/raid1/www/Hosts/bankrupt/TCR_Public/010509.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, May 9, 2001, Vol. 5, No. 91
Headlines
ABRAXAS: Proposes Exchange Offer To Subsidiary's Shareholders
BRIDGE: Reuters Buys Substantially All Assets For $275,000,000
CALIFORNIA STATE: S&P Downgrades Insurer's Rating To BBB+ From A
EDWARDS PAPER: Tissue Mill Now Owned By American Paper Recycling
EMPIRE DISTRICT: Debt Ratings Fall To Low-B's & Outlook Negative
FINOVA GROUP: Disclosure Statement Hearing Scheduled For June 7
FRUIT OF THE LOOM: Union Sells Bowling Green Property For $1.75M
FURRS SUPERMARKETS: Looking For Buyer of 71 Stores
GOLF TRUST: Raises $6.4 Mil From Sale Of Woodlands Golf Course
GROVE WORLDWIDE: Files Prenegotiated Chapter 11 Plan
GROVE WORLDWIDE: Court Gives Nod On $10 Million DIP Financing
HALYK SAVINGS: Moody's Reviews D Rating For Possible Downgrade
ICG COMMUNICATIONS: Assumes Key Employee & Consulting Agreements
IMPERIAL SUGAR: Savannah Retirees Seek Appointment Of Examiner
INNOFONE.COM: Court Declares Canadian Unit Bankrupt
LERNOUT & HAUSPIE: Settling Lawsuits By Sail Labs & Van Driesten
LOEWEN GROUP: Asks For Fifth Extension of Exclusive Periods
LOEWEN: Anticipates Filing 2nd Amended Plan In About Two Weeks
MARINER POST-ACUTE: GranCare Terminates Lake Waccamaw Agreement
METAL MANAGEMENT: Delaware Court Approves Disclosure Statement
METAL MANAGEMENT: Reports Third Quarter Financial Results
MOE GINSBURG: Sterling National Extends $1 Million DIP Loan
MOE GINSBURG: Chapter 11 Case Summary
NETWORK COMMERCE: Discloses Q1 Results & Restructuring Efforts
OHIO CASUALTY: S&P Lowers Ratings & Revises Outlook to Negative
PACIFIC DUNLOP: Moody's Downgrades Debt Ratings To Low-B's
PACIFIC GAS: Agrees To Modify Stay For Eminent Domain Proceeding
PARK PLACE: Fitch Rates Senior Subordinated Notes at BB+
PILLOWTEX CORP.: May Continue Funding Fieldcrest Foundation
PLANET HOLLYWOOD: Annual Shareholders' Meeting Set For May 25
PRIMUS TELECOMMUNICATIONS: Existing Debt Amounts To $1 Billion
SAFETY-KLEEN: ECDC Moves To Annul Stay To Pursue Action In N.J.
SELECT MEDIA: Needs More Capital To Sustain Operations
SLATKIN, REED: Earthlink Co-founder Files For Bankruptcy
SUN HEALTHCARE: Rejecting 11 Real Property Leases & 2 Subleases
ULTRAMAR DIAMOND: Fitch Puts Rating On Watch
URANIUM RESOURCES: Completes Private Placement Of 26 Mil Shares
US OFFICE: Amends Purchase Agreement With Corporate Express
W.R GRACE: Property Damage Claimants' Committee Appointed
WESTERN DIGITAL: Posts Third Quarter 2001 Losses
WHEELING-PITTSBURGH: Proposes Procedures For Reclamation Claims
* Meetings, Conferences and Seminars
*********
ABRAXAS: Proposes Exchange Offer To Subsidiary's Shareholders
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Discussing the proposed exchange offer to be made by Abraxas
Petroleum Corporation (AMEX:ABP) to the shareholders of its 49%
owned subsidiary, Grey Wolf Exploration Inc. (TSE:GWX), Abraxas'
CEO Bob Watson commented, "This offer presents a real win-win
situation for both Abraxas and Grey Wolf Exploration. By
eliminating the minority interest on Abraxas' financial
statements, assuming 100% acceptance by Grey Wolf Exploration
shareholders, this transaction will add approximately $0.10 to
EPS, based on the Company's projected 2001 results, and $0.50 to
book value per share while at the same time simplifying our
corporate structure and financial reporting.
For Grey Wolf Exploration shareholders, the proposed transaction
provides a substantial premium to the market price of Grey Wolf
Exploration's stock prior to the time that Abraxas and Grey Wolf
Exploration first announced they were in discussions regarding a
possible combination as well as a significant improvement in
liquidity in a stock with a much broader following in the
investment community."
The proposed exchange offer is subject to customary regulatory
approvals and approval of the shareholders of Abraxas. Once it
has completed the preparation of the necessary documents and all
applicable filings, Abraxas expects to begin the exchange offer
for the 51% of Grey Wolf Exploration that it does not already
own and close the transaction in June.
Abraxas Petroleum Corporation is a San Antonio-based crude oil
and natural gas exploration and production company that also
processes natural gas. It operates in Texas, Wyoming and western
Canada. For additional information about the Company, you may
visit the web site, www.abraxaspetroleum.com, for the most
current and updated information. According to the Company, the
web site is updated daily in order to comply with the SEC
Regulation FD (Fair Disclosure).
BRIDGE: Reuters Buys Substantially All Assets For $275,000,000
--------------------------------------------------------------
After nearly a month of widely-reported competitive bidding for
Bridge Information Systems, Inc.'s assets by eleven bidders,
arguments over compliance with bidding procedures, and
objections interposed by parties to various executory contracts
to be assumed, Reuters prevailed as the party advancing the
highest and best offer.
Under the terms of a final Asset Purchase Agreement dated May 2,
2001, by and among Bridge Information Systems, Inc., Bridge
Information Systems America, Inc., Bridge Data Company, Bridge
Information Systems Canada, Inc., Bridge Information Systems
International, Inc., Bridge News International, Inc., Bridge
Trading Technologies, Inc., Bridge Transaction Services, Inc.,
Bridge Ventures, Inc., BTS Securities, Inc., BTT Investments,
Inc., Wall Street on Demand, Inc., Bridge International
Holdings, Inc., StockVal, Inc., as Sellers, Bridge Trading
Company, Bridge Trading Company UK Limited, Bridge Trading
Company Asia, Ltd., and Bridge Transaction Services Asia
Pacific, Limited, as so-called Designated Entities, and Reuters
America, Inc., and Reuters, S.A., as the Purchaser, Judge
McDonald approved the $275,000,000 sale transaction.
The Purchase Agreement provides that Reuters will acquire:
(A) All the tangible and intangible assets and business
operations in the United States or Canada used in or necessary
to conduct the business of Bridge Information Systems (excluding
Telerate) and/or Bridge Data Company (including, without
limitation, Bridge Trading Room Systems, Bridgestation,
BridgeFeed, BridgeChannel, BridgeActivel, CRB Index, the core
ticker plant, the central database and all assets and business
operations used to serve U.S. and Canadian clients), including,
but not limited to, the products, whether completed or in
development, of such business, including all software that
comprises the products or used in the delivery of such products
including source code and documentation, contracts (other than
Canadian customer contracts), intellectual property, equipment,
inventory and other fixed assets.
(B) All the tangible or intangible assets and business
operations used in or necessary to conduct the business of EJV
and the business formerly known as Telesphere (including,
without limitation, Bonds Page (web-based bond product), EJV
Data Extractor via FTP, EJV Data Extractor Proxy Server, EJV
Rack, Global Pricing/EJV, EN Customized delivery, the data file
for the Lehman Sunbond Product, applications, source codes,
Corporate Actions, Global Pricing and securities administration
businesses), including, but not limited to, the products,
whether completed or in development, of such business, including
all software that comprises the products or used in the delivery
of such products including source code and documentation,
contracts (other than Canadian customer contracts), intellectual
property, equipment, inventory and other fixed assets.
(C) All the tangible or intangible assets and business
operations used in or necessary to conduct the business of the
DAIS Group and the business of StockVal, including, but not
limited to, the products, whether completed or in development,
of such businesses, including all software that comprises the
products or used in the delivery of such products including
source code and documentation, contracts (other than Canadian
customer contracts), intellectual property, equipment, inventory
and other fixed assets.
(D) All the tangible or intangible assets and business
operations, other than the Designated Entities, used in or
necessary to conduct the Bridge Trading Technologies and Bridge
Transaction Services business (including, without limitation,
databases and data, EasyFix, Triad, including MultiRoute and
OmniView, Institutional Order Entry, IOE Comms Server suite,
OrdPro, including the Electronic Order Module, Bridge Order
Indication, Order Trades, FIX Bridge Interpreter, G1oba1FN and
Bridge VPN), including, but not limited to, the products,
whether completed or in development, of such business, including
all software that comprises the products or used in the delivery
of such products including source code and documentation,
contracts (other than Canadian customer contracts), intellectual
property, equipment, inventory, interfaces, associated inbound
and outbound connectivity and other fixed assets.
(E) All the tangible or intangible assets and business
operations used in or necessary to conduct the eBridge business,
(including, without limitation, WSOD, Bridge Internet Tool Kit,
BridgeInvestor, BridgeChannel, BridgeFlight, BridgeTraveler and
BridgeConnect), including, but not limited to, the products,
whether completed or in development, of such business, including
all software that comprises the products or used in the delivery
of such products including source code and documentation,
contracts (other than Canadian customer contracts), intellectual
property, equipment, inventory and other fixed assets.
(F) All software, intellectual property and equipment used
in the collection, distribution, display, databasing or
management of exchange and third party data feeds, research
content, news and other data collection feeds, including
NewsWatch, NewsDesk, WebDesk and BridgeCollector.
(G) All the tangible and intangible assets used in or
necessary to conduct the business of Bridge Trading's soft
dollar and execution only business, including all the software
that comprises the products or used in the delivery of such
products including source code and documentation, contracts
(other than Canadian customer contracts), intellectual property,
equipment, inventory and other fixed assets.
(H) All right, title and interest in the name of "Bridge"
(whether used alone or in conjunction with other words) and all
other trade names used in the businesses described above,
including, without limitation, all [Necessary Trademarks], other
than "Telerate," "Passbook," "TeleTrack" and "TDFF."
(I) All of Sellers' interest in intellectual property owned
or used by the businesses described above, including, without
limitation, the Intellectual Property.
(J) All owned real estate used in the operations of the
businesses described above but not excluded.
(K) All equipment relating to the businesses described
above (including any equipment located at customer locations,
all equipment in which GECC claims an interest ("GECC-Financed
Equipment") except that, subject to Purchaser receiving
assurances, reasonably satisfactory to Purchaser that the
business and operations of Savvis will not be put at risk as
a result thereof, the GECC-Financed Equipment subleased by
Sellers to Savvis and any income derived from such subleases
shall be expressly excluded from this paragraph), including,
with respect to the business in paragraph A, any equipment
located outside the U.S. and Canada that is used in collecting
data in connection with the Bridge Information Systems business.
(L) Sellers' interest in BondsInAsia Ltd., including all
related records, business plans, agreements and other documents
relating to the same but subject to Purchaser's review of any
arrangement and resolution of any necessary issues, such that,
by reasonable advance notice to Sellers, Purchaser may determine
not to purchase such interest, it being understood that there
shall be no Purchase Price adjustment if Purchaser so
determines.
(M) All operating data assets and records, business plans
and projections relating to the assets described.
(N) All claims, warranty rights, causes of action,
subrogation rights and other similar rights arising in the
conduct of the business and the ownership of the assets
described, including, without limitation, any claims for
indemnification or offset under any acquisition agreements
relating to the conduct and ownership of the assets described
and any claims of Sellers under the Designated Contracts assumed
by and assigned to Purchaser pursuant to the terms of this
Agreement.
(O) To the extent that the assets or other property
referred to herein would in whole or in part be equity interests
in subsidiary entities (other than the Designated Entities) the
underlying assets of such entity (rather than the equity
interests) shall be transferred.
The Purchase Agreement specifically EXCLUDES from the sale:
(a) All stock held, directly or indirectly, by Sellers in
Savvis Communications Corporation, and the entire assets and
business operations thereof.
(b) All interests held, directly or indirectly, by Sellers
in Bridge/DFS Limited and the entire assets and business
operations thereof.
(c) All interests held, directly or indirectly, by Sellers
in Future Source/Bridge LLC and the entire assets, including all
contracts, and business operations thereof.
(d) The Minex division and the entire assets and business
operations thereof.
(e) All stock held, directly or indirectly, by Sellers in
INETBridge Inc. and the entire assets and business operations
thereof.
(f) All stock held, directly or indirectly, by Seller in
Prescient Markets, Inc. and the entire assets and business
operations thereof, including cpmarkets.com.
(g) All interests held, directly or indirectly, by Sellers
in WebFN.
(h) All stock held, directly or indirectly, by Sellers in
Telerate Holdings, Inc. and its subsidiaries and the entire
assets and business operations thereof (except to the extent
constituting Acquired Assets).
(i) All stock held, directly or indirectly, by Sellers in
Bridge News International, Inc., and all assets and business
operations of Seller to the extent they are used in the
journalistic and editorial business operations of Bridge News
(including all Bridge News Livewire assets).
(j) All stock held, directly or indirectly, by Sellers in
Bridge Commodity Research Bureau, Inc. and the assets and
business operations thereof other than any assets used in the
Acquired Business.
(k) The ADP division of Bridge Information Systems and all
assets relating exclusively thereto.
(l) All accounts receivable earned prior to Closing, but
not including accounts receivable or portions thereof:
(1) that relate to periods on or after Closing
including even where such amounts have been billed
to the relevant client prior to Closing,
(2) to the extent included in any Designated Entity and
(3) that relate to Sellers' trading activities.
(m) All actual or potential claims in litigation,
arbitration or bankruptcy against Sellers and all actual or
potential causes of action including, without limitation, causes
of action arising pursuant to Chapter 5 of the Bankruptcy Code.
(n) All property and assets used exclusively in connection
with the Sun VAR business, including the Sun Microsystems U.S.
Indirect Value-Added Reseller (IVAR) Agreement.
(o) All interest held, directly or indirectly, by Sellers
in Brut, LLC and the entire assets and business operations
thereof.
(p) The following contracts:
(1) Any contracts which, following the Closing, would
be between any of Purchaser and its subsidiaries,
on the one hand, and any of Bridge and its
subsidiaries, on the other;
(2) Trade or Redistributor Agreements with Cantor
Fitzgerald & Company;
(3) All Canadian customer contracts; and
(4) Contracts of the Debtors that are not assumed
pursuant to the provisions of Section 2.4 of the
Agreement.
(q) All interests of Sellers in the owned real property
listed below:
(1) 700 Office Parkway, Creve Coeur, MO;
(2) 760 Office Parkway, Creve Coeur, MO;
(3) 11456 Olive Boulevard, Creve Coeur, MO; and
(4) 201 E. Park, Mt. Laurel, NJ.
(r) Assets used exclusively in the business of Telerate,
including, without limitation, any agreements for the provision
of data by Cantor Fitzgerald.
(s) The shares of Savvis (subject to the Option set out in
Section 7.26) and the loan note between Bridge Information
Services, Inc., and Savvis.
(t) Accounts Receivable of Sellers.
(u) All stock held, directly or indirectly, by Sellers in
Bridge eMarkets, Inc. and the entire assets and business thereof
(excluding any interests of Sellers, held in BondsinAsia, Ltd.
and assets and business thereof and any other acquired assets).
Under the Purchase Agreement, Bridge also grants Reuters:
(1) the right and option to purchase certain assets and
business operations of Sellers:
(a) necessary to conduct the eBridge business and the
business conducted by Wall Street on Demand, Inc.;
and
(b) necessary to conduct the EJV business;
(2) the right and option to purchase certain assets and
business operations of Sellers necessary to conduct the StockVal
business, together with certain obligations and liabilities
relating thereto;
(3) the right and option to purchase certain assets and
business operations of Sellers necessary to conduct the business
of Bridge Trading Technologies, Inc. and its subsidiaries,
including Bridge Trading Company (Delaware), Bridge Trading
Company UK Limited, Bridge Trading Company Asia, Ltd. (Hong
Kong), Bridge Transaction Services, Inc. and DAIS Group
(excluding StockVal) businesses, together with certain
obligations and liabilities relating thereto and all shares
of capital stock of the Designated Entities; and
(4) the right and option to purchase from Sellers, subject
to the terms and conditions set forth in the Purchase Agreement,
their equity interest in Savvis Communications Corporation.
Lehman Brothers, Inc., serves as Reuters' financial advisor and
David Zeltner, Esq., S. Wade Angus, Esq., and Richard Krasnow,
Esq., at Weil, Gotshal & Manges LLP, serve as Reuter's legal
counsel in connection with this transaction. (Bridge Bankruptcy
News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
CALIFORNIA STATE: S&P Downgrades Insurer's Rating To BBB+ From A
----------------------------------------------------------------
Standard & Poor's removed from CreditWatch and lowered its
counterparty credit and financial strength ratings on the
California State Compensation Insurance Fund to triple-'B'-plus
from single-'A'.
These ratings had been placed on CreditWatch on April 17, 2001,
with negative implications. The outlook is negative.
The downgrade reflects the steady deterioration in the fund's
capital adequacy, which was fueled by consecutive years of net
operating losses, weakening reserve adequacy and rapid premium
growth.
