/raid1/www/Hosts/bankrupt/TCR_Public/020705.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, July 5, 2002, Vol. 6, No. 132
Headlines
360NETWORKS: Gets Until Sept. 23 to Make Lease-Related Decisions
ACCUHEALTH: Trustee Gets Nod to Hire Oxman Tulis as Attorneys
ACME METALS: Court to Consider Disclosure Statement on August 27
ACME METALS: Secures Exclusivity Extension through July 15
ACT MANUFACTURING: Unsecured Panel Taps L&S as Thailand Counsel
ACT MANUFACTURING: Sun Entity Pitches Winning Bid for US Assets
ADELPHIA COMMS: Will Continue Using Existing Bank Accounts
AMERICAN ENERGY: Creditors File Involuntary Bankruptcy Petition
AMERICAN ENERGY: Involuntary Chapter 7 Case Summary
ANC RENTAL: Court Approves Subordination of Belgium Unit's Debt
ANTHONY CRANE: Liquidity Concerns Spur S&P to Junk Credit Rating
ARMSTRONG: Gets SEC Approval to Delist Shares from Two Exchanges
ASPEON INC: Discloses $19MM Equity Deficit at March 31, 2002
AUSTRIA FUND: Completes Liquidation & Dissolution Proceedings
BCE INC: Will Repurchase 20% Bell Canada Shares from SBC Comms.
BRIGHTSTAR INFO: Updates Earnings Guidance for Second Quarter
BURLINGTON: Buffalo Balks At Move to Transfer JV Interest to JC
CARIBBEAN PETROLEUM: Gets Nod to Tap Kirkland for EPA Litigation
CELERIS CORP: Completes Sale of All Assets to STATPROBE, Inc.
CONSOLIDATED FREIGHTWAYS: John Brincko Reorganizes Management
COUNCIL TRAVEL: Look for Schedules and Statements on August 6
COVANTA ENERGY: Pamela Wright Wants Prompt Decision on Agreement
DAIRY MART: Terminates Arthur Andersen Engagement as Auditors
ELAN CORP: S&P Hatchets Corporate Credit Rating to BB- from BBB-
ENRON CORP: Winning Bidder for Excalibur Pact Still Undisclosed
ENRON CORP: Hearing on Excalibur Charter Sale Set for Thursday
FEDERAL-MOGUL: Deadline to Commence Litigation Moved to August 2
FOAMEX INT'L: William D. Witter Discloses 6.0% Equity Stake
GADZOOX NETWORKS: Fails to Meet Nasdaq Listing Requirements
GLOBAL CROSSING: John Hovel Pushing for Equity Panel Appointment
GRAHAM PACKAGING: Begins Tender Offer for 10.75% Sr. Disc. Notes
GROUP TELECOM: Section 304 Petition Summary
ICH CORPORATION: Looks to Morgan Lewis for Financial Advice
IFX CORP: UBS Capital-Led Investors Bring-In $5MM New Funding
IT GROUP: Occidental Chemical Seeks Stay Relief to Continue Suit
JUPITER MEDIA: Falls Below Nasdaq Minimum Listing Requirements
KAISER ALUMINUM: Wants to Continue Risk Management Transactions
KEY3MEDIA GROUP: S&P Ratchets Junk Credit Rating Down One Notch
KMART CORP: Seeks Approval of Committee Confidentiality Pact
KNOWLEDGE HOUSE: Financial Reporting Defaults Continue
LODGIAN INC: Asks Court to Allow Use of CCA's Cash Collateral
MCI CAPITAL I: S&P Drops 8% QUIPS to D after Interest Nonpayment
MPOWER HOLDING: Gets Nod to Retain Arthur Andersen as Auditors
METALS USA: Plan Filing Exclusivity Intact until August 30, 2002
NTL INC: Secures Final Approval of $630 Million DIP Financing
NATIONAL STEEL: Implementing Key Employee Retention Plan
NATIONSRENT INC: Shoos-Away Arthur Andersen as Accountants
NEON COMMUNICATIONS: Employs Paul Hastings as Bankruptcy Counsel
NET2000: Trustee Secures Nod to Hire Adelman Lavine as Counsel
ORTEC INT'L: Fails to Comply with Nasdaq Listing Guidelines
OWENS CORNING: Court Extends Removal Period Deadline to Feb. 21
PAXSON COMMS: Lowers Q2 Guidance Prompts S&P to Revise Outlook
PEREGRINE: Continues Nasdaq Trading Pending Hearing Outcome
POLAROID: JPMorgan Seeking Protective Order to Quash Subpoenas
SUTTON TRADING: Attempting To Raise Funds To Continue Operations
TECSTAR INC: Taps Environmental Data Management as Consultant
TROY MILLS: Sells Headliner Division to Cosmopolitan Textile Co.
US AIRWAYS: PSA Reaches Pacts with Pilots & Flight Attendants
US AIRWAYS: TWU Local 545 Agrees to Terms of Restructuring Plan
VENTURE HOLDINGS: Makes $14MM Semi-Annual Bond Interest Payment
VENTURE HOLDINGS: S&P Slashes Rating to SD Following Nonpayment
VERTICAL COMPUTER: Accountants Express Going Concern Doubt
VISKASE COMPANIES: Amends Rights Agreement with Harris Trust
WILLIAMS COMMS: Will Provide Streaming Media to Golf Channel
WILLIAMS CONTROLS: Closes $37MM Recapitalization Transactions
WORLDCOM INC: Fails to Comply with Nasdaq Listing Requirements
WORLDCOM INC: CEO Sidgmore Says Bankruptcy Filing Not Imminent
WORLDCOM INC: IDT Corp. to Unveil "Stabilization Plan" Today
WORLDCOM: Fitch Says Crisis May Impact Niche Fin'l Guarantors
XEROX CORP: Fitch Downgrades Senior Unsecured Debt Rating to BB-
XO COMMS: U.S. Trustee Appoints Unsecured Creditors' Committee
* BOOK REVIEW: The Phoenix Effect: Nine Revitalizing Strategies
No Business Can Do Without
*********
360NETWORKS: Gets Until Sept. 23 to Make Lease-Related Decisions
----------------------------------------------------------------
Prior to the Petition Date, 360networks inc., and its debtor-
affiliates entered into a lease for nonresidential real property
located at 600-780 South Federal Street 76 W. Polk and 75 W.
Harrison Street, in Chicago, Illinois. Waterton Printers'
Square, as successor to LaSalle National Bank, is the lessor.
According to Joel L. Miller. Esq., at Kaye Scholer L.L.C., in
Chicago, Illinois, subsequent to the Petition Date, Berthel
Lewis Electric, Inc. and McClier Corporation asserted
contractors' claims for liens against Waterton and its building.
Berthel Lewis Electric, Inc. asserted its lien in March 2002 in
the amount of $20,212 and McClier Corporation filed its lien on
December 20, 2001, in the amount of $66,465. "The placement of
the Liens is a direct result of the Debtors' failure to satisfy
their obligations to the Lienors for labor, equipment and
materials provided under contracts for improvement of the leased
premises," Mr. Miller states.
In addition, the Debtors have failed to make payments for
postpetition rent electric bills, common area maintenance fees
and related charges under the Lease in the total outstanding
amount of approximately $1,000.
Mr. Miller further explains that in light of its postpetition
defaults, the Debtors cannot meet their burden of showing cause
for an extension of their time to assume or reject the Waterton
Lease. Mr. Miller provides more reasons that:
(i) the Debtors have accumulated substantial postpetition
obligations to Waterton by allowing $86,000 in Lien claims
to placed and for failure to pay approximately $1,000
rent-related obligations;
(ii) the Debtors have the ability to settle lien claims and
obtain the release of liens in full and final satisfaction
of its liens;
(iii) the extension of time will damage Waterton as the danger
of the Lienors foreclosing on their Liens increases; and
(iv) the extension of time will damage Waterton by increasing
the amount necessary to satisfy the Lien claims because
interest accrues as a result of the Debtors having to pay
even the interest on the Lien claims.
Based on those postpetition defaults, Mr. Miller says, Waterton
now disputes the Debtors' requested extension of time to assume
or reject the Lease, which is included in their motion. "The
Debtors' motion should only be granted upon the condition that
they satisfy those obligations," Mr. Miller asserts.
Debtors Respond
"The Debtors disagree with the Landlord's legal theory and
assert that the Court has ample discretion to grant the Motion
regardless of the Landlord's dispute concerning the discharge of
the Mechanics Liens," Shelley C. Chapman, Esq., at Willkie Farr
& Gallagher, in New York, states.
Ms. Chapman explains that extension of time to assume or reject
a lease does not require that the Debtors be current on all
postpetition obligations under the lease. Instead, the status
of postpetition lease obligations is but one of multiple factors
to be considered in deciding whether to grant an extension.
"The Debtors are paying for the use of the property and
minimizing any damage to the Landlord by being current on all
known, undisputed payments due under the Lease," Ms Chapman
says. Meanwhile, the potential for the holders of the Mechanics
Liens to seek to enforce their liens is minimized by the
automatic stay.
* * *
The Court extends the time within which the Debtors may assume
or reject their unexpired nonresidential real property leases in
these cases to September 23, 2002. (360 Bankruptcy News, Issue
No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ACCUHEALTH: Trustee Gets Nod to Hire Oxman Tulis as Attorneys
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gives its stamp of approval to Mark S. Tulis, the Chapter 7
Trustee overseeing the liquidation of Accuhealth, Inc., to hire
Oxman Tulis Kirkpatrick Whyatt & Geiger LLP, Attorneys at Law,
to represent him.
Oxman Tulis is expected to:
a) give advice to the Trustee with respect to its powers
and duties in liquidation of debtor's business and
specifically to make motions as is appropriate for the
liquidation of the debtor's estate.
b) prepare on behalf of the Trustee necessary
applications, answers, orders, reports and other
motions, complaints, pleadings and documents.
c) appear before the Bankruptcy Judge and the United
States Trustee in connection with any such applications.
d) perform legal services for the Trustee which may be
necessary and appropriate.
The Trustee's Application says that the Court will "determine
all compensation payable to Oxman Tulis, including reimbursement
of expenses, upon application for compensation." The Trustee
does not relate what he's promised to pay Oxman Tulis.
Before filing bankruptcy protection, Accuhealth, Inc. were
engaged in the business of providing home health care services
in the New York metropolitan area. Gerard Sylvester Catalanello,
Esq., and James J. Vincequerra, Esq., at Brown Raysman Millstein
Felder & Steiner and Martin A. Mooney, Esq., at Deily, Dautel &
Mooney, LLP represent the Debtors as they wind-up their
financial affairs.
ACME METALS: Court to Consider Disclosure Statement on August 27
----------------------------------------------------------------
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: ) Chapter 11
)
ACME METALS INCORPORATED, ) Case No. 98-2179 (RJN)
ACME STEEL COMPANY, )
ACME PACKAGING COMPANY, )
ALPHA TUBE CORPORATION, )
ALABAMA METALLURGICAL ) Jointly Administered
CORPORATION and ACME STEEL ) Objection Deadline: July 17,
COMPANY INTERNATIONAL, INC., ) 2002 at 2:00 p.m. (ET )
) Hearing: August 27, 2002 at
Debtors. ) 2:00 p.m. (ET)
NOTICE OF HEARING TO CONSIDER APPROVAL OF
DISCLOSURE STATEMENT OF ACME PACKAGING COMPANY
1. On June 14, 2002, Acme Packaging Company, one of the
above-captioned debtors and debtors in possession in these
chapter 11 cases, filed with the United States Bankruptcy Court
for the District of Delaware the Debtors Plan of Reorganization
Under Chapter 11 of the Bankruptcy Code and a Debtor's
Disclosure Statement Pursuant to 11 U.S.C. Sec. 1125. If
necessary, the Debtor intends to present the Disclosure
Statement and any changes or modifications thereto for approval
at a hearing before the Honorable Randall J. Newsome, beginning
at 2:00 p.m. (ET) on August 27, 2002 in the Bankruptcy Court,
6th Floor, 824 Market Street, Wilmington, Delaware 19801.
2. Objections, if any, to approval of the Disclosure
Statement must be in writing and shall (i) state the name and
address of the objector or entity proposing a modification to
the Disclosure Statement and the amount of its claim or nature
of its interest in the Debtor's chapter 11 case; (ii) specify
the basis and nature of any objection or proposed modification
together with suggested language, if any, and (iii) be filed
with the Bankruptcy Court, 5th Floor, 824 Market Street,
Wilmington, Delaware 19801 together with proof of service, and
served so as to be RECEIVED on or before 4:00 p.m. prevailing
Eastern Time on July 17, 2002 by the following: (a) Young
Conaway Stargatt & Taylor, LLP, The Brandywine Building, 1000
West Street, 17th Floor, Wilmington, DE 19801 (Attn: Brendan
Linehan Shannon, Esq.); (b) Chadbourne & Parke LLP, 30
Rockefeller Plaza, New York, NY 10112 (Attn: David Lemay, Esq.,
and Melissa Fitzpatrick, Esq.); (c) Stroock Stroock & Lavan, 180
Maiden Lane, New York, NY 10038 (Attn: Lawrence Handelsman,
Esq.) (d) Potter Anderson & Corroon, LLP, 1313 N. Market Street,
6th Floor, P.O. Box 951; Wilmington, DE 19899-0951 (Attn: Laurie
Selber Silverstein, Esq.); (e) Office of the United States
Trustee, 844 King Street, Room 2313, Wilmington, DE 19801.
3. Copies of the Plan and Disclosure Statement may be
obtained by parties in interest at the Debtor's expense upon
written request to Young Conaway Stargatt & Taylor, LLP, The
Brandywine Building, 1000 West Street, 17th Floor, Wilmington,
DE 19801 (Attn: Debbie Laskin) or Logan & Company, 546 Valley
Road, Upper Montclair, NJ 07043. In addition, copies of the
Disclosure Statement and the Plan may be found on the Bankruptcy
Court's Web site, http://www.deb.uscourts.govand are on file
with the Clerk of the Bankruptcy Court, 5th Floor, 824 Market
Street, Wilmington, Delaware 19801. The Disclosure Statement may
be amended at any time prior to the Disclosure Statement
Hearing, and the Disclosure Statement Hearing may be adjourned
from time to time without further notice, except for the
announcement of the adjourned date(s) at the Disclosure
Statement Hearing or any continued hearing(s).
Dated: Wilmington, Delaware
June 18, 2002
YOUNG CONAWAY STARGATT & TAYLOR, LLP CHADBOURNE & PARKE LLP
/s/ Joseph A. Malfitano David Lemay
Brendan Linehan Shannon (No. 3136) Melissa Fitzpatrick
Joseph A. Malfitano (No. 4020) 30 Rockefeller Plaza
Matthew B. Lunn (No. 4119) New York, NY 10112
The Brandywine Building (212) 408-5100
1000 West Street, 17th Floor
Wilmington, Delaware 19801
(302) 571-6600
CO-COUNSEL FOR ACME PACKAGING COMPANY
ACME METALS: Secures Exclusivity Extension through July 15
----------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of
Delaware, Acme Metals Incorporated and its debtor-affiliates
obtained an extension of their exclusive periods. The Court
gives the Debtors, until July 15, 2002, the exclusive right to
file their plan of reorganization and until September 16, 2002,
to solicit acceptances of that Plan.
Acme Metals with its debtor-affiliates are engaged in the
business of steel manufacturing and fabricating, filed for
chapter 11 bankruptcy protection on September 28, 1998. Brendan
Linehan Shannon, Esq. and James L. Patton, Esq. at Young,
Conaway, Stargatt & Taylor represent the Debtors in their
restructuring efforts. When the company filed for protection
from its creditors, it listed assets of $813 million and
liabilities of $541 million.
ACT MANUFACTURING: Unsecured Panel Taps L&S as Thailand Counsel
---------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
Chapter 11 cases involving ACT Manufacturing, Inc., and its
debtor-affiliates, seek permission from the U.S. Bankruptcy
Court for the District of Massachusetts to retain and employ Law
and Solicitors Limited as their special Thailand counsel.
The Committee is familiar with L&S' professional standing and
reputation S and believes that the firm's experiences in all
forms of security interest under Thai laws make L&S very
qualified for the position.
Specifically, Law and Solicitors Limited will:
a. Assist the Committee assess the extent to which the
Debtors' subsidiary in Thailand may be subject to liens
imposed by the Debtors' secured lenders.
b. Provide limited research and consulting services
relating to Thai laws governing security interests and
perfection matters.
c. Render such other services as the Committee or its
counsel may deem necessary relating to Thai law that
are not duplicative of services provided by other of
the Committee's professionals in this proceeding.
L&S will charge for its legal services on an hourly basis in
accordance with its ordinary and customary hourly rates. Those
rates are not disclosed in the Committee's papers delivered to
the Bankruptcy Court.
Act Manufacturing, Inc., is a global provider of value-added
electronic manufacturing services to original equipment
manufacturers in the networking and telecommunications, high-and
computer and industrial and medical equipment markets. The
Debtors filed for chapter 11 protection on December 21, 2001.
Richard E. Mikels, Esq., at Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo represents the Debtors in their restructuring efforts.
When the Company filed for protection from its creditors, it
listed $374,160,000 in total assets and $231,214,000 in total
debts.
ACT MANUFACTURING: Sun Entity Pitches Winning Bid for US Assets
---------------------------------------------------------------
Sun ACT Acquisition Corp., an affiliate of Sun Capital Partners,
Inc., a leading private investment firm specializing in
leveraged buyouts and turnarounds of market-leading companies,
has emerged from the bankruptcy process as the winning bidder
for the U.S. assets of ACT Manufacturing, Inc. After the
transaction closes, the U.S. business will be a separate
operating entity providing value-added electronics manufacturing
services to original equipment manufacturers in the networking
and telecommunications, high-end computer and industrial and
medical equipment markets. The transaction is expected to close
within one week.
"ACT Manufacturing has developed a strong reputation in its
industry. This reputation, combined with a healthy balance
sheet, will be very beneficial as the economy recovers and
volume increases," said M. Steven Liff, Vice President of Sun
Capital, based in Boca Raton, Florida. "Furthermore, by
combining our business expertise at Sun Capital with the
strengths of existing management, we expect to extend ACT's
position in its respective market niche."
ACT's Chief Executive Officer, John A. Pino added, "We are
pleased with the results of our court approved auction process
and especially enthusiastic that Sun Capital has emerged as the
successful bidder to acquire ACT's domestic operations." He
added, "The acquisition by Sun Capital will create a preeminent
technology supplier with a strong commitment to its customers,
employees and suppliers."
Sun Capital Partners, Inc. is a leading private investment firm
focused on leveraged buyouts of market-leading companies that
can benefit from its in-house operating professionals and
experience. Sun Capital has invested in more than 30 companies
during the past several years with combined revenues in excess
of $3 billion. Investments have included companies in the
following industries: paper and packaging, filmed entertainment,
automotive after-market parts, financial services, healthcare,
media and communications, outdoor advertising, building
products, wireless communication, industrial and decorative
mirrors, computer and workstation peripherals, consumer
products, furniture manufacturing, general merchandise
distribution and technology. For more information about Sun
Capital Partners, visit http://www.suncappart.com
ADELPHIA COMMS: Will Continue Using Existing Bank Accounts
----------------------------------------------------------
Adelphia Communications and its debtor-affiliates sought and
obtained permission to continue using all of their existing bank
accounts and business forms and authority to continue their
investment practices in the ordinary course.
According to Myron Trepper, Esq., at Willkie Farr & Gallagher in
New York, the ACOM Debtors maintain approximately 590 Bank
Accounts at several different banks in the United States. The
bank accounts that make up the Debtors' cash management system
include:
* a concentration account that is used, among other things,
to manage the cash of Adelphia and the Managed Rigas
Entities;
* a disbursement account;
* two payroll accounts;
* one cable lockbox account for subscriber payments made by
check;
* 330 local depository accounts for cash payments made by
cable subscribers in payment centers;
* an account maintained and administered by Princeton E-com
used to process subscriber payments made via automatic
debit and/or electronic banking transfer;
* two Non-Cable Business lockboxes;
* an ACH account that is accessed by taxing authorities and
other third parties authorized to debit funds directly
from the Debtors;
* 190 petty cash, imprest accounts, for General Managers;
* 25 overnight and short term investment accounts;
* an employee loan account;
* two accounts which cash collateralize certain letters of
credit;
* two accounts for customer refunds; and
* a certified check disbursement account.
The Debtors believe that continuation of the Bank Accounts is
essential to a smooth and orderly transition into chapter 11.
All parties in interest will be best served by the Debtors'
continued utilization of the Bank Accounts because such
continuation allows the Debtors to preserve the continuity of
their businesses and avoid the operational and administrative
paralysis that closing the Bank Accounts and opening new ones
entails.
The U.S. Trustee's Operating Guidelines for chapter 11 debtors
require that checks bear a "DIP" or "debtor in possession"
legend. Mr. Trepper relates that the Debtors intend to mark
their checks "DIP" or "debtor in possession." However, because
of the nature and scope of ACOM's businesses and the numerous
subscribers, customers and suppliers of goods and services with
whom ACOM transacts business, it is necessary that the Debtors
be permitted to use their existing business forms and stock
without alteration or change. If ACOM is forced to change their
business stock, it may further damage the Debtors' businesses at
this critical juncture. In addition, inasmuch as ACOM may issue
communications on behalf of certain non-debtor entities that
they manage, recipients of business forms marked "DIP" or
"debtor in possession" might wrongly assume that such entities
have filed for chapter 11 protection. The Debtors submit that
allowing the continued use of existing business forms will
facilitate a smooth and orderly transition of the Debtors'
operations into chapter 11 and will minimize the disruption of
their business affairs, without violating the policies of
chapter 11. (Adelphia Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Adelphia Communications' 10.875% bonds due 2010 (ADEL10USR1),
DebtTraders reports, are quoted at 42.25. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL10USR1
for real-time bond pricing.
AMERICAN ENERGY: Creditors File Involuntary Bankruptcy Petition
---------------------------------------------------------------
The American Energy Group, Ltd. (OTCBB:AMEL) has received notice
of an involuntary bankruptcy petition filed on June 28, 2002 in
the United States Bankruptcy Court for the Southern District of
Texas-Houston Division by three individuals claiming to be
qualified creditors of the company. The petitioners named are
Michael Bleks of Dortmund, Germany, Daniel Stoll of Zurich,
Switzerland and Peter Barben of Wollcrau, Switzerland. Mr.
Bleks has identified the nature of his claim as a personal loan
in the amount of $25,000, while Messrs. Stoll and Barben have
identified the nature of their claims as unpaid private
placement fees in the amounts of $15,867.13 and $9,114.00,
respectively.
The company has not yet responded to the petition but intends to
vigorously defend the claims based upon its belief that these
individuals are not now and never have been qualified creditors
of the company. Subsequent to the filing, one of the
individuals, Mr. Barben, signed a written statement indicating
his desire to withdraw from the proceedings.
In its investigation to date, the company has also learned that
Mr. Georg von Canal assisted counsel for the petitioners in
securing the signatures on the petition from two of the
petitioners, Messrs. Stoll and Barben. The full extent of Mr.
von Canal's involvement in the filing by the three gentlemen has
not yet been determined by the company.
The American Energy Group, Ltd. is an independent oil and gas
exploration, drilling, and production company currently based in
Houston, Texas, engaged in international exploration projects.
AMERICAN ENERGY: Involuntary Chapter 7 Case Summary
---------------------------------------------------
Alleged Debtor: American Energy Group Ltd.
Involuntary Petition Date: June 28, 2002
Case Number: 02-37125 Chapter: 7
Court: Southern District Judge: Manuel D. Leal
of Texas (Houston)
Petitioners' Counsel: Leonard H. Simon, Esq.
Hughes Watters & Askanase LLP
1415 Louisiana, 37th floor
Houston, Texas 77002
713-328-2828
Fax : 713-759-6834
Petitioners: Michael Bleks
Schuctzengrund 7
D-44227 Dortmund, Germany
Daniel Stoll
Rautistrasse 8
CH-8047 Zurich
Switzerland
Peter Barben
Roostrasse 67
CH-8032 Wollerau
Switzerland
Amount of Claims: $49,981
ANC RENTAL: Court Approves Subordination of Belgium Unit's Debt
---------------------------------------------------------------
ANC Rental Corporation, and its debtor-affiliates obtained Court
authority to subordinate the inter-company debt of Republic
Industries Automotive Rental Group (Belgium) Inc., a non-debtor
subsidiary of ANC, to the debt of the Belgium subsidiary of Bank
Brussels Lambert (BBL).
With the Court approval, BBL is expected to agree to extend
through August 31, 2002 the approximately $5,000,000 fleet
financing and working capital facility. BBL has agreed to
extend the facility through June 30, 2002 to allow the Debtors
to obtain the relief sought in the Motion. BBL had requested
that the Debtors obtain Court approval to subordinate inter-
company debt of the ANC's Belgium subsidiary, which is
approximately $3,300,000, to the liabilities of the Belgium
subsidiary to BBL (at present, there is approximately $4,000,000
outstanding under the facility). (ANC Rental Bankruptcy News,
Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ANTHONY CRANE: Liquidity Concerns Spur S&P to Junk Credit Rating
----------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on Anthony
Crane Rental L.P. (ACR), a leading provider of rental cranes and
other heavy equipment, to triple-'C'-plus from single-'B' due to
very tight liquidity conditions and near-term payment risks.
At the same time, Standard & Poor's lowered its corporate credit
rating on ACR's holding company, Anthony Crane Rental Holdings
L.P., to triple-'C'-plus from single-'B'. The ratings remain on
CreditWatch with negative implications where they were
originally placed on December 14, 2001. The Pittsburgh,
Pennsylvania-based company has total debt of $700 million.
"The rating reflects the company's dependence on favorable
business and financial conditions to maintain adequate liquidity
over the near term," said Standard & Poor's analyst John Sico.
The CreditWatch listing is based on ACR's limited cash position
of about $2.8 million as of June 17, 2002, the expected
reduction in the company's borrowing base on January 1, 2003
(expected decrease of $30 million - $37 million), and the $8
million semi-annual interest payment due February 2003. As part
of the amended credit facility, Bain Capital contributed $8
million, which is in a restricted account earmarked for the
August 2002 interest payment.
The company's weakened operating performance is due to the
overall weak U.S. economy, increased competition, and slower
growth in the equipment rental industry, resulting in lower
utilization rates on equipment and soft pricing for equipment
sales. Liquidity, therefore, will remain constrained due to the
expected challenging and difficult economic environment for the
remainder of 2002, which heightens the payment risk on its
obligations. The company stated in its 2001 Form 10K that it is
in compliance with its bank loan covenants and expects to be
throughout 2002. It has not yet filed its Form 10Q for the
period ended March 31, 2002.
Standard & Poor's expects to meet with the company's management
to discuss prospects for achieving operating improvements, and
improving its liquidity position. Absent favorable developments,
the ratings could be lowered.
ARMSTRONG: Gets SEC Approval to Delist Shares from Two Exchanges
----------------------------------------------------------------
The Securities and Exchange Commission issued its order granting
the Application of the Philadelphia Stock Exchange, Inc., to
strike from listing and registration the common stock, $1.00 par
value, of Armstrong Holdings, Inc., effective at the opening of
business June 3, 2002.
The SEC also issued an order granting the Application of
Armstrong Holdings, Inc. to withdraw its common stock, $1.00 par
value, from listing and registration on the Pacific Exchange,
effective at the opening of business on June 27, 2002.
(Armstrong Bankruptcy News, Issue No. 24; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
Armstrong Holdings Inc.'s 9% bonds due 2004 (ACK04USR1) are
trading at 58.5, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ACK04USR1for
real-time bond pricing.
ASPEON INC: Discloses $19MM Equity Deficit at March 31, 2002
------------------------------------------------------------
Aspeon, Inc. (OTC: ASPE) announced a $2,250,900 net loss for the
quarter ended March 31, 2002 before a $7,276,100 loss on
disposal of its UK subsidiary company bringing to $9,527,000 the
total net loss for the quarter. Revenues for the quarter were
$6,678,600. The loss on disposal was comprised of goodwill
write-off of $4.8 million, write-down of assets of $0.9 million,
and realization of deferred foreign exchange differences of $1.6
million. These compared to a net loss of $7,929,700 including
impairment charges of $2,664,900 on sales of $14,700,200 in the
same quarter in 2001.
For the nine months ended March 31, 2002 the Company reported a
net loss of $7,870,800 on sales of $27,847,200 before a
$7,276,100 loss on disposal of its UK subsidiary company
bringing to $15,146,900 the total net loss for the nine months.
This compared to a net loss of $46,472,100, including impairment
charges of $20,030,900, on sales of $50,473,200 during the same
period the previous year.
Shown as an extraordinary item in the current year to date is
$520,100 reflecting gains on settlement of accounts payable
pursuant to debt restructuring agreements, and included in long-
term debt at March 31, 2002 is approximately $1.1 million
representing long-term settlements of accounts payable pursuant
to debt restructuring agreements.
Included in the current year loss for the quarter is an amount
of $554,100 accrued for default interest on the Company's
mandatorily redeemable preferred stock which was in default
(approximately $1.7 million for the 9 months), and on the
balance sheet shown as a current liability is an amount of
$16,074,700 representing the balance owing under the preferred
stock agreement (in default). Subsequent to March 31, 2002 the
Company reported in a press release dated May 14, 2002 "In
return for a cash payment the Company was released from all
liabilities under the Preferred Share Agreement. The transaction
will have a net positive effect on the Company's Balance Sheet
of approximately $19 million."
At March 31, 2002, Aspeon's balance sheet shows a working
capital deficit of about $22 million, and a total shareholders'
equity deficit of about $19 million.
As previously reported, the Company's auditors, BDO Seidman,
LLP, have not had access to the working papers of the Company's
auditors for prior fiscal years, and therefore was not able to
complete its audit of the Company's financial statements for the
fiscal year ended June 30, 2001. The Company continues to
explore alternatives as to how it might be possible to proceed,
however no assurances can be made that the Company's auditors
will be able to complete their audit of the Company's financial
statements for the fiscal year ended June 30, 2001.
Aspeon Inc. is a leading manufacturer and provider of point-of-
sale (POS) systems and services for the retail and foodservice
markets. Visit Aspeon at http://www.aspeon.com
AUSTRIA FUND: Completes Liquidation & Dissolution Proceedings
-------------------------------------------------------------
Dave H. Williams, Chairman and President of The Austria Fund,
Inc., has sent the following letter to the Fund's stockholders
under date of April 30, 2002:
"Dear Shareholder:
"This report contains investment results and market commentary
for The Austria Fund for the semi-annual reporting period ended
February 28, 2002.
Investment Objective and Policies
"This closed-end fund seeks long-term capital appreciation
through investment primarily in the equity securities of
Austrian companies. However, as discussed below, the Fund's
liquidation, pursuant to shareholder approval, is virtually
completed, and this will be the Fund's final report to
shareholders.
"Over the three-, six-, and 12-month periods ended February 28,
2002, the Fund underperformed its benchmark as a result of the
continued attrition in the prices of small technology and
telecommunications issues, in which the Fund has held an
overweight position.
"Throughout the latter part of the reporting period, we have
been engaged in the orderly liquidation of the Fund's portfolio
positions pursuant to the Plan of Liquidation and Dissolution
approved by the Fund's shareholders at their October 24, 2001
Special Meeting. The Fund paid its first liquidating
distribution, in the amount of $5.88 per share, on March 1, 2002
to shareholders of record on February 12, 2002. This first
distribution represented approximately 90% of the Fund's total
net assets. A second liquidating distribution, in the amount of
$0.47 per share (or approximately 8% of the Fund's original
total net assets), was paid on April 18, 2002 to shareholders of
record on April 5, 2002. The Fund's small remaining net assets
will be distributed to shareholders in the final liquidating
distribution, which is payable on May 3, 2002 to shareholders of
record on April 26. 2002. On April 26, 2002, which was the
Fund's last day of trading on the New York Stock Exchange, the
books and records of the Fund were closed.
"As we thus conclude, we wish to thank all of our shareholders
for their interest in The Austria Fund throughout the 13 years
of its existence."
Sincerely,
/s/ Dave H. Williams
Dave H. Williams
Chairman and President
The Fund is a U.S.-registered closed-end management investment
company advised by Alliance Capital Management L.P. As of
October 19, 2001, the Fund had reported assets of approximately
$42 million.
BCE INC: Will Repurchase 20% Bell Canada Shares from SBC Comms.
---------------------------------------------------------------
BCE Inc. has reached a negotiated agreement with SBC
Communications Inc. of San Antonio, Texas, that will lead to the
repurchase of SBC's 20% interest in Bell Canada for C$6.32
billion.
Michael Sabia, President and Chief Executive Officer of BCE
said: "The decision to regain full ownership of Bell Canada
indicates our confidence in the company and the opportunities we
see for the future. We will go forward as a strong Canadian
company in full control of our future."
Under the terms of the agreement, the initial payment for the
purchase of approximately 4%, will be valued at C$1.33 billion
and close June 28, 2002. SBC will acquire, by way of private
placement, C$250 million of BCE common equity on July 15, 2002.
BCE will exercise its right to purchase the remaining
approximately 16% valued at C$4.99 billion, on or before January
3, 2003, at BCE's discretion for consideration that may include
notes, cash and up to C$250 million of BCE common stock. A
subsidiary of Ameritech Corporation, now owned by SBC
Communications, had purchased a 20% interest in Bell Canada in
June 1999, for C$5.1 billion.
"We believe the purchase price represents fair value to both
companies. BCE can finance the repurchase while maintaining the
financial strength of our balance sheet and the integrity of our
capital structure. Most importantly, we will complete the
repurchase within our 2002 financial guidance while maintaining
our current dividend," added Mr. Sabia.
BCE will also purchase, at face value, on or before December 31,
2004, C$314 million of inter-company notes previously purchased
by SBC as part of the privatization of Bell Mobility.
Interim financing for the transaction is as follows:
- BCE has arranged through Bank of Montreal, a two-year bank
facility for C$3.3 billion with a syndicate of North
American banks.
- BCE can issue promissory notes to SBC up to a total of
C$3.5 billion, for a period of up to 18 months from the
issue date.
BCE intends to secure permanent financing for this transaction
as follows:
- A common equity issue in the range of CDN$1.0 billion and
C$1.5 billion in addition to the private placements to SBC
of up to C$500 million.
- Public debt issues in the range of C$2.0 billion to
C$2.5 billion.
- Partial proceeds from a sale or securitization of Bell
Canada's directories business. A substantial amount of the
proceeds will remain at Bell. Depending on the option
implemented, BCE will access, at fair value from Bell,
between C$1.0 billion to C$2.0 billion.
Following a review of these transactions with the rating
agencies, BCE expects that it will maintain strong investment
grade credit ratings in line with its financial objectives of
maintaining financial flexibility and a strong balance sheet.
"Gaining full ownership of our core asset is another major step
for BCE's ongoing efforts to diminish uncertainty and focus our
operations," said Michael Sabia, "We now have greater
flexibility to manoeuvre and we will continue to regularly
assess our strategy to maintain momentum and build value."
SBC and Bell Canada intend to continue their on-going
cooperation in numerous areas which may include traffic,
specialized services, joint purchasing and exchange of
technology.
Concluded Mr. Sabia, "We have enjoyed a positive and beneficial
relationship with SBC and we are pleased that this relationship
will continue in the future."
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.
As reported in the April 24, 2002 edition of Troubled Company
Reporter, Bell Canada International Inc.'s December 31, 2001
balance sheet shows that the company has a working capital
deficit of about C$900 million.
BRIGHTSTAR INFO: Updates Earnings Guidance for Second Quarter
-------------------------------------------------------------
BrightStar Information Technology Group, Inc. (OTC Bulletin
Board: BTSR), a provider of information technology services,
updated its guidance for the second quarter ended June 30, 2002.
"Second quarter revenues are expected to be in the range of
$2.35 to $2.45 million, which is below previous guidance of $2.6
to $2.9 million," said Ken Czaja, Chief Financial Officer. "As a
result, we expect to report a small operating loss for the
quarter, in the range of $0 to $0.2 million," continued Czaja.
"However, we have made further improvements on our balance
sheet, primarily through the deconsolidation of BRBA, Inc., an
insolvent subsidiary which has filed for liquidation under
Chapter 7. BRBA ceased operations last year when its long-term
outsourcing contract with a large client was terminated as a
result of the client's bankruptcy proceedings. The
deconsolidation of BRBA effectively eliminates BRBA's balance
sheet and operating results from BrightStar's reported results.
This action will result in BrightStar reporting an extraordinary
gain in Q2 of about $1.0 to $1.5 million resulting from the
elimination of previously recorded liabilities belonging to
BRBA. The deconsolidation will substantially improve
BrightStar's working capital position reported on its
consolidated balance sheet at the end of the second quarter,"
concluded Mr. Czaja.
