/raid1/www/Hosts/bankrupt/TCR_Public/010305.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, March 5, 2001, Vol. 5, No. 44
Headlines
ABC-NACO: Fitch Places Senior Debt Ratings On Credit Watch
ADATOM.COM: New CEO Gets 35.18% Stake in Common Stock
ADATOM.COM: Gordon Lee Takes Helm to Implement Turnaround Plan
ADATOM.COM: Hires Stefanou & Company as New Certifying Accountant
AMAZON.COM: Denying Bankruptcy Rumors . . . Hmmm, Wonder Why?
BRIDGE INFORMATION: Court Okays Use Of Cash Management System
CITYXPRESS.COM: Needs More Funds to Continue Operations
COMPUTER LEARNING: Raises $3 Million Selling Nev. & Ga. Schools
CONCORD FAMILY: Moody's Cuts Bond Rating to Caa3 From B2
DAEWOO CORP.: American Committee Prepares $400 Million Lawsuit
DOW CORNING: Elects Gary E. Anderson as Chairman of the Board
EMB CORPORATION: Divesting Assets to Meet Debt Obligations
FLEETWOOD ENTERPRISES: Standard & Poor's Cuts Ratings to Low-B's
FLEETWOOD ENTERPRISES: Discloses 3rd Quarter and 9-Month Losses
FRANK'S NURSERY: Case Summary & 30 Largest Unsecured Creditors
FRUIT OF THE LOOM: Resolves Accounting Software Lease With Oracle
GENEVA STEEL: Post-Emergence Financials Reflect Continued Losses
HARNISCHFEGER: Has Until May 1 to Assume & Reject Leases
ICG COMMUNICATIONS: Rejecting Parker-Raleigh Switch Site Lease
INTEGRATED HEALTH: Oncology Begs to File Late Proof Of Claim
IRONBRIDGE: Plans to Liquidate Assets Under Bankruptcy Protection
LASON INC.: Sells Escrow Services Business To DSI Technology
LERNOUT & HAUSPIE: Engages PwC as Financial Advisors
LOEWEN GROUP: Rock Of Ages Closes Deal on 16 Kentucky Cemeteries
LTV CORP.: Cendant Seeks Order Compelling Assumption of Contract
MARLTON TECHNOLOGIES: Amends First Union Bank Loan Agreement
NEFF CORP.: Moody's Cuts Ratings After United Rental Talks End
OCEAN RIG: S&P Taking Dim View of Norwegian Deepwater Rig Maker
OWENS CORNING: Court Approves Purchasing Card Agreement With BofA
PHENIX BIOCOMPOSITES: Case Summary & List of 20 Largest Creditors
PLAY-BY-PLAY: Names Tomas Duran As New Chief Executive Officer
SERVICE MERCHANDISE: Proposes Modified Employee Retention Program
SHOWSCAN ENTERTAINMENT: Files Chapter 11 Plan in California
SHOWSCAN ENTERTAINMENT: Russell Chesley is New President & CEO
SILVERLEAF RESORTS: Moody's Slashes Senior Notes To Ca
SOUTH FULTON: Fitch Puts DD Rating on $33.5MM of Hospital Bonds
SUPERCONDUCTIVE: Recurring Losses Raise Going Concern Doubts
TAM RESTAURANTS: Reports Increasing Losses in 2000
TRANS WORLD: Galileo Bids $220 Million for 26% Worldspan Stake
VENCOR INC: Judge Walrath Confirms Debtors' 4th Amended Plan
WATERLINK INC.: NYSE Asks Company for a Plan to Avoid Delisting
WATERLINK INC.: Sells Separations Division To Parkson For $19MM
WATERLINK INC.: Reports First Fiscal Quarter Financial Results
WHEELING-PITTSBURGH: Employs PwC For Tax Consulting Work
BOND PRICING: For the week of March 5 - 9, 2001
*********
ABC-NACO: Fitch Places Senior Debt Ratings On Credit Watch
----------------------------------------------------------
Fitch has placed the ratings of ABC-NACO Inc. (ABCR) on Rating
Watch Negative.
Ratings impacted include the company's senior secured debt rated
'BB-' and $75 million of senior subordinated notes rated 'B'.
The rating watch action reflects heightened concern regarding
ABCR's ability to successfully meet certain requirements of its
bank agreement. If ABCR is unable to amend the existing terms of
the agreement, including scheduled debt amortization and
maintaining compliance with certain financial covenants, Fitch
believes management will be challenged to achieve a successful
amortization within the required time period, creating a
potential payment default.
Financial covenants governing the bank debt, as well as covenants
on subordinated debt, were amended during the last half of 2000.
Nevertheless, even under the amended covenants, there is little
room for deterioration of financial measures. The bank covenants
presumably will need to be amended at or prior to the end of
March 2001, when covenant levels revert to the more restrictive
levels put into effect by the March 9, 2000, Second Amended and
Restated Credit Agreement. The company's ratings will depend on
the success of future asset sales, the amount of subsequent debt
reduction, the amount of liquidity available to the company upon
completion of the asset sales and the implications of any
amendments to bank debt covenants.
ABCR posted extremely weak operating results during 2000,
resulting in a deterioration in credit measures and substantially
reduced liquidity (availability at Sept. 30, 2000, under the $200
million bank credit facility was only $6 million). Recent asset
sales raised roughly $30 million, which was used to reduce ABCR's
bank borrowings. However, bank debt is still required to be
reduced by another $30 million before April 15, 2001. The company
anticipates these funds will come from further asset sales.
Longer term, ABCR's ability to significantly reduce debt and
leverage will rely in large part on the level of capital spending
in the railroad industry for new railcars and railcar repair and
for track maintenance. Debt/EBITDA at Sept. 30, 2000, was 6.7
times (x) (using annualized nine month results) and
EBITDA/interest for the nine month period was 1.6x. These levels
do not support the current ratings, but are expected to improve
following plant realignments and consolidations, intended to
reduce the company's cost structure, that were essentially
completed by the end of 2000 and should boost EBITDA moderately
even without revenue gains.
ADATOM.COM: New CEO Gets 35.18% Stake in Common Stock
-----------------------------------------------------
On November 28, 2000 Dr. Sridhar Jagannathan resigned as Chief
Technology Officer and from the Board of Directors of Adatom.com,
Inc. On December 26, 2000 Richard Barton resigned as Chief
Executive Officer and President of the company.
On December 26, 2000, the entire Board of Directors consisting of
Richard Barton, Victor Nee, Ralph Frasier, Debra Shaw appointed
Gordon Lee Chief Executive Officer, President and Director of the
company prior to resigning from the Board of Directors
themselves.
Presently, Gordon Lee is the company's sole Director. Under
Delaware corporate law a corporation may have as few as one
director.
On January 11, 2001, the company issued 10,000,000 shares of
common stock in a private placement to Gordon Lee for a purchase
price of $0.01 per share. The number of common shares issued and
outstanding rose from 18,428,877 shares to 28,428,877 shares. The
10,000,000 shares issued to Gordon Lee represents 35.18% of the
company's current issued and outstanding voting common stock. The
issuance does not affect the public float as the securities were
not registered and therefore are restricted from trading.
ADATOM.COM: Gordon Lee Takes Helm to Implement Turnaround Plan
--------------------------------------------------------------
Adatom.com, Inc. (OTC:ADTM) has completed a Definitive Agreement
transferring the operational and governance responsibilities for
the company to Mr. Gordon Lee.
Adatom's current Officers and Directors have determined the
company is insolvent and have not been successful in their
attempts to procure additional working capital to sustain daily
operations. The agreement requires Mr. Lee to put forth an
operating plan to reduce Adatom's debt and enhance shareholder
value, preserving the company's value for the benefit of the
creditor and shareholders.
Mr. Lee has extensive experience in the legal rights and
responsibilities of partnerships and corporations, knowledge of
the global securities and investment industry and is a sought
after specialist and consultant in national and international
trade. Mr. Lee has been a partner, officer and director of such
companies as USA Video Corporation, Laser Vision, Inc.,
Startek.com Corp., Future Media Technologies and Rose & Ruby Film
Productions.
Mr. Lee is currently Chairman and CEO of Bentley Communications
Corp. (OTC Bulletin Board: BTLY) and American IDC Corp. (OTC:
ACNI), publicly traded companies on the NASD OTCBB exchange.
Mr. Lee stated, "Aside from the opportunity to 'clear the slate'
and rebuild shareholder value for Adatom, I believe we can bring
financial fruition to the various 'transaction fee based'
informational type technologies we plan to deploy throughout Asia
based on Adatom's foundation and my own experiences in the 'New
West.'"
ADATOM.COM: Hires Stefanou & Company as New Certifying Accountant
-----------------------------------------------------------------
On December 4, 2000, all remaining former employees of Adatom.com
were laid off. The company's Milpitas, California head office was
closed shortly thereafter on December 26, 2000, and moved to its
new location in Los Angeles.
An unknown number of former employees may have, or have actually,
filed complaints with the California Labor Commission for unpaid
salary. The company believes that its potential legal liability
for two months of salary owed to employees may have a material
affect on the financial viability of the company. At this time,
the extent of the company's financial liability with respect to
former employees is unknown. The company's new management hopes
to negotiate a settlement with any former employees who may be
owed back-pay as part of management's general efforts to
restructure the company's debts and finances.
On February 14, 2001, Adatom.com dismissed its certifying
accountant, Richard A. Eisner & Company, LLP. Eisner's report for
the year ended December 31, 1999 contained an explanatory
paragraph regarding the substantial doubt about the company's
ability to continue as a going concern. The decision to dismiss
Eisner was approved by the company's Board of Directors.
The company has engaged Stefanou & Company LLP as its certifying
accountant as of February 14, 2001 for the company's fiscal year
ending December 31, 2000.
AMAZON.COM: Denying Bankruptcy Rumors . . . Hmmm, Wonder Why?
-------------------------------------------------------------
Amazon.com vigorously denied market rumors that the company is
planning to file for bankruptcy, but shares in the online
retailer fell 9% in trading Wednesday, according to the
Associated Press. "I have no idea where this rumor is coming
from," said spokeswoman Patty Smith. "I can tell you absolutely,
positively that there is no truth whatsoever (to the rumor)."
The rumors were apparently sparked by a short story early
Wednesday on German business news wire VWD, which said the
speculation about an Amazon bankruptcy filing was coming from the
United States. Shares of Amazon fell $1.06 to $10.69 in
afternoon trading on the Nasdaq Stock Market. Amazon spokesman
Bill Curry said the company started the year with $1.1 billion in
cash, and expects to finish the year with $900 million in cash.
"We've got piles of moolah," he said. "People just don't pay
attention." (ABI World, March 1, 2001)
Clearly, Amazon has cash and won't be filing for bankruptcy this
month. But all the vigorous denials and public relations
rhetoric don't change the fact that Amazon's finances are getting
uglier quarter-by-quarter. Amazon.com, Inc., released its pro
forma financial results for the fourth quarter and year ending
December 31, 2000 in early February, disclosing a $545 million
fourth-quarter GAAP net loss. The Company's pro forma
balance sheet speaks for itself:
AMAZON.COM, INC.
Abridged Unaudited Balance Sheet
At December 31, 2000
ASSETS
Current assets $ 1,361,129,000
Non-Current assets 774,040,000
---------------
Total assets $ 2,135,169,000
===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities $ 974,956,000
Long-term debt 2,127,464,000
Stockholders' deficit (967,251,000)
---------------
Total liabilities and deficit $ 2,135,169,000
===============
Amazon's liabilities first outpaced assets when the Company
reported last-quarter's results in October 1999. Liabilities now
exceed assets by nearly $1 billion. Moody's Investors Service
and Standard & Poor's assigned their junk ratings to Amazon's
public debt nearly a year ago. Friday, Amazon's 4.750% Notes
due 2009 traded below 40 cents-on-the-dollar -- a 20% slide from
last month's pricing.
Amazon continues to project losses in 2001. To contain those
losses, as related in the February 2 edition of the Troubled
Company Reporter, Amazon said that it is planning a "reduction in
its corporate staffing and a consolidation of its distribution
and customer service center network, resulting in the closure of
a distribution center in McDonough, Georgia, and a customer
service center in Seattle, Washington. The company's Seattle
distribution center will be operated seasonally. This
restructuring reduces staffing by approximately 15% of
Amazon.com's overall workforce, or 1,300 jobs, and will result in
a charge in excess of $150 million in the first half of 2001. In
addition to a standard severance package, the company has
established a trust fund of Amazon.com stock to be distributed to
affected employees in 2003."
"That stock to be distributed to these 1,300 employees in 2003
will be worth very little, "opines Steven L. Gidumal, Managing
Director for Rediscovered Opportunities Fund in New York City
(sgidumal@hbvllc.com). Mr. Gidumal looked at Amazon from every
financial and operational angle imaginable last year and
concludes that Amazon won't exist on a stand-alone basis by
2003.
"Amazon has been underpricing their product for years. They're
now faced with having to move up the price elasticity curve
in order to generate profits, which few (if any) companies in
American history have done. Therefore with higher prices," Mr.
Gidumal explains, "revenue growth will unquestionably slow,
altering downward investors price estimates. At a growth rate
of 15% per year -- well above average for a normal book and
music business -- the value of Amazon shares will be $1 to $2
per share," Mr. Gidumal argues.
BRIDGE INFORMATION: Court Okays Use Of Cash Management System
-------------------------------------------------------------
Bridge Information Systems, Inc. employs an integrated
centralized cash management system to collect, transfer and
disburse funds generated by their operations and to accurately
record all such transactions as they are made. This Cash
Management System is managed by Bridge's Treasury Department and
includes, among other things, centralized cash forecasting and
reporting, collection and disbursement of funds and
administration of the company's Bank Accounts required to
effectuate the Debtors' collection, disbursement and movement of
cash.
Deborah Grossman, Bridge's Senior Vice President and Treasurer,
told the Court that virtually all of the cash used to finance
the Debtors' working capital expenditures derives from one of two
sources:
(a) the Debtors' daily collection of accounts receivable or
(b) draw-downs on the Debtors' senior credit facility.
The Debtors obtain cash management services primarily from Harris
Trust and Savings Bank and US Bank. The Debtors' Cash management
system maintained with Harris is comprised of lockbox sites in
Chicago, Illinois, lockbox accounts, zero balance accounts,
investment accounts and Concentration Accounts through which the
lockbox, wire transfers and accounts payable are settled. On a
daily basis, substantially all of the cash remaining in the
Debtors' Cash Management System is consolidated in the
Concentration Accounts. To the extent that cash remains in the
Concentration Accounts in excess of amounts needed to fund daily
disbursements, such cash is transferred to the investment account
and invested with or by Harris, US Bank or Goldman Sachs (in its
Financial Square Prime Obligations Fund -- Institutional), in
money market funds and/or overnight investment-grade securities.
The Debtors have used this Cash Management System for over 5
years. The Cash Management System is highly automated and
computerized and includes the necessary accounting controls to
enable the Debtors, as well as creditors and the Court, if
necessary, to trace funds through the system and ensure that all
transactions are adequately documented and readily ascertainable.
The Debtors will continue to maintain detailed records reflecting
all transfers of funds including, but not limited to,
intercompany transfers.
The Debtors' cash management procedures are ordinary, usual and
essential business practices, and are similar to those used by
other major corporate enterprises. The Cash Management System
provides significant benefits to the Debtors, including the
ability to (a) control corporate funds centrally, (b) invest idle
cash, (c) ensure availability of funds when necessary and (d)
reduce administrative expenses by facilitating the movement of
funds and the development of more timely and accurate balance and
presentment information. In addition, the use of a centralized
Cash Management System reduces interest expenses by enabling the
Debtors to better utilize funds within the system rather than
relying upon short-term borrowing to fund cash requirements.
