Rhodes Cos. creditors agree to mediation
The Rhodes Cos., the homebuilding and development companies that filed for bankruptcy in late March, avoided a legal battle with creditors on Friday when key participants in the case agreed to mediation.
Bankruptcy Judge Linda Riegle accepted an agreement among first lien creditors, the agent for the second lien creditors, the unsecured creditors’ committee, the debtors and others.
The agreement allows owner Jim Rhodes to continue using cash for business operations until Aug 28. Parties signing the agreement also will go through up to three days of mediation over how to reorganize the companies. Parties will not file potentially competing plans of reorganization until Aug. 28.
The 32 related companies have about $400 million in liabilities and $100 million in assets.
As CIT Group talks with banks, shares rise
CIT Group Inc.’s shares nearly doubled Friday as the commercial lender held talks with several large banks about securing emergency financing in hopes of avoiding a bankruptcy filing.
But the company’s stock remains well below $1 — and down 54 percent from only a week ago — suggesting investors still rate its prospects of survival as slim after the federal government refused to rescue the firm.
CIT is in talks with JPMorgan Chase & Co., Goldman Sachs and Morgan Stanley about receiving short-term financing that may help it avoid filing for Chapter 11 protection, a person familiar with the talks told The Associated Press. The person spoke on condition of anonymity.
CIT’s shares rose 29 cents, or 70.73 percent, Friday to close at 70 cents on the New York Stock Exchange. The shares had risen as high as 93 cents earlier in the day.
California gaming sites wager on horse racing
Horse racing, in a comeback bid, is headed for some California casinos.
Beginning this weekend, fans of horse racing can place bets and watch televised races at the Commerce Casino, the first new “off-track betting” site approved under a major California initiative to whip up the struggling horse-racing industry.
At the new site — sometimes called OTBs — gamblers will be able to bet at electronic kiosks and follow races from across the country on a bank of 26 television screens. The Commerce Casino, in the Los Angeles suburb of Commerce, will be the first of 15 new wagering sites permitted by legislation approved in Los Angeles, Kern, San Bernardino, Santa Barbara and Ventura counties.
State and gaming officials are hoping the casino will be the first of 45 new gaming mini-satellite sites allowed in sports bars, card clubs, casinos and other gathering spots.
Delphi bankruptcy decision postponed
Resolution of Delphi Corp.’s Chapter 11 bankruptcy was postponed until Tuesday as U.S. Bankruptcy Judge Robert Drain delayed an auction to sell the company’s assets that had been scheduled for Friday.
Beverly Hills, Calif., investment firm Platinum Equity is the only bidder for the world’s biggest auto parts maker and a key supplier to General Motors Co.
However, a group of Delphi’s bankruptcy lenders said in a court filing this week that they planned to submit a so-called credit bid, which would involve forgiving their debts to Delphi in return for acquiring its assets. Various lenders have provided almost $3.5 billion in financing to Delphi since it filed for bankruptcy in October 2006.
The bankruptcy lenders and other creditors have objected to the Platinum bid, calling it a “sweetheart deal” that would provide big returns for the investment firm while the lenders would recoup, at best, only 20 cents on the dollar.
Eddie Bauer shop chain bought for $286 million
San Francisco investment firm Golden Gate Capital has won the bankruptcy auction for the Eddie Bauer chain with a $286 million offer, besting several liquidators with a plan to keep open most of the outdoor-clothing retailer’s 370 stores in the U.S. and Canada.
Eddie Bauer Holdings Inc., based in Bellevue, Wash., attracted several bidders, including liquidators Great American Group, Hilco Consumer Capital and Gordon Bros. Group, as well as Iconix Brand Group Inc., which owns Rocawear clothing. CCMP Capital Advisors made the initial $202 million offer as a so-called stalking horse, a court-approved bidder who gets the action going in exchange for a fee, in this case $5 million.
The liquidators wanted to sell off the assets of Eddie Bauer, which opened its first store in 1920.
As supply fears worsen, oil prices rise again
Oil prices surged through the week, rising above $63 a barrel Friday as China reported faster economic growth and political turmoil in Iran raised concerns about future oil supplies.
Benchmark crude for September delivery jumped $1.52 to settle at $64.58 a barrel on the New York Mercantile Exchange. In London, Brent prices climbed $2.63 to settle at $65.38 a barrel on the ICE Futures exchange.
Earlier in the week, crude futures were tugged higher by a rally on Wall Street, and prices continued to rise as China reported that its economy grew faster in the second quarter.
European Union leaders OK Pfizer-Wyeth deal
Pfizer Inc. said Friday that European Union antitrust regulators cleared its $68 billion purchase of rival Wyeth.
The European Commission approved the deal, and Pfizer said it committed to divesting some businesses in the EU. Pfizer agreed to buy Wyeth in January, but approvals from regulators and governments on several continents are required due to the size of the businesses involved.
Pfizer also said the Chinese Ministry of Commerce extended its review of the deal beyond the initial 30 days. A 90-day regulatory review in the U.S. is continuing, and Wyeth shareholders will also need to approve the sale.
SAN JOSE, Calif.
Cisco Systems lays off 600 to 700 workers
Cisco Systems Inc. laid off 600 to 700 workers at its company headquarters and an undisclosed number of employees at other locations this week, bringing the world’s largest maker of computer networking gear closer to its goal of reducing its work force by about 2,000 positions.
The majority of the cuts, reported earlier by The Wall Street Journal, were made at Cisco’s San Jose headquarters Thursday, adding to the 447 California workers Cisco had already laid off since the end of February, according to notices filed with the state.
As of the end of April, Cisco employed about 66,560 people. The company would not say how many people it has laid off outside of California.