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T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, November 20, 2001, Vol. 5, No. 227
Headlines
ANC RENTAL: Seeks Approval of Fried Frank as Lead Counsel
AMERICAN TOWER: S&P Ratchets Ratings Down a Notch
AMES DEPT: Seeks Open-Ended Extension of Removal Period
ASPEON INC: Appoints Robert D. Nichols as New CEO & President
BIG V: Inks Deal to Sell All Assets to Wakefern Food for $150MM
BRANDSELITE: Has Until December 21 to File Proposal to Creditors
BRIGGS PLUMBING: Closes Debt Refinancing Deal with Transamerica
BURLINGTON: Will Honor $7MM in Pre-Petition Customer Obligations
CANADA 3000: PwC Named Trustee in Five Subsidiaries' Bankruptcy
CASTLE DENTAL: Continues Negotiations for Debt Restructuring
COUBA OPERATING: Court Confirms 2nd Amended Reorganization Plan
COVAD COMMUNICATIONS: Taps Ernst & Young for Auditing Services
DAIRY MART: Court Okays Key Employee Retention Program
DELTA AIR: Names Mark Balloun as VP of Corp. Strategic Planning
EXIDE TECHNOLOGIES: S&P Pulls Junk Ratings Down a Step
EXODUS COMMS: Seeks Approval of Contract Rejection Procedures
FEDERAL-MOGUL: Signs-Up EYCF As Advisor in Lighting Group's Sale
FLORSHEIM: Considering More Asset Sales to Meet Capital Needs
FRUIT OF THE LOOM: Court Extends Solicitation Period to Jan. 31
GENTIVA HEALTH: S&P Places Low-B Ratings on CreditWatch Positive
GLENOIT CORP: Seeks Removal Period Extension Until February 6
HA-LO INDUSTRIES: Wants Removal Period Extended Until March 29
HARBORSIDE HEALTHCARE: Completes Subordinated Debt Restructuring
HUNGARIAN TELEPHONE: Banks Agree to Amend Senior Debt Facility
ICH CORP: Working Capital Deficit Stands at $13MM at End of Q3
IPI INC: Seeks Shareholders' Approval of Liquidation Plan
IMPERIAL SUGAR: Wants More Time to File Claims Objections
INNOVATIVE GAMING: Considers Seeking Short-Term Debt Financing
LEINER HEALTH: Finalizing Talks on Financial Restructuring Terms
MEMC ELECTRONICS: Reports Negative Operating Cash Flow in Q3
METALS USA: Secures Interim Authority to Use Cash Collateral
MONTANA POWER: Shareholders Okay Restructuring & Sale of Utility
NATIONAL ENERGY: Business Operations Improve in Third Quarter
OWENS CORNING: Asks Court to Fix April 15 Bar Date for Claims
PCSUPPORT.COM: Lacks Capital After September Restructuring
PACIFIC GAS: UST Asked to Appoint Committee for Gov't Entities
POLAROID CORP: US Trustee Appoints Official Creditors' Committee
PRECISION PARTNERS: Bank Group & GECC Waive Covenants to Dec. 19
SULZER MEDICA: Implant Product Liability Hearing Set for Nov. 29
SYSTEMONE TECHNOLOGIES: Sees Improved Results in Third Quarter
TELERGY: Private Investors' Group Extends $10MM in DIP Financing
THERMADYNE: Files for Chapter 11 Reorganization in Missouri
THERMASYS CORP: S&P Drops Corporate Credit and Bank Rating to B
U.S. AGGREGATES: Seeks Waivers of Defaults Under Debt Agreements
US PLASTIC LUMBER: Seeking Options to Refinance Credit Facility
US UNWIRED: S&P Junks Subordinated Debt Rating
WARNACO GROUP: Court Allows Insurance Companies to Make Payments
WASHINGTON GROUP: Names Charles R. Oliver Jr. New COO
WASTE SYSTEMS: Wants Removal Period Extended Until March 7, 2002
*********
ANC RENTAL: Seeks Approval of Fried Frank as Lead Counsel
---------------------------------------------------------
ANC Rental Corporation and its debtor-affiliates present the
Bankruptcy Court in Wilmington with their application to employ
and retain Fried, Frank, Harris, Shriver & Jacobson as lead
bankruptcy counsel in their chapter 11 cases.
Wayne Moore, the Debtors' Senior Vice President and Chief
Finance Officer, submits that the Debtors seek the retention of
Fried Frank because of the firm's extensive experience and
knowledge in the field of debtors' and creditors' rights and
business reorganizations under chapter 11 of the Bankruptcy Code
and because of its expertise, experience and knowledge
practicing before this Court, its experience in representing the
Debtors prior to the Filing Date, and its ability to quickly
respond to all issues that may arise in these cases. In
representing ANC for some time and in preparing for these cases,
Fried Frank has become familiar with the Debtors' businesses and
affairs and many of the potential legal issues that may arise in
the context of these chapter 11 cases. Mr. Moore believes that
Fried Frank is both well qualified and uniquely able to
represent the Debtors in these chapter 11 cases as well as
perform the attendant general corporate, securities and other
work required by the Debtors.
Mr. Moore tells the Court that Fried Frank will provide its
expertise with respect to bankruptcy-related issues and will act
as general bankruptcy counsel for the Debtors and will continue
to provide general corporate, security and transactional
expertise to the Debtors. In addition, Fried Frank will also
provide services, to the extent requested, in a variety of other
areas as to which it has expertise, including corporate, tax,
litigation, real estate and ERISA and other employee benefits
areas. By reason of its long-standing relationship and ongoing
representation of the Debtors, Mr. Moore claims that Fried Frank
has acquired invaluable knowledge of the Debtors' affairs, which
would be difficult and expensive for another firm to acquire.
Particularly for that reason, the Debtors believe that the
retention of Fried Frank as their attorneys is in the best
interests of the Debtors, their estates and their creditors.
Prior to the Filing Date, Fried Frank rendered legal advice to
the Debtors with respect to their restructuring alternatives and
will continue to:
A. provide legal advice with respect to the Debtors' powers and
duties as debtors-in-possession in the continued operation
of their businesses and management of their properties and
the authorization and approval of a plan of reorganization;
B. take necessary action to protect and preserve the Debtors'
estates, including the prosecution of actions on behalf of
the Debtors and the defense of actions commenced against
the Debtors;
C. prepare on behalf of the Debtors, as debtors-in-possession,
necessary applications, motions, answers, orders, reports
and other legal papers in connection with the
administration of their estates in these cases;
D. negotiate and prepare on the Debtors' behalf plan(s) of
reorganization, disclosure statement(s), and all related
agreements and/or documents, and take any necessary action
on behalf of the Debtors to obtain confirmation of such
plan(s); and
E. perform any other necessary corporate, securities and other
legal services for the Debtors, as debtors-in-possession,
in connection with these chapter 11 cases.
Mr. Moore adds that Fried Frank will consult with the Debtors'
management and financial advisors in connection with any
potential transaction involving the Debtors and the operating,
financial and other business matters relating to the ongoing
activities of the Debtors. Fried Frank will also, to the extent
requested, attend and participate in creditors' committee
meetings, and make appearances before this Court.
Matthew Gluck, Esq., a Fried Frank member, confirms that in
connection with Fried Frank's pre-petition efforts on behalf of
the Debtors during the one year period prior to the Filing Date
and with respect to professional and ancillary services rendered
and to be rendered, Fried Frank received from the Debtors
payments in the aggregate amount of $4,027,010, including an
advance payment of $500,000. As of the Filing Date, a portion
of that advance payment may have been exhausted but the Firm
will file a supplemental disclosure stating the amount of the
net advance payment remaining. Mr. Gluck states that Fried Frank
will credit any excess amount remaining from the advance payment
against dollar amounts awarded to Fried Frank by this Court with
respect to applications for compensation and reimbursement of
expenses submitted by Fried Frank to and approved by this Court.
Subject to the Court's approval, Mr. Gluck relates that Fried
Frank will charge the Debtors for its legal services on an
hourly basis in accordance with its ordinary and customary rates
for Bankruptcy Court authorized engagements in effect on the
date services are rendered, and submits that such rates are
reasonable. Set forth below are the current hourly rates that
Fried Frank presently charges for the legal services of its
professionals:
Partners $490 - $850 per hour
Of Counsel $420 - $660 per hour
Special Counsel $420 - $495 per hour
Associates $245 - $420 per hour
Legal Assistants $ 95 - $195 per hour
The Fried Frank bankruptcy and restructuring attorneys and legal
assistants who are likely to perform services in these cases,
and the hourly rates attributable to their work for this
engagement, effective as of the date of this Declaration, are:
Brad Eric Scheler $690
Matthew Gluck $620
Alan N. Resnick $620
Gerald C. Bender $460
Brian D. Pfeiffer $340
Craig M. Price $285
Jibreel Turner $125
Mr. Moore asserts that Fried Frank's attorneys are highly
skilled and have developed a familiarity with the Debtors'
affairs and therefore, the Debtors believe that the retention of
Fried Frank is in the best interests of the Debtors, their
estates and their creditors. (ANC Rental Bankruptcy News, Issue
No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900)
AMERICAN TOWER: S&P Ratchets Ratings Down a Notch
-------------------------------------------------
Standard & Poor's lowered its ratings on American Tower Corp.
(AMT) and units. The outlook is stable.
The downgrade follows third-quarter 2001 operating results,
which showed that the company's core tower leasing business
continues to perform well but that its networks services and
Verestar business units remain weaker than previously expected.
As a result of reduced cash flow levels from these two units,
AMT will not achieve credit metrics over the medium term
supportive of the 'BB-' corporate credit rating.
On a positive note, AMT's aggressive growth is moderating
significantly, as new tower builds and acquisition activity are
being curtailed. The company is significantly restructuring
Verestar, cutting costs in the rest of the company to reduce its
overall cost structure and improve profitability, and making
enhancements to its IT systems. Debt levels are expected to peak
in 2002, and, as long as tenant lease-up activity remains
healthy, the company should be able to grow into its capital
structure over the next two years.
The company's bank credit availability is a key liquidity
factor. AMT recently added $250 million to its line of credit,
bringing total bank lines up to $2.25 billion. The facility is
subject to a number of financial covenants, which restrict
availability under the lines. The total debt, excluding
convertible debt and cash, to EBITDA covenant is 7.75 times and
steps down to 6.50 by year-end 2002. Bank covenant EBITDA is
calculated as annualized current quarter tower cash flow
(excluding the Mexican operations) plus 75% of latest 12-month
services and Verestar cash flow. Based on third-quarter 2001
numbers, the company had about $700 million in availability.
Total debt at September 30, 2001, was about $3.5 billion, while
cash balances were $338 million. EBITDA for the nine months
ended September 30, 2001, was $191 million, and is expected to
exceed $300 million in 2002. Same-tower revenue growth exceeded
20% in the third quarter, and tower cash flows represent more
than 80% of consolidated EBITDA. The company anticipates
building between 800 and 1,000 new towers in 2002, resulting in
capital expenditures, including maintenance and upgrades, of
about $325 million. This could be scaled back because only about
$150 million is in contracted obligations, the majority of which
is from additional ALLTEL Corp. towers that AMT will close on in
the fourth quarter of 2001. To cover cash interest expense of
about $280 million and capital expenditures of more than $300
million, the company will need to draw on its line of credit in
2002. Principal amortization of about $50 million on the $850
million term loan A begins in 2003 and significantly accelerates
thereafter.
Outlook: Stable
Management is taking steps to reduce costs, improve margins, and
reduce debt leverage. Credit metrics should improve in 2002 and
2003, as the company focuses on existing operations and scales
back growth. Improving the balance sheet is critical at a time
when capital market access is limited and economic conditions
are weak. Although tower lease-up rates are healthy, longer-term
uncertainties exist with regard to the potential lifting of
spectrum caps, carrier consolidation, and the impact on tower
business models as 2.5 generation networks are deployed.
Ratings Lowered
American Tower Corp. TO FROM
Corporate credit rating B+ BB-
Senior unsecured debt B- B
Shelf registration:
Senior unsecured debt prelim. B- prelim. B
Preferred stock prelim. CCC+ prelim. B-
American Towers Inc.*
American Tower L.P*
American Tower International Inc.*
Towersites Monitoring Inc.*
Verestar Inc.*
Senior secured bank loan
(Guaranteed by American Tower Corp.) BB- BB
*Co-issuer.
AMES DEPT: Seeks Open-Ended Extension of Removal Period
-------------------------------------------------------
As of August 20, 2001, Ames Department Stores, Inc., and its
debtor-affiliates were parties to approximately 200 civil
actions and proceedings in a variety of state and federal
courts. The time within which the Debtors must file motions to
remove any pending Civil Actions and Proceedings currently is
set to expire on November 19, 2001.
By this Motion, the Debtors seek issuance of an order extending
the Debtors' time to file notices of removal of the Civil
Actions and Proceedings until the date an order is entered
confirming a chapter 11 plan in the Debtors' chapter 11 cases.
Martin J. Beinenstock, Esq., at Weil Gotshal & Manges LLP in
Wilmington, Delaware tells the Court that the Debtors are
continuing to review their records to determine whether they
should remove any claims or civil causes of action pending in
state or federal court to which they might be a party. Because
the Debtors are parties to approximately 200 lawsuits, and
because the Debtors' key personnel are assessing these lawsuits
while being actively involved in the Debtors' reorganization,
the Debtors require additional time to consider filing notices
of removal in the Civil Actions and Proceedings.
The Debtors believe the proposed time extension will provide
sufficient additional time to allow them to consider, and make
decisions concerning, the removal of the Civil Actions and
Proceedings. Unless such enlargement is granted, the Debtors
believe they will not have sufficient time to consider the
removal of the Civil Actions and Proceedings. Accordingly, the
Debtors submit cause exists for the relief requested herein.
(AMES Bankruptcy News, Issue No. 8; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ASPEON INC: Appoints Robert D. Nichols as New CEO & President
-------------------------------------------------------------
Aspeon Inc. (Pink Sheets:ASPE) announced that the Aspeon board
of directors has appointed Robert (Bob) D. Nichols as president,
chief executive officer, and a director of the company.
Nichols replaces Richard Stack who remains a director of the
company and leaves to become president of a software and
services company located in Orange County.
Nichols was a prior director and executive of the company and
owner of the CCI Group which was purchased by Aspeon in 1997.
Most recently Nichols was with FreedomPay, a wireless payment
and loyalty company backed by Nokia. Previously at Aspeon,
Nichols ran all aspects of the U.S. Sales, Professional Services
and Operations.
Nichols stated, "I welcome the opportunity to join Aspeon and
believe my knowledge of the company, its products and customers
will assist the company in achieving its strategic goals
relative to the Javelin brand."
Jay Kear, incoming chairman of the board, stated, "The board of
directors interviewed several well-qualified CEO candidates, but
felt Bob was the one who could hit the ground running
immediately and be well accepted by our customers and
employees."
Aspeon is a leading manufacturer and provider of point-of-sale
(POS) systems, services and enterprise technology solutions for
the retail and foodservice markets. Visit Aspeon at
http://www.aspeon.com
Aspeon, Troubled Company Reporter stated in its November 9
edition, defaulted on its interest on preferred shares. On its
balance sheet, TCR said, there was included as a current
liability an amount of $14,671,000 representing the balance
owing under the preferred share agreement (in default).
Meanwhile, at the end of September, Aspeon's current liabilities
exceeded its current assets by $13.5 million, while
stockholders' equity deficit amounted to about $7.6 million.
BIG V: Inks Deal to Sell All Assets to Wakefern Food for $150MM
---------------------------------------------------------------
Big V Supermarkets, Inc. said that, as part of its effort to
work with its creditors toward a successful resolution of its
chapter 11 case, the company has entered into a term sheet with
Wakefern Food Corp., which, subject to the completion of
definitive documentation and approval by the bankruptcy court,
is intended to form the basis of a plan of reorganization for
Big V.
The term sheet provides, among other things, that Wakefern will
purchase substantially all of the assets (including leases,
equipment and inventory, but not including certain cash and
other assets) of Big V in accordance with the terms of a court-
approved plan of reorganization to be jointly proposed by Big V
and Wakefern. The purchase price would be approximately $150
million, which would include the assumption of certain existing
capital lease and equipment financing obligations. Certain
accrued liabilities not included in the purchase price would
also be assumed by Wakefern, and would be funded by Big V
primarily through a transfer of cash and other assets not
transferred in consideration of the purchase price.
Big V noted that the total value of the proposed transaction
could substantially exceed the $150 million purchase price
because Wakefern would also waive certain significant claims it
has asserted against Big V. The term sheet also reflects
comprehensive agreements between Big V and Wakefern regarding
the reconciliation of numerous claims and credits asserted by
each of the parties against the other. In addition, the term
sheet provides that Big V shall be entitled to receive, subject
to certain limited exceptions, the credits and other benefits
consistent with membership in good standing in the Wakefern
cooperative.
Jim Toopes, President and Chief Executive Officer of Big V
Supermarkets, said, "The signing of a term sheet follows
intensive negotiations with Wakefern, as well as discussions
with two other potential purchasers and representatives of our
lenders and other creditor groups. We believe the agreement we
have reached with Wakefern provides an appropriate basis for a
plan of reorganization that will ultimately provide favorable
recoveries for Big V's primary creditor constituents,
particularly as compared with other plan alternatives that may
be contemplated."
He continued, "We intend to work closely with Wakefern and the
other creditor representatives to flesh out the term sheet into
a full and fair plan of reorganization worthy of the support of
all of our creditors and then to solicit acceptances of that
plan as soon as practicable. We are optimistic that this process
can be completed in early 2002."
Based in Florida, N.Y., privately held Big V Supermarkets, Inc.
owns and operates 31 supermarkets in New York and New Jersey.
Big V is the market share leader in the Hudson Valley region of
New York and also has a significant market presence in the
Trenton, New Jersey area.
BRANDSELITE: Has Until December 21 to File Proposal to Creditors
----------------------------------------------------------------
Brandselite International Corporation (TSE: BNT) advises that it
has been granted by the Ontario Superior Court a further
extension to December 21, 2001 to file a proposal to its
creditors pursuant to the Bankruptcy and Insolvency Act
(Canada).
The extension will provide the Company with additional time
necessary to finalize its plan.
BRIGGS PLUMBING: Closes Debt Refinancing Deal with Transamerica
---------------------------------------------------------------
Transamerica Business Capital Corporation (TBC), a member of the
Transamerica Finance Corporation (TFC) family of companies,
announced that it has provided $25,000,000 in Revolving Credit
and Term Loan Facilities to Briggs Plumbing Products, Inc., to
refinance existing indebtedness and for ongoing working capital
purposes. Briggs is a wholly owned subsidiary of Ceramicas
Industriales, S.A.
According to Jorge Meruane, Chief Financial Officer of CISA and
Treasurer of Briggs Plumbing Products Inc, "Our previous lender
was not comfortable with the small size of our loan and the fact
that we had spotty historical financial performance". He adds,
"I was particularly impressed with TBC's ability to become
comfortable with our restructuring process. I believe that TBC
is a better lender for us and will provide for an improved
funding scenario and reasonable covenants going forward."
"We are very pleased to have been able to provide this financing
for Briggs," says Steve Fischer, Transamerica Business Capital
President. "Our ability to structure and close this complex
restructuring reflects the confidence that we have in an
excellent management team and a strong parent company which has
and continues to show significant support. We look forward to a
long and mutually beneficial relationship for all concerned."
Briggs, headquartered in Goose Creek, SC (Charleston) was
founded in the early 1900's and is a leading marketer and
distributor of vitreous china products and a leading
manufacturer of porcelain-on-steel bathtubs, lavatories and
sinks in the United States. The Company also produces a
competitive line of faucets and fittings. Briggs can be found on
the web at www.briggsplumbing.com .
Briggs parent company, CISA, headquartered in Santiago, Chile,
has a major commitment to the plumbing products industry. CISA
has china sanitaryware factories in Chile, Ecuador and
Venezuela, all with market shares varying from 60-80 percent.
CISA also has South American facilities producing toilet sinks,
tank fittings, faucets and plastic bathtubs. Briggs and CISA
combined are one of the largest producers of sanitaryware in the
Western Hemisphere.
Located in Rye, NY, Transamerica Business Capital (TBC), a
member of the Transamerica Finance Corporation family of
companies, is a leader in the asset based lending industry with
a focus on both asset based financing and structured finance
opportunities to include revolving credit and term loan
facilities -- $10 million to $150 million, or larger. Asset
based lending is designed to offer financial solutions to
middle-market companies that are restricted or are unable to
obtain conventional bank financing. TBC currently has committed
over $3.5 Billion in debt financing to companies throughout
North America. Transamerica Business Capital can be found on the
Web at http://www.TransamericaFinance.com/tbc
Transamerica Finance Corporation's parent, AEGON, NV, is one of
the world's largest listed insurance and related financial
services organizations in the world with over $227 billion in
assets.
BURLINGTON: Will Honor $7MM in Pre-Petition Customer Obligations
----------------------------------------------------------------
In the ordinary course of their businesses, Burlington
Industries, Inc., and its debtor-affiliates engage in marketing,
sales and promotional practices that are targeted to develop and
sustain positive reputations for their products in the
marketplace. These customer-targeted practices and promotional
efforts include:
(a) Credits. The Debtors utilize various practices and
procedures that are designed to attract new customers for the
Debtors' products and to enhance product loyalty among the
Debtors' existing customer base, including rebates, discounts,
contras, refunds, adjustments (including adjustments to billing)
and other credits relating to sales. As of the Petition Date,
the Debtors owed Credits to various customers on account of
goods or services delivered or provided to customers
prepetition.
(b) Deposits. The Debtors typically receive deposits or
prepayments from certain customers for goods and services not
yet delivered or provided to such customers in full or in part.
The Debtors generally apply the Deposits towards the customer's
account and then subsequently deliver or provide the goods or
services in accordance with the terns of the parties' agreement.
