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Week in Review

TOP STORIES -- Nov. 17-22

November 24, 2002|From Times Staff

Asia Global Crossing Files for Chapter 11

Asia Global Crossing Ltd., a key asset of ailing Global Crossing Ltd., filed a Chapter 11 petition to reorganize its debt and sell its assets to a new venture formed by a Chinese telecommunications company.

The long-expected petition, filed in U.S. Bankruptcy Court in New York, would turn over control of 24,200 miles of a sophisticated underwater high-speed, fiber-optic network to Asia Netcom, created by government-owned China Netcom Communications Group Corp., for $120 million. Joining in Asia Netcom are venture firms Newbridge Capital and Softbank Corp.'s Softbank Asia Infrastructure Fund. Asia Netcom would have a $150-million bank line of credit under the deal.

The deal, if approved by the court, would represent the first overseas investment by a Chinese telecom firm and one of the few investments by any government-run enterprise.

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Tenet Says SEC Has Begun Informal Inquiry

Hospital chain Tenet Healthcare Corp., already under federal scrutiny for its Medicare reimbursements, said the Securities and Exchange Commission has begun an informal inquiry into the company, including examining the unusually high volume of Tenet stock trades in the last few weeks.

In an open letter to shareholders, Tenet Chairman and Chief Executive Jeffrey C. Barbakow said executives met with regional SEC representatives. The meeting included questions about Tenet's Medicare payments and sales of Tenet shares by company insiders.

Barbakow said he did not know whether the SEC intends to launch a formal investigation, but he said the Santa Barbara-based company was cooperating fully. In a formal investigation the SEC typically obtains subpoena powers to gather additional information.

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BMG Unveils Revamped Royalties

Breaking ranks with industry rivals, Bertelsmann Music Group launched what the company called a "fairer, more transparent" accounting system for royalty payments, a move that artist representatives say could ease the controversy over whether performers are being cheated by their labels.

BMG, home to such acts as Carlos Santana, OutKast and Britney Spears, is the first major music company to scrap contract deductions that artists say obfuscate their earnings.

The action came as lawmakers in California and New York have begun to scrutinize complaints from pop stars about questionable accounting practices in the industry.

In the years ahead, BMG plans to introduce a contract model in which the company would control an act's recording career for fewer years but share in new revenue streams, including concert proceeds and sponsorship and film deals.

None of the four other music giants -- Universal Music Group, Sony Music Entertainment, Warner Music Group and EMI Group -- intends to follow suit anytime soon.

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Trade Pact to Benefit Some California Firms

Some California technology firms will enjoy lower tariffs and streamlined customs processing under a wide-ranging free-trade agreement between the U.S. and Singapore.

The pact, the first for the United States in Asia, is expected to bolster U.S. efforts to create a free-trade zone across the southeast part of the continent, already the third-largest market for U.S. goods.

Expanding U.S. commercial relations in Asia is good news for California. In addition to helping Silicon Valley firms such as Solectron Corp. and Advanced Micro Devices Inc., which use Singapore as a regional base and production platform, the accord expands access to the Asian city-state for banks, insurance companies and law firms.

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L.A. Developer Faces $184-Million Verdict

A jury awarded $184 million in damages to former investors in a series of limited partnerships run by Los Angeles apartment tycoon Alan I. Casden.

The Los Angeles jury awarded $92 million in punitive damages to about 18,000 investors who sold their interests in Casden-run partnerships that owned apartment complexes. The action came four days after the same panel granted $92 million in general damages to the investors after finding Casden and his associates at Casden Properties Inc. guilty of violating federal securities laws and breaching their fiduciary duties.

Casden Properties is owned by Denver-based Apartment Investment & Management Co. Casden is expected to appeal.

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Boeing Launches New Delta IV Rocket

After more than $1.5 billion in development costs and a year of delays and with much of its reputation on the line, Boeing Co. launched its new Delta IV rocket, putting the company back in the race against its archrival Lockheed Martin Corp. for supremacy in space.

Powered by the nation's first new rocket engine in nearly three decades, the Delta IV took off from Cape Canaveral, Fla., and placed a European communications satellite in orbit, lifting the prospects for Boeing's hobbled launch business.

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