/raid1/www/Hosts/bankrupt/TCR_Public/020408.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, April 8, 2002, Vol. 6, No. 68
Headlines
ACT MANUFACTURING: Brings-In Lazard Freres to Manage Asset Sale
ANC RENTAL: Wants to Continue Cash Collateral Use Until Sept. 30
ACME TELEVISION: S&P Puts Rating on Watch Neg. Over Station Deal
ADELPHIA BUSINESS: Will Honor Prepetition Customer Obligations
ADELPHIA COMMS: Taps 3 Investments Banks as Financial Advisors
AHEAD COMMS: Seeks to Stretch Lease Decision Period to July 8
ALPINE GROUP: Superior Telecoms' Losses Hurt on FY 2001 Results
ARMSTRONG HOLDINGS: Court OKs Trafelet as Future Claimants' Rep.
BUDGET GROUP: S&P Plunks Rating to SD Following Default on Notes
BUILDNET INC.: Wants Plan Exclusivity Stretched to April 15
CKE RESTAURANTS: Fidelity National Discloses 6.6% Equity Stake
CALL-NET: Security Holders Okay Proposed Recapitalization Plan
CAREMATRIX: 2nd Amended Joint Plan Declared Effective April 4
CHELL GROUP CORPORATION: Signs Letter of Intent to Acquire EMTEC
COMDISCO INC: Seeks Approval of Settlement Pact with CIT Group
CORAM HEALTHCARE: Trustee Hires Schnader Harrison as Counsel
COVANTA ENERGY: Taps Cleary Gottlieb as Chapter 11 Co-Counsel
EB2B COMMERCE: Can't Beat Form 10-KSB Filing Deadline
EMMIS COMMS: Looks for $104 Million from New Equity Sales
ENRON CORP: US Trustee Appoints Harrison Goldin as ENA Examiner
ENRON CORP: ENA Gets Okay to Sell 2 Gas Contracts to Occidental
ENRON CORP: Unit Wins Nod to Reject EOTT Storage & Tolling Pacts
EXODUS COMMS: Hearing on Exclusivity Extension Set for April 23
FLEMING COMPANIES: S&P Rates New $260MM Senior Sub. Notes at B+
FRIEDE GOLDMAN: Appoints Jack R. Stone as New President and CEO
GALEY & LORD: US Trustee Appoints Unsecured Creditors' Committee
GLOBAL CROSSING: Taps Elizabeth Gloster as Spec. Bermuda Counsel
GLOBAL CROSSING: Asian Unit Restructures Vendor Financing Pacts
GREKA ENERGY: Taps Durham Capital to Arrange Debt Restructuring
GROUP MANAGEMENT: Defaults on $1.1 Million Convertible Notes
HEGCO CANADA: OSC Ceases Trading for Failure to Make Filings
HYBRID NETWORKS: Fails to Meet Nasdaq Continued Listing Criteria
IT GROUP: U.S. Trustee Says Zolfo's Engagement is Unnecessary
ITC DELTACOM: S&P Hatchets Credit Rating Down to Junk Level
INTELLICORP: Special Shareholders' Meeting Set for April 30
INTERSTATE BAKERIES: Moody's Confirms Low-B Senior Debt Ratings
KAISER ALUMINUM: Deadline for Filing Schedules Moved to May 12
KEYSTONE CONSOLIDATED: Expects Full-Year Net Loss to Exceed $21M
KMART: Court Okays Jones Day as Institutional Panel's Counsel
KMART CORP: Makes Payment on Postpetition Rent Due Lexington
LA QUINTA: S&P Affirms BB- Credit Rating with Negative Outlook
LEGION INSURANCE: Commences Voluntary Rehabilitation Proceedings
LEGION INSURANCE: A.M. Best Slashes Fin'l Strength Rating to E
LERNOUT & HAUSPIE: Seeks 5th Extension of Lease Decision Period
LODGIAN INC: Hilton Seeks Stay Relief to Terminate License Pacts
MBC HOLDING: U.S. Trustee Names Unsecured Creditors' Committee
MEMC ELECTRONIC: No Date Yet for Special Shareholders' Meeting
MARINER POST-ACUTE: Wants Solicitation Period Extended to June 3
MCLEODUSA: Delaware Court Confirms Prepackaged Chapter 11 Plan
METALS USA: Proposes a July 8, 2002 General Claims Bar Date
METALS USA: Intends to Divest 11 Business Units to Cut Bank Debt
MRS. FIELDS': Working Capital Deficit Jumps 182% to $22 Million
MUTUAL RISK: Expects to Trade on OTCBB After NYSE Delisting
NATIONAL STEEL: Court Approves Interim Compensation Procedures
NETIA HOLDINGS: Wins Nod to Up Share Capital and Issue Warrants
NEWKIDCO INTERNATIONAL: Completes Capital Restructuring Plan
NORTEL NETWORKS: Moody's Downgrades Debt Ratings to Low-B Level
NORTEL NETWORKS: Moody's Slashes 2001-1 Certificates to Ba3
NORTEL: Says Moody's Downgrades Have Little Impact on Operations
OMEGA HEALTHCARE: Explorer Holdings Discloses 53.3% Equity Stake
ORIUS CORP: S&P Keeping Watch on Senior Bank Loan Junk Rating
PANAVISION INC: Moody's Drags Certain Debt Ratings to Junk Level
POINT.360: Can't File Form 10-K with SEC on Scheduled Due Date
POLAROID: Workers Get More Time to React to Severance Pay Offer
RELIANCE GROUP: Liquidator Fixes Dec. 31 Bar Date for RIC Claims
STATIONS HOLDING: Creditors' Meeting to Convene on April 29
STOCKWALK GROUP: Court Okays Leonard Street as Debtor's Counsel
SUNBEAM CORP: Seeks Okay to Further Enlarge Solicitation Period
TESORO PETROLEUM: Fitch Cuts Ratings to Low-B's Over Valera Deal
TRANSTECHNOLOGY: Secures Forbearance Pacts through September
UNILAB: Equity Deal Spurs S&P to Maintain Watch on Low-B Ratings
UNOVA INC: S&P Ups Credit Rating to B- Amid Improving Liquidity
W.R. GRACE: Wins Nod to Acquire Addiment Inc. Assets & Business
WHEELING-PITTSBURGH: Gets OK to Accept $650K Pennsylvania Grant
* BOND PRICING: For the week of April 8 - 12, 2002
*********
ACT MANUFACTURING: Brings-In Lazard Freres to Manage Asset Sale
---------------------------------------------------------------
In response to inquiries about its sales process, ACT
Manufacturing, Inc. announced that the company remains committed
to continuing to operate in the ordinary course of its business
and has no plans to auction off the plant, equipment and
inventory of the company in a piecemeal fashion.
ACT has hired Lazard Freres, a New York investment banker with
offices throughout the world, to manage the sale of the company.
Lazard has provided information to and has received bids from
several qualified buyers. As a result of the level of interest
demonstrated by the potential buyers to date, ACT continues to
believe that the sale of the company as a going concern to a
buyer who will continue the company's operations will best
maximize value for its creditors and ensure ongoing service to
our valued customers. ACT remains committed to its customers
and will continue to meet its customers' requirements.
The sale procedures will be approved by the U.S. Bankruptcy
Court in Worcester and these procedures will be similar to those
used in other major Chapter 11 cases. The procedures will be
designed to assure fairness in the process and the best possible
return for creditors. ACT expects the sale process to be
substantially completed by the end of June 2002.
ACT believes that its strategy will produce the best results for
its employees, for its customers and for its creditors.
However, the company regrets that it is unlikely that
stockholders will recover any value from the sale of the
company's businesses.
ACT, with headquarters in Hudson, Massachusetts, provides
electronics manufacturing services to equipment manufacturers in
networking and telecommunications, computer and industrial and
medical equipment markets. ACT provides OEMs with complex
printed circuit board assembly primarily utilizing advanced
surface mount technology, electro-mechanical subassembly, total
system assembly and integration, mechanical and molded cable and
harness assembly and other value-added services.
ANC RENTAL: Wants to Continue Cash Collateral Use Until Sept. 30
----------------------------------------------------------------
ANC Rental Corporation, and its debtor-affiliates ask the Court
to continue to use Cash Collateral through September 30, 2002 or
such other time as the Court deems appropriate so as to continue
the operation of their business and to fund these Chapter 11
cases.
According to Mark J. Packel, Esq., at Blank Rome Comisky &
McCauley LLP in Wilmington, Delaware, the most significant use
of Cash Collateral is for vehicle lease payments and cash
collateralization. These are critical and necessary to support
the financing and purchase of the vehicles rented by the
Debtors. This use of cash does not diminish the value of the
collateral held by Secured Lenders. The failure to obtain
authorization for the continued use of Cash Collateral would end
the Debtors' reorganization efforts and would be disastrous to
their creditors, equity holders and employees.
In addition, Mr. Packel continues, in the ordinary course of the
Debtors' business, the Debtors may, from time to time, provide
liquidity to certain of their non-debtor foreign subsidiaries on
an "as needed" basis to cover working capital shortfalls at
certain times of the year. These foreign subsidiaries represent
important assets of the Debtors and are critical to the Debtors'
ability to provide their customers with complete North American
as well as international service. The use of Cash Collateral to
continue this practice, in the ordinary course, would enable the
Debtors to maintain and preserve the substantial value that
these foreign subsidiaries bring to the Debtors. To date, the
Debtors have not used any Cash Collateral for this purpose.
In addition, the Debtors ask to use Cash Collateral to fund
other administrative expenses incurred by the Debtors during the
pendency of their Chapter 11 cases, including:
A. professional fees and expenses payable pursuant to Orders of
the Court;
B. reimbursement of allowed expenses incurred by the members of
any official committee appointed by the Office of the
United States Trustee in the Debtors' cases;
C. fees payable under Section 1930 of the Bankruptcy Code and
related costs; and,
D. other charges incurred in administering the Debtors' Chapter
11 cases.
The Debtors presently have substantial cash balances, but
without the ability to use the cash generated by the business,
including obtaining the use of Cash Collateral, the Debtors
cannot meet their obligations to vendors. In addition, they
would not be able to obtain the services needed to maintain
their business operations, purchase and lease vehicles, and pay
the wages, salaries, rent, utilities and other expenses
associated with operating their business, Mr. Packel admits.
The Debtors have been exploring their available options
regarding the prospects of obtaining, and the potential terms
of, debtor in possession financing. Although the Debtors are
evaluating these options, there can be no assurances that the
Debtors can find terms for such financing that satisfy the
Debtors' needs going forward. Until such time as any debtor in
possession financing is in place, the use of Cash Collateral --
including cash generated from the sale of inventory and
collection of accounts receivable -- will be the Debtors' sole
source of working capital with which to operate their businesses
or, most importantly, obtain vehicles to run the business. (ANC
Rental Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ACME TELEVISION: S&P Puts Rating on Watch Neg. Over Station Deal
----------------------------------------------------------------
On April 3, 2002, Standard & Poor's placed its 'CCC+' corporate
credit rating on TV station owner ACME Television LLC/ACME
Finance Corp. on CreditWatch with negative implications. The
action followed the company's announcement of its agreement to
acquire a Madison, Wisconsin TV station for $5.6 million cash.
Santa Ana, California-based ACME has about $252 million debt
outstanding, including holding company debt.
Although the station may offer a longer term cash flow
opportunity, the purchase hurts ACME's already dwindling
liquidity. In addition, the station is a startup, so potential
losses could further impair the company's weak credit measures.
Pro forma for the station purchase and an April 1, 2002, $9.5
million bond interest payment, Standard & Poor's estimates that
ACME has less than $5 million cash. The company will probably
soon need to borrow from its $30 million revolving facility,
where availability is subject to financial covenants. Financial
pressure will further increase with the approach of the March
31, 2003 initial $4.2 million cash interest payment on the
holding company discount notes.
Standard & Poor's will likely resolve the CreditWatch listing
after assessing ACME's business and financial prospects.
ADELPHIA BUSINESS: Will Honor Prepetition Customer Obligations
--------------------------------------------------------------
Adelphia Business Solutions, Inc., and its debtor-affiliates
obtained authorization to honor Pre-petition Customer
Obligations in the same manner and on the same basis as those
obligations were honored prior to the commencement of these
Chapter 11 cases. Judge Gerber makes it clear that the Debtors'
decision to honor any Customer Obligation does not constitute an
approval or assumption of any Customer Program or related
agreement or policy.
According to Harvey R. Miller, Esq., at Weil Gotshal & Manges
LLP in New York, certain of the Debtors' customers may hold
contingent pre-petition claims against the Debtors for refunds,
adjustments (including adjustments to billings), and other
credits. While the Debtors do not believe that the amount of
these Credits will be substantial, the aggregate sum of Credits
that are accrued but unpaid as of the Commencement Date is
impossible to determine. Historically, however, the amount of
credits granted to customers on a monthly basis approximates
$350,000. Mr. Miller adds that by their very nature, the amount
of Credits arising from a pre-petition transaction that may
become an actual obligation after the Commencement Date will not
be determined until sometime in the post-petition period.
In the ordinary course of their businesses, the Debtors
implemented, from time to time, various customer rebate programs
designed to encourage new customers to use the Debtors'
services. Mr. Miller relates that the Debtors currently
maintain a rebate program which was commenced February 8, 2002
and is scheduled to conclude on April 30, 2002 to encourage new
customers to sign long term contracts for local-switch dial tone
service, long-distance service, and Internet connectivity
service. Through the Rebate Program, the Debtors offered
specified rebates to prospective qualified customers who sign a
contract for at least 1 year of service. The specific extent of
these rebates depends on type of customer and the nature of the
services purchased.
Pursuant to the Rebate Program, Mr. Miller tells the Court that
prospective Type I customers are entitled to a rebate of up to
$2,000 for the purchase of local-switch dial tone service.
Prospective Type II customers are entitled to a rebate of up to
$1,000 for the purchase of such service.
All prospective customers are entitled to an additional 20%
rebate with the purchase of long-distance service. Additionally,
prospective Type I customers are entitled to a rebate of up to
$800 for the purchase of Internet connectivity service, and
prospective Type II customers are entitled to a rebate of up to
$400 for the purchase of such service.
Mr. Miller believes the Rebate Program is beneficial to the
Debtors' businesses since these programs have been instrumental
in acquiring new customers. The Debtors estimate that as of the
Commencement Date, the claims that may be made under the Rebate
Program, for sales consummated prior to the Commencement Date,
is approximately $122,750 in the aggregate.
Mr. Miller submits that the success of the Debtors' business is
totally dependent on the loyalty and confidence of their
customers. Continued customer loyalty throughout the Chapter 11
process is essential to the viability of the Debtors' businesses
and the Debtors' ability to reorganize. Any delay in honoring or
inability to honor the Credits or Rebate Programs will severely
and irreparably impair the Debtors' customer relations at a time
when maintenance and expansion of customer loyalty and patronage
are extremely critical.
Mr. Miller assures the Court that the Debtors have sufficient
funds, based on anticipated access to post-petition financing,
to pay all amounts that are due, or may become due, regarding
the Credits and the Rebate Program. Moreover, the Debtors relay
that they will not honor or make any payments related to the
Credits or the Rebate Program that, in their discretion, do not
facilitate the Debtors' reorganization. ((Adelphia Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
ADELPHIA COMMS: Taps 3 Investments Banks as Financial Advisors
--------------------------------------------------------------
Adelphia Communications Corporation (Nasdaq: ADLAC) said that it
has engaged three major investment banks -- Salomon Smith
Barney, Bank of America Securities and Credit Suisse First
Boston -- as the Company's financial advisors, and that Adelphia
and those advisors will together explore opportunities to reduce
Adelphia's debt, strengthen the Company's balance sheet and, in
turn, build value for Adelphia shareholders by various means
including, in particular, potential cable asset sales. The
Company has also engaged Daniels & Associates as a special
advisor.
Adelphia also announced that it has engaged the law firm of
Fried, Frank, Harris, Shriver & Jacobson to advise it on various
matters.
John J. Rigas, Chairman and CEO of Adelphia, said: "We want our
shareholders to know that both Adelphia and the Rigas family are
committed to building the value of the Company for all Adelphia
shareholders. We recognize that this is a challenging time for
all of our shareholders, as well as our employees. But Adelphia
has many valuable assets that generate strong and predictable
revenue and cash flow, and nearly 6 million loyal customers. We
believe that the steps we are taking to reduce debt and
deleverage our balance sheet through potential cable asset sales
will result in a stronger company better-positioned to build
shareholder value."
Adelphia said there can be no assurance that the exploration
process the Company and its financial advisors have launched
will result in any asset sale or other transaction.
Adelphia Communications Corporation, with headquarters in
Coudersport, Pennsylvania, is the sixth-largest cable television
company in the country.
According to DebtTraders, Adelphia Communications' 7.875% bonds
due 2009 (ADEL09USR1) are being quoted at a price of 84. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL09USR1
for real-time bond pricing.
AHEAD COMMS: Seeks to Stretch Lease Decision Period to July 8
-------------------------------------------------------------
Ahead Communication Systems, Inc. asks for more time from the
U.S. Bankruptcy Court for the District of Connecticut to
determine whether to assume, assume and assign, or reject non-
residential real property leases -- until July 8, 2002.
The Debtor relates that it is currently reviewing all its
business options, including the option of whether to stay in its
current locations. The Debtor tells the Court that it is still
premature to determine whether to assume or reject the Leases.
The Debtor further assures the Court that it will remain
faithful in its current rent payments.
Ahead Communication Systems, Inc. designs and produce robust
broadband networking systems for private and public networking
environments. The Company filed for chapter 11 bankruptcy
protection on February 07, 2002. Craig Lifland, Esq. at Zeisler
and Zeisler represent the Debtor in its restructuring efforts.
When the Company filed for protection from its creditors, it
listed $21,071,000 in assets and $23,310,000 in debts.
ALPINE GROUP: Superior Telecoms' Losses Hurt on FY 2001 Results
---------------------------------------------------------------
The Alpine Group, Inc. (NYSE: AGI) reported results for its
fourth quarter and full year ended December 31, 2001.
For the quarter ended December 31, 2001, Alpine reported a pro
forma loss (loss from continuing operations before non-recurring
charges, goodwill amortization and extraordinary loss) of $5.1
million as compared to a pro forma loss of $6.4 million for the
2000 fourth quarter. For the full year, Alpine reported a pro
forma loss of $18.7 million as compared to 2000 full year pro
forma income of $5.2 million.
Total sales for the December 31, 2001 quarter which represents
revenues of Alpine's 50.2% owned subsidiary, Superior TeleCom
Inc. (NYSE: SUT) were $362 million, a decline on a copper
adjusted basis of 21% as compared to revenues in the fourth
quarter of 2000. For the 2001 full year, revenues were $1.747
billion, a decline on a copper adjusted basis of 12% as compared
to full year 2000 revenues. The comparative sales declines from
Superior's operations result from recessionary conditions
negatively impacting demand and, particularly in the second half
of 2001, a significant contraction in spending by substantially
all of Superior's customers in the telecommunications market.
The Company's pro forma loss for the three months and full year
ended December 31, 2001 excludes the after tax and minority
interest impact of the following items: (i) impact of goodwill
amortization charges at Superior and PolyVision of $0.18 per
diluted share and $0.79 per diluted share, respectively, (ii)
impact of non-recurring charges of $0.09 per diluted share and
$0.35 per diluted share, respectively, (iii) income from
discontinued operations at Alpine (related to the reduction of
certain accrued tax liabilities associated with the August 1999
sale of Premier Refractories, Inc.) of $0.40 per diluted share
and $0.41 per diluted share, respectively and (iv) impact of an
extraordinary loss at Superior from early extinguishment of debt
of $0.10 per diluted share. The net loss after the above noted
items for the three month and full year periods ended December
31, 2001 was $4.6 million and $31.0 million, respectively.
As discussed below, the 2001 full year loss reflects certain
adjustments to operating results previously reported in the
Company's Form 10-Q for the quarter ended June 30, 2001 related
to loss on securities.
Included within the pro forma net loss for the three month and
twelve month periods ended December 31, 2001 is loss on
securities of $5.9 million and $33.8 million, respectively,
representing the loss on the sale of, and mark-to-market
valuation charges related to, the Company's investment in
ordinary shares of Cookson Group plc (FTSE: CKSN.L). During the
2001 fourth quarter, the Company initiated actions to reverse
and close out certain forward sale contracts related to
approximately 73% of its shareholding in Cookson. In the first
quarter of 2002, the close out of such forward sale contracts
was completed. These actions were undertaken in order to
liquidate borrowings associated with the forward sale
transaction as part of a continuing deleveraging of Alpine's
corporate balance sheet. In connection therewith, the 2001
year-to-date loss on securities includes a $22.6 million pre-tax
charge as an adjustment to the Company's operating results from
amounts previously reported for its second quarter ended June
30, 2001. The 2001 second quarter adjustment reflects a
retroactive mark-to- market charge for the Company's investment
in Cookson shares including the Cookson shares subject to the
forward sale transactions (which forward sale transactions were
entered into in the second quarter 2001). These mark-to-market
charges were previously reported through "other comprehensive
income" (a component of stockholders' equity) rather than
through the income statement. The after-tax impact of the
adjustments to the second quarter 2001 income statement for such
mark-to-market charges was $14.4 million, resulting in a revised
second quarter net loss of $18.1 million. The adjustment had no
impact on the previously reported June 30, 2001 balance sheet,
as such securities were carried at market value on the balance
sheet. The revised income statement for the quarter ended June
30, 2001 reflecting the aforementioned adjustments is included
in the notes to the consolidated financial statements filed with
the Company's Form 10-K for the year ended December 31, 2001.
For the three month and twelve month period ended December 31,
2000, the Company's pro forma loss excludes the after tax and
minority interest impact of goodwill amortization charges of
$0.19 per diluted share and $0.74 per diluted share,
respectively, and non-recurring charges of $0.12 per diluted
share and $0.37 per diluted share, respectively. After giving
effect to these items, net loss for the December 31, 2000 three
month and full year periods was $10.9 million and $11.2 million
($0.77 per diluted share), respectively.
As was disclosed on November 15, 2001, Steelcase Inc. (NYSE:
SCS) acquired PolyVision's outstanding common and preferred
stock including Alpine's 48% common equity position in
PolyVision and PolyVision's preferred shares held by Alpine.
Alpine reported a gain on this transaction of $8.4 million.
After taxes, the net gain on the PolyVision sale amounted to
$5.2 million ($0.35 per diluted share) and is included as a
component of pro forma results for the 2001 fourth quarter and
full year period. Alpine received $42 million from the sale of
its equity interest in PolyVision. The proceeds were used to
reduce certain Alpine corporate debt and increase cash reserves.