The fund has had operating losses each year since 1998. In
addition, in recent years, its status as a California workers'
compensation carrier significantly exposed it to the severe
price competition of that market.
The fund's mandate to operate as a nonprofit public enterprise
has also affected its operating results, as its goal is to
provide insurance at cost and to return excess capital to
policyholders in the form of dividends. As a result, the fund's
capital adequacy, albeit still strong, has steadily
deteriorated, as illustrated by a Standard & Poor's capital
adequacy ratio of 170% at year-end 2000.
Since 1996, surplus has declined by 18%, whereas the fund's
market share has increased significantly to almost 30% from
approximately 21% historically. Standard & Poor's believes the
rapid growth in the fund's market share will strain its capital
adequacy further.
In 2000, the fund's net premiums written increased 45% to $1.79
billion from $1.24 billion in 1999. In the first quarter of
2001, net premiums written were $715 million, a 112% increase
over the $337 million in the first quarter of 2000.
This growth was caused by a combination of new policy growth and
rate increases on existing accounts. New business growth is
being driven by the substantial loss of capacity in the
California workers' compensation market that has resulted from
the financial difficulties or market withdrawal of some major
competitors.
The withdrawal of capacity is having a positive impact on rates,
which should allow the fund -- with its dominant market share --
to gradually improve its earnings and capital. Standard & Poor's
believes the fund's growth will slow down in the second half of
2001 as much of the displaced business in the marketplace gets
absorbed.
California State Compensation Insurance Fund is a Security
Circle insurer, which means that it voluntarily underwent
Standard & Poor's most comprehensive analysis and was assigned
ratings in one of the top four categories for financial
security.
OUTLOOK: NEGATIVE
The fund's operating performance is expected to improve in 2001
as its rate increase for 2001 begins to affect its earnings.
Standard & Poor's believes the fund will have an ROR of about
negative 3% in 2001, an improvement over the negative 5% in
2000.
The fund is expected to return to profitability in 2002, with an
ROR of more than 2%, as it should be able to obtain additional
rate increases if needed. Capitalization is expected to remain
very strong or strong in the foreseeable future, declining
slightly in 2001 and 2002 and then improving in 2003, Standard &
Poor's said.
EDWARDS PAPER: Tissue Mill Now Owned By American Paper Recycling
----------------------------------------------------------------
Miami-based American Paper Recycling has acquired the former
Edwards Paper tissue mill in Miami through a bankruptcy court
auction. Edwards filed for chapter 11 protection in May 2000 and
shut down its tissue machine in August. Included among the
assets acquired by American Paper Recycling were the tissue mill
and equipment to produce jumbo rolls, standard tissue, center-
pull, c-fold and multi-folding toweling, as well as a warehouse.
(ABI World, May 7, 2001)
EMPIRE DISTRICT: Debt Ratings Fall To Low-B's & Outlook Negative
----------------------------------------------------------------
Moody's Investors Service has lowered the debt ratings of
Missouri-based Empire District Electric Company's (EDE) to
reflect the company's deterioration in credit measures. Said
ratings are:
* senior secured to Baa1 from A2,
* senior unsecured to Baa2 from A3,
* junior subordinated to Baa3 from Baa1,
* preferred stock rating to "baa2" from "a3", and
* the commercial paper rating to Prime-2 from Prime-1.
The outlook is negative.
The ratings action also reflect the company's heightened
regulatory risk associated with its efforts to obtain necessary
levels of rate increases from the Missouri Public Service
Commission (MPSC) to recover the company's ongoing capital
expenditures and increased operating expenses, according to
Moody's.
EDE has reportedly increased its use of leverage to finance the
construction of its State Line facility without issuing equity,
which has contributed to a weaker credit profile.
The company also faces rising operating expenses related to
higher natural gas prices, while its increased debt burden and
higher operating expenses have resulted in a sustained weakening
of the company cash flow coverage levels, reported Moody's.
FINOVA GROUP: Disclosure Statement Hearing Scheduled For June 7
---------------------------------------------------------------
The FINOVA Group, Inc. filed their Joint Plan of Reorganization
and a Disclosure Statement, dated May 2, 2001, in support of the
Joint Plan. The purpose of the Disclosure Statement is to enable
a creditor whose Claim is impaired or an equity interest holder
whose equity interest is impaired under the Plan, to make an
informed decision about whether to accept or reject the Plan.
Judge Walsh has scheduled a Hearing on June 7, 2001 at 3:30 p.m.
at 824 Market Street, 6th Floor, Courtroom #2, Wilmington, DE
19801 to consider whether the Debtors' Disclosure Statement
Contains adequate information, within the meaning of 11 U.S.C.
Sec. 1125, of a kind and in sufficient detail that would enable
a hypothetical reasonable investor to make an informed judgment
about whether to vote to accept or reject the Joint Plan.
(Finova Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
FRUIT OF THE LOOM: Union Sells Bowling Green Property For $1.75M
----------------------------------------------------------------
Fruit of the Loom, Ltd.'s Union Underwear subsidiary wants to
sell real property located at 700 Church Street, in Bowling
Green, Kentucky, to Houchens Warehousing Inc. The sale includes
easements, rights, privileges, appurtenances, improvements and
fixtures. Some of the equipment listed includes fork trucks,
battery chargers, batteries and racking equipment.
Ms. Stickles pointed out to the Court that Fruit of the Loom has
made substantial progress improving capacity utilization,
streamlining operations and simplifying its production
processes. In connection with this effort, Union Underwear
ceased manufacturing operations at the Bowling Green facility.
Except for Union's periodic use for storage and returns
processing, the premises have been idle for manufacturing
purposes since 1997. Since that time, Union has actively
marketed the premises through its management consultant,
Corporate Asset Advisors. Union received several inquiries and
several potential purchasers visited the premises to assess
their interest. However, no written offers or other firm
expressions of interest were received until Houchens
Warehousing's.
The sale price is for $1,750,000 with $1,675,000 attributable to
the premises and $75,000 attributable to the personal property.
Houchens has already paid $75,000. At the closing of the sale,
Houchens will be obligated to pay the balance of the purchase
price, subject to adjustment based on the apportionment of
charges and taxes. Houchens has the right to inspect the
premises in areas such as structural and mechanical systems,
soil, geological, engineering, environmental, hazardous or toxic
materials, noise, pollution, seismic or other tests. Houchens is
to pay all title and survey charges and any other deeds required
to effectuate the transaction. Fruit of the Loom retains the
right to 19,000 square feet to store documents and miscellaneous
property for a period not to exceed 90 days after closing. Fruit
of the Loom will also have reasonable access to common areas and
loading docks.
Jamie Gipson, president of Houchens Warehousing, signed the
agreement.
Union stated that there is sound business justification for the
sale and it is a reasonable business judgment. The sale is fair
and reasonable and the purchaser is proceeding in good faith.
The sale is in the best interests of creditors and the estates.
Union requested that the sale be free and clear of all liens,
claims, interests and encumbrances.
With no objections to this transaction, Judge Walsh granted the
Debtors' Motion in all respects. (Fruit of the Loom Bankruptcy
News, Issue No. 28; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
FURRS SUPERMARKETS: Looking For Buyer of 71 Stores
--------------------------------------------------
Furrs supermarkets, an Albuquerque, N.M.-based supermarket
chain, is yet to find a buyer during its chapter 11
reorganization, leaving the fate of 71 stores in the air,
according to the Albuquerque Journal. All but one of the Furrs
stores are in rented space, with leases worth hundreds of
thousands of dollars a year to the landlords. The company has
until Aug. 10-the same day its reorganization plan is due-to
decide what stores, if any, to close. In addition, an accounting
firm for the unsecured creditors committee is evaluating the
leases for Furrs' stores to determine whether the rental rates
are too high. Furrs' filed for bankruptcy protection on Feb. 8.
(ABI World, May 7, 2001)
GOLF TRUST: Raises $6.4 Mil From Sale Of Woodlands Golf Course
--------------------------------------------------------------
Golf Trust of America, Inc. (AMEX:GTA), a real estate investment
trust (REIT), has sold Woodlands Golf Course for total
consideration of $6.4 million.
On May 1, the Company closed the sale of Woodlands Golf Course,
an 18-hole golf course, located in Gulf Shores, Alabama, to
Brights Creek Development Company, LLC, an affiliate of the
lessee and previous owner of the golf course.
Commenting on recent sales, W. Bradley Blair II, president and
chief executive officer, stated, In our ordinary course of
business, we have closed on the sale of 9.5 18-hole equivalent
golf courses for total consideration of approximately $41
million. Mr. Blair added, I am encouraged by the sales prices
received, which are meeting our expectations and the
fundamentals of our plan of liquidation, as set forth in our
special proxy to stockholders.
Golf Trust of America, Inc. will hold a special meeting of
stockholders at 10:00 a.m. on May 22, 2001 to vote on the plan
of liquidation, as set forth in the Company's special proxy to
stockholders of record as of April 6, 2001. Stockholders should
read the proxy statement carefully because it contains important
information, and submit their votes in a timely manner to ensure
receipt prior to the recorded vote on May 22, 2001. The special
meeting of stockholders will be held at The Charleston Place
Hotel, located at 205 Meeting Street, Charleston, South
Carolina.
Golf Trust of America, Inc. is a real estate investment trust
involved in the ownership of high-quality golf courses in the
United States. The Company currently owns an interest in 37.5
(eighteen-hole equivalent) golf courses. Additional information,
including an archive of all corporate press releases, is
available over the Company's website at www.golftrust.com .
GROVE WORLDWIDE: Files Prenegotiated Chapter 11 Plan
----------------------------------------------------
Grove Worldwide, a leading worldwide provider of mobile
hydraulic cranes, truck mounted cranes and aerial work
platforms, has reached an agreement with its secured lender bank
group and is actively negotiating with its senior bondholders on
a financial restructuring of the Company. Through the plan,
Grove Worldwide's debt will be reduced from $584 million to $205
million, and annual interest expense would be reduced from $63
million to $17 million. To implement the restructuring, Grove
Worldwide today filed voluntary petitions for reorganization
under Chapter 11 of the Bankruptcy Code together with a
"prenegotiated" plan of reorganization that embodies the terms
of the restructuring.
The filing includes the Company's domestic operations
headquartered in Shady Grove, Pennsylvania, and its National
Crane subsidiary located in Waverly, Nebraska. All of the
Company's operations outside the United States -- in the United
Kingdom, France, Germany, Australia, Singapore, China and the
United Arab Emirates -- are excluded from the filing.
Chairman and Chief Executive Officer Jeffry D. Bust said that
because the Company already has an agreement on its
restructuring in place with its secured lender banks and is
actively working toward a similar agreement with its
bondholders, the Company expects to achieve plan confirmation
and successfully complete the reorganization within a matter of
months. Under the terms of the plan presented to the Court and
subject to Court approval:
-- General unsecured creditors (other than bondholders)
will receive a cash payment equal to 100 percent of allowed
claims.
-- Members of the pre-petition bank group will be issued
on a pro-rata basis promissory notes in an aggregate principal
amount of $125 million, $45 million in 14% debentures that will
be due on the sixth anniversary of the effective date of the
plan, and 75 percent of the new common stock in a reorganized
Grove.
-- Holders of the Company's 9-1/4% Senior Subordinated
Debentures will receive a pro rata share of 20 percent of the
new common stock in the reorganized company, plus warrants to
purchase an additional 10 percent of the shares exercisable at
predetermined strike prices.
-- Interests of the holders of the 14 1/2% Senior Notes,
11-5/8% Senior Discount Notes and the interests of the existing
equity holders will be cancelled.
The Company said that during the restructuring period, no
principal or interest payments will be made on certain
indebtedness incurred prior to the filing, including the
prepetition bank debt, the 9-1/2% Senior Subordinated Notes due
2009, the 11-5/8% Senior Discount Debentures due 2009 and the
14-1/2% Senior Debentures due 2010 until its proposed plan of
reorganization defining the payment terms has been approved by
the Bankruptcy Court.
"The prenegotiated plan of reorganization represents good news
for our employees and our customers, and will result in a much
stronger company," Bust said. "It directly addresses our
balance sheet issues and removes the uncertainties and concerns
created by our burdensome debt obligations, which have placed
significant financial pressure on the Company and have inhibited
our ability to implement our growth strategy. It will permit
Grove Worldwide to effectively put the challenges of the past
behind it, and provide our company with a more appropriate
capital structure and sufficient financial resources to help
secure our future. Moreover, because the proposed
reorganization plan has the support of our secured lenders, we
are optimistic that our reorganization will move forward
expeditiously toward a successful conclusion."
Bust stressed that the restructuring process will have no impact
on the Company's abilities to fulfill its obligations to its
employees or to its customers throughout the world. "During the
restructuring period and beyond, we will continue our commitment
to provide the highest quality product and service that our
customers have come to expect. Our daily operations will
continue as usual without interruption and our vendors will be
paid for all supplies furnished and services rendered subsequent
to the filing.
"With our DIP financing and the protections provided under the
Bankruptcy Code for post-petition purchases, we are confident
our suppliers will continue to support us while we complete our
restructuring. Moving forward, we will continue to service our
existing customers, renew current contracts and write new
business," Bust said.
"Ours is a balance sheet problem, not an operational one," he
said. "From an operational standpoint, the Company has never
been stronger. Since 1999 we have invested more than $41
million to improve design and manufacturing processes at Shady
Grove, including an investment of $14 million in the
manufacturing process improvement initiative and $9 million in
capital improvements." Mr. Bust noted that the positive impacts
of this factory flow program are now beginning to be evident in
increased productivity and product quality. Improved product
development processes enabled the Company to launch 15 new
models in 18 months, representing a decrease in lead-time to 12
months, down from 24 to 36 months.
He said the Company has made significant gains in the last two
years in reducing costs and developing new and innovative
products. "At the same time, the Company's Manlift segment of
the business has been refocused," Mr. Bust stated, noting that
Grove has flattened its organizational structure and streamlined
its processes. Further, the Company's National Crane subsidiary
has had one record year after another, and its market share
continues to increase worldwide.
"While we do not expect to close any locations or have any
layoffs as a direct result of the filing, we will continue to
evaluate our strategic and staffing needs as a part of an
ongoing review of the business, and will make these decisions
based upon what is in the best long-term interests of the
Company," Bust noted.
Bust emphasized that all of the Company's international
operations have been excluded from the filing, and there should
be no impact whatsoever on their ability to continue to meet the
needs of their customers and employees and their financial
obligations to their suppliers, vendors and creditors.
"Our operations in Europe are stronger than ever. Deutsche
Grove has been operating at capacity for the last three years,
and our Delta Manlift operations in France have had significant
growth. We are continuing to increase our share in the AT
market and have just completed a very successful showing at the
BAUMA international trade show, which resulted in $30 million
(US) in new orders at our stand," he said.
"Moreover, once the restructuring is complete, our Europe
operations should be in a stronger competitive position, because
the uncertainties surrounding the parent company will have been
removed," Bust noted. "We realize that our competitors
overseas, as well as domestically, will try to capitalize on
this news, but the simple truth is that we are not going away
and the actions we are taking today will make us a much stronger
company in the future. We will have a balance sheet and
financial structure that will enhance our position as a leading
worldwide provider of mobile hydraulic cranes, truck mounted
cranes and aerial work platforms."
The entities included in the filing are: GPA, Inc. (formerly
Grove Investors LLC), Grove Investors Capital, Inc., Grove
Holdings LLC, Grove Holdings Capital, Inc., Grove Worldwide LLC,
Grove Capital, Inc., Grove U.S. LLC, Crane Acquisition Corp,
Crane Holdings Inc., National Crane Corporation. The excluded
entities are: Grove Australia Pty. Ltd., Grove Holdings France
SAS, Grove France SAS, Delta Manlift SAS, Grove France LLC,
Grove Worldwide Holdings Germany GmbH, Grove Europe Limited,
Grove Cranes SL, Grove Europe Pension Trustees Limited, Grove
Cranes Limited (UK), Manlift Limited (UK), Deutsche Grove GmbH.
The Company filed its voluntary petitions and plan of
reorganization in the U.S. Bankruptcy Court for the Middle
District of Pennsylvania in Harrisburg.
GROVE WORLDWIDE: Court Gives Nod On $10 Million DIP Financing
-------------------------------------------------------------
Grove Worldwide, a leading worldwide provider of mobile
hydraulic cranes, truck mounted cranes and aerial work
platforms, received Bankruptcy Court approval to, among other
things, pay pre-petition and post-petition employee wages,
salaries and benefits during its voluntary restructuring under
Chapter 11.
The Court also approved $10 million of interim debtor-in-
possession (DIP) financing for immediate use by the Company to
continue operations, pay employees, and purchase goods and
services going forward. In conjunction with the filing, Grove
received commitments for up to $35 million in DIP from a group
of its pre-petition lenders led by The Chase Manhattan Bank to
fund operations during the restructuring. The final hearing on
the DIP agreement has been set for May 30, 2001.
Chairman and Chief Executive Officer Jeffry D. Bust said he was
pleased with the Bankruptcy Court's prompt approval of its
first-day orders and interim DIP financing.
"We expect the DIP financing to provide adequate funding for our
post-petition trade and employee obligations," Mr. Bust said,
noting that the Company has been in contact with many of its
major suppliers and customers, who have indicated that they will
support Grove during the restructuring process, which is
expected to conclude expeditiously, within a matter of months.
The Court also granted approval for the Company to honor all
warranties, refunds and other customer service programs.
