AMR files bankruptcy exit plan in step towards merger with US Airways

Mon Apr 15, 2013 10:18pm EDT

* Reorganization plan is necessary step to emerge from bankruptcy

* Plan requires creditor and court approval

* Merger would create world's largest airline

NEW YORK, April 15 (Reuters) - AMR Corp, the parent company of American Airlines, filed formal plans to exit bankruptcy on Monday, bringing its proposed $11 billion merger with US Airways Group closer to reality.

The reorganization plan, which details some executive compensation and outlines measures for creditors and shareholders, is a necessary step before the two companies can come together to create the world's largest airline. The plan requires both court and creditor approval.

Under the plan, AMR's outgoing chief executive, Tom Horton, would receive a $19.9 million severance package.

U.S. Bankruptcy Judge Sean Lane declined to approve the same severance proposal earlier this month, ruling that it was not permitted under federal bankruptcy law, but suggested it be included in AMR's reorganization plan, making it subject to creditor approval.

Secured creditors would be paid in full, while unsecured creditors would receive shares of preferred stock.

As expected, AMR shareholders would receive a 3.5 percent equity stake in the new company, which would make it one of the few major bankruptcies in which equity holders earn some recovery. An attorney for AMR's creditors committee has said the stake could be valued at between $350 million and $400 million.

US Airways Chief Executive Doug Parker would serve as CEO of the new airline. He would receive $19.5 million if he loses the job during the merger, the companies said in a separate filing on Monday.

Parker was paid about $5.5 million last year, up from $3.8 million in 2011. While his base salary stayed the same at $550,000, his incentive compensation rose nearly fivefold as US Airways met financial goals.

AMR is the last major U.S. carrier to go through bankruptcy, after its competitors all underwent restructurings in the last decade.

The company's initial opposition to a merger faded under pressure from its creditors' committee, and Parker aggressively wooed AMR by appealing to its unions, striking a tentative deal with the airline's workers before formal talks between the two companies had begun in earnest.

The merger was approved by a bankruptcy judge last month but still requires regulatory approval.

The combined carrier would keep the American name and would be based in AMR's hometown of Fort Worth, Texas. The merger is expected to close in the third quarter.

The case is In re: AMR Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 11-15463.

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

PRESS DIGEST - Wall Street Journal - April 16

April 16 | Tue Apr 16, 2013 2:27am EDT

April 16 (Reuters) - The following are the top stories in the Wall Street Journal. Reuters has not verified these stories and does not vouch for their accuracy.

* Satellite-TV provider Dish Network Corp made a $25.5 billion bid for Sprint Nextel Corp, an effort to derail the No. 3 U.S. wireless carrier's acquisition by Japan's SoftBank, kicking off an old-fashioned merger brawl that puts two maverick billionaires on a collision course. ()

* Gold posted its biggest one-day percentage drop in 30 years Monday as new signs of a global economic slowdown emerged and fears diminished that central banks' easy-money policies would stoke inflation. ()

* Energy Future Holdings Corp, the struggling Texas power company formerly called TXU Corp, on Monday revealed plans for a potential bankruptcy filing that would eliminate about $32 billion in debt and preserve some of the ownership stakes of its biggest investors. ()

* Recent pipeline ruptures, including one at an Exxon Mobil Corp pipeline that caused a major oil spill in Arkansas last month, are raising fresh questions about the safety of pipes made decades ago using obsolete welding techniques. ()

* Citigroup Inc escaped the mortgage slowdown affecting some rivals thanks to its smaller presence in the U.S. market for home loans and a newfound zeal for keeping a lid on expenses. The third-largest U.S. bank by assets said Monday that its first-quarter net income rose 30 percent to $3.81 billion. ()

* Cash-strapped J.C. Penney Co Inc drew $850 million from a credit line to help fund its day-to-day operations, buying time for new chief executive Myron "Mike" Ullman to reverse sagging sales at the department store operator while it looks for ways to raise additional capital. ()

* The Securities and Exchange Commission leveled civil charges against former Rochdale Securities LLC trader David Miller, who last year also was charged with wire fraud for alleged unauthorized trades in Apple Inc shares. ()

* Foxconn Technology Group has resumed hiring assembly line workers in China after a postholiday freeze, in the latest sign that customer Apple Inc is gearing up for production of a new iPhone. Foxconn is the trade name for Taiwan-based Hon Hai Precision Industry Co. ()

* The Ugandan government and three international oil companies, Tullow Oil Plc, Total SA and Cnooc Ltd, have agreed to build an export pipeline and refinery in the east African country, ending a deadlock that has delayed the development of large oil discoveries on its western border for almost two years. ()

* Baseball team the Chicago Cubs on Monday announced an agreement with the city for a $500 million privately financed renovation of historic Wrigley Field, but property owners who offer fans a view of the action from neighboring rooftops are threatening to throw a monkey wrench into the plans. ()

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

PRESS DIGEST-New York Times business news - April 16

April 16 | Tue Apr 16, 2013 2:30am EDT

April 16 (Reuters) - The following are the top stories on the New York Times business pages. Reuters has not verified these stories and does not vouch for their accuracy.

