/raid1/www/Hosts/bankrupt/TCR_Public/010531.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, May 31, 2001, Vol. 5, No. 106
Headlines
ARMSTRONG WORLD: Taps Peterson Consulting as Data Technician
BRIDGE INFORMATION: Rejects Telerate Data License
CAPITAL ENVIRONMENTAL: Posts $7.3 Million Loss in First Quarter
COVAD COMMUNICATIONS: Optimistic Despite $1.4 Billion Loss
ESSEX CORPORATION: Looks For More Funds To Support Operations
FINE AIR: Disclosure Statement Hearing Set For June 13
FMI FORWARDING: Seeks To Establish June 20 Claims Bar Date
FRIEDE GOLDMAN: Bankrupt Shipbuilder Gets Military Contract
FRUIT OF THE LOOM: Selling Yarn Facility Equipment To Tex-Mach
GENESIS HEALTH: Assumes Two Creek Parkway Property Leases
GRAHAM-FIELD: Wants More Time to Assume/Reject Property Leases
HEILIG MEYERS: Moves To Reject Certain Real Property Leases
INTEGRATED HEALTH: Agrees to Filing of 12 Tardy Proofs of Claim
LERNOUT & HAUSPIE: Investors Present Alternative Recovery Plan
LOEWEN GROUP: Selling Certain Ohio Assets For $2.2 Million
LTV CORPORATION: Continues Talks with United Steelworkers
MKTG SPECIALISTS: Inks Tentative Consolidation Pact with Acosta
NETSOL INT'L: Sets Stockholders' Special Meeting On June 11
PHILIP SERVICES: Amends Covenant On Two Secured Debt Facilities
PHYCOR INC.: Sells Healthcare Management Unit To SHPS, Inc.
PICO MACOM: Disclosure Statement Hearing Set For June 20
PILLOWTEX, INC: Seeks Authority to Sell Certain Loom Equipment
RBX GROUP: Confirmation Hearing Scheduled for July 12
RELIANCE INSURANCE: Pa. Court Grants Rehabilitation Petition
SAFETY-KLEEN: Wants To Sell Illinois Property To Burnside
SUNTERRA CORPORATION: Employs Ross Altman As General Counsel
SUNTERRA CORP: Names Andy Gennuso as New Chief Operating Officer
UNICAPITAL EQUIPMENT: Fitch Junks Certain Lease-Backed Notes
UNITED AIRLINES: Moody's Lowers Senior Unsecured Rating To Ba1
UNITY WIRELESS: May Liquidate Assets If Unable To Raise Funds
US AIRWAYS: Moody's Cuts Ratings To Junk & Low-B Levels
VENCOR INC.: Rose Maxwell Asks For Relief From Automatic Stay
VIDEO CITY: Showtime USA Objects to Disclosure Statement
W.R. GRACE: Seeks Nod To Retain Pitney Hardin As Special Counsel
WAREFORCE INC.: Obtains Extension of $30 Million Credit Term
WASHINGTON GROUP: Seeks Court Nod For Employee Retention Plan
WHEELING-PITTSBURGH: Court Okays $33 Million Cash Infusion
WINSTAR: Seeks Court Approval Of Sale Contract With Sayers Group
WORLD ACCESS: I-Link To Acquire Unit's Long Distance Business
XATA CORPORATION: Posts Weak First Quarter 2001 Results
*********
ARMSTRONG WORLD: Taps Peterson Consulting as Data Technician
------------------------------------------------------------
Armstrong World Industries, Inc., and its debtor-affiliates seek
court authority to employ Peterson Consulting as a Data
Technician and Statistics Consultant in their chapter 11 cases.
A hearing on the application will be held on June 13, 2001 at
12:30 PM at the US District Court, 844 King Street, Courtroom
6A, Wilmington, DE.
The debtors request that the court approve the employment of
Peterson Consulting in such capacities to perform the necessary
data and statistics consulting services that are incidental to
the administration of the debtors' Chapter 11 estates. Peterson
Consulting has provided data and statistics consulting services
to AWI since 1985 with respect to the asbestos bodily injury
claims filed against AWI and the insurance coverage available to
AWI to cover the costs of those claims. Peterson Consulting also
assisted in representing AWI in disputes with its insurance
carriers.
As data technician and statistics consultant, the debtors will
request that Peterson Consulting continue conducting factual
investigations and analyses, performing data and statistics
research, and assisting and advising the debtors concerning: the
debtors' historical asbestos claims information, the debtor's
potential future asbestos claims liabilities, and the debtors'
insurance coverage available to pay asbestos claims. Peterson
Consulting's current hourly billing rates are as follows:
Managing/Senior Managing Director $300-$450
Director $250-$350
Principal $240-$300
Senior Engagement Manager $190-$250
Senior Consultant $175-$200
Consultant $150-$180
Associate $125-$155
Analyst $85-$120
BRIDGE INFORMATION: Rejects Telerate Data License
-------------------------------------------------
Bridge Information Systems, Inc. sought and obtained bankruptcy
court authority to reject their interests in a Dow Jones
Telerate Data License Agreement, dated as of December 29, 1995,
by and between Financial Times Information/Interactive Data,
formerly known as Valorinform, S.A., and Dow Jones Telerate.
(Bridge Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
CAPITAL ENVIRONMENTAL: Posts $7.3 Million Loss in First Quarter
---------------------------------------------------------------
Capital Environmental Resource Inc. (Nasdaq: CERI) reported
first quarter 2001 results. For the first quarter, the Company
reported a loss after certain one-time items of $7.3 million or
$1.02 per share (diluted), compared to net income of $0.3
million or $0.05 per share for the comparable period in 2000.
Revenue for the quarter was $25.8 million, compared with $26.4
million for the year earlier period. Adjusted EBITDA in the
first quarter of 2001 (after adjusting for approximately $3.3
million of transaction expenses and provisions related to the
sale of a substantial portion of the Company's U.S. operations
on April 2, 2001, $1.1 million of non-cash unrealized foreign
exchange losses and $0.7 million of costs associated with
meeting financing requirements under the Company's Senior Debt
Facilities) was $4.7 million or 18.3% of revenue compared to
$5.1 million or 19.5% of revenue in the first quarter of 2000.
Adjusted EBITDA is defined as net income (loss) plus income
taxes, net interest and financing expense, depreciation and
amortization and identified unusual items. Operating loss for
the first quarter of 2001 was $3.1 million, from an income of
$2.7 million or 10.1% of revenue for the year earlier period.
Adjusted for the unusual items noted above in the first quarter
of 2001 resulted in operating income of $2.0 million or 7.7% of
revenue.
On April 2, 2001, the Company sold substantially all of its
assets in New York and Pennsylvania for a total sale price of
approximately $21.0 million. The net cash proceeds (after taking
into account a holdback plus transaction and other related
costs) from the transaction of approximately $16.4 million
were used to repay indebtedness to the Company's Senior Debt
Lenders. In connection with the sale of these assets, the
Company has accrued expenses of approximately $1.4 million in
the first quarter of 2001 related primarily to lease termination
penalties, severance costs, change of control payments, union
pension liability payments, professional fees and other
transition costs.
In connection with the U.S. asset sales, the Company has
established an allowance for doubtful accounts and provided for
an impairment of certain U.S. assets held for sale totaling $1.9
million, which are based on the Company's estimates of the
future net realizable value of certain U.S. assets and are
therefore subject to adjustment. The Company announced during
its fourth quarter conference call on May 8, 2001, that it
intends to sell the balance of its U.S. assets over the course
of 2001. Transaction costs associated with future asset sales
will be recorded when the likelihood and amount of these costs
are known.
In the first quarter of 2001, the Company recorded a $1.1
million dollar non-cash unrealized foreign exchange loss,
primarily relating to translation of United States dollar
denominated debt resident in Canada. Prior to December 2000, the
Company had hedged a significant portion of its U.S. dollar debt
by swapping it to Canadian dollars and consequently was not
exposed to foreign exchange rate fluctuations on its Canadian
borrowings. In conjunction with the amendment to the Company's
Senior Debt Facility in December 2000, the swaps were terminated
and consequently the weakness of the Canadian dollar in the
first quarter of fiscal 2001 resulted in a significant
unrealized loss on translation of the U.S. debt. Any cash gains
or losses on foreign exchange related to this debt will be
realized when the debt is repaid using the foreign exchange rate
prevailing at that time.
In connection with the previously announced requirement that the
Company make reasonable progress towards a transaction to reduce
or refinance the Senior Debt Facility by $16.0 million on or
before June 15, 2001, the Company has incurred costs of
approximately $0.7 million related primarily to legal and
consulting fees in the first quarter of 2001 which have been
charged to selling, general and administrative expenses.
Additionally, the Company has incurred approximately $0.2
million of financing costs related to this requirement, which
has been charged to interest and financing expenses.
As announced on March 15, 2001, the Company is in default of one
of its obligations under its Senior Debt Facilities. In
conjunction with the sale of certain of the Company's United
States assets disclosed above, the senior lenders have agreed to
modifications to the Company's Senior Debt Facilities to exclude
the effects of the transaction for the purposes of determining
the Company's compliance with its financial covenants. In
addition, the Senior Debt Lenders have agreed that they will not
take action under the Senior Debt Facilities with respect to
certain defaults by the Company provided that the Company
satisfies certain conditions, including that it continues to
make reasonable progress towards a transaction to reduce or
refinance the Senior Debt Facilities by June 15, 2001. The
Company is in discussions with certain parties with respect to
possible transactions which would satisfy these conditions;
however, there is no assurance that such discussions will be
successful. As a result, the full amount of the Senior Debt
Facility has been included in current portion of long-term debt.
Capital Environmental Resource Inc. is a regional integrated
solid waste services company that provides collection, transfer,
disposal and recycling services in markets in Canada. The
Company's web site is http//www.capitalenvironmental.com
COVAD COMMUNICATIONS: Optimistic Despite $1.4 Billion Loss
----------------------------------------------------------
A day after belatedly posting a $1.4 billion loss for 2000 and
revealing auditors' concerns about its viability, high-speed
Internet provider Covad Communications Group Inc. insisted that
it would not file for bankruptcy, according to the Associated
Press. Covad, the third-largest provider of Digital Subscriber
Line (DSL) service, said extensive cost-cutting measures have
saved it enough cash to keep it from running out until the
second quarter of 2002, instead of the first quarter as it had
previously reported.
The Santa Clara, Calif.-based Covad said its customer base is
now more stable, but the company needs between $400 million and
$700 million to survive until it can earn a profit. "This is not
a major financing in our view," said Charles McMinn, Covad's
founder and chairman. Without mentioning specifics, McMinn said
Covad is talking to several players in the business to raise the
money, which won't be needed for another year. It had $640
million in cash at the end of March. (ABI World, May 29, 2001)
ESSEX CORPORATION: Looks For More Funds To Support Operations
-------------------------------------------------------------
Essex Corporation's revenues were $413,000 and $975,000 for the
first quarters of 2001 and 2000, respectively. The first quarter
2000 revenues include approximately $148,000 for recovery of
excess indirect costs on a government contract completed in
1994. There was no such cost recovery in the first quarter of
2001. Without this recovery, first quarter 2000 revenues would
have been $827,000. Revenues in the first quarter of 2001 were
therefore 50% lower than the first quarter of 2000. The decline
in revenues was due to the diversion of labor resources to
continuing development work and the delay in receipt of new
contract awards until April 2001.
As of April 1, 2001, the Company had a backlog on programs
related to services and applications of optoelectronics of
approximately $1,943,000, up from $997,000 at December 31, 2000.
