/raid1/www/Hosts/bankrupt/TCR_Public/020403.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, April 3, 2002, Vol. 6, No. 65
Headlines
ADELPHIA BUSINESS: Form 10-K Can't Be Timely Filed
ADELPHIA COMMS: Accounting Review Delays Form 10-K Filing
ADELPHIA COMMS: S&P Places Low-B Ratings on CreditWatch Negative
ADVOCAT INC: Pursuing Talks with Lenders to Restructure Debts
AERCO LTD: S&P Maintains Watch on Ratings due to Industry Woes
ALLEGIANCE TELECOM: S&P Lowers Senior Unsecured Debt Rating to B
ARMSTRONG: AWI Gets OK to Disclose Settlement Pacts to PD Panel
AVIATION CAPITAL: S&P Still Keeping Watch on Low-B Notes Rating
BMK INC: Enters Pact to Sell Assets to Sun Capital Unit for $55M
BANYAN STRATEGIC: Closes Sale of University Square Business Ctr.
BIG BUCK: Fails to Comply with Nasdaq Listing Requirements
BURNHAM PACIFIC: December Net Assets in Liquidation Tops $136MM
CTN MEDIA: Seeking Financing to Bridge Working Capital Deficits
CALPINE: S&P Lowers Credit Rating to BB Over Plan to Secure $2BB
CORAM HEALTHCARE: Arlin M. Adams Appointed as Chapter 11 Trustee
COVANTA ENERGY: Fitch Monitoring Municipal Solid Waste Debt
CRESCENT REAL: S&P Affirms Low-Bs After Canceling Purchase Pacts
ENRON: Broadband Resolves Adequate Protection Dispute with Qwest
FAIRFIELD MFG: S&P Hatchets Rating to B- On Weak Performance
FARMLAND INDUSTRIES: Fitch Junk $520MM Subordinated Debt Rating
FOOT LOCKER: S&P Ups Rating to BB+ On Improved Financial Profile
GLIATECH INC: May File for Bankruptcy If Financing Deal Crumbles
GLOBAL CROSSING: Will Restructure Services Agreement with SWIFT
HQ GLOBAL: Trustee Appoints Unsecured Creditors' Committee
IT GROUP: Court Approves Proposed Interim Compensation Protocol
KAISER ALUMINUM: Taps Bifferato as Special Litigation Counsel
KMART CORP: Court Grants Injunction Against Utility Companies
LBP INC: Final Liquidating Distribution Slated for June
LA QUINTA CORP: Amends Certain Terms of $375MM Credit Facility
LODGIAN INC: Court Okays Richard Cartoon as Chief Fin'l Officer
METROMEDIA FIBER: Defaults on 14% Term Notes Issued to Nortel
NPR INC: Reaches Agreement to Sell Assets to Sea Star Line LLC
NTL INC: Withholds Interest Payments on Certain High-Yield Notes
NAT'L GOLF: Inks Merger & Reorganization Deal with American Golf
NATIONAL STEEL: Wins Nod to Continue Workers' Compensation Plans
NATIONSRENT: Court OKs Berenson Minella as Panel's Fin'l Advisor
NETZEE INC: Lenders Will Extend Credit Facility Maturity
NUEVO ENERGY: Brings-In C. Paige DiMaggio as New Treasurer
O2WIRELESS SOLUTIONS: Full-Year 2001 Net Loss Tops $27 Million
PACIFIC GAS: Seeks Court Approval of Claim Estimation Procedures
POINT.360: Expects to Firm-Up Debt Restructuring Agreement Soon
POLAROID: Retirees' Committee Seeks Reinstatement of Health Plan
PRIMEDIA INC: Thinning Interest Coverage Spurs S&P Downgrades
PSINET INC: Cogent Comms. Acquires Majority of U.S. Operations
RECOTON: Lenders Amend Financial Covenants Under Credit Pacts
ROMARCO MINERALS: TSE to Suspend Trading Over Listing Violations
STANDARD MOTOR: Industry Conditions Prompt S&P to Cut Ratings
STATIONS HOLDING: Seeks Court Approval to Hire Kirkland & Ellis
SUNBEAM CORP: Deadline to Vote on Plan Extended to July 8, 2002
TRANSTECHNOLOGY: Selling Aerospace Rivet Unit to Allfast for $4M
UNITED AUSTRALIA: Case Summary & 20 Largest Unsecured Creditors
VIKONICS INC: Files for Chapter 11 Reorganization in New York
VIKONICS INC: Chapter 11 Case Summary & 20 Largest Creditors
W.R. GRACE: Judge Fitzgerald Names Warren Smith as Fee Auditor
WESTERN INTEGRATED: Signs-Up Q Consulting for Financial Advice
WILLIAMS COMM: Banks Extend Debt Workout Negotiations to Apr. 26
WINSTAR COMMS: Trustee Told to Make Perot Contract Decision Now
ZENITH INDUSTRIAL: Signs-Up Dratt-Cambell as Business Consultant
* Meetings, Conferences and Seminars
*********
ADELPHIA BUSINESS: Form 10-K Can't Be Timely Filed
--------------------------------------------------
Adelphia Business Solutions, Inc., tells the Securities and
Exchange Commission that it won't be able to timely file its
annual report on Form 10-K for 2001. Preparing for the
Company's chapter 11 filing and negotiating the terms of a
potential reorganization plan took priority, ABIZ Vice President
John B. Glicksman, explains.
ABIZ advised that results for the fiscal year ended December
31, 2001 are anticipated to decline on a basis comparable to the
fiscal year ended December 31, 2000. The Company currently
estimates that net loss applicable to common stockholders will
increase from approximately $330,528,000 to approximately
$1,583,035,000 for the fiscal years ended December 31, 2000 and
2001, respectively. The decline in the financial performance is
primarily due to an approximate $1,152,656,000 impairment write-
down of long-lived assets.
ADELPHIA COMMS: Accounting Review Delays Form 10-K Filing
---------------------------------------------------------
Adelphia Communications Corporation (Nasdaq: ADLAC) said that it
is requesting an extension in filing its Annual Report on Form
10-K with the Securities and Exchange Commission. The extension
is being sought to allow the Company and its outside auditors
additional time to review certain accounting matters relating to
co-borrowing credit facilities which Adelphia is party to. This
review could not be completed in sufficient time for Adelphia to
complete its financial statements, receive its independent
auditors' report thereon, and file the Form 10-K within the
prescribed time period without unreasonable effort and expense.
Adelphia also said that it is conducting a review aimed at
providing additional clarification of certain of the Company's
co-borrowing credit facilities and related matters. The review,
which reflects the Company's commitment to meet its
shareholders' desire for increased transparency, will be
completed and its findings released as soon as practicable.
John J. Rigas, Chairman and CEO of Adelphia, said: "We recognize
that in the current financial environment, shareholders are
looking for greater clarity and transparency from the companies
in which they choose to invest. We at Adelphia recognize and
respect that desire for greater clarity and transparency, and
are committed to providing it in a timely manner."
Adelphia Communications Corporation, with headquarters in
Coudersport, Pennsylvania, is the sixth largest cable television
company in the country.
ADELPHIA COMMS: S&P Places Low-B Ratings on CreditWatch Negative
----------------------------------------------------------------
The ratings on Adelphia Communications Corp. and related
entities were placed on CreditWatch with negative implications
on March 27, 2002.
Credit Rating:
BB Watch Negative
The CreditWatch listing was due to the potential negative impact
of bank debt that is co-borrowed by subsidiaries of Adelphia and
by entities managed by Adelphia but owned by the Rigas family
(managed entities). These co-borrowings totaled about $2.3
billion at December 31, 2001, and are not reflected in
Adelphia's consolidated debt. The managed entities own about
300,000 cable subscribers and other assets, however, a
reasonable valuation of these assets may well fall short of the
associated incremental debt.
In resolving the CreditWatch listing, Standard & Poor's will
adjust Adelphia's balance sheet and cash flow to reflect the
impact of the managed entities' associated debt, cash flow, and
asset value. These modifications will include certain
adjustments to the extent that the managed entities hold
material amounts of Adelphia securities.
Standard & Poor's anticipates resolving the CreditWatch within
the next few weeks.
DebtTraders reports that Adelphia Communications' 7.875% bonds
due 2009 (ADEL09USR1) are quoted at a price of 91. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL09USR1
for real-time bond pricing.
ADVOCAT INC: Pursuing Talks with Lenders to Restructure Debts
-------------------------------------------------------------
Advocat Inc. (OTC Bulletin Board: AVCA) announced its results
for the fourth quarter and year ended December 31, 2001. The
Company reported a net loss after taxes of $8.6 million in the
fourth quarter of 2001 compared with a loss of $4.2 million for
the same period in 2000. The loss for 2001 included $4.8 million
for impairment of long-lived assets and other non-recurring
charges. Net revenues for the fourth quarter of 2001 increased
6.7% to $53.5 million compared with $50.1 million in the same
period of 2000.
Fourth Quarter Results
Net revenues for the fourth quarter of 2001 increased to $53.5
million compared with $50.1 million in the same quarter of the
prior year. Patient and resident revenues increased 7% to $52.6
million compared with $49.2 million in the fourth quarter of
2000. The growth in patient and resident revenues was due to
higher Medicare rates in Arkansas and other states, higher
Medicare census, and increases in Medicaid rates compared with
the prior year. These increases were partially offset by the
termination of a Florida nursing home lease on October 1, 2001.
In addition, Advocat terminated a lease on an additional Florida
nursing home effective December 31, 2001, that will affect
revenue in 2002. Management fees rose 0.8% to $910,000 compared
with $903,000 in the fourth quarter of 2000.
Total expenses rose 13.9% to $61.9 million compared with $54.4
million in the fourth quarter of 2000. Operating expenses
represented 85% of revenues for the latest quarter compared with
83% of revenues in the fourth quarter of 2000. The increased
costs were due to increased professional liability costs, higher
salaries and wages, and a $4.8 million impairment of long-lived
assets and other non-recurring charges in the fourth quarter of
2001.
The Company reported a net loss of $8.6 million in the fourth
quarter of 2001 compared with a loss of $4.2 million in the
fourth quarter of 2000.
2001 Results
Net revenues for 2001 rose 5.2% to $206.2 million compared with
$196.0 million in 2000. Patient and resident revenues increased
to $203.1 million in 2001 from $192.0 million in 2000 as a
result of higher Medicare rates, higher Medicare census, and
increases in Medicaid rates compared with the prior year.
Management fees totaled $3.0 million in 2001 compared with $3.9
million in 2000. The decline in management fees related to a
"priority of distribution" calculation at four nursing homes
that resulted from higher operating costs, including
professional liability costs and provisions for cost report
settlements, that reduced the amount of fee income due Advocat
as determined by the priority of distribution calculation.
Total expenses increased 14.1% to $228.0 million in 2001
compared with $198.8 million in 2000. Operating expenses
represented 86% of net patient revenues in 2001 compared with
78% in 2000. The Company experienced a significant jump in
professional liability costs in 2001 that accounted for over 50%
of the increase in operating expenses compared with the prior
year. The largest component of operating expenses was wages,
which increased to $88.8 million in 2001 from $82.9 million in
2000, a 7% increase.
The Company reported a net loss after taxes of $22.3 million in
2001 compared with a loss of $3.9 million for 2000.
At December 31, 2001, Advocat had negative working capital of
$64.4 million primarily due to $58.7 million of debt being
classified as current liabilities resulting from the Company's
covenant non-compliance and other cross-default provisions.
Based on regularly scheduled debt service requirements, the
Company has $34.3 million of debt that must be repaid or
refinanced in 2002. The Company has been in discussions with
its lenders regarding potential ways to restructure or refinance
its debt, but there can be no assurance that these efforts will
be successful.
Advocat Inc. operates 116 facilities including 54 assisted
living facilities with 5,298 units and 62 skilled nursing
facilities containing 6,992 licensed beds as of December 31,
2001. The Company operates facilities in 12 states, primarily
in the Southeast, and four provinces in Canada.
For additional information about the Company, visit Advocat's
Web site: http://www.irinfo.com/avc
AERCO LTD: S&P Maintains Watch on Ratings due to Industry Woes
--------------------------------------------------------------
Prevailing woes in the global aviation industry have meant that
several aircraft lease rental rates in the portfolio of AerCo
Ltd. have been re-negotiated, and that other leases negotiated
recently have realized depressed rates for AerCo. Of the 61
aircraft in this transaction, 15% by appraised value (as at
February 2002) are due to be re-leased before March 2003 and
thus are exposed to likely weak market conditions. The class D2
notes in this transaction are considered the most vulnerable to
any adverse changes in performance. All aircraft in the
portfolio are, however, currently on-lease with airlines and, as
a whole, are achieving relatively strong revenue.
Standard & Poor's considers that no rating action is warranted
at this time, although the class D2 notes will remain on
CreditWatch with negative implications. The class D2 notes can
draw on a liquidity facility, which is currently $55.2 million.
AerCo's aircraft portfolio is diverse and consists mostly of
widely used narrowbodies, though it includes very few of the
most desirable current generation of popular Airbus and Boeing
narrowbody planes. The credit quality of the current airline
lessors is considered average for an aircraft lease portfolio
securitization.
Outstanding Ratings On Creditwatch
With Negative Implications
AerCo Ltd.
Class D2 BB/Watch Neg
ALLEGIANCE TELECOM: S&P Lowers Senior Unsecured Debt Rating to B
----------------------------------------------------------------
The senior unsecured debt rating on facilities-based competitive
local exchange carrier Allegiance Telecom Inc. and the senior
secured bank loan rating on subsidiary Allegiance Finance Co.
were lowered on March 28, 2002. All ratings were placed on
CreditWatch with negative implications.
Credit Rating:
B Watch Negative
The senior unsecured debt rating on Dallas, Texas-based
Allegiance Telecom was lowered two notches below the corporate
credit rating due to the amount of secured debt and priority
obligations in the capital structure. The bank loan rating was
lowered one notch to the level of the corporate credit rating
because, based on Standard & Poor's simulated default scenario,
it is not certain that a distressed enterprise value would be
sufficient to cover the entire loan facility.
The CreditWatch listing reflects the risk that the company may
need to seek a waiver on the minimum revenue covenant under its
$500 million bank facility in the second or third quarter of
2002. In addition, cash flow measure improvement could be
impacted by a slower turnaround in the economy.
In the fourth quarter of 2001, overall revenues increased 12%
from the third quarter, primarily due to increased data revenues
and increased demand for the Integrated Access Service. This
service delivers high speed, always-on Internet access and
combines voice, data, and Internet over a single access line.
The company's EBITDA margin loss of about 15% has continued to
improve on a quarterly basis due to cost controls and increased
cash flow in 16 of its 36 markets. Capital expenditures were
about $45 million in the fourth quarter, about 50% less than the
third quarter due to the completion of the company's 36-market
buildout. Nevertheless, cash flow measures remained weak for the
rating. As of December 31, 2001, Allegiance Telecom's liquidity
position consisted of $399 million in cash and $150 million
available under the bank facility. Availability under the bank
facility is needed to support the company's business plan. As of
December 31, 2001, Allegiance Telecom had total debt outstanding
of about $1 billion.
ARMSTRONG: AWI Gets OK to Disclose Settlement Pacts to PD Panel
---------------------------------------------------------------
Armstrong Worldwide, Inc. asks Judge Newsome to allow the
Company to disclose certain confidential settlement agreements
in connection with discovery being sought by the Official
Committee of Asbestos Property Damage Claimants in connection
with the PD Committee's motion seeking an extension of the bar
date and a revised notice.
AWI reminds Judge Newsome of the pendency of the PD Committee's
Motion seeking an extension of the bar date for filing claims as
to asbestos-related property damage claimants, and for
renoticing. In that connection, the PD Committee has commenced
discovery, inter alia, of "[a]ll Documents that relate or refer
to any payments made to asbestos-related property damage
claimants for the remediation or removal of any [asbestos-
containing product]" and "[a]ll Documents that relate or refer
to any insurance coverage held by the Debtors that may cover any
property damage claims related to any [asbestos-containing
products]."
The Confidential Agreements
Before the Petition Date, AWI was a party to litigation
instituted by various plaintiffs on account of the PD
Committee's allegation of asbestos-related property damage. In
order to avoid the risk and expense of further litigation, AWI
entered into settlement agreements with certain of the property
damage plaintiffs. Notwithstanding its entry into these
settlement agreements, AWI has denied, and continues to deny,
that any of the property damage plaintiffs' claims for injuries,
losses and damages were caused by any of AWI's products or any
material in any way supplied to the property damage plaintiffs
by AWI.
Nine of the property-damage settlements contain confidentiality
provisions that prohibit the disclosure of the terms of such
agreements absent satisfaction of specified requirements, such
as if the parties consent to such disclosure, a court orders
such disclosure, or such disclosure is required by law. Six of
the confidential agreements provide that the parties may not
disclose the terms of the agreements unless a court enters an
order permitting such disclosure. The remaining three
confidential agreements consist of:
(i) a confidential agreement that provides that
disclosure of its terms is permitted only
pursuant to an order of a particular court,
(ii) a confidential agreement that provides that,
absent an agreement by the parties to the
contrary, the parties are required to maintain
the confidentiality of the amount of any
payments made under the agreement, and
(iii) a confidential agreement that is subject to a
court order directing all parties to the agreement
to maintain the confidentiality of the terms of
the agreement.
As to the single confidential agreement that permits disclosure
upon agreement of the parties, AWI has sought, but has not yet
been able to obtain, consent to disclosure.
In response to the PD Committee's document request, AWI agreed
to produce the settlement agreements, including the confidential
agreements. AWI stated in its written responses and objections
to the bar date discovery, however, that it would produce
documents only as permitted by applicable confidentiality
agreement, protective order, or similar agreement or order, and
only after the PD Committee and AWI enter into an appropriate
agreement protecting the confidentiality of the agreements to be
produced. Accordingly AWI has not yet supplied the PD Committee
with copies of the confidential agreements. Instead, AWI has
produced to the PD Committee a spreadsheet setting out a list
of the property-damage settlement agreements, with information
relating to the confidential agreements redacted from the
spreadsheet.
In order to permit AWI to produce the confidential agreements in
response to the PD Committee's request, AWI asks Judge Newsome
to authorize AWI to (i) disclose the confidential agreements to
the PD Committee in connection with the bar date discovery, and
(ii) seek authorization from the appropriate court to permit
similar disclosure of the confidential agreements requiring a
disclosure order from the situs court. AWI further asks Judge
Newsome to provide that any disclosure of the confidential
agreements will be subject to the agreement of the PD Committee
to maintain the confidentiality of the information contained in
the documents.
Judge Newsome Says Okay
Judge Newsome grants this Motion, authorizing the Debtor to
release the confidential agreements it can and to seek the
authorization of other, appropriate courts where necessary.
However, he requires that copies of the confidential agreements
be made available to the US Trustee, the Unsecured Creditors'
Committee, the Asbestos PI Committee, and the proposed legal
representative for future claimants. Judge Newsome also orders
that any party receiving a copy of these agreements must
maintain that confidentiality. (Armstrong Bankruptcy News, Issue
No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900)
AVIATION CAPITAL: S&P Still Keeping Watch on Low-B Notes Rating
---------------------------------------------------------------
The aircraft securitization Aviation Capital Group Trust (ACG
Trust) has seen the lease revenues in its portfolio fall as
adverse conditions in the air transportation industry continue.
Since the closing of this transaction in December 2000 the
downturn in the airline sector has resulted in a number of
leases in the portfolio being restructured with leases being
negotiated downward. The class D-1 fixed-rate notes are
particularly vulnerable to drops in revenue, although Standard &
Poor's does not consider that any rating action is warranted on
these notes at this time. They will, however, remain on
CreditWatch with negative implications. Mitigating the
vulnerability of the class D notes to further revenue reduction
is the fact that all except one of its 30 aircraft are currently
on-lease and few of these leases are scheduled to expire in the
near term. The aircraft portfolio is considered one of the
strongest among lease portfolio securitizations, with about one-
third of the total value in desirable A320-200s and most of the
rest consisting of widely used planes. The credit quality of the
airline lessors is judged average. In addition, $30 million cash
held in an investment account has not been drawn upon to date
and remains available to cover any note interest and minimum
principal payment shortfalls.
Outstanding Ratings On Creditwatch
With Negative Implications
Aviation Capital Group Trust
Class D-1 BB/Watch Neg
BMK INC: Enters Pact to Sell Assets to Sun Capital Unit for $55M
----------------------------------------------------------------
BMK Inc., a leading distributor of merchandise from cosmetics to
pet supplies to many of the nation's top supermarkets and
drugstores, said that it has entered into an agreement to sell
its assets to an affiliate of Sun Capital Partners, Inc., for
$55 million cash plus the assumption of certain obligations,
subject to Bankruptcy Court approval and a process whereby
higher and better offers will be solicited.
"This is a great Company with an excellent employee base and an
outstanding customer base. We are pleased to have found a
partner who shares our enthusiasm about its potential. We are
now in an excellent position to take advantage of opportunities
in the marketplace," said BMK Chief Executive Officer Richard
Craig.
"We are very enthusiastic regarding our future investment in
BMK, a market leader in the distribution of general merchandise
products to grocery and drug chains. Our capital infusion and
business expertise, coupled with BMK's existing management will
provide an opportunity for BMK to expand its market presence by
leveraging is strengths," said Jason Neimark, Vice President of
Sun Capital Partners.
The Company and its subsidiaries have been operating smoothly
since filing Chapter 11 reorganization petitions under the
Bankruptcy Code in early December, Mr. Craig said, adding,
"Since then, our day-to-day business has continued
uninterrupted, and we have been able to provide the same high
quality of service and dedication that customers expect from
BMK."
"We have enjoyed substantial support from our vendors and
customers -- and that, coupled with our financing support, has
allowed us to make significant inventory investments and to
achieve a higher fill rate than before beginning the Chapter 11
process," Mr. Craig said. Fill rate is the percentage of shelf
space in grocery and drug stores that are kept filled with
products.
The sale must be approved by the U.S. Bankruptcy Court and is
subject to overbids. BMK retained the investment banking firm
of Houlihan Lokey Howard & Zukin to solicit interest in the
Company. According to Matt Niemann of Houlihan Lokey, "Upon
receiving Bankruptcy Court approval, we will solicit higher and
better offers from other interested parties and, ultimately,
will conduct an auction to ensure that the Company has maximized
the value of its assets for the benefit of its stakeholders."
BMK expects to require the submission of competing bids by mid-
May and to close a sale as soon as possible thereafter.
"The announcement of this transaction should provide our valued
employees, customers and vendors with the assurances and
certainty that they're entitled to as we progress toward
resuming business as usual after the sale," Mr. Craig said.
BMK and seven affiliates filed reorganization petitions in U.S.
Bankruptcy Court for the Central District of California in Los
Angeles in early December. The cases were assigned to Judge Alan
Ahart. Corporate turnaround specialist The Scotland Group,
Inc., of Newport Beach, California was brought in to assist in
reorienting BMK. The Company's corporate counsel is Locke,
Liddell & Sapp LLP of Dallas, and its bankruptcy counsel is
Peitzman, Glassman, Weg & Kempinsky LLP of Los Angeles.
