Business Desk

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

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NATIONAL


ATA FILES FOR BANKRUPTCY PROTECTION; REACHES DEAL WITH AIRTRAN


ATA Airlines Inc., the nation’s 10th-largest airline, filed for bankruptcy protection yesterday, becoming the latest American airline tripped up by rising fuel costs and fare wars. ATA sold off airport slots and other assets to AirTran Airways Inc. for $87.6 million but said it plans to honor tickets and maintain its full flight schedule. The Orlando, Fla.-based AirTran Holdings Inc. will assume ATA’s flight operations, gate leases and routes at Chicago Midway Airport, and arrival and departure slots at New York’s LaGuardia Airport and Ronald Reagan Washington National Airport. The deal is subject to approvals by the bankruptcy court and other entities and is expected to take effect by early next year, ATA officials said. “We will recreate ATA as a formidable, low-cost carrier,” founder and chief executive George Mikelsons said yesterday. ATA on Monday named an executive to oversee the restructuring of the discount carrier’s mounting debt. ATA’s announcement came amid speculation that Delta Air Lines Inc., the nation’s third-largest airline, would win $1 billion in concessions from its pilots and avoid bankruptcy. Delta is expected to decide by today whether to seek Chapter 11 bankruptcy protection. The ATA filing under Chapter 11 of the federal bankruptcy code came as the Indianapolis-based airline, whose parent company is ATA Holdings Corp., faces sharply lower demand for military charter flights, in addition to the soaring fuel costs and fare wars. ATA also is saddled with millions of dollars in debt from new aircraft purchases. The value of the company plummeted 36% yesterday, its stock closing at 93 cents a share, down 53 cents, on the Nasdaq stock exchange. The stock had hit a 52-week high of $13.31 on Feb. 2.


– Associated Press


MACE SECURITY STOCK ZOOMS ON PEPPER-GEL ANNOUNCEMENT


Mace Security International Inc.stock rocketed yesterday after the New Jersey company said it would introduce a new gel form of its namesake pepper spray this quarter.


Shares of Mace closed yesterday at $5.45, up $2.48, or 83.5%. It is still well off its high of $14.80 set in April when security concerns bolstered shares of any company seen benefiting from increased homeland security spending. The stock has been trading under $4 since August.


The Mount Laurel, N.J., security products maker hopes the gel spray will make inroads in the police and military markets. Mace sold its law enforcement business to Armor Holdings Inc. in 1998, allowing Armor to sell Macebrand pepper sprays.


Last year, Mace was able to sell pepper sprays to the military and police again, but under a new brand, Takedown, which a company spokesman, Eduardo Nieves, said isn’t significant to its business.


The company, however, continues to sell Mace pepper sprays to consumers.


Mace will sell the new spray as Mace Gel to consumers, and as Pepper Gel to police and military.


– Associated Press


IN THE COURTS


LEXMARK RIVALS MAY RESELL INK CARTRIDGES, COURT SAYS


An American appeals court lifted a ban on sales of rebuilt toner cartridges that compete with products made by Lexmark International Inc., the no. 2 U.S. maker of computer printers.


A federal appeals court in Cincinnati said a judge in Lexmark’s hometown of Lexington, Ky., was incorrect to block sales of cartridge parts by closely held Static Control Components. The parts, used by rebuilders of printer cartridges, circumvent Lexmark’s efforts to protect the copyright on software that runs the cartridges. The ruling is a boon to the 5,000 companies that take used cartridges, replace any worn parts, and refill them for resale. Lexmark, which gets a majority of its revenue from sales of cartridges, inserts a chip in its printers and cartridges with a computer program that includes an authentication sequence to prevent the use of what it calls “unauthorized” replacement cartridges.


The ban was imposed in February 2003, to halt sales while Lexmark’s lawsuit against Static Control is pending.


– Bloomberg News


AT&T TO PAY $100M TO SETTLE CLASS-ACTION LAWSUIT


AT&T Corp. yesterday said it and a former subsidiary will pay $100 million to settle a shareholder class-action lawsuit that sought $2.4 billion.


The deal came nearly three weeks after a trial began in Trenton before U.S. District Judge Garrett E. Brown Jr., who must still approve the terms.


AT&T said the payment would be split between the company and its former broadband subsidiary, which was spun off in 2002. AT&T said it would seek reimbursement from its insurers.


“As we have said all along, we categorically deny any wrongdoing by AT&T or any of its officers and remain confident that we would have been vindicated at the end of this trial,” said Edward R. Barillari, vice president of law and government affairs. “But, given the size of the claims compared to the relatively low amount of the settlement, the inherent risk and uncertainty of legal proceedings, and the very substantial expense of those proceedings, this settlement is the prudent course for the company.”


The company is determining what effect the settlement will have on its recently announced third-quarter earnings, but cannot say when the information will be available, spokesman Bob Nersesian said.


The lawsuit was brought in October 2000 on behalf of those who bought stock from December 6, 1999 to May 1, 2000, according to AT &T and court records.


One of the lawyers for the plaintiffs, Peter S. Pearlman, said the lawsuit charged that then-AT&T chairman and chief executive C. Michael Armstrong knowingly overstated revenue growth for the company’s business division.


Armstrong first made the projection of 9% to 11% growth for 2000 during a conference call with analysts on December 6, 1999, and the guidance was repeated until revised downward on May 2, 2000, Mr. Pearlman said.


– Associated Press


FOREIGN


E.U. LOWERS 2005 GROWTH FORECAST TO 2% ON SURGE IN OIL PRICES The European Commission cut its growth forecast for 2005,saying record oil prices will damp global demand and warned that five of the 12 countries using the euro will post deficits at or above European limits next year.


Growth in the $9 trillion economy will reach 2% in 2005, less than the 2.3% predicted in April and lagging America for the 12th year in 13, the commission said in a report in Brussels. For this year, it predicts growth of 2.1%, more than the 1.7% estimated in April.


“Risks to the outlook have increased due to uncertainties about the potential impact of higher oil prices on the world economy, worsening external and internal imbalanced in the United States, and the risk of a sharp slowdown in China,” the commission said.


Oil prices above $50 a barrel are threatening to damp the export demand that pulled the region out its weakest growth in a decade last year. With unemployment stuck at a five-year high of 9%,there are few signs of a rebound in consumer spending. Retailers including Paris-based Carrefour SA are cutting or freezing prices to spur household demand.


– Bloomberg News


REGULATORY


SEC PROPOSES ELIMINATION OF IPO ‘QUIET PERIOD’


The Securities and Exchange Commission proposed scrapping the so-called quiet period which was intended to prevent companies poised to sell shares to the public from promoting the stock.


SEC commissioners voted 5-0 to submit the new regulation for public comment. It would amend a Depression-era rule that almost derailed Google Inc.’s $3.47 billion initial public offering in August after Playboy published an interview with the company’s founders.


The new rule would let companies distribute written material, in addition to the prospectus, about securities for sale and to sponsor so-called electronic road shows for investors.


The commission may also clarify that regular corporate communications, such as earnings releases, are permitted regardless of the status of a stock or bond sale.


Any public statement permitted under the new rule would have to be accurate and not misleading, matching the legal standard that now applies to a company’s prospectus.


– Bloomberg News

NY Sun
NEW YORK SUN CONTRIBUTOR

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.


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