/raid1/www/Hosts/bankrupt/TCR_Public/010712.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, July 12, 2001, Vol. 5, No. 135
Headlines
360NETWORKS INC.: Secures Permission To Use Cash Collateral
AMERICAN SKIING: Completes Amendments To $165MM Credit Facility
AMERICAN TISSUE: S&P Lowers Credit Ratings To B From B+
AMERICA WEST: Expects Loss in Second Quarter
AMF BOWLING: Hires Blackstone As Financial Advisor
BRIDGE INFORMATION: Rejects Six Unexpired Nonresidential Leases
CLARITI TELECOMMUNICATIONS: Appeals Nasdaq Delisting
CMI INDUSTRIES: Court Dismisses Involuntary Bankruptcy Petition
COMPASS AEROSPACE: Corporate & Senior Debt Ratings Drop To D
CONSUMER PORTFOLIO: Hires David Kenneally as Senior VP & CFO
CRIIMI MAE: Sets First Post-Bankruptcy Shareholders' Meeting
CYBERCASH, INC.: Public Notice of September 4 Claims Bar Date
ELECTRONIC TELE-COMMUNICATIONS: Shares Knocked Off Nasdaq
ETHYL CORP.: S&P Lowers Corporate Credit Rating to BB- from BB+
FALCON PRODUCTS: Closes And Downsizes Facilities
GENESIS HEALTH: How Claims are Treated Under the Revised Plan
GERALD STEVENS: Completes Sale Of Florafax To Teleflora LLC
LAIDLAW: Court Grants Motion To Maintain Existing Bank Accounts
LERNOUT & HAUSPIE: Dictaphone Committee Hires Crossroads LLC
LOEWEN GROUP: Reports On Miscellaneous Asset Transactions In May
LTV STEEL: Sues Fritz Enterprises For Nonpayment of Debt
MARINER: Seeks Approval Of Settlement With Northwest Trustee
MICROWARE SYSTEMS: Appeals Nasdaq's Delisting Determination
OWENS CORNING: Taps Interelate for Marketing Services Expertise
PACIFIC GAS: Retirees & Survivors Form 30-Member Committee
PACIFIC GAS: Calpine Corp. Acquires San Diego Power Project
PACIFIC GAS: Employs Leroy Barnes As New VP and Treasurer
PILLOWTEX CORP.: Reports on Various Miscellaneous Asset Sales
PSINET INC.: Paying Prepetition Tax Obligations
RENNAISSANCE CAPITAL: S&P Assigns Junk Counterparty Ratings
SERVICE MERCHANDISE: Rejects Lease On Store #930 In Orlando, FL
SES-CORP.: Files Chapter 11 Petition In E.D. Michigan
SILICON GRAPHICS: S&P Cuts Corporate Debt Rating to CCC-
SIRIUS SATELLITE: S&P Rates $500 Million Shelf Filing At CCC-
STEELCLOUD: Shares Face Nasdaq Delisting
SUN HEALTHCARE: Settles Various Tort Litigation Claims
TELESYSTEM INT'L: S&P Cuts Ratings Following Exchange Offer
USG CORPORATION: Obtains Injunction Against Utility Companies
US INTERACTIVE: Files Plan of Reorganization in Wilmington
VIADOR INC.: Securities Subject To Nasdaq Delisting
VLASIC FOODS: Walking Away From 230 Executory Contracts
WARNACO GROUP: Honoring Pre-petition Shipping Charges
WASHINGTON GROUP: Court Approves Renewed Bonding Capacity
WINSTAR COMM.: Selling 1,400 KDDI Shares To KDDI Corporation
ZANY BRAINY: Waterton Management Extends $115 Million Funding
*********
360NETWORKS INC.: Secures Permission To Use Cash Collateral
-----------------------------------------------------------
Prior to the Petition Date (as defined below), 360networks inc.
(and most of its affiliates) obtained approximately
$1,200,000,000 of working capital financing under a Credit
Agreement, dated as of September 29, 2000, among 360networks
inc., 360networks holdings (USA) inc., The Chase Manhattan Bank,
as Administrative Agent and Collateral Agent, Chase Securities,
Inc., as Joint Book Manager and Co-Lead Arranger, Credit Suisse
First Boston Corporation (successor in interest to DLJ Capital
Funding, Inc.), as Joint Book Manager, Co-Lead Arranger and Co-
Documentation Agent, Goldman Sachs Credit Partners L.P., as
Arranger and Syndication Agent and Toronto Dominion (Texas),
Inc., as Arranger and Co-Documentation Agent and Export
Development Corporation, as Arranger and the lenders from time
to time party thereto. The five-largest lenders under that
facility are:
Lender Revolver Term A Loan Term B Loan
------ -------- ----------- -----------
Chase Manhattan Bank $42,058,824 $77,107,843 $94,000,000
Loan and Agency
Services Group
1 Chase Manhattan Plaza
8th Floor
New York, NY 10017
212-935-9935
Credit Suisse First 42,058,824 77,107,843 47,250,000
Boston as Successor
In Interest to DLJ
Capital Funding, Inc.
277 Park Avenue
New York, NY 10127
212-892-3000
Goldman Sachs Credit 42,058,824 77,107,843 41,000,000
Partners L.P.
85 Broad Street
New York, NY 10004
212-902-1000
Toronto Dominion 35,294,118 64,705,882 0
(Texas), Inc.
909 Fannin Street
Suite 1700
Houston, TX 77010
713-652-2644
Export Development 35,294,118 64,705,882 0
Corporation
151 O'Connor
Ottawa, Ontario K1A1K3
613-598-2500
To secure repayment of these obligations, 360 granted the
Prepetition Lenders liens on and security interests in
substantially all of its assets, subject, inter alia, to certain
exclusions and minimum value thresholds. The Debtors do not
admit, and reserve all of their rights to contest, the extent,
validity, enforceability, and perfection of the Prepetition
Lenders' liens and security interests.
The Debtors possess in excess of $100,000,000 of cash, which is
sufficient for the Debtors to operate. This Existing Cash
resides in a bank account or accounts at institutions that do
not form part of Prepetition Lenders' syndicate or in which the
Debtors have not granted the Prepetition Lenders an interest.
Therefore, the Debtors assert that Existing Cash is either
unencumbered or encumbered by liens and security interests
subject to avoidance.
The Prepetition Lenders do not share the Debtors' view. They
assert a security interest in Existing Cash. To avoid what
would otherwise be unauthorized use of cash collateral if the
repetition Lenders were to prevail in their assertions, the
Debtors sought and have obtained the Prepetition Lenders'
consent to use Cash Collateral, subject to certain terms and
conditions as more fully set forth herein. The Prepetition
Lenders took the bait and signed-off on an agreement designed to
preserve the interests, if any, of such lenders in Existing Cash
while providing the Debtors with sufficient liquidity.
The key terms of this consensual cash collateral arrangement
are:
(a) To provide the Prepetition Lenders with adequate
protection of their security interests, the Debtors will
grant replacement liens to the extent of any diminution
in the value of the Prepetition Lenders' interests,
whether resulting from the Debtors' use of Cash
Collateral or otherwise;
(b) The Debtors have prepared and presented [non-public]
cash flow projections to the Prepetition Lenders.
(c) The Debtors agree to limit their use of Cash Collateral,
and the Prepetition Lenders have consented to such use
in accordance with the projections, subject to a 10%
variance on the disbursement side of the equation.
(d) Except for the Debtors acknowledging the approximate
amount due to the Prepetition Lenders, the Debtors (and
all other parties in interest) reserve all rights
regarding the Prepetition Lenders' claims and liens.
(e) The Prepetition Lenders consent to debtor in possession
financing for the Debtors secured by liens senior to
those of the Prepetition Lenders if the other terms of
such financing are acceptable to the Prepetition
Lenders.
(f) During the time this agreement is in force, the Debtors
will segregate proceeds from the disposition of the
Prepetition Lenders' prepetition collateral.
(g) As adequate protection for the Prepetition Lenders'
valid, binding, and perfected prepetition liens, the
Prepetition Lenders shall receive superpriority claims
and liens on substantially all of the Debtors' assets
except:
(1) section 506(c) recoveries and
(2) avoidance actions against and avoidance of liens of
all parties other than the Prepetition Lenders. The
Adequate Protection Liens and superpriority claims
shall be subject only to:
(A) DIP financing liens consented to by the
Prepetition Lenders;
(B) a Carve-Out for (i) the unpaid fees of the clerk
of the Bankruptcy Court and of the United States
Trustee pursuant to 28 U.S.C. Sec. 1930, and
(ii) the aggregate allowed unpaid fees and
expenses payable under sections 330 and 331 of
the Bankruptcy Code to professional persons
retained pursuant to an order of the Court by
the Debtors or any statutory committee appointed
in these chapter 11 cases (other than the fees
and expenses, if any, of any such professional
persons incurred, directly or indirectly, in
respect of, arising from or relating to, the
initiation or prosecution of any action for
preferences, fraudulent conveyances, other
avoidance power claims or any other claims or
causes of action against the Pre-Petition Agents
or the Pre-Petition Lenders or with respect to
the Pre-Petition Indebtedness or the Pre-
Petition Liens), not to exceed $1,000,000 of
payments in the aggregate from and after the
occurrence of a Termination Event.
(C) valid, binding, and perfected liens on the
Debtors' assets existing on the Petition Date;
and
(d) Excluded Assets (which are recoveries by the
estates under chapter 5 of the Bankruptcy Code).
(h) Transfers by the Debtors to their non debtor affiliates
shall be subject to certain restrictions.
(i) The stipulation, but not the Debtors' right to use Cash
Collateral, shall terminate upon the occurrence of
any one of eight specified Termination Events:
(1) material non-compliance by any of the Debtors with
any of the terms or provisions of this Stipulation
and Order;
(2) any stay, reversal, vacatur, rescission or other
modification of the terms of this Stipulation and
Order not consented to by the Required Pre-Petition
Lenders in their sole and absolute discretion;
(3) entry of an order by this Court or any other Court
having jurisdiction over these chapter 11 case
approving the Post-Petition Financing Documents
(other than in accordance with the Commitment
Letter) not consented to by the Required Lenders in
their sole and absolute discretion;
(4) entry of an order by this Court dismissing any of
the Debtors' chapter 11 cases or converting any of
the Debtors' chapter 11 cases to cases under chapter
7 of the Bankruptcy Code or entry of an order by a
court having similar consequence with respect to any
of the Canadian Debtors, in each case, not consented
to by the Required Lenders in their sole and
absolute discretion;
(5) the appointment of a trustee or the appointment of
an examiner with enlarged powers in any of the
Debtors' chapter 11 cases;
(6) any Pre-Petition Liens that were valid, binding and
perfected, first priority Liens on the Petition
Date shall cease to be valid, binding and
perfected, first priority Liens subject only to the
Priming Liens, the Carve-Out and the Adequate
Protection Liens;
(7) the Debtors or the Canadian Debtors shall have
consummated the sale of all or substantially all of
their assets and properties, or shall have
authority to do so, in either case, on terms not
consented to by the Required Lenders in their
sole and absolute discretion; or
(8) July 27, 2001 (as such date may be extended with
the consent of the Required Lenders, in the
exercise of their sole and absolute discretion,
without further order of the Court).
(j) The first cash used by the Debtors shall be deemed to
be un-liened cash.
By this Motion, the Debtors ask Judge Gropper to but his stamp
of approval on a Stipulation memorializing this agreement. The
Debtors make it clear to the Court that they intend to maintain
an appropriate level of liquidity and are optimistic that the
Prepetition Lenders will continue to consent to use of Cash
Collateral.
Harold S. Novikoff, Esq., at Wachtell, Lipton, Rosen & Katz,
serves as special bankruptcy counsel to the Pre-Petition Agents;
and Blake, Cassels & Graydon LLP serves as special Canadian
counsel to the Pre-Petition Agents. (360 Bankruptcy News, Issue
No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900)
AMERICAN SKIING: Completes Amendments To $165MM Credit Facility
---------------------------------------------------------------
American Skiing Company (NYSE: SKI) successfully completed
amendments to its $165 million resort senior credit facility,
which is a key component of the Company's previously announced
comprehensive strategic plan to improve its capital structure
and enhance future operating performance.
The amended facility includes new covenants consistent with the
Company's revised business plan and retroactively amends certain
financial covenants with respect to the Company's recently
completed third fiscal quarter.
"We are pleased that we completed the amendments to the senior
credit facility working together with the syndicate," said
American Skiing Company chief financial officer Mark Miller.
"The amended facility lays the groundwork for completing the
other aspects of the Company's financial restructuring package,
so this is a major development in completing our objectives."
Miller said that American Skiing Company was encouraged by
progress made in negotiations with lenders to the Company's Real
Estate subsidiary and that the Company is nearing completion of
a new infusion of capital. A comprehensive announcement
detailing the terms of the entire restructuring package will be
released upon completion of the remainder of the negotiations.
No assurance can be given at this time that the remaining
negotiations will be successfully concluded. The inability to
successfully renegotiate the terms of the real estate credit
facilities 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.
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,
http://www.peaks.com.
AMERICAN TISSUE: S&P Lowers Credit Ratings To B From B+
-------------------------------------------------------
Standard & Poor's lowered its ratings on American Tissue Inc.
The ratings remain on CreditWatch, however the implications are
revised to developing from negative.
The rating actions follow a prolonged period of very tight
liquidity. The developing CreditWatch implications reflect the
range of outcomes that could affect credit quality depending on
the success or failure of the planned consolidation of American
Tissue with affiliated companies and a related debt financing.
Developing implications means that ratings could be raised,
lowered, or affirmed.
The recently launched tender for American Tissue's 12.5% senior
secured notes due 2006 is contingent on successful completion of
the contemplated refinancing. The ratings on American Tissue
could be lowered if the planned refinancing does not take place
and liquidity remains inadequate. The ratings could be affirmed
or raised if the tender offer is successful. Preliminary
indications are that following a successful refinancing , the
corporate credit rating of the larger, consolidated entity would
likely be either single-'B' or single-'B'-plus.
Hauppauge, N.Y.-based American Tissue is a privately held
manufacturer of tissue, uncoated free sheet, and pulp, and holds
modest positions in these cyclical, highly competitive
markets.The company has grown through an aggressive acquisition
strategy, and has a highly leveraged capital structure.
Operating cash flow and bank line availability have been
inadequate to meet the company's growing working capital and
capital spending needs, which has lead to the need for
supplementary equity infusions.
Standard & Poor's will monitor the company's refinancing
activity and revise the ratings accordingly.
Ratings Lowered With CreditWatch Implications
Revised To Developing From Negative
American Tissue Inc. To From
Corporate credit rating B B+
Senior secured debt B B+
Senior secured bank loan rating B B+
AMERICA WEST: Expects Loss in Second Quarter
--------------------------------------------
America West Holdings Corporation (NYSE: AWA), parent company of
America West Airlines, expects a second quarter net loss of $20
to $30 million, excluding special charges previously announced.
Including those special charges, the second quarter net loss is
expected to be $40 to $50 million. The losses are driven by
continued weakness in the U.S. economy and high fuel prices.
The company's revenue per available seat mile (RASM) is
projected to be 6 percent to 8 percent lower than the second
quarter of 2000. America West's decline in RASM is due to a
dramatic industry-wide decrease in business travel. However,
America West's anticipated RASM decline is less severe than
that announced by other major U.S. airlines. Furthermore,
America West's load factors for the second quarter have been
among the highest in the industry and have increased while other
airlines have experienced declines. The company believes this
relative outperformance is largely due to pricing initiatives
and the significant improvement in operations at America West.
"America West, like the rest of the airline industry, continues
to experience the effects of a sharp reduction in business
travel and high fuel prices," said William A. Franke, chairman,
president and chief executive officer. "While we are encouraged
that we are outperforming the industry, we are not immune to the
business cycle."
America West has the lowest unit costs of any major hub and
spoke carrier. To underscore its commitment to maintaining its
cost advantage and to address the deteriorating economic
environment, America West previously announced $75 million of
cost reduction initiatives including a 10 percent reduction in
management/administration payroll, a $25 million reduction in
capital spending and the return to lessors of seven B737-300
aircraft earlier than anticipated. As previously announced,
these steps will result in a pre-tax charge of approximately $30
million in the second quarter 2001.
AMF BOWLING: Hires Blackstone As Financial Advisor
--------------------------------------------------
The size of its operations and the complexity of their financial
difficulties required AMF Bowling Worldwide, Inc. to employ
experienced advisors to render financial advisory services in
connection with potential restructuring strategies, Stephen E.
Hare, Executive Vice President and Chief Financial Officer for
AMF Bowling Worldwide, Inc., tells Judge Tice. Accordingly, in
May, 2000, the Debtors, retained Blackstone to provide advice
and assistance with regard to such matters. Blackstone has been
intimately involved in assisting the Debtors in restructuring
negotiations and, in the Debtors' judgment, Blackstone remains a
critical player in the Debtors' efforts. The Debtors believe
that the continued employment of Blackstone will be essential to
the successful reorganization of the Debtors. In addition, due
to the limited size of the Debtors' financial management staff,
employing such advisors will help management to focus its
attention on successfully reorganizing the Debtors' business and
financial affairs.
The Debtors contemplate that Blackstone will provide financial
advisory services in connection with the restructuring and
reorganization of the Debtors' affairs throughout the course of
these chapter 11 cases as the Debtors may request. Specifically,
the Debtors look to Blackstone to:
(a) assist in the evaluation of the Debtors' businesses and
prospects;
(b) assist in the development of the Debtors' long-term
business plan;
(c) assist in the development of financial data and
presentations to various lenders, note holders, creditors, and
other third parties;
(d) analyze the Debtors' financial liquidity and financing
requirements;
(e) evaluate the Debtors' debt capacity and alternative
capital structures;
(f) provide strategic advice with regard to restructuring
or refinancing the Debtors' indebtedness and obligations;
(g) participate in negotiations among the Debtors and its
lenders, noteholders, creditors and other third parties;
(h) assist in arranging exit financing in connection with
the Restructuring;
(i) evaluate proposals made to the Debtors regarding a
Restructuring;
(j) value the Debtors and any securities offered by the
Debtors in connection with a Restructuring; and
(k) provide expert witness testimony.
Arthur B. Newman, leading the engagement from Blackstone's New
York offices, assures the Court that the members and associates
of Blackstone principally involved in advising the Debtors do
not have any connection with the Debtors, their creditors or any
other party in interest, or their respective attorneys, except:
(a) Investment partnerships managed by affiliates of
Blackstone have owned shares of common stock in AMF Bowling Inc.
("BINC") since 1996. Their ownership percentage in BINC amounts
to approximately 10.1% of the outstanding shares as of December
31, 2000 according to its annual report for that date.
Shareholders hereby waive (i) their voting rights (and other
rights regarding corporate governance) and (ii) any recovery or
distribution from the estates on account of such equity
interest. The Blackstone professionals who have been and will
continue to provide financial advisory services to the Debtors
in these cases were not involved in the decision to make an
equity investment in the Debtors in 1996;
(b) A Blackstone partner, Mr. Howard Lipson, was involved
in the decision to invest in the equity securities of the
Debtors and has served on the Board of Directors of BINC and
WINC since 1996. Mr. Lipson resigned from the Boards of BINC and
WINC on May 30, 2001. Mr. Lipson received $7,000 in annual
director's fees. Mr. Lipson has not been involved in the
provision of advisory services by Blackstone to the Debtors and
would not be involved in such services going forward. The
Debtors assert, based on advice of counsel, that Blackstone
remains "disinterested" notwithstanding Mr. Lipson's prior
service on the Board of Directors;
(c) Willkie Farr & Gallagher, bankruptcy co-counsel for the
Debtors; Weil Gotshal & Manges and Dresdner Kleinwort
Wasserstein, counsel and financial advisor, respectively, for
the Debtors' prepetition lenders; Debevoise & Plimpton and
Houlihan Lokey Howard & Zukin, counsel and financial advisor,
respectively, to the Debtors' prepetition unsecured noteholders
have each, from time to time in the past and present, provided
services in transactions, unrelated to these cases, in which
Blackstone was or is involved. "To the best of my knowledge,
there are two specific occasions in which there exists a more
direct relation with any of these firms," Mr. Newman says,
explaining that first, WGM retained Blackstone to provide
financial advisory services to WGM's clients (the prepetition
bank lenders of Safety-Kleen); second, Republic Technologies, a
debtor in possession with respect to which investment funds
managed by Blackstone are creditors and shareholders, retained
WGM as its bankruptcy counsel;
(d) Blackstone and certain of its members and employees
have in the past represented, currently represent, and may in
the future represent entities that are involved in the Debtors'
bankruptcy cases in matters wholly unrelated to this case.