As of the Petition Date, the Debtors held numerous Deposits for
goods or services not yet delivered or provided to customers.
(c) Warranty Claims. In addition, the Debtors offer and
extend certain warranties to cover products sold to their
customers. Although these warranties may vary based on the
product or the particular customer, they generally impose an
obligation on the Debtors to replace products that are
defective, nonconforming or otherwise unacceptable to the
Debtors' customers. As of the Petition Date, the Debtors had
outstanding obligations on account of Warranty Claims.
(d) Promotional Claims. Finally, the Debtors enter into
arrangements with certain customers under which the customer
promotes and advertises (including cooperative advertising and
advertising placement in local newspapers or trade publications)
the Debtors' products. The Debtors, in turn, have certain
monetary or performance obligations to their customers under
these arrangements, some of which were outstanding as of the
Petition Date.
John D. Englar, Burlington's Senior Vice President, Corporate
Development and Law, tells Judge Walsh that the Company
estimates, as of the Petition Date, that the aggregate sum of
these Customer Obligations approximates $7,000,000.
The success and viability of the Debtors' businesses, Mr. Englar
says, are dependent upon the loyalty and confidence of their
customers. The continued support of this constituency is
absolutely essential to the survival of the Debtors' businesses
and the Debtors' ability to reorganize. Any delay in honoring
or paying various Customer Obligations will severely and
irreparably impair the Debtors' customer relations at a time
when the loyalty and support of those customers are extremely
critical. By contrast, honoring these prepetition obligations
will require minimal expenditure of estate funds and will assist
the Debtors in preserving key customer relationships to the
benefit of all stakeholders. Accordingly, to preserve the value
of their estates, the Debtors must be permitted, in the Debtors'
sole discretion, to continue honoring or paying all Customer
Obligations without interruption or modification. In addition,
to provide necessary assurances to the Debtors' customers on a
going-forward basis, the Debtors request authority to continue
honoring or paying all obligations to customers that arise from
and after the Petition Date in the ordinary course of the
Debtors' businesses.
Mr. Englar notes that the Debtors anticipate their Prepetition
Customer Obligations will be satisfied primarily (if not
exclusively) by providing on-going goods to customers in the
ordinary course of the Debtors' businesses. The Debtors won't
be writing checks totaling $7,000,000. Certain Customer
Obligations, of course, may be satisfied by providing refunds or
similar direct payments to customers.
The Debtors make it clear that nothing contained in their
request is intended or should be construed as: (a) an admission
as to the validity of any claim against the Debtors; (b) a
waiver of the Debtors' rights to dispute any claim; or (c) an
approval or assumption of any agreement, contract or lease,
pursuant to section 365 of the Bankruptcy Code. (Burlington
Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
CANADA 3000: PwC Named Trustee in Five Subsidiaries' Bankruptcy
---------------------------------------------------------------
Assignments in bankruptcy were filed on November 11, 2001 on
behalf of Canada 3000 Inc. (TSE: CCC), Canada 3000 Airlines
Limited/Lignes Aeriennes Canada 3000 Limitee and Royal Aviation
Inc. and each of the companies also continues to be subject to
Companies' Creditors Arrangement Act proceedings.
Deloitte & Touche Inc., acting as Trustee in bankruptcy and as
Monitor in respect of the CCAA proceedings, is taking steps to
preserve the assets of these companies and to explore
possibilities for a going concern transaction.
On November 16, 2001, the following direct and indirect
subsidiaries of Canada 3000 Inc., made voluntary assignments
into bankruptcy:
Holiday Travel Consultants Ltd.
Canada 3000 Airport Services Limited
Royal Handling Inc.
Canada 3000 Sales Limited
C3 Leisure Limited/C3 Leisure Limitee
PricewaterhouseCoopers LLP has been appointed as trustee in
bankruptcy of these five subsidiaries.
CASTLE DENTAL: Continues Negotiations for Debt Restructuring
------------------------------------------------------------
Castle Dental Centers (OTC Bulletin Board: CASL) reported a net
loss of $2.9 million for the third quarter of 2001 compared to
net loss of $10.5 million in the prior year period. Operating
results in the third quarter 2001 were impacted by a 14.6%
decrease in patient revenues, higher costs resulting from legal
fees, management recruiting expenses and restructuring charges.
Patient revenues in the Houston, San Antonio and Tennessee
markets were adversely affected by the general slowdown in
retail sales and the impact of the September 11 terrorist
attacks. In the third quarter 2000, the Company recorded pre-
tax charges of $11.9 million related to changes in the
collectibility of accounts receivable, the closure of dental
offices, severance costs and increased litigation expenses. For
the first nine months of 2001, the Company had a net loss of
$7.1 million compared to the year earlier net loss of $11.1
million.
Net patient revenues were $23.2 million for the third quarter of
2001, $3.9 million or 14.6% less than revenues in the third
quarter of 2000. Patient revenues from dental centers open more
than one year decreased by 8.7% in the third quarter of 2001
compared to the same period last year. The Company also closed
or consolidated 14 dental centers in the last year resulting in
reduced revenues of approximately $1.6 million in the third
quarter of 2001. For the nine months ending September 30, 2001,
net patient revenues were $75.4 million, 6.2% less than revenues
of $80.3 million in the first nine months of 2000.
James M. Usdan, president and chief executive officer, commented
on the third quarter results, "Our third quarter results have
been adversely affected by the general economic slowdown that
began earlier this year and the impact of the tragic events of
September 11 that reduced patient visits and continues to
adversely affect retail sales. We are also incurring additional
restructuring expenses and higher than normal interest expense
due to the continuing defaults on our senior and subordinated
debt. We have put in place a plan to improve operating
performance by focusing on patient care, improving provider
relations and creating a stable work environment for Castle
Dental associates. In this regard, we have recently
strengthened our management team through the addition of Mr.
Dean Clemens as vice-president and chief personnel officer and
Ms. Kris Kelly as vice-president of marketing. Both Dean and
Kris have extensive experience in their respective fields in
healthcare related businesses and will make valuable
contributions to the turnaround of Castle Dental."
Mr. Usdan continued, "We have not yet concluded negotiations
with our senior bank and subordinated debt lenders concerning
the restructuring of our debt. These negotiations have taken
longer than anticipated and, although there can be no assurance
as to the ultimate success of these discussions, we continue to
believe that the Company will be able to restructure its debt.
We also are discussing potential equity investments by private
investors that would be used to reduce debt and secure the
financial viability of Castle Dental. Any debt restructuring or
equity investment, if available and successfully concluded,
would most likely result in substantial dilution to the
Company's stockholders."
Castle Dental Centers, Inc. develops, manages and operates
integrated dental networks through contractual affiliations with
general, orthodontic and multi-specialty dental practices in the
U.S. The Company presently manages 89 dental centers with
approximately 190 affiliated dentists in Texas, Florida,
Tennessee and California.
COUBA OPERATING: Court Confirms 2nd Amended Reorganization Plan
---------------------------------------------------------------
Gothic Resources Inc. (CDNX: GCR) announces that the Second
Amended Plan of Reorganization of Couba Operating Company
submitted by the Company and its wholly owned subsidiary,
American Natural Energy Corporation, was confirmed in U.S.
Federal Bankruptcy Court.
A statutory ten day appeal period commences Friday, November 16,
2001. On expiry of the appeal period, ANEC will acquire
substantially all of the assets of Couba, comprised of existing
oil and gas properties that include leasehold and 3D seismic
inventory in St. Charles Parish, Louisiana.
COVAD COMMUNICATIONS: Taps Ernst & Young for Auditing Services
--------------------------------------------------------------
Covad Communications Group, Inc., presents to the Court an
application for entry of an order authorizing the employment and
retention of Ernst & Young LLP, nunc pro tune effective as of
August 15, 2001, to render accounting, independent auditing and
tax services to the Debtor.
Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young & Jones,
P.C. in Wilmington, Delaware, submits that Ernst & Young is one
of the nation's leading professional services firms providing
accounting, auditing, tax and other services to its clients. The
firm has extensive experience in bankruptcy proceedings under
chapter 11 of the Bankruptcy Code, advising debtors, creditors
and other parties-in-interest. Ms. Jones explains that the
Debtor seeks to retain Ernst & Young because of their experience
in the reorganization of cases, familiarity with the Debtor, and
its operations, as well as its ability to perform the services
required, effectively, expeditiously and efficiently for the
benefit of the Debtor. Moreover, Ernst & Young has previously
provided recurring audit, accounting, tax and other business
advisory services to the Debtor and is familiar with the
Debtor's business operations.
Subject to further order of this Court, Paul O. Thompson, a
Partner of Ernst & Young LLP proposes to render accounting,
independent auditing and tax services to the Debtor, including:
A. Audit and report on the consolidated financial statements of
the Debtor for the year ending December 31, 2001, and to
perform interim reviews of the Debtor's unaudited condensed
financial statements, beginning with the 3 and 9 month
periods ending September 30, 2001. Such services, and any
additional assurance or accounting services that may be
requested by the Debtor, will be billed based upon the
hours incurred by E&Y professionals at E&Y's standard
hourly rates. The hourly rates, as of July 1, 2001, that
E&Y will use to calculate its fees for these services are
set forth below:
Professional Hourly Rates
------------ ------------
Partners and Principals $593 - $684
Senior Managers $431 - $585
Managers $317 - $445
Seniors $192 - $308
Staff $156 - $221
B. Provide tax consulting and compliance services, including
on-going assistance with federal, state and local
transaction-based tax issues, certain limited scope
procedures, in connection with the Debtor's federal and
state income tax returns, beginning with the year ended
December 31, 2000, assistance with potential refunds of
withholding taxes attributable to stock options exercised
by employees during the year ended December 31, 2000, tax
claims administration and settlement services, and any
other tax consulting or compliance services requested by
the Debtor. The fees for these services will be billed
based upon the hours incurred by E&Y professionals at E&Y's
standard hourly rates. The hourly rates, as of July 1,
2001, that E&Y will use to calculate its fees for these
services are set forth below:
Professional Hourly Rates
------------ ------------
Partners and Principals $581 - $684
Senior Managers $546 - $578
Managers $377 - $466
Seniors $229 - $314
Staff $161 - $195
Mr. Thompson explains that the specific rates of individual
professionals vary depending upon their seniority and experience
and hourly rates may also differ between equal levels of
experience given the geographical location of a professional's
office. All services performed by E&Y will be at the Debtor's
direction so as to avoid duplicative efforts among the
professionals retained in this case. Mr. Thompson states that
the compensation arrangement provided for in the Agreements is
consistent with and typical of arrangements entered into by
Ernst & Young with respect to rendering similar services for
clients such as the Debtor.
As of the petition date in the above-captioned Chapter 11 case,
Mr. Thompson informs the Court that the Firm was in the midst of
performing the interim review of the Debtor's unaudited
condensed consolidated financial statements for the three and
six-month periods ended June 30, 2001. The completion of such
interim review by Ernst & Young, subsequent to the petition
date, was necessary in order to enable the Debtor to file its
Quarterly Report on Form 10-Q for the three and six-month
periods ended June 30, 2001 prior to the deadline prescribed by
the Securities and Exchange Commission. Mr. Thompson believes
that a non-timely filing of such Quarterly Report on Form 10-Q
would have had a material adverse effect on the Debtor's
business. Consequently, Mr. Thompson requests the Court's
approval of Ernst & Young's retention retroactive to the
petition date in the above-captioned Chapter 11 case.
During the 90 days immediately preceding the Petition Date, Mr.
Thompson relates that the Debtor made payments to Ernst & Young
aggregating $2,414,551 on account of services rendered prior
thereto. As of the date of the filing of Debtor's Petition, and
based upon the Firm's internal billing records, Ernst & Young
was owed by the Debtor approximately $58,000 for services
provided and completed during the pre-petition period. To the
extent that Ernst & Young is retained to provide services to the
Debtor during the post-petition period, Mr. Thompson states that
the Firm will waive its rights to the $58,000. Furthermore,
Ernst & Young was inadvertently paid approximately $54,000 of
the aforementioned balance during the post-petition period.
Accordingly, at the discretion of the Court, Ernst & Young will
either remit the $54,000 back to the Debtor, or apply it against
the Firm's initial billing for services initiated during the
post-petition period.
Mr. Thompson submits that to the best of their knowledge, Ernst
& Young has not been retained to assist any entity or person
other than the Debtor on matters relating to, or in connection
with this chapter 11 case. If the Court approves the Debtor's
retention of Ernst & Young, the Firm will not accept any
engagement or perform any services for any entity or person
other than the Debtor in this chapter 11 case. Mr. Thompson
states that Ernst & Young will continue to provide professional
services to entities or persons that may be creditors of the
Debtor, or parties in interest in this chapter 11 case, provided
such services do not relate to, or have any direct connection
with, this chapter 11 case. (Covad Bankruptcy News, Issue No.
10; Bankruptcy Creditors' Service, Inc., 609/392-0900)
DAIRY MART: Court Okays Key Employee Retention Program
------------------------------------------------------
The US Bankruptcy Court in New York City last week, F&D Reports
says, gave Dairy Mart Convenience Stores the go-signal to
implement its modified Key Employee Retention Program (KERP).
According to F&D, the most important elements of the modified
program are that employees that are hired by any successor
entity that purchases the Company's operations will not be
entitled to a "severance" payment under the Dairy Mart KERP, but
would be entitled to keep any retention payment they received.
The retention portion of the program is estimated to cost the
Company $863,000, while the total severance payments could
amount to approximately $3.2 million, however, it's not likely
that all employees covered by the KERP would be terminated
during the Chapter 11.
Then there's Gregg Landry, the Company's current CEO. F&D says
that under the settlement reached between the Creditors
Committee:
(a) the Company and Mr. Landry, his employment agreement will be
assumed by the Company and he will receive a base annual
salary of $450,000;
(b) he will receive a retention bonus of 100% of base salary in
three semi-annual installments beginning in February 2002
(would be accelerated by the earlier of a change of control
or confirmation of a Plan of Reorganization);
(c) he will also receive an emergence/sale bonus of $450,000 if
a stand-alone plan is confirmed prior to February 28, 2003,
or a sale bonus of between $500,000 and $1.5 million based
on certain factors; and
(d) a severance payment equal to one-and-one-half times his full
base salary and annual bonus plus the unpaid balance of his
Retention and Emergence Bonuses, if he were to be terminated
without cause.
DELTA AIR: Names Mark Balloun as VP of Corp. Strategic Planning
---------------------------------------------------------------
Delta Air Lines (NYSE: DAL) Chairman and Chief Executive Officer
Leo Mullin announced the appointment of Mark Balloun as vice
president of Corporate Strategic Planning, effective
immediately. "The environment in this period of transition for
the airline industry is extremely dynamic. Potential industry
restructuring and changes in the regulatory environment are just
some of the issues Delta must address in the future. Mark
Balloun will creatively guide Delta's corporate strategic
planning effort as we navigate through the challenges and
opportunities that lie ahead," said Mullin.
"Delta is in a strong strategic position and I'm confident in
our ability to maximize our business advantages going forward.
Delta will emerge from this current downturn as a winner," said
Balloun, who will report directly to Mullin.
Balloun served in leadership roles in Delta's Strategy &
Business Development department for the past two years, first as
director of Business Development from 1999 to 2000 and then as
managing director of Strategic Planning for the past year. In
that role he tackled a broad range of strategic issues,
including developing Delta's response to industry consolidation,
assessing strategic and financial merits of potential
acquisitions, and facilitating the development and integration
of various business strategies.
Prior to joining Delta, Balloun was active in assessing and
developing strategic responses for major corporations in a
variety of industries. From 1996 to 1999, Balloun served as a
management consultant with McKinsey & Company, Inc., serving
Delta as well as major corporations in other industries. During
his tenure at Equifax from 1993 to 1996, Balloun was the
director of corporate development and later director of global
payment services. From 1988 to 1991, Balloun worked for IBM in
sales. Balloun received his M.B.A. from Harvard Business School
(1993) and B.S. degree in electrical engineering from Princeton
University (1988).
Balloun replaces Fred Buttrell, Delta's former senior vice
president of Strategy and Business Development, who was recently
named president and chief executive officer of Delta Connection,
Inc., the wholly owned subsidiary that manages the airline's
regional carriers and partners. The primary focus of the
corporate strategic planning team remains the same -- to
facilitate the synthesis of operational, marketing and financial
strategies in accordance with corporate priorities, and evaluate
opportunities for Delta to maximize its strengths and remain a
leader in the industry.
Delta's goal is to become the No. 1 airline in the eyes of its
customers, flying passengers and cargo from anywhere to
everywhere. People choose to fly Delta more often than any
other airline in the world on 4,850 flights each day to 368
cities in 65 countries on Delta, Delta Express, Delta Shuttle,
Delta Connection carriers and Delta's Worldwide Partners. Delta
is a founding member of SkyTeam, a global airline alliance that
gives customers extensive worldwide destinations, flights and
services. In addition to safely and securely making
reservations and purchasing tickets at delta.com, Delta
customers can select seats, upgrade, get up-to-date flight
information, make accommodations reservations, and more. U.S.-
based travel agencies also can access Delta Web fares for their
customers via delta.com's Online Agency Service Center. For
more information, go to http://www.delta.com
EXIDE TECHNOLOGIES: S&P Pulls Junk Ratings Down a Step
------------------------------------------------------
Standard & Poor's lowered its ratings on Exide Technologies
(formerly Exide Corp.) and related Exide Holdings Europe S.A. At
the same time, the ratings remain on CreditWatch with negative
implications, where they were placed August 31, 2001.
The rating actions reflect Standard & Poor's belief that there
is an identifiable risk that Exide could default on its debt
obligations within the coming year. This view is based on the
following factors:
* The recent deterioration in Exide's operating results;
* The likelihood that weak industry fundamentals will
prevent the company from achieving any material
improvement in operating results over the near term;
* The company's currently constrained liquidity;
* The likelihood that the acceleration of restructuring
efforts will put additional pressure on liquidity in the
near term; and
* The heavy debt service burden the company faces.
Princeton, New Jersey-based Exide is a leading producer of
automotive batteries and industrial batteries in North America
and Europe. Exide recently announced a dramatic decline in
results for the second quarter ended September 30, 2001, and has
withdrawn its earnings guidance for the remainder of the year.
For the quarter ended September 30, 2001, the company reported a
net loss of $15.9 million (excluding non-recurring charges)
compared with net earnings (pro forma for the acquisition of GNB
Technologies Inc. and excluding non-recurring charges) of $6.8
million for the September 30, 2000, quarter.
Exide's operating results and cash generation have been under
pressure for the past several years due to industry pressures,
costs associated with internal restructuring activities, and
legal issues. Pressures have recently intensified due to slowing
demand in the automotive original equipment market and in the
industrial battery market (primarily related to the slowdown in
the telecommunications sector). Market fundamentals are expected
to remain challenging over the near to intermediate term.
Meanwhile the company continues to face weather-related swings
in demand in its largest market segment, the automotive
aftermarket.
As a result of these factors and the company's substantial debt
burden, cash flow protection measures are currently quite weak.
Adjusted for operating leases and accounts receivable sales and
nonrecurring items, debt to EBITDA was more than 7 times in
fiscal 2001 (fiscal year ended March 31, 2001) and funds from
operations to debt was less than 10%.
Cash requirements of its restructuring program, seasonal
borrowing requirements, a heavy debt service burden, and slowing
end-market demand have all combined to significantly constrain
the company's financial flexibility. Availability under its
revolving credit facility was just $65 million at September 30,
2001. Given the near-term market outlook, restructuring costs,
and heavy debt service requirements, the borrowing capacity
could become even more constrained over the near term, even if
the company is successful in getting additional covenant
waivers.
Exide recently announced the hiring of turnaround specialist,
Jay Alix and Associates, to help in restructuring the company
and The Blackstone Group to assist in evaluating the company's
capital structure and related strategic alternatives. The
company has suspended its quarterly common stock dividend and
announced an acceleration of restructuring actions, including a
20% reduction in headcount to be completed by the end of fiscal
year 2002 (fiscal year end is March 31). Exide was in violation
of covenants under its bank agreement as of September 30, 2001,
and received a waiver. However, it has not received a waiver for
subsequent quarters and, as a result, has reclassified its
outstanding bank obligations as short-term debt.
Standard & Poor's will monitor the status of ongoing bank
negotiations and continue to assess near-term financing
requirements and restructuring plans. Should Exide run into a
liquidity squeeze or fail to meet upcoming debt service
requirements, the ratings will be lowered.
Ratings Lowered, Remain On Creditwatch Negative
Exide Technologies TO FROM
Corporate credit rating CCC B-
Senior unsecured rating CC CCC
Senior secured bank loan CCC B-
Subordinated debt rating CC CCC
Exide Holding Europe S.A.
Senior unsecured debt rating CC CCC
* * *
According to DebtTraders, Exide Technologies' 10.000% bonds due
in 2005 (EXIDE2) are now being traded in the low 20's. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=EXIDE2for
real-time bond pricing.
EXODUS COMMS: Seeks Approval of Contract Rejection Procedures
-------------------------------------------------------------
Exodus Communications, Inc., and its debtor-affiliates currently
lease real property, used as internet data center ("IDC") space,
office space and related space; and personal property, including
IDC equipment, office equipment and computer equipment and also
contract for goods & services with a number of vendors. As part
of their reorganization efforts, the Debtors are in the process
of closing underutilized IDCs to consolidate operations and
reduce operating costs. In the course of such consolidation, the
Debtors likely will reject a number of unnecessary leases and
contracts. In addition, as part of the general restructuring
process, the Debtors also will reject additional leases and
contracts that contain unfavorable terms.
By this motion, the Debtors seek approval, of certain procedures
to allow them to reject unexpired leases and executory
contracts, upon notice to Landlords to such leases and to the
non-Debtor parties to such contracts; and counsel to the Bank
Agent to the Debtors' post-petition lenders, counsel to the
Committee and the Office of the United States Trustee, but
without the need for further Court order unless an Affected
Party or Notice Party objects.
