/raid1/www/Hosts/bankrupt/TCR_Public/011016.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 16, 2001, Vol. 5, No. 202
Headlines
AMF BOWLING: Houlihan Lokey Under Fire from Debtors & Citibank
ADVANCED MICRO: S&P Affirms Low-B and Junk Ratings
ANN TAYLOR: S&P Places Low-B Ratings on CreditWatch Negative
ARMSTRONG HOLDINGS: AWI Seeks Approval to Employ Videx As Broker
BETHLEHEM STEEL: Files For Chapter 11 Protection in New York
BETHLEHEM STEEL: Case Summary & 30 Largest Unsecured Creditors
BETHLEHEM STEEL: Q3 Net Loss Soars As Realized Prices Drop 9%
BRIDGE INFO: Court Extends Lease Decision Deadline to Feb. 12
BROCKER TECHNOLOGY: Nasdaq Staff Continues to Mull Delisting
COMDISCO INC: Engages Rothschild Inc. as Investment Banker
COMDISCO: Takes SunGard's $825MM Bid & Throws H-P Overboard
COMDISCO INC: H-P Plans to Contest Sungard's "Inferior" Bid
DAIRY MART: AMEX Intends to Delist Debtors' Shares
EXODUS COMMS: Obtains Investment & Deposit Requirement Waiver
FEDERAL-MOGUL: Signs-Up Rothschild Inc. as Financial Advisor
FEDERAL-MOGUL: Wins Four Contracts at Over $20 Million Annually
GENESIS WORLDWIDE: Gets Approval to Access $6MM DIP Financing
GENESIS WORLDWIDE: Judge Waldron Schedules Auction on Nov. 13
GLOBAL TELESYSTEMS: Expects Delaware Petition to be Withdrawn
GLOBIX CORP: S&P Junks Ratings & Says Outlook is Negative
HAWK CORP: S&P Says Outlook Stable But Industry is Weakening
INFU-TECH INC: Has No Idea When it Will Make Form 10-K Filing
INTEGRATED HEALTH: Wants to Reject 5 & Preserve 9 Florida Leases
LAM RESEARCH: S&P Changes Outlook Over Decline in Order Backlog
LEVEL 3 COMMS: S&P Places Junk Ratings on CreditWatch Negative
METAL MANAGEMENT: Distributes 8.8M Shares of New Common Stock
METAL MANAGEMENT: Results Improve Upon Chapter 11 Emergence
NYACK HOSPITAL: Fitch Concerned About Low Debt Coverage Levels
PACIFIC GAS: Gets Court Approval to Assume 51 QF PPAs as Amended
POLAROID CORP: Court Allows Access to $13.1MM of Cash Collateral
POLAROID CORP: S&P Drops Bank Loan to D After Chapter 11 Filing
PROVINCE HEALTHCARE: S$P Rates $250M Senior Secured Credit at B+
PSINET INC: Court Okays Sale of Metamor Shares to CIBER For $40M
PSINET INC: TELUS Completes Takeover of Canadian Operations
RAILTRACK PLC: Junk Ratings Reflect Proposed Standstill Terms
REDBACK NETWORKS: Reduced Liquidity Prompts S&P to Junk Ratings
SMTC CORP: Losses Have S&P Placing Ratings on Watch Negative
SEIRA LTD: S&P Junks EUR10 Million Series 5 Notes
SPIGADORO INC: Says Banks Extend Maturity Date for 60 Days
SUN HEALTHCARE: Removal Period Further Extended to November 22
TEKNI-PLEX: S&P Affirms Low-B Ratings After Acquiring Mark IV
TELEMUNDO: S&P Places Low-B & Junk Ratings on Watch Positive
TRI-NATIONAL: Senior Care Deems Complaint "Seriously Deficient"
USG CORP: L&W and Channelinx Team Up For Online Sales & Service
VENTUREQUEST: Enters Deal to Acquire VytalTek For About CDN$405K
VLASIC FOODS: Urges Rejection of Retiree Panel Appointment
WARNACO GROUP: Seeks Court Approval to Reject 57th Street Lease
WASHINGTON GROUP: Court Junks Chairman's Agreement with Lenders
WINSTAR COMMS: Trizechahn Demand Payment of Postpetition Arrears
*********
AMF BOWLING: Houlihan Lokey Under Fire from Debtors & Citibank
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The Official Committee of Unsecured Creditors of AMF Bowling
Worldwide, Inc., presents its application to the Court to employ
and retain Houlihan Lokey Howard & Zukin Capital as its
financial advisor in the Debtors' consolidated chapter 11
bankruptcy cases.
The Committee submits that it will be necessary to employ and
retain a financial advisor to understand, among other things:
A. Financing options for the Company, including Exit Financing;
B. Potential divestiture, acquisition and merger transactions
for the Company;
C. Valuation analyses of the Company as a going-concern, in
whole or part;
D. Capital structure issues for the reorganized Company,
including debt capacity;
E. Financial issues and options concerning potential plans of
reorganization, and coordinating negotiations with respect
thereto;
F. The Company's business plan, including an analysis of the
Company's long term capital needs and changing competitive
environment;
and to provide:
G. Testimony in court on behalf of the Committee, if necessary;
and
H. Any other necessary services as the Committee or the
Committee's counsel may request from time to time with
respect to the financial, business and economic issues that
may arise.
Robert S. Hamwee, Chairman of the Official Committee of
Unsecured Creditors relates that on September 15, 2000, an
informal committee of certain holders of the Debtors' senior
subordinated notes retained Houlihan Lokey to represent it in
the investigation of the financial condition of the Debtors and
consideration of options available to the Bondholder Committee
with respect thereto. Houlihan Lokey has represented the
Bondholder Committee in the restructuring efforts leading up to
the filing of these chapter 11 cases. As part of the
representation of the Bondholder Committee, Mr. Hamwee says that
Houlihan Lokey became fully familiar with the business
operations and financial affairs of the Debtors.
Mr. Hamwee tells the Court that the Committee seeks to retain
Houlihan Lokey as its financial advisor because of Houlihan
Lokey's extensive experience and expertise in bankruptcy and
insolvency matters, particularly business reorganizations under
chapter 11 of the Bankruptcy Code, and Houlihan Lokey's
expertise in representing creditors' committees in Chapter 11
cases. The Committee believes that Houlihan Lokey is well
qualified to represent it in these chapter 11 cases, and
requests entry of an Order authorizing it to employ and retain
Houlihan Lokey as its financial advisor to perform financial
advisory services for the Committee during these chapter 11
cases.
David R. Hilty, director of Houlihan Lokey Howard & Zukin
Capital informs the Court that the firm provides services to a
large and diverse client base and has on occasion provided, and
may continue to provide, services to certain creditors and
parties in interest of the Debtors, including services provided
in matters unrelated to these proceedings.
Mr. Hilty says that he directed the firm to conduct a conflict
check prior to engagement in these cases and made these
discoveries:
A. Houlihan Lokey is currently providing, or has in the past
provided, advisory services in unrelated matters to the
following potential parties-in-interest in this case:
1. Goldman Sachs and its affiliates;
2. Bain Capital;
3. Blackstone Capital Partners and its affiliates;
4. Kelso Equity Partners and its affiliates;
5. Citicorp; and
6. Bank of America.
B. On March 21, 1996 an affiliate of Houlihan Lokey rendered an
opinion to one or more affiliates of the Debtors in
connection with a recapitalization. Houlihan Lokey was not
an investment banker to the Debtors or its affiliates and
was not involved in the issuance of any securities.
Furthermore, GE Capital, a holder of pre-petition secured
bank debt is a limited partner in a private equity fund in
which Houlihan Lokey is the general partner.
C. Certain other creditors and parties in interest may have in
the past, are currently, or in the future may serve on
official or "informal" committees in other, unrelated cases
which Houlihan Lokey advises on financial restructuring
matters.
Mr. Hilty certifies that no services have been provided to any
of the creditors or other parties in interest which could impact
their rights in the Debtors' cases, nor does Houlihan Lokey's
involvement in these cases compromise its ability to continue
such advisory services. He adds that Houlihan Lokey will not
represent these or other unsecured creditor's individual
interests in these matters except as financial advisor to the
Committee.
Mr. Hilty informs the Court that Houlihan Lokey is well
qualified to act as the Committee's financial advisors as they
provides a range of financial advisory, investment banking, and
valuation services to debtors and debtors-in-possession,
creditors' committees, acquirers, and other parties-in-interest
in connection with bankruptcy cases and financially distressed
situations. Houlihan Lokey professionals have served or are
presently serving as financial advisors to debtors, creditors
and trustees in numerous Chapter 11 proceedings and are
presently working on approximately 50 other major financial
restructuring transactions both in and out of court. Mr. Hilty
contends that the professionals assigned to this engagement
possess the requisite experience to handle complex bankruptcy
matters.
Mr. Hilty relates that as stated in the Engagement Letter, if
approved by this Court, Houlihan Lokey will be entitled to a
monthly fee equal to $125,000 plus the reimbursement of all
reasonable out-of-pocket expenses and will also be entitled to a
transaction fee in an amount equal to $1,000,000. Mr. Hilty
states that the Transaction Fee shall be earned upon the
confirmation of a chapter 11 plan and paid upon the effective
date of any such plan and shall be payable in cash, or, at the
option of the Committee, in the same form as is received on a
weighted average basis by all unsecured creditors.
Debtors Object
The Debtors object to the Committee's Application on four bases:
A. The Committee's employment of Houlihan should not be
retroactive back to the Petition Date.
B. Houlihan should not be entitled to a $1,000,000 success fee
upon confirmation.
C. The indemnification sought by Houlihan is broader than that
which the Committee deems to be appropriate for the Debtors'
proposed financial advisor.
D. The Court's scope of review of Houlihan's compensation should
be the same as for the Debtors' financial advisor.
Dion W. Hayes, Esq., at McGuire Woods, LLP in Richmond,
Virginia, says that the most remarkable aspect of the
Application is that Houlihan seeks its retention to be made
effective retroactively back to the Debtors' petition date of
July 2, 2001, while the Committee was not appointed until July
17, 2001. In addition, the Committee did not vote to retain
Houlihan until July 20, 2001, and the Committee waited until 67
calendar days on September 25, 2001, after that vote to file the
Application.
Mr. Hayes tells the Court that estate professionals cannot
normally be compensated for work performed before court approval
of their retention, and nunc pro tunc employment of estate
professionals can only be granted in exceptional circumstances.
Mr. Hayes explains that Houlihan in its Application and the
annexed affidavit has made absolutely no effort to explain to
this Court its failure to seek timely approval of its
employment.
In the event the Court authorizes the Committee's retention of
Houlihan as its financial advisor, such retention should not be
effective prior to September 25, 2001, the date the Committee
filed the Application.
Mr. Hayes adds that Houlihan also seeks certain compensation
commitments and indemnification provisions, which violate and
exceed the parameters the Committee has previously urged this
Court to approve for the Debtors' financial advisor. Mr. Hayes
contends that it is inappropriate for the Committee to seek more
favorable treatment for its financial advisor than that which it
urges for the Debtors' financial advisor. Accordingly, for these
reasons, Mr. Hayes requests that the Court should deny the
Application.
Under the Houlihan Engagement Letter, Mr. Hayes states that
Houlihan would apparently be entitled to this success fee of
$1,000,000 even if the plan confirmed by this Court was
vehemently opposed by the Committee. Mr. Hayes submits that the
amount of the proposed success fee is excessive, considering
Houlihan's contributions to this restructuring process to date
and the work that Houlihan will likely undertake in the future.
Further, Mr. Hayes asserts that no success fee in any amount
should be payable to Houlihan except upon confirmation of a plan
which is supported by the Committee.
Mr. Hayes informs the Court that the Houlihan Engagement Letter
contains certain broad indemnification provisions which would
provide for full, unlimited indemnification of Houlihan by the
Debtors for any liabilities or obligations incurred by Houlihan
as a result of its own negligence in the course of its
representation of the Committee. The Debtors do not oppose a
limited and appropriate form of indemnification for Houlihan but
such indemnification should not be broader than the
indemnification the Court approves for the Debtors' financial
advisor.
Citibank Objects
Tyler P. Brown, Esq., at Hunton & Williams in Richmond,
Virginia, tells the Court that Citibank objects to the terms of
Houlihan's retention because of the request for retroactive
effective date of employment to July 2, 2001, prior to the date
which the Committee was appointed. Although the Committee voted
to retain Houlihan on July 20, 2001, Mr. Brown states that the
Committee offered no justification, excuse or explanation for
its failure to file an application until September 25, 2001.
Even if the Court approves Houlihan's employment, Mr. Brown
requests that it should not permit the employment to begin on
July 2 because this date and July 14, the Committee was employed
and paid by the Bondholder Committee.
Citibank also objects to the proposal to compensate Houlihan
with a $125,000 monthly fee plus reasonable out-of-pocket
expenses, because it has no expressed relationship to the actual
services provided by Houlihan to the Committee. Mr. Brown states
that the Court should not approve this compensation but rather
should be required the same type of information fee required of
other professionals for the Court to decide the reasonableness
of compensation.
Lastly, Citibank opposes the Committee's proposal to pay
Houlihan a $1,000,000 success fee upon confirmation of a plan of
reorganization because it does not require Houlihan to do any
work in negotiating, formulating or participating in the plan
process. Mr. Brown contends that the Committee bear the burden
of showing that the success fee is reasonable and in the best
interest of the Debtors estates. Mr. Brown submits that the
determination of reasonableness of such fees should await the
outcome of these cases.
Mr. Brown says that Houlihan should not be permitted to avoid
its burden of justifying a success fee and should be required to
submit a final fee application at the end of these cases to
evaluate the success of these cases and Houlihan's contribution
to that success. Mr. Brown asserts that Houlihan should not be
entitled to the success fee because it did not have anything to
do with the proposed reorganization plan of the Debtors, that
was submitted prior to its retention. (AMF Bankruptcy News,
Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ADVANCED MICRO: S&P Affirms Low-B and Junk Ratings
--------------------------------------------------
Standard & Poor's revised its outlook on Advanced Micro Devices
Inc. (AMD) to stable from positive, while affirming the ratings.
The ratings on AMD reflect the challenges the company faces in
executing its business plan in a very competitive market.
Sunnyvale, California based AMD manufactures personal computer
microprocessors and "flash" memory chips. Flash memories are
non-volatile, rewritable chips used to provide long-term storage
of information, such as frequently called numbers, in cell
phones and networking equipment.
The company's most recent series of microprocessors have
established a good, but second-tier, position in the consumer
and small business personal computer market. However, the
company continues to lack presence with enterprise customers and
does not make products for the high-performance server market.
Dominant competitor Intel Corporation has cut prices very
aggressively in recent months, pressuring AMD's margins,
although manufacturing performance remains good. Furthermore,
some PC makers have consolidated their purchases on Intel-based
platforms to reduce manufacturing costs and simplify branding.
Still, marketplace forces are expected to support the company's
continued presence as a microprocessor supplier.
AMD's flash memories, made in factories owned jointly with
Fujitsu Ltd., are used in cell phones, routers, and other
communications products. The market has weakened substantially
in recent quarters as previously anticipated phone sales and
networking growth rates failed to take place. Industry-wide
flash inventory levels are still excessive. Still, AMD is a
leader in this currently pressured industry.
AMD generated record revenues of $4.6 billion and EBITDA of $1.9
billion in 2000, and sales continued at that pace into the first
quarter of 2001. However, conditions declined materially during
2001, as sales in the June quarter were 17% below the March
level. Revenues declined a further 22% in the September period,
and weakness had accelerated during the course of the quarter.
The company expects to report a net loss from operations of $90
million-$110 million for the September quarter, in addition to a
restructuring charge of the same magnitude.
Cash balances totaled $1.1 billion at June 30, 2001, about equal
to total debt levels, while there are no near-term maturities.
Outlook: Stable
AMD is expected to continue to be a significant participant in
the personal computer microprocessor industry, as well as to
remain a major supplier of flash memory chips, although its
financial flexibility is also expected to remain limited.
Ratings Affirmed, Outlook Revised to Stable
Advanced Micro Devices Inc.
Corporate credit rating B
Sr secd bank loan B+
Shelf Sr secd/sub debt (Rule 415) B/CCC+
ANN TAYLOR: S&P Places Low-B Ratings on CreditWatch Negative
------------------------------------------------------------
Standard & Poor's placed its double-'B'-minus corporate credit
rating on Ann Taylor Inc., and its single-'B' subordinated debt
rating on Ann Taylor Stores Corp., which is guaranteed by Ann
Taylor Inc., on CreditWatch with negative implications.
The CreditWatch placement is based on disappointing sales to
date in 2001, and Standard & Poor's concern that this trend may
persist to the detriment of earnings and credit protection
measures.
Ann Taylor continues to have merchandising problems, and
Standard & Poor's believes improvements in sales trends for the
remainder of 2001 and into 2002 will be difficult to achieve
given the weak economic environment in the U.S. Ann Taylor's
same-store sales decreased 13.9% in September and 8.8% for the
fiscal year to date.
The sales decline is due to the confluence of poor execution by
Ann Taylor, a decrease in consumer spending, and the weak U.S.
economy. The company's operating margin declined to 18.4% in the
first half of 2001 from 20.7% in the same period in 2000.
Standard & Poor's believes the company's operating performance
will remain under pressure due to the increasingly difficult
retail environment.
Standard & Poor's plans to meet with management to discuss the
company's operating and financial strategies.
ARMSTRONG HOLDINGS: AWI Seeks Approval to Employ Videx As Broker
----------------------------------------------------------------
Armstrong World Industries, Inc., asks Judge Joseph J. Farnan to
authorize it to enter into a sales agreement with Perry Videx
LLC, and to further authorize the Debtor, in its business
judgment and consistent with its prepetition practices, to sell
from time to time certain used and surplus equipment without
further notice or Order.
Sale of AWI's Used and Surplus Equipment
As part of its normal business operations, AWI uses certain
production equipment, including, but not limited to, mixers,
mills and pumps. In the past, as such equipment was replaced
with newer equipment or in the event there was a surplus of such
equipment, AWI would sell the used or surplus equipment to
various purchasers.
Such sales are an integral part of Awl's ongoing business in
that they prevent AWI's assets from sitting idle. When AWI sold
such equipment prior to the Petition Date, it either sold the
equipment directly to purchasers or enlisted the services of a
broker to market and sell the equipment. In this Motion, the
Debtors elect the latter course.
The Agreement with Perry Videx
In connection with the sale of the equipment, AWI desires to
enter into the Agreement with Perry Videx, a recognized
equipment broker. Specifically, the parties' obligations under
the Agreement are:
(a) For a period of one year, beginning on September 1,
2001, Perry will be AWI's "preferred and recommended agent with
exclusive rights to sell any of the [E]quipment once it is
listed for sale." The exclusive period will be effective with
respect to an item of equipment for 6 months after AWI lists the
equipment for sale or until such equipment is sold, whichever
comes first. AWI may also use Perry as its agent to procure used
equipment; however, the seller will pay commissions earned by
Perry as a result of such sale.