"Continued softness in the market for IT services, combined with
the postponement or loss of previously expected business,
accounted for our disappointing revenues in the second quarter,"
said Joe Wagda, Chief Executive Officer. "Corporate IT spending
remains weak, with little indication that this will change in
2002. Given this market environment, we are exploring a number
of initiatives intended to distinguish BrightStar's offerings
from those of its competitors and potentially create new revenue
streams."
BrightStar Information Technology Group, Inc. is a provider of
information technology services. We help companies maximize
their competitive advantage through the implementation and /or
management of leading edge enterprise level applications
including enterprise resource planning, customer relationship
management, and business process management software solutions.
BrightStar has established a strong vertical business presence
in healthcare, energy, technology, and state and local
government. BrightStar has its headquarters in the San Francisco
Bay Area with field offices in Dallas, Texas, and Quincy,
Massachusetts, and can be reached via the company's Web site at
http://www.brightstar.com
At March 31, 2002, the company recorded a working capital
deficit of close to $2 million.
BURLINGTON: Buffalo Balks At Move to Transfer JV Interest to JC
---------------------------------------------------------------
Buffalo Color Corporation is an unsecured creditor of Burlington
Industries, Inc., and its debtor-affiliates, having an unpaid
claim, as of the Petition Date, of nearly $500,000. Buffalo
sold indigo dye to the Debtors prior to the Petition Date and
continues to sell the product to the Debtors postpetition.
Jami B. Nimeroff, Esq., at Buchanan Ingersoll, in Wilmington,
Delaware, relates that Buffalo disputes the Motion and the
Transaction, to the extent that:
(i) the parties intend to release or otherwise negatively
impact Buffalo's rights to assert their claims
against the subject venture or any of the parties;
(ii) the Transaction would release the venture or any of the
parties and result in the Debtors or any of their debtor-
affiliates remaining liable to Buffalo solely through
indemnity; and
(iii) the Transaction definitive documents may materially alter
the rights of Buffalo or otherwise deviate from the Term
Sheet.
Mr. Nimeroff states that the Debtors allege in the Motion, and
the Term Sheet provides, that the parties to the transaction
will enter into a mutual release with respect to inter-venture
claims only. No claims of either party to third parties will be
released.
"In light of the products sold by Buffalo to the Debtors and the
business of the venture, Buffalo believes that they hold claims
against the venture and the parties, jointly and severally, with
respect to their prepetition sales and unpaid invoices," Mr.
Nimeroff says.
Accordingly, Buffalo reserves the right to review the definitive
documents so as to assure themselves that no aspect of the
Transaction impacts their rights and claims and to further
object as they deem necessary.
Therefore, Buffalo Color Corporation asks the Court to approve
the Motion in part by authorizing the Transaction to proceed.
They want to ensure that the Transaction does not have a
negative impact upon their rights and claims against the joint
venture or any party. They also want the definitive documents
to be circulated and subject to review and objection by parties
in interest with a negative notice not less than 10 business
days. (Burlington Bankruptcy News, Issue No. 15; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Burlington Industries' 7.25% bonds due 2005 (BRLG05USR1) are
quoted at a price of 16, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=BRLG05USR1
for real-time bond pricing.
CARIBBEAN PETROLEUM: Gets Nod to Tap Kirkland for EPA Litigation
----------------------------------------------------------------
Caribbean Petroleum LP obtained approval from the U.S.
Bankruptcy Court for the District of Delaware to employ James H.
Schink, Esq., and Kirkland & Ellis as special litigation
counsel.
The Debtors retained Kirkland & Ellis to render legal advice
with respect to pending litigation filed by the Environmental
Protection Agency and the US Department of Justice, Civil Action
No. 99-1171.
The Debtors agreed to compensate Kirkland & Ellis for its
services at its usual hourly rates. Mr. Schink's hourly rate is
$520 and other Kirkland members and associates bill between $710
to $160 per hour.
Caribbean Petroleum L.P. distributes petroleum products and
owns/leases real property on which service stations selling
petroleum products are stored and sold to retail customers. The
Company filed for chapter 11 protection on December 17, 2001.
Michael Lastowski, Esq., and William Kevin Harrington, Esq., at
Duane, Morris & Heckscher LLP represent the Debtors in their
restructuring efforts.
CELERIS CORP: Completes Sale of All Assets to STATPROBE, Inc.
-------------------------------------------------------------
Celeris Corporation (OTCBB:CRSC), a provider of specialty
clinical research services to pharmaceutical, medical device and
biotechnology companies, announced the completion, effective
June 30, 2002, of the sale of substantially all of the Company's
assets, other than its cash, to STATPROBE, Inc. The sale of the
Company was approved by the Company's shareholders at a special
meeting held on June 26, 2002.
Celeris currently anticipates distributing between $0.29 and
$0.35 per share in cash to its shareholders in a liquidating
distribution following the sale. The actual distribution could
be higher or lower than the range per share contemplated
depending on a number of factors, some of which are outside of
the Company's control or ability to quantify at this time.
Celeris currently anticipates that the distribution will occur
in the fourth quarter of 2002.
Celeris Corporation is a provider of specialty clinical research
services and information technology services that expedite and
streamline the clinical trial and regulatory submission process
for pharmaceutical, medical device and biotechnology
manufacturers.
STATPROBE Inc. is a privately held, full-service contract
research organization (CRO) serving pharmaceutical,
biotechnology and medical device clients. The company was
founded in 1988 and currently employs over 300 in Ann Arbor, MI;
Columbus, OH; Lexington, KY; San Diego, CA and Cary, NC.
CONSOLIDATED FREIGHTWAYS: John Brincko Reorganizes Management
-------------------------------------------------------------
Consolidated Freightways Corporation (Nasdaq:CFWY) announced a
reorganization of its executive structure to ensure the most
efficient management of its business.
This new organization places the CEO's office and senior
management closer to field operations and facilitates both
information flow and timely decision making, important elements
in CF's ongoing restructuring effort.
John P. Brincko, chief executive officer, said, "Since I joined
CF a month ago, I've been assessing the highly competitive LTL
marketplace and the way our company is organized and operates in
this market. We place a high premium on customer relationships
and I'm committed to strengthening this aspect of our business
and adding to our customer base. This requires a centralized,
focused and highly responsive management structure, enabling
leadership to make decisions rapidly and implement them
directly," Brincko said.
The new management organization consists of the following:
-- Elimination of the position at the motor carrier
subsidiary of president and chief operating officer and creation
of a corporate position -- executive vice president, terminal
operations -- responsible for the day-to-day management of motor
carrier operations, reporting to the CEO. This position will be
filled by Robert Warner, a senior executive who has been with CF
since 1975 and has most recently served as operations vice
president in CF's Central region. Thomas Paulsen, who served as
the motor carrier's president and chief operating officer, was
offered another senior corporate executive position but chose to
leave the company after 36 years of service.
-- Consolidation of field operations and the national and
local sales organizations into five regions, to centralize
decision-making and bring the company closer to customers. The
operating regions will report to the executive vice president,
terminal operations. The national and local sales organizations
will report to Martin Larson, senior vice president of sales.
-- The appointment of Stephen Sokol to the positions of
executive vice president of finance and chief financial officer.
Prior to joining CF, Mr. Sokol worked with Mr. Brincko in
various corporate turnarounds. In addition to his expertise in
business restructuring, Mr. Sokol has held various executive
management positions and has practiced law with a major law
firm. In assuming the chief financial officer responsibilities,
Mr. Sokol succeeds Robert Wrightson, who has retired after 40
years of service with CF.
-- The appointment of Phillip Seeley to the position of
executive vice president of process improvement, with
responsibility for process improvement initiatives in
information technology and other operations. Mr. Seeley rejoined
the company last year as vice president of administration after
having managed a logistics-focused venture capital firm and a
software consulting company between 1996 and 2001. Previously,
between 1968 and 1996, he held various leadership positions with
CF in sales, administration, management systems and information
technology.
Messrs. Warner, Larson, Sokol and Seeley report to Mr. Brincko,
as well as Frits Kromhout -- senior vice president of marketing,
Mark Bunte -- vice president of transportation and Wayne Bolio -
- vice president of human resources.
Mr. Brincko said, "These changes blend restructuring and
operating expertise at the highest decision making levels of the
company and also enable me to work much more closely with field
operations. The restructuring also helps us accelerate the
company's cost-reduction efforts to help CF reach the goal of
becoming a financially sound, customer-focused, profitable
competitor."
Consolidated Freightways Corporation is comprised of national
less-than-truckload carrier Consolidated Freightways, third
party logistics provider Redwood Systems, Canadian Freightways
LTD, Grupo Consolidated Freightways, the company's subsidiary in
Mexico and CF AirFreight, an air freight forwarder.
Consolidated Freightways is a transportation company primarily
providing less-than-truckload freight transportation throughout
North America using its system of 300 terminals and over 18,000
employees.
At March 31, 2002, Consolidated Freightways Corp. had a working
capital deficiency of about $20 million.
COUNCIL TRAVEL: Look for Schedules and Statements on August 6
-------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the Southern District
of New York, Council Travel Services and its debtor-affiliates
obtained an extension of the deadline to file their Schedules
and Statements. The Court gives the Debtors until August 6,
2002 to file all their lists, schedules of assets and
liabilities and statements of financial affairs as required by
11 U.S.C. Sec. 521(a) and Rule 1007 of the Federal Rules of
Bankruptcy Procedure.
Council Travel, America's leader in student travel filed for
chapter 11 bankruptcy protection on February 05, 2002. Schuyler
Glenn Carroll, Esq. at Olshan Grundman Frome Rosenzweig &
Wolosky LLP represents the Debtors in their restructuring
efforts.
COVANTA ENERGY: Pamela Wright Wants Prompt Decision on Agreement
----------------------------------------------------------------
Pursuant to Section 365(d)(2) of the Bankruptcy Code, Pamela C.
Wright asks the Court to compel Covanta Energy Corporation, and
its debtor-affiliates to assume or reject an executory Stock
Purchase Agreement dated July 30, 1999 between Pamela C. Wright,
Eileen C. Cunningham, Roy E. Reehil and William M. Buchan --
shareholders of DDS Environmental, Inc. -- and Ogden Water
Systems, Inc., now known as Covanta Energy Corporation. In the
alternative, the Court may fix the date in which the Debtor must
assume or reject the executory Agreement and order the Debtor to
pay all postpetition Royalty Payments up to the date the Debtors
makes the decision. Furthermore, Ms. Wright also seeks relief
from the automatic stay to the extent necessary for her to
terminate the Agreement and immediately exercise her right in
and all "copyrights" and "trademarks", including but not limited
to the "Dual Sand System" and to recover all outstanding and
future "Royalty Payments" due to her under the terms of the
Agreement.
Glenn M. Fjemedal, Esq., at Harris Beach LLP, in Pittsford, New
York, relates that under the Stock Purchase Agreement, the
shareholders sold 90% of all outstanding capital DSS stock to
the Debtor and the copyrights and trademarks for the Dual Sand
System. In addition, the Debtor also acquired from DSS certain
contracts, including:
-- Industrial Treatment Operations Contracts,
-- Material Contracts,
-- Municipal Surface Drinking Water Operations Contracts,
-- Municipal Wastewater Operation Contracts, and
-- Water Reclamation and Reuse Operations Contracts.
In return of the stock, the Debtor agreed to make certain
periodic royalty payments to the shareholders on or prior to May
1 of each year from the Closing Date to November 5, 2016. The
Debtor will pay each Shareholder its Proportionate Share of:
(1) Royalty Payment
(i) an amount equal to 10% of DSS Equipment Sales Price
during the prior calendar year for sales outside the
New York City Watershed;
(ii) an amount equal to 18% of DSS Equipment Sales Price
during the prior year for sales inside the New York
City Watershed; and
(iii) an amount equal to 10% of DSS Licensing Fees received
by DSS during the prior calendar year.
(2) Operations Revenue
Type of Operations Contract % of Revenue Sharing
--------------------------- --------------------
Municipal Surface Drinking Water two percent
Municipal Wastewater one percent
Industrial Treatment two percent
Water Reclamation and Reuse one percent
Mr. Fjemedal informs the Court that Ms. Wright was to receive
50% of the Royalty Payments due to all Shareholders.
In the event of default under the Agreement, Mr. Fjemedal says
that the shareholders may exercise their accounting or audit
rights, the Debtor has to indemnify the shareholders and the
Royalty Payments will be due every quarter instead of an annual
payment.
The Debtor is in default of their Royalty Payments since June
2000. Mr. Fjemedal also identifies 10 projects under the DSS
Equipment Sales where the Debtor owes Ms. Wright:
Project Amount due to Ms. Wright
------- ------------------------
Walton $366,818
Delhi 208,592
Port Henry 19,284
Tampa Bay 400,000
Equipment Only 200,000
Stamford 306,000
Keeseville 19,181
St. Regis 14,621
Wilmington 13,831
Watehtower 129,591
Hunter Highland 60,502
In addition, the Debtor has also failed to make its first
quarterly Royalty Payment due on March 30, 2002, which Ms.
Wright should have received $112,489.
Accordingly, Mr. Fjemedal contends, the Motion is warranted
because the Debtor has failed to comply with the dictates of
Section 365(b)(1) of the Bankruptcy Code when:
(a) the Debtor is in material breach of the Agreement with
its failure to make Royalty Payment for the first quarter
of 2002;
(b) the Debtor has failed to provide any assurances that the
default would be promptly cured;
(c) that Ms. Wright would be compensated for her resulting
losses; and
(d) the Debtor would provide adequate assurances of future
performance under the Agreement. (Covanta Bankruptcy News,
Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
DAIRY MART: Terminates Arthur Andersen Engagement as Auditors
-------------------------------------------------------------
On June 17, 2002, the Audit Committee of the Board of Directors
of Dairy Mart Convenience Stores Inc. decided to no longer
engage Arthur Andersen LLP as the Company's independent public
accountants upon completion of the audit of the consolidated
financial statements as of February 2, 2002. Effective June 17,
2002, the Company engaged Grant Thornton LLP to serve as the
Company's independent public accountants for its fiscal year
2003, which ends on February 1, 2003.
Dairy Mart Convenience Stores goes way beyond milk, selling more
than 3,000 items ranging from cigarettes and snacks to lottery
tickets. The company runs about 550 Dairy Mart stores (almost
20% of which are franchised), primarily in Ohio, but also in six
nearby states. Most are located in suburban neighborhoods where,
when possible, Dairy Mart is adding branded gas pumps (about
half of its stores offer gas).
Dairy Mart filed on September 24, 2001 for Chapter 11
Reorganization in the U.S. Bankruptcy Court for the Southern
District of New York.
ELAN CORP: S&P Hatchets Corporate Credit Rating to BB- from BBB-
----------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating to double-
'B'-minus from triple-'B'-minus, and all of its other ratings,
on specialty pharmaceutical company Elan Corp. PLC. The ratings
remain on CreditWatch with negative implications.
The actions reflect increased risk regarding the potential
pressure on Dublin, Ireland-based Elan to repurchase royalty
rights on its product portfolio and drug pipeline in the face of
its shrinking access to capital.
"Today's filing of Elan's 2001 financial report, which provides
detail on risk-sharing arrangements, suggests the potential for
substantial royalty-payment increases or the repurchase of these
rights, pertaining to drugs related to much of Elan's future
cash flow. Such a repurchase could well create a funding need in
excess of $1 billion over the next couple of years," commented
Standard & Poor's credit analyst Michael Kaplan.
At the same time, a potential put on a $1 billion debt
instrument looms more formidable, given equity share collapse
that reduces the likelihood that the obligation will be redeemed
for Elan shares.
Standard & Poor's expects to soon meet with Elan management to
examine specific plans to bolster its financial position and
business strategy.
ENRON CORP: Winning Bidder for Excalibur Pact Still Undisclosed
---------------------------------------------------------------
A formal auction for the Excalibur Contract was conducted. Out
of 37 potential purchasers, Enron LNG was able to identify a
superior Final Bid. The name of the superior bidder is not yet
disclosed.
However, Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in
New York, tells the Court, the Superior Bid required amendments
to the Time Charter. Enron LNG informed Exmar of this
particular bid. Ms. Gray notes that there will certainly be a
delay in consummating a transaction with this Final Bidder
because Enron LNG would have to negotiate and obtain consent for
numerous alterations to the Time Charter. "It is also doubtful
that Enron LNG will obtain Exmar's consent to any amendment to
the Time Charter since Exmar contends it would downgrade the
economics of the Time Charter," Ms. Gray says.
In the interest of a speedy consummation, Exmar offered Enron
LNG a firm bid of $1,500,000 for the Assets on an "as is, where
is" basis.
Ms. Gray explains that the need to close quickly on Exmar's
proposed offer is based on Exmar's professed exposure to
liability for alleged defaults of Solaia's obligations under the
Lease Agreement and the Loan Agreement due to Exmar's inability
to make final payments for the Excalibur without a time charter
in place. Exmar reports that the Lenders have granted a
moratorium on the loan obligations until September 2002, but
Exmar has indicated that it must immediately begin its search
for a replacement charter party capable of satisfying the
Guarantee Requirements if it hopes to have a replacement time
charter in effect by that time.
After negotiations, Ms. Gray says, Enron LNG and Exmar reached
an agreement for Enron LNG to assume, assign, and sell the
Assets to Exmar on an "as is, where is" basis, subject to higher
or better offers. At present, Enron LNG believes that the Exmar
offer is the highest and best offer it has received for the Time
Charter and that the sale of the Assets to Exmar is commercially
reasonable.
Their Purchase and Sale Agreement dated June 24, 2002 provides
that the Debtors will:
(i) assume the Assets pursuant to Section 365 of the
Bankruptcy Code, and
(ii) assign the Assets to Exmar in consideration of a purchase
price aggregating $1,500,000.
The Purchase and Sale Agreement has these major provisions:
(a) Payment Terms: The aggregate purchase price to be paid by
Exmar to Enron LNG will be $1,500,000.
(b) Escrow Arrangements: Contemporaneously with the execution
of the Purchase and Sale Agreement, Exmar must:
(i) execute and deliver to Enron LNG and Weil, Gotshal
& Manges LLP, as escrow agent an escrow agreement
among Exmar, Enron LNG, and Escrow Agent, and
(ii) deposit by wire transfer $150,000 in immediately
available funds to be held in escrow with Escrow
Agent pursuant to the Escrow Agreement.
The release of escrowed funds from the Escrow must be in
accordance with the terms and conditions of the Purchase
and Sale Agreement and the Escrow Agreement.
(c) Closing Date: July 17, 2002, subject to the satisfaction
of the provisions of the Purchase and Sale Agreement. At
the Closing, Exmar will pay to Enron LNG by wire transfer
an amount equal to the Purchase Price less the Deposit
deposited in Escrow, all in immediately available funds to
the account or accounts specified by Enron LNG to Exmar on
or prior to the Business Day immediately preceding the
Closing.