Blackstone has a large and diversified practice which
encompasses the representation of many financial institutions
and commercial corporations, some of which may be claimants in
the Debtors' bankruptcy case or otherwise have an interest in
such pending case. "Based on the information available to me, I
believe Blackstone holds no interest adverse to the Debtors, its
creditors or the estates as to the matters for which it is to be
employed," Mr. Newman states, stressing that "Blackstone shall
not represent any of the Debtors' creditors in matters related
to this case."
(e) Affiliates of Blackstone serve as general partner for
and manage a number of investment vehicles. The investors in the
Blackstone Funds are principally unrelated third parties but
also include affiliates of Blackstone and various officers and
employees, including Mr. Newman. Among other things, the
Blackstone Funds are passive investors in other funds managed
by a number of non-traditional money managers, similar to being
investors in mutual funds. Several of these non-traditional
money managers may now hold, or in the future acquire,
securities of, or claims against, distressed companies such as
the Debtors "although . . . I am unaware of any such holdings
with respect to the Debtors," Mr. Newman says. As would be the
case in a mutual fund, neither Blackstone, its affiliates, the
Blackstone Funds nor Blackstone Employees have any control over
the investments made by the Investment Funds in which the
Blackstone Funds are invested, including, but not limited to,
investment purchases, investment divestitures and the timing of
both. Blackstone maintains a strict separation between its
Employees assigned to the Debtors' bankruptcy case and the
Employees assigned to any work for the Blackstone Funds. To
avoid any appearance of impropriety, (i) should the Blackstone
Funds receive information about such Investment Funds' investing
in distressed situations in which Blackstone acts as an advisor,
Blackstone maintains internal procedures designed to preclude
the dissemination of such information to the Employees of
Blackstone who are providing such advisory services; (ii) no
Employee assigned to work on the Debtors' bankruptcy case has
received information concerning the individual investments of
Investment Funds in which Blackstone Funds are invested; and
(iii) in addition, no confidential information concerning the
Debtors has been permitted to be communicated to the Employees
working for the Blackstone Funds.
(f) Blackstone, through its private equity investment
activities, routinely makes investments in, or purchases of, the
equity of public and private companies. As described above, some
investment partnerships managed by affiliates of Blackstone are
shareholders of BINC. During these cases, Blackstone will
maintain a strict separation between its Employees assigned to
the Debtors' bankruptcy case and the Employees assigned to any
work for Blackstone investment activities, including Blackstone
Merchant Banking and Mr. Lipson. Blackstone maintains internal
procedures designed to preclude the dissemination of investment
information to the Employees of Blackstone who are providing
such advisory services. In addition, no confidential information
concerning the Debtors is permitted to be communicated to the
Employees working for Blackstone Merchant Banking. As noted
above, Mr. Lipson has confidential information concerning the
Debtors as a result of being a former director of the Debtors.
Accordingly, Mr. Newman is convinced that Blackstone is
"disinterested" and does not hold or represent an interest
adverse to the Debtors' estates. In addition, the Debtors and
Blackstone, through their respective legal counsels, have
discussed the relationships described above with the U.S.
Trustee and the Debtors and Blackstone believe that the U.S.
Trustee concurs with the Debtors' assertion that Blackstone is
"disinterested" and does not represent an interest adverse to
the Debtors' estates.
The Debtors retained Blackstone pursuant to an engagement letter
signed July 11, 2000 for substantially similar pre-petition
services. Under that Engagement Letter, Blackstone performed
services in exchange for (a) a monthly advisor fee of $200,000,
(b) reimbursement of all necessary and reasonable out-of-pocket
expenses incurred during its engagement and (c) a restructuring
fee equal to 1.0% of the total face or accreted value of any
indebtedness restructured, modified, or amended as part of a
Restructuring. Based on total indebtedness of approximately $1.3
billion, subject to credits of approximately $700,000, the
restructuring fee, as defined by the July 2000 Engagement
Letter, would have been approximately $12.3 million. As a result
of negotiations with the Debtors' Prepetition Senior Lenders,
Blackstone and the Debtors agreed to the revised compensation
structure and enter into a new Engagement Letter providing for:
(a) a $200,000 Monthly Advisory Fee;
(b) reimbursement of all necessary and reasonable out-of-
pocket expenses incurred during its engagement; and
(c) upon completion of a Restructuring, a $7,000,000
Restructuring Fee.
The Debtors agree to indemnify and hold Blackstone harmless
against any claims, liabilities and obligations arising out of
its retention in these chapter 11 cases, except to the extent
that any such claim, liability and obligation results from bad
faith, gross negligence or willful misconduct. Although not
explicitly provided for in the Indemnification Agreement,
Blackstone agrees that if before the earlier of (i) the entry of
an order confirming a chapter 11 plan (that order having become
a final order, no longer subject to appeal), and (ii) the entry
of an order closing the Debtors' chapter 11 cases, Blackstone
believes that it is entitled to the payment of any amounts by
the Debtors on account of the Debtors' indemnification,
contribution and/or reimbursement obligations under the
Indemnification Agreement, including without limitation the
advancement of defense costs, Blackstone will follow the
procedures for interim compensation and reimbursement of expense
of professionals. Blackstone has agreed to the foregoing only to
specify the period of time under which the Court shall have
jurisdiction over any request for fees and expenses by
Blackstone for indemnification, contribution or reimbursement
and not as a provision to limit the duration of the Debtor's
obligation to indemnify Blackstone.
Mr. Newman discloses that, during the 14 month period prior to
the Petition Date, the Debtors made payments aggregating
$2,907,520.81, comprised of: (i) $2,800,000.00 for monthly
advisory fees, and (ii) $107,520.81 for reimbursement of out-of-
pocket expenses (which includes a $10,000 advance for unbilled
expenses incurred by Blackstone through the Petition Date).
Blackstone's last Monthly Fee paid by the Debtors covers the
period from June 16, 2001 through July 15, 2001. Blackstone has
agreed that it will credit the portion of such Monthly Fee
relating to the period subsequent to the Petition Date against
any amounts payable to Blackstone pursuant to applicable court
orders. If, at the conclusion of this case, Blackstone's
expenses are ultimately approved in an aggregate amount less
than the remainder of the $10,000 advance after application of
all previously unpaid expenses incurred prior to the Petition
Date, Blackstone will return such remainder to the Debtors. No
other payments, other than amounts paid to Howard Lipson as a
board member of approximately $7,000 in annual director's fees,
were made to Blackstone by the Debtors within one year prior to
the Petition Date. (AMF Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
BRIDGE INFORMATION: Rejects Six Unexpired Nonresidential Leases
---------------------------------------------------------------
Bridge Information Systems, Inc. sought and obtained an order
rejecting six leases of nonresidential real property, effective
March 15, 2001. The leased sites consist of office, storage,
network server and equipment sites.
The Debtors convinced the court that these leases are no longer
necessary for their ongoing operations. With the Court's
approval, the Debtors saved a total rent of $42,067.17 per
month.
The landlords are also directed to refund the Debtors of any and
all amounts paid in advance after the rejection date.
Leased Site Landlord
----------- --------
600 University Street Union Square Limited Partnership
Seattle, WA c/o UNICO Properties
Rainier Tower
1301 5th Avenue
Suite 3500
Seattle, WA 98101-2647
717 Pierson Street 7th Avenue Self Storage
Phoenix, Arizona 717 Pierson Street
Phoenix, Arizona 85013
2344 Weldon Parkway Weldon Fee Fee Investors, L.L.C.
St. Louis, Missouri 10829 Olive Boulevard, Ste. 200
63146 St. Louis, Missouri 63141
111 Gaither Drive Lester M. Entin Associates
Mount Laurel, New Jersey 1033 Clifton Avenue
P.O. Box 2189
Clifton, New Jersey 07015
136 Gaither Drive W9/PHC Real Estate Limited
Partnership
Mount Laurel, New Jersey c/o Grubb & Ellis
523 Fellowship Road, Suite 270
Mount Laurel, New Jersey 08054
4879 E. LaPalma Avenue Foremost Airport Vegas, Limited
Anaheim, California 35351 Alicia Parkway, Suite A
92806 Laguna Hills, California 92653
* * *
For the same reasons, the Debtors also sought and obtained the
Court's authority to reject 5 prime leases and 5 subleases of
non-residential property effective March 22, 2001:
Leased Site Landlord Subtenant
----------- -------- ---------
75 Wall Street Barclays Wall Street Corp. Technimetrics,
Inc.
New York, NY c/o Cushman & Wakefield 75 Wall Street
10005 88 Pine Street, 27th Floor New York, NY 10265
New York, NY 10005 Attn: Director of
18th Floor Finance and Unit
19-1 Administration
19-2
75 Wall Street Barclays Wall Street Corp. Thomson
Information
New York, NY c/o Cushman & Wakefield Services, Inc.
10005 88 Pine Street, 27th Floor 22 Thomson PI.
New York, NY 10005 Boston, MA 02210
20th Floor Attn: Vice
President
Real Estate
8713 Airport Northstar Partnership Matrix Telecom,
Inc.
Freeway Phase II, Limited 8713 Airport
Freeway
No. Richland c/o The Centra Group Suite 430
Hills 1612 Summit Avenue No. Richland Hills
Texas 76180 Suite 200 Texas 76180
Forth Worth, Texas 76102
3475 Lenox Road U.S. Property Inv. Fund Luminant Worldwide
Atlanta, Georgia c/o TMW Management LLC Corporation
30326-1232 Two Ravina, Suite 400 3475 Lenox Road
Atlanta, Georgia Atlanta, Georgia
30346 30326-1232
900 Thorndale Elk Grove Village DecisionOne Corp.,
Avenue Industrial Park Limited Incorporated
Elk Grove c/o Hamilton Partners 50 E. Swedesford
Village, IL 300 Park Boulevard Road
60007 Itasca, IL 60143 Frazer, PA 19355
Maintaining these prime leases cost the Debtors approximately
$199,487.05 per month.
Judge McDonald also authorizes the Debtors to reject an auto
lease, a Ford Expedition, with G.E. Capital Corporation. The
Debtors saved $614.25 per month in the rejection of this auto
lease. (Bridge Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
CLARITI TELECOMMUNICATIONS: Appeals Nasdaq Delisting
----------------------------------------------------
Clariti Telecommunications International, Ltd. (Nasdaq:CLRI)
received a Nasdaq Staff Determination on July 5, 2001 indicating
that the Company fails to comply with the common stock market
capitalization requirement for continued listing set forth in
Marketplace Rule 4310(c)(2)(B)(ii), and that its securities are,
therefore, subject to delisting from The Nasdaq SmallCap
Market.
The Company has requested a hearing before the Nasdaq Listing
Qualifications Panel to review the Staff Determination. There
can be no assurance the Panel will grant the Company's request
for continued listing.
CMI INDUSTRIES: Court Dismisses Involuntary Bankruptcy Petition
---------------------------------------------------------------
CMI Industries, Inc. said that the involuntary bankruptcy
petition filed against the Company has been dismissed pursuant
to an agreement previously reached between the Company and
certain holders (the "Petitioning Bondholders") of its Senior
Subordinated Notes (the "Notes"). On Monday, the United States
District Court for the District of Delaware issued the order
for dismissal that the Company and Petitioning Bondholders had
jointly requested. Under the dismissal order, the Company is to
make the April interest payment owed with respect to the Notes
and the parties will engage in good faith efforts to negotiate
an overall restructuring of the Notes.
Said Joseph L. Gorga, President of the Company, "The Company
extends its appreciation to all of its customers, vendors and
associates for their support during these last few weeks. Their
support was a significant factor in our ability to resolve this
matter in the best interests of all parties. CMI and its
bondholders have already engaged in extensive discussions on
restructuring the Company's capital structure, and the framework
for quickly and fairly achieving this goal is now in place. We
look forward to continuing to focus on customer needs and
customer service, while moving forward with strategic
initiatives to grow our elastics business."
CMI Industries, Inc., and its subsidiaries manufacture textile
products that serve a variety of markets, including the home
furnishings, woven apparel, elasticized knit apparel and
industrial/medical markets. Headquartered in Columbia, South
Carolina, the Company operates manufacturing facilities in
Clarkesville, Georgia; Greensboro, North Carolina; and Stuart,
Virginia. The Company had net sales from continuing operations
of $194.7 million in 2000.
COMPASS AEROSPACE: Corporate & Senior Debt Ratings Drop To D
------------------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
secured debt ratings for Compass Aerospace Corp. to 'D' from
'SD' and triple-'C'-minus, respectively.
The company is in default under the terms of its senior credit
agreement, with outstanding obligations of about $42.7 million
of principal and $1.9 million of interest. Still, Standard &
Poor's expects the syndicate of lenders extending credit under
that agreement to come out significantly better than Compass
Aerospace's unsecured creditors in a likely restructuring of the
firm's obligations. On April 20, 2001, Standard & Poor's lowered
its rating to 'D' on Compass Aerospace's senior subordinated
notes due 2005, stemming from the company's failure to make an
April 15 interest payment.
Compass Aerospace manufactures original equipment parts used
primarily in the structural elements of commercial airplanes,
with Boeing Co. accounting for a majority of sales, Standard &
Poor's said.
Ratings Lowered
TO FROM
-- ----
Compass Aerospace Corp.
Corporate credit rating D SD
Senior secured debt D CCC-
CONSUMER PORTFOLIO: Hires David Kenneally as Senior VP & CFO
------------------------------------------------------------
Consumer Portfolio Services Inc. (Nasdaq:CPSS) discloses that
David N. Kenneally has joined the company as senior vice
president and chief financial officer.
Kenneally has spent nine years in the financial services
industry, most recently serving as chief financial officer at
LoanGenie.com Inc. Kenneally will be responsible for all
control, treasury, finance, tax and financial planning
functions.
"We are delighted to have attracted someone of Dave's caliber to
CPS," said Charles E. Bradley, Jr., president and chief
executive officer. "Dave is a seasoned professional with
tremendous experience in the public and capital markets areas,
investor relations and cost controls. His expertise will be
especially welcome as we, and the rest of the consumer finance
industry, deal with the changing economic environment."
Prior to joining Loan Genie last year, Kenneally spent six years
as vice president-finance of Fidelity National Financial Inc.,
the leading issuer of real estate title insurance. Kenneally
began his professional career in 1986 as an auditor with KPMG.
He holds a Bachelor of Arts degree in business economics from
the University of California, Santa Barbara. He is 34.
Consumer Portfolio Services purchases, sells and services retail
installment sales contracts originated predominantly by
franchised dealers for new and late model used cars.
CRIIMI MAE: Sets First Post-Bankruptcy Shareholders' Meeting
------------------------------------------------------------
CRIIMI MAE Inc. (NYSE: CMM) has set an August 9, 2001 record
date for shareholders entitled to vote at the annual meeting of
shareholders scheduled for September 25, 2001. This is the first
annual meeting since the Company emerged from bankruptcy on
April 17, 2001.
CRIIMI MAE also announces that shareholders will be asked at the
annual meeting to consider and approve, among other matters, a
one-for-ten reverse stock split of the Company's issued and
outstanding common stock in order to help facilitate two
important objectives: to maintain the common stock's listing on
the New York Stock Exchange ("NYSE") and to increase the
attractiveness of the common stock to the investment community.
In January 2001, CRIIMI MAE received notification from the NYSE
that it had until the later of July 11, 2001 (the six month
deadline) or the Company's next annual meeting of shareholders,
if shareholder approval is required for a corporate action, to
raise its common stock price above $1 in order for the Company's
common stock to remain listed on the NYSE. In light of the
Company's announcement that it will ask shareholders to consider
and approve a one-for-ten reverse stock split, the NYSE will not
commence suspension and delisting procedures but will allow the
Company sufficient time to solicit shareholder approval and
implement the reverse stock split, if approved. If the reverse
stock split is not approved and implemented, the NYSE will
commence suspension procedures.
CYBERCASH, INC.: Public Notice of September 4 Claims Bar Date
-------------------------------------------------------------
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
------------------------------------x
In re: : Chapter 11
:
CYBERCASH, INC. et al., : Case Nos. 01-0622 (MFW)
: through 01-0624 )MFW)
Debtors. :
: Jointly Administered
------------------------------------x
NOTICE OF BAR DATES FOR FILING OF
PROOFS OF CLAIMS AND REQUESTS
FOR PAYMENT OF ADMINISTRATIVE EXPENSES
TO ALL CREDITORS:
PLEASE TAKE NOTICE OF THE FOLLOWING:
The United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court") has entered an order in the
above-captioned Chapter 11 cases (the "Bar Date Order")
establishing September 4, 2001 as the general claims bar date
(the "Bar Date") in the Chapter 11 cases of the above-captioned
debtors and debtors in possession (collectively, the "Debtors").
Except as described below, the Bar Date Order requires all
Entities, as defined in section 101(15) of the Bankruptcy code,
11 U.S.C. Secs. 101-1330 (the "Bankruptcy Code"), including
individuals, partnerships, corporations, estates and trusts and
governmental units, that have or assert any prepetition claims
against (as defined herein) any of the Debtors to file a proof
of claim with the The Altman Group, Inc. (the "Altman Group") so
that such proof of claim is received on or before 5:00 p.m.,
prevailing Eastern Time, on the Bar Date. The Bar Date Order
further requires any Entity asserting a claim for payment of an
Administrative Expense, as such item is defined in section 503
of the Bankruptcy Code, to file a request with the Bankruptcy
Court so that such request is received o n or before 4:00 p.m.,
prevailing Eastern Time, on July 30, 2001 (the "Administrative
Bar Date").
DEFINITION OF CLAIM
For purposes of this Bar Date Notice, "claim" shall mean,
as to any of the Debtors, (1) any right to payment, whether or
not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, legal,
equitable, secured or unsecured; or (2) any right to an
equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
PERSONS OR ENTITIES WHO MUST FILE A
PROOF OF CLAIM OR A REQUEST FOR
PAYMENT OF ADMINISTRATIVE EXPENSES
Pursuant to the Bar Date order, Entities required to file
proofs of claim by the Bar Date or required to file a request
for payment of administrative expenses by the Administrative Bar
Date include, without limitation, the following:
(1) Creditors whose claims arise out of the rejection
of executory contacts or unexpired leases by the Debtors prior
to the entry of the order establishing the Bar Date;
(2) Governmental units (as such term is defined in
section 101(27) of the Bankruptcy Code) holding claims for
unpaid taxes, whether arising out of prepretition tax years or
periods, or prepetition transactions to which one of the Debtors
was a party;
(3) Entities whose claims arise out of the obligations
of such Entities under a contract for the provision of liability
insurance to a Debtor; and
(4) Entities whose claims arise out of expenses
related to the administration of the Debtors' estates, pursuant
to section 503 to the Bankruptcy code, that accrued on or prior
to May 4, 2001.
Any Entity whose claims arises out of the rejection of an
executory contract or unexpired lease after the date of the
notice but prior to the entry of an order confirming a plan or
plans of reorganization in these Debtors' cases must file a
proof of claim on or before the later of (1) 30 days after the
date of the order authorizing the rejection of such contract or
lease and (20 the Bar Date (the "Rejection Bar Date").
If, subsequent to the mailing and publication of this
Notice, the Debtors amend the Schedules to designate a claim as
disputed, contingent or unliquidated or to change the amount,
nature or classification of a claim, then the affected claim
holder shall have 30 days form the date of service of notice
thereof to file a proof of claim or to amend any previously
filed proof of claim in respect of such amended claim (the
"Amended Schedule Bar Date').
Any Entity whose prepetition claim is not listed or is
improperly classified in the Schedules, is listed in an
incorrect amount or is listed as "disputed," "contingent" or
"unliquidated and that desires to participate in any of these
Chapter 11 cases or share in any distribution in any of these
Chapter 11 cases must file a proof of claim with the Altman
Group on or before 5:00 p.m., prevailing Eastern Time, on the
appropriate Bar Date.
The Bar Date Order further provides that the following
claimants need not file a proof of claim or interest by the Bar
Date: (1) those who have already properly filed with the Court
a proof of claim against one or more of the Debtors; (2) those
(a) whose claim is not listed as "disputed," "contingent" or
"unliquidated" in the Schedules and (b) who agree with the
nature, classification and amount of such claim as set forth in
the Schedules; and (3) those w hose claims previously have been
approved, or paid, by an order of the Bankruptcy Court,
including (a) certain prepetition wages, salaries, overtime pay,
contractual compensation, sick pay, vacation pay, commissions,
bonuses, reimbursement of business expenses and employee
benefits owed to employees that the Debtors were authorized pay
pursuant to an order of the Bankruptcy Court, and (b) certain
federal excise taxes and state and federal sales and use taxes
collected from the Debtors' customers that the Debtors were
authorized to pay pursuant to an order of the Bankruptcy Court.
FILING PROOFS OF CLAIM OR REQUESTS FOR PAYMET OF
ADMINISTRATIVE EXPENSES AGAINST MULTIPLE DEBTORS
Any Entity asserting claims against or requesting payment
of an administrative expense claim against more than one Debtor
must file a separate proof of claim or request for payment of
Administrative Expenses (as appropriate) for each such Debtor.
All Entities must identify on their proof of claim the
particular Debtor against which their claim is asserted.
CONSEQUENCES OF FAILURE TO FILE PROOF OF CLAIM
OR REQUEST FOR PAYMENT OF ADMINISTRATIVE EXPENSE
Any creditor who is required to file a proof of claim or a
request for payment of administrative expenses but who fails to
do so in a timely manner, shall be forever barred, estopped and
enjoined from (10 asserting any claim that such Entity has
against or in any of the Debtors that is (a) in excess of the
amount set forth in the Schedules as liquidated, undisputed and
not contingent or (b) for a different amount, nature or
classification under, any plan or plans of reorganization in
these Chapter 11 cases in respect of such Unscheduled Claims.
If it is unclear from the Schedules whether your claim is
disputed, contingent or unliquidated as to amount or is
otherwise properly listed and classified, you must file a proof
of claim on or before the Bar Date. Any Entity that desires to
rely on the Schedules has responsibility for determining that
its claim is accurately listed therein.
RESERVATION OF RIGHTS
The Debtors reserve the right to (1) dispute, or to assert
offsets, counterclaims or defenses against, any filed claim or
any request for payment of Administrative Expenses or any claim
listed or reflected on the Schedules as to amount, liability,
nature, classification or otherwise; or (2) designate,
subsequently any claim as disputed, contingent or unliquidated.
Nothing set forth in this notice shall preclude the Debtors from
objecting to any claim whether scheduled or filed, on any
grounds.
TIME AND PLACE FOR FILING
PROOFS OF CLAIM OR INTEREST OR
REQUESTS FOR PAYMENT OF ADMINISTRATIVE EXPENSES
All proofs of claim must be filed with the Altman Group so
as to be received on or before 5:00 p.m., prevailing Eastern
Time, on or before the Bar Date, the Rejection Bar Date or the
amended Schedule Bar Date, depending upon the nature of the
claim. All requests for payment of Administrative Expenses must
be filed with the Bankruptcy court, 824 N. market St.,
Wilmington, Delaware, 19801, so as to be received on or before
4:00 p.m., prevailing Eastern Time, on or before the
Administrative Bar Date. Proofs of claim may be filed in person
or by courier service, hand delivery or mail addressed to:
The Altman Group, Inc.
60 East 42nd Street, Suite 1241
New York, New York 10165
Attn: CyberCash Claims Processing
Proofs of claim will be deemed filed only when actually
received by the Altman Group. Facsimile transmissions will not
be accepted. If you wish to receive acknowledgement of the
receipt of your proof of claim, you must also submit a copy of
your original proof of claim and a self-addressed, stamped
envelope.
ADDITIONAL INFORMATION
If you require additional information regarding the filing
of a proof of claim, you may contact the Altman Group by
telephone at (212) 681-9600 or at the following address: 60 Eat
42nd Street, Suite 1241, New York, New York 10165. The
Debtors' Schedules may be examined by interested parties; (i)
during regular business hours at the Altman Group's offices, 60
East 42nd Street, Suite 1241, New York, New York 10165; and (ii)
during posted business hours at the offices of the Clerk of the
Bankruptcy Court, 824 North Market Street, Fifth Floor,
Wilmington, Delaware 19801. Additionally, copies of the
Debtors' Schedules are available, at a requesting Entity's sole
cost and expense, from IKON Office Solution, 901 Market Street,
Suite 718 Wilmington, Delaware 19801, ph: (302)777-4500, Attn:
John Tricky.
Dated: Wilmington, Delaware BY THE ORDER OF THE
June 27, 2001 UNITED STATES BANKRUPTCY COURT
ELECTRONIC TELE-COMMUNICATIONS: Shares Knocked Off Nasdaq
---------------------------------------------------------
Electronic Tele-Communications, Inc. (ETC) Class A common stock
began trading on the OTC Bulletin Board on Wednesday, July 11,
2001. Its stock was delisted from the Nasdaq SmallCap Market
after the market closed on July 10, 2001. The Nasdaq delisting
occurred because ETC did not meet the minimum market value of
public float and $1 minimum bid price requirements for continued
listing set forth in Marketplace Rules 4310(c)(7) and
4310(c)(4). On June 8, 2001, ETC requested a hearing before a
Nasdaq Listing
Qualification Panel to review the Staff Determination regarding
delisting. Subsequently, ETC has decided to withdraw its request
for the hearing.
Commenting on the change in stock markets, ETC President Dean
Danner said, "We decided not to pursue the hearing process any
further because, in the month since June 8, 2001 when we
requested the hearing, the economy and ETC's stock price have
continued to struggle. These conditions would make it
extremely difficult to be successful in any hearing with the
Nasdaq Panel. The OTC Bulletin Board will continue to offer our
shareholders and the investment community the ability to trade
ETC stock and obtain pertinent information about our Company. We
will continue to file reports as a public company with the SEC
and provide quarterly reports to shareholders of record."
Electronic Tele-Communications is a supplier of Voice
Application Processing Platforms to domestic and foreign
telephone utilities and of messaging systems to the commercial
market. ETC's equipment, provides a wide range of audio
information and call handling services via telephone networks,
computer networks, and the Internet. ETC, with corporate
headquarters in Waukesha, Wisconsin also has operations in
Norcross, Georgia.
ETHYL CORP.: S&P Lowers Corporate Credit Rating to BB- from BB+
---------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating for Ethyl
Corp. to double-B-minus from double-B-plus. The outlook is now
stable. The rating action impacting this producer of petroleum
additive products reflects a deterioration in the company's
business position and sharply lower profitability (excluding
nonrecurring gains), because of difficult conditions in the
crankcase additives product line, exacerbated by substantially
higher raw material costs and adverse effects from foreign
currency exchange.
Credit quality incorporates a meaningful position in the
petroleum additives industry, substantial downsizing of the
crankcase product operations, and likely additional healthy debt
reduction in the next couple of years, offset by persistent
operating challenges.
Petroleum additives are specialty chemicals that improve the
performance of fuels, automotive crankcase oils, transmission
and hydraulic fluids, and industrial engine oils. Research and
development costs are significant to meet new product
specifications required by auto and diesel engine manufacturers.
A major factor in the company's overall earnings decline the
last few years has been the market deterioration in one of the
key business sectors, crankcase additives--the high-volume motor
oil portion of the petroleum additives segment. Overcapacity in
the crankcase industry and the considerable pricing leverage of
the consolidating oil industry has made it very difficult to
obtain satisfactory price increases, and the industry is
suffering from low to no growth. Last year, Ethyl lost crankcase
sales positions at three customers. To return the crankcase
product line to profitability, Ethyl has downsized those
operations. Two of Ethyl's three major competitors in the
petroleum additives industry are substantially larger in size.
Petroleum additives segment income continued its slide recently,
penalized by lower shipments and higher raw material costs.
Asset write-downs and other costs related to the rationalization
of the crankcase lines amounted to $23 million in the 2001 first
quarter, and more special charges will be taken in the second
quarter. Benefits from cost-reduction efforts, moderating
petroleum raw material costs, and less dependence on crankcase
product could lead to an overall earnings rebound for 2002.
Tetraethyl lead (TEL) income, which remains a substantial
contributor to overall profitability, is on a long-term downward
trend due to clean air initiatives.
Capital expenditures for the next few years probably will not be
dramatically different from the $11 million projected for 2001,
thus bolstering the company's discretionary cash generation.
During 2001-2002, the company expects to reduce the debt load
($443 million as of March 31) by $200 million, utilizing
proceeds from the sale of nonstrategic assets, $50 million-$60
million from an overfunded, terminated U.S. salaried pension
plan, and internal funds flow. Consequently, total debt to
EBITDA should decline meaningfully from the aggressive 3.7 times
(x), while the funds from operations to total debt ratio is
expected to strengthen from the poor 14% area.
Ethyl's near-term liquidity and refinancing requirements will be
addressed with the expected completion of a $115 million
qualified asset-based secured financing and debt reduction.
These actions enhance prospects that Ethyl will be able to
extend the maturity of its credit facility to Dec. 31, 2003,
from Aug. 28, 2002.
Outlook: Stable
The likelihood of substantial debt reduction in the next two
years, coupled with the expectation that earnings will bottom
out in 2001, bolster prospects for ratings stability. Still,
ongoing challenges include the ability to realize satisfactory
price increases in the petroleum additives business and to
replace contributions from lead-based fuel additives. Once debt
reduction is completed, management will pursue new business
opportunities, given the slow-growth market for lubricant
additives, Standard & Poor's said.
FALCON PRODUCTS: Closes And Downsizes Facilities
------------------------------------------------
Falcon Products, Inc. (NYSE: FCP), a leading manufacturer of
commercial furniture, provided details on its previously
announced plans to implement certain strategic initiatives and
restructure its manufacturing facilities. The Company will close
its Statesville, North Carolina facility and significantly
downsize its Zacatecas, Mexico facility and transfer production
into the Company's other plants. These initiatives build on the
acquisition of Shelby Williams and are a key component of the
Company's plans to reduce costs and improve customer service
through tightening its supply chain.
The initiatives are expected to improve operating efficiencies,
provide greater levels of customer service, reduce required
inventory levels, and generate annual pre-tax savings of
approximately $5 million to $6 million when fully realized. The
Company said it expects to complete the plant closing and
production transfers by the second quarter of fiscal 2002.
To account for the costs associated with these actions, the
Company said it would take a pre-tax charge totaling
approximately $19.0 million. Approximately $18.0 million of this
charge will be recorded in the Company's fiscal third quarter
ending July 28, 2001, and $1.0 million during the following six-
month period. On an after-tax basis, the total charge is
equivalent to approximately $11.6 million, or $1.31 per diluted
share. This one-time charge includes costs associated with asset
write-downs and dispositions, real estate exit costs, employee
severance, and other related costs. The cash component of the
pre-tax charge is expected to be approximately $4 million.
In making the announcement, Franklin A. Jacobs, Chairman and
Chief Executive Officer, stated, "As we previously communicated,
the primary focus of these restructuring efforts will be to
build centers of excellence for specific manufacturing
competencies. The rationale for the changes is straightforward:
aligning these competencies in fewer manufacturing locations
enables us to deepen the skills of our people and provide
greater levels of customer service, including shortened lead
times, while creating operating efficiencies."
"These actions will build upon the consolidation activities we
started following the acquisition of Shelby Williams in 1999. At
the time of the acquisition we identified consolidation cost
savings of more than $9 million annually. Although these savings
will be realized by the end of the fiscal year, we are now
targeting an incremental $5 million to $6 million through
further streamlining our operations," Mr. Jacobs continued. "The
identified annual cost savings are expected to be achieved
beginning during the first quarter of fiscal 2002."
Falcon Products, Inc. is the leader in the commercial furniture
markets it serves, with well-known brands, the largest
manufacturing base and the largest sales force. Falcon and its
subsidiaries design, manufacture and market products for the
hospitality and lodging, food service, office, healthcare and
education segments of the commercial furniture market. Falcon,
headquartered in St. Louis, Missouri, currently operates 12
manufacturing facilities throughout the world and has more than
3,500 employees.
GENESIS HEALTH: How Claims are Treated Under the Revised Plan
-------------------------------------------------------------
The following list shows the assumptions for estimation of
recoveries. In the event of revisions made under the Revised
Joint Plan of Genesis Health Ventures, Inc. & The Multicare
Companies, Inc., the revised figures are shown in [] and figures
under the orginal Plan are shown in ():
-- The new debt instruments to be issued under the Plan of
Reorganization have a value equal to their face amounts.
(Same as under original Plan.)
-- The enterprise value for the Debtors is $1,525,000,000
(including cash on hand). This amount, less cash on hand of
$25,000,000, is the mid-point of the range of valuations for
the Genesis Debtors and the Multicare Debtors. (Same
as under original Plan.)
-- The aggregate amount of allowed secured claims against the
Genesis Debtors (excluding the Genesis Senior Lender Claims)
is [$120,077,000] ($115,077,000 under the original Plan) and
against the Multicare Debtors (excluding the Multicare Senior
Lender Claims) is $26,318,000 (Same as under original Plan).
-- The aggregate amount of Genesis Senior Lender Claims is
[$1,193,460,000] ($1,198,460,000 under original Plan)
(excluding postpetition interest and before giving effect to
postpetition payments) and the aggregate amount of the
Multicare Senior Lender Claims is $443,400,000 (excluding
postpetition interest) (Same as under original Plan).
-- The aggregate amount of general unsecured claims against the
Genesis Debtors is $467,494,000 ([Classes G4 and G5]excluding
the claims of the Multicare Debtors against the Genesis
Debtors) and the aggregate amount of the general unsecured
claims against the Multicare Debtors is $284,256,000([Classes
M4 and M5] excluding the claims of the Genesis Debtors
against the Multicare Debtors). (The figures are the same as
under original Plan.)
-- For purposes of the recovery estimate, no current value is
included for the New Warrants because they are priced at the
approximate projected value of the New Common Stock. However,
under a Black-Scholes analysis, the New Warrants would have a
value between [$16,000,000 and $23,000,000] ($8,500,000 and
$12,100,000 respectively under original Plan).
Treatment of Genesis Creditors and Shareholders
(In the event of revisions made, the figures under the revised
Plan are shown in [] and figures under the orginal Plan are
shown in ().)
Class/
Entitle-
ment
Estimated
to vote Description Treatment Recovery
------ ----------- --------- ---------
-- Debtor in Possession Payment of all amounts 100%
No Credit Agreement outstanding, and cash
Claims collateralization or
replacement of
outstanding L/Cs by
L/Cs issued under
the exit facility.
-- Other Administrative Paid in full. 100%
No Expense Claims
-- Priority Tax Paid in full or with 100%
No Claims interest over a period
not to exceed 6 years
from the date of
assessment of the tax.
G1 Other Secured See separate See
See Claims descriptions below.
below
G2 Senior Lender $195,979,000 in cash* 79.14%
Yes Claims $94,923,000 in New
(Aggregate Senior Notes
approximately ($99,923,000 under
$1.2 billion and original Plan)
are the largest $31,000,000 in New
claims against Conv Preferred Stock
the Genesis [74.35%] of New Common
Debtors.) Stock. (74.58% under
original Plan)
* cash payments
through June 30, 2001.
G3 Priority Non-Tax Paid in full. 100%
No Claims
G4 General Unsecured Uninsured claims: [7.34%]
Yes Claims [0.71%] of New Common (exclusive
(Aggregate Stock (0.67% under of value
approximately original Plan) of New
$1,131,655,000 [10.65%] of New Warrants
as at Bar Date; Warrants. (17.25% (6.94%
allowed amount under original Plan.) under
estimated to be Insured claims: Paid in original
around ordinary course of Plan.)
$80,069,000 business from and to
- includes the extent of insurance
claims by vendors, proceeds; any portion
landlords, not covered by insurance
litigation will be treated in same
claimants.) manner as uninsured claims.
G5 Senior Subordinated [3.41%] [7.34%]
Yes Note Claims of New Common Stock (Exclusive
(Total (3.22% originally) of value
$387,425,000 [51.54%] of New of
New
Warrants. Warrants)
(82.75% originally) (6.94%
under
original
Plan.)
G6 Intercompany Claims Unimpaired. 100%
No
G7 Punitive Damage No distribution (except None
No Claims to the extent covered
by insurance).
G8 Series G Preferred No distribution. None
No Stock Interests
(Consists of
586,240 shares of
preferred stock
issued to HCR
Manor Care, Inc.)
G9 Series H Preferred No distribution. None
No Stock Interests
(Consists of
586,240 shares of
preferred stock
issued to The
Cypress Group,
TPG Parters II, L.P.
and Nazem, Inc.
G10 Series I Preferred No distribution. None
No Stock Interests
(equity interests)
Consists of
17,631 shares of
preferred stock
issued to The
Cypress Group,
TPG Parters II, L.P.
and Nazem, Inc.
G11 Common Stock No distribution. None
No Interests
(common equity
interests)
Consists of
Genesis outstanding
48,641,456 shares
of common stock,
$0.02 par value)
The G1 Subclasses
Class G1 is a group of subclasses, including aggregate allowed
mortgage secured claims of approximately $120,077,000 as of the
date of the Disclosure Statement (exclusive of interest and net
of reinstatement payments). For the most part, claims in these
subclasses are mortgage financings of various properties owned
and/or operated by the Genesis Debtors and equipment financings
of various types. Each subclass represents a separate mortgage
or collateral pool.
* Subclass G1-8
Subclass G1-8 consists of the secured claim of SunTrust Bank, as
successor indenture trustee under that certain Trust Indenture,
dated as of May 1, 1990 between the New Jersey Economic
Development Authority ("NJEDA") and SunTrust, pursuant to which
NJEDA issued (a) those certain $1,175,000 New Jersey Economic
Development Authority Economic Development Refunding Bonds
(Geriatric and Medical Services, Inc. - Care Inn of Voorhees
Project) 1990 Series A; and (b) those certain $5,000,000 New
Jersey Economic Development Authority Economic Development
Refunding Bonds (Geriatric and Medical Services, Inc. - Care Inn
of Voorhees Project) 1990 Series B (collectively, the "Kresson
View Center Bonds").
The secured claim of SunTrust in Subclass G1- 8 is (i) allowed
in the principal amount of $5,535,000, plus accrued and unpaid
interest, and reasonable costs and expenses, and (ii) secured by
a duly perfected, first priority mortgage and lien on certain
real and personal property (whether now owned or to be acquired)
of Geriatric and Medical Services, Inc. relating to a project
known as the "Kresson View Center" f/k/a "Care Inn of Voorhees"
located in the Township of Voorhees, New Jersey, including
without limitation, all revenues and accounts arising therefrom,
among other collateral. In addition, the secured claim of
SunTrust in Subclass G1-8 is guaranteed pursuant to a Guaranty
Agreement (the "Kresson View Center Guaranty") by and between
Geriatric & Medical Companies, Inc. (as successor to Geriatric &
Medical Centers, Inc.) and SunTrust.
As of the Effective Date, the Genesis Debtors' obligations in
connection with the Kresson View Center Bonds will be reinstated
and each and every indenture, loan agreement, mortgage, security
agreement, guaranty, subordination agreement, and other document
executed in connection with the Kresson View Center Bonds,
including, without limitation, the Kresson View Center Guaranty
and the Subordination Agreement dated May 1, 1990 executed by
Mellon Bank N.A., as agent, in favor of NJEDA will be
reinstated. All legal, equitable, and contractual rights under
the Kresson View Center Bond Documents and the Kresson View
Center Bonds will remain unaltered after confirmation of the
Plan. To the extent necessary to reinstate all such obligations,
rights, agreements, and documents, the Genesis Debtors will
execute and obtain such replacement agreements and documents,
including, without limitation, a guaranty, subordination
agreements, and UCC financing statements, each in form and
substance materially identical to existing agreements and
documents, as SunTrust may require.
As of the Effective Date, the maturity date of the Kresson View
Center Bonds will be reinstated. On the Effective Date, the
Genesis Debtors will cure any default under the Kresson View
Center Bonds and the Kresson View Center Bond Documents
(including, without limitation, past due payments of principal),
and will reimburse SunTrust for all reasonable fees, costs, and
expenses, including legal fees and expenses, which have accrued
and are required to be paid under the relevant Kresson View
Center Bond Documents.
* Subclass G1-12
The Plan reinstates the claims in Subclasses G1-1 through G1-12.
The aggregate cost to cure defaults and reinstate the debt in
these subclasses is projected to be $6,604,000 as of June 30,
2001. These claims are not impaired, and the holders of the debt
are not entitled to vote to accept or reject the Plan of
Reorganization.
Upon confirmation of the Plan, the claim of U.S. Bank Trust
National Association ("U.S. Bank"), as successor indenture
trustee pursuant to the Indenture of Mortgage and Deed of Trust,
dated as of September 1, 1992 (the "U.S. Bank Indenture"), will
be deemed an allowed Genesis Other Secured Claim in the
principal amount of $19,337,000, plus accrued and unpaid
interest, fees, and other costs.
The Plan will leave unaltered the legal, equitable, and
contractual rights to which the holders of Claims in Subclass
G1-12 are entitled, and the allowed Claim of U.S. Bank in
Subclass G1-12 will be unimpaired under the Plan.
In satisfaction of their allowed Subclass G1-12 Claim, members
of Subclass G1-12 will receive, on or before the Effective Date,
(i) all accrued and unpaid interest due under the 9 1/4% First
Mortgage Bonds (Series A) due 2007 in the original principal
amount of $25,000,000 (the "Bradford Bonds"), whether incurred
prior to or after the Commencement Date, together with interest
on interest, pursuant to the terms of the U.S. Bank Indenture,
and (ii) all indenture trustee fees and expenses due under the
U.S. Bank Indenture, including reasonable attorneys' fees,
whether incurred prior to or after the Commencement Date. U.S.
Bank will submit to the Genesis Debtors an itemization of the
amounts due and owing under the U.S. Bank Indenture 10 days
prior to the Effective Date.
From and after the Effective Date, all documents relating to the
Bradford Bonds, including, but not limited to, the U.S. Bank
Indenture, the mortgages securing repayment of the Bradford
Bonds, and the bond instruments shall be deemed reinstated in
their entirety. In connection with such reinstatement and as a
result of the Genesis Debtors' failure to redeem the Bradford
Bonds in April 2001, any holder of a Bradford Bond will have the
right for 60 days following the Effective Date to present such
Bradford Bonds for redemption in accordance with Article 9 of
the U.S. Bank Indenture. After that, the deadline to present the
Bradford Bonds for redemption will be governed by the applicable
provisions of the Indenture. All rights and liens of U.S. Bank,
as indenture trustee, will survive to the same extent, validity,
and priority as existed prior to the Commencement Date. Among
other things, all of the mortgages securing repayment of the
Bradford Bonds will continue to be valid and perfected, and no
further notice, filing, or other act shall be required to effect
such perfection.
* Subclass G1-17
Subclass G1-17 consists of the claims under the Amended and
Restated Synthetic Lease Financing Facility, dated as of October
7, 1996, among Genesis, Genesis Eldercare Properties, Inc.,
Mellon Bank N.A., as administrative agent, certain co-agents
named therein, and the lender parties thereto. The Synthetic
Lease claims, which total $78,236,000 are secured by the
properties identified in the chart below (the "G1-17
Properties"). Accordingly, a portion of such claims
($50,000,000) is classified in Subclass G1-17. The remaining
portion of the claims (the deficiency claims of $28,236,000) are
part of Class G2.
Under the Plan, the holders of these claims will receive a
mortgage note in the principal amount of $50,000,000. The
mortgage note will bear interest at LIBOR plus 5% and will
mature on the sixth anniversary of the Effective Date. The
mortgage note will be secured by (i) the G1-17 Properties and
(ii) a lien of equal priority with the New Senior Notes on the
property securing such notes. The mortgage documents will permit
a junior lien on the G1-17 property in favor of the New Senior
Notes.
Subclasses G1-13 through G1-17 are impaired and are entitled to
vote.
The proposed notes will be secured by the same collateral
securing the existing obligations. In the event of those
impaired classes rejects the Plan of Reorganization, the Genesis
Debtors reserve the right to return the collateral in full
satisfaction of the claims secured by such property or adjust
the principal amount of the proposed note to the value of the
collateral as determined by the Bankruptcy Court. The percentage
recovery indicated in the following table is based on the value
of the collateral securing these obligations.
* Other Subclasses
In addition to Subclasses G1-1 through G1-17, there are other
subclasses of miscellaneous secured claims of approximately
$3,536,000 against the Genesis Debtors, each of which will be
treated as a separate class. This class also includes certain
contingent claims of Bank of America, N.A. in connection with a
guaranty by Genesis of the obligations of the Age Institute.
Under the Plan of Reorganization, either these claims will be
reinstated or the Reorganized Debtors will return the property
securing such claim. These claims are not impaired and the
holders are not entitled to vote to accept or reject the Plan of
Reorganization.
Class/
Entitle-
ment
Estimated
to vote Description Treatment Recovery
------ ----------- --------- ---------
G1-1 Broad Street Office $1,600,000 mortgage 100%
No Building reinstated
148 West State Street,
Kennett Square, Pa.
(Pa. IDA)
G1-2 Broad Street Office $985,039 mortgage 100%
No Building reinstated
148 West State Street,
Kennett Square, Pa.
(Pa. IDA)
G1-3 Pleasant View Center $8,864,446 mortgage 100%
No (HUD) reinstated
G1-4 Country Village $1,810,259 mortgage 100%
No Center (HUD) reinstated
G1-5 Abington Manor $3,475,000 mortgage 100%
No (Lackawanna County reinstated
IDA)
G1-6 Silver Lake Center $2,155,000 mortgage 100%
No (Del. EDA Bonds) reinstated
G1-7 River Street Center $2,430,000 mortgage 100%
No (Luzerne County IDA) reinstated
G1-8 Kresson View Center $5,535,000 mortgage 100%
No (NJEDA Refunding reinstated
Bonds)
G1-9 Mifflin Court $2,474,000 mortgage 100%
No (ElderTrust) reinstated (as previously
reduced and approved by
the Bankruptcy Court)
G1-10 Oaks Center $3,500,086 mortgage 100%
No (ElderTrust) reinstated (as
Previously reduced and
approved by the
Bankruptcy Court)
G1-11 Coquina Assisted $1,400,000 mortgage 100%
No Living (ElderTrust) reinstated (as previously
reduced and approved by
the Bankruptcy Court)
G1-12 Homestead Center [$19,337,000 mortgage 100%
No Kimberly Hall South reinstated
Center ($19,325,829 under
Kimberly Hall North original Plan.)
Center
Seaford Center
Milford Center
Windsor Center
(U.S. Bank, N.A., as
trustee for the
"Bradford Bonds")
G1-13 Brakeley Park New secured note 100%*
Yes Center (HUD) maturing on
[Outstanding Jan 1, 2033,
Mortgage: in $7,985,079 principal
$7,985,079 amount with annual interest
Interest Rate: at 8.5% and level monthly
10.35% payments of principal and
calue of Capital: interest
Approximately equal
To amount of claim]
G1-14 North Cape Center New secured note 100%*
Yes (HUD) maturing on
[Outstanding March 1, 2036, in
Mortgage: $5,573,020 principal
$5,573,020 amount with annual
Interest Rate: interest at 8.0% and
9.5% level monthly
Value of Collateral: payments of principal
Approximately equal and interest
To amount of claim]
G1-15 Oak Hill Center Return the collateral 100%*
Yes (HUD)
[Outstanding
Mortgage:
$7,805,061
Interest Rate:
8.45%]
G1-16 Rittenhouse Pine New secured 10 year 100%*
Yes Center (Meditrust) note in $5,000,000
[Outstanding principal amount with
Mortgage: annual interest at 8%
$6,690,441 and level monthly
Interest Rate: payments of principal
10.75% and interest based on
a 25-year amortization
schedule (unsecured
deficiency of
$1,690,441)
G1-17 Atlantis Center New secured 5-1/2 year 100%*
Yes Bowmans Center note in [$50,000,000]
Fairway Center principal amount with
Oakwood Center annual interest at LIBOR
Riverwood Center plus 3.5% and no
Tierra Center amortization before
Willimsburg Center maturity (secured
Windham Center deficiency of
Woodmont Center $28,236,000)
(synthetic lease
lenders) Under original Plan:
(New secured 5-1/2 year
note in $45,000,000
principal amount with
annual interest at
LIBOR plus 3.5% and
no amortization before
maturity (secured
deficiency
of $33,236,000)
* Based on a valuation of the collateral securing these
claims. Section 506(a) of the Bankruptcy Code provides that a
claim is secured only to the extent of the value of the
underlying collateral. The deficiency claims of the holders of
claims in Class G1-16 are part of Class G4 (Genesis General
Unsecured Claims). The obligations of the Genesis Debtors
under The synthetic lease (Class G1-17) are secured by the
property identified above and by all the property of the
Genesis Debtors that secures the claims in Class G2. Therefore
the deficiency claims of the holders of claims in Class G1-17
are part of Class G2 (Genesis Senior Lender Claims). To the
extent the Bankruptcy Court determines that any of the
proposed interest rates do not meet the standards set forth in
section 1129 of the Bankruptcy Code, the Debtors will adjust
such rates accordingly.
In addition to subclasses G1-1 through G1-17, there are other
subclasses of miscellaneous secured claims of approximately
$3,536,000 against the Genesis Debtors, each of which will be
treated as a separate class. This class also includes certain
contingent claims of Bank of America, N.A. in connection with a
guaranty by Genesis of the obligations of the Age Institute.
Under the Plan of Reorganization, either these claims will be
reinstated or the Reorganized Debtors will return the property
securing such claim. These claims are not impaired and the
holders are not entitled to vote to accept or reject the Plan of
Reorganization.
Treatment of Multicare Creditors and Shareholders
Class/
Entitle-
ment
Estimated
to vote Description Treatment Recovery
------ ----------- --------- ---------
-- Debtor in Possession Payment of all amounts 100%
No Credit Agreement outstanding, and cash
Claims collateralization or
replacement of
outstanding L/Cs by
L/Cs issued under
the exit facility.
-- Other Administrative Paid in full. 100%
No Expense Claims
-- Priority Tax Paid in full or with 100%
No Claims interest over a period
not to exceed 6 years
from the date of
assessment of the tax.
M1 Other Secured See separate See
See Claims descriptions below. below
below
M2 Senior Lender $25,000,000 in cash [77.31%]
Yes Claims $147,682,000 in New (81.68%
Aggregate Senior Notes under
approximately $11,600,000 in New original
$443,400,000 and Conv Preferred Stock
are the largest [19.02%] of New Common
Claims against Stock (21.35% originally.)
Multicare. Resulting from the
exchange of 88.37% of
the shares of the New
Multicare Stock that
the Claimants are
entitled to, upon
Merger if the
Plan is confirmed.
M3 Priority Non-Tax Paid in full. 100%
No Claims
M4 General Unsecured Uninsured: [0.23%] of [7.34%]
Yes Claims New Common Stock. (5.67%
Amount filed [3.52% of New under
Aggregate Warrants.] original
approximately (0.18% of New Common Plan.)
$1,702,490,000 Stock originally.)
Allowed amount Insured: Paid in
estimated to be ordinary course of
around business from and to
$26,439,000 extent of insurance
proceeds; any portion
not covered by
insurance will be
treated in same manner
as uninsured claims.
M5 Senior Subordinated [2.27% of New Common [7.34%]
No Note Claims Stock,
Total approximately 34.29% of New Warrants.]
$257,817,000 (No distribution (0.00%)
Notes governed by under original Plan.)
Indenture between
Multicare and
PNC Bank.
M6 Intercompany Claims Unimpaired. 100%
No
M7 Punitive Damage No distribution None
No Claims (except to the extent
covered by insurance).
M8 Common Stock No distribution. None
No Interests
The M1 Subclasses
(No change from original Plan, as described below)
Class M1 is a group of subclasses, with aggregate allowed
secured claims of approximately $26,318,000 as of the date of
the Disclosure Statement (exclusive of interest and net of
reinstatement payments). For the most part, claims in these
subclasses are mortgage financings of various properties owned
and/or operated by the Multicare Debtors and equipment
financings of various types. Each subclass represents a separate
mortgage or collateral pool.
The Plan reinstates the claims in Subclasses M1-1 through M1-6.
The aggregate to cure defaults and reinstate the debt in these
subclasses is projected to be $3,522,000 as of June 30, 2001.
These claims are not impaired, and the holders of the claims are
not entitled to vote to accept or reject the Plan.
Subclass M1-7 is impaired and is entitled to vote.
Class/
Entitle-
ment
Estimated
to vote Description Treatment Recovery
------ ----------- --------- ---------
M1-1 Rosewood Center $825,000 mortgage 100%
No (Tyler County, WV) reinstated
M1-2 Sisterville Center $1,960,000 mortgage 100%
No (Care Haven) reinstated
(Tyler County, WV)
M1-3 Raleigh Center $1,840,000 mortgage 100%
No (WV Hospital bonds reintstated
Authority)
M1-4 Westford Center $6,637,992 mortgage 100%
No (HUD) reinstated
M1-5 Willows Center $11,900,815 mortgage 100%
No Cedar Ridge Center reinstated
Dawn View Center
(MediTrust)
M1-6 Teays Valley (West $3,665,000 mortgage 100%
No Virginia Hospital reinstated
Authority)
M1-7 Point Pleasant Return of 100%*
No (Mason County WV) collateral
* Based on a valuation of the collateral securing these claims.
(Section 506(a) of the Bankruptcy Code provides that a claim is
secured only to the extent of the value of the underlying
collateral.
The percentage recovery indicated is based on the value of the
collateral securing these obligations.
In addition to Subclasses M1-1 through M1-7, there are other
subclasses of miscellaneous secured claims of approximately
$71,000 against the Multicare Debtors, each of which will be
treated as a separate class. Under the Plan of Reorganization,
either these claims will be reinstated or the Reorganized
Debtors will return the property securing such claim. These
claims are not impaired, and the holders are not entitled to
vote to accept or reject the Plan of Reorganization.
Claims Allowed
Class Description Allowed Amount
----- ----------- --------------
G2 Genesis Senior Lender Claims $1,193,460,000
G5 Genesis Senior Subordinated Note Claims 387,425,000
M2 Multicare Senior Lender Claims 443,400,000
M5 Multicare Senior Subordinated Note Claims 257,817,000
(Genesis/Multicare Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
GERALD STEVENS: Completes Sale Of Florafax To Teleflora LLC
-----------------------------------------------------------
Gerald Stevens Inc. (OTCBB:GIFTE) completed the sale of
Florafax, its wire service business unit, to Teleflora LLC for
$10.71 million in cash and the assumption of certain
liabilities. The sale was approved at a hearing before the U.S.
Bankruptcy Court in Miami.
At the hearing, Teleflora LLC submitted the highest and best
offer for the business. In connection with the sale, Gerald
Stevens paid a termination fee to Equity Resource Partners. As
previously announced, Equity Resource Partners had entered into
contract to purchase Florafax. The contract was subject to
higher and better offers and approval by the U.S. Bankruptcy
Court.
About Gerald Stevens
Gerald Stevens Inc. is the largest specialty retailer and
marketer of floral products in the United States. The company
operates a network of approximately 300 floral specialty retail
stores; an Internet business that handles retail orders 24 hours
a day, seven days a week; and National Flora, a leading national
floral marketing company with premium-placed advertisements in
Yellow Page directories. Gerald Stevens also owns its own import
and sourcing operation in Miami.
LAIDLAW: Court Grants Motion To Maintain Existing Bank Accounts
---------------------------------------------------------------
Operating guidelines established by the United States Trustee
require Laidlaw Inc. to close all pre-petition bank accounts and
open three new "Debtor-in-Possession" accounts -- one general
operating account, a payroll account and one account to
segregate tax payments. Laidlaw can't run its multi-billion
dollar business from three bank accounts, Ivan R. Cairns, Vice
President and Secretary of Laidlaw USA, Inc., tells Judge
Kaplan. Closing and reopening scores of bank accounts won't work
either. The Debtors have no difficulty guarding against improper
transfers from a bank honoring pre-petition checks post-
petition.
It is obvious, Judge Kaplan observed at the First Day Hearing,
that the Debtors could not close their existing bank accounts
and open new "debtor-in-possession" accounts without causing
severe disruption to their normal operating procedures and to
their ability to pay normal post-petition operating expenses in
the ordinary course. Existing relations with vendors -- with
whom good relations are critical to the Debtors' ability to
continue to operate their businesses -- could be adversely
affected by the inevitable delays resulting from the Debtors'
need to establish new accounts from which post-petition payments
would be made after the Petition Date. "The Debtors' Motion is
granted," Judge Kaplan ruled. (Laidlaw Bankruptcy News, Issue
No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900)
LERNOUT & HAUSPIE: Dictaphone Committee Hires Crossroads LLC
------------------------------------------------------------
Neil B. Glassman of The Bayard Firm of Wilmington, acting on
behalf of The Official Committee of Unsecured Creditors of
Dictaphone Corp., asks Judge Wizmur to approve their retention
of Crossroads LLC to provide the Committee with accounting and
related forensic services and analyses regarding the financial
administration, reporting and management information, systems
environment, operations and bankruptcy of Dictaphone, to render
financial advisory services, and to perform an independent
financial analyses of the transactions contemplated in the
Debtors' cases. Specifically, Crossroads' services to the
Committee include:
(a) Review, quantification and analysis of cash and non-
cash, if any, prepetition and postpetition inter-company and
related part transactions between Dictaphone and other Lernout &
Hauspie Speech Products N.V. entities, including but not limited
to L&H Speech Products and Holdings;
(b) Review and analysis of inter-company charges and
allocation assumptions and methodologies proposed to be
implemented by the Debtors' accountant, PwC;
(c) Support to the Dictaphone Committee in its analysis
of Dictaphone as a stand-alone entity, separate from the other
L&H businesses and legal entities and/or its value contribution
to a consolidated and restructured L&H enterprise;
(d) Analysis of Dictaphone's management information
systems and internal control environment to identify weaknesses
in its financial reporting systems;
(e) Assistance with identification of potential reporting
and operating issues of Dictaphone and its affiliated Debtors;
and
(f) Investigation of other trends and issues in
Dictaphone's business lines and/or other L&H entities, or any
other further and additional tasks reasonably related to the
services to be provided, as directed by the Committee.
