/raid1/www/Hosts/bankrupt/TCR_Public/011123.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, November 23, 2001, Vol. 5, No. 229
Headlines
ANC RENTAL: Gets Okay to Continue Use of Cash Management System
ALLIED WASTE: S&P Rates Proposed $500MM Notes due 2008 at BB-
AMERICAN CLASSIC: Faces Nasdaq Delisting After Chapter 11 Filing
ARMSTRONG HOLDINGS: Court Appoints Wm. Sudell as Special Master
AVIATION DISTRIBUTORS: GMAC Waives Covenants Under Credit Pact
BURLINGTON INDUSTRIES: Taps Jones Day as Lead Bankruptcy Counsel
BURLINGTON: S&P Drops Ratings to D Following Bankruptcy Filing
COMDIAL CORP: Bank of America Agrees to Forbear until January 15
COMDISCO INC: Gets Okay to Assign Assumed Contracts to SunGard
CROWN CORK: S&P Drops and Places Ratings on CreditWatch Negative
CROWN CORK: Trial Lawyers Doubt Veracity of Bankruptcy Warnings
CROWN CORK: Plans to Delist Shares from Paris Stock Exchange
EASYRIDERS INC: Cuts Q3 Net Loss to $600K on $6.3MM in Revenues
ELDER-BEERMAN: Shortfall Drops Even As Revenues Slide 0.9% in Q3
ENRON: Fitch Sees a Bankruptcy Filing if Dynergy Walks
EXODUS: Dell Financial Seeks Adequate Protection on Leases
FEDERAL-MOGUL: Signs-Up Stout Risius for Appraisal Services
GOLDEN NORTHWEST: S&P Ratchets Low-B Ratings Down a Notch
GRAPES COMMS: S&P Junks Rating Following 23% Cash Tender Offer
INDIGO BOOKS: Liquidity Strained Despite Positive EBITDA in Q2
INSTEEL INDUSTRIES: Plans to Seek Refinancing of Credit Facility
INT'L FIBERCOM: Defaults on Covenant Under Credit Facility
KBC ORION: S&P Junks 1999-1 Class D Notes Series
LTV CORP: USWA Calls Shut Down "Reckless & Irresponsible"
LOEWEN GROUP: Taps Crossland & Conaty as Litigation Counsel
METALS USA: S&P Drops Ratings to D After Chapter 11 Filing
MOSLER CANADA: Closes Deal to Sell Assets to Diebold
MOTIENT: Distributes XM Stake to Senior Secured Debt Guarantors
NATIONAL REFRACTORIES: Chapter 11 Case Summary
OMNISKY: Considers Restructuring Under Federal Bankruptcy Code
PACIFIC GAS: Court Okays Entry into NGX Pact & Letter of Credit
PACIFIC WEBWORKS: Survival Uncertain In Wake of Sustained Losses
PARTS.COM: Expects to Complete Financial Workout Before Dec. 31
PHILIPP BROTHERS: S&P Concerned About Heightened Financial Risk
PHONETEL: Violates Financial Covenants Under Loan Agreement
POINTONE COMMS: Selling Substantially All Assets to DataVoN
RELIANCE GROUP: Court Okays Hangley's Engagement as Counsel
REPUBLIC TECHOLOGIES: Plan Filing Period Extended to March 21
RUSSELL-STANLEY: Completes Exchange Offer for 10-7/8% Notes
SAMSONITE CORP: Appealing Delisting Action by Nasdaq Staff
SIMON WORLDWIDE: Doubt Raised About Ability to Continue
SLEEPMASTER: Case Summary & 25 Largest Unsecured Creditors
SPINNAKER: Roger Williams Univ. Discloses 12.1% Equity Stake
SULZER MEDICA: Considers Bankruptcy Option for Orthopedics Unit
SUN HEALTHCARE: Lays-Out Overview of Proposed Joint Reorg. Plan
TRAK AUTO: Restructures Operations in Maryland, Virginia & D.C.
VALLEY MEDIA: Files for Chapter 11 Protection in Delaware
VALLEY MEDIA: Case Summary & 20 Largest Unsecured Creditors
VLASIC FOODS: Committee Amends Members of VFI LLC Managing Board
WINSTAR COMMS: Seeks Approval of Settlement Agreement with AT&T
WINSTAR COMMS: Plans to Commence Auction of Assets in December
XETA TECHNOLOGIES: Completes Restructuring of Credit Facilities
* DebtTraders Real-Time Bond Pricing
* BOOK REVIEW: ONE HUNDRED YEARS OF LAND VALUES IN CHICAGO:
The Relationship of the Growth of Chicago to the
Rise of its Land Values, 1830-1933
*********
ANC RENTAL: Gets Okay to Continue Use of Cash Management System
---------------------------------------------------------------
ANC Rental Corporation, and its debtor-affiliates currently use
a centralized cash management system, which provides for a
comprehensive set of internal controls governing the receipt and
disbursement of funds within the cash management system and
which govern inter-company debts. Specifically, pursuant to
this cash management system:
A. all of ANC and its debtor subsidiaries' cash is consolidated
in a central account maintained by ANC Financial, LP;
B. short-term investments are placed at the ANC Financial, LP
level;
C. borrowings and repayments under its credit facility are
distributed through ANC and the general and limited
partners of ANC Financial, LP; and
D. a number of bank accounts have been opened for specific
transactions in order to minimize ANC's tax exposure.
Each Operating Subsidiary has its own master account in which
funds are automatically transferred to and from ANC Financial,
LP. In light of the fact that the Debtors' revenues are
primarily generated from car rentals, the Debtors primary source
of cash receipts is from credit cards, which are deposited into
the master accounts on a daily basis via wire transfer. In
addition, each Operating Subsidiary also owns a lockbox and a
depository account. Lockbox cash receipts consist primarily of
receipts from corporate accounts, tour operators, travel agents
and insurance companies while Depository accounts are
established with local banks in close proximity to individual
rental locations. Cash received at the rental locations are
deposited into local accounts and consolidated in the depository
account of the individual Operating Subsidiary on a daily basis.
Cash outflows are distributed through accounts payable accounts
at each Operating Subsidiary, although certain expenses are paid
via wire and ACH transfers.
Payroll for ANC, Alamo and National is paid out of a centralized
account funded directly by ANC while Alamo Local's payroll is
paid out of its own bank account, which may be funded by ANC,
created specifically for that purpose. In addition, Alamo and
National hold imprest accounts used primarily for small
disbursements at each rental location. Alamo Local uses local
petty cash accounts funded by ANC for such minor disbursements
while the payment of claims on behalf of Alamo, National and
Alamo Local are handled by a separate legal entity, Car Rental
Claims, Inc. In the ordinary course of the Debtors' business,
many of the Debtors enter into transactions with one another.
Each party to an inter-company transaction records such
transaction as an inter-company receivable or payable. Each
month, inter-company receivables and payables are eliminated in
consolidation.
Wayne Moore, the Debtors' Senior Vice President and Chief
Financial Officer, believes that the successful reorganization
of the Debtors' businesses and the preservation and enhancement
of the Debtors' estates make it critical that the Debtors'
operations not be interrupted. Therefore, it is essential that
the Debtors be permitted to continue to utilize their existing
cash management system to avoid disruption to the Debtors'
operations, maximize efficiency, invest idle cash efficiently,
and reduce costs and administrative expenses by facilitating the
movement of funds between entities.
Mr. Moore tells the Court that the Debtors' cash management
system provides the Debtors with substantial benefits, including
the ability to control receipts and disbursements, to invest
idle cash, to ensure maximum availability of funds, and reduce
the costs and administrative expenses inherent in moving funds
between entities and tracking such funds. In order to continue
the operation of the Debtors' businesses and to preserve the
value of their property for the benefit of creditors, it is
imperative that the Debtors' customary cash management
practices, which are essential to meeting their post-Filing Date
obligations in the ordinary course, not be interrupted by
implementation of new cash management procedures.
Bonnie Glantz Fatell, Esq., at Blank Rome Comisky & Macauley LLP
in Wilmington, Delaware, tells the Court that it is imperative
that the Debtors' existing cash management practices, which are
essential to their ability to meet their post-Filing Date
obligations in the ordinary course and to obtain the goods and
services necessary for their continued operation, not be
interrupted by implementation of new cash management procedures.
If the Debtors were forced to change their cash management
system, it would cause needless disruption to the Debtors'
business and significantly impede the Debtors' ability to make a
relatively seamless transition into chapter 11. In addition,
such a transition would cause the Debtors to incur substantial
costs and deplete assets of the estate without providing any
benefit to the Debtors' estates.
Ms. Fatell contends that the Debtors' cash management system
provides the Debtors with substantial benefits, including the
ability to control receipts and disbursements, to invest idle
cash, to ensure maximum availability of funds, and reduce the
costs and administrative expenses inherent in moving funds
between entities and tracking such funds. In order to continue
the operation of the Debtors' businesses and to preserve the
value of their property for the benefit of creditors, it is
imperative that the Debtors' customary cash management
practices, which are essential to meeting their post-Filing Date
obligations in the ordinary course, not be interrupted by
implementation of new cash management procedures.
Ms. Fatell assures the Court that the Debtors will continue to
maintain books and records reflecting all transfers of money
between the Debtors.
* * *
Finding the relief requested is necessary to the ongoing
operations of the Debtors' business and in the best interests of
the Debtors and their estates, and creditors, Judge Walrath
authorizes the Debtors to continue using their cash management
system in the ordinary course of business. (ANC Rental
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
ALLIED WASTE: S&P Rates Proposed $500MM Notes due 2008 at BB-
-------------------------------------------------------------
Standard & Poor's assigned its double-'B'-minus rating to Allied
Waste North America Inc.'s (AWNA) proposed $500 million senior
notes due 2008 offered under Rule 144A with registration rights.
At the same time, Standard & Poor's affirmed its existing
ratings on AWNA's parent, Allied Waste Industries Inc. (Allied
Waste; BB/Stable/). The outlook is stable.
Proceeds of the notes will be used to ratably repay portions of
tranches A, B, and C of the term loans under AWNA's credit
facility. The notes will be issued on the same basis as AWNA's
existing senior notes.
The ratings reflect Allied Waste's strong competitive business
position, offset by a relatively weak credit profile. The July
1999 largely debt-financed acquisition of Browning-Ferris
Industries Inc. has made Allied Waste the second-largest solid
waste management firm in the U.S., with estimated 2001 revenues
of $5.5 billion. The company provides collection, transfer,
disposal, and recycling services to about 10 million
residential, commercial, and industrial customers in 39 states.
A national network of facilities creates opportunities for
growth through internal development, supplemented by tuck-in
acquisitions, focusing on the vertical integration business
model.
Although the U.S. solid waste industry is mature and
competitive, its overall risks characteristics are favorable,
supported by the essential nature of services, relatively strong
and reliable cash flows, and considerable resilience to economic
swings, particularly in the residential and light commercial
segments. Allied Waste's market position is enhanced by a low
cost structure, very good collection route density, and a
relatively high rate of waste internalization. Still, the
worsening economic slowdown is beginning to have a modestly
adverse effect on the firm's volumes, especially in the
industrial and roll-off segments, while greater competition for
the remaining waste is pressuring pricing at landfills. Ongoing
weakness in commodity prices is also impacting performance.
Consequently, Allied Waste's historically very impressive profit
margins in the mid-30% area are likely to decline to the low 30%
area in 2002. As a result, the anticipated improvement in
currently subpar credit protection measures has been somewhat
delayed. In the intermediate term, funds from operations to debt
should approach the mid-teens percent, with debt to EBITDA at
4.0 times -4.5x, EBITDA interest coverage about 2.75x, and debt
to capital in the high-70% area. Further strengthening in the
credit profile is expected longer term, aided by additional debt
reduction, primarily from internally generated funds.
Outlook: Stable
Leading market positions, efficient operations, solid cash flow
generation, and management commitment to improve the balance
sheet should strengthen the financial profile to a level
consistent with the ratings.
AMERICAN CLASSIC: Faces Nasdaq Delisting After Chapter 11 Filing
----------------------------------------------------------------
American Classic Voyages Inc., (Nasdaq: AMCVQ), a U.S.-flag
cruise company, announced that it was notified by Nasdaq Listing
Qualifications Staff that the Company's Common Stock and Trust
Preferred Securities would be delisted from The Nasdaq Stock
Market, effective November 22, 2001. The Nasdaq Listing
Qualifications Staff indicated that these securities would be
delisted due to the Company's October 19, 2001 filing under
Chapter 11 of the U.S. Bankruptcy Code as well as the Company's
failure to demonstrate sustained compliance with all
requirements for continued listing on The Nasdaq Stock Market.
The Company will not protest the delisting.
The company announced on October 19, 2001, that it had filed a
voluntary petition for reorganization under Chapter 11 of the
U.S. Bankruptcy Code in the United States Bankruptcy Court for
the District of Delaware (Case No. 01-10954). Since then, the
Company has been operating only one vessel, the Delta Queen
steamboat, under the protection of the Bankruptcy Court while it
pursues restructuring alternatives.
The company has established a customer information hotline (800-
856-9904), and additional information is available on the
company's Web site at http://www.amcv.com Individuals with
deposits on future American Classic cruises other than the Delta
Queen steamboat should contact Logan and Co., Inc. for
information about registering a claim via fax (973-509-1131) or
mail (546 Valley Road, Upper Montclair, NJ 07043).
ARMSTRONG HOLDINGS: Court Appoints Wm. Sudell as Special Master
---------------------------------------------------------------
To deal with the increasing number of discovery disputes in
matters that concern Armstrong Holdings, Inc., and its debtor-
affiliates, Judge Joseph Farnan has appointed a special master.
The parties advise Judge Farnan that they agree on the
appointment of William H. Sudell, Jr., of the Wilmington firm of
Morris Nichols Arsht & Tunnell. Mark D. Collins advises Judge
Farnan that Mr. Sudell's hourly rate is $450, which Judge Farnan
holds is reasonable under the circumstances of this appointment.
Judge Farnan authorizes compensation to Mr. Sudell upon his
transmittal of a bill to the parties on a monthly basis, with
payment to be made within 30 days of receipt of Mr. Sudell's
invoice. Any contest to an invoice submitted to Mr. Sudell may
be presented to Judge Farnan for resolution within 10 business
days of receipt of the invoice.
Judge Farnan orders that all decisions by Mr. Sudell are final
unless a written objection is lodged with the Court within 5
days of the decision. If the decision being objected to was not
written, Mr. Sudell shall file his reasons for the decision
within 5 business days of his receipt of a written notice that
an objection has been lodged. (Armstrong Bankruptcy News, Issue
No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900)
AVIATION DISTRIBUTORS: GMAC Waives Covenants Under Credit Pact
--------------------------------------------------------------
Aviation Distributors, Inc. (OTC Bulletin Board: ADIN) reported
that revenues for the three months ended September 30, 2001 were
$6,234,000, a decrease of 38.4% as compared to revenues of
$10,113,000 for the same period a year ago. Net loss for the
quarter, including non-cash increases in reserves for inventory
and bad debt of $1.7 million, was $3,240,000 compared to net
loss of $570,000 for the prior year period.
For the nine-month period ended September 30, 2001, revenues
were $24,647,000, a decrease of 13.2% from $28,385,000 in the
year ago period. For the nine-month period ended September 30,
2001, net loss, including non-cash increases in reserves for
inventory and bad debts of $3.0 million, was $6,362,000 compared
to net loss of $426,000 for the prior year nine- month period.
The Company also reported that it was not in compliance at
September 30, 2001 with certain of the financial covenants
contained in its line of credit agreement with GMAC Commercial
Credit LLC. GMAC has waived these financial covenant
requirements as of September 30, 2001.
Commenting on the announcement, the Company said that it
continues to face the industry-wide downward pressure on both
revenues and gross margins that is attributable to both an
unprofitable worldwide commercial airline industry and the
excess availability of surplus parts. In response to these
negative market conditions, the Company, effective July 1, 2001,
has taken steps to decrease its annual selling, general and
administrative expenses by $1.8 million.
As previously announced, the Company has formed a new wholly
owned subsidiary, ADI Leasing, Inc., and has signed a letter of
intent for funding of up to $100 million and is presently
negotiating certain lease contracts with major airlines. In
addition, the Company continues to explore options to improve
its capital structure, but has not consummated any such
agreements as of this date.
Aviation Distributors, Inc. is one of the world's 10 largest
aircraft part redistributors and inventory management service
providers to major commercial airlines worldwide with agents in
the US, UK, throughout Europe, Australia, India, Jordan,
Indonesia and Chile with its headquarters in Lake Forest,
California.
BURLINGTON INDUSTRIES: Taps Jones Day as Lead Bankruptcy Counsel
----------------------------------------------------------------
Burlington Industries, Inc., and its debtor-affiliates desire to
retain and employ Jones Day Reavis & Pogue as counsel in these
chapter 11 cases to represent the Debtors in all aspects of
their reorganization.
John D. Englar, Senior Vice President of Burlington Industries,
Inc., tells the Court that Jones Day is particularly well suited
for the type of representation required by the Debtors. In
particular, Mr. Englar says, Jones Day has substantial
bankruptcy and restructuring, corporate, employee benefits,
environmental, finance, intellectual property, labor and
employment, litigation, real estate, securities and tax
expertise. Having assisted the Debtors with their restructuring
and reorganization activities, Jones Day's professionals have
worked closely with the Debtors' management and other
professionals and have become acquainted with the Debtors'
corporate history, debt structure, business and related matters,
Mr. Englar notes. Accordingly, Mr. Englar says, Jones Day has
developed relevant experience and expertise regarding the
Debtors that will assist it in providing effective and efficient
services in these chapter 11 cases.
The Debtors anticipate that Jones Day will render general legal
service to the Debtors as needed throughout the course of these
chapter 11 cases. Mr. Englar outlines the specific legal
services that the Debtors will look to Jones Day to perform:
(i) advise the Debtors of their rights, powers and duties as
debtors and debtors in possession continuing to operate
and manage their respective businesses and properties
under chapter 11 of the Bankruptcy Code;
(ii) prepare on behalf of the Debtors all necessary and
appropriate applications, motions, draft orders, other
pleadings, notices, schedules and other documents and
review all financial and other reports to be filed in
these chapter 11 cases;
(iii) advise the Debtors concerning, and prepare responses to,
applications, motions, other pleadings, notices and
other papers that may be filed and served in these
chapter 11 cases;
(iv) advise the Debtors with respect to, and assist in the
negotiation and documentation of, financing agreements
and related transactions;
(v) review the nature and validity of any liens asserted
against the Debtors' property and advise the Debtors
concerning the enforceability of such liens;
(vi) advise the Debtors regarding their ability to initiate
actions to collect and recover property for the benefit
of their estates;
(vii) counsel the Debtors in connection with the formulation,
negotiation and promulgation of a plan of reorganization
and related documents;
(viii) advise and assist the Debtors in connection with any
potential property dispositions;
(ix) advise the Debtors concerning executory contract and
unexpired lease assumptions, assignments and rejections
and lease restructurings and recharacterizations;
(x) assist the Debtors in reviewing, estimating and
resolving claims asserted against the debtors' estates;
(xi) commence and conduct any and all litigation necessary or
appropriate to assert rights held by the Debtors,
protect assets of the Debtors' chapter 11 estates or
otherwise further the goal of completing the Debtors'
successful reorganization;
(xii) provide corporate governance, litigation and other
general nonbankruptcy services for the Debtors to the
extent requested by the Debtors; and
(xiii) perform all other necessary or appropriate legal
services in connection with these chapter 11 cases for
or on behalf of the Debtors.