* Dish Network Corp said on Monday that it had submitted a $25.5 billion bid for Sprint Nextel Corp, the third-largest wireless carrier in the United States, saying a merger between the two companies could roll television, high-speed Internet and cellphone services into a single package. ()

* The trustee seeking money for victims of Belinkrnard Madoff's multibillion-dollar Ponzi scheme was barred on Monday from blocking a $410 million settlement resolving New York State's claims against a hedge fund manager, J. Ezra Merkin, who was accused of secretly steering client money to Madoff. ()

* AMR Corp, the parent company of American Airlines, filed its formal plans to exit bankruptcy late Monday, bringing its proposed $11 billion merger with the US Airways Group Inc closer to reality. ()

* Energy Future Holdings Corp, the Texas energy giant that was taken private in 2007 in a record-breaking $45 billion buyout, disclosed Monday a potential bankruptcy plan to its creditors. ()

* Gold prices tumbled 9 percent on Monday, the sharpest drop in 30 years, heightening fears that investors' faith in the safe haven has been shattered. The steep fall in gold, after a slump on Friday, led a broader sell-off in commodities and stock markets. ()

* Big pharmaceutical companies have used an array of tactics aimed at preventing generic manufacturers from developing low-cost copies of their drugs. But federal regulators contend the latest strategy - which relies on a creative interpretation of drug safety laws - is illegal. ()

* The government of India, home to many of the world's leading software outsourcing companies, wants to replicate that success by creating a homegrown industry for computer hardware.

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

UPDATE 3-Judge denies $20 million severance to outgoing AMR chief

Fri Apr 12, 2013 7:53pm EDT

* CEO Horton's payout set in AMR-US Airways merger

* Judge says payment not authorized under bankruptcy law

* AMR plans to address severance in reorganization plan

By Jonathan Stempel and Tanya Agrawal

April 12 (Reuters) - A judge has rejected a proposed severance package of nearly $20 million for Thomas Horton, the chairman and chief executive officer of American Airlines parent AMR Corp, saying the payout was not allowed under federal bankruptcy law.

U.S. Bankruptcy Judge Sean Lane in Manhattan issued his decision on Thursday, after having approved at a March 27 hearing AMR's planned $11 billion merger with US Airways Group Inc.

Horton's $19.9 million severance had been part of the merger agreement and was to consist of equal amounts of cash and shares of the combined company.

Lane had suggested at the hearing that severance might be better addressed in AMR's reorganization plan, which the company has yet to submit and which requires creditor approval.

U.S. Trustee Tracy Hope Davis, a Department of Justice monitor for the bankruptcy, also opposed Horton's severance.

"It's American Airlines' current intention to address Mr. Horton's compensation arrangement in the plan of reorganization," said Mike Trevino, a spokesman for the carrier.

The combined company would be run by US Airways CEO Doug Parker, with Horton as nonexecutive chairman. Parker would become chairman after the first annual shareholder meeting, probably in the spring of 2014.

The plan of reorganization will address how creditors will get paid back. Shareholders of AMR may end up with a stake of at 3.5 percent in the combined company, which an attorney for AMR's creditor's committee has said could be valued at between $350 million and $400 million.

Horton first joined AMR in 1985, left in 2002 for a four-year stint at AT&T Corp and then returned. He became CEO of AMR when it filed for bankruptcy in November 2011.

AMR at first opposed merging while still in bankruptcy, but reversed itself under pressure from creditors. The merger would create the world's largest airline, and AMR and US Airways hope to save more than $1 billion of annual costs by 2015.

UNCLEAR PURPOSE

Davis had called Horton's proposed payout too large relative to severance for nonmanagement workers, and improper because it was not part of a program for full-time workers in general.

Lane rejected AMR's argument that these restrictions did not apply because the payout would be made - or could be voided - by the combined company after the merger closed.

"It is unclear what purpose would be served by the court's approval of the severance if (the combined company) could later veto the severance through a vote of its board," he wrote.

