/raid1/www/Hosts/bankrupt/TCR_Public/001124.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, November 24, 2000, Vol. 4, No. 230
Headlines
AAMES FINANCIAL: Rights Offering Details Still Up in the Air
ACTION PERFORMANCE: Sells Fantasy Sports Operation for $4.2MM
AMERICAN EQUITIES: Case Summary and 20 Largest Unsecured Creditors
AMF BOWLING: Eliminates 100 Positions To Improve Performance
AMRESCO, INC.: Jon Pettee Leaves Post as Executive Vice President
AMRESCO, INC: Third Quarter Results Reflect $18.4MM Net Loss
BENTON OIL: Wasserstein Retained to Explore Alternatives
BORDEN CHEMICALS: Closes Methanol Operations in Geismar, Louisiana
CIGNA HEALTHCARE: S&P Assigns Bpi Financial Strength Rating
CKE RESTAURANTS: Moody's Downgrades All Ratings & Outlook Negative
COLE NATIONAL: Working on Turning Optical Revenues into Earnings
COMSTOCK: Poor Management Skills Lead to Bankruptcy Filing
CONTIFINANCIAL: Confirmation Hearing Scheduled for Dec. 19
COVAD COMM: Shareholder Class Action Suits Continue to Roll In
CROWN CORK: John W. Conway Succeeds William J. Avery as CEO
FAMILY GOLF: Executive Officers Leave Posts To Act as Consultants
FIELDS AIRCRAFT: California Court Confirms Reorganization Plan
FREMONT GENERAL: Moody's Downgrades Senior Debt Rating to B2
GENESIS MANUFACTURING: Seeks Investor/Buyer for Bail-Out
GENEVA STEEL: Utah Bankruptcy Court Confirms Reorganization Plan
GRAND UNION: C&S Closes Deal to Sell Stores in Vermont to Shaw
HARNISCHFEGER: Summary of Significant Unresolved Claims
J.C. PENNEY: Reports $30MM Net Loss in Third Quarter
LOEWS CINEPLEX: Banks Extend Covenant Waiver Until Dec. 8
LORAL SPACE: Moody's Places Debt Ratings on Review for Downgrade
MEDICAL RESOURCES: Court Approves Debtor's Disclosure Statement
MICROAGE INC: Inks Agreement with UPS to Sell Assets for $11.5MM
NEVADA BOB'S: Ozer Group Retained to Sell 36 Stores
OWENS CORNING: Employs Skadden Arps as Bankruptcy Counsel
PARAMOUNT CARE: S&P Affirms Bpi Financial Strength Rating
PLAINWELL INC: Files for Bankruptcy Reorganization in Wilmington
PLAINWELL INC: Case Summary and 20 Largest Unsecured Creditors
PNV INC: Moody's Gives Thumbs Down to 13% Senior Notes
RUSSELL-STANLEY: Moody's Cuts Senior Secured Credit Rating to B3
SECURITIZATION CORP: S&P Gives Mortgage Securitization CCC Rating
SERVICEMASTER: Rising Debt Load Prompts Moody's to Lower Ratings
SIMCALA INC: Moody's Junks 9-5/8% Senior Notes with Caa3 Rating
SUN HEALTHCARE: Asks for Exclusivity through January 8
THERMATRIX INC: Files Chapter 11 Reorganization Plan in Calif.
UNICAPITAL: Bank of America Extends Revolver Amendment to Dec. 1
UNITED ARTISTS: In Final Talks on $35 Million Exit Facility
VERTIGO SOFTWARE: Completes Debt Restructuring
WHITE LINE: Tulsa Lift & Yellow Cab Operator Files for Chapter 11
* BOOK REVIEW: Bankruptcy and Secured Lending in Cyberspace
*********
AAMES FINANCIAL: Rights Offering Details Still Up in the Air
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Aames Financial Corporation (NYSE:AAM), a leader in subprime home
equity lending, announced that it held its 2000 Annual Meeting of
Stockholders and that a quorum of stockholders, present in person
or by proxy, approved all of the proposals presented at the
meeting, elected directors and ratified the appointment of the
Company's independent auditors.
At the meeting, stockholders approved a proposal to amend the
Company's Certificate of Incorporation to eliminate any adjustment
in the conversion ratio of the Company's preferred stock that
would result from a planned rights offering. Stockholders also
approved a proposal to increase the number of shares of preferred
stock which is designated as Series D Convertible Preferred Stock
and to authorize the issuance of such stock in the planned rights
offering. A proposal to amend the Company's Amended and Restated
1999 Stock Option Plan to increase the number of shares available
for issuance under that plan was approved by stockholders as well.
Steven M. Gluckstern, Mani A. Sadeghi, Adam M. Mizel and Robert A.
Spass were elected by the holders of the Company's Series B
Convertible Preferred Stock as Series B Directors for one-year
terms expiring at the 2001 Annual Meeting. David H. Elliott and A.
Jay Meyerson were elected by the holders of the Company's Common
Stock and Series B Convertible Preferred Stock, voting together,
as Class I Common Stock Directors for three-year terms expiring at
the 2003 Annual Meeting of Stockholders.
The appointment of Ernst & Young LLP as the Company's independent
accountants for the fiscal year ending June 30, 2001 was ratified
by the stockholders at the meeting.
The Company also announced that the Board of Directors has not yet
made a determination as to the effective date or record date of
the Company's planned rights offering and that the Company will
make further public announcement at the appropriate time regarding
the effective date and record date of the planned rights offering.
The Company announced that, following the Annual Meeting of
Stockholders, the Board of Directors unanimously re-elected Steven
M. Gluckstern as Chairman of the Board, Steven M. Gluckstern
(Chairman), Georges C. St. Laurent, Jr. and Adam A. Mizel as
members of the Compensation Committee and Georges C. St. Laurent,
Jr. (Chairman) and David H. Elliott as members of the Audit and
Stock Option Committees.
The Company will release information as to the votes cast for each
of the proposals presented at the meeting as well as for the
election of directors as part of its Quarterly Report on Form 10-Q
for the quarter-end December 31, 2000.
Aames Financial Corporation is a leading home equity lender, and
at September 30, 2000 operated 97 retail Aames Home Loan offices
and 5 wholesale loan centers nationwide.
ACTION PERFORMANCE: Sells Fantasy Sports Operation for $4.2MM
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*** 4.35% Bonds due 2005 are trading around 40.
*** Interest payments are due October 1 and April 1.
*** Moody's assigns Caa rating to Action's Bonds
Action Performance Companies Inc. (Nasdaq:ACTN), the leader in the
design, marketing, promotion, and distribution of licensed
motorsports merchandise, reported that it has completed the sale
of its Fantasy Sports operation for $4.2 million in cash as a part
of its ongoing restructuring strategy to streamline operations and
refocus on its core competencies in collectible die-cast race car
replicas, apparel, and other memorabilia.
Fantasy Sports operates Fantasy Cup Auto Racing through its Web
site at www.fantasycup.com.
Cash proceeds from the sale approximate the company's carrying
value of Fantasy Sports.
Commenting on the sale, David Martin, Action Performance CFO,
said, "This sale marks another important step for the company in
its efforts to improve its liquidity and focus on its core
business, which we believe holds more attractive potential for
sales growth and profitability."
Action Performance Companies Inc. is the leader in the design,
marketing, promotion, and distribution of licensed motorsports
merchandise. Its products include a broad range of motorsports-
related die-cast replica collectibles, apparel, souvenirs, and
other memorabilia.
The company markets and distributes products through a variety of
channels, including Racing Collectables Club of America(TM)
(RCCA), trackside at racing events, mass retail department stores,
and a worldwide network of wholesale distributors and specialty
dealers.
AMERICAN EQUITIES: Case Summary and 20 Largest Unsecured Creditors
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Debtor: American Equities Group, Inc.
80 East Route 4, Suite 202
Paramus, NJ 07652
Chapter 11 Petition Date: November 21, 2000
Court: Southern District of New York
Bankruptcy Case No.: 00-15487
Judge: Burton R. Lifland
Debtor's Counsel: Warren R. Graham, Esq.
Warshaw Burnstein Cohen Schlesinger & Kuh, LLP
555 Fifth Avenue
New York, NY 10017
(212) 984-7708
Fax : (212) 972-9150
Email: wbcsk@pipeline.com
Total Assets: $ 4,193,240
Total Debts: $ 4,600,978
20 Largest Unsecured Creditors
Private Bank and Trust Company
10 North Deerborn
Chicago, IL 60602 $735,000
Jeff and Virginia Carter
1146 Clipper Drive
Slidell, Louisiana 70458 $404,000
Whitney National Bank
Jeff and Virginia Carter
1146 Clipper Drive
Slidell, Louisiana 70458 $ 404,000
Retirement Accounts and Company, Inc. $ 200,000
Howard and Charles Gelber $ 150,000
Lorraine De Masi $ 125,000
Retirement Accounts and Company, Inc. $ 104,000
Resources Trust Company $ 100,000
Young Sop Pae $ 100,000
Resources Trust Company $ 100,000
Jeff and Virginia Carter $ 80,000
Virginia Carter $ 74,000
Retirement Accounts and Company $ 70,000
National Investors Corporation $ 52,000
Michael B. Coven $ 50,000
Manuel P. Blas, MD Retirement Trust $ 50,000
Janet C. Di Domenco $ 50,000
Resources Trust Company $ 50,000
First Midwest Trust $ 50,000
Revest LLC $ 50,000
Ignatius A. Leone $ 50,000
AMF BOWLING: Eliminates 100 Positions To Improve Performance
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*** 10.875% Notes due 2006 trade around 15.
*** Notes are in default at this time.
*** Many analysts speculate a bankruptcy filing is imminent
AMF Bowling Inc., Richmond Times-Dispatch reports, has begun
reorganizing its management and will eliminate 100 positions to
improve its performance. The announcement came right after NYSE
suspended trading the company's shares. Aside from that, SEC has
started investigation on the company's recent financial results.
The bowling center operates 408 centers in the United States and
119 overseas. AMF is the world's largest owner and operator of
bowling centers, with 408 centers in the United States and 119
overseas. It employs 17,000 people worldwide and about 900 in the
Richmond area. The company manufactures bowling equipment at a
plant in Hanover County.
AMRESCO, INC.: Jon Pettee Leaves Post as Executive Vice President
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AMRESCO, INC. (Nasdaq: AMMB) announced that Jon Pettee, Executive
Vice President and Chief Financial Officer, will resign to pursue
other interests effective December 31, 2000. Stephen Smith,
currently Treasurer of AMRESCO, INC. will be promoted to Executive
Vice President and Chief Financial Officer on that date.
Previously, Mr. Smith served as Chief Financial Officer of AMRESCO
Independence Funding, Inc., one of the Company's remaining
businesses units.
"Jon has been an integral part of the Company's turn around effort
over the last year and we have appreciated his experience and
commitment," said Randy Brown, Chairman & CEO, "Steve has helped
direct a significant amount of the Company's financial activities
in recent periods and should make a significant contribution going
forward."
AMRESCO, INC. is a small and middle market business lending
company. Based in Dallas, AMRESCO has offices nationwide. For more
information about AMRESCO, visit the website at www.amresco.com.
AMRESCO, INC: Third Quarter Results Reflect $18.4MM Net Loss
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AMRESCO, INC. (Nasdaq: AMMB) reported a net loss of $18.4 million
for the quarter ended September 30, 2000, or ($1.90) per basic and
diluted share.
Operating results for the quarter were reduced by, among other
items; (i) $27.0 million in write-downs on home equity retained
interests, (ii) $5.6 million in losses related to the sale of the
homebuilder finance assets and operations, (iii) a $3.8 million
loss on the sale of a commercial mortgage backed security, (iv)
$2.7 million in write-downs on commercial finance retained
interests in securitizations related to telephone equipment
finance loans and (v) a $2.5 million write-down of a real estate
asset. These losses were offset in part by $20.8 million in gains
from the securitizations of conventional business loans and small
business administration loans and a $3.5 million after tax gain on
repurchases of subordinated debt.
During the third quarter 2000, the Company repurchased $10 million
of its senior subordinated notes. The repurchase resulted in a
pre-tax gain of $5.7 million and an after tax gain of $3.5
million, which is reflected as an extraordinary gain in the
Company's third quarter financial statements. Through November 6,
2000, the Company utilized a substantial portion of its cash
position to repurchase an additional $183.7 million of senior
subordinated notes. These subsequent repurchases will result in
net pre-tax gains of $73.1 million, and net after tax gains of
approximately $45.3 million in the fourth quarter.
As of September 30, 2000, the Company had $1.1 billion in assets,
$853.5 million in liabilities and $270.0 million in shareholders'
equity. Tangible net worth (shareholders ' equity less intangible
assets) was $109.9 million at quarter end, or $10.95 per share.
"The sale of the assets and operations of the Company's
homebuilder finance division in September and October produced
cash of $148.7 million, which was a significant step in the
Company's strategic plan" said Randy Brown, the Company's new
Chairman and CEO. "The funds made available through the
homebuilder sale were used primarily to repurchase senior
subordinated notes. The Company anticipates holding a majority of
its current cash and cash equivalents position for future working
capital uses, loan repurchase obligations and other operating and
financing needs."
The Company has experienced significant losses during current and
prior quarters. A substantial portion of these losses resulted
from write-downs on retained interests in securitizations due to
increased default and loss severity on the underlying collateral.
The Company has also encountered deterioration of asset quality on
certain other owned asset classes resulting in increased charge
offs and provisions for loan losses during current and prior
quarters. Current performance trends indicate that additional
write-downs, charge offs and provisions may be necessary in future
periods.