Pursuant to the terms and conditions of the firm's Engagement
Letter with the Debtors, Jones Day intends to:
(a) charge for its legal services on an hourly basis in
accordance with its ordinary and customary hourly rates
in effect on the date services are rendered, and
(b) seek reimbursement of actual and necessary out-of-pocket
expenses.
The names, positions and current hourly rates of the Jones Day
lawyers and paraprofessionals currently expected to have primary
responsibility for providing services to the Debtors are:
Professional Position Rate
------------ -------- ----
David G. Heiman Partner $630
Richard M. Cieri Partner 575
Neil P. Olack Of Counsel 330
Reginald A. Greene Associate 300
Michelle Morgan Harner Associate 300
Brett J. Berlin Associate 225
Carl E. Black Associate 220
Robbin S. Rahman Associate 145
Adam D. Munson Associate 140
Antony L. Sanacory Associate 140
Lynne Fischer Staff Attorney 150
Maureen Stanley Staff Attorney 125
Linda Montgomery Legal Assistant 130
Richard M. Cieri, Esq., a Jones Day member, discloses that on
November 1, 2001, the Debtors provided Jones Day with a retainer
of $400,000, which remains unapplied. The Debtors also made
payments to Jones Day aggregating $698,369 during the year
immediately preceding the Petition Date on account of fees and
expenses incurred by Jones Day on matters relating to the
Debtors.
JPMorgan Chase Bank, the proposed administrative agent and
syndication agent under the Debtors' proposed DIP facility, is
one of Jones Day's clients, but Mr. Cieri swears that Jones Day
does not and will not represent JPMorgan Chase or its direct or
indirect affiliates in matters relating to the Debtors. In
addition, Mr. Cieri relates, Jones Day represents or formerly
represented certain other parties in interest in these cases,
such as Wachovia Bank, N.A., BNP Paribas, Societe Generale, bank
of Nova Scotia, Hong Kong & Shanghai Bank, the Bank of New York,
as well as several unsecured creditors. Jones Day does not and
will not represent these entities in matters adverse to the
Debtors, Mr. Cieri affirms.
"As far as I have been able to ascertain," Mr. Cieri adds,
"neither I, Jones Day nor any partner or associate thereof holds
or represents any interest adverse to the Debtors or their
respective estates in the matters for which Jones Day is
proposed to be retained." Thus, Mr. Cieri assures the Court,
Jones Day is a "disinterested person," as defined in Section
101(14) of the Bankruptcy Code.
Accordingly, the Debtors ask Judge Walsh for authority to retain
and employ Jones Day as their counsel in these chapter 11 cases,
nunc pro tunc as of the Petition Date. (Burlington Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
BURLINGTON: S&P Drops Ratings to D Following Bankruptcy Filing
--------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating for
Burlington Industries Inc. to 'D' from single-'B'. At the same
time, the senior unsecured debt rating and the preliminary shelf
registration rating were also lowered to 'D' from triple-'C'-
plus.
Total rated debt is $400 million (including shelf debt).
The downgrade follows Burlington's announcement that it filed a
voluntary petition for reorganization under Chapter 11 of the
U.S. Bankruptcy Code. The company cited excessive debt and a
highly competitive and difficult operating environment,
exacerbated by the continued influx of foreign imports and the
slowing economy, as the main reasons behind its filing.
Burlington also announced that it has arranged a $190 million
debtor-in-possession (DIP) facility, subject to bankruptcy court
approval.
Burlington Industries is a manufacturer and marketer of apparel
and home furnishing textile products.
COMDIAL CORP: Bank of America Agrees to Forbear until January 15
----------------------------------------------------------------
Comdial Corporation (Nasdaq:CMDL), a leading provider of
business communications solutions, reports that net sales for
the third quarter ended September 30, 2001, were $22.9 million.
Net loss declined 41.7 percent to $3.0 million from the same
period a year ago.
"The third quarter reflected Comdial's improved financial and
operational capabilities under our new business model," said
Nick Branica, president and chief executive officer. "We
demonstrated that we can meet demand for our new products and
benefited from improved year-over-year gross margins as a result
of our outsourcing."
Net Sales and Gross Profit
Net sales declined 4.9 percent from the third quarter last year.
Net sales were affected by promotional pricing as well as
reduced prices for the DSU and the FX systems, and telephones.
Net sales increased 11 percent over the second quarter 2001.
Gross profit increased by 72 percent for the third quarter of
2001 to $7.3 million, compared with $4.3 million in the third
quarter of 2000. These savings are attributable to the redefined
product line as well as the cost savings from outsourcing the
manufacturing operations. Gross margin, as a percentage of
sales, increased 14.3 points to 32.1 percent from 17.8 percent
for the third quarter of 2000. Sequentially, gross margins
declined from 39.1 percent to 32.1 percent due to transitional
manufacturing overhead burdened upon lower sales of in-house
manufactured products, returns from Ingram Micro, and DX-80
promotions that expired in October 2001.
Net Loss
The net loss decreased by 41.7 percent to $3.0 million from
$5.1 million versus last year. On a pre-tax basis, the loss
declined 63.5 percent. The company fully reserved its net
operating losses last year, and therefore no credit was taken
against this year's losses.
"Comdial continues to make progress against its restructuring
plan; and despite aggressive pricing and reduced demand for
telecommunications products in general, by lowering our cost of
goods sold and operating expenses, we were able to narrow our
losses as compared to last year," Branica said.
Working Capital
Accounts receivables increased by $1 million since December 31,
2000, but decreased by $3.7 million since June 30, 2001. This is
primarily due to aggressive collection efforts as well as lower
sales levels in September versus June. Inventory increased by
$1.3 million versus December 31, 2000 and $3.1 million versus
June 30, 2001. The inventory levels increased versus June due to
lower than expected sales levels in September. Accounts payable
levels increased by $8.0 million versus December 31, 2000 and
$1.2 million versus June 30, 2001. Accounts payables increased
due to slower payments to vendors and to an increase in payments
to the company's outsourcing partners.
Debt
Current and long-term debt was reduced from $38.4 million at
December 31, 2000 to $27.1 million as of September 30, 2001. The
improvement is primarily due to the $8.4 million note repayment
by Seminole Properties, LLC. For the quarter ending September
30, 2001 the company was in default of its Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA)
covenant, and the company did not make the required $1.4 million
principal payment due Bank of America on September 30, 2001. The
company and Bank of America have signed a forbearance agreement
forbearing the EBITDA covenant, the principal payments due
September 30 and December 20, 2001, and maintaining the over-
advance in addition to available collateral under the Revolver
at $2.5 million versus a step down to $0 million by the end of
the year. The forbearance agreement expires January 15th, 2002.
The forbearance agreement contains certain restrictions
primarily related to monthly EBITDA levels. The company has
retained Raymond James & Associates, Inc. to assist with
restructuring its debt.
Business Summary
The company has shipped in excess of 1,000 FX-II systems, a
sophisticated business telephone system capable of bridging
legacy and emerging communications systems. Over ten percent of
these systems incorporate the company's VoIP networking
capabilities. Additionally, the company has released its
Internet Protocol (IP) telephone called iPrimo, which rounds-out
its branch office and telecommuting IP telephony solutions.
Together with the DX-80, Comdial's feature-rich small business
telephone system, Comdial has increased its market share 26%
year-over-year as reported by Phillips InfoTech, Third Quarter
2001.
"Due to on-going economic challenges and declining demand, we
are taking a conservative approach and are preparing for a
period of softness in the telecom market. We are continuing our
cost-cutting programs into 2002. Furthermore, the company
continues to work out its capital structure and is confident
that we will find a solution," said Branica.
Nasdaq Requirements
On October 15, 2001, the Company notified the NASDAQ Stock
Market of its intent to appeal NASDAQ's decision to de-list the
Company from NASDAQ's national market listings. The following
day, NASDAQ notified the Company that it had stayed de-listing
pending a hearing on the matter, which took place on November
15, 2001. At the hearing, the Company explained how it planned
to achieve compliance with NASDAQ's minimum net tangible assets
or minimum shareholder equity requirements, and to sustain long
term compliance with all of NASDAQ's continued listing
requirements. The Company believes it has met the burden of
demonstrating its ability to comply with NASDAQ's listing
requirements. However, there is a substantial possibility that
the Company will be de-listed. The Company is awaiting a
decision from NASDAQ. This decision will be either that the
Company has been granted additional time to meet NASDAQ's
listing requirements or that the Company will be de-listed. In
the event of de-listing, the Company may seek to be listed on
NASDAQ's Small Caps market listings.
Comdial Corporation, headquartered in Sarasota, Florida,
develops and markets sophisticated telecommunications products
for small- to mid-sized businesses, government, and other
organizations. Comdial enhances business productivity with
products that include voice switching systems, Internet Protocol
telephony, voice processing, and computer telephony integration.
For more information, visit http://www.comdial.com
COMDISCO INC: Gets Okay to Assign Assumed Contracts to SunGard
--------------------------------------------------------------
Judge Barliant permits Comdisco, Inc., and its debtor-affiliates
to:
(1) assume and assign to SunGard, effective upon the Closing
of the Sale, the Assumed Contracts free and clear of all
Interests of any kind or nature whatsoever; and
(2) execute and deliver to SunGard such documents or other
instruments as may be necessary to assign and transfer
the Assumed Contracts and Assumed Liabilities to
SunGard.
With respect to the Assumed Contracts, the Court rules that:
(a) the Assumed Contracts shall be transferred and assigned
to, and following the closing of the Sale remain in full
force and effect for the benefit of, SunGard in
accordance with their respective terms, notwithstanding
any provision in any such Assumed Contract that
prohibits, restricts or condition such assignment or
transfer and the Debtors shall be relieved from any
further liability with respect to the Assumed Contracts
after such assignment to and assumption by SunGard;
(b) each Assumed Contract is an executory contract of the
Debtors;
(c) the Debtors may assume each Assumed Contract;
(d) the Debtors may assign each Assumed Contract, and any
provisions in any Assumed Contract that prohibit or
condition the assignment of such Assumed Contract or
allow the party to such Assumed Contract to terminate,
recapture, impose any penalty, condition renewal or
extension, or modify any term or condition upon the
assignment of such Assumed Contract, constitute
unenforceable anti-assignment provisions, which are void
and of no force and effect;
(e) all other requirements and conditions under section 363
and 365 of the Bankruptcy Code for the assumption by the
Debtors and the assignment to SunGard of each Assumed
Contract have been satisfied; and
(f) upon Closing, SunGard shall be fully and irrevocably
vested in all right, title and interest of each
contract, including but not limited to, each Customer
Contract, Property Lease and IP License Agreement.
The Court mandates that any portions of the Property Leases with
respect to any of the leased premises which purport to permit
the Landlords to cancel the remaining term of any of the
Property Leases if Debtors discontinue their use or operation of
the Premises are void and of no force and effect. In addition,
Judge Barliant states, it shall not be enforceable against
SunGard, its assignees and sublessees. Accordingly, the Court
rules that the landlords under such Property Lease shall not
have the right to cancel or otherwise modify the Property Lease
or increase the rent, assert any claim or impose any penalty by
reason of such discontinuation, Debtors' cessation of
operations, the assignment of the Property Leases to Purchaser,
or the interruption of business activities at any of the leased
premises.
At the Closing of the Sale or as soon as practicable, Judge
Barliant orders the Debtors to cure all defaults or other
obligations under the Assumed Contracts arising or accruing
prior to the Closing Date. Judge Barliant makes it clear that
SunGard shall have no liability or obligation arising or
accruing prior to the date of the Closing of the Sale except as
otherwise expressly provided in the Agreement. (Comdisco
Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
CROWN CORK: S&P Drops and Places Ratings on CreditWatch Negative
----------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating for Crown
Cork & Seal Co. Inc. to single-'B'-minus from double-'B'-minus
and lowered its ratings on the firm's unsecured debt to triple-
'C' from single-'B'. At the same time, Standard & Poor's placed
all of its ratings on the company on CreditWatch with negative
implications.
The rating actions reflect Standard & Poor's heightened concerns
regarding Crown's ability to meet or renegotiate its pending
debt maturities due to delays in completing planned asset sales
and diminished access to capital markets, which have tightened
because of uncertainties regarding economic conditions. Crown's
access to capital markets has been further impaired by its
unfavorable perception due to its ongoing asbestos litigation
and its extremely aggressive debt maturity schedule and poor
performance.
Standard & Poor's had expected that Crown would dispose of about
$1.2 billion in assets by early 2002 (half of which was expected
by the close of this year) and use proceeds to redeem its $400
million term loan due February 2002 and its $350 million of
unsecured notes due September 2002. These actions, if completed,
would likely provide some comfort and enhance the company's
ability to renegotiate with lenders. However, Crown's progress
has been slower than expected with respect to asset sales and
current economic and credit market conditions may impair the
firm's ability to complete a refinancing plan prior to its debt
maturities scheduled for 2002. Should Crown be unable to obtain
an alternative financing arrangement in the very near term, the
ratings will likely be lowered again.
Philadelphia, Pennsylvania-based Crown Cork is a large global
packaging manufacturer, providing a broad array of metal and
plastic packaging products. These include metal food and
beverage cans, polyethylene terephthalate (PET) plastic soft
drink containers, and plastic containers for the health and
beauty care market.
Ratings Lowered, Placed On Creditwatch Negative
Crown Cork & Seal Co. Inc. TO FROM
Corporate credit rating B- BB-
Senior unsecured debt CCC B
* * *
DebtTraders reports that Crown Cork & Seal's 8.375% bonds due
2005 (CCK7) are trading between 45 and 46.5. Go to
http://www.debttraders.com/price.cfm?dt_sec_ticker=CCK7 for
real-time bond pricing.
CROWN CORK: Trial Lawyers Doubt Veracity of Bankruptcy Warnings
---------------------------------------------------------------
A review of Crown Cork & Seal's most recent report to
shareholders has prompted the Pennsylvania Trial Lawyers
Association to doubt the truthfulness of statements the company
has been making to legislators in Harrisburg regarding special
legislation to dramatically reduce Crown's liability for
asbestos damages.
For months, Crown Cork & Seal has been working to convince
elected officials that it faces bankruptcy if their bill is not
passed. But its annual report, dated March 23, 2001, tells
shareholders, ". . . the Company believes, after consultation
with counsel, that resolution of these (asbestos liability)
matters is not expected to have a material adverse effect on the
Company's financial position."
And, having paid about $100 million in liability claims in
fiscal 2000, the company received $127 million in federal tax
benefits according to its report to investors, "in connection
with current year losses arising from the asbestos litigation
provision." Crown Cork & Seal goes on to assure stockholders
that it "will continue to review the recoverability of these and
all other deferred tax assets each quarter."
Clifford A. Rieders, president of the Pennsylvania Trial Lawyers
Association said, "This country's taxpayers, including
Pennsylvanians, have sufficiently subsidized Crown's
obligations, and then some."
The corporate document also acknowledges the existence -- and
expansion -- of a reserve fund to provide for the compensation
of legitimate victims, presently valued at approximately $420
million. "Besides," Rieders continues, "this company has put
aside funds to cover potential damages and the IRS gives them
significant tax benefits in return. They're already covered."
The hazards of asbestos have been known for over 60 years.
Still, the laws are not structured on a "no-fault" basis.
Instead, plaintiffs must prove negligence or a defective
product. Plaintiffs must prove causation and actual damages.
Sellers and manufacturers are presumed innocent.
Crown Cork & Seal also received insurance benefits through 1998
for their asbestos liability cases. "It seems intellectually
dishonest to say now, after all these years and all the money
that has changed hands, that Crown Cork & Seal should not be
fully liable for the asbestos related claims against them," said
Rieders.
Further evidence that the company is fiscally healthy can be
found in the series of mergers and acquisitions that the company
has completed over the past several years. Between 1998 and
2000, Crown Cork & Seal has secured new business interests in
Spain, Portugal, Greece, United Kingdom, China, Singapore,
Thailand, Vietnam and South Africa.
But in contrast to their efforts to retract the previously
assumed liabilities, in its most recent annual report, Crown
Cork & Seal freely demonstrates their newly incurred
liabilities, which amount to 43 percent of assets acquired.
Mark Phenicie, PaTLA Legislative Counsel, observed, "These
people are talking out of both sides of their mouth. For
investors, everything is rosy, but for the legislators and even
their own employees, it's a sad, sad song."
On Friday, company officials reported to its workforce that
without passage of the proposed financial relief legislation,
plant expansion in Pennsylvania is not feasible.
Phenicie added, "It makes you wonder, doesn't it, about all the
foreign investment they've made over the past three years. They
had millions to spend on growth -- everywhere except here in
Pennsylvania. Their intent is to leave our injured citizens
high and dry, but promise expansion and jobs in return. If they
didn't put their cash here when the economy was thriving, why
would they under these economic conditions? Their sincerity is
underwhelming."
Because penalties for false or misleading statements to
shareholders can be severe and potentially include criminal
charges, the Trial Lawyers believe that the annual report
truthfully reflects Crown Cork & Seal's status. "Neither
PricewatershouseCooper nor their legal counsel would put
themselves at risk to condone any misguiding information to
shareholders," said Rieders. "This is a shameless attempt to get
a bail out from the people of our state."
CROWN CORK: Plans to Delist Shares from Paris Stock Exchange
------------------------------------------------------------
Crown Cork & Seal Company, Inc. (NYSE: CCK; Paris Bourse)
announced that the Company intends to delist its shares from the
Paris Stock Exchange (Bourse) due to consistently low trading
volumes. This action will be effective on December 27, 2001.
Crown has retained Societe Generale as its agent in the
delisting process.
Shareholders with shares through Euroclear France System will
have the option to sell their shares on the NYSE or to retain
them for future trading on the NYSE. The Company does not
expect this action to have a material impact on trading volumes
on the NYSE.
Crown Cork & Seal is a leading supplier of packaging products to
consumer marketing companies around the world. World
headquarters are located in Philadelphia, Pennsylvania.
* * *
Late last month, Matthew Breckenridge (212-247-5300), an analyst
at DebtTraders, gave a BUY recommendation on the debt issues of
Crown Cork & Seal. Mr. Breckenridge stated, "Although the
results of the operations were in line with our Worst Case
estimates (see Crown Cork & Seal, June 29, 2001), we believe
that operations will improve in 2002 due to price initiatives
that the Company is undertaking. In addition, we believe that
management has made it clear that cash generation is the
priority over managing for net income."
Crown Cork & Seal's management further advised, the DebtTraders
analyst continued, that the company is moving ahead with its
working capital reduction plan and expected to generate between
$150 million to $200 million in cash, resulting in estimated
year-end liquidity of $750 million.
"Therefore, we continue to believe that upon successful
completion of asset sales, the Company will have sufficient
funds to retire the 7.125% Notes due 9/1/02 (SAFETY 66%;
ATTRACTIVENESS 84%) and the 6.75% Notes due 4/15/03 (SAFETY 64%;
ATTRACTIVENESS 80%). However, based upon the conference call and
our conversation with management, we believe that the successful
and timely completion of asset sales is becoming increasingly
less likely. As a result, we are reiterating our BUY
recommendations on both the 7.125% Notes due 9/1/02 and the
6.75% Notes due 4/15/03, but we will be reviewing our SAFETY
ratings for further downgrade if asset sales and improvements in
operations do not materialize," Mr. Breckenridge concluded.
