/raid1/www/Hosts/bankrupt/TCR_Public/020115.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, January 15, 2002, Vol. 6, No. 10
Headlines
360NETWORKS: Court Okays Shandro as Committee's Canadian Counsel
AMC ENTERTAINMENT: Will Issue $175M Notes to Pay Down Bank Debts
AMC ENTERTAINMENT: S&P Rates $150 Mill. Senior Sub Notes as Junk
ANC RENTAL: Seeks Approval to Hire Jay Alix as Financial Advisor
AT PLASTICS: Secures $70 Million Revolver After Debt Refinancing
ADVANCED SYSTEMS: Negotiating Refinancing of $560K Sub. Debt
ADVOCAT INC: Wallace E. Olson Discloses 13.44% Equity Holding
ANN TAYLOR: Revises Financial Covenants Under Credit Agreement
AQUIS COMMS: Finova & AMRO Agree to Forbear Until March 29, 2002
ARGUSS: Court to Hear Motions Re Case vs. Pierce-Olsen on Jan 25
ARMSTRONG HOLDINGS: Assuming Director Indemnification Pacts
BETHLEHEM STEEL: Panel Wants USWA's Fees Reimbursement Modified
BRIDGE INFORMATION: Plan Confirmation Hearing Set for Feb. 13
BUCKEYE: S&P Drops Ratings as Debts Expected to Remain Elevated
CHESAPEAKE CORP: Commences Exchange Offer for Outstanding Notes
CHIQUITA BRANDS: Court Okays Blackstone as Financial Advisor
COMDISCO INC: Will Sell 2 Leasing Businesses to GE Capital Unit
DELPHI INT'L: Expects to Complete Liquidation by End of March
DELTA AIR: Closes Sale of $730.5M European Certs. Series 2001-2
ENRON CORP: Taps Bankruptcy Services as Claims & Noticing Agent
ENRON CORP: UBS Pitches Winning Bid for Wholesale Trading Assets
ENRON CORP: IRS Launches Investigation Into Accounting Practice
EXODUS COMMS: Signs-Up Venture Asset Group as Marketing Agent
FEDERAL-MOGUL: Asbestos Panel Taps Campbell & Levine as Counsel
FORMICA CORP: Liquidity Concerns Pushes Ratings to Junk Level
FOURTHSTAGE: Case Summary & 20 Largest Unsecured Creditors
FRIENDLY ICE CREAM: S&P Ups Junk Rating to B- After Refinancing
FRUIT OF THE LOOM: Plan's Classification & Treatment of Claims
GENERAL BINDING: Bank Group Amends & Extends Credit Facility
HAYES LEMMERZ: Signs-Up McKinsey & Co. as Management Consultants
HAYNES INTERNATIONAL: Financial Results Improve in Fiscal 2001
LTV CORP: Gets Interim Approval of $15MM Loans for LTV Tubular
LODGIAN INC: US Trustee Appoints Unsecured Creditors' Committee
LOGICSOUTH: Chapter 11 Case Summary
MARINER POST-ACUTE: Health Debtors Settle $5MM IRS Audit Claims
NATIONSRENT: Needs Until Apr. 16 to File Schedules & Statements
NETIA HOLDINGS: Sets Special Shareholders' Meetings in Poland
NETIA HOLDINGS: Settles Cross-Currency Swap with Unit & JPMorgan
NETLIBRARY: Secures Court Approval to Sell Assets to OCLC
NEW WORLD RESTAURANT: Exchange Offer for Sr. Notes Expires Today
OMEGA HEALTHCARE: Sets Jan. 22 Record Date for Rights Offering
OWENS CORNING: UST Balks At Solomon's Fees as Claimants' Advisor
OWENS-ILLINOIS: Fitch Assigns Low-B Ratings to Sr. Secured Notes
PACIFIC AEROSPACE: Amends Lock-Up Agreement with Noteholders
PILLOWTEX CORP: FieldCrest Intends to Assume Tax Incentive Pact
PINNACLE: Contracting Liquidity Prompts Moody's Downgrade
POLAROID: Hearing on PDS Assets Sale to Appareo Set for Today
POLAROID CORP: Withdraws Request to Pay Executives $5MM Bonuses
PRESIDENT CASINOS: Shareholders' Equity Deficit Widens to $29MM
PSINET INC: Proofs of Claims Must be Filed not Later Than Feb. 5
RADNOR HOLDINGS: S&P Affirms B- Ratings After Thermisol Sale
STELCO INC: S&P Assigns Low-B Ratings On Weak Financial Profile
W.R. GRACE: Look for 2d Exclusivity Extension Request this Month
WEBVAN GROUP: Expects Liquidating Plan Will Be Effective Today
WICKES INC: Closes Sale of 3 Store Locations to Bailey Lumber
*********
360NETWORKS: Court Okays Shandro as Committee's Canadian Counsel
----------------------------------------------------------------
After due deliberation, Judge Gropper authorizes the Official
Committee of Unsecured Creditors of 360networks inc., and its
debtor-affiliates to retain Shandro Dixon Edgson to serve as its
Canadian counsel in the Debtors' Chapter 11 cases, nunc pro tunc
as of September 5, 2001.
The Court further allows the Shandro Firm to seek payment of up
to $3,636 for fees, disbursements and applicable Canadian taxes,
in connection with services rendered to date on behalf of the
Committee. (360 Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
AMC ENTERTAINMENT: Will Issue $175M Notes to Pay Down Bank Debts
----------------------------------------------------------------
AMC Entertainment Inc., (AMEX:AEN) announced that it has agreed
to sell $175 million principal amount of 9-7/8% Senior
Subordinated Notes due 2012 through an institutional private
placement.
Net proceeds from the offering will be used to reduce the
Company's outstanding bank indebtedness, to pursue the Company's
current business strategy, including acquisitions, and for
general corporate purposes. The offering is expected to close on
Wednesday, January 16, 2002.
The Notes will be sold to qualified institutional buyers in
reliance on Rule 144A and outside the United States to non-U.S.
persons in reliance on Regulation S. The Notes will not be
registered under the Securities Act of 1933, as amended, and
unless so registered, may not be offered or sold in the United
States except pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities
Act and applicable state securities laws. This press release
shall not constitute an offer to sell or the solicitation of an
offer to buy, nor shall there be any sale of the Notes in any
state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such state.
DebtTraders reports that AMC Entertainment Inc.'s 9.500% bonds
due March 15, 2009 (AMC1) are trading slightly below par,
between 96 and 98. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=AMC1
AMC ENTERTAINMENT: S&P Rates $150 Mill. Senior Sub Notes as Junk
----------------------------------------------------------------
Standard & Poor's assigned its triple-'C' rating to AMC
Entertainment Inc.'s proposed Rule 144A $150 million senior
subordinated notes due 2012. All existing ratings on the company
are affirmed. The outlook is stable.
Proceeds of the notes will be used to repay existing revolving
credit balances, to fund the company's planned purchase of GC
Cos. Inc., and for general corporate purposes. The purchase of
GC, the owner of General Cinemas, is subject to bankruptcy court
and regulatory approval. It is expected to be funded by a
combination of debt and equity and should maintain AMC's key
credit measures.
The ratings reflect AMC's modern theater circuit as well as its
aggressive financial profile and the still weak, but
stabilizing, industry operating environment.
The addition of GC's circuit will expand AMC's screen base
approximately 22% while modestly improving its geographic
diversity. Because GC is still in bankruptcy, AMC will have the
opportunity to further shape its theater circuit and the terms
of the obligations it assumes. The combination should result in
cost reductions and other synergies. AMC will continue to be
second-largest exhibitor in the U.S. with more than 3,400
screens and the largest operator based on revenue, as a result
of its big market orientation. The company's circuit will remain
relatively modern -- a high percentage of its complexes will
include both stadium seating and a large number of screens.
These features are popular with patrons and support AMC's
circuit performance and image. Still, the industry remains
highly competitive with a lingering oversupply of screens,
especially in AMC's more densely populated markets. The company
also maintains a large number of very large megaplexes, which
have questionable economics in Standard & Poor's opinion.
AMC's EBITDA increased more than 40% and its EBITDA plus rent
(EBITDAR) increased by almost 19% in the 12 months ending
September 2001 compared with the same period one year earlier.
EBITDA and EBITDAR margins improved as well to 11.2% and 29.5%
from 8.8% and 27.3%, respectively. Although this improvement
partially reflects the quality of AMC's circuit and its closing
of underperforming theaters, it is primarily the result of
favorable industry attendance trends, which could create
difficult comparisons in 2002.
AMC's credit measures remain weak on a lease-adjusted basis as a
result of the company's heavy reliance on off-balance sheet
financing. EBITDAR coverage of interest plus rent was 1.25 times
for the 12 months ending September 2001 and lease adjusted debt
to EBITDAR was more than 5.5x. AMC continues to generate
negative discretionary cash flow, which is a rating concern,
although it has moderated as a result of improved profitability
and reduced capital expenditures.
Negative discretionary cash flow should persist in fiscal March
2002, but it should continue to decline due to lower interest
rates, the repayment of $250 million in debt in April 2001 with
preferred stock that accrues dividends for three years, and a
reduction in capital commitments. Capital expenditures remain
high, given the poor operating environment and the company's
high leverage. The proposed note offering will enhance liquidity
and near-term maturities are nominal. The planned use of equity
to fund the GC purchase is key to maintaining the company's
credit profile and debt ratings. AMC hopes to raise additional
common equity in the near term, which could improve its credit
profile, depending on the amount of funds raised and their
ultimate use. No material improvement is currently incorporated
in the ratings, in light of the company's growth orientation and
its increased liquidity to fund expansion following the
repayment of revolving credit balances.
Outlook: Stable
Ratings stability is contingent upon AMC maintaining financial
policies that preserve its current credit profile.
Rating Assigned
AMC Entertainment Inc. Rating
$150 mil. senior subordinated notes CCC
Ratings Affirmed
AMC Entertainment Inc.
Corporate credit rating B-
Subordinated debt CCC
DebtTraders reports that AMC Entertainment Inc.'s 9.500% bonds
due 2011 (AMC2) currently trade between 95.750 and 96.750. See
http://www.debttraders.com/price.cfm?DT_SEC_TICKER=amc2 for
real-time bond pricing.
ANC RENTAL: Seeks Approval to Hire Jay Alix as Financial Advisor
----------------------------------------------------------------
ANC Rental Corporation, and its debtor-affiliates ask permission
from the court to employ Jay Alix & Associates as their
financial advisor nunc pro tunc to December 20, 2001.
Wayne Moor, the Debtors' Senior Vice President and Chief
Financial Officer, tells the court that because of the size and
complexity of these Chapter 11 cases, the Debtors require the
services of experienced financial advisors. The Debtors chose
Jay Alix & Associates because of the firm's restructuring
expertise, extensive knowledge of restructuring strategies,
credit analysis and negotiation skills in distressed situations.
Jay Alix & Associates has advised on many large restructuring
cases including that of Burlington Industries Inc., Fruit of the
Loom Inc., Regal Cinemas, FINOVA Capital Corporation, LTV Steel
Company Inc., National Car Rental System Inc., Oxford Health
Plans Inc. and Pittsburgh-Canfield Corporation. Mr. Moor
believes that Jay Alix & Associates' services are necessary to
enable the Debtors to exit the bankruptcy proceedings quickly
and efficiently and maximize the Debtors estates and their
distribution to creditors.
The services expected of Jay Alix & Associates include:
A. Assistance in developing one or more financial models that
will enable the Debtors to better predict their future cash
flows as well as to model the impact of a number of
restructuring alternatives under consideration, including
operational changes that will alter the Debtors' operating
model;
B. Assistance to the Debtors in managing their bankruptcy
process including working with and coordinating the efforts
of other professionals representing the Debtors' various
stakeholders;
C. Assistance in obtaining and presenting information required
by parties-in-interest in the Debtors' bankruptcy process
including official committees appointed by the Court;
D. Assistance in overseeing the implementation of an operational
restructuring plan designed to streamline the Debtors'
court base and efficiency of operation while preserving
customer base;
E. Assistance in reviewing and implementing changes to the
Debtors' information technology platform to reduce cost,
improve service levels and support the operational
restructuring that is to be implemented;
F. Assist as requested in tasks such as reconciling, managing
and negotiating claims, determining preferences and
collection of the same and the like;
G. Assist the Debtors and any investment banker the Debtor may
retain in obtaining and compiling information that is
needed to present the Debtors to prospective purchasers or
investors and to further support those efforts by due
diligence and obtaining or preparing supplemental
information that may be needed to obtain maximum value to
the Debtors' stakeholders;
H. Per request, assist in managing any litigation that may be
brought in the bankruptcy court against the Debtors; and
I. Provide such other assistance as may be requested and is
within Jay Alix & Associates expertise to support.
Ted Stenger, a principal of Jay Alix & Associates, submits that
pursuant to the engagement, the professionals at Jay Alix &
Associates will be compensated based on their prevailing hourly
rates plus reimbursement of all reasonable out-of-the-pocket
expenses incurred in connection with this engagement. The
current hourly rates of Jay Alix's professionals are:
Principals $325 to $640
Senior Associates $275 to $495
Associates $235 to $385
Accountants $195 to $290
Consultants $195 to $290
Analysts $135-$160
Jay Alix & Associates will also be paid a one-time success fee
of $2,250,000 if the Debtors confirm a Chapter 11 Plan of
Reorganization that becomes effective, or complete one or more
transactions that substantially transfers more than two-thirds
of the pro forma revenues or operating assets of the Debtors'
business to another entity.
Pursuant to a letter of engagement dated December 20, 2001, Mr.
Stenger states that the Debtors or Jay Alix may terminate the
engagement at any time with or without cause. Notwithstanding
the provisions relating to the payment of fees and expenses
accrued through the date of termination, the confidentiality
provisions of the engagement, as well as Jay Alix & Associates'
obligations upon termination, will still hold true. Jay Alix &
Associates will also be entitled to a break up fee of $250,000,
subject to the Court's approval at the conclusion of the Chapter
11 cases, unless the Debtors terminated the engagement for cause
within six months of execution of the engagement. In addition,
if disputes arise with respect to the terms of the Engagement
Letter on their interpretation, performance or breach, and no
resolution is reached within thirty days, either of the parties
may require settlement through binding arbitration if the
bankruptcy court does not retain jurisdiction over a controversy
or claim.
Mr. Stenger assures the court that the firm is a disinterested
person in the Debtors' cases. However, the firm had
relationships with parties-in-interests in unrelated matters,
including:
A. Creditors: Accenture, American Airlines Inc., American
Broadcasting Company, Delphi Automotive Systems Corp.,
IBM Corporation, American Airlines, Inc., American Express,
AT&T, FedEx, Northwest Airlines, Inc., United Airlines
Inc., Worldspan, Bank One N.A., Corporate Express,
Electronic Data Systems, Merrill Lynch Pierce Fenner &
Smith, Inc., Michelin North America Inc., Ryder
Transportation Services, Wells Fargo Card Services, Inc..
B. Insurance Providers: Allianz Insurance Company, Continental
Casualty Company, Chubb Atlantic Indemnity Ltd., Executive
Risk Indemnity Inc., Federal Insurance Company, Great
American Alliance Insurance Company, Hartford Fire
Insurance Company, Lexington Insurance Company, Ltd. and
Royal Indemnity Insurance Company, Commerce and Indemnity
Insurance Company, New Hampshire Insurance Company and Star
Excess Liability Insurance Company, Ltd. New Hampshire
Insurance Company, Liberty Mutual, National Union Fire
Insurance Company.
C. Lenders: Bank Austria Creditanstalt Corporate Finance, Inc.,
Bank of Montreal, Bankers Trust Company, Citibank N.A.,
Credit Suisse First Boston, First Union National Bank,
Fleet National Bank, Heller Financial, MBIA, Provident
Bank, Textron.
E. Professionals: W. Paul, Hastings, Janofsky & Walker, LLP,
Mr. Stenger submits that because the Debtors are a large
enterprise with thousands of creditors and other relationships,
Jay Alix & Associates is unable to state with certainty that
every client relationship or connection has been disclosed.
Lehman Bros. Objects
Lehman Brothers Inc. and Lehman Commercial Paper Inc., as term
loan agent, register their limited objection to the Debtors'
application to employ Jay Alix & Associates.
According to William P. Bowden, Esq., at Ashby & Geddes LLP in
Wilmington, Delaware, the court must review the proposed success
fee provided in the engagement letter under the reasonableness
standard and not the improvidence standard of the Bankruptcy
Code, at the conclusion of the case when the outcome of the case
and Jay Alix's role are known.
Mr. Bowden fears that since the proposed success fee is too
broadly defined and so the potential recoveries to creditors and
other constituencies could vary widely. This could produce a
full payout to creditors under some scenarios and a very low
return to others. The success thresholds stated in the
engagement letter - mere confirmation of any plan of
reorganization or sale of a significant portion of the Debtors
business as a going concern - are too low and provides no
incentive for the proposed financial advisor to work to maximize
creditors' recoveries.
Mr. Bowden points out that there is also no requirement for a
causal relationship between the work that Jay Alix & Associates
performs and the proposed payment of a success fee. The
engagement letter contemplates payment of a success fee
regardless of the role that Jay Alix & Associates might play in
achieving it. If, for example, shortly after the firm is
retained, someone offers to buy the Debtors at an acceptable
price, the engagement letter entitles the firm to payment of the
said fee whether or not they made a substantial contribution to
the result.
Lehman also objects to the provision of a breakup fee which, Mr.
Bowden believes, is unsupportable and should not be approved.
Payment of a breakup fee represents payment for work not
performed, which is unethical to the principles of compensating
professionals under the Bankruptcy Code, which provides for no
severance payments to professionals. Similarly, value must be
given to the estate before an administrative expense is awarded.
Mr. Bowden asserts that, surely, no one is suggesting that the
hypothetical termination of Jay Alix would generate value to the
estate. (ANC Rental Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
AT PLASTICS: Secures $70 Million Revolver After Debt Refinancing
----------------------------------------------------------------
AT Plastics (TSE: ATP; Amex: ATJ) announced that it has
completed the refinancing of its debt, marking the final phase
of a major restructuring program designed to enable the Company
to achieve profitable growth by focusing on core operations with
reduced leverage. This restructuring program has consisted of:
- Sale of the Wire & Cable business for net proceeds of
$9.4 million, effective May 31, 2001;
- Equity offering, with net proceeds of $32.3 million, in
August 2001;
- Sale of the Packaging business, and certain remaining
assets in the Performance Compounds business segment,
for gross proceeds of $44 million, in December 2001, and
- Refinancing the balance of the Company's debt.
The refinancing consists of:
- a 3-year committed revolving credit facility of up to
$70 million and $10 million term loan facility. The revolving
debt facility provides financial flexibility, as the amount is
linked to the level of inventories and receivables.
- an $85 million (US$53 million) 5-year senior term credit
facility, and
- a $40 million (US $25 million) 5-year subordinated term
credit facility. The subordinated term lender was also issued
4,171,798 warrants to acquire common shares exercisable over
five years at $1.57 per share.
On closing, $33 million of the $70 million revolving credit
facility was drawn. None of the $10 million term loan was drawn.
The blended interest rate at closing on all three facilities
consists of 11.0% cash interest plus 2.8% deferred interest.
Total debt outstanding, at closing was $158 million reduced from
$228 million at June 30, 2001.
Relating to the restructuring, the Company will record
additional special charges in its financial statements of
approximately $19 million related to: "make-whole" payments to
previous note-holders of $12 million, write-off of deferred
exchange and financing charges related to extinguished debt ($4
million), and severance and other costs. The Company is not
paying any additional restructuring fees to previous lenders
other than the $5.7 million recorded in the third quarter
financial statements. In view of the timely completion of the
refinancing, the Company was relieved of the obligation to pay
an additional $2.3 million restructuring fee as at December 31,
2001.
"We have completed what we set out to do," Mr. Connaughty said.
"I am very proud of the Company for having successfully
completed this significant restructuring, within the ambitious
time table we set. We can now focus on maximizing returns from
our core Specialty Polymers and Films operations, targeting
niche markets where AT Plastics has a leadership position and
exciting growth opportunities. We are encouraged by the signs of
economic strengthening.
"We have a growth strategy in place to which we can now devote
full attention," Mr. Connaughty added. "To increase revenue, we
have strengthened our sales and marketing teams and since mid
last year have been implementing a customer targeting strategy
which has resulted in new accounts and significant new orders
for higher margin products. To increase profitability, we are
optimizing production with particular emphasis on our expanded
Specialty Polymers facility, strictly controlling overheads, and
improving product mix."
AT Plastics develops and manufactures specialty plastics raw
materials and fabricated products. The Company operates in
specialized markets where its product development and process
engineering have allowed it to develop proprietary and patented
technologies to meet evolving customer requirements in niche
markets. Products are sold in the United States, Canada and
internationally. AT Plastics' shares are listed on The Toronto
Stock Exchange, under the trading symbol "ATP", and on the
American Stock Exchange, under the trading symbol "ATJ." AT
Plastics may be contacted through its website:
http://www.atplas.com
ADVANCED SYSTEMS: Negotiating Refinancing of $560K Sub. Debt
------------------------------------------------------------
Advanced Systems International, Inc. (OTC:ADSN) today announced
that the Company is in default in connection with a holder of a
$560,000 subordinated debenture.
The Company has received notification from the debenture holder
of the default and request for payment to be made in accordance
with the terms of the original financing.
The Company has been in negotiations to refinance its
outstanding debentures with this holder and all other current
holders. In addition, the Company has executed an agreement
with Donnelly, Penman, French and Haggarty, an investment
banking firm, to represent the Company in identifying strategic
financing alternatives, which may involve raising additional
capital, refinancing current indebtedness, and/or identifying
other financing opportunities. Management believes that their
financing negotiations with current and potential financing
sources will allow the Company to remedy the default in the next
30 days.
Advanced Systems International is a supplier of application
software for the e-business information market. The Southfield,
Mich.-based company offers a broad range of high-end workforce
management systems and application software for the transparent
collection and distribution of business data across the
enterprise. Managers are provided the capability to track
critical material, production process, inventory and labor data,
in real-time, to support their cost efficient, streamlined,
supply chain, order fulfillment and e-business initiatives. For
more information on ADSN, visit our web site at
http://www.advsysintl.com
The Company's customers include market leaders such as:
DaimlerChrysler (NYSE: DCX), Continental Airlines (NYSE: CAL),
Johnson Controls (NYSE: JCI), HJ Heinz (NYSE: HNZ), Dana
Corporation (NYSE: DCN), Sara Lee (NYSE: SLE), Lear Corporation
(NYSE: LEA), Rolls-Royce (LSE: RR), Volvo (NASD: VOLVY) and
Imperial Tobacco.
ADVOCAT INC: Wallace E. Olson Discloses 13.44% Equity Holding
-------------------------------------------------------------
Wallace E. Olson beneficially owns 738, 150 shares of the common
stock of Advocat, Inc. representing 13.44% of the outstanding
common stock of that Company. He holds sole voting and
dispositive powers over 350,750 such shares; shared voting and
dispositive powers over 387,400 shares. Mr. Olson's business
location is in the state of Tennessee.
Advocat operates some 65 owned or managed nursing homes with
more than 7,000 beds, as well as about 55 assisted-living
centers with nearly 5,500 units. The company focuses on rural
areas, mainly in the Southeast and Canada. Advocat's facilities
provide a range of health care services including skilled
nursing, recreational therapy, and social services, as well as
rehabilitative, nutritional, respiratory, and other specialized
ancillary services. Payments from Medicare and Medicaid account
for more than 80% of total revenues. With an upside-down balance
sheet (stockholders' deficiency standing at around $2 million,
as of June 30, 2001), the company is pursuing negotiations for
covenant waivers under its credit agreement and refinancing with
its lenders.
ANN TAYLOR: Revises Financial Covenants Under Credit Agreement
--------------------------------------------------------------
AnnTaylor Stores Corporation (NYSE: ANN) announced sales for the
five weeks ended January 5, 2002, increased 7.7 percent to
$167,094,000 from $155,224,000 for the five weeks ended December
30, 2000.
Comparable store sales decreased 2.4 percent for the fiscal
month compared with a comparable store sales decrease of 0.3
percent for the same five-week period last year. By division,
comparable store sales for fiscal December 2001 were down 5.2
percent for the Ann Taylor division and up 5.3 percent for the
new concept Ann Taylor Loft division.
Due to the early Thanksgiving holiday this year versus last, the
Company is providing December and nine weeks ended January 5,
2002 comparable store sales on a shifted calendar basis.
Comparable store sales on a shifted calendar basis for the month
of December increased 6.6 percent, while comparable store sales
on a shifted calendar basis for the nine-week period increased
2.9 percent. By division, shifted calendar comparable store
sales for the month of December were up 4.7 percent for the Ann
Taylor division and up 12.3 percent for the new concept Ann
Taylor Loft division. By division, shifted calendar comparable
store sales for the nine week period ended January 5, 2002 were
up 0.3 percent for the Ann Taylor division and up 10.3 percent
for the new concept Ann Taylor Loft division.
Ann Taylor Chairman J. Patrick Spainhour said, "Although we are
pleased with December's better than expected comparable store
sales results, the fourth quarter environment continues to prove
to be extremely promotional. However, early sales results on
January transitional product, which accounts for less than 10
percent of the current month's in-store inventory, have been
satisfactory. Due to the ongoing aggressive promotional
environment of the quarter that is resulting in reduced margin
opportunity, we still continue to be comfortable with fourth
quarter earnings guidance in the range of $0.25 - $0.30 per
share on a diluted basis excluding the charge described below."
Inventory levels at the end of December were down approximately
10 percent on a per square foot basis, compared to the prior
year. This follows an approximate 9 percent decrease in
inventory levels on a per square foot basis, at the end of
November 2001, compared to the prior year. Both comparisons
exclude inventory attributable to Ann Taylor Global Sourcing.
From a national perspective, the Company continues to be most
negatively impacted in downtown and tourist locations. For
fiscal December, comparable store sales in downtown and tourist
locations decreased approximately 14 percent, following an 11
percent decrease in these same locations for November.
Geographically, the results in the West and South regions
continue to lag in comparison to the rest of the country. This
performance was consistent across both the Ann Taylor and Ann
Taylor Loft divisions.
The Company did not open or close any stores during December.
The total store count at month end was 342 Ann Taylor stores,
168 Ann Taylor Loft stores, 18 Ann Taylor Loft Outlet stores and
13 Ann Taylor Factory stores. Total store square footage at the
end of the month increased 13.9 percent over the year before.
Year-to-date sales of $1,214,536,000 for the 48 weeks ended
January 5, 2002 represent an increase of 5.6 percent over sales
of $1,149,795,000 for the 48 weeks ended December 30, 2000. The
Company's year-to-date comparable stores sales decreased 7.3
percent over the same period last year. Comparable store sales
by division for the fiscal year-to-date period were down 10.2
percent for Ann Taylor and up 3.4 percent for new concept Ann
Taylor Loft.
AnnTaylor Stores Corporation also announced a pre-tax charge to
earnings in the fourth quarter of 2001 of approximately $17
million or an earnings per share impact of $0.33. This charge
is comprised of approximately $7 million for the writedown of
certain assets associated with AnnTaylor.com, approximately $3.3
million for the settlement of a class action lawsuit, as well as
charges related to the discontinuation of the Ann Taylor
Cosmetics line, costs associated with canceling certain Fall
2001 and Spring 2002 merchandise orders and severance costs
associated with reductions made in Ann Taylor's store and home
office workforce. Going forward, the projected annual pre-tax
savings will be approximately $3.5 million.
The $7 million write-off associated with the Company's Online
Store, was based upon projected cash flows, which were not
deemed adequate to support the value of the assets associated
with this ongoing business. The Online Store failed to achieve
the sales volume that it was expected to perform prior to its
launch in November of 2000.
The Company has reached an agreement in principle to settle the
class action lawsuit pending in the United States District Court
for the Southern District of New York against the Company, its
wholly-owned subsidiary and certain former officers and
directors, alleging that the defendants made false and
misleading statements about the Company and its subsidiary from
February 3, 1994 through May 4, 1995. The net cost to the
Company, after application of insurance proceeds, will be
approximately $3.3 million. The decision to settle this action
was not an admission of any wrong-doing, but reflected the
significant legal fees, other expenses and management time that
would have to be devoted to continue to vigorously defend it in
the courts. Finalization of the settlement is subject to Court
approval.
In addition, Ann Taylor announced it has reached an agreement in
principle to sell its proprietary credit card portfolio. The
sale is subject to entering into a definitive agreement and
receiving all necessary approvals and consents. Depending on
the level of receivables as of the signing date, the Company
expects to receive cash of approximately $55 million upon the
completion of the sale. The Company anticipates that the sale
of the proprietary credit card portfolio will provide the means
for strategic growth of the Ann Taylor credit card.
The Company also announced an amendment to its existing $175
million credit facility primarily consisting of revisions to its
financial covenants and specifically excludes the pre-tax charge
from covenant calculations.
Ann Taylor is one of the country's leading women's specialty
retailers, operating 541 stores in 42 states, the District of
Columbia and Puerto Rico, and also an Online Store at
http://www.anntaylor.com
* * *
As reported in the October 16, 2001, edition of the Troubled
Company Reporter, Standard & Poor's placed its double-'B'-minus
corporate credit rating on Ann Taylor Inc., and its single-'B'
subordinated debt rating on Ann Taylor Stores Corp., which is
guaranteed by Ann Taylor Inc., on CreditWatch with negative
implications. The CreditWatch placement, S&P said, was based on
the company's disappointing sales in 2001, and the international
rating agency's concern that this trend might persist to the
detriment of earnings and credit protection measures.
AQUIS COMMS: Finova & AMRO Agree to Forbear Until March 29, 2002
----------------------------------------------------------------
Aquis Communications Group, Inc., (OTC Bulletin Board: AQIS)
announced that it has received an extension through March 29,
2002 of its previously negotiated series of Forbearance
Agreements with both its senior secured lender, Finova Capital
Corporation and its Convertible Debenture holder, AMRO
International. The Agreements and these extensions cover all of
the Company's institutional indebtedness.
Under the terms of the Agreements and these extensions, Finova
and AMRO mutually agree not to take any action with respect to
the Company's defaulted institutional debt until March 30, 2002,
subject to certain conditions. Aquis continues to work with
Finova and AMRO at restructuring its balance sheet.
Aquis continues to proceed aggressively with the implementation
of its revised business plan focused on growing its traditional
one-way paging business in the Company's key Northeast and Mid-
Atlantic markets.
Aquis Communications Group, Inc. currently offers two-way
interactive messaging as well as national, regional and local
messaging services to customers in the Northeast and Mid-
Atlantic areas. The Company also offers cellular, PCS and
Internet access. Headquartered in Parsippany, NJ, Aquis
Communications maintains offices in Freehold, NJ; Baltimore, MD;
and Tyson's Corner, VA. For more information on Aquis
Communications visit: http://www.aquiscommunications.com
ARGUSS: Court to Hear Motions Re Case vs. Pierce-Olsen on Jan 25
----------------------------------------------------------------
Ronald D. Pierce beneficially owns 1,232,850 shares of the
common stock of Arguss Communications, Inc., representing 8.5%
of the outstanding common stock of the company. Mr. Pierce
holds sole dispositive and voting powers over the stock held.
Kenneth R. Olsen holds 0.09% of the outstanding common stock of
the Company represented by his beneficial ownership of 12,400
shares over which he holds shared voting power, and 500 shares
over which he holds shared dispositive power.
On December 21, 2001, Mr. Pierce and Mr. Olsen filed a
definitive consent solicitation statement with the Securities
and Exchange Commission seeking the removal of the current board
of directors of the Company, the election of new directors
which, in addition to Mr. Pierce and Mr. Olsen, include James
Gerson, Stephen G. Moore, Dennis Nolin, Michael Sparkman and
George Tamasi and the repeal of any by-law amendments adopted by
the Company's current Board between October 1, 2001 and the date
on which the proposal becomes effective.
Mr. Nolin, a director nominee, beneficially owns 3.9% of the
Company's common stock.
In accordance with applicable Securities & Exchange Commission
regulations, Mr. Pierce and Mr. Olsen intend to solicit consents
from the shareholders of the Company to remove the Company's
current Board of Directors, elect the Nominees to the Company's
Board of Directors, and to take the actions proposed in lieu of
a meeting pursuant to Section 228 of the Delaware General
Corporation Law.
* * *
In December 2001, the Company filed suit against Mr. Pierce and
Mr. Olsen in the United States District Court for the District
of Maryland. The Company's complaint alleges that the Defendants
violated Section 13(d) of the Securities Exchange Act of 1934,
as amended by, among other things, failing to timely disclose
their plan and proposal to purportedly seize control of the
Company. The Complaint also alleges that the Defendants violated
Section 14(a) of the Exchange Act by making purportedly false
and misleading representations concerning, among other things,
the Company's financial results and condition, the actions of
current management, and the experience of the Nominees proposed
by the Defendants, in the preliminary consent statement filed
with the Commission on November 30, 2001. The Complaint seeks,
among other relief, that Mr. Pierce and Mr. Olsen be required to
file a complete and truthful amendment to their Schedule 13D
statement in accordance with Section 13(d), be required to file
an accurate and complete consent statement consistent with
Section 14(a), and be enjoined from future violations of
Sections 13(d) and 14(a). The Complaint also seeks an order
enjoining them from soliciting consents until at least 15 days
after corrective materials are filed with the Commission,
purportedly in order to allow the Company to respond thereto.
The court has ordered that discovery in the action be conducted
on an expedited basis, and set a hearing date of January 25,
2002 for any further motions.
The Defendants indicate that they believe the Complaint is
without merit and is merely an attempt to prevent shareholders
from removing the current directors from office as well as a
dilatory tactic to create additional and unnecessary cost and
expense for them. They intend to vigorously defend the lawsuit
and pursue the consent solicitation.
The action is currently pending.
ARMSTRONG HOLDINGS: Assuming Director Indemnification Pacts
-----------------------------------------------------------
Armstrong World Industries, Inc., asks Judge Randall J. Newsome
to authorize it to assume indemnification agreements with the
current directors of AWI and its parent company, Armstrong
Holdings, Inc. AWI reminds Judge Newsome that the Code
authorizes a debtor to assume any prepetition executory contract
if to do so is a "reasonable exercise of the debtor's business
judgment."
The Indemnification Agreements
Stephen Karotkin, Esq., at Weil Gotshal & Manges LLP, explain
that ten directors currently serve on Holdings' Board. Two of
these directors, plus an executive officer, currently comprise
AWI's three-member Board. As the "ultimate decision-making
authority" for AWI and Holdings, the current directors regularly
make policy decisions that significantly affect the entire
business enterprise. In addition, the current directors are
responsible for making critical strategic decisions relating to
the chapter 11 cases, including approving any plan of
reorganization ultimately proposed by the Debtors.
The current directors serving on AWI's Board are 1) Michael D.
Lockhart, 2) James E. Marley, and 3) John N. Rigas. Messrs.
Lockhart and Marley also serve as current directors of Holdings.
The other current directors of Holdings are 1) H. Jesse Arnelle,
2) Van C. Campbell, 3) Donald C. Clark, 4) Judith R. Haberkorn,
5) John A. Krol, 6) David W. Raisbeck, 7) Jerre L. Stead, and 8)
M. Edward Sellers.
The current directors of Holdings also perform various statutory
duties in connection with Holdings' status as a publicly
reporting company. The statutory duties include, but are not
limited to, establishing an audit committee (comprised of a
subset of directors) that is required to monitor the operations
and finances of the consolidated company and complying with
pubic reporting requirements established by the Securities and
Exchange Commission. AWI itself would be required to be
a public reporting company as a result of its public debt if
Holdings were not the public company. Nevertheless, the
applicable rules governing these duties require that the
statutory duties be performed by the current directors of
Holdings -- not AWI.
In order to protect the current directors against personal
liability arising from the performance of duties related to
their service on the Board of Directors of AWI or Holdings, and
the Debtor says, as is customary with most corporations, the
corporate bylaws of Holdings and AWI each provide for
indemnification of and advancement of expenses to the current
directors. The Bylaws provide that AW1 and Holdings are not
obligated to indemnify and advance expenses to its officers and
directors if a court determines that the act or failure to act
giving rise to the indemnification claim constituted willful
misconduct or recklessness. The liability insurance policies
maintained by AWI for the benefit of the officers and directors
of AWI and Holdings also provide the current directors with
further protection against such liability. AWI argues that, in
order to attract and retain qualified directors, AWI and
Holdings have provided the current directors with additional
protection against personal liability under the contractual
indemnification agreements.
Before the May 2000 restructuring, AWI entered into the
indemnification agreements with all of its then current
directors, including eight of the current directors. As a
result of the May 2000 Restructuring, these eight directors
became directors of Holdings, and Holdings and AWI entered into
additional indemnification Agreements with them to cover the
period from and after the May 2000 Restructuring. Mr. Lockhart,
who is a current director of both AWI and Holdings, entered
into a single indemnification agreement with AWI and Holdings
effective August 7, 2000, when he joined Holdings. Because
Holdings has no assets other than its indirect ownership of AWI,
AWI joined in the indemnification of the current directors of
Holdings and is a party to such Indemnification Agreements.
M. Edward Sellers, who is a current director of Holdings,
received an indemnification agreement with AWI and Holdings
after the Petition Date. AW1 believes that entering into such
agreement with Mr. Sellers was a transaction in the ordinary
course of business.
The Terms of the Indemnification
AWI and Holdings have agreed to indemnify the current directors
of AWI and Holdings for claims brought against them by reason of
their service as directors. The Indemnification Agreements also
provide that AWI and Holdings will maintain insurance coverage
for the benefit of the Current Directors that is at least
comparable to the coverage available under the D&O Policies. To
the extent AWI and Holdings do not maintain the D&O Policies or
purchase new insurance policies, AWI and Holdings are required
to (a) indemnify the current directors to the full extent of the
coverage otherwise available under the D&O Policies (or
comparable insurance policies) and (b) upon a current director's
written request, create a trust for the benefit of such current
director, and deposit funds in the trust sufficient to pay all
amounts such current director may be entitled to receive under
the indemnification agreements. Section 2(d) of the
Indemnification Agreements provides that a current director also
may request the creation of such a trust in the event of a
potential change of control. The obligations of AWI and Holdings
under the indemnification agreements continue so long as the
current directors are subject to personal liability on account
of (a) their service on the Board of Directors of AWI or
Holdings or (b) their service, at the request of AWI or
Holdings, as directors, officers, trustees, or representatives
of any Company entity.
In connection with these indemnities, AWI, prior to the
commencement of these cases, deposited $1,000,0000 for the
benefit of the current directors of Holdings with McDermott Will
& Emory, counsel to the current directors of Holdings. The
Indemnity Fund is held by MW&E for the benefit of the current
directors of Holdings. In addition, AWI and Holdings agreed to
pay for the fees and expenses of MW&E.
Judge Farnan's Order approving the employment and retention of
MW&E as special employee relations and employee benefits counsel
to the Debtors, see prior entries at [00069], [00047] and
[00021], included a provision that fees and expenses are payable
by AWI, subject to MW&E's identification separately in the fee
applications of the services rendered to the current directors
of Holdings and the fees and expenses incurred in that
connection.
The Debtor's Arguments
Reminding Judge Newsome again that these types of agreements are
typical, AWI says that, but for the unique circumstances facing
the current directors as a consequence of the holding company
structure, the current directors would be directors of AWI.
Assumption of the indemnification agreements will provide these
directors with "typical indemnification protection . customary
for enterprises of this nature", rather than solely an
indemnification from Holdings - which as a holding company of a
debtor entity does not have the financial wherewithal to honor
its indemnification provisions.
Mr. Karotkin says that "simply put, the current directors, who
have the responsibility for decisions made with respect to the
enterprise, should be entitled to the normal protections
attendant upon such a role."
AWI believes that, consistent with the indemnification
provisions of the bylaws and public policy behind corporate
statutes providing for such indemnification provisions, the
current directors should be properly protected against any
possible actions seeking to hold them personally liable for acts
taken and decisions made by them in connection with the chapter
11 case or otherwise for their service. AWI believes it is
important to retain and attract directors from the most capable
persons possible. Assumption of these indemnification
agreements will help further their purpose and the policy
underlying them, and provide current directors with assurance
that they can rely on AWI's commitment to protect them from the
personal expense and distractions, as well as the potentially
ruinous personal liability that could otherwise result from
their good faith service benefiting AWI.
The current directors are "central to AWI's operations and
absolutely critical to the reorganization effort". The current
directors are said to possess "unique knowledge, skills and
experience which are vital to the business enterprise and, in
many cases, impossible to replicate". The departure of the
current directors would result in the loss of their invaluable
skills and expertise. The current directors possess a thorough
understanding of AWI's businesses, and their undivided attention
and efforts are necessary in order to make the strategic
decisions that not only are necessary to AWI's ongoing business
operations, but also will be central to AWI's successful
emergence from Chapter 11.
Mr. Karotkin assures Judge Newsome that "to ensure that the
current directors can fully perform their obligations to
Holdings and AWI without distractions or risks, the assumption
of the indemnification agreements is necessary", but admits that
to date no claims have been asserted against the current
directors of Holdings in that capacity. (Armstrong Bankruptcy
News, Issue No. 15; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
BETHLEHEM STEEL: Panel Wants USWA's Fees Reimbursement Modified
---------------------------------------------------------------
The Official Committee of Unsecured Creditors believes that the
United Steelworkers of America plays a critical role in the
reorganization efforts of Bethlehem Steel Corporation, and its
debtor-affiliates. Thus, the Committee also believes it is
necessary and appropriate for the United Steelworkers to receive
competent and comprehensive advice and counsel. Accordingly,
the Committee contends, it is appropriate for the Debtors to
reimburse the United Steelworkers for the reasonable cost of
such advice and counsel. James C. McCarroll, Esq., at Kramer,
Levin, Naftalis & Frankel LLP, in New York, New York, makes it
clear that the Committee does not object to the Debtors'
reimbursement of the United Steelworkers for $1,500,000 in
professional fees and disbursements over the first six months
of the case.
However, Mr. McCarroll asserts that United Steelworkers'
investment banker - Keilin & Company - should be allowed a
success fee only to the extent that Keilin helps achieve a
favorable result in these cases that is supported by the United
Steelworkers. "Any success fee must be reasonable," Mr.
McCarroll emphasizes.
That's why, Mr. McCarroll says, the Committee seeks to modify
the Debtors' proposed order to allow Keilin a success fee of up
to $5,000,000 only upon:
(a) confirmation of a plan of reorganization or consummation
of a sale of substantially all of the Debtors' assets,
which is, in either case, supported by the United
Steelworkers; and
(b) Keilin's application for such fee, subject to review by
this Court under the same standards set forth in Section
330 of the Bankruptcy Code, after the sale or
confirmation, in light of the results obtained.
For these reasons, the Committee asks the Court for an order
granting the Debtors' motion only to the extent of:
(i) approving reimbursement of monthly fees incurred by the
United Steelworkers up to an aggregate maximum of
$1,500,000 for the first six months of the case, and
(ii) allowing Keilin a success fee of up to $5,000,000 only
upon the fulfillment of certain conditions. (Bethlehem
Bankruptcy News, Issue No. 8; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
BRIDGE INFORMATION: Plan Confirmation Hearing Set for Feb. 13
-------------------------------------------------------------
Having considered all of the objections, responses and
arguments, Judge McDonald approves Disclosure Statement filed by
Bridge Information Systems, Inc., and its debtor-affiliates.
Accordingly, Judge McDonald overrules all objections of the
Disclosure Statement that have been rendered moot by the
Debtors' objections at the Hearing. The Debtors are directed to
file with the Court such amendments to the Disclosure Statement
and the Plan to incorporate the announcements and the Court's
directions at the Hearing. The Debtors have until January 11,
2002 to accomplish this task.
Savvis Communications Corporation, Goldman Sachs Credit Partners
LP, Cantor Fitzgerald Securities, and Market Data Corporation
earlier tried to block the approval of the Disclosure Statement.
Among other things, the objecting parties claimed the Disclosure
Statement fails to provide "adequate information".
Notices will be provided to all creditors and equity interest
holders. It will contain:
(i) the Court's approval of the Disclosure Statement,
(ii) the date of the Confirmation Hearing,
(iii) the deadline and procedures for filing objections to the
confirmation of the Plan, and
(iv) the deadline for voting on the Plan.
The Court also instructs the Debtors to publish the Notice no
later than January 18, 2002 in:
(a) The Wall Street Journal (National Edition); and
(b) St. Louis Post Dispatch.
January 8, 2002 is fixed as the record date for purposes of
determining which creditors are entitled to vote on the Plan.
Judge McDonald directs Harris Trust and Savings Bank, the
Administrative Agent pursuant to the Debtors' pre-petition
credit facility to deliver to the Debtors, on January 11, 2002
or as soon as practicable, the names and mailing addresses of
holders of record of Claims under the Pre-petition Credit
Facility as of the close of business on January 8, 2002 -
together with sufficient information to enable the Debtors to
determine the amount of each Pre-Petition Lender Claim.
The Court further approves these solicitation procedures:
(A) The Debtors shall mail to all creditors in Classes 2, 3 and
5 a Full Solicitation Package containing, the Notice, the
Plan, the Disclosure Statement and the appropriate Ballot
and a Ballot envelope. Each holder of a Pre-Petition Lender
Claim shall receive a Ballot for both Class 2 and Class 5.
(B) The Debtors shall mail to all creditors of Classes 1, 4 and
6 of the Plan an Unimpaired Class Package containing, the
Notice, the Plan and the Disclosure Statement:
(C) The Debtors shall mail to all creditors and equity interest
holders in Classes 7 and 8 of the Plan, a Non-Voting
Impaired Class Package containing, the Notice and written
notice that such creditors and equity interest holders are
not entitled to vote on the Plan and information regarding
how such creditors and equity interest holders may obtain
copies of the Plan and the Disclosure Statement.
(D) The Debtors shall implement these procedures for
distribution of the Solicitation Packages:
(1) No later than January 18, 2002, the Debtors shall mail by
first class mail the appropriate Solicitation Package to:
(a) each entity listed in the Debtors' schedules of
liabilities as holding a liquidated, non-contingent,
undisputed claim as of the Record Date,
(b) the holders of Pre-petition Lender Claims, and
(c) each entity having timely filed with the Court a
proof of claim against any Debtor that has not been
disallowed by an order of the Court a proof of claim
against any Debtor that has not been disallowed by an
order of the Court entered on or before the Record
Date; provided, however, that the assignee of any
such proof of claim shall be permitted to vote such
claim only if an appropriate transfer and assignment
of claim has been property noted on the Court's
docket by the close of business on the Record Date.
(2) No later than January 18, 2002, the Debtors shall also
mail by first class mail an Unimpaired Class Package to:
(a) all parties that have filed a notice in accordance
with Rule 2002 of the Federal Rules of Bankruptcy
Procedures on or before the Record Date;
(b) the Securities and Exchange Commissions; and
(c) all parties listed on the Master Service List.
(3) No later than January 18, 2002, the Debtors shall also
mail by first class mail the appropriate Solicitation
Package to each holder of record, as of the Record Date,
of shares of the Debtors and to each beneficial owner, as
of the Record Date, of bond indebtedness of the Debtors.
(4) To permit such mailing and to facilitate the transmittal
of Solicitation Packages to beneficial owners of shares
of the Debtors and any bond indebtedness that is held in
"street name", all transfer agents and record owners are
ordered to use their best efforts to provide the Debtors
or their agents with a list and mailing labels containing
the names, addresses and principal amount of the holdings
of the respective beneficial holders as of the Record
Date.
(5) Banks, brokerage firms or agents through which beneficial
owners hold shares of the Debtors and bond indebtedness
shall use their best efforts to distribute promptly
appropriate Solicitation Packages to the beneficial
owners for which they serve.
(6) The Debtors shall serve a copy of this order approving
the solicitation procedures on each known bank, brokerage
firm or agent through which beneficial owners hold shares
of the Debtors or bond indebtedness as well as the
Independent Election Corporation of American and ADP
Proxy Services, intermediaries that routinely process
voting materials for many banks and brokerage firms. In
addition, the Debtors shall, upon written request,
reimburse such entities for their reasonable, actual and
necessary out-of-pocket expenses incurred in performing
these tasks, not in excess of the standard proxy
solicitation rates of reimbursement established by the
New York Stock Exchange.
According to the Court, the Debtors will not be required to mail
Solicitation Packages to any individual or entity from whom
notice of the hearing to consider approval of the Disclosure
Statement was returned to the Debtors as undeliverable, unless
the Debtors' counsel and the Court Clerk are provided, in
writing, with accurate addresses from these creditors by January
15, 2002.
All Ballots must be received by the Bankruptcy Support Group no
later than 5:00 p.m. (St. Louis time) on February 6, 2002.
Facsimile transmissions will not be accepted.
The hearing to consider confirmation of the Plan shall be held
on February 13, 2002 at 10:00 a.m. (St. Louis time).
Judge McDonald rules that all preliminary objections to the
confirmation of the Plan should be communicated to the Debtors'
counsel on or before February 1, 2002. The parties should try
to resolve these objections no later than February 6, 2002. If
an agreement cannot be reached, then the objecting party must
file a written objection on or before 11:00 a.m. of February 8,
2002. Judge McDonald emphasizes that the Court will not
consider any objections at the Confirmation Hearing that have
not been timely filed and served to appropriate parties. (Bridge
Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
BUCKEYE: S&P Drops Ratings as Debts Expected to Remain Elevated
---------------------------------------------------------------
Standard & Poor's lowered its ratings on Buckeye Technologies
Inc. The current outlook is negative.
The downgrade reflects Standard & Poor's expectation that debt
will remain elevated over the intermediate term, which will
likely prevent Buckeye from restoring financial flexibility to a
level appropriate for the previous rating. Capital expenditures
should decline substantially now that construction of the
company's new $100 million airlaid nonwovens machine is
complete. However, weak markets, machine ramp-up costs, and
heightened competitive pressures, are likely to dampen near-term
earnings and impede free cash flow generation.
The ratings reflect Buckeye's below-average business profile,
with leading positions in niche pulp markets, and its aggressive
financial profile.
Buckeye is a leading producer of absorbent products and
specialty pulps, including airlaid nonwoven products, fluff
pulp, chemical cellulose, and customized paper cellulose. The
company has upgraded and expanded operations through primarily
debt-financed capital investment and acquisitions over the
past few years. High barriers to entry, such as long-term
customer relationships and technical know-how, protect Buckeye's
solid market positions, and the company benefits from good
geographic diversity. However, additional industry capacity,
including Buckeye's new 50,000-ton airlaid nonwoven machine, is
escalating competitive pressures. Plus, the company has not yet
reaped commercial benefits from certain new products. As a
result, operating margins (before depreciation and
amortization), currently impaired by weak fluff pulp prices and
start-up costs, are likely to remain below 20% versus previous
levels of about 25%. In addition, earnings and cash flow
volatility could increase because pricing under a major customer
contract has reverted to market prices.
Buckeye is expected to remain highly leveraged with debt to
capital of about 75%. Until financial flexibility improves,
additional bolt-on acquisitions, share repurchases, or dividends
are not expected. However, debt to EBITDA, currently 5 times, is
likely to rise further in the near term, with soft earnings and
little debt reduction, before improving to between 3x and 4x
over the intermediate term as pulp markets recover and new
capacity is absorbed. With capital expenditures falling
substantially from $153 million in fiscal 2001 to about $40
million in fiscal 2002 (June year end), Buckeye should break
even on a free cash flow basis, returning to positive cash flow
generation if markets improve as expected later this calendar
year. As a result, funds from operations to debt is likely to
deteriorate from its current mid-teens percentage level to below
10% by the middle of this calendar year, but improve with higher
earnings toward the upper teens percentage area over the
intermediate term. EBITDA interest coverage is also likely to
decline to about 2.5x from 3x currently, but improve towards
3.5x over the next two years.
Heavy capital spending for capacity expansion amid weak markets
has reduced Buckeye's financial flexibility. About $31 million
continues to be available under the company's $215 million
revolving credit facility, and proceeds from a new $30 million
accounts receivable facility were used to pay a December 2001
$22 million seller note installment. However, the rating
reflects the assumption that financial flexibility will improve
during the next year.
Outlook Negative
The ratings could be lowered if market conditions deteriorate
further, if the company fails to achieve expected benefits from
its expanded capacity, or if financial flexibility does not
improve.
Ratings Lowered
Ratings
Buckeye Technologies Inc. To From
Corporate credit rating BB BB+
Subordinated debt rating B+ BB-
CHESAPEAKE CORP: Commences Exchange Offer for Outstanding Notes
---------------------------------------------------------------
Chesapeake Corporation (NYSE: CSK) announced that it has
commenced an offer to exchange up to 115 million pounds Sterling
aggregate principal amount of its 10-3/8% Senior Subordinated
Notes due 2011 (Original Notes) for a like principal amount of
its 10-3/8% Senior Subordinated Notes due 2011 (Exchange Notes)
that have been registered under the U.S. Securities Act of 1933,
as amended, pursuant to a registration statement declared
effective on January 10, 2002. The Original Notes are
represented by a Regulation S Global Note with an ISIN of
XS0138519995 and a Common Code of 013851999 and a Rule 144A
Global Note with an ISIN of XS0138520498 and a Common Code of
013852049. The Exchange Offer will commence on January 11,
2002, and will remain open until 5:00 p.m., London time, on
February 11, 2002.
The terms of the Exchange Notes will be substantially identical
to the terms of the Original Notes, except that the Exchange
Notes may be resold without complying with the registration
requirements of the Securities Act of 1933. Any Original Notes
not exchanged will continue to have restrictions on their
transfer. Application has been made to list the Exchange Notes
on the Luxembourg Stock Exchange. Chesapeake will exchange all
of the Original Notes that are validly tendered and not
withdrawn. Tenders may be withdrawn at any time before the
expiration of the Exchange Offer.
The Bank of New York is acting as Exchange Agent for the
Exchange Offer, and The Bank of New York (Luxembourg), S.A. is
acting as Luxembourg Exchange Agent.
To tender Original Notes in the Exchange Offer, prior to
expiration of the Exchange Offer a holder must either:
* deliver a properly completed Letter of Transmittal to
the Exchange Agent or the Luxembourg Exchange Agent; or
* instruct Euroclear or Clearstream, as the case may be,
to transmit on behalf of the holder a computer-generated message
to the Exchange Agent or the Luxembourg Exchange Agent in which
the holder acknowledges and agrees to be bound by the terms of
the Letter of Transmittal.
In addition, prior to the expiration of the Exchange Offer,
either:
* the Exchange Agent must receive timely confirmation of
book-entry transfer of the Original Notes into the Exchange
Agent's account at Euroclear or Clearstream, according to the
procedures for book-entry transfer of Euroclear or Clearstream,
as applicable; or
* the Exchange Agent must receive timely confirmation from
Euroclear or Clearstream that the securities account to which
the Original Notes are credited has been blocked from and
including the day on which the confirmation is delivered to the
Exchange Agent and that no transfers will be effected in
relation to such Original Notes at any time after such date.
To be tendered effectively, the Exchange Agent must receive any
physical delivery of the Letter of Transmittal and other
required documents at the address set forth in the prospectus
related to the Exchange Offer before expiration of the Exchange
Offer.
Copies of the Letter of Transmittal and the Exchange Offer
prospectus are available from each of the Exchange Agent, the
Luxembourg Exchange Agent, Euroclear and Clearstream.
Chesapeake Corporation, headquartered in Richmond, Virginia, is
a global leader in specialty packaging. Chesapeake is a leading
European folding carton, leaflet and label supplier and a leader
in plastics packaging for niche markets. Chesapeake has over 50
locations in North America, Europe, Africa and Asia.
Chesapeake's website is http://www.cskcorp.com
* * *
As reported in the Troubled Company Reporter on Nov. 29, 2001,
Standard & Poor's affirmed its low-B ratings on Chesapeake Corp.
and removed the 'double-B' corporate credit and senior unsecured
debt ratings from CreditWatch, were they were placed on
November 1, 2001. The current outlook is stable.
According to the report, the ratings reflect Chesapeake Corp.'s
slightly below-average business position within specialty
packaging, a growth by debt-financed acquisition strategy, and
aggressive financial policies.
CHIQUITA BRANDS: Court Okays Blackstone as Financial Advisor
------------------------------------------------------------
The United States Trustee challenges Chiquita Brands
International, Inc.'s application to employ and retain The
Blackstone Groups as its financial advisor to the extent that it
asks for court approval of indemnification provisions.
Neal J. Weill, Assistant United States Trustee, in Cincinnati,
Ohio, tells the Court that these indemnification provisions are
intended to shield Blackstone from its own negligence. Mr.
Weill explains that these provisions are contrary to the
interests of the Debtor because they are intended to negate or
limit the estate's recovery damages for any negligence or
misconduct by Blackstone. "It may also impose future unknown
fees, costs and other administrative expenses upon the Debtor's
estate without any benefit in return," Mr. Weill adds. Mr.
Weill further states that the provisions are inconsistent with
the duty of care and high degree of professionalism and
expertise with which Blackstone claims to perform its financial
advisory services to justify the amount of fees it has received
in this case. "Given the high amount of fees that Blackstone
has received from representing the Debtor, it is reasonable to
expect them to be fully accountable for its work product and the
services it has provided and will provide. Blackstone is
perfectly capable of managing its risk of liability exposure
through appropriate insurance coverage and recouping its
insurance costs from the substantial fees it has been paid," Mr.
Weill asserts.
Thus, the US Trustee asks the Court to deny the Debtor's
application to retain Blackstone unless the indemnification
clauses are stricken from the agreement and the application.
* * *
"The Court is satisfied that Blackstone represents no interest
adverse to the Debtor's estate with respect to the matters upon
which it is to be engaged," Judge Aug declares.
Conceding that the employment of Blackstone is necessary and
would be in the best interests of the Debtor, its creditors and
the Debtor's estate, Judge Aug authorizes the Debtor to employ
and retain Blackstone as its financial advisor. Judge Aug notes
that Blackstone's employment shall be on the terms set forth in
the Debtor's application and its agreement with Blackstone,
except with respect to the indemnification obligations.
(Chiquita Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
COMDISCO INC: Will Sell 2 Leasing Businesses to GE Capital Unit
---------------------------------------------------------------
Comdisco, Inc., (NYSE:CDO) announced that it has agreed to sell
its Electronics and Laboratory & Scientific leasing businesses
to GE Capital's Commercial Equipment Financing unit. GE Capital
is the financial services unit of the General Electric Company
(NYSE:GE). The agreement is subject to approval by the U.S.
Bankruptcy Court for the Northern District of Illinois at a
hearing scheduled for January 24, 2002.
Under the terms of the agreements, GE Capital Commercial
Equipment Financing will pay Comdisco approximately $665
million, with future contingent payments based on various
portfolio performance criteria. The consideration includes the
assumption of related secured debt. If approved, the sales are
expected to close by no later than March 31, 2002.
Comdisco also said that, as part of its comprehensive evaluation
process to maximize business enterprise value for its
stakeholders, it expects to complete its evaluation of its
remaining Leasing businesses -- Information Technology (IT),
Telecommunications and Healthcare -- by January 31, 2002. The
company said it received bids for all of the business units
during the Court-supervised auction process that concluded in
December 2001, and that all of the bids must stay open until
January 31, 2002.
Norm Blake, Comdisco's chairman and chief executive officer,
said, "The board concluded that the consideration offered for
the Electronics and Laboratory & Scientific assets represents
the highest value we could expect to receive and we are
confident that these businesses and their customers will benefit
from the unparalleled reputation and tremendous resources of GE
Capital Commercial Equipment Financing. With respect to our
other equipment leasing businesses, we expect to conclude our
review by January 31, 2002."
Comdisco, Inc., and 50 domestic U.S. subsidiaries filed
voluntary petitions for relief under Chapter 11 of the U.S.
Bankruptcy Code in the U.S. Bankruptcy Court for the Northern
District of Illinois on July 16, 2001. The filing allows the
company to provide for an orderly sale of some of its
businesses, while resolving short-term liquidity issues and
enabling the company to reorganize on a sound financial basis to
support its continuing businesses. Comdisco's operations located
outside of the United States were not included in the Chapter 11
reorganization cases. All of Comdisco's businesses, including
those that filed for Chapter 11, are conducting normal
operations. The company has targeted emergence from Chapter 11
during the first half of 2002.
Comdisco ( http://www.comdisco.com) provides technology
services worldwide to help its customers maximize technology
functionality and predictability, while freeing them from the
complexity of managing their technology. The Rosemont (IL)
company offers leasing to key vertical industries, including
semiconductor manufacturing and electronic assembly, healthcare,
telecommunications, pharmaceutical, and biotechnology. Through
its Ventures division, Comdisco provides equipment leasing and
other financing and services to venture capital backed
companies.
DELPHI INT'L: Expects to Complete Liquidation by End of March
-------------------------------------------------------------
Delphi International Ltd. (Nasdaq: DLTDF) announced that, at a
special general meeting of its shareholders held on January 8,
2002, the shareholders of the Company approved the voluntary
liquidation of Delphi International Ltd. and its subsidiaries.
Accordingly, the Company and its subsidiaries have now commenced
liquidation under the Bermuda Companies Act 1981 and it is
expected that the liquidation procedures will be substantially
completed by the end of March 2002.
Delphi International Ltd. is the parent of Oracle Reinsurance
Company Ltd., a Bermuda-based specialty reinsurer.
DELTA AIR: Closes Sale of $730.5M European Certs. Series 2001-2
---------------------------------------------------------------
Delta Air Lines (NYSE: DAL) announced that it completed on
December 28, 2001, the sale in a private placement of $730.5
million principal amount of European Enhanced Equipment Trust
Certificates, Series 2001-2. The certificates have a final
maturity date of December 18, 2011, bear interest at variable
rates ranging from LIBOR plus 1.70 percent to LIBOR plus 2.90
percent, payable quarterly, and are secured by 19 Delta-owned
aircraft, consisting of 11 Boeing 737-800 aircraft, four Boeing
767-300ER aircraft and four Boeing 777-200ER aircraft. The net
proceeds of the sale are available to Delta for general
corporate purposes.
The securities offered will not be, and have not been,
registered under the Securities Act of 1933 in reliance upon one
or more exemptions from registration and may not be offered or
sold in the United States absent registration or an applicable
exemption from registration requirements.
Delta Air Lines, the world's second largest carrier and the
leading U.S. airline across the Atlantic, offers more than 5,350
flights each day to 414 destinations in 73 countries on Delta,
Delta Express, Delta Shuttle, Delta Connection carriers and
Delta's worldwide partners. Delta is a founding member of
SkyTeam, a global airline alliance that provides customers with
extensive worldwide destinations, flights and services. For
more information, please go to http://www.delta.com
ENRON CORP: Taps Bankruptcy Services as Claims & Noticing Agent
---------------------------------------------------------------
Enron Corporation, and its debtor-affiliates seek the Court's
authority to employ Bankruptcy Services LLC as the claims and
noticing agent of these chapter 11 cases.
Martin A. Sosland, Esq., at Weil, Gotshal & Manges, LLP, in New
York, New York, relates that the Debtors have over 20,000
creditors and 4,400 equity interest holders of record, as of the
Petition Date.
"The Debtors believe that the retention of Bankruptcy Services
as the Court's outside agent is in the best interests of their
estates and parties in interest," Mr. Sosland says.
Ron Jacobs, president of Bankruptcy Services LLC, informs Judge
Gonzalez that the firm specializes in providing consulting and
data processing services to chapter 11 debtors in connection
with the administration, reconciliation and negotiation of
claims and solicitation of votes to accept or reject plans of
reorganization. "Bankruptcy Services also specializes and has
expertise in serving as outside claims agent to the United
States Bankruptcy Court with respect to all aspects of claims
administration, including docketing and storage of claims,
maintenance of claims registers, and related noticing services,"
Mr. Jacobs relates.
Considering that Bankruptcy Services has provided identical or
substantially similar services to other chapter 11 debtors in
other cases, Mr. Jacobs assures the Court that the firm is well
qualified to act as Enron's claims and noticing agent for these
cases.
Subject to the Court's approval, Mr. Sosland outlines the
services to be provided by Bankruptcy Services to the Debtors:
(a) electronically transferring the creditor database into
Bankruptcy Services' claims management system;
(b) assisting with the preparation of the Debtors' schedules
of liabilities as required by Rule 1007 of the Federal
Rules of Bankruptcy Procedure;
(c) notifying creditors of the bar date to be established in
these chapter 11 cases pursuant to Bankruptcy Rule
3003(c)(3), mailing a proof of claim form to all
potential claimants and providing a certificate of
mailing thereof;
(d) coordinating receipt of filed claims with the Court and
providing secure storage for all original proofs of
claim;
(e) entering filed claims into Bankruptcy Services'
database;
(f) working directly with the Debtors to facilitate the
claims reconciliation process, including:
(i) matching scheduled liabilities to filed claims,
(ii) identifying duplicate and amended claims,
(iii) categorizing claims within "plan classes", and
(iv) coding claims and preparing exhibits for omnibus
claims motions;
(g) maintaining the official claims register and providing
the Clerk with copies thereof as required by the Court;
(h) providing exhibits and materials in support of motions
to allow, reduce, amend and expunge claims;
(i) updating the Claims Register to reflect Court orders
affecting claims resolutions and transfers of ownership;
(j) printing creditor and shareholder/class specific ballots
and coordinating the mailing of ballots, the plan and
related disclosure statement, and generating an
affidavit of service regarding the same;
(k) establishing a toll free "800" number for the purpose of
receiving questions regarding voting on the plan;
(l) soliciting votes on the plan; and
(m) receiving ballots at a post office box, inspecting, date
stamping and numbering such ballots consecutively and
tabulating and certifying results.
According to Mr. Sosland, the Claims Register maintained by
Bankruptcy Services will be open to the public for examination
without charge during regular business hours.
In exchange for these services, the Debtors propose to
compensate Bankruptcy Services in accordance with the Retention
Agreement, which provides for these payment terms:
(1) Payment at Bankruptcy Services' standard rates and prices
for its services and supplies provided to the Debtors
together with reimbursement of its reasonable expenses.
The applicable pricing schedule for Bankruptcy Services is
set forth in the Retention Agreement.
(2) Payments are to be based upon the submission by Bankruptcy
Services of a billing statement, which includes a detailed
listing of such services, expenses and supplies, at the
end of each calendar month. For those services for which
Bankruptcy Services charges an hourly rate, Bankruptcy
Services will bill its time in increments of one-tenth of
an hour. Bankruptcy Services will serve the Monthly
Billing Statement upon the Debtors. If no objections are
filed and received by the Debtors and Bankruptcy Services
within 10 days following receipt of the Monthly Billing
Statement and if the Court does not otherwise schedule a
hearing, the Debtors will be authorized to pay the amounts
reflected in the Monthly Billing Statement for Bankruptcy
Services' services and expense reimbursement.
(3) The Court will resolve any objections with respect to the
Monthly Billing Statements filed and served by Bankruptcy
Services in accordance with the procedures of the
preceding paragraph and, pending resolution, the Debtors
shall be permitted to pay the undisputed portion of
Bankruptcy Services' Monthly Billing Statement.
The Debtors believe that such compensation rates are reasonable
and appropriate for services of this nature and comparable to
those charged by other providers of similar services, Mr.
Sosland relates.
The Debtors also urge the Court to allow the payment of
Bankruptcy Services' fess and expenses pursuant to the proposed
procedures and forego the filing of formal fee applications in
order to reduce the administrative expenses related to
Bankruptcy Services' retention.
Mr. Jacobs further assures the Court that neither Bankruptcy
Services, nor any of its employee, has any connection with the
Debtors, their creditors, or any other party in interest in
these chapter 11 cases. "To the best of my knowledge, after
diligent inquiry, neither Bankruptcy Services, nor any of its
employee, represents any interest adverse to the Debtors'
estates with respect to any matter upon which the firm is to be
engaged," Mr. Jacobs informs Judge Gonzalez. (Enron Bankruptcy
News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
ENRON CORP: UBS Pitches Winning Bid for Wholesale Trading Assets
----------------------------------------------------------------
Enron (NYSE: ENE) announced that it has selected, and its
Creditors' Committee has approved, UBS Warburg, the investment
banking group of UBS AG, as the successful bidder for Enron's
North American wholesale electricity and natural gas trading
business.
Terms of the proposed transaction, which is subject to
Bankruptcy Court approval, call for Enron to retain a residual
interest in the income of the business.
The parties filed executed documents with the bankruptcy court
by 8:30 a.m. EST yesterday, Jan. 14, 2002, and posted such
documents on http://www.nysb.uscourts.gov
"With UBS's AA credit rating and Enron's proven industry
expertise, we believe this will maximize the value of the
trading operation going forward," said Kenneth L. Lay, chairman
and chief executive officer of Enron. "This is a key milestone
as we build the new Enron and work to establish a platform for
restructuring the company and emerging from Chapter 11
bankruptcy protection."
Enron's chief financial officer, Jeff McMahon, said, "We
evaluated numerous bids and, after a period of intense
negotiations, believe we have arrived at a deal that represents
the highest and best offer for our creditors, shareholders and
employees." McMahon continued, "The value of this business and
its potential for success was evidenced in a highly competitive
and fair auction process and provides a viable future for the
trading operation."
Enron markets electricity and natural gas, delivers energy and
other physical commodities, and provides financial and risk
management services to customers around the world. Enron's
Internet address is http://www.enron.com The stock is traded
under the ticker symbol "ENE".
* * *
The Bankruptcy Court has scheduled a hearing at 2 p.m. EST on
Friday, Jan. 18, 2002, to consider final approval for the
transaction.
DebtTRaders reports that Enron Corp's 7.375% bonds due 2019
(ENRON7) now trade in the low 20s. For real-time bond pricing,
see http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON7
ENRON CORP: IRS Launches Investigation Into Accounting Practice
---------------------------------------------------------------
The Internal Revenue Service has opened its own investigation of
Enron Corp., the beleaguered and bankrupt energy trader,
according to senior government investigators, BusinessWeek
Online has learned.
The tax service could bring civil or criminal charges if it
found that Enron's accounting snafus were reflected in its tax
returns.
The IRS probe pushes to an even dozen the count of government
inquiries into the accounting, securities, and pension practices
of the failed Houston-based giant. The Securities & Exchange
Commission is investigating whether errors on Enron's financial
statements constituted securities fraud -- a question which is
also subject to an investigation by a nationwide task force of
the Justice Dept.
Meanwhile, the Labor Dept. is investigating Enron's pension
plans, which barred employees from selling their Enron stock as
the company melted down last fall. And President George W. Bush
has ordered two Cabinet-level task forces to look into issues
surrounding Enron's pensions and energy trading, while at least
six committees in Congress have announced probes or hearings.
Contacted by Business Week Online, the IRS would neither confirm
or deny any investigation, citing Enron's privacy rights as a
taxpayer. Enron had no immediate comment. And Enron's outside
counsel, Washington attorney Robert Bennett, could not be
reached for comment for this story.
Details of the IRS probe were not available. But according to
attorneys familiar with tax law, the agency could be looking
into whether the original accounting treatment, which separated
the partnerships' profits and losses from Enron's, misstated the
giant company's tax liability. In particular, the probe could
look at whether Enron claimed interest deductions for $1.2
billion in debt which it carried on its books as shareholders'
equity.
The complete text of the article appears on BusinessWeek Online
at http://www.businessweek.com
EXODUS COMMS: Signs-Up Venture Asset Group as Marketing Agent
-------------------------------------------------------------
Exodus Communications, Inc., and its debtor-affiliates request
entry of an order from the Court authorizing the employment and
retention of Venture Asset Group, LLC as asset marketing agent.
According to Adam W. Wagner, the Debtors' Senior Adviser for
Legal and Corporate Affairs, Venture Asset is to be employed in
connection with the sale, lease or other disposition of certain
of the Debtors' Internet Data Centers and "in place" personal
property used with the operation of the said facilities as
stand-alone operating units in the United States, Canada and
abroad.
The Debtors seek to retain Venture Asset as marketing agent
because:
A. Venture Asset and its principals have an excellent reputation
of providing high quality asset marketing service to
debtors and creditors in bankruptcy reorganizations and
other debt restructurings,
B. Venture Asset has demonstrated an extensive knowledge of the
Debtors' assets and how to maximize their value,
C. Venture Asset is capable of providing the Debtors with asset
marketing services where the Debtors intend to sell, lease
or otherwise dispose of assets as stand alone operating
units.
Mr. Wagner relates that prior to retaining Venture Asset, the
senior management of the Debtors interviewed senior personnel
of, and considered proposals from other asset marketing firms.
The firms were evaluated based on each one's overall experience,
overall capability in assisting the Debtors in implementing
their asset marketing strategy and maximizing the value of the
assets, geographic scope of services, creativity in devising fee
structures that meet the Debtors' needs, familiarity with the
Chapter 11 process, the likely attention that will be focused on
the Debtors by the firm's senior personnel and the compensation
to be charged. After due consideration and in an exercise of
business judgment, the Debtors concluded that Venture Asset is
best qualified to render for them asset marketing services at a
reasonable compensation level.
Sean Doherty, managing partner of Venture Asset Group LLC,
assures the Court that the firm has extensive knowledge of the
Debtors' Assets and believes it can assist them in selling the
assets with recoveries significantly exceeding salvage or
liquidation values.
Under the agreement, Venture Asset will perform specific tasks
in the areas of:
A. Feasibility Plans - Venture Asset shall develop, complete and
deliver a feasibility plan for the sale, acquisition,
refinancing or other disposition of assets in accordance
with the Debtors' goals and objectives and provide ongoing
advice to the Debtors regarding transactions.
B. Physical Inspection of Property - Venture Asset shall inspect
property and document physical inspection for potential
buyers (including photos, verification of assets,
comparison of plans to actual inspection, environmental,
zoning or other issues), verify list of assets and
personal property, meet with landlords, vendors, suppliers
or other contacts necessary to document current state of
property and determine and maximize value.
C. Document Gathering or Due Diligence - Venture Asset shall
prepare due diligence list and requirements, gather due
diligence information from various internal and external
resources to enable the Debtors to present a clear, concise
presentation for potential buyers and prepare due diligence
binders with all documentation available for potential
buyer review.
D. Government Regulation and Compliance Check- Venture Asset
shall confirm issuance of all necessary government
approvals, identify and list all necessary government
approvals not obtained by the Debtors and assist the
Debtors in obtaining any additional approvals necessary for
sale of property or transfer of assets.
E. Marketing - Venture Asset hall prepare one-page flyers on
each property for general marketing purposes, prepare in-
depth or binder documents on each property for analysis by
qualified buyers, contact potential buyers of property or
assets through a variety of means including telephone, e-
mail, and in-person solicitations, advertising or marketing
in industry publications, newsletters and websites and any
other means required to ensure sufficient inquiry on the
sale of assets and property. Also, the firm shall receive,
track and follow-up inquiries for sale of assets and or
property, keeping records of all activity for inspection by
the Debtors, arrange for tours or inspections of property
and oversee sales activity and facilitate fast track
pipeline for sale process from initial contact through
letter of intent.
F. Negotiations - Venture Asset shall meet with landlords to
discuss rent reductions or abatement during marketing
activity and return of security deposits or other
collateral where possible, assist the Debtors in removing
liens against property to enable legal sale of such
property, negotiate sale of property and assets acting on
behalf of the Debtors seeking maximum recovery on all sales
and work with potential purchasers to remove contingencies
on sale.
G. Drafting of Contracts and Agreements - Venture Asset shall
act as resource for buyer in drafting purchase documents and
related agreements, act as resource for the Debtors in
review and analysis of purchase documents and related
documents and facilitate quick process for legal counsel
review and manage documents tracking.
H. Third Party Consents - Venture Asset shall act as resource
for Debtors' legal counsel in preparing paperwork, motions
and supporting documents necessary for court approval of
transaction.
I. Closing or post-closing in the case of property sale -
Venture Asset shall work with the Debtors' legal counsel to
obtain closing statement after sale review and verify closing
statement for accuracy, review title policy for conformity
and prepare and deliver post-closing documentation binder
to the Debtors.
Venture Asset will be compensated with transaction fees for each
closing equivalent to:
A. 2.25% of the consideration actually paid to the Debtors for
each closing of a sale of a Debtors' asset.
B. 2.25% of the sum of the total rental stream for each closing
of a lease by the Debtors' asset.
C. 10% of the amount of the consideration actually paid to the
Debtors for each closing of a sale or other disposition of
leased assets and upon closing of a transaction that
exceeds the sum of the salvage value for the assets that
have been sold. (Exodus Bankruptcy News, Issue No. 11;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
FEDERAL-MOGUL: Asbestos Panel Taps Campbell & Levine as Counsel
---------------------------------------------------------------
The Official Committee of Asbestos Claimants of Federal-Mogul
Corporation, and its debtor-affiliates asks the court that they
be allowed to employ and retain Campbell & Levine LLC as
Delaware and associate counsel, nunc pro tunc to November 13,
2001.
Committee member Colette Margaret Platt tells the court that the
professionals at Campbell & Levine are to be retained because of
their substantial experience in bankruptcies involving mass tort
liability, insolvency, corporate reorganization and debtor-
creditor law and commercial law. In addition, they have
participated in numerous proceedings before the bankruptcy
court.
The services anticipated by the ACC for Campbell & Levine to
provide include but are not limited to:
A. Providing legal advice as counsel regarding the rules and
practices of the court applicable to the ACC's powers and
duties as an official court-appointed committee;
B. Providing legal advice as Delaware counsel regarding the
rules and practices of the court;
C. Preparing and reviewing, as counsel, applications, motions,
complaints, answers, orders, agreements and other legal
papers filed on or behalf of the ACC for compliance with
the rules and practices of the court;
D. Preparing in Court as counsel to present necessary motions,
application and pleadings and otherwise protecting the
interests of the ACC and asbestos-related, personal injury
creditors of the Debtor;
E. Investigating, instituting and prosecuting causes of action
on behalf of the ACC and/or the Debtors' estates;
F. Performing such other legal services for the ACC as the
committee believes is necessary and proper in the
proceedings.