The judge also said deferring to AMR's "business judgment" in allowing the payout was "exactly what Congress sought to prevent" in capping severance awards by companies in bankruptcy.

AMR has said the payment to Horton recognized his efforts in leading the company through bankruptcy and into the merger.

Its lawyer, Stephen Karotkin, told Lane on March 27 that the desire of AMR directors to maximize value and see the merger through justified payments to Horton and others.

The combined carrier would take the American name and be based in AMR's hometown of Fort Worth, Texas. US Airways is based in Tempe, Arizona.

The case is In re: AMR Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 11-15463.

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

PRESS DIGEST - Wall Street Journal - April 15

April 15 | Mon Apr 15, 2013 2:40am EDT

April 15 (Reuters) - The following are the top stories in the Wall Street Journal. Reuters has not verified these stories and does not vouch for their accuracy.

* Thermo Fisher Scientific Inc was nearing a deal Sunday to take over fellow laboratory-equipment maker Life Technologies Corp for as much as $13 billion, in a move that could enable the company to slash costs and reap gains from next-generation genetic-sequencing machines. ()

* China's economic growth slowed unexpectedly in the first quarter, raising concerns that a recovery that started in the second half of last year is already losing steam. ()

* Energy Future Holdings Corp, the troubled Texas power company formerly known as TXU Corp that is at the center of a record private equity buyout, plans to pay roughly $270 million in interest due on its bonds in May, which could let it stave off a bankruptcy filing for as long as another 18 months, according to people close to the situation. ()

* Federal aviation regulators on Monday will order special inspections and, if needed, replacement of improperly manufactured parts on more than 1,000 Boeing Co 737 jets that could cause pilots to lose control. ()

* Mark Zandi, a prominent economist, has emerged as a leading candidate to head the regulator of mortgage-finance companies Fannie Mae and Freddie Mac amid signs that he would likely attract support from Senate Republicans, according to people familiar with the matter. ()

* In a settlement proposal to European Union antitrust lawyers, Google Inc for the first time has agreed to submit to a legally binding commitment to make minor changes to the look of its web-search engine in order to allay concerns that it is hurting competitors, according to a person familiar with the matter. ()

* Nissan Motor Co Ltd is considering a new plant in North America to produce at least 100,000 of its premium Infiniti vehicles a year, likely starting in 2017 as the automaker fans out production globally from Japan. ()

* General Motors Co and Ford Motor Co have teamed up to produce a nine-speed and a 10-speed automatic transmission for use in their portfolios of cars, crossovers, sport-utility vehicles and pickup trucks as they look to keep in step with their rivals both foreign and closer to home. ()

* The first patent on OxyContin expires Tuesday, a milestone in the history of one of the most powerful and abused painkillers on the market. But it could be quite some time before generic versions of the drug are available. ()

* Hedge fund Barington Capital Group is pressuring Jones Group Inc to sell parts of its portfolio, according to a person familiar with the matter, as the apparel manufacturer pursues a turnaround. ()

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

Lehman Europe creditors may be repaid in full

DUBLIN, April 15 | Sun Apr 14, 2013 7:00pm EDT

DUBLIN, April 15 (Reuters) - Creditors of the European arm of U.S. investment bank Lehman Brothers, which collapsed in September 2008, may be repaid in full, administrators said on Monday.

The settlement of rival claims over assets has freed up billion of dollars that can now be distributed to former clients of the bank's European arm, PricewaterhouseCoopers (PwC) said in its ninth progress report to creditors.

"To be able to advise ordinary unsecured creditors that we now have a reasonable chance of eventually repaying their claims in full, marks a significant milestone," said Tony Lomas, lead administrator and partner at PwC.

"There is still a lot to do before finalizing the wind-down but we do expect to pay a second, significant dividend to creditors in the near future, taking us another step towards this new target."

Some 13.6 billion pounds worth of assets, including securities and cash, have been returned to former clients of the European unit of Lehman Brothers since the start of the wind down.

PwC said one recent settlement would free up $9.1 billion of assets, which could be returned to creditors later this year.

In November 2012, a first interim dividend of 25.2 percent was paid to unsecured creditors, usually one of the last to be paid in any wind down. (Reporting by Carmel Crimmins; Editing by Maureen Bavdek)

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

Detroit mayor offers budget, but emergency manager flexes power

Fri Apr 12, 2013 4:09pm EDT

* Budget would increase city's deficit by 16 pct to $380 mln

* Mayor signals intent to play major role in setting course

* Newly appointed emergency manager to have final say

* 2013-14 spending plan must be adopted by June 30

By Steve Neavling

DETROIT, April 12 (Reuters) - Detroit Mayor Dave Bing proposed a $1 billion budget on Friday that allows the deficit to balloon to $380 million, despite a financial crisis that led the state to appoint Emergency Manager Kevyn Orr to take over the city's purse strings.

