/raid1/www/Hosts/bankrupt/TCR_Public/020205.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, February 5, 2002, Vol. 6, No. 25
Headlines
AMF BOWLING: Reorganized Debtor's New Officers & Directors
ANC RENTAL: Court Approves Fried Frank as Bankruptcy Counsel
ACTERNA: Unit Closes Sale of $75MM 12% Notes to Clayton Dubilier
ALPINE GROUP: Submits Plan for NYSE Listing Criteria Compliance
AMERICAN COMM'L: S&P Maintains Watch on Senior Secured Debt
AMERICAN MULTI-SYSTEMS: Chapter 11 Case Summary
AMRESCO CAPITAL: Nasdaq to Delist Shares on February 8, 2002
APPLICAST INC: Chapter 11 Case Summary
ARMSTRONG HOLDINGS: Court OKs Arthur Andersen as Tax Consultants
AUSTRIA FUND: Declares $5.88 Per Share Liquidating Distribution
BETHLEHEM STEEL: Michael Zaia Takes Additional Responsibilities
BOISE CASCADE: S&P Assigns BB+ Rating to $150MM Sr. Unsec. Notes
BROADWING: Board Elects Richard G. Ellenberger as New Chairman
CHARTER COMMS: Enters Deal to Sell 3 Senior Notes Issues
CLARENT CORP: Appoints Gary J. Sbona as Board Chairman and CEO
COSERV ELECTRIC: Files for Chapter 11 Protection in Fort Worth
COSERV ELECTRIC: Coop Airs Disappointment over Bankruptcy Filing
DELTA MILLS: S&P Drops Ratings over Weak Operating Performance
DOW CORNING: Foreign Tort Claimants Get Less than U.S. Claimants
DOW CORNING: 6th Circuit OKs Non-Consensual Non-Debtor Releases
EASYLINK SERVICES: AT&T Discloses 14.7% Equity Stake
ENRON: Absolute Recovery Wants Chapter 11 Trustee Appointed
ENRON: Special Committee Completes Investigation & Issues Report
EVENFLO CO.: S&P Further Junks Ratings & Says Outlook Negative
EXODUS: Completes Sale of Assets to Cable & Wireless for $750MM
GENEVA STEEL: Seeks Okay to Employ LeBoeuf Lamb as Local Counsel
GLOBIX CORP: Won't Make Interest Payment on 12-1/2% Senior Notes
GRAND TOYS: Fails to Comply with Nasdaq Listing Requirements
HAYES LEMMERZ: Panel Hires Houlihan Lokey as Financial Advisor
HOULIHAN'S RESTAURANTS: Court OK's Deloitte & Touche as Auditors
IT GROUP: Wants to Pay Up to $1.8MM of Foreign Vendors' Claims
INTEGRATED HEALTH: Premiere Panel Taps BDO as Financial Advisors
INTERIORS INC: Appoints Mark J. Allen to Board & as President
KEYSTONE CONSOLIDATED: Noteholders Support Debt Restructuring
KMART: Court Okays Payment of Credit Card Processor Obligations
LTV CORP: Foundation to Extend Grant for Terminated Employees
LEVEL 3 COMMS: Expects to be EBITDA Positive in 1st Quarter
LODGIAN INC: Seeks Appointment of Joint Fee Review Committee
MAGNUM HUNTER: Proposed Merger with Prize Energy Corp. Approved
MCLEODUSA: S&P Drops Ratings to D Following Bankruptcy Filing
MERISANT CO: S&P Affirms BB- Ratings on Credit and Secured Notes
MERISTAR HOTELS: Credit Facility Maturity Extended to Feb. 2003
NCS HEALTHCARE: Taps Brown Gibbons to Seek Debt Workout Options
NATIONSRENT INC: Wants to Hire Ordinary Course Professionals
PACIFIC GAS: Files Plan Supplement Documents for Plan of Reorg.
PEOPLEPC INC: Special Shareholders' Meeting Set for March 15
PHICO INSURANCE: Gets Approval to Commence Liquidation Process
PHOTOWORKS INC: Robert A. Simms Discloses 6.83% Equity Stake
POLAROID CORPORATION: Taps Groom Law Group as Special Counsel
QUESTRON TECHNOLOGY: Files for Chapter 11 Protection in Delaware
QUESTRON TECHNOLOGY: Case Summary & Largest Unsecured Creditors
RANCH 1 INC: NY Court Sets Plan Confirmation Hearing for Feb. 14
RENCO STEEL: Missed Interest Payment Prompts S&P Downgrade
SIMONDS INDUSTRIES: Defaults on Interest Payment on 10.25% Notes
SPINNAKER INDUSTRIES: March 14 Bar Date For Proofs of Claims
TRAILMOBILE CANADA: Working Capital Deficit Tops $11.2 Million
TRANSTECHNOLOGY: Sells German Business to Barnes Group for $20MM
VIASYSTEMS: S&P Junks Ratings Over Weakening Operating Results
WHX CORPORATION: S&P Revises Low-B Rating Outlook to Stable
W.R. GRACE: Seeks Second Extension of Exclusive Periods
*********
AMF BOWLING: Reorganized Debtor's New Officers & Directors
----------------------------------------------------------
In accordance with section 5.8 of the now-confirmed Joint Plan
of Reorganization Under Chapter 11 of the Bankruptcy Code for
AMF Bowling Worldwide, Inc., and its debtor-affiliates, the
Debtors advise that these persons shall serve as directors and
officers of Reorganized AMF:
Directors of Reorganized AMF Affiliations
---------------------------- ----------------------------------
Roland C. Smith President and Chief Executive
Officer
Frederick G. Kraegel Executive Vice President, Chief
Administrative Officer and Chief
Accounting Officer
Meridee A. Moore Managing Member, Farallon Capital
Management, LLC
Mark D. Sonnino Principal, Satellite Asset
Management, L.P.
Thomas M. Fuller Director, Angelo, Gordon & Co., LP
George W. Vieth, Jr. Consultant, Chrysalis Ventures
Officers of Reorganized AMF Title/Affiliations
--------------------------- ----------------------------------
Roland C. Smith President and Chief Executive
Officer
Frederick G. Kraegel Executive Vice President, Chief
Administrative Officer and Chief
Accounting Officer
Christopher F. Caesar Senior Vice President, Chief
Financial Officer and Treasurer
Timothy N. Scott Senior Vice President, Marketing
Pursuant to section 5.8(b) of the Debtors' Plan, the Board of
Directors or other internal governing body, as applicable, of
each Reorganized Debtor other than Reorganized AMF shall
continue as in effect immediately prior to the Effective Date
until removed or replaced pursuant to applicable law or in
accordance with such Reorganized Debtor's corporate governance
procedures.
In accordance with Sec. 1129(a)(5)(B) of the Bankruptcy Code,
the following insiders of the Debtors will be retained by
Reorganized AMF:
Name Compensation
--------------------- ------------
Roland C. Smith $ 700,000
Frederick G. Kraegel 288,000
Christopher F. Caesar 200,000
Timothy N. Scott 217,083
The principal officers and directors of the Reorganized Debtors
shall generally be a subset of the officers and directors of
Reorganized AMF set forth above. Such individuals shall not
receive additional compensation or benefits on account of such
service. (AMF Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ANC RENTAL: Court Approves Fried Frank as Bankruptcy Counsel
------------------------------------------------------------
ANC Rental Corporation and its debtor-affiliates sought and
obtained approval from the Bankruptcy Court in Wilmington to
employ and retain Fried, Frank, Harris, Shriver & Jacobson as
lead bankruptcy counsel in their chapter 11 cases.
With the Court approval, Fried Frank will provide its expertise
with respect to bankruptcy-related issues and will act as
general bankruptcy counsel for the Debtors and will continue to
provide general corporate, security and transactional expertise
to the Debtors. In addition, Fried Frank will also provide
services, to the extent requested, in a variety of other areas
as to which it has expertise, including corporate, tax,
litigation, real estate and ERISA and other employee benefits
areas. By reason of its long-standing relationship and ongoing
representation of the Debtors, Fried Frank has acquired
invaluable knowledge of the Debtors' affairs, which would be
difficult and expensive for another firm to acquire.
Particularly for that reason, the Debtors believe that the
retention of Fried Frank as their attorneys is in the best
interests of the Debtors, their estates and their creditors.
Prior to the Filing Date, Fried Frank rendered legal advice to
the Debtors with respect to their restructuring alternatives and
will continue to:
A. provide legal advice with respect to the Debtors' powers and
duties as debtors-in-possession in the continued operation
of their businesses and management of their properties and
the authorization and approval of a plan of reorganization;
B. take necessary action to protect and preserve the Debtors'
estates, including the prosecution of actions on behalf of
the Debtors and the defense of actions commenced against
the Debtors;
C. prepare on behalf of the Debtors, as debtors-in-possession,
necessary applications, motions, answers, orders, reports
and other legal papers in connection with the
administration of their estates in these cases;
D. negotiate and prepare on the Debtors' behalf plan(s) of
reorganization, disclosure statement(s), and all related
agreements and/or documents, and take any necessary action
on behalf of the Debtors to obtain confirmation of such
plan(s); and
E. perform any other necessary corporate, securities and other
legal services for the Debtors, as debtors-in-possession,
in connection with these chapter 11 cases.
Moreover, Fried Frank will consult with the Debtors' management
and financial advisors in connection with any potential
transaction involving the Debtors and the operating, financial
and other business matters relating to the ongoing activities of
the Debtors. Fried Frank will also, to the extent requested,
attend and participate in creditors' committee meetings, and
make appearances before this Court.
Fried Frank will charge the Debtors for its legal services on an
hourly basis in accordance with its ordinary and customary rates
for Bankruptcy Court authorized engagements in effect on the
date services are rendered, and submits that such rates are
reasonable. Set forth below are the current hourly rates that
Fried Frank presently charges for the legal services of its
professionals:
Partners $490 - $850 per hour
Of Counsel $420 - $660 per hour
Special Counsel $420 - $495 per hour
Associates $245 - $420 per hour
Legal Assistants $ 95 - $195 per hour
The Fried Frank bankruptcy and restructuring attorneys and legal
assistants who are likely to perform services in these cases,
and the hourly rates attributable to their work for this
engagement are:
Brad Eric Scheler $690
Matthew Gluck $620
Alan N. Resnick $620
Gerald C. Bender $460
Brian D. Pfeiffer $340
Craig M. Price $285
Jibreel Turner $125
Matthew Gluck, Esq., a Fried Frank member discloses that, in
connection with Fried Frank's pre-petition efforts on behalf of
the Debtors during the one year period prior to the Filing Date
and with respect to professional and ancillary services rendered
and to be rendered, Fried Frank received from the Debtors
payments in the aggregate amount of $4,027,010, including an
advance payment of $500,000. Mr. Gluck states that Fried Frank
will credit any excess amount remaining from the advance payment
against dollar amounts awarded to Fried Frank by this Court with
respect to applications for compensation and reimbursement of
expenses submitted by Fried Frank to and approved by this Court.
(ANC Rental Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ACTERNA: Unit Closes Sale of $75MM 12% Notes to Clayton Dubilier
----------------------------------------------------------------
On December 27, 2001, Acterna LLC, a Delaware limited liability
company that is wholly-owned and controlled by Acterna
Corporation, agreed to issue and sell $75,000,000 aggregate
principal amount of 12% Senior Secured Convertible Notes Due
2007 to Clayton, Dubilier & Rice Fund VI Limited Partnership on
the terms and conditions set forth in an Investment Agreement,
dated as of December 27, 2001, among Acterna, Acterna LLC and
Clayton, Dubilier & Rice.
Clayton, Dubilier & Rice Fund VI Limited Partnership and
Clayton, Dubilier & Rice Fund V Limited Partnership together own
approximately 80% of Acterna's outstanding common stock and are
jointly managed by Clayton, Dubilier & Rice, Inc. As a result of
this relationship, a special committee of independent directors
of Acterna evaluated the terms of the Transaction and
unanimously determined that such terms were fair to Acterna from
a financial point of view. The Transaction closed on January 15,
2002.
Acterna is the world's largest provider of test and management
solutions for optical transport, access and cable networks and
the second largest communications test company overall. Focused
entirely on providing equipment, software, systems and services,
Acterna helps customers develop, install, manufacture and
maintain their optical transport, access, cable, data/IP, and
wireless networks. The company serves customers globally with a
presence in more than 80 countries. In addition, the company
supplies in-flight passenger information systems and video color
correction systems through its AIRSHOW and da Vinci Systems
subsidiaries. Through its Itronix subsidiary, the company sells
ruggedized computing devices for field service applications. At
September 30, 2001, the company had a total shareholders' equity
deficit of $223.2 million.
DebtTraders reports that Acterna Corp.'s 9.750% bonds due 2008
(ACTR1) are trading between 30 and 35. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ACTR1for
real-time bond pricing.
ALPINE GROUP: Submits Plan for NYSE Listing Criteria Compliance
---------------------------------------------------------------
The Alpine Group, Inc., (NYSE: AGI) reported that it has been
informed by the New York Stock Exchange (NYSE) that it had
fallen below the NYSE's continued listing standards requiring a
total market capitalization of not less than $50 million and
stockholders' equity of not less than $50 million. The Company
has recently submitted a plan to the NYSE demonstrating how it
plans to comply with the aforementioned NYSE continued listing
standards within the required 18-month period.
As provided under applicable NYSE regulations, the Company's
plan will be reviewed by the Listing and Compliance Committee of
the NYSE for acceptance. If the Plan is accepted, the Company
will be subject to quarterly monitoring for compliance with its
Plan. If the Plan is not accepted, the Company's common stock
will be subject to suspension and delisting by the NYSE. If
Alpine's shares cease to be traded on the NYSE, the Company will
pursue an alternative trading venue.
The Alpine Group, Inc., headquartered in New Jersey, is a
holding company for the operations of Superior TeleCom Inc.
(NYSE: SUT), Alpine's 51% owned subsidiary, which is the largest
North American wire and cable manufacturer and among the largest
wire and cable manufacturers in the world. Superior TeleCom
manufactures a broad portfolio of products with primary
applications in the communications, original equipment
manufacturer and electrical wire and cable markets. It is a
leading manufacturer and supplier of communications wire and
cable products to telephone companies, distributors and system
integrators; magnet wire and electrical insulation materials for
motors, transformers and electrical controls; and building and
industrial wire for applications in construction, appliances,
recreational vehicles and industrial facilities.
AMERICAN COMM'L: S&P Maintains Watch on Senior Secured Debt
-----------------------------------------------------------
Standard & Poor's rating on American Commercial Lines LLC's
(ACL; SD) senior secured debt remains on CreditWatch with
negative implications after the company's announcement that it
failed to make the $15.1 million interest payment on its 10.25%
senior unsecured notes (lowered to 'D' on January 2, 2002) that
was originally due December 31, 2001, during the 30-day grace
period which ended January 30, 2002.
ACL is still in negotiations with the noteholders and other
creditors regarding a financial restructuring of the company.
Filing for protection from bankruptcy remains a possibility as
part of a restructuring or due to an impasse in reaching an
agreement, but negotiations continue for now. ACL has sufficient
cash to make the interest payment if it chooses to and has
indicated that is intends to remain current with all of its
suppliers and other creditors.
Rating Remains on CreditWatch
with Negative Implications
Rating
American Commercial Lines LLC
Senior secured debt B+
AMERICAN MULTI-SYSTEMS: Chapter 11 Case Summary
-----------------------------------------------
Debtor: American Multi Systems, Inc.
306 East 105th St., #A
New York, NY 10029
Bankruptcy Case No.: 02-10432-cb
Chapter 11 Petition Date: January 31, 2002
Court: Southern District of New York (Manhattan)
Judge: Cornelius Blackshear
Debtor's Counsel: Dan Shaked, Esq.
Shaked & Posner
225 W. 34th Street
Suite 1109
New York, NY 10122
Tel: (212) 494-0035
Fax: (212) 563-7966
Estimated Assets: $500,000 to $1 million
Estimated Debts: $1 million to $10 million
Debtor's Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Central Funding Borough Hall $400,000
Brooklyn NY 11201 Collateral FMV
$300,000
A H Funding Ltd $165,000
Collateral FMV
$150,000
Yezid Valdes $100,000
Udo Lieske $100,000
Gloria Valdes $50,000
Sam J. Nole $11,800
NYS Franchise Tax $2,700
NYC General Corp Tax $2,700
NYC Dept Of Finance $800
AMRESCO CAPITAL: Nasdaq to Delist Shares on February 8, 2002
------------------------------------------------------------
AMRESCO Capital Trust (Nasdaq: AMCT) said that on January 31,
2002 it received a Nasdaq Staff Determination letter stating
that the company had failed to comply with the annual
shareholder meeting requirements set forth in Marketplace Rules
4350(e) and 4350(g) and that its securities will be delisted
from The Nasdaq Stock Market at the opening of business on
February 8, 2002. The company believes that it meets the
criteria to have its securities available for immediate
quotation on the OTC Bulletin Board.
As previously communicated, the company is liquidating its
assets under a plan of liquidation and dissolution.
Shareholders approved the liquidation and dissolution of the
company on September 26, 2000. To date, the company has
disposed of all of its assets other than one mortgage loan.
APPLICAST INC: Chapter 11 Case Summary
--------------------------------------
Debtor: APPLICAST, INC.
aka Agilera West, Inc.
1030 W Maude Ave. #200
Sunnyvale, CA 94085
Bankruptcy Case No.: 02-50608
Chapter 11 Petition Date: January 31, 2002
Court: Northern District of California (San Jose)
Judge: James R. Grube
Debtor's Counsel: L. Donald Raub, Jr., Esq.
Law Offices of Brooks and Raub
721 Colorado Ave. #101
Palo Alto, CA 94303-3913
Tel: (650) 321-1400
ARMSTRONG HOLDINGS: Court OKs Arthur Andersen as Tax Consultants
----------------------------------------------------------------
Armstrong Holdings, Inc., and its debtor-affiliates remind Judge
Newsome that on January 12, 2001, they presented an application
to employ, on behalf of these estates, Arthur Andersen LLP as
tax compliance and employee benefit consultants to the Debtors.
In these capacities, Andersen would be responsible for
performing necessary tax consulting and tax return preparation,
and compensation and benefits consulting services.
Notwithstanding that no objections were timely filed to that
application, no Order was entered disposing of it.
The Debtors explain that prior to the Petition Date they
employed the firm of Arthur Andersen in the same capacities as
they have continued to render services to these estates.
However, the prepetition tax compliance and compensation
services were "incidental" to the operation and management of a
business the size of the Debtors. Should Judge Newsome enter an
Order granting this long-pending Application, Andersen will be
formally authorized to perform these duties, as it has without
interruption since the application was first filed.
The tax consulting services include:
* Preparation of federal and state income tax returns and
franchise tax returns;
* Preparation of tax account analysis;
* Calculation of FAS109 analysis and tax provisions;
* Responses to notices from federal and state taxing
authorities;
* Research regarding federal and state tax matters as
requested by the Debtors.
The compensation and employee benefits consulting services will
include:
* Compensation and benefits consulting;
* Expert testimony;
Because the Debtors have requested that Arthur Andersen commence
work immediately, the Debtors ask that this retention be made
nunc pro tunc to the Petition Date.
Michael W. Van Belle, a partner of Andersen, discloses that,
within one year prior to the Petition Date, the Debtors paid
Andersen approximately $1,529,000 aggregate in the ordinary
course of their business for services and expenses. Andersen
has historically provided the Debtors with limited billing
support for those consulting services that Andersen provided to
the Debtors under negotiated, fixed-fee arrangements. Mr. Van
Belle says Andersen expects to continue certain of these non-
restructuring related services on a fixed-fee basis during
the pendency of these chapter 11 cases. Given the nature of
these services, and the manner in which Andersen has
historically billed the Debtors on those assignments, Andersen
asks that it be permitted to report time incurred for all
services to the Debtors and the Court by professional, by
activity category and by day, without specific time entries to
the tenths of an hour. For all non-fixed fee assignments,
Andersen will report time to the tenths of an hour. He further
states that Andersen will accept such compensation as the Court
awards, but that Andersen's current billing rates are:
Partners and Directors $325-$500
Senior Managers & Managers $260-$460
Seniors $190-$260
Staff $ 80-$165
While Mr. Van Belle avers that Andersen is "disinterested" and
neither holds nor represents any interests adverse to the
Debtors, he discloses that Andersen "provides audit, assurance,
business advisory, tax, business and specialty accounting and
global corporate finance services to thousands of companies,
firms and individuals who may have (and in many cases have)
provided goods and services to the Debtors." However, he assures
Judge Newsome that to the best of his knowledge, Andersen's
services to these parties were not for the purpose of assisting
such parties with respect to the Debtors' bankruptcy and do not
create a conflict of interest.
Mr. Van Belle names several interested parties specifically as
Andersen clients and parties with pecuniary interests in these
cases, but again reassures Judge Newsome that none of the
engagements or relationships that Andersen has with these
creditors relate to the Debtors' chapter 11 cases:
Among trade creditors - William W. Bird Company; Cain & Bultman,
Inc.; ExxonMobile Chemical Company; Occidental Chemical Company;
BBDO; MFS, Inc.; Weyerhauser Company; Owens Corning Fiberglas
Corp.; El Paso Merchant Energy Gas LP; American Express; AT&T;
Ferro Corporation; Union Carbide Corporation; Borden Chemicals &
Plastics; KPMG; Georgia Power Company.
