/raid1/www/Hosts/bankrupt/TCR_Public/011009.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, October 9, 2001, Vol. 5, No. 197
Headlines
360NETWORKS: UST Sets First Meeting of Creditors for October 11
360NETWORKS: Confirms Plan to File Q2 Results By Mid-October
AMC ENTERTAINMENT: S&P Raises Junk Ratings to B-
AMERIJET INT'L: Plan Contemplates New Equity & a Sale Leaseback
ASIANA AIRLINES: Fitch Places BB- Rating on Watch Negative
AUGMENT SYSTEMS: Reports Working Capital & Shareholder Deficits
AZTEC TECHNOLOGY: Files Chapter 11 Petition in Boston
BALANCED CARE: Expects to Pursue Recapitalization Measures
BRIDGE INFO: Lessor Group Wants to Escrow Reuters Sale Proceeds
CANADIAN RED CROSS: Executes Plan of Arrangement Effective Oct 5
CNET NETWORKS: Bleak Ad Climate Prompts S&P to Revise Outlook
COMDISCO INC: Seeks Approval of Stipulation with Bank of America
EXODUS COMMS: Court Okays Use of Existing Cash Management System
EXODUS COMMUNICATIONS: Begins Trading On OTCBB Effective Oct. 5
FEDERAL-MOGUL: Taps PricewaterhouseCoopers as Financial Advisors
FINOVA: Equity Panel Balks At Payment to GECC & Goldman Sachs
FRUIT OF THE LOOM: UST Wants Fried Frank Settlement Disclosure
GRUPO MINERO: Fitch Cuts Corporate Rating to BB from BBB-
INFINIUM SOFTWARE: Expects Savings From Completed Restructuring
LTV CORP: Litigation Removal Period Extended to March 25
LAND O'LAKES: S&P Drops Ratings On Aggressive Financial Profile
LERNOUT & HAUSPIE: Selling L&H Medical Solutions Interests
MCMS INC: Secures Court Approval of $49 Million DIP Facility
MAGNESIUM CORP: Court Approves $33 Million DIP Financing Pact
MARINER POST-ACUTE: NeighborCare To Acquire APS Unit for $42MM
MONTANA POWER: Annual Shareholders' Meeting Set For December 20
MPOWER COMMS: S&P Junks Ratings On Funding Gap In Business Plan
NABI: S&P Ups Junk Ratings After Antibody Collection Assets Sale
OPEN PLAN: Closes Sale of Remanufacturing Facility in Michigan
OXFORD AUTOMOTIVE: S&P Downgrades Ratings on Liquidity Concerns
PACIFIC GAS: Creditors to Receive $40 Million Note Placement Fee
RAMPART SECURITIES: Transfer of Accounts to IDA Firms Fails
SPALDING HOLDINGS: Ratings Junked After Interest Payment Missed
STERLING CHEMICALS: Lease Decision Period Extended to March 13
SUN HEALTHCARE: Turns to Gazes to Prosecute Avoidance Actions
THERMOGENESIS: Says Continuing Losses May Lead to Staff Cuts
USG CORP: Unsecured Panel Hires Duane Morris As Local Counsel
UNITED PETROLEUM: Must Raise New Capital & Restructure Operation
VERADO HOLDINGS: Huge Hosting Acquires Shared Web Hosting Assets
VLASIC FOODS: Wants to Estimate Claims & Establish Reserve
WARNACO GROUP: Wants Plan Filing Deadline Extended to February 6
WHEELING-PITTSBURGH: Court Okays GRC to Sell Brook County Assets
WINSTAR COMMS: Gets Okay to Reject Citizens Leasing Master Lease
*********
360NETWORKS: UST Sets First Meeting of Creditors for October 11
---------------------------------------------------------------
The United States Trustee for Region 2 will convene a meeting
of 360networks inc.'s Creditors pursuant to 11 U.S.C. Sec.
341(a) on October 11, 2001 at 4:00 p.m., at 80 Broad Street,
Second Floor in New York City. All creditors are invited, but
not required, to attend. This Official Meeting of Creditors
offers the one opportunity in a bankruptcy proceeding for
creditors to question a responsible office of the Debtor under
oath. (360 Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
360NETWORKS: Confirms Plan to File Q2 Results By Mid-October
------------------------------------------------------------
360networks, inc. confirmed that the company expects to file its
second quarter 2001 financial statements and the related
management's discussion and analysis by mid October 2001.
This delay is due to additional requirements related to the
complexity of the company's various creditor protection and
insolvency proceedings.
In compliance with the provisions of the Alternate Information
Guidelines contained in the Ontario Securities Commission Policy
57-603, 360networks is issuing a default status report every two
weeks until the second quarter results are issued.
360networks offers optical network services to
telecommunications and data-centric organizations in North
America. The company's fiber optic network includes terrestrial
segments and undersea cables in North America and South America.
On June 28, 2001, the company and several of its operating
subsidiaries filed for protection under the Companies' Creditors
Arrangement Act (CCAA) in the Supreme Court of British Columbia.
The company's principal U.S. subsidiary, 360networks (USA) inc.
and 22 of its affiliates concurrently filed for protection under
Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy
Court for the Southern District of New York. The company has
also instituted insolvency proceedings in Europe.
For more information about 360networks, visit http://www.360.net
AMC ENTERTAINMENT: S&P Raises Junk Ratings to B-
------------------------------------------------
Standard & Poor's raised its ratings on AMC Entertainment Inc.
and removed them from CreditWatch where they were placed with
positive implications on June 8, 2001. The current outlook is
stable.
The rating actions are based on Standard & Poor's view that
AMC's financial condition and earnings prospects are now on a
more stable footing.
The ratings reflect AMC's modern theater circuit and the
improved financial flexibility resulting from the preferred
stock issued earlier this year. Ratings also incorporate the
company's still aggressive financial profile and the weak, but
stabilizing, industry operating environment.
AMC is the largest movie exhibitor in the U.S. based on revenue
and the second-largest based on screen count. It has one of the
industry's most modern theater circuits due to its rapid
expansion and consistent disposition activity since 1995.
Nonetheless, a surplus of screens has hurt the industry
operating environment, especially in AMC's highly populated
markets. The company's profits were flat from fiscal year-end
April 1, 1997, through the 12 months ending December 31, 2000,
despite a $20 million reduction in annual corporate expenses and
a 40% increase in screens over this period.
AMC's profitability improved considerably in the past two
quarters driven by the strong industry box office, improved
results at its existing theaters, and the closing of
underperforming theaters. AMC's asset quality should be a
benefit as the operating environment slowly improves once excess
screens are gradually taken off-line in the next few years. No
significant improvement is expected in the near term.
Financial flexibility improved considerably as a result of AMC's
repayment of bank debt with proceeds of $250 million in
preferred stock in April 2001. This eliminated the near-term
risk of a financial covenant violation and should ensure
sufficient liquidity to complete existing construction
commitments. PIK dividend provisions will alleviate pressure on
the company's historically negative discretionary cash flow.
Nonetheless, the preferred stock will require cash payments in
2008 and AMC might feel pressure to pay in cash after three
years or to refinance the stock after five years in order to
avoid dilution.
EBITDA, exclusive of theater closure expenses, increased
significantly to $131.5 million in the 12 months ending June
2001 versus $109.4 million in the 12 months ending December
2000. Still, AMC's financial profile remains weak on a lease-
adjusted basis due to its heavy reliance on lease financing.
EBITDA plus rent (EBITDAR) coverage of interest expense plus
rent is thin at 1.2 times and lease adjusted debt to EBITDAR is
high at 5.7x. Both ratios are weaker if preferred dividends and
principal are considered. Discretionary cash flow is likely to
remain negative in the current fiscal year, although it should
improve as a result of increasing profits, lower interest rates,
the PIK preferred dividends, and a reduction in capital
commitments.
Still, AMC's capital expenditures remain high in Standard &
Poor's opinion, given the poor operating environment and the
company's high leverage. AMC may purchase a bankrupt competitor,
GC Companies; however, the likelihood and structure of such a
transaction are uncertain and such a purchase would require a
full review of the transaction terms and assets purchased to
determine the effect on AMC's credit profile.
Outlook: Stable
Standard & Poor's expects that AMC's profits and credit measures
will improve gradually as a result of improving profitability,
slowing expansion, and the more stable and slowly improving
industry operating environment.
Ratings Raised & Removed From CreditWatch
Ratings
AMC Entertainment Inc. To From
Corporate credit rating B- CCC+
Subordinated debt B- CCC-
AMERIJET INT'L: Plan Contemplates New Equity & a Sale Leaseback
---------------------------------------------------------------
Bankrupt Amerijet International Inc., which had been trying to
find debtor-in-possession (DIP) financing, was expected to file
a reorganization plan Thursday that included the sale of two-
thirds of the company to HIG Capital, a Miami-based private
equity firm, TheDeal.com reported.
The Miami Herald reported the cargo airline would sell off 66
percent of itself to HIG for an immediate cash infusion of $1
million. The agreement also calls for HIG to buy Amerijet's
Fort Lauderdale, Fla., headquarters building for $2 million and
lease it back to the airline.
HIG also said it will assist in obtaining new credit to repay
Amerijet's secured lender, Bank of America Corp., $5.5 million
and provide additional working capital. If Judge A.J. Cristol
in the U.S. Bankruptcy Court in Miami approves the plan,
Amerijet could emerge from bankruptcy within 30 days. (ABI
World, October 5, 2001)
ASIANA AIRLINES: Fitch Places BB- Rating on Watch Negative
----------------------------------------------------------
Fitch, the international rating agency, has placed the 'BB-' (BB
minus) Senior Unsecured Debt rating of Asiana Airlines and the
'BB' rating of OZ Receivables PLC, the future flow
securitization deal backed by Asiana's airline ticket
receivables from its trans-Pacific routes, on Rating Watch
Negative.
The disruption of air travel in the US as of 11 September
affected not only US carriers, but also Asian flag carriers,
whose international flights to the US account for a significant
portion of their revenues. Asian airlines resumed service to the
US, but the temporary shutdown of American airports during the
week of the 11th was costly, adding to the expected losses
because of sluggish passenger and cargo traffic due to the
economic downturn.
Asiana Airlines, which derives 22% of its income from trans-
Pacific routes, put its carrier's losses due to the US
cancellation at KRW5.4 billion (US$4.15 million).
Airlines are expected to adjust to rising costs, increased
safety demands, and falling passenger numbers. According to
Asiana Airlines, the overall load factor for September decreased
by 3.6% compared to September 2000, and the load factor for the
period from September 12 to September 23 dropped by 5.8%
compared to the period from September 1 to September 10 before
the terrorist attack. Asiana Airlines estimates that revenue
would contract by approximately KRW6 billion (US$4.6 million) a
month in the future.
Many airlines are now at risk of being grounded by the sudden
increase in insurance premiums. The South Korean government said
it would let its national carriers pass war-risk premiums of
USD1.25 per passenger on to customers, which insurers will
introduce starting 1 October.
Airline insurers revised their policies for third-party damage
by limiting the coverage to only US$50 million. The South Korean
government said that it would guarantee the coverage that is
over the US$50 million limit up to US$1.5 billion.
Before the attack in the US, Asiana Airlines said that it
terminated its code sharing with American Airlines on 18 August
due to a US safety rating downgrade for all Korean airlines.
Asiana's annual revenues from the code-sharing agreement
accounted for US$12 million in passenger sales and USD4 million
in cargo sales.
The termination of code sharing with American Airlines is not
likely to affect the securitization transaction since the code
share revenue is not subject to the securitization program. The
transaction securitized sales receivables of the tickets that
passengers purchase through travel agents or Asiana ticketing
offices in the US using their credit cards.
Credit card companies such as Visa, Master, American Express,
and Diners directly remit the cash flow to the offshore account
for the trust. The code share receivables are settled through a
mechanism that is outside the credit card settlement process.
The transaction requires a minimum debt service coverage ratio
of 2.5x. In the event cash flows decrease below this minimum
coverage level, collections on the receivables may be retained
by the trust for payment to noteholders. The debt service
coverage ratio for the 2001 July, August, and September was
5.07x, 4.89x, and 4.59x, respectively.
Fitch will continue to monitor the credit rating of Asiana
Airlines and OZ Receivables PLC and will issue further updates
as developments unfold.
AUGMENT SYSTEMS: Reports Working Capital & Shareholder Deficits
---------------------------------------------------------------
Augment Systems Inc. has incurred substantial losses since
inception and was engaged primarily in product development.
The Company has funded its losses primarily from a combination
of debt and equity financings. In addition, at June 30, 2001,
the Company had a working capital deficiency of $177,075 and a
stockholders' deficit of $177,075.
Also, management's initial concept to be a business-to-business
e-commerce venture, the Right2web business model, is subject to
various risks including intense competition, need for
substantial funds and qualified personnel, internet security
concerns, potential technological difficulties, development of
new technology, reliance on key personnel, and market conditions
for internet companies.
In the past few months, because of the inherent risks, the
Company has decided not to pursue Right2Web's business model.
However, the Company will pursue, subject to financing, its
original concept of developing and distributing fiber optic
printed circuit boards in the publishing and printing industry.
The Company will also seek to acquire companies in related
fields.
The Company's shortage of capital, uncertainty of its business
plan and insufficient qualified personnel raises substantial
doubt about the Company's ability to continue as a going-
concern.
