Insurance and finance giant Conseco filed for Chapter 11 protection -- the third-largest U.S. bankruptcy, behind WorldCom and Enron -- after four months of talks with creditors to restructure the company's $6.5 billion in debt. Although the filing was not surprising given the company's recent woes, it marked a dramatic downfall for the nation's seventh-largest insurance firm, whose stock was once a Wall Street darling. From 1988 to 1998, Conseco's stock averaged a total return of 47 percent per year and shares traded as high as $58. Yesterday, shares closed just under 4 cents. The filing follows a years' long tailspin after the conglomerate's aggressive acquisition strategy in the 1990s backfired. Indianapolis-based Conseco is seeking a judge's approval of a prepackaged bankruptcy. Terms were negotiated before last night's filing in U.S. Bankruptcy Court in Chicago, a company spokesman said.
Global Crossing Sale Approved
Global Crossing's plan to emerge from bankruptcy was approved. It is based on the sale of a 61.5 percent stake to Hutchison Whampoa and Singapore Technologies Telemedia for $250 million. Bondholders owed more than $4.54 billion and other unsecured creditors will divide 32.5 percent of the reorganized company's shares and $25 million of notes. Shareholders get nothing.
FAO, the owner of FAO Schwarz and Zany Brainy toy stores, said it will file for bankruptcy protection if its lender doesn't relax borrowing restrictions. Wells Fargo Retail Finance, the company's lender, was asked to relax recently imposed conditions, FAO said in a statement. FAO, formerly called Right Start, said earlier this week that slumping sales forced it to cancel orders for the rest of the holiday season to prevent excess inventory.
Industrial production increased in November, the Federal Reserve said. Production at factories, mines and utilities increased 0.1 percent last month, the first rise since July, after dropping a revised 0.6 percent in October, the Fed said. Production rose by an average 0.4 percent a month from January through July. Meanwhile, home construction rose in November for the second time in three months, Commerce Department figures showed. Builders broke ground on new homes at an annual pace of 1.697 million units, up 2.4 percent from October's revised 1.657 million rate.
A bankruptcy judge refused an emergency request from the trustee for the United Airlines employee stock-ownership plan for permission to sell off up to $40 million of the company's stock. The ESOP held about 55 percent of the company's shares until September when its trustee, State Street Bank & Trust, began selling off 24.1 million shares.
Arthur Andersen's former in-house counsel, Nancy Temple, should be investigated to determine whether she lied to the House Energy and Commerce Committee, panel members said in a letter to Attorney General John D. Ashcroft. Temple may have lied when she denied that her advice to Andersen auditors about retaining Enron documents was a veiled order to destroy the material, the committee said.
Cadbury Schweppes agreed to buy Pfizer's Adams candy unit for $4.2 billion to become the world's second-largest maker of chewing gum by adding brands such as Trident and Dentyne.
Salomon Smith Barney has been ordered to pay $3.2 million to a female stockbroker, the first such ruling stemming from a notorious sexual harassment lawsuit against the firm. The award to Tameron Keyes, who works as a broker in Salomon's Beverly Hills, Calif., office, is an outgrowth of the lawsuit filed by three women working in Smith Barney's Garden City, N.Y., office, which alleged that sexual pranks and lewd behavior by male employees created a hostile working environment.
Federal bank regulators proposed a rule that would allow them to remove or suspend accountants who have shown evidence of reckless or negligent behavior, or bar them from auditing banks with assets of $500 million or more. Regulators said if the rule had been in effect when Enron collapsed, they could have barred Enron's auditor, Arthur Andersen, from auditing some banks.
Underage viewers were more likely than adults of legal drinking age to have been exposed to a quarter of the alcohol commercials aired on television last year, a Georgetown University study found. Twelve-to-20-year-olds saw two beer or ale ads in 2001 for every three such commercials aired on programs viewed primarily by adults, Georgetown's Center on Alcohol Marketing and Youth reported.
Orbitz, the online travel company owned by five major airlines, is not monopolizing online travel sales, the Transportation Department's inspector general found. Traditional travel agents and Internet-based travel companies have raised concerns that Orbitz's airline owners wouldn't give their competitors a fair chance to sell the cheapest airline fares.
Electrolux said it will cut more than 5,000 jobs in the next two years and close an air-conditioner plant in Edison, N.J., in an effort to reduce costs and improve productivity. The Stockholm-based producer of household appliances also said it will consolidate its operations in China and India.
The Transportation Security Administration announced it has signed a 10-year lease for Arlington office space owned and previously occupied by bankrupt WorldCom. Beginning Jan. 2, the TSA will begin taking over the former headquarters of WorldCom subsidiary MCI in Pentagon City. The deal, for 491,000 square feet of space at a price of $37.25 per square foot per year, will cost the agency about $18 million a year over the duration of the lease.
CSX agreed to sell control of its ocean shipping unit to the District-based Carlyle Group for $300 million to concentrate on its rail business. CSX Lines, which has 17 ships and 22,00 cargo containers, carries freight between the U.S. mainland and offshore points such as Alaska.
America Online was awarded $7 million in damages against companies that sent subscribers e-mail that advertised adult Web sites. Among the defendants was CN Productions, against which AOL won damages and an injunction barring the company from sending junk messages to AOL members. In the latest case, AOL said CN and its associates transmitted more than 1 billion junk messages.
Micron Technology lost $315.9 million in its first fiscal quarter, far worse than Wall Street expected. The chipmaker wrote down inventory to reflect the extended downturn in the telecommunications and networking markets. Sales were $685.1 million. A year earlier the company posted a net loss of $265.9 million on revenue of $423.9 million. It was the eighth consecutive quarter of red ink for Micron, which has claimed it is being victimized by unfair marketing by South Korean competitors.
Interstate Bakeries, the maker of Hostess Twinkies and Wonder Bread, said fiscal second-quarter earnings fell 45 percent, to $11.6 million, because of an unexpected drop in snack-cake sales and higher chocolate and wheat costs. Sales dropped 0.3 percent, to $823.2 million.
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers