Business Digest

BUSINESS DIGEST

October 16, 2002

In the Region

FTC confirms its investigation of Rite Aid chain

The Federal Trade Commission confirmed yesterday that it is investigating Rite Aid Corp., although the focus of the investigation remains unclear. An FTC spokesman in Washington said the investigation is in progress but declined to comment further.

In a brief statement in a quarterly report filed yesterday with the Securities and Exchange Commission, Rite Aid reported that the FTC had begun on Sept. 11 to investigate the company's consumer-privacy and advertising practices. Rite Aid said later that it is cooperating with the investigation, which it said is in its preliminary stages.

Rite Aid has struggled to rebuild after accounting irregularities led to the resignation of its top management and forced the nation's third-largest drugstore chain to revise its earnings for fiscal 1998 and 1999 downward by more than $1 billion.

In June, three former top executives and one now-suspended executive were indicted by a federal grand jury on charges that they manipulated the company's books to make it appear more profitable. The company itself was not charged.

DynPort to test vaccine for anthrax on humans

DynPort Vaccine Co. said yesterday that its experimental, injectable anthrax vaccine will begin testing in humans.

The tests, which will involve about 70 volunteers, will be conducted at the Walter Reed Army Institute of Research.

Frederick-based DynPort is developing the vaccine for the Department of Defense using technology licensed from Avant Immunotherapeutics Inc. of Needham, Mass. DynPort is a joint venture between DynCorp of Reston, Va., and Porton International Inc. of Paris.

Sterling Venture invests in waste-system company

Sterling Venture Partners of Baltimore announced yesterday that it has invested $4 million as part of a $16.7 million round of funding for an upstate New York company that develops environmentally sound wastewater treatment systems.

Sterling Venture Partners joined Cordova Ventures, Alliant Energy Resources Inc., Roser Ventures SBIC LLC and others in the investment in AnAerobics, a privately held company near Rochester, N.Y. Its waste treatment systems are used by Kraft Foods North America Inc., Canandaigua Wine Co. and Seneca Foods.

Elsewhere

Court raises limit on borrowing by WorldCom

Telecommunications giant WorldCom Inc. won approval from a bankruptcy judge yesterday to borrow up to $1.1 billion to continue operations while it sorts out a plan to emerge from bankruptcy protection, and indicated that its financial health had improved significantly.

WorldCom originally was granted permission to borrow $750 million immediately after filing for bankruptcy in July, in the largest such case in U.S. history. At the time, WorldCom attorneys said the company might need to raise that limit to $2 billion to stay afloat.

WorldCom attorneys said the company has restored normal lines of credit with suppliers and worked to reassure wary customers, improving WorldCom's cash holdings from $360 million in July to $1 billion now.

Consequently, Clinton, Miss.-based WorldCom decided that its total bankruptcy loans, known as debtor-in-possession financing, need only be $1.1 billion, attorney Marcia L. Goldstein said in U.S. Bankruptcy Court in Manhattan.

AT&T asks end to fees for local phone routing

AT&T Corp., the largest U.S. long-distance telephone company, has asked federal regulators to eliminate fees that U.S. local-phone companies charge other carriers to use their local networks.

Regional companies such as Verizon Communications Inc. and BellSouth Corp. charged AT&T and rivals $5 billion in such fees last year, AT&T said in a statement. AT&T says it passes along that cost to customers. AT&T uses other companies' local networks to provide phone and fast Internet service to business customers.

AT&T wants the Federal Communications Commission to halt the fees immediately and look into lowering them and eventually ending them, President David Dorman said on a conference call.

Northwest Airlines closing Atlanta maintenance shop

Northwest Airlines said yesterday that it will close its Atlanta maintenance center and transfer the work to Minnesota, resulting in the layoffs or transfers of 1,450 employees in Atlanta.

The airline also said it will close its reservations center in Long Beach, Calif., and ticket offices at the Mall of America in Bloomington, Minn.; in San Jose, Calif.; and in New York.

The 250 or so reservation clerks in Long Beach will be eligible for transfer to other reservations centers. Northwest has such centers in Minneapolis and Chisholm, Minn., Baltimore, Detroit, Seattle and Tampa, Fla.

An additional 100 management positions will be eliminated in Atlanta and Long Beach, Northwest said.

Whirlpool steps up hiring for new refrigerator line

Whirlpool Corp. will add as many as 700 jobs through 2005 at its Fort Smith, Ark., plant as it expands to manufacture a new line of refrigerators, the company said yesterday,

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