AZTEC TECHNOLOGY: Files Chapter 11 Petition in Boston
-----------------------------------------------------
Aztec Technology Partners, Inc. (OTC Bulletin Board: AZTC) said
that the company and its operating subsidiaries had filed
voluntarily for financial restructuring under Chapter 11 of the
U.S. Bankruptcy Code, after its bank lenders refused to grant an
additional extension of the deadline to renegotiate the
repayment of its debt and made a demand for payment in full of
the loan.
The filing, made in U.S. Bankruptcy Court in Boston, seeks
authority to continue operating without interruption.
Peter A. Pelletier, interim chief executive officer, said, "We
had worked hard for months to reach a mutually acceptable
restructuring of our bank debt. However, once the banks ended
negotiations, we determined that it was in the best interests of
our customers, suppliers, and employees to seek bankruptcy
protection. The filing is a step towards enabling us to
continue delivering to our customers leading edge e-Solutions
through Blueflame; voice and data services through Aztec
International; and e-Integration services through Aztec New
England"
Aztec's debt came due April 30 and totaled $51 million at the
time. The company, which currently owes the banks approximately
$40 million, was given several forbearances of the deadline
through September 28, 2001 while restructuring negotiations were
underway.
Aztec Technology Partners, Inc. is a single-source provider of
e-Solutions and e-Integration products and services for middle
market and Fortune 1000 companies across a broad range of
industries. Aztec helps clients throughout the U.S. gain
competitive advantages by exploiting the power of intranet,
Internet and extranet technologies. For further information,
visit http://www.aztectech.com
BALANCED CARE: Expects to Pursue Recapitalization Measures
----------------------------------------------------------
Balanced Care Corporation (Amex: BAL), an integrated operator of
assisted living communities and related services, reported
operating results for the fourth quarter and fiscal year ended
June 30, 2001.
Fourth quarter Financial Results
Fourth quarter revenues totaled $13.7 million compared to
revenues of $11.7 million for the comparable quarter in the
prior year, a 17% increase. Assisted living revenues increased
by $1.8 million, a 20% increase over the prior year fourth
fiscal quarter.
The net loss for the FY 2001 fourth quarter was $17.7 million,
compared to a net loss of $9.6 million for the same quarter in
the prior year. The higher loss in the FY 2001 fourth quarter
is primarily attributable to a charge of $8.7 million associated
with the write-down of certain assets. Excluding this one-time
charge, the loss for the fourth quarter ended June 30, 2001
would have been $9.0 million, which represents a $0.6 million
improvement compared to the prior year's loss of $9.6 million.
The improvements in the FY 2001 fourth quarter over the
corresponding FY 2000 quarter (excluding the charge for write-
down of certain assets) resulted from improved operating
performance of assisted living operations and the reduction in
losses from termination of development activities, which were
partially offset by increased interest and purchase option
expenses.
Year-End Financial Results
Revenues for FY 2001 were $56.8 million compared to revenues of
$60.7 million in the prior fiscal year. The lower revenues in
the most recent fiscal year are due to lower patient services
revenues attributable to the Company's sale of its Missouri
operations early in the third quarter of FY 2000. Assisted
living revenues grew from $31.6 million in the prior fiscal year
to $46.3 million for the year ended June 30, 2001, a 46%
increase.
The net loss for FY 2001 increased to $46.1 million from $21.6
million in the prior year, due primarily to the write-down of
certain assets, higher provision for losses on shortfall funding
agreements, higher depreciation and amortization attributable to
real estate acquisitions in FY 2000 and financial restructuring
expenses. Excluding the charges associated with the write-down
of certain assets and financial restructuring expenses during FY
2001, the net loss for the year was $29.6 million, compared to
the prior year's loss of $21.6 million.
Financial Restructuring
The Company is finalizing various agreements with its landlords
regarding the restructuring of the Company's lease obligations
to obtain covenant modifications, purchase options, rent
reductions/deferrals/abatements and/or facility transfers that
reflect the current economics of the facilities.
As part of the proposed restructuring plan, the Company expects
to proceed with a recapitalization strategy including a rights
offering of approximately $55.0 million and a bridge loan from
IPC, the Company's 53% stockholder.
Completion of the Company's restructuring and recapitalization
plans are contingent upon the execution of definitive agreements
with various third parties and the receipt of all necessary
approvals.
Balanced Care operates 57 facilities with system-wide capacity
of 3,961 residents. Subsequent the fiscal year end, the Company
completed construction and opened an additional facility,
bringing facilities under operation to 58 with resident capacity
of 4,063.
Balanced Care Corporation utilizes assisted living facilities as
the primary service platform to provide an array of health care
and hospitality services, including preventive care and
wellness, Alzheimer's/dementia care and, in certain markets,
extended care services.
As of end of June 2001, the Company's current liabilities
totaled $101.9 million, while its current assets amounted to
only $7 million. The company is insolvent with a debt ratio of
1.1 to 1.
BRIDGE INFO: Lessor Group Wants to Escrow Reuters Sale Proceeds
---------------------------------------------------------------
General Electric Capital Corporation holds secured claims
against certain of Bridge Information Systems, Inc.'s assets
based upon the Master Lease Agreement dated March 1999 and its
related schedules and guaranties between the Debtors and GE
Capital, according to David A. Warfield, Esq., at Husch &
Eppenberger, LLC, in St. Louis, Missouri.
Mr. Warfield relates that Highland Capital Management, L.P.,
Heller Financial Leasing, Inc., First Bank Pilgrim Prime Rate
Trust, and Transamerican Equipment Financial Services
Corporation also hold secured claims against certain of the
Debtors' assets based upon their participation in the Master
Lease Agreement. The Debtors owe the Lessor Group approximately
$42,389,186 in principal plus interest, fees and other expenses,
Mr. Warfield tells the Court.
The Lessor Group's collateral consist of, among other things:
(i) computer and other high technology equipment, including
servers and other similar type equipment that is indispensable
to the Debtors' day-to-day operations, and
(ii) an assignment of the Debtors' right to receive all rent
and other sums payable by SAVVIS Communications Corp.
under the Sublease Agreement dated February 2000.
When the Debtors moved to sell all of their assets to Reuters,
Mr. Warfield recounts, the Lessor Group filed an objection,
which was withdrawn when the parties reached certain agreements.
Two of the most salient terms of the agreement were:
(A) SAVVIS would continue to make all sublease payments into
an escrow account, pending the closing of the transaction with
Reuters. The Debtors further announced that they would arrange
for the establishment of the escrow account into which payments
would be made; and
(B) The Lessor Group's liens would attach to the sale
proceeds to the extent of $42,389,186 and that all parties would
reserve their rights with respect to the issues raised in the
Lessor Group's objection to the Sale Motion.
Since entry of the Sale Order, Mr. Warfield reports, several
material terms of the settlement have not been fulfilled. Mr.
Warfield informs the Court that SAVVIS has failed to make all of
the required sublease payments. As a result, Mr. Warfield says,
there is a shortfall of approximately $3,000,000 that should
have been available to the Lessor Group.
Consequently, Mr. Warfield notes, the Debtors, the Pre-Petition
Lenders, the Lessor Group, and other parties in interest have
not finalized all of the documentation necessary to implement
the terms of the settlement previously reached.
Mr. Warfield reminds Judge McDonald that the Sale Order
specifically states that the sale of the assets to Reuters shall
be free and clear of all liens and that "absent further order of
the Court upon consent of the parties," the asserted liens of
the Lessor Group shall attach to and have a first priority claim
with respect to $42,389,186 of the net proceeds of sale and
shall be maintained in a segregated, interest bearing account,
pending further order of the Court.
Thus, GE Capital, Heller, First Bank, and Transamerican request
that the Court enter a separate order authorizing and directing
the Debtors to establish an escrow account into which the sum of
$42,389,186 shall be deposited pending further order of the
Court. (Bridge Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
CANADIAN RED CROSS: Executes Plan of Arrangement Effective Oct 5
----------------------------------------------------------------
The Canadian Red Cross Society announced that it has
successfully completed its restructuring and emerged from Court
protection.
The Society's Plan of Compromise and Arrangement, which was
approved by creditors and transfusion claimants in August of
last year, has been implemented effective October 5, 2001.
CNET NETWORKS: Bleak Ad Climate Prompts S&P to Revise Outlook
-------------------------------------------------------------
Standard & Poor's revised its outlook on CNET Networks Inc. to
negative from stable. All ratings on the company are affirmed.
The outlook revision reflects an increasingly difficult
advertising environment that is limiting the company's prospects
for revenue growth. In addition, business fundamentals that were
already challenged are being negatively affected by the
terrorist attacks in the U.S. on September 11, 2001, that are
intensifying concerns about an economic slowdown and a further
downturn in advertising spending.
CNET is particularly vulnerable given that it receives a
significant portion of its revenue from high-tech related
advertising, an especially weak sector amid a general
retrenchment in online advertising. Limited visibility due to
concerns of a cyclical and secular downturn in the on-line
advertising industry, slower than expected sales among several
major technology companies that could cause ad spending to be
reduced or deferred, and the ongoing evolution of the Internet
as a viable media channel could further pressure revenue growth
expectations.
The ratings on CNET continue to reflect high risks from a
competitive and evolving marketplace, challenges surrounding
expansion beyond core computer technology bases, relatively
heavy promotional spending, and historically weak profitability.
These factors are somewhat mitigated by CNET's established
position as a leading on-line publisher, and healthy cash
position that provides flexibility at the rating level should
operating conditions continue to deteriorate.
CNET connects buyers, sellers, and suppliers in the information
technology supply chain through its advertiser-supported on-line
news, product reviews, and data about computers and information
technology. Its brand portfolio includes CNET, ZDNET, mySimon,
News.com, Computer Shopper Magazine, CNET Radio, and CNET
Channel Services. CNET had more than 38 million unique users at
June 30, 2001, representing a 26% increase year-over-year.
Still, revenue growth trends were negative on both year-over-
year and sequential comparisons.
CNET faces substantial competition for consumers' and
advertisers' interest in on-line services, print media, and
television, as well as added pressure from a weakening
advertising environment and participation in an unproven
marketplace. There is considerable uncertainty as to whether the
company can attain critical mass given the competitive landscape
and evolving environment.
Revenue and cash flow growth are vulnerable to reductions in ad
spending due to general economic conditions, and the sales and
product cycles of the information technology sector. The company
generates both net losses and negative discretionary cash flow.
As of June 30, 2001, the company had about $275 million in cash
and cash equivalents, providing support for the rating. Debt
outstanding totaled about $185.4 million, consisting primarily
of CNET's $173 million subordinated notes issue due 2006.
Outlook: Negative
Ratings are supported by CNET's cash balances, which provide
liquidity amid weakening general economic conditions and
advertising spending trends. Still, the ratings could be lowered
should operating conditions further deteriorate and reduce the
company's financial flexibility.
Ratings Affirmed
CNET Networks Inc. Ratings
Corporate credit rating B-
Subordinated debt CCC
COMDISCO INC: Seeks Approval of Stipulation with Bank of America
----------------------------------------------------------------
Comdisco, Inc. asks Judge Barliant to put his stamp of approval
on a Stipulation with Bank of America.
Felicia Gerber Perlman, Esq., at Skadden, Arps, Slate, Meagher &
Flom, relates the Debtors and Bank of America are parties to a
Master Facility Agreement dated April 2000. Under the
Agreement, Ms. Perlman explains, Comdisco delivered to Bank of
America the sum of $31,885,641 to be held as cash collateral for
letters of credit issued. Such funds were deposited into an
account maintained with the name of "Bank of America, N.A. for
the benefit of Comdisco, Inc., Cash Collateral Account", Ms.
Perlman notes.
As Letters of Credit were presented to Bank of America, Ms.
Perlman says, Bank of America would debit the Account for the
amount of the Letter of Credit draw and the Letter of Credit
drawing fees.
As of Petition Date, Ms. Perlman informs the Court that Bank of
America ceased drawing funds from the Account to pay Letters of
Credit drawn on Bank of America pending a Court order.
Under the Agreement, Ms. Perlman notes that upon the funding of
any letter of credit that is not reimbursed, such funding shall
be deemed a loan to Comdisco and bear interest in the amount of
prime plus 3%. According to Ms. Perlman, the interest rate paid
on the Cash Collateral Account is less than prime plus 3%.
Ms. Perlman outlines the letters of credit that have been
presented since Petition Date.
Letter of Credit Orig. Amount Draw Date Draw Amount
---------------- ------------ --------- -----------
LC# 7403167 - Issued on $1,846,677 8/17/01 $611,256
4/7/00 in the name of
Stag Investor 2000, Ltd.
LC# 7404456 - Issued on 1,202,394 8/07/01 1,202,394
12/27/00 in the name of
Speiker Properties, L.P.
LC# 7404266 - Issued on 577,342 8/24/01 577,342
10/26/00 in the name of
The Irvine Company
LC# 7404150 - Issued on 5,000,000 8/28/01 5,000,000
9/21/00 in the name of
Renco Investment Company
Since the Petition Date, Ms. Perlman says, Letter of Credit
#7403708 issued to Civic Center Development in the face amount
of $444,887 has expired.
As of the Petition Date, Ms. Perlman says, amounts then credited
to the Cash Collateral Account exceeded in the undrawn face
amount of Letters of Credit then outstanding by an amount in
excess of $500,000.
At the same time, Ms. Perlman emphasizes that Bank of America is
an oversecured creditor as to the letter of credit obligations
and the Account. According to Ms. Perlman, Letters of Credit
will continue to be presented to Bank of America on a regular
basis.
The Debtors believe that it is in the best interest of their
estates and creditors that the Cash Collateral be used to pay
the Letters of Credit as drawn instead of incurring the interest
cost resulting from a failure to promptly reimburse Bank of
America for such amount, according to Ms. Perlman. Thus, Bank
of America and the Debtors have agreed to a process whereby:
when Letters of Credit are presented, Bank of America shall
debit the Account for amounts drawn under the Letter of Credit,
plus (to the extent of any then-unapplied Over-
Collateralization) its applicable fees.
Ms. Perlman reminds the Court that the use of cash collateral is
authorized if an entity that has an interest in such cash
collateral consents. In this case, Ms. Perlman says, Bank of
America has consented to the use of the Cash Collateral.
The Stipulation, Ms. Perlman explains, is necessary to modify
the automatic stay and to effectuate the terms of this
agreement. (Comdisco Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
EXODUS COMMS: Court Okays Use of Existing Cash Management System
---------------------------------------------------------------
Exodus Communications, Inc. sought and obtained an order from
the Court authorizing continued use of their existing cash
management systems, pending a hearing on the Debtors' "first-
day" motions in its cases.
Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP in
Wilmington, Delaware, relates that prior to the commencement of
these cases, the Debtors used a highly-automated and integrated
centralized cash management system used to collect, transfer and
disburse funds generated by their operations and to accurately
record all such transactions as they are made.
The Debtors' Cash Management System has been constructed to
provide a substantially integrated system for the Debtors'
operating group, Mr. Chehi says, which allows for an integrated
method for revenues and expenses to be collected, paid and
accounted for.
Mr. Chehi relates that cash used to fund operating expenditures
of the Debtors comes largely from the daily collection of
accounts receivable. Receivables from third parties are
collected primarily in a lockbox depository account, that funds
a concentration account, that, in turn, funds a master
concentration account.
In addition, some receivables are collected via wire transfer
directly into the Master Concentration Account. The Master
Concentration Account is utilized to fund the Parent Company
payroll and other disbursements through designated payroll and
controlled disbursements accounts, Mr. Chehi explains, as well
as investment and money market accounts where excess cash is
held to provide a return to the Debtors on such cash.
Mr. Chehi informs the Court that the Master Concentration
Account also is used to fund Parent Company travel reimbursement
and employee benefits accounts. In addition, both of the
concentration accounts fund overnight investment sweep accounts
if levels of cash above certain amounts are deposited into the
concentration accounts.
Mr. Chehi states that the Cash Management System is highly
automated and computerized and includes the necessary accounting
controls to enable the Debtors, as well as creditors and the
Court, if necessary, to trace funds through the system and
ensure that all transactions are adequately documented and
readily ascertainable. Mr. Chehi asserts that the Debtors'
cash management procedures are ordinary, usual and essential
business practices, and are similar to those used by other major
corporate enterprises. The Cash Management System provides
significant benefits to the Debtors, including the ability to:
(a) control corporate funds centrally,
(b) segregate the respective cash flows of the Debtors,
(c) invest idle cash,
(d) ensure availability of funds when necessary, and
(e) reduce administrative expenses by facilitating the
movement of funds and the development of more timely
and accurate balance and presentment information.
Mr. Chehi tells the Court that the operation of the Debtors'
businesses requires that the Cash Management System continue
during the pendency of these chapter 11 cases. Requiring the
Debtors to adopt new cash management systems at this critical
stage of these cases would be expensive, create unnecessary
administrative burdens, and be much more disruptive than
productive, adversely impacting the Debtors' ability to
reorganize.
Consequently, Mr. Chehi contends that maintenance of the
existing Cash Management System is in the best interests of
all creditors and other parties in interest. (Exodus Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
EXODUS COMMUNICATIONS: Begins Trading On OTCBB Effective Oct. 5
---------------------------------------------------------------
Exodus Communications(R), Inc. (OTC Bulletin Board: EXDSQ)
announced the company's common stock began trading on the OTC
Bulletin Board (OTCBB), effective as of the opening of business
on October 5, 2001.
The OTCBB is a regulated quotation service that displays real-
time quotes, last-sale prices and volume information in over-
the-counter (OTC) equity securities. OTCBB securities are
traded by a community of market makers that enter quotes and
trade reports. The company's common stock will trade under the
ticker symbol of EXDSQ.
Exodus delisted voluntarily from the Nasdaq after trading of its
common stock was suspended on September 26, 2001. The Company
filed recently to reorganize under Chapter 11 of the U.S.
Bankruptcy Code.
Exodus Communications is the leading provider of managed hosting
services for enterprises with mission-critical Internet
operations. The company offers sophisticated system and network
management solutions along with professional services to provide
optimal performance for customers' Internet infrastructures.
Exodus manages its network infrastructure via a worldwide
network of Internet Data Centers (IDCs) located in North
America, Europe and Asia Pacific. More information about Exodus
can be found at http://www.exodus.net
FEDERAL-MOGUL: Taps PricewaterhouseCoopers as Financial Advisors
----------------------------------------------------------------
Federal-Mogul Corporation and its debtor-affiliates ask the
Court for permission to employ PricewaterhouseCoopers LLP as
their financial advisors and claims management consultants
James J. Zamoyski, Esq., the Debtors' Senior Vice President and
General Counsel, tells the Court that PwC has a wealth of
experience in providing financial advisory and claims management
services in restructurings and reorganizations and enjoys an
excellent reputation for services it has rendered in large and
complex chapter 11 cases on behalf of debtors and creditors
throughout the United States.
The Debtors submit that PwC's services are necessary to enable
them to maximize the value of their estates and to reorganize
successfully.
The Debtors believe that PwC is well qualified and able to
provide services to the Debtors in a cost-effective, efficient,
and timely manner. Mr. Zamoyski relates that PwC has provided
various financial advisory services to the Debtors since
December 2000 and is familiar with the Debtors and their
businesses. In addition, PwC has provided internal audit support
services, and various tax advisory support services to the
Debtors since the mid-1990's.
PwC will provide such financial advisory and claims management
services as PwC and the Debtors shall deem appropriate and
feasible in order to advise the Debtors in the course of these
chapter 11 cases. Specifically, PwC will:
(A) assist in analyzing various elements of the business,
operations, properties and financial condition of the
Debtors as necessary and feasible;
(B) assist in the preparation of all reports or filings as
required by the Bankruptcy Court or the Office of the United
States Trustee, including any monthly operating reports and
Schedules of Assets and Liabilities or Statements of
Financial Affairs and Executory Contracts;
(C) provide advisory assistance in various negotiations the
Debtors have with bank lenders, bondholders and any
creditors' or equity committees;
(D) assist in the preparation of financial information for
distribution to creditors and other parties in interest,
including cash receipts and disbursements analyses, legal
entity financial statements, analyses of various asset and
liability accounts, and analyses of proposed transactions
for which Bankruptcy Court approval is sought;
(E) assist, as requested, with the development and promulgation
of the Debtors' Plan of Reorganization;
(F) assist in the preparation of financial information and
documents necessary for confirmation of these chapter 11
cases, including information contained in the disclosure
statement;
(G) consult with and provide advisory assistance related to the
development of strategic business plans;
(H) attend meetings of the Debtors' management and counsel
focused on the coordination of resources related to the
ongoing bankruptcy reorganization effort;
(I) assist the Debtors in the identification of and, to the
extent requested, consultation and assistance related to the
implementation of internal strategic and cost reduction
plans;
(J) assist, as requested, with the development of the Debtors'
liquidation analysis;
(K) assist in the review or development of labor and employee
compensation arrangements;
(L) provide litigation consultation services and expert witness
testimony if requested by the Debtors;
(M) attend meetings of the Debtors' management and counsel
related to human resources issues as requested;
(N) advise and assist the Debtors regarding tax planning issues,
including calculating net operating loss carry forwards and
the tax consequences of any proposed plans of
reorganization, and assist in the preparation of any
Internal Revenue Service ("IRS") ruling requests regarding
the future tax consequences of alternative organization
structures;
(O) assist the Debtors in responding to and tracking calls
received from suppliers in each of four call centers in the
United States and England including the production of
various management reports reflecting call center activity;
(P) assist the Debtors in aspects relating to a bar date,
including review of notice plan and notice materials,
consult on proof of claim form development, determination of
claimant notice population, oversight of the claims handling
process, and establishment of claims docketing protocols;
(Q) assist the Debtors in claims analysis and reporting
including plan classification modeling and claimant product
exposure analysis;
(R) assist with the preparation of objections to invalid claims;
(S) assist the Debtors with selection of and oversight of a
tabulation agent, ballot design, development of tabulation
protocols, and tabulation reporting;
(T) assist the Debtors with plan distribution activities; and
(U) provide such other financial advisory and claims management
services consistent with PwC's role in this matter as may be
required or requested by the Debtors or their counsel.
Mr. Zamoyski relates that PwC will also continue to provide
internal audit services to the Debtors, which are not directly
related to the administration of the bankruptcy case but are
standard support services that companies use to ensure that
their accounting controls and procedures are functioning as
intended.
PwC also continues to provide the Debtors with Vendor Call
Center services directly related to the proceedings, given the
nature of these tasks and the expected volume of supplier calls.
The Debtors request that the Court allow the PwC internal audit
group and the Call Center Group to submit only summary
documentation within the overall PwC fee applications that
provides the hours incurred by level and descriptions of the
categories of tasks that were completed by the group during the
applicable time period in lieu of providing detailed time
records for the individual internal audit professionals.
Mr. Zamoyski informs the Court that PwC has received various
retainers in connection with preparing for the filing of these
cases and for its proposed post-petition work on behalf of the
Debtors.
The residual unapplied retainer totals approximately
$100,000, and will constitute a general retainer for post-
petition services and expenses which would be applied against
the initial post-petition billing after approval from this
Court.
Mr. Zamoyski states that PwC will calculate its fees for
professional services in these matters by reference to the
standard hourly rates for these services for the professionals
contemplated to be involved in this matter:
Partners $500 - 625
Managers/ Directors 325 - 495
Associates/ Sr. Associates 175 - 325
Administrative Support/Paraprofessionals 85 - 150
Pursuant to certain Dispute Resolution Procedures, Mr. Zamoyski
relates that any controversy or claim in connection with this
Application shall be brought in the Bankruptcy Court or the
District Court for the District of Delaware if such District
Court withdraws the reference, and the parties to this
Application consent to the jurisdiction and venue of such court
as the sole and exclusive forum for the resolution of such
claims, causes of actions or lawsuits.
Mr. Zamoyski adds that the Procedures stipulate that the parties
to this Application hereby waive trial by jury, such waiver
being informed and freely made.
If the Bankruptcy Court or the District Court if the reference
is withdrawn does not have or retain jurisdiction over the
foregoing claims and controversies, Mr. Zamoyski says that the
parties to this Application agree to submit first to non-binding
mediation; and, if mediation is not successful, then to binding
arbitration, in accordance with the dispute resolution
procedures. Judgment on any arbitration award may be entered in
any court having proper jurisdiction.
PwC Partner Jeffrey J. Stegenga relates that he conducted a
series of searches of PwC's databases to identify relationships
with creditors and other parties-in-interest and discovered
several relationships in matters unrelated to these cases. Mr.
Stegenga tells the Court that PwC will continue to render
services as these services could not impact their rights in
these cases.
Specifically, Mr. Stegenga discloses that PwC will continue to
provide Babcock & Wilcox and Armstrong World Industries in their
chapter 11 proceedings. He also states that PwC supported the
Debtors' filing of a refund claim related to research &
development costs, under which, PwC would be eligible to receive
up to $250,000 of the proceeds as compensation for its services.
(Federal-Mogul Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FINOVA: Equity Panel Balks At Payment to GECC & Goldman Sachs
-------------------------------------------------------------
The Official Committee of Equity Security Holders of The FINOVA
Group, Inc., objects to the application of General Electric
Capital Corporation and Goldman Sachs Mortgage Company for
allowance and payment of a chapter 11 administrative expense
claim against the Debtors' estates.
Kevin Gross, Esq., at Rosenthal, Monhait, Gross & Goddess, P.A.,
in Wilmington, Delaware, says that the Equity Committee objects
to any payment of compensation to GE-Goldman for a substantial
contribution to these cases because:
(i) the Debtors' plan, as confirmed by this Court, which was
based upon their transaction with Berkadia, already had
been fully negotiated prior to the commencement of these
cases; and
(ii) while the Equity Committee became aware of GE-Goldman's
interest in making a bid for the Debtors in early May, GE-
Goldman imposed an unacceptable confidentiality
constraint, and thus effectively declined requests to
discuss the terms of its bid with either the Equity
Committee or the Debtors until June 5, 10 days after the
Creditors Committee had already endorsed it and only 8
days before the confirmation hearing in these cases.
According to Mr. Gross, GE-Goldman's attempt to impose
confidentiality under these circumstances during this crucial
period precluded the use of the GE-Goldman bid as a stalking
horse or negotiating tool for the Equity Committee or for the
Debtors. As such, Mr. Gross contends that GE-Goldman
effectively were bidding and negotiating only in its own
interests and not for the interests of the Debtors' estate as a
whole. Accordingly, Mr. Gross asserts, an award of compensation
to GE-Goldman for a "substantial contribution" to the Debtors'
estates is not warranted.
Should the Court be inclined to allow GE-Goldman's claim, Mr.
Gross adds, the Equity Committee believes that payment of any
such claim should be made only out of the recovery to unsecured
creditors in these cases and that no payment should be made to
GE-Goldman out of any assets of the residual equity estate. Mr.