Matthew G. Zaleski III, Esq., at Campbell & Levine LLC in
Wilmington, Delaware, states that the Firm has not received any
retainer and will only be will be compensated by hourly rates
for its professionals plus reimbursement for the actual,
necessary expenses incurred.
The hourly rates applicable to the proposed professionals in
Delaware are:
Professional Position Rate
Matthew G. Zaleski III Member $275
Cathie J. Boyer Paralegal $120
Stephanie L. Peterson Legal Assistant $90
While the hourly rates applicable to the proposed professionals
in Pittsburgh include:
Professional Position Rate
Douglas A. Campbell Member $350
David B. Salzman Member $350
Philip E. Milch Member $225
Michele Kennedy Paralegal $90
Mr. Zaleski tells the Court that the firm is a disinterested
person in these cases, although it recently represented in
unrelated matters parties-in-interet in these cases including GE
Capital Corporation, The CIT Group/Business Credit Inc., Bank
America Business Credit Inc., Heller Financial Inc., La Salle
Business Credit Inc., Sanwa Business Credit Corporation, the
Bank of New York Commercial Corporation, Corestates Bank, FSB
Business Finance Corp., First National Bank of Boston, Nation's
Bank of Texas, BTM Capital Corporation, Gribalter Corporation of
America and National City Commercial Finance Inc. as defense
counsel of an adversary proceeding captioned Bart A. Brown Jr.
as Chapter 7 Trustee vs. General Electric Capital Corporation
related to a pending bankruptcy case of Foxmeyer Corporation
regarding loans the Defendants made to the company in June of
1996. Mr. Zaleski adds that the firm also represents the
Official Committee of Asbestos Claimants in the bankruptcy
proceedings for Pittsburgh Corning Corporation and Owens Corning
and represents the Official Committee of Asbestos Personal
Injury Claimants in the proceedings for W.R. Grace & Company,
Armstrong World Industries Inc. and USG Corporation. Campbell &
Levine is also counsel to H.K. Porter Company Inc. Asbestos
Trust, in the bankruptcy case of H.K. Porter Company Inc.
Mr. Zaleski assures the court that for as long as it represents
the Asbestos Claimants Committee, Campbell & Levine will not be
involved with any other entity that is a party in interest in
these cases. (Federal-Mogul Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
FORMICA CORP: Liquidity Concerns Pushes Ratings to Junk Level
-------------------------------------------------------------
Standard & Poor's today lowered its ratings on Formica Corp. The
ratings remain on CreditWatch with negative implications where
they were placed on July 2, 2001.
The company's near-term liquidity continues to be a concern.
Formica has no availability under its $120 million revolving
credit facility, and its waiver for bank covenant violations
expires February 9, 2002. Although Formica has sufficient cash
($26 million at the end of the third quarter) to make its March
1, 2002, bond interest payment, Standard & Poor's is concerned
that the company might not be successful in amending the credit
facility or extending the waiver, possibly leading the banks to
bar the interest payment and accelerate repayment of the $320
million outstanding under the facility. Such an occurrence would
be also be considered an event of default under the company's
$215 million subordinated notes.
In addition, Formica recently replaced its chief executive
officer and entered into an agreement with Lazard Freres & Co.
LLC to advise it in connection with potential restructurings,
business combinations, and financings. Standard & Poor's
believes these actions, in conjunction with the looming waiver
expiration, heighten the possibility that the company could file
for bankruptcy. The ratings could be lowered again if the
company is unable to achieve a long-term solution to improve
liquidity.
Formica manufactures and distributes the high-pressure laminate
used in commercial and residential interior surfacing
applications such as countertops, cabinetry, furniture, and
doors. The company's owners include Credit Suisse First Boston
Private Equity, Citicorp Venture Capital Ltd., and CVC Capital
Partners Ltd.
Standard & Poor's will continue to monitor Formica's bank
negotiations and analyze the credit impact of potential actions
arising from the restructuring review.
Ratings Lowered and Remaining on CreditWatch
with Negative Implications
Ratings
Formica Corp To From
Corporate credit rating CCC B-
Senior secured bank loan rating CCC B-
Subordinated debt rating CC CCC
DebtTraders reports that Formica Corp's 10.875% bonds due 2009
(FORMICA1) are trading between 20 and 25. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=FORMICA1for
real-time bond pricing.
FOURTHSTAGE: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Fourthstage Technologies, Inc.
aka Webvision
aka Aperian
aka Outernet
aka Micro Media Solutions Incorp.,
aka Infinity Interactive
aka MSI Holdings
3030 North Third Street, 7th Floor
Phoenix, AZ 85012
Bankruptcy Case No.: 01-17604-EWH
Type of Business: The Company provides technology integration
systems.
Chapter 11 Petition Date: December 31, 2001
Court: District of Arizona (Phoenix)
Judge: Eileen W. Hollowell
Debtor's Counsel: Lori A. Schmig, Esq.
Christopher H. Bayley, Esq.
Snell & Wilmer L.L.P.
One Arizona Center
400 E. Van Buren
Phoenix, AZ
Tel: 85004-2202
602-382-6389
Fax: 602-382-6070
Email: LSchmig@swlaw.com
Total Assets: $49,045,972
Total Debts: $27,055,174
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Cisco Systems Capital Trade Debt $960,000
Corp.
PO Box 6000
File No. 73226
San Francisco, California
94160
Comstor Trade Debt $311,450
PO Box 10040
Church Street Station
New York
New York 10259-0040
Cisco Systems Trade Debt $300,000
PO Box 61000
Dept. 1659
San Francisco, California
94161
Bryan Cave LLP Trade Debt $226,834
Gardere Wynne Sewell, LLP Trade Debt $176,720
Triple Five Investments Trade Debt $172,566
State Comptroller-Arizona Sales Taxes $161,546
Park Tower Investors, LTD Trade Debt $148,171
Hall-Mark Division Trade Debt $135,510
Camali Corp. Trade Debt $114,235
Lee Collins Trade Debt $110,619
Dale Van De Vrede Trade Debt $110,619
Chris Donahue Trade Debt $110,619
Ernst & Young LLP Trade Debt $99,303
Qwest (webvision) Trade Debt $95,300
Regis Property Management Rent $93,330
Kane, Russell, Coleman & Trade Debt $86,401
Logan
Verizon-California Trade Debt $86,000
EMC Corporation Trade Debt $84,190
Dallas FDS, L.P. Rent $83,846
Los Angeles County Tax Sales Tax $82,963
Collector
FRIENDLY ICE CREAM: S&P Ups Junk Rating to B- After Refinancing
---------------------------------------------------------------
Standard & Poor's raised its corporate credit rating on Friendly
Ice Cream Corp., to single-'B' from single-'B'-minus and raised
its senior unsecured debt rating to single-'B'-minus from
triple-'C'-plus. The outlook is stable.
The upgrade is based on the company's restored financial
flexibility following the successful completion of its
refinancing plan. The refinancing includes a $34.5 million sale
and leaseback of 45 restaurants, $55 million in long-term
mortgages secured by 75 restaurants, and a $30 million revolving
credit facility. The plan also includes the repurchase of about
$21 million of its 10.5% senior notes due in 2007. The
refinancing significantly extends the maturities of the
company's debt, as Friendly was facing about $75 million in
maturities in 2002 on its term loans and revolving credit
facility.
The ratings on Friendly reflect its participation in the
intensely competitive restaurant industry, weak credit
protection measures, and a highly leveraged capital structure.
These factors are partially offset by the company's established
brand name and regional market position.
The company's operating performance improved in the first nine
months of 2001. Same-store sales rose 1.5% in the third quarter
of 2001 following a 1.4% increase in the second quarter and a
1.0% increase in the first quarter, after declining 3.3% in all
of 2000. The improved results have come after the closing of 135
underperforming restaurants since March 2000. Credit protection
measures are weak, with EBITDA coverage of interest for the 12
months ended September 30, 2001, at 1.7 times, and leverage is
high, with total debt to EBITDA at 5.6x for the same period.
Wilbraham, Massachusetts-based Friendly operates 394
restaurants, franchises 160 restaurants and six cafes, and
manufactures a line of packaged frozen desserts distributed
through more than 3,500 supermarkets and other retail locations.
Outlook: Stable
Friendly's restored financial flexibility following the
completion of its refinancing plan and improved operating
performance provide support for the ratings. Ratings incorporate
Standard & Poor's expectation that the company will maintain
stable operating performance and that credit measures will
continue to improve.
FRUIT OF THE LOOM: Plan's Classification & Treatment of Claims
--------------------------------------------------------------
Fruit of the Loom filed its Amended Plan of Reorganization
premised on a sale of substantially all of its assets to
Berkshire-Hathaway. The Plan, filed in the U.S. Bankruptcy
Court for the District of Delaware in Wilmington, classifies and
treats creditors following this scheme:
Type of Claim or
Equity Interest/
Estimated Amount
Class of Allowed Claims Treatment
----- ----------------- -------------------------------------
N/A Administrative Paid in full, in Cash, on the
Priority Claims Effective Date
N/A DIP Facility Claims Paid in full, in Cash, on the
Effective Date
N/A Priority Tax Claims Paid in full, in Cash, on the
Effective Date, or over time
together with 6% interest
1 Priority Non-
Tax Claims
1A: Priority Non-Tax Unimpaired-not entitled to vote; paid
Claims Against the in full, in cash, or other treatment
Consolidated Estate as agreed upon by holder of an
Allowed Priority Non-Tax Claim and
Estimated Allowed Fruit of the Loom, or the applicable
Amount: Not more Plan Entity.
than $2,000,000
1B: Priority Non-Tax Unimpaired; not entitled to vote; paid
Claims which are in full in cash, or other treatment as
NWI Claims agreed upon by holder and NWI or the
Applicable Plan Entity, as applicable.
Estimated Allowed
Amount: $0
2 Prepetition Secured Impaired-entitled to vote; each holder
Creditor Claims of an Allowed Prepetition Secured
Creditor Claim will receive its pro
Estimated Allowed rata portion of (a) cash in an amount
Amount: Approx. to be determined, between $275 million
$1,200,000,000 and $300 million (which shall be
(subject to calculated as $275 million plus an
adjustments for amount equal to the proceeds of asset
Adequate Protection sales by FTL from and after January 1,
Payments and 2001, which exceeded $200,000 per sale
True-Up) and which exceeded $15,000,000 in the
aggregate, but not to exceed the
aggregate adjustment amount of
$25,000,000); (b)92.5% of the adjusted
net purchase price for the Apparel
Business, which adjustment will deduct
from the purchase price (after all
adjustments under the Berkshire
Agreement) the following amounts:
i) all allowed administrative expense
claims and priority claims to be
paid or reserved for by FTL estates
under the Plan on the Effective
Date, including severance and other
amounts due to the "Designated
Executives" and the remaining
balance of the Post-Petition
Financing, but excluding
letters of credit outstanding,
ii) all other amounts to be paid in
cash or reserved for in full on the
Effective Date by the FTL estates,
including, without limitation, any
required cash payments (or
reserves) for holders of Class 3
Other Secured Claims (as defined in
the Plan), the cure amounts for
assumed contracts, and reserves for
future expenses of the estates, and
iii) the sum to be distributed to
Class 2 under clause (a) above (the
purchase price as adjusted by the
foregoing clauses: i), ii) and
iii), the "Adjusted Apparel
Business Sale Proceeds"); and
c) 92.5% of the interest in FOL
Liquidation Trust. [Holders of
Allowed Prepetition Secured
Creditor Claims against NWI will
also be entitled to
proceeds of liquidation of NWI
after payment in full of all
Allowed Priority Claims and Allowed
Administrative Expense Claims
against NWI, on account of their
liens on the assets of NWI].
[Note: NWI treatment may change based
NWI Settlement].
3 Other Secured Impaired-entitled to vote; at the
Claims Debtors' option, each holder will
receive (a) cash payments made on the
Estimated Allowed Effective Date; (b) secured notes on
Amount: $2,000,000 terms that satisfy Section 1129(b)(2)
(A); (c) reinstatement; (d) collateral
securing its Allowed Other Secured
Claim; or (e) other treatment as may be
agreed to in writing between holder and
Reorganized FTL, FTL or FOL Liquidation
Trust; provided that if the Allowed
Amount exceeds $250,000 (provided all
such claims do not exceed $1.5 million
in the aggregate), FTL may not elect
treatment provided in (a), (c) or (e)
with respect to such Other Secured
Claim without the Consent of the
Prepetition Secured Creditors; and
provided that notwithstanding the
foregoing proviso, such Claim shall be
treated in accordance with clause (a)
unless Purchaser consents to the
treatment of Claim in accordance with
one of the other foregoing clauses.
Subject to the foregoing provisos, if
the holder of an Allowed Secured Claim
receives treatment as provided in (b)
or (c),the holder will retain the Liens
securing the Claim until paid in full.
Any deficiency amount relating to an
Allowed Secured Claim will be treated
either as a Class 4 Unsecured Claim or
a Class 5 Trade Election Claim.
4 Unsecured Claims
4A Against Impaired-entitled to vote; each holder
Consolidated Estate of Allowed Unsecured Claim (other than
NWI claims) will receive its pro rata
Estimated Allowed interest in the Unsecured Creditors
Amount:$450 million Trust holding (a) 7.5% of the Adjusted
(not including the Apparel Business Sale Proceeds, and
deficiency claims (b) the Unsecured Creditors Trust which
of holders of holds 7.5% of the interests in FOL
Class 2 Claims) Liquidation Trust and the UCT Claims.
Although this Class will include the
deficiency claims held by holders of
Allowed Class 2 Claims for voting
purposes, the holders of the Allowed
Class 2 Claims have agreed to waive
their right to a Distribution on
account of their deficiency claims in
this Class as part of the settlements
embodied in the Plan.
4B Unsecured Claims Impaired-entitled to vote. Each holder
which are NWI of an Allowed NWI Claim will receive
Claims its pro rata share [of the proceeds of
liquidation of NWI after payment in
Estimated Allowed in full of all Allowed Priority Claims
Amount: (plus the and Allowed Administrative Claims
amount of the against NWI of FTL Inc.] or [If the NWI
deficiency claims Environmental Claims Settlement is
of the holders of incorporated into the Plan, 50% of the
Class 2 Claims) proceeds of the liquidation of certain
NWI assets (the other assets being
dedicated to remediation and cleanup of
real property owned by NWI); such
liquidation will consist of dividends
or other payments relating to preferred
shares of stock in True Specialty
Corp., currently owned by NWI. These
proceeds would be realized through a
settlement in which NWI will contribute
certain assets to the Custodial Trust
and/or NWI Successor and receive
releases for NWI and FTL Inc., with
respect to certain environmental
claims. The proceeds would be received
only after 1) the sale of Velsicol
Chemical Corp., shares or assets, and
2) payment of the first $25 million in
respect of the Preferred Shares to a
fund established for payment of
environmental cleanup costs, and
reimbursement to FOL Liquidation Trust
of $4,450,000 of administrative
expenses advanced by the Prepetition
Secured Creditors from collateral
proceeds.] FTL is unable to estimate
the value, if any, and timing of the
Distribution to holders of Allowed
Class 4B Claims.
5 Trade Election Impaired-entitled to vote. Each holder
Claims [Trade of an Allowed Trade Election Claim (or
Claims up to holder of an Allowed Unsecured Claim
$2,500 or reduced that is a Trade Claim, who elects to
to $2,500] reduce its Allowed Claim to $2,500)
will receive Cash Distributions
Estimated Allowed totaling up to 25% of its Allowed Trade
Amount: Not to Election Claim; provided that the
exceed $6 million maximum aggregate distribution to
holders of Allowed Class 5 Claims shall
not exceed $1,500,000 and in the event
that Allowed Trade Election Claims
exceed $6,000,000, the percentage
distribution to holders of Class 5
Claims shall be reduced on a pro rata
basis. No interest will be paid on any
Allowed Trade Election Claim.
6 Creditor Securities Impaired-subordinated to all other
Fraud Claims creditor claims pursuant to Section
501(b); receives no distribution under
Estimated Allowed the Plan, therefore is deemed to have
Amount: N/A rejected the Plan and is not entitled
to vote.
7 Old Capital Stock: Impaired-deemed to reject Plan; not
entitled to vote. A holder of an
Estimated Allowed Allowed Old Capital Stock interest will
Amount: N/A not receive or retain property or
distribution under the Plan.
Subclasses:
7A-Old FTL Cayman
Common Stock
7B-Old FTL Inc.
Preferred Stock
7C-Old FTL Inc.
Common Stock
8 Transferred Debtor Impaired-deemed to have rejected the
Subsidiary Equity Plan and not entitled to vote. The New
Interests Common Stock of the Directly
Transferred Subsidiaries will be
Estimated Allowed issued to Union Underwear, which will
Amount: N/A transfer it to Purchaser under the
Berkshire Agreement. New Common Stock
of each of the Debtors that is an
Indirectly Transferred Subsidiaries
will be issued to the Purchaser or one
of the Directly or Indirectly
Transferred Subsidiaries, as designated
by the Purchaser. After completion of
the foregoing but not less than one day
after the Effective Date, all now-
existing Equity Interests in Union
Underwear will be cancelled.
9 Other Equity Impaired-deemed to reject Plan; not
Interests entitled to vote. Holder of an Allowed
(including Other Equity Interest will not receive
Liquidating Debtors or retain any property or distribution
and NWI) under the Plan.
Estimated Allowed
Amount: N/A
(Fruit of the Loom Bankruptcy News, Issue No. 46; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
GENERAL BINDING: Bank Group Amends & Extends Credit Facility
------------------------------------------------------------
General Binding Corporation (Nasdaq: GBND) announced that it has
successfully amended and extended its primary credit facility
with its group of 18 multinational financial institutions, led
by Harris Bank, providing the financial flexibility and
necessary liquidity to support all currently-anticipated
operating and capital requirements. The amended facility
includes a $90 million multicurrency revolving credit facility
and term loans totaling $200 million. The facility also provides
for higher interest rates than those payable under the previous
facility, a reflection of current bank credit market conditions
and the extended maturity.
The Company was able to significantly reduce the size of the
facility by $120 million, from $410 million to $290 million, as
a result of the reduction in debt it has achieved through the
successful execution of wide-ranging cost reduction and
rationalization programs initiated in 1999.
In addition, the maturity date on the majority portion of the
facility has been extended for a two-year period to January 13,
2004, and the maturity date on approximately $40 million of the
term loans has been extended to July 13, 2004. Despite the
higher interest rates, this duration beneficially allows GBC the
opportunity to implement a comprehensive set of new initiatives
in each of its businesses aimed at significantly reducing costs
further and intensifying the focus on its profitable businesses.
The Company expects to announce these initiatives, which will
streamline facilities and operations while simplifying its
product lines, customer bases and business processes, in early
February.
GBC is an innovative global technology leader in document
finishing, film lamination, visual communications and paper
shredder products. GBC's products are marketed in over 115
countries under the GBC, Quartet, Ibico, VeloBind, Shredmaster,
Bates, Sickinger, Pro-Tech, and Fordigraph brands and are used
in the commercial, business, educational, home office and
governmental markets. As of June 30, 2001, the company reported
its strained liquidity position, with total current liabilities
exceeding total current assets by about $74 million.
HAYES LEMMERZ: Signs-Up McKinsey & Co. as Management Consultants
----------------------------------------------------------------
Kenneth A. Hiltz, Chief Financial Officer and Chief
Restructuring Officer of Hayes Lemmerz International, Inc., and
its debtor-affiliates, tells the court that improvement of the
Hayez Lemmerz's operational performance is critical to a
successful reorganization effort. The improvements that need to
be made are widespread and fundamental, reaching from the
operations of senior management to various facilities around the
country. Mr. Hiltz believes that considering the magnitude of
the strategic, operational and organizational issues facing the
company, a professional management consulting company is
required.
