/raid1/www/Hosts/bankrupt/TCR_Public/010615.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 15, 2001, Vol. 5, No. 117
Headlines
AMERICAN SKIING: Upbeat About Talks with Senior Resort Lenders
ARMSTRONG WORLD: Names Barry M. Sullivan as VP & Treasurer
ARMSTRONG: DLW AG Unit Ends Talks With CVC Capital re Desso Sale
BALDWIN PIANO: Cuts More Jobs & Closes Mississippi Facility
BALDWIN PIANO: Chief Financial Officer Duane Kimble Resigns
DeVLIEG-BULLARD: Plan Confirmation Hearing Set For June 21
DUALSTAR: Securities Now Trading on the OTC Bulletin Board
EINSTEIN/NOAH: FTC Clears Way For New World Acquisition
FINOVA GROUP: Seeks To Extend Removal Period To October 3, 2001
FRUIT OF THE LOOM: Wants To Reject 28 Burdensome Contracts
GAYLORD CONTAINER: S&P Junks Credit Ratings, Outlook Is Negative
GC COMPANIES: Onex and Oaktree To Buy New Equity for $36.6 Mil
GENESIS HEALTH: Financial Advisors Disclose Valuation Analyses
IMPERIAL SUGAR: Hiring D. F. King & Co. As Voting Agent
INTEGRATED HEALTH: Rejects HBOC Lease With General Electric
iPRINT TECHNOLOGIES: Receives Delisting Notice From Nasdaq
KINROSS GOLD: New York Stock Exchange Delists Shares
LTV STEEL: USWA Open To Labor Talks With Creditors' Committee
LTV STEEL: Welcomes Creditors' Involvement in Labor Talks
LUCENT TECHNOLOGIES: S&P Lowers Corporate Credit Rating to BB+
MATTHEWS STUDIO: Completes $12.65MM Sale of Subsidiary's Assets
MEDIQ INC.: Emerges From Chapter 11 Bankruptcy
PACIFIC GAS: Declares Higher Discounts For Assistance Programs
PACIFIC GAS: Judge Allows Some Creditors to Trade Securities
PILLOWTEX: Amended Membership List Of Creditors' Committee
PRANDIUM INC.: Restructures Organization to Reduce Costs
PSINET INC.: US Trustee Appoints Unsecured Creditors' Committee
QUAD SYSTEMS: Inks U.S. Assets Sale Pact With Tyco Electronics
RESEARCH INC.: Restructuring Debt & Operations Due To Losses
SAFESCIENCE: Securities Subject to Delisting from Nasdaq
SUNCRUZ CASINOS: May File For Bankruptcy Protection
THERMASYS CORP: S&P Places BB- Credit Ratings on Watch
UNOVA: Ratings Remain on Credit Watch With Negative Implications
VLASIC FOODS: Committee Taps Jefferies As Financial Advisor
W.R. GRACE: Moves to Extend Lease Decision Period To Feb.1, 2002
WASHINGTON GROUP: Awarded $4.5MM Contract for Coal Mine Project
WASHINGTON GROUP: Wins $90 Million Contract For Ecuador Project
WESTPOINT STEVENS: S&P Cuts Senior Debt Rating To CCC+ From B
WHEELING-PITTSBURGH: Inks New Mictec Contract for Entry Nozzles
WINSTAR COMM: US Trustee Appoints Unsecured Creditors' Committee
BOOK REVIEW: GROUNDED: Frank Lorenzo and the Destruction of
Eastern Airlines
*********
AMERICAN SKIING: Upbeat About Talks with Senior Resort Lenders
--------------------------------------------------------------
American Skiing Company (NYSE: SKI) announced improved results
from its resort operations for its third fiscal quarter ended
April 29, 2001. The Company generated record resort revenues and
solid year-over-year increases in skier visits primarily as a
result of substantial skier visit growth at its eastern resorts
and The Canyons in Park City, Utah.
"Excluding non-recurring charges, the Company's resort
operations showed significant improvement over the prior year,"
said American Skiing Company chief financial officer Mark
Miller. "Skier visits for the 2000-2001 ski season increased 10
percent at our eastern resorts and 5 percent overall. The
Company also generated significantly higher revenue per skier
visit, due largely to the additional bed base at The Canyons and
Steamboat, higher lift ticket yields and improved retail and
food and beverage operations throughout our resort network."
The net income available to common shareholders for the third
quarter of fiscal 2001 was $7.2 million, or $0.19 per diluted
share, compared with net income of $21.5 million, or $0.42 per
diluted share for the third fiscal quarter of 2000. Excluding
non-recurring charges and a change to the Company's income tax
adjustments, net income available to common shareholders would
have been $14.5 million, or $0.30 per diluted share.
During the third quarter of fiscal 2001, the Company recognized
charges of $3.6 million related to its withdrawn merger plan
with MeriStar Hotels & Resorts, $2.1 million in corporate
restructuring charges and a $0.8 million loss on sale related to
the sale of its interest in the Heavenly Grand Summit Hotel
development subsidiary in South Lake Tahoe, California. In
addition, in light of the restructuring program announced May
30th, the Company has re- evaluated its income tax position and
determined that it will reverse the income tax benefits of $13.7
million recognized in the first and second quarters of fiscal
2001 and does not expect to recognize any income tax expense or
benefit in the foreseeable future.
Total revenues were $179.6 million for the third quarter of
fiscal 2001, compared with $223.1 million for the previous
year's third quarter. Resort revenue was $164.2 million for the
quarter, compared with $149.9 million in the third quarter of
fiscal 2000. As expected, real estate revenues declined from the
prior year during which the Company began recognizing revenues
on the Sundial Lodge and Grand Summit Hotel at The Canyons
Resort in Park City, Utah. Real estate revenues were $15.4
million, versus $73.2 million for the same period in fiscal
2000.
The Company's total earnings from operations before interest,
income taxes, depreciation, and amortization ("EBITDA"), was
$57.8 million in the third fiscal quarter of fiscal 2001,
compared with $71.7 million in the same period in fiscal 2000.
After adjusting for non-recurring charges, resort EBITDA
increased $2.0 million over the comparable period in fiscal 2000
to $64.6 million. Excluding the loss on the sale of the Heavenly
Grand Summit, real estate EBITDA was a loss of $0.3 million
compared with a gain of $9.7million for the third quarter of
2000. The Company will receive a contingent sales fee as part of
the sale of its interest in the Heavenly Grand Summit Hotel
development subsidiary. The Company has not recognized the value
of the contingent fee in calculating its loss on the sale.
The net loss available to common shareholders for the nine
months ended April 29, 2001 was $27.3 million, or $0.90 per
basic and diluted share, compared with a net loss of $21.6
million, or $0.71 per basic and diluted share, in the
corresponding period of fiscal 2000. The net loss for the first
nine months of 2001 included a $2.5 million benefit, net of
taxes, from the cumulative effect of a change in accounting
principle related to marking interest rate derivatives to their
current market value as required by Statement of Financial
Accounting Standards No. 133.
Excluding this benefit, the aforementioned charges, $0.8 million
of hotel start-up charges in the first quarter, and the income
tax adjustment, the net loss available to common shareholders
would have been $20.5 million, or $0.67 per basic and diluted
share. By comparison, the net loss in the first nine months of
fiscal 2000 included an extraordinary loss from restructuring
the Company's senior credit facility, the cumulative effect of a
change in accounting principle, the write-off of certain
deferred tax assets, an after-tax gain related to the sale of
certain non-strategic assets and hotel start-up costs. The
fiscal 2000 net loss available to common shareholders excluding
these non-recurring items was $17.2 million, or $0.57 per basic
and diluted share.
Total revenues were $384.0 million for the first nine months of
fiscal 2001, compared with $373.1 million for the first nine
months of fiscal 2000. Resort revenue was $310.6 million
compared with $275.2 million in fiscal 2000. Real estate revenue
was $73.3 million, versus $97.8 million for the same period last
year.
Total EBITDA for the first nine months of fiscal 2001 was $69.4
million versus $66.4 million in the comparable period in fiscal
2000. Resort EBITDA was $62.4 million compared to $57.7 million
last year. After adjusting for non-recurring charges, resort
EBITDA was $69.0 million compared to $57.9 million during the
same period in fiscal 2000 representing an increase of 19%. Real
estate EBITDA was $7.0 million compared to $8.6 million in
fiscal 2000. After adjusting for the loss on the Heavenly Grand
Summit sale, real estate EBITDA was $7.9 million for the first
nine months of fiscal 2001.
"As we announced on May 30th, we are pursuing a comprehensive
restructuring plan designed to improve our capital structure and
enhance future operating performance," said American Skiing
Company president and CEO B.J. Fair. "Substantial progress has
been made on negotiating amendments to our key debt facilities
and securing an additional capital infusion. However, those
negotiations are not yet complete. As a result, the Company has
entered into a waiver extension with its senior resort lenders
to provide the Company with sufficient time to complete
negotiations and documentation."
Because negotiations with its senior resort lenders have not
been completed, the Company filed its Form 10Q with a
reclassification of the long-term portion of its senior credit
facility to current liabilities. Upon completion of the
amendment process, which is expected in the near future, the
Company will file restated financials that once again reclassify
the above debt to long-term. No assurance can be given at this
time that these negotiations will be successfully concluded. The
inability to successfully renegotiate the senior credit
facility's terms would likely have a material adverse effect on
the Company. The Company's management encourages interested
parties to review its recently filed Form 10Q for a more
complete discussion of these matters.
"Our management team is squarely focused on reducing debt,
improving our financial flexibility and simultaneously creating
efficiencies at every level of the organization," concluded
Fair.
The Company's third quarters of fiscal 2001 and fiscal 2000 were
comprised of 13 weeks. Results for the first nine months of
fiscal 2001 were based on 39 weeks compared to 40 weeks during
fiscal 2000.
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
ARMSTRONG WORLD: Names Barry M. Sullivan as VP & Treasurer
----------------------------------------------------------
Armstrong World Industries, Inc. (NYSE: ACK) has appointed Barry
M. Sullivan to the position of Vice President and Treasurer. He
will report directly to Leonard A. Campanaro, Senior Vice
President and Chief Financial Officer.
Sullivan joins Armstrong from RailWorks Corp. of Baltimore where
he was also Vice President and Treasurer. RailWorks Corp. is an
$800 million engineering and contracting firm specializing in
the construction and maintenance of railroad and transit
infrastructure.
He graduated from Bucknell University in 1967 with a degree in
French literature and served as a naval officer for three years
before embarking on a career in international banking, with
Chase Manhattan and Chemical Banks, and later corporate finance,
with several multi-national corporations.
"We're pleased to have someone with Barry's wide experience both
as a corporate treasurer and also in internationally oriented
corporate finance," said Campanaro. "His knowledge covers a
broad array of treasury functions in manufacturing, banking and
other sectors."
Sullivan is not new to the Central Pennsylvania area. From 1993
to 1999, he served as Vice President of Corporate Development
and Treasurer of Harsco Corp. of Camp Hill, Pa., a global
manufacturing firm with $1.7 billion in annual sales.
Sullivan and his wife, Betty, who are purchasing a home in
Lancaster, have two grown sons.