BMK, with revenues last year of approximately $400 million, is
the nation's largest full-service distributor of general
merchandise, serving 44 states and most major grocery and drug
chains in the United States. Its U.S. operations are comprised
of three divisions. The Western operations do business primarily
as The Berton Company and Advantage Merchandising, both of
California, and Wasatch Service & Supply of Utah. BMK's Central
U.S. operations, which also serve East Coast customers,
primarily conduct business as Nationmark Merchandising &
Distribution of Texas, Jacks Service Company of Oklahoma and
M.W. Kasch of Wisconsin. The West and Central U.S. operations
focus on general merchandise. BMK's Somody subsidiary in
southern Minnesota focuses on specialty products. Nationwide,
the company has approximately 1,900 full-time and 500 part-time
employees.
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 professionals and
experience. Sun Capital invests in companies with market
leadership positions such as BMK. Sun Capital has invested in
more than 30 companies during the past several years with
combined revenues in excess of $2 billion. Investments have
included companies in the following industries: paper and
packaging, filmed entertainment, automotive after-market parts,
financial services, healthcare, media and communications,
outdoor advertising, building products, wireless communication,
industrial and decorative mirrors, computer and workstation
peripherals, and technology. For more information about Sun
Capital Partners, visit http://www.suncappart.com
BANYAN STRATEGIC: Closes Sale of University Square Business Ctr.
----------------------------------------------------------------
Banyan Strategic Realty Trust (Nasdaq: BSRTS) announced that it
has completed the sale of its Huntsville, Alabama property,
known as University Square Business Center, for a gross purchase
price of $8.45 million. The purchaser is USBC, LLC, an Alabama
limited liability company, whose principals include Alan C.
Jenkins and Joel L. Teglia. Mr. Jenkins is a principal in
InterSouth Properties, Inc., Banyan's contract manager of the
property, and Mr. Teglia is the Executive Vice-President and CFO
of Banyan.
University Square is a six-building office complex containing
184,738 rentable square feet on 19 acres located in western
Huntsville, Alabama. It is currently 90% leased with a total of
48 tenants.
Upon closing, Banyan discharged its outstanding first mortgage
indebtedness to Wells Fargo Bank ($4.68 million) and credited
the purchaser with $0.27 million, representing unfinished tenant
improvement work and related leasing commissions and
construction management costs. Banyan also paid $0.19 million
in real estate commissions, closing costs, prorations and
transaction expenses. The purchaser paid the prepayment penalty
of $0.725 million associated with the payoff of the Wells Fargo
debt. Banyan realized $3.3 million in net proceeds from the
sale, or $0.21 per share.
Banyan also announced that it has given irrevocable notice of
its intent to retire the outstanding bond indebtedness on its
Louisville, Kentucky, Riverport Property, paving the way for a
May 1, 2002 closing of that sale. The company previously
announced on February 21, 2002, that it had entered into a
contract for the sale of the Riverport Property. In the event
the closing does not occur, Banyan will be required to use other
funds to retire the outstanding bond indebtedness of $3.4
million.
Banyan is marketing for sale its remaining property, The
Northlake Tower Festival Mall in Atlanta, Georgia. The company
recently acquired the interest of its joint venture partner in
this property and now owns and controls the property outright.
L.G. Schafran, Interim President and CEO of Banyan, commenting
upon the University Square transaction said: "We are pleased to
announce the completion of the University Square sale, which
furthers our Plan of Termination and Liquidation adopted in
January of 2001. We currently anticipate making the next
liquidating distribution following the closing of the sale of
the Riverport asset, which is scheduled to occur on May 1, 2002.
If that closing occurs as scheduled, we anticipate a
distribution of approximately $0.30 per share. Combining these
two transactions will reduce the administrative expenses
associated with making this distribution."
Nasdaq Delisting
Banyan previously announced that on February 14, 2002, it was
notified by Nasdaq that because the minimum bid price for
Banyan's shares of beneficial interest closed below $1.00 per
share for the preceding thirty consecutive trading days,
Banyan's shares faced delisting. Nasdaq has advised that the
bid price must close at $1.00 or more per share for ten or more
consecutive trading days, between the notification date and May
15, 2002, for delisting to be avoided. If this criterion is not
met, the shares would be delisted, subject to Banyan's right of
appeal. Since February 14, 2002, the closing price of Banyan's
shares has averaged $0.68 per share and it is not anticipated
that the share price will exceed $1.00 before May 15, 2002.
Banyan is currently looking into alternatives in order to
provide a market for the exchange of its shares.
Banyan Strategic Realty Trust is an equity Real Estate
Investment Trust (REIT) that, on January 5, 2001, adopted a Plan
of Termination and Liquidation. On May 17, 2001, the Trust sold
approximately 85% of its portfolio in a single transaction and
now owns interests in two real estate properties located in
Atlanta, Georgia and Louisville, Kentucky. As of this date, the
Trust has 15,496,806 shares of beneficial interest outstanding.
BIG BUCK: Fails to Comply with Nasdaq Listing Requirements
----------------------------------------------------------
Big Buck Brewery & Steakhouse, Inc. (Nasdaq: BBUC) announced
that it has received notices from Nasdaq regarding its non-
compliance with the $1,000,000 minimum market value of publicly
held shares requirement stated in Marketplace Rule 4310(C)(7)
and the $1.00 minimum bid price requirement stated in
Marketplace Rule 4310(C)(4).
Big Buck has until June 17, 2002 to regain compliance with the
minimum market value requirement, which would require Big Buck's
common stock to achieve a market value of publicly held shares
of $1,000,000 or more for a minimum of 10 consecutive trading
days. If Big Buck fails to meet this requirement, or fails to
maintain compliance with any other listing requirement, its
securities will become subject to delisting from The Nasdaq
SmallCap Market.
If Big Buck regains compliance with the minimum market value
requirement by June 17, 2002, it will have until August 13, 2002
to regain compliance with the minimum bid price requirement,
which would require Big Buck's common stock to achieve a bid
price of $1.00 or more for a minimum of 10 consecutive trading
days. If Big Buck fails to meet this requirement, or fails to
maintain compliance with any other listing requirement, its
securities will become subject to delisting from The Nasdaq
SmallCap Market.
If Big Buck's securities do not continue to be listed on The
Nasdaq SmallCap Market, such securities would become subject to
certain rules of the SEC relating to "penny stocks." Such rules
require broker-dealers to make a suitability determination for
purchasers and to receive the purchaser's prior written consent
for a purchase transaction, thus restricting the ability to
purchase or sell the securities in the open market. In
addition, trading, if any, would be conducted in the over-the-
counter market in the so-called "pink sheets" or on the OTC
Bulletin Board, which was established for securities that do not
meet Nasdaq listing requirements. Consequently, selling Big
Buck's securities would be more difficult because smaller
quantities of securities could be bought and sold, transactions
could be delayed, and security analyst and news media coverage
of Big Buck may be reduced. These factors could result in lower
prices and larger spreads in the bid and ask prices for Big Buck
securities. There can be no assurance that Big Buck securities
will continue to be listed on The Nasdaq SmallCap Market.
Big Buck Brewery & Steakhouse, Inc. operates restaurant-brewpubs
in Gaylord, Grand Rapids and Auburn Hills, Michigan, offering
casual dining featuring a high quality, moderately priced menu
and a variety of award- winning craft-brewed beers. In August
2000, the Company opened its fourth unit in Grapevine, Texas, a
suburb of Dallas. This unit is owned and operated by Buck &
Bass, L.P. pursuant to a joint venture agreement between the
Company and Bass Pro Outdoor World, L.L.C.
BURNHAM PACIFIC: December Net Assets in Liquidation Tops $136MM
---------------------------------------------------------------
Burnham Pacific Properties, Inc. (NYSE: BPP) announced financial
results for the fourth quarter and year ended December 31, 2001.
Net income available to common stockholders for the fourth
quarter of 2001 was $2,723,000 as compared to net income of
$1,691,000 for the quarter ended December 31, 2000. For the
year ended December 31, 2001, net income available to common
stockholders was $13,173,000 as compared to a net loss of
$41,245,000 for 2000.
The Company historically reported Funds From Operations because
it is generally accepted in the REIT industry as a meaningful
supplemental measure of performance. However, because the
Company is liquidating, it no longer believes that FFO is
meaningful in understanding its performance and therefore no
longer reports FFO.
Review of Results
For the fourth quarter ended December 31, 2001, total revenues
decreased $17,990,000 to $11,910,000 from $29,900,000 in the
fourth quarter of 2000. This decrease was primarily attributable
to asset sales completed since September of 2000 under the
Company's Plan of Complete Liquidation and Dissolution. Net
income available to common stockholders for the fourth quarter
of 2001 was $2,723,000 as compared to net income of $1,691,000
for the fourth quarter of 2000.
The 2000 three-month period was favorably impacted by a net gain
on sales of real estate of $5,660,000. The 2000 three-month
period was unfavorably impacted by costs of $3,052,000
associated with the Company's pursuit of its strategic
alternatives and litigation and legal expenses of $1,852,000.
In addition, because of its adoption of the liquidation basis of
accounting on December 15, 2000, the Company did not record
depreciation expense in 2001. From October 1, 2000 through
December 15, 2000, the Company recorded depreciation and
amortization expense of $4,914,000.
For the fiscal year ended December 31, 2001, revenues decreased
$56,973,000 to $64,237,000 from $121,210,000 in 2000. Rental
revenues decreased $57,006,000 primarily as a result of asset
sales completed in 2000 and 2001. Management fee income
decreased $768,000 as a result of the termination of the
Company's former joint venture with CalPERS. Interest and other
income increased $801,000 primarily as a result of the sale of
historic tax credits on the Company's 1000 Van Ness property.
Net income available to common stockholders for 2001 was
$13,173,000 compared to a net loss of $41,245,000 in 2000. The
2001 and 2000 periods were unfavorably impacted by litigation
and legal expenses of $885,000 and $5,465,000, respectively.
Net income for 2000 was unfavorably impacted by costs of
$7,694,000 associated with the Company's pursuit of its
strategic alternatives, legal and litigation settlement expenses
of $3,902,000 related to a verdict against the Company in favor
of a tenant, a restructuring charge of $1,921,000 for severance
and related costs for employees affected by the termination of
the Company's joint venture with CalPERS, and an impairment
write-off of $32,330,000 taken in connection with the Company's
plan to liquidate. The 2000 period was favorably impacted by a
net gain on sales of real estate of $6,886,000. In addition,
because of its adoption of the liquidation basis of accounting
on December 15, 2000, the Company did not record depreciation
expense in 2001. In 2000, the Company recorded depreciation and
amortization expense of $24,874,000.
Liquidation Basis of Accounting
As a result of the adoption of the Plan of Liquidation and its
approval by the Company's stockholders, the Company adopted the
liquidation basis of accounting for all periods subsequent to
December 15, 2000. Accordingly, on December 16, 2000, assets
were adjusted to estimated net realizable value and liabilities
were adjusted to estimated settlement amounts, including
estimated costs associated with carrying out the liquidation.
The valuation of real estate held for sale as of December 31,
2001 is based on current contracts, estimates as determined by
independent appraisals and other indications of sales value, net
of (i) estimated selling costs and (ii) anticipated capital
expenditures during the remaining liquidation period of
approximately $6,337,000. Actual values realized for assets and
settlement of liabilities may differ materially from the amounts
estimated. Factors that may cause such a variation include,
among other factors, tenant financial difficulties, the
possibility that assets currently under contract may not be sold
on the terms currently provided in those contracts or at all,
and the other risk factors that were disclosed in the Company's
Form 10-K filed with the Securities and Exchange Commission on
April 1, 2002.
Adjustments to Net Assets in Liquidation
The net adjustment at December 16, 2000, required to convert
from the going concern (historical cost) basis to the
liquidation basis of accounting, amounted to a negative
adjustment to Net Assets in Liquidation of $85,228,000, which is
included in the Consolidated Statements of Changes in Net Assets
(liquidation basis) for the period December 16, 2000 to December
31, 2000. In 2001, the Company recorded an additional negative
adjustment of $10,458,000 to Net Assets in Liquidation.
Net Assets in Liquidation
Net Assets in Liquidation at December 31, 2001 of $135,860,000
does not include the Deferred Gain on Real Estate Assets of
$5,819,000 as the recognition of these amounts has been deferred
until their sales. Additionally, Net Assets in Liquidation at
December 31, 2001 does not include future net operating income
or loss during the period of liquidation. The aggregate amount
of liquidation distributions made since the adoption of the Plan
of Liquidation by the Company's Board of Directors in August
2000 through December 31, 2001 is $1.45 per share and per common
unit. The valuation of Net Assets in Liquidation is based on
estimates as of December 31, 2001, and the actual values
realized for assets and settlement of liabilities may differ
materially from the amounts estimated.
Dispositions
Since the adoption of the Plan of Liquidation by the Company's
Board of Directors in August 2000 through March 26, 2002, the
Company has disposed of 52 properties and two parcels of
undeveloped land for aggregate proceeds of approximately
$843,416,000, consisting of approximately $508,557,000 in cash,
2,512,778 shares of common stock of Developers Diversified
Realty Corporation valued at $20.21 per share (the value of a
share of DDR common stock as of the close of business on the
closing date of the sale by the Company of two properties to
DDR), and the assumption of approximately $284,076,000 of
liabilities. The Company applied approximately $126,000,000 of
the cash proceeds to redeem all of the Company's outstanding
preferred equity, approximately $2,578,000 to redeem units of
limited partnership interests in conjunction with the sale of
certain assets, and approximately $243,255,000 to further reduce
the Company's outstanding indebtedness. To date, the Company
has also made liquidating distributions to its common
stockholders and the holders of common units of limited
partnership interests in its subsidiaries of approximately
$73,591,000 in cash ($2.20 per share and common unit) and has
distributed all of the shares of DDR common stock at a ratio of
0.07525 of a share of DDR common stock for each share of the
Company's common stock and each common unit. The remainder of
the net proceeds (excluding current cash reserves) was used for
capital improvements in development projects, tenant
improvements and leasing commissions, litigation costs,
severance and other liquidation costs, and the repayment of
other obligations. The aggregate amount of liquidating
distributions made to date, using the value of the DDR common
stock of $20.21 per share, is $3.72 per share and common unit.
As of April 1, 2002, the Company owned seven properties, all of
which are located in California. The Company currently expects
that not later than the end of the second quarter of 2002 any
then remaining assets (which may include direct or indirect
interests in real property) and liabilities will be transferred
to a liquidating trust, although there can be no assurance in
this regard. At that time, certificates representing
outstanding shares of our common stock will be automatically
deemed to evidence ownership of beneficial interests in the
liquidating trust. Beneficial interests in the liquidating
trust will be non-certificated and non-transferable, except by
will, intestate succession or operation of law. As a result,
the beneficial interests in the liquidating trust will not be
listed on any securities exchange.
Prior to transferring the Company's remaining assets and
liabilities to a liquidating trust, the Company will make a
public announcement indicating, among other things, the date on
which the transfer is expected to occur, the identity (if known
at that time) of one or more trustees that will oversee the sale
of any remaining real property and the distribution of the
remaining cash and net proceeds, and a summary of the rights of
holders of beneficial interests in the liquidating trust. The
Company expects that such notice will precede any transfer to a
liquidating trust by approximately sixty (60) days.
CTN MEDIA: Seeking Financing to Bridge Working Capital Deficits
---------------------------------------------------------------
CTN Media Group, Inc. (NASDAQ: UCTN), which owns and operates
College Television Network, the nation's leading broadcast
television network for young adults ages 18-24, announced
results for its fourth quarter and the year ended December 31,
2001.
In July 2001, the Company sold Armed Forces Communications,
Inc., a New York corporation doing business as Market Place
Media. Accordingly, MPM's separate results are reported as
discontinued operations in the Company's financial statements.
The Company's overall revenue, including the results of College
Television Network, Link Magazine, iD8 Advertising and
Wetair.com totaled $10,110,696 for fiscal 2001 as compared to
total revenue of $16,809,549 for fiscal 2000. Much of this
decrease is due to the ceasing of operations of Link Magazine
and iD8 Marketing in 2001. CTN, like every other broadcaster,
has been negatively impacted by what the industry has noted is
the worst advertising recession in a decade. Network advertising
revenue of $8,678,899 represented a 36% decrease from fiscal
2000. A soft advertising market and a transition in the
Company's sales force have contributed to this decrease. The
Company's fees and commission revenue through iD8 of $1,286,591
represented a 25% decrease from fiscal 2000. This overall
decrease is attributable to ceasing operations of the agency as
of July 31, 2001. Publishing revenue consisted of $145,206 for
one issue of Link Magazine published for fiscal 2001 as compared
to $1,563,677 for fiscal 2000 when the Company published
multiple issues.
During the current year and the last fiscal year, the Company's
strategy regarding the Network has been to expand the number of
advertisers on the Network and maintain the existing affiliate
base of institutions in which the Network is offered. The
Company believes it has reached a sufficient critical mass of
audience to effectively attract and retain advertisers. Based on
estimates from the October 2001 Nielsen Media Research audience
measurement, CTN projects that nearly 8.2 million college
students view CTN every week in their current affiliate
locations across approximately 800 campuses nationwide. The
Company will now focus on increasing inventory sell-out
percentages by obtaining a larger group of advertisers. National
advertisers on the Network during fiscal 2001 included AOL/Time
Warner; AT&T Corporation; The Andrew Jergens Co.; Best Buy
Company, Inc.; Bristol Meyers Squibb (Clairol); Burger King
Corporation; Duckhead Apparel Company, Inc.; Hershey Foods
Corporation; Johnson & Johnson; Kellogg Company; K-Swiss, Inc.;
Levi Strauss & Co.; New Line Cinema Corporation; Procter and
Gamble Co.; Reebok International; S.C. Johnson & Son Co.; Sony
Corporation; Twentieth Century Fox Home Entertainment (News
America Group); U.S. Army; Visa International Service
Association; The Walt Disney Company; and Wendy's International.
The Company reported a net loss from continuing operations of
$17,212,534 as compared to a loss of $19,546,220 in fiscal 2000.
Although total revenue decreased by 40%, the net loss from
continuing operations decreased by 12%. The Company's mandate to
contain costs was the primary reason the net loss decreased with
significant reductions in operating, publishing and S,G&A
expenses in 2001 versus 2000.
As noted earlier, on July 10, 2001, the Company completed a
stock sale for all the outstanding stock of Market Place Media.
Accordingly, the results of that business have been reflected as
discontinued operations. Revenue related to discontinued
operations (MPM) totaled $23,262,696 through the disposition
date (July 10, 2001) versus $52,088,209 for the twelve months
ending December 31, 2000. The Company reported a net loss from
discontinued operations of $1,242,992 for the current fiscal
year reporting period versus a net loss of $2,911,517 for the
twelve months ending December 31, 2000. In conjunction with the
sale of MPM on July 10, 2001, the Company recognized a gain on
disposition of discontinued operations of $5,025,885.
Including the results from discontinued operations in fiscal
2001 and 2000, coupled with adjustments in fiscal 2000 related
to the Company's' redeemable preferred stock, the Company
reported a net loss available to common stockholders of
$13,917,665. Included in this amount are adjustments to
stockholders' equity of approximately $488,024. The Company
reported a net income available to common stockholders of
$6,723,031 for the year ended December 31, 2000. Included in
this amount are adjustments to stockholders' equity of
approximately $29,180,768 related to the Company's redeemable
preferred stock. The majority of this non-cash adjustment is a
result of adjustments that were required in order to reflect the
full redemption value of the redeemable preferred stock as of
December 31, 2001 and 2000 respectively, due to a drop in the
stock price from December 31, 1999.
The Company continues to improve operating efficiencies through
cost containment measures. Additionally, advertising revenue is
starting to increase as more and more advertisers learn about
the Network. Patrick Doran, CTN's Chief Financial Officer, said,
"our revamped sales organization is starting to see positive
results from their efforts. CTN has already booked advertising
commitments equal to 81% of the Network's total revenue in
fiscal 2001. We will continue cost containment measures to
preserve capital while insuring the Network's integrity is not
compromised".
CTN continues to attempt to obtain financing to bridge certain
working capital deficits in 2002, much of which is attributable
to the seasonality of its business. U.C. Holdings, LLC is
currently financing CTN's working capital deficits through a
bridge loan facility. To assist in these fund-raising efforts in
Europe, CTN has retained Intratech Capital Finance Limited, a
London, England investment banking firm.
Revenue for the quarter ended December 31, 2001 was $2,698,588
as compared to $6,152,563 for the comparable quarter one year
ago. Net loss from continuing operations was $4,712,225 for the
current quarter. Including adjustments in the fourth quarter of
2000 related to the Company's redeemable preferred stock, the
Company posted a net gain of $4,429,295. Net loss from
discontinued operations amounted to $1,638,943 in the fourth
quarter of 2000. In the fourth quarter of 2000, the net income
available to common stockholders amounted to $2,790,352.
CALPINE: S&P Lowers Credit Rating to BB Over Plan to Secure $2BB
----------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on Calpine
Corp. to double-'B' from double-'B'-plus. The outlook is stable.
At the same time, Standard & Poor's lowered its rating on
Calpine's senior unsecured debt to single-'B'-plus from double-
'B'-plus, two notches below the corporate credit rating; its
rating on the "SLOBS" (Tiverton/Rumford and Southpoint/Broad
River/Rockgen) to double-'B' from double-'B'-plus; and its
rating on the convertible preferred stock to single-'B' from
single-'B'-plus.
In addition, all of the above ratings were removed from
CreditWatch, where they were placed on March 12.
The actions follow Calpine's decision to secure approximately $2
billion ahead of Calpine's unsecured bondholders. "Calpine plans
to pledge all of its 2.0 trillion cubic feet of U.S. and
Canadian gas assets, as well as its Saltend power plant in the
U.K. and its equity investment in nine U.S. power plants to
three groups of secured debt holders," said Standard & Poor's
analyst Jeffrey Wolinsky. Calpine has secured a $1 billion
revolver and the existing $400 million corporate revolver that
expires in May 2003, and plans to finalize a $600 million, two-
year term loan shortly. This security adds to the existing
secured asset base under the $3.5 billion construction revolver,
which includes power plants under construction and about $1
billion of secured assets under the SLOBS.
To shore up its liquidity position, Calpine has added about $1.5
billion of debt beyond its forecast in October 2001, which
brings adjusted minimum and average funds from operations to
interest coverage ratios to about 1.9 times and 2.4x,
respectively, from 2002-2005. This deviates substantially from
the previous forecast ratios of 2.3x and 2.8x, respectively.
This change in coverage ratios comes with little alteration to
the forecast portfolio of assets since October 2001. While the
$2 billion in secured debt may improve Calpine's short-term
liquidity position, the additional debt will increase interest
expense, refinancing risk, and interest-rate risk.
In line with Standard & Poor's notching criteria, the amount of
secured debt on a sub-investment grade corporation relative to
Calpine's capitalization warrants a two-notch differential
between the corporate credit rating and the unsecured debt
rating. Moreover, Standard & Poor's believes that the magnitude
of the secured debt financing will likely prevent Calpine from
obtaining unsecured debt financing in the future. Therefore, the
expectation is that future debt issuances would also be secured,
further subordinating the unsecured bonds. Although Calpine's
guarantee of the SLOBS might suggest a rating commensurate with
Calpine's unsecured debt rating, the SLOBS are considered
secured debt under Standard & Poor's subordination criteria and
are rated at the corporate credit rating. The level of security
provided by the assets, however, does not warrant elevation
above the corporate credit rating.
The double-'B' corporate credit rating reflects the following
risks:
Calpine's merchant portfolio, one-third of its capacity, exposes
cash flow to potential volatility, as evidenced by dramatic
swings in U.S. western power markets during the past 18 months.
Even contracted revenues may see the consequences of market
cyclically as contracts expire and are replaced with new
contracts, priced at rates higher or lower than the initial
contracts.
That nearly $3.5 billion of debt matures in late 2003-early 2004
places considerable pressure on Calpine's credit risk profile
given growing concerns about Calpine's access to equity and debt
markets.
Calpine also has substantial exposure to the California market
through contracts with the California Department of Water
Resources (DWR) and Pacific Gas & Electric Co., which represent
about 25% of cash available for debt service in 2005. The DWR
contracts, which represent 20% of cash available for debt
service in 2005, have been challenged by the state of
California, with a decision pending from the Federal Energy
Regulatory Commission, which adds uncertainty to the contracts'
stability.
Because of Calpine's preferred method of construction, Calpine
assumes all risks for construction delays and cost overruns and
does not benefit from the liquidated damages characteristic of
typical engineering, procurement, and construction contracts.
Calpine is also vulnerable to having stranded assets in
construction if the long-term price for electricity were to
crater.
Nonetheless, the following strengths adequately mitigate the
above risks at the double-'B' rating level:
Calpine has quickly adjusted to the collapse in U.S. power
markets by drastically cutting back on its, heretofore,
aggressive growth plans that would have outstripped its ability
to raise capital. Although the company may exercise its option
to resume its construction program, it is unlikely that this
will occur within the next one-two years.
During the past year Calpine has proven its ability to manage
and construct multiple plants in a timely and efficient manner.
Calpine has successfully built its projects on time and within
budget. Calpine can standardize the design of its plants and
achieve economies of scale in design and maintenance because
most of the new plants are combined-cycle facilities, using "F"
turbine technology.
Highly efficient gas turbines increasingly make up a larger
percentage of Calpine's fleet, which should ensure a higher
level of dispatch compared to the older plants that Calpine's
competitors have purchased over the past few years.
Calpine mitigates merchant risk through its strategy covering
two-thirds of its capacity under long-term contract. Revenues
from existing contracts during the next five years, assuming
steady state conditions, cover 100% of debt service, but only
minimally.
Outlook: Stable
The stable outlook reflects the expectations that Calpine will
continue to construct its plants on time and within budget. A
change in the rating is highly dependant on Calpine's ability to
service its debt. Substantial debt reduction in the near-term
could result in an upgrade, after assets in construction come on
line, combined with minimal new construction projects. Any one
or more of the following developments could cause a downgrade or
a change to a negative outlook: a reduction in the hedged
portfolio substantially below the 65% target; a resumption of
new construction without a material deleveraging of the company;
or, difficulties in refinancing near-term maturities.
DebtTraders reports that Calpine Corp.'s 8.500% bonds due 2011
(CPN11USR1) are quoted at a price of 79. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CPN11USR1for
real-time bond pricing.
CORAM HEALTHCARE: Arlin M. Adams Appointed as Chapter 11 Trustee
----------------------------------------------------------------
Mr. Donald F. Walton, the Acting U.S. Trustee appointed Arlin M.
Adams, Esq. as the Chapter 11 Trustee in the chapter 11 cases
involving Coram Healthcare Corp. and Coram Inc.
The U.S. Trustee tells the Court that he has consulted these
parties-in-interest regarding the appointment of Ms. Adams:
a) Adam Shiff, Esq., counsel to the Debtors;
b) Richard Levy, Esq., counsel to the Committee of Equity
Security Holders;
c) Alan Miller, Esq. counsel to the Unofficial Committee of
Noteholders;
d) Theodore Gewertz, Esq., counsel to the Official
Committee of Unsecured Creditors; and
e) Michael Cook, Esq., counsel to Cerberus Partners.
Coram Healthcare, a provider of home infusion-therapy services
filed for Chapter 11 bankruptcy protection on August 8, 2000 in
the District of Delaware. Under the terms of its bankruptcy it
still operates more than 70 branches in 40 states and Canada
while it restructures its debt. Goldman Sachs and Cerberus
Partners each own about 30% of the firm. Christopher James
Lhuiler, Esq., at Pachulski Stang Ziehl Young & Jones PC
represents the Debtors in their restructuring efforts.
COVANTA ENERGY: Fitch Monitoring Municipal Solid Waste Debt
-----------------------------------------------------------
Fitch Ratings is examining court filings and other information,
following the filing of petitions for relief under Chapter 11 of
the United States bankruptcy code on April 1, 2002 by Covanta
Energy Corp., and various of its wholly owned subsidiaries.
Outstanding ratings related to $650 million of municipal solid
waste bonds, payable from revenues associated with waste-to-
energy projects owned or leased by subsidiaries of Covanta,
formerly Ogden Corp., had been downgraded most recently on March
1, 2002, to reflect Covanta's financial position and the
possibility of bankruptcy and its related uncertainties. Fitch
is evaluating information concerning these bonds, with specific
respect to court filings and/or action, and will adjust ratings
as warranted by such evaluations. The bond issues are:
-- Bristol Resource Recovery Facility Operating Committee,
CT solid waste revenue bonds (Ogden Martin Systems of Bristol,
Inc. Project), 1995 series, unenhanced rating of 'CC' - Rating
Watch Evolving;
-- Massachusetts Industrial Finance Agency and
Massachusetts Development Finance Agency resource recovery
revenue bonds (Ogden Haverhill Project), unenhanced rating of
'CC' - Rating Watch Evolving;
-- Onondaga County Resource Recovery Agency, NY project
revenue bonds, series 1992, unenhanced rating of 'CC' - Rating
Watch Evolving;
-- Suffolk County Industrial Development Agency, NY solid
waste disposal facility revenue bonds (Ogden Martin Systems of
Huntington Limited Partnership Recovery Facility), series 1999
(insured: Ambac), unenhanced rating of 'CC' - Rating Watch
Evolving;
-- Union County Utilities Authority, NJ solid waste
landfill taxable revenue bonds, series 1998 (insured: Ambac),
unenhanced rating of 'CC' - Rating Watch Evolving;
-- Union County Utilities Authority, NJ solid waste
facility senior lease revenue bonds, series 1998 A & B (Ogden
Martin Systems of Union, Inc. Lessee), unenhanced rating of 'CC'
- Rating Watch Evolving;
-- Union County Utilities Authority, NJ solid waste
facility senior lease revenue bonds (Ogden Martin Systems of
Union, Inc. Lessee) series 1998A (insured: Ambac), unenhanced
rating of 'CC' - Rating Watch Evolving; and
-- Union County Utilities Authority, NJ solid waste
facilities subordinate lease revenue bonds, series 1998A (Ogden
Martin Systems of Union, Inc. Lessee) (insured: Ambac),
unenhanced rating of 'CC' - Rating Watch Evolving;
Additionally, approximately $520 million of outstanding
municipal bonds for projects serviced by Covanta and secured by
payment obligations of certain public entities, remain on Rating
Watch Negative or Evolving, as listed below, in recognition of
possible operating and other risks that could result from
Covanta's bankruptcy filing:
-- Lee County, FL solid waste system refunding revenue
bonds, series 2001 (insured: MBIA), unenhanced rating of 'A-' -
Rating Watch Negative;
-- Lee County, FL solid waste system revenue bonds, series
1995 (insured: MBIA), unenhanced rating of 'A-' - Rating Watch
Negative;
-- Northeast Maryland Waste Disposal Authority, MD solid
waste revenue bonds (Montgomery County Resource Recovery
Project), series 1993 A and B, unenhanced rating of 'AA-' -
Rating Watch Negative; and
For more information, see Fitch Ratings' earlier releases on
this matter, available at the agency's Web site on
http://www.fitchratings.com: 'Fitch Ratings Dwngrs $650MM
Covanta Muni Solid Waste Debt to 'CC' from 'CCC' (March 1,
2002); 'Fitch Ratings Dwngrs $650MM Covanta Muni Solid Waste
Debt' (Feb. 28, 2002), 'Fitch Ratings Lowers $650MM Muni Solid
Waste Debt to 'B' (Jan. 30, 2002),' 'Fitch Ratings Removes
Rating Watch Neg On Montgomery Cnty MD Solid Waste Rev Bnds
(Feb. 6, 2002),' and 'Fitch Monitoring Solid Waste Bonds
Connected With Covanta (Jan. 25, 2002).'
CRESCENT REAL: S&P Affirms Low-Bs After Canceling Purchase Pacts
----------------------------------------------------------------
Standard & Poor's affirmed its ratings on Crescent Real Estate
Equities Co. and Crescent Real Estate Equities L.P. and removed
them from CreditWatch, where they were placed on Jan. 23, 2002.
The outlook remains negative.
The former CreditWatch placement followed Crescent's announced
termination of its agreement to purchase certain assets of
Crescent Operating Inc., an unrated, publicly traded company
formed by Crescent. As a result of this termination, it was
uncertain if COPI, which is Crescent's largest lessee, would be
able to continue as a going concern. Crescent has received
COPI's lease interests in eight of Crescent's resort/hotel
properties and the voting interests in substantially all of
Crescent's residential development corporations and related
entities. Crescent will assist and provide funding to COPI for
the implementation of a prepackaged bankruptcy of COPI. In
addition, the prepackaged bankruptcy petition provides for the
distribution of Crescent's common shares to COPI's stockholders
in an amount that will be determined by reference to the claims,
costs, and expenses of COPI's bankruptcy and related
transactions. These costs are not expected to exceed $14
million. Crescent has also agreed to acquire, for $15.5 million,
COPI's tenant interest in AmeriCold and spin it off to
Crescent's shareholders.
By controlling certain COPI assets, Crescent now has a more
direct ownership structure, reflective of this management team's
currently more focused strategy. Fort Worth, Texas-based
Crescent, with book-value assets of just over $4 billion, now
has three key business segments: office (72% of unleveraged
funds from operations), resort/residential development (18%),
and investment/non-core (10%). Despite weakness in Crescent's
core Houston and Dallas office markets, the company's portfolio
currently outperforms these markets in terms of occupancy and
rental rate. Softness in Crescent's high-end Desert Mountain
residential development and Sonoma luxury resort spa remains a
modest credit concern.
The company's financial profile generally improved in 2001, with
the refinancing of $970 million of debt. However, coverage
measures at year-end were weak, primarily due to COPI-related
net asset write-downs. Leverage of 55% book value, or just under
50% market value, is expected to remain static during 2002,
following a proposed $375 million senior unsecured debt
issuance, while the debt tenor will be lengthened. Proceeds from
the company's proposed debt issuance are expected to be used to
repay $310 million of unsecured credit facility balances and
retire a $55 million preferred position in a partnership. The
company is expected to use the credit facility to retire the
$150 million unsecured debt due to mature in September 2001 and
the $64 million of maturing secured debt. The company's retiring
debt is likely to be refinanced at a higher rate; debt service,
and fixed-charge coverages are expected to drop to the 2 times
area. In addition, while last fall's dividend cut did result in
improved liquidity, it also drove the company's stock price
lower. The company used asset sale proceeds and the liquidity
from the dividend cut to pursue share repurchases instead of
direct debt reduction.
Outlook: Negative
Crescent's financial profile is weak, with low coverage measures
and a largely encumbered portfolio that limits financial
flexibility. The company's core office portfolio performance has
been fairly stable but is highly concentrated in markets with
current weak fundamentals. Sustained portfolio weakness, coupled
with the potential for meaningful activity on the company's
share repurchase program (which has over $400 million
remaining), could stress financial measures further, prompting a
one-notch downgrade. Alternatively, a return to stable would be
driven by successful portfolio performance, despite the current
market softness, and a demonstrated commitment by management to
a more conservative financial profile with a tempered policy
toward share repurchases.
Ratings Affirmed And Removed From CreditWatch
Issue To From
Crescent Real Estate Equities Co.
Corporate credit rating BB BB/Watch Neg
$200 million 6-3/4%
preferred stock B B/Watch Neg
$1.5 billion mixed shelf prelim B/B+ prelim B/B+/Watch Neg
Crescent Real Estate Equities L.P.
Corporate credit rating BB BB/Watch Neg
$150 million 6 5/8% senior
unsecured notes due 2002 B+ B+/Watch Neg
$250 million 7 1/8% senior
unsecured notes due 2007 B+ B+/Watch Neg
ENRON: Broadband Resolves Adequate Protection Dispute with Qwest
----------------------------------------------------------------
Enron Broadband Services Inc. asks Judge Gonzalez to put his
stamp of approval on a Joint Stipulation for Adequate Protection
with Qwest Communications Corporation.
Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York,
relates that Enron Broadband and Qwest are parties to two
separate agreements related to the Enron Broadband fiber optic
network.
Dark Fiber Agreement
Under the Dark Fiber Agreement, Ms. Gray tells the Court that
Qwest purchased an indefeasible right to use certain dark fibers
on the Enron Broadband Network for a total purchase price of
$308,000,000. According to Ms. Gray, Qwest paid $112,000,000 at
closing and signed two promissory notes in favor of Enron
Broadband for the balance of the purchase price. One promissory
note in the amount of $47,401,100 is payable on April 1, 2002
while the second promissory note in the amount of $148,598,900
is payable in two installments:
-- $50,598,900 on April 1, 2002, and
-- $98,000,000 on September 30, 2002.
Ms. Gray informs Judge Gonzalez that each installment of the
$148,000,000 Note is supported by separate letters of credit
issued by Bank of America in favor of Enron Broadband.
Additionally, Ms. Gray continues, Qwest is obligated to pay
Enron Broadband $4,200,000 a year (subject to annual increase)
for operation and maintenance services performed by Enron
Broadband.
Wave IRU
Under the Wave IRU, Ms. Gray relates that Qwest sold certain
indefeasible rights to use certain lit wavelength capacity in
two tranches. Enron Broadband paid Qwest $112,000,000 for the
first tranche at closing, according to Ms. Gray. " Enron
Broadband could potentially owe up to an additional $83,500,000
to Qwest for additional wavelength capacity no later than
September 30, 2002," Ms. Gray notes. Under the Wave IRU, Ms.
Gray says, Enron Broadband is obligated to pay Qwest operation
and maintenance fees totaling approximately $93,000 per month.
Adequate Protection Dispute
As a result of Enron Broadband's chapter 11 filing, Qwest has
alleged that it has a right to demand adequate protection of
performance of the Dark Fiber Agreement. But Enron Broadband
contends otherwise. Moreover, Ms. Gray adds, Enron Broadband
and Qwest have various disputes regarding the nature, scope, and
terms of the agreements that they have previously entered into.
Stipulation
To avoid the cost and risk of litigation over Qwest's demand for
adequate protection, the parties have entered into the Joint
Stipulation for Adequate Protection. The salient terms of the
Stipulation provides that:
-- Qwest will pay the April Payment to Enron Broadband and all
interest payments due under the $148,000,000 Note into a
segregated, interest-bearing account of the Debtor, which
will be property of the Enron Broadband estate, subject to
the setoff or recoupment rights, if any, held by Qwest;
-- If Qwest fails to make the April Payment, Enron Broadband may
exercise its rights under the Letter of Credit applicable to
the April Payment;
-- The Stipulation will expire on May 31, 2002;
-- Unless the parties have reached an agreement with respect to
the funds in the Segregated Account, the funds will remain in
the Segregated Account after May 31, 2002, pending further
Court order, and litigation may then be commenced by the
parties to determine the parties' rights to such funds;
-- Enron Broadband remains responsible for the operational and
maintenance services under the Wave Agreement and Qwest
remains obligated for operational and maintenance services
under the Dark Fiber Agreement until such time as the parties
reach a new agreement, which may provide that Qwest may
assume responsibility for operational and maintenance
services under such agreement;
-- Qwest will be allowed to reduce its Dark Fiber Agreement
operational and maintenance payment obligations to Enron
Broadband by the amount that Enron Broadband is currently
obligated to pay Qwest under the Wave Agreement;
-- Adequate protection will be provided to Qwest by clarifying
its right to monitor and inspect certain parts of the Enron
Broadband Network in which Qwest has an interest;
-- The parties intend to negotiate in good faith to resolve
their disputes and will attempt to reach a global settlement;
and
-- Neither party waives its rights to assert any rights and
remedies available to it under the Dark Fiber Agreement or
the Wave Agreement, including the right of setoff or
recoupment. (Enron Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FAIRFIELD MFG: S&P Hatchets Rating to B- On Weak Performance
------------------------------------------------------------
On March 27, 2002, Standard & Poor's lowered its long-term
corporate credit rating to 'B-' on Lafayette, Indiana-based
Fairfield Manufacturing Co. Inc. The rating outlook is negative.
The rating action reflects Fairfield's much weaker-than-expected
financial performance, which has resulted in a severe
deterioration of credit protection measures and increased
liquidity pressures. Additionally, Standard & Poor's expects
that the company's financial performance will remain sub-par in
the near term, reflecting very depressed market conditions.
Fairfield is the leading independent North American producer of
custom gears and planetary gear systems sold to a diverse range
of transportation, mining, road construction, agriculture, and
maintenance machinery manufacturers.
Fairfield's financial performance continues to reflect very soft
end-market demand in key markets (especially in the aerial
platform market). Additionally, the company continues to
experience pricing pressures, resulting from lower-cost
international competition. For the full year ended December 31,
2001, EBITDA declined more than 65% to $11.4 million compared
with $34.7 million in 2000.
Fairfield is undertaking initiatives to improve financial
performance, including reducing capital spending and
manufacturing overhead, however, the company has been unable to
offset weak end-market demand. For the year ended December 31,
2001, total debt to EBITDA was around 10 times and interest
coverage was around 1x. Standard & Poor's had expected total
debt to EBITDA in the 5.0x-5.5x range, and interest coverage of
around 2x.
The company recently amended its bank credit facility to help
ease covenants. However, if end-market conditions decline
further or remain depressed for a prolonged period, future
covenant violations are possible. Liquidity and financial
flexibility are gradually deteriorating with cash on hand at
year-end 2001 of about $12.8 million and about $16 million in
availability on the credit facility, compared with $16.3 million
in cash and $20 million in bank credit facility availability at
year-end 2000. In the near term, Fairfield faces a $4.8 million
interest payment on April 15, 2002, associated with its $100
million subordinated notes.
The ratings are based on the assumption that the financial
performance and liquidity will not materially deteriorate from
current levels. In the future, as market conditions improve,
credit protection measures should show modest improvement, with
total debt to EBITDA in the 7x area and interest coverage around
1.5x.
Outlook
Financial stress could increase if Fairfield experiences a
continued weakening in business conditions. Failure to improve
financial performance and credit protection measures could
result in increasing liquidity pressures and potential covenant
violations, resulting in further downgrades.
FARMLAND INDUSTRIES: Fitch Junk $520MM Subordinated Debt Rating
---------------------------------------------------------------
Fitch has assigned a rating of 'B-' to Farmland Industries'
(Farmland) $500 million senior secured credit facility, and a
rating of 'CCC-' to Farmland's outstanding subordinated debt of
approximately $520 million. Concurrently, Fitch has withdrawn
Farmland's senior implied rating of 'BB-', and has downgraded
the outstanding $100 million cumulative preferred stock to 'CC'
from 'B-'. The Rating Watch Negative has been replaced with a
Negative Outlook.
The ratings reflect the continued weak operating performance of
Farmland's fertilizer business, the limited proceeds likely to
be generated by a sale of Farmland's petroleum refinery and
associated assets, Farmland's diminishing financial flexibility
and increasing dependence on a subordinated debt program
(marketed at a retail level to members and affiliates) for over
half of debt capital outstanding.
Farmland's new credit facility is comprised of a $350 million
asset based revolver and a $150 million two-year amortizing term
loan. The new revolver is secured by receivables and inventories
and the term loan is secured by a basket of fixed assets. The
proceeds of the new credit facility were used to refinance the
previous revolver and refinance a synthetic lease related to the
construction of the Coffeyville gasifier plant.
Fitch's ratings concerns relate to Farmland's consolidated debt
levels of over $1 billion, which in the context of cyclically
depressed fertilizer industry conditions have caused Farmland to
pursue asset sales to generate cash to service short-term debt
obligations. While the sale of petroleum operations would be
considered a positive, since proceeds would reduce debt and
generate liquidity. Asset sales are also something of a tradeoff
for Farmland in terms of lower future cash flows. Asset sales
could have the effect of heightening the importance of a
recovery in the fertilizer segment. Farmland's refrigerated food
and petroleum operations generated a substantial portion of
operating income in 2001, while the fertilizer operations
generated significant operating income losses in 2001.
Continued operating income weakness is a significant near-term
concern in light of restrictive senior secured credit facility
covenants on minimum EBITDA, EBITDA-to-interest and other
financial ratios.
Additional concerns relate to Farmland's potential increased
reliance on new issuance of subordinated debt. New subordinated
debt would add to Farmland's already disproportionately large
subordinated debt levels. The subordinated debt program has been
in place since the 1940's.
Farmland is the largest farmer-owned regional cooperative in the
United States, with 2001 sales of nearly $12 billion. The
company operates four main businesses, including crop
production, petroleum refining and marketing and beef and pork
processing. Based on total productive capacity, the company is
one of the largest producers of anhydrous ammonia fertilizer in
the United States. Farmland is the sixth-largest pork processor
and the fourth-largest beef processor in the nation. Though
doing business in all 50 states and internationally, the
company's primary trade territory is in the Midwestern section
of the United States.
FOOT LOCKER: S&P Ups Rating to BB+ On Improved Financial Profile
----------------------------------------------------------------
The ratings on Foot Locker Inc. were raised on March 29, 2002.
The upgrade was based on an improved credit profile,
strengthened operating performance, and more favorable industry
conditions. The rating action also incorporated Standard &
Poor's expectation that Foot Locker's financial profile will
remain moderate. Outlook is stable.
The ratings on New York, New York-based Foot Locker reflect the
intensely competitive and fashion sensitive nature of the
athletic footwear and apparel industry, unpredictable demand
patterns, and long lead times for ordering merchandise from
vendors. These risks are partially offset by Foot Locker's
leading market position in the athletic footwear retail industry
and a moderate financial profile.
Foot Locker is primarily a mall-based specialty athletic
retailer that operates about 3,600 retail stores in 14 countries
in North America, Europe, and Australia. Through its Foot
Locker, Lady Foot Locker, Kids Foot Locker, and Champs Sports
retail stores, the company is a leading provider of athletic
footwear and apparel. Over the past several years, Foot Locker
has divested its non-athletic businesses, allowing the company
to focus on the athletic retail segment.
Industry fundamentals in the athletic footwear industry
continued to recover in 2001 with favorable demand trends driven
by renewed interest in athletic footwear, product innovation
from manufacturers, and square footage reduction in the
industry. Still, athletic footwear trends depend on new
technology and new fashion to drive sales, and consumer tastes
can change quickly.
Foot Locker has made significant progress in improving its
operating performance over the past two years. Helped by more
favorable industry fundamentals and improved operating
efficiency at its store base, Foot Locker achieved strong same-
store sales growth over the past 10 quarters. Same-store sales
increased 5% in 2001, following an 11% increase in 2000. In
addition, the company rationalized its store base and improved
productivity through tighter inventory controls and cost-cutting
measures, resulting in operating margins increasing to about 16%
in 2001 from 12% in 1999.
Despite the company's recent good performance, the intensely
promotional and difficult retail environment could exert some
downward pressure on operating margins. Given the mature and
saturated domestic market, Foot Locker is turning to
international markets for growth opportunities. The company
plans to open 50 stores in 2002 in Europe, after increasing its
store base by 38 new stores in 2001. Although the expansion in
Europe will increase geographic diversity, it also exposes the
company to the risks of operating in these markets.
Foot Locker's financial profile has strengthened over the past
two years as cash flow from operations increased and debt
declined. EBITDA interest coverage reached 4.3 times in 2001, up
from 2.4x in 1998, and total debt to EBITDA moderated to 2.4x in
2001 from 4.5x in 1998. Foot Locker plans to fund capital
spending related to new store openings and remodels with
internally generated cash flow. Because of this, debt leverage
is expected to remain moderate over the next couple of years.
Financial flexibility is adequate, provided by availability
under the company's $190 million revolving credit facility and a
cash balance of more than $200 million.
Outlook
Management has been successful in improving the company's
operating performance. Standard & Poor's expects that the
rationalized store base and improved efficiency will allow Foot
Locker to maintain its credit profile, despite the intensely
competitive and promotional environment.
GLIATECH INC: May File for Bankruptcy If Financing Deal Crumbles
----------------------------------------------------------------
Gliatech Inc. (OTC Bulletin Board: GLIA.OB) announced financial
results and earnings for the fourth quarter and fiscal year
ended December 31, 2001. Total revenues for 2001 decreased to
$3.1 million from $23.7 million in 2000. Net product sales
decreased to $2.6 million in 2001 compared to $23.1 million in
2000, net of a $2.4 million product recall provision recorded in
2000. The Company recognized $0.1 million of a $1.5 million
license fee payment from Abgenix and $0.4 million in research
contract revenue in 2001 related to the agreement entered into
with Abgenix in November 2001. The Company recognized $0.5
million related to government grants in 2000.
The Company successfully relaunched ADCONr-L internationally in
May 2001. International net product sales were $2.6 million in
2001 compared to $4.0 million in 2000. The decrease in
international net product sales was due to fewer months of
product sales and no net product sales of ADCON-T/N in 2001.
International net product sales were $0.9 million in the fourth
quarter of 2001 compared to $0.7 million in the fourth quarter
of 2000.
The Company's net loss increased to $23.7 million in 2001
compared to a net loss of $12.9 million in 2000. The increase
in the net loss resulted primarily from the lack of U.S. sales
in 2001. In 2001, the Company recorded charges of $1.2 million
related to costs to exit its leased U.S. manufacturing facility
and $0.9 million related to the settlement of an investigation
by the Department of Justice.
Financial Status
As of December 31, 2001, Gliatech had approximately $3.0 million
of cash, cash equivalents and short-term investments. Subsequent
to year-end, the Company reached a settlement agreement with its
business interruption insurance carrier for property damages
arising from the January 2001 product recall. The Company
received $2.0 million net of legal expenses in settlement of the
claim. Under terms of the agreement, the Company has released
its insurance carrier from any future insurance claims relating
to the product recall. The Company believes that it currently
has sufficient cash, cash equivalents and short-term investments
on hand to meet operating requirements through mid-May 2002.
As previously disclosed, the Company is seeking additional
financing. Gliatech has recently executed a non-binding term
sheet with a group of investors regarding a proposed private
placement of convertible debt, preferred stock and warrants
totaling approximately $15 million to be invested in two stages.
The issuance of the equity securities associated with this
financing if consummated, will result in substantial dilution to
the Company's stockholders, and, upon completion of stage two,
result in a change of control of the Company. The structure of
the agreement as currently contemplated will require stockholder
approval of stage two. Certain significant agreements required
for completion of this transaction have not yet been reached.
There can be no assurance that the Company will be able to
complete the financing or will be able to consummate strategic
alternatives or other alternatives in a timely manner on terms
acceptable to the Company, if at all. In the event that the
Company is unable to consummate this financing or strategic
alternatives, the Company may seek court protection under the
U.S. Bankruptcy Code.
The securities proposed to be issued in the financing will not
be registered under the Securities Act of 1933 and may not be
offered or sold in the United States absent registration or an
applicable exemption from registration requirements. This press
release shall not constitute an offer to sell or a solicitation
of an offer to buy nor shall there be any offer, solicitation or
sale of such securities in any jurisdiction in which such offer,
solicitation or sales would be unlawful prior to registration or
qualification under the securities laws of any such
jurisdiction. This press release is issued pursuant to the
provisions of Rule 135c under the Securities Act.
Regulatory Update
As previously disclosed, the Company has developed an
Application Integrity Policy corrective action plan to address
concerns raised by the FDA or the independent auditor regarding
internal systems, procedures, training and data integrity. This
AIP corrective action plan was submitted to the FDA in November
2001. Subsequently, the Company has responded to several
comments from the FDA related to this plan. The corrective
action plan and these responses are currently under review by
the FDA and the Company expects that the FDA will conduct an
inspection of the Company before deciding, at FDA's sole
discretion, if and when the Company will be removed from AIP.
Litigation Update
In March 2002, the Company entered into a written Plea Agreement
with the Department of Justice. Under the terms of the
Agreement, the Company agreed to plead guilty to six misdemeanor
violations of the Food, Drug and Cosmetic Act. Pursuant to the
Agreement, the Company admitted to (i) failing to submit Medical
Device Reports to the FDA regarding four adverse events possibly
related to the use of ADCON-L; (ii) a single event of the
adulteration of a medical device held for sale relating to
Gliatech's failure to maintain complete complaint files as
required by FDA regulations; and (iii) the submission to the FDA
of a report pertaining to a medical device that was false and
misleading regarding the omission of data from the final report
of the U.S. Clinical Study for ADCON-L. All of the conduct at
issue occurred prior to March 2000 and relates to matters
previously disclosed in press releases and filings with the SEC.
The Company has not admitted in the Agreement that there is any
causal relationship between ADCON-L and the adverse events
discussed in the Agreement. The Company also has not admitted
that any of the misdemeanor violations were committed with the
intent to defraud or mislead the FDA.
The Agreement proposes a total fine of $1.2 million to be paid
in six equal, interest-free installments over a five-year
period, with the first payment due at the time of sentencing.
The Agreement is subject to approval and acceptance by the
United States District Court for the Northern District of Ohio.
If accepted by the United States District Court, the Agreement
resolves the investigation of the Company by the DoJ's Office of
Consumer Litigation and the FDA's Office of Criminal
Investigations.
SBIR Grant
In January 2002, Gliatech was awarded a Phase I Small Business
Innovation Research Award for $94,000 to evaluate the
development of potent and selective inhibitors of the glycine
transporter type 1. The Company has identified a small molecule
lead compound in its research program involving the regulation
of human glycine transporters. These transporters modulate the
levels of the neurotransmitter glycine in the central nervous
system. The Company may develop inhibitors of these glycine
transporters intended to increase the levels of glycine at the
glycine receptor, which may be useful in treating symptoms of
schizophrenia.
Gliatech Inc. is engaged in the discovery and development of
biosurgery and pharmaceutical products. The biosurgery products
include ADCON(R)-L, ADCON(R)-T/N and ADCON(R) Solution, which
are proprietary, resorbable, carbohydrate polymer medical
devices designed to inhibit scarring and adhesions following
surgery. Gliatech's pharmaceutical product candidates include
small molecule drugs to modulate the cognitive state of the
nervous system and proprietary monoclonal antibodies designed to
inhibit inflammation.
GLOBAL CROSSING: Will Restructure Services Agreement with SWIFT
---------------------------------------------------------------
Global Crossing announced that it has signed a memorandum of
understanding to restructure its network services agreement with
SWIFT, the industry-owned co-operative supplying secure
messaging services and interface software to 7,000 financial
institutions in 196 countries. Yesterday, the companies
announced their intentions to restructure their agreement, which
was originally executed last year.
"Our new agreement with SWIFT aligns with our goal to become
world's most focused, cost-competitive data communications
provider," explained John Legere, Global Crossing's chief
executive officer. "To do so, we are emphasizing our core
services which deliver higher margins and have more immediate
positive impact on our cash position and financial results. We
look forward to continuing to serve SWIFT under the restructured
agreement signed today."
Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network, which reaches
27 countries and more than 200 major cities around the globe.
Global Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services. Global Crossing operates throughout the Americas and
Europe, and provides services in Asia through its subsidiary,
Asia Global Crossing.
On January 28, 2002, certain companies in the Global Crossing
Group (excluding Asia Global Crossing and its subsidiaries)
commenced Chapter 11 cases in the United States Bankruptcy Court
for the Southern District of New York and coordinated
proceedings in the Supreme Court of Bermuda.
Please visit http://www.globalcrossing.comor
http://www.asiaglobalcrossing.comfor more information about
Global Crossing and Asia Global Crossing.
SWIFT is the industry-owned cooperative supplying secure
messaging services and interface software to 7,000 financial
institutions in 196 countries. SWIFT carried over 1.5 billion
messages in 2001. The average daily value of payment messages
on SWIFT is estimated to be above US$6 trillion. SWIFT provides
messaging services to banks, broker/dealers and investment
managers, as well as to market infrastructures in payments,
treasury, securities and trade. These services help customers
reduce costs, improve automation and manage risk. For more
information about SWIFT please refer to our Web site:
http://www.swift.com
HQ GLOBAL: Trustee Appoints Unsecured Creditors' Committee
----------------------------------------------------------
Donald F. Walton, the Acting United States Trustee for Region 3,
appoints these creditors to serve the Official Committee of
Unsecured Creditors of HQ Global Holdings, Inc. and its
affiliated debtors:
1) Blackstone Mezzanine Partners, LP
Attn: Salvatore Gentile, 345 Park Avenue
28th Floor, New York, NY 10154
Tel: 212-583-5443, Fax: 212-583-5482;
2) J.P. Morgan Partners BHCA, LP
Attn: Kevin O'Brien, 1221 Avenue of the Americas
39th Floor, New York, NY 10020-1080
Tel: 212-899-3495, Fax: 917-464-7465;
3) Ares Leveraged Investment Fund II, LP
Attn: Eric Beckman, 1999 Avenue of the Stars
Suite 1900, Los Angeles, CA 90067
Tel: 310-201-4215, Fax: 310-201-4157;
4) CT Mezzanine Partners 1 LLC
Attn: Mr. Thomas C. Ruffing, 410 Park Avenue
14th Floor, New York, NY 10022
Tel: 212-655-0216, Fax: 212-655-0044;
5) Jackson Wood, LTD.
Attn: Keith Brent Stew ard, 900 Jackson Stre et
Suite B-10, Dallas, TX 75202
Tel: 214-748-1904, Fax: 214-748-1945;
6) Cort Furniture Rental Corporation
Attn: Jerome F. Szelc, 12250 Waples Mill Road
Suite 500, Fairfax, VA 22030
Tel: 703-968-8500, Fax: 703-968-8556; and
7) Brook Furniture Rental, Inc.
Attn: Louis Spillone, Jr., 100 Field Drive
Suite 220, Lake Forest, IL 60045
Tel: 847-810-4069, Fax: 847-810-4095
HQ Global Holdings Inc., one of the largest providers of
flexible office solutions in the world, filed for chapter 11
protection on March 13, 2002 in the U.S. Bankruptcy Court for
the District of Delaware. Daniel J. DeFranceschi, Esq. at
Richards, Layton & Finger, P.A. and Corinne Ball, Esq. at Jones,
Day, Reavis & Pogue represent the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed estimated assets of more than $100 million.
IT GROUP: Court Approves Proposed Interim Compensation Protocol
---------------------------------------------------------------
Judge Walrath grants The IT Group, Inc., and its debtor-
affiliates authority to implement the interim compensation
procedures for professionals subject to the following
conditions:
A. Each member of any official committee appointed by the U.S.
Trustee or by the Court is permitted to submit statements
of expenses and supporting vouchers to counsel to the
Committee, who shall collect and submit the Committee
members' request for reimbursement to the Court; and,
B. The Debtors shall include all payments to professionals on
their monthly operating reports, detailed so as to state
the amount paid to each of the Professionals.
As approved by the Court, the payment of compensation and
reimbursement of expenses of the Professionals will be
structured as follows:
A. On or before the 25th day of each month following the month
for which compensation is sought, each Professional will
prepare a monthly statement of all fees and costs incurred
during the preceding months which Monthly Fee Statement
will include detailed itemizations of the services and
hours expended by matter and Professional, and a summary
statement of the status of prior compensation requests, but
which summary need not include the narrative discussion
generally included in interim fee applications or a
notarized certification of the Professional.
B. The Monthly Fee Statement will be filed with the Court and
served on the following parties:
a. The IT Group, Inc., 2790 Mosside Boulevard, Monroeville,
PA 15146-2792 (Attn: James M. Redwine);
b. counsel for the Debtors, Skadden, Arps, Slate, Meagher &
Flom (Illinois), 333 West Wacker Drive, Chicago,
Illinois 60606 (Attn: David S. Kurtz, Esq. and Timothy
R. Pohl, Esq.), and Skadden, Arps, Slate, Meagher &
Flom LLP, One Rodney Square, P.O. Box 636, Wilmington,
Delaware 19899-0636 (Attn: Gregg M. Galardi, Esq.);
c. counsel for the lenders, Weil, Gotshal & Manges (Attn:
Stephen Karotkin, Esq.);
d. the Office of the United States Trustee, J. Caleb Boggs
Federal Building, 844 King Street, Suite 2313, Lockbox
35, Wilmington, Delaware 19801 (Attn: Mark Kenney,
Esq.) and
e. counsel to the official Committee of Unsecured
Creditors, White & Case, First Union Financial Center,
2000 South Biscayne Blvd., Miami, Florida 33131-2352
(Attn: Thomas Lauria, Esq.), and to any other official
committees appointed in these cases.
C. Each Notice Party will have 20 days after service of a
Monthly Fee Statement to object thereto. Any objections to
a Monthly Fee Statement will set forth the nature of the
objection and the specific amount of fees and/or costs at
issue and will be filed with the Court and served so as to
be received on or before 20 days following service of the
Monthly Fee Statement by the Professional whose statement
is objected to and the other Notice Parties.
D. If none of the Notice Parties objects before the Objection
Deadline, then the Debtors will be authorized to pay each
Professional 90% of the fees and 100% of the expenses
requested in the Monthly Fee Statement. If an objection is
received, then the objecting party and the affected
Professional may attempt to resolve the objection on a
consensual basis. If the parties are unable to reach a
resolution of the Objection, the affected Professional may
either:
a. file a request for payment with the Court, which request
will be heard at the first scheduled omnibus hearing
occurring at least 20 days after the filing and
service of such request, or
b. forego payment of the disputed amount until the next
interim or final fee application hearing, at which
time the Court will consider and dispose of the
Objection.
Even where an Objection is received, the Debtors will be
authorized to pay 90% of the fees and 100% of the
reimbursements requested that are not the subject of the
objection.
E. Thereafter, at three-month intervals, each of the
Professionals must file with the Court and serve on the
Notice Parties an interim fee application for Court
approval of the compensation and reimbursement of expenses
sought in the Monthly Fee Statements filed during such
3-month period. In addition to the service requirement in
the previous sentence, each Professional will serve notice
of its Interim Fee Application on all parties that have
entered their appearance pursuant to Bankruptcy Rule 2002.
F. Each Professional must file its first Interim Fee Application
on or before May 25, 2002, and the first Interim Fee
Application should cover the Interim Fee Period from the
Petition Date through and including April 30, 2002.
Thereafter, Interim Fee Applications will be due on or
before the 25th day of the month following the end of the
3-month Interim Fee Period for which interim approval of
compensation and reimbursement is sought.
G. Any Professional that fails to file an Interim Fee
Application when due will be ineligible to receive further
interim payments of fees or expenses under these Procedures
until such time as a further Interim Fee Application is
submitted by the Professional.
H. The Debtors will request that the Court schedule a hearing on
the Interim Fee Applications after all such Applications
for the Interim Fee Period have been filed, or at such
other intervals as the Court deems appropriate. Upon
allowance by the Court of a Professional's Interim Fee
Application, the Debtors will be authorized to promptly pay
such Professional all fees and expenses not previously paid
pursuant to the Monthly Fee Statements.
I. The pendency of an objection to payment of compensation or
reimbursement of expenses will not disqualify a
Professional from the future payment of compensation or
reimbursement of expenses.
J. Neither the payment of or the failure to pay, in whole or in
part, monthly or interim compensation and reimbursement of
expenses under these Procedures nor the filing of or
failure to file an Objection will bind any party in
interest or the Court with respect to the allowance of
interim or final applications for compensation and
reimbursement of expenses of Professionals. All fees and
expenses paid to Professionals under these Procedures are
subject to disgorgement until final allowance by the Court.
(IT Group Bankruptcy News, Issue No. 7; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
KAISER ALUMINUM: Taps Bifferato as Special Litigation Counsel
-------------------------------------------------------------
Kaiser Aluminum Corporation, and its debtor-affiliates want to
employ Bifferato, Bifferato & Gentilotti as special counsel in
connection with special litigation matters which are unrelated
to the administration of the Debtors' chapter 11 cases.
Paul N. Heath, Esq., at Richards, Layton & Finger in Wilmington,
Delaware, submits that Bifferato has considerable experience in
and knowledge of the debtors', creditors' and equity security
holders' rights, business reorganizations and bankruptcy law
which can be beneficial to the Debtors as well as their
respective estates, creditors, and equity interest holders.
Bifferato's attorneys and paraprofessionals designated to
represent the Debtors as special counsel are:
Attorney/ Paraprofessional Rate
-------------------------- ----
Ian Connor Bifferato $275
Jeffrey M. Gentilotti $275
Vincent A. Bifferato, Jr. $275
Megan N. Harper $195
Amy W. Kiefer $ 95
Kristin M. Wright $ 85
Ian Connor Bifferato, Esq., discloses that the firm has in the
past represented, in matters wholly unrelated to these
bankruptcy cases, the U.S. National Bank that may be parties in
interest in these cases. However, the firm's representation
concluded prior to the commencement of the Debtors' bankruptcy
cases. (Kaiser Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
KMART CORP: Court Grants Injunction Against Utility Companies
-------------------------------------------------------------
Fifteen more utility companies have sought to exempt themselves
from the proposed utilities procedures, as proposed by Kmart
Corporation, and its debtor-affiliates:
1) Entergy Louisiana Inc.
2) Entergy Gulf States Inc.
3) Entergy Arkansas Inc.
4) Entergy Mississippi Inc.
5) Entergy New Orleans Inc.
6) United Power Company
7) Alabama Power Company
8) Mississippi Power Company
9) Southern California Edison
10) Florida Power & Light Company
11) Potomac Electric Power Company
12) Sacramento Municipal Utility District
13) Cumberland Valley Electric Inc.
14) Grayson Rural Electric Cooperative Corporation
15) FirstEnergy Solutions Corporation
Objections Debtors' Responses
---------- ------------------
The proposed final order The proposed form of order has
appears to start a new been clarified to reflect that
25-day period for requesting there is only one 25-day period
adequate assurance
The automatic stay should These complaining utilities
be lifted to permit the present no cause for permitting
complaining utility to them to collect pre-petition
debts
collect pre-petition invoices before other unsecured creditors
The procedures improperly The procedures grant an
limit utilities to an administrative claim on an
interim
administrative claim basis without prejudice to a
utility's request for additional
adequate assurance
Administrative expense A bankruptcy court's authority
treatment can never to modify the level of the
deposit
constitute "adequate or other security includes the
assurance of payment, in power to require no deposit where
the form of a deposit or none is necessary to provide
other security", for adequate assurance of payment
post-petition utility service
The Debtors' unpaid pre- This objection is just an attempt
petition obligations, and to jump to the front of the line
the complaining utility's of over 200 utilities that have
billing cycle, require also requested further adequate
deposits from 2 to 3 times assurance. The utilities
the bill for an average procedures are designed to
resolve
month to assure payment for each request from over 200
post-petition service utilities, before resorting to
litigation before this court.
These utilities should be
required to comply with the
procedures that bind all other
utilities.
The Debtors' unpaid pre-petition
obligations are irrelevant to
determining whether payment for
post-petition services is
assured. In general, the Debtors'
cash, from ongoing operations and
its DIP credit facility, and
their substantial unencumbered
assets (up to $8,000,000,000 at
book value) provide adequate
assurance that post-petition
utility bills will be paid.
The procedures' bar date If circumstances change, utility
improperly restricts companies are free to make a
utilities' rights under proper motion under Fed.R.Bankr.
section 366 and their access P. 9024 that the changed
to the court circumstances require relief from
the utilities procedures
The 25-day bar date is too The utilities raising this
short objection have complied with
the bar date. This objection is
therefore moot
The objecting party is not The Debtors expect to present an
a utility -- FirstEnergy agreed order resolving this issue
Solutions Corporation before or at the hearing
The stay against altering, Bankruptcy courts have the
refusing, or discontinuing inherent authority to grant
service to the Debtors is injunctive relief in these types
an improper injunction; it of emergency situations. Here,
requires the filing of a the Debtors had to reach
complaint, the requirement agreements with over 2,000
for an injunction have not utilities or file the same number
been satisfied, and the of adversary proceedings within
stay should be vacated the first 20 days. Thus, courts
have approved similar stays as
part of utilities procedures in
scores of large retail cases
Service of the motion was A contested matter is litigation
improperly executed to resolve an actual dispute.
Service of the motion on these
utilities that later objected,
thus giving right to a dispute
at that time, was therefore
properly executed. Moreover, the
nature of the emergency facing
the Debtors warrants finding such
a deficiency to be harmless error
The Debtors contend that most of the objections are just really
requests for adequate assurances. In fact, the Debtors inform
the Court that they have already received over 200 requests for
adequate assurance and have attempted to respond to them in the
order received. Furthermore, the Debtors assert that the
Utilities Procedures are reasonable for cases of this size. And
there is no doubt that Kmart's case represents the largest
retail chapter 11 case ever filed and is one of the 10 largest
chapter 11 cases ever filed. The Debtors also assure the Court
that the Utilities Procedures were properly issued.
Thus, the Debtors ask Judge Sonderby to overrule all objections.
* * *
"Motion granted," Judge Sonderby rules, and all objections to
the Debtors' motion are overruled, except FirstEnergy's
objection, which will be resolved in a separate order or
stipulation. (Kmart Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LBP INC: Final Liquidating Distribution Slated for June
-------------------------------------------------------
The Company announced that it filed its final Annual Report on
Form 10-K with the Securities and Exchange Commission.
In accordance with prior no-action letters issued by the SEC,
the Company will no longer file periodic reports.
Pursuant to the Plan of Liquidation approved by stockholders, in
October 2001 the Company declared and paid its first liquidating
distribution of $5.10 per share, and intends to pay a final
liquidating distribution of approximately $.76 per share within
the next 12 months, subject to the approval of the Delaware
Court of Chancery. It is anticipated that a hearing will be held
before the Court in June 2002.
For the period ended May 15, 2001, LBP reported net income of
$279,000 on a going concern basis. Subsequent to May 15, 2001,
the Company adopted the liquidation basis of accounting, and
financial statements for subsequent periods include estimates of
all costs until the liquidation is completed.
At December 31, 2001 the Company had net assets of $3.8 million,
consisting of cash and cash equivalents of $4.3 million, less
accrued expenses and other liabilities including liquidation
costs of $.5 million. Pursuant to accounting rules the Company
is not permitted to accrue anticipated interest income.
The Company will file reports on Form 8-K to disclose any
material events relating to its liquidation, and upon completion
of the liquidation, the Company will file a final report on Form
8-K.
LA QUINTA CORP: Amends Certain Terms of $375MM Credit Facility
--------------------------------------------------------------
La Quinta(R) Corporation (NYSE: LQI) announced that it has
amended certain terms of its $375 million credit facility.
The amendment provides for the relaxation of the maximum total
leverage ratio and the minimum fixed charge coverage ratio
through March 31, 2003 and a reduction in the minimum lodging
EBITDA covenant. Also included in the amendment are some
modifications to certain definitions and other items. Pricing
remained unchanged. Additional information will be provided
when the Company's first quarter Form 10-Q is filed.
"We are pleased with the amendment to our credit facility and
appreciate the strong support provided by our lenders as we
continue to manage through the effects of September 11, 2001 on
our business," said David L. Rea, Executive Vice President and
Chief Financial Officer. "The amendment is consistent with our
previously announced expectation of a difficult first half in
2002 followed by a stronger second half."
At December 31, 2001, the Company had $145 million of bank notes
outstanding under its term loan and no borrowings under its $225
million revolving line of credit. Total indebtedness at
December 31, 2001 was $1 billion of which $35 million matures in
2002. The Company had $138 million of cash at December 31,
2001.
Dallas-based La Quinta Corporation (NYSE: LQI), a mid-scale
limited service lodging company, owns, operates or franchises
over 300 La Quinta Inns and La Quinta Inn & Suites in 33 states.
Today's news release, as well as other information about La
Quinta, is available on the Internet at http://www.laquinta.com
LODGIAN INC: Court Okays Richard Cartoon as Chief Fin'l Officer
---------------------------------------------------------------
Lodgian, Inc. obtains the Court's permission to employ and
retain Richard Cartoon LLC (with services to be provided by Mr.
Richard Cartoon) as their Chief Financial Officer to perform the
necessary financial services that are incidental to the
administration of the Debtors' chapter 11 estates.
With the Court's approval, Richard Cartoon LLC will charge for
services rendered to the Debtors in these cases on,
substantially, the following terms:
A. A retainer of $25,000 will be held. Fees associated with
services rendered will be offset against the retainer
amount.
B. Richard Cartoon's services will be compensated at the hourly
rate of $310 per hour. To the extent that RCLLC requires
the assistance of staff employees, the fee charged for
Senior Associates will be $250 per hour and the fee
charged for Associates and Consultants will be $140.
Richard Cartoon informs the Court that the Firm will also seek
reimbursement of out-of-pocket expenses incurred in connection
with the Debtors' cases. (Lodgian Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
METROMEDIA FIBER: Defaults on 14% Term Notes Issued to Nortel
-------------------------------------------------------------
Metromedia Fiber Network, Inc. (NASDAQ: MFNX), the leading
provider of digital communications infrastructure, announced
that the Board of Directors has, effective immediately,
appointed John W. Gerdelman as President and Chief Executive
Officer of MFN and Robert F. Doherty as Executive Vice
President, Finance and Administration of MFN to provide the
Company with focused leadership and to guide the Company through
its previously announced efforts to seek to restructure its
indebtedness and to explore other opportunities in order to
satisfy its near-term and medium-term liquidity needs.
Mark Spagnolo, President and Chief Executive Officer of MFN, and
Randall Lay, Senior Vice President and Chief Financial Officer,
have elected to leave the Company to pursue other interests.
John Gerdelman is a technology and telecommunications industry
veteran bringing with him over 20 years of experience. Mr.
Gerdelman was Managing Partner of Mortonsgroup LLC, an
information technology and telecommunications venture and
consulting group located in Northern Virginia. He previously
served as President and CEO of USA.NET, a privately held
provider of innovative email solutions. Prior to USA.NET, Mr.
Gerdelman served as President of the network and information
technology division of MCI Telecommunications Corporation.
Mr. Gerdelman's 13 year tenure at MCI covered all areas of the
company, including sales, marketing, service, network operations
& information technology. As one of three MCI division
presidents responsible for achieving MCI's annual earnings
targets, he developed and delivered on MCI's network and
information technology strategy - including the transition from
a priced based telecom company to a global full service data
communications company. He led his team of over 20,000 network
and information technology professionals from the bottom to the
top industry ratings in numerous performance categories. Earlier
assignments within MCI included Senior Vice President in the
consumer division and President and CEO of MCI Services
Corporation.
Before joining MCI, Mr. Gerdelman was with Baxter Travenol
Corporation in sales operations. He served in the U.S. Navy as a
naval aviator after graduating with a BS degree in chemistry
from the College of William and Mary.
Robert Doherty brings with him over ten years of experience in
the telecommunications industry. Mr. Doherty was most recently
with Salomon Smith Barney as a Managing Director for the firm's
investment banking division. At Solomon Smith Barney, Mr.
Doherty built and headed the east coast's communications
equipment group and prior to that he was a Director in the
telecommunications group. Prior to Salomon Smith Barney, Mr.
Doherty was with PaineWebber as a Vice President for the firm's
investment banking division in the telecommunications/media
group. Throughout his career, Mr. Doherty has gained extensive
experience in business transaction execution, strategic advisory
services and the equity and fixed income capital markets. Mr.
Doherty has an MBA in finance and information systems from New
York University's Stern School of Business and a BA degree from
the University of Pennsylvania.
MFN also announced that at the close of business on Friday,
March 29, 2002, an "event of default" occurred on its $231
million 14.0% Term Notes due 2007 originally issued to Nortel
Networks Inc. because MFN did not make its approximately $8.1
million interest payment on the Nortel indebtedness. The Company
was unable to make the interest payment and at the same time
satisfy its other near-term cash requirements. MFN also
announced today that the event of default under the Nortel
indebtedness has triggered cross-default provisions on its $150
million Floating Rate Guaranteed Term Notes due 2006 issued to a
group of holders led by Citicorp, USA as a holder and as
administrative agent, its approximately $62.5 million 8.5%
Senior Subordinated Convertible Notes due 2003 issued to Bechtel
Corporation, its $50 million 8.5% Senior Secured Convertible
Notes issued to Verizon, its $180 million 8.5% Senior
Convertible Notes due 2011 and certain of its promissory notes
issued to various vendors. As a result, an "event of default"
also occurred at the close of business on March 29, 2002 under
such indebtedness and the lenders under such indebtedness may
accelerate the entire amount of such indebtedness at any time.
In addition, MFN previously announced that it deferred payment
of approximately $30 million of interest due on March 15, 2002
on its $975 million 6.15% Subordinated Convertible Notes issued
to Verizon Communications, Inc. Such interest payment has not
been made to date and, if not made prior to the expiration of a
30-day grace period, an "event of default" under the indenture
governing these notes will occur.
Messrs. Gerdelman and Doherty will be formulating a proposal to
MFN's creditors in an effort to restructure the Company's
indebtedness. As a result, the Company expects to shortly
commence negotiations with the holders of its indebtedness
regarding a consensual restructuring. However, there can be no
assurances that the Company will reach an agreement with its
creditors. As previously announced, if MFN is unable to
successfully restructure its indebtedness, the Company may be
required to file for protection under Chapter 11 of the U.S.
Bankruptcy Code. In addition, any potential restructuring of
MFN's indebtedness may result in substantial dilution to MFN's
existing stockholders.
MFN also announced that it has delayed the filing of its Form
10K for the year ended December 31, 2001 due to the current
issues surrounding the Company. The Company is filing Form 12b-
25 requesting an extension, and anticipates that it will be
filing the 10K by April 16, 2002.
MFN is the leading provider of digital communications
infrastructure solutions. The Company combines the most
extensive metropolitan area fiber network with a global optical
IP network, state-of-the-art data centers, award-winning managed
services and extensive peering relationships to deliver fully
integrated, outsourced communications solutions to Global 2000
companies. The all-fiber infrastructure enables MFN customers to
share vast amounts of information internally and externally over
private networks and a global IP backbone, creating
collaborative businesses that communicate at the speed of light.
Customers can take advantage of MFN's complete, end-to-end
solution or select individual components to complement their
existing infrastructures. By leasing MFN's metropolitan and
regional fiber, customers can create their own, private optical
network with virtually unlimited, un-metered bandwidth at a
fixed fee. For more reliable, secure and high-performance
Internet connectivity, customers can use MFN's private IP
network to communicate globally without ever touching the
public-switched network. Moreover, MFN's comprehensive managed
services enable companies to create a world-class Internet
presence, optimize complex sites and private optical networks,
and transform legacy applications, all with a single point of
contact.
PAIX.net, Inc., a subsidiary of MFN and the original neutral
Internet exchange, offers secure, Class A co-location facilities
where ISPs and other Internet-centric companies can form public
and private peering relationships with each other, and have
access to multiple telecommunications carriers for circuits
within each facility.
DebtTraders reports that Metromedia Fiber Network's 10.000%
bonds due 2009 (MTFIB1) are quoted at a price of 8. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MTFIB1for
real-time bond pricing.
NPR INC: Reaches Agreement to Sell Assets to Sea Star Line LLC
--------------------------------------------------------------
Sea Star Line, LLC announced that it has reached an agreement to
acquire the assets of Navieras/NPR, Inc., and of certain related
entities. The agreement covers the purchase of ships, equipment,
assignment of terminal leases, trade names and other assets
related to NPR's Puerto Rico service.
The purchase agreement, subject to U.S. Bankruptcy Court
approval, will become effective at the end of April 2002. Sea
Star's expanded service will provide the premium intermodal
transportation system between the continental United States and
Puerto Rico, the Dominican Republic and the U.S. Virgin Islands.
The operation will combine Sea Star's versatile ro-ro/lo-lo
service with Navieras' market-leading container service. Sea
Star customers will enjoy greater frequency of service including
a weekly sailing between Philadelphia and San Juan, while
Navieras customers will also enjoy improved frequency between
Florida ports and San Juan plus access to a wider range of
container and trailer sizes and types.
The purchase underscores Sea Star's long-term commitment to
serving Puerto Rico and the Caribbean. "Sea Star recognizes that
market conditions today are highly competitive in the Puerto
Rico trade," said Mike Shea, President, Sea Star. "We are
nevertheless confident that this acquisition will allow Sea Star
to emerge as the leading ocean carrier in the trade. Since the
company was formed in 1998, we have consistently demonstrated
our ability to deliver quality service. Our versatile fleet
allows us to accommodate virtually any type of shipment,
including containers, trailers, heavy equipment, vehicles of all
types, bulk liquids, flat beds, refrigerated cargoes and open
tops. The purchase directly reflects Sea Star's dedication to
serving Puerto Rico and the region with fast, versatile vessels
and making ongoing investments in our service that benefit our
customers, including a wide range of container equipment and
modern, state-of-the-art terminal facilities."
Tom Holt, NPR President, added: "My senior management team fully
supports this purchase agreement and will do everything possible
to ensure the transition is seamless for our customers. We are
confident that the expanded Sea Star operation will provide all
customers with the best transportation services in the trade."
Sea Star Line, LLC is a privately owned vessel operating
transportation company providing service between the continental
United States and Puerto Rico and the U.S. Virgin Islands. Sea
Star is headquartered in Jacksonville, Florida with offices in
San Juan, Port Everglades and St. Thomas.
NTL INC: Withholds Interest Payments on Certain High-Yield Notes
----------------------------------------------------------------
NTL Incorporated (OTC BB: NTLD; NASDAQ Europe: NTLI), announced
that after consideration of the request of an unofficial
committee of holders of certain of the Company's outstanding
publicly traded bonds, it was not making interest payments at
this time due April 1 on its U.S. subsidiaries' high-yield notes
listed below.
A final decision on whether to make the payments will be made
within the 30-day grace period provided for under each
applicable indenture.
The Company emphasized that withholding these interest payments
at this time is not expected in any way to affect the normal
course of its business operations in the UK, Ireland and
Continental Europe. NTL has sufficient liquidity to make the
current interest payments and trade obligations, given its
existing liquidity and the expected net proceeds of
approximately U.S. $300 million from the anticipated closing in
Australia on or about April 2, 2002 of the sale of NTL's
Australian broadcast business. The decision not to make the
interest payments at this time was made at the request of an
unofficial committee of the Company's bondholders who have
indicated they are representing the holders of approximately 50%
of the face value of NTL and its subsidiaries' outstanding
publicly traded bonds.
NTL's bank lenders continue to be supportive of the company's
recapitalization plans.
The bonds on which interest payments are being withheld are the
following notes issued by NTL Communications Corp.: the 9-1/2%
senior notes; the 11-1/2% senior notes and the 11-7/8% senior
notes.
More on NTL:
-- As announced on January 31, NTL has appointed Credit
Suisse First Boston, JPMorgan and Morgan Stanley to advise on
strategic and recapitalization alternatives to strengthen the
company's balance sheet and reduce debt.
-- As previously announced, following the New York Stock
Exchange's announcement on March 28, 2002 that it had withheld
trading of shares of NTL's common stock pending delisting, the
Company expects that the shares will commence trading on the
Over the Counter Bulletin Board in the United States as early as
Monday April 1, 2002 and will trade at such time under the new
symbol "NTLD". The Company will provide additional information
to investors if and when available.
-- NTL offers a wide range of communications services to
homes and business customers throughout the UK, Ireland,
Switzerland, France, Germany and Sweden. Over 20 million homes
are located within NTL's franchise areas, covering major
European cities including London, Paris, Frankfurt, Zurich,
Stockholm, Geneva, Dublin, Manchester and Glasgow. NTL and its
affiliates collectively serve over 8.5 million residential cable
telephony and Internet customers.
-- In the UK, over 11 million homes are located within
NTL's fibre-optic broadband network, which covers nearly 50% of
the UK including, London, Manchester, Nottingham, Oxford,
Cambridge, Cardiff, Glasgow and Belfast. NTL Home now serves
around 3 million residential customers.
-- NTL Business is a (pound)600 million operation and
customers include Royal Bank of Scotland, Tesco, Comet, AT&T and
Orange. NTL offers a broad range of technologies and resources
to provide complete multi-service solutions for businesses from
large corporations to local companies.
-- NTL Broadcast has a 47-year history in broadcast TV and
radio transmission and helped pioneer the technologies of the
digital age. 22 million homes watch ITV, C4 and C5 thanks to
NTL's broadcast transmitters. With over 2300 towers and other
radio sites across the UK, NTL also provides a full range of
wireless solutions for the mobile communications industry.
DebtTraders reports that NTL Incorporated's 11.50% bonds due
2006 (NLI1) are quoted at a price of 33. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NLI1for
real-time bond pricing.
NAT'L GOLF: Inks Merger & Reorganization Deal with American Golf
----------------------------------------------------------------
National Golf Properties, Inc. (NYSE:TEE) announced that its
board of directors has approved a definitive merger agreement
with its primary tenant, American Golf Corporation and certain
of American Golf's affiliates, including Golf Enterprises, Inc.
and European Golf, LLC.
Under the terms of the agreement, National Golf and American
Golf and its designated affiliates will become subsidiaries of a
newly-formed corporation, incorporated in Delaware, to be named
at a later date. All issued and outstanding shares of National
Golf will be converted tax-free on a one-for-one basis into an
equal number of shares of common stock in the new company. In
addition, all common limited partnership interests in National
Golf Operating Partnership, L.P. (other than those held by
affiliates that will be owned by the new company) will be
converted on a one-for-one basis into an equal number of shares
of common stock in the new company. Upon consummation of the
merger, National Golf will no longer be a real estate investment
trust. In full, there are currently 20.5 million outstanding
National Golf shares and common units that will be converted,
representing a total of 20.5 million votes in the newly combined
company.
Shareholders of American Golf and its affiliates will receive
total consideration of up to 100,000 shares of Class C preferred
stock in the new company, 156,005 shares of common stock in the
new company (which is equivalent to 156,005 common limited
partnership units in National Golf Operating Partnership, L.P.
currently held by entities controlled by David Price that are
being contributed to the new company) and $10,000 cash. Each of
the shares of Class C preferred stock may be converted at any
time within seven years into a number of shares of common stock
in the new company equal to 22.8 multiplied by the current
market price of the common stock minus $15.00, then divided by
the current market price. This Class C preferred stock carries
no dividend, has no put rights, represents a total of 230,000
votes, has a liquidation preference of $1 million and may, at
the new company's option, be redeemed for $1 million at any time
after the twentieth anniversary of the closing of the
transaction.
After the merger is completed, current National Golf
shareholders and National Golf Operating Partnership, L.P.
common unit holders together will own 100 percent of the new
company's common shares.
The new company will achieve a $6 million benefit due to the
cancellation of net debt owed to David Price and his related
entities.
As of December 31, 2001, American Golf and its related entities
had unaffiliated third-party debt of $126 million. National Golf
had unaffiliated third-party debt of $484 million and cash on
hand in the amount of $63 million at year-end 2001. Upon
consummation of the transaction, each company and its related
entities would remain subject to their debt obligations unless
such debt obligations are refinanced.
The transaction is subject to approval by National Golf
shareholders, lenders to National Golf and American Golf and
common and preferred unit holders of National Golf Operating
Partnership, L.P., as well as customary regulatory approvals and
certain other conditions described in the merger agreement. The
companies currently anticipate that the transaction will close
by the end of the third quarter of 2002. In the event that the
transaction is not completed or is materially delayed, there may
be serious adverse consequences on the financial condition and
operations of both National Golf and American Golf. There can be
no assurance as to whether or when these conditions will be
satisfied.
Charles S. Paul, chairman of the Independent Committee and
interim chief executive officer of National Golf, stated, "The
Independent Committee has evaluated the alternatives available
to us, and we have concluded that a merger with American Golf is
in the best interests of all our stakeholders. This transaction
aligns the interests of shareholders and puts the assets of the
combined company under a unified management structure with
common goals and a focused execution strategy. We are working
closely with the lenders of both National Golf and American Golf
to extend our near-term debt maturities. As the next step in
this process, we are pursuing new debt and equity financing."
David G. Price, founder of National Golf and American Golf,
stated, "Through today's transaction, I have invested the Price-
related assets of American Golf into National Golf. This firmly
aligns my interests with those of National Golf shareholders,
positioning the combined company for future growth and success.
I look forward to working with the Independent Committee to help
ensure a smooth and productive transition and merger."
Upon the signing of the merger agreement, American Golf and its
affiliates became bound by certain covenants that allow the
Independent Committee of National Golf oversight into the day-
to-day operations at American Golf. In addition, the independent
directors will be responsible for the integration of the
companies during the transition period, the negotiation and
approval of a new equity investment, and determination of the
management of the new company.
The board of directors of the new company will be comprised of
the five members who currently sit on the board of National Golf
and will include David Price. The majority of the board is and
will continue to be independent. It is possible that the board
of directors will be modified as part of discussions with new
equity investors.
Upon completion of the merger, the new company will become the
largest owner and operator of golf courses worldwide with a
portfolio of over 300 public, private and resort courses in the
United States, the United Kingdom, Japan and Australia. The
companies today:
- Operate 246 properties in the United States, with a
strong presence in Southern California and other highly
desirable golf markets including the San Francisco Bay area, New
York City, Atlanta, Hilton Head Island, Chicago and Las Vegas;
- Operate 27 properties in the United Kingdom, Japan and
Australia;
- Own 124 of the above-mentioned properties;
- Have over 50,000 members at 78 private country clubs;
- Have nearly 100,000 active paid members of a golf
frequency reward program offered at more than 150 of the new
company's public courses;
- Have over 20,000 employees; and
- Have combined revenues in excess of $700 million.
The Independent Committee's plan undertakes to strengthen the
company's balance sheet while also stabilizing and enhancing the
value of the new company's leading property portfolio through
selective investments, the continuation of a strategic
acquisition and divestiture program and the roll-out of new
membership products and services. The Independent Committee
believes this transaction would enhance value for shareholders
while further reducing debt.
On March 29, 2002, National Golf entered into an agreement with
certain of its lenders on account of defaults under its
$300,000,000 unsecured credit facility, extending the term of
the existing forbearance agreement with these lenders until
April 30, 2002 and extending the maturity of the revolver
portion of the facility from March 29, 2002 until April 30,
2002.
National Golf noted that American Golf has paid in full its rent
obligations for March 2002 and has paid year-to-date
approximately one-half of its rent obligations. With the
approach of the high demand season, the company expects American
Golf to be current with its rent obligations on a monthly basis
going forward.
Advisors
Lazard served as investment banker to the Independent Committee
and Wachtell, Lipton, Rosen & Katz served as legal advisors.
National Golf Properties is the largest publicly traded company
in the United States specializing in the ownership of golf
course properties with 131 golf courses geographically
diversified among 22 states.
American Golf is the largest operator of golf facilities in the
world. The company (including its affiliates) employs over
20,000 men and women and operates more than 300 private, resort
and daily fee golf courses and practice centers in the United
States, United Kingdom, Australia and Japan.
As reported in the February 12, 2002, edition of Troubled
Company Reporter, National Golf's lenders agreed to forbear the
company's defaults under its credit agreements.
NATIONAL STEEL: Wins Nod to Continue Workers' Compensation Plans
----------------------------------------------------------------
National Steel Corporation, and its debtor-affiliates sought and
obtained the Court's approval to:
(i) continue their workers' compensation insurance programs on
a post-petition basis; and
(ii) pay certain pre-petition workers' compensation claims,
premiums and related expenses.
According to Mark P. Naughton, Esq., at Piper Marbury Rudnick &
Wolfe, in Chicago, Illinois, the Debtors maintain workers'
compensation coverage and other federally mandated coverage.
The Debtors' obligations include claim expenses and assessments
for which the Debtors are self-insured, insurance premiums and
certain administrative and processing costs.
A. Self-Insured Costs
Mr. Naughton relates that certain Debtors operate as self-
insured employers with respect to their workers' compensation
obligations. These Debtors maintain a variety of self-insured
workers' compensation programs under which they directly pay
applicable Workers Compensation Obligations as they arise.
Mr. Naughton explains that for self-insured programs, which
require surety bonds, the Debtors have posted approximately
$25,000,000. With respect to workers' compensation
obligations under the Longshore Act and the Black Lung Act,
the Debtors have posted surety bonds with the U.S. Department
of Labor of $300,000 and $15,000,000 respectively.
Furthermore, Mr. Naughton reports that the Debtors annual and
average monthly expenditures for workers' compensation
obligations during 2001 are approximately $16,000,000 and
$1,330,000 respectively.
B. Insured Programs
Mr. Naughton relates that in certain other jurisdictions, the
Debtors maintain insurance programs to satisfy their Workers'
Compensation Obligations. "Under the Insured Programs, the
Debtors pay annual premiums aggregating approximately
$240,000," Mr. Naughton says.
