. 14. Delta spokeswoman Chris Kelly said that the airline would consider extending the Dec. 16 deadline "if we felt a consensual agreement could be reached." Read more.

In other news, CIT Group Inc. will buy 10 new Boeing 737-800 aircraft from Delta Air Lines Inc. for $600 million, the Wichita Business Journal reported Tuesday. The aircraft are currently part of Atlanta-based Delta’s existing order backlog with Boeing, CIT said. Nine of the aircraft will be delivered in 2007 and one in 2008. The sale of the aircraft was approved by the U.S. Bankruptcy Court for the Southern District of New York presiding over Delta’s chapter 11 bankruptcy proceedings. New York-based CIT provides commercial and consumer finance services. Delta has also tapped Orbitz Supplier Link technology in an attempt to lower distribution costs. Read more.

Meanwhile, Delta won’t be able to fully repay creditors the $28.3 billion they’re owed, a company lawyer told a bankruptcy judge in New York Monday. According to wire service reports, Delta detailed its financial condition for U.S. Bankruptcy Judge Prudence Carter Beatty to persuade her to authorize cuts in pilots’ pay. Delta wants to save $325 million a year as part of a plan to reduce expenses by $3 billion.

Northwest Workers Rally in Show of Unity
More than 300 Northwest Airlines Corp. ground workers, pilots and flight attendants rallied yesterday in a show of union solidarity as the company closes in on the $1.4 billion in pay cuts it’s seeking, the Associated Press reported today. The head of the ground workers’ union said that ground workers, baggage handlers and ticket agents would strike if a judge throws out the union contract. Pilots have said they might also strike if that happens. A hearing on Northwest’s request to reject the union contracts for those groups begins Jan. 17 before a bankruptcy court judge in New York; those two groups and the flight attendants are in talks to try to make a deal before that happens. Read more.

NYSE Delisting Calpine

The New York Stock Exchange (NYSE) said Monday that it will suspend trading of embattled power producer Calpine Corp. because of its low stock price, adding to the problems of a company already on the brink of bankruptcy and looking to replace its ousted chief executive and founder, InsideBayArea.com reported today. Calpine, which in the 1990s spent billions of dollars to become the nation’s largest independent power producer, has struggled in recent years to overcome staggering losses and bad credit. The NYSE delisting announcement cited Calpine’s slumping stock, which fell to 24 cents a share Monday, and the company’s own warnings that it might not have enough cash to pay $313 million owed to bondholders as required by a recent court ruling.

In other news, Calpine Corp. asked a Delaware court yesterday to block a move by bondholders demanding that the company immediately restore $312 million in cash to a special account or face being declared in default on the debt, Dow Jones reported. Wilmington Trust Co., trustee for $3 billion in second-lien secured bonds, told Calpine Monday that it could declare the company in default on the debt, if cash spent by Calpine to buy natural gas this summer isn’t returned Wednesday. Read more.

Owens Corning Agreement Announced

Owens Corning announced that it has reached an agreement with Asahi Glass Co. to acquire its composites business. Further details were not immediately available, BankruptcyData.com reported today. The transaction is expected to close in the second quarter of 2006 and is subject to regulatory and court approvals.

Texas Collects $8.3 Million in Back Taxes From Enron

Enron Corporation has given the Texas Attorney General’s office its largest single tax collection, the Associated Press reported yesterday. Attorney General Greg Abbott announced that his office has collected $8.3 million in back taxes from the failed Houston energy company and three subsidiaries. Abbott says that’s the largest single tax collection in the bankruptcy and collections division’s history.

Frontier Plan Confirmed

A U.S. bankruptcy court confirmed Frontier Insurance Group’s reorganization plan, and the company anticipates emerging from chapter 11 protection in the fourth quarter of 2005, BankruptcyData.com reported today. The plan calls for the company’s emergence under the ownership of Lancer Financial.

Metropolitan Mortgage Claim Filed

Western United Life Assurance, a Metropolitan Mortgage & Securities insurance affiliate has filed a $220 million claim against the company, BankruptcyData.com reported today. The report states that if Western United’s claim is upheld, Metropolitan could be forced to set aside money that would reduce what would have been paid to creditors from 9 cents on the dollar to 5 cents.

Footstar Disclosure Statement Approved

A U.S. bankruptcy court approved Footstar’s disclosure statement related to the company’s reorganization plan, BankruptcyData.com reported today. The court order also approves the retention of Financial Balloting Group as voting and tabulation agent. Ballots accepting or rejecting the plan and/or any plan objections must be received by Jan. 17, 2006, and the court scheduled a Jan. 25, 2005 hearing to consider confirming the plan.

International

Yemen Customers Enraged as Watani Bank Declares Bankruptcy
The Watani Bank announced last week that it failed to meet its financial obligations to its customers as stipulated by the articles 43, 44 and 46 of the Law No. 38 issued in 1998 concerning banks and financial institutions, the Yemen Times reported today. The Central Bank of Yemen decided to take firm measures against the bankrupt bank as of last Wednesday and put an end to the authority of its board of directors and executive administration. Hundreds of angry customers gathered at the WB, which was surrounded by a large number of security troops and police vehicles to avoid its being stormed. Read more.