(d) Expiration Date: July 22, 2002, or at a later date as the
Parties may mutually, but in their respective sole
discretion, agree in writing.
(e) Exmar's Parent Guaranty: Contemporaneously with the
execution of the Purchase and Sale Agreement, Exmar will
deliver to Enron LNG Exmar's Parent Guaranty, duly
executed by Exmar Lux S.A., the guarantor, pursuant to
which the guarantor must guarantee the payment and
performance of all of Exmar's obligations and liabilities
under the Purchase and Sale Agreement and any other
agreement or instrument to be executed or delivered by
Exmar.
(f) Brokerage Fees and Commissions: None
(g) Termination of Agreement: The Purchase and Sale Agreement
and the transactions contemplated thereby may be
terminated at any time prior to the Closing:
(i) by the written mutual agreement of Enron LNG and
Exmar;
(ii) if the Closing has not occurred by the close of
business on the Expiration Date, then by Enron LNG
if any condition specified in Section 6.1 of the
Purchase and Sale Agreement has not been satisfied
on or before the close of business, and has not
been waived by Enron LNG, provided that the
failure to consummate the transactions contemplated
on or before that date did not result from the
failure by Enron LNG to fulfill any undertaking or
commitment provided for on the part of Enron LNG
that is required to be fulfilled on or prior to
Closing;
(iii) if the Closing has not occurred by the close of
business on the Expiration Date, then by Exmar if
any condition specified in Section 6.2 of the
Purchase and Sale Agreement has not been satisfied
or waived on or before the close of business, and
has not been waived by Exmar, provided that
the failure to consummate the transactions
contemplated on or before that date did not result
from the failure by Exmar to fulfill any
undertaking or commitment provided for on the part
of Exmar that is required to be fulfilled on or
prior to Closing;
(iv) if the Deposit is not deposited into the Escrow,
then by Enron LNG upon written notice to Exmar;
(v) by Enron LNG upon written notice to Exmar if
either:
(1) an order by the U.S. Bankruptcy Court or the
Grand Court of the Cayman Islands is entered
approving the sale or other disposition of the
Assets to any Person other than Exmar having
made a higher or better offer or, at Enron
LNG's election, or
(2) upon the consummation of the sale or other
disposition of the Assets to another Person;
(vi) by Exmar or Enron LNG, if there is any Law
enacted after June 25, 2002 that makes consummation
of the transactions contemplated in the Purchase
and Sale Agreement illegal or otherwise prohibited
or if any court of competent jurisdiction or other
Governmental Authority has issued an order, decree
or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated, and
the order, decree, ruling or other action is not
subject to appeal or has become final and
unappealable;
(vii) if the U.S. Bankruptcy Court or the Grand Court of
the Cayman Islands do not enter the U.S. Bankruptcy
Court Order or the Cayman Islands Court Order,
respectively, by the Expiration Date, then by
Exmar or Enron LNG by written notice to the other
Party;
(h) General Remedies: Without either Party waiving or
releasing the obligations of the other Party which survive
the termination of the Purchase and Sale Agreement or its
rights or remedies, unless the Parties otherwise agree in
writing:
(i) Mutual Agreement: Upon a termination of the
Purchase and Sale Agreement by Enron LNG and Exmar,
Exmar will be entitled to receive back the Deposit
as its sole and exclusive remedy, and neither Exmar
nor Enron LNG will be entitled to any other remedy
under the Purchase and Sale Agreement, at law, or
in equity for the termination, unless the Parties
otherwise agree in writing; and Enron LNG agrees
promptly to execute the instructions to Escrow
Agent as may be required pursuant to the Escrow
Agreement so to release the Deposit to Exmar;
(ii) Enron LNG's Remedies: Upon a termination of the
Purchase and Sale Agreement by Enron LNG, Enron LNG
will be entitled to retain the Deposit as its sole
and exclusive remedy for the termination, and
neither Exmar nor Enron LNG will be entitled to
any other remedy, at law, or in equity; and Exmar
agrees promptly to execute the instructions to
Escrow Agent as may be required pursuant to the
Escrow Agreement so to release the Deposit to Enron
LNG;
(iii) Exmar's Remedies: Upon a termination of the
Purchase and Sale Agreement by Exmar, or by Enron
LNG, Exmar will be entitled to receive back the
Deposit as its sole and exclusive remedy for the
termination, and Exmar will not be entitled to any
other remedy, at law, or in equity; and Enron LNG
agrees promptly to execute the instructions to
Escrow Agent as may be required pursuant to the
Escrow Agreement so to release the Deposit to
Exmar.
(i) Buyer's Special Remedies: If the Purchase and Sale
Agreement is terminated by Enron LNG, Enron LNG will,
subject only to the Procedures Order having been entered
and being in full force and effect as of the date of the
termination and Exmar not being in breach of this
Agreement as of the date of the termination, pay to Exmar
the sum of $35,000 as a break-up fee by wire transfer of
immediately available funds within five Business Days
following the closing and consummation of the sale of the
Assets to the third party making the higher or better
offer.
Ms. Gray assures the Court that the terms and conditions of the
Purchase and Sale Agreement were negotiated by Enron LNG and
Exmar at arm's length and in good faith. "Exmar does not hold
any interests in any of the Debtors and is not otherwise
affiliated with the Debtors or their officers or directors," Ms.
Gray asserts.
Exmar demands that the transactions in the Purchase and Sale
Agreement be consummated no later than July 22, 2002, because
of:
(1) the pressure Exmar is purportedly facing as a result of
the cross-defaults in the Lease Agreement and the Loan
Agreement, and
(2) the risk that final payments for the Excalibur may not be
made if there is no substitute charter party for the
vessel in place before September 2002.
If there is no closing of the transactions by July 22, 2002, Ms.
Gray says, the Purchase and Sale Agreement may be terminated at
Exmar's option. (Enron Bankruptcy News, Issue No. 35; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Enron Corp.'s 9.125% bonds due 2003 (ENRON2), DebtTraders says,
are trading at about 11.5. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON2
ENRON CORP: Hearing on Excalibur Charter Sale Set for Thursday
--------------------------------------------------------------
The sale of the Excalibur Time Charter and other related assets
pursuant to the Purchase and Sale Agreement is subject to higher
or better offers. In order to ensure maximum value is obtained
for the Assets, Enron LNG proposes that certain terms and
procedures govern the submission of competing bids for the
Assets at the Auction.
The Bidding Procedures provide that:
(a) The Sale Hearing will be held before the Honorable Arthur
J. Gonzalez, United States Bankruptcy Judge, in Courtroom
523 (AJG) of the United States Bankruptcy Court for the
Southern District of New York, One Bowling Green, New York
10004-1408, on July 11, 2002 at 10:00 a.m., or as soon
thereafter as counsel may be heard.
(b) The Auction will be held immediately prior to the
commencement of the Sale Hearing for consideration of
qualifying higher or better offers that may be presented
to Enron LNG.
(c) Any entity that wishes to make a competing bid for the
Assets must provide Enron LNG with sufficient and adequate
information to demonstrate, to the satisfaction of Enron
LNG, upon consultation with the Creditors' Committee, that
the competing bidder:
(i) has the financial wherewithal and ability to
consummate the sale including evidence of adequate
financing, and including a financial guaranty, if
appropriate,
(ii) has a credit rating of BBB (-) and above as rated
by Standard & Poors and Baa 3 and above as rated by
Moody's or can provide an irrevocable letter of
credit in the amount of $74,500,000, and
(iii) can provide all non-debtor contracting parties to
the contracts to be transferred under the Purchase
and Sale Agreement with adequate assurance of
future performance as contemplated by section 365
of the Bankruptcy Code;
(d) Enron LNG, upon consultation with the Creditors'
Committee, must entertain Competing Offers that are on
substantially the same terms and conditions as those terms
set forth in the Purchase and Sale Agreement and
accompanied by a cash deposit at least equal to $150,000;
(e) Competing Offers must:
(1) be in writing, and
(2) be received by:
Enron LNG Shipping Company
1400 Smith Street, Houston, Texas, 77002
Attention: Greg Curran
Weil, Gotshal & Manges LLP
767 Fifth Avenue, New York, New York 10157
Attention: Brian Rosen, Esq.
Facsimile: 212-310-8007
Attorneys for Enron LNG
KPMG Corporate Recovery
PO Box 493 GT, Century Yard
Grand Cayman, Cayman Islands
Attention: Kris Beighton
Facsimile: 345- 945-3470
Joint Provisional Liquidators for Enron LNG
and
Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza, New York, New York 10005
Attention: Luc A. Despins, Esq.
Facsimile: 212-530-5219
Attorneys for the Creditors' Committee,
so that the bid is received by the parties no later
than July 2, 2002, at 4:00 p.m. (EST);
(f) All Competing Offers will be considered at the Auction to
be held immediately prior to the commencement of the Sale
Hearing, or in a manner and at an alternative location as
Enron LNG, in consultation with the Creditors' Committee,
may determine or the Court may direct, on July 11, 2002
commencing at 10:00 a.m. (EST);
(g) Any Competing Offer must be presented under a contract
substantially similar to the Purchase and Sale Agreement,
marked to show any modifications made to the Agreement,
and the bid must not be subject to due diligence review
or obtaining financing;
(h) Enron LNG, upon consultation with the Creditors'
Committee, will, after the Bid Deadline and prior to the
Auction, evaluate all bids received, and determine which
bid reflects the highest or best offer for the Assets.
Enron LNG will announce the determination at the
commencement of the Auction;
(i) Initial overbids must be in an amount that is at least
$70,000 greater than the $1,500,000 purchase price;
(j) Subsequent bids, including subsequent bids made by the
Exmar, must be in an amount that is at least $35,000 more
than the prior bid;
(k) The Auction must be conducted not later than July 12,
2002;
(l) In the event a competing bidder is the winning bidder, and
the winning bidder fails to consummate the proposed
transaction by the Closing Date, Enron LNG, upon
consultation with the Creditors' Committee, will be free
to consummate the proposed transaction with the next
highest bidder at the final price bid by the bidder at
the Auction without the need for an additional hearing or
order of the Court;
(m) All bids for the purchase of the Assets will be subject
to approval of the Bankruptcy Court;
(n) No bids will be considered by Enron LNG or the Bankruptcy
Court unless a party submitted a Competing Offer in
accordance with the Auction Terms and participated in the
Auction. Enron LNG, upon consultation with the Creditors'
Committee, may reject any Competing Offers not in
conformity with the requirements of the Bankruptcy Code,
the Bankruptcy Rules or the Local Bankruptcy Rules of the
Court, or contrary to the best interests of Enron LNG and
parties in interest;
(o) All bids are irrevocable until the earlier to occur of:
(1) the closing of the sale, or
(2) 30 days following the last date of the Auction;
(p) Neither Buyer nor any of its respective directors,
employees, accountants, or other agents and
representatives will, directly or indirectly, solicit a
competitive bid from a third party to purchase the Assets,
or engage in or continue any discussions or negotiations
with any party that has made or who may make a competitive
bid;
(q) All bids are subject to other terms and conditions as
are announced by Enron LNG, in consultation with the
Creditors' Committee, at the outset of the Auction; and
(r) Notwithstanding anything to the contrary, Enron LNG, in
consultation with the Creditors' Committee, will have the
right to entertain non-conforming offers at its
discretion, provided that any non-conforming offer
requiring amendments to the Time Charter must require the
consent of Exmar, which consent shall not be unreasonably
withheld.
Enron LNG asserts that the proposed bidding protections are fair
and reasonable because it will enable them to induce one or more
potential purchasers to submit a higher or better bid than might
otherwise be forthcoming and increase the chances that Enron LNG
will receive the highest or best price for the Assets. (Enron
Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
FEDERAL-MOGUL: Deadline to Commence Litigation Moved to August 2
----------------------------------------------------------------
The Prepetition Agent, on behalf of the Existing Lenders and the
holders of Tranche C Loans, the Surety Bond issuers and the
Stipulation Parties composed of Federal-Mogul Corporation's
Unsecured Creditors' Committee, Asbestos Claimants Committee,
the Indenture Trustees, and the Legal Representative for the
Future Asbestos-Related Claimants, sought and acquired the
Court's approval of another stipulation to further extend the
Litigation Commencement Date (but only for the parties to this
Stipulation) pursuant to the Final DIP Order. The Stipulation
Parties stipulate and agree that:
A. The Litigation Commencement Date for any of the Stipulation
Parties to commence a Proceeding is extended until August 2,
2002;
B. The Litigation Commencement Date for all other parties in
interest will remain April 17, 2002, other than the Indenture
Trustees for which the Litigation Commencement Date will
remain June 3, 2002;
C. This Stipulation is without prejudice to the right of the
Stipulation Parties to request a further extension of the
Litigation Commencement Date;
D. This Stipulation is without prejudice to the right of the
Prepetition Agent, the Existing Lenders, the holders of
Tranche C Loans and the Surety Bond Issuers to, at any time,
commence an action to establish the amount, validity,
enforceability, perfection, or priority of the Existing
Obligations or the liens on the Existing Obligations
Collateral in respect thereof or of the Tranche C Loans;
E. The Committees and the Futures Representative will
coordinate, and share the results of, their discovery
requests to the Prepetition Agent, the Existing Lenders, the
holders of Tranche C Loans and the Surety Bond Issuers. They
will not serve duplicative discovery requests on the
Prepetition Agent, the Existing Lenders, the holders of
Tranche C Loans and the Surety Bond Issuers. They will not
notice (whether by subpoena or otherwise) more than one
deposition of the same individual representative of any of
the Prepetition Agent, the Existing Lenders, the holders of
Tranche C Loans and the Surety Bond Issuers absent a showing
of good cause as to why an additional deposition of that
representative is necessary. This is provided, however, that:
a. the deposition of a corporate representative designated
pursuant to Fed.R.Civ.P. 30(b)(6) and a separate
deposition of the same witness specifically noticed by
name; and,
b. a narrow deposition limited to privilege or other
evidentiary issues and a separate deposition of the same
individual on substantive issues, will not, in and of
itself, constitute "duplicative discovery." (Federal-Mogul
Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DebtTraders reports that Federal-Mogul Corporation's 8.8% bonds
due 2007 (FEDMOG6) are quoted at a price of 21. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=FEDMOG6for
real-time bond pricing.
FOAMEX INT'L: William D. Witter Discloses 6.0% Equity Stake
-----------------------------------------------------------
William D. Witter Inc. and William D. Witter beneficially own
1,456,590 shares of the common stock of Foamex International,
Inc., representing 6.0% of the outstanding common stock shares
of the Company. The firm and Mr. Witter, as President of the
investment advising firm, hold sole powers of voting and
disposition over the total stock held.
Foamex International is one of North America's largest makers of
polyurethane foam for carpets and furniture. Foamex's flexible
polyurethane and polymer foams are used in mattresses, couches,
car interior trim, carpets, and industrial filters. Its products
are sold primarily through outlets in North America, with the US
accounting for most of its sales. Automotive supplier Johnson
Controls accounts for 12% of sales. Other customers include
Sealy, Wal-Mart, Ford, and General Motors.
At March 31, 2002, Foamex Int'l has a total shareholders' equity
deficit of about $173 million.
GADZOOX NETWORKS: Fails to Meet Nasdaq Listing Requirements
-----------------------------------------------------------
Gadzoox Networks, Inc., (Nasdaq: ZOOX), a global supplier of
innovative Storage Area Network products, amended the Company's
announcement dated May, 28, 2002 and titled "Gadzoox Networks
Receives Anticipated Delisting Notification From Nasdaq" to
include its non-compliance with either the minimum $4,000,000
net tangible assets or minimum $10,000,000 shareholders' equity
test set forth in Marketplace Rule 4450(a)(3).
Since 1996 Gadzoox Networks has led the industry in market
"firsts" and continues to drive the Storage Area Network (SAN)
edge market with innovative Fibre Channel switching technology.
The company has consistently delivered a time to market
advantage to major OEM customers enabling them to create clear
business value for their customer base. Gadzoox Networks is a
voting member of the Storage Networking Industry Association
(SNIA), with corporate headquarters located in San Jose,
California. For more information about Gadzoox Networks'
products and technology advancements in the SAN industry, visit
the company's Web site at http://www.gadzoox.com
GLOBAL CROSSING: John Hovel Pushing for Equity Panel Appointment
----------------------------------------------------------------
John Hovel, a stockholder of Global Crossing Ltd., and the
founder of a group of hundreds of independent Global Crossing
stockholders, aka GXstockholders, asks the Court to appoint an
Equity Security Holders' Committee. The Gxstockholders say
they've been damaged by these proceedings, the officers, and the
directors. Without an official committee, the security holders
are not adequately equipped to protect their own legal
interests, as provided for by law.
On January 28, 2001, Mr. Hovel initiated an external Global
Crossing investigation on behalf of a group of hundreds of
Global Crossing stockholders owning millions of shares of Global
Crossing stock. The investigation utilized public information,
including SEC documents filed, news reports referring to Global
Crossing, Global Crossing's news releases, information in the
law suit filed by former Global Crossing employee Roy Olofson,
and any available input from former Global Crossing employees.
The preliminary results of the stockholder's investigation
supports the need for a security holders' committee to be formed
as a matter of law and necessity.
To date, Judge Gerber has replied by way of a form letter to
many stockholders that have requested the appointment of an
equity committee. In a reply letter dated February 19, 2002
from Judge Gerber to a Global Crossing stockholder, Judge Gerber
stipulated that he would allow stockholders to enter their
properly constructed requests for relief, without an attorney.
In a letter dated March 29, 2002, the US Trustee denied the
appointment of an equity committee in this case, pointing out
that the denial was made based on consultation with the debtor's
counsel and the counsel for the creditor's committee. An
opinion was given that the basis for denial was that "Global
Crossing would soon write off approximately $8,000,000,000 in
goodwill and assets, an amount exceeding the approximately
$8,900,000,000 of the last reported common shareholders equity.
The US Trustee also gave an opinion that the debtor was
"hopelessly insolvent," attempting to further justify the denial
of appointment of an equity committee. The US Trustee closed
the letter by expressing an "understanding of the concerns" of
the stockholders.
Mr. Hovel contends that neither an understanding exists, nor is
the US Trustee executing the existing legal responsibilities
required by law in this case. The definition of "hopelessly"
insolvent requires that the debtor's liabilities must be larger
than the debtor's assets and also need that the debtor's debt is
indisputable. No examination of allegations of fraud or
mismanagement has been conducted by the US Trustee or an
Examiner. The US Trustee appears bias in these matters, and
therefore, the replacement of the US Trustee, direction by the
court of the US Trustee to comply, or the appointment of an
examiner, is necessary in this case.