Accordingly, the Debtors propose the following procedures to
streamline the rejection of the unexpired leases and executory
contracts:
A. Contract Rejection Procedures - The Debtors request that the
Court approve the following procedures to enable the
Debtors to promptly and effectively reject contracts once
those contracts no longer prove to have utility or value to
the Debtors, and without further order of the Court:
1. Prior to rejecting a contract, the Debtors will serve an
irrevocable notice of the proposed rejection by
facsimile on the Affected Parties and Notice Parties.
2. The Affected Parties and Notice Parties shall have three
business days following service of the Contract
Rejection Notice to serve by facsimile upon counsel to
the Debtors an objection to the proposed rejection.
3. If a timely objection is filed, the Debtors shall be
required to obtain approval of the decision to reject
a Proposed Rejected Contract at the next regularly-
scheduled omnibus hearing and shall retain the burden
of proof on establishing the merits of the rejection
decision.
4. If the above conditions have been met and no timely
objection has been made in accordance with the
foregoing procedures, the Proposed Rejected Contract
shall be deemed to be effectively rejected on the date
that is the fifth business day following service of
the Contract Rejection Notice.
5. If a timely objection has been made, the Effective Date
of Rejection shall be the date ordered by the Court;
provided, however, that if such objection is overruled
by the Court, the Effective Date of Rejection shall be
retroactive to the original date set forth on the
Contract Rejection Notice.
B. Lease Rejection Procedures - The Debtors request that the
Court approve the following rejection procedures with
respect to unexpired leases:
1. Prior to rejecting an unexpired lease, the Debtors will
serve an irrevocable notice of the proposed rejection
by facsimile (or by overnight courier if no facsimile
number is available) on the Affected Parties and
Notice Parties.
2. The Affected Parties and Notice Parties shall have three
business days following service of the Lease Rejection
Notice to serve by facsimile upon counsel to the
Debtors an objection to the proposed rejection.
3. With respect to a Proposed Rejected Lease for personal
property, within five business days of service of the
Lease Rejection Notice, the Debtors shall make
available such personal property for repossession by
the Affected Party at such Affected Party's expense.
4. With respect to the a Proposed Rejected Lease for real
property, the Debtors may, at their option and
discretion, either remove all or part of the
furniture, fixtures or equipment, as identified by the
Debtors in the Lease Rejection Notice, from the
premises or abandon such furniture, fixtures or
equipment identified in the Lease Rejection Notice to
the landlord of such premises.
5. If a timely objection is filed, the Debtors shall be
required to obtain approval of the decision to reject
at the next regularly scheduled omnibus hearing and
shall retain the burden of proof on establishing the
merits of the rejection decision.
6. If the above conditions have been met and no timely
objection made in accordance with the foregoing
procedures, the Effective Date of Rejection with
respect to the Proposed Rejected Lease shall be the
fifth business day following service of the Lease
Rejection Notice.
8. If a timely objection has been made, the Effective Date
of Rejection shall be the date ordered by the Court;
provided, however, that if such objection is
overruled, the Effective Date of Rejection shall be
retroactive to the original date set forth on the
Lease Rejection Notice.
As a result of their reorganization efforts, Mr. Hurst contends
that the Debtors will no longer need certain leased space,
property and services and desire to swiftly reject valueless
leases and contracts relating to the same at the earliest
practicable time. The Debtors believe that the proposed
procedures for rejecting unexpired leases and executory
contracts, with notice to Affected Parties and Notice Parties
but without the need for a hearing on the merits unless any such
party objects, are tailored to minimize administrative expenses,
maximize distributions to creditors in these cases, quickly
return property to lessors, grant certainty to contract parties
and reduce burdens imposed upon the Court. (Exodus Bankruptcy
News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
FEDERAL-MOGUL: Signs-Up EYCF As Advisor in Lighting Group's Sale
----------------------------------------------------------------
Federal-Mogul Corporation and its debtor-affiliates request
authorization to employ and retain Ernst & Young Corporate
Finance LLC as their advisor in connection with the potential
divestiture of the Lighting Group, nunc pro tunc to October 1,
2001. Specifically, Ernst & Young Corporate Finance will
provide such services as the Debtors shall deem appropriate and
feasible, including:
A. advising the Debtors in developing their strategy with regard
to the Transaction;
B. assisting in analyzing the financial effects of the proposed
Transaction;
C. assisting in the preparation or update, if necessary, of a
descriptive memorandum regarding the Transaction;
D. assisting the Debtors in contacting potential buyers selected
and approved by the Debtors;
E. assisting the Debtors in coordinating management
presentations and site visits, as appropriate;
F. advising the Debtors in their preparation for due diligence
and their management of a data room;
G. advising the Debtors in negotiations regarding the
Transaction; and
H. providing other services, as needed and mutually agreed upon
by Ernst & Young and the Debtors.
Pursuant to the terms and conditions of the Engagement Letter,
Corporate Finance intends to charge for the professional
services rendered to the Debtors in these chapter 11 cases on
the following terms:
A. monthly fees as presented below; and
October 2001 $100,000
November 2001 $100,000
December 2001 $150,000
January 2002 $150,000
February 2002 $150,000
March 2002 $150,000
B. fees for services rendered subsequent to March 2002, if
necessary, will be $100,000 per month.
In addition, in accordance with the Engagement Letter, Corporate
Finance will seek reimbursement of expenses incurred in
connection with the engagement in accordance with the Bankruptcy
Code, the Local Rules for the District of Delaware and the
orders of this Court. Mr. Carter tells the Court that Corporate
Finance will bill the Debtors for its expenses related to this
engagement on a monthly basis, and such expense invoices will be
payable upon the Debtors' receipt thereof. (Federal-Mogul
Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
FLORSHEIM: Considering More Asset Sales to Meet Capital Needs
-------------------------------------------------------------
Florsheim Group Inc. (NASDAQ: FLSC) reported a net loss of
$2,837,000 for the third quarter of 2001, excluding non-
recurring costs, compared to a net loss of $7,233,000 for the
third quarter of 2000.
For the nine months ended September 29, 2001, the net loss was
$9,376,000 excluding non-recurring costs, compared to a net loss
of $10,937,000 for the nine months ended September 30, 2000.
Including non-recurring items, the net loss for the three months
ended September 29, 2001 was $9,250,000 compared to a net loss
of $14,529,000 for the three months ended September 30,2000. On
the same basis, for the nine months ended September 29, 2001,
the net loss was $15,931,000 compared to a net loss of
$19,393,000 for the comparable period last year.
Non-recurring charges of $644,000 in the current quarter related
to the closing of the Company's manufacturing plant in
Australia. For the comparable quarter last year, $5.1 million in
non-recurring charges related to the write downs of remaining
assets of the Golf product line, raw material inventory and
barter credits. The third quarter and nine month periods of 2001
also included $6.0 million of tax expense related to the
establishment of valuation allowances related to net operating
loss carryforwards. The third quarter and nine month periods of
2000 included tax expense of $4.1 million related to the
establishment of valuation allowances related to foreign tax
credits.
Net sales were $43.8 million for the third quarter of 2001,
compared to $50.0 million in the corresponding 2000 period. For
the nine months ended September 29, 2001, net sales were $139.4
million compared to $157.8 million for the nine months ended
September 30, 2000.
U.S. Wholesale net sales for the third quarter were $16.7
million, down $1.1 million or 6.3% from the comparable quarter
last year. The decline was due in part to a continued weakness
in orders in both dealer and department store channels of
distribution, coupled with a significant reduction in "at once"
orders for the weeks immediately following the events of
September 11th. For the nine month period, net sales in 2001
were $57.1 million, down 6.7% from the $61.2 million reported
last year. U.S. Retail net sales for specialty and outlet stores
decreased 13.9% for the third quarter and 11.0% for the nine
month period as a result of store closings and lower comparable
store sales. Comparable store sales were significantly impacted
during the last three weeks of the quarter following the events
of September 11th. U.S. same store sales decreased 6.8% for the
quarter and 3.3% for the nine month period. International net
sales were down 19.3% in the third quarter and declined 22.9%
for the nine month period compared to the prior year, primarily
due to the effect of currency rates in Australia and a decline
in the Company's Canadian wholesale business.
Subsequent to the end of the quarter, the Company completed a
transaction in which it licensed its Canadian wholesale
operations to a footwear distributor in Canada. As part of that
transaction, the licensee purchased certain assets related to
the Canadian wholesale operations at book value.
Florsheim also reported that in October 2001 it completed the
previously announced termination of benefits under the Company's
pension plan, and the reversion of excess assets to the Company.
The Company said that the reversion from the pension fund
represents assets in the plan in excess of those required to
meet plan obligations. As part of the transaction the Company
transferred $9.5 million of the excess plan assets to a
qualified plan for current and future employees. As part of the
reversion, the Company received approximately $24 million,
(after tax), of excess assets after the final termination of the
plan. The Company used $19 million of the proceeds to
permanently reduce bank debt pursuant to an agreement reached
with its lenders in November 2000. The remainder of the proceeds
will be used to fund working capital requirements. As previously
reported, in July 2001, the Company completed the sale of its
equity interest in the Indian joint venture for book value, or
$3.8 million after tax.
Peter P. Corritori, Chairman and CEO, commented, "The events of
September 11th have compounded an already challenging retail
environment. Industry trends since September 11th indicate that
men's footwear and apparel sales in both specialty and
department stores have suffered disproportionately. Our near-
term outlook is clouded by factors beyond our control. Rising
unemployment and the uncertainty of world events are pointing to
one of the most difficult and promotional holiday seasons in
many years." Corritori commented further, "Our ability to
execute our strategic initiatives and advance our agenda have
clearly been interrupted at a critical juncture. Present
circumstances make it impossible to predict near term
improvement in performance."
The Company also reported that it has classified its outstanding
indebtedness as a current liability in light of the debt
maturing within the next 12 months coupled with the Company's
current performance. In addition to the ongoing management of
working capital, the Company will continue to review additional
sale of assets and other transactions in order to address its
future capital requirements.
Florsheim Group Inc. designs, markets and sources a diverse and
extensive range of products in the middle to upper price range
of the men's quality footwear market. Florsheim distributes its
products in more than 6,000 department and specialty store
locations worldwide, through approximately 219 company-operated
specialty and outlet stores and 43 licensed stores worldwide
Florsheim Group Inc., at September 29, 2001, reported an upside-
down balance sheet, with stockholders' equity plummeting to a
deficit of $2.9 million from a positive $13.5 million at the end
of last year. Further, the company is suffering from a strained
liquidity, with current liabilities totaling $141 million, as
opposed to current assets of $83.6 million.
FRUIT OF THE LOOM: Court Extends Solicitation Period to Jan. 31
---------------------------------------------------------------
The Informal Committee of Senior Secured Noteholders supports
Fruit of the Loom's bid to extend the solicitation period. Fred
S. Hodara, Esq., and Robert J. Stark, Esq., at Akin, Gump,
Strauss, Hauer & Feld, tell Judge Walsh that the delays
experienced in these proceedings have been due to Fruit of the
Loom's good faith efforts to resolve intercreditor conflicts.
The attorneys remind Judge Walsh that matters became so strained
that Professor James J. White was appointed as a mediator.
Professor White was able to help forge a settlement in
principle, but the meditation process took a long time to
complete.
Now that the news is public, Mr. Hodara and Mr. Stark point to
the Berkshire Hathaway asset purchase agreement, adviding that
agreement represents the product of weeks of heated
negotiations. As the Court knows, all creditor representatives
that participated in those negotiations support the agreement.
The various creditor groups are now working on the next step:
appropriate modifications to the plan to incorporate the
settlement, the Berkshire agreement, and mechanisms to allow
higher and better offers to emerge. The process is moving
rapidly towards conclusion, Mr. Hodara indicates, and all
parties will be aided in their efforts by the brief extension of
exclusivity requested in the motion.
The Informal Committee debunks the objection interposed by DDJ
Capital Management, Lehman Brothers and Mariner Investments.
Those dissident bondholders, the Informal Committee charges,
want to subject Fruit of the Loom to an open and potentially
chaotic plan process. The Informal Committee understands that
the ad hoc committee feels slighted because negotiations
occurred outside its immediate purview. What the three
dissidents refuse to appreciate is that these negotiations
involved representatives of all creditor constituencies --
including the Official Committee of Unsecured Creditors. So,
their interests were represented at the negotiating table.
Messrs. Hodara and Stark tell Judge Walsh that he should
overrule the ad hoc committee's objection for three reasons.
First, the parties spent considerable time and effort resolving
a difficult issue-the terms of sale to Berkshire. Second, the
process was fair since all Fruit of the Loom's creditors were
represented at the bargaining table and will be afforded an
opportunity to vote on the agreement when brought before this
Court at a confirmation hearing. Third, Fruit of the Loom has
used its exclusivity productively and in good faith.
Richard D. Feintuch, Esq., at Wachtell, Lipton, Rosen & Katz and
David S. Walls, Esq., from Moore & Van Allen, as representatives
of Bank of America, agree with the Informal Committee. They
tell Judge Walsh that the actual amount of time should not be
the criteria for an exclusive solicitation period, but what the
Debtor does during that time. Indeed, according to BofA, Fruit
of the Loom has made remarkable achievements during its period
of exclusivity, all of which have been outlined in previous
filings for asset sales, claims objections and rejections of
burdensome contracts. BofA also notes the extraordinary offer
on the table from Berkshire as proof that all parties have been
working diligently towards resolution of these proceedings.
Messrs. Feintuch and Walls also address the complaints of the ad
hoc committee. The committee complains it has not timely
received materials arising from the marketing process such as
copies of preliminary bids, drafts of definitive purchase
agreements and other documents. However, this same information
has not been distributed to any of the other individual
creditors in these cases, including any members of the Bank
Group or the Agent. The marketing process was managed by Fruit
of the Loom through its investment bankers, which kept the
financial advisors and investment bankers of the Bank Group, the
Noteholders Committee and the Creditors Committee fully apprised
of the status and content of the bidding process. Due to the
highly sensitive nature of the information generated through
this process, neither the Agent nor members of the Bank Group
received (i) the bids from prospective purchasers, (ii) the term
sheet provided by Berkshire, (iii) any of the multiple drafts of
the definitive purchase agreement. Therefore, the ad hoc
committee's access to the marketing process was the same as for
any individual member of the Bank Group. Indeed, to the extent
that the ad hoc committee did obtain some of these materials
directly from Fruit of the Loom, they received information about
the marketing process, which was superior in its scope and
detail than that provided to the Bank Group or any other
individual creditor constituencies.
Finally, the lawyers tell Judge Walsh, it is significant to
observe what the ad hoc committee's objection does not say.
They do not say they are prepared to file a bona fide plan of
reorganization. Nor do they suggest in any way that they have a
vision or strategy for realizing more value for these estates.
Their vision is to use the termination of exclusivity as a
weapon to derail a plan process that enjoys overwhelming support
of Fruit of the Loom and every other creditor constituency in
this case.
Judge Walsh, finding merit in the rebuttals, signs an order
extending Fruit of the Loom's solicitation period through
January 31, 2002. (Fruit of the Loom Bankruptcy News, Issue No.
42; Bankruptcy Creditors' Service, Inc., 609/392-0900)
GENTIVA HEALTH: S&P Places Low-B Ratings on CreditWatch Positive
----------------------------------------------------------------
Standard & Poor's placed its single-'B'-plus corporate credit
rating and its preliminary single-'B'-plus/single-'B'-minus
rating on Gentiva Health Services Inc.'s $150 million senior
unsecured/subordinated shelf registration on CreditWatch with
positive implications following its recent improved operating
performance and reduction in debt.
Melville, New York-based Gentiva is a leading provider of
specialty pharmaceuticals and home health care services through
300 locations in the U.S. The company's performance has tracked
well following its spin-off from Olsten Corp. in March 2000 and
it has paid off all the debt it assumed at that time. Lower
exposure to Medicare and the conclusion of a government
investigation also limit business risk. Financial flexibility is
afforded by its increased cash on hand and prospects for
continued improved operating cash flow. Standard & Poor's will
meet with management to review the company's financial policy
before taking rating action.
GLENOIT CORP: Seeks Removal Period Extension Until February 6
-------------------------------------------------------------
Glenoit Corporation asks the United States Bankruptcy Court for
the District of Delaware to extend the period to file notices of
removal with respect to civil actions pending on the Petition
Date through February 6, 2002.
The Debtors believe that they may be party to actions currently
pending in the courts of various states and federal districts.
However, due to the size and complexity of these cases, the
Debtors have not had a full opportunity to investigate their
involvement in the Pre-Petition Actions. Because the attention
of the Debtors' personnel and management has been focused
primarily on stabilizing the business and administering the
bankruptcy proceeding, the Debtors and their professionals have
not had sufficient time to fully review all of the Pre-Petition
Actions to determine if any should be removed.
Currently, the deadline established by the Prior Extension Order
by which the Debtors may seek to remove actions and related
proceedings is on November 6, 2001.
Headquartered in New York City, Glenoit Corporation is a
domestic manufacturer of small rugs, knit pile fabrics and an
importer and manufacturer of home products such as quilts,
comforters, shams, shower curtains, table linens, pillows and
pillowcases with operations in North Carolina, Ohio, California
and Canada. The Company filed for Chapter 11 protection on
August 8, 2000 in the US Bankruptcy Court for the District of
Delaware. Joel A. Waite, Esq. at Young, Conaway, Stargatt &
Taylor represents the Debtors in their restructuring efforts.
HA-LO INDUSTRIES: Wants Removal Period Extended Until March 29
--------------------------------------------------------------
Ha-Lo Industries, Inc. wants to extend the time period to remove
Pre-Petition Actions to March 29, 2002.
The Debtors ask the U.S. Bankruptcy Court for the District of
Delaware to further extend the time which they may file notices
of removal with respect to civil actions pending as of Petition
Date - the same extension granted for the time period to assume
or reject unexpired real property leases.
HA-LO Industries, Inc. and subsidiaries Lee Wayne Corporation
and Starbelly.com, Inc., provide full service, innovative brand
marketing in the custom and promotional products industry. The
Company filed for Chapter 11 Petition on July 30, 2001 in the
U.S. Bankruptcy Court for the District of Delaware. Adam G.
Landis, Eric Lopez Schnabel, Mary Caloway at Klett Rooney Lieber
& Schorling represent the Debtors in their restructuring
efforts.
HARBORSIDE HEALTHCARE: Completes Subordinated Debt Restructuring
----------------------------------------------------------------
Harborside Healthcare Corporation announced operating results
for the quarter ended September 30, 2001. Net revenues for the
third quarter of 2001 totaled $88,210,000, a 2.4 percent
increase from the $86,127,000 recorded in the second quarter of
2001 and a 9.0 percent increase from the $80,927,000 recorded in
the third quarter of 2000. Total net revenues less facility
operating expenses were $17,001,000 for the third quarter of
2001, approximately equal to the $17,041,000 reported in the
second quarter of 2001 and 7.0 percent higher than the
$15,894,000 reported for the third quarter of 2000.
For the three months ended September 30, 2001, Earnings Before
Interest, Taxes, Depreciation, Amortization and Rent ("EBITDAR")
(excluding the amortization of prepaid management fees and the
incurrence of facility reorganization costs) was $11,946,000 as
compared to $11,708,000 for the second quarter of 2001. For the
three months ended September 30, 2000, EBITDAR (excluding the
amortization of prepaid management fees and the lease
termination charge) was $11,313,000. For the three months ended
September 30, 2001, the Company reported a net loss of $455,000
compared to a net loss of $7,734,000 during the second quarter
of 2001 and a net loss of $7,286,000 for the third quarter of
2000.
The average occupancy rate was 88.8% during the third quarter of
2001 as compared to 89.1% in the second quarter of 2001 and
89.7% in the third quarter of 2000. Quality mix of revenues was
53.3% during the third quarter of 2001 as compared to 54.7% in
the second quarter of 2001 and 49.8% in the third quarter of
2000. Primarily as the result of Medicare rate increases
implemented on April 1, 2001, the Company's average Medicare
Part A rate was $344 per Medicare patient day during the third
quarter of 2001 as compared to $323 per Medicare patient day
during the third quarter of 2000.
Net revenues for the first nine months of 2001 totaled
$256,423,000, a 7.2 percent increase from the $239,317,000
recorded in the first nine months of 2000. Total net revenues
less facility operating expenses were $49,039,000 for the first
nine months of 2001, 3.1 percent higher than the $47,586,000
reported in the first nine months of 2000.
For the nine months ended September 30, 2001, EBITDAR (excluding
the amortization of prepaid management fees and the incurrence
of financial restructuring costs and facility reorganization
costs) was $33,814,000 as compared to EBITDAR (excluding the
amortization of prepaid management fees and the lease
termination charge) of $33,074,000 for the nine months ended
September 30, 2000. For the nine months ended September 30,
2001, the Company reported a net loss of $14,625,000 compared to
a net loss of $11,723,000 during the first nine months of 2000.
The average occupancy rate was 89.0% during the first nine
months of 2001 versus 90.2% in the first nine months of 2000.
Quality mix of revenues was 53.4% during the first nine months
of 2001 as compared to 50.9% during the first nine months of
2000. Primarily as the result of Medicare rate increases
implemented on April 1, 2001, the Company's average Medicare
Part A rate increased to $338 per Medicare patient day during
the first nine months of 2001 from $313 per Medicare patient day
during the first nine months of 2000.
During the third quarter of 2001, the Company incurred a non-
recurring charge of $750,000 in connection with its decision to
revise the marketing approach for facilities operated through
subsidiaries in Florida. The Company determined that a local
community-based marketing approach would better serve the needs
of these facilities. The marketing approach stresses ties to the
local community and required renaming these facilities in order
to emphasize this approach. In connection with this effort, the
Company also restructured certain of its subsidiaries effective
October 1, 2001. In order to implement this strategy, the
Company incurred non-recurring marketing, legal and other
expenses.
