Business Digest

BUSINESS DIGEST

January 09, 2003

In The Region

Magellan appoints Lerer as its chief operating officer

Magellan Health Services Inc. yesterday named Dr. Rene Lerer as chief operating officer. Lerer replaces Jay J. Levin, who became COO in April and moved up to president in November when Daniel S. Messina, chief executive and president, resigned.

Lerer held a similar post at Prudential Healthcare, where he worked with Steven J. Shulman, who was named last month as Magellan's new CEO.

Columbia-based Magellan, which provides mental health coverage for 68 million people, has an extension from its lenders on debt agreements until next week. Magellan's profitability hasn't met levels set in the agreements, which could allow the lenders to demand accelerated payments. If that happened, the company would likely be forced into bankruptcy. Magellan is seeking to renegotiate its debt terms.

Elsewhere

GM ready to lower expected return on pension fund assets

General Motors Corp. said yesterday that it likely will lower the return it expects from assets invested on behalf of retirees, a move that would increase its pension expenses and lower earnings.

The automaker currently uses a 10 percent asset assumption rate for the pension fund, which was at $67 billion at the end of 2001. GM said it will discuss the fund's status and recap 2002 contributions today.

Standard & Poor's lowered GM's long-term corporate credit ratings Oct. 16 because of questions about pension liabilities and other investments.

Business-management software maker cuts jobs

SAP AG, the biggest maker of business management software, cut 88 jobs from its U.S. sales force this week in a shake-up of its flagging American business.

The German company also fired another 44 U.S. sales people, but said they will be replaced. SAP employed about 3,500 people in the United States at the end of 2001.

The move was the first notable head count reduction at SAP, which has refrained from cutting staff despite the slowdown in the software market. It was also the first significant move by the German company's new North American division chief, former Siebel Systems Inc. executive Bill McDermott, who was brought in three months ago to improve performance.

$101 million suit filed against Nortel Networks

The U.S. subsidiary of former Chapter 11 debtor 360networks Corp., a Canadian telecommunications company, and its committee of unsecured creditors filed a lawsuit against Nortel Networks Inc. in Wilmington, Del., yesterday seeking $101.1 million in damages.

The subsidiary and its creditor panel are seeking to recover money that was transferred to Nortel within 90 days of 360networks' bankruptcy filing. Vancouver-based 360networks Corp., parent of 360networks (USA), filed for protection from creditors in U.S. and Canadian courts in June 2001 after failing to meet scheduled debt payments. It emerged from bankruptcy protection in November.

Under the terms of the Chapter 11 reorganization plan, unsecured creditors could receive roughly $81.5 million if the plaintiffs are successful in recovering the $101.1 million. The balance would go to 360networks.

Suit against AT&T alleges race, gender and age bias

Twenty current and former AT&T Corp. employees from around the country are accusing the phone company of racial, gender and age discrimination, claiming it failed to act on their repeated complaints about improper behavior in the workplace.

The employees filed a federal lawsuit against AT&T in Trenton, N.J., in November and held a teleconference yesterday to detail their claims.

This column was compiled from reports by Sun staff writers, the Associated Press, Dow Jones and Bloomberg News.

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