BENTON OIL: Wasserstein Retained to Explore Alternatives
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*** 9.375% Notes due 2007 trade around 61.
*** Interest payments due May 1 and November 1
*** Moody's and S&P rate Notes at B3 & B
Benton Oil and Gas Company (NYSE:BNO) reported for the quarter
ended September 30, 2000 net income of $9.0 million ($0.29 per
share on a diluted basis) compared to a loss of $14.1 million
($0.48 per share on a diluted basis) for the quarter ended
September 30, 1999. Adjusted for extraordinary gains of $3.1
million on the repurchase of debt, net income for third quarter
2000 was $5.9 million ($0.19 per diluted share).
This compares to a net loss for the third quarter 1999 of $1.1
million ($0.04 per diluted share) adjusted for non-cash charges of
$13.0 million.
Revenues for the third quarter ended September 30, 2000 were $38.0
million compared to $24.6 million for the same quarter in 1999.
Oil sales for the third quarter were 2.4 million barrels, or 26.0
thousand barrels of oil per day, compared to 2.3 million barrels,
or 25.0 thousand barrels of oil per day in the year earlier
quarter. Oil prices realized in Venezuela, which are subject to an
operating services agreement, were $15.81 per barrel, compared to
$10.70 per barrel in the third quarter of 1999.
Cash flow from operations, before working capital changes, for the
quarter ended September 30, 2000 was $10.1 million ($0.33 per
diluted share) compared to $3.6 million ($0.12 per diluted share)
for the third quarter 1999. Earnings before interest, taxes,
depletion, depreciation and amortization ("EBITDA") for the period
ended September 30, 2000 was $22.2 million, compared to EBITDA of
$11.1 million for the third quarter 1999. Capital expenditures for
the period were $16.8 million, primarily related to the infill
drilling program in Venezuela, compared to $4.9 million last year.
Dr. Peter J. Hill, Benton's President and Chief Executive Officer,
said, "The improvements quarter-on-quarter and year-on-year are
encouraging. The Company continues to benefit from higher crude
prices, but now is also beginning to realize the benefits from its
efforts to achieve reductions in its cost structure and to improve
operating and capital efficiencies. Oil prices increased 48% from
last year's third quarter while our G&A has decreased by 15% over
the same period. We continue to attack costs to improve margins."
Dr. Hill also said, "The Company, with the full support of its
reconstituted Board of Directors, has adopted a comprehensive
business strategy. The strategy concentrates on two initiatives to
enhance shareholder value: restoring the Company's financial
flexibility and exploiting the Company's core assets. In
connection with these initiatives and the financial challenges it
faces, the Company has retained Wasserstein Perella & Co. as its
financial advisor to assist in analyzing financial alternatives,
with particular focus on strengthening the balance sheet. Many
options are being considered and analyzed, including, among
others, refinancings, alliances, cash purchases of debt at a
discount, asset disposals and debt for equity swaps. Their initial
report will be submitted to the Board later this month, and
integrated as part of the strategic plan."
Since the end of the third quarter, the Company has further
reduced its total debt outstanding by $4 million, having issued
1.4 million shares of common stock in a series of transactions to
holders of its 11-5/8% senior notes due 2003.
"The Company is already well advanced in further developing its
core assets," Dr. Hill continued. "In Venezuela, a major strategic
shift is being made to focus on maximizing the value of production
at its South Monagas Unit rather than increasing production at any
cost." As part of this shift, the Company, with the assistance of
alliance partner Schlumberger, is reviewing all aspects of
operations to integrate revised computer field simulation models
with improved completion technology. The goal will be a new and
more effective infill drilling and workover program that is
designed to deliver lower cost production in the second half of
2001. The Company believes there is significant upside to the
value of the remaining reserves in the Unit that is still to be
realized and optimized. In addition, discussions are underway with
PDVSA, the Venezuelan state oil and gas company, to sell gas from
the Unit, which could further enhance the value of the Company's
position in the South Monagas area.
"In Russia," Dr. Hill said, "the Company's operating strategy for
34%-owned Geoilbent is to continue to increase production, improve
drilling and completion efficiency and extend infrastructure."
Geoilbent remains self-funding, and is positioned to start
repaying its loans from the European Bank of Reconstruction and
Development and the International Moscow Bank in January 2001. Oil
sales included in the Company's third quarter results were 13,300
barrels of oil per day, compared to 11,500 barrels of oil per day
in the comparable period last year. At Arctic Gas (60%-owned), the
Company has been successfully expanding production of oil and
condensate through the recompletion of existing wells, gaining
operational experience and generating attractive cash flows. Oil
sales, which began in June, averaged just over 1,600 barrels of
oil per day in September 2000. The short-term strategy is to build
facilities and pipelines to optimize delivery of liquids and to
start production and sales of natural gas. The technical details,
scope of the pipeline links and access to the Gazprom
infrastructure have all been agreed upon. Combined with an
aggressive pursuit of gas contracts, this will demonstrate the
Company's capability to economically produce, deliver and market
hydrocarbons from the Arctic Gas license and to tap a portion of
its vast resource base.
Dr. Hill concluded, "When I joined the Company at the end of
August, I quickly came to appreciate the enormous resource base
and long-term potential of Benton's core assets and its dedicated
and skilled staff. As our financial and strategic initiatives come
to fruition, the Company should be able to reduce its financial
leverage and exploit the value of its unique, world class
projects. We believe this should result in greater values for all
of our stakeholders."
For the nine-month period ended September 30, 2000, the Company
reported net income of $11.7 million ($0.39 per diluted share)
compared to a loss of $30.3 million ($1.03 per diluted share) for
the period ended September 30, 1999. Adjusted for extraordinary
gains and non-cash charges, net income in 2000 was $9.7 million
($0.32 per diluted share) compared to net loss in 1999 of $16.0
million ($0.54 per diluted share).
Revenues for the nine-month period ended September 30, 2000 were
$101.5 million compared to $61.0 million for the year earlier
period. Oil sales for the nine-month period were 6.9 million
barrels, or 25.1 thousand barrels of oil per day, compared to 7.4
million barrels, or 27.1 thousand barrels of oil per day in the
year earlier period. The decrease is the result of the suspension
in Venezuela of drilling activity in 1999 and natural field
decline during the year. New production from the 2000 infill
drilling program did not commence until February. Oil prices
realized in Venezuela were $14.71 per barrel, compared to $8.25
per barrel in the corresponding period of 1999. Cash flow from
operations, before working capital changes, was $23.5 million
($0.78 per diluted share) as compared to negative $0.4 million
(negative $0.01 per diluted share). EBITDA for the nine-month
period ended September 30, 2000 was $57.8 million, compared to
$20.0 million for the same period in 1999. Capital expenditures
for the period were $40.1 million, compared to $29.4 million last
year.
Benton Oil and Gas Company, headquartered in Carpinteria,
California, is an independent oil and gas exploration and
development company with principal operations in Venezuela and
Russia. Additional information about the Company can be found at
the Company's web site: www.bentonoil.com.
BORDEN CHEMICALS: Closes Methanol Operations in Geismar, Louisiana
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Borden Chemicals and Plastics Limited Partnership (NYSE:BCU)
announced that it will close its methanol operations in Geismar,
Louisiana, effective in early January 2001. This will complete the
process of exiting all of the Partnership's non-vinyl based basic
chemical businesses, following the sale of its formaldehyde assets
and the closure of the nitrogen product facilities in July 2000.
The process for the Partnership to exit these businesses and focus
on its polyvinyl chloride resin operations was announced in June
2000. In July 2000, the Partnership completed the sale of its
formaldehyde assets and certain other assets to Borden Chemical,
Inc. (BCI), a separate entity which is a subsidiary of Borden,
Inc., for $48.5 million. As part of the agreement, BCI obtained an
option to acquire the methanol assets by year-end. BCI has
informed the Partnership that it has elected not to exercise its
option to acquire the assets.
The Partnership expects it will continue to operate the methanol
facility until early January 2001 to meet customer and operating
requirements and will shut down the facility at that time. The
Partnership said it expected to absorb most of the employees
involved with its methanol operations into its ongoing PVC
operations.
Borden Chemicals and Plastics Limited Partnership produces
polyvinyl chloride resins and intermediate raw materials at
facilities located in Geismar and Addis, La., and Illiopolis, Ill.
BCP Management, Inc., a wholly owned subsidiary of Borden, Inc.,
has a 2 percent interest and serves as general partner. Publicly
traded units account for the remaining 98 percent ownership.
CIGNA HEALTHCARE: S&P Assigns Bpi Financial Strength Rating
-----------------------------------------------------------
Standard & Poor's has assigned its single-'Bpi' financial strength
rating to CIGNA Healthcare of New Jersey Inc. (CIGNA New Jersey).
The rating reflects the company's weak capitalization and limited
business profile, given its single-state concentration, mitigated
somewhat by extremely strong earnings and liquidity.
CIGNA New Jersey, headquartered in Rockaway, N.J., is licensed and
operates in New Jersey. It is a wholly owned subsidiary of
Healthsource Inc., which is a wholly owned subsidiary of CIGNA
Health Corp., which is an indirect wholly owned subsidiary of
CIGNA Corp. (single-'A' counterparty credit rating).
Major Rating Factors:
-- CIGNA New Jersey's risk-based capitalization is weak, with a
capital adequacy ratio of 54.7% at year-end 1999, as
measured by Standard & Poor's model.
-- Earnings are extremely strong, with an earnings adequacy
ratio of 297% at year-end 1999, as measured by Standard &
Poor's model.
-- Liquidity is extremely strong, with a liquidity ratio of
502.2% at year-end 1999, as measured by Standard & Poor's
model.
CKE RESTAURANTS: Moody's Downgrades All Ratings & Outlook Negative
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*** 9.125% Notes due 2009 trade around 63.
*** Interest payments due November 1 and May 1
Moody's Investors Service downgraded all ratings of CKE
Restaurants, Inc. Ratings downgraded are as follows:
a) $282.0 million revolving credit facility to B2 from B1,
b) $200.0 million 9 1/8% senior subordinated notes to Caa1 from
B3,
c) $159.2 million 4 ¬% convertible subordinated notes to Caa2
from Caa1,
d) Senior implied to B2 from B1,
e) Issuer rating to B3 from B2.
The rating outlook is negative.
The rating downgrade was prompted by continued weakness in the
company's operations (particularly at the Hardee's restaurants),
ongoing deterioration at Hardee's without signs of a turnaround,
and the company's increasingly leveraged financial condition. The
Hardee's concept has not progressed since CKE purchased the brand
and 861 stores in July 1997 and 557 additional franchised stores
in April 1998. We believe that initiatives to improve operations
and to design appealing marketing programs have not yet proven
effective in connecting with potential consumers so a Hardee's
turnaround is not yet visible.
The ratings reflect the company's highly leveraged financial
condition and the limited availability on the company's bank
facility. Intense competition within the quick service segment of
the industry and aggressive marketing programs of several direct
competitors also negatively impact the ratings. The ratings
consider the poor restaurant operating margin at Hardee's, several
consecutive years of substantial comparable store sales declines
at Hardee's, and our expectation that, given CKE's constrained
liquidity position, the company will be hard pressed to make
substantial progress on the needed Hardee's remodel program.
However, the ratings recognize that CKE is the nation's fourth
largest operator of quick service hamburger restaurants, our
belief that both Hardee's and Carls Jr are well-recognized in
their respective regions, and management's reasonable progress at
meeting plans to sell 500 stores (mostly Hardee's) to franchisees.
Carls Jr's industry leading operating margins also support the
ratings.
The B2 rating on the revolving credit facility recognizes that the
collateral and structure of the facility would benefit the banks
in a distressed scenario. The facility is secured by the operating
stock of the company's operating subsidiaries, guaranteed by the
operating subsidiaries, and secured by the operating subsidiaries
non real estate assets. We note that the banks will permanently
reduce the facility as CKE must pay down the facility using asset
sale proceeds as a condition for receiving a covenant violation
waiver.
The Caa1 rating on the senior subordinated notes recognizes that
these notes are guaranteed by the company's operating
subsidiaries, but are contractually subordinated to the bank
facility. We expect that these notes would achieve substantial
recovery in a distressed scenario, but impairment is likely. The
Caa2 rating on the convertible subordinated notes considers that
these notes are structurally subordinated to all of the company's
other obligations since they are not guaranteed by the company's
subsidiaries. We anticipate that these subordinated notes would be
significantly impaired in a distressed scenario.
Besides the risks of operating a sizable company with a limited
liquidity cushion ($25 million in cash and $20 million of revolver
availability), the negative outlook considers the probable rating
consequences if a recovery in Hardee's operations (as measured by
restaurant operating margins and comparable store sales) or a
reversal in the leverage trend does not become apparent within the
next several months.
The company has announced its intention to sell Taco Bueno, the
125 store quick service Mexican food concept, to a group of
private investors for approximately $90 million. All proceeds will
be used to pay down the revolving credit facility and to
permanently reduce the facility. We believe that the level of
capital expenditures and managerial oversight required to
successfully grow the brand is no longer compatible with the
necessity of marshalling all resources for Hardee's. We recognize
that raising cash through the sale of marketable assets is
necessary given the company's current situation, but note that CKE
is walking away from a profitable concept with considerable
potential.
Besides selling Taco Bueno, the company is also taking additional
steps to increase liquidity. First, the company intends to sell to
franchisees a total of 500 restaurants (mostly Hardee's) before
January 2001. As of November 2000, the company has sold 366
company operated restaurants for $118 million. All proceeds were
used to pay down the revolving credit facility. Second, the
company has significantly reduced making capital investments in
the Star/Hardee's conversion program until the refranchising
strategy is complete. The Star/Hardee's program was designed to
remodel Hardee's restaurants and add popular Carl's Jr menu items
to the Hardee's menu.