Among the Debtors' lenders - Chase Manhattan Bank; Morgan
Guaranty Trust Company of New York; Bank of America NA; Wachovia
Bank NA; Citibank NA; First National Bank of Chicago; PCN Bank;
Suntrust Bank; Mellon Bank; Banc One Capital Markets; and
others.
Current and former officers of AWI - Edward R. Case; David D.
Wilson; James E. Marley.
Entities in which an officer or director of Armstrong was also
an officer/director in the past 3 years - Waste Management,
Inc.; Eastman Chemical Company; Textron, Inc.; Corning, Inc.; R.
R. Donnelley & Sons Company; Womble Carlyle Sandridge & Rice;
Bell Atlantic; Bechtel Corporation; Cargill Inc.; Conrail; Iowa
State University, and others.
Shareholders of 5% of more of the stock of AWI - Mellon
Financial Corporation; T. Rowe Price Associates, Inc.; Morgan
Stanley Dean Witter & Co.
Mr. Van Belle also identifies insurers of the Debtors, lessors
to the Debtors, parties to license agreements with the Debtors,
and creditors holding liens or security interests in property of
the Debtors.
Moving this case along, Judge Newsome enters his Order granting
the Application on the terms stated, nunc pro tunc to the
Petition Date, but strikes a portion of the engagement letter
titled "remedies" and reduces the Debtors' assumption of
business risks. He further reserves any decision on any
indemnification at all for Andersen at this time, and
specifically preserves the rights of the United States Trustee
and any other parties to raise issues regarding any
indemnification. (Armstrong Bankruptcy News, Issue No. 16;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
AUSTRIA FUND: Declares $5.88 Per Share Liquidating Distribution
---------------------------------------------------------------
The Austria Fund, Inc. (NYSE: OST), a closed-end management
investment company, declared on this date, February 1, 2002, a
liquidating distribution of $37,676,434, equal to $5.88 per
share of Common Stock, payable on March 1, 2002 to stockholders
of record at the close of business on February 12, 2002. Ex-
date will be March 4, 2002.
The liquidating distribution is made pursuant to the Fund's Plan
of Liquidation and Dissolution, which was approved by the Fund's
stockholders at the October 24, 2001 Special Meeting of
Stockholders. Friday's distribution represents approximately
90% of the Fund's total net assets. The remaining approximately
10% of the Fund's assets is still invested in portfolio
securities that are in the process of sale by the Fund. As
previously disclosed, the sale of this relatively less liquid
portion of the Fund's investment portfolio, which includes two
small positions in unlisted Austrian securities, may require
approximately two additional months. As the Fund's remaining
portfolio securities are sold, the Fund will make one, or
possibly two, further liquidating distributions to its
stockholders, thus completing the Fund's liquidation.
The Austria Fund, Inc. is managed by Alliance Capital Management
L.P.
BETHLEHEM STEEL: Michael Zaia Takes Additional Responsibilities
---------------------------------------------------------------
J. Michael Zaia, president of Bethlehem Steel Corporation's
subsidiary railroads, will assume additional responsibilities as
general manager, transportation and logistics, for Bethlehem
Steel Corporation.
"We are centralizing, under Mike's leadership, all matters
pertaining to the movement of materials into, within and out of
our operations," said Robert J. Jones, vice president,
operations services. "Mike's track record of successfully
managing the railroad operations will be applied to broader
transportation and logistical issues to further improve
efficiency and service to our facilities and our customers," Mr.
Jones said.
A native of Allentown, Pa., Mr. Zaia received a bachelor of
science degree in electrical engineering from Villanova
University in 1965. In addition, he completed the Advanced
Management Program at the University of Pennsylvania Wharton
School in 1998.
A registered professional engineer, Mr. Zaia joined Bethlehem
Steel Corporation in 1965. During his career, he has served as
vice president, operations, at Pennsylvania Steel Technologies
in Steelton, Pa., and as vice president, operations, at
Bethlehem Steel's former Structural Products Division in
Bethlehem, Pa. In 1994, Mr. Zaia was named president of
Bethlehem Steel's subsidiary railroads.
Mr. Zaia's professional and community affiliations include the
Pennsylvania Rail Freight Advisory Committee; the American Short
Line and Regional Railroad Association board of directors and
safety committee; Burn Prevention Foundation board of directors,
Concours d'Elegance chairman; United Way of the Greater Lehigh
Valley Manufacturing Division Chairman (1999-2001); Bethlehem
Chamber of Commerce board of directors and executive committee;
Keystone State Railroad Association board of directors and
executive committee; Intermodal Association of North America;
Association of Iron and Steel Engineers; Association of American
Railroads; Traffic Club of Philadelphia; Traffic Club of New
York, Inc.; Traffic Club of the Lehigh Valley, Inc., and the
Villanova University Varsity Club.
Mr. Zaia and his wife, Marie, reside in Lower Saucon Township,
Pa., and are the parents of four grown children. (Bethlehem
Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
BOISE CASCADE: S&P Assigns BB+ Rating to $150MM Sr. Unsec. Notes
----------------------------------------------------------------
Standard & Poor's assigned its double-'B'-plus rating to Boise
Cascade Corp.'s $150 million 7.5% senior unsecured notes due
February 1, 2008. Proceeds from the issue will be used to pay
down debt and for general corporate purposes.
The ratings reflect Boise Cascade Corp.'s (BB+/Stable/--)
slightly below-average business position in cyclical paper and
wood products markets, and high debt levels resulting from an
aggressive, primarily debt-financed acquisition program within
its office products business.
Boise Cascade is a major distributor of office products and
building materials, manufactures paper and wood products, and
owns more than 2 million acres of timberland. Although office
products distribution has lower margins than the company's other
businesses on average, it should provide somewhat greater
earnings stability thereby moderating the more volatile results
produced by the company's printing and writing grade papers and
wood products.
Heavy capital spending, a series of largely debt-financed
acquisitions, and weak paper markets have kept debt leverage at
high levels, despite the application of proceeds from
divestitures towards debt reduction. Credit protection measures
should continue to gradually improve, with debt to capital
moving toward the 50% to 55% range over time, from between 55%
and 60% for the past few years. Funds from operations to debt is
expected to average in the low-20% area through the industry
cycle.
Outlook: Stable
Changes in the company's business mix during the past few years
should lead to operating performance at adequate levels and
permit improved credit protection measures over an industry
cycle.
Rating Assigned
Rating
Boise Cascade Corp.
$150 mil sr unsecured notes due 2008 BB+
BRIDGE INFO: Seeks Okay to Pay Deloitte & Touche Incentive Fees
---------------------------------------------------------------
Bridge Information Systems, Inc., and its debtor-affiliates
employ Deloitte & Touche for accounting and professional
services in connection with these chapter 11 cases.
By this Motion, the Debtors seek authority to modify the
employment and compensation arrangements of Deloitte & Touche.
David M. Unseth, Esq., at Bryan Cave, in St. Louis, Missouri,
states that Deloitte & Touche assists the Debtors in collecting
cash and settle outstanding receivables which, receivables are
pledged for the benefit of certain pre-petition senior secured
lenders. The Debtors propose to modify the employment and
compensation arrangements of Deloitte & Touche on the terms
under the Supplemental Engagement Letter, which provides that:
(i) the Debtors shall pay Deloitte & Touche an incentive fee
based upon the actual amount receivable collected. No
accounts receivable incentive fee shall be payable until
the amount collected is equal to or greater than 60% of
the accounts receivable, net of certain adjustments. The
accounts receivable incentive fee shall increase in amount
as the percentage of net collectable base collected
increases;
(ii) in consideration of the payment of the accounts receivable
incentive fee, the Debtors and Deloitte & Touche agree
that the application, the original engagement letter, the
retention order and all other documents, pleadings and
orders related to the employment and compensation of
Deloitte & Touche in effect as of the date of the
supplemental engagement letter shall be deemed amended to
provide that, from and after November 1, 2001, the rates
at which the Debtors shall be billed for all matters
relating to Deloitte's collection of outstanding accounts
receivables shall be fixed at $150 per hour.
Mr. Unseth explains that the supplemental engagement letter does
not alter the Deloitte & Touche retention documents but only
alters the compensation payable to Deloitte & Touche in an
equitable manner to compensate for the valuable services they
provide and will continue to provide to the Debtors.
Therefore, the Debtors ask the Court for authority to modify the
employment and compensation arrangements of Deloitte & Touche.
(Bridge Bankruptcy News, Issue No. 25; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
BROADWING: Board Elects Richard G. Ellenberger as New Chairman
--------------------------------------------------------------
Broadwing Inc., (NYSE:BRW) said that its Board of Directors has
elected Richard G. Ellenberger to assume the role of Chairman,
succeeding James D. Kiggen, who has reached the company's
mandatory retirement age and will retire as Chairman after
Broadwing's Annual Meeting of Shareholders to be held April 29,
2002. Ellenberger will also continue to function as CEO.
"Rick Ellenberger's vision and leadership have been the driving
force behind Broadwing's development from a one-city local
exchange company into a nationally recognized integrated
communications provider," said Kiggen. "The Board and I are
extremely confident that as Chairman and CEO, Rick will continue
to lead Broadwing to seize new opportunities and focus on value
for its customers and shareholders alike."
Prior to creating Broadwing from the merger of Cincinnati Bell
and IXC Communications, Ellenberger served as president and CEO
of Cincinnati Bell, establishing the environment for the
company's nationally acclaimed launch of PCS and ADSL services
and its emergence as one of the most successful local providers
in the nation.
"It is a great honor to follow the wonderful leadership of
Broadwing's first Chairman, Jim Kiggen," said Ellenberger.
"Jim's commitment to our employees, shareholders, and customers
is a legacy I am proud to build upon."
Broadwing Inc., (NYSE:BRW) is an integrated communications
company. Broadwing leads the industry as the world's first
intelligent, all-optical, switched network provider and offers
businesses nationwide a competitive advantage by providing data,
voice and Internet solutions that are flexible, reliable and
innovative on its 18,500-mile optical network and its award-
winning IP backbone. Local service subsidiary Cincinnati Bell is
one of the nation's most respected and best performing local
exchange and wireless providers with a legacy of unparalleled
customer service excellence and financial strength. J.D. Power
and Associates recently ranked Cincinnati Bell number one in
customer satisfaction for both local residential telephone
service and residential long distance among mainstream users.
Cincinnati Bell provides a wide range of telecommunications
products and services to residential and business customers in
Ohio, Kentucky and Indiana. Broadwing Inc. is headquartered in
Cincinnati, Ohio. For more information, visit
http://www.broadwing.com
* * *
While Broadwing, Inc., is projected to be free cash flow
positive towards the next half, Fidelity Market Capital analyst
James Lee is seeing a not-so sunny picture on the horizon. In
the January 29, 2002, edition of Communications Today, Mr. Lee
is quoted as saying that in his opinion, "[a] thorough look at
[Broadwing's] capital structure revealed that the company will
likely break the covenants on its existing bank facility in
2002. . . ." Mr. Lee based his analysis on the telecom services
provider's high debt levels and reduced spending on network/data
by carriers.
Broadwing funds its working capital needs by drawing on a $2.3
billion bank facility.
"We doubt that bankers will pull the plug and force [Broadwing]
into bankruptcy since the company maintains a healthy EBITDA
coverage ratio. However, we think [Broadwing] may (1) pay
higher rates on its existing balance of $1.9 billion and (2)
lose the ability to borrow the remainder of this credit line
($425 million) if new terms are negotiated," Mr. Lee says.
CHARTER COMMS: Enters Deal to Sell 3 Senior Notes Issues
--------------------------------------------------------
On January 8, 2002, Charter Communications Holdings, LLC and
Charter Communications Holdings Capital Corporation,
subsidiaries of Charter Communications, Inc., announced that
they had entered into an agreement to sell $350 million
principal amount of 9.625% Senior Notes due 2009, $300 million
principal amount of 10.000% Senior Notes due 2011 and $250
million of 12.125% Senior Discount Notes due 2012 with a
principal maturity of $450 million.
Cable system operator Charter Communications serves nearly 7
million subscribers in 40 US states. Not only is it a leading
cable TV player, but Charter has also embarked on a $3.5 billion
system upgrade to be able to offer broadband services over its
cable. Its new products include digital cable (1 million
customers) and high-speed Internet access via cable modem
(252,000 customers). Charter teams with companies such as Wink
and WorldGate to provide interactive TV services, and it's a
member of Broadband Partners, which is developing personalized
interactive services. Microsoft co-founder Allen controls about
94% of Charter's voting power. At September 30, 2001, the
company had a working capital deficit of about $1 billion.
DebtTraders reports that Charter Comm Holdings LLC's 10.250%
bonds due 2010 (CHTR4) are trading slightly above par between
101.5 and 102.5. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=CHTR4
CLARENT CORP: Appoints Gary J. Sbona as Board Chairman and CEO
--------------------------------------------------------------
Clarent Corporation, a leading provider of softswitch solutions
for next generation networks, said that Gary J. Sbona has been
appointed chairman of the board and chief executive officer. Mr.
Sbona replaces Mike Vargo, who recently resigned.
The company has recently faced challenges resulting from the
previously announced investigation of financial irregularities
and the restatement of financial results, the effect of the
restatement on the company's financial condition and the process
of delisting of the Company's common stock from the Nasdaq Stock
Market. Additionally, the Company has experienced high senior
management turnover. To address these matters, the board of
directors of Clarent Corporation engaged Regent Pacific
Management to provide the services of Regent Pacific principals,
including Mr. Sbona, as part of the Clarent management team. Mr.
Sbona, the chairman and chief executive officer of Regent
Pacific, will continue his management and board positions with
other Regent Pacific engagements.
Clarent Corporation has received notice from the Listing
Qualifications Panel that its stock has been delisted from the
Nasdaq Stock Market effective January 30, 2002. As a result, the
Company's common stock is now quoted on the OTC market Pink
Sheets Electronic Quotation Service under the symbol CLRN.
"The appointment of Gary Sbona and the Regent Pacific team is
the first step in the company's evaluation of Clarent's
strategic position and product direction, and will allow
management to focus on the Company's goal of restructuring its
operations, and increasing long-term shareholder value," said
Director, J. Mark Hattendorf.
"The new executive team is currently focused on analyzing the
operational and financial issues, including the financial
restatement, and in developing a new operating plan for Clarent
Corporation. We expect this process to take several weeks. The
company is finalizing the restatement of its financial
statements for the year 2000 and the first two quarters of 2001
and the Form 10Q for the third quarter ended September 30, 2001.
We look forward to speaking with the investment community and
sharing our detailed plans as they solidify," concluded Sbona.
Mr. Sbona founded Regent Pacific Management in 1974. Regent
Pacific is an international firm that specializes in the
recovery and restructuring of under-performing companies. Mr.
Sbona is a senior executive with 35 years of domestic and
international business experience in management, operations and
finance for high-technology companies. Mr. Sbona has served on
the board of directors of numerous publicly and privately held
global corporations.
Clarent Corporation is a leading provider of softswitch
solutions for next generation networks. Clarent's solutions
enable service providers to deploy a converged network (voice,
data and applications). Clarent solutions reduce costs and
increase operating efficiencies while delivering innovative new
services that allow end users to manage their communications.
Founded in 1996, Clarent is headquartered in Redwood City,
Calif. and has offices in Asia, Europe, Latin America and North
America. For more information please visit
http://www.clarent.com
COSERV ELECTRIC: Files for Chapter 11 Protection in Fort Worth
--------------------------------------------------------------
CoServ Electric has voluntarily sought Chapter 11 protection.
The company cited the failure of continued negotiations with its
lender, National Rural Utilities Cooperative Finance Corporation
(NYSE:NRX), to result in a satisfactory resolution of the
significant differences between the two companies. The Chapter
11 filing stops the foreclosure action CFC had filed against
certain CoServ assets. Concurrent with the Chapter 11 filing,
CoServ has filed suit against CFC alleging lender liability and
fraudulent conveyance.
"First and foremost, filing for Chapter 11 protection means that
our approximately 64,000 customers in North Texas will continue
to receive electric service while we resolve these issues and
implement a reorganization plan," said Bill McGinnis, CoServ
president and chief executive officer. "We have been negotiating
with CFC in good faith for several months. Three weeks ago, CFC
filed a lawsuit against us seeking to foreclose on some of our
assets. It is clear CFC was trying to use its financial leverage
to force us into agreeing to terms that are not in the best
interests of the cooperative. CFC has left us with no
alternative other than to seek Chapter 11 protection, which
effectively stops the foreclosure actions, provides court
supervision to resolve our issues and allows us to continue
providing our customers the high levels of service they have
come to expect from us."
No staff reductions are anticipated as a result of the Chapter
11 filing.
CoServ's lawsuit against CFC includes claims of lender
liability. These claims relate to financing agreements to permit
CoServ to expand and support its service offerings, and which
CFC encouraged CoServ to pursue. Subsequent to reaching the
financing agreements, CFC breached the agreements, refused to
meet legitimate funding requests under these agreements and made
a series of unreasonable demands on CoServ. These actions by CFC
have resulted in damages of hundreds of millions of dollars to
CoServ and ultimately led to the November 30, 2001, Chapter 11
filing for CoServ's telephone and cable companies, an action
that was also encouraged by CFC. CoServ's lawsuit against CFC
also includes claims of fraudulent conveyance, arising out of
CFC's failure to perform according to these agreements. These
claims may result in the voiding of liens on a substantial
portion of CoServ's assets.
"The lawsuit against CFC will show very clearly that we were
operating according to a plan CFC not only funded but also
encouraged us to pursue," said McGinnis. "We have been meeting
the objectives of the plan, and we have met our obligations
under the agreements. Yet CFC subsequently refused to honor its
commitment to meet legitimate funding requests that were in line
with the very plan CFC reviewed and approved. It is unfortunate
for all our stakeholders that CFC has taken this position and
has forced us to seek protection. CFC is now backtracking on its
position of 'cooperative diversification' that was the central
focus of CFC's marketing plan for the past several years.
Cooperatives across the nation who followed CFC's advice are now
scrambling to obtain operating money from new sources. CFC has
effectively chopped down the cherry tree, and now they're trying
to put the hatchet in someone else's hands."
The companies affected by the Chapter 11 filing include CoServ
Electric, CoServ Investments, L.P., CoServ Utility Holdings,
L.P. and CoServ Realty Holdings, L.P. In conjunction with the
previous Chapter 11 filing by CoServ's telephone and cable
companies, CoServ companies currently operating under the
protection of Chapter 11 reorganization include those companies
providing electric, telephone and cable service and real estate
development financing. CoServ companies not included in the
Chapter 11 filings include natural gas, security and Internet
services. CoServ will continue to provide service to all of its
customers and maintain all of its operations as it proceeds with
the Chapter 11 process. CoServ Electric currently is negotiating
for debtor-in-possession (DIP) financing to provide financial
resources and facilitate meeting payment obligations to vendors
during the restructuring process.
CoServ stated that its gas company was not included in the
Chapter 11 filing because it was not subject to foreclosure
action by CFC. However, because of the current financial
situation, CoServ is now seeking an equity partner or a
purchaser for its gas company. CoServ will continue to provide
high levels of service to its gas customers. CoServ's gas
operations serve approximately 10,000 customers in North Texas.
The Chapter 11 petitions were filed in the United States
Bankruptcy Court, Northern District of Texas, in Fort Worth,
Texas. Copies of the Chapter 11 petitions and other related
documents are -- supposedly -- being made available via the web
site of CoServ's legal counsel, Gardere Wynne Sewell LLP,
http://www.gardere.com/Bankruptcy/listcases.asp
For nearly 65 years, CoServ Electric has provided dependable,
affordable electric power to thousands of customers in the North
Texas area. In 1998, the company expanded both its service area
and its service offerings to include a broad range of services.
CoServ currently provides a wide variety of services, including
electric, gas, telephone, cable television, security and
internet to several counties in North Texas. Additionally,
CoServ has provided financial support for real estate
developments in the area and stimulated growth in the North
Texas region. Further information on CoServ is available at
http://www.coserv.com
COSERV ELECTRIC: Coop Airs Disappointment over Bankruptcy Filing
----------------------------------------------------------------
National Rural Utilities Cooperative Finance Corporation (CFC)
expressed its disappointment at the actions of Denton County
Electric Cooperative (d/b/a CoServ) which Friday filed for
bankruptcy.
"The entire CoServ situation is most regrettable," said CFC
Governor and CEO Sheldon C. Petersen. "CFC has acted in good
faith in attempting to find viable solutions to CoServ's
financial difficulties. We developed with CoServ a comprehensive
debt restructuring agreement in March 2001 that would have
enabled CoServ to avoid bankruptcy. Unfortunately, CoServ's
management decided not to honor that agreement."
CFC is a not-for-profit finance cooperative that is owned and
operated by the nation's nearly 1,000 electric cooperatives.
With more than 30 years of experience in utility lending, CFC
provides loans and financial services to the nation's electric
cooperative network. More than 70 of CFC's member electric
cooperatives are located in the state of Texas.
"What is really unfortunate," Petersen continued, "is that
CoServ's management, through its many affiliated companies and
partnerships, has been incurring staggering losses that threaten
CoServ's financial viability. Given the current business
climate, these losses from affiliates and partnerships are
particularly troubling."
CoServ's financial issues became public last November, when
CoServ filed for Chapter 11 bankruptcy protection for some of
its telecommunications affiliates. On December 31, 2001, CoServ
refused to make its regularly scheduled payment of more than $8
million to CFC, while declaring publicly that it had the funds
to do so. "At that point," Petersen said, "it was our
responsibility to our members-owners, as well as to our
extensive network of investors, to initiate foreclosure on
CoServ."