Compensation in the form of monthly advisory fees and
reimbursement of out-of-pocket expenses will be payable to
Crossroads on an hourly basis as:
Principals $450-$580
Directors $315-$450
Consultants $220-$330
Associates/Accountants $150-$215
Administrative $ 95
In addition, Dictaphone is to indemnify and hold harmless
Crossroads, its officers, directors, employees, agents and
affiliates, from and against any and all losses, claims,
damages, judgments, assessments, costs and other liabilities.
Dictaphone will reimburse each indemnified person for all fees
and expenses (including reasonable fees and expenses of counsel)
as they are incurred in investigating, preparing, pursuing or
defending any claim, action, proceeding or investigation,
whether or not in connection with pending or threatened
litigation and whether or not any indemnified person is a party,
arising out of or in connection with advice or services rendered
or to be rendered by an indemnified person under the engagement
letter, the transaction contemplated thereby, or any indemnified
person's actions or inactions in connection with any such
advice, services, or transaction; however, Dictaphone is not
responsible for any liabilities or expenses of an indemnified
person that are determined by a court of competent jurisdiction,
by an order which becomes final and non-appealable, to have
resulted from such indemnified person's gross negligence or
willful misconduct in connection with any of the advice,
actions, inactions or services in this engagement.
Crossroads does provide that in no event would it be liable to
the Committee, Dictaphone, or otherwise with regard to services
under this engagement, for which no express or implied warranty
is made, nor predictions of the result, whether a claim be in
tort construct or otherwise, for any amount in excess of the
total fees paid under this agreement, or for any consequential,
indirect, lost profits or similar damages relating to
Crossroads' services, except to the extent finally determined to
have resulted from the gross negligence, willful misconduct, or
fraudulent behavior of Crossroads.
Mr. Joel M. Simon, a principal of Crossroads, advises Judge
Wizmur that the firm of Milbanks, Tweed, Hadley & McCloy,
counsel to the Debtors, is a referral source for Crossroads, and
Crossroads refers business to Milbanks. In addition, Milbanks
frequently represents parties adverse to Crossroads' clients in
other active and past engagements. Crossroads has also retained
Milbanks as its attorneys in other unrelated matters.
Fleet Bank, an unsecured creditor in these cases, and certain of
its affiliates are referral sources for Crossroads and
Crossroads refers business to Fleet Bank. Crossroads is
involved in or has been involved in several bankruptcy cases
where Fleet Bank was a member of the debtor's lender group, and
at times adverse to the position of Crossroads' clients in the
engagement.
Finova Capital, an unsecured creditor in these cases, and
certain of its affiliates are referral sources for Crossroads
and Crossroads refers business to Finova Capital. Crossroads is
involved in or has been involved in several bankruptcy cases
where Finova Capital was a member of the debtor's lender group,
and at times adverse to the position of Crossroads' clients in
the engagement.
MCI Worldcom, Pacific Bell, and AT&T and certain of their
respective affiliates are unsecured creditors in these cases,
and have been unsecured creditors in former or current
Crossroads' engagements.
The Bayard Firm, proposed co-counsel to the Committee,
represents a party adverse to Crossroads in a current
engagement.
Deutsche Financial, an unsecured creditor in these cases, and
certain of its affiliates, PPM America, City National Bank, and
Wilmington Trust Company, an unsecured creditor, are each
unsecured lenders or bondholders adverse to Crossroads' position
in other unrelated engagements.
PricewaterhouseCoopers LLC, accountant to the Debtors, and/or
their affiliates are referral sources for Crossroads, and
Crossroads refers business to each of them. In addition,
Crossroads is involved in, or has been involved in, several
bankruptcy cases where PwC audits companies in which Crossroads
has an ownership, but not a controlling interest.
Merrill Lynch, an unsecured creditor, and/or its affiliates are
referral sources for Crossroads, and Crossroads refers business
to them.
Mr. Simon assures Judge Wizmur that Crossroads is a
"disinterested" party within the meaning of the Bankruptcy Code
and neither holds nor represents any interest adverse to these
estates or the Committee on the matters for which employment is
sought.
Judge Wizmur agrees with the Motion, finds that Crossroads is a
disinterested party, and approves the employment on the terms
stated. However, Judge Wizmur also orders that Dictaphone, and
only Dictaphone, is responsible for paying the compensation of
Crossroads, and stays and enjoins L&H Speech Products from in
any way interfering with or preventing that payment.
(L&H/Dictaphone Bankruptcy News, Issue No. 8; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LOEWEN GROUP: Reports On Miscellaneous Asset Transactions In May
----------------------------------------------------------------
Pursuant to the Miscellaneous Transaction Procedures established
by Court order, The Loewen Group, Inc. reports that, during May,
2001, Debtor AFH, Inc. sold certain real property and related
personal property (collectively, the Property to Sherman L.
Andersen, or his nominee, at a Purchase Price of $90,000 in
cash.
The Property consists of:
(a) approximately one-half acre of real property located at
7687 East State Street in Dugger, Indiana;
(b) the buildings and improvements currently situated on
the real property;
(c) all personal property currently located at the real
property.
Currently, a former funeral home consisting of 3,100 square feet
is situated on the real property. The personal property being
sold as a part of this transaction is limited to certain
fixtures of the former funeral home, the value of which the
Debtors believe is de minimis.
Other than the liens granted to the DIP Lenders, AFH was not
aware of any liens on or interests in the Property at the time
of the transaction. Nonetheless, to the extent that the DIP
Lenders or any other party had a lien on or an interest in the
Property, AFH believes that such liens and interests are subject
to money satisfaction in accordance with section 363(f)(5) of
the Bankruptcy Code.
AFH sold the Property to the Purchaser on an "as is" basis, free
and clear of all liens, claims, encumbrances and other
interests, pursuant to section 363(f) of the Bankruptcy Code.
AFH did not assume or assign any executory contracts or
unexpired leases pursuant to section 365 of the Bankruptcy Code
in connection with the purchase and sale transaction. (Loewen
Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
LTV STEEL: Sues Fritz Enterprises For Nonpayment of Debt
--------------------------------------------------------
LTV Steel seeks the turnover of certain funds it claims are owed
to it by Fritz Enterprises, Inc. for what LTV Steel says is
Fritz' willful refusal to pay amounts it owes to LTV Steel for
the sale by LTV Steel to Fritz Enterprises of iron and steel
scrap. The amount claimed by LTV is $460,409.60.
LTV Steel, couching this as a recovery of monies owned, rather
than collection of an account receivable, tells Judge Bodoh that
from June 2000 through October 2000, Fritz Enterprises purchased
iron and steel scrap from LTV Steel on credit. Fritz owes LTV
$460,409.60, for which LTV says Fritz "flatly refuses to pay".
LTV says it has asked Fritz repeatedly to pay the past due
amounts owed, without result. This debt is matured and is due on
demand. The Bankruptcy Code provides that an individual injured
by a willful violation of a stay provided by the Bankruptcy Code
may recover actual damages, including costs and attorney's fees,
and in appropriate circumstances, may recover punitive damages.
Further, the Bankruptcy Code provides that any entity that owes
a debt that is property of the estate, and that is matured,
payable on demand, or payable on order, will pay the debt to the
[debtor]. since Fritz has knowledge of the commencement of these
cases and has refused to pay the amount it owes, it is willfully
violating the stay, so that LTV is entitled to recover judgment
for the amount of the debt, plus its costs, including its
attorney's fees. (LTV Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-00900)
MARINER: Seeks Approval Of Settlement With Northwest Trustee
------------------------------------------------------------
On or about July 13, 1998, Mariner Post-Acute Network, Inc.
acquired Summit Medical Holdings, Ltd. (SMH) and Summit Medical
Management, Inc. (SMM), now debtors in the MPAN cases. Before
the acquisition, SMH and SMM were affiliates/subsidiaries of
Renaissance Hospital Management, Inc. (formerly known as Summit
Hospital Management, Inc.), an affiliate of Northwest Family
Hospital f/k/a Summit Acquisition, Inc. (Northwest) As Summit
Entities affiliated with Northwest, SMH and SMM were among the
defendants named in an adversary proceeding in the chapter 7
bankruptcy case of Northwest in which the plaintiff (the trustee
of Northwest) seeks damages in excess of $9.8 million.
After negotiations, the plaintiff and the defendants in the
Indiana action reached agreement to resolve the action and all
claims between and among them. Accordingly, MPAN, SMH and SMM
seek the Bankruptcy Court's authority, pursuant to section 105
of the Bankruptcy Code and Bankruptcy Rule 9019(a), to enter
into the Settlement Agreement reached by the parties.
Northwest, Summit Entities and Renaissance
On or about October 25, 1993, Northwest Family Hospital f/k/a
Summit Acquisition, Inc. (Northwest), at that time still a non-
Debtor corporation, purchased the assets of Lakeshore Health
Systems, Inc. in connection with its operation of the St. Mary
Medical Center, a 300-bed licensed general acute care hospital,
located in Gary, Lake County, Indiana (the "Northwest
Hospital").
Summit Hospital Management, Inc. ("Renaissance"), also a non-
Debtor corporation, is an affiliate of Northwest. Subsequent to
Northwest's bankruptcy filing, Summit Hospital Management, Inc.
changed its name to Renaissance Hospital Management, Inc.
During the relevant period, Renaissance had numerous other
subsidiaries and affiliates in addition to Northwest, including,
but not limited to, Debtors SMM and SMH, Summit Hospital
Management Company, and Summit Institute of Northern Indiana,
Inc. (the "Summit Entities").
Chapter 7 Petition against Northwest on Dec 29, 1995
On or about December 29, 1995, certain creditors filed an
involuntary chapter 7 petition against Northwest. Northwest's
chapter 7 case is currently pending in the United States
Bankruptcy Court for the Northern District of Indiana, Hammond
Division.
William F. Brandt was appointed as a trustee for the estate of
Northwest by the Indiana Bankruptcy Court On or about May 21,
1996. Brandt then began an investigation, on behalf of
Northwest's estate and creditors, into the relationship between
and among Northwest, Renaissance, the Renaissance Officers and
Directors, and the Summit Entities.
Debtor SMH filed a proof of claim in the Northwest bankruptcy on
or about July 25, 1996 for $429,895.47 comprising of a
liquidated claim for $150,000 for "monies had and received" by
Northwest and a contingent claim for $279,873.47 for "amounts
for which Summit Medical Holdings, Ltd. may be found liable
arising out of the lawsuit filed by Emergency Professionals,
Inc. and Hospital Resources Corporation on April 23, 1996.
Officers and Directors
Of Northwest, Summit and Renaissance
The Debtors advise that at all relevant times,
-- the officers and directors of Northwest included Rembert T.
Cribb and Michael E. Fitzgerald.
-- the officers and directors of Renaissance included: Cribb,
Fitzgerald, Kenneth W. Couch, and William D. Adams.
-- the officers and directors of the Summit Entities included
one or more of the Renaissance Officers and Directors.
The Management Agreement
On or about November 22, 1993, Renaissance entered into a
management agreement with Northwest, pursuant to which
Renaissance was to perform certain management services at the
Northwest Hospital in exchange for the payment of management
fees by Northwest, which were to be determined based on a
percentage of Northwest's annual revenue. Numerous of the Summit
Entities also provided services to and through the Northwest
Hospital. Such services were provided to and, through the
Northwest Hospital pursuant to real property lease and other
agreements between the relevant Summit Entity and Northwest.
The Indiana Action
On or about December 12, 1997, Brandt, on behalf of Northwest's
estate, filed an adversary complaint against Renaissance, the
Renaissance Officers and Directors, and the Summit Entities in
the Indiana Bankruptcy Court, styled Brandt, Trustee v.
Renaissance Hospital Management, Inc., et al., Adversary
Proceeding No. 97-6227.
Pursuant to the Indiana Action, the Plaintiff seeks to hold the
Defendants liable for, among other things, their alleged breach
of fiduciary duties and/or preferential transfers and fraudulent
conveyances. Northwest seeks damages in excess of $9.8 million,
Essentially, the Indiana Action is founded on allegations that
the Defendants operated Northwest as an alter ego for their
benefit and to the detriment of Northwest. Northwest alleges
that the Defendants' actions result in its insolvency and
inability to meet its obligations to its creditors.
The Settlement Agreement
After substantial negotiations, the Plaintiff and Defendants
have agreed to fully and finally resolve the Indiana Action and
any and all other claims between them by executing the
Settlement Agreement, which provides for:
(A) Monetary Payment
The Defendants (other than SMH and SMM) shall pay or cause
to be paid to the Plaintiff $750,000 within 5 business days
after final, non-appealable orders approving the Settlement
Agreement are entered by both the Indiana Bankruptcy Court and
the Delaware Bankruptcy Court. The Debtors will not be liable
for any part of this payment.
(B) Dismissal of Indiana Action
The Plaintiff and Defendants, subject to the Finality of the
Settlement Orders, stipulate and agree to the Indiana Bankruptcy
Court's entry of an order dismissing the Indiana Action with
prejudice. The Order of Dismissal shall become effective only
after expiration of 100 days from and after the date of the
negotiation of the Settlement Payment. Such Order of Dismissal
is vacatable upon the election of the Plaintiff if any of the
Defendants (other than SMH and SMM, which have chapter 11 cases
currently pending) file for bankruptcy within such 100-day
period.
(C) Withdrawal/Waiver of Claims
The parties stipulate and agree, subject to the Finality of
the Settlement Orders, to disallow their respective proofs of
claim in the Northwest Bankruptcy Case in Indiana and in the
MPAN Bankruptcy cases in Delaware. If the Order of Dismissal is
vacated, then the Claims Orders will likewise be vacated.
(D) General Releases
The Defendants and the Plaintiff agree to a mutual general
release of any and all claims and liability. The Settlement
Agreement explicitly excepts First Union Corporation f/k/a
First Union Bank of Georgia from the general release of claims.
The Debtors believe that the Northwest Settlement is in the best
interest of the Debtors' estates, creditors, and other parties
in interest.
If the Plaintiff was to prevail in the Indiana Action, the
Defendants may be held to be jointly and severally liable for
over $9.8 million. The Debtors tell Judge Walrath they believe
that the Plaintiff's allegations against them are unfounded, but
they recognize a judgment could be rendered against all of the
Defendants in the Indiana action on a joint and several basis.
Further, even if no adverse judgment were to be rendered, the
defense of that action would be costly and time consuming and
would distract certain of the Debtors' personnel from their
other duties.
The Debtors remind Judge Walrath that if the Settlement
Agreement is approved, they will be released by the plaintiff in
the Indiana Action without making actual payment but by
relinquishing a Proof of Claim in the amount of approximately
$429,800, approximately $279,800 of which is contingent.
Further, according to research done by counsel to the
Defendants, the estimated recovery for such prepetition claims
in the Northwest case will likely be no greater than 10-15%.
(Mariner Bankruptcy News, Issue No. 15; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
MICROWARE SYSTEMS: Appeals Nasdaq's Delisting Determination
-----------------------------------------------------------
Microware Systems Corporation (Nasdaq:MWAR), a leading provider
of embedded software solutions, sent a letter requesting a
hearing from NASDAQ to appeal the potential delisting of the
company's common stock from the NASDAQ National Market. This
press release is being issued as required by NASDAQ National
Market Rule 4815(b).
In a letter dated July 3, 2001, NASDAQ informed the company that
it had failed to comply with Marketplace Rule 4450(a)(5), which
requires that the company's common stock maintain a minimum bid
price of $1.00 per share. Therefore, its common stock is subject
to delisting.
Pursuant to the rules of the appeals process, the company's
common stock will not be delisted pending the hearing's outcome.
The company noted that there can be no assurance as to when
NASDAQ will reach a decision, or that such a decision will be
favorable to the company. An unfavorable decision would result
in the immediate delisting of the company's common stock from
the NASDAQ National Market.
About Microware
Microware Systems Corporation provides embedded software
solutions that are used in advanced communications
infrastructure, Internet appliances, consumer electronics,
wireless communications devices, industrial automation, office
automation, automotive control, and multimedia devices. Products
include software components such as the OS-9 real-time operating
system and IXP1200 Microcode Support Library and consulting
services. Founded in 1977, Microware is headquartered in Des
Moines, Iowa, with sales offices in the United States, Europe,
and Japan. Microware is a member of the Intel IXA Developers
Forum. RadiSys Corporation of Hillsboro, OR has made a tender
offer to acquire Microware. For more information, visit
www.microware.com or send e-mail to info@microware.com
OWENS CORNING: Taps Interelate for Marketing Services Expertise
---------------------------------------------------------------
Interelate, Inc., a leading provider of comprehensive customer
intelligence solutions and web-based marketing infrastructure,
said that Owens Corning, a leading manufacturer of products for
the construction industry, has contracted Interelate's services
to assist with the rollout of its Acoustic Systems Division's
new Visionaire FX(TM) Franchise offering.
Interelate is helping Owens Corning's Acoustic Systems Division
to better quantify the market opportunity for this franchise
undertaking by combining available market data with other data
and analysis, including demographic, behavioral and attitudinal
data and propensity scores. Owens Corning will use the
information gained from Interelate's analysis to determine
market opportunity and to develop franchise strategies for the
new product line.
"Our new Visionaire FX Personal Entertainment Centers will be
popular in various geographies and within certain demographics,"
said Ralph McGrath, Business Manager of Visionaire FX(TM) &
Franchising. "The detailed analysis of relevant data Interelate
provided will help us determine how best to focus our franchise
recruitment efforts."
"Owens Corning created a highly differentiated product for a
target market," said Wade Myers, CEO, Interelate. "Our analysts
and strategic marketing experts worked with Owens Corning to
understand their product and franchise proposition to determine
the data required and perform the necessary analysis to refine
and clarify their target market."
About Owens Corning
Owens Corning is a world leader in building materials systems
and composites systems. The company has annual sales of about $5
billion and employs approximately 20,000 people worldwide.
Additional information is available on Owens Corning's Web site
at http://www.owenscorning.com.
About Interelate
Interelate is the leading provider of customer intelligence and
marketing infrastructure to meet the next-generation customer
relationship management (CRM) needs of Global 2000 companies.
Interelate builds, hosts and manages sophisticated, predictive
customer intelligence solutions that are offered at a
predictable monthly fee. Interelate's turn-key solutions combine
best-in-class packaged CRM software with relevant third-party
demographic, behavioral and attitudinal data; propensity scores
to predict customer actions; as well as domain expertise in the
target industries and database marketing. Interelate helps
financial services, travel and leisure, retail and
telecommunications/utilities clients acquire, cross-sell and
retain customers by enabling them to better understand their
customers and build highly-personalized real-time and/or direct
marketing offers. Headquartered in Eden Prairie, Minnesota, the
company's European office is located in The Netherlands.
Interelate can be reached at (952) 908-8000 or
http://www.interelate.com.
PACIFIC GAS: Retirees & Survivors Form 30-Member Committee
----------------------------------------------------------
John T. Hansen, Esq., and Brendan F. Macaulay, Esq., at
Nossaman, Gunther, Knox & Elloitt, LLP, advise the Court, in a
Statement filed pusuant to Rule 2019 of the Federal Rules of
Bankruptcy Procedure, that they represent a 30-member Committee
of Pacific Gas and Electric Company Retirees and Survivors owed
"benefits to which they are entitled under a non-qualified
pension plan known as the Supplemental Executive Retirement
Plan, and such other plans, trusts and other instruments as the
Debtor put in place to supplement or secure their benefits."