During the second quarter of 2001, the Company incurred a charge
of $9,045,000 in connection with a comprehensive financial
restructuring of its subordinated debt and preferred stock. The
financial restructuring significantly improved the Company's
financial position.
Harborside provides high quality long-term care, subacute and
other specialty medical services in four regions - the Midwest,
New England, the Mid-Atlantic and the Southeast. As of September
30, 2001, the Company operated 50 facilities with a total of
6,124 licensed beds. Effective November 1, 2001, the Company
began leasing an additional 150 bed facility located in
Marietta, Ohio.
Harborside Healthcare had an upside-down balance sheet at the
end of September, with stockholders' equity deficit totaling
over $28 million.
HUNGARIAN TELEPHONE: Banks Agree to Amend Senior Debt Facility
--------------------------------------------------------------
Hungarian Telephone and Cable Corp. (AMEX:HTC) announced that it
has reached an agreement with its banking syndicate to amend its
Senior Secured Debt Facility. Hungarian Telephone's banking
syndicate eliminated one financial covenant and agreed to waive
another financial covenant for the fourth quarter of 2001 and
the first quarter of 2002. In connection with such actions,
Hungarian Telephone, among other things, agreed to a 5%
prepayment of the original loan; the addition of 15 basis points
to the interest margin on the Debt Facility; and the
cancellation of the EUR 5 million revolver portion of its Debt
Facility following its repayment in April 2002.
Commenting on the amended credit facility, Hungarian Telephone's
Controller and Treasurer William McGann said, "We are quite
pleased that our lenders unanimously were able to accommodate us
in revising our credit facility. This also enables Hungarian
Telephone to significantly reduce its debt; thus positively re-
balancing its debt-to-equity ratio. While we could have serviced
the debt as it existed, the reduced interest payments from the
reduced debt should positively affect Hungarian Telephone's
bottom line in quarters to come."
Hungarian Telephone's amended credit facility was managed by
Citibank. The Company is filing a copy of the amendment with its
quarterly report on Form 10-Q for the third quarter of 2001.
Results For Third Quarter
The Company reported a net loss ascribable to common
stockholders of $1.6 million for the third quarter of 2001,
compared to a net loss ascribable to common stockholders of $2.7
million for the third quarter of 2000. Income from operations
increased 11% to $4.9 million for the third quarter of 2001 from
$4.4 million for the third quarter of 2000. Net telephone
service revenues for the third quarter ended September 30, 2001
increased to $11.5 million, a 7% increase over net telephone
service revenues of $10.7 million reported for the same period
in 2000. Earnings before interest, foreign exchange
gains/losses, taxes, depreciation and amortization (EBITDA)
increased 8% to $7.2 million for the third quarter of 2001,
compared to $6.7 million for the third quarter of 2000. The
Company's operating margin, excluding depreciation and
amortization, was 63% for each of the three month periods ended
September 30, 2001 and 2000. The Company's interest expense
decreased by 24% during the third quarter of 2001 to $3.2
million, from $4.3 million for the third quarter of 2000. The
Company's net foreign exchange loss of $3.5 million for the
third quarter of 2001, compared to a net foreign exchange loss
of $3.2 million for the third quarter of 2000 reflects the
weakening of the Hungarian forint against the euro, of
approximately 6% between June 30, 2001 and September 30, 2001,
being somewhat offset by the strengthening of the Hungarian
forint against the U.S. dollar, of approximately 2% between June
30, 2001 and September 30, 2001. As of November 12, 2001, the
Hungarian forint had gained approximately 3% back of what it had
lost against the euro between June 30, 2001 and September 30,
2001.
In functional currency terms, revenues increased by 6% to 3.2
billion Hungarian forints during the three months ended
September 30, 2001, as compared to 3.0 billion Hungarian forints
during the same period in 2000, while EBITDA increased by 6%
quarter-on-quarter. These growth rates in Hungarian forint terms
can be seen in the reported U.S. dollar results due to the
consistency of Hungarian forint/U.S. dollar exchange rates
between the periods.
Results For Nine Months
The Company reported net income ascribable to common
stockholders of $6.7 million for the nine months ended September
30, 2001, compared to a net loss ascribable to common
stockholders of $6.4 million for the same period in 2000. Income
from operations increased 10% to $14.2 million for the nine
months ended September 30, 2001, from $12.8 million for the nine
months ended September 30, 2000. Net telephone service revenues
for the nine months ended September 30, 2001 increased to $33.7
million, a 3% increase over net telephone service revenues of
$32.7 million reported for the same period in 2000. EBITDA
increased 5% to $21.1 million for the nine months ended
September 30, 2001, from $20.1 million for the nine months ended
September 30, 2000. The Company's operating margin, excluding
depreciation and amortization was 63% for the nine months ended
September 30, 2001, compared to 61% for the same period in 2000.
The Company's interest expense decreased by 30% during the nine
months ended September 30, 2001 to $10.3 million, from $14.7
million for the nine months ended September 30, 2000. The
Company's net foreign exchange gain of $1.9 million for the nine
months ended September 30, 2001, compared to a net foreign
exchange loss of $5.7 million for the nine months ended
September 30, 2000, reflects the appreciation of the Hungarian
forint against the euro, of approximately 3% between January 1,
2001 and September 30, 2001, as well as an approximate 1%
appreciation of the Hungarian forint against the U.S. dollar
between January 1, 2001 and September 30, 2001.
In functional currency terms, revenues increased by 8% to 9.7
billion Hungarian forints during the nine months ended September
30, 2001, as compared to 9.0 billion Hungarian forints during
the same period in 2000, while EBITDA increased by 10% period-
on-period. These growth rates in Hungarian forint terms,
however, are not readily apparent in the reported U.S. dollar
results due to the 5% strengthening of the U.S. dollar relative
to the Hungarian forint, vis-a-vis the euro, between the
periods.
Commenting on these financial results, Ole Bertram, President
and Chief Executive Officer stated, "Given current economic
conditions in Hungary and throughout the world, we are pleased
with the 11% increase in operating income between the two
quarters, as well as our strong operating margin of 63%. Our
cash flow has allowed us to repay some of our debt early, which
should lower our interest costs in the future. At the present
time, we are still expecting to end the year with a net profit
of at least $3 million."
Mr. Bertram went on to say, "We were not happy with the movement
of the Hungarian forint against the euro during the quarter, but
if recent exchange rate movements hold until year-end, we should
gain back some of the exchange loss we incurred during the third
quarter thereby positively affecting our results during the
fourth quarter."
Hungarian Telephone and Cable Corp. is a provider of telephone,
ISDN, Internet and other telecommunications services in five
defined operating regions of the Republic of Hungary. The
Company operates nearly 203,000 lines serving over 680,000
people through four Hungarian subsidiaries which have been
granted 25-year telecommunications concessions by the Hungarian
government. These concessions are exclusive through 2002.
ICH CORP: Working Capital Deficit Stands at $13MM at End of Q3
--------------------------------------------------------------
I.C.H. Corporation (AMEX:IH) announced its results of operations
for the third quarter ended September 30, 2001. ICH is a
Delaware holding corporation which, through its principal
operating subsidiaries, currently operates 240 "Arby's"
restaurants located primarily in Michigan, Texas, Pennsylvania,
New Jersey, Connecticut and Florida.
Loss from continuing operations for the three months ended
September 30, 2001 was $174,000 compared to income from
continuing operations of $346,000 for the prior year comparable
period. The loss for the current period includes a non-cash,
pre-tax charge of $336,000 related to the amortization of
goodwill, which charge the company does not expect will continue
beyond the current fiscal year based upon recent FASB accounting
rule changes. Excluding this non-cash charge, pre-tax income
from continuing operations for the three months ended September
30, 2001 would have been $279,000.
The Company's revenues from continuing operations for the three
months ended September 30, 2001 were $52.6 million, an increase
of $11.1 million over the prior year comparable period. This
increase is a result of sales from new Arby's store openings and
acquisitions and a same-store sales increase for the quarter of
3.3%. Same store sales for the July, August and September
periods were +2.3%, +4.0% and +3.6%, respectively.
The Company's operating margin (restaurant sales less restaurant
costs and expenses, depreciation and amortization) from
continuing operations for the period was $5.7 million, or 10.9%
of sales, an increase of $473,000 from the prior year comparable
period.
The Company's EBITDA (earnings before interest, income taxes,
depreciation and amortization) from continuing operations
increased to $4.8 million from $4.4 million, an increase of
$409,000 from the prior year comparable period.
Loss from continuing operations for the nine months ended
September 30, 2001 was $1.4 million compared to a loss from
continuing operations of $1.9 million for the prior year
comparable period. The loss for the current period includes a
non-cash, pre-tax charge of $849,000 related to the amortization
of goodwill, which charge the company does not expect will
continue beyond the current fiscal year based upon recent FASB
accounting rule changes. Excluding this non-cash charge, the
pre-tax loss from continuing operations for the nine months
ended September 30, 2001 would have been $702,000. The nine-
month period ended September 30, 2000 included a one time charge
(after taxes) of $3.1 million primarily related to required
payments associated with the September 2000 departure of the
former CEO of the Company.
The Company's revenues from continuing operations for the nine
months ended September 30, 2001 were $144.3 million, an increase
of $26.1 million over the prior year comparable period. This
increase is a result of sales from new Arby's store openings and
acquisitions, offset by a same store sales decrease of 0.3% for
the period.
The Company's operating margin (restaurant sales less restaurant
costs and expenses, depreciation and amortization) from
continuing operations for the nine months ended September 30,
2001 was $15.2 million, or 10.6% of sales, a decrease of $1.6
million from the prior year comparable period.
The Company's EBITDA (earnings before interest, income taxes,
depreciation and amortization) from continuing operations,
excluding the effects of the non-recurring charge in the Third
quarter of 2000, decreased by $888,000, to $12.0 million, from
the prior year comparable period.
ICH is a Delaware holding corporation which, through its
principal operating subsidiaries, currently operates 240 Arby's
restaurants located primarily in Michigan, Texas, Pennsylvania,
New Jersey, Connecticut and Florida.
At the end of September, ICH recorded a working capital deficit
of nearly $13 million, while stockholders' equity fell around
28% to $3.9 million from $5.4 million at the end of December
2000.
IPI INC: Seeks Shareholders' Approval of Liquidation Plan
---------------------------------------------------------
IPI, Inc. (AMEX:IDH) the parent company of Insty-Prints, Inc.,
franchisor of Insty-Prints fast-turnaround business printing
centers, and Change of Mind Learning Systems, Inc., a franchisor
of learning centers, announced an Asset Purchase Agreement dated
November 15, 2001 has been signed to sell the assets relating to
its Insty-Prints franchise business to Allegra Holdings LLC.
Allegra Holdings LLC is the parent company of Allegra Network
LLC which is the franchisor of more than 350 printing and
graphic communications centers operating under the names of
"Allegra Print and Imaging", "American Speedy Printing Centers",
"Quik Print", "Instant Copy", "Speedy Printing Centers" and
"Zippy Print".
IPI will receive $4,125,000 in cash in exchange for the sale of
the operating assets of the Insty-Prints franchising business,
less an amount for certain liabilities assumed by Allegra, plus
an additional amount to be calculated at closing for certain
accounts and notes receivable, inventory and prepaid expenses.
IPI believes the total consideration for this sale will be
approximately $5.6 million, $4.1 million to be received as of
the date of closing and $1.5 million expected to be realized in
the following 12 months. Income taxes associated with the sale
are estimated to be $840,000 resulting in net proceeds of $1.05
per share of IPI stock currently outstanding.
IPI will file a proxy statement to seek shareholder approval of
the sale to Allegra as well as the approval to adopt a plan of
liquidation and dissolution of the Company that will authorize a
distribution to shareholders, de-registration of the Company's
stock and dissolution of the Company. As a result of the Plan of
Liquidation, the Company will de-list the Company's common stock
from the American Stock Exchange and de-register the Company's
common stock under the Securities Exchange Act of 1934. The Plan
of Liquidation is subject to, among other conditions,
shareholder approval and upon the consummation of the sale the
assets to Allegra. We estimate that net proceeds available,
after all liquidation expenses and taxes, in one or more
distributions to shareholders will be approximately $5.64 per
share of IPI stock currently outstanding for non-controlling
shareholders. This estimate of proceeds available for
distribution includes the net proceeds from the sale to Allegra,
as well as an assumed value for shares of Clarent Corporation
common stock owned by IPI at its acquisition cost of
approximately $6 per share, pursuant to a guarantee by the
majority shareholders of IPI, as will be fully described in the
proxy statement. Clarent common stock is currently suspended
from trading.
"We believe there are a great deal of similarities and synergy
between the Insty-Prints and Allegra franchise systems and the
sale of Insty-Prints assets to Allegra offers many advantages to
both franchise systems including the benefit of being part of a
larger network. The sale of Insty-Prints allows IPI to proceed
with its liquidation, dissolution and distribution plan to its
shareholders. We believe our shareholders could realize a higher
rate of return than has been historically experienced if IPI
distributes its assets rather than operating its business or
acquiring and operating another business," the Company press
release said.
IPI, its board and executive officers, as well as certain other
members of management and certain employees may be soliciting
proxies from IPI shareholder in favor of the transactions
described in this press release. Information concerning IPI's
participants in this solicitation is set forth in the Company's
annual report on Form 10-K for the Year ended November 30, 2000
filed with the SEC on February 16, 2001.
IMPERIAL SUGAR: Wants More Time to File Claims Objections
---------------------------------------------------------
Imperial Distributing, Inc., and its affiliated Debtors, ask
Judge Robinson to extend the time period during which the
Debtors may file objections to proofs of claims in these cases.
The Debtors remind Judge Robinson that, during the course of
these Chapter 11 cases, several bar dates for filing proofs of
claim or motions, as applicable, were established by her Order.
These include (i) April 23, 2001, the general bar date
established for asserting all prepetition claims, excluding
certain enumerated exceptions, against the Debtors, and (ii)
45 days after the Effective Date, the date by which holders of
administrative claims, other than enumerated exceptions, were
required to file motions with the Clerk. The Effective Date of
the Plan was August 29, 2001.
In addition, under the confirmation order any claim for damages
arising by reason of the rejection of an executory contract or
unexpired lease was to be filed with the Claims Agent no later
than the earlier of (a) September 12, 2001, or (b) 30 days after
the date of any final order approving a Debtor's rejection of
the contract or lease.
The Debtors must file objections to claims with the Bankruptcy
court "in no event later than sixty days after entry of the
confirmation order" unless Judge Robinson orders otherwise. To
date the Debtors have filed multiple omnibus objections to
claims and numerous individual claim objections. The Debtors
assure Judge Robinson they believe that most of the objections
that the Debtors may have to claims have already been filed.
However, out of an abundance of caution the Debtors seek to
extend the deadline for filing objections to claims through and
including December 11, 2001.
The Debtors assure Judge Robinson they have been working
diligently to review the claims in these cases in order to
reconcile these claims and to determine if filing objections is
appropriate. The Debtors suggest that this requested relief is
ministerial in nature and in the best interests of the Debtors,
their estates and their creditors. The extension sought will
afford the Debtors an opportunity to make fully informed
decisions concerning the validity of the claims asserted, the
need to file objections, and will help assure that distributions
are made under the Plan only to those creditors, and in such
amounts as are appropriate. Further, the Debtors submit that
the rights of claimants will not be prejudiced by an extension.
To the contrary, denying the requested relief will be very
detrimental to the Debtors. Absent granting the relief
requested, the Debtors will hastily have to prepare and file
objections, many of which might be unnecessary if they had
additional time to properly review and reconcile the claims
asserted and engage in discussions with the claimants. (Imperial
Sugar Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
INNOVATIVE GAMING: Considers Seeking Short-Term Debt Financing
--------------------------------------------------------------
Innovative Gaming Corporation of America (Nasdaq: IGCA) reported
a loss of $10.2 million in the third quarter of 2001 largely due
to a series of non-recurring events. Of this amount, $5.6
million resulted from the write-down of receivables from two
significant customers. An additional $1.5 million resulted from
losses on the Company's investment in Xertain, Inc. The Company
previously reported cancellation of its planned merger with
Xertain.
The remaining $3.1 million loss resulted from unabsorbed
operating expenses. Notwithstanding a continued strong customer
interest in its products, the Company's sales revenues were down
substantially from prior quarters due primarily to working
capital shortages that prevented the Company from building
orders. Total sales for the third quarter of 2001 were
approximately $700,000 compared to $2.2 million in the third
quarter of 2000. The Company continued diverting its production
from direct machine sales to a new participation model, wherein
the Company shares in casinos' profits on the gaming devices
based on game play. The Company placed equipment with a sales
value of $770,000 in operation this quarter.
IGCA recently secured lease financing in an amount up to $10
million to expand its participation placement program. This
line of credit is available to fund machines as they are placed.
The Company has also entered into a $3 million line of credit to
finance its work in process which funds specific purchase orders
from customers. Taken together, the Company believes the two
credit facilities should prevent working capital shortages from
limiting its sales in the future. The Company continues to
search for additional short-term debt or equity financing.
Tom Foley, Chairman and Chief Executive Officer of IGCA
commented, "We want to be very direct. We have identified and
addressed critical issues and are now reorganizing and
rightsizing."
According to IGCA's Chief Financial Officer, Laus M. Abdo, whose
experience includes restructuring of debt and equity financing
for gaming companies, "By the end of this year we believe that
our expenses will be greatly reduced and we will concentrate on
our core business; the participation placement and sales of our
machines, which are doing very well."
The Company also provided guidance on the general operations of
the Company:
IGCA Product Offerings:
IGCA recently submitted several new game titles to its in-house
test lab as well as to regulatory testing labs for approval.
These submissions will bring IGCA's total game library to 9
titles up from the current library of 6 titles. IGCA
anticipates that all games will be available for participation
or sale by the end of the fourth quarter. IGCA anticipates
adding 12 additional titles during the 2002 calendar year.
In addition, all IGCA gaming devices will have hopper and/or
ticket in ticket out capability by January 2002.
Participation Portfolio:
In 2002, IGCA's goal for placement of machines through its
participation program is 100 machines per month. The Company
has over 150 player positions in its participation pool.
Sale of Machines:
The Company continues to experience strong demand for its
products. The Company's 2002 machine sales goal is 100 machines
per month.
Proprietary Technology:
Following the recent termination of the Xertain merger, IGCA
retains sole ownership of its proprietary Linux and Java based
slot operating system, as well as all of its currently offered
game titles and various key patents for its modular multi-player
games.
GET Venture:
The Company continues to work on its previously announced joint
venture with GET Systems, for the implementation of the
technology from a single machine application to a broader
intranet implementation through IGCA's new ITEM platform. The
first step of this implementation was demonstrated at two gaming
trade shows in Las Vegas during October 2001.
Europe Expansion:
IGCA anticipates sales of its new Euro ITEM street machine in
Holland will commence as early as mid-December 2001. The first
game title offered on the Euro ITEM will be "Gatekeeper," a game
designed specifically for the Holland market by Gameworks, an
Australian subcontractor for IGCA. IGCA will begin offering the
additional titles for the Euro ITEM in Holland in the first
quarter of 2002. Following the Holland release of Euro ITEM,
IGCA will begin marketing in Belgium with games currently under
design specifically for that market.
Indian Gaming Opportunities:
The Company continues to focus its sales and marketing efforts
on Indian casinos and continues to place machines in numerous
Indian casinos in California, Arizona, New Mexico, and across
the mid-western United States. Many of its Indian casino
customers are placing repeat orders with IGCA for additional
product.
IGCA Chief Executive Officer Tom Foley, a former Vice Chairman
of the National Indian Gaming Commission, commented, "IGCA's
products have been very well received in the Indian casinos we
service. We expect continued sales growth in the Indian gaming
marketplace and anticipate making a significant announcement in
the coming weeks regarding a new relationship with a prominent
mid-western tribe."
Innovative Gaming Corporation of America, through its wholly-
owned operating subsidiary, Innovative Gaming, Inc., develops,
manufactures and distributes fast playing, high-entertainment
gaming machines. The Company distributes its products both
directly to the gaming market and through licensed distributors.
LEINER HEALTH: Finalizing Talks on Financial Restructuring Terms
----------------------------------------------------------------
Leiner Health Products Inc. reported financial and operating
results for its second quarter ended September 30, 2001.
The Company said that its reengineering initiative, which began
in July 2000, coupled with a growing U.S. private label vitamin,
mineral and supplement (VMS) market, have continued to
contribute to positive results.
Net sales for the second quarter were $151.6 million compared to
$165.0 million during the same period a year ago. Gross profit
was $33.1 million in the second quarter compared with the prior
year period of $35.2 million. Gross profit as a percentage of
net sales improved to 21.8% in the current quarter vs. 21.3% in
the prior year period. The improvement in gross profit
percentage is primarily due to improved plant efficiencies and
the impact of the discontinuation of less profitable SKU's and
customers as part of the Company's reengineering initiatives.
Operating expenses in the current quarter improved from $31.6
million in the prior year quarter to $29.7 million in the
current year quarter (after exclusion of $5.1 million of non-
recurring expenses described below). The non-recurring items are
comprised of $3.1 million in restructuring professional fees and
expenses, a charge of $0.4 million related to severance
associated with a second reduction in force and the inclusion in
the prior year quarter of $1.6 million of net settlement income
arising from a supplier dispute.
Although operating income for the quarter decreased by $5.2
million from a positive $3.5 million in the prior year quarter
to a loss of $1.7 million, the current year quarter reflects
$5.1 million in non-recurring expenses more fully described in
paragraph 3 above. Excluding these non-recurring expenses and
the recognition in the prior year quarter of $1.7 million in net
settlement income arising from a supplier dispute, operating
income increased by $1.6 million on sales, which were $13.4
million less than in the prior year's quarter.
The reported net loss for the quarter was $11.9 million compared
with the prior year quarter's net loss of $2.6 million. The
increase in the reported net loss $9.2 million reflects the $5.1
million in non-recurring expenses listed in arriving at
operating income and the recognition in the prior year quarter
of $1.7 million is net settlement income arising from a supplier
dispute. After adjustment for these items $6.8 million, together
with a reduction in the provision for income tax benefits of
$3.6 million the net loss actually decreased by $1.2 million.