At nearly the same time on Friday, Orr issued an order underscoring that it is the emergency manager, not city officials, who has final say on appropriations, contracts and other substantive matters. Any such acts "will not be valid or effective unless and until approved by the Emergency Manager or designee in writing," Orr wrote in his Order No. 3.

The order does allow the city to take all actions necessary to deliver city services. Orr has final say over the city budget, and the state law creating the emergency manager position requires Orr to deliver a financial and operating plan for Detroit by May 9.

Bing's proposal to council represents the first major action by the mayor since Orr took his position on March 25. It also is a sign of his intent to play a significant role in setting the city's political and budgetary course, in apparent hope Orr will focus chiefly on reducing the city's $14 billion in long-term debt.

"He is not here to run the city day-to-day," Bing said at a news conference. "That is not his strength. His expertise is long-term debt."

Orr's spokesman, Bill Nowling, said the emergency manager is acting carefully in hopes the city's elected officials can meet the annual budget demands and continue to keep the budgeting process transparent.

"It serves no purpose to come in with a heavy hand," Nowling said of Orr, a bankruptcy lawyer and turnaround expert. "It's important for the elected council and mayor to weigh in. That is going to position us to work on restructuring the long-term problems."

Those structural problems include pension and healthcare costs. Healthcare payments to current and former employees make up a third of the city's general fund budget. The $380 million deficit is up 16 percent from last year's $327 million in red ink.

Bing's 2013-14 spending plan, which by law must be adopted by June 30 when the prior spending plan expires, calls for continued mandatory furlough days - one unpaid day every two weeks for city workers - and a $4 million reduction in the city council's $11.2 million budget. But it avoided any sweeping cuts to spending on public safety, transportation, blight removal, public lighting and parks and recreation.

"I don't think we can cut anything else and still be functional," Bing said.

City officials alerted the firefighters union on Thursday that the city plans to impose a new contract on the Detroit Fire Fighters Association without negotiating with the union.

Bing's budget also proposes revenue increases, including jumps ranging from 15 to 50 percent on various city fees.

Bing said he is optimistic that he and the council will continue to play an important role in the city's future and its delivery of services.

"If we do what we're supposed to do, I can't see the emergency manager making significant changes," he said.

Nowling said Orr plans to pore over the spending plan in the coming weeks before making any decisions.

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

Bankruptcy estate of meningitis-linked pharmacy to battle states

By Tim McLaughlin

BOSTON, April 12 | Fri Apr 12, 2013 6:12pm EDT

BOSTON, April 12 (Reuters) - The bankruptcy estate of the pharmacy linked to a deadly U.S. meningitis outbreak plans to battle nearly 30 states to preserve its right to redeem several million dollars worth of insurance policies for creditors.

The insurance policies are key assets in New England Compounding Center's bankruptcy estate.

Paul Moore, the trustee for NECC's bankruptcy estate, requested court approval to hire Collora LLP, a Boston law firm known for its high-profile defense work, according to documents filed on Friday. Collora would battle pharmacy board regulators from at least 28 states and contend with an ongoing, previously disclosed investigation by the U.S. Justice Department, according to the trustee.

Creditors in the bankruptcy include the victims of the outbreak, court records show. Their claims, however, are much larger than NECC's assets, which have been listed at between $1 million and $10 million.

In January, U.S. Bankruptcy Judge Henry Boroff temporarily restricted NECC's owners from selling their luxury homes or spending up to $21 million they received last year in salary and shareholder distributions. The Official Committee of Unsecured Creditors, which represents meningitis victims, has said it would like to claw back that money for the bankruptcy estate.

Lawyers for NECC's owners have said there is no evidence that any of them directly participated in the events that led to the deadly U.S. meningitis outbreak. They have been named in a number of civil lawsuits.

NECC filed for Chapter 11 bankruptcy protection in December. The U.S. Food and Drug Administration shut down its operations after the compounding pharmacy shipped thousands of vials of steroids tainted with fungal meningitis. The ensuing outbreak that killed 53 people and sickened 733 others is attributable to injectable steroids distributed by NECC, according to the U.S. Centers for Disease Control and Prevention.