Grove announced that it has reached an agreement with its
secured lender bank group and is actively negotiating with its
senior bondholders on a financial restructuring of the Company.
Under the terms of the plan, Grove Worldwide's debt will be
reduced from $584 million to $205 million and annual interest
expense would be reduced from $63 million to $17 million.
HALYK SAVINGS: Moody's Reviews D Rating For Possible Downgrade
--------------------------------------------------------------
Moody's announced that it has placed Halyk Savings Bank of
Kazakhstan's (HSBK) "D" financial strength rating (FSR) on
review for possible downgrade. This is reportedly due to the
bank's falling profitability and persisting low efficiency.
These negative trends prevail despite the low cost of funding
derived mainly as a result of HSBK's high level of retail
deposits, Moody's said. Also, the rating agency noted that
despite the recent increase in share capital, the losses
incurred in 2000 contributed to a further deterioration in the
bank's capitalisation.
HSBK, headquartered in Almaty, Kazakhstan, had consolidated IAS
assets totalling KZT102.19 billion (US$702.26 million) as at
December 2000.
ICG COMMUNICATIONS: Assumes Key Employee & Consulting Agreements
----------------------------------------------------------------
Judge Walsh granted ICG Communications, Inc. authority to enter
into proposed employee and consulting agreements, as well as
assume its contract with CEO Randall Curran.
As reported, prior to the Petition Date there were ten employees
of ICG Communications, Inc. (other than the Chief Executive
Officer, that had employment contracts with the Debtors. Of
those ten, four have left the Debtors' employ. These four
persons were the Debtors' President and Chief Operating Officer,
the Debtors' Chief Financial Officer, the head of human
resources, and the head of regulatory affairs. After these
departures, the Debtors restructured the responsibilities and
reporting structure of the members of senior management below
the level of CEO, resulting in six employees that do not have
employment contracts being promoted to positions that report
directly to the CEO. The Debtors believe that the six remaining
employees with employment contracts, the six employees that now
report directly to the CEO, and the CEO together constitute key
members of senior management of the Debtors.
By Motion, the Debtors sought Judge Walsh's authorization to:
(1) Assume the six existing employment contracts;
(2) Enter into new contracts with the six employees that
newly report directly to the CEO;
(3) Assume the Debtors' contract with Randall Curran, the
Debtors' CEO; and
(4) Enter into consulting agreements with the four former
executives who have left the Debtors' employ.
Employees with Existing Employment Contracts
The six employees who have employment contracts at present, and
their respective titles, are:
Michael D. Kallet
Executive Vice President
Operations
Richard E. Fish
Executive Vice President and
Chief Financial Officer
Darlinda Coe Senior
Vice President
Network Support
David Hurtado
Senior Vice President
Telephony Operations
Gary F. Lindgren
Senior Vice President
Engineering
John Colgan
Senior Vice President
Financial Planning/Corporate Controller
New Employees Without Existing Employment Contracts
The employees with whom the Debtors do not at present have
employment agreements, but with whom employment contracts are
being proposed, are:
Bernard Zuroff
Executive Vice President
General Counsel/Secretary
Kim Gordon
Senior Vice President
Marketing
Gayle Landis
Senior Vice President
People Resources
Robert Athey
Senior Vice President
Sales
Jack Campbell
Senior Vice President
Information Systems and Services
Brian Cato
Senior Vice President
Customer Care
General Terms of Proposed Employment Contracts
If entry into the proposed contracts is authorized, the
employment status of the key executives will remain "at-will",
and thus the employment of each of these executives may be
terminated by the Debtors at any time for any reason.
The proposed contracts provide for:
(a) Payment of base salary until termination;
(b) Participation in normal corporate benefits and plans
until termination; and
(c) A severance benefit equal to one year's base salary,
payable as a lump sum equal to one year's base salary, if the
employee is terminated other than for cause, death or
disability, or if the employee resigns as a result of
"constructive dismissal". The present contracts, which provide
for a severance package equaling one year's base salary plus any
bonus, will be amended to reduce the package to one year's base
salary.
The proposed contracts also contain provisions requiring, after
an employee's termination, continued maintenance of confidential
information, and prohibit, after an employee's termination,
solicitation of other employees of the Debtors.
The Curran Agreement
In early September 2000, the Debtors' Board of Directors hired
Mr. Randall Curran to become the Debtors' new CEO and to lead
their restructuring efforts. At that time, the Debtors entered
into the Curran Agreement, which they now seek authority to
assume. The principal terms of the Curran Agreement, the term of
which is month to month, are:
Duties: Mr. Curran shall serve as the Debtors' Chief
Executive Officer and shall report to the Board of Directors and
the Special Executive Committee of the Board.
Compensation: Mr. Curran shall receive a monthly base
salary of $75,000. This salary may be increased in accordance
with normal business practices of the Debtors.
Benefits: Mr. Curran shall receive employee benefits as are
generally provided to senior executives of the Debtors:
temporary housing; certain travel costs; an automobile for use;
and reimbursement of expenses.
Severance: Mr. Curran shall receive a lump sum termination
benefit in an amount equal to twelve month's base salary, at the
rate then in effect, as severance upon termination other than
for death, disability, cause or good reason.
The Debtors advised Judge Walsh that, during Mr. Curran's
tenure, the Debtors' operations have been substantially
stabilized, operating costs have been significantly reduced, and
the process of developing a long- term plan has begun.
Therefore, the Debtors asserted that continuing Mr. Curran's
contract is beneficial to and in the best interests of these
estates and their creditors.
The Consulting Agreements
Each of the four former employees were parties to employment
agreements with the Debtors, and each was a participant in the
Debtors' retention plan initiated prior to the Petition Date.
This plan provides, among other things, that participants who
are severed are entitled to receive remaining payments under the
program in a lump sum upon termination. The Court's approval of
the retention plan expressly excluded these former executives.
Each of the former employees has agreed, at the Debtors'
request, to continue consulting with the Debtors on an "as
needed" basis over the next approximately six months, as well as
to continue to respond to ongoing requests for information and
assistance. In fact, the Debtors told Judge Walsh they will need
access to these individuals as they move forward with their
restructuring efforts.
In addition, each of these former executives has claims
assertable against these estates arising out of their former
employment contracts. While the Debtors believe that any such
claims would be prepetition unsecured claims, the former
executives have contended that some portion of their claims
would have administrative priority status. To ensure that the
Debtors continue to have access to these individuals, to ensure
that these former executives do not attempt to solicit the
Debtors' current employees, and resolve any claims these former
employees may have against these estates, the Debtors believe it
is best that these estates enter into consulting agreements with
each of these former executives.
In addition to providing for continued consulting services, non-
solicitation of employees, and mutual releases, the proposed
consulting agreements provide for each former executive to
receive payments for a 26-week period on a bi-weekly basis. The
amount of the proposed payments for each former officer total:
Bill Beans $528,895
Former President and CEO
Harry Herbst $342,548
Former CFO
Carla Wolin $257,500
Former head of human resources
Cindy Schonhaut $217,500
Former head of regulatory affairs
These proposed payments are approximately the amount of the
remaining retention payments these former executives were slated
to receive under the retention plan, less approximately half of
the salary payments made to them for the period of December 4,
2000, to February 4, 2001. No other payments are proposed under
the consulting agreements, and if approved, all claims based on
the existing employment agreements will be released. The Debtors
told Judge Walsh that aggregate claims under the existing
employment agreements could exceed $2.2 million.
Upon consideration, Judge Walsh granted the Debtors' Motion,
authorizing the Debtors to assume the Curran agreement and enter
into the proposed contracts and consulting agreements. However,
Judge Walsh instructed that the proposed contracts must provide
for the severance payments to be paid (i) 50% in a lump sum upon
termination, and (ii) 50% over a one-year period, subject to
mitigation in the event the affected employee obtains other
employment. Judge Walsh further retained jurisdiction over any
dispute arising under any of the agreements made the subject
of the Motion and his Order. (ICG Communications Bankruptcy
News, Issue Nos. 4 & 5; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
IMPERIAL SUGAR: Savannah Retirees Seek Appointment Of Examiner
--------------------------------------------------------------
Neil B. Glassman and Michael L. Vild, members of The Bayard Firm
of Wilmington, Delaware, together with James L. Paul and Matthew
J. McCoyd of the Atlanta, Georgia firm of Chamberlain, Hrdlicka,
White, Williams & Martin, on behalf of 85 Supplemental Executive
Retirement Plans and deferred-compensation claimants who are
former employees of Savannah Foods & Industries, Inc., and its
direct and indirect subsidiaries, asked that Judge Robinson
order the appointment of a Chapter 11 examiner to conduct an
investigation of the financial affairs of Imperial Sugar
Company. These moving creditors asserted that they collectively
hold claims against Savannah Foods in excess of $34 million. The
Schedules of the Debtor reflects that Imperial Distributing has
assumed these liabilities of Savannah Foods.
The Movants asserted that appointment of a Chapter 11 examiner
is mandatory and not within the Court's discretion because each
of the Schedules filed by Imperial Distributing, Inc., and
Savannah Foods shows fixed, liquidated, unsecured debt in excess
of $5 million.
However, even if the Court were to find that appointment of an
examiner is not mandatory in these cases, the Movants said that
the Court should appoint an examiner as being in the best
interests of these estates, their creditors, and equity security
holders. The basis for this Motion and the cause for the
Movants' concerns is that the Plan presented by the Debtors
provides for a complete release of all officers and directors of
all 37 affiliated debtors for all prepetition acts. However, the
related Disclosure Statement does not identify these acts, nor
describe what investigation, if any, has occurred. Further, none
of the Debtors' Schedules list any claims against the Debtors.
Since Baker Botts, attorneys for the Debtors, have represented
management of some of the Debtors, the firm is in no position to
conduct an independent investigation of the acts of the officers
and directors. The Movants tell Judge Robinson that during the
meeting of creditors, the Debtors' representative stated that he
had no knowledge of any claims against officers and directors,
but that the Debtors had $25 million in insurance coverage for
directors' and officers' liability insurance. The Movants
therefore urge that an examiner should be appointed to
investigate whether claims against officers and directors exist,
and if appropriate, pursue recovery under the present insurance
policies.
The Movants also told Judge Robinson that an examiner should be
appointed to investigate avoidance actions between and among the
Debtors with regard to preferential and fraudulent transfers. As
no order has been entered substantively consolidating these
cases, and the Debtors stated at the meeting of creditors that
there was no intention to file such a motion, the Plan
obliterates all intercompany claims between and among the
Debtors. The Debtors admit that they routinely transfer funds
among themselves, and the Debtors' representative stated during
the meeting of creditors that the Debtors had not conducted any
investigation of any avoidance of transfers as fraudulent or
preferential by and among the Debtors. The Debtors' Disclosure
Statement does not mention whether any such actions exist.
Appointment of an examiner is therefore appropriate to determine
whether such actions exist as assets of any estate.
The date of insolvency of the various Debtors must be
investigated and fixed, said the Movants, because at the time
when any of the Debtors traverse into the "zone of insolvency",
the directors of that insolvent Debtor owe fiduciary duties to
the creditors of that debtor. Once that occurs, the acts and
conduct of the insolvent debtor must be scrutinized from the
standpoint of the discrete creditor body of that specific debtor
in order to determine whether there are any breaches of
fiduciary duty or other claims which may be asserted against the
directors. Further, certain rights of recovery of transfers
occurring during the Debtors' insolvency arise on the date of
insolvency.
Finally, the Movants want an examiner appointed to investigate
and report on intercompany receivables and payables among the
Debtors since the Plan likewise obliterates all intercompany
obligations. The Disclosure Statement does not describe the
intercompany receivables and payables, although some are listed
on the Schedules in very general terms, describing only millions
of dollars of intercompany receivables owed by "various"
affiliates.
The Movants told Judge Robinson this lack of information will
raise the possibility that creditors will vote on a plan on the
basis of a lack of sufficient information, and the Debtors'
burden of proof at the confirmation hearing will be artificially
lowered.
The Movants also claimed that the Debtors may have undervalued
their interests in real property with two results: the voting of
creditors on the Debtors' Plan will be based on misinformation
set out in the Schedules and Disclosure Statement, and the
Debtors will succeed in artificially reducing their burden of
proof at the confirmation hearing with regard to the "best
interests of creditors" test requiring that unsecured creditors
receive at least as much in the Chapter 11 cases as they would
if the cases were converted to liquidation proceedings. The
Debtors' Disclosure Statement has no liquidation analysis at
all, so creditors cannot compare their distribution under the
plan with what they might receive in liquidation. Although the
Schedules show a combined value of $156,148,785.90 in real
property interests among the Debtors, none of the Schedules show
what basis was used to determine those values. During the
meeting of creditors, the Debtors' representative testified that
the real property values in the Schedules were based on ad
valorem tax returns, and that no appraisals had been obtained.
The Debtors' representative also admitted that the Debtors'
records showed values different than those listed in the
schedules. The Movants therefore wish that an examiner be
appointed to determine the accurate and correct values of the
Debtors' real property.
The Movants also believe that the Debtors have undervalued their
trade names, trademarks, service marks and general intangibles.
The Debtors repeatedly claim that they are the largest
processors and marketers of refined sugar in the United States.
The Debtors market their products under various trade names and
marks. The Debtors' undervaluation of these assets again raises
the possibility that the voting of creditors on the Debtors'
Plan will be based on misinformation set out in the Schedules
and Disclosure Statement, and the Debtors will succeed in
artificially reducing their burden of proof at the confirmation
hearing. The Debtors' marks are given only nominal or no value,
and yet no investigation has been undertaken by the Debtors to
determine what their actual value might be.
The Movants are also concerned that the Debtors have overstated
their indebtedness to the Senior Subordinate Bondholders. The
same amount is listed on the Schedules of 21 of the Debtors as
if each owed the full amount of $263,541,666.67. However, the
Trust Indenture is signed only by Imperial Sugar, Inc., as the
primary obligor, and by 18 other debtors as guarantors. The
terms of the Trust Indenture make it clear that the liability of
each guarantor debtor is limited to a dollar amount which would
not make the debtor insolvent or leave it with unreasonably
small capital at the time of execution. At the meeting of
creditors, the Debtors' representative admitted that the persons
responsible for preparing the Schedules were unaware of the
limitation on the guarantors' liabilities, and stated that he
was unaware of any investigation to determine the limits of the
liabilities of each of the 18 guarantors.
The Movants also want an examiner to determine whether the
break-up and sale of the Debtors' operations would result in a
greater return to creditors than the present plan. For example,
Savannah Foods had operated as an independent sugar refining
company for more than 85 years before its acquisition by the
Debtors. At that time Savannah Foods was a publicly held company
and the largest processor of refined sugar in the United States.
Imperial Sugar acquired Savannah Foods at a purchase price in
excess of $500 million. Other prospective buyers had offered
nearly that much for Savannah, and after its acquisition
Savannah continues to operate as a going concern. Since the
Debtors' Disclosure Statement has no liquidation analysis, the
Debtors' representative was questioned during the meeting of
creditors. He advised that the Debtors were preparing an amended
Disclosure Statement which would include a liquidation analysis,
but that he does not consider liquidation through break-up and
sale (with the exception of Michigan Sugar) as an option.
However, the representative admitted that the Debtors had not
undertaken any analysis to determine whether a break-up and sale
might produce a greater return. (Imperial Sugar Bankruptcy News,
Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900)
INNOFONE.COM: Court Declares Canadian Unit Bankrupt
---------------------------------------------------
Innofone.com, Inc. (OTTCB:INNF) disclosed that on May 3rd, 2001,
its operating subsidiary, Innofone Canada, Inc., was adjudged
bankrupt by a Judge of the Bankruptcy and Insolvency Division of
the Superior Court of Quebec, District of Montreal.
The Court further appointed a trustee and declared that the
Subsidiary was deemed to have made an assignment of its assets
to the trustee for the benefit of its creditors as of February
27, 2001, the date of the Petition for a Receiving Order under
the Bankruptcy & Insolvency Act of Canada.
The Company retains its interest as a creditor in the
Subsidiary.
As a result of the bankruptcy of the Subsidiary, the Company has
suspended current business operations. The Company will seek to
be acquired by or acquire an interest in a business entity that
desires to seek the perceived advantages of a corporation which
has a class of securities registered under the Securities
Exchange Act of 1934. The Company does not plan to restrict its
search to any specific business, industry or geographic
location. Management anticipates that it will be able to
participate in only one potential business venture because the
Company has nominal assets and limited financial resources.
There can be no assurance that the Company will be successful in
locating or negotiating an agreement with any such business
entity.
LERNOUT & HAUSPIE: Settling Lawsuits By Sail Labs & Van Driesten
----------------------------------------------------------------
Lernout & Hauspie Speech Products N.V., asked Judge Wizmur to
permit it to settle and compromise certain lawsuits against it
by (i) Sail Labs Holding N.V. and 16 of Sail Labs' employees,
(ii) Peer Van Driesten, and (iii) Sail Labs. L&H and Van
Driesten, President and CEO of Sail Labs, respectively hold
19.99 (275,000 shares) and 30.5% (413,333 shares) of the equity
of Sail Labs, out of a total of 1,375,000 shares. The Debtor and
Van Driesten extended to Sail Labs convertible loans in the
respective amounts of 12,901,848.43 Euro (approximately
$11,611,663.59) and 5,093,498.50 Euro (approximately
$4,074,798.80. In 1999 Van Driesten personally borrowed
$7,000,000 from Artesia Banking Corporation N.V., and made a
$7,000,000 nonconvertible loan to Sail labs. Lernout & Hauspie
Investment Company N.V. is alleged to have guaranteed that a
bank guarantee would be provided for the Artesia loans. Van
Driesten is alleging that the bank guarantee provided for the
Artesia loans was a false guarantee because it was issued by
Artesia.