McKinsey & Company Inc. fits the bill, and the Debtors ask the
Court for permission to employ McKinsey as their management
consultant, nunc pro tunc to the Petition Date. Specifically,
McKinsey will:
A. Provide services related to implementation of the operational
improvements program at Sedalia and Huntington Facilities.
B. Analyze operational and strategic issues at Briston, Howell
and Gainesville facilities and implement an operational
improvements program thereto.
C. Analyze operational and strategic issues at other facilities
as needed and requested by the Debtors and also implement
an operational improvements program thereto.
D. Conduct on-the-job training programs with respect to the
various objectives of the operational improvements program.
E. Continue support in connection with the formulation and
finalization of business plans.
F. Provide services in connection with operationalizing the
office of the turnaround.
G. Review of option for certain of the Debtors' non-Debtor joint
ventures.
With this retention, the Debtors agree to indemnify and hold
harmless McKinsey, its affiliates and their respective
directors, officers, stockholders, agents and employees from
against all liabilities, losses, damages and expenses incurred
arising from or related to the consulting relationship or any
transaction or matter related to McKinsey's engagement unless
such losses are determined by a competent court to have resulted
from gross negligence, willful misconduct or bad faith of any
indemnified person.
Mr. Hiltz informs the Court that as compensation for its
services, McKinsey shall be paid a flat monthly fee of
$1,500,000 plus reimbursement of out-of-pocket expenses. The
firm has also been paid a retainer of $660,000 while
approximately $2,300,000 was paid for services rendered and out-
of-pocket expenses incurred during pre-petition.
Richard K. Skyes, a principal of McKinsey & Co., tells the Court
that his Firm has no centralized conflicts identification
process but does maintain a central database of clients and
engagements performed for clients that are kept principally for
record keeping purposes. After reasonable investigation, Mr.
Skyes informs the court that McKinsey has served or currently
serves several of the parties-in-interest identified on various
matters but not directly involving or adverse to the Debtors.
(Hayes Lemmerz Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
HAYNES INTERNATIONAL: Financial Results Improve in Fiscal 2001
--------------------------------------------------------------
Net revenues of Haynes International Inc., increased
approximately $22.2 million to approximately $251.7 million in
fiscal 2001 from approximately $229.5 million in fiscal 2000.
The average selling price increased 11.4% to $12.65 per pound in
fiscal 2001 from $11.36 per pound in fiscal 2000. Volume
remained steady at 19.9 million pounds sold in fiscal 2001
compared to 20.0 million pounds sold in fiscal 2000.
Sales to the aerospace industry in fiscal 2001 increased by 9.7%
to approximately $103.4 million in fiscal 2001 from
approximately $94.3 million for fiscal 2000, due primarily to a
9.7% increase in the average selling price per pound. The
increase in the average selling price is due to generally
improved market prices, and a larger proportion of the higher
priced specialty alloys compared to the lower priced nickel base
alloys.
Sales to the chemical processing industry increased by 8.8% to
approximately $67.8 million in fiscal 2001 from approximately
$62.3 million in fiscal 2000, due to a 12.8% increase in the
average selling price per pound which was partially offset by a
3.4% decrease in volume. The improved average selling price is
the result of a greater proportion of higher valued proprietary
alloy flat and tubular products sales as compared to lower
priced plate product sales for large projects combined with
generally improved market prices. The decrease in volume can be
attributed to the lack of large projects in the industry.
Sales to the land-based gas turbine industry increased by 35.0%
to approximately $47.4 million in fiscal 2001 from approximately
$35.1 million in fiscal 2000, due to a 24.3% increase in volume
combined with a 8.5% increase in the average selling price per
pound. The increase in volume can be attributed to improved
global shipments of proprietary alloy round products as well as
nickel-base alloy and specialty alloy flat products to
fabricators in support of the growing demand at the gas turbine
manufacturers. The increase in the average selling price can be
attributed to the larger proportion of the higher priced
specialty and proprietary alloys combined with improved market
prices.
Sales to the flue gas desulfurization industry deceased by 28.3%
to approximately $3.8 million in fiscal 2001 from approximately
$5.3 million in fiscal 2000, due to a 33.3% decrease in volume
which was partially offset by a 7.6% increase in the average
selling price per pound. The decrease in volume can be
attributed to fewer domestic retrofit projects and a lack of any
major European or export projects. The increase in the average
selling price is a result of improved market price conditions
partially offset by lower volume pricing for retrofit projects.
Sales to the oil and gas industry decreased by 12.2% to
approximately $6.5 million in fiscal 2001 from approximately
$7.4 million in fiscal 2000, due to a 37.5% decrease in volume
which was partially offset by a 40.5% increase in the average
selling price per pound. The decrease in volume can be
attributed to a combination of less project business of tubular
products which was offset by improved round product sales. The
increase in the average selling price reflects a larger
proportion of sales of the higher priced nickel base alloy
tubular products for major project activity and increased market
prices.
Sales to other industries decreased by 3.1% to approximately
$22.0 million in fiscal 2001 from approximately $22.7 million in
fiscal 2000, due to an 20.0% decrease in volume which was offset
by a 21.2% increase in the average selling price per pound. The
increase in the average selling price can be attributed to
generally improved market prices and a larger proportion of the
higher priced specialty alloys for specialty markets compared to
the higher volume, lower priced nickel base alloys for
industrial markets.
The Company recognized net income of approximately $300,000 in
fiscal 2001 compared to a net loss in fiscal 2000 of
approximately $4.2 million.
Haynes International makes high temperature alloys (HTA) for
protecting equipment from extreme temperatures and corrosion
resistant alloys (CRA) mainly for aerospace production and
chemical processing. HTAs are used in jet engines, land-based
gas turbines, and waste-incinerators. CRAs protect equipment
used in chemical processing, power plant emissions control, and
hazardous waste treatment. Haynes' alloys, which are nickel- and
cobalt-based, are mostly made in sheet, core, and plate form.
The US accounts for more than 60% of its sales, which are made
directly from Haynes service centers. The Blackstone Group owns
73% of Haynes. As at June 30, 2001, the company's balance sheet
was upside-down, with stockholders' equity deficit of about $100
million.
LTV CORP: Gets Interim Approval of $15MM Loans for LTV Tubular
--------------------------------------------------------------
Judge Bodoh approves, on an interim basis, a financing facility
which is intended to provide an independent source of operating
capital for LTV Tubular for the period stated in the Motion, and
approves a short-term bridge loan to provide operating capital
to Copperweld until the time that a long-term facility can be
finalized and approved. (LTV Bankruptcy News, Issue No. 22;
Bankruptcy Creditors' Service, Inc., 609/392-00900)
LODGIAN INC: US Trustee Appoints Unsecured Creditors' Committee
---------------------------------------------------------------
The United States Trustee for Region II appoints these creditors
to serve on the Official Committee of Unsecured Creditors in the
Chapter 11 cases of Lodgian, Inc., and its debtor-affiliates:
A. Northeast Investors Trust
50 Congress St., Suite 1000, Boston, MA 02109
Attention: Bruce H. Monrad
Phone: (617) 523-3588
B. BRE/HY Funding, L.L.C.
C/o Blackstone Real Estates Acquisitions LLC
345 Park Ave., 31st Floor, New York, NY 10154
Attn: Kenneth A. Caplan
Phone: (212) 583-5544
C. OCM real Estates Opportunities Fund II, L.P.
c/o Oaktree Capital Management LLC
1301 Ave. of the Americas, 34th Floor, New York, NY
10019
Attention: Marc Porosoff
Phone: (212) 284-1900
D. Bankers Trust Company
100 Plaza One, Jersey City, New Jersey 07311
Attention: Stanley Burg
Phone: (201) 593-6865
E. Third Avenue Funds
767 Third Ave., New York, NY 10017
Attention: Michael Winer, Portfolio Manager
Phone: (201) 906-1159
F. U.S. Foodservice, Inc.
80 International Drive, Greenville, SC 29615
Attention: Floyd Babbitt, Esq., FagelHaber LLC
Phone: (312) 346-7500
G. Marriott International, Inc.
Marriott Drive, Washington DC 20058
Attention: Steven M. Goldman
Phone: (301) 380-7414
(Lodgian Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
LOGICSOUTH: Chapter 11 Case Summary
-----------------------------------
Debtor: LogicSouth, A Corporation
aka Carolina Computer Systems
aka Netside Network
PO Box 1543
Irmo, SC 29063
Bankruptcy Case No.: 02-00167
Type of Business: The Company is an Internet Service Provider
in the Southeastern united States.
Chapter 11 Petition Date: January 7, 2002
Court: District of South Carolina (Columbia)
Judge: John E. Waites
Debtor's Counsel: Gene Trotter, Esq.
Gene Trotter Attorneys at Law
1701 Richland Street
Columbia, SC 29201
803-799-6000
MARINER POST-ACUTE: Health Debtors Settle $5MM IRS Audit Claims
---------------------------------------------------------------
As a result of an IRS audit of Mariner Health Group Debtors'
consolidated corporate federal income tax returns for the tax
years ending December 31, 1996, December 31, 1997, July 31, 1998
and other tax years affected by carrybacks and carryforwards
from such tax years, on September 13, 2000, the IRS issued a
Statutory Notice of Deficiency and a related tax form to Debtors
that increased Debtors' taxable income for the years ending
December 31, 1996 and December 31, 1997 by $11,343,789 and
$20,795,671, respectively, and decreased taxable income for the
tax year ending July 31, 1998 by $98,654.
Because Debtors had carried back tax losses in the tax years
ending December 31, 1997 and July 31, 1998 to earlier tax years,
the effect of the IRS-proposed adjustments was to reduce the
loss carrybacks to the tax years ending December 31, 1994 and
December 31, 1995, to create positive taxable income in the tax
year ending December 31, 1997 and to increase the loss carryback
to the tax year ending December 31, 1996.
The adjustments proposed by the IRS in the Statutory Notice, if
allowed to stand, would have created the following income tax
deficiencies for the following tax years of Debtors:
Tax Year Proposed Tax Deficiency
----------------- -----------------------
December 31, 1994 $2,678,759
December 31, 1995 $1,675,273
December 31, 1996 $ 226,876
December 31, 1997 $ 215,096
----------
Total $4,796,004
Consequently, Debtors would have owed nearly $5 million in
additional income taxes if Debtors were to agree with the
adjustments proposed by the IRS.
Debtors did not agree with the adjustments proposed by the IRS
and appealed such proposed adjustments to the IRS Appeals
Office. The dispute between Debtors and the IRS principally
involved three technical tax issues: (1) The propriety of mark-
to-market deductions claimed by Debtors pursuant to Internal
Revenue Code section 475; (2) Medicare revenue recognition
issues; and (3) an issue concerning book/tax disparities.
Collectively, more than 90 percent of the income tax
deficiencies proposed by the IRS in the Statutory Notice relate
to these three issues.
Mr. John Hoehn, Director of Taxes for the Mariner Group, entered
into discussions with the IRS Appeals Office and reached a
contingent settlement of this tax controversy. The IRS revised
its earlier determination and adjusted the increase in taxable
income for the tax year ending December 31, 1996 downward to
$6,300,876 (instead of $11,343,789) and to $3,916 for the tax
year ending December 31, 1997 (instead of $20,795,671).
This contingent settlement is embodied in the Proposed Form 870-
AD. Under the Proposed Form 870-AD, the Debtors agree that the
IRS may proceed to assess an additional $783.00 in income taxes
for the tax year ended December 31, 1994 and an additional
$107,815.00 in income taxes for the tax year ended December 31,
1996. Additionally, Debtors may be liable for certain restricted
interest on what the tax deficiency may have been before the
carryback, based on Revenue Procedure 60-17, as modified. The
proposed income tax deficiencies stated in the Statutory Notice
are annulled and superseded by the adjustments made on Form 870-
AD.
The finality of the settlement proposed by the IRS on Form 870-
AD is expressly contingent upon two major factors. First, it is
contingent upon the completion of a review of the settlement
without objection by the United States Congress's Joint
Committee on Taxation. Second, Form 870-AD expressly provides
that this matter may be reopened by the IRS (even after Joint
Committee approval) if any of the following occurred: (1) fraud,
malfeasance, concealment or misrepresentation of a material
fact; (2) an important mistake in a mathematical calculation;
(3) a deficiency or overassessment resulting from certain
adjustments made under Subchapters C and D of Chapter 63
concerning the tax treatment of partnership and subchapter S
items determined at the partnership and corporate level; or (4)
an excessive tentative allowance of a carryback provided by law.
In the event the Form 870-AD fails to ripen into a final
agreement because of a failure of the first contingency or is
reopened as a result of the second contingency, Debtors will not
be bound by assessments proposed by the IRS and will have the
right to oppose such proposed assessments under applicable tax
law. Based upon these contingencies, the execution of Form 870-
AD is in the nature of a contingent settlement rather than a
final settlement.
However, the IRS will not submit the settlement to the Joint
Committee for review and approval unless and until Debtors
execute Form 870-AD. Because of the procedural posture adopted
by the IRS, the settlement process cannot move forward until
Debtors execute Form 870-AD. The IRS has indicated informally
that in the event Debtors execute Form 870-AD and the settlement
is approved by the Joint Committee on Taxation, the IRS will
file an amended proof of claim conforming the IRS's claim to the
terms of the settlement set forth on Form 870-AD.
Debtors believe that it is unlikely that any of the
contingencies described above will prevent the settlement from
becoming final. Debtors believe that in all probability the
Joint Committee on Taxation will complete its review without
objecting to the settlement and that none of the conditions to
the finality of Form 870-AD (fraud, malfeasance, etc.) are
applicable in this case. Consequently, there is a great
probability that the last act likely to be performed by Debtors
(as distinguished from acts to be performed by the IRS and the
Joint Committee) before the settlement becomes final is the
execution of Form 870-AD.
Debtors therefore sought and obtained the Court's authority,
pursuant to section 105 of the Bankruptcy Code and Bankruptcy
Rule 9019(a), to enter into a contingent settlement with the
United States Internal Revenue Service relating to the tax years
ending December 31, 1994 through July 31, 1998 (inclusive) by
executing Form 870-AD (Offer to Waive Restrictions on Assessment
and Collection of Tax Deficiency and to Accept Overassessment)
and any other documents as may be reasonably required to effect
such contingent settlement.
Debtors believe that the proposed contingent settlement is in
the best interest of Debtors' estates, creditors, and other
parties in interest. The IRS has agreed to a reduction of over
95% in the proposed income tax deficiencies stated in the
Statutory Notice. The contingent settlement resolves the matter
at issue. In light of the time, expense, and uncertainty that
would be involved in litigating the remaining 5% of the income
tax deficiencies originally proposed by the IRS in the Statutory
Notice, Debtors believe that it is in the best interests of its
estate and creditors to execute the Proposed Form 870-AD
proffered by the IRS. (Mariner Bankruptcy News, Issue No. 23;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
NATIONSRENT: Needs Until Apr. 16 to File Schedules & Statements
---------------------------------------------------------------
NationsRent Inc., and its debtor-affiliates move the Court for
the entry of an order extending the time within which the
Debtors must file their Schedules and Statements through and
including April 16, 2002.
Daniel J. DeFranceschi, Esq., at Richards Layton & Finger P.A.
in Wilmington, Delaware, submits that the Debtors are large and
complex enterprises with operations throughout the United
States. Because of the substantial size and scope of the
Debtors' businesses, the complexity of their financial affairs,
the limited staffing available to perform the required internal
review of their accounts and affairs and the press of business
incident to the commencement of these chapter 11 cases, the
Debtors were unable to assemble, prior to the Petition Date, all
of the information necessary to complete and file the Schedules
and Statements. The Debtors, moreover, have thousands of active
vendors, approximately 3,300 employees and numerous other
creditors. Mr. DeFranceschi contends that the Debtors must
ascertain the pertinent information, including addresses and
claim amounts, for each of these parties to complete the
Schedules and Statements on a Debtor-by-Debtor basis.
Given the urgency with which the Debtors sought chapter 11
relief and the more critical and weighty matters that the
Debtors' limited staff of accounting and legal personnel must
address in the early days of these cases, Mr. DeFranceschi
believes that the Debtors will not be in a position to complete
the Schedules and Statements by the date required. Completing
the Schedules and Statements for each of the 12 Debtors will
require the collection, review and assembly of information from
multiple locations throughout the United States. Nevertheless,
recognizing the importance of the Schedules and Statements in
these chapter 11 cases, the Debtors intend to complete the
Schedules and Statements as quickly as possible under the
circumstances.
Mr. DeFranceschi points out that the substantial size, scope and
complexity of these cases and the volume of material that must
be compiled and reviewed by the Debtors' limited staff to
complete the Schedules and Statements for all of the Debtors
during the hectic early days of these chapter 11 cases provides
ample "cause" for justifying, if not compelling, the requested
extension.
A hearing on this request is scheduled for January 18, 2002.
(NationsRent Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
NETIA HOLDINGS: Sets Special Shareholders' Meetings in Poland
-------------------------------------------------------------
Netia Holdings S.A. (Nasdaq: NTIA, WSE: NET), Poland's largest
alternative fixed-line telecommunications services provider,
announced that it will hold two Extraordinary General Meetings
of Shareholders in Warsaw on February 5, 2002 and on February
19, 2002, to adopt resolutions on, among other things, a
decrease of the Company's share capital by reducing the nominal
value of the Company's shares from PLN 6 to PLN 1, the issuance
of a new series of the Company's shares, and amendments to the
Company's Statute, if required, in connection with the Company's
reorganization.
Owing to the present market valuation of Netia's shares, Netia
will propose a decrease of the Company's share capital through
decreasing the nominal value of the Company's shares in order to
enable the issuance of new shares since, as required by the
Polish Commercial Companies' Code, the issuance price of new
shares cannot be lower than their nominal value. Netia will
propose an increase in the Company's share capital up to PLN
631,419,172 through the issuance of up to 600,000,000 ordinary
bearer series H shares with a nominal value of PLN 1. In
addition, Netia will propose granting authorization to the
Management Board to further increase the Company's share capital
by up to PLN 141,386,274 through the issuance of ordinary bearer
series I shares, or a subsequent series of shares, within the
period ending on February 5, 2005 (authorized capital). Approval
of the capital increase would not, in and of itself, represent a
commitment on the part of any shareholder to provide additional
capital or financial support to the Company, and no such
commitments exist at this time.
Due to ongoing discussions with bondholders concerning a
consensual reorganization of Netia's balance sheet, the
Management Board will announce its recommendation on resolutions
to be voted on prior to each Shareholders' Meeting. If the
negotiations with the bondholders are not well advanced in due
time, the Management Board will recommend not to adopt any
resolutions concerning the capital increase at one or both
Shareholders' Meetings and reserves the right to cancel one or
both meetings.
Netia is the leading alternative fixed-line telecommunications
provider in Poland. Netia provides a broad range of
telecommunications services including voice, data and Internet-
access and commercial network services. Netia's American
Depositary Shares ("ADSs") are listed on the Nasdaq National
Market (NTIA), and the Company's ordinary shares are listed on
the Warsaw Stock Exchange. Netia owns, operates and continues to
build a state-of-the-art fiber-optic network that, as at
September 30, 2001, had connected 343,634 active subscriber
lines, including 93,713 business lines. Netia currently provides
voice telephone services in 24 territories throughout Poland,
including in six of Poland's ten largest cities.