Gross notes that the distribution to creditors in these Cases
included nearly $8,000,000,000 in cash, along with more than
$3,000,000,000 in notes. That is a more than ample sum to
provide a source of payment to them and to GE-Goldman, Mr. Gross
observes.
The Equity Committee acknowledges that parties who have
benefited the Creditors Committee's constituency may be entitled
to compensation, Mr. Gross tells the Court. But, Mr. Gross
maintains, it is not fair or equitable to seek to do so at the
expense of another constituency, the equity, in which the
creditors have no interest.
Moreover, Mr. Gross states that GE-Goldman's late filing of its
application disadvantaged the Equity Committee, considering that
GE-Goldman effectively declined to disclose the terms of their
bid to the Equity Committee until 8 days before the confirmation
hearing. Had the Equity Committee understood in advance what
GE-Goldman now seeks, Mr. Gross says, that issue could have been
a factor in plan negotiations with the equity constituency.
Thus, the Equity Committee asks the Court to deny GE-Goldman's
application.
United States Trustee Also Objects
Patricia A. Staiano, the United States Trustee for Region 3,
believes that GE-Goldman participated in the "de facto" Bid
process for its own self-interest and should not be awarded
administrative expenses.
Ms. Staiano says that GE-Goldman's application fails the
requirements of Section 503(b) in two respects:
(a) While GE-Goldman may be a creditor, the underlying basis
of contribution, which they claim to have, if any, is in
their role as a competing (and losing) bidder and not as a
creditor, and as such they can not employ their creditor
status to bring them into the ambit of the provisions of
Section 503(b).
(b) Even as a creditor, they are only entitled to "actual,
necessary expenses incurred," whereas the instant
application is, by GE-Goldman's own characterization, a
"break-up" fee.
According to Ms. Staiano, there is no evidence before the Court
tending to show that GE-Goldman incurred expense other than in
pursuit of its own interests.
For these reasons, the United States Trustee requests Judge
Walsh to deny or reduce GE-Goldman's application.
Additionally, the United States Trustee suggests that the Court
consider all similar applications for compensation or "success
fees" contemporaneously and in relation to one another, in order
to determine:
(a) which of the parties, if any, made what substantially
contributions,
(b) the aggregate amount, which should be awarded for these
contributions from the Debtors' estate, and
(c) the extent to which each applicant should participate
therein.
The United States Trustee urges the Court to establish a bar
date for the filing of such applications for substantial
contribution or otherwise for a success fee or fee enhancement,
and schedule all such applications for a common hearing date
after the bar date has passed. (Finova Bankruptcy News, Issue
No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900)
FRUIT OF THE LOOM: UST Wants Fried Frank Settlement Disclosure
--------------------------------------------------------------
Patricia A. Staiano, the United States Trustee for Region III,
objects to the Joint Motion of Fried, Frank, Shriver & Jacobson
and Fruit of the Loom, Ltd. on two bases:
(A) the U.S. Trustee objects to the terms of the
Settlement Agreement for reasons she can't disclose;
and
(B) the U.S. Trustee objects to the Parties' attempts to
keep the Settlement Agreement out of public view.
Joseph J. McMahon, Jr., Esq., on behalf of Ms. Staiano, reminds
the Court that 11 U.S.C. Sec. 107(b) provides:
"On request of a party in interest, the bankruptcy court
shall, and on the court's own motion, the bankruptcy court may
-- (1) protect an entity with respect to a trade secret or
confidential research, development, or commercial information;
or (2) protect a person with respect to scandalous or defamatory
matter contained in a paper filed in a case under this title."
Rule 9018 of the Federal Rules of Bankruptcy Procedure provides:
"On motion or on its own initiative, with or without
notice, the court may make any order which justice requires (1)
to protect the estate or any entity in respect of a trade secret
or other confidential research, development, or commercial
information, (2) to protect any entity against scandalous or
defamatory matter contained in any paper filed in a case under
the Code, or (3) to protect governmental matters that are made
confidential by statute or regulation. If an order is entered
under this rule without notice, any entity affected thereby may
move to vacate or modify the order, and after a hearing on
notice the court shall determine the motion."
Case law teaches that there is a strong, compelling presumption
of open access to judicial records and proceedings in civil
matters. In rejecting the debtor's motion to file its list of
creditors under seal, the United States Bankruptcy Court for the
Eastern District of Pennsylvania (Fox, J.) observed in In re
Foundation for New Era Philanthropy, 1995 WL 478841 (Bankr. E.D.
Pa. 1995): [Section 107(b)] was not intended to save the debtor
or its creditors from embarrassment, or to protect their privacy
in light of countervailing statutory, constitutional and policy
concerns. . . . Full disclosure of bankruptcy records may help
insure that the bankruptcy statute is applied effectively in
this case. It may also assist governmental entities in the
performance of their duties vis-a-vis this debtor and its
officers. . . . Thus, there are significant public concerns,
which favor full public access to all documents filed in this
case.
As the party seeking relief, Mr. McMahon argues, Fruit of the
Loom, Inc. has the burden of demonstrating that the documents
proposed to be sealed contain material, which may be protected
under section 107(b) and Rule 9018. Furthermore, if Fruit of the
Loom is successful in demonstrating that the documents proposed
to be sealed contain material which may be protected under
section 107(b) and Rule 9018, the relief granted should be
narrowly tailored to protect such material -- the entire
document should not be filed under seal where a few lines may be
redacted. See Continental Airlines, 150 B.R. at 339.
The documents at issue should not be sealed. Fruit of the Loom's
causes of action against Fried Frank are estate assets, and any
settlement of the litigation should be open to evaluation by all
parties in interest. The Rule 9019 motion should be re-noticed
after the settlement has been made available to parties on the
2002 service list. Fruit of the Loom's argument for sealing the
documents risks putting this Court on the slippery slope towards
the point where, once the debtor and a third-party litigant make
confidentiality a material term of a settlement, justice
presumptively requires the sealing of the settlement.
Even if this Court were to decide that the documents should be
sealed, Mr. McMahon suggests, the vast majority of information
contained in the documents (particularly the fee application)
may appear of public record without compromising the
confidentiality interest sought to be protected. "The UST
leaves Fruit of the Loom to its burden on the merits." (Fruit of
the Loom Bankruptcy News, Issue No. 38; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
GRUPO MINERO: Fitch Cuts Corporate Rating to BB from BBB-
---------------------------------------------------------
Fitch has downgraded the local currency corporate credit rating
for Grupo Minero Mexico, S.A. de C.V. (GMM) from `BBB-' Rating
Watch Negative to `BB' Rating Outlook Stable. The company's
secured export notes (SENs) were also downgraded to `BB' Rating
Outlook Stable from `BBB-' Rating Watch Negative.
In addition, GMM's guaranteed notes due 2008 and 2028, were also
downgraded from `BB+' Rating Watch Negative to `BB-' Rating
Outlook Stable. GMM's foreign currency rating has been lowered
from `BB+' to `BB' Rating Outlook Stable. Fitch maintains the
`AAA' foreign currency rating on GMM's series E SENs which are
guaranteed by MBIA Insurance Corporation. The rating actions
affect approximately $1.0 billion of debt securities.
The rating actions are the result of the continuing negative
trend in GMM's credit quality since the company upstreamed $250
million to its parent company, Grupo Mexico, in 1999 for its
acquisition of Asarco, Inc (Asarco).
During 2000 and the first half of 2001, the company's EBITDA-to-
interest expense (U.S. GAAP) ratios were 1.7 times and 1.6x,
respectively, and its total debt-to-EBITDA ratios were 6.0x and
7.1x, respectively. While copper prices were relatively weak
during this time period (averaging $0.82 per pound in 2000 and
$0.77 per pound in 1H01), these ratios were below those expected
by Fitch for the then existing rating category during that stage
in the price cycle.
Since July 2001, copper prices have remained near $0.65 per
pound. Due to the negative economic outlook in the U.S. next
year, prices are expected to remain depressed. Should copper
prices average in the low 70-cents-per-pound range, GMM would
not generate sufficient cash flow to cover production costs,
financing costs and even to a lesser extent discretionary
capital expenditures.
In addition to the declining trend in copper prices, a strong
Mexican peso relative to the U.S. dollar as well as high energy
costs continue to pressure GMM's earnings. As a result, it is
unlikely that GMM's credit protection measures will improve in a
material manner in the near term.
Fitch's ratings also consider the indirect burden of higher cost
and higher-levered affiliate company Asarco. In addition,
refinancing risk has increased as a result of heightened risk
aversion. Approximately $850 million of GMM's total debt of $1.3
billion comes due between 2001 and 2004. To meet these
amortizations, GMM expects to use its free cash flow and
proceeds from new bank facilities, including an extension of a
secured export note guaranteed by MBIA.
GMM's ratings are supported by the company's favorable cost
structure and attractive mining assets. GMM's principal copper
mining facilities -- Mexicana de Cobre and Mexicana de Cananea -
- are located in northern Mexico and include two open-pit copper
mines with a cash cost of production of about $0.55 per pound at
June 30, 2001. Copper sales of about 390,000 tons (860 million
pounds) account for approximately two-thirds of GMM's revenues.
GMM's copper mining assets and competitive cost structure should
produce healthy cash flows at copper prices in the mid-80-cents-
per-pound range.
GMM's assets also consist of Industrial Minera Mexico (IMMSA),
which operates several underground polymetallic mines throughout
Mexico that produce mainly zinc, as well as gold, silver and
other metals.
GMM is a wholly owned subsidiary of Grupo Mexico, Mexico's
largest mining company. In order to maximize efficiencies, Grupo
Mexico recently aggregated its principal mining operations GMM
and Asarco, by uniting them under a new holding company called
Americas Mining Corporation (AMC). A key asset of the Asarco
operations is a 54%-ownership stake in Southern Peru Copper
Corporation (SPCC), one of the world's largest, low-cost private
sector copper producers, which is located in Peru. AMC's
primarily U.S. dollar-denominated sales accounted for 84% of
Grupo Mexico's total sales in 2000.
Serving the export market through operating entities in three
countries, Grupo Mexico benefits from geographically diverse
cash flow generation. In addition, Grupo Mexico owns 74% of
Grupo Ferroviario Mexicano, S.A. de C.V. (GFM), in partnership
with Union Pacific (26%). This profitable and low-leveraged
subsidiary generated approximately 25% of Grupo Mexico's
consolidated EBITDA in 2000 and has become an important source
of cash flows for Grupo Mexico from outside the copper/mining
industry. In addition, Grupo Mexico has the ability to monetize
part of its investment in GFM without losing operating control.
INFINIUM SOFTWARE: Expects Savings From Completed Restructuring
---------------------------------------------------------------
Infinium Software, Inc. (Nasdaq: INFM), a provider of Web-
integrated enterprise business solutions, announced that it has
completed its strategic restructuring to strengthen the
Company's financial and market positions.
The actions associated with this concluding step of its
strategic restructuring are expected to yield Infinium
significant savings and further improve its overall fitness
from, among other things: the discontinuation of Infinium ASP
operations, and the reduction of approximately 30 Infinium ASP
and Advantage employees.
"As part of our strategic restructuring we analyzed Infinium
from every conceivable direction -- the goal being not only to
fully understand our core competencies, but our financial model
as well," said Jim McGowan, President and CEO of Infinium. "From
this analysis, we established that our two most immediate
objectives were attaining profitability and improving the
overall fitness of the company."
Infinium ASP did not present an opportunity for timely
profitability and was therefore determined to no longer be
aligned with the Company's strategic direction. Infinium
intends to work with its existing ASP customers to transition to
alternative solutions.
"We have created a more efficient, effective and profitable
organization that better meets customer and market demands" said
McGowan. "We firmly believe that these restructuring actions
were made in the long-term best interests of our customers and
shareholders."
Infinium will take a one-time charge of approximately $9-11
million in the fourth quarter of fiscal year 2001 which will
include the costs associated with these actions.
Previous steps of its strategic restructuring have already
yielded Infinium a significant savings. Specifically,
Infinium's third quarter operating costs were reduced by 42
percent and its third quarter operating loss, excluding one-time
charges, was reduced by 75 percent year-over-year, as previously
announced. Infinium's cost structure and results of operations
have significantly improved, and are expected to continue to
improve for the fourth quarter of fiscal year 2001 and fiscal
year 2002 as a result of these restructuring actions.
Infinium will report its financial results for the fourth
quarter of fiscal year 2001, ended September 30, 2001, on
Monday, October 29, 2001 at 4:00 p.m. EST.
Infinium will discuss its fourth quarter of fiscal year 2001
results in a conference call Monday, October 29, 2001 at 5:00
p.m. EST. Interested parties may attend the conference call by
dialing (800) 967-7141 within the US, or (719) 457-2630 outside
of the US, and by entering the passcode: 556689. For those
unable to participate in the live call, a remote replay will be
available from Monday, October 29, 2001 at 9:00 p.m. EST until
Monday, November 5, 2001 at 5:00 p.m. EST by dialing (888) 203-
1112 within the US, (719) 457-0820 outside the US, and by
entering passcode: 556689.
Infinium is a provider of Web-integrated enterprise business
solutions that include: human resources, payroll, financial
management, customer relationship management, materials
management, process manufacturing, and business intelligence
analytics offerings optimized for the IBM eServer iSeries.
Infinium has over 1,800 customers worldwide representing a
variety of industries including: manufacturing, hospitality and
gaming, healthcare, transportation and distribution, retail, and
financial services.