In addition, Mr. Naughton states that the Debtors also incur
processing and administrative costs in connection with the
Workers' Compensation Obligations. The Debtors' average monthly
cash expenditures during 2001 for the processing costs was
approximately $25,000.
"If the Debtors' current Workers' Compensation Programs are not
maintained, the Debtors would be required to make alternative
arrangements for workers' compensation coverage, almost
certainly at a higher cost, since such coverage is required
under all state laws and certain federal laws," Mr. Naughton
explains. If workers' compensation coverage is not maintained
as required by such laws, Mr. Naughton warns that:
(i) employees could bring lawsuits against the Debtors and
their officers for potentially unlimited damages;
(ii) the Debtors' ongoing business operations in certain states
could be enjoined; and
(iii) the Debtors' officers could be subject to criminal
prosecution.
In addition, Mr. Naughton relates that if the Debtors fail to
pay the Pre-petition Self-Insured obligations in Indiana,
Illinois, Michigan and Minnesota, and under the Longshore Act
and the Black Lung Act, for which the Debtors have posted
security, those jurisdictions would immediately draw down their
available collateral. "If this occurred, it may be difficult
and expensive for the Debtors to comply with their Workers'
Compensation Obligations," Mr. Naughton adds.
Mr. Naughton also explains that payment of processing costs is
justified because the failure to pay any such amount might
disrupt services of third-party providers. By paying processing
costs, the Debtors may avoid temporary disruptions and ensure
that:
(i) their employees obtain all workers' compensation benefits
without interruption; and
(ii) the Debtors will remain with applicable Workers'
Compensation Obligations all the time.
Judge Squires further rules that all applicable banks and
financial institutions are authorized and directed, in the
Debtors' sole discretion, to receive, process, honor and pay all
checks drawn on the Debtors' accounts to pay the Pre-petition
Obligations and Post-petition Obligations. (National Steel
Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
NATIONSRENT: Court OKs Berenson Minella as Panel's Fin'l Advisor
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of NationsRent
Inc., and its debtor-affiliates obtained Court approval to
employ and retain Berenson Minella & Company as financial
advisors and investment bankers in these Chapter 11 cases, nunc
pro tunc to January 4, 2002.
Committee chairman James Schaeffer states that Berenson Minella
will be rendering these services:
A. Financial analysis related to the proposed DIP financing
motion and other first day motion including assistance in
negotiations, attendance at hearings and testimony;
B. The review of all financial information prepared by the
Debtors or their consultants as requested by the Committee
including, but not limited to, a review of the Debtors'
financial statements as of the Petition Date showing in
detail all assets and liabilities and priority and secured
creditors;
C. Monitoring of the Debtors' activities regarding cash
expenditures, receivable collections, asset sales and
projected cash requirements;
D. Attendance at meetings including the Committee, the Debtors,
creditors, their attorneys and consultants, federal and
state authorities if required;
E. Review of the Debtors' periodic operating and cash flow
statements;
F. Review of the Debtors' books and records for inter-company
transactions, related party transactions, potential
references, fraudulent conveyances and other potential pre-
petition investigations;
G. Any investigation that may be undertaken with respect to the
pre-petition acts, conduct, property, liabilities and
financial condition of the Debtors, their management,
creditors including the operation of their businesses, and
where appropriate, avoidance actions;
H. Review of any business plant prepared by the Debtors or their
consultants;
I. Review and analysis of proposed transaction for which the
Debtors seek Court approval;
J. Assistance in a sale process of the Debtors collectively or
in segments or other delineations;
K. Assist the Committee in developing, evaluating, structuring
and negotiating the terms and conditions of all potential
plans of reorganization;
L. Estimate the value of the securities, if any, that may be
issued to unsecured creditors under any such plan;
M. Provide the Committee with other and further financial
advisory services with respect to the Debtors, including
valuation, general restructuring and advice with respect to
financial, business and economic issues that may arise
during the course of restructuring as requested by the
Committee.
Mr. Schaeffer states that Berenson Minella will be compensated
on these terms:
A. $100,000 fixed monthly rate beginning January 4, 2002;
B. Success fee of 1% of the value attained by the Unsecured
Creditors pursuant to a Plan of Reorganization; and
C. Reimbursement for reasonable out of the pocket expenses.
(NationsRent Bankruptcy News, Issue No. 8; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
NETZEE INC: Lenders Will Extend Credit Facility Maturity
--------------------------------------------------------
Netzee, Inc. (Nasdaq: NETZ), a leading provider of integrated
Internet banking products and services and Internet commerce
solutions, announced that it has reached agreements that extend
the termination date of its credit facility and the required
repurchase date of its preferred stock into 2003.
The company reached an agreement to amend its credit facility
with InterCept, Inc. and John H. Harland Company to extend the
maturity date to April 10, 2003. In exchange for this
extension, the amount available under the credit line was
reduced to $18 million from $19.6 million, and Netzee agreed to
pay a fee of $100,000 to InterCept and a $20,000 fee to Harland.
The facility originally was due to mature in November 2002.
At the same time, the company also reached an agreement with the
holders of its Series B preferred stock to defer until April 10,
2003, their option to require the company to repurchase the
preferred stock. The option will become exercisable immediately
if the indebtedness under Netzee's credit facility is
accelerated. The option previously was exercisable on June 15,
2002. In connection with this agreement, Netzee agreed to pay
the preferred shareholders an extension fee of $501,000.
"Our financial condition continues to improve as we focus on our
core Internet products and services, and we believe the amount
available under our line of credit is sufficient to fund working
capital requirements for the foreseeable future," said Donny R.
Jackson, chief executive officer.
"Our continuing financial improvement is apparent in the fact
that we expect to report positive EBITDA for the quarter ended
March 31, 2002, our second consecutive quarter in which Netzee
will have achieved positive EBITDA," Jackson said. "In
addition, we generated positive cash flow for the first quarter
of 2002, excluding the impact of the settlement of a previously
disclosed lawsuit for $750,000."
Netzee expects to report first-quarter financial results the
week of April 22, 2002.
Netzee provides financial institutions with a suite of Internet-
based products and services, including full-service Internet
banking, bill payment, cash management, Internet commerce
services, custom web design and hosting, branded portal design,
access to brokerage services, implementation and marketing
services, financial analytic tools and financial information
tools. Netzee was formed in 1999 as a subsidiary of
The InterCept Group, Inc. (Nasdaq: ICPT), and as the successor
to a company founded in 1996. Netzee became a public company in
November 1999. The company's stock is traded on the Nasdaq
National Market under the symbol NETZ. Further information about
Netzee is available at http://www.netzee.com
NEWPOWER HOLDINGS: Fails to Meet NYSE Continued Listing Criteria
----------------------------------------------------------------
As announced by the New York Stock Exchange (NYSE) earlier, the
shares of common stock of NewPower Holdings, Inc. (NYSE: NPW)
have been suspended from trading on the NYSE as the company does
not currently meet the continued listing criteria of the
exchange requiring an average closing share price of not less
than $1 per share over a consecutive 30 trading day period.
NewPower announced that this event is not expected to have any
effect on business operations or customer service. The Company
is exploring which market would be best suited for the trading
of shares of its common stock and will provide additional
information to investors when available.
NewPower Holdings, Inc. through The New Power Company, is the
first national provider of electricity and natural gas to
residential and small commercial customers in the United States.
The Company offers consumers in restructured retail energy
markets competitive energy prices, pricing choices, improved
customer service and other innovative products, services and
incentives.
NUEVO ENERGY: Brings-In C. Paige DiMaggio as New Treasurer
----------------------------------------------------------
Nuevo Energy Company (NYSE: NEV) announced that C. Paige
DiMaggio has joined the Company as Treasurer, replacing David V.
Andrews who resigned to pursue other interests. Ms. DiMaggio
will be responsible for all treasury functions including capital
raising, bank relationships, and treasury management.
"We appreciate all the contributions David has made in the
finance area during the past four and a half years he has been
with Nuevo and we wish him well in his new endeavors," commented
Janet Clark, Senior Vice President and Chief Financial Officer.
"We are very pleased to have a person the caliber of Paige join
us," stated Janet Clark. "She will be an important member of
the finance team as we pursue our plan to strengthen our balance
sheet and enhance our profitability."
Prior to joining Nuevo, Ms. DiMaggio was Treasurer for
Weatherford International, Inc. from 1998 to 2001. From 1996 to
1998 she was Investor Relations Director for Weatherford
Enterra, Inc. and from 1990 to 1996 she was Vice President,
Energy Group for Bank of America. Ms. DiMaggio is a graduate of
Texas A&M University with a M.B.A. and The University of Texas
with a B.B.A. in Finance.
Nuevo Energy Company is a Houston, Texas-based Company primarily
engaged in the acquisition, exploitation, development,
production, and exploration of crude oil and natural gas.
Nuevo's principal domestic properties are located onshore and
offshore California. Nuevo is the largest independent producer
of oil and gas in California. The Company's international
properties are located offshore the Republic of Congo in West
Africa and onshore the Republic of Tunisia in North Africa. At
September 30, 2001, the company's total current liabilities
exceeded its total current assets by about $20 million. To learn
more about Nuevo, please refer to the Company's internet site at
http://www.nuevoenergy.com
O2WIRELESS SOLUTIONS: Full-Year 2001 Net Loss Tops $27 Million
--------------------------------------------------------------
o2wireless Solutions, Inc. (Nasdaq: OTWO), a leading provider of
outsourced network services to the global wireless
telecommunications industry, reported that it has filed its
Annual Report on Form-10K for the year ended December 31, 2001
with the Securities and Exchange Commission. As previously
reported, the Company has accounts receivable aggregating $2.4
million with one customer who is experiencing financial hardship
and recently filed for protection under the federal Bankruptcy
Code. The Company believes that the outstanding receivables
have a high degree of collectibility risk and therefore
established a provision for the entire balance outstanding at
year end. This resulted in the recognition of additional bad
debt expense of $2.4 million for fiscal 2001 and thereby
increased the net loss from continuing operations of $ 24.8
million, as previously reported in the Company's earnings
release dated February 26, 2002, to $27.2 million.
o2wireless Solutions provides outsourced telecommunications
services to wireless services providers, equipment vendors and
tower companies. o2wireless' full suite of services includes
planning, design, deployment and on-going support of wireless
voice and data telecommunications networks. It has contributed
to the design and implementation of more than 50,000
communications facilities in all 50 US states and in 30
countries. o2wireless offers expertise in all major
technologies, including 2.5G and 3G technologies. The company
has 475 employees and is headquartered in Atlanta, Georgia. For
more information, please visit http://www.o2wireless.com
* * *
As reported in the February 28, 2002 edition of Troubled Company
Reporter, the Company has receivables aggregating $2.4 million
from a customer whose liquidity and financial condition have
deteriorated over the past year to the point where there is
concern regarding the customer's ability to pay its obligations
to the Company. The Company is actively working with this
customer to effect payment, and management currently anticipates
a favorable resolution and collection of substantially all of
these receivables. However, should the customer fail to pay
these obligations, the Company could recognize a loss in 4th
Quarter 2001 for these receivables. In the absence of a waiver
from certain credit facility covenants, this loss could
precipitate a default under the Company's credit agreement.
PACIFIC GAS: Seeks Court Approval of Claim Estimation Procedures
----------------------------------------------------------------
Approximately 13,000 proofs of claim have been filed in Pacific
Gas and Electric Company bankruptcy case aggregating over $44
billion. While many of the claims are small, simple trade
payables or are otherwise reasonably amenable to speedy
liquidation (80% are for amounts less than $100,000), a number
of the claims are large, complex, and not necessarily readily
subject to resolution.
PG&E maintains that many of these large claims are materially
overstated, to the tune of billions of dollars in the aggregate.
PG&E intends to object to allowance of all or a portion of many
of these claims, and the objection process has begun.
However, Section 1129(a)(ll) requires that, as a condition of
confirmation, a plan must be feasible and leave the reorganized
entity financially stable enough to meet its obligations under
the plan, in order to determine whether the Plan is feasible.
Were the Court to await final adjudication, liquidation and
allowance or disallowance of these claims, it would materially
retard the progress of the case and frustrate the reorganization
effort.
Because the billions of dollars of overstated Claims may clearly
affect the feasibility of the Plan, under controlling Ninth
Circuit, it is necessary and appropriate, therefore, for the
Court to estimate these claims for the limited purpose of
judging the feasibility of the Plan pursuant to Section
1129(a)(11) of the Bankruptcy Code. PG&E emphasized that such
estimation for feasibility purposes is in no way determinative
of the allowed amount of such claims or the distributions on
such claims.
Estimation of the Claims is likely to require substantial time
and attention because of their volume, diversity and complexity.
If performed by the Court unassisted, the process could
substantially burden the Court's docket and interfere with the
efficient administration of the case. Accordingly, the Court
will want to consider various means of streamlining the process.
In this motion, PG&E suggests procedures and process for
estimating the Claims for the Court's consideration and
approval.
The large claims include:
* approximately 112 environmental claims for a total of
approximately $1 billion,
* over 200 generator claims totaling about $8.4 billion,
* approximately 50 claims filed by energy service providers
totaling more than $580 million,
* approximately nine commercial claims totaling over $4
billion,
* approximately 1,250 chromium-related tort claims totaling
approximately $580 million,
* approximately 450 miscellaneous tort claims totaling more
than $315 million, and
* approximately 15 employment claims totaling over $110
million.
PG&E suggests the following procedures and process for
estimating the Claims:
(A) With respect to Environmental Claims, Commercial Claims,
Employment Claims,
-- Retention of a Court-approved expert to evaluate the
Claims.
The expert would report to the Court with a recommendation
regarding the estimated amount PG&E will reasonably need
to address these Claims. The expert could be empowered to
determine in the first instance, subject to the Court's
approval, the appropriate procedures for accomplishing the
estimation. Subject to the Court's approval, PG&E proposes
to file appropriate papers on or before April 17, 2002 for
the retention of such expert, coupled with a motion for
the Court's estimation of such Claims for feasibility
purposes at such time as the Court has the benefit of such
expert's report.
(B) With respect to Generator Claims, Energy Service Provider
Claims
-- Estimation by the Court based on written submissions.
Subject to the Court's approval, PG&E proposes to file one
or more motions for estimation on or before April 17, 2002
for the estimation of these Claims.
(C) SPI Commercial Claim
-- Estimation by the Court of one commercial Claim, asserted
by Sierra Pacific Industries (SPI), for more than $1
billion, with which the Court is already familiar. Subject
to the Court's approval, PG&E proposes to file a motion on
or before April 17, 2002 for the estimation of this Claim.
(D) Tort Claims
-- Retention of a Court-approved expert to assist the Court
in estimating, on an aggregate basis, approximately 450
miscellaneous tort Claims totaling more than $315 million,
based on the application of statistical methodology to
relevant litigation data accumulated by PG&E over the last
five years.
PG&E also will ask the Court to estimate the reasonable
aggregate value of approximately 1,250 additional personal
injury tort Claims, with an alleged value of approximately
$580 million, that relate to alleged exposure to chromium
from particular PG&E compressor stations.
Subject to the Court's approval, PG&E proposes to file
appropriate papers on or before April 17, 2002 for the
retention of the expert to be retained in connection with
valuation of the miscellaneous tort Claims, coupled with a
motion for the Court's estimation of such Claims for
feasibility purposes at such time as the Court has the
benefit of such expert's analysis, as well as a motion for
the Court's estimation of the Chromium Claims for
feasibility purposes.
As legal basis, PG&E represents that both Section 1129(a)(11)
and controlling Ninth Circuit mandate the estimation of claims
where necessary to determine whether a plan or reorganization is
feasible. Both logic and case law demonstrate that courts can
and should estimate any disputed claims for plan feasibility
purposes if the alleged value of those claims may affect the
feasibility of a plan of reorganization, the Debtor represents.
Absent such estimation, any recalcitrant creditor could bring
the plan process to a standstill by asserting large and
factually complex claims that they claim are merely "disputed",
insisting that the plan feasibility requirement could not be
applied or satisfied until after the conclusion of evidentiary
hearings resulting in the allowance or disallowance of the
claim, the Debtor points out.
The Debtor believes that if such authority does not exist
squarely under Section 502(c), then it in any event surely
exists under Section 1129(a)(11). Additionally, Section 105(a)
of the Bankruptcy Code authorizes the bankruptcy court to "issue
any order, process, or judgment that is necessary or appropriate
to carry out the provisions of this title."
Accordingly, PG&E requests that the Court make and enter its
order determining the processes and procedures for estimating
the Claims in a timely fashion for purposes of determining the
feasibility of the Plan under Section 1129(1)(11). s(Pacific Gas
Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
POINT.360: Expects to Firm-Up Debt Restructuring Agreement Soon
---------------------------------------------------------------
Point.360 (Nasdaq: PTSX), a leading provider of media asset
management services, announced that progress has been made in
restructuring its credit facility with a group of banks. The
Company also said it will delay filing with the Securities and
Exchange Commission its Form 10-K for the fiscal year ended
December 31, 2001 until April 15, 2002 to permit completion of
its financial statement disclosures related to the bank
negotiations.
Mr. Bagerdjian, Chairman of the Company, said: "In February, we
announced major improvements in cash flow along with our
operating results for 2001. Since then, significant progress has
been made toward reaching a satisfactory long-term resolution of
our breached credit agreement. We hope to finalize a
restructured agreement within the next several weeks."
Point.360 is one of the largest providers of video and film
asset management services to owners, producers and distributors
of entertainment and advertising content. Point.360 provides
the services necessary to edit, master, reformat, archive and
ultimately distribute its clients' film and video content,
including television programming, spot advertising, feature
films and movie trailers.
The Company delivers commercials, movie trailers, electronic
press kits, infomercials and syndicated programming, by both
physical and electronic means, to hundreds of broadcast outlets
worldwide.
The Company provides worldwide electronic distribution, using
fiber optics, satellites, and the Internet.
Point.360's interconnected facilities in Los Angeles, New York,
Chicago, Dallas and San Francisco provide service coverage in
each of the major U.S. media centers. Clients include major
motion picture studios such as Universal, Disney, Fox, Sony
Pictures, Paramount, MGM, and Warner Bros. and advertising
agencies TBWA Chiat/Day, Saatchi & Saatchi and Young & Rubicam.
POLAROID: Retirees' Committee Seeks Reinstatement of Health Plan
----------------------------------------------------------------
After conducting the investigation regarding the termination of
the Polaroid Corporation's Retiree Health Plan, the Retirees'
Committee seeks reinstatement of the Plan on the grounds that
the Debtors did not effectively terminate the Plan before the
Petition Date.
Scott D. Cousins, Esq., at Greenberg Traurig, LLP, in
Wilmington, Delaware, informs Judge Walsh that the Plan provides
that participation in the Plan ceases only when:
(a) the Participant dies; or
(b) the Participant is no longer eligible for benefits
because he is no longer a spouse or Dependent; or
(c) the Debtors terminate the plan; or
(d) the Participant fails to make premium payment.
Mr. Cousins recounts the events supporting the relief requested:
(a) the Debtors purported to terminate the Plan effective
October 9, 2001 but the signature at the end of the
re-issued Plan was undated;
(b) Americana Insurance, retained to handle the mailing of
notices, delivered the Termination Letters dated October
9, 2001 to a mail house, "All the Answers" on October
11, 2001;
(c) All of the Answers delivered the Letters to the
Providence, Rhode Island Post Office on the afternoon
of October 11, 2001.
(d) the next day, the Debtors filed for Chapter 11
protection;
(e) some Plan participants and beneficiaries received the
letter on or about October 13, 2001;
(e) at least one Committee Member called his Claims
Administrator and Health Insurance provider upon receipt
of the letter and was informed that his coverage has not
been terminated.
Thus, Mr. Cousins asserts that the Debtors failed to effectively
communicate to all parties-in-interest the termination of the
Plan pre-petition.
Also, Mr. Cousins points out that the Plan was not effectively
terminated prior to Petition Date in accordance with the
provisions of Employee Retirement Income Security Act. Mr.
Cousins explains that the Act provides that a welfare benefit
plan is terminated only when the retiree receives the actual
notice of its termination. And yet, Mr. Cousins informs Judge
Walsh, many Plan holders actually received the Notice after the
Petition Date. Accordingly, Mr. Cousins maintains that the
provisions of Section 1114 of the Bankruptcy Code require that
the Plan be reinstated.
Since the Debtors demonstrated that they have no interest in
protecting the Retirees, the Retirees Committee asks the Court
to appoint it as the "Authorized Representative" of the retirees
pursuant to Section 1114(b) of the Bankruptcy Code. As an
alternative, the Court may:
(a) increase the initial cap on fees and expenses of
professionals, and
(b) expand the Investigation, and any other and further
relief as is just.
Mr. Cousins relates that the Committee is still conducting its
investigation into the facts and circumstances surrounding the
Debtors' pre-petition attempt to terminate certain retiree
benefits and severance payments. Since the Investigation has
already helped shed light on developments regarding termination
benefits, pension plans and ERISA-related issues, the Retiree
Committee believes that the Cap is insufficient to reimburse the
professionals employed in this case to investigate the issue.
Mr. Cousins also notes that since the U.S. Congress has given
attention on the liquidation of the Debtors' Employee Stock
Ownership Plan, the scope of the Committee's investigation
should be further expanded to include actions taken in response
to the Senate Committee's request and the pursuit of changes in
legislation which have been brought to the forefront in these
cases. (Polaroid Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PRIMEDIA INC: Thinning Interest Coverage Spurs S&P Downgrades
-------------------------------------------------------------
On March 28, 2002, Standard & Poor's lowered its credit ratings
on PRIMEDIA Inc. to 'B'. The ratings remain on CreditWatch with
negative implications where they were placed on September 26,
2001. Standard & Poor's will reassess the ratings following the
release of first quarter 2002 results. Ratings are likely to be
affirmed barring further negative surprises.
PRIMEDIA, based in New York City, holds good positions in
various publishing industry sectors, including special interest
and trade magazines, classroom and workplace education, and
consumer and business information. Total debt and preferred
stock as of December 31, 2001, was about $2.5 billion.
The downgrade reflects poor operating performance and thin
interest coverages resulting from the lackluster advertising
environment and losses incurred from the company's Internet
strategy. In addition, management's expectation of a continued
drop in EBITDA in the first quarter of 2002 will place further
pressure on interest coverage and may restrict flexibility
within bank covenants. Even when an upturn materializes, debt
will remain high and Internet operations are still likely to be
in a development mode.
Profitability of the company's Channel One school TV news
operation, consumer and trade magazines, and About.com portal
are weak due to the soft market for general brand, business-to-
business, and Internet advertising. EBITDA coverage of interest
expense and preferred dividends declined to 1.0 times in 2001
from 1.3x in 2000, reflecting a 29% drop in EBITDA from
continuing businesses. PRIMEDIA estimates that EBITDA will
decline roughly 28% in the seasonally weak first quarter of 2002
reflecting a continued weak advertising industry environment and
a sharp drop in noncash assets for equity revenues. Despite
lackluster first quarter profit, the company expects EBITDA for
the full-year 2002 will increase about 25% due to cost
reductions already taken, reduced Internet losses, and a full
year ownership of EMAP USA. Standard & Poor's takes a cautious
view of 2002 EBITDA growth and gains in interest coverage, which
may be restricted by the uncertain industry outlook for
traditional and Internet advertising demand.
