/raid1/www/Hosts/bankrupt/TCR_Public/020510.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, May 10, 2002, Vol. 6, No. 92
Headlines
ANC RENTAL: San Francisco Wants Concession Defaults Cured
ALLIANCE LAUNDRY: Says Cash Flow Ample to Meet Cash Requirements
AMEDISYS INC: Shoos-Away Arthur Andersen as Independent Auditors
AMERICAN ARCHITECTURAL: Closes Sale of Eagle Window to Linsalata
AMERICAN SAFETY: S&P Hacthets Credit Rating Down to Junk Level
ARTHUR ANDERSEN: KPMG Offers Cash for Business Consulting Units
ASHTON TECHNOLOGY: Completes OptiMark Investment Transaction
BCE INC: Appoints David McLennan as New Chief Financial Officer
BANYAN STRATEGIC: Q1 Net Assets in Liquidation Drops by $300K
BOMBARDIER CAPITAL: Fitch Junks Series 1999-B Class B-2 Rating
CALICO COMMERCE: Auditors Doubt Company's Ability to Continue
CONTOUR ENERGY: Noteholders Agree to Forbear Until June 30, 2002
CORRECTIONS CORP: S&P Ratchets Corp. Credit Rating Up a Notch
DT INDUSTRIES: Enters Pact to Effect Major Recapitalization Deal
DYNASTY COMPONENTS: CEO/CFO Marc Brule Resigns Effective May 31
EARLE M. JORGENSEN: S&P Assigns B- Rating to $250MM Senior Notes
ENRON CORP: Employees' Committee Taps Kronish Lieb as Co-Counsel
ENRON CORP: Employees' Committee Also Signs-Up McClain & Siegel
ENRON CORP: Azurix Wins Noteholder Consents to Sell Wessex Water
ENVIRO-RECOVERY: Shareholders Vote for New Board of Directors
EXIDE TECH.: Gets Okay to Reject Unexpired Leases & Contracts
FLAG TELECOM: US Trustee Appoints Unsecured Creditors Committee
FRANK'S NURSERY: Maryland Court Confirms 2nd Amended Joint Plan
GLOBAL CROSSING: Look for Schedules & Statements on May 31
GLOBAL CROSSING: Expects Q1 Consolidated Revenue of $788 Million
GOLDMAN INDUSTRIAL: US Trustee Appoints Creditors Committee
IT GROUP: Committee Wins Nod to Hire Chanin Capital as Advisors
ITC DELTACOM: Pursuing Options to Ease Liquidity Strain
INTELLICORP: Shareholders Approve 1-for-10 Reverse Stock Split
INTEGRATED HEALTH: Felser Has Until May 20 to File Claims
INTERLIANT INC: Annual Shareholders' Meeting Set for June 13
KAISER ALUMINUM: Gets Approval to Hire MWW Group as PR Advisors
KMART CORPORATION: Says KeyBank Has No Basis to Seek Stay Relief
KMART CORPORATION: Rejects Consulting Services Pact with DBS
LDM TECH: S&P Junks Corp. Credit Rating Following Exchange Offer
LTV CORP: Pays GECC $530,000 to Extend DIP Financing Commitment
LAIDLAW INC: Court Extends Exclusive Periods through June 30
LAS VEGAS SANDS: S&P Maintains Watch on B & Lower Credit Ratings
LOUISIANA-PACIFIC: Board Approves Asset Sale Plan to Trim Debt
MAURICE CORP: Dean Bozzano Sued for Embezzling Over $1 Million
MED-EMERG: HSBC Canada Agrees to Forbear Until June 28, 2002
MICROCELL TELECOM: Moody's Hatchets Credit Ratings to Junk Level
MOSSIMO INC: Sets Annual Shareholders' Meeting for June 3, 2002
NATIONSRENT: Committee Hires Thomas Putman as Industry Expert
OWENS CORNING: Wants Until December 4 to Make Lease Decisions
PACIFIC GAS: Wants to Pay for New Entities Contract Procurement
PARADISE MUSIC: Porter Capital Discloses 20.3% Equity Stake
PENN SPECIALTY: Wants Lease Decision Period Stretched to July 9
PHOENIX INT'L: EPICUS Enters Services Pact with Palladium Comms.
PICCADILLY CAFETERIAS: Working Capital Deficit Tops $13 Million
PILLOWTEX CORP: Wants to Assume Transamerica Lease Agreement
POLAROID CORP: CEO Gary DiCamillo Will Resign Effective July 1
PRECISION SPECIALTY: Wants Until July 13 to Decide on Leases
PSINET INC: US Trustee Appoints Consulting Creditors' Committee
QUALITY DISTRIBUTION: S&P Junks Rating Over $140M Exchange Offer
QUESTRON TECHNOLOGY: Completes Asset Sale to GE Supply Logistics
RECOTON CORP: Lenders Waive Defaults & Amend Loan Covenants
SALIENT 3 COMMS: Reports Q1 Net Asset Value of $1.49 Per Share
SIMON WORLDWIDE: Fails to Meet Nasdaq Listing Requirements
SUN INT'L: Commencing Tender Offer to Purchase 9% Senior Notes
SWAN TRANSPORTATION: Wants to Engage Kinsella as Noticing Agent
TANDYCRAFTS: Disclosure Statement Hearing Scheduled for June 4
THERMOVIEW: Crowe Chizek Replacing Andersen as Accountants
VERADO HOLDINGS: Obtains Court Nod for Weil Gotshal's Engagement
VLASIC FOODS: Wants Claims Objection Deadline Moved to Sept. 11
VOICEFLASH: Shares Delisted from Nasdaq SmallCap Effective May 8
WARNACO: Proposes Uniform Store Closing Sale Bidding Procedures
WHEELING-PITTSBURGH: WPC Selling Property to City of Follansbee
WILLIAMS COMMS: Signing-Up Logan as Claims and Noticing Agents
WILLIAMS: GlobalAxxess Outlines Shareholder Pipedream Plan
WINSTAR COMMS: Trustee Has Until Sept. 25 to Decide on Leases
XEROX CORP: Fitch Changes Outlook on Low-B Ratings to Negative
YIFAN COMMS: Intends to Pursue Additional Financing Alternatives
* BOOK REVIEW: Land Use Policy in the United States
*********
ANC RENTAL: San Francisco Wants Concession Defaults Cured
---------------------------------------------------------
The City and County of San Francisco is asking the Court to
compel ANC Rental Corporation and its debtor-affiliates to pay
lease obligations related to their Alamo Rent-A-Car and National
Car Rental Systems car rental operations at the San Francisco
International Airport.
David M. Fournier, Esq., at Pepper Hamilton LLP in Wilmington,
Delaware, tells the Court substantial post-petition defaults
exist under each of the leases. Alamo and San Francisco are
parties to an agreement dated December 8, 1998, pursuant to
which San Francisco granted Alamo the right to operate an
automobile rental business from the rental car facility at San
Francisco International Airport. The facility included rental
car counters, office space, and telephone reservation boards for
a term of five years. San Francisco has the option to extend the
Alamo office agreement for an additional five-year term. Alamo,
meanwhile, is required to pay San Francisco, for the duration of
the agreement, the greater of 10% of the total gross revenue
derived by Alamo during a year or a Minimum Annual Guarantee
(MAG) of $3,751,000. Mr. Fournier states that rent is to be
paid in monthly installments equal to 1/12 of the MAG or 10% of
Alamo's gross revenue for the preceding month, whichever is
greater. Monthly payments are due, and must be received by San
Francisco within 20 days after the end of each calendar month.
The expressed terms of the agreement also requires Alamo to pay
San Francisco's costs and attorneys' fees extended to recover
any sum due or to enforce the terms of the agreement.
According to Mr. Fournier, Alamo and San Francisco are also
parties to a ground lease dated March 1, 1999 whereby Alamo
leased space in San Francisco's rental car facility for a Quick
Turn-around Area (QTA), vehicle staging, and storage. Pursuant
to the ground lease, San Francisco granted Alamo the right to
use both common and exclusive space for garage, QTA and surface.
The term of the ground lease is for a period of five years with
San Francisco having the option to extend the Alamo SFO Ground
Lease for an additional five-year term. Alamo, in return, is
required to pay $1,867,136 per year, or $155,595 per month and
is also required to pay all property taxes, utility charges, and
maintenance charges. As with the office agreement, Mr. Fournier
submits that Alamo is required to pay San Francisco's costs and
attorneys' fees used to recover any sum due or to enforce the
terms of the ground lease. For both agreements, Alamo is in
default of not less than $1,192,284, exclusive of applicable
interest, late fees, attorneys' fees and costs and environmental
claims.
National and San Francisco, meanwhile, are also parties to the
same agreements that were entered into by San Francisco with
Alamo, except that National is required to pay 10% greater than
the total gross revenue derived by National from the operation
of its automobile rental business or the MAG of $2,879,124. As
for the ground lease, National is required to compensate San
Francisco at a rate of $1,335,594.60 per year. Mr. Fournier
informs the Court that National is in default of $776,060,
exclusive of applicable interest, late fees, attorneys' fees and
costs and environmental claims.
Mr. Fournier asserts that the Debtors must pay its post-petition
obligations under the Leases when due pursuant to Section
365(d)(3) of the Bankruptcy Code. The Debtors are imposing on
San Francisco the very burdens Section 365(d)(3) was meant to
prevent. The Debtors also continue to benefit from the use of
the Leases and services of San Francisco without staying current
on their post-petition obligations. Accordingly, San Francisco
requests an order requiring the Debtors to immediately pay all
post-petition amounts owed under the Leases, amounting to
$1,958,344.39, plus applicable interest, late fees, attorneys'
fees and costs. (ANC Rental Bankruptcy News, Issue No. 12;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ALLIANCE LAUNDRY: Says Cash Flow Ample to Meet Cash Requirements
----------------------------------------------------------------
Alliance Laundry Systems LLC believes it is the leading
designer, manufacturer and marketer of stand-alone commercial
laundry equipment in North America and a leader worldwide. Under
the well-known brand names of Speed Queen, UniMac, Huebsch and
Ajax, the Company produces a full line of commercial washing
machines and dryers with load capacities from 16 to 250 pounds
as well as presses and finishing equipment. The Company's
commercial products are sold to four distinct customer groups:
(i) laundromats; (ii) multi-housing laundries, consisting
primarily of common laundry facilities in apartment buildings,
universities and military installations; (iii) on-premise
laundries, consisting primarily of in-house laundry facilities
of hotels, hospitals, nursing homes and prisons; and (iv)
drycleaners.
Alliance Laundry Systems LLC's net revenues for the quarter
ended March 31, 2002, decreased $2.9 million, or 4.5%, to $59.8
million from $62.7 million for the quarter ended March 31, 2001.
This decrease was primarily attributable to lower commercial
laundry revenue of $2.2 million and lower service parts revenue
of $0.7 million. The decrease in commercial laundry revenue was
due primarily to lower North American equipment revenue of $1.3
million, lower international revenue of $0.2 million and lower
earnings from the Company's off-balance sheet equipment
financing program of $0.7 million. The decrease in North
American equipment revenue was primarily due to lower revenue
from laundromats resulting from a general economic slowdown. The
lower earnings from the financing program were due to a lower
level of loans originated and sold in the first quarter of 2002
as compared to 2001.
Gross profit for the quarter ended March 31, 2002 increased $1.1
million, or 6.4%, to $17.1 million from $16.0 million for the
quarter ended March 31, 2001. This increase was primarily
attributable to favorable manufacturing efficiencies, a recent
price increase, and a $0.5 million favorable impact on 2002
resulting from a change in accounting principle whereby goodwill
is no longer amortized. These favorable impacts were partially
offset by the lower earnings from the financing program. Gross
profit as a percentage of net revenues increased to 28.5% for
the quarter ended March 31, 2002 from 25.6% for the quarter
ended March 31, 2001. This 2.9% increase was primarily
attributable to the manufacturing efficiencies, price increase
and accounting principle change.
Net income for the quarter ended March 31, 2002 increased $4.8
million to net income of $3.7 million as compared to a net loss
of $1.1 million for the quarter ended March 31, 2001. Net income
as a percentage of net revenues increased to 6.2% for the
quarter ended March 31, 2002 from a loss as a percentage of 1.7%
for the quarter ended March 31, 2001.
Liquidity And Capital Resources
The Company's principal sources of liquidity are cash flows
generated from operations and borrowings under its $75.0 million
revolving credit facility. The Company's principal uses of
liquidity are to meet debt service requirements, finance the
Company's capital expenditures and provide working capital. The
Company expects that capital expenditures in 2002 will not
exceed $7.0 million. The Company expects the ongoing
requirements for debt service, capital expenditures and working
capital will be funded by internally generated cash flow and
borrowings under the Revolving Credit Facility.
As of March 31, 2002, the Company has $321.2 million of combined
indebtedness outstanding, consisting of outstanding debt of
$192.0 million under the Term Loan Facility, $110.0 million of
senior subordinated notes and $17.8 million of junior
subordinated notes, $0.7 million of borrowings pursuant to a
Wisconsin Community Development Block Grant Agreement, and $0.7
million of borrowings pursuant to an equipment financing
transaction with Alliant Energy - Wisconsin Power & Light
Company. At March 31, 2002 there were no borrowings under the
Company's Revolving Credit Facility. Letters of credit issued on
the Company's behalf under the Revolving Credit Facility totaled
$14.1 million at March 31, 2002. As a result, at March 31, 2002
the Company had $60.9 million of its $75.0 million Revolving
Credit Facility available subject to certain limitations under
the Company's $275 million credit agreement dated May 5, 1998.
After considering such limitations, which relate primarily to
the maximum ratio of consolidated debt to EBITDA, the Company
could have borrowed $23.0 million at March 31, 2002 in
additional indebtedness under the Revolving Credit Facility.
Additionally, at March 31, 2002 the Company could have sold
additional trade receivables of approximately $6.8 million to
finance its operations. The maximum ratio of consolidated debt
to EBITDA under the Senior Credit Facility is scheduled to be
reduced from 6.0 at March 31, 2002 to 5.25 at December 31, 2002.
Management believes that future cash flows from operations,
together with available borrowings under the Revolving Credit
Facility, will be adequate to meet the Company's anticipated
requirements for capital expenditures, working capital, interest
payments, scheduled principal payments and other debt repayments
that may be required as a result of the scheduled reduction in
the ratio of consolidated debt to EBITDA.
* * *
At June 30, 2001, the company reported an upside-down balance
sheet, showing a total shareholders' equity deficit of about
$158 million. As previously reported, Standard and Poor's junked
the company's subordinated debt rating.
AMEDISYS INC: Shoos-Away Arthur Andersen as Independent Auditors
----------------------------------------------------------------
On April 30, 2002, the Board of Directors of Amedisys, Inc.,
upon recommendation by the Audit Committee, decided to no longer
engage Arthur Andersen LLP as the Company's independent
auditors.
Amedisys, Inc. is a leading multi-regional provider of home
health nursing services. The company, at December 31, 2001,
reported a working capital deficit of about $18 million.
AMERICAN ARCHITECTURAL: Closes Sale of Eagle Window to Linsalata
----------------------------------------------------------------
American Architectural Products Corporation (OTC Bulletin Board:
AAPCE) completed the sale of substantially all the assets of its
wholly owned subsidiary, Eagle & Taylor Company d/b/a Eagle
Window & Door, Inc. to a company controlled by Linsalata Capital
Partners. Linsalata emerged as the successful bidder through a
competitive bidding process authorized by Section 363 of the
U.S. Bankruptcy Code and approved by the Bankruptcy Court.
Conway, Del Genio, Gries & Co., LLC served as financial advisor
to AAPC in the transaction.
Linsalata is a Cleveland, Ohio-based private equity fund,
founded in 1984 by Frank Linsalata. Linsalata is a leading
private equity firm focused on acquiring middle market companies
and using its expertise and resources to accelerate the growth
of these businesses.
Eagle, founded in 1977 and acquired by AAPC in 1996, is a leader
in the fenestration industry, providing premium aluminum-clad
and wood windows and doors. AAPC filed a voluntary petition for
reorganization under Chapter 11 of the Bankruptcy Code on
December 18, 2000. The completion of the sale marks a major
milestone in AAPC's restructuring efforts.
Earlier this year, AAPC completed the sale of substantially all
of the assets of American Glassmith Inc., Binnings Pan American,
and the aluminum extrusion businesses of American Weather-Seal
Company.
Conway, Del Genio, Gries & Co., LLC is acting as financial
advisor to AAPC during its reorganization. For further
information, please contact Robert A. Del Genio of CDG, a firm
specializing in corporate finance advisory services with a focus
on restructurings and mergers and acquisitions. Mr. Del Genio's
telephone number is (212) 813-1300.
AAPC manufacturers and markets a broad range of fenestration
products, including windows and doors, primarily for light
commercial and residential applications, through its wholly
owned subsidiaries located throughout the United States.
AMERICAN SAFETY: S&P Hacthets Credit Rating Down to Junk Level
--------------------------------------------------------------
On May 7, 2002, Standard & Poor's lowered its ratings on
American Safety Razor Co. to 'CCC' from 'B'. The ratings remain
on CreditWatch, now with developing implications. Developing
implications mean that the ratings could be raised, lowered, or
affirmed, depending on the outcome of Standard & Poor's review.
The downgrade and CreditWatch listing are based on American
Safety Razor's noncompliance with financial covenants included
in its bank credit agreement. Specifically, the company was not
in compliance with the leverage, fixed charge, and interest
coverage ratios for the quarters ended December 31, 2001, and
March 31, 2002. American Safety Razor has been negotiating with
its lenders to obtain a waiver of the loan covenant violations
in existence through March 31, 2002, and to amend the covenants
for the remainder of the life of the facility.
The ratings could be raised should the company obtain an
amendment from its bank group waiving the loan covenant
violations and loosening future financial covenants. Conversely,
the ratings could be lowered should the company not reach an
agreement with its bank group, resulting in an event of default
under either the credit agreement or senior unsecured notes.
Standard & Poor's will continue to monitor developments,
including negotiations with senior lenders, and meet with
American Safety Razor's management to discuss its ongoing
business and financial strategies.
American Safety Razor is a manufacturer of private-label and
value-brand consumer-shaving razors and blades, as well as
industrial blades.
Ratings List To From
American Safety Razor Co.
* Corporate credit rating CCC B
* Senior unsecured credit rating CCC B
* Senior secured credit rating CCC B
ARTHUR ANDERSEN: KPMG Offers Cash for Business Consulting Units
---------------------------------------------------------------
KPMG Consulting Inc., (Nasdaq: KCIN), one of the world's largest
business consulting and systems integration firms, has signed a
Letter of Intent to acquire the Business Consulting units of
member firms of Andersen Worldwide Societe Cooperative, also
known as Andersen Worldwide. The Letter of Intent is an offer
to acquire up to 23 independent Andersen consulting units at a
price of up to $284 million.
Additionally, up to 6.5 million shares of stock will be issued
over a three-year period to Andersen's consulting partners who
join KPMG Consulting in connection with the transaction.
The Letter of Intent covers the acquisition of consulting
practices of Andersen Worldwide member firms in Europe, the
United States, Asia Pacific and Latin America. The acquisitions
are subject to the execution of definitive binding agreements
and satisfaction of customary closing conditions with each
business consulting unit. In addition, the acquisition by KPMG
Consulting of the business consulting practice of Arthur
Andersen LLP in the United States is subject to the satisfactory
resolution of potential liability issues. KPMG Consulting has
already completed the purchase of the Andersen consulting
practices in Hong Kong and in China. The combined net revenue
of the Andersen consulting practices included in these proposed
transactions was approximately $1.4 billion in FY01, more than
half of which was generated from Global 2000 clients. Included
among the potential benefits of these acquisitions, KPMG
Consulting will:
* Have significantly extended its geographic balance and
reach;
* Have increased strength and coverage in the targeted
industries it serves;
* Have increased its client base to more than 700 of the
Global 2000 companies; and
* Have added depth and breadth of talent, skills and
leadership in the business with a combined global
workforce of more than 16,000 employees.
"Our proposed acquisitions are consistent with KPMG Consulting's
stated business goal of strengthening our ability to service our
global clients," said Rand Blazer, Chairman and CEO, KPMG
Consulting. "Our actions will join the Andersen Business
Consulting world-class professionals with ours in the
common pursuit of client service excellence. We are excited and
delighted with what these acquisitions will mean for our
clients, our professionals worldwide and our shareholders. I am
also proud that KPMG Consulting, with the support of Andersen
Business Consulting Units, is moving decisively and prudently to
strengthen our position as a market leader for business
integration services."
"Joining with KPMG Consulting provides an outstanding
opportunity for the Andersen Business Consulting clients,
partners and employees," said Gail Steinel, the managing partner
of Andersen's Business Consulting practice. "Together, the
companies will be able to continue providing outstanding
service to Global 2000 clients worldwide."
KPMG Consulting, Inc. (Nasdaq: KCIN), based in McLean, Virginia,
is one of the world's largest business consulting and systems
integration firms with approximately US$2.9 billion in annual
revenues for the fiscal year ended June 30, 2001. Around the
world, over 9,000 employees provide business and technology
strategy, systems design and architecture, applications
implementation, network and systems integration, and related
services. We help our clients capitalize on information
technology to achieve their business objectives and build real-
time enterprises. Working with market leading hardware and
software companies we serve more than 2,500 clients, including
Global 2000 companies, small and medium-sized businesses,
government agencies and other organizations. Our business and
technology solutions are tailored to meet the specific needs of
the industries we serve, and are delivered through global
industry-focused lines of business, including communications and
content companies, consumer and industrial markets, financial
services industries, high technology companies, and federal,
state and local governments.
For more information about KPMG Consulting, visit the Web site
at http://www.kpmgconsulting.com For news media, visit
http://kpmgconsulting.com/news/media_contacts.html
KPMG Consulting, Inc. is an independent consulting company, no
longer affiliated with KPMG LLP, the tax and audit firm.
Reference the company as KPMG Consulting, since KPMG is not an
abbreviated name for its business and is an unaffiliated firm.
The Andersen Business Consulting units are systems integrators
with a business driven consulting approach that use technology
to provide complete business solutions from strategy through
implementation.
Completion of the acquisitions is subject to the execution of
definitive agreements with each of the participating Andersen
Worldwide Member Firms. Each agreement will require appropriate
approvals from local partners and regulatory authorities.
ASHTON TECHNOLOGY: Completes OptiMark Investment Transaction
------------------------------------------------------------
The Ashton Technology Group, Inc. (OTCBB: ASTN) and OptiMark
Innovations Inc., announced the completion of the strategic
investment in Ashton by Innovations and the re-launch of
Ashton's business.
As a result of the transaction, Ashton has received $7,272,727
in cash, as well as intellectual property and technology in
exchange for shares of Ashton common stock, par value $.01 per
share, representing 80% of the total issued and outstanding
shares of Ashton common stock at closing. In addition,
Innovations has lent $2,727,273 in cash to Ashton in exchange
for a senior secured convertible note.
Ashton intends to use the cash, intellectual property and
technology proceeds from this transaction to re-launch its
businesses. The immediate focus will be expanding the guaranteed
liquidity program for buy-side institutions. Subsequently,
Ashton intends to use the remaining proceeds from the
transaction along with the proprietary quantitative trading
algorithms and exchange platforms received from OptiMark
Innovations to penetrate new markets that will benefit from
Ashton's low-cost guaranteed liquidity.
"This investment brings vital capital, technology, leadership
and relationships to Ashton that will help position the company
as a valuable liquidity provider to institutional investors"
said Robert Warshaw, the acting CEO of Ashton. "We are prepared
to immediately offer institutional investors the highest levels
of low-cost liquidity in a broader universe of stocks."
Mr. Warshaw said Ashton, over the next three months, plans to
introduce substantial enhancements to its product offerings,
including increasing the number of match sessions to 30-minute
increments, allowing institutional traders to gain access to
Ashton's low cost liquidity throughout the day.
In conjunction with the closing, OptiMark Innovations Inc.
disclosed that it had received a private equity investment from
Draper Fisher Jurvetson ePlanet Ventures. The proceeds of this
investment were used by OptiMark Innovations to fund its
investment in Ashton described above.
Upon the closing of the OptiMark Innovations transaction, Ashton
announced the following:
Issuance of Shares/Resignation of Certain Directors
Ashton has issued 608,707,567 shares of its common stock to
Innovations and reserved an additional 52,870,757 shares of its
common stock for conversion of the senior secured convertible
note issued to Innovations. Concurrent with the closing, Ashton
has accepted the resignations of Messrs. Thomas Brown, K. Ivan
Gothner, Fredric W. Rittereiser and William W. Uchimoto as
members of the Board of Directors.
New Executive Management/Board of Directors
Fred Weingard, Ashton's chief technology officer, remains on the
Board of Directors and will be joined by Mr. Warshaw, Trevor
Price, Ashton's new chief operating officer, and Ronald D.
Fisher, managing director of SOFTBANK Capital Partners.
Additional directors shall be named in the near future.
Ashton's new Board of Directors named Mr. Warshaw as acting
chief executive officer, Trevor Price as chief operating officer
and James Pak as chief financial officer. They join Fred
Weingard (chief technology officer), Jennifer Andrews (executive
vice president, finance) and William Uchimoto (general counsel)
as members of Ashton's executive management team.
RGC International Investors
Ashton also announced the re-structuring of its existing
agreements with RGC International Investors, LDC. RGC has
exchanged the 9% Secured Convertible Note of Ashton dated July
13, 2001 for (i) a 7.5% Senior Secured Note that will mature in
four years and (ii) warrants to purchase shares of Ashton common
stock. In addition, Ashton has re-paid the principal and accrued
interest in connection with a $250,000 bridge loan extended to
Ashton by RGC on April 11, 2002.
Separation Agreement with Fredric W. Rittereiser
In connection with Fredric W. Rittereiser's resignation as a
director and the termination of his existing employment
agreement, Ashton has entered into a separation and release
agreement. The agreement calls for cash payments totaling
$150,000, payable within a year from the close of the
transaction with Innovations. Mr. Rittereiser will also receive
four million shares of Ashton common stock and health care
benefits for one year.
Ashton Technology, through its subsidiaries, provides global
institutional investors with low-cost liquidity in S&P500,
NASDAQ 100 and Russell 1000 securities. Ashton's guaranteed
price/fill program is a highly reliable, easily accessible
source for anonymous block liquidity, eliminating market impact
and guaranteeing trade execution results that beat 80% of all
institutional equity trades (Elkins-McSherry). As a result of
the investment in Ashton by Innovations, OptiMark Inc., SOFTBANK
Capital Partners and Draper Fisher Jurvetson ePlanet Ventures
are indirect investors in Ashton.
OptiMark Innovations Inc. is a holding company funded by
OptiMark, Inc. and affiliates of SOFTBANK Capital Partners and
Draper Fisher Jurvetson ePlanet Ventures.