(b) In consideration for its services, Perry will receive
a commission payment equal to 20% of the purchase price. In
addition to direct sales by Perry, Perry will receive a
commission for a sale to any purchaser who:
(i) purchases equipment from AW1 during the term of
the Agreement; or
(ii) has been identified by Perry as a purchaser
with which it was negotiating a sale of
equipment and purchases within six months
after the termination of the Agreement.
The commission may be reduced to the extent that AWI purchases
used equipment from Perry.
(c) All offers shall be submitted to AWI. If AWI accepts
an offer to purchase any of the equipment, payment in "cleared
funds" may be made to either AWI or to Perry. If payment is
delivered to Perry, Perry is authorized to remit such payment to
AWI after setting off any commissions earned with respect to the
particular sale.
(d) AWI is under no obligation to accept offers to
purchase the equipment, and Perry is under no obligation to
accept a listing of equipment for sale.
Before entering into the Agreement with Perry, AW1 evaluated a
number of approaches to selling the equipment. As part of this
process, AWI contacted various equipment brokers it identified
through exhaustive internet searches and its attendance at
various trade shows. AWI requested information from a number of
equipment dealers and conducted telephone interviews and
participated in meetings with those dealers that appeared able
to provide AWI the services it requires with respect to the
equipment. In particular, AWI sought to retain a single
equipment broker that could provide selling services, plus
equipment sales consultation and the software needed to manage
the equipment sales process.
Of the equipment brokers AWI considered, few had the expertise,
experience, software and database specifications required by AWI
to sell the equipment, while others were charging fees in excess
of those provided for the brokering services contemplated in the
Agreement.
Perry, who had provided prepetition equipment brokerage services
to AWI, had charged a 20% commission fee in the past, but was
willing to provide the following additional services without any
additional fees:
(i) consulting services, including on-site visits to
AWI's plants;
(ii) a database to be used by both Perry and AWI in
tracking the equipment and possibly transferring the
equipment to another location within AWI, and the
necessary software in that connection; and
(iii) searches for used equipment for sale by other
manufacturers like AWI.
AW1 negotiated with Perry, intensely scrutinized the terms of
the Agreement and compared it to offers it received from other
equipment brokers. AWI's management team determined that as a
result of this process the terms offered by Perry, as set out in
the Agreement, provide the greatest benefit to AWI's estate.
The Debtor announces that Perry Videx does not intend to file an
application with the Court under the Bankruptcy Code before
requesting and receiving payment from AWI or setting off amounts
owing to AWI for commissions earned from the sale of any of the
Equipment.
The Debtor's Business Purpose
By this Motion, AWI seeks entry of an order authorizing AWI's
entry into the Agreement with Perry Videx. Prior to the Petition
Date, as part of its general business practices, AW1 sold its
used and surplus equipment and purchased various used equipment
necessary for AWI's continued operations. Prior to the Petition
Date, AW1 sometimes sold this equipment directly to purchasers,
and at other times used a broker to sell such Equipment.
The terms of the Agreement, including the proposed 20%
commission, arc substantially similar to those used by AWI in
the past. Accordingly, AWI submits that its decision to enter
into the Agreement for brokering services for the sale of the
equipment should be deemed to be in the ordinary course of AWI's
business.
Nevertheless, out of an abundance of caution, because the
Agreement involves the disposition of estate assets, AWI
respectfully asks Judge Farnan to authorize its entry into the
Agreement, effective as of September 1, 2001.
It is clear, at least to AWI, that its decision to enter into
the Agreement is supported by sound and reasonable business
judgment and is in the best interest of AWI's estate. As
stated, in order to maximize the value of its business and thus,
its estate, AWI has determined that it must sell equipment that
is no longer being used in AWI's business either because such
equipment is no longer needed in AWI's operations or it has been
replaced by newer models.
In the exercise of its business judgment, AWI has determined
that it is advisable to retain a broker to market and sell its
equipment. AWI believes that Perry Videx, as its agent, will
ensure the efficient and expedient sale of AWI's equipment
thereby maximizing the value of the equipment to AWI's estate.
Furthermore, AWI has determined that the commission fee
arrangement with Perry Videx will ensure that AWI receives the
greatest dollar amount feasible for all of the equipment sold.
Because Perry Videx's commissions are linked to the ultimate
sale price of the equipment, Perry Videx has every reason to
identify the purchaser offering the highest price for each piece
of equipment, thereby creating a competitive bidding process
similar to an auction.
This process undoubtedly will maximize the value of the
equipment to the benefit of AWI, its creditors and its estate.
Additionally, AWI determined as a result of its negotiations
with a number of other equipment dealers that the commission
contemplated under the Agreement is reasonable and consistent
with the industry standard. AWI submits that the decision to
enter into the Agreement represents a sound exercise of AWI's
business judgment, and AWI respectfully requests that the Court
authorize it to enter into the Agreement and to pay any amounts
due and owing to Perry Videx under the Agreement (including,
without limitation, permitting Perry to offset its fees against
amounts paid to Perry for sold equipment) without further
application to, or order of, the Court.
Lastly, notwithstanding anything in Rule 6004(g) of the Federal
Rules of Bankruptcy Procedure, AWI requests that the Court
authorize the parties to take any and all actions contemplated
in the Agreement immediately upon entry of an Order with respect
to this Motion and order that such actions are not stayed for a
period of 10 days.
In the absence of any objection, Judge Farnan promptly enters an
Order granting the requested relief effective September 1, 2001,
and expressly providing that the Debtors may sell any and all of
its used or surplus equipment at any time that AWI deems
appropriate in the exercise of its business judgment and
consistent with AWI's prepetition practices. (Armstrong
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
BETHLEHEM STEEL: Files For Chapter 11 Protection in New York
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Bethlehem Steel Corporation (NYSE: BS), the second-largest
integrated steel manufacturer in the nation, announced that it
has filed a voluntary petition under Chapter 11 of the Federal
Bankruptcy Code in the United States Bankruptcy Court for the
Southern District of New York.
Despite nearly $300 million in net cost reductions since the
middle of 1998, the Company could not overcome the injury caused
by record levels of unfairly traded steel imports and the
slowing economy that have severely reduced prices, shipments and
production.
Since mid-1998, Bethlehem's revenues have been reduced over this
same period by approximately $1.3 billion annually. The
resulting operating losses of approximately $500 million and
negative cash flow since the middle of 1998 have severely
impaired the Company's financial condition.
The entire domestic steel industry is suffering from the
onslaught of record steel imports since 1998, resulting in over
20 prior bankruptcy filings. The events of September 11 have
contributed to a further weakening in demand for consumer
products that rely on steel, such as automobiles, appliances and
new homes, and to a worsening outlook for our near-term
performance.
Bethlehem is seeking protection under Chapter 11 to provide the
necessary time to stabilize the Company's finances and to
develop and implement a strategic plan to return Bethlehem to
sustained profitability.
Key objectives of the plan will include improving the Company's
capital structure, working with the United Steelworkers of
America (USWA) to improve productivity and further reduce costs,
particularly employment and healthcare costs, and finding a
solution to its approximate $3-billion retiree healthcare
obligation. While in Chapter 11, Bethlehem will continue to
work with the federal government to remedy unfair trade
practices, reduce excess global steel capacity and foster
domestic steel industry consolidation.
The Company has secured a loan commitment for $450-million
Debtor-in- Possession (DIP) financing from GE Capital, subject
to Court approval. This financing package, combined with other
actions, should provide sufficient liquidity to meet ongoing
operating needs.
During these restructuring proceedings, Bethlehem will continue
steel production without interruption with the same level of
commitment to superior quality and service to our valued
customer base. The Company's key supplier relationships remain
intact and the continued support of the supply base is essential
to the development of a successful Plan of Reorganization.
"This step is imperative to preserve not only the Company's
future, but also the future of our workforce. Working together
with the USWA and government, management intends to take full
advantage of the opportunities afforded by the Chapter 11
process to return Bethlehem to sustained profitability," said
Robert S. Miller, Jr., chairman and chief executive officer of
Bethlehem Steel Corporation. "Our employees have demonstrated
their support to get us through these difficult times. We
appreciate their continued loyalty and contributions."
Mr. Miller continued, "Bethlehem has made considerable progress
in reducing its costs and meeting customers' increasing demand
for high quality products. However, we need to do more.
Chapter 11 does not solve our problems. It provides us a
process and framework within which we can address and explore
the significant issues facing the Company. The cooperation of
the USWA is essential to increase productivity by establishing
more flexible work practices and to implement new initiatives to
significantly reduce our healthcare obligations. Discussions
with the USWA have already begun. Aggressive company-wide cost
reduction initiatives are underway and we are also developing
plans to further reduce our total workforce by January 2002.
Reducing our costs and strengthening our balance sheet will
allow Bethlehem to make the necessary investments in our
facilities to remain a leader in the steel industry."
Beyond these self-help measures, Bethlehem will seek government
assistance through strict enforcement of our trade laws
including a successful conclusion of the Section 201 trade case
now before the International Trade Commission.
In addition, Bethlehem will explore participation in the
necessary consolidation of the highly fragmented domestic steel
industry, and will look for solutions to the retiree healthcare
issue. Government assistance and support will be required if we
are to reestablish a vibrant and healthy domestic steel
industry.
Mr. Miller concluded, "There is much hard work ahead to restore
the Company to a position of financial viability. One thing is
clear, our national security and our economy depend upon a sound
and productive American steel industry, and Bethlehem is
determined to be an integral part of the future of our
industry."
Bethlehem Steel Corporation is the nation's second largest
integrated steel producer with revenues of about $2.6 billion
and shipments of 6.1 million tons of steel products for the
first nine months of 2001.
Founded in 1904 by Charles M. Schwab, Bethlehem Steel
Corporation traces its origins to the Saucona Iron Company,
which was established in 1857 in Bethlehem, Pa. Later renamed
the Bethlehem Iron Company, this single plant became the nucleus
around which the modern Bethlehem Steel Corporation was formed.
For 97 years, Bethlehem Steel has provided the steel to build,
transport and defend America. Its products have produced
enduring structures such as the Golden Gate Bridge, U.S. Supreme
Court Building, Chicago's Merchandise Mart and much of the New
York City skyline. A major producer of armaments for the
military, Bethlehem Steel's workforce in World War II numbered
about 300,000.
In addition to its steel plants, Bethlehem had shipyards on both
U.S. coasts that delivered a ship a day (1,121 in total) to the
Allied war effort. The Company's support of the military
continues today as it was the sole supplier of armor plate steel
for the repair of the USS Cole.
Bethlehem Steel currently employs about 13,000 and provides
benefits to about 130,000 individuals. The Company produces a
wide variety of steel mill products including hot-rolled, cold-
rolled and coated sheets, tin mill products, carbon and alloy
plates, rail, specialty blooms, carbon and alloy bars, and large
diameter pipe. Its principal markets include automotive,
construction, machinery and equipment, appliance, container,
service center, rail and energy.
Bethlehem Steel's principal operations include the Burns Harbor
Division, located 40 miles southeast of Chicago on the shores of
Lake Michigan in Burns Harbor, Ind.; the Sparrows Point Division
located on the Chesapeake Bay near Baltimore, Md.; and
Pennsylvania Steel Technologies located in Steelton, Pa., just
south of Harrisburg.
The Sparrows Point Division also operates steelmaking and plate
operations in Coatesville and Conshohocken, Pa. Burns Harbor's
operations include a galvanizing mill in Lackawanna, N.Y.,
located just south of Buffalo. Bethlehem also has iron ore,
lake shipping and trucking operations and operates eight
shortline railroads.
BETHLEHEM STEEL: Case Summary & 30 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor entities filing separate chapter 11 petitions:
Case No. Debtor Entity
-------- -------------
01-15288 Bethlehem Steel Corporation
01-15289 Alliance Coatings Company, LLC
01-15290 BethEnergy Mines, Inc.
01-15291 Bethlehem Cold Rolled Corporation
01-15292 Bethlehem Development Corporation
01-15293 Bethlehem Rail Corporation
01-15294 Bethlehem Steel de Mexico, S.A. de C.V.
01-15295 Bethlehem Steel Export Company of Canada, Limted
01-15296 Bethlehem Steel Export Corporation
01-15297 BethPlan Corporation
01-15298 Chicago Cold Rolling, L.L.C.
01-15299 Eagle Nest Inc.
01-15300 Encoat-North Arlington, Inc.
01-15301 Energy Coatings Company
01-15302 Greenwood Mining Corporation
01-15308 HPM Corporation
01-15309 Kenacre Land Corporation
01-15310 LI Service Company
01-15311 Marmoraton Mining Company, Ltd
01-15312 Mississippi Coatings Limited Corporation
01-15313 Mississippi Coatings Line Corporation
01-15314 Ohio Steel Service Company, LLC
01-15315 Primeacre Land Corporation
Bethlehem affiliates Bethlehem Steel Credit Affiliate One, Inc.,
Bethlehem Steel Credit Affiliate Two, Inc., Bethelehem Steel
Funding, LLC, Cambria and Indiana Railroad Co., Conemaugh &
Black Lick Railroad Co., Patapsco & Back Rivers Railroad Co.,
Brandywine Valley Railroad Co., Upper Merion & Plymouth Railroad
Co., Keystone Railroad Inc., Lake Michigan & Indiana Railroad
Co. LLC, Bethtran, Inc., Carrier Express, Inc., Beth Intermodal
Inc., RailQuest LLC, Steelton & Highspire Ralroad Co., Bethlehem
Hibbing Corp., Ontario Iron Co., Hibbing Development Co.,
Hibbing Taconite Co., Hibbing Land Corp., IPV, Inc., Bethlehem
Blank Welding, Inc., EGL Steel Co., Inc., Bethlehem Steel
International Corp., Bethlehem Roofing Co., LLC, Interocean
Shipping Co., Bethlehem Energy Services, Inc., Bethlehem
Industries Corp., Pennsylvania Steel Technologies, Inc.,
Bethlehem Steel Foundation, and Twincast Property Leasing, Inc.,
did NOT file chapter 11 petitions.
Petition Date: October 15, 2001
U.S. Bankruptcy Court: United States Bankruptcy Court
Southern District of New York
Alexander Hamilton Custom House
One Bowling Green, 5th Floor
New York, New York 10004-1408
Telephone (212) 668-2870
Bankruptcy Judge: The Honorable Burton R. Lifland
Debtors' Counsel: Harvey R. Miller, Esq.
Jeffrey L. Tanenbaum, Esq.
George A. Davis, Esq.
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Telephone (212) 310-8000
Debtors'
Financial Advisor: Michael A. Kramer
Managing Director
GREENHILL & CO., LLC
300 Park Avenue
New York, NY 10022
(212) 389-1500
Debtors' Special
Corporate Counsel: D. Collier Kirkham, Esq.
CRAVATH, SWAINE & MOORE
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Telephone (212) 474-1000
U.S. Trustee: Carolyn S. Schwartz
Office of United States Trustee
33 Whitehall Street, 21st Floor
New York, NY 10004
Telephone (212) 510-0500
Debtors' 30 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
U.S. Bank Trust National 7-5/8% Notes Loan $150,000,000
Darlene Garsteig
Association, Trustee
180 East 5th Street,
2nd Floor
St. Paul, MN 55101
651-244-5000
The Bank of New York, 10-3/8% Senior Notes $105,000,000
Trustee Loan
Iliana A. Arciprete
101 Barclay Street, 21W
New York, NY 10286
212-495-1784
U.S. Bank Trust National 6-1/2% Notes Loan $75,000,000
Association, Trustee
Darlene Garsteig
180 East 5th Street,
2nd Floor
St. Paul, MN 55101
651-244-5000
Chase Manhattan Bank 8.45% Debenture Loan $74,000,000
Delaware, Trustee
John Cashin
1201 Market Street
Wilmington, DE 19801
302-552-6279
Baltimore County, 7.50% Bonds $33,000,000
Maryland
c/o Baltimore County
Robert L. Hannon
Department of Economic
Development
400 Washington Avenue
Courthouse Mezzanine
Towson, MD 21204
410-887-8000
Town of Burns Harbor Bonds $26,200,000
Esther V. Nickell
Town Hall
1240 Boo Road
Burns Harbor, IN 46304
219-787-9413
Cambria County Industrial Bonds $25,500,000
Warren M. Myers
Development Authority
P.O. Box 94
Ebensburg, PA 15931
814-472-7420
Northampton County Bonds $23,400,000
Industrial
Development Authority
John W. Kingsley
669 Washington Street
Easton, PA 18042
610-559-3200
Baltimore County 7.55% Bonds $20,800,000
Maryland
c/o Baltimore County
Department of Economic
Development
400 Washington Avenue
Courthouse Mezzanine
Towson, MD 21204
Robert L. Hannon
410-887-8000
DTE Burns Harbor LLC Trade Debt $9,909,544
425 S Main Street
Suite 201
PO Box 8614
Ann Arbor, MI 48107
Barry Markowitz
734-913-2081
United Steelworkers Union $9,000,000
of America
Leo W. Gerard
International President
Five Gateway Center
Pittsburgh, PA 15222
412-562-2400
Mitsubishi International Trade Debt $4,481,400
Corporation
Yutaka Kashiwagi
Bank of America
231 South LaSalle Street
Chicago, IL 60697
212-605-3433
EDS Corporation Trade Debt $4,182,681
P.O. Box 281935
Atlanta, GA 30384-1935
Michael Hughes
610-694-2637
Eighth & Eaton Avenues
Bethlehem, PA 18016
American Iron & Steel Trade Debt $3,315,000
Institute
Andrew G. Sharkey, III
President & CEO
Suite 1300
1101 17th Street NW
Washington, D.C. 20036
202-452-7100
Norfolk Southern Trade Debt $2,971,627
Railway Co
David R. Good
P.O. Box 75623
Charlotte, NC 28275
757-629-2610
Vesuvius USA Trade Debt $2,879,493
James Engel
5645 Collections
Center Drive
Chicago, IL 60693
217-351-5002
Walbridge Coatings Trade Debt $2,818,424
Ed Williams
P.O. Box 98150
Chicago, IL 60693
419-661-5902
Baltimore Gas & Trade Debt $2,274,845
Electric Co
Charles Lidard
P.O. Box 1475
Baltimore, MD 21203
410-265-4039
Consolidation Coal Co Trade Debt $2,167,145
Vince Czajkoski
P.O. Box 36003M
Pittsburgh, PA 15251-6003
412-831-4696
DTE Sparrows Point LLC Trade Debt $2,075,406
Jim Brown
Bank One Detroit
425 S Main Street, Suite 201
PO Box 8614
Ann Arbor, MI 48107
410-477-0600
Philip Metals Inc. Trade Debt $2,010,216
Fred Smith
Dept L-427P
Pittsburgh, PA 15264
216-752-4000
Praxair Inc. Trade Debt $1,997,906
Gary Scheidt
P.O. Box 281901
Atlanta, GA 30384-1901
219-391-5207
CSX Transportation Trade Debt $1,378,652
John W. Snow
P.O. Box 640839
Pittsburgh, PA 15264-0839
804-782-1434
Metal Building Trade Debt $1,278,343
Components LP
(for Metal Coaters of Georgia)
Randy Froehlich
P.O. Box 840326
Dallas, TX 75284-0326
678-797-9822
Iron Ore Company of Canada Trade Debt $1,226,227
Ernest Dempsey
1010 Sherbrooke St W
Suite 2500
Montreal, Quebec H3A 2R7
Canada
514-285-8402
Tippins Incorporated Settlement $1,200,000
435 Butler Street
Pittsburgh, PA 15223
John E. Thomas
412-781-7600
Chairman, President & CEO
Indometal (London) Limited Trade Debt $1,098,726
326-A City Road
Angel Gate, London EC1
Yogie Dadang
9-011-44-207-837-5344
Pennsylvania Lime Inc. Trade Debt $1,083,024
P.O. Box 91832
Chicago, IL 60693-1832
Anthony Mantione
717-867-5800
Air Products & Chemicals Trade Debt $1,052,157
Inc.