The operation of the Debtors' businesses requires the continued
use of the Cash Management System during the pendency of these
chapter 11 cases. Requiring the Debtors to adopt new, segmented
cash management systems at this critical stage of these cases
would be expensive, would create unnecessary administrative
burdens, and would be much more disruptive than productive,
adversely impacting the Debtors' ability to confirm a
reorganization plan. Consequently, maintenance of the
existing Cash Management System is in the best interests of all
creditors and other parties-in-interest.
Considering the merits of the Debtors' arguments, Judge McDonald
granted the Debtors' request to maintain their existing cash
management system. Additionally, Judge McDonald ruled, to the
extent that money within the cash management system is lent from
one Debtor or non-debtor affiliate to one of the Debtors, those
Intercompany Transactions shall constitute superpriority
administrative claims against the borrower pursuant to 11 U.S.C.
Sec. 364(c)(1).
Further, Judge McDonald ruled, any obligation incurred by Harris
that results from ordinary course transactions under the Cash
Management System shall be paid and secured as part of the
indebtedness under the DIP Financing Facility. (Bridge Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
CITYXPRESS.COM: Needs More Funds to Continue Operations
-------------------------------------------------------
CityXpress.com Corp. is a software developer and Internet
publisher. For the three months ended December 31, 2000 and six
months ended December 31, 2000, substantially all the company's
revenue was derived from Lee Enterprises Incorporated.
The company incurred a net loss of $1,068,240 for the six months
ended December 31, 2000 and has a working capital deficiency of
$333,454 and deficit of $6,757,938 at December 31, 2000. There is
substantial doubt about the ability of the company to continue as
a going concern.
The ability of the company to continue as a going concern is
dependent upon its ability to achieve profitable operations and
to obtain additional capital. Management expects to raise
additional capital through private placements and other types of
venture funding. The outcome of these matters cannot be predicted
at this time. No assurances can be given that the company will be
successful in raising sufficient additional capital.
Further, there can be no assurance, assuming the company
successfully raises additional funds, that the company will
achieve positive cash flow. If the company is unable to obtain
adequate additional financing, management will be required to
curtail the company's operating expenses.
The company incurred a net loss for the three months ended
December 31, 2000 of $619,036 as compared to a net loss of
$581,545 for the same period in 1999, an increase of $37,491. The
company recorded revenue of $28,017 in the quarter ended December
31, 2000 resulting in an increase of $21,929 over the same three-
month period last year. This revenue increase resulted primarily
from its media partner Lee Enterprises Incorporated (Lee). The
increase in net loss for the three months ended December 31, 2000
of $37,491 is the result of increased expenses resulting
primarily from the following items compared to the same three
month period ended December 31, 1999:
- Decrease in cost of the listing information for the
database of $42,800.
- Increase in general office expenses caused by the increase
in investor relations and consulting services of $38,080.
- Increase in sales and marketing expenses as a result of
increase in promotional and consulting services of $45,995.
Lee portal sites accounted for $26,827 of revenue for the quarter
ended December 31, 2000. As of December 31, 2000, the company
had a cash balance of $143,195, a working capital deficiency of
$333,454 that included shareholders' loans of $249,751 a demand
installment loan of $165,017 and accounts payables and accrued
liabilities of $247,857.
COMPUTER LEARNING: Raises $3 Million Selling Nev. & Ga. Schools
---------------------------------------------------------------
Computer Learning Centers Inc. (CLC) raised $3 million from the
sale of two schools in Nevada and Georgia, and part of the
proceeds will be used to pay back employees and students, the
company's bankruptcy trustee said, according to Reuters.
The now-defunct Manassas, Va.-based company, which ran technology
training schools, is also auctioning the rest of its assets
including 23 other schools in 10 states. CLC suspended classes
in all its centers on Jan. 22 and filed for bankruptcy protection
three days later following a Department of Education ruling that
it must repay $187 million in student aid. Prior to the filing,
CLC had 2,000 full and part-time employees and 9,500 students. So
far about 400 students have filed claims.
The closing came as a surprise to CLC students across the
country, many of whom have taken loans from private lenders to
pay the $10,000-$15,000 per-course tuition. Students were turned
away from their classes with no information on their transcripts
or how to finish their studies. Academic records of the students
have been sent to state education authorities around the country.
The Department of Education also announced in January that CLC's
practice of paying its admission officers based on their success
in enrolling students violated federal student-aid laws. (ABI
World, March 1, 2001)
CONCORD FAMILY: Moody's Cuts Bond Rating to Caa3 From B2
--------------------------------------------------------
Moody's Investors Service has lowered Concord Family and Youth
Services' (fka Concord-Assabet Family and Adolescent Services)
bond rating to Caa3 from B2, affecting approximately $6.9 million
of debt outstanding.
With this rating revision and assignment of a negative outlook,
Moody's tells it has removed the rating from Watchlist.
According to the rating agency, the downgrade reflects the
increased credit risk created by the severity of ongoing
operating difficulties at CFYS, which has resulted in further
deterioration of the organization's already weak financial
profile, and the lack of any financial resources to withstand
continued operating difficulties. Also, Moody's is concerned
about the future financial viability of CFYS and the ability of
the organization to meet future debt service payments.
The negative outlook, Moody's says, reflects the agency's belief
that CFYS faces significant challenges in implementing its
turnaround plan given continued legal concerns and staffing
shortages and that payment of future debt service is
questionable.
DAEWOO CORP.: American Committee Prepares $400 Million Lawsuit
--------------------------------------------------------------
John H. Bae, Esq., Mitchell I. Sonkin, Esq., at Cadwalader,
Wickersham & Taft in New York, are ready to file a lawsuit on
behalf of the Official Committee of Unsecured Creditors appointed
in the Daewoo International (America) Corp., chapter 11 case.
The Committee's Proposed Lawsuit seeks to recover more than
$400,000,000 from Hanvit Bank, Korea First Bank, Resolution and
Finance Corp., Chohung Bank, Koram Bank, Seoul Bank, Industrial
Bank of Korea, Shinhan Bank and Korea Exchange Bank, Daewoo
Corporation, Daewoo International Corporation, Daewoo Engineering
& Construction Co., Ltd., Daewoo U.K. Ltd., and Korea Asset
Management Corporation, on behalf of the American Debtor's
estate.
Earlier this year, with Judge Lifland's blessing, the Creditors'
Committee launched an investigation into potential claims that
Daewoo America's estate may have against the Korean financial
institutions that at one time served on the Creditors' Committee.
Subject to Bankruptcy Court permission, the Committee is prepared
to assert Daewoo America's claims now.
The Committee is convinced that a $400 million receivable owed by
Daewoo Corp. resulted from an international conspiracy between
Daewoo Corp. and Daewoo U.K. to siphon money out of the Debtor's
estate to fund the British Finance Centre in London that,
according to an investigation launched by the Korean government,
served as an illegal slush fund for Daewoo Corp. and its
executives. The estate's claims against KAMCO and the Korean
Banks arise from the intentional actions undertaken by these
defendants to spin-off Daewoo Corp.'s significant assets to
Daewoo Int'l. and Daewoo E&C as part of the Daewoo Corp.
restructuring in Korea, while completely disregarding the
estate's objection to such spin-off. These actions have impaired
the estate's ability to pursue and recover on the approximately
$400 million in damages Daewoo Corp. caused the estate.
The Committee tells Judge Lifland that Daewoo America has
significant claims, including a claim for civil conspiracy, based
on the agreement between KAMCO and the Korean Banks to ignore the
objection and authorize the restructuring to proceed in violation
of Korean and U.S. law. The Committee's Draft Complaint is
intended to redress the estate for damages caused by the wrongful
actions of these defendants. The Committee's Draft Complaint also
seeks to equitably subordinate the claims of these defendants to
the claims of unsecured creditors that did not engage in such
misconduct.
The Committee believes the estate has meritorious claims against
these defendants and the claims should be pursued. The Committee
has requested that the Debtor consent to the relief sought
herein. However, Daewoo America has declined to give the
Committee its consent. The Committee urges Judge Lifland to
grant leave to the Committee to assert these significant claims
because, as evidenced by its refusal to consent to the relief
sought herein, the Debtor is hopelessly conflicted from properly
prosecuting these claims.
The Claims Against Daewoo Corp.
According to Daewoo America's Schedules of Assets and
Liabilities, Statement of Financial Affairs and Monthly Operating
Reports filed with the Bankruptcy Court, Daewoo America holds a
$5,432,915 receivable owed by Daewoo Corp. on account of
ship-building commissions.
Fom November 1998 through July 1999, Daewoo America made 43
separate wire transfers totaling $398,897,842 to accounts in
London payable to "Daewoo London". The Debtor booked these wire
transfers as debt owed to the Debtor by Daewoo U.K. Ltd., which
has the identical address as Daewoo London. These wire transfers
were made by the Debtor based on direction received from Daewoo
Corp. The Committee understands that all directions to wire
transfer funds to Daewoo London were made to the Debtor's Finance
Manager, Mr. In Duk Yoo. While the Debtor booked these transfers
as loans made to Daewoo U.K., at the time Daewoo Corp. directed
the Debtor to make these wire transfers, the Debtor was not given
any explanation as to the purpose of the wire transfers, or how
the U.K. Receivable was to be repaid to the Debtor.
Moreover, no loan agreements were executed between the Debtor and
Daewoo U.K. or Daewoo Corp. in connection with these transfers,
nor was any promise made by Daewoo Corp. or Daewoo U.K. as to how
or when the U.K. Receivable would be repaid. At the time the
Debtor made the wire transfers, none of the Debtor's lenders was
advised of the transfers. In fact, the Committee believes that
these wire transfers were not loans to Daewoo U.K., but rather,
were part of an international conspiracy between Daewoo Corp.,
Daewoo U.K. and Mr. In Duk Yoo (the Debtor's former Finance
Manager) to inject cash into a slush fund in London known as the
British Finance Centre, which is the subject of an investigation
launched by the Korean government.
According to press reports, the British Finance Centre was an
informal bank account that managed approximately $20 billion
unlawfully transferred from other affiliates of Daewoo Corp.
throughout the world, much like the wire transfers that took
place involving the Debtor. Daewoo U.K. was responsible for
overseeing and/or managing the funds that the Debtor wire
transferred to Daewoo London, which has the exact same address as
Daewoo U.K. Daewoo Corp. has admitted that the Debtor's wire
transfers were made to accounts owned by Daewoo Corp.
The Korean Restructuring
Beginning in mid-1999, Daewoo Corp. and its affiliates became
subject to an out of court restructuring of their debt in Korea.
As part of the Korean Restructuring, a creditors' committee was
formed made up of Daewoo Corp.'s largest Korean creditors to
oversee Daewoo Corp.'s restructuring and operations. Each of the
Korean Banks became a member of this Korean Committee.
In addition, Hanvit Bank is the lead creditor bank in charge of
overseeing the Daewoo Corp. restructuring. KAMCO, the largest
creditor of Daewoo Corp., holds approximately 41% of Daewoo
Corp.'s debt. It is believed that KAMCO plays a significant role
in Daewoo Corp.'s restructuring.
Under the Korean Restructuring, each of the Korean creditors of
Daewoo Corp. is to participate in a debt-for-equity swap,
pursuant to which the creditors would become the eventual equity
holders of Daewoo Corp. Upon information and belief, important
decisions involving Daewoo Corp.'s operations and restructuring
are made by Daewoo Corp.'s Korean Committee and KAMCO.
By notice to Creditors of Daewoo Corp. dated July 24, 2000,
Daewoo Corp. notified its foreign creditors that Daewoo Corp.
would spin-off its trading division and construction division
into new companies as a part of the Daewoo Corp. restructuring.
The Committee was advised that a significant portion of Daewoo
Corp.'s assets would be transferred to the new companies as part
of the spin-off. The remaining Daewoo Corp. would retain Daewoo
Corp.'s non-operating businesses as well as significant
liabilities. The Notice stated that creditors of Daewoo Corp.
may register their objection to the spin-off by delivering a
written objection to Daewoo Corp. by August 24, 2000. The
Committee was advised that failure to file an objection to the
spin-off would cause the creditor's claim to remain only against
the remaining Daewoo Corp., which would have no assets with which
to satisfy the claim, and that the creditor could not seek to
satisfy its claim against the two new companies. In order to
preserve the estate's claims against Daewoo Corp., the Debtor, at
the urging of the Committee, timely filed an objection to the
proposed spin-off.
On or about December 21, 2000, the Debtor's counsel and Daewoo
Corp.'s U.S. counsel sought the Committee's consent to have the
Debtor withdraw the objection because Daewoo Corp. had to
effectuate the spin-off prior to the end of 2000 in order to
receive significant tax benefits under Korean law in the range of
hundreds of millions of U.S. dollars. They sought to obtain the
withdrawal of the objection because the spin-off was not possible
under Korean law unless the Debtor's objection was resolved. The
Debtor, Daewoo Corp. and the Committee entered into a compromise
whereby $25 million would be set aside to secure the claims of
the Trade Creditors in the event a plan of reorganization were
not to otherwise yield a payment to satisfy in full the claims of
the Trade Creditors. In an effort to obtain Court approval of the
proposal, the Debtor's counsel requested an emergency hearing
with the Court, which the Court granted to be heard on December
26, 2000. Notwithstanding the compromise reached by the Debtor,
Daewoo Corp. and the Committee that would have allowed the Trade
Creditors to be paid in return for the Committee's consent to the
withdrawal of the objection, the Korean creditors, including
KAMCO and the Korean Banks, rejected the proposal. The Committee
has learned that, in late-December 2000, KAMCO and the Korean
Banks entered into an agreement to participate in a vote to
determine whether they should spin-off Daewoo Corp. as planned
under the Korean Restructuring, without satisfying the Debtor's
objection as required under Korean law. Upon information and
belief, the defendants agreed that the spin-off would be
effectuated and all Korean creditors would be bound to such
decision, notwithstanding the objection, if the Korean creditors
approved the spin-off. Then, pursuant to the vote of the Korean
creditors, Daewoo Corp.'s trading division was spun off to Daewoo
International Corporation and Daewoo Corp.'s construction
division was spun off to Daewoo Engineering & Construction Co.,
Ltd. The spin-off of Daewoo Corp. in the face of the Debtor's
Objection, the Committee charges, was a violation of, among other
things, Articles 530-9 paragraph 4, 527-5 and 232 of the Korean
Commercial Code.
The Claims Against
Daewoo Corp. and Daewoo U.K.
The Committee's Proposed Lawsuit asserts significant claims
against Daewoo Corp. and/or Daewoo U.K. for:
(A) Civil Conspiracy. Each time Daewoo Corp. directed the
Debtor to wire funds to Daewoo London, Daewoo Corp. and
Daewoo U.K. entered into a conspiracy to unlawfully
transfer funds out of the estate to be used to fund the
British Finance Centre. These agreements caused damages to
the estate in an amount not less than $398,897,915, plus
interest and costs.
(B) Money Had and Received. Defendant Daewoo Corp., having full
control over the Debtor, caused the Debtor to transfer
$398,897,915 to accounts controlled by Daewoo Corp. Thus,
Daewoo Corp. owes to the estate the sum of $398,897,84,
plus interest and costs.
(C) Conversion. Daewoo Corp. unlawfully exercised dominion and
control over the $398,897,842 that belong to the estate,
and has caused damages to the estate in an amount not less
than $398,897,842, plus interest and costs.
(D) Breach of Contract. Daewoo Corp. owes the estate a sum of
$5,432,915 for shipbuilding services the Debtor provided
pursuant to an agreement with Daewoo Corp. This amount
remains due and owing, and the estate is entitled to
collect this amount, plus interest and costs.
(E) Fraudulent Transfer (three counts). The transfers to
Daewoo U.K. at the direction of Daewoo Corp. were made with
the intent to hinder, delay and defraud the Debtor's
creditors, and prevented the Debtor from being able to
satisfy its debts as they came due.