As for CoServ's customers, Petersen said, "I want to reassure
the members of CoServ that CFC's goal is that the lights stay on
and that the electric utility continue to operate without
interruption."
"As the financial cooperative for electric cooperatives,"
Petersen continued, "we have a tradition of enhancing the lives
of America's electric co-op members. We are committed to
maintaining that bond with the customers of CoServ. We are
confident that this commitment to CoServ's membership will
become evident as these proceedings move forward."
With approximately $20 billion in loans outstanding, CFC is the
premier private lender to the nation's electric cooperative
network. Formed in 1969, CFC provides state-of-the-art financial
products and services to its 1,045 electric cooperative owners
located in 49 states and four U.S. territories.
DELTA MILLS: S&P Drops Ratings over Weak Operating Performance
--------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on Delta
Mills Inc. (a wholly owned subsidiary of Delta Woodside Inc.) to
single-'B'-minus from single-'B'-plus. At the same time, the
senior unsecured debt rating was also lowered to single-'B'-
minus from single-'B'-plus. The ratings remain on CreditWatch
with negative implications, where they were placed on August 15,
2001.
Total rated debt is about $84 million.
The downgrade reflects Delta Mills' significantly weakened
operating performance and related credit measures for the six
months ended Dec. 29, 2001, and the expectation that such
measures will remain pressured in the near term. Considerable
volume and unit declines during the period, as a result of the
weak economy and the extremely difficult conditions at retail,
led to margin pressures and a meaningful drop in operating
profits. Although there is financial flexibility provided by the
company's unused $50 million secured bank facility, the company
might need to secure a waiver or amendment at some future date.
Delta Mills is a leading domestic manufacturer and marketer of
woven cotton fabrics (about 80% of total volume) and synthetic
fabrics (about 20% of total volume).
Standard & Poor's will meet with the company in the near future
to discuss its operating and financial strategies.
According to DebtTraders, Delta Mills Inc.'s 9.625% bonds due
2007 (DELTAM1) are currently trading between 47 and 55. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=DELTAM1for
real-time bond pricing.
DOW CORNING: Foreign Tort Claimants Get Less than U.S. Claimants
----------------------------------------------------------------
The United States Court of Appeals for the Sixth Circuit put its
stamp of approval on the provision buried in Dow Corning Corp.'s
Amended Joint Plan of Reorganization that delivers less
compensation to silicone implant claimants in foreign countries
than to similarly injured claimants residing in the United
States of America.
Handfuls of foreign claimants asked the Sixth Circuit to decide
whether the Plan's classification of foreign claimants meets the
Bankruptcy Code's classification requirements. The Sixth
Circuit holds that the Plan's classification of foreign
claimants meets the Code's requirements, explaining that:
Under the Plan, a foreign claimant is defined as someone
who (1) is not a United States citizen, (2) is not a resident
alien, or (3) did not have his or her medical procedure
performed in the United States. Plan Sections 1.67. The Plan
creates two classes for foreign claimants. Class 6.1 consists of
claimants who are from a country that either (1) belongs to the
European Union, (2) has a common law tort system, or (3) has a
per capita Gross Domestic Product of greater than 60% of the
United States' per capita Gross Domestic Product. Class 6.2
consists of claimants from all other countries. Class 5
generally consists of domestic breast-implant claimants. Class
6.1 claimants receive settlement offers of 60% of analogous
domestic claimants' settlements, and Class 6.2 receive
settlements of 35% of the domestic claimants' settlements.
Members of both classes retain the option to litigate against
the Litigation Facility for the full value of the claim should
they deem the settlement offer inadequate.
The various groups of foreign claimants argue that their
claims are not worth less than those of the domestic tort
claimants and, therefore, should not be classified separately
from domestic claims. The issue is whether the Plan improperly
classifies the foreign claimants separately from domestic
claimants. For the following reasons we hold that the separate
classification is not improper.
The Bankruptcy Code provides that "a plan may place a
claim or an interest in a particular class only if such claim or
interest is substantially similar to the other claims or
interests of such class." 11 U.S.C. Sections 1122(a). This
circuit has recognized that section 1122(a), "by its express
language, only addresses the problem of dissimilar claims being
included in the same class." In re U.S. Trucking, 800 F.2d 581,
585 (6th Cir. 1986). Section 1122(a) does not demand that all
similar claims be in the same class. Id. To the contrary, the
bankruptcy court has substantial discretion to place similar
claims in different classes. Id. We have observed that "Congress
incorporated into section 1122 . . . . broad discretion to
determine proper classification according to the factual
circumstances of each individual case." Id. at 586.
In this case, the bankruptcy court determined that the
evidence supported the factual assumptions upon which the
classifications are based, and that given those facts, the
Plan's classifications are proper. For example, the bankruptcy
court found the testimony of three widely recognized expert
witnesses helpful. These three expert witnesses had served on
the panel for developing the classification scheme used in
Bowling v. Pfizer, Inc., (S.D. Ohio 1995). Pfizer's
classification scheme was the model used to develop the scheme
in this case. Id. These expert witnesses explained the Pfizer
methodology and its relevance to the current case. They offered
quantitative evidence demonstrating that the highest tort awards
in various other countries were significantly lower than in the
United States. For example, one expert witness testified that
the highest non-pecuniary award in injury cases in Australia is
approximately $230,000. The bankruptcy court found these
witnesses credible, in contrast to the foreign claimants'
witnesses, who the court found to be "unhelpful." In re Dow
Corning Corp. 244 B.R. at 660. Based on such evidence, the
bankruptcy court found that "without question, the evidence on
the record shows that tort recoveries in the United States tend
to be significantly higher than those in foreign jurisdictions."
Id. at 661. Though the foreign claimants point to countervailing
considerations, their arguments, at best, show that there was
conflicting evidence on the factual assumptions underlying the
classification scheme. The foreign claimants have not shown that
the facts used to support the separate classifications for
foreign and domestic claimants were clearly erroneous.
Second, the various groups of foreign claimants contend that
their claims are more valuable than claims originating from
other countries in their respective classes. They argue that the
various claims in their class are not "substantially similar" as
required by section 1122(a). They further argue that by giving
identical consideration to class members whose claims are of
different value, they are not being treated the same as other
members of their class in violation of the Code's requirement
that claimants within a class be treated equally. 11 U.S.C
1123(a)(4). This issue, therefore, turns on whether the Plan
improperly places foreign claims that are not "substantially
similar" in the same class. For the following reasons we find
that the bankruptcy court's determination that the claims within
a given class are "substantially similar" is not clearly
erroneous.
The bankruptcy court relied on the testimony of a leading
expert in comparative law methodology, Basil Markenisis, who
pointed to legal, economic, and cultural factors supporting the
bankruptcy court's conclusion that the claims within each class
are "substantially similar." Markenisis discussed (1) the
availability of social safety nets in other countries, (2) other
countries' reliance on judges as opposed to juries, (3)
limitations on punitive damages, (4) unavailability of
contingency fees, (5) limitations on strict liability doctrines,
(6) cultural factors, (7) reluctance to use lawyers, especially
in the Far East, and (8) reliance upon semi-official medical
reports in Europe. The bankruptcy court concluded, based on such
evidence, that the claims are "substantially similar." Though
the foreign claimants offer countervailing considerations, they
have offered no evidence to indicate that the facts relied upon
by the bankruptcy court were clearly erroneous.
Moreover, the Sixth Circuit notes, all foreign claimants retain
the right to pursue full payment of their claims in the
Litigation Facility. The fact that foreign claimants maintain
the litigation option further supports the finding that the Plan
does not treat claims that are in the same class unequally, the
Sixth Circuit says.
DOW CORNING: 6th Circuit OKs Non-Consensual Non-Debtor Releases
---------------------------------------------------------------
Nearly two years to the day, the United States Court of Appeals
for the Sixth Circuit delivered an opinion saying its okay to
grant non-consensual releases to non-debtor entities under a
plan if there are "unusual circumstances," but instructing the
District Court to gather more evidence before non-consensual
releases are granted to Dow Chemical Company, Corning,
Incorporated, and various insurance companies, under Dow Corning
Corp.'s Amended Joint Plan of Reorganization.
The Sixth Circuit notes that this is the first time it has been
asked to decide whether a bankruptcy court has the authority to
enjoin a non-consenting creditor's claims against a non-debtor
to facilitate a reorganization plan under Chapter 11 of the
Bankruptcy Code. Holding that the Bankruptcy Code does not
prohibit non-consensual releases to non-debtors, the Sixth
Circuit says:
The Bankruptcy Code does not explicitly prohibit or
authorize a bankruptcy court to enjoin a non-consenting
creditor's claims against a non-debtor to facilitate a
reorganization plan. In re Continental Airlines, 203 F.3d 203,
211 (3d Cir. 2000). However, bankruptcy courts, "as courts of
equity, have broad authority to modify creditor-debtor
relationships." United States v. Energy Resources Co., 495 U.S.
545, 549 (1990). For example, section 105 (a) of the Bankruptcy
Code grants a bankruptcy court the broad authority to issue "any
order, process, or judgment that is necessary or appropriate to
carry out the provisions of this title." 11 U.S.C. Sections
105(a). This section grants the bankruptcy court the power to
take appropriate equitable measures needed to implement other
sections of the Code. See In re Granger Garage, Inc., 921 F.2d
74, 77 (6th Cir. 1990).
Consistent with section 105(a)'s broad grant of authority,
the Code allows bankruptcy courts considerable discretion to
approve plans of reorganization. Energy Resources Co., 495 U.S.
at 549. Section 1123(b)(6) permits a reorganization plan to
"include any. . . appropriate provision not inconsistent with
the applicable provisions of this title." 11 U.S.C. Sections
1123(b)(6). Thus, the bankruptcy court, as a forum for resolving
large and complex mass litigations, has substantial power to
reorder creditor-debtor relations needed to achieve a successful
reorganization. For example, under the doctrine of marshaling of
assets, "[t]he bankruptcy court has the power to order a
creditor who has two funds to satisfy his debt to resort to the
fund that will not defeat other creditors." In re A.H. Robins
Co., 880 F.2d 694, 701 (4th Cir. 1989). Moreover, it is an
"ancient but very much alive doctrine . . . [that]. . . a
creditor has no right to choose which of two funds will pay his
claim." Id. Likewise, when a plan provides for the full payment
of all claims, enjoining claims against a non-debtor so as not
to defeat reorganization is consistent with the bankruptcy
court's primary function. See id. For the foregoing reasons,
such an injunction is "not inconsistent" with the Code, and is
authorized by section 1123(b)(6).
Nevertheless, some courts have found that the Bankruptcy
Code does not permit enjoining a non-consenting creditor's
claims against a non-debtor. See In re Lowenschuss, 67 F.3d
1394, 1401 (9th Cir. 1995); In re Western Real Estate Fund,
Inc., 922 F.2d 592, 600 (10th Cir. 1990). These courts primarily
rely on section 524(e) of the Code, which provides that "the
discharge of the debt of the debtor does not affect the
liability of any other entity on, or the property of any other
entity for, such debt." 11 U.S.C. 524(e). However, this
language explains the effect of a debtor's discharge. It does
not prohibit the release of a non-debtor. See In re Specialty
Equip. Co., 3 F.3d 1043, 1047 (7th Cir. 1993) ("This language
does not purport to limit or restrict the power of the
bankruptcy court to otherwise grant a release to a third
party."); Republic Supply Co. v. Shoaf, 815 F.2d 1046, 1050 (5th
Cir. 1987); In re A.H. Robins Co., 880 F.2d at 702.
The Sixth Circuit disagrees with Judge Spector's conclusion that
while non-debtor releases are authorized by 11 U.S.C. Sec.
1123(b)(6), they are precluded by a non-bankruptcy law
limitation on the bankruptcy court's equity power. In re Dow
Corning Corp., 244 B.R at 744. The bankruptcy court cited Grupo
Mexicano de Desarrollo v. Alliance Bond Fund, Inc., 527 U.S.
308, 322 (1999), for the proposition that a court=s use of its
general equity powers Ais confined within the broad boundaries
of traditional equitable relief." The Grupo Mexicano Court
explained that, "the equity jurisdiction of the federal courts
is the jurisdiction in equity exercised by the High Court of
Chancery in England at the time of the adoption of the
Constitution and the enactment of the original Judiciary Act,
1789." Id. at 318 (quoting A. Dobie, Handbook of Federal
Jurisdiction and Procedure 660 (1928)). Based upon this
principle, the Grupo Mexicano Court vacated an injunction
preventing a toll road operator from dissipating, transferring,
or encumbering its only assets to the prejudice of an unsecured
note holder because traditional equity jurisprudence did not
allow such remedies until a debt had been established. Id. at
319. The bankruptcy court, applying the Grupo Mexicano analysis,
concluded that non-debtor releases were also unprecedented in
traditional equity jurisprudence, and therefore exceeded the
bankruptcy court's equitable powers. In re Dow Corning Corp.,
244 B.R. at 744.
The district court rejected this argument on the grounds that
the releases were authorized by "sufficient statutory authority
under the Bankruptcy Code." In re Dow Corning Corp., 255 B.R. at
480.
For the following reasons, the Sixth Circuit says it agrees with
the district court:
In Grupo Mexicano, the Supreme Court distinguished its own
holding from that in United States v. First National City Bank,
379 U.S. 378 (1965). 527 U.S. at 326. First National approved an
injunction preventing a third-party bank from transferring any
of a taxpayer's assets. 379 U.S at 379-380. The Grupo Mexicano
Court distinguished that holding on the grounds that the First
National case "involved not the Court's general equitable
powers under the Judiciary Act of 1789, but its powers under the
statute authorizing tax injunctions." Grupo Mexicano, 527 U.S.
at 326. Thus, because the district court had a statutory basis
for issuing such an injunction, it was not confined to
traditional equity jurisprudence available at the enactment of
the Judiciary Act of 1789. The statute in First National gave
courts the power to grant injunctions necessary or appropriate
for the enforcement of the internal revenue laws. 26 U.S.C.
Sec. 7402(a)(1964). Similarly, the Bankruptcy Code gives
bankruptcy courts the power to grant injunctions "necessary or
appropriate to carry out the provisions of [the Bankruptcy
Code]." 11 U.S.C. Sections 105(a). We conclude that due to this
statutory grant of power, the bankruptcy court is not confined
to traditional equity jurisprudence and therefore, the
bankruptcy court's Grupo Mexicano analysis was misplaced.
Finding that enjoining a non-consenting creditor's claim against
a non-debtor is "not inconsistent" with the Code and that Grupo
Mexicano does not preclude such an injunction, the Sixth Circuit
then turn to the issue of when such an injunction is an
"appropriate provision" of a reorganization plan pursuant to
section 1123(b)(6). Because such an injunction is a dramatic
measure to be used cautiously, the Sixth Circuit says that it
will follow those circuits that have held that enjoining a
non-consenting creditor's claim is only appropriate in "unusual
circumstances." See In re Drexel Burnham Lambert Group, Inc.,
960 F.2d 285, 293 (2nd Cir. 1992); In Re A.H. Robins Co., 880
F.2d at 702; MacArthur v. Johns-Manville, Corp., 837 F.2d 89,
93-94 (2nd Cir. 1988). The Sixth Circuit adopts the factors
used by its sister courts to determine when there are "unusual
circumstances," and holds that when the following seven factors
are present, the bankruptcy court may enjoin a non-consenting
creditor's claims against a non-debtor: (1) There is an identity
of interests between the debtor and the third party, usually an
indemnity relationship, such that a suit against the non-debtor
is, in essence, a suit against the debtor or will deplete the
assets of the estate; (2) The non-debtor has contributed
substantial assets to the reorganization; (3) The injunction is
essential to reorganization, namely, the reorganization
hinges on the debtor being free from indirect suits against
parties who would have indemnity or contribution claims against
the debtor; (4) The impacted class, or classes, has
overwhelmingly voted to accept the plan; (5) The plan provides a
mechanism to pay for all, or substantially all, of the class or
classes affected by the injunction; (6) The plan provides an
opportunity for those claimants who choose not to settle to
recover in full and; (7) The bankruptcy court made a record of
specific factual findings that support its conclusions. See In
re A.H. Robins, 880 F.2d at 701-702; Johns-Manville, 837 F.2d at
92-94; In re Continental Airlines, 203 F.3d at 214.
While the Sixth Circuit supports the notion of non-consensual
non-debtor releases, the Court is concerned that Judge Spector
did not obtain a sufficient record in Dow Corning's case to find
"unusual circumstances" supporting enjoining non-consenting
creditors' claims against a non-debtor. The Sixth Circuit says
Judge Spector's findings of fact with regards to the "unusual
circumstances" test were no more than conclusory statements that
restated elements of the test in the form of factual
conclusions. The bankruptcy court provided no explanation or
discussion of the evidence underlying these findings. Moreover,
the findings did not discuss the facts as they related
specifically to the various released parties, but merely made
sweeping statements as to all released parties collectively.
Such factual determinations are not sufficiently specific and
explained to support a finding of "unusual circumstances." And,
when "the bankruptcy court's factual findings are silent or
ambiguous as to. . . outcome determinative factual question[s],.
. . [we] must remand the case to the bankruptcy court for the
necessary factual determination[s]." In re Caldwell, 851 F.2d at
857.
The Sixth Circuit points-out three mistakes Judge Spector made:
(A) First, the bankruptcy court's factual determination
that the release and injunction provisions of the Plan are
"essential" to the reorganization is ambiguous. In its November
30, 1999 Findings of Fact and Conclusions of Law, the bankruptcy
court concluded that the release and injunction provisions were
"essential to the reorganization pursuant to the Plan." However,
the bankruptcy court subsequently interpreted the release and
injunction provisions to apply only to consenting creditors,
implying that enjoining non-consenting creditors is not
essential to the reorganization. It explained that it found the
provisions "essential" in order to "obviate the need for remand
in the event [the bankruptcy court is] reversed on appeal with
regard to the scope and permissibility of the release and
injunction provisions." In re Dow Corning Corp., 244 B.R. at
747. These are inconsistent fact findings that the bankruptcy
court must clarify in order for us to endorse enjoining claims
against non-debtors.
(B) Second, the bankruptcy court did not make sufficiently
particularized factual findings that the Settling Insurers,
Corning, Incorporated, the Dow Chemical Company, and Dow's
affiliates will make significant contributions to the
reorganization pursuant to the Plan. The bankruptcy court
declared the contributions important without explaining
how or why it reached this conclusion. To satisfy the "unusual
circumstances" test, the bankruptcy court must specify facts
that support a conclusion that the released parties will make
significant contributions to the reorganization pursuant to the
Plan.
(C) Third, in order for the Plan to be approved under the
"unusual circumstances" test, it must ensure an opportunity for
those claimants who choose not to settle to recover in full, and
this determination must be supported by particularized factual
findings. The bankruptcy court determined that Class 15
claimants, composed of the United States and the Canadian
provinces of Alberta and Manitoba, "who obtain judgments against
the Litigation Facility will be paid in full." In re Dow Corning
Corp., 244 B.R. at 712. We find the determination that Class 15
claimants will be paid in full to be clearly erroneous with
regards to the United States.
Accordingly, the Sixth Circuit remands Dow Corning's chapter 11
case back to Judge Hood with instructions to make the specific
findings of fact that should have been made in the bankruptcy
court.
EASYLINK SERVICES: AT&T Discloses 14.7% Equity Stake
----------------------------------------------------
In connection with the restructuring of approximately
$35,000,000 of indebtedness owed by EasyLink Services, Inc., to
AT&T, including the retirement of portions of the Indebtedness
and an extension of the maturity date with respect to the
remaining indebtedness, the Company transferred 14,239,798
shares of its Class A common stock to AT&T and gave AT&T
immediately exercisable warrants to purchase an additional
10,000,000 shares at a price of $0.61 per share. The
Indebtedness was created by the Company's default under the
terms of a promissory note made by EasyLink in favor of AT&T.
The promissory note evidenced the Company's obligation to pay
AT&T for certain services under a Transition Services Agreement
between EasyLink and AT&T, dated January 31, 2001.
As a result of the debt restructuring of EasyLink, AT&T
acquired the Class A Common Stock. AT&T intends to treat the
common stock of EasyLink as a passive investment and will
realize a gain or loss, if any, on the sale of the shares.
AT&T is the beneficial owner of the shares. The shares
represent approximately 14.7% of the total number of shares of
the Class A common stock of the Company as of November 30, 2001.
AT&T maintains the power to vote or to direct the voting of, and
the power to dispose of, or to direct the disposition of, the
shares.
EasyLink Services delivers e-mail and more. The company manages
outsourced e-mail systems for businesses and provides other
electronic message delivery services, including telex and
desktop fax. It also provides virus protection and help desk
services. The former Mail.com has expanded by buying messaging
provider Swift Telecommunications, which had acquired AT&T's
EasyLink Services messaging unit. EasyLink Services has sold its
e-mail advertising business and its consumer e-mail business,
which served some 5 million active users, and it plans to sell
its domain name development business, WORLD.com.
ENRON: Absolute Recovery Wants Chapter 11 Trustee Appointed
-----------------------------------------------------------
Absolute Recovery Hedge Fund LP and the Regents of the
University Of California want the Court to appoint a permanent
Chapter 11 trustee for all of the estates of Enron Corporation
and its debtor-affiliates, going a step further than the Trading
Creditors who are lobbying for a chapter 11 trustee just for
Enron North America. In addition, Absolute Recovery and the
Regents ask Judge Gonzalez to immediately appoint an emergency
"gap" trustee pending the appointment of the permanent Chapter
11 trustee and to direct the Debtors to cooperate with the
emergency "gap" trustee and the permanent Chapter 11 trustee.
Melvyn I. Weiss, Esq., at Milberg, Weiss, Bershad, Hynes &
Lerach LLP, in New York, explains that Absolute Recovery and
Regents want a Chapter 11 trustee appointed in order to
safeguard, supervise, and manage the assets and property of all
the Debtors' estates, as well as to secure and protect all the
Debtors' books, records, files, businesses, assets, cash and
other monetary receipts.
Mr. Weiss asserts that an independent trustee must be appointed
because management has inherent conflicts of interest. "There
are reports of a proposal to employ a restructuring officer, but
this does not cure the separate necessity for an independent
trustee whose duties run to the court and Creditors," Mr. Weiss
says.
Mr. Weiss contends that the immediate appointment of an
emergency "gap" trustee and then a permanent Chapter 11 trustee
is necessary. Since the Petition Date, Mr. Weiss relates, there
have been a lot of revelations and allegations of fraud,
dishonesty, incompetence, and gross mismanagement of the affairs
of Enron by current management. "The admitted destruction of
documents by Enron and its longtime auditor, Arthur Andersen LLP
make it clear that current management is not administering, and
cannot and will not administer, these estates in a manner that
will benefit creditors, equity security holders, and other
parties in interest," Mr. Weiss observes. Moreover, Mr. Weiss
continues, given that Enron's current management is the subject
of civil suits, civil and criminal investigations, and
Congressional and administrative agency investigations, current
management will almost surely act to protect and benefit
themselves. "This leaves a void in management which must be
cured by the appointment of an independent fiduciary," Mr. Weiss
insists.
Mr. Weiss asserts that the appointment of a Chapter 11 trustee
for all the Debtors will facilitate the full and complete
disclosure -- from each jointly administered Debtor and their
pre-petition professionals -- of relevant books, records and
documents. "Absent a Chapter 11 trustee, each Debtor maintains
its attorney-client privilege and can resist production of
information on that basis," Mr. Weiss notes. However, Mr. Weiss
says, a Chapter 11 trustee holds such privilege and can waive it
to benefit the creditors . . . and that waiver would provide
broad access to a panoply of documents that likely will be
crucial to the ongoing discovery efforts of a multitude of
parties.
Absolute Recovery and Regents inform Judge Gonzalez that the
Enron debt instruments and securities they hold have been
rendered virtually valueless based upon the Debtors' bankruptcy
filing, the plunge in Enron's share price, and the improper
actions of the Debtors, their principals and their advisors.
"Only by placing a single fiduciary in charge and control of all
of the Debtors' estates and assets, can creditors, equity
holders, and other interested parties of the respective estates,
be protected," Mr. Weiss maintains. (Enron Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ENRON: Special Committee Completes Investigation & Issues Report
----------------------------------------------------------------
Enron Corp., (ENRNQ) announced that the Special Investigative
Committee of the Board of Directors has completed its previously
announced investigation and review of transactions between Enron
and certain related parties, and delivered Saturday its 203-page
report to the full Board.
The full text of the Special Investigative Committee's report --
a huge 10-megabyte file -- is available for TCR subscribers at
http://bankrupt.com/EnronDoc1260.pdfat no charge.
The Special Committee was established by the Enron Board on Oct.
28, 2001. The completion and release of the Special Committee
report is an important step in the Company's effort to stabilize
and reorganize its businesses, protect 20,000 jobs and embark on
a productive future.
The Board of Directors reviewed the report in detail and
directed that it be immediately filed with the Bankruptcy Court
and provided to the United States Department of Justice, the
Securities and Exchange Commission and the various Congressional
Committees conducting hearings with respect to Enron. The Board
also reaffirmed that Enron will continue to cooperate fully with
all governmental inquiries and investigations.
The report has made the Board aware of numerous past events for
the first time. These events are deeply regretted by the Board.
The Board is in the process of forming a Restructuring
Committee, which will consist of Raymond S. Troubh, a recently
appointed independent director who served on the Special
Investigative Committee, and at least two other new independent
directors to be identified by the Nominating and Governance
Committee, which also will consult with the Creditors Committee.
Stephen Cooper, the recently elected chief restructuring officer
and acting chief executive officer, will be an ex-officio member
of the Committee.
The Board also directed its counsel, Weil, Gotshal & Manges LLP,
in cooperation with the Creditors Committee in the Chapter 11
case, to review the report and make recommendations concerning
the steps which should be taken based on the report, including
further investigations and appropriate legal actions.
William C. Powers, Jr., chairman of the Special Committee, said,
"the Committee's report is the result of an extensive review and
investigation involving 430,000 pages of documents, and
interviews of more than 65 people, conducted over approximately
three months with the assistance of experienced legal counsel
from Wilmer, Cutler & Pickering and the accounting advice of the
firm, Deloitte & Touche LLP." Board members Troubh and Herbert
S. Winokur, Jr. were members of the committee.
Enron delivers energy and other physical commodities and
provides other energy services to customers around the world.
Enron's Internet address is http://www.enron.com
DebtTraders reports that Enron Corp.'s 9.125% bonds due 2003
(ENRON2) currently trade between 16 and 18.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON2for
real-time bond pricing.
EVENFLO CO.: S&P Further Junks Ratings & Says Outlook Negative
--------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on Evenflo
Company Inc. to double-'C' from triple-'C'. At the same time,
the senior unsecured debt rating was lowered to single-'C' from
triple-'C'-minus. The outlook remains negative.
The ratings action affects $110 million of rated debt.
The downgrade reflects Standard & Poor's increasing concern
relating to Evenflo's ability to meet its February 15, 2002,
senior unsecured debt interest payment, now that the company's
temporary increase in bank availability and waivers of bank
covenant compliance have expired. During 2001, Evenflo's
operating performance deteriorated due to product supply chain
problems, that led to cancelled customer orders, and to the weak
retail environment. While new management implemented
restructuring plans in an effort to improve operating
efficiencies, Standard & Poor's does not expect Evenflo's
financial performance and very constrained financial flexibility
to improve in the very near-term, given the company's heavy debt
load, internal operational challenges, and continued difficult
retail environment.
Vandalia, Ohio-based Evenflo is a manufacturer in the highly
competitive infant and juvenile products industry.
Outlook: Negative
The outlook incorporates the possibility of a default on
Evenflo's 11-3/4% senior notes due 2006, if discussions with the
company's banks fail to provide Evenflo with adequate liquidity.
DebtTraders reports that Evenflo Co. Inc.'s 11.750% bonds due
2006 (EVENFL1) are trading between 9 and 12. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=EVENFL1for
real-time bond pricing.
EXODUS: Completes Sale of Assets to Cable & Wireless for $750MM
---------------------------------------------------------------
Cable and Wireless plc (NYSE:CWP), the global telecommunications
group, announced today that it and its wholly owned subsidiary,
Digital Island, Inc., have completed the acquisition from Exodus
Communications Inc., the United States' leading web hosting
provider, in an all-cash transaction, of selected assets and a
majority of the business activities of Exodus in the United
States.
This follows the approval of the US transaction by the United
States Bankruptcy Court for the District of Delaware granted on
17 January 2002.
Together with the Exodus assets in the UK, Germany and Japan,
the acquisition of which is being finalized, the total
enterprise value of the transaction will be approximately US$750
million. This final amount is US$100 million below the US$850
million value announced on 30 November 2001 as a result of the
finalization of certain estimates outstanding at that time.
Integration and Branding
The Exodus Business will be combined with the hosting businesses
of Digital Island and Cable & Wireless to create a world leader
in hosting and Internet services. The combined entity will be a
separate division of Cable & Wireless Global and has an
annualized current run rate of revenue of approximately US$800
million.
It will be supported by the powerful global infrastructure and
financial strength of Cable & Wireless to provide a unique
offering to business customers around the world.
Bill Austin, who joined Exodus in July 2001 and is Chief
Financial Officer with additional responsibility for IT,
customer care and business development, will become CEO of the
new division, reporting to Don Reed, Chief Executive of Cable &
Wireless Global.
He will lead the process of integrating the Exodus Business with
Cable & Wireless' existing hosting businesses which is expected
to be largely complete by April 2002.
Based on comprehensive market research, all hosting services
currently marketed by Cable & Wireless, Digital Island and
Exodus in the USA will be branded "Exodus, a Cable & Wireless
Service". All other business activities in the USA will continue
under the Cable & Wireless name. In the rest of the world all
services will be marketed under the Cable & Wireless brand.
Rebranding will be completed by May 2002.
Graham Wallace, Chief Executive, Cable & Wireless, said: "Cable
& Wireless' financial strength, scale and world-class IP
infrastructure ensures that Exodus' customers will get the
quality and guaranteed continuity of service that they are
seeking from providers of mission-critical services. Bill Austin
has helped steer Exodus successfully through the Chapter 11
process and his extensive experience of both finance and
business makes him ideal to lead the business to profitability."
Bill Austin, Chief Financial Officer, Exodus, said: "The
acquisition by Cable & Wireless marks a major step forward for
Exodus and strengthens our commitment to deliver the high
quality of service and support that customers have come to
expect from us. Leveraging the global infrastructure and
financial strength of Cable & Wireless, we can now offer a broad
range of integrated outsourcing solutions to support customers'
evolving business needs."
Strategic Rationale and Benefits
Exodus provides managed and co-location hosting services
supported by sophisticated systems as well as network management
and security solutions, mainly to large corporate ("enterprise")
customers with mission critical internet operations.
Exodus serves approximately 3,200 customers including many
leading companies across the financial services, technology,
healthcare, automotive and transportation sectors. 15 of the top
25 web properties have chosen Exodus (source: Nielsen/Netratings
Inc., December 2001).
The acquisition fits within Cable & Wireless Global's strategy
to provide global IP (Internet Protocol) and data services to
business customers in the US, Europe and Japan.
The acquisition accelerates the development of value-added
services and integrated communications and e-commerce solutions,
building on the successful acquisition of Digital Island and
Cable & Wireless' existing high-performance global IP
infrastructure and transactional web services capabilities.
This combination positions Cable & Wireless to take full
advantage of the predicted growth in managed hosting and web
services.
Transaction Details
The Exodus Business comprises substantially all of the Exodus
Group's US customer contracts, together with selected corporate
and data centre assets, know-how, intellectual property
(including the Exodus brand), high quality employee base and
other resources required to support these customers and grow the
business.
The selected assets include 26 of Exodus' 44 operational data
centers.
These data centers represent approximately 4 million square feet
of gross space. Cable & Wireless has selected the centres in
order to create, when combined with Cable & Wireless' existing
operations, an optimum portfolio of strategically positioned and
well utilized data centers that would enable the continued
provision of excellent service to Exodus' customers.
The acquisition by Cable & Wireless of Exodus assets and
business in Japan, the UK and Germany is in the process of
finalization.
Based on its plan for the Exodus Business, Cable & Wireless
anticipates up to a maximum of US$ 250 million of additional net
investment will be required to take the Exodus Business to cash
flow break-even. After taking synergies into account, the Exodus
Business is expected to become EBITDA positive during calendar
2003.
The sale of selected assets and liabilities of Exodus to Cable &
Wireless will have no impact on Exodus shareholders. As
previously announced on November 12, 2001, Exodus stock trading
under the symbol EXDSQ on the OTCBB is expected to have no
future value.
Greenhill & Co. and Merrill Lynch International acted as co-
financial advisors to Cable & Wireless in this transaction.
Cable & Wireless is a major global telecommunications business
with revenue of over (pound)8 billion (US$11 billion) in the
year to 31 March 2001 and customers in 70 countries and consists
of two core and complementary divisions: Cable & Wireless
Regional and Cable & Wireless Global. Cable & Wireless Regional
offers a full range of telecommunications services in 27
countries around the world.
Cable & Wireless Global's focus for future growth is on IP
(internet protocol) and data services and solutions for business
customers. It is developing advanced IP networks and value-added
services in the US, Europe and the Asia-Pacific region in
support of this strategy.
With the capability of its global IP infrastructure and its
financial strength, Cable & Wireless holds a unique position in
terms of global coverage and services to business customers. For
more information about Cable & Wireless, go to www.cw.com.
Greenhill & Co. International Limited and Merrill Lynch
International which are regulated in the United Kingdom by The
Securities and Futures Authority Limited, are acting as
financial advisers to Cable & Wireless in relation to the
Transaction and to no one else and will not regard any other
person as their customer or be responsible to any one other than
Cable & Wireless for providing the protections afforded to
customers of either Greenhill & Co. or Merrill Lynch or for
providing advice in relation to the transaction.
DebtTraders reports that Exodus Communications Inc.'s 11.625%
bonds due 2010 (EXDS3) currently trade between 20.5 and 22.5.
See http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDS3for
real-time bond pricing.
GENEVA STEEL: Seeks Okay to Employ LeBoeuf Lamb as Local Counsel
----------------------------------------------------------------
Geneva Steel LLC asks permission from the U.S. Bankruptcy Court
for the District of Utah to employ the law firm of LeBoeuf,
Lamb, Greene & MacRae, LLP as its local counsel. The Debtors
said that employing LeBoeuf would save them a great deal of
administrative expenses taking into account the firm's proximity
to this Court.
Kaye Scholer, the Debtor's lead counsel will consult LeBoeuf on
matters regarding local practice and procedure. Both law firms
assure the Court that they will make every effort to avoid
duplication of services.
The Debtor is retaining LeBoeuf as its counsel because of the
firm's extensive experience and knowledge in the field of the
debtors' and creditors' rights and business reorganizations
under chapter 11. The Debtor also takes note of the firm's
experience and knowledge practicing before this Court and its
ability to respond quickly to emergency matters.
Subject to the approval of this Court, the services to be
provided by LeBoeuf in the Debtor's behalf are:
a) advising the Debtor of its rights, powers, and duties as
a debtor and debtor in possession;
b) taking all necessary action to protect and preserve the
estate of the Debtor;
c) assisting in preparing all necessary motions,
application, answers, orders, reports, and papers;
d) assisting in presenting the Debtor's proposed plan of
reorganization and all related transactions, revisions,
amendments, etc.; and
e) performing all other necessary legal services in
connection with this chapter 11 case.
Prior to the filing of the Debtor's chapter 11 petition, LeBoeuf
received $18,985.15 from the Debtors as a general retainer for
prepetition and postpetition services and expenses that LeBoeuf
has provided.
The Debtor proposes to pay LeBoeuf its customary hourly rates.
The rates however, are not disclosed.
Geneva Steel owns and operates an integrated steel mill located
near Provo, Utah. The Company filed for chapter 11 protection on
January 25, 2002. Andrew A. Kress, Esq., Keith R. Murphy, Esq.
and Stephen E. Garcia, Esq. at Kaye Scholer LLP represent the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it listed $264,440,000 in total
assets and $192,875,000 in total debts.
GLOBIX CORP: Won't Make Interest Payment on 12-1/2% Senior Notes
----------------------------------------------------------------
Globix Corporation (OTC Bulletin Board: GBIX) said that as part
of its previously announced financial restructuring agreement
with more than 51% of its bondholders, the Company would not
make its scheduled February 1 interest payment on its 12-1/2%
senior notes due 2010. The Company also will not make the
interest payment within the 30-day grace period thereafter.
The Company previously announced in a press release on January
14, 2002, it had reached agreement on a financial restructuring
of its equity and debt and entered into lock-up agreements with
certain holders owning more than 51% of its outstanding
$600,000,000 issuance of senior notes, and holders of its series
A 7-1/2% convertible preferred stock. The Company also
announced that it had commenced soliciting acceptances of its
proposed financial restructuring from the other holders of the
senior notes. The financial restructuring will be finalized
through a voluntary prepackaged bankruptcy proceeding under
Chapter 11 of the U.S. Bankruptcy Code, which is expected to be
filed in the month of February, 2002.
Globix is a leading provider of advanced Internet hosting,
network and applications solutions for business. Globix delivers
services via its secure state-of-the-art Data Centers, its high-
performance global backbone and content delivery network, and
its world-class technical professionals. Globix provides
businesses with cutting-edge Internet resources and the ability
to deploy, manage and scale mission-critical Internet operations
for optimum performance and cost efficiency.
GRAND TOYS: Fails to Comply with Nasdaq Listing Requirements
------------------------------------------------------------
Grand Toys International, Inc., (Nasdaq: GRINC, GRIN) announced
that a "C" had been added to its trading symbol as a result of
its failure to solicit proxies and hold its 2000 Annual Meeting
of Shareholders. Nasdaq Marketplace Rules 4350(g) and 4350(e),
respectively, require Nasdaq listed companies to solicit proxies
and hold an annual meeting each year. Grand was notified of this
deficiency on January 8, 2002 and it advised the Nasdaq Staff
that it would promptly remedy this deficiency. As a result, the
Nasdaq Listing Panel advised Grand that Grand's securities would
continue to be listed on Nasdaq if it files a proxy statement
with the SEC by February 4, 2002, hold its annual meeting by
March 15, 2002 and, consistent with the terms of previous
exceptions granted by the Nasdaq Listing Panel, is able to
demonstrate net tangible assets of at least $2,000,000 or
shareholders equity of at least $2,500,000 by April 1, 2002.
Grand intends to meet the criteria set forth in the Nasdaq
delisting panel's exception so that it can regain compliance
with Nasdaq's requirements for continued listing on the Nasdaq
Smallcap Market, although there can be no assurance that this
will be the case. If at some future date the company's
securities should cease to be listed on the Nasdaq SmallCap
Market, they may continue to be listed on the OTC Bulletin
Board.
Founded in 1960, Grand Toys International, Inc. is a premier
licensee and distributor of a wide variety of toys and ancillary
items in Canada and since January 1999, a supplier of
proprietary products in the United States.
HAYES LEMMERZ: Panel Hires Houlihan Lokey as Financial Advisor
--------------------------------------------------------------
The Official Committee of Unsecured Creditors of Hayes Lemmerz
International, Inc., and its debtor-affiliates, seeks authority
from the Court to employ and retain Houlihan Lokey Howard &
Zukin as its financial advisor, nunc pro tunc to December 17,
2001.
Committee Co-Chair Leonard Rettinger, Jr., tells the Court
Houlihan Lokey is needed to render these services:
A. Valuation analyses of the Debtors as a going concern, in
whole or in part;
B. Review and consultation on potential divestitures for the
Debtors;
C. Review and consultation on the capital structure issues for
the reorganized Debtors including debt capacity;
D. Review of a consultation on the financial issues and options
concerning potential plans of reorganization and
coordinating negotiations with respect thereto;
E. Review and consultation on the Debtors' operating ad business
plans including long term capital needs and changing
competitive environment;
F. Testimony in court in behalf of the Official Creditors'
Committee if necessary; and
G. Any other necessary services to which the Committee and
Houlihan Lokey agree from time to time with respect to the
financial, business and economic issues that may arise.
Mr. Rettinger states that in choosing Houlihan Lokey, the
Committee considered the firm's role as financial advisors to
the ad hoc committee composed of institutional lenders of
significant amounts of the Debtors' unsecured notes. As
financial advisors to that unofficial committee, the firm gained
valuable insight of the Debtors' financial operations, analyzed
in-depth the Debtors' proposed DIP facility and to engage the
Debtors in meaningful dialogue to further their reorganization
efforts.
Based on a letter agreement dated January 9, 2002, Mr. Rettinger
submits that Houlihan Lokey will be entitled to a monthly fee
equal to $150,000 plus reimbursement of all reasonable out-of-
the-pocket expenses. The firm will also be entitled to a
transaction fee equal to 1% of the gross proceeds distributed to
the unsecured creditors, less:
A. 25% of the monthly fees paid by the Debtors after the
first six months,
B. 50% of the monthly fees paid by the Debtors after the first
twelve months
C. 75% of the Monthly Fees paid by the Debtors after the first
18 months.
Mr. Rettinger reveals that during the past year prior to the
Petition Date, Houlihan Lokey was by the Debtors paid $150,000
for services rendered to the ad hoc committee.
Houlihan Lokey Senior Vice President William H. Hardie III,
contends that the neither firm nor any of its affiliates has any
connections with the Debtors, creditors and other parties-in-
interests and is a "disinterested person" in these cases, as
defined in the Bankruptcy Code. Out of an abundance of caution,
Mr. Hardie discloses that Houlihan Lokey was retained by Hayes
Lemmerz International in January 1999 to render a fairness
opinion on Hayes' acquisition of CMI International Inc., which
was rendered in February 1999. (Hayes Lemmerz Bankruptcy News,
Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900)
HOULIHAN'S RESTAURANTS: Court OK's Deloitte & Touche as Auditors
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri
grants Houlihan's Restaurants, Inc. and its Debtor-Affiliates a
permission to employ and retain Deloitte & Touche LLP as
Independent Auditors for these chapter 11 cases.
The services which D&T will render to the Debtors include:
(a) auditing and reporting on the fiscal 2001 financial
statements of the Debtors;
(b) as may be agreed, D&T may assist with other matters as
the Debtors, their attorneys, or financial advisors may
request.
The Debtors provided D&T with a retainer in the amount of
$25,000. The Debtors will pay D&T its customary hourly rates and
reimburse D&T according to its customary reimbursement policies.
Houlihan's Restaurants, Inc. filed for chapter 11 protection
together with affiliates on January 23, 2002. Cynthia Dillard
Parres, Esq. and Laurence M. Frazen, Esq. at Bryan, Cave LLP
represent the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed an
estimated debts and assets of more than $100 million.
IT GROUP: Wants to Pay Up to $1.8MM of Foreign Vendors' Claims
--------------------------------------------------------------
The IT Group, Inc., and its debtor-affiliates seek entry of an
order authorizing, but not requiring, the Debtors to pay, in
their discretion and in the ordinary course of business, as and
when due, the Prepetition Claims of the Foreign Entities. The
Debtors estimate that the amount of Prepetition Claims owing to
Foreign Entities is no more than $1,800,000. The Debtors also
request that the Court authorize banks to honor any prepetition
checks drawn or fund transfer requests made for payment of
Prepetition Claims to Foreign Entities.
Harry J. Soose, the Debtors' Senior Vice President, Chief
Financial Officer and Principal Financial Officer, relates that
the Debtors are parties to numerous service contracts with
various governments and multinational corporations throughout
the world. Often, service contracts between a Debtor and a
domestic entity that calls for international provision of
services will be performed by a non-debtor affiliate of the
Debtors on foreign soil. Accordingly, in the ordinary course of
the Debtors' businesses, the Debtors transact business with
numerous Foreign Vendors to perform services and provide
materials and equipment that the Debtors use at foreign sites.
In addition, as a result of conducting business worldwide, the
Debtors pay taxes and other administrative fees to foreign
government entities. Such taxes include value added, sales and
gross receipt taxes.
Mr. Soose believes that payment of the Prepetition Claims is
critical to the Debtors' continued worldwide operations. Because
the Foreign Entities may not agree that they are subject to the
jurisdiction of this Court, the Debtors may be unable to rely on
the automatic stay to protect themselves or their foreign assets
from actions in foreign jurisdictions to collect obligations
that remain unpaid. Absent prompt and full payment, Mr. Soose
fears that the Foreign Vendors are likely not to provide the
goods and services the Debtors require to transact business
abroad. Even if such Foreign Vendors did not take such drastic
action, it is likely that they will delay providing such goods,
materials and equipment and, thereby, jeopardize the Debtors'
cash flow and expose them to significant liquidated damages. Mr.
Soose adds that absent payment on the Prepetition Claims owed to
Foreign Governmental Entities, the Debtors may lose their right
to conduct business in certain foreign jurisdictions. Such
actions would seriously impair the value of the Debtors' foreign
assets, would erode the Debtors' relationships with certain
foreign affiliates and would potentially diminish the recoveries
of all creditors. The Debtors also are concerned that some of
the Foreign Entities may exercise "self help" remedies and seize
valuable assets abroad to secure payment on the Prepetition
Claims. (IT Group Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
INTEGRATED HEALTH: Premiere Panel Taps BDO as Financial Advisors
----------------------------------------------------------------
The Premiere Committee in the chapter 11 cases of Integrated
Health Services, Inc., and its debtor-affiliates asks the Court
to authorize it to retain and employ BDO Seidman, LLP as
accountants and financial advisor pursuant to section 11 U.S.C.
Sec. 1103(a). The Premiere Committee retained the services of
BDO on January 11, 2002, and requests that the Court authorize
BDO's retention nunc pro tunc to January 11, 2002.
The Premiere Committee has selected BDO as its accountants and
financial advisors because of the firm's extensive experience in
and knowledge of business reorganizations under chapter 11 of
the Bankruptcy Code, and for BDO's particular experience in all
aspects of the healthcare industry. The Premiere Committee
believes that BDO is qualified to represent it in these cases in
a most cost effective, efficient, and timely manner.
Gerald J. D'Amato submits that to the best of his knowledge, and
BDO's knowledge, information and belief, BDO neither holds nor
represents any interest adverse to the Debtors, the Premiere
Group Debtors, or their estates in the matters for which it is
proposed to be retained. Accordingly, BDO believes that it is a
"disinterested person," as defined in section 101(14) of the
Bankruptcy Code and as modified by section 1107(b) of the
Bankruptcy Code and as required by section 327(a). It is the
Premiere Committee's understanding that from time to time. BDO
may have provided services, and likely may in the future provide
services, to certain of the Debtors' creditors or the Premiere
Group Debtors' creditors and various other parties potentially
adverse to the Debtors in matters unrelated to these Chapter 11
cases. If BDO discovers additional information that it
determines requires disclosure, BDO will file a supplemental
disclosure with the Court promptly.
The Premiere Committee contemplates that BDO will:
(a) Review the Debtors' balance sheets to determine the relative
relationship between assets and liabilities.
(b) Review the business, financial, managerial, and legal
relationships between Debtors and the Premiere Group for the
purpose of determining the advisability of substantive
consolidation.
(c) Review the use of pre-petition and post-petition loan
proceeds to determine how much, if any, was utilized by the
Premiere Group.
(d) Review and critique the "Memorandum addressing upstream
guaranty by IHS subsidiaries under the 1997 Citibank Credit
Facility.
(e) Review financial statements of entities comprising the
Premiere Group as appropriate.
(f) Review books and records of the entities comprising the
Premiere Group, including general and subsidiary ledgers and
account analyses, as appropriate.
(g) Meet with the Debtors' representatives and acquire necessary
information to accomplish all of the tasks described in the
application.
(h) Review operations of the Premiere Group to determine its
ability to function as a stand-alone entity.
(i) Assist the Premiere Committee in its review of the financial
aspects of a plan or plans of reorganization submitted by
the Debtors, or in arriving at a proposed plan(s) of
reorganization.
(j) Attend meetings of creditors, confer with representatives of
the creditor groups and their counsel, and attend
negotiation sessions with and among creditors, Debtors, the
lenders and other interested parties.
(k) Perform any other services that BDO may deem necessary in
their role as accountants and financial advisors to the
Premiere Committee or that may be requested by counsel for
the Premiere Committee.
If services are contemplated outside the scope indicated above,
BDO will submit an amended affidavit to the Court, expanding the
scope of the engagement.
BDO intends to work closely with the Premiere Committee and any
professional(s) the Premiere Committee may retain in these cases
to ensure that there is no unnecessary duplication of services
performed or charged to the Debtors' estates.
Subject to the Court's approval in accordance with section
330(a) of the Bankruptcy Code, BDO will charge compensation on
an hourly rate basis, plus reimbursement of actual, necessary
expenses incurred by the firm. The current hourly rates of the
firm for work of this nature are as follows at present:
Partner $330 to $550
Senior Manager $215 to $480
Manager $195 to $330
Senior $140 to $245
Staff $85 to $185
In the normal course of business, BDO revises its regular hourly
rates to reflect changes in responsibilities, increased
experience, and increased costs of doing business. Accordingly,
BDO requests that the aforementioned rates be revised to the
regular hourly rates that will be in effect from time to time.
(Integrated Health Bankruptcy News, Issue No. 28; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
INTERIORS INC: Appoints Mark J. Allen to Board & as President
-------------------------------------------------------------
Interiors, Inc., (OTCBB:INTXA) said that on December 27, 2001, a
change in control of the Company occurred following the
Company's issuance of 100,000 shares of newly created super-
voting Series F Preferred Stock to Paladin Trading Company Ltd.
The Series F Preferred Stock entitles the holder to elect 75% of
the total number of directors then constituting the whole Board
of Directors of the Company, and provides the holder with a
majority of the votes eligible to be cast at a meeting of the
shareholders of the Company.
The Series F Preferred Stock was issued as part of a Debt
Restructuring Agreement among the Company and certain of its
secured creditors dated December 27, 2001, pursuant to which the
Company restructured and reduced its obligations to such
creditors. The Company also permitted the uncontested
foreclosure by the secured creditors who had a first priority
lien on the capital stock of the Company's Petals subsidiary,
which collateralized the indebtedness owed by the Company to
such secured creditors pursuant to secured loan agreements
entered into by and between the Company and such secured
creditors in 1999.
The Company also announced that, pursuant to an asset purchase
agreement dated December 24, 2001, on December 27, 2001, it sold
all of the assets relating to its APF Master Framemakers
Division to APF Acquisition Corp., an affiliate of the then
Chairman, Chief Executive Officer and President of the Company.
The purchase paid by APF Acquisition for the assets of the APF
Master Framemakers Division was $1,750,000, consisting of (a)
the assumption by APF Acquisition of $1.0 million of the
Company's indebtedness to another of its secured creditors, as
evidenced by a $1.0 million secured promissory note of APF
Acquisition in favor of such creditor, and (b) execution and
delivery to the Company of a $750,000 secured promissory note of
APF Acquisition in favor of the Company, which may be reduced to
$500,000 if certain conditions are met, including prepayment and
obtaining release of other liabilities of the Company. In
addition, APF Acquisition Corp. assumed certain additional
liabilities of the Company. The closing of the sale of the APF
Master Framemakers Division was subject to the delivery of a
fairness opinion of and appraisal by Empire Valuation
Consultants, which deemed the consideration paid by APF
Acquisition to be fair to the Company from a financial point of
view. Such fairness opinion and appraisal were delivered to the
Company.
The Company also announced that subsequent to the closing of the
Debt Restructuring Agreement and the sale of the APF Master
Framemakers Division two of the three members of the Board of
Directors of the Company resigned as directors of the Company.
The Chairman of the Board thereupon appointed a designee of the
Series F Preferred Stock holder to fill one of the vacancies on
the Board of Directors created by the aforesaid resignations.
Subsequent to that appointment, the Chairman resigned from the
Board of Directors. On January 23, 2002, Mark J. Allen was
appointed to the Board by the aforementioned designee. Mr. Allen
subsequently accepted the position of President of the Company.
On January 31, 2002, the initial designee to the Board of
Directors tendered his resignation to the Board.
The Company also announced that on January 23, 2002, it
completed the sale of all of the capital stock of its indirect,
wholly-owned subsidiary, Concepts 4, Inc., to Homada LLC. At the
time of sale, the Company owed over $5 million to former
shareholders of Concepts 4 in purchase price installments and
notes, of which approximately $1.9 million was currently due and
payable by the Company, and which was secured by a pledge of 10
million shares of the Company's common stock. The purchase price
paid by Homada for Concepts 4 included Homada's assumption of
the indebtedness of the Company to the former shareholders of
Concepts 4 plus payment of an additional $1.5 million; $750,000
of which was paid in cash at closing, $125,000 of which was paid
by execution and delivery of an unsecured promissory note of
Homada which was paid on January 30, 2002, and $625,000 of which
was paid by execution and delivery of an unsecured promissory
note of Homada which is payable over five years. As a result of
the sale, the 10 million shares of Company stock held as
collateral for the indebtedness was returned to the Company and
retired. All cash proceeds from the sale of Concepts 4 were paid
directly to the Company's first priority senior secured lender.
Additional contingent purchase consideration may be payable
based upon the achievement of certain operating results of
Concepts 4 over the next three years.
The Company also confirmed that its 2001 annual meeting of
stockholders, originally scheduled for December 21, 2001 and
rescheduled for Friday, January 18, 2002, has been postponed and
will be conducted in the future on a date to be determined.
The transactions completed pursuant to the Debt Restructuring
Agreement, including the change in control, and the sale of the
APF Master Framemakers Division are described in the Company's
Current Report on Form 8-K, which was filed with the Securities
and Exchange Commission on January 23, 2002. The Company's sale
of its Concepts 4 subsidiary will be described in a Current
Report on Form 8-K to be filed on or before February 7, 2002.
The aforesaid sales of assets and subsidiaries have effectively
concluded the Company's previously disclosed formal plan adopted
by the Board of Directors in late 2000 to sell various assets of
the Company in order to reduce the Company's indebtedness.
KEYSTONE CONSOLIDATED: Noteholders Support Debt Restructuring
-------------------------------------------------------------
Keystone Consolidated Industries, Inc., (OTC Bulletin Board:
KESN) said that holders representing 85% of the principal amount
of its $100 million 9-5/8% Senior Secured Notes have committed
to support a plan to achieve an out of court restructuring of
the Company's obligations. Such plan of restructuring would
include, among other things, an offer to the holders of the
Company's Senior Secured Notes to exchange their notes for
either
(a) a discounted cash amount (subject to an aggregate limit
for holders electing such option) and common stock;
(b) new preferred equity and subordinated debt securities
of the Company; or
(c) subordinated unsecured debt securities of the Company.
The Company intends to distribute an offer to all holders of the
Company's Senior Secured Notes to exchange their Notes as
outlined above. The exchange offer will be subject to, among
other things, the success of continuing efforts to renew or
replace existing revolving credit facilities, securing new term
financing, reaching agreement on a proposed subordinated loan
from the State of Illinois and satisfactory restructuring of
other obligations of the Company, as well as attaining a
specified level of participation in the exchange offer. No
assurance can be given that all of these efforts will be
successful.
KMART: Court Okays Payment of Credit Card Processor Obligations
---------------------------------------------------------------
Kmart Corporation, and its debtor-affiliates are parties to
certain agreements with credit card companies and processors
pursuant to which the Debtors are able to accept credit card
purchases in their retail stores, subject to certain
adjustments, returns and refunds. The Debtors continued ability
to honor and process credit card transactions is essential to
the Debtors reorganization efforts and continued customer
loyalty. Without this ability, John Wm. Butler, Esq., at
Skadden, Arps, Slate, Meagher & Flom argues, the Debtors would
lose a major avenue for conducting sales transactions in the
ordinary course of their retail operations. Credit and debit
card transactions account for a significant percentage of sales
at Kmart's Domestic Retail Stores:
Card Name Approximate Annual Volume
--------- -------------------------
American Express $700,000,000
Discover $1,000,000,000
VISA $5,000,000,000
Mastercard $3,000,000,000
JCB $1,000,000
Kmart Capital One Mastercard $500,000,000
Debit cards $4,000,000,000
Under the terms of their agreements, the Debtors are required to
pay the credit card companies and processors fees for their
services, certain amounts of which may have accrued but remain
unpaid as of the Petition Date.
By Motion, the Debtors sought and obtained authority from
the Court to continue paying these fees in the ordinary course
of their business in order to avoid interruption of these vital
credit card processing services. For the fiscal year ended
prior to the commencement of theses cases, the Debtors paid
approximately $183,000,000 in credit card processing and related
fees. As of the Petition Date, the Debtors estimate that
approximately $1,500,000 in prepetition fees are owed to credit
card companies and processors. (Kmart Bankruptcy News, Issue No.
2; Bankruptcy Creditors' Service, Inc., 609/392-0900)
LTV CORP: Foundation to Extend Grant for Terminated Employees
-------------------------------------------------------------
The LTV Foundation said that it was planning to make a major
grant to a local charitable organization to be used to help meet
community needs resulting from the closure of LTV Steel. The
grant also would provide economic assistance to the steel
company's former employees, many of whom received no benefits at
the time of their termination. The Foundation has been
developing this program for the past five weeks and currently is
finalizing arrangements for the administration of the $14
million program. The LTV Foundation is a philanthropic
organization with separate assets not affected by the LTV
bankruptcy. After the conclusion of the hardship program, the
LTV Foundation will be closed.
"It is the Foundation's goal that these funds help former LTV
employees cope with the hardships caused by the loss of income
and benefits," said Glenn J. Moran, chairman of the LTV
Foundation. Mr. Moran also is the chairman and chief executive
officer of The LTV Corporation.
Eligible former LTV employees will receive more information
about the program within the next four weeks.
Throughout its 50-year history, The LTV Foundation has provided
grants to community service, education, healthcare and cultural
organizations serving its plant communities.
LEVEL 3 COMMS: Expects to be EBITDA Positive in 1st Quarter
-----------------------------------------------------------
Level 3 Communications, Inc. (Nasdaq: LVLT) issued the following
statement, which can be attributed to James Q. Crowe, chief
executive officer:
"On Jan. 29, 2002, we issued a news release that included
the following:
'Level 3 has a $1.775 billion Senior Secured Credit
Facility and is in compliance with all terms and conditions
under this facility as of December 31, 2001. Based on first
quarter 2002 projections, the company also expects to be in
compliance as of the end of the first quarter. If the current
rate of sales, cancellations, and disconnects were to continue,
the company may violate a revenue-based financial covenant as
early as the end of the second quarter. To the extent the
company's operational performance improves or it completes
acquisitions that generate additional revenue, a potential
violation of the covenant could be delayed beyond the second
quarter of 2002 or eliminated entirely.'
"This statement has obviously caused concern on the part of
a number investors, which has been further exacerbated by press
reports that seem to indicate that Level 3 was giving some sort
of implied notice of an impending filing for protection from its
creditors under the federal bankruptcy statutes. This
speculation is no doubt fueled by the spate of bankruptcy
filings in the telecommunications sector, including two this
very week.
"This is an incorrect interpretation of our statement. I
believe our situation is markedly different and financially much
better than the companies in our sector that have sought
bankruptcy protection.
"In the fall of 1999, Level 3 finalized an agreement to
borrow money from a group of financial institutions, primarily
commercial banks. This 'senior secured credit facility'
agreement provided for both a term loan that today is fully
drawn or borrowed at $1.125 billion and a $650 million revolving
loan (that is, a loan that can be borrowed, repaid and re-
borrowed over its term) which today has yet to be borrowed.
"The bank agreement contains several terms that Level 3
agreed to in return for receiving the loans. Since the
institutions loaning the money are keenly interested in being
repaid, a central part of the agreement is the terms and
schedule of interest and principal payments.
"As is customary for these credit facilities, Level 3's
senior secured credit facility agreement includes a series of
provisions, called covenants, that generally identify actions
that Level 3 is not permitted to take without prior bank
approval, and certain levels of financial and operational
performance that Level 3 must achieve or maintain to demonstrate
the financial and operational health of the business. The
covenants in Level 3's agreement include covenants relating to
network construction milestones, minimum revenues and
limitations on incurrence of additional debt.
"Since, as this past year has demonstrated, unforeseen
events do occur, the agreement specifies the process by which
covenants can be modified or waived, generally to address
conditions that were not anticipated at the time the original
agreement was completed. For modifications and waivers
considered central or core to the intent of the agreement, such
as payment schedules and interest rates, the agreement requires
-- in addition to the approval of Level 3 -- the affirmative
vote of 100% of the lenders. For other non-core covenant
modifications and waivers, including covenants designed to
measure the financial performance of the business, the agreement
requires, in addition to the approval of Level 3, an affirmative
vote of lenders having more than 50% of the commitments to make
loans to Level 3.
"As is common with such agreements, Level 3 and the lenders
have concluded a variety of covenant modifications and waivers.
Just this past month, the company and the lending banks agreed
to a covenant waiver to allow for the sale of certain of Level
3's Asian operations.
"The covenant referenced in the January 29th news release
is commonly referred to as the Minimum Telecom Revenue covenant.
"The Minimum Telecom Revenue covenant is calculated on a
quarterly basis based on revenue for the prior four quarters.
The covenant specifies a minimum of $1.5 billion in telecom
revenue as of year-end 2001. The required covenant level grows
to $2.3 billion by year-end 2002.
"Based on the fourth quarter results Level 3 announced on
January 29th, including the asset impairment charge that was
described in detail at that time, Level 3 is in full compliance
with all covenants under the senior secured credit facility.
"Based on the company's first quarter projections that were
also announced on January 29th, we expect to be in full
compliance with all covenants for the first quarter.
"It is possible that, if our current rate of sales and
current rate of both cancellations and disconnects continue, we
may have a covenant violation with respect to the Minimum
Telecom Revenue financial covenant later this year. A potential
financial covenant violation could occur after the second
quarter, depending on our results during that quarter. However,
to the extent Level 3's operational performance improves, or
Level 3 completes acquisitions that generate sufficient
incremental cash revenue that meets the requirements of the
Minimum Telecom Revenue covenant, Level 3 may never violate this
covenant.
"It is also worth noting that if we were to violate the
Minimum Telecom Revenue covenant, this would be considered a
financial covenant violation, which we believe is far less
serious than a potential payment violation. We believe that the
company's ability to service its debt, absent economic
improvement, has been enhanced significantly over the course of
the past year as we've restructured the balance sheet, sold our
Asian operations, and reduced expenditures in line with revenue.
As a result, we do not anticipate any scenario whereby we would
risk a payment violation.
"Recognizing, however, that we might violate a financial
covenant later in the year under certain scenarios, we have
begun discussions with JP Morgan Chase, the administrative agent
for our senior secured credit facility, to assess appropriate
modifications to the senior secured credit facility agreement.
As is customary for these kinds of amendments, banks look for
several concessions in exchange for these modifications,
including reductions in principal, higher interest rates or
changes to other terms of the agreement.
"We believe we will be able to resolve these issues prior
to any covenant violation.
"A number of parties have asked why Level 3 is different
from other companies in our sector that gave notice of potential
covenant violations and in very short order filed for protection
from their creditors under the Federal bankruptcy laws.
"We believe that there are clear differences between our
company and those that have sought bankruptcy protection. These
differences include:
-- As a matter of fundamental strategy, Level 3
prefunded its operations to free cash flow breakeven, including
the cost of interest and principal payments. As a consequence,
we had the available liquidity to deal with both the effects of
the economic slowdown and to take advantage of opportunities to
improve cashflow. The recently announced acquisition of
McLeodUSA's ISP access business and the subsequent, related
announcement of a $100 million plus contract with SBC is a clear
example.
-- Over one year ago, we announced a corporate-wide
effort to focus our customer sales efforts on established
companies with growing needs for our services. The completion
of our U.S. and European networks and the development of unique
operating capabilities like the award winning ONTAP(SM)
provisioning system have greatly aided this effort. The results
are apparent in the substantial number of customer wins with
companies like AOL, Microsoft, Verizon, Sony and Cox
Communications.
-- Over one year ago, Level 3 began taking actions to
adjust our cost and capital structure to what we saw as an
accelerating slowdown in the telecom industry. We cut capital
expenditure projections by approximately $5 billion between the
beginning of 2001 and the time at which we estimate we will
achieve free cash flow breakeven. We also cut operating expense
projections by approximately $1.5 billion over the same period.
