WorldCom Settlements Approved
A federal judge approved settlements that will return more than $6.1 billion to investors who suffered losses in the WorldCom accounting fraud. The deals will divide payments among approximately 830,000 people and institutions that held stocks or bonds in the telecommunications company around the time of its collapse in 2002.
Money for the payouts will come from a long list of defendants, including investment banks, auditing firms and former WorldCom chief executive Bernard J. Ebbers, who was convicted of fraud earlier this year and sentenced to 25 years in prison. The largest chunks of the settlements were a previously approved $2.58 billion payment by Citigroup and a $2 billion payment by J.P. Morgan Chase.
McDonald's Plans Chipotle IPO
McDonald's said it plans to file for an initial public offering of a minority stake in its Chipotle Mexican Grill brand by the end of October and expects to launch the IPO in the first quarter of 2006. McDonald's also said its board raised the company's annual dividend by 22 percent, boosting the total dividend payout to more than $825 million. The dividend is payable Dec. 1 to shareholders of record Nov. 15.
Northwest to Expand Layoffs
Northwest Airlines said it plans to lay off 1,400 flight attendants as the carrier reduces flights while under Chapter 11 bankruptcy protection. The layoffs will begin with 900 furloughs on Oct. 31, including 480 in Detroit, Northwest's largest hub, and 355 in Minneapolis, according to a memo by a Northwest vice president for in-flight services that was provided by the Professional Flight Attendants Association.
Eagan, Minn.-based Northwest filed for bankruptcy protection on Sept. 14 and said the next day that it would furlough 400 pilots as it scales back flying hours by 13 percent. The carrier has blamed its $2.5 billion in losses in the past four years on high labor and fuel costs and heightened discount competition.
Delta Pension Plan Squeezed
An exodus of Delta Air Lines pilots has drained the pension plan to the point where future lump-sum payouts to retirees by the bankrupt carrier may be in jeopardy, the chairman of the pilot union's executive committee, John Malone, said in a letter to members. Two hundred and two pilots retired Sept. 1, two weeks before Delta's bankruptcy filing, and more than 2,300 have put in their papers since January 2003, Malone said.
Malone said Delta has told the union that lump sums due to pilots who retired Sept. 1 will create a cash shortfall for the pension plan, forcing the company to make up for it with a special contribution. If the company does not make that contribution, the plan would be prohibited from making lump-sum payments until the shortfall is erased.
Zarb Asked to Stay at AIG
Frank G. Zarb, who took charge of American International Group during an accounting probe earlier this year, has been asked to extend his chairmanship as the world's largest insurer grooms potential successors.
Arthur Levitt Jr., a former chairman of the Securities and Exchange Commission who is helping AIG recruit directors, said he asked Zarb to stay on. Zarb, who declined to comment on his plans, had requested earlier that the board seek a replacement before the end of the year.
Tracinda Wants to Boost GM Stake
Tracinda, the private equity firm owned by billionaire investor Kirk Kerkorian, said it plans to boost its 9.5 percent stake in General Motors to as much as 9.9 percent and may approach the world's biggest automaker about getting representation on its board.
The investment group has been steadily increasing its stake in GM while continuing to play down suggestions that it wants to increase its influence over the company. Tracinda said it is buying GM shares solely for investment purposes and does not aim to gain or influence control over GM's business now.
Morgan Stanley said its third-quarter profit fell 83 percent as the Wall Street firm took a $1 billion charge on the reduced value of its aircraft financing business. Its results without the charge surpassed Wall Street's expectations. For the quarter ended Aug. 31, Morgan Stanley earned $144 million, compared with $837 million in the corresponding period of 2004. Revenue climbed 29 percent, to $6.95 billion.
Compiled from staff and news service reports.