The reengineering of the Company's operations continued in the
quarter. These have included the previously announced closure of
three OTC drug manufacturing facilities, the reduction of
approximately 3,200 of it's 6,700 SKUs and the elimination of
more than 600 positions.
In addition to the improvement in gross profit margins, the
company's reengineering has yielded significant working capital
improvements. Gross inventory levels at the quarter end was
($133.9 million) were lower than the prior year by $45.4 million
reflective of complexity reduction and supply chain
reengineering. These improvements have been realized while
simultaneously improving customer service levels significantly
during the six months ended September 30, 2001 and reducing the
U.S. outstanding order backlog during the quarter.
Commenting on the second quarter results, Robert M. Kaminski,
chief executive officer of Leiner Health Products, said, "Our
aggressive reengineering of operations continues to contribute
towards positive results. Despite the recent slow down of the
economy and the difficult organizational changes that have been
made, the Leiner team has persevered and significantly
influenced our financial performance. The improvements seen in
our half year's results attest to the dedication and hard work
of the men and women of Leiner. Their continued commitment to
the Company remains important as we work to finalize the
recently announced agreements in principle regarding our
restructuring."
In the six months ended September 30, 2001 the reported
operating income decreased from $10.6 million of income in the
prior year six month period to $0.7 million in the current year
six month period. On an adjusted basis however, operating income
improved by $14.3 million from a loss of $4.9 million in the
prior year six month period to a profit of $9.4 million in the
current year six month period. This improvement is calculated
after exclusion in the current six month period of non-recurring
expenses comprising $7.1 million of restructuring professional
fees and expenses and severance charges of $1.6 million and the
exclusion in the prior year six month period of $15.5 million of
a one-time net settlement income arising from a supplier
dispute. This improvement was primarily due to an increase in
gross profit dollars of $11.6 million (representing an
improvement in gross profit of 4.3 percentage points to 24.8%
primarily as a result of production cost reductions). The
residual improvement of $2.7 million was due to operating
expense reductions primarily in marketing and selling expenses.
As previously announced on November 2, 2001, Leiner entered into
an agreement in principle on a forbearance agreement with its
existing bank lenders. The agreement in principle was finalized
effective November 2, 2001 and extends through December 14,
2001.
The Company continues to make progress toward finalizing the
previously announced agreements in principle with its primary
investors on terms of an additional equity investment, and with
its bank lenders and principal subordinated debtholders on the
terms of a comprehensive financial restructuring.
Kaminski continued, "We continue to be gratified by the ongoing
support we have received from our customers and suppliers
throughout our restructuring. Their confidence in Leiner has
helped to allow us to achieve significant progress in our
efforts to restructure the Company's finances. Once finalized,
the financial restructuring will enable Leiner to reduce its
debt burden and gain access to new working capital."
Leiner Health Products Inc., headquartered in Carson,
California, is one of America's leading vitamin, mineral,
nutritional supplement and OTC pharmaceutical manufacturers. The
company markets products under several brand names, including
Natures Origin, YourLife and Pharmacist Formula. For more
information about Leiner Health Products, visit
http://www.leiner.com
MEMC ELECTRONICS: Reports Negative Operating Cash Flow in Q3
------------------------------------------------------------
MEMC Electronic Materials, Inc. (NYSE: WFR) reported net sales
of $120.7 million for the 2001 third quarter compared to net
sales of $222.8 million in the year ago period. The 46% decrease
reflects the industry's well-documented slowdown. MEMC Korea
Company (MKC) has been consolidated with the Company since the
2000 fourth quarter. Had MKC been consolidated with the Company
for the 2000 third quarter, the Company's net sales for the 2000
third quarter would have been approximately $260 million.
The Company's gross margin decreased to negative 28.8% for the
2001 third quarter compared to positive 16.7% in the year ago
period and negative 10.7% for the 2001 second quarter. The
Company incurred an operating loss of $67.6 million in the 2001
third quarter compared to an operating profit of $3.0 million
for the quarter ended September 30, 2000. For the second quarter
ended June 30, 2001, the Company had an operating loss of $51.5
million, excluding restructuring charges.
The sequential decline in gross margin and operating profit is
primarily the result of under-absorption of manufacturing fixed
costs reflecting significantly lower product volumes. Both
pricing and product mix declined modestly on a sequential basis.
Compared to the year ago period, had MKC been included in the
Company's consolidated results for the 2000 third quarter,
product volumes would have decreased approximately 51% in the
2001 third quarter as compared to the year ago period.
The Company reported a net loss for the 2001 third quarter of
$67.4 million compared to a net loss of $2.3 million for the
2000 third quarter.
"We continued to feel the effects of the weak semiconductor
market this quarter, across all world areas and all diameters.
As a result of this continuing trend, we took additional actions
to reduce our costs, including headcount reductions totaling 500
last month. Together with other actions taken to date, our total
worldwide headcount will be reduced by 30% as compared to the
beginning of 2001," commented Klaus von Horde, MEMC's Chief
Executive Officer.
"Furthermore, we were pleased to announce [Wednesday] morning
that Texas Pacific Group has completed its purchase of E.ON AG's
equity and debt interests in MEMC. As a result of the debt
restructuring and the additional liquidity provided in
connection with the TPG purchase, MEMC is in a strong position
to respond when the market returns," continued Mr. von Horde.
The Company reported negative operating cash flow of $20.8
million for the 2001 third quarter. Capital expenditures during
the quarter totaled $11.7 million.
Equity in income of the Company's Taiwanese joint venture was
break-even in the third quarter of 2001, flat as compared to the
prior quarter. Despite the weakened market, the joint venture
continues to achieve positive free cash flow, which is after
capital expenditures.
MEMC is a leading worldwide producer of silicon wafers for the
semiconductor industry. Silicon wafers are the fundamental
building block from which almost all semiconductor devices are
manufactured, such as are used in computers, mobile electronic
devices, automobiles, and other consumer and industrial
products. Headquartered in St. Peters, MO, MEMC operates
manufacturing facilities directly or through joint ventures in
every major semiconductor manufacturing region throughout the
world, including Europe, Japan, Malaysia, South Korea, Taiwan
and the United States.
METALS USA: Secures Interim Authority to Use Cash Collateral
------------------------------------------------------------
On March 14, 2001, Metals USA, Inc., and each of its debtor-
affiliates entered into two new financing agreements with Bank
of America N.A. and PNC Bank N.A. These Credit Facilities
provide the Debtors with access to $450,000,000 in the form of a
$350,000,000 revolving credit facility and a $100,000,000
receivables securitization facility. Prior to any syndication
of these facilities, BofA and PNC split the lending commitment
50/50. All borrowings are secured by [recently recorded]
mortgages on certain of the Debtors' real estate and liens on
all of the Company's receivables (not otherwise pledged under
the accounts receivable facility), inventories, property and
equipment, virtually every other asset owned and not otherwise
pledged, and all cash and cash proceeds from that collateral.
The Debtors tell Judge Greendyke that they need access --
immediately -- to that Cash Collateral to fund their on-going
working capital needs. Without access to the Lenders' Cash
Collateral, the Company can't meet its day-to-day expenses.
The Debtors argue that the Bank Group is adequately protected.
At the Petition Date, the Debtors owe the Bank Group
approximately $250,000,000. The value of the Debtors'
inventory, receivables and equipment pledged to the Bank Group
is well over $500,000,000. The Debtors propose to (i) segregate
all cash the constitutes Cash Collateral, (ii) provide the Bank
Group with enhanced levels of post-bankruptcy financial
reporting, and (iii) grant the Bank Group a post-petition
replacement lien, "leaving the Bank Group well protected."
The Debtors ask for immediate non-consensual authority to use
the Lenders' Cash Collateral on an interim basis pending a final
Cash Collateral Hearing in exchange for the adequate protection
package offered. Between now and the time of that Final
Hearing, the Debtors plan to (i) sit down and attempt to hammer-
out a consensual permanent Cash Collateral Order with the Bank
Group or (ii) secure a debtor-in-possession financing facility
from the Bank Group or another lender and bring that deal to the
Court for approval.
At an Emergency Hearing convened, Judge Greendyke finds that the
Debtors have an immediate need to use the Lenders' Cash
Collateral to avoid immediate and irreparable harm to their
estates. The Debtors may use the Lenders' Cash Collateral to
fund their day-to-day post-petition operating expenses. The
Debtors' adequate protection proposal is approved. The Debtors
are directed to segregate and carefully account for all Cash
Collateral. The Bank Group is granted a replacement lien to the
extent that the Debtors use any of the Bank Group's cash
collateral. Judge Greendyke will convene a Final Cash
Collateral Hearing at 1:30 p.m. on December 5, 2001. (Metals USA
Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
MONTANA POWER: Shareholders Okay Restructuring & Sale of Utility
----------------------------------------------------------------
Due to a slowing economy, an additional proceeds' distribution
to utility customers from the sale of the company's non-
regulated oil and gas business, and a write-down of
unconsolidated telecommunications investments, The Montana Power
Company (NYSE: MTP) reported a loss of $0.26 per share in
consolidated net income for the third quarter ended September
30, compared to net income of $0.29 cents per share for the same
period a year ago.
Earnings from continuing operations in telecommunications, the
utility and other operations for the quarter were a loss of
$0.12 per share, compared to $0.07 income per share for the
third quarter 2000. The loss included a $14.8 million pre-tax
write-down of investments in a PCS joint venture in the Upper
Midwest and a broadband media services company.
Earnings from discontinued operations in Montana Power's former
coal and oil and natural gas operations for the quarter showed a
loss for the quarter of $0.14 per share, compared with earnings
of $0.22 per share for the same period a year ago. The loss
this quarter is due to the settlement in a natural gas
regulatory filing, resulting in additional proceeds from the
sale of the oil and gas business being distributed to the
utility's natural gas customers. Last year's earnings were from
the then operating oil and gas and coal production businesses
that were sold.
Year-to-date earnings for 2001 were $0.20 per share, a decrease
of $0.71 per share compared to earnings for the same nine-month
period in 2000, mainly attributed to lower earnings from
telecommunications and the utility, and the decrease in earnings
due to the sale of the coal and oil and gas businesses. For
additional information on third-quarter 2001 and year-to-date
earnings, consult the company's Form 10-Q filed November 14 with
the Securities and Exchange Commission.
On March 28, 2000, Montana Power announced it would sell its
energy businesses, including its utility, to focus on
telecommunications under Touch America. To date, the company
has sold its oil and gas, coal and independent power production
businesses and is in the final stages of selling its electric
and natural gas utility.
Robert P. Gannon, chairman and chief executive, said quarterly
results reflect the continued slowing of the nation's economy
and the difficult transition of Montana Power from a diversified
energy company to Touch America, a stand-alone
telecommunications company.
On September 21, shareholders representing more than two-thirds
of the company's outstanding common stock approved the
restructuring of Montana Power that will result in Touch America
Holdings, Inc. becoming the publicly traded company.
Shareholders also approved the sale of the utility to
NorthWestern Corporation and the redemption of two issues of
Montana Power preferred stock -- the $4.20 and $6 series.
"We have sold all our energy businesses except the utility, and
we have received all but one of the approvals necessary for this
transaction to proceed," Gannon said. "The Montana Public
Service Commission must approve the Utility, under
NorthWestern's ownership, as a fit, willing and able provider of
utility service. We believe we have met all the information
requirements in order to obtain this approval, and the
commission has set a schedule to reach their decision by January
31, 2002. I must emphasize the importance of closing the
utility sale in a timely manner, which will provide Touch
America with $602 million in order to meet its business
objectives," he added, saying Montana Power and NorthWestern are
working to accelerate that date through settlement discussions.
Gannon also said Touch America was not in compliance with
financial covenants under its five-year Senior Secured Credit
Facility based on third quarter results. "On November 14, we
received a 30-day waiver of these covenant requirements but
cannot draw on the credit facility during the waiver period," he
said. "I believe our current short-term liquidity issue as
described in our Form 10-Q report can be successfully addressed
and that we will negotiate an agreement to the credit facility
for additional liquidity. Touch America will maintain a fully-
funded business plan through 2003."
The company's plan to transition from energy to a stand-alone,
profitable, broadband network owner and service provider without
debt and with cash in the bank remains intact. "This is one way
we intend to differentiate Touch America in the marketplace;
this has been our focus for the past 18 months," Gannon said.
Touch America continues to make improvements in its operations,
including the expansion in the third quarter of the company's
national Customer Care Center in Missoula, Montana that now
centralizes and handles all requests for customer assistance,
whether for new service, additional service, or billing or
trouble needs. Touch America also recently has introduced
products for managed security and privacy for network
application and data protection, as well as advanced Voice over
IP (VoIP) services and two new dial Internet access products
that offer businesses and residential customers unlimited
Internet access from almost anywhere in the country.
Touch America
On June 30, 2000, Touch America acquired for approximately $200
million Qwest Communication's wholesale, private-line, and long-
distance business in Qwest's 14-state West and Midwest regulated
region. The sale included customers, employees and associated
facilities and was a Federal Communication Commission (FCC)
condition to Qwest's merger with US WEST at the same time.
On August 22, 2001, Touch America filed a lawsuit in Montana
Federal District Court to require Qwest to comply with federal
laws, FCC orders and its agreements with Touch America regarding
the sale. The complaint sought to clarify contractual
agreements and to determine if certain telecommunications
services Qwest is marketing and selling in its regulated 14-
state region -- specifically so-called "Capacity IRUs" that in
essence are dedicated, fiber- optic broadband circuits -- are in
violation of Section 271 of the Telecommunications Act of 1996
and a constraint to long-distance voice and data competition by
a market-dominant monopoly. Touch America also claims that
because Qwest has tied billing and network services together it
has violated anti-trust laws.
On November 5, the Montana Federal Court dismissed the matter
from its jurisdiction without deciding the merits of the lawsuit
because of the "first to file" doctrine. "We have requested
reconsideration of the dismissal of our suit in Montana Federal
Court, and we still have the option to file any claims not
subject to arbitration either in the United States District
Court for the District of Colorado or with the Federal
Communications Commission," Gannon said.
Preceding this action and after settlement talks failed, Qwest
filed with the American Arbitration Association and in Colorado
State District Court to resolve billing disputes between the two
companies.
Comparing third quarter 2001 to the previous quarter,
telecommunications revenues increased approximately $3.5
million, or three percent. Network wholesale and dedicated line
revenues increased $6.6 million, while retail sales, which
include wholesale commercial and retail consumer long-distance
voice revenues decreased approximately $1 million.
Third quarter expenses increased approximately $12.5 million, or
nine percent, compared to the previous quarter. Operations and
maintenance expenses increased $11 million for the third quarter
over second, primarily due to higher network costs and Touch
America booking certain Qwest charges pending the outcome of
litigation. Depreciation and amortization expense and taxes,
other than income taxes, increased $1.8 million mainly due to
the continued expansion of Touch America's fiber-optic network.
NATIONAL ENERGY: Business Operations Improve in Third Quarter
-------------------------------------------------------------
National Energy Group, Inc. (OTC Bulletin Board: NEGI) announces
results for the third quarter ended September 30, 2001.
Results of Operations
On September 12, 2001, the Company contributed all its operating
assets and oil and gas properties excluding cash of $4.3 million
to NEG Holding LLC in exchange for an initial 50% membership
interest (LLC Contribution). For tax and valuation purposes,
the effective date is May 1, 2001; however, for financial
reporting purposes the transaction is as of September 1, 2001.
Operations from September 1 to September 12, 2001 were not
significant. For the quarter ended September 30, 2001 the
Company recorded two months of oil and gas operations and one
month of accretion of the preferred investment and management
fees. For the nine months ended September 30, 2001, the Company
recorded eight months of oil and gas operations and one month of
accretion of the preferred investment and management fees. In
the future, the Company will only recognize income from
accretion of the preferred investment and management fees.
For the Three Months Ended September 30, 2001
Net income of $31.2 million was recognized for the three months
ended September 30, 2001, compared with net loss of $28.8
million for the comparable 2000 period. The third quarter of
2001 includes a $31.9 benefit from income taxes as a result of
the Company's contribution of all its oil and gas assets to NEG
Holding LLC and $.3 million in deferred income tax expense. The
third quarter of 2000 includes a $33.4 million extraordinary
loss in connection with the confirmation of the Plan of
Reorganization. Excluding the effects of these amounts, a net
loss of $.1 million would have been recognized for the three
months ended September 30, 2001 compared to net income of $4.6
million for the same period in 2000.
Total revenues decreased $4.5 million (32.4%) to $9.4 million
for the third quarter of 2001 from $13.9 million for the third
quarter of 2000. The decrease in revenues was due to the
decrease in oil and natural gas production and prices during the
third quarter of 2001. Average oil prices decreased $6.07 per
barrel to $25.47 per barrel for 2001 from $31.54 per barrel for
2000, while average natural gas prices decreased $1.12 per Mcf
to $3.15 per Mcf for 2001 from $4.27 per Mcf for 2000. Total
revenues also declined due to the LLC Contribution.
The Company produced 115 Mbbls of oil during the third quarter
of 2001 and 203 Mbbls of oil in the third quarter of 2001, a
decrease of 43.3%. The Company produced 1,117 Mmcf of natural
gas during the third quarter of 2001 and 1,758 Mmcf of natural
gas during the third quarter of 2000, a decrease of 36.4%. The
decrease in production is due to natural decline in production
and the LLC Contribution.
For the Nine Months Ended September 30, 2001
Net income of $35.5 million was recognized for the nine months
ended September 30, 2001, compared to a net loss of $19.0
million for the comparable 2000 period. The first nine months
of 2001 includes income of $.4 million related to the Bankruptcy
Proceeding and a $31.9 million benefit from income taxes as a
result of the LLC Contribution and $.3 million deferred income
tax expense. Net loss for the first nine months of 2000 (i)
excludes $10.5 million in additional interest expense on the
Company's senior notes not accrued during the Bankruptcy
Proceeding, (ii) includes expenses of $1.0 million relating to
the Bankruptcy Proceeding, (iii) includes $1.1 million in
interest income on cash accumulating during the Bankruptcy
Proceeding and (iv) includes a $33.4 extraordinary loss in
connection with the confirmation of the Plan of Reorganization.
Excluding the effects of these amounts, net income of $3.4
million would have been recognized for the nine months ended
September 30, 2001 compared to net income of $3.8 million for
the same period in 2000.
Total revenues decreased $.8 million (2.2%) to $36.1 million for
the nine months ended September 30, 2001 from $36.9 million for
the same period of 2000. The decrease in revenues was due to
the decrease in oil and natural production during the first
eight months of 2001 and the LLC Contribution.
The Company produced 428 Mbbls of oil during the nine months
ended September 30, 2001 and 640 Mbbls of oil in the same period
of 2000, a decrease of 33.1%. The Company produced 4,333 Mmcf
of natural gas during the nine months ended September 30, 2001
and 5,469 Mmcf of natural gas during the same period of 2000, a
decrease of 20.8%. The decrease in production is due to natural
decline in production and the LLC Contribution.
Oil and Gas Drilling Operations
On September 12, 2001, but effective as of May 1, 2001, the
Company contributed to NEG Holding LLC all of its oil and gas
operating assets in exchange for an initial 50% membership
interest in NEG Holding LLC. Concurrently, Gascon Partners
contributed to NEG Holding LLC the oil and gas producing assets
of its affiliate, Shana Petroleum Company, cash in the amount of
$75 million and a note receivable for $10.9 million for an
initial 50% membership interest in NEG Holding LLC. The Company
manages all of the oil and gas operations of these assets
pursuant to a management agreement with NEG Operating LLC, an
affiliate of NEG Holding LLC.
Since January 1, 2001, the Company has drilled, or is drilling
28 wells. Two of these wells are currently drilling, 19 have
been completed and 3 are in the process of being completed.
Anticipated gross production from the producing and tested wells
is 23.9 Mmcf of gas and 1,152 Bbls of oil per day, resulting in
a net of 3.9 Mmcf of gas and 262 Bbls of oil per day to the NEG
Holding LLC interest.
Since January 1, 2001, Shana Petroleum Company drilled 7
development wells and completed 6 wells. Of these, 4 wells are
producing and 2 wells are currently in the process of
completion. Current gross production from the completed wells
is 50 Bbls of oil per day and 1.8 Mmcf of gas, resulting in a
net of 21 Bbls of oil and .8 Mmcf of gas per day to the NEG
Holding LLC interest.
National Energy Group, Inc. is a Dallas, Texas based independent
oil and gas exploration and production company. The Company's
principal properties are located onshore in Texas, Louisiana,
Oklahoma and Arkansas.
OWENS CORNING: Asks Court to Fix April 15 Bar Date for Claims
-------------------------------------------------------------
Owens Corning, and its debtor-affiliates move the Court for an
Order establishing the bar date; approving a proof of claim form
for claims other than Excluded Claims; approving the form and
manner of notice of the General Claims Bar Date; and approving
special procedures relating to certain employee and retiree
claims.
The Debtors also request that the Court establish April 15,
2002, as the last date and time by which any entity holding a
claim that arose prior to the Petition Date against one or more
of the Debtors, other than an Excluded Claim, may assert such
claim.