Draper Fisher Jurvetson ePlanet Ventures is a global venture
capital firm focused on the information technology sector. DFJ
ePlanet was founded in 1999 to take advantage of the growing
trend towards globalization in technology by the leading Silicon
Valley-based venture capital firm, Draper Fisher Jurvetson, in
partnership with Europe-based ePlanet Partners. DFJ ePlanet
Ventures has offices in Redwood City, CA, London, Tel Aviv,
Singapore, Hong Kong and Tokyo.
* * *
As reported in the February 22, 2002 edition of Troubled Company
Reporter, Ashton Technology has recognized recurring operating
losses and has financed its operations primarily through the
issuance of equity securities. As of December 31, 2001, it had
an accumulated deficit of $82,605,379, a working capital
deficiency of $315,324, and stockholders' deficiency of
$2,435,982, all of which raise substantial doubt as to its
ability to continue as a going concern.
BCE INC: Appoints David McLennan as New Chief Financial Officer
---------------------------------------------------------------
Michael J. Sabia, President and Chief Executive Officer of BCE
announced the following executive appointments, effective
immediately.
David McLennan is appointed Chief Financial Officer, Bell
Canada. Mr. McLennan, 40, was most recently President of Bell
ExpressVu. He joined BCE in 1993 and has held numerous positions
in finance including Chief Financial Officer of Bell ExpressVu.
In his new position, Mr. McLennan will report to Stephen
Wetmore, Vice-Chairman, Corporate, Bell. Mr. McLennan's
appointment is the result of a joint selection process conducted
by both SBC and Bell. He replaces Jon Klug who returns to an
executive position at SBC following his two-year assignment at
Bell Canada.
Tim McGee is appointed President of Bell ExpressVu. Mr. McGee,
44, replaces Mr. McLennan. Mr. McGee joined Bell Canada in 1998
and was most recently Chief Legal Officer. In his new position,
he will report to John Sheridan, President, Bell Canada.
Richard Mannion is appointed Chief Legal Officer, Bell Canada.
Mr. Mannion, 46, replaces Tim McGee. Mr. Mannion joined Bell
Canada's law department in 1984 and has held numerous positions
in the group including at BCE and BCE Mobile. He will report to
Stephen Wetmore.
In addition, the Bell Canada Board of Directors confirmed the
appointment of Michael J. Sabia as Chief Executive Officer of
Bell Canada in consultation with the company's shareholders.
BCE is Canada's largest communications company. It has 23
million customer connections through the wireline, wireless,
data/Internet and satellite services it provides, largely under
the Bell brand. BCE leverages those connections with extensive
content creation capabilities through Bell Globemedia which
features some of the strongest brands in the industry - CTV,
Canada's leading private broadcaster, The Globe and Mail,
Canada's National Newspaper and Sympatico-Lycos, the leading
Canadian Internet portal. As well, BCE has extensive e-commerce
capabilities provided under the BCE Emergis brand. BCE shares
are listed in Canada, the United States and Europe.
BANYAN STRATEGIC: Q1 Net Assets in Liquidation Drops by $300K
-------------------------------------------------------------
Banyan Strategic Realty Trust (Nasdaq: BSRTS) said that for the
quarter ended March 31, 2002 its Net Assets in Liquidation
decreased by approximately $0.3 million, from approximately
$12.4 million at December 31, 2001, to approximately $12.1
million at March 31, 2002. The decrease was due primarily to an
operating loss of $0.3 million and minority interest of $0.1
million, offset by $0.1 million of interest income on cash and
cash equivalents.
For the three months ended March 31, 2001, the Trust reported
that Net Assets in Liquidation increased by approximately $1.2
million, from approximately $64.2 million at December 31, 2000,
to approximately $65.4 million at March 31, 2001. These results
reflected the net operations of the Trust prior to the sale of
27 of its 30 properties on May 17, 2001, and are not comparable
to the results for the quarter ended March 31, 2002, at which
time the Trust owned only the three remaining properties.
Status of Real Estate Asset Sales
As previously announced, the Trust sold University Square
Business Center on April 1, 2002 and 6901 Riverport Drive on May
1, 2002. By reason of the receipt of proceeds from the sale of
these properties, the Trust also announced that it will make an
interim liquidating distribution of $0.30 per share on May 31,
2002, to shareholders of record as of May 16, 2002.
Furthermore, on May 2, 2002, the Trust announced that it had
signed a contract to sell its Tucker (Atlanta), Georgia
property, known as Northlake Tower Festival Mall, for a gross
purchase price of $20.5 million. If the transaction closes at
the contract price, the Trust expects to realize net proceeds of
approximately $3.35 million, or approximately $0.215 per share,
after crediting the Purchaser the amount of the existing
Northlake debt (approximately $16.8 million) and paying related
closing costs and prorations (expected to be approximately $0.35
million).
Nasdaq Delisting
Banyan previously announced that on February 14, 2002, it was
notified by Nasdaq that because the minimum bid price for
Banyan's shares of beneficial interest closed below $1.00 per
share for the preceding thirty consecutive trading days,
Banyan's shares faced delisting. Nasdaq has advised that the bid
price must close at $1.00 or more per share for ten or more
consecutive trading days, between the notification date and May
15, 2002, for delisting to be avoided. If this criterion is not
met, the shares would be delisted, subject to Banyan's right of
appeal. Since February 14, 2002, the closing price of Banyan's
shares has averaged $0.70 per share and it is not anticipated
that the share price will exceed $1.00 before May 15, 2002.
Banyan is currently looking into alternatives in order to
provide a continued market for the exchange of its shares.
Banyan Strategic Realty Trust is an equity Real Estate
Investment Trust that adopted a Plan of Termination and
Liquidation on January 5, 2001. On May 17, 2001, the Trust sold
approximately 85% of its portfolio in a single transaction.
Additional properties were sold on April 1, 2002 and May 1,
2002. Banyan now owns a leasehold interest in one (1) real
estate property located in Atlanta, Georgia, representing
approximately 9% of its original portfolio. Since adopting the
Plan of Termination and Liquidation, Banyan has made liquidating
distributions totaling $4.95 per share. On May 1, 2002, Banyan
announced that an additional distribution of $0.30 per share
will be made on May 31, 2002 to shareholders of record on May
16, 2002, thus increasing the total liquidating distributions to
$5.25 per share. As of this date, the Trust has 15,496,806
shares of beneficial interest outstanding.
BOMBARDIER CAPITAL: Fitch Junks Series 1999-B Class B-2 Rating
--------------------------------------------------------------
Bombardier Capital Manufactured Housing Contracts, series 1999-
B, class B-2 is lowered to 'CCC' from 'BB' and series 2000-A,
class B-2 is lowered to 'B' from 'BB', with both classes being
placed on Rating Watch Negative by Fitch Ratings. Additionally,
class B-1 of the 1999-B transaction is lowered to 'BBB-' from
'BBB' and placed on Rating Watch Negative.
The actions reflect the poor performance of the underlying
manufactured housing loans in the transactions. Higher than
expected losses have resulted in reduction of the amount of
overcollateralization. As of the distribution date on April 15,
2002, the overcollateralization amount for series 1999-B and
2000-A is equal to $1,814,921 (0.48%) and $7,270,282 (2.10%),
respectively. The original o/c target for series 1999-B and
2000-A is equal to $24,563,064 (5.25%) and $15,598,878 (3.74%),
respectively.
Although the company exited the manufactured housing lending
business in September 2001, it continues to service its
approximately $1.8 Billion manufactured housing loan portfolio.
The departure form the lending business has had an adverse
impact on already deteriorating performance. As a result of
exiting the manufactured housing lending business the company is
now heavily reliant upon wholesale liquidations of repossessed
homes. Recovery rates on wholesale liquidations are generally
substantially lower than retail liquidation recoveries.
Cumulative losses to date are 7.69% and 7.09% for series 1999-B
and 2000-A, respectively. Fitch will continue to monitor the
performance of the collateral pools backing the securities as
well as the status of the servicing platform.
CALICO COMMERCE: Auditors Doubt Company's Ability to Continue
-------------------------------------------------------------
On April 29, 2002, the San Francisco, California independent
auditors for Calico Commerce, Inc. rendered their Auditors
Report to the Board of Directors and stockholders of the
Company. In part, the Auditor's report says:
"On December 14, 2001, the Company filed a voluntary
petition for reorganization under Chapter 11 of the United
States Bankruptcy Code. The uncertainties inherent in the
bankruptcy process and the Company's sale of its operating
assets raise substantial doubt about the Company's ability
to continue as a going concern."
Calico has historically provided interactive selling software
that enabled its customers to sell broad and complex product
offerings through their different sales channels as well as
direct to customers over the Internet. The company's products
were Java and standards-based, and contained advanced
configuration, recommendation and pricing technology that
allowed its customers to interact directly with users to create
a web-based, guided selling experience. Although applicable to a
wide range of industries and markets, Calico historically
focused on the telecommunications, financial services, retail,
computer hardware and manufacturing industries.
As of March 31, 2002, Calico Commerce had $26.5 million of cash
and cash equivalents. The Company received $4.5 million upon the
closing of the sale to PeopleSoft on February 6, 2002, and
$500,000 was deposited into escrow to be held for six months as
a non-exclusive remedy to satisfy any claims that PeopleSoft may
have against Calico under the asset purchase agreement. As a
result of the sale, Calico no longer owns any intellectual
property and has few operating assets, it does not intend to
continue selling products, and is prohibited by the terms of the
asset purchase agreement with PeopleSoft from competing with its
business. Management believes that cash on hand will provide
sufficient funds to allow Calico to continue its operating
activities and to meet its post-petition obligations as they
become due, while a plan of reorganization is developed and
considered. However, the ability to continue as a going concern
(including the ability to meet post-petition obligations of
Calico and its subsidiaries) and the appropriateness of
presenting its financial statements on a going concern basis are
dependent upon, among other things, any cash management orders
entered by the Bankruptcy Court concerning matters outside of
the ordinary course of business, and obtaining confirmation of a
plan of reorganization under the Bankruptcy Code that provides
for Calico's continuation through a merger with or acquisition
by another entity. Alternatively, the Company may file a plan of
reorganization providing for its liquidation and dissolution.
Although Calico expects to satisfy all known, nondisputed, non-
contingent claims, at this time, it does not know if its cash
will be sufficient to pay all claims in full or to make a
distribution to stockholders.
Although Calico reported net income of $1.7 million in the three
months ended March 31, 2002, $4.7 million of this was due to a
gain on the sale of assets to PeopleSoft. It also reported net
income for the quarter ended December 31, 2001, however, $16.3
million of income was comprised of a realized gain from the sale
of shares of Digital River stock. Income from the sale of
Digital River common stock was a one-time, non-recurring event.
The Company has historically incurred substantial operating
losses and negative cash flows from operations in every fiscal
period since inception. For the year ended March 31, 2002, it
incurred a loss from operations of $17.5 million and negative
cash flows from operations of $10.4 million. As of March 31,
2002, Calico Commerce had an accumulated deficit of $202.7
million.
CONTOUR ENERGY: Noteholders Agree to Forbear Until June 30, 2002
----------------------------------------------------------------
Contour Energy Co. has executed an agreement with the holders of
over 75% of its 10-3/8% senior subordinated notes to forbear
from enforcing certain default rights under the indenture while
restructuring discussions are ongoing. The "forbearance
agreement" will expire on June 30, 2002.
The trustees for both the 10-3/8% senior subordinated notes and
14% senior secured notes have been informed of the forbearance
agreement and that the Company does not intend to pay interest
currently due on the 10-3/8% senior subordinated notes prior to
expiration of the grace period. The forbearance agreement does
not waive the default under the indenture governing the 10-3/8%
senior subordinated notes that will occur as a result of the
failure to pay interest within the grace period.
All interest due on the Company's 14% senior secured notes was
paid on Friday, May 3, within the grace period provided by that
indenture. However, failure to pay interest timely on the 10-
3/8% senior subordinated notes will be a cross-default under the
indenture governing the 14% senior secured notes. The Company
has not sought a waiver or forbearance of this cross default.
Negotiations continue with the major holders to effect a
conversion of the 10-3/8% senior subordinated debt into equity
of the Company. Even though negotiations are continuing, there
can be no assurance that a mutually acceptable agreement will be
reached among the parties. Furthermore, the forbearance
agreement does not alter the likelihood of a bankruptcy filing.
Contour Energy Co. is engaged in the exploration, development,
acquisition and production of natural gas and oil.
Contour Energy Co. common stock is traded on the OTC Bulletin
Board under the symbol CONC.
CORRECTIONS CORP: S&P Ratchets Corp. Credit Rating Up a Notch
-------------------------------------------------------------
On May 6, 2002, Standard & Poor's removed the corporate credit
rating on correctional services provider, Corrections Corp. of
America, from CreditWatch with positive implications, and raised
the rating to 'B+' from 'B'.
In addition, the 'CCC+' rating on the company's 12% senior notes
and 'B' rating on its $869.4 million credit facility were
withdrawn. The outlook on Nashville, Tennessee-based CCA is
stable. The rating actions followed the completion of CCA's
refinancing, relieving the company of onerous near-term debt.
The ratings on CCA reflect the company's high debt leverage,
somewhat mitigated by its leading position in the correctional
facility management and construction businesses and improved
liquidity stemming from the terming-out of its debt maturities.
CCA is the nation's largest private provider of detention and
corrections services to government agencies, with more than
61,000 beds in service, representing 52% of the private-bed
market. Despite recent reports that state prison populations are
leveling off, the demand for prison beds continues to be strong
in the states where CCA has facilities. In addition, the federal
government system continues to be somewhat overcrowded. Standard
& Poor's expects industry leader CCA to continue winning its
share of new contracts as they surface.
Through cost controls and improved utilization of its
facilities, CCA has improved its cash flow generation and
financial profile over the past year and a half. Credit measures
are average for the rating; total debt to EBITDA was about 5
times and EBITDA coverage of cash interest expense was about
1.9x for 2001. CCA generated solid free cash flow in 2001,
primarily as a result of relatively low capital spending for
maintenance purposes, and Standard & Poor's expects another good
free cash-flow year in 2002. Available cash of $50 million as of
March 31, 2002 and a new $75 million revolving-credit facility
provide adequate financial resources.
Outlook
Standard & Poor's expects the company to maintain cash coverage
in the 2x area and leverage at or below 5x over the intermediate
term.
Ratings List To From
* Corporate credit rating B+ B
* $715 mil secured credit facility B+ --
* $1 billion secured credit facility NR B
* $250 million 9.875% senior notes B- --
* $100 million 12% senior notes NR CCC+
DT INDUSTRIES: Enters Pact to Effect Major Recapitalization Deal
----------------------------------------------------------------
DT Industries, Inc. (Nasdaq: DTII), an engineering-driven
designer, manufacturer and integrator of automation systems and
related equipment used to manufacture, assemble, test or package
industrial and consumer products, has reached agreements-in-
principle to effect a major financial recapitalization
transaction. The financial recapitalization will strengthen the
Company's balance sheet by adding approximately $63.7 million to
stockholder's equity and reducing indebtedness by approximately
$66.4 million. Upon completion of the financial
recapitalization transaction, the Company will:
-- extend the maturity date of its senior credit facility
from July 2, 2002 to July 2, 2004 and repay approximately $16.3
million of outstanding indebtedness under the facility and
concurrently reduce the lenders' commitments by approximately
$12.0 million;
-- sell 7.0 million shares of its common stock in a private
placement to several current stockholders at a purchase price of
$3.20 per share, for an increase in capital of $22.4 million,
less expenses and taxes;
-- reduce the outstanding 7.16% Convertible Preferred
Securities of DT Capital Trust (and the related junior
subordinated debentures of the Company held by the Trust) (the
"TIDES") by approximately $50.1 million through an exchange of
half of the outstanding amount, plus all accrued and unpaid
interest through March 31, 2002, for 6,260,658 shares of the
Company's common stock at an exchange price of $8.00 per share;
and
-- amend the terms of the remaining $35.0 million of TIDES
by reducing their conversion price from $38.75 to $14.00 per
share, shortening their maturity from May 31, 2012 to May 31,
2008 and providing that interest does not accrue during the
period from March 31, 2002 until July 2, 2004.
All parties to the recapitalization agreements have approved
them and the Company expects the agreements to be fully-executed
in the next few days.
Jack Casper, Senior Vice President and Chief Financial Officer,
said, "We believe the financial recapitalization will help the
Company reach its previously stated goals -- matching the
business risks of a cyclical business with its financial risks
by reducing the Company's debt to equity ratio below 0.75 to 1
and providing the necessary working capital to support the
Company's forward business plan." Casper further stated that he
expects the recapitalization agreements to be executed in the
next few days and expects the financial recapitalization
transaction to close in June 2002. Appendix 1 contains a table
showing the pro forma impact of the financial recapitalization
on the Company's capital structure.
Steve Perkins, President and Chief Executive Officer said, "The
Company appreciates the confidence that our stockholders, TIDES
holders and lenders have placed in DTI's turnaround plan.
Management confidently believes that, with a delevered balance
sheet and our excellent employees, DTI will be positioned to
achieve improved operating results as the economy rebounds."
The financial recapitalization transaction will be subject to
customary closing conditions, as well as the approval by the
Company's stockholders of the issuance of an aggregate of
13,260,658 shares of common stock in the private placement and
TIDES restructuring. The securities offered in the financial
recapitalization have not been and, except pursuant to resale
registration rights granted to the holders of the securities,
will not be registered under the Securities Act of 1933, as
amended, and may not be offered or sold in the United States
absent registration or an applicable exemption from registration
requirements.
The Company intends to file with the SEC and mail to its
stockholders a proxy statement on Schedule 14A with respect to
its special meeting of stockholders in connection with the
proposed issuance of common stock in the private placement and
TIDES restructuring. The Company's stockholders are urged to
read the proxy statement when it is available, and any other
relevant documents filed by the Company with the SEC, because
they will contain important information about the Company and
the proposed transactions. After they have been filed, you may
obtain these documents free of charge at the web site maintained
by the SEC at http://www.sec.gov In addition, you may obtain
these documents free of charge by making your request to the
Company's General Counsel, Dennis Dockins, at 907 West Fifth
Street, Dayton Ohio 45407, telephone number: 937/586-5600.
The Company and its directors and executive officers may be
deemed to be participants in the solicitation of proxies from
the Company's stockholders with respect to the issuance of
common stock in the private placement and the TIDES
restructuring. Information regarding the Company's directors
and executive officers is included in the Company's proxy
statement for its 2001 Annual Meeting, which was filed with the
SEC on October 4, 2001. More recent information regarding the
beneficial ownership interests in Company common stock of the
Company's directors and executive officers and information
regarding the Company will be included in the proxy statement
regarding the proposed issuance of common stock in the private
placement and the TIDES restructuring to be filed with the SEC.
DYNASTY COMPONENTS: CEO/CFO Marc Brule Resigns Effective May 31
---------------------------------------------------------------
Dynasty Components Inc. (TSE:DCI) announced that its Chief
Executive Officer and CFO, J. Marc Brule, will be departing at
the end of May 2002 in order to pursue another career
opportunity. Mr. Brule assumed the role of CEO last December to
guide DCI through the development and implementation of its
restructuring plan.
DCI has been under protection pursuant to the Companies'
Creditors Arrangement Act since November 30, 2001, with the
current Order continuing the stay of proceedings until May 30,
2002. During this time period the Company has re-focused its
business strategy on its e-procurement logistics software and
solution delivered through its wholly-owned subsidiary, Parts
Logistics Management Corp. Company President, Jon Hansen,
replaces Mr. Brule on DCI's Board of Directors. Mr. Hansen is
the original founder and former CEO of PLM, and is the architect
of the Company's patent pending Interactive Parts Ordering
System(TM). In addition, Mr. Gary Economo and Ms. Karen Morrison
resigned this week from DCI's Board of Directors.
Since the inception of the CCAA protection, the Company has been
operating in a cash-positive manner and has not incurred further
debt. The Company is considering a number of options to further
the Plan including the raise of new capital through the issuance
of new shares and expressions of interest from parties
interested in purchasing all or portions of DCI's business.
Parts Logistics Management Corp. provides web-based B2B e-
procurement and fulfillment logistics solutions. Focused almost
exclusively on the Information Technology (IT) industry, PLM
provides logistics solutions to IT outsourcing service
providers, assisting them in managing the procurement, delivery
and tracking of IT parts, as well as parts disposition and
logistics management services to computer original equipment
manufacturers. PLM's logistics management solution provides a
computerized and centralized system for managing the e-
procurement, delivery and tracking of mission-critical IT spare
parts at lower costs and with shorter delivery cycles. The
engine of PLM's logistics solution is its patent pending
Interactive Parts Ordering System(TM) (IPOS(TM)) which is
accessed by clients over the Internet on a 7/24 basis. In May
2002, PLM launched its new parts disposition web site,
PLMPartsdirect.com. PLMPartsDirect sells OEM direct and after-
market computer and printer parts to both service providers and
corporate end users. Product consists of OEM parts that are no
longer available from the manufacturer.
EARLE M. JORGENSEN: S&P Assigns B- Rating to $250MM Senior Notes
----------------------------------------------------------------
On May 8, 2002, Standard & Poor's assigned its single-'B'-minus
rating to Earle M. Jorgensen Co. 's $250 million senior secured
notes due 2012. Proceeds of the proposed note offering will be
used to refinance its $105 million of 9-1/2% senior notes and
its $96 million term loan and fund a $25 million dividend to its
parent company, Earle M. Jorgensen Holding Co. Inc. At the same
time, Standard & Poor's affirmed its existing ratings on the
Brea, California-based company. The outlook is stable. Total
debt outstanding at the company is $370 million (including
operating leases).
The proposed notes, although secured on a first-priority basis
by substantially all of the company's existing and future
acquired unencumbered property, plant and equipment, are
effectively junior to the company's $200 million senior secured
bank credit facility, which is secured by the more liquid
assets, accounts receivable and inventory.
The ratings reflect Jorgensen's below average business position
and its aggressive financial management. Jorgensen is a leading
metal distributor in the U.S. with 35 service and processing
centers with emphasis on non-flat-rolled products such as bars,
tubes and plates. Jorgensen provides value-added services on
most of its products including, cutting, honing, polishing and
other services to meet customer specifications. Jorgensen
benefits from broad geographic coverage, a diversified customer
base, and significant economies of scale in purchasing and
marketing operations. Nonetheless, the metals distribution
industry is highly competitive, fragmented, and working capital-
intensive. Competition includes other national distributors,
regional players, and captive operations run by some of its
metals suppliers. End markets served are highly cyclical,
including industrial machinery and equipment, automotive and
construction markets. Although the company serves highly
cyclical end-use markets it benefits from a high variable cost
structure compared with both primary metals producers and end-
users of processed metals. Financial performance has benefited
from MIS investments and improved financial reporting systems,
enhancing management's ability to improve inventory management
and customer service. In the past year, Jorgensen has faired
better than other metals processors, largely due to its product
mix, which has a limited exposure to the competitive flat-rolled
steel market. Still, weakening demand across most of the
company's product lines and lower realized prices have resulted
in weaker cash flow measures. Difficult market conditions are
expected to moderate later in 2002, as the economy has shown
signs of strengthening.
Despite difficult market conditions, Jorgensen's gross margins
have remained relatively stable at about 28%. Management has
implemented ongoing efficiency enhancements the past several
years and reduced headcount by more than 300 people or 15%. The
company has also modernized its storage facility in its Kansas
City, Mo. facility and is currently making similar improvements
at its flagship Chicago, Ill. facility, where it is also in the
process of installing a new inventory and retrieval system that
should reduce inventory handling costs and floor space, increase
storage capacity and further reduce headcount. A small amount of
Jorgensen's sales are under contracts that fix the price for up
to 12 months. In order to limit the risk of fluctuating market
selling prices negatively impacting its margins the company
enters into corresponding fixed cost supply contracts. The rest
of the company's business is transactional, which may be subject
to temporary periods of margin compression.
Capital spending levels are expected to decline, as the
company's major modernization programs will soon be completed.
For the fiscal year ended March 31, 2002, Jorgensen's EBITDA to
interest and total debt to EBITDA were weak at 1.4 times and
4.9x, respectively. These measures are expected to improve to
about 2x and 4x, due to cost reductions and lower capital
spending, with improved free cash flow applied towards debt
reduction. Following the proposed refinancing, debt maturities
will be relatively light for the next few years. Jorgensen's
liquidity is aided by $85 million of availability under the
company's revolving credit facility (at March 31, 2002) and
relatively modest capital needs. PIK debt at the holding company
is considered to be equity-like because it is held by the
majority shareholder and is pay-in-kind. Concurrently, with the
refinancing, the holding company is also expected to extend the
agreement with the holders of its notes (beyond the 2012
maturity of the proposed notes) to 2013 from 2006.
Outlook
Benefits from a lower cost structure, working capital
improvements, and debt reduction should enable the company to
restore its cash flow coverages from currently weak levels.
Ratings List:
Earle M. Jorgensen Holding Co. Inc.
* Corporate credit rating: B+
* Senior secured notes B-
Earle M. Jorgensen Co.
* Corporate credit rating: B+
ENRON CORP: Employees' Committee Taps Kronish Lieb as Co-Counsel
----------------------------------------------------------------
The Official Employment-Related Issues Committee seeks to retain
and employ Kronish Lieb Weiner & Hellman LLP, nunc pro tunc to
April 2, 2002, as its co-counsel in Enron Corporation's chapter
11 cases.
To recall, the Employee Committee is currently comprised of
these members:
-- Mr. Michael P. Moran;
-- Mr. Richard D. Rathvon;
-- Ms. Diana S. Peters;
-- Mr. Jess Hyatt; and
-- State Street Bank and Trust Company, in its capacity as
special fiduciary for certain Enron plans.
At a meeting on April 2, 2002, the Employee Committee appointed
Mr. Michael P. Moran and Mr. Richard D. Rathvon as co-chairs,
and selected Kronish Lieb as co-counsel along with the Houston
law firm of McClain & Siegel, P.C. to represent the Employee
Committee in certain employee-related matters during the
pendency of Enron's Chapter 11 cases.
Mr. Moran tells the Court that they had interviewed several
firms and carefully considered the advisability of hiring a
single law firm to represent their interests in these cases.
According to Mr. Moran, the Employee Committee recognized,
however, that the interests of the Committee and its
constituency would be best served by retaining professionals who
are familiar with:
(i) the Court in which the cases are pending;
(ii) counsel for other significant parties in the cases;
(iii) the provisions of ERISA and other non-bankruptcy areas of
law;
(iv) the operation of official committees in complex Chapter 11
bankruptcy cases;
(v) the background of these cases and the parties in these
cases in particular;
(vi) the laws of the State of Texas as they relate to employee
claims; and
(vii) the environment in which the majority of current and
former employees reside and work.