Commenting on the fourth quarter results, Steven S. Elbaum,
Chairman and Chief Executive Officer stated, "Alpine's results
were clearly impacted by losses incurred at our Superior TeleCom
subsidiary in the fourth quarter of 2001. Notwithstanding these
losses, which impacted Alpine's pro forma results by $5.7
million in the fourth quarter ($0.39 per diluted share), Alpine
still had positive achievements, including the completion of the
sale of our equity interest in PolyVision, the proceeds of which
have provided the flexibility to reduce corporate debt at Alpine
and strengthen cash reserves.
"Turning to Superior, for the fourth quarter of 2001 Superior
reported a pro forma loss of $11.3 million, resulting from
lowered revenues across all business units and unabsorbed
manufacturing overhead costs associated with reduced production
levels to control inventories and working capital and to enhance
cash flow.
"Superior's Communications Group was particularly impacted in
the fourth quarter of 2001 from a substantial cutback in
spending by major telephone companies for local loop investment,
including reductions in maintenance spending which we believe
are temporary and should rebound in future periods. Market-wide
declines in data communications project and network expenditures
also depressed sales of Superior's copper and fiber optic
broadband products. Sales in the Communications Group, as a
result, were down comparatively 32% in the fourth quarter of
2001.
"Superior's OEM operations, which principally includes magnet
wire for industrial applications, continued to be impacted in
the fourth quarter from recessionary industrial economic
conditions. While sales were down comparatively by 14% in the
fourth quarter, we have seen sequential quarter strengthening
through the first quarter of 2002 as economic conditions are
stabilizing and beginning to show signs of expansion.
"In Superior's Electrical Group, lower volumes and pricing
driven by soft demand and extremely competitive market
conditions were offset with strong productivity gains, resulting
in improved profitability in this segment in the fourth quarter.
"Superior did take appropriate actions to reduce costs and
manage working capital and cash flow in the 2001 fourth quarter.
Superior's balance sheet and capital structure is extremely
leveraged. However, as recently reported by Superior, it has
achieved amendments to its principal bank credit agreements
which, along with other proactive management actions to reduce
cash outflows for CAPEX, dividends and interest costs, should
further enhance cash flow and liquidity in 2002.
"The sale of PolyVision has strengthened and liquefied Alpine's
balance sheet. While Superior's balance sheet is consolidated
with Alpine for financial reporting purposes, Superior's debt is
non-recourse to Alpine and Alpine has not guaranteed nor is
Alpine otherwise liable for Superior's debt (except with respect
to certain capitalized lease obligations).
"At December 31, 2001, Alpine had approximately $33 million in
unrestricted corporate cash and cash equivalents. Alpine's debt
(excluding debt of Superior and certain debt of Alpine which is
linked to a forward-sale of investment securities and was
liquidated in the first quarter of 2002) amounted to
approximately $13 million, consisting principally of 12-1/4%
senior subordinated notes due in July 2003. In February 2002,
we repurchased $8.2 million face amount of such notes plus
accrued interest for $5.8 million, which will result in a pre
tax gain of approximately $2.4 million in the first quarter of
2002.
"Following the sale of PolyVision, Alpine's near term operating
results will be based principally on the results of Superior,
which is focused on managing through a very difficult market
environment and a highly leveraged capital structure. Alpine
will continue to evaluate investment and business opportunities
and other strategies to provide value for its shareholders.
"As we announced last January, the Company had submitted a plan
to the New York Stock Exchange ("NYSE") demonstrating how it
planned to achieve compliance within an eighteen month period
with certain NYSE continued listing standards for the Company's
common stock. We are pleased to report that the NYSE has
accepted Alpine's plan and that during the eighteen month period
the NYSE will perform quarterly reviews of progress toward
compliance in accordance with the plan."
The Alpine Group, Inc., headquartered in New Jersey, is a
holding company for the operations of Superior TeleCom Inc.
(NYSE: SUT), Alpine's 50.2% owned subsidiary, which is the
largest North American wire and cable manufacturer and among the
largest wire and cable manufacturers in the world. Superior
TeleCom manufactures a broad portfolio of products with primary
applications in the communications, original equipment
manufacturer and electrical wire and cable markets. It is a
leading manufacturer and supplier of communications wire and
cable products to telephone companies, distributors and system
integrators; magnet wire and electrical insulation materials for
motors, transformers and electrical controls; and building and
industrial wire for applications in, construction, appliances
recreational vehicles and industrial facilities.
ARMSTRONG HOLDINGS: Court OKs Trafelet as Future Claimants' Rep.
----------------------------------------------------------------
Judge Newsome overrules the U.S. Trustee's objection and
approves the appointment on the terms stated in Armstrong World
Industries, Inc.'s motion to appoint Dean M. Trafelet as the
legal representative for future claimants in the Debtors'
chapter 11 cases, as of December 17, 2001.
The high costs of settling and defending asbestos personal
injury claims are the major reason for AWI's decision to seek
the protection of the bankruptcy laws. As of the Petition Date,
asbestos-related lawsuits involving more than 173,000
prepetition claimants were pending against AWI, the majority of
which allege bodily injuries purportedly resulting from exposure
to asbestos or asbestos-containing products allegedly
manufactured, installed or sold by AWI or AWI's former
subsidiaries, Armstrong Contracting and Supply Corporation,
later known as A.C.& S., and National Cork Company.
AWI believes that it will be subject to additional asbestos-
related personal injury claims from individuals who may have
been exposed to asbestos or asbestos-containing products but
who, prior to confirmation of a plan or plans of reorganization
for the Debtors, have not manifested symptoms of asbestos-
related diseases resulting from such exposure. Each of these
Future Claimants represents either a "claim" under the
Bankruptcy Code or a "demand" within the meaning of the
Bankruptcy Code.
Mr. Trafelet's Background
AWI submits that Mr. Trafelet is well qualified to serve as the
Future Representative. Mr. Trafelet served as a trial judge in
the Circuit Court of Cook County, Illinois from 1984 to 1998
during which time, and by special assignment, he presided over
all asbestos-related product liability and property damage
cases. During this period of time he was responsible for the
supervision of the entire asbestos docket and personally
disposed of more than 35,000 asbestos product liability cases by
verdict and/or settlement.
Mr. Trafelet has more than 25 years' experience in handling
asbestos-related claims and issues, as well as other mass tort,
product liability and environmental matters. As one of the
early creators of the Asbestos Pleural Registry, which became a
model for jurisdictions throughout the country, Mr. Trafelet has
lectured nationally on its benefits and effects. From 1989 to
1990, Mr. Trafelet served as a special Federal Mediator to
assist the Honorable Barry S. Schermer, United States Bankruptcy
Judge for the Eastern District of Missouri, in the disposition
of thousands of asbestos related Jones Act claims arising from
asbestos exposure of seamen throughout the world while on board
U.S. flagged ships.
In addition, since 1988 Mr. Trafelet has served as a Trustee for
the Amatex Asbestos Settlement Trust which was established under
the Amatex plan of reorganization to process and compensate
asbestos claims of exposed workers throughout the United States.
He has been a member of the National Center for State Court Mass
Tort Litigation Committee and is listed in five categories in
the National Judicial College's A Directory of Judges: Managing
Mass Torts. In addition to supervising and managing the asbestos
docket from 1984 to 1998, his judicial responsibilities included
the supervision and management of In Re: Salmonella Litigation,
which involved the largest worldwide outbreak of salmonella
poisoning.
Presently, Mr. Trafelet serves as an arbitrator and mediator and
is a Trustee of the American Home Products Diet Drug (Fen-Phen)
Settlement Trust and the Amatex Asbestos Settlement Trust.
AWI believes that Mr. Trafelet's many years of practical
experience and involvement in the resolution of substantial
numbers of asbestos-related personal injury claims make him well
qualified to fully comprehend the issues relevant to these
chapter 11 cases and to competently and effectively represent
the interests of the Future Claimants. Further, Mr. Trafelet's
knowledge of judicial procedure and the bankruptcy and claims
process will be a significant benefit to the Future Claimants.
With the approval of the Court, the appointment of Mr. Trafelet
is made on terms and conditions as:
(a) Standing. The future Representative shall have
standing under section 1109(b) of the Bankruptcy Code to be
heard as a party in interest in all matters relating to the
Debtors' chapter 11 cases, and shall have such powers and duties
of a committee as set forth in section 1103 of the Bankruptcy
Code as are appropriate for a Future Representative.
(b) Engagement of Professionals. The Future
Representative may employ attorneys, and other professionals,
consistent with the Bankruptcy Code, subject to prior approval
of the Bankruptcy Court and pursuant to the Administrative
Order, Pursuant to Sections 105(a) and 331 of the Bankruptcy
Code, Establishing Procedures for Interim Compensation and
Reimbursement of Expenses of Professionals entered by this Court
on January 5, 2001.
(c) Compensation. Compensation, including professional
fees and reimbursement of expenses, shall be payable to the
Future Representative and his professionals from AWI's estates,
subject to approval of the Bankruptcy Court, and in accordance
with the terms, conditions, and procedures set forth in the
Administrative Compensation Order or such other orders as may be
entered by the Bankruptcy Court with respect to the compensation
of professionals in these cases. The Debtors and Mr. Trafelet
have agreed that Mr. Trafelet shall be compensated at the rate
of $550 per hour.
(d) Liability/indemnity of Future Representative, The
Future Representative shall not be liable for any damages, or
have any obligations other than as prescribed by orders of this
Court; provided, however, that the Future Representative may be
liable for damages caused by his willful misconduct or gross
negligence. The Future Representative shall not be liable to any
person as a result of any action or omission taken or made by
the Future Representative in good faith. AWI shall indemnify,
defend and hold the Future Representative harmless from any
claims by any party against the Future Representative arising
out of or relating to the performance of his duties as Future
Representative, provided, however, that the Future
Representative shall not have such indemnification rights if a
court of competent jurisdiction determines pursuant to a final
and non-appealable order that the Future Representative is
liable upon such claim as a result of willful misconduct or
gross negligence.
In the event that a cause of action is asserted against the
Future Representative arising out of or relating to the
performance of his duties as Future Representative, the Future
Representative shall have the right to choose his own counsel.
(e) Right to Receive Notices. The Future Representative
and his counsel shall be entitled to receive all notices and
pleadings that are served upon the Committees and their
respective counsel pursuant to any and all orders entered in
these chapter 11 cases, including, without limitation, (i) the
Administrative Compensation Order, and (ii) any and all orders
authorizing the Debtors to obtain postpetition financing AWI
further requests that such appointment be made effective nunc
pro tunc to December 17, 2001. On that date, Mr. Trafelet was
advised that AWI, the Creditors' Committee, and the Asbestos PI
Committee had reached agreement on the selection of Mr. Trafelet
as the Future Representative. Mr. Trafelet has expended a
substantial amount of time and effort since that date
familiarizing himself with the background of AWI's chapter 11
case and with his responsibilities as the Future Claimants'
Representative. (Armstrong Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
BUDGET GROUP: S&P Plunks Rating to SD Following Default on Notes
----------------------------------------------------------------
Standard & Poor's on April 3, 2002, lowered its corporate credit
rating on Budget Group Inc. to 'SD' (selective default) and
removed the rating from CreditWatch, where it had been placed on
March 22, 2002. Standard & Poor's also lowered the rating on
Budget Group's senior unsecured notes, and removed them from
CreditWatch, following the company's failure to make an interest
payment due April 1. The Lisle, Illinois-based company, a major
car and consumer truck rental concern, has about $700 million
rated debt outstanding.
The downgrade is based on Budget Group's default on its public
senior notes, which the company proposes to restructure as part
of a broader recapitalization. Budget announced on April 3 that
it is seeking investors to provide private equity and has begun
discussions with the senior noteholders regarding "a balance
sheet restructuring." The company stated that it had continued
debt service on its vehicle fleet financing and will continue
existing operations.
DebtTraders reports that Budget Group Inc.'s 9.125% bonds due
2006 (BD06USR1) are quoted at a price of 12. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=BD06USR1for
real-time bond pricing.
BUILDNET INC.: Wants Plan Exclusivity Stretched to April 15
-----------------------------------------------------------
Buildnet, Inc. and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Middle District of North Carolina to extend their
exclusive periods for filing a plan of reorganization and
soliciting acceptances of that plan. The Debtors want to
stretch their Exclusive Plan Filing Period through April 15,
2002 and want their Exclusive Solicitation Period to run through
June 14, 2002.
The Debtors disclose that they have completed a draft of the
Plan, however, the Disclosure Statement draft has not been
completed and finalized. They are asking the Court to give them
an additional fifteen-day extension of their current deadline.
The Debtors believe that the requested extension of the
Exclusive Periods will not unduly prejudice the creditors or any
other parties in interest.
BuildNet, which is engaged in the business of development and
sale of software primarily for the building industry, filed for
Chapter 11 protection on August 8, 2001 in the Middle District
of North Carolina. John A. Northen, Esq., and Richard M.
Hutson, II, Esq., represent the Debtors in their restructuring
effort. As of August 23, 2001, the company reported $35,998,691
in assets and $79,614,191 in debt.
CKE RESTAURANTS: Fidelity National Discloses 6.6% Equity Stake
--------------------------------------------------------------
On March 1, 2002, CKE completed a merger with Santa Barbara
Restaurant Group, Inc. in which SBRG stockholders received 0.491
shares of CKE common stock for each share of SBRG common stock
held at the effective time of the Merger. As a result of the
Merger, Fidelity acquired 2,321,333 shares of CKE common stock
and warrants to purchase 967,267 shares of CKE Common Stock.
As of the close of business on March 1, 2002, after giving
effect to the Merger, Fidelity National Financial, Inc. was the
direct beneficial owner of 2,934,888 shares of CKE common stock
and warrants to purchase 967,267 shares of CKE common stock,
which constitutes 6.6% of the outstanding shares of CKE common
stock (based on 59,444,302 shares of common stock outstanding,
which is the sum of (a) the shares of CKE common stock
outstanding as of January 25, 2002, plus (b) the shares of Santa
Barbara Restaurant Group, Inc. common stock outstanding as of
January 18, 2002 multiplied by the exchange ratio of 0.491, plus
(c) the 967,267 currently exercisable warrants held by Fidelity.
Fidelity has the sole power to vote, direct the voting of,
dispose of and direct the disposition of such shares of CKE
common stock. Fidelity has the sole right to receive or the
power to direct the receipt of dividends from, or the proceeds
from the sale of, such shares of CKE common stock.
Fidelity acquired the CKE common stock and warrants to purchase
CKE common stock referred to above for investment purposes. The
purchases were made in the ordinary course of business and not
for the purpose of acquiring control of CKE.
A group comprised of Cannae Limited Partnership, a Nevada
Limited Partnership, Folco Development Corporation, a Nevada
corporation, Frank P. Willey, Daniel V., Inc., a Nevada
Corporation, and The Daniel D. Lane Revocable Trust own in the
aggregate 2,147,023 shares of CKE common stock. Certain
individuals who are members of or otherwise associated with the
Cannae Group are directors, officers or employees of Fidelity.
In particular, (1) William P. Foley, II, the Chairman of the
Board and Chief Executive Officer of Fidelity, is (i) the
President of Bognor Regis, Inc., a Nevada corporation
and the sole general partner of Cannae, (ii) the President of
Folco, which is a limited partner of Cannae and which in
addition owns directly 478,705 shares of CKE common stock and
(iii) together with his wife, the trustor of a trust which is
the sole shareholder of Folco; (2) Daniel D. (Ron) Lane, a
director of Fidelity, is the President and sole stockholder of
Daniel and the trustee of the Lane Trust, each of which are
limited partners of Cannae and which in addition own directly in
the aggregate 332,267.28 shares of CKE common stock; and (3)
Wayne Diaz, President of American National Financial, Inc., an
indirect subsidiary of Fidelity, is a limited partner of Cannae.
In addition to the relationships described above, Mr. Foley is
Chairman of the Board of the Company and beneficially owns
6,044,213 shares of the common stock of the Company and Mr. Lane
is a director of the Company and beneficially owns 2,985,870
shares of the common stock of the Company.
By virtue of the relationships described above, Fidelity could
be deemed to be a member of a group with respect to shares of
CKE common stock comprised of Fidelity and the Cannae Group, and
accordingly, pursuant to Rule 13d-5(b)(i) under the Securities
Exchange Act of 1934, as amended, Fidelity could be deemed to be
the beneficial owner of the shares of CKE common stock
beneficially owned by the members of the Cannae Group. Fidelity
expressly disclaims that it has entered into an agreement with
the Cannae Group for purposes of acquiring, holding, voting or
disposing of equity securities of the Company and further
disclaims that it is a member of a group with respect to such
securities comprised of Fidelity and the Cannae Group. Fidelity
further expressly disclaims beneficial ownership of the shares
of CKE common stock beneficially owned by the members of the
Cannae Group, other than those shares owned directly by
Fidelity.
Notwithstanding the foregoing and notwithstanding that Fidelity
has acquired the shares of CKE common stock for the purpose of
investment, Fidelity may at any time in the future determine to,
and expressly reserves the right to, take actions with respect
to the Company and/or its equity securities in parallel to or in
concert with actions taken by the Cannae Group, if and to the
extent that Fidelity determines that the taking of such actions
by Fidelity are in the best interests of Fidelity and its
shareholders. Fidelity reserves the right, however, to take any
such actions independent of any actions of, or any plans or
proposals of, the Cannae Group.
CKE Restaurants owns or franchises more than 3,500 restaurants,
including about 2,560 Hardee's restaurants (two-thirds are
franchised). It also owns or franchises about 970 Carl's Jr.
quick-service hamburger restaurants, primarily in the western
US. CKE is focusing on jump-starting the Hardee's brand; it has
added new items to the chain's menu and is remodeling many
locations (including the conversion of some Hardee's into Star
Hardee's, a combination of the Hardee's and Carl's Jr.
concepts). In addition, the company has been selling company-
owned Hardee's to franchisees to pay off debt. It also sold its
125 Taco Bueno restaurants in 2001 to help with the Hardee's
turnaround. At November 5, 2001, the company had a working
capital deficit of about $66 million.
CALL-NET: Security Holders Okay Proposed Recapitalization Plan
--------------------------------------------------------------
Call-Net Enterprises Inc. (TSE: CN, CN.B) announced that, at
meetings held on the morning of April 3, 2002, its Noteholders
and Shareholders overwhelmingly approved a proposed plan of
arrangement under the Canada Business Corporations Act providing
for a comprehensive recapitalization of Call-Net that will
reduce the company's debt by more than $2 billion.
At the Noteholders' Meeting in excess of 97% of the votes cast
supported the proposed plan of arrangement. Subsequently, at the
Shareholders' Meeting more than 96% of the votes cast supported
the proposed plan of arrangement.
Implementation of the plan of arrangement is subject to the
Company receiving a final order from the Ontario Superior Court
of Justice under the Canada Business Corporations Act. The Court
is scheduled to hear the application for the final order on
April 5, 2002. Subject to obtaining the final order from the
court, the transaction is expected to close on April 10, 2002.
"We are very encouraged by the strong support our
recapitalization proposal received from securityholders this
morning," said Bill Linton, President and Chief Executive
Officer of Call-Net Enterprises. "We believe this support is a
very important step in obtaining the Court's approval on
Friday to proceed with the completion of the plan of arrangement
on April 10."
Call-Net Enterprises Inc. is a leading Canadian integrated
communications solutions provider of local and long distance
voice services as well as data, networking solutions and online
services to businesses and households primarily through its
wholly-owned subsidiary Sprint Canada Inc. Call-Net,
headquartered in Toronto, owns and operates an extensive
national fibre network and has over 100 co-locations in nine
Canadian metropolitan markets. For more information, visit the
Company's Web sites at http://www.callnet.caand
http://www.sprint.ca.
DebtTraders reports that Call-Net Enterprises Inc.'s 9.375%
bonds due 2009 (CN09CAR1) are quoted at a price of 29. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CN09CAR1for
real-time bond pricing.
CAREMATRIX: 2nd Amended Joint Plan Declared Effective April 4
-------------------------------------------------------------
CareMatrix Corporation, a provider of assisted living services,
announced today that the Seconded Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code, as
Further Modified filed jointly by the Company, CareMatrix of
Massachusetts, Inc., CareMatrix of Needham, Inc., CMD Securities
Corp, Lakes Region Villages, LLC, Dominion Village at Poquoson,
L.P., Dominion Village at Chesapeake, L.P. and Dominion Village
at Williamsburg, L.P., and its Official Committee of Unsecured
Creditors, confirmed by the United States Bankruptcy Court for
the District of Delaware on January 29, 2002 became effective
Thursday, April 4, 2002. Three other subsidiaries of the
Company, CareMatrix of Dedham, Inc., CareMatrix of Palm Beach
Gardens (SNF), Inc., and CCC of Maryland, Inc. still remain in
Chapter 11 and were not covered by the Plan. The Company's
other subsidiaries were not in Chapter 11.
Pursuant to the Plan, 100% of the common stock of the
reorganized Company will be issued to holders of allowed general
unsecured claims in full satisfaction of their claims. Also,
pursuant to the Plan, the Company's senior secured credit line
will be modified and reinstated. Existing holders of the
Company's old common stock and old preferred stock will not
receive or retain any property or interest in property on
account of their stock interests under the Plan.
Michael Zaccaro, Chairman and CEO, stated "We are pleased that
the Company has emerged from its Chapter 11 case and is now able
to focus on its primary goal of providing the highest level of
care and services to our residents. The Company is also now
positioned to evaluate potential opportunities for controlled
expansion within its primary market areas, which will continue
to be the Northeast and Mid-Atlantic states."
The Company is a provider of senior housing services including
assisted living, supportive independent living and specialized
programs for people with Alzheimer's disease. The Company
currently owns or operates 23 facilities in 10 states,
representing over 2800 units. Of these facilities, subsidiaries
of the Company lease 5 facilities; manage 8 facilities and own
10 facilities.
CHELL GROUP CORPORATION: Signs Letter of Intent to Acquire EMTEC
----------------------------------------------------------------
Chell Group Corporation (NASDAQ:CHEL), a technology holding
company announced the signing of a Letter of Intent with EMTEC
Inc., (NASD OTC: ETEC.OB), to acquire 100% of its outstanding
shares in a proposed cash/stock transaction. Founded in 1981,
EMTEC is a profitable solutions integration firm that has been
providing information technology solutions to the corporate and
educational sectors for over 20 years.
Cameron Chell, Chell Group Chairman and CEO noted, "This is a
significant step in our growth strategy to build a pre-eminent
portfolio of operating IT Services companies. EMTEC, with its
well-run, profitable operations and high-end solutions, which
include products from SUN Microsystems, diversifies Chell
Group in terms of geography, products and service offerings. The
EMTEC team has delivered strong operating results and we are
very excited about this transaction."
John Howlett, EMTEC CEO said, "We are pleased to be part of the
Chell Group, and look forward to continue to grow our business
and to deliver increased value for both our shareholder groups."