Pursuant to the proposed General Claims Bar Date Order, these
entities are not required to file a proof of claim on or before
the General Claims Bar Date with respect to the following
claims:
A. An asbestos-related personal injury claim or asbestos-related
wrongful death claim, whether or not such claim has been
resolved or is subject to resolution pursuant to a
settlement agreement; or is based on a judgment;
B. A claim that already has been properly filed with the Clerk
of the United States Bankruptcy Court for the District of
Delaware or the Claims Agent using a claim form that
substantially conforms to Official Form No. 10;
C. A claim that is listed on the Debtors' Amended Schedules; is
not described in the Amended Schedules as "disputed,"
"contingent," or "unliquidated;" and is in the same amount
and is of the same priority as set forth in the Amended
Schedules;
D. An administrative expense of any Debtor's chapter 11 case;
E. A claim of a Debtor or a non-Debtor subsidiary of a Debtor
against a Debtor;
F. A claim that has been allowed, paid or otherwise satisfied by
or pursuant to an Order of the Court;
G. A claim of an employee of any of the Debtors for deferred
compensation;
H. A claim of a retired employee of any of the Debtors for
retirement benefits, including deferred compensation,
pension and medical benefits;
I. A claim of a current or former employee of any of the Debtors
for pre-petition worker's compensation benefits;
J. A claim that has been subject to a bar date established by
Order of the Court other than the General Claims Bar Date
Order; and
K. A claim which is limited exclusively to a claim for the
repayment by the applicable Debtor of principal and
interest on or under any of the Debtors' 7.5% Notes due
2005, 7.7% Debentures due 2008, 7.5% Debentures due 2018,
and 7% Senior Notes due 2009 or on or under any industrial
development, industrial revenue or other conduit bonds
issued by a public instrumentality for the benefit of any
Debtor or the indenture in respect of each of the Notes or
Bonds; provided, however, that:
a. the foregoing exclusion in this subparagraph shall not
apply to the indenture trustees under each of the
Indentures;
b. each Indenture Trustee shall be required to file a proof
of claim on account of the applicable debt Claims or
under the applicable Debt Instruments for which it is
the Indenture Trustee, on or before the General Claims
Bar Date; and
c. any holder of Notes or Bonds that wishes to assert a
claim arising out of or relating to a Debt Instrument,
other than a Debt Claim, shall be required to file a
proof of claim on or before the General Claims Bar
Date, unless another exception identified herein
applies.
Norman L. Pernick, Esq., at Saul Ewing LLP in Wilmington,
Delaware, informs the Court that under the proposed General
Claims Bar Date Order, each Entity that asserts a claim against
any of the Debtors that arose prior to October 5, 2000, must
file an original, written proof of such claim that substantially
conforms to the Proof of Claim Form so as to be received on or
before the General Claims Bar Date by Robert L. Berger &
Associates, either by mailing or delivering by overnight courier
or messenger, to the following address: In re Owens Corning, et
al., c/o Robert L. Berger & Associates, 16161 Ventura Boulevard,
PMB 517, Encino, CA 91436.
The proposed General Claims Bar Date Order further provides that
the Claims Agent will not accept Proof of Claim Forms sent by
electronic submission or facsimile and that Proof of Claim Forms
shall be deemed filed timely only if such Proof of Claim Forms
are actually received by the Claims Agent on or before the
General Claims Bar Date. Mr. Pernick adds that the proposed
General Claims Bar Date Order provides that, unless otherwise
agreed to by the Debtors or ordered by the Court, a single Proof
of Claim Form cannot be used to assert claims against more than
one Debtor and that Proof of Claim Forms which assert a claim
against more than one Debtor shall be deemed filed against the
first-identified Debtor only.
In order to comply with Bankruptcy Rule 1009, the Debtors
proposed to include, on all Proof of Claim Forms sent to
scheduled claimants, specific information regarding the manner
in which the claimant's claim is reflected on the Amended
Schedules. Such information will specify:
A. the name of the applicable Debtor and creditor;
B. whether the creditor's claim is designated on the Amended
Schedules as disputed, unliquidated or contingent;
C. whether the creditor's claim is designated on the Amended
Schedules as secured, unsecured or priority; and
D. the amount set forth in the Amended Schedules for such
creditor's claim.
Mr. Pernick submits that the proposed General Claims Bar Date
Order provides that any Indenture Trustee shall be required to
file claims on account of the securities held on behalf of all
holders of securities issued pursuant to the trust instrument
under which it is trustee. Any holder of a claim against one or
more of the Debtors who is required, but fails, to file a proof
of claim for such claim in accordance with the General Claims
Bar Date Order on or before the General Claims Bar Date shall be
forever barred, estopped and enjoined from asserting such claim
against such Debtor, and such Debtor and its property shall be
forever discharged from any and all indebtedness or liability
with respect to such claim, and such holder shall not be
permitted to vote on any plan or plans of reorganization or
participate in any distribution in such Debtor's Chapter 11 case
on account of such claim or to receive further notices regarding
such claim.
The Debtors have determined that it would be in the best
interest of their estates to give notice by publication to
potential creditors, including those creditors to whom no other
notice was sent and who are unknown or not reasonably
ascertainable by the Debtors; and known creditors whose
addresses are unknown to the Debtors. The Debtors request
authority to publish notice of the General Claims Bar Date Order
and propose to publish the Publication Notice twice in the
national and international editions of The New York Times, The
Wall Street Journal, and USA Today at least 30 days prior to the
General Claims Bar Date; once in the newspapers at least 30 days
prior to the General Claims Bar Date; once in trade publications
on the estimated publication dates. As with the General Claims
Bar Date Notice, the Publication Notice includes a toll-free
telephone number that creditors may call to obtain a Proof of
Claim Form, as well as the website address that claimants may
visit to obtain information and download a Proof of Claim Form.
(Owens Corning Bankruptcy News, Issue No. 22; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PCSUPPORT.COM: Lacks Capital After September Restructuring
----------------------------------------------------------
PCsupport.com Inc. (OTC BB: PCSP), a leading provider of
outsourced helpdesk solutions, announced financial results for
the quarter ended September 30, 2001. The Company recorded
revenues of $903,513 for the quarter and a net loss of
$1,054,088 versus a loss of $2,103,371 on revenues of $98,549 in
the first quarter of 2000.
"Our monthly recurring revenue stream increased in the quarter
while expenses were reduced dramatically in the final month of
the quarter." said Mike McLean, President and CEO of
PCsupport.com. "We regret that we have received notice from
Skyenet of their intention to terminate our service contract;
while the Skyenet contract was our largest source of revenues in
the first quarter, the impact of this contract is not material
to us from a cash flow perspective, given the low margins we
experience as a result of the bulk of this contract being
telephone support which we ourselves in turn have been
outsourcing. Our financial position has improved since the end
of our prior fiscal year, and we expect that the bottom line
impact of the restructuring we undertook in September will be
very beneficial in upcoming quarters."
During the first quarter of fiscal 2002, and in the subsequent
period, the Company:
- raised gross proceeds of $167,000 from the issuance of a
convertible debenture and $271,000 by private placement
- engaged in a three-year contract to support Sears
Roebuck's computer customers in August 2001, after the
successful completion of a trial period during June 2001
- completed two bridge-loan agreements that were repaid in
October 2001
- signed and implemented contracts with 2 additional ISP
clients
- signed a corporate client for a 3-month trial, which
commenced in September 2001
- continued to build on our sales demonstration pipeline
Additional Financial Information
During the first quarter of this year, revenues from service
contracts accounted for $868,362, with the balance of $ 35,151
from subleases of certain of our premises. In September we
restructured our operations and eliminated approximately 30
positions, reducing our fixed cost base by approximately 40% in
a strategic effort to move toward becoming cash self-sustaining
while continuing to grow our customer base. Development costs
decreased to $217,269 for the period from $310,340, primarily as
a result of decreased personnel in Development and a reduction
in software license costs. Marketing and promotion expenses
decreased to $239,948 during the quarter compared to $967,252
for the same period in the previous year as a result of
significant reduction to the personnel assigned to marketing
activities and the minimization of payments to third parties for
advertising activities.
Its September restructuring also reflected the company's lack of
sufficient working capital to support its prior level of
operations. The company continues to require additional working
capital to maintain its current level of operations.
PCsupport.com is a leading provider of outsourced help desk
solutions. The Company partners with corporations to assist them
in reducing the costs of providing technical support services
while improving the overall support experience of computer users
through a comprehensive suite of help desk services.
PCsupport.com has received numerous industry awards and
accolades, including the 2001 WebStar Award, the 2001 MVP Award
for Best IT Outsource Solution and the 2000 Harold H. Short
Award for Innovations in Service. For more information, visit
PCsupport.com's web site at http://www.pcsupport.com
PACIFIC GAS: UST Asked to Appoint Committee for Gov't Entities
--------------------------------------------------------------
Creditors (Alameda County, City of Berkeley, City of San Jose,
San Luis Obispo County, City and County of San Francisco,
Siskiyou County and Sonoma County) move the Court for an order
directing the U.S. Trustee to appoint an official committee of
government creditors of Pacific Gas and Electric Company
and its debtor-affiliates pursuant to Bankruptcy Code section
1102(a)(2).
As indicated by their proof of claim forms, Movants' claims
include short-term commercial debt claims, tort and indemnity
claims and franchise claims, among others.
The reason for the request, the movants say, is that the
Official Committee of Unsecured Creditors does not represent the
interests of the cities and counties and their constituents
adequately and fairly.
In particular, the Movants note that the Joint Plan, and the
recent "Support Agreement" filed by the Committee, Debtor and
its Parent show that the Committee is willing to sacrifice the
interests of the creditors in general to the financial interests
of the power producers and traders who dominate the Committee,
and Debtor and Parent acquiesce in the Committee's conduct
because it enables PG&E to sweep under the rug all troubling
aspects of their joint plan of reorganization, including the
failure to force PG&E Corp. to return $4.6 billion it received
from PG&E.
Specifically, Movants point out that the Plan provides for the
release of all claims that the Debtor may have against Parent,
"including but not limited to, any Cause of Action arising under
Chapter 5 of the Bankruptcy Code or any state fraudulent
conveyance statute," and any claims that the Debtor may have
against members of the Committee. These releases abandon a
potential recovery of $4.6 billion from Parent and all claims
for recovery of excess charges that could bring millions of
dollars or even billions into the estate to pay creditors,
Movants tell the Court.
The movants point out that seven of the Committee's eleven
current members (Enron Corporation, Dynegy Power Marketing,
Inc., the City of Palo Alto, GWF Power Systems Co., Inc., P-E
Berkeley, Inc., Morgan Guaranty and Merrill Lynch) are Energy
Traders who have been active in the California energy markets,
including the sale of electricity to the Debtor. These form a
clear and dominant majority and have financial interests
substantially divergent from the majority of other creditors.
Yet another, Bank of America, also has financial interests in
the energy commodities market and joined in the Committee's
request for a safe harbor order protecting its members from
liability arising from activities relating to energy commodities
trading. The remaining members of the 0CC include a second
financial institution (Pacific Investment Management Company), a
pension fund (State of Tennessee) and an arborist (The Davey
Tree Expert Co.).
The movants note that, during the summer of 2001, the Court
approved agreements between the Debtor and most of the
qualifying facilities from which it purchases power, including
GWF and P-E Berkeley. Under the agreements, the Debtor will pay
GWF and P-E Berkeley 100% of their prepetition payables plus
interest no later than the Plan's Effective Date.
In order to protect the creditors whose interests are not being
served by the 0CC, the integrity of this Court and the viability
of this case, the Court should direct the Trustee to appoint an
official committee of government creditors pursuant to
Bankruptcy Code section 1102(a)(2), the movants put forward. The
new committee would have access to the Debtor's financial data
and the resources necessary to analyze and digest the proposed
Plan fully and effectively, thus enabling it to raise meaningful
opposition and alternatives by which the Court can measure the
adequacy and soundness of the Plan, Movants envisage. Without
the proposed committee, no party other than the current
Committee will have the information or resources to do so, the
movants aver.
Prior to the filing of this motion, Movants requested that the
Trustee appoint a committee of government creditors due to their
concerns over lack of representation by the current Committee.
In response, the Trustee encouraged the Movants to make their
request directly to the Court. Movants also asked the Debtor to
consent to the appointment of a government creditors committee,
which the Debtor refused to do.
Argument
Movants draw the Court's attention to 11 U.S.C. section
1102(a)(2) which authorized the Court to order the US Trustee to
appoint an additional official committee of creditors in any
chapter 11 case. Movants argue that the circumstances,
including its size and complexity, as weel as the predominance
of the Energy Traders on the Committee, demonstrate the need for
an additional official committee.
Movants accuse the Committee of inadequate representation as
follows:
(A) The Plan releases critical claims to the detriment of
unsecured creditors in general while providing favorable
treatment to Committee Members.
-- The Energy Traders' claims are over-inflated and subject
to legal challenge due to anticompetitive conduct.
However, despite the Debtor' retention of two special
counsel, Keker & Van Nest and Cooley, Godward, to
investigate and challenge these types of claims, the Plan
fails to propose any affirmative action to challenge
them, an action that could potentially bring hundreds of
millions of dollars, if not billions, into the estate to
pay creditors. Instead, the Plan releases any claims that
the Debtor may have against the Committee members and
their affiliates.
-- Under the Plan, 40% of creditors' claims will be paid
over periods ranging from 10 to 30 years. Significantly,
the Energy Traders with inflated claims can afford to
write off a portion of these claims, the natural
consequence of spreading out payments over such a long
period of time, and may even benefit through tax
treatment. As to GWF and PE-Berkeley, this provision of
the Plan has on impact since they will get 100% of their
prepetition payments plus interest on the Effective Date
under their settlement agreements with PG&E. By contrast,
cities and counties cannot forego present expenditures
for public health and safety by promising more
expenditures tomorrow. For many creditors, receiving 40%
over those proposed long terms can be disastrous.
-- PG&E's generous treatment of Committee members is
reciprocated by the Committee as to issues of concern to
PG&E and Parent. In addition to releasing the Debtor's
potential claims for the $4.6 billion Debtor transferred
to Parent, the Committee promises in the Support
Agreement that it will "support the extension of PG&E's
exclusivity under section 1121 and will not object to
confirmation of the Plan or otherwise commence any
proceeding to oppose..." Significantly, the Committee did
not secure a "fiduciary escape clause" reserving the
right to terminate its support obligations in the event
it later determines that continued support would violate
the Committee's fiduciary obligations.
(B) Additionally, the following are three major problems with
the Plan identified by movants:
(1) The Debtor seeks to circumvent all state and local laws,
except the rate-making function of the California Public
Utilities Commission, in the Restructuring, contrary to
bankruptcy law and policy.
(2) The generating and transmission assets that Debtor
proposes to spin off to Parent have not been valued for
the Plan, and the assets appear to be worth
substantially more than any offsetting benefit to PG&E.
(3) The following unknown effects of the Restructuring are
of particular concern to cities and counties: (i)
whether the real property assets transferred in the
proposed Restructuring will continue to be assessed on
the unitary roll by the State Board of Equalization or
be assessed locally, subject to tax protection under
Proposition 13; and (ii) whether the obligations under
the Debtor's franchise agreements with most cities and
many counties will or can be assumed as proposed by the
Debtor and Parent.
(C) The Committee's prior conduct also shows a failure to
represent the interests of the unsecured creditors
(1) its failure to protest the Debtor's refusal to pay all
of its property taxes to the counties;
(2) its filing of the commodities motion;
(3) its motion for an unprecedented "safe harbor" order
benefiting only Committee members Dynegy, Enron, Merrill
Lynch, Bank of America, Morgan Guaranty and Bank of New
York (later resigned).
(4) The Committee made no effort to solicit the opinions of
the cities and counties, and both the Debtor and the
Committee have refused to provide the cities and
counties with substantive information about the Plan or
other negotiations.
(5) The Committee has joined in, consented to or remained
silent on virtually every significant motion brought by
the Debtor in the case, without soliciting opinions from
unsecured creditors in general in order to reach its
decisions. Similarly, the Debtor has consented to or
remained silent on virtually every motion brought by the
Committee. Their actions demonstrate that the interests
of the Committee and the Debtor are aligned to a degree
rarely seen in chapter 11 cases, which works to the
detriment of the creditors as a whole.
By virtue of its agreement to support the Plan without
substantive alteration, the Committee has abdicated its
obligations to the majority of creditors for whom these issues
are of real and serious import, Movants allege. In order to fill
this void, Movants seek to develop and propose an alternative
plan. To undertake this role effectively, however, Movants need
the stature and resources of an official committee. As a
practical reality, individual creditors will not be able to
match even a fraction of the resources that have been available
to the Debtor and the Committee. The Debtor had spent
approximately $7 million dollars on consultants' and bankruptcy
counsel's fees and expenses through July 31, 2001. The
Committee's consultants and attorneys have matched this spending
on expert fees and costs. These numbers do not include the
undisclosed sums spent by Parent in its reorganization efforts.
Denying this motion would allow the Debtor and the 0CC to parlay
their economic advantages in this case into a confirmed plan
virtually unchallenged, to the detriment of the vast majority of
unsecured creditors.
This motion is timely, it is not a situation in which the
appointment of a new committee is requested late in a case that
has been pending for years when the motion is made, Movants
assert. Until Movants received and reviewed the Plan and the
Support Agreement, Movants did not truly appreciate the extent
to which the Committee would sacrifice the interests of the
majority of unsecured creditors in order to protect the Energy
Traders' inflated claims, nor could Movants be aware of the
major legal and practical problems that the Plan would raise,
movants explain. Movants argue that they should not be penalized
for not having anticipated all of the legal and factual issues
presented by the proceeding and the Plan because they do not
have the financial resources of the Debtor, Parent or the
Committee.
Movants argue that the filing of a plan is not, in and of
itself, reason to find a motion directing the appointment of a
new committee untimely, citing in In re Diversified Capital
Corp., 89 B.R. 826 (Banks. C.D. Cal. 1988), in which the court
directed the appointment after the confirmation of the debtor's
reorganization plan, but before its consummation, to allow the
committee to monitor the activities of the debtor, participate
in investigation of matters relevant to the case and assist in
unresolved litigation.
Movants further argue that the proposed appointment would not
disrupt an orderly process of reorganization but is necessary to
ensure a fair and orderly process of reorganization.
Finally, Movants argue that bankruptcy law allows the
appointment of a government creditors committee. Movants argue
that the proposed appointment of a government creditors
committee satisfies the sole prerequisite at issue, because each
holds an unsecured prepetition claim within the meaning of
section 1102. Section 1102(b)(1) provides that "[a] committee of
creditors appointed under subsection (a) of this section shall
ordinarily consist of the persons, willing to serve, that hold
the seven largest claims against the debtor of the kinds
represented by such committee ..." Movants argue that the term
"ordinarily" modifies the word "person," and, accordingly,
justifies the appointment of creditors who are not "persons"
within the meaning of the Bankruptcy Code.
Moreover, in this case, neither the Debtor nor the Committee may
complain about this issue in light of the fact that the City of
Palo Alto and the State of Tennessee are currently both members
of the Committee, the Movants note.
In conclusion, Movants tell that Court that "this case is at a
critical juncture. The Plan unveiled recently by the Debtor is a
naked attempt to use this bankruptcy as a vehicle to transfer
its most valuable assets to Parent at bargain prices and in
violation of state law, while making the larger constituency of
relatively powerless creditors foot the bill. Because the Energy
Traders and their claims are protected under the Plan, the
Committee has sacrificed its ability to challenge the Debtor's
schemes even though the Plan would injure other creditors
disproportionately by stretching out full payment of their
claims for up to thirty years. Under these circumstances, the
Committee does not represent adequately the interests of the
creditors, including Movants here, and does not function as
their advocate. Additionally, no single creditor has the
resources that would afford a reasonable opportunity to conduct
meaningful analysis of or opposition to the Plan presented to
this Court, let alone a full-blown well-conceived alternate
plan. For each of these reasons, the Court should direct the
Trustee to appoint a government creditors committee." (Pacific
Gas Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
POLAROID CORP: US Trustee Appoints Official Creditors' Committee
----------------------------------------------------------------
Donald F. Walton, Acting United States Trustee for Region 3,
appoints these 7 unsecured claimants to the Official Committee
of Unsecured Creditors for Polaroid Corporation's chapter 11
cases:
Rexam, Inc./Rexam Image Products
4201 Congress Street, Suite 340
Charlotte, NC 28209
Attn: Ronald H. Glasshoff
Tel: 704-375-0057
Fax: 704-332-1197
Enron Corporation
1400 Smith Street, EB2865
Houston, TX 77002
Attn: Michael A. Tribolet
Tel: 713-853-3820
Fax: 713-646-8525
State Street Bank & Trust Company
2 Avenue de Lafayette, 6th Floor
Boston, MA 02111
Attn: Robert C. Butzier
Tel: 617-622-1751
Fax: 617-662-1456
Protective Life Corporation
2801 Highway 280 South
Birmingham, AL 35223
Attn: Stephen M. Liberatore, CFA
Tel: 205-803-6899
Fax: 205-868-3294
Triton CBO III, Limited
565 Fifth Avenue
New York, NY 10017
Attn: Michael H. Sollott
Tel: 212-792-2170
Fax: 212-792-2121
PI Industries Profit Sharing Plan & Trust
510 Broad Hollow Road, Suite 205
Melville, NY 11747
Attn: Stanley P. Roth
Tel: 631-752-9600
Fax: 631-752-9618
Pension Benefit Guaranty Corp.
1200 K Street, N.W.
Washington, D.C. 20005
Attn: Laura Rosenberg
Tel: 202-326-4070, Ext: 3778
Fax: 202-842-2643
Mark S. Kenney, Esq., is the trial attorney from the U.S.
Trustee's office assigned to this case. (Polaroid Bankruptcy
News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
PRECISION PARTNERS: Bank Group & GECC Waive Covenants to Dec. 19
----------------------------------------------------------------
Precision Partners, Inc., a leading supplier of precision
machined metal parts, tooling and assemblies, announced results
for its third quarter and nine months ended September 30, 2001.
Included in these results are charges related to the closing of
one production facility at Galaxy Industries (Galaxy), two
production facilities at Certified Fabricators (Certified) and
the disposal of idle equipment at these and other business
units.
Net sales for the third quarter of 2001 rose 14.3 percent to
$43.0 million from $37.6 million in the comparable period of
2000. Net sales for the nine months ended September 30, 2001
increased 11.3 percent to $139.8 million, compared to $125.7
million for nine months ended September 30, 2000. Sales
increases resulted primarily from growth in power generation
component sales at Mid State Machine, sales of heavy
construction and off-road diesel engine blocks at Galaxy and
heavy truck axle components at Nationwide. However, softer
demand for medical and business equipment components at Gillette
and lower sales volume in automotive and light truck components
at Galaxy and General Automation partially offset those
increases.