Armstrong Holdings, Inc., is the parent company of Armstrong
World Industries and is a global leader in the design,
innovation and manufacture of floors and ceilings. Based in
Lancaster, Pa., Armstrong has approximately 15,000 employees
worldwide. In 2000, Armstrong's net sales totaled more than $3
billion. Additional information about the company can be found
on the internet at www.armstrong.com.
ARMSTRONG: DLW AG Unit Ends Talks With CVC Capital re Desso Sale
----------------------------------------------------------------
Armstrong DLW AG announced that discussions have been terminated
with CVC Capital Partners B.V. concerning the possible sale of
the textile and sports flooring businesses in its Desso
commercial carpet operations. On February 19, 2001, Armstrong
DLW AG issued an announcement that discussions had begun with
CVC with a view towards a sale of Desso.
According to President and CEO, Gerard L. Glenn, discussions
ended after the parties were unable to come to agreement on all
the issues. Mr. Glenn also stated, "We will continue to operate
the Desso businesses, grow them profitably, and enhance
shareholder value consistent with our strategic objectives."
Desso, with approximately 1,300 employees worldwide,
manufactures textile and sports flooring in The Netherlands,
Germany and Belgium. Based in Oss, The Netherlands, Desso had
annual sales of approximately 300 million Euros in 2000.
Armstrong Holdings, Inc. (NYSE: ACK) is the parent company of
Desso and is a global leader in the design, innovation and
manufacture of floors and ceilings. Based in Lancaster, PA,
Armstrong has approximately 15,000 employees worldwide. In 2000,
Armstrong's net sales totaled more than $3 billion.
BALDWIN PIANO: Cuts More Jobs & Closes Mississippi Facility
-----------------------------------------------------------
Baldwin Piano & Organ Company (Nasdaq: BPAO) announced that it
has made additional workforce reductions as part of a strategy
to restructure the Company under Chapter 11 of the United States
Bankruptcy Code. The reduction in workforce is occurring at
Baldwin's Greenwood, Mississippi facility where twenty-four
positions were eliminated to coincide with the closure of the
facility. In April, the Company announced it would be closing
the Greenwood facility in June after its sale.
Robert Jones said, We have anticipated the reduction of
personnel since Baldwin sold the manufacturing plant in April.
The downsizing reduces payroll by approximately $1,400,400,
bringing our annualized cumulative net cost savings under the
restructuring program to approximately $3.3 million. On June 6,
the Company announced the initial phase of its restructuring
program involving a workforce reduction that cut the Company's
annual payroll by an estimated $1,625,780.
Jones concluded, Management will continue to review operations
and seek alternatives to enhance value, increase profitability
and develop operating efficiencies.
Kenneth W. Pavia, chairman explained, "Robert Jones and his
management team are carefully reviewing all operations to insure
the realization of maximum return from their strategic
downsizing, while maintaining the Company's ability to produce
the quantity and quality of pianos traditionally associated with
our manufacturing facilities. Through their restructuring
program they will continue to explore any and all alternatives
that may lead to increased performance."
BALDWIN PIANO: Chief Financial Officer Duane Kimble Resigns
-----------------------------------------------------------
Baldwin Piano & Organ Company announced the resignation of its
chief financial officer, Duane Kimble. Kimble has been with
Baldwin since 1998, when he was retained by Karen Hendricks to
serve under her administration. Perry Schwartz, the Company's
former chief financial officer, with the assistance of Financial
Resource Associates Inc., a Cincinnati consulting firm
specializing in corporate finance, will assume Kimble's duties
at the Company. Robert Jones spoke highly of Schwartz and
Financial Resource Associates, expressing confidence in their
ability to manage the day-to-day affairs of Baldwin's financial
operations: "Perry Schwartz is a company veteran with many years
of experience as a chief financial officer. I expect that he
will work well within our Company and with our outside
consultants."
Baldwin Piano & Organ Company, the maker of America's best
selling pianos, has marketed keyboard musical products for over
140 years.
DeVLIEG-BULLARD: Plan Confirmation Hearing Set For June 21
----------------------------------------------------------
DeVlieg-Bullard Inc. has won court approval of a disclosure
statement for its chapter 11 plan of liquidation, setting the
stage for the precision engineered machine tool manufacturer to
seek plan confirmation on June 21. The hearing, scheduled before
Judge Marilyn Shea-Stonum of the U.S. Bankruptcy Court in Akron,
Ohio, will be almost exactly one year after the company closed
on the sale of substantially all of its assets. The plan
represents the means by which the company will liquidate its
remaining assets and distribute the proceeds to its creditors.
Plan ballots and any objections from creditors and other
interested parties must be received by Monday. (ABI World, June
13, 2001)
DUALSTAR: Securities Now Trading on the OTC Bulletin Board
----------------------------------------------------------
DualStar Technologies Corporation (Nasdaq: DSTR) has been
advised by Nasdaq that the Company's common shares have been
delisted from the Nasdaq National Market.
The Company's common shares will trade on the NASD Over-the-
Counter (OTC) Bulletin Board effective today and its ticker
symbol will continue to be DSTR.
The decision by the Nasdaq Listing Qualifications Panel to
delist DualStar's securities was based on the Company's failure
to maintain a minimum bid price of $1.00 per share.
About DualStar
DualStar Technologies Corp., through its subsidiaries, designs
and installs infrastructure systems and provides services that
control and enhance the environment in buildings. DualStar
construction subsidiaries, including Centrifugal/Mechanical
Associates, Inc., High-Rise Electric, Inc. and Integrated
Controls Enterprises, Inc., provide services governing heating,
ventilation and air conditioning (HVAC), electrical contracting,
building control and energy management (BMS), and security and
safety.
DualStar's communications subsidiaries, OnTera, Inc. and
ParaComm, Inc., provide various integrated communications
services including enhanced local, regional and long distance
telephony as a Competitive Local Exchange Carrier (CLEC), direct
broadcast satellite (DBS) and cable television as a System
Operator (MSO and SO), and high-speed Internet access as an
Internet Service Provider (ISP). For more information, email the
Company at info@dualstar.com or visit http://www.dualstar.com
DualStar common stock is traded on the OTC Bulletin Board under
the symbol DSTR.
EINSTEIN/NOAH: FTC Clears Way For New World Acquisition
-------------------------------------------------------
New World Coffee-Manhattan Bagel Inc. (NWCI) received antitrust
clearance from the U.S. Federal Trade Commission for its pending
acquisition of the assets of Einstein/Noah Bagel Corp.,
according to Dow Jones. The agency said that it has granted the
companies early termination of the waiting period required under
the Hart-Scott-Rodino Antitrust Improvements Act.
Affiliates of NWCI were the high bidders in the bankruptcy
auction of Einstein/Noah's assets, offering $160 million cash
plus the assumption of up to $30 million in debt. The deal is
expected to close before June 20. Einstein/Noah filed for
chapter 11 bankruptcy protection on April 27, listing assets of
about $316 million and liabilities of about $213 million. (ABI
World, June 13, 2001)
FINOVA GROUP: Seeks To Extend Removal Period To October 3, 2001
---------------------------------------------------------------
The ninety-day period set forth in Bankruptcy Rule 9027(a)(2)(A)
within which The FINOVA Group, Inc. may remove prepetition civil
actions to the U.S. District Court for the District of Delaware
expired on June 5, 2001. In a motion, the Debtors requested that
this period be extended by 120 days, through and including
October 3, 2001.
The Debtors represented that ample cause exists for the
extension requested, considering that:
-- The Debtors are parties to over one thousand civil
actions pending in various court throughout the United States.
Claims asserted in the Civil Actions include, among others,
lender liability claims, intercreditor disputes, breach of
contract claims and securities fraud claims. Many, if not all,
of the Civil Actions are subject to removal pursuant to section
1452 of title 28 of the United States Code, which applies to
claims relating to bankruptcy cases.
-- The Debtors' management has spent numerous hours in
working towards developing a chapter 11 plan of reorganization,
which the Debtors filth with the Court on May 2, 2001 in
addition to carrying out usual day-to-day responsibilities,
maintaining business operations and dealing with issues that
typically are attendant with the commencement of large chapter
11 cases. As a result, the Debtors' management has not had a
sufficient opportunity to review the Civil Actions, in
consultation with the various attorneys handling such matters,
in order to make fully informed decisions concerning the removal
of each Civil Action.
-- The rights of any party to the Civil Actions will not be
prejudiced by such an extension. Inasmuch as section 362(a) of
the Bankruptcy Code automatically stays actions against the
Debtors, the Civil Actions will not be proceeding in their
respective courts even absent the relief requested herein.
Moreover, if the Debtors ultimately seek to remove any action
pursuant to Bankruptcy Rule 9027, any party to the litigation
can seek to have such action remanded pursuant to Section
1452(b). (Finova Bankruptcy News, Issue No. 8; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FRUIT OF THE LOOM: Wants To Reject 28 Burdensome Contracts
----------------------------------------------------------
Fruit of the Loom, Ltd. moved the Court for an order, pursuant
to 11 U.S.C. Sec. 365(a), authorizing the rejection of certain
executory contracts where the Debtor has determined that the
burdens of the contract outweigh the benefits:
Counterparty Debtor Entity Contract Type
------------ ------------- -------------
Alactn Trading Union Underwear Cotton Contract
Allenburg Cotton Union Underwear Cotton Contract
American Cotton Suppliers Union Underwear Cotton Contract
Calcot, Ltd. Union Underwear Cotton Contract
Colly International Union Underwear Cotton Contract
Commonwealth Gin Union Underwear Cotton Contract
Cottage Hill Union Underwear Cotton Contract
Delta Cotton Union Underwear Cotton Contract
Dunavant Enterprises Union Underwear Cotton Contract
Eastern Trading Co. Union Underwear Cotton Contract
ECOM USA Union Underwear Cotton Contract
Fashion Options BVD Licensing License Agrmnt
Hohenberg Bros Union Underwear Cotton Contract
Jordan Cotton Union Underwear Cotton Contract
Middlebrooks Cotton Union Underwear Cotton Contract
Midway Textile Fruit of the Loom Letter of Intent
Modern Distributors Pro Player Service Contract
Montgomery Cotton Union Underwear Cotton Contract
Oakland Gin Union Underwear Cotton Contract
Omega Cotton Union Underwear Cotton Contract
Paul Reinhart Inc. Union Underwear Cotton Contract
Savannah River Cotton Union Underwear Cotton Contract
Staplcotn Union Underwear Cotton Contract
T.J. Beall & Co. Union Underwear Cotton Contract
Winross Co. Fruit of the Loom License Agrmnt
Toyo Cotton Union Underwear Cotton Contract
Toyoshima USA Union Underwear Cotton Contract
Weil Brothers Cotton Union Underwear Cotton Contract
(Fruit of the Loom Bankruptcy News, Issue No. 30; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
GAYLORD CONTAINER: S&P Junks Credit Ratings, Outlook Is Negative
----------------------------------------------------------------
Standard & Poor's lowered its ratings on Gaylord Container Corp.
as follows:
To From
* Corporate credit rating B- B
* Senior unsecured debt CCC+ B-
* Subordinated debt CCC CCC+
The outlook is negative.