PRIMEDIA has been spending heavily to develop Internet-delivered
services for its core operations. Nevertheless, Internet revenue
growth in 2001 has been negatively affected by declining
advertising spending. In addition, the ultimate success of
PRIMEDIA's efforts to cross-sell advertisements on About.com
from its traditional advertising base is uncertain.
Proceeds of roughly $157 million from asset sales have been used
to reduce debt, though debt levels remain elevated due to
negative discretionary cash flow in 2001 and the EMAP
acquisition. The company also expects that additional asset
sales of about $93 million will be completed by the end of the
second quarter. Revolving credit availability as of December 31,
2000, was roughly $190 million, though weaker performance in the
2002 first quarter would reduce permitted borrowings under bank
covenants.
Standard & Poor's remains concerned that soft economic and
advertising conditions will continue to have a negative impact
on profitability despite cost reductions. Worse than anticipated
weakness in operating performance could put pressure on bank
debt covenants. Standard & Poor's will continue to monitor the
company's business strategies and operating performance for
indications that it can maintain its flexibility.
PSINET INC: Cogent Comms. Acquires Majority of U.S. Operations
--------------------------------------------------------------
Cogent Communications Group, Inc. (Amex: COI), a Tier One
optical Internet Service Provider, announced that it has
completed the acquisition of the majority of the U.S. operations
of PSINet, Inc., the first commercial Internet service company
ever established. On March 27th, the U.S. Bankruptcy Court for
the Southern District of New York approved Cogent's acquisition,
clearing the way for Cogent to finalize documentation related to
the closing. In this acquisition, Cogent acquires PSINet assets
-- including PSINet's customer base, backbone network and
associated equipment and rights to intellectual property -- for
only $10 million.
"With the consolidation going on in the Internet service
provider space, Cogent has been able to identify some excellent
opportunities to accelerate its business plan," said Dave
Schaeffer, Chief Executive Officer and Founder of Cogent
Communications. "PSINet will enable Cogent to immediately
incorporate a revenue stream from a set of products that
complement Cogent's core offering of 100 Mbps Internet
connectivity for $1,000 per month."
"By eliminating some of the high costs associated with the
PSINet network combined with a reduction in staff, Cogent
expects to take a business with poor operating results and turn
it around," said Helen Lee, Cogent's Chief Financial Officer.
"At the same time, increasing traffic on Cogent's backbone
should lead to significant economies of scale for Cogent."
Cogent plans to support and build the PSINet brand name, one of
the most recognizable ISPs in the country. Under the PSINet
label, Cogent will continue offering PSINet services, including
Internet connectivity. "Cogent will continue to support
PSINet's core strengths. PSINet has developed one of the most
knowledgeable and trusted teams of experts in the country to
build and deliver its services," added Schaeffer. "We also have
found that customers have chosen PSINet due to its superior
customer service, and we intend to maintain or exceed the level
of service as PSINet emerges as a Cogent Communications
company."
Cogent Communications (Amex: COI) is a next generation optical
ISP focused on delivering ultra-high speed Internet access and
transport services to businesses in the multi-tenant marketplace
and to service providers located in major metropolitan areas
across the United States. Cogent's signature service offered to
commercial end-users of 100 Mbps for $1,000 per month, offers
100 times the observed bandwidth of a T-1 connection at up to
two-thirds of the cost. The Cogent solution makes ultra-high
speed Internet access an affordable reality for small and
medium-sized businesses, as well as large enterprises and
service providers. Cogent's facilities-based, all-optical end-
to-end IP network enables non-oversubscribed 100 Mbps and 1000
Mbps connectivity for radically low, unmetered pricing levels.
Cogent's network consists of a dedicated nationwide multiple OC-
192 fiber backbone, multiple intra-city OC-48 fiber rings, and
optically-interfaced high-speed routers. Cogent has been
recognized as the first IP+Optical Cisco Powered Network (CPN).
Cogent is currently servicing 20 metropolitan markets. Cogent
Communications is headquartered at 1015 31st Street, NW,
Washington, D.C. 20007. For more information, visit
http://www.cogentco.com Cogent Communications can be reached at
202-295-4200 or via email at info@cogentco.com.
DebtTraders reports that PSINET Inc.'s 11.000% bonds due 2009
(PSINET2) are quoted at a price of 9.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=PSINET2for
real-time bond pricing.
RECOTON: Lenders Amend Financial Covenants Under Credit Pacts
-------------------------------------------------------------
Recoton Corporation (Nasdaq: RCOT), a leading global consumer
electronics company, announced financial results for the fourth
quarter and year ended December 31, 2001 (see attached tables).
Simultaneously the Company announced that it has successfully
completed negotiations with its lenders to modify certain debt
covenants and obtain waivers of defaults, thus providing
continuing financial stability for Recoton.
Robert L. Borchardt, Chairman, President and Chief Executive
Officer of Recoton, stated, "We have reached a successful
conclusion with our lending group led by GE Capital. The group
waived our defaults at December 31, 2001 and has amended our
financial covenants going forward. As a provision of our loan
agreement, the Company paid a default rate of interest equal to
2% per annum above the Company's then prevailing cost of funds
for the first quarter of this year. With the execution of this
amendment the default rate has been eliminated and the Company's
cost for funds will increase 1/4% above its cost of funds at
December 31, 2001. In addition, the lending group will also
receive a fee of 3/8 of 1% on the existing loan commitment,
payable in three installments during the year. With the
necessary financing in place to support operations, we can
continue to focus the Company's efforts on capitalizing on the
digital convergence in consumer electronics."
Mr. Borchardt continued, "Despite a difficult retail environment
and a soft economy, Recoton's consumer electronic accessory and
audio business segments generated strong operating results in
fiscal 2001, producing an EBIT of $24.8 million for the consumer
electronic segment and $14.7 million for the audio segment.
These positive contributions, however, were masked by losses in
our video game segment (InterAct). The lingering effects of the
recent industry hardware transition, sell through of legacy
platform inventories, new product development costs, cost of air
freighting goods for product launches, K-mart's (NYSE:KM)
chapter 11 bankruptcy, the high cost of maintaining third party
market leadership and certain inherent inefficiencies in our
video game business all contributed to the poor results. Despite
the difficulties encountered in this segment, we continue to
believe in InterAct's potential and remain confident that this
segment of our business will return to profitability in 2002.
"During the first quarter of 2002 we began to take immediate
actions to reduce our operating expenses at the video game
segment, including eliminating certain fixed costs which, on an
annualized basis, is expected to save the Company approximately
$7 million. Furthermore, given the success achieved in the
turnaround of both the consumer electronics accessory and audio
segments of our business, the Company has again retained the
services of Zolfo Cooper to assist management in attaining long-
term success in the video game segment. The Company remains
committed to its video game segment customers and will continue
to improve services and support levels."
Mr. Borchardt continued by discussing the strong operating
performance at Recoton's consumer electronics accessory and
audio business segments during 2001. "Although the soft economy
affected comparisons, the consumer electronics accessories
segment produced an EBIT of approximately $8.3 million on sales
of $77.2 million in the fourth quarter of 2001 as compared to an
EBIT of $12.7 million on sales of $76.0 million in the fourth
quarter of 2000. For the full year the consumer electronics
accessory segment generated sales of $233.9 million and produced
an EBIT of $24.8 million versus $238.3 million in sales with an
EBIT of $27.0 million in fiscal 2000. The decline in both
revenue and EBIT in this segment is reflective of both a decline
in OEM business and reestablishing our consumer electronic
accessories business in Europe. New opportunities abound because
of the prospective growth of digital TV and the convergence of
audio, video and computers. New digital camcorder and photo
products, DVD players and recorders will become increasingly
affordable and will enhance the home entertainment environment.
The accessories needed to connect or enhance these products such
as high-end cable, switches, TV antennas, TV remote controls,
surge protection devices, wireless headphones, wireless speakers
and a host of cellular and digital camcorder and photo
accessories will proliferate. As a result, we believe that the
consumer electronic accessory segment will enjoy growth in both
revenue and profitability as consumers embrace new digital
products.
"Despite what was a very soft retail environment, our audio
segment generated an EBIT of approximately $5.4 million on sales
of $67.3 million in the fourth quarter of 2001 as compared to an
EBIT of $6.8 million on sales of $63.8 for the fourth quarter of
2000. For the full year of 2001 this segment generated $14.7
million of EBIT on sales of $222.9 million versus an EBIT of
$19.2 million on sales of $233.4 million. The decline in both
revenues and EBIT in this segment is attributable to the soft
retail environment for audio products during 2001 and the sell
through in the first half of the year of more mature products
prior to the launch of new products in the second half of the
year.
"We believe that we are well positioned with our brands to
continue growing our market share and increasing profitability.
The tragic events of 9/11 have caused many people to cocoon in
their homes. Consumers have purchased, and we expect will
continue to purchase, DVD players and digital and plasma
televisions. This, in turn, should create a demand for home
theatre speaker systems under Recoton's Jensen(R), Advent(R),
A/R Acoustic Research(R) and NHT (Now Hear This)(R) brand names.
We have observed that families have increased their personal
travel in the family car and we believe that this will help
sales of car audio entertainment including receivers, speakers,
amplifiers, in-vehicle TV & DVD players. We also believe that
the launch in selected markets of satellite radio service from
Sirius Satellite Radio(R) (Nasdaq: SIRI) in February 2002 offers
us an exciting opportunity for growth. We commenced selling our
Jensen brand satellite aftermarket car radio receivers, which
have been designed to accept the Sirius signal, concurrent with
Sirius' service launch. Sirius has just announced that it is
accelerating its national service roll out to July 1, 2002 with
a target of acquiring 100,000 - 200,000 subscribers by year-end.
Recoton will supply its Jensen/Sirius capable receiver products
in each new market that Sirius enters. In addition, this Fall we
will be delivering our exclusive Jensen branded PNP (Plug-n-
Play) adapter and antenna which enables quick installation of
the Sirius satellite service with current car radios. The
phenomenon of satellite radio has been compared by some to the
early days of satellite television, which has become an
entertainment staple for many American consumers."
The video game segment (InterAct) during the fourth quarter of
2001 produced an EBIT loss of $6.5 million on sales of $61.2
million versus an EBIT loss of $1.3 million on sales of $69.8
million during the same period last year. For the year 2001 the
EBIT loss was $17.2 million on sales of $156.3 million versus an
EBIT loss of $9.9 million on sales of $177.6 for the full year
of 2000.
Mr. Borchardt stated, "As a result of the poor performance in
the video game segment, we are reviewing and cutting operating
expenses and implementing changes to increase our gross margins.
As previously stated, we have begun to cut operating expenses at
our North American and Asian operations, which we expect will
lead to a reduction of these expenses by approximately $7
million on an annualized basis. In addition, we intend to
implement changes throughout the remainder of the 2002 to
improve the cost of goods sold.
"InterAct still maintains the largest third party market share
of video game accessories. We have introduced full lines of
compatible accessories for Microsoft's Xbox(R) and Nintendo
GameCube(R) and Game Boy Advance(R), plus Sony's(R) Playstation
2(R) platforms, which have all achieved industry wide
acceptance. We expect to introduce GameShark(R) for Nintendo
GameCube in the second quarter of 2002 and believe it, too, will
enjoy the same success ratios as our previously introduced
GameShark products."
On a consolidated basis, net sales for the 2001 fourth quarter
totaled $205,700,000 versus $209,600,000 for the same period
last year. Net sales for the twelve months ended December 31,
2001 were $613,100,000 as compared to $649,300,000 in 2000. The
net loss for the fourth quarter of 2001 was $2,362,000 versus
net income of $2,510,000 for the fourth quarter of 2000. The net
loss for 2001 was $7,556,000 versus a net loss of $4,836,000
last year. The loss for the 2001 fourth quarter and year also
included a provision on the outstanding Kmart receivables of
approximately $2,600,000. Sales to Kmart represented
approximately 3% of Recoton's total sales for 2001.
Mr. Borchardt concluded by stating, "We are very pleased that
our lenders have demonstrated continued support of our
relationship. This amendment provides Recoton with the financial
stability and flexibility needed for operations and short term
expansion. In 2002 we believe that our consumer electronic
accessories and audio business segments should continue to
produce strong operating results. The restructuring of our video
game business, taken in conjunction with the completed
transition of the video gaming industry, should produce
strong operating results. We are projecting the Company's
revenues on a comparative basis to fiscal 2001 to total between
$640,000,000 and $655,000,000, against which the Company expects
net earnings for the year in the range of $7,500,000 and
$8,500,000 (in accordance with new accounting rule ETIF 0025, in
fiscal year 2002 we will be required to record market expansion
expenses as dilution to sales instead of reporting it as a
selling expense; we anticipate market expansion expenses to
range between $40 and $50 million in fiscal 2002). The new wave
of digital products that just a couple of year ago were
considered cutting edge are now becoming commonplace. Each of
Recoton's distinct business segments should benefit as these
next generation digital products reach more affordable price
points and foster increased consumer awareness."
Recoton Corporation is a global leader in the development and
marketing of consumer electronic accessories, audio products and
gaming products. Recoton's more than 4,000 products include
highly functional accessories for audio, video, car audio,
camcorder, multi-media/computer, home office and cellular and
standard telephone products, as well as 900MHz wireless
technology products including headphones and speakers;
loudspeakers and car and marine audio products including high
fidelity loudspeakers, home theater speakers and car audio
speakers and components; and accessories for video and computer
games.
ROMARCO MINERALS: TSE to Suspend Trading Over Listing Violations
----------------------------------------------------------------
The common shares of Romarco Minerals Inc. (Symbol:R) will be
suspended from trading on the Toronto Stock Exchange at the
close of business on Thursday, March 28, 2002, for failure to
meet the continued listing requirements of the TSE.
It is understood that the common shares will commence trading on
the Canadian Venture Exchange Inc. at the opening on Monday,
April 1, 2002 under the stock symbol "R" and CUSIP number 775903
10 7.
STANDARD MOTOR: Industry Conditions Prompt S&P to Cut Ratings
-------------------------------------------------------------
On March 27, 2002, Standard & Poor's lowered its long-term
corporate credit rating on Standard Motor Products Inc. to 'BB-'
and removed the rating from CreditWatch, where it was placed
December 19, 2001. The rating actions reflect Standard & Poor's
belief that the industry challenges will prevent the company
from achieving the improvement in financial measures factored
into previous ratings. The rating outlook is stable.
The ratings on Standard Motor reflect its leading niche market
positions, offset by exposure to the challenges of the
automotive aftermarket and the risks associated with a product
line subject to weather related swings in demand. Standard Motor
produces and distributes engine management products and
temperature control products, with sales split almost evenly
between the two segments. The company has a strong position with
warehouse distributors and the retail segment of the automotive
aftermarket. Standard Motor primarily serves the North American
market, but the company has established a presence in Europe and
is expected to expand its international position over time.
Standard Motor's operating results have come under pressure
during the past two years due to higher-than-expected product
returns in its temperature control segment; inventory reduction
efforts by the company and several major retail customers; and
weather-related drops in demand. As a result, credit protection
measures have remained below expected levels.
Previous ratings were based on the expectation that debt to
EBITDA would improve to the 4 times level in the near term and
settle in the 3.0x-3.5x range over the longer term. Debt to
EBITDA (adjusted for operating leases) is currently estimated to
be about 5.9x. Financial measures are expected to improve in the
next year or two. Standard Motor has taken steps to address the
product returns issue that hurt 2000 results. It has also taken
steps to reduce costs. In addition, it is not facing significant
inventory issues, compared with last year. However, the company
will remain subject to industry pressures and weather related
swings in demand.
Standard Motor's debt levels fluctuate during the year due to
the seasonality of the temperature control business, with the
peak borrowing period occurring in the first half of the year.
Current ratings are based on the assumption that debt to EBITDA
will improve from current levels and settle in the 4.0x-4.5x
range and that EBITDA interest coverage will average 3.0x.
Outlook
The ratings are based on the assumption that management will
remain committed to improving the financial profile of the
company and that benefits from cost cutting, improved working-
capital management, and new policies and procedures regarding
product returns will lead to better financial measures during
the next two years.
STATIONS HOLDING: Seeks Court Approval to Hire Kirkland & Ellis
---------------------------------------------------------------
Stations Holding Company, Inc., seeks permission from the U.S.
Bankruptcy Court for the District of Delaware to tap the legal
expertise of the firm Kirkland & Ellis as its attorneys in this
chapter 11 case.
In preparing for this case, Kirkland & Ellis has become familiar
with the Debtor's businesses and affairs and many potential
legal issues that may arise in the context of chapter 11 case.
As Counsel, Kirkland & Ellis is expected to:
a) advise the Debtor with respect to its powers and duties
as debtor in possession in the continues management and
operation of its business and properties;
b) attend meetings and negotiate with representatives of
creditors and other parties in interest;
c) take all necessary action to protect and preserve the
Debtor's estate, including the prosecution of actions on
the Debtor's behalf, the defense of any action commenced
against the Debtor, negotiations concerning all
litigation in which the Debtor is involved, and
objections to claims filed against the estate;
d) prepare on behalf of the Debtor all motions,
applications, answers, orders, reports, and papers
necessary to the administration of the estate;
e) negotiate and prepare on behalf of the Debtor's behalf a
plan of reorganization, disclosure statement, and all
related agreements/documents, and take any necessary
action on behalf of the Debtor to obtain confirmation of
such plan;
f) represent the Debtor in connection with any potential
sale of assets;
g) advise the Debtor in connection with any potential sale
of assets;
h) appear before this Court, any appellate courts, and the
United States Trustee and protect the interests of the
Debtor's estate before such Courts and the United States
Trustee;
i) advise the Debtor regarding the maximization of value of
the estate for its creditors;
j) consult with the Debtor regarding tax matters; and
k) perform all other necessary legal services and provide
all other necessary legal advice to the Debtor in
connection with the Chapter 11 Case.
To date, Kirkland & Ellis received approximately $590,000 for
its prepetition bankruptcy and non-bankruptcy related services.
The Debtor agrees to pay Kirkland & Ellis its customary hourly
rates but does not disclose its specific rates in its
application and affidavit.
Stations Holding Company, Inc. is a holding company with minimal
operations other that from its non-debtor, wholly-owned
subsidiary, Benedek Broadcasting Corporation. Benedek
Broadcasting owns and operates 23 television stations located
throughout the United States. The Company filed for chapter 11
protection on March 22, 2002. Laura Davis Jones, Esq. at
Pachulski, Stang, Ziehl Young & Jones and James H.M. Sprayregen,
Esq. at Kirkland & Ellis represent the Debtor in its
restructuring efforts. When the Company filed for protection
from its creditors, it listed estimated debts and assets of more
than $100 million.
SUNBEAM CORP: Deadline to Vote on Plan Extended to July 8, 2002
---------------------------------------------------------------
Pursuant to orders of the United States Bankruptcy Court for the
Southern District of New York, dated April 30, 2001, the
deadline to vote on Sunbeam Corporation's Second Amended Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code and its
chapter 11 debtor subsidiaries' Second Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code, both
dated April 26, 2001, has been extended to July 8, 2002.
Therefore, all persons and entities entitled to vote on the
Plans, shall deliver their Ballots by mail, hand delivery or
overnight courier by no later than 4:00 p.m. Eastern Time on
July 8, 2002 to the Balloting Agent at:
BANKRUPTCY SERVICES, LLC
Heron Tower, 70 East 55th Street, 6th Floor
New York, New York 10022
Attn: Kathy Gerber
TRANSTECHNOLOGY: Selling Aerospace Rivet Unit to Allfast for $4M
----------------------------------------------------------------
TransTechnology Corporation (NYSE:TT) announced that it had
signed a definitive agreement to sell all of the shares of its
Aerospace Rivet Manufacturers Corporation subsidiary to Allfast
Fastening Systems Inc. of Los Angeles, California for cash
consideration of $4 million.
The acquisition, which is subject to the completion of due
diligence and other conditions, 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, in December 2001, sold its
Engineered Components business for $96 million, and in February
2002 sold its German retaining ring business for $20 million.
The company has used the proceeds of these divestitures and its
internally generated cash flow to reduce its total debt from
$273 million at March 31, 2001 to $108 million at the end of
March 2002. The company will use the expected proceeds from the
sale of ARM 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.
Allfast Fastening Systems, Inc. -- http://www.allfastinc.com--
manufactures solid rivets, blind rivets and installation tooling
for the aerospace industry.
UNITED AUSTRALIA: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: United Australia/Pacific, Inc.
4643 S. Ulster Street
Suite 1300
Denver, Colorado 80237
Phone: 303-220-6637
fka UIH Australia Programming, Inc.
fka UIH Australia/Pacific, Inc.
Bankruptcy Case No.: 02-11467
Type of Business: United Australia/Pacific, Inc., through an
indirect 51.4% owned subsidiary, is a leading
provider of pay television, telephone and
Internet services in Australia and New
Zealand.
Chapter 11 Petition Date: March 29, 2002
Court: Southern District of New York (Manhattan)
Debtors' Counsel: Martin N. Flics, Esq.
Latham & Watkins
885 Third Avenue
New York, New York 10022
Pone: (212) 906-1224
Fax : (212) 751-4864
and
Gregg D. Josephson, Esq.
Latham & Watkins
885 Third Avenue
New York, New York 10022
Pone: (212) 906-1224
Fax : (212) 751-4864
Total Assets: $42,705,901
Total Debts: $549,803,884
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
MacKay-Shields Financial Corp. Bondholder $203,455,000
Donald Morgan $19,285,000
9 West 57th St., 33rd Fl.
New York New York 10019
212-230-3911
Fidelity Investments Bondholder $45,930,000
David Glancy $13,450,000
82 Devonshire Street
Boston Massachusetts 02109
617-563-7944
Federated Investors Bondholder $25,757,000
Mark Durbiano
1001 Liberty Avenue
Pittsburgh Pennsylvania 15222
412-288-7542
The TCW Group, Inc. Bondholder $17,500,000
Mark Attanasio
11100 Santa Monica Boulevard,
Suite 2000
Los Angeles California 90025
310-235-5900
GoldenTree Asset Management Bondholder $15,185,000
Steven Tananbaum $240,000
300 Park Avenue,
25th Floor
New York, New York 10022
212-847-3500
The Dreyfus Corp. Bondholder $14,125,000
Roger King $3,325,000
200 Park Avenue,
55th Floor
New York, New York 10166
212-922-6498
CIGNA Retirement & Bondholder $13,150,000
Investment Services
Thomas Jones
900 Cottage Grove Road
Bloomfield Connecticut 06002
860-726-7767
Bank of America Bondholder $11,975,000
Securities LLC
Scott Reifer
300 Harmon Meadows Boulevard
Secaucus, New Jersey 07094
201-325-4328
Magten Asset Management Corp. Bondholder $10,700,000
Allan Brown
35 E. 21st Street
New York, New York 10010
212-529-6600
SunAmerica Asset Management Bondholder $10,200,000
Corp
James Ramsay
1999 Avenue of the Stars,
37th Floor
Los Angeles, California 90067
310-772-6101
Lutheran Brotherhood Bondholder $10,000,000
Securities Corp.