The Re-employment Letter
In May 1999, Gaston Bastianens, who was then CEO of L&H, sent
Van Driesten a letter which allegedly guaranteed that former L&H
employees working at Sail Labs could return to work at L&H if
they were dismissed by Sail Labs for economic reasons.
The Stockholders' Agreement & License Agreement
In October 1999, Sail Labs assigned to L&H the license to use
intellectual property from B.B.N. Technology that Sail labs
received through a March 1999 agreement. Sail Labs has developed
a certain "know-how" concerning audiomining based on this
intellectual property of B.B.N. Technology. In March 2000 L&H
and Sail Labs entered into a Stockholders' Agreement which
provided for a right of first refusal, tag-along rights,
preemptive rights, and a call option. At the same time, L&H and
Sail Labs also entered into a License and Development Agreement
under which Sail Labs developed know-how in the field of
intelligent content management. Under this agreement, L&H gave
Sail Labs a nonexclusive source code license to distribute the
L&H technology as incorporated in Sail Labs products, provided
that the products were not competitive with L&H products and
represented a significant improvement to L&H technology. Sail
labs has customer contracts for this technology with various
third parties. By other terms:
(a) Sail Labs granted a license on its technology to L&H
for incorporation into L&H products;
(b) The ownership of technology developed by L&H belongs to
L&H, and technology developed by Sail Labs belongs to
Sail Labs;
(c) L&H has a right of first negotiation to become the
exclusive licensee of certain technology developed by
Sail Labs;
(d) L&H has a buy-out right on all intellectual property
and ownership rights as to the Sail labs technology;
and
(e) Sail Labs pays L&H 9% of its net revenue from the sale
of its product.
The Belgium Litigation
By writ issued in December 2000, Sail Labs and 16 employees sued
L&H in the Commercial Court of Ieper, Belgium, based on an
alleged right to return to work at L&H if they were dismissed by
Sail Labs for economic reasons. By writ in January 2001, Van
Driesten sued L&H, Artesia, and LHIC in the Commercial Court of
Ieper, Belgium, based on the allegedly "false" bank guarantee
issued by Artesia for the Artesia loans. By writ in February
2001, Sail Labs sued L&H in the Commercial Court of Ieper,
Belgium, alleging that the Stockholders Agreement and the
License and Development Agreement were null and void because
they violated rights L&H allegedly gave to third parties.
Sail Labs owes L&H receivables totaling 358,757.55 Euro
(approximately $322,881.80) in interest as of February 28, 2001,
and 1,158,332.24 Euro (approximately $1,042,499.02) for
outstanding invoices. Sail Labs owes Van Driesten receivables on
account of the $7 million nonconvertible loan, and 128,160.29
Euro (approximately $115,344.26) in interest as of the end of
February 2001. In March 2001, each of L&H, Van Driesten, and
Sail Labs signed a settlement agreement, subject to approval of
the Bankruptcy Court, the commissioners in the Belgium concordat
proceeding, the Board of Directors of L&H, the DIP financing
lenders, and the L&H Creditors' Committee, settling all lawsuits
against L&H.
Terms of the Settlement
The Settlement Agreement provides that:
(a) L&H will convert 5,051,242.45 Euro (approximately
$4,546,118.21) in principal and 358,757.55 Euro (approximately
$322,881.80) in interest of its convertible loans at 20 Euro
(approximately $18) a share to 270,000 shares of Sail Labs with
the result that L&H will own a total of 28.61% of the shares of
Sail Labs. L&H will benefit from antidilution protection for
eighteen months repricing the conversion rate should there be
any capital increases at a price below 20 Euro, and as long as
L&H has at least 15% of the shares of Sail Labs, L&H will be
entitled to one board member to be agreed upon by the Debtor and
Sail Labs;
(b) Van Driesten will convert his convertible loans of
5,093,000 Euro (approximately $4,583,700) in principal and
127,000 Euro (approximately $114,300) in interest, to 261,000
shares in Sail Labs for a total of 35.36%. L&H will irrevocably
grant Van Driesten for 5 years its voting rights in excess of
19.99% of its shares. Van Driesten will recognize that all of
his claims against L&H and any company or person in its group
are satisfied, and his claims against Sail Labs, except for the
nonconvertible loans and 3,658.79 Euro (approximately $3,292.91)
are satisfied;
(c) Under an asset purchase agreement and deed of
assignment, Sail labs will transfer to the Debtor full ownership
of the rights to the ICM know-how for setting off 5,000,000 Euro
(approximately $4,500,000) from the L&H receivables. Sail Labs
and L&H will use their best efforts to negotiate on or before
the closing an assignment and modification of the Sail Labs
contracts for the ICM know-how with e- help and Wextech to L&H
and/or Sail Labs Bvba;
(d) L&H will set off 4 million Euro (approximately
$3,600,000) of the L&H receivables to acquire 100% of the shares
of Sail Labs Bvba, which includes the Intelligent Content
Management group in Antwerp (formerly Novell) consisting of 28
employees, understanding that Sail Labs Bvba has no liabilities,
and will incur total operating expenses of approximately 300,000
Euro (approximately $270,000);
(e) Sail Labs will irrevocably waive all of their claims
against L&H, and L&H will recognize that its claims against Sail
Labs are satisfied, except for 8,305.51 Euro (approximately
$7,474.96);
(f) The Stockholders Agreement will be novated into a new
Shareholders Agreement, and will include only tag-a-long rights
for all shareholders;
(g) The License and Development Agreement will be
terminated, and all of L&H's technology will be returned to L&H.
L&H will then grant Sail labs an object code license on its
RealSpeak and G2P technology, and L&H will grant Sail Labs a
source code license on the T1 machine translation engine which
L&H acquired from GMS, the company owned by Van Driesten;
(h) L&H will cancel and revoke, to the extent possible, the
Sail Labs' employees' alleged right of return to L&H, and at
least 98% of Sail labs' affected employees, including the
employees who brought the suit, will waive the alleged right of
return to work at L&H;
(i) L&H will recognize that the proceeds of the loan from
Artesia was destined for Sail Labs, based on a guarantee
provided by LHIC, and L&H will use its best efforts to support
LHIC, Sail Labs, and Van Driesten in the renegotiation of the
loan with Artesia so that Artesia accepts Sail Labs as its sole
debtor for the loan. Upon closing Van Driesten will waive his
claim against L&H; and
(j) Sail Labs' fully-owned German subsidiary, Sail Labs
Bmbh, will repay over a term 1,129,597.79 Euro (approximately
$1,016,638.01) owed to L&H's subsidiary, Mendez Deutschland
GmbH, for computer equipment and furniture.
The Debtor argued that execution of this settlement agreement
should be approved as a reasonable business decision. It is
likely that Sail Labs would have to apply for creditor
protection (composition, or gerechtelijk akkoord) in Belgium if
the settlement agreement is not approved. In that event, L&H
would not recover from Sail Labs in full the receivables owed to
it, and any additional sums that might be awarded to it by a
court. If the settlement agreement is approved, L&H will settle
several costly and time-consuming lawsuits and secure the ICM
know-how, and Sail Labs Bvba for L&H, which will benefit L&H's
creditors and these estates. The settlement agreement will also
benefit L&H's creditors and these estates by providing for the
repayment of a loan to Mendez, which is being sold for the
benefit of the Debtors' estates. (L&H/Dictaphone Bankruptcy
News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
LOEWEN GROUP: Asks For Fifth Extension of Exclusive Periods
-----------------------------------------------------------
"[O]nly one issue -- the dispute over the secured status of
approximately $1.1 billion in debt issued under the Collateral
Trust Agreement -- is preventing the Debtors from proceeding
with the disclosure statement approval and plan solicitation
process," Richard M. Cieri, Esq., at Jones, Day, Reavis & Pogue,
told Judge Walsh. The Loewen Group, Inc.'s management, Mr. Cieri
related, has actively participated in the medition process under
the guidance of Professor James J. White from the University of
Michigan. Management and the Debtors' professionals have held
three face-to-face meetings with Professor White so far and are
prepared to outline what the Company thinks is necessary to
bring resolution to the CTA dispute at a status conference
scheduled for May 25, 2001.
By Motion, the Debtors requested a fifth extension of their
exclusive period during which to file a plan of reorganization
through October 31, 2001. The Debtors asked for a concomitant
extension of their exclusive period during which to solicit
acceptances of that plan through December 31, 2001. "[T]he
Debtors, through no fault of their own, have been unable
to advance the plan process," Mr. Cieri continues. "Under these
unique circumstances, where the Debtors have successfully
restructured their businesses and have been prevented from
advancing the plan process only as a result of the pendency of
the CTA dispute, a further extension of exclusivity is merited."
Judge Walsh will entertain the Debtors' request at a hearing on
May 18. Loewen Bankruptcy News, Issue No. 37; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LOEWEN: Anticipates Filing 2nd Amended Plan In About Two Weeks
--------------------------------------------------------------
The Loewen Group Inc. said it will file a Second Amended Plan of
Reorganization with the United States Bankruptcy Court for the
District of Delaware. That filing is expected to occur within
the next two weeks.
Management believes that, operationally, the Company is ready,
and has been ready since at least October, 2000, to emerge from
the pending Chapter 11 and CCAA proceedings. However,
confirmation of a plan of reorganization has been prevented by
one principal issue -- a continuing dispute among certain
creditor groups as to whether holders of the Company's Series 3,
4, 6 and 7 Senior Notes and Pass-through Asset Trust Securities
(PATS) are secured and entitled to the benefits of the
collateral held under the terms of the Collateral Trust
Agreement (CTA).
As earlier reported, the United States Bankruptcy Court, in
January, 2001, initiated a mediation process aimed at achieving
a settlement of the CTA dispute. The Court appointed as mediator
a highly-respected law professor and authority on commercial and
bankruptcy law. Pursuant to the Court's order, the mediator
extensively researched, reviewed and evaluated the positions
presented by the various creditor groups in light of law
pertinent to the CTA dispute. The mediator also conducted formal
and informal mediation sessions in addition to working directly
with representatives of and advisors to principal creditor
groups and the Company. The mediation did not produce a
consensual resolution of the CTA issue. However, the mediator
has provided a report to the Company recommending a range of
possible adjustments to the Company's previously-filed Plan of
Reorganization based upon his objective evaluation of the
probabilities of success of the various legal and factual
arguments presented by the various parties.
The Second Amended Plan of Reorganization to be filed by the
Company will adopt the mediator's recommendations and will
propose creditor recoveries at the mid-point of the mediator's
recommended range.
Specifically, the Second Amended Plan will differ from the Plan
filed on February 16, 2001, primarily in that holders of various
securities claiming the benefits of the collateral held under
the terms of the CTA will no longer be treated on a pari passu
basis. Instead, subject to adjustment as a result of the
Company's ongoing review of claims estimates:
* the proposed aggregate recoveries for holders of the
Series 6 and 7 Senior Notes and PATS will be reduced from
the levels shown in the February 16, 2001 Plan by
approximately $87.4 million;
* the aggregate recoveries for holders of Series 3 and 4
Senior Notes will be increased by approximately
$14.6 million; and
* the aggregate recoveries for the holders of the Company's
bank debt, and Series D, E, 1, 2, and 5 Senior Notes will
be increased by approximately $72.8 million.
Subject to the continuing claims review, it is anticipated that
other creditor groups will not be materially affected by the
changes to the Plan. As explained in the Plan and related
Disclosure Statement, all projections of creditor recoveries in
the Plan are estimates based upon certain considerations and
assumptions set forth therein.
It is the intention of the Company to ask the United States
Bankruptcy Court to approve submittal of this Second Amended
Plan to a vote of the Company's creditors.
MARINER POST-ACUTE: GranCare Terminates Lake Waccamaw Agreement
---------------------------------------------------------------
Mariner Post-Acute Network, Inc.'s wholly-owned subsidiary
GranCare Inc. and the other MPAN Debtors sought and obtained the
Court's approval of:
(1) the Lease Termination Agreement by and between Lake
Waccamaw Convalescent Center (the Landlord), and GranCare, as
former tenant, including the Operations Transfer Agreement by
and among the Landlord, its replacement operator, Premier Living
and Rehab., L.L.C., and GRANCARE, as former tenant, with respect
to the Lake Waccamaw Convalescent Center nursing home facility
located at 106 Cameron Street, Lake Waccamaw, North Carolina;
(2) the rejection of certain executory contracts related to
the Facility;
(3) the assumption and assignment to Premier of the
Medicare Provider Agreement between GranCare and the Health Care
Financing Administration (HCFA) relating to the Facility.
The lease was rejected in October, 2000.
GranCare represented that to provide for an orderly transition
of operations at the facility, which will minimize Landlord's
damages and the costs of exiting the facility, while at the same
time minimizing or avoiding any disruption in patient care, the
parties have agreed to the proposed Agreements, subject to the
Court's approval.
(A) The Lease Termination Agreement provides for:
(1) The payment by GRANCARE of all administrative claims
owed to third parties and incurred in connection with the
operation of the Facility from the Petition Date to February 1,
2001, the date possession of the Facility was surrendered to the
Landlord and the date that Premier took over operations of the
Facility (the Transition Date);
(2) Payment of
(a) All unpaid rent and real property taxes due under
the Lease from the Petition Date through the
Transition Date;
(b) Payment of $565.68 in unpaid real property taxes,
including penalties and interest, incurred from
January 18, 2001, to the Transition Date, and
(c) The sum of $60,938.32 in full and complete
satisfaction of Landlord's asserted administrative
maintenance claims, and in consideration for the
obligations assumed under the Operations Transfer
Agreement;
(3) The transfer of the personal property and assignment of
the leases and executory contracts to Premier as set forth in
the Operations Transfer Agreement; and
(4) A waiver of all other claims against GRANCARE and the
other Debtors, including, without limitation, administrative,
priority and Pre-Petition Date claims, that Landlord may have
against Operator relating to the Lease, its rejection by
Operator, or Operator's use, occupancy or maintenance of the
Facility.
(B) The Operations Transfer Agreement generally governs the
transition of operations at the Facility, including:
(1) The transfer of supplies on hand at the Facility and the
facility transportation van, free and clear of liens and
encumbrances, all of which assets are believed to have nominal
value.
(2) The orderly transfer of Patient Trust Fund accounts;
(3) The coordination of final cost reports;
(4) The employment of all or virtually all of GRANCARE's
employees at the Facility as of the Transition Date, thereby
avoiding any WARN Act and severance claims which might otherwise
be asserted if the Facility were to cease operations;
(5) The assumption by Premier of certain group health care
obligations;
(6) The reconciliation of future amounts received from the
collection of accounts receivable;
(7) Prorations as of the Transition Date;
(8) The transfer of patient records and financial data; and
(9) The assumption or rejection of certain executory
contracts.
(C) Assumption And Assignment Of The Medicare Provider Agreement
As part of the Operations Transfer Agreement, GRANCARE will
assume and assign to the Premier the Medicare Provider Agreement
between GRANCARE and HCFA relating to the Facility on terms
substantially identical to terms which have been previously
approved by HCFA and the Court with respect to dispositions of
similar facilities. GRANCARE will seek HCFA's approval of such
terms with respect to this transaction.
However, the assumption and assignment of the Medicare Provider
Agreement, any claim of Medicare, the applicable fiscal
intermediary, the Department of Health and Human Services (HHS),
or any other party against the Debtors under the Medicare
Provider Agreement arising prior to the Petition Date will
continue to be treated as a prepetition claim with the same
rights, status, and priority as if such Medicare Provider
Agreement had been rejected, so that such claims will not become
or be treated as administrative claims, and will not be offset
against any of the Debtors' claims arising after the Petition
Date. Instead, HCFA will be allowed to offset all such claims
(to the extent valid, and without prejudice to the Debtor's
right to dispute such claim) against any prepetition
underpayment claim of the Debtors against Medicare, even if the
claim and debt are not "mutual," as ordinarily required by 11
U.S.C. Section 553, and without further order of the Court;
provided, however, that to the extent HCFA's claim is not
satisfied in full via exercise of the offset right, the United
States shall have an administrative expense claim pursuant to 11
U.S.C. Section 507(b) for any such deficiency against GRANCARE's
estate, which will be capped at an amount presently under
discussion with HCFA, but which the Debtors believe will not
exceed $50,000 with respect to the Facility.
The rights accorded the United States under the Approval Order
will constitute "cure" under 11 U.S.C. Section 365 so that
Premier will not have successor liability for any claim against
any Debtors under the Medicare Provider Agreement arising prior
to the effective date of the assignment of such Medicare
Provider Agreement to Premier. Nevertheless, Premier will
succeed to the quality of care history of GRANCARE as to the
Facility, except that the assignee shall not be liable to pay
any civil monetary penalty accruing prior to the Transition
Date.
(D) Rejection of the Service Contracts
Because GRANCARE intends to cease doing business at the
Facility, the Service Contracts related to the Facility will be
unnecessary and burdensome to GRANCARE's estate upon the
Transition Date. Accordingly, GRANCARE and the Landlord have
agreed that GRANCARE is not and will not be obligated to assume
or assign the Service Contracts, except as designated by Premier
and presented to the Court on the exhibit to the motion, and
that the Service Contracts not so designated by Premier will
instead be deemed rejected effective as of the Transition Date.