Don Pagnutti, Chell Group CFO said, "Upon closing, we would look
for this acquisition to be immediately accretive to our earnings
per share and to continue to generate solid, positive operating
cash flows. EMTEC, a leader in its markets, will add significant
recurring revenues to Chell Group. We anticipate a due diligence
phase of 60 days."
After completion of due diligence, joint Board approval and the
signing of a Definitive Merger Agreement, it is anticipated that
a proxy statement will be sent to all EMTEC Shareholders for
their approval, with the positive recommendation of the EMTEC
Board.
Chell Group Corporation (NASDAQ Small Cap: CHEL) is a technology
holding company in business to acquire and grow undervalued
technology companies. Chell Group's portfolio includes wholly-
owned Logicorp Ltd., http://www.logicorp.ca,NTN Interactive
Network Inc. http://www.ntnc.com,GalaVu Entertainment Network
Inc. http://www.galavu.com,and Engyro Inc. (investment
subsidiary) http://www.engyro.comand cDemo Inc. (investment
subsidiary) http://www.cdemo.com.For more information on the
Chell Group, please visit the company's Web site at
http://www.chell.com.
Since 1981, EMTEC has provided IT solutions and services for
leading companies throughout New York, New Jersey, Connecticut,
Pennsylvania, Delaware and Georgia. A leading organization in
information technology, EMTEC provides services including
Network Monitoring, Help Desk, and IT Consulting integrated
with solutions in Information Security, Data Storage, Data
Protection and Enterprise Infrastructure. EMTEC has been listed
on the VAR Business 500 continuously since 1995. For more
information, please visit the company's Web site at
http://www.emtecinc.com
COMDISCO INC: Seeks Approval of Settlement Pact with CIT Group
--------------------------------------------------------------
Comdisco, Inc., and its debtor-affiliates seek the Court's
authority to enter into a Settlement Agreement with CIT Group
Inc., formerly known as Tyco Capital Corporation. Under the
settlement, the Debtors retain $1,000,000 and will return the
remainder of CIT Group's good faith deposit, plus interest, made
in connection with CIT Group's proposed purchase of the Debtors
leasing assets.
John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher &
Flom, in Chicago, Illinois, relates that the Court has approved
the Debtors' bidding procedures prior to this motion.
Accordingly, the Debtors solicited bids from potential
purchasers for the sale of their leasing assets. "CIT Group bid
for certain of those assets by submitting a written bid and by
participating in an auction for the assets," Mr. Butler states.
In connection to the Bid, CIT Group delivered the deposit to
Goldman, Sachs & Co, as agent for the Debtors, in the amount of
$50,000,000. In accordance to the Bidding Procedures and CIT
Group's sealed bid, the Bid is irrevocable through January 31,
2002.
Mr. Butler explains that, after evaluating a number of competing
proposals, the Debtors selected the Bid as the highest with
respect to the sale of their IT Leasing business, and worked to
negotiate a definitive sale agreement with CIT Group. "However,
on January 31, 2002, CIT Group withdrew the Bid," Mr. Butler
reports.
CIT Group then requested a return of the deposit. According to
Mr. Butler, the Debtors declined to return the deposit pending
further review of whether CIT Group withdrew the Bid prior to
its expiration.
Thus, Mr. Butler tells the Court, the Debtors and CIT Group have
negotiated a settlement with respect to the deposit wherein the
Debtors retain $1,000,000 and will return the entire remainder
of the deposit plus interest earned to CIT Group. The
Settlement Agreement also provides a mutual release to both
parties for any claims related to the Bid or the deposit.
The Debtors believe that the Settlement Agreement is fair and
reasonable under the circumstances. "Through this settlement,
the Debtors are able to recoup costs associated with the Bid
while avoiding litigation with respect to the deposit," Mr.
Butler adds. Failure to resolve this dispute would result in
costly and difficult litigation. Not only is the outcome of any
litigation uncertain, but also the costs in terms of money and
human resources outweigh any potential gain.
The Settlement Agreement specifies that:
(i) the Debtors retain $1,000,000 of the deposit and the
entire remainder of the deposit plus all interest will be
returned to CIT Group as soon as practicable or in any
event within one business day after the complete execution
and acknowledgement of this agreement, by wire transfer in
immediately available funds. Furthermore, the parties
acknowledge that all disputes about the Bid and the
deposit are settled, and directs Goldman, Sachs & Co. to
release the deposit;
(ii) the Debtors release and forever discharge CIT Group from
any and all claims, actions, causes of actions and
liabilities of any type arising from or related to the
deposit or the Bid; and
(iii) CIT Group releases and forever discharges the Debtors from
any claims, actions, causes of actions and liabilities of
any type arising from or relating to the deposit or the
Bid. (Comdisco Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
CORAM HEALTHCARE: Trustee Hires Schnader Harrison as Counsel
------------------------------------------------------------
Arlin M. Adams, the chapter 11 trustee appointed in the Coram
Healthcare Corp. and Coram, Inc., cases, asks for authority from
the U.S. Bankruptcy Court for the District of Delaware to employ
and retain Schnader Harrison Segal & Lewis LLP as his counsel to
perform the necessary legal services required.
The Trustee selected Schnader Harrison as his counsel because of
the Firm's knowledge and experience in the fields of bankruptcy,
insolvency and creditors' rights, as well as litigation,
corporate and securities and labor law. From 1947 until joining
the Third Circuit Bench in 1969, Mr. Adams was a senior partner
at Schnader Harrison. Mr. Adams has a long and extensive
relationship with Schnader Harrison that demonstrates personal
faith and confidence.
Schnader Harrison is expected to:
a. provide legal advice with respect to the Trustee's
powers and duties in the continued operation of the
Debtors' businesses and management of their properties;
b. prepare, negotiate and pursue confirmation of a plan and
approval of a disclosure statement;
c. prepare necessary applications, motions, answers,
orders, reports and other legal papers on the Trustee's
behalf;
d. appeare in court to protect the interests of the
Debtors' estates and their creditors; and
e. perform all other legal services for the Trustee that
may be necessary and proper in these bankruptcy cases.
The principal attorneys and paralegals presently designated to
represent the Trustee and their standard hourly rates are:
Professional Position Hourly Rate
------------ -------- -----------
Barry E. Bressler Partner $315
Nicholas J. LePore, III Partner $310
Richard A. Barkasy Partner $240
Michael J. Barrie Associate $140
Eric L. Scherling Associate $130
Tracey Dopson Paralegal $110
By separate application, the Trustee is seeking to retain the
firm of Weir & Partners LLP as local counsel. Weir & Partners
and Schnader Harrison have conferred regarding the division of
responsibilities to avoid duplication of tasks, the Trustee
assures the Court.
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: Taps Cleary Gottlieb as Chapter 11 Co-Counsel
-------------------------------------------------------------
Covanta Energy Corporation, and its debtor-affiliates request
Judge Blackshear's permission to employ Cleary, Gottlieb, Steen
& Hamilton as co-counsel in the Chapter 11 proceedings and to
represent them in their reorganization.
Covanta Secretary and Senior Vice President of Legal Affairs,
Jeffrey R. Horowitz, states that if the Debtors were required to
retain counsel other than Cleary, Gottlieb in connection with
the prosecution of the Chapter 11 cases, "the Debtors, their
estates and all parties in interest would be unduly prejudiced
by the time and expense necessarily required by such new
attorneys to familiarize themselves with the intricacies of the
Debtors' businesses, operations and capital structure."
Mr. Horowitz explains that the Debtors have determined Cleary,
Gottlieb possesses the extensive experience and knowledge
necessary in the aspects of law that may arise in these cases.
Cleary, Gottlieb's firm employs more than 500 attorneys,
maintaining offices in the United States, Belgium, England,
Germany, France, Hong Kong, Italy and Japan.
Cleary Gottlieb is familiar with the Debtors' businesses and
financial affairs. Over the past 10 years, the firm has
represented the Debtors' in the divestiture of its media and
aviation businesses, and the renewal of its pre-petition
revolving credit facility.
Specifically, Cleary, Gottlieb will:
(a) provide advice to the Debtors with respect to their
powers and duties as debtors and debtors in possession
in the continued operation of their businesses and the
management of their properties:
(b) take necessary or appropriate action to protect and
preserve the Debtors' estates, including prosecuting
actions commenced against the Debtors, conducting
negotiations concerning litigation in which the Debtors
are involved, and file and prosecute objections to
claims filed against the Debtors' estates, except where
such litigation is handled by Jenner or other retained
counsel;
(c) prepare, on behalf of the Debtors, applications,
motions, answers, orders, reports, memoranda of law
and papers in connection with the administration of
the Debtors' estates;
(d) represent the Debtors in negotiations with all
other creditors and Debtors' equity holders, including
governmental agencies and municipal authorities;
(e) represent the Debtors in negotiations regarding
possible dispositions of some or all of their assets;
(f) negotiate, on behalf of the Debtors, one or more plans
of reorganization and all related documents; and
(g) perform other necessary or appropriate legal services
in connection with these chapter 11 cases.
Cleary, Gottlieb will bill for its professionals' services at
its customary hourly rates:
Position Rate
-------- ----
Partners $525-695
Special Counsel $505-695
Associates $225-455
Managing Attorneys $440-455
Law Clerks/Summer Associates $155-220
Paralegals/Clerks $155-220
Also, Cleary, Gottlieb will bill the Debtors for any ordinary
out-of pocket expenses associated with their services to the
Debtors.
Ms. Buell discloses that the Debtors paid Cleary, Gottlieb
$6,162,946.30 for legal services in the last 12 months and the
firm holds no claim against the Debtors for amounts owing for
pre-petition services.
Ms. Buell relates that a records search to ascertain possible
conflicts related to the Debtors' representation by the Firm
reveals that Cleary, Gottlieb represents some of the Debtors'
creditors, equity holders and other parties of interest. She
assures Judge Blackshear that Jenner & Block LLC, the Debtor's
choice for co-counsel in connection with the financial and
litigation aspects of the Chapter 11 cases will undertake any
litigation involving these parties. She relates the four parties
representing 1%, but less than 5%, of the Firm's 2001 gross
revenues are: BNP Paribas, Deutche Bank, Credit Suisse First
Boston and Salomon Smith Barney. Cleary, Gottlieb represents
these parties only in matters unrelated to the Debtors' cases.
She assures Judge Blackshaw that the Debtors are aware of this.
Mr. Horowitz adds, "I believe that Cleary, Gottlieb's current
and future representation of these entities will not in any way
adversely affect the firm's representation of the Debtors."
Cleary, Gottlieb does not hold or represent any interest adverse
to the Debtors or their estates and, to the best of Ms. Buell's
knowledge, is a "disinterested person" as defined in Section
101(14) of the Bankruptcy Code. (Covanta Bankruptcy News, Issue
No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900)
EB2B COMMERCE: Can't Beat Form 10-KSB Filing Deadline
-----------------------------------------------------
eB2B Commerce Inc. will be late in filings its most recent
financial information with the Securities and Exchange
Commission. In 2001, the Company effected a restructuring plan,
which included the elimination of a number of positions. In
December 2001, a new controller was hired by the Company, which
controller has significant responsibility for preparing the Form
10-KSB. In January 2002, the Company completed its acquisition
of Bac-Tech Systems, Inc. The controller of the Company has
spent significant time in connection with the integration of
this company,among other responsibilities. As a result of the
foregoing events, additional time is required to prepare and
review the Company's Form 10-KSB.
The Company's operating results for 2001, as compared to 2000,
as are follows: Revenues for 2001 were $6.8 million, as compared
to $5.5 million for 2000. Excluding the goodwill impairment
charge recorded in 2001 of $43.4 million, earnings before
interest, taxes, depreciation and amortization (EBITDA)
was a loss of $11.7 million in 2001 compared to an EBITDA loss
of $13.1 million for 2000. EBITDA excluding restructuring and
impairment charges (Recurring EBITDA) was a loss of $8.3 million
in 2001 compared to a Recurring EBITDA loss of $13.1 million in
2000. Net loss was $73.4 million in 2001, as compared to a net
loss of $41.3 million in 2000. The higher loss in 2001 is mainly
attributable to the above-mentioned $43.4 million impairment
charge.
eB2B Commerce (formerly DynamicWeb Enterprises) is hoping that
two e-businesses are better than one. The provider of business-
to-business (B2B) e-commerce services and software for
facilitating buyer-supplier transactions took its present form
when investor Commonwealth Associates engineered a reverse
acquisition between two B2B e-commerce companies with histories
of losses -- privately held eB2B Commerce and publicly traded
DynamicWeb Enterprises. eB2B creates electronic marketplaces for
specific vertical industries, including sporting goods and drug
stores. The company's customers include retailers Rite Aid, Best
Buy, and Linens & Things. Chairman Peter Fiorillo owns about 35%
of the company. At September 30, 2001, the company had a working
capital deficit of about $1.3 million.
EMMIS COMMS: Looks for $104 Million from New Equity Sales
---------------------------------------------------------
Emmis Communications Corporation is offering Class A common
stock in a public offering. The Company is offering 4,000,000
shares of ita Class A common stock. Its Class A common stock is
traded on the Nasdaq National Market under the symbol "EMMS". On
March 26, 2002, the last reported sale price of its Class A
common stock was $27.00 per share.
PER SHARE TOTAL
--------- -----
Public offering price $26.80 $107,200,000
Underwriting discounts
and commissions $0.56 $2,240,000
------ ------------
Proceeds, before expenses, to Emmis $26.24 $104,960,000
Emmis has granted the underwriters the right to purchase up to
600,000 additional shares of Class A common stock to cover over-
allotments.
Sole Book-Running Manager: Deutsche Banc Alex. Brown; Co-Lead
Manager: Credit Suisse First Boston
The company owns and operates more than 20 radio stations
serving some of the top markets in the US, including New York
City, Los Angeles, and Chicago. It also owns two radio networks
(AgriAmerica and Network Indiana) in Indiana. Abroad, the
company has stakes in two stations in Argentina and one in
Hungary. Emmis plans to spin off its TV division -- 15 network-
affiliated television stations in 12 states. In addition to
broadcasting, the company publishes several regional magazines,
including Indianapolis Monthly, Los Angeles Magazine, and Texas
Monthly. Chairman Jeffrey Smulyan controls nearly 60% of the
firm.
As previously reported, Emmis Communications Corporation in
December announced the amendment of its existing $1.29 billion
senior secured credit facility of Emmis Operating Company, a
wholly-owned subsidiary of Emmis Communications, as part of its
efforts to reduce its leverage. The amendment provides Emmis
with financial covenant relief through December 1, 2002.
ENRON CORP: US Trustee Appoints Harrison Goldin as ENA Examiner
---------------------------------------------------------------
Assistant United States Trustee Mary Elizabeth Tom sought and
obtained the Court's approval of the appointment of Harrison J.
Goldin, Esq., as the Examiner in Enron North America
Corporation.
The decision to appoint Mr. Goldin was reached, Ms. Tom relates,
after consultations with:
-- Martin J. Bienenstock, Esq. and Peter Gruenberger, Esq. of
Weil, Gotshal & Manges - Counsel to the Debtors;
-- Luc A. Despins of Milbank, Tweed, Hadley & McCloy - Counsel
to the Creditors' Committee;
-- Thomas E Lauria, Esq. of White & Case - Counsel to the Ad Hoc
Committee of Energy Merchants;
-- Judith W. Ross, Esq. and David M. Bennett, Esq. of Thompson &
Knight, and Aaron R. Cahn, Esq. of Carter, Ledyard & Milburn
- Counsel to Dunhill Resources, et al.;
-- Deborah A. Reperowitz, Esq. and Charles Panzer, Esq. of Reed
Smith - Counsel to the Wiser Oil Company;
-- Robin E. Keller, Esq. of Stroock & Stroock & Lavan - Counsel
to American Home Assurance Co.;
-- Robin Phelan, Esq. of Haynes and Boone - Counsel to FBTC
Leasing Corp.;
-- Lawrence J. Kotler, Esq. of Duane Morris & Heckscher LLP -
Counsel to National Fire Insurance Company, Federal Insurance
Company, and Continental Casualty Company;
-- W. Jonathan Airey, Esq. of Vorys, Sater, Seymour & Pease LLP
- Counsel to the Independent Producers Group;
-- Michael S. Etkin, Esq. of Lowenstein Sandler PC - Counsel to
Dominion;
-- John C. Nabors, Esq. of Gardere Wynne Sewell - Counsel to
EXCO Resources, Inc.; and
-- Barnet B. Skelton, Jr., Esq. - Counsel to the Southern Ute
Indian Tribe.
Mr. Goldin has been a Senior Managing Director of Goldin
Associates, L.L.C., since 1990. His other experiences include:
(a) Chief Restructuring Officer: Rockefeller Center Properties
(b) Financial Advisor: Drexel Burnham Lambert Trading Company
(creditors)
(c) Trustee: Granite Partners, First Interregional, Power
Company of America
(d) Examiner: Bruno's, Citiscape
Mr. Goldin also served as Comptroller for the City of New York
from 1974 to 1989. As Comptroller, Mr. Goldin:
-- oversaw financial restructuring of New York City,
-- directed financial and investigative audit units,
-- managed $40,000,000,000 of pension assets,
-- received numerous GFOA financial reporting awards, and
-- was voted "Best Comptroller in America" by a panel of over
100 expert judges selected by Crain's Publications.
Mr. Goldin had also dabbled in the securities business with
Edwards & Hanley and James H. Oliphant & Company from 1970 to
1973.
During the 1960s, Mr. Goldin was connected with U.S. Department
of Justice (1961-1963) and Davis Polk & Wardwell (1963-1969).
From 1966 to 1973, Mr. Goldin was a member of the New York State
Senate. In 1989, Mr. Goldin made a run for mayor of New York
City.
In the 1980s, Mr. Goldin taught as:
-- Adjunct Professor of Law, New York Law School, 1983-1989
-- Adjunct Professor of Law, Cardozo Law School, 1983-1989
-- Adjunct Professor of Accounting, Stern Graduate School of
Business, New York University, 1982-1989
-- Lecturer in Law, Columbia Law School, 1974-1989
Mr. Goldin graduated summa cum laude from Princeton University,
A.B. in 1957. Mr. Goldin spent a year in Harvard Graduate
School (Woodrow Wilson Fellow) from 1957 to 1958. Mr. Goldin
took up law at Yale Law School, LL.B. where he was Articles
Editor for Yale Law Journal in 1961.
"To the best of my knowledge, I do not have any connection with
Enron Corp., Enron North America Corp. or their respective
affiliates and subsidiaries, their attorneys, their creditors,
or any other parties in interest," Mr. Goldin assures the Court.
Mr. Goldin asserts that:
-- he is a "disinterested person", within meaning of section
101(14) of the Bankruptcy Code, and
-- he doesn't hold or represent any interest adverse to the
Debtor's estate or the Debtor's creditors in Enron North
America's case. (Enron Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ENRON CORP: ENA Gets Okay to Sell 2 Gas Contracts to Occidental
---------------------------------------------------------------
Peoples Energy (NYSE: PGL) announced that the United States
Bankruptcy Court in New York has approved Enron North America's
sale of two Gas Purchase and Agency Agreements to Occidental
Energy Marketing, Inc., a unit of Occidental Petroleum
Corporation (NYSE: OXY).
Pursuant to the court's order, Occidental Energy Marketing,
Inc., will assume responsibility for the Gas Purchase and Agency
Agreements with The Peoples Gas Light and Coke Company and North
Shore Gas Company effective April 1. "We are pleased that these
important gas supply agreements are with an energy supplier that
has extensive experience with the Chicago marketplace as well as
a strong credit position," said William Morrow, Executive Vice
President. "Our utility customers will continue to receive
highly reliable supply with no added cost."
Other court-approved transactions include Peoples Energy
acquiring Enron's fifty-percent interest in enovate, L.L.C. --
the wholesale marketing partnership jointly owned by the two
partners. Peoples Energy is continuing to provide these
midstream services to the Chicago regional marketplace
independently while it evaluates new partnership opportunities
with Occidental. The settlement also provides for assignment to
Occidental of Enron's interests in certain commodity and weather
hedge positions.
"With the court's action, Peoples Energy's exposure under all
its agreements with Enron has been effectively eliminated,"
added Morrow.
Peoples Energy is a diversified energy company comprised of five
primary business segments: Gas Distribution, Power Generation,
Midstream Services, Retail Energy Services, and Oil and Gas
Production. The Gas Distribution business serves about 1 million
retail customers in Chicago and northeastern Illinois. Visit
the Peoples Energy Web site at http://www.PeoplesEnergy.com
ENRON CORP: Unit Wins Nod to Reject EOTT Storage & Tolling Pacts
----------------------------------------------------------------
EOTT Energy Partners, L.P. (NYSE: EOT) announced that a federal
bankruptcy judge has signed the stipulation and agreed order
that will permit EOTT to secure long-term storage and tolling
agreements for its Mont Belvieu storage facility and MTBE plant
in the Houston Ship Channel area. EOTT expects the order to
become final on April 12, 2002, ten days after it was signed and
entered.
In proceedings related to the bankruptcy filing of Enron Corp.,
the bankruptcy court has approved the rejection of the existing
agreements between EOTT and an Enron subsidiary, Enron Gas
Liquids Inc., clearing the way for EOTT to seek other customers
for the two facilities. EOTT sought court approval of the
rejection of the contracts so it could develop new customers for
the facilities, which became necessary as a result of EGLI's
failure to uphold its obligations under the contracts after
Enron's bankruptcy filing. As a result of the rejection of the
contract, EOTT has a monetary damage claim against EGLI and
Enron Corp. that will be filed in the bankruptcy proceedings.
The exact amount of EOTT's claim resulting from the rejection of
these two agreements has not yet been fully determined or
calculated.
"This action is yet another step in resolving the challenges
EOTT has faced in the wake of Enron's bankruptcy," said EOTT
President and Chief Executive Officer Dana Gibbs. "We are now
able to pursue long-term contracts for these facilities, enhance
earnings and cash flow, and manage our business in a way that
best serves our customers, our suppliers and our unitholders."
EOTT Energy Partners, L.P. is a major independent marketer and
transporter of crude oil in North America. EOTT transports most
of the lease crude oil it purchases via pipeline, which includes
8,000 miles of active intrastate and interstate pipeline and
gathering systems. In addition, EOTT owns and operates a
hydrocarbon processing plant and a natural gas liquids storage
and pipeline grid system. EOTT Energy Corp. is the general
partner of EOTT with headquarters in Houston. EOTT's Internet
address is http://www.eott.com The Partnership's Common Units
are traded on the New York Stock Exchange under the ticker
symbol "EOT".
DebtTraders reports that Enron Corp.'s 9.125% bonds due 2003
(ENRON2) are quoted at a price of 12.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON2for
real-time bond pricing.
EXODUS COMMS: Hearing on Exclusivity Extension Set for April 23
---------------------------------------------------------------
Without prejudice to their right to seek further extension,
Exodus Communications, Inc., and its debtor-affiliates ask the
Court to extend their Exclusive Plan Proposal Period to April
29, 2002 and to extend the Exclusive Solicitation Period to June
28, 2002.