The rating action reflects concerns regarding the company's
continued access to liquidity amid difficult market conditions
and its failure to reduce debt and improve financial measures to
levels appropriate for the former ratings.
Deerfield, Ill.-based Gaylord Container Corp. is a medium-sized
manufacturer of containerboard and kraft paper, with about a 5%
share of the U.S. market. The company converts about 90% of
production into corrugated containers and multiwall and retail
bags.
Despite significant production discipline among industry
participants, including Gaylord, product pricing is declining
from cyclical highs achieved late last year. Containerboard
consumption has fallen with the softening in the domestic
economy and continued weak export demand due to the strength of
the U.S. dollar. In addition, Gaylord has suffered sharp energy
cost increases. In the absence of price improvement, which
Standard & Poor's does not expect, the company will most likely
require modifications to the covenants in its bank credit
agreement, its primary source of liquidity, by December 2001.
Covenants previously were amended during fiscal 2000.
Debt levels are very aggressive, with debt to EBITDA exceeding 7
times (x). Credit protection measures likely will be very weak,
with funds from operations to debt remaining well below 10%, and
EBITDA covering interest expense between 1.0x and 1.5x during
the next one to two years. At these levels, the company is
unlikely to generate free operating cash flow for debt
reduction.
Outlook: Negative
If market conditions worsen or access to bank credit lines is
restricted, ratings could be lowered, Standard & Poor's said.
GC COMPANIES: Onex and Oaktree To Buy New Equity for $36.6 Mil
--------------------------------------------------------------
GC Companies, Inc. (NYSE:GCX), parent company of General Cinema
Theatres, Inc., signed a letter of intent with Onex Corporation
(TSE:OCX) and investment funds and accounts managed by Oaktree
Capital Management, LLC providing for the acquisition by Onex
and Oaktree of all of the equity of the reorganized Company
pursuant to a plan of reorganization to be filed with the
Bankruptcy Court under Chapter 11 of the U.S. Bankruptcy Code.
Under the terms of the letter of intent, subject to Bankruptcy
Court approval, Onex and Oaktree would invest $36.6 million of
cash in the Company in exchange for 100% of the common stock of
the reorganized Company.
Certain creditors of the Company would receive:
(i) portions of the Onex/Oaktree cash investment;
(ii) new promissory notes from the Company; and
(iii) a portion of the proceeds from the liquidation of the
Company's investment portfolio in certain publicly-
traded and privately-held businesses.
Existing holders of the Company's Common Stock may also receive
a distribution of cash, but only if the net proceeds from the
liquidation of the Company's investment portfolio exceed $90.0
million. If the plan of reorganization is confirmed by the
Bankruptcy Court and implemented, all existing shares of the
Company's Common Stock will be cancelled and will no longer
represent an equity interest in the Company. The Special
Committee of the Board of Directors has retained a customary
fiduciary exception which will permit competing offers.
The commitment of Onex and Oaktree is subject to a number of
conditions, including the completion of due diligence by Onex
and Oaktree, the Company's successful arrangement of a new
working capital credit facility, no material adverse changes
pending consummation of the plan of reorganization, the
Bankruptcy Court's approval of certain overbid/investor
protection provisions and other customary terms and conditions.
The parties expect to file a motion for approval of the
overbid/investor protection provisions by June 21, 2001 and the
plan of reorganization and accompanying disclosure statement by
July 11, 2001. It is anticipated that the Bankruptcy Court will
confirm the plan of reorganization by no later than October 31,
2001.
The Company, Onex and Oaktree expect that following the
consummation of the transactions contemplated by the letter of
intent, Onex and Oaktree will own 100% of the reorganized
Company's equity (other than any equity reserved for management
incentive plans), and Onex will control the reorganized
Company's Board of Directors.
G. Gail Edwards, President and Chief Operating Officer of GC
Companies, Inc., said, We are pleased to have the opportunity to
work with such preeminent sponsors as Onex and Oaktree to
complete our reorganization. This transaction will strengthen
the Company's position financially and allow General Cinema to
take advantage of the strong franchise that it has developed.
Anthony Munk, Managing Director of Onex Investment Corp. said
General Cinema is an outstanding theatre operator with excellent
assets in key markets throughout the United States and Latin
America. As a result of the reorganization of the Company upon
emergence of bankruptcy, General Cinema will be a stronger and
more competitive company with significant capital to take
advantage of future growth opportunities.
Onex Corporation is a diversified company with 2000 annual
consolidated revenues of C$24.5 billion, consolidated assets of
C$19.7 billion and 97,300 employees. Onex is the 4th largest
company in Canada. It operates through autonomous subsidiaries
that are leaders in their industries. They include Celestica,
Inc., ClientLogic Corporation, Lantic Sugar Limited, Dura
Automotive Systems, Inc., J.L. French Automotive Castings, Inc.,
MAGNATRAX Corporation, InsLogic Corporation, Performance
Logistics Group, Inc., Radian Communication Services Corporation
and Galaxy Entertainment, Inc. Onex shares trade on The Toronto
Stock Exchange under the stock symbol OCX.
Oaktree Capital Management, LLC is a U.S.-based investment
management firm with more than $18.0 billion in assets under or
committed for management primarily from institutional investors
as well as a limited number of high net worth individuals.
GENESIS HEALTH: Financial Advisors Disclose Valuation Analyses
--------------------------------------------------------------
UBS Warburg, Genesis Health Ventures, Inc.'s financial advisor
in these chapter 11 cases, is prepared to testify that, as of
April 6, 2001, Genesis' Total Enterprise Value is between $1.0
billion and $1.25 billion.
Credit Suisse First Boston Corporation, The Multicare Companies,
Inc.'s financial advisor concludes that, as of March 20, 2001,
Multicare's Total Enterprise Value falls between $350 million
and $400 million.
The Debtors specified that the valuation analyses were prepared
for the information of the Boards of Directors of Genesis and
Multicare respectively in connection with their consideration of
the Plan of Reorganization and for the purpose of determining
the value available to distribute to creditors pursuant the Plan
and the relative recoveries to creditors thereunder. The Debtors
made it clear that these analyses do not constitute a
recommendation to any holder of claims as to how to vote on the
Plan, nor do the estimates of the respective ranges of
enterprise value constitute an opinion as to the fairness from a
financial point of view of the consideration to be received
under the Plan or of the terms and provisions of the Plan.
The preparation of valuation analyses, the Debtors said, is a
complex analytical process involving various determinations as
to the most appropriate and relevant methods of financial
analysis and the application of those methods to particular
facts and circumstances, many of which are beyond the control of
Genesis and UBS Warburg. Accordingly, the analyses and estimates
are inherently subject to substantial uncertainty, the Debtors
advised.
The Debtors also advised that valuation ranges indicated by the
analyses are not necessarily indicative of the prices at which
the common stock or other securities of Genesis/Multicare may be
bought or sold or predictive of future financial results or
values, which may be significantly more or less favorable than
those indicated by the analyses. (Genesis/Multicare Bankruptcy
News, Issue No. 10; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
IMPERIAL SUGAR: Hiring D. F. King & Co. As Voting Agent
-------------------------------------------------------
Imperial Sugar Company asked Judge Robinson to approve their
employment of D. F. King & Co. of New York as voting agent under
the Plan. In that capacity King will also provide consultation,
noticing, solicitation and tabulation services in support of the
confirmation efforts of the Debtors.
Mr. Thomas A. Long, Executive Vice President of D. F. King,
disclosed that D. F. King may have rendered services in the past
to certain creditors or equity security holders of the Debtors,
or may have been involved in matters in which creditors or
equity security holders of the Debtors were also involved, but
all of these matters were unrelated to the Debtors and these
Chapter 11 cases. However, D. F. King is neither a creditor nor
an interest holder, and to the best of Mr. Long's knowledge, has
no engagements or representations adverse to the Debtors'
interests.
The Debtors believe that the services of D. F. King are
necessary to enable the Debtors to timely perform their duties
as debtors-in- possession. Subject to Judge Robinson's
approval, D. F. King is expected to provide services as:
(a) Providing advice to the Debtors and their counsel
regarding voting, election, and tabulation procedures and
documents needed for votes and elections;
(b) Reviewing the disclosure statement, ballots and
election forms, particularly as they may relate to beneficial
owners in "street names";
(c) Working with the Debtors to request appropriate
information from the trustee(s) of the bonds, the common stock
from the transfer agent, and The Depository Trust Company;
(d) Mailing solicitation materials, including disclosure
statements, voting documents, election forms, notices and other
materials to creditors and interest holders;
(e) Coordinating the distribution of solicitation
materials to street name holders of the bonds and common stock
by forwarding such materials to the banks, brokerage firms, and
agents holding the securities, who in turn will forward it to
beneficial owners of securities;
(f) Distributing copies of the master ballots and master
election forms to the appropriate banks and brokerage firms (or
their agents) so that firms may cast votes and transmit election
results on behalf of beneficial owners of securities;
(g) Preparing certificates of service for filing with the
Court;
(h) Handling requests for documents from any party who
requests them, including brokerage firm and bank back-offices,
institutional holders, and other parties in interest;
(i) Responding to telephone inquiries from bondholders,
stockholders and other parties in interest regarding the
disclosure statements and the voting procedures and the election
procedures. D. F. King will restrict its answer to the
information contained in the plan documents. It will seek
assistance from Baker Botts LP, Young Conaway Stargatt & Taylor
LLP, or the Debtors on any questions that fall outside the plan
documents;
(j) If requested to do so, assisting with an effort to
identify beneficial owners of the bonds and/or common stocks;
(k) Receiving and examining all ballots, master ballots,
and election forms returned by holders of the bonds and/or
common stock. D. F. King will date- and time-stamp the originals
of all such materials upon receipt;
(l) Tabulating all ballots, master ballots, and election
forms received prior to the voting deadline in accordance with
established procedures, and preparing a certification (and
certificate of service) for filing with the Court; and
(m) Coordinating with the Debtors in printing, mailing,
and publishing various notices.
For these services, D. F. King estimates that the total charges
will be:
Proxy Solicitation Fee $ 10,000
Inbound/Outbound Calls $ 5,000
Search & delivery services $ 4,000
Tabulation services $ 8,500
Telecom, postage, courier $ 6,500
The Debtors are to pay 50% of this fee on the date the Debtors'
materials are first sent or mailed to voting parties, and the
remainder on the date of the confirmation hearing. In addition,
the Debtors will reimburse D. F. King for all its expenses,
including broker bills.
The parties acknowledge that D. F. King cannot undertake to
verify facts supplied to it by the Debtors of factual matters
included in material prepared by D. F. King and approved by the
Debtors. Accordingly, the Debtors have agreed to indemnify and
hold harmless D. F. King, King's controlling persons, officers,
directors, employees and agents from and against all losses,
claims, damages, liabilities, disbursements and expenses
(including reasonable attorney's fees and expenses) that D. F.
King may incur in connection with any claim arising out of,
relating to, or in connection with the services provided under
the Agreement; provided, however, that the Debtors will not be
liable for any indemnification to the extent that any such suit,
action, proceeding, claim, damage, loss, liability or expense
results from that indemnified person's gross negligence or
willful misconduct. This provision survives the expiration or
earlier termination of the agreement between the Debtors and D.
F. King. (Imperial Sugar Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
INTEGRATED HEALTH: Rejects HBOC Lease With General Electric
-----------------------------------------------------------
A hearing was held on General Electric Capital Corporation's
Motion to: (A) Compel Integrated Health Services, Inc. to Assume
or Reject Certain Equipment Leases Pursuant to 11 U.S.C. section
365; and/or (B) Compel Payments in Accordance with II U.S.C.
section 365(D)(l0) of the Bankruptcy Code. The Motion relates to
over 40 equipment leases which were executed by the Parties
prior to the Petition Date.
At the hearing, the Stipulation was presented which resolved a
portion of the Motion.
The Stipulation says that:
-- the Debtors have asserted that certain computer hardware
and software which is the subject of one of the Leases (the
"HBOC Lease"), was transferred by the Debtors to Medshares/LHS
Acquisition, Inc. prior to the Petition Date;
-- On or about July 29, 1999, Medshares and its affiliates
and subsidiaries filed for Chapter 11 protection in the U.S.
Bankruptcy Court for the Western District of Tennessee;
-- The Debtors have determined that the HBOC Lease provides
no benefit to the Debtors, their estates and their creditors;
-- The Debtors have determined that the rejection of the
HBOC Lease is a prudent and proper exercise of their business
judgment, and is in the best interests of their estates and
their creditors in accordance with Section 365 of the Bankruptcy
Code (11 U.S.C. 101, Ct seq.)
The Stipulation also sets forth the agreement reached by the
parties, that:
(1) The HBOC Lease is rejected;
(2) Nothing contained in this Stipulation and Order shall
affect, in any way, GECC's rights to assert administrative or
rejection damage claims relating to the HBOC Lease, nor shall it
affect, in any way, the Debtors' rights to object to such claim
or claims;
(3) GECC will have until 60 days after the service of the
Court's order approving the Stipulation (the Rejection Claims
Deadline) to file a claim, including an administrative claim(s),
if any, relating to the rejection of the HBOC Lease; If GECC
fails to timely file such a claim or claims on or prior to the
expiration of the Rejection Claims Deadline, it will be (a)
forever barred from asserting such claim against any of the
Debtors or their estates and sharing in any distribution out of
the Debtors' estates or assets under any plan of reorganization
confirmed in the IHS Chapter 11 cases or otherwise, and (b)
bound by the terms of any such plan and/or Order of the Court
authorizing distributions from the Debtors' estates.
(4) The Rejection Claims Deadline may be extended through
the mutual consent of the Parties;
(5) Nothing contained in this Stipulation and Order shall
affect, in any way, the remaining leases referred to in the
Motion (the "Remaining Leases") or any other leases entered into
between the Parties.
At the hearing, the Court instructed counsel to provide 7 days
notice to counsel to Meridian prior to entry of an order
approving the Stipulation. Counsel to Meridian has been given an
opportunity to review the Stipulation and have represented to
counsel to the Debtors that they have no objections to the
relief requested in the Stipulation.
Accordingly, the Debtors requested and the Court granted the
approval of the Stipulation. (Integrated Health Bankruptcy News,
Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900)
iPRINT TECHNOLOGIES: Receives Delisting Notice From Nasdaq
----------------------------------------------------------
iPrint Technologies, Inc. (Nasdaq:IPRT), the leading online
printing technology and infrastructure provider, reported that
it received a Nasdaq Staff Determination on June 8, 2001,
indicating that the company's bid price has not complied with
the minimum bid requirement for continued listing, and that its
securities are, therefore, subject to delisting from the Nasdaq
National Market.
iPrint will request a hearing before the Nasdaq Listing
Qualifications Panel to review the Staff Determination. There
can be no assurance that the Listing Qualifications Panel will
grant the Company's request for continued listing. iPrint's
stock will continue to be traded on the Nasdaq National Market
pending the final decision by the Listing Qualifications Panel.
The hearing date will be determined by Nasdaq.
About iPrint Technologies, inc.
Founded in 1996, iPrint Technologies, inc. is the leading online
printing technology and infrastructure provider. iPrint creates
technology that improves the print buying process, serving such
companies as Intel, 3M, Microsoft, OfficeMax, Oracle, and
PeopleSoft. iPrint's technology integrates into e-procurement
platforms, streamlining the cost of ordering professional
printing and improving the overall ROI of e-procurement efforts.
iPrint's technology also powers the award-winning, branded Web
site, iPrint.com, which offers SOHO customers convenience and
significant cost savings on professionally printed products.
iPrint has been distinguished with the Inc./Cisco Technology
Award, an Innovation in Print award by CAP Ventures, and named
the No. 15 top eBusiness by InformationWeek. iPrint
Technologies, Inc. can be reached at http://www.iPrint.com
KINROSS GOLD: New York Stock Exchange Delists Shares
----------------------------------------------------
Kinross Gold Corporation (TSE-K; NYSE-KGC) and its subsidiary,
Kinam Gold Inc. (NYSE-KGC PrB), announced that the New York
Stock Exchange (NYSE) has decided to proceed with the delisting
of the common shares of Kinross and the preferred shares of
Kinam on the NYSE. This action is due solely to the fact that
Kinross common shares have been trading at less than US$1.00 per
share and as such Kinross is in contravention of a rule
implemented by the NYSE in 1999.
Kinross has appealed this decision by the NYSE and has been
informed that Kinross common shares and Kinam preferred shares
will continue to trade on the NYSE until a review is completed
by a Committee of the Board of Directors of the NYSE. Following
the review, not anticipated by Kinross before early August,
2001, a decision by the Committee will be announced as to
whether to move forward with formal NYSE suspension and
delisting or tocontinue trading the securities.
Bob Buchan stated that as disappointing as this potential NYSE
delisting is, Kinross' primary market for its common shares is
the Toronto Stock Exchange (TSE) with about 80% of the volume
compared to about 20% for the NYSE. In the event that the NYSE
proceeds with delisting Kinross will investigate alternate
listings to facilitate the trading of its securities, in
addition to maintaining its TSE common share listing.
LTV STEEL: USWA Open To Labor Talks With Creditors' Committee
-------------------------------------------------------------
The Official Committee of Unsecured Creditors of LTV Steel said
that it will be meeting with the United Steelworkers of America
(USWA) and LTV Steel with the expectation of negotiating a new
Collective Bargaining Agreement by June 26th that can be
presented to LTV Steel and that will allow the Company to
meet its restructuring objectives while providing wages and
benefits acceptable to its hourly employees and retirees. Any
agreement would be subject to Bankruptcy Court approval. The
Committee has been advised by LTV Steel that it fully supports
the Committee's involvement in the negotiation of an acceptable
labor agreement.
The Official Committee of Unsecured Creditors consists of 15
members appointed by the United States Trustee to represent the
interests of the trade creditors in LTV Steel's Chapter 11 case.
The members include 12 trade creditors who supply goods and
services to LTV Steel, including iron ore, coke, electricity,
and shipping services. The Committee also includes
representatives from LTV Steel's salaried retirees, the USWA,
and the Pension Benefit Guaranty Corp., the governmental entity
that insures private pension plans.
The United Steelworkers of America (USWA) welcomed this move as
an important and positive development.
Leo Gerard, president of the 700,000-member USWA, which
represents 9,000 workers at LTV operations in Ohio, Indiana, and
Illinois, said that he had great confidence that a mutually
acceptable agreement could be negotiated by the June 26 target
date set in an announcement today by the Official Committee of
Unsecured LTV Creditors.
Working with members of the Unsecured Creditors Committee, who
are now the real owners of LTV and who appear to share our
commitment to preserving integrated steel production, Gerard
said, "we feel strongly that we can successfully restructure LTV
to the satisfaction of the Bankruptcy Court.
Like the men and women who labor in the mills, he added, LTV's
Unsecured Creditors understand that it will take a truly
cooperative effort to successfully reorganize the company.
Gerard noted that this announcement should dispel any
uncertainty that may have been created when LTV management
abruptly abandoned negotiations last week and filed a motion
Monday in federal Bankruptcy Court seeking authorization to
reject its agreements with the Steelworkers.
It will take a hard exchange of views, an open-minded
willingness to entertain innovative proposals - and some tough
bargaining - to reach an acceptable agreement that can transform
LTV into a profitable steel company, he said. But it's always
better to negotiate with people who share your desire to see the
company continue to operate.
LTV: Says It Welcomes Creditors' Involvement in Labor Talks
-----------------------------------------------------------
The LTV Corporation (OTC Bulletin Board: LTVCQ) welcomed the
involvement of its Committee of Unsecured LTV Steel Creditors in
the Company's continuing efforts to negotiate a new labor
agreement with the United Steelworkers of America.
"Our creditors have a great stake in the successful
reorganization and viability of LTV Steel," said William H.
Bricker, chairman and chief executive officer of The LTV
Corporation. "We are pleased that the Committee shares our
commitment to develop an acceptable agreement that enables our
integrated steel operations to become viable and competitive,
while continuing to provide good wages and benefits to our
employees and retirees," he said.
Mr. Bricker added that the well being of 9,000 employees and
60,000 retirees depend on the successful restructuring of LTV
Steel. He said that the futures of the Cleveland and Northwest
Indiana economies also were at stake and that it was critical to
reach an agreement by June 26.
Representatives of the United Steelworkers of America and LTV
Steel will continue discussions on Thursday, June 14 in
Pittsburgh.
The LTV Corporation is a manufacturing company with interests in
steel and metal fabrication. LTV's Integrated Steel segment is a
leading producer of high-quality, value-added flat rolled steel,
and a major supplier to the transportation, appliance,
electrical equipment and service center industries. LTV's Metal
Fabrication segment consists of LTV Copperweld, the largest
producer of tubular and bimetallic products in North America and
VP Buildings, a leading producer of pre-engineered metal
buildings for low-rise commercial applications.
LUCENT TECHNOLOGIES: S&P Lowers Corporate Credit Rating to BB+
--------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on Lucent
Technologies Inc. to double-'B'-plus from triple-'B'-minus and
removed it from CreditWatch, where it had been place on March
28, 2001, with negative implications. (Other rating actions are
listed below.)
The outlook is negative.
The ratings change, which completes Standard & Poor's current
review of the company, reflects significant uncertainties about
the company's ability to continue to improve its operating
profitability and cash flows to anticipated levels, in light of
challenging communications sector market conditions.
Ratings had been placed on CreditWatch in March following a $2
billion shortfall in proceeds from the IPO of its Agere Systems
Inc., triple-'B'-minus/Negative/-- semiconductor operation, now
about 57%-owned by Lucent. The remaining Agere shares are
expected to be distributed to Lucent shareholders by Sept. 30,
2001, provided that Lucent also bolsters its liquidity by $2
billion from nonoperating sources by that date. The company's
plan to sell its fiber optic cable unit would likely satisfy
that requirement.
Lucent has expected to sequentially increase revenues and reduce
operating losses quarterly during its fiscal year ending Sept.
