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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AIRLINES


DELTA EXPECTED TO FILE FOR CHAPTER 11 THIS WEEK


Delta Air Lines is expected to file for bankruptcy-court protection as early as this week and is nearing agreement on $1.7 billion in financing that would keep the carrier flying while it seeks to restructure, according to people familiar with the situation.


The filing, expected to be made in U.S. Bankruptcy Court in New York, wouldn’t occur until after Delta directors hold a final vote to authorize Chapter 11, these people said. The board also must approve debtor-in-possession financing, which is expected to come from creditors led by General Electric’s commercial finance unit, these people said.


The people familiar with the matter said it would likely take until Thursday at least to complete the debtor-in-possession financing and other details and convene the board for a vote.


To obtain the financing, Delta will have to hock essentially every unencumbered asset, including aircraft, spare parts, its Comair regional feeder unit and AirElite private-jet operation, gates at New York City’s LaGuardia Airport, and even its routes to Tokyo and London, according to documents reviewed by the Wall Street Journal. The assets have an estimated value of about $3 billion.


Legislation that could help Delta spread out some pension obligations is advancing in Congress, but airline officials now are focusing on how that could help Delta while in bankruptcy. Employees hope it won’t dump its obligations on the government’s Pension Benefit Guaranty Corporation, as UAL Corporation’s United Airlines and US Airways Group have.


– Dow Jones Newswires


AUTOMOTIVE


FORD AGREES TO SELL HERTZ FOR $15 BILLION


Ford Motor agreed to sell Hertz, the largest American car-rental company, to investors Clayton, Dubilier & Rice, the Carlyle Group, and Merrill Lynch & Company’s buyout unit for about $15 billion.


The buyers will pay $5.6 billion for Hertz and assume $9.4 billion of debt, Ford said in a statement yesterday. It’s the largest leveraged buyout announced since Kohlberg Kravis Roberts & Company paid $31 billion for RJR Nabisco in 1989.


Ford, the no. 2 American automaker, is selling Park Ridge, N.J.-based Hertz to raise cash as it loses market share to rivals led by Toyota. Ford’s North American business has been unprofitable for three of the past four quarters. Chief Executive Officer William Clay Ford Jr. has promised to increase earnings.


“They’ve decided it’s a non-core business,” a Burnham Securities analyst, David Healy, said of Ford, which is based in Dearborn, Mich.


– Bloomberg News


IN BRIEF


Goldman Sachs, riding a surge in fees from equity and debt underwriting and higher revenue from oil trading, probably led American securities firms to record third-quarter earnings … Marsh & McLennan, the insurance broker that paid $850 million this year to settle New York attorney general Eliot Spitzer’s bid-rigging accusations, said another state prosecutor may sue … Senate Republican leaders said they would be willing to aid Hurricane Katrina survivors by making minor modifications to a new bankruptcy law as Democrats press for more fundamental changes … Wachovia agreed to buy Westcorp and its WFS Financial unit for $3.91 billion to gain California’s biggest provider of used-car loans … The Canadian Auto Workers union said it tentatively accepted a financial proposal from Ford that includes investment in some Canadian plants while cutting total employment … China’s recent revaluation of its currency didn’t go far enough, and it’s important for the nation to make the exchange rate more flexible to protect against external fiscal shocks, the International Monetary Fund said … Microsoft is accumulating cash so quickly that it will probably have to boost its dividend and accelerate plans to buy back shares, according to analysts at New York-based Sanford C. Bernstein & Company.


– Bloomberg News and Dow Jones Newswires

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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