The Claims Against
KAMCO and the Korean Banks
The Committee's Proposed Lawsuit asserts separate claims against
KAMCO and the Korean Banks as a result of the Korean
Restructuring and their conduct in these proceedings for:
(A) Civil Conspiracy. By agreeing to be bound by a vote to
spin-off Daewoo Corp.'s trading and construction divisions
over the objection of the Debtor, KAMCO and the Korean
Banks entered into a conspiracy to commit a crime and/or a
tort under Korean and U.S. law. KAMCO and the Korean Banks,
as the eventual equity holders of Daewoo Int'1. and Daewoo
E&C, had a financial incentive to enter into the conspiracy
to effectuate the spin-off over the Debtor's objection to
prevent the estate from recovering on the U.K. Receivable
and the Corp. Receivable. KAMCO and the Korean Banks took
overt step's in furtherance of the conspiracy by in fact
taking the vote and causing Daewoo Corp. to spin-off its
trading and construction divisions to Daewoo Int'l. and
Daewoo E&C, respectively. As a result of this conspiracy,
the Debtor's estate's ability to recover on the U.K.
Receivable and the Corp. Receivable from Daewoo Corp. has
been severely impaired, and has caused damages to the
Debtor's estate in an amount not less than $404,330,757,
plus interest and costs.
(B) Fraudulent Transfer (two counts). Daewoo Corp., with the
intent to hinder, delay and defraud its creditors,
undertook to effectuate the Korean Restructuring. Daewoo
Corp. organized defendants Daewoo Int'l. and Daewoo E&C as
corporations and transferred and conveyed substantially all
of its assets to those defendants. KAMCO and the Korean
Banks aided and abetted the fraudulent transfer by
authorizing the spin-off over the Objection of the Debtor.
KAMCO and the Korean Banks, as the eventual equity holders
of Daewoo Int'1. and Daewoo E&C, had a financial motive in
fraudulently transferring Daewoo Corp.'s assets to Daewoo
Int'1. and Daewoo E&C.
(C) Breach of Fiduciary Duty Against Hanvit Bank, Seoul Bank,
Chohun Bank, Industrial Bank of Korea Shinhan Bank and
Resolution and Finance Com. Hanvit Bank, Seoul Bank,
Chohung Bank, Industrial Bank of Korea, Shinhan Bank and
Resolution and Finance Corp., as members of the Official
Committee of Unsecured Creditors, owed a fiduciary duty to
all unsecured creditors of this estate. By participating in
the conspiracy to spin-off Daewoo Corp.'s business and
aiding and abetting the fraudulent transfer of Daewoo
Corp.'s assets for their own benefit as the eventual equity
holders of Daewoo Int'1. and Daewoo E&C, they breached
their fiduciary duty to other unsecured creditors. As a
consequence of this breach, the estate has damages claims
against these defendants in an amount not less than
$404,330,757, plus interest and costs.
(D) Equitable Subordination. The claims held by KAMCO and the
Korean Banks against the Debtor's estate should be
equitably subordinated to the claims of general unsecured
creditors. By conspiring with each other to cause the
spin-off of Daewoo Corp.'s trading and construction
divisions in violation of Korean and U.S. law, KAMCO and
the Korean Banks engaged in inequitable conduct. By aiding
and abetting the fraudulent transfer of Daewoo Corp.'s
assets to Daewoo Int'1. and Daewoo E&C, KAMCO and the
Korean Banks also engaged in inequitable conduct. By their
control and dominion over Daewoo Corp., which in turn
controlled the Debtor, KAMCO and the Korean Banks are
insiders or controlling persons of the Debtor. By taking
the above actions to impair the Debtor's estate's ability
to recover on the U.K. Receivable and the Corp. Receivable
from Daewoo Corp., KAMCO and the Korean Banks benefited
themselves as the ultimate shareholders of Daewoo Int'1.
and Daewoo E&C, to the detriment of all other unsecured
creditors of the Debtor. Therefore, subordination of the
claims of KAMCO and the Korean Banks to the claims of the
Trade Creditors would be wholly consistent with the
provisions of the Bankruptcy Code.
Essentially, the Committee explains, the conduct of KAMCO and the
Korean Banks has left Daewoo America and its creditors with
valueless claims against Daewoo Corp. because Daewoo Corp., by
its own admission, has been left with only "insolvent assets" as
a result of the Korean Restructuring.
These claims are the Daewoo's single largest assets and the
Committee asks Judge Lifland for permission to pursue these
claims on behalf of the estate.
DOW CORNING: Elects Gary E. Anderson as Chairman of the Board
-------------------------------------------------------------
The Dow Corning Corp. board of directors has elected Gary E.
Anderson to serve as chairman of the board.
Anderson succeeds Richard A. Hazleton, who retired on March 1.
Anderson will continue as president and chief executive officer
of Dow Corning.
The board of directors also elected Stephanie A. Burns, and Peter
F. Volanakis, directors of Dow Corning. Burns, a Ph.D. silicon
chemist, was elected Dow Corning executive vice president earlier
this year. Volanakis, president of Corning Technologies, replaces
Norman E. Garrity, vice chairman of Corning, Inc., who retires on
March 1.
Volanakis, 45, joined Corning in 1982. During his nearly 20-year
career at Corning, he has held a variety of senior management
positions in the optical products, environmental products, cable
systems and display products divisions in the U.S. and abroad.
Corning's Information Display and Advanced Materials sectors are
responsible for producing some of today's most in-demand
technologies, such as glass for LCD displays, ceramics used in
catalytic converters to control automobile emissions, and micro
arrays for DNA research and drug development. Volanakis has a
bachelor's degree in Economics from Dartmouth College and a
master's degree in Finance from the Tuck School at Dartmouth
College.
Further resolutions by the Dow Corning board of directors include
the appointments of Stephanie A. Burns, James B. Flaws, and J.
Pedro Reinhard to serve on the Audit Committee and the Corporate
Responsibility Committee.
Flaws is executive vice president and chief financial officer of
Corning. Reinhard, executive vice president and chief financial
officer of The Dow Chemical Company, will serve as chairman of
both these committees.
Dow Corning, which develops, manufactures and markets diverse
silicon-based products, currently offers more than 7,000 products
to customers around the world. Dow Corning is a global leader in
silicon-based materials, with shares equally owned by The Dow
Chemical Company and Corning Incorporated. More than half of Dow
Corning's sales are outside the United States.
EMB CORPORATION: Divesting Assets to Meet Debt Obligations
----------------------------------------------------------
Since the cessation, in December 1998, of the operations of EMB
Mortgage Corporation, subsidiary of EMB Corporation, and EMB's
January 2000 plan to divest its remaining mortgage banking
operations, EMB acquired Titus Real Estate Corporation, which
owned a combination of non-operated working and royalty interests
in 71 producing oil and gas wells located in the State of
Oklahoma. In October 2000 this transaction was rescinded and the
common stock issued to the prior owner of Titus Real Estate
Corporation was returned to the company for cancellation.
In June 2000, the EMB entered into an asset purchase agreement
with Cyrus to acquire rights to operate two natural gas
processing plants in Tennessee. In connection with this
agreement, the company issued 2,500,000 shares of common stock.
In November 2000, the Company and Cyrus rescinded the transaction
due to the quality of the gas available for processing and the
common stock issued to Cyrus was returned to the company for
cancellation.
In November 2000, the EMB's Board of Directors approved a plan to
acquire various natural gas pipelines, located in the State of
Oklahoma, from Commanche for total consideration of $1,200,000,
the purchase price to be paid by means of a convertible
promissory note. The proposed acquisition was subject to the
company's due diligence investigation regarding the pipelines.
EMB expects to conclude its due diligence during March 2001.
Thereafter, the company expects that it will conclude
negotiations with Commanche regarding the final terms and
conditions of, and transaction documentation for, the proposed
acquisition.
Until its transition to an active oil and gas company is
complete, EMB does not expect to conduct material business
activities. During fiscal 2000, the company received
approximately $2.9 million in connection with the sale of AMRES.
Proceeds were used to (i) reduce accounts payable and payroll-
related liabilities by approximately $1.1 million, (ii) repay
related-party notes payable totaling $1.1 million, and (iii) pay
down convertible debenture liabilities, including penalties and
interest totaling $0.7 million. Cash at September 30, 2000 was
$39,438 compared to $47,801 at September 30, 1999. Cash outflows
from operating activities for the year ended September 30, 2000
totaled $2,025,950 compared to a cash inflow of $11,056,825 for
the year ended September 30, 1999 and were due to the operating
loss caused by higher selling, general and administrative
expenses.
Cash inflows from investing activities for the year ended
September 30, 2000 totaled $1,595,000 compared to cash inflows
from investing activities of $68,015 for the year ended September
30, 1999. The increase is due to the proceeds received from the
sale of AMRES. Cash generated from financing activities totaled
$422,587 for the year ended September 30, 2000 compared to a cash
outflow from financing activities of $11,118,607 for the year
ended September 30, 1999. Cash outflows during the year ended
September 30, 2000 were for payments on notes payable of
approximately $640,000, payments on related-party notes payable
of approximately $1,504,000 and payments on convertible notes of
$43,000. Cash inflows for this period were from proceeds related
to the sale of AMRES of $1,350,000, and borrowings on notes
payable and related-party notes payable totaling $1,259,000. For
the year ended September 30, 1999, the company made net
repayments on a warehouse line of credit totaling $12,717,000 and
payments on notes payable and capital lease obligations totaling
$134,000. Inflows for the 1999 period were from borrowings from
related parties.
In April of 2000, the company received 7,500,000 shares of e-
Net's common stock. At September 30, 2000, the company controlled
approximately 36% of issued and outstanding common stock of e-
Net. The company reported its equity in e-Net's losses totaling
$864,952 for the period from April 12, 2000 through September 30,
2000. As of September 30, 2000, EMB had no net material assets,
including any cash. The company has no commitment for any capital
expenditures and foresee none. However, it will incur routine
fees and expenses incident to its reporting duties as a public
company and continue to incur operating costs, including
professional fees payable to attorneys and accountants, for which
the cash balance will be used. The company has substantial long
term and short term liabilities.
At September 30, 2000, management determined that the investment
in e-Net may be permanently impaired based on market conditions
and e-Net's operating environment. Accordingly, management
impaired its investment in e-Net by $2,885,048 in the fourth
quarter of 2000, based on the market value of e-Net's common
stock at September 30, 2000 of $0.50 per share. Since 1996, the
company has incurred significant losses from operations,
and at September 30, 2000, the company had a working capital
deficit of $6.7 million. The company requires immediate proceeds
from the collection of $1.055 million from e-Net, a financing or
from the sale of its assets to meet its current obligations. As a
result of these factors, the company's independent auditors
issued their audit report with a "going concern" opinion. "These
factors raise substantial doubt about the company's ability to
continue as a going concern."
Management is seeking private equity and debt capital, as well as
seeking to find a buyer for its land in Monterey County,
California. There are no assurances that such sale will occur or
that capital will be raised to satisfy its obligations.
FLEETWOOD ENTERPRISES: Standard & Poor's Cuts Ratings to Low-B's
----------------------------------------------------------------
Standard & Poor's lowered its rating on Fleetwood Enterprises
Inc. to double-'B'-plus from triple-'B'-plus. In addition, the
rating on the company's $250 million convertible trust preferred
stock was lowered to single-'B'-plus from triple-'B'-minus. Both
ratings are placed on CreditWatch with negative implications.
The rating action follows a recent, sizeable third quarter loss
related to a goodwill impairment charge and continued weak
performance within the company's retail, manufactured housing,
and recreational vehicle business segments. The negative
CreditWatch listing is prompted by the tripping of a debt
covenant related to an $80 million senior note private placement.
Mirroring very weak industry-wide conditions, unit sales within
Fleetwood's manufactured housing and recreational vehicle
business segments for the third quarter ending January 28, slid a
material 46% and 30%, respectively. While the company's
manufactured housing group remained modestly profitable, the
retail housing and recreational divisions generated losses of $25
million and $29 million, respectively. This performance compared
to a modest loss at retail last year and a $20 million profit
within the recreational vehicle group for the same period.
While both manufacturers and retailers within the manufactured
housing industry have been working to reduce excess retail
inventory for close to two years, competition from repossessed
units and continued very tight lending conditions within the
sector have hampered this effort. At the same time, demand has
also fallen off sharply in each of Fleetwood's three recreational
vehicle divisions, no doubt negatively impacted by signs of the
slowing economy, waning consumer confidence, and higher fuel
costs.
In addition to the operating loss of $56 million for the quarter,
Fleetwood recorded noncash charges of close to $175 million
related to the write down of goodwill, which was associated with
retail acquisitions, and the shuttering of an additional three
manufacturing facilities. The loss reduces the company's book
equity base to about $333 million and pushes leverage (debt plus
trust preferred stock) to 60% from 50%.
The company is in the process of pursuing refinancing
alternatives to replace its current floor plan financing. In
addition, Fleetwood currently has about $90 million in
unrestricted cash balances. Ratings will remain on CreditWatch
pending the curing of aforementioned covenant default and
finalization of long term financing, Standard & Poor's said.
FLEETWOOD ENTERPRISES: Discloses 3rd Quarter and 9-Month Losses
---------------------------------------------------------------
Fleetwood Enterprises, Inc. (NYSE: FLE), the nation's largest
manufacturer of recreational vehicles and a leading producer and
retailer of manufactured housing, announced results for the third
quarter and nine months ended January 28, 2001.
The Company reported a third quarter net loss of $205.0 million
or $6.26 per diluted share, which included a non-cash charge of
$4.86 per share for goodwill impairment and 21 cents per share
for other non-recurring charges. The loss also reflects
significantly reduced sales volume in both of the Company's core
businesses. The Company earned a profit of $15.9 million or 48
cents per diluted share in last year's third quarter.
Fleetwood's President and Chief Operating Officer, Nelson W.
Potter, commented on the non-cash charges: "Conditions in the
manufactured housing market have been in a state of decline for
the past two years, but have deteriorated further in recent
months. This has prompted us to downsize our retail housing
operations and to take a third quarter charge to reduce the value
of goodwill related to prior acquisitions of retail businesses.
In addition, we have closed 13 housing manufacturing operations
over the past 18 months, three of which occurred during the third
quarter."
For the first nine months of fiscal 2001, the Company incurred a
net loss of $239.5 million or $7.31 per diluted share. This
compares with a profit of $72.1 million or $2.04 per diluted
share for the corresponding period in the prior year. Current
year results were adversely affected by non-recurring
restructuring and asset impairment charges totaling $5.40 per
diluted share, which included the goodwill impairment charge, as
well as other charges related to the closing of manufacturing and
retail operations and other downsizing initiatives. Also in the
current year, the Company recorded a one-time cumulative charge
to earnings of $11.2 million after taxes or 34 cents per diluted
share, which was related to a change in accounting for retail
housing credit sales.
Consolidated revenues for the third quarter totaled $510 million,
down 40 percent from the record $852 million in last year's third
quarter. Nine-month revenues fell 30 percent to $1.96 billion
from a record $2.82 billion recorded in the similar period last
year.
"Revenues were down sharply in the third quarter for both
recreational vehicles and manufactured housing," Potter said.
"Recreational vehicle sales in the third quarter declined 42
percent to $251 million from a record $434 million in last year's
comparable quarter, with all three Fleetwood RV divisions posting
lower sales. This resulted in an operating loss for the RV group.
We believe the market slowdown is mainly attributable to
declining consumer confidence, concerns about the slowing
economy, higher interest rates and fuel prices. The market for RV
products has proven to be very resilient in the past, which gives
us reason to be optimistic about improved results for the Company
as general economic concerns abate," Potter said.
Within the RV group, motor home sales for the quarter declined to
$148 million from a record $274 million last year. In the towable
category, travel trailer and folding trailer sales declined to
$78 million and $25 million, respectively, compared to $134
million and $26 million in the prior year.
Nine-month RV sales were off 35 percent to $921 million compared
to last year's record $1.42 billion. Motor home revenues fell to
$492 million versus $891 million last year. Travel trailer sales
declined to $344 million from $433 million a year ago, while
folding trailer revenues eased to $85 million from last year's
$92 million.
Manufactured housing revenues in the third quarter fell 38
percent to $252 million from $407 million last year. Housing
revenues included $130 million of wholesale factory sales and
$122 million of retail sales from Company-owned sales centers.