In a letter of response to the US Trustee dated April 2, 2002,
Mr. Hovel pointed out that "It is within the Trustee's
discretion to appoint committees, including for equity security
holders for the public good as provided by the Bankruptcy Code.
We conclude that the court is aware of it's clear discretionary
powers, that afford for the wisdom to appoint a security
holders' committee in any Chapter 11 case, especially where
fraud, incompetence or mismanagement has possibly occurred. It
is only through a committee that security holders' can be
adequately protected. We are not without something to protect.
We have our various rights and interests in a complicated case
to protect. We have the rights and interests of the debtor to
protect."
The basis of Mr. Hovel's expressed concern was that "In theory
the board of directors would represent the interest of equity
holders during bankruptcy. The weight of history contradicts
that theory. The board of directors for Global Crossing is
under a legal cloud for past actions. Various investigations
are in process which could affect the interests of creditors and
equity holders alike. Doubt is cast on the reliability of
accounting statements. The equity holders should be part of the
restructuring process until that time as investigations are
concluded with proper assessments."
Since Mr. Hovel's last mentioned correspondence, the
stockholder's investigation has found that there is substantial
evidence to suggest that Global Crossing Ltd. is the alter ego
of Mr. Gary Winnick, the chairman of the board and publicized
founder of Global Crossing Ltd., and the beneficial owner of
Pacific Capital Group. Evidence also suggests that the Canadian
Imperial Bank of Commerce has also been an alter ego of Global
Crossing Ltd. since the inception of Global Crossing. Mr.
Winnick and the board members or officers of Global Crossing
that are beholden to Mr. Winnick, CIBC, CIBC's several past
representatives on the Global Crossing board of directors, Mr.
Li Ka-shing who owns a substantial stake in CIBC and is a major
stake holder in Global Crossing's subsidiary Asia Global
Crossing, and Pacific Capital are not likely to be the total
persons or entities that comprise the present or past alter ego
of Global Crossing. It is believed that these individuals and
institutions and their agents, used Global Crossing as a shell
corporation for their own financial enrichment. Together they
had control over and/or knowledge of the hidden true financial
condition of Global Crossing, and used it to their financial
benefit as insiders. They additionally acted as stockholders,
not responsible directors or creditors of Global Crossing, thus
damaging the debtor now in Chapter 11.
Furthermore, Mr. Hovel points out that the present directors and
other officials of Global Crossing Ltd. are beholden to Mr.
Winnick and his associate board members, simply because Mr.
Winnick and his associate board members appoint all officers and
board members. This includes the latest three new board members
appointed to the Global Crossing board of directors, appointed
to internally investigate alleged accounting improprieties al
Global Crossing, at the pay rate of several hundred dollars an
hour to each of the three appointees. It is not believed that
there is any true measure of independence from an alter ego of
Global Crossing. It is a fad, that while it is not unusual for
directors of any one company to be a director of another
company, the directors of the debtor have, and in some cases
still do, sit on other boards in conflict with their positions
at the debtor company. Any notion that all past relationships
between the original founders of the debtor no longer exist is
untrue. These relationships still exist, if in no other form
than in relation to the Clarity group and the Carlyle Group
investments or interests, and include a former CEO of the
debtor, Mr. Jack Scanlon, the present CEO of the debtor's
subsidiary Asia Global Crossing, and the Chairman of PrimeCo.
Other directors, officers and attorneys are inter-connected, and
have been throughout the history of Global Crossing.
Mr. Hovel believes that it is both necessary and justified to
"Pierce The Corporate Veil" of Global Crossing and it's
subsidiaries for the purpose of realizing what the truth is in
this case. This case, if property examined, passes the test in
favor of "Piercing" easily. Elements seen in this case are:
undercapitalization, undue influence, conflicting interests,
creditors as directors, diversion of funds, multiple identities,
diversion of assets, use of the debtor as a shell or conduit,
forming the corporation of the debtor for the purpose of
assuming the liabilities of another entity, the commission of
fraud through accounting practices, improper use of inside
information, etc. It cannot go unsaid that, the duty to
investigate and prove those claims, rests with the US Department
of Justice and The Securities and Exchange Commission, and does
not fall under the expressed responsibility of the debtor's
security holders. The debtor's security holders' have the right
to be represented in this case, to consult with the debtor,
other committees, the US Trustee, and to cause to come to
consideration, the need for examination of the debtor's affairs,
both past and present.
Mr. Hovel states that corporate directors serve the corporation,
not the stockholders, although directors are appointed by
stockholders. Because directors owe a fiduciary duty of loyalty
only to the corporation, their business decisions must be
directed toward the best interests of the corporation, and must
not reflect personal motivation or self-interest. However, the
directors have failed in this regard.
Mr. Hovel asserts that many of the SEC documents filed over the
past five years by Global Crossing since it's inception,
indicate that the founders of Global Crossing initially used
Global Crossing to purchase assets from themselves, that those
founders held in other telecom companies or investment
instruments, at inflated prices. They did so by way of trading
to themselves Global Crossing stock, which was later subjected
to a 100-1 stock split. They also engaged in essentially
worthless swaps or empty IRU contracts with at least one of
those companies they had an ownership interest in, to give the
appearance of generating revenue at Global Crossing before the
Global Crossing Initial Public Offering of stock. A history of
"worthless swaps" or other misleading or improper accounting
practices is known to the public, the SEC, the DOJ, and to the
Federal Court System. These are also known by way of news
reports that point out that the SEC is investigating the debtors
connections to Enron, Qwest, among others. The Debtors has
issued statements that the SEC is also investigating the
accounting practices of the debtor itself, and has subpoenaed
records. Further public information exists through the public
court records filed in case 02-01693, in US District Court,
Central District of California, Western Division, by Roy
Olofson, a former high ranking accounting employee of the
debtor, which explicitly outlines serious improprieties and/or
infractions that have occurred in the course of business at the
debtor. There is no lack of evidence or motivation that can
excuse these allegations to be disregarded in this court. The
accounting and accounting cover-up allegations, coupled with the
public information contained in the debtor's SEC filings to
report stock transactions, is well enough to warrant this court
to openly examine all of the debtor's business transactions. So
also is it the duty of the SEC and DOJ to bring these evidence
and examination forward to the court.
Mr. Hovel alleges that the founders, CIBC, Gary Winnick and
Pacific Capital, were particularly enriched in what appears now
through investigative hindsight, to have been a scheme to profit
by forming a public corporation for the purpose of providing a
trading market for the securities the primary founders held.
This scheme also allowed for the securing and transferring of
debt, placing the debt in the name of Global Crossing, to allow
the scheme to continue over the course of years. It was
necessary from the beginning to misrepresent the earnings of
Global Crossing to allow this scheme to work. This scheme
reportedly netted as much as $2,500,000,000 in stock profits for
CIBC, and $1,500,000,000 in stock profits for Mr. Winnick and
other insiders at Global Crossing. This combined total of
$4,000,000,000 does not include hundreds of millions of dollars
in other fees for interest or consulting that were paid to the
founders, investment bankers or attorneys. Also not included in
the total of $4,000,000,000 in financial gain, is the amount of
gain reaped by other individuals or institutions that may also
be named in the near future as having been participating
accomplices or willing accessories to this scheme. Previously,
the large proportion of investments in Global Crossing held by
the founders and other officials at Global Crossing were
represented as being investments in good faith toward the
profitability of Global Crossing. The stockholders
investigation concludes these investments were not in good
faith, but simply a scheme to build up the market capitalization
of Global Crossing in order to harvest that market
capitalization. This constitutes an alter ego and intent to
defraud. It is not incumbent on the securities holders' to
prove these in this motion for the purpose of the appointment of
a security holders' committee and an examiner. The publicly
known accounting irregularities are enough to warrant the
appointments and an official SEC investigation of the debtor.
This can only and inevitably lead to the conclusion that these
additional allegations will be found to be correct.
Mr. Hovel feels that the covering up of allegations of the use
of improper accounting and IRU schemes to inflate revenue made
by a former Global Crossing accounting employee, the prevention
of a re-merger of Global Crossing and the sale of assets of Asia
Global Crossing, the withholding of information and issuing
false information to the public to facilitate the filing of a
surprise pre-packaged Chapter 11 plan that involved special
interest insiders including the recent discovery of investments
by company directors in K1 Ventures which is linked to Singapore
Technologies, should be in the forefront of this case. We can
only wonder how much recent information it takes for the SEC,
DOJ, US Trustee or this court to act in accordance with the law.
Mr. Hovel notes that the Debtors has even been used to publicly
announce a distracting news release to encourage investors,
pertaining to the issuing of stock options to the Global
Crossing CEO that were known to be worthless options in the
future at the price of $1.35, while plans to file Chapter 11
were underway. There is also the improper use of Global Crossing
funds to issue loans to company officials for personal stock
related transactions, the improper forgiveness of loans to
insiders and increasing the size of the loans forgiven in order
to eliminate the borrowers income tax liability at the expense
of Global Crossing or it's subsidiaries. We have seen the
postponement of the sale of Global Crossing assets until a
bankruptcy petition could be filed, the plan to wipe out all of
any outsider's stock equity and voting control in Global
Crossing by filing a secretly planned Chapter 11 pre-packaged
restructuring that was immediately earlier said not to be in the
near future of Global Crossing. We see the alter ego of Global
Crossing manipulating the legal counsel of the company of which
company's counsel has engaged in serious financial and ethical
conflicts of interest, to further schemes involving the assets
and debts of Global Crossing, to the detriment of the company
and to cover up any alleged Rico violations committed by the
alter ego. Again, the security holders are not responsible for
proving the existence of/or the validity of these offenses or
occurrences, it is the responsibility of our Federal government
to do so. Our responsibility is to protect our right to be
adequately represented, in order that we can be assured that the
debtor's case is property administered.
Mr. Hovel tells the Court that the stockholders associated with
Mr. John Hovel are of the opinion that, by law, evidence exists
to warrant the appointment of a security holders' committee that
includes a reasonable number of stockholders that are not
associated with Mr. Gary Winnick, CIBC, Pacific Capital, or any
secured or unsecured creditor of the debtor. The SEC and US
Department of Justice have not officially acknowledged their
investigations of the Global Crossing case, nor has the US
Bankruptcy Court or US Trustee shown that the required criminal
investigation by the DOJ and SEC has been initiated by the US
Trustee or an Examiner. While not every allegation or
transaction may be illegal singularly, the events are seen to be
a clear picture of the methods and motives of an alter ego of
Global Crossing to commit illegal acts in the end, to the
detriment of the debtor. It is the right of the security
holders', in the interest of the debtor and honest creditors,
and the transparency and integrity of the court proceedings,
that a security holders' committee be appointed and allowed to
function to protect those interests and rights. "We have an
interest in the possibilities of appointment of a new Board of
Directors, evaluation of the debtor's counsel, openly requesting
on behalf of ourselves and the debtor that an official federal
investigation into what we see as the alter ego of the debtor be
announced, insure that there is no further attempt to manipulate
the debtor's counsel, or any internal or external investigation
of the debtor," Mr. Hovel says. Likewise, in this circumstance,
the stockholder's equity committee must without fail, be allowed
to protect our rights and the debtor's Chapter 11 rights, to the
extent that it can be determined if the debtor is actually
hopelessly insolvent or if an alter ego or defective management
of the debtor is ultimately responsible for all or part of the
debt in this case.
Mr. Hovel submits that the Global Crossing case has no
possibility that the directors can exercise their ordinary
judgment independent of their own interests. Stockholders see
the manipulated circumstances leading up to the company's
Chapter 11 filing as being in part, an attempt to eliminate the
ability of the stockholders to remove "Certain Rogue Officials
Of Global Crossing." The stockholders have made attempts to
remove "Certain Rogue Officials Of Global Crossing." A large
number of directors and officers received letters dated February
22, 2002, requesting their resignation from Global Crossing.
They were informed that they were seen to be in breech of their
fiduciary responsibilities and/or their agreements or contracts
with Global Crossing Ltd. A small number of directors resigned.
Mr. Hovel adds that a letter re-requesting resignation dated
April 1, 2002 was sent further explaining the request that the
remaining "Certain Rogue Officials Of Global Crossing" resign
for the benefit of the company they have damaged, and can only
continue to damage in the future. That direct language was used
to inform the recipients known as "Certain Rogue Officials Of
Global Crossing" that they are alleged to be unable to act,
and/or should be disallowed from acting, on behalf of the debtor
in any previous capacities. Under the present circumstances, no
other remedy is available to the stockholders that can for the
benefit of the debtor, remove a defective leadership of the
debtor. The defective leadership, has for the most part,
avoided or refused to acknowledge the requests of the
stockholders. This Chapter 11 petition is also seen in part, as
an attempt by the alter ego and defective leadership to "skirt"
the bye-laws of the debtor, avoid their requirement to be
reelected, and manipulating the Chapter 11 laws and rules to
maintain their control of the debtor and the debtor's assets.
Thus, it is further necessary that a security holders' committee
be appointed to assure adequate and proper representation of the
stockholders and the debtor. (Global Crossing Bankruptcy News,
Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900)
GRAHAM PACKAGING: Begins Tender Offer for 10.75% Sr. Disc. Notes
----------------------------------------------------------------
GPC Capital Corp. II is commencing a cash tender offer and
consent solicitation for the 10-3/4% Senior Discount Notes due
2009 issued by the Offeror and Graham Packaging Holdings
Company. The Offeror is offering to purchase for cash any and
all of the outstanding notes, upon the terms and subject to the
conditions set forth in its Offer to Purchase and Consent
Solicitation Statement and in the accompanying Consent and
Letter of Transmittal. In conjunction with the Offer, the
Offeror is soliciting consents of the registered holders of
notes to the adoption of certain proposed amendments to the
Indenture relating to the notes.
The total consideration for each $1,000 of principal amount of
notes at maturity will be based upon a fixed spread of 75 basis
points over the yield to the earliest redemption date on the
applicable U.S. Treasury Note, including a consent payment of
$20 for each $1,000 principal amount at maturity of notes. In
order to be eligible to receive the consent payment, holders of
notes must tender their notes and deliver their consents to the
proposed amendments on or prior to 5:00 p.m., New York City
time, on July 17, 2002, unless extended. The Offer is scheduled
to expire at 5:00 p.m., New York City time, on July 31, 2002.
The Offer and Solicitation are being made in connection with a
reorganization and refinancing in which: (i) the Offeror and
Holdings will effect an internal reorganization in which the
Offeror will change its name to Graham Packaging Company, Inc.,
and exchange newly issued shares of its common stock for all of
the partnership interests of Holdings; (ii) Holdings will
liquidate and all of its assets will be transferred to the
Offeror; (iii) the Offeror intends to sell $250.0 million of
shares of its common stock in its initial public offering; (iv)
the Offeror's subsidiaries, Graham Packaging Company, L.P., and
GPC Capital Corp. I, will enter into a new senior credit
agreement that will consist of a $550.0 million term loan
facility and a $150.0 million revolving credit facility to fund
ongoing working capital requirements and general corporate
purposes following the consummation of the Transactions; and (v)
Graham Packaging Company, L.P., and GPC Capital Corp. I will
issue $100.0 million aggregate principal amount of new senior
subordinated notes due 2008.
The Offeror intends to use the net proceeds from the Initial
Public Offering to fund the repurchase of the notes pursuant to
the Offer. The Offeror will contribute the remaining proceeds
from the Initial Public Offering to Graham Packaging Company,
L.P., which will use those proceeds, along with borrowings under
the New Senior Credit Agreement and proceeds from the Senior
Subordinated Notes Offering, to repay all indebtedness and
accrued interest under its existing senior credit agreement. As
of March 31, 2002, there were $674.2 million of term and
revolving loans outstanding and $2.4 million of accrued interest
under the existing senior credit agreement.
The Offer is conditioned upon the receipt of the consents
necessary to adopt the proposed amendments. The amendments will
only become operative if a majority of the outstanding aggregate
principal amount of notes are tendered. The Offer is also
conditioned upon, among other things, the completion of the
Initial Public Offering, the Senior Subordinated Notes Offering
and the Bank Refinancing.
The proposed amendments will be effective as to all notes that
are not purchased in the Offer when the Offer is consummated,
provided all other conditions to the Offer have otherwise been
satisfied. If the proposed amendments become operative, they
would (a) eliminate most of the restrictive covenants including,
without limitation, the covenants limiting the incurrence of
indebtedness, restricted payments, transactions with affiliates,
asset sales and dividend and other payment restrictions
affecting subsidiaries, (b) eliminate limitations on mergers,
consolidations, (c) eliminate certain events of default and (d)
modify certain repurchase and defeasance provisions. Adoption of
the proposed amendments requires the consent of holders of at
least a majority of the outstanding notes. After the IPO
Reorganization, the Offeror will remain as the sole issuer of
the notes.
Deutsche Bank Securities Inc. and Salomon Smith Barney Inc. are
acting as the dealer managers for the Offer and the
Solicitation. The information agent for the Offer and the
Solicitation is MacKenzie Partners, Inc. The depositary for the
Offer and the Solicitation is The Bank of New York. The Offer
and the Solicitation are being made pursuant to an Offer to
Purchase and Consent Solicitation Statement and related Consent
and Letter of Transmittal, which more fully set forth the terms
of the Offer and the Solicitation.
Additional information concerning the terms of the Offer and the
Solicitation may be obtained from Deutsche Bank Securities,
Inc., at (800) 553-2826 or from Salomon Smith Barney, Inc., at
(800) 558-3745. Copies of the Offer to Purchase and Consent
Solicitation Statement and related documents may be obtained
from MacKenzie Partners, Inc., at (212) 929-5500 or (800) 322-
2885.
Graham Packaging is a worldwide leader in the design,
manufacture and sale of customized blow molded plastic
containers for the branded food and beverage, household and
personal care, and automotive lubricants markets with 55 plants
throughout North America, Europe and Latin America.
* * *
As reported in Troubled Company Reporter's June 19, 2002
edition, Standard & Poor's assigned its single-'B' rating to
Graham Packaging Co.'s (100%-owned operating subsidiary of
Graham Packaging Holdings Co.) proposed $700 million senior
secured credit facility.
In addition, Standard & Poor's assigned its triple-'C'-plus
rating to Graham's proposed $100 million senior subordinated
notes due 2008. Both these ratings were placed on CreditWatch
with positive implications. Proceeds will be used to refinance
existing debt. The single-'B' corporate credit rating on the
York, Pa.-based company remains on CreditWatch with positive
implications, where it was placed on May 29, 2002. Graham, a
leading manufacturer of customized, blow-molded plastic
containers for foods, non-carbonated beverages, household
products and automotive lubricants, had outstanding debt of
about $1.08 billion as at March 31, 2002.