Founded in 1981, Infinium has offices worldwide and is
headquartered in Hyannis, Massachusetts. For more information
please visit http://www.infinium.com
As of June 2001, the Company's total liabilities exceeded its
assets by $6.2 million, while its working capital deficiency was
pegged at $21.4 million.
LTV CORP: Litigation Removal Period Extended to March 25
--------------------------------------------------------
The LTV Corporation asks Judge Bodoh to give them a further
extension of the time period during which they may remove
litigative and administrative actions to federal court.
In particular, the Debtors propose that the time by which they
may file notices of removal with respect to any of the thousands
of civil actions pending in multiple for a and tribunals, which
assert a wide variety of claims, be extended to the later of:
(a) March 25, 2002 (an additional 180 days), or (b) 30 days
after the entry of an order terminating the automatic stay with
respect to any particular action sought to be removed.
To determine whether to remove any particular action, the
Debtors must individually examine and evaluate the numerous
actions filed against them in various jurisdictions. During the
first removal period, the Debtors aggressively pursued, and made
substantial progress towards, their reorganization goals.
To this end, the Debtors devoted substantially all of their time
and resources to: (a) developing, validating and implementing
their long-term business plan and global restructuring strategy;
(b) analyzing and working to resolve various complex issues
relating to the restructuring plan and the Debtors' ultimate
emergence from chapter 11, including the Debtors' short-term and
long-term financing needs and certain labor issues; and (c)
addressing the numerous day-to-day administrative matters in
these chapter 11 cases.
Consequently, during the first removal period, the Debtors did
not have an opportunity to complete their review of the actions
and determine which actions, if any, they will seek to remove.
According, the Debtors believe that a further extension of the
removal period is warranted.
The Debtors submit to Judge Bodoh that the relief requested in
this Motion is in the best interests of the Debtors and their
respective estates and creditors. The requested extension will
afford the Debtors a sufficient opportunity to make fully-
informed decisions concerning the removal of each action and
will assure that the Debtors do not prematurely forfeit valuable
rights.
Moreover, such an extension will not prejudice the rights of the
adverse parties in the actions. If the Debtors remove any
action to federal court, any affected adverse party will retain
its rights to seek remand of the removed action back to state
court.
Thus, a further extension is not unconscionable to Judge Bodoh,
who grants the Motion and overrules the objections -- but states
that the relief granted by his order does not apply to (1) the
personal injury action commenced by the Pritchards, or (2) the
personal injury action commenced by Glenn Evans. (LTV Bankruptcy
News, Issue No. 15; Bankruptcy Creditors' Service, Inc.,
609/392-00900)
LAND O'LAKES: S&P Drops Ratings On Aggressive Financial Profile
---------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on Land O'
Lakes Inc. to double-'B'-plus from triple-'B'-plus and lowered
the preferred stock rating on Land O'Lakes Capital Trust I
(guaranteed by Land O'Lakes Inc.) to single-'B'-plus from
triple-'B'-minus.
These ratings are removed from CreditWatch. The outlook is
stable.
The preferred stock rating is three notches below the corporate
credit rating on Land O'Lakes, reflecting the preferred stock's
deep subordination.
At the same time, Standard & Poor's assigned a triple-`B'-minus
rating to the $1.075 billion senior secured credit facility.
This rating is placed on CreditWatch with negative implications.
The senior secured debt rating is based upon Standard & Poor's
expectation that Land O'Lakes will complete, by December 31,
2001, an unsecured debt financing of at least $300 million,
which is expected to reduce the secured bank debt outstanding.
If the transaction is not completed by that date or the amount
of the unsecured financing is less than $300 million, Standard &
Poor's will lower the senior secured debt rating to double-`B'-
plus and reevaluate the outlook.
The bank loan rating is one notch higher than the corporate
credit rating. The security interest in substantially all of the
company's assets offers reasonable prospects for full recovery
of principal. Considering some of Land O'Lakes brands, it is
anticipated that the cooperative would retain value in the event
of a bankruptcy.
These rating actions are based on the anticipated early October
closing of the Purina Mills Inc. acquisition by Land O'Lakes at
$23 per share for total consideration of about $380 million.
Upon completion of the transaction, Purina Mills will become
part of Land O'Lakes Farmland Feed LLC, a feed joint venture
with Farmland Industries Inc. (a minority holder).
The downgrade reflects the position of the merged entity, with
the number one market position in the fragmented, but
consolidating, U.S. animal feed industry. The ratings further
reflect the newly merged company's strong portfolio of national,
regional, and local brands, greater geographic diversity in the
consolidating animal feed industry, and cost savings
opportunities.
These factors are offset by an aggressive financial profile,
modest discretionary cash flow, and a sizable debt amortization
schedule. The rating also incorporates the operating risk
associated with integrating the two firm's operations. In
addition, Land O'Lakes' recent operating performance has been
impacted by the cyclical downturn in many areas of the
cooperative's agricultural-based businesses as well as by a
series of acquisitions. This has resulted in credit measures,
before the Purina Mills acquisition, that were below Standard &
Poor's expectations.
Land O'Lakes is a national, farmer-owned dairy and agricultural
marketing and supply cooperative. The dairy segment produces and
markets products under the strong Land O'Lakes and Alpine Lace
brands as well as under regional brands. Agricultural products
consist of seed, animal feed, and an extensive line of
agricultural supplies and services to farmers and local
cooperatives.
Pro forma for the transaction (treating the preferred stock as
debt and capitalizing operating leases under Standard & Poor's
methodology), EBITDA to interest is 3.2 times, EBITDA margin is
4.0%, and total debt to EBITDA is about 5.0x. In fiscal 2002,
financial measures are expected to substantially improve with
EBITDA to interest in the 3.5x area, EBITDA margin of about
5.0%, and total debt to EBITDA of about 3.5x. Key to the rating
will be Land O'Lakes ability to achieve cost savings of about
$64 million over the first three years following the merger, the
divestiture of swine assets and other noncore assets, and
moderate capital spending.
Although Standard & Poor's treats the preferred stock as debt
and the dividends as interest in calculating credit measures,
the preferred stock's equity characteristics provide Land
O'Lakes with some additional financial flexibility.
There is some refinancing risk since the unrated $75 million Co-
Bank ACB credit facility matures six months after the closing of
the Purina Mills acquisition and the $250 million Tranche C Term
Loan matures in April 2003. Standard & Poor's expects that the
Tranche C Term Loan and a portion of the borrowing under the
revolver will be repaid with the proceeds of the expected
unsecured debt financing. The Co-Bank ACB credit facility is
expected to repaid with the proceeds of the expected accounts
receivable securization program.
Outlook: Stable
Standard & Poor's expects Land O'Lakes to maintain its leading
market positions and to moderately improve its financial profile
over the intermediate term.
LERNOUT & HAUSPIE: Selling L&H Medical Solutions Interests
----------------------------------------------------------
Lernout & Hauspie Speech Products N.V. asks that Judge Judith
Wizmur (1) review and approve the Debtors' proposed bidding
procedures, break-up fees, and expense reimbursements, and (2)
approve a Share Purchase Agreement between Lernout & Hauspie
Speech Products, N.V. and Transcription Acquisition, LLC,
subject to higher or better offers, and (3) authorize the sale
of the common stock of L&H Medical Solutions, Inc., a non-debtor
entity, to the highest or otherwise best bidder.
The Debtors further request that Judge Wizmur authorize
Dictaphone Corporation to release certain inter-company claims
against L&H Medical and its subsidiaries, and authorize the
assumption and assignment of certain executory contracts and
unexpired leases of commercial real property. Finally, the
Debtors ask that Judge Wizmur authorize the transfer and
delivery of certain assets to Lonestar Medical Transcription
USA, Inc., a non-debtor subsidiary of L&H Medical.
The Debtors disclose that the purchaser, Transcription
Acquisition, is an entity controlled by officers and other
insiders of L&H Medical and its direct and indirect
subsidiaries:
Michael J. Cavill General Manager - Transcription
Services
Arnold A. Jennerman Vice President of Finance
Pamela J. Wirth Regional Vice President - Midwest
Region
After extensive marketing by L&H NV, with the assistance of its
investment banker, Credit Suisse First Boston, L&H NV believes
that, based on the current economic environment, the aggregate
purchase price offered is the best and highest value achievable
for L&H Medical for the benefit of the estate.
The Debtors assure Judge Wizmur that negotiations with the
management group were conducted at all times at arm's length.
Although the management group and other officers of L&H Medical
made presentations to other potential bidders during due
diligence sessions, members of the management group were not
involved and will not be involved with any negotiations with
other bidders.
L&H NV seeks Judge Wizmur's approval of the bidding procedures
that the Debtor believes will ensure that the maximum value
achievable is obtained for L&H Medical. L&H NV has negotiated
to allow the agreement with the Purchaser, subject to payment of
a break-up fee, to serve as a "stalking horse" bid that other
potential bidders can use as a starting point got additional
offers.
L&H Medical: Background
L&H Medical is not a debtor in these chapter 11 cases and is a
wholly-owned subsidiary of L&H NV, with its headquarters in
Madison, Wisconsin. L&H Medical also has facilities in Atlanta
Georgia, Houston Texas and Manila Philippines and maintains 13
local service transcription service centers that support clients
in some of the local markets and house parts of L&H Medical's
technical infrastructure. As of August 2001, L&H Medical
employed approximately 1,100 transcriptionist employees
throughout the world, including 250 in Manila.
L&H Medical: Products & Services
L&H Medical is an inventor, marketer and provider of outsourced
medical manual transcription services and products. L&H Medical
provides outsourced manual medical transcription services to
various hospitals and outpatient facilities. Medical
transcription is the process of converting into written form
medical information that has been dictated by a physician or
other health care professional. Transcribed medical information
may include patient history, physical examination notes,
procedure reports, radiology reports, hospital discharge
summaries or emergency department encounter reports. L&H
Medical's current customer base includes over 300 hospitals,
clinics and group practices.
L&H Medical: Market Share
L&H Medical operates in a market that is highly fragmented, with
over 1,500 small regional providers. Through its operating
strategy, L&H Medical has captured significant revenues in its
business regions, and it is the second largest participant in
the medical transcription industry, behind Medquist.
Non-Core Asset and Best Interests
Notwithstanding all of these attributes, the Debtors tell Judge
Wizmur that L&H Medical is a non-core asset of L&H NV that can
easily be segregated from L&H NV's other businesses and sold to
a third party. L&H NV believes, in its business judgment, that
its estate will receive maximum benefit from L&H Medical if it
is sold on the terms set forth in this Motion, subject to higher
or otherwise better offers in accordance with the proposed
bidding procedures.
The Debtors argue that the sale is necessary. Since the
commencement of these chapter 11 cases, the Debtors tell Judge
Wizmur that their primary objective has been to stabilize
operations, develop a strategic, long-term business plan built
around core businesses, and maximize the value of its assets for
the benefit of these estates. In its business judgment, L&H has
concluded that the sale of L&H Medical serves those best
interests.
The sale of L&H Medical will generate a gross of approximately
$22 million that, after payment of certain costs and expenses,
will be utilized by L&H NV to defease borrowings under L&H NV's
DIP financing facility and finance operations of L&H NV and its
subsidiaries as well as serving as a significant step toward
emergence from chapter 11 proceedings. (L&H/Dictaphone
Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
MCMS INC: Secures Court Approval of $49 Million DIP Facility
------------------------------------------------------------
MCMS, Inc. announced that the U.S. Bankruptcy Court for the
District of Delaware granted final approval of a $49 million
Debtor-in-Possession (DIP) financing facility provided to it by
a consortium of banks led by PNC Bank. The DIP facility will be
used to fund the ongoing business operations of MCMS.
The Court also approved bidding procedures regarding the sale of
substantially all of the assets of MCMS to Manufacturers'
Services Limited (MSL). The sale to MSL is subject to higher and
better offers through the Court supervised competitive sale
process.
The order approving the bidding procedures provides that
competing bids must be submitted by November 19, 2001. An
auction involving MSL and those parties that have timely
submitted bids will be held on November 27, 2001. A hearing on
the sale is scheduled for November 29, 2001, in Wilmington,
Delaware.
Rick Rowe, Chief Executive Officer of MCMS, said, "MCMS is very
pleased with the approval by the Court of the final DIP
facility, which we believe will provide customers and vendors
assurance that we will meet normal business obligations and
operate without interruption. We are grateful for the continued
support of the banks, customers and vendors and the dedication
of our employees. MCMS is also pleased that the Court set the
bid deadline for November 19th. This timeframe provides
assurance to customers, vendors and employees as to the
conclusion of the auction process and will provide potential
bidders ample time to conduct due diligence and formulate bids"
As previously announced, on September 18, 2001, MCMS and its two
U.S. subsidiaries filed voluntary petitions for relief under
Chapter 11 of the U.S. Bankruptcy Code in the United States
Bankruptcy Court for the District of Delaware in Wilmington to
implement a sale of substantially all of its assets to MSL.
MCMS, Inc. is a global leading provider of advanced electronics
manufacturing services to original equipment manufacturers who
primarily serve the data communications, telecommunications, and
computer/memory module industries. MCMS targets customers that
are technology leaders in rapidly growing markets, such as
Internet infrastructure, wireless communications and optical
networking, that have complex manufacturing service requirements
and that seek to form long-term relationships with their
electronics manufacturing service providers.