EASYRIDERS INC: Cuts Q3 Net Loss to $600K on $6.3MM in Revenues
---------------------------------------------------------------
Easyriders Inc., (AMEX:EZR) announced that for the three-month
period ended September 30, 2001 the Company recorded revenues of
$6.3 million, which generated net loss of $0.6 million compared
with revenues of $6.3 million and a net loss of $1.8 million
during the same period a year earlier. Cash flow as measured by
EBITDA (earnings before interest, taxes, depreciation and
amortization) was $0.4 million, which was the same amount
reported for the similar period in fiscal 2000.
For the nine-month period ended September 30, 2001, the Company
reported revenues of $21.5 million which produced a net profit
of $0.4 million, compared with revenues of $22 million and a net
loss of $8.7 million reported during the same period a year
earlier. Cash flow as measured by EBITDA was $3.9 million, which
represented a $5.4 million improvement from the negative $1.6
million reported for the same period a year earlier.
"While we performed above plan with respect to our quarterly and
nine-month revenue targets, the bottom line was adversely
effected by non-recurring costs of approximately $500,000
associated with our Chapter 11 filing at the beginning of the
third quarter," stated Bob Fabregas, president and chief
executive officer. "When you compare our results for this most
recent nine-month operating period against the same period last
year, it is clear that the Company's new management has reversed
the negative trends of the past two years, and is generating
sustained positive cash flow as measured by EBITDA," continued
Fabregas.
"The effects of our restructuring at the beginning of the year
continue to yield positive quarterly cash flow," stated Joe
Teresi, chairman. "Our challenge now is to maintain focus for
continued improvement each quarter, and present a plan of
reorganization which will permit the Company to emerge from
Chapter 11 as stronger enterprise."
Easyriders is a publicly traded, diversified company with
publishing, retail, and entertainment interests dedicated to
serving the independent, free-spirited motorcycling and related
lifestyles market.
Easyriders currently publishes more than a dozen popular
motorcycle, special interest and lifestyle magazines, with a
total worldwide readership of more than 6 million. The company
also licenses Easyriders retail stores throughout the United
States and Canada, Easyriders Events, and the Bros Club road
service company.
ELDER-BEERMAN: Shortfall Drops Even As Revenues Slide 0.9% in Q3
----------------------------------------------------------------
The Elder-Beerman Stores Corp. (Nasdaq:EBSC) incurred a net loss
of $3.9 million for the third quarter ended November 3, 2001,
versus a $8.2 million net loss in the same period in 2000.
Third quarter 2001 results include pretax charges of $2.7
million relating to the retirement of Frederick J. Mershad,
chairman, president and CEO, and the search for a new chief
executive. Third quarter 2000 results included pretax charges of
$9.3 million for development and implementation of the company's
strategic plan and $1.4 million related to a store closing.
Excluding these items, Elder-Beerman would have incurred a loss
of $2.2 million for the third quarter 2001, versus a loss of
$1.4 million for the third quarter 2000.
Total revenues for the quarter fell 0.9 percent versus last year
to $160.6 million. As previously reported, total sales for the
quarter decreased 0.7 percent and comparable sales for the
quarter decreased 4.3 percent.
Elder-Beerman incurred a net loss of $7.7 million for the 39
weeks ended November 3, 2001, versus a net loss of $15.2 million
for the same period in 2000.
Year to date 2001 results include pretax charges of $2.7 million
relating to Mr. Mershad's retirement and the search for a new
chief executive and $0.6 million in pretax income related to a
recovery of an investment in a cooperative buying group in the
second quarter. In the third quarter 2000, year to date results
included pretax store closing costs of $6.1 million and pretax
charges of $11.3 million for development and implementation of
the company's strategic plan. Excluding these items, Elder-
Beerman would have incurred a loss of $6.4 million for the 39
weeks in 2001 versus a loss of $4.1 million for the 39 weeks in
2000.
Total revenues year to date declined 0.9 percent versus last
year to $445.7 million. As previously reported, total sales year
to date decreased 1.0 percent and comparable sales year to date
decreased 3.2 percent.
Mr. Mershad stated, "The tragic events of September 11 and the
subsequent economic weakening accelerated the negative sales
trends we saw earlier in the year. Immediately after September
11 we reviewed and reduced our Fall merchandise and expense
plans as a reaction to this difficult and uncertain environment.
Due to the continued erosion of the economy and the steep drop
in consumer confidence, however, we do not expect to achieve our
prior estimate of 15 percent earnings growth in fiscal 2001
versus 2000. Because the current economic and retail environment
make it unusually difficult to forecast holiday sales
accurately, we do not plan to provide guidance for the fourth
quarter and fiscal 2001 until after Christmas."
The Company has recently learned that Shoebilee, Inc., the
company that purchased the assets of Elder-Beerman's subsidiary
The Bee-Gee Shoe Corp. in 2000, is currently in default under
its lending agreement, and is attempting to restructure its
financing, including the remaining amounts it owes Elder-Beerman
from the 2000 purchase. In connection with this restructuring,
Elder-Beerman expects to incur pre-tax charges in the third or
fourth quarter of 2001 in a range of $2.0 million to $5.6
million, depending on the ultimate outcome of Shoebilee's
financial restructuring.
The nation's ninth largest independent department store chain,
The Elder-Beerman Stores Corp. is headquartered in Dayton, Ohio
and operates 66 stores in Ohio, West Virginia, Indiana,
Michigan, Illinois, Kentucky, Wisconsin and Pennsylvania. Elder-
Beerman also operates two furniture galleries. For more
information about the company see Elder-Beerman's web site at
http://www.elder-beerman.com
ENRON: Fitch Sees a Bankruptcy Filing if Dynergy Walks
------------------------------------------------------
Since Fitch's last update on Enron on Nov. 9, 2001 following the
announcement of the possible Dynegy merger transaction, several
important negative developments have occurred. At that time it
was expected that the significant cash infusion and positives
associated with the merger would stabilize the company's
liquidity situation. In fact there continues to be liquidity
pressures. Most importantly, Fitch believes that there have been
significant cash collateral calls from wholesale trading
customers well in excess of previous expectations. Additional
concerns include the surprise $690 million debt acceleration and
other potential near-term debt maturities which would require
additional cash outlays. The company has less flexibility to
deal with these continuing issues as well as possible off
balance sheet debt accelerations, negotiations with banks
including the extension beyond the recently negotiated mid-
December 2001 maturity of the $690 million repayment and the
major bank line refinancing needs in early 2002.
In addition, the present situation is pressuring some of the
perceived fundamental values of the company. While it is unclear
how much weaker the wholesale trading business profile is, it is
likely that counterparties will continue to closely monitor and
limit their exposure to Enron. In addition, the company's
ability to favorably negotiate and realize inherent value of
many planned asset sales is substantially weaker in the present
crisis mode.
Dynegy has recommitted its support for pursuing the Enron
merger, subject to completion of its confirmatory due diligence.
However, in light of recent developments Dynegy's position
regarding the merger must be considered less certain. The
unanticipated deterioration, the surprise liquidity
developments, and the potential negative impact on the combined
company's ratings from these worse dynamics at a minimum
suggests a strong renegotiation possibility or a possible
discontinuance under the 'MAC' clause out.
More equity and cash may be needed to stabilize Enron's credit
profile. It is probable the lower stock price reflects this
reality as well as potential stockholder equity dilution. If
Dynegy steps away entirely from the merger, Enron's credit
situation seems untenable with a bankruptcy filing highly
possible. Our present 'BBB-' rating rests on the merger
possibility and continued support of the lending banks, without
which Fitch would consider lowering the rating to the ``B'
category to reflect Enron's already compromised credit profile.
At this point Fitch is not overly concerned about additional
increased liquidity pressures or merger 'outs' from our rating
actions or other rating agencies' potential actions as
significant negotiation is occurring across all creditor fronts
already.
Enron's ratings remain on Rating Watch Evolving as follows:
'BBB-' senior unsecured debt; 'BB' subordinated debt; 'B+'
preferred stock; and 'F3' commercial paper.
According to DebtTraders, Enron Corp.'s 9.125% bonds due in 2003
(ENRON2) are trading from 65 to 70. Go to
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON2 for
real-time bond pricing.
EXODUS: Dell Financial Seeks Adequate Protection on Leases
----------------------------------------------------------
Dell Financial Services (DFS), a lessor of computer equipment
and related personal property currently held and used by Exodus
Communications, Inc., and its debtor-affiliates, asks the Court
to provide them with adequate protection for DFS' interests in
leased equipment.
Patricia Pyles McGonigle, Esq., at Seitz Van Ogtrop & Green,
P.A., in Wilmington, Delaware, relates that on November 11, 1999
the Debtors entered into a Master Lease Agreement with DFS,
whereby the parties executed multiple Equipment Schedules for
various types of Dell computer equipment, including 3,091
laptops, 259 servers, 1,700 desktops and related equipment.
Under the Equipment Schedules and the Equipment Leases, the
Debtors are obligated to make aggregate monthly rental payment
of $779,762.74 to DFS but have not paid any post-petition rental
payments. As of September 25, 2001, Ms. McGonigle submits that
the total amount of rental payments outstanding under the
Equipment Leases is $7,165,496.93.
Prior to the petition date, Ms. McGonigle understands that the
Debtors laid off a number of their employees. The majority of
DFS' Leased Equipment is laptops, most of which are generally
kept by employees at their homes and offices. Without the
Debtors taking steps to protect and/or retrieve the laptops, it
has been DFS' experience in all-similar situations that the
laptops disappear and are stolen. Within days of Petition date,
Ms. McGonigle says that she contacted Debtors' counsel to
determine what steps were being taken to safeguard the laptops
and thereafter followed up with a letter requesting the same
information. Unfortunately, no information was ever provided in
response to the requests.
MS. McGonigle relates that the Debtors have recently sought
blanket authority from the Court to be able to sell certain
leasing creditors' equipment but have not identified the
specific equipment, the lessors or the purchase price. The
Debtors have failed to provide any form of adequate protection
to the leasing creditors through their request to have blanket
authority to sell leased equipment to their customers. In
addition, the specific notices required by the Bankruptcy Code
under 363 and 365 and the Bankruptcy Rules of Procedure 4001,
6004, and 2002 are also missing.
Ms. McGonigle states that the Debtors filed a Motion to Retain
Professional Liquidators, Hilco Industrial, LLC and Henry
Butcher International, for the liquidation and sale of property
at their 44 Internet Data Centers. The specific assets for sale
have not been identified and DFS has no way of knowing if the
Debtors intend to sell through this process Dell computer
equipment that is similar to the Leased Equipment and/or the
Leased Equipment. Moreover, Ms. McGonigle explains that the
Debtors have not identified what steps if any will be taken by
the Debtors to segregate, protect and account for the Leased
Equipment of DFS, prior to the sale of the IDC assets. In any
event, DFS has not and does not consent to the sale of its
Leased Equipment and steps need to be taken by the Debtors to
adequately protect DFS's interest in the Leased Equipment.
Further, Ms. Gonigle informs the Court that although requests
for proof of insurance and the insurance policies have been made
in multiple phone messages and correspondence, no response has
been received. Insurance is required under the Equipment Leases
because the Leased Equipment is subject to theft, shrink and
rapid depreciation and lack of insurance would be
extraordinarily harmful to the property interests of DFS. Ms.
McGonigle submits that the majority of the Leased Equipment
includes laptops, which are highly portable and subject to theft
or loss if not kept in secure areas. If the Laptops are not
being used by the Debtors, Ms. McGonigle asks the Court that
they should be returned to DFS or at the least should be
accounted for with location listed, along with a serial number
and the person that laptop has been assigned. Further, as IDC's
assets are liquidated the Debtors have failed to specify what
steps will be taken to remove and safeguard the Leased Equipment
from these locations and what steps will be taken to return the
Leased Equipment to DFS.
DFS requests that the Court require the Debtor to provide
adequate protection for DFS' interest in the Leased Equipment in
the following manner:
A. commence post-petition payments due under the Equipment Lease
for Debtors' post-petition use of the Leased Equipment;
B. return all laptops not being used to DFS with shipment and
freight being paid by the Debtors;
C. provide the locations and serial numbers of all laptops in
use and identification of the responsible person in
possession;
D. provide proof of insurance for all of the Leased Equipment, a
record of any loss that has occurred, the steps that will
be taken to recover the losses, and identify an employee at
Exodus who will be responsible for processing the claims;
and
E. set forth a plan for the steps that will be taken to
safeguard the Leased Property during the reorganization and
liquidation sale process. (Exodus Bankruptcy News, Issue No.
7; Bankruptcy Creditors' Service, Inc., 609/392-0900)
FEDERAL-MOGUL: Signs-Up Stout Risius for Appraisal Services
-----------------------------------------------------------
Federal-Mogul Corporation, and its debtor-affiliates want to
employ Stout Risius Ross, Inc., as appraisers to provide
valuation analysis for their accounts receivable, inventory,
personal property, real property, intellectual property and
other intangible assets.
The services that Stout Risius will perform for the Debtors
include:
A. preparing a preliminary valuation analysis, documented in a
brief letter report, which may be submitted in support of
certain first day motions; and
B. prepare a final valuation analysis, accompanied by a report
documenting Stout Risius' procedures and opinion value.
Jeffrey M. Risius, Managing Director of Stout Risius, submits
that the firm's professionals are familiar with the Debtors and
their financial affairs, having provided service to the Debtors
in preparation for the filing of these cases. The Debtors
believe that Stout Risius' valuation analysis of the Debtors
assets is essential to the Debtors' successful reorganization
and will provide a substantial benefit to the Debtors and their
estates, particularly in obtaining the value of collateral for
approval of the Debtors' post-petition financing.
Mr. Risuis informs the Court that Stout Risius will charge the
Debtors for its valuation services approximately $250,000 for
preliminary valuation analysis and $300,000 to $400,000 for
final valuation analysis plus out-of-pocket expenses related to
the services. In addition, any professional time related to
Court preparation and testimony will be billed at Stout Risius'
standard rates within the range of $110 to $350 per hour.
Mr. Risius relates that Stout Risius has received $650,000 in
compensation and retainers in connection with preparing for the
filing of these chapter 11 cases and for post-petition services
for the Debtors, all of which was received within 90 days prior
to petition date.
Mr. Risuis asserts that the Firm, its members, counsel and
associates do not represent or hold any material adverse
interest to the Debtors or their estates with respect to the
matters upon which S&H is to be employed, and do not have any
material connections with the Debtors, their officers,
affiliates, creditors or any other patty in interest, or their
respective attorneys, except being engaged in:
A. active representation of Ford Motor Co., in Supply Chain
Management Consulting involving the Debtors;
B. active representations in unrelated matters to known
institutional lenders to the Debtors including Bank of
America, Bank One/NBD, Comerica Bank, and National City
Bank.
C. active unrelated representation to Dykema Gossett PLLC, one
of the professionals retained by the Debtors.
The Debtors believe that it is necessary and in the best
interests of their estates and creditors to employ and retain
Stout Risius as their appraisers. (Federal-Mogul Bankruptcy
News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
GOLDEN NORTHWEST: S&P Ratchets Low-B Ratings Down a Notch
---------------------------------------------------------
Standard & Poor's lowered its ratings on Golden Northwest
Aluminum Inc. (GNA) and removed them from CreditWatch, where
they were placed May 8, 2001. The outlook is negative. The
downgrade reflects the heightened risks associated with GNA's
ongoing strategy to become energy self-sufficient and the
company's limited liquidity position.
Following a period of exorbitantly high power rates, which
rendered production at GNA's two aluminum smelters uneconomic,
GNA began to idle capacity at these smelters. In response, GNA
entered into a remarketing addendum to its existing contract
with the Bonneville Power Administration (BPA) in December 2000
that allowed the BPA to sell the power allocated for GNA's
smelting operations into the spot market, raising approximately
$285 million in net proceeds. Of this amount, $177 million has
been earmarked for the development of two natural-gas-fired
power projects that GNA is constructing since the BPA will not
be supplying power to aluminum smelting operations in the
Pacific Northwest after 2006.
GNA is in the early stages of seeking joint venture partners to
construct these gas-fired facilities. The remaining $108 million
was available to GNA to meet "qualified expenditures" that
includes debt service obligations, employee wages, and a
contract breakage fee of $42 million to Norsk Hydro. Certain
developments since the placement of the CreditWatch have placed
a greater degree of uncertainty and risk with regards to the
company's strategy:
* Given its current liquidity position, Standard & Poor's
estimates the company has approximately a year of
available funds to service debt obligations and meet
employee wages and other expenses. This includes the yet
to be received final payment of $34 million from the $108
million that was available to GNA. Furthermore, the
commissioning of the company's CLIFF project, originally
slated for February 2002, has been delayed a year.
Standard & Poor's recognizes, however, that successful
negotiations with possibly joint venture partners for
these projects could raise proceeds from the sale of any
interest in these projects. Also, although uncertain, GNA
could ultimately gain partial access to the $177 million
of funds at the BPA earmarked for the development
projects. Nevertheless, if financing is arranged for the
projects, it is still not possible at this point to
accurately predict cash flow from potential power sales,
GNA's ultimate ownership share of proceeds, and whether or
not GNA will be required to keep a substantial portion
of its investment at the projects.
* The power rates in the Pacific Northwest, largely due to a
FERC order imposing price caps, have fallen dramatically.
Power rates, once well over $250 per megawatt, have fallen
precipitously, and are currently below $30 per megawatt,
which is less than the cost to construct some of GNA's
power development projects. Moreover, despite low power
rates, GNA will not be able to operate its smelter
operations profitably given the low aluminum price of
$0.58 per pound. Considering the current state of the
global economic environment it is unlikely aluminum prices
will recover to the mid $0.70 level needed to operate
GNA's smelters profitably.
* GNA's attempts to negotiate lower wages with the union
have unsuccessful. It is unclear if further negotiations
will prove successful.
* GNA is considering redeeming all (for below the $45
million of par value plus pay-in-kind of dividends) or a
portion of the preferred stock held by its retirement plan
which is facing a liquidity problem due to an increase in
retirees as a result of smelter curtailment. A meaningful
payment to the plan will further erode the company's
liquidity position.
Outlook: Negative
Further delays in power project commissioning or unsuccessful
attempts to improve its liquidity position, could lead to a
downgrade. Standard & Poor's will continue to assess
developments and management's strategies as they unfold.
Ratings Lowered And Removed From Creditwatch
To From
Golden Northwest Aluminum Inc.
Corporate credit rating B- B+
Senior secured debt B- B+
GRAPES COMMS: S&P Junks Rating Following 23% Cash Tender Offer
--------------------------------------------------------------
Following the recent cash tender offer by telecommunications
operator Grapes Communications N.V. (Grapes) for all of its
EUR200 million 13.5% unsecured notes due in 2010, Standard &
Poor's lowered to double-'C' from triple-'C'-minus its long-term
corporate credit and senior unsecured debt ratings on the
company. At the same time, the ratings were placed on
CreditWatch with negative implications.
Grapes has made a cash tender offer representing 23% of the
notes' face value, and is seeking to make amendments to the
indenture covering the notes as part of a restructuring plan.
The transaction is conditional upon the approval of the plan by
bondholders holding at least two-thirds of the principal amount
of outstanding bonds and upon receipt of at least 95% of the
outstanding principal amount of notes.
The cash offer would be financed through Grapes' escrow account
of about EUR50 million--initially reserved for interest payments
on the notes--as well as with a portion of its existing cash
balance, estimated at about EUR30 million at the end of
September 2001, which would further weaken its funding
situation. While the company has indicated that it will meet its
November 15, 2001, interest payment, it has also stated that
failure to obtain sufficient acceptance for its restructuring
plan and tender offer could lead it to file for bankruptcy under
Chapter 11 of the U.S. Bankruptcy Code.