David R. Hurst, Esq., at Skadden Arps Slate Meagher & Flom LLP
in Wilmington, Delaware, states that the extension is warranted.
The Debtors need additional time to finalize their Liquidating
Plan and provide certain parties-in-interest sufficient time to
review and provide comments on that plan.
In granting extensions to exclusive periods, the courts have
always looked to the size and complexity of a debtors' cases, a
debtors' progress in resolving issues facing its estates and
whether an extension of time harms a debtors' creditors. Mr.
Hurst assures the Court that the requested extension is
justified, in that the Debtors' cases are very large and complex
and that they have been making good faith progress toward
proposing a plan. Additionally, the requested extension is for a
relatively short period of time. The requested extension is not
being sought to pressure creditors to give in to any of the
Debtors' demands.
Mr. Hurst states that since the Petition Date, the Debtors have
made significant progress in their Chapter 11 cases, including:
A. The Debtors' management focusing on stabilizing the Debtors'
businesses and responding to the many time-consuming demands
that inevitably accompany the commencement of a Chapter 11
case, including responding to myriad inquiries from vendors,
taxing authorities, utilities, landlords, customers,
professionals, the Creditors' Committee and other parties-in-
interest;
B. Each of the Debtors' filing the schedules and statements
required under the Bankruptcy Code;
C. The Debtors' seeking and obtaining Court approval under
Section 365 to reject unneeded real property leases;
D. The Debtors' seeking and obtaining Court approval under
Section 363(b) for several significant asset sales, including
the sale of substantially all of the Debtors' assets to
Digital Island Inc., which closed on February 1, 2002; and
E. The Debtors' drafting of a Reorganization Plan which the
Debtors, the Creditors' Committee and their respective
advisors currently are refining and finalizing in preparation
for the filing of the plan with the Court.
Mr. Hurst warns that should the Exclusive Periods prematurely
terminate, the Debtors would be faced with the concomitant
threat of multiple plans that could lead to unwarranted
confrontations, resulting in increased administrative costs. The
requested extension of the Exclusive Periods does not prejudice
the legitimate interests of any creditor or equity security
holder since an extension increases the likelihood of a greater
distribution to the creditors.
A hearing on the motion is scheduled on April 23, 2002. (Exodus
Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
FLEMING COMPANIES: S&P Rates New $260MM Senior Sub. Notes at B+
---------------------------------------------------------------
A 'B+' rating was assigned to Fleming Cos. Inc.'s proposed $260
million senior subordinated notes due in 2012 on April 3, 2002.
Proceeds of the new issue will be used to redeem the company's
$250 million 10.5% senior subordinated notes due in 2004.
Fleming's corporate credit rating at 'BB' and other ratings were
also affirmed at that time. Credit rating outlook is negative.
Fleming is one of the two largest food wholesalers in the U.S.,
and has demonstrated positive operating trends and solid
financial progress over the past two years. This improvement
provides some cushion to enable Fleming to get through a period
of adjustment related to the bankruptcy filing of Kmart Corp.,
its largest customer. Kmart accounted for about 20% of Fleming's
$16 billion of revenues in fiscal 2001. Fleming's 10-year supply
chain agreement with Kmart, effective June 2001, covers
distribution of substantially all of Kmart's food and
consumables products.
The ratings are supported by Fleming's designation as a critical
vendor by the bankruptcy court, giving it priority in payment
over other vendors; the expectation that Fleming will continue
its supply contract with Kmart; and Standard & Poor's belief
that Kmart will emerge from bankruptcy. Although the supply
contract can be confirmed or denied in bankruptcy court, neither
party is expected to cancel the contract, given the mutual
dependency of the relationship, though some alteration is
possible. Kmart's national presence, large base of employees,
and vendor support increase the likelihood of its successful
reorganization. Kmart is targeting emergence from bankruptcy for
the summer of 2003.
Kmart's recently announced 284-store closing program targets
lower-volume stores, accounting for significantly less sales
than their relative percentage of the total Kmart store base.
Fleming's management has estimated that revenues from Kmart
would decline by about $900 million from previous expectations,
with $400 million attributable to lost sales from the closed
stores and $500 million from lower volumes in existing stores,
typical of a retailer undergoing the disruption of bankruptcy.
Originally estimated at $4.5 billion, Fleming now expects annual
volume under the Kmart contract to be about $3.6 billion. The
anticipated $10 million negative impact on net earnings for
fiscal 2002 is relatively modest.
The lower than expected volume resulting from the Kmart
bankruptcy filing is being partially offset by gains in
distribution from new and existing customers. Growth in non-
Kmart customers was 4% in fiscal 2001 and is expected to be 5%
in fiscal 2002. Moreover, Fleming has made good improvements in
its core distribution and retail business. Operating efficiency
is improving, reflected in higher inventory turnover and return
on assets. Continued leveraging of sales growth and investments
in technology should enable cash flow to grow. The company's
growth plans include acquisitions of both retail stores and
distribution businesses. These are expected to be carried out
within the context of a moderate financial policy, as management
has stated its intent to deleverage the company.
EBITDA covered interest expense 2.8 times in fiscal 2001, up
from 2.6x in fiscal 2000. Moderate growth in cash flow in
fiscals 2002 and 2003 should allow coverage to improve. The
company's $600 million revolving credit facility provides good
flexibility for ongoing operations.
Although Fleming's traditional wholesale customer base eroded
over the past few years, the company's shift to non-traditional
channels bodes well for this segment. The traditional wholesale
customer has been affected by accelerated consolidation in the
supermarket industry, which is creating chains with the critical
mass to self-distribute and placing independent operators at
risk. Yet Fleming is gaining new customers from independent
supermarket operators and non-traditional retail channels,
including general merchandise retailers, supercenters, and
convenience stores. The company has also gained some business
from self-distributing supermarket chains that find Fleming's
value proposition economically advantageous in certain regions.
Fleming is focused on growing its food and general merchandise
distribution in these channels as well as its Food 4 Less value
retail format. The "no frills" Food 4 Less format can be
expanded more quickly and with less capital than conventional
supermarkets. The company has exited its conventional
supermarket chains, which had very poor profitability in recent
years.
Outlook
Continued modest improvement in cash flow protection is
incorporated into the rating on Fleming. Further negative
developments from the Kmart alliance, including additional store
closings or an inability to compete successfully in the discount
industry, could negatively affect Fleming's business and
financial position. With a new management team at Kmart, the
extent of further restructuring is unclear at this time.
FRIEDE GOLDMAN: Appoints Jack R. Stone as New President and CEO
---------------------------------------------------------------
Friede Goldman Halter, Inc. (OTCBB:FGHLQ) (FGH) announced the
resignation John Alford as President and Chief Executive Officer
of Friede Goldman Halter. Mr. Alford has served in that
capacity since August 2000.
The Board of Directors has elected Mr. Jack R. Stone, Jr.,
currently serving as the Chief Restructuring Advisor to FGH, to
the additional post of President and CEO effective April 5,
2002. Mr. Stone, a principal of Glass & Associates, Inc., a
nationally prominent management-consulting firm, has been
advising the Board of Directors since October 2001 on
restructuring matters.
As previous announced, FGH has filed a Plan of Reorganization
which, if approved, anticipates the unsecured creditors will
receive a majority of the ownership of the reorganized Friede
Goldman Offshore and reorganized Halter Marine. The plan
presently provides no recovery for the current equity security
holders of the company.
Friede Goldman Halter is a world leader in the design and
manufacture of equipment for the maritime and offshore energy
industries. Its operating units are Friede Goldman Offshore
(construction, upgrade and repair of drilling units, mobile
production units and offshore construction equipment), Halter
Marine (construction and repair of ocean-going vessels for
commercial and governmental markets), FGH Engineered Products
Group (design and manufacture of cranes, winches, mooring
systems and marine deck equipment), and Friede & Goldman Ltd.
(naval architecture and marine engineering).
GALEY & LORD: US Trustee Appoints Unsecured Creditors' Committee
----------------------------------------------------------------
Carolyn Schwartz, the United States Trustee for Region 2,
appoints these creditors of Galey & Lord, Inc. to serve on the
Official Committee of Unsecured Creditors:
1. CFSB Global Opportunities Partners, L.P.
Eleven Madison Avenue, 16th Floor
New York, NY 10010
Attn: Michael Watzky, Director
Tel. No. (212) 325-2019
2. Barclays Capital
222 Broadway
New York, NY 10038
Attn: Mike Econn, CFA
Tel. No. (212) 412-7689
3. Weil Brothers - Cotton, Inc.
P.O. Box 20100
Montgomery, AL 36120
Attn: Robert Weil, II
Tel. No. (334) 244-1800
4. Clariant Corporation
400 Monroe Road
Charlotte, NC 28205
Attn: Walter B. Fowlkes, Treasurer
Tel. No. (704) 331-7057
5. Ciba Specialty Chemicals Corp
540 White Plains Road
Tarrytown, NY 10591
Attn: John M. Sullivan, Group Credit Manager
Tel. No. (914) 785-2000
6. Merrill Lynch Bond Fund, Inc.- High Income Portfolio
800 Scudder Mill Road
Plainsboro, NJ 08536
Attn: Philip Brendel
Tel. No. (609) 282-0143
7. Suntrust Bank- Indenture Trustee
25 Park Place, 24th Floor
Atlanta, GA 30303
Attn: George Hogan, Vice President
Tel. No. (404) 588-7591
G&L, a leading global manufacturer of textiles for sportswear,
including cotton casuals, denim, and corduroy, and is a major
international manufacturer of workwear fabrics, filed for
chapter 11 protection on February 19, 2002 together with its
affiliates. When the Company filed for protection from its
creditors, it listed $694,362,000 in total assets and
$715,093,000 in total debts.
DebtTraders reports that Galey & Lord Inc.'s 9.125% bonds due
2008 (GNL1) are trading between 13.5 and 15.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GNL1for
real-time bond pricing.
GLOBAL CROSSING: Taps Elizabeth Gloster as Spec. Bermuda Counsel
----------------------------------------------------------------
Global Crossing Ltd., and its debtor-affiliates seek to retain
Elizabeth Gloster, Queen's Counsel (QC) as their special Bermuda
counsel in their Chapter 11 cases, pursuant to Sections 327(e)
and 328 of the Bankruptcy Code, and effective as of the Petition
Date.
Ms. Gloster will perform certain legal services necessary during
these Chapter 11 cases, and will assist special counsel Appleby
Spurling & Kempe in addressing relevant issues arising under
Bermuda law and with issues arising pursuant to the coordination
of proceedings thereunder.
According to Mitchell C. Sussis, the Debtors' Corporate
Secretary, Elizabeth Gloster, QC has extensive experience and
knowledge in the field of debtors' and creditors' rights and
business reorganizations under Bermuda law, as well as in cross-
border reorganizations generally. The Debtors' reorganization
has involved the filing of a winding-up proceeding and the
appointment of provisional liquidators in Bermuda. Coordination
of these proceedings with the Debtors' Chapter 11 cases is
therefore necessary.
In a complex international bankruptcy matter, Mr. Sussis
explains that it is not unusual for a debtor in Bermuda to
employ both a QC (a senior barrister) and a firm of attorneys in
Bermuda to assist in an insolvency matter. A QC works closely
with the Bermuda firm of attorneys to provide expert advice on
complex issues of law, as and when requested from the Bermuda
firm. This process does not involve the duplication of services
that are ordinarily provided by the Bermuda firm of attorneys.
Mr. Sussis contends that Elizabeth Gloster, QC is well qualified
to render these services having extensive experience counseling
large corporations with regard to reorganization and
restructuring under Bermuda law, cross-border insolvencies
generally, and matters of corporate law and governance under
English legal systems such as those in Bermuda.
The Debtors selected Elizabeth Gloster, QC as special Bermuda
counsel based on her special expertise in Bermuda law and the
international aspects of the Bermuda restructuring proceedings.
Elizabeth Gloster, QC will work closely with the Debtors' other
attorneys to ensure that there is no duplication of services
performed for or charged to the Debtors' estates.
Mr. Sussis tells the Court that the services of Elizabeth
Gloster, QC as special Bermuda counsel are necessary to enable
the Debtors to address the anticipated host of legal issues
arising under Bermuda law, and to coordinate the Debtors'
approaches to and strategies for addressing developments in the
concurrent proceedings thereunder, quickly and efficiently,
thereby assisting with an expeditious exit from Chapter 11. In
this way, retention of Elizabeth Gloster, QC will help maximize
the value of the Debtors' estates and lead to an enhanced
dividend to creditors.
Elizabeth Gloster, QC, informs the Court that the Debtors paid
her a total of 15,000 pounds for pre-petition services rendered
and related expenses. Ms. Gloster will also apply to the U.S.
Court for allowance of compensation and reimbursement of
expenses in accordance with applicable provisions of the
Bankruptcy Code, the Bankruptcy Rules and Orders of this Court.
The Debtors propose to pay Elizabeth Gloster, QC her of 600
pounds (approximately $860 today) per hour, subject to periodic
adjustments.
Ms. Gloster assures the Court that she does not have any
interest materially adverse to the interests of the estate. She
does not have a direct or indirect relationship to, or interest
in, the Debtors except that she has previously rendered services
to Sumitomo Trust & Banking Co., KPMG, Arthur Andersen, in
matters unrelated these cases. (Global Crossing Bankruptcy News,
Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that Global Crossing Holdings Ltd.'s 9.625%
bonds due 2008 (GBLX3) are quoted at a price of 2.125%. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX3for
real-time bond pricing.
GLOBAL CROSSING: Asian Unit Restructures Vendor Financing Pacts
---------------------------------------------------------------
Asia Global Crossing announced vendor financing agreements with
both of its major construction vendors, KDDI-SCS and NEC. These
agreements will reduce related payments for capital expenditure
by approximately $230 million this year.
KDDI-SCS and NEC are each constructing segments of Asia Global
Crossing's pan-Asian East Asia Crossing subsea cable system, and
the vendor financing agreements that have been renegotiated are
related to this system.
Under the terms of the original agreement with KDDI-SCS, Asia
Global Crossing would have paid KDDI-SCS approximately $95
million this year. The revised agreement allows Asia Global
Crossing to limit the principal payments to KDDI-SCS in 2002 to
$45 million.
Under the terms of the original NEC agreement, Asia Global
Crossing was scheduled to pay NEC approximately $240 million
this year. The new agreement with NEC instead spreads the
payments out until 2005. Total principal payments to NEC will
be limited to $80 million in 2002, which, as part of the
agreement, includes a $50 million refund by Asia Global Crossing
of amounts previously paid by NEC for capacity to be activated
in future periods.
The negotiated agreements grant both KDDI-SCS and NEC security
in the East Asia Crossing cable system. In addition, Asia
Global Crossing agreed to guarantee the amounts its subsidiary
East Asia Crossing Ltd. owes to NEC.
"Successful renegotiation of these vendor financing agreements
was integral to our restructuring process and we are extremely
pleased that we have achieved this target. This allows us to
retain approximately $230 million in cash this year that we were
previously expecting to spend, thereby dramatically reducing the
amount of outside capital we must raise to successfully
restructure the company and continue operations into 2003 and
beyond," said Jack Scanlon, Asia Global Crossing vice chairman
and acting chief executive officer.
Scanlon also stated that Asia Global Crossing is engaged in
active discussions with potential investors with respect to a
potential capital infusion.
Asia Global Crossing, a company whose largest shareholders
include Global Crossing, Softbank (Tokyo Stock Exchange: 9984),
and Microsoft (Nasdaq: MSFT), provides the Asia Pacific region
with a full range of integrated telecommunications and IP
services. Through a combination of undersea cables, terrestrial
networks, city fiber rings and complex web hosting data centers,
Asia Global Crossing is building one of the first truly pan-
Asian networks, which will provide seamless connectivity among
the region's major business centers. In addition, in
combination with the worldwide Global Crossing Network, Asia
Global Crossing provides access to more than 200 cities
worldwide. As part of its strategy to provide city-to-city
services, Asia Global Crossing partners with leading companies
in each country it connects to provide backhaul networks.
DebtTraders reports that Asia Global Crossing's 13.375% bonds
due 2010 (AGCX10USS1) are trading between 17 and 18.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AGCX10USS1
for real-time bond pricing.
GREKA ENERGY: Taps Durham Capital to Arrange Debt Restructuring
---------------------------------------------------------------
Greka Energy Corporation (Nasdaq: GRKA) announced the activities
implemented to date by the Company pursuant to its restructured
business strategy announced on March 4, 2002.
Acquisition -- Increased Refinery Utilization
Pursuant to the escrow agreement with Vintage Petroleum, Inc.,
crude produced from their oil and gas properties in the Santa
Maria Valley of Central California is being delivered to Greka's
asphalt refinery. On March 18, 2002 the deliveries started at
approximately 800 barrels per day and are currently at
approximately 2000 barrels a day. These deliveries have
materially enhanced the feed-stock supply to the refinery.
Divestitures -- E&P Assets
Since the restructuring announcement on March 4th, the Company
has primarily focused on the sale of its interests in the Potash
Field (Louisiana) and Richfield East Dome Unit (California).
The Company has already received several offers pertaining to
the REDU interests, while the Company is anticipating bids
during this month pertaining to the Potash Field interests. The
Potash Field data room was opened on March 20th in Houston and
has seen consistent attendance from interested buyers since
then.
In March 2002, the Company entered into an agreement to sell its
exploration interests in Indonesia and the office in Jakarta has
been closed. The sale requires the customary consent by
Pertamina, the Indonesian state-owned oil company, that has been
requested and is currently pending.
The Company is in the process of evaluating the fair market
value of the E&P assets and the resulting impairment, if any, on
the Company's financial statements at December 31, 2001. The
Company has determined that it is in its best interest to allow
sufficient time for this valuation analysis and thus has filed
an extension with the SEC to complete the preparation of its
annual report on Form 10-K.
Debt Restructuring
As part of the Company's plan to complete the restructuring of
its debt, the Company has engaged Durham Capital Corporation to
arrange new senior secured financing for the Company in the
amount of up to $65 million in availability. The credit line is
intended to allow up to a $15 million working capital facility
based on availability secured by the current assets and a $50
million term facility secured by the fixed assets to include the
asphalt refinery and oil and gas reserves in Santa Maria in
Central California within the Company's Integrated Operations.
Mr. Randeep S. Grewal, Chairman, CEO & President, stated, "We
are pleased with the short term progress made by the Company in
accordance with the restructured business strategy. We have
embarked on an aggressive, focused restructuring to be completed
within the second quarter and are well on our way to achieve the
specific objectives timely. Management's successful
implementation over the last four weeks of the Company's
restructured plan has facilitated the objectives laid out on
March 4th.
"Specifically, the deliveries of crude produced from Vintage
Petroleum's assets in Santa Maria, California started with 800
barrels per day in the third week of March and are presently at
approximately 2000 barrels per day into our refinery. During
March, our employees in Santa Maria did an exceptional job of
constructing the necessary crude transfer facilities in three
locations to timely enable an on-schedule crude lift of
approximately 1,200 barrels per day from the Vintage Cat Canyon
Field effective April 1st. Resulting from the timely
accomplishments, the increased crude deliveries/feedstock into
the refinery has increased the throughput rate at the refinery
to 3,500 barrels per day and is envisioned hereafter to be in
this range, representing an approximate 35% increase over the
year 2001 average."
Mr. Grewal further stated, "In regard to the sales process of
our non-Santa Maria E&P assets, the current increase in
commodity prices should further facilitate the sales
transactions within the Company's expectations. The Company had
spent considerable effort and capital in creating value in the
Potash Field and we expect to receive adequate returns on these
investments. The data room process continues on schedule with
some interested parties moving on to field inspections.
Likewise, REDU is a field that has seen significant interest
from regional operators in Southern California. The Company has
several offers in hand and expects to negotiate with a short
list of prospective qualified buyers.
"The closing of these scheduled sales will result in a
significant change to the Company's business and its balance
sheet going forward. In consideration of the close proximity
between these prospective sales and the Company's filing of its
annual report on Form 10-K, we believe that the balance sheet
impact needs to be evaluated by the Company prior to releasing
year end financials. Accordingly, an extension of the Company's
filing of its 10-K was in order to accommodate this material
analysis and its incorporation into the Company's year end
financials."
As further stated by Mr. Grewal, "We look forward to concluding
the financing with Durham Capital to provide long-term liquidity
for the Company. In addition, to enhance the Company's short-
term liquidity during the implementation of the restructuring
plan, the Company is currently closing a bridge facility."
Greka is a vertically-integrated energy company with primary
areas of activities in California and long-term in China. The
Company is principally focused on exploiting the high cash
margin within the full cycle economics created from the
relatively stable natural hedge from equity crude production and
the asphalt market in Central California.
At September 30, 2001, the company's balance sheet showed that
its total current liabilities exceeded its total current assets
by about $41 million.
GROUP MANAGEMENT: Defaults on $1.1 Million Convertible Notes
------------------------------------------------------------
Group Management Corp (OTCBB:GPMT) --
http://www.groupmanagementcorp.com-- disclosed that holders of
a $1.1 million convertible note filed a complaint in United
States District Court for the Southern District of New York
against, the Company and Elorian Landers, the Company's Chief
Executive Officer.
In their complaint, the note holders allege, among other things,
fraud in connection with the sale of the notes and breach of
contract on the notes. The note holders are seeking monetary
damages in excess of $1.1 million and certain injunctive relief
in connection with the registration of the common stock
underlying the notes, conversion of the notes into Company
common stock and transfer of Company common stock pledged as
collateral in connection with a related financing transaction
surrounding the notes. The note holders had previously declared
the Company in default on the notes and demanded payment
thereon.
The Company believes the litigation is without merit and intends
to vigorously defend the litigation.
Group Management Corp. provides a value-added corporate
structure within its two business units, Creative Products and
Business Services, enabling these groups to leverage their
competencies and deploy their business strategies through GPMT
corporate resources. The Company expands its business model
through selective acquisitions and business development. Group
Management Corp. currently trades on the NASD OTC Bulletin Board
under the symbol GPMT.
HEGCO CANADA: OSC Ceases Trading for Failure to Make Filings
------------------------------------------------------------
The Ontario Securities Commission announced a Temporary Cease
Trading Order on the shares of Hegco Canada Inc., on April 3,
2002, for failure to make statutory filings. Hearing will take
place on April 15, 2002 at 10:00 a.m.
HYBRID NETWORKS: Fails to Meet Nasdaq Continued Listing Criteria
----------------------------------------------------------------
Hybrid Networks Inc. (Nasdaq:HYBR) announced it has received a
Staff Determination letter dated March 28, 2002 from the Nasdaq
Stock Market stating that Nasdaq plans to delist Hybrid from the
Nasdaq Stock Market on April 8, 2002 because of concerns that
Hybrid's securities have no remaining value and that Hybrid has
failed to demonstrate that it can meet the continued listing
requirements.
Headquartered in San Jose, California, Hybrid Networks Inc.
designs, develops, manufactures and markets fixed broadband
wireless systems that enable telecommunications companies,
wireless systems operators and network providers to offer high-
speed Internet data and voice services to businesses and
residences. Hybrid was first to market with patented two-way
wireless products that focus on the MMDS and WCS spectrum in the
United States. For more information, call 408/323-6252 or visit
http://www.hybrid.com
IT GROUP: U.S. Trustee Says Zolfo's Engagement is Unnecessary
-------------------------------------------------------------
Mark S. Kenney, Esq., trial attorney for the U.S. Trustee,
questions the necessity The IT Group, Inc., and its debtor-
affiliates to employ Zolfo Cooper and the propriety of incurring
the cost to the estate -- and ultimately to creditors -- under
the circumstances and posture of this case as posited by the
Debtors. Mr. Kenney points out that the Debtors allegedly hired
Zolfo Cooper to assist them in restructuring their business and
developing, negotiating and confirming a plan of reorganization.
On the contrary, the case has not been presented as one in which
the Debtors might restructure their business or reorganize but
as a liquidation for the benefit of secured creditors.
In addition, Mr. Kenney relates, the Debtors have characterized
the case as a "quick sale" case to The Shaw Group, Inc. who had
agreed pre-petition to acquire all of the Debtors' assets and to
provide debtor-in-possession financing. Therefore, there is no
apparent purpose to be served by the post-petition continuation
of Zolfo Cooper's pre-petition engagement because the sale has
been presented as a "done deal" subject only to the formalities
of briefly exposing the assets to higher and better offers and
obtaining the Court's approval.
Mr. Kenney asserts that even if the employment of a bankruptcy
consultant and special financial advisor were necessary and
appropriate, the Trustee objects to the Zolfo Application and
the proposed order because the application and the affidavit of
Salvatore LoBiondo, Jr., neither provide necessary context by
disclosing whether the Catalyst Fund or any of the persons or
entities in the Catalyst Fund's "chain of control" acting in
their own right or as agents or representatives of third
parties, have had or intend to have any contact with the Debtors
in connection with investments in the Debtors and acquisition of
their assets, whether directly or indirectly. Similarly, neither
the application nor the LoBiondo Affidavit discloses what
activities, if any, the Catalyst Entities have engaged in with
respect to the Debtors. Lacking such information, it is not
possible to assess Zolfo Cooper's disinterestedness or the
existence or adequacy of safeguards designed to ensure that the
firm remains disinterested and does not hold, acquire or
represent any interests adverse to the estates.
Mr. Kenney deems that the indemnification provisions set forth
in the engagement letter may be contrary to applicable law and
inconsistent with prior decisions in the district. The firm's
request for indemnification appears inconsistent with the firm's
obligation to be and to remain disinterested and to hold no
interests adverse to those of the estate.
Subsequently, Mr. Kenney surmises being a "quick sale" case,
there is virtually no contingency factor to the consummation
Fee; in reality it is simply a risk-free back-end fee equivalent
to an additional 2,222 hours of professional time at the firm's
highest hourly rate of $675. Moreover, the fee would be payable
out of the estate - and out of funds which might otherwise
redound to the benefit of unsecured creditors - in connection
with a transaction undertaken solely for the benefit of secured
creditors. Zolfo Cooper's regular hourly rates would already
compensate the firm for the value of its services as calculated
on a lodestar basis. No back-end fee of any kind, including the
Consummation Fee, should be payable except upon demonstration of
both extraordinary value added to the estate and inadequacy of
the firm's regular hourly rates. Even then, the back-end fee
should be proportionate to the incremental value added; the
estate should be enriched rather than impoverished by the
employment of the firm.
In addition, Mr. Kenney points out that the LoBiondo Affidavit
states that Zolfo Cooper does not bill clients for first class
airfare "when prohibited by applicable Administrative Order."
Although no order entered in these cases specifically prohibits
first class air travel, no professionals engaged in these cases
should be permitted under any circumstances to bill such costs
to the estate. Plus, the proposed form of order accompanying the
Motion directs the Debtors to pay Zolfo Cooper upon receipt of
the firm's monthly invoices, on account of and subject to the
firm's formal fee applications. Mr. Kenney believes that such
payments would apparently be made even before the filing of fee
applications and review thereof by parties in interest. The
Debtors offer no explanation for deviating from the procedures
set forth in the proposed order establishing administrative
procedures for interim compensation of professionals, and there
is no principled basis for doing so. Zolfo Cooper should be
subject to the same compensation procedures as all other
professionals in this case.
Unsecured Creditors' Committee Objects
Eric M. Sutty, Esq., at The Bayard Firm, P.A., in Wilmington,
Delaware tells the Court that the Committee objects to a
$1,500,000 Success Fee for Zolfo. On one hand, the Debtors in
their chapter 11 petitions declared that there is no recovery
for unsecured creditors in these cases. On the other hand, the
Debtors seek authority to pay the fee to the Zolfo for standard
bankruptcy consultant and financial advisory services.
Mr. Sutty suggests that, if at the conclusion of this case,
Zolfo believes it is entitled to additional fees for its
services, it should apply for additional compensation. (IT Group
Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
ITC DELTACOM: S&P Hatchets Credit Rating Down to Junk Level
-----------------------------------------------------------
The corporate credit rating on integrated telecommunications
service provider ITC DeltaCom Inc. was lowered to 'CC' on April
3, 2002. The rating remained on CreditWatch with negative
implications at that time.
The downgrade was based on the going-concern opinion received
from ITC's auditors in the 2001 10-K. The auditors cited the
company's recurring losses and negative cash flows from
operations as well as its limited access to additional capital.
Given the company's weak liquidity position ($41 million cash
balance as of December 31, 2001), it is likely that a debt
restructuring will occur in the next few months. ITC has
indicated that it is actively pursuing various alternatives,
which include a debt for equity exchange. If this type of
exchange occurs, the corporate credit rating will be lowered to
'SD' on completion of the exchange. West Point, Georgia-based
ITC had total debt outstanding of about $724 million as of Dec.
31, 2001.
ITC provides integrated voice and data telecommunications
services to midsize and major regional businesses. The company
is also a leading regional provider of wholesale long-haul
services to other telecommunications companies in the Southwest.
INTELLICORP: Special Shareholders' Meeting Set for April 30
-----------------------------------------------------------
The Special Meeting of Stockholders of IntelliCorp, Inc. will be
held at the offices of the Company, 1975 El Camino Real West,
Suite #201, Mountain View, California, 94040-2216 on April 30,
2002 at 9:00 a.m. local time for the following purposes:
1. To approve the issuance of shares of common stock
directly to, or to entities affiliated with, Norman J. Wechsler,
one of the Company's Directors, in connection with a private
financing.
2. To consider and act upon a proposed amendment to
the Certificate of Incorporation of the Company to effect a 1
for 10 reverse stock split.
Only stockholders of record at the close of business on March 4,
2002 are entitled to notice of, and to vote at, the meeting and
any adjournments or postponements of the meeting.
IntelliCorp is a leading solutions and services firm focused on
the implementation of Sales Side B2B, B2C and B2R solutions
requiring extensive technical integration and business process
expertise. At December 31, 2001, IntelliCorp had a total
shareholders' equity deficit of about $4 million.
INTERSTATE BAKERIES: Moody's Confirms Low-B Senior Debt Ratings
---------------------------------------------------------------
Moody's Investors Service confirmed the senior secured and
senior implied ratings for Interstate Bakeries Corporation and
its guaranteed subsidiaries. Outlook remains negative.
This confirmation is based on the good operating performance
that IBC had last year, thereby reducing its debt leverage, and
follows the company's announcement to repurchase 7.4 million
shares of IBC stock from Nestle S.A. for approximately $160
million.
IBC's leading position in the U.S. fresh bread and sweet goods
market supports it ratings but this is mitigated by the highly
competitive and low margin nature of its business, as well as
the challenges it meets in improving the company's operating
performance.
Although overall performance has improved, IBC's rating outlook
remains negative. The planned shares repurchase will once again
cause leverage to increase and liquidity to decrease. If the
company goes for additional shares repurchase or leveraged
acquisitions before restoring financial flexibility or if
operating performance falter, the ratings could be downgraded.
Rating Confirmations:
Interstate Bakeries Corporation:
* Senior implied rating - Ba1
* Senior unsecured issuer rating - Ba2
* Preferred Shelf at - (P)B1
Interstate Brands Corporation and Interstate Brands West
Corporation as Co-borrowers:
* $300 million senior secured revolving
credit facility - Ba1
* $375 million senior secured
Term Loan A facility - Ba1
* $125 million senior secured
Term Loan B facility - Ba1
Interstate Bakeries Corporation, Interstate Brands
Corporation, Interstate Brands West Corporation as joint
and several obligors:
* Senior unsecured shelf - (P)Ba2
* Subordinated shelf - (P)Ba3
With its headquarters in Kansas City, Missouri, Interstate
Bakeries Corporation is the largest baker and distributor of
fresh bakery products in the U.S.
KAISER ALUMINUM: Deadline for Filing Schedules Moved to May 12
--------------------------------------------------------------
Judge Fitzgerald grants Kaiser Aluminum Corporation, and its
debtor-affiliates an extension through and including May 12,
2002 within to file their Schedules of Assets and Liabilities
and Statements of Financial Affairs. (Kaiser Bankruptcy News,
Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that Kaiser Aluminum & Chemicals' 12.750%
bonds due 2003 (KAISER2) are quoted at a price of 20. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KAISER2for
real-time bond pricing.
KEYSTONE CONSOLIDATED: Expects Full-Year Net Loss to Exceed $21M
----------------------------------------------------------------
Keystone Consolidated Industries Inc. has been unable to
complete the preparation of its Annual Report on Form 10-K for
the year ended December 31, 2001 due to delays in assembling the
information required to prepare, and be included in, the Annual
Report.
As previously disclosed, Keystone did not make the interest
payments due August 1, 2001 and February 1, 2002 on its $100
million of 9-5/8% Senior Secured Notes Due 2007. Under the
governing indenture, a failure to make a scheduled interest
payment for 30 days gives the holders of the Senior Notes the
right to accelerate the unpaid principal of the Senior Notes.
Such a failure also gives the trustee of the Senior Notes the
ability to take certain actions and to exercise certain remedies
on behalf of the Senior Note holders. Keystone received various
consents from holders representing more than 75% of the
principal amount of the Senior Notes in which the Senior Note
holders agreed to defer exercising their right to accelerate
the payment of the Senior Notes pursuant to the acceleration
provisions of the Senior Note indenture for specified periods of
time, and agreed to not direct the trustee of the Senior Notes
to take any action or exercise any remedy available to the
trustee as a result of Keystone's failure to make the interest
payment. In addition, Keystone's primary working capital lender
agreed to forbear remedies available to it solely as a result of
Keystone's failure to make the interest payments on the Senior
Notes.
Keystone's board of directors authorized the management of
Keystone, with the assistance of its financial advisors, to
pursue discussions with creditors of Keystone, including holders
of the Senior Notes, to facilitate the development and
implementation of a consensual, out-of-court restructuring for
certain of Keystone's obligations. To date, Keystone has
completed the following elements of its restructuring plan:
-- Holders representing $93,850,000 principal amount of the
Senior Notes have exchanged their Senior Notes for cash and/or
new debt or equity securities of Keystone,
-- Keystone executed agreements with certain key vendors to
provide for the long-term repayment of their existing past-due
trade obligations, and
-- Documents related to $10 million of new, interest-free
subordinated borrowings for Keystone from the County of Peoria,
Illinois have been executed, and the funds are being held in
escrow by a bank in Peoria pending completion of certain other
documents.
As part of its restructuring plan, Keystone is still working on
obtaining (i) an extension of its primary working capital credit
facility through December 31, 2004 and (ii) new term loan
financing from the same lender.
All of these efforts by Keystone to develop and implement a
consensual, out-of-court restructuring for certain of its
obligations have consumed scarce accounting and financial
resources, causing the delay in assembling the information
required to prepare, and be included in, the Annual Report for
filing.
Keystone currently expects to report net sales of approximately
$309 million in the year ended December 31, 2001. Keystone
expects to report a net loss for the same period. While the
amount of such net loss is not yet determined, Keystone
currently believes such net loss will be larger than the $21
million net loss Keystone reported in the year ended December
31, 2000.
The company is a leading manufacturer and distributor of fencing
and wire products, carbon steel rod, industrial wire, nails and
construction products for the agricultural, industrial,
construction, original equipment markets and the retail
consumer. Keystone is traded on the New York Stock Exchange
under the symbol KES.
KMART: Court Okays Jones Day as Institutional Panel's Counsel
-------------------------------------------------------------
The Official Committee of Institutional Creditors of Kmart
Corporation obtained authority from the Court to retain Jones,
Day, Reavis & Pogue as its counsel in these chapter 11 cases,
nunc pro tunc to January 31, 2002.
With the Court's approval, Jones Day will:
(a) advise the Committee concerning its rights, powers and
duties under section 1103 of the Bankruptcy Code;
(b) advise the Committee concerning the administration of the
Debtors' chapter 11 cases;
(c) advise the Committee concerning any efforts by the Debtors
or other parties to collect and recover property for the
benefit of the Debtors' estates;
(d) counsel the Committee in connection with the formulation,
negotiation and confirmation of a plan or plans of
reorganization and related documents;
(e) review the nature, validity and priority of liens asserted
against the Debtors' property and advise the Committee
concerning the enforceability of such liens;
(f) investigate, if necessary, any actions pursuant to
sections 542-550 and 553 of the Bankruptcy Code;
(g) prepare on behalf of the Committee all necessary and
appropriate applications, motions, notices, draft orders
and other pleadings, and review all financial and other
reports filed in these chapter 11 cases;
(h) advise the Committee concerning, and prepare responses to,
applications, motions, pleadings, notices and other
pleadings and papers that may be filed in these chapter 11
cases;
(i) advise and assist the Committee in connection with any
potential dispositions of property of the Debtors'
estates;
(j) advise and assist the Committee concerning proposed
executory contract and unexpired lease assumptions,
assumptions and assignments, and rejections;
(k) assist the Committee in claims analysis and resolution
matters;
(l) commence and conduct any and all litigation necessary or
appropriate to assert rights on behalf of the Committee,
or otherwise further the goals of the Committee in these
cases; and
(m) perform all other legal services for and on behalf of the
Committee that may be necessary or appropriate to assist
the Committee in performing its duties under section 1103
of the Bankruptcy Code.
Jones Day will charge for legal work at its customary hourly
rates. The Jones Day attorneys who will do the most work in
Kmart's cases are:
Professional Position Office Location Hourly Rate
------------ -------- --------------- -----------
David G. Heiman Partner Cleveland $675
Richard M. Cieri Partner Cleveland 635
Paul E. Harner Partner Chicago 565
Brad B. Erens Associate Chicago 425
Ray C. Schrock Associate Chicago 280
Ilana N. Glazier Associate Chicago 240
Daniel B. Pricto Associate Chicago 240
(Kmart Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
KMART CORP: Makes Payment on Postpetition Rent Due Lexington
------------------------------------------------------------
Lexington Corporate Properties Trust (NYSE: LXP), a real estate
investment trust, announced that it has received from Kmart the
rental payment due on Lexington's Warren, Ohio property from
January 22, 2002, the date Kmart filed for bankruptcy
protection, through April 1, 2002. After the receipt of the
rental payment Lexington had accounts receivable of $4.5 million
from Kmart, including $1.9 million in accrued straight-lined
rent and $2.6 million in pre-bankruptcy petition rent relating
to the period October 1, 2001 through January 21, 2002. The pre-
petition rent would be paid to Lexington if and when Kmart
affirms the lease on the Warren, Ohio property as part of its
reorganization and the accrued straight-lined rent would be
realized over the remaining lease term. There have been no
discussions with Kmart with respect to the lease.
Comments From Management
T. Wilson Eglin, Lexington's President and Chief Operating
Officer, said, "Kmart is current in their rent obligation to us
since filing for bankruptcy. We believe this property continues
to perform an important function in their distribution network
and that Kmart will wish to continue leasing the facility.
According to the tenant, this property ranks third in
distribution volume out of sixteen leased warehouse/distribution
facilities utilized in Kmart's logistical operations. Kmart's
announced store closings impact less than 10% of the stores
supplied by this property."
Lexington Corporate Properties Trust is a real estate investment
trust that owns and manages office, industrial and retail
properties net-leased to major corporations throughout the
United States. Lexington Realty Advisors, Inc., an affiliate of
Lexington, provides investment advisory and asset management
services to investors in the net lease area. Lexington common
shares closed Thursday, April 4, 2002 at $16.24 per share.
Lexington, which pays an annualized dividend of $1.32 per share,
has approximately 32.2 million convertible preferred shares,
common shares and operating partnership units outstanding.
Additional information about Lexington is available at
http://www.lxp.com
LA QUINTA: S&P Affirms BB- Credit Rating with Negative Outlook
--------------------------------------------------------------
Standard & Poor's affirmed the 'BB-' corporate credit rating of
La Quinta Corp. and took it off Credit Watch. Outlook for the
said rating is negative.
The ratings reflect the company's good quality portfolio of La
Quinta branded properties, which are expected to generate a more
stable level of cash flow as management progresses in rebuilding
its lodging business. These factors are offset by high debt
leverage, and the expectation that the lodging environment will
remain challenging in the near term.
Based in Dallas, Texas, La Quinta's portfolio consists of 292
owned hotels and 11 franchised hotels operating in the
midpriced, limited service segment. While the La Quinta brand is
relatively well recognized throughout the U.S., the portfolio is
concentrated in the Western and Southern U.S. regions,
particularly in Texas (32% of rooms) and Florida (12%).
Current management assumed control in April of 2000 and has been
making good progress in its efforts to shed its health care
assets to focus exclusively on the limited-service lodging
sector. As of December 31, 2001, the company had reduced the
size of its healthcare assets to $236 million (net of
impairments), or 9% of its total asset portfolio, and had used
sale proceeds to reduce debt. At the end of 2001, debt totaled
$1 billion, down from $1.6 billion at the end of 2000.
The terrorist attacks on September 11, 2001, and the slowing
economy have hindered management's ability to improve operating
performance. Revenue per available room (RevPAR) for 2001
declined 4.5% and lodging EBITDA declined around 8%. EBITDA
margins of 37% for 2001 remain lower than the historical
portfolio's high of roughly 45%. Management expects flat RevPAR
and lodging EBITDA growth for 2002.
The company recently announced amendments to its $375 million
credit facility, including a relaxed maximum total leverage
ratio and a minimum fixed-charge coverage ratio through March
31, 2003, as well as a reduction in its minimum lodging EBITDA
covenant. This increases financial flexibility for the company
to manage through the difficult lodging environment.
Total debt to EBITDA leverage ended the year in the mid- 3.0
times area and interest coverage was in the high 2.0x. Liquidity
was adequate with $138 million of cash at the end of 2001 and
$203 million of unused capacity under the company's $225 million
revolving credit facility.
Outlook
Despite recent improvements to the company's financial profile,
the economic slowdown has negatively affected lodging demand and
will make it more challenging for management to achieve a
meaningful turnaround in the near term.
LEGION INSURANCE: Commences Voluntary Rehabilitation Proceedings
----------------------------------------------------------------
Mutual Risk Management, Ltd. (NYSE:MM) announced that two of its
U.S. insurance companies, Legion Insurance Company and Villanova
Insurance Company, have been placed into voluntary
rehabilitation as a result of an order issued by the
Commonwealth Court of Pennsylvania.
The order of rehabilitation, which will be effective April 1,
2002, was filed with the consent of the boards of directors of
the Legion Companies.
Beginning on April 1, 2002, the Legion Companies will operate in
run-off under the control of the Insurance Commissioner of the
Commonwealth of Pennsylvania as Rehabilitator. No new policies
will be bound and the Legion Companies will begin a process to
non-renew their in-force policies in accordance with applicable
state regulations.
Mutual Risk is evaluating the financial accounting implications
of this development and continuing to evaluate strategic
alternatives with its financial advisor, Greenhill & Co., LLC.
Mutual Risk also announced today the appointment of Mr. Angus
Ayliffe as Chief Financial Officer in place of Mr. James Kelly
who was acting in that capacity on an interim basis. Mr. Ayliffe
was previously Mutual Risk's Controller.
Mutual Risk Management Ltd. provides risk management services to
clients in the United States, Canada and Europe seeking
alternatives to traditional commercial insurance for certain of
their risk exposures, as well as financial services to
individuals and other companies. Mutual Risk Management Ltd.
(MM) Common Shares are listed on the New York and Bermuda stock
exchanges.
LEGION INSURANCE: S&P Revises Financial Strength Ratings to 'R'
---------------------------------------------------------------
Standard & Poor's said it revised its financial strength ratings
on Legion Insurance Co. and Villanova Insurance Co. to 'R'
because of a Pennsylvania State Court decision effective April
1, 2002, to place the companies under regulatory control.
Standard & Poor's also said it lowered its financial strength
rating on Legion Indemnity Co., the remaining pool member, to
triple-'C' because it expects the company's regulators to
consider a similar action.
"Legion Insurance and Villanova Insurance have $1.3 billion of
assets and continue to pay claims," said Standard & Poor's
credit analyst Karole Dill Barkley. "Pennsylvania has not
decided whether it will attempt to rehabilitate or liquidate the
two companies."
The ratings on Legion Indemnity Co and Mutual Risk Management
Ltd., the Bermuda-based holding company, remain on CreditWatch
negative, where they were placed on Dec. 19, 2001.
LEGION INSURANCE: A.M. Best Slashes Fin'l Strength Rating to E
--------------------------------------------------------------
A.M. Best Co. has downgraded the financial strength rating to E
(Under Regulatory Supervision) from B (Fair) for Legion
Insurance Company and Villanova Insurance Company, Pennsylvania.
The downgrade reflects the March 29, 2002, announcement by their
ultimate parent company, Mutual Risk Management, Ltd. (NASDAQ:
MM) that the Commonwealth Court of Pennsylvania has placed the
insurance companies into voluntary rehabilitation. The order of
rehabilitation is effective April 1, 2002.
A.M. Best has also downgraded the financial strength rating to E
(Under Regulatory Supervision) from B (Fair) for Legion
Indemnity Company, Illinois, to reflect its affiliation with
companies under regulatory supervision and the uncertainty
regarding the status of its reinsurance recoverables from these
affiliates. The three companies have operated under an
intercompany reinsurance pooling arrangement since 1996.
Additionally, they have operated as the fronting carriers for
most of the Bermuda-based I.P.C. Group rent-a-captive programs.
A.M. Best has also placed the B+ (Very Good) rating of I.P.C.
Group, Bermuda, under review with negative implications pending
discussions with management on the collateralized nature of its
loss reserves, strategic alternatives including finding another
quality fronting carrier and other related issues.
A.M. Best Co., established in 1899, is the world's oldest and
most authoritative insurance rating and information source. For
more information, visit A.M. Best's Web site at
http://www.ambest.com
LERNOUT & HAUSPIE: Seeks 5th Extension of Lease Decision Period
---------------------------------------------------------------
Each of the Debtors Lernout & Hauspie Speech Products N.V. and
L&H Holdings USA, Inc., ask Judge Judith H. Wizmur for an order
further extending the time period during which they may assume,
assume and assign, or reject unexpired nonresidential real
property leases. The Debtors ask that she extend the period as
to those leases where either of the Debtors is a lessee or
sublessee to the effective date of a confirmed plan relating to
L&H NV or Holdings, respectively.
In support of this requested extension, L&H NV and Holdings
remind Judge Wizmur that they have filed a Joint Plan of
Reorganization with respect to each of their estates, and that
the Plan, as amended, by Dictaphone has been confirmed.
These two Debtors have identified approximately 23 leases or
subleases which relate to corporate offices, storage facilities
or consolidated warehouse and office facilities to which either
of L&H NV or Holdings is a party. Each of these leases is
subject to the Bankruptcy Code's authorization for assumption,
assumption and assignment, or rejection. The Debtors urge that
multiple extensions have been granted in other large, complex
chapter 11 cases similar to this one.
Shortly after the Debtors filed the Joint Plan and Joint
Disclosure Statement in August 2001, a change in circumstances
compelled the Debtors to decide not to seek approval of the
Joint Disclosure Statement at that time insofar as it related to
either of L&H NV or Holdlings. Specifically, the Belgian court
supervising the concordat proceedings of L&H NV in Belgium
issued an order on September 21, 2001, that imposed several
conditions on L&H NV that (i) might not be consistent with the
Joint Plan, and (ii) might affect L&H NV's ability to consummate
the Joint Plan. Moreover, insufficient progress had been made
at that time in the sale or other disposition of the Speech and
Language Technology Division of L&H NV and Holdings, impeding
those Debtors' ability to describe adequately in the Disclosure
Statement the prospective timing of any transaction, the likely
consideration to be realized from such a transaction, the
structure of any such transaction, and the likely recovery to
creditors as a result of such transaction.
Given the existence of these unresolved matters, L&H NV and
Holdings determined that the most productive and cost-efficient
course would be to adjourn final consideration of the Joint
Disclosure Statement insofar as it related to L&H NV and
Holdings and to proceed with seeking approval of a disclosure
statement, and ultimately a plan, exclusively with respect to
Dictaphone.
Since the decision to adjourn consideration of the Joint Plan,
the members of the L&H Group and their retained professionals
have been consumed with the exigencies of the complex
reorganization cases of L&H NV and Holdings, significant asset
sales relating to the assets of L&H NV and Holdings, including
the sale of the Speech and Language Technology Division, and the
negotiation and documentation of the Dictaphone plan and its
confirmation. Given their preoccupation with these matters, L&H
NV and Holdings require additional time to evaluate and assess
the real property leases relating to L&H NV and Holdings, at
least through the Effective Date of their respective or joint
Plans of Reorganization. At this point, the Debtors assure
Judge Wizmur, they are now in a better position to finalize the
terms and conditions of their own plans and the role these
leases will play in the formulation of those plans. These two
Debtors announce that they hope to conclude negotiations among
the various parties in interest with respect to plans relating
to L&H NV and Holdings within the next month, as well as the
documentation of the same.
Without these requested extensions, the Debtors may be forced to
make decisions prematurely relating to these leases.
Specifically, L&H NV and Holdings risk prematurely and
improvidently assuming leases that either could later discover
to be burdensome. These Debtors also risk a premature and
improvident rejection of leases that L&H NV and Holdings could
later discover to be critical or capable of generating value
through assignment. The extensions sought will ensure that the
Debtors do not forfeit valuable rights under the Bankruptcy
Code.
By Delaware Local Rule, the time period for assumption or
rejection is automatically extended to and including Judge
Wizmur's ruling on this Motion. Judge Wizmur does not intend to
convene a hearing on this request unless an objection is filed
by April 15, 2002. (L&H/Dictaphone Bankruptcy News, Issue No.
21; Bankruptcy Creditors' Service, Inc., 609/392-0900)
LODGIAN INC: Hilton Seeks Stay Relief to Terminate License Pacts
----------------------------------------------------------------
Hilton Hotel Corporation, Promus Hotels, Inc., Doubletree Hotel
Services, Inc. and Hilton Inns, Inc., asks the Court for relief
from the automatic stay to authorize it to terminate certain
license agreements and related agreements pursuant to which
Lodgian, Inc., and its debtor-affiliates operate a number of
hotels under the Hampton Inn, Doubletree and Hilton flags, or,
in the alternative, to compel the Debtors to reject the License
Agreements.
According to Jonathan Landers, Esq., at Gibson Dunn & Crutcher
LLP in New York, New York: for over 55 years, Hilton, its
predecessors and/or affiliates have been in the business of
operating, both self-owned and through license agreements, a
worldwide network of hotels utilizing the names "Hilton(R)",
"Hampton Inn(R)", "Hampton Inn & Suites(R)", "Doubletree(R)",
"Doubletree Guest Suites(R)", and other associated trademarks
and service marks. In conducting this business, Hilton owns and
licenses a system of operations designed to provide distinctive,
high-quality hotel service to the public under the Marks. The
products and services of Hilton, through its authorized licenses
and otherwise, have been extensively advertised and offered
throughout the United States and the world, and have earned, as
a result of the expenditure of vast amounts of money, corporate
energy, hard work and dedication to providing high-quality
services, enormous commercial success, favorable recognition and
acceptance by the traveling public. Hilton has, in connection
with all such activities, employed the Marks throughout the
United States and the world to identify its products and
services for the purpose of distinguishing them from the
products and services of others.
Mr. Landers tells the Court that Hilton and its affiliates own
the Marks and they have been duly registered in the United
States Patent and Trademark Office. The Marks and the goodwill
of the business associated with them are of great and
inestimable value, are highly distinctive and have become
universally associated in the public mind with products and
services of highest quality and reputation.
Hilton relies on its franchisees to maintain the System under
the Hilton flags in a first class manner, as guests expect from
the name Hilton and Hilton's affiliated flags. Mr. Landers
claims that poor guest satisfaction and conditions at Hotels
under the Hilton flags reflect poorly on Hilton and the entire
Hilton hotel system. For example, when a hotel guest has a bad
experience at a Hilton hotel, that same guest may associate such
experience with all Hilton hotels and tell others of his
negative experience. Such a situation adversely affects the
business and reputation of Hilton in the market place to the
detriment of Hilton and its franchises.
Mr. Landers relates that Hilton has attempted to resolve the
below issues informally, but have received no response from the
Debtors by sending a letter requesting that the Debtors' counsel
identify the proper person within the Lodgian organization to
discuss the issues. Although counsel for the Debtors informed
counsel for Hilton that an officer of the Debtors would contact
Hilton promptly, this has not occurred.
Mr. Landers contends that a continuation of the automatic stay
would severely hinder Hilton and would irreparably hurt its
goodwill and reputation. As noted above, a guest's bad
experience at one Hilton hotel has a likely impact on other
Hilton hotels and, ultimately, Hilton's entire business and
Hilton may never even hear about the guest's dissatisfaction.
For this reason, Hilton must take preemptive steps to protect
the flag to avoid permanent damage. Termination of the stay, on
the other hand, would not harm the Debtors since the Hilton
hotels constitute only a handful of the total number of hotels
operated by the Debtors and none of these hotels can be
considered a flagship hotel in a world-class city such as New
York or San Francisco. Also, Mr. Landers adds that there cannot
be a particular operational synergy based on the Hilton hotels
operated by the Debtors, since the Debtors operate hotels under
multiple flags other than Hilton flags and the hotels are in
widely diverse geographic areas. Therefore, terminating the
License Agreements would not affect the Debtors' overall
business. Thus, the weighing of the equities strongly favors
lifting the automatic stay.
Mr. Landers points out that the Debtors have not complied with
Hilton's quality standards with respect to three of the seven
License Agreements. Moreover, Hilton's name and Marks and the
goodwill associated with such name and Marks are of substantial
value to Hilton. The Debtors' inability to maintain the Hotel in
a manner and condition satisfactory to Hilton has and continues
to cause harm to Hilton's name and Marks in addition to
influencing the public's perception of Hilton and the hotels
within its system.
Mr. Landers believes that the fact that the Debtors have not
maintained those hotels in an acceptable manner harms Hilton and
is sufficient cause for granting Hilton relief from the
automatic stay. Furthermore, because of the Debtors obvious cash
problems, it is unlikely that they will be able to maintain the
remaining hotels in an acceptable manner. Accordingly, Hilton
submits that cause exists to lift the automatic stay either to
terminate the License Agreements or to allow Hilton to
immediately send Debtor the requisite termination notice and
take such further actions as are necessary to terminate the
License Agreements so as to protect its reputation and name from
further deterioration.
Mr. Landers informs the Court that the Debtors also have not
provided adequate protection to Hilton that the Debtors will or
can comply with the monetary and quality assurance covenants in
the License Agreements. The Debtors have failed to pay fees and
other amounts due under each License Agreement, which came due
before and, significantly, after the Petition Date. In fact, the
Debtors have not made any payments of postpetition fees and
other amounts due under the License Agreements.
Mr. Landers maintains that the Dothan License Agreement and the
Fort Wayne License Agreement will terminate upon their own
terms. Each License Agreement provides that upon notice and
opportunity to cure, the agreements will terminate. Hilton sent
the Dothan Notice of Default and the Fort Wayne Notice of
Default on December 20, 2001 and December 5, 2001, respectively
and since the Debtors received these Notices of Default, they
have not cured any of the defaults. Therefore, in accordance
with the terms of those License Agreements and the Notices of
Default, the Dothan License Agreement has terminated on January
7, 2002 and the Fort Wayne License Agreement will terminate on
March 12, 2002. Mr. Landers argues that the automatic stay
cannot be used to extend the term of an agreement, which is set
to terminate or expire upon the terms of the agreement in
question. Since the License Agreements state that Hilton may
terminate the License Agreement upon notice and the opportunity
to cure, the default notices sent by Hilton triggered the
automatic termination right. Therefore, the automatic stay is
ineffective to reinstate those License Agreements terminated by
their own terms.
Finally, Mr. Landers asserts that the Debtors have been using
the benefits of the License Agreements without paying for them.
The Debtors have made no payments of postpetition fees and the
quality assurance problems have continued postpetition. The
Debtors should be required to provide adequate protection for
the Debtors' claims and for the Debtors' postpetition breaches
of the License Agreements.
Mr. Landers states that the License Agreements are executory
because substantial obligations to perform remain on both sides.
Besides the Debtors' obligations under the License Agreements,
Hilton is obligated to perform certain services such as
technical assistance, and central purchasing services.
Therefore, to assume the License Agreements, the Debtor must
meet all the requirements that Sec. 365 imposes on assumption.
Since it cannot do this, Hilton requests this Court either to
deem the License Agreements rejected or to order the Debtor to
reject it.
Mr. Landers believes that the Debtors can neither cure their
defaults under the License Agreements nor give adequate
assurance that it will promptly do so since it is almost certain
that the Debtors will not honor their commitments. The License
Agreements have therefore failed of its central purposes, which
is to operate the hotels under the Hilton flags in a manner that
provides first class service that is commonly associated with
the Hilton name and to pay to use the System. The failure to
provide quality service is a historical fact that is incapable
of being cured. Mr. Landers notes that those guests who found
mold growing on the wall to their hotel room will likely not
return to that specific hotel or one in its flag. This is a harm
that Hilton has suffered which is irreparable and incapable of
being cured and therefore, the Debtors cannot satisfy the first
requirement of Sec. 365(b)(1) with respect to those License
Agreements.
More importantly, Mr. Landers contends that the Debtors cannot
satisfy the third requirement of Sec. 365(b)(1) as it cannot
provide adequate assurance of future performance. For those
three hotels that failed the QA Reviews (the Dothan Hotel, the
Pensacola Hotel and the Northfield Hotel), the Debtors cannot
demonstrate that in the future it will reliably provide high
quality service or will pay the fees as they come due. The
Debtor has been in both monetary and qualitative default for a
substantial period of time prior to the Petition Date, which has
continued after the Petition Date. Mr. Landers points out that
the Debtor's past and present performance failures are certain
indicators that it cannot perform going forward and its
financial position is simply too precarious for it to fulfill
its obligations under the License Agreement. Under these
circumstances, the Debtors cannot give Hilton adequate assurance
that it will steadily perform as required or will perform at the
quality level associated with the Hilton name.
Furthermore, Mr. Landers tells the Court that the Dothan License
Agreement and the Fort Worth License Agreements are both set to
terminate upon their own terms and therefore cannot be assumed.
Each License Agreement provides that upon notice and opportunity
to cure, the agreements will terminate. Hilton sent the Debtors
the Dothan Notice of Default and the Fort Wayne Notice saying
that if the defaults are not cured, then the agreements will be
deemed terminated. Since the Debtors received these Notices of
Default, they have not cured any of the defaults.
According to Mr. Landers, all of the License Agreements are in
default with respect to the monetary covenants prepetition as
well as postpetition. Based on past performance, it will be
unlikely that the Debtors will be able to provide adequate
assurance of future performance with respect to paying the
monetary covenants. Furthermore, these obvious cash problems
provide a greater risk that the quality provided in each of the
hotels will continue to slide, as shown by those three hotels
which have failed the recent QA Reviews.
Because the Debtor cannot cure the previous defaults nor offer
adequate assurance of its future performance, necessary
prerequisites to assume an executory contract, the Court should
deem the License Agreements to be rejected or order the Debtors
to reject the License Agreements at this time. (Lodgian
Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
MBC HOLDING: U.S. Trustee Names Unsecured Creditors' Committee
--------------------------------------------------------------
The U.S. Trustee appoints these creditors to serve on the
Official Committee of Unsecured Creditors in the chapter 11 case
of MBC Holdings Company:
1) Lovergreen Industrial Services, Inc.
Contact Person: Gerald F. Johnson
2280 Sibley Court
Eagan, MN 55122
Tel: 651 890 1166
2) Gamer Packaging, Inc.
Contact Person: Kenneth S. Gamer
3055 Old Highway 8, #101
Minneapolis, MN 55418
Tel: 612 788 4444
3) Viking Pallet Corporation
Contact Person: Timothy Logan
9188 Cottonwood Lane
PO Box 167
Osseo, MN 55369
Tel: 763 425 6707
The U.S. Trustee designates Mr. Johnson as Acting Chairperson of
the Committee pending the selection of a permanent Chairperson.
MBC Holding Company which operates a full scale brewery in St.
Paul, Minnesota filed for chapter 11 bankruptcy protection on
February 21, 2002 in the U.S. Bankruptcy Court for the District
of Minnesota. Michael F. McGrath, Esq. at Ravich Meyer Kirkman
McGrath & Nauman PA represents the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed $16,154,876 in total assets and $17,230,642
in total debts.
MEMC ELECTRONIC: No Date Yet for Special Shareholders' Meeting
--------------------------------------------------------------
MEMC Electronic Materials, Inc. will hold a special
stockholders' meeting at the MEMC Learning Center at 1613 E.
Terra Lane, O'Fallon, Missouri 63366, on a date yet to be
announced, at 7:00 a.m., local time, for the following purposes:
1. To consider and vote upon the issuance of 260,000 shares
of Series A Cumulative Convertible Preferred Stock, warrants to
purchase 16,666,667 shares of common stock and the common stock
issuable on conversion of such preferred stock and exercise of
such warrants;
2. To consider and vote upon an amendment to its restated
certificate of incorporation authorizing a one-for-two reverse
split of its common stock;
3. To consider and vote upon an amendment to its restated
certificate of incorporation authorizing an increase in its
authorized capital stock from 200,000,000 shares of common stock
to 250,000,000 shares of common stock;
4. To consider and vote upon a future merger between MEMC
Electronic Materials, Inc. and TPG Wafer Holdings LLC in
connection with debt restructuring; and
5. To transact such other business as may properly come
before the meeting and all adjournments thereof.
The Board of Directors has not yet fixed a date as the record
date for the determination of the stockholders entitled to
notice of, and to vote at, the special meeting and all
adjournments thereof.
MEMC is a leading worldwide producer of silicon wafers for the
semiconductor industry. Silicon wafers are the fundamental
building block from which almost all semiconductor devices are
manufactured, such as are used in computers, mobile electronic
devices, automobiles, and other consumer and industrial
products. Headquartered in St. Peters, MO, MEMC operates
manufacturing facilities directly or through joint ventures in
every major semiconductor manufacturing region throughout the
world, including Europe, Japan, Malaysia, South Korea, Taiwan
and the United States. MEMC's liabilities eclipsed $1.5 billion
of reported assets on the Company's June 30, 2001 balance sheet,
following continued quarter-by-quarter operating attributed to
excess capacity, declining prices and interest expense.
At December 31, 2001, the company recorded a total shareholders'
equity deficit of $20.2 million.
MARINER POST-ACUTE: Wants Solicitation Period Extended to June 3
----------------------------------------------------------------
The Mariner Post-Acute Network, Inc. Debtors and the Mariner
Health Group Debtors move the Court, pursuant to section
1121(d), for an extension of their exclusive period during
which to solicit acceptances of their Plan to and including
June 3, 2002.
The Debtors have completed the solicitation of acceptances or
rejections of their Plan and they require a limited amount of
additional time to seek confirmation of their Plan and to meet
the conditions precedent to the Plan's effectiveness. The
Debtors believe that until such time they should retain the
exclusive right to propose and solicit acceptances of a plan of
reorganization; otherwise they may be unnecessarily distracted
from the confirmation and implementation of their plan.
Judge Walrath will convene a hearing on April 17, 2002, at 11:30
a.m., to consider this Motion. Pursuant to Local Rule 9006-2,
the filing of the motion automatically extends the Debtors'
exclusive period through the conclusion of that hearing.
(Mariner Bankruptcy News, Issue No. 28; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
MCLEODUSA: Delaware Court Confirms Prepackaged Chapter 11 Plan
--------------------------------------------------------------
McLeodUSA Incorporated, one of the nation's largest independent
competitive local exchange carriers, announced that the United
States Bankruptcy Court for the District of Delaware entered an
order confirming its pre-negotiated Plan of Reorganization,
which was filed on January 31, 2002. The Bankruptcy Court
approval follows last week's overwhelming acceptance of the Plan
by over 98% of the senior notes and shares of the Company's
preferred stock that voted on the Plan.
McLeodUSA expects the Plan to become effective on April 16,
2002. As outlined in the Company's Form 8-K dated March 5, 2002,
this comprehensive recapitalization will eliminate $3 billion of
high yield debt and approximately $325 million of associated
interest expense. Key elements of the Plan include the
following:
-- the sale of the Company's Directory Publishing
Business;
-- a new cash investment by Forstmann Little & Co. for new
common stock and warrants;
-- payment of cash and issuance of new Series A preferred
stock and warrants to the existing bondholders;
-- conversion of the existing preferred stock into new
common stock;
-- the conversion of existing common stock into new common
stock;
-- repayment of term loans and a reduction in commitments
under its senior secured credit agreement.
The Company's new common stock will be listed on the Nasdaq
National Market and is expected to be open for trading shortly
after the effectiveness of the Plan. McLeodUSA has applied for
inclusion of the new Series A preferred stock, to be distributed
to the existing bondholders, on the Nasdaq National Market.
Prior to the effective date of the Plan, the Company will
provide additional information about the timing of distributions
under the Plan and the procedures for effecting such
distributions.
Under the terms of the Plan, the Company will not be able to
make the full distribution of the new common stock to its
existing common stockholders upon the effective date due to
unresolved purported class action securities claims against
McLeodUSA. McLeodUSA believes that the securities claims are
without merit and intends to object to the allowance of such
claims. Under the bankruptcy laws, any recovery for such
shareholder claims must be satisfied from the shares of new
common stock available for distribution to existing common
stockholders. Until such issues are resolved, the Court requires
that a portion of common stock be reserved. The Company will
petition the Court to establish a minimum reserve of new common
stock for such claims in order to allow for the prompt
distribution of the remaining shares of new common stock to
existing holders of common stock pursuant to the terms of the
Plan. A hearing date of April 29, 2002 has been set to deal with
the reserve, if necessary.
McLeodUSA provides integrated communications services, including
local services, in 25 Midwest, Southwest, Northwest and Rocky
Mountain states. The Company is a facilities-based
telecommunications provider with, as of December 31, 2001, 42
ATM switches, 60 voice switches, 485 collocations, 525 DSLAMs,
over 31,000 route miles of fiber optic network and more than
8,600 employees. Visit the Company's Web site at
http://www.mcleodusa.com
DebtTraders reports that McLeodusa Inc.'s 11.375% bonds due 2009
(MCLD2) are last quoted at a price of 25.25. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MCLD2for
real-time bond pricing.
METALS USA: Proposes a July 8, 2002 General Claims Bar Date
-----------------------------------------------------------
Metals USA, Inc., and its debtor-affiliates ask the Court to fix
July 8, 2002 as the General Bar Date by which creditors must
file proofs of claims.
Zack A. Clement, Esq., at Fulbright & Jaworski LLP in Houston,
Texas, says that this date will give creditors an opportunity to
review the Debtors' Schedules of Assets and Liabilities. If
creditors disagree with the way their claims are scheduled, they
will be required to file a formal proof of claim on or before
the General Bar Date. (Metals USA Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
METALS USA: Intends to Divest 11 Business Units to Cut Bank Debt
----------------------------------------------------------------
Metals USA, Inc. (OTC Bulletin Board: MUIN), a metals
distributor and processor headquartered in Houston, Texas,
announced that it is selling 11 business units, with 2001 gross
revenues of approximately $390 million, to help the company
become more strategically focused and reduce bank debt.
In making the announcement, J. Michael Kirksey, Chairman,
President & Chief Executive Officer of Metals USA, stated,
"These divestitures represent operations that added specific
market or product expertise but are not central to the future
operating platform we envision. Our three core business units
remain a nationwide platform founded on high value-added
customer service. The sale of these businesses, which comprises
approximately ten percent of the company's 108 facilities, along
with four previously announced divestitures, will enable us to
pay bank debt down by approximately $100 to $120 million.
"With significantly reduced debt, the company becomes more
flexible and refinancing options improve," concluded Mr.
Kirksey.
The company, which filed a voluntary petition for reorganization
under Chapter 11 of the U.S. Bankruptcy Code on November 14,
2001, stated recently that its bank debt had dropped from a 2001
high of $375 million to $250 million in March of 2002. This
reduction was achieved primarily through a decrease in accounts
receivable and inventory, as well as the sale of previously
announced business units.