Brian Sullivan
P.O. Box 360545M
Pittsburgh, PA 15251-0545
610-481-8641
Superior Natural Gas Corp Trade Debt $985,350
Mark Snapp
Southwest Bank of Texas
1021 Main Street, Suite 2100
Houston, TX 77002-6502
713-353-5360
BETHLEHEM STEEL: Q3 Net Loss Soars As Realized Prices Drop 9%
-------------------------------------------------------------
Bethlehem Steel Corporation (NYSE: BS) reported a net loss for
the third quarter of 2001 of $152 million. Bethlehem's third
quarter results include a $40 million charge for the closure of
our Lackawanna, New York coke facility, offset by a $22 million
gain from the sale of our equity interest in MBR, a Brazilian
iron ore property.
Excluding these unusual items Bethlehem's third quarter net loss
was $134 million. This compares with a net loss for the third
quarter of 2000 of $35 million.
Sales for the third quarter of 2001 were about $825 million
compared to $989 million for the same period last year. Prices
on a constant mix basis declined about $40 per ton, shipments
declined about 117,000 tons and our product mix was worse.
Excluding unusual items, loss from operations was $109 million
for the third quarter of 2001 compared to $14 million for the
same period last year. This decline was caused principally by
lower realized prices that on a constant mix basis were down by
about 9%.
Our third quarter 2001 loss from operations of $109 million was
$14 million more than the second quarter of 2001. This larger
loss was a result of a 9% decline in shipments and a further
decline in realized prices.
"The U.S. economy has slowed considerably during the past year
and the events of September 11 have contributed to a further
weakening in demand for consumer products that rely on steel
such as automobiles, appliances and residential construction,"
said Robert S. Miller, Jr., Chairman and Chief Executive Officer
of Bethlehem Steel Corporation. "While we believe that the
recent interest rate cuts by the Federal Reserve and the federal
income tax cut will help to support consumer spending, we
currently believe that the economy and steel market conditions
will remain weak through about the middle of next year."
Mr. Miller said, "We continue to be concerned about the high
level of excess world steel capacity and the threat it poses for
continued high levels of unfairly traded steel imports. We
remain encouraged by the investigation by the International
Trade Commission under Section 201 of the Trade Act of 1974
concerning the injury caused by steel imports on the U.S. steel
industry and the negotiations between governments to eliminate
inefficient excess capacity in the steel industry worldwide and
to eliminate underlying market-distorting subsidies."
In a separate story, Bethlehem announced that it has filed a
voluntary petition under Chapter 11 of the Federal Bankruptcy
Code in the United States Bankruptcy Court for the Southern
District of New York. Bethlehem is seeking protection under
Chapter 11 to provide the necessary time to stabilize the
Company's finances and to implement a strategic plan to return
Bethlehem to sustained profitability.
Key objectives of the plan will include improving the Company's
capital structure, working with the United Steelworkers of
America (USWA) to improve productivity and further reduce costs,
particularly employment and healthcare costs, and finding a
solution to its approximately $3 billion retiree healthcare
obligation.
BRIDGE INFO: Court Extends Lease Decision Deadline to Feb. 12
-------------------------------------------------------------
Judge McDonald grants Bridge Information Systems, Inc. an
extension through February 12, 2002, to make decisions about
whether to assume, assume and assign or reject these lease
agreements:
Landlord Leased Site
-------- -----------
1) 7th Avenue Self Storage 717 W. Pierson Street
Phoenix, Arizona 85013
2) Mall SPE, LLC 3115 N. Third Avenue, Suite 150
c/o Mall Management Phoenix, Arizona 85013
3) North Tower, LLC 333 South Grand Avenue, Suite 1400
Los Angeles, California 90071
4) Shuwa Investments Corp. 515 S. Flower Street, Suite 1000
c/o North America Bldg. Los Angeles, California 90071
Management Corporation
5) Harbor Investment Partners 2465 Faber Place
c/o Insignia/ESG, Inc. Palo Alto, California 94303
6) OTR c/o Scagate 44 Montgomery Street, Suite 2410
Properties San Francisco, California 94104
7) Golden Gateway Center 8 Boston Ship Plaza
San Francisco, California 94111
8) Market Front Associates One Front Street, Suite 1300
c/o LaSalle Partners San Francisco, California 94111
9) Amerimar Realty 999 Eighteenth Street, Suite 215
Management Denver, Colorado 80202
10) Nash's Plaza, LLC 181 Post Road West, Unit NW 1B #1
Westport, Connecticut
11) Lend Lease Real Estate 600 14th Street NW
Investments Hamilton Square, Suite 700
Washington, DC 20005
12) SRI Miami Venture, LP 200 S. Biscayne Blvd., Suite 950
c/o Shorenstein Co., LP Miami, Florida 33131
13) Tower Place, LP 3340 Peachtree Road NE
Tower Place, Suite 275
Atlanta, Georgia 30026
14) Shidler Group 33 South King Street, Suite 514
Honolulu, Hawaii 96813
15) Metropolitan Life 10 S. LaSalle Street, Suite 2400
Insurance Company Chicago, Illinois 60603
16) C-B-T Corporation 141 West Jackson, Room 3050
Chicago, Illinois 60604
141 West Jackson, Cabinet 25
Chicago, Illinois 60604
141 West Jackson, Cabinet 1-5
Chicago, Illinois 60604
17) 10 & 30 South Wacker, LLC 30 S. Wacker, Suite 1818
c/o Equity Office Chicago, Illinois 60606
Properties
18) Habitat Corporate Suites 625 West Madison, Apt. #4-4210
Network Chicago, Illinois 60661
625 West Madison, Apt. #4-4810
Chicago, Illinois 60661
19) Knickerbocker Properties 10975 Grandview, Suite 200/320
Overland Park, Kansas 66210
9900 W. 109th Street, Suite
200 Overland Park, Kansas 66210
20) Metropolitan Life 701 Poydras Street
Insurance Company One Shell Square, Suite 3900
New Orleans, Louisiana 70139
21) Washington Management 1 Devonshire Place, Apt. #3405
Limited Partnership Boston, Massachusetts 02109
22) 260 Franklin, Inc. 260 Franklin Street, Suite 600
c/o Jones, Lang, LaSalle Boston, Massachusetts 02110
260 Franklin Street, Suite 610
Boston, Massachusetts 02110
23) Carlyle/Paradigm 99 Summer Street, 12th Floor
99 Summer, LLC Boston, Massachusetts 02110
24) Kasco, Inc. 26075 Woodward Avenue, Suite 250
Detroit/Hungtington Woods,
Michigan 48070
25) Zeller Management Corp. 30 East 7th Street, Suite 2900
St. Paul, Minnesota
26) Walmer Investment Co. 10050 Manchester Road
St. Louis, Missouri 63122
27) Duke Realty Investments 2055 Westport Center Dr. Bldg.
481 St. Louis, Missouri 63146
28) Portside Towers 100 Warren Street, Unit 714W
Jersey City, New Jersey 07302
100 Warren Street, Apt. 1710W
Jersey City, New Jersey 07302
155 Washington Street, Apt. 2113E
Jersey City, New Jersey 07302
155 Washington Street, Apt. 813E
Jersey City, New Jersey 07302
155 Washington Street, Apt. 814E
Jersey City, New Jersey 07302
29) William Kreszl 2301 Route 37 East
Lower Level - Rear Unit
Toms River, New Jersey 08753
30) The Port Authority of 2 World Trade Center
New York and New Jersey 57th & 58th Floor
New York, New York 10048
2 World Trade Center, B-3
New York, New York 10048
31) Milford Management Corp. 200 Rector Place, 7X
New York, New York 10280
32) Lehman Brothers, Inc. 200 Vesey Street
3 World Financial Center
27th, 28th, & 29th Floors
New York, New York 10281
33) Nimal DeLanerolle 21 South End Avenue
The Regatta, #406
New York, New York 10280
34) Milford Management Corp. 377 Rector, Liberty House, Apt. 3C
New York, New York 10280
35) Raymond A. Hill, III 55 Liberty Street, 9B
New York, New York 10005
36) South Ferry Building Co. One State Street Plaza, 22nd Floor
New York, New York 10004
37) LQV Equities, LLC 3539 Hampton Road
Oceanside, New York 11572
38) NationsBank, N.A. 211 North Robinson
Leadership Square
7th, 15th, 16th floors & part 13th
Oklahoma City, Oklahoma 73102
39) Fidelity Court Associates 259 Radnor-Chester Road, Suite 190
Radnor, Pennsylvania 19087-5240
40) TrizeeHahn Plaza of the 600 North Pearl
Americas Suite 800, L.B. 1363
Dallas, Texas 75201
41) W9/LWS II Real Estate 4828 Loop Central Drive, Suite 800
Limited Partnership Houston, Texas 77081
4888 Loop Central Drive, Suite 440
Houston, Texas 77081
42) Ronnie S. Stangler, M.D. 1507 Western Avenue, Suite 402
Seattle, Washington 98101
43) Plaza III Ltd. 3005 Center Green
Boulder, Colorado 80301-2294
44) Equity Corporate Housing 11518 Craig Road, Unit 711
St. Louis, Missouri 63146-6210
45) Pacific Place Holdings 9/F One Pacific Place
Limited 88 Queensway, Admiralty
Hong Kong
46) SL Development Pte. Ltd. 50 Raffles Place, #23-01/2
Singapore 068808
(Bridge Bankruptcy News, Issue No. 18; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
BROCKER TECHNOLOGY: Nasdaq Staff Continues to Mull Delisting
------------------------------------------------------------
Brocker Technology Group Ltd. (Nasdaq: BTGL) (TSE: BKI) --
http://www.brockergroup.com -- issued the following
announcement:
The Company disclosed in prior press releases that the Staff of
the Nasdaq Stock Market had notified the Company that the
Company's Common Stock was subject to delisting from the Nasdaq
National Market because of the Company's failure to satisfy
certain Nasdaq requirements for continued listing.
These requirements relate to minimum market value of the
Company's publicly held common stock, minimum bid price, minimum
stockholders' equity and minimum net tangible assets as set
forth in Market Place Rules 4450(a)(2) and (a)(3).
The Company was required by SEC rules to file its Annual Report
on Form 20-F for the fiscal year ended March 31, 2001 by
September 30, 2001. The Company, however, has not yet done so
because it is still in the process of preparing the report.
The Company has been notified by the Staff of the Nasdaq Stock
Market that the Company's failure to timely file this report is
inconsistent with the requirements for continued listing set
forth in Market Place Rule 4310(c)(14) and that such failure was
an additional basis for delisting the Company's common stock
The Staff's determination to delist the Company's Common Stock
is to be reviewed by an Independent Panel in accordance with the
procedures provided by the Nasdaq Stock Market rules. The
delisting will be stayed until the Independent Panel makes its
determination on these matters.
The Company cannot predict the outcome of the review process
and, accordingly, there is no assurance that the Company's
listing on the Nasdaq Stock Market will be continued. The
Company's listing on the Toronto Stock Exchange is not affected
by the Nasdaq Stock Market action.
Brocker Technology Group is a communications company focused on
improving information flows by delivering innovation and market
leadership in telecommunication services, e-commerce strategies
and information management technologies. Brocker subsidiary,
Datec also provides a broad range of IT and communications
solutions to companies across the South Pacific.
COMDISCO INC: Engages Rothschild Inc. as Investment Banker
----------------------------------------------------------
Comdisco, Inc. seeks Judge Barliant's authority to employ and
retain Rothschild Inc. as their investment banker.
Robert E.T. Lackey, Chief Legal Officer of Comdisco, relates
that Rothschild is a member of one of the world's leading
independent investment banking groups, with expertise in
domestic and cross border mergers and acquisitions,
restructurings, privatization advice and other financial
advisory services.
Mr. Lackey tells the Court that Rothschild is experienced in
providing high quality financial advisory services to
financially troubled companies. According to Mr. Lackey, the
resources, capabilities and experience of Rothschild in advising
the Debtors are crucial to the Debtors' successful
restructuring. For these reasons, Mr. Lackey says, the Debtors
believe that the retention of Rothschild as investment banker is
in the best interests of their estates.
Mr. Lackey declares that Rothschild's retention will not result
in any unnecessary duplication of effort among the Debtors'
financial advisors and there will be no additional cost to the
Debtors to the extent there is any overlap in services provided.
Pursuant to a Letter of Agreement dated August 28, 2001, the
Debtors will look to Rothschild to provide these financial
advice and investment banking services:
(a) to the extent Rothschild deems necessary, appropriate and
feasible, or the Debtors may request, review and analyze
the Debtors' assets and the operating and financial
strategies of the Debtors;
(b) review and analyze the business plans and financial
projections prepared by the Debtors including, but not
limited to, testing assumptions and comparing those
assumptions to historical company and industry trends;
(c) evaluate the Debtors' debt capacity in light of its
projected cash flows and assist in the determination of an
appropriate capital structure for the Debtors;
(d) assist the Debtors and their other professionals in
reviewing the terms of any proposed Transaction, in
responding thereto and, if directed, in evaluating
alternative proposals for a Transaction, whether in
connection with a plan of reorganization or otherwise;
(e) determine a range of values for the Debtors and any
securities that the Debtors offer or propose to offer in
connection with a Transaction;
(f) advise the Debtors on the risks and benefits of
considering a Transaction with respect to the Debtors'
intermediate and long-term business prospects and
strategic alternatives to maximize the business enterprise
value of the Debtors, whether pursuant to a Plan or
otherwise;
(g) review and analyze any proposals the Debtors receive from
third parties in connection with a Transaction, including,
without limitation, any proposals for financing, as
appropriate;
(h) assist or participate in negotiations with the parties in
interest, including, without limitation, any current or
prospective creditor of, or holders of equity in, the
Debtors in connection with a Transaction;
(i) advise and attend meetings of third parties and official
constituencies, as necessary;
(j) if requested by the Debtors, participate in hearings
before the Bankruptcy Court and provide relevant testimony
with respect to the matters described herein and issues
arising in connection with any proposed Plan;
(k) render such other financial advisory and investment
banking services as my be agreed upon by Rothschild and
the Debtors in connection with any of the foregoing; and
(l) to the extent deemed desirable by the Debtors, identify
and/or initiate potential transactions.
As compensation for these services, the Debtors will pay
Rothschild in cash:
(a) A $200,000 Monthly Fee payable on the first day of each
month during the pendency of Rothschild's engagement. The
initial monthly fee shall be pro-rated based on the
commencement of services as of the Rothschild Agreement
date and shall be payable upon the execution of the
Rothschild Agreement.
(b) A Completion Fee of $5,500,000, payable in cash upon the
earlier of:
(i) the confirmation and effectiveness of a plan of
reorganization under the Bankruptcy Code, or
(ii) the consummation of another Transaction.
Rothschild shall credit against the Completion Fee 100% of
the Monthly Fees payable and paid after January 28, 2002;
provided, that such credit shall not exceed the Completion
Fee. Rothschild has further agreed that the aggregate
amount of fees payable by the Debtors to Rothschild
hereunder shall not exceed $6,500,000.
(c) To the extent Rothschild is requested by the Debtors to
pursue any structured financing, including, but not
limited to, any warehouse facility, asset-backed
commercial paper placement or term asset-backed security,
a New Capital Fee equal to:
(i) 1.0% of the face amount of any senior secured debt
and
(ii) 3.5% of the face amount of any junior secured or
senior or subordinated unsecured debt (convertible or
with warrants), excluding any capital provided by the
existing shareholders or creditors of the Debtors.
(d) To the extent the Debtors request Rothschild to perform
additional services not contemplated by this Agreement,
such additional fees as shall be mutually agreed upon by
Rothschild and the Debtors, in writing, in advance.
(e) The Debtors will reimburse Rothschild for reasonable out-
of-pocket expenses incurred in connection with the
provision of services under the Rothschild Agreement, the
execution, delivery and enforcement of this Agreement and
the consummation of any Transaction contemplated or
attempted by the Rothschild Agreement. The Company shall
promptly reimburse Rothschild for expenses upon
presentation of an invoice or other similar documentation
with reasonable detail.
In addition, the Debtors also specifically request that the
indemnification provisions contained in the Rothschild Agreement
be approved. Such indemnification provisions are substantially
in the same form as those that were approved by the Court in
connection with the employment of McKinsey & Company, Mr. Lackey
notes.
Todd R. Snyder, a Managing Director at Rothschild, assures the
Court that, to the best of his knowledge, Rothschild:
(a) does not have any material connection with the Debtors,
their affiliates, their creditors, or any other party in
interest,
(b) is a "disinterested person," as defined in section 101(14)
of the Bankruptcy Code, and
(c) does not hold or represent any interest adverse to the
estate.
Mr. Snyder promises to file supplemental disclosures if
additional relevant information regarding Rothschild's
relationships with parties-in-interest is obtained. (Comdisco
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
COMDISCO: Takes SunGard's $825MM Bid & Throws H-P Overboard
-----------------------------------------------------------
Comdisco, Inc. (NYSE: CDO) agreed to sell its Availability
Solutions (Technology Services) business to Wayne, PA-based
SunGard Data Systems Inc. (NYSE: SDS) for $825 million. The
agreement was the result of a court-authorized auction and is
subject to approval by the U.S. Bankruptcy Court for the
Northern District of Illinois at a hearing set for October 23,
2001.
Comdisco further announced that the bid by SunGard is fully
supported by the Official Committee of Unsecured Creditors and
the Official Equity Committee, both of which participated in the
auction process.
The sale, which the parties intend to close as soon as possible
after court approval, includes the purchase of assets of
Comdisco's U.S. operations and the stock of its subsidiaries in
the United Kingdom, France and Canada related to Availability
Solutions. The sale excludes the purchase of the stock of
subsidiaries in Germany and Spain, as well as other identified
assets, including Network Services and IT CAP Solutions.
Norm Blake, chairman and chief executive officer of Comdisco,
said, "Upon completion of the auction process, Comdisco
concluded that the SunGard offer was the highest or otherwise
best submitted during the bidding and auction process. We are
very pleased to have the full support of both the Official
Creditors' and Equity Committees in this decision. The
considerable interest in Comdisco's Availability Solutions
business evident in the sales process testifies to the
extraordinary professionalism of our Availability Solutions
employees and their dedication to customer service under the
most challenging conditions. We look forward to a swift
completion of the transaction and to assisting SunGard in
ensuring a transition to new ownership that will be seamless to
our customers."