Standard & Poor's views Grapes' tender offer as coercive, as
refusal to accept the offer and the restructuring plan may lead
to an even worse prospect of recovery for bondholders. Although
the company has not defaulted under its indentures as a result
of this offer, completion of the transaction would be treated as
a default, at which time the corporate credit rating on the
company would be lowered to 'SD' (selective default) and the
rating on the euro-denominated 13.5% senior unsecured notes
would be lowered to 'D'.
Grapes is an alternative provider of voice and data transmission
services primarily targeting small and medium-sized businesses
in Italy and Greece. The company had about 18,400 customers at
the end of the first half of 2001, and is in the process of
rolling out fiber optic metropolitan rings in seven cities in
Italy, linked to a Pan-European fiber optic backbone. Grapes
recorded pro forma revenues of EUR23.4 million for the six
months ended June 2001.
INDIGO BOOKS: Liquidity Strained Despite Positive EBITDA in Q2
--------------------------------------------------------------
Indigo Books & Music Inc., (TSE: IDG) Canada's largest book
retailer, reported earnings before interest, taxes, depreciation
and amortization (EBITDA) of $1.0 million for the second fiscal
quarter ended September 29, 2001, representing a $3.9 million
improvement over the $2.9 million EBITDA loss in the same period
the previous year. This is the first time since September 1998
that the Company has reported positive consolidated operating
earnings for the second quarter.
Year to date, the EBITDA loss for the 26-week period ended
September 29, 2001 was reduced by $15.2 million to $0.7 million
as compared to an EBITDA loss of $15.9 million the previous
year.
"The operating changes made this year are beginning to have
positive impact," said Heather Reisman, President and Chief
Executive Officer of Indigo. "We hope to see further
improvements as a result of our new merchandising standards,
improved inventory mix, process improvements in our warehouse
and positive relationships with suppliers. In addition, with the
merger of Chapters and Indigo and the subsequent acquisition of
Chapters Online, we can continue our focus on reducing costs."
Reisman said that September revenues were adversely affected in
the aftermath of the tragic events of September 11. "Due to the
impact of September 11, consumer confidence remains uncertain
and we expect the upcoming holiday season to be extremely
challenging," said Reisman.
Total consolidated revenues in the second quarter increased 1.2%
to $155.9 million from $154.1 million in the second quarter last
year. The sales increase was primarily attributable to the
addition of 15 Indigo superstores for the seven weeks in the
quarter following the merger on August 14 and to operating five
additional Chapters superstores, offset by sales decreases from
closing 24 mall stores and from lower sales at Chapters Online.
On a year to date basis, total consolidated revenues were $291.2
million as compared to $290.9 million last year.
The consolidated net loss for the second quarter was $31.3
million as compared to a net loss of $7.8 million in the second
quarter last year. This loss is primarily due to restructuring
and other charges of $21.2 million relating to store closures
and other costs associated with the merger. The charges comprise
$12.3 million in non-cash capital asset write downs, $4.5
million relating to store closings, $1.7 million relating to
relocation and other costs associated with the merger and $2.7
million in financing charges. It is anticipated that further
store closures and other costs related to the merger will be
incurred during the remainder of the year.
Indigo Retail
Retail sales in the second quarter of fiscal year 2002 were
$149.0 million as compared to $141.3 million for the same period
last year, an increase of 5.5%. Retail sales on a year to date
basis were $274.9 million as compared to $265.5 million last
year, an increase of $9.4 million or 3.5%. Operating earnings
year to date were $2.0 million, compared to $2.1 million on the
same basis last year.
Superstores
Revenues at the 92 Chapters and Indigo superstores, including
the World's Biggest Bookstore, grew to $104.5 million, a 12.5%
increase compared to $92.9 million in the second quarter last
year. Comparative store sales declined 3.1% during the quarter
attributable to the addition of stores in shared trade areas.
Year to date revenues increased $15.4 million to $191.7 million
as compared to last year, attributed to the addition of Indigo
superstores and five additional Chapters stores.
Mall stores
Revenues declined to $37.4 million in the second quarter, a
decrease of 9.3% in comparison to $41.2 million in the second
quarter last year. The decline in revenue was the result of the
closure of 24 locations or approximately 10% fewer stores than
the same quarter last year. A comparative store sales decrease
of 0.7% is a significant improvement over the 5% decline in the
second quarter last year. Year to date revenues decreased $5.6
million to $73.1 million compared to last year. Comparative
store sales increased 1.3% year to date, a significant
improvement over a 5.6% decrease during the same period last
year.
Online
Revenues in the second quarter were $6.9 million as compared to
$12.7 million in the second quarter last year, a decrease of
46%. The decline was anticipated and is attributed to less
aggressive marketing activities and a greater focus on cost
containment. Operating losses were reduced by $7.2 million to
$1.3 million as a result of cost reduction and restructuring
activities undertaken in the previous two quarters. Operating
losses were reduced by $15.3 million on a year to date basis to
$2.7 million, a significant improvement.
Indigo is a Canadian company and the largest book retailer in
Canada, operating bookstores in all provinces under the names
Indigo Books Music & more, Chapters, Coles, SmithBooks, and
World's Biggest Bookstore. Indigo is majority owner of Chapters
Online Inc., operating http://www.chapters.indigo.ca-- an
online retailer of books, music, videos and DVDs.
Indigo is a publicly traded company, listed on the TSE under the
stock symbol IDG. To learn more about Indigo, please visit the
About Our Company section of http://www.chapters.indigo.ca
At September 29, 2001, Indigo Books' consolidated balance sheet
shows strained liquidity with total current liabilities
exceeding total current assets by about $36 million.
INSTEEL INDUSTRIES: Plans to Seek Refinancing of Credit Facility
----------------------------------------------------------------
Insteel Industries, Inc. (NYSE: III), one of the nation's
leading manufacturers of wire products, reported that interest
expense, in the fourth quarter, rose to $3.3 million from $2.6
million primarily due to higher amortization expense associated
with capitalized financing costs. The increase in amortization
expense was principally related to the acceleration of the
maturity date of the company's senior secured credit facility
and additional lender fees incurred under the terms of previous
amendments to the credit agreement. In November 2001, the
company and its lenders agreed to an amendment that modified
certain terms and conditions of the credit agreement, including
an extension in the maturity date to October 2002 and an
increase in the amount of the revolving credit facility to $50.0
million. The company intends to refinance the credit facility
prior to its amended maturity date.
The company also reported fourth-quarter net earnings of
$438,000 compared with a net loss of $1.1 million for the same
period last year. Sales decreased 11 percent to $77.6 million
from $87.0 million. Sales of the company's concrete reinforcing
products (welded wire fabric and PC strand) declined seven
percent compared with the prior year quarter while sales of wire
products (industrial wire, nails and tire bead wire) were flat.
For the fiscal year ended September 29, 2001, the company
reported a net loss of $23.8 million compared with earnings of
$2.1 million for the same period last year. The fiscal year
2001 loss includes non-cash restructuring charges totaling
$17.3 million on an after-tax basis that were recorded in the
company's third quarter. Excluding these charges, the fiscal
2001 net loss was $6.4 million. Sales decreased five percent to
$299.8 million from $315.3 million. Sales of the company's
concrete reinforcing products rose four percent compared with
the prior year while sales of wire products fell 20 percent.
"In view of the difficult conditions that we experienced in
several of our markets, we are pleased with the substantial
progress that is reflected in the company's fourth-quarter
financial results," commented H.O. Woltz III, Insteel president
and chief executive officer. "Most of our facilities extended
the favorable productivity and cost trends that were achieved
during the third quarter. These improvements have served to
partially offset the unfavorable impact of weakening demand and
increasing import competition in certain of our markets and
escalating raw material costs."
Selling, general and administrative expenses dropped by $1.9
million, or 39 percent, falling to $3.1 million from $5.0
million in the year-ago quarter primarily as a result of the
company's cost reduction initiatives and the sale of the
galvanized strand business in the third quarter. The company
has implemented a broad range of actions to reduce the staffing
and discretionary spending associated with its selling and
administrative activities consistent with current business
conditions.
Commenting on expectations for the upcoming fiscal year, Woltz
said, "We anticipate that the general weakening in the economy
together with the increased uncertainty and volatility in demand
will continue to create challenging business conditions for the
company in fiscal 2002. Rising uncertainties in the market for
the company's primary raw material, hot rolled carbon steel wire
rod, serve to heighten our concern about margin pressures in the
coming months. Reduced domestic capacity together with the
pending antidumping and countervailing duty actions could
significantly reduce the supply of wire rod available to
domestic producers of steel wire products. In order to meet
these challenges, we will remain focused on building upon the
productivity improvements and cost reductions that were attained
in recent months and pursue further actions that will reduce the
company's debt. We are encouraged by the significant progress
that has already been achieved, and appreciate the dedication
and commitment demonstrated by Insteel employees during these
difficult times."
The company also announced that it had been notified by the New
York Stock Exchange ("NYSE") that its share price had fallen
below the continued listing criteria requiring an average
closing price of not less than $1.00 over a consecutive 30
trading-day period. Following notification by the NYSE, the
company has up to six months by which time the company's share
price and average share price over a consecutive 30 trading-day
period may not be less than $1.00. In the event that these
requirements are not met by the end of the six-month period, the
company would be subject to NYSE trading suspension and
delisting and, in such event, the company believes that an
alternative trading venue would be available. The company is
currently considering alternatives to bring its average share
price back into compliance with NYSE requirements. The company
had previously announced that it had fallen below the continued
listing criteria relating to total market capitalization.
Accordingly, the company is operating under a NYSE-approved
business plan that is intended to restore compliance with the
continued listing standards by the end of the 18-month plan
period. During the plan period, the company is subject to
quarterly monitoring for compliance with the goals and
initiatives outlined in the plan.
Insteel Industries is one of the nation's leading manufacturers
of wire products. The company manufactures and markets concrete
reinforcing products, industrial wire, nails and tire bead wire
for a broad range of construction and industrial applications.
INT'L FIBERCOM: Defaults on Covenant Under Credit Facility
----------------------------------------------------------
International FiberCom Inc. (Nasdaq:IFCI), announced its results
for the third quarter and nine months ended Sept. 30, 2001,
which were contained in its 10-Q Report filed with the
Securities and Exchange Commission Monday.
Revenues for the three months ended Sept. 30, 2001 were $68.3
million compared with $76.6 million for the year-earlier
quarter, a decline of 11 percent. The company incurred a loss
from continuing operations for the third quarter of 2001 of
$99.7 million compared with net income of $3.2 million in the
third quarter of 2000.
The company also reported an additional loss from discontinuance
of its Equipment Distribution Division of $21.9 million for the
third quarter to reflect losses anticipated upon disposal of the
division because of its inability to find a buyer for the
division and prospect of possible liquidation of the division.
The third quarter operating loss includes a charge of $44.9
million attributable to the write-off of certain assets,
consisting primarily of goodwill, equipment and deferred debt
acquisition costs. The bulk of this charge relates to goodwill
specifically attributable to certain operations whose projected
future cash flows did not support recoverability of the assets.
The quarterly loss also includes a reserve of $35.4 million to
reflect the net realizable value of costs in excess of billings
and accounts receivable that may be at risk. The discussions and
negotiations with customers regarding these items did not
progress positively during the quarter and while the company
intends to pursue the amounts owed, the realization may be
significantly delayed or reduced, and, in some cases, may
require litigation. In this regard, the company continues to
have discussions with its largest customer aimed at resolving
disputes relating to work, billings and payments on several
significant projects.
For the nine months ended Sept. 30, 2001, revenues were $226.7
million compared with $200.4 million in the same period in 2000,
an increase of 26 percent. For the nine months ended Sept. 30,
2001, the company lost $143.6 million compared with income of
$10.2 million for the same period in 2000. The nine month
figures for 2001 include a charge for the loss on disposal of
the Equipment Distribution Division of $41.4 million.
The company is in covenant default of its credit facility and is
in the process of preparing a plan designed to return operations
to profitability, cure these defaults, substantially pay down
outstanding indebtedness and find alternative financing sources.
The company continues to pursue its cost-cutting and downsizing
efforts in order to implement a cost structure and streamline
operations to reach breakeven point as rapidly as possible;
however, it continues to experience a reduced level of cash flow
from its operations. The company noted in its 10-Q Report that
there is substantial doubt regarding its ability to continue as
a going concern. The company is also pursuing other
alternatives, including sale of all or part of the business to
raise additional capital to meet future financial obligations.
If the company is unable to raise additional financing or
implement its business plan and generate sufficient cash flow
from operations, it will have to curtail operations. The company
can offer no assurances that it will be successful or that
future results of operations will be sufficient to sustain its
operations or borrowings.
KBC ORION: S&P Junks 1999-1 Class D Notes Series
------------------------------------------------
Standard & Poor's lowered its ratings on the class D-1 and D-2
notes issued by KBC Orion Commercial Loan Master Trust's (KBC
Orion) series 1999-1 to triple-'C'-minus from double-'B', and
removed them from CreditWatch with negative implications, where
they were placed on Aug. 13, 2001. At the same time, the triple-
'B' ratings assigned to the class C-1 and C-2 notes are affirmed
and removed from CreditWatch with negative implications, where
they were also placed on Aug. 13, 2001. Simultaneously, ratings
are affirmed on classes A, B-1, and B-2.
The lowered ratings assigned to the class D-1 and D-2 notes
reflect the default of several assets within KBC Orion's
collateral pool and the resulting write-down of the balances of
the class D-1 and D-2 notes from their initial balances of $14.4
million and $9.6 million to their current balances of $661,534
and $441,022, respectively. The written-down balances on the
class D notes reflect the gross losses from the default of the
loans within the collateral pool, without giving credit to
potential future recoveries from sale or workout of the
defaulted loans. Because the current market value of the
defaulted loans is less than the amount required to reimburse
the written-down portion of the D-1 and D-2 notes, the
likelihood of the class D noteholders receiving their full
principal due will depend on the future market values of the
defaulted loans and the amount of excess spread that can be used
to reimburse the written-down portions of the class D-1 and D-2
notes going forward.
The affirmed ratings on the class C-1 and C-2 notes, their
removal from CreditWatch negative, and the affirmed ratings on
the class A, B-1, and B-2 notes reflect the amount of
subordination available to these notes and the overall credit
quality of the performing assets within KBC Orion's collateral
pool. With the class A notes having been paid down significantly
since KBC Orion triggered an early amortization event in June
2001, the class A, B, and C notes have more subordination
available in the currently de-levering structure (giving credit
for the defaulted loans at their current market values) than
when the transaction was initially rated. In addition, all of
Standard & Poor's required portfolio collateral quality tests
are currently within compliance.
Standard & Poor's has reviewed the results of current cash flow
runs generated for KBC Orion's series 1999-1 to determine the
level of future defaults the transaction can withstand while
still maintaining its ability to pay all of the interest and
principal due on the rated notes. After comparing the results of
these cash flow runs with the projected default performance of
KBC Orion's current collateral pool, Standard & Poor's
determined that the ratings previously assigned to the class D-1
and D-2 notes were no longer consistent with the credit
enhancement available, resulting in the lowered ratings. At the
same time, Standard & Poor's determined that the ratings
assigned to the class A, B-1, B-2, C-1, and C-2 notes remain
consistent with the credit enhancement available to support
these classes of notes. Standard & Poor's will continue to
monitor the future performance of the transaction, including the
market values of the currently defaulted loans, in order to
ensure that the ratings assigned to all the classes of notes
remains consistent with the credit enhancement available.
Outstanding Ratings Lowered And Removed
From Creditwatch With Negative Implications
KBC Orion Commercial Loan Master Trust
Series 1999-1
Class Rating Balance ($ million)
To From Original Current
----- ------------ -------- -------
D-1 CCC- BB/Watch Neg 14.400 0.662
D-2 CCC- BB/Watch Neg 9.600 0.441
Outstanding Ratings Affirmed And Removed
From Creditwatch With Negative Implications
KBC Orion Commercial Loan Master Trust
Series 1999-1
Class Rating Balance ($ million)
To From Original Current
----- ----------- -------- -------
C-1 BBB BBB/Watch Neg 22.050 22.050
C-2 BBB BBB/Watch Neg 14.700 14.700
Outstanding Ratings Affirmed
KBC Orion Commercial Loan Master Trust
Series 1999-1
Class Rating Original Balance Current Balance
----- ------ ---------------- ---------------
A AAA $1,396.5 million $377.979 million
B-1 A $16.200 million $16.200 million
B-2 A $10.800 million $10.800 million
LTV CORP: USWA Calls Shut Down "Reckless & Irresponsible"
---------------------------------------------------------
The United Steelworkers of America (USWA) was in the middle of
"constructive negotiations" with the Official Unsecured
Creditors Committee of LTV Steel on changes to the Union's
Modified Labor Agreement (MLA) when negotiators learned that LTV
management had filed a petition with the Federal bankruptcy
court to wipe out the labor and benefit agreements of more than
60,000 steel workers and steelworker retirees.
The need for renewed negotiations had arisen from deteriorating
conditions in the economy and the continuing crisis of depressed
pricing in the steel industry.
"LTV management's decision to shut down its operations at a time
when we and the Creditors Committee were still engaged in
negotiations," said USWA President Leo W. Gerard, "was reckless
and irresponsible. As they have since first announcing their
bankruptcy, LTV's management has engaged in unnecessary
confrontations that initially cost it contracts with major
customers and ultimately threaten the livelihoods and health
care benefits of tens of thousands of steelworkers and
steelworker retirees throughout the country, and could devastate
the communities they live and work in."
The USWA is engaged in negotiations with the Creditors Committee
on changes it said it is confident will satisfy the concerns of
the Emergency Steel Loan Guarantee Board -- a crucial step in
securing the bank loans necessary for successfully restructuring
LTV.
Gerard said that LTV public statements are disingenuous at best,
"if not outright falsehoods. They had not seen our most recent
proposal to the Creditors Committee before taking action to shut
down," he said. As late as 4:00 p.m. Tuesday -- at a time when
LTV's press release was already on the news wires, William
Bricker, the company's Chief Executive Officer, was professing
not to know whether or not the company had filed its actions
with the bankruptcy court.
"For the top management of LTV to have reverted to its earlier
destructive tactic of misinformation and needless confrontation
raises serious questions as to whether shutting down its
operations to break its contractual commitments to our members
hasn't been their strategy from day one," Gerard said.
"Nonetheless," he said, "we remain committed, as we have been
throughout our negotiations with the Creditors Committee, to
work together to reach an agreement that will save LTV's
operations for our members, retirees, and their communities."
LOEWEN GROUP: Taps Crossland & Conaty as Litigation Counsel
-----------------------------------------------------------
The Loewen Group, Inc., and its debtor-affiliates seek the
Court's authorization, pursuant to section 327(e) of the
Bankruptcy Code and Rule 2014(a) of the Bankruptcy Rules, to
retain and employ Crossland & Conaty, nunc pro tunc to July 19,
2001, as special litigation counsel to handle Preference
Claims.
The Debtors propose to engage C&C to act as co-counsel with
Jones, Day, Reavis & Pogue to perform legal services in
connection with the investigation and prosecution of the
Preference Claims.