NETIA HOLDINGS: Settles Cross-Currency Swap with Unit & JPMorgan
----------------------------------------------------------------
Netia Holdings S.A. (Nasdaq: NTIA, WSE: NET), Poland's largest
alternative fixed-line telecommunications services provider,
today announced that a settlement had been reached between
Netia's subsidiary, Netia Holdings III B.V., and JPMorgan Chase
Bank regarding the cross-currency swap transactions entered into
on July 31, 2000 and January 18, 2001.
In late December, Netia had announced that it did not make the
payment due on December 17, 2001 under the swap agreement of
January 18, 2001, and that it was in discussions with JPMorgan
Chase Bank as to the renegotiation of all swaps entered into
with that bank.
The swap agreements were terminated by mutual consent of the
parties, and the termination became effective immediately. The
swaps were terminated due to a planned debt restructuring by the
Company. As it has previously announced, Netia is engaged in
discussions with its bondholders concerning a consensual
reorganization of its balance sheet to reduce its debt and
interest burdens.
Netia is the leading alternative fixed-line telecommunications
provider in Poland. Netia provides a broad range of
telecommunications services including voice, data and Internet-
access and commercial network services. Netia's American
Depositary Shares ("ADSs") are listed on the Nasdaq National
Market (NTIA), and the Company's ordinary shares are listed on
the Warsaw Stock Exchange. Netia owns, operates and continues to
build a state-of-the-art fiber-optic network that, at September
30, 2001, had connected 343,634 active subscriber lines,
including 93,713 business lines. Netia currently provides voice
telephone service in 24 territories through Poland, including in
six of Poland's ten largest cities.
NETLIBRARY: Secures Court Approval to Sell Assets to OCLC
---------------------------------------------------------
Subject to a 10-day appeal period, final closing on the sale of
netLibrary assets to OCLC Online Computer Library Center has
been set for later this month, based upon approval granted
Friday last week by the U.S. Bankruptcy Court for the District
of Colorado. The sale includes both the eBook Division and the
MetaText eTextbook Division of netLibrary.
"OCLC has received very strong support and encouragement from
libraries, publishers and distribution partners since the
announcement of our intent to purchase netLibrary's assets,"
said Jay Jordan, president and CEO, OCLC. "We are excited to be
in a position to continue netLibrary's pioneering efforts. This
acquisition will further our goals of providing libraries around
the world with economical access to knowledge by continually
expanding content and integrated services."
"We are pleased to join the OCLC cooperative and to be able to
add eBooks to the impressive lists of products and services
already available through OCLC," said Rob Kaufman, president and
CEO of netLibrary. "eBooks have proven their value in libraries
around the globe, and we look forward to working with the entire
OCLC team to continue to expand their role in supporting the
research, reference and learning programs delivered through the
world's universities and libraries."
netLibrary's eBook operation will become a division of OCLC and
will continue to operate in Boulder, Colorado, serving libraries
and their users. The digital textbook group will become a for-
profit subsidiary of OCLC and will also continue to operate in
Boulder.
netLibrary develops and markets eBooks and MetaText digital
textbooks. eBooks are full-text electronic versions of published
books that library patrons can search, borrow, read and return
via the Internet. With netLibrary eBooks, users can access
library resources anywhere, anytime, and perform full-text
searches across hundreds of books or within a specific book to
speed research and reference projects. eBooks can be viewed
online from any location using an Internet browser. netLibrary's
catalog now contains approximately 40,000 titles covering a wide
range of subject areas such as business, economics, technology,
the social sciences and more.
netLibrary also markets MetaText digital textbooks, interactive,
web-based textbooks with enhanced teaching, collaborating and
learning tools for teachers and students. MetaText works with
the leading textbook publishers to transform print textbooks
into course-centric digital textbook learning environments. The
MetaText catalog of digital textbooks, which includes more than
160 titles, covers topical areas ranging from Anthropology to
Zoology.
Headquartered in Dublin, Ohio, OCLC Online Computer Library
Center is a nonprofit organization that provides computer-based
cataloging, reference, resource sharing and preservation
services to 41,000 libraries in 82 countries and territories.
OCLC was founded in 1967 to improve access to the world's
information and reduce information costs, and conducts ongoing
research to develop technologies to support that mission. Forest
Press, a division of OCLC since 1988, publishes the Dewey
Decimal Classification system.
In the United States, more information is available (via
telephone: +1-614-764-6000 or 1-800-848-5878; fax: +1-614-764-
6096; or e-mail: oclc@oclc.org). In Europe, the Middle East and
Africa, contact the OCLC Europe office, located in Birmingham,
United Kingdom (phone: +44 121 456 4656; fax: +44 121 456 4680;
or e-mail: europe@oclc.org). In Asia and the Pacific region,
contact the OCLC Asia Pacific office in Dublin, Ohio (phone: +1-
614-764-6189; fax: +1-614-764-4331; or e-mail:
asia_pacific@oclc.org). In Canada, contact the OCLC Canada
office in Montreal, Quebec (phone: +1-450-658-6583 or 1-888-658-
6583; fax: +1-450-658-6231; or e-mail: canada@oclc.org). In
Latin America and the Caribbean, contact the OCLC Latin America
and the Caribbean office in Dublin, Ohio (phone: +1-614-761-
5196; fax: +1-614-718-1026; or e-mail: america_latina@oclc.org).
More information about OCLC and OCLC regional service providers
is available at http://www.oclc.org
netLibrary ( http://www.netLibrary.com) is the leading provider
of eBooks and Internet-based content management services for the
institutional library market. netLibrary develops, hosts,
maintains and preserves eBook collections for academic,
corporate, public, and school libraries. Thousands of libraries
throughout the United States and internationally are currently
providing netLibrary eBooks to their patrons. The MetaText
Division ( http://www.MetaText.com) of netLibrary creates,
hosts and manages web-based digital textbooks for leading
textbook publishers. MetaText digital textbooks provide
instructors and students with a full range of interactive
teaching, collaborating and learning tools.
Dewey, Dewey Decimal Classification, Forest Press and OCLC are
registered trademarks of OCLC.
NEW WORLD RESTAURANT: Exchange Offer for Sr. Notes Expires Today
----------------------------------------------------------------
New World Restaurant Group, Inc. is offering to exchange
$140,000,000 of its new Senior Secured Increasing Rate Notes Due
2003, for all of its outstanding Senior Secured Increasing Rate
Notes Due 2003.
The exchange offer expires at 5:00 p.m., New York City time, on
February 15, 2002, unless extended. All outstanding notes that
are validly tendered and not validly withdrawn will be
exchanged.
Tenders of outstanding notes may be withdrawn at any time before
5:00 p.m., New York City time, on the expiration date of the
exchange offer. The exchange of notes will not be a taxable
exchange for U.S. federal income tax purposes.
New World Restaurant Group advises that they will not receive
any proceeds from the exchange offer.
The terms of the new notes to be issued are substantially
identical to the outstanding notes, except that the new notes
will not have transfer restrictions, and holders of the notes
will not have registration rights with respect to the new notes.
There is no established trading market for the new notes, and
the Company does not intend to apply for listing of the new
notes on any securities exchange.
New World is a leading company in the 'quick casual' sandwich
industry. The Company operates stores primarily under the
Einstein Bros and Noah's New York Bagels brands and primarily
franchises stores under the Manhattan Bagel and Chesapeake Bagel
Bakery brands. As of October 2, 2001, the Company's retail
system consisted of 494 company-owned stores and 294 franchised
and licensed stores. The Company also operates three dough
production facilities and one coffee roasting plant. As at
September 30, 2001, the company's liquidity is strained, with
total current liabilities exceeding total current assets by
almost $20 million.
OMEGA HEALTHCARE: Sets Jan. 22 Record Date for Rights Offering
--------------------------------------------------------------
Omega Healthcare Investors, Inc., (NYSE:OHI) announced that the
record date for its previously announced rights offering has
been set for the close of business on January 22, 2002 or such
later date as the registration statement relating to the rights
offering is declared effective by the Securities and Exchange
Commission.
As previously announced, Omega plans to distribute one non-
transferable right to purchase one share of Omega common stock
for every 2.15 shares of common stock held by stockholders as of
the record date.
The number of rights that each common stockholder will receive
represents the stockholder's prorated portion on an as-converted
basis of the $50 million Omega plans to raise, thereby allowing
stockholders who fully participate in the rights offering the
opportunity to avoid any dilution in their ownership interest.
The subscription price for each right is $2.92 per share.
Omega is a Real Estate Investment Trust investing in and
providing financing to the long-term healthcare industry.
A registration statement relating to the securities offered in
the rights offering has been filed with the Securities and
Exchange Commission, but has not yet become effective. These
securities may not be sold, nor may offers to buy be accepted,
prior to the time the registration statement becomes effective.
The Company will send a copy of the prospectus when it is
available to holders of record of the Company's common stock as
of the record date. Stockholders can also request a copy of the
prospectus by contacting Robert Stephenson, The Company's Chief
Financial Officer, Omega Healthcare Investors, Inc., 9690
Deereco Road, Suite 100, Timonium, Maryland 21093.
Omega Healthcare Investors ends the burden of real-estate
management. The real estate investment trust (REIT) is
capitalizing on the desire of health care companies to get out
of the real estate business by selling their properties and
leasing them back. Omega Healthcare Investors owns more than 200
long-term care, skilled nursing, assisted living, and acute care
facilities and provides mortgages for about 60 more properties;
the company also owns two rehabilitation hospitals. Although
Omega Healthcare Investors usually targets long-term care
properties in the US, it is seeking investments to broaden the
diversity of its portfolio in terms of geographic location and
operator and facility type.
As reported in December 3, 2001, by Troubled Company Reporter,
Fitch downgraded its 'B+' rating to 'B-', and placed the
rating on Rating Watch Negative, for Omega Healthcare Investors,
Inc.'s outstanding $97.6 million 6.95% senior unsecured notes
due June 15, 2002 and $100 million 6.95% senior unsecured notes
due Aug. 1, 2007.
In the same report, Fitch also affirmed its 'D' preferred stock
rating on Omega's outstanding $57.5 million series A 9.25%
cumulative preferred stock and $50 million series B 8.625%
cumulative preferred stock.
Fitch's rating action, the report said, was precipitated by
liquidity concerns surrounding the company's $236.6 million of
scheduled debt maturities in 2002 and the continued weakness in
Omega's operations.
OWENS CORNING: UST Balks At Solomon's Fees as Claimants' Advisor
----------------------------------------------------------------
The U.S. Trustee objects to four aspects Solomon's proposed
retention by the Legal Representative for Future Claimants of
Owens Corning:
A. The proposed compensation structure is set forth only for the
first three months of the engagement. After the first three
months, the engagement shifts to a month-to-month
engagement at an amount to be agreed on periodically
between the Futures Representative and Solomon up to a
monthly maximum of $175,000. These terms are too vague and
undefined; the Court is being asked to approve an
"agreement to agree" that does not give interested parties
adequate notice of the terms of the engagement.
B. The Application does not set forth any formula or other basis
under which the proposed success fee would be calculated,
or give any range or other indication of the quantum of
success fee that Solomon might seek, making this element of
the compensation another form of "agreement to agree."
C. In light of the vagueness and indefiniteness of the
compensation terms of the Application, the U.S. Trustee
objects to pre-approval of the compensation subject only to
the very limited extent of review permissible under section
328(a) of the Bankruptcy Code as that section has been
interpreted in this district. Where the compensation is
undefined and subject to later specification and
modification, an adequate foundation has not been laid for
approval under section 328(a). To the extent the proposed
retention can be approved, if at all, on an "agreement to
agree" basis, it should be approved only if subject to full
plenary review under sections 327 and 330.
D. The U.S. Trustee objects to the provisions of paragraph 4 of
the engagement letter under which Debtors would be required
to reimburse all of Solomon's counsel fees relating to the
engagement. Professionals are not generally entitled to
bill the estate for their own counsel representing their
interests in being retained and in rendering services under
the agreement. The U.S. Trustee objects to any general
authority to bill Solomon's counsel fees to the estate.
(Owens Corning Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
OWENS-ILLINOIS: Fitch Assigns Low-B Ratings to Sr. Secured Notes
----------------------------------------------------------------
Fitch has assigned a 'BB' rating to Owens-Illinois' (NYSE: OI)
proposed $300 million privately placed, Rule 144A senior secured
notes due 2009. At the same time, ratings for approximately $4
billion of outstanding secured credit agreement, $1.7 billion of
outstanding senior notes, and $453 million of outstanding
convertible preferred stock are affirmed at 'BB', 'B+' and 'B-',
respectively. The Rating Outlook remains Negative.
The issuer is Owens-Brockway Glass Container Inc., a second-tier
subsidiary of Owens-Illinois, and OI plans to use the net
proceeds of the offering to repay a portion of the outstanding
term loan under the secured credit agreement. The secured credit
agreement, comprised of a $3 billion revolving loan commitment
due March 2004 and a $1.05 billion term loan due March 2004, is
secured by substantially all of the domestic assets and 65% of
stock of first-tier foreign subsidiaries. In contrast, the new
notes will also be secured by all of the domestic assets, but
will exclude foreign subsidiaries. This will translate into
differences in access to cash flow (100% for the credit
agreement, vs. approximately 60% for the senior secured) and in
collateral (50% of OI's assets plus 65% of stock of foreign
subsidiaries, vs. 50% of assets).
Of the $1.7 billion in outstanding senior unsecured notes
borrowed at the parent level, $650 million will come due over
the next 18 months. Fitch expects OI to refinance this amount as
Owens-Illinois Group senior secured. Also, over the long run, it
is anticipated that OI will issue more senior secured notes to
refinance existing senior unsecured and term loan. Due to
overall collateralization, Fitch does not believe the lack of
foreign subsidiaries is currently material enough to
differentiate the new senior secured notes. If the senior
secured class becomes significant, it will warrant the rating
differential.
OI has been able to maintain stable margins and positive free
cash flow (after asbestos payments) through the severe economic
environment. The North America glass containers industry is
operating near full capacity given the tight supply, and OI
expects price increases in 2002. While there are issues such as
greater price pressure in the plastics industry, specifically in
the beverage bottles and household & chemical packaging
segments, Fitch believes that OI has solid and stable operations
overall. The main concern of the company has evolved around the
asbestos issue. While the bankruptcy of several companies with
asbestos exposure has heightened interest in the company's
asbestos exposure, OI has been proactively seeking out claims at
more favorable settlements, and expects total expenses to start
declining over the next few years. Nevertheless, there are still
great uncertainties and Fitch will continue to monitor this
issue. While the operations have improved during the third
quarter 2001, the Negative Rating Outlook reflects such
uncertainties. EBITDA margin improved to 26.9% for the third
quarter of 2001, from 24.6% for the same period a year earlier
and 25% for the fiscal year 2000. Last 12-month (LTM) EBITDA
interest coverage also improved to 2.8 times at Sept. 30, 2001
from 2.7x at June 30, 2001. Debt-to-EBITDA remains high but has
improved.
Owens-Illinois is a leading manufacturer of glass containers and
plastics packaging products. OI's glass bottle business makes
about one of every two glass containers produced worldwide. The
markets the company serves include soft drink and alcoholic
beverage markets, as well as food and pharmaceutical companies.
DebtTraders reports that Owens-Illinois Inc.'s 8.100% bonds due
2007 (OILL5) are currently trading in the low 90s. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=OILL5for
real-time bond pricing.
PACIFIC AEROSPACE: Amends Lock-Up Agreement with Noteholders
------------------------------------------------------------
Pacific Aerospace & Electronics, Inc. (OTC Bulletin Board: PCTH)
announced that it has entered into a revised lock-up agreement
with the holders of approximately 97.5% of its 11-1/4% senior
subordinated notes regarding a plan to restructure the Company's
debt and equity. In connection with the Revised Lock-up, the
Company and the Noteholders, who will own approximately 97.5% of
the Company's equity after the restructuring, have agreed that
one or more of the Noteholders will make a new five-year senior
secured loan to the Company in the principal amount of $36.0
million. The New Senior Loan will be issued at a discount and
the net proceeds of approximately $22.0 million will be used to
pay off the Company's existing senior secured debt, for working
capital, to pay certain fees and expenses of the restructuring
and for other general corporate purposes. In addition to the
initial discount, the New Senior Loan will bear interest at 5%
per annum.
Through continued cooperation between the Noteholders and the
Company, the completion of the restructuring (through an out-of-
court exchange of the Company's outstanding senior subordinated
notes for a combination of common stock, preferred stock and new
notes) and the funding of the New Senior Loan currently are
expected to occur by the end of February of this year.
"We are pleased to be able to announce this resolution of our
financing concerns," said Don Wright, President and CEO of the
Company. "We think it makes a great deal of sense for our
Noteholders, who will control the Company after the
restructuring, to provide the financing needed to pay off the
senior lenders and put the Company in a position to go forward
on a more stable financial basis. We are also grateful to our
senior lenders for their patience as we work through the issues
related to the restructuring. We expect that the exchange and
the new loan, which are the first steps in the restructuring,
can now be completed within the next several weeks."
The Company previously announced that it had entered into an
agreement with the holders of the Senior Debt to waive payment
defaults and certain other defaults on the Senior Debt. This
agreement expired on
December 31, 2001. Additionally, the Company failed to repay
the Senior Debt on December 31, 2001, its maturity date. As a
result, the holders of the Senior Debt have the right to demand
payment of the Senior Debt and to pursue additional recourse
against the Company, including foreclosure. The holders of the
Senior Debt have not taken any such action to date and the
Company currently does not believe that the holders of the
Senior Debt will exercise their rights if the New Senior Loan is
issued and the Senior Debt is repaid in full in the manner
contemplated in the Revised Lock-up. There can be no assurance,
however, that the holders of the Senior Debt will continue to
provide forbearance.
In other news, the Company announced the sale, as of December
21, 2001, of its engineering operations in Mountlake Terrace,
Washington. As a result, all but one of the Company's U.S.
businesses are now located in Wenatchee, Washington. The
Company also continues to operate at several locations in
England.
Pacific Aerospace & Electronics, Inc. is an international
engineering and manufacturing company specializing in
technically demanding component designs and assemblies for
global leaders in the aerospace, defense, electronics, medical,
telecommunications, energy and transportation industries. The
Company utilizes specialized manufacturing techniques, advanced
materials science, process engineering and proprietary
technologies and processes to its competitive advantage. Pacific
Aerospace & Electronics, Inc. has approximately 750 employees
worldwide and is organized into three operational groups -- U.S.
Aerospace, U.S. Electronics and European Aerospace.
PILLOWTEX CORP: FieldCrest Intends to Assume Tax Incentive Pact
---------------------------------------------------------------
Fieldcrest Cannon Inc., seeks the Court's authority to assume a
tax incentive agreement with Cabarrus County, North Carolina,
the City of Kannapolis, North Carolina and the City of Concord,
North Carolina.
Michael G. Wilson, Esq., at Morris, Nichols, Arsht & Tunnell, in
Wilmington, Delaware, tells the Court that Fieldcrest and the
Local Governments entered into an agreement on December 10,
1998, pursuant to which:
(a) Fieldcrest agreed to make improvements to certain of its
facilities located in Cabarrus County, North Carolina and
(b) the Local Governments agreed to provide Fieldcrest with
certain industrial development incentive grants over a
five-year period.
Provided that Fieldcrest makes its annual payments in respect of
the ad valorem real and personal property taxes assessed against
Fieldcrest by the Local Governments, Mr. Wilson explains, the
Local Governments are each required to make an annual incentive
payment to Fieldcrest. "The Tax Incentive Agreement continues
for five consecutive tax years," Mr. Wilson says.