James Mann, chairman and chief executive officer of SunGard,
said, "The exceptional skills of Comdisco's Availability
Solutions staff have been more apparent than ever in the wake of
the World Trade Center disaster. SunGard looks forward to
working with this talented team to continue to set the
standard in business continuity and expand opportunities in a
growing and rapidly evolving market sector. The combination of
our two businesses will ensure that there will be a strong
independent vendor in this important industry. It will enable us
to offer customers critical service advantages, including
platform independence without hardware bias, and increased
facilities, hardware, network capacity and technical personnel
with greater redundancy and broader geographic coverage. We will
announce further details about the transaction soon."
As previously announced on July 16, 2001, Comdisco entered into
an agreement with Hewlett-Packard Company to sell its
Availability Solutions business for $610 million, which was
subject to higher or otherwise better offers and Bankruptcy
Court approval. By its terms, the Hewlett-Packard offer remains
open through December 19, 2001.
Comdisco -- http://www.comdisco.com-- provides technology
services worldwide to help its customers maximize technology
functionality, predictability and availability, while freeing
them from the complexity of managing their technology. The
Rosemont, (IL) company offers a complete suite of information
technology services including business continuity, managed web
hosting, storage and IT Control and Predictability
Solutions(SM). Comdisco offers leasing to key vertical
industries, including semiconductor manufacturing and electronic
assembly, healthcare, telecommunications, pharmaceutical,
biotechnology and manufacturing. Through its Ventures
division, Comdisco provides equipment leasing and other
financing and services to venture capital backed companies.
COMDISCO INC: H-P Plans to Contest Sungard's "Inferior" Bid
-----------------------------------------------------------
At an auction held Thursday last week in Chicago in the
bankruptcy action for Comdisco, Inc., SunGard Data Systems, Inc.
was notified by the debtor that it had secured the highest bid
position for Comdisco's business continuity services business.
Final confirmation of the successful bidder is still subject to
approval by the bankruptcy court after the Oct. 23 sale hearing
and a ten-day appeal period thereafter.
Furthermore, an acquisition by SunGard can only proceed if the
U.S. Department of Justice does not block it on antitrust
grounds. The department sent a letter to the bankruptcy court
this week stating that it has an ongoing investigation of a
possible acquisition by SunGard.
HP's bid to acquire Comdisco's continuity business is both pro-
customer and pro-competition. Competition helps ensure that
customers receive the best prices and best quality of service.
An HP acquisition would help ensure the continued presence of at
least three large market participants, and preserve strong
market competitive forces that are in the best interest of all
customers.
HP, which cleared the Hart-Scott-Rodino regulatory waiting
period on Aug. 1, plans to object to the debtor's selection of
SunGard as the highest or otherwise best bidder and to
participate in the Oct. 23 bankruptcy court sale hearing, and it
expects to be confirmed the successful bidder given the
anticompetitive nature of SunGard's proposed acquisition.
The Justice Department letter to the bankruptcy court confirmed
that the department reviewed HP's proposed acquisition of
Comdisco's business continuity services business and decided not
to open any investigation of HP's acquisition.
Hewlett-Packard Company -- a leading global provider of
computing and imaging solutions and services -- is focused on
making technology and its benefits accessible to all. HP had
total revenue from continuing operations of $48.8 billion in its
2000 fiscal year. Information about HP and its products can be
found on the World Wide Web at http://www.hp.com.
DAIRY MART: AMEX Intends to Delist Debtors' Shares
--------------------------------------------------
Dairy Mart Convenience Stores, Inc. (AMEX:DMC) received notice
from the American Stock Exchange on October 4 indicating that it
no longer complies with the continued listing guidelines as set
forth in the exchange's Company Guide, and its common stock is
therefore subject to being delisted.
The exchange cited the company's losses in two of its three most
recent fiscal years, its shareholders' equity having fallen to
deficit levels, its failure to file a 10-Q for the quarter ended
August 4, 2001, and its September 24 Chapter 11 bankruptcy
filing as factors in the determination.
The exchange said it intended to file an application with the
Securities and Exchange Commission to strike the stock from
listing and registration. Dairy Mart said it would not appeal
the exchange's action. The company said it did not expect its
common stock would be eligible for trading on the OTC Bulletin
Board but that the stock may continue to trade on the over-the-
counter market.
Dairy Mart Convenience Stores, Inc. owns or operates
approximately 550 retail stores in seven states located in the
Midwest and Southeast. For more information, visit Dairy Mart's
Web Site at http://www.dairymart.com
EXODUS COMMS: Obtains Investment & Deposit Requirement Waiver
-------------------------------------------------------------
Exodus Communications, Inc. sought and obtained an interim order
waiving investment and deposit requirements proscribed under 11
U.S.C. Sec 345, and, provided that there are no objections to
the relief requested in this motion, request prompt entry of a
final order waiving the investment and deposit requirements.
Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP,
in Wilmington, Delaware, tells the Court that the Debtors have
14 bank accounts in financially stable banking institutions with
FDIC or FSLIC insurance. The Debtors maintain institutional
investment funds with Merrill Lynch, Goldman Sachs and Credit
Suisse First Boston, and cash manager accounts with Paine
Webber, Solomon Smith Barney and Morgan Stanley Dean Witter.
With the exception of the Debtors' Wells Fargo concentration
account, which is swept and invested nightly if certain funding
levels are exceeded, Mr. Chehi says that the remainder of the
Bank Accounts contain zero or minimal operating balances and are
not invested overnight. The Debtors utilize the Investment
Accounts as an investment device for excess cash in their Master
Concentration Account.
The Debtors believe that their use of the Bank Accounts,
including the Investment Accounts, substantially conforms with
the approved investment practices and that all deposits and
investments into the Investment Accounts and their other Bank
Accounts are safe, prudent and designed to yield the maximum
reasonable net return on the funds invested with minimal risk.
Out of an abundance of caution, Mr. Chehi submits that to the
extent that such deposits and investments do not conform with
the approved investment practices, the Debtors seek to waive
such requirements.
The Debtors believe that sufficient cause exists to allow the
Debtors to deviate from the approved investment practices
established by the Bankruptcy Code, especially in light of the
importance of maximizing the return on funds that the Debtors
may be investing at any given time, and the safety of the
investment vehicles used by the Debtors to invest idle cash.
Accordingly, the Debtors respectfully request authority:
A. to invest and deposit funds in a safe and prudent manner in
accordance with their existing investment guidelines,
notwithstanding that such guidelines may not strictly comply
in all respects with the approved investment practices, and
B. for the applicable institutions to accept and hold or invest
such funds in accordance with the Debtors' pre-petition
practices.
Mr. Chehi claims that the majority of the Debtors' Bank Accounts
are maintained as minimum or zero balance accounts that are not
invested and therefore, the investment and deposit restrictions
can be waived with respect to these accounts as not applicable.
With respect to the Investment Accounts, the Debtors submit that
the safety of the investment vehicles utilized by the Debtors to
invest the idle funds in this account constitutes sufficient
cause to allow the Debtors to deviate from the approved
investment practices established by the Bankruptcy Code.
Accordingly, the Debtors request authority to maintain the
Investment Accounts in a safe and prudent manner in accordance
with their existing investment practices. (Exodus Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
FEDERAL-MOGUL: Signs-Up Rothschild Inc. as Financial Advisor
------------------------------------------------------------
Federal-Mogul Corporation seek Bankruptcy Court authority to
employ Rothschild Inc., as their financial advisor and
investment banker in these chapter 11 cases.
David M. Sherbin, the Debtors' Vice President and Deputy General
Counsel, tells the Court that Rothschild will perform services
in connection with the formulation, analysis and implementation
of various options for a restructuring, reorganization or other
strategic alternative relating to the Debtors. Mr. Sherbin
relates that Rothschild's professionals have extensive
experience in providing financial advisory and investment
banking services in reorganization proceedings.
In addition, Rothschild enjoy an excellent reputation for the
services that they have rendered on behalf of debtors, creditors
and equity holders in large and complex chapter 11 cases
throughout the United States.
Mr. Sherbin relates that Rothschild has provided services to the
Debtors in preparation for the Debtors' restructuring efforts,
including preparations for the filing of these Chapter 11 Cases
and the arrangement of the Debtors' post-petition financing, and
is therefore familiar with the Debtors and their businesses.
Mr. Sherbin believes that that Rothschild's general
restructuring experience and expertise, its knowledge of the
capital markets and its merger and acquisition capabilities will
inure to the benefit of the Debtors in pursuing any
transactions.
James J. Zamoyski, the Debtors Senior Vice President and General
Counsel, informs the Court that Rothschild will:
A. to the extent deemed desirable by the Debtors, identify and
initiate potential transactions or other transactions;
B. to the extent Rothschild deems necessary, appropriate and
feasible, or as the Debtors may request, review and analyze
the Debtors assets and the operating and financial
strategies of the Debtors;
C. review and analyze the business plans and financial
projections prepared by the Debtors, including testing
assumptions and comparing those with historical company and
industry trends;
D. evaluate the Debtors' debt capacity in light of its projected
cash flows and assist in the determination of an appropriate
capital structure for the Debtors;
E. assist the Debtors and their other professionals in reviewing
the terms of any proposed transaction or other transaction,
in responding thereto and in evaluating alternative
proposals for a transaction or other transaction, whether in
connection with a plan of reorganization or otherwise;
F. determine a range of values for the Debtors and any
securities they may offer or propose in connection with a
transaction or other transaction;
G. advise the Debtors on the risks and benefits of considering a
transaction with respect to the Debtors' immediate and long-
term business prospects and strategic alternatives to
maximize the business enterprise value of the Debtors,
whether pursuant to a plan or otherwise;
H. review and analyze any proposal the Debtors receive from
third parties in connection with a transaction including any
proposal for debtor in possession financing;
I. assist in the review of asbestos claims, any examination
model for payments and funding scenarios;
J. assist or participate in negotiations with the parties in
interest, including any current or prospective creditors of,
holders of equity in, or claimants against the Debtors or
their respective representatives in connection with a
transaction;
K. advise and attend meetings of the Debtors Board of Directors,
creditor groups, official constituencies, and other
interested parties;
L. participate in hearings before this Court and provide
relevant testimony with respect to the matters described
herein and issues arising in connection with any proposed
plan; and
M. render such other financial advisory services and investment
banking services as may be agreed by Rothschild and the
Debtors in connection with any of the foregoing;
Mr. Zamoyski submits that Rothschild's professionals have
extensive experience in providing financial advisory and
investment banking services in reorganization proceedings. Mr.
Zamoyski states that Rothschild has provided pre-petition
services in preparation of the Debtors' restructuring efforts
and is therefore familiar with the Debtors and their businesses.
The Debtors believe that Rothschild's experience and expertise
will benefit the Debtors' restructuring efforts and is therefore
necessary to enable the Debtors to execute their duties.
Mr. Zamoyski informs the Court that Rothschild received a
$400,000 retainer for post-petition services. In addition,
Rothschild received $600,000 for services rendered during the
year prior to the petition date in connection with these
bankruptcy cases.
Todd R. Snyder, Managing Director of Rothschild, submits that
the professionals employed by Rothschild are well qualified to
act as financial and strategic advisors to the Debtors. Mr.
Snyder relates that as compensation, the Debtors has agreed to
these payments:
A. Retainer in an amount equal to twice the monthly fee to be
applied against the fees and expenses of Rothschild under
this agreement.
B. Cash advisory fee of $200,000 per month payable in advance on
the first day of each month.
C. If Rothschild has assisted the Debtors in reviewing its
strategic alternatives and the Debtors decides to pursue a
course of action that does not involve a transaction and no
completion fee is payable under this agreement, then the
minimum monthly fees payable to Rothschild under this
agreement shall be greater of (a) the aggregate monthly fees
for the months which have elapsed from the date of agreement
to termination or (b) $1,000,000.
D. Completion fee of $10,000,000 payable in cash upon
confirmation and effectiveness of a plan or the substantial
consummation of another transaction.
E. Merger & Acquisition Fee if (a) the Debtors sells or acquires
assets or equity interests or any securities convertible
into, or options, warrants or other rights to acquire such
equity interests, which sale or acquisition does not
constitute a transaction, and (b) Rothschild provides
services in connection with such sale or acquisition,
including any of the services contemplated under this
agreement, which fee shall be payable in cash at the closing
of any such sale or acquisition.
F. To the extent the Debtors require additional services not
contemplated by this Agreement, such additional fees shall
be mutually agreed upon by Rothschild and the Debtors in
advance.
Mr. Snyder states that Rothschild has conducted a series of
searches of its records to identify relationships with creditors
and other parties. These relationships bubbled to the surface:
A. Rothschild represented institutional lenders in matters
unrelated to the Debtors such as ABN Amro Bank N.V., BNP
Paribas, Banco Espirito Santo, Commerzbank AG, Credit
Agricole Indosuez, Credit Lyonnais, Erste Bank, HSBC, Lloyds
TSB Bank, PLC, Mellon Bank, N.A., Royal Bank of Scotland.
B. Representations to the Debtors' major customers in unrelated
matters such as Fiat, General Motors Corporation, Advance
Refractory Technologies.
C. Representation to insurers to the Debtors n unrelated
matters, such as Chubb Insurance Group and Winterthur
International.
D. Former unrelated representation to GE Company, one of the 20
largest unsecured creditors to the Debtors.
Mr. Snyder assures the Court that he and his Firm are
disinterested and do not represent any entity other than the
Debtors in connection with these chapter 11 cases. (Federal-
Mogul Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
FEDERAL-MOGUL: Wins Four Contracts at Over $20 Million Annually
---------------------------------------------------------------
Federal-Mogul Corporation (NYSE: FMO) has been awarded four
contracts with a combined value of more than $20 million
annually to supply powertrain and brake components to North
American vehicle manufacturers and first-tier suppliers.
The contracts -- two from auto manufacturers and two from
suppliers -- were awarded since Federal-Mogul voluntarily began
financial restructuring proceedings in the United States and the
United Kingdom on October 1 to resolve asbestos liabilities.
The components to be supplied by Federal-Mogul will be used as
original equipment and replacement parts on passenger cars and
light trucks, starting as early as 2002.
"These new business awards underscore what customers have been
telling us all along, that they value our technology, our
quality, and our cost-effectiveness, and they are sticking with
us for the long-term," said Federal- Mogul Chairman and Chief
Executive Officer Frank E. Macher. "I am especially pleased
that we earned this new business -- against solid competition --
based on our ability to deliver world-class products at
competitive prices."
Federal-Mogul announced October 1 that to separate its asbestos
liabilities from its true operating potential, the company and
its U.S. subsidiaries had filed for financial restructuring
under Chapter 11 of the U.S. Bankruptcy Code.
In addition, Federal-Mogul subsidiaries in the United Kingdom
filed jointly for Chapter 11 and Administration under U.K. laws.
No company subsidiaries outside of the U.S. and the U.K. were
included in the filings.
"Federal-Mogul is continuing business operations without
interruption and with the full support of our major customers,"
Macher said. "Our employees are focused on meeting our
customers' needs and winning more business based on our
competitive strengths."
Headquartered in Southfield, Michigan, Federal-Mogul is an
automotive parts manufacturer providing innovative solutions and
systems to global customers in the automotive, small engine,
heavy-duty and industrial markets. The company was founded in
1899. Visit the company's Web Site at http://www.federal-
mogul.com for more information
GENESIS WORLDWIDE: Gets Approval to Access $6MM DIP Financing
-------------------------------------------------------------
Genesis Worldwide, Inc. (OTCBB:GWOW) said that U.S. Bankruptcy
Court Judge Thomas Waldron has approved a $6.0 million debtor-
in-possession financing (DIP) credit facility for the Company.
Court approval of the DIP facility enables the Company to
continue to pay salaries and other benefits to its employees,
thereby ensuring its ability to manufacture and deliver products
and provide services to customers. Genesis received interim
approval of the Company's DIP facility on September
19.
Genesis Worldwide and its 10 subsidiaries filed voluntary
petitions for reorganization under chapter 11 on September 17.
The chapter 11 filing was made to facilitate the sale of the
Company in accordance with Section 363 of the U.S Bankruptcy
Code.
Genesis Worldwide, Inc. engineers and manufactures high-quality
metal coil processing and roll coating and electrostatic oiling
equipment in the United States. The Company also provides mill
roll reconditioning, texturing and grinding services in addition
to its rebuild, repair and spare parts business.
GENESIS WORLDWIDE: Judge Waldron Schedules Auction on Nov. 13
-------------------------------------------------------------
Genesis Worldwide, Inc. (OTCBB:GWOW) said that U.S. Bankruptcy
Court Judge Thomas Waldron approved procedures for the sale of
the Company.
Genesis Worldwide and its 10 subsidiaries filed voluntary
petitions for reorganization under chapter 11 on September 17.
The chapter 11 filing was made to facilitate the sale of the
Company in accordance with Section 363 of the U.S Bankruptcy
Code.
At the time of the filing, the Company signed an asset purchase
agreement through which Pegasus Partners II, L.P. and KPS
Special Situations Fund, L.P. agreed to acquire substantially
all the domestic assets and businesses of Genesis, subject to
higher offers and court approval.
Interested parties will have the opportunity to submit
alternative offers to acquire all or a portion of the Company's
businesses. The court-approved procedures provide, among other
things, that written offers must be submitted to Resilience
Capital Advisors, LLC, the Company's financial advisor and
investment banker, by the close of business on November 8, 2001,
accompanied by a cash deposit equal to 10% of the total value of
the bid, and that alternative offers to acquire all of the
Company must be at least $22.5 million in value.
Following the evaluation of written offers determined to be
fully binding commitments, an auction will be held for qualified
bidders on November 13, 2001. A hearing will be held before the
Bankruptcy Court to obtain court approval of the highest and
best offer(s) on November 14, 2001.
The Company will continue to operate its business in the
ordinary course throughout this process.
Genesis Worldwide, Inc. engineers and manufactures high-quality
metal coil processing and roll coating and electrostatic oiling
equipment in the United States. The Company also provides mill
roll reconditioning, texturing and grinding services in addition
to its rebuild, repair and spare parts business.
GLOBAL TELESYSTEMS: Expects Delaware Petition to be Withdrawn
-------------------------------------------------------------
Global TeleSystems, Inc. (OTC: GTLS; NASDAQ EUROPE: GTSG;
Frankfurt: GTS) said that three individual holders of its
convertible debentures, who had filed a Petition against the
company under Chapter 7 of the United States Bankruptcy Act,
have agreed to immediately withdraw the petition on certain
conditions.
The parties are holding discussions on those conditions at this
time.
Robert Amman, Chairman of GTS, Inc., commented: "This action
seems nothing more than a negotiating tactic by a small group of
security holders who are involved in our restructuring
discussions and who are simply trying to improve their
bargaining leverage and recovery in those discussions. I want to
make very clear that this action does not affect the day-to-day
operations of the business in any way, and we will not allow it
to stand in the way of our effort to negotiate a comprehensive
restructuring plan. We still hope to complete this process very
soon."