Mark Simenstad
625 Fourth Avenue S.,
10th Floor
Minneapolis, Minnesota 55415
612-340-7000
Middenbank Curacao NV Bondholder $7,900,000
Zelendia Office Park
P.O. Box 3895
Kaya WFG Mensig 14
Curacao Netherlands Antilles
ABN Amro Asset Management Bondholder $6,025,000
H-Y Trade Desk $1,765,000
208 S. LaSalle Street
Chicago, Illinois 60604
312-855-7600
Brinson Advisors Inc. Bondholder $5,500,000
James Keegan
51 West 52nd Street
New York, New York 10019
212-713-3685
Royal Bank Of Canada Bondholder $4,865,000
Trust (Jersey) $4,335,000
Income Department
P.O. Box 194
19-21 Broad Street
St. Helier / Jersey,
Channel Islands
JE 4 8RR
Allstate Insurance Company Bondholder $4,550,000
Pamela Ann Gordon
3075 Sanders Road, Suite H1A
Northbrook, Illinois 60062
847-440-4762
Van Kampen American Capital Bondholder $4,500,000
Stephan Esser
One Parkview Plaza
Oakbrook Terrace,
Illinois 60181
630-684-6000
Bank of Montreal Bondholder $3,500,000
David Hyma
1 First Canadian Place,
3rd Floor
Toronto, ON M5X 1H3
416-867-5829
Merrill Lynch Trade Desk Bondholder $3,000,000
Sheldon Broutman
4 Corporate Place,
Corporate Park 287
Piscataway, New Jersey 08855
908-878-6506
Conseco Capital Management Bondholder $2,500,000
Gregory Hahn
11825 N. Pennsylvania Street
Carmel, Indiana 46032
317-817-2622
VIKONICS INC: Files for Chapter 11 Reorganization in New York
-------------------------------------------------------------
Vikonics, Inc. (OTC Bulletin Board: VKSI) announced that it has
filed a voluntary petition for Chapter 11 reorganization with
the U.S. Bankruptcy Court for the Southern District of New York.
Vikonics will ask the Bankruptcy Court to consider a variety of
motions to support its employees, customers and suppliers. These
include motions seeking Court permission to utilize its cash
collateral to continue the operation of its business, retain
legal counsel for the reorganization process and seek Court
approval for the sale of substantially all of the Company's
assets.
The Company has incurred significant losses in each of the past
ten years and has been unable to obtain financing or renegotiate
the terms of payment of significant amounts due to private
investors who provided the Company with a loan in 1993. During
this ten-year period the Company has also incurred significant
tax liabilities, which are secured with a lien on the Company's
assets. The Company believes that it is in the best interest of
the Corporation, its creditors, customers, shareholders and
other interested parties that the petition be filed for Chapter
11 reorganization.
Vikonics designs, manufactures, markets, installs and supports a
line of sophisticated, computer-based security systems. The
Company markets its systems to defense contractors and
government agencies as well as general commercial customers.
VIKONICS INC: Chapter 11 Case Summary & 20 Largest Creditors
------------------------------------------------------------
Debtor: Vikonics, Inc.
c/o Breslow & Walker
767 Third Avenue
New York, New York 10017
Bankruptcy Case No.: 02-11397
Chapter 11 Petition Date: March 27, 2002
Court: Southern District of New York (Manhattan)
Judge: Burton R. Lifland
Debtors' Counsel: Bruce J. Zabarauskas, Esq.
Meltzer Lippe Goldstein & Schlissel, P.C
190 Willis Avenue
Mineola, New York 11501
(516) 747-0300
Fax : (516) 747-2956
Total Assets: $178,410
Total Debts: $2,586,793
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Leonard J. Fassler Loan $237,000
John L. Kaufman Loan $222,764
Mr. Manny & Mrs. Lillian Loan $174,250
Weiss
Mr. Randolph N. Reynolds Loan $139,400
Estate of Arthur Sweeney Loan $34,850
North Teterboro Associates Unpaid Rent $48,726
State of New Jersey Withholding Taxes $45,393
State of New Jersey Unemployment & $35,795
Disability Insurance
State of New York Withholding & Sales Taxes $45,747
Commonwealth of Virginia Withholding Taxes $5,211
John P. Colangelo, Esq. Legal Fees $14,495
Carella Byrne Legal Fees $8,613
Industrial Properties, Inc. Rent $7,318
Sentrol, Inc. Trade Debt $5,900
HID Corporation Trade Debt $5,614
Continental Transfer Transfer Agent $5,535
Company
Citrin Cooperman & Co., LLP Accounting Fees $5,380
Guardian Life Insurance Medical Insurance $4,037
Pausin Manufacturing Trade Debt $6,690
Quickline Design & Mfg., Trade Debt $3,773
Inc.
W.R. GRACE: Judge Fitzgerald Names Warren Smith as Fee Auditor
--------------------------------------------------------------
Judge Judith Fitzgerald observes that the size, complexity and
duration of the chapter 11 cases of W. R. Grace & Co., and its
debtor-affiliates will result in numerous and lengthy written
applications for payment of professional fees and reimbursement
of expenses in significant amounts. The appointment of a fee
auditor is therefore in the best interests of the Debtors'
estates, their creditors and parties-in-interest as the Court
seeks to fulfill its responsibility to review fee applications
in accord with the requirements of the Bankruptcy Code in a
"thorough and efficient manner."
Warren H. Smith & Associates PC is appointed as the fee auditor
to act as a special consultant to the Court for professional fee
and expense review and analysis. All parties other than those
appointed by the Court or whose employment does not require fee
applications are subject to Smith's review.
Each applicant is directed to serve Smith with a copy of the fee
application and to email supporting detail. Smith is directed
to review fee applications in detail, but to avoid duplication
of review as between interim and final fee applications. During
the course of this review, Smith is within 30 days to
communicate to the applicant in writing about the results of
that review. Within 15 days of that event, Smith is to consult
with each applicant if it notes any "areas of concern" regarding
actual and necessary fees and expenses. Smith is directed to
endeavor in good faith to reach consensual resolutions of any
concerns. Within 45 days, Smith is to conclude the informal
response process by filing with the Court a final report on each
application, although this latter time period may be extended by
agreement with the applicant. In this final report, Smith is to
give its opinion on whether the fee application meets the
standards of the Bankruptcy Code and Local Rules. Within 20
days of this Final Report, the applicant may respond in writing.
Smith is further directed to have a general familiarity with the
documents and docket in these cases, being deemed to have filed
a request for service under Fed R Bankr Pro 2002.
Smith's fees are to be paid by these chapter 11 estates and are
to be the lesser of (i) the ordinary hourly rate of the fee
auditor for services of this nature, or (ii) 1% of the aggregate
applicant billings over the life of these chapter 11 cases
reviewed by the auditor. (W.R. Grace Bankruptcy News, Issue No.
21; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WESTERN INTEGRATED: Signs-Up Q Consulting for Financial Advice
--------------------------------------------------------------
Western Integrated Networks, LLC and its debtor-affiliates seek
permission from the U.S. Bankruptcy Court for the District of
Colorado to employ and retain Q Consulting LLC as their
Financial Advisors.
The Debtors selected Q Consulting because of its expertise in
providing restructuring services and capital raising assistance
to the U.S. and global telecommunication and energy industries.
Western Integrated will look to Q Consulting for:
a) assistance with preparation and review of new business
plan;
b) creation of restructuring strategy to facilitate
emergence from chapter 11 and attraction of additional
equity capital;
c) financial due diligence on viability of business plan;
d) assistance in negotiating terms with additional equity
investors;
e) financial due diligence on viability of business plan;
d) assistance in negotiating terms with additional equity
investors;
e) assistance in negotiating terms with additional equity
investors;
e) assistance in preparation of reorganization plan and
related bankruptcy documents;
f) negotiation of restructuring plan with creditors and
counsel; and
g) assistance in seeking potential buyers for Debtors and
their assets.
Q Consulting will receive a $60,000 monthly retainer until
confirmation of a plan of reorganization, a sale of a majority
of the voting interests of Debtors, or a sale of a majority of
Debtors' assets, whichever comes first. Q Consulting will
receive a $500,000 transaction fee at closing. The Debtors will
pay Q Consulting, in any Capital Raising Activities, a fee equal
to 5% of the amount with any capital investment in the Company
from a third party investors brought to Debtors by Q
Consultants.
Western Integrated Networks, LLC is a single source facilities
based provider of broadband services to residential and small
business customers in certain targeted markets. The Company
filed for chapter 11 protection on March 11, 2002. Douglas W.
Jessop, Esq. at Jessop & Company, P.C. assists the Debtors in
their restructuring efforts.
WILLIAMS COMM: Banks Extend Debt Workout Negotiations to Apr. 26
----------------------------------------------------------------
Williams Communications (OTC Bulletin Board: WCGR), a leading
provider of broadband services for bandwidth-centric customers,
announced that it had accomplished two key milestones in its
previously-announced restructuring efforts. On March 29, 2002,
the Company closed on the purchase of certain important network
assets that had been leased from third parties pursuant to an
asset defeasance program. As a consequence, title to those
assets has been transferred to Williams Communications. The
purchase price of approximately $753 million was paid by The
Williams Companies, Inc. (NYSE: WMB) in accordance with a 1999
agreement. In exchange, the Company delivered an unsecured note
to The Williams Companies in the approximate amount of
$753 million.
As previously announced and as noted by the Company's auditors
in the Company's Annual Report on Form 10-K, the Company's banks
have informed Williams Communications that, in their view, there
may be a default under the Company's bank credit facility. The
banks have reserved their rights accordingly. The banks'
position is reflected in the report of the Company's independent
public accountants in an "explanatory paragraph," whereby the
accountants note that if Williams Communications is unable to
successfully restructure its balance sheet, then its bank
lenders may take steps that could disrupt the Company as a going
concern. The Company has been working closely with its banks
and other key creditor groups to formulate a comprehensive
restructuring of its balance sheet that will enable Williams
Communications not only to continue to operate, but to thrive as
a leading provider of broadband services going forward. In
recognition of the progress being made in that process, the
banks have once again extended the negotiating period, this time
to April 26, 2002, and remain supportive of the Company's
restructuring efforts.
To continue to conserve cash that would otherwise be devoted to
debt service, Williams Communications also announced that it
intends to avail itself of the 30-day grace period for the
payment of interest on its senior redeemable notes, in the
approximate aggregate amount of $91 million on a consolidated
basis, that were scheduled for April 1, 2002. The Company is
also suspending the quarterly dividend payment on its preferred
stock.
Scott Schubert, Williams Communications executive vice president
and chief financial officer, commented, "Discussions with our
creditors continue to be constructive. In the meantime, the $1
billion in cash on our balance sheet at the end of 2001 will be
used to assure continued delivery of uninterrupted, high-quality
service to our customers, which is in the best interests of all
of our constituents."
Williams Communications also announced in its Form 10-K that it
had taken asset impairment charges to its fourth quarter 2001
results. This move was prompted by general economic conditions,
as well as conditions in the telecommunications industry.
Despite the fact that it continues to successfully execute its
operational plan, the Company has reduced the carrying value of
its long-lived assets by $2.9 billion in the fourth quarter of
2001. Of the charge, $1.9 billion is related to fiber and
conduit, while the remainder is attributable to equipment,
international assets, wireless capacity, suspended or abandoned
projects, intangibles and investments. After the charge,
Williams Communications retains long-lived assets of
approximately $4.5 billion. For the full year, Williams
Communications' net loss was $3.8 billion. With regard to the
Year 2002, the Company believes that the financial guidance
announced on February 13, 2002, is no longer appropriate.
Revised guidance will be provided after the Company has
completed its restructuring process.
Schubert added, "While it is premature to predict the timing and
ultimate outcome of our balance sheet restructuring efforts, our
focus has been and always will remain on sustaining the health
of the business and maximizing enterprise value. Williams
Communications remains committed to working through this period
of uncertainty."
Based in Tulsa, Oklahoma, Williams Communications Group, Inc.,
is a leading broadband network services provider focused on the
needs of bandwidth-centric customers. Williams Communications
operates the largest, most efficient, next-generation network in
North America. Connecting 125 U.S. cities and reaching five
continents, Williams Communications provides customers with
unparalleled local-to-global connectivity. By leveraging its
infrastructure, best-in-breed technology, connectivity and
network and broadband media expertise, Williams Communications
supports the bandwidth demands of leading communications
companies around the globe. For more information, visit
http://www.williamscommunications.com
DebtTraders reports that Williams Communications Group Inc.'s
10.875% bonds due 2009 (WCG2) are quoted at a price of 14.75.
See http://www.debttraders.com/price.cfm?dt_sec_ticker=WCG2for
real-time bond pricing.
WINSTAR COMMS: Trustee Told to Make Perot Contract Decision Now
---------------------------------------------------------------
Judge Katz orders Winstar Holdings to direct the Chapter 7
Trustee to render a decision on whether it will assume or reject
Winstar Communications, Inc.'s contract -- a Master Services
Agreement dated March 11, 1996 -- with Perot Systems Corporation
without further delay.
Perot Systems filed a Motion for Relief from Stay, to setoff or
recoup the balance of a pre-payment of $1,507,076.46 against the
amount Debtors owed to the company for pre-petition services.
The Court then approved a Stipulation between Perot Systems and
the Debtors which, among others, relieved Perot Systems from the
automatic stay and allowed the company to recoup or setoff its
pre-petition claims with that of the pre-payment. Under the
Stipulation, the Debtors agreed to pay Perot Systems for post-
petition services rendered within thirty days from receipt of
the invoice. On October 11, 2001, Perot Systems filed a Proof of
Claim for $567,620.31 for pre-petition amounts owed to them by
the Debtors.
Pursuant to a stipulation approved during the course of
Winstar's chapter 11 proceeding, Perot Systems continues to
provide the Debtors with services pending the assumption or
rejection of the Master Service Agreement. The Debtors,
meanwhile, have paid the company for post-petition services
rendered from the Petition Date until August 2001 but still have
to pay for post-petition services rendered in September,
October, November and a portion of December. The Debtors on
November 30, 2001 filed a Notice of Cure Amount with Respect to
Possible Assumption and Assignment of Executory Contract or
Unexpired Lease, which pegged the Cure Amount for the contract
at $400,000.
Perot Systems filed an objection to the cure amount since the
company's claim for $567,620.31and the Debtors owe $847,670.73
to Perot Systems for post-petition services provided from
September to November 2001. The cure amount also failed to
account for fees for December services totaling $275,196.40. Mr.
Macauley submits that upon information and belief, bills issued
by Perot Systems account for approximately $30,000,000 of the
Debtor's monthly revenue, and therefore the company's services
are crucial to the Debtors' operations.
As of December 18, 2001, the date when the Debtors substantially
sold all of its assets to IDT Winstar Acquisition Inc., Perot
Systems was owed $984,366.12. IDT on January 9, 2002 partially
paid Perot Systems $123,000 for services rendered from December
19, 2001 to December 31, 2001. A balance of $15,501.01 remains
for services rendered on the same period. The company will
provide services to IDT totaling $432,000 in January 2002,
comprising $260,000 in billing services, $150,000 in maintenance
for the CUBES billing system and $22,000 for professional
services. (Winstar Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ZENITH INDUSTRIAL: Signs-Up Dratt-Cambell as Business Consultant
----------------------------------------------------------------
Zenith Industrial Corporation and its affiliated debtors ask for
authority from the U.S. Bankruptcy Court for the District of
Delaware to retain Dratt-Cambell Company as their Business
Consultant.
Dratt-Campbell has extensive experience in reorganization
proceedings and enjoys an excellent reputation for services
rendered in large and complex chapter 11 cases throughout the
United States.
Dratt-Campbell will:
a) provide assistance in the development and implementation
of strategic business plan for an estimated cost of
$25,000 to $50,000;
b) determine the appropriate capital structure based upon
the business plan result for an estimated cost of
$25,000 to $40,000;
c) assist management and counsel in structuring an
appropriate plan of reorganization and in negotiating
with creditors and their advisors concerning trade
credit and the plan for an estimated cost of $35,000 to
$50,000;
d) assist in the identification of and, to the extent
requested, provide consultation related to the
implementation of internal cost reduction plans for
estimated cost $10,000 to $20,000;
e) assist in the review or development of labor and
employee compensation arrangement for an estimated cost
of $10,000 to $20,000;
f) assist n the review or development of labor and employee
compensation arrangements for an estimated cost of
$10,000 to $20,000;
g) assist in the preparation of documents necessary for
confirmation of this Chapter 11 case/sale of the Debtor
including debt agreements and financial information
contained in the disclosure statement for an estimated
cost of $30,000 to $40,000; and
h) provide litigation consultation services and expert
witness testimony if requested by the Debtors for an
estimated cost of $10,000 to $20,000
At the Debtor's request, Dratt-Campbell may provide additional
bankruptcy and business consulting services for the benefit of
the Debtor's estate in an estimated fee of $140,000 to $240,000.
Zenith Industrial Corporation, a leading worldwide, full-service
Tier 1 supplier of highly engineered metal-formed components,
complex modules and mechanical assemblies for automotive OEMs
filed for chapter 11 protection on March 12, 2002. Joseph A.
Malfitano, Esq., Edward J. Kosmowski, Esq., Robert S. Brady,
Esq. at Young Conaway Stargatt & Taylor, LLP and Larry S. Nyhan,
Esq., Matthew A. Clemente, Esq., Paul J. Stanukinas, Esq. at
Sidley Austin Brown & Wood represent the Debtor in its
restructuring efforts. When the Company filed for protection
from its creditors, it listed estimated debts and assets of more
than $100 million.
* Meetings, Conferences and Seminars
------------------------------------
April 11-14, 2002
COMMERCIAL LAW LEAGUE OF AMERICA
72nd Annual Chicago Conference
Westin Hotel, Chicago, Illinois
Contact: 312-781-2000 or clla@clla.org or
http://www.clla.org/
April 11-14, 2002
NORTON INSTITUTES ON BANKRUPTCY LAW
Norton Bankruptcy Litigation Institute II
Flamingo Hilton, Las Vegas, Nevada
Contact: 770-535-7722 or Nortoninst@aol.com
April 18-21, 2002
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
April 25-27, 2002
ALI-ABA
Fundamentals of Bankruptcy Law
Rittenhouse Hotel, Philadelphia
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
April 28-30, 2002
COMMERCIAL LAW LEAGUE OF AMERICA
4th International Conference
Jurys Ballsbridge Hotel - The Towers, Dublin, Ireland
Contact: 312-781-2000 or clla@clla.org or
http://www.clla.org/
May 13, 2002 (Tentative)
AMERICAN BANKRUPTCY INSTITUTE
New York City Bankruptcy Conference
Association of the Bar of the City of New York
New York, New York
Contact: 1-703-739-0800 or http://www.abiworld.org
May 15-18, 2002
ASSOCIATION OF INSOLVENCY AND RESTRUCTURING ADVISORS
18th Annual Bankruptcy and Restructuring Conference
JW Mariott Hotel Lenox, Atlanta, GA
Contact: (541) 858-1665 Fax (541) 858-9187 or
aira@airacira.org
May 24-27, 2002
COMMERCIAL LAW LEAGUE OF AMERICA
54th Annual New England Meeting
Cranwell Resort and Gold Club, Lenox, Massachusetts
Contact: 312-781-2000 or clla@clla.org or
http://www.clla.org/
May 26-28, 2002
INTERNATIONAL BAR ASSOCIATION
International Insolvency 2002 Conference
Dublin, Ireland
Contact: Tel +44 207 629 1206 or member@int-bar.org
or http://www.ibanet.org
June 6-9, 2002
AMERICAN BANKRUPTCY INSTITUTE
Central States Bankruptcy Workshop
Grand Traverse Resort, Traverse City, Michigan
Contact: 1-703-739-0800 or http://www.abiworld.org
June 13-15, 2002
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts, Taxation,
Drafting,
Securities, and Bankruptcy
Seaport Hotel, Boston
Contact: 1-800-CLE-NEWS or http://www.ali-
aba.org/aliaba/cg097.htm
June 20-21, 2002
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Fifth Annual Conference on Corporate Reorganizations
Fairmont Hotel, Chicago
Contact: 1-800-726-2524 or ram@ballistic.com
June 27-29, 2002
ALI-ABA
Chapter 11 Business Reorganizations
Fairmont Copley Plaza, Boston
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
June 27-30, 2002
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains, Advanced Bankruptcy Law
Jackson Lake Lodge, Jackson Hole, Wyoming
Contact: 770-535-7722 or Nortoninst@aol.com
July 11-14, 2002
AMERICAN BANKRUPTCY INSTITUTE
Northeast Bankruptcy Conference
Ocean Edge Resort, Cape Cod, MA
Contact: 1-703-739-0800 or http://www.abiworld.org
July 12-17, 2002
COMMERCIAL LAW LEAGUE OF AMERICA
108th Annual Convention
Grand Summit Hotel, Park City, Utah
Contact: 312-781-2000 or clla@clla.org or
http://www.clla.org/
July 17-19, 2002
ASSOCIATION OF INSOLVENCY AND RESTRUCTURING ADVISORS
Bankruptcy Taxation Conference
Snow King Resort, Jackson Hole, WY
Contact: (541) 858-1665 Fax (541) 858-9187 or
aira@airacira.org
August 7-10, 2002
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Conference
Kiawah Island Resort, Kiawaha Island, SC
Contact: 1-703-739-0800 or http://www.abiworld.org
September 26-27, 2002
ALI-ABA
Corporate Mergers and Acquisitions
Marriott Marquis, New York
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
October 9-11, 2002
INSOL INTERNATIONAL
Annual Regional Conference
Beijing, China
Contact: tina@insol.ision.co.uk or
http://www.insol.org
October 24-28, 2002
TURNAROUND MANAGEMENT ASSOCIATION
Annual Conference
The Broadmoor, Colorado Springs, Colorado
Contact: 312-822-9700 or info@turnaround.org
November 21-24, 2002
COMMERCIAL LAW LEAGUE OF AMERICA
82nd Annual New York Conference
Sheraton Hotel, New York City, New York
Contact: 312-781-2000 or clla@clla.org or
http://www.clla.org/
December 5-8, 2002
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
The Westin, La Paloma, Tucson, Arizona
Contact: 1-703-739-0800 or http://www.abiworld.org
April 10-13, 2003
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
Grand Hyatt, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
May 1-3, 2003 (Tentative)
ALI-ABA
Chapter 11 Business Organizations
New Orleans
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
May 8-10, 2003 (Tentative)
ALI-ABA
Fundamentals of Bankruptcy Law
Seattle
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
July 10-12, 2003
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts, Taxation,
Drafting,
Securities, and Bankruptcy
Eldorado Hotel, Santa Fe, New Mexico
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
December 3-7, 2003
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
La Quinta, La Quinta, California
Contact: 1-703-739-0800 or http://www.abiworld.org
April 15-18, 2004
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
December 2-4, 2004
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Marriott's Camelback Inn, Scottsdale, AZ
Contact: 1-703-739-0800 or http://www.abiworld.org
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via
e-mail to conferences@bankrupt.com are encouraged.
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2002. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
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The TCR subscription rate is $625 for 6 months delivered via e-
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*** End of Transmission ***