Moore said he initially thought NECC creditors would be best served if he allowed the pharmacy's operating licenses to be forfeited in various states. But he said he quickly learned there could be "adverse collateral consequences," namely the ability to redeem various insurance policies and claims for the benefit of creditors, if he let that happen.

As of early March, there have been actions in at least 28 states to compel a suspension, revocation or forfeiture of NECC's license, the trustee said in his court request.

In addition, the trustee learned that one unnamed state may seek to impose a penalty of more than $2.5 million.

Collora law partner Paul Cirel has been interacting with the U.S. Justice Department, which is investigating the Framingham, Massachusetts-based pharmacy, the trustee said. Cirel has represented NECC since 2003 on regulatory matters. He also has represented Barry Cadden, NECC's chief pharmacist. (Reporting By Tim McLaughlin; Editing by Bernard Orr)

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

UPDATE 3-Judge denies $20 million severance to outgoing AMR chief

Fri Apr 12, 2013 7:53pm EDT

* CEO Horton's payout set in AMR-US Airways merger

* Judge says payment not authorized under bankruptcy law

* AMR plans to address severance in reorganization plan

By Jonathan Stempel and Tanya Agrawal

April 12 (Reuters) - A judge has rejected a proposed severance package of nearly $20 million for Thomas Horton, the chairman and chief executive officer of American Airlines parent AMR Corp, saying the payout was not allowed under federal bankruptcy law.

U.S. Bankruptcy Judge Sean Lane in Manhattan issued his decision on Thursday, after having approved at a March 27 hearing AMR's planned $11 billion merger with US Airways Group Inc.

Horton's $19.9 million severance had been part of the merger agreement and was to consist of equal amounts of cash and shares of the combined company.

Lane had suggested at the hearing that severance might be better addressed in AMR's reorganization plan, which the company has yet to submit and which requires creditor approval.

U.S. Trustee Tracy Hope Davis, a Department of Justice monitor for the bankruptcy, also opposed Horton's severance.

"It's American Airlines' current intention to address Mr. Horton's compensation arrangement in the plan of reorganization," said Mike Trevino, a spokesman for the carrier.

The combined company would be run by US Airways CEO Doug Parker, with Horton as nonexecutive chairman. Parker would become chairman after the first annual shareholder meeting, probably in the spring of 2014.

The plan of reorganization will address how creditors will get paid back. Shareholders of AMR may end up with a stake of at 3.5 percent in the combined company, which an attorney for AMR's creditor's committee has said could be valued at between $350 million and $400 million.

Horton first joined AMR in 1985, left in 2002 for a four-year stint at AT&T Corp and then returned. He became CEO of AMR when it filed for bankruptcy in November 2011.

AMR at first opposed merging while still in bankruptcy, but reversed itself under pressure from creditors. The merger would create the world's largest airline, and AMR and US Airways hope to save more than $1 billion of annual costs by 2015.

UNCLEAR PURPOSE

Davis had called Horton's proposed payout too large relative to severance for nonmanagement workers, and improper because it was not part of a program for full-time workers in general.

Lane rejected AMR's argument that these restrictions did not apply because the payout would be made - or could be voided - by the combined company after the merger closed.

"It is unclear what purpose would be served by the court's approval of the severance if (the combined company) could later veto the severance through a vote of its board," he wrote.

The judge also said deferring to AMR's "business judgment" in allowing the payout was "exactly what Congress sought to prevent" in capping severance awards by companies in bankruptcy.

AMR has said the payment to Horton recognized his efforts in leading the company through bankruptcy and into the merger.

Its lawyer, Stephen Karotkin, told Lane on March 27 that the desire of AMR directors to maximize value and see the merger through justified payments to Horton and others.

The combined carrier would take the American name and be based in AMR's hometown of Fort Worth, Texas. US Airways is based in Tempe, Arizona.

The case is In re: AMR Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 11-15463.

• Link this
• Share this
• Digg this
• Email
• Reprints

16.47 | 0 komentar | Read More

STXNEWS LATAM-S&P downgrades Brazil's Lupatech to "D" after default

Thu Apr 11, 2013 8:49pm EDT

Ratings agency Standard & Poor's downgraded Brazilian oil service and engineering company Lupatech SA to "D" from "CCC" on Thursday after the company failed to make a $6.79 million interest payment on $275 million of 9.875 percent perpetual bonds. Lupatech has said it faces cash-flow problems as giant oil projects by Brazil's state-controlled Petroleo Brasileiro SA and other companies have been delayed. (Reuters Messaging: jeb.blount.thomsonreuters.com@reuters.net)

16.47 | 0 komentar | Read More