The Company offers a broad range of electronics manufacturing
services, including pre-production engineering and product
design support, prototyping, supply chain management,
manufacturing and testing of printed circuit board assemblies,
full system assembly, end-order fulfillment and after-sales
product support. The Company delivers this broad range of
services through operations in Nampa, Idaho; Durham, North
Carolina; Penang, Malaysia; Monterrey, Mexico; and San Jose,
California. MCMS information is available by visiting the
company's Web site at http://www.mcms.com
MAGNESIUM CORP: Court Approves $33 Million DIP Financing Pact
-------------------------------------------------------------
A judge in the U.S. Bankruptcy Court in Manhattan on Tuesday
granted Magnesium Corp. of America (MagCorp) final approval of a
$33 million debtor-in-possession (DIP) financing agreement with
lender Congress Financial Corp., Dow Jones reported.
Congress Financial has agreed to provide MagCorp with a $33
million revolving credit line through Aug. 4, 2002. The Salt
Lake City-based company filed for chapter 11 bankruptcy
protection on Aug. 2 under the threat of an involuntary filing
by some noteholders.
The company is the largest single producer of magnesium in the
United States. It is a unit of Renco Group Inc., a New York-
based holding company. (ABI World, October 5, 2001)
MARINER POST-ACUTE: NeighborCare To Acquire APS Unit for $42MM
--------------------------------------------------------------
NeighborCare Pharmacy Services, Inc., a subsidiary of Genesis
Health Ventures, Inc., announced that it has signed an agreement
to purchase the assets of American Pharmaceutical Services, Inc.
(APS), a subsidiary of Mariner Health Group (MHG) and Mariner
Post-Acute Network (MPAN), for approximately $42 million plus up
to $18 million in deferred payments contingent on performance.
The sale is subject to several conditions including, US
Bankruptcy Court approval of an overbidding procedure, followed
by a competitive bidding process and final court approval of the
prevailing bid in the MPAN and MHG chapter 11 cases.
The intent to enter into the asset purchase agreement was
previously announced in US Bankruptcy Court as a part of the
Genesis' plan of reorganization which was confirmed September
20. Genesis emerged from bankruptcy October 2.
NeighborCare expects to consolidate operations with APS
following closure of the sale. NeighborCare is the third largest
institutional pharmacy provider in the US and serves 250,000
long-term care beds. APS is the fifth largest long-term care
pharmacy provider in the US and operates 33 institutional
pharmacies in 15 states that serve 60,000 beds.
APS also operates three retail pharmacies and four respiratory
therapy sites.
"The APS acquisition gives NeighborCare the opportunity to
increase revenue by expanding operations in existing markets as
well as seven new states" said NeighborCare President and COO
Bob Smith. "Acquisition synergies and cost savings will enable
NeighborCare to build a stronger network from which to serve
long term care providers nationwide"
NeighborCare operates retail and long term care pharmacies,
medical supply centers, infusion services and home medical
equipment facilities for over 250,000 customers in long term
care settings and for more than one million covered lives in
home care settings in 41 states.
NeighborCare is an integral part of the Genesis ElderCare
Network and is a subsidiary of Genesis Health Ventures, Inc.
(GHVEV) of Kennett Square, Pennsylvania. NeighborCare is
headquartered in Baltimore, Maryland.
MONTANA POWER: Annual Shareholders' Meeting Set For December 20
---------------------------------------------------------------
The Montana Power Company (NYSE: MTP) announced it has scheduled
its Annual Shareholder Meeting for December 20, 2001, at 4 p.m.
in the Mother Lode Theatre, Butte, Montana, for shareholders of
record at the close of business November 2, 2001.
However, the meeting won't be necessary or held if the company
completes the restructuring and sale of the utility before
December 20, 2001.
"When the restructuring and utility sale is accomplished,
Montana Power will transition to a stand-alone
telecommunications enterprise under Touch America, which will
become the traded company" said Patrick Fleming, Montana Power's
corporate secretary.
"Montana Power, then, will no longer be a traded company and an
Annual Meeting won't be necessary" he said. Touch America's
first Annual Meeting would be scheduled for early 2002.
To complete the utility transaction, Montana Power needs one
last regulatory step. The Montana Public Service Commission
must approve the buyer of the utility, NorthWestern Corporation
of Sioux Falls, South Dakota, as a fit, willing and able
provider of utility service. Montana Power and NorthWestern
have made a joint filing for this approval.
MPOWER COMMS: S&P Junks Ratings On Funding Gap In Business Plan
---------------------------------------------------------------
Standard & Poor's lowered its ratings on MPower Communications
Inc. and placed the ratings on CreditWatch with negative
implications.
The rating actions follow competitive local exchange carrier
MPower's recent announcement that further economic weakness has
led to deterioration in operating performance and has caused a
funding gap in its current business plan.
Given extremely difficult capital market conditions, bridging
the funding gap is unlikely. The company has indicated that it
is evaluating strategies to strengthen its balance sheet,
including a possible debt restructuring.
Ratings Lowered and Placed on Creditwatch Negative
MPower Communications Inc. TO FROM
Corporate credit rating CCC+ B-
Senior secured debt CCC+ B-
Senior unsecured debt CCC CCC+
NABI: S&P Ups Junk Ratings After Antibody Collection Assets Sale
----------------------------------------------------------------
Standard & Poor's raised its corporate credit rating on Nabi to
single-'B' from triple-'C'-plus. At the same time, the rating on
Nabi's $78.5 million outstanding subordinated convertible notes
has been raised to triple-'C'-plus from triple-'C'-minus.
The action reflects the company's increased financial
flexibility, following the announcement that it has completed
the sale of its antibody collection business to Australian-based
CSL Ltd. for $152 million in cash.
The ratings were removed from CreditWatch, where they were
placed on June 25, 2001, after the announcement of the planned
sale. The outlook is stable.
The ratings on Boca Raton, Fla.-based Nabi, are based on the
company's position as a leading provider of human antibody-based
drugs, offset by the company's limited size, the risks inherent
in drug development, and the company's limited financial
resources.
With the completed sale of 47 of its 56 antibody collection
centers, Nabi has restructured its operations to focus on its
higher-margin, polyclonal antibody-based drug business and its
vaccine pipeline. The company has four approved products on the
market (Nabi-HB, WinRho SDF, Autoplex T, and Aloprim) to treat
infectious and autoimmune diseases. The hepatitis B treatment,
Nabi-HB, and the blood disorder treatment, WinRho SDF, account
for an estimated 85% of pro forma biopharmaceutical revenues.
Sales of both products have been steadily growing.
The company's 6.5% convertible subordinated notes, of which
$78.5 million remain outstanding, are set to mature in 2003. Net
proceeds from the sale of the antibody collection sites may be
used to retire this debt and fund R&D costs relating to its
product pipeline.
Outlook: Stable
With lessened concerns surrounding the maturity of its
convertible notes and the fact that the company remains
marginally cash flow positive, Nabi enjoys increased financial
flexibility. Nevertheless, Nabi plans to continue its efforts to
find development partners for its pipeline products, such as its
staph infection treatment, StaphVAX, given the funding
requirements for their commercialization.
OPEN PLAN: Closes Sale of Remanufacturing Facility in Michigan
--------------------------------------------------------------
Open Plan Systems, Inc. (OTCBB:PLAN) announced that it has
completed the sale of its remanufacturing facility under
construction in Lansing, Michigan.
The sale resulted in cash proceeds to the Company of
approximately $395,000 after payment of amounts due to the
contractor engaged to construct the facility and certain
expenses related to the sale. In connection with the closing,
the contractor's suit against the Company for amounts owed under
the construction contract was dismissed.
The Company also announced that it had redeemed all of the
outstanding Michigan Strategic Fund Variable Rate Demand Limited
Obligation Revenue Bonds in anticipation of the sale of the
Lansing facility. At the time of redemption, there were $2.4
million of such bonds outstanding. The bonds had been issued in
2000 to finance the construction of the new Lansing facility.
The sale of the remanufacturing facility under construction in
Lansing, Michigan is part of the Company's restructuring plan
adopted in June 2001. The Company previously had ceased
remanufacturing operations in Lansing and consolidated all of
its remanufacturing operations in Richmond, Virginia as part of
the restructuring plan. However, the Company intends to continue
to operate its Detroit, Michigan sales office and to service
Michigan customers.
Thomas M. Mishoe, Jr., President and Chief Executive Officer of
the Company, said, "I am pleased with the progress being made
with respect to the Company's restructuring plan. Although it
was a difficult decision for the Company to make, the closing of
the Lansing plant and the sale of the new Lansing facility under
construction were important steps that needed to be taken in the
effort to reduce costs, improve margins and bring the Company
back to profitability."
Open Plan Systems, Inc. remanufactures and markets modular
office workstations through a network of Company-owned sales
offices and selected dealers. Workstations consist of movable
panels, work surfaces, storage units, lighting and electrical
distribution combined into a single integrated unit. The Company
has recycled over fifty million pounds of workstations. Under
its "As I" program, the Company also purchases and resells used
workstations. Additionally, the Company markets a wide variety
of other office-related products including chairs, desks and
other office furniture.
Violations of Loan Covenants
At December 31, 2000 and thereafter, the Company was not in
compliance with certain of the covenants contained in the letter
of credit facility and the revolving line of credit agreements.
As a result of the covenant violations as well as the
significant net loss in fiscal year 2000, the Company's
auditors, in its report filed as part of the Form 10-K,
expressed substantial doubt as to the Company's ability to
continue as a going concern.
OXFORD AUTOMOTIVE: S&P Downgrades Ratings on Liquidity Concerns
---------------------------------------------------------------
Standard & Poor's lowered its ratings on Oxford Automotive Inc.
and placed them on CreditWatch with negative implications.
The rating actions reflect Standard & Poor's increased concerns
regarding the company's near-term liquidity situation and
operating outlook.
Oxford is a Tier I supplier of engineered metal components,
assemblies, and modules for the original equipment automotive
industry. Core products include closure systems, suspension
systems, and complex structural subsystems. In fiscal year 2001
(fiscal year end is March 31), Oxford generated $824 million in
revenues.
Oxford's operating performance has deteriorated during the past
year due to the weakening in North American automotive demand
and increased costs associated with the launch of new business.
The diminished operating performance has led to a significant
reduction in financial flexibility in the past year.
At June 30, 2001, the company only had $18 million of
availability under its bank lines and about $40 million in cash.
(This compares with $64 million in cash and $18 million of
availability under bank lines at March 31, 2001.) This does not
give Oxford much flexibility for dealing with current industry
pressures, especially given the company's significant investment
requirements over the near term and high debt burden. Debt to
EBITDA is currently estimated to be more than 8 times.
Previous ratings had incorporated an expectation that cost-
cutting actions would enable Oxford to improve operating results
and cash generation over the near to intermediate term. With the
likelihood that industry fundamentals will weaken further for at
least the next few quarters, Standard & Poor's believes that
Oxford's cost-cutting efforts will be insufficient to offset the
effect of intensified industry pressures.
As a result, Standard & Poor's believes that Oxford's near-term
cash flow outlook is much weaker than previously expected and
that the company's flexibility for dealing with industry
pressures is likely to deteriorate further over the near term.
Standard & Poor's will meet with management to discuss near-term
operating prospects, cash generating potential, and investment
requirements. If it appears that liquidity will come under
additional pressure, the ratings are likely to be lowered.
Ratings Lowered, Placed on Creditwatch Negative
Oxford Automotive Inc. TO FROM
Corporate credit rating B B+
Senior secured debt B B+
Subordinated debt CCC+ B-
PACIFIC GAS: Creditors to Receive $40 Million Note Placement Fee
----------------------------------------------------------------
General unsecured creditors of bankrupt Pacific Gas & Electric
Co. will recover more than 100 percent of their claims when a
$40 million note placement fee is factored into their recovery,
Dow Jones reported.
A support agreement the creditors' committee entered into with
PG&E and its parent provides that general unsecured creditors
will receive a $40 million placement fee as consideration for
their receiving new notes under the company's reorganization
plan.
The placement fee is in addition to the 60 percent cash and 40
percent in notes general unsecured creditors will recover on
account of their claims under the plan. (ABI World, October 5,
2001)
RAMPART SECURITIES: Transfer of Accounts to IDA Firms Fails
-----------------------------------------------------------
Rampart was suspended by the IDA and OSC on August 14, 2001.
The suspension effectively froze all client accounts. Since that
date, efforts by the company to transfer client accounts to
other IDA firms, under the supervision of a monitor, have been
unsuccessful due to inadequate financial resources.
CIPF has issued a petition for the appointment of a trustee in
bankruptcy of Rampart on August 31, 2001. Rampart is opposing
such an appointment. Pending the resolution of this matter, CIPF
sought the appointment of an Interim Receiver. By an Order dated
September 24, 2001, the Ontario Superior Court of Justice
appointed Ernst & Young Inc. as Interim Receiver of the business
and assets of Rampart under the Bankruptcy and Insolvency Act
(Canada).
The Interim Receiver's mandate is to oversee Rampart's
activities and safeguard the interests of Rampart's clients and
other stakeholders. The Court has ordered that customer accounts
may only be released with a further order of the Court. The
Interim Receiver is currently conducting a detailed review of
Rampart's accounts and will report to the Court to seek further
direction as soon as possible.
CIPF is a customer compensation fund that is financed by the
Members of the securities industry through the sponsoring Self
Regulatory Organizations: the Investment Dealers Association of
Canada, the Toronto Stock Exchange Inc., the Canadian Venture
Exchange Inc. and the Bourse de Montreal Inc.
CIPF covers customers' losses of securities, cash balances and
certain other property such as segregated funds, within
prescribed limits. The CIPF coverage limit is $1 million for
aggregate losses in each customer's general account (defined as
the combination of all cash, margin, short sale, options,
futures and foreign exchange accounts).