Under US bankruptcy rules, the Company has 20 days to respond to
the petition. The filing of the Petition itself does not mean
that the company is in bankruptcy, or is otherwise inhibited
from undertaking business or operating in the normal course.
GLOBIX CORP: S&P Junks Ratings & Says Outlook is Negative
---------------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
unsecured note ratings on Globix Corp to triple-'C' from single-
'B'-minus. The outlook is negative.
The rating action is based on Globix' announcement that it has
engaged a financial adviser as it explores financing options for
its highly leveraged financial profile. In addition, Standard &
Poor's expects the company's lagging operating performance to be
exacerbated by a more challenging economic environment.
Ratings for Globix reflect an unproven business model that has
yet to achieve profitability. New York, N.Y.-based Globix
provides advanced Internet services and connectivity for
businesses in the U.S. and Europe through its fiber-optic
network and state-of-the-art Internet data centers in New York;
Santa Clara, Calif.; and London, U.K.
Globix' weak financial profile with senior debt of more than
$600 million and revenue of $105 million for the 12 months ended
June 2001 is compounded by mounting operating losses. Quarterly
sales have not meaningfully increased in 2001 and are likely to
be pressured in the near term. Consequently, likely
deterioration in Globix' financial position and uncertainty
associated with the company's business model leave the company's
credit profile vulnerable, despite a cash balance of $227
million as of June 2001.
Outlook: Negative
A difficult operating environment and heavy debt burden for
Globix make ratings susceptible to further downgrade.
HAWK CORP: S&P Says Outlook Stable But Industry is Weakening
------------------------------------------------------------
Standard & Poor's revised its outlook on Hawk Corp. to stable
from positive. At the same time, Standard & Poor's affirmed its
ratings on Hawk, affecting about $100 million in rated debt and
bank credit facilities.
The outlook revision reflects Standard & Poor's expectations
that softening industry fundamentals will reduce the company's
profitability and cash flow generation, which will curtail
improvements to the credit profile and reduce financial
flexibility in the short term. The previous outlook had
incorporated intermediate-term improvements in profitability and
credit protection measures, resulting from a modest improvement
in cash flow generation.
Hawk announced on Sept. 9, 2001, that due to weak end markets
(including commercial aircraft), revenues for the third quarter
will be at least 12% below last year's levels and that the
company expects to report a loss for the quarter. As a result,
anticipated improvement in credit protection measures over the
near term will not materialize.
The ratings on Hawk reflect its established niche positions in
cyclical industrial markets, combined with an aggressive
financial profile and modest financial flexibility.
Hawk manufactures friction products, which account for about 54%
of sales and include brake pads, transmission disks, and clutch
buttons. Other products include powdered metal components, die-
cast aluminum rotors, and other performance products.
Cyclicality of end markets is a risk, but about 50% of the
company's friction product sales are in the more stable
aftermarket. The company's friction segment remains soft due to
weakness in the aerospace, motorcycle, and other industrial
markets. Hawk's powdered metals segment continues to be
negatively impacted by the reduction in volumes in heavy-duty
trucks and weak lawn and garden markets.
A continued focus on improving manufacturing efficiencies and
cost-cutting initiatives should help keep operating margins in
the high- single- to low-double-digits area over the near term.
Hawk's financial profile is expected to remain aggressive. For
the quarter ended June 30, 2001, total debt to EBITDA was about
3.7 times and EBITDA interest coverage was about 2.4x. Over the
cycle, total debt to EBITDA is expected to range between 2.5x
and 3.5x, and interest coverage should range between 3.0x and
4.0x. Financial flexibility is limited with about $15 million in
availability under the company's $30 million revolving credit
facility as of June 30, 2001. However, the company does have the
ability to sell discrete business units, if necessary.
Outlook: Stable
Established niche market positions, a focus on improving
profitability, and maintaining credit protection measures limit
downside credit risk. An aggressive financial profile, limited
financial flexibility, and weak industry fundamentals restrict
upside ratings potential.
Ratings Affirmed, Outlook Revised to Stable
Hawk Corp.
Corporate credit rating B+
Senior unsecured rating B+
INFU-TECH INC: Has No Idea When it Will Make Form 10-K Filing
-------------------------------------------------------------
Infu-Tech, Inc. (OTCBB:INFU.OB) filed a Form 12b25, Notification
of Late Filing with the Securities and Exchange Commission
Friday with respect to its Annual Report on Form 10-K and
notifying the Commission that Edward Letko is no longer acting
as the Company's President.
The Company previously announced that its principal operating
subsidiary, Infu-Tech, Inc. (a New Jersey Corporation) filed for
Chapter 11 bankruptcy protection in U.S. Bankruptcy Court,
Newark, N.J. on August 22, 2001. As a result, the Company cannot
complete its audit at this time. Accordingly, the Company is
uncertain when it will be able to file its Annual Report on Form
10-K.
INTEGRATED HEALTH: Wants to Reject 5 & Preserve 9 Florida Leases
----------------------------------------------------------------
Out of the fourteen leases between the same landlord (Palm
Garden Healthcare, Inc.) and fourteen different Integrated
Health Services, Inc., respectively, for non-residential real
property and improvements located in the State of Florida (the
Palm Garden Leases), the Debtors seek the Court's authority to
reject five of the leases (collectively, the Rejected Leases)
and preserve nine leases (collectively, the Preserved Leases),
pursuant to Sections 105(a) and 365(a) of the Bankruptcy Code,
and Rule 6006 of the Bankruptcy Rules.
In light of the cross-default, and associated cross-renewal,
provisions (the Cross Default Provisions) which make a default
under any one of the Palm Garden Leases an automatic default
under all of the Palm Garden Leases, the Debtors ask the Court
to find that rejection of the Rejected Leases neither
constitutes nor results in a default under the Preserved Leases.
Furthermore, the Debtors request that the Court preserve their
rights under the Preserved Leases, and their right to assume or
reject each of the Preserved Leases at an appropriate time in
the future.
The Debtors tell Judge Walrath that the five facilities operated
by the entities among them pursuant to the Rejected Leases are
unprofitable and negotiations with the landlord for rent
concessions have been futile. The Debtors determined that
prospects for transitioning the Rejected Facilities were slim
under the chilling effect of the above-market rent coupled with
the concession-averse Landlord, and have accordingly determined
that estate assets would be better spent in pursuit of
authorization to reject the Rejected Lease as the first step
toward divesting the Rejected Facilities.
Financial Data re Rejected Facilities
for 6 Months Ended March 31, 2001
(Annualized)
Proforma Proforma
Facility Debtors Tenant EBITDA Cash Flow
---------------- -------------- --------- ----------
Palm Garden of IHS of Florida ($98,062) ($173,062)
Clearwater No. 1
Palm Garden of IHS of Florida ($178,518) ($266,018)
Largo No. 4
Palm Garden of IHS of Florida ($557,070) ($632,070)
Orlando No. 7
Palm Garden of IHS of Florida $35,564 ($39,436)
Port. St. Lucie No. 9
Palm Garden of IHS of Florida ($73,042) ($148,042)
Tampa No. 11
The Debtors are analyzing the remaining nine facilities operated
pursuant to the Preserved Leases.
If the Court enforces the Cross Default Provisions, the Debtors
will be compelled to assume or reject all of the Palm Garden
Leases simultaneously. If this happens, the Debtors will not be
able to selectively assume and reject the leases for the goal of
maximizing the value of their estates.
Absent the relief requested in this motion, the Debtors envisage
that they will be forced to revise their reorganization strategy
not only with respect to the Palm Garden Leases, but also with
respect to their many other cross-defaulted lease portfolios.
Such strategic impairment will stifle, if not derail, the
Debtors' reorganization and will certainly prejudice the IHS
bankruptcy estates and creditors, the Debtors tell Judge
Walrath.
In support of their request for the relief, the Debtors
represent that:
-- Each individual Palm Garden Facility is a separate
and distinct operational unit, which is located in a
separate city in Florida,
-- Each Facility is run by an individual Debtor-
operator.
-- The Palm Garden Facilities do not cross-capitalize
each other, nor do they share or rotate skilled
staff.
-- The Palm Garden Leases do not evidence an intent to
structure a unified or integrated transaction.
-- There is clear operational demarcation between the
Palm Garden Facilities.
Debtors that are each a party to the Rejected Leases are:
IHS of Florida No. 1 (IHS-1) IHS of Florida No. 4 (IHS-4)
IHS of Florida No. 7 (IHS-7) IHS of Florida No. 9 (IHS-9)
Debtors that are each a party to the Preserved Leases are:
IHS of Florida No. 2 (IHS-2) IHS of Florida No. 3 (IHS-3)
IHS of Florida No. 5 (IHS-5) IHS of Florida No. 6 (IHS-6)
IHS of Florida No. 8 (IHS-8) IHS of Florida No. 10 (IHS-10)
IHS of Florida No. 12 (IHS-12) IHS of Florida No. 13 (IHS-13)
IHS of Florida No. 14 (IHS-14)
The Debtors indicate that they have no intention of abandoning
their patients at the Rejected Facilities or permitting the care
of the patients at the Rejected Facilities to suffer as a result
of the rejection of the Rejected Leases, but intend, if
reasonably possible, to transition the Rejected Facilities to
new licensed operators, or, if such a transition is not
feasible, to terminate operations at the Rejected Facilities in
accordance with all applicable governmental regulations.
By this motion, the Debtors seek the entry of an order: (a)
finding that the rejection of the Rejected Leases does not
constitute a breach of or a default under the Preserved Leases;
(b) authorizing the Debtors to reject the Rejected Leases; and
(c) preserving the Debtors' rights under the Preserved Leases,
including the right to assume or reject the Preserved Leases at
a later date.
Objection & Cross-Motion of Palm Garden Healthcare, Inc.
The Landlord Palm Garden Healthcare, Inc. (PGHI), objects to the
Debtors' "cherry picking" motion and their attempt "to reject 5
of the leases and leave the other 9 in limbo pending a spring or
summer 2002 hypothetical emergence from Chapter 11."
In summary, PGHI contends that IHS and the 14 IHS Subs were and
are willing parties to a single integrated non-severable
transaction with PGHI and its affiliates.
PGHI cross moves for an order directing the Debtors to assume or
reject all of their leases with PGHI or, in the alternative, for
an order setting November 30, 2001, as the date by which the
Debtors are required to move to assume or reject all leases with
PGHI. The landlord also requests the opportunity for limited
discovery, a hearing and either pre- or post-hearing briefing
before the entry of any order authorizing the rejection or
assumption of less than all of the 14 leases.
PGHI objects to the motion on the following bases:
(A) Leases
PGHI points out that:
-- IHS and the fourteen subsidiary Debtors (the IHS Subs) were
formed simultaneously for the purpose of entering into
fourteen template leases that were part of a single
integrated lease transaction that was entered into on April
16, 1999 and was effective on August 1, 1999.
-- each of the IHS Subs simultaneously applied for licenses to
operate the 14 facilities and all 14 licenses were
simultaneously issued.
-- IHS guaranteed the payment and performance of all
obligations of all 14 of the IHS Subs
-- management of all of the 14 IHS Subs are controlled by
management of IHS. IHS charges each of the IHS Subs a
management fee.
In summary, PGHI contends that IHS and the 14 IHS Subs were
and are willing parties to a single integrated non-severable
transaction with PGHI and its affiliates.
(B) Financing Arrangement
The Landlord tells the Court that, when PGHI and its
principals and affiliates entered into the lease transactions
with IHS and the sub-Debtors, the parties knew that the PGHI
companies were going to be refinancing the indebtedness on the
real estate, and Section 23 of the template leases dealt with
these issues in detail. As a result of the bankruptcy
proceedings of the IHS companies, the Landlord says, it has
been extremely difficult for PGHI to maintain and replace
letters of credit which were required to avoid declarations of
default on many of the mortgage loans for the properties.
Specifically, PGHI notes that the current set of letters of
credit expire in April 2002 and if the issue of the assumption
or rejection of the 14 leases is not resolved by December 31,
2001, and PGHI is certain that obtaining renewals or
extensions of the relevant letters of credit will be extremely
difficult.
(C) Performance and Rent Concessions
PGHI seeks to correct the Debtors' statements about
profitability and rent concessions. PGHI believes that on a
consolidated basis, the 14 IHS Subs were very profitable in
calendar year 2000 and in year 2001 to date. Specifically,
PGHI believes that the Clearwater and Port St. Lucie locations
are profitable nursing homes. PGHI queries the source of
information attached to the Debtors' motion, and point to the
pro forma financial statements previously provided to PGHI by
the Debtor, from which PGHI note different actual and
annualized results for all five locations.
Regarding negotiations for rent concessions, PGHI tells Judge
Walrath that IHS made only a single proposal and PGHI did
offer specific concessions to which the Debtors did not
respond. PGHI indicates that it is willing to negotiate
further to see if any agreement can be reached. Specifically,
PGHI relates, IHS representatives and a representative of PGHI
met on or about August 1 to review IHS' term sheet for lease
amendments with respect to all 14 leases. By August 14, 2001,
PGHI responded to IHS' proposal with a number of questions
and a proposal to share the projected increases in liability
insurance costs as to all 14 locations on a per licensed bed
basis. "This proposal, PGHI asserts, would have saved IHS and
the IHS Subs well over $1.0 million in projected future costs
under the 14 leases," the landlord tells the Court, "In
addition, PGHI agreed to negotiate amendments to the leases to
resolve the financial covenant (security deposit) defaults ...
and advised the Debtors that any amendments to the leases
would require the approval of their letter of credit issuer."
"Instead of engaging in further discussions or responding to
PGHI's offer, this motion was filed," the Landlord goes on.
The Landlord challenges the Debtors' business judgment in
seeking the relief.
PGHI opines that, given the magnitude of the amounts involved
and how the lives of thousands of residents are affected, and
the need for 6 to 9 months for transition or closure,
proceeding with this motion after one meeting and no further
discussions after PGHI's first response is inappropriate.
PGHI also criticize the Debtors of the failure to propose a
procedure for transition as a going concern. The Court should
not permit the Debtors to use the Court's valuable time before
responding to PGHI's counter-proposal or reaching an impasse
after good faith negotiations, PGHI asserts.
PGHI requests that:
-- the opportunity for limited discovery, a hearing and either
pre- or post-hearing briefing before the entry of any order
authorizing the rejection or assumption of less than all of
the 14 leases;
-- in the event that the Court determine that the PGHI leases
with the IHS Subs are severable, and authorizes the rejection
of less than all of the leases, the rejection effective date
and the rejection damage claim filing date must not be
allowed to occur unless and until the relevant IHS Sub has
complied with each and every relevant Florida and Federal
law, rule or regulation applicable to the transfer of the
facilities and their licenses;
-- under no circumstances should the Debtors be allowed to
compromise patient care;
-- in the event of any rejections, the Debtors must be directed
to maintain each facility as a going concern without movement
of patients to their other locations which will compete with
former Palm Garden locations until the Landlord has had a
reasonable opportunity to locate either a suitable
alternative operator or takes over a divested location;
-- the principals of Florida Convalescent Centers, Inc. must be
excused from their covenants not to compete in any markets
and the Debtors must be ordered and restrained from using the
Palm Gardens name at any location, including those which it
intends to retain.
PGHI argues that the Debtors' motion should be denied because
the prejudice to PGHI that lies with the relief outweighs the
debtors' right to an extension of the deadlines for assumption
or rejection of the 9 Reserved Leases. "It is inappropriate for
PGHI to remain in such a precarious financial position," PGHI
contends, "It is also impermissible to grant an extension under
section 364(d)(4) when the Debtor has not shown that cause
exists for such an extension."
PGHI notes that the factor which weighs most heavily against the
Debtors is time. However, the Debtors have had since February
2000, over 18 months, to evaluate the performance of these
locations, PGHI argues. Moreover, the Debtors' proposals for
concessions clearly show that they have spent considerable time
on the evaluation of these facilities, PGHI points out. The
Debtors simply have not shown a need for additional time to
perform further analysis, PGHI alleges.
PGHI, on the other hand, needs to promptly be advised of what
the Debtors intend to do, so that it can have sufficient time to
extend its letters of credit, obtain new letters of credit or
refinance some or all of the facilities, the landlord asserts.
"The risk to PGHI is significantly greater than any compensation
available to it under the Code given the fact that it could face
its own Chapter 11 proceeding if its is forced to go into
default under its own financial obligations," the landlord
represents, "Such an extreme degree of prejudice can not be
outweighed by the Debtors desire to have some extra time to
think about things."
As to the cross-motion for an order requiring the debtors to
move to assume or reject the 14 leases by November 30, 2001,
PGHI tells the Court that the Debtors have had since February
2000 to determine, and from the information supplied to PGHI the
Debtors have determined, the individual and consolidated
expected future performance of the 14 IHS Subs.
In conclusion, PGHI requests that the Court:
(1) require the Debtors to engage in further good faith
negotiations for the assumption or rejection of all 14
leases for a period of at least 30 days;
(2) continue any hearing on this and the cross-motion for 45
days and, if necessary, allow the parties to take limited
document and deposition discovery;
(3) schedule a one-half day separate evidentiary hearing on all
disputed issues of fact, if any, related to the Debtors'
motion and this cross-motion;
(4) deny the Debtors' motion and require that the Debtors assume
or reject all 14 leases at the same time or, in the
alternative, direct the Debtors to move to assume or reject
each lease on or before November 30, 2001;
(5) in the event of any rejections, require the Debtors to
propose and obtain the Court's approval of a procedure for
transition or closure of any facility for which the lease is
to be rejected; where the effective date of the rejection
and the rejection damage claims deadline are tied to the
date of transition or closure; where the rights of PGHI and
its affiliates to compete is protected; where termination of
the license to use the Palm Gardens name is assured; where
all post-petition compliance expenses of the transition or
closure are paid in full by IHS and the IHS Subs and where
the Landlord is paid all post-petition rent and additional
rents at the contract rates during said period; and
(6) for such other relief as is just and equitable under the
circumstances. (Integrated Health Bankruptcy News, Issue No.
20; Bankruptcy Creditors' Service, Inc., 609/392-0900)
LAM RESEARCH: S&P Changes Outlook Over Decline in Order Backlog
---------------------------------------------------------------
Standard & Poor's revised its outlook on Lam Research
Corporation to negative from stable. At the same time, Standard
& Poor's affirmed the ratings on the company.
The ratings on Lam Research reflect its good, but not leading,
position in the volatile semiconductor capital goods industry,
as well as its good liquidity. The revised outlook recognizes
Lam's declining order backlog as market conditions continue to
deteriorate, indicative of likely substantially weaker revenues
in forthcoming quarters.
Fremont, Calif.-based Lam Research manufactures equipment to
deposit, etch, and polish microscopically thin layers on the
surface of silicon wafers, as part of the semiconductor
manufacturing process. The company has materially refreshed its
product line and somewhat improved its market position in the
past few years. However, in light of deteriorating semiconductor
markets and economic recession, chip makers have cut their
expansion plans.