This compares with $262 million and $145 million, respectively,
last year. Gross manufacturing revenues declined to $183 million
from $341 million last year, and included $53 million of
intercompany sales to Company-owned stores. Manufacturing unit
volume was off 51 percent to 6,833 homes and homes sold at
Fleetwood retail stores dropped 22 percent to 2,774.
"Our housing manufacturing operations were profitable in the
third quarter, despite very challenging market conditions,"
Potter said. "We were able to partially offset the effect of
lower volume by slightly improving gross margins and by sharply
reducing operating costs."
"We have been taking strong steps to adjust our manufacturing and
retail capacities and to cut costs throughout the organization,"
Potter continued. "We have reduced our Company-wide employment
base by approximately 5,500 or 28 percent since its peak in
October 1999. We believe our downsizing and cost reduction moves
will serve us well in the quarters ahead. Despite these actions,
it is not likely in the current operating environment that we
will be profitable in the fourth quarter. Also, we will incur
some further charges for restructuring and downsizing initiatives
in the final quarter."
As a consequence of the Company's operating results and non-cash
charges during the third fiscal quarter, the Company is in
violation of certain financial covenants in the agreement
governing $80 million of unsecured notes with the Prudential
Insurance Company of America. The Company is current as to all
interest and principal payments due under the Prudential notes,
but the terms of the agreement provide that defaults allow
Prudential to accelerate the notes or exercise other remedies. An
uncured default under the Prudential agreement may result in a
default under other debt agreements, including approximately $100
million of secured financing on inventory at the Company's retail
sales centers. The Company is currently in discussions with
Prudential regarding a possible waiver of the covenant violations
or an amendment that would eliminate any default. No assurance
can be given, however, that the Company will reach an agreement
on satisfactory terms with Prudential.
FRANK'S NURSERY: Case Summary & 30 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Frank's Nursery & Crafts, Inc.
1175 West Long lake
Troy, Michigan 48098
Debtor Affiliate: FNC Holdings, Inc.
Type Of Business: The company operates a chain of specialty
retail stores devoted to the sale of lawn and garden products.
Chapter 11 Petition Date: February 19, 2001
Court: District Of Maryland (Baltimore Division)
Bankruptcy Case Nos.: 01-52415 and 01-52416
Debtors' Counsel: Paul M. Nussbaum, Esq.
Whiteford, Taylor & Preston
7 St. Paul St., #1400
Baltimore, MD 21202
410-347-8700
and
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
(212) 728-8000
Total Assets (Consolidated): $471,945,000
Total Debts (Consolidated): $337,962,000
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Bankers Trust Company Indenture Trustee $115,000,000
Four Albany Street for 10 1/4 Senior
Fourth Floor Subordinated Notes
New York, New York 10006 Due 2008
Contact: Asante Denis
212-250-6702
Susan Johnson
212-250-6569
Gary Products Group Inc. Trade $1,206,488
2601 S.E. Loop 289
Lubbock, TX 79404
(806)748-5007
Burpee Garden Products Co. Trade $728,776
300 Park Avenue
Warminster, PA 18974
Contact: Fred Hobson
(215)674-4900 ext.333
Davie Boag Trade $706,645
H.K. Int'l Trade
& Exhibit Ctr.
1 Trademart Drive,
Wang Ching St.
Rm No. 1001-1011,
10th Floor
Kowloon, Hong Kong
Contact: S.K. Lai
Fax-(9-011-8522-764-5918)
American Oak Preserving Trade $683,046
Co. Inc.
601 Mulberry St.
North Judson, IN 46366
Contact: Mary
(800)348-5008
NK Lawn & Garden Co. Trade $546,839
P.O. Box 24028
Chattanooga, TN 37422-4028
Contact: Stacy Deabler
(800)517-1151 ext. 2964
Cluett Corp. Trade $516,268
P.O. Box 6666
Tyler, TX 75711
Contact: Phil Matthews
(800)527-8446 ext. 281
K. Van Bourgondien Trade $508,201
& Sons Inc.
P.O. Box A, Route 109
Babylon, NY 11702
Contact: Linda Williams
(757)543-7099 ext. 317
Kirk Company Trade $502,452
201 St. Helens Ave.
Tacoma, WA 98402-2519
Contact: Tom Thomas
(253)627-1752
Variety Accessories, Inc. Trade $473,512
P.O. Box 4528
Great Neck, NY 11027
Contact: Mike
(516)829-5553
1-Boto Company Ltd Trade $469,049
17/F Eight Commercial Tower
8 Sun VIP St.
Chaiwan Hong Kong
Contact: Michael Kao
Fax: 852-2897-0141
Polytree Trade $460,610
25/F CCT Telecom Bldg
11 Wo Shing Street
Fo Tan Shatin, N.T.
Contact: Paul Cheng
(852)260-55109
Fax: (852)269-78711
Great Lakes Craft Trade $412,879
& Hobby Dist.
46660 Van Dyke
Shelby Township, MI 48317
Contact: Tom or Steve
(810)323-1300
I-Raymond Steve & Bros. Trade $398,248
Development
St. 611 Tower A Hunghom
39 Matauwei Rd.
HungHom Kowloon
Contact: Steve Tsui
(852)277-40686
Fax: (852)277-46188
Lake Valley Seed Trade $367,036
5717 Arapahoe
Boulder, CO 80303-1338
(303)449-4882
F: (303)449-8752
Happy Holiday Xmas Trade $355,878
Trees/Color Spot
3819 E. Sidney Rd.
Sheridan, MI 48884
Contact: Jeannie
(800)367-2325
Angel Plants, Inc. Trade $336,763
560 Deer Park Avenue
Dix Hills, NY 11746
Contact: Jack
(631)848-7788
Wilson WreathCo Ltd. & Trade $327,590
KeyBank NA
480 Main Street
Presque Isle, ME 04769
Contact: Marleta
(506)367-3199
The Washington Post Expense $322,556
P.O. Box A200
Washington, D.C. 20071
Contact: Royston DeSouza
202-334-7714
Teufel Holly Farms Trade $322,198
160 S.W. Miller Rd
Portland, OR 97225
Contact: John Coulter
(800)525-2692
C.M. Offray & Son, Inc. Trade $305,901
858 Willow Circle
Hagerstown, MD 21740
Contact: Jenny Henson
T: (301)714-4899
F: (301)714-4888
Artfaire/CPS Corporation Trade $303,626
1715 Columbia Hwy P.O. Box 68-
1000
Franklin, TN 37068
Contact: Sarah
(615)791-5173
Nolan & Cunnings Expense $298,229
P.O. Box 2111
Warren, Mi 48090-2111
Contact: John
(810)751-4670 ext. 118
Fiskars Group Trade $270,303
636 Science Drive
Madison, WI 53711
Fax 608-233-5321
Valfei Products Trade $267,610
P.O. Box 185
Norton, VT 05907
Contact: Sylvai Vaillancourt
(800)849-7019
Graphic Communications Expense $267,055
P.O. Box 54120
Los Angeles, CA 90054-0120
Contact: Brian Brazell
704-846-8155
I.C.Y Hung Co. Ltd. Trade $266,365
11/F Telford House 16
Wang Hoi Road
Kowloon Bay, Kowloon
Contact: Tony Hong
852-(2)721-9951
Wilson Enterprises Trade $262,110
P.O. Box 4, U.S. Hwy 2 & 41
Wilson, MI 49896
Contact: Kathy Wilson
(906)497-5534
Hermann Engelmann Trade $262,066
Grnhse, Inc.
2009 Marden Rd.
Apopka, FL 32704
Contact: Sandra Kitain
(407)886-3434
Easy Gardener Trade $255,203
PO Box 21025
Waco, Texas 76702-1025
and
1750 17th Street
Paris, KY 40361-1160
Fax: 254-753-5372
FRUIT OF THE LOOM: Resolves Accounting Software Lease With Oracle
-----------------------------------------------------------------
In 1995, Fruit of the Loom, Ltd. updated its core financial
software to new, Oracle-based software. Its functions include
account ledgers, profit and loss statements, accounts receivable
registers and accounts payable registers.
Around October 12, 1995, Fruit of the Loom and Oracle entered a
software license and service agreement. Fruit of the Loom agreed
to place one or more orders for software that provided for a
perpetual license. Fruit of the Loom contracted with Oracle for
support services. Fruit of the Loom also enrolled in Oracle's
Silver technical support plan.
Around March 25, 1997, Fruit of the Loom and Oracle entered a new
agreement that amended the previous one. It provided a three-
year, non-exclusive, non-perpetual license with an option to
purchase software and payment terms on four years of support
services. The payment plan involves consecutive quarterly
installment payments and a balloon payment at the end of the base
term.
Within this agreement, Oracle assigned certain rights and
obligations to Banc Boston Leasing. Banc Boston subsequently
sold, assigned and transferred its right, title and interest,
inter alia, to HSBC.
After commencement of the Chapter 11 cases, a dispute arose
between Oracle and Fruit of the Loom regarding the nature of the
software licensing agreement. Oracle contended that the
arrangement constituted a true lease while Fruit of the Loom
asserted it amounted to a financing transaction.
Under the settlement agreement, all disputes are resolved through
payments to Oracle, Banc Boston and HSBC. Fruit of the Loom will
assume the previously mentioned agreements. Oracle or any other
party asserting a claim is required to file a proof of claim.
Fruit of the Loom is deemed to have paid all necessary fees and
cure amounts under previous agreements, and has acquired a
license for use of software.
Last, upon the assumption date, all proofs of claim filed against
Fruit of the Loom in connection with the three parties are
withdrawn with prejudice and expunged in their entirety without
further action.
The settlement amounts are:
(1) Banc Boston Leasing Inc. $82,589
(2) HSBC Bank USA $322,411
(3) Oracle Corporation $1,584,793
Fruit of the Loom argued that the above actions are an exercise
of sound business judgment and will benefit its estates. The
agreement articulates the duties and obligations of the affected
parties and is both fair and reasonable. Judge Walsh agreed and
assents to the motion in all material respects.
G. William Newton, Chief Financial Officer of Fruit of the Loom,
Brenda G. Woodson, Vice President and General Counsel of Oracle,
Michael P. Marinelli, Assistant Vice President of Banc Boston
Leasing, signed the agreement. (Fruit of the Loom Bankruptcy
News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
GENEVA STEEL: Post-Emergence Financials Reflect Continued Losses
----------------------------------------------------------------
Geneva Steel Holdings Corp. (Nasdaq: GNVH) reported a net loss
before an extraordinary item of $32.3 million, or a loss of $1.93
per diluted common share, for the quarter ended December 31,
2000. This compares with net income of $1.8 million, or income of
$0.09 per diluted common share, for the same period last year.
The operating loss for the quarter ended December 31, 2000, was
$26.8 million, compared with an operating loss of $4.0 million
during the same period last year. As a result of the cancellation
of indebtedness in connection with its emergence from bankruptcy,
the Company recognized an extraordinary gain of $249.3 million,
resulting in net income for the quarter ended December 31, 2000,
of $217.0 million, or $12.86 per diluted common share. The
results of operations for the quarters ended December 31, 2000
and 1999 reflect the operations of the predecessor company under
the supervision of the bankruptcy court. With the emergence of
the Company from bankruptcy and the implementation of "fresh-
start" accounting, future results of operations will not be
comparable to those of the predecessor company.
The Company also changed its fiscal year-end from September 30 to
December 31. The Company reported the transition period from
October 1 through December 31, 2000, on Form 10-Q and will report
its new fiscal year on Form 10-K for the period ended December
31, 2001.
Recent Operating Results: The Company experienced lower overall
price realization per ton for its products during the three
months ended December 31, 2000, as compared to the same quarter
in the prior year. The weighted average sales price per ton (net
of transportation costs) of sheet and slab products decreased by
approximately 4.3% and 15.2%, respectively, during the 2000
quarter, while the weighted average sales price per ton of plate
and pipe products increased by approximately 7.6% and 6.7%,
respectively, as compared to the same quarter in the prior year.
Sales and tons shipped during the most recent quarter were $112.2
million and 404,000 tons, respectively, compared with sales and
tons shipped of $126.2 million and 444,000 tons, respectively,
for the same period last year.
Steel imports into the U.S. and domestic steel inventory levels
have recently been high and are adversely affecting the Company's
order entry and pricing. Additionally, new plate production
capacity is being added in the domestic market. The Company
expects that its overall price realization and shipments will
remain at relatively low levels during the first calendar quarter
and negatively impact the financial performance of the Company
during the first calendar quarter of 2001 and potentially beyond
that period. The Company's order entry has, however, recently
improved. In light of indications of market improvements, the
Company recently announced price increases of $20 and $10 per ton
on hot-rolled bands and plate, respectively. Although the Company
expects the hot-rolled band and plate markets to improve, there
can be no assurance that such will be the case.
As a result of weaker market conditions, the Company operated two
blast furnaces at a reduced pace during the quarter ended
December 31, 2000. Given continued weak market conditions, the
Company idled its #2 blast furnace for 25 days beginning in late
January during which time repairs were made that are expected to
significantly defer the next required reline. During such time,
the Company operated at a one blast furnace level. The #2 blast
furnace was recently placed back in operation. Given continued
weak market conditions, the Company intends to idle its #1 blast
furnace, currently in operation, within two weeks to perform
repairs that are expected to significantly defer the next reline.
The Company believes that the repairs to the #1 blast furnace can
be completed by May 31 at which time the Company could return to
a two blast furnace operation if market conditions warrant doing
so.
The Company's operating costs per ton for the three months ended
December 31, 2000 increased as compared to the same period in the
prior year, primarily as a result of production inefficiencies
associated with operating two blast furnaces at a significantly
reduced level and significantly higher natural gas costs.
Decreased production volumes and higher natural gas costs
continue to adversely impact the Company's results of operations.
Operating costs per ton increased as production volume decreased
in part because fixed costs are allocated over fewer tons.
Liquidity: In connection with its emergence from bankruptcy, the
Company entered into a $110 million term loan agreement and
established a $125 million revolving credit facility. At December
31, 2000, the Company's balance sheet included $22.9 million in
cash from the term loan. This cash was used in early January
2001, primarily to pay accounts payable, which increased during
the previous quarter as a result of delays in closing the term
loan and revolving line of credit and the Company's resulting
lack of liquidity. As of February 28, 2001, the Company's
eligible inventories, accounts receivable and equipment supported
access to $69.3 million in borrowings under the Company's credit
facility. As of February 28, 2001, the Company had $60.3 million
available under the credit facility, with $5.1 million in
borrowings and $3.9 million in letters of credit outstanding.
Capital expenditures were $1.4 million and $0.6 million for the
three months ended December 31, 2000 and 1999, respectively.
These expenditures were made primarily in connection with the
Company's ongoing modernization and maintenance efforts. Capital
expenditures for fiscal year 2001 have been revised in light of
current market conditions and are now budgeted at approximately
$15 million, which includes the blast furnace repairs described
above (and excludes any significant spending on the Company's
planned walking beam furnace), and minimal maintenance spending.
Given the Company's recent emergence from Chapter 11, current
market conditions, and the uncertainties created thereby, the
Company is continuing to closely monitor and control its capital
spending levels. Depending on market, operational, liquidity and
other factors, the Company may elect further to adjust the
design, timing and budgeted expenditures of its capital plan.
The Company's plan of reorganization provided each holder of
unsecured debt a right to participate in a $25 million preferred
stock rights offering in the Company. The Company had previously
entered into two standby purchase agreements for the purchase of
up to $25 million of the new preferred stock. The standby
purchaser that would have purchased up to $10 million of the
preferred stock funded a portion of the $110 million term loan
and was released from its standby purchase agreement. The other
standby purchaser took the position that for a number of reasons,
including the assertion of a material adverse change, it was no
longer bound by its standby commitment to purchase up to $15
million of the preferred stock and filed a lawsuit seeking a
declaratory judgment that it was no longer bound. The Company and
the standby purchaser have settled the lawsuit, subject to
appropriate bankruptcy court approval, through a payment to the
Company of a nominal settlement amount. In light of current
capital market conditions for steel companies, the recent trading
value of the common stock of the Company and the lack of any
standby commitments, the Company has elected not to proceed with
its preferred stock rights offering, subject to appropriate
bankruptcy court approval.