The company reported a $0.2 million operating loss for the
current quarter before restructuring, impairment of fixed assets
and other charges of $10.0 million, compared to operating losses
of $1.3 million before impairment of long-lived assets and other
charges of $10.2 million in the comparable period of 2000.
Operating income before restructuring, impairment of fixed
assets and other charges for the nine months ended September 30,
2001 was $5.3 million compared to operating income of $3.9
million before impairment of long-lived assets and other charges
in the comparable period of 2000. Both periods of 2001 benefited
from an increase in operating profits from power generation
component sales, reduced operating losses in off-road diesel
engine blocks and lower corporate expenses. Operating results
for both periods were negatively impacted mainly by lower demand
for automotive components, but the effect was partially
mitigated by cost control measures.
Operating income plus depreciation and amortization (EBITDA)
before restructuring, impairment of fixed assets and other long-
lived assets and other charges (Adjusted EBITDA) was $4.7
million for the third quarter of 2001 versus Adjusted EBITDA of
$3.3 million during the comparable period of 2000. Adjusted
EBITDA was $19.9 million for the first nine months of 2001
versus $16.6 million during the comparable period of 2000.
As a result of the plant consolidation plans at Galaxy and
Certified along with the disposal of assets and inventory
valuation adjustments at General Automation and Gillette, the
Company incurred pre-tax charges totaling $10.0 million in the
third quarter of 2001 compared to charges described below in the
same period of 2000 totaling $10.9 million. The charges in both
periods of 2001 related to the impairment and disposal of
unproductive or idle assets, lease costs related to the closure
of production facilities and reductions in the carrying value of
inventory. In addition, related cash charges of approximately
$0.4 million in the fourth quarter, $0.3 million in each of the
first and second quarters of 2002 are expected for relocation of
equipment at Galaxy and Certified. The charges in both periods
of 2000 related to the impairment of goodwill at Galaxy, the
impairment and disposal of machinery and equipment at Galaxy and
Certified, and reductions in the carrying value of inventory and
other assets.
Net losses including restructuring, impairment of fixed assets
and other charges totaled $13.8 million for the current quarter
compared to net losses including impairment of long-lived assets
and other charges of $12.3 million in the comparable period of
2000. Net losses including restructuring, impairment of fixed
assets, inventory valuation adjustments and other charges
totaled $19.1 million for the nine months ended September 30,
2001 compared to net losses of $14.6 million including
impairment of long-lived assets and other charges in the
comparable period of 2000. Contributing to the net losses for
both periods of 2001 was higher interest expense due to higher
average debt balances.
On September 25, 2001, the Company notified its bank group and
General Electric Capital Corporation (GECC) of its anticipated
noncompliance with certain financial covenants applicable to the
three and nine month periods ending September 30, 2001. On
November 16, 2001, the bank group and GECC agreed to waive this
non-compliance with the financial covenants through December 19,
2001.
On November 16, 2001, the Company accepted a joint commitment
from two financial institutions to provide a new four-year $75.0
million credit facility, which will retire existing debt
obligations and operating leases outstanding with its bank group
and GECC and provide additional working capital availability.
The transaction, which is subject to the satisfaction of several
conditions, is anticipated to be completed in December 2001.
John Raos, president and chief executive officer, said, "We
implemented plant consolidations at Galaxy and Certified to
significantly reduce our fixed costs and provide a more
competitive cost structure to generate greater operating
margins. Our focus on controlling costs and increasing sales,
supported by our recent addition of Rick Rose, vice president of
sales and marketing, is positioning Precision to maximize profit
margins when the markets we serve strengthen. In addition, our
new proposed credit facility will provide the working capital
and flexibility we need to operate in a difficult economic
environment."
Raos also offered an outlook for the coming period, "We expect
continued strong operating results at our power generation
components operation to partially offset lower operating results
at our automotive and light truck and business machine and
medical equipment component operations. Although sales in the
fourth quarter are expected to approximate the level of sales in
the same period of the prior year, we expect operating profits
and EBITDA to be lower than the results reported in the fourth
quarter of 2000."
Precision Partners, Inc. is a leading supplier of precision
machined metal parts, tooling and assemblies for original
equipment manufacturers with sales for the last four quarters
ending September 30, 2001 of approximately $184 million. By
using our broad manufacturing capabilities and highly engineered
processes to provide a full line of high quality manufacturing
and sub-assembly services, as well as engineering and design
assistance, we meet the critical specifications of our customers
across a wide range of industries who rely on their "Preferred"
or "Qualified" suppliers for outsourced manufacturing.
SULZER MEDICA: Implant Product Liability Hearing Set for Nov. 29
----------------------------------------------------------------
The medical device company Sulzer Medica reported SFr. 321
million in third quarter sales, a nominal 5% increase over the
same period last year. Business was again adversely affected by
several extraordinary factors: net profit decreased 49% to SFr.
21 million. A U.S. Appeals Court has deferred a decision on
individual lawsuits in the implant product liability case until
a further court hearing scheduled for November 29, 2001. The
group is optimistic that a settlement can be reached with the
affected patients within a reasonable time, although additional
legal difficulties will remain. The new management team has
already implemented various measures to improve the group's
operating profitability.
Sulzer Medica's third quarter was strongly affected by two
developments: the new group management thoroughly investigated
the overall business portfolio and has now initiated steps to
strengthen the profitability in all areas. These steps include
the ending of the biotech research project "Ne- Osteo", a
program to realize aggressive growth targets for the manufacture
of vertebral implants (Spine-Tech), and the partial
restructuring of the Cardiovascular Prosthesis Division. The
second main area of activity centers on the group's efforts to
reach a fast and fair settlement with American patients involved
in the hip and knee joint litigation. On November 8, at Sulzer's
request, a U.S. Appeals Court deferred a decision on individual
lawsuits until a further court hearing scheduled for November
29. If a settlement cannot be reached in court, Sulzer is
prepared to co-operate in an out-of-court agreement as long as
the total costs do not exceed the $783 million as previously
proposed. If a settlement cannot be achieved in or out-of-court,
the firm is considering putting the subsidiary Sulzer
Orthopedics Inc., in Austin, Texas, under Chapter 11 protection.
Until the end of the first quarter 2002, Sulzer Medica has set
four goals: performance improvement in operational businesses,
reaching a settlement in the U.S. legal case, launching new
branding for the group, and completing the review of the group
strategy. The ongoing legal case as well as costs for
restructuring to optimize operating profits will have an impact
on performance in the fourth quarter 2001 and the first quarter
2002.
Overall business activities were constrained during the third
quarter. Sales and profitability were strongly influenced by
exceptional factors, including additional costs in connection
with acquisitions earlier this year, the appointment of new
group management, and the spin-off from Sulzer AG as well as the
increased efforts in the U.S. hip implant market. For all these
reasons, Sulzer Medica reported a net profit decrease of 49% to
SFr. 21 million over the same period last year.
Sulzer Medica's subsidiary companies develop, produce, and
distribute medical implants and biological materials for
cardiovascular and orthopedic markets worldwide. The product
array includes artificial joint, vertebral, and dental implants,
trauma products, heart valves and synthetic blood vessels.
(Swiss Stock Market symbol: SMEN, New York Stock Exchange
symbol: SM)
SYSTEMONE TECHNOLOGIES: Sees Improved Results in Third Quarter
--------------------------------------------------------------
SystemOne Technologies Inc. (OTC Bulletin Board: STEK), reported
revenues for the three months ended September 30, 2001 were
$4,047,000 compared to revenues of $4,536,000 in the
corresponding period of 2000. The company generated an
operating profit for the three months ended September 30, 2001
of $703,000 compared with an operating loss of $2,197,000 in the
corresponding period of 2000. The company's net loss for the
three months ended September 30, 2001 was $474,000 compared with
a net loss of $2,805,000 in the corresponding period of 2000.
The company's net loss to common stock after preferred dividends
for the three months ended September 30, 2001 was $927,000
compared with a net loss of $3,096,000 in the corresponding
period of 2000.
Revenues for the nine months ended September 30, 2001 were
$12,586,000 compared to revenues of $13,832,000 in the
corresponding period of 2000. The company generated an
operating profit for the nine months ended September 30, 2001 of
$1,655,000 compared with an operating loss of $7,782,000 in the
corresponding period of 2000. The company's net loss for the
nine months ended September 30, 2001 was $1,814,000 compared
with a net loss of $9,433,000 in the corresponding period of
2000. The company's net loss to common stock after preferred
dividends for the nine months ended September 30, 2001 was
$3,145,000 compared with a net loss of $10,258,000 in the
corresponding period of 2000.
Chief Executive Officer Paul I. Mansur stated, "We are pleased
to report that the company's third quarter operating results
reflected the third consecutive quarter of significant quarter
to quarter and year to year improvement. The third quarter
operating profit increased 74% over the first quarter of this
year and operating profits for the first nine months reflect a
substantial $9.4 million improvement over the comparable period
last year."
Mr. Mansur further stated, "These results are primarily due to
progressive improvements in manufacturing efficiencies and
corporate streamlining which we expect will continue through the
fourth quarter. Cost cutting programs resulting from our
strategic shift to Safety-Kleen distribution resulted in a $11
million reduction in operating expenses through the third
quarter this year versus the same period last year. We shipped
over 7,500 SystemOne units to Safety-Kleen through the third
quarter representing a 65% increase in volume compared to last
year. Summing up, we continue to believe that our successful
distribution alliance and streamlined operations coupled with a
pipeline of planned new product introductions and international
expansion positions us well for continuing growth in revenue and
profits."
For further information contact SystemOne CEO Paul I. Mansur at
(305) 593-8015 or email: mansurp@systemonetechnologies.com.
Detailed information about SystemOne can be found on the
company's website: http://www.systemonetechnologies.com
Founded in 1990, SystemOne Technologies designs, manufactures,
sells and supports a full range of self-contained recycling
industrial parts washing products for use in the automotive,
aviation, marine and general industrial markets. The Company has
been awarded eleven patents for its products, which incorporate
environmentally friendly, proprietary resource recovery and
waste minimization technologies. The Company is headquartered
in Miami, Florida.
Systemone Technologies' balance sheet at September 30, 2001
showed strained liquidity as total current liabilities exceeded
total current assets by about $6 million. Stockholders' equity
deficit amounted to $41 million.
TELERGY: Private Investors' Group Extends $10MM in DIP Financing
----------------------------------------------------------------
Telergy announced that a private investment group led by
businessman Frank Zaccanelli will provide $10 million in new
financing to allow the company to restructure its operations and
pave the way for Telergy to emerge as a premier
telecommunications provider.
The new funding will allow Telergy to continue operations
normally while a reorganization plan is developed, according to
James W. Harris, the restructuring specialist brought in to
guide Telergy in August.
The $10 million loan to Telergy, known as "debtor-in-possession"
financing, will be presented to the Bankruptcy Court for
approval in several weeks, Harris said. On Oct. 26, Telergy
filed for protection in Federal Court in Utica under provisions
of Chapter 11 of the Bankruptcy Code. Telergy is expected to
present its full reorganization plan to the court in mid-
January.
"This financing will provide us with adequate working capital as
our reorganization plan is developed and reviewed, as well as
funding for new capital projects for our customers," said
Harris. "This new capital structure allows Telergy to emerge
from reorganization in a position to compete effectively in the
market and become the preeminent telecommunications provider in
the region."
The private investment group is led by Syracuse native, Frank
Zaccanelli, now a Dallas businessman.
"After a difficult period for the telecom industry in general
and Telergy in particular, today we can share good news," said
Zaccanelli. "My investment group has developed a plan together
with the financial institutions that gives Telergy the best
chance to reorganize and continue to contribute to the economy
of Central New York."
In addition to the financing, Zaccanelli said his investor group
also has reached an agreement with Telergy's lenders regarding
the treatment of the bank's claims against Telergy. "Our plan
will allow Telergy to emerge from bankruptcy as a fully-funded,
debt-free, facilities-based telecommunications provider," said
Zaccanelli. "Next year, with a solid financial base, a state of
the art network and an experienced staff, Telergy can emerge as
the telecommunications leader in New York State."
Harris, President of Seneca Financial Inc. will continue to
serve as CEO of Telergy, with James Sullivan as COO. "The
entire Telergy team has an exciting challenge clearly ahead of
us," said Harris. "We must work to instill the best business
practices possible to service our customers better than our
competitors, build our business in a prudent and profitable
manner, and continue to attract and motivate the best talent
available to assist us in accomplishing our objectives."
In September Harris announced plans for Telergy to streamline
its operations and to concentrate on serving large enterprise
networking customers and the wholesale communications market
(other carriers). Harris said Telergy's state of the art
network and a loyal customer base are providing the foundation
that will permit the company to survive and compete.
"During the last several months as we have stabilized
operations, our billings have increased, thanks to a
tremendously loyal customer base that wants Telergy to succeed,"
said Harris. "I want to personally thank every Telergy employee
whose dedication and professionalism have carried us this far.
Now we can turn our attention to showing prospective customers
how good we can be." Harris said he and other senior Telergy
officials will continue meeting with existing customers to
reinforce their commitment to service and to outline the
company's new focus.
With a network spanning more than 2,000 route miles, Telergy is
a facilities-based provider of integrated broadband
telecommunications services and high-bandwidth fiber optic
capacity in the northeastern United States. The Telergy network
is designed to be a regional fiber optic intranet combining
direct last-mile connections to its customers, intracity rings
and long-haul capacity. The network is being built over broad
contiguous rights of way in the region, primarily using across
rights granted by utility companies.
Frank Zaccanelli is a former director and senior advisor to
Telergy. He left the board in the fall of 2000. Zaccanelli
formerly served as president of Dallas based Hillwood Investment
Company. During his 13-year tenure at Hillwood, Zaccanelli
along with company chairman Ross Perot, Jr., helped build one of
the leading commercial real estate companies in the world.
Their benchmark project was the development of Alliance Airport.
In 1988, President George Bush called Alliance, "The model for
public-private partnership in the United States." Zaccanelli,
who is also a minority owner of the NBA's Dallas Mavericks,
negotiated the deal that culminated in Ross Perot, Jr.'s
purchase of the club in 1996. As acting-president/general
manager Zaccanelli hired current Mavericks head coach/general
manager Don Nelson. While at Hillwood, Zaccanelli was lead
negotiator with the City of Dallas on the new $310 million
downtown sports arena and the surrounding master development
project called Victory.
THERMADYNE: Files for Chapter 11 Reorganization in Missouri
-----------------------------------------------------------
Thermadyne Holdings Corporation (OTC BB:TDHC.OB) announced that
the Company and its domestic subsidiaries have voluntarily filed
for reorganization under Chapter 11 in U.S. Bankruptcy Court for
the Eastern District of Missouri in St. Louis.
The company also announced it has secured a commitment for $60
million in debtor-in-possession (DIP) financing to fortify its
strong, positive cash flow in order to ensure it has the
resources to continue to conduct business-as-usual during the
reorganization process.
"This voluntary filing will enable our strong operating
companies to continue business-as-usual while we work with our
bank lending group and our bondholders to create a plan for
reducing Thermadyne's debt and restructuring its balance sheet
so it can emerge as a financially healthy company," said Karl R.
Wyss, chairman and CEO.
"The Thermadyne companies are strong operationally, but we
simply have too much debt. Now, we will be able to work toward
agreement on a plan that will give us the financial stability we
need to capitalize on the brand and operating strengths of our
companies. During this process, we will continue to meet our
commitments to our customers, suppliers and employees."
Thermadyne, headquartered in St. Louis, is a multinational
manufacturer of cutting and welding products and accessories.
THERMASYS CORP: S&P Drops Corporate Credit and Bank Rating to B
---------------------------------------------------------------
Standard & Poor's lowered its ratings on ThermaSys Corp. and
removed them from CreditWatch with negative implications, where
they were placed June 12, 2001.
The rating action affects about $109 million in bank credit
facilities. The outlook is negative.
The rating actions reflect ThermaSys' weakening financial
results in recent quarters and Standard & Poor's expectation
that credit protection measures will remain below previously
expected levels over the near to intermediate term. In addition,
further erosion in the firm's credit profile could lead to
additional financial covenant violations under its already
amended credit facility.
The ratings reflect ThermaSys' aggressive financial profile and
limited financial flexibility, which largely offset decent niche
market position. Dublin, Ohio-based ThermaSys is a leading
manufacturer of heat-transfer systems and transmission
components for the automotive, heavy truck, off-road, and
industrial original equipment manufacturers (OEM) markets and
aftermarkets. Products include welded aluminum and copper/brass
tubing, radiators, oil coolers, air conditioning condensers, and
automatic transmission clutch plates.
ThermaSys' weak results are primarily due to the industry-wide
slowdown in North American vehicle production, production
inefficiencies, and the loss of some business, which was taken
in-house by certain OEM customers. As a result, operating income
for the first six months of 2001 declined by more than 40% to
$9.3 million compared with $16.4 million in the year earlier
period. To help improve operating results, management has
improved production processes, reduced headcount, and continued
to focus on new product opportunities.
The company amended its bank credit facility at the end of the
first quarter as a result of earnings pressures. Although the
amended facility provided near-term financial flexibility,
Standard & Poor's is concerned that the modest cushion under its
revised covenants, combined with meaningful and increasing debt
amortization payments, and challenging market conditions could
lead to additional financial pressures and possible further
covenant violations.
Credit protection measures are stretched with total debt to
EBITDA of about 4.8 times and interest coverage of around 1.8x
as of June 2001. Financial flexibility is limited with about $20
million in availability under the company's $42.5 million
revolving credit facility as of June 30, 2001. In the future,
total debt to EBITDA is expected in the 4x-5x range and interest
coverage is expected to range between 1.5x and 2.0x.
Outlook: Negative
A protracted decline in market conditions, or failure to achieve
benefits from operating initiatives could further weaken credit
quality and financial flexibility, resulting in lower ratings.
Ratings Lowered, Removed From Creditwatch,
Outlook Negative
ThermaSys Corp. TO FROM
Corporate credit rating B BB-
Bank loan rating B BB-
U.S. AGGREGATES: Seeks Waivers of Defaults Under Debt Agreements
----------------------------------------------------------------
U.S. Aggregates, Inc. (NYSE: AGA) reported net sales for the
quarter ended September 30, 2001 were $61.2 million, a 34.2%
decrease from the $93.0 million reported for the same period in
2000. Net sales in 2000 included sales from operations in
Alabama, Eastern Idaho, Nevada and Northern Utah that were sold
in 2000 and the first quarter of 2001. Excluding sold or closed
operations, net sales for the same period in 2000 were $66.6
million. Excluding the effect of sold or closed operations,
aggregate sales for the 2001 third quarter decreased 6% due to a
decrease in aggregate volumes partially offset by an increase in
average selling prices. Third quarter asphalt, paving and
construction sales increased 1% and ready mix concrete sales
decreased 17% primarily due to lower volumes as compared to the
corresponding period in 2000. In addition, there were
reductions in transportation and other sales.
For the three months ended September 30, 2001, the Company
recorded a net loss of $7.4 million compared with net income of
$1.7 million for the same quarter of 2000. The loss reflects
the lower level of sales (including the absence of businesses
that were sold or closed), lower margins in the Company's
construction operations and $2.3 million of increased cost due
to inventory valuations and write-downs, and lower cost
allocations to capital projects. These increased costs are
primarily the result of management's continued comprehensive
review of the Company's operations begun during the second
quarter of 2001. The Company also incurred higher selling,
general and administrative costs in the third quarter of 2001
compared with the prior year caused primarily by increased legal
and professional fees, higher employee related costs, costs
related to the terminated Florida Rock transaction and increased
provisions for doubtful accounts receivable. Interest and
financing costs were also higher during the quarter ended
September 30, 2001 than the prior year due to higher debt
levels, increased interest rates and other financing costs. In
addition, the Company recorded $0.9 million of expenses related
to asset impairments and assets dispositions during the third
quarter.
For the nine-month period ended September 30, 2001, net sales
were $165.1 million, a 28.5% decrease from the $231.0 million
for the first nine months of 2000. Comparable sales on a pro-
forma basis were approximately $159.7 million compared to $167.7
million for the same period in 2000. The net loss for the nine-
month period ended September 30, 2001 was $50.8 million, or
$3.41 per share, compared with a net loss of $0.3 million, or
$0.02 per share, for the same period of 2000.
The Company is currently in default on certain of its debt
agreements including its Senior Secured Debt Agreements and as
such has classified such indebtedness as a current liability as
of September 30, 2001. The Company has requested waivers of
covenant defaults and is currently in discussions with its
Senior Secured Lenders for an extension of the due date for
payment of certain interest, fee and principal payments. While
there can be no assurance, the Company believes it will be able
to obtain such waivers. However, the Company's ability to
continue as a going concern is dependent on its ability to
refinance and restructure its indebtedness. The Company is also
currently in discussions with its senior secured lenders
relative to refinancing and restructuring its indebtedness.
There can be no assurance that the Company will be able to
restructure its indebtedness.
Founded in 1994, U.S. Aggregates, Inc. is a producer of
aggregates. Aggregates consist of crushed stone, sand and
gravel. The Company's products are used primarily for
construction and maintenance of highways and other
infrastructure projects as well as for commercial and
residential construction. USAI serves local markets in nine
states in two regions of the United States, the Mountain states
and the Southeast.
US PLASTIC LUMBER: Seeking Options to Refinance Credit Facility
---------------------------------------------------------------
U.S. Plastic Lumber Corp. (Nasdaq:USPL), announced operating
results for the third quarter of 2001, which include a
restructuring charge for closing three of its manufacturing
plants and consolidating the production of the closed plants
into larger existing plants. USPL also announced that it has
leased two of its resin processing plants to a third party raw
material processor.