The Debtors' proposed retention of C&C is limited to
representing the Debtors in connection with the Preference
Claims. C&C will not perform services typically performed by the
Debtors' general bankruptcy counsel, Jones Day and Morris,
Nichols, Arsht & Tunnell. Specifically, C&C will not perform
services regarding the Debtors' general restructuring efforts or
other matters involving the conduct of the Debtors' chapter 11
cases.
Morris, Nichols, Arsht & Tunnell, bankruptcy co-counsel for the
Debtors, has a potential conflict of interest in representing
the Debtors with respect to five of the preference actions filed
by the Debtors. Morris, Nichols, Arsht & Tunnell will continue
to serve as Delaware counsel with respect to the remainder of
the preference complaints that the Debtors have filed.
Therefore, the Debtors submit that it is necessary, pursuant to
Rule 2014-1 of the Local Rules for the United States Bankruptcy
Court for the District of Delaware, for the Debtors to employ
C&C as its Delaware special litigation counsel with regard to
the Preference Claims.
The Debtors seek to retain C&C as its Delaware special
litigation counsel because of the firm's extensive experience
and knowledge in the field of creditors' rights and business
reorganizations under chapter 11 of the Bankruptcy Code, and
because of its expertise, experience, and knowledge in
commercial litigation, its proximity to the Court, its ability
to respond quickly to emergency hearings and other emergency
matters in the Court. The Debtors believe that C&C is well
qualified and uniquely able to act as special litigation counsel
in this chapter 11 cases in a most efficient and timely manner.
The Debtors tell the Court that Jones Day and C&C have made and
will make every effort to avoid and/or minimize duplication of
effort in these cases between their firms.
Subject to Court approval in accordance with section 330(a) of
the Bankruptcy Code, compensation will be payable to C&C on an
hourly basis, plus reimbursement of actual, necessary expenses
incurred by C&C. The attorneys and paralegals presently
designated to represent the Debtors and their current standard
hourly rates are as follows:
(a) Daniel T. Crossland (partner) $200 per hour
(b) Thomas P. Conaty, IV (partner) 200 per hour
(c) David E. Matlusky (Associate) 175 per hour
(d) Amanda S. Boedecker (Paralegal) 90 per hour
These hourly rates are subject to periodic adjustments to
reflect economic and other conditions. Other attorneys and
paralegals may from time to time serve the Debtors in connection
with the Preference Claims. Additionally, the Debtors may call
upon the specialized knowledge and skills of other attorneys at
C&C to provide services, as necessary. (Loewen Bankruptcy News,
Issue No. 49; Bankruptcy Creditors' Service, Inc., 609/392-0900)
METALS USA: S&P Drops Ratings to D After Chapter 11 Filing
----------------------------------------------------------
Standard & Poor's lowered its ratings on Metals USA Inc. to `D'
and removed them from CreditWatch. The actions follow the
company's announcement that it has filed a voluntary petition to
reorganize under Chapter 11 of the U.S. Bankruptcy Code.
Metals USA is the second-largest metals processor and
distributor in North America, with revenues of more than $2.0
billion. Metals USA had recently announced that it was in
continuing discussions with its banks concerning an amendment to
its loan agreement, as it was likely to be out of compliance on
certain covenants due to its poor performance. However, an
agreement with the banks could not be reached. As a result,
Metals USA opted to file for bankruptcy protection in an attempt
to obtain additional time to stabilize the company's finances
and ensure its long-term viability.
A number of factors, including a material decrease in volumes
due to an economic recession and soft market prices, have
significantly hindered management's efforts to improve
profitability through cost reduction initiatives. The company
has also been unsuccessful so far in selling noncore assets and
enhancing liquidity. In addition, the company's prospects are
bleak, as demand levels are expected to remain subpar well into
2002.
Ratings Lowered and Removed from CreditWatch
Ratings
Metals USA Inc. To From
Corporate credit rating D CCC+
Senior secured bank loan rating D B-
Subordinated debt D CCC-
MOSLER CANADA: Closes Deal to Sell Assets to Diebold
----------------------------------------------------
In a strategic move to solidify Diebold's existing customer base
in Canada and build upon a growing list of potential customers
in the security and automated banking machine (ABM) industry,
Diebold, Incorporated (NYSE: DBD) announced it has closed a deal
to purchase the physical and electronic security assets,
currency processing, certain service and support activities, and
related properties of Mosler Canada Inc.
"This purchase will effectively expand our Canadian operations,
complement our existing customer base and enhance our product
and service offerings," said C. Neil James, managing director of
Diebold in Canada. "For the past several years Diebold has
focused on expanding its presence in the Canadian market through
organic growth, partnerships and acquisitions. The Mosler
acquisition will enhance those actions by expanding our breadth
of service and security across the nation."
Mosler, which announced August 3 it would cease operations and
file for Chapter 11 bankruptcy, was a leading integrator of
physical and electronic security systems, monitoring services,
support and maintenance in the United States and Canada.
The acquisition provides Diebold with immediate inventory of
intellectual property, proprietary parts, technical
documentation and trained personnel with the capability
necessary to serve its burgeoning customer base. Diebold will
continue its practice of supporting other company's products, as
it also obtained the rights to sell, install and service
security equipment formerly sold by Mosler.
Diebold has hired most of the Mosler personnel in Canada, and is
currently managing former Mosler offices in Halifax, Ottawa,
Mississauga and Calgary, while preserving relationships with key
vendors and manufacturers. Mosler Inc. offered a comprehensive
line of electronic and physical security systems that secure
physical premises, manage access and monitor events. Mosler
tailored its solutions to financial institutions, government
facilities and a wide range of commercial and industrial market
segments. For additional information on Diebold security, visit
http://www.diebold.com/security
Diebold, Incorporated, is a global leader in providing
integrated self-service delivery systems and services. Diebold
employs more than 12,000 associates with representation in more
than 80 countries worldwide and headquarters in Canton, Ohio,
USA. Diebold reported revenue of $1.7 billion in 2000 and is
publicly traded on the New York Stock Exchange under the symbol
'DBD.'
MOTIENT: Distributes XM Stake to Senior Secured Debt Guarantors
---------------------------------------------------------------
Motient Corporation (Nasdaq: MTNT) announced that, as part of
its ongoing debt restructuring efforts, it has distributed its
remaining stake in XM Satellite Radio (Nasdaq: XMSR) to its
guarantors, in full satisfaction of its outstanding guaranteed
loan balance for its senior secured debt. The guarantor group
consists of Hughes Electronics, Singapore Telecommunications
Limited and Baron Capital Partners.
"This is an important step in restructuring our balance sheet,"
said Walter V. Purnell, Jr., president and CEO of Motient, "and
I am encouraged by the pace with which the restructuring
discussions are proceeding. We are pleased to have been a part
of incubating XM Satellite Radio and wish our friends at XM
every success as they bring the next generation of radio to
America."
Motient -- http://www.motient.com-- owns and operates an
integrated terrestrial/satellite network and provides a wide
range of two-way mobile and Internet communications services
principally to business-to-business customers and enterprises.
The company provides eLink(SM) and BlackBerry? by Motient two-
way wireless email service to customers accessing email through
corporate servers, Internet Service Provider (ISP) and Mail
Service Provider (MSP) accounts, and paging network suppliers.
Motient serves a variety of markets including mobile
professionals, telemetry, transportation, field service, and
nationwide voice dispatch offering coverage to all 50 states,
Puerto Rico, the U.S. Virgin Islands, and thousands of miles of
U. S. coastal waters.
eLink is a service mark and Motient is a trademark of Motient
Corporation. The BlackBerry and RIM families of related marks,
images and symbols are the exclusive properties of, and
trademarks of Research In Motion Limited and are used by
permission. "BlackBerry by Motient" - used by permission.
NATIONAL REFRACTORIES: Chapter 11 Case Summary
----------------------------------------------
Lead Debtor: National Refractories and Minerals Corp.
1852 Rutan Dr.
Livermore, CA 94550-7635
Bankruptcy Case No.: 01-45482
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Chicago Fire Brick, Inc. 01-45483
Wellsvile Fire Brick Company 01-45484
National Affiliated
Technologies, Inc. 01-45485
National Refractories and
Minerals, Inc. 01-45486
Chapter 11 Petition Date: October 10, 2001
Court: Northern District of California (Oakland)
Judge: Leslie Tchaikovsky
Debtors' Counsel: Terrance L. Stinnett, Esq.
Goldberg, Stinnett, Meyers and Davis
44 Montgomery St. #2900
San Francisco, CA 94104
415-362-5045
Estimated Assets: more than $50 million
Estimated Liabilities: more than $50 million
OMNISKY: Considers Restructuring Under Federal Bankruptcy Code
--------------------------------------------------------------
OmniSky Corporation (Nasdaq: OMNY) announced that it has filed,
under applicable Securities and Exchange Commission regulations,
for an extension of time to submit its quarterly report on Form
10-Q for the third quarter ended September 30, 2001. The filing
extends the due date for the Form 10-Q until November 19, 2001.
"We remain committed to providing our award-winning service to
our customers as we continue to evaluate our strategic options,"
said Patrick McVeigh, OmniSky's Chairman and Chief Executive
Officer. "While we have made every effort over the past several
months to raise the additional capital necessary to execute on
our business plan, we have not yet been successful in doing so.
We continue to actively consider all available options to
preserve and enhance our assets for our shareholders and other
stakeholders, although our outlook has, unfortunately, been
adversely affected by the continued deterioration in the capital
markets since September 11. We are also evaluating the potential
benefits of a reorganization, sale or other form of
restructuring under the federal bankruptcy code and may make a
decision to pursue that alternative if we believe it will allow
for a more orderly process or advantageous transaction."
OmniSky -- http://www.omnisky.com-- is a leading provider of
wireless applications and services and offers its proprietary
wireless applications and services, including Communications,
Content Delivery and Location-Based Services to
telecommunications carriers, online service providers, hardware
manufacturers and other third parties. OmniSky enables these
companies to offer differentiated wireless data solutions on any
mobile device, from WAP-compliant cell phones to PDAs and laptop
computers, and on the most widely available wireless networks,
such as CDPD, CDMA, GSM and GPRS.
OmniSky's award-winning service offers mobile professionals
access to up to six e-mail accounts, including corporate e-mail
via Microsoft Outlook as well as POP3 e-mail, the ability to
search and surf the Internet, a broad range of optimized Web
content, and the ability to securely conduct e-commerce
transactions. OmniSky offers service for the Palm V and Palm Vx,
Handspring Visor Platinum, Visor Prism and Visor Edge, HP
Jornada 520/540 Series Pocket PC, Compaq iPAQ Pocket PC and
Casio E-125 Pocket PC, as well as a wireless access solution for
the HP Pavilion Notebook PC.
PACIFIC GAS: Court Okays Entry into NGX Pact & Letter of Credit
---------------------------------------------------------------
To participate in a Canadian natural gas commodities exchange
operated by NGX Financial, Inc. and Natural Gas Exchange, Inc.
(collectively, NGX) in the face of Pacific Gas and Electric
Company's down-graded credit rating, PG&E sought and obtained
the Court's authority, pursuant to Bankruptcy Code Section 364,
to enter into a new agreement (the Exchange Agreement) with NGX
after the previous one was terminated, and, as a corresponding
measure at the request of NGX, to incur post-petition secured
debt in favor of Union Bank of California, N.A. in connection
with the issuance of a letter of credit to NGX Financial, Inc.,
a Canadian corporation, as beneficiary.
Pursuant to the Exchange Agreement, PG&E will provide an
irrevocable standby letter of credit in the maximum amount of
$10 million, to be issued by Union Bank for the account of PG&E
in favor of NGX Financial as beneficiary. As consideration to
Union Bank for issuing the L/C, PG&E will pay Union Bank a fee
equal to 1/2% of the face amount outstanding under the L/C, and
to collateralize any obligations to Union Bank in connection
with the L/C by maintaining a certificate of deposit with Union
Bank in the amount of $10 million.
Qualified Contracting Parties may purchase or sell natural gas
and related financial contracts through the Exchange. Because
NGX Financial "clears" all accounts for all Contracting Parties
in the Exchange, the debts which Contracting Parties incur as a
result of transactions entered into through the Exchange are
deemed to be owed by the Contracting Parties to NGX Financial.
Accordingly, a Contracting Party's agreement with NGX contains
provisions concerning the payment of debts incurred by the
Contracting Party to NGX Financial as a consequence of Exchange
transactions, as well as a number of stringent requirements
concerning the creditworthiness of Contracting Parties.
Prior to petition for bankruptcy, PG&E was a Contracting Party
on the Exchange, pursuant to an Agreement with NGX dated
February 27, 1998. PG&E found the Exchange to be a particularly
favorable means of purchasing and selling gas supplies, for a
number of reasons. The Exchange is immediately accessible to
Contracting Parties, and Contracting Parties may electronically
view and anonymously post in "real time" bid and sale prices for
natural gas traded on the Exchange. There are approximately 80
Contracting Parties, giving PG&E immediate access to many
possible sources of supply. The Exchange is also available to
Contracting Parties seven days a week.
PG&E regularly participated in purchase and sale transactions
through the Exchange until January, 2001 when credit reporting
agencies down-graded PG&E's credit rating status to a level
below that permissible under the Pre-Petition Agreement.
Although the Pre-Petition Agreement did provide that Contracting
Parties whose creditworthiness was not within permissible
standards could continue to qualify to trade on the Exchange
through a variety of credit enhancing measures, PG&E was unable
at that time to obtain any such credit enhancements. NGX
accordingly terminated its relationship with PG&E by letter
dated as of January 19, 2001.
NGX is willing to enter into a new form of Agreement with PG&E,
pursuant to which PG&E would again become a Contracting Party on
the NGX Exchange. Although NGX calculates the aggregate amount
of liability by any Contracting Party on a daily basis,
Contracting Parties on the Exchange, including PG&E, are billed
for such amounts on a monthly basis. PG&E's maximum aggregate
liability to NGX under the Proposed Exchange Agreement as a
Contracting Party on the Exchange would be limited to $10
million. However, NGX's Risk Management Policy requires that
non-investment grade Contracting Parties, such as PG&E, deposit
certain acceptable types of collateral with NGX as security for
performance. One such acceptable form of collateral from PG&E is
a letter of credit in the amount of PG&E's maximum aggregate
liability to NGX ($10 million). The letter of credit must be an
irrevocable standby letter of credit from an institution
acceptable to NGX, and may be drawn upon by NGX Financial upon
default by PG&E, including partial thaws for amounts less than
the total amount available under the L/C.
Because of the importance to PG&E of securing gas supplies for
its customers and the desirability to PG&E of being able to
participate on the Exchange, PG&E is willing to provide a letter
of credit for the benefit of NGX Financial in order to become a
Contracting Party on the Exchange. PG&E believes that the terms
and conditions for the issuance of the L/C by Union Bank are
reasonable and are the most favorable terms available to PG&E at
this time. (Pacific Gas Bankruptcy News, Issue No. 17;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PACIFIC WEBWORKS: Survival Uncertain In Wake of Sustained Losses
----------------------------------------------------------------
Pacific WebWorks, Inc. has a limited operating history and has
sustained losses since inception. In addition the Company had
negative cash flows from operations of $1,109,046 and $2,051,440
during the nine-month periods ended September 30, 2001 and 2000,
respectively and $2,100,149 during the year ended December 31,
2000. The company had negative working capital of $1,346,971 at
September 30, 2001 and $2,583,400 at December 31, 2000. As a
result, the Company has relied significantly upon equity and
debt funding to support certain of its operations. The Company
is working through various matters related to disputes with a
vendor and an employee claim, which may impact its cash
position.
During the nine months ended September 30, 2001, the Company
indicates it has taken steps to reduce its burn rate in order to
meet its monthly cash requirements from operations with its
reoccurring monthly cash revenues. This has been accomplished
through a reduction in personnel, relocation to lower-cost
office facilities and other expense reduction activities. The
Company has also focused its immediate attention to the
operations and growth of its core business units: Pacific
WebWorks, Inc. and Intellipay, Inc. In the course of these
activities, the Logio, Inc. subsidiary, which had temporarily
ceased development and operations of its Internet products,
became unable to make payment on its payables and certain of its
capital lease agreements related to hardware and infrastructure.
As a result of these defaults, Logio's most significant creditor
obtained possession of the equipment under its lease agreements
in May of 2001. These events have caused impairments related to
the loss of the equipment under capital leases, other long-lived
assets related to the equipment and the goodwill of the
subsidiary to be recorded during second quarter 2001 impairment
losses recorded for these events and the assessment of
impairment in the World Commerce Network subsidiary resulted in
$2,688,300 of impairment losses for the nine months ended
September 30, 2001.
There is substantial doubt about the Company's ability to
continue as a going concern.
PARTS.COM: Expects to Complete Financial Workout Before Dec. 31
---------------------------------------------------------------
Parts.com, Inc. (OTC Bulletin Board: PART), a marketplace and
software solutions provider for the parts industry, announced
its results for the third quarter ended September 30, 2001.
Revenues for the third quarter of 2001 were $317,879, down 10
percent from the same period last year. Pro forma net loss for
the quarter was $67,153 or a loss of $.02 per share. During the
corresponding quarter in 2000, the comparable pro forma net loss
was $746,152 or a loss of $0.31 per share.
For the three-month period ended September 30, 2001, the Company
reported net sales of $317,879 a 36 percent decrease compared to
net sales of $493,058 for the quarter ended June 30, 2001. As
stated in the Company's 10Q report, it records only its net
transaction fees on parts sales.
For the quarter ended September 30, 2001, the Company reduced
its Other Selling, General and Administrative Expenses to
$244,134 from $881,426 for the comparable quarter in 2000.
Pro forma results exclude stock-based employee compensation;
stock-based consulting fees, amortization, depreciation, and
interest expense.
"Considering the difficult business environment during the third
quarter, we are pleased with our results," stated Shawn D. Lucas
President and CEO. "Although revenues for the quarter were down
10 percent, the Company successfully reduced its operating cost
by 76 percent compared to the second quarter of 2001."
"Parts.com is working with its secured creditors/investors, the
Internal Revenue Service and its vendors to complete a financial
workout before our fiscal year-end which is December 31, 2001.
Parts.com can make no assurances that it will resolve these
obligations, as several unresolved issues still remain that will
dictate the final outcome of the Company's debt obligations. I
am hopeful this restructuring will be completed in the coming
weeks, allowing Parts.com's management and employees to focus
100% of their time on sales for 2002," concluded Mr. Lucas.
Parts.com, based in Sanford, Florida, provides business-to-
business electronic commerce software and parts procurement
platform provider. The Company's e-procurement solutions enable
corporations to use electronic automation to streamline business
transactions and reduce costs. In addition to automating
existing relationships between buyers and seller, Parts.com also
provides a marketplace where buyers and sellers can conduct
transactions electronically.
PHILIPP BROTHERS: S&P Concerned About Heightened Financial Risk
---------------------------------------------------------------
Standard & Poor's revised its outlook on Philipp Brothers
Chemicals Inc. to negative from stable. At the same time,
Standard & Poor's affirmed its ratings on the company.
The outlook revision reflects heightened financial risk and
deteriorating credit quality measures due to weaker-than-
expected operating and financial performance. Profitability and
cash flow have been negatively impacted by lower selling prices
across a number of key products, including the negative impact
of foreign exchange, volume pressure in certain end markets such
as the printed circuit board industry, and higher selling,
general, and administrative expenses. Sustained weakness could
impair Philipp Brothers' ability to achieve further debt
reduction as anticipated in the wake of the acquisition of the
medicated feed additives business of Pfizer Inc. in November
2000.