Operating margins at all three concepts have decreased over the
past several years. Carls Jr's average restaurant margin of 21%
still leads the quick service hamburger industry but Hardee's
average margin of 7% trails every other hamburger concept measured
by Moody's. As a consequence, Carls Jr contributed 38% of CKE's
revenue and 71% of cash flow (as measured by EBITDA) for the
twelve months ending August 2000, a significant increase from 33%
of revenue and 40% of cash flow for Fiscal 1999. Taco Bueno also
achieves outstanding restaurant margins of 23%, but since it
contributes only 5% of the company's revenue, its impact is
relatively minor compared to Carls Jr and Hardee's.
Leverage has increased since the Hardee's acquisition with
adjusted debt to EBITDAR of 7.1 times for the twelve months ending
August 2000 compared to 6.1 times in January 2000 and 3.7 times in
January 1998. Interest coverage (EBITDA to interest expense)
declined to 2.4 times for the first two quarters of Fiscal 2001
versus 4.4 times for the corresponding period of Fiscal 2000,
while cash flow failed to cover interest expense and capital
expenditures in both periods. Going forward after completion of
the asset sale program and with limited availability on the bank
facility, we expect that cash from operations will just suffice to
cover interest payments and modest capital expenditures until
Hardee's performance becomes closer to industry norms.
CKE Restaurants Inc, headquartered in Anaheim, California,
operates or franchises 967 Carl's Jr and 2747 Hardee's quick
service hamburger restaurants.
COLE NATIONAL: Working on Turning Optical Revenues into Earnings
----------------------------------------------------------------
*** 8.625% Notes due 2007 trade around 65.
*** Interest payments due February 15 and August 15
Cole National Corporation (NYSE: CNJ), one of the nation's leading
retailers of optical services through Cole Vision Corporation and
personalized gifts through Things Remembered, today announced
results for the third quarter ended October 28, 2000.
Financial and Operating Highlights for the Quarter
* Revenues for the quarter rose to $ 255,950,000 as a result of
improvements in both the Company's optical and gift
businesses, which now operate from a total of 2,822 locations
throughout the U.S. and in Canada and the Caribbean.
* Chainwide comparable store sales for Pearle Vision were
positive for each month of the quarter and increased by 5.6%
during the period. Pearle's Focus Store initiative
contributed to this strong growth.
* The Company opened 45 Target Optical stores, bringing the
total number of Target Optical stores opened this year to 87.
There are now 117 Target Optical stores open.
Larry Pollock, President, commented, "In the third quarter, we
successfully continued the process of building a strong foundation
for Cole National's future business. We are particularly pleased
by the 6.4% increase in comparable store sales that Pearle's
company-owned stores achieved. Our Pearle Focus Store initiative,
which we introduced in August for 80 company- owned locations,
produced especially strong results. These stores received
additional investment in the areas of merchandise assortment,
inventory levels, doctor support, marketing and training to
enhance customer service, and their sales improved significantly
as a result. Our plan is to replicate this success by rolling out
the Focus Store program to approximately 100 additional stores
next year."
Mr. Pollock added, "Another area in which we saw improved
performance was the Target Optical segment of our Licensed Brands,
which operates in host stores. As a result of refinements in our
approach, opening sales for the new stores were higher than those
for units opened in the second quarter. Comparable store sales for
stores that have been open for a year or more also grew by 12%
during the third quarter."
Mr. Pollock continued, "While we have made progress, there is
still much work to be done to turn Target Optical's revenues into
earnings, to strengthen Pearle Vision's operations and to rebuild
shareholder value. We recently brought Michael C. McCauley, Senior
Vice President, on board to take charge of our Target Optical
business. Mike's extensive experience, including his previous
positions with Wal-Mart Optical's company stores and LensCrafters,
demonstrates his ability to successfully develop this brand. In
the fourth quarter of 2000, we will also be executing strategies
to achieve a healthy holiday sales season for Things Remembered.
Through a combination of expanded outreach to both Things
Remembered corporate and individual customers, focused
merchandising and value pricing, we expect a successful season
and, as a result, strong improvements in Cole National's fourth
quarter performance over last year."
Mr. Pollock concluded, "Finally, I am pleased to announce that
David Howard has joined Cole National as our Vice President and
Chief Information Officer. Dave most recently served as Senior
Vice President of Management Information Systems for the Zale
Corporation, and previously held senior positions with Marshall
Field's Department Stores, Roses Discount Stores, and SPORTMART.
He not only has extensive systems expertise, but also a strong
background in retail and distribution that will be very helpful to
Cole National as we move forward."
Financial Results
Revenues for the quarter rose to $255,950,000 from $251,165,000
last year as a result of improvements in both the Company's
optical and gift businesses, driven by total comparable store
sales increase of 3.5% for the quarter. Comparable store sales
increased by 6.4% for Pearle's company owned stores and by 5.0%
for franchise stores. Cole Licensed Brands, which includes Sears
Optical, B.J.'s Optical and Target Optical, experienced an
increase in comparable sales of 2.2% and Things Remembered
experienced an increase of 4.0%.
Overall gross margin improved to 67.4% from 65.4%, driven by
warehouse productivity improvement at Things Remembered and an
increase in the average spectacle retail in both optical retail
businesses, as well as revenue generated from the MetLife Vision
Care business the Company acquired in October 1999.
Operating expenses increased primarily as a result of incremental
expense associated with the MetLife acquisition, the expansion and
start-up costs of Target Optical and incremental retail payroll
expense in both of the optical businesses.
For the quarter, the Company experienced a net loss of $.04 per
share, as compared to a loss of $.19 per share in 1999, which
included severance charges of $.19 per share. The third quarter
2000 loss represents an improvement over the Company's previously
announced estimated per share loss in the range of $.06 to $.09.
At the end of the third quarter, the Company reassessed its
estimate of the annual effective tax rate for fiscal 2000
increasing the tax rate for the year to approximately 67%.
Nine month revenues totaled $ 778,384,000 as compared to
$772,566,000 last year. For the period, the Company experienced a
net loss per share of $.10 versus earnings of $.28 per share in
1999.
Cole National Corporation's vision business, together with Pearle
franchisees, has 2,028 locations in the US, Canada, Puerto Rico
and the Virgin Islands and includes Cole Managed Vision, one of
the largest managed vision care benefit providers to employers,
HMO's and other organizations. Cole's personalized gift business,
Things Remembered, serves customers through 794 locations
nationwide, catalogs, and the internet at www.thingsremembered.com
Cole also has a 22% stake in Pearle Europe, which has 628 optical
stores in the Netherlands, Belgium, Germany, Austria and Italy.
COMSTOCK: Poor Management Skills Lead to Bankruptcy Filing
----------------------------------------------------------
Employees of Reno, Nevada-based Comstock Hotel-Casino, which
recently filed for Chapter 11, knew something was wrong with the
company prior to the filing, The Associated Press reports. The
casino's closure came days after Comstock announced that it still
had 60 days before ceasing operations. Kathy Harvey states that
the hotel's Chapter 11 filing in the U.S. Bankruptcy Court was
handled the situation poorly by management. "They gave us no
notice. That's pretty sad," Ms. Harvey said. She has been working
as a cage cashier for 12 1/2 years and adds that the company could
have survived with better management. Comstock officials said that
they failed to operate after losing one-fourth of its workforce.
An investment group in Miami agreed to purchase the 308-room
property for $6 million and turn it into an apartment building and
condominium complex.
CONTIFINANCIAL: Confirmation Hearing Scheduled for Dec. 19
-----------------------------------------------------------------
The U.S. Bankruptcy Court approved ContiFinancial Corp.'s
Disclosure Statement related to its Plan of Reorganization, filed
September 13, 2000. The Court also scheduled a December 19th
confirmation hearing, with objections due December 13th. The
Company has been operating under Chapter 11 protection since May
17, 2000. (New Generation Research, Inc. 21-Nov-00)
COVAD COMM: Shareholder Class Action Suits Continue to Roll In
--------------------------------------------------------------
*** 12% Notes due 2010 trade around 41
*** Interest payments due February 15 and August 15
*** Moody's and S&P rate notes at B3 and B-
Gold Bennett Cera & 1Sidener LLP announced that it had filed a
class action in the United States District Court for the Northern
District of California, Case No. C-00-4293-BZ, on behalf of
purchasers of Covad Communications Group, Inc. ("Covad" or the
"Company") (Nasdaq: COVD) common stock during the period between
September 7, 2000 through November 14, 2000 (the "Class Period"),
including those who acquired Covad shares in connection with
Covad's acquisition of BlueStar Communications Group ("BlueStar"')
and those who acquired Covad convertible senior notes. Plaintiff
seeks to recover damages on behalf of all purchasers of Covad
securities during the Class Period.
The plaintiff is represented by the San Francisco law firm of Gold
Bennett Cera & Sidener LLP. For over 30 years, Gold Bennett Cera &
Sidener LLP and its predecessors have successfully engaged in
complex commercial litigation, including shareholder, consumer and
antitrust class actions, in federal and state courts throughout
the United States, recovering hundreds of millions of dollars for
its clients. Purchasers of Covad securities may visit the Firm's
website at http://www.gbcsf.comfor additional information.
The complaint charges Covad and certain of its officers and
directors with violations of the Securities Exchange Act of 1934.
The complaint alleges that defendants misrepresented the revenues
that Covad was deriving from its newly acquired BlueStar business,
which, together with defendants' false representations that Covad
would post Q3 2000 EPS of $(1.18) and revenues of $74.7 million,
operated to artificially inflate the price of Covad stock to a
Class Period high of $20.93 on September 11, 2000. This upsurge in
Covad's stock caused by defendants' alleged false and misleading
statements enabled Covad to complete a $500 million bond offering
and the $140 million stock-for-stock acquisition of BlueStar. On
October 17, 2000, 15 business days after the acquisition of
BlueStar was completed and just 18 business days after Covad
raised $500 million in a debt offering, Covad revealed that it was
in fact suffering a huge decline in revenues, was not posting
smaller negative EPS growth, and contrary to defendants' repeated
assurances, Covad was forced to reveal the problems it had been
experiencing during the Class Period in attempting to grow its
business. This announcement caused its stock price to drop to as
low as $3.50 (or over $5 per share) on record volume of 70 million
shares on October 18, 2000, causing hundreds of millions of
dollars in damages to members of the Class. Finally, on November
14, 2000, Covad announced that the Company would be adjusting its
previously announced third quarter 2000 financial results,
resulting in its stock price dropping over 20% on very high
trading volume.
Contact Joseph M. Barton, Esq. of Gold Bennett Cera & Sidener LLP,
595 Market Street, Suite 2300, San Francisco, California 94105, by
telephone at (800) 778-1822 or (415) 777-2230, by facsimile at
(415) 777-5189 or by e-mail at Covad@gbcsf.com for additional
information.
CROWN CORK: John W. Conway Succeeds William J. Avery as CEO
-----------------------------------------------------------
Crown Cork & Seal Company, Inc. (NYSE: CCK; Paris Bourse)
announced that William J. Avery has stated his intention to retire
as Chief Executive Officer of Crown on January 5, 2001. The Board
of Directors of Crown has elected John W. Conway, Crown's
President and Chief Operating Officer, to become Chief Executive
Officer at that time. Mr. Avery will remain as Chairman until the
next annual meeting of shareholders in April 2001 but has decided
not to stand for reelection to the Board of Directors at that
meeting.
Mr. Avery stated, "I had told our board some time ago that I did
not foresee working much past my 60th birthday last June, but that
I would stay on until my successor was ready. With John Conway's
experience and his leadership abilities so clearly demonstrated, I
think this is the time for me to step aside and let John and his
management team guide this great Company."
Mr. Avery has served Crown for over 41 years. He started with
Crown in 1959 as a management trainee in the Chicago plant, worked
in a number of sales and production positions, serving variously
as an Area Manufacturing Manager, Senior Vice President of Sales,
Chief Operating Officer and President along the way, and was
elected Chairman and Chief Executive Officer in 1990. Under his
leadership the Company grew from less than $2 billion in sales in
1989 to the world's largest packaging company today, with over $7
billion in annual sales.
John Conway has been with the Company for 24 years, including his
prior service with Continental Can Company, and has held numerous
management positions, both in the United States and abroad. He
joined the Company's Board of Directors in 1997 and was named
President and Chief Operating Officer in 1998. He is a member of
the Board of Directors of PPL Corporation and West Pharmaceutical
Company, Inc. He is a director of the Can Manufacturers Institute,
having also served as its Chairman, and of the National Food
Processors Association. He is a graduate of the University of
Virginia and Columbia University Law School.
Mr. Conway commented that, "Bill Avery has led and inspired us all
in seeing Crown through a time of great growth to become today the
world's largest company in our field. His vision and foresight
were exemplary. He saw where we needed to go and he took us there.
And he never forgot his sales and manufacturing roots at Crown --
he knew that business depended on customers and our ability to
fill their needs. I look forward to building on the great
foundation he has given us."
FAMILY GOLF: Executive Officers Leave Posts To Act as Consultants
-----------------------------------------------------------------
Seeking to improve its ailing financial state, Family Golf Centers
Inc., has retained the services of Zolfo Cooper Management LLC to
run the firm, Dow Jones reports. Chairman and CEO Dominic Chang
and COO Krishnan Thampi have agreed to leave their posts, and
awaiting court approval, would act as consultants till Dec. 31,
2001. According to the proposed agreement, Philip Gund of Zolfo
Cooper will be named chairman and CEO of Family Golf and Robert
Sundius will be the new chief financial officer.