On October 1, 2001 USPL announced that it was closing its
Fontana, California, Denton, Maryland, and Trenton, Tennessee
plants and relocating the equipment and manufacturing processes
at these plants to the Chicago, Illinois and Ocala, Florida
manufacturing locations. USPL will also discontinue raw material
processing at its Auburn, Massachusetts and Chino, California
resin plants and has leased these facilities to a third party
raw material processor. USPL will continue raw material
processing, for its own use, at the Chicago and Ocala plants. As
a result of these changes, USPL recorded a restructuring charge
in the third quarter of 2001 of $11.5 million, of which $1.5
million will require cash over the next twelve months and $10.0
million will provide for non-cash charges such as equipment
impairment and goodwill write downs.
Revenues for the third quarter of 2001 were $46.8 million
compared with $50.1 million for the same quarter in 2000, a
decrease of 7%. Revenues from USPL's Environmental Recycling
Division for the third quarter of 2001 were $31.5 million
compared with $30.6 million for the same quarter in 2000, an
increase of 3%. Revenues from USPL's Plastic Lumber Division for
the third quarter of 2001 were $15.3 million compared with $19.5
million for the same quarter in 2000, a decrease of 22%.
Revenues in USPL's Plastic Lumber Division for the third quarter
of 2001 were negatively impacted by $4.8 million, when compared
with the same quarter in 2000, due to USPL's decision to exit
the lower margin resin trading and recycling business. The
Plastic Lumber Division's revenues increased approximately 4% in
the third quarter of 2001, when compared to the same quarter in
2000, when revenues from the resin trading and recycling
business are excluded from both quarters on a comparable basis.
Revenues in USPL's Environmental Recycling Division for the
third quarter of 2001 improved due to increased project work
within the dredging and environmental construction services
group.
USPL reported an operating loss for the third quarter of 2001,
excluding the restructuring and asset impairment charge, of $1.2
million compared with $1.7 million loss for the same quarter in
2000. USPL's Environmental Recycling Division reported operating
income for the third quarter of 2001 of $2.8 million compared
with operating income of $3.3 million for the same quarter in
2000. USPL's Plastic Lumber Division reported an operating loss
of $2.6 million for the third quarter of 2001, excluding the
restructuring and asset impairment charge, compared with an
operating loss of $4.1 million for the same quarter in 2000.
Mark S. Alsentzer, Chairman, CEO and President of USPL, said,
"Our third quarter revenues reflect the uncertain economic
conditions which are prevalent throughout our country leading to
a slow down in the economy, fewer decking orders subsequent to
September 11th and our earlier decision to exit the lower margin
resin trading and recycling business. We also believe that the
increasing number of competitors, with increased capacity and
substantial amounts of composite deck board inventory, have out
paced the growth of the composite deck board market, resulting
in lower pricing and more suppliers capturing revenues. This
ultimately could result in a consolidation of the composite
decking industry." Alsentzer added, "While several areas of our
Environmental Recycling Division were temporarily impacted by
the events of September 11th, the demand for our services in
this sector has continued to grow. We also see increasing demand
for our packaging and OEM products and 100% plastic decking,
which make up more than 85% of our Plastic Lumber Division
revenues year to date excluding resin revenues."
Alsentzer, added, "By consolidating three of our manufacturing
facilities into larger existing facilities and leasing two of
our resin processing plants to third party raw material
processors, we expect to reduce our fixed and overhead costs by
approximately $5 million annually. Moreover, we can manufacture
the same amount of products from our larger plants and in the
process have eliminated the fixed costs of running the smaller
facilities. This is especially true in our California plants,
where escalating power costs added to an already exceedingly
high rent and tax environment." USPL reported that approximately
140 full time positions, or approximately 24% of the Plastic
Lumber Division's manufacturing and administrative personnel,
will be eliminated as a result of these changes.
Thomas McEvoy, President of U S Plastic Lumber LTD., added, "The
consolidation of our production capacity into three plants will
actually increase our efficiencies by locating similar extruders
and manufacturing processes into core plants. The Chicago plant
will focus on Polyethylene profiles (decking and OEM), slipsheet
packaging, and composite OEM profiles, whereas the Ocala plant
will focus on composite decking, structural lumber, and
cornerboard. The Denver plant will continue to focus on
tiersheet and slipsheet packaging."
Frank Barbella, President of Clean Earth Inc, said, "The
Environmental Recycling Division experienced a solid quarter
with strong revenues from its dredging and environmental
construction services group. Our backlog remains at a record
level and we continue to see substantial bidding opportunities
in areas of our expertise." The Company reported that Clean
Earth was recently awarded a new contract to provide dredging
services for the Federal Emergency Management Agency "FEMA" in
New York City. Clean Earth will also treat the dredge material
at its permitted treatment facility in Jersey City, New Jersey
and beneficially reuse the dredge material at a New York
landfill.
"These consolidations and cost reductions are extremely
important as we seek to refinance our capital structure over the
next two quarters," said John W. Poling, USPL's Chief Financial
Officer. "Our working capital has been negatively impacted by
the terms and conditions of our senior credit facility, which
currently matures on July 2, 2002." The Company reported that it
is exploring several options, including the potential sale of
certain assets, to refinance the senior credit facility.
The Company also reported that it did not make a principal
payment due September 30, 2001 on its senior credit facility and
was in violation of several financial covenants contained within
its senior credit facility and its master credit facility.
However, USPL continues to make all interest payments to these
senior lenders and is negotiating the deferral of principal
payments until the sale of certain assets that will permit USPL
to refinance the Company's debt structure. Poling added, "We
have not been declared in default during this period and are
continuing to negotiate waivers and amendments with our senior
lenders."
U.S. Plastic Lumber Corp. has two main business lines: the
manufacture of plastic lumber, packaging and other value added
products from recycled plastic, and the operation of inter-
related environmental recycling services. USPL is a highly
integrated, nationwide processor of a wide range of products
made from recycled plastic feedstocks. USPL creates high
quality, competitive building materials, furnishings, and
industrial supplies by processing plastic waste streams into
purified, consistent products. USPL's products are
environmentally responsible and are both aesthetically pleasing
and maintenance friendly. They include such brand names as
Carefree Decking, SmartDeck, RecycleDesign, Trimax, Earth Care,
and OEM products including Cyclewood. USPL currently operates
eight plastic manufacturing and recycling facilities. USPL's
environmental services company provides soil recycling services,
infrastructure and brownfield renewal projects involving heavy
civil and environmental construction methods, landfill
construction and closures, deep excavation and trenching,
earthwork, building and operating water treatment plants and
other geo-environmental installations.
US UNWIRED: S&P Junks Subordinated Debt Rating
----------------------------------------------
Standard & Poor's revised its outlook on Sprint PCS affiliate US
Unwired Inc. to positive from stable.
At the same time, Standard & Poor's affirmed its single-'B'
corporate credit and senior secured bank loan ratings and its
triple-'C'-plus subordinated debt rating on the company.
The outlook revision is based on improved cash flow measures,
the successful migration of most the company's subscribers to
Sprint PCS's billing and customer care platform, rapid
subscriber growth, completion of the initial network buildout,
and overall improvement in operating metrics.
US Unwired's performance has been strong, with cash flow
measures and subscriber count exceeding Standard & Poor's
expectations. The company has reported two consecutive quarters
of positive EBITDA, a result of strong growth in service and
roaming revenues, declining cost per gross addition (CPGA), and
cost savings. Monthly average revenue per user (ARPU) has been
about $50, which is at the low end of the Sprint PCS affiliates,
a result of US Unwired's pre-paid offerings. Nevertheless, ARPU
improved to $54 in the third quarter of 2001, and should
continue to benefit from the migration of pre-paid subscribers
to Account Spending Limit (ASL) plans. Longer-term basic ARPU is
expected to stabilize in the $50 area due to rate declines and
higher take-up of lower-priced plans by more cost-sensitive
subscribers, which should more than offset the new revenue
stream from data services.
Roaming revenue has been strong, and was about 36% of total
revenue in the third quarter of 2001. Unlike other Sprint PCS
affiliates, which will have their reciprocal roaming rate with
Sprint PCS lowered to 10 cents by January 2002, US Unwired
benefits from a special agreement with Sprint PCS that maintains
the reciprocal roaming rate of 20 cents through 2002. This will
allow US Unwired to capitalize on its favorable inbound to
outbound roaming ratio that reached 1.75-to-1.0 in the third
quarter of 2001. Although this ratio is expected to come down,
it should stay above 1.0 over the intermediate term, as the
Sprint PCS subscriber base expands rapidly.
Lower personal communications services (PCS) CPGA has also
resulted in cash flow measure improvement. In the first three
quarters of 2001, CPGA was below $350, down from a peak of $430
in the fourth quarter of 2000. The transition to a type II from
a type III affiliate was substantially completed in mid-2001,
meaning that US Unwired's billing and customer care are now
provided by Sprint PCS. This conversion generates cost savings
and allows the company to offer ASL plans, which represented 33%
of net customer additions in the third quarter of 2001.
Subscriber growth has also been strong, with the company adding
35,107 net PCS subscribers in the third quarter of 2001. As of
Sept. 30, 2001, US Unwired had 235,966 PCS customers and 37,078
cellular customers. The strong subscriber take-up has been
achieved at favorable post-paid churn levels. In the third
quarter of 2001, churn was relatively low, at 1.8%. However,
this metric is expected to increase and stabilize in the low- to
mid-2% area, as US Unwired adds more volatile ASL subscribers to
its base.
In mid-2001, US Unwired completed the initial network buildout
covering 65% of its 9.8 million population equivalents (pops)
and launched all of its 41 markets. The company is now focusing
on coverage improvement and the upgrade of its CDMA platform to
1xRTT. This transition is expected to be completed by mid-2002
at a low cost of $2 to $3 per pop. The new technology is
expected to double the voice capacity and bring data speeds up
to 144 kilobits per second.
The ratings on US Unwired also take into account its high
leverage and the competitive challenges the company faces from
well-established cellular and PCS providers in its markets.
Total debt at September 30, 2001, was $329.9 million. Financial
measures are expected to remain weak in 2002, but improvement is
anticipated for 2003 as the company generates free cash flow and
EBITDA fully covers interest expense. US Unwired has healthy
financial flexibility due to its strong liquidity, its spectrum-
rich position, and a diversified portfolio of non-core assets,
such as cellular operations and towers, which could be monetized
in the case of financial distress.
Outlook: Positive
US Unwired has demonstrated strong execution, with overall
improvement in operating and financial metrics. Continued
improvement of cash flow measures could lead to an upgrade in
the next 12 months.
WARNACO GROUP: Court Allows Insurance Companies to Make Payments
----------------------------------------------------------------
The Warnaco Group, Inc., and its debtor-affiliates seek an order
of the Court that would enable it to receive approximately
$3,300,000 in cash under one of its insurance policies. Also,
the Debtors request Judge Bohanon's permission to allow its
insurance companies to reimburse the costs and expenses of
defense of its officers and Officers and Directors, who are
entitled to reimbursement out of various insurance policies
under which they are insured parties.
Shalom L. Kohn, Esq., at Sidley Austin Brown & Wood, in New
York, New York, relates Warnaco is a party to various pre-
petition insurance policies, which insure the Company and its
Officers and Directors with respect to various claims.
Specifically, Mr. Kohn relates that National Union Fire
Insurance Company of Pittsburgh, Pennsylvania sold to Warnaco
certain directors, officers and corporate liability insurance
policies with policy periods of September 6, 1997 to October 1,
2000 and October 1, 2000 to October 1, 2002, respectively.
According to Mr. Kohn, Coverage A of the primary insurance
policies provides coverage for "the Loss of each and every
Director or Officer of the Company arising from a Claim ... for
any actual or alleged Wrongful Act..." While Coverage B of the
primary insurance policies provides coverage for "the Loss of
the Company arising from a Securities Claim first made against
the Company, or Claim first made against the Directors or
Officers...for any actual or alleged Wrongful Act..."
Thus, Mr. Kohn notes, the Officers and Directors of Warnaco, as
well as Warnaco itself, are insured under the primary insurance
policies.
In addition, Mr. Kohn tells the Court, Warnaco purchased excess
insurance policies from these insurance companies to provide
coverage once the limits of the primary insurance policies have
been exhausted:
(i) Columbia Casualty Company, Reliance Insurance Company (now
assumed by The Hartford Group), Federal Insurance Company;
and
(ii) Continental Casualty Company, Twin City Fire Insurance
Company, Lumbermens Insurance Company, Greenwich Insurance
Company, Great American Insurance Company, Zurich
Insurance Company, and National Union.
Hence, Mr. Kohn says, the Officers and Directors of Warnaco, as
well as Warnaco itself, are also insured under the excess
insurance policies.
According to Mr. Kohn, National Union has agreed that coverage
exists under one of the primary insurance policies for an action
styled as Calvin Klein Trademark Trust and Calvin Klein, Inc. v.
Linda Wachner, Warnaco Group, Inc., Warnaco, Inc., Designer
Holdings, Ltd., CKJHoldings, Inc., Jeanswear Holdings Inc.,
Calvin Klein Jeanswear Co., and Outlet Holdings, Inc., No.
00-CIV-4052 (S.D.N.Y.).
In accordance with National Union's acknowledgment of coverage,
Mr. Kohn says, Warnaco began submitting schedules of invoices
for reimbursement by National Union relating to the legal fees
and costs incurred by Warnaco in the defense of its Officer and
Director in the Calvin Klein action. Mr. Kohn informs Judge
Bohanon that National Union made partial payments on that
reimbursement claim to Warnaco in January 2001, and again in May
2001.
After the Petition Date, Mr. Kohn says, National Union agreed
that an additional $3,299,073 was due and owing on Warnaco's
reimbursement claim in relation to the Calvin Klein action.
However, Mr. Kohn relates, National Union refused to pay unless
Warnaco first obtain the Court's order authorizing the payment.
Thus, Mr. Kohn explains, this motion is intended to satisfy
National Union's demand and to facilitate the receipt by the
estate of approximately $3,300,000 in cash.
Separately, Mr. Kohn informs the Court that National Union has
also admitted that coverage exists under one of the primary
insurance policies for two currently pending consolidated
securities class action lawsuits:
(a) In re The Warnaco Group, Inc. Securities Litigation, No.
00-CIV-6266 (LMM) (S.D.N.Y.); and
(b) In re The Warnaco Group, Inc. Securities Litigation (II),
No. 01-CIV-3346 (MGC) (S.D.N.Y.)
Mr. Kohn says Warnaco and certain of its Officers and Directors
are named as defendants in the Securities Litigation.
Likewise, Mr. Kohn relates, Warnaco also submitted reimbursement
requests to National Union as to the legal fees and costs
incurred in the defense of its Officers and Directors in the
Securities Litigation. Similarly, Mr. Kohn notes, National
Union refused to make any payments under the primary insurance
policy of the legal fees and costs incurred in the defense of
Warnaco's Officers and Directors in the Securities Litigation
until Warnaco first obtain a Court order authorizing such
payment.
In addition, Mr. Kohn tells Judge Bohanon that the Excess
Insurance Companies have also reserved their rights with respect
to the Securities Litigation. Warnaco contends that the Excess
Insurance Companies will be obligated to begin making payments
under the excess insurance policies once the limits of the
primary insurance policies have been exhausted. At that time,
the Debtors anticipate that the Excess Insurance Companies will
also doubtless demand a Court order as a prerequisite to any
such payments.
After hearing the arguments and responses, Judge Bohanon rules
in favor of the Debtors. The Court authorizes National Union
Fire Company of Pittsburgh, Pennsylvania and the Excess
Insurance Companies to reimburse the Debtors as required under
the Policies as to the legal fees and expenses of its Officer
and Director with respect to the Calvin Klein action, including
without limitation, effecting payment of the sum of $3,299,073 -
which National Union admits is currently due and owing.
Furthermore, Judge Bohanon directs National Union and the Excess
Insurance Companies to make payments as required under the
Policies of the legal fees and expenses of Warnaco's Officers
and Directors with respect to the Securities Litigation,
including reimbursement of Warnaco to the extent it advances or
has advanced any such costs.
In addressing the Lead Plaintiffs' concern, Judge Bohanon rules
that, "nothing herein shall constitute a determination whether
Court approval is required for the relief set forth herein, or
whether the Policies or the proceeds of such Policies are
property of the estate.
At the same time, the Court states that the Creditors' Committee
shall have the right, on notice and hearing, to seek a
modification of this order, provided that no such modification
shall affect this authorization for payment of all legal fees
and expenses accrued prior to the time that such modification is
ordered. (Warnaco Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WASHINGTON GROUP: Names Charles R. Oliver Jr. New COO
-----------------------------------------------------
Washington Group International, Inc., a leader in the
engineering and construction industry, announced that Charles R.
Oliver Jr. has been named Chief Operating Officer following the
retirement of industry veteran Vincent L. Kontny.
Mr. Kontny is retiring from full-time service and moving to a
consulting role following two years of service as the company's
Chief Operating Officer. The company also announced other key
executive appointments and organizational changes.
Mr. Kontny, who joined Washington Group in April 2000, will
continue to serve as a strategic advisor to the company's Office
of the Chairman. He is the former President and Chief Operating
officer of Irvine, California-based Fluor Corporation and
President of Fluor Daniel, Inc. He retired from Fluor in 1994
after 29 years with the company.
"Vince Kontny is an industry legend, and we are grateful for the
tremendous job he has done as our COO," said Stephen G. Hanks,
Washington Group President and Chief Executive Officer. "While
we'll miss his full-time contribution, the company will continue
to benefit from his experience and leadership."
Mr. Oliver, previously the company's Chief Business Development
Officer, joined Washington Group in January 2001. He spent 30
years with Fluor Daniel and retired in late 1999 as Group
President of Sales, Strategic Planning, and Regions. He
previously served as President of Fluor Daniel's Hydrocarbon
Sector; President - Business Units; Group President, Global
Sales and Project Finance; and head of the company's operations
in the Middle East, India, and Africa.
Stephen M. Johnson, a 28-year veteran of the engineering and
construction industry, joins Washington Group as Senior
Executive Vice President and Chief Business Development Officer.
Prior to joining Washington Group, Johnson spent 25 years with
Fluor Corporation, and served as its Senior Vice President for
Global Development, Marketing and Strategy. His experience
includes the transportation, infrastructure, oil and gas, power,
chemicals, general manufacturing, and government markets. He has
worked in China, the Middle East, Algeria, and Europe.
Mr. Oliver and Mr. Johnson join Mr. Hanks, Executive Vice
President and Chief Financial Officer George H. Juetten, and
Chairman Dennis R. Washington in the company's Office of the
Chairman.
"Winning new work, executing with excellence and posting strong
financial results are our priorities going forward," said Mr.
Hanks. "The concept behind the Office of the Chairman has proven
successful, and I look forward to Steve Johnson joining our team
and helping grow our business."
New Organization Provides Market Flexibility
As part of a new organizational approach, the company also
announced the formation of two operations support centers and a
new operating unit. The two centers, located in Denver and
Princeton, are large engineering and support organizations that
serve all of the company's market-oriented operating units.
"These centers give us the agility to respond to emerging
markets and market accelerations without replicating engineering
and support functions," said Mr. Hanks. "Given the dynamics of
national security and our company's heritage of service to the
Department of Defense, I am pleased to announce the formation of
the Washington Defense operating unit."
Ambrose L. Schwallie will serve as President of Washington
Defense, which is focused on U.S. and international chemical and
biological demilitarization, weapons reduction, and defense site
environmental clean-up.
"Since the incidents following September 11, the destruction of
chemical and biological weapons has become a national and
worldwide priority," said Mr. Hanks. "That's why we have asked
Ambrose, one of our strongest and most successful operating unit
presidents, to focus on that market. The move demonstrates the
new market-oriented flexibility of our integrated corporate
structure, which can quickly respond to growing markets with
dedicated attention, while drawing on the talents of all of our
legacy companies."
Mr. Schwallie was previously President of the Government
operating unit. He joined the company in 1999 as part of the
Westinghouse Government Services acquisition. He has more than
27 years experience in Westinghouse's commercial and government
operations.
Ralph R. DiSibio has been named Corporate Executive Vice
President, and President and Chief Executive Officer of the
Washington Energy operating unit, focused on the U.S. Department
of Energy marketplace, and other Westinghouse Government
Services markets.
Mr. DiSibio joined Washington Group in March of this year as
Executive Vice President of Business Development in the
company's Power operating unit. He has more than 20 years of
experience in the commercial nuclear and DOE markets. He was the
President of Parsons Power Group prior to joining Washington
Group, and from 1982 to 1993 was an executive in Westinghouse's
government operations.
Chris L. Phillips has been named Senior Vice President of
Business Development in Washington Power, replacing Mr. DiSibio.
Mr. Phillips was previously Vice President, New Generation
Business Development in Washington Power. He joined the company
in 1993 in power business development, following 20 years with
Fluor in marketing and construction engineering assignments for
nuclear and fossil utility clients.
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.
WASTE SYSTEMS: Wants Removal Period Extended Until March 7, 2002
----------------------------------------------------------------
Since Waste Systems International Inc., and its debtor-
affiliates have not had sufficient time to review the pending
actions and proceeding on and after the petition date, they ask
the U.S. Bankruptcy Court for the District of Delaware to
further extend the time to determine removal, if any, of these
proceedings.
The extension sought is through March 7, 2002 within which the
Debtors may file notices to remove related claims or causes of
action.
Waste Systems International, Inc., an integrated non-hazardous
solid waste management company that provides solid waste
collection, recycling, transfer and disposal services to
commercial, industrial and municipal customers in the Northeast
and Mid-Atlantic Unites States, filed for chapter 11 protection
on January 11, 2001 in the U.S. Bankruptcy Court District of
Delaware. Victoria Watson Counihan, Esq., at Greenberg Traurig
LLP represents the Debtors in their restructuring efforts.
*********
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Copyright 2001. All rights reserved. ISSN: 1520-9474.
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