Lam's orders declined 25% sequentially from the June 2001 to the
September quarters. Revenues, $340 million in the September
period, are likely to decline over the next few quarters. Lam is
adjusting its costs through mandatory shutdowns, has reduced
executive salaries, and has delayed merit pay increases. The
company will continue its expenditures on strategic programs to
advance its semiconductor manufacturing technology. Due to
depressed conditions, EBITDA was about $38 million in the
September quarter, or 11% of sales, compared to $110 million one
year earlier.
Lam's cash balance of $500 million, net of a potential cash
redemption of a debenture issue in September 2002, should
provide the resources to continue product development and
support operations over the intermediate period. Lam's debt, pro
forma for the redemption, is $350 million.
Outlook: Negative
Ratings could be lowered if market conditions remain depressed
or if the company's debt protection measures deteriorate
significantly.
Ratings Affirmed, Outlook Revised to Negative
Lam Research Corp.
Corporate credit rating BB-
Sr unsecd bank loan BB-
Sub debt B
LEVEL 3 COMMS: S&P Places Junk Ratings on CreditWatch Negative
--------------------------------------------------------------
Standard & Poor's placed its ratings of Level 3 Communications
Inc. on CreditWatch with negative implications.
The CreditWatch placement follows Level 3's announcement that it
has amended its modified Dutch tender offer for a portion of its
unsecured debt securities. The amendments increase the maximum
tender offer amount to $2.86 billion aggregate face amount of
debt at maturity, with the discount to face ranging from 85% to
52%. The $1.05 billion aggregate tender will be funded from cash
on hand, and will reduce the company's outstanding debt from its
current $8 billion level, with an accompanying savings on
interest expense.
Standard & Poor's does not consider the tender offer to be
coercive. Given the company's current and anticipated level of
cash balances that will remain subsequent to the completed
offer, bondholders do not face the prospect of imminent default
by Level 3 if they do not participate in the exchange. The
deletion of cash required by the offer results in some
deterioration in the company's near-term liquidity and
associated financial profile; under Standard & Poor's definition
of a coercive exchange an improvement needs to be demonstrated.
The new capital structure will have a greater proportion of
senior secured bank debt in place and less cash. This, along
with the severely diminished asset value of Level 3, will likely
warrant a two-notch differential between the company's corporate
credit and senior unsecured debt ratings. Standard & Poor's will
review the final capital structure when the tender is complete.
Ratings Placed on Creditwatch Negative
Level 3 Communications Inc. Rating
Corporate credit rating B-
Senior unsecured debt CCC+
Subordinated debt CCC
Shelf registration:
Senior unsecured debt preliminary CCC+
Preferred stock preliminary CCC-
METAL MANAGEMENT: Distributes 8.8M Shares of New Common Stock
-------------------------------------------------------------
Metal Management, Inc., one of the nation's largest full service
scrap metal recyclers, made an initial distribution of its New
Common Stock.
Issuance of New Common Shares
The Company directed its transfer agent to issue approximately
8.8 million shares of common stock, par value $.01 per share
(New Common Stock), pursuant to its First Amended Joint Plan of
Reorganization which became effective on June 29, 2001.
The distribution of New Common Stock represents a partial
distribution to holders of allowed class six claims under the
Plan (which includes the holders of the 10% Senior Subordinated
Notes) and distribution in full of 100,000 shares of New Common
Stock in settlement of the common stock (Old Common Stock) and
preferred stock issued and outstanding as of June 29, 2001.
It is expected that a subsequent distribution will be made to
holders of allowed class six claims once the final dollar amount
of class six claims is determined. The Company expects that this
determination will be made within the next sixty days.
Additionally, the Company is in the process of issuing the
Series A Warrants, to holders of Old Common Stock and preferred
stock, which represents the right to purchase New Common Stock
over a five year period at an exercise price which will be equal
to the amount of allowed claims in class six divided by 10
million. While the exercise price of the Series A Warrants is
not yet known, the exercise price is currently estimated by the
Company to be approximately $21.50 per share. The Company is
seeking to list the New Common Stock and Series A Warrants for
trading on a national exchange.
METAL MANAGEMENT: Results Improve Upon Chapter 11 Emergence
-----------------------------------------------------------
Metal Management, Inc., one of the nation's largest full service
scrap metal recyclers, announced the results for its final
fiscal period of operations under Chapter 11 which ended June
30, 2001.
Albert A. Cozzi, Chairman and Chief Executive Officer remarked,
"conditions in the steel and scrap sectors continued to be
difficult in the quarter as evidenced by a 31% reduction in
sales during the first quarter ended June 30, 2001 compared to
the quarter ended June 30, 2000."
Despite the difficult market conditions and the effects of
operating in Chapter 11, the Company was able to produce better
results than in the year ago period. Improvement is evident in
its gross margin that improved to 10.3% of net sales this year
from 9.5% of net sales last year and lower administrative
expenses that declined by $3.5 million or 23% by comparison to
the prior year.
In connection with the recently completed restructuring under
Chapter 11 its debt was reduced by in excess of $200 million,
and as a consequence, interest expense declined by in excess of
50% to approximately $5.2 million in the first quarter ended
June 30, 2001 from $10.3 million in the first quarter ended June
30, 2000. "This benefit is also attributable to lower bank
borrowings and lower interest rates. Looking forward, I expect
interest expense to be even lower and to be approximately $3
million per quarter. Metal Management is in a better position
than ever to become profitable," said Mr. Cozzi.
Due to lower processing and administrative expenses coupled with
reduced interest expense, cost structure has improved by
approximately $45 million per year. Though market conditions
continue to be difficult in the second fiscal quarter businesses
are continuing to generate sufficient cash flow from operations
to advance the Company's leadership position in the domestic
scrap metal recycling industry. "Our employees are the best in
the business and are completely focused on the goal of making
Metal Management profitable. Once market conditions provide
opportunities for organic top line growth, there is no question
that our goal for profitability will be realized."
Cozzi continued, "upon our emergence from Chapter 11 at the end
of June, I was joined on our board of directors by four
accomplished business professionals with substantial experience
in the scrap metal recycling industry. Joining our board of
directors are Daniel W. Dienst, John T. DiLacqua, Harold "Skip"
Rouster, and Kevin P. McGuinness. This company is fortunate to
have secured the interests of these professionals and I look
forward to their many contributions to the Company."
The Company reported revenues of $166.3 million and a net loss
before reorganization costs, income taxes, cumulative effect of
change in accounting principle and extraordinary gain from
recurring operations (i.e. before non-cash and non-recurring
expense) of $4.5 million for the quarter ended June 30, 2001,
compared to revenues of $241.9 million and a net loss before
reorganization costs, income taxes, cumulative effect of change
in accounting principle and extraordinary gain from recurring
operations (i.e. before non-cash and non-recurring expense and
goodwill amortization) and preferred stock dividends of $7.6
million for the quarter ended June 30, 2000.
NYACK HOSPITAL: Fitch Concerned About Low Debt Coverage Levels
--------------------------------------------------------------
The approximately $25.6 million Dormitory Authority of the State
of New York hospital revenue bonds (Nyack Hospital), series
1996, have been downgraded to `B+' from `BB+' by Fitch.
In addition, the bonds remain on Rating Watch Negative, meaning
the bonds may be lowered again in the near future.
The multi-notch downgrade and the resumption of Rating Watch
Negative is the result of Nyack Hospital's (Nyack) significant
erosion of cash, continued operating losses, and very low debt
service coverage levels that will very likely trigger a
technical default for the second consecutive year.
Nyack had approximately $4.7 million of unrestricted cash and
investments as of August 31, 2001, representing an anemic 14.2
days cash on hand. This cash level represents a significant
decline from Nyack's low cash levels as of Dec. 31, 2000 (fiscal
year-end), when Nyack's $9.2 million of unrestricted cash
represented a very thin 25.8 days cash on hand.
Nyack's $4.0 million loss from operations ($500,000 attributed
to one-time consultant costs) through eight months of fiscal
2001 indicates an improvement from fiscal 2000's loss of $33.6
million, of which $10 million represented a loss from operations
over the 12-month period. The remainder of fiscal 2000's loss
was comprised of one-time expenses of $19 million related to
Nyack's six-month nurses' strike that ended in May 2000, and $4
million attributed to a write-down of a clinic that was closed.
Nyack's maximum annual debt service coverage was 0.4 times (x)
as of August 31, 2001, signaling the strong likelihood that
Nyack will trigger a technical default for the second straight
year. Fiscal 2000's debt service coverage was negative 5.6x.
Fitch is primarily concerned with Nyack's declining liquidity
levels, which is the main reason for the maintenance of Rating
Watch Negative. Although Nyack continues to lose money from
operations, it has a strong foundation that may help it return
to operating profitability in the near term. Among these
strengths is physician loyalty, which helped Nyack to
impressively increase its discharges during a long and well-
publicized nurses' strike.
Nyack's discharges increased 1.6% in 2000 and are up 9.5%
through eight months of fiscal 2001.
Nyack maintains a very strong market share position, which
should be helpful in its renegotiations of its managed care
contracts, some of which have not had rate increases in the last
five years. Fitch views Nyack's sweeping change of executive
management positively, representing an immediate improvement in
the areas of managed care contracting and financial reporting.
Nyack is a 375-bed staffed hospital located in Nyack, NY,
approximately 25 miles north of New York City. Nyack had total
operating revenue of $118 million in fiscal 2000.
PACIFIC GAS: Gets Court Approval to Assume 51 QF PPAs as Amended
----------------------------------------------------------------
Judge Montali authorized PG&E to enter into the Power Purchase
Agreement Amendments and Assumption Agreements. Accordingly,
Pacific Gas and Electric Company and Qualifying Facilities shall
be bound by all of the terms of the PPA Amendments and
Assumption Agreements and all terms and conditions stated
therein.
Each of the QFs operates a power generation facility and is a
counter-party to a PPA, which provides for the purchase of power
by PG&E from the respective QF.
Prior to the commencement of its bankruptcy case, PG&E failed to
pay in full the amounts due under the PPAs, resulting in pre-
petition claims for payment to the QFs.
On June 13, 2001, the CPUC issued Decision No. 01-06-015 (the
"Lynch Decision"), whereby QFs under Standard Offer Contracts
with PG&E may request that their contracts be modified to
replace the energy pricing term with a five-year average fixed
price of 5.37 cents/kWh (the "Price Modification"), as proposed
in the March 23, 2001 comments of the Independent Energy
Producers referred to in Decision No. 01-06-015.
On July 31, 2001, PG&E and each of the QFs agreed to amend each
respective PPA to replace the energy price term with the CPUC
price modification for 5 years.
The QFs included are:
Amount of
Capacity Pre-Petition
Qualifying Facility (kW) Payables
------------------- ---------- -------------
City of Concord 105 $ 20,984.04
Rhone-Poulenc (Stauffer Chemical) 4,000 $ 112,788.08
EBMUD (Oakland) 4,000 $ 2,548.16
Bio-Energy Part 6,000 $1,946,987.59
Sea West Energy-Seawest 60 $ 480.00
Sea West Energy-CWES 1,500 $ 11,727.93
Sea West Energy-Altech 5,760 $ 45,039.72
Sea West Energy-Western 900 $ 7,039.95
Sea West Energy-Viking 1,560 $ 12,191.93
Sea West Energy-Taxvest 10,680 $ 83,519.48
Yountville Cogen Associates 3,000 $ 2,673.45
Yolo County Flood & WCD 2,500 $ 0.00
Sonoma County Water Agency 2,600 $ 637,590.72
Bes Hydro 400 $ 25,183.70
Hammeken Hydro 330 $ 7,325.19
Indian Valley Hydro 3,335 $ 50,291.90
Owl Companies 600 $ 67,913.25
Gansner Power& Water 275 $ 487.55
James B. Peter 15 $ 5,132.09
Perry Logging 300 $ 29,807.15
T & G Hydro 340 $ 33,903.89
Sutter's Mill 150 $ 39,143.01
Arbuckle Mountain Hydro 360 $ 21,272.68
Shamrock Utilities 200 $ 33,475.89
Mega Renewables(Roaring Crk) 2,000 $ 345,529.68
Mega Renewables (Hatchet Crk) 7,000 $ 892,156.87
Mega Renewables (Bidwell Ditch) 2,000 $ 668,574.62
Olsen Power Partners 5,000 $ 223,765.82
Mega Renewables (Silver Springs) 600 $ 107,082.17
Nelson Creek Power Inc. 1,100 $ 85,990.63
Hat Creek Hereford Ranch 100 $ 25,290.10
McMillan Hydro 975 $ 93,143.80
Mega Hydro #1 (Clover Creek) 1,000 $ 232,138.11
Robert W. Lee 30 $ 6,465.01
NID/Scotts Flat 850 $ 30,753.22
Eagle Hydro 550 $ 39,096.70
NID/Combie North 330 $ 9,667.39
NID/Combie South 1,500 $ 60,704.47
Sierra Energy Company 200 $ 1,099.19
Placer County Water Agency 500 $ 97,731.42
Swiss America 100 $ 8,532.00
Tri-Dam Authority 16,200 $ 901,513.78
Jackson Valley Irrigation Dist 455 $ 34,315.25
Altamont Midway Ltd. 12,500 $ 281,854.00
Monterey Regional Water 1,740 $ 35,039.12
Monterey Regional Waste Mgmt Dis 2,900 $ 872,011.64
Cedar Flat Hydro 300 $ 43,402.79
Humboldt Bay MWD 2,000 $ 128,934.32
American Energy, Inc. (Wolfsen BYP) 1,000 $ 1,156.31
American Energy, Inc. (San Luis Bypa) 675 $ 0.00
International Turbine Research 16,000 $ 533,142.56
(Pacific Gas Bankruptcy News, Issue No. 15; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
POLAROID CORP: Court Allows Access to $13.1MM of Cash Collateral
----------------------------------------------------------------
At the Petition Date, Polaroid Corporation owes approximately
$333,000,000,000 pursuant to the terms of the Amended and
Restated Credit Agreement dated as of December 11, 1998, as
amended.
Morgan Guaranty Trust Company of New York serves as the
administrative and collateral agent, and Fleet National Bank
(formerly known as BankBoston, N.A.) as Co-Agent for a
consortium of lenders comprised (as of August 10, 2001) of ABN
AMRO Bank N.V.; Transamerica Business Credit Corporation;
Deutsche Bank AG, New York and/or Cayman Islands Branches; Bank
One, NA; Senior Debt Portfolio; Sumitomo-Mitsui Banking
Corporation; Fleet National Bank; Mellon Bank, N.A.; Textron
Financial Corporation; PNC Bank, National Association; Foothill
Income Trust, L.P.; Erste Bank New York; General Electric
Capital Corporation; Wingate Capital, Ltd.; Barclays Bank PLC;
Cerberus Partners, L.P.; Lehman Commercial Paper Inc.; and J.P.
Morgan Securities Inc., as agent for The Chase Manhattan Bank.
The Debtors' obligations under the Prepetition Credit Agreement
are guaranteed by Inner City, Inc.; Polaroid Asia Pacific
Limited; Polaroid Digital Solutions, Inc.; Polaroid Eyewear,
Inc.; Polaroid ID Systems, Inc.; Polaroid Latin America
Corporation; Polaroid Malaysia Limited; and PRD Capital, Inc.
Under the Prepetition Credit Agreement, the Prepetition Secured
Lenders provided the Debtors with a revolving credit facility
and other financial accommodations including. Polaroid
Corporation granted a security interest to the Prepetition
Secured Lenders in substantially all of Polaroid Corporation's
domestic personal property, accounts receivable and real estate
now owned or hereafter acquired by the Debtors.
All of the Debtors' cash and other proceeds generated from the
Prepetition Collateral as of the Petition Date constitutes cash
collateral of the Prepetition Secured Lenders within the meaning
of 11 U.S.C. Sec. 363(a). The Debtors believe that the
Prepetition Secured Lenders currently hold valid, perfected and
enforceable first priority liens in substantially all the
Debtors' assets.
The Debtors need immediate access to the Prepetition Lenders'
Cash Collateral in order to fund their payroll. Without the
ability to use the Prepetition Lenders' Cash Collateral,
Polaroid's chapter 11 restructuring would be over before it
begins.
By this Emergency Motion, the Debtors sought and obtained Judge
Walsh's permission to use up to $13,100,000 of the Prepetition
Lenders' Cash Collateral to fund payroll and other critical
post-petition obligations to which the Prepetition Lenders give
their consent. To the extent that the Debtors use the
Prepetition Lenders' Cash Collateral, Judge Walsh directs that
the Prepetition Lenders are granted dollar-for-dollar
superpriority post-petition priming liens on all of the Debtors'
assets. (Polaroid Bankruptcy News, Issue No.1; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
POLAROID CORP: S&P Drops Bank Loan to D After Chapter 11 Filing
---------------------------------------------------------------
Standard & Poor's lowered its rating on Polaroid Corp.'s $350
million senior secured bank loan to 'D' from double 'CC' and
removed the rating from CreditWatch.
The rating action follows the company's voluntarily filing for
bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. All
other ratings remain 'D'.
Rating Lowered and Removed from CreditWatch
Rating
Polaroid Corp. To From
Senior secured bank loan rating D CC
PROVINCE HEALTHCARE: S$P Rates $250M Senior Secured Credit at B+
----------------------------------------------------------------
Standard & Poor's assigned its single-'B'-plus rating to
Province Healthcare Co.'s $250 million senior secured credit
facilities due 2005. At the same time, Standard & Poor's
affirmed its single-'B'-plus corporate credit, and single-'B'-
minus subordinated ratings.
The outlook is stable.
The secured credit facility is rated the same as the corporate
credit rating. The facility is comprised of a $200 million
revolving credit facility and a $50 million End Loaded Lease
Financing Facility (ELLF). The revolving credit facility is
secured by a first priority lien on and security interest in the
tangible and intangible assets of seven of Province's hospitals,
five of which are leased, and two are owned by Province and Brim
Healthcare.
The ELLF facility, which replaces an existing ELLF facility, is
secured by the assets of one hospital and three medical office
buildings. While the collateral affords bank lenders a material
advantage over unsecured creditors, it is not clear, based on
Standard & Poor's default scenario, that a distressed enterprise
value would be sufficient to cover all secured debt.
The speculative-grade corporate credit rating on Brentwood,
Tennessee-based Province Healthcare reflects the company's
strong market position in small, non-urban markets, offset by
its relatively small revenue base and only modestly diversified
hospital portfolio.
Province Healthcare owns or leases 18 acute care hospitals with
about 2,000 beds in 11 states. The company has been built
through a string of hospital acquisitions, beginning in 1996.
Province focuses on small, non-urban markets with a minimum
population of 20,000, where the company can establish a leading
competitive position.
Province's hospitals are typically either the sole, or primary,
hospital providers in their service areas. Management's program
to improve the financial performance of acquired hospitals
includes expanding the scope of services, improving hospital
operations, and recruiting new physicians. Province's strong
same-store admission trends are indicative of the success of
these business strategies.
Still, Province's limited size and potential for operating
vulnerability remain overriding credit concerns. Province's
acquisition pace has recently accelerated and the company plans
to maintain a pace of acquiring two to four hospitals annually.