The ratings continue to reflect a decent business profile.
Privately held Philipp Brothers is a manufacturer and marketer
of a somewhat diverse line of specialty chemicals to a variety
of industries. Core product segments include agricultural and
industrial chemicals, with products sold into a number of end
markets, including animal nutrition and health, electronics,
wood treatment, pharmaceutical, glass, construction and
concrete. Many of the products have leading market shares, and
revenues are geographically diversified.
The medicated feed additives transaction significantly increased
the company's sales base, and when combined with Philipp
Brothers' existing animal nutrition and health business, created
a leading global medicated feed additives company with expanded
positions in the Americas, the Middle East, and Asia. Still, the
transaction, along with the recent divestiture of the company's
crop protection chemicals operations, resulted in a greater
concentration of sales in animal nutrition and health.
Philipp Brothers' lackluster operating margins in recent years
in part reflect manufacturing problems at ODDA Smelteverk AS, a
Norwegian company acquired in 1998. The Pfizer assets should
help improve profitability over time.
The acquisition of Pfizer's feed additives business was
partially financed by a $45 million PIK preferred stock
investment (redeemable after subordinated notes) in Philipp
Brothers by Palladium Equity Partners LLC, a New York, New York-
based private investment firm. However, the deal required
a meaningful increase in debt. As a result, credit protection
measures remain weak, with funds from operations (FFO) as a
percentage of total debt less than 5% (including preferred stock
and substantial contingent payments related to the Pfizer
transaction).
The ratings incorporate expectations that a gradual improvement
in operating performance and profitability, as well as an
emphasis on debt reduction, will strengthen credit protection
measures, with FFO to debt of 10% to 15%. Integration of the
acquired operations could prove challenging to the company, thus
limiting the expected improvement in debt-servicing capability.
Standard & Poor's expects the proceeds from asset sales, such as
the recent sale of the Agtrol crop protection business, to be
applied to debt reduction, and that debt-financed acquisitions
will be limited during the intermediate term. Moderate working
capital and investment needs should limit further debt use.
Outlook: Negative
A further weakening in business conditions and deterioration in
the financial profile could lead to downgrades.
Ratings Affirmed
Philipp Brothers Chemicals Inc. Rating
------------------------------- ------
Corporate credit rating B
Subordinated debt CCC+
PHONETEL: Violates Financial Covenants Under Loan Agreement
-----------------------------------------------------------
PhoneTel Technologies, Inc. (OTCBB:PHTE) reported that, at
September 30, 2001, the Company was not in compliance with
certain financial covenants under its loan agreement for post-
reorganization financing entered into on November 17, 1999. In
addition, the Company has not paid the monthly interest
previously due on September 1 through November 1, 2001 and is in
default with respect to the Loan Agreement. Management has
requested and expects to obtain an amendment to the Loan
Agreement that would permit the Company to continue to defer the
payment of past due interest by adding it to loan principal and
to waive the defaults described above.
Although the lenders have previously waived compliance with
respect to certain financial covenants, entered into amendments
to defer the due date of certain payments and granted their
consent to enter into the letter of intent to merge with Davel
(which contemplates a substantial debt restructuring), there can
be no assurance that the lenders will waive the current or any
future defaults or permit the deferral of past due interest
through the maturity date of the loan. If the Company is unable
to obtain waivers of defaults or deferral of amounts due under
the Loan Agreement, all outstanding amounts could, at the option
of the lenders, become immediately due and payable.
PhoneTel also reported that revenues for the third quarter were
$11.8 million, compared to $16.0 million in the prior year's
third quarter. This decline reflects a 9.7% reduction in the
number of installed pay telephones and the continuing impact of
wireless communications on payphone usage. Third quarter EBITDA
(earnings before interest, taxes, depreciation and amortization,
and other unusual charges and contractual settlements) was $0.7
million, compared to $2.2 million in the prior year's third
quarter. The net loss for the third quarter was $7.4 million
compared to a net loss of $7.8 million in the third quarter of
2000. The third quarter 2001 net loss included a non-cash charge
of $1.8 million for the write-off of intangible assets related
to approximately 2,000 pay telephones removed from service as
part of the Company's continuing program of evaluating and
removing phones that are no longer profitable. A similar charge
for $2.9 million for the removal of approximately 1,500 pay
telephones in last year's third quarter is included in other
unusual charges and contractual settlements in the condensed
consolidated statements of operations.
Revenues for the third quarter 2001 decreased $0.5 million when
compared to second quarter revenues of $12.3 million. Third
quarter EBITDA of $0.7 is an increase of $0.9 million compared
to second quarter 2001 EBITDA. The net loss for the third
quarter decreased by $5.4 million compared to the second quarter
2001 net loss of $12.8 million. The reduction in net loss was
due principally to a $6.3 million asset impairment loss relating
to the non-cash write-down in the carrying value of certain
payphone assets included in other unusual charges and
contractual settlements in the second quarter of 2001.
Revenues for the nine months ended September 30, 2001 were $35.5
million, compared to $45.9 million for the same period in 2000.
For the nine months ended September 30, 2001, EBITDA was $0.5
million compared to $5.9 million for the same period in 2000.
The net loss for the nine months ended September 30, 2001, was
$26.4 million compared to a net loss of $18.2 million last year.
As previously announced on June 13, 2001, the Company has
entered into a servicing agreement and a letter of intent to
merge with Davel Communications, Inc. The letter of intent
contemplates the execution of a definitive merger agreement as
well as a substantial debt restructuring of each company.
Completion of the merger is also subject to approval by the
boards of directors, shareholders and existing secured lenders
of both companies and the receipt of material third party and
governmental approvals and consents. In anticipation of the
merger, the companies have implemented mutual servicing
arrangements affecting their respective field service operations
on a geographic basis.
The merger, once completed, will bring together the nation's two
largest independent payphone providers with resulting
improvements in route densities and operating costs that are
critical to success in today's payphone environment. In pursuing
the merger, the companies look forward to fully combining the
relative strengths and resources of their corporate and field
service organizations through a formal business combination
early next year.
PhoneTel Technologies, Inc., is a leading independent provider
of pay telephones and related services with operations in 45
states and the District of Columbia. PhoneTel serves a wide
array of customers operating in the shopping center,
hospitality, health care, convenience store, university, service
station, retail and restaurant industries.
POINTONE COMMS: Selling Substantially All Assets to DataVoN
-----------------------------------------------------------
DTVN Holdings, Inc., (OTC Bulletin Board: DTVN) through its
wholly owned subsidiary DataVoN, Inc., a nationwide provider of
packet-switched network communications services, announced that
subsequent to the close of the third quarter ended September 30,
2001, DataVoN and PointOne Communications executed a letter of
intent for the purchase of substantially all of PointOne's
assets. He said that, "PointOne's execution of the Letter of
Intent evidences its Board's belief in DataVoN and its business
plan."
PointOne is currently a Chapter 11 debtor in a bankruptcy
proceeding in Austin, Texas, and any transaction between DataVoN
and PointOne is subject to Bankruptcy Court approval.
DataVoN Chief Operating Officer Steve Holden concluded, "The
potential PointOne asset acquisition could significantly
accelerate our future network deployment and revenue growth.
Additionally, the hidden gem of the PointOne asset portfolio is
a state-of-the-art Operating Support System that we could
integrate into our current systems. This would save us money
and time related to OSS upgrades and would allow us to
immediately improve the customer service side of our business
and enhance our network capacity and utilization tracking
capabilities. DataVoN also successfully launched its new
VisuallyThere videoconferencing product during the third
quarter. With this product we are able to deliver high-quality,
very competitively priced service for Fortune 100 and small
businesses alike. DataVoN customers will now have access to our
broad range of converged services, including world-class
videoconferencing at a time of heightened concerns with travel
and economic conditions."
DataVoN, Inc. -- http://www.datavon.com-- Video Intelligence,
Inc. -- http://www.video-intelligence.com-- and Zydeco
Exploration, Inc. are wholly owned subsidiaries of DTVN
Holdings, Inc. DataVoN has received the Frost & Sullivan 2001
Market Engineering Award for Business Development Strategy.
DataVoN's core business is to provide wholesale origination,
transport and termination services through its state-of-the-art
packet-switched network which facilitates sharing of voice, data
and video transmissions over the same medium. Video
Intelligence, with offices and operations in West Chester,
Pennsylvania and Fort Worth, Texas, is a premiere provider of
business- critical video applications and services, and
specializes in enterprise IP video services, including video
conferencing. Zydeco manages the corporate oil and gas
resources. DTVN has headquarters and its Network Operations
Center in Richardson, Texas.
RELIANCE GROUP: Court Okays Hangley's Engagement as Counsel
-----------------------------------------------------------
Steven R. Gross, Esq., of Debevoise & Plimpton, representing
Reliance Group Holdings, Inc., and its debtor-affiliates, asks
Judge Gonzalez for permission to employ the law firm Hangley,
Aronchick, Segal & Pudlin as special counsel. Mr. Gross informs
the Judge that HASP attorneys have considerable experience
before the state and federal Courts of the Commonwealth of
Pennsylvania and expertise in litigation, bankruptcy and other
corporate matters.
The professional services that HASP will perform include, but
are not limited to, the following:
a) advising RGH with respect to their rights and
obligations in the Commonwealth of Pennsylvania relating to RIC,
the actions and any other matters relating to RIC or RGH in the
Commonwealth of Pennsylvania;
b) taking the necessary legal steps to effectuate the
removal and transfer of venue of certain claims and civil
actions from the state courts for the Commonwealth of
Pennsylvania to the Bankruptcy Court for the Southern District
of New York;
c) preparing on behalf of RGH, as debtors-in-possession,
necessary applications, motions, complaints, answers, orders,
reports and other pleadings and documents relating to any civil
actions, in the Commonwealth of Pennsylvania;
d) appearing before the state and federal courts in the
Commonwealth of Pennsylvania and protecting the interests of RGH
in such jurisdictions;
e) advising RGH regarding the rehabilitation and
liquidation proceedings involving RIC and the role of the
Pennsylvania Insurance Department in operations of RGH
subsidiaries;
f) performing such other legal services for RGH as may be
necessary and appropriate, including but not limited to,
assisting Debevoise & Plimpton in any matters relating to the
proceedings.
HASP proposes to be compensated for the services at its ordinary
billing rates and in accordance with customary billing
practices.
The current hourly rates of the partners, associates and legal
assistants of HASP who are expected to render services in these
proceedings are as follows:
William T. Hangley $440
Myron A. Bloom $325
James M. Matour $310
Hillary C. Steinberg $200
Matthew A. Hammermesh $180
Christine A. Hewlett $125
The expenses to be charged include, photocopying, witness fees,
travel expenses, certain secretarial and other overtime
expenses, filing and recording fees, long distance telephone
calls, postage, express mail and messenger charges, computerized
research charges and other computer services, expenses for
working meals and telecopier charges.
HASP has a fixed fee arrangement with Westlaw. This arrangement
permits HASP to charge its clients less for computer research
than the standard rate normally charged by Westlaw. Accordingly,
HASP charges all of its clients 55% of Westlaw's standard hourly
research rate.
HASP declares itself a "disinterested person," as this term is
defined, within the meaning of sections 101(14) and 101(31).
Judge Gonzalez, agreeing that RGH may need special counsel,
approves the application to employ HASP. (Reliance Bankruptcy
News, Issue No. 15; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
REPUBLIC TECHOLOGIES: Plan Filing Period Extended to March 21
-------------------------------------------------------------
Republic Technologies International LLC, the nation's leading
supplier of special bar quality steel, announced U. S.
Bankruptcy Court approval for an extension of the exclusive
period in which the company can propose a Chapter 11 plan of
reorganization.
With today's court ruling, Republic's exclusive right will last
through March 21, 2002.
"This will give us additional time to develop and build
consensus for a plan that addresses all of Republic's
constituencies," said Joseph F. Lapinsky, president and chief
executive officer. "Despite the complicated issues and poor
market conditions we are facing, we have made substantial
progress on our reorganization, while preserving solid
relationships with our customers and suppliers.
"We have also moved forward in negotiations with the United
Steelworkers union toward contract changes that are critical for
our success, and are hopeful that the remaining issues can be
resolved. We expect to conclude these discussions very soon and
get on with the business of reorganizing Republic to emerge
stronger than ever."
Union officials have agreed to some short term contract
modifications, including one that deferred a November 1 wage
increase to at least December 1, and another that will
facilitate the temporary idling of some operations. Idled this
week as a result of lower volume were parts of Republic's Canton
and Massillon hot-rolled plants and cold-finished plants in
Massillon, Beaver Falls, Pa., Gary, Ind., Harvey, Ill. and
Hamilton, Ont. The same facilities are slated for idlings the
week of Christmas. Shipments from the facilities will continue
during the temporary outages.
In ruling for the extension, the court agreed to give the
company time to develop a plan of reorganization. Republic had
stated that an extension was necessary because of the multiple
issues to be resolved before a reorganization plan can be
proposed and negotiated. These issues include the collective
bargaining agreements, claims of the Pension Benefit Guaranty
Corp. and the creation of a business plan.
Republic Technologies International, based in Fairlawn, Ohio, is
the nation's largest producer of high-quality steel bars. With
4,600 employees and 2000 sales of nearly $1.3 billion, Republic
was included in Forbes magazine's 2000 and 1999 lists of the
largest U.S. private companies. Republic operates plants in
Canton, Massillon, and Lorain, Ohio; Beaver Falls, Pa.; Chicago
and Harvey, Ill.; Gary, Ind.; Lackawanna, N.Y.; Cartersville,
Ga.; and Hamilton, Ont. The company's products are used in
demanding applications in the automotive, agricultural,
aerospace, off-highway, industrial machinery and energy
industries.
RUSSELL-STANLEY: Completes Exchange Offer for 10-7/8% Notes
-----------------------------------------------------------
On Friday, Russell-Stanley completed its exchange offer for its
$150 million 10-7/8% Senior Subordinated Notes due 2009.
The completion of the financial restructuring has resulted in a
significant de-leveraging of the company's balance sheet.
Under terms of the completed deal, bank lenders amended the
existing revolving credit and term loan facility to provide for
a $95 million commitment, an increase of $10 million over the
latest commitment. Note holders exchanged $150 million of
10-7/8% Senior Subordinated Notes due 2009 into substantially
all of the equity of the reorganized company and $20 million of
new 9% Senior Subordinated Notes due 2008. Interest on the new
notes will be paid-in-kind until August 31, 2003 and payable in
cash thereafter if certain financial conditions are met.
Russell-Stanley Holdings, Inc. is a leading manufacturer and
marketer of plastic and steel containers and a leading provider
of related container services in the United States and Canada.
SAMSONITE CORP: Appealing Delisting Action by Nasdaq Staff
----------------------------------------------------------
Samsonite Corporation (Nasdaq: SAMC) announced that it is
appealing a determination by the Nasdaq staff to delist
Samsonite stock from trading on the Nasdaq Smallcap Market.
In the days following the terrorist attack on September 11,
2001, as stock markets fell in reaction to that terrible event,
Samsonite's market capitalization dropped below Nasdaq standards
required for continued listing. It was not able to recover
sufficiently during a 30-day grace period granted by Nasdaq.
Pursuant to Nasdaq rules, Samsonite has requested a hearing
before a Nasdaq-convened Listing Qualifications Panel to seek
more time to regain compliance with Nasdaq Smallcap listing
standards. Samsonite believes that both fairness and the
national interest require greater leniency in the application of
Nasdaq rules in order to keep American companies from suffering
additional and unnecessary hardship as a result of this
unprecedented event.
Nasdaq has granted the requested hearing, which is scheduled to
be held on December 20, 2001. Until the decision of the panel
is issued, the delisting is stayed and Samsonite will continue
trading on the Nasdaq Smallcap Market.
Samsonite is one of the world's largest manufacturers and
distributors of luggage and markets luggage, casual bags,
business cases and travel-related products under brands such as
SAMSONITE, AMERICAN TOURISTER, LARK, HEDGREN and SAMSONITE black
label.
SIMON WORLDWIDE: Doubt Raised About Ability to Continue
-------------------------------------------------------
Simon Worldwide, Inc. (Nasdaq: SWWI) announced results for the
third quarter and nine months ended September 30, 2001 and also
announced that in the wake of the recent loss of several
significant clients it would eliminate approximately an
additional 215 jobs worldwide and that there is substantial
doubt about its ability to continue as a going concern.
Net sales for the third quarter 2001 were $93.8 million compared
with $178.7 million for the corresponding period a year ago.
Third quarter net loss available to common stockholders was
$67.5 million compared with a net loss available to common
stockholders of $1.7 million in 2000. For the nine-month period
ended September 30, 2001, the Company reported net sales of
$311.4 million compared with $580.3 million in 2000. Net loss
available to common stockholders for the nine-month period ended
September 30, 2001 totaled $87.0 million compared with net loss
available to common stockholders of $12.4 million for the first
nine months of 2000.
As previously reported, as a result of the alleged fraudulent
actions of a former employee of its main operating subsidiary,
Simon Marketing, the Company's two largest customers, McDonald's
and Philip Morris, representing approximately 88% of its sales
base, terminated their relationship with the Company in August
2001. As a result of the loss of these major customers, along
with associated legal matters described in the Company's
quarterly report for the third quarter 2001 on Form 10-Q, there
is substantial doubt about the Company's ability to continue as
a going concern. Results for the three and nine-month periods
ended September 30, 2001 included pre-tax charges of
approximately $48.8 million and $69.0 million, respectively,
relating principally to the write-down of goodwill attributable
to Simon Marketing.
The Company also reported that, in addition to the third quarter
2001 elimination of 177 jobs, it would be eliminating, in the
fourth quarter of 2001, approximately an additional 215 jobs
worldwide to further reduce its operating costs in the wake of
the loss of its McDonald's and Philip Morris business. This
action will bring the Company's worldwide work force to
approximately 90.
Simon Worldwide is a diversified marketing and promotion agency
with offices throughout North America, Europe and Asia. The
Company has worked with some of the largest and best-known
brands in the world and has been involved with some of the most
successful consumer promotional campaigns in history. Through
its wholly owned subsidiary, Simon Marketing, Inc., the Company
provides promotional agency services and integrated marketing
solutions including loyalty marketing, strategic and calendar
planning, game design and execution, premium development and
production management. The Company was founded in 1976.
SLEEPMASTER: Case Summary & 25 Largest Unsecured Creditors
----------------------------------------------------------
Lead Debtor: Sleepmaster, LLC
2001 Lower Road
Lindern, NJ 07036-6520
Case No: 01-11342
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Sleepmaster Finance Corporation 01-11341
Sleepmaster Holdings, LLC 01-11343
Adam Wuest Corporation 01-11344
Lower Road Associates, LLC 01-11345
Crescent Sleep Products Company 01-11346
Simon Mattress Manufacturing Co. 01-11347
Palm Beach Bedding Company 01-11348
Herr Manufacturing Company 01-11349
Chapter 11 Petition Date: November 19, 2001
Court: District of Delaware
Judge: Mary F. Walrath
Debtors' Counsel: Laura Davis Jones, Esq.
Debra Grassgreen, Esq.
David M. Berthenthal, Esq.
Pachulski, Stang, Ziehl, Young & Jones, P.C.
919 North Market Street, 16th Floor
PO Box 8705
Tel: 302 652 4100
Fax: 302 652 4400
Debtor's Top 25 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
United States Trust Indentured Trustee $115,000,000
Company of NY
Corporate Trust Department
25th Floor
114 West, 47th Street
New York, NY 10036
State Street Bank Bondholder $39,170,000
& Trust Company
Attn: Joseph J. Callahan
1776 Heritage Dr.
Globals Corporate Action Unit
JAB 5NW No.