The Company had no firm orders for ImSyn(TM) units as of the
date of its most recent financial report.
There was an operating loss of $954,000 and $400 in the first
quarters of 2001 and 2000, respectively. There was a net loss of
$948,000 and $9,000 in the first quarters of 2001 and 2000,
respectively. Without the approximately $148,000 recovery of
excess costs on a previously completed contract, the first
quarter 2000 operating and net losses would have been larger by
this amount. Cost of goods sold and services provided as a
percentage of revenues (excluding revenue from recovery of prior
year excess costs) for the first quarter of 2001 was 48.2%,
which was slightly lower than the 48.5% in 2000.
The Company incurred significant losses in the first quarter of
2001, primarily due to the increased expenditures for
development of its optoelectronics products and services,
particularly the optical telecommunications device technologies.
The Company plans to continue research and development spending
in 2001 in the optoelectronics operations.
The Company is seeking to establish joint ventures or strategic
partnerships including licensing of its technologies to major
industrial concerns to facilitate these goals. The Company may
also seek additional funds under appropriate terms from private
sources, including the Investor Group, to continue to finance
development and to achieve initial market penetration.
Significant delays in the commercialization of the Company's
optoelectronic products, failure to market such products or
failure to raise substantial additional working capital would
have a significant adverse effect on the Company's future
operating results and future financial position.
FINE AIR: Disclosure Statement Hearing Set For June 13
------------------------------------------------------
By order entered on May 18, 2001, Judge A. Jay Cristol, US
Bankruptcy Court, Southern District of Florida, set June 13,
2001 at 2:30 PM as the date for a hearing to consider approval
of Disclosure Statement of Fine Air Services Corp., et al.
FMI FORWARDING: Seeks To Establish June 20 Claims Bar Date
----------------------------------------------------------
The debtor, FMI Forwarding Co., Inc., is seeking to establish
June 20, 2001 at 5:00 PM as the Bar Date for filing proofs of
claim in the case.
FRIEDE GOLDMAN: Bankrupt Shipbuilder Gets Military Contract
-----------------------------------------------------------
Friede Goldman Halter Inc. (FGH) on Friday was awarded a
military contract with options worth $78 million, according to
the Associated Press. The Gulfport, Miss.-based company will
receive $26.9 million from the U.S. Army to construct and design
a logistic support vessel (LSV) and has options on two more LSVs
for more than $50 million. Construction of the vessel will take
place at Friede Goldman Moss Point shipyard and is scheduled to
take about two years.
Earlier this month, FGH stopped work on two of the rigs, which
were being built for Petrodrill. Friede has asked the bankruptcy
court to negate its "highly unprofitable" contracts with
Petrodrill. FGH is trying to raise capital by selling some
assets as it works on other projects. Friede has a construction
backlog of $324 million, as well as a pending $400 million
contract to build four patrol vessels for the Egyptian navy.
(ABI World, May 29, 2001)
FRUIT OF THE LOOM: Selling Yarn Facility Equipment To Tex-Mach
--------------------------------------------------------------
Union Yarn Mills owns and operates a yarn manufacturing facility
in Jacksonville, Alabama. In March 2001, Fruit of the Loom, Ltd.
and Union decided to cease operations at the plant to bring
capacity in line with demand and streamline internal cost
structures. Management stated that activity will cease at the
Jacksonville plant by the end of May 2001. Plans for the sale of
the plant are already at advanced stages. As a result, Union and
Fruit of the Loom have determined that the equipment at the
plant will no longer be needed. Therefore, to maximize value for
the estate, it should be sold. The current value of the
equipment, as carried on Fruit of the Loom's books, net of
depreciation and other charges, is approximately $2,800,000.
The sale, dismantling and removal of the equipment must be
conducted in an expeditious manner so as to effectuate the sale
of the plant itself. Fruit of the Loom told the Court that in
light of the time constraints, the current market for used
knitting equipment and the large quantity of used equipment
being liquidated, bids were submitted from equipment brokers
that specialize in the sale of used textile manufacturing
infrastructure.
By letter, dated March 26, 2001, Fruit of the Loom solicited
offers to purchase the equipment in bulk from six prospective
interested parties. Only one offer has been received, that from
Tex-Mach Inc. Tex-Mach offers $1,152,000 to purchase the
equipment and offers to commit to an expeditious removal
schedule, including provisions which insure that Fruit of the
Loom will not encounter occupancy problems in connection with
the sale of the plant and property. Therefore, Tex-Mach's offer
is the highest and best, and in the opinion of Fruit of the Loom
managers, reflects the equipment's fair market value.
The purchase price is payable in cash, certified check,
cashier's check, bank money order or wire transfer. Tex-Mach
will make a good faith deposit of $115,200, which will be
credited against the purchase price at closing. Fruit of the
Loom agrees, that if the Court approves the transaction, it will
reimburse Tex-Mach for up to $15,000 in expenses relating to the
equipment purchase. The equipment shall be transferred "as is"
and "where is," with Fruit of the Loom extending no warranties
of any kind. Union will provide egress to remove the equipment
from the second floor of the plant by providing an access hole
at its expense.
The closing of the transaction shall occur upon the latter of
(i) 15 days following the execution of the sale order and (ii) 5
business days following written notification by Fruit of the
Loom that the equipment is available for removal, time being of
the essence. Tex-Mach agrees to remove the equipment within 60
days following the sale closing. Failure to meet this deadline
will result in an obligation to Union of $165 per day for each
day the equipment remains at the facility beyond 60 days of
closing. Tex-Mach will provide Union with a certificate of
insurance in the amount of $5,000,000 to insure against any and
all costs associated with damages incurred by Union in
connection with the dismantling and removal of the equipment
from the Jacksonville facility.
Fruit of the Loom asserted that the sale is a reasonable
business decision. There is a sound business justification for
such sale. The proposed sale represents the greatest recovery
for creditors and the estates. The offer was the best received.
Last, Fruit of the Loom requested that the sale be free and
clear of liens, claims and encumbrances.
No objections were filed by the objection deadline of May 2,
2001 so the sale process can begin. (Fruit of the Loom
Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
GENESIS HEALTH: Assumes Two Creek Parkway Property Leases
---------------------------------------------------------
Genesis Health Ventures, Inc. & The Multicare Companies, Inc.
sought and obtained the Court's approval for the assumption of 2
leases pertaining to office and warehouse space in two buildings
- 9 Creek Parkway and 12 Creek Parkway - both located at
Boothwyn, Delaware County, Pennsylvania to provide services in
the Boothwyn area:
(1) the 9 Creek Parkway lease - a lease between Debtor ASCO
Healthcare, Inc. t/a NeighborCare and 9 Creek Parkway, L.P.
pursuant to which NeighborCare leased from 9 Creek Parkway
office and warehouse space of approximately 34,578 square feet
in the building known as 9 Creek Parkway, Boothwyn, Delaware
County, Pennsylvania, to provide institutional pharmacy services
in the Boothwyn area;
(2) the Chester County Fund Lease - a lease between Debtor
Genesis ElderCare Diagnostic Services, Inc. and Chester County
Fund, Inc. pursuant to which Genesis Diagnostic leased from
Chester County Fund certain office and warehouse space
consisting of approximately 3,638 square feet, located in the
building known as 12 Creek Parkway, Boothwyn, Delaware County,
Pennsylvania, to provide therapy and diagnostic services in the
Boothwyn area.
The Debtors have concluded that it is sound business judgment to
assume the leases because these pertain to profitable operations
in a location targeted by the Debtors as a strategic market for
their services. These operations, the Debtors note, present
opportunities for continued success, and thus should be part of
the Debtors' reorganized business operations. Moreover, the
Debtors have obtained from the lessors concessions and
modifications to the lease terms that the Debtors consider are
beneficial to their estates.
The 9 Creek Parkway Lease provides for a seven year term
commencing April 1, 1998 and ending March 31, 2005, renewable at
NeighborCare's option for an additional five year term, and
graduated monthly rentals over the term of the lease ranging
from $21,899.42 per month in the first year of the lease term to
$25,443.67 per month in the seventh year of the lease term.
Prior to the Commencement Date, NeighborCare was in default
under the lease in the amount of $44,955.
The Chester County Fund Lease provides for a five year term
commencing January 1, 2000 and ending December 31, 2004, and
graduated monthly rentals over the term of the lease ranging
from $3,638.00 per month in the first year of the lease term to
$4,092.7 5 per month in the fifth year of the lease term. The
Debtors are not aware of any defaults under the Chester County
Fund Lease.
Previously, the lessors each filed a motion to compel the
Debtors to assume or reject the respective leases and to compel
payment of any cure amounts. The parties subsequently entered
into negotiations and reached agreement, and the lessors
withdrew their motions to compel assumption/rejection of the
respective leases.
As an incentive for the Debtors to assume the 9 Creek Parkway
Lease, 9 Creek Parkway has agreed to reduce the amount of the 9
Creek Parkway Lease Default to $35,000 (the Cure Amount).
The Chester County Fund has agreed to amend the Chester County
Fund Lease to provide for termination rights to either party,
without cause, upon 120 days written notice to the
nonterminating party. The Chester Creek Modification also
provides Genesis Diagnostic with the flexibility of seeking
other premises for their operations should the location become
unprofitable in the future.
Considering the factors, the Debtors have concluded that the
assumption of the Leases is a valid exercise of their business
judgment and is in the best interests of their creditors, and
all parties in interest. (Genesis/Multicare Bankruptcy News,
Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900)
GRAHAM-FIELD: Wants More Time to Assume/Reject Property Leases
--------------------------------------------------------------
Graham-Field Health Products, Inc. sought an order extending the
time to assume or reject unexpired leases of nonresidential real
property under 11 USC Section 365(d)(4) through and including
October 13, 2001.
The debtors, working with their financial advisors are still in
the process of developing a long-range business plan that will
form the basis of a Chapter 11 plan of reorganization. The
debtors have presented a draft of the business plan, various
financial information, and a preliminary set of financial
projections for 2002, to the committee and have engaged in
discussions relating to the business plan with the Creditors
Committee and its advisors. The business plan will help to
determine the configuration of the debtors' business, including
whether the debtors' manufacturing and distribution facilities
will be maintained at their present leased locations. Thus, the
debtors are continuing to analyze the strengths and weaknesses
of each distribution and manufacturing location and the benefits
and burdens associated with maintaining each underlying lease.
The debtors states that they should not be compelled to make
determinations as to whether they should assume or reject any
lease before a complete analysis of that lease has been made in
light of their developing long-term business plan. "The debtors
should not be forced to reject a valuable lease or assume an
undesirable lease inadvertently or as a result of a premature
deadline.
The debtors stated that they require additional time to analyze
the leases in light of the long-term business strategy that the
debtors are currently developing and discussing with the
committee.
The debtors requested that the court enter an order extending
the time within which the debtors may assume or reject their
unexpired leases of nonresidential real property under section
365(d)(4) of the Bankruptcy Code by 120 days, through and
including October 31, 2001.
HEILIG MEYERS: Moves To Reject Certain Real Property Leases
-----------------------------------------------------------
Heilig-Meyers Company, et al. seeks bankruptcy court authority
to reject certain nonresidential real property leases.
The debtors submit that rejection of certain leases is
beneficial to their estates and creditors. The debtors have
determined in their business judgment that the leases are not
necessary for their continued operations and do not have market
value sufficient to warrant their continuing administrative
costs. The leases serve no useful purpose for the debtors and
the debtors' estates. The debtors request that the court approve
rejection of the leases as a sound exercise of business
judgment.