By Motion, GRANCARE sought the Court's Order which authorizes
(a) GRANCARE to consummate the Agreements, including the
sale to the Landlord of all of the owned personal property
assets utilized in connection with the operation of the Facility
free and clear of liens, claims, encumbrances, and interests
under Bankruptcy Code sections 105(a) and 363(b), (f), (m), and
(n);
(b) the rejection of certain executory contracts relating
to the Facility;
(c) the assumption conditioned upon assignment of the
Medicare Provider Agreement. (Mariner Bankruptcy News, Issue No.
14; Bankruptcy Creditors' Service, Inc., 609/392-0900)
METAL MANAGEMENT: Delaware Court Approves Disclosure Statement
--------------------------------------------------------------
Metal Management, Inc., one of the nation's largest full service
scrap metal recyclers, announced that the disclosure statement
with respect to its plan of reorganization was approved by the
Delaware Bankruptcy Court at a hearing held on May 4, 2001.
Emergence from Chapter 11
Albert A. Cozzi, Metal Management's Chairman and Chief Executive
Officer remarked, "We are pleased our company is moving forward
with the solicitation of its plan of reorganization which will
put us in a position to emerge from bankruptcy next month. While
bankruptcy was a strategic tool that allowed us to efficiently
recapitalize the company it has now served its purpose and it
is time to move forward. Looking forward, we intend to prove the
basis for industry consolidation with a rational capital
structure, lower fixed costs, and strong regional management
teams. We owe a great deal of gratitude to our dedicated
workforce, suppliers, and lenders for their conviction and
commitment to Metal Management throughout this reorganization
process."
Metal Management indicated that the approval by the Bankruptcy
Court of the disclosure statement and related balloting
procedures was a significant milestone in its efforts to emerge
from Chapter 11 bankruptcy protection. According to the company,
the approval of the disclosure statement will allow the company
to begin solicitation of its plan of reorganization. The plan of
reorganization, as previously announced, provides for the
conversion of in excess of $200 million of prepetition
indebtedness into equity reducing leverage and interest expense.
The plan of reorganization contemplates that the company will
emerge from bankruptcy on or before June 30, 2001.
The company has been operating its business as a debtor-in-
possession subject to the jurisdiction of the United States
Bankruptcy Court for the District of Delaware since filing for
relief under Chapter 11 of the United States Bankruptcy Code on
November 20, 2000.
During the pendancy of the bankruptcy, the company is financing
its operations through a $200 million Post-Petition Financing
Agreement by and among BT Commercial Corporation, as Agent, and
certain other lenders. As of April 30, 2001, the company had
undrawn availability of approximately $18 million under the DIP
Agreement.
METAL MANAGEMENT: Reports Third Quarter Financial Results
---------------------------------------------------------
Albert A. Cozzi, Metal Management's Chairman and Chief Executive
Officer said, "Our results for the third quarter reflect the
continued weakness in the steel and scrap metals industries.
Although the weakness continued into our recently completed
fourth quarter, we are positioning our company to make money in
any type of market condition by reducing operating expenses and
inventory levels. We have completed a full review of all of our
operations and have begun to implement initiatives which will
significantly improve our operating results in the future. We
expect that in Fiscal 2002, our operating expenses will decline
by approximately $38 million which will reduce our breakeven
point in terms of EBITDA to approximately $36 million or 4% of
sales. We project our business to be profitable in Fiscal 2002
which started last month. As we emerge from Chapter 11, we will
continue to be the leader in the scrap industry, with a strong
balance sheet which positions us for future growth."
During the quarter, the company adopted a change in its policy
for assessing whether an impairment exists in the recorded
amount of acquired business unit goodwill and other intangible
assets to the use of a fair value method. As a consequence of
that change in accounting policy, the company wrote-off in full
the carrying value of its goodwill and certain other intangible
assets through a one time non-cash charge to earnings. In the
third quarter, the company recognized a non-cash charge of
$280.1 million representing the impairment of goodwill and other
intangible assets under the new accounting policy. The
impairment charge is predominately due to an evaluation of
acquisitions made during the previous four years in recognition
of market conditions reflecting the adverse effects of changes
in international trade flows for scrap metals. The implication
of these changes to the scrap industry over recent years has
reduced demand and prices for scrap processed in the United
States and which is expected to be more or less permanent.
During the quarter, the Company also recorded $10.7 million of
bankruptcy reorganization expenses, of which $9.0 million were
non-cash expenses associated with the write-off of deferred
financing costs. Additionally, the company recorded $4.3 million
of charges associated with bankruptcies filed by three steel
producers during the quarter.
The company also reported revenues of $154.8 million and a net
loss before preferred stock dividends of $21.3 million, or $.36
per share, from recurring operations (i.e. before non-recurring
expenses, goodwill impairment charges, and reorganization
expenses) for the quarter ended December 31, 2000, compared
to revenues of $233.7 million and a net loss before preferred
stock dividends of $1.6 million, or $.03 per share, from
recurring operations for the quarter ended December 31, 1999.
The company reported revenues of $610.5 million and a net loss
before preferred stock dividends of $53.4 million, or $.91 per
share, from recurring operations (i.e. before non-recurring
expenses, goodwill impairment charges and reorganization
expenses) during the nine months ended December 31, 2000,
compared to revenues of $643.9 million and a net loss before
preferred stock dividends of $7.6 million, or $.14 per share,
from recurring operations for the nine months ended December 31,
1999.
MOE GINSBURG: Sterling National Extends $1 Million DIP Loan
-----------------------------------------------------------
Sterling National Bank, the principal banking subsidiary of
Sterling Bancorp (NYSE: STL), has approved a $1 million debtor-
in-possession financing to Moe Ginsburg, Inc. Sterling National
Bank will provide the company with a revolving line of credit
and the Bank's subsidiary, Sterling Factors Corporation, will
provide trade credit and guarantee payment to vendors.
Moe Ginsburg, Inc., founded in 1966, is a leading New York City
retailer of name brand men's fashions. The company filed for
bankruptcy protection under Chapter 11 of the Bankruptcy Code on
May 1, 2001 and will undergo a strategic reorganization using
the debtor-in-possession financing provided by Sterling National
Bank, subject to Bankruptcy Court approval. Special counsel for
Moe Ginsburg, Inc., is Ronald Itzler, of Feder, Kaszovitz,
Isaacson, Weber, Skala, Bass & Rhine LLP.
"The debtor-in-possession financing, along with the credit for
purchases to be supplied by Sterling Factors, gives us the
financial flexibility we need to continue to run our business
and to implement a restructuring plan that will position us for
financial recovery and growth in the long-term," said Mr. Paul
Ginsburg, president of Moe Ginsburg, Inc. Mr. Ginsburg noted
that recent expenses for capital improvements, coupled with a
shift in trends in the men's apparel market put a strain on
working capital. "When our attorney approached Sterling with our
needs, they quickly analyzed the situation and were able to come
up with an appropriate financing arrangement. They not only
agreed to provide a line of credit for working capital, but also
immediately involved their factoring company, which is able to
provide the trade credit and payment guarantees we need to
continue to do business," added Mr. Ginsburg. Mr. Howard M.
Applebaum, Executive Vice President of Sterling National Bank,
stated, "The recent declining economic environment has driven
many companies to seek bankruptcy protection, while they undergo
necessary reorganizations. Sterling is thoroughly experienced in
Chapter 11 financings. We have found that certain of the
companies filing for Chapter 11 are viable businesses, with
experienced management, who have been in business for many
years. With an infusion of working capital and financial
counseling from a knowledgeable lender these companies often
return to profitability. Companies like Moe Ginsburg, Inc. come
to Sterling because of our reputation and expertise as a leading
commercial bank and for the personalized service we provide
efficiently and expeditiously."
Sterling Bancorp (NYSE: STL) is a financial holding company with
assets of $1.2 billion, offering a full range of banking and
financial services products. Its principal banking subsidiary is
Sterling National Bank, founded in 1929. Sterling provides a
wide range of products and services, including commercial
lending, asset-based financing, factoring/accounts receivable
management, international trade financing, commercial and
residential mortgage lending, equipment leasing, trust and
estate administration and investment management services.
Sterling has operations in the metropolitan New York area,
Virginia and other mid-Atlantic states and conducts business
throughout the U.S. More information is available on the
company's Website, http://www.sterlingbancorp.com.
MOE GINSBURG: Chapter 11 Case Summary
-------------------------------------
Debtor: Moe Ginsburg, Inc.
162 Fifth Avenue
New York, NY 10010
Chapter 11 Petition Date: May 01, 2001
Court: Southern District of New York (Manhattan)
Bankruptcy Case No.: 01-12564-reg
Judge: Judge Robert E. Gerber
Debtor's Counsel: Ronald S. Itzler, Esq.
Feder, Kaszovitz, Isaacson, Weber, Skala
& Bass LLP
750 Lexington Avenue
New York, NY 10022-1200
(212) 888-8200
Fax : (212) 888-7776
Email: ritzler@fkiwsb.com
Estimated Assets: $1 Million to $50 Million
Estimated Debts: $50,000 to $500,000
NETWORK COMMERCE: Discloses Q1 Results & Restructuring Efforts
--------------------------------------------------------------
Network Commerce Inc. (Nasdaq:NWKC), the technology
infrastructure and services company, announced financial results
for its first quarter ended March 31, 2001.
Total revenue for the quarter was $10.1 million, compared to
$18.7 million in the first quarter 2000 and $27.1 million in the
fourth quarter 2000. Revenue in the first quarter 2001 from
continuing business units was $6.6 million, compared to $1.6
million during the same period last year and $2.7 million during
the fourth quarter of last year. Internet Domain Registrars,
acquired on Dec. 22, 2000, provided revenue of $3.1 million in
the first quarter 2001.
First quarter 2001 pro forma gross profit was $7.8 million or
77.2% of total revenue, compared to $8.3 million or 44.4% of
total revenue in the first quarter 2000 and $11.5 million or
42.6% of total revenue for the fourth quarter 2000. First
quarter pro forma operating loss was $19.0 million versus $21.3
million during the first quarter of 2000 and $25.8 million
during the fourth quarter 2000. Period-to-period comparisons are
complicated by several factors, including acquisitions, layoffs
and closures of business units.
Net loss, including one-time charges, for the quarter was
$177.6 million versus $22.8 million for the same period last
year and $185.5 million for the fourth quarter last year. During
the first quarter 2001, Network Commerce incurred $12.7 million
in restructuring charges stemming primarily from the closing of
certain business units. In addition, the company recognized a
$119.7 million impairment charge in the first quarter 2001
relating to certain acquired intangible assets and goodwill from
business acquisitions, and cost-basis investments.
Pro forma figures exclude the effects of restructuring and
impairment charges, non-recurring settlement charge and non-cash
charges relating to the amortization of intangible assets,
stock-based compensation, accretion of convertible promissory
note and deferred income tax benefits.
Said chief executive officer, Dwayne Walker, We will continue to
take the steps necessary to reduce our expenses and to position
our businesses for a better future. We have gone through the
pain of reducing our staffing levels by approximately two
thirds, and we have slashed other expenses as well. We have shut
down all businesses that we do not believe will become
profitable in the near term.
We have also taken important steps to better position our
continuing businesses for the future, Walker said. Our payment
processing group, Go Software, became profitable this quarter
and successfully launched its RiTA server. Our E-host business
is also profitable and leverages our substantial infrastructure.
Freemerchant was repositioned with a pay-for-services model, and
currently we have more than 3,000 paying Freemerchant.com
customers, up from none in January. Our One to One marketing
group, which sells data and e-mail services, experienced revenue
growth from zero to more than $1 million last quarter. Our
domain registration business remains the largest of our business
units. In the quarter just ended, we sold more than 100,000
domains. We hope for substantial growth in the months ahead as
new blocks of domains such as .info, .pro, .biz and other top-
level domains become available.
As of March 31, 2001, Network Commerce had $26.3 million in
cash, compared to $49.9 million as of Dec. 31, 2000. Subsequent
to the end of the quarter, the Company paid off its credit
facility with Imperial Bank and retired certain other
obligations. As of May 7, 2001, the Company had approximately
$9.4 million in cash. The historical results of operations, the
balance sheet and certain claims against the Company have led
the Company's auditors to issue a going concern opinion in its
most recent annual report.
Major restructuring at Network Commerce continues. Staffing
levels have been reduced from 660 in October 2000 to 220 today.
Certain businesses -- including ShopNow.com, SpeedyClick.com,
PriceCrazy.com, Uberworks, and Bottomdollar.com -- have been
shut down, several facilities and locations closed and a number
of other assets impaired. The Company is exploring strategic
alternatives, which may include a merger, an asset sale,
additional equity or debt investment in the Company by either a
strategic or financial investor or another comparable
transaction or a financial restructuring.
Earnings and sales forecasts are complicated by ongoing
restructuring efforts. As a result of the uncertainties
surrounding these efforts, the Company is offering no forward-
looking guidance at this time as to anticipated revenues or
losses beyond the following: the Company anticipates that it has
reduced its burn rate from ongoing operations to approximately
$2.0 to $3.0 million per month; in addition, cash is being
utilized to satisfy outstanding obligations.
About Network Commerce Inc.
Established in 1994, Network Commerce Inc. (Nasdaq:NWKC) is the
technology infrastructure and services company. Network Commerce
provides a comprehensive technology and services platform,
including domain registration services, hosting services,
commerce services, business services, and one-to-one marketing
services. Network Commerce's technology and services platform
operates on the infrastructure of four data centers, more than
500 servers, and bandwidth in excess of 400 megabits per second.
Network Commerce is headquartered in Seattle, Wash.
OHIO CASUALTY: S&P Lowers Ratings & Revises Outlook to Negative
---------------------------------------------------------------
Standard & Poor's lowered its counterparty credit and financial
strength ratings on American Fire & Casualty Co., Ohio Casualty
Insurance Co., Ohio Security Insurance Co., and West American
Insurance Co.-- which make up the Ohio Casualty Insurance Co.
Intercompany Pool (OCG) -- to triple-'B' from triple-'B'-plus.
At the same time, Standard & Poor's lowered its counterparty
credit rating on Ohio Casualty Corp., the holding company, to
double-'B' from double-'B'-plus. In addition, Standard & Poor's
revised its outlook on these companies to negative
from stable.
These rating actions reflect OCG's continued poor operating
performance and declining capitalization as well as the holding
company's limited financial flexibility. Offsetting these
negative factors are the group's improved strategic focus under
the leadership of a new management team and continued
restructuring and re-underwriting, which should yield gradual
improvements in underwriting over the medium and long terms.
Major Rating Factors:
* Poor operating performance. OCG's operating performance
continued to deteriorate significantly in 2000, with the group
reporting a calendar-year combined ratio of 119% and a net loss
of $79.2 million. Results in the first quarter of 2001 showed
modest improvement but remained below Standard & Poor's
expectations, with the combined ratio at 115% and a net loss of
$4.1 million. For full-year 2001, Standard & Poor's expects the
combined ratio to remain high at about 114%-115% and ROR to
hover in the 0%-1% range, with more meaningful improvements in
2002. Interest coverage is expected to remain negative for 2001
and modestly improve to 1.5 times (x)-2.5x in 2002.
* Adequate capitalization. Although capitalization is still
at a level supportive of the rating, it is no longer as strong
as it had been. Standard & Poor's capital adequacy model
indicates that OCG's capitalization was 127% in 2000 compared
with 146% at year-end 1999. Standard & Poor's expects
capitalization to decline further to the triple-'B' range (about
120%-122%) in 2001 because of the pressure on earnings and
potentially large dividend payments to the holding company.
* Limited financial flexibility. OCG's financial
flexibility is significantly limited by strict covenants on the
holding company's $205 million bank debt. The group is currently
in compliance with the covenants, but management has limited
maneuverability. Unless Ohio Casualty Corp. refinances its debt,
Standard & Poor's expects the holding company to resort to
dividends from its subsidiaries to repay the principal, which is
payable in full in October 2002.
* Improved strategic focus and re-underwriting actions. In
December 2000, Dan Carmichael joined OCG as chief executive
officer. Carmichael has since appointed several new members to
his management team. Standard & Poor's expects this team to
bring new strategic direction to OCG and to increase the speed
of the restructuring and re-underwriting actions. However, these
efforts are not expected to affect operating results until 2002
and 2003.
OUTLOOK: NEGATIVE
The outlook reflects concerns that over the short-term, OCG's
operating losses will continue to place pressure on the group's
capitalization, limiting interest coverage and reducing
resources available for principal payment of the debt at the
holding company. Furthermore, Standard & Poor's believes any
meaningful improvement in the group's operating performance will
be closely linked with management's ability to implement its
strategic plan successfully.
Standard & Poor's believes a sustained improvement in operating
performance and the successful refinancing or repayment of the
debt at the holding company will be necessary to revise the
outlook to stable. Conversely, a significant deterioration in
operating results or capitalization beyond Standard & Poor's
expectations could lead to a further downgrade.