Metals USA, Inc. is a leading North American metals distributor
and processor. With a customer base of more than 45,000, Metals
USA, Inc. provides a wide range of products and services in the
Carbon Plates and Shapes, Flat Rolled Products, and Building
Products markets. For more information, visit the company's Web
site at http://www.metalsusa.com
MRS. FIELDS': Working Capital Deficit Jumps 182% to $22 Million
---------------------------------------------------------------
In 1996, an investor group led by Capricorn II, formed MFOC and
The Mrs. Fields' Brand, Inc. as Delaware corporations and
subsidiaries of Mrs. Fields' Holding. On September 17, 1996,
Mrs. Fields' Holding initiated operations when the Company
purchased substantially all of the assets and assumed certain
liabilities of Mrs. Fields, Inc. and its subsidiaries, Original
Cookie and the pretzel business of Hot Sam. Historically, the
Company has achieved growth in both its cookie and pretzel
businesses through strategic acquisitions and may continue this
strategy if appropriate opportunities arise.
In a series of transactions in 1997 and 1998, the Company
acquired substantially all of the assets, including 79 Pretzel
Time stores, of H & M Concepts Ltd. Co., the largest franchisee
of Pretzel Time, Inc., the franchisor of the Pretzel Time
concept, along with all of the common stock of Pretzel Time,
Inc., all of the outstanding capital stock of Great American
Cookie Company, Inc. and 48 stores from four Great American
franchisees, and all of the outstanding capital stock of
Pretzelmaker. Pretzelmaker had 248 franchised stores at the
time of the acquisition.
During fiscal 2001, the Company incurred a loss from operations
of $4.9 million compared to operating income in the prior year
of $2.4 million. This change in operating results was due to a
reduction in store contribution of $8.9 million, non-cash
compensation expense of $2.0 million, offset by increased
contribution from franchising and licensing of $3.3 million,
increased mail order contribution of $317,000 and increased
revenues under a management agreement.
The $8.9 million decrease in store contribution in 2001 verses
2000 resulted from a number of factors. Prior to September 11
and as result of the economic recession, which commenced in
March 2001, year-over-year sales were down 2.5 percent from that
of the prior year. After September 11, year-over-year sales
declined 5.6 percent from the prior year. The impact of the
recession and September 11 resulted in year-over-year sales
decrease of approximately $3.0 million and $1.3 million,
respectively, aggregating to a reduction in year-over-year sales
of $4.3 million and a reduction in store contribution of
$3.0 million. The decrease in store contribution was also
the result of contribution losses in poor performing stores
identified for closure in 2001 of approximately $2.0 million,
the Wal-Mart locations loss at the operating level of
approximately $600,000, increased costs of raw materials, such
as butter, of approximately $465,000, and labor and benefit
increases of approximately $1.4 million.
The decline in store contribution was due to a variety of
factors. Of the Company's 463 corporate owned stores, 285 showed
positive year-over-year results, and a store contribution margin
of 18.9 percent, or 1 to 2 percent below expectations. The
remaining stores included 84 stores with negative year-over-year
sales, 45 Wal-Mart locations and 49 new stores and non year-
over-year stores. These stores earned a negative contribution
margin. The loss from these stores relative to target of 15 to
20 percent margin accounts for most of the year-over-year store
contribution decline. Various marketing, cost reduction and
management upgrade programs are currently being rolled out to
all stores, especially, the poor performing ones.
Total revenues decreased by $514,000, or 0.3 percent, from
$178.5 million in fiscal 2000 to $178.0 million in fiscal 2001.
Total operating costs and expenses increased $6.8 million, or
3.9 percent, from $176.1 million in fiscal 2000 to $182.9
million in fiscal 2001. Net loss increased by $2.8 million, or
14.4 percent, from $19.4 million in fiscal 2000 to $22.2 million
in fiscal 2001.
Liquidity
As of December 29, 2001, the Company had liquid assets
(unrestricted cash and cash equivalents and accounts receivable)
of $10.6 million, a decrease of 16.0 percent, or $2.0 million,
from December 30, 2000 when liquid assets were $12.6 million.
Current assets decreased by $722,000, or 4.0 percent, to $17.2
million at December 29, 2001 from $17.9 million at December 30,
2000. This decrease was primarily the result of a decrease in
inventories, prepaid rents and the current portion of deferred
tax assets, partially offset by an increase in accounts
receivable.
Long-term assets decreased $6.1 million, or 3.7 percent, to
$159.1 million at December 29, 2001 from $165.2 million at
December 30, 2000. This decrease was primarily the result of
depreciation and amortization of property and equipment,
goodwill and deferred loan costs, which was partially offset by
an investment of approximately $20 million in Wal-Mart and other
new stores.
Current liabilities increased by $13.8 million, or 53.1 percent,
to $39.6 million at December 29, 2001 from $25.9 million at
December 30, 2000. This increase is due to an increase in
accounts payable and borrowings on the Company's line of credit,
which was partially offset by a decrease in the current portion
of the store closure reserve.
The Company's working capital deficit increased by $14.5
million, or 181.8 percent, to a deficit of $22.4 million at
December 29, 2001 from a deficit of 8.0 million at December 30,
2000.
MUTUAL RISK: Expects to Trade on OTCBB After NYSE Delisting
-----------------------------------------------------------
Mutual Risk Management, Ltd. announced that it expects its
common stock will be de-listed from the New York Stock Exchange.
The Company said that it is working with the appropriate parties
to arrange for its shares to be quoted on the OTC Bulletin
Board. The Company said that it will notify shareholders through
a press release when it expects shares to begin trading on the
OTC Bulletin Board. The shares will trade under a new ticker
symbol "MLRM".
The Company reiterated that management continues to evaluate
strategic alternatives with its financial advisor, Greenhill &
Co., LLC.
The OTC Bulletin Board is a regulated quotation service that
displays real-time quotes, last-sale prices and volume
information in over-the-counter (OTC) equity securities. OTC
Bulletin Board securities are traded by a community of
registered market makers that enter quotes and trade reports.
Information regarding the OTC Bulletin Board can be found at
http://www.otcbb.com
Mutual Risk Management Ltd. provides risk management services to
clients in the United States, Canada and Europe seeking
alternatives to traditional commercial insurance for certain of
their risk exposures, as well as financial services to
individuals and other companies.
NATIONAL STEEL: Court Approves Interim Compensation Procedures
--------------------------------------------------------------
National Steel Corporation, and its debtor-affiliates sought and
obtained the Court's authority to establish procedures for
periodic compensation and reimbursement of expenses of
professionals.
Mark P. Naughton, Esq., at Piper Marbury Rudnick & Wolfe, in
Chicago, Illinois, relates that the Debtors have already sought
and obtained the Court's approval of their applications to
employ and retain Ordinary Course Professionals. The Debtors
anticipate that they may need to retain other Ordinary Course
Professionals and special counsel during the pendency of these
cases.
Mr. Naughton states that compensation procedures are necessary
to:
(i) eliminate the burdens placed on the Court by a requirement
that the Court hear uncontested monthly fee applications;
(ii) enable all parties to closely monitor the costs of
administering these cases;
(iii) enable the Debtors to maintain a consistent level of cash
flow availability; and
(iv) ensure that Professionals are compensated for their fees
and reimbursed for their expenses in a timely fashion.
The Procedures
Specifically, the Debtors have established these procedures for
the payment of compensation and reimbursement of expenses of the
Ordinary Course Professionals:
(i) 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 month, 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 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;
(ii) the monthly fee statement will be filed with the Court and
served on these parties:
(a) National Steel Corporation
4100 Edison Lakes Parkway,
Mishawaka, Indiana
Attn: Ronald J. Werhnyak, Esq.;
(b) Counsel for the Debtors
Piper Marbury Rudnick & Wolfe
203 North LaSalle Street, Suite 1800
Chicago, Illinois
Attn: Mark A. Berkoff, Esq.;
(c) Counsel for the Debtors
Skadden Arps Slate Meagher & Flom
333 West Wacker Drive
Chicago, Illinois
Attn: Timothy R. Pohl, Esq.;
(d) Counsel for the Lenders
Weil, Gotshal & Manges
767 Fifth Avenue, New York
Attn: Elaine Strangland, Esq.;
(e) the Office of the United States Trustee
227 West Monroe Street, Suite 3350
Chicago, Illinois
Attn: Stephen Wolfe, Esq.;
(f) Counsel for any statutory Committee appointed in
these cases; and
(g) any other Professionals, excluding Ordinary Course
Professionals, retained pursuant to Order of this
Court in these cases.
(iii) each Notice Party will have 20 days after services of a
monthly fee statement to object. Any objections to a
monthly fee statement will provide the nature of the
objection and the specific amount of fees and costs at
issue and will be filed with the Court and served as to be
received on or before 20 days following service of the
monthly fee statement by:
(a) the Professional whose statement is objected to; and
(b) the other Notice Parties.
(iv) 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 subject of the objection.
(v) thereafter, at four months 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
four month period. In addition to the service
requirement, each Professional will serve notice of its
Interim Fee Application on all parties that have entered
their appearance in accordance with the Bankruptcy Code;
(vi) each Professional must file its first Interim Fee
Application on or before August 30, 2002, and the First
Interim Fee Application should cover the Interim Fee
Period from the Petition Date through and including July
31, 2002. Thereafter, Interim Fee Applications will be
due on or before the 25th day of the month;
(vii) 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 a further Interim Fee
Application is submitted by the Professional;
(viii) 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, including the 10%
holdback, and expenses not previously paid to the monthly
fee statements;
(ix) 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;
(x) neither:
(a) 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
(b) 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; and
(xi) the Debtors further request that each member of any
committee appointed in these cases be permitted to submit
statements of expense, excluding committee member counsel
fees and expenses, and supporting vouchers to counsel for
such committee, who will collect and file such requests
for reimbursement in accordance with the Procedure for
monthly, interim and final compensation and reimbursement
of Professionals. (National Steel Bankruptcy News, Issue
No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900)
NETIA HOLDINGS: Wins Nod to Up Share Capital and Issue Warrants
---------------------------------------------------------------
Netia Holdings S.A. (Nasdaq: NTIAQ, WSE: NET) announced that its
Extraordinary General Meeting of Shareholders approved an
amendment Thursday to the Company's corporate statute concerning
a conditional increase of the Company's share capital and also
authorized Netia's Management Board to issue warrants in
connection with its debt restructuring.
As previously announced by Netia, the resolutions adopted today
concern, among other things, a conditional increase of the
Company's share capital by up to PLN 83,222,437 (through the
issuance of ordinary bearer series "J" and "K" shares) with the
aim of facilitating the issuance of warrants to existing
shareholders (up to 64,848,652 of series "J" shares), as well as
a stock option plan for Netia's key employees (up to 18,373,785
of series "K" shares). In accordance with the terms of the
Restructuring Agreement, dated March 5, 2002, the Company may
not allocate more than 5% of its post-restructuring share
capital, before the issuance of warrants, to this stock option
plan.
DebtTraders reports that Netia Holdings SA's 13.125% bonds due
2009 (NETH09PON1) are trading between 18 and 20. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NETH09PON1
for real-time bond pricing.
NEWKIDCO INTERNATIONAL: Completes Capital Restructuring Plan
------------------------------------------------------------
NewKidCo International Inc. (OTCBB:NKCIF) (TSE:NKC) announced
the completion of a capital restructuring plan that will provide
the Company with the strength and the resources to execute its
high growth strategy for 2002. The key components include:
-- New capital and conversion of outstanding debt, by way
of private placement, of US $6 million.
-- Cancellation of over 9 million outstanding warrants.
-- Acceleration of the term on the remaining 5 million
warrants, to cause their exercise or elimination during the
second quarter of 2002.
-- Conversion to equity, of US $624 thousand in
convertible debentures (at US $0.624/share).
-- Spinner Global Technology Fund, Ltd. was the lead
investor in the private placement investing US $5.0 million to
have a 24% interest in the company on a fully diluted basis.
"We are pleased with this financing," said Henry Kaplan, Chief
Executive Officer of NewKidCo. "It will help our company
accomplish its business plan objectives and capitalize on the
extraordinary video game software industry growth that will
occur over the next several years."
Prior to this transaction, the Company had 32,468,961 shares
issued and outstanding, plus outstanding warrants and
convertible securities for a total of 46,669,153 fully diluted
shares. Post the transaction, the Company will have 56,984,458
fully diluted shares, assuming all the aforementioned warrants
are exercised. In the process, NewKidCo will have raised US $8.1
million, eliminated a further US $624 thousand of debt, and
erased the possibility of future warrant dilution.
NewKidCo International Inc. (TSE:NKC; OTCBB:NKCIF),
headquartered in New York, New York, publishes children's video
games based on popular licensed characters, for interactive
entertainment game systems from Sony Computer Entertainment,
Nintendo and Microsoft. NewKidCo publishes and distributes their
products directly in North America and in Europe through
distribution partner, Ubi Soft Entertainment SA. For more
information, please visit http://www.newkidco.com
NORTEL NETWORKS: Moody's Downgrades Debt Ratings to Low-B Level
---------------------------------------------------------------
Moody's Investors Service has lowered the ratings on senior long
term debt issued or guaranteed by Nortel Networks Limited, the
rating on the company's preferred stock and the company's rating
for commercial paper. Moody's has also assigned a Ba3 senior
implied rating to the company.
Rating Action To From
Nortel Networks Limited:
* Commercial paper Not Prime Prime 3
* Senior debt Ba3 Baa3
* Preferred stock B3 Ba2
Nortel Networks Capital Corporation (Guaranteed by Nortel
Networks Limited):
* Senior debt Ba3 Baa3
* Senior shelf (P)Ba3 (P)Baa3
Nortel Networks Corporation (Guaranteed by Nortel Networks
Limited):
* Senior debt Ba3 Baa3
Nortel Networks Inc. (Guaranteed by Nortel Networks Limited)
* Commercial paper Not Prime Prime 3
"The downgrades reflect the continued decline in spending by
telecom carriers which is expected to be deeper and more
protracted than previously anticipated," Moody's declares. "The
timing of the rating change is not focused on anticipated
results for the first quarter but rather our expectation that
Nortel's operating performance will remain under pressure for an
extended period and that it will prove difficult for the company
to return to profitability this year," Moody's adds.
Nortel however, has leading market share in its products. The
company has also reduced its cost base by approximately $6
billion per year and has successfully managed its working
capital. These strengths has limited the increase of its debts
in the past year without resorting to significant asset sales.
Incorporated under Canadian law and headquartered in Brampton,
Ontario, Nortel Networks Limited is a leader in networking and
communications solutions and infrastructure for service
providers and corporations.
DebtTraders reports that Nortel Networks Ltd.'s 6.125% bonds due
2006 (NT06CAN1) are quoted at a price of 73. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAN1for
real-time bond pricing.
NORTEL NETWORKS: Moody's Slashes 2001-1 Certificates to Ba3
-----------------------------------------------------------
Moody's Investors Service lowered the Pass-Through Trust
Certificates rating of Nortel Networks Lease Pass-Through Trust.
Rating Action To From
Pass-Through Trust Certificates,
Series 2001-1 Ba3 Baa3
The action was based on the triple net leases guaranteed by
Nortel which was downgraded by Moody's on April 4, 2002 to Ba3.
The rating decline reflects the lowered spending by telephone
carriers which are expected to become more protracted than
previously anticipated. The rating also took into consideration
Nortel's geographically diversified customer base and the
progress it has made in reducing its costs structure.
It is Moody's belief that Nortel will remain challenged and that
it will be difficult for the company to return to profitability
this year.
Nortel Networks Limited is headquartered in Brampton, Ontario.
The company is a global leader in networking and communications
solutions and infrastructure for service providers and
corporations.
NORTEL: Says Moody's Downgrades Have Little Impact on Operations
----------------------------------------------------------------
In response to an announcement that Moody's Investors Service,
Inc. has downgraded Nortel Networks (NYSE:NT)(TSE:NT.) credit
ratings to below investment grade, company president and chief
executive officer Frank Dunn said, "We do not expect the ratings
downgrade to have a significant impact on our day-to-day
business operations."
Dunn added, "We see the downgrade as being primarily driven by
industry conditions affecting the telecom sector following the
events of 2001. Our work plan for dealing with conditions in the
wake of last year contemplated and factored in the possibility
of credit rating downgrades. In arranging our credit facilities,
we took the possibility of downgrades into account. We are
prepared. We gave ourselves flexibility to ensure we'd continue
focusing on our priorities and objectives for regaining market
momentum and profitability. It is business as usual."
Moody's announcement lowered ratings on securities issued by
Nortel Networks Corporation and its principal operating
subsidiaries to below investment grade (a).
As a result of Thursday's ratings downgrade, and as previously
described in Nortel Networks securities filings, various liens,
pledges and guarantees became effective under certain credit and
security agreements entered into by Nortel Networks Limited and
Nortel Networks Inc. As such, all of Nortel Networks credit
agreements and outstanding public debt securities are now
secured by liens over substantially all of the assets of NNL and
most of its United States and Canadian subsidiaries, and by a
pledge of shares in certain of NNL's other subsidiaries. In
addition, certain of NNL's subsidiaries have guaranteed NNL's
obligations under the credit agreements and the outstanding
public debt securities. The liens, pledges, and guarantees will
be in effect until the expiration of the bank commitments under
all of Nortel Networks outstanding credit facilities or a return
of NNL's long-term debt rating to specified investment grade
ratings (b).
Nortel Networks plans to release its financial results for the
first quarter of 2002 on April 18, 2002.
Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges
information. The company is supplying its service provider and
enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and
multimedia services spanning Metro and Enterprise Networks,
Wireless Networks and Optical Long Haul Networks. As a global
company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be found
on the Web at http://www.nortelnetworks.com
OMEGA HEALTHCARE: Explorer Holdings Discloses 53.3% Equity Stake
----------------------------------------------------------------
Explorer Holdings, L.P., Explorer Holdings GenPar, LLC,
Hampstead Investment Partners III, L.P., Donald J. McNamara and
Daniel A. Decker beneficially own 11,942,153 shares of the
common stock and 1,048,420 shares of Series C Convertible
Preferred Stock of Omega Healthcare Investors, Inc. The Series C
shares are convertible into 16,774,720 shares of common stock of
Omega. Based upon the number of shares of common stock reported
to be outstanding by Omega as of January 24, 2002 and the
additional shares reported to have been issued by Omega on its
Form 8-K filed March 4, 2002, all such shares would represent
53.3% of Omega's common stock, after giving effect to the
conversion of the Series C Preferred. Messrs. McNamara and
Decker disclaim beneficial ownership of all shares held by
Explorer. All holders of the stock mentioned share voting and
dispositive powers.
The above entities made current purchases of 667,647 shares of
common stock in two separate transactions. The source of funds
for the purchase of the 667,647 shares was working capital,
which was derived from capital contributions from its partners.
The following current transactions were placed on the New York
Stock Exchange:
Trade Date Number of Shares Purchased Price
---------- -------------------------- -----
3/25/2002 73,247 $4.71
3/26/2002 581,700 $4.88
3/27/2002
Omega Healthcare Investors ends the burden of real-estate
management. The real estate investment trust (REIT) is
capitalizing on the desire of health care companies to get out
of the real estate business by selling their properties and
leasing them back. Omega Healthcare Investors owns more than 200
long-term care, skilled nursing, assisted living, and acute care
facilities and provides mortgages for about 60 more properties;
the company also owns two rehabilitation hospitals. Although
Omega Healthcare Investors usually targets long-term care
properties in the US, it is seeking investments to broaden the
diversity of its portfolio in terms of geographic location and
operator and facility type.
As reported in December 3, 2001, by Troubled Company Reporter,
Fitch downgraded its 'B+' rating to 'B-', and placed the
rating on Rating Watch Negative, for Omega Healthcare Investors,
Inc.'s outstanding $97.6 million 6.95% senior unsecured notes
due June 15, 2002 and $100 million 6.95% senior unsecured notes
due Aug. 1, 2007.
In the same report, Fitch also affirmed its 'D' preferred stock
rating on Omega's outstanding $57.5 million series A 9.25%
cumulative preferred stock and $50 million series B 8.625%
cumulative preferred stock.
Fitch's rating action, the report said, was precipitated by
liquidity concerns surrounding the company's $236.6 million of
scheduled debt maturities in 2002 and the continued weakness in
Omega's operations.
ORIUS CORP: S&P Keeping Watch on Senior Bank Loan Junk Rating
-------------------------------------------------------------
Standard & Poor's senior secured bank loan rating at 'CC' on
Orius Corp. remains on CreditWatch with negative implications.
In the company's April 2, 2002, Form 12b-25 filing with the SEC,
Orius stated that it is in the process of negotiating the terms
of an amendment and waiver to its existing bank facility with
regards to compliance to certain financial covenants.
Should the company not be successful in obtaining another
amendment and waiver, the bank loan rating will be changed to
'D', and the corporate credit rating will be changed to 'D' from
'SD'. If an agreement is reached, Standard & Poor's will review
the amendment terms to determine the credit impact. Should the
amended terms include a delay in interest or principal
repayment, it would be viewed as tantamount to a default, and
both the corporate credit and bank loan ratings would be changed
to 'D'.
Orius competes in the large and highly fragmented
telecommunications infrastructure service industry. For the past
several quarters, the industry has rapidly deteriorated due to a
weak U.S. economy and the inability of many customers in the
telecommunications and cable markets to access the capital
markets, which has further constrained their capital spending
plans. Relative to other rated telecommunications infrastructure
providers, Orius historically generated a higher percentage of
sales from project-specific agreements, making the company more
vulnerable to softening market conditions than other rated
peers. As a result, the company's operations and financial
performance have been severely impacted by the rapid decline in
new construction activity in the telecommunications
infrastructure sector during the past few quarters. For the
first nine months of 2001, revenues declined 23% and EBIT
dropped by 95%.
PANAVISION INC: Moody's Drags Certain Debt Ratings to Junk Level
----------------------------------------------------------------
Moody's Investors Service downgraded the debt ratings of
Panavision Inc.
Rating Action To From
* $195 million of 9 5/8% senior subordinated Ca Caa1
discount notes, due 2006,
* $340 million of secured bank credit B3 B2
facilities,
* the company's senior implied rating Caa1 B2
* senior unsecured issuer rating Caa3 B3
In addition, Moody's assigned new ratings.
Rating Action Assigned Rating
* Panavision's $30 million senior B3
secured revolving credit,
* $150 million senior secured Term Loan B, B3
* $250 million senior secured notes due 2009 Caa2
Rating outlook is negative. And at the close of the proposed
transaction, Moody's will withdraw the ratings on Panavision's
existing bank facility.
The lowered ratings reflect Moody's belief that the company's
capital structure is over leveraged at present. Panavision is
subject to volatility of revenues and impact from threatened and
real strike activities. Panavision's revenue and cash flow
performance has also fallen short of Moody's expectations. If
the proposed transaction is successful, current note holders are
expected to receive less than par for their existing bonds.