Pursuant to the Tax Incentive Agreement, Mr. Wilson relates,
Fieldcrest timely paid its Taxes for 1999. However, Mr. Wilson
notes, the Local Governments did not make the corresponding
Incentive Payments in March 2000. Following Fieldcrest's
commencement of its chapter 11 case, Mr. Wilson states, the
Local Governments continued to withhold the 1999 Incentive
Payments. "And because Fieldcrest did not have authority to do
so, Fieldcrest did not pay its taxes for the year 2000 when they
came due in 2001," Mr. Wilson further explains. Accordingly,
Mr. Wilson informs Judge Robinson, the Local Governments did not
make the corresponding Incentive Payments for the 2000 Taxes.
As a result, Mr. Wilson says, Fieldcrest currently owes the
Local Governments $1,452,616 for its 2000 Taxes, and the Local
Governments owe Fieldcrest $417,787 in respect of the 1999
Incentive Payments and will owe Fieldcrest an estimated amount
of approximately $576,604 in respect of the 2000 Incentive
Payments once the 2000 Taxes are paid.
Mr. Wilson asserts that the Tax Incentive Agreement provides a
significant annual benefit to Fieldcrest's estate in the form of
the Incentive Payments, which effectively will reduce
Fieldcrest's annual Taxes through the year 2003. "Although
Fieldcrest owes the 2000 Taxes to the Local Governments, the
Local Governments also owe Fieldcrest amounts for the 1999
Incentive Payments and, upon payment of the 2000 Taxes, will owe
amounts in respect of the 2000 Incentive Payments," Mr. Wilson
explains. As a result, Mr. Wilson tells Judge Robinson that the
net amount necessary to cure all defaults under the Tax
Incentive Agreement is estimated to be only approximately
$458,225, an amount that will be exceeded by future Incentive
Payments made by the Local Governments.
Thus, Fieldcrest requests the Court to approve the assumption of
the Tax Incentive Agreement with the Local Governments of North
Carolina. (Pillowtex Bankruptcy News, Issue No. 20; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PINNACLE: Contracting Liquidity Prompts Moody's Downgrade
---------------------------------------------------------
Moody's Investors Service downgraded the ratings on Sarasota,
Florida-based Pinnacle Holdings and its subsidiary Pinnacle
Towers. Affected in this downgrade are approximately $845
million of debt and credit facilities.
Pinnacle Holdings, Inc.'s senior implied rating is dropped to
Caa2 from B2 while its $325 million 10% senior discount notes
due 2008 to Ca from Caa1. Pinnacle Towers, Inc.'s $520 million
senior secured credit facility on the other hand is downgraded
to B3 from B2.
Moody's cites the Company's inability to get longer-term
covenant relief from its bank group, its severe lack of
liquidity, and the continuing erosion of its tenant base,
primarily from ailing paging carriers.
Currently, Pinnacle is operating on its second forebearance
agreement with its senior lenders relating to its non-compliance
with certain covenants under its credit facility as of September
30, 2001, and has no access to any additional borrowings under
that facility. This forebearance agreement runs through February
6, 2002.
Moody's stated that "the company's two sources of liquidity are
cash from operations which has suffered due to the amount of
churn Pinnacle has experienced in its tenant base, and the
potential sale of certain non-core assets."
Pinnacle Holdings owns approximately 2,500 communications sites
in the United States.
POLAROID: Hearing on PDS Assets Sale to Appareo Set for Today
-------------------------------------------------------------
By this motion, Polaroid Corporation and Polaroid Digital
Solutions Inc. ask Judge Walsh for an order:
(i) approving the asset purchase agreement for the sale of
substantially all of the assets of the business of
Polaroid Digital Solutions to Appareo Software Inc.;
(ii) authorizing the sale of the Assets free and clear of all
liens, claims, encumbrances and interests;
(iii) determining that such Asset Sale is exempt from any
stamp, transfer, recording or similar tax;
Polaroid Digital Solutions, a wholly-owned subsidiary of
Polaroid, is a leading provider of electronic forms, digital
photo imaging and automation tools for the real estate,
insurance and corporate inspection communities. The company
markets software under the ACI, MCS, CSA, Lighthouse,
PolaroidForms and Polaroid brands.
Mark A. Fink, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP,
in Wilmington, Delaware, tells the Court that the Debtors have
identified Polaroid Digital as one that is not a core business
and one that is easily separable and saleable. "The Debtors do
not wish to continue the capital investment necessary to the
continued growth of the Business, that's why the Debtors began a
sale process even before the Petition Date," Mr. Fink explains.
According to Mr. Fink, the Debtors mounted a significant effort
to identify and contact potential purchasers of the Assets. As
a result, Mr. Fink relates, three buyers were identified -
Appareo and two other entities, one led by certain of the
current management of Polaroid Digital and a different, non-
related party. Mr. Fink informs Judge Walsh that each of these
entities made successive proposals for the Business. In the
end, Mr. Fink says, Appareo offered the highest and best bid for
the Assets.
Pursuant to the Agreement, Mr. Fink explains that the Debtors
will:
(i) sell substantially all of the Assets used in operating the
Business, free and clear of all liens, claims, interests
and encumbrances, and
(ii) assume and assign the contracts to Appareo.
Mr. Fink assures the Court that the Agreement was negotiated at
arm's length and in good faith by the parties, following
thorough consideration of all possible alternatives by the
Debtors.
The salient terms of the Agreement are:
Purchase Price: On the Closing Date, Appareo will pay the
Debtors $4,802,000.
Included
Assets: The proposed sale will include the Assets and
Contracts. The Assets include, but are not
limited to: customary pre-paid expenses,
furniture, and equipment, computer software and
hardware, and all other fixed assets; all vendor
owned technology and code; all right, title and
exclusive interest to all patents, trademarks,
trade names, technical processes, and trade
secrets.
Excluded
Assets: The excluded Assets are: certain accounts
receivables and certain cash and cash
equivalents.
The Debtors intend to assume and assign all Executory
Contracts and Leases related to the assets being sold that
Appareo wants to assume.
Mr. Fink explains that the Debtors are seeking the Court's
approval of the sale to reduce their secured indebtedness and
facilitate the formulation and ultimate confirmation of a
reorganization plan that will yield the highest possible returns
to the Debtors' creditors. "If the sale is not accomplished
now, the value of the Assets will deteriorate," Mr. Fink warns.
A hearing will be convened today, January 15, 2002 at 2:00 p.m.
to consider this motion. (Polaroid Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
POLAROID CORP: Withdraws Request to Pay Executives $5MM Bonuses
---------------------------------------------------------------
DebtTraders reports that Friday last week, Polaroid Corporation
announced that it had withdrawn a request to the bankruptcy
court to pay key executives $5 million in retention bonuses. The
bankruptcy court previously approved $1.55 million in retention
bonuses but was reviewing additional payments. The proposal
infuriated many Polaroid retirees as well as thousands of
recently laid-off employees as shortly before filing for
bankruptcy protection Polaroid cut health benefits and warned
that the pension may be underfunded.
According to DebtTraders analysts Daniel Fan and Blythe
Berselli, Polaroid Corporation's 6.75% bonds due 2002 were last
quoted at a price of 9.5. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=PRD1
PRECISION PARTNERS: Default Waivers Under Credit Pact Extended
--------------------------------------------------------------
Precision Partners, Inc., a leading supplier of precision
machined metal parts, tooling and assemblies, announced that the
company has received an extension of waivers for certain
defaults under its credit facilities and master equipment lease
agreement through January 25, 2002. The deadline of the
commitment letter relating to the proposed new $75.0 million
financing facility was also extended to January 25, 2002. The
company expects to receive further extensions of this commitment
letter and waivers from its current lenders until the closing of
the proposed new $75.0 million financing facility, which is
anticipated to occur later this month.
The company continues to maintain substantial cash balances, are
currently in excess of $8.0 million.
Precision Partners, Inc. is a leading supplier of precision
machined metal parts, tooling and assemblies for original
equipment manufacturers with sales for the last four quarters
ending September 30, 2001 of approximately $184 million. By
using its broad manufacturing capabilities and highly engineered
processes to provide a full line of high quality manufacturing
and sub-assembly services, as well as engineering and design
assistance, Precision Partners meets the critical specifications
of customers in a wide range of industries who rely on
"Preferred" or "Qualified" suppliers for outsourced
manufacturing. For additional information, see
http://www.precisionpartnersinc.com
PRESIDENT CASINOS: Shareholders' Equity Deficit Widens to $29MM
---------------------------------------------------------------
President Casinos, Inc. (OTC Bulletin Board: PREZ) announced
results of operations for the third quarter ended November 30,
2001.
For the three-month period ended November 30, 2001, the Company
reported a net loss of $4.7 million, compared to net income of
$26.2 million for the quarter ended November 30, 2000. Results
for the quarter ended November 30, 2000, reflected net income
from the Davenport operations of $33.4 million, which amount
included a gain of $34.3 million on the sale of these facilities
in October 2000. Results for the quarter ended November 30,
2001, included (i) an increase of approximately $1.9 million in
St. Louis operating income partially offset by a reduction of
operating income of $0.3 million at the Biloxi properties, (ii)
an increase of Corporate leasing, administrative and development
expense of $0.5 million, and (iii) a $1.5 million reduction in
net interest expense.
Revenues for the three-month period ended November 30, 2001 were
$30.8 million, compared to revenues of $33.3 million for the
quarter ended November 30, 2000. The Company disposed of its
St. Louis non-gaming riverboat cruise operations in July 2001.
Excluding the Davenport and Gateway operations, revenues for the
quarter ended November 30, 2000 were $26.1 million.
For the three-month period ended November 30, 2001, the Company
had earnings before interest, taxes, depreciation and
amortization (EBITDA) and before impairment of long-lived assets
and gain/loss on disposal of assets of $1.2 million, compared to
$1.0 million for the three-month period ended November 30, 2000.
Revenues for the nine-month period ended November 30, 2001 were
$96.7 million, compared to revenues of $124.0 million for the
nine-month period ended November 30, 2000. Excluding the
Davenport and Gateway operations, revenues for the nine-month
period ended November 30, 2001 were $96.0 million compared to
$82.8 million for the nine-month period ended November 30, 2000.
For the nine-month period ended November 30, 2001, the Company
reported a net loss of $9.5 million compared to a net loss of
$7.2 million for the nine-month period ended November 30,
2000.
For the nine-month period ended November 30, 2001, the Company
had EBITDA before impairment of long-lived assets and gain/loss
on disposal of assets of $7.4 million, compared to $10.7 million
for the nine-month period ended November 30, 2000. Excluding
the Davenport and Gateway operations, EBITDA increased to $7.4
million for the nine-month period ended November 30, 2001
compared to $3.2 million for the nine-month period ended
November 30, 2000.
President Casinos, Inc. owns and operates dockside gaming
facilities in Biloxi, Mississippi and in downtown St. Louis,
Missouri, north of the Gateway Arch. As of November 30, 2001,
the company's stockholders' equity deficit widened to $29.3
million.
PSINET INC: Proofs of Claims Must be Filed not Later Than Feb. 5
----------------------------------------------------------------
Judge Gerber directs that all proofs of claim in the Chapter 11
cases of PSINet, Inc. and its debtor-affiliates must be filed no
later than February 5, 2002. (PSINet Bankruptcy News, Issue No.
12; Bankruptcy Creditors' Service, Inc., 609/392-0900)
RADNOR HOLDINGS: S&P Affirms B- Ratings After Thermisol Sale
------------------------------------------------------------
Standard & Poor's removed its corporate credit and senior
unsecured debt ratings on Radnor Holdings Corp. from
CreditWatch, where they were placed May 11, 2001, due to
heightened concerns of very weak liquidity and significant
refinancing risks. At the same time, the ratings were affirmed.
The current outlook is stable.
The ratings affirmation follows the completion of the company's
sale of its Thermisol operations for around $35 million to CRH
PLC, and the successful extension of its bank facility through
2004. These actions reflect the expected improvement in Radnor's
financial flexibility because proceeds from the asset sale have
increased the company's borrowing capacity under its revolving
credit facility, and the resolution of near-term refinancing
concerns.
The ratings reflect the company's fair business profile as a
producer of foam disposable cups and containers, and expandable
polystyrene (EPS), and a very aggressive financial leverage.
Radnor holds a meaningful share in the mainly duopolistic U.S.
foam disposable cup and container market, although competition
is intense, both from its larger competitor and from substitute
products like paper and plastic cups. Cost advantages and better
performance characteristics for some uses have made foam
products a good growth sector within the disposable cup and
container market. Also, Radnor benefits from proprietary
production technology, vertical integration and favorable raw
material sourcing, an established distribution network, and
long-standing relationships with key customers.
Although near-term operating performance has benefited from
recently improved pricing for disposable cups, lower raw
material prices (mainly styrene monomer) and energy costs, these
factors have been somewhat offset by the oversupply position and
strained profitability in the EPS business. As a result,
increased debt levels have led to deterioration in credit
protection measures with total debt to EBITDA of 7.7 times for
the 12 months period ended September 30, 2001, as compared to
5.5x for the previous year. In the future, profitability is
expected to improve marginally, supported by the full effect of
price increases and volume growth in the foam cup and container
segment. In addition, lower capital spending and working capital
needs should enable some free cash flow generation, which will
be used towards debt reduction. Furthermore, the recent asset
sale was a deleveraging event, and pro forma total debt to
EBITDA is expected to strengthen to around 5x in the near term,
and pro forma EBITDA to interest coverage ratio is expected to
improve to above 2.0x from 1.7x.
Refinancing risk remains because Radnor's $161 million in senior
notes mature in December 2003. However, improved liquidity from
recent asset sales, further strategic actions by management, and
an improving financial profile should aid management's efforts
to meet refinancing needs in the intermediate term.
Outlook: Stable
Ratings stability is provided by the company's improved
liquidity position, and an improving trend in operating
performance, which should enable management to mitigate
refinancing risks.
Ratings Affirmed, Removed from CreditWatch
Radnor Holdings Corp.
Corporate credit rating B-
Senior unsecured debt B-
STELCO INC: S&P Assigns Low-B Ratings On Weak Financial Profile
---------------------------------------------------------------
Standard & Poor's assigned its single-'B' subordinated debt
rating to Stelco Inc.'s CDN$90 million convertible subordinated
debt issue due February 1, 2007. At the same time, Standard &
Poor's assigned its preliminary double-'B'-minus senior
unsecured debt rating and preliminary single-'B' subordinated
debt rating to the company's CDN$300 million shelf.
In addition, the ratings outstanding on the company, including
the double-'B'-minus corporate credit rating, were affirmed. The
outlook is negative.
The ratings on Stelco reflect a weakened financial profile due
to the effect of the ongoing economic downturn and the
prevailing difficult steel industry conditions on its financial
results, offset by the company's fair business position.
Stelco is the largest steel producer in Canada, with both
integrated and minimill production of rolled and manufactured
steel products at multiple production sites. In 2000, Stelco
shipped 4.7 million tons of steel, about one-quarter of Canadian
consumption. The company has a broad product mix with an above-
average amount of value-added. Stelco serves diverse markets
but has high exposure to the auto industry, which represents
about 40% of sales. The company has a competitive cost position
in hot rolled sheet, particularly at its Lake Erie plant, and in
bar products at its two minimills, and an average cost structure
in other product lines produced at Hilton Works. Stelco has
invested more than CDN$800 million since 1997 in its facilities
to increase capacity, reduce costs, and improve operating
efficiency and overall profitability. This is expected to result
in higher operating margins in the future.
Nevertheless, the company operates in an industry that is
cyclical, capital-intensive, and subject to strong competition
from foreign steel imports. Although Stelco had solid financial
results from 1994-1999, it has now had five consecutive
quarterly losses. Unusually high steel imports and weakened
demand, particularly in the auto sector, due to a slowdown in
the North American economy, led to prices hitting 20-year
cyclical lows.
In addition, energy costs increased. Although natural gas prices
have moderated, electricity and coal prices remain higher.
Profitability and cash flow protection measures are weak. Stelco
has reduced inventories substantially and is expected to
continue to focus on cash conservation and cash generation
through additional cost reductions, sale leaseback transactions,
and control of capital spending. Near-term financial flexibility
remains adequate and is moderately enhanced by the announced
CDN$90 million five-year convertible subordinated debt issue. As
of September 30, 2001, the company had CDN$266 million of
available operating lines of credit and CDN$45 million of cash
and cash equivalents on the balance sheet.
Outlook: Negative
If the current economic downturn continues and difficult steel
industry conditions persist, resulting in further deterioration
in the financial profile, the ratings could be lowered.
W.R. GRACE: Look for 2d Exclusivity Extension Request this Month
----------------------------------------------------------------
W.R. Grace & Co., and its debtor-affiliates secured an extension
of their exclusive period during which to file a plan of
reorganization through February 1, 2002, and secured a
concomitant extension of their exclusive period during which to
solicit acceptances of that plan through April 1, 2002.
The Debtors don't keep it a secret that they'll be requesting a
second extension of their exclusive periods before month-end.
While the Debtors have accomplished a great deal since they
filed for chapter 11 protection, there is still considerable
work that must be done before the Debtors or any other party-in-
interest could propose a confirmable plan of reorganization in
these chapter 11 cases. (W.R. Grace Bankruptcy News, Issue No.
17; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WEBVAN GROUP: Expects Liquidating Plan Will Be Effective Today
--------------------------------------------------------------
Webvan Group, Inc., announced that it has received confirmation
of its Plan of Liquidation. The Plan, which was confirmed by
the Bankruptcy Court on December 20th, 2001, sets forth, among
other things, the procedure by which Webvan and its subsidiaries
will distribute all of their assets to creditors.
Webvan also announced, that all of Webvan's Directors have
resigned and that, on the Effective Date of the Plan, all of the
Company's remaining Officers will resign. Upon the Effective
Date, the Disbursing Agent, Wayne Elggren, will take control of
the Company's affairs and manage the distribution of the assets
in accordance with the Plan.
As of the Effective Date, all of the Company's capital stock
will be cancelled. As previously stated, the Company expects to
have funds available for distribution to its unsecured
creditors. The Company, does not expect, however, to have any
funds available for distribution to its equity holders.
The Company anticipates that the Effective Date of the Plan will
be January 15, 2002.
WICKES INC: Closes Sale of 3 Store Locations to Bailey Lumber
-------------------------------------------------------------
Wickes Inc. (Nasdaq: WIKS), a leading distributor of building
materials and manufacturer of value-added building components,
announced that it has closed the previously announced sale of
operations in Pearl, Pascagoula and Ocean Springs, Mississippi,
and Baton Rouge, Louisiana, to Bailey Lumber.
J. Steven Wilson, president and chief executive officer, stated,
"The closing of this sale begins a major phase in Wickes'
ongoing focus to redirect our business efforts toward achieving
increased focus on our core operations and improving financial
performance."
Wickes Inc. is a leading distributor of building materials and
manufacturer of value-added building components in the United
States, serving primarily building and remodeling professionals.
The company distributes materials nationally and
internationally, operating building centers in the Midwest,
Northeast and South. The company continues to expand its
building component manufacturing facilities, which produce
value-added products such as roof trusses, floor systems, framed
wall panels, pre-hung door units and window assemblies. Wickes
Inc.'s web site, http://www.wickes.comoffers a full range of
valuable services about the building materials and construction
industry. The company is traded on the Nasdaq stock market
under the stock symbol "WIKS".
In November, Standard & Poor's lowered its corporate credit
rating on Wickes Inc., to single-'B'-minus from single-'B' and
lowered its senior subordinated debt rating to triple-'C' from
triple-'C'-plus, both with negative outlook.
According to the international rating agency, the rating action
reflects the company's marginal cash flow and liquidity, and
Standard & Poor's concern regarding the company's ability to
improve operations if lumber pricing remains volatile and the
housing market slows significantly in light of the weakening
U.S. economy.
*********
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 2002. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $575 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***