Monday PM April 2nd, 2007
by: Ed Mayberry, April 2, 2007 5:04:00 am
Enron creditors are receiving an additional $1.8 billion payout from the bankrupt company. This is the 15th distribution of funds to Enron's creditors. The distribution includes about $1.7 billion in cash and $171.1 million in shares of Portland General Electric, Enron's former utility. Since late 2004, the Enron Creditors Recovery Corporation has returned about $11.5 billion to creditors in twice-yearly distributions, in April and October, as well as in "catch-up'' distributions paid on an interim basis, usually about every two months. The estate continues to sell remaining assets, settle claims and prosecute litigation against Citigroup and Deutsche Bank. The trial on those fraud and bankruptcy claims is set to begin in January 2008. Enron founder Ken Lay and former chief executive Jeff Skilling were convicted last year for their roles in the company's 2001 collapse, after years of accounting tricks could no longer hide billion in debt or make failing ventures appear profitable. Thousands lost their jobs and pensions, and stockholders lost billions of dollars. Skilling is currently serving a sentence of more than 24 years. Lay's convictions for conspiracy, fraud and other charges were wiped out with his July death from heart disease.
Federal prosecutors have filed papers asking U.S. District Judge Lee Rosenthal to grant a former Enron executive's request to withdraw Christopher Calger's 2005 guilty plea to wire fraud in connection with an asset sale and to dismiss the case. Prosecutors used the same legal theory that prompted a U.S. 5th Circuit Court of Appeals panel last year to overturn all convictions of three former Merrill Lynch executives and most against a fourth in a 2004 Enron case. In 2005, a judge approved former top Arthur Andersen accountant David Duncan's request to erase his 2002 plea to obstruction of justice. That move allowed the U.S. Supreme Court's overturning of the firm's conviction of obstruction for destroying Enron-related audit documents in late 2001.
A federal initiative aimed at forcing utilities to clean up emissions from aging coal-fired power plants has gotten a boost from the U.S. Supreme Court. In a unanimous decision, the justices ruled against Duke Energy in a lawsuit brought by the Clinton administration. The lawsuit was part of a massive enforcement effort targeting more than a dozen utilities. Most companies settled with the government. But several Clinton-era cases involving more than two dozen power plants in the south and the midwest are still pending. In the Duke case, the justices ruled that a federal appeals court overstepped its authority by effectively invalidating EPA regulations in a way that favored Duke. The case now returns to the lower courts. The enforcement program is aimed at reducing power plant emissions of nitrogen oxide and sulfur dioxide that contribute to smog and acid rain.
TXU Corporation said it hasn't received any offer beating the $32 billion buyout bid of Kohlberg Kravis Roberts and Texas Pacific Group. And TXU's financial adviser says it doesn't expect one. The bid from New York-based KKR and Fort Worth-based Texas Pacific would be the largest private takeover in U.S. corporate history. The Dallas-based electric utility has two more weeks to solicit rival bids. The deal, however, has run into opposition in the Texas legislature. Lawmakers are considering bills to let state regulators review the sale and force TXU to sell power plants. KKR and Texas Pacific have protested that lawmakers want to change the rules after a deal was reached to buy TXU--which is the largest electric generator in Texas.
A judge in Denver has overturned a verdict that Kerr-McGee knowingly underpaid federal oil royalties by nearly $7.6 million. The judge on Friday ruled the now-former government auditor who accused the company--Bobby Maxwell--didn't have the legal standing to sue. Kerr-McGee is owned by Houston-based Anadarko Petroleum. A jury this year determined Kerr-McGee sold oil produced from the Gulf of Mexico at below-market prices to Houston-based Texon from 1999 to 2002. Maxwell worked for the U.S. Minerals Management Service. Kerr-McGee claimed Maxwell didn't qualify as a whistle-blower under federal law, since information from whistle-blowers about alleged fraud must be provided voluntarily. Maxwell was required to provide the information as a government auditor. His attorney didn't immediately comment.
The annual airline quality rating report shows more passengers were bumped, more bags were lost, and there were fewer on-time flights in 2006 than 2005. It's the third year in a row those problems have grown worse for the industry. Wichita State University associate professor Dean Headley is co-author of the study. He says: "they just don't get it yet.'' But researchers say there's an upside: the number of complaints about airlines has stabilized since hitting a five-year low in 2005. An industry spokesman doesn't expect travel woes to improve anytime soon. David Castelveter says, "we're going to see more delays.'' He blames most delays on bad weather. But he says the air traffic control system isn't capable of handling the industry's rate of growth. Among the study's conclusions are that Dallas-based Southwest had the lowest number of complaints in 2006. United and US Airways were tied with the most. Hawaiian Airlines had the best on-time performance for 2006, followed by Frontier Airlines and Southwest. Atlantic Southeast Airlines had the worst on-time performance, followed by Fort Worth-based American Eagle and Comair.
Private buyers have completed their $4.5 billion purchase of Sabre Holdings. The deal signs the end of public trading of shares in the parent of online travel-booking service Travelocity.com. Sabre shareholders approved the offer from affiliates of Silver Lake Partners and Texas Pacific Group. Southlake-based Sabre plans has ended the listing of its common shares. The company will still offer periodic financial updates on its Web site. Sabre runs Travelocity and reservation distribution systems that link airlines with travel agents. It started as an arm of Fort Worth-based American Airlines but was eventually spun off into a separate company.