Early Briefing: Home Prices Take Biggest Hit Since 1970
*The Commerce Department said that the median price of a new single-family home dropped 13 percent in October, the biggest percentage drop in 37 years. Local builders and home sellers said that while there's still action in the market, some people can't buy new houses because they can't sell their current ones. See story
*Ike Leggett might be caught in the middle of the fight over a new music venue in Montgomery County, but he and the county can still win economically and politically, columnist Steven Pearlstein says. See his column here.
*E-Trade Financial, which is based in New York but has banking operations in Arlington, got a $2.5 billion cash infusion from Citadel Investment Group and said Mitchell H. Caplan, a Washington area resident, had resigned. See story
*The Prince George's liquor board agreed to give a liquor license to Gaylord National Resort and Convention Center's National Harbor project. In exchange, the hotel chain will drop legal action against the board. See story.
*BDO Seidman, which does the District government's annual financial audit, is threatening to quit because, it says, a D.C. Council member threatened it with a lawsuit. See story.
*A homeowner and a group of lawyers filed a class-action lawsuit on behalf of residents in Gambrills and Crofton against Constellation Energy Group of Baltimore, saying the energy firm knew that the fly ash it dumped in Gambrills was contaminating the water of nearby homeowners but failed to warn them. See story.
*Chick Hall's Surf Club, born in 1955, the Washington area's last roadhouse, is about to be sold. See story
*SK Telecom, South Korea's largest mobile-phone operator, said the company was part of a group that offered to buy a stake in Sprint Nextel of Reston. SK Telecom and partners, including a financial investor, approached Sprint in mid-November about cooperating with it, said spokesman Ko Chang Kook.
The talks included discussions on a stake investment and cooperation on technology and networks, said Ko, who declined to name the partners or comment on financial terms. SK Telecom hasn't been officially notified about the offer being rejected, Ko said.
The Wall Street Journal reported (subscription required) that Sprint had rejected a $5 billion bid from SK Telecom and private-equity firm Providence Equity Partners that would have involved making former chairman Tim Donahue chief executive. See story
*Sallie Mae of Reston will pay Executive Chairman Albert Lord $3 million. See SEC filing.
*Freddie Mac of McLean set a price of $25 a share for the $6 billion in special stock it is selling to help shore up its finances amid strong investor demand for the stock. The company also said it had decided, in light of the robust demand for its special cash-raising offering, to make all 240 million shares of preferred stock not convertible to common stock. See release.
*Shoppers in the District have until Sunday to take advantage of the sales-tax holiday on clothing, shoes and accessories that cost less than $100.
*TierOne shareholders approved the sale of the company to Chevy Chase lender CapitalSource for $423.4 million.
*Creditors of InPhonic said they would rather see the company pushed into Chapter 7 bankruptcy than be taken over by Versa Capital Management, calling the proposed sale a farce.
Here's part of the Dow Jones Newswires report (via the Associated Press): A hearing is set for today in the U.S. Bankruptcy Court in Wilmington, Del., on a bid by the official committee of unsecured creditors of the troubled Web seller of wireless services to dismiss or convert the Chapter 11 bankruptcy case InPhonic filed Nov. 8. Creditors also want to block the sale.
"The entire sale process is a farce that, if permitted, would run its course at the expense of many unsecured creditors that will not receive any benefit from the sale," lawyers for the official creditors committee said in court papers issued Nov. 21.
Creditors maintain the Chapter 11 filing is a set-up that will allow Versa Capital, which bought InPhonic's $90 million bank debt for an unknown price, to take the company over on the cheap. Besides being the top secured creditor and prospective buyer, Versa is also the source of a Chapter 11 loan for InPhonic, but says there is "nothing sinister" about the assortment of roles it's playing in the case.
Creditors warn that Versa's ability to bid up to $90 million worth of bank debt will scare away potential competitors, who would have to top the credit-bid with cash. Unless a rival bidder steps forward, the bankrupt company will be left with little or nothing for unsecured creditors, while the private-equity firm takes over operations free and clear of InPhonic's past trade debts, creditors say.
Lawyers for unsecured creditors say that's not how Chapter 11 bankruptcy is supposed to work, so InPhonic's case should be converted to a Chapter 7 proceeding or dismissed. Versa is the only creditor that stands to benefit if the sale goes through, and that if the company wants to foreclose on InPhonic, it should do so outside Chapter 11 bankruptcy to avoid running up legal bills, according to creditors.
Versa says it's the only entity that has offered to salvage InPhonic, and that secured creditors are entitled to use Chapter 11 bankruptcy to help them get the most from their troubled investments. Keeping InPhonic up and running means jobs will be saved and some back debts will be covered, the investing fund said.
The precipitous decline in business fortunes that preceded Washington, D.C.-based InPhonic's tumble into bankruptcy has continued in Chapter 11, with losses at the rate of $3.2 million per week, according to Versa.
November 30, 2007; 5:00 AM ET
Previous: Newseum Hires Agency Behind the Geico 'Caveman' Ads | Next: Citadel To The Rescue?
Please email us to report offensive comments.
Posted by: Richard Mariani | December 5, 2007 9:24 AM
The comments to this entry are closed.