While the integration of acquired facilities appears to have
gone well so far, the effective control and expansion of its
growing operations will be an ongoing challenge.
Furthermore, the company has significant revenue concentration
in a small number of facilities and is highly dependent on
governmental payors, with more than 70% of revenues derived from
them. The company remains vulnerable to the expected moderation
of the currently strong managed-care pricing environment and to
the future uncertainties of government payments to hospitals in
a weakened economy.
Outlook: Stable
The rating incorporates the expectation of a modest debt-
financed acquisition program and subsequent increases in
leverage.
PSINET INC: Court Okays Sale of Metamor Shares to CIBER For $40M
----------------------------------------------------------------
PSINet Inc.'s wholly-owned subsidiary, PSINet Consulting
Solutions Holdings, Inc. (formerly Metamor Worldwide, Inc.),
signed a definitive agreement with CIBER, Inc., pursuant to
which CIBER will acquire two subsidiaries of PSINet Consulting
Solutions Holdings -- Metamor Industry Solutions, Inc., and
Metamor Government Services Inc.
PSINet, Inc., a New York Corporation and a debtor in possession,
directly owns 100% of the outstanding shares of PSINet
Consulting Solutions Holdings, Inc. and indirectly owns 100% of
the Shares. Metamor Industry Solutions, Inc. (one of the
subsidiaries of PSINet Consulting, a Delaware corporation and a
non-debtor), is an operating company which directly owns 100% of
the outstanding shares of Metamor Government Solutions, Inc. (a
Florida corporation and a non-Debtor).
By this Motion, the Debtors sought and obtained authority to
sell Metamor Industry Solutions, Inc., pursuant to a Stock
Purchase Agreement dated September 7, 2001 between Holdings (the
Seller), then a non-debtor, and PSINet, on the one hand and
CIBER, Inc. (the Buyer) on the other hand. Additionally, the
Debtors ask for explicit authority to assume and assign all
relevant executory contracts and unexpired leases.
Pursuant to the Stock Purchase Agreement, Holdings agrees to
sell all of the issued and outstanding stock of the Company to
Buyer for $40,000,000, in cash (of which $3,000,000 will be
placed into escrow for six months, with a possible extension to
twelve months for certain items).
The Purchase Price is subject to post-closing adjustment based
on whether or not Metamor's Net Worth is less than $16 million
(in which case there is a dollar-for-dollar reduction to the
Purchase Price to the extent of such deficiency) or more than
$18 million (in which case there is a dollar-for-dollar increase
to the Purchase Price to the extent of such excess).
The Sale is without financial recourse to PSINet.
The Debtors represent that their decision to sell the Company
pursuant to the Stock Purchase Agreement is an exercise of sound
business judgment. Although the Debtors believe that on a stand-
alone basis the Company and its wholly-owned subsidiary are
profitable, the Debtors believe these entities will be more
valuable as part of the Sale rather than as part of the PSINet
or Holdings corporate family. A sale of the Shares is necessary
for the Debtors' reorganization, the Debtors represent.
First, the proceeds of a sale of the Company, to the extent sold
as a going concern, likely will be greater than if sold by
piecemeal liquidation or if the Company were retained for a
reorganization of Holdings' business. Second, a prompt sale will
aid in minimizing administrative expenses of the estates. Third,
the Company's operations no longer have a place in the Debtors'
business strategy.
Moreover, the Company has been extensively marketed by Lazard
and CIBER's offer for the Shares is the best offer the Debtors
have received as of the date of this Motion. The negotiations
with CIBER were extensive, in good-faith, non-collusive, at arms
length and conducted by the companies and their respective
professionals, the Debtors tell the Court. The Debtors believe
that their pre-petition marketing efforts and arms-length
negotiations with CIBER, combined with the post-petition notice
of the terms of the Sale and opportunity to make higher and
better offers, will affirm that the ultimate purchase price is
fair and reasonable under the circumstances.
As an integral part of the Sale, and by way of a separate
motion, the Debtors ask the Court to authorize the assumption of
the executory contracts and unexpired leases as identified in
the disclosure schedules to the Stock Purchase Agreement by the
relevant Debtors and the assignment of such contracts to Metamor
Industry Solutions, Inc., with a reservation of rights to
withdraw any particular executory contract or lease prior to the
date of the closing of the Sale.
The Debtors do not believe that they are in breach of any of the
terms of the Assumed Contracts. Pursuant to the terms of the
Stock Purchase Agreement., to the extent such cure costs exists
they will be borne by Holdings.
The PSINet Debtors are advised that Metamor (following its
acquisition by CIBER) will have the financial capability to
satisfy any and all going-forward obligations it will incur in
connection with the contracts and leases to be assumed and
assigned to the Company under the Stock Purchase Agreement.
CIBER presently has a market capitalization of over $275
million.
Cisco's Limited Objection To Motions Re Sale Of Metamor
Cisco Systems Capital Corporation (together with affiliates,
Cisco) filed a Limited Objection to the Debtors' motion to
dispose of business operations of Metamor Solutions, Inc. and
Metamor Government Solutions, Inc., and the Debtors' motion to
assume and assign certain executory contracts as are necessary
to consummate the Metamor Sale.
Cisco makes it clear that, to the extent the Sales do not
transfer any interests in any Leased Cisco Equipment to the
purchasers, Cisco does not object to the Sales. However, the
proposed Sales would have the effect of transferring Cisco's
software licenses, Cisco notes.
Cisco surmises that items of Leased Cisco Equipment may have
been transferred among the Debtors and their affiliates,
including non-debtor subsidiaries, without notification to or
consent by Cisco. A schedule of equipment, which was requested
and obtained by Cisco from the Debtors, includes 11 pieces of
equipment which may be leased from Cisco pursuant to agreements
entered by Cisco and Debtors prior to the commencement of the
PSINet chapter 11 bankruptcy cases. Cisco tells the Court that
the Debtors have defaulted on rent payments under the terms of
the Cisco Agreements, in an amount projected by Cisco to exceed
$100 million while Cisco is in the process of calculating the
obligations owed by Debtors.
Cisco's software that is necessary to operate this equipment
cannot be used without Cisco's consent, Cisco tells the Court.
The Debtors' Motions do not identify any executory contracts to
which Cisco is a party or to seek authority to assume or assign
executory contracts to which Cisco is a party under 11 U.S.C.
section 365, Cisco alleges. Further, Cisco accuses, the Debtors
fail to address the inability of the Debtors to transfer any
Cisco license agreements, which are necessary to operate the
Debtors Owned Cisco Equipment which the Debtors propose to
transfer to CIBER, Inc.
Cisco reserves all of its rights with respect to its software,
including the right to require assumption and assignment of its
software licenses (including its right to object to such
assumption and assignment), the right to require payment of
software license fees by any new user, and the right to assert
any claims for infringement that may now exist or hereafter
arise under applicable law.
Cisco objects to the Sales unless provisions as suggested by
Cisco are incorporated into the Order to protect Cisco's rights
in any Leased Cisco Equipment and Cisco's proprietary interests
in its software.
The Sale Order
Among other things, the Court's order granting the motion
provides that:
-- all responses and/or objections to the Motion have been
withdrawn or overruled
-- PSINet is authorized, empowered and directed, pursuant
to Sections 105 and 363(b) and (f) of the Bankruptcy
Code, (i) to vote the shares of its subsidiary,
Holdings, in favor of a sale of the Industry Solutions
Stock to Purchaser pursuant to and in accordance with
the terms and conditions of the Stock Purchase
Agreement and (ii) to enter into and become a party to
the Stock Purchase Agreement for the limited purpose of
complying with the provisions of Section 5.9, 10.1,
10.3, 10.6 and 10.8 thereof.
-- Holdings is authorized, empowered and directed,
pursuant to Sections 105 and 363(b) and (f) of the
Bankruptcy Code, to enter into and become a party to
the Stock Purchase Agreement.
-- Pursuant to Sections 105 and 363 of the Bankruptcy
Code, title to the Industry Solutions Stock and related
Business shall pass to Purchaser on the Closing Date,
free and clear of Liens and Claims (as defined in
Section 101(5) of the Bankruptcy Code), with all such
Liens and Claims to attach only to the proceeds of the
Sale with the same priority, validity, force and effect
as they now have in or against Holdings.
-- Except as otherwise provided in the Order, all parties
and/or entities asserting Liens and Claims against the
Industry Solutions Stock or Holdings are permanently
enjoined and precluded from: (i) pursuing such Liens
and Claims against Industry Solutions and its wholly-
owned subsidiary Metamor Government Solutions, Inc. and
the Business and assets associated therewith; (ii)
asserting, commencing or continuing omission,
transaction or the occurrence taking place on or before
the Closing in any way relating to the Debtors, the
Debtors' Chapter 11 cases, or the Sale.
-- Pursuant to Sections 105(a) and 365 of the Bankruptcy
Code and subject to and conditioned upon the Closing of
the Sale, the Debtors' assumption and assignment to
Industry Solutions, and Industry Solutions' assumption
on the terms set forth in the Stock Purchase Agreement,
of the Debtor Agreements is approved, and the
requirements of Section 365(b)(1) of the Bankruptcy
Code with respect thereto are deemed satisfied.
-- The Debtor Agreements do not include that certain stock
purchase agreement by and among Holdings, General
Electric Capital Corporation (GECC) and G.E. Capital
Consulting, Inc., dated March 4, 1999 (the GECC SPA),
and neither Purchaser nor Industry Solutions nor
Metamor Government Solutions Inc. shall have any
liability to Holdings, GECC or GE Capital Consulting
Inc under the GECC SPA.
-- The Debtor Agreements shall be transferred to, and
remain in full force and effect for the benefit of,
Industry Solutions in accordance with their respective
terms, excluding and notwithstanding any provision in
any such Debtor Agreement (including those described in
Section 365(b)(2) and (f) of the Bankruptcy Code) that
prohibits, restricts, or conditions such assignment or
transfer to Industry Solutions.
-- Pursuant to U.S.C. section 365(k), the PSINet Debtors
shall be relieved from any liability with respect to
the Debtor Agreements that arises after such assumption
and assignment to Industry Solutions.
-- All defaults or other obligations of the PSINet Debtors
under the Debtor Agreements arising or accruing prior
to the closing of the Sale (without giving effect to
any acceleration clauses or any default provisions of
the kind specified in Section 365(b)(2) of the
Bankruptcy Code) have been cured or shall promptly be
cured by the Debtors from the proceeds of the Sale,
such that Industry Solutions shall have no liability or
obligation with respect to any default or obligation
arising or accruing prior to the date of the Closing of
the Sale. Each non-debtor party to a Debtor Agreement
is barred from asserting against the Debtors or
Industry Solutions any default existing as of the date
of the Sale Hearing if such default was not raised or
asserted prior to or at the Sale Hearing.
-- The Debtors are authorized and empowered to execute and
deliver any and all instruments as may be required to
effectuate the terms of the Stock Purchase Agreement
and the Court's Order including any agreements
necessary to effectuate the absolute purchase price
floor of $34 million as set forth at the Sale
Hearing on October 9, 2001.
-- The Cisco Equipment owned by Metamor is sold to CIBER,
Inc., without any software or software licenses, unless
such software license may be transferable by its terms
without licensor's consent, provided, however, that if
the Cisco Equipment is ultimately determined to be
leased by Cisco to Metamor rather than owned by
Metamor, Cisco Capital Corporation's liens and
interests will attach to the proceeds in an amount
equal to the value of the equipment, not to exceed
$30,000.00.
-- As provided by Bankruptcy Rules 6004(g), 6004(d) and
7062, because time is of the essence, this Order shall
be effective and enforceable immediately upon entry.
-- The Stock Purchase Agreement and any related
agreements, documents or other instruments may be
modified, amended or supplemented by the parties
thereto, in a writing signed by both parties, and in
accordance with the terms thereof without further
order of the Court, provided that any such
modification, amendment or supplement is not material.
(PSINet Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PSINET INC: TELUS Completes Takeover of Canadian Operations
-----------------------------------------------------------
TELUS successfully completed the purchase of PSINet's Canadian
operations and facilities.
"This transaction is a major step toward achieving our goal of
becoming the leading e-solutions provider in Canada and supports
our national data and Internet Protocol growth strategy," said
Darren Entwistle, president and CEO of TELUS. "This acquisition
underscores TELUS' commitment to be the leading Internet access
and hosting provider in the Canadian market."
TELUS announced on June 20 that it had signed an agreement with
certain subsidiaries of Virginia-based PSINet Inc. to purchase
PSINet's Canadian operations and facilities for approximately
US$77 (CDN$120) million. PSINet Inc. announced on September 26
that both the U.S. Bankruptcy Court and the Ontario Superior
Court approved the transaction.
Through this acquisition, TELUS gains approximately 250 highly
skilled employees, a state-of-the-art Internet data centre in
Toronto, national fibre infrastructure including approximately
6,400 fibre kilometres and over 50 points of presence, and over
8,000 corporate accounts across the country.
TELUS also assumes ownership of Calgary-based Internet Service
Provider CADVision. Last year PSINet Canada generated most of
its revenue in Ontario.
TELUS Corporation (TSE: T, T.A; NYSE: TU) is one of Canada's
leading telecommunications companies providing a full range of
telecommunications products and services that connect Canadians
to the world. The company is the leading service provider in
Western Canada and provides data, Internet Protocol, voice and
wireless services to Central and Eastern Canada. For more
information about TELUS, visit http://www.telus.com
RAILTRACK PLC: Junk Ratings Reflect Proposed Standstill Terms
-------------------------------------------------------------
Standard & Poor's lowered its long-term corporate credit ratings
on U.K. rail infrastructure company, Railtrack PLC, to double-
'C' from single-'A'. At the same time, the senior unsecured
ratings on Railtrack were lowered to single-'C' from single-'A'
and the short-term corporate credit and commercial paper ratings
were lowered to single-'C' from 'A-1'.
The ratings were placed on CreditWatch with developing
implications to reflect the ongoing development of the proposals
on the treatment of the company's financial creditors.
The rating actions reflect the current proposed terms of the
standstill agreement and transfer arrangements into a new not-
for-profit company.
The current provisions under special railway administration
provide for all nondefault finance charges and scheduled
interest repayments to be paid for at least 45 days, from
payments provided by the government to the administrators. To
continue to receive these payments, however, finance creditors
are required to sign up to the existing standstill arrangements.
These arrangements require the waiver of certain rights. Should
a finance creditor not sign up to these arrangements no
guarantee of payment can be made and debt obligations might not
be paid in full or on time.
Further explanatory government and regulatory statements are
expected over the next few days. These could lead to further
changes to the ratings and/or the CreditWatch status of
Railtrack and its debt obligations.
REDBACK NETWORKS: Reduced Liquidity Prompts S&P to Junk Ratings
-------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on Redback
Networks Inc. to triple-'C'-plus from single-'B'-minus. At the
same time, Standard & Poor's rating on the company's convertible
subordinated notes was lowered to triple-'C'-minus from triple-
'C'.
The outlook is negative.
The rating actions reflect Redback's reduced liquidity and
significantly lower revenue outlook, amid expected continued
weakness in telecommunications capital spending. The company
announced a 54% decline in revenues, to $37 million for the
September 2001 quarter, from $81 million in the September 2000
quarter.
The company expects December 2001 revenues to be flat with the
September quarter. In addition, Redback's quarterly cash burn
rate accelerated to $67 million in the September quarter, with
cash balances falling to $247 million at September 2001.
While Redback expects modest reductions in its quarterly
operating expenses over the next few quarters, it has indicated
it will need to double quarterly revenues to $75 million in
order achieve cash flow breakeven, a challenge in the current
telecom spending environment.
Sunnyvale California based Redback offers a subscriber
management system (SMS), which automates the provisioning and
management of large numbers of digital subscriber access lines
at the point where the lines enter a carrier's network. The
company is in the early stages of marketing its SmartEdge
optical access system, designed to improve the efficiency of
provisioning optical access facilities.
Fundamental marketplace conditions are eroding as carriers
constrain nonessential capital expenditures. Still, the need to
support existing trial installations can quickly consume
substantial staff resources of a small company, with only
limited assurance of subsequent volume orders.
Outlook: Negative
The depressed telecom spending environment will make it
difficult for Redback to increase revenues substantially over
the near term. Ratings could be lowered if cash balances
continue to decline without significant revenue growth.
SMTC CORP: Losses Have S&P Placing Ratings on Watch Negative
------------------------------------------------------------
Standard & Poor's placed its single-'B'-plus corporate credit
and senior secured bank loan ratings for SMTC Corporation on
CreditWatch with negative implications.
The action reflects operating losses in the first half of 2001
and the likelihood of further operating losses due to a
difficult industry environment that is expected to persist over
the intermediate term. These factors, compounded by a leveraged
financial profile will likely lead to weaker credit measures
that are not consistent with the current rating.
SMTC Corp, a mid-tier electronic manufacturing services
provider, faces challenging conditions as end market demand in
communications and computing markets have deteriorated
throughout 2001. Sales declined about 20% sequentially in the
quarter ended July 1, 2001, from the previous quarter.
Operating performance deteriorated with lower capacity
utilization, despite management's aggressive rationalization and
working capital management efforts.
Standard & Poor's will meet with management of SMTC to assess
its near-term operating prospects, financial flexibility under
its bank loan agreement, and actions to adapt to weaker market
conditions.
SEIRA LTD: S&P Junks EUR10 Million Series 5 Notes
-------------------------------------------------
Standard & Poor's lowered its rating on the EUR10 million series
5 notes issued by Seira Ltd., a special-purpose entity, to
double-'C' from single-'A' and placed the rating on CreditWatch
with developing implications.
The notes are credit-linked to the unsecured obligations of
Railtrack PLC (double-'C'/Watch Dev/'C'). The rating action on
Seira's series 5 notes reflects Standard & Poor's lowering of
Railtrack PLC's corporate credit rating to double-'C'/'Watch
Dev' from single-'A'.
SPIGADORO INC: Says Banks Extend Maturity Date for 60 Days
----------------------------------------------------------
Spigadoro, Inc. (AMEX:SRO), a leading manufacturer of branded
and private label products in the Mediterranean food sector,
announced that it has received verbal indications from its bank
consortium that the maturity of its outstanding $20 million
syndicated credit facility will be extended for 60 days.
As previously disclosed, the credit facility was originally
scheduled to mature on October 11, 2001. During the extension
period, it is anticipated that the Company will continue its
ongoing negotiations with the bank consortium regarding a
medium-term refinancing of this credit facility.
In addition, the Company noted that the specter of the maturity
of this $20 million short-term credit facility had led the
Company's banks to temporarily restrict the Company's access to
other unused lines of credit required by the Company to support
its working capital needs in connection with day-to-day
operations. Such lines of credit are vital to the maintenance of
the Company's operations and liquidity.
The Company is currently negotiating with its banks regarding
both a refinancing of its $20 million credit facility and a
restoration of its access to its unused working capital lines of
credit. There can be no assurance that such negotiations will be
concluded favorably.