GROUP TELECOM: Section 304 Petition Summary
-------------------------------------------
Petitioner: GT Group Telecom Inc.
20 Bay Street
Toronto, Ontario
Canada M5J 2N8
Bankruptcy Case No.: 02-13193
Petitioner's affiliates filing separate Section 304 petitions:
Entity Case No.
------ --------
GT Group Telecom Services Corp. 02-13194
Gt Group Telecom Services (USA) Corp. 02-13195
Type of Business: The principal business of GT Group is
providing Internet, high-speed data and voice
services targeted primarily to small and
medium sized business. GT Services is
Canada's largest, independent facilities-
based telecommunications company.
Section 304 Petition Date: June 27, 2002
Court: Southern District of New York (Manhattan)
Judge: Robert D. Drain
Petitioners' Counsel: Jeffrey K. Cymbler, Esq.
Angel & Frankel, P.C.
460 Park Avenue
New York, NY 10022
(212) 752-8000
Fax : (212) 752-8393
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
ICH CORPORATION: Looks to Morgan Lewis for Financial Advice
-----------------------------------------------------------
ICH Corporation sought and obtained approval from the U.S.
Bankruptcy Court for the Southern District New York to employ
Morgan Lewis Githens & Ahn, Inc., as its investment bankers and
financial advisors.
The Court approved Motgan's employment under a general retainer
agreement. Prior to the filing of these cases, the Debtors paid
Morgan approximately $158,000 for the Prepetition Services
rendered. As of the Petition Date, there is approximately
$105,000 remained for postpetition services.
The Debtors believe that Morgan is uniquely qualified to advise
them in connection with maximizing their business enterprise
value. Morgan is a preeminent investment banking, financial and
restructuring advisor, with a reputation for creativity in
complex situations.
Morgan will:
a) assist in the evaluation of the Debtors' businesses and
prospects;
b) assist in the development of the Debtors' long-term
business plan;
c) assist in the development of financial data and
presentations to the Debtors' Boards of Directors,
various creditors, any official committees formed in a
Chapter 11 proceeding, other and third parties;
d) analyze the Debtors' financial liquidity and evaluate
alternatives to improve such liquidity;
e) analyze various restructuring scenarios and the
potential impact of these scenarios on the value of the
Debtors and the recoveries of those stakeholders
impacted by the Restructuring;
f) provide strategic advice with regard to restructuring or
refinancing the Debtors' Obligations, including an
offering of debt and/or equity securities;
g) provide such other advisory services as are customarily
provided in connection with the analysis and negotiation
of any transactions.
ICH Corporation, a Delaware holding corporation, which operates
Arby's restaurants, located primarily in Michigan, Texas,
Pennsylvania, New Jersey, Florida and Connecticut. The Company
filed for chapter 11 protection on February 05, 2002. Peter D.
Wolfson, Esq., at Sonnenschein Nath & Rosenthal represents the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed debts and assets of
over $50 million.
IFX CORP: UBS Capital-Led Investors Bring-In $5MM New Funding
-------------------------------------------------------------
IFX Corporation (Nasdaq: FUTR) -- http://www.ifxcorp.com--
announced that as previously reported, pursuant to a Stock
Purchase Agreement dated as of February 19, 2002, UBS Capital
Americas III, L.P. and UBS Capital LLC, International Technology
Investments LC, LSC, LLC, and Jak Bursztyn agreed to invest a
total of $5 million and surrender shares of IFX's preferred
stock and Common Stock in exchange for IFX's newly issued Series
D Convertible Preferred Stock. ITI is an affiliate of Michael
Shalom, Chief Executive Officer of IFX.
On June 28, 2002, the Purchasers purchased approximately 6.4
million shares of Series D Preferred Stock. Each share of
Series D Preferred Stock is convertible into two shares of IFX's
Common Stock. The Series D Preferred Stock carries a
liquidation preference such that, upon a bankruptcy,
liquidation, dissolution or winding up of IFX, each holder of
Series D Preferred Stock will be entitled to receive a Stated
Preference of $6.00 per share plus 10% of such amount per annum
from the date of issuance and will also participate with the
holders of Common Stock after the Purchasers receive their
liquidation preference and accrued dividends, provided that the
maximum amount which can be received with respect to the Series
D Preferred Stock after taking into account the participation
feature is limited to 3-1/2 times the Stated Preference.
In the transaction, UBS Capital Americas invested approximately
$3.33 million in cash and surrendered 750,000 shares of Series C
Preferred Stock in exchange for approximately 4.6 million shares
of newly issued Series D Preferred Stock. Each of ITI and LSC
invested $812,500 in cash and surrendered approximately 333,000
shares of Common Stock in exchange for approximately 850,000
shares of Series D Preferred Stock. Giving effect to this
transaction, IFX would have approximately 41.5 million shares of
common stock outstanding (of which approximately 62.5% would be
owned by UBS), if all of IFX's convertible preferred stock were
converted into common stock.
In addition, IFX announced that on June 20, 2002, Charles
Delaney and Charles W. Moore, who served as two of the four
members of IFX's Board of Directors selected by the holders of
the IFX's Convertible Preferred Stock, were replaced on IFX's
Board of Directors by Richard Capone and George Duarte, both
partners in UBS Capital Americas.
IFX Corporation (Nasdaq: FUTR) is a Latin American
telecommunication services provider. Headquartered in Miami,
Florida, IFX Networks -- http://www.ifxnetworks.com-- a wholly
owned subsidiary of IFX, offers state-of-the-art technology and
the most extensive continent-wide platform for providing full-
service, tailored turnkey network access solutions and a broad
range of ATM and IP value-added services to corporations,
carriers and ISPs in the region. IFX's product portfolio
includes Dedicated Connectivity, International Long Distance,
Dial-up Services, Co-location, Web Hosting, and Value Added
Services such as VPN and IFX Managed Network, supported by 24x7
technical assistance (where available). An expansive pan-
regional network, advanced technology, and superior quality of
service from experienced regional and local management teams in
12 Latin American countries and the United States, make IFX the
ideal choice of demanding enterprises seeking a competitive
advantage in the region.
At March 31, 2002, IFX's balance sheet shows a total
shareholders' equity deficit of about $41 million.
UBS Capital Americas is an independent private equity investment
firm with in excess of $2.5 billion of capital under management.
It currently manages UBS Capital Americas II, a $1.0 billion
fund dedicated to North America, and UBS Capital Americas III, a
$500 million fund dedicated to Latin America. Both funds focus
on both mature companies and emerging growth companies in a
variety of industries. UBS Capital Americas is headquartered in
New York City, with an office in Sao Paulo, Brazil.
IT GROUP: Occidental Chemical Seeks Stay Relief to Continue Suit
----------------------------------------------------------------
Occidental Chemical Corporation (OxyChem) wants to modify the
automatic stay to permit the continuation of proceedings against
International Technology Corporation in the U.S District
Court for the Western District of New York and enable OxyChem to
liquidate its claims against ITC. OxyChem will not exercise
dominion or control of any property of The IT Group, Inc.'s
estates or ITC upon any judgment.
Michael R. Lastowski, Esq., at Duane Morris LLP in Wilmington,
Delaware, relates that OxyChem charged ITC with breach of the
terms of a Project Contract when ITC failed to adequately
perform and complete the installation of a drainage collection
system as required. The project was part of the remediation
services, dubbed the S-Area Landfill RRT Remedial Program,
undertaken by OxyChem at "S-Area", a privately-owned land in
Niagara County, New York.
According to Mr. Lastowski, OxyChem's complaint seeks damages
for:
a. Delayed performance -- in excess of $350,000
& extra costs
b. Backcharges paid to -- $43,069 plus interest
replacement contractors
c. additional costs paid -- $40,907 plus interest
to certain subcontractor
d. defective work & breach -- in excess of $500,000
of contract and warranty
After the complaint was filed, the damages claim for defective
work and breach of terms expanded to $5,200,000. OxyChem spent
this amount to remove the drain collection system which ITC
improperly installed. They replaced it with a properly
functioning system.
Mr. Lastowski contends that, allowing the District Court Action
to proceed will not prejudice the bankruptcy estate or the
Debtors because the District Court Action has been proceeding
for several years and is in an advanced state. Discovery is
substantially completed since OxyChem commenced the Court action
in January 28, 1997, but has not been concluded because of the
automatic stay imposed by ITC's bankruptcy filing. All document
discovery is complete including depositions of two witnesses and
disclosure of expert reports. At this stage of the litigation,
the expense of extensive discovery is no longer an issue.
"Neither the estate nor the Debtors will suffer any legitimate
prejudice by allowing the District Court Action to proceed to
liquidate OxyChem's claims against ITC. Modifying the
bankruptcy stay will not adversely impact the Debtors because no
proceedings to execute against the property to the bankruptcy
estate will be approved under the proposed order submitted," Mr.
Lastowski ascertains.
In addition, it is significant that ITC has asserted three
counterclaims seeking combined damages in excess of $1,500,000.
Mr. Lastowski notes that any alleged or perceived prejudice to
the bankruptcy estates or the Debtors is non-existent under
these circumstances since ITC is using the District Court Action
offensively to litigate its counterclaims. ITC, thus, will
suffer no prejudice if the District Court Action were to
proceed.
In contrast to the lack of prejudice to the Debtors and their
estates, Mr. Lastowski claims that OxyChem will be prejudiced by
not lifting the stay. OxyChem has pursued claims to recover
those costs against ITC for over five years. OxyChem has a
well-founded and legitimate interest in resolving those long-
standing claims in an efficient and timely manner. Allowing the
Court Action to proceed will advance those interests.
Mr. Lastowski believes that OxyChem has a probability of
prevailing on the merits in the District Court Action. The
facts have shown that the written contract required ITC to
construct a drain collection system in the S-Area landfill with
a "minimum width" of two feet for a lump sum price of
approximately $1,400,000, as adjusted by approved changes.
Because of the means and methods that ITC used, the actual width
of the system expanded beyond the two feet "minimum" to, in
extreme cases, as much as ten feet or greater. ITC had no
authorization from OxyChem to expand the "minimum" width of the
trench.
"Discovery of ITC witnesses has shown that ITC is attempting to
recover for its own malfeasance by claiming the "total cost" of
all work, which is the difference between what OxyChem paid
under the lump sum contract and what ITC spent, plus overhead
and profit," Mr. Lastowski discloses.
Mr. Lastowski further relates that, after paying ITC for its
services, the system did not function to the satisfaction of the
federal Environmental Protection Agency and New York's
regulatory agency, the Department of Environmental Conservation.
Hence, OxyChem was required to remove that system and replace it
with a functioning one at a cost of about $5,200,000. (IT Group
Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
JUPITER MEDIA: Falls Below Nasdaq Minimum Listing Requirements
--------------------------------------------------------------
Jupiter Media Metrix, Inc. (Nasdaq: JMXI) announced that it
received a Nasdaq Staff Determination on June 27, 2002, that it
has not maintained compliance with the minimum bid price
requirement for continued listing set forth in Marketplace Rule
4450(a)(5), and that its common stock is, therefore, subject to
delisting from the Nasdaq National Market.
Jupiter Media Metrix has requested a hearing before a Nasdaq
Listing Qualifications Panel to appeal the Staff Determination.
Nasdaq is required to grant Jupiter Media Metrix a hearing
within 45 days of receiving the request, and Jupiter Media
Metrix' listing status will not change until a final
determination has been issued by the Panel following the
hearing. Jupiter Media Metrix is currently in compliance with
all other continued listing requirements. There can be no
assurance, however, that the Panel will grant Jupiter Media
Metrix' request for continued listing on the Nasdaq National
Market. Jupiter Media Metrix is appealing the Nasdaq Staff
Determination in the event its plan of liquidation and
dissolution is not approved by its shareholders.
KAISER ALUMINUM: Wants to Continue Risk Management Transactions
---------------------------------------------------------------
Paul N. Heath, Esq., at Richards, Layton & Finger P.A. in
Wilmington, Delaware, relates that, prior to the Petition Date,
Kaiser Aluminum Corporation and its debtor-affiliates entered
into Risk Management (or hedging) Transactions, in the ordinary
course of their business, to mitigate financial risks with
respect to:
a. anticipated revenues from sales of alumina, primary aluminum
and fabricated aluminum products, net of expected purchase
costs for items that fluctuate with primary aluminum prices;
b. fluctuating prices for electricity, natural gas, fuel oil and
diesel used in their production processes; and,
c. foreign currency requirements with respect to their cash
commitments for foreign subsidiaries and affiliates.
Some of the Risk Management Transactions are:
A. Transactions to Limit Primary Aluminum Price Exposure: The
Debtors enter into a variety of derivative contracts with
third parties to protect against the financial losses that
would occur with respect to the Debtors' Net Hedging Volume
(market price for primary aluminum) exposure if prices of
aluminum decreased substantially. These contracts include
forward contracts, swaps, put and call options, collars or a
combination; and,
B. Foreign Exchange Facilities: The Debtors routinely enter
into Foreign Exchange (FX) Contracts because of the
protection against foreign currency rate volatility that an
FX Contract provides. The Debtors fixed U.S. dollar amounts
that they are required to pay at a specified future date or
capped the value of a foreign currency relative to the value
of U.S. dollars.
Mr. Heath further elaborates that in all hedging practices
employed by the Debtors, derivative contracts are not used as a
means of speculating on market prices or investing in
commodities not sold or purchased by the Debtors or their
affiliates. Rather, the Debtors utilize those contracts only to
protect underlying physical transactions occurring as part of
the Debtors' business from adverse market fluctuations.
After assessing the continuing need for these transactions, the
Debtors ask the Court to permit them to resume Risk Management
Transactions in order to limit financial risks associated with
the Debtors' business.
"These Risk Management Transactions should be viewed in concept
as a form of insurance policy, enabling the Debtors to compete
without assuming the risks traditionally associated with price
fluctuations beyond the Debtors' control," Mr. Heath says.
Additionally, Mr. Heath asks the Court to allow the Debtors to
consummate Risk Management Transactions without further Court
Order because companies in the Debtors' industry routinely enter
into these Risk Management Transactions in the past. Mr. Heath
believes that a hypothetical creditor would not be exposed to a
different risk than it previously expected when it provided
credit to the Debtors.
Mr. Heath, however, requests that the Court enter an order
authorizing them to enter into these transactions. Certain
counter-parties are unwilling to take any risk on the ordinary
course issue and instead want the comfort of an order of the
Court confirming the Debtors' inherent authority to enter into
these transactions.
Mr. Heath further submits that the counter-parties have also
requested confirmation that, consistent with Sections
362(b)(17), 555 and 556 of the Bankruptcy Case, any hedging
contracts entered into with the Debtors on a postpetition basis
may be liquidated and set-off in accordance with the terms and
conditions of the hedging contracts without obtaining relief
from automatic stay. (Kaiser Bankruptcy News, Issue No. 11;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
According to DebtTraders, Kaiser Aluminum & Chemicals' 12.75%
bonds due 2003 (KAISER2) are trading at about 17. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KAISER2for
real-time bond pricing.
KEY3MEDIA GROUP: S&P Ratchets Junk Credit Rating Down One Notch
---------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on trade
show organizer Key3Media Group Inc. to triple-'C' from triple-
'C'-plus. The rating action reflects Standard & Poor's concern
that Key3Media's earnings decline may be worse and more
protracted than previously expected.
At the same time, Standard & Poor's lowered its debt ratings on
Key3Media and removed them from CreditWatch with negative
implications. The outlook is negative.
Key3Media, headquartered in Los Angeles, California, is one of
the largest exhibition organizers in the world and the largest
focusing exclusively on the technology markets. The company's
key trade show brands are COMDEX and Networld + Interop (N+I),
which represented 26% and 40% of revenue, respectively, in 2001.
The company has faced ongoing weakness in the information
technology end markets it serves.
"Key3Media's already sharply curtailed profits are expected to
be further strained by the significant and growing problems in
the domestic telecommunications sector served by its key N+I
trade shows," said Standard & Poor's analyst Steve Wilkinson.
"These problems have forced the company to further amend its
bank loan covenants following a revision in late 2001." Standard
& Poor's said it is uncertain when Key3Media's earnings
prospects will improve given both the ongoing information
technology weaknesses and the growing problems in the U.S.
telecommunications market.
While the new covenant requirements are less restrictive, they
underscore the magnitude of the drop in Key3Media's
profitability. The company's ability to comply with the revised
covenants is uncertain given the lingering softness in business
travel and the significant decline in advance bookings for trade
shows.
Standard & Poor's said that ratings could be lowered further if
Key3Media is unable to meet its minimum EBITDA hurdles or if the
company's modest liquidity continues to decrease.
KMART CORP: Seeks Approval of Committee Confidentiality Pact
------------------------------------------------------------
John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher &
Flom, in Chicago, Illinois, recounts that shortly after the
Petition Date, Kmart Corporation and its debtor-affiliates
received an anonymous letter dated January 9, 2002, expressing
concern regarding unspecified accounting matters. Certain Kmart
employees reportedly sent this letter to the Securities and
Exchange Commission. Copies were furnished to Kmart's Board of
Directors and Kmart's independent auditors. Kmart immediately
contacted the SEC and provided the anonymous letter, then
promised its cooperation on any investigation.
The Board instructed Skadden to conduct an internal
investigation and retain independent accounting advisors,
Chicago Partners LLC and Ten Eyck Associates Inc., to assist
them. According to Mr. Butler, Kmart received many additional
anonymous letters concerning various matters on a regular basis
up through and including June 21, 2002.
Mr. Butler notes that the matters raised in the Anonymous
Letters have been included as part of the Investigation, as well
as other matters identified by the Company or by Skadden and its
forensic accounting advisors. Kmart and Skadden believe that
the Anonymous Letters have been prepared and delivered by
informed employees who are attempting to assist the Company in
successfully reorganizing its business. However, Mr. Butler
says, aspects of the Investigation have been made more difficult
and have been delayed by the continued anonymity of the letter
writers. "So Kmart informed its employees that it strongly
encourages the authors of the Anonymous Letters to identify
themselves to the Company's Chief Executive Office, President
and Chief Operating Officer, Chief Compliance Officer, Skadden
or to the U.S. Attorney's Office," Mr. Butler relates. They
assured the employees that anybody who assists in the
Investigation need not fear of reprisal or adverse action.
An Audit Committee consisting of four independent outside
directors of Kmart supervises the actual conduct of the
Investigation. Its duties include:
(a) keeping informed of Kmart's financial condition, and
(b) reviewing Kmart's financial policies and procedures,
internal accounting controls, and the objectivity of its
financial reporting.