Quincy, MA 02171
Tel: 617 985 6453
Fax: 617 537 5004
Chase Manhattan Bank/CCSG Bondholder $18,545,000
Attn: Debbie Lorenzo
PO Box 2558
Houston, TX 77252
Tel: 713 216 4488
Fax: 713 216 6932
Boston Safe Deposit Bondholder $17,250,000
and Trust Co
Attn: Constance Holloway
c/o Mellon Bank N.A.
Three Mellon Bank Cntr.
#153-3016
Pittsburgh, PA 15259
Tel: 412 234 2929
Fax: 412 234 7244
Chase Manhattan Bank Bondholder $12,640,000
Attn: Paula Dabner
c/o JP Morgan Investor
Services
14201 Dallas Pkwy
12th Floor
Dallas, TX 75240
Tel: 469 477 0081
Fax: 469 477 2183
Leggett & Platt Trade Debt $4,665,830
Larry Reeves
PO Box 198767
Atlanta, GA 30384
Tel: 973 824 8891
Fax: 973 824 0045
E.R. Carpenter Trade Debt $514,869
Alan Gordon
PO Box 75252
Charlotte, NC 28275
Tel: 800 627 2728
Fax: 410 889 4151
Flexible Foam Trade Debt $451,152
Jay Denenberg
12575 Bailey Road
PO Box 124
Spencerville, OH 45887
Tel: 716 235 8356
Fax: 419 647 1402
Capitol Foam Trade Debt $407,807
Lenny Miraglia
75 East Union Avenue
PO Box 7564
East Rutherford
NJ 07073-7564
Tel: 800 562 4707
Fax: 201 933 7684
Blumenthal Trade Debt $371,069
Greg Chacharon
PO Box 13395
90550 Broad St.
New Orleans, LA 70185
Tel: 800 635 8590
Fax: 800 358 7862
Culp Ticking Trade Debt $193,147
Mid South Extrusion Trade Debt $160,751
Hanes Ind. Trade Debt $121,593
Deslee Textile Trade Debt $99,575
Masterack Trade Debt $70,368
M Chasen Trade Debt $48,458
KLM Ind Trade Debt $47,273
Hendrix Batting Trade Debt $43,590
Fritz Marketing Trade Debt $36,516
CT Nassau Trade Debt $31,066
Mid America Fiber Trade Debt $23,128
Pension Acturial Consult Trade Debt $22,170
Coats North America Trade Debt $21,203
Intermec Technologies Trade Debt $18,728
Stanley Bostitch Trade Debt $17,530
SPINNAKER: Roger Williams Univ. Discloses 12.1% Equity Stake
------------------------------------------------------------
Roger Williams University beneficially owns 430,000 shares of
the common stock of Spinnaker Industries, Inc. with sole voting
and dispositive powers. This amount represent 12.1% of the
outstanding common stock of the Company.
Spinnaker Industries' authorized capital stock consists of (A)
10,000,000 shares of Class A common stock, of which 3,566,067
are issued and outstanding and (B) 15,000,000 shares of common
stock, of which 3,775,680 are issued and outstanding.
Roger Williams University acquired the common stock as
charitable donation. Spinnaker's common stock and Class A common
stock enjoy the same rights and priorities upon liquidation or
dissolution and vote together as one class on all matters except
as otherwise provided by law, except each share of common stock
held by the University is entitled to 1/10 of one vote and each
share of Class A common stock is entitled to 1 vote. Thus: (A)
the University holds 12.1% of the Class A common stock voting
as a single class and 10.9% of the total voting control of the
Company and (B) the University owns 5.9% of the total equity of
Spinnaker Industries, Inc.
Spinnaker is a leading supplier of pressure sensitive paper
stock for labels and the largest producer of such stock for
pressure sensitive U.S. postage stamps. On November 13, 2001,
Spinnaker filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code in the Southern District of Ohio in Dayton.
SULZER MEDICA: Considers Bankruptcy Option for Orthopedics Unit
---------------------------------------------------------------
Based on the current U.S. litigation situation, Sulzer Medica's
Board of Directors has decided to postpone the Extraordinary
Shareholders' Meeting originally fixed for December 20, 2001.
For the time being, Sulzer Medica plans to present its strategy
for settling the class action suit in the U.S. on occasion of an
Extraordinary Shareholders' Meeting in the 1st quarter of 2002.
"We want to know what exactly we are dealing with before
presenting the litigation situation to our shareholders and
showing them how we will master it", says Mr. Max Link, Chairman
of the Board of Sulzer Medica AG. In the interest of both
patients concerned and shareholders, Sulzer Medica AG continues
to pursue the class action settlement agreement it proposed to
the U.S. District Court in Cleveland (OH). At the same time, the
Company is considering a legal alternative, i.e. having Sulzer
Orthopedics, Inc. in Austin (Texas) file for Chapter 11.
SUN HEALTHCARE: Lays-Out Overview of Proposed Joint Reorg. Plan
---------------------------------------------------------------
The Joint Plan of Reorganization of Sun Healthcare Group, Inc.,
and its debtor-affiliates, governs the treatment of claims
against and interests in each of the 186 separate Debtors in the
chapter 11 cases.
The Plan provides for the Debtors' issuance of new common stock,
90% of which will be distributed to the Debtors' prepetition
senior lenders, and approximately 10% will go to the Debtors'
general unsecured creditors. The Plan also incorporates the
terms of a settlement of claims between the Debtors and the
United States of America, acting through the Centers for
Medicare and Medicaid Services and the Office of Inspector
General of the United States Department of Health and Human
Services, and the Department of Justice. In addition, the Plan
authorizes the Debtors to enter into a new revolving credit
agreement to fund the Debtors' business obligations.
Proposed New Capital Structure of Reorganized Sun
The post-Effective Date financing arrangements are anticipated
to include a revolving credit facility in the amount of up to
$200 million. Except as otherwise provided in the Plan and
described in the disclosure statement, unless the underlying
property is sold or surrendered, the Debtor that is the current
obligor on a mortgage will continue as the mortgagee.
Instrument Description Comments
---------------- -------------------- --------------
Revolver up to $200.0 million exit financing
Mortgages $68.0 million reinstated or
amended
HHS Note $10.0 million restructuring
security
New Redeemable Up to 10.0 million restructuring
Pref. Stock shares securities
New Common Stock Series A: 10.0 mil. restructuring
shares, convertible securities
into New Redeemable
Preferred Stock
Series B: [ ] million management comp.
shares
New Warrants To purchase up to restructuring
5.0% of the securities
New Series A Common
Stock (issued only if
Class F votes to
accept the Plan)
The Exit Facility
The only condition to the effectiveness of the Plan of
Reorganization is that the Debtors have obtained exit financing
sufficient to pay administrative expenses and provide necessary
working capital for operations after the Effective Date. The
Debtors are in discussions with several lenders to arrange such
a facility and expect such a facility to take the form of a new
revolving credit agreement. The Debtors are seeking a facility
with a $200,000,000 borrowing limit. The Debtors anticipate that
such a facility will have to be secured by the same property as
presently secures its debtor in possession financing.
Discharge of Claims and Termination
of Equity interests
Confirmation of the Plan of Reorganization will discharge all
existing debts and claims and terminate all equity interests, of
any kind, nature or description whatsoever, against or in Sun.
All holders of existing claims against and equity interests in
the Debtors will be enjoined from asserting against the Debtors,
or any of their assets or properties, any other or further claim
or equity interest based upon any act or omission, transaction,
or other activity that occurred prior to the Effective Date,
whether or not such holder has filed a proof of claim or proof
of equity interest. In addition, upon the Effective Date, each
holder of a Claim against or equity interest in the Debtors
shall be forever precluded and enjoined from prosecuting or
asserting any discharged claim against or terminated equity
interests in the Debtors.
Indemnification
The Plan provides for the assumption and continuation of normal
corporate indemnification contracts or provisions related to the
protection of officers and directors.
Exculpation
The Plan of Reorganization exculpates the Debtors, the
Creditors' Committee and their respective agents for conduct
relating to the prosecution of the chapter 11 cases.
Specifically, the Plan of Reorganization provides that neither
the Debtors, the disbursing agent, the Creditors' Committee nor
any of their respective members, officers, directors, employees,
agents or professionals shall have or incur any liability to any
holder of any claim or equity interest for any act or omission
in connection with, or arising out of, the chapter 11 cases, the
confirmation of the Plan of Reorganization, the consummation of
the Plan of Reorganization or the administration of the Plan of
Reorganization or property to be distributed under the Plan of
Reorganization, except for willful misconduct or gross
negligence.
Releases
The Plan provides for a release of all claims by the Debtors
against the current and former officers, directors, employees,
financial advisors, professionals, accountants, and attorneys of
the Debtors, the Creditors' Committee, and Bank of America,
N.A., as agent for the holders of the Senior Lender Claims. This
provision is intended to release all claims of the Debtors,
whether arising prepetition or postpetition, and based on any
theory (whether negligence, gross negligence, or willful
misconduct) against these individuals. The release is limited to
claims that could be asserted by the Debtors and only applies to
claims against such parties in their representative capacity.
The purpose of the release of the Debtors' personnel is to
prevent a collateral attack against the Debtors by asserting
large claims against its current and former officers and
directors. Those entities would be entitled to assert
indemnification claims against the Debtors for any amounts
recovered, thereby defeating the purpose of the discharge
granted by the Bankruptcy Code. In addition, because of the
extraordinary regulatory scrutiny which currently exists in the
healthcare industry, it is generally very difficult to retain
qualified management. This difficulty is compounded when the
healthcare company is operating as a debtor in possession under
chapter 11 of the Bankruptcy Code. Despite these daunting
obstacles, management of the Debtors has made enormous
contributions to the reorganization efforts and the compromises
set forth in the Plan. Therefore, it is important that these
individuals be relieved of the threat of any derivative actions
against them personally by parties in the Sun reorganization
cases that may be dissatisfied with the treatment provided in
the Plan. The Debtors are not aware of any pending or
threatened actions against these representatives.
Preservation of Avoidance Actions
The Debtors are preserving and retaining their right to
prosecute any avoidance or recovery actions under the Bankruptcy
Code.
Recoveries by the Debtors can give rise to additional allowed
claims against their estates. To satisfy those claims, the
Debtors will provide a credit of [__%] of such allowed claims
against the recovery to be received. This credit will be in full
satisfaction of the allowed claim arising from such avoidance
action. The determination of the percentage to be credited is
based on the midpoint of the expected recoveries for holders of
general unsecured claims, adjusted for the aggregate additional
claims the Debtors estimate will be generated through the
prosecution of avoidance actions. Thus the midpoint percentage
recoveries for holders of allowed claims in Class E is adjusted
by adding $[_______] of expected additional general unsecured
claims to the amount described in the table below (section
II.D.5 of the Plan) ($270,000,000) and recalculating the pro
rata recovery based on the midpoint of the enterprise values
described in the Valuation Analysis as described below (section
IV.D of the Plan).
Securities to Be Issued or Authorized
(1) New Series A Common Stock
The Plan will authorize the issuance of 25,000,000 shares of new
common stock (series A), $0.01 par value, of Reorganized Sun.
Ten million shares will be issued on or after the Effective Date
to the holders of the Senior Lender Claims and the General
Unsecured Claims. Five hundred thousand shares will be reserved
for the exercise of the New Warrants into shares of New Series A
Common Stock. The balance of the shares of New Series A Common
Stock will be available for other corporate purposes. The
allocation of New Series A Common Stock is as follows:
% of New Series A
% of New Series A Common Stock for
Amount of General Common Stock for the General Unsecured
Unsecured Claims Senior Lenders Claims
----------------------------------------------------------------
$297,000,000 or more 89.0% 11.0%
283,500,000 89.5% 10.5%
270,000,000 90.0% 10.0%
256,500,000 90.5% 9.5%
243,000,000 or less 91.0% 9.0%
Until the third anniversary of the Effective Date, each share of
New Series A Common Stock will be convertible, at the option of
the holder, into one share of New Redeemable Preferred Stock.
Each share of New Series A Common Stock will entitle the holder
thereof to one vote for the election of directors and in
connection with all other matters submitted to shareholders for
vote.
(2) New Redeemable Preferred Stock
The Plan will authorize the issuance of up to 10,000,000 shares
of New Redeemable Preferred Stock of Reorganized Sun. The New
Redeemable Preferred Stock will be issued only on conversion of
shares of the New Series A Common Stock.
The New Redeemable Preferred Stock will have a liquidation
preference of $25 per share (for an aggregate liquidation
preference of $250,000,000, assuming all shares of New Series A
Common Stock convert) and will accrue dividends at the annual
rate of 7%. Dividends may be paid if Sun has legally adequate
capital and if such payment is permitted under then existing
loan obligations of the Reorganized Debtors. To the extent
legally permissible, the New Redeemable Preferred Stock will be
subject to mandatory redemption at its liquidation preference
within 90 days after the end of any fiscal year in which EB1TDA
equals or exceeds $250,000,000. In addition, on January 31,
2007, Reorganized Sun shall make a payment equal to $5 for each
share of New Redeemable Preferred Stock outstanding on such
date. After such date, the liquidation preference for the New
Redeemable Preferred Stock shall be $20 per share. Each share of
New Redeemable Preferred Stock will entitle the holder thereof
to one vote on all matters subject to a vote by the holders of
the New Series A Common Stock, including the election of
directors.
(3) New Warrants
On the Effective Date, Reorganized Sun will issue warrants to
purchase 500,000 shares of New Series A Common Stock. This
represents 5% of the New Series A Common Stock issued on the
Effective Date, subject to dilution for stock issuances or the
exercise of options under a management incentive plan
established by the new board of directors for key employees. The
New Warrants will expire on the third anniversary of the
Effective Date and will have an exercise price of [$104.98] per
share of New Series A Common Stock. The current valuation of the
New Warrants is between [$1,600,000] and [$3,100,000], based on
(i) volatility of 62%, (ii) an estimated value of [$28.00] per
share for the New Series A Common Stock, (iii) the exercise
price of [$104.98] for the New Warrants, (iv) a three-year
expiration for the New Warrants, and (v) a risk free rate of
[3%].
(4) Management Shares - New Series B Common Stock
Shares of common stock (Series B) will be authorized for
issuance to key employees as determined by the new board of
directors (either as direct grants or through the exercise of
stock options) as part of a new management incentive plan. (Sun
Healthcare Bankruptcy News, Issue No. 26; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
TRAK AUTO: Restructures Operations in Maryland, Virginia & D.C.
---------------------------------------------------------------
Trak Auto Restructures in Maryland, Virginia and the District of
Columbia as Liquidation of Their Midwest Division Commenced On
November 15th
Trak Auto, a leading retailer in discount automotive parts based
in Landover, Md., has teamed up with Hilco Merchant Resources to
liquidate all of the Illinois, Indiana and Wisconsin stores.
This comes as part of a reorganization which Trak Auto set in
motion on November 15, 2001. Trak Auto continues to operate 80
stores in the Washington metropolitan area, Richmond and Central
Pennsylvania.
Trak Auto is committed to strengthen its foothold in
metropolitan Maryland, Virginia, the District of Columbia and
Richmond. Name brand merchandise continues to flow through the
Landover, Maryland distribution center and into Trak Auto's
convenient neighborhood stores.
Hilco Merchant Resources is the foremost industry expert in the
liquidation of retail merchandise. Hilco, a Chicago based firm
with offices in Boston, Toronto and London, is a broad-spectrum
financial resource with unparalleled asset knowledge and
expertise. Hilco is composed of the top people in the fields of
inventory, machinery, equipment and real estate appraisal
services, machinery & equipment auction services, real estate
services, merchant resources for the redeployment of inventory,
acquisition of receivables and junior secured debt financing.
This senior management team has an average of 20 years in their
respective business area and Hilco has done in excess of $25
billion in transactions.
VALLEY MEDIA: Files for Chapter 11 Protection in Delaware
---------------------------------------------------------
On November 20, 2001, Valley Media, Inc. (Nasdaq:VMIX) filed a
voluntary petition for relief under Chapter 11 of the federal
bankruptcy code in the United States Bankruptcy Court for the
District of Delaware. No trustee, receiver or examiner has been
appointed, and the Company will act as debtor-in-possession
while being subject to the supervision and orders of the Court.
On November 16, 2001, the Company further reduced staffing
levels at its Woodland, CA facilities by approximately 200
employees. Valley previously furloughed substantially all of its
employees in its Louisville, KY distribution facility in October
2001. The Company plans to seek Court authorization to enable it
to continue to support its customers from its Woodland, CA,
distribution facility, and to provide for its post-petition
trade and employee obligations during this process.
Valley Media, Inc. is a distributor of music, video and DVD
product, offering Full-line distribution, Independent
distribution and New Media fulfillment services for e-commerce,
in addition to publications and proprietary database products.
Valley Media has distribution facilities in Louisville, KY, and
Woodland, CA, where its corporate headquarters are located.
Additional information about Valley Media is available at
http://www.valley-media.com
VALLEY MEDIA: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Valley Media, Inc.
1280 Santa Anita Court
Woodland, California 94776
Type of Business: Valley Media, Inc. is a full-line distributor
of music and video entertainment products.
Chapter 11 Petition Date: November 20, 2001
Court: District of Delaware
Bankruptcy Case No.: 01-11353
Judge: Peter J. Walsh
Debtor's Counsel: Neil B. Glassman, Esq.
Steven M. Yoder, Esq.
Christopher A. Ward, Esq.
The Bayard Firm
223 Delaware Avenue, Suite 900
PO Box 25130
Wilmington, DE 19699
Tel: 302 655 5000
-and-
Patricia S. Mar, Esq.
Morrison & Foerster, LLP
425 Market Street
33rd Floor
San Francisco, CA 94105-2482
Tel: 415 368 7000
Total Assets: $241,547,000
Total Debts: $259,206,000
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Warner/Electra/ Trade Debt $22,860,245
Atlantic Corp (WEA)
Kristen Stachowiak
2280 Ward Avenue
Simi Valley, CA 93065
Tel: 805 579 1200
Fax: 818 729 3568
Warner Home Video Trade Debt $18,218,776
David Ju
21701 Prairie Street
Chatsworth, CA 91311
Tel: 818 709 4190
Fax: 818 729 1810
Universal Music and Trade Debt $13,176,004
Video Distribution
John Kahlow
3800 Burham Blvd.
Los Angeles, CA 90068
Tel: 818 845 0365
Fax: 317 595 5451
20th Century Fox Home Trade Debt $12,669,969
Entertainment
Ray Pacheco
PO Box 900
Beverly Hills, CA 91213
Tel: 310 369 0026
Fax: 310 369 8799
Paramount Home Video Trade Debt $12,500,106
Henri Fructuoso
5555 Melrose Avenue
Hollywood, CA 90038
Tel: 323 862 8528
Fax: 323 862 1183
BMG Distribution Trade Debt $10,963,093
Jackie Rottman
1133 Avenue of the Americas
New York, NY 10036
Tel: 800 777 0622
Fax: 310 358 4073
Sony Music Entertainment Trade Debt $10,043,011
Inc.