In addition, the Company noted that the extension of the $20
million short-term facility would not become official until it
received written confirmation of such extension, the receipt of
which could not be assured. The failure by the Company either to
restore access to its working capital lines of credit within the
next several days or to achieve a favorable conclusion to its
refinancing negotiations within the 60 day extension period
would have a material adverse effect on the Company's
operations, financial condition and liquidity.
Spigadoro is a leading manufacturer of branded and private label
products in the Mediterranean food sector. Its pasta and other
Mediterranean products are internationally recognized as high
quality products and are marketed under the brand name
"Spigadoro" ("Golden Ear of Wheat") in Italy, Europe, the U.S.
and the Far East. The Company's animal feed products are
manufactured at seven plants throughout Italy and are marketed
under the "Petrini" name. The Company's recent acquisition of
Pastificio Gazzola also establishes it as a European leader in
private label pasta.
As of June 2001, the Company recorded total current assets of
$60.8 million, while total current liabilities were pegged at
$99.8 million.
SUN HEALTHCARE: Removal Period Further Extended to November 22
--------------------------------------------------------------
Judge Walrath signed an order authorizing an extension of the
time within which Sun Healthcare Group, Inc. may file notices of
removal of related proceedings under Bankruptcy Rule 9027 until
the earlier of (a) November 22, 2001, or (b) thirty days after
the confirmation hearing. (Sun Healthcare Bankruptcy News, Issue
No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900)
TEKNI-PLEX: S&P Affirms Low-B Ratings After Acquiring Mark IV
-------------------------------------------------------------
Standard & Poor's affirmed its ratings on Tekni-Plex Inc.
following its recent announcement of the acquisition of Mark IV
Industries Inc.'s Swan garden hose business for about $80
million. The outlook is stable.
The transaction will be entirely equity funded and is expected
to close by end October 2001.
The ratings on Tekni-Plex Inc. reflect an aggressive financial
profile, which overshadows the firm's fair business position.
Somerville, New Jersey based Tekni-Plex is a $525 million,
geographically diversified manufacturer of packaging products
and materials for the health care, consumer, and food packaging
industries.
Barriers to entry include strong market positions in its niche
markets, innovative technologies, and a business mix that
includes some highly specialized products. The company also
benefits from the consumer-oriented nature of its end markets
and a wide breadth of products, which provides a measure of
stability to operating results. Relatively low customer
concentration (the top 10 customers account for less than 32% of
sales) also is a positive factor.
Management has successfully expanded its business through a
series of debt-financed acquisitions and has a track record of
successfully integrating operations and strengthening
profitability. The acquisition of the Swan hose business of Mark
IV Industries, with annual revenues of $95 million, will further
strengthen Tekni-Plex's market position in the garden hose
segment, expand its customer base, and provide operating
synergies.
Still, recent operating results reflect weaker demand growth and
inventory de-stocking by customers for healthcare packaging
products, coupled with a shift in a key customer's buying
pattern for garden hose products. These issues have adversely
affected earnings and cash flow generation in 2001.
The company's financial profile was significantly weakened
following its recapitalization in June 2000, which led to
increased debt levels. However, the deleveraging effect of the
Swan acquisition and expectations that free cash will support
further debt reduction in the intermediate term, should support
some improvement to the financial profile so that the ratio of
total debt to EBITDA trends toward 4.5 times to 5.0x from around
6.5x as of June 2001. Also, at the current ratings, EBITDA
interest coverage is expected to approach 2.0x, supported by
profitability growth through cost savings, new products, market
penetration, and moderating raw material prices.
Financial flexibility is aided by the absence of meaningful
maturities in the intermediate term, and revolving credit
facility availability of about $35 million as of June 2001.
Following the equity call exercised for the Swan acquisition,
about $17 million in committed equity reserve will be available
to the company.
Outlook: Stable
Generally favorable business prospects and solid market
positions should support management's efforts to improve the
financial profile and maintain credit quality in the
intermediate term.
Ratings Affirmed
Tekni-Plex Inc.
Corporate credit B+
Senior secured debt B+
Subordinated debt B-
TELEMUNDO: S&P Places Low-B & Junk Ratings on Watch Positive
------------------------------------------------------------
Standard & Poor's placed its ratings on Telemundo Holdings Inc.
on CreditWatch with positive implications.
The CreditWatch placement follows the announcement by NBC, a
unit of General Electric Co. (GE), that it has agreed to acquire
Telemundo's parent, Telemundo Communications Group Inc.
Consideration of about $2.7 billion includes cash, GE stock, and
Telemundo's approximately $700 million existing debt.
Through 100% ownership of Telemundo Group Inc., Telemundo
Holdings owns ten full power UHF television stations affiliated
with the Telemundo Network, the second-ranked U.S. Spanish
language network. Telemundo Communications owns 67% of the
Telemundo Network and Sony Pictures Entertainment Inc. owns
the remainder.
Standard & Poor's will resolve the CreditWatch listing upon
completion of the proposed transaction.
Ratings Placed on CreditWatch with Positive Implications
Telemundo Holdings Inc. Ratings
Corporate credit rating B
Senior unsecured debt CCC+
Telemundo Group Inc.
Corporate credit rating B
Senior secured bank loan rating B+
TRI-NATIONAL: Senior Care Deems Complaint "Seriously Deficient"
---------------------------------------------------------------
Richard Mata, general counsel to Senior Care Industries Inc.
(OTCBB:SENC), announced that the United States District Court in
San Diego has set December 17, 2001, as the date for a hearing
on Senior Care's motion to dismiss the complaint brought against
Senior Care and certain officers of Senior Care by Tri-National
Development Corp. (OTCBB:TNAV) and its president, Michael
Sunstein.
Mata described Tri-National's complaint as seriously deficient
in several areas of the law and stated that he expected that
Judge Lorenz, who has been assigned to the case, would dismiss
the complaint. But, most likely, would allow Tri-National to
amend it if the trustee in Tri-National's bankruptcy case
desires to move forward with this suit.
A petition in the Bankruptcy Court was filed by several
creditors of Tri-National in August and a hearing is presently
set for Oct. 26, 2001, before Judge Hargrove to determine
whether Tri-National should be forced into bankruptcy. If they
are declared bankrupt before the hearing on Dec. 17, 2001,
before Judge Lorenz, it would be up to the trustee in that case
to decide whether to go forward with the case, Mata explained.
Senior Care builds homes for seniors using Senior Care's "smart
home" technology. Presently, the company has projects under
development in Las Vegas, San Jacinto, Calif., outside of Palm
Springs and intends to build an apartment complex for seniors in
Albuquerque, N.M.
Senior Care is currently selling condominiums at its Evergreen
Manor II project in Los Angeles and will soon start formal
development of its projects in Baja California.
USG CORP: L&W and Channelinx Team Up For Online Sales & Service
---------------------------------------------------------------
ChanneLinx, a premier provider of e-commerce software and
services, announced that USG Corporation subsidiary L&W Supply
will use ChanneLinx technology to power its private network for
online sales and customer service.
L&W Supply, the nation's largest distributor of gypsum
wallboard and building materials, will use ChanneLinx's
eLinx(TM) e-commerce platform to enhance its product catalog and
customer service through the http://www.lwsupply.comwebsite
By establishing an additional channel for sales and customer
service, L&W plans to improve the overall customer experience
and maintain a competitive advantage in the industry.
Fareed Khan, Vice President of Marketing and Business
Development at L&W, comments on the partnership, "We are
extremely pleased to team with ChanneLinx in our efforts to
provide our customers with value-added services through the
Internet. ChanneLinx has done a thorough job of understanding
our objectives, and they presented a strong technology platform
that is a good fit for our industry and our customers."
ChanneLinx specializes in intelligent Internet-based
software that connects suppliers and customers to streamline
business processes. ChanneLinx's suite of products and services
allows companies to create private procurement marketplaces,
sell products over the web, and develop online communities for
buying groups, associations, and other organizations.
Numerous Fortune 500 companies in the oil and gas, retail
distribution, electronics manufacturing, telecommunications, and
construction industries use ChanneLinx technology. ChanneLinx
is headquartered in Greenville, SC, with an additional office in
Houston, TX.
With over $1.1 billion in sales, L&W Supply is the leading
distributor of drywall and related building products in the
construction industry. L&W has nearly 200 locations operating
under local company names and maintains more than 40,000
products throughout a nationwide network. In addition to their
large product offering, L&W provides job-site delivery, credit,
and technical support to professional contractors nationwide.
Headquartered in Chicago, L&W has been serving the building
materials industry for over 30 years.
eLinx is a trademark of ChanneLinx, Inc. All other names are
trademarks and/or registered trademarks of their respective
owners. (USG Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
VENTUREQUEST: Enters Deal to Acquire VytalTek For About CDN$405K
----------------------------------------------------------------
VentureQuest Group, Inc., a Nevada corporation, (Pink Sheets:
VQGI), said that further to its strategy of combining internal
growth with the targeted acquisition of companies with
unrealized value, it has entered into an agreement to acquire
all of the outstanding shares and approximately CDN$405,000 of
secured and unsecured indebtedness of VytalTek Security Services
Inc., a privately held Canadian corporation operating in
Vancouver, British Columbia in exchange for 2,750,000 restricted
shares of the Company's common stock and CDN$120,000 payable at
the rate of CDN$3,333.33 per month for 36 months.
VytalTek is a full service security company that sells,
installs, services and monitors commercial and residential
security systems and solutions.
The controlling shareholder and President of VytalTek, Thomas
Roney has agreed to remain with VytalTek for a period of three
years and use his best efforts to obtain additional business for
VytalTek while preserving its current Recurring Monthly Revenue
(RMR) of approximately CDN$27,000 by minimizing the attrition of
VytalTek's existing account base.
Mr. Rooney has agreed to a non-competition agreement in which he
undertakes not to compete directly or indirectly with VytalTek
for a period of 36 months from the closing date and not to
solicit any of VytalTek's current or prospective clients for a
period of 60 months from the closing date.
"I am delighted to announce this acquisition of VytalTek both
for its established base of recurring revenue and its
established base of technical expertise that we expect to
utilize in other installations of CyberTrak 3.0, the Company's
suite of proprietary Management tools." stated Eric Hutchingame,
Chairman and CEO of VentureQuest.
"This acquisition is a natural extension of our efforts to
further position the Company for rapid growth by the targeted
acquisition of companies with unrealized value to obtain
multiple recurring revenue streams that utilize a common base of
strategic assets," he added.
"VytalTek was seeking to be acquired by a publicly traded
company with a management team that had a proven track record of
successfully restructuring enterprises," advised Mr. Rooney.
"I am certain their restructuring efforts will be successful,
because I believe that a publicly traded stock subject to U.S.
law and SEC regulations combined with our established RMR, will
be attractive to the financial stakeholders of VytalTek," added
Rooney.
The agreement is subject to the final approval of the
VentureQuest's Board of Directors and successfully completing a
Formal Proposal under the Bankruptcy and Insolvency Act of
Canada.
The company also announced that by agreement with SlopeMaster
Inc., it would defer its acquisition of Slope Master's patented
golf driving range platform until the company has successfully
consolidated the operations of VytalTek. "We remain enthusiastic
about SlopeMaster, but believe that the VytalTek acquisition
provides a stronger base from which to develop this
opportunity," said Hutchingame.
VentureQuest is in the business of acquiring and consolidating
emerging or underachieving companies or opportunities that
provide recurring revenue.
As at June 30, 2001, the Company's total current liabilities, at
the end of June, stood at $276,081, exceeding its total current
assets of $201,580.
VLASIC FOODS: Urges Rejection of Retiree Panel Appointment
-----------------------------------------------------------
Robert A. Weber, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in Wilmington, Delaware, observes that the reasons cited by
the United Farm Workers for the appointment of a retiree
committee are sympathetic, rather than legal. But Vlasic Foods
International, Inc. will establish at the hearing that the
termination motion was made necessary by the economics of these
cases rather than any improper motive, Mr. Weber informs the
Court.
The Debtors understand that the termination of retiree benefits,
if granted, may result in some hardship or inconvenience to the
constituents of the Untied Farm Workers, Mr. Weber says. But,
Mr. Weber notes, if the United Farm Workers' motion to form a
retiree committee is granted, it will prejudice the Debtors'
unsecured creditors by further reducing the pool of assets from
which distributions may be made. The additional expense that
would result from the appointment of a retiree committee here
would not serve the purposes of section 1114 and would ignore
the operative provisions of the benefit plans at issue, Mr.
Weber asserts.
On the United Farm Workers' argument that a committee should be
appointed to conduct additional factual investigations, Mr.
Weber reminds Judge Walrath that the Debtors:
(1) have adjourned the hearing on the termination motion
several times, and
(2) have provided the affected parties with ample time to
investigate whatever facts such parties deem
appropriate.
Also, the Debtors have responded promptly to each request for
copies of the plan and for information concerning the plan, Mr.
Weber adds.
Mr. Weber contends that further delays are inappropriate,
considering that the plan confirmation hearing is approaching
and the ample period for investigation has already passed.
So, for these reasons, and those, which may be presented at the
hearing, the Debtors request that the Court deny the United Farm
Workers' motion to set up a retiree committee. (Vlasic Foods
Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WARNACO GROUP: Seeks Court Approval to Reject 57th Street Lease
---------------------------------------------------------------
The Warnaco Group, Inc. seeks the Court's authority to reject
their lease covering a multi-story building on 57th Street in
Manhattan that houses a Speedo/Authentic Fitness retail store on
the ground level, and has 4 upper floors of vacant space that is
entirely unfinished and, therefore, currently unsuitable for any
retail, office or residential use.
Elizabeth R. McColm, Esq., at Sidley Austin Brown & Wood, in New
York, New York, explains that the Debtors have decided to close
the Speedo/Authentic Fitness retail store and reject the 57th
Street Lease (which has no more value to their estates) because:
(i) the Store is losing money and is projected to continue to
incur losses in the future;
(ii) before the Lease may be assumed and assigned, the Debtors
may be required to incur considerable costs in connection
with litigating over The Estate of H.M. Hassan II's
demand that substantial repairs are required to be made
in the Building at the Debtors' cost and, if the Debtors
are unsuccessful in such litigation, they actually must
incur such costs of repair; and
(iii) there is currently a weakened market for retail leases in
New York City.
Ms. McColm clarifies that this analysis was made prior to the
disastrous September 11, 2001 events in New York City that have
had a negative impact on the retail environment in general. To
avoid any further losses, Ms. McColm says, the Debtors have
concluded that they should close the Store.
If the Court will not allow the Debtors to reject the Lease, Ms.
McColm explains, the only potential value of the Lease might be
realized through an assumption and assignment of the Lease to a
third party. However, Ms. McColm notes, if the Debtors were to
assume the Lease, they would have to cure outstanding defaults.
In this case, Ms. McColm informs the Court, the Lessor have
repeatedly alleged that the Debtors are in default under the
Lease due to the Debtors' alleged failure "to put, keep and
maintain" the Building in "thorough repair and good order and
safe condition".
Early this year, Ms. McColm relates, the Lessor sent a "Notice
to Cure" to the Debtors asserting numerous defaults under the
Lease and demanding that the Debtors perform extensive
renovations and repairs throughout the Building, including,
without limitation, significant repairs to the roof, elevator,
ceilings, floors, walls and oil storage tank. In compliance,
Ms. McColm notes, the Debtors have spent over $85,000 for
repairs in the Building.
Still, Ms. McColm tells Judge Bohanon, the Lessor continues to
assert that substantial additional renovations and repairs are
required, and the Debtors remain in default under the Lease.
Just last month, Ms. McColm says, the Lessor delivered a 7-page
report prepared by an outside engineer detailing over 50 alleged
deficiencies throughout the Building, and demands that extensive
repairs should be made at the Debtors' sole cost and expense.
If this dispute is brought to Court, Ms. McColm notes, the
Debtors would have to devote substantial time, effort and money
in litigation. And if the Debtors lose the battle, Ms. McColm
says, the Debtors will be required to spend thousands of dollars
more for repairs and renovations in the Building. Besides, Ms.
McColm adds, it will be difficult for the Debtors to find an
assignee that would be willing to pay an amount sufficient to
yield a profit for the Debtors.
Thus, the Debtors contend that it would be in the best interests
of their estates and creditors to reject the Lease. The
rejection, Ms. McColm says, will save the Debtors an annualized
rental cost of $300,000, plus the cost of litigating long-
standing disputes with the Lessor regarding Building renovations
and repairs, and potentially, the cost of such repairs. (Warnaco
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WASHINGTON GROUP: Court Junks Chairman's Agreement with Lenders
---------------------------------------------------------------
Washington Group International said that the judge in United
States Bankruptcy Court in Reno did not approve an agreement
between the company's secured lenders and its Chairman, Dennis
R. Washington.
While the court rejected the specific agreement, the company's
secured lenders and unsecured creditors made it clear that they
want Mr. Washington to continue in his position as Chairman of
the Board.
"I remain committed to the success of Washington Group and I am
committed to remaining as its chairman," said Mr. Washington.
Mr. Washington said he is disappointed in the ruling on the
agreement that, "was negotiated on a arms-length basis with our
secured lenders. We expected this process to be dynamic and our
top priority is to get our plan of reorganization approved by
the court. I am committed to continue to work with our employees
to get this done as soon as possible."
During the hearing, the judge also made it clear that his
decision does not affect Washington Group's exclusive right to
propose a plan of reorganization.
Washington Group International, Inc., is a leading international
engineering and construction firm with more than 30,000
employees at work in 43 states and more than 35 countries. The
Company offers a full life-cycle of services as a preferred
provider of premier science, engineering, construction, program
management, and development in 14 major markets.
WINSTAR COMMS: Trizechahn Demand Payment of Postpetition Arrears
----------------------------------------------------------------
TrizecHahn Office Properties, Inc., and Winstar Communications,
Inc. entered into various agreements for numerous buildings
and/or operated by TrizecHahn, including a Master
Telecommunications Agreement and a form of Telecommunications
Service License Agreement utilized by the Debtors.
Lisa McLaughlin, Esq., at Philips Goldman & Spence, in
Wilmington, Delaware, tells the Court that as a result of the
Agreements, many of TrizecHahn's buildings were made available
to the Debtors and enabled them to enter into agreements with
many of the buildings' tenants for various telecommunication
services.
However, Ms. McLaughlin says, despite these benefits, the
Debtors are not current on their post-petition obligations under
the Agreements. She states that, for the period of April 18,
2001 to September 1, 2001, the Debtors accrued post-petition
obligations in the amount of $282,736.66. These amounts, she
says, remain unpaid.
The Debtors are protected by the automatic stay and TrizecHahn
is barred to take necessary actions to protect its rights
without Court order. However, Ms. McLaughlin asserts, the
Debtors are also required to remain current on all of its post-
petition obligations. Ms. McLaughlin contends that TrizecHahn is
being, and will continue to be, harmed by the Debtors' failure
to pay their obligations.
On these Grounds, TrizecHahn respectfully requests the Court to
compel the Debtors to remit payment for all post-petition
arrears within 5 days of the date of entry of an order approving
their Motion. (Winstar Bankruptcy News, Issue No. 15; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
*********
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Copyright 2001. All rights reserved. ISSN: 1520-9474.
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