Mr. Butler tells the Court that the current goals of the
Investigation are to:
(1) determine and assess the facts as to all allegations and
issues being examined in the Investigation;
(2) obtain advice as to whether any illegal acts or violations
of Kmart's policies occurred by existing or former
employees so that the Company may take all appropriate or
desirable action in respect of these matters;
(3) obtain advice as to Kmart's legal options, including a
determination as to whether any prior or subsequent
employee termination should be deemed "for cause";
(4) assess legal theories for recovering company assets or
compensation paid to former management whether or not
related to improper conduct; and
(5) assess the adequacy of policies and procedures relating to
corporate compliance and governance and internal controls.
Mr. Butler continues that the initial priority goal of the
Investigation, which consumed the largest amount of time and
effort prior to May 15, 2002, and which was completed as of that
date, was to complete the elements of the Investigation related
to accounting matters so as to enable the Company to complete
its financial statements for the 2001 fiscal year, obtain an
unqualified audit opinion from its independent auditors, and
timely file its Form 10-K Annual Report for the fiscal year
ended January 30, 2002.
Since January 2002, Mr. Butler reports that Skadden has
collected, reviewed and analyzed more than 600,000 pages of
documents, including audit work papers, accounting records, and
various company policies, contracts and invoices, as well as
more than 180,000 pages of electronic mail and other electronic
material. "In response to certain requests propounded by the
SEC, Skadden has assisted the Company in reviewing more than
1,500,000 pages of information, and thus far, has processed and
produced more than 200,000 pages to the SEC," Mr. Butler notes.
Skadden has also conducted interviews of more than 125 former
and present Kmart employees.
In addition of the Company's Investigation and SEC's own private
investigation, the U.S. Attorney's Office for the Eastern
District of Michigan was conducting an investigation into the
matters raised in the Anonymous Letters. The Audit Committee
and Kmart have agreed to provide to the SEC and the U.S.
Attorney's Office certain information that has been obtained in
the course of the Investigation. Mr. Butler explains that Kmart
seeks to cooperate fully with the SEC and the U.S. Attorney's
Office, without waiving the attorney-client privilege, the
attorney work product doctrine, or any other privilege or
protection attaching to any produced information through the
disclosure pursuant to Confidentiality Agreements.
Furthermore, Mr. Butler relates, Kmart has provided procedural
and substantive information to the Statutory Committees
appointed by the United States Trustee for the Northern District
of Illinois pursuant to Section 1104 of the Bankruptcy Code
regarding the investigation on several occasions prior to the
filing of the Company's Form 10-K on May 15, 2002. Kmart is now
continuing its investigation of the former management team's
stewardship of the Company, which it expects to conclude by the
beginning of September 2002.
Mr. Butler continues that Kmart is also planning to provide
additional procedural and substantive information to the
Statutory Committees and consult with the Statutory Committees
regarding the conduct and completion of the Investigation.
"Kmart and the Statutory Committees believe that it is in the
best interests of the Debtors' estate for Kmart to disclose
confidential information related to the Investigation in order
to keep them adequately apprized of the ongoing progress of the
Investigation, without losing any privilege or protection
attaching to any produced information through the disclosure,"
Mr. Butler explains. Kmart and the Statutory Committees also
contend that they share common interests in this regard.
Kmart believes that the proper conduct and completion of the
Investigation, all resulting findings, and any necessary
corrective or remedial action are critically important to
Kmart's efforts to restructure its business and to regain the
confidence of its employees, creditors and suppliers in Kmart's
management, business integrity, and go-forward operations.
Thus, in connection with their continuing stewardship review,
the Debtors seek:
(a) approval of the Joint Interest Agreement with the
statutory committees and the Confidentiality Agreements
with the SEC and the U.S. Attorney's Office;
(b) entry of a protective order with respect to information
and documents produced pursuant to the Agreements; and
(c) an order authorizing Kmart, in cooperation and with the
participation of their statutory committees, to conduct
discovery and examinations pursuant to Bankruptcy Rule
2004 without further order of the Court. (Kmart
Bankruptcy News, Issue No. 26; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
Kmart Corp.'s 9.875% bonds due 2008 (KMART18) are quoted at a
price of 45, says DebtTraders. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=KMART18
KNOWLEDGE HOUSE: Financial Reporting Defaults Continue
------------------------------------------------------
Knowledge House Inc. (TSX VEN:KHI) wishes to advise that it
remains in default of filing its annual Audited Financial
Statements for the period ended December 31, 2001 which were to
have been filed on or before May 21, 2002 pursuant to relevant
securities laws because of a requirement to change auditors.
Mr. Daniel F. Potter, Chairman of the Board and the Chief
Executive Officer of Knowledge House advised on May 22, 2002
that the Company was unable to meet its deadline due to a change
in auditors of the Company, given that the current auditors will
be taking shares of the Company pursuant to its proposal to
creditors, discussed below. As a result of the delay in the
completion and filing of the annual Audited Financial
Statements, the Company was also late in filing its Interim
Financial Statements for the first quarter ended March 31, 2002
which were due to be filed on or before May 30, 2002.
Discussions are underway with an auditing firm and the Company
expects to file the Audited Financial Statements and the Interim
Financial Statements on or before July 21, 2002.
On June 5, 2002, Mr. Potter advised that the board of directors
was being reduced in size given that the Company is currently
inactive.
On May 22, 2002, the Company obtained from the Nova Scotia
Securities Commission a management cease trade order pursuant to
Section 134 of the Securities Act (Nova Scotia) and CSA Staff
Notice 57-301 with respect to securities of the Company and
issued a Notice of Default in relation thereto. The order places
restrictions on the trading of the Company's securities by
certain persons who have been directors, officers or insiders of
the Company since the Company's most recent financial statements
were filed in accordance with prescribed filing requirements.
CSA Staff Notice 57-301 requires the filing and dissemination of
a Default Status Report on a bi-weekly basis disclosing, among
other things, whether or not there has been a material change in
the information contained in the Notice of Default. Since May
22, 2002, there have been no changes in the affairs of the
Company or in the information contained in the Notice of Default
which are required to be disclosed pursuant to CSA Staff Notice
57-301.
Should the Company fail to file its financial statements on or
before July 21, 2002, the Nova Scotia Securities Commission and
other securities commissions or regulators may impose an issuer
cease trade order that all trading in securities of the Company
cease for such period as specified in the order.
The Company intends to issue a Default Status Report on a bi-
weekly basis for as long as it remains subject to the management
cease trade order or in default of prescribed filing
requirements. An issuer cease trade order may be imposed sooner
if KHI fails to file its Default Status Report on time.
As noted in material change reports and press releases issued by
the Company, on November 26, 2001, KHI's unsecured creditors
approved its proposal filed on October 26, 2001, under the
Bankruptcy and Insolvency Act (Canada). The proposal has not yet
been approved by the Supreme Court of Nova Scotia and remains
subject to court, shareholder and other required regulatory
approvals. The Company will file material change reports
containing the same information it provides to creditors at the
same time the information is provided to creditors throughout
the period it remains in default.
LODGIAN INC: Asks Court to Allow Use of CCA's Cash Collateral
-------------------------------------------------------------
Lodgian, Inc., and its debtor-affiliates submit this motion
asking the Court's authority to authorize certain of the Debtors
to use the cash collateral of The Capital Company of America LLC
(CCA) for the time period of 120 days.
Steven J. Reisman, Esq., at Curtis Mallet-Prevost Colt & Mosle
LLP in New York, New York, recounts that pursuant to the CCA
Cash Collateral Stipulation, CCA consented to the Debtors' use
of cash collateral. Although the Debtors, since the inception
of these proceedings, have addressed the concerns of CCA
regarding the usage of the CCA Cash Collateral, it is apparent
that the Debtors and CCA are at an impasse regarding the
Debtors' continued use of the CCA Cash Collateral beyond June
30, 2002, particularly its use to fund CCA's allocable
proportion of the Debtors' reorganization expenses. The
continued use of CCA's Cash Collateral to fund the capital
expenses, operating expenses, and the CCA Borrowers' pro rata
share of corporate overhead and reorganization expenses is
essential to the ability of the Debtors to maintain the
collateral properties as going concerns, thus providing the
value of the CCA lenders' collateral. This provides CCA with
the adequate protection to which it is entitled under Section
363(e). The Debtors submit that, absent authority by this Court
to use the CCA Cash Collateral, the viability of the Debtors'
financing arrangements, which have been in existence since the
Commencement Date, will be in jeopardy, subjecting the Debtors'
estates to irreparable harm as a result of the diminution in, or
the loss of, the Debtors' going concern value.
Prior to the Commencement Date, Mr. Reisman relates that CCA
made loans to IMPAC Hotels II, L.L.C. and IMPAC Hotels III,
L.L.C., two of the Debtors herein. The CCA Borrowers are
obligated to repay CCA the sum of approximately $108,625.000
pursuant to the loan agreements executed on or about August 31,
2000. The CCA Prepetition Loans are guaranteed by IMPAC Hotel
Group, LLC and Lodgian, and secured by mortgages on 18 hotel
properties, as well as a grant of a security interest in all
personal property located on the premises of the CCA Hotel
Properties and certain monies and accounts. Prior to the
Commencement Date, revenue generated by the Debtors' hotel
properties was commingled and deposited in a separate bank
account in the name of Lodgian, with the exception of cash
generated from the CCA Hotel Properties which was remitted to
accounts under CCA's control.
Mr. Reisman contends that the Debtors will be able to show
through analyzing past results and through testimony that if the
court authorizes the Debtors to use the CCA Cash Collateral, CCA
will be adequately protected because the CCA Hotel Properties
will not suffer a diminution in the value of the collateral, and
CCA's security interest may, in fact, be enhanced by the use of
the CCA Cash Collateral. Indeed, the risk of the diminution in
value of CCA's security interest is greater if the Debtors are
not authorized by this Court to use the CCA Cash Collateral to
pay reasonable operating and administrative expenses during the
Debtors' reorganization process. Specifically, upon the
authorization to use the CCA Cash Collateral, the CCA Borrowers
shall be authorized to pay only their own Designated Expenses.
The Debtors' use of the CCA Cash Collateral will therefore
provide for the preservation of CCA's security interest, and
thereby offers adequate protection.
Mr. Reisman assures the Court that as is evident from the CCA
Cash Collateral Stipulation, the Debtors do not seek to use the
CCA Cash Collateral for purposes of providing Limited
Intercompany Advances to other Debtors. To the contrary, the
Debtors simply require the use of the CCA Cash Collateral to
fund those expenses of the CCA Borrowers which will preserve the
going concern value of the CCA Borrowers, and thereby preserving
the value of the CCA Hotel Properties.
The Debtors submit that the expenses to be paid with the CCA
Cash Collateral (e.g., operating expenses, capital expenditures,
the pro rata share of actual Lodgian monthly corporate overhead
expenses, and the pro rata share of actual reorganization
expenses) will enhance the prospects of reorganization of the
Debtors. Mr. Reisman submits that the evidence will show that
payment of the 3% management fee by the CCA Borrowers, which is
less than the management fee paid by most of the Debtors, does
not begin to meet these needs. Thus, the payment of a pro rata
share of the corporate overhead and reorganization expenses will
enable the affiliated management companies to continue to
function and provide services to the CCA Borrowers, thus
maintaining the value of the CCA Hotel Properties. The Debtors'
use of the CCA Cash Collateral for payment of the above expenses
will preserve the going concern value of the CCA Borrowers
during the administration of their Chapter 11 cases and thereby
primarily inure a benefit to CCA, as well as to all creditors of
the Debtors' estate.
Mr. Reisman believes that the benefits of the reorganization
expenses are manifest, particularly in the case of the CCA
Borrowers. In addition to the disproportional amount of time
that has been invested in the management of the CCA Hotel
Properties, the Debtors have spent significant resources
pursuing various financing alternatives in an effort to provide
liquidity to CCA since the Commencement Date, at CCA's specific
request. Moreover, but for the expenditure of the reorganization
expenses, CCA would have lost perhaps its most valuable asset-
its relationship with its franchise licensors. Of the 18 CCA
Hotel Properties, seven operate pursuant to franchise license
agreements with Marriott International, Inc., and 10 pursuant to
license agreements with Holiday Inns Franchising, Inc. As will
be demonstrated at the hearing on the Motion, the termination of
these franchise agreements could have the significant effect of
decreasing the revenue of the CCA Hotel Properties by
approximately 30% and this will negatively impact hotel values.
To "reflag" the CCA Hotel Properties would take an enormous
expenditure of time, effort and cost outside of a Chapter 11
proceeding, dwarfing any reorganization expenses which have been
incurred by the Debtors in maintaining the franchise agreements
in Chapter 11 to date.
CCA Responds
Andrew A. Kress, Esq., at Kaye Scholer LLP in New York, New
York, informs the Court that CCA has no objection to the
continued use of its "cash collateral" to fund:
A. the reserves or subaccounts with respect to taxes, insurance
premiums, payments to LaSalle Bank, N.A. for deposit account
costs, and capital expenditures in a manner consistent with
the terms of the Cash Collateral Stipulation,
B. actual capital expenditures from the capital expenditure
reserve or subaccount in a manner consistent with the
procedures set forth in the Cash Collateral Stipulation,
C. day-to-day operating expenses incurred by the eighteen hotel
properties owned or leased by the CCA Borrowers, and
D. the monthly 3% management fee due Impac Hotel Management, LLC
However, CCA objects to the entry of an order approving the Cash
Collateral Motion solely to the extent that it seeks the use of
CCA's "cash collateral" to fund a portion of Lodgian's corporate
overhead expenses and the Debtors' reorganization expenses based
on an arbitrary formula. The use of the arbitrary formula
proposed by the Debtors to calculate that portion of the
Intercompany Charges to be paid by the CCA Borrowers will result
in the CCA Borrowers paying, as administrative expenses,
Intercompany Charges without the Debtors meeting the legal
requirements of Section 503(b)(1)(A) of title 11 of the United
States Code, 11 U.S.C. Sections 101 et seq. Therefore, CCA
submits that this portion of the Cash Collateral Motion is
premature and should be deferred until the Debtors comply with
the requirements of the Bankruptcy Code which mandate that the
Debtors demonstrate that the portion of the Intercompany Charges
sought to be assessed against the CCA Borrowers and paid through
the use of CCA's "cash collateral," are of direct benefit to the
CCA Borrowers. (Lodgian Bankruptcy News, Issue No. 12;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
MCI CAPITAL I: S&P Drops 8% QUIPS to D after Interest Nonpayment
----------------------------------------------------------------
Standard & Poor's lowered its rating on MCI Capital I's 8%
cumulative quarterly income preferred securities (QUIPS) to 'D'
from single-'C' following non-payment of the interest payment on
June 30, 2002. MCI Capital I is a funding conduit for MCI
Communications Corp., a subsidiary of WorldCom Inc. On June 19,
2002, WorldCom announced that it would defer interest payments
on the issue. As referenced in its June 20, 2002, press release,
Standard & Poor's indicated that the rating would be lowered to
'D' upon the missed interest payment.
The double-'C' long-term and single-'C' short-term corporate
credit ratings on WorldCom remain on CreditWatch with negative
implications. Clinton, Mississippi-based WorldCom had about $30
billion total debt outstanding as of March 31, 2002.
MPOWER HOLDING: Gets Nod to Retain Arthur Andersen as Auditors
--------------------------------------------------------------
Mpower Holding Corporation and its debtor-affiliates sought and
obtained authority from the U.S. Bankruptcy Court for the
District of Delaware to retain Arthur Andersen LLP as their
auditors.
The Debtors employ Arthur Andersen to provide necessary
quarterly review and year-end auditing services. The Debtors
tell the Court that the services of Arthur Andersen are not
duplicative to the proposed financial advisors, Deloitte &
Touche LLP. The Debtors clarify that Arthur Andersen will not be
providing any traditional financial advice relating to the
chapter 11 filing.
Among other things, the Debtors need Arthur Andersen to:
-- review the quarterly financial information to be
included in the Debtors' reports filed with the
Securities and Exchange Commission for the quarter ended
March 31, 2002;
-- perform the audit of the Debtors' consolidated balance
sheet as of December 31, 2001 and the related
consolidated statement of operations and cash flow for
the year then ended; and
-- assist in the filing with the SEC of the annual report
on Form 10-K
The Debtors will pay Arthur Andersen:
a) i) a fee estimated to be between $225,000 and $250,000,
plus secretarial, communication and out-of-pocket
expenses, and
ii) a fee estimated to be between $5,000 and $6,000,
plus secretarial, communication and out-of-pocket
expenses;
b) a fee estimated to be between $15,000 and $25,000 per
quarter, plus secretarial, communication and out of
pocket expenses for Arthur Andersen's review of
quarterly financial information to be included in
reports filed with the SEC.
Mpower Holding Corporation and its affiliates are a facilities-
based communications company offering local dial tone, long
distance, Internet access via dial-up or dedicated Symmetrical
Digital Subscriber Line technology, voice over SDSL, Trunk Level
1. The Debtors filed its pre-negotiated chapter 11 plan of
reorganization and disclosure statement simultaneously with
their chapter 11 bankruptcy protection on April 8, 2002. Pauline
K. Morgan, Esq., M. Blake Cleary, Esq., Timothy E. Lengkeek,
Esq. at Young, Conaway, Stargatt & Taylor and Douglas P.
Bartner, Esq., Jonathan F. Linker, Esq. at Shearman & Sterling
represent the Debtors in their restructuring efforts. When
Mpower Holding filed for protection from its creditors, it
listed $490,000,000 in total assets and $627,000,000 in total
debts. Its debtor-affiliates, Mpower Communications listed
$831,000,000 in assets and $369,000,000 in debts; Mpower Lease
listed $242,000,000 in assets and $248,000,000 in debts.
METALS USA: Plan Filing Exclusivity Intact until August 30, 2002
----------------------------------------------------------------
Judge Greendyke convened a hearing on June 26, 2002, to consider
the status of Metals USA, Inc.'s progress in developing their
plan of reorganization and to consider further clarifications
that were necessary. Judge Greendyke expressed his delight that
the Debtors and the Committee have hammered-out the broad terms
for a plan to emerge from chapter 11.
Judge Greendyke ruled that the Debtors' exclusive period to
propose and file a plan of reorganization is extended through
and including August 30, 2002. Through October 30, 2002, the
Debtors retain the exclusive right to solicit acceptances of
that plan from their creditors. (Metals USA Bankruptcy News,
Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900)
NTL INC: Secures Final Approval of $630 Million DIP Financing
-------------------------------------------------------------
NTL Incorporated (OTC BB: NTLD; NASDAQ Europe: NTLI), has
obtained final approval from the Court in which its United
States Chapter 11 cases are pending for the previously announced
Debtor in Possession financing.