Dow Jones added, The Melville, N.Y., operator of golf, ice skating
and family entertainment centers' May 4 Chapter 11 bankruptcy
petition listed $491.4 million in assets and $338.8 million in
liabilities.
FIELDS AIRCRAFT: California Court Confirms Reorganization Plan
--------------------------------------------------------------
Fields Aircraft Spares (OTC:FASIQ) announced that the United
States Bankruptcy Court for the Central District of California has
confirmed its Plan of Reorganization.
The confirmation was the last major hurdle to overcome for the
Company to emerge from bankruptcy, and it is now expected that
Fields will formally emerge prior to December 31, 2000.
The plan provides for $2.35 million of new debt and equity
financing from private investors. The private investors will
receive shares representing controlling interest in the
reorganized Company and 100% of the shares of Skylock Industries.
The existing shareholders will retain equity equal to between 5 to
10% of the reorganized company with the Company's Bondholders,
Unsecured Creditors and Employees retaining the balance.
Alan Fields, the company's CEO, stated, "The confirmation of our
plan by the court is a major milestone for our company, customers
and suppliers. Our customers can now be confident that Fields will
be here to provide the level of service and support that they have
depended on for the last 15 years.
"The new financing ensures that company has the financial
resources needed to continue to provide comprehensive Just-in-Time
support for many of the world's major airlines."
Fields Aircraft Spares, Inc., through its wholly owned
subsidiaries, is a leading distributor of aircraft cabin interior
replacement products and is a redistributor for a wide variety of
factory new parts applicable to the majority of commercial
aircraft models and manufacturers.
FREMONT GENERAL: Moody's Downgrades Senior Debt Rating to B2
------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of Fremont
General Corporation (senior debt to B2 from Ba3) and its insurance
operating subsidiaries (financial strength to B2 (Poor) from
Ba1(Questionable)). The rating on Fremont's trust preferred
securities was moved to "b3", while the rating on the company's
senior bank credit facility was withdrawn. The rating outlook is
considered to be developing, owing to the continued uncertainty
surrounding the consummation of the company's third-party
reinsurance arrangement for its property/casualty subsidiaries.
These rating actions reflect Moody's concern on several fronts,
including i) the weak financial position of its property/casualty
insurance subsidiaries; ii) continued uncertainty for the
appropriate 'run rate' combined ratio on current insurance
business; iii) recent aggressive growth and the above-average risk
profile of its primary source of earnings -- Fremont Investment
and Loan (FIL); iv) the ability to sustain the level of
profitability at FIL necessary to support the interest expense and
other cash uses at the parent holding company. These concerns are
mitigated, at least for the immediate term, by cash held at the
parent company and by the flow of tax proceeds from FIL to the
parent (where cash proceeds remain due to a NOL at the holding
company).
Expanding on its rating rationale, Moody's cited the $450 million
insurance reserve charge announced by Fremont in August, 2000 as
the initial impetus for its rating action. At that time, the
company's debt and financial strength ratings were downgraded and
left on review for possible further downgrade. Since that time,
the company has sought to conclude a reinsurance transaction which
would involve the transfer of loss reserves and support Fremont's
combined surplus. In the absence of such an agreement, Moody's
believes that Fremont's combined statutory surplus would be
insufficient to support the company's operating risks (including
loss reserve and ongoing premium writings). Various insurance
regulatory authorities have been active in reviewing the proposed
transaction since it was first announced. For these reasons, the
rating outlook is considered to be developing. However, Moody's
does not envision the transaction, as it is currently understood,
to support a higher financial strength rating. Operating trends in
workers compensation and management's track record will continue
to be rating considerations.
Moody's commented that Fremont Investment and Loan, which provides
primarily commercial and residential real estate lending funded by
retail deposits, has provided an expanding source of earnings for
the company. Presently, tax payments made by FIL to Fremont
General Corporation are an important source of cash for the parent
holding company. However, the recent rapid expansion in FIL's loan
portfolio as well as its exposure to the California economy and
the commercial real estate sector are rating concerns. Moody's
believes that the company's property/casualty operations are not
likely to provide any financial support to the parent in the near-
to-medium term. As a result, the debt ratings at the parent
company rest largely with Moody's view of the prospects for FIL,
tempered by the financial difficulties experienced by the
property/casualty operations.
The rating agency noted that Fremont General Corporation does not
have any immediate liquidity issues. The first tranche of the
company's senior debt does not mature until 2004, and parent
holding company maintained a liquid cash position of $63 million
at the end of the third quarter.
The following rating actions have been taken:
I) Fremont General Corporation
a) Senior unsecured debt downgraded to B2 from Ba3;
b) Senior bank credit facility rating withdrawn.
c) Subordinated debt to B3 from B2;
d) Trust preferred securities to "b3" from "b2";
II) Fremont Indemnity Company
a) insurance financial strength to B2 from Ba1;
III) Fremont Compensation Insurance Company
a) insurance financial strength to B2 from Ba1;
IV) Fremont Casualty Insurance Company
a) insurance financial strength to B2 from Ba1;
V) Fremont Industrial Indemnity Company
a) insurance financial strength to B2 from Ba1;
VI) Fremont Indemnity Company of the Northwest
a) insurance financial strength to B2 from Ba1;
VII) Fremont Employers Insurance Company
a) insurance financial strength to B2 from Ba1;
VIII) Fremont Pacific Insurance Company
a) insurance financial strength to B2 from Ba1;
Fremont General, based in Santa Monica, California, is engaged
through its subsidiaries in underwriting workers' compensation
insurance and in providing various financial products on a
nationwide basis. Fremont General's financial services businesses'
lending activities include residential and commercial real estate
lending and investing in senior and secured syndicated loans.
Fremont General reported a net year to date loss of $248 million
and shareholder's equity of $485 million at the end of the third
quarter 2000.
GENESIS MANUFACTURING: Seeks Investor/Buyer for Bail-Out
---------------------------------------------------------
Genesis Manufacturing Inc., based in Oldsmar, Florida, was forced
last month to file for protection under Chapter 11 and lay off 43
of its 140 employees, Electronic Buyers' News reports. President
Dick Owens said recently that he hopes to find an investor capable
of helping the contract electronics manufacturer pay its debts.
Owens declined to name the telecom firm that accounts for 60% of
Genesis' business. "Our largest customer ran out of money," Owens
said. "They had cash flow problems that became our problems."
Genesis is looking to Equity Partners Inc., a brokerage firm in
Wye Mills, Md., to help raise money. "We work with distressed
companies all the time," said Kenneth Mann, a partner at Equity
Partners. "The odds are Genesis will get an offer within 60 days."
Genesis operates out of a 26,200-sq.-ft. leased plant in Oldsmar,
only half of which is currently being used. The facility has two
continuous-flow SMT lines and two batch-assembly surface-mount
lines. The company lies within a 40-mile radius of larger CEMs and
several smaller counterparts that are scattered throughout
Hillsboro, Pinellas, and Pasco counties in the Tampa Bay area.
GENEVA STEEL: Utah Bankruptcy Court Confirms Reorganization Plan
----------------------------------------------------------------
Geneva Steel Company announced that its Plan of Reorganization was
confirmed by the United States Bankruptcy Court for the District
of Utah on November 21, 2000. The objective of the Plan is to
restructure the Company's balance sheet to (i) significantly
strengthen the Company's financial flexibility throughout the
business cycle; (ii) fund required capital expenditures and
working capital needs; and (iii) fulfill those obligations
necessary to facilitate emergence from Chapter 11. The Plan was
proposed jointly by the Company and the Official Committee of
Bondholders in the Company's Chapter 11 case. It was also
supported by the Official Committee of Unsecured Creditors.
When consummated, the Plan will significantly reduce the Company's
debt burden and provide additional liquidity. The Company's
prebankruptcy unsecured creditors will receive, in lieu of cash
payments, substantially all of the common stock of the Company and
the right to purchase convertible preferred stock. The elimination
of substantially all of the Company's prepetition debt will
significantly deleverage the Company. The prebankruptcy holders of
the Company's common and preferred stock will not receive a
distribution under the Plan.
The Plan involves new financings in the form of a $110 million
term loan that is guaranteed 85% by the United States government,
and a $125 million revolving line of credit. The Company will also
offer $25 million in convertible preferred stock to its unsecured
creditors. As a part of its amended plan, the Company will release
a standby purchaser for $10 million of the offering. The standby
purchaser for the remaining $15 million has informed the Company
that it believes it is released from its standby commitment.
Consequently, there can be no assurance that any proceeds will be
raised through the convertible preferred stock offering.
The Company, with Citicorp USA, filed an application on January
31, 2000, for a U.S. government loan guarantee under the Emergency
Steel Loan Guarantee Program. The application sought an 85%
guarantee for the $110 million term loan incorporated into the
Plan. The Emergency Steel Loan Guarantee Board extended an offer
of guarantee to Citicorp USA on June 30, 2000, which it has
recently confirmed.
The Plan remains subject to consummation, which involves financial
closings on the contemplated financings and the fulfillment of
other conditions. The Company expects to close the financings in
early December.
"We believe that the Plan will achieve our stated objectives and
position Geneva as a strong competitor. Although the Chapter 11
process has been difficult, it has allowed the Company to address
the financial issues that made us vulnerable to market
disruptions," said Joseph A. Cannon, chairman and chief executive
officer of the Company.
The Company is represented by the firms of Cadwalader, Wickersham
& Taft and LeBoeuf, Lamb, Greene & MacRae LLP, as bankruptcy
counsel, and The Blackstone Group, L.P., as financial advisor.
Confirmation doesn't mean everything's a done deal, Geneva
cautioned: "There can be no assurance at this time that the Plan
will be consummated, or that the Plan will achieve the objectives
described above. Similarly, there can be no assurance that the
financings contemplated by the Plan can actually be obtained on
terms favorable to the Company, or at all."
Geneva Steel is an integrated steel mill operating in Vineyard,
Utah. The Company manufactures steel plate, hot-rolled coil, pipe
and slabs for sale primarily in the Western and Central United
States.
GRAND UNION: C&S Closes Deal to Sell Stores in Vermont to Shaw
--------------------------------------------------------------
C&S Wholesale Grocers advanced the winning bid for 185 of 197
Grand Union Co. stores and offered $301.8 million, topping ten
bidders for the chain's assets. According to The Associated
Press, C&S (Grand Union's principal supplier and largest Creditor)
has now sold the 12 Grand Union grocery stores in Vermont and 6 in
Connecticut to Shaw's Supermarkets. "The stores that we are
acquiring, the soon-to-be former Grand Union stores, are very
desirable locations for us to continue our presence in the Vermont
area," Rogan said. Shaw's expects to receive an approval from
bankruptcy court to purchase the stores by the end of the month.
And the company probably won't begin taking possession of the
stores until January, he added.
Shaw's Supermarket Inc. was buying Grand Union stores located in
Poultney, Fair Haven, Middlebury, New port, South Burlington,
Montpelier, Ludlow, Wilmington, Stowe, Waitsfiedl, Bristol and
Randolph. According to Bernard Rogan, Shaw's spokesman that his
company had an interest in expanding in Vermont. And in West
Bridgewater, Mass., the regional supermarket chain operates large
grocery stores in Colchester and Berlin, another store in
Williston still under construction.
Grand Union filed for Chapter 11 Bankruptcy Petition in Newark,
New Jersey on October 30. The filing will enable the Company to
continue to conduct business as usual, provide service to its
customers and meet its commitments during the sale process.
HARNISCHFEGER: Summary of Significant Unresolved Claims
-------------------------------------------------------
Harnischfeger Industries, Inc., and its debtor-affiliates note in
their Joint Disclosure Statement that there are certain categories
of Disputed Claims are not yet resolved. Confirmation of the Joint
Plan is not conditioned on the resolution of these claims, but the
ultimate resolution may materially impact distributions from any
reserves or trusts established under the Joint Plan:
(A) Indemnified Claims
The Debtors are indemnified for certain Claims by entities to whom
the Debtors sold divisions or assets before the Petition Date.
Specifically, Terex Cranes, Inc. has indemnified the Debtors for
Claims related to mobile construction cranes. Morris Material
Handiing, Inc. and its affiliates have indemnified the Debtors for
Claims related to overhead industrial cranes and hoists. HK
Systems, Inc. has indemnified the Debtors for Claims relating to
automated material handling systems.
The Debtors believe that Terex and HK will comply with their
indemnification obligations. The Debtors will seek to have Terex
and HK pay for Claims indemnified by each respectively.
However, Morris filed for chapter 11 protection on May 17, 2000.
Consequently, Morris' ability and willingness to pay its
indemnification obligations is unknown at this time.
(B) Pension Claims
The Pension Benefit Guarantee Corporation and Laurie D. Wicks
filed certain contingent Claims against the Debtors for unfunded
benefit liabilities and minimum funding contributions that may be
due if the Debtors terminated their Qualified Pension Plans. The
Debtors believe these Claims will ultimately be expunged because
the Plan does not contemplate termination of any such Qualified
Pension Plan and all minimum funding requirements thereunder have
been satisfied.
(C) Directors' and Officers' Claims
Proofs of claim filed by the Debtors' directors and officers are
presently unliquidated, as they assert various claims that are
presently contingent, such as indemnification claims. If the Plan
is confirmed, then the directors and officers will be released of
the Released Claims, as specified in the Plan, the respective
indemnification claims will be accordingly disallowed and
all remaining portions of the Claims will be assumed by the New
Debtors and reclassified as Administrative Claims. If that part of
the Plan in connction with such release is modified, then the
Notes Holdback and the Liquidating Estate Claim Holdback will be
adjusted accordingly.