Geneva Steel Holdings Corp. 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.
HARNISCHFEGER: Has Until May 1 to Assume & Reject Leases
--------------------------------------------------------
Harnischfeger Industries, Inc. sought and obtained the Court's
approval for the extension of the period within which they must
file a motion to assume or reject unexpired leases through and
including the earlier of (a) the effective date of any confirmed
plan of reorganization or (b) May 1, 2001, subject to the
Debtors' right to request a further extension and the rights of
any lessor to request that the extension be shortened as to a
particular lease.
The Debtors reminded the Court that under the Joint Plan that has
been filed, the Reorganizing Debtors will assume all unexpired
leases, unless specifically rejected and the Liquidating Debtors
will reject all unexpired leases, unless specifically assumed.
The confirmation hearing, during which the Debtors will seek
approval for this Plan, is currently set for April 3, 2001.
In light of this, the Debtors find that if the requested
extension is not granted, they will be compelled to assume large,
long-term liabilities, creating substantial administrative
expense claims, or to forfeit leases prematurely, impairing their
ability to operate and to preserve the going concern value of
their estates. The extension requested, on the other hand,
will enable them to examine more thoroughly each of the unexpired
leases in the context of the reorganization.
Therefore, the Debtors believe that the relief requested is in
the best interests of the Debtors' estates and their creditors
and should be granted. (Harnischfeger Bankruptcy News, Issue No.
38; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ICG COMMUNICATIONS: Rejecting Parker-Raleigh Switch Site Lease
--------------------------------------------------------------
ICG Communications, Inc., with the consent of the Creditors'
Committee, sought Judge Walsh's approval to reject a lease of a
telecommunications switch site as unnecessary to their ongoing
business operations. The rent and other expenses under this lease
aggregate to approximately $11,001.23 per month, and constitute
an unnecessary drain and administrative expense on the Debtors'
cash flow. Moreover, the Debtors told Judge Walsh that they would
be unable to obtain any value for this lease by assignment to
third parties. As of the filing of this Motion, the Debtors have
sent the affected landlord a letter stating, among other things,
that the leased premises are abandoned. The keys have been
returned by hand delivery or by separate letter.
The leased location is 6451 Meridien Drive, Raleigh, North
Carolina. The landlord is Parker-Raleigh Development XXX, LLC,
located at P. O. Box 58036, Raleigh, North Carolina, and the
leasing entity is ICG Equipment, Inc. (ICG Communications
Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
INTEGRATED HEALTH: Oncology Begs to File Late Proof Of Claim
------------------------------------------------------------
Oncology Therapeutic Network, Inc., which provided medical
supplies to Integrated Health Services, Inc. prior to the
Debtors' petition date, acknowledged that the Debtors' bankruptcy
notice was sent to Oncology but was mistakenly filed by a
temporary file clerk at Oncology. As a result, suitable personnel
at Oncology for the matter only became aware of the document as
late as October 2000. Oncology then sent the file to Stephen
Benda, Esq., a California attorney who then prepared and filed a
proof of claim which was received by the claims agent, Poorman
Douglas on November 7, 2000. Sometime in late November, Mr. Benda
realized he might need relief to file the proof of claim and he
contacted local counsel Michael P. Morton, P.A. for assistance in
preparing and filing a Motion for Leave of Court to File and
proof of claim.
Accordingly, Oncology sought the relief from Court to file a late
proof of claim, or in the alternative allow nunc pro tunc the
November 7, 2000 proof of claim. Oncology has attached to the
motion a copy of the November 7, 2000 proof of claim in the
amount of $151,000.78.
Oncology sought the relief in accordance with the "excusable
neglect" standard as set forth in Rule 9006(b)(1) which Oncology
says has been interpreted liberally by the United States Supreme
Court in Pioneer Inv. Serv. Co. V. Brunswick Assocs. Ltd.,
Partnership, 507 U.S. 380 (1993) and by the United States Court
of Appeals for the Third Circuit in Chemetron Corporation v.
Jones, 72 F.3d.341 (3d Cir. 1995), cert. denied, 517 U.S.
1137 (1996). Oncology also represented that the relief requested
will have no prejudicial effect on the IHS bankruptcy
proceedings, which are still in the pre-confirmation phase.
(Integrated Health Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
IRONBRIDGE: Plans to Liquidate Assets Under Bankruptcy Protection
-----------------------------------------------------------------
Start-up IronBridge Networks is planning to file for bankruptcy
protection after it failed to secure extra financing or find a
buyer, company executives said, according to CNET News.com.
IronBridge Chief Financial Officer Nick Pettinella said that the
company will file for Chapter 7 bankruptcy protection, meaning
the company will liquidate all its assets.
IronBridge, which laid off 90 percent of its staff in January,
had built a high-speed networking device to compete against
networking giant Cisco Systems, Juniper Networks and Avici
Systems.
The three-year-old startup laid off 170 employees in late January
after the company failed to secure an extra $100 million in
financing. A small group of about 15 to 20 employees had remained
to look for more venture capital or a buyer. The company's
executives had previously said $100 million in funding fell
through in early December because venture capitalists became
skittish about the current state of the technology market.
IronBridge is partly owned by French telecommunications equipment
maker Alcatel and some analysts have wondered if Alcatel would
step in and save the start-up. Alcatel could not immediately be
reached for comment, but analysts have speculated that Alcatel
doesn't need IronBridge's technology because the company has its
own internal project to develop a high-end router. (ABI World,
March 1, 2001)
LASON INC.: Sells Escrow Services Business To DSI Technology
------------------------------------------------------------
Lason, Inc. (OTCBB: LSON) announced the sale of the assets of its
Fort Knox Escrow Services, Inc. subsidiary to DSI Technology
Escrow Services Inc., an Iron Mountain Company (NYSE: IRM). Terms
of the sale were not disclosed.
"The sale of the assets of the Fort Knox subsidiary is a
significant asset sale for Lason and is part of our strategy to
divest non-core assets and simplify operations," stated Ronald D.
Risher, Executive Vice President and Chief Financial Officer of
Lason, Inc. "The sale proceeds will be used to reduce Lason's
debt and strengthen our working capital position. We remain in
discussions with a number of interested parties regarding the
sale of other non-core assets while actively focused on building
our core business operations."
Fort Knox Escrow Services provides technical and intellectual
property escrow services. The Company is located in Atlanta,
Georgia.
About the Company
LASON -- http://www.lason.com-- is a leading provider of
integrated information management services, transforming data
into effective business communication, through capturing,
transforming and activating critical documents. LASON has
operations in the United States, Canada, Mexico, India, Mauritius
and the Caribbean. The company currently has over 85 multi-
functional imaging centers and operates over 60 facility
management sites located on customers' premises.
LERNOUT & HAUSPIE: Engages PwC as Financial Advisors
----------------------------------------------------
Daniel P. Hart, Senior Vice President and General Counsel for
Lernout & Hauspie Speech Products N.V. and Dictaphone Corp.,
applied on behalf of the Debtors to Judge Judith H. Wizmur for
authorization to employ and retain PricewaterhouseCoopers LLP as
the Debtors' financial advisors and restructuring accountants,
effective as of the petition date.
The professional services that PricewaterhouseCoopers intend to
render include advice and assistance to the Debtors in:
(a) Preparation, analysis and monitoring of historical,
current and projected financial affairs, including without
limitation schedules of assets and liabilities, statements of
financial affairs, periodic operating reports, analyses of cash
receipts and disbursements, analyses of cash flow forecasts,
analyses of various asset and liability accounts, analyses of any
unusual or significant transactions between themselves and any
other entities, and analyses of proposed restructuring
transactions;
(b) Assist the Debtors in the valuation of businesses and
preparation of a liquidation valuation for a reorganization plan
and disclosure purposes;
(c) Assist the Debtors in preparation of a rolling 13-week
cash forecast;
(d) Assist the Debtors in their review of existing proposed
systems and controls, including but not limited to cash
management;
(e) Assist the Debtors in the development and negotiation of
any plan of reorganization scenarios, including, as necessary,
certain information to be included in the disclosure statement;
(f) Assist the Debtors in the preparation or review of
strategic options, business plans and financial projections;
(g) Assist the Debtors in their review of executory
contracts and provision of recommendations to assume or reject;
(h) Assist the Debtors in their assessment of the management
team, including a review of the bonus, incentive, retention and
severance plans;
(i) Assist and advise the Debtors to review and evaluate the
claims process;
(j) Assist and advise the Debtors regarding various
reorganization tax issues, including calculating net operating
loss carry-forwards, and the tax consequences of any proposed
reorganization;
(k) Attend meetings and court hearings as may be required in
PwC's role as the Debtors' financial advisors and restructuring
accountants;
(l) Render expert testimony and litigation support services
the Debtors and their counsel may request regarding the SEC
investigation of L&H, the feasibility of a reorganization plan
and other matters;
(m) Assist the Debtors in the investigation of their Korean
affiliate's activities and operations;
(n) Advise and assist the Debtors in the process of
identifying and reviewing DIP financing;
(o) Advise and assist the Debtors in the preparation of a
collateral package in support of the DIP Financing;
(p) Advise and assist the Debtors in identifying and/or
reviewing preference payments, fraudulent conveyances, and other
causes of action;
(q) Advise and assist the Debtors in reviewing any proposed
sales of assets or business units; and
(r) Assist with such other accounting and financial advisory
services as may be requested by the Debtors or their counsel.
PricewaterhouseCoopers has agreed with the Debtors to charge its
standard hourly rates for financial advisory services based on
actual hours incurred excluding reimbursement for necessary and
actual out-of- pocket expenses. PwC's standard hourly rates for
these services are:
Partners $570 to $595
Directors $510 to $525
Managers $400 to $420
Senior Associates $265 to $315
Associates $215 to $225
Para-Professionals $140 to $160
These rates are subject to change but will remain in line with
market rates for comparable services. Hourly rates for
specialists may vary from the standard rates but will be
consistent with those rates charged to other firm clients for
specialist services. The Debtors' application and the
accompanying affidavit do not contain any details concerning
differing rates for specialists' services.
Joseph L. D'Amico a partner of PricewaterhouseCoopers assured
Judge Wizmur that the firm is a disinterested person in that
neither he nor any other partner, principal, associate or staff
person of the firm has any connection with or holds any interest
adverse to the debtors, their estates, creditors, shareholders or
any other party in interest or their attorneys in the matters for
which it is proposed to be retained.
He disclosed that in the past the firm has rendered the following
pre-petition services to the Debtors and/or one of the affiliates
or subsidiaries:
(a) Audit and advisory services to the L&H investment
Company, which is owned by Joe Lernout and Paul Hauspie. This
company has an 85% interest in a holding corporation, which in
turn owns an 8.5% controlling interest in L&H Speech Products
N.V.
(b) Purchase price allocation and intangible asset valuation
services in connection with acquisitions made by the Debtors;
(c) Dispute analysis and investigation services to the
Debtors' attorneys.
Mr. D'Amico declared that these services have been concluded, and
that partial payments for these completed pre-petition services
have been made and the $40,000 unpaid balance has been forgiven.
He said that neither he nor any other professional of the firm is
related or connected to any US Delaware or District Judge or the
US Trustee for the District of Delaware or to any employee in
those offices except for Ms. Kim Astin, a tax manager with the
firm. Mr. D'Amico added that Ms. Astin is married to Daniel
Astin, an attorney with the US Trustee for the region that
includes Delaware. Ms. Astin is neither involved in these cases
nor participates in any aspect of the firm's bankruptcy or
business recovery practice. The firm believes that its employment
of Ms. Astin has no impact on the firms eligibility for
employment by the Debtors. (L&H/Dictaphone Bankruptcy News, Issue
No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900)
LOEWEN GROUP: Rock Of Ages Closes Deal on 16 Kentucky Cemeteries
----------------------------------------------------------------
Rock of Ages Corp. (NASDAQ/NMS:ROAC) announced that it has
completed the previously announced acquisition of 16 cemeteries
and one granite memorial retailer in Kentucky formerly owned by
the Loewen Group Inc.
The purchase price was $6.8 million, representing approximately
90% of the 1999 revenue of the acquired entities.
Taken together, the 16 cemeteries have approximately 50,000
cemetery lots available for sale and 170 acres of undeveloped
land available for future cemetery use. In accordance with an
agreement between Rock of Ages and Keith & Keith Enterprises LLC
made prior to the latter's successful bankruptcy auction bid for
20 cemeteries, a memorial retailer, and 31 funeral homes owned by
the Loewen Group, Rock of Ages took title to the 16 cemeteries
and one memorial retailer directly from Loewen as the designee of
Keith & Keith, a real estate investment partnership owned by John
Keith and Roy Keith Jr.
Simultaneously with the Rock of Ages transaction, Keith & Keith
sold all of the funeral homes and remaining cemeteries to third
parties with the exception of certain undeveloped acreage at a
cemetery not purchased by Rock of Ages.
John Keith and Roy Keith Jr., the principals of Keith & Keith,
have agreed to extensions of their existing employment contracts
with Rock of Ages through Dec. 31, 2004. They will assume
responsibility for all of the company's operations in Kentucky
and Southern Illinois.
"This acquisition is an exceptional opportunity for Rock of Ages
to dramatically expand our granite memorial market in Kentucky.
The acquired businesses currently generate revenue of
approximately $7.5 million annually, primarily from the sale of
cemetery lots and flush markers. We believe that we can increase
this contribution in two ways. First, we will open new retail
memorial sales locations at the cemeteries that are not close to
any of the retail outlets we already own in this state. Second,
14 of the 16 cemeteries involved in the transaction currently
allow only flush bronze markers. We plan to establish upright
granite monument sections in all but one of the 16 cemeteries,
which will give our customers freedom of choice in memorials and
provide us with the opportunity to expand sales of Rock of Ages-
branded memorials," said Kurt Swenson, chairman and chief
executive officer of Rock of Ages.
"Our retail growth strategy is to create an integrated network to
better and more efficiently serve consumers by providing them
with more choices of memorials in each of the geographic regions
in which we operate. Because Rock of Ages already has a good
retail presence in the Kentucky market, all of the operational
and management assets we need to properly integrate this new
cemetery model into our overall retail concept are already in
place. So we see this as a logical and low-risk opportunity to
expand our retail business. Based on our experience in Kentucky,
we would consider acquiring additional cemeteries in other
regions if circumstances warrant," Swenson added. (Loewen
Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
LTV CORP.: Cendant Seeks Order Compelling Assumption of Contract
---------------------------------------------------------------
Under the Court's Order authorizing The LTV Corporation to pay
prepetition employee and independent contractor wages, make
contributions to employee benefits plans, the Debtors were
granted a right to honor current hourly and salaried employee
paychecks, expense checks, and health benefit claims. However,
Jeffrey B. Fleck of Jeffrey B. Fleck & Associates of Youngstown,
Ohio, told Judge Bodoh, on behalf of Cendant Mobility Services
Corporation, that the Order does not specifically refer to a
right to honor employee benefits after any proposed payment for
postpetition services provided to the Debtors by Cendant
Mobility.
Cendant Mobility is in the business of corporate relocation,
assisting its clients in relocating employees for the benefit of
the client. In 1981, Cendant's predecessor, Executrans, Inc.,
entered into a Relocation Management Agreement with Copperweld
Corporation, under which Cendant was providing services on the
Petition Date. Cendant has a similar agreement with LTV Steel
Company, Inc.
As of that date, Copperweld owed Cendant $32,986.72 for services
rendered, though Copperweld had issued an advance of
approximately $79,000, against which $25,700 of the balance of
$32,986 may be setoff. The arrearage continues to increase,
however, as Copperweld continues to use Cendant's services for
its employees.
On the Petition Date LTV owed Cendant Mobility $1,108.85. Cendant
has an advance in the approximate amount of $79,000 for the costs
associated with two employee homes currently in inventory. The
prepetition costs associated with these homes are approximately
$25,700. LTV has requested that Cendant continue to provide
benefits to its employees, but has not assumed the contract or
cured the default.
Cendant asserted that the Relocation Agreements are executory
contracts, and that each of Copperweld and LTV should be
compelled to assume or reject it under the Bankruptcy Code.
Cendant says that, in light of the status of Copperweld's post-
petition operations it appears highly unlikely, if not
impossible, for Copperweld's estate to ever provide adequate
assurance of future performance to Cendant so as to allow
assumption of the agreement. Cendant therefore asked that it be
awarded an administrative claim for all monies owing to it and
unpaid postpetition by each of these estates, and that Copperweld
and LTV each be compelled to assume or reject the Agreements to
avoid the creation of a larger administrative claim, and to
permit Cendant to cease rendering services if the Debtors intend
to reject the contract. (LTV Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-00900)
MARLTON TECHNOLOGIES: Amends Bank Loan Agreement with First Union
-----------------------------------------------------------------
Marlton Technologies, Inc. (ASE:MTY) has executed an Amendment to
its Revolving Credit and Security Agreement with First Union
National Bank which cures Marlton's previously reported covenant
non-compliance for the third quarter of 2000.
As a result of a bad debt provision and inventory write down
recorded in the third quarter of 2000, Marlton was not in
compliance with certain financial ratio covenants based on its
earnings before interest, taxes, depreciation and amortization
("EBITDA") at September 30, 2000 and thereafter. Marlton had
obtained a temporary waiver from the Bank.
This Amendment excludes the effect of the bad debt provision and
inventory write down from the calculation of EBITDA based ratios
through June 30, 2001. Since these ratios are measured on a
twelve month historic basis, the effect of the third quarter 2000
bad debt provision and inventory write down will not affect the
calculation of these ratios after June 30, 2001.
The Amendment also reduces Marlton's maximum permissible senior
funded debt to EBITDA ratio from 3.75 to 3.50 immediately and to
3.25 after September 30, 2001, and may increase the interest rate
by up to 0.75% on certain borrowings, dependent upon Marlton's
quarterly senior funded debt to EBITDA ratio.
A full-text copy of the original Amended And Restated Revolving
Credit And Security Agreement Dated as of January 21, 2000 among
Marlton Technologies, Inc., Sparks Exhibits Holding Corporation,
Sparks Exhibits & Environments Corp., Sparks Exhibits &
Environments, Inc., Sparks Exhibits & Environments, Ltd., Sparks
Exhibits & Environments, Incorporated, Sparks Scenic Ltd., Sparks
Productions Ltd., DMS Store Fixtures LLC, collectively, the
Borrowers, and First Union National Bank, as Agent and Lender is
annexed as Exhibit 10(v) to the Company's Form 10-K filed with
the SEC on March 30, 2000, and posted at
http://www.sec.gov/Archives/edgar/data/96988/0000950116-00-
000709.txt
Marlton Technologies, Inc., through its Sparks Exhibits &
Environments and DMS Store Fixtures subsidiaries, is engaged in
the design, marketing and production of trade show, museum, theme
park and themed interior exhibits and store fixture and point of
purchase displays, both domestically and internationally.
NEFF CORP.: Moody's Cuts Ratings After United Rental Talks End
--------------------------------------------------------------
Moody's Investors Service downgraded Neff Corporation's ratings
following Neff's announcement that negotiations with United
Rentals, Inc. were terminated. These ratings are as follows:
* senior secured debt to B3 from B1;
* senior subordinated notes to Caa2 from B3;
* senior implied rating to B3 from B1;
* and unsecured issuer rating to Caa1 from B2.
The outlook is negative and approximately $420 Million of debt
securities are affected.
At the same time, Moody's also removed the debt ratings of Neff
from review for possible upgrade.
Moody's states, the downgrades and negative outlook reflect
Neff's weak performance through the nine months ended September
30, 2000 (during which EBITA failed to cover total interest
expense); expectations for continued weakness in both Q4-00 and
Q1-01; and likely covenant violations on the senior secured
credit facilities. Accordingly, full-year 2000 results are
expected to be released during the first week of March, at which
time Moody's will review the results to determine if the ratings
should be lowered further.
Neff Corporation is based in Miami, Florida, and is a leading
equipment rental company with 83 locations in 17 states.
OCEAN RIG: S&P Taking Dim View of Norwegian Deepwater Rig Maker
---------------------------------------------------------------
Standard & Poor's revised its CreditWatch implications to
negative from developing on the triple-'C' ratings of Ocean Rig
Norway A.S.'s (ORN) $125 million floating-rate senior-secured
loans and $225 million fixed-rate senior-secured notes.
This action reflects the company's recent announcement that
Friede Goldman does not intend to complete the rigs without a new
agreement between the parties. Absent near-term completion
prospects for the rigs, the company faces significant challenges
and uncertainty as to an ultimate source of repayment on the
bonds. ORN still has no drilling contracts in place to provide
ongoing operating cash flow.
ORN is a Norwegian company and a wholly owned subsidiary of Ocean
Rig A.S.A., a public joint stock company organized under the laws
of Norway, formed in 1996 to construct, own, and operate a fleet
of semisubmersible drilling rigs for offshore oil and gas
exploration and development in deep water and harsh environments.
Start-up company risk; lack of a drilling contract, which exposes
the company to uncertain day rates; one of the highest break-even
costs among competitors; and construction-completion risk
indicate a negative trend.
The rating incorporates the following risks:
-- ORN currently suffers from poor liquidity and financial
flexibility.
-- ORN lacks long-term drilling contracts and thus a
predictable, stable source of revenue for servicing the
notes. Dayrates that the company could eventually secure
are highly dependent on market forces.
-- A six to nine month delay on delivery of the rigs
precludes ORN from tendering any bids for contracts until
a more certain delivery date is known.
-- There is limited contingency built into the construction
budget. If there is a cost overrun and ORN is not
successful in raising additional capital, ORN may default
on its obligations earlier.
-- ORN is new, lacks an operating history, and has limited
experience in rig management.
-- ORN's limited financial flexibility and a 50% leverage
ratio are above larger and more well-capitalized
competitors. ORN could experience difficulty in meeting
debt service if one of the rigs is unavailable.
-- Construction is being performed in two stages by two
unrated contractors in different geographic locations.
Though the works are being performed under engineering,
procurement, and construction style contracts, provisions
for delay-liquidated damages are limited and insufficient
to cover debt service.
-- The collateral package lacks full and first priority
security on the project's assets. The bondholders will
receive a first lien on Rig 1 and a second lien on Rig 2.
In addition, while the collateral package includes a
pledge of receivables generated under any contracts,
Norwegian law precludes a creditor from obtaining a
security interest in contracts themselves, therefore no
contracts are pledged as collateral.
-- ORN may incur up to $1 billion in total indebtedness,
subject only to restrictions based on a pro forma
EBITDA/interest ratio of 2 to 1 and a loan-to-cost ratio
of 2 to 3 for construction of Rigs 3 and 4.
-- There is refinancing of a bullet maturity.
-- There is lack of structural features common to project
financing, including trustee-controlled accounts,
restricted activities, and reserve accounts.
However, these strengths mitigate the risks outlined above:
-- There is $480 million of equity invested to date.
-- The Bingo 9000 design is a fifth-generation
semisubmersible, which is the most advanced in the world
and capable of drilling in water depths of up to 3,000
meters.
ORN is using the proceeds of the bonds to fund the costs of
construction of two, fifth-generation, dynamically positioned
deepwater semisubmersible drilling rigs (Bingo 9000 design), to
pay interest on the notes through the delivery date, and to fund
the costs of construction of two more baredeck hulls, Standard &
Poor's said.
OWENS CORNING: Court Approves Purchasing Card Agreement With BofA
-----------------------------------------------------------------
Judge Walrath entered an Order granting Owens Corning authority
to enter into a purchasing card agreement with Bank of America
N.A. (USA), and amended the Final Order authorizing postpetition
financing on a superpriority basis to include the Debtors'
obligations under this agreement within its scope. (Owens Corning
Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
PHENIX BIOCOMPOSITES: Case Summary & List of 20 Largest Creditors
-----------------------------------------------------------------
Debtor: Phenix Biocomposites LLC
P.O. Box 609
Mankato, MN 56002-0609
Type of Business: Manufactures decorative and industrial panels
for the furniture and construction industries.
Chapter 11 Petition Date: February 26, 2001
Court: District of Minnesota
Bankruptcy Case No.: 01-40760
Judge: Nancy c. Dreher
Debtor's Counsel: Steven J. Kluz, Sr., Esq.
Rider Bennett Egan & Arundel
333 South 7th St Ste 2000
Minneapolis, MN 55402
612-340-7968
Total Assets: $32,781,316
Total Liabilities: $52,850,028
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Douglas Pierson Soybean Deliveries $401,552
7 Valhalla Dr
Slayton, MN 56172
(507) 763-3410
First National Bank Of Onaga Debenture Round 2 $400,000
Jane Rieschick
P.O. Box 420
Onaga, KS 66521
(785)889-4213
Frank Gazzola Debenture Round 2 $400,000
410 Jackson St. Ste 510
Mankato, MN 56001
(507) 388-4855
UM Bank NA EB Div Debenture Round 2 $210,000
Xcel Energy Accounts Payable $204,189
Reynolds Welding Supply Debenture Round 2 $200,000
Robert Schemel Soybean Deliveries $174,413
Land Records Accounts Payable $148,088
Minnegasco Reliant Energy Accounts Payable $135,027
B & H Manufacturing Inc. Accounts Payable $113,303
Darrell Toutge Soybean Deliveries $110,225
Loren Norgaard Soybean Deliveries $104,560
Henry Carlson Company Debenture Round 2 $100,000
Catalytic Comb 401K Debenture Round 2 $100,000
Thomas Reynolds Debenture Round 2 $100,000
Joyce R. Larson Debenture Round 2 $100,000
Melvin R. Larson Debenture Round 2 $100,000
Richard E. & Cherryl Jameson Debenture Round 2 $100,000
Olga & Patsy Cuomo Debenture Round 2 $100,000
Charles F. Barbarisi MD Debenture Round 2 $100,000
PLAY-BY-PLAY: Names Tomas Duran As New Chief Executive Officer
--------------------------------------------------------------
Play-By-Play Toys & Novelties, Inc. (Nasdaq: PBYP) announced that
Tomas Duran, 55, has been named Chief Executive Officer,
effective immediately. Arturo Torres, 64, formerly Chief
Executive Officer, will remain as Chairman of the Board.
Mr. Duran has been affiliated with Play-By-Play for several years
in various capacities. Most recently, he served as a special
consultant to the Company and was instrumental in negotiating and
restructuring the Company's Convertible Debentures. In addition,
Mr. Duran has played a key role in restructuring the terms of
several significant licensing agreements with Warner Bros.
Consumer Products. Mr. Duran was a member of the Company's Board
of Directors from November 1992 to February 2000, and served as
the Chairman of its Audit Committee from 1995 to February 2000.
Mr. Duran has owned an insurance consulting business located in
Corpus Christi, Texas, since August 1992. From 1988 through July
1992, he was Director of Management and Budget and Senior City
Manager for the City of Corpus Christi, Texas. Mr. Duran received
a Bachelor of Arts degree in international relations from West
Texas State University in 1970.
Arturo G. Torres, Chairman of the Board, commented, "The Board of
Directors and I believe that Tomas is the best person to assume
the responsibilities of Chief Executive Officer given his
extensive business experience in both the public and private
sectors. His experience with our Company in the past, and most
recently with his involvement in negotiating and restructuring
our Convertible Debentures, has been vital. We believe his
knowledge, vision and leadership skills will be beneficial to the
Company's future growth."
Mr. Duran commented, "I am extremely pleased to be joining Play-
By-Play as the Chief Executive Officer. As a member of the Board
and serving the Company in various capacities in the past, I have
gained great deal of respect for Arturo and the senior management
team currently in place. I look forward to working with everyone
at Play-By-Play to return the Company to more prosperous times."
Play-By-Play also announced that Ottis Byers, 56, has joined the
Company as Director, National Sales and Luis Benet Chacopino, 39,
who joined the Company in November 1999 as Chief Financial
Officer - Europe, has been promoted to Director, International
Finance. Mr. Byers is currently a member of the Company's Board
of Directors.
Mr. Torres continued, "I believe that these changes solidify our
management team and will provide the Company with the experience
and leadership that is necessary for our continued progress. We
are excited about the Company's future and we firmly believe we
have the best-suited management team in place to lead the Company
in the coming years."
Play-By-Play Toys & Novelties, Inc. designs, develops, markets
and distributes a broad line of quality stuffed toys, novelties
and consumer electronics based on its licenses for popular
children's entertainment characters, professional sports team
logos and corporate trademarks. The Company also designs,
develops and distributes electronic toys and non-licensed stuffed
toys, and markets and distributes a broad line of non-licensed
novelty items. Play-By-Play has license agreements with major
corporations engaged in the children's entertainment character
business, including Warner Bros., Paws, Incorporated, Nintendo,
and many others, for properties such as Looney Tunes(TM),
Batman(TM), Superman(TM), Garfield(TM) and Pokemon(TM).
SERVICE MERCHANDISE: Proposes Modified Employee Retention Program
-----------------------------------------------------------------
Service Merchandise Company, Inc. sought to implement an employee
retention program for fiscal year 2001 and related matters. This
2001 Employee Retention Program, the Debtors said, will not
materially alter the terms of the current retention program
previously approved by the Court but will encompass additional
modifications to meet needs due to:
(a) expiry of the Current Retention Program in the first
quarter of 2001;
(b) workforce reductions under the 2001 Initiatives which
has dampened employee morale and increased concern over job
security;
(c) the Debtors' planned emergence following the 2001
Christmas selling season instead of mid 2001, which makes it
necessary for the Debtors' to have an employee retention program
for fiscal year 2001 to maintain employee morale and preserve a
stable workforce as the Debtors work toward emergence;
(d) changes in senior management structure and composition.
The Debtors told the Court that PricewaterhouseCoopers has
prepared a report on the 2001 Employee Retention Program. Subject
to court approval, the Program will be implemented in accordance
with this report.
The 2001 Employee Retention Program provides for:
(A) Tier Adjustment
The 2001 Program will accommodate changes in the
Debtors' senior management structure and composition due to the
departure of the Debtors' President/Chief Operating, the
expansion in the role of the Chief Executive Officer following
that to include the duties and responsibilities of the Chief
Executive Officer, President and Chairman of the Board. In
addition, the Debtors intend to establish a new senior management
position known as Chief Merchandising Officer.
Under the current program, in Tier I, there are the Chief
Executive Officer and President/Chief Operating Officer, in Tier
II there is only the Chief Administrative Officer. With the
adjustments, in Tier I, the only employee will be the Executive
Officer/President/Chairman of the Board, while Tier II will
include both the Chief Administrative Officer and Chief
Merchandising Officer.
The remaining tiers are unaltered from the Current Retention
Program.
(B) Stay Bonus Program
With respect to the Stay Program, in addition to any
payments due in fiscal year 2001, an additional Stay Bonus will
be paid in two equal installments on specific dates based upon
the key employees' continued employment with the Debtors and
satisfactory performance evaluations during the Debtors'
restructuring program. Like the Current Retention Program, the
maximum amount of the Stay Bonus is calculated as a percentage of
the key employees' base salary, with the percentage being tied to
the tier level of each key employee.
The only change in the percentage for calculating stay bonus is
that with respect to the Chief Executive. Because his role now
includes President and Chairman of the Board, his Stay Bonus will
be increased from 60% to 90% of his annual base salary.
The Stay Bonus will vest and be paid on certain dates.