PACIFIC DUNLOP: Moody's Downgrades Debt Ratings To Low-B's
----------------------------------------------------------
Moody's Investors Service lowered the ratings of Pacific Dunlop
Limited (PDL) and its guaranteed subsidiaries as follows:
Pacific Dunlop Limited:
- senior unsecured rating to Baa3 from Baa1,
- issuer rating to Baa3 from Baa1,
- and commercial paper rating to Prime-3 from Prime-2
Pacific Dunlop USA, Inc. (backed):
- senior unsecured rating to Baa3 from Baa1
Pacific Dunlop Holdings Inc. (backed):
- senior unsecured rating to Baa3 from Baa1 and
- commercial paper rating to Prime-3 from Prime-2
Pacific Dunlop Holdings (NZ) Limited (backed):
- commercial paper rating to Prime-3 from Prime-2
The ratings are also kept on review for possible downgrade.
Approximately A$1 billion of debt securities are affected.
Accordingly, the downgrades reflect Moody's concerns about the
company's continued poor trading conditions across its
businesses, deteriorating liquidity position, and the impact of
adverse currency movements. Moody's said that the rating action
also considers the prospective profile of PDL following planned
asset divestitures, with a potential significant decrease in
both scale and scope of operations. The continuing review will
focus on the company's ability to complete asset sales, reduce
debt, and extend bank facilities, as well as the company's
ultimate business and financial structure, according to Moody's.
Pacific Dunlop Limited, a diversified international enterprise,
is based in Melbourne, Australia.
PACIFIC GAS: Agrees To Modify Stay For Eminent Domain Proceeding
----------------------------------------------------------------
In 1999, the San Mateo County Transit District sued Pacific Gas
and Electric Company; Target Corporation; Sears, Roebuck and
Company; Tanforan Park Shopping Center LLC; Tanforan Parking
Shopping Center Limited Partnership and Sneath Lane Associates
in the San Mateo Superior Court (Case No. 407836) to obtain land
needed for construction of an extension of a Bay Area Rapid
Transit District rail line to the San Francisco International
Airport. A trial, with the Defendants complaining they weren't
being adequately compensated, was underway when the Debtor filed
for chapter 11 protection. Fears about violating the automatic
stay brought the Superior Court proceedings to a grinding halt.
Telling Judge Montali that it has no objection to allowing the
trial to resume, the Debtor presented the Court with a
Stipulation providing for modification of the automatic stay to
permit continued litigation with Sam Trans. (Pacific Gas
Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
PARK PLACE: Fitch Rates Senior Subordinated Notes at BB+
--------------------------------------------------------
Fitch has assigned a `BB+' rating to Park Place Entertainment's
(NYSE:PPE) $350 million 8.25% rule 144A senior subordinated
notes due 2011. These notes were priced at 310 basis points over
the 10-year treasury and proceeds from the issuance will be used
to reduce outstanding bank debt. Ratings affirmed include:
$1.325 billion of senior notes at `BBB-` and $1.3 billion of
senior subordinated notes at `BB+' and commercial paper at `F3'.
The Rating Outlook is Stable.
The ratings reflect PPE's large and diversified asset base,
proven cash flow generating capabilities and good financial
flexibility. Offsetting factors include improving, but still
competitive conditions on the Las Vegas Strip and the
Mississippi Gulf Coast, the potential for share repurchases
and debt-financed acquisitions.
PPE's operating results declined slightly during the first
quarter 2001 compared to the prior year's first quarter as
EBITDA decreased 3.7% to $315 million. The decline is largely
attributed to an unfavorable calendar (Chinese New Year and
Superbowl on the same weekend), which affected the company's
Caesar's Palace property and inclement weather in the Eastern
Region. However, the decline was partially offset by improvement
at Bally's/Paris and the Las Vegas Hilton, a 36% quarter over
quarter EBITDA improvement at Caesar's Indiana to $15 million,
and improving competitive conditions in the Mississippi Gulf
Coast, which posted flat EBITDA results.
As a result, credit statistics remained solid with trailing 12
month EBITDA/interest of 2.8 times (x) and debt to trailing 12
month EBITDA of approximately 4.3x.
PPE generated approximately $133 million in excess cash flow
during the first quarter, which was used to reduce debt by $78
million to $5.3 billion and repurchase nearly $12 million in
stock. Fitch expects free cash flow during 2001 and 2002 to
aggregate $850 million to $1 billion and be deployed in a
balanced manner amongst sound property reinvestment, debt
reduction, and share repurchases. External growth through
opportunistic acquisitions is expected to occur selectively
while recognizing major consolidation activities in the industry
have largely been completed. In addition, the affirmation
assumes PPE will continue to maintain prudent financial policies
that are consistent with the current ratings.
PILLOWTEX CORP.: May Continue Funding Fieldcrest Foundation
-----------------------------------------------------------
Fieldcrest Cannon Foundation, a North Carolina non-profit
corporation, operates as a charitable organization. It is
managed by a board of directors composed of nine members elected
by the Debtor Fieldcrest Cannon, Inc.'s board. Since its
inception in 1959, the Foundation has awarded annual college
scholarships to children, stepchildren or adopted children of
both hourly and salaried employees and retirees of the Debtor.
In 1998, grandchildren of employees and retirees became eligible
for the program, and the program expanded to include all of the
Pillowtex Corporation Debtors. Depending on availability of
funds, the Foundation hands out about 40 scholarships in the
amount of $2,500 per year, if the student attends a four-year
college and, $1,250 per year if the student attends a community
college. The primarily merit-based scholarships once awarded,
demands that the student meets certain grade-point average and
semester-hours requirements each semester. The Foundation also
provides grants renewable for four year, varying from $200 to
$1,2000 each, that do not have to be repaid, to assist the
Debtors' employees' and retirees' children, stepchildren,
adopted children and grandchildren with the cost of their
college education. Similarly, once a grant is awarded, the
student must meet certain grade-point average and semester-hours
requirements each semester.
William H. Sudell, Jr., Eric D. Schwartz, and Michael G. Wilson,
at Morris, Nichols, Arsht & Tunnell, in Delaware, explained to
Judge Robinson that, historically, the Foundation's funding
comes from profits generated from the Debtors' canteens, which
are vending areas at the Debtors' facilities. The Debtors fund
the Foundation at the end of each fiscal quarter only if the
canteens have made a profit. If the canteens fail to make a
profit during a quarter, the Foundation receives no funding at
that time. The Debtors however, anticipate that the canteens
will generate profits for the first quarter of 2001, which would
ordinarily be turned over to the Foundation during the early
part of April. By motion, the Debtors sought authority to:
(a) Continue to provide funding to the Foundation with
profits generated by the canteens from and after bankruptcy
filing; and
(b) Pay the Foundation $13,458.96 for the third quarter of
fiscal year 2000.
Mr. Sudell informed Judge Robinson that the Debtors' employee
regard the Foundation's grants and scholarship as employee
benefits funded essentially with the money they spend in the
canteens. If they are prohibited from continuing to fund the
Foundation, the Debtors fear that the Foundation will be forced
to decrease or altogether stop the disbursement of scholarship
and grant awards, which in turn, would have an immediate and
perhaps irreparable, impact on the employee morale and support.
Considering the merits of the Debtors' request, Judge Robinson
found the Debtors' Motion well taken. The Debtors, in their sole
discretion, may continue funding the Foundation with profits
generated by the canteens from and after the Petition Date and
may pay the Foundation $13,458.96 for the third quarter of
fiscal year 2000. (Pillowtex Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PLANET HOLLYWOOD: Annual Shareholders' Meeting Set For May 25
-------------------------------------------------------------
Planet Hollywood International, Inc. will hold its Annual
Meeting of Stockholders on Friday, May 25, 2001 at 2:00 p.m.
(local time) at:
Sheraton New York Hotel and Towers
811 Seventh Avenue at 52nd Street
New York City, New York 10019
Phone: (212) 581-1000
Liberty III Conference Room
The meeting is being held to consider and act upon the following
matters:
(1) The election of three directors (Class I directors) to
the Company's Board of Directors.
(2) Such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has selected April 23, 2001 as the record
date for determining stockholders entitled to notice of and to
vote at the meeting and any adjournment thereof.
PRIMUS TELECOMMUNICATIONS: Existing Debt Amounts To $1 Billion
--------------------------------------------------------------
Despite company denials, bankruptcy may be in the cards for
international long distance carrier Primus Telecommunications
Inc., according to TheDeal.com. Most of Primus's bonds are
trading at about 20 cents on the dollar, reflecting investor
concern that the company may also be headed for a default.
Jordan Darrow, Primus's investor relations director, said that
Primus is funded through mid-2002 and will make its $10 million
interest payment due in August. However, the McLean, Va.-based
company carries about $1 billion in debt. Because about $850
million of that debt is in bonds, Darrow said the company
carries little bank debt. Primus sells voice, data and web-
hosting services to small- and medium-sized customers. (ABI
World, May 7, 2001)
SAFETY-KLEEN: ECDC Moves To Annul Stay To Pursue Action In N.J.
---------------------------------------------------------------
ECDC Environmental, L.C., contended that it: (a) entered into
two non-assignable Army Corps Contracts with the US Army Corps
of Engineers; (b) agreed to perform dredging and dredging-
related services in, and around the waters of Newark Bay and
Arthur Kill, New Jersey; and (c) entered into an agreement with,
and subcontracted certain of the dredging and related work it
was to perform under the Army Corps Contracts, to the Dutra
Group. Subsequently, ECDC Environmental, ECDC Holdings, Inc.,
Allied Waste Industries, Inc., Laidlaw Environmental Services of
Delaware, Inc., RACT, Inc. and Laidlaw, Inc. executed a Purchase
Agreement whereby ECDC Holdings, Inc., acquired all of ECDC
Environmental's stock from Laidlaw Environmental, the Debtor
Safety-Kleen Corp.'s predecessor, and RACT.
The Purchase Agreement required ECDC Environmental to assign to
Laidlaw Environmental and RACT, or their designee, all of its
contracts relating, in any manner, to dredge, and dredge-related
projects. To the extent it was unable to assign any dredging and
related contracts, ECDC Environmental would maintain ownership
of those contracts, but would subcontract all aspects of those
contracts to Laidlaw Environmental and RACT, or their designee.
In the event of a subcontract, Laidlaw Environmental and RACT,
or their designee, would receive all revenue generated pursuant
to the contracts, and would be responsible for performing all of
the requirements of the contracts.
ECDC Environmental submits that: (i) Laidlaw Environmental
created a subsidiary to act as its designee for the purpose of
doing the works under the Army Corps contracts; (ii) the
subsidiary-designee was the predecessor-in-interest to Safety-
Kleen Services; and (iii) the spirit and intent of the parties
to the Purchase Agreement was to repose all the attributes of
ownership of the dredging and related contracts, including all
assets and liabilities, with Laidlaw Environmental's and/or
RACT's designee (ultimately, Services), while recognizing that
ECDC Environmental would continue to retain legal title.
Pursuant to the Purchase Agreement, Laidlaw Environmental,
Laidlaw, Inc. and RACT agreed to indemnify ECDC Environmental
against any third-party claims arising under the Army Corps
contracts. ECDC Environmental subcontracted all aspects of the
Army Corps contracts to Laidlaw Environmental and/or RACT's
designee, Safety-Kleen Services.
Maintaining that it had completed its obligations under the Army
Corps contracts, the Dutra Group filed a complaint captioned
"The United States of America for the Use and Benefit of the
Dutra Group, The Dutra Group vs. ECDC Environmental, L.C.,
Safety-Kleen Services East, L.C., and American Home Assurance
Company," in the US District Court, District of New Jersey. In
its complaint, the Dutra Group sought to recover against ECDC
Environmental and Safety-Kleen Services in the amount of
$3,744,745.30 for damages it allegedly incurred primarily during
its dredging and dredging- related services in connection with
its work on the Army Corps contracts. It alleged that these
damages resulted from an alleged breach of contract by ECDC
Environmental and/or Safety-Kleen Services.
Henry H. Taylor, an employee of the Debtors, represented himself
to be ECDC Environmental's authorized agent, waived service of
summons and complaint on ECDC Environmental, and personally
accepted service of the Dutra complaint on behalf of ECDC
Environmental. ECDC Environmental charges that Mr. Taylor
intercepted the summons and complaint intended for it, and
precluded its knowledge of the suit. Later, the law firm of
Blank Rome Comisky & McCauley filed an answer and an amended
counterclaim on behalf of ECDC Environmental, Safety-Kleen
Services and American Home Assurance Co., in the Dutra
Litigation.
Blank Rome instituted Army Corps litigation as a complaint
before the US Court of Federal Claims on Services' behalf,
entitled, "SK Services East, L.C., as successor-in-interest to
ECDC Environmental, L.C. v. The United States." The complaint,
filed only on Services' behalf, alleges that : (a) Services is
ECDC Environmental's successor-in-interest, and (b) Services is
entitled to recover damages pursuant to the two Army Corps
contract.
ECDC Environmental said that, among the claims asserted by
Services against the Army Corps are claims asserted by the Dutra
Group, Services and ECDC Environmental. Accordingly, Services is
seeking to recover from the Army Corps damages that may be
recoverable by the Dutra Group, against Services and ECDC
Environmental.
ECDC Environmental claimed that it was more than a month and a
half after Services filed its complaint in the Army Corps
litigation when Blank Rome first notified it of the existence of
the Dutra Litigation, and the fact that Blank Rome had been
representing ECDC Environmental. ECDC Environmental then filed a
proof of claim against the Debtors, in the amount of not less
than $3,745,000.00, pursuant to ECDC Environmental's right to
indemnification from the Debtors under the Purchase Agreement,
and for damages from breach of contract claims against the
Debtors.
Before Magistrate Chesler, Services' counsel represented that
the automatic stay would not preclude the Dutra Litigation from
proceeding in the District Court. ECDC Environmental, compelled
by filing deadlines imposed by a Scheduling Order in the Dutra
Litigation, filed the ECDC Pleading, its Answer, Counterclaims,
Cross-Claims and Third-Party Complaint in the Dutra Litigation.
In the ECDC Pleading, ECDC Environmental asserts multiple claims
against multiple parties, including: (a) breach of contract
against Services; (b) indemnification against Safety-Kleen, RACT
and Laidlaw, Inc.; (c) breach of the implied warranty of
authority against Mr. Taylor; (d) negligent misrepresentation
against Mr. Taylor; (e) respondeat superior against the Debtors;
(f) negligence/legal malpractice against the firm of Blank Rome;
(g) civil conspiracy against Services and Blank Rome; (h) prima
facie tort against Services and Messrs. Blank and Rome; and (i)
estoppel against the Debtors.
ECDC Environmental informed the Court that American Home has
filed a motion for leave to amend its answer to assert a cross-
claim against ECDC Environmental for common-law indemnification,
subrogation and exoneration, and a third-party complaint against
Laidlaw, Greyhound Lines, Inc., Laidlaw Transit, Inc., Laidlaw
Transit Services, Inc., and American Medical Response, Inc., for
contractual indemnification, subrogation, exoneration and
common-law indemnification. In addition, The United States of
America for the Use and Benefit of Hughes Brothers, Inc., and
Hughes Barge Line, LLC, and Marmac, LLC, and Hughes Brothers,
Inc., and Hughes Barge Line, LLC, and Marma, LLC, individually,
have filed a notice of a motion to intervene as a third-party
plaintiff in the Dutra Litigation to assert a negligence cause
of action against the Dutra Group.
Relief Requested
By motion, ECDC Environmental, L.C., requested Judge Walsh to
annul the automatic stay to continue with the non-bankruptcy
action in the District in New Jersey. Neal J. Levitsky, at
Agostini, Levitsky, Isaacs & Kulesza, in Delaware explained to
the Court that the Dutra Litigation involves 3 defendants, 1
intervening third-party plaintiff, 2 third-party plaintiffs,
and 9 third-party defendants, all asserting multiple claims,
cross-claims and counter-claims against one another. Granting
relief from stay, he added, would permit the resolution of all
issues as between all the parties in the Dutra Litigation.
Entitlement to Relief from Stay
Mr. Levitsky argued that, although ECDC Environmental has filed
a proof of claim in the Debtors' bankruptcy cases, which it
intends to amend in the near future, the resolution of its
claims are intricately linked to the outcome of the Dutra
Litigation. In addition, granting stay relief would not
interfere with the administration of the Debtors' bankruptcy
cases, given that the Dutra Litigation, including ECDC
Environmental's claims, involve claims resolution. None of the
parties in the Dutra Litigation seek to impose liens on the
Debtors' assets, or obtain control of any of the estate's
property.
ECDC Environmental submitted that it is entitled to the
requested relief because the resolution of the complex
intertwined claims in the Dutra Litigation would free the Court
from the need of duplicating the judicial work being done in the
Dutra Litigation. Also, ECDC Environmental contends, the Dutra
Litigation primarily involves non-debtor parties, and failure to
lift the stay would unfairly divorce its claims against the
Debtors from the rest of the Dutra Litigation, including its
counterclaims against the Dutra Group, and the claims of various
parties against American Home and Safeco Insurance Company of
America, an insurer and surety bond issuer not affiliated with
the Debtors.
Judicial Economy
Mr. Levitsky opined that judicial economy, and expeditious and
economical resolution of the litigation, warrant granting relief
from the stay. One forum -- the District Court -- can dispose of
all of the claims arising out of the Dutra Litigation. Having
been specially granted jurisdiction to hear Miller Act cases,
the District Court is the appropriate forum for the Dutra
Litigation, which arises in significant part out of Miller Act
claims. The Dutra Litigation has been pending for two years, and
forcing portions of the claims in that litigation to be heard
before the Bankruptcy Court would needlessly piecemeal the
litigation.