CIPF also provides separate coverage for accounts for registered
retirement accounts of a customer, such as RRSPs, LIRAs, RRIFs
and LIFs, which are combined and aggregated as a single separate
account. CIPF does not cover customers' losses that result from
other causes such as changing market values of securities,
unsuitable investments or the default of an issuer of
securities. Further information concerning CIPF including its
brochure and polices is available on the website,
http://www.cipf.ca
SPALDING HOLDINGS: Ratings Junked After Interest Payment Missed
---------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on
Spalding Holdings Corp. to double-'C' from single-'B'-minus, and
also lowered its triple-'C' subordinated debt rating to single-
'C'.
At the same time, Spalding's senior secured rating was lowered
from single-'B'-minus to double-'C'. Ratings remain on
CreditWatch where they were placed with negative implications on
May 31, 2001.
The downgrade follows Spalding's recent announcement that it
elected not to make its October 1 interest payment on its senior
subordinated notes. Spalding will take advantage of the 30-day
grace period on the indenture while it negotiates an exchange of
the notes for other securities with its largest bondholder as
part of a recapitalization of the company.
The subordinated debt ratings have not been lowered to default
at this time, as the company has indicated they currently have
the liquidity to make the payment.
However, an exchange of the bonds into securities at below par
or failure to make the interest payment at the end of the grace
period would effectively result in a default on these bonds,
according to Standard & Poor's ratings criteria. Standard &
Poor's will reassess the situation at the end of the 30-day
grace period.
STERLING CHEMICALS: Lease Decision Period Extended to March 13
--------------------------------------------------------------
Because of the complexity of Sterling Chemicals Holdings'
chapter 11 cases, United States Bankruptcy Court Judge William
R. Greendyke allows the company to have more time to evaluate
their unexpired leases.
Sterling Chemicals now have until March 13, 2002 to decide
whether to assume or reject its unexpired leases of
nonresidential real property.
Judge Greendyke emphasizes that Sterling Chemicals should
perform their obligations under the unexpired leases. The
extension does not give Sterling Chemicals license to neglect
their rent payments, Judge Greendyke asserts.
Sterling Chemicals Holdings, a manufacturer of petrochemicals,
acrylic fibers, and pulp chemicals, filed for Chapter 11
protection on July 16, 2001 in the Southern District of Texas
Bankruptcy Court. D. J. Baker, Esq., at Skadden, Arps, Slate,
Meagher & Flom, represents the Debtors in their restructuring
effort. Subject to further extensions, the Debtors exclusive
period during which to file a plan expires on November 13,
2001.
As of its September 21, 2001 report to the Securities and
Exchange Commission, the Debtors listed $403,681,000 in assets
and $1,207,403,000 in debt.
SUN HEALTHCARE: Turns to Gazes to Prosecute Avoidance Actions
-------------------------------------------------------------
Sun Healthcare Group, Inc. has determined that it is more cost
effective to prosecute all but certain of the largest of their
avoidance actions on a contingency fee basis.
While Richards, Layton & Finger has agreed to prosecute certain
of the larger avoidance actions at its ordinary hourly rate
neither of the Debtors' retained professionals -- RL&F and Weil,
Gotshal & Manges -- have agreed to prosecute the remaining
avoidance actions on a contingency basis. Accordingly, the
Debtors need to retain Special Counsel with respect to those
remaining avoidance actions.
The Debtors have selected Gazes as special counsel to commence
and prosecute certain avoidance actions because they are
experienced practitioners in the filing of multiple avoidance
actions in large bankruptcy cases. Each of the Debtors desires
to employ Gazes because the Debtors believe that Gazes is well
qualified to act as special counsel to commence and prosecute
avoidance actions on the Debtors' behalf.
Accordingly, the Debtors submit an application for an order
pursuant to sections 327(a) and 329 of the United States
Bankruptcy Code, 11 U.S.C. sections 101-1330, as amended, and
Rules 2014 and 2016 of the Bankruptcy Rules authorizing the
employment and retention of Gazes & Associates LLP as special
counsel to the Debtors to commence and prosecute certain
avoidance actions.
Specifically, the Debtors request entry of an order authorizing
each of them to employ and retain Gazes as special counsel to
commence and prosecute certain avoidance actions during and, if
appropriate, after their Chapter 11 cases.
Subject to the Court's approval, Gazes will be required to
represent the Debtors as special counsel to commence and
prosecute certain avoidance actions that are not commenced by
RL&F. The Debtors covenant to take appropriate steps to avoid
unnecessary and wasteful duplication of legal services among
Gazes and RL&F.
Moreover, the Debtors believe that as Gazes will perform its
services on a contingency basis, duplication of effort is of
less concern here than in other section 327(a) applications.
Gazes will seek compensation for legal services rendered in the
Sun cases on a contingency basis, at the rate of 33 1/3% of the
gross recoveries (inclusive of interest), plus expenses, on all
avoidance actions filed by it in Sun's chapter 11 cases. The
Debtors represent that such compensation is appropriate based
upon the professional time to be spent by Gazes, the necessity
of such services to the administration of the estate, the
reasonableness of the time within which the services are to be
performed in relation to the results achieved, and the
complexity, importance and nature of the problems, issues, or
tasks addressed in the Sun Healthcare cases.
Gazes intends to apply to the Court for allowance of
compensation for professional services rendered and
reimbursement of expenses incurred in the Sun Chapter 11 cases
in accordance with applicable provisions of the Bankruptcy Code,
the Bankruptcy Rules, the Local Rules and the orders of the
Court.
Denise L. Savage, an attorney associated with Gazes, represents
that neither Gazes nor any member or associate of the firm is
related or connected to any United States District Judge or
Bankruptcy Judge in the District of Delaware or to the United
States Trustee for such district or any employee in the office
of the U.S. Trustee. Ms. Savage declares that, to the best of
her knowledge, the members and associates of Gazes (i) do not
have any connection with the Debtors or their affiliates, their
creditors, or any other party in interest, or their respective
attorneys and accountants, (ii) are "disinterested persons" as
that term is defined in section 101(14) of the Bankruptcy Code
and (iii) do not hold any interest adverse to the estates. (Sun
Healthcare Bankruptcy News, Issue No. 23; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
THERMOGENESIS: Says Continuing Losses May Lead to Staff Cuts
------------------------------------------------------------
Thermogenesis Corporation has incurred recurring operating
losses and has an accumulated deficit of $44,072,000 as of June
30, 2001.
The report of independent auditors on the Company's June 30,
2001 financial statements includes an explanatory paragraph
indicating there is substantial doubt about the Company's
ability to continue as a going concern.
The Company believes that it has developed a viable plan to
address these issues and that its plan will enable the Company
to continue as a going concern through the end of fiscal year
2002.
This plan includes the realization of revenues from the
commercialization of new products, the consummation of debt or
equity financing in amounts sufficient to fund further growth,
and the reduction of certain operating expenses as necessary.
Although the Company believes that its plan will be realized,
there is no assurance that these events will occur.
Net revenues increased $1,581,000, or 38%, from fiscal 2000 to
fiscal 2001. The increase in sales was primarily a result of
increases in the sale of BioArchive and ThermoLine (plasma
freezers and thawers) products.
BioArchive revenues increased $526,000 or 44% over the prior
year due to the resources added in fiscal 2000 to accelerate the
BioArchive sales process. ThermoLine revenues increased $739,000
or 26% over the prior year. The increase is primarily due to a
restructured sales department which includes an experienced
field-based sales executive to call on customers in North
America and provide sales leadership for the telemarketing sales
force.
Additionally, freezer sales increased due to increased sales to
Europe. Specifically, the distributor to the CIS countries
(formerly known as the USSR) accounted for 11% of the freezer
sales for this year.
Net revenues decreased from fiscal year 1999 to fiscal year 2000
by $897,000, or 18%. Licensing fees decreased $400,000 and the
BioArchive product line revenues decreased by $498,000 from
fiscal year 1999 sales as the number of units placed fell from
nine to six.
The technical and regulatory hurdles within each country that
are required to authorize this new medical therapy, prepare the
cord blood bank site and obtain the necessary budget allocations
are more time consuming and complex than originally estimated by
the Company. Thus, customers did not move quickly through the
sales pipeline. The Company added more resources during fiscal
year 2000 in order to accelerate this process in fiscal year
2001.
Thermogenesis has incurred net losses since its inception and
the Company expects losses to continue. Except for net income
of $11,246 for fiscal 1994, the Company has not been profitable
since inception. For the fiscal year ended June 30, 2001, the
Company had a net loss of $6,153,000, and an accumulated deficit
at June 30, 2001, of $44,072,000.
As stated, the report of independent auditors on the June 30,
2001, financial statements includes an explanatory paragraph
indicating there is substantial doubt about Thermogenesis'
ability to continue as a going concern.
Although the Company is executing on its business plan to market
launch new products, continuing losses will impair its ability
to fully meet its objectives for new product sales and will
further impair its ability to meet continuing operating expenses
that may result in staff reductions and curtailment of clinical
trials currently planned.
If the Company is unable to raise funds its growth may be
adversely affected. Historically, the Company has had to seek
capital for growth and operations due to lack of revenues. Based
on proceeds of approximately $7.0 million received in its most
recent private placement, Thermogenesis believes it will have
sufficient working capital for the fiscal year 2002 operations
including CryoSeal human clinical trial expenses of $2.5
million.
However, if actual sales do not meet expectations, or marketing,
production and clinical trial costs increase significantly, the
Company will need additional financing to complete and implement
its long-term business objectives. Further, delays in obtaining
required governmental clearances for, or additional testing
requirements prior to, marketing its new products will result in
decreased revenues and increased costs that may require it to
seek additional financing. In the event that there is a cash
shortage and the Company is unable to obtain a debt financing,
additional equity financing will be required which will have the
effect of diluting the ownership of existing stockholders.
USG CORP: Unsecured Panel Hires Duane Morris As Local Counsel
-------------------------------------------------------------
Mr. David Barse, President and Chairman of Third Avenue Trust
and Committee Chair, requests Judge Newsome's approval to retain
Duane, Morris & Heckscher, LLP, as local counsel to the Official
Committee of Unsecured Creditors of USG Corporation.
Because Stroock & Stroock & Lavan, the Committee's lead counse,
does not have offices in Delaware, Mr. Barse reminds the Court,
the Committee is required under Local Bankruptcy Rule 9010-1 to
retain local counsel.
Duane Morris will charge for it's services on an hourly basis.
The principal Duane Morris attorneys and paralegals who will
represent the Committee and their hourly rates are:
Professional Position Rate
------------ -------- ----
William S. Katchen Partner $450
Michael R. Lastowski Partner $375
Richard W. Riley Partner $290
William J. Harrington Associate $245
John W. Weiss Associate $175
Carolyn B. Fox Paralegal $110
Shelley A. Hollinghead Paralegal $110
Duane Morris will provide professional services, including but
not limited to:
- providing legal advice with respect to the Committee's
rights, powers and duties in these cases;
- prepare on behalf of the Committee all necessary
applications, answers, responses, objections, forms of
orders, reports and other legal papers;
- represent the Committee in matters involving contests
with the Debtors and other parties of interest;
- assist the Committee in its investigation and analysis
of the Debtors and the operations of the Debtor's
business; and
- perform all other legal services for the Committee which
may be necessary and proper in these cases.
To the best of his knowledge, Mr. Katchen tells the Court, Duane
Morris is a "disinterested person" within the meaning of
Sections 327(a) and 101(14) of the Bankruptcy Code and neither
holds or represents an entity having an adverse interest in
connection with the case. (USG Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
UNITED PETROLEUM: Must Raise New Capital & Restructure Operation
----------------------------------------------------------------
United Petroleum Corporation has incurred substantial operating
losses and cash flow deficiencies subsequent to the Merger, due
to, among other things, persistently high gasoline
prices, the interest burden of substantial Merger-related
financing with variable rates that increased during the year,
high general and administrative expenses relating to its own
operations as well as the operations of Farm Stores Grocery,
Inc. and difficulties encountered in implementing the Company's
expansion by acquisition, gas branding and other growth
strategies.
As a result of these financial difficulties, the Company cannot
comply with the covenants and other provisions of its principal
institutional financing arrangement, and therefore the entire
amount outstanding under this debt of approximately $23 million
is classified as a current obligation on the Company's balance
sheet for the fiscal year ended September 3, 2000, the latest
financial statements filed with the SEC, on September 28, 2001.
The Company planned to address the above cited circumstances by
seeking additional financing and substantially retrenching its
operations, including selling certain stores and reducing its
general and administrative expenses.
This reduction in general and administrative expenses left the
Company unable to perform under its management agreement with
Farm Stores Grocery, Inc. and therefore the Company terminated
its management agreement with Farm Stores Grocery, Inc.
effective January 15, 2001.
The Company's future success will depend on its ability to raise
additional capital, restructure its operations, and improve its
cash flow, and there can be no assurance that the measures the
Company takes will adequately address the Company's financial
difficulties.
The Company's auditors' report on the Company's consolidated
financial statements as of September 3, 2000 contains an
uncertainty paragraph concerning the ability of the Company to
continue as a going concern. If the Company is unable to reach
satisfactory arrangements regarding its primary institutional
financing and substantially increase its cash flow, the Company
may be forced to sell or cease its operations or reorganize.