The debtors submit that the lessors for the leases will not be
prejudiced by a rejection effective on May 31, 2001 and may, in
fact, benefit from such rejection since lessors may move
immediately to the premises.
The leases cover nonresidential property located in West
Virginia, Georgia, West Virginia, Ohio, Arizona, Washington,
Maryland.
The debtor is represented by Bruce H. Matson, Lynn Lewis
Tavenner and Paula S. Beran, LeClair Ryan, PC and Matthew A.
Feldman and Paul V. Shalhoub of Willkie, Farr & Gallagher.
INTEGRATED HEALTH: Agrees to Filing of 12 Tardy Proofs of Claim
---------------------------------------------------------------
Integrated Health Services, Inc. has agreed to grant 12 more
movants permission to file proofs of claim after the bar date.
Subject to the reservation of rights to object to such proofs of
claim on bases other than timeliness, the Debtors agreed that
these proofs of claim will be deemed timely if they are filed
within 30 days of the date of entry of the respective Stipulated
and Agreed Order:
* Sue Conrad, John Lawrence Lafoy and Kimberly Nelson,
individually and as heirs of the Estate of Ollie Lafoy,
deceased;
* The Estate of Leona Grace DeBuck by and through her
Personal Representative Tammy Westbrook;
* CAN Companies
* Peter A. Rowe for the benefit of Norma L. Blackmore
* Lena Patricia Pickron
* Conrado Gonzalez on behalf of Jenaro Gonzalez
* Tom Whitlow as Personal Representative of the Estate of
Joseph L. Whitlow, Sr.
* Myrtle Domeracki, Personal Representative of the Estate
of Ruby Stawarz
* Charles D. Benally, Executor of the Estate of Grace B.
Benally
* Pauline Begay, as Guardian of Edna Joe
* Tina Ailene Smith, as the Personal Representative of the
Estate of Edith Bishop Hewitt
* Willie Hampton
(Integrated Health Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LERNOUT & HAUSPIE: Investors Present Alternative Recovery Plan
--------------------------------------------------------------
A group of investors in bankrupt Lernout & Hauspie Speech
Products NV (L&H) announced that they have developed an
alternative recovery plan they say will benefit shareholders,
according to the Associated Press. Last week L&H filed its
recovery plan with a Belgian court, which would involve selling
the speech and language technology or forming a new company from
those assets. L &H spokesman Ron Schuermans said that is the
plan the creditors will decide on.
The shareholders group, however, is critical of the company's
official plan. They believe the plan is unclear about who
receives any proceeds raised through a possible recovery. They
also claim that existing shareholders would be forbidden from
holding shares in a restructured company. The shareholders' plan
will let the company avoid liquidation, and offers creditors
certainty about the amounts they will eventually receive. (ABI
World, May 29, 2001)
LOEWEN GROUP: Selling Certain Ohio Assets For $2.2 Million
----------------------------------------------------------
Pursuant to The Loewen Group, Inc.'s Disposition Program, Loewen
Cemetery (Ohio), Inc., Midwest Cemetery Service Company and Fort
Steuben Management, Inc. (the Selling Debtors) and Loewen Group
International, Inc. (collectively with the Selling Debtors, the
Assigning Debtors) sought and obtained the Court's authority:
(a) to sell, pursuant to section 363 of the Bankruptcy
Code, free and clear of all liens, claims and encumbrances,
their real property and substantially all of their other assets
used in connection with the management of the cemeteries located
at 11 Sale Locations;
(b) to assume and assign to the Purchaser, pursuant to
section 365 of the Bankruptcy Code, the 11 executory contracts
as presented with the motion, consisting of 10 sales and
management agreements and 1 lease;
(c) enter into all related agreements and transactions.
The Debtors told Judge Walsh that in accordance with the
Disposition Program, they have entered into the Asset Purchase
Agreement dated April 10, 2001 with the Initial Bidder Ascend,
Inc. Pursuant to the Asset Purchase Agreement, the Initial
Bidder agrees to buy and the Debtors agree to sell the property
for $2,200,000 less the amount paid by the Initial Bidder under
the Neweol Purchase Agreement. Certain accounts receivable,
transferable permits and goodwill relating to the management of
the Businesses will be transferred to the Purchaser. The Initial
Bidder agrees to assume all of the Assigning Debtors' rights and
obligations under the Assignment Agreements.
The Initial Bidder paid to the Selling Debtors a Deposit in the
amount of $110,000 upon the execution of the Purchase Agreement
and agrees to pay the remainder of the Purchase Price at the
closing.
Pursuant to the Purchase Agreement, the Purchaser is entitled to
a break-up fee of $44,000 under certain circumstances.
The Debtors have determined that the sale of the Business to the
Purchaser on the terms set forth in the Purchase Agreement is in
the best interests of their estates and creditors.
The Sale Locations are:
* Crawford County Memorial Gardens
Route 30, Crestline, Ohio 44827
* East Lawn Memorial Park
Route 1-Box 138, Marietta, Ohio 45750
* Evergreen Memorial Gardens
Route 339, Belpre, Ohio 45714
* Fort Steuben Burial Estates Association
801 Canton Road, Wintersville, Ohio 42953
* Meigs Memory Gardens
45065 Eagle Ridge Road, Pomeroy, Ohio 45769
* Pineview Memorial Park
4049 Youngstown Road, Warren, Ohio 44484
* Oak Grove Memorial Park
4108 State Route 42 South, Lexington, Ohio 44904
* Athens Memory Gardens
7360 Cameron Road, Athens, Ohio 45701
* Greenlawn Memory Gardens
7360 Cameron Road, Athens, Ohio 45701
* Seneca Memory Gardens Chapel Mausoleum
4565 West US 224, Tiffin, Ohio 44883
* Riverview Memory Gardens
29231 State Route 424 East, Defiance, Ohio 43812
(Loewen Bankruptcy News, Issue No. 39; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
LTV CORPORATION: Continues Talks with United Steelworkers
---------------------------------------------------------
The LTV Corporation (OTC Bulletin Board: LTVCQ) and the United
Steelworkers of America announced that senior executives of the
Company and senior officials of the Union had met to discuss a
number of important issues.
The parties characterized the discussions as, "frank and
constructive."
They pledged to continue their discussions and reiterated their
desire to find a mutually acceptable approach that will allow
the Company to restructure itself in a manner that is fair to
employees, retirees and creditors.
The LTV Corporation is a manufacturing company with interests in
steel and metal fabrication. LTV's Integrated Steel segment is a
leading producer of high-quality, value-added flat rolled steel,
and a major supplier to the transportation, appliance,
electrical equipment and service center industries. LTV's Metal
Fabrication segment consists of LTV Copperweld, the largest
producer of tubular and bimetallic products in North America and
VP Buildings, a leading producer of pre-engineered metal
buildings for low-rise commercial applications.
MKTG SPECIALISTS: Inks Tentative Consolidation Pact with Acosta
---------------------------------------------------------------
Acosta Sales and Marketing Company and Marketing Specialists
Corporation (OTCBB:MKSP), two of the nation's largest sales and
marketing agencies serving the consumer packaged goods industry,
announced that they have reached a tentative agreement to
consolidate Marketing Specialists@ business into Acosta. Acosta
will assume no debt of Marketing Specialists under the
consolidation agreement.
"We're committed to giving our clients world class sales and
marketing services. As we carry out this consolidation, that
class of service will be the foundation on which we will build,"
said Gary Chartrand, Chairman & CEO of Acosta. "Our companies
have similar cultures. We are confident that we can blend the
strengths of both into a team that will be even stronger for the
benefit of our clients.
"Our industry has been through rapid consolidation over the last
few years. This agreement solidifies our position as the
industry leader. Our current Associates and our future
Associates from Marketing Specialists will benefit greatly from
the combined strength of the consolidated company," added
Chartrand.
Last Thursday, Marketing Specialists filed a voluntary petition
for protection under Chapter 11 of the U.S. Bankruptcy Code.
Since the bankruptcy filing, Marketing Specialists and Acosta
executives have been meeting to discuss an agreement that would
allow for the transition to Acosta of as much Marketing
Specialists business and as many Associates as possible. The
tentative agreement announced today has been approved by both
boards of directors but now must be approved by the bankruptcy
court in Texas, which is anticipated to occur in the very near
term. Creditors of Marketing Specialists must pursue recovery
from Marketing Specialists through the bankruptcy court.
"We wanted to move quickly to protect as many of our Associates
and all of the manufacturers we represent. We felt that Acosta
was the logical company for us to approach for that purpose,"
said Marketing Specialists President, Gerald Leonard.
Acosta and Marketing Specialists executives said the arrangement
would expedite the transition of many Marketing Specialists
Associates to Acosta, although the exact number cannot be known
immediately. They said the agreement also would allow for an
orderly transition of business, thereby minimizing disruption of
services to manufacturers, retailers and consumers.
"When it became necessary for us to file for Chapter 11 last
week, we told our Associates that we were working hard to allow
a future for them in this business. We're especially happy that,
as a result of this action, a significant number of Marketing
Specialists Associates will be able to continue their jobs as
part of the Acosta team," said Leonard.
"If approved by the bankruptcy court, this consolidation will be
good news to the manufacturers Marketing Specialists represents
because it will ensure them that the servicing of their accounts
will be quickly and smoothly transitioned to Acosta," said
Leonard. "Retailers and consumers will likewise benefit from
this orderly transition."
Both companies provide outsourced sales and marketing services
to manufacturers of consumer-packaged products. Acosta, which
has approximately 9,200 Associates at 66 locations, is
headquartered in Jacksonville, FL. Marketing Specialists, with
5,700 Associates at 65 locations is based in Dallas, TX.
With the tentative consolidation agreement as a basis, officials
of both companies are working through the specifics of how it
will affect Marketing Specialists' Associates, assets,
contracts, leases and related matters.
NETSOL INT'L: Sets Stockholders' Special Meeting On June 11
-----------------------------------------------------------
A special meeting of stockholders of NetSol International, Inc.,
a Nevada corporation, will be held beginning at 9:00 a.m. (local
time), at NetSol's offices at 24025 Park Sorrento, Calabasas,
California, on Monday, June 11, 2001, for the following purpose:
(1) Consider and act upon a proposal submitted by NetSol
Shareholders Group, LLC to amend the Company's bylaws to expand
the current eight member board of directors by increasing and
fixing the number of authorized directors at fifteen directors;
and if this proposal is successful, then
(2) Fill the newly created vacancies by electing the
nominees of the board of directors named in the Company's proxy
and consent solicitation statement or the nominees of NetSol
Shareholders Group, LLC named in its proxy and consent statement
dated May 17, 2001.
(3) If the first proposal is unsuccessful, then approve
Netsol's amended and restated articles of incorporation to (a)
remove cumulative voting in the election of directors, (b)
authorize the creation of shares of undesignated preferred
stock, (c) provide for a classified board of directors so each
director is elected for a three year term with one-third of the
board standing for election each year, (d) provide that the
holders of at least 66 2/3% of outstanding voting stock vote in
favor of any amendment to the bylaws and some amendments to the
articles of incorporation and (e) include provisions identical
to those in the Company's bylaws and described in the next
proposal.
(4) If the first proposal is unsuccessful, then approve the
amended and restated bylaws to: (a) provide that any action to
be taken by stockholders may be taken only at the annual or a
special meeting of stockholders, and not by written consent of
stockholders, (b) provide for an advance notice procedure for
the nomination, other than by the board of directors, of
candidates for election as directors as well as for other
proposals to be considered at the meetings of stockholders, (c)
provide that only the chief executive officer, president,
chairman of the board or board of directors may call a special
meeting of stockholders, (d) provide that the directors may only
be removed from office for cause, (e) provide that the
affirmative vote of holders of at least 66 2/3% of outstanding
voting stock be required to amend the bylaws and (f) provide for
limited liability for the directors, officers and other agents.
No other business may be transacted at the special meeting.
Stockholders of record at the close of business on May 11, 2001
are entitled to notice of and to vote at the special meeting.
Only stockholders and invited guests will be permitted to attend
the special meeting.
PHILIP SERVICES: Amends Covenant On Two Secured Debt Facilities
---------------------------------------------------------------
Philip Services Corporation (NASDAQ:PSCD/TSE: PSC) announced its
consolidated financial results for the quarter ended March 31,
2001. In addition, the Company announced that it has sought and
obtained covenant amendments under its two secured loan
facilities, including approval allowing the Company to redeem
the rights under its Rights Agreement.
"The Company's industrial outsourcing and by-products services
businesses posted strong performance in the first quarter, with
double-digit revenue growth and improved profitability compared
with the prior year," said Anthony Fernandes, President and CEO.
"This was the result of increased demand for the Company's
services in the refining, petrochemical and utilities sectors,
as well as continued momentum in our analytical and by-products
management businesses. While PSC posted a first quarter net loss
of $9.2 million, this included a negative impact of $9.5 million
as a result of three of our clients filing for bankruptcy
protection. We have taken additional measures to minimize our
credit exposure, while continuing to deliver high quality
service and products to our key clients."
Financial Highlights For The Quarter Ended March 31, 2001:
* Revenue for the first quarter of 2001 was $413.0 million
compared to revenue of $480.4 million in the same period last
year. Excluding the effect of the sale or closure of certain
businesses, which contributed revenue of $34.5 million in the
first quarter of 2000, revenue decreased by $32.9 million,
solely the result of a decline in the Company's metals business.
This significant decrease was due to a 21% decrease in the
volume of scrap managed by the Metals Services Group and a 32%
decrease in ferrous scrap prices, the result of very difficult
conditions in the steel market.
* The income from operations for the first quarter of 2001
was $2.9 million, not including special charges of $2.8 million
as a result of the Company's process re-engineering program.
This represented a decline of $8.9 million compared to the first
quarter of 2000, all of which occurred within PSC's Metals
Services Group. This decline was primarily due to three of the
Company's customers filing for bankruptcy protection, which
impacted income by $9.5 million in the first quarter 2001.
Income from operations for the first quarter of 2001 increased
in both the Industrial Outsourcing and By-Products Services
Group compared to the same period in the prior year.
The net loss from continuing operations for the first quarter of
2001 was $9.2 million, which included the loss as a result of
customer bankruptcy filings described above as well as special
charges of $2.8 million. This compared to a net loss from
continuing operations of $1.0 million for the same period in the
prior year.
* Selling, general and administrative costs (SG&A) for the
first quarter of 2001 were $34.3 million compared to $37 million
for the first quarter of 2000. This decline in SG&A costs was
primarily the result of PSC's continued efforts to establish a
highly competitive cost structure.
PHYCOR INC.: Sells Healthcare Management Unit To SHPS, Inc.
-----------------------------------------------------------
PhyCor, Inc. (OTCBB:PHYC) announced the sale of CareWise, Inc.,
its healthcare demand management subsidiary, to Louisville,
Kentucky-based SHPS, Inc., a leading healthcare management, HR
and benefits administration company.
According to Tom Dent, president and chief executive officer of
PhyCor, "We have completed the sale of all assets other than
those in our core businesses. We can now focus our management
expertise and financial resources on our IPA operations, PhySys
management services and related initiatives. With the sale of
CareWise, our bank debt and related bank obligations have been
completely repaid or otherwise satisfied."
PhyCor operates and manages Independent Practice Associations
(IPAs) in California through its PrimeCare and North American
Medical Management subsidiaries. It also manages IPAs in
Chicago, Illinois; Kansas City, Missouri; San Antonio, Texas;
and Nashville, Tennessee. PhyCor's PhySys Division provides
management services to physician networks.
PhyCor is in default on the payment of certain obligations,
including the interest on its Convertible Subordinated Notes and
is in discussion with a committee that represents the holders of
these notes. The failure to reach a satisfactory agreement with
these holders and other bondholders and creditors could have a
material adverse effect on the Company.
PICO MACOM: Disclosure Statement Hearing Set For June 20
--------------------------------------------------------
On June 20, 2001 at 10:00 AM, the Honorable Arthur M. Greenwald,
US Bankruptcy Judge for the Central District of California will
conduct a Hearing to consider whether the Disclosure Statement
filed by Pico Macom, Inc. contains "adequate information."
This is a reorganizing plan. The debtor seeks to accomplish
payment under the plan by continuing operations and paying
certain creditors the funds generated from its operations. In
March, 2001, to assist the debtor's liquidity needs, a creditor
of the debtor, Steren Electronics International, LLC agreed to
purchase a substantial amount of inventory from the debtor.
The debtor has entered into an Inventory Agreement whereby the
debtor is required to purchase and pay for the goods within 60
days after the goods are received by the debtor on consignment.
During the first three months after the court approves the plan,
the debtor shall not be required to accept any refinancing that
does not provide at least $1.7 million in additional working
capital. If the debtor's "net income" is a minimum of $300,000
for the first quarter, then the minimum refinancing amount that
the debtor is required to accept is $3 million, which sum
provides the debtor with additional working capital of $1.7
million. If the debtor's "net income" is less than $300,000 for
the first quarter, then the minimum refinancing amount that the
debtor is required to accept is $2 million, which amount
provides the debtor with additional working capital of $700,000.
General unsecured claims under the plan total $2,740,965.
Creditors holding allowed, unsecured, non-priority claims shall
not receive any payment or other value on account of such claims
under the plan.
Attorneys for the debtor are David W. Levene and Monica Y. Kim
of Levene, Neale, Bender, Rankin & Brill LLP.
PILLOWTEX, INC: Seeks Authority to Sell Certain Loom Equipment
--------------------------------------------------------------
Pillowtex, Inc. seeks an order authorizing the sale of certain
loom equipment. The loom equipment consists of 352 Sulzer
Weaving Machines. The Initial Bidder has agreed to pay an
aggregate purchase price of $1,872,700 for the Loom Equipment.
Any competing bid must be served and actually received by May
28, 2001. The bid must exceed $1,966,335, that is it must be
5% greater than the Purchase price and each successive bid must
increase the purchase price by increments of at least $93,635.
If one or more qualified competing bids are received, an auction
will be conducted for the loom equipment at 2:00 PM on June 4,
2001 at the offices of Morris, Nichols, Arsht & Tunnell, the
debtors' Delaware counsel.
RBX GROUP: Confirmation Hearing Scheduled for July 12
-----------------------------------------------------
The Honorable William F. Stone, Jr. entered an order on May 11,
2001 approving the adequacy of information in the Disclosure
Statement in support of a second amended joint plan of
reorganization of RBX Group, Inc. and its subsidiaries.
The Confirmation Hearing is set for July 12, 2001 at 10:00 AM.
RELIANCE INSURANCE: Pa. Court Grants Rehabilitation Petition
------------------------------------------------------------
Pennsylvania Insurance Commissioner M. Diane Koken announced
that the Commonwealth Court of Pennsylvania has just granted the
Insurance Department's request to place financially troubled
Reliance Insurance Company into rehabilitation, effective
immediately.
"I took the step of asking the Commonwealth Court to put
Reliance Insurance Company into rehabilitation in order to
protect the policyholders, as the company has been unable to
restore itself to sound financial condition," Commissioner Koken
said. "The Commonwealth Court granted our Petition for
Rehabilitation, and the company now is in rehabilitation.
"Rehabilitation will enable us to immediately protect and
preserve for policyholders all of Reliance's assets. This is the
department's No. 1 priority in the rehabilitation.
"To ensure the rehabilitation proceeds as effectively as
possible, I have retained a team of experienced consultants to
assist the department in this rehabilitation. They are on site
at Reliance at this very hour -- assuming control of the
company's operations, and already beginning our intensive review
of the company's finances.
"In the coming weeks and months, we will use that review to
develop the factual information we need to make a reasoned
determination of whether to proceed with rehabilitation, or to
move to liquidation."
A Pennsylvania domiciled company, Reliance Insurance Company is
licensed to write coverage in all 50 states, although it put in
place a process to stop writing virtually all new or renewal
business in June 2000. The states with the largest number of
policyholders include California, New York, Florida,
Pennsylvania, Illinois and Texas. Reliance Insurance Company's
insurance business consists of workers' compensation, commercial
auto, commercial liability and personal auto coverage. The
company's direct written premiums for 1999 were $1.5 billion.
The Order of Rehabilitation places Reliance Insurance Company
under the statutory control of the Pennsylvania Insurance
Department. This order grants to the Insurance Commissioner the
direct authority to preserve the assets of the Company and to
oversee the company's financial situation and current
operations, while continuing to pay policyholder claims.
The Insurance Department will perform an independent and
thorough evaluation of the company's finances. Based upon the
review, the Insurance Department then will determine the
viability of a plan of rehabilitation. Any plan will give
priority of payment to policyholder claims.
Policyholders and other interested parties will receive further
information about the rehabilitation in the future. In the
interim, questions from policyholders concerning claims or non-
claim matters should be referred to the appropriate claim
office, or representative, as was done in the usual course of
business.
Included in the Order of Rehabilitation are the following
companies that were previously merged into or otherwise acquired
by Reliance Insurance Company: Reliance Insurance Company of
Illinois; Reliance Direct Insurance Company; Reliance Surety
Company; United Pacific Insurance Company; Reliance National
Insurance Company; Reliance Universal Insurance Company Inc.;
Reliance National Indemnity Company; United Pacific Insurance
Company of New York; and Reliance Lloyds.
SAFETY-KLEEN: Wants To Sell Illinois Property To Burnside
---------------------------------------------------------
Safety-Kleen Systems, Inc., joined by the remaining debtors and
acting through Gregg M. Galardi of the Wilmington, Delaware firm
of Skadden, Arps, Slate, Meagher & Flom LLP, brought a Motion
seeking to sell Systems' interest in real property located in
Elgin, Illinois, to Burnside Construction Company, or the
successful bidder, free and clear of all liens, claims and
encumbrances. In addition, the Debtors asked that Judge Walsh
determine that the sale is free and clear of any stamp,
transfer, recording or similar tax, and authorizing the payment
of a broker's fee of 6% of the purchase price to Cushman
Wakefield of Illinois.
No Use for the Property
The Debtors told Judge Walsh that, as part of their plan to
restructure their operations, they have begun to identify and
divest themselves of underperforming or non-core assets. Toward
that end, the Debtors have determined that the Elgin property is
not essential to Systems' reorganization. The Elgin property
consists of certain real property located in the vicinity of
Route 20 and Shales Parkway, Cook County, Elgin, Illinois. More
specifically, the Elgin property is a 38.426 acre parcel
currently zoned M-1 limited manufacturing. This property is part
of a larger parcel formerly used by Systems as a distribution
and recovery facility. At present, however, neither Systems nor
the Debtors are using the property and it remains vacant.
The Sale Terms
The Debtors proposed that Systems convey its interest in the
Elgin property to the Purchaser, for which the Purchaser will
pay Systems the sum of $2,259,832. As conditions precedent, the
Purchaser must determine that the property is suitable for its
purposes, which must be made within 90 days, but which is in the
Purchaser's sole discretion. The Purchaser must obtain, within
120 days of the expiration of its Feasibility Period,
dissolution of a Consent Agreement with respect to the Elgin
property. The Seller must then execute and deliver all documents
necessary to transfer title.
The Debtors are soliciting higher and better bids for the Elgin
property. A qualifying higher offer must be a minimum of
$2,359,832 - $100,000 higher than the purchase price at present,
and must propose a form of sale agreement whose terms are equal
to or more satisfactory than that from the Purchaser. If the
Debtors receive a timely higher offer, they will conduct an
auction at the office of Skadden, Arps in Wilmington, Delaware.
Bids will be made in increments of $25,000 until such time as
the buyers have submitted their highest and final bids. If no
higher or better bids are received, the Debtors will report the
same to the Court and proceed with the sale to the Purchaser. If
the Debtors receive one or more higher and better bids, and
conduct an auction sale of the Elgin property, the Debtors will
notify the Court of the results of the auction and request
authorization to proceed with a sale to the successful bidder.
The Debtors reserve the right to determine, in their sole
discretion, after consultation with the Creditors' Committee,
which offer, if any, is the highest or best offer, and to reject
any offer at any time prior to entry of an order of the Court
approving an offer, including any offer which the Debtors deem
to be inadequate or insufficient, or not in conformity with the
requirements of the Bankruptcy Code, the Bankruptcy Rules, or
the terms of this sale, or otherwise contrary to the best
interests of these estates and their creditors.
The proceeds of the sale will be applied in accordance with the
terms of the credit agreement governing the Debtors DIP
facility. The Debtors will record and account for such proceeds
on Systems' books and records, on a non-consolidated basis, so
that the proceeds may be readily traced, if necessary.
This sale, the Debtors told Judge Walsh, is in their sound
business discretion. The property is not in use at the present,
but the Debtors remain liable for the carrying costs of the
property, such as taxes and insurance. Neither Systems nor the
Debtors are deriving any benefit from the property, and believe
that this sale will maximize its benefit for these estates and
their creditors. The Debtors further believe that an expeditious
sale is necessary to assure that the greatest possible price is
received for this property.
The Debtors believe that any delay will jeopardize Systems'
ability to realize that value, which the Debtors describe as
fair and reasonable. Prior to entering into this sale agreement,
the Debtors, together with Cushman and Wakefield of Illinois,
marketed the Elgin property through the use of direct mailings
and advertising on the property. The offer from the Purchaser is
the highest and best received to date and the Debtors believe it
is extremely unlikely that additional marketing would result in
significantly greater net proceeds to Systems' estate. In
addition, this sale is subject to competing bids, thus ensuring
that Systems will receive the highest or best value for the
property.
The proposed sale has been negotiated in good faith, the Debtors
assured Judge Walsh. There is no connection or affiliation
between the Purchaser and the Debtors, and the ability of third
parties to make higher or better bids ensures that the Purchaser
has not exercised any undue influence over Systems or the
Debtors.
The Debtors told Judge Walsh they do not believe that any party
holds an interest in the Elgin property. If and to the extent
that the Debtors identify any party which does hold such an
interest, The Debtors will obtain all necessary consents prior
to the sale hearing, if any.
Tax Relief
The Third Circuit Court of Appeals has held that sales which are
outside of, but which are in furtherance of, the effectuation of
a plan of reorganization may not be taxed under any law imposing
a stamp or similar tax. The Debtors are seeking approval of this
sale to, among other things, facilitate the formulation and
ultimate confirmation of a plan of reorganization that will
yield the highest possible return to the Debtors' creditors.
Therefore, the sale of the Elgin property is a necessary step
toward a reorganization plan, and accordingly should be exempt
from any stamp or similar tax.
The Broker's Fee
It is normal and customary in this type of transaction, the
Debtors assured Judge Walsh, for the selling party to pay a
brokerage fee or commission. The ability of the debtor to offer
such a fee allows a debtor to sell its property for the benefit
of the estate and its creditors. Here, C&W assisted the Debtors
in their marketing with respect to the Elgin property by
advertising the property and engaging in direct mailings with
respect to the property. The Debtors believe that payment of a
broker's fee of 6% of the purchase price, or $135,589.92 is
warranted under the circumstances, particularly in light of the
efforts undertaken by C&W to facilitate the sale of this
property. Accordingly, the Debtors asked that Judge Walsh permit
the payment of the broker's fee on the closing of the sale of
the Elgin property. (Safety-Kleen Bankruptcy News, Issue No. 16;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
SUNTERRA CORPORATION: Employs Ross Altman As General Counsel
------------------------------------------------------------
Sunterra Corporation announced that Ross Altman joined the
company as its General Counsel as of April 23, 2001.
Mr. Altman was the former Senior Vice President, General Counsel
and Secretary of Beloit Corporation, a global equipment
manufacturer and EPC contractor of pulp and paper plants.
Previously, Mr. Altman was a partner in the Chicago office of
the law firm of Rudnick & Wolfe (now Piper Marbury Rudnick &
Wolfe), where he chaired the firm's construction law practice
group.
"We are extremely pleased to have Ross join the Sunterra team.
Ross's background is a great asset as we move forward", said
Greg Rayburn, CEO of Sunterra.
Sunterra is one of the world's largest vacation ownership
companies with owner families and resorts in North America,
Europe, the Pacific, the Caribbean and Japan.
SUNTERRA CORP: Names Andy Gennuso as New Chief Operating Officer
----------------------------------------------------------------
Sunterra Corporation has announced that Andy Gennuso joined the
company as its Chief Operating Officer beginning May 21, 2001.
"We are extremely pleased to announce the addition of Andy to
the Sunterra team. Andy is a well-respected and experienced
executive in the vacation ownership industry and he will be an
integral part of our reorganization process," said Greg Rayburn,
CEO of Sunterra.
Sunterra is one of the world's largest vacation ownership
companies with owner families and resorts in North America,
Europe, the Pacific, the Caribbean and Japan.
UNICAPITAL EQUIPMENT: Fitch Junks Certain Lease-Backed Notes
------------------------------------------------------------
The following classes of UniCapital Equipment Lease
Securitizations are downgraded by Fitch.
* UCP 99-1 LLC I and UCP 99-1 LLC II, series 1999-1
-- The class B notes are downgraded to 'CCC' from 'BBB';
-- The class C notes are downgraded to 'C' from 'BB';
-- The class B and C notes are also placed on Rating Watch
Negative.
* UniCapital 2000-1 LLC I & UniCapital 2000-1 LLC II, series
2000-1
-- The class B notes are downgraded to 'CCC' from 'BBB-';
-- The class C notes are downgraded to 'D' from 'BB';
-- The class B and C notes are also placed on Rating Watch
Negative.
These rating actions are the result of adverse collateral
performance and deterioration of asset quality well outside of
Fitch's original base case expectations. Losses from defaulted
leases have significantly reduced the remaining credit
enhancement available for each class of securities.
Delinquencies have also been significantly higher than
historical levels. The higher than expected defaults and
delinquencies are attributable, in part, to the bankruptcy of
Unicapital and the resulting transition of servicing to
Portfolio Financial Servicing Company. UniCapital Operations
Group, a subsidiary of UniCapital Corporation, was the original
servicer of both transactions.
UniCapital Corporation filed petitions for reorganization under
Chapter 11 of the United States Bankruptcy Code in December
2000. Portfolio Financial Servicing Company, which previously
acquired substantially all of the assets of UniCapital
Operations Group, is currently servicing both transactions.
Fitch will continue to closely monitor these transactions and
may take additional rating action in the event of further
deterioration.
UNITED AIRLINES: Moody's Lowers Senior Unsecured Rating To Ba1
--------------------------------------------------------------
With approximately $12.9 billion of debt securities affected,
Moody's Investors Service downgraded the senior unsecured rating
of United Airlines, Inc. (United) to Ba1 from Baa3 and left the
rating under review for possible further downgrade. All other
ratings of United and its parent, UAL Corporation, were also
downgraded as follows:
United Air Lines, Inc.:
* Issuer rating and senior unsecured rating to Ba1 from
Baa3;
* Bank Credit Facility to Ba1 from Baa3;
* Equipment Trust Certificates to Baa2 from Baa1;
* Enhanced Equipment Trust Certificates:
-- Series 2000-1, Class A to Aa3 from Aa2, and Class B to
A2 from A1
-- Series 2000-2, Class A to Aa3 from Aa2, Class B to A2
from A1 and Class C to A3 from A2
-- Shelf registration for senior secured debt, to (P)
Baa2 from (P)Baa1; and senior subordinated debt
confirmed at (P)Ba2;
* Jets Equipment Trusts
-- Series 1994-A, Class A to A3 from A2, Class B to Baa2
from Baa1 and the junior class to Baa3 from Baa2
-- Series 1995-A, Class A to A2 from A1, Class B to Baa1
from A3, Class C to Baa2 from Baa1 and the junior
class to Baa3 from Baa2
-- Series 1995-B, Class A to A2 from A1, Class B to Baa1
from A3, Class C to Baa2 from Baa1 and the junior
class to Baa3 from Baa1
* IRB's to Ba1
UAL Corporation:
* Shelf registration for senior unsecured debt to (P) Ba2
from (P)Ba1;
* subordinated debt to B1 from Ba3; and
* preferred stock, to "b1" from "ba3"
UAL Corporation Capital Trust I:
* preferred stock, to " b1" from "ba3"
The ratings remain on review for possible further downgrade.
The downgraded ratings reflect Moody's expectation of weak
operating cash flow in the near term, the negative impact that
the continued weak operating performance is likely to have on
debt protection measurements, and the longer term impact of a
high cost structure resulting from recent wage agreements.
Acknowledged in the ratings is the company's strong route
structure, brand name and global alliance, and the improvement
in the system performance measures since the operational
difficulties experienced in the third quarter of 2000, Moody's
related.
Reportedly, the rating agency's review is based on a combination
of concerns over continued weak operating performance and the
company's intention to acquire US Airways in a cash transaction
valued at $11.6 billion including assumed debt and operating
lease obligations including a $4.3 billion cash component.
Moody's will review the financial and organizational aspects of
the merger, if approved, for its impact, almost certainly to be
negative in the intermediate term, and adjust the ratings of the
company's debt accordingly.
UAL Corporation, is located in Elk Grove Village, Illinois. It
is the parent of United Airlines, Inc. the second largest air
carrier in the world.
UNITY WIRELESS: May Liquidate Assets If Unable To Raise Funds
-------------------------------------------------------------
The Company has changed its name to Unity Wireless Corporation
from Sonic Systems Corporation. It began using the new name as a
"dba" in March, 2000, and formally changed its name by filing
Articles of Amendment with the State of Delaware Secretary of
State effective July 20, 2000.
Operations of Unity Wireless to date have been primarily
financed by long-term debt and equity transactions. The
Company's future operations are dependent upon the
identification and successful completion of additional long-term
or permanent equity financing, the continued support of
creditors and shareholders, and, ultimately, the achievement of
profitable operations. There can be no assurances that the
Company will be successful. If it is not, the Company will be
required to reduce operations or liquidate assets. The Company
says it will continue to evaluate its projected expenditures
relative to its available cash and to seek additional means of
financing in order to satisfy its working capital and other cash
requirements.
The auditor's report on the December 31, 2000 consolidated
financial statements for the Company includes an explanatory
paragraph that states that as the Company has suffered recurring
losses from operations, substantial doubt exists about its
ability to continue as a going concern.
US AIRWAYS: Moody's Cuts Ratings To Junk & Low-B Levels
-------------------------------------------------------
Moody's Investors Service lowered the following ratings of US
Airways Group, Inc.:
(i) US Airways, Inc.: senior implied rating to B3 from B2,
pass through certificates to B1from Ba3 enhanced
equipment trust certificates;
* Series 1996-A to A3 from A2, series 1996-B to Baa2
from Baa1, and series 1996-C to Ba3 from Ba2;
* Series 1998-1, Class A to Baa1 from A3, Class B to
Ba2 from Ba1, and Class C to Ba3 from Ba2
* Series 1999-1, Class A to Baa1 from A3, Class B to
Baa3 from Baa2 and Class C to Ba3 from Ba2
* Series 2001-1, Class C to Ba3 from Ba2
* Senior Secured Bank Credit Facility to B2 from B1
* Industrial Revenue Bonds to Caa2 from B3
* Shelf registration for senior secured debt to (P)B1
from (P)Ba3.
(ii) Piedmont Aviation: Pass through certificates to B1 from
Ba3, IRBs to Caa2 from B3.
(iii) US Airways Group, Inc.:
* Preferred stock is confirmed at "ca";
* shelf registration for senior unsecured debt to (P)Ca
from (P)Caa2,
* subordinated debt to (P)Ca from (P)Caa3.
Moody's said that the ratings remain under review with uncertain
direction while approximately $5.2 billion of debt securities
are affected.
According to the rating agency, downgrades consider the
continuing erosion of operating performance at US Airways, the
significant uncertainties surrounding the completion of the
proposed acquisition of US Airways Group by UAL Corp., and the
deterioration of US Airways credit quality.
Moody's related that the ratings could still go up if the long
pending acquisition by UAL Corp is ultimately completed. But
additional downgrades may also occur if the merger plan is not
pushed through and if the company's performance continues to
deteriorate.
US Airways Group, Inc., based in Arlington, Virginia, is a major
US air carrier.
VENCOR INC.: Rose Maxwell Asks For Relief From Automatic Stay
-------------------------------------------------------------
Rose Maxwell, as Surviving Daughter of Thusnelda J. Fisher,
Deceased, and as Personal Representative of the Estate of
Thusnelda J. Fisher, moved the Court, pursuant to 11 U.S.C.
section 362(d)(1) and Bankruptcy Rule 4001, for relief from the
automatic stay and for relief from any injunctions pursuant to
the Plan in order that Movant may proceed with litigation
against Vencor, Inc. currently pending in the Circuit Court in
and for Brevard County, Florida.
Ms. Maxwell told the Court that it was not until July 13, 2000,
that counsel for Debtor forwarded correspondence to her counsel
advising of Debtors' bankruptcy and the imposition of the
automatic stay.
The State Court Action
Ms. Maxwell related that her late mother, Thusnelda J. Fisher
was a resident at Vencor Nursing Centers East, LLC, d/b/a
Titusville Rehabilitation and Nursing Center from March 10, l998
through July 22, 1998. On or about July 22, 1998, Ms. Fisher was
unable to be aroused and was transferred to Parrish Medical
Center in Titusville, Florida. Upon admission to Parrish Medical
Center, Ms. Fisher was observed to have significant dehydration
and malnutrition, ecchymotic bruises throughout her body, and
numerous contusions in various stages of healing on her
extremities, Ms. Maxwell went on. These injuries, Ms. Maxwell
said, occurred over an extended period of time during her
residency at Titusville Rehabilitation and Nursing Center. As a
result of these injuries, Ms. Fisher developed renal failure,
and died, Ms. Maxwell alleged.
As a result, Rose Maxwell initiated suit on June 23, 2000
against Debtor in the Circuit Court in and for Brevard County,
Florida, captioned as Rose Maxwell, as Surviving Daughter of
Thusnelda J. Fisher, Deceased, and as Personal Representative of
the Estate of Thusnelda J. Fisher v. Vencor Nursing Centers
East, LLC d/b/a Titusville Rehabilitation and Nursing Center;
James A. Owens, Administrator; and Sheri Lewis, Administrator,
Case No. 05-2000- CA-009979.
The cause of action is based upon Florida law; all parties will
either consent to jurisdiction and/or reside or do business in
Florida; and most of the material witnesses work and reside in
Florida, Rose Maxwell tells the Court. Although not known for
sure, Ms. Maxwell believes it is almost certain that no
witnesses are located in Delaware. Thus, Ms. Maxwell represented
that all parties would incur the added expense if her claims
were determined in Delaware.
In support of her request for relief from the Stay and/or
Injunction, Ms. Maxwell represented that:
-- Administration of the estate will not be delayed by
granting this Motion.
-- Any inconvenience to the Debtors by the continuation of
the pending State Court Action is outweighed considerably by the
hardship to Movant resulting from the postponement of the State
Court Action.
-- The prosecution of Movant's claims will not deprive the
Debtors of assets nor any other right but will facilitate
Debtors' reorganization by reducing Movant's unliquidated claims
to finality.
-- It is probable that Movant will prevail on the merits at
the time of trial in the State Court Action.
-- Upon information and belief, the damages sought by
Movant would be and are covered under Debtors' liability
insurance insuring Debtors at the time of the claim.
Accordingly, Movant submits that she should be granted relief
from the Stay in order for her to pursue her claims for damages
in the State Court Action, recover such judgment as the State
Court may award and apply the proceeds of the insurance to any
such judgment and to the costs of prosecuting Movant's case
should she prevail. (Vencor Bankruptcy News, Issue No. 30;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
VIDEO CITY: Showtime USA Objects to Disclosure Statement
--------------------------------------------------------
Creditor, Showtime USA, objects to the proposed Disclosure
Statement of Video City, Inc. claiming that it fails to provide
sufficient detail and disclosure in the manner that would afford
creditors and interested parties the opportunity to analyze and
evaluate the circumstances pertaining to the bankruptcy filing.
The creditor claims that the Disclosure Statement should reveal
the relationship between the debtor, Videoland, Inc., Showtime
and Creditor Justin Hilburn. The creditor states that the debtor
has made no payments to Hilburn, fails to acknowledge Hilburn as
a secured creditor and, indeed, has primed Hilburn's first
priority position to all assets in connection with the post-
petition arrangement with Fleet Mortgage. The creditor believes
that the debtor has substantially impaired Hilburn's collateral
by replacing it with inventory, fixtures and concessions of a
different type and of a lesser quality than that which
collateralized the initial obligation. In short, debtor is
obligated to remain current post-petition with respect to the
obligations to Hilburn and Showtime pursuant to "cross default"
provisions evidenced in the transactions with each.
The creditor states that the Disclosure Statement must detail
the relations with Hilburn in greater detail and, in light of
the "cross default" provisions, should provide that it is
debtor's intention to reject the lease arrangement with Showtime
in light of the substantial default in its obligation to
Hilburn. The Disclosure Statement should also indicate the
debtor's intent to surrender the collateral securing the
obligation to Hilburn. " In short, the Disclosure Statement must
be more complete in terms of the cash collateral/stay issues
pertaining to the above parties."
W.R. GRACE: Seeks Nod To Retain Pitney Hardin As Special Counsel
----------------------------------------------------------------
W. R. Grace & Co., through David B. Siegel, Senior Vice
President and General Counsel, asked that Judge Farnan approve
their employment of the firm of Pitney, Hardin, Kipp & Szuch LLP
as special counsel for the Debtors nunc pro tunc to the Petition
Date to continue to represent them in certain matters in which
PHKS has represented the Debtors over an extended period of time
and with which PHKS is intimately familiar.
The Debtors currently seek to retain PHKS, subject to the
oversight and orders of this Court, in:
(a) In re Intercat, Inc. This matter involves a Chapter 11
filing by Intercat, Inc. in the United States Bankruptcy Court
for the Southern District of Georgia, Savannah Division. W. R.
Grace & Co.-Conn. Holds a judgment against Intercat in the
amount of approximately $23,000,000. Grace is Intercat's largest
unsecured creditor and is one of three members of the creditors'
committee in the case. Grace, by and through PHKS, has been
actively involved in Intercat's bankruptcy case since the
petition date, which was October 6, 1999. For example, Grace
actively participated in a lengthy hearing early in the case to
appoint a Chapter 11 trustee, which was granted. However, the
Bankruptcy Court left Intercat in "partial possession" of its
business affairs. Accordingly, Grace has been involved with both
the trustee and the debtor-in-possession. Currently, PHKS, on
Grace's behalf, is reviewing Intercat's informal proposal for a
plan of reorganization and the trustee's anticipated plan of
orderly liquidation including an asset sale. In addition, PHKS
has been appointed as special counsel to the trustee to
prosecute an avoidance action which is pending. Intercat's
estate is responsible for the payment of PHKS's legal fees and
out-of-pocket costs in connection with the adversary proceeding;
however, to the extent that any fees or costs are disallowed by
the Court, Grace has agreed to pay the fees and costs.
(b) Maryland Cas. V. W. R. Grace & Co. (S.D.N.Y.). In June
1988, Maryland Casualty Company, one of Grace's primary
Comprehensive General Liability carriers, filed a complaint in
the federal District Court for the Southern District of New York
seeking a declaratory judgment against Grace that it did not owe
Grace coverage for environmental claims arising from five sites.
Grace answered that complaint and added claims in connection
with fourteen additional sites, and cross-claimed against all of
its CGL primary and first-level excess carriers that issued
policies to Grace from 1962 to June 30, 1984. Each carrier
answered Grace's cross-claim and added more sites/claims to the
litigation, totaling approximately 220.
In June 1992 the court held that New York law will apply to all
contract interpretation issues. Thereafter, Grace and the
carriers filed motions and briefs seeking black letter law
rulings on, among other things: whether New York law permitted
coverage for "gradual pollution" claims, the carriers' duty to
defend; whether certain notices by governmental agencies
constitute "claims" triggering the carries' duty to defend; and
the application of the "sudden and accidental" pollution
exclusion clause in certain policies. In April 1994 the court
granted the insurers' motion, finding that, under Section 46 of
the New York Insurance Law (repealed in 1981), Grace's "gradual
pollution" claims are not covered under the policies sold by
Continental Casualty Company, Grace's primary insurer from 1973
through 1984; that under the CAN policies at issue, CAN is not
obligated to provide a defense by application of deductibles and
retrospective premium arrangements; and, on a case- by-case
basis, that certain governmental notices do not rise to the
level of "claims" triggering coverage.
Following settlements with carriers, except CAN, Grace entered
into a Stipulation of Voluntary Dismissal With Prejudice with
CAN to dismiss the only active claims in the litigation, the
approximately eight claims arising from "sudden and accidental"
discharges. Grace sought this voluntary dismissal to permit an
appeal of the Court's prior rulings that resolved claims against
Grace arising from "gradual pollution" and the Court's rulings
regarding choice of law and interpretation of the 1990
settlement agreement between Grace and CAN. PHKS, on Grace's
behalf, is filing the appeal.
(c) Gloucester New Communities Company, Inc. v. Del Monte
Corporation et al, United States District Court for the District
of New Jersey. In 1998 Gloucester New Communities Company, Inc.,
a wholly-owned subsidiary of Grace and one of the Debtors in
these Chapter 11 cases, sued the Del Monte Corporation, two
southern New Jersey municipalities, and a corporation hired by
them to operate a former sanitary landfill during the late 1950s
through 1975 that was located on real property now owned by GNCC
in Woolwich Township, New Jersey. GNCC seeks to recover
environmental investigation and response costs of approximately
$2.5 million incurred in performing the proper closure of the
landfill. Each of the defendants has asserted counterclaims
against GNCC for contribution to the response costs. Defendants
filed several motions for summary judgment and dismissal of the
complaint in the spring of 1999. GNCC opposed and the Court
denied the defendants' summary motions in December 1999.
Thereafter, the case proceeded to substantial fact discovery and
depositions in 2000. Significant efforts were expended during
discovery to establish the defendants' liability for the
landfill. Fact discovery concluded in late January 2001.
Settlement discussions were held between the parties in early
2001 at a court conference, but no settlement was reached at
that time. In march 2001 GNCC filed a motion for leave to amend
its complaint to include common law damages to real property
based, in part, on recent NJDEP requirements for a buffer zone
to address methane gas migration from the landfill. A hearing
and argument were scheduled on April 24, 2001, for this motion.
The case is currently in expert discovery. GNCC has retained
several experts in the case. GNCC served its expert reports on
the defendants in mid-February 2001. The defendants are
scheduled to serve their expert reports on GNCC by April 30,
2001. Expert depositions are scheduled for May 2001. The case is
scheduled for another settlement conference in early June 2001.
No trial date has been set by the Court.
Since its inception, this matter has been handled by PHKS on
behalf of GNCC on a contingency basis of 30% of the amount
recovered from the defendants, not to exceed $240,000, exclusive
of engagement costs. PHKS proposed that this prepetition
contingency fee arrangement be approved by this Court on a
postpetition basis.
PHKS will not serve as general bankruptcy and reorganization
counsel to the Debtors, and while certain aspects of the
representations will necessarily involve both PHKS and the
Debtors' bankruptcy and reorganization counsel, the Debtors
believe that the services PHKS will provide will be
complementary rather than duplicative of the services to be
performed by the bankruptcy and reorganization counsel. The
Debtors assured Judge Farnan that they are very mindful of the
need to avoid duplication of services, and appropriate
procedures will be implemented to ensure that there is minimal
duplication of effort as a result of PHKS's role as special
counsel.
Because the Debtors owe PHKS $47,556.93 for professional
services arising from PHKS's representation of the Debtors in
the subject matters and other, unrelated matters, PHKS does not
appear to be a "disinterested" person, as that term is defined
in and construed under the Bankruptcy Code. The Debtors submit
that PHKS's retention is still allowable with the Court's
discretion as such representation would be in the best interest
of the estate. Anthony J. Marchetta averred that PHKS does not
represent or hold any interest adverse to the Debtors or to the
estates with respect to the specific matters in connection with
which retention is sought.
However, in the interests of full disclosure, Mr. Marchetta
advised that in matters unrelated to this case, PHKS has in the
past represented, may currently represent, and may in the future
represent certain of the Debtors and certain of the Debtors' and
their affiliates' creditors, including unsecured creditors,
secured creditors, and customers, including W. R. Grace & Co.-
Conn, Gloucester New Communities, Inc., the Bank of New York,
Chase Manhattan Bank, and First Union National Bank.
In accordance with the Bankruptcy Code the Debtors propose to
compensate PHKS on an hourly basis at its customary hourly rates
for services rendered, plus reimbursement of actual, necessary
expenses incurred by PHKS, except as to the GNCC matter, in
which PHKS will be paid on a contingency basis per the
prepetition agreement of the parties. The primary attorneys of
PHKS who will be handling the above matters, and their current
standard hourly rates, are:
Attorney Hourly Rate
-------- -----------
Anthony J. Marchetta $395
Scott A. Zuber $265
Michael E. Waller $265
Kathy Helmer $250
Brian E. Moffit $230
Alashia L. Chan $220
In addition, Mr. Marchetta advised that PHKS's customary hourly
rates are $75 to $150 for paralegals, $155 to $250 for
associates, and $250 to $450 for partners, subject to periodic
adjustments.
These hourly rates are subject to periodic adjustments to
reflect economic and other conditions. Other attorneys or
paralegals may from time to time serve the Debtors in the
matters for which PHKS's retention is sought. (W.R. Grace
Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WAREFORCE INC.: Obtains Extension of $30 Million Credit Term
------------------------------------------------------------
Wareforce.com Inc. announced that its wholly owned subsidiary,
Wareforce Inc., has received an extension of its $30 million
revolving loan facility from Congress Financial Corp. through
June 27, 2001.
This period will enable the company to implement a business plan
that focuses Wareforce on its core lines of business and moves
forward with the disposition of certain non-strategic parts of
the business. Additionally, this time enables Wareforce to move
forward with the negotiations previously announced with certain
business partners, with the objective of completing these
negotiations by June 27, 2001.
"We are gratified to receive this credit facility extension to
support our plan for refocusing Wareforce and returning to
profitability," commented Jim Illson, Wareforce president. "We
believe the activities we are undertaking will provide us with a
leaner, more cost-efficient organization, focused on existing
business segments which are already profitable and necessary to
compete in the current economy."
In a separate development, Wareforce announced that effective
May 24, 2001, the company's common stock was delisted from
trading on the National Association of Securities Dealers (NASD)
over the counter electronic bulletin board system for failure to
meet the public reporting requirements of NASD Rule 6530. The
stock is an NSCC Eligible Security (National Securities Clearing
Corp.), commonly known as the "Pink Sheets."
About Wareforce
Founded in 1989, Wareforce is a comprehensive, provider of
information technology (IT) solutions which include e-business
solutions, IT systems, a wide range of technical support
services, technical staffing, and wireless applications to
Fortune 1000 and mid-sized corporations, educational
institutions, and state and county organizations.
The company's B2B services feature system integration and e-
procurement solutions. Technical support services include
network design and management, maintenance and response
services, infrastructure development (cabling) and enterprise
systems technologies and support through certified partnerships
with such manufacturers as Compaq, Cisco, Hewlett-Packard, IBM
and Microsoft.
In addition, Wareforce provides product fulfillment and work
flow management via the company's proprietary OpsTRACK(R)
technology that streamlines supply chain management and permits
Wareforce customers immediate access to online inventories of
more than 140,000 IT products from 900 manufacturers.
Wareforce is based in El Segundo, in the greater Los Angeles
area, and has operations in 16 states with regional offices in
California; Minneapolis; Phoenix; Philadelphia; Ft. Lauderdale,
Fla.; and St. Louis, Mo., and annualized revenues totaling
approximately $180 million.
Additional information is available on the Web at
http//www.wareforce.com
WASHINGTON GROUP: Seeks Court Nod For Employee Retention Plan
-------------------------------------------------------------
Washington Group International Inc. is seeking bankruptcy court
approval to institute an employee retention and severance
program that the company considers vital to its existence,
according to Dow Jones. According to a motion filed with the
U.S. Bankruptcy Court in Reno, Nev., on Thursday, the cost of
the employee retention program won't exceed $28.9 million and
the cost of the severance program won't exceed $25.5 million. A
hearing is scheduled for June 13.
Washington Group said a denial of the employee retention and
severance program "may lead to resignations among key employees
and reduce employee morale" as well as disrupt its ability to
emerge from chapter 11 bankruptcy. Washington Group filed for
bankruptcy on May 14 and listed assets of $3.7 billion and
liabilities of $3.3 billion. (ABI World, May 29, 2001)
WHEELING-PITTSBURGH: Court Okays $33 Million Cash Infusion
----------------------------------------------------------
Wheeling-Pittsburgh Steel Corporation, Wheeling-Pittsburgh
Corporation and WHX Corporation (NYSE: WHX) announced that the
companies received bankruptcy court approval Friday of a
settlement agreement that will provide an infusion of
approximately $33 million of cash to Wheeling-Pittsburgh Steel
Corporation.
The agreement provides Wheeling-Pittsburgh Steel Corporation
with an immediate infusion of $17 million for the settlement of
various inter-company accounts between WHX and Wheeling-
Pittsburgh Corporation, plus an additional $3 million relating
to the sale of Wheeling-Pittsburgh's Corporation's Windsor Coal
properties to American Electric Power.
WHX also has agreed, subject to higher and better offers and to
the satisfaction of certain conditions, to purchase certain
assets of Pittsburgh-Canfield Corporation, a subsidiary of
Wheeling-Pittsburgh Corporation, for $15 million. Upon the
completion of this sale in late June, approximately $13 million
of the sale proceeds will be available to Wheeling-Pittsburgh
Steel Corporation, with about $2 million going to Citibank N.A.
as a partial payment of the company's debtor-in-possession (DIP)
financing. Wheeling-Pittsburgh Steel Corporation is a subsidiary
of Wheeling-Pittsburgh Corporation.
In addition, the settlement provides for certain modifications
to the terms of Wheeling-Pittsburgh's existing DIP financing
agreement and includes an agreement by WHX not to charge
Wheeling-Pittsburgh for any pension funding contributions or
pension expenses through the earlier of December 31, 2002, or
the date of consummation of Wheeling-Pittsburgh's plan of
reorganization.
"This settlement is welcome news for Wheeling-Pittsburgh and its
employees, customers and suppliers," said James G. Bradley,
President. "The settlement agreement will provide substantial
funding benefits going forward and allows us to sustain our
operations until our reorganization is completed."
Bradley notes that Wheeling-Pittsburgh Steel and the United
Steelworkers of America have made substantial progress in their
joint efforts to reduce the company's costs. "The company
expects that these cost containment initiatives, coupled with a
seasonally improving market for Wheeling Corrugating Company's
products, will contribute to its recovery," Bradley said.
Pittsburgh-Canfield Corporation is located in Canfield, OH, and
produces electrogalvanized steel used in appliance and
construction markets. Wheeling-Pittsburgh Steel is the ninth
largest domestic steel producer. It filed for Chapter 11
bankruptcy protection on November 16, 2000.
WINSTAR: Seeks Court Approval Of Sale Contract With Sayers Group
----------------------------------------------------------------
Winstar Wireless, Inc., asked Judge Farnan to approve an Asset
Purchase Agreement dated April 12, 2001, between Winstar
Wireless and Sayers Group LLC, to authorize the sale of
substantially all of the assets used in or related to Winstar's
Wireless Professional Services division free and clear of any
liens, claims or encumbrances, and authorize Winstar to assume
and assign certain executory contracts and unexpired leases.
Prior to the commencement of these cases, the Debtors advised
Judge Farnan that they were engaged in an effort to sell certain
non-core assets in order to increase their liquidity and to
focus restructuring efforts around the Debtors' core business of
providing broadband services. In that connection, the Debtors
identified the division and assets being sold here as non-core
and began efforts to market it to carrier-based organizations
with operations similar to those of Winstar, selected investment
banks, and other competing professional firms with service lines
similar to those of Winstar. During the initial stages, these
assets were marketed through telephone calls and written
solicitation materials. Because there is a critical need for a
quick sale, a presentation booklet was created that profiled the
business without disclosing the actual name of the organization
in order to generate interest among potential purchasers. The
Debtors conducted initial discussions with prospective
purchasers by telephone. At the outset, the biggest obstacle the
Debtors faced was convincing prospective purchasers to commence
the due diligence process promptly, due to the perception that
the business might immediately lay off a significant number of
employees. Valuation of the business also presented special
problems. Typically, the value of any business is measured by
its signed contracts, accounts receivable and fixed assets,
along with the intangible assets of the employees in the
organization that possess the skills and certifications to
actually sell and deliver on the signed contracts. Usually a
premium or discount is then applied to reflect the overall
condition of the business. In this case, the business would be
assessed as a high-risk investment because of the deterioration
of the Debtors' businesses over the past four months, and the
pending Chapter 11 proceedings, and the Debtors applied an
appropriate discount to the valuation of the business.
Many factors weigh in favor of an expeditious closing with
Sayers. At the time the Debtors signed the letter of intent,
they were unable to obtain any hardware for resale to their
client base, had just cut their work force from 176 to 123
employees, and the business was earmarked to be wound up over a
period of months. Under these circumstances, there was great
risk of the loss of talented personnel, which would jeopardize
the Debtors' ability to complete backlogged work and expose the
Debtors to liability from clients. To mitigate these risks,
Sayers made a non-refundable deposit in the amount of $100,000
upon the signing of the letter of intent, which was used by the
Debtor to partially defray payroll costs.
In sum, the Debtors have concluded that billable, project-based
consultants are not part of their core business or long-term
strategy, and that the sale of the business will permit the
Debtors to obtain value for a business that otherwise would be
wound up in a very short time. Unlike the Debtors, Sayers is
prepared and able to provide a cash infusion that will be
required to maintain the business as an on- going entity. The
sale thus represents the best means of realizing value of this
asset for the Debtors' estates, while at the same time
preserving 120 jobs.
Further expansion of the marketing, or contacting additional
buyers, would not enhance the value the Debtors will receive
from this sale. Time is clearly of the essence for the Debtor to
derive any value from these assets. A professional service
organization has a very limited shelf life and any further delay
in closing the transaction will dramatically decrease the value
of the business, as account executives and consultants will
likely leave, depriving the business of its valuable human
capital. In addition, because the business is not currently
funded with working capital, with the exception of payroll, the
organization cannot buy products for resale and has been shut
off from its distributors. It cannot ship inventory to client
sites, as its contracts with shipping vendors has been
terminated. The only viable option for realizing value from the
business is an immediate sale to Sayers.
The salient terms of the purchase agreement are:
(a) Seller: Winstar Wireless, Inc.
(b) Buyer: Sayers Group LLC
(c) Assets to be sold: All right, title and interest of the
Seller in and to the properties, assets and rights of every
nature, kind and description, tangible and intangible, including
goodwill, whether real, personal or mixed, whether accrued
contingent or otherwise, and whether now existing or hereinafter
acquired, as the same may exist on the closing date that are
used in or relate to the business.
(d) Purchase Price: Includes the Initial Purchase Price,
plus the Receivable Payments plus the Excess Service Revenues
Payments, plus the Earn out Payments, if any.
(i) The Initial Purchase Price of $1,500,000, including
minimum floor payments of $1,000,000 for Receivables Payments
and $300,000 for Excess Service Revenue payments, and $200,000
for fixed assets.
(ii) Receivables Payments. Beginning in May 2001, and
continuing on the 15th day of each month thereafter until May
15, 2002, Sayers will pay Winstar an amount equal to the actual
cash collections received by Sayers for the immediately
preceding month then ended from the payment of the Purchased
Receivables, but only to the extent that the aggregate cash
collections from all Purchased Receivables exceed the $1,000,000
minimum floor payment.
(iii) Excessive Service Revenue Payments. Beginning in
May 2001, and continuing until May 2003, Sayers will pay Winstar
an amount equal to 15% of the Service Revenues of the
immediately preceding month, but only to the extent that the
Service Revenues to date exceed $2,000,000, the amount of
Service Revenues which would result in the $300,000 minimum
floor payment made by Sayers under the payment of the Initial
Purchase Price.
(iv) Earn out Payments. For each year during the earn
out period, the Purchaser will pay to the Seller as an
additional purchase price a payment in the amount of 10% of the
pre-tax operating profits. In the event that Winstar receives
any payment with respect to GSA, Winstar will immediately notify
Sayers in writing of receipt of the payment and remit the
payment to Sayers. Winstar agrees that any payment so received
will be segregated and in trust for the benefit of Sayers until
paid to Sayers.
(e) Assumed Liabilities. Sayers will assume and agree to
pay when due only:
(i) Those liabilities of Winstar to employees of the
business hired by Sayers for accrued commissions and bonuses and
time and expense liabilities, subject to Winstar's policies with
respect to such commission, bonuses and expenses which shall in
no event exceed $400,000;
(ii) Any and all liabilities, obligations and
commitments arising out of the customer contracts, other than
the payment of accounts payable with respect to these contracts,
including payment of monies to subcontractors, and breaches by
Winstar under these contracts; and
(iii) Any and all liabilities related to the performance
of the pre-paid service contracts, other than the payment of
accounts payable with respect to these contracts, including
payment of monies to subcontractors, and breaches by Winstar
under these contracts.
(f) Indemnification. Winstar will indemnify Sayers, its
officers, directors, employees, agents, advisors,
representatives and affiliates for losses resulting from or
arising out of the inaccuracy of any representation or warranty
any failure of Winstar to perform any covenant or agreement
under the Asset Purchase Agreement, any taxes of Winstar or the
failure to obtain tax releases, certain benefit liabilities with
respect to employees arising on or before the closing date,
environmental liabilities and costs, and claims with respect to
services rendered by Winstar. Winstar shall not be obligated to
indemnify Sayers until losses exceed $50,000, in which case
Winstar will be required to indemnify Sayers from the first
dollar of such losses.
(g) Nonsolicitation. Winstar and its affiliates and their
agents and representatives shall not directly or indirectly
solicit or engage in any discussions or negotiations of any kind
whatsoever with any person regarding a sale of the assets to
such person, except as advised in a written opinion from
Winstar's outside counsel.
(h) Break-up Fee. Subject to Bankruptcy Court approval, in
the vent any portion of the assets is sold to a purchaser other
than Sayers, Winstar will pay Sayers a break-up fee in the
amount of $100,000.
The Debtors also proposed to assume and assign to Sayers all of
the customer contracts of the business. The Debtors advise that
they expect this transaction will net approximately $7 million
for these estates, after final purchase price adjustments and
payment of all closing-related items. Under the terms of the DIP
Facility the Debtor will remit all proceeds to the Post-Petition
Collateral Agent and the sum will be applied in reduction of the
post-petition indebtedness. The Debtors will be able to access
this cash, subject to the terms of the DIP Facility. (Winstar
Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WORLD ACCESS: I-Link To Acquire Unit's Long Distance Business
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I-Link Incorporated (Nasdaq:ILNK) has agreed to acquire
substantially all of the assets of the retail long distance
business of WorldxChange Communications, Inc., with traffic
originating in the U.S. and Canada and terminating worldwide,
for an aggregate purchase price of $15 million, including all
accounts receivable.
Counsel Corporation (Nasdaq:CXSN)(TSE:CXS.), the majority
stockholder of I-Link and bidding on behalf of I-Link, was the
sole all-cash bidder in the auction of the WorldxChange assets
conducted under the supervision of the U.S. Bankruptcy Court for
the Northern District of Illinois in the Chapter 11 bankruptcy
proceedings of World Access, Inc., the parent company of
WorldxChange. Financing for the transaction will be supported by
the acquired assets as well as a loan from Counsel Corporation
on terms being negotiated. I-Link will have the right to cause
WorldxChange to assume or reject, at I-Link's election, each of
WorldxChange's telecommunications equipment leases, carrier and
service agreements and other executory contracts. The estimated
annualized revenues of WorldxChange's core "dial around"
business are approximately $70 million with approximately
300,000 retail subscribers.
"This is a significant milestone in the execution of our
strategy to create a global telco-grade Voice over Internet
Protocol (VoIP) company," said Gary Wasserson, CEO and President
of I-Link. "Last month's acquisition of Nexbell Communications
solidified I-Link 's technology platform and set the stage for
rapid growth through the acquisition and migration of
traditional telephony traffic to our network. The WorldxChange
transaction reflects our strategic focus on opportunistic
acquisitions of revenue-generating businesses to further
leverage our outstanding infrastructure. In addition, this
transaction is expected to significantly augment our retail
customer base and provide greater opportunities for the
expansion of our next generation services."
I-Link will continue to identify and pursue appropriate
opportunities to acquire telecommunications assets that advance
its global business strategy.
About I-Link
Headquartered in Draper, Utah, I-Link (Nasdaq: ILNK - news) is
an enhanced voice/data service provider. With its software-
defined network architecture, I-Link simplifies the delivery of
unified communications today. I-Link offers a full range of
enhanced services such as one-number call routing; caller
screening; unified voice, fax, pager and e-mail messaging;
voice-and fax-on-demand; conference calling; and seamless call
transfer from cell phone to land-line and vice versa via a
direct connection to its nationally deployed Internet Protocol
telephony network. I-Link's open API-programming platform for
enhanced IP communications, Gatelink, uses softswitch technology
to rapidly create and deploy IP-based, enhanced communications
services with less expense and complexity. For further
information, visit I-Link's website at http://www.i-link.com.
XATA CORPORATION: Posts Weak First Quarter 2001 Results
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XATA Corporation's net sales for the three months ended March
31, 2001 were $4,191,966, an increase of 33% compared to net
sales of $3,162,783 for the three month period ended March 31,
2000. Net sales for the six months ended March 31, 2001
increased 8% to $6,588,464 from the comparable six months ended
March 31, 2000. The increase in net sales for the three and six
months ended March 31, 2001 was due to a combination of
increased demand for the Company's fleet products and improved
product availability. The Company anticipates that total revenue
for fiscal 2001 will exceed fiscal 2000 levels.
The Company had a gross profit of $1,697,661 (41% of net sales)
for the three months ended March 31, 2001, compared to a gross
profit of $1,332,422 (42% of net sales) for the same period in
2000. Gross profit for the six months ended March 31, 2001
decreased to $2,423,181 (37% of net sales) compared to
$2,646,217 (43% of net sales) for the same period in 2000. The
decrease in gross profit percentage in the current year was due
to a decrease in high margin software service contract revenue
as well as higher purchased materials costs as a percentage of
sales.
Net earnings for the three month period ended March 31, 2001 was
$161,906 compared to net earnings of $394,081 for the three
month period ended March 31, 2000. Net loss for the six month
period ended March 31, 2001 was $214,363 compared to net
earnings of $528,871 for the six month period ended March 31,
2000. The decrease in net earnings was primarily due to
increased research and development expense in the current year,
reduced gross profit resulting from lower software service
contract revenue in the current year, and the deferred tax
benefit recorded in the prior year.
At March 31, 2001, the Company had working capital of $1,034,517
compared to working capital of $2,088,439 at September 30, 2000.
The decrease in working capital is due to the decrease in cash
and increase in the bank line of credit resulting from the
significant investment in software development since the
beginning of the fiscal year, as well as the net loss for the
six-month period ending March 31, 2001.
Cash provided by operating activities during the six months
ended March 31, 2001 totaled $90,044 compared to $788,381 for
the same period a year ago. Cash provided by operating
activities for the six months ended March 31, 2001 was primarily
the result of an increase in accounts payable of $171,737, and
non-cash expenses of depreciation and amortization totaling
$558,056, off-set by an increase in accounts receivable of
$196,902, a decrease in accrued expenses of $315,368, and the
net loss for the period of $214,363.
The Company believes its current cash balances, line of credit,
vendor terms, and anticipated additional investments by John
Deere Special Technologies Group will provide adequate cash to
fund anticipated revenue growth, operating needs and product
development for the foreseeable future. If any of the John Deere
Special Technologies Group investments does not take place, any
new product development will be managed in accordance with
available funding. It is possible that the Company's cash needs
may vary significantly from its predictions, due to failure to
generate anticipated cash flow, failure to obtain the
anticipated equity funds from John Deere Special Technologies
Group, or other reasons. No assurance can be given that the
Company's predictions regarding its cash needs will prove
accurate, that the Company will not require additional
financing, that the Company will be able to secure any required
additional financing when needed, or that such financing, if
obtained at all, will be on terms favorable or acceptable to the
Company.
*********
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*********
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Copyright 2001. All rights reserved. ISSN: 1520-9474.
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