(D) L/C Claims
Various banks have asserted Claims against various Debtors with
respect to outstanding letters of credit in the aggregate amount
of approximately $385.3 million. Approximately $27.4 million of
such letters of credit have since been drawn since the Petition
Date and have become liquidated fixed claim (with the possible
exception of a disputed $3.3 million item). Approximately $67.8
million of such letters of credit have since expired by their own
terms or have been returned for cancellation. In addition,
approximately $124.9 million of such Claims have been expunged
after hearing.
Further objections to such Claims in the aggregate amount of
approximately $75.2 million are pending. If all such objections
aregranted, there will remain contingent Claims based on
outstanding letters of credit of approximately $89.9 million. The
Debtors estimate that approximately $23.5 million of the remaining
Claims based on letters of credit may become fixed and liquidated
before the Plan is confirmed.
Although some of these Claims were filed against Joy, P&H and/or
Beloit, the Debtors contend that all such Claims are properly
assertable against HII, and should be expunged visa-vis Joy, P&H
and/or Beloit.
(E) Environmental
The Reorganizing Debtors may be liable on account of certain
environmental claims, and these Claims may not be resolved.
(F) Asbestos
Although historically, the Debtors' liability for asbestos-related
claims has been insignificant, and, in most cases, covered by
insurance, the future liability for asbestos related Claims cannot
be predicted with certainty.
(G) Morris Claims
Morris and its affiliates have asserted more than 200 Claims
against the Debtors. Most of these Claims are duplicative, and the
liquidated claimed amount is approximately $500,000. However, all
Claims assert additional unliquidated amounts. In addition, Morris
has advised the Debtors that it may assert additional claims
against one or more of the Debtors relating to the voidability of
the transactions in which Morris and certain of its affiliates
purchased the Material Handling Equipment business from P&H and
certain of its affiliates in March 1998 for approximately $340
million.
(H) Retiree Litigation
In 1993, HII approved and announced a program that resulted in the
elimination of all company-subsidized contributions towards post-
retirement health care coverage, effective January 1, 1999 for
several thousand retirees.
Additionally, increases in costs paid by HII were capped for
certain health benefit plans beginning in 1994 extending through
199S.
Certain retirees have challenged the elimination of company-
subsidized contributions effective January 1, 1999. Litigation is
pending in the United States District Court for the Eastern
District of Wisconsin. The plaintiffs have tendered a settlement
offer that has not been accepted by the Debtors. (Harnischfeger
Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
J.C. PENNEY: Reports $30MM Net Loss in Third Quarter
----------------------------------------------------
J.C. Penney Company, Inc. (NYSE: JCP) reported a loss of $0.12 per
share, before the effects of non-comparable items, for the third
quarter ended October 28, 2000. Including these non-comparable
items the net loss was $30 million, or $0.15 per share, compared
with net income of $142 million, or $0.51 per share, in last
year's third quarter.
JCPenney Stores and Catalog
Operating profit totaled $81 million for the quarter compared with
$226 million last year. Department store sales declined 3.7
percent for comparable stores, those open at least one year.
Catalog sales decreased 5.4 percent from last year's period. E-
commerce sales, which are included as a component of Catalog
sales, totaled $73 million this quarter, compared with $20 million
last year. Gross margin declined principally as a result of higher
levels of markdowns associated with clearance activities. SG&A
expense dollars declined for the third quarter.
Eckerd Drugstores
Eckerd reported an operating loss of $63 million for the quarter
compared with operating profit of $23 million in 1999. Drugstore
sales increased 9.1 percent on a comparable store basis, comprised
of a 14.8 percent increase in pharmacy sales and a 1.0 percent
decrease in general merchandise sales. Gross margin was impacted
by declines in higher-margin general merchandise sales and an
increased proportion of lower-margin managed care pharmacy sales.
SG&A expenses increased principally as a result of higher expense
levels associated with new and relocated stores.
Direct Marketing
Operating profit for the direct marketing business was $65 million
compared with $64 million in last year's third quarter. Revenue
was $288 million, an increase of 2.1 percent.
Corporate and Other Unallocated
Corporate and other unallocated consists of real estate and
investment gains and losses and other items that are not included
in the results of the operating segments. Corporate and other
unallocated in this year's third quarter includes non-comparable
pre-tax expenses of $15 million related to the restructuring of
the Company's merchandising processes and organization.
J. C. Penney Company, Inc. is one of America's largest department
store, drugstore, catalog, and e-commerce retailers, employing
more than 290,000 associates. The Company operates approximately
1,100 JCPenney department stores in all 50 states, Puerto Rico,
and Mexico. In addition, the Company operates 48 Renner department
stores in Brazil. Eckerd operates over 2,600 drugstores located
throughout the Southeast, Sunbelt and Northeast regions of the
United States. JCPenney Catalog, including e-commerce, is the
nation's largest catalog merchant of general merchandise. J.C.
Penney Direct Marketing Services, Inc. markets insurance products
and membership services to various credit card customers by direct
response solicitations primarily in the United States and Canada.
In addition, J. C. Penney Company, Inc. is the sponsor of JCPenney
Afterschool, a partnership committed to providing kids with high-
quality afterschool programs to help them reach their full
potential.
LOEWS CINEPLEX: Banks Extend Covenant Waiver Until Dec. 8
---------------------------------------------------------
*** 8.875% Notes trading around 19 to 20
*** Interest payments due February 1 and August 1
*** Moody's and S&P rate Notes at C and CC
Loews Cineplex Entertainment Corporation (NYSE:LCP; TSE:LCX)
announced that it has entered into an agreement with the syndicate
banks that provide funding to the Company under its Senior Secured
Revolving Credit Facility to extend from November 24, 2000 through
December 8, 2000 the waiver of compliance with various financial
covenants under the Credit Facility.
Under the modified terms, the Company will continue to have access
to funds under the Credit Facility to meet its anticipated
financial obligations during the waiver period. In addition, the
waiver provides that the interest rate for those borrowings under
the Credit Facility that are subject to the LIBOR option, which
are $705 million as of this date, will increase by 1% to LIBOR
plus 3 1/2 %.
During the waiver period, the Company and its lending group will
continue discussions in order to address the Company's long-term
liquidity needs beyond this period. There can, of course, be no
assurance that the Company will be able to reach such an agreement
with its lenders. If the Company is unsuccessful in its
negotiations, the banks could accelerate the maturity of these
loans and the Company could face the prospect of a restructuring
under bankruptcy proceedings.
Loews Cineplex Entertainment Corporation is one of the world's
largest publicly traded theatre exhibition company in terms of
revenues and operating cash flow, with 2,960 screens in 376
locations primarily in major cities throughout the United States,
Canada, Europe and Asia. Loews Cineplex's divisions include Loews
Cineplex United States, Cineplex Odeon Canada and Loews Cineplex
International. Loews Cineplex operates theatres under the Loews,
Sony, Cineplex Odeon and Europlex names. In addition, the Company
is a partner in Magic Johnson Theatres and Star Theatres in the
U.S., Yelmo Cineplex of Spain, De Laurentiis Cineplex in Italy,
Odeon Cineplex in Turkey and Megabox Cineplex of Korea.
LORAL SPACE: Moody's Places Debt Ratings on Review for Downgrade
----------------------------------------------------------------
Moody's Investors Service placed the debt ratings of Loral Space &
Communications on review for possible downgrade. Also placed on
review for possible downgrade are the ratings of Orion Network
Systems, a 100% owned subsidiary of Loral, and the ratings of
Globalstar, LP.
Moody's notes that the operating performance of Globalstar has
failed to meet expectations. Thus while the transfer of $500
million of bank debt from Globalstar to Loral, benefits Globalstar
by removing the debt service and accompanying financial covenants
associated with this bank credit, at its current pace Globalstar
will not be able to continue to service its remaining debt
obligations without a significant capital infusion by the first
half of next year. The assumption of this fully drawn $500 million
credit facility by Loral places additional debt burden on Loral
whose financial performance has not been meeting Moody's
expectations since we changed the ratings outlook on the Loral and
Orion bonds to negative in June of last year.
In resolving this review, Moody's will meet with management to
assess the steps being taken to improve profitability at Loral and
its affiliates, and to strengthen the consolidated balance sheet
of the company.
The ratings on review for possible downgrade are:
A) Loral Space & Communications Ltd.
a) Senior ImpliedBa3
b) 9.5% Senior Notes due 2006B1
c) 6% Conv. Preferred Stock Series C & D"b3"
B) Orion Network Systems, Inc. (aka Loral Cyberstar, Inc.)
a) 11.25% Senior Notes due 2007B2
b) 12.5% Senior Discount Notes due 2007B2
C) Globalstar, LP
a) Senior Implied Rating Caa1
b) $500 Million Secured Bank Credit Ba3 (transferred to
Loral)
c) 11.375% Senior Notes due 2004Caa1
d) 11.25% Senior Notes due 2004Caa1
e) 10.75% Senior Notes due 2004Caa1
f) 11.5% Senior Notes due 2005Caa1
Loral Space & Communications Ltd., is a leading satellite
communications company with interests in the design, manufacture,
and operation of satellite systems. Loral owns approximately 45%
of Globalstar, a satellite-based mobile telephony project.
MEDICAL RESOURCES: Court Approves Debtor's Disclosure Statement
---------------------------------------------------------------
Medical Resources, Inc. (OTC Bulletin Board: MRIIQ) announced that
the United States Bankruptcy Court has approved the Company's
Disclosure Statement describing its proposed Plan of
Reorganization. The Disclosure Statement is currently being
distributed to the Company's creditors who are entitled to vote
on the Plan of Reorganization, and a Confirmation Hearing has been
set for January 11, 2001 to approve the Plan. Commenting on the
approval of the Disclosure Statement and the upcoming Confirmation
Hearing, Christopher J. Joyce, the Company's Co-Chief Executive
Officer, said "We are very pleased by these events and the
progress the Company has made in its reorganization. Given
the overwhelming support of the Plan of Reorganization by our
lenders, we believe the Plan will be approved at the Confirmation
Hearing, and the Company will emerge from Chapter 11 shortly
thereafter."
Medical Resources specializes in the ownership, operation and
management of fixed-site outpatient medical diagnostic imaging
centers. The Company operates 70 imaging centers in the United
States and provides network management services to managed care
organizations in regions where its centers are concentrated.
MICROAGE INC: Inks Agreement with UPS to Sell Assets for $11.5MM
----------------------------------------------------------------
MicroAge Inc. Tuesday announced a definitive agreement to sell the
assets of its MicroAge Teleservices business to UPS
Telecommunications Inc., a subsidiary of United Parcel Service
(UPS).
Under the agreement, UPS Telecommunications will pay MicroAge Inc.
$11.5 million for the assets of Teleservices. MicroAge
Teleservices supplies its clients with a wide range of inbound and
outbound call center services, including technical support
services. UPS is the company's primary client for customer
technical call center services.
The agreement was approved by the Court today, and the sale is
expected to close within one week.
MicroAge Chairman and Chief Executive Officer Jeffrey D. McKeever
stated, "We believe today's action is in the best interests of
MicroAge Inc., MicroAge Teleservices and its customers, and
MicroAge associates. The sale paves the way for MicroAge
Teleservices to move forward and capitalize on its individual
strengths in combination with the capabilities of UPS.
"In addition, MicroAge Inc. has obtained maximum value for
MicroAge Teleservices, taken a key step toward fulfillment of its
restructuring initiatives and moved toward the goal of providing a
better recovery in the company's voluntary Chapter 11 case."
MicroAge and certain of its subsidiaries filed voluntary petitions
for reorganization under Chapter 11 of the Bankruptcy Code on
April 13, 2000. MicroAge Teleservices, originally excluded from
the filing, filed a voluntary Chapter 11 petition on Sept. 29,
2000 in order to facilitate the sale of its business.
About UPS
United Parcel Service is the world's largest express carrier and
package delivery company, offering an unmatched array of service
options to more than 200 countries and territories. Based in
Atlanta, UPS employs more than 344,000 people worldwide, delivers
more than 3.28 billion packages and documents yearly, and earned
revenues of $27.1 billion in 1999.
UPS has invested more than $12 billion in its extensive technology
infrastructure, maintains one of the world's largest databases,
and has won two Computerworld Smithsonian awards for technology
leadership and innovation. For more information, visit the UPS web
site at www.ups.com.
About MicroAge Inc.
MicroAge Inc. provides B2B technology solutions and infrastructure
services. The corporation is composed of information technology
businesses, delivering ISO 9001-certified, multi-vendor
integration services and solutions to large organizations and
computer resellers.
The company does business in more than 20 countries and offers
over 250,000 products from more than 1,000 suppliers backed by a
suite of technical, financial, logistics and account management
services. More information about MicroAge is available at
www.microage.com.
NEVADA BOB'S: Ozer Group Retained to Sell 36 Stores
---------------------------------------------------
The Bankruptcy Court in Fort Worth, Texas, approved the sale of 36
Nevada Bob's company-owned stores in transactions orchestrated by
The Ozer Group of Needham, Mass. Ozer had been retained by Nevada
Bob's Golf Inc., earlier this month to act as its restructuring
consultant and its agent to sell all or part of the Company's
store-level assets in connection with Nevada Bob's recently filed
Chapter 11 case. Yesterday's Bankruptcy Court approval represented
a major step in Nevada Bob's plans.