Finally, we reduced debt by about $2 billion on what we believe
are favorable terms. This is in stark contrast to many of our
competitors, who indicated that they were experiencing no
difficulties during the first half of 2001, and as a result did
not take the difficult steps to reduce costs and reduce
leverage.
-- As a result of the actions that we have taken, we
are able to reiterate our conviction that we remain fully funded
to free cash flow breakeven, with an adequate cushion, in
accordance with our business plan. Our confidence is
underscored by our recent announcement that we expect to be
EBITDA positive for the first quarter and remain so in the
future.
"We believe that this is a significant milestone,
particularly given the fact that we completed our network less
than one year ago.
-- Finally, and of critical importance, is the
contrast between Level 3's possible covenant violation and those
of certain companies that subsequently sought protection from
their creditors under the bankruptcy statutes. If we were to
violate the Minimum Revenue Telecom covenant, this would be a
non-payment covenant violation, which, again, we believe is far
less serious than a potential payment violation.
"Based on our financial situation as it exists today, we do
not envision any scenario whereby Level 3 would have a payment
default with respect to not only our senior secured credit
facility, but also any other Level 3 debt. As a consequence, we
also do not anticipate a scenario under which Level 3 would
expect to seek protection from its creditors under the
bankruptcy statutes.
"Over the past year we have reiterated our conviction that
the services we sell are a fundamental part of the US and global
economy. Although the timing is hard to predict with accuracy,
the current lack of investment in our industry, we believe, will
lead to an imbalance between supply and demand in the
foreseeable future.
"Our goal has been, and continues to be, to ensure that
Level 3 has the operational and financial strength to take
advantage of the opportunities that are sure to be available as
our economy begins to rebound. I am confident that we are in
just such a position."
Level 3 (Nasdaq: LVLT) is a global communications and
information services company offering a wide selection of
services including IP services, broadband transport, colocation
services and the industry's first Softswitch based services.
Its Web address is http://www.Level3.com
LODGIAN INC: Seeks Appointment of Joint Fee Review Committee
------------------------------------------------------------
Lodgian, Inc., and its debtor-affiliates ask the Court appoint a
joint fee review committee, to be composed of:
A. Brian Masumoto, Esq., a representative of the Office of
the United States Trustee for this District or his
designee;
B. Dan Ellis, Esq., Vice President of Legal Affairs and Risk
Management of the Debtors; and
C. a designated member of the Official Committee of Unsecured
Creditors.
Michael J. Edelman, Esq., at Cadwalader Wickersham & Taft in New
York, assures the Court that the proposed members of the Joint
Fee Review Committee, as identified, have experience in respect
of professional compensation and interest in the administration
of the chapter 11 cases.
Mr. Edelman submits that the duties of the Joint Fee Review
Committee will be to review all billing statements and
applications filed by Covered Professionals for compliance with
the applicable provisions of the Bankruptcy Code, the Federal
Rules of Bankruptcy Procedures, the Local Rules of the United
States Bankruptcy Court for the Southern District of New York,
the Fee Guidelines promulgated by the Executive Office of the
United States Trustee, and any applicable orders of this Court
and make such reports to the Court as may be appropriate.
Mr. Edelman states that if the Joint Fee Review Committee
concludes that any billing statement submitted or application
filed by a Covered Professional fails to comply with any of the
Compensation Requirements, the Joint Fee Review Committee shall
contact such Covered Professional in an effort to resolve any
potential objection. If the Joint Fee Review Committee and the
Covered Professional are not able to resolve any potential
objection on a consensual basis, the Joint Fee Review Committee
will file an objection in conformity with the Interim
Compensation Order or other applicable orders of this Court
setting forth with particularly the manner in which it believes
the statement or application filed by the Covered Professional
fails to comply with the Compensation Requirements.
With respect to interim or final fee applications filed by
Covered Professionals, Mr. Edelman tells the Court that the
Joint Fee Review Committee may serve and file an appropriate
statement with the Court setting forth the results of its review
of such applications and whether the application filed by each
Covered Professional complies with the Compensation Requirements
and any other relevant comments that it deems necessary for
consideration of the application. (Lodgian Bankruptcy News,
Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900)
MAGNUM HUNTER: Proposed Merger with Prize Energy Corp. Approved
---------------------------------------------------------------
The Boards of Directors of Magnum Hunter Resources, Inc., and
Prize Energy Corp.. have each unanimously approved a merger that
will combine the two companies. The Boards of Directors of
Magnum Hunter and Prize believe that the merger creates a mid-
size independent oil and gas company with a:
- substantially larger equity market capitalization,
greater liquidity and enhanced visibility which may
result in a higher valuation in the capital markets,
- larger, more diversified and long-lived oil and gas
reserve base together with an acreage position that
provide a balanced portfolio of development and
exploration growth opportunities,
- lower operating and corporate cost structure, and
- stronger competitive position and greater access to
additional business opportunities, than either company
would have on a stand-alone basis.
The Boards believe that the merger will benefit the stockholders
of both companies, and is asking for stockholder support in
voting for the merger proposals at its meetings. The merger
cannot be completed without the approval of the merger proposals
by both Magnum Hunter stockholders and Prize stockholders. A
second proposal relating to an increase in Magnum Hunter's
authorized shares of common stock does not, however, need to be
approved by Magnum Hunter stockholders in order for the merger
to be completed.
The combined Company will be owned approximately 52% by Magnum
Hunter stockholders and 48% by Prize stockholders, without
taking into account the options and warrants that will be
outstanding after the merger. The Board of Directors of the
combined Company will consist of seven members of the Magnum
Hunter Board and two members of Prize's Board. The Chairman,
President and Chief Executive Officer of the combined Company
will be Gary C. Evans, Magnum Hunter's Chairman, President and
Chief Executive Officer.
Magnum Hunter, the independent exploration and production
company, has proved reserves of 367 billion cu. ft. of natural
gas equivalent (74% is natural gas) in the midcontinent, Permian
Basin, and onshore and offshore Gulf of Mexico (where it
partners with Remington Oil and Gas and Wiser Oil). It owns
interests in 3,000 producing wells. In addition, Magnum Hunter
owns more than 480 miles of gas gathering systems and a half
interest in three gas processing facilities. The company markets
gas in the western US through 30%-owned NGTS and provides oil
field services through subsidiary Gruy Petroleum Management. In
2001 the company announced plans to acquire Texas-based Prize
Energy for $320 million. Natural gas distributor ONEOK owns 22%
of Magnum Hunter. At September 30, 2001, the company had a
working capital deficiency of about $7 million, and a total
stockholders' equity deficit of $118 million.
MCLEODUSA: S&P Drops Ratings to D Following Bankruptcy Filing
-------------------------------------------------------------
Standard & Poor's lowered its senior secured bank loan, senior
unsecured debt, preferred stock, and preliminary shelf
registration ratings on McLeodUSA Inc. to 'D' and removed them
from CreditWatch following the company's filing of bankruptcy
protection.
In addition, the company's corporate credit rating was revised
to 'D' from 'SD'. The corporate credit rating had been lowered
to 'SD' on Jan. 4, following the company's missed interest
payment on its 11.375% senior unsecured notes.
Ratings Lowered and Removed from CreditWatch
McLeodUSA Inc. TO FROM
Senior secured bank loan D C
Senior unsecured debt D C
Preferred stock D C
Shelf registration:
Senior unsecured debt D prelim. C
Preferred convertible stock D prelim. C
Rating Revised
McLeodUSA Inc. TO FROM
Corporate credit rating D SD
DebtTraders reports that McLeodusa Inc.'s 11.375% bonds due 2009
(MCLD2) are trading between 24.5 and 25.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MCLD2for
real-time bond pricing.
MERISANT CO: S&P Affirms BB- Ratings on Credit and Secured Notes
----------------------------------------------------------------
Standard & Poor's affirmed the double-'B'-minus corporate credit
and senior secured ratings for the company were affirmed. In
addition, its outlook on Merisant Co. is revised to positive
from stable.
The affirmation takes into the account the firm's proposed $70
million increase to its existing secured credit facility. The
proceeds are to be used to refinance higher-interest
subordinated debt.
The outlook revision reflects the company's improvement in
credit protection measures because of paying down debt ahead of
schedule. Standard & Poor's expects the company's financial
profile to continue to strengthen.
The ratings reflect Merisant Co.'s concentration of sales and
earnings in one main product line, as well as its leveraged
financial profile. Somewhat offsetting these factors are the
company's leading global market share in the sugar substitute
industry, its international diversification, and its solid cash
flow generation.
Merisant is a processor and marketer of sugar substitutes for
use as a food and beverage additive. More than 80% of the
company's sales and earnings are generated by aspartame-based
products sold under the Equal, Canderel, and NutraSweet brand
names. Although these brands have a global presence, the company
has a narrow product portfolio. In the past, performance has
been negatively impacted by scientific research studies, and the
company will continue to remain vulnerable to changes in
consumer perception surrounding sweetener products. However,
aspartame is one of the most thoroughly tested products by the
FDA and it has been in use since 1979. Historically,
considerable resources were spent on developing Equal's and
Canderel's brand image and awareness. Television advertising and
celebrity endorsements have established these brands as global
leaders, resulting in a strong No. 1 worldwide market share of
about 40% on a dollar basis.
Merisant's business profile is helped by the fact that its
products are sold in more than 100 countries. Sales are
diversified among four regions: North America,
Europe/Africa/Middle East, Latin America, and Asia/Pacific.
Latin America and Asia/Pacific represent the fastest-growing
regions due to the increasing income levels in emerging markets,
as compared to the more mature U.S. and European markets.
Credit measures are appropriate for the rating. Total debt to
EBITDA was in the 3.0-3.5 times range for 2001, and EBITDA
coverage of interest expense was in the 2.5x-3x range. Standard
& Poor's expects EBITDA coverage to improve to over 4x, as a
result of the interest savings associated with the refinancing
and lower debt balances. Capital spending needs are minimal
because the company's products do not require heavy
manufacturing. Free cash flow is expected to be sufficient to
cover material amortization requirements in the near term.
Adequate financial flexibility is provided by a $40 million
revolving credit facility.
Outlook: Positive
The outlook reflects the expectation that Merisant will continue
to generate solid free cash flow while maintaining its strong
market position. Future growth in consumption of sugar
substitutes is expected to be driven by favorable demographics.
As the company's credit measures improve, the ratings could be
raised in the intermediate term.
MERISTAR HOTELS: Credit Facility Maturity Extended to Feb. 2003
---------------------------------------------------------------
MeriStar Hotels & Resorts (NYSE: MMH), the nation's largest
independent hotel management company, announced results for the
fourth quarter and full year ended December 31, 2001.
For comparative purposes, the results for the three and 12
months ended December 31, 2000, are presented on a pro forma
basis as if the company's 106 leases with MeriStar Hospitality
Corporation (NYSE: MHX) that were converted to management
contracts on January 1, 2001, had been converted on January 1,
2000. In addition, the company announced that it has amended its
senior credit facility.
Fourth-quarter revenues for 2001 declined 11.0 percent to $65.0
million. Excluding non-recurring items, net loss for the quarter
was $1.7 million compared to net loss of $0.5 million in the
2000 fourth quarter. Recurring earnings before interest, taxes,
depreciation and amortization (EBITDA) decreased 6.1 percent to
$3.7 million. During the fourth quarter, the company recorded
$1.6 million of non-recurring charges related to restructuring
at its corporate headquarters and BridgeStreet Corporate Housing
Worldwide subsidiary.
Same-store revenue per available room (RevPAR) for all full-
service managed hotels in the 2001 fourth quarter declined 22.7
percent to $53.84. Occupancy declined 14.7 percent to 56.1
percent and average daily rate (ADR) fell 9.3 percent to $96.02.
Same-store RevPAR for all limited-service leased hotels in the
2001 fourth quarter declined 10.4 percent to $43.45. ADR
declined 2.9 percent to $77.04, and occupancy decreased 7.7
percent to 56.4 percent.
"While the events of September 11 were unprecedented,
management's extensive experience in all phases of the economic
cycle played an important role in controlling costs and
weathering the dramatic falloff in travel," said Paul W.
Whetsell, chairman and chief executive officer of MeriStar. "We
had already implemented cost containment policies in response to
the declining economy in the second quarter and modified them
following the terrorist attacks. As a result, in the fourth
quarter we held gross operating profit margins to a decline of
approximately 10 basis points for each 100 basis point drop in
RevPAR at our full-service managed hotels and improved margins
by 80 basis points at our limited-service leased hotels."
New Management Contracts
During the 2001 fourth quarter, MeriStar added six new hotel
contracts: the Marriott Hotel at Vanderbilt Nashville; the
Nathan Hale Inn & Conference Center at the University of
Connecticut; and four hotels owned by MeriStar Hospitality that
previously were leased and managed by Prime Hospitality.
"During tougher economic times, properties tend to change hands
more frequently and owners look to stronger management companies
with a proven track record, like MeriStar," Whetsell noted. "We
are aggressively reaching out to the hotel ownership and
investment communities to find new hotel management
opportunities."
Due to a sharp decline in corporate travel during the fourth
quarter, MeriStar continued to selectively reduce its
BridgeStreet division's U.S. corporate housing inventory. "We
can expand or contract our inventory in response to shifting
economic trends," Whetsell said. "Based on our recent inventory
and cost reductions, we expect the EBITDA contribution from
BridgeStreet to increase by $2 million to $3 million in 2002.
Our European operations remain strong, and we continue to look
at expansion opportunities in Europe."
Credit Facility Amendment
The company also announced that it had amended its senior
secured credit facility to provide more flexibility with certain
financial covenants and allow it to extend the maturity from
February 2002 until February 2003. The interest rate on the
revolver increases 100 basis points to LIBOR plus 450 basis
points.
"The amended facility gives us much more flexibility to operate
within our business plan for 2002," said John Emery, MeriStar
president and chief operating officer. "We expect to refinance
the facility during 2002."
Full-Year Results
Excluding non-recurring items, net loss for 2001 was $3.7
million compared to net income of $4.5 million in 2000. Revenues
for the 12 months increased 9.6 percent to $305.9 million.
Recurring EBITDA declined 21.6 percent to $18.7 million.
Same-store average daily rate (ADR) for all full-service managed
hotels was down 1.7 percent to $105.73 in 2001, while occupancy
decreased 8.0 percent to 65.9 percent. Revenue per available
room (RevPAR) declined 9.6 percent to $69.64, compared to 2000.
ADR for all limited-service leased hotels improved 2.8 percent
to $80.22, while occupancy declined 7.6 percent to 63.6 percent.
RevPAR decreased 5.0 percent to $51.03.
NYSE Notification
MeriStar also announced that it has received notification from
the New York Stock Exchange (NYSE) that MeriStar is not in
compliance with the continued listing standards of the NYSE
because MeriStar's average closing share price was less than
$1.00 over a consecutive 30-day trading period. The NYSE's
continued listing standards require that MeriStar bring its 30-
day average closing price and its share price above $1.00 by
June 20, 2002, subject to certain conditions. MeriStar is
currently evaluating its alternatives with regard to complying
with this standard.
Outlook
"The aftereffects of the terrorist attacks on the travel
industry are slowly abating, however, the economy remains
sluggish," Emery said. "We have seen steady month-to-month
improvements in RevPAR in the fourth quarter but still have a
lot of ground to make up. We expect to achieve long-term
benefits from the adjustments we have made as the economy begins
to rebound."
For the first quarter of 2002, MeriStar expects EBITDA of $1.0
million to $1.5 million and a net loss per common share of
0$0.07 to $0.06. For the full year 2002, the company expects to
generate EBITDA of $20 million and earnings per share of $0.01.
Key Financial Information
As of December 31, 2001:
- Total debt of $118.5 million
- Total debt to annual EBITDA of 5.5x
- Senior debt to annual EBITDA of 3.8x
- Annual interest coverage ratio of 1.9x
- Average cost of debt of 8.8 percent
MeriStar Hotels & Resorts operates 275 hospitality properties
with more than 57,000 rooms in 41 states, the District of
Columbia, and Canada, including 54 properties managed by
Flagstone Hospitality Management, a subsidiary of MeriStar
Hotels & Resorts. BridgeStreet Corporate Housing Worldwide, a
MeriStar subsidiary, is one of the world's largest corporate
housing providers, offering upscale, fully furnished corporate
housing throughout the United States, Canada, the United
Kingdom, France and 35 additional countries through its network
partners.
For more information about MeriStar Hotels & Resorts, visit the
company's Web site: http://www.meristar.com
NCS HEALTHCARE: Taps Brown Gibbons to Seek Debt Workout Options
---------------------------------------------------------------
NCS HealthCare, Inc., (OTC Bulletin Board: NCSS.OB) announced
financial results for its fiscal second quarter ended December
31, 2001.
For the three months ended December 31, 2001, revenues increased
2.7% to $161,708,000 from $157,461,000 recorded in the second
quarter of the previous fiscal year. Net loss for the quarter
was $5,239,000 as compared to net loss of $7,203,000 for the
fiscal second quarter of the previous year.
For the six months ended December 31, 2001, revenues increased
1.0% to $319,544,000 from $316,483,000 recorded in the six
months ended December 31, 2000. Net loss for the six months
ended December 31, 2001 was $10,418,000 as compared to net loss
of $14,316,000 for the comparable period in the previous fiscal
year.
The results for the three and six month periods ended December
31, 2001 reflect the previously announced adoption of Statements
of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations" and No. 142, "Goodwill and Other Intangible
Assets," which resulted in discontinuing the amortization of
goodwill effective July 1, 2001. As a result of the early
adoption of SFAS No. 142, net loss for the three and six month
periods ended December 31, 2001 was reduced by $2.6 million and
$5.2 million, respectively. As required by SFAS No. 142, the
results for the three and six month periods ended December 31,
2000 are as originally reported and include goodwill
amortization.
Kevin B. Shaw, President and Chief Executive Officer of NCS
commented, "We continue to be focused on customers and have
begun to experience increased demand for our services. Nursing
home customers are benefiting from the timely information we
provide to help them manage their pharmacy utilization and
overall costs."
Gross margin for the three months ended December 31, 2001 was
16.3% as compared to 17.2% for the previous quarter. The
decline in gross margin was due primarily to a change in service
mix, the continued shift toward lower margin payer sources such
as Medicaid and third party insurance, and lower Medicaid and
insurance reimbursement levels. Medicaid and insurance revenues
accounted for 59.8% of revenues in the fiscal 2002 second
quarter versus 59.4% in the previous quarter and 57.0% in the
second quarter of fiscal 2001.
Selling, general and administrative expenses as a percent of
revenues declined to 15.5% for the fiscal 2002 second quarter as
compared to 16.0% of revenues during the previous quarter. This
improvement was primarily due to lower bad debt expense
incurred during the most recent quarter.
Depreciation and amortization expense for the three months ended
December 31, 2001 was $3.3 million, as it was during the
previous quarter. Net interest expense decreased to $6.5 million
for the most recent quarter as compared to $7.0 million for the
quarter ended September 30, 2001 primarily due to lower interest
rates.
Mr. Shaw added, "We continued to improve our working capital
position as net days sales outstanding at December 31, 2001 were
reduced to 52 days from 54 days. In addition, cash collected as
a percentage of pharmacy operating revenues remained strong."
The Company early adopted SFAS No. 142 effective July 1, 2001.
Under SFAS No. 142, goodwill and other indefinite lived
intangible assets will no longer be amortized. Under this non-
amortization approach, goodwill and other indefinite lived
intangible assets will be reviewed for impairment using a fair
value based approach as of the beginning of the year in which
SFAS No. 142 is adopted. The Company was required to complete
the initial step of the transitional impairment test by December
31, 2001 and is required to complete the final step of the
transitional impairment test by the end of the current fiscal
year. Going forward, these assets will be tested for impairment
on an annual basis or upon the occurrence of certain triggering
events as defined by SFAS No. 142. Any impairment loss resulting
from the transitional impairment test will be recorded as a
cumulative effect of a change in accounting principle as of the
beginning of the current fiscal year. The Company has completed
the initial step of the transitional impairment test, which
indicates that the goodwill of the Company is potentially
impaired. The Company does expect that it will be required to
recognize an impairment loss as a result of the adoption of SFAS
No. 142. The amount of the impairment loss is not known at this
time; however, it could be material to the Company's financial
position.
As previously reported, net losses incurred during fiscal 2000
resulted in certain technical covenant defaults under the
Company's senior credit facility. The Company continues to make
all interest payments to its senior lenders in accordance with
the credit facility. The Company has elected to not make the
$2,875,000 interest payments due February 15, 2001 and August
15, 2001 on its 5-3/4% Convertible Subordinated Debentures due
2004. As a result of these non-payments, the Company has
received a formal Notice of Default and Acceleration and Demand
for Payment from the indenture trustee.
Brown, Gibbons, Lang & Company Securities, Inc. (BGL&Co.)
continues to act as the Company's financial advisor in its
continuing discussions with the Company's senior lenders and
with an ad hoc committee of holders of the 5-3/4% Convertible
Subordinated Debentures due 2004, with respect to the defaults
and to restructuring options. BGL&Co. is also discussing
various strategic alternatives with third parties. No decision
has been made to enter into any transaction or as to what form
any transaction might take. NCS can give no assurance with
respect to the outcome of these discussions or negotiations.