Prejudice to Parties
He warned that a continued stay would be injurious to ECDC
Environmental, considering that it would be required to
duplicate litigation efforts in two different forums at
substantial expense. On the other hand, granting relief would
not prejudice any party, including the Debtors. ECDC
Environmental's claims have to be resolved somewhere. In any
event, the Dutra claims are going to proceed against Services in
the District Court, based on an earlier grant of stay relief. It
would be fair and efficient for all claims to be resolved in one
forum, the District Court.
Annulment of the Stay is Warranted
Mr. Levitsky pleaded with Judge Walsh that the stay relief
granted by the Court should be in the form of annulment of the
stay. He explained that an annulment of stay, rather than a
simple termination, is necessary because an annulment would
eliminate any doubt as to the propriety of ECDC Environmental's
filing of its claim in the District Court. He cautioned that the
Debtors may argue that the automatic stay voids from the very
beginning ECDC Environmental's action of prosecuting its claims
against the Debtors. Without annulment of the stay, ECDC
Environmental would have to be concerned that its pleading in
the District Court could be rendered a nullity, if the Debtors
later contend successfully to the Court that the stay rendered
such pleading void. He adds that annulment of stay would be
appropriate, considering that annulment would render relief from
stay retroactively, preventing an action from being voided.
(Safety-Kleen Bankruptcy News, Issue No. 15; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
SELECT MEDIA: Needs More Capital To Sustain Operations
------------------------------------------------------
Select Media is a New York corporation whose common stock is
currently traded in the "pink sheets" under the symbol
"SMTV.OB." Select Media began in the business of producing and
distributing "vignettes," which are short-form (thirty-second)
informational programs distributed by particular sponsors for
viewing during regular programming. In 1998, Select Media hired
personnel to provide services to worldwide news broadcasters and
act as a television news agency under the name "Select
International Television Network" ("SITN") to produce and
distribute news segments for sale to local and foreign news
broadcasters.
Revenues from SITN dramatically fell in 2000 due to a lack of
planned studio space at the Company's former 666 Third Avenue,
New York, New York location. The Company ceased operations of
SITN as of October 30, 2000. In general, in the year ended
December 31, 2000, the Company's sources of revenues consisted
of revenues from Sigma. Resale of advertising airtime has never
constituted a major source of the Company's revenues.
In the period from the Company's bankruptcy filing in October
1995 until September 1998, the Company was essentially dormant.
In 1999, the Company was dependent upon one major customer
(General Motors Corporation) for over 35% of its revenues, most
of which were received in the first six months of the year.
The SITN Business accounted for approximately 45% of the
Company's revenue in 1999. Beginning in the fall of 1999, the
Company began its restructuring and moved its offices. In 2000,
the Company has had minimal revenues as it has focused on
restructuring its business and acquiring Sigma and AHP. The
Company closed the SITN Business permanently as of October 30,
2000. Thus, in 2000, the Company has not been dependent on any
major customers.
In January 2000, Select Media repositioned itself as the owner
of entertainment content providers whose product can be marketed
through traditional media and over the Internet. In January
2000, Select Media purchased all the outstanding stock of Sigma
for $1,000,000 payable in cash in several payments, with the
final payments due May 31, 2001. Sigma is a full service
recording studio that provides services to record companies,
independent artists and record producers. The Company believes
that the price paid for the Sigma acquisition was fair. Select
Media says it believes the Sigma Sound name and reputation is
well known and well respected in the sound recording industry
and has significant value, as does the relationship with Sigma's
management and professional staff. The Company expects the
revenue generated by Sigma in the future to justify the
acquisition cost premium over the value of the assets acquired.
In March 2000, Select Media purchased the assets of AHP,
consisting of a number of contracts for recording projects, for
$125,000 in cash. AHP creates custom music and video products.
AHP has produced one new album of musical works for sale by
select Media through shopping channels and direct response
television ads since the acquisition.
Before the Sigma acquisition, Select Media's net revenues were
derived mainly from the sales of vignettes, video press releases
and SITN. In the year ended December 31, 1999, net revenues
increased by $1,861,879, or 415%, to $2,310,002 from $448,123 in
the year ended December 31, 1998. The increase in net revenues
during 1999 was primarily attributable to revenues from its
international news operations and video press releases for
General Motors Corporation. Revenues decreased in 2000 to
$477,899 or (79)%, from $2,310,002 in the year ended December
31, 1999. The decrease in 2000 was due to a loss of SITN
revenues due to the inability to use studio space at Select
Media's facility caused by a dispute with its landlord and the
subsequent decision to cease SITN operations on October 30,
2000.
The Company incurred losses from operations of $(5,961,485) in
2000 compared to $(4,513,161) in 1999, for an increase of
$(1,448,324) or 32%. The increase in losses was due primarily to
the decision to close the SITN business, which accounted for
approximately 45% of the Company's revenues in 1999, the
expenses of the Sigma and AHP acquisitions and the redirection
of the Company to acquire content providers and production and
post production houses.
Select Media has significant capital needs and cannot be certain
that additional financing will be available to the Company on
favorable terms when required, or at all. The Company does not
have a firm commitment for financing the balance of the
Betelgeuse acquisition costs, namely $9,500,000. If Select Media
raises additional funds through the issuance of equity, equity-
related or debt securities, such securities may have rights,
preferences or privileges senior to those of the rights of the
Company's common stock and the Company's stockholders may
experience additional dilution. Select Media requires
substantial working capital to fund the Company's business.
Since the Company's emergence from Chapter 11 bankruptcy
proceedings, Select Media has experienced negative cash
flow from operations and expects to experience significant
negative cash flow from operations for the foreseeable future.
Select Media received on October 22, 1999 a best efforts letter
of intent from Lloyds Bahamas Securities, Ltd. ("Lloyds") for $1
million in additional financing which was funded for 4,500,000
shares of common stock. During 2000 the Company raised an
additional $259,300 through Lloyds for which 259,300 shares of
common stock are due. Also in 2000 the Company raised $1,522,200
in convertible debt from International Electronic Trading
Securities, Ltd. which was converted into 1,522,200 common
shares on January 15, 2001. Lloyds is an investment banking and
securities brokerage business located in Nassau, the Bahamas. In
raising equity capital for the Company in 2000, Lloyds assigned
part of its interest to International Electronic Trading
Securities, Ltd. The Company has received a separate best
efforts letter of intent from Lloyds for an additional $3
million in financing once the Company's common stock is relisted
on the OTC Bulletin Board. Between January 1 and April 7, 2001,
the Company has received $279,935.75 from Lloyds in advance of
relisting on the OTC Bulletin Board for which 559,872 shares of
common stock are due. The Company also has received a separate
commitment from Lloyds for the $500,000 down payment on the
Betelgeuse transaction of which $298,102 has been received and
paid to Betelgeuse. The Company estimates that if Lloyds
completes its best effort $3 million financing in 2001 once it
is relisted on the OTC Bulletin Board together with anticipated
revenues, this will be sufficient to fund the Company's business
plan for 2001. There can be no assurance that such a financing
will be completed or, if completed, be on favorable terms.
The Company has also received a non-binding letter of intent
from Bryn Mawr Investment Group, Inc. to provide up to $10
million in financing to the Company through private or public
offerings of securities, to be used for working capital and
acquisitions.
SLATKIN, REED: Earthlink Co-founder Files For Bankruptcy
--------------------------------------------------------
Reed Slatkin, co-founder of the Atlanta-based Internet company
Earthlink, filed for chapter 11 bankruptcy protection last week,
according to the Associated Press. Slatkin, who listed more than
$100 million in debts, resigned last week from Earthlink's board
of directors. The Associated Press reported that his voluntary
filing was incomplete and did not list all creditors or
substantiate his claim to more than $100 million in debts.
Lawsuits filed by investors claim that Slatkin bilked them of
more than $35 million through a phony investment operation. The
plaintiff's lawyers claim Slatkin's investment company, FanFare
LLC, is just a shell that consists of a single office. (ABI
World, May 7, 2001)
SUN HEALTHCARE: Rejecting 11 Real Property Leases & 2 Subleases
---------------------------------------------------------------
Sun Healthcare Group, Inc. sought and obtained the Court's
authority, pursuant to section 365(a) of the Bankruptcy Code and
Bankruptcy Rule 6006, to reject 11 nonresidential real property
office leases and 2 nonresidential real property office
subleases associated with the leases. Due to the restructuring
and consolidation of certain of their operations, the Debtors no
longer require the leased space. By Rejecting the lease, the
Debtors expect that they will save approximately $2.2 million in
future rent obligations. Absent mitigation, the Debtors estimate
that lease rejection damages will amount to approximately $1.05
million.
The leases relate to:
* 7 combination office/distribution centers;
* 1 office/off-site outpatient clinic; and
* 3 offices.
Specifically, these leases relate to:
(A) Surrendered Properties
Estimated
Property Address Expiry Date Monthly Rent Damages Effective
---------------- ----------- ------------ --------- ---------
4045 Wadsworth Blvd, 5/31/02 $ 1,703 $ 20,440 3/21/01
Suite 307
Wheat Ridge
CO 80033
The Lenox Plaza Bldg. 10/31/02 $ 9,690 $ 116,278 3/21/01
3384 Peachtree Rd., NE
Atlanta, GA 30326
1225 Brookville Way 10/31/02 $ 5,400 $ 64,800 3/21/01
Indianapolis
IN 46241
2030 Powers Perry Rd. 2/28/03 $ 3,177 $ 38,123 3/21/01
Suite 440
Atlanta, GA 30339
7320 Bryan Dairy Rd. 12/31/03 $ 15,198 $ 182,381 3/21/01
Suite 350
Largo, FL 33777
(B) Occupied Properties
Estimated
Property Address Expiry Date Monthly Rent Damages Effective
---------------- ----------- ------------ --------- ---------
14135 N E Airport Way 8/31/03 $ 14,034 $ 168,408 3/31/01
Portland, OR 97230
11211 Jersey Blvd. 7/31/03 $ 14,511 $ 174,129 3/31/01
Rancho Cucamonga
CA 90630
4401 Distribution 4/30/01 $ 7,210 $ 7,210 3/31/01
Drive
Fayetville, NC 28311
231 Bobrick Drive 10/31/00 NA NA 3/31/01
Jackson, TN 28311
2525 Davie Road 6/30/02 $ 10,699 $ 128,393 3/31/01
Suite 3222
Westport Business Park
Building Three
Davie, FL 33317
(C) Grand Prairie Property
Property Address Expiry Date Monthly Rent Effective
---------------- ----------- ------------ ---------
2710 Regency, Suite 600 7/5/03 $ 12,595 4/30/01
Grand Prairie, TX 75050
The property at Lenox Plaza at Atlanta, GA is subject to 2
subleases, in which the Debtors, as sublessors, sublet to 2
sublessees. Although the Bobrick Drive lease expired by its own
terms on October 31, 2000, the Debtors remained in possession on
a month-to-month bases, By including the lease in the motion,
the Debtors sought and obtained the Court's authority to reject
any obligations that may survive the expiration of the lease. As
the leases were entered into at a time when the real estate
market was substantially stronger, they are at or above the
current market rate. After contacting local real estate brokers
and/or analyzing the lease terms of comparable properties within
the same geographic vicinity, the Debtors believe that the costs
associated with marketing the leases, in addition to any cure
amounts that would be required to be paid pursuant to section
365(d)(3) of the Bankruptcy Code, would be significantly greater
than any potential value that might be realized by any future
sale or sublease, or any continuing sublease pursuant to the
Subleases.
Accordingly, the Debtors have determined in the exercise of
their business judgment that such leases and subleases should be
rejected. (Sun Healthcare Bankruptcy News, Issue No. 20;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ULTRAMAR DIAMOND: Fitch Puts Rating On Watch
--------------------------------------------
Fitch has placed Ultramar Diamond Shamrock Corporation (UDS) on
Rating Watch Negative following the announced acquisition of UDS
by Valero Energy Corporation.
Fitch rates the UDS senior unsecured debt at 'BBB' and the
company's trust originated preferred securities 'BBB-'. Fitch
has a rating of 'F2' on the commercial paper of UDS.
As part of the evaluation of the transaction, Fitch has affirmed
the senior unsecured rating of Valero at `BBB-` with a Stable
Rating Outlook. Fitch rates Valero's premium equity
participating security units (PEPS) at `BB+'.
Valero announced plans to acquire Ultramar Diamond Shamrock for
approximately $4 billion plus the assumption of $2 billion of
outstanding debt. The acquisition will be funded 50% through an
issuance of Valero stock and 50% in cash fixed at a price of $55
per share of UDS stock. Closing is expected to occur in the
fourth quarter of 2001.
The combination of Valero and UDS will be the second largest
refiner in the U.S. with a total throughput capacity of
1,865,000 barrels per day (bpd) of crude and other feedstocks.
UDS also provides a significant retail marketing base of
approximately 4,600 sites which complements the 340 Valero sites
in northern California. The combined companies had revenues in
2000 of $29.61 billion and EBITDA of $1.85 billion.
In recent years, both companies have aggressively grown their
respective operations through acquisitions in the downstream
sector of the oil industry. The most notable acquisitions were
two complex refineries in California during 2000. Valero
purchased the Benicia refinery from ExxonMobil in May for $890
million and UDS purchased the Avon refinery (renamed Golden
Eagle) from Tosco in September for $808 million. The full year
benefit of these highly profitable West Coast refineries will
add significant earnings to the 2001 results.
If margins remain at or near the current peak levels, the
highest since the Gulf War, Valero management should be able to
minimize the debt required to finance the $2 billion cash
portion of the transaction. Following the acquisition, Valero
has indicated that free cash flows will be used for debt
reduction as well. The assumed UDS debt alone, however, will
significantly increase Valero's long-term debt. Valero and UDS
had outstanding long-term debt of $1.04 billion and $1.92
billion respectively at the end of the 1st quarter of 2001.
Should the strong industry margins persist, Valero's plan to
aggressively reduce debt would put positive pressure on the
combined company's credit profile.
Ultramar Diamond Shamrock is one of the largest independent
refiners and marketers of petroleum products in North America.
The company's refining system consists of seven refineries with
the capacity to process approximately 850,000 barrels per day of
crude oil and other feedstocks. UDS markets refined products
through over 5,000 retail sites across the United States and
eastern Canada.
URANIUM RESOURCES: Completes Private Placement Of 26 Mil Shares
---------------------------------------------------------------
Uranium Resources, Inc. has completed a private placement of
26,062,500 shares of Common Stock of the Company at $0.08 per
share, consisting of $1,835,000 in cash and the cancellation of
$250,000 of debt. A significant portion of the funds raised in
the transaction were arranged through Mr. Rudolf J. Mueller,
Winchester Group, with the balance from individual private
investors.
The Company will register for resale these shares and an
additional 15,091,950 shares of common stock. The Company has
engaged the firm of Hein+Associates LLP to perform an audit of
its 1999 and 2000 year-end financial statements to permit the
filing of the registration statement. Upon completion of the
audit the Company intends to request the OTC Bulletin Board to
include the common stock in its quotation service.
This placement and the August 2000 equity infusion of $750,000
complete the planned transactions needed to fund the Company's
non-restoration overhead costs and land holding costs needs for
approximately the next two years. Together with the restoration
funding agreement completed in October 2000 with the Texas
regulatory authorities and the Company's bonding company the
Company says it now has the financial resources for both the
restoration and operating needs of the Company through
approximately the first quarter of 2003, assuming that the
Company is able to extend the restoration agreement for another
year after its current expiration date of December 31, 2001. The
funds raised in this private placement are to be used to fund
the non-restoration overhead costs and land holding costs of the
Company until such time as the price of uranium increases to a
profitable level. Additional capital will be required to permit
the Company to commence mining operations.
Uranium Resources, Inc. is a Dallas area based uranium-mining
company, whose shares are quoted on the Pink Sheets under the
symbol URIX. The Company specializes in in-situ solution mining
and holds substantial uranium resources in South Texas and New
Mexico.
US OFFICE: Amends Purchase Agreement With Corporate Express
-----------------------------------------------------------
US Office Products Company announced that it has amended its
Asset Purchase Agreement with Corporate Express, a Buhrmann
company, relating to the sale by US Office Products of its North
American office supplies and furniture business to Corporate
Express.
US Office Products has filed a motion with the U.S. Bankruptcy
Court in Delaware requesting that the Court approve the
amendment to the Asset Purchase Agreement on an expedited basis
at a hearing scheduled for May 10. Under the terms of the
amendment, the companies have agreed to close the transaction
promptly following Bankruptcy Court approval and have targeted a
mid-May closing date.
Under the revised agreement, the base purchase price for the
assets will be $175 million, subject to certain closing and
post-closing adjustments. The amendment also eliminates
substantially all of the conditions to the closing of the deal
(other than Bankruptcy Court approval).
It also reduces the amount of the escrow available to fund
working capital adjustments and other post-closing claims from
$37.5 million to $12 million and reduces the escrow period from
12 months to six months.
The amendment was reached to resolve issues arising from the
performance of US Office Products' North American business since
March 5, when US Office Products filed for Chapter 11 protection
to facilitate the transaction with Corporate Express.
Dresdner Kleinwort Wasserstein has advised US Office Products on
the transaction.