"The Employee Committee is keenly aware that, while the cases
are pending in New York, the Debtors Human Resources department
(and therefore most of the relevant information) is located in
Houston," Mr. Moran says. In fulfilling its fiduciary duties to
employees, Mr. Moran explains that they expect to interview and
interact with many of the Debtors' employees or other witnesses,
the majority of whom work in Houston. Mr. Moran relates that
one of the most significant charges facing the Employee
Committee is implementation of a comprehensive and accurate
notice program to provide timely and accurate information to
current and former employees and the tens of thousands of
retirees located throughout the country. "The notice program is
most effectively conducted from Houston," Mr. Moran notes. So
after reviewing the qualifications of each of the firms
interviewed, the Employee Committee concluded that the best and
most economical means for fulfilling its duties will be to
select two counsels and require those firms to carefully avoid
any duplication of effort.
In light of all of these considerations, the Employee Committee
specifically sought counsel with a strong presence in New York
as well as in Houston, Texas. "While there may be a single firm
which possesses all of these characteristics, in light of the
size and complexity of the cases, many of these firms already
represent parties in interest in these cases," Mr. Moran
observes. After reviewing the qualifications of each of the
firms, the Employee Committee is convinced that the two counsels
it has selected each possess unique talents and characteristics
that, when combined, make them a better choice than any single
law firm.
The Employee Committee has retained the Kronish Lieb firm at
1114 Avenue of the Americas in New York, and the McClain firm at
Two Houston Center, 909 Fannin in Houston, Texas, as co-counsels
to represent it in all matters that come before this Court in
these proceedings.
Mr. Moran asserts that Kronish Lieb's expertise in representing
committees in national Chapter 11 cases; its expertise with
ERISA issues and respect to the local rules; and its proximity
to the Court make the firm uniquely qualified to represent the
interests of the Employee Committee.
Kronish Lieb is expected to provide these services:
(a) Assist the Employee Committee in the continuation of
health or other benefits for former employees of the
Debtors;
(b) Assist the Employee Committee in the investigation of
possible violations by the Debtors of certain provisions
of ERISA;
(c) Assist, advise and represent the Employee Committee with
respect to its powers and duties under the Bankruptcy Code
in connection with these cases to accomplish the mandate
set forth by the United States Trustee in the Amended
Appointment of Employment-Related Issues Committee; and
(d) Attend the meetings of the Employee Committee;
(e) Confer with the Debtors' management and counsel and the
Official Committee of Unsecured Creditors and various
employee groups regarding severance related issues;
(f) Review the Debtors' activities and motions and third
party filings and advising the Committee as to the
ramifications regarding all of the employee-related
activities and motions;
(g) Confer with third party fiduciaries and governmental
entities regarding employee-related issues;
(h) Review benefit plans and the Debtors' oversight and
compliance;
(i) Provide the Employee Committee with legal counsel with
respect to the New York venued employee-related issues;
and
(j) Perform such other legal services for the Committee as
may be necessary or proper in these proceedings.
James A. Beldner, Esq., at Kronish Lieb Weiner & Hellman LLP, in
New York, informs Judge Gonzalez that the firm will charge its
customary hourly rates for its legal services rendered. The
current hourly rates of the Kronish Lieb professionals that will
render services in these cases are:
James A. Beldner Partner $495
Jay R. Indyke Partner 485
Ronald R. Sussman Counsel 475
Cathy R. Hershcopf Partner 425
Robert A. Boghosian Special Counsel 400
Eric J. Haber Special Counsel 390
Charles J. Shaw Associate 395
Richard S. Kanowitz Associate 360
Christopher A. Jarvinen Associate 235
Gregory G. Plotko Associate 235
Bethanne D. Haft Associate 220
Brent Weisenberg Associate 205
Joanna Bergman Associate 205
Ryan Papir Associate 205
Rebecca Goldstein Legal Assistant 170
Novica Petrovski Legal Assistant 170
Mr. Beldner assures the Court the firm will maintain detailed,
contemporaneous records of time and any actual and necessary
expenses incurred in connection with the rendering of the legal
services.
"It is also the firm's policy to charge its clients for all
disbursements and expenses incurred in the rendition of
services," Mr. Beldner adds. These disbursements and expenses
include, among other things, long distance telephone and
outgoing facsimile charges, photocopying, travel, business
meals, computerized research, messengers, couriers, postage,
witness fees and other fees related to trials and hearings,
which are charged at cost or based on formulas that approximate
actual cost where the actual cost is not readily ascertainable.
Mr. Beldner asserts that Kronish Lieb members and associates:
(i) do not have any connection with the Debtors, the Debtors'
creditors, or any other party in interest, or their
respective attorneys and accountants, and
(ii) pursuant to Section 1103(b) of the Bankruptcy Code, do not
represent any other entity having an adverse interest in
connection with these cases.
Although Mr. Beldner admits that prior to April 2, 2002, Kronish
Lieb has represented various entities and parties in interest
related to the Debtors and their affiliates in matters
unconnected to these Chapter 11 cases. "Should occasion arise,
which is highly unlikely due to the focused and restricted
mandate of the Employee Committee promulgated by the U.S.
Trustee as to employment-related issues, where even a potential
conflict could arise, McClain, proposed co-counsel, will act for
the Employee Committee," Mr. Beldner explains. (Enron Bankruptcy
News, Issue No. 25; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
ENRON CORP: Employees' Committee Also Signs-Up McClain & Siegel
---------------------------------------------------------------
McClain & Siegel PC's experience and knowledge of the Bankruptcy
Code due to its representation of Enron Corporation and its
debtor-affiliates, creditors' committees, and individual
creditors in Chapter 11 cases prompted the Official Employment-
Related Issues Committee of Enron to retain the firm.
Richard Rathvon, co-Chair of the Employee Committee, explains
that McClain is the ideal partner for Kronish Lieb Weiner &
Hellman LLP. McClain is based in Houston, Texas where the
Debtors' day-to-day business and the bulk of their employees and
former employees are located. On the other hand, Kronish Lieb
will take care of New York, where the Debtors' Chapter 11 cases
are pending.
According to Mr. Rathvon, McClain and Kronish Lieb have clearly
defined duties and will coordinate their efforts to prevent any
duplication of services. Specifically, the Employee Committee
expects McClain to:
(a) Assist them in the investigation of claims uniquely held
by employees, as such, against the Debtors;
(b) Assist them in the investigation of the treatment of
employees' claims under any plan of reorganization or
liquidation;
(c) Assist them in the investigation of possible WARN Act
violations by the Debtors in discharging employees;
(d) Assisting them in the investigation of possible
violation by the Debtors of state labors laws;
(e) Assist them in the dissemination of non-confidential
information to employees, former employees, or groups
thereof;
(f) Assist, advise and represent them with respect to their
powers and duties under the Bankruptcy Code in
connection with these cases to accomplish the mandate
set forth by the United States Trustee in the Amended
Appointment of Employment-Related Issues Committee;
(g) Perform such other legal services as may be required and
in the interest of the Employee Committee of the
Debtors' estates, including the negotiation, preparation
and consummation of an effective disclosure statement
and plan of reorganization;
(h) Attend the meetings of the Employee Committee;
(i) Review financial and employee-related information
furnished by the Debtors and third parties to the
Employee Committee;
(j) Confer with the Debtors' management and counsel and the
Official Committee of Unsecured Creditors and various
employee groups regarding key employee retention plan
issues;
(k) Provide them with legal counsel with respect to the
employee-related issues specific to the laws of the
State of Texas in these cases; and
(l) Perform such other legal services that are in the
interest of the Employee Committee.
David P. McClain, President of McClain & Siegel PC, relates that
the Employee Committee has agreed to retain the firm in
accordance with its normal billing practices, including
reimbursement of actual and necessary expenses including, but
not limited to, postage, photocopying, messenger services, long
distance telephone charges, travel expenses, deposition fees and
filing fees incurred by McClain.
According to Mr. McClain, the firm periodically adjusts the fees
for professionals services rendered, usually on an annual basis.
"The adjustments are designed to take into account, among other
factors, changes in the marketplace as well as the experience of
the firm's professionals," Mr. McClain explains. The current
hourly rates for bankruptcy related services rendered by McClain
range from:
$300 to $400 shareholders
$150 to $275 associates
$60 to $145 legal assistants
"To the best of my knowledge, McClain does not represent or hold
any interest adverse to the Employee Committee, any of the
Debtors' known creditors or have any interest materially adverse
to the Debtors' estates," Mr. McClain assures the Court.
McClain is a disinterested person within the meaning of Section
101(14) of the Bankruptcy Code, Mr. McClain adds. (Enron
Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
ENRON CORP: Azurix Wins Noteholder Consents to Sell Wessex Water
----------------------------------------------------------------
Azurix Corp. has received tenders and consents from holders of
the required majorities of its 10-3/8 percent Series B Senior
Dollar Notes due 2007 and 10-3/4 percent Series B Senior Dollar
Notes due 2010 for the sale of Wessex Water Ltd. and other
matters in its pending tender offer and consent solicitation.
Azurix previously had announced it had received tenders and
consents from holders of the required majority of its 10-3/8
percent Series A and B Senior Sterling Notes due 2007 and
executed the related supplemental indenture with the trustee.
The required majorities of all three series of notes now have
consented to the Wessex sale.
Azurix intends to execute immediately supplemental indentures
for the Senior Dollar Notes with the trustee under the indenture
under which the notes were issued, at which time the tenders
will cease to be withdrawable and the consents will be
irrevocable. The supplemental indenture for the Senior Sterling
Notes already has been executed, and tenders of Senior Sterling
Notes continue to be non-withdrawable and the related consents
irrevocable.
Azurix also is extending the expiration of the tender offer and
consent solicitation from 5:00 p.m. New York time on Thursday,
May 16, 2002 to midnight New York time on Thursday, May 16,
2002. Holders of notes validly tendered at or before the
expiration of the expiration of the tender offer and consent
solicitation will be entitled to receive US$922.50 per US$1,000
principal amount in the case of Senior Dollar Notes and Pounds
Sterling 922.50 per Pounds Sterling 1,000 principal amount in
the case of Senior Sterling Notes. As of May 8, 2002, holders of
an aggregate principal amount of approximately US$109 million of
the Senior Dollar Notes due 2007, approximately Pounds Sterling
74 million of the 10-3/8 percent Senior Sterling Notes due 2007
and approximately US$97 million of the Senior Dollar Notes due
2010 had validly tendered and not withdrawn their notes pursuant
to Azurix's tender offer and consent solicitation.
Salomon Smith Barney is acting as dealer manager of the tender
offer and consent solicitation. Questions regarding the tender
offer and consent solicitation may be directed to Salomon Smith
Barney at 800/558-3745. An Offer to Purchase and Consent
Solicitation, dated April 1, 2002, and related Letter of
Transmittal and Consent describing the tender offer and consent
solicitation have been distributed to holders of notes. Requests
for additional copies of documentation can be made to Mellon
Investor Services at 866/293-6625.
Enron Corp.'s 9.125% bonds due 2003 (ENRON2), DebtTraders says,
are quoted at a price of 12.5. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON2
ENVIRO-RECOVERY: Shareholders Vote for New Board of Directors
-------------------------------------------------------------
On April 24, 2002, the stockholders of Enviro-Recovery, Inc.,
held a special meeting of the stockholders with the purposes of
removing the existing directors and electing new directors.
There are 101,016,803 shares of stock outstanding and entitled
to vote and there were 68,128,699 shares of stock represented at
the meeting by stockholders and proxies constituting a quorum.
With respect to Resolution I, the removal of existing directors,
67,967,566 shares of stock voted for the removal of the
directors, 159,533 voted against and 1600 abstained. The
resolution required the affirmative vote of a majority of the
shares of stock then entitled to vote and was approved.
With respect to Resolution II, the election of directors, the
shares of stock were voted as follows:
John K. Tull
- For: 67,828,880 Authority Withheld: 14,800
Jack Lowry
- For: 67,829,070 Authority Withheld: 13,700
David "Caz" Neitzke
- For: 67,824,301 Authority Withheld: 1,134,075
A plurality of the shares of stock represented at the meeting
was required to elect directors. The directors, as nominated,
were elected.
Enviro-Energy's creditors filed an involuntary Chapter 11
petition against the company on January 25, 2002 in the U.S.
Bankruptcy Court for the Western District of Wisconsin in Eau
Claire.
EXIDE TECH.: Gets Okay to Reject Unexpired Leases & Contracts
-------------------------------------------------------------
In connection with their efforts to reduce costs and formulate a
workable business plan centered on consolidated operations,
Christopher J. Lhulier, Esq., at Pachulski Stang Ziehl Young &
Jones P.C. in Wilmington, Delaware, relates that Exide
Technologies and its debtor-affiliates have evaluated certain
executory contracts and nonresidential real property leases in
the locations where the Debtors operate. The Debtors have
identified locations that are not in the Debtors ongoing
business plan and that will not be a part of their
restructuring. Likewise, the Debtors have identified contracts
that are not essential to the Debtors' business.
Accordingly, the Court authorizes the Debtors to reject un-
expired leases of nonresidential real property associated with
these locations:
Landlord Location
----------------------------------- ---------------------------
Port of Grays Harbor Aberdeen, Washington
TC Atlanta, Inc. Atlanta, Georgia
Manabal Auburn Hills LLC Auburn Hills, Michigan
Industrial Properties Inc. Austin, Texas
S&B Limited Bel Air, Maryland
Bloomfield Woodward Ave. Associates Bloomfield Hills, Michigan
Regency Holdings Decatur, Georgia
Lorentz-Marchand Trust Duluth, Minnesota
Commerce Square Development East Moline, Illinois
Svedala Industries Fyfe, Washington
J&P Investments Grand Rapids, Michigan
EB Ludwig Harahan, Louisiana
American National Bank Hickory, Illinois
Waterplace South Holland, Ohio
LF Jax Realty Corp. Jacksonville, Florida
Jacab & Phyllis Geraci Lafayette, Louisiana
A.W. Albany Las Vegas, Nevada
Alley Trust Medford, Oregon
Industrial Progress Park of Medina Medina, Ohio
L.H. Leasing Corp. Michigan City, Indiana
MKH Properties Monroe, Louisiana
Richard C. Simonson Phoenix, Arizona
R.S. Hoyt Jr. Family Trust Phoneix, Arizona
Earl F. Bates Portland, Oregon
First Industrial Realty Trust Romulus, Michigan
Major Defoe Springfield, Oregon
Robert O. Laird Tulsa, Oklahoma
Viking Corp. Worcester, Massachusetts
Buncher Management Company Youngwood, Pennsylvania
In connection with the rejection of leases, the Court also
authorizes the Debtors to reject these executory contracts:
Contracting Party Type of Contract
------------------------------ --------------------------------
Aida-Dayton Technologies Corp. Security Agreement
Ateilers Roche Purchase Agreement
Cominco Ltd. Purchase Agreement
Praxair Inc. Oxygen Supply Agreement
Quality Battery Systems Inc. Rep Agreement
Roush Motorsports Inc. Sponsorship Termination
Agreement
Kelvin R. Morano Severance Agreement
James M. Diasio Severance Agreement
Bernard Stewart Severance Agreement
BASS Inc. Sponsorship Agreement
Pace Global Energy Systems Energy Mgt. Agreement
Enemex Technical Assistance Technical Assistance & License
Golden State Transportation Drive Log Audit & Mgt. System
Mr. Lhulier informs the Court that the Debtors presently are
engaged in a restructuring and reconfiguration of their
business. The Debtors have evaluated each of the Rejected
Contracts and Leases and, in the exercise of their business
judgment, the Debtors have determined that the Rejected
Contracts and Leases are not useful for their ongoing
operations. Therefore, the Debtors seek to reject the Rejected
Contracts and Leases pursuant to Section 365(a) of the
Bankruptcy Code with such rejection to be effective as of the
Petition Date.
After reviewing and assessing the terms of the Rejected
Contracts and Leases, Mr. Lhulier states that the Debtors
determined that these agreements have little, if any, value to
the estates given the nature of the leases and contracts, the
remaining term of the leases and contracts, and in the case of
an un-expired lease, the markets in which the space is located.
Due in part to the continuing burden the Debtors face as a
result of the administrative expenses that might arise under the
Rejected Contracts and Leases, the Debtors have determined that
attempting to market and sell the leases or to assign the
contracts would be significantly more costly than any potential
value that might be realized by any future sale, assignment or
sublease.
Mr. Lhulier informs the Court that the Debtors will save
approximately $150,000 per month in contract and lease costs
that arise under the Rejected Contracts and Leases. The Debtors
may have claims against a contract counter-party or lessor
arising under, or independently of, any contract or lease
rejected hereby. The Debtors do not waive such claims by the
filing of this Motion or by the rejection of any such rejected
contract or lease.
Mr. Lhulier believes that the Debtors have no personal property
remaining at any of the real property locations covered by the
Rejected Contracts and Leases. To the extent the Debtors in fact
have any property at any of the locations, the Debtors will
remove such property or in the alternative seek authority to
abandon such property. (Exide Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
FLAG TELECOM: US Trustee Appoints Unsecured Creditors Committee
---------------------------------------------------------------
The United States Trustee appoints these creditors to serve on
the Official Committee of Unsecured Creditors of FLAG Telecom
Holdings Limited and its debtor-affiliates:
1. Alcatel Submarine Networks
c/o Proskauer Rose LLP
1585 Broadway
New York, New York 10036-8299
Attn: Michael E. Foreman, Esq.
Telephone (212) 969-3000
Fax (212) 969-2900
2. Lucent Technologies Inc.
600 Mountain Avenue
Murray Hill, New Jersey 07974
Counsel:
Lowenstein Sandler, P.C.
65 Livingston Avenue
Roseland, New Jersey 07068
Attn: Kenneth A. Rosen, Esq. and Robert D. Towey, Esq.
Telephone (973) 597-2500
Fax (973)597-4200
3. HSBC Bank USA
452 Fifth Avenue
New York, New York 10018
Attn: Robert A. Conrad, Vice President
Telephone (212) 525-1314
Fax (212) 525-1366
Counsel:
Reed Smith, LLP
375 Park Avenue, 17" Floor
New York, New York 10152
Attn: Deborah A. Reperowitz, Esq.
Telephone (212) 521-5400
Fax (212)521-5550
4. The Bank of New York
5 Penn Plaza, 13th Floor
New York, New York 10001
Attn: Gerard Facendola, Vice President
Telephone (212) 896-7224
Fax (212)328-7302
Counsel:
Bryan Cave, LLP
245 Park Avenue
New York, New York 10167
Attn: Heidi Sorvino, Esq.
Telephone (212) 692-1803
Fax (212)692-1900
5. Cerberus Capital Management, L.P.
450 Park Avenue, 28th Floor
New York, New York 10022
Attn: Scott Cohen, Managing Director
6. Elliott Management Corp.
712 Fifth Avenue
New York, New York 10019
Attn: Norbert Lou, Portfolio Manager
Telephone (212) 506-2999
Fax (212)586-9429
Counsel:
Kasowitz Benson Torres & Friedman, LLP
1633 Broadway
New York, N.Y. 10019-6799
Attn: David Rosner, Esq.
Telephone (212) 506-1726
7. Varde Partners, Inc.
3600 West 80th Street, Suite 425
Minneapolis, MN 55431
Attn: Jeremy D. Hedberg, Vice President
Telephone (952) 893-3124
Fax (952) 893-9613
Counsel:
Kasowitz, Benson Torres & Friedman, LLP
Attn: David Rosner, Esq.
1633 Broadway
New York, N.Y. 10019-6799
Telephone (2120 506-1700
8. PPM America
225 W. Wacker
Chicago, IL 60606
Attn: James Schaeffer, Assistant Vice President
Telephone (312) 634-2576
Fax (312) 634-0728
9. Pacific Investment Management Company, LLC, a.k.a. PIMPCO
840 Newport Center Drive, Suite 300
Newport Beach, CA 92660
Attn: Raymond Kennedy and David Behenna
Telephone (949) 720-6378
Fax (310) 265-1301
(Flag Telecom Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FRANK'S NURSERY: Maryland Court Confirms 2nd Amended Joint Plan
---------------------------------------------------------------
Frank's Nursery & Crafts, Inc. and FNC Holdings Inc., announced
that, at their confirmation hearing held on May 7, 2002, the
U.S. Bankruptcy Court for the District of Maryland, Baltimore
Division confirmed the Company's Second Amended Joint Plan of
Reorganization. A complete copy of the Plan will be filed by the
Company with the Securities and Exchange Commission as an
Exhibit to the Form 8-K on or before May 22, 2002.
The Plan sets forth the treatment for prepetition creditors and
equity holders. The Plan provides for issuance of the common
stock of the reorganized company, Frank's Nursery & Crafts,
Inc., in settlement of the claims of the unsecured creditors
entitled to receive such distribution under the Plan. The
unsecured creditors approved the Plan with 98% of the amount of
claims voted, voting favorably for approval of the Plan.
Settlements were reached with all of the Company's mortgagees,
which are detailed in the Plan. Current equity holders will
receive warrants to purchase shares representing 3% of the
reorganized Company for a premium of 20% over the ascribed value
of $1.15 per share. Their currently outstanding common stock
will be cancelled.
The Effective Date of the Plan will be the date on which all of
the conditions precedent to the Effective Date, as described in
the Plan, have been met. While there can be no assurances, the
Company anticipates that the Effective Date will occur on May
20, 2002.
Frank's Nursery & Crafts, Inc. currently operates 170 stores in
fourteen states and is the largest United State chain (as
measured by sales) of specialty retail stores devoted to the
sale of lawn and garden products. Frank's is also a leading
retailer of Christmas trim-a-tree merchandise, artificial
flowers and arrangements, garden and floral crafts, and home
decorative products.
Frank's Chief Executive Officer Steve Fishman commented, "We
worked very hard to develop a plan that was acceptable to our
bondholders, vendors, and mortgagees. I am pleased with the
support we received from both our associates and our creditors
in getting us to this point. We now begin a new era in
recrafting Frank's future."
GLOBAL CROSSING: Look for Schedules & Statements on May 31
----------------------------------------------------------
Global Crossing Ltd., and its debtor-affiliates ask the Court to
extend the deadline to file their schedules of assets and
liabilities, statements of financial affairs, and schedules of
executory contracts and un-expired leases through and including
May 31, 2002, without prejudice to their right to seek an
additional extension or extensions, for cause shown.
Harvey R. Miller, Esq., at Weil Gotshal & Manges LLP in New
York, New York, tells the Court that the Debtors' Chapter 11
cases are large and complex, involving 56 Debtors located
throughout the world, approximately 35,000 creditors, and
approximately $15,000,000,000 of invested capital. The global
nature of the Debtors' businesses adds an additional layer of
complexity, as does the overlay of coincident extraterritorial
proceedings involving the Bermuda Group and the appointment of
the JPLs.
Since the Commencement Date, Mr. Miller submits that the
Debtors' management has expended substantial efforts responding
to the many exigencies and other matters that are incident to
the commencement of any Chapter 11 case, but which are
compounded by the sheer size and complexity of these cases. The
Debtors have had to, among other things, stabilize their
businesses, negotiate with potential investors, respond to
approximately 400 requests for adequate assurance pursuant to
Section 366 of the Bankruptcy Code, identify and commence the
sale of assets that are no longer economically beneficial to the
estates, maintain current services necessary to the operation of
their businesses, conduct meetings with numerous vendors with
respect to continuing pre-petition business relationships,
commence additional Chapter 11 cases by one of the Debtors'
affiliates, and attend to pressing matters involving certain
individual creditors. Moreover, the Debtors' ability to confront
the various exigencies incidental to their Chapter 11 cases has
been affected by a workforce reduction of nearly 2,000 personnel
since the Commencement Date.
Mr. Miller states that the Debtors have worked diligently to
prepare their lists of equity security holders, schedules of
assets and liabilities, statements of financial affairs, and
schedules of executory contracts and un-expired leases. Despite
the demands of the Chapter 11 cases, the Debtors have mobilized
between 50 and 100 employees who, in addition to their other
duties, are working in the Schedules preparation process.
Nonetheless, many of the employees who have left the Debtors
since the Commencement Date possessed the information needed to
prepare the Schedules. As a result, personnel who are relatively
unfamiliar with the books and records have filled those
vacancies, causing some unavoidable delay in the process.
Mr. Miller informs the Court that Arthur Andersen LLP, retained
by the Debtors as Auditors and Accounting, Tax and Financial
Advisors, is assisting the Debtors in the preparation of the
Schedules. In addition, the Debtors have retained Robert L.
Berger & Associates LLC to provide specialized assistance in the
preparation of the Schedules. Approximately 10 Andersen
employees have worked with the Debtors on the preparation of the
Schedules, together with the Debtors' management and employees
as needed. Berger had six people assisting the Debtors in
formatting and finalizing the Schedules.
According to Mr. Miller, the Debtors' employees working on the
Schedules and their professionals have communicated frequently
to gather the requisite information and address the issues
related to preparing the Schedules. Although much progress has
been made, for the reasons set forth above, the Debtors require
additional time to complete the Schedules beyond the current May
13, 2002 deadline. After consulting with their professionals and
the various employee teams assigned to the task of preparing the
Schedules, the Debtors believe that a 18-day extension of the
May 13, 2002 deadline, to and including May 31, 2002 should
provide sufficient time to finish preparing and reviewing the
Schedules.
A hearing on the motion will be held on May 13, 2002. (Global
Crossing Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
GLOBAL CROSSING: Expects Q1 Consolidated Revenue of $788 Million
----------------------------------------------------------------
Global Crossing Continues Streamlining, Cost Reductions, and
Operational Turn-Around; First Quarter Preliminary Performance
on Target
Global Crossing, which earlier this year announced plans to
streamline operations, reduce costs and optimize cash as part of
a turn-around strategy, released an update on business
performance as part of its continued restructuring efforts.
"On March 8th, we released information describing our plans to
restructure and streamline our business operations," said John
Legere, chief executive of Global Crossing. "As part of this
turn-around strategy we made a commitment to keep our customers,
employees and the business community updated on the state of our
business. We continue to fulfill that commitment, and are
pleased to report [Wednes]day that Global Crossing's overall
performance for the first quarter of 2002 was well in line with
the goals contained in the operating plan that we had previously
presented to our creditors. We said we would aggressively
restructure costs and cash management and we did so -- without
compromising service or quality."
For continuing operations in the first quarter of 2002, Global
Crossing expects to report consolidated revenue of approximately
$788 million, including service revenue of approximately $754
million. Excluding Asia Global Crossing and reflecting certain
eliminations and adjustments, these amounts were approximately
$768 million for revenue and $736 million for service revenue.
Figures from continuing operations exclude Global Marine.