Bank of America, File 1231
1000 W. Temple Street
Los Angeles, CA 90012
Tel: 800 444 0143
Fax: 310 445 2260
Columbia Tristar Trade Debt $6,780,431
Home Video
Matthew Reed
10202 West Washington Blvd.
Culver City, CA 90232-319
Tel: 310 224 2462
Fax: 310 244 4886
EMI Music Distribution Trade Debt $6,065,970
Merrily Shneider
3116 West Avenue 32
Los Angeles, CA 90065
Tel: 213 341 5657
Fax: 805 384 5610
Death Row Recordings, LLC Trade Debt $4,095,931
Debbie Struhs
8306 Wilshire Blvd.
Suite 2027
Beverly Hills, CA 90211
Tel: 323 852 5000
Fax: 323 852 5018
Fantasy Records, Inc. Trade Debt $3,206,054
Kirk Roberts
Tenth & Parker
Berkeley, CA 94710
Tel: 510 549 2500
Fax: 510 486 2015
Lyrick Studios Trade Debt $2,210,907
Chris Armstrong
2435 N. Central Expressway
Suite 1600
Richardson, TX 75083
Tel: 972 390 6101
Fax: 972 390 6110
Sony Video Trade Debt $1,539,810
Rich Cazin
516-827-3790
550 Madison Avenue
New York, NY 100221-321
Tel: 310 445 2207
Fax: 310 445 2260
R.E.D. Inc./ Trade Debt $1,330,132
Sony Music
Richard Bennet
Bank of America
1000 W. Temple St.
Los Angeles, CA 90012
Tel: 213 212 0801
Fax: 310 445 2660
Universal Home Video Trade Debt $1,304,349
John Kahlow
999 East 121 Street
Rishers, IN 46038
Tel: 317 395 5176
Fax: 317 595 5451
Welk Group Trade Debt $1,228,838
Dan Sell
2700 Pennsylvania Avenue
Santa Monica, CA 91404
Tel: 310 829 9355
Fax: 310 315 9996
D3 Entertainment Trade Debt $1,138,337
Aldy Damian
149 Palos Verdes Blvd.
Redondo Beach, CA 90277
Tel: 310 373 4003
Fax: 310 373 4347
Caroline Distribution Inc. Trade Debt $1,048,896
Steve Brooks
6161 Santa Monica Blvd. #208
Los Angeles, CA 90038
Tel: 213 468 8626
Fax: 805 304 5677
Disney/Buena Vista Trade Debt $952,038
Home Video
Nancy McGinley
500 S. Buena Vista Street
Burbank, CA 91521-9730
Tel: 818 553 7700
Fax: 732 623 6093
Pamplin Trade Debt $799,917
James High
10209 S.E. Division Street
Potland, OR 97266
Tel: 503 262 3809
Fax: 503 251 1555
United Parcel Service Trade Debt $704,862
Brent Gardere
8455 Jackson Road
Suite 200
Sacramento, CA 95826
Tel: 916 386 3441
Fax: 916 386 3328
MGM Home Entertainment Trade Debt $684,361
Helena Kaucheck
2500 Broadway
Santa Monica, CA 90404
Tel: 310 586 8366
Fax: 310 586 8390
VLASIC FOODS: Committee Amends Members of VFI LLC Managing Board
----------------------------------------------------------------
During the confirmation process and in response to certain
objections, Michael R. Lastowski, Esq., at Duane, Morris &
Heckscher LLP, relates that the Official Committee of Unsecured
Creditors of Vlasic Foods International, Inc., and its debtor-
affiliates agreed that the Debtors were authorized to select a
trade debt representative reasonably acceptable to the
Committee. Accordingly, Mr. Lastowski tells the Court, the
Debtors have designated Mr. James Dorsch for that Managing Board
position. However, the approval of Mr. Dorsch's appointment is
still.
The remaining members of the Managing Board were:
(i) Gramercy Capital Advisor, through their designated
representative Mr. Nicholas Walsh, and
(ii) Connecticut General Life Insurance Company, through
their designated representative Mr. Noah Postyn.
But Mr. Lastowski relates that Connecticut General Life
Insurance Company has now decided that William M. Duncan, Esq.,
will replace Mr. Noah Postyn as their designated representative
to serve on the Managing Board. Thus, the initial members of
the Managing Board of VFI LLC as selected and ratified by the
Committee are:
Gramercy Capital Advisors
c/o Mr. Nicholas Walsh
3 Sheridan Square
Suite 11E
in New York, New York 10014
Connecticut General Life Insurance Company
c/o William M. Duncan, Esq.
Assistant General Counsel, Investment Law
CIGNA Corporation
280 Trumbull Street
Hartford, Connecticut 06103
(Vlasic Foods Bankruptcy News, Issue No. 15; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WINSTAR COMMS: Seeks Approval of Settlement Agreement with AT&T
---------------------------------------------------------------
Prior to the petition date, Winstar Communications, Inc., and
its debtor-affiliates provided and issued invoices to AT&T for
switched access services at the rates set forth in the Debtors'
switched access service tariffs. AT&T requested that certain
corrections be made to the Debtors' invoices and the Debtors'
disputed the corrections. The dispute between the Debtors and
AT&T regarding the charges for these services became the subject
of pending litigation in the United States District Court of
Virginia.
The Debtors and AT&T desire to avoid costly and time-consuming
litigation, the results of which are uncertain and to resolve
the disputes between the parties pursuant to the terms of a
switched access services agreement.
By this Motion, the Debtors seek entry of an order approving the
settlement between the Debtors and AT&T. The parties have agreed
to enter the Settlement Agreement in order to resolve a
long-standing point of controversy between the parties in a
cooperative, mutually beneficial fashion, to avoid potentially
costly litigation and to provide valuable benefits to the
Debtors' estates and to AT&T.
M. Blake Cleary, Esq., at Young Conaway Stargatt & Taylor LLP,
in Wilmington, Delaware, relates that the central element of the
Settlement Agreement is AT&T's undertaking to pay the Debtors
$3,700,000 to resolve outstanding amounts allegedly owed by AT&T
to the Debtors in respect of switched access services provided
by the Debtors to AT&T. In consideration therefore, the Debtors
have agreed to dismiss the Virginia Litigation and to provide
AT&T with a release with respect to the Dispute.
The Debtors submit that approval of the Settlement Agreement is
in the best interests of the Debtors, their estates and their
creditors because the Debtors receive significant benefits under
the Settlement Agreement. As an initial matter, Mr. Cleary
submits that the Debtors will receive two cash payments from
AT&T in the aggregate amount of $3,700,000, with $2,000,000 to
be paid within 3 business days of the date of execution of the
Settlement Agreement and $1,700,000 to be paid within 3 business
days of the entry of an order approving the Settlement
Agreement. This settlement will permit the Debtors to receive
this cash immediately, and to avoid the costs and uncertainties
associated with litigation. The Debtors believe that the benefit
of obtaining this cash immediately, and of avoiding potentially
costly and protracted litigation to obtain a judgment compelling
payment of sums owed for switched access services, greatly
outweighs any claims against AT&T that are to be released under
the Settlement Agreement.
Mr. Cleary contends that the Debtors clearly satisfy the
business judgment standard in entering the Settlement Agreement
with AT&T. The Debtors believe, in the exercise of their sound
business judgment, that the exchange of mutual releases with
AT&T in connection with this settlement is beneficial to the
Debtors' estates and will foster their reorganization. The
settlement will provide significant financial benefits to the
Debtors, particularly in the present and near term.
The Debtors also request that the Court enter an order
authorizing the Debtors to file under seal a Settlement
Agreement with AT&T Corp. and its Subsidiaries and directing
that the Settlement Agreement shall remain under seal and
confidential, and shall not be made available to anyone other
than:
A. the Court,
B. the United States Trustee,
C. counsel to the Official Committee of Unsecured
Creditors, and
D. counsel to the Debtors' pre- and post-petition lenders.
The Debtors submit that good cause exists for the Court to grant
the relief requested herein. Mr. Cleary explains that the
Settlement Agreement contains non-public information, which is
highly confidential, regarding the settlement of pending
litigation. Filing the Settlement Agreement under seal is
necessary because the confidentiality terms of the Settlement
Agreement can only be properly effectuated through filing the
Settlement Agreement under seal. (Winstar Bankruptcy News, Issue
No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WINSTAR COMMS: Plans to Commence Auction of Assets in December
--------------------------------------------------------------
Winstar Communications, Inc. announced that it intends to file a
motion with the Bankruptcy Court in the District of Delaware
seeking to establish procedures for an auction of the company's
assets in early December 2001.
As the company announced in August, Winstar has been working
toward a potential sale of or investment in the company to speed
its exit from Chapter 11.
In addition, William J. Rouhana Jr., Chairman and Chief
Executive Officer, and Nathan Kantor, President and Chief
Operating Officer have resigned in order to be in a position to
submit a bid for Winstar as part of the auction process. Frank
J. Jules, the current President and Chief Operating Officer of
U.S. Operations, will assume the position of Acting CEO, and
Steven B. Magyar, currently a director of Winstar, will be the
new Acting Chairman of the board of directors.
"I am pleased that a timetable for the auction process has been
set, as we continue with our plan to emerge from Chapter 11 as
quickly as possible," said Frank J. Jules, CEO, Winstar. We have
a strong management team in place as we move forward with the
auction process and the ultimate sale of Winstar."
Winstar is a registered trademark of Winstar Communications.
XETA TECHNOLOGIES: Completes Restructuring of Credit Facilities
---------------------------------------------------------------
XETA Technologies (Nasdaq: XETA) announced an un-audited preview
of sales and earnings for its fourth fiscal quarter and for the
fiscal year ending October 31, 2001. The annual audit is
scheduled for completion by mid-December, after which changes to
these results, if any, will be published.
According to the un-audited results, during the quarter, the
Company earned net income after-tax of $0.849 million, or $0.09
per share on a diluted basis, on sales of $17.4 million. The
Company also reported earnings for the fiscal year of $3.481
million, or $0.36 per share on a diluted basis, on sales of
$86.1 million.
Jack Ingram, President and CEO, stated, "During our fourth
fiscal quarter we continued to experience the effects of the
deteriorating economy, exacerbated by the effects of the
September 11th attack. In spite of the increasingly difficult
business climate, we are pleased to have maintained our earnings
fairly consistent with the level generated in our third quarter.
Improved gross margins and effective cost management virtually
offset the effects of a 17% quarter-over-quarter revenue decline
and allowed us to again hit our earnings target of $0.08 to
$0.11 per quarter as stated in our last quarterly earnings
announcement.
"We achieved these results by continuing to intently focus on
integration issues related to our acquisitions, transformation
issues related to achieving our vision, along with the
implementation of numerous new internal operating processes in
the Commercial Division of our company. We substantially
completed this work insofar as our installation and service
processes are concerned, and we are just beginning the same
restructuring procedures in our inventory management and
material logistics functions. Even though this is still a work
in progress, we have achieved dramatic improvements, the
tangible results of which have become quite evident.
"For the second consecutive quarter, we are pleased to have
experienced improvements in gross profit margins. Overall gross
profit margins for the fourth quarter were 29.3%, the highest
for any quarter this year. Improved management of manufacturer
rebates accounted for the majority of the current 1.7 point
quarter-over-quarter margin improvement. Also, during the
fourth quarter, we expanded our sales force by 30%, continued to
strengthen the competencies of our system design personnel,
further improved the performance of our project management and
material logistics functions and continued to expand our overall
technical capabilities in the complex applications consistent
with our long-range strategies. We are especially pleased to
have accomplished all of this while still reducing total
quarterly operating expenses by another $360,000 on top of the
$1.1 million reduction we achieved in the third quarter."
According to Larry Patterson, Sr. Vice President of Sales and
Services, "During the quarter, we continued to invest in
improving our technical capabilities and core business systems.
Combined with the implementation of comprehensive work flow
processes, we are consistently delivering high-quality
communications solutions and can now claim to have successfully
transported our tradition of excellence into our Commercial
Division. Also, we essentially completed our key FY-01
'transformational' initiatives in order to effectively meet the
needs of the emerging convergence market. Our long-range vision
'to be the nation's premier provider of converged voice and data
communications solutions' is also rapidly becoming reality. We
are heavily involved in the complex applications arena and have
established the necessary convergence capabilities to
effectively service and install the complete line of Avaya's
converged communications solutions. Sales of strategic
applications (which includes VoIP, Data, CRM and UM) were up
over 50% from the third quarter level and nearly double that of
the same period last year. In the IP arena, XETA is the first
and only inductee into Avaya's new 'IP Hall Of Fame.' This
prestigious award recognized XETA as being Avaya's highest
producing dealer of IP communications solutions from June
through September."
According to Robert Wagner, CFO, "During the fourth quarter, we
were able to continue to make progress in our cash management
initiatives, and we also successfully closed a restructuring of
our credit facilities. Cash flows from operations during the
fourth quarter were a positive $1.4 million and DSOs on billed
receivables were at our target of 70. As previously announced,
on October 31st we closed on a restructuring of our credit
facility which reduces our quarterly principal payments by
$750,000 and temporarily eases some of the financial covenants
while we wait for economic conditions to improve. The
restructuring of our credit facility represents a vote of
confidence by our banking partners as to the actions that have
been taken in response to the downturn in our market."
According to Ingram, "For four consecutive quarters we have
expressed our concerns regarding the difficulty in predicting
the general economic climate in which we operate. We still
believe that the near future contains a high degree of
uncertainty, but are becoming cautiously optimistic regarding
fiscal 2002 as a whole. As mentioned, during the fourth
quarter, we aggressively expanded our sales force by 30%. Even
so, we still feel that the short-term challenge is to achieve
constant quarter-over-quarter revenues in order to demonstrate
we are on firm footing for expansion and growth. Until we
confirm this foothold, we will continue emphasizing cost
management and feel that, if we achieve constant quarter-over-
quarter revenues, we can continue to achieve earnings in the
$0.08 to $0.11 cents per share range."
XETA Technologies is a leading communications integrator with
sales and service locations nationwide. Celebrating the
Company's twentieth anniversary, XETA has grown from being the
lodging industry's leading provider of call accounting solutions
and distributors of Hitachi PBX systems, to a major national
integrator of enterprise communications equipment. Through
internal growth and corporate acquisitions, XETA today is
positioned to serve and lead the growing market of converged
communications network solutions for voice and data
applications. XETA is also building upon its success as one of
the largest integrators of Avaya voice and data systems, serving
national business clients in sales, consulting, engineering,
project management, installation and service support. As proven
technologies come to the market place, XETA is at the forefront
of providing communication solutions and consulting services
that support such platforms as Microsoft Exchange 2000 and the
growing demand for Call Center, Unified Messaging and Voice-over
Internet Protocol (VoIP) applications.
XETA Technologies was recently named to the Fortune Small
Business magazine's Top 100 Fastest-Growing Companies list.
XETA was also recognized by Fortune magazine as one of the 100
Fastest-Growing Companies in 2000. XETA has been named numerous
times to the Forbes list of the Best 200 Small Companies in
America and twice to BusinessWeek's Top 100 Hot Growth
Companies. For more information on XETA Technologies, visit the
Company's website at http://www.xeta.com
* DebtTraders Real-Time Bond Pricing
------------------------------------
Issuer Coupon Maturity Bid - Ask Weekly Change
------ ------ -------- --------- -------------
Crown Cork & Seal 7.125% due 2002 58 - 60 -4
Federal-Mogul 7.5% due 2004 11 - 13 0
Finova Group 7.5% due 2009 36 - 38 -2
Freeport-McMoran 7.5% due 2006 69 - 72 0
Global Crossing Hldgs 9.5% due 2009 19 - 20 +5
Globalstar 11.375% due 2004 7 - 9 0
Levi Strauss & Co 11.625% due 2008 76 - 78 +5
Lucent Technologies 6.45% due 2029 68 - 70 +1
Polaroid Corporation 6.75% due 2002 4.5 - 6.5 -0.5
Terra Industries 10.5% due 2005 73 - 76 0
Westpoint Stevens 7.875% due 2005 32 - 35 0
Xerox Corporation 8.0% due 2027 50 - 52 +4
Source: DebtTraders is a specialist in global high yield
securities, providing clients unparalleled services in the
identification, assessment, and sourcing of attractive high
yield debt investments. For more information on institutional
services, contact Scott Johnson at 1-212-247-5300. To view
our research and find out about private client accounts, contact
Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available
at http://www.DebtTraders.com/
* BOOK REVIEW: ONE HUNDRED YEARS OF LAND VALUES IN CHICAGO:
The Relationship of the Growth of Chicago to the
Rise of its Land Values, 1830-1933
--------------------------------------------------------------
Author: Homer Hoyt
Publisher: Beard Books
Soft cover: 519 pages
List Price: $34.95
Review by Gail Owens Hoelscher
Buy a copy for yourself and one for a colleague on-line at:
http://amazon.com/exec/obidos/ASIN/1587980169/internetbankrupt
This book represents the first comprehensive study of land
values in a large city over a long period of time. The author's
goal was to trace cyclical fluctuations in land values in an
American city, in the expectation of contributing to the policy
debate on taxing real estate investments. He managed to achieve
much more, however. Indeed, from the viewpoint of land values,
he offers a fascinating general history of Chicago through the
early 1930s. He very skillfully interweaves the city's social
and economic history into its land economic history, and
interprets the interrelationships among them.
The book covers the years 1830-1933, a period of dizzying
growth, during which time Chicago grew from a cluster of a dozen
log huts at the site where the Chicago River meets Lake
Michigan, to a booming city of 211 square miles and a population
of almost 3.5 million. Over those hundred years, ground value
grew from a few thousand dollars to more than $5 billion. And
what a century it was, a roller coaster of the railroad boom,
the Civil War, the Great Chicago Fire, the first skyscrapers,
the first World's Fair, World War I, and the Great Depression.
The reader is immediately struck by the sheer size of the
research project the author designed and undertook. He examined
thousands of actual real estate sales and compared them with the
appraisals and opinions of real estate dealers. He researched
and had drawn 103 maps showing land values of specific sections
of the city in various years; the evolution of the railroad; the
growth of public transportation (from horse-car lines and
street-car lines to elevated lines); sewer construction; the
distribution of buildings of various heights; population
densities; and residential areas by predominant ethnic group,
among others. There are 103 data tables as well, including the
value of various buildings in different years; construction of
infrastructure; number and types of registered vehicles;
employment and wages; mortgage rates and amounts; property sales
and rents; and various comparisons with cities of similar size.
The author defines a real estate cycle as "the composite effect
of the cyclical movements of a series of forces that are to a
certain degree independent and yet which communicate impulses to
each other in a time sequence, so that when the initial or
primary factor appears it tends to set the others in motion in a
definite order." He found that in Chicago during the period
studied, these forces, in the order in which they appeared, were
population growth; rent levels and operating costs of existing
buildings and new construction; land values; and subdivision
activity. He divides these forces into 20 "events," all the way
from the first, "gross rents begin to rise rapidly;" through to
the sixth, "volume of building is stimulated by easy credit;"
the eleventh, "lavish expenditure for public improvements;" the
seventeenth, "banks reverse their boom policy on real estate,"
leading to stagnation and foreclosures; the nineteenth, "the
wreckage is cleared away;" and finally, "ready for another
boom."
One Hundred Years of Land Values in Chicago is a source of
invaluable data and analysis for students of urban land
economics as well as for students of American history. The
author noted that "with all its kaleidoscopic neighborhoods and
its babble of tongues.with all its rough edges and its
bluntness, Chicago is a city with a unique and magnetic
personality." And worth reading about.
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Ronald P. Villavelez and Peter A. Chapman, Editors.
Copyright 2001. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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*** End of Transmission ***