Specifically, for Tiers I, II, III and IV employees, which, as
altered, consist of the Chief Executive
Officer/President/Chairman of the Board, Chief Administrative
Officer, Chief Merchandising Officer, Senior Vice Presidents and
Vice Presidents, the payments would be (i) 40% of the total Stay
Bonus on or about July 31, 2001 and (ii) 60% of the total Stay
Bonus on or about the earlier of emergence or July 31, 2002.
However, for Tiers V, VI and VII employees, which consist of
Assistant Vice Presidents, Store Managers, Assistant Store
Managers, Buyers, Merchandisers and other selected positions, the
payments would be (i) 40% of the total Stay Bonus on or about
July 31, 2001 and (ii) 60% of the total Stay Bonus on or about
the earlier of emergence or March 31, 2002.
(C) Annual Incentive Program
Like the Current Retention Program, an additional
payment will be given based upon a sliding scale of three-to-five
strategically significant goals, while team performance is based
upon the Debtors' net EBITDAR ("threshold", "target" and
"stretch" EBITDAR) which the Debtors intend to establish levels
by the end of the first quarter of 2001 when the Debtors have
finalized their performance results under their business plan for
2000.
The maximum amount of the Incentive Bonus is calculated as a
percentage of the key employees' base salary, tied to the tier
level of each key employee. The Incentive Bonus will be paid
after the end of fiscal year 2001 and the percentage used is the
same as that used under the Current Retention Program, except
with respect to the Chief Executive Officer whose "target"
and "stretch" percentages will be increased from 40% and 80% of
his base salary, respectively, to 60% and 120% of his base
salary, respectively due to his new responsibilities of President
and Chairman of the Board.
Under the 2001 Employee Retention Program, "Threshold" EBITDAR
will be established as 80% of net "Target" EBITDAR for tiers II,
III and IV employees and 50% of net "Target" EBITDAR for tiers V,
VI and VII employees, and is not self-funding (i.e., "Threshold"
targets include "Threshold" bonus amounts for Tiers II through
VII). "Target" EBITDAR will be self-funding, net of bonuses due,
and will be equivalent to continuing EBITDAR in the 2001 Business
Plan. Finally, "Stretch" EBITDAR will be self-funding, net of
bonuses due, and will be set at continuing EBITDAR of
$100,000,000. For results between 80% "threshold" and "target"
and between "target" and "stretch," the Incentive Bonus will be
interpolated. In addition, cash distributions to Tier I
participants in the 2000 Incentive Program was subject to a
formula. This provision has been eliminated in the 2001 Incentive
Program.
(D) Severance Program
Under the Current Retention Program, Tier I, II and III
employees are entitled to receive severance payments equal to a
multiple of the sum of:
(i) the highest annual base salary earned over the
previous five years plus
(ii) any annual bonus. In order to be consistent with the
base salary definition and to adequately compensate
these employees under the 2001 Employee Retention
Program, the severance payment for these tiers will
be altered so that the look-back period with respect
to the annual bonus will be the highest annual bonus
paid or payable during the last five years.
The Debtors represented that this change in severance payments is
required in order to assure senior managers that if they
successfully implement the Debtors' 2001 Initiatives, they would
not subsequently be terminated without cause or resign "for good
reason" as defined in their respective employment agreements as
approved by the Court on May 25, 1999.
(E) IT Retention Program
The IT Retention Program will be recharged under the
2001 Employee Retention Program so that an IT Employee could be
entitled to receive an additional payment of up to 10 percent of
base salary depending on the employee's performance against
previously established goals.
(F) Discretionary Bonus Pool
As under the Current Retention Program, the
Discretionary Bonus Pools will be within the discretion of the
Chief Executive Officer. However, these Pools will be recharged
under the 2001 Employee Retention Program and will consist of, in
addition to any carry-forward amounts that may exist, $400,000
available to selected Associates in pay grades 7 through 12 as
under the Current Retention Program, and the CEO Discretionary
Pool of $250,000 as in the Original Retention Program.
The Debtors iterated that they have invested substantial time and
money in protecting employee morale and job security since the
petition date and the success of these efforts is shown by the
successful restructuring efforts in their cases, heightened
employee morale, and a return to a more normalized attrition
rate. These results, the Debtors say, are however threatened by
the workforce reductions commenced under the 2001 Initiatives. In
light of the importance to retain the key employees, the
difficulty, time and effort to attract replacement employees of
comparable quality, experience, knowledge and character, the
Debtors have determined, in the exercise of their business
judgment, to implement the 2001 Employee Retention Program
and to seek the Court's approval for its implementation and
further relief as is just and proper. (Service Merchandise
Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
SHOWSCAN ENTERTAINMENT: Files Chapter 11 Plan in California
-----------------------------------------------------------
Showscan Entertainment (OTC Bulletin Board: SHOW) has filed its
formal Disclosure Statement and Reorganization Plan in accordance
with the guidelines and schedules as set forth by the U.S.
Bankruptcy Court for the Central District of California.
The Company, which filed a voluntary Chapter 11 petition to
reorganize in August 2000, will continue to operate its
businesses under the reorganization plan, subject to approval by
the Court.
Octograph Inc., Showscan's long term film production partner, has
purchased Showscan's major secured claim, previously held by a
European financial institution. As part of that acquisition,
Octograph has agreed to financially support Showscan's
reorganization, and to convert its claims into a majority equity
position, subject to Court approval of the Showscan
reorganization plan. Octograph has also agreed to provide interim
cash infusions for Showscan's working capital, if needed, and has
agreed in principal on the terms for further infusions as needed
to implement Showscan's reorganization plan.
Dennis Pope, Showscan's former President and Chief Executive
Officer, said, "Octograph and Showscan already enjoy a strong
relationship. This reorganization plan can only lead to a
strengthening of that alliance, and provide for a constant flow
of future titles to the simulation attraction and large format
industries, all of which will be distributed through Showscan."
Octograph is an integrated film production company, specializing
in the creation of films for simulation rides and other major
attractions, as well as 70mm large format films and other special
venue motion pictures.
Showscan currently is the exclusive worldwide distributor of two
major simulation thrill ride films produced by Octograph, "Dragon
Planet" and "Robo Soldier." Octograph is producing two new
stereoscopic 3-D simulation ride films for Showscan distribution
this Summer.
SHOWSCAN ENTERTAINMENT: Russell Chesley is New President & CEO
--------------------------------------------------------------
Showscan Entertainment announced that Mr. Dennis Pope has
resigned as the company's President and Chief Executive Officer
on March 2, 2001 to pursue other interests and activities. Mr.
Pope, who voluntarily deferred a substantial portion of his
compensation, beginning in April 2000, as an integral element of
Showscan's reorganization plan, said, "In April 2000, I promised
Showscan's Board of Directors and its employees that I was
committed to lead the Company to a specific point. With the
filing of Showscan's Disclosure Statement and Reorganization
Plan, together with Octograph's financial commitment to, and its
direct involvement in, the reorganization plan and operations,
that specific point has arrived."
Mr. Pope will be available on a non-exclusive basis to Showscan
to assist with certain specific matters relating to operations
and the reorganization of Showscan. Assuming Mr. Pope's
responsibilities will be Russell Chesley, Showscan Senior Vice
President, who has been significantly involved in Showscan's
reorganization, in addition to his extensive operating
responsibilities. Mr. Chesley will reassign internally specific
responsibilities.
Showscan is an international leader in production, distribution
and exhibition of exciting movie-based attractions shown in large
format theatres worldwide. Showscan's simulation attractions and
special venue theatres are open or under construction in 24
countries around the globe, located in theme parks, cinema
multiplexes, expos, festivals, world's fairs, resorts, shopping
centers, casinos, museums, location based and family
entertainment centers, and other tourist destinations. It is
estimated that over 100 million people worldwide have experienced
a Showscan Entertainment attraction. The Showscan camera system,
used by Showscan in creating the world's premier entertainment
attractions and experiences, was awarded a Scientific and
Engineering Achievement Academy Award(TM) in 1993 by the Academy
of Motion Picture Arts and Sciences. For more information, visit
Showscan on the Internet at www.showscan.com.
SILVERLEAF RESORTS: Moody's Slashes Senior Notes To Ca
-------------------------------------------------------
Moody's Investors Service lowered the following ratings on
Silverleaf Resorts, Inc.:
* $75 million senior subordinated notes, due 2008, to Ca
from B3
* senior implied rating to Caa2, from B1,
* the senior unsecured issuer rating to Caa3, from B2.
Approximately $75 million of debt securities are affected, while
the ratings outlook is negative.
According to Moody's, the downgrades and negative outlook are in
response to the announcement by Silverleaf that it has not
successfully negotiated an extension of its credit facilities
with some of its lenders and that it anticipates liquidity and
going concern issues. The downgrades also consider management's
caution about relying on any information previously provided
regarding Silverleaf's 2000 results and 2001guidance together
with the expected delay in completion of the company's Dec 31,
2000 year-end audit, Moody's states.
The negative outlook reflects the possibility that the ratings
could be further lowered should a financial restructuring or any
other announcements by the company adversely affect the recovery
potential of the senior subordinated notes, Moody's says.
Accordingly, Silverleaf has hired Amroc Securities, LLC as
financial advisor to assist with a financial restructuring and
review of other strategic alternatives.
Headquartered in Dallas, Texas, Silverleaf Resorts is a
developer, owner and operator of vacation ownership resorts.
SOUTH FULTON: Fitch Puts DD Rating on $33.5MM of Hospital Bonds
---------------------------------------------------------------
Fitch has downgraded to `DD' from `C' its rating on Tri-City
Hospital Authority, GA's approximately $33.5 million outstanding
revenue anticipation certificates, (South Fulton Medical Center),
series 1993.
The bonds have also been placed on Rating Watch Evolving. Bonds
with a rating of `DD' indicate that payment default has already
occurred and an ultimate recovery potential of all outstanding
obligations is low. Fitch has based its rating on information
provided by the trustee for the bonds, the hospital, and public
documents.
Since the time of Fitch's last rating action in May 2000, Tenet
Healthcare System has signed an asset purchase agreement for
approximately $30 million with South Fulton Medical Center (SFMC)
and is expected to close this transaction by mid-April. As part
of this agreement, Tenet will not assume the outstanding series
1993 bonds.
Finalization of this agreement is still uncertain and depends on
two events, an auction that is expected to take place in March
and court approval of the sale.
Of the $33.5 outstanding, $3.3 million from the debt service
reserve fund is currently held by the trustee and secured for
payment to bondholders. This fund has not been tapped because of
the bankruptcy filed by SFMC in April of 2000. In addition, the
trustee is holding $1.6 million from a sinking fund, however the
hospital is attempting to get these funds back.
Fitch is unable to determine what portion of the remaining $30
million will be repaid to bondholders. However, based on certain
events the likelihood of bondholders being repaid in full has a
low probability. One event is the debtor in possession (DIP)
financing of approximately $8 million the hospital secured post-
bankruptcy last year to continue operations.
In addition, there are other secured obligations and costs
associated with bankruptcy administration claims. These are
senior to the series 1993 bonds. Next there are the current legal
proceeding being undertaken by the hospital to declare the series
1993 bonds unsecured as a result of the expiration of the
security filings in 1998.
In the event the current pledge of gross revenues is lifted, it
is unclear where in the line of creditors the bondholders would
be positioned. Lastly, Fitch is unable to estimate the timing of
these outcomes, as it is expected that either party will appeal
the court decision regarding the series 1993 bonds' security. As
updated information becomes available, Fitch will monitor the
situation.
SFMC is a 369-bed acute care hospital located in East Point,
Georgia (a southern suburb of Atlanta).
SUPERCONDUCTIVE: Recurring Losses Raise Going Concern Doubts
------------------------------------------------------------
To date, Superconductive Components Inc. has received revenue
predominantly from commercial sales and also government research
contracts and non-government research contracts. The company has
incurred cumulative losses of $6,009,192 from inception to
September 30, 2000.
Revenue for the nine months ended September 30, 2000, was
$2,294,392, an increase of $323,583 or 16.4% from the year
earlier period when sales totaled $1,970,809. The company's net
loss for the nine months ended September 30, 2000, totaled
$141,084, compared to a loss of $22,972, for the previous year.
The 2000 period was impacted by the increase in general and
administrative expenses in comparison to the prior period.
Revenues in fiscal 1999 increased by 7.2% to $2,678,362 from the
fiscal 1998 level of $2,498,162. Contract research revenue in
fiscal 1999 was $425,153 compared to $470,552 in fiscal 1998, a
decrease of 9.6%.
In July 2000, the company's independent accountants, Hausser +
Taylor LLP, rendered an opinion on Superconductive Component's
financial statements as of December 31,1999. According to the
accounting firm the "company's recurring losses from operations
and lack of sufficient cash flow to fund these deficits raises
substantial doubt about its ability to continue as a going
concern".
TAM RESTAURANTS: Reports Increasing Losses in 2000
--------------------------------------------------
Tam Restaurants operates LUNDY BROS. RESTAURANT, a high-volume,
casual, upscale seafood restaurant located in Brooklyn, New York,
AMERICAN PARK AT THE BATTERY, a multi-use facility featuring an
upscale restaurant, catering floor, two outside patios and a fast
food kiosk, located at the water's edge in Battery Park, a New
York City landmark, and operated THE BOATHOUSE IN CENTRAL PARK, a
multi-use facility featuring an upscale restaurant and catering
pavilion, located on the lake in New York City's Central Park
through September 30, 2000.
Until July 31, 2000 the company leased approximately 4,300 square
feet of space in Staten Island, New York for its executive
offices from Frank Cretella, a director and a principal
stockholder of the company. Beginning August 1, 2000 the company
downsized its office space to approximately 2,500 square feet.
The landlord has requested that the company vacate this space on
or before April 15, 2001 and the company is currently seeking
suitable office space and is confident that such space will be
found.
Sales for the fiscal year ended September 27, 2000 ("fiscal
2000") were $20,147,199, an increase of $954,317, or 5.0%, as
compared to $19,192,882 for the year ended September 29, 1999
("fiscal 1999").
Cost of sales for fiscal 2000 were $13,012,538, an increase of
$3,318,659 or 34.2%, as compared to $9,693,879 for fiscal 1999.
The increase in the cost of sales is attributable to significant
managerial and operational problems at LUNDY'S, which were
substantially corrected in August 2000, as well as losses
experienced as a result of the company's involvement in providing
food and beverage services for Bay Casino, LLP and the
termination of the company's mail order operations.
Gross profit for fiscal 2000 was $7,134,661 or 35.4% of sales, as
compared to $9,499,003 or 49.5% of sales for fiscal 1999. The
decrease in gross profit is primarily attributed to significant
losses the company experienced in the second and third quarter of
fiscal 2000. Beginning in June 2000 the company began a
restructuring program and effective July 29, 2000 Mr. Cretella
resigned as President of the company.
Operating expenses for fiscal 2000 were $10,869,309 or 53.9% of
sales, as compared to $8,714,024 or 45.4% of sales for fiscal
1999. Operating expenses for fiscal 2000 were higher primarily as
a result of the costs associated with the closing of THE
BOATHOUSE and LUNDY'S AT SEA which accounted for a one time
charge to earnings of $1,208,447, non-recurring sales tax
assessments of $420,000 and costs associated with the company's
restructuring and its aggressive pursuit of The Boathouse license
agreement.
Other expenses for fiscal 2000 were $1,094,293, an increase of $
7,960 or 0.1%, as compared to $1,086,323 for fiscal 1999. Other
expenses for fiscal 2000 consisted of $ 400,003 of interest
expense and $721,964 of barter expense. This was partially offset
by interest income of $27,684. Other expenses for fiscal 1999
consisted of $262,673 of interest expense, $485,053 of barter
expense, a non-recurring, non-cash charge of $308,083 relating to
the original issue discount associated with a $1,000,000 loan
provided to the company by Kayne Anderson and a non-recurring,
non-cash charge of $30,257 associated with warrants issued to
Frank Cretella, the company's director and principal stockholder,
in conjunction with Mr. Cretella's conversion of a note due him
by the company into Preferred Stock.