W.R GRACE: Property Damage Claimants' Committee Appointed
---------------------------------------------------------
Pursuant to 11 U.S.C. Sec. 1102(a)(1), the United States Trustee
for Region III appoints these creditors to serve on a 4-member
Official Committee of Asbestos Property Damage Claimants in W.R.
Grace & Co.'s chapter 11 cases:
Marco Barbanti, as Class Representative
c/o Darryl W. Scott, Esq.
Lukins & Annis, P.S.
1600 Washington Trust Financial Center
7171 West Sprague Avenue
Spokane, WA 99201
(509) 455-9555
Pacific Freeholds
c/o Thomas J. Brandi, Esq.
Law Offices of Thomas J. Brandi
44 Montgomery Street, #1050
San Francisco, CA 94104
(415) 989-1800
The Prudential Insurance Company of America
Attention Stephen C. Parker
751 Broad St., 21st Floor
Newark, NJ 07102
(973) 367-4955
The Trustees of Princeton University
Attention Howard S. Ende, Esq., General Counsel
120 Alexander Street
Princeton, NJ 08544
(609) 258-2525
Frank J. Perch, III, Esq., is the attorney assigned to monitor
and represent the interests of the U.S. Trustee in W.R. Grace's
chapter 11 cases. (W.R. Grace Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
WESTERN DIGITAL: Posts Third Quarter 2001 Losses
------------------------------------------------
Western Digital Corp. (NYSE: WDC) reports revenue of $533.4
million and a net loss of $3.0 million, or $.02 per share, for
its third quarter ended March 30, 2001--including an $11.9
million operating profit in its hard drive business. The net
loss includes an extraordinary gain of $371,000 relating to bond
redemptions.
Unit shipments of approximately 6 million desktop hard drives in
the third quarter reflect sequential growth of 3.5 percent from
the 5.8 million units shipped in the second fiscal quarter and
better than 15 percent growth over the year-ago quarter. The
Company's industry-leading 7200 RPM drives accounted for more
than 50 percent of third quarter revenue, compared with 42
percent in the second fiscal quarter.
The third quarter results included operating losses totaling $15
million for the Company's new business ventures, compared with
nearly $20 million in the second fiscal quarter.
In the year-ago period, the Company reported revenues of $516.6
million and a net loss of $70.7 million, or $.53 per share. The
net loss for the year-ago period included non-recurring charges
totaling $62.8 million related primarily to the Company's exit
of the enterprise hard drive market, and also included a $14.7
million gain on the disposition of certain investment
securities. Excluding these items, the Company's net loss for
the year-ago period was $22.6 million, or $.17 per share.
Matt Massengill, Western Digital president and chief executive
officer, stated: "The most noteworthy development in the quarter
was the hard drive industry's continued improvement in inventory
management and better-than-expected pricing dynamics in the face
of the PC industry's most challenging quarter in many years.
Against this background, our execution and focus enabled us to
achieve profitability and sequential growth in our hard drive
business for the second consecutive quarter. As a result of our
first-to-market leadership in both 5400 RPM and 7200 RPM-class
drives, we optimized our product mix across all of our channels
on a worldwide basis."
For the nine months ended March 30, 2001, revenue was $1.5
billion and the net loss was $34.8 million, or $.21 per share,
including extraordinary gains of $22.2 million. This compares to
year-earlier revenues of $1.5 billion and a net loss of $192.2
million, or $1.64 per share, including non-recurring charges of
$158.3 million, a $14.7 million gain on disposition of
investment securities, and $166.9 million of extraordinary gains
relating to bond redemptions.
ABOUT WESTERN DIGITAL
Western Digital, one of the storage industry's pioneers and
long-time leaders, provides products and services for people and
organizations that collect, manage and use digital information.
The Company's core business produces reliable, high-performance
hard drives that keep users' data close-at-hand and secure from
loss. Applying its data storage core competencies to emerging
markets, Western Digital's new ventures meet the increasing
demand for innovative information management solutions arising
from the proliferation of the Internet and broadband services.
Keen Personal Media provides interactive personal video recorder
and set-top box software, services and hardware for broadband
television content management and commerce. Connex designs
Network Attached Storage products that enable IT managers to
quickly expand network storage. SANavigator develops and markets
software that simplifies the central management of Storage Area
Networks. SageTree is a software company providing enterprise
manufacturing and supply chain analytic applications.
Western Digital was founded in 1970. The Company's storage
products are marketed to leading systems manufacturers and
selected resellers under the Western Digital brand name. Visit
the Investor section of the Company's Web site
(www.westerndigital.com) to access a variety of financial and
investor information.
WHEELING-PITTSBURGH: Proposes Procedures For Reclamation Claims
---------------------------------------------------------------
In the ordinary course of their businesses, Wheeling-Pittsburgh
Steel Corp. purchase and received goods from various
manufacturers and suppliers for use in their manufacturing
operations. These goods ranged from raw materials used in the
manufacture of flat rolled steel products, to fuel sources such
as coal, oil and natural gas, to office supplies, medical
supplies and other items used in the normal operation of their
business. The Debtors have received reclamation demands totaling
$5,400,000 from a number of vendors claiming reclamation rights
in accordance with applicable state law and the Bankruptcy Code.
Two vendors, Yenkin-Majestic Paint Corp., and Mississippi Lime
Company, have in fact, filed adversary proceedings to enforce
their respective reclamation demands. While these vendors may
have the right to reclaim goods sold to the Debtors prior to the
petition date, the Debtors submitted that it would be either
impossible or impractical to segregate and return the goods for
which reclamation demands have been made considering that these
goods made either have been incorporated into the Debtors' pre-
existing inventory supply stocks or have been used in the
Debtors' manufacturing operations.
Scott N. Opincar, Esq., at Calfee, Halter & Griswold LLP, in
Ohio, explained to Judge Bodoh that the Debtors have determined,
after consultation with the Committees, to implement a
consensual procedure for the liquidation and treatment of the
reclamation demands and for the resolution of disputes as to the
specifics of individual reclamation demands, in order to avoid
expense and burdensome litigation necessarily attendant with
defending reclamation claims.
While the Bankruptcy Code allows the granting of a lien to
secure a vendor's claim, Mr. Opincar told the Court that to
bestow liens in favor of vendors' claims in the Debtors' case
would violate the agreements governing the Debtors' postpetition
financing arrangements. By motion, the Debtors proposed to grant
each vendor an administrative expense priority claim in the
amount, if any, of its allowed reclamation claim, with the
amount of that allowed reclamation claim subject to the
resolution of all the Debtors' defenses. The Debtors requested
that the Court, approve the following procedures for the
determination of the allowed amount of each vendor's reclamation
claim:
(1) Within 20 days after the entry of a Court order, the
Debtors will notify each vendor whether the Debtors require
proof of delivery or other further documentation of the vendor's
reclamation claim. Each vendor will, to the extent it has not
previously done so, submit to the Debtors within 25 days after
receipt of the notice, the proof of delivery or other
documentation as the Debtors reasonably request.
(2) Within 90 days from entry of the proposed order, the
Debtors will file the reclamation claims report, setting forth
the value of each vendor's reclamation claim as determined by
the Debtors' internal audit of each reclamation demand. As to
each vendor, the reclamation claims report will provide the
following information:
(a) The date on which the reclamation demand was first
received by the Debtors, the Debtors' counsel or
the Court, if such reclamation demand was initially
misdirected to the Bankruptcy Court;
(b) The dollar value of the goods received by the
Debtors from the vendor within 10 calendar days, or
such other period allowed by the Bankruptcy Code,
prior to the date on which the demand appears to
have been dispatched by the vendor to the Debtors,
the Debtors' counsel or the Court;
(c) The dollar value of the goods listed in the
immediately preceding item that were, (i) in the
possession of the Debtors, (ii) specifically
identifiable and (iii) unconverted as to form, in
each case, as of date on which the reclamation
demand was received by the Debtors, the Debtors'
counsel or the Court;
(d) The Debtors' reasons for excluding any portion of
any reclamation demand from the corresponding
reclamation claim amount, including all known legal
bases for excluding that value.
(3) The reclamation claims report will be filed with the
Court and served upon interested parties. Any vendor having
previously made a reclamation demand that does not appear on the
reclamation claims report shall notify the Debtors in writing,
within 10 days of obtaining notice of entry of service thereof,
of the existence of that vendor. Upon receipt of notice, that
vendor shall be added to the reclamation claims report. Any
vendor who fails to timely provide the required notification
shall be deemed to waived his vendor's reclamation demand;
(4) If no objection to the reclamation claims report is
filed with the Court within 20-days Objection Deadline after
services of the reclamation claims report, the vendors'
reclamation claim amounts will be deemed liquidated without any
further action by the Debtors or further Court action, subject
to such further defenses as may exist by reason of liens granted
to the Debtors' secured creditors.
(5) If the Debtors and any vendor are unable to reach an
agreement as to that vendor's reclamation claim amount prior to
the Objection Deadline, that vendor may object to the
reclamation claims report and move the Court for determination
of its reclamation claim amount. The vendor will be required to
prove:
(a) Timely written notice of its reclamation claim;
(b) The value of goods delivered to the Debtors by the
vendor in the 10 days, or such other period allowed
by Bankruptcy Code, before that vendor made its
written reclamation demand; and
(c) Compliance with any other applicable statutory,
territorial or common law reclamation requirements.
Defenses that relate to the Debtors' secured creditors' rights
will not be considered in connection with the vendor's motion,
but instead will be addressed as provided in paragraph 6 below.
(6) Following the determination of all of the vendor's
reclamation claim amounts, in accordance with the foregoing
procedures, the Debtors may commence further proceedings to
determine the extent to which the reclamation claim amounts are
subject to further defenses by reason of liens granted to the
Debtors' secured creditors. In the alternative, the Debtors may
propose to resolve those issues through a proposed
reorganization plan that specifies the extent to which the
reclamation claims shall be treated as allowed administrative
expense priority claims;
(7) The allowed amounts of the reclamation claims shall be
equal to the amounts determined by the Court after completion of
all of the foregoing procedures and consideration of all of the
applicable defenses; and
(8) These procedures constitute the vendors' sole remedies
with respect to their reclamation demands. Vendors will not be
required to initiate adversary proceedings or to take any
procedural step in order to preserve or perfect their
reclamation demands. Vendors and other third parties also shall
be prohibited and enjoined from interfering with the Debtors'
receipt, use or disposition of the goods. (Wheeling-Pittsburgh
Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
* Meetings, Conferences and Seminars
------------------------------------
May 14, 2001
American Bankruptcy Institute
NY City Bankruptcy Conference
Association of the Bar of the City of New York
New York, New York
Contact: 1-703-739-0800 or http://www.abiworld.org
May 25, 2001
American Bankruptcy Institute
Canadian-American Bankruptcy Program
Hotel TBA, Toronto, Canada
Contact: 1-703-739-0800
June 7-10, 2001
American Bankruptcy Institute
Central States Bankruptcy Workshop
Grand Traverse Resort, Traverse City, Michigan
Contact: 1-703-739-0800 or http://www.abiworld.org
June 13-16, 2001
Association of Insolvency & Restructuring Advisors
Annual Conference
Hyatt Newporter, Newport Beach, California
Contact: 541-858-1665 or aira@ccountry.com
June 14-16, 2001
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts,
Taxations, Drafting, Securities, and Bankruptcy
Swissotel, Chicago, Illinois
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
June 18-19, 2001
American Bankruptcy Institute
Investment Banking Program
Association of the Bar of the City of New York,
New York, New York
Contact: 1-703-739-0800 or http://www.abiworld.org
June 21-22, 2001
RENAISSANCE AMERICAN MANAGEMENT & BEARD GROUP, INC.
Bankruptcy Sales & Acquisitions
The Renaissance Stanford Court Hotel,
San Francisco, California
Contact: 1-903-592-5169 or ram@ballistic.com
June 25-26, 2001
TURNAROUND MANAGEMENT ASSOCIATION
Advanced Education Workshop
The NYU Salomon Center at the Stern School
of Business, New York, NY
Contact: 312-822-9700 or info@turnaround.org
June 28-July 1, 2001
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains, Advanced Bankruptcy Law
Jackson Lake Lodge, Jackson Hole, Wyoming
Contact: 770-535-7722 or Nortoninst@aol.com
June 28-July 1, 2001
American Bankruptcy Institute
Hawaii CLE Program
Outrigger Wailea Resort, Maui, Hawaii
Contact: 1-703-739-0800 or http://www.abiworld.org
June 30 through July 5, 2001
National Association of Chapter 13 Trustees
Annual Seminar
Marriott Hotel and Marina, San Diego, California
Contact: 1-800-445-8629 or http://www.nactt.com
July 12-15, 2001
American Bankruptcy Institute
Northeast Bankruptcy Conference
Stoweflake Resort, Stowe, Vermont
Contact: 1-703-739-0800 or http://www.abiworld.org
July 26-28, 2001
ALI-ABA
Chapter 11 Business Reorganizations
Hotel Loretto, Santa Fe, New Mexico
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
August 1-4, 2001
American Bankruptcy Institute
Southeast Bankruptcy Conference
The Ritz-Carlton, Amelia Island, Florida
Contact: 1-703-739-0800 or http://www.abiworld.org
September 6-9, 2001
American Bankruptcy Institute
Southwest Bankruptcy Conference
The Four Seasons Hotel, Las Vegas, Nevada
Contact: 1-703-739-0800 or http://www.abiworld.org
September 7-11, 2001
National Association of Bankruptcy Trustees
Annual Conference
Sanibel Harbor Resort, Ft. Myers, Florida
Contact: 1-800-445-8629 or http://www.nabt.com
September 10-11, 2001
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Fourth Annual Conference on Corporate Reorganizaitons
The Knickerbocker Hotel, Chicago, IL
Contact 1-903-592-5169 or ram@ballistic.com
September 13-14, 2001
ALI-ABA
Corporate Mergers and Acquisitions
Washington Monarch, Washington, D. C.
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
September 14-15, 2001
American Bankruptcy Institute
ABI/Georgetown Program "Views from the Bench"
Georgetown University Law Center, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
October 3-6, 2001
American Bankruptcy Institute
Litigation Skills Symposium
Emory University School of Law, Atlanta, Georgia
Contact: 1-703-739-0800 or http://www.abiworld.org
October 12-16, 2001
TURNAROUND MANAGEMENT ASSOCIATION
2001 Annual Conference
The Breakers, Palm Beach, FL
Contact: 312-822-9700 or info@turnaround.org
October 16-17, 2001
International Women's Insolvency and
Restructuring Confederation (IWIRC)
Annual Fall Conference
Somewhere in Orlando, Florida
Contact: 703-449-1316 or
http://www.inetresults.com/iwirc
November 26-27, 2001
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Seventh Annual Conference on Distressed Investing
The Plaza Hotel, New York City
Contact 1-903-592-5169 or ram@ballistic.com
November 29-December 1, 2001
American Bankruptcy Institute
Winter Leadership Conference
La Costa Resort & Spa, Carlsbad, California
Contact: 1-703-739-0800 or http://www.abiworld.org
January 31 - February 2, 2002
American Bankruptcy Institute
Rocky Mountain Bankruptcy Conference
Westin Tabor Center, Denver, Colorado
Contact: 1-703-739-0800 or http://www.abiworld.org
January 11-16, 2002
Law Education Institute, Inc
National CLE Conference(R) - Bankruptcy Law
Steamboat Grand Resort
Steamboat Springs, Colorado
Contact: 1-800-926-5895 or
http://www.lawedinstitute.com
February 7-9, 2002 (Tentative)
American Bankruptcy Institute
Rocky Mountain Bankruptcy Conference
Westin Tabor Center, Denver, Colorado
Contact: 1-703-739-0800 or http://www.abiworld.org
February 28-March 1, 2002
ALI-ABA
Corporate Mergers and Acquisitions
Renaissance Stanford Court
San Francisco, California
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
March 15, 2002 (Tentative)
American Bankruptcy Institute
Bankruptcy Battleground West
Century Plaza Hotel, Los Angeles, California
Contact: 1-703-739-0800 or http://www.abiworld.org
April 18-21, 2002
American Bankruptcy Institute
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
May 13, 2002 (Tentative)
American Bankruptcy Institute
New York City Bankruptcy Conference
Association of the Bar of the City of New York,
New York, New York
Contact: 1-703-739-0800 or http://www.abiworld.org
June 6-9, 2002
American Bankruptcy Institute
Central States Bankruptcy Workshop
Grand Traverse Resort, Traverse City, Michigan
Contact: 1-703-739-0800 or http://www.abiworld.org
June __, 2002
American Bankruptcy Institute
Delaware Bankruptcy Conference
Hotel Dupont, Wilmington, Delaware
Contact: 1-703-739-0800 or http://www.abiworld.org
December 5-8, 2002
American Bankruptcy Institute
Winter Leadership Conference
The Westin, La Plaoma, Tucson, Arizona
Contact: 1-703-739-0800 or http://www.abiworld.org
April 10-13, 2003
American Bankruptcy Institute
Annual Spring Meeting
Grand Hyatt, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
December 5-8, 2003
American Bankruptcy Institute
Winter Leadership Conference
La Quinta, La Quinta, California
Contact: 1-703-739-0800 or http://www.abiworld.org
April 15-18, 2004
American Bankruptcy Institute
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via
e-mail to conferences@bankrupt.com are encouraged.
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
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.
This material is copyrighted and any commercial use, resale or
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electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
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The TCR subscription rate is $575 for 6 months delivered via e-
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*** End of Transmission ***