The transactions approved yesterday included 17 of the 36 stores
being sold to Texas- Tri-Capital Ventures, headed by Mark
Gunderson. Mark Gunderson is the founder of Alien Golf, which had
been acquired by Nevada Bob's several years ago. Another 19 stores
were sold to California-based New Golf Holding Company, headed by
Richard Oldenburg. Oldenburg is the founder of Orlimar Golf, which
makes and markets the popular TriMetal woods. As part of both
transactions, the buyers have received the right to use the Nevada
Bob's Golf name.
"There is still quite a bit of work to do. However, we are
satisfied that these transactions will help position the company
for emergence from bankruptcy as a franchiser and not a store
operator" said David Peress, Managing Director and General Counsel
of The Ozer Group. "There remain more stores to sell in the U.S.
and Canada and the Company and The Ozer Group continue to look for
buyers."
Nevada Bob's system of company-owned and franchised golf specialty
retail stores is the largest in the world. At the commencement of
its Chapter 11 case and related CCAA proceeding in Canada, the
Company operated 82 corporate and was franchiser of 108 franchise
locations around the world.
Based on research performed by independent consultants, the Nevada
Bob's brand is easily the most recognized retail name in the golf
business today. Nevada Bob's Golf stores offer a full line of golf
products and accessories including clubs, balls, bags, footwear,
various accessories, and apparel which include brands such as
Titleist, Callaway, Taylor Made, Spalding, Cleveland, Maxfli,
Alien, Adams, Orlimar, MacGregor, Mizuno, Hogan, Footjoy, Tommy
Armour, Cobra, and Wilson.
In addition to its retail operations, Nevada Bob's manufactures
and distributes golf products and accessories through its Alien
Sport brand. The original Alien Ultimate Wedge was one of the most
successful specialty clubs ever made and is one of the primary
reasons the Alien brand has remained strong in the golf industry
for several years.
Based in Needham, Mass., The Ozer Group is one of the country's
leading retail consulting, business evaluation and asset
disposition firms. Ozer is quick, flexible and creative in
offering solutions to retailers of all sizes throughout North
America and Europe. In addition to helping companies maximize
realization for their assets, Ozer manages human resources issues,
real estate relationships and other critical areas that are
affected when companies undergo change. Ozer's management and
partners are retailers who have managed thousands of stores and
billions of dollars in inventory. Ozer's partners are directly
involved in every project. To learn more about The Ozer Group,
visit www.ozer.com.
OWENS CORNING: Employs Skadden Arps as Bankruptcy Counsel
---------------------------------------------------------
Owens Corning and its debtor-affiliates sought and obtained Judge
Walrath`s approval to employ Skadden, Arps, Slate, Meagher & Flom
LLP and its affiliated law practice entities as their principal
reorganization counsel to prosecute these cases under Chapter 11
of the Bankruptcy Code. Mark S. Chehi, Esq., leads the engagement
from Skadden's Wilmington Delaware office. He will be
assisted by Peter J. Neckles, Esq., who will coordinate the firm's
representation of the Debtors, David S. Kurtz, Esq., who will
coordinate the restructuring department's involvement in these
cases, and other members of the firm.
Specifically, Skadden will:
(a) Advise the Debtors with respect to their powers and duties as
debtors and debtors-in-possession in the continued management
and operation of their businesses and properties;
(b) Attend meetings and negotiate with representatives of
creditors and other parties in interest and advise and consult
on the conduct of the cases, including all of the legal and
administrative requirements of operating in chapter 11;
(c) Take all necessary action to protect and preserve the Debtors'
estates, including the prosecution of actions on their behalf,
the defense of any actions commenced against those estates,
negotiations concerning all litigation in which the Debtors
may be involved, and resolution of objections to claims filed
against the estates;
(d) Prepare on behalf of the Debtors all motions, applications,
answers, orders, reports and papers necessary to the
administration of the estates;
(e) Negotiate and prepare on the Debtors' behalf plan(s) of
reorganization, disclosure statement(s) and all related
agreements and/or documents, and take any necessary action on
behalf of the Debtors to obtain confirmation of such plan(s);
(f) Advise the Debtors in connection with any sale of assets;
(g) Appear before the Bankruptcy Court, any appellate courts, and
the United States Trustee, and protect the interests of the
Debtors' estates before such courts and the United States
Trustee; and
(h) Perform all other necessary legal services and provide all
other necessary legal advice to the Debtors in connection with
these Chapter 11 cases.
Under an Engagement Agreement dated as of December 9, 1999, Owens
Corning retained Skadden, Arps prior to commencement of the
bankruptcy cases to, among other things, provide strategic,
corporate and general advice, other than any advice with respect
to any personal injury or property damage asbestos litigation, or
any litigation in which Owens Corning sought contribution,
indemnity or other reimbursement or recovery from any person
or entity arising from Owens Corning's asbestos litigation. At
that time, Skadden Arps disclosed its prior representation of
various clients, and in particular, Metropolitan Life Insurance
Company in its past, present, and future asbestos litigation
matters, for which a waiver of conflicts of interest might be
required. Owens Corning agreed that it would not, for itself or
any other party, assert Skadden's prior representation or the
existing representation of Owens Corning as a basis for
disqualifying Skadden from representing another party in any
Permitted Adverse Representation, or assert any Permitted Adverse
Representation as a basis for any claim of breach of duty. The
Permitted Adverse Representation includes, without limitation,
representation of a client over which Owens Corning might be
seeking to acquire influence or control, or from which Owens
Corning might wish to buy assets, and representation of a client
regarding its interest at the time in acquiring influence or
control over an entity in which Owens Corning then had or has a
similar interest. In the event that Skadden determines that its
continued representation of Owens Corning became incompatible with
its continued representation of MetLife, Skadden would continue to
represent MetLife and would withdraw from its representation of
Owens Corning.
By an Engagement Agreement dated as of October 2, 2000, various
Owens Corning subsidiaries retained Skadden, Arps under a
supplement to the December 1999 Engagement Agreement. The
Engagement was expanded to include advice to and representation of
Owens Corning and its affiliates in preparation for filing cases
under Chapter 11 of the Bankruptcy Code and as the debtors and
debtors-in-possession in the cases, and service in the cases as
principal reorganization counsel. In addition to the above, post-
petition services include all out-of-court planning and
negotiations.
In the event that the Bankruptcy Court does not approve some items
proposed within the scope of Skadden's representation of the
Debtors as general bankruptcy counsel, Skadden would continue to
render services on as many matters as are approved, but in no
event would Skadden undertake any representation of the Debtors in
any asbestos-related personal injury litigation, or any litigation
with any other entity, such as tobacco companies, for
reimbursement or contribution on account of the Debtors'
losses relating to asbestos personal injury claims. Skadden
further does not provide certain kinds of fact-intensive opinion
letters in connection with restructuring and bankruptcy
reorganization cases to clients or any others who may wish to rely
upon such letters.
In the one-year period prior to the Petition Dates, Skadden
received a retainer of $750,000, which was applied in August 2000
to services and expenses in the amount of $742,842. On September
29, 2000, the Debtors paid Skadden an additional $2 million on
account of professional services rendered and expenses charged by
Skadden, and for future services and expenses to be rendered and
incurred, so that the Debtors had a credit balance in their
retainer account of $2,007,158. Skadden then applied an
additional $678,676 from the retainer account to payment of
prepetition fees and charges, leaving $1,328,482 on retainer. On
October 4, 2000, Skadden applied $450,203 to prepetition services
posted as of October 4, 2000, and the Debtors paid Skadden an
additional $1,121,721 for professional services rendered and
expenses charged by Skadden and for future services in connection
with the chapter 11 cases, leaving a balance of $2,000,000 in the
retainer account. In addition, the Debtors paid Skadden $18,260 to
be applied to the filing fees for the chapter 11 petitions, of
which $14,940 was actually paid in filing fees. Skadden thus
received a total pre-petition compensation and expense
reimbursement of $1,871,721, and has a retainer of $2,003,320.
For services rendered in these chapter 11 cases, Skadden will bill
using its bundled rate structure at hourly rates:
Partners $445 to $670
Counsel and associates $230 to $415
Legal assistants $80 to $160
and will seek reimbursement of its expenses for such matters as
on-line research services, travel, photocopying, electronic
communications, postage, courier services, meals, filing fees,
transcription fees, and other out-of-pocket disbursements.
The hourly fee amounts are subject to periodic increases in the
normal course of the firm's business, often due to the increased
experience of a particular professional.
Mr. Chehi discloses that Skadden has represented, or is
representing, certain creditors of the Debtors in matters
unrelated to the Debtors, the Debtors' reorganization cases, or
such entities' claims against or interests in the Debtors. In
particular, Skadden discloses it has or is representing the
Debtors' Prepetition Bank Agent, Credit Suisse First Boston;
certain prepetition lenders, including Bank of America,
NationsBank, Bank of New York, and others, and that certain of
Skadden's attorneys are directors of certain of the prepetition
lenders or affiliates of prepetition lenders; the Debtors-in-
Possession Bank Agent, Bank of America; other lenders such as The
Chuo Mitsui Trust & Banking Company and Union Bank of California;
certain lessors of the Debtors, certain indenture trustees of
identified securities of the Debtors, and other prepetition
creditors of the Debtors such as Enron Energy Services, Exxon
Corporation, International Paper. (Owens-Corning Bankruptcy News,
Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PARAMOUNT CARE: S&P Affirms Bpi Financial Strength Rating
---------------------------------------------------------
Standard & Poor's has affirmed its single-'Bpi' financial strength
rating on Paramount Care, Inc. (PCI).
The rating affirmation reflects the health maintenance
organization's weak risk-based capitalization and earnings, offset
by good liquidity and strong business position. The rating is also
based on implicit support from the parent, ProMedica Health
System.
PCI, headquartered in Maumee, Ohio, is a wholly owned subsidiary
of Paramount Preferred Options Corp. (PPO Corp.), which is 80%
owned by Promedica Insurance Corp.(PIC), which is a wholly owned
subsidiary of ProMedica Health System. Health Alliance Plan of
Michigan owns 20% of PPO Corp.
Major Rating Factors:
-- PCI's risk-based capitalization is very weak, reflected by a
capital adequacy ratio of 27.7% at year-end 1999 as
measured by Standard & Poor's model.
-- The company's operating performance has been weak, with net
losses of $5.8 million in 1999 and $4 million in 1998. PCI
has experienced losses since year-end 1997.
-- Liquidity is good, with a liquidity ratio of 117.8%, as
measured by Standard & Poor's model.
PLAINWELL INC: Files for Bankruptcy Reorganization in Wilmington
----------------------------------------------------------------
PLAINWELL INC., a specialty paper and tissue manufacturer,
announced that it has filed a voluntary petition for
reorganization under Chapter 11 of the United States Bankruptcy
Code.
The petition was filed with the United States Bankruptcy Court in
Wilmington, Del. Under Chapter 11, PLAINWELL INC. is able to
continue to conduct business in the ordinary course while it
devotes efforts to implement a reorganization plan.
"We want to assure our customers that we are dedicated to serving
their needs today while we strengthen our ability to provide them
with high-quality products well into the future," said Gary A.
Hayden, president and chief operating officer of PLAINWELL INC.
"Protecting customer interests and providing them with exceptional
customer service has been and remains one of our top priorities."
Along with its Chapter 11 petition, PLAINWELL INC. immediately
sought preliminary court approval for a new $55 million debtor-in-
possession (DIP) financing facility to be provided by Congress
Financial Corp. The new facility will provide an immediate source
of funds to the company, enabling it to satisfy the customary
obligations associated with the daily ongoing operation of its
businesses.
Hayden stated that significant debt interest obligations, rising
raw material and energy costs in both of the core businesses,
along with market resistance to offsetting price increases in its
specialty paper division, have had a negative impact on profit
margins.
"We already have taken appropriate steps to focus corporate
management on our core assets, and to focus on our business at the
divisional level," Hayden said. "In addition to corporate
reductions and the recent closure of the Michigan specialty papers
mill, we remain dedicated to those actions we believe necessary to
make us profitable in the future, including an immediate need to
restructure the balance sheet of the company.
"Once we have completed the reorganization process, we expect
Plainwell to emerge as a stronger company with a sound financial
structure that is appropriate not only for today's level of
business activity, but also for the future," he said. "The
decision to file for Chapter 11 protection was difficult, but
necessary in order to protect our ability to meet our obligations
to our customers."
PLAINWELL INC: Case Summary and 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Plainwell Inc., a Delaware Corporation
1270 Northland Drive, Suite 300
Minneapolis, MN 55124
Type of Business: Paper manufacturing and converting.
Chapter 11 Petition Date: November 21, 2000
Court: District of Delaware
Bankruptcy Case No.: 00-04350
Debtor's Counsel: Laura Davis Jones, Esq.
Pachulski, Stang, Zlehl, Young & Jones PC
919 North Market Street, 16th Floor
P.O. Box 8705
Wilmington, DE 1999-8705
Total Assets: $ 217,901,000
Total Debts : $ 232,201,000
20 Largest Unsecured Creditors
Scudder Kemper Investments
Sharon Tepper
222 South Riverside Plaza
Chicago, IL 60606-5808
Fax:(312) 537-8335 Bond Debt $ 36,150,000
Alliance Capital
Management L.P.