The Committee, the lawyers tell Judge Montail, was organized by
George A. Maneatis, Frederick W. Mielke, Jr., Stanley T.
Skinner, and Howard V. Golub. (Pacific Gas Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PACIFIC GAS: Calpine Corp. Acquires San Diego Power Project
-----------------------------------------------------------
Calpine Corporation (NYSE:CPN) and PG&E Corporation's (NYSE:PCG)
PG&E National Energy Group said that Calpine has completed the
acquisition of the Otay Mesa Generating Project in San Diego
County.
The PG&E National Energy Group developed the project, which was
licensed by the California Energy Commission in April.
Construction of the 500-megawatt energy center is expected to
begin later this summer, with completion targeted for mid-2003.
Under the terms of the sale, Calpine will build, own and operate
the facility and PG&E National Energy Group will contract for up
to 250 megawatts of output.
"This project will directly address the electricity supply
imbalance that currently exists in San Diego County," said Ron
Walter, Senior Vice President - Business Development. "Otay Mesa
is an important component needed to ensure price stability and
power reliability for San Diego and all of California."
"The PG&E National Energy Group is committed to being part of
the energy solution in California," said Thomas B. King,
president and Chief Operating Officer of the PG&E National
Energy Group, West Region. "Generation from the Otay Mesa plant
will be an important part of our growing western resource
portfolio."
The Otay Mesa Generating Project will be located within a 46-
acre property on the eastern portion of Otay Mesa, near the base
of the San Ysidro Mountains, approximately 1.5 miles from the
United States-Mexico border.
Designed as a highly efficient, combined-cycle generating
station, the Otay Mesa facility will be fueled by natural gas
and will include state-of-the-art emission control equipment and
water conservation technology. In addition, in a first-of-its-
kind program, the Otay Mesa Generating Project will utilize
mobile emission reduction credits to offset emissions. A large
portion of the mobile credits will be created through the
conversion of refuse-hauling vehicles in San Diego to natural
gas fuel.
Power from the Otay Mesa plant will be sold into the California
wholesale market. As part of the agreement to sell the project
to Calpine, the PG&E National Energy Group will enter into a 10-
year tolling arrangement under which it will contract for up to
250 megawatts. Calpine will market the balance of the output
through its energy services group.
In addition to the capacity it will receive from the Otay Mesa
Plant, the PG&E National Energy Group is constructing a 1,000-
megawatt LaPaloma plant near Bakersfield, Calif., which is
expected to be fully operational by mid-2002. Additionally, the
PG&E National Energy Group is in the process of acquiring 66
megawatts of wind generation near Palm Springs, and it is also
developing with Sempra International the proposed North Baja
Pipeline, which will provide a potential new source of natural
gas for Southern California and Northern Mexico.
In total throughout the West, the PG&E National Energy Group has
more than 4,000 megawatts of new generation in construction or
advanced development.
Building upon its existing 2,425-megawatt natural gas and
geothermal operating portfolio, Calpine has launched the largest
power generating initiative in the state with 1,950 megawatts of
energy centers under construction in and around California, and
has announced the development of an additional 3,850 megawatts
of generation.
By the end of 2005, Calpine plans to build more than 12,000
megawatts of generation dedicated to restoring the stability of
California's energy markets. Calpine's total North American
portfolio will exceed 70,000 megawatts by the end of 2005. The
company recently announced the acquisition of a 1,200-megawatt
natural gas-fired plant in the United Kingdom.
Calpine Corporation, based in San Jose, Calif., is dedicated to
providing customers with reliable and competitively priced
electricity. Calpine is focused on clean, efficient, natural
gas-fired generation and is the world's largest producer of
renewable geothermal energy. Calpine has launched the largest
power development program in North America.
To date, the company has approximately 34,000 megawatts of base
load capacity and 7,200 megawatts of peaking capacity in
operation, under construction, pending acquisition and in
announced development in 29 states, the United Kingdom and
Canada. The company was founded in 1984 and is publicly traded
on the New York Stock Exchange under the symbol CPN.
Headquartered in Bethesda, Md., PG&E National Energy Group
develops, owns and operates electric generating and gas pipeline
facilities and provides energy trading, marketing and risk-
management services.
More information about each company can be found at their
respective websites at www.calpine.com or www.pgecorp.com.
PACIFIC GAS: Employs Leroy Barnes As New VP and Treasurer
---------------------------------------------------------
PG&E Corporation (NYSE:PCG) announced that Leroy T. Barnes, Jr.,
50, has joined the company as Vice President and Treasurer. Mr.
Barnes brings to his new position more than 20 years of
financial management experience and expertise, including, most
recently, five years as vice president and treasurer of Gap,
Inc. In his new post, Mr. Barnes will oversee all treasury
operations at the Corporation, which is the parent company of
both Pacific Gas and Electric Company and the PG&E National
Energy Group.
"Mr. Barnes's talent and track record make him an excellent
addition to our officer team, and will position him to make an
immediate contribution as PG&E Corporation manages the financial
challenges associated with the energy crisis," said Robert D.
Glynn, Jr., PG&E Corporation Chairman, CEO and President. "We
are pleased to welcome him aboard."
At Gap, Inc., Mr. Barnes oversaw all treasury functions,
including cash management, debt financing, equity issuance,
capital structure, and commercial paper, hedging and investment
policies, among other areas. He led Gap's first major public
debt issue and managed the Gap's $1 billion common stock
repurchase program.
Prior to joining Gap, from 1985 through 1997, Mr. Barnes held a
number of financial management positions at Pacific Telesis
Group/SBC Communications, including Assistant Treasurer from
1991 through 1997. His experience also includes positions at the
University of California Press, where he was Chief Operating
Officer and Chief Financial Officer, and Deloitte & Touche,
where he was a management consultant. Mr. Barnes has also been a
financial consultant to the U.S. Departments of Treasury,
Agriculture and Defense.
Mr. Barnes is an alumnus of Stanford University, where he earned
an MBA in finance, a master's degree in administration and a
bachelor's degree in psychology. He currently is a member of the
boards of directors of the McClatchy Newspaper Company and The
California Endowment.
PILLOWTEX CORP.: Reports on Various Miscellaneous Asset Sales
-------------------------------------------------------------
Pillowtex Corporation wants to sell some miscellaneous assets
to:
(A) Louisville Bedding Company
Pillowtex Corporation proposes to sell one Pinsonic Quilter
to Louisville Bedding Company for $15,000. The Quilter was
manufactured by James Hunter and is located at the Debtors'
Laurel Hill, North Carolina facility.
Of the $15,000 purchase price, the Debtors will only receive a
net amount of $13,500 in cash because 10% or $1,500 will go to
their sales agent, TexMach Inc., as commission.
(B) Bruce R. Smerch and Mrs. Catherine E. Smerch
Pillowtex also wants to sell its Condominium Unit 2108 in
Building 2 of the Columbine Condominiums located in the County
of Gunnison, City of Crested Butte in Colorado, to Mr. Bruce R.
Smerch and Mrs. Catherine E. Smerch. The net book value of the
property is $74,498.
Mr. and Mrs. Smerch have agreed to pay $302,000 in cash for the
property. The sale is conditioned upon the buyer's receipt of
financing. It is also subject to a right of first refusal in
favor of the Columbine Condominium Owners Association. Pursuant
to the right of first refusal, the Owners Association has 30
days from receiving the notice to exercise its right of first
refusal. At the same time, Owners Association has the right to
purchase the property on the same terms as those offered by
buyer. Of the net proceeds received by Pillowtex, a 7%
commission will be paid to Prudential Becky Hamlin Realty, Inc.
pursuant to an Exclusive Right-to-Sell Listing Contract entered
into by Pillowtex and Prudential. So out of the $302,000
purchase price, the commission payable to Prudential will be
$21,140. If the Owners Association exercises its right to
purchase the property, Pillowtex will complete the sale with
them rather than Mr. and Mrs. Smerch. Pillowtex would then be
prohibited to file another notice pursuant to the sale order.
(C) Industrial Service & Supply Incorporated
Opelika Industries, one of the Debtors, want to sell some
11.758 acres of real property located at 1534 First Avenue in
Opelika, Alabama to Industrial Service & Supply Incorporated for
$75,000.
The purchase price shall be paid by:
(i) an earnest money deposit of $15,000 paid to Opelika;
and
(ii) the remainder of the purchase price to Opelika at the
closing in cash, certified check or other immediately
available funds, subject only to prorations for ad
valorem real property taxes.
After closing, and within 30 days of subsequent demolition of
any buildings on Parcel C, buyer shall donate approximately 50%
of Parcel C to the Community Missionary Baptist Church on behalf
of Pillowtex Corporation.
(D) Richard McGuire Properties, L.L.C.
Fieldcrest Cannon, one of the Debtors, propose to sell real
property located at 425, 426, and 427 Oak Avenue in Kannapolis,
North Carolina, and a house (not including real property)
located at 305 Maple Street in Cabarrus County, North Carolina,
to McGuire Properties.
McGuire Properties has agreed to pay a purchase price of $90,000
in cash of the property.
The purchase price shall be paid:
(i) an earnest money deposit of $4,500 paid to the title
company upon execution hereof; and
(ii) the remainder of the purchase price to seller at the
closing in cash, certified check or other immediately available
funds, subject only to prorations for ad valorem real property
taxes.
(E) D&R Development Corporation
Fieldcrest Cannon also wants to sell a building and
approximately 4.136 acres of land located at 204 West Stadium
Drive, Eden, North Carolina to D&R Development Corporation.
D&R agreed to pay a purchase price of $221,672.50 in cash for
the property.
(i) an earnest money deposit of $26,000 must be paid to the
title company upon execution hereof; and
(ii) the remainder of the purchase price to seller at the
closing in cash, certified check or other immediately available
funds, subject only to prorations for ad valorem real property
taxes.
In closing their respective transactions, Industrial Service,
McGuire Properties and D&R have to pay for:
(a) any fees and disbursements of its counsel, inspecting
architect, engineer and other consultants, if any;
(b) the real property transfer and other similar taxes
imposed on the transaction by the state, county and/or
municipality, as well as the deed recording costs;
(c) the cost of an ALTA owner's title insurance commitment
and policy issued in connection with the transaction, whether
pursuant to the title commitment or otherwise;
(d) the cost of the survey will be ordered and paid for the
by the buyer; and
(e) any other expense(s) incurred by Opelika or its
representative(s) in inspecting or evaluating the property or
closing the transaction.
In addition, McGuire and D&R will also be required to pay for
any escrow fees and escrow closing charges.
Ad valorem taxes on the property shall be prorated on a calendar
year basis as of the closing date.
Michael G. Wilson, Esq., at Morris Nichols Arsht & Tunnell, in
Wilmington, Delaware, notes that the Debtors are not aware of
any liens on or interests in these properties, other than the
liens granted to the Debtors' lenders under the Debtors'
existing secured pre-petition and post-petition financing
facilities.
But nonetheless, Mr. Wilson explains that if the secured lenders
or any other party has a lien on or an interest in the property,
then it would be subject to money satisfaction.
Mr. Wilson relates that the Debtors want to sell these
properties:
(a) on an "as is" and "where is", "Mill Floor" basis,
without any representations or warranties from the Debtors as to
the quality or fitness of such assets for either their intended
or any particular purposes; and
(b) free and clear of all liens, claims, encumbrances and
other interests therein.
Mr. Wilson says all such liens, claims and encumbrances, and
other interests will attach to the proceeds of the proposed
sales.
Mr. Wilson also emphasizes that the Debtors do not intend to
assume and assign any executory contracts or unexpired leases in
connection with the sales.
If there are no objections filed with the Court, Mr. Wilson
notes, the Debtors will be authorized to consummate the
transaction without further notice and without further order of
the court. (Pillowtex Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PSINET INC.: Paying Prepetition Tax Obligations
-----------------------------------------------
At PSINet, Inc.'s behest, Judge Gerber authorized PSINet Inc.
and the affiliated Debtors to pay prepetition sales and use and
similar taxes due to the Taxing Authorities in the ordinary
course of business, by whatever means the Debtors may deem
appropriate, including, without limitation, the issuance of
postpetition checks.
In connection with the normal operation of their businesses,
some or all of the Debtors incur liability for sales and use and
similar taxes and collect sales and use and similar taxes from
their customers on behalf of the Taxing Authorities for payment
to such Taxing Authorities.
On a periodic basis, typically once every month, the Debtors
make payments to each of the Taxing Authorities for sales and
use and similar taxes that, during the previous reporting
period, were invoiced. Typically the Debtors calculate the
amount of tax to be paid to the Taxing Authorities for a given
period by relying on sales invoices issued by the Debtors to
their customers during that period.
The Debtors are required to pay these invoiced tax amounts to
the Taxing Authorities regardless of whether customers have made
payment to the Debtors on the invoices by the time the tax is
due from the Debtors. Because most customers do not pay the
Debtors for products or services delivered until some time after
receiving invoices, the amount of taxes paid by a Debtor to the
Taxing Authorities for a given period typically exceeds the
amount collected by the Debtor from its customers during that
period with respect to those taxes. In effect, these uncollected
taxes are paid in advance by the Debtors. On the other hand,
some taxes that were invoiced and collected in the prepetition
period had not been paid to the Taxing Authorities as of the
Petition Date because these taxes were not due in the ordinary
course until after the Petition Date.
Based on financial records, the Debtors believe they were
substantially current on their payments of sales and use and
similar taxes to those Taxing Authorities in jurisdictions where
the Debtor is registered for such taxes. However, there also are
certain ongoing audits and discussions with Taxing Authorities
regarding the Debtors' sales and use tax obligations. The
Debtors estimate that aggregate sales and use and similar taxes
invoiced but unpaid as of the Petition Date as a result of these
are approximately $ 1.4 million. In addition, the Debtors have
accrued approximately an additional $2.5 million for sales and
use and similar taxes that have not yet been billed or assessed
by Taxing Authorities.
The Debtors believe that the payment of the taxes is necessary
to avoid potential administrative difficulties which may be a
marked increase in state audits and a flurry of lien filings or
lift stay motions. Moreover, some states hold responsible
officers personally liable in various circumstances for unpaid
sales and use taxes. To the extent that any sales and use and
similar taxes remain unpaid by the Debtors, the Debtors'
officers may be subject to lawsuits or criminal prosecution
during the pendency of these Chapter 11 cases. The possibility
of any such lawsuit or criminal prosecution would distract the
Debtors and their officers in their attempt to implement a
successful reorganization strategy, to the detriment of all
parties in interest in these Chapter 11 cases.
Prompt and regular payment of the taxes will avoid unnecessary
governmental action and the distraction of the Debtors and their
officers from their reorganization efforts. (PSINet Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
RENNAISSANCE CAPITAL: S&P Assigns Junk Counterparty Ratings
-----------------------------------------------------------
Standard & Poor's assigned first ratings to Renaissance Capital
Holdings Ltd. (RCHL), the holding company of the international
Renaissance Capital group, a Russian stockbroker and advisory
house. Triple-C long-term and single-C short-term counterparty
credit ratings were assigned. The outlook is stable. The ratings
reflect the risk of dealing Russian equities, which constitutes
the Renaissance Capital group's main line of business. The
ratings also reflect the risks of operating in the Russian
economy, with its unpredictable and arbitrary legal system and
low speculative-grade counterparties. These risks are partially
offset by the Renaissance Capital group's leading position in
dealing Russian equities with institutional investors outside
Russia, long-standing senior management, and growing revenues
from investment banking in Russia.
The Renaissance Capital group operates in Russia through
subsidiaries LLC Renaissance Broker and ZAO Renaissance Capital,
in London through licensed broker-dealer Renaissance Capital
Limited, and in New York via licensed securities dealer RC
Securities Inc. The group had $30 million in consolidated
capital and 157 employees worldwide at year-end 2000.
Renaissance Capital group has a consolidated international legal
structure comprising more than 20 separate legal entities in
offshore centers, including Bermuda and Cyprus. RCHL, the
consolidating holding company of the group, is based in Bermuda.
Equity sales and brokering are the main drivers of revenues,
particularly transactions with foreign investors. In 2000,
equity advisory services on Russian mergers and acquisitions,
including privatizations and public equity and debt offerings,
also generated significant revenues. The Renaissance Capital
group is vulnerable to both the operational risk of any drop in
trading and deal flows and the settlement risk arising from its
brokerage and trading businesses in the event of a market
downturn in Russia. Moreover, the Russian stock market is thinly
traded and concentrated in a handful of listed companies, adding
to the group's risk profile.
The Renaissance Capital group has been in business since 1995,
but the 1998 Russian financial crisis caused heavy losses and
forced the group to reduce the size and scope of its activities
and completely restructure and recapitalize. In August 1999, the
group emerged from the restructuring: Its decision not to
publish accounts for 1998 and the first eight months of 1999
is a negative factor in the group's credit profile. Leading up
to the 1998 crisis, the group was in the process of merging with
the International Company for Finance and Investment (MFK),
closely linked to the Uneximbank/Interros group. All ties with
this group were completely unwound during the restructuring that
followed the crisis.
Many of the group's senior managers, most of whom are non-
Russians with experience at Western investment banks, have been
at Renaissance Capital since its inception. This stability is
unusual in Russia's financial sector, which was shaken by the
1998 crisis, and is a positive point for RCHL from a credit
perspective. Since it began operations, the Renaissance Capital
group has remained focused on dealing Russian equities. The
company has built itself a reputation for good market research
and an ability to achieve results in Russian investment banking
deals.
Outlook: Stable
The Renaissance Capital group is dependent on the performance of
the Russian stock market with respect to trading volumes and
share-price volatility. If Russia's economy continues to expand
and the government succeeds in implementing reforms, it has a
good chance of increasing its business and improving its
creditworthiness. If Russia falters, the Renaissance Capital
group is more exposed than many other players in the economy,
due to its dependence on the stock market, Standard & Poor's
said.
SERVICE MERCHANDISE: Rejects Lease On Store #930 In Orlando, FL
---------------------------------------------------------------
At Service Merchandise Company, Inc.'s behest, the Court
authorized the Debtors to reject the unexpired lease with
respect to Debtors' Store Number 930 in Orlando, Florida. Judge
Paine specifies that the rejection be
effective as of the date of the motion.
The lease, between The Four B's, a New Jersey partnership and
SMCO, covers premises of approximately 460,000 square feet of
space formerly used as the Debtors' distribution center in
Orlando, Florida.
Due to the Debtors' changed merchandise mix and reduced need for
retail space under their business plan for 2000, the premises
are no longer necessary to the Debtors' business operations. The
Debtors have also determined in their business judgment that the
costs associated with the premises are substantial and
constitute an unnecessary use of their cash resources. In
addition, the Debtors believe that their current monthly costs
under the lease represent a market or above market rate for the
type of property involved, which means they will be unable to
obtain any value from a third party for the lease through an
assumption and assignment.
Therefore, in an effort to reduce postpetition administrative
costs and in the exercise of their business judgment, the
Debtors decided on the course of rejecting the lease.
Accordingly, the Debtors have actually vacated the premises and
have advised both the Committee and the Landlord accordingly.
Pursuant to an agreed order signed by counsel to SMCO and
counsel to the landlord, the Debtors will have no further
obligations under the lease arising from and after the Rejection
Date, except for obligation with respect to damages arising from
the rejection of the lease. Judge Paine also fixed July 1, 2001
as the deadline for filing rejection claims.
The agreed order provides that the landlord would have the
exclusive right on or before June 18, 2001 at 4:00 p.m. to file
a motion requesting the Court to enforce any administrative
claims that the landlord may have under the lease and/or to
determine the effective date of the rejection of the lease,
except that the landlord agrees that the Rejection Date will not
be later than May 22, 2001. In the event that the landlord did
not file any motion by the deadline, the rejection date would be
March 31, 2001. The agreed order also provides that any motion
by the landlord filed by the deadline would be considered at the
July 24, 2001 Omnibus Hearing.
The landlord did file the motion, alleging that the Debtors
failed to exercise the option to renew the lease in December,
2000, as required under the lease but failed to surrender
control of the premises to the landlord despite the landlord's
attempt to gain access. The Four B's tells Judge Paine that the
Debtors maintained exclusive control of the premises prior to
May 22, 2001. The landlord also alleges that the Debtors failed
to maintain the interior of the premises as required under the
lease and caused additional damages in vacating the premises.
The landlord estimates that the cost to repair the damages and
deferred maintenance is approximately $317,950.00.
Accordingly, The Four B's as landlord, requests that the Court:
(a) determine that the lease was rejected on May 22, 2001;
(b) award the landlord an administrative expense claim
under 11 U.S.C. section 365(d)(3) for all unpaid obligations
associated with the lease, including pro-rated taxes, deferred
maintenance and damages to the property. (Service Merchandise
Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
SES-CORP.: Files Chapter 11 Petition In E.D. Michigan
-----------------------------------------------------
IVG Corp. (OTC Bulletin Board: IVGG) (http://www.ivgcorp.com),
announces that SES-Corp., Inc., has filed a voluntary petition
under Chapter 11 of the United Stated Bankruptcy Code. The
bankruptcy filing, made by SES on July 9, 2001, in the United
States Bankruptcy Court for the Eastern District of Michigan,
has occurred as a result of actions by Michigan National Bank to
suspend the bank accounts of SES and its affiliates. SES expects
to emerge from bankruptcy with a reorganized, successful
company.
Following the bankruptcy filing, the Board of Directors of SES
has appointed Mr. Joseph Whall to serve as the company's new
CEO.
Also on July 9, 2001, the Board of Directors of IVG voted to
rescind the acquisition of SES-Corp, Inc. The IVG Board believes
that the bankruptcy filing, the ongoing dispute between SES and
Michigan National Bank, as well as SES' ongoing dispute with the
Internal Revenue Service relating to tax years prior to the
acquisition, present a picture of SES' financial condition that
is different than at the time of the acquisition. As a result,
the Board has determined that a right of rescission exists.
Completion of the recession is subject to approval of the terms
of a written Rescission Agreement. Upon completion of the
Rescission Agreement, Mr. Dennis Lambka and Mr. Ron Bray have
agreed to relinquish their seats on the IVG Board of Directors.
Mr. Elorian Landers, President and CEO of IVG Corp., said,
"While we continue to believe that the acquisition of SES would
have created a strong platform to consolidate the PEO industry,
we simply cannot endorse a decision to proceed with the
transaction under the facts as we understand them today. In
recent weeks, several complex issues have emerged that have
severely hindered our ability to move forward with our
consolidation strategy. Our decision today was based on what we
felt was in the best interest of the Company and its
shareholders."
According to Mr. Landers, "IVG Corp. still remains well-
positioned to consolidate the multi-billion dollar PEO industry.
Already, we are reviewing other alternatives with PEOs to
execute our strategy. It is simply under a new consolidation
platform that we will move forward. The rescission in no
way effects our other operations or our business model and we
continue to aggressively explore other portfolio companies"
IVG Corp. does not anticipate having to restate any reported
financial information as a result of the rescission of the SES
acquisition, as none of the currently filed public reports
include SES financial results.
About IVG Corp., Inc.
IVG Corp. acquires and enhances revenue-generating companies
with a compelling business model, technology and/or proprietary
service. IVG Corp. provides a value-added corporate structure
intended to enable its portfolio companies to quickly leverage
their expertise and deploy their business strategy by utilizing
the management, financial and corporate resources of the
Company. IVG Corp. currently trades on the NASD OTC Bulletin
Board under the symbol IVGG.
SILICON GRAPHICS: S&P Cuts Corporate Debt Rating to CCC-
--------------------------------------------------------
Standard & Poor's lowered its ratings (see list below) on
Silicon Graphics Inc., reflecting a declining revenue base,
ongoing losses, and limited financial flexibility. The outlook
is negative.
While Mountain View, Calif.-based Silicon Graphics has had a
strong technology position in high-end graphics and computing,
the company has been struggling to restore revenue growth and
profitability in the highly competitive workstation and
enterprise server markets. In addition, economic weakness and
reduced levels of information technology spending will continue
to pressure the company's efforts to stabilize revenues and
improve profitability.
Silicon Graphics released preliminary fourth quarter results for
the quarter ended June 30, 2001. The company expects to report
an operating loss, before restructuring and other charges, in
the range of $70 million-$80 million. This compares to an
operating loss of $47 million (before charges) in the previous
quarter. Restoring revenue growth and profitability will remain
a significant challenge in the highly competitive server and
workstation markets.
Significant net losses have eroded Silicon Graphics' balance
sheet and liquidity. Unrestricted cash balances were about $120
million at the end of the fourth quarter, down from more than
$250 million as of fiscal year-end 2000.
Outlook: Negative
Further deterioration in financial flexibility and liquidity
could lead to lower ratings, Standard & Poor's said.
Ratings Lowered
Silicon Graphics Inc. To From
Corporate credit rating CCC-/Neg. CCC+/Neg.
Senior debt CCC- CCC+
Subordinated debt CC CCC-
SIRIUS SATELLITE: S&P Rates $500 Million Shelf Filing At CCC-
-------------------------------------------------------------
Standard & Poor's assigned its CCC- preliminary ratings to
Sirius Satellite Radio Inc.'s $500 million Rule 415 universal
shelf registration. All existing ratings on Sirius are affirmed.
The outlook remains negative.
The shelf filing is intended to provide additional long-term
funding flexibility. Sirius believes that current cash balances
will fund its capital needs through the third quarter of 2002.
The ratings reflect the challenges Sirius faces as a startup
company that is launching a new subscription radio service.
Considerable uncertainty remains regarding consumer demand for
pay radio and the required marketing costs to attract and retain
subscribers. The company will also require a material amount of
additional funding before it reaches cash flow self-sufficiency.
Sirius' delay in launching its service could increase these
challenges.
Sirius is one of two companies building a nationwide,
subscription-based, satellite digital audio radio network.
Satellite radio is vying to be the third radio broadcast band,
along with AM and FM, and is designed to offer subscribers
digital quality sound, coast-to-coast coverage, a broad
selection of formats with up to 100 channels, and limited or no
commercials. Early generation equipment for the two services
will not be compatible, and inter-operable equipment is not
expected until 2004. Sirius' satellites are in place and tested
and its terrestrial repeater network is almost complete.
However, delays in finalizing the chipsets necessary for
consumer receivers have pushed back the scheduled commercial
launch from mid-2001 to late-2001. Furthermore, only a limited
number of Sirius-capable receivers, perhaps 20,000, will be
available by year-end. Its competitor, XM Satellite Radio,
will be first to market with its commercial launch this summer
and it expects to have substantially more radios available this
year.
Both companies are targeting motorists as their primary audience
and have formed relationships with major automobile
manufacturers to promote their services. Sirius does not have a
commitment from its auto partners to install satellite-capable
radios in their cars, although they should be available through
the dealerships as an add-on in certain models next year.
Receivers will also be available in retail outlets and Sirius
continues to negotiate with its auto partners to have its
service included as a standard feature.
Sirius projects that it can reach breakeven EBITDA with
approximately 4 million subscribers, or 2% of the target market.
The company does not expect to generate positive EBITDA until
2003, at the earliest. Attracting subscribers could be difficult
considering that they will need to invest $150 or more for the
necessary stereo equipment and also pay $12.95 per month. An
increase in projected subscriber acquisition costs could
significantly alter the company's projections. At the present
time, Sirius' expected monthly cost is $3 more than XM's,
although this is likely to be temporary and is unlikely to be a
point of differentiation. Both companies will also remain
vulnerable to competitive pressures from conventional radio and
other media.
Outlook: Negative
The outlook reflects the considerable hurdles the company faces
at this stage of its development. Ratings could be lowered in
the near term if the company faces additional delays or
increased costs in launching its service. Following its 2001
launch, Standard & Poor's will monitor consumer acceptance,
Sirius' subscriber acquisitions and progress towards
profitability, and the company's ability to raise the additional
capital needed before it achieves breakeven cash flow.
Incorporated in the ratings is the assumption that funding in
the intermediate term will be predominantly, if not exclusively,
equity.
Preliminary Ratings Assigned
Sirius Satellite Radio Inc. Ratings
$500 million universal shelf registration
Preliminary senior unsecured shelf CCC-
Preliminary subordinated shelf CCC-
Ratings Affirmed
Sirius Satellite Radio Inc.
Corporate credit rating CCC+
Senior secured debt CCC+
Subordinated debt CCC-
STEELCLOUD: Shares Face Nasdaq Delisting
-----------------------------------------
SteelCloud (Nasdaq: SCLD), a leader in the development of
turnkey network appliance solutions, received a Nasdaq Staff
Determination that the Company's common stock fails to comply
with the $1.00 minimum bid price requirement for continued
listing on The Nasdaq National Market as set forth in
marketplace Rule 4450(a)(5), and that its common stock is,
therefore, subject to delisting from The Nasdaq National Market.
The Company has requested an oral hearing with the Nasdaq
Listing Qualifications Panel to review the Staff Determination.
The delisting of the Company's common stock will be stayed
pending the outcome of the hearing.
Thomas Dunne, Chief Executive Officer of SteelCloud commented,
"Over the past four years, SteelCloud has made a significant
investment in its Nasdaq listing, and as the Company moves
through this process, management will explore every viable
option with the intent to maintain the Company's listing."
There can be no assurance that the Company's actions will
prevent the delisting of its common stock from The Nasdaq
National Market. In the event that the Company is unsuccessful
in maintaining its Nasdaq listing, the Company's common stock
will be listed on the NASD OTC Bulletin Board.
About SteelCloud
SteelCloud is a leading provider of turnkey server appliances to
software companies and organizations that develop, implement,
and support e-business infrastructure solutions. The company has
built on a solid 14-year history of delivering over 15,000
complex server solutions to major corporate and public sector
enterprises. It counts as its customers some of the world's
largest software and IT companies. SteelCloud's ISO 9002
manufacturing facility in Puerto Rico, and it's engineering and
support competencies at its Dulles Virginia headquarters,
combine to provide a unique capability for delivering rapidly
developed, cost effective, and reliable customer-centric network
appliances. SteelCloud can be reached at 703-450-0400.
Additional information is available at http://www.steelcloud.com
or by e-mail at IR@steelcloud.com.
SUN HEALTHCARE: Settles Various Tort Litigation Claims
------------------------------------------------------
Subsequent to the settlement of State Court Actions regarding
personal injury between certain of the Sun Healthcare Group,
Inc. Debtors and the claimants respectively, the parties agree
that the proofs of claims previously filed by the respective
claimants will be withdrawn and/or disallowed and the respective
claimant(s) will assert a claim against the Debtors in the
amount agreed upon and collect insurance proceeds for the
remainder of the settlement amount.
Proofs of Claim Stipulated Amount
Filed & Expunged Debtor to Be Asserted Claimant
---------------- ------ ----------------- ---------
-- SunBridge $75,000 Janet Jarin
Deborah Steele
Christine Willis
Cynthia Steele
Michael Steele,
Individually and
As heirs of
Emmett Steele
09796 Stockton $85,000 Casey Corkhill
Rehab. Center Larry Corkhill
John Corkhill
Individually and
As successor-in-
Interest to
DePaul Corkhill
09786 SunBridge $85,000 John K. Tank,
09787 individually and
09788 as successor-in-
09789 interest to
($1M each) Lillian L. Gaab
-- Care $85,000 Roxanne Francisco
Enterprises Donna Crouse
West, Inc. Doreen La Scala
Individually and
as Executor of
The Estate of
Peter Francisco
1092600 SunBridge $98,000 Edna (Teddie)
($175,000) Dingle
09519 SunBridge $85,000 Marcia Cator
($2M)
09617 Care $80,000 Joyce Young
09616 Enterprises
($1M each) West, Inc.
09774 SunBridge $85,000 Linda Snider
09775 ndividually and
09776 as Successor-in-
09777 interest to
($1.5M each) SunBridge $85,000 Edwin H. Snider
-- Care $65,000 Paulette A. Gorman
Enterprises William T. Marshall
West, Inc. Kenneth Marshall
James Marshall
Miriam Ryder
Amy Choate -
Heirs at Law of
William R. Marshall
(Deceased)
-- Regency-NC $98,000 David Charles Sides
individually and
Patricia Gene Sides,
Individually and
As Administratrix
Of the Estate of
Elizabeth Ann Sides
08717 Vista Knoll $70,000 Clayton Porter,
($500,000) Rehab Center, individually and
Inc. as successor-in-
Interest to
Agnes Porter
13089 Care $85,000 Richard Krom
13459 Enterprises Thomas Martinsen,
13460 West III
13461 Betty Maddon
13462 individually and
13462 as successor-in-
($1.5M each) interest to
Thomas Martinsen,
Jr.
-- Retirement $40,000 Dallas Peoples
Care Individually and
Associate, Inc. by and through
His Power of Attys.
Jackie McMillan and
Patricia Thompson
Care $85,000 Janice Cova
Enterprises Individually and
West as Executor of the
Estate of Isabel
Bowser, Ronald L.
Bowser and Robert J.
Bowser
A hearing on the above stipulations has been scheduled for July
13, 2001.
Judge Walrath has given her stamp of approval to the following
stipulations:
Proofs of Claim Stipulated Amount
Filed & Expunged Debtor to Be Asserted Claimant
---------------- ------ ----------------- ---------
13244 SunBridge $85,000 Kelly A. Bennett,
($1M) individually and as
Executrix of the
Estate of Kris A.
Bennett
-- Regency-NC $92,500 Larry R. Taylor and
Cathy Stacy,
Individually and as
Co-executors of
the Estate of
Hattie B. Taylor,
decedent
-- Quality $90,000 Anne M. Carrano
Nursing individually and
Care of as Executrix of
MA the Estate of
Josephine R. Smith,
Decedent, and
John A. Grimaldi
Peter J. Grimaldi
Steven M. Grimaldo
Alan J. Grimaldi
08942 Clipper $100,000 Linda E. Moore and
($3M) Home of Wallace Moore
N. Conway
(Sun Healthcare Bankruptcy News, Issue No. 21; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
TELESYSTEM INT'L: S&P Cuts Ratings Following Exchange Offer
-----------------------------------------------------------
Standard & Poor's lowered its ratings on Telesystem
International Wireless Inc. (TIW), following an exchange offer
launched by the company on July 6, 2001. These ratings remain on
CreditWatch negative, where they were placed Aug. 20, 2000.
The ratings on TIW subsidiary Dolphin Telecom PLC remain on
CreditWatch negative (see list), where they were placed March 8,
2000. The ratings on Dolphin are not affected by the exhange
offer of TIW.
The downgrade of the ratings on TIW is based on its announced
proposal to exchange a combination of up to $195 million new
senior notes due Dec. 30, 2003, plus $50 million cash, for its
$547 million 10.50% and 13.25% senior unsecured notes. The new
bond will be secured by a lien on the capital stock of TIW's
Brazilian cellular operations and by a lien on the capital stock
of Clearwave N.V. held by TIW, but will be subordinated to
existing bank debt.
Standard & Poor's would consider the completion of the exchange
to be tantamount to a default since the total value of the
proposed notes will be significantly less than the par value of
the existing notes. Although the exchange offer remains subject
to several conditions, the corporate credit rating on TIW will
be lowered to 'SD' and ratings on the company's 13.25% and
10.50% senior unsecured notes will be lowered to 'D' on
completion of the exchange. Subsequent to the successful
completion of the exchange offer, the corporate credit rating
could be revised to as high as triple-'C' from 'SD'.
The ratings on TIW and Dolphin remain on CreditWatch due to
ongoing concerns about the ability of subsidiary Dolphin to
obtain additional funding in the short-term given its weak
competitive position and difficult capital market conditions,
Standard & Poor's said.
Ratings Lowered And Remaining On CreditWatch Negative
Telesystem International Wireless Inc. TO FROM
Corporate credit rating CC CCC
10.50% senior unsecured discount notes due 2007 C CCC-
13.25% senior unsecured discount notes due 2007 C CCC-
Ratings Remaining On CreditWatch Negative
Dolphin Telecom PLC RATING
Corporate credit rating CCC-
Senior unsecured debt C
USG CORPORATION: Obtains Injunction Against Utility Companies
-------------------------------------------------------------
The USG Corporation Debtors use natural gas, water, electricity,
telephone, and other services provided by about 500 Utility
companies. The Utility Companies provide these services to the
Debtors' manufacturing, distribution and other facilities. Other
than utility bills not yet due, and owing at the petition date,
the Debtors' payments to these Utility Companies were paid in
full when due.
By this motion the Debtors sought and obtained an order
determining that the Debtors' history of prompt and full
payments to the natural gas, water, electric, telephone and
other utility companies, the Debtors' demonstrable ability to
pay future utility bills, and the administrative priority status
afforded the Utility Companies' postpetition claims together
constitute adequate assurance of payment for future utility
services, pursuant to 11 U.S.C. Sec. 366(b). The Debtors ask
Judge Farnan to approve certain Determination Procedures in the
event a Utility Company feels it does not have adequate
assurance of future payment.
The Debtors share with the Court lists of the hundreds of
Utility Companies from which USG receives service:
Average Monthly Payment
Type Of Service Lowest Highest
--------------- ------ -------
Telecommunications $38 $9,750
Electric $773 $380,000
Gas $623 $1,800,000
Water $40 $19,484
Oil $623 $623
Local Distribution Service $6,000 $50,000
Sewer $100 $33,000
Any interruption in utility services, the Debtors stress, could
be detrimental to USG's ability to continue operations and
reorganize.
Mr. Harner reminds Judge Farnan that under section 366(b) of the
Bankruptcy Code, debtors are to be protected from utility
service cutoffs upon the filing of a bankruptcy case, while
providing utility companies with the assurance that they will
pay for postpetition services. He explains Section 366(b) of the
Bankruptcy Code does not require the Debtors to provide
postpetition Security Deposits to obtain ongoing utility
service. A utility may not alter or deny service to a debtor due
to the commencement of a bankruptcy unless, within 20 days after
the date of the order for relief, neither the trustee nor debtor
has provided adequate assurance of payment. The "adequate
assurance" may be in the form of a deposit or other security,
the amount of which may be ordered by the court, upon the
request of the party of interest, reasonably modified to
provide adequate assurance. "In fact," Mr. Harner says, "the
drafters of the Bankruptcy Code recognized that 'it will not be
necessary to have a deposit in every case,'" pointing Judge
Farnan to H.R. Rep. No.595, 95th Cong., 1st Sess. 350 (1978).
Mr. Harner relates that the Debtors have excellent payment
history with each of the Utility Companies. He continues that
Courts have determined that Utilities have adequate assurance of
future payment under Section 366 when, among other things, a
Debtor demonstrates its history of promptly paying past bills
and its ability to pay future utility bills. The Debtors have
paid their prepetition utility bills in full and when due. The
Debtors believe they have sufficient cash to pay their utility
bills on an ongoing basis, in the ordinary course of business.
Any claims will be entitled to priority treatment under sections
503(b) and 501(a)(1) of the Bankruptcy Code, allowing
additional assurance that obligations to the Utility Companies
in the future will be paid in full.
In conclusion, Mr. Harner submits that the Debtors' prepetition
payment history, their demonstrated ability to pay future
utility bills, and the priority status given to the Utility
Companies for their postpetition claims add-up to equal adequate
assurance to each Utility Company for payment of any services
they continue to provide. Further, it would be an "unwise use
of available funds" for the Debtors to make cash security
deposits with each of the Utility Companies.
For these reasons, the Debtors request that
(a) they not be required to make any postpetition deposits
with the Utility Companies, and
(b) the Utility Companies be prohibited from drawing upon
any existing cash security deposit, surety bond, or
other form of security to secure future payment for
utility services.
In addition to the adequate assurance of payment above, the
Debtors further propose a mechanism by which the Utility
Companies may request additional assurance of future payment
from the Debtors. The Debtors request that an interim order be
entered which grants the relief sought in this Motion be
entered without prejudice to the Utility Company rights to
request additional assurance by using the following procedures:
(1) Within ten business days after the entry of the interim
order granting this Motion, the Debtors will mail a copy
of the Interim Utility Order to the Utility Companies on
the Utility Service List;
(2) A Utility company that wishes to seek additional
assurance of future payment from, the Debtors must make
a written request for such additional assurance within
30 days after service of the Interim Utility Order to:
(x) the Debtors, c/o USG Corporation, 125 South Franklin
Street, Chicago, Illinois 60601 (Attn: Suzanne K
Torrey, Esq.); and
(y) counsel to the Debtors, Jones, Day, Reavis & Pogue,
77 West Wacker, Chicago, Illinois, 60601 (Attn: Brad
B. Erens, Esq.);
(3) Without further order of the Court, the Debtors may
enter into agreements granting to the Utility Companies
that have submitted Requests any additional assurance of
payment that Debtors, in their sole discretion,
determine is reasonable;
(4) If a Utility Company timely requests additional
assurance of future payment that the Debtors believe is
unreasonable, then, upon the request of the Utility
Company and after good faith negotiations by the
parties, the Debtors promptly will (i) file a motion
seeking determination of adequate assurance of future
payment with respect to the requesting Utility Company
and (ii) schedule that Determination Motion to be heard
by the Court at the next regularly- scheduled omnibus
hearing in these cases that is at least 20 days after
the filing of the Determination Motion.
(5) Any Utility Company that does not timely request
additional assurance as set forth above
automatically will be deemed, on a final basis, to have
adequate assurance of payment for future utility
services under section 366 of the Bankruptcy Code;
(6) If a Determination Motion is filed or a Determination
Hearing is scheduled, any Utility Company requesting
additional assurance will be deemed to have adequate
assurance of Payment for future utility services under
section 366 of the Bankruptcy Code without the need for
payment of additional deposits or other security until
the Court enters an order in connection with such
Determination Motion or Determination Hearing.
(USG Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
US INTERACTIVE: Files Plan of Reorganization in Wilmington
----------------------------------------------------------
U.S. Interactive, Inc. (OTC:USITQ) and its wholly-owned
subsidiary U.S. Interactive Corp. (Delaware) (USIC) filed a plan
of reorganization and disclosure statement with the U.S.
Bankruptcy Court for the District of Delaware in the Company's
Chapter 11 proceedings. Management of the Company anticipates
that the filing of the plan should pave the way for the
Company's emergence from bankruptcy in early Fall, subject to
creditor approval and Bankruptcy Court confirmation.
The plan is designed to improve the balance sheet and financial
strength of the Company. The Company's principal creditors have
advised management that they presently intend to support the
plan.
U.S. Interactive President and CEO, Vinay Deshpande said,
"filing this plan represents a major milestone in our bankruptcy
proceedings. We look forward to completing this restructuring
and emerging from bankruptcy. Our customers deserve our full
undivided attention."
The next steps in the process involve the Company obtaining
Court approval of the disclosure statement and, thereafter,
sending the plan and disclosure statement to all creditors and
stockholders who are entitled to vote on the plan seeking their
approval in accordance with the applicable bankruptcy rules.
About U.S. Interactive, Inc.
US Interactive(R) (OTC:USITQ) is an Internet professional
services company that provides customer management solutions to
the communications industry.
VIADOR INC.: Securities Subject To Nasdaq Delisting
---------------------------------------------------
Viador Inc.(TM) (Nasdaq: VIAD) received a letter from Nasdaq
indicating the Company has failed to comply with the minimum bid
price required for continued listing on the Nasdaq National
Market System as set forth in Nasdaq Marketplace Rule 4450
(a)(5) and that its securities are, therefore, subject to
delisting from the Nasdaq National Market System. The Company
has requested a hearing before a Nasdaq Listing Qualifications
Panel to review this determination and the Company's stock will
continue to trade on The Nasdaq National Market pending the
Panel's decision. While consideration to this appeal will likely
be given over the following months, there is no assurance the
panel will grant the Company's request for continued listing on
the Nasdaq National Market System.
The Company has made significant progress in streamlining its
organization, in attracting potential financing to meet its
future anticipated needs and in developing a strategy for
success in the rapidly growing Enterprise Information Portal
marketplace. The Company believes it will succeed in executing
these plans in a timeframe consistent with the Nasdaq appeal
process and will work in earnest to meet the requirements Nasdaq
has established for maintaining its listing on the National
Market System in the future. However, the Company cannot provide
any assurance that these plans, if executed, would be sufficient
to permit it to maintain its listing on the Nasdaq National
Market System.
To maintain its position as a leader in the growing Enterprise
Information portal market space, the Company is focusing all
resources on working with its customer base numbering over 370,
Original Equipment Manufacturers, prospects in the e-government
market arena and select geographic areas to ensure increased
success with Viador's product and service offerings.
Viador had recently announced key management changes, including
Dick Warmington, who joined Viador after a 33 year career with
Hewlett-Packard Company, as its Interim Chief Executive Officer
and Don Cochrane as its Executive Vice President Sales and
Marketing. A number of cost saving measures are being taken by
the Company in its goal to attain profitability and all
operational expenses not fully aligned with the Company's
strategies have been eliminated. The Company's goal is to
achieve profitability in Q4 of this year.
Viador requires additional financing to meet the above-described
goals. The Company previously announced it had a committed term
sheet for $10 million in new financing. While the potential
investors associated with this financing delayed the funding
timeframe, the Company decided to seek an equity infusion from
another source. $500,000 in bridge financing has already been
provided to Viador by the new group of investors to meet some
immediate cash flow requirements. The management team believes
that the Company will obtain additional new financing in the
next four weeks.
About Viador Inc.
Viador Inc. combines proven experience, technology and
partnerships to deliver self-service portals for leading
businesses and organizations worldwide. The Viador E-Portal
facilitates enterprise-wide productivity gains, including
increased revenue from new e-services, improved partner
communications, better customer relationships and retention, and
streamlined, paperless information distribution at lower cost.
Viador continues to receive industry recognition and awards
including being named to the Deloitte & Touche Fast 50,
CrossRoads 2000 A-List, Federal Computer Week's Top 10 Companies
to Watch list while the Viador E-Portal product family was named
Product of the Year by a CMP Media publication. Over 350 leading
companies have chosen Viador for their self-service portal
needs, including Amazon.com, Charles Schwab, the Federal
Aviation Administration (FAA), IBM, Nortel Networks, Shiseido
and Xerox. Viador is headquartered in Mountain View, Calif. For
more information, call 650-645-2000 or visit the Viador web site
at www.viador.com.
VLASIC FOODS: Walking Away From 230 Executory Contracts
-------------------------------------------------------
Judge Walrath authorized Vlasic Foods International, Inc. to
reject 230 executory contracts and unexpired leases that they
determined to be unnecessary, burdensome, and without value.
The rejection is effective as of the closing date of the
Purchase Asset Agreement with Pinnacle Foods Corp. to limit the
liability of the Debtors' estates under the rejected contracts.
The Court gives counterparties to these executory contracts 30
days to file a claim for rejection damages, if any, arising from
the rejection of the Contracts. (Vlasic Foods Bankruptcy News,
Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WARNACO GROUP: Honoring Pre-petition Shipping Charges
-----------------------------------------------------
The Warnaco Group, Inc. Debtors import some raw materials from
overseas, and manufacture and purchase some products overseas,
then import them into the United States.
As of the Petition Date, the Debtors were already indirectly
obligated to pay for certain imported goods that they have not
yet received because such goods were either overseas, in transit
to the United States, or awaiting clearance by the United States
Customs Service.
If they won't pay these obligations, the Debtors fear, it would
result in a severe disruption of their supply network and
endanger to their business operations.
So, the Debtors sought and obtained the Court's order
authorizing, but not directing, them to pay their import
obligations, shipping charges and warehouse charges that are
necessary to obtain the release of their goods. This includes
payment of incidental pre-petition import expenses like customs
duties, general order penalties, ocean freight, air freight,
trucking charges, brokerage fees, detention and demurrage fees,
surety bond premiums, and consolidation and deconsolidation
charges, etc.
Judge Bohanon also declares that vendors now have administrative
expense claims with priority under section 503(b) of the
Bankruptcy Code for undisputed obligations that stem from
outstanding orders relating to shipments of products and goods
received and accepted by the Debtors on or following the
petition Date. The Debtors are also authorized, but not
directed, to pay these undisputed obligations.
All banks and other financial institutions are directed to
receive, process, honor and pay any and all checks showing
amounts paid by Debtors pursuant to the Court's authority
whether presented before or after the Petition Date.
But, Judge Bohanon emphasizes, the Court's order does not mean
an assumption, or authorization to assume any contracts or other
agreements with any of the shippers, distributors, warehousemen,
vendors or parties to whom import obligations are owed.
The Debtors estimate that import obligations owed pre-petition
will not exceed $5,200,000 while pre-petition shipping charges
will not exceed $5,150,000. But the Debtors did not disclose
estimates for their outstanding obligations with vendors.
(Warnaco Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
WASHINGTON GROUP: Court Approves Renewed Bonding Capacity
---------------------------------------------------------
Washington Group International, Inc. announced that the Federal
Bankruptcy Court in Reno, Nevada, has approved an agreement in
principle between the company and Federal Insurance Company to
provide renewed bonding capacity.
The agreement provides Washington Group with bonding capacity
for joint venture projects and adequate bonding capacity for
those projects that the company intends to pursue alone. The
agreement has been consented to by the company's lenders under
its current working capital facility.
"A bonding facility like this one -- for a company working
through a restructuring such as ours -- is unprecedented in the
engineering and construction industry and sends a strong message
of support for Washington Group and the success of our Plan of
Reorganization," said Stephen G. Hanks, Washington Group
President and Chief Executive Officer.
"With this bonding capacity, we can return to an aggressive
business development strategy, especially in the growing
transportation infrastructure market," Mr. Hanks added. "This is
another positive step in our accelerated financial restructuring
and an important indicator of the financial community's
confidence in Washington Group's operational performance."
Washington Group International, Inc. is a leading international
engineering and construction firm. 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
Energy, environmental, government, heavy-civil, industrial,
mining, nuclear-services, operations and maintenance, petroleum
and chemicals, process, pulp and paper, telecommunications,
transportation, and water-resources.
WINSTAR COMM.: Selling 1,400 KDDI Shares To KDDI Corporation
------------------------------------------------------------
By motion, Winstar Communications, Inc. asks Judge Farnan to
approve the sale of their 1,400 shares in a Japanese
telecommunications company to KDDI Corporation for 350,000,000
Yen, which is equivalent to US$2,700,000.
Prior to Petition Date, the Debtors, KDDI Corporation, and
Sumitomo Corporation entered into a Shareholders' Agreement in
December 1998 to establish a joint venture in Japan that would
build and operate broadband fixed wireless networks within some
of its major cities.
Cz Czerner, senior vice-president for corporate development of
Winstar Communications, relates that they initially invested
US$3,000,000 for a subscription for 70 shares of common stock
representing 35% of all the common stock of the Company. On May
2000, Mr. Czerner adds, they invested an additional US$3,400,000
to maintain its 35% interest in the Company. Mr. Czerner says
the remaining equity in the Company is owned by KDDI at 55% and
Sumitomo Corporation at 10%. The Company operates in 4 Japanese
markets: Tokyo, Osaka, Nagoya and Fukuoka. It offers access to
the Company's broadband network to customers of KDDI.
KDDI is a local and long distance provider of voice, data,
Internet, and mobile telephone services in the business market,
Mr. Czerner explains. The Company also offers limited Internet
services, Mr. Czerner notes, but KDDI is not keen on expanding
this aspect of the business because they don't want it to
compete with their main business. Last year, the Company's
revenue reached US$2,500,000 with an EBITDA loss of
US$3,700,000.
To increase their liquidity and focus on their restructuring
efforts, the Debtors plan to sell all their shares in the
Company. But under the Shareholders Agreement, Mr. Czerner
relates, the KDDI and Sumitomo have the right to prohibit them
from selling their shares to a third party within the 5 years
following its acquisition. After the lapse of the 5-year period,
KDDI and Sumitomo are entitled to a right of first refusal if
the Debtors will sell its shares of the Company. Because of
these provisions in the Shareholders Agreement, Mr. Czerner
explains, they were limited from looking for buyers. Since
Sumitomo is not interested to buy their shares, KDDI
automatically becomes the purchaser.
KDDI offered to buy the Debtors' 1,400 shares for 350,000,000
Yen (or approximately US$2,700,000 after exchange fees). This
represents the Debtors' investment in the Company minus the
accumulated losses from the start of the joint venture. Mr.
Czerner says they are resigned to accept KDDI's offer since any
delay will only mean a reduction of KDDI's offer especially if
the Company continues to incur losses. In fact, KDDI already
tried to reduce their offer price to 320,000,000 Yen, Mr.
Czerner tells Judge Farnan. But, Mr. Czerner says, they insisted
that they already accepted the first offer and KDDI could no
longer take it back without losing face. KDDI promised to obtain
Sumitomo's written consent to the sale.
Before accepting KDDI's offer, the Debtors entered into
negotiations with other potential purchasers. Mr. Czerner
explains they were hoping KDDI would be spurred to increase its
offer or agree to a sale to a third party. The Debtors marketed
their shares to Asian telecom companies, selected private equity
funds, and to other broadband network providers offering
services similar to the Company, but to no avail.
On June 11, 2001, the Debtors and KDDI executed a sale and
purchase agreement with the terms:
Seller: Winstar International, Inc.
Purchaser: KDDI Corporation
Shares to be sold: 1,400 shares among all the issued and
outstanding shares (4,000) in KDDI
Winstar Corporation.
Purchase Price: 350,000,000 Yen
Representations and Warranties: The Seller is the sole
shareholder of the Shares and owns the Shares free and clear on
any lien, pledge or other encumbrances, except for the approval
that is required by the Bankruptcy Court. The Seller will
promptly apply for the approval of the Bankruptcy Court. Subject
to obtaining Bankruptcy Court approval, and except for any
approval required by Sumitomo Corporation, which KDDI
represents, that it has obtained or will obtain, the Seller has
all requisite corporate power and authority to enter into this
Agreement to consummate the transaction.
Governing Law: Japan
The Debtors believe that the sale price under the purchase
agreement reflect the present fair market value of the shares,
and is fair and reasonable.
Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor, in
Wilmington, Delaware, informs Judge Farnan that proceeds of the
sale will initially be applied to reduce the Debtors'
indebtedness under the DIP Credit Agreement, which will
hopefully result in greater availability for borrowing.
The Debtors appeal to Judge Farnan to approve the purchase
agreement as soon as possible to prevent deterioration in the
value of the shares. (Winstar Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ZANY BRAINY: Waterton Management Extends $115 Million Funding
-------------------------------------------------------------
Zany Brainy, Inc. (OTC Bulletin Board: ZANYQ), a leading
specialty retailer of high quality toys, games, books and
multimedia products, has signed an agreement pursuant to which
Waterton Management, LLC, or its affiliates, have agreed to fund
approximately $115 million which Zany Brainy will utilize in the
reorganization of its business operations and ultimate emergence
from bankruptcy. Zany Brainy filed for Chapter 11 bankruptcy
protection on May 15, 2001. The Official Committee of Unsecured
Creditors has indicated its support for the proposed
transaction, which is subject to Bankruptcy Court approval.
"In a market that is riddled by consolidation and liquidation,
one brand consistently stands out in terms of providing the
merchandise and shopping experience that kids love and parents
trust. That brand is Zany Brainy," said Kenneth J. Abdalla,
managing member of Waterton Management. "Zany Brainy's Chapter
11 filing was about liquidity. Zany Brainy has a strong brand,
excellent store locations, and hard working and talented
employees and management. Working with Tom Vellios, Zany
Brainy's President and Chief Executive Officer, and his team, we
see the opportunity to build on Zany Brainy's focus on providing
the foremost shopping experience for young families and becoming
an even greater force in the marketplace."
Upon receiving Bankruptcy Court approval, which is expected to
occur in August, Zany Brainy will transfer substantially all of
its employees, assets and certain liabilities, including post-
petition trade payables and store leases, to a newly created
subsidiary whose operations are not subject to the Bankruptcy
Court proceedings. Waterton Management will arrange for a new
secured loan facility for this subsidiary. Zany Brainy will
utilize cash received from the new subsidiary to pay off the
existing Debtor-in-Possession facility, pay certain other
expenses and obligations and, under a plan of reorganization,
fund payments to its unsecured creditors. The new operating
subsidiary will also retain substantial working capital at the
time of closing.
As soon as practicable after the closing, Zany Brainy intends to
file a plan of reorganization. Provided that Zany Brainy meets
its sales targets and other projections prior to closing, it is
anticipated that unsecured creditors will receive a distribution
on their pre-petition claims in the range of fifteen to twenty
cents on the dollar. Existing Zany Brainy shareholders are not
expected to receive any distribution.
"Our filing for Chapter 11 eight weeks ago was a strategic move
to address the Company's financial and operational issues in
order to restore the Company to health and position Zany Brainy
for the future," said Tom Vellios. "This transaction will
provide the Company and our associates with a great opportunity
to build on our leadership position and reach the full potential
of the Zany Brainy brand."
Vellios continued, "The fact that we were able to structure this
transaction in only two months is a real testament to the
strength of the brand, the supportive position of the trade and
commitment of the Waterton Management team. Almost immediately
after the filing, we were able to secure the hottest products of
the summer. And our associates did an excellent job of focusing
on service to minimize the impact of our Chapter 11 status on
our customers."
Alexander Cappello, Chairman and CEO of Cappello Group, Inc.,
financial advisors to Waterton Management stated, "We believe
that the restructured and recapitalized Zany Brainy will serve
as a strong platform, with the critical mass sufficient to be
the premier specialty retailer of educational and developmental
toys and games in the 12 years and under category. As a result
of this restructuring, Zany Brainy will emerge as a well-
capitalized and focused enterprise."
"I congratulate Tom Vellios and the Zany Brainy management team
for structuring a transaction that will allow Zany Brainy to
restructure prior to the critical holiday selling season. Demand
for high quality specialty toys continues to grow, and Zany
Brainy is extremely well positioned to be the leading
destination for toys that encourage creative, safe and fun play
for kids of all ages," said John Lee, President of Learning
Curve International and a Co-Chair of the Official Creditors'
Committee. "I support this transaction because it will provide
the resources to help Zany Brainy reach that goal and that
outcome is positive for all vendors targeting this market."
About Zany Brainy:
Zany Brainy, Inc. is a leading specialty retailer of high
quality toys, games, books and multimedia products for kids. The
Company combines distinctive merchandise offering with superior
customer service and in-store events to create an interactive,
kid-friendly and exciting shopping experience for children and
adults. The Company presently operates 187 stores in 34 states.
About Waterton Management, LLC
Waterton Management is a private investment entity located in
Los Angeles, CA.
*********
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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
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of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
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Copyright 2001. All rights reserved. ISSN: 1520-9474.
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