The Court has approved the entire $630 million DIP facility,
which includes the previously announced $500 million in new
financing to be provided by certain of the Company's bondholders
or their affiliates. The facility provides financing that may be
used for the Company's operations during the Chapter 11 process.
This new financing ensures that the Company's business
operations will have access to sufficient liquidity to continue
ordinary operations.
Commenting on the Court approval, the Company's President and
CEO, Barclay Knapp, said "We are extremely pleased with this
result. The Court's approval is yet another positive development
in the Company's rapidly proceeding restructuring process. Our
new facility is also a strong endorsement for the company as it
is being provided by our future majority equity holders. Now
both our recapitalization plan and our operating plans for
emergence can continue to move forward at full speed."
More on NTL:
- On May 8, 2002, NTL and certain of its subsidiaries
filed a Chapter 11 "prearranged" plan of reorganization under US
law.
- On May 2, 2002, NTL announced that the Company, a
steering committee of its lending banks and an unofficial
committee of its public bondholders had reached an agreement in
principle on implementing a recapitalization plan. The members
of the bondholder committee hold in the aggregate over 50% of
the face value of NTL and its subsidiaries' public bonds. In
addition, France Telecom and another holder of the Company's
preferred stock have also agreed to the plan of reorganization.
- On May 24, NTL filed an amended plan of reorganization
and a disclosure statement. The court has set July 12, 2002 as a
hearing date to consider approval of the disclosure statement.
- On June 21, 2002, an official committee of creditors,
comprised of the members of the unofficial committee of public
bondholders and three additional members, was appointed by the
United States Trustee to oversee the Chapter 11 cases.
- NTL offers a wide range of communications services to
homes and business customers throughout the UK, Ireland,
Switzerland, France, Germany and Sweden.
NTL Incorporated's 11.5% bonds due 2006 (NLI1), DebtTraders
says, are trading at about 41. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=NLI1
NATIONAL STEEL: Implementing Key Employee Retention Plan
--------------------------------------------------------
National Steel Corporation and its debtor-affiliates obtained
Court's authority to:
(i) implement an employee retention program and a severance
program; and
(ii) continue an existing executive deferred compensation
plan.
The Program has four key components:
(a) Retention Program -- covers 95 key employees;
(b) General Severance Program -- covers 1,500 non-union
employees without employment contracts; it is designed to
ensure basic job protection for employees at all levels;
(c) Senior Management Severance Program -- covers 11 key
executive officers and nine other key management employees
that have pre-petition contracts; and
(d) Deferred Compensation Plan -- it is designed to ensure
continuation of certain existing benefits to 11 key
executives.
The Debtors contend that:
-- the number of executives and employees covered by the
Retention Program and Severance Program is within range of
competitive practice; and
-- the amount of the proposed bonuses, severance and other
benefits is within the range of competitive practice.
A. The Retention Program -- Pay to Stay and Emergence Bonuses
The Retention Program provides for distribution of pay-to-stay
bonuses to 95 key employees based on a percentage of the
employee's annual base salary. The Retention Program is
designed to incentivize these key employees to remain in the
employ of the Debtors throughout these reorganization cases.
Specifically:
(a) Tier I Employees -- up to 12 current key employees,
comprised of the Chief Executive Officer, the Chief
Operating Officer and Vice-Presidents of the Debtors,
shall receive Pay-to-Stay Bonuses equal in the aggregate
to 47% of their Annual Base Compensation;
(b) Tier II Employees -- up to 62 current key employees,
comprised of certain general managers and certain director
level employees of the Debtors, shall receive Pay-to-Stay
Bonuses equal in the aggregate to 31% of their Annual Base
Compensation; and
(c) Tier III Employees -- up to 21 current key employees,
comprised of certain other director level employees, shall
receive Pay-to-Stay Bonuses equal in the aggregate to 21%
of their Annual Base Compensation.
The proposed Pay-to-Stay Bonuses shall accrue from the
Petition Date until 22 months later. Pay-to-Stay Bonuses
shall be payable in four equal installments on specified dates
in arrears, provided that the respective employee remains in
the Debtors' employ on each payment date. If approved by
the Court, the Debtors will pay the Pay-to-Stay Bonuses on
these dates:
-- July 6, 2002 (4 months after the Petition Date);
-- January 6, 2003 (10 months after the Petition Date);
-- July 6, 2003 (16 months after the Petition Date); and
-- January 6, 2004 (22 months after the Petition Date).
The cost of providing the Pay-to-Stay Bonuses will be at most
$4,000,000.
The Retention Program also provides for the Debtors to pay
bonuses to these 95 key employees upon Emergence.
Specifically, the Tier I, II and III Employees shall receive
an Emergence Bonus equal to 47%, 31% and 21% of their Annual
Base Compensation, respectively. The total maximum cost of
providing the Emergence Bonuses is $4,000,000.
Under the Retention Program, Emergence means the earlier of:
(a) the effective date of a confirmed plan of
reorganization; or
(b) the date of a Change-in-Control.
A Change-in-Control means:
(i) the sale, disposition or other transfer of all or
substantially all of the assets of the Debtors on an
operating basis in one or a series of related
transactions, or
(ii) any entity, other than NKK Corporation or any
subsidiary thereof, becoming the beneficial owner,
directly or indirectly, of securities of the Debtors
representing at least a majority of the combined
voting power of the Debtors' then outstanding voting
securities.
In sum, the Emergence Bonus is designed so that it is payable
only upon a successful outcome for these cases, i.e.,
confirmation of a reorganization plan or a transaction
involving substantially all of the Debtors' assets.
In total, the Tier I, II and III Employees have the potential
to receive Pay-to-Stay and Emergence Bonuses aggregating 94%,
62% and 42% of their Annual Base Compensation, respectively,
for an estimated total maximum cost of approximately
$8,000,000. Notwithstanding the foregoing, the Chief
Executive Officer and Chief Operating Officer will not receive
interim Pay-to-Stay Bonuses like the other Participants, but
instead will only receive their Pay-to-Stay Bonuses upon
Emergence in a lump sum.
Finally, if the date of Emergence occurs prior to the 22-month
anniversary of the Petition Date (January 6, 2004), then
within three business days from the date of the Emergence, a
Participant will be paid a hump-sum cash amount equal to the
aggregate value of all the Participant's Retention Payments,
including any applicable Emergence Bonus, less any Retention
Payments paid to the Participant prior to the date of
Emergence.
B. The General Severance Program (Non-Union Employees Without
Employment Contracts)
The Debtors propose to make severance payments to employees
that are involuntarily terminated by the Debtors without
cause. The Debtors propose to cover approximately 1,500
non-union employees under the General Severance Program.
Consistent with prior business practices, an employee's
entitlements under the General Severance Program will depend
on whether the employee has signed a wavier that releases the
Debtors from any and all potential claims of the terminated
employee.
Specifically, if a terminated employee does not sign a waiver,
then the employee would be entitled to one week of pay for
each full year of service, with a maximum of up to four weeks
of pay, and would be paid any unused vacation. The employee,
however, would not be eligible to receive Company-paid COBRA
benefits.
If a terminated employee signs a waiver, then the employee
would be entitled to receive between two to nine months of
pay, with the actual amount payable dependant on both the
individual employee's years of service and tier level of
employment within the Debtors. Moreover, during the two to
nine months severance period, the terminated employee would be
eligible to receive Company-paid COBRA benefits. Finally, the
employee would also be paid any unused vacation.
Assuming that all 1,500 employees were summarily terminated
(which, of course, is not anticipated to occur), the
theoretical total cost of the General Severance Program would
be approximately $43,600,000.
Notwithstanding these theoretical costs, the Debtors have
agreed with the Creditors' Committee to impose three
limitations on the Debtors' ability to pay severance under the
General Severance Program:
(1) No employee will be entitled to payments under the General
Severance Program if the employee is terminated in
connection with or after the announcement of the closing
or substantial closing of a major operating facility of
the Debtors;
(2) The Debtors may not continue to make severance payments
under the General Severance Program if and after an
aggregate total of $6,900,000 has been spent; and
(3) The Debtors may not continue to make severance payments
under the General Severance Program if and after the
aggregate number of persons severed reaches 15% of the
salaried workforce as of the date the Court approves the
General Severance Program.
Notwithstanding these limitations, if there is a Change-in-
Control of the Debtors, the Debtors shall be authorized to
make payments under the General Severance Program totaling $
17,000,000 in the aggregate, inclusive of any severance
amounts actually paid prior to the Change in Control. An
employee shall be entitled to severance in a Change-in-Control
if the employee is not employed by the acquirer or successor
company or is terminated without cause less than three months
after the Change-in-Control. Finally, any payments under the
General Severance Program (which shall not be paid in a lump
sum, but shall be paid in the form of continuing salary) are
subject to mitigation by the terminated employee upon
obtaining other employment.
C. The Senior Management Severance Program (Non-Union Employees
With Employment Contracts)
As of the Petition Date, 20 key employees of the Debtors had
employment contracts with the Debtors. The Debtors are not
seeking to assume or reject these employment contracts at this
time. With one exception, none of these Key Officers are part
of the General Severance Program, however, and thus as part of
the Program, the Debtors are seeking to provide the Key
Officers with certain severance and other benefits that are
currently provided for in the their Employment Contracts. The
Key Officers consist of:
Name Title
---- -----
Hisashi Tanaka Chairman and CEO
John Maczuzak President and COO
Kirk Sobecki SVP and Chief Financial Officer
Ronald Werhnyak SVP, General Counsel and Secretary
John Kaloski SVP - Commercial and Planning
John Davis VP - Purchasing, IT and Engineering
Michael Gibbons VP and GM - Granite City Division
Stephen Denner VP - Research and Technology
Daniel Joeright VP and GM - Regional Division
William McDonough VP and Treasurer
Lawrence Zizzo VP - Human Resources
Thomas Peluso VP/GM of National Steel Pellet Company
Robert Foley Asst. Controller - Accounting
Stephen Thomas Asst. Treasurer
Scott Ryan Hunter Asst. Controller - Finance
John Moran Jr. Senior Counsel and Asst. Secretary
Tamara Freeman GM - Safety, Health & Employee Welfare
Vikram Singh Director - Human Resources of National
Steel Pellet Company
Scott Montross GM - Sheet, Tin and Appliance Sales
The Debtors believe that these Key Officers are entitled to
certain severance and other protections, which are typical for
senior executives and managers, are necessary to ensure their
continued employment and efforts in these cases for the
benefit of all constituencies.
Each Key Officer under the Senior Management Severance Program
shall be entitled to severance payments in the amounts subject
to certain limitations. Severance payments provided under the
Employment Contracts range from one to two times the sum of
the terminated employee's Annual Base Compensation plus Bonus.
The aggregate potential cost of severance benefits provided
under the Senior Management Severance Program equals
$8,900,000.
The severance benefits, while generally as set forth in the
Employment Contracts, shall be limited in the Senior
Management Severance Program as:
(1) For all Key Officers other than the CEO and COO, upon a
severance event, rather than receiving all severance
payments in a single lump sum as provided for in the
Employment Contracts, the terminated Key Officer will
receive in a lump sum the lesser of:
(i) the severance payment specified in the relevant
Employment Contract, or
(ii) a payment equal to one year's Annual Base
Compensation plus Bonus.
Any severance amounts specified in the relevant Employment
Contract in excess of the Lump Sum Payment are fully
earned but subject to mitigation by the terminated Key
Officer upon obtaining new employment.
(2) With respect to the CEO and COO, although their employment
contracts provide for two years' severance, these Key
Officers will initially be entitled under the Senior
Management Severance Program to only one year of
severance, but shall earn an additional month of severance
entitlement for each month of continuing employment by the
Debtors after the Petition Date, capped at two years.
(3) The CEO and COO shall not receive any severance in a lump
sum, but instead, as to them, all severance payments shall
be paid in the form of continuing salary, subject to
mitigation upon obtaining new employment.
With respect to severance after a Change-in-Control, severance
shall only be payable if payable under the pre-petition
employment contracts, if the employee is not employed by the
acquirer or successor company or if the employee is terminated
within six months of the Change-in-Control.
In addition to the severance entitlements, under the Senior
Management Severance Program, the Key Officers shall be
entitled to indemnification by the Debtors to the extent set
forth in Debtors' charter or bylaws, the Employment Contracts
and indemnification agreements with the Key Officers, but the
indemnification shall be limited to:
(a) available director and officer liability insurance
coverage, and
(b) advancement of attorney fees and expenses and amounts not
covered by an insurer as a result of deductibles or
retention provisions.
This ensures that the Key Officers have appropriate coverage
from the Debtors for amounts not covered by director and
officer liability insurance, but not coverage in a potentially
unlimited amount.
D. The Deferred Compensation Plan
Before the Petition Date, the Debtors maintained the Deferred
Compensation Plan for 11 senior executives. The Deferred
Compensation Plan is intended to be a non-qualified retirement
plan under the Internal Revenue Code and the Employee
Retirement Income Security Act of 1974, as amended. The
Deferred Compensation Plan provides supplemental benefits to
these executives in addition to benefits that the employees
may be eligible to receive under the Debtors' qualified
retirement plans. These 11 senior executives funded the
Deferred Compensation Plan by deferring receipt of wages they
had earned from the company and contributed the wages to the
plan. This type of plan is common in large corporations and
is commonly funded through a "Rabbi Trust". Rabbi Trusts are
grantor trusts that qualify for certain tax benefits under the
Internal Revenue Code, but to do so also require that, in the
event of bankruptcy of the company, the funds in the trust
become subject to the claims of the company's general
unsecured creditors.
The Debtors' grantor trust contains funds with an approximate
value of $870,000, which covers the deferred compensation
earned by these officers as of December 31, 2001. Rather than
forcing the employees to lose previously earned compensation
that they voluntarily deferred, the Debtors propose to
continue the Deferred Compensation Plan post-petition and
exempt these funds from creditors' claims. Because these
funds were already earned by the executives, the Debtors
believe that it would be extremely unfair to these employees
if their own deferred compensation were to vanish, and that to
retain these key personnel, other compensation would have to
be provided in any event. (National Steel Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
NATIONSRENT INC: Shoos-Away Arthur Andersen as Accountants
----------------------------------------------------------
On July 1, 2002, NationsRent, Inc., formally dismissed Arthur
Andersen LLP as its auditors -- effective immediately. The
Company is in the process of retaining an independent accountant
to audit the Company's consolidated financial statements which
retention is subject to the approval of the United States
Bankruptcy Court for the District of Delaware in connection with
the Company's chapter 11 cases. The decision to change
accountants was recommended by the Audit Committee and approved
by the Board of Directors.
Arthur Andersen's report dated May 21, 2002, on the Company's
consolidated financial statements for the year ended December
31, 2001 contained a statement expressing substantial doubt
about the Company's ability to continue as a going concern in
light of significant losses over the last two years, the
Company's large stockholders' deficit and the Company's filing
of a voluntary petition under Chapter 11 of Title 11 of the
United States Code with the Bankruptcy Court on December 17,
2001. Arthur Andersen's report dated March 15, 2001, on the
Company's consolidated financial statements for the year ended
December 31, 2000 did not contain an adverse opinion or
disclaimer of opinion, nor was it qualified or modified as to
uncertainty, audit scope or accounting principles.
During the years ended December 31, 2001 and 2000 and through
the date of this Current Report, there were no disagreements
between the Company and Arthur Andersen on any matter of
accounting principle or practice, financial statement
disclosure, or auditing scope or procedure which, if not
resolved to Arthur Andersen's satisfaction, would have caused it
to make reference to the subject matter in connection with its
report on the Company's consolidated financial statements for
such years; and there were no reportable events as defined in
Item 304(a)(1)(v) of Regulation S-K.
NEON COMMUNICATIONS: Employs Paul Hastings as Bankruptcy Counsel
----------------------------------------------------------------
NEON Communications, Inc., and NEON Optica, Inc. wants the U.S.
Bankruptcy Court for the District of Delaware to approve their
employment of Paul, Hastings, Janofsky & Walker LLP as lead
bankruptcy counsel.
The Debtors have determined that it will be necessary to engage
counsel with knowledge and experience in the areas of
bankruptcy, litigation, corporate finance, telecommunications,
regulatory, immigration, real estate, intellectual property,
labor and tax.
The Debtors relate that Paul Hastings has represented the
Debtors since March 2001. The Firm has assisted the Debtors in
developing a restructuring strategy, and in negotiations with
the holders of the Debtors' 12_ Senior Notes.
Paul Hastings will be expected to:
a) give advice to the Debtors with respect to the
Debtors' powers and duties as debtors in possession in
the continued operation of the Debtors' business and the
management of their properties, including the
negotiation and finalization of any financing
agreements;
b) assist the Debtors in formulating a plan of
reorganization and to take necessary legal steps in
order to confirm such plan, including the preparation
and filing of a disclosure statement relating thereto;
c) prepare and file on behalf of the Debtors, all
necessary applications, motions, orders, reports,
adversary proceedings and other pleadings and documents;
d) appear in Court and to protect the interests of the
Debtors before the Court;
e) analyze claims and negotiate with creditors on behalf
of the Debtors; and
f) perform all other legal services for the Debtors
which may be necessary in these proceedings.
Paul Hastings will bill for services at its customary hourly
rates:
Partners $395 - $710 per hour
Of Counsel $390 - $615 per hour
Associates $210 - $415 per hour
NEON Communications, Inc. owns certain rights to fiber and all
of the outstanding stock of NEON Optica, Inc., which owns and
operates a fiber optic network services. The Company filed for
chapter 11 protection on June 25, 2002. David B. Stratton, Esq.
at Pepper Hamilton LLP and Madlyn Gleich Primoff, Esq. at
Richard Bernard, Esq., at Paul Hastings represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from its creditors, it listed $55,398,648 in assets
$19,664,234 in debts.
NET2000: Trustee Secures Nod to Hire Adelman Lavine as Counsel
--------------------------------------------------------------
Michael B. Joseph, the Chapter 7 Trustee supervising the
liquidation of Net2000 Communications, Inc.'s estate, sought and
obtained Court permission to engage Adelman Lavine Gold and
Levin, a Professional Corporation, as his attorneys.
The U.S. Bankruptcy Court for the District of Delaware is told
that Adelman Lavine will:
a) provide legal advice with respect to the Trustee's
powers and duties with respect to the management of
property of the Estate;
b) take necessary action to protect and preserve the
Trustee's Estate, including the prosecution of actions
on behalf of the Estate and the defense of actions
commenced against the Estate;
c) prepare, present and respