/raid1/www/Hosts/bankrupt/TCR_Public/010601.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, June 1, 2001, Vol. 5, No. 107
Headlines
ACKERLEY GROUP: S&P Cuts Long-Term & Sub Debt Ratings To Low-B's
AMERICAN SKIING: Formulates Plan to Improve Capital Structure
BALDWIN PIANO: Plans To Reorganize Under Chapter 11 Protection
BANYAN: Will Make Initial Liquidating Distribution On June 28
BLUESTAR: Lumina Demands Immediate Payment of $1.3 Million Debt
BRIDGE INFORMATION: Market Data Asks For Payment of April Fees
CAMBEX CORPORATION: Annual Stockholders' Meeting Is On June 28
CASUAL MALE: Nasdaq Delists Shares & Convertible Sub Notes
COLD METAL: Reports Fourth Quarter and Fiscal Year 2001 Losses
EINSTEIN/NOAH: Hearing On Sale Motion Set For Today
FINOVA: Berkadia Sweetens Its Offer for a Second Time
FRUIT OF THE LOOM: BofA Objects To Kasowitz's Fee Application
FUTECH INTERACTIVE: Janex International Acquires Certain Assets
GE CAPITAL: Moody's Cuts 23 Mortgage Securitization Certificates
GENESIS HEALTH: Proposes ADR Procedures for Litigation Claims
GENEVA STEEL: Posts $30.7 Million Net Loss For Q1 2001
INOTEK: Davis Instruments To Acquire Shares Through Merger
LERNOUT & HAUSPIE: Taps Learning Company As Product Distributor
LERNOUT & HAUSPIE: Buys More Time To File Plan Exclusively
LOEWEN GROUP: Selling Certain Assets In Indiana
LOEWS CINEPLEX: Pacific Capital Backs Out of Buyout Plan
LOIS/USA, INC: Applies for Order Extending Exclusive Periods
MIDLAND FOOD: Bay View Mortgage Seeks to Terminate Exclusivity
MUSICMAKER.COM: Taps Bid4Assets & Schottenstein For Asset Sales
NAMIBIAN MINERALS: Delays Filing Q1 Interim Statements
PACIFIC GAS: Committee Asks for Permission to Continue Trading
PINNACLE HOLDINGS: S&P Lowers Senior Unsecured Rating To CCC
PLAY BY PLAY: Richard Neitz Resigns As President And COO
PNV INC: Seeks To Extend Exclusive Period Through June 18
RESORT AT SUMMERLIN: Asks For 60-Day Extension of Exclusivity
SAFETY-KLEEN: Selling Illinois Real Property To Land Trust
SILVERLEAF RESORTS: Indenture Trustee Issues Notice of Default
TELIGENT INC.: Howard Jonas Steps Down As Chairman of the Board
TEXFI INDUSTRIES: Asks To Extend Exclusive Period To September 7
THERMADYNE HOLDINGS: Lenders Grant Waiver of Covenant Defaults
TOKHEIM CORPORATION: PwC Resigns As Public Accountants
TRICO STEEL: Wants More Time to Assume Or Reject Leases
VENCOR INC.: Annie Pearl Pride Seeks Relief From Automatic Stay
WINSTAR COMM.: Hires Shearman & Sterling As Lead Counsel
WORLD SALES: Filing of Proposal Extended To June 28
BOOK REVIEW: HOSPITAL TURNAROUNDS: Lessons in Leadership
*********
ACKERLEY GROUP: S&P Cuts Long-Term & Sub Debt Ratings To Low-B's
----------------------------------------------------------------
Standard & Poor's lowered its long-term corporate credit rating
for Ackerley Group Inc. to single-'B'-plus from double-'B'-minus
and its subordinated debt rating to single-'B'-minus from
single-'B'. These ratings are removed from CreditWatch where
they were placed Sept. 8, 2000.
The outlook is negative.
The lower ratings reflect Seattle-headquartered Ackerley's
weaker financial position. The company is projecting EBITDA for
2001 of about $35 million and year-end debt levels of about $275
million. This results in estimated 2001 debt to EBITDA in the
high 7 times (x) area and EBITDA to interest in the mid 1x area.
EBITDA levels are being hurt by the slowing economy and reduced
advertising revenues. However, Ackerley is undertaking a
corporate-wide cost-reduction program to help achieve its EBITDA
target for 2001. In addition, the company recently completed the
rollout of a digital broadcasting system for its regional
television station groups, which is expected to improve
televisions margins in coming periods. In April 2001, Ackerley
significantly reduced its debt levels with the sale of the
sports and entertainment operations, primarily the Seattle
Supersonics NBA team, for $200 million in pretax proceeds. Pro
forma debt at March 2001 was about $230 million. With tax
payments on this transaction to be paid in the second half of
the year, debt will rise to the estimated level by year-end.
Ratings are supported by the company's solid market positions
and the business and geographic diversity of its outdoor
advertising, television, and radio operations.
Outlook: Negative
Ratings may be lowered if Ackerley's overall financial profile
deteriorates significantly this year from current expectations
or if it does not meaningfully improve in 2002, Standard &
Poor's said.
AMERICAN SKIING: Formulates Plan to Improve Capital Structure
-------------------------------------------------------------
American Skiing Company (NYSE: SKI) announced a comprehensive
strategic plan to improve its capital structure and enhance
future operating performance. The plan includes the following
key components:
* Strategic redeployment of management and capital
resources to emphasize the integration and growth of
resort village development and operations
* Intent to sell Steamboat ski resort
* Operational cost savings of approximately $5 million
through reorganization and staff reduction.
* Amendments to the Company's senior credit facilities and
an anticipated new capital infusion to enhance financial
flexibility
The Company also announced anticipated third quarter operating
results and revised earnings guidance for fiscal 2001 below the
previously indicated range due to several non-recurring charges
related to corporate restructuring and merger activities and
weaker than expected results of its real estate subsidiary.
"The plan represents a fundamental change in the way we manage
our businesses," said American Skiing Company CEO B.J. Fair. "It
entails a number of significant corporate events, including a
strategic asset sale, cost reduction initiatives at every level
of the organization and restructuring of the senior debt of our
real estate company to reduce interest cost and extend
amortization and maturity dates. This plan positions American
Skiing Company to deleverage its capital structure and execute
on growth opportunities within its portfolio of resort and real
estate assets in a manner that maximizes value for our investors
and provides the highest quality guest experience for our
customers."
The strategic plan includes a series of steps that are outlined
below:
Strategic Plan
American Skiing Company's strategic plan will redirect
management and capital resources towards high growth
opportunities within the existing resort and real estate
network. The plan will focus on building out resort villages and
integrating real estate development with resort village
amenities. The Company's marketing efforts will emphasize the
complete resort experience, targeting increased destination
business.
"Over the last several years, American Skiing Company has made
significant investments in state-of-the-art lifts, snow-making
and skier development programs in order to solidify its
reputation for delivering the ultimate skiing and riding
experience at all its resorts nationwide," said Fair. "As part
of the strategic plan, we will turn our focus to enhancing the
broader resort village experience through the development of
core amenities, to improve guest service and strengthen the
resort destination experience offered to our customers."
With an improved capital structure, American Skiing Company
Resort Properties, Inc. ("ASCRP") will pursue its strategy of
developing high-return projects internally as well as continue
to use partnerships and joint ventures with strategic third
party developers in order to create immediate value and speed
the build-out of resorts, thereby generating incremental resort
revenues.
Proposed Sale of Steamboat
American Skiing Company has retained Credit Suisse First Boston
to assist with marketing the Steamboat Ski and Resort
Corporation in Steamboat Springs, Colorado, the sale of which is
anticipated to close prior to the end of calendar 2001. The sale
of the resort may also include certain other real estate assets
at Steamboat.
"Steamboat is an outstanding property and premier ski resort
destination," said Fair. "The decision to sell the resort was
very difficult, however, it demonstrates our commitment to
reduce the Company's debt and improve its capital structure, as
well as refocus human and capital resources on our remaining
strategically vital resort properties."
$5 Million of Operational Cost Savings
American Skiing Company is in the process of implementing a
staff reorganization at every level of the organization in order
to provide greater flexibility in its cost structure. The
Company is converting 160 full-time year-round positions to
seasonal positions, in order to better match its operating
cycle. In addition, the Company has eliminated approximately 70
full time year-round positions.
Prior to the reorganization, the Company had approximately 1,600
full time, year-round positions. At peak employment during the
ski season, the Company employs approximately 11,700 people. The
reorganization is intended to provide the Company greater
flexibility in its cost structure and more appropriately respond
to the seasonal nature of the business.
Management estimates that these measures, along with other
organizational changes and cost reduction initiatives, will
result in approximately $5 million of annual cost savings.
Although the impact of the cost savings will be immediate, near-
term restructuring costs will likely delay the benefit from cost
savings until the first quarter of fiscal 2002.
Capital Structure Improvements
Resort
American Skiing Company has entered into an agreement with its
resort lenders whereby the lenders have agreed to waive certain
financial covenants under the Company's $165 million Senior
Secured Credit Facility, for a specified period of time, while
both parties negotiate a comprehensive amendment to the
facility. The Company is seeking the approval of its resort
lenders for the sale of the Steamboat property, as well as
changes to the existing financial covenant package to
accommodate the sale, to reflect changes to its revised business
plan and to revise financial covenants for the third quarter of
fiscal 2001 and beyond.
Real Estate
The Company is revising its real estate business plan and is
pursuing discussions with its Senior Lenders regarding near-term
liquidity issues and a package of restructuring initiatives
designed to significantly improve the capital structure and
liquidity of its real estate subsidiary, ASCRP. Components of
the business plan that are under consideration include seeking
to restructure the $73 million loan facility at ASCRP to
substantially reduce interest rates and extend amortization and
maturity dates.
The Company is also in advanced discussions with potential
sources of additional investment capital for the real estate
Company. Additional capital would both address the Company's
near-term liquidity needs and enhance its ability to execute on
the growth opportunities within the existing portfolio of
assets. The terms of such investments, however, would likely
result in dilution to common equity holders.
Preliminary Third Quarter Results
The Company's anticipated results for the third quarter of
fiscal 2001 excluding non-recurring charges are as follows:
Resort:
Resort revenues for the quarter are expected to be approximately
$164 million compared with $149.9 million in the third quarter
of fiscal 2000
Resort earnings before interest, taxes, depreciation and
amortization ("EBITDA") is expected to be approximately $64
million before non- recurring charges of $5.7 million, compared
with Resort EBITDA of $62.0 million in the third quarter of
fiscal 2000
Real Estate
Real Estate revenues are expected to be approximately $15
million, compared with $73.2 million in the third quarter of
fiscal 2000, when the Company began delivering units of the
Sundial Lodge and Grand Summit Hotel at The Canyons
Real Estate operations are anticipated to generate an EBITDA
loss of approximately $0.3 million, excluding the loss on the
sale of development rights for the Heavenly Grand Summit
quartershare hotel of $0.8 million, compared with positive
EBITDA of $9.7 million in the third quarter of fiscal 2000
Consolidated
Total revenues are expected to be approximately $179 million
compared with $223.1 million in the third quarter of 2000
The Company expects third quarter fiscal 2001 EBITDA to be
approximately $64 million before non-recurring charges of $6.5
million, compared with $71.7 million in the third quarter of
2000
As a result of the proposed restructuring plan and related
changes to the Company's business plan, the Company has re-
evaluated its income tax position and has determined that it
will reverse the income tax benefits recognized during the first
and second quarters of fiscal 2001 and does not expect to
recognize any income tax expense or benefit in the foreseeable
future. As a result, the Company expects to incur income tax
expense in the third quarter of approximately $13.7 million.
The Company anticipates reporting several non-recurring charges
for the third quarter of fiscal 2001 attributable to corporate
restructuring, the terminated merger with MeriStar Hotels &
Resorts, and a loss on the sale of development rights for the
Heavenly Grand Summit quartershare hotel. In total, these non-
recurring charges are expected to be approximately $6.5 million.
The Company also anticipates approximately $1.1 million in
restructuring charges in the fourth quarter of fiscal 2001. In
addition, the Company is evaluating potential asset write-downs
that may result from the restructuring transaction and related
business plan changes, but does not expect to realize any write-
downs for the third quarter. The amount and timing of any write-
downs resulting from this process has not yet been determined.
"Although challenged by inconsistent weather and a decline in
destination visits at our western resorts, overall skier visits
returned to a more normalized level and the Company's Resort
business generated revenues and EBITDA in line with our March
28th revised guidance, excluding non-recurring charges," Fair
said. "Coupled with non-recurring charges related to our
corporate restructuring and merger activities, we expect lower
Real Estate revenues to result in total company EBITDA
performance that will fall short of what we had anticipated to
report for the third quarter. Consequently, we are revising the
previously provided full-year fiscal 2001 financial guidance."
Fiscal 2001 Business Outlook
For fiscal 2001, the Company expects resort skier visits of
slightly under 5.3 million and growth in revenue per skier visit
of 6% to 7% generating resort revenues between $328 and $331
million and resort EBITDA of between $49 and $51 million
(excluding approximately $7.6 million in non-recurring charges),
in line with its March 28th revised guidance. Real estate
revenues are expected to be between $98 and $102 million and
real estate EBITDA is expected to be between $7 and $9 million,
excluding the loss on the sale of development rights for the
Heavenly Grand Summit quartershare hotel, which correlates to
the lower than expected visitation at our western resorts.
On a consolidated basis, the Company anticipates revenue of
between $426 and $433 million and EBITDA of between $56 and $60
million (excluding approximately $8.4 million in non-recurring
charges) as compared to total revenue and EBITDA of $424.1
million and $47.0 million, respectively, for fiscal 2000.
"While we have had a challenging year, looking further ahead, we
are confident that this new plan places us on track toward
generating steady improvement in our financial performance in
fiscal 2002 and beyond. We will continue to focus on improving
our capital structure and achieving efficiencies in our resort
operations, high return projects in our real estate business and
partnership opportunities that leverage our resort network,"
Fair concluded.
About American Skiing Company
Headquartered in Newry, Maine, American Skiing Company is the
largest operator of alpine ski, snowboard and golf resorts in
the United States. Its resorts include Steamboat in Colorado;
Killington, Mount Snow and Sugarbush in Vermont; Sunday River
and Sugarloaf/USA in Maine; Attitash Bear Peak in New Hampshire;
The Canyons in Utah; and Heavenly in California/Nevada. More
information is available on the company's Web site,
www.peaks.com.
BALDWIN PIANO: Plans To Reorganize Under Chapter 11 Protection
--------------------------------------------------------------
Baldwin Piano & Organ Company announced its intent to file for
bankruptcy protection under Chapter 11 of the United States
Bankruptcy Code. Previously, the Company announced on April 24,
2001, a liquidity squeeze that was having a negative impact on
the Company. Subsequently, Baldwin hired Robert Jones as the new
chief executive officer and announced that Kenneth W. Pavia was
elected chairman of the board of directors.
In a statement, Pavia said that while he had full confidence in
Jones and his ability to return the Company to profitability,
the liquidity squeeze coupled with certain legacy issues made
the operation of Baldwin, as presently defined, virtually
impossible.
Pavia commented, "The legacy of past management makes the day-
to-day operations of our core business impossible.
Disproportionate severance agreements, excessive inventory,
excess administrative expenses in relation to historical Company
performance, internal control issues, executive compensation
arrangements that seem to exceed reasonable standards, and an
extensive list of substantial payables are some examples of the
factors we can not overcome."
"Other factors that led to our decision to file for protection,"
Pavia added, "included unduly burdensome lease arrangements
entered into under past administrations, restrictive borrowing
arrangements with our lender, and the inability to secure
concessions in regard to our liquidity crisis."
"The dealers, factory personnel, and the new management deserve
the opportunity to bring Baldwin back to its glory without the
added pressure of past mismanagement," Pavia emphasized. "All
attempts to resolve this matter informally were explored and
given due consideration. Unfortunately, the pressures caused by
the lack of liquidity and the demand of our creditors, including
prior management's demand for the immediate payment under
certain change of control agreements, made any recovery
impossible. In the end, for the benefit of all concerned,
including our shareholders, a formal, orderly reorganization
became the only viable alternative."
In a statement, Jones said that he looked forward to leading the
Company out of bankruptcy and working diligently to restore the
Baldwin name and maintain the Company's relationship with its
dealers and customers. He continued, "Despite being CEO for only
three weeks, I am convinced that the personnel at our factories
have the ability, desire, and loyalty to make quality pianos and
achieve enhanced values. I firmly believe that the Baldwin name
stands for our loyal employees and dealers. With their continued
support and the implementation of our strategic plan, Baldwin
can return to profitability within a relatively short period."
Baldwin Piano & Organ Company, the maker of America's best
selling pianos, has marketed keyboard musical products for over
140 years.
BANYAN: Will Make Initial Liquidating Distribution On June 28
-------------------------------------------------------------
Banyan Strategic Realty Trust (Nasdaq: BSRTS) announced that its
Board of Trustees has authorized distribution of the sum of
$4.75 per share on June 28, 2001 to shareholders of record as of
June 13, 2001. Banyan indicated that this is the initial
liquidating distribution pursuant to its Plan of Termination and
Liquidation, adopted on January 5, 2001.
The distribution is funded from the proceeds of the sale of 85
percent of Banyan's portfolio on May 17, 2001 to affiliates of
Denholtz Management Corp. In that transaction, the Trust
realized $84.3 million in net proceeds after the payment of
first mortgage debt and transaction costs.
Because of the Trust's adoption of the Plan of Termination and
Liquidation, the distribution will be characterized as a return
of capital to shareholders to the extent of their respective
bases in their shares.
Banyan also indicated that, currently, it continues to expect to
distribute a total of approximately $6.00 per share (inclusive
of the initial distribution of $4.75) to shareholders before the
end of 2002. Distributions will be made, as warranted, upon the
disposition of the remaining assets, and the discharge of
remaining liabilities.
In other news, Banyan announced that it has cancelled its first
quarter earnings conference call, previously scheduled for May
15, 2001. Banyan noted that in light of its Plan of Termination
and Liquidation and the sale of 85% of its portfolio, it will no
longer be reporting earnings on a quarterly basis by conference
call.
Banyan Strategic Realty Trust is an equity Real Estate
Investment Trust (REIT) that, prior to the sale referenced
above, owned primarily office and flex/industrial properties.
The properties are located in certain major metropolitan areas
of the Midwest and Southeastern United States, including
Atlanta, Georgia and Chicago, Illinois, and smaller markets such
as Huntsville, Alabama; Louisville, Kentucky; Memphis,
Tennessee; and Orlando, Florida. Banyan now owns three (3) real
estate properties located in Atlanta, Georgia; Huntsville,
Alabama; and Louisville, Kentucky. As of this date Banyan has
15,488,137 shares of beneficial interest outstanding.
BLUESTAR: Lumina Demands Immediate Payment of $1.3 Million Debt
---------------------------------------------------------------
BlueStar Battery Systems International Corp. announced that the
Company's secured lender, Lumina Group, LLC notified the Company
on May 21, 2001 that it demands immediate payment of the
principal amount of $1,262,673.38 with accrued and unpaid
interest of $45,940.43 pursuant to the terms of an Amended and
Restated Loan Agreement dated February 6, 2001 between BlueStar
and Lumina.
Lumina is controlled by James A. Risher, Chairman and Chief
Executive Officer of BlueStar. Under the Loan Agreement, Lumina
is entitled, among other things, to reimbursement for all costs
incurred in enforcing its rights under the Loan Agreement,
including Lumina's reasonable attorney's fees.
On April 11, 2001, Lumina notified BlueStar that it was in
default of the Loan Agreement but witheld from taking any
further actions while the Company attempted to restructure and
obtain new capital.
BlueStar sells power and charging systems in North America. The
Company markets battery products and certain related components
from several of the world's leading manufacturers. BlueStar's
common stock currently trades on the Canadian Venture Exchange
under the symbol BSG.
BRIDGE INFORMATION: Market Data Asks For Payment of April Fees
--------------------------------------------------------------
Market Data Corporation supplies value-added data to Telerate, a
provider of financial information and related services. The
data, MDC, was necessary in the early stages of Bridge
Information Systems, Inc.'s chapter 11 cases, to allow the
Debtors to maintain the semblance of normalcy. Despite continued
use of MDC's data, MDC hasn't received a check for post-petition
services. MDC understands that the DIP Financing Facility
expires shortly and it wants its money before that event occurs.
MDC asked the Court for an order directing immediate payment of
all accrued postpetition amounts due and weekly payments for any
future use.
MDC relates that it entered into a Master Optional Services
Agreement with Telerate, Inc., in 1990. MDC takes raw financial
data from third parties and adds value to it by making various
calculations and comparisons which, in turn, allow Telerate's
subscribers to obtain yields and other real-time time financial
information. Telerate is obligated to pay MDC for the greater of
(a) actual customer usage and (b) a guaranteed minimum.
MDC received a $6.2 million payment from the Debtors for service
from February 16, 2001 through March 31, 2001. MDC is still
looking for $4.7 million owed on account of April service.
Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy,
represents MDC in Bridge's chapter 11 cases. (Bridge Bankruptcy
News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
CAMBEX CORPORATION: Annual Stockholders' Meeting Is On June 28
--------------------------------------------------------------
The Annual Meeting of Stockholders of Cambex Corporation, a
Massachusetts corporation, will be held in the Conference Room
of Cambex Corporation, 360 Second Avenue, Waltham,
Massachusetts, on Thursday, June 28, 2001, at 10:00 A.M. for the
following purposes:
(1) To elect the Class II Director to the Board of
Directors to serve for a term ending in 2004 and until his
successor is duly elected and qualified.
(2) To consider and act upon a proposal to amend the
Company's Articles of Organization to increase the number of
authorized shares of Common Stock of the Company from 25,000,000
shares to 50,000,000 shares.
(3) To consider and act upon any other matters which may
properly come before the meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on
Monday, April 30, 2001 as the record date for determination of
stockholders entitled to notice of and to vote at the Annual
Meeting and any adjournments thereof.
CASUAL MALE: Nasdaq Delists Shares & Convertible Sub Notes
----------------------------------------------------------
Casual Male Corp. (CMAL:NASDAQ) announced that effective May
31st, its common stock and 7% Convertible Subordinated Notes due
June 2002 were de-listed from the Nasdaq National market System.
Subject to the restrictions on trading imposed by the "automatic
stay" in Casual Male's chapter 11 cases, Casual Male investors
interested in trading their Casual Male securities should
contact a registered securities representative to explore the
possibility of off-market trading through the so-called "Pink
Sheets" Electronic Quotation Service.
According to their website, www.pinksheets.com, the Pink Sheets'
Electronic Quotation Service is not an exchange, but a nexus in
which competitive market makers display real-time prices and
potential liquidity in thousands of domestic equities for
companies that are unable or chose not to list their securities
on the Nasdaq or a securities exchange. The Company expects that
its common stock will be quoted through the Pink Sheets service
under the ticker symbol CMALQ and that its 7% Convertible
Subordinated Notes due June 2002 will be quoted under the ticker
symbol CMAGQ.
Investors are reminded, however, that the United States
Bankruptcy Court for the Southern District of New York approved
on May 18, 2001 the Company's motion to limit the trading of
Casual Male common stock and 7% Convertible Subordinated Notes
due 2002. In his Order, the Bankruptcy Court recognized that the
automatic stay under Section 362 of the Bankruptcy Code serves
to prevent beneficial holders of the common stock and
convertible notes from acquiring an amount of such stock or
convertible notes that, when added to their total beneficial
ownership of such securities, would equal more than 4.99% of the
Company's stock or convertible notes. The Order also requires
that if such holders beneficially own 5% or more of such stock
or convertible notes, they are stayed from purchasing any
additional notes or stock. Pursuant to the Order, any sale or
other transfer in violation of the Order will be null and void.
Casual Male asked for this limitation to protect its substantial
net operating loss carryforward tax asset, which would be
significantly limited upon a change of control. Accordingly, the
possibility of investors being able to trade through the Pink
Sheets in no way limits the procedural requirements and
restrictions for trading imposed by the Company's chapter 11
cases.
About Casual Male Corp.
Casual Male Corp. operates specialty retail businesses in large,
under-served niche markets. The Company currently operates 592
retail stores, three catalog titles, and two commerce-enabled
websites selling apparel and accessories for big and tall men
under the Casual Male Big & Tall, Repp Ltd. Big & Tall, and B&T
Factory trade names. The Company also offers rugged workwear and
healthcare apparel through its 70 Work 'n Gear stores, direct
marketing offerings and e-commerce initiatives. Casual Male
Corp. is currently a debtor in possession under Chapter 11 of
the United States Bankruptcy Code.
COLD METAL: Reports Fourth Quarter and Fiscal Year 2001 Losses
--------------------------------------------------------------
Cold Metal Products, Inc., (Amex: CLQ) announced losses for the
fourth quarter and fiscal year ended March 31, 2001.
Net loss for the fourth quarter of fiscal year 2001 was $3.2
million or $0.50 per share, compared to net income of $1.4
million or $0.22 per share in the fourth quarter of fiscal year
2000. The current year results included special charges
associated with restructuring manufacturing operations, which
increased fourth quarter net loss by $800,000. These charges
were principally related to the planned shutdown of the New
Britain, Conn., facility and a reduction in force at the
Hamilton, Ont., operation. Sales for the quarter decreased 16.8
percent to $46.7 million compared to the fourth quarter in
fiscal year 2000 despite the increased volume attributable to
the company's acquisition of Alkar Steel Corporation on March
31, 2000. On a comparable location basis, sales revenues
declined 30 percent on 62,479 tons sold during this quarter,
which represents a decrease of 15 percent in tons sold.
Net loss for the fiscal year ended March 31, 2001 was $5.8
million or $0.90 per share, compared to net income of $4.5
million or $.71 per share for the previous fiscal year. Special
charges associated with the aforementioned restructuring
increased fiscal 2001 net loss by $1.4 million. Sales of $214.5
million in fiscal 2001 increased 2.8 percent compared to fiscal
2000 due to the Alkar acquisition. On a comparable location
basis, sales revenues declined 12.7 percent in fiscal year 2001
on annual volume that increased nominally to 275,462 tons sold.
The company also announced it has reached agreements with its
secured lenders that modify its credit facilities to adjust
financial covenants for existing market conditions and
effectively reaffirm scheduled repayment of the company's long-
term obligations according to originally stated terms.
Cold Metal Products continues to take the actions necessary to
respond to the current weak market environment and strengthen
the company for the long term. These actions increased this
quarter's loss but are necessary to develop a less utilization
dependent business model capable of delivering superior
financial performance through all phases of the business cycle,
according to Raymond P. Torok, CMP's president and chief
executive officer.
"As we announced in August of 2000, Cold Metal Products' future
direction is focused on providing innovative solutions and high
quality products to our customers," Torok said. "Led by our
supply chain organization, this focus drives very different
actions from those of manufacturing companies that emphasize
facilities utilization. In this vein, we have announced the
closure of our New Britain, Conn., facility. During the quarter,
we have streamlined our Hamilton facility and refocused it on
the Canadian market. We are discontinuing the full processed
line of specialty stainless steel and idling the associated
production equipment at our Youngstown facility. We also have
simplified the sales organization and have streamlined the
company's overhead structure.
"The support provided by our senior secured creditors as we
continue to identify and work through opportunities to improve
our performance is appreciated. We are committed to
demonstrating to the market that Cold Metal Products can deliver
the expertise, service and value to enable it to be the leading
provider of precision strip steel solutions in North America
while achieving financial performance that makes us an
attractive investment for all of our stakeholders."
A leading intermediate steel processor, Cold Metal Products
provides a wide range of strip steel products to meet the
critical requirements of precision parts manufacturers. Through
cold rolling, annealing, normalizing, edge conditioning,
oscillate-winding, slitting and cutting-to-length, the company
provides value-added products to manufacturers in the
automotive, construction, cutting tools, consumer goods and
industrial goods markets. Cold Metal Products operates plants in
Youngstown and Ottawa, Ohio; Indianapolis, Ind.; Detroit, Mich.;
Hamilton, Ont.; and Montreal, Quebec. CMP currently employs
approximately 600 people.
EINSTEIN/NOAH: Hearing On Sale Motion Set For Today
---------------------------------------------------
On May 23, 2001, the U.S. Bankruptcy Court for the District of
Arizona denied the motion of New World Coffee-Manhattan Bagel,
Inc., as joined in by the trustee under the Boston Chicken plan
of reorganization, to continue the motion of Einstein/Noah Bagel
Corp. and Einstein/Noah Bagel Partners, L.P. to sell
substantially all of their assets in a sale under Section 363 of
the United States Bankruptcy Code. The Bankruptcy Court vacated
the dates that had previously been set for a hearing on
confirmation of the joint plan of reorganization originally
filed on April 2, 2001 by the Boston Chicken Plan Trustee, and
the Bankruptcy Court confirmed June 1, 2001 as the date for the
hearing on the sale motion.