In addition, Global Crossing expects to report a cash balance as
of March 31, 2002 of approximately $894 million which includes
$485 million unrestricted cash, $335 million restricted cash and
$74 million from Global Marine. This number excludes $350
million of Asia Global Crossing cash. These cash balance amounts
represent preliminary Generally Accepted Accounting Principles
(GAAP) book balances as of March 31, 2002.
Tuesday, Global Crossing filed its Monthly Operating Report for
the month ended March 31, 2002 with the United States Bankruptcy
Court for the Southern District of New York. In addition, the
MOR will be attached as an exhibit to a Current Report on Form
8-K that will be filed with the United States Securities and
Exchange Commission.
Status Of Reorganization
Global Crossing continues to work with creditors and potential
investors to develop a plan of reorganization to be filed with
the Bankruptcy Court to restructure approximately $8 billion of
claims against those Global Crossing companies that filed for
chapter 11 protection. More than sixty potential new investors
have expressed interest. Global Crossing does not expect that
any plan of reorganization, if and when approved by the
Bankruptcy Court, would include a capital structure in which
existing common or preferred equity would retain any value.
Retaining Customers, Winning New Contracts
During the quarter, Global Crossing's resources and personnel
were primarily focused on ensuring that existing customers were
satisfied and continued to turn to Global Crossing for
additional services.
In addition to maintaining a steady base of existing customer
business, Global Crossing signed approximately 475 new service
agreements during the period, including both renewals and new
business. Included are Convergia, a new carrier customer
announced earlier this week, and FAPESP, the largest research
network in Brazil, which chose Global Crossing to provide an
ExpressRoute IP-VPN solution between Brazil and the United
States. Global Crossing also announced during the quarter
network service agreements with Agnostic Media, Club Med,
Washingtonpost-Newsweek Interactive, Jabil, NBC News Channel,
DANTE, Nextel Argentina, and ABZ Ingenieros. Global Crossing
also signed renewal contracts during the quarter with Techtel,
Radiant, OPEX and CNBC Europe.
"In a very difficult market and during a very challenging time
for Global Crossing, our sales teams and sales support personnel
kept their focus on ensuring that our existing customers were
well served and satisfied," noted Mr. Legere. "This effort paid
off in our low customer turn-over rate and high number of
renewed contracts. As we predicted, new sales slowed on a
relative basis during our restructuring effort; however, we are
very pleased to have signed up some valuable new customers. We
appreciate the support of our customers, existing and new, and
would like to publicly thank our employees who have worked so
diligently to ensure customer satisfaction."
Network Performance, Product Performance
Yesterday, Global Crossing announced that traffic on its global
voice network surpassed 4 billion minutes per month on average
during the first quarter. Nearly 25% of those minutes were
packet-based Voice Over IP (VoIP) calls on what is believed to
be the world's most extensive commercial VoIP network. This
represented approximately 40% growth compared to the previous
quarter with over 900 million VoIP minutes logged in March.
Yesterday, Global Crossing also released results from Atlantic
ACM's Annual "2002 Wholesale Carrier Report Card" survey. The
telecommunication analyst firm's annual survey asked six hundred
wholesale customers to rate carriers on billing, provisioning,
network, customer service, products, and pricing for 2001.
Global Crossing's scores displayed a dramatic, 31% year over
year improvement in network availability, a category that
includes both geographic reach and available capacity.
Wednesday Global Crossing announced that the IP network Global
Crossing provides to one of its customers -- SurfNet based in
the United Kingdom -- was named the world's fastest by
Internet2, a not-for-profit consortium being led by over 190
universities working in partnership with industry and government
to develop and deploy advanced network applications and
technologies.
Global Crossing's sub-sea and terrestrial transport, data and
voice network performance remained at peak levels throughout the
first quarter, with network availability running consistently
above the 99.99% mark.
"Far from standing still during this period, our dedicated
employees have enabled us to restructure without compromising
our service levels and network performance -- in fact, service
and quality have continually improved during this period," said
Mr. Legere. "In particular, we were extremely pleased to see the
growth in VoIP usage as we continue to convert those 4 billion
minutes per month into an increasing percentage of VoIP minutes.
The convergence of voice, data and video into streamlined data
applications over a unified protocol illustrates the true
potential of our global fiber optic network. The record we broke
in March was an exciting milestone for Global Crossing."
Global Crossing also noted that several product enhancements
were launched during the first quarter. Enhancements included:
-- FreeIPdb, a free software tool that can help manage and
assign Internet Protocol (IP) address space to customers more
efficiently;
-- Direct Dial Services, an enhanced voice service that
delivers high-quality international and national long distance
voice connections to 240 countries over Global Crossing's secure
fiber optic network; and,
-- IP Origination, which provides wholesale customers with
an IP-to-IP interface for voice services via access to Global
Crossing's Voice over IP (VoIP) network.
In addition, Global Crossing expanded two services into new
regions:
-- Carrier Outbound Services, which provides complete
global termination capabilities for facilities-based carriers to
more than 450 destinations, was introduced in Latin America;
and,
-- Ready-Access Global 800 Service expanded its toll-free
reservationless audio conferencing offering to more than 60
countries worldwide.
Operational Improvements, Significant Cost Reductions
Global Crossing implemented several efficiency measures during
the first quarter of 2002, including voluntary and involuntary
layoffs totaling approximately 2,000 employees, real estate
consolidations, and process improvements. These initiatives are
expected to enable Global Crossing to cut operating expenses
(excluding Asia Global Crossing) by 42 percent to approximately
$900 million in 2002, as compared to $1,550 million reported in
2001. Global Crossing forecasts the annual run-rate for
operating expense to come in at $720 million by the end of 2002.
Office consolidations alone are estimated to save Global
Crossing over $100 million in 2002. Total costs in 2001 ran over
$300 million. By the end of March 2002, 181 offices had been
closed; 217 offices are expected close by year-end, effecting
ongoing annualized savings of approximately $121 million.
"These cost-cutting initiatives are part of an effort to
streamline business operations that will prove important as
Global Crossing emerges at the end of the restructuring process
as a lean, healthy, globally competitive data communications
provider. We were able to reduce operating costs significantly
during the first quarter, although the choices were often
difficult," explained Mr. Legere. "We realize this has been a
painful time for former employees, and a challenging time for
those employees who remain in place and continue to work harder
than ever to turn our business around."
"Global Crossing is leading the way for recovery in the
telecommunications sector," concluded Mr. Legere. "By focusing
on our customers, concentrating on our service offerings, and
carefully controlling our costs, we're building a formidable
operation in preparation for our successful restructuring."
Board Of Directors Update
Global Crossing announced that Joseph P. Clayton has resigned
from its board of directors due to the demands of his other
professional responsibilities. On April 8, 2002 Global Crossing
announced three new board members:
-- Alice T. Kane, a consultant for investment banking firm
Blaylock & Partners, L.P. and former chairman and president of
three mutual fund and variable annuity businesses within
American International Group;
-- Jeremiah D. Lambert, formerly a senior partner with the
law firm of Shook, Hardy & Bacon L.L.P.; and
-- Myron E. "Mike" Ullman, III, a former director general
of LVMH and former chairman of the Board of DeBeers LV.
Notes
The estimates of revenue, service revenue and cash balances are
preliminary and unaudited and have not been reviewed by Global
Crossing's independent public accountants. On April 2, 2002
Global Crossing announced that the filing with the SEC of its
2001 Annual Report on Form 10-K would be delayed pending
investigations by a special committee of its board of directors,
by the SEC and by the U.S. Attorney's Office for the Central
District of California into allegations regarding Global
Crossing's accounting and financial reporting practices made by
a former employee. Among these allegations are claims that
Global Crossing's accounting for purchases and sales of fiber
optic capacity and services with its carrier customers has not
complied with GAAP. Until it prepares its 2001 financial
statements, completes the related Form 10-K disclosures and
receives an audit report, Global Crossing will be unable to file
its 2001 Annual Report on Form 10-K or to file subsequent
quarterly reports on Form 10-Q.
"Service revenue" refers to Revenue less (i) revenue recognized
immediately for circuit activations that qualified as sales-type
leases and (ii) revenue recognized due to the amortization of
IRUs sold in prior periods and not recognized as sales-type
leases.
Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network, which reaches
27 countries and more than 200 major cities around the globe.
Global Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services. Global Crossing operates throughout the Americas and
Europe, and provides services in Asia through its subsidiary,
Asia Global Crossing.
On January 28, 2002, Global Crossing and certain of its
affiliates (excluding Asia Global Crossing and its subsidiaries)
commenced Chapter 11 cases in the United States Bankruptcy Court
for the Southern District of New York and coordinated
proceedings in the Supreme Court of Bermuda. On the same date,
the Bermuda Court granted an order appointing joint provisional
liquidators with the power to oversee the continuation and
reorganization of the Bermuda-incorporated companies' businesses
under the control of their boards of directors and under the
supervision of the U.S. Bankruptcy Court and the Supreme Court
of Bermuda. On April 23, 2002, Global Crossing commenced a
Chapter 11 case in the United States Bankruptcy Court for the
Southern District of New York for its affiliate, GT UK, Ltd.
Please visit http://www.globalcrossing.comor
http://www.asiaglobalcrossing.comfor more information about
Global Crossing and Asia Global Crossing.
DebtTraders reports that Global Crossing Holdings Ltd.'s 9.625%
bonds due 2008 (GBLX3) are currently being traded at about 2.25.
See http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX3for
real-time bond pricing.
GOLDMAN INDUSTRIAL: US Trustee Appoints Creditors Committee
-----------------------------------------------------------
The United States Trustee appoints these five creditors to serve
on the Unsecured Creditors' Committee on the Chapter 11 cases of
Goldman Industrial Group, Inc. and its debtor-affiliates:
1. Computer Express, L.L.C.
Attn: Michael Psillas, 155 John Downey Drive
New Britain, CT 06052
Phone: (860) 826-1310, Fax: (860) 826-1320;
2. Eastern Bearings, Inc.
Attn: Seymour N. Schwartz, 158 Lexington Street
Waltham, MA 02452
Phone: (781) 899-3952, Fax: (781) 647-2476;
3. Machine Tool Source, Inc.
Attn: John Alan Kuieck, 769 Stoney Ridge Court
Caledonia, MI 49316
Phone: (616) 877-0301, Fax: (616) 877-0307;
4. Linford E. Stiles Associates
Attn: Linford E. Stiles, 46 Newport Road, Suite 208
New London, NH 03257
Phone: (603) 526-6566, Fax: (603) 526-6185; and
5. Industrias Romi S.A., c/o Miller Canfiled
Paddock & Stone, Attn: Michael H. Traison, Esquire
150 West Jefferson, Suite 2500
Detroit, MI 48226
Phone: (313) 963-6420, Fax: (313) 496-7500.
Goldman Industrial Group, Inc., with its affiliates, provide
metalworking machinery to manufacturers; marketing and selling
original equipment primarily to the aerospace, automotive,
computer, defense, medical, farm, construction, energy,
transportation and appliance industries. The Company filed for
chapter 11 protection on February 14, 2002. Victoria W.
Counihan at Greenberg Traurig, LLP represents the Debtors in
their restructuring efforts.
IT GROUP: Committee Wins Nod to Hire Chanin Capital as Advisors
---------------------------------------------------------------
The Official Committee of Unsecured Creditors in the chapter 11
cases of The IT Group, Inc., and its debtor-affiliates obtained
Court authority to employ and retain Chanin Capital Partners,
LLC as its financial advisor.
Chanin Capital Partners is expected to:
A. review the Debtors' business operations including historical
financial results and future projections and assist the
Committee in assessing the Debtors' business, operating and
financial strategies;
B. review and evaluate the Debtors' ongoing asset ales efforts,
any chapter 11 plan filed by the Debtors and the proposed
distributions to the classes of claimants under the
Debtors' plan;
C. analyze and value the securities and other assets to be
distributed to each class of claimants under the Debtors'
plan including the estimated trading value of any such
securities;
D. assist the Committee in negotiating the terms of the Debtors'
plan including, as may be necessary, developing,
evaluating, proposing and negotiating alternatives to the
plan;
E. advise the Committee with respect to strategic options
available with respect to the Debtors' business operations
and assets;
F. analyze the financial and economic rights and interest in
relation to inter-creditor issues regarding the Debtors'
various claimants and the rights and obligations of other
constituents in connection with the Debtors' estates;
G. advise the Committee with respect to the exclusive sale or
disposition of assets and the raising of capital, including
DIP financing; and,
H. render such other financial advisory and investment banking
services as may be agreed upon by Chanin and the Committee
in connection with the foregoing.
Chanin agrees to perform these services in exchange for a
$150,000 monthly fee plus monthly reimbursement of the actual
and necessary expenses that the firm incurs in connection with
its services. (IT Group Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ITC DELTACOM: Pursuing Options to Ease Liquidity Strain
-------------------------------------------------------
In April 2002, ITC DeltaCom, Inc. issued a draw down notice to
the investors under its investment agreement dated February 27,
2001, as amended, with ITC Holding Company, Inc., SCANA
Corporation and HBK Master Fund L.P. stating that the Company
had exercised its right to require the investors to purchase
additional securities from the Company under the agreement. The
investment agreement provides that the Company may require the
investors to purchase the Company's Series B cumulative
convertible preferred stock and related common stock purchase
warrants in a series of closings on or before June 20, 2002 for
a total purchase price of up o $150 million. As previously
reported, the obligation of the investors to purchase these
securities at any closing is subject to the Company's compliance
with closing conditions specified in the investment agreement.
The investors have purchased securities in two prior closings
for a total purchase price of $70 million pursuant to the
investment agreement. The Company has received written notice
from the investors asserting that the investors are not
obligated to purchase additional securities at a third closing
in accordance with the Company's April 2002 draw down notice
because the Company allegedly has failed to satisfy certain
closing conditions. The Company has advised the investors that
it is reviewing its rights and remedies under and with respect
to the investment agreement.
The Company indicates that it is continuing actively to pursue
various alternatives to alleviate the significant constraints on
its liquidity. These alternatives include seeking to raise
additional equity capital and pursuing a potential restructuring
in which holders of the Company's public senior notes and
convertible subordinated notes would exchange their notes for
equity securities or for a combination of equity securities and
cash. The Company has been engaged in discussions and has begun
negotiations regarding a potential restructuring with a
committee representing holders of a significant amount of the
senior notes and with the financial advisor engaged by the
committee to assist it in this process. The Company stated in a
press release it issued on April 18, 2002 that it will provide
additional information about its restructuring efforts in a
conference call to be held on or before May 15, 2002.
An Integrated Telephone Company, ITC DeltaCom Is Taking on the
Competition. The competitive local-exchange carrier (CLEC)
provides telecommunications services to more than 14,000
business customers and operates some 283,000 access lines in
nine southern US states. It also wholesales long-distance
services to other carriers (including AT&T, WorldCom, and
Sprint) through its roughly 9,700 mile regional fiber-optic
network. The firm owns about 5,900 miles of the network and
manages the rest, which is owned by Duke Power, FPL, and
Entergy. Retail services include local and long-distance voice,
data-network services, and Internet access; subsidiary
e^deltacom provides Web hosting and server colocation.
INTELLICORP: Shareholders Approve 1-for-10 Reverse Stock Split
--------------------------------------------------------------
IntelliCorp, Inc. (OTCBB:INAI), a leading provider of consulting
services, business process oriented solutions and software
focused on the SAP(TM) R3(R) suite, announced approval of the
two proposals presented for vote by its shareholders at the
Special Meeting of Shareholders on April 30, 2002.
"The two proposals were approved by our shareholders. The first
proposal was to authorize the directors 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. This proposal
was originally an effort to maintain our then-current NASDAQ
listing. As previously announced on April 11, 2002, IntelliCorp
was delisted from the Nasdaq Stock Market and is currently
trading on the Over-the-Counter Bulletin Board (OTCBB). The
Board of Directors will continue to evaluate the timing and
necessity for the reverse split. However, it does not appear to
be warranted in the near future. The second proposal was to
approve the issuance of shares of common stock to repay certain
notes payable and accrued interest thereon," said Jerry Klajbor,
Vice President and Chief Financial Officer of IntelliCorp.
IntelliCorp is a leading solutions and services firm focused on
the optimization of key business processes across the entire
enterprise requiring extensive technical integration and
business process expertise. Today's challenging business climate
requires the tight integration of front-office processes with
back-office systems to reduce cost and improve operational
efficiencies, while increasing customer satisfaction and
retention. IntelliCorp has deep capability and experience with
SAP R3, MySAP.com, Siebel eBusiness Applications, and a number
of other dominant software suites and components. In addition,
IntelliCorp offers a suite of software solutions, tools, and
applications for business process management and support of the
integration and management of SAP's back office systems.
Headquartered in Mountain View, CA, the company has offices
across the United States and throughout Europe. IntelliCorp's
Web site is http://www.intellicorp.com
INTEGRATED HEALTH: Felser Has Until May 20 to File Claims
---------------------------------------------------------
Upon the request of Jay M. Felser and Felser Health Ventures,
Inc., with the consent of Integrated Health Services, Inc. and
its debtor-affiliates, the Court has authorized that the Bar
Date for the movants to file a proof or proofs of claim against
any one or more of the Debtors is extended until May 20, 2002
without prejudice for Felser's right to request for a further
extension and the Debtors' right to object to any further
extension of the Bar Date. (Integrated Health Bankruptcy News,
Issue No. 35; Bankruptcy Creditors' Service, Inc., 609/392-0900)
INTERLIANT INC: Annual Shareholders' Meeting Set for June 13
------------------------------------------------------------
The Annual Meeting of Stockholders of Interliant, Inc. will be
held in the Seminar Room, 4th floor, at the USTA Building, 70
West Red Oak Lane, White Plains, New York on June 13, 2002, at
10:00 a.m. Eastern time for the following purposes:
1. To elect ten directors;
2. To approve the issuance of 93,468,580 shares of
Interliant's common stock upon conversion of 10% Convertible
Subordinated Notes of Interliant due 2005 and upon exercise of
warrants which may be issued to parties that purchase such New
Notes including, without limitation, harterhouse Equity Partners
III L.P. and Mobius Technology Ventures VI L.P. and its related
funds;
3. To approve an amendment to Interliant's Amended
Certificate of Incorporation to increase the number of
authorized shares of Interliant's common stock from 250,000,000
shares to 500,000,000 shares;
4. To approve a series of amendments to Interliant's
Amended Certificate of Incorporation to effect, at any time
prior to the 2003 Annual Meeting of Stockholders, a reverse
stock split of the Company's common stock whereby each
outstanding 5, 7, 10, 12, 15, 18 or 20 shares would be combined,
converted and changed into one share of common stock, with the
effectiveness of one of such amendments and the abandonment of
the other amendments, or the abandonment of all amendments as
permitted under Section 242(c) of the Delaware General
Corporation Law, to be determined by the Company's Board of
Directors;
5. To approve and ratify the appointment of Ernst & Young
LLP as Interliant's independent auditors for the fiscal year
ending December 31, 2002; and
6. To transact such other business, if any, as may
properly come before the Annual Meeting or any adjournment
thereof.
Stockholders of record at the close of business on April 26,
2002 are entitled to receive notice of, and to vote at, the
Annual Meeting.
Interliant, Inc. (Nasdaq:INIT) is a leading global application
service provider (ASP) and pioneer in the ASP market.
Interliant's INIT Solutions Suite includes managed messaging,
managed hosting, security, Web hosting (branded solutions, OEM
and private label), and professional services. At December 31,
2001, the company reported an upside-down balance sheet, showing
a total shareholders' equity deficit of about $75 million.
KAISER ALUMINUM: Gets Approval to Hire MWW Group as PR Advisors
---------------------------------------------------------------
Kaiser Aluminum Corporation, and its debtor-affiliates secured
authority from the Court to employ and retain The MWW Group as
their corporate communication consultant in these chapter 11
cases.
Among other things, MWW will:
A. Develop and implement communications programs and related
strategies and initiatives for communications with the
Debtors' key constituencies including customers, employees,
vendors, shareholders, bondholders and the media regarding
the Debtors' operations and financial performance and the
Debtor' progress through the chapter 11 process;
B. Develop public relations initiatives for the Debtors to
maintain public confidence and internal morale during these
chapter 11 cases;
C. prepare press releases and other public statements for the
Debtors, including statements relating to major chapter 11
events;
D. Prepare other forms of communication o the Debtors' key
constituencies and the media, potentially including
materials to be posted on the Debtors' websites; and,
E. Perform such other communications consulting services as may
be requested by the Debtors.
The Debtors agree to pay MWW at its customary hourly rates:
Professional Hourly Rate
----------------- -------------
Michael Kemper $500
Carreen Winters $400
Richard Tauberman $300
Jamie Schwartz $250
As previously reported, the Debtors made prepetition payments to
the firm. On January 10, 2002, January 25, 2002 and February 7,
2002, the Debtors made three payments to MWW in the aggregate
amount of $250,000, for the services rendered or to be rendered
and expenses incurred or to be incurred on behalf of the
Debtors. The firm has applied $190,446.71 of the payments to
prepetition billings and $59,553.29 of the payment will be held
by the firm as a postpetition retainer. Other than these
payments, the firm has not received other payments form the
Debtors in connection with the Debtors' bankruptcy cases.
(Kaiser Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
KMART CORPORATION: Says KeyBank Has No Basis to Seek Stay Relief
----------------------------------------------------------------
According to J. Eric Ivester, Esq., at Skadden, Arps, Slate,
Meagher & Flom, in Chicago, Illinois, representing Kmart
Corporation and its debtor-affiliates, there are several reasons
why KeyBank should be denied:
-- KeyBank is adequately protected, so these is no basis to
grant relief from the automatic stay;
-- KeyBank's motion is not timely, having been brought over 60
days after KeyBank froze the Debtors' accounts; and
-- the equities do not favor KeyBank's attempt to obtain the
funds in the accounts.
"Assuming arguendo that KeyBank holds a valid setoff right,
KeyBank constitutes a secured creditor," Mr. Ivester notes. The
Debtors contend that the extent and validity of KeyBank's
asserted setoff rights need not be finally adjudicated at this
time. Moreover, Mr. Ivester asserts, the automatic stay need
not be modified to authorize KeyBank to effectuate a setoff, nor
should the Debtors be further constrained from utilizing the
funds in the Accounts, because KeyBank is adequately protected
by a replacement lien that the Debtors proposed to grant to
KeyBank on substantially all their assets.
In addition, Mr. Ivester says, it would be unequitable and
unfair for KeyBank to benefit from setting off the funds of the
Debtors when other creditors who continued to support the
Debtors, including numerous other banks that held deposits of
approximately $110,000,000 as of the Petition Date, are left
with general unsecured claims.
Thus, the Debtors ask the Court to deny KeyBank's motion. (Kmart
Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
KMART CORPORATION: Rejects Consulting Services Pact with DBS
------------------------------------------------------------
Kmart Corporation and its debtor-affiliates sought and obtained
Court's authority to reject the Consulting Services Agreement
dated October 12, 1998 with Diversified Business Solutions Inc.,
effective as of April 1, 2002.
Mark A. McDermott, Esq., at Skadden, Arps, Slate, Meagher &
Flom, in Chicago, Illinois, tells the Court that Kmart had been
doing business with DBS since October 1998. During that time,
Mr. McDermott recounts that DBS performed a variety of services
for Kmart. For example, Mr. McDermott illustrates, DBS supplied
contract employees to assist Kmart in its information technology
department and its human resource and benefits group.
Specifically, Mr. McDermott says, DBS was working with accounts
payable on certain general ledger projects. According to Mr.
McDermott, Kmart was paying DBS $130,000 a month for its
services.
But since the Debtors filed for bankruptcy, Mr. McDermott
relates that DBS began to remove its employees from Kmart. By
March 2002, Mr. McDermott says, DBS stopped performing services
for Kmart. Initially, Mr. McDermott explains, Kmart asked DBS
to return to work. "But the Debtors later concluded that DBS'
services were no longer needed on an ongoing basis and decided
to terminate the relationship," Mr. McDermott notes. Kmart
informed DBS of this decision on April 1, 2002.
Mr. McDermott indicates that the rejection of the Agreement is
warranted because each of the projects that DBS employees were
working on has been successfully transitioned to Kmart
employees. (Kmart Bankruptcy News, Issue No. 19; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LDM TECH: S&P Junks Corp. Credit Rating Following Exchange Offer
----------------------------------------------------------------
On May 8, 2002, Standard & Poor's lowered its corporate credit
rating on LDM Technologies Inc. to double-'C' from single-'B'-
minus and lowered its subordinated debt rating on the company to
single-'C' from triple-'C'. The corporate credit and
subordinated debt ratings were placed on CreditWatch with
negative implications. Standard & Poor's affirmed its single-
'B'-minus senior secured rating on the company, which was not
placed on CreditWatch.
The rating actions follow LDM's commencement of an offer to
exchange $700 principal amount of new 10.75% senior notes due
2007 for each $1,000 principal amount of its existing 10.75%
senior subordinated notes due 2007. The exchange offer
represents a deep discount to the face value of the existing
notes, which Standard & Poor's considers tantamount to a
default.
If the exchange offer is completed, the corporate credit rating
will be lowered to 'SD' and the subordinated debt rating will be
lowered to 'D'. Subsequently, the corporate credit rating will
be raised back to single-'B'-minus, reflecting the company's
somewhat reduced, but still heavy, debt burden. The new senior
notes will be rated triple-'C'-plus, reflecting their higher
priority in the company's capital structure.
LDM, a manufacturer of automotive interior, exterior, and under-
the-hood components, has reported weak financial results during
the past year due to reduced automotive production, intense
pricing pressure, and the costs associated with a new facility
launch. Although successful completion of the exchange offer
will modestly improve cash flow by reducing debt service
requirements, LDM's liquidity will remain constrained, with only
$18 million available under a revolving credit facility as of
March 31, 2002. The company's debt maturity schedule is onerous,
at about $8.5 million per year for the next two years, and
financial covenant compliance will remain tight.
Ratings List: To: From:
Ratings Lowered, Placed on CreditWatch Negative
LDM Technologies Inc.
* Corporate credit rating CC B-
* Subordinated debt rating C CCC
Rating Affirmed
LDM Technologies Inc.
* Senior Secured debt rating B-
LTV CORP: Pays GECC $530,000 to Extend DIP Financing Commitment
---------------------------------------------------------------
The Copperweld Corporation and Welded Tube Holdings, Inc., and
each of their debtor-subsidiaries, ask Judge Bodoh to authorize
them to pay an additional commitment fee in order to secure an
extension of GE Capital's commitment to provide a DIP financing
facility.
In February 2002, Judge Bodoh approved the payment of a
commitment fee in the amount of $530,000 to GE Capital under a
commitment letter to secure postpetition financing for the
Copperweld Debtors. The letter provides for a commitment to
fund up to $300 million for working capital and capital
expenditures and rollover and refinance certain existing loan
facilities.