Moody's notes however, that Panavision's strengths are
considerable. The company maintains a leading position in the
North American feature film, television and commercial markets.
It has a joint shared capital investment venture with Sony. One
of Panavision's subsidiaries is also in the process of acquiring
EFILM which operates digital labs.
The negative outlook is indicative of Moody's concern on
Panavision's strength to withstand added negative events. Likely
under investments in the company's equipment will also lead to
the company losing its strong market position at present.
Panavision, based in Woodland Hills, California, manufactures
and rents camera systems and lighting equipment to motion
picture and television producers worldwide.
POINT.360: Can't File Form 10-K with SEC on Scheduled Due Date
--------------------------------------------------------------
Point.360 will delay the filing of its financial information
with the SEC since in September 2000, the Company entered into a
credit agreement with a group of banks providing a revolving
credit facility of up to $45,000,000. The Agreement provided
that the aggregate commitment will decline by $5,000,000 on
each December 31 beginning in 2002 until expiration of the
entire commitment on December 31, 2005.
By December 31, 2000, the Company had borrowed $31,024,000 under
the Agreement and was not in compliance with certain financial
covenants due to adjustments recorded to prior years' and 2000
results. The bank waived compliance with the covenants and
amended the Agreement in April 2001.
As of April 30, May 31 and June 30, 2001, outstanding amounts
under the line of credit exceeded the borrowing base. On June 11
and July 20, 2001, the Company entered into amendment and
forbearance agreements with the banks which required the
Company to repay the amount of excess borrowings. In August
2001, the Company did not make required debt payments which
created a breach of the amendment and forbearance agreements.
As a consequence of the breach, the amount outstanding under the
credit facility became immediately due and payable and,
therefore, were reclassified as a current liability as of
December 31, 2001. In December 2001, the banks terminated the
commitment. The Company remains current in its interest
payments to the banks and is actively engaged in renegotiating
its relationship with the banks. The length of time required
for the negotiations with the banks to restructure an amendment
to the credit agreement going forward has prevented completion
of the financial statements for filing.
POLAROID: Workers Get More Time to React to Severance Pay Offer
---------------------------------------------------------------
Polaroid Corporation, and its debtor-affiliates agree to extend
for 45 days the period for which the Debtors' employees may
respond to certain reduced severance pay offers that were mailed
on December 19, 2001. The new deadline will be on April 27,
2002 from the first extension on March 12, 2002. However, the
offer does not apply to anyone who has already signed or
received a check.
The offer is pursuant to the Court Order dated November 27,
2001, approving the Debtors' new post-petition restructuring
program that would allow the Debtors to pay a transition benefit
to employees who were eliminated as a result of the
restructuring through December 30, 2001. Accordingly, eligible
employees could elect to receive four weeks base salary pay as
well as continued participation in the Debtors' medical plans in
exchange for, inter alia, releasing the Debtors from all claims
arising from employment with the Debtors or termination of
employment. The eligible employees had 45 days from December 19,
2001 to respond to this offer. (Polaroid Bankruptcy News, Issue
No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900)
RELIANCE GROUP: Liquidator Fixes Dec. 31 Bar Date for RIC Claims
----------------------------------------------------------------
M. Diane Koken, the Insurance Commissioner of Pennsylvania and
Liquidator for Reliance Insurance Company, reminds the
Commonwealth Court and claimants that although RIC is insolvent,
it has significant assets, including reinsurance that must be
collected. She anticipates that there will be money to
distribute to some claimants in accordance with priorities set
by Pennsylvania law. Ms. Koken cautions that it will be many
years before these assets are collected and the amount can be
determined. Nevertheless, to participate in a distribution
claimants must file a proof of claim. This is particularly
important for insureds claiming benefits and losses where there
is no guaranty association coverage or where the claim exceeds
the limits of guaranty association coverage. Claimants must
keep Reliance fully advised of all developments in these cases
so that Reliance can use this information to recover funds from
reinsurers and thereby increase the distribution to creditors.
Other than administrative expenses, claims for losses under
insurance policies have the highest priority for payment.
After all claims against Reliance are evaluated by the Statutory
Liquidator and approved by the Court, approved claims will be
paid by priority level based on available funds in accordance
with 40 P.S. Section 221.19, et seq. The payment amount will
depend on the assets recovered. The amount to be paid on an
individual claim, if any, will not be known until all claims are
evaluated and assets are recovered. Payment will not be made for
several years. The Statutory Liquidator's receipt of this proof
of claim form does not constitute any waiver or relinquishment
by the Statutory Liquidator of any defense, setoff, or
counterclaim that may exist against any person, entity or
governmental agency, regarding any actions pursued by the
statutory Liquidator of Reliance Insurance Company on behalf of
Reliance Insurance Company claimants, policyholders and
creditors.
Claimants must complete and return formal proof of claim forms.
Failure to return the completed form will result in the denial
of the claim. Ms. Koken outlines the procedures for the types
of potential claims.
1. If the claim is for Policy Benefits, complete the front
of the form. If the claim is already filed with Reliance,
complete the proof of claim form, but do not resubmit
documentation to support the claim. If additional documentation
is required, the claimant will be contacted. If the claim is
new, attach documentation to support the claim. If the claim is
a contingent claim under an insurance policy, use the space
provided for policy benefits and indicate that the claim is
contingent. If the policy was renewed, a claim should be filed
for each policy number.
2. If the claim is for the Return of Unearned Premium or
other premium refunds, complete the front of the form. Attach
the appropriate documentation to support the claim.
3. If the claim is that of a General Creditor, attach
copies of all outstanding invoices to this form.
4. If the claim is for Agent Balances, attach a complete
accounting by policy/contract in support of the claim.
5. If there are any other types of claim, describe the
claim, i.e., stockholder, employee, taxes, license fees,
assessments. Attach copies of information to support the claim.
The Liquidator retains the right (but not the obligation) to
request additional supporting information. A claimant's failure
to promptly provide such additional information may result in
denial of the claim. The proof of claim form must be signed by
the claimant, and must contain the claimant's current address
and zip code. No claim can be considered for payment without a
social security number or tax identification number. Where
applicable, the name and address as well as the telephone number
of the claimant's attorney, if any, must be shown.
A separate proof of claim form must be filed for each claim. If
there is more than one claim, either copy the claim for or call
(215) 864-4000 for additional proof of claim forms. The proof of
claim form is also available at:
http://www.insurance.state.pa.us/html/relproofclaim.html
under the link "Final Notice and Q&A."
The proof of claim form must be signed and mailed it to:
Proof of Claim Department
Statutory Liquidator of Reliance Insurance Company
P. O. Box 13527
Philadelphia, PA 19101-3527
This form must be received no later than 5:00 PM EST on
December 31, 2003, subject to the provisions of Article V of the
Insurance Department Act pertaining to the filing of claims.
(Reliance Bankruptcy News, Issue No. 21; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
STATIONS HOLDING: Creditors' Meeting to Convene on April 29
-----------------------------------------------------------
Donald F. Walton, the Acting U.S. Trustee, will convene a
meeting of Stations Holding, Inc.'s creditors on April 29, 2002,
a 10:00 a.m. The meeting will be held on the 2nd Floor, Room
2112 of the J. Caleb Boggs Federal Building in Wilmington,
Delaware. This is the first meeting of creditors required under
11 U.S.C. Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
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.
STOCKWALK GROUP: Court Okays Leonard Street as Debtor's Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Minnesota approves
the application of Stockwalk Group, Inc. to employ and retain
Leonard, Street and Deinard, Professional Association as its
bankruptcy counsel.
The Debtor employs Leonard Street because it believes its
competence and wide experience in Chapter 11 and bankruptcy
matters, and in SEC and general corporate matters.
In the Affidavit of Albert A. Woodward, Esq., the services that
are expected from the firm are:
a. analyzing the Debtor's financial situation and rendering
advice and assistance in determining how to proceed;
b. assisting with the preparation and filing of the
petition, exhibits, attachments, schedules, statements
and lists, and preparation of other documents required
by the Bankruptcy Code, Rules, Local Rules of the Court
in connection with this proceeding;
c. representing the Debtor at the meeting of creditors;
d. negotiating with creditors and other parties in
interest;
e. making and responding to motions, applications and
requests for relief on behalf of the Debtor;
f. representing the Debtor in any adversary proceedings;
g. negotiating and preparing with the Debtor a plan of
reorganization and disclosure statement; and
h. performing such other services as are requested by the
Debtor or are reasonably necessary to represent the
Debtor in this case.
The Debtor takes into consideration the risk that there may not
be funds available to pay the fees. Any delay in making payment
of fees, and such other factors are all subject to the Court's
approval. The Debtor shall pay Leonard Street its customary
hourly rates. Specific hourly rates however are not disclosed.
Stockwalk Group Inc. filed for chapter 11 protection on February
11, 2002 in the U.S. Bankruptcy Court for the District of
Minnesota. Steven D. DeRuyter, Esq. at Leonard, Street and
Deinard represents the Debtor in its restructuring efforts.
SUNBEAM CORP: Seeks Okay to Further Enlarge Solicitation Period
---------------------------------------------------------------
Sunbeam Americas Holdings, Ltd. and its debtor-affiliates seeks
approval from the U.S. Bankruptcy Court for the Southern
District of New York for an extension on the time period within
which the Debtors may solicit acceptances of the Plan of
Reorganization to run through August 15, 2002. A hearing on the
motion is currently scheduled for April 12, 2002.
The Debtors relate that they have expended a significant amount
of time and their limited resources to resolve complex issues,
to negotiate with the prepetition lenders with respect to the
Plan and to finalize exit financing. The Debtors believe that
their filing of the Second Amended Plan and the approval of the
Disclosure Statement evidence the substantial progress they are
making toward confirmation of the Plan.
Sunbeam Corporation, the largest manufacturer and distributor of
small appliances, sells mixers, coffeemakers, grills, smoke
detectors, toasters and outdoor & camping equipment in the
United States, filed for chapter 11 protection on February 6,
2001 in the Southern District of New York. George A. Davis,
Esq., of Weil Gotshal & Manges LLP, represents the Debtors in
their restructuring effort. As of filing date, the company
listed $2,959,863,000 in assets and $3,201,512,000 in debt.
TESORO PETROLEUM: Fitch Cuts Ratings to Low-B's Over Valera Deal
----------------------------------------------------------------
Fitch Ratings has downgraded the debt of Tesoro Petroleum
Corporation in expectation of the company's acquisition of
Valero's 168,000-bpd Golden Eagle refinery and 70 associated
marketing sites. Fitch downgraded Tesoro's senior secured credit
facility to 'BB' from 'BB+' and the company's subordinated debt
to 'B+' from 'BB-'. The Rating Outlook is Stable.
The purchase agreement, amended in late February to eliminate
earnout payments, calls for Tesoro to pay $995 million for the
assets plus working capital estimated at $130 million. Tesoro is
financing the acquisition through a combination of new debt and
equity.
The estimated $900 million debt portion of the acquisition is
expected to come from an issuance of $450 million of new
subordinated notes and proceeds from the company's secured
credit facility, which will be amended to accommodate the
additional debt. The $1.225 billion amended credit facility will
consist of a five year $225 million revolving credit facility, a
$250 million Tranche A term loan and a $750 million Tranche B
term loan.
In early March, Tesoro completed an offering of 20 million
shares of common stock plus an over-allotment of 3 million
shares at $11.25 per share for net proceeds of $246 million. The
equity offering increased the company's outstanding shares by
56% to 64 million shares.
The addition of Golden Eagle provides Tesoro with a complex
refinery in the high margin state of California. Although Fitch
views the acquisition as a significant positive from an
operational and geographical diversification standpoint, the
acquisition requires the addition of a significant amount of
debt. The Golden Eagle acquisition follows closely behind
Tesoro's debt financed acquisition of two refineries and
associated retail assets from British Petroleum (BP) in
September 2001 for $670 million. At closing, adjusted debt-to-
capitalization (including 8.0 times gross rental expense) should
be 70%. Going forward, Fitch expects credit protection, as
measured by EBITDA-to-interest to be above 3.0 times with debt-
to-EBITDA of 3.0x to 4.0x.
Tesoro operates five wholly owned refineries with a total
combined capacity of 390,000 bpd. Tesoro refocused its business
strategy in the late 1990s, becoming primarily a downstream
player in the oil industry. The Washington and Hawaii refineries
were acquired in 1998 and in late 1999, Tesoro sold its
exploration and production assets to EEX Corp., effectively
exiting the upstream end of the business.
The company sells refined products wholesale or through
approximately 675 retail outlets and is beginning to market
through the Mirastar brand at Wal-Mart sites in 17 states in the
western United States. Tesoro is also the largest operator of
marine terminals along the Louisiana and Texas Gulf Coast with
16 terminals and operates several marine terminals on the West
Coast as well.
TRANSTECHNOLOGY: Secures Forbearance Pacts through September
------------------------------------------------------------
TransTechnology Corporation (NYSE:TT) said that it had agreed to
an extension of its existing forbearance agreements with its
senior lending group and its subordinated debt holders through
September 25 and September 27, 2002, respectively.
The company also stated that it was in continuing discussions
relative to the sale or spin-off of its three remaining
retaining ring operations in the United States, England and
Brasil, and hoped to complete those transactions within the
current fiscal quarter. Earlier this week the company announced
that it had entered into an agreement to sell its Aerospace
Rivet Manufacturers' Corporation subsidiary for $4 million and,
subject to the completion of due diligence and other conditions,
expected to complete that transaction within the next few weeks.
The company also said that it was in continuing discussions with
several new lenders relative to refinancing its existing senior
credit facility under which $30 million is currently
outstanding.
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.
UNILAB: Equity Deal Spurs S&P to Maintain Watch on Low-B Ratings
----------------------------------------------------------------
On April 2, 2002, Standard & Poor's placed its ratings on
diagnostic service provider Unilab Corp. on CreditWatch with
positive implications.
Credit Rating: BB -- Stable Outlook
Unilab agreed to be acquired by higher-rated Quest Diagnostics
Inc. in a majority equity deal valued at about $1.1 billion,
including approximately $200 million in assumed debt.
Tarzana, California-based Unilab is the leading provider of
diagnostic-testing services in California. The company's
operating margins (before depreciation and amortization), of
more than 20%, have been maintained over the past few years,
primarily because of successful leveraging of its infrastructure
and migration to higher margined tests. Unilab continues to have
more than twice the revenues of the next-largest independent
diagnostic-testing provider in California. Furthermore,
contracts with about 150 large buyers provide a recurring
revenue stream. Unilab will add about $400 million dollars in
revenue to Quest's top line.
Nevertheless, despite its leading position, Unilab has only
about a 25% share of California's independent lab market. Given
this fragmented competitive field, pricing flexibility remains a
concern, because of managed care's significant penetration in
the California market and current soft economic conditions.
The transaction is subject to regulatory review and shareholder
approval. At that time of closing, the ratings on Unilab's long-
term debt would be raised, and the corporate credit and bank
loan ratings on the company would be withdrawn.
UNOVA INC: S&P Ups Credit Rating to B- Amid Improving Liquidity
---------------------------------------------------------------
On April 1, 2002, Standard & Poor's raised to 'B-' its long-term
corporate credit rating on mobile computing and manufacturing
systems provider UNOVA Inc. At the same time, the rating was
removed from CreditWatch where it was placed November 30, 2001.
The upgrade reflects UNOVA's modestly improved liquidity
position. The negative outlook reflects the potential for delays
in operational improvement and possible erosion to the company's
financial profile if market conditions remain weak.
Financial flexibility is marginal, but has improved from a
number of initiatives, including a $120 million pension
reversion, amended bank covenants, and a number of operational
programs, which should improve cash flow generation. At December
31, 2001, UNOVA had about $100 million in cash. Nevertheless,
flexibility will likely remain constrained for the next several
quarters given the company's very "lumpy" working capital
requirements, particularly for the Industrial Automation Systems
(IAS) operation, along with moderate fixed capital and R&D
needs.
At December 31, 2001, UNOVA had a very aggressive financial
profile with total debt to EBITDA of around 7.6 times and EBITDA
to interest coverage around 1.2x. Credit protection measures are
unlikely to improve in the intermediate term, as UNOVA continues
to experience weak market conditions in both its Automated Data
Systems (ADS) and IAS business segments, which has led to
further pricing pressures. Additionally, capital spending at the
company's automotive and heavy-duty truck customers is expected
to remain depressed over the near term, which will also
constrain UNOVA's sales and earnings. UNOVA recently amended its
bank credit agreement, which provides some financial covenant
flexibility. However, if market conditions deteriorate further,
future covenant violations are possible.
UNOVA is composed of two business segments: IAS and ADS. The IAS
business segment includes integrated manufacturing systems;
metal-cutting production systems; body welding and assembly
systems; and precision grinding and abrasive operations
(primarily serving the automotive, off-road vehicle, and diesel
engine industries), and stand-alone machine tools for the
aerospace and manufacturing industries. The ADS business segment
comprises wireless networking and mobile computing products and
services, and Internet-enabled automated data collection,
principally serving industrial and logistics/supply chain
management markets.
Outlook
Continued weak market conditions could delay improvements in
operating performance, further eroding the company's financial
profile. Failure to improve financial performance will result in
deterioration in financial flexibility, increasing liquidity
pressures, and potentially leading to a future downgrade.
W.R. GRACE: Wins Nod to Acquire Addiment Inc. Assets & Business
---------------------------------------------------------------
W. R. Grace & Co. (NYSE: GRA) announced that it has acquired the
business and assets of Addiment, Incorporated, headquartered in
Doraville, Georgia. Addiment is a leading supplier of specialty
chemicals to the concrete paver and masonry industries in the
U.S. and Canada. Terms of the transaction were not disclosed.
Addiment is a wholly owned subsidiary of Lehigh Cement
Company, which is part of the HeidelbergCement Group. Addiment
is a leading supplier of admixtures, cleaners and sealers for
the concrete paver and masonry industries. The acquisition
strengthens Grace's product offerings to the manufactured
concrete market and enhances its presence in the paver industry.
Addiment will be integrated into the Grace Construction
Products' business, a unit of Grace Performance Chemicals.
"This investment underscores our commitment to grow our business
to better serve our customers. Addiment's strong position in the
manufactured concrete sector provides us with a platform to
accelerate our growth, consistent with our strategy for this
segment," said Paul J. Norris, Grace Chairman, President and
Chief Executive Officer. "We are committed to growing Grace
through internal development and by doing acquisitions like this
one where we can create economic value for all of our
stakeholders."
"Grace, like Addiment, is dedicated to providing the industry
with quality products and the highest level of customer service.
These strong similarities in philosophy are key reasons why
Grace and Addiment will so effectively complement one another,"
said Robert J. Bettacchi, President, Grace Performance
Chemicals. "The Addiment name and its products have strong brand
recognition throughout the industry. Combining Addiment's
products with our strong masonry product portfolio will position
Grace as a leader in the fast growing paver segment." (W.R.
Grace Bankruptcy News, Issue No. 21; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
WHEELING-PITTSBURGH: Gets OK to Accept $650K Pennsylvania Grant
---------------------------------------------------------------
Wheeling-Pittsburgh Steel Corp. asks Judge Bodoh to give his
approval to WPSC's acceptance of a conditional grant from the
Commonwealth of Pennsylvania, acting through the Department of
Community and Economic Development.
On February 28, 2002, the Department approved WPSC's request for
an Opportunity Grant Program grant. The Department has offered
WPSC grant assistance in the amount not to exceed $650,000,
subject to certain conditions set out in the Department's
commitment letter and proposed contract.
The Contract provides in relevant part that:
(1) The Department will make available to WPSC a grant in
the sum of $650,000, or such portion as may be required by WPSC
and authorized by the Department;
(2) The Department will pay WPSC for eligible project
costs incurred under the Contract between January 1, 2002 and
June 20, 2004;
(3) If WPSC does not use all or a portion of the funds
for purposes of and in accord with the Contract, WPSC shall be
liable to the Department for the amount of funds unused or
improperly used and shall return these funds to the Department.
The repayment may include all interest accrued from the date of
disbursement;
(4) Interest and any other income or accumulations earned
on funds awarded under the Contract will be repaid to the
Department upon the termination of the Contract, unless
otherwise directed by the Department.
The Commitment Letter provides in relevant part that:
(1) The Grant will be used for working capital associated
with the operations of WPSC's flat-rolled steel facility in
Allenport Borough, Washington County, Pennsylvania. The Grant
may not be used for any other activities without first obtaining
the written consent of the Department;
(2) The Grant offer is extended based upon
representations made by WPSC that:
(i) WPSC has 365 existing employees in Pennsylvania
and will preserve for 3 years, beginning January 1, 2002, 365
full-time jobs at the project site;
(ii) WPSC will invest at least $2,600,000 in private
match at the project site within 3 years beginning January 1,
2002; and
(iii) WPSC will operate at the project site for a
minimum of five years. If WPSC fails to satisfy any of these
obligations, WPSC will be liable for a penalty equal to the full
amount of the grant awarded to it, unless the penalty is waived
by the Department because such failure is due to circumstances
outside the control of WPSC.
The proposed grant is structured as an interest-free grant of
funds to WPSC. However, because under certain conditions WPSC
may be obligated to repay all or a portion of the grant to the
Department, in an abundance of caution WPSC is seeking approval
of the grant from Judge Bodoh.
This grant from the Department will enhance WPSC's liquidity and
assist WPSC in continuing its operations. As such, it is a
critical and positive step toward the Debtors' completion of a
successful reorganization. Accordingly, WPSC submits that,
under the circumstances and in the exercise of its business
judgment, the approval of the grant is in the best interests of
WPSC's estate and its creditors.
Agreeing with the Debtor's assertions, Judge Bodoh promptly
signs an Order authorizing acceptance of the grant on the terms
stated. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
* BOND PRICING: For the week of April 8 - 12, 2002
--------------------------------------------------
Following are indicated prices for selected issues:
Amresco 9 7/8 '05 25 - 26(f)
AES 9 1/2 '09 79 - 81
AMR 9 '12 96 - 98
Asia Pulp & Paper 11 3/4 '05 24 - 25(f)
Bethlehem Steel 10 3/8 '03 12 - 14(f)
Enron 9 5/8 '03 13 - 15(f)
Global Crossing 9 1/8 '04 3 - 4(f)
Level III 9 1/8 '04 43 - 45
Kmart 9 3/8 '06 49 - 51(f)
McLeod 11 3/8 '09 23 - 25(f)
NWA 8.70 '07 92 - 94
Owens Corning 7 1/2 '05 39 - 41(f)
Revlon 8 5/8 '08 47 - 49
Trump AC 11 1/4 '06 70 - 72
USG 9 1/4 '01 80 - 82(f)
Westpoint 7 3/4 '05 48 - 50
Xerox 5 1/4 '03 94 - 95
*********
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
reliable, but is not guaranteed.
The TCR subscription rate is $625 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***