The Bankruptcy Court also ruled that New World was a Qualified
Bidder under the bidding procedures applicable to the sale. The
Company and Bagel Partners have received a bid from New World,
and its affiliate Greenlight New World, L.L.C., to purchase
substantially all of their assets for a purchase price
consisting of $151.0 million in cash and the assumption of up to
$30 million in current liabilities and certain other liabilities
and obligations. The Company and Bagel Partners have not yet
made a determination whether the New World Bid is a Qualified
Bid under the bidding procedures, or whether the New World Bid
is the highest and best bid.
FINOVA: Berkadia Sweetens Its Offer for a Second Time
-----------------------------------------------------
The FINOVA Group Inc. (NYSE: FNV) and Berkadia LLC, a joint
venture of Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) and
Leucadia National Corporation (NYSE: LUK; PCX), announced that
they have agreed to modified terms for the proposed Joint Plan
of Reorganization previously filed with the Delaware Bankruptcy
Court by FINOVA and eight of its subsidiaries. Under the
improved terms:
* The interest rate on Berkadia's $6 billion loan to FINOVA
Capital will be LIBOR plus 225 basis points per year. The
previously proposed minimum rate of 9% per year and the annual
25 basis point facility fee on this loan will be eliminated.
* The proceeds of the $6 billion Berkadia loan will be
used, together with cash on hand, to make an aggregate cash
payment to general unsecured creditors of FINOVA Capital in an
amount equal to approximately $7.35 billion, which includes
approximately $350 million of post-petition interest (assuming
an effective date of the Plan of August 31, 2001). As a result,
general unsecured creditors of FINOVA Capital will receive a
cash payment of approximately $.64 for each $1.00 of pre-
petition principal and interest claims plus $.03 of post-
petition interest for each $1.00 of their aggregate pre-petition
claims. New Senior Notes of FINOVA Group will be issued for the
balance of pre-petition claims (approximately $3.9 billion).
Provisions for a mandatory sinking fund on the New Senior Notes
to be issued by FINOVA Group will be eliminated.
* The new ten-year Senior Notes of FINOVA Group will have
an interest rate of 7% per year.
In all other respects the terms of the Plan as previously filed
with the Bankruptcy Court are unchanged.
Berkadia's commitment to these modifications will terminate if
there is any agreement for or Bankruptcy Court approval of
breakup, topping, due diligence or similar fees for any party
other than Berkadia, whether or not any such agreement, approval
or fee is subject to conditions or future events. Berkadia's
commitment is not subject to due diligence or financing
conditions and can be completed quickly.
Berkadia believes that Berkshire Hathaway, with approximately
$1.428 billion principal amount of FINOVA Capital bank and bond
debt is the largest holder of such debt, and following the
reorganization, will become the largest holder of the New Senior
Notes.
The debtors intend to file a revised Plan and Disclosure
Statement with these modifications. The Bankruptcy Court has not
approved these modifications or the Plan or Disclosure Statement
previously filed. The solicitation process will not begin until
the Bankruptcy Court approves the Disclosure Statement (as
revised) and authorizes FINOVA to solicit the votes of their
creditors and stockholders in connection with the revised Plan.
Thereafter, FINOVA will send the revised Plan and Disclosure
Statement to all creditors and stockholders who are entitled to
vote on the Plan.
FRUIT OF THE LOOM: BofA Objects To Kasowitz's Fee Application
-------------------------------------------------------------
Bank of America, as prepetition bank agent and prepetition
collateral agent for the bank group, objected to the second
interim allowance of compensation of Kasowitz, Benson, Torres &
Friedman, counsel for the official committee for unsecured
creditors in Fruit of the Loom, Ltd.'s chapter 11 cases.
Previously, the Court provided prepetition secured lenders
substantive and procedural protections for their respective
secured claims. These protections include a grant of replacement
liens on all Debtor assets and a superpriority claim under
section 507(b). Such replacement liens and superpriority claim
status were made subject and subordinate only to (i) the priming
liens granted to secure the DIP facility, (ii) a fund (the
"carve out") created for the payment of allowed fees and expense
of professionals retained by either the Debtors of the creditors
committee, and (iii) with respect to the replacement liens,
other valid liens existing as of the petition date. Mark D.
Collins Esq., of Richards, Layton & Finger, on behalf of Bank of
America, argues that the prepetition secured lenders continue to
rely materially on the protections afforded by the replacement
liens and superpriority claim status. The outstanding balance
under the DIP agreement approximates $150,000,000, with
additional borrowing availability of $300,000,000, which amounts
continue to prime the liens of the prepetition secured lenders.
In addition, Debtor has sold more than $60,000,000 of assets
comprising collateral of the prepetition secured lenders and
none of the proceeds of these sales have been paid to this
party.
Mr. Collins contended that the adequate protection order
provides that the fees and expenses of professionals of the
creditors committee incurred in connection with pending
litigation against the secured lenders shall be excluded from
the carve out and ineligible for payment from assets
constituting the collateral. This provision was designed to
protect the prepetition secured lenders from the prospect of
having to fund, from their own collateral, on a current basis
and without limit, litigation against themselves.
As stated in the application, the committee retained the
Kasowitz firm expressly to serve as special litigation counsel
for the prosecution of an adversary proceeding against the
prepetition secured lenders. Mr. Collins asserted that it
appears that the services for which compensation is sought
relate to the adversary proceeding. As a result, the fees and
expenses sought to be paid through the application are, pursuant
to the adequate protection order, not eligible for inclusion in
or payment from the carve- out. Such payment would therefore
violate the adequate protection order.
Mr. Collins held that since the committee initiated an adversary
proceeding against the prepetition secured lenders, there is no
economic incentive for them to be realistic in their pursuit of
such proceeding. They are conducting litigation with the
prepetition lenders collateral. If the committee believes that
there are valid challenges in the litigation, a mechanism will
be found to fund Kasowitz's fees at the end of the day. If the
litigation is merely a means of extracting hold-up value, as its
conduct of the lawsuit to date clearly indicates, then such a
mechanism likely will not be found. In either event, the Court
should apply the terms of the adequate protection order and not
allow the creditors committee to gamble with another party's
money. (Fruit of the Loom Bankruptcy News, Issue No. 29;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
FUTECH INTERACTIVE: Janex International Acquires Certain Assets
---------------------------------------------------------------
Janex International, Inc. (OTC: Bulletin Board: JANX) --
designer, manufacturer, and distributor of unique children's
products -- has completed the acquisition of certain and
specific assets of Futech Interactive Products, Inc. - a company
that specialized in patented interactive books, toys, games,
educational products and stationery as well as select,
traditional, related products. Vincent W. Goett, Janex Chairman
said, "The acquisition of the Futech assets, coupled with our
recent acquisition of the DaMert Company (www.Damert.com), gives
us the resources which should enable us to implement our
strategic initiative to become a contender in the children's
book, toy, game and educational products industry. The combined
attributes of Janex, DaMert and the acquired assets of Futech
should improve our ability to introduce new lines of proprietary
interactive products, increase our distribution channels and
allow us to penetrate new markets. As a result of the
acquisition of the Futech assets and the recent acquisition of
the DaMert Company, the operations of the Company have expanded.
The Company has determined that its current President, Dan
Lesnick, who has substantial operating experience in the toy
industry, will focus his efforts on the operations side of the
business. Accordingly, Mr. Lesnick has resigned as President and
Chief Executive Officer and has been appointed Executive Vice
President, Operations. Vincent Goett, the Company's Chairman,
has been appointed President and Chief Executive Officer.
Under the terms of the Futech Acquisition Agreement, as approved
by the Bankruptcy Court, Janex has acquired certain assets of
Futech in exchange for the following consideration: (i) an
aggregate of approximately 22 million shares of Janex common
stock; (ii) the assumption of an aggregate of approximately $3
million of indebtedness; and (iii) the payment of approximately
$150,000 in cash. Of the approximate 22,000,000 shares, 20.6
million shares are issuable in satisfaction of an aggregate
$36.5 million face amount of indebtedness (including trade debt)
of Futech. The shares of common stock are issuable within
approximately 150 days.
The assets include Futech's patented Talking Pages(R) printed
conductive ink technology, used in the manufacturing of their
talking children's books, board games and stationery products
which incorporate music, speech and sound effects to entertain
and educate. Mr. Goett stated that, "Once again we have found a
perfect fit in our business plan of developing interactive,
audible response based products. The Talking Pages technology
products respond by the touch of a finger to the surface of a
page or game board." Also included in the acquired assets were
Futech's trademarks and copyrights.
The company believes that the Futech technologies can be used in
a wide range of applications, from board games to children's
books and learning aids. Goett went on to say, " Using speech
synthesis in conjunction with the ability to visually project
the message will reinforce that message or lesson plan, in the
case of interactive learning aids. Our goal is to bring an
affordable interactive experience to the public by using as many
of the senses as possible. So far we have covered sight, sound
and touch."
The patented technologies, trademarks and copyrights, coupled
with Janex's ongoing research and development, established
manufacturing alliances, current sales/marketing endeavors, and
distribution channels, should allow Janex to become a
competitive producer of proprietary interactive and traditional
children's products in the book, toy, game, educational and
stationery markets.
Janex is exploring ways to capitalize on the commercial
applications of the acquired patented technologies. The Company
is considering the introduction of a line of interactive sales
brochures and related promotional items to compliment major new
product introduction campaigns for leading mass consumer goods
companies and other entities desiring specialized, interactive
promotional materials. Janex is also evaluating providing
specialized interactive promotional materials to various
commercial markets.
Another significant asset acquired from Futech is the innovative
children's web site www.oKID.com and browser. This "virtual
world" Internet experience for kids utilizes software to produce
an online destination that resembles an entertaining cartoon
world environment instead of the traditional HTML experience.
Goett stated, "The acquisition of a web site and browser as
innovative and entertaining as www.oKID.com should enhance Janex
product branding and provide opportunities to expand its
business on an international basis. The site's extensive
interactive capabilities affords us another medium in which to
introduce and market our various product lines. For Janex to
develop a comparable site would take a significant amount of
time, manpower and capital."
Janex's current business focuses on the development, design,
manufacturing and marketing of children's toys and
specialty/educational products, , water activity products and
battery operated toothbrushes trademarked under the names Janex,
DaMert and Malibu Fun Stuff. Janex incorporates licensed
characters into most of its products, and sells its products to
the United States' and Canada's mass merchant retailers, toy
specialty stores and department stores. With the acquisition of
www.oKID.com, consumers will have the ability to purchase these
products directly on the Internet through a series of select
portals.
GE CAPITAL: Moody's Cuts 23 Mortgage Securitization Certificates
----------------------------------------------------------------
Moody's Investors Service related that it downgraded the ratings
of twenty-three subordinate classes of certificates issued by GE
Capital Mortgage Services, Inc. from the home equity
securitization series 1996-HE3, 1997-HE2, 1997-HE3, 1997-HE4,
1998-HE1 and 1998-HE2.
Moody's explained that the rating action was prompted by the
high level of seriously delinquent loans, high loss severities
and higher than anticipated cumulative losses.
Moody's said that the GE home equity transactions rely
exclusively on subordination for credit enhancement. Excess
spread generated by the underlying loans, the rating agency
added, is not available to cover losses and does not constitute
credit enhancement for the certificates.
The complete rating actions are as follows:
Securities: GE Capital Mortgage Services, Inc. Pass-Through
Certificates, Series 1996-HE3
Ratings
From To
* Class B1 Certs. Baa1 Baa2
* Class B2 Certs. Ba2 B1
* Class B3 Certs. Caa3 C
GE Capital Mortgage Services, Inc. Pass-Through
Certificates, Series 1997-HE2
Ratings
From To
* Class B1 Certs. A2 Ba3
* Class B2 Certs. Ba1 Caa2
* Class B3 Certs. Caa1 C
* Class B4 Certs. Caa3 C
GE Capital Mortgage Services, Inc. Pass-Through
Certificates, Series 1997-HE3
Ratings
From To
* Class B1 Certs. A2 Baa1
* Class B2 Certs. Baa2 Ba1
* Class B3 Certs. Ba2 Caa2
* Class B4 Certs. B2 C
GE Capital Mortgage Services, Inc. Pass-Through
Certificates, Series 1997-HE4
Ratings
From To
* Class B1 Certs A2 Baa1
* Class B2 Certs. Baa2 Ba1
* Class B3 Certs. Ba2 Caa1
* Class B4 Certs. B2 C
GE Capital Mortgage Services, Inc. Pass-Through
Certificates, Series 1998-HE1
Ratings
From To
* Class B1 Certs. A2 Baa2
* Class B2 Certs. Baa2 Ba2
* Class B3 Certs. Ba2 Caa3
* Class B4 Certs. B2 C
GE Capital Mortgage Services, Inc. Pass-Through
Certificates, Series 1998-HE2
Ratings
From To
* Class B1 Certs. A2 Baa2
* Class B2 Certs. Baa2 Ba3
* Class B3 Certs. Ba2 Caa3
* Class B4 Certs. B2 C
GENESIS HEALTH: Proposes ADR Procedures for Litigation Claims
-------------------------------------------------------------
Genesis Health Ventures, Inc. & The Multicare Companies, Inc.
have identified approximately 275 prepetition claims (the
Pending Actions) against the Debtors based on personal injury,
employment litigation, and similar claims by various claimants,
not including claims in which a lawsuit has yet to be commenced
or a statutory pre-suit demand has yet to be served.
Certain Pending Actions relate to claims against persons or
entities for whom the Debtors retain ultimate liability,
including non-Debtor defendants in Pending Actions who are (1)
current or former employees of the Debtors, (ii) affiliates of
the Debtors, or (iii) parties who are indemnified by the
Debtors.
Claims arising from the Pending Actions have been scheduled by
the Debtors as contingent, disputed, and unliquidated.
In order to expedite the resolution of the Pending Actions, the
Debtors propose to implement the ADR Procedures. The principal
terms of the Procedures, as set forth in the ADR Term Sheet, are
as follows:
(A) ADR Notice
(1) Upon service by the Debtors of an ADR Notice on a
Claimant or a Claimant's counsel, if counsel is known, a Pending
Action shall be deemed an "ADR Claim" and shall be subject to
the ADR Procedures. The Preliminary ADR Claims List, comprised
of all of the Pending Actions of which the Debtors are aware,
has been drawn up and attached to the motion.
(2) If the holder of a prepetition claim timely informs the
Debtors that his or her claim meets the criteria of a Pending
Action, but was omitted from the Preliminary ADR Claims List, or
if the Debtors become aware of an additional Claimant whose
claim was omitted from the Preliminary ADR Claims List, the
Debtors shall classify such claim as an "Additional ADR Claim."
(3) Upon service on such Claimants of (i) the Order granting
this Motion (the ADR Order); (ii) a copy of the ADR Term Sheet;
(iii) an ADR Notice; and (iv) an Opt-Out Stipulation, the
Additional ADR Claims shall be deemed included in the definition
of ADR Claims, unless otherwise specified, and shall be subject
to the ADR Procedures.
(4) The holders of Additional ADR Claims shall have 20 days
from receipt of the Order granting the Motion, the ADR Term
Sheet, the ADR Notice, and the Opt-Out Stipulation to object to
being included in the ADR Procedures by filing a written
objection with the Court (the ADR Objection). If no ADR
Objection is timely filed, or if the Court overrules the ADR
Objection, such holder's Additional ADR Claim will be subject to
the ADR Procedures.
(5) Any Claimant not served with an ADR Notice may request
inclusion in the ADR Procedures and shall be treated as the
holder of an Additional ADR Claim. The Debtors shall provide
their insurers or other third party payors with timely notice
of all Additional ADR Claims.
(6) After entry of the ADR Order and commencing on the date
of service of the ADR Notice, holders of ADR Claims shall be
enjoined from, among other things, commencing or continuing any
action or proceeding in any manner or any place to collect or
otherwise enforce their ADR Claims against the Debtors or their
property other than through the ADR Procedures (the ADR
Injunction).
(B) ADR Injunction
(7) In addition, the ADR Injunction shall enjoin (1)
proceedings against any Indemnitee and (ii) any direct action
against a Third Party Payor.
(8) With respect to Additional ADR Claims, the ADR
Injunction shall commence: (i) if a Claimant does not timely
file an ADR Objection, upon expiration of the ADR Objection
Deadline or (ii) if a Claimant timely files an ADR Objection, on
such date that the Court enters an order overruling the ADR
Objection and approving inclusion of such Claimant's Additional
ADR Claim in the ADR Procedures.
(9) The ADR Injunction will expire with respect to any ADR
Claim or Additional ADR Claim upon the earliest of (i) one year
from the date of entry of the ADR Order; (ii) the completion of
the ADR Procedures; (iii) a Claimant's entry into a stipulation
with the Debtors to modify the automatic stay; (iv) the Court's
entry of an order modifying the stay; or (v) further order of
the Court.
(10) Although the ADR Injunction shall not prohibit a
Claimant from filing and serving a complaint or naming and
serving additional third parties in a previously filed
complaint, if the newly served or named defendant is a Debtor,
such actions would constitute a violation of section 362 of the
Bankruptcy Code.
(C) Four Stage Resolution
(11) A four stage process will be established for the orderly
and efficient resolution of the ADR Claims.
(i) The first stage is a formal demand/counteroffer
stage, with limited discovery available to the
parties.
(ii) The second stage is mediation.
(iii) The third stage is binding arbitration only for
those Claimants who consent to such arbitration.
(iv) The fourth stage, which shall commence only after
all mediation has been completed, is relief from
the automatic stay for those Claimants whose ADR
Claims were not settled or submitted to binding
arbitration.
(D) Opt-Out Stipulation
(12) At any time, a Claimant may opt out of the ADR
Procedures by entering into a stipulation with the Debtors (the
Opt-Out Stipulation), which requires the Claimant to
(i) waive any and all claims for punitive damages,
attorneys' fees, and any similar enhanced
remedies;
(ii) dismiss, with prejudice, any and all claims
against any Indemnitee;
(iii) agree not to name any Indemnitee as a defendant in
the Pending Action; and
(iv) agree to limit his or her recovery, if any, solely
to available insurance proceeds and waive any and
all rights to seek recovery from the assets of the
Debtors or their estates.
(13) Relief from the automatic stay granted pursuant to an
Opt-Out Stipulation shall commence no earlier than 4 months
after the entry of the ADR Order.
(14) Each Opt-Out Stipulation shall be filed with the Court
and served upon the Committee, the U.S. Trustee, the Debtors'
prepetition and postpetition lenders, and the applicable
Third Party Payor, if any.
(15) If no objections to the Opt-Out Stipulation are filed
within 20 days after the filing and service of such stipulation,
the automatic stay shall be deemed modified on the terms set
forth therein. If an objection to an Opt-Out Stipulation is
timely filed, a hearing will be held on the next omnibus hearing
date scheduled in these cases or such other date as the Court
may direct.
The Debtors drew Judge Wizmur's attention to substantially
similar alternative dispute resolution procedures recently
approved in other bankruptcy cases of debtors in the health care
industry, as In re Sun Healthcare Group, Inc., Ch. 11 Case No.
99-3 657 (MFW) (Bankr. D. Del. Aug. 24, 2000); In re Mariner
Post-A cute Network, inc., Ch. 11 Case Nos. 00-113 through 00-
214 (MFW) (Bankr. D. Del. Dec. 26, 2000).
In the GHV cases, the Debtors represented that the proposed ADR
Procedures are necessary for their successful reorganization and
beneficial to the estates and creditors.
First, the Debtors asked Judge Wizmur to consider the sheer
magnitude of the Pending Actions, that some of the claims made
are largely uninsured, and that the remainder of these claims
have insurance policies with aggregate limitations. The proposed
ADR Procedures, the Debtors believe, will expedite the
resolution of the Pending Actions, save the Debtors and the
Claimants substantial litigation costs, and facilitate a fair
distribution of insurance proceeds (if applicable).
Second, while the Debtors acknowledge that a process for
estimating and liquidating the Pending Actions is a necessary
component of their reorganization, they do not think that
liquidation of the Pending Actions in the Bankruptcy Court is
feasible or proper. There are a large number of Pending Actions,
a significant number of which are based on personal injury tort
claims, which the Bankruptcy Court cannot hear pursuant to 28
U.S.C. section 157, the Debtors explain. Moreover, the Debtors
believe that the resolution of these claims through litigation,
in any court, would be a time-consuming, inefficient process,
which would be a substantial drain on the time and resources of
the Debtors. With respect to employment litigation claims and
personal injury claims incurred after June 1, 2000, the costs of
litigation are exacerbated by the fact that the Debtors have a
large self- insured retention.
Thus, in the absence of ADR, the time and cost associated with
such claims would drain substantial assets from the estates to
the direct detriment of all unsecured creditors, the Debtors
represented.
Additionally, in the Debtors' experience, the implementation of
the ADR Procedures will give Debtors and Claimants an
opportunity to analyze the evidence and merits of their
respective case which, in the Debtors experience, vastly
increases the possibility of a prelitigation settlement.
Thus, the Debtors believe that ADR Procedures will provide a
mechanism for the early, cost-effective analysis, resolution,
and liquidation of Pending Actions.
The Debtors reminded Judge Wizmur that, as a prerequisite to the
success of the ADR Procedures, it is critical that the automatic
stay remain in effect and prohibit the commencement or
continuation of any and all prepetition personal injury,
employment law, and similar claims that have been or may be
asserted against the Debtors, except as provided in the ADR Term
Sheet. If Claimants were able to obtain relief from the
automatic stay on an ad hoc basis before they were required to
comply with the ADR Procedures, the Debtors reasoned, such
procedures would have little or no benefit to the Debtors. The
Debtors would then be forced to expend their limited time and
resources defending the Pending Actions in various courts
throughout the United States.
Therefore, the Debtors submit that the automatic stay should not
be terminated at different points of time in these cases with
respect to each Claimant whose ADR Claim is not resolved through
the demand/counteroffer stage and the mediation stage. Rather,
the stay only should be modified after the Debtors have
completed the mediation of all ADR Claims so that the litigation
of some ADR Claims will not divert the Debtors' time and money,
thereby impairing the Debtors' ability to complete the ADR
Procedure with respect to all ADR Claims.
For similar reasons, the Debtors submit that the Opt-Out
Stipulations should provide that the effective date of the
modification of the automatic stay shall be 4 months after the
date of entry of the ADR Order. The Debtors note that
preservation of the automatic stay during this time period will
enable their personnel to concentrate on the resolution of all
ADR Claims in a focused, efficient manner.
Finally, the Debtors submit that extending the ADR Injunction to
the Indemnitees is both reasonable and necessary because the
Indemnitees are named as codefendants in many of the Pending
Actions. If the ADR Injunction is not extended to the
Indemnitees, the Debtors will be required to defend the Pending
Actions on behalf of the Indemnitees, effectively negating any
benefit to the Debtors of the ADR Procedures or the ADR
Injunction. Moreover, Claimants would have no incentive to
participate in good faith in the ADR Procedures because they
could proceed against the same insurance policy outside the ADR
Procedure by virtue of their claim against the codefendants. For
the same reasons, the ADR Injunction should also enjoin direct
suits against the Third Party Payors, the Debtors represented,
citing the Sun and Mariner chapter 11 cases in which the very
same provisions were approved.
In sum, the Debtors represented that the ADR Procedures will
treat all Claimants fairly, will not excessively delay the
underlying litigation of the Pending Actions, the Claimants'
rights will not be abridged during the suspension of litigation
as the ADR Procedures are intended to enable the parties to
engage in meaningful settlement discussions and/or claims
resolution. Furthermore, if settlement of an ADR Claim is not
reached, the ADR Procedures allow each Claimant to litigate his
or her Pending Action in the court where such action would have
been filed if the Debtors were not in chapter 11.
The Debtors submit that the implementation of the ADR Procedures
will expedite the resolution of the ADR Claims, reduce the
associated costs of liquidating such claims, and control the
outflow of insurance proceeds for the benefit of all parties.
Accordingly, the Debtors sought approval of the ADR Procedures
for the benefit of the Debtors' estates and creditors.
Objections
The proposal has drawn numerous objections which the Debtors
list in a chart as follows:
Description Claimants Debtors' Response
----------- --------- -----------------
Desires general Hennessey; McGuire; Will be provided pursuant
insurance Beaty; Caldwell; to the existing ADR term
information. Wilkes sheet.
Due to its Hennessey; McGuire. The Bankruptcy Court is
"expertise" in not trying the case; it
such matters, is just being asked to
the District order the ADR Procedures.
Court should If ADR is unsuccessful,
hear employment the case returns to its
cases. original jurisdiction.
Court cannot Russo; Carpenter The term sheet makes
order mandatory clear that arbitration
arbitration. will only occur if the
claimant consents to it.
No mediation Russo; Carpenter The Debtors have chosen
Site is close 13 central mediation
to Claimant's sites. They should not be
Location. required to have a site
in every state.
Stay relief is Russo, Carpenter Ignores the benefits of
Warranted where ADR, including Debtors'
the claimant reorganization time and
only wants efforts. Also ignores
to proceed that insurance is limited
against and that certain claims,
insurance such as claims for
proceeds. punitive damages, might
not be insurable in
certain states. Finally,
it ignores that claimants
can Still move for stay
relief.
Employment McGuire This is incorrect as a
cases matter of law in a
"may not be chapter 11 case and,
Dischargeable." additionally, is entirely
irrelevant.
Procedures Hale To the contrary, costs
involve will be saved by ADR
increased burdens rather than litigation.
and costs for
claimants.
Information on Landsman/Pomerantz. The Debtors have already
excess and agreed to provide such
umbrella information.
insurance
policies should
be provided.
Debtors should Landsman/Pomerantz. This type of analysis
supply an is overly burdensome.
analysis of the In addition, because
amount of the number Claimants
insurance that seek is a "moving target"
has been : by the time the
exhausted. analysis is completed,
the number will have
changed. Thus, there is
no benefit to the
Claimant that would
justify such a burden.
ADR injunction Henry; Brooks Overruled in Sun and
improperly Wilkes Mariner cases because,
enjoins inter alia, (i) the
proceedings Debtors retain ultimate
against third liability for such third
parties. parties; (ii) the
temporary injunction
lasts a maximum of 1
year; (iii) the
injunction is necessary
to secure participation
in the ADR Procedure; and
(iv) it will save time
and costs for the
Debtors' employees.
Opt-out Henry; Wilkes Overruled in Sun and
Stipulation Mariner cases because,
should not inter alia, (i) entering
require the into an opt-out
waiver of stipulation is optional;
claims against (ii) in return Claimant
parties is getting something to
affiliated which he or she is
against the not entitled - relief
Debtors. from the stay; and
(iii) the provision is
necessary to prevent
erosion of the Debtors'
insurance & to prevent a
time drain on the
Debtors' personnel.
Discovery is Henry; Wilkes; Overruled in Sun and
too limited. Hale. Mariner cases because
(i) one purpose of the
ADR Procedures is to
streamline and to save
costs, and full
discovery does not
comport with these goals;
and (ii) discovery rights
ultimately are
unaffected; if a Claimant
believes she has too
little information to
settle the case, she is
not forced to settle, and
then can obtain complete
discovery in state court.
Debtors have Caldwell. Ms. Caldwell and her
mislead Claimants attorney have misread
on insurance Para. 11 of the ADR
availability. Motion which states that
all employment cases, as
well as personal injury
cases incurred after June
1, 2000, have a large
self-insured retention.
It does not state that
there is no self-insured
retention on employment
cases prior to June 1,
2000. The Debtors'
representation that all
employment cases are
subject to a $500,000
self-insured retention is
correct.
Third party Brooks Brooks' factual
should not extend allegations are
to claims against are incorrect. Age
Age Institute. Institute was an
additional insured
under the Debtors'
insurance policies at the
relevant time.
Accordingly, the
rationale for the ADR
injunction for this claim
is no different than the
others.
Court lacks Wilkes The Bankruptcy Court
jurisdiction lacks jurisdiction only
to enter order. to try personal injury
cases. The Debtors have
not asked the Court to
try any personal injury
claims pursuant to the
ADR motion or the TS.
The opt-out Wilkes The ADR Procedures do
Provision allow a claimant to move
Should merely for unfettered relief
State that the from stay. The opt-out
Claimant's case stipulation is merely
Is stayed and they another option.
Can move for stay
relief.
The opt-out Wilkes. Thirty-six tort claimants
stipulation is already have signed
so onerous that a nearly identical
no one would stipulation in this case
accept it. Moreover, this objection
was overruled in the
Mariner case because
each provision of the
opt-out stipulation is
warranted.
An adversary Wilkes Overruled in Mariner
proceeding is because, as here, (i) the
required to injunction is a necessary
enter the component to a much
ADR Injunction. larger procedure, and(ii)
due notice has been
given.
Statute of Wilkes Para. 2 of the ADR Term
limitations is Sheet already addresses
not tolled as to this concern by allowing
third parites. Claimants to file and
serve complaints against
third parties, which
thereafter become stayed.
Court lacks Wilkes This is not true, because
jurisdiction the insurers are
over insurance creditors who were
carriers. provided with notice and
an opportunity to object.
It is also irrelevant, as
the insurers have
consented to the ADR
Procedures.
The Procedures Wilkes. They do no such thing.
require Claimants They merely ask the
to turn over Claimant to specify why
attorney work he or she believes that a
product to valuable claim exists, so
substantiate that the Debtors can make
the claim. an informed counter-
offer.
A Sanction Wilkes. That is one potential
Against the Sanction. The additional
Debtors should language to which these
be "unqualified" Claimants object,
stay relief. "without prejudice to
seek punitive damages and
assert third party
claims," was language
demanded by a group of 80
claimants in the Mariner
case to specify that such
Sanction does not require
the waivers of the opt-
out stipulation.
If the Debtors Wilkes. They are subject to
fail to provide sanctions. Claimants have
certain requested cited the wrong section
information, they one that deals with
should be subject the Debtors' request for
to Sanctions. additional documents to
Claimants.
Immediate stay Wilkes. Nothing in these ADR
relief is Procedures prevents a
warranted for Claimant from moving
all living for stay relief and
Florida residents. arguing their version of
the Knowles decision and
its import to the
automatic stay. This
issue is irrelevant to
the entry of an order
authorizing these ADR
Procedures.
Pending stay Wilkes. Nothing in these
relief motions Procedures purports to do
should not so. Moreover, these
be denied. claimants lack standing
to assert this defense,
because they do not have
pending stay relief
motions.
(Genesis/Multicare Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
GENEVA STEEL: Posts $30.7 Million Net Loss For Q1 2001
------------------------------------------------------
Geneva Steel Holdings Corp (Nasdaq: GNVH) reported a net loss of
$30.7 million, or a loss of $4.42 per diluted common share, for
the quarter ended March 31, 2001. This compares with a net loss
of $1.7 million, or a loss of $0.11 per diluted common share,
for the same period last year. The operating loss for the
quarter ended March 31, 2001, was $27.4 million, compared with
operating income of $1.7 million during the same period last
year.
As a result of the Company's emergence from Chapter 11
bankruptcy and implementation of fresh start accounting, the
reorganized company's consolidated financial statements as of
March 31, 2001 and for periods subsequent to December 31, 2000
are not comparable to those of the predecessor company for
periods prior to December 31, 2000. For financial reporting
purposes, the effective date of the plan of reorganization is
considered to be the close of business on December 31, 2000.
Operating Results
As a result of weak market conditions, in January 2001 the
Company idled one of its two operating blast furnaces and has
since operated at a one-blast furnace level. Net sales decreased
approximately 38.7% primarily due to decreased shipments of
approximately 202,000 tons for the three months ended March 31,
2001 as compared to the same period in the previous year. The
weighted average sales price per ton of sheet and slab products
decreased by 12.0% and 9.6%, respectively, during the 2001
quarter, while the weighted average sales price per ton of pipe
and plate products increased by approximately 7.6% and 1.8%,
respectively, as compared to the same quarter in the prior year.
Sales and tons shipped during the three months ended March 31,
2001, were $98.5 million and 306,000 tons, respectively,
compared with sales and tons shipped of $160.7 million and
508,000 tons, respectively, for the same period last year.
Steel imports into the U.S. and domestic steel inventory levels
have been high and adversely affected the Company's order entry
volume and pricing. Additionally, new plate production capacity
is being added in the domestic market. The Company expects that
its overall price realization and shipments will remain at
relatively low levels for 2001 and negatively impact the
financial performance of the Company during 2001 and potentially
beyond that period. The Company believes that price realization
may start to strengthen during the second half of the year, but
there can be no assurance of such increases in pricing and
demand.
On November 13, 2000, several U.S. steel producers filed
antidumping cases against imports of hot-rolled sheet (which
includes coiled plate) from the following eleven countries:
Argentina, China, India, Indonesia, Kazakhstan, Netherlands,
Romania, South Africa, Taiwan, Thailand and Ukraine. Imports
from these eleven countries increased from 600,000 tons of hot-
rolled sheet in 1998 to 4.2 million tons in 2000. Countervailing
duty (subsidy) cases were also filed against imports from
Argentina, India, Indonesia, South Africa and Thailand. The
International Trade Commission ("ITC") made unanimous
affirmative preliminary determinations of a reasonable
indication of injury on December 28, 2000. On May 2, 2001, the
Department of Commerce ("DOC") issued preliminary affirmative
antidumping duty margins covering imports of hot-rolled sheet
steel from these eleven countries. The preliminary antidumping
duties ranged from 2.38% to 239%. The DOC also found companies
from five of these countries benefited from significant
government subsidies and imposed preliminary countervailing
duties ranging from 7% to 40%. Final antidumping duties are
expected to be issued in late July 2001. The ITC is expected to
issue a final injury determination by the end of August 2001.
The Company expects that these cases will ultimately have a
significant beneficial effect on the market, although there can
be no assurance as to the outcome or effect.
The Company owns a 50MW electric generator that can supply
electric power for internal use or for sale into the wholesale
electric market. In light of current market conditions for
wholesale electricity in the Western United States and continued
weak market conditions in the steel industry, the Company has
actively pursued several alternatives for realizing increased
value from its electric generation facilities and its ability to
curtail electricity consumption through operational changes. The
Company recently reached a verbal agreement with its electric
utility supplier pursuant to which the Company will be
compensated for curtailing its production during eight of the
most critical peak hours for power consumption each week day,
thus reducing the Company's electric load during those hours. In
addition, the utility has agreed to pay the Company spot-market-
based prices for excess generation that reduces the Company's
energy usage in other hours through operation of the generator
at higher capacities.
The Company expects to execute a written agreement within a few
days. Certain regulatory actions or approvals are necessary for
the arrangement. The Company anticipates receiving substantial
payments under the power arrangement beginning in June 2001.
Through shifting production schedules, the Company expects to
continue to produce and ship the full output from a one-blast
furnace operation. The power arrangement will extend through at
least September 15, 2001, during which time the Company will be
limited to a one-blast furnace operation. There can, however, be
no assurance that the written agreement will be signed by the
utility, that the required regulatory approvals will be granted
or that the market-based prices will be as expected.
The Company's operating costs per ton for the three months ended
March 31, 2001 increased as compared to the same period in the
prior year, primarily as a result of production inefficiencies
associated with operating at a one-blast furnace level and
significantly higher natural gas costs. Decreased production
volumes and higher natural gas costs continue to adversely
affect the Company's results of operations. Operating costs per
ton increased as production volume decreased in part because
fixed costs were allocated over fewer tons.
The Company is a party to a collective bargaining agreement with
the United States Steelworkers that was scheduled to expire on
April 30, 2001, but has been extended through May 31, 2001. The
Company anticipates that an additional extension will be agreed
upon. The Company and the Union are continuing negotiations, but
have not yet reached agreement on a new contract. Several issues
have not been resolved. There can be no assurance that a new
labor agreement satisfactory to the Company can be reached. The
Company's operations and future profitability will be adversely
affected if it is unable to reach a new labor agreement with the
union on terms and conditions satisfactory to the Company.
Liquidity
As of May 30, 2001, the Company's eligible inventories, accounts
receivable and equipment supported access to $65.1 million in
borrowings under the Company's revolving credit facility (the
"Revolving Credit Facility"). As of May 30, 2001, the Company
had $43.1 million available under the Revolving Credit Facility,
with $17.5 million in borrowings and $4.5 million in outstanding
letters of credit and other reserves.
In March 2001, the terms of the Revolving Credit Facility were
amended to extend the date to December 31, 2001 by which the
Company is required to enter into an interest rate contract or
contracts to provide protection against interest rates exceeding
8.8% per annum on $75 million of debt. On April 30, 2001, the
Company entered into a second amendment reducing to $35 million
from $50 million the minimum liquidity threshold below which
certain financial covenants apply to the Company. If borrowing
availability on the Revolving Credit Facility declines below $35
million, the Company becomes subject to an EBITDA to cash
interest expense ratio and a senior leverage ratio. These and
other financial covenants would most likely not be met if the
minimum liquidity threshold drops below $35 million, which would
require the Company to request further amendments in order to
avoid a default under the Revolving Credit Facility. In
addition, the second amendment reduced maximum allowable capital
expenditures and the Company's tangible net worth requirement.
There can be no assurance that the Company can stay above the
minimum liquidity threshold, meet its financial and other
covenants or, if necessary, obtain further amendments to the
Revolving Credit Facility.
Capital expenditures were $5.5 million and $1.5 million for the
three months ended March 31, 2001 and 2000, respectively. The
expenditures during the recently completed quarter were made
primarily in connection with the Company's blast furnace
repairs. Capital expenditures for fiscal year 2001 have been
revised in light of current market conditions and are budgeted
at approximately $15 million, which includes the blast furnace
repairs described above and other capital maintenance spending.
Given current market conditions and the uncertainties created
thereby, the Company is continuing to closely monitor and
control its capital spending levels. Depending on market,
operational, liquidity and other factors, the Company may elect
further to adjust the design, timing and budgeted expenditures
of its capital plan. There can be no assurance that the Company
will be able to limit its capital spending to the amounts
budgeted.
Geneva Steel Holdings Corp. is an integrated steel mill
operating in Vineyard, Utah. The Company manufactures steel
plate, hot-rolled coil, pipe and slabs for sale primarily in the
Western and Central United States.
INOTEK: Davis Instruments To Acquire Shares Through Merger
----------------------------------------------------------
Davis Instruments, LLC and Inotek Technologies, Inc. (NASDAQ:
INTK.OB) have entered into a definitive merger agreement in
which Davis Instruments will acquire all of the outstanding
shares of Inotek. Under the terms of the agreement, Inotek's
shareholders will receive $0.65 in cash for each share of Inotek
stock they own. The aggregate purchase price is approximately
$3.2 million.
Inotek, a Delaware Corporation based in Dallas, Texas, provides
end-users and engineering contractors with product sales and
calibration/repair servicing of process controls and
instrumentation, information management products, and test and
measurement equipment. Inotek also operates regional locations
in Charlotte, North Carolina; Chicago, Illinois; Denver,
Colorado; Houston, Texas; Kansas City, Missouri; and Tulsa,
Oklahoma. Inotek has 66 employees and trailing four-quarter
revenues of approximately $18 million.
The merger is subject to customary closing conditions and
governmental approvals, and the merger agreement is not subject
to any financing condition. The boards of directors of each
company have approved the acquisition unanimously. Inotek's
Chairman, Neal Young, and two other shareholders, who together
own approximately 69% of Inotek's outstanding common stock, have
executed written consents approving the merger and granted
irrevocable proxies to Davis supporting the transaction.
"We expect the combined strength of Davis and Inotek to provide
tremendous value to our combined customer base," stated Davis
Instruments' CEO Lee Rudow. "The acquisition will benefit
Inotek's current customers, as the combined companies can
provide a much broader product offering and increased
calibration service capabilities. The acquisition will also
provide opportunities to achieve operational efficiencies that
otherwise would not be realized by either company operating
independently."
"The acquisition of Inotek now provides Davis Instruments the
ability to extend its product and services reach nationally,"
said Rudow. "This acquisition presents Davis with a most
promising opportunity to lead the national calibration services
and asset management marketplace."
Neal Young, Chairman of Inotek Technologies, said: "We are
excited to complete this transaction. Our combination with Davis
provides great benefits to our shareholders, customers, and
employees."
Davis Instruments, LLC, a Baltimore, MD-based limited liability
company, is a leader in the distribution, development,
manufacture and service of electronic instrumentation that is
used principally for measurement, indication and transmission of
information. Davis Instruments, founded in 1912, is owned by JPB
Enterprises, Inc., a Columbia, MD-based private investment
holding company. Additional information about Davis Instruments
may be obtained at http://www.davis.com/
LERNOUT & HAUSPIE: Taps Learning Company As Product Distributor
---------------------------------------------------------------
The Learning Company (TLC), a leading publisher of productivity
and education software, reached an agreement in principle with
L&H Holdings USA, Inc., a chapter 11 debtor in a case pending
before the United States Bankruptcy Court for the District of
Delaware and L&H Applications USA, Inc. to be the sole
distributor, within the United States and Canada, of the L&H
Voice Xpress(TM) and Dragon Naturally Speaking(R) consumer
product lines through retail, e-tail and direct-to-consumer
channels. L&H is currently the leader in the $35 million US
retail speech recognition software category with over 70% market
share, according to NPD INTELECT (for the 12 months ending March
2001).
"The Dragon Naturally Speaking and L&H Voice Xpress product
lines are category leaders and will make a great addition to our
existing lines of market leading productivity products," said
Joe Roberts, general manager of the Broderbund Division of The
Learning Company. "We plan to fold these products into the
existing marketing and sales plans of our productivity lines and
believe that the L&H products will benefit greatly from being
marketed alongside industry leading brands such as The Print
Shop(R), 3D Home Architect(R), Family Tree Maker(R) and others."
John Shagoury, president of L&H's Speech and Language Solutions
Group, said, "We see tremendous value in our relationship with
The Learning Company -- their retail marketing and distribution
strength coupled with L&H's world-leading speech recognition
products will allow us to maximize our sales in the consumer
market. Further, this agreement will allow L&H to focus its
resources on marketing and selling our speech recognition
products in the corporate/enterprise market while realizing the
full value of our technology investments overall."
The agreement with Holdings is subject to approval by the
Bankruptcy Court presiding over Holding's chapter 11 bankruptcy
case. Following Bankruptcy Court approval, The Learning Company
plans to re-launch the L&H retail product lines with strong
promotion and marketing support to take advantage of the second
half of the year's sales strength, as well as the post-holiday
opportunities for Q1 2002 and beyond.
About The Learning Company
The Learning Company (TLC) is a leading, worldwide publisher of
innovative, interactive consumer software with more than 65
million users worldwide. The company develops and publishes some
of the all-time best selling consumer software under brands such
as The Print Shop, Reader Rabbit, 3D Home Architect, Carmen
Sandiego, and Clue Finders. TLC is also the licensed publisher
of software under the Arthur, American Greetings, Scooby-Doo,
Family Tree Maker and Cosmopolitan Magazine brands. The
company's products are distributed worldwide on PCs, PDAs, Game
Systems and online, using a multi-channel approach that includes
retail, OEM licensing, and direct-to consumers at home, in
schools and in businesses.
LERNOUT & HAUSPIE: Buys More Time To File Plan Exclusively
----------------------------------------------------------
Lernout & Hauspie Speech Products NV (L&H) is seeking to keep
creditors from filing competing plans in its U.S. chapter 11
case for another 60 days while it tries to put together a
chapter 11 plan to complement the one it recently proposed in
Belgium, according to Dow Jones. The request would give the
Belgium-based speech recognition software company the exclusive
right to file a plan in its U.S. case until July 30. It was set
to expire Tuesday, May 29.
If the company filed a plan by July 30, it would further
maintain its plan exclusivity through Sept. 26 while it solicits
plan votes and seeks plan confirmation. Although the extension
request wouldn't directly apply in the company's reorganization
proceeding in Belgium, the Belgian plan-which could be put to a
creditor vote as early as June 5-contains a provision
"practically suspending" its effect until a plan containing
similar terms is confirmed in the United States.
Moreover, the Ieper Court in Belgium said that three former top
L&H executives must remain in custody while a fraud
investigation continues. The court agreed to keep Jo Lernout,
Pol Hauspie and Nico Willaert in jail for an additional 30 days.
Former Chief Executive Officer Gaston Bastiaens, who was
arrested last week in Massachusetts, was arraigned Tuesday in
the United States. The public prosecutor in Ieper has requested
that he be extradited, but the U.S. Justice Department may
decide to try him in the United States. (ABI World, May 30,
2001)
LOEWEN GROUP: Selling Certain Assets In Indiana
-----------------------------------------------
The Loewen Group, Inc. and 6 Selling Debtors (seven Assigning
Debtors) seek the Court's authority,
(1) to sell cemetery businesses plus related assets at 4
locations in Indiana (the Sale Locations), and the management
businesses relating to 2 other locations in Indiana (the Managed
Locations), to the entity that the Debtors, in their sole
business judgment, determine has submitted the highest and best
offer;
(2) to assume and assign to the Purchaser the executory
contracts and unexpired leases presented with the motion for the
Court's approval
pursuant to Sections 363 and 365 of the Bankruptcy Code, and the
Court's Disposition Order (A) Approving Global Bid Procedures
Program and (B) Authorizing Debtors to Grant Pre-Approved Bid
Protections to Prospective Purchasers, dated January 21, 2000.
The Initial Bidder (Futura Group, LLC) has agreed to pay an
aggregate purchase price of $750,000.00 for the Sale Locations
and the Businesses, subject to higher and better offer in
accordance with the Bidding Procedures. The Initial Bidder paid
to the Selling Debtors a deposit in the amount of $37,500.00
upon the execution of the Purchase Agreement and agrees to pay
the remainder of the Purchase Price at the closing.
The Sale Locations are:
(1) Bicknell Memorial Cemetery (Loc. No. 5834) at 1102
Alexander Street Bicknell, IN 47512;
(2) Park View Cemetery (Loc. No. 5798) at 104N. Harrison
Alexandria, IN 46001;
(3) Rest Haven Memorial Park (Loc. No. 5608) at 1200
Sagamore Parkway North Lafayette, IN 47904;
(4) Sugarland Memorial Gardens Loc.No. (Loc. No. 5671) at
10 Northeast Fourth Street, Washington, IN 47501
The Managed Locations are:
(1) Ever Rest Memorial Park, Inc. (Loc. No. 5681) at 83l5
East US 24, Logansport, IN 46747;
(2) Green Lawn Cemetery, Inc. (Loc. No. 5522) at 496 West
Circle 200 South Frankfort, IN 46041.
The Selling Debtors are:
* Bicknell Memorial Cemetery, Inc.;
* Alexandria Cemetery Association, Inc.;
* Rest-Hawn Cemetery Association, Inc.;
* Daviess Co. Cemetery Assoc., Inc.;
* Great Lakes Cemetery Corp.; and
* EMRP Cemetery, Inc.
Expenses
The Initial Bidder is entitled to Expenses in the amount of
$15,000.00 if the Selling Debtors fail to consummate the
Transaction contemplated by the Purchase Agreement, but only if
the failure to consummate the Transaction is because (i) the
Selling Debtors accept a higher or better offer from another
entity and actually close the sale with, and receive the
Purchase Price from, such entity or (ii) the Selling Debtors
materially breach their obligations under the Purchase Agreement
and the Initial Bidder does not materially breach its
obligations under the Purchase Agreement.
Liens, Claims and Encumbrances
The Selling Debtors believe that any and all liens, claims,
encumbrances and other interests in or against the Sale
Locations and the Businesses are subject to money satisfaction
in accordance with section 363(f)(5) of the Bankruptcy Code.
Accordingly, the Selling Debtors seek to sell the Sale Locations
and the Businesses free and clear of all Property Interests,
pursuant to sections 363(b) and 363(f) of the Bankruptcy Code,
with all such Property Interests to attach to the net proceeds
of the sale with the same validity and priority as they attached
to the Sale Locations and the Businesses.
Transfer of Net Sale Proceeds
In accordance with the Net Asset Sale Proceeds Procedures, the
Debtors will use the proceeds generated to repay any outstanding
balances under the Replacement DIP Facility and deposit the net
proceeds into an account maintained by LGII at First Union
National Bank for investment, pending ultimate distribution on
court order. The Debtors advised that currently, there are no
net borrowings outstanding under the Replacement DIP Facility,
so this provision is not presently operative. The Debtors
covenant to comply with this provision to the extent that it
becomes operative in the future. Funds necessary to pay bona
fide direct costs of a sale may be paid from the account without
further order of the Court. The Debtors will deposit the net
proceeds into an account maintained by LGII at First Union
National Bank for investment, pending ultimate distribution on
court order.
Executory Contracts and Unexpired Leases
The Debtors seek to assume and assign to the Purchaser 9
executory contracts/unexpired leases: 1 Rental Agreement, 1
lease, 2 Management Agreements and agreements related to Copier
Usage, waste, septic service, water cooler, and waste removal.
The Debtors do not believe that they could market the Assignment
Agreements outside of the context of a sale of the Sale
Locations and the Businesses. The Debtors believe it is in the
best interest of the estates to assume and assign the
agreements.
The Debtors submit that, since the Petition Date, they have
continued to comply with their obligations under each of the
Assigmnent Agreements. As a result, the Debtors do not believe
that there are any monetary defaults or cure costs associated
with the assumption and assignment of the Assignment Agreements.
The Debtors, however, are continuing to review each of the
Assignment Agreements and will notify the nondebtor party to an
Assignment Agreement immediately if they identify any cure
obligation associated with that agreement.
Neweol Purchase Agreement
In connection with the proposed sale of the Sale Locations,
Neweol would sell and the Initial Bidder would purchase certain
accounts receivable related to the Sale Locations pursuant to a
purchase agreement between Neweol and the Initial Bidder. The
amount of the Neweol Allocation will be determined immediately
prior to closing.
Bidding Procedures
Any entity that desires to submit a competing bid for the Sale
Locations and Businesses may do so in accordance with the
following Bidding Procedures approved by the Disposition Order:
(1) Any competing bid for the Sale Locations and Businesses
must be in writing and comply with the following (each a
"Qualified Competing Bid");
(2) The bid must be served upon (and actually received by)
the parties identified on the Service List on or before 5:00
p.m., Eastern Time, five business days prior to the Hearing Date
(a hearing on the motion is scheduled for May 18, 2001 at 9:30
a.m. before Judge Walsh);
(3) The bid must exceed $787,500.00, i.e., 3% above the
Purchase Price plus the applicable Expenses;
(4) The bid must be on the same or more favorable terms and
conditions as set forth in the Purchase Agreement with the
Initial Bidder;
(5) The bid must not be contingent upon any due diligence
investigation, the receipt of financing or any board of
directors, shareholders or other corporate or partnership
approval;
(6) The bid must be accompanied by proof, in a form
satisfactory to the Debtors, of the entity's financial ability
to consummate its offer to purchase the Sale Locations and
Businesses;
(7) The bid must contain an acknowledgment that the
successful bidder for the Sale Locations and Businesses will be
obligated to submit a Deposit and execute a purchase agreement
containing terms and conditions substantially similar to the
Purchase Agreement; and
(8) The bid must contain an acknowledgment that the bid
shall remain open and irrevocable, subject to certain conditions
relating to material adverse changes in the business operations
of the Sale Locations and the Businesses and acceptable to the
Debtors until (i) the Court approves the sale of the Sale
Locations and the Businesses to another entity and (ii) the
Debtors close the sale with, and receive the Purchase Price
from, such entity.
(9) If one or more Qualified Competing Bids are received,
an auction will be conducted for the Sale Locations and
Businesses at 2:00 p.m., Eastern Time, on the last business
day before the Hearing Date, at the offices of Morris, Nichols,
Arsht & Tunnell, the Debtors' Delaware counsel;
(10) The Debtors will notify all bidders submitting
Qualified Competing Bids at least two business days before the
date of the Auction;
(11) At the Auction, competing bidders (including the
Initial Bidder) may submit bids for the Sale Locations and
Businesses in excess of the Purchase Price, provided that such
bids (i) are in increments of 3% (subject to rounding) of the
Purchase Price and (ii) otherwise comply with the requirements
for Qualified Competing Bids.
(12) At the Auction, the Debtors may select, after
consulting with the Creditors' Committee, the Successful Bid
that they, in their sole business judgment, determine to be the
highest and best bid for the Sale Locations and Businesses;
(13) The Debtors reserve the right at the Auction to: (i)
consider offers for individual or subpackages of the Sale
Locations and the Businesses, as opposed to all of the Sale
Locations and the Businesses; or (ii) accord greater weight to
offers for all of the Sale Locations and the Businesses, as
opposed to offers for individual or subpackages of the Sale
Locations and the Businesses. The Debtors further reserve the
right to refuse to consider the bid of any bidder that fails to
meetthe procedures established by the Debtors at the Auction or
to submit a Qualified Competing Bid;
(14) The Selling Debtors will seek authority to enter into
the Purchase Agreement with, and consummate the sale of the Sale
Locations and the Businesses to, the bidder submitting the
Successful Bid at the hearing on the Motion.
(15) If no Qualified Competing Bids are received for the
Sale Locations and the Businesses, the Debtors may, after
consulting with the Creditors' Committee, seek the Court's
approval of the Purchase Agreement and the Transaction without
conducting the Auction. (Loewen Bankruptcy News, Issue No. 39;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
LOEWS CINEPLEX: Pacific Capital Backs Out of Buyout Plan
--------------------------------------------------------
Loews Cineplex Entertainment Corp. confirmed that Los Angeles-
based investment bank Pacific Capital Group has withdrawn from a
group of investors planning an $850 million buyout of North
America's second-largest theater circuit, according to The
Hollywood Reporter. The move leaves Canadian billionaire Gerald
Schwartz's Onex Corp. and Los Angeles investment firm Oaktree
Capital Management to battle for control of Loews Cineplex from
its creditors, a group that petitioned to file a rival
bankruptcy plan last week.
On Friday, Loews filed a motion with the U.S. Bankruptcy Court
in Manhattan asking the court to cancel a series of subpoenas
issued by its creditors' committee that asks to have several of
its senior executives deposed, according to Dow Jones. The
motion accuses the committee of attempting to disrupt the
company's attempt to reorganize. The committee sent subpoenas on
Friday to Chief Executive Lawrence Ruisi; Travis Reid, president
of Loews Cineplex United States; and John Walker, senior vice
president and chief financial officer of Loews Entertainment.
The committee also subpoenaed Jim Millstein, a managing director
of Lazard Freres & Co., the company's financial adviser during
its reorganization. The committee wants to depose the four
executives at the June 1 hearing, during which it also will seek
to end Loews' exclusive period to file a reorganization plan and
solicit plan acceptances. (ABI World, May 30, 2001)
LOIS/USA, INC: Applies for Order Extending Exclusive Periods
------------------------------------------------------------
Lois/USA Inc. and its debtor affiliates seek a court order
extending the exclusive periods within which they may file a
Chapter 11 plan and solicit acceptances thereto.
The debtors recently settled an adversary proceeding against
Orthodontic Centers of America. The stipulation settling this
proceeding has been presented to the court for approval. The
debtors are also involved in a contentious adversary proceeding
with Proscape Technologies involving more than $550,000 in
receivables. The debtor is currently reconciling 800 proofs of
claim, and this process impacts the collection of the account
receivables.
In addition the Committee has commenced an adversary proceeding
against the lenders on the grounds of bad faith and
misrepresentation. The Committee seeks damages in the sum of $40
million and the disallowance or equitable subordination of the
lenders' claims. The court recently dismissed certain claims and
others will go forward against the lenders. The outcome of this
action will have a significant impact on the debtors' plan and
the ultimate recovery by general unsecured creditors.
The debtors seek to extend the debtors' exclusive period for
filing a Chapter 11 plan through and including august 31, 2001,
and the debtors' exclusive period for obtaining acceptances of
any such plan through and including October 31, 2001.
MIDLAND FOOD: Bay View Mortgage Seeks to Terminate Exclusivity
--------------------------------------------------------------
Bay View Franchise Mortgage Acceptance Company seeks to
terminate the exclusive periods during which the debtor may file
and solicit acceptance of a plan of reorganization.
According to Bay View, the debtor intends to effectuate a
"cramdown" of the plan pursuant to Section 1129(b).
Bay View stated that the plan violates 1129(b)(2)(B)(ii) and the
absolute priority rule because the holders of claims which are
junior to the Class 5 unsecured claims are retaining property
under the plan in the form of their equity interests as such
interests are defined in the plan.
Pursuant to the debtor's Disclosure statement, the estimated
recovery to general unsecured claims is approximately 3.4%.
Class 2 secured claims and Class 5 secured claims are impaired.
The Class 4 FMAC Secured Claim is also classified as impaired.
The equity interests, however, are classified as unimpaired.
Therefore, Bay View states that the plan as proposed is
unconfirmable. Bay View pointed out that the patent defect in
the debtor's plan, in which old equity retains its ownership
interest without contributing any new capital, does not even
reach the issue as to whether the new value is sufficient, as
there is simply no "new" value being contributed. This is a
violation of the absolute priority rule at its basest level. Bay
View stated that cause clearly exists to terminate exclusivity.
According to Bay View, the debtor has effectively exposed its
equity interests to competitive bidding, and therefore any
rights to exclusivity have been forfeited.
MUSICMAKER.COM: Taps Bid4Assets & Schottenstein For Asset Sales
---------------------------------------------------------------
Bid4Assets, Inc., a leading asset disposition and advisory
services company, will auction select assets from Musicmaker.com
and other local area technology companies. The auction will
include high-end computer equipment, such as servers,
workstations, monitors and laptops, a large inventory of high-
capacity CD duplication machines and a wide variety of high-end
office furniture. The live auction will be held June 13 at 10780
Parkridge Blvd., Suite 50 in Reston, Va.
Asset inspection for Musicmaker.com will be held June 12 from 10
a.m. - 4 p.m. at the auction location in Reston, Va. Additional
inspection and sale information will be announced as it becomes
available. Interested bidders can contact Bid4Assets with
questions by calling (877) 427-7387 or by email at
service@bid4assets.com. Photographs and other due diligence
materials are available online at www.bid4assets.com.
"We're helping technology companies throughout the country
access the broadest possible buyer base for their assets," said
Bid4Assets President Jim Russell. "This is a great opportunity
for growing companies to purchase the equipment and furniture
they need at competitive prices. We are very excited to offer
high-capacity CD duplication machines for sale."
About Bid4Assets, Inc.
Bid4Assets, Inc. (http://www.bid4assets.com)is a leading asset
disposition and advisory services company that sources assets
from financial institutions, government agencies, bankruptcies
and private industry. Bid4Assets combines a centralized Internet
marketplace with essential offline solutions to sell financial
instruments, real estate, intangible property, personal property
and bankruptcy claims to a worldwide network of sophisticated
buyers more quickly and efficiently than traditional methods.
Since its launch in November 1999, Bid4Assets has conducted more
than 4,000 auctions for assets in all 50 states. The company is
located in Silver Spring, Md., phone (301) 650-9193, fax (301)
650-9194.
About Schottenstein Bernstein Capital Group
Schottenstein Bernstein Capital Group (SBCG) is a leading asset
disposition firm specializing in distressed and non-performing
assets. Schottenstein owns and operates retail businesses with
sales of more than $2 billion annually. For more than 25 years,
the asset recovery professionals of SBCG have helped hundreds of
clients convert under-performing inventories, receivables,
fixtures and real estate into cash. SBCG works with a wide range
of businesses, from healthy companies in transition desiring
liquidity for under-performing assets, to firms in Chapter 11
requiring appraisal and/or full liquidation service.
Transactions have ranged in value from $1 million to $500
million and store groups from one to 500 across the U.S. and
Canada. The company is located in Great Neck, NY; phone (516)
829-2400, fax (516) 829-2404.
NAMIBIAN MINERALS: Delays Filing Q1 Interim Statements
------------------------------------------------------
Namibian Minerals Corporation ("Namco") (Nasdaq: NMCOF)
announced that the filing of its interim financial statements
for the first quarter ended March 31, 2001 will be briefly
delayed past the May 30 due date.
The delay arises as a result of a combination of events
including the accident to the Company's NamSSol mining system,
the subsequent deterioration of Namco's financial position, the
provisional liquidation of certain subsidiary companies and
refinancing initiatives and the subsequent intensive time and
effort which was expended by Namco to prepare and file its
annual audited statements, management's discussion and analysis,
annual information form and annual report (all of which has been
filed with securities regulators). In addition, the Company has
been devoting its efforts to the preparation and filing of a
preliminary long form prospectus to qualify the exercise of
special securities issued by it in recent private placement
transactions previously announced. The prospectus was filed
yesterday, together with a full technical report prepared in
accordance with the new National Instrument 43-101 of the
Canadian Securities Administrators.
Although the British Columbia and Ontario Securities Commissions
have the power to impose a cease trade order in respect of
trading in Namco's securities due to the delay, Namco
anticipates that the interim statements will be filed no later
than Wednesday, June 6, 2001, a delay of one week. Until the
interim statements are filed, Namco intends to satisfy the
provisions of the "alternate information guidelines" pursuant to
Ontario Securities Commission Policy 57-603. Pursuant to the
Policy, if Namco's interim statements have not been filed by
July 30, 2001, the Ontario Securities Commission may issue a
cease trade order in respect of Namco's securities. Given the
brief delay in filing anticipated by Namco, Namco does not
believe this aspect of the Policy will have relevance to it.
PACIFIC GAS: Committee Asks for Permission to Continue Trading
--------------------------------------------------------------
Pacific Gas & Electric Co.'s committee of unsecured creditors is
seeking a court order that would allow some of its members to
serve on the committee without forfeiting their ownership of
company securities. The motion, filed with Judge Dennis Montali
of the U.S. Bankruptcy Court in San Francisco on May 18, asks
that an "ethical wall" be constructed. This will allow a
committee member to represent a company that owns a stake in
company securities as long as he has no contact with his
colleagues who buy and sell the securities. A hearing on the
matter is slated for today, June 1. (ABI World, May 30, 2001)
PINNACLE HOLDINGS: S&P Lowers Senior Unsecured Rating To CCC
------------------------------------------------------------
Standard & Poor's lowered its ratings on communications tower
operator Pinnacle Holdings Inc. (see list below) The ratings
remain on CreditWatch with negative implications, where they
were placed Feb. 7, 2001.
In addition, Standard & Poor's assigned a single-'B'-minus
rating to operating subsidiary Pinnacle Towers Inc.'s $520
million aggregate secured bank facilities.
The ratings downgrade is based on the weakening financial
profile Pinnacle exhibited in 2000, the result of an increased
reliance on debt funding compared with levels anticipated by
Standard & Poor's. More importantly, Standard & Poor's has
heightened concern about Pinnacle's credit profile in 2001
because of the company's significant reliance on the paging
sector.
This sector has been subject to substantial financial
deterioration over the past six to 12 months, including the
bankruptcy filing of TSR Wireless and PageNet and the debt
default of Metrocall.
Pinnacle has not been able to access the capital markets because
of an SEC investigation initiated in August 2000 and, as a
result, cancelled a planned secondary equity offering in 2000.
Nevertheless, the company's cost structure reflects its ongoing
development costs for acquisitions, construction, and expansion
of the customer base, which have been incurred despite the
company's very limited acquisition activities in 2000. Such
expenses, in turn, have resulted in declines in operating cash
flow margins, which totaled 33% for 2000 versus 50% in 1999.
Moreover, EBITDA interest coverage and total debt to EBITDA were
a weak 0.9 times (x) and 15.8x, respectively, for 2000,
including non-recurring items. Furthermore, the company was not
in compliance with two of the financial covenants in its $520
million secured bank facilities for the fourth quarter of 2000,
and had to obtain waivers and amendments to the bank covenants
which increased the overall fees and interest rate on the
facilities. Pinnacle will face the challenge of meeting the
financial covenant requirements for the remainder of 2001, which
become increasingly tighter than those required in 2000.
Moreover, the company must meet a $13 million amortization
requirement in the latter half of 2001.
The bank loan rating is the same as the corporate credit rating,
reflecting the uncertainty that exists as to whether the
company's tower portfolio would provide full recovery of the
fully drawn bank facility in a distressed scenario, based on the
value ascribed to the company's assets, including its nearly
2,500 owned revenue-producing tower portfolio, additional towers
that would be acquired with further draw-downs on the bank
facility, and other assets. The unsecured debt is rated two
notches lower than the corporate credit rating, reflecting the
company's increased reliance on bank debt in the capital
structure compared with Standard & Poor's previous expectations.
Total priority obligations relative to the value of the
company's assets now exceed Standard & Poor's 30% threshold for
two notches.
Pinnacle is a communications tower operator with an asset base
consisting of nearly 4,000 towers either owned or leased. Unlike
many of its competitors, the company's core strategy has been
focused on consolidating small tower operators rather than on
obtaining leasing rights from major wireless carriers as anchor
tenants. As a result, the credit risk of the company's overall
customer portfolio is somewhat higher than the other major tower
operators. Although Pinnacle has made a concerted effort to
reduce dependence on the paging sector through expansion of
telephony and other services, 26% of the company's revenues is
still generated from this financially fragile sector.
The company faces significant constraints for its business
expansion plans due to the ongoing SEC inquiry regarding the
company's dealings with its public accounting auditor Price
Waterhouse Coopers (PWC). This inquiry has focused on Pinnacle's
use of PWC in providing professional services related to its
acquisition of 1,858 towers from Motorola in 1999. This
investigation and the ensuing restatement of 1999 and 2000
financial statements have spawned a shareholder lawsuit against
the company and certain officers, alleging misleading statements
about the company's financial statements. The uncertainties
surrounding resolution of these matters will likely continue
to constrain the company's access to capital in 2001, thereby
limiting its ability to grow its tower base.
The ratings remain on CreditWatch based on the fact that the
company's near-term liquidity could be adversely affected if it
is unable to meet financial covenant requirements under its bank
facilities. Such concerns are exacerbated by the risk that the
SEC investigation could result in restatements or other changes
in accounting for acquisition activities that will affect such
bank compliance. Pinnacle also faces the challenge of improving
its financial profile in 2001 through cost-cutting efforts
designed to limit its fixed development expenses, as it
currently has very limited prospects for implementing its
acquisition plans. Standard & Poor's will monitor the company's
improvement in credit measures and compliance with bank
financial covenants over the next several quarters and assess
the impact of the final resolution of the SEC inquiry on the
company's ratings.
Ratings Lowered And Remaining On CreditWatch Negative:
Pinnacle Holdings Inc. To From
Corporate credit rating B- B+
Senior unsecured debt CCC B
Ratings Assigned & Placed On CreditWatch Negative
Pinnacle Towers Inc. Rating
$285 million secured revolving credit B-
$125 million secured term loan B-
$110 million secured term loan B-
PLAY BY PLAY: Richard Neitz Resigns As President And COO
--------------------------------------------------------
On May 23, 2001, Play By Play Toys & Novelties, Inc. received
the resignation of Richard R. Neitz from his position as
President and Chief Operating Officer and member of the
Company's Board of Directors.
PNV INC: Seeks To Extend Exclusive Period Through June 18
---------------------------------------------------------
PNV Inc., f/k/a Park 'N View, Inc., moves for an additional
extension of the exclusivity period during which only the debtor
may file a Chapter 11 plan, pursuant to 11 USC Section 1121(d).
The debtor and the Bondholders' Committee have exchanged drafts
and comments and are still in the process of working to resolve
issues relating to the plan and disclosure statement. PNV
received the Committee's comments on the plan on May 7, 2001 and
expects to receive the Committee's proposed revisions to the
Disclosure statement shortly. PNV continues to believe that the
value of the estate's assets can be maximized through PNV's
proposed plan. In order to allow the opportunity for PNV and the
Committee to continue their work on the proposed plan and
disclosure statement prior to filing, the debtor requests
additional 30-day extension of the exclusivity period through
June 18, 2001.
RESORT AT SUMMERLIN: Asks For 60-Day Extension of Exclusivity
-------------------------------------------------------------
The Resort at Summerlin, Limited Partnership, and The Resort at
Summerlin, Inc. seek a further extension for sixty days of the
plan filing and solicitation exclusivity periods. The debtor
seeks an extension of sixty days, until July 23, 20001, the
period during which the debtors shall have the exclusive right
to file a plan and extending until September 19, 2001,
the period during which the debtors shall have the exclusive
right to confirm a plan.
The hearing on the motion will be held on June 19, 2001 at 1:30
PM, US Bankruptcy Court, District of Nevada.
SAFETY-KLEEN: Selling Illinois Real Property To Land Trust
----------------------------------------------------------
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, have brought a
Motion seeking to sell Systems' interest in real property
located in Elgin, Illinois, to Lake Forest Bank & Trust as
Trustee for the Land Trust 1345, 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 1.79 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 is 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 $156,590. 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
$166,590 - $10,000 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 $10,000 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 $9,414, 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)
SILVERLEAF RESORTS: Indenture Trustee Issues Notice of Default
--------------------------------------------------------------
Silverleaf Resorts, Inc. (NYSE: SVR) announced that it has
received a notice from the Trustee under the Indenture for its
10-1/2% Senior Subordinated Notes due 2008.
The notice declares all principal, interest and other charges
under the Subordinated Notes to be immediately due and payable
as a result of an event of default which occurred when
Silverleaf was unable within an automatic 30 day cure period to
remit the interest payment due to the Trustee on April 1, 2001.
Silverleaf intends to continue ongoing discussions with the
holders of the Subordinated Notes and their representatives
concerning restructuring of the Company's indebtedness to them.
The principal amount outstanding under the Subordinated Notes is
approximately $66.7 million.
As previously announced on February 26, 2001, Silverleaf's
liquidity has been adversely impacted due to the limited amount
of financing available to it under credit facilities with its
senior lenders and its inability to date to obtain new sources
of financing. Therefore, Silverleaf's ability to continue to
operate as a going concern remains in question. Silverleaf is
continuing its efforts to negotiate definitive forbearance
agreements and other relief under credit facilities with its
existing senior lenders.
Silverleaf is continuing to work with its financial advisors to
identify other possible strategic alternatives in view of its
lack of liquidity. It is foreseeable that an integral part of a
financial restructuring plan or any other available alternative
may involve Silverleaf filing for protection from its creditors
under applicable law.
Based in Dallas, Texas, Silverleaf Resorts, Inc. currently owns
and/or operates 22 resorts in various stages of development.
Silverleaf resorts offer a wide array of country club-like
amenities, such as golf, swimming, horseback riding, boating and
many other organized activities for children and adults.
Silverleaf has a managed ownership base of over 122,000.
TELIGENT INC.: Howard Jonas Steps Down As Chairman of the Board
---------------------------------------------------------------
Teligent, Inc. announced that Howard Jonas resigned as chairman
of the board. Jonas replaced Alex Mandl as chairman on April 30,
2001. Microwave Services Inc. is entitled to fill the board
vacancy, under a prior agreement, according to a filing made
with the Securities and Exchange Commission. (New Generation
Research, May 30, 2001)
TEXFI INDUSTRIES: Asks To Extend Exclusive Period To September 7
----------------------------------------------------------------
Texfi Industries, Inc. seeks a court order further extending the
exclusive periods for the debtor to file a plan of
reorganization and to solicit acceptances thereof. A hearing on
the motion will take place before the Honorable Arthur J.
Gonzalez on June 5, 2001 at 10:00 AM, US Bankruptcy Court,
Southern District of New York.
The debtor seeks entry of an order pursuant to Section 1121(d)
of the Bankruptcy Code further extending the exclusive Periods
by an additional 90 days as to all parties in interest except
the Committee. The Exclusive Periods expired as to the Committee
on July 1, 2000, in accordance with the terms of the First
Financing Orders. The debtor seeks an extension through and
including September 7 and November 6, 2001, respectively.
The debtor has recently located a potential plan investor that
has the financial capacity to make a significant equity
investment in the debtor.
The debtor believes that it is unlikely that it will be able to
finalize the terms of an agreement with its plan investor and
submit a plan before June 9, 2001, the date on which debtor's
current exclusive period is set to expire.
The debtor needs additional time to resolve an agreement with
BOA and expects to reach a similar agreement with BancBoston in
the near future.
Therefore the debtor needs additional time to reach an agreement
with its plan investor and to negotiate with its secured
creditors, the Committee, the US Trustee and other parties in
interest to prepare and finalize a consensus plan to present to
the court.
The debtor is represented by Stephen B. Selbst and Barbra R.
Funt, Of McDermott, Will & Emery.
THERMADYNE HOLDINGS: Lenders Grant Waiver of Covenant Defaults
--------------------------------------------------------------
Thermadyne Holdings Corporation (BB: TDHC.OB) announced that it
has entered into a forbearance agreement with its bank lending
group under which the lenders agree to refrain from exercising
any rights or remedies in respect of certain existing financial
covenant and other defaults existing under the Company's credit
agreement through July 31, 2001.
As previously announced, the Company received a waiver of
certain financial covenants through May 23, 2001.
The Company also announced that it has begun discussions with
members of an informal committee of holders of its subordinated
debt issued by Thermadyne Holdings and its subsidiary Thermadyne
Mfg. LLC, with a goal of reaching a consensual restructuring of
the debt.
"Thermadyne is pleased by the ongoing discussions with our
stakeholders. I am optimistic that we will find a permanent
solution that is equitable to all parties in the near term,"
stated Karl Wyss, chairman and chief executive officer of
Thermadyne.
"The Company continues to perform well, and is fully meeting the
needs of our customers. Thermadyne is positioned to meet its
goal of emerging from a restructuring as a strong, healthy
company with an appropriate capital structure within months,"
Mr. Wyss concluded.
The Company has received a payment blockage notice from the bank
lending group, prohibiting any further payments under Thermadyne
Mfg. LLC 9 7/8% Senior Subordinated Notes due 2008, including
the semi-annual interest payment of approximately $10 million
due on June 1, 2001.
Thermadyne, headquartered in St. Louis, Missouri, is a
multinational manufacturer of cutting and welding products and
accessories.
For more information, contact James Tate, senior vice president
and chief financial officer, Thermadyne Holdings Corporation at
(314) 746-2107.
TOKHEIM CORPORATION: PwC Resigns As Public Accountants
------------------------------------------------------
Following the solicitation by Tokheim Corporation of bids for
independent public accountants, PricewaterhouseCoopers LLP
informed the Chief Financial Officer of the Company via
telephone on May 18, 2001, that PwC was not going to make a
proposal to continue as the Company's independent public
accountants and that PwC resigned as the current independent
public accountants of the Company effective immediately. PwC
sent the Company a letter on May 18, 2001, confirming that the
client-auditor relationship between the Company and PwC had
ceased. PwC had served as the Company's independent public
accountant for more than 15 years.
In the second quarter of 1999, the Company and PwC had a
disagreement over the propriety of charging certain payroll
costs to acquisition reserves. The financial statements were
adjusted to PwC's satisfaction prior to the filing of the second
quarter report.
In the two most recent fiscal years and through May 18, 2001,
there have been no reportable events (as defined in Regulation
S-K Item 304(a)(1)(v)) except as follows:
(1) In connection with the audit of the fiscal year ended
November 1999 financial statements, PwC advised the Company in
PwC's report to the Company's Audit Committee of an internal
control deficiency at one of the Company's US subsidiaries,
specifically inadequate inventory control and valuation
procedures. The Company undertook certain steps to address the
internal control deficiencies. The Company's Audit Committee
discussed the subject matter of PwC's report with PwC.
(2) In connection with the audit of the fiscal year ended
November 2000 financial statements, PwC advised the Company in
PwC's report to the Company's Audit Committee of an internal
control deficiency at one of the Company's German subsidiaries,
specifically, inadequate preparation of reconciliations, account
analyses and supporting documentation in a timely manner. The
Company provided the required reconciliations, account analyses
and supporting documentation prior to the completion of the
audit. The Company's Audit Committee discussed the subject
matter of PwC's report with PwC.
The Company has not engaged a successor independent accountant
at this time.
TRICO STEEL: Wants More Time to Assume Or Reject Leases
-------------------------------------------------------
The debtor, Trico Steel Company LLC requests an order, pursuant
to section 365(d)(4) of the Bankruptcy Code, extending the date
on or before which the debtor may assume or reject unexpired
leases to September 26, 2001.
The requested extension is necessary to maximize value for the
debtor's estate through an orderly liquidation of its assets
and, ultimately, a sale of the debtor's mill. If the deadline is
not extended beyond May 26, 2001, the debtor may be compelled,
prematurely, to assume, long-term liabilities under the
unexpired leases or forfeit valuable benefits to the detriment
of the debtor's estate and creditors. The decision to assume or
reject a particular unexpired leases and the timing of such
assumption or rejection depends in large part on the results of
the debtor's efforts to sell all or substantially all of its
assets. While the debtor has begun the process of formulating a
strategic asset disposition plan, it is not possible to
determine at this early stage whether it is prudent to assume or
reject the unepxired leases.
A hearing on the relief requested in the motion will be held
before the Honorable Mary F. Walrath, US Bankruptcy Court, 824
Market Street, Wilmington, DE on June 11, 2001 at 4:00 PM.
VENCOR INC.: Annie Pearl Pride Seeks Relief From Automatic Stay
---------------------------------------------------------------
Annie Pearl Pride asserted a cause of action against Vencor,
Inc. for injuries due to alleged negligence and statutory
violations while she was a resident on Vencor Nursing Centers
East, LLC, one of the Debtors, d/b/a Pointe Nursing Pavilion,
4201 31st Street South, St. Petersburg, Florida 33712 from June
1999 to the present.
The Debtors disputed any liability in connection with the
incidents referenced in the Underlying Action.
Annie Pearl Pride sought relief from the automatic stay pursuant
to section 362 of chapter 11 of the Bankruptcy Code to permit
her to initiate litigation in the State Court, Florida, Civil
Division.
The Debtors objected to Ms. Pride's motion for relief from the
automatic stay because while the Bar Date for filing proofs of
claim was January 7, 2000, Ms. Pride filed proofs of claim on
February 27, 2001 and March 2, 2001, well beyond the various
claim bar dates established. Without a valid claim against
their estates, the prosecution of the Underlying Action would be
a waste of the Debtors' valuable resources, the Debtors told the
Court. (Vencor Bankruptcy News, Issue No. 30; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WINSTAR COMM.: Hires Shearman & Sterling As Lead Counsel
--------------------------------------------------------
Winstar Communications, Inc. asked that Judge Farnan authorize
and approve their employment of the New York law firm of
Shearman & Sterling as their lead bankruptcy counsel in these
Chapter 11 proceedings. Subject to court approval, compensation
will be payable to Shearman on an hourly basis, plus
reimbursement of expenses. At present, Shearman provides legal
services at rates ranging from $475 to $650 per hour for
partners, $195 to $495 for counsel and associates, and $90 to
$165 per hour for associates and clerks. These rates are subject
to periodic adjustment to reflect economic and other conditions.
The services Shearman is to provide to the Debtors include:
(a) The provision of legal advice with respect to their
powers and duties as debtors-in-possession in the continued
operation of their businesses and the management of their
property;
(b) The pursuit of confirmation of a plan and approval of a
disclosure statement;
(c) The preparation on behalf of the Debtors of necessary
applications, motions, answers, orders, reports and other legal
papers;
(d) The appearance in court, and acts necessary to protect
the interests of the Debtors before the Court; and
(e) The performance of all other legal services for the
Debtors which may be necessary and proper in these proceedings.
Shearman has represented the Debtors since 1997 in matters
including general corporate, securities, real estate,
derivatives, financing, and other related matters. As disclosed
in an affidavit by Douglas P. Bartner, a member of Shearman, the
firm is a disinterested person within the meaning of the
Bankruptcy Code, neither holding nor representing any interest
adverse to the Debtors in these cases. However, Shearman may
represent, or may have represented, creditors of these estates
in matters not connected with these Chapter 11 cases. Shearman
is conducting a continuing inquiry into any matters which would
affect the firm's disinterested status. In the event additional
disclosure is necessary, Shearman will file a supplemental
affidavit setting forth any relevant facts and circumstances.
Shearman disclosed that it currently represents ABN Amro Bank
NV, The Bank of Nova Scotia, Barclays Bank PLC, CIBC World
Capital Markets, Citicorp North America, Citibank, N.A., Credit
Lyonnais, Credit Suisse First Boston, Dresdner Bank AG, Eaton
Vance Management, Fleet National Bank, General Electric Capital
Corporation, Merrill Lynch Asset Management, Morgan Guaranty
Trust Company, Morgan Stanley Dean Witter Prime Interest Trust,
The Bank of Montreal, The Royal Bank of Canada, Societe
Generale, and Van Kampen Funds, all of whom are lenders to the
Debtors under the prepetition credit agreement, but not in
matters adverse to the Debtors or these estates. In addition,
Shearman represents certain affiliates of the lenders under the
credit agreement, including Siemans AG, an affiliate of Siemans
Financial Services Inc., UBS Warburg, an affiliate of UBS AG,
Stamford Branch, ING Barings, an affiliate of ING Capital
Advisors, BNY Capital Funding LLC, an affiliate of the Bank of
New York, and Toronto Dominion Bank, an affiliate of Toronto
Dominion (Texas), Inc. Shearman assured Judge Farnan it does not
and will not represent any of these entities in connection with
the Debtors or these cases.
Shearman also represents the holders of equity securities of the
Debtors as Alex Brown Investment Management, United States Trust
Company of New York, Credit Suisse First Boston, and Hugh
O'Kane, an affiliate of Hugh O'Kane Electric Co., but only in
matters unrelated to the Debtors or these cases.
In 1995 and 1996 Shearman represented Morgan Stanley & Co.,
Inc., as underwriter of certain high-yield indebtedness of
Winstar Communications, Inc. This representation ended in July
1996. Upon information and belief, Shearman believes that
approximately $17 million of this debt remains unpaid. In
addition, Shearman & Sterling and partners and partners and
associates of Shearman have in the past represented, represent,
and will continue to represent other entities that are claimants
or equity security holders in matters unrelated to the Debtors
or these estates. In addition, each of PricewaterhouseCoopers
and Arthur Andersen are presently clients of Shearman in matters
not related to these cases.
Shearman disclosed it has received a retainer of $500,000 for
its pre- and postpetition services to these Debtors, and will
hold and apply this retainer only as approved by the Court.
(Winstar Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
WORLD SALES: Filing of Proposal Extended To June 28
---------------------------------------------------
World Sales & Merchandising Inc. (CDNX: YWH) filed a Notice of
Intent to Make a Proposal pursuant to subsection 50.4(1) of the
Bankruptcy & Insolvency Act on April 3rd, 2001. The date for
filing The Proposal has been extended to June 28th, 2001.
It is important to note that WSMI is not bankrupt. Management
will prepare the necessary documents, which includes a proposal
to the creditors by June 28th, 2001, pursuant to the guidelines
of the Act. A further press release will be disseminated to the
public upon the completion and status of the proposal.
Soberman Isenbaum Colomby Tesis Inc., a licensed Trustee has
consented to act as Trustee in this assignment.
BOOK REVIEW: HOSPITAL TURNAROUNDS: Lessons in Leadership
--------------------------------------------------------
Editors: Terence F. Moore and Earl A. Simendinger
Publisher: Beard Books
Softcover: 236 Pages
List Price: $34.95
Review by: Susan Pannell
Order your copy today at
http://amazon.com/exec/obidos/ASIN/1893122093/internetbankrupt
If the health care institution you administer is, like so many
others, experiencing a period of financial distress, find the
time to read this book. The fourteen health care executives who
contributed to the work have been in your position. Here, they
share the lessons in techniques, tactics, and politics they
learned from managing successful turnarounds in a myriad of
healthcare environments. Each chapter presents a separate case
history and focused on a particular strategy, allowing the
reader to concentrate on the issues of greatest individual
interest.
A good place to begin might be by properly diagnosing your
facility's problems and potential, following the guidelines in
Chapter 1. Marketing and public relations tips (e.g., community
meetings, a health kiosk in a local shopping center, direct
mailings of hospital newsletters and physician directories) are
provided in Chapter 2. An overall plan for a turnaround,
including financial strategies and methods of streamlining
administration, is laid out in Chapter 3, one of the most
comprehensive sections of the book.
Chapters 4-6 focus on people management. Issues addressed
include turnarounds in which substantial employee reduction was
required; the value of education in handling people issues,
including staff retreats; and the revitalization of a rural
hospital where staff already had been cut to the bone and the
facility's survival depended upon volunteerism at all levels,
whether medical or administrative.
Reducing expenses is never enough; a successful turnaround
requires revenue as well. Chapter 7 describes a turnaround
accomplished by emphasizing the hospital's best-performing core
services while letting go of non-performing peripherals such as
its retail pharmacy. This facility also developed a targeted
marketing plan that concentrated on doing a few things very
well, rather than trying to be all things to all people.
Leadership techniques, which include a strong consumer
orientation and good employee communications, are discussed in
Chapter 8, while Chapter 9 tracks a lengthy turnaround over an
eight-year period, including a description of the problems that
lead to the health care organization's decline in the first
place.
Trying something entirely different might be the key to your
turnaround. Chapter 10 documents the beneficial effect of
initiating high-quality specialty programs such as cosmetics and
cataract surgeries and impotency solutions in a small hospital.
Chapter 11 analyzes the programs that were expanded and those
that had to be discontinued to turn around in a mid-sized
hospital.
Almost anyone can downsize an organization. The art of the
turnaround is to minimize the trauma while maximizing the
hospital's potential, and protecting the turnaround artist's own
job in the process. The principles in this book, first published
in 1993, are equally sound and instructive in this 1999 reprint.
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of
Delaware, please contact Vito at Parcels, Inc., at 302-658-
9911. For bankruptcy documents filed in cases pending outside
the District of Delaware, contact Ken Troubh at Nationwide
Research & Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Debra Brennan, Yvonne L.
Metzler, Bernadette de Roda, Aileen Quijano and Peter A.
Chapman, Editors.
Copyright 2001. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
The TCR subscription rate is $575 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are $25 each. For subscription information, contact
Christopher Beard at 301/951-6400.
*** End of Transmission ***