Since the approval of the payment of the commitment fee, the
Copperweld Debtors and GE Capital have worked together to
resolve the remaining obstacles to closing the Copperweld DIP
Facility. In the interim, however, the deadline to close the
Copperweld Facility provided in the commitment letter passed.
In light of the progress made in resolving outstanding issues
surrounding the Copperweld DIP Facility, GE Capital has agreed
to extent the commitment to May 3 2002. In consideration of
this extension, the Copperweld Debtors have agreed to pay GE
Capital an additional commitment fee of $530,000, subject to
Judge Bodoh's approval. As with the original commitment fee,
the additional commitment fee will be credited to the closing
fees for the Copperweld Facility. The Copperweld Debtors assert
that the payment of this additional commitment fee is reasonably
necessary to obtain the Copperweld DIP Facility, which is in the
best interests of these estates.
Judge Bodoh agrees and promptly enters his Order granting this
Motion. (LTV Bankruptcy News, Issue No. 29; Bankruptcy
Creditors' Service, Inc., 609/392-00900)
LAIDLAW INC: Court Extends Exclusive Periods through June 30
------------------------------------------------------------
Judge Kaplan extends Laidlaw Inc. and its debtor-affiliates'
Exclusive Period to propose and file a plan of reorganization
and the Exclusive Period to solicit acceptances of that plan
through and including June 30, 2002. (Laidlaw Bankruptcy News,
Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900)
LAS VEGAS SANDS: S&P Maintains Watch on B & Lower Credit Ratings
----------------------------------------------------------------
Standard & Poor's said that its single-'B' corporate credit
ratings of Las Vegas Sands Inc. and its subsidiary, Venetian
Casino Resort LLC remain on CreditWatch with negative
implications where they were placed on September 24, 2001.
The CreditWatch listing was associated with an anticipated
challenging gaming environment in Las Vegas following the
September 11 terrorist attacks, combined with Standard & Poor's
expectation that the Venetian's liquidity position would be
tight.
On May 6, 2002, the Venetian announced that it had commenced a
tender offer to purchase its $425 million 12.25% mortgage notes
due 2004 and its $97.5 million 14.25% senior subordinated notes
due 2005. The tender is subject to the successful refinancing of
the Venetian's existing debt with its proposed $375 million
senior credit facility, $850 million second mortgage notes, and
$105 million secured mall loan facility.
Standard & Poor's expects to affirm the corporate credit rating
for both Las Vegas Sands Inc. and Venetian Casino Resort LLC
with a stable outlook upon the successful refinancing.
The new bank facility is expected to be rated single-'B'-plus as
a result of its priority lien on assets, which provides for a
high probability of full recovery of principal under a
distressed liquidation scenario. The new mortgage notes are
expected to be rated single-'B'-minus given their second lien
position. Standard & Poor's will remove its ratings from
CreditWatch and withdraw its ratings from the notes that are
being refinanced upon completion of the new financing and
successful tender for the notes.
The Venetian reported solid results for the 2002 first quarter.
EBITDAR (before pre-opening expenses and after corporate
expenses) of $49.9 million was 9% higher than in the same period
in 2001. The property's average daily room rate of $211 was only
4% lower than in the comparable 2001 quarter, underscoring that
a recovery is well under way. In addition to improving operating
results, Standard & Poor's expects that the refinancing will
improve the Venetian's financial flexibility by extending debt
maturities, reducing amortization under the bank facility, and
providing a financing mechanism for the Phase 1A hotel
expansion.
RATINGS LIST
Las Vegas Sands Inc.
* Corporate credit rating B/Watch Neg
* Senior secured B-/Watch Neg
* Subordinated CCC+/Watch Neg
Venetian Casino Resort LLC
* Corporate credit rating B/Watch Neg
* Senior secured B-/Watch Neg
* Subordinated CCC+/Watch Neg
DebtTraders reports that Venetian Casino's 12.25% bonds due 2004
(VENETIAN) are quoted at an above-par price of 103. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=VENETIANfor
real-time bond pricing.
LOUISIANA-PACIFIC: Board Approves Asset Sale Plan to Trim Debt
--------------------------------------------------------------
Louisiana-Pacific Corporation (NYSE:LPX) said that its board of
directors has approved a plan to sell selected businesses and
assets in order to significantly reduce its current debt.
Once targeted debt levels have been achieved, capital will be
available to grow the more focused, more profitable product
lines that it retains.
The plan involves divesting the company's 935,000 acres of
timberlands along with its plywood, industrial panels and lumber
businesses. The company anticipates net proceeds in the $600-700
million range and that the majority of the sales will be
completed within 12 to 18 months. The company plans to apply the
bulk of proceeds from these sales to debt reduction. The company
anticipates cash restructuring charges, associated primarily
with severance, and non-cash impairment charges on certain
assets to be sold.
Following the divestitures, the company will focus on businesses
where the company has a strong competitive position and where
further opportunities exist for rationalization and profitable
improvement. These core businesses will include:
-- oriented strand board (OSB),
-- composite wood products (specialty OSB, SmartSystem(R)
siding and hardboard siding),
-- engineered wood products, and
-- plastic building products (vinyl siding, composite
decking and mouldings)
LP Chairman and Chief Executive Officer, Mark A. Suwyn said, "We
believe that our greatest potential to create shareholder value
will result from focusing on our core businesses as well as from
using proceeds from the divestitures to pay down debt.
Additionally, our more focused company will have the resources
to apply technology and capital to further enhance our
competitiveness, and the simplified organizational structure
will allow us to reduce infrastructure costs even lower."
In 2001, the four businesses to be retained under this plan had
revenues of $1.4 billion and generated an operating profit of
$46 million. Further, earnings before interest, taxes,
depreciation, depletion and amortization (EBITDA) for the
retained businesses were $172 million. "These businesses have
proven their ability to generate attractive returns even in a
very sharp downturn. As this plan is implemented, we expect to
dramatically improve our earnings potential and strengthen our
balance sheet," noted Suwyn.
LP's Chief Financial Officer, Curtis M. Stevens, said, "We
remain focused on improving the company's credit statistics.
Ultimately, we believe that it is desirable to maintain
investment grade ratings through all points in the business
cycle in order to best compete in this industry. Over the long-
term, this will allow the company to have a competitive cost of
capital which will complement our low cost operational status
and increase our financial flexibility."
The company will also change its segment reporting in order to
reflect each of the four businesses retained as individual
segments. Stevens noted, "In today's capital market environment,
we believe this additional level of disclosure and transparency
will benefit our shareholders and provide the necessary
information to the marketplace that demonstrates the long-term
attractiveness of these key businesses to the company."
Retained operations
The company's major platform will continue to be OSB, where LP
is the world's leading producer. The company will grow its
specialty OSB business which uses LP's OSB technology to develop
new building applications such as exterior cladding, concrete
forming panels, and soffit and trim products. The company
expects OSB to continue its strong growth rate as OSB takes
market share from plywood. In addition, new specialty OSB
applications, particularly in the industrial and transportation
segments, are expected to grow rapidly as they gain market
acceptance.
The company will also retain its engineered wood products
business, which is growing and has proven to be an important
link to top builders and their key suppliers. The plastic
businesses, including vinyl siding, moulding and decking, are
focused primarily at retail and specialty distribution.
Operations to be divested
The most significant assets to be divested are LP's 935,000
acres of timberlands in Texas, Louisiana and Idaho, and its
lumber business which produces 1.4 billion board feet annually
and holds the number-one position in stud lumber in North
America. "Our timberlands are very valuable properties. However,
given that we primarily buy pulp wood on the open market and
that there are more tax-efficient ownership vehicles for this
asset, we have made the decision to sell them. In lumber, we
have made significant improvements in the past several years,
including the acquisition of two modern mills and the closure of
more than 30 non-competitive ones. This business is now well-
positioned to become part of an organization that is focused on
lumber," noted Suwyn.
The company will also divest its plywood, industrial panels,
wholesale and distribution businesses.
Following the divestitures, LP expects to operate 30-35 mills in
North America and employ a workforce of approximately 5,300
compared to its current portfolio of 60 mills and a workforce of
9,700.
Goldman, Sachs & Co. is acting as the company's financial
advisor.
LP is a premier supplier of building materials, delivering
innovative, high-quality commodity and specialty products to its
retail, wholesale, homebuilding and industrial customers. Visit
LP's Web site at http://www.lpcorp.comfor additional
information on the company.
MAURICE CORP: Dean Bozzano Sued for Embezzling Over $1 Million
--------------------------------------------------------------
A Phoenix, Arizona man was charged Wednesday in federal court
with 14 counts of bankruptcy embezzlement and 14 counts of
bankruptcy fraud, all in connection with his embezzlement of
more than $1 million from bankruptcy debtor Maurice Corporation
of Massachusetts.
United States Attorney Michael J. Sullivan and Charles S.
Prouty, Special Agent in Charge of the Federal Bureau of
Investigation in New England, said that Dean Bozzano, age 42, of
320 West Bethany Home, Phoenix, Arizona, was charged in an
indictment with 14 counts of bankruptcy embezzlement and 14
counts of bankruptcy fraud.
The indictment alleges that Bozzano and his company, Magnum
Capital, were authorized by the U.S. Bankruptcy Court in
Worcester to be the Liquidating Chief Executive Officer of
Maurice Corporation, a Massachusetts business which operated
retail clothing stores, which had filed a bankruptcy petition on
June 21, 2000. It is alleged that as the Liquidating CEO BOZZANO
had control over Maurice Corporation assets which were to be
used to pay creditors. It is alleged however, that on 14
occasions from November, 2000 through July, 2001, BOZZANO caused
a total of $1,060,000 to be wired from a Maurice Corporation
bank account to an account in Phoenix, Arizona in the name of an
entity owned and controlled by BOZZANO. It is alleged that
BOZZANO used the funds for personal and business reasons
unrelated to Maurice Corporation. It is alleged that when
BOZZANO was terminated as the Liquidating CEO for Maurice
Corporation in January, 2002, he failed to return any of the
funds.
The indictment also alleges that to conceal his fraudulent
embezzlement scheme, Bozzano caused monthly operating reports to
be submitted to the U.S. Trustee's Office in Worcester,
Massachusetts and to attorneys representing Maurice Corporation
which failed to disclose the disbursements of the Maurice
Corporation funds from its bank account to the account
controlled by Bozzano. It is alleged that the reports also
falsely represented the amounts remaining in the Maurice
Corporation bank account.
Bozzano was arrested Tuesday in Arizona and will have an initial
appearance before a U.S. Magistrate Judge in Arizona. If
convicted on these charges, Bozzano faces up to 5 years'
imprisonment, to be followed by 3 years of supervised release,
and a $250,000 fine on each of 28 counts.
The case was investigated by the Federal Bureau of Investigation
and was referred to the U.S. Attorney's Office by the U.S.
Trustee's Office in Worcester and Boston. It is being
prosecuted by Assistant U.S. Attorney Mark J. Balthazard in
Sullivan's Economic Crimes Unit.
MED-EMERG: HSBC Canada Agrees to Forbear Until June 28, 2002
------------------------------------------------------------
Med-Emerg International Inc. (NASDAQ: MDER-MDERW) said that the
HSBC Bank Canada has granted an extension of its forbearance
agreement. Subject to certain terms and conditions, the bank
will continue to work with the company through June 28, 2002.
MICROCELL TELECOM: Moody's Hatchets Credit Ratings to Junk Level
----------------------------------------------------------------
Moody's Investors Service downgraded the ratings on Microcell
Telecommunications Inc., concluding its review of the company.
Outlook is negative.
Rating Action To From
* Senior Implied rating Caa2 B3
* Issuer rating Caa3 Caa1
* Senior Unsecured rating Caa3 Caa1
comprised of the following debt issues:
- 14% Senior Discount Notes due 2006, US$471 million face
value
- 11.125% Senior Discount Notes due 2007, US$429 million face
value
- 12% Senior Discount Notes due 2009, US$270 million face
value
Microcell has managed to arrange additional liquidity in late
2001 and early 2002. However, Moody's believes that it will
again need to access funding from capital markets within two
years as the company has a high debt leverage and because of its
status as the most financially constrained of the four Canadian
wireless companies. Should Microcell need to restructure its
debts, the investors service expresses doubts that the company's
asset values can fully cover its debt obligations.
Microcell's has a price-oriented, mass-market strategy but the
company has the most number of prepaid subs in the business,
partially the reason why it has the lowest blended average
revenue per subcriber (ARPU). Microcell is recently trying to
reduce its prepaid mix, emphasizing profitability rather than
subscription growth.
A further rating downgrade may happen if the company fails to
improve its cash flow. However, the said ratings are also
subject to upgrade if operating results improved considerably.
Microcell, headquartered in Montreal, Quebec, is a Canadian
wireless telecommunications service provider with 1.2 million
GSM subscribers at the end of 2001.
MOSSIMO INC: Sets Annual Shareholders' Meeting for June 3, 2002
---------------------------------------------------------------
The Annual Meeting of Stockholders of Mossimo, Inc. will be held
at the Bel Air Hotel, 701 Stone Canyon Rd., Los Angeles, CA
90077 on June 3, 2002 at 4:00 p.m. for the following purposes:
1. To elect two directors to serve three-year terms until
their successors are duly elected and qualified;
2. To approve The Mossimo Giannulli Bonus Plan (including
the performance objectives and objective bonus formulas
established by the Compensation Committee of the Board of
Directors under the plan); and
3. To transact such other business as may properly come
before the Annual Meeting and any adjournments thereof.
The Board of Directors has fixed April 15, 2002 as the record
date for determination of stockholders entitled to notice of and
to vote at the Annual Meeting and any adjournment thereof.
Founded in 1987, Mossimo, Inc. is a designer of men's, women's,
boy's and girl's apparel and footwear, home textiles, cosmetics,
eyewear and other fashion accessories such as jewelry, watches,
handbags, belts and hair care products. Mossimo, at December 31,
2001, had a total shareholders' equity of $0.7 million.
NATIONSRENT: Committee Hires Thomas Putman as Industry Expert
-------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
cases of NationsRent Inc., and its debtor affiliates obtained
approval to retain Thomas J. Putman, an acknowledged industry
expert, as their business consultant effective as of March 7,
2002.
Given the size, complexity and nature of the Debtors'
businesses, Daniel K. Astin, Esq., at The Bayard Firm, in
Wilmington, Delaware, submits that the Debtors need to address
important operational decisions that have significant short and
long term implications on all the interested parties. In order
to effectively evaluate these operational issues, the Committee
needs such an industry expert as consultant. The primary role
that Mr. Putman will serve is to review and analyze the Debtors'
business, primarily from an operational perspective, and to
advice and assist the Committee in carrying out its duties. In
particular, the services to be performed by Mr. Putman are to
review, analyze, and make recommendations to the Committee
about:
A. the Debtors' strategic alliance with Lowe's;
B. the Debtors' rental fleet and store level profitability;
C. the structure and operation of the core rental business;
D. the management structure and operation of Lowe's business;
E. information management integration (fleet management);
F. integration of the business (identify synergy);
G. the business plan;
H. management structure and proposed incentives;
I. corporate policy;
J. key issues for executing the business/operating plan; and,
K. target customer strategy and execution.
Pursuant to the terms of his retention and subject to the
Court's approval, Mr. Putman's fees will be based on the actual
hours expended at an hourly ate of $250. The Committee and Mr.
Putman have agreed that retention period will be limited to an
initial period of 400 hours, subject to extension upon
application and order of the Court, Mr. Astin continues. The
proposed consultant will also be entitled to reimbursement for
reasonable out-of-pocket expenses, including, but not limited
to, all travel related expenses.
Mr. Astin accords that Mr. Putman has extensive experience in
the equipment rental business. In particular, from 1990 to 1997,
he was president and CEO of American Equipment Company (AEC), a
large global supplier of construction equipment, tools,
maintenance and related services based in Greenville, South
Carolina. From 1975 to 1990, Mr. Putman held a number of other
positions at AEC. In addition, from 1997 through 2000, Mr.
Putman held senior executive positions with Fluor Corp., a
diversified, multinational corporation which acquired AEC. His
experience includes the successful integration of business
operations of equipment rental companies acquired through
acquisitions. (NationsRent Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
OWENS CORNING: Wants Until December 4 to Make Lease Decisions
-------------------------------------------------------------
Owens Corning and its debtor-affiliates ask to extend the time
within which they must move to assume or reject unexpired leases
of nonresidential real property until December 4, 2002.
Norman L. Pernick, Esq., at Saul Ewing LLP in Wilmington,
Delaware, submits that there are sufficient reasons to grant the
Debtors another extension on the lease decision period, all of
which subscribe to the minimum requirements in jurisprudence,
including:
A. the case is complex and involves a large number of leases;
B. the leases are primary among the assets of the debtor; and
C. the lessor continues to receive post-petition rental
payments.
As of the Petition Date, Pernick points out that the Debtors had
assets in excess of $6,000,000, employed more than 16,000
employees and operated production and distribution facilities in
locations throughout the United States. many of these
facilities are located in leased premises that are the subject
of the unexpired leases. Apart from this, the Debtors' cases are
extremely complex given that they involve 18 debtors and dozens
of non-debtor entities. In addition, the cases also involve
complex inter-creditor issues involving numerous competing
creditor groups such as bondholders, an unsecured bank group,
trade creditors and those creditors holding present and future
asbestos claims.
As of April 15, 2002, Mr. Pernick informs the Court that the
Debtors are lessees under hundreds of unexpired leases. Most of
these leases involve use of space for conducting the production,
warehousing, distribution, sales, sourcing, accounting and
general administrative functions of the Debtors' businesses.
These leases are assets of the Debtors' estates and are integral
to the Debtors' continued operations as they seek to reorganize.
The Debtors have remained, and will continue to remain, current
on all of their postpetition rent obligations.
Mr. Pernick notes that the Debtors and their professionals
presently are reviewing the unexpired leases and are conducting
appropriate market analyses to determine which decision, whether
to reject or assume and assign, is in the best interest of the
Debtors' estates. So far approximately 54 unexpired leases or
only approximately 17% of the Debtors' lease portfolio at the
Petition Date. Additional time is therefore needed to review the
rest of the leases. The Debtors will be asking the Court's
permission to reject additional un-expired leases before the
Chapter 11 cases conclude. Mr. Pernick expects that many of the
leases will prove to be desirable, necessary even, to the
continued operation of the Debtors' businesses. Other un-expired
leases, meanwhile, while not necessary for the Debtors' ongoing
operations, may prove to be "below market" leases that may yield
value to the estates through their assumption and assignment to
third parties. (Owens Corning Bankruptcy News, Issue No. 31;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PACIFIC GAS: Wants to Pay for New Entities Contract Procurement
---------------------------------------------------------------
Pacific Gas and Electric Company requests authorization to incur
and pay expenses in the process of procuring New Contracts for
goods and services that the New Entities under the proposed Plan
of Reorganization will need to operate. In PG&E's estimation,
the expenses will total $4.7 million with respect to services to
be performed by Buyers, Clerks and a Consultant.
The contracts cover a wide span of areas including , for
example, contracts for wood pole replacement, tree trimming and
brush removal, facility construction and maintenance, and
software license agreements, etc. PG&E expects that
approximately 1,200 new contracts will be needed because out of
the approximately 3,500 contracts currently held by PG&E,
approximately 1,200 contracts are shared among two or more of
the business lines.
PG&E estimates that it could take up to nine months to complete
the contract Procurement Work needed for the implementation of
the proposed Plan.
PG&E's typical procurement process involves: the solicitation of
competitive bids from three or more pre-qualified vendors,
followed by development of specifications regarding the goods
and services to be provided, establishing vendor selection
criteria, providing vendors with instructions regarding the
bidding process, collecting and evaluating the bids, and making
a vendor selection based on the vendor selection criteria. The
final step in the process is to document and enter into a
written contract with the vendor, based on PG&E's previously
developed specifications and the vendor's bid proposal.
While PG&E has in-house expertise in this area, PG&E requires
substantial outside assistance as a result of the volume of New
Contracts required and the limited time period for completion of
the work. PG&E intends to hire temporary Buyers and Clerks and a
Consultant to assist it with the Procurement Work. PG&E budgets
for and requests for approval for the following:
(1) Buyers
PG&E intends to hire approximately 20 individuals as Buyers on a
temporary basis through Corestaff Services, Inc., a staffing
agency.
Under the direction of a PG&E supervisor, the Buyers will be
responsible for coordinating and conducting negotiations for the
New Contracts. This will include developing technical and
commercial requirements, identifying and qualifying vendors,
establishing bid evaluation criteria, soliciting proposals from
vendors, negotiating contract terms and conditions, and contract
documentation.
PG&E requests approval to incur approximately $3.5 million in
expenses with respect to the services of the Buyers for the
period beginning May 2002 and continuing to the Effective Date
or such earlier date on which the Procurement Work has been
completed. PG&E would pay the Buyers, through Corestaff, on a
weekly or bi-monthly basis, based on the number of hours worked
by each Buyer.
(2) Clerks
PG&E intends to hire approximately 10 individuals as Clerks on a
temporary basis through Corestaff.
The Clerks will support the Buyers as well as PG&E staff
performing the Procurement Work and will perform general office
services, such as typing, filing, copying and answering
telephones.
PG&E requests approval to pay the Clerks approximately $400,000,
for the period beginning May 2002 and continuing to the
Effective Date or such earlier date on which the Procurement
Work has been completed. PG&E would pay the Clerks, through
Corestaff, on a weekly or bi-monthly basis, based on the number
of hours worked by each Clerk.
(3) Consultant
PG&E also intends to use Stan Miyamoto (Consultant) to assist
with project planning, scheduling and cost management support
with respect to the Procurement Work.
Consultant is experienced in providing project management
support and has previously performed similar services for PG&E.
PG&E requests approval to pay Consultant approximately $80,000
for the period beginning May 2002 and continuing to the
Effective Date or such earlier date on which the Procurement
Work has been completed. PG&E would pay Consultant on a monthly
basis as work is completcd, based on monthly billings by
Consultant.
Need for Procurement Work
Because it could take up to nine months to complete the
Procurement Work PG&E believes that the process must begin now
in order not to delay the implementation of the Plan and
requests for the approval although the Plan is not yet
confirmed. PG&E tells the Court that, as with Permit & Franchise
Work for the New Entities, to the extent that subsequent events
demonstrate that the Procurement Work will not be necessary, the
work can be terminated immediately. Also, any New Contracts that
are negotiated prior to the Effective Date would not obligate
PG&E to incur any costs or other liabilities unless and until
the Effective Date occurs.
Although PG&E believes that the hiring of temporary staff is
routine and within the ordinary course of its business, since
the Procurement Work is related to implementation of the Plan,
PG&E is requesting Court approval for the Procurement Expenses
under Bankruptcy Code Section 363(b)(l) as a use of estate
property that is outside of the ordinary course of business.
PG&E believes that the Buyers, Clerks and Consultant do not
require approval as professionals under the Bankruptcy Code, due
both to the nature of the services to be provided and to their
limited role in connection with PG&E's reorganization
proceeding.
PG&E believes that sound business justifications exist for
approval of the Procurement Expenses, because the Procurement
Work is necessary, a delay in commencing the work could cause a
delay in the implementation of the Plan, and PG&E does not have
sufficient capacity in-house to handle the Work. Also, PG&E is
solvent and has sufficient cash to pay the Procurement Expenses.
PG&E reminds the Court that, as reflected in its Monthly
Operating Report, the company held more than $4.8 billion in
cash reserves as of February 28, 2002. (Pacific Gas Bankruptcy
News, Issue No. 34; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
PARADISE MUSIC: Porter Capital Discloses 20.3% Equity Stake
-----------------------------------------------------------
Porter Capital Corporation, an Alabama Corporation and a
financial services firm, beneficially owns an aggregate of
5,850,000 shares of the common stock of Paradise Music
Entertainment, Inc., which constitutes approximately 20.3% of
the issued and outstanding common stock of the Company,
excluding 775,000 shares, or 2.7% of the issued and outstanding
common stock which it has the right to acquire upon exercise of
warrants, and excluding an additional number of shares to be
issued upon default and exercise Porter's conversion right to
bring the total number of shares to be owned by Porter to not
less than 14,697,562 (approximately 51%) of the shares that
would then be outstanding.
Porter presently has the sole power to vote or to direct the
vote, and sole power to dispose of 5,850,000 shares of common
stock.
On April 17, 2002, Porter and Paradise Music Entertainment
entered into a forbearance agreement relating to defaults by the
Company under a Commercial Factoring Agreement dated April 25,
2001, as amended, and related documents which was supplemented
by a Loan Agreement dated August 15, 2001 with respect to a loan
in the principal amount of $250,000, and by a Loan Agreement
dated January 24, 2002 with respect to a loan in the principal
amount of $80,000. The Company owes Porter $421,101.45 under
the Factoring Agreement. The source of all said funds advanced
under the Factoring Agreement and the Loan Agreement was working
capital of Porter. Pursuant to the Forbearance Agreement, Porter
and the Company have agreed to the conversion of $200,000 of the
amount owed to Porter under the Factoring Agreement to 4,000,000
shares of common stock.
The Forbearance Agreement also reduced the exercise price of
warrants to purchase 75,000 shares of common stock issued to
Porter in connection with the Factoring Agreement and warrants
to purchase 200,000 shares of common stock issued in connection
with the 2001 Loan Agreement from $.25 per share to $.05 per
share.
In addition Porter holds warrants to purchase 500,000 shares of
common stock at $ .02 per share issued in connection with the
2002 Loan Agreement.
For financial services rendered in connection with the 2001 Loan
Agreement and the 2002 Loan Agreement, the Company issued to
Porter 250,000 shares and 1,600,000 shares of common stock,
respectively.
As collateral for the loan granted to the Company pursuant to
the 2002 Loan Agreement, the Company's president, Kelly Hickel,
pledged 1,064,569 shares owned by him, and the Company
instructed its transfer agent to reserve for issuance to Porter
upon notice of default an additional 3,5000,000 shares of common
stock. As collateral for a personal loan from Porter in the
amount of $15,000 Mr. Hickel has also pledged to Porter an
addition 500,000 shares of common stock owned by him.
In the event of default of the Convertible Secured Promissory
Note issued by the Company pursuant to the 2002 Loan Agreement,
Porter has the right to convert the Note, together with all sums
due under the Factoring Agreement, into such number of shares of
common stock as shall give Porter, upon conversion, together
with all other shares of common stock owned by Porter, 51% of
the outstanding shares on a fully diluted basis.
As the result of all of the above, Porter currently owns
5,850,000 shares of common stock, and warrants to acquire an
aggregate of 775,000 shares of common stock. An additional
5,064,569 shares of common stock are pledged or reserved for
issuance to Porter in the event of default of outstanding loans.
In the event of a default under the Note, Porter would have the
right to convert the Note so as to hold 51% of the Company's
outstanding common stock on a fully diluted basis.