As a result of the foregoing, loss from continuing operations for
fiscal 2000 was $4,828,931 as compared to a loss from continuing
operations of $301,344 for fiscal 1999.
The company's capital requirements have been and will continue to
be significant and its cash requirements have been exceeding its
cash flow from operations (at September 27, 2000, the company had
a working capital deficit of $ 5,951,259), due to, among other
things, costs associated with development, and pre-opening costs
associated with Lundy's Times Square, the loss of THE BOATHOUSE
license agreement, the closing of LUNDY'S AT SEA, the suspension
of the company's mail order operations and a general corporate
restructuring. The company has been substantially dependent upon
sales of its equity securities, loans from financial institutions
and the company's officers, directors and stockholders and
bartering transactions with member dining clubs to finance a
portion of its working capital requirements. As a result, of the
above the company ability to carry out its business and continue
as a going concern is contingent upon continued trade vendor
support, additional financing or equity. Management indicates
that it is aggressively seeking to locate and secure the required
financing.
TRANS WORLD: Galileo Bids $220 Million for 26% Worldspan Stake
--------------------------------------------------------------
Galileo International, Inc. (NYSE: GLC), a leading electronic
global distribution services (GDS) provider for the travel
industry, announced it has submitted a $220 million bid for Trans
World Airlines' 26 percent stake in Worldspan, a U.S.-based GDS
company.
"In today's environment where consolidation and partnerships are
re-defining the travel industry, the auction of TWA's stake in
Worldspan presents Galileo with a unique opportunity," said James
E. Barlett, chairman, president and CEO of Galileo International.
AMR, parent company of American Airlines, had earlier agreed to
acquire substantially all of TWA's assets, setting a $200 million
value on its Worldspan stake. Galileo's bid, filed by the
bankruptcy court's Feb. 28 deadline, met the minimum amount
established by the bankruptcy court judge. Galileo's bid is
contingent on various terms and conditions, including
satisfactory completion of due diligence, securing financing and
amending the Worldspan partnership agreement to incorporate
Galileo's interests. The TWA creditors' committee will be the
determining factor on whether Galileo's or any bids will be
accepted.
"We continue to believe very strongly that the GDS business is a
great business and is essential to the travel industry. Our high
regard for the Worldspan organization and its airline owners
makes this a value-enhancing opportunity," said Barlett.
Galileo continues to pursue select strategic alternatives and
believes that interested parties will view this proposed
transaction positively.
Galileo International is one of the world's leading providers of
electronic global distribution services for the travel industry.
The company provides travel agencies, corporate travel managers
and Internet users with the ability to book travel by accessing
schedule, availability and pricing information. Galileo e-enables
the travel industry, providing industry-leading technology
solutions such as an advanced suite of wireless applications and
numerous Internet initiatives. Through its Internet subsidiary,
TRIP.com, the mobile business professional can access premier
one-stop online travel services and technology solutions from
Galileo. Building one of the largest TCP/IP global networks
through its subsidiary Quantitude, Galileo is providing advanced
telecommunication services for a variety of customers both in the
travel industry and beyond. Headquartered in Rosemont, Ill., USA,
Galileo International has offices worldwide and operates its
state-of-the-art Data Center in Greenwood Village, Colo., USA. To
learn more about Galileo International, visit www.galileo.com .
VENCOR INC: Judge Walrath Confirms Debtors' 4th Amended Plan
------------------------------------------------------------
Vencor, Inc., succeeded in prosecuting to confirmation before the
United States Bankruptcy Court for the District of Delaware its
fourth amended plan of reorganization filed with the Court on
December 14, 2000. The Court noted that all creditor classes
entitled to vote on the Amended Plan voted in favor of its
confirmation.
The Company also announced that it has entered into a commitment
letter for a $120 million senior exit facility with a bank group
led by Morgan Guaranty Trust Company of New York (the "Exit
Facility"). The Exit Facility will be available to fund the
Company's obligations under the Amended Plan and its ongoing
operations following emergence from bankruptcy.
"Our goal from the outset of the reorganization has been to
attain a sustainable capital structure for the Company that is
fair to all lenders, landlords and other creditors and that will
enable us to continue to provide high-quality care to those
people who cannot take care of themselves," said Edward L. Kuntz,
Chairman, Chief Executive Officer and President of the Company.
"I am pleased that we have completed one more significant step
toward achieving our goal, and we look forward to continuing to
serve the more than 36,000 residents and patients nationwide
whose care and well being are entrusted to us."
The Company is proceeding expeditiously to implement the Amended
Plan. Under the Court's confirmation order, the Amended Plan must
be effective no later than May 1, 2001.
In addition to the factors noted below, the consummation of the
Amended Plan is subject to a number of material conditions
including, without limitation, the negotiation and execution of
definitive agreements for the Exit Facility. There can be no
assurance that the Amended Plan will be implemented.
Vencor and its subsidiaries filed voluntary petitions for
reorganization under Chapter 11 with the Court on September 13,
1999. Throughout the Chapter 11 process, the Company has
maintained normal operations in its nursing centers and
hospitals. Vencor, Inc. is a national provider of long-term
healthcare services primarily operating nursing centers and
hospitals.
"This is a very positive outcome for Ventas shareholders,"
Ventas, Inc. (NYSE:VTR) President and CEO Debra A. Cafaro said.
"Ventas can look forward to a stable revenue stream, with healthy
rent escalations each year, from a creditworthy tenant. With a
sustainable capital structure in place, Vencor can focus on
improving its operations, credit profile and profitability."
Ventas, Vencor's principal landlord, voted in favor of Vencor's
Reorganization Plan. The Plan also received overwhelming support
from those creditors entitled to vote, including Vencor's senior
bank creditors, Vencor's subordinated noteholders and the
Department of Justice (DOJ) on behalf of the United States. The
Plan includes a full settlement with the DOJ releasing Vencor and
Ventas from all Medicare billing disputes, investigations and
claims brought by the United States.
Ventas said the effective date for the Vencor Plan is expected to
occur within the next 45 days, but no later than May 1, upon
satisfaction of all conditions to effectiveness. There can be no
assurances that the Effective Date will occur within that
timeframe or that the Plan will become effective. Conditions to
the Vencor Effective Date include closing of Vencor's $120
million new revolving credit facility; execution of lease
documentation and financing documentation; and issuance of
Vencor's new stock to Ventas, the senior bank creditors and the
subordinated noteholders.
Ventas added that consistent with the terms of the existing Rent
Stipulation with Vencor, if the Effective Date is after March 31,
2001, it would receive April rent from Vencor at the same
stipulated monthly rate that Vencor has been paying since
September 1999 of $15.133 million per month ($181.6 million per
year).
If the Vencor Effective Date occurs after March 31, 2001, Ventas
will exercise the option contained in its credit agreement to
extend the deadline by which the Effective Date must occur.
Ventas has the option to extend such deadline through June 30,
2001.
Ventas intends to provide detailed guidance about its expected
2001 Funds From Operation (FFO) and 2001 dividend on or about the
Vencor Effective Date.
Ventas is a real estate investment trust whose properties include
45 hospitals, 216 nursing centers and eight personal care
facilities operating in 36 states.
WATERLINK INC.: NYSE Asks Company for a Plan to Avoid Delisting
---------------------------------------------------------------
Waterlink Inc. (NYSE:WLK) received notice from the New York Stock
Exchange that the Company is below the NYSE's continued listing
requirements relating to total market capitalization,
shareholders' equity and minimum share price. As permitted by the
NYSE, the Company will be submitting a plan demonstrating how the
Company will comply with the continued listing requirements. The
NYSE will review the plan and determine whether the Company's
common stock will continue to be eligible for trading on the
NYSE.
Waterlink is an international provider of integrated water
purification and wastewater treatment solutions, treating process
water and wastewater for its industrial customers and drinking
water for its municipal customers. Waterlink's executive offices
are located in Canton, Ohio, USA.
WATERLINK INC.: Sells Separations Division To Parkson For $19MM
---------------------------------------------------------------
Waterlink, Inc. sold substantially all of the assets and certain
liabilities of its Waterlink Separations Division to Parkson
Corporation, a wholly-owned subsidiary of Axel Johnson Inc.,
headquartered in Stamford, CT, for a gross purchase price of
approximately $19 million. Waterlink Separations accounted for
$36.3 million of Waterlink's net sales for the fiscal year ended
September 30, 2000. The net proceeds from the sale will be used
by Waterlink to reduce its senior indebtedness.
The completion of this transaction marks the second division
Waterlink has sold since its May 2000 announcement that it was
seeking strategic alternatives to maximize shareholder value. The
Company sold its Biological Wastewater Treatment Division in a
series of transactions in September and December, 2000 for total
gross proceeds of approximately $4.2 million.
Commenting on the sale of the Separations and Biological
Divisions, Waterlink's President and Chief Executive Officer
Scott King stated, "The sale of these two divisions are
significant events in Waterlink's strategic alternative process
as it reduces our leverage, lessens the Company's dependence on
large wastewater capital equipment orders, and in the case of our
Biological Division, allows us to shed an unprofitable segment of
our business. While these sales are important, there is still
much work to be done to improve the Company, as we continue to
seek out potential asset sales with a focus on our capital goods
intensive businesses, and cost reductions to improve our
profitability."
WATERLINK INC.: Reports First Fiscal Quarter Financial Results
--------------------------------------------------------------
Waterlink, Inc. announced results for its first fiscal quarter
ended December 31, 2000. Net sales from continuing operations,
which excluded the Separations and Biological Divisions which
were presented as discontinued operations, were $23.8 million for
the current quarter as compared to $35.1 million in the prior
year. The decrease in sales primarily occurred in the Company's
U.K. and Swedish operations within the European Division and in
the domestic portion of its Specialty Products Division. Bookings
from continuing operations for the quarter ended December 31,
2000 were $27.6 million, resulting in backlog from continuing
operations at December 31, 2000 of $34.1 million, a 15.8%
increase from September 30, 2000. Each of the Divisions within
continuing operations contributed to the increase in backlog.
For the quarter ended December 31, 2000 the Company recorded a
loss from continuing operations of $1,552,000, or ($0.08) per
share, as compared to income from continuing operations of
$1,024,000, or $0.06 per share in the prior year quarter. The
current period net loss of $5,438,000, or ($0.28) per share,
included an estimated loss on the disposal of the Separations
Division of $3,891,000, or ($0.20) per share, recorded in the
quarter. The Company reported net income of $1,452,000, or $0.08
per share, during the same period last year, which included
income from discontinued operations of $428,000, or $0.02 per
share. The Company is currently in violation of certain covenants
related to its senior credit facility which have created an event
of default under that facility. The Company is in discussions
with its senior bank group regarding this default, however no
assurance can be given as to whether a satisfactory waiver of the
default or amendment to the senior credit facility will be
obtained from its senior bank group.
Scott King further commented, "Our disappointing first quarter
results reflects a general softness in the market, most notably
within our U.K. operations. In the U.K., although quoting levels
have recently increased, we have yet to see much in the way of
water treatment equipment orders by water utility companies,
which equipment will be necessary due to regulatory requirements
over the next several years."
WHEELING-PITTSBURGH: Employs PwC For Tax Consulting Work
--------------------------------------------------------
Pittsburgh-Canfield and its affiliated Debtors asked approval of
their employment of PricewaterhouseCoopers LLP in an additional
engagement to reduce Wheeling-Pittsburgh Steel Corp.'s Ohio
tangible personal property tax liability associated with the
Debtors' Ohio business locations for tax years 1994 through 2001
by (i) identifying and quantifying potential tax savings
opportunities, (ii) taking necessary action on behalf of the
Debtors to reduce the property tax, and (iii) obtaining refunds
of paid taxes.
The Debtors told Judge Bodoh they have paid the State of Ohio
approximately $31 million for personal property tax liability for
the 1994-2000 tax years, over $4,000,000 each year. The Ohio
Department of Revenue has no finalized its total assessments for
these years. Thus, because those tax years are still open, the
Debtors may still attempt to find misallocations among asset
categories and other errors which could result in refunds being
paid to the Debtors. The Debtors cautiously anticipate, based on
preliminary review of the returns for the 1994-2000 tax reporting
years, that the additional engagement of PwC may result in
refunds in the conservative range of approximately $500,000, but
this amount may be more or less depending on the final outcome of
the complete review of the tax information by PwC.
Specifically, PwC will:
(a) Review the annual returns, asset records, accounting and
reporting methodologies employed by the Debtors;
(b) Perform onsite inspections of the operating facilities
for the purpose of asset identification and classification;
(c) Analyze reported fixed assets to ensure the most
advantageous classification and value for Ohio personal property
taxation;
(d) Analyze reported inventory values to ensure property
calculation in the most advantageous manner by considering book
reserves, physical inventory calculations, scrapped and unusable
inventories and employ costing/valuation methodologies; and
(e) Research and analyze property tax statutes, the
administrative code, and tax commissioner directives for
opportunities to identify additional functional and economic
obsolescence as additional fixed asset depreciation for the
purpose of optimizing property tax savings.
Except as specifically ordered otherwise, the additional
engagement of PwC will be governed in all respects by the Court's
original order approving the employment of PwC as the estates'
accountants and tax advisors.
The Debtors will pay PwC 20% of the "actual tax savings"
attributable to the period 1994-2000 and refunds secured,
including applicable interest, for Ohio tax report years 1994
through 2000. The actual tax savings will be determined as the
difference between the tax liability as currently assessed,
adjusted for items currently on appeal, and the reduced tax
liability resulting from subsequent appeals. The actual tax
savings will not include any reductions received by the Debtors
for personal property tax appeals presently pending, including
disputed assessments for which the State of Ohio is seeking to
collect for the years 1994-1998, as the Debtors are handling
those matters.
The Debtors will also pay PwC a fixed fee of $30,000 for services
related to the property tax for the 2001 tax reporting year. PwC
will not be entitled to receive any additional compensation from
the Debtors for actual tax savings for the 2001 year. The Debtors
paid over $4.6 million to the State of Ohio for this tax in he
year 2000. The Debtors anticipate that the total liability
savings obtained for the 2001 tax year and all subsequent years
will likely substantially exceed the $30,000 fixed fee being paid
to PwC.
The Debtors will also pay PwC its standard hourly rates
previously approved by the Court for filing any air, industrial
water, noise, energy conversion, solid waste, co-generation
facilities, or thermal efficiency conversion facility pollution
control applications for Ohio personal property tax exemption
which the Debtors requested that PwC undertake. PwC is not
entitled to receive any additional contingent compensation from
the Debtors for actual tax savings related to property tax
savings or refunds based on the filing of these applications.
Payment for these services have already been approved by the
Court in its prior order approving PwC's retention, and are
included here only for clarity.
After consideration of this Application, Judge Bodoh ordered that
the employment of PwC for this additional purpose is approved.
(Wheeling-Pittsburgh Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
BOND PRICING: For the week of March 5 - 9, 2001
-----------------------------------------------
Following are indicated prices for selected issues:
AMC Ent 9 1/2 '05 80 - 82
Amresco 9 7/8 '04 52 - 54
Asia Pulp & Paper 11 3/4 '05 30 - 32 (f)
Chiquita 9 5/8 '04 48 - 50 (f)
Conseco 9 '06 84 - 85
Federal Mogul 7 1/2 '04 24 - 26
Globalstar 11 3/8 '04 11 - 12 (f)
Oakwood 7 7/8 '04 40 - 42
Owens Corning 7 1/2 '05 27 - 29 (f)
PSI Net 11 '09 18 - 22
Revlon 8 5/8 '08 48 - 49
Saks 7 '04 83 - 85
Sterling 11 3/4 '06 57 - 58
Teligent 11 1/2 '07 7 - 9
TWA 11 3/8 '06 12 - 16 (f)
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
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Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
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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 USA, and Beard
Group, Inc., Washington, DC USA. Debra Brennan, Yvonne L.
Metzler, Aileen Quijano and Peter A. Chapman, Editors.
Copyright 2001. All rights reserved. ISSN: 1520-9474.
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