VERADO HOLDINGS: Huge Hosting Acquires Shared Web Hosting Assets
----------------------------------------------------------------
Verado Holdings, Inc. (Nasdaq: VRDO), a provider of outsourced
managed hosting and professional services solutions, announced
it has sold its shared Web hosting business to Denver-based Huge
Hosting. Terms of the sale were not disclosed.
The sale is Verado's final step toward focusing on its core
business of providing enterprises with managed and professional
services.
The transaction brings Huge Hosting an additional 50,000 Web
sites to host and is expected to boost Huge Hosting revenues by
800 percent. Huge Hosting will co-locate its equipment in
Verado's data centers.
"We are confident in Verado's ability to manage our hosting
needs from its data centers" says Alex Burney, president of Huge
Hosting.
"We are very excited about this transaction. It brings our
business to a new level and lets us focus on our shared Web
hosting expertise," concludes Burney.
"The sale of Verado's shared Web hosting business substantially
completes the Company's commitment to the divestment of its non-
data center lines of businesses. Verado is now completely
dedicated to providing enterprises with secure managed and
professional services. We are pleased to have Huge Hosting as a
new customer," notes Tom McGrath, president and CEO of Verado.
Huge Hosting, LLC, is a leading-edge provider of technical Web
hosting and business enabling application services. Founded in
2000 by members with over 30 years of industry experience, Huge
Hosting is engaged in the development of professional Web site
solutions for businesses. Huge Hosting offers total hosting
solutions and Web site development for any size business and any
business segment, including the offering of 22 different levels
in shared, private, and dedicated hosting that embrace all major
operating systems.
Verado Holdings, Inc., headquartered in Denver, Colorado, is a
provider of outsourced managed and professional services and
data center solutions for businesses. Verado's state-of-the-art
data centers host, monitor and maintain mission-critical Web
sites, e-commerce platforms and business applications. Verado
provides managed services to enterprises including MetLife
Investors, KBKids.com, Toshiba, Parascript and more. For more
information, visit Verado's Web site at http://www.verado.com
As of June 2001, Verado Holdings recorded total assets of $202.2
million, while liabilities totaled $336.5 million.
VLASIC FOODS: Wants to Estimate Claims & Establish Reserve
----------------------------------------------------------
Prior to the Petition Date, Vlasic Foods International, Inc.
received loans and extensions of credit from certain Lenders and
from the DF Participants. According to Robert A. Weber. Esq.,
at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington,
Delaware, the outstanding aggregate principal amount owed under
the Pre-petition Credit Facility exceeded $318,000,000 as of the
Petition Date.
The DF Participants are the majority shareholders of VFI, Mr.
Weber tells the Court. The DF Participants assert that, prior
to the Petition Date, they acquired a participation interest in
the Pre-petition Credit Facility. In addition, the DF
Participants also insist that they are entitled to receive
certain fees and expenses and other obligations, and that such
obligations constitute secured claims.
Mr. Weber reminds Judge Walrath that the Court has authorized
the Debtors to distribute the cash proceeds from the Pinnacle
Sale to the Lenders and DF Participants. Accordingly, Mr. Weber
says, the Debtors distributed a total of $323,616,449 to the
Lenders.
The Debtors also distributed the sum of $586,649 on account of
the outstanding unpaid DF Direct Obligations, Mr. Weber reports.
According to Mr. Weber, the Lenders contend that the
distribution made by the Debtors did not pay the full amount of
interest, fees and expenses owed under the Pre-petition Credit
Facility. Mr. Weber advises the Court that the Lenders contend
that the additional unpaid amount owing to the Lenders is
approximately $2,500,000 (the Liquidated Expenses), including:
(i) approximately $2,400,000 on account of accrued post-
default interest on the principal amount of the Pre-
petition Credit Facility, at the post-default rate,
plus accrued interest on such amount, and
(ii) $125,000 on account of unpaid expenses and
indemnification costs owing under the Pre-petition
Credit Agreement.
Moreover, Mr. Weber relates, the Lenders and the DF Participants
each assert additional secured claims in the nature of
contingent, unliquidated indemnification claims for future out-
of-pocket expenses, including the fees and disbursements of
counsel, and future indemnification for certain other
liabilities, losses and costs in connection with any bankruptcy
cases involving the Debtors (the Unliquidated Expenses). These
parties have identified in particular certain litigation, which
has been threatened against each of them by the Committee, and
the expenses, which may result therefrom, Mr. Weber says.
The Debtors' joint plan of distribution provides for the
creation of a distribution Reserve for the future allowance and
payment of the indemnification expenses of the Lenders and the
DF Participants, Mr. Weber tell Judge Walrath. In order to
facilitate the confirmation of the Plan, Mr. Weber says, the
Debtors desire to establish the Reserve prior to the
Confirmation Hearing, and, as part of such request, seek entry
of an order, which estimates the Unliquidated Expenses.
The Debtors propose that the Reserve amount be established in an
amount which:
(i) is not less than $2,500,000, which is the approximate
amount of the Liquidated Expenses, and
(ii) an additional amount, to be determined by the Court,
that is appropriate for the Unliquidated Expenses.
The amount reserved for Unliquidated Expenses should be
sufficient to conservatively cover the reasonably anticipated
professional costs of the Lenders and DF Participants for the
balance of these proceedings, Mr. Weber suggests. In fixing
such amount, Mr. Weber also urges the Court to recognize that:
(i) the Lenders and DF Participants have already been repaid
all of the principal, non-default interest, and various
other fees owed to them under the applicable agreements;
and
(ii) the Lenders and the DF Participants believe that the
potential claims against them which have been identified
by the Committee are wholly lacking in merit.
In addition, Mr. Weber reminds the Court that the Plan provides
for the post-confirmation creation of a limited liability
company, VFI LLC, to administer distributions under the Plan and
to prosecute claims and causes of action that property of the
Debtors' estates. An individual designated by the Committee
prior to confirmation will manage VFI LLC, Mr. Weber says. In
this connection, the Debtors request that the Reserve amount to
be fixed by the Court be expressly subject to the right of the
Debtors and the LLC Manager, once appointed, to seek its
modification, upon notice to affected parties and with Court
approval.
Delay in the estimation of the Unliquidated Expenses and the
fixing of the Reserve could delay confirmation of the Plan and
unduly interfere with the administration of the Debtors' cases,
Mr. Weber warns.
Mr. Weber emphasizes that the Debtors do not seek in this motion
to allow or disallow the Unliquidated Expenses or any other
aspect of the claims of the Lenders of the DF Participants at
this time. Likewise, the Debtors do not seek in this motion to
determine the amount that such parties shall receive as
distributions under the Plan on account of their allowed claims,
Mr. Weber adds.
Thus, the Debtors ask Judge Walrath for an order (i) estimating
the Unliquidated Expenses, and (ii) establishing the Reserve for
the Liquidated and Unliquidated Expenses. (Vlasic Foods
Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WARNACO GROUP: Wants Plan Filing Deadline Extended to February 6
----------------------------------------------------------------
In a Stipulation, The Warnaco Group, Inc., the Debt Coordinators
for the Pre-Petition Banks, the Post-Petition Lenders, the U.S.
Trustee, and the Creditors' Committee agree to extend the
exclusive period to file a plan of reorganization to October 18,
2001.
Judge Bohanon also confirmed that there is a need to extend the
exclusive period since the next omnibus hearing date scheduled
is on October 18, 2001, which 9 days after the expiration of the
deadline to file a plan of reorganization.
In their motion, filed a few days later, the Debtors argue that
"cause" exists to extend their exclusive periods for 120 days
each. The Debtors propose:
(a) February 6, 2002 as the deadline to file a plan of
reorganization, and
(b) April 9, 2002 as the expiration of their solicitation
period.
Kelley A. Cornish, Esq., at Sidley Austin Brown & Wood, in New
York, New York, tells the Court that the Debtors have taken
several key steps towards a successful and consensual resolution
of these chapter 11 cases since Petition Date. In particular,
Ms. Cornish outlines that the Debtors have:
(i) obtained adequate liquidity to fund their operations
going forward,
(ii) augmented the restructuring capabilities of senior
management by hiring a Chief Restructuring Officer with
recognized experience in turnaround situations,
(iii) implemented extensive cost-cutting measures, and
(iv) made substantial progress towards completion of the
business plan reviews that will serve as the basis for
formulating the Debtors' overall restructuring plan.
Also, Ms. Cornish adds, the Debtors have worked cooperatively
with their key constituencies with the goal of achieving a
consensual resolution of these cases.
Ms. Cornish asserts that the Debtors are now in a strong
liquidity position and believe that the $600,000,000 DIP
Financing Facility will provide more than adequate liquidity to
fund their business going forward. As of September 30, 2001,
Ms. Cornish informs Judge Bohanon, there were $165,000,000 in
borrowings, together with $66,300,000 in trade letters of credit
and $2,500,000 in standby letters of credit, outstanding under
the DIP Financing Facility.
Ms. Cornish also relates that Chief Restructuring Officer
Antonio C. Alvarez has been working closely with the Debtors'
top management officials to implement these cost-cutting
initiatives:
(i) a comprehensive evaluation of over 250 real property
leases, resulting, to date, in the rejection of over 30
leases of retail stores, offices and other facilities
yielding approximately $5,000,000 in annual savings;
(ii) the rejection of two aircraft leases and the elimination
of related expenses resulting in approximately
$6,100,000 in annual savings;
(iii) reductions in corporate expenses resulting in
approximately $25,900,000 in annual savings, including
reductions in personnel, outside computer contractors
and other corporate expenses;
(iv) the sale of a non-essential distribution facility in
Stratford, Connecticut for net proceeds of approximately
$4,500,000;
(v) the sale of a corporate apartment in New York City and
the disposition of leaseholds for approximately
$750,000; and
(vi) the sale of aircraft and helicopter parts for $245,000.
According to Ms. Cornish, the Debtors expect to complete a
comprehensive business plan review and planning process in
November 2001.
With the help of their financial advisors, Ms. Cornish says, the
Debtors have identified four business units that they are
predisposed to sell. The Debtors also intend to explore the
potential sale of the remaining business units for purposes of
comparing the values that could be achieved in a sale with
stand-alone reorganization values, according to Ms. Cornish.
Recognizing the benefits of working cooperatively with their
constituencies, the Debtors have attended the periodic meetings
with representatives of their pre-petition lenders, the
Committee and their professionals, and have also provided
extensive financial information and documentation.
But while they have made significant progress, Ms. Cornish
asserts, the Debtors still require more time to complete their
business plan reviews, to formulate and propose an overall plan
to their constituencies, and to pursue a consensual resolution
of these cases.
Ms. Cornish contends that the 120-day extensions of the
Exclusive Periods will give the Debtors the opportunity to
complete the stabilization, cost-cutting and business planning
programs that are well underway, as well as to formulate a
comprehensive long-term business plan that will serve as the
basis for plan negotiations.
Ms. Cornish assures the Court that the requested extensions will
not prejudice the legitimate interests of any creditor or equity
security holder. Ms. Cornish informs Judge Bohanon that the
Debtors have already discussed the requested 120-day extension
with their DIP Lenders, Pre-petition Lenders and the Committee,
and they don't expect any objection from them. (Warnaco
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WHEELING-PITTSBURGH: Court Okays GRC to Sell Brook County Assets
----------------------------------------------------------------
Wheeling-Pittsburgh Steel Corp. has received the court approval
to retain broker General Realty Company to sell the two groups
of unimproved real property in Brooke County, West Virginia --
the Green's Run Property and the Riverfront Property.
GRC is to receive a 6% commission upon the closing of the real
estate transactions for the sales of each of these properties.
(Wheeling-Pittsburgh Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WINSTAR COMMS: Gets Okay to Reject Citizens Leasing Master Lease
----------------------------------------------------------------
Judge Farnan approved a Stipulation between Winstar
Communications Inc. and Citizens Leasing which providing that:
A. Effective September 20, 2001, Winstar Wireless, Inc. rejects
the Master Lease.
B. Winstar Wireless shall make available for pickup by Citizens
all of the Leased Vehicles within September 20-27, 2001. The
Vehicles shall be left in good repair and working order, in
compliance with the manufacturer's recommended tolerances
for operation and performance in all material respects.
Within the same period, Winstar Wireless shall use
commercially reasonable efforts to consolidate the Leased
Vehicles at the WWI office closest to each of the Leased
Vehicles' usual place of garage, and shall further make
similar efforts to consolidate them at one centralized WWI
office per city. WWI shall also provide the location of each
of the Leased Vehicles to Citizens and, in the event of any
damage to the Vehicles, deliver collected insurance proceeds
or assist Citizens in the collection of such proceeds.
C. Both parties acknowledge that Citizens is entitled to an
administrative claim totaling not less than $162,022.85. The
Debtors are currently reviewing their books to determine the
appropriate allowed amount for the claim. In the event that
this amount is not resolved by both parties before the next
Omnibus hearing on October 18, 2001, the Court shall then
set a hearing to resolve the issue on that date.
D. Not later than September 22, 2001, WWI shall designate one
or more individuals to coordinate and facilitate the return
of the Leased Vehicles.
E. The automatic stay is modified to permit citizens to re-
lease or sell the Leased Vehicles. Nothing shall be deemed
to affect Citizens' general unsecured claim, including any
arising from the rejection of the Master Lease. Citizens is
given until October 30, 2001 to file a claim arising from
the rejection of the Master Lease. (Winstar Bankruptcy News,
Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
*********
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For copies of court documents filed in the District of Delaware,
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*********
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Copyright 2001. All rights reserved. ISSN: 1520-9474.
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