Porter acquired its shares of common stock for investment
purposes.
Paradise Music & Entertainment, a music, film, and digital
entertainment company, has been in the red for several years and
the struggling advertising industry is forcing Paradise to
shutter some of its ad related subsidiaries. Paradise generates
most of its revenue by producing TV commercials, music videos,
and original music scores and ad themes, as well as by managing
music artists. The company also creates and delivers Web content
for online and digital customers. The company has closed
advertising subsidiaries Straw Dogs and Shelter Films, which
contributed about 70% of revenue. At June 30, 2001, the
company's balance sheet showed a working capital deficit of
about $2 million.
PENN SPECIALTY: Wants Lease Decision Period Stretched to July 9
---------------------------------------------------------------
Penn Specialty Chemicals, Inc. wants the U.S. Bankruptcy Court
for the District of Delaware to extend its time period to decide
whether to assume, assume and assign, or reject unexpired
nonresidential real property leases until July 9, 2002.
The premises covered by the Unexpired Leases are an asset to the
Debtor's estate. The Debtor concedes that at this time, it
cannot intelligently evaluate whether a potential contract party
would be interested in assuming the Unexpired Leases. The
unexpired leases are integral to their continued operation of
their business. Any decision with respect to assuming or
rejecting the unexpired leases would be premature at this time.
The Debtor tells the Court that an extension of time is
appropriate in order to afford them the time to review the
unexpired leases to develop a comprehensive chapter 11 strategy.
The Debtor relates that it is currently working with its legal
and financial advisors, investment bankers, and with the
Committee -- to explore the potential for a consensual
resolution of its chapter 11 case and to develop the foundations
for a chapter 11 plan.
The Debtor assures the Court that the requested extension will
not result in any harm or prejudice to other parties-in-
interest, but will relieve the Debtor of having to make a
premature decision with respect to such lease.
Penn Specialty, one of the world's largest suppliers of
specialty chemicals THF and PTMEG, filed for chapter 11
protection on July 9, 2001, in the U.S. Bankruptcy Court for the
District of Delaware. Deborah E. Spivack, Esq., at Richards,
Layton & Finger, in Wilmington, Delaware, represents the company
in its restructuring effort.
PHOENIX INT'L: EPICUS Enters Services Pact with Palladium Comms.
----------------------------------------------------------------
Palladium Communications, Inc. (OTC Bulletin Board: PDMC), a
telecom, educational Internet service, and eCommerce solutions
provider, has entered into an agreement with EPICUS, Inc. for
the provision of telecommunications services to Palladium and
its customers. EPICUS, Inc., an Integrated Communications
Provider that delivers comprehensive communications services to
residential and business customers, is a wholly owned subsidiary
of Phoenix International Industries, Inc. (OTC Bulletin Board:
PHXU).
Under the terms of the agreement, Palladium will sell EPICUS'
bundled services, which include local, long distance and dial-up
Internet service, to Palladium's small business and residential
customers in the Southeastern United States.
"We are very pleased to announce this strategic relationship
with EPICUS, which will allow us to continue providing quality
telecommunications services to our customers," stated Ray
Dauenhauer, President and Chief Executive Officer of Palladium
Communications, Inc. "EPICUS will replace Adelphia
Communications, which recently filed bankruptcy, as our primary
vendor for telecommunications services. In the initial phase of
the relationship, we will seamlessly transition our existing
Internet customers to the EPICUS network through an automated
online sign-up process."
Palladium Communications, Inc. is a telecom, educational
Internet service and eCommerce solutions provider that utilizes
a proven network marketing model in its business activities and
intends to expand the breadth of products and services provided
to its target customer base. The Company is headquartered in
Louisville, Kentucky, and its common stock trades on the OTC
Bulletin Board under the symbol "PDMC".
* * *
Phoenix International's November 30, 2001 balance sheet was
upside-down, with a total shareholders' equity deficit of about
$5 million.
PICCADILLY CAFETERIAS: Working Capital Deficit Tops $13 Million
---------------------------------------------------------------
Piccadilly Cafeterias, Inc. (NYSE:PIC) announced operating
results for its third quarter and nine months ended March 31,
2002. Net income was $3.1 million for the third quarter of 2002,
compared with a net loss of $27.0 million in the same quarter
last year. Current quarter results include a one-time $2.0
million income tax benefit that resulted from a provision in the
Job Creation and Worker Assistance Act of 2002 enacted in March
2002, which increased the carry back period for net operating
losses for the 2001 tax year to five years. Included in the
prior-year third quarter results are accounting charges for
impairment of property, plant and equipment, goodwill and
deferred tax assets. After elimination of certain charges and
benefits for the current and prior-year third quarter,
comparative net income was $1.3 million and $0.7 million net
loss, respectively.
The Company's net sales for the third quarter were $93.7
million, compared with $103.4 million for the same period in
2001, a decline of 9.3%. Fewer cafeterias operating during the
comparable periods accounted for $5.8 million of the decline
while same-store sales declined $3.9 million, or 4.0%.
Net income for the nine months ended March 31, 2002 was $3.5
million, compared with a net loss of $29.6 million in the prior-
year nine-month period. Comparative net income adjusted for
certain charges and benefits for the current and prior-year
nine-month periods was $3.6 million and $2.1 million net loss,
respectively.
The Company's net sales for the nine months ended March 31,
2002, were $289.1 million, compared with $324.1 million for the
same period in 2001, a decline of 10.8%. Fewer cafeterias
operating during the comparable periods accounted for $20.1
million of the decline while same-store sales declined $14.9
million, or 4.9%.
Earnings before extraordinary and nonrecurring charges,
interest, taxes, depreciation, and amortization (EBITDA) for the
nine months ended March 31, 2002, were $20.1 million, up $4.2
million over the same nine-month period last year. EBITDA for
the quarter ended March 31, 2002, was $6.8 million, up $0.5
million compared with last year's third quarter. The
improvements in earnings and EBITDA are primarily the results
of: (1) improving labor efficiencies, (2) closing non-performing
cafeterias, and (3) a reduction in corporate overhead due to
management restructuring completed in the fourth quarter of
fiscal 2001.
Cash and Liquidity
Since June 30, 2002, the Company's cash balances have grown by
$7.2 million, working capital has improved by $6.6 million, and
the Company has retired $13.0 million of its long-term senior
notes due 2007. Since the Company issued its long-term debt in
December 2000, the leverage ratio of debt to EBITDA has declined
from over three-to-one to less than two-to-one.
A provision of the Company's senior secured notes due 2007
requires the Company to make an offer, subject to limitations,
to repay a portion of its debt each year. The amount of the
required offer is determined by the amount of excess cash flow,
as defined below, for the prior fiscal year. The note agreements
define excess cash flow as EBITDA less interest expense, income
tax expense, and capital expenditures. For the nine months ended
March 31, 2002, excess cash flow was approximately $14.2 million
and the maximum required offer to repay debt from fiscal 2002
cash flows is approximately $10.0 million.
The company's March 31, 2002 balance sheet shows a working
capital deficit of about $13 million.
Recent Sales Initiatives
Same-store sales for the comparative months of January, February
and March were down 6.7%, 3.8% and 2.3%, respectively. On March
11, 2002, the Company introduced its "Everybody's Got a
Favorite, What's Yours?" advertising campaign, which introduces
an all-you-can-eat fried chicken meal for $6.99 on Tuesdays,
desserts for $0.79 on Wednesdays and a Friday feature of eight
seafood entree offerings. Additionally, a "Kid's Night" on
Thursday night where kids under 12 can eat for $0.99 and a
senior citizen discount program were introduced. The advertising
campaign includes television and/or radio advertising in markets
covering approximately one-half of the Company's cafeterias. All
of the Company's cafeteria markets are included in a related
direct mail promotion.
Comments from the Chairman
Ronald A. LaBorde, Chairman and Chief Executive Officer,
commented, "We are pleased with the improved operating results
for both the quarter and nine month period ended March 31, 2002.
Operationally, we are encouraged by the efficiencies that we
have achieved. We remain focused on building sales and
increasing guest traffic. Our advertising campaign, "Everybody's
Got a Favorite, What's Yours?," is being well received by our
guests, and we believe the campaign positively affected our
sales results for March.
"We completed the remodeling of a cafeteria in Baton Rouge in
March and celebrated its completion with a grand re-opening on
March 2. Both interior and exterior elements of the re-design
feature brighter colors that create warmth throughout the
restaurant. Interior highlights include new, vibrant carpeting
and wall paint, new photography, new menu boards and point-of-
purchase materials, and new team member uniforms. Exterior
elements include new awnings and updating the exterior signage
to the current logo. Guests will also notice significant changes
in the cafeteria's food line. A two-item carving station has
been added and the presentation of Piccadilly's great entree
selections will be enhanced to include a made to order salad
station plus enhanced displays of fresh baked breads and
extensive dessert choices.
"Our guests have responded positively. Since the grand re-
opening, we are experiencing double-digit sales improvements
over last year in that location. We are excited about the
results so far in this single unit and will test our remodeling
approach with four additional remodels scheduled for completion
within the next 90 days. It is premature for us to forecast the
sustainability of these results and we will continue to develop
and evaluate our remodeling approach."
Anticipated Shareholders' Equity Reduction
at June 30, 2002
The Company also said that it is probable that it will record a
balance sheet liability of between $16 million and $18 million
as of June 30, 2002, the normal measurement date, reflecting
that the present values of its defined benefit pension plan
liabilities are estimated to exceed the fair values of plan
assets as of such date. All of the Company's defined benefit
plans are frozen and no further benefits are therefore accruing.
The deterioration in the funded status of the pension plans from
June 30, 2001, reflects the depressed earnings on plan assets
coupled with a significant decline in market interest rates that
increases the present value of plan liabilities. The actual
liability to be recorded depends on plan asset values and market
interest rates at June 30, 2002, and could be materially
different.
The recording of this balance sheet liability, which is mandated
by the accounting rules, will not result in a charge against the
Company's earnings, but will be reflected as a reduction of
shareholders' equity. The pension plan liability recorded on the
balance sheet will be evaluated and adjusted, up or down as
appropriate, on an annual basis to reflect changes in the
relative valuations of plan assets and liabilities at future
annual valuation dates.
Given its magnitude, the Company has contacted its credit
facility lender regarding the anticipated pension liability.
Although the Company believes that the liability should not
adversely affect the Company's ability to continue to utilize
its revolving credit facility after June 30, 2002, the lender
has not yet confirmed the Company's view. If the Company and the
lender determine that the pension liability requires an
amendment to the credit facility, the Company will seek to
obtain such an amendment in order to insure the Company's
continuing access to the full funding limits of the facility.
Currently, the Company has no outstanding borrowings under the
credit facility although the credit facility supports
approximately $11 million of outstanding letters of credit. It
believes that its cash flows from operations will be sufficient
to meet its operating and capital expenditure needs and satisfy
its obligations under its senior notes at least through fiscal
2003.
The anticipated pension plan liability will have no immediate
cash impact. If future earnings on plan assets do not recover to
eliminate the under funding, the Company may be required to
begin contributing to the pension plans beginning in fiscal 2004
or 2005. The Company has been advised that, in the event that
contributions are required, those contributions will be spread
over several years. The Company believes that it will be able to
absorb the cost of these contributions without materially
affecting its liquidity or its ability to implement its
previously announced business plan.
Additionally, the anticipated pension plan liability will have
no impact on fiscal 2002 earnings. The pension accounting rules
require that the net accumulated impact of fluctuations in
pension interest rate assumptions, actuarial assumptions, and
differences between the expected and actual pension asset
earnings be amortized into future earnings. While subject to the
final year-end calculation, we expect that next year's pension
expense will include approximately $0.5 of related amortization
expense.
Finally, the recording of this pension plan liability will have
no impact on the security of pension benefits of the Company's
employees, past or present.
The Company previously announced that it had submitted a plan to
the New York Stock Exchange to demonstrate that the Company
could meet the continued listing requirements of the NYSE by
February 8, 2003, a deadline established by the NYSE. With the
anticipated reduction in shareholders' equity expected on June
30, 2002, it is likely that the Company will not meet on
schedule the shareholders' equity level targeted by the plan and
that the NYSE could commence delisting of the Company's shares
soon after the Company's financial results for fiscal 2002 are
announced. Given the uncertainty that the Company will be able
to continue its listing on the NYSE, the Company is evaluating
its eligibility to list its stock on other stock exchanges.
Piccadilly is a leader in the family-dining segment of the
restaurant industry and operates over 200 cafeterias in the
Southeastern and Mid-Atlantic states. For more information about
the Company visit the Company's website at www.piccadilly.com.
PILLOWTEX CORP: Wants to Assume Transamerica Lease Agreement
------------------------------------------------------------
Pillowtex Corporation and its debtor-affiliates seek the Court's
authority to assume, as modified, an equipment lease agreement
with Transamerica Equipment Financial Services Corporation. In
this lease, Transamerica agrees to lease to the Debtors textile
production equipment used in their manufacturing operations.
Christopher M. Winter, Esq., at Morris, Nichols, Arsht &
Tunnell, in Wilmington, Delaware, states that the Lease
Agreement has a term of 72 months. It has an option at the end
of the term to purchase the Production Equipment for fair market
value. The Lease Agreement also has an early purchase option
that is exercisable after the first 36 months of the Lease
Agreement for a purchase price that is based on a specified
percentage of the original acquisition cost. "The aggregate
monthly rent under the Lease Agreement is approximately
$59,028," Mr. Winter says.
Mr. Winter tells the Court that as part of the Debtors' strategy
to restructure their production equipment leases, the Debtors
have negotiated a restructuring of the Lease Agreement with
Transamerica that allows them to purchase the Production
Equipment at an earlier date and at a more favorable price. The
material terms of the Amendment include:
-- The Lease Agreement will be assumed, as modified by the
Amendment.
-- Provided that the Debtors have made all required payments
under the Amendment and are not in default, the Debtors
must pay, within 15 days after the effective date of any
plan of reorganization confirmed by the Court, $1,600,000
plus any applicable sales or property taxes for the
Production Equipment. In addition, they must pay all
other post-petition amounts due and remaining unpaid under
the Lease Agreement.
-- After receiving the Post-petition Amounts and the Purchase
Price for the Production Equipment, Transamerica must
provide the Debtors with a bill of sale for the Production
Equipment, and the Lease Agreement terminates.
-- The Debtors agree to pay Rent to Transamerica until the
date the Lease Agreement terminates.
-- Subject to the effectiveness of the Amendment and provided
that the Debtors are not in default under the Lease
Agreement and have paid the Post-petition Amounts and the
Purchase Price, Transamerica agrees to waive all rights to
an administrative claim for the cure of pre-petition
defaults under the Lease Agreement. However, it will have
an allowed unsecured claim against the Debtors' estates
for $1,539,207.
-- With the exception of the allowed unsecured claim,
the Debtors and Transamerica mutually agree to release
each other from all claims and obligations existing prior
to the Court's approval of the Amendment.
Mr. Winter asserts that the assumption of the Lease Agreement,
as modified, will enable the Debtors to continue using the
Production Equipment, which is necessary for the Debtors'
manufacturing operations. The purchase of the Production
Equipment will also eliminate the obligations to continue paying
Rent and will convert over $1,500,000 of the amounts due under
the Lease Agreement into a general unsecured claim against the
Debtors' estates. (Pillowtex Bankruptcy News, Issue No. 27;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
POLAROID CORP: CEO Gary DiCamillo Will Resign Effective July 1
--------------------------------------------------------------
Polaroid Corporation announced that Gary T. DiCamillo, chairman
and chief executive officer, will resign effective July 1, 2002
to become president and chief executive officer of TAC Worldwide
Companies, based in Dedham. He will continue in his position at
Polaroid until that date, and then remain as a member of the
Polaroid board of directors.
DiCamillo said, "I feel a responsibility to see Polaroid through
this crucial period of its reorganization and to help prepare
the company to emerge from Chapter 11 as an independent company
ready for new ownership and new growth opportunities. This is a
time of new beginnings both for Polaroid for me personally as I
assume the job of CEO at TAC Worldwide, one of the largest
private corporations in the United States.
"I will leave with sincere thanks to the strong management team
at Polaroid, to the many employees with whom I have been
privileged to work, and to a loyal and independent board of
directors," he said.
DiCamillo joined Polaroid as chairman and chief executive
officer in October 1995. Prior to that, he served as group vice
president of the Black & Decker Corporation and president of
Worldwide Power Tools and Accessories.
Board member Alfred M. Zeien, retired chairman and chief
executive officer of The Gillette Company, said, "We have been
fortunate to have Gary remain to guide the company over this
long, difficult period."
Another member of the board, John W. Loose, former president and
chief executive officer of Corning Incorporated, said, "Gary has
been steadfast in fulfilling the Board's wishes that he remain
CEO. He has earned our gratitude, and we wish him only good
things in the future."
Sal Balsamo, founder of TAC and co-chairman of the company's
board of directors, stated, "To attract someone of Gary
DiCamillo's professional and personal excellence to head our
company is indeed our good fortune. Gary's leadership
expertise, as well as his abundantly fine character, will
provide TAC with steadiness and strength as we move forward in
years to come."
Polaroid Corporation (OTC Bulletin Board: PRDQE) is the
worldwide leader in instant imaging. The company supplies
instant photographic cameras and films; digital imaging
hardware, software and media; secure identification systems; and
sunglasses to markets worldwide. Additional information about
Polaroid is available on the company's Web site at
http://www.polaroid.com
Polaroid Corporation's 11.50% bonds due 2006 (PRD3), an issue in
default, are trading at a price of 3, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=PRD3for
real-time bond pricing.
PRECISION SPECIALTY: Wants Until July 13 to Decide on Leases
------------------------------------------------------------
Precision Specialty Metals, Inc., asks the U.S. Bankruptcy Court
for the District of Delaware to give it more time to decide
which unexpired nonresidential real property leases should be
assumed, assumed and assigned, or rejected. The Debtor wants
its lease decision period to run through July 13, 2002.
The Debtor relates to the Court that it is currently utilizing a
DIP financing facility, which expires on the earlier of June 30,
2002, or the Termination Date. The DIP financing agreement
contains an affirmative covenant requiring the Debtor to adhere
to a specified timetable for the sale of its assets or capital
stock. Upon the sale of its assets or capital stock, the Debtor
expects to assume and assign or reject the unexpired leases,
depending upon the structure of the sale.
If the requested extension is not granted, the Debtor says that
it will be compelled either to assume long-term liabilities or
to forfeit unexpired leases prematurely, impairing the its
ability to operate as it did pre-petition, sell its assets, and
preserve the going concern value of its estates.
Precision Specialty Metals is a specialty steel conversion mill
engaged in re-rolling, slitting, cutting and polishing stainless
steel and high- performance alloy hot band into standard or
customized finished thin-gauge strip and sheet product. The
Company filed for Chapter 11 petition on June 16, 2001 in the
U.S. Bankruptcy Court for the District of Delaware. Laura Davis
Jones, Esq. at Pachulski, Stang, Ziebl, Young & Jones P.C.
represents the Debtor on its restructuring efforts.
PRINTING ARTS: Gets Approval to Retain Caspert as Appraisers
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gives its
approval to Printing Arts America, Inc. and its debtor-
affiliates to retain Caspert Management Co., Inc. as appraisers,
nunc pro tunc to March 15, 2002.
Caspert will perform appraisals of certain equipment financed by
Debtors from CIT Group/Equipment Financing, Inc. and Gramery
Leasing Services.
The Debtors will pay Caspert a flat fee of $500 for any document
based Appraisal. Caspert will perfom the Illinois Appraisal,
Tennessee Appraisal, Pennsylvania Appraisal, and Florida
Appraisal for $1,500 each.
Printing Arts America, Inc. filed for chapter 11 protection on
November 1, 2001 in the U.S. Bankruptcy Court for the District
of Delaware. Teresa K.D. Currier, Esq. and William H. Schorling,
Esq. at Klett Rooney Lieber & Schorling represent the Debtors in
their restructuring efforts. When the Company filed for
protection from its creditors, it listed estimated assets and
debts of over $100 million.
PSINET INC: US Trustee Appoints Consulting Creditors' Committee
---------------------------------------------------------------
Pursuant to Section 1102(a) and 1102(b) of the Bankruptcy Code,
the United States Trustee appoints these six creditors, being
among the largest unsecured claimants, to serve on the Official
Committee of Unsecured Creditors PSINet Consulting Solutions
Holdings, Inc.:
(1) NTFC Capital Corporation
10 Riverview Drive
Danbury, CT 06810
Attn: Robert Wotten
Counsel:
Madlyn Gleich Primoff, Esq.
Paul, Hastings, Janofsky & Walker, LLP
75 East 55th Street
New York, New York 10022
(212) 318-6827
(2) Operating Subsidiaries of Verizon Communications, Inc.
11750 Beltsville Drive
Beltsville, MD 20705
Attn: Daniel G. Flagler
(301) 595-2131
(3) Morgan Stanley Dean Witter Investment Mgt.
1 Tower Bridge
W. Conshohocken, PA 19428
Attn: Deanna Loughnane or Brandon Stranzl
(601) 260-7392
(4) Mackay Shields
9 West 57th Street, 33rd Floor
New York, New York 10019
Attn: Jordan Teramo
(212) 230-3918
(5) Varde Partners, Inc.
3600 West 80th Street, Suite 425
Minneapolis, MN 55431
Attn: George Hicks or Jeremy Hedberg
(952) 893-1554
(6) CFSC Wayland Advisers, Inc.
12700 Whitewater Drive
Minnetonka, MN 55343
Attn: Joseph Martin Delgman
(952) 984-3709
(PSINet Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
QUALITY DISTRIBUTION: S&P Junks Rating Over $140M Exchange Offer
----------------------------------------------------------------
On May 7, 2002, Standard & Poor's lowered the corporate credit
rating on tank truck carrier Quality Distribution Inc. to
double-'C' from single-'B'-plus and the company's subordinated
debt rating to double-'C' from single-'B'-minus after the
company announced an exchange offer for its $140 million in
subordinated notes. Approximately $500 million of rated debt is
affected.
All the ratings have been placed on CreditWatch with negative
implications. The Tampa, Florida-based company's single-'B'-plus
senior secured bank facility rating has been affirmed.
Quality Distribution's ratings reflect its heavy debt burden,
offset somewhat by its strong competitive position, albeit in a
low margin capital intensive industry. The company is the
largest bulk tank truck carrier in North America, transporting
chemical and chemical-related products in specialized trailers.
It also provides specialized dry bulk handling, tank cleaning,
and freight brokerage.
Since the company's debt-financed acquisition of Chemical Leaman
Inc. in 1998, Quality Distribution's already weak financial
profile has been further hurt by the weak economy and reduced
demand. As a result, its earnings and cash flow have weakened,
and its equity account deficit has widened since the
acquisition, totaling $135 million as of December 31, 2001.
As a privately held company, Quality Distribution has limited
financial flexibility in that it is solely reliant on its $360
million in secured bank facilities. The company is currently in
compliance with financial covenants of these facilities, due to
an amendment that was granted through December 31, 2002, and is
in the process of negotiating another amendment for the period
subsequent to that date. As of December 31, 2001, the company
had $17 million available under the facilities.
If successful, the exchange offer would likely result in reduced
interest expense, but Quality Distribution would still suffer
from a relatively heavy debt burden. Standard & Poor's will
monitor the progress of the exchange offer to determine the
impact on Quality Distribution's ratings.
Outlook
If the exchange offer is successful and judged by Standard &
Poor's to impair full and timely payments of the rated
securities, ratings on Quality Distribution's subordinated notes
would be lowered to single-'D' and the corporate credit rating
to selective default.
Ratings List: To From
* Corporate credit rating CC/Watch Neg/-- B+/Negative/--
* Subordinated debt rating CC/Watch Neg/-- B-
* Senior secured bank facilities B+
QUESTRON TECHNOLOGY: Completes Asset Sale to GE Supply Logistics
----------------------------------------------------------------
Questron Technology, Inc. (OTCBB:QUSQE) said that the previously
announced sale of its business and assets to GE Supply, a
business unit of General Electric Company (NYSE:GE) has been
completed. GE Supply completed the transaction through its newly
launched business unit GE Supply Logistics, LLC.
The GE Supply purchase price is insufficient to cover all of
Questron's liabilities, and therefore, Questron's stockholders
will not receive any distribution upon completion of the
bankruptcy proceedings.
Questron and its subsidiaries filed voluntary petitions for
reorganization under Chapter 11 of the Bankruptcy Code on
February 3, 2002 in the United States Bankruptcy Court for the
District of Delaware.
* * *
GE Supply, the electrical products distribution business of the
General Electric Company (NYSE: GE), announces the formal launch
of GE Supply Logistics, LLC. The new GE Supply business unit is
the result of the acquisition of the assets of Questron
Technology, Inc. and its subsidiaries. In April, GE Supply won a
bankruptcy court-approved auction of Questron's assets and the
GE Supply-Questron transaction has received all necessary
approvals. Questron filed for Chapter 11 protection in February.
GE Supply Logistics provides supply chain management solutions
and inventory logistics management programs through two
operating units: GE Supply Logistics and GE Supply Aerospace
Logistics. Based in Dallas, Texas, the business employs close to
400 in 35 locations nationwide.
GE Supply President and CEO Bill Meddaugh has named Jason Jones
as President and General Manager of GE Supply Logistics. Jones
is a graduate of Texas A&M University with a Bachelor's degree
in industrial engineering. He began his GE career in the
Company's Distribution Management Program and served on the GE
Corporate Audit Staff. He has extensive international and broad
functional experience, most recently leading GE Supply's
distribution operation.
Customer base synergy
According to Jones, "the addition of Questron Technology's
assets presents GE Supply with an excellent opportunity to
complement our already expanding value proposition in terms of
fulfilling customer requirements. Utilizing their integrated
logistics management programs for small commodity parts and GE
Supply's expertise as an international electrical distributor,
GE Supply Logistics will be able to deliver new levels of
service. The combined organizations will also benefit from a
natural synergy between our mutual customer bases, which include
the aerospace industry, commercial and industrial users, and
OEMs."
GE Supply is a full-line, international distributor of
electrical products, aerospace parts, power generation products,
voice and datacom equipment and supplies from GE and other
leading manufacturers. It serves electrical contractors,
industrial and commercial users, engineer constructors, OEMs,
utilities and the aerospace industry. Its operating units
include GE Supply, GE Structured Services, and GE Supply
Logistics. GE Supply supports its customers with service
offerings including the National Sales Center, National Tech
Center, Product Specialist Network, 24-hour Internet Ordering
and e-Commerce services, Hub and Spoke Distribution facilities,
and 24-hour emergency service. Headquartered in Shelton,
Connecticut, the company utilizes 4.5 million square feet of
warehouse space and has more than 150 branch offices and five
distribution Hubs throughout the U.S., Mexico, South America,
Ireland, the Middle East and Southeast Asia. GE Supply can be
reached at (203) 944-3000; Web site http://www.gesupply.com
RECOTON CORP: Lenders Waive Defaults & Amend Loan Covenants
-----------------------------------------------------------
Recoton Corporation (Nasdaq: RCOT), a leading global consumer
electronics company, announced financial results for the first
quarter ended March 31, 2002, highlighted by strong year-over-
year results at its audio segment and continued profitable
operations at its consumer electronic accessories segment.