Kate Kutasi
1345 Avenue of the
Americas 41st Floor
New York, NY 10105
(212) 969-1000
Fax:(212) 969-6820 Bond Debt $ 34,500,000
Grandview Capital
Management, LLC
James Lisko
820 Manhattan Avenue,
Suite 200
Manhattan Beach, CA 90268
Fax:(310) 376-1274 Bond Debt $ 22,000,000
First Citizens Bank
Trust SVCS
David Klimzak
100 East Tyron Road
Raleigh, NC 27603
(919) 755-7422 Industrial Revenue
Fax:(919) 716-2025 Bond Debt $ 18,000,000
Sunamerica
Jeff Baxter
1999 Avenue of the Stars
37th Floor exact amt unknown
Los Angeles, CA 90067-6022 in excess of
(310) 772-6000 Bond Debt $ 5,000,000
The Bank of New York
Michael White
101 Barclay St.
New York, NY 10286
(212) 815-4813 Industrial Revenue
Fax:(212) 815-5096 Bond Debt $ 3,500,000
Crystal Print Inc.
Dan Gavronski
P.O. Box 733
Appleton, WI 54912
(920) 789-9135
Fax:(920) 739-9130 Trade Debt $ 1,547,094
Northern States Power
P.O. Box 1147
Eau Claire, WI 54702-1147
(800) 481-4700
Fax:(800) 895-2895 Trade Debt $ 1,023,575
PG Energy
One PEI Center
Wilkes-Barre, PA 18711
(570) 829-3461
Fax:(570) 829-8736 Trade Debt $ 601,898
Longview Fibre
5851 East River Road
Minneapolis, MN 55440
(612) 612-865-2487
Fax:(518) 842-2605 Trade Debt $ 591,104
Peltz Bros
4600 Port Washington Road
Milwaukee, WI 53217
(414) 967-1800
Fax:(414) 967-1801 Trade Debt $ 565,359
Marubeni Pulp & Paper
P.O. Box 93359
Chicago, IL 60673-3359
(312) 527-3800
Fax:(312) 527-8226 Trade Debt $ 557,545
Bowater Incorporated
P.O. Box 75081
Charlotte, NC 28275
(905) 319-4119
Fax:(905) 332-1866 Trade Debt $ 545,151
Graphic Packaging Corp
Tom Walsh
160 Washington Street
Menasha, WI 54952
(920) 729-8793
Fax:(920) 729-8770 Trade Debt $ 503,079
Pennsylvania Power & Ligth
P.O. Box 25224
Lehigh Valley, PA 18002-5224
(800) 358-6623
Fax:(610) 774-3713 Trade Debt $ 348,317
Fitzpatrick, Francis J
1201 Yale Place
Minneapolis, MN 55403
(612) 333-8253
Fax:(612) 333-5963 Severance Claim $ 341,545
Viking Fiber
3070 Bristol Pike
Suite 222
Bensalem, PA 19020
(215) 639-6622
Fax:(215) 639-2250 Trade Debt $ 337,114
Blue Water Fiber Limited
Department #77346
P.O. Box 77000
Detroit, MI 48277-0346
(810) 984-3531
Fax:(810) 987-6356 Trade Debt $ 331,983
Willamette Industries, Inc.
P.O. Box 75402
Chicago, IL 60675
(503) 227-5581
Fax:(503) 273-5604 Trade Debt $ 313,087
Wicor Energy SVCS-Industrial
71363 Treasury Center
Chicago, IL 60694-1300
(800) 926-6290
Fax:(414) 226-4508 Trade Debt $ 299,955
PNV INC: Moody's Gives Thumbs Down to 13% Senior Notes
------------------------------------------------------
Moody's Investors Service downgraded the debt ratings of PNV,
Inc.'s (PNV) 13% senior notes due 2008, to Caa3 from B3. Moody's
also lowered PNV's senior implied and Issuer ratings to Caa3 from
B3. The ratings downgrade resulted from Moody's concern over PNV's
liquidity position due to the company's statement that it will not
make its current scheduled interest payment.
When originally issued, the 13% senior notes benefited from a two
year interest escrow account which secured interest through May
2000. However, PNV failed to make its first scheduled interest
payment of $4.9 million due on November 15, 2000. Moreover, the
company stated that if it is unsuccessful in obtaining additional
liquidity to fund operations in the near term either through the
issuance of debt, equity or the sale of assets, it may be unable
to continue as a going concern for a reasonable period of time.
PNV provides bundled telecommunications, cable TV, and internet
access service into the cabs of trucks parked at truck stops. As
of September 30, 2000, the company provided its bundled service at
288 sites, and telecommunications service only at an additional
109 sites.
PNV, Inc. is headquartered in Coral Springs, Florida.
RUSSELL-STANLEY: Moody's Cuts Senior Secured Credit Rating to B3
----------------------------------------------------------------
Moody's Investors Service downgraded Russell-Stanley Holdings,
Inc.'s $100 million of senior secured credit facilities to B3 from
Ba3 and its $150 million of 10 7/8% senior subordinated notes, due
2009 to Caa3 from B3. The senior implied rating was lowered to B3
from B1. The unsecured issuer rating was lowered from B2 to Caa1.
The outlook is negative.
The ratings reflect the company's weak financial performance
through the third quarter of 2000, due to lower volume and higher
commodity resin prices (which could not be offset by increased
selling prices due to increased competition); large debt burden;
and weak balance sheet (including high intangibles and modest
equity).
The negative outlook reflects the likelihood that the debt will
need to be restructured. It is also unclear what further
sponsorship the company can expect from Vestar Capital Partners
("Vestar"), which has invested over $55 million of equity in the
company to date.
The ratings acknowledge some recent success in passing through
resin cost increases, although not to an extent necessary to
support the company's overleveraged balance sheet. Russell
Stanley's remaining strength is its established (albeit declining)
market share, particularly in the U.S. plastic drum market as well
as in regional markets with respect to steel drums. However, since
Russell-Stanley's competitors are better capitalized than the
company, their financial strength has allowed them to compete on
price, (despite narrowing margins), giving them market share gains
at Russell-Stanley's expense.
As of 9/30/00, the outstanding balance under the senior secured
credit facilities was about $67 million. Under a distressed or
liquidation scenario, Moody's estimates that the bank debt would
be covered; however, given the company's weak performance, and
considering that Hunter Drums, (which represents approximately 12%
of consolidated assets), is not a guarantor, the senior
subordinated notes would be severely impaired.
For the 3 months ended 9/30/00 ("Q3-00"), revenues decreased by 4%
to $68.5 million, due to lower volumes partially offset by higher
selling prices. EBIT was $.9 million in Q3-00 versus $3.3 million
in Q3-99. EBIT and EBIT margins declined due to lower volume and
higher raw materials prices (which could not be offset by
increased selling prices due to increased competition), partially
offset by cost savings initiatives. EBITA was $1.6 million in Q3-
00 versus $4 million in Q3-99; both failed to cover interest
expense of $5.9 million and $5.6 million, respectively. EBITDA of
$8.6 million in Q3-00 provided 1.5x coverage versus EBITDA of
$11.2 million in Q3-99, which covered interest by 2x.
For the 9 months ended 9/30/00, financial performance deteriorated
for the reasons mentioned above. Revenues decreased by 2.1% to
$211 million. EBIT was $2.2 million, or 1% of sales, versus $12.5
million, or 5.8% of sales for the comparable 1999 period. EBITA
was $4.3 million, which failed to cover interest expense of $17.2
million, compared to EBITA of $14.6 million in the 1999 comparable
period, which covered interest expense of $15.6 million by .9x.
EBITDA of $26.1 million in the nine month 2000 period provided
1.5x coverage versus EBITDA of $35.2 million in the 1999
comparable period, which covered interest by 2.3x.
For LTM ended 9/30/00, revenues were $282.5 million compared to
$287 million for the year ended 12/31/99. EBIT, (net of non-
recurring charges), was $2.9 million versus $13.2 for the 1999
year. EBITA was $6 million, which failed to cover interest expense
of $22.7 million. EBITDA of $34.2 million for LTM 9/30/00 provided
1.5x coverage versus EBITDA of $43.3 million for the year ended
12/31/99, which covered interest by 2.1x.
Total debt at 9/30/00 was $216 million, or 36x LTM EBITA (6.3x LTM
EBITDA). Book equity was $15.6 million compared to $26 million at
12/31/99.
Given Russell-Stanley's poor performance and large debt
obligations, Moody's is concerned about the adequacy of Russell-
Stanley's liquidity, particularly how much cushion exists under
recently revised bank covenants before violations occur. Revolver
borrowings have increased by a net $23.1 million through the nine
months ended 9/30/00, bringing outstandings to $41.9 million (out
of $75 million of availability). Iit is unclear whether the
undrawn balance would be available if those covenants were
violated.
Russell-Stanley Holdings, Inc., located in Bridgewater, New
Jersey, is a leading manufacturer of plastic and steel industrial
containers and a leading provider of related services in the
United States and Canada. For the latest 12 months ended 9/30/00,
sales, EBITA, and EBITDA were $282.5 million, $2.9 million, and
$34.2 million.
SECURITIZATION CORP: S&P Gives Mortgage Securitization CCC Rating
-----------------------------------------------------------------
Standard & Poor's lowered its rating on Asset Securitization
Corp.'s commercial mortgage pass-through certificates series 1995-
D1 class B-2 to triple-'C' from single-'B'.
Concurrently, Standard & Poor's affirmed its ratings on its other
rated classes (see list).
The lowered rating reflects the loss that was realized on the sale
of a 376-unit apartment complex located in Lindenwold, N.J. The
property, built in 1971, had significant deferred maintenance
needs that the borrower neglected to take care of. The special
servicer, in order to prepare the property for sale, made some
necessary repairs, including spending over $1 million to correct
several leaky roofs. The credit support for the lowest rated class
was impacted as a result of the loss.
In addition to the realized loss, Standard & Poor's is concerned
that possible losses may result from a specially serviced 90-plus-
day delinquency. The $3.2 million loan (1.87% of total principal
balance) is secured by a 60-room congregate care facility. The
property, located in Lyons, Ill. (a suburb of Chicago), is
experiencing occupancy declines in a very competitive local market
that has not yet stabilized. The special servicer has ordered
third-party reports for the property.
The other rated classes have sufficient credit support at their
current levels. The pool's debt service coverage is stable at 1.93
times (x) as of Dec. 31, 1999, compared to 1.89x as of Dec. 31,
1998, Standard & Poor's said.--CreditWire
Outstanding Rating Lowered
* Asset Securitization Corp.
-- Commercial mortgage pass-through certs series 1995-D1
Class Rating
To From
B-2 CCC B
Outstanding Ratings Affirmed
* Asset Securitization Corp.
-- Commercial mortgage pass-through certs series 1995-D1
Class Rating
A-1 AAA
A-2 AA+
A-3 A+
A-4 BBB
B-1 BB
SERVICEMASTER: Rising Debt Load Prompts Moody's to Lower Ratings
----------------------------------------------------------------
Moody's downgraded The ServiceMaster Company's senior unsecured
ratings reflecting the company's increased debt levels and weaker
debt protection measures resulting primarily from share repurchase
and acquisition activity. The outlook is negative reflecting the
likelihood that debt protection measures will not improve in the
near term.
Ratings downgraded:
a) Senior unsecured notes to Baa3 from Baa2.
b) Senior unsecured bank facility to Baa3 from Baa2.
c) Senior unsecured shelf to (P) Baa3 from (P) Baa2.
ServiceMaster's debt levels have been rising due to acquisitions
and more recently from aggressive share repurchase activity. Also,
the company's earnings will be lower than anticipated due to
difficulties in the integration of the 1999 acquisition of
LandCare USA, as well as labor and fuel costs increases. Moody's
does not anticipate that the company's debt levels will reduce
over the next 12-24 months given our expectation of slower
earnings growth and the likelihood that share repurchase and
acquisition activity will continue. On a trailing twelve month
basis the company's retained cash flow to debt and total coverage
is approximately 14% and 3.0x, respectively. Although
ServiceMaster will continue to benefit from lifestyle and
demographic trends, its consumer service offerings are
discretionary and are therefore vulnerable to changes in consumer
spending habits and general economic conditions. Additionally the
results of the company's largest divisions in terms of revenues
and operating profit, TruGreen and Terminix, are vulnerable to
weather conditions.
The rating outlook is negative reflecting Moody's expectation that
debt protection measures will remain weak despite a reduction in
the pace and size of its acquisitions and more moderate share
repurchase activity. Moody's expects the landcare division results
will improve given the company's focus on this division. However,
the timetable is difficult to predict given the seasonality of the
business, as well as its vulnerability to weather conditions. If
operating results do improve more quickly than anticipated, the
outlook could be revised to stable.
The investment grade ratings remain supported by the company's
solid franchise which includes branded service offerings aimed at
both residential and commercial customers. ServiceMaster has grown
by taking advantage of changing lifestyles, such as dual income
families who demand time saving services, as well as the trend
towards outsourcing among commercial accounts. The ratings also
recognize the company's geographic diversity, acceptable customer
retention rates and lack of customer concentration. Product and
geographic diversity, low capital intensity, as well as a somewhat
variable cost structure will help to mitigate margin erosion that
is likely to occur during an economic downturn or slower growth
period. ServiceMaster also has a stable position within the low
margin health and education management services business which
provides stable cash flow from 3-5 year contracts.
The ServiceMaster Company, headquartered in Downers Grove,
Illinois, provides a range of services to individual consumers,
businesses, and institutions in the United States and over 40
countries worldwide. At year-end revenues were $5.7 billion.
SIMCALA INC: Moody's Junks 9-5/8% Senior Notes with Caa3 Rating
---------------------------------------------------------------
Moody's Investor's Service downgraded the ratings of SIMCALA, Inc.
The rating on SIMCALA's $75 million of 9-5/8% senior notes, due
2006, was lowered to Caa3 from Caa1, and its $15 million secured
revolving credit facility was downgraded to B3 from B2. SIMCALA's
senior implied rating was lowered to Caa2 from B3, and its senior
unsecured issuer rating was lowered to Caa3 from Caa1. The rating
outlook is negative.
The downgrades were driven by declining silicon sales, lower
selling prices, weak interest coverage, and diminished liquidity.
Lower sales are attributed to the slowing US economy and imports
of aluminum-grade silicon, a trend supported by the strong US
dollar. SIMCALA's average silicon selling price has continued to
decline, averaging $1,417 per metric ton for the first 9 months of
2000, compared to $1,461 in 1999 and $1,627 in 1998. SIMCALA's
production has been strong, indicating that it has overcome past
production problems and the initial impact of a strike by the
United Steelworkers, which began August 8 and continues. However,
if production must be reduced to adjust to lower demand, unit
operating costs will rise and inventory levels may remain high (at
September 30, SIMCALA's inventory represented about 42 days of
sales, compared to a more typical 25 days, with part of this
increase due to a build-up of inventory prior to the expiration of
the USWA contract). Moody's noted that the Chapter 11 bankruptcy
filing by Dow Corning, SIMCALA's largest customer, has not had,
and is not expected to have, a material impact on SIMCALA's
shipments or receivables collection.
The current market fundamentals and economic environment suggest
SIMCALA will experience a decline in interest coverage, which
could cause it to violate financial covenants under its $15
million revolving credit facility, and severely limited liquidity.
For the nine months ended September 30, SIMCALA's EBITDA to
interest was a weak 0.8 times. SIMCALA's liquidity at September 30
consisted of unrestricted cash of $5.6 million and it had about $9
million available under its revolver. Inability to access the
revolving credit facility would make it difficult for SIMCALA to
pay the April 2001 coupon on its senior notes.
SIMCALA, a leading producer of silicon metal for the chemical and
aluminum industries, is headquartered in Mt. Meigs, Alabama.
SUN HEALTHCARE: Asks for Exclusivity through January 8
------------------------------------------------------
The Debtors sought and obtained the Court's approval, pursuant to
section 1121(d), of a further extension of the Exclusive Period
during which they may file a plan of reorganization to and
including January 8, 2001, and if a plan is filed within such
time, extension of the Exclusive Period to solicit acceptances to
and including March 9, 2001.
The Debtors relate that they have reached an agreement with the
federal government regarding the disposition of underperforming
facilities, but agreements still need to be reached with the
various state Medicaid agencies. A global settlement of the claims
of the federal government, the Debtors say, are complex and are
taking longer to resolve than expected. However, until some of the
remaining outstanding issues are closer to resolution, they will
not be able to accurately assess the changes that will have to be
made to the existing agreement in principle with their bank
lenders and senior subordinated noteholders, the Debtors tell
Judge Walrath.
The requested extension of their Exclusive Periods, the Debtors
believe, will enable them to complete these matters and propose a
plan of reorganization.
Therefore, the Debtors and their professionals believe that the
requested extension of exclusive periods is in the best interest
of the Debtor companies, their estates and creditors. (Sun
Healthcare Bankruptcy News, Issue No. 16; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
THERMATRIX INC: Files Chapter 11 Reorganization Plan in Calif.
--------------------------------------------------------------
Thermatrix Inc. (OTC:TMXIQ) announced that a Plan of
Reorganization has been filed with the United States Bankruptcy
Court, Central District of California.
The Plan is a reorganizing plan by Thermatrix and a liquidating
plan by Wahlco, Inc. and Wahlco Engineered Products, Inc. and was
proposed jointly by the Debtors-in-Possession and the Official
Committee of Creditors Holding Unsecured Claims. The proponents
seek to accomplish payments under the Plan from (1) revenues
generated from the business operations of Thermatrix; (2) an
advance payment from The Dow Chemical Company on a contract
utilizing the Thermatrix FTO technology; (3) the issuance of new
subordinated debt; (4) a new revolving line of credit; and (5) the
sale of the assets of Wahlco and WEP.
Motions to sell the assets of Wahlco and WEP have been filed with
the Court and it is expected that the transactions will be
completed by December 31, 2000 and January 31, 2001 respectively.
A hearing on the adequacy and feasibility of the Plan Disclosure
Statement is scheduled for December 20, 2000. The Effective Date
of the proposed Plan is anticipated to be February 28, 2001. The
Company will post a copy of the Plan and Disclosure Statement on
its Web site (www.thermatrix.com) once the Bankruptcy Court
approves the Disclosure Statement.
This release is not intended to solicit consent to the Plan and is
provided for informational purposes only.
Thermatrix is an industrial company primarily serving the global
market of continuously operating facilities for a broad range of
industries that include refining, chemical, pharmaceutical, pulp
and paper, and industrial manufacturing. Thermatrix provides a
wide variety of air pollution control solutions, including its
unique flameless thermal oxidation technology, as well as a wide
range of engineered products and services to meet the needs of its
clients.
UNICAPITAL: Bank of America Extends Revolver Amendment to Dec. 1
-----------------------------------------------------------------
UniCapital Corporation (NYSE:UCP) announced it has reached an
agreement with Bank of America, N.A., its principal financial
creditor, to continue through December 1, 2000, the amendment of
certain terms of the company's revolving credit facility and the
company's commercial paper conduit facility with Bank of America.
UniCapital Corporation provides asset-based financing in
strategically diverse sectors of the commercial equipment leasing
industry. Headquartered in Miami, UniCapital originates, acquires,
sells and services equipment leases and arranges structured
financing in the big ticket, middle market, small ticket and
computer and telecommunications segments of the commercial
equipment leasing industry. For more information, visit
UniCapital's Web site at www.unicapitalcorp.com.
UNITED ARTISTS: In Final Talks on $35 Million Exit Facility
-----------------------------------------------------------
United Artists Theater Company announced that it is in final
negotiations for a $35 million secured revolving credit line with
an unidentified lender. The Company proposes that the financing,
which will be available upon emergence from Chapter 11 protection,
will be used to repay borrowings under its debtor-in-possession
credit line and also for working capital and general corporate
needs. Separately, the Company further announced financial results
for the thirteen weeks ended September 28, 2000, reporting total
consolidated revenues of $149.5 million, compared to $180.2
million for the same period last year. Net loss available to
common stockholders was $54.8 million, compared to $23.4 million
for the same period last year. United Artists has been operating
under Chapter 11 protection since September 5, 2000. (New
Generation Research, Inc. 21-Nov-00)
VERTIGO SOFTWARE: Completes Debt Restructuring
----------------------------------------------
Vertigo Software Corp. (CDNX:YVS) wishes to announce that further
to the Company's news release dated February 8, 2000 and
subsequent receipt of shareholders' approval at the Company's
Annual and Special Meeting held on March 10, 2000, the Company has
now completed the following transactions:
1. The Company currently has outstanding a convertible debenture
held by a non-related third party in the principal amount of
$305,917.28 originally issued on June 30, 1994, convertible
into common shares of the Company on the basis of 1 common
share for each $0.35 of principal and was repayable by June 30,
1999. Effective immediately, the Arm's Length Debenture has
been extended until June 20, 2001 and the conversion price is
reduced from $0.35 to $0.15 per common share.
2. The Company currently has outstanding a convertible debenture
held by Donald R. Sheldon in the principal amount of $150,000
originally issued on January 15, 1999 for a five-year term and
convertible into common shares of the Company on the basis of 1
common share for each $0.20 of principal. Effective
immediately, the conversion price of the Debenture has been
reduced from $0.20 to $0.15 per common share.
3. The Company currently has 1,942,190 Class A Preferred Shares
outstanding (1,131,884 held by Donald R. Sheldon and 810,306
held by John K. Purdy). Each Preferred Share is convertible
into a unit consisting of one common share and one warrant to
purchase one additional common share at $1.40 per share for two
years from the date of conversion. Effective immediately, the
Company has reduced the exercise price of the warrants issuable
on conversion of the Preferred Shares from $1.40 per share to
$0.15 per common share.
4. Conversion of debt by issuance of the following debentures:
* $240,000 Convertible Debenture to Donald R. Sheldon, a
Director of the Corporation, in satisfaction of $240,000 debt
owned to him; and
* $150,000 Convertible Debenture to John K. Purdy, a Director
of the Corporation, in satisfaction of $150,000 debt owned to
him.
Both Convertible Debentures bear interest at the rate of Prime
plus 1% per annum, are for a term of 5 years, and are convertible
at any time into common shares of the Company at the rate of
$0.10per common share.
The Company also wishes to announce that it has completed the
cancellation and settlement of the Columbia Diversified Software
Fund Limited Partnership ("Columbia") agreement. Vertigo
Technology Inc. ("Vertigo"), a wholly owned subsidiary of the
Company, has reacquired certain plug-in software that Vertigo had
sold to Columbia.
The original purchase agreement had provided for Vertigo to pay
Columbia periodic cash payments as well as a portion of revenues
derived from the sales of the plug-ins. Due to the lack of sales
of the plug-ins, Vertigo repurchased the software for
consideration of 1,000,000 preferred shares ("Preferred Shares")
issued at $0.15 per common share, and cancellation of the $8.68
million note receivable. The Company subsequently purchased the
Preferred Shares from Columbia by the issuance of 1,000,000 common
shares at $0.15 per common share.
The Canadian Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of the contents of
this press release.
WHITE LINE: Tulsa Lift & Yellow Cab Operator Files for Chapter 11
-----------------------------------------------------------------
The Operator of both Tulsa Transit Lift and Yellow Checker Cab Co.
has filed for bankruptcy protection under Chapter 11, The Tulsa
World reports. White Line Inc. provided lift program services for
the handicapped and disabled since the 1980s. "We are very sorry
this partnership is ending," Mark Pritchard said. Mr. Pritchard is
the General Manager of the Tulsa Transit. Tulsa Transit will
discontinue accepting reservations for same-day trips until
further notice "due to the likely strain this transition will
place on our operations," Pritchard added.
Current White Line drivers will provide a limited Lift Program van
service under a new management company. Taxi services, also a Lift
Program service, will be coordinated through Tulsa Answering
Dispatch.
* BOOK REVIEW: Bankruptcy and Secured Lending in Cyberspace
-----------------------------------------------------------
Author: Warren E. Agin
Publisher: Bowne Publishing Co.
List Price: $225.00
Order on-line at http://www.agin.com/book/
Review by Gail Owens Hoelscher
The word "cyberspace" did not appear in the Merriam-Webster
Dictionary until 1986, defined as "the on-line world of computer
networks." The word "Internet" showed up that year as well, as
"an electronic communications network that connects computer
networks and organizational computer facilities around the world."
Cyberspace has been leading a kaleidoscopic parade ever since,
with the legal profession striding smartly in rhythm. Now, Warren
Agin provides a guide to some of the legal issues arising in this
electronic age.
There is no definition for the word "cyberassets" in the current
Merriam-Webster. Fortunately, Bankruptcy and Secured Lending in
Cyberspace tells us what cyberassets are and lays out in
meticulous detail how to address them, not only for troubled
technology companies, but for all companies with websites and
domain names.
Cyberassets are primarily websites and domain names, but also
include technology contracts and licenses. There are four types
of assets embodied in a website: content, hardware, the Internet
connection, and software. The website's content is its
fundamental asset and may include databases, text, pictures, and
video and sound clips. The value of a website depends largely on
the traffic it generates.
A domain name provides the mechanism to reach the information
provided by a company on its website, or find the products or
services the company is selling over the Internet. Examples are
Amazon.com, bankrupt.com, and "swiggartagin.com." Determining the
value of a domain name is comparable to valuing trademark rights.
Domain names can come at a high price. Compaq Computer Corp. paid
Alta Vista Technology Inc. more than $3 million for
"Altavista.com" when it developed its Alta Vista search engine.
The subject matter covered in this book falls into three groups:
the Internet's effect on the practice of bankruptcy law; the ways
substantive bankruptcy law handles the impact of cyberspace on
basic concepts and procedures; and issues related to cyberassets
as secured lending collateral.
The book includes point-by-point treatment of the effect of
cyberassets on venue and jurisdiction in bankruptcy proceedings;
electronic filing and access to official records and pleadings in
bankruptcy cases; using the Internet for communications and
noticing in bankruptcy cases; administration of bankruptcy estates
with cyberassets; selling bankruptcy estate assets over the
Internet, trading in bankruptcy claims over the Internet; and
technology contracts and licenses under the bankruptcy codes.
The chapters on secured lending detail technology escrow
agreements for cyberassets; obtaining and perfecting security
interests for cyberassets; enforcing rights against collateral for
cyberassets; and bankruptcy concerns for the secured lender with
regard to cyberassets. The book concludes with chapters on Y2K
and bankruptcy; revisions in the Uniform Commercial Code in the
electronic age; and a compendium of bankruptcy and secured lending
resources on the Internet. The appendix consists of a
comprehensive set of forms for cyberspace-related bankruptcy
issues and cyberasset lending transactions.
Warren E. Agin is a partner in the Boston-based firm of Swiggart &
Agin LLC. He is Chair of the American Bar Association's
Electronic Transactions in Bankruptcy Subcommittee and Vice-Chair
of the Business Law Section's Joint Subcommittee on Electronic
Financial Services.
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles available
from Amazon.com -- go to
http://www.amazon.com/exec/obidos/ASIN/189312214X/internetbankrupt
-- or through your local bookstore.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter, co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group,
Inc., Washington, DC. Debra Brennan, Yvonne L. Metzler, Ronald
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Copyright 2000. All rights reserved. ISSN 1520-9474.
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