30, 2001. Still, telecommunications industry demand levels have
deteriorated during the year as economic pressures have
expanded. Reflecting a very dynamic situation, the loss for the
year is likely to be more than what was expected just a few
months ago, and operating performance will take longer than had
initially been expected to return to levels consistent with an
investment-grade rating.
Despite very difficult conditions, Lucent is addressing the
challenges it faces. It completed the first phase of the Agere
spin-off under very adverse conditions. In addition, Lucent
continues to take steps to reduce operating costs by $2 billion
annually and also to reduce working capital requirements by $2
billion by the end of this fiscal year. However, most of the
staff reductions will not occur until the September quarter. The
company also remains exposed to a subpar vendor finance
portfolio.
In light of difficult market conditions, coupled with uncertain
progress in reducing costs, Standard & Poor's believes that
Lucent will be challenged to generate sufficient progress to
warrant investment-grade ratings. Standard & Poor's feels that
Lucent's return to operating profitability will likely be
delayed until the first half of its fiscal 2002. While Lucent
has ample near-term liquidity, expected to be bolstered by the
fiber sale or other transactions, operating cash flows are
expected to remain materially negative over the next few
quarters.
Outlook: Negative
Ratings on Lucent anticipate that the Agere spin-off will close
before Sept. 30, 2001, the end of Lucent's fiscal year, and that
net proceeds from any nonoperating sources of liquidity will
exceed the $2 billion Agere shortfall. Ratings also anticipate
that Lucent will achieve sustained operating profitability by
the first half of fiscal 2002. Should the fiber or Agere
transactions not proceed as planned, or if material operating
losses continue beyond the end of fiscal 2001, ratings would
likely be lowered, Standard & Poor's said.
Ratings Lowered, Off CreditWatch; Outlook Negative
To From
Lucent Technologies Inc.
Corporate credit rating BB+ BBB-
Senior unsecured debt BB+ BBB-
Commercial paper B A-3
MATTHEWS STUDIO: Completes $12.65MM Sale of Subsidiary's Assets
---------------------------------------------------------------
On May 31, 2001, Four Star Lighting, Inc., which is a subsidiary
of Matthews Studio Equipment Group, completed the sale of its
operation to Four Star Acquisition Company, LLC for $12.65
million paid in cash on closing.
Four Star rented theatrical and industrial lighting equipment.
Matthews Studio, which filed for bankruptcy in April 2000, had
been in the business of supplying traditional lighting, grip,
transportation, generators, camera equipment, professional video
and audio equipment, automated lighting and complete theatrical
equipment and supplies to entertainment producers through its
worldwide distribution network.
MEDIQ INC.: Emerges From Chapter 11 Bankruptcy
----------------------------------------------
MEDIQ Inc., and its wholly owned subsidiary MEDIQ/PRN Life
Support Services Inc., announced that the company has
successfully completed its financial reorganization and emerged
from Chapter 11.
"MEDIQ is now free to move ahead with a restructured balance
sheet and a greatly reduced debt load," said Regis Farrell,
MEDIQ president and chief executive officer. "The new MEDIQ is a
stronger company with a solid financial foundation that will
support current and future operations, and open the doors to new
customer programs in the future.
"While this marks the end of the restructuring process, we will
continue to implement plans to provide the best support to our
facilities and customers to keep service at the highest levels.
We are extremely pleased that we now have the flexibility,
through our restructured capitalization, to supply state-of-the-
art medical equipment to meet our customers' needs."
Emergence from Chapter 11 occurred simultaneously with the
company's Plan of Reorganization going into effect. The Plan,
which was initially filed in conjunction with the company's
Chapter 11 petition on Jan. 24, 2001, had been approved by the
company's secured lenders, led by Banque Nationale de Paris (BNP
Paribas), as agent, and the unofficial committee representing
the unsecured creditors. The Plan was subsequently approved by
the United States Bankruptcy Court in Delaware on May 24.
MEDIQ Inc. is a holding company with headquarters in Pennsauken,
N.J., in the Philadelphia metropolitan area. The company
operates MEDIQ/PRN Life Support Services Inc., the largest
movable critical care and life support medical equipment rental
business in the U.S. The wholly owned subsidiary employs
approximately 1,200 and operates more than 100 branches
throughout the country.
MEDIQ/PRN includes operations for MEDIQ/ACS, which sells
disposable, infusion and other medical products to the alternate
infusion marketplace, including home health-care providers.
Through all of its business units, the company serves more than
10,000 nationwide.
PACIFIC GAS: Declares Higher Discounts For Assistance Programs
--------------------------------------------------------------
Pacific Gas and Electric Company announced that low income gas
and electric customers who participate in its CARE (California
Alternate Rates for Energy) program will receive a bigger
discount in their utility bill. This change comes as a result of
a ruling by the California Public Utilities Commission (CPUC)
and is effective immediately.
The CARE program now provides a 20 percent monthly discount on
gas and electric rates to income qualified households, who
previously received a 15 percent discount. The participants in
the CARE program are also exempt from the recently approved
electricity rate surcharges.
The utility is working in coordination with community-based
organizations such as the Greenlining Institute and Latino
Issues Forum to promote participation in this money saving
program. All customers will find information about the new
discount and income levels for CARE in an insert with the
monthly bills. At the end of May, Pacific Gas and Electric
Company had certified 433,646 customers at a rate of 2,200
certifications per day. "We encourage families who need help in
paying their electricity bill to call PG&E and inquire about
their payment assistance programs. Also, it is important that
community leaders become active in educating our community
during this crisis," said Luis Arteaga, assistant director of
Latino Issues Forum.
Also, the income eligibility levels were raised by the CPUC for
the CARE and Low-Income Energy Efficiency (LIEE) programs from
150 percent of federal poverty guidelines to 175 percent.
Customers with a senior or disabled head of household continue
to be eligible at 200 percent of the federal poverty guidelines
for the LIEE program. This program provides weatherization and
energy efficiency services.
PACIFIC GAS: Judge Allows Some Creditors to Trade Securities
------------------------------------------------------------
Federal Bankruptcy Judge Dennis Montali said he would allow
certain major creditors to trade securities of Pacific Gas &
Electric's (PG&E) parent company, because he was persuaded that
an "ethical wall" could be established to prevent any insider
trading, according to Reuters. The judge said he would grant a
request by the official committee of unsecured creditors in the
case, overruling objections brought by the U.S. Trustee and the
City and County of San Francisco. Montali's decision applies to
Morgan Stanley, Merrill Lynch, Bank of America and Enron Corp.,
all of which had asked for permission to continue trading equity
securities and credit derivatives of Pacific Gas & Electric's
parent company, PG&E Corp.
The U.S. Trustee had said it would be impossible to monitor
whether potentially valuable information gleaned through the
bankruptcy proceedings was being used in trading decisions.
Montali delayed a decision on a parallel request by the four
firms, joined by energy giant Dynegy, for a similar order
allowing them to continue trade commodities such as electricity
and natural gas contracts with PG&E, asking them to explain more
fully what trading would be covered. (ABI World, June 13, 2001)
PILLOWTEX: Amended Membership List Of Creditors' Committee
----------------------------------------------------------
The Office of the United States Trustee amended the membership
of the Official Committee of Unsecured Creditors in Pillowtex
Corporation's chapter 11 cases. The current committee members
are:
Union of Needletrade, Industrial, and Textile Employees
Attn: David Prouty
Southern Regional Counsel
1710 Broadway
New York, New York 10019
Tele: (212) 265-7000
Fax: (212) 307-6904
Santee Print Works
Attn: Hugh Everett Harrington
P. O. Box 340
Sumter, South Carolina 29151
Tele: (803) 773-1461
Fax: (803) 773-0227
Parkdale Mills, Inc.
Attn: H. Lee Brooks, II
P. O. Drawer 1787
Gastonia, North Carolina 28053
Tele: (704) 864-7433
Fax: (704) 853-3538
HSBC Bank USA, as successor Indenture Trustee
Attn: Robert A. Conrad
140 Broadway, 12th floor
New York, New York 10005
Tele: (212) 658-6041
Fax: (212) 658-6425
State Street Bank & Trust Co., Indenture Trustee
Attn: Laura L. Moran
2 Avenue de Lafayette
Boston, Massachusetts 02111
Tele: (617) 662-1753
Fax: (617) 662-1456
Credit Suisse First Boston Corporation
Attn: Alexander C. Robinson
Eleven Madison Avenue
New York, New York 10010-3629
Tele: (212) 538-6808
Fax: (212) 325-8078
Federated High Income Bond Fund, Inc.
Attn: Paul S. Drotch, Vice-President
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222
Tele: (412) 288-1409
Fax: (412) 288-8141
Accordingly, U. S. Bank Trust N. A. and Lehman Brothers Inc.
resigned, replaced by HSBC Bank USA and Federated High Income
Bond Fund, Inc.
The new attorney assigned to the case is Joseph J. McMahon, Jr.,
Esq., Tele: (302) 658-9200, Fax: (302) 658-3989. McMahon
replaced Assistant United States Trustee Daniel K. Astin.
(Pillowtex Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
PRANDIUM INC.: Restructures Organization to Reduce Costs
--------------------------------------------------------
Prandium, Inc. (OTC Bulletin Board: PDIM) announced that it is
streamlining its corporate support functions at its headquarters
in Irvine, California as well as at its Chi-Chi's subsidiary
office in Louisville, Kentucky. The re-organization is designed
to centralize certain divisional functions, to reduce corporate
overhead costs and to gain efficiencies for the business going
forward.
Prandium's new organization will continue to be led by
restaurant industry veteran Kevin S. Relyea, who is its current
president, chief executive officer and chairman and president of
Chi-Chi's, Inc., a Prandium subsidiary. In addition to these
duties, the company also announced that Mr. Relyea will assume
the additional responsibilities as President of the Koo Koo Roo
division. As a result, Koo Koo Roo's current president, Gayle A.
DeBrosse, will be leaving the company.
Mr. Relyea commented on these announcements, "As a result of our
business analysis, Gayle and I together have decided that our
company cannot afford two presidents. We as an organization, and
I in particular, will miss Gayle. She has provided much needed
leadership at every juncture of her career here at Prandium.
Over the years, her responsibilities have grown and she has
contributed greatly to our company.
"I am excited about the potential of our brands and look forward
to working directly with each of the divisions as we forge ahead
to regain Chi-Chi's dominance in the Mexican casual segment and
as we work to enable Koo Koo Roo to live up to its long standing
potential."
Prandium also announced the consolidation of all its brands'
Marketing and Food and Beverage Development in its Irvine
location. As a result, separate functions currently in the Chi-
Chi's and the Koo Koo Roo divisions will be centralized and
consolidated in existing Irvine facilities and led by 16-year
company veteran Laurie A. Katapski, in her new role as Executive
Vice President of Marketing. Katapski, currently Executive Vice
President of Marketing and Food and Beverage Research and
Development for Chi-Chi's, will relocate to Irvine, California
from Louisville, Kentucky. While this consolidation accounts for
a net reduction in employees, a few new positions in these areas
will be added in Irvine.
"We will gain economic efficiencies as the new organization
consolidates here in Irvine. I look forward to tapping into the
wealth of restaurant industry talent in the Southern California
area and look forward to launching some innovative products and
marketing for our brands," commented Katapski.
Prandium CEO, Kevin S. Relyea, summed up the announcements by
saying, "I believe in the long term possibilities for our
company and its stake holders. Restructuring decisions such as
these are always difficult because of relationships that are
formed with talented people over the years. But, we believe that
the streamlining of our business is necessary for the
organization as we move forward. The team that remains will be
highly focused on concluding our debt restructuring, completing
a sale of the Hamburger Hamlet concept, improving operating
margins in our core businesses and increasing sales in existing
locations. I wish all the best for the team members who will be
leaving the organization and very much appreciate the
contributions they have made to Prandium over the years."
Prandium(TM) operates a portfolio of full-service and fast-
casual restaurants including Koo Koo Roo(R), Hamburger
Hamlet(R), and Chi-Chi's(R) in the United States and also
licenses its concepts outside the United States. Prandium, Inc.
is headquartered in Irvine, California. To contact the company
call (949) 757-7900, or the toll free investor information line
at (888) 288-PRAN, or link to www.prandium.com. Address email to
invest@prandium.com.
PSINET INC.: US Trustee Appoints Unsecured Creditors' Committee
---------------------------------------------------------------
Pursuant to Section 1102(a) and 1102(b) of the Bankruptcy Code,
the United States Trustee appointed the following creditors,
being among the largest unsecured claimants, to serve on the
Official Committee of Unsecured Creditors in the PSINet, Inc.,
et al., chapter 11 cases:
(1) NTFC Capital Corporation
10 Riverview Drive
Danbury, CT 06810
Attn: Robert Wotten
Counsel: Madlyn Gleich Primoff, Esq.
Paul, Hastings, Janofsky & Walker, LLP
75 East 55th Street
New York, New York 10022
(212) 318-6827
(2) Metromedia Fiber Network Services
360 Hamilton Avenue, 7th Floor
White Plains, New York 10601
Attn: Robert Sokota
(914) 421-6708
(3) Operating Subsidiaries of Verizon Communications, Inc.
11750 Beltsville Drive
Beltsville, MD 20705
Attn: Daniel 0. Flagler
(301) 595-2131
(4) Morgan Stanley Dean Witter Investment Mgt.
1 Tower Bridge
W. Conshohocken, PA 19428
Attn: Deanna Loughnane or Brandon Stranzl
(610) 260-7392
(5) Mackay Shields
9 West 57th Street, 33rd Floor
New York, New York 10019
Attn: Jordan Teramo
(212) 230-3918
(6) Varde Partners, Inc.
3600 West 80th Street, Suite 425
Minneapolis, MN 55431
Attn: George Hicks or Jeremy Hedberg
(952) 893-1554
(7) CFSC Wayland Advisers, Inc.
12700 Whitewater Drive
Minnetonka, MN 55343
Attn: Joseph Martin Delgman
(952) 984-3709
(PSINet Bankruptcy News, Issue No. 1; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
QUAD SYSTEMS: Inks U.S. Assets Sale Pact With Tyco Electronics
--------------------------------------------------------------
Quad Systems Corporation (OTC: QSYSQ), executed a definitive
agreement on May 31, 2001 with Tyco Electronics Corporation, a
Pennsylvania corporation and a subsidiary of Tyco International
Ltd. (NYSE: TYC), (Tyco), which has agreed to acquire
substantially all of the Company's U.S. assets and to assume
certain liabilities.
The purchase price is payable in cash based on a minimum book
value of the purchased assets at the closing of the transaction,
subject to adjustment following the closing for changes to
reflect the actual book value of the purchased assets.
The Company and Tyco are also negotiating for the sale/purchase
of the Company's U.K. assets. The Company expects to finalize
this additional agreement shortly, and to close on both
agreements simultaneously.
The Company is currently operating as a debtor-in-possession
pursuant to its Chapter 11 bankruptcy filing currently pending
before the United States Bankruptcy Court for the Eastern
District of Pennsylvania. The closing under the Purchase
Agreement is subject to the approval of the Bankruptcy Court and
certain other conditions as set forth in the Purchase Agreement.
The Company expects to close the transaction before July 15,
2001 or as soon as practicable thereafter upon receipt of the
approval of the Bankruptcy Court. The proceeds from the sale
will be distributed to creditors in the plan of reorganization
and liquidation under the oversight and procedures of the
Bankruptcy Court and the Company does not expect that any
proceeds from the sale will be available for distribution to
stockholders.
Quad Systems Corporation is a manufacturer of flexible, high-
performance SMT and APT assembly systems. Quad equipment
solutions include placement systems, stencil printers and
convection reflow ovens. Quad has an installed base of over
3,500 machines around the globe. For more information, visit
http://www.quad-sys.com
RESEARCH INC.: Restructuring Debt & Operations Due To Losses
------------------------------------------------------------
Research, Inc. (Nasdaq: RESR) has discontinued its reflow oven
business serving the electronics board assembly and
semiconductor markets in response to the losses it has incurred
from the severe downturn in this area in the last two quarters.
The company will implement a staff reduction of approximately 20
percent as a result of this move and will now focus on its
products primarily for the ink-jet printing and plastics
markets.
As a result, Research, Inc. will incur one-time, pre-tax charges
of approximately $3,900,000 in the third quarter related to
these actions. The company said that it now expects to incur a
loss in the third quarter of approximately $3.0 million or $2.25
a share.
"This is a painful, but necessary step to reverse the negative
impact on our business caused by the severe market downturn in
the electronics industry, affecting our reflow oven product
lines," Claude Johnson, President and Chief Executive Officer
commented. "Despite our highly talented team and excellent
technology, the extreme volatility of this market was
threatening the viability of our entire company. However, in
this latest of our restructuring moves, we have streamlined our
organization for maximum efficiency and minimum fixed-cost
structure. We are now focused on steadily growing markets that
we know very well, and we are confident that these moves mark
the end of restructuring at Research, Inc. for the foreseeable
future. We believe we are on track for a return to quarterly
profitability during fiscal 2002."
As a result of the downturn in its business in the last two
quarters and the impact of the these one-time charges, Research,
Inc. said that it will not be in compliance with the tangible
net worth covenant in its agreement with its bank, as addressed
in the second quarter 10-Q. The company said that it is working
with the bank to resolve this non-compliance situation.
Research, Inc. designs and manufactures complete product
solutions based on its core competency: the precise control of
heat. The company targets high-growth markets worldwide
including printing (ink drying and paper transport systems) and
plastics extrusion. Research, Inc. is headquartered in Eden
Prairie, Minn. The company's common stock trades on the Nasdaq
SmallCap Market under the symbol: RESR. Additional news and
information can be found on the company's Web site at
http://www.researchinc.com
SAFESCIENCE: Securities Subject to Delisting from Nasdaq
--------------------------------------------------------
SafeScience, Inc. (Nasdaq: SAFS) received a Nasdaq Staff
Determination on June 6, 2001, indicating that the Company
fails to comply with the Nasdaq Marketplace Rule 4310c(2)(B)
requirement that a company satisfy any one of Nasdaq's minimum
net tangible assets, market capitalization or earnings
standards, and that its securities are, therefore, subject to
delisting from the Nasdaq Small Cap Market.
The Company has requested a hearing before a Nasdaq Listing
Qualifications Panel to appeal the Nasdaq Staff Determination.
The appeal will stay the delisting of the Company's common
stock, pending the decision of a Nasdaq Listing Qualifications
Panel which is expected to hear the appeal within 45 days. There
can be no assurance that the Listing Qualifications Panel will
grant the Company's request for continued listing.
Bradley J. Carver, President and Chief Executive Officer of
SafeScience, stated that the Company has been in formative
negotiations regarding potential financing and/or the formation
of a strategic partnership for some time and although there can
be no assurance that the Company will consummate such
transactions, the Company believes that completion of such
arrangements during the appeal process would likely cure its
non-compliance with one or more of the Nasdaq listing
requirements under Nasdaq Marketplace Rule 4310c(2)(B) thus
providing the basis for its continued listing on the Nasdaq
Small Cap Market.
SafeScience
SafeScience develops and licenses pharmaceutical and
agricultural products. The Company's human therapeutic products
include GBC-590, a unique compound to treat cancer, which is in
Phase II human clinical trials, as well as, an anti-fungal
compound, CAN-296, in development. In the area of agriculture,
SafeScience has received U.S. EPA approval of Elexa-4r Plant
Defense Booster, an innovative compound which stimulates the
plant to protect itself against pathogens. Further information
is available on SafeScience's web site: www.safescience.com
SUNCRUZ CASINOS: May File For Bankruptcy Protection
---------------------------------------------------
SunCruz Casinos owner Adam Kidan disclosed that the gambling
boat company would probably file for chapter 11 bankruptcy
protection within days, according to the Associated Press. "It's
a likelihood, not a possibility," Kidan told the South Florida
Sun-Sentinel. The Hollywood, Fla.-based company has been plagued
with lawsuits alleging everything from mob ties to fraud. Kidan
said the bankruptcy would consolidate all eight lawsuits spawned
by the sale last September of SunCruz by the late Konstantinos
"Gus" Boulis to a group of investors led by Kidan. Kidan said
SunCruz would continue operations during the company's
restructuring. (ABI World, June 13, 2001)
THERMASYS CORP: S&P Places BB- Credit Ratings on Watch
------------------------------------------------------
Standard & Poor's placed its ratings for ThermaSys Corp. on
CreditWatch with negative implications, affecting about
$109 million in bank credit facilities. Said ratings are the
company's: (i) corporate credit rating at BB-; and (ii) bank
loan rating at BB-.
The CreditWatch placement reflects the company's weaker-than-
expected operating results, compared with its business plan, and
increasing liquidity pressures. For the quarter ending March 31,
2001, pro forma operating income declined almost 70% compared to
the same period in 2000. As a result, credit protection measures
have weakened. As of March 31, 2001, pro forma total debt to
EBITDA was around 4.8 times (x). Standard & Poor's had expected
total debt to EBITDA of around 3 (x). As a result of earnings
pressures, the company amended its bank credit agreement at the
end of the first quarter (March 31, 2001) to loosen bank
covenants.
Dublin OH-based ThermaSys is a leading manufacturer of heat-
transfer systems and transmission components for the automotive,
heavy truck, off-road, and industrial OEM markets and
aftermarkets. Products include welded aluminum and copper/brass
tubing, radiators, oil coolers, air conditioning condensers, and
automatic transmission clutch plates
ThermaSys' weak financial performance has resulted from weak
industry fundamentals in both the automotive and heavy-duty
truck markets.
Standard & Poor's will meet with management to review the
company's financial results and to discuss the likely time frame
for achieving operating improvements. If it appears that
financial performance will remain below expected levels, ratings
could be lowered, Standard & Poor's said.
UNOVA: Ratings Remain on Credit Watch With Negative Implications
----------------------------------------------------------------
Standard & Poor's ratings on UNOVA Inc. remain on CreditWatch
with "negative" implications, where they were placed May 10,
2001. The ratings are as follows:
* Corporate credit rating at CCC+
* Bank loan rating at CCC+
* Senior unsecured debt rating at CCC
* Senior unsecd/sub shelf (prelim) at CCC/CCC-
The CreditWatch listing continues to reflect the company's
constrained liquidity, and limited financial flexibility. It
also reflects uncertainty about the refinancing of the company's
current bank credit facility.
The company recently announced that it had received more than
$100 million in proceeds from a planned pension reversion. The
proceeds from the pension reversion were used to pay down bank
debt, enabling the company to reduce its bank credit facility to
$200 million, without incurring additional fees or borrowing
costs. The company is negotiating a new bank credit facility,
since the old facility matures in November 2001. However,
financial flexibility and liquidity are expected to improve
somewhat if the company successfully negotiates a new bank
facility. However, UNOVA's working capital requirements can be
quite large, as the company is not always able to obtain
progress payments on the large transfer line project produced by
the company's IAS division.
In addition, the company continues to experience earnings and
cash flow pressures due to the slowing U.S. economy and soft
end-market demand. Credit protection measures are very weak,
with total debt to EBITDA over 10 times (x) and EBITDA interest
coverage of around 1.2 (x) as of March 31, 2001.
Woodland Hills, Calif.- based UNOVA is composed of two business
segments: IAS and ADS. The IAS business segment includes
integrated manufacturing systems, metal-cutting production
systems, band assembly systems, and precision grinding and
abrasive operations, primarily serving the automotive and
aerospace industries. The ADS business segment comprises
wireless networking and mobile computing products and services,
as well as Internet-enabled automated data collection,
principally serving industrial and logistics/supply chain
management markets.
Standard & Poor's will continue to monitor the company's
operating and financial results as well as its progress in
obtaining new bank financing. Ratings will remain on CreditWatch
with negative implications until near-term refinancing issues
have been resolved. If the proposed new bank facility provides
sufficient liquidity, the company's corporate credit, senior
unsecured, and preliminary shelf ratings will be affirmed.
Ratings on the company's new bank facility will be assigned when
full details of the facility are disclosed. If the company is
unable to obtain adequate bank financing or if financial
performance weakens further, ratings could be lowered, Standard
& Poor's said.
VLASIC FOODS: Committee Taps Jefferies As Financial Advisor
-----------------------------------------------------------
To evaluate the complex financial and economic issues raised in
Vlasic Foods International, Inc.'s reorganization proceedings,
the Committee needs the services of a financial advisor. By
application, the Official Committee of Unsecured Creditors
sought to retain and employ Jefferies & Company, Inc. as its
financial advisor.
The Committee chose Jefferies because of its expertise in
providing financial advisory services to debtors and creditors
in bankrupt and distressed situations. Jefferies is a global
investment-banking firm, and a registered broker-dealer and
investment adviser with the United States Securities and
Exchange Commission. Jefferies is also a member of the Boston
Stock Exchange, the Chicago Stock Exchange, the London Stock
Exchange, the National Association of Securities Dealers, the
New York Stock Exchange, the Pacific Exchange, the Philadelphia
Stock Exchange, and the SIPC.
The Committee wants to retain Jefferies as their investment
bankers because:
(1) Jefferies and its senior professionals have an
excellent reputation for providing high quality investment
banking services to debtors and creditors in bankruptcy
reorganizations and other debt restructurings,
(2) Jefferies has significant capabilities in merger,
acquisition and sale transactions, and
(3) Jefferies has extensive knowledge of the capital
markets.
Specifically, the Committee will turn to Jefferies for:
(a) Analysis of the Debtors' business, operations,
properties, financial condition and prospects in each of its
relevant markets;
(b) Advising the Committee on the current state of the
"restructuring market";
(c) Assisting and advising the Committee in developing a
general strategy for accomplishing a restructuring;
(d) Assisting and advising the Committee in implementing a
plan of restructuring with the Debtors;
(e) Assisting and advising the Committee on developing a
strategy with respect to recapitalization possibilities for the
Debtors;
(f) Assisting and advising the Committee in evaluating and
analyzing a restructuring, in the value of the securities, if
any, that may be issued under any restructuring plan;
(g) Assisting the Committee and counsel to the Committee
identifying potential financing sources for recapitalization;
(h) Assisting the Committee and counsel to the Committee in
the negotiation in any and all aspects of a restructuring; and
(i) Rendering such other financial advisory services as
may, from time to time, be agreed upon by the Committee and
Jefferies.
The Committee and Jefferies have drafted an Engagement Letter
outlines the compensation package of Jefferies:
(i) A monthly fee equal to $150,000 per month in cash for
the first month following the date of the Engagement Letter, and
$120,000 per month in cash for the following three months in
advance on the first day of each month. Jefferies' engagement
shall continue on substantially similar terms, mutually agreed
upon by Jefferies' and the Committee for all subsequent months.
(ii) In addition, Jefferies will receive reimbursement of
all out-of-pocket expenses, including, but without limitation
to, travel and lodging expenses, word processing charges,
messenger and duplicating services, facsimile expenses, and
other customary expenses.
(iii) In the event that the Debtors will complete a
restructuring during the term of the Engagement Letter, the
Debtors shall pay or cause to be paid to Jefferies a fee in the
amount equal to 0.5% of the recovery value. The recovery value
is the total proceeds and other consideration paid or received
or to be paid or received by holders of unsecured claims in
connection with the restructuring. At the option of the
Committee, the success fee may be paid in cash or in the same
securities received by the holders of the unsecured claims in
connection with the restructuring.
(iv) Jefferies may resign at any time and the Committee
alone may terminate Jefferies' services at any time, each upon
30 days' prior written notice to the other. If Jefferies resigns
or the Committee terminated Jefferies' retention, Jefferies
shall be entitled to receive all of the amounts with respect to
monthly fees and success fees, up to and including the effective
date of such termination or resignation, as the case may be.
Managing Director William Q. Derrough leads the engagement from
Jefferies' New York office. Mr. Derrough assures the Court that
Jefferies is a "disinterested person", neither Jefferies nor its
professionals have any connection with the Debtors, their
creditors not any other party-in-interest in these Chapter 11
cases; and Jefferies does not hold or represent any interest
adverse to the Committee in the matters for which it is to be
retained. Mr. Derrough notes that Jefferies works with and
across the table from many of the professionals retained and
employed in these cases in other restructuring matters wholly
unrelated to Vlasic's chapter 11 cases. (Vlasic Foods Bankruptcy
News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
W.R. GRACE: Moves to Extend Lease Decision Period To Feb.1, 2002
----------------------------------------------------------------
W. R. Grace & Co. asked Judge Farnan to extend the time period
during which they may assume, assume and assign, or reject any
lease, sublease, or other agreement that may be considered "an
unexpired lease of nonresidential real property" under the
Bankruptcy Code through and including February 1, 2002. This
extension would be without prejudice to (a) the rights of the
Debtors to request a further extension of time to assume, assume
and assign, or reject the unexpired leases and executory
contracts, and (b) the rights of any lessor to request that the
extension be shorted as to a particular lease.
The Debtors told Judge Farnan they are parties to several
hundred unexpired leases that fall into two major categories:
(A) real property leases for offices and plants throughout
the United States and Puerto Rico; and
(B) leases where the Debtors are lessees under leases of
commercial real estate, often retail stores, restaurants, and
other similar facilities most of which have been sub-leased to
other tenants.
These leases are important assets of the estate, such that the
decision to assume or reject is central to any plan of
reorganization. Further, these cases are large and complex, and
involve large numbers of leases. The Debtors have not yet had
time to intelligently appraise each lease's value to its plan.
The Debtors assured Judge Farnan they are current in all of
their postpetition rent payments and other contractual
obligations with respect to the unexpired leases. The Debtors
intend to continue to timely pay all rent obligations on leases
until they are either rejected or assumed, and will continue to
timely perform their contractual obligations with respect to the
assumed leases. As a result, the continued occupation of the
relevant real property by the Debtors (whether directly or as
sublessees) will not prejudice the lessors of the real property
or cause the lessors to incur damages that cannot be recompensed
under the Bankruptcy Code. (W.R. Grace Bankruptcy News, Issue
No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WASHINGTON GROUP: Awarded $4.5MM Contract for Coal Mine Project
---------------------------------------------------------------
Washington Group International, Inc. (NYSE:WNG) announced that
its Mining Division has been awarded a $4.5-million contract by
TransAlta Centralia Mining LLC to provide mine-related earth-
moving services at its Centralia Packwood Development Project.
The project, located six miles northeast of Centralia,
Washington, in the Big Hanaford Valley, involves the development
of the Central Packwood mining area for the Centralia Mine. At
full capacity, the mine will produce about four million tons of
coal annually.
The project, which will begin immediately, will involve the
removal of almost two million bank-cubic-yards of topsoil.
Washington Group's contract services will include the clearing
of the mining area and road right-of-ways, the removal and stock
piling of topsoil, and the building of infrastructure in the
form of a sediment impoundment, and ditches.
"We are delighted to be working for a quality client on this
important project," said Roy Wilkes, Executive Vice President of
the Mining Division of the Washington Infrastructure & Mining
operating unit. "We have operated mines for more than 50 years
and have one of the best service records in the mining industry.
We are committed to adding to that outstanding record at the
Centralia Mine."
Washington Group presently operates coal, industrial minerals,
and metals mines in the Western U.S., Germany, Venezuela, and
Indonesia, and provides mine-engineering services to clients
worldwide.
"TransAlta is pleased to be joined by Washington Group in this
exciting project and looks forward to a long-lasting working
relationship," said Rich Woolley, TransAlta Vice President of
Centralia Operations.
TransAlta Centralia Mining, LLC is a wholly owned subsidiary of
TransAlta Corporation, headquartered in Calgary, Alberta,
Canada. TransAlta is Canada's largest non-regulated electricity
generation company, operating many business units: generation,
IPP, transmission, energy marketing, and sustainable
development.
Washington Group International, Inc., is a leading international
engineering and construction firm. With more than 35,000
employees at work in 43 states and more than 35 countries, the
company offers a full life-cycle of services as a preferred
provider of premier science, engineering, construction, program
management, and development in 14 major markets.
Markets Served
Mining, energy, environmental, government, heavy-civil,
industrial, nuclear-services, operations and maintenance,
petroleum and chemicals, process, pulp and paper,
telecommunications, transportation, and water-resources.
WASHINGTON GROUP: Wins $90 Million Contract For Ecuador Project
---------------------------------------------------------------
Washington Group International (NYSE:WNG) received an
engineering, procurement, construction-management, and start-up
services contract for a $90 million gas-fired power plant in
Ecuador. The power project is being developed by Noble
Affiliates, Inc. (NYSE:NBL) through its subsidiary Machalapower
Ltda. Cia.
The power plant will be supplied with natural gas from wells off
the coast of Ecuador that are owned and operated by Noble's
Energy Development Corporation Ecuador Ltd. (EDC). In its final
configuration, the power plant will generate 240 megawatts of
power for local use and for use by the Ecuadorian national power
grid.
"Ecuador currently relies heavily on hydroelectric power, which
can be vulnerable during periods of drought," said Thomas H.
Zarges, president and chief executive officer of Washington
Power. "This new gas-fired plant will add diversity to the
country's electric power system, and its output will support
economic development. We are very pleased to be working with
Noble to bring this plant on-line."
The Machala plant will come on line in two phases. Phase one, a
simple-cycle operation providing 130 megawatts of electric
output, is scheduled to start up in the first half of 2002. In
phase two, the plant will be converted to a highly efficient
combined-cycle operation. When both phases are completed, the
plant will consist of two combustion turbine generators, two
heat recovery steam generators, and one steam turbine generator.
A new transmission line will provide interconnection to the
national power grid.
Noble Affiliates, Inc., based in Houston, Texas, is an
independent energy company with exploration and production
operations throughout major basins in the United States,
including the Gulf of Mexico, as well as international
operations primarily in Argentina, China, Ecuador, Equatorial
Guinea, the Mediterranean Sea, and the North Sea.
WESTPOINT STEVENS: S&P Cuts Senior Debt Rating To CCC+ From B
-------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on
WestPoint Stevens Inc. to single-'B' from double-'B'-minus and
lowered its senior unsecured debt rating to triple-'C'-plus from
single-'B'. The outlook is negative.
Total rated debt is about $1 billion.
The downgrade is based on Standard & Poor's concern that
liquidity and financial flexibility may be impaired by the
imminent required reductions in the company's $800 million
secured bank facility, peak seasonal working capital
requirements, and continued difficult conditions in retail.
Despite the recently renegotiated financial covenants under the
bank facility, WestPoint remains challenged to meet those
covenants. Although WestPoint has several new product programs
that are expected to generate incremental sales for the second
half of fiscal 2001, Standard & Poor's does not expect credit
measures to improve significantly in the near term due to
difficult operating conditions.
The ratings reflect WestPoint Stevens' substantial debt burden
and limited financial flexibility, as well as very competitive
and cyclical industry conditions. These factors are offset by
the company's leading positions in the U.S. bed linen and bath
towel market; broad product line across multiple price points
and distribution channels; the low-cost, vertically integrated
production base; and historically strong operating margins.
The company's previously announced "Eight Point" program will be
substantially complete by the end of the September 2001 quarter,
however, the full cost-savings benefit (about $38 million) is
not expected until 2002. Under this program, WestPoint Stevens
is rationalizing manufacturing operations, reducing corporate
overhead, improving inventory utilization, increasing global
sourcing, enhancing the supply chain and logistics, expanding
the company's brands, exploring new licensing opportunities, and
improving the capital structure.
The company's overall financial profile is highly leveraged and
financial measures remain weak. Total debt to EBITDA (including
trade receivable securitization) was about 6.2 times (x), EBITDA
margin was about 16%, and EBITDA to interest was in the 2.2x
area for the 12 months ended March 31, 2001.
Outlook: Negative
The outlook reflects the expectation that WestPoint Stevens will
maintain its strong market positions. However, continued
difficult operating conditions or the failure to maintain
adequate liquidity for the rating would prompt a review for a
downgrade.
WHEELING-PITTSBURGH: Inks New Mictec Contract for Entry Nozzles
---------------------------------------------------------------
The Debtor Wheeling-Pittsburgh Steel Corporation asked Judge
Bodoh for his approval of its entry into a new contract with
Mictec, Inc., for the supply of submerged entry nozzles. These
nozzles are specially manufactured items that WPSC uses in the
process of pouring molten steel into a caster mold. WPSC used
significant quantities of submerged entry nozzles in its
operation. WPSC will need approximately 400 new submerged entry
nozzles each month over the course of the next year.
WPSC has arranged to purchase these nozzles from Mictec under
the terms of a Sale/Purchase Agreement. Prior to entering into
this agreement, WPSC assured Judge Bodoh it contacted other
potential suppliers and determined that the prices and terms
offered by Mictec were most beneficial to WPSC and to its
estate. The Agreement is a standard postpetition contract for
the supply of goods. The Agreement provides that WPSC must order
its monthly shipment of submerged entry nozzles three months in
advance. This lead time is necessitated because the parts
supplied by Mictec must be specially manufactured in Japan. WPSC
is locked into purchasing only those orders that it has placed
under the Agreement.
The Agreement contains several provisions that limit WPSC's
potential liability. First, WPSC may terminate the Agreement at
any time. Second, the Agreement limits the extent of WPSC's
liability, which cannot exceed the cost of 1,200 submerged entry
nozzles at any one time.
WPSC anticipates purchasing a total of 3,600 submerged entry
nozzles. Specifically, the Debtor is to purchase 1,800 units of
35o at $475 per unit, and 1,800 units of 20o at $475 per unit.
These nozzles will be purchased at the rate of 400 per month
(200 of each type), beginning on or about April 1, 2001. Before
the execution of the Agreement, WPSC agreed, in the ordinary
course of its business, to purchase 600 35o nozzles, and 600 20o
nozzles as its initial order, intended to cover its needs for
such product for the months of April, May and June, 2001. The
parties recite that this initial order benefits WPSC's
bankruptcy estate, and that the transaction was entered into to
preserve the estate.
WPSC told Judge Bodoh it has searched for a supplier of
submerged entry nozzles, which are a necessary part of its
operations. Mictec has agreed to the best terms and prices
available to WPSC. It is WPSC's business judgment that the
Agreement with Mictec is in the best interest of its estate, and
is appropriate and necessary to its continued business
operation.
Mictec has asked for confirmation that WPSC's obligations under
the Agreement will constitute administrative expense obligations
of the WPSC estate. WPSC submits that such confirmation is
appropriate. The incurrence of potential postpetition
obligations under the Agreement is necessary in order to obtain
the goods at issue, and is necessary for the preservation of
WPSC's estate.
Moving forward promptly on this Motion, Judge Bodoh granted the
requested relief and authorized WPSC to enter into the agreement
and purchase the submerged entry nozzles from Mictec, Inc., in
accordance with the Sale/Purchase Agreement, including the award
of administrative status for any amounts owing under the
Agreement. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
WINSTAR COMM: US Trustee Appoints Unsecured Creditors' Committee
----------------------------------------------------------------
The United States Trustee appointed the following entities to
serve as members of the Official Committee of Unsecured
Creditors in Winstar Communications, Inc.'s Chapter 11 cases:
MAS Funds High Yield Portfolio
c/o Morgan Stanley Dean Witter Investment Management
Attn: Deanna Loughnane
One Tower Bridge, Suite 1100
West Conshohocken, Pennsylvania 19428
Tele: (610) 940-5691
Fax: (610) 260-7088
Teachers Insurance and Annuity Association of America
Attn: Roi G. Chandy
730 Third Avenue
New York, New York 10017
Tele: (212) 916-6139
Fax (212) 916-6140
Digital Microwave Corporation
Attn: Charles A. Nelson
170 Rose Orchard Way
San Jose, California 95134
Tele: (408) 944-3519
Fax: (408) 944-1880
WorldCom Inc.
Attn: Stephen J. Rubio
3 Ravinia Drive, 6th Floor
Atlanta, Georgia 30346
Tele: (770) 380-6458
Fax: (770) 280-4845
P-Com Inc.
Attn: Caroline Baldwin Kahl
3175 S. Winchester Boulevard
Campbell, California 95008
Tele: (408) 874-4258
Fax: (408) 874-4229
Metromedia Fiber Network Inc.
Attn: Hadley E. Feldman
One Meadowlands Plaza
East Rutherford, New Jersey 07073
Tele: (201) 531-8016
Fax: (201) 531-2803
United States Trust Company of New York,
as Indenture Trustee
Attn: Gerard F. Ganey
600 Campus Drive
Florham Park, New Jersey 07932-1037
Tele: (917) 596-0532
Fax: (973) 443-4609
Mark S. Kenney, Esq., is the Staff Attorney for the United
States Trustee assigned to the Debtors' cases. (Winstar
Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
BOOK REVIEW: GROUNDED: Frank Lorenzo and the Destruction of
Eastern Airlines
-----------------------------------------------------------
Author: Aaron Bernstein
Publisher: Beard Books
Softcover: 272 Pages
List Price: $34.95
Review by: Susan Pannell
Order your personal copy today at
http://amazon.com/exec/obidos/ASIN/1893122131/internetbankrupt
Barbara Walters once referred to Frank Lorenzo as "the most
hated man in America." Since 1990, when this work was first
published and Eastern Airlines' troubles were front-page news,
there had been many worthy contenders for the title.
Nonetheless, readers sensitive to labor-management concerns,
particularly in the context of corporate restructuring, will
find in this book much to support Barbara Walters'
characterization.
To recap: For a few brief and discordant years, Frank Lorenzo
was boss of the biggest airline conglomerate in the free world
(Aeroloft was larger), combining Eastern Continental, Frontier,
and People Express into Texas Air Corporation, financing his
empire with junk bonds. TAC ultimately comprised a fleet of 452
planes and 50,000 employees, with revenues of $7 billion.
But Lorenzo was lousy on people issues, famously saying, "I'm
not paid to be a candy ass." The mid-180's were a bad time to
take that approach. Those were the years when the so-called
Japanese model of management, which emphasized cooperation
between management and labor, was creating a stir. The Lorenzo
model was old school: If the unions give you any trouble, break
'em.
That strategy had worked for him at Continental, where he'd
filed Chapter 11 despite the airline's $60 million in cash
reserves, in order to exploit a provision in the Bankruptcy Code
allowing him to abrogate his contracts with the unions. But
Congress plugged that Loophole by the time Lorenzo went to the
mat with Charles Bryan, IAM chapter president. Lorenzo might
have succeeded in breaking the machinists alone, but when flight
attendants and pilots honored the picket line, he should have
known it was time to deal. He didn't.
Instead he tried again for a strategic advantage through the
bankruptcy courts, by filing Chapter 11 in the Southern District
of New York where bankruptcy judges were believed to be more
favorably disposed toward management than in Miami where Eastern
is headquartered, Eastern had to hide behind the skirts of its
subsidiary, Ionosphere clubs, Inc., a New York Corporation, in
order to get into SDNY. Six minutes later, Eastern itself filed
in the same court as a related proceeding.
The case was assigned to Judge Burton Lifland, whom Eastern's
bankruptcy lawyer, Harvey Miller, knew well, but Lorenzo was
mistaken if he believed that serendipitous lottery assignment
would be his salvation. Judge Lifland a year later declared
Lorenzo unfit to run the airline and appointed Martin Shugrue as
trustee.
Most hated man or not, one wonders whether the debacle was all
Lorenzo's fault. Eastern unions, in particular the notoriously
militant machinist, were perpetual malcontents, and Charlie
Bryan was an anti-management zealot, to the point of
exasperating even other IAM officers.
The book provides a detailed account of the three-and-a-half
period between Lorenzo's acquisition of Eastern in the autumn of
1986 and judge Lifland's appointment of the trustee in April
1990. It includes the history of Eastern's pre-Lorenzo
management, from World War I flying ace Eddie Rickenbacker to
astronaut Frank Borman.
*********
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of interest to troubled company professionals. All titles are
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For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Debra Brennan, Yvonne L.
Metzler, Bernadette de Roda, Aileen Quijano and Peter A.
Chapman, Editors.
Copyright 2001. All rights reserved. ISSN: 1520-9474.
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