These two segments produced a combined EBIT (Earnings Before
Interest and Income Taxes) for the 2002 first quarter of
approximately $7.0 million. The Company also outlined specific
steps it has taken, and expects to take, to improve overall
operating results in its video game segment, which produced an
EBIT loss of approximately $6.3 million in the first quarter of
2002. Recoton expects a return to profitability in its video
game business in 2002, as well as continued strong operating
results from its consumer electronic accessories and audio
segments throughout the year.
Robert L. Borchardt, Chairman, President and Chief Executive
Officer of Recoton, discussed management's plan to improve the
overall operations in its video game segment, stating, "As
previously announced, the Company enacted initiatives in mid-
March 2002 which, on an annualized basis, should reduce
operating costs by an estimated $7.0 million. Subsequently,
Recoton retained the services of a financial consulting firm to
further evaluate and assist management in the development and
implementation of a comprehensive plan to return the video game
segment to profitability. It should be noted that this
consulting firm assisted management in the successful turnaround
of both its consumer electronics accessories and audio segments.
"While certain initiatives have already been implemented to
reduce operating expenses and improve gross margins, we do not
anticipate the full implementation of the strategic plan until
the end of May 2002. Our internal efforts should be supported by
expected growth in the video game industry in 2002, spurred on
by several factors. We anticipate a reduction in platform prices
may occur as early as the upcoming E3 (Electronic Entertainment
Expo) being held in Los Angeles from May 22-24, which should
open up a more affordable market to millions of new households.
In addition, an array of new and exciting software titles should
provide increased incentive for the purchase of InterAct's
joysticks, controllers, racing wheels, memory cards and its
popular GameShark(R) products. InterAct, the industry's leading
third party marketer of video game products and accessories, is
well positioned to benefit from this anticipated growth.
"Over the years, Recoton's commitment to excellence has allowed
us to become a global leader in the manufacture, development,
marketing and sales of a broad array of consumer electronic
products and accessories. Our goal is to bring this same energy
and commitment to enhancing the operations in our video game
business and ensuring that Recoton is an active participant in
one of the industry's most exciting and promising categories."
Mr. Borchardt continued, "In the first quarter of 2002, EBIT at
our audio segment more than doubled to approximately $4.9
million on sales of $56.1 million compared to EBIT of
approximately $2.4 million on sales of $49.4 million for the
same period one year ago. This increase in sales and EBIT
reflects the overall acceptance of our new lines of products,
which were introduced in the second half of 2001. Our mobile and
home audio products, primarily sold under the Jensen(R),
AR/Acoustic Research(R), Advent(R), NHT(R) and Magnat(R) brand
names, continued to increase their market share globally.
Furthermore, we are anticipating additional growth in our audio
segment due to Recoton's involvement with the launch of Sirius
Satellite Radio(R), which provides 100 channels of commercial
free entertainment. Sirius is now providing service in a number
of states and expects to roll-out national service availability
by July 1, 2002. Recoton is selling its Jensen-brand, Sirius-
capable aftermarket car radio receivers concurrent with Sirius'
entry into each new market and, in Fall 2002, expects to deliver
its exclusive Jensen branded PNP (Plug-n-Play) system to enable
quick installation of the Sirius satellite service with current
car radios.
The consumer electronics accessories segment produced an EBIT of
approximately $2.1 million on sales of approximately $45.7
million in the first quarter of 2002, compared to an EBIT of
$4.6 million on sales of $47.2 million for the same period last
year. The first quarter reduction in EBIT was primarily
attributable to one-time promotional charges, product mix,
increased air freight expense to satisfy customer orders, as
well as increased sales expense resulting from higher retail
versus OEM sales.
Mr. Borchardt stated, "We expect continued growth and
profitability from this segment throughout the year. Our
customer base is expanding as customers of these retailers
purchase our products, including high-end cables, switches, TV
antennas, TV remote controls, surge protection devices, wireless
headphones, wireless speakers and a host of cellular, camcorder
and photo accessories, to support a proliferation of digital
technology. Consumers also find Recoton accessories vital in the
maintenance, upgrade and integration of older, yet still
functional, systems."
Mr. Borchardt continued, "The EBIT loss at our video game
segment was $6.3 million on sales of $29.5 million, compared to
an EBIT loss of $3.1 million on sales of $31.6 million in the
first quarter of 2001. These results were primarily due to
factors previously stated. InterAct remains the industry's
leading third-party provider of video game products. We believe
that we are well positioned with product assortments at most key
retailers and should benefit from the anticipated surge in the
video game business during the second half of the year."
As previously announced, the continued losses at the video game
segment were the major factor in the Company's net loss for the
first quarter. Steps to determine and implement the changes
required to help restore this business segment to profitability
were begun late in the first quarter of 2002, but the benefits
of these actions will not be realized until further into the
year.
On a consolidated basis, net sales for the 2002 first quarter
totaled $131.2 million versus $128.2 million for the same period
last year. The net loss for the first quarter of 2002 was $4.5
million versus a net loss of $2.8 million for the first quarter
of 2001.
Mr. Borchardt concluded by stating, "The restructuring of our
video game business currently in progress, coupled with
continued strong performance at our consumer electronic
accessories and audio business segments, should produce improved
operating results in 2002 over those reported in 2001. We are
reiterating our previous guidance of revenues between
$640,000,000 and $655,000,000, against which the Company expects
net income for the year in the range of $7,500,000 to
8,500,000. In accordance with new accounting requirements
starting in 2002, we have reported market expansion expenses as
a reduction to sales instead of as an increase in selling
expense. We anticipate market expansion expenses to range
between $40 and $50 million in fiscal 2002.
"On January 1, 2002 the Company adopted new accounting
pronouncements for Business Combinations, Goodwill and Other
Intangible Assets and accordingly, upon adoption of these
pronouncements the Company eliminated Goodwill amortization over
its estimated useful life. The Company is still in the process
of evaluating whether there is any transitional amount to be
recorded relative to the carrying value of its Goodwill that
would result from the adoption of these pronouncements and will
complete its evaluation by June 30, 2002."
Recoton Corporation is a global leader in the development and
marketing of consumer electronic accessories, audio products and
gaming products. Recoton's more than 4,000 products include
highly functional accessories for audio, video, car audio,
camcorder, multi-media/computer, home office and cellular and
standard telephone products, as well as 900MHz wireless
technology products including headphones and speakers;
loudspeakers and car and marine audio products including high
fidelity loudspeakers, home theater speakers and car audio
speakers and components; and accessories for video and computer
games. The Company's products are marketed under three business
segments: Consumer Electronics Accessories, Audio and Video
Gaming. CE Accessory products are offered under the AAMP(TM),
Ambico(R), Ampersand(R), AR(R)/Acoustic Research(R),
Discwasher(R), InterAct(R), Jensen(R), Parsec(R), Peripheral(R),
Recoton(R), Rembrandt(R), Ross(TM), SoleControl(R), SoundQuest
and Stinger brand names. Audio products are offered under the
Advent(R), AR(R)/Acoustic Research(R), HECO(TM), Jensen(R),
MacAudio(R), Magnat(R), NHT(R) (Now Hear This)(R), Phase
Linear(R) and Recoton(R) brand names. Gaming products are
offered under the Game Shark(R), InterAct(R) and Performance(TM)
brand names.
SALIENT 3 COMMS: Reports Q1 Net Asset Value of $1.49 Per Share
--------------------------------------------------------------
Salient 3 Communications, Inc., (OTC Bulletin Board: STCIA)
announced that as of the end of its first fiscal quarter, ended
March 29, 2002, its estimated net assets in liquidation per
outstanding share were $1.49. This value represents an increase
of $0.04 per share from the estimated net assets in liquidation
of $1.45 as of December 28, 2001, reported in the Company's Form
10-K for 2001 as filed with the Securities and Exchange
Commission.
The Company cautioned that under liquidation basis accounting,
all values of realizable assets and settlement amounts of
liabilities are estimates, subject to continual reassessment
based on changing circumstances. Therefore, it is not presently
determinable whether the amounts realizable from the remaining
assets or the amounts due in settlement of obligations will
differ materially from the amounts shown on the statement of net
assets in liquidation as of March 29, 2002.
The Company expects to make further distributions as specific
events provide available cash at a level where the Board of
Directors can properly authorize a distribution, consistent with
its obligations under Delaware rules and regulations governing
companies in liquidation.
In accordance with SEC Regulation FD (Fair Disclosure), Salient
3 will not respond to individual investor inquiries regarding
the timing, process or ultimate outcome of its liquidation
process. The Company will, however, issue announcements whenever
material events occur in its liquidation process that could have
a potential impact on its net assets in liquidation.
SIMON WORLDWIDE: Fails to Meet Nasdaq Listing Requirements
----------------------------------------------------------
Simon Worldwide, Inc., said that the Company's securities were
delisted from the Nasdaq Stock Market by Nasdaq on May 3, 2002
due to the Company's failure to comply with the minimum
$4,000,000 net tangible assets and the minimum $10,000,000
stockholders' equity listing requirements.
SUN INT'L: Commencing Tender Offer to Purchase 9% Senior Notes
--------------------------------------------------------------
Sun International Hotels Limited (NYSE:SIH) and its wholly owned
subsidiary Sun International North America, Inc. are commencing
a cash tender offer to purchase any and all of their outstanding
9% Senior Subordinated Notes due 2007. The tender offer is being
made pursuant to an Offer to Purchase and Consent Solicitation
Statement and a related Letter of Transmittal and Consent, dated
May 8, 2002. The tender offer is scheduled to expire at
midnight, New York City time, on June 4, 2002, unless extended
to a later date or time or earlier terminated. In conjunction
with the tender offer, the Company and SINA will be soliciting
consents to proposed amendments to the indenture governing the
notes. The proposed amendments would eliminate substantially all
of the restrictive covenants and certain events of default from
the indenture governing the notes. Holders that tender their
notes will be required to consent to the proposed amendments,
and holders that consent to the proposed amendments will be
required to tender their notes.
Tenders of notes and deliveries of consents made on or prior to
5:00 p.m., New York City time, on Monday, May 20, 2002, may be
withdrawn or revoked at any time on or before the Consent Date.
Tenders of notes made after 5:00 p.m., New York City time, on
Monday, May 20, 2002, may be withdrawn at any time until
midnight, New York City time, on the expiration date for the
tender offer, which is currently scheduled to be June 4, 2002.
Subject to conditions specified in the Statement, the total
consideration to be paid for each properly delivered consent and
validly tendered note received (and not properly revoked) on or
prior to 5:00 p.m., New York City time, on Monday, May 20, 2002
and accepted for payment will be $1,045.00 per $1,000.00 of
principal amount, plus accrued and unpaid interest. The total
consideration for each note tendered includes an early consent
premium of $20.00 per $1,000.00 of principal amount of notes
payable only to those holders that tender their Notes on or
prior to 5:00 p.m., New York City time, on Monday, May 20, 2002
(and do not withdraw their tender). Holders that tender their
notes after that time but prior to the expiration of the tender
offer will receive $1,025.00 per $1,000.00 of principal amount
of notes validly tendered and accepted for payment, plus accrued
and unpaid interest.
The tender offer is conditioned upon the satisfaction of a
financing condition, a consent under the Company's existing
revolving credit facility, a minimum tender condition, as well
as other general conditions. If the tender offer is consummated,
the Company and SINA intend promptly thereafter to call for
redemption, in accordance with the terms of the indenture
governing the notes, all notes that remain outstanding, at the
applicable redemption price of $1,045.00 per $1,000.00 of
principal amount thereof, plus interest accrued to the
redemption date.
Copies of the tender offer and consent solicitation documents
can be obtained by contacting D. F. King & Co., Inc., the
Tabulation Agent and Information Agent for the consent
solicitation, at 800-848-3416 (toll free) and 212-269-5550
(extension 6832).
Bear, Stearns & Co. Inc. is acting as Dealer Manager for the
tender offer and Solicitation Agent for the consent
solicitation. Questions concerning the tender offer and consent
solicitation may be directed to Bear, Stearns & Co. Inc., Global
Liability Management Group, at 877-696-2327 (toll free).
Sun International Hotels Limited is a leading developer and
operator of premier casinos, resorts and luxury hotels. Our
flagship destination is Atlantis, a 2,317-room, ocean-themed
resort located on Paradise Island, The Bahamas. Atlantis is a
unique destination casino resort featuring three interconnected
hotel towers built around a 7-acre lagoon and a 34-acre marine
environment that includes the world's largest open-air marine
habitat. We also developed and receive certain revenue from the
Mohegan Sun casino in Uncasville, Connecticut. The Native
American-themed Mohegan Sun is one of the premier casino gaming
properties in the Northeast. In our luxury resort hotel
business, we operate eight beach resorts in Mauritius, Dubai,
the Maldives and The Bahamas. For more information concerning
Sun International Hotels Limited and its operating subsidiaries,
visit its Web site at http://www.sunint.com
Sun International Hotels' September 31, 2001 balance sheet
showed that the company had a working capital deficiency of
about $42 million.
SWAN TRANSPORTATION: Wants to Engage Kinsella as Noticing Agent
---------------------------------------------------------------
Swan Transportation Company asks permission from the U.S.
Bankruptcy Court for the District of Delaware to employ Kinsella
Communications, Ltd. as notice consultants.
Kinsella works on either a percentage of ad cost, or flat fee
basis. In this case, Kinsella has agreed to charge a $25,000
flat fee, plus $100 per day for Court or deposition testimony,
plus expenses.
To provide claimants with unknown addresses with a fair
opportunity to participate in this case, the Debtor needs hire a
noticing agent to give notice of the bar date and the Debtor's
proposed Plan via publication.
In its retention, Kinsella will be required to:
1) update the notice plan, as needed;
2) produce the actual TV, radio, and printed ad content;
3) place the ads;
4) monitor the ads;
5) testify in Court regarding all these matters; and
6) perform such other steps as necessary and helpful to
accomplishing the notice campaign.
According to the Declaration of Ms. Kathy Kinsella, Kinsella has
not represented the Debtor, its creditors, equity security
holder, or any other parties in interest, or their respective
attorneys, in any matters relating to the Debtor or its estate.
Swan Transportation Company filed for chapter 11 protection on
December 20, 2001. Tobey Marie Daluz, Esq., Kurt F. Gwynne, Esq.
at Reed Smith LLP and Samuel M. Stricklin, Esq. at Neligan,
Tarpley, Stricklin, Andrews & Folley, LLP represent the Debtor
in its restructuring efforts. When the Company filed for
protection from its creditors, it listed assets and debts of
over $100 million.
TANDYCRAFTS: Disclosure Statement Hearing Scheduled for June 4
--------------------------------------------------------------
Tandycrafts, Inc. and its debtor-affiliates filed their Joint
Plan of Reorganization with the accompanying Disclosure
Statement to the U.S. Bankruptcy Court for the District of
Delaware. A hearing to consider the Motion shall be held before
the Honorable Mary F. Walrath on June 4, 2002 at 10:30 a.m. to
consider the adequacy of the Disclosure Statement.
Any objection to the Disclosure Statement is due to be filed
with the Clerk of the Bankruptcy Court by May 28, 2002 with a
copy served to:
i) Proskauer Rose LLP, 1585 Broadway
New York, New York 10036
Attn: Alan B. Hyman, Esq. and
Scott K. Rutsky, Esq.
and
Cozen O'Connor, 1201 N. Market Street
Suite 1400, Wilmington, DE 19801
Attn: Mark E. Felger, Esq.
ii) Counsel to the Official Committee of Unsecured
Creditors
Lowenstein Sandler, P.C.
65 Livingston Avenue, Roseland, New Jersey 07068
Attn: Kenneth A. Rosen, Esq.
and
The Bayard Firm, 222 Delaware Avenue, Suite 900
Wilmington, DE 19899
Attn: Michael Vild, Esq.
iii) Counsel to the Pre-Petition Lenders
Vinson & Elkins, LLP
3700 Trammell Crow Center, 2001 Ross Avenue
Dallas, Texas, 75201
Attn: William L. Wallander, Esq.
and
Bifferato, Bifferato & Gentilotti, 1308 Delaware Avenue,
Wilmington, DE 19899
Attn: Ian Connor Bifferato, Esq.; and
iv) The Office of the United States Trustee
824 North Market Street, Federal Building
Wilmington, Delaware 19801
Attn: Julie L. Compton, Esq.
Tandycrafts, a leading manufacturer and marketer of picture
frames, mirrors and other wall decor products, filed for chapter
11 protection on May 15, 2001. Mark E. Felger, Esq., at Cozen
and O'Connor, represents the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed assets of $64,559,000 and debts of
$56,370,000.
THERMOVIEW: Crowe Chizek Replacing Andersen as Accountants
----------------------------------------------------------
On April 25, 2002, the Board of Directors of ThermoView
Industries, Inc., on the recommendation of the Audit Committee,
dismissed Arthur Andersen LLP and engaged Crowe Chizek as the
Company's independent certifying accountants for the year ended
December 31, 2002. Arthur Andersen LLP was notified of their
dismissal on April 25, 2002.
Headquartered in Louisville, ThermoView Industries, Inc. reaches
consumers in 16 states, from California to Ohio and North Dakota
to Missouri, and in major metropolitan areas including Los
Angeles, Chicago and St. Louis. The company designs,
manufactures, markets, and installs home improvements in the
$200 billion home improvement/renovation industry, and is the
fifth-largest remodeler in the country, according to the
September 2001 issue of Qualified Remodeler Magazine. As
previously reported on March 1, 2002, the company announced its
intention to continue cost-cutting efforts through 2002.
The goal for 2002 is an additional reduction of $1 million in
overhead costs, and to generate between $5.5 million and $6.5
million in EBITDA. The company seeks to pay down debt by
approximately $2.5 million in 2002, and refinance the remaining
balance under more favorable terms.
VERADO HOLDINGS: Obtains Court Nod for Weil Gotshal's Engagement
----------------------------------------------------------------
Verado Holdings, Inc. and its debtor-affiliates obtained
authority from the U.S. Bankruptcy Court for the District of
Delaware to employ Weil, Gotshal & Manges LLP as its attorneys
in its chapter 11 cases. Martin A. Sosland, Esq., and Saundra
R. Steinberg, Esq., lead the engagement.
Specifically, Weil Gotshal will:
a) take all necessary action to protect and preserve the
Debtors' estates, including the prosecution of actions
on the Debtors' behalf, the defense of any actions
commenced against the Debtors, the negotiation of
disputes in which the Debtors are involved, and the
preparation of objections to claims filed against the
Debtors' estates;
b) prepare on behalf of the Debtors, as debtors in
possession, all necessary motions, applications,
answers, orders, reports and papers in connection with
the administration of the Debtors' estates;
c) to negotiate and prepare on behalf of the Debtors, a
chapter 11 plan; and
d) perform all other necessary legal services in connection
with these chapter 11 cases.
Weil Gotshal received a $200,000 retainer from the Debtors. The
Debtors agree to pay Weil Gotshal its customary hourly rates:
Members and Counsel $375 to $700 per hour
Associates $200 to $410 per hour
Paraprofessionals $80 to $150 per hour
Verado Holdings, Inc., through its subsidiaries, provides
outsourced services as well as professional services, data
center, and application hosting solutions for various
businesses. The Company filed for chapter 11 protection on
February 15, 2002. When the Debtors filed for protection from
its creditors, it listed $61,800,000 in assets and $355,400,000
in liabilities.
VLASIC FOODS: Wants Claims Objection Deadline Moved to Sept. 11
---------------------------------------------------------------
Vlasic Foods International, Inc. and its debtor-affiliates ask
to extend the time under the Second Amended Joint Plan of
Distribution to object to claims filed on or before the Bar
Date. Specifically, the Debtors ask for an extension until
September 11, 2002 to object to claims.
Robert A. Weber, Esq., at Skadden, Arps, Slate, Meagher & Flom,
in Wilmington, Delaware, explains that approximately 1,200
proofs of claim have been filed against the Debtors' estates.
Accordingly, the Debtors and their advisers have made
substantial progress on the reconciliation of the proofs of
claim. To date, the Debtors have filed four omnibus objections
to claims and have addressed approximately 250 proofs of claim.
"Separate objections to 15 specific proofs of claim were also
addressed," Mr. Weber adds. In addition, the Debtors have
determined that 225 proofs of claim should not be the subject of
an objection.
Mr. Weber tells the Court that the Debtors and their advisers
continue to reconcile the remaining proofs of claim. They
anticipate the addition of 450 to 550 claims totaling more than
$2,200,000,000 that are still to be filed.
Due to the complexity and the size of these cases, there is
insufficient time to permit the Debtors to complete the claims
resolution process before June 3, 2002 -- the Claims Objection
Deadline fixed under the Plan. "Absent the extension, all
creditors may suffer, because improper claims will significantly
dilute distributions under the Plan," Mr. Weber says.
According to Mr. Weber, one of the reasons for the delay is that
the Debtors have only a skeletal staff. And until recently, Mr.
Weber adds, the Debtors and their advisors had limited direct
access to electronic information contained in the books shared
with Pinnacle. Although expanded access improved the Debtors'
ability to reconcile claims, the volume and complexity of the
proofs of claim to be reconciled necessitate the extension
requested.
Finally, Mr. Weber states that the Debtors need additional time
to resolve factual and legal issues for certain complex claims.
"At this time, the Debtors estimate that an extension of 100
additional days will provide sufficient time to complete the
reconciliation process," Mr. Weber says. (Vlasic Foods
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
VOICEFLASH: Shares Delisted from Nasdaq SmallCap Effective May 8
----------------------------------------------------------------
VoiceFlash Networks, Inc. (OTCBB:VFNX) (formerly Nasdaq:VFNX)
received notice that its common stock will be delisted from the
Nasdaq Small Cap Market effective May 8, 2002. Although
VoiceFlash is disappointed with the NASDAQ's determination,
VoiceFlash anticipates that its common stock will be immediately
eligible to trade on the OTC Bulletin Board.
Robert J. Kaufman, VoiceFlash's Chief Executive Officer, pointed
out, "We have made substantial progress re-engineering the
Company as a profitable financial services company as evidenced
by the recently reported quarter. Last quarter we reported the
most successful quarter in the Company's history (net income of
$459,713 on revenues of $1,189,000). We expect this revenue and
earnings momentum to continue in this fiscal year and beyond."
Kaufman continued, "The strategic addition of United Capturdyne
in October 2001 has provided us with state-of-the-art technology
and broad capabilities in the financial services industry. Since
October 2001, the Company has satisfied its needs for working
capital from cash generated from operations."
"Going forward, we are continuing to develop compelling new
products and services, and we fully anticipate further growth
and expansion in 2002. Similar to the recently announced
partnership with CrossCheck, Inc. we anticipate entering into
other strategic relationships and adding new dimensions to the
company's capacities and capabilities."
"We believe we have implemented a plan that would have brought
us into compliance with the NASDAQ's continued listing
requirements. This NASDAQ determination does not change our
plans to execute upon our previously announced business
strategies."
VoiceFlash Networks, Inc. (OTCBB:VFNX) is a leader in the
commercialization and integration of wireless technologies into
legacy point-of-sale software and hardware systems. The company
develops wireless technologies on the cutting edge of wireless
evolution that link independent mobile devices on a unified
platform to manage personal consumer data via point-of-sale
systems and an open standards-based Application Programming
Interface (API). For more information, please visit VoiceFlash
at http://www.voiceflash.com
United Capturdyne Technologies, Inc., a wholly owned subsidiary
of VoiceFlash Networks, Inc., specializes in cost-effective and
timely custom non-cash payment solutions. The foundation of UCT
technology lies in its processing engines, including AccountMax,
TransMax, CheckMax, InterMax, and SHARON. With these dynamic
tools, UCT can modify any in-place cash-register or POS software
system, with no change in the retailer's hardware or software,
and manage all customer files. For more information, please
visit United Capturdyne at http://www.capturdyne.com
WARNACO: Proposes Uniform Store Closing Sale Bidding Procedures
---------------------------------------------------------------
In conjunction with The Warnaco Group, Inc.'s motion to conduct
Store Closing Sales, the Debtors need to conduct an Auction to
get the best and highest bidder to liquidate store inventory.
J. Ronald Trost, Esq., at Sidley Austin Brown & Wood LLP, in New
York, tells Judge Bohanon that the four liquidators who received
the store information have until May 3, 2002 to submit their
bids. After which, the Debtors propose to follow this schedule:
(a) the Debtors will finish the evaluation of the bids and
will file a motion to approve the sale to the highest
bidder by May 7, 2002, subject to overbids at an auction;
(b) conduct an auction on May 17, 2002;
(c) hearing of the Sale Motion to the highest bidder on May
21, 2002;
(d) Store inventory with the winning bidder on June 2, 2002;
and
(e) commencement of the Store Closing Sales on June 3, 2002.
Those parties who wish to participate in the auction, must
follow these procedures:
(a) All bidders must submit an offer in writing based on the
Agency Agreement, indicating any and all proposed
changes, to the:
-- Debtors' bankruptcy counsel, Sidley Austin Brown &
Wood, LLP;
-- Debtors' corporate counsel, Skadden, Arps, Slate,
Meagher & Flom, LLP;
-- counsel to the Debt Coordinators for the Pre-Petition
Lenders;
-- counsel to the Agent for the Post-Petition Lenders; and
-- counsel to the Official Committee of Unsecured
Creditors;
(b) All bidders must agree to be bound by all of the terms and
conditions of the Agency Agreement, with appropriate
modifications for the identity of the successful bidder,
the increased price and the better terms;
(c) All bidders must provide evidence, satisfactory to the
Debtors, of the bidder's financial ability to perform its
obligations under the Agency Agreement, as modified;
(d) All competing bids must remain open and irrevocable until
entry of an order by the Bankruptcy Court approving the
Agency Agreement;
(e) The initial overbid must be for an increase in the
percentage on which the Guaranteed Amount is based of at
least 1%. Successive bids thereafter will be for an
increase of at least 0.50% over the previous bid; and
(f) Competing bids cannot be contingent on completion of due
diligence, the receipt of financing or any board of
directors, shareholders or other corporate approval.
Objections
(1) OVP Management
Brian D. Huben, Esq., at Katten Muchin Zavis Rosenman, in Los
Angeles, California, relates that the Landlord wish to have
these provisions added to the Sale Guidelines to protect the
interests of OVP and the other tenants at Settlers Green:
(a) Signage
* There should be no distribution of handbills, leaflets
or other written materials outside the premises of any
store, and banners should not be permitted.