NCS HealthCare, Inc., is a leading provider of pharmaceutical
and related services to long-term care facilities, including
skilled nursing centers, assisted living facilities and
hospitals. NCS serves approximately 210,000 residents of long-
term care facilities in 33 states and manages hospital
pharmacies in 14 states.
NATIONSRENT INC: Wants to Hire Ordinary Course Professionals
------------------------------------------------------------
Daniel J. DeFranceschi, Esq., at Richards Layton & Finger P.A.
in Wilmington, Delaware, relates that the employees of
NationsRent Inc., and its debtor-affiliates, in the day-to-day
performance of their duties, regularly call upon certain
professionals, including accountants; attorneys; actuaries;
environmental, financial and other consultants and
professionals, to assist them in carrying out their assigned
responsibilities. Because of the magnitude and breadth of the
Debtors' businesses and the geographic diversity of the
professionals regularly retained by the Debtors, it would be
costly, time-consuming and administratively cumbersome for the
Debtors and this Court to require each Ordinary Course
Professional to apply separately for approval of its employment
and compensation. The Debtors submit that the uninterrupted
service of the Ordinary Course Professionals is vital to the
Debtors' continuing operations and their ability to reorganize.
The Debtors do not believe that any of the Ordinary Course
Professionals will have average monthly fees of more than
$50,000 during the pendency of these chapter 11 cases. However,
if the average monthly fees of any Ordinary Course Professional
exceed $50,000 during the preceding six-month period ending at
the conclusion of the prior calendar month, Mr. DeFranceschi
assures the Court that the Debtors will seek to retain that
professional. The Debtors propose that no Ordinary Course
Professional will receive payment for post-petition services
rendered until such professional files an affidavit with the
Court setting forth that such professional does not represent
or hold any interest adverse to the Debtors or their estates
with respect to the matters for which the professional seeks
retention. The Debtors propose that they serve each Retention
Affidavit on the Office of the U.S. Trustee, counsel to the
Debtors' proposed post-petition lenders and counsel to any
statutory committee appointed in these cases.
The Debtors believe that the Ordinary Course Professionals are
not "professionals" within the meaning of section 327(a) of the
Bankruptcy Code. In particular, Mr. DeFranceschi points out that
the Ordinary Course Professionals generally will not be involved
in the administration of these chapter 11 cases, but instead
will provide services in connection with the Debtors' ongoing
business operations and the resolution of any related
operational difficulties. To the extent services provided by the
Ordinary Course Professionals involve some element of
administration of the Debtors' estates, that involvement will be
minimal. As a result, the Debtors do not believe that the
retention and payment of the Ordinary Course Professionals must
be approved by the Court.
Mr. DeFranceschi submits that the Debtors will seek specific
Court authority, to employ all professionals materially involved
in the actual administration of these chapter 11 cases. In
addition, no Ordinary Course Professional with monthly fees
averaging in excess of $50,000 for services rendered to a Debtor
during any Reporting Period will receive any future payments
from the Debtors until the Debtors first obtain an order of the
Court authorizing the retention and employment of the
professional. Notwithstanding the foregoing, the Debtors may
pay, without the prior review or approval of the Court, all fees
and expenses incurred by an Ordinary Course Professional:
A. through and including the end of the Reporting Period in
which the professional's fees first exceed the monthly
average fee limit established for the particular professional
by any order granting this Motion or
B. prior to the professional having a material involvement in
the administration of a Debtor's estate; provided, however,
that, once an Ordinary Course Professional is retained in
these cases all of its fees and expenses incurred from and
after the Petition Date will be subject to the review and
approval of the Court in connection with the professional's
final fee application.
In connection with the foregoing, commencing with the last day
of the calendar month that is at least 180 days after the
Petition Date, and every six months thereafter, Mr. DeFranceschi
informs the Court that the Debtors will file a statement with
the Court, and serve that statement on the U.S. Trustee, counsel
to the DIP Lenders and counsel to any statutory committee
appointed in these cases, that includes the following
information:
A. any Ordinary Course Professionals employed by the Debtors
during the previous 180 days; and
B. for each Ordinary Course Professional, its name, the
aggregate amounts paid as compensation for services rendered
and reimbursement of expenses incurred by such professional
during the Reporting Period and a general description of
the services rendered by such professional. (NationsRent
Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
PACIFIC GAS: Files Plan Supplement Documents for Plan of Reorg.
---------------------------------------------------------------
As requested by the U.S. Bankruptcy Court, PG&E Corporation
(NYSE: PCG) and Pacific Gas and Electric Company jointly filed
the plan supplement documents for the plan of reorganization.
The approximately 900-page filing shows the progress PG&E has
made in its Chapter 11 case and provides additional information
on several issues previously addressed in the plan and discussed
in Court, including:
-- Master Separation and Distribution Agreement -- Provides
additional detail on the separation of the companies and the
spin-off of the utility from the holding company and establishes
the framework for the future, arms length relationships between
the new entities.
-- Pre-petition Contracts and Leases -- The plan supplement
lists the ongoing contracts and unexpired leases that are being
assumed and assigned to one of the new companies or rejected.
Over 7,000 contracts and leases will be assumed and assigned to
one of the new entities. 10 contracts will be rejected. One
rejected contract relates to fiber optic cable installation and
the remainder relate to the California Power Exchange.
-- Tax Agreement -- The tax sharing agreement defines how
the utility's taxes will be allocated between the new entities
and the reorganized utility.
-- Transfer of assets to Newco -- A list of assets that the
utility will transfer to the Newco or its subsidiaries under the
plan of reorganization. Examples include: administrative and
technical services facilities and equipment and property on or
near generating facilities.
In the plan of reorganization, assets not identified to be sold
or transferred will remain with the reorganized utility.
PEOPLEPC INC: Special Shareholders' Meeting Set for March 15
------------------------------------------------------------
A Special Meeting of the stockholders of PeoplePC Inc., a
Delaware corporation, will be held on March 15, 2002 at 10:00
a.m., local time. (Location of the Meeting is yet to be
announced). At the Special Meeting, stockholders will be asked
to approve:
1. The issuance of 437,500,000 shares of the Company's
common stock, which will exceed 20% of the total common
stock outstanding, upon conversion of the Company's
Series B Preferred Stock sold in its recent private
placement.
2. Amendments to the Company's 2000 Stock Plan to increase
the number of shares of common stock reserved for
issuance thereunder by 126,404,098 shares and to
increase the Internal Revenue Code Section 162(m)
limits on the number of options and stock purchase
rights granted in any fiscal year of the Company or in
connection with an individual's initial employment with
the Company from 2,000,000 to 40,000,000.
3. An amendment to the Company's Amended and Restated
Certificate of Incorporation to effect a reverse stock
split of not less than 1 for 15 and not more than 1 for
20 and to authorize the Company's Board of Directors to
determine which, if any, of these reverse stock splits
to effect.
4. To approve an amendment to the Company's Amended and
Restated Certificate of Incorporation to increase the
number of authorized shares of common stock from
500,000,000 to 750,000,000.
5. To transact such other business as may properly come
before the meeting or any adjournment therof.
Only stockholders of record at the close of business on February
14, 2002 are entitled to notice of and to vote at the Special
Meeting.
The company sells three-year memberships for about $25 a month
and in return, customers receive a name-brand computer (replaced
every three years) with warranty, Internet access, and access to
its buyer's club, which offers discounts for other businesses
(such as E*TRADE and BUY.COM). The company also sells
memberships just to its buyer's club and has a program that
sells products to businesses' employees. Wholesale distributor
Ingram Micro supplies and distributes PeoplePC's computer
products and processes its orders. Formed in late 1999, PeoplePC
is about 31%-owned by SOFTBANK and its affiliates; co-founder,
chairman, and CEO Nick Grouf owns about 18%. At September 30,
2001, the company's upside-down balance sheet showed a total
stockholders' equity deficit of $26 million.
PHICO INSURANCE: Gets Approval to Commence Liquidation Process
--------------------------------------------------------------
Pennsylvania Insurance Commissioner M. Diane Koken announced
that the Commonwealth Court has granted her petition to enter an
Order of Liquidation for PHICO Insurance Company of
Mechanicsburg, Cumberland County. The company will be in
liquidation effective immediately.
PHICO's primary business was writing medical-malpractice
insurance for health systems, hospitals and physicians. In
addition, PHICO wrote workers' compensation insurance.
"An accurate financial picture of PHICO has shown us that
further attempts to rehabilitate the company would be futile,"
Koken said. "We had no choice but to liquidate PHICO in order
to avoid further risk of loss to PHICO's policyholders,
claimants and creditors.
"Our responsibility now is to take the necessary steps to
orderly liquidate the company. The court's liquidation order
triggers the state guaranty associations to pay policyholder
claims to the maximum levels allowed by law."
In August 2001, PHICO filed a quarterly statement that reflected
a surplus of only $6.8 million -- a substantial and alarming
decrease from its year-end 2000 surplus of more than $127
million. This diminished level of surplus placed PHICO
Insurance Company at mandatory control level under
Pennsylvania's Risk Based Capital (RBC). As a result, the
Insurance Department assumed control of PHICO to stabilize the
company and determine whether a plan of rehabilitation would be
viable.
"As part of the rehabilitation process, we engaged independent
actuarial consultants to perform a thorough financial analysis
focused on the company's loss and loss adjustment expense
reserves," Koken said. "This analysis concluded that the
company's previous estimates of loss reserves were substantially
understated. In fact, this recent analysis showed that a
reserve deficiency exceeding $250 million existed as of June 30,
2001.
"Insurance companies must establish reserves sufficient to pay
claims. PHICO Insurance Company did not establish adequate
reserves, nor does the company have the assets available to
cover the shortfall. This gap between assets and liabilities
renders the company insolvent."
With headquarters in Mechanicsburg, PHICO Insurance Company was
licensed to write insurance in 50 states, the District of
Columbia and Puerto Rico. In 2000, the company's direct written
Premiums were in excess of $242 million. The states with the
largest number of policyholders include Pennsylvania, Texas,
Florida, Indiana and New Jersey.
State law requires that all remaining in force PHICO policies be
cancelled in 30 days. Questions from policyholders concerning
claims or policy matters may call toll-free 1-800-382-1378,
locally (717) 766-1122 or log on to www.PHICO.com.
A copy of the Order of Liquidation can be obtained through the
Insurance Department's Web site via the PA PowerPort at
http://www.state.pa.usor directly at
http://www.insurance.state.pa.us
Commissioner Koken's written statement regarding PHICO Insurance
Company also is available on the Insurance Department's Web
site. Individuals without Internet capability may call (717)
787-3289 to request a copy.
PHOTOWORKS INC: Robert A. Simms Discloses 6.83% Equity Stake
------------------------------------------------------------
Robert A. Simms beneficially owns 1,137,144 shares of the common
stock of PhotoWorks Inc. with sole voting and dispositive
powers. 1,137,144 share represents 6.83% of the outstanding
common stock of the Company.
Formerly Seattle FilmWorks, the company offers -- primarily
through regular and electronic mail -- 35mm film, photo
processing, and services that allow users to store images on
disks, CDs, and online. It also provides software and services
that enable users to turn photos into digital albums, screen
savers, and cards. In addition to selling via mail-order,
PhotoWorks operates through some 35 retail stores in Washington
and Oregon. Started in 1976, PhotoWorks is transforming itself
into an online photo catalog and provider of imaging services in
light of slumping sales and the growing popularity of digital
cameras. CEO Gary Christophersen owns about 5% of the company.
At June 30, 2001, the company's balance sheet showed a working
capital deficit of over $5 million.
POLAROID CORPORATION: Taps Groom Law Group as Special Counsel
-------------------------------------------------------------
Polaroid Corporation, and its debtor-affiliates seek Court's
authority to employ Groom Law Group, Chartered as special
counsel nunc pro tunc to October 12, 2001.
Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom,
in Wilmington, Delaware, explains that Groom will provide the
Debtors legal services on employee benefit matters arising from
the Chapter 11 cases only. Groom has a wide experience
representing debtors on employee benefits matters like the cases
of:
- Stone & Webster, Inc.
- Sterling Chemical Holdings, Inc.
- Montgomery Ward Holding Corp.
- Continental Airlines, Inc.
- Westmoreland Coal Corp.
- New Valley Corp.
In fact, Groom has assessed employee benefits issues that may
arise due to Debtors' cases since September 24, 2001.
Mr. Galardi further informs the Court that to compensate the
services rendered, Groom will charge the Debtors on an hourly
basis in accordance with Groom's established billing practices
and procedures. The rates of those who will render the services
are:
Principals Hourly Rate Non-Principals Hourly Rate
---------- ----------- -------------- -----------
Groom $ 560 Hanrahan $ 435
Ell 495 McAllister 435
Ford 495 Thrasher 400
Mazawey 495 Daines 355
Saxon 495 Valer 340
Gallargher 495 Anillo 330
Scallet 480 Prame 320
Fitzgerald 445 Dold 310
Lanoff 445 Hogans 310
Breyfogle 445 Keller 310
Sherman 415 Napier 300
Matta 410 Levine 300
Hassel 405 Tinnes 260
Gigot 405 Eller 260
Powell 390 Keene 260
St. Martin 380 Barone 225
Evans 380 McRae 225
Lofgren 370 Boyles 200
Ufford 370
Other Professionals:
Imes $ 175
Lehmann 145
Gary M. Ford, a principal in the law firm of Groom Law Group,
assures the Court that Groom does not represent or hold any
interest adverse to the Debtors with respect to the matters for
which Groom will be employed. Groom also has no connection with
the Debtors, their creditors, the U.S. Trustee or other parties
with actual or potential interest in the cases, Mr. Ford adds.
(Polaroid Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
QUESTRON TECHNOLOGY: Files for Chapter 11 Protection in Delaware
----------------------------------------------------------------
Questron Technology, Inc., announced that it has signed a
definitive purchase agreement with QTI Acquisition Corp.
providing for QTI's acquisition of substantially all of
Questron's assets and has, together with its subsidiaries, filed
for protection under Chapter 11 of the U.S. Bankruptcy Code in
the United States Bankruptcy Court for the District of Delaware.
The asset sale is subject to customary closing conditions, as
well as the completion of a bankruptcy court supervised auction
process and bankruptcy court approval. QTI is a newly formed
company owned and organized by an affiliate of Sun Capital
Partners, Inc.
"This filing protects the value of Questron's business for the
benefit of Questron's creditors and will help ensure that our
customers continue to receive uninterrupted service through the
sale process and thereafter," said Dominic A. Polimeni, Chairman
and Chief Executive Officer of Questron. While the bankruptcy
court reviews the proposed sale to QTI and any other offers that
may emerge, Questron believes that it has sufficient cash on
hand to finance its operations, including supporting the
company's post-petition trade and employee obligations, as well
as its ongoing operating needs during the process.
M. Steven Liff, Vice President at Sun Capital, stated: "We are
very enthusiastic about the prospect of acquiring Questron's
business and are excited about investing in a business that is
well positioned in its industry. With our capital infusion and
operational expertise, the business should have sufficient
liquidity and ongoing support to take advantage of revenue
growth and to continue to provide excellent service to its
strong customer base."
Under the terms of the agreement, QTI has agreed to acquire
substantially all of the assets in exchange for the assumption
of the debt outstanding under Questron's senior secured debt
facility (currently approximately $81.5 million), the assumption
of obligations under Questron's leases, customer contracts and
certain other agreements, the issuance of 4% of QTI's capital
stock and the funding of up to $500,000 for certain wind-down
expenses. QTI has agreed that it will employ all of Questron's
employees at the closing and provide them with comparable
benefits, and has also indicated that it will employ existing
management on terms comparable to their current arrangements.
QTI will not assume any other Questron liabilities. Questron
expects that the purchase price payable by QTI will be
insufficient to cover all of Questron's liabilities and
therefore, Questron's stockholders will not receive any
distribution upon completion of the bankruptcy proceedings.
The agreement also provides that if Questron completes an
alternate transaction with another bidder, it must pay QTI a fee
of $2,500,000 and reimburse its legal and due diligence
expenses, up to $500,000. Such amounts are payable only out of
the proceeds of an alternate transaction, which must exceed
QTI's purchase price by $1,000,000 in cash plus such amounts and
must be structured in a manner to provide cash sufficient to pay
such fee and expenses.
Questron Technology Inc., is a leading provider of supply chain
management solutions and professional inventory logistics
management programs for small parts commonly referred to as "C"
inventory items (fasteners and related products) focused on the
needs of Original Equipment Manufacturers (OEMs). Questron's
securities are traded on NASDAQ under the symbols QUST (common)
and QUSTW (warrants). More information about the company can be
found in its filings with the Securities and Exchange Commission
or by visiting http://www.questrontechnology.com
Sun Capital Partners, Inc., is a leading private investment firm
focused on leveraged buyouts of market leading companies that
can benefit from its in-house operating personnel and
experience. The firm has successfully invested in approximately
30 companies during the past several years with combined annual
revenues in excess of $2 billion. More information about Sun
Capital can be found on its Web site: http://www.SunCapPart.com
QUESTRON TECHNOLOGY: Case Summary & Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: Questron Technology, Inc.
6400 Congress Avenue
Suite 2000
Boca Raton, FL 33487
Bankruptcy Case No.: 02-10319
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Questron Finance Corp. 02-10320-PJW
Questron Operating Company 02-10321-PJW
Questron Distribution Logistics, Inc. 02-10322-PJW
Integrated Material Systems, Inc. 02-10323-PJW
Power Components, Inc. 02-10324-PJW
Questnet Components, Inc. 02-10325-PJW
Fortune Industries, Inc. 02-10326-PJW
Fas-Tronics, Inc. 02-10327-PJW
Action Threaded Products, Inc. 02-10328-PJW
Capital Fasteners, Inc. 02-10329-PJW
B&G Supply Company, Inc. 02-10330-PJW
R.S.D. Sales Co., Inc. 02-10331-PJW
California Fasterners, Inc. 02-10332-PJW
Compware, Inc. 02-10333-PJW
Actions Threaded Products of Georgia, Inc. 02-10334-PJW
Action Threaded Products of Minnesota,Inc. 02-10335-PJW
Power Too, Inc. 02-10336-PJW
Type of Business: The Debtors are providers of supply chain
management solutions and inventory logistics
management services for small parts commonly
referred to as "C inventory items." "C
inventory items" are fasteners and related
products, including, but not limited to,
screws, bolts, nuts, washers, pins, rings,
fittings, springs, spacers, stanoffs, plastic
components, cable ties and accessories,
drawer slides, connectors and other similar
parts. Through Questron Distribution
Logistics (QDL) and its operating
subsidiaries, the Debtors are focused
primarily on the needs of original equipment
managers (OEMs), providing a wide range of
value-added services, just-in-time delivery
programs, advisory engineering services,
component kit production and delivery,
consolidated billing, and electronic data
interchange applications to OEMs.
Chapter 11 Petition Date: February 03, 2002
Court: District of Delaware
Judge: Peter J. Walsh
Debtors' Counsel: David S. Rosner, Esq.
Kasowitz Benson Torres & Friedman LLP
1633 Broadway
New York, New York 10019
Tel: 212 506 1700
-and-
John H. Knight, Esq.
Richards Layton & Finger PA
One Rodney Square
Wilmington, Delaware 19801
Tel: 302 651 7700
Total Assets: $178,415,000
Total Debts: $131,039,000
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Albion Alliance Mezzanine 11/9/00 $17,500,000 $10,000,000
Fund II, L.P. 14.5% Senior
1345 Avenue of the Americas Subordinated Notes
New York, NY 10105
Albion Alliance Mezzanine 6/29/99 $20,000,000 $7,000,000
Fund, L.P. 14.5% Senior
1345 Avenue of the Americas Subordinated Notes
New York, NY 10105
IBJ Whitehall Bank & 6/29/99 $20,000,000 $7,000,000
Trust Company 14.5% Senior
One State Street Subordinated Notes;
New York, NY 11/9/00 $17,500,000
14.5% Senior
Subordinated Notes
Alliance Investment 6/29/99 $20,000,000 $5,000,000
Opportunities Fund, LLC 14.5% Senior
1345 Avenue of the Americas Subordinated Notes
New York, NY 10105
The Equitable Life 6/29/99 $20,000,000 $5,000,000
Assurance Society of 14.5% Senior
the United States Subordinated Notes
1345 Avenue of the Americas
New York, NY 10105
Exeter Capital Partners, 11/9/00 $17,500,000 $3,500,500
IV 14.5% Senior
10 E. 53rd Street Subordinated Notes
New York, NY 10022
12 Technologies Trade $600,500
One 12 Place
11701 Lana Road
Dallas, TX 75234
800-800-3288
Sbi, Inc. Trade $543,500
2825 East Cottonwood
Parkway
Salt Lake City, UT 84121
801 733 3200
O III Realty, Inc. Trade $225
Worldwide Express Trade $18
RANCH 1 INC: NY Court Sets Plan Confirmation Hearing for Feb. 14
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approves the disclosure statement of Ranch 1, Inc. Confirmation
hearing is scheduled on February 14, 2002 at 9:30 AM at
Courtroom 523 of this Court before the Honorable Arthur J.
Gonzales.
Ranch*1, Inc., and its subsidiaries own, operate, franchise and
license upscale quick-service restaurants that specialize in
fresh-grilled skinless, boneless chicken breast sandwiches,
fries and a variety of freshly prepared healthy menu elections.
The Company filed for chapter 11 protection on June 3, 2001.
Alan J. Brody, Esq. at Buchanan Ingersoll represents the Debtors
in their restructuring effort. When the Company filed for
protection from its creditors, it listed $6,817,423 in assets
and $12,381,680 in liabilities.
RENCO STEEL: Missed Interest Payment Prompts S&P Downgrade
----------------------------------------------------------
Standard & Poor's lowered its ratings on Renco Steel Holdings
Inc., and its wholly owned subsidiary, WCI Steel Inc. The
current outlook is negative.
The Renco Holdings downgrade follows the company's announcement
that it doesn't have enough liquidity to make the February 1,
2002, $6.5 million interest payment on its senior secured notes
due 2005 and that it expects Renco Group Inc., the sole
shareholder of the company, will provide adequate funds to make
the interest payment before the expiration of the grace period
that ends on March 1. Unless Renco Steel obtains additional
financial support or obtains an alternate financing arrangement,
it is unlikely to be able to make its $6.5 million interest
payment on August 1, 2002. Should Renco Steel fail to make the
interest payment within the grace period, its ratings will be
lowered to 'D'. There are no cross-defaults in either Renco
Steel or WCI's bond indentures.
The downgrade on WCI reflects its deteriorating financial
flexibility due to persistent operating losses caused by weak
steel prices and volumes resulting from the economic recession
and high import levels.
Renco Steel Holdings is a holding company that owns 100% of WCI
Steel Inc., a niche-oriented integrated producer of value-added
custom steel products. WCI Steel Inc. is a relatively small
integrated steel producer that focuses on certain specialty
steel products. Relative to many other integrated steel
producers, the company derives a higher proportion of its sales
from custom products that are typically less price-sensitive
than commodity products. Still, operating leverage is high and
the markets served by the company are mature and highly
cyclical. Indeed, the company has experienced an 18% decline in
tons shipped in the past 12 months, primarily a result of waning
customer demand from the slowing U.S. economy. WCI's margins
have been pressured by lower selling prices and higher unit
fixed costs due to low capacity utilization. For the fiscal year
ended October 31, 2001, WCI incurred an operating loss of $61
million versus a profit of $34 million for the same period a
year ago. As a result of difficult market conditions in the past
year, WCI's financial flexibility has deteriorated
significantly. Indeed, WCI's cash position decreased to $32
million at October 31, 2001, from $89 million at October 31,
2000 and due to restrictive covenants, availability under the
company's revolving credit facility declined to $45 million at
October 31, 2001, from $81 million in just three months.
Recently, selling prices have increased and supply levels have
declined, as some competitors have had to shut down facilities
due to their own financial straits. Although WCI's quarter
ending January 31, 2002, is expected to remain weak, the
following quarters should improve because the company has
experienced a significant increase in order intake and backlog
due to both competitor capacity reductions and lower import
levels. In addition, customer purchases have begun to increase
following a prolonged period of inventory reductions, possibly
indicating the beginning of an economic recovery.
Outlook: Negative
The outlook reflects Standard & Poor's uncertainty regarding the
possible implications for WCI were Renco Steel to seek
bankruptcy protection. Also if recent improving trends are not
sustained and financial flexibility at WCI continues to erode,
ratings could be lowered again.
Ratings Lowered
Ratings
Renco Steel Holdings Inc. To From
Corporate credit rating CCC- B
Senior secured debt C CCC+
WCI Steel Inc.
Corporate credit rating B- B
Senior secured debt B- B
SIMONDS INDUSTRIES: Defaults on Interest Payment on 10.25% Notes
----------------------------------------------------------------
Simonds Industries Inc., announced that it has defaulted on its
semi-annual interest payment under its 10-1/4% Senior
Subordinated Notes due 2008, and that as of Friday, as a result
of such non-payment, an event of default exists with respect to
those notes under the terms of the Indenture.
The company has retained Credit Suisse First Boston to examine
alternatives to strengthen its balance sheet. The Company has
initiated discussions with representatives of the noteholders.
The company does not anticipate that there will be any
noticeable impact on company operations as a result of a
recapitalization. The company believes that it has adequate
liquidity to finance operating and working capital needs during
the restructuring period.
The company's Chief Operating Officer, Ray Martino, expressed
confidence that the company's long-term prospects will be
enhanced by a less levered capital structure.
SPINNAKER INDUSTRIES: March 14 Bar Date For Proofs of Claims
------------------------------------------------------------
UNITED STATES BANKRUPTCY COURT
FOR THE SOUTEHRN DISTRICT OF OHIO
WESTERN DIVISION AT DAYTON
IN RE: CHAPTER 11
SPINNAKER INDUSTRIES, INC., CASE NOS. 01-38066
SPINNAKER COATING, INC., 01-38069
F/k/a Brown Bridge Industries, Inc.,
SPINNAKER COATING-MAINE, INC., 01-38072
ENTOLETER, INC., 01-38074
DEBTORS. JOINTLY ADMINISTERED
JUDGE HOFFMAN
NOTICE OF LAST DAY TO FILE PRROFS OF CLAIM
In accordance with the Order Fixing Proofs of Claim Bar Date,
and pursuant to Bankruptcy Rule 3003 (c)(3), a deadline has been
established within which Proof of Claim or interest may be
filed.
It has been Ordered that the last day for filing Proof of Claim
or interest in this case is:
March 14, 2002, at or before 4:00 p.m. Eastern Standard Time.
All Proofs of Claim may be filed by mailing or delivering by
hand to:
The United States Bankruptcy Court for the
Southern District of Ohio
Dayton Divisional Office
In re Spinnaker Industries, Inc., et al.
Claims Processing
120 West Third Street
Dayton, OH 45402
Attn: Mr. Michael D. Webb, Clerk of Court
The Debtors' schedules are available for review at the Clerk's
office during ordinary business hours.
If your claim is scheduled and is not listed as disputed,
contingent or unliquidated, it will be allowed in the amount
scheduled unless you file a Proof of Claim or you are sent
further notice about he claim. Whether or not your claim in
Scheduled, you are permitted to file a Proof of Claim. If your
claim is not listed at all or if your claim is listed as
disputer, contingent, or unliquidated, then you must file a
Proof of Claim by the deadline listed above or you may not be
paid any money on your claim against the debtor in the
bankruptcy case.
Proofs of Claim should be filed with the Clerk of the Bankruptcy
Court at the address above.
To obtain further information and to obtain a proof of claim
form, interested parties should contact the Poorman-Douglas
Corporation, the Debtors' claims agent, at the customer service
line at (800) 750-3351. the proof of claim may be filed by
regular mail. If you wish to receive proof of its receipt by
the Bankruptcy court, enclose a photocopy of the proof of claim
together with a stamped self-addressed envelope.
There is no fee for filing the Proof of Claim. Any creditor who
has filed a Proof of Claim already need to file another Proof of
Claim.
Dated: January 24, 2002
Michael D. Webb
Clerk, U.S. Bankruptcy Court
TRAILMOBILE CANADA: Working Capital Deficit Tops $11.2 Million
--------------------------------------------------------------
Trailmobile Canada Limited announced its fiscal results for the
year ended September 28, 2001.
Revenues in fiscal 2001 continued to slide throughout the year
as a result of the weakening economic conditions. Revenues for
the twelve months ended September 28, 2001 were $72.0 million.
This represents a decrease of $60.5 million or 45.7% when
compared to revenues for the twelve months ended September 29,
2000. The decrease is largely a result of the economic slow down
which has translated to a decrease in the overall demand of
transport trailers. Excess manufacturing capacity in addition to
the lowest demand for dry van trailers in ten years, resulted in
lower profit margins and a loss of $2.4 million for the year.
Trailmobile Canada Limited manufactures dry-freight trailers for
commercial trucking customers in Canada and the United States.
The company is majority owned by Chicago-based Trailmobile
Corporation. Trailmobile is one of North America's largest
trailer manufacturers, with an extensive sales and distribution
network in both the USA and Canada. Trailmobile Canada Limited's
head office and manufacturing facility are located in
Mississauga, Ontario.
Annual Financial Statements September 28, 2001
Management's Discussion And Analysis
Results Of Operation
Overview
The discussion and analysis that follows relates to the
Company's results of operations for the twelve months ended
September 28, 2001 along with the comparative figures ended
September 29, 2000.
Revenues in fiscal 2001 continued to slide throughout the year
as a result of the weakening economic conditions. Excess
manufacturing capacity in addition to the lowest demand for dry
van trailers in ten years, resulted in lower profit margins. The
Company expects the industry demand for trailers to remain weak
over the near term with increased order demand in the later part
of fiscal 2002.
Revenue
Revenues for the twelve months ended September 28, 2001 were
$72.0 million. This represents a decrease of $60.5 million or
45.7% when compared to revenues for the twelve months ended
September 29, 2000. The decrease is largely a result of the
economic slow down which has translated to a decrease in the
overall demand of transport trailers.
GROSS PROFIT
Gross profit for the twelve months ended September 28, 2001 was
$3.0 million. This represents a decrease of $5.9 million or
66.3% when compared to the gross profit for the twelve months
ended September 29, 2000. The lack of trailer demand coupled
with manufactures' over capacity continues to place pressure on
margins. Additional vendor concessions were offset mainly by
lower average selling prices and to a lessor extent, the
Canadian dollar.
General & Administrative Expenses (G&A)
General and administrative expenses were $2.7 million or 3.8% of
revenues, a decrease of $0.7 million when compared to the twelve
months ended September 29, 2000. The decrease in G&A resulted
from the continuous cost cutting initiatives, which were ongoing
throughout the fiscal year and impacted all support functions.
Amortization
Amortization charges for the twelve months ended September 28,
2001 totaled $1.3 million or 1.8% of revenues, a marginal
decrease of $50,000 when compared to the twelve month period
ended September 29, 2000. The deferral of capital purchases due
to the slowing economic conditions resulted in a lower
amortization charge for fiscal 2001.
Financing
Financing charges for the twelve months ended September 28, 2001
were $1.4 million or 1.9% of revenues, a decrease of $0.4
million when compared to the twelve months ended September 29,
2001. The decrease in financing charges is due to a recoverable
of $0.5 million. The total recoverable amount relates to
extended credit terms given to affiliates, as indicated in the
independent study of related party transactions.
Liquidity And Capital Resources
As at September 28, 2001 the company had a working capital
deficiency of $11.2 million. This represents an increase of $1.4
million over fiscal 2000. The negative working capital is mainly
attributed to losses incurred in the previous years. Of the
$11.2 million working capital deficiency as at September 28,
2001, $8.6 million represents the amount of the capital
deficiency prior to Trailmobile Corporation acquiring control of
the Company with the remainder attributable to the fiscal 1999
transitional year, whereby the Company went through a major
restructuring of its manufacturing facility.
Subsequent to the year end, the Company completed a financing
arrangement with Tyco Capital, whereby the company would be
permitted a temporary over-advance on its line of credit. One of
the conditions for the re-financing arrangement includes equity
financing which is to take place no later than April 2002.
Risk And Uncertainties
Trailmobile Canada Limited faces a number of risks and
uncertainties, including:
Competition
Trailmobile Canada Limited faces competition from numerous truck
trailer manufacturers located in both Canada and the United
States, some of which have greater financial resources and
higher revenues. Certain competitive factors and market
conditions may affect Trailmobile Canada's ability to compete
with these companies.
Business Cycle
The truck trailer manufacturing industry is dependant on the
demand for its products from the trucking industry. Unit sales
of new truck are subject to cyclical variations. Historically,
periods of economic recession in Canada and the United States
have caused declines in the demand for new truck trailers
Distributors
Trailmobile Canada Limited's success depends on the ability of
it channel partners to sell its products.
Financing
Trailmobile Canada Limited is dependant upon Tyco Capital to
finance its inventory and accounts receivable. In addition,
Trailmobile Canada Limited is also dependant on Trailmobile
Corporation in the USA to effectively finance its operations,
which includes Trailmobile Trailer Canada Limited, a subsidiary
of Trailmobile Trailer LLC. Trailmobile Trailer LLC filed for
Chapter 11 bankruptcy protection on December 12, 2001.
Suppliers
Trailmobile Canada Limited relies on several key suppliers for
materials. Delays in receipt of these materials may affect the
Company's ability to fulfill customer orders. Subsequent to the
Chapter 11 bankruptcy filing by Trailmobile Trailer LLC, vendors
implemented stringent payment terms, which put pressure on the
Company's cash flow.
Currency fluctuations
A portion of Trailmobile Canada Limited's transactions are in US
funds and are therefore subject to exchange rate fluctuations
that may have a positive or negative affect on the Company's
financial statements.
Commodity prices
Certain raw material costs are dependent on worldwide commodity
pricing. Any increase in commodity costs may translate to
increases in raw material input costs, which may or may not be
passed on to customers due to the competitive landscape.
Outlook
The transportation industry continues to be affected by the
prolonged economic down turn, which is now approaching two
years. Overall industry volumes in fiscal 2001 were lower by 50%
when compared to fiscal 2000. This is in addition to the 35%
decrease in industry volumes recorded in the previous fiscal
year. By the end of fiscal 2001, industry backlog and order
activity has fallen to below volume levels recorded during the
1990-1991 recession.
The Chapter 11 filing by Trailmobile Trailer LLC has resulted in
higher production rates and order back log at Trailmobile Canada
Limited by 50% and five-fold respectively. With the support of
its valued employees, customers and vendors, Trailmobile Canada
Limited is committed to servicing the North American
marketplace.
TRANSTECHNOLOGY: Sells German Business to Barnes Group for $20MM
----------------------------------------------------------------
TransTechnology Corporation (NYSE:TT) announced that it had
signed a definitive agreement to sell substantially all of the
manufacturing assets of its German retaining ring business,
Seeger-Orbis GmbH & Co. OHG, to Barnes Group Inc. (NYSE:B) for
cash consideration of $20 million.
The acquisition is expected to close within the next few weeks.
TransTechnology previously announced a restructuring program
through which it planned to exit the manufacture of specialty
fasteners and other industrial products in order to focus solely
on the design and manufacture of defense and aerospace products.
In July 2001 the company sold its Breeze and Pebra hose clamp
businesses for $48 million and, in December, sold its Engineered
Components business for $96 million. The company has used the
proceeds of these divestitures and its internally generated cash
flow to reduce its debt from $273 million at March 31, 2001 to
$127 million at the end of January 2002. The company will use
the proceeds of the sale of Seeger Orbis to further reduce its
debt.
TransTechnology Corporation -- http://www.transtechnology.com--
headquartered in Liberty Corner, New Jersey, designs and
manufactures aerospace products with over 380 people at its
facilities in New Jersey, Connecticut, and California. Total
aerospace products sales were $81 million in the fiscal year
ended March 31, 2001.
Barnes Group Inc., -- http://www.barnesgroupinc.com-- is a
diversified international manufacturer of precision metal parts
and distributor of industrial supplies, serving a wide range of
markets and customers. Founded in 1857 and headquartered in
Bristol, Connecticut, Barnes Group consists of three businesses
with 2000 sales of $740 million and nearly 5,200 employees at
more than 50 locations worldwide.
VIASYSTEMS: S&P Junks Ratings Over Weakening Operating Results
--------------------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
secured bank loan ratings on Viasystems Group Inc. to triple-'C'
from single-'B'-minus, and lowered its subordinated debt rating
to double-'C' from triple-'CCC'. The outlook is negative.
The downgrade is based on deteriorating operating performance,
largely driven by the severe downturn in demand in
telecommunications and networking end markets, leading to
marginal credit measures. St. Louis, Missouri-based Viasystems,
which was formed in 1996, grew through a series of acquisitions
to become a major provider of printed circuit boards,
backpanels, and electronic manufacturing services for original
equipment manufacturers.
Sales declined throughout 2001 and profitability fell by nearly
80% in the fourth quarter of 2001 from the comparable period in
2000. Sales and profitability are likely to remain depressed
over the near term because conditions in the printed circuit
board market and communications end markets are severely
depressed.
Operating margins, which were in the 16%-18% range in previous
years, are likely to be in the 4%-6% range in the near term due
to low capacity utilization and lagging end-market demand.
Viasystems has nearly $1.1 billion in debt. Credit measures are
very weak; debt to EBITDA was more than 9 times for 2001 and
EBITDA coverage fell below 1x for the fourth quarter of 2001.
Additionally, the company is likely to be challenged to remain
in compliance with covenants associated with its credit facility
in the near term, severely limiting financial flexibility.
Outlook: Negative
The ratings are likely to be lowered unless management enhances
liquidity in the near term.
WHX CORPORATION: S&P Revises Low-B Rating Outlook to Stable
-----------------------------------------------------------
Standard & Poor's revised its outlook on WHX Corp. to stable
from negative. All ratings on the company are affirmed.
The outlook revision reflects the improvement in WHX Corp.'s
(B/Stable/--) financial flexibility following the sale of its
interest in Wheeling Downs Racetrack for $105 million. Proceeds
from the transaction are expected to be used for either debt
reduction or to service its future cash obligations related to
its Wheeling-Pittsburgh Corp. (WPC), subsidiary, which filed for
Chapter 11 bankruptcy protection on November 16, 2000.
The bankruptcy filing did not trigger any cross-default
provisions under either WHX's borrowing agreements, or those of
its other subsidiaries, and WPC's creditors have apparently not
made any effort to drag WHX into WPC's bankruptcy proceedings.
Still, WHX could be required to fund significant pension
obligations should WPC close its operations. WHX estimates that
if there were a partial shutdown of the WPC's operations in the
near term, WHX's liability for early retirement pension benefits
could range from approximately $80 million to $100 million and
could be significantly greater were there to be a complete
shutdown. WHX is unlikely to bear any continuing responsibility
for WPC's other post-retirement employee benefits liability.
WHX has two other businesses: Handy & Harman, a manufacturer of
specialty wire, tubing, and fasteners, and precious metals
plating and fabricated products; and Unimast Inc., a
manufacturer of steel framing and other products for commercial
and residential construction. These units are well-positioned in
their respective sectors. Although financial performance has
been broadly stable in recent years, its Handy & Harman business
has recently been affected by the cyclical downturn in its key
end markets, automobiles and telecommunications, as well as a
decline in the market price of precious metals. These markets
are expected to remain weak through to the second half of 2002.
Until there is a rebound in the economy and WHX's key markets,
EBITDA will likely remain inadequate to meet its heavy debt-
service requirements. As of September 30, 2001, WHX had total
debt $473 million, a cash position of $134 million and $48
million of availability under its bank credit agreements.
Debt maturing in 2004 and 2005 poses significant refinancing
risk.
Outlook: Stable
The company's cash on hand, plus availability under its
subsidiary borrowing agreements, should provide adequate
financial flexibility to meet near-term requirements despite
weaker market conditions. If WHX were to be required to service
some portion of WHX's pension and environmental liabilities,
payments would likely be spread out over a number of years.
W.R. GRACE: Seeks Second Extension of Exclusive Periods
-------------------------------------------------------
W. R. Grace & Co., and its debtor-affiliates ask Judge
Fitzgerald to extend their exclusive period during which only
W.R. Grace may file a plan to and including August 1, 2002. The
Debtors also seek to extend their exclusive period to solicit
acceptances of that plan to and including October 1, 2002. The
Debtors further request that this extension be without prejudice
to the Company's right to seek additional extensions of the
exclusivity filing and solicitation periods.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, reminds the
Court that these chapter 11 cases were filed as a result of
mounting asbestos-related litigation liabilities rather than as
a result of difficulties with the Debtors' core businesses.
Defining these liabilities and then providing for payment of
valid claims on a basis that preserves the Debtors' core
business operations is a complex process that is central to
resolving these chapter 11 cases. Given its nature, this
process could require significant litigation, which will, of
course, take time.
Considering the strength of the Debtors' core businesses, the
Debtors submit that it is reasonable to believe that the Company
will be able to file a viable plan of reorganization in due
course as the procedures for addressing the asbestos-related
claims unfolds. Amid intense opposition (from the Asbestos
Committees, of course) over the process to be employed, the
Debtors are working to put a case management schedule before the
Court that will establish a system to efficiently manage the
adjudication of the myriad of asbestos-related claims against
their estates.
A further extension of their exclusive periods will not harm
creditors and other parties-in-interest, Mr. Sprayregen argues.
Indeed, Mr. Sprayregen says, a termination of the exclusive
periods would defeat the very purpose behind 11 U.S.C. Sec.
1121, which is to afford the Debtors a meaningful and reasonable
opportunity to negotiate with their creditors and to then
propose and confirm a consensual plan of reorganization.
Termination of the exclusive periods, Mr. Sprayregen warns,
would signal a loss of confidence in the Debtors and their
reorganization efforts by the Court. The Debtors' core
businesses would deteriorate, value would evaporate, and
everybody would lose.
Mr. Sprayregen notes that extensions of the exclusive periods
are typical in multi-billion-dollar chapter 11 cases in
Delaware, pointing to In re Harnischfeger Industries, Inc.,
Bankr. Case No. 99-2171 (PJW) (multiple extensions totaling 20
months); In re Loewen Group Int'l, Inc., Bankr. Case. No. 99-
1244 (PJW) (exclusive periods extended for 19 months); In re
Montgomery Ward Holding Corp., Bankr. Case No. 97-1409 (PJW)
(exclusive periods extended for 21 months); In re Trans World
Airlines, Inc., Bankr. Case No. 02-115 (HSB) (exclusivity
extended for approximately 20 months).
Judge Fitzgerald will consider the Debtors' request at a hearing
to be held on February 25, 2002. By application of
Del.Bankr.L.R. 9006-2, the Debtors' exclusive period during
which to file a plan of reorganization is automatically extended
through the conclusion of that hearing. (W.R. Grace Bankruptcy
News, Issue No. 18; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
*********
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S U B S C R I P T I O N I N F O R M A T I O N
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Copyright 2002. All rights reserved. ISSN: 1520-9474.
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