* There should be reasonable restrictions on the number,
size and location of the signs.
* There should be no reference to "Bankruptcy" or "Court
Ordered" sale.
(b) Furnishings, Fixture and Equipment
If furnishings, fixtures and equipment are sold, they
should not be removed from the store until the store
closing sale has concluded, and even then only after
shopping center hours, through a non-public access areas,
and after the store-front is covered or "dressed." The
Debtors should also identify to the Landlords which
furnishings, fixtures and equipment they intend to remove
or sell so as to avoid a later controversy regarding the
Debtors' right to remove or sell what otherwise may be a
fixture which is a property of the Landlord.
(c) Reports of sales and Compliance with Lease Terms
The Debtors should continue to provide sales reports to
OVP and otherwise comply with all terms of the Lease.
(d) Expedited Relief
OVP should be afforded expedited relief of a default
under the Lease or breach of the Guidelines.
(2) New Plan Excel Realty Trust, Inc.
David L. Pollack, Esq., at Ballard Spahr Andrews & Ingersoll,
LLP, in Philadelphia, Pennsylvania, informs Judge Bohanon that
New Plan has entered into a new lease with Perfume Outlet of St.
Augustine for the premises. This lease will commence on July 1,
2002. However, Mr. Pollack says, Perfume Outlet now desires to
take possession of the premises by June 17, 2002. Accordingly,
New Plan coordinated with the Debtors, and the Debtors agreed,
to vacate the premises by June 16, 2002.
Thus, New Plan will allow the Debtors to conduct the Store
Closing Sale as long as the premises is returned to New Plan no
later than June 16, 2002, subject to appropriate guidelines.
Mr. Pollack relates that conducting a going-out-of-business
would breach a lot of provisions of the Lease and New Plan
stands against:
(a) placing of any signs or banners on the outside of the
tenant's store;
(b) auction or other sales of fixtures or equipment inside
the stores; and
(c) allowing the Agent to make any alterations whatsoever to
the premises.
Furthermore, Mr. Pollack contends that the Proposed Order to bar
the Landlords from "interfering with the Debtors from conducting
the sale" is very broad. Mr. Pollack proposes that any order
entered allowing the going-out-of-business sale should be
limited in scope to those issues adjudicated at the hearing and
governed by the Guidelines. Otherwise, Mr. Pollack declares, the
Landlords would be deprived of their "rights to be heard on
particular issues. This could be interpreted as granting the
Debtors and their agents broader rights to breach the leases
than are provided for in the Guidelines. (Warnaco Bankruptcy
News, Issue No. 24; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
WHEELING-PITTSBURGH: WPC Selling Property to City of Follansbee
---------------------------------------------------------------
Wheeling-Pittsburgh Corporation owns two parcels of real estate
situated in Follansbee, Brooke County, West Virginia, containing
approximately 16 acres of land. The property was acquired by
WPC's predecessor, LaBelle Iron Works, in 1907 and 1918.
Because of its proximity to commercial property, the property
has never been used by WPC for industrial purposes. One of the
parcels has been leased for the last 39 years to the City of
Follansbee for $1.00 a year for use as baseball fields. The
other parcel has been leased for various purposes since 1954 and
is currently being used by the Follansbee City Schools as a
football field.
The Debtors want to sell the Property to the City of Follansbee
for $1,400,000. Based on the sales of similar properties, WPC
believes this is a fair price for the property. Together, the
property has a total of five acres of frontage on West Virginia
State Route 2. A licensed appraiser recently estimated the
value of frontage in this area to be approximately $215,900 per
acre. Recent comparable sales of frontage range from $200,000
to $250,000 per acre. WPC will receive approximately $213,800
per acre, or $1,069,000 for this frontage. The remaining eleven
acres of property are much less visible and usable, thereby
having far less value. WPC will receive approximately $36,000
per acre, or $396,000 for the acreage at the rear of the
property.
Subject to Bankruptcy Court approval, the parties have signed a
contract conveying the Property "as is, where is and if is" to
the City in exchange for cash.
General Realty served as WPC's broker in this transaction.
Judge Bodoh has already approved GRC's representation in
connection with this transaction. GRC will receive a $90,700
brokerage fees.
A title report indicated that several liens exist on the
property, including Citicorp (the DIP Lender) and other
mortgages in existence prior to WPC's prior bankruptcy. The
buyer is willing to accept an affidavit from WPC stating that
all deeds of trust presently on record in the Brooke County
Clerk's Office concerning any and all of the property which WPC
and/or Wheeling-Pittsburgh Steel Corporation owns and/or owned
in Brooke County, West Virginia, have been released in
full by virtue of the previous bankruptcy.
WPC seeks to sell this property free and clear of all liens,
claims and encumbrances, with such liens, claims or encumbrances
attaching to the proceeds from the property with the same force
and effect as such liens previously had on the property, subject
to the rights and defenses, if any, of WPC in those regards.
WPC proposes that the sale proceeds be applied in accordance
with (1) the terms of the DIP Credit Agreement of November 2000
among WPSC, the remaining Debtors in these cases, Citibank NA,
as initial issuing bank, Citicorp USA, Inc., as Agent, and the
DIP Lenders, and (2) the terms of Judge Bodoh's May 2001 O4der
approving the settlement of inter-company disputes and approving
related transactions and agreements.
Based on these terms and conditions, WPC, using its best
business judgment, asserts that the sale of the property to the
City in accord with the terms of the sale agreement is in the
best interests of WPC, its estate, and its creditors.
Noteholders' Committee
The Official Noteholders Committee of Wheeling-Pittsburgh
Corporation, represented by Jean R. Robertson of the Cleveland
firm of Hahn Loeser & Parks LLP, tells Judge Bodoh that the
Committee has no objection to the sale, as it appears to be in
the best interests of the estate. But the Committee, whose
constituents are creditors of both WPC and Wheeling-Pittsburgh
Steel Corporation, is concerned about the disposition of the
sale proceeds.
The property at issue is owned by WPC and not WPSC. Under the
terms of Judge Bodoh's May Order approving these two Debtors'
settlement and release agreement, WPC cannot "without the prior
consent of the Official Committee of Noteholders . lend or
otherwise make available to WPSC the proceeds from the
disposition of any of its assets."
The Committee does not consent to the use of the proceeds from
this sale for steel company operations. In the past, the
Debtors have sold other real property of WPC and used the
proceeds to increase WPSC's liquidity. Give the state of the
steel company, the creditors of WPC should not be put in a
position where the assets of their estate are used to further
fund losing operations of the steel company.
Accordingly, the Committee asks that the Debtors be required to
hold the sales proceeds in escrow until they demonstrate to
Judge Bodoh, the committee and other parties-in-interest, prior
to any use of the sales proceeds by WPC, that such use is
necessary, reasonable and appropriate.
The Agreed Order
The Debtors and the Noteholders Committee submit an Agreed Order
authorizing this sale, and Judge Bodoh promptly signs it.
However, by the terms of the Agreed Order the proceeds from the
sale of the realty are to be applied in accordance with (1) the
terms of the DIP Credit Agreement of November 2000, among WPC,
WPSC, the remaining Debtors, Citibank NA, as Initial Issuing
Bank), Citicorp USA, Inc. as Agent, and the other lends party to
the Credit Agreement, and (2) Judge Bodoh's May Order approving
the settlement of inter-company disputes and releases.
More specially, the Agreed Order as signed by Judge Bodoh
directs that WPC may re-borrow or otherwise use the proceeds of
the sale of the property to pay its administrative expenses;
provided that in the event that WPC wishes to re-borrow or
otherwise use any portion of the proceeds for the purpose of
making any payment to any of the other Debtors, or for the
purpose of paying any expense that is allocated among the
Debtors (including payments of portions of the professional
fees paid by the Debtors in these cases), or for the purpose of
paying any debt that is a joint obligation of WPC and any other
Debtor in these cases, WPC must first give ten days' advance
written notice of the amount and purpose of the proposed re-
borrowing or use to the Official Committees and to the Office of
the United States Trustee and, in the event that either of the
Official Committee or the Trustee objects to the proposed re-
borrowing or use within the ten-day period, WPC may not re-
borrow or use the proceeds for such purpose without first
obtaining Judge Bodoh's separate approval. (Wheeling-Pittsburgh
Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WILLIAMS COMMS: Signing-Up Logan as Claims and Noticing Agents
--------------------------------------------------------------
Williams Communications Group, Inc., and its debtor-affiliates
ask the Court to authorize the retention of Logan & Company Inc.
as a claims processing and noticing agent, pursuant to Section
156(c) of the Judicial Code.
Pursuant to the retention agreement with Logan, it is
anticipated that Logan will perform, at the request of the
Debtors or the Office of the Clerk of the Court, as applicable,
the following services as the Claims and Noticing Agent:
A. prepare and serve required notices in the Chapter 11 cases,
including:
a. notice of the commencement of the Chapter 11 cases and
the initial meeting of creditors under Section 341(a) of
the Bankruptcy Code;
b. notice of the claims bar date once such date is ordered by
the Court;
c. notice of the Debtors' objections to claims;
d. notice of any hearings on approval of a disclosure
statement and confirmation of a Chapter 11 plan; and
e. such other miscellaneous notices as the Debtors or the
Court may deem necessary or appropriate for an orderly
administration of the Chapter 11 cases;
B. within five days after the mailing of a particular notice,
file with the Clerk's Office a certificate or affidavit of
service;
C. maintain copies of all proofs of claim and proofs of interest
filed in these cases;
D. maintain official claims registers in these cases by
docketing all proofs of claim and proofs of interest in a
claims database that includes the following information for
each claim or interest asserted:
a. the name and address of the claimant or interest holder
and any agent thereof, if the proof of claim or proof of
interest was filed by an agent;
b. the date the proof of claim or proof of interest was
received by Logan and, if applicable, the Court;
c. the claim number assigned to the proof of claim or proof
of interest;
d. the asserted amount and classification of the claim; and
e. the applicable Debtor against which the claim or interest
is asserted;
E. implement necessary security measures to ensure the
completeness and integrity of the claims registers;
F. transmit to the Clerk's Office a copy of the claims registers
on a weekly basis, unless requested by the Clerk's Office on
a more or less frequent basis;
G. maintain an up-to-date mailing list for all entities that
have filed proofs of claim or proofs of interest in these
cases and make the list available upon requests to the
Clerk's Office or at the expense of any party in interest;
H. provide access to the public for examination of copies of the
proofs of claim or proofs of interest filed in these cases,
without charge during regular business hours;
I. record all transfers of claims pursuant to Bankruptcy Rule
3001(e) and provide notice of such transfers to the extent
required by Bankruptcy Rule 3001(e);
J. provide temporary employees to process claims, as necessary;
K. promptly comply with such further conditions and requirements
as the Clerk's Office or the Court may at any time prescribe;
and
L. provide such other claims processing, noticing, and related
administrative services as may be requested from time to time
by the Debtors.
In addition, the Debtors propose that Logan assist them with:
A. the preparation of the Debtors' schedules of assets and
liabilities, statements of financial affairs, master creditor
lists, and any amendments thereto;
B. the management and data processing necessary for the
reconciliation and resolution of claims;
C. the preparation, marking, and tabulation of ballots and other
services related to voting to accept or reject a chapter 11
plan; and
D. technical and other support in connection with the foregoing.
Although Logan will provide notices on behalf of the Court, the
Clerk's office, and the Debtors, Logan has agreed that:
A. Logan will not consider itself employed by the United States
government and will not seek any compensation from the United
States government in its capacity as the Claims and Noticing
Agent in the Chapter 11 cases;
B. by accepting employment, Logan waives any rights to receive
compensation from the United States government;
C. in its capacity as the Claims and Noticing Agent, Logan will
not be an agent of the United States government and will not
act on behalf of the United States government; and
D. Logan will not employ any past or present employees of the
Debtors in connection with its work as the Claims and
Noticing Agent in the Chapter 11 cases.
Erica M. Ryland, Esq., at Jones Day Reavis & Pogue in New York,
New York, informs the Court that the Debtors have thousands of
creditors and equity interest holders. Logan is a data
processing firm that specializes in claims processing, noticing,
and other administrative tasks in large Chapter 11 cases similar
to the Debtors' cases. If engaged, Logan would transmit certain
designated notices, maintain claims files and claims registers,
and assist the Debtors with administrative functions related to
confirmation of a Chapter 11 plan. In its 12 years as a claims
processor, Logan has provided similar claims agent and general
case management services directly to debtors in possession and
trustees in numerous other large chapter 11 cases, including In
re Laidlaw USA, Inc., Case No. 01-14099 (MJK) (Bankr. W.D.N.Y.
2001); In re Comdisco, Inc., No. 01-24795 (RB) (Bankr. N.D.
Ill.); In re Montgomery Ward, Case No. 00-4667 (RTL) (Bankr. D.
Del. 2000); and In re DIMAC Holdings, Inc., Case No. 00-1596
(MJW) (Bankr. D. Del. 2000).
Ms. Ryland contends that the Debtors' cases require the use of
an agent, such as Logan, to facilitate notice to the voluminous
list of creditors, equity interest holders, and other parties in
interest. To burden the Clerk's Office or the Debtors with the
task of serving each and every notice in these cases, or the
coordination of the claims procedures, would be inappropriate.
Such a burden would impair the Debtors' ability to effectively
focus their limited resources on their reorganization efforts.
The Debtors have also provided Logan with a retainer in an
amount equal to $30,000. (Williams Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
WILLIAMS: GlobalAxxess Outlines Shareholder Pipedream Plan
----------------------------------------------------------
GlobalAxxess Holdings has announced its intent to submit a plan
to the stockholders of Williams Communications Group ("WCG"
Ticker Symbol "WCGRQ") that will protect their interests by
swapping WCG shares for privately-held shares of GlobalAxxess.
GlobalAxxess intends to submit a bankruptcy bid for WCG in such
a manner that the WCG stockholders would not be wiped out.
According to the current reorganization plan that was filed as
the Chapter 11 bankruptcy it is intended to wipe out the
economic interests of all out existing shareholders.
See http://bankrupt.com/williams.txt
The Company intends to offer stock swap agreements that the WCG
stockholders will be included in a reorganization plan that is
sponsored by GlobalAxxess on behalf of WCG and its shareholders.
Such swap agreements would be contingent upon bankruptcy
acquisition of WCG by GlobalAxxess and subject to reaching
agreements that would resolve matters with creditors, equity
holders and other interested parties.
The GlobalAxxess swap offers will be available to holders of the
publicly traded shares, the WCG employees who would suffer loss
to their 401(k) plans under the proposed reorganization, and the
ERISA fraud claimants that have already filed suit against The
Williams Companies and contemplating such action against WCG.
See http://www.erisafraud.com/williamsco
GlobalAxxess has indicated to WCG its desire to submit a
proposal that would acquire the company and implement a
comprehensive workout with creditors and shareholders but was
not allowed into the negotiations prior to the April 22
bankruptcy filing. On April 12, GlobalAxxess notified WCG and
legal counsel for the Unofficial Creditors Committee that a
higher GlobalAxxess offer was open for discussions but the
negotiations remained in "lock up" and a higher offer was not
considered. As part of that bankruptcy filing, it was announced
that the WCG equity holders would receive nothing in the
proposed reorganization and the Williams Companies had offered
$200 million and a conversion of creditor debt into equity
shares of a new reorganized entity that would be owned by The
Williams Companies and WCG creditors.
Preliminary discussions between GlobalAxxess and creditor
representatives commenced May 7.
GlobalAxxess is engaged in the acquisition of multiple networks
and consolidation of the assets into one operating company to
deliver a broad range of services. GlobalAxxess believes that
its consolidation approach will strengthen the surviving
companies well beyond any standalone plan and build greater
value for stockholders and creditors.
Interested shareholders should register at the Williams
Communications Shareholder Web site at http://www.wcgiso.com
GlobalAxxess is a privately held company and an initial public
offering is planned for 2004 if market conditions permit. At
time of an IPO, much of the losses of the WCG equity holders
should be recoverable as well as those creditors who convert
part of their claims into an equity stake during the
reorganization process.
WINSTAR COMMS: Trustee Has Until Sept. 25 to Decide on Leases
-------------------------------------------------------------
Christine C. Shubert, the Chapter 7 Trustee overseeing the
liquidation of Winstar Communications, Inc. and its debtor-
affiliates, obtained a Court Order granting an extension of the
time within which she must decide whether to assume, assume and
assign, or reject any executory contracts, unexpired leases, or
subleases of non-residential real or personal property to which
the Debtors are a party. The deadline for making those lease-
related decisions is extended to September 25, 2002.
XEROX CORP: Fitch Changes Outlook on Low-B Ratings to Negative
--------------------------------------------------------------
Fitch Ratings has changed its Rating Outlook on Xerox Corp. and
its subsidiaries to Negative from Stable. The company's and its
subsidiaries' 'BB' senior unsecured debt and 'B+' convertible
trust preferred ratings are affirmed.
The Rating Outlook Negative reflects the company's on-going
negotiations with its bank group to refinance the $7.0 billion
revolver due October 2002 which Fitch expects will ultimately be
successful, the potential that Xerox's core operating cash flow
could limit access to the capital markets and the delay of the
company's public annual and quarterly filings following the
settlement with the Securities and Exchange Commission (SEC)
that will include financial restatements. As revenues are
forecasted flat to down, it is crucial that Xerox continues
executing its cost cutting programs in order to return the core
operations to consistent profitability levels. Cash flow remains
strained and will have to increase significantly in order to
support debt obligations.
The ratings also consider the company's weakened credit
protection measures, refinancing risk of the revolver,
significant debt maturities for the next three years, the
competitive nature of the printing industry, the necessity for
constant new product introductions, and overall weak economic
conditions. Fitch continues to recognize the company's improving
operational performance, strong, technologically competitive
product line and business position, completed asset sales,
execution of the cost restructuring program, and progress in
exiting the financing business. Xerox continues to improve its
core operations as core EBITDA for the fourth quarter of 2001
was approximately $420 million, compared to $61 million in the
third quarter, mainly as a result of higher gross margins and a
lower cost structure.
As of March 30, 2002, Xerox's cash position was $4.7 billion
with total debt of approximately $17 billion, of which more than
half is from customer financing, supported by significant
financing receivables. The company has a finance receivable
monetization program with GECC which could provide an additional
$1.6 billion in funding in 2002. Debt maturities for second
quarter of 2002 are $1.3 billion and $1.5 billion for the second
half of the year. The company's $7 billion revolver expires on
October 22, 2002, and Xerox is currently in compliance with all
covenants and refinancing is expected to occur by late June
2002. Any extension of this timeline could result in negative
rating actions. Fitch anticipates core credit protection
measures will continue to be challenged for the near term,
despite continued anticipated cost reductions from the company's
ongoing restructuring programs.
Xerox continues to make progress in exiting the customer
financing business, with GECC eventually being the primary
source of customer financing in the U.S., Canada, Germany, and
France, and De Lage Landen International BV managing equipment
financing for Xerox customers in the Netherlands. The company
has also made arrangements for third-party financings in Nordic
Region, Italy, Mexico, and Brazil. In addition, Xerox has made
significant progress with its turnaround strategy as the
previously announced $1 billion cost cutting program was
achieved ahead of schedule and larger than anticipated,
including a more than 10% headcount reduction from year-end
2000. Asset sales have totaled more than $2.0 billion, including
an agreement to outsource approximately half of its
manufacturing, the common stock dividend has been eliminated,
and the company exited the ink-jet market, which was a
significant cash drain.
In addition to Xerox Corp., the ratings affected are: Xerox
Credit Corp. and Xerox Capital (Europe) plc's rated senior debt.
YIFAN COMMS: Intends to Pursue Additional Financing Alternatives
----------------------------------------------------------------
Yifan Communications Inc. was incorporated under the laws of the
State of Ohio in October 1991 as Sports Sciences, Inc. At its
1996 Annual Meeting, its stockholders approved a plan to change
its name and its corporate domicile by means of a statutory
merger with Smart Games Interactive, Inc., a newly formed
Delaware corporation that was a wholly owned subsidiary of the
company immediately before the merger. This merger was completed
on October 11, 1996.
On July 21, 2000 the Board of Directors approved a plan to
change the name by means of a statutory merger with Yifan
Communications, Inc., a newly formed Delaware corporation that
was a wholly owned subsidiary of the company immediately before
the merger. This merger was completed on July 28, 2000.
Yifan Communications is an Internet communications, e-commerce
and software development company that provides a variety of
software products and Internet services tailored to the specific
needs of the Chinese speaking population. While over one-quarter
of the world's population reads and writes Chinese, Internet
sites written in the Chinese language are relatively rare and
the companies that focus on the needs of the Chinese speaking
population are ordinarily much smaller than their English
language counterparts. Yifan believes that over the next 15 to
20 years, the Chinese language Internet will become an important
communications medium. The Company also believes underdeveloped
communications infrastructure, unpredictable regulatory policies
and immature markets are likely to impede the growth and
development of the Internet in the Peoples Republic of China
(the "PRC") and other Chinese speaking countries. Since Yifan
believes the market for Chinese language Internet services will
develop at different rates in different parts of the world, it
intends to grow its business by focusing first on the needs of
Chinese communities in North America and other industrialized
nations. Then, when the infrastructure, regulatory policies and
market potential in the PRC and other less-developed Chinese
speaking countries justifies the anticipated cost of expansion,
the Company intends to expand its operations into these larger
markets.
Yifan Communications has limited financial resources and will
need substantial additional capital, which it may not be able to
obtain.
The Company had approximately $186,000 in cash and accounts
receivable at December 31, 2001. Management believes these
resources will be adequate to provide for its operating expenses
for a period of six to twelve months. Thereafter, it will need
additional capital to pay its operating expenses and finance its
planned expansion.
The Company will need at least $3 to $5 million in additional
capital to fund its current operating expenses and its planned
expansion. In addition, long-term capital requirements are
difficult to plan in the rapidly changing Internet industry. It
is currently expected that the Company will need capital to pay
its ongoing operating costs, fund additions to its portal
network and computer infrastructure, pay for the expansion of
its sales and marketing activities and finance the acquisition
of complementary assets, technologies and businesses. It intends
to pursue additional financing as opportunities arise.
Yifan's ability to obtain additional financing in the
future will be subject to a variety of uncertainties, including:
o Changes in the demand for online information services;
o Changes in the nature of its business resulting from
the introduction of new services;
o Changes in the nature of its business resulting from
its entry into new markets;
o Changes in its future results of operations, financial
condition and cash flows;
o Changes in investors' perceptions of and appetite for
Internet-related securities;
o Changes in capital markets in which it may seek to
raise financing; and
o Changes in general economic, political and other
conditions in its target markets;
The inability to raise additional funds on terms favorable to
it, or at all, would have a material adverse effect on its
business, financial condition and results of operations. If the
Company is unable to obtain additional capital when required, it
will be forced to scale back its planned expenditures, which
would adversely affect its growth prospects.
Yifan Communications has a history of losses and anticipates
future losses. During the year ended December 31, 2000, the
Company received $117,000 in revenue from grocery diversion
activities, which resulted in a gross profit of approximately
$20,000. For the year ended December 31, 2000, the Company had a
net loss of $336,382, including $240,300 in non-cash expenses
that were paid through the issuance of common sock. To date, all
of the operating losses have been paid from capital..
During the year ended December 31, 2001, Yifan had a net loss of
$184,422 on revenues of $1,227,685 from grocery diversion
activities. It anticipates that the Company will continue to
incur operating losses for the foreseeable future due to a high
level of planned operating and capital expenditures, increased
sales and marketing costs, additional personnel costs, greater
levels of product development and its overall expansion
strategy. It is likely that operating losses will increase in
the future and Yifan may never achieve or sustain profitability.
* BOOK REVIEW: Land Use Policy in the United States
---------------------------------------------------
Author: Howard W. Ottoson
Publisher: Beard Books
Paperback: US$34.95
Review by Gail Owens Hoelscher
Order your personal copy today and one for a colleague at
http://amazon.com/exec/obidos/ASIN/1893122832/internetbankrupt
In 1962, marking the 100th anniversary of the signing of the
Homestead Act by President Lincoln, 20 nationally recognized
economists, historians, a political scientist, and a geographer
presented papers at the Homestead Centennial Symposium at the
University of Nebraska. Their task was to appraise the course
that United States land policy had taken since independence. The
resulting papers are presented in this book, grouped into five
major areas: historical background; social factors influencing
U.S. land policy; past, present and future demands for lands in
the U.S.; control of land resources; and implications for future
land policy.
This book begins with a summary of the Homestead Act, its
antecedents, the arguments of its supporters and detractors, and
its intent versus implementation. The Act offered a quarter
section (160 acres) of public land in the West to citizens and
intended citizens for a $14 filing fee and an agreement to live
on the land for five years. The program ended in 1935.
Advocates claimed that frontier lad had no value to the
government until it was developed and began generating tax
revenue. Opponents feared the Act would lower land valued in the
East and pushed for government sale of the land. In practice,
states, territories, railroads and investors were able to set
aside more land than was eventually handed over to the
homesteaders.
One paper deals with land policy before 1862. From the start,
the U.S. required that "all grants of land by the federal
government should embody a description of the land not merely in
quality, but in place as defined by relation to an actual
survey." This policy avoided countless boundary disputes so
vexing to other countries.
Perhaps most interesting are the social history chapters:
Czechoslovakians pushing wheelbarrows across Nebraska,
"Daughters and Sons of the Revolution.(living) next
to.Mennonites," and "an illiterate.neighborly with a Greek and a
Hebrew scholar from a colony of Russian Jews." Mail-order
brides, "defectors from civilization," the importance of the
Mason jar, the Jeffersonian dream of a nation of agrarian
freeholders, and Santayana's observation that the typical
American skitters between visionary idealism and crass
materialism, all make for fascinating reading.
The land-use policy problems discussed certainly haven't been
solved today. And, although land use conflicts in the U.S.
haven't always been resolved equitably, "the big step forward
taken by the United States during the last one hundred and fifty
years in the age-long struggle of man towards the ideals of
mutuality and equity has been the working out of a system
wherein the sovereign superior who prescribes the working-rules
for land use and decision making have become, himself, a
collective of the citizenry."
A chapter is devoted to the arguments between the family farm ad
the "sentiment against concentration of wealth in the hands of a
few." The discussion of the Land Grant college system and its
contribution to international development closes with a quote
from Chester Bowles:
"Can we, now the richest people on earth, become creative
participants in the unprecedented revolutionary changes of our
era, changes that the most privileged people will oppose tooth
and nail, but which for the bulk of mankind offer the hopeful
prospect of a little more food, a little more opportunity, a
doctor for their sick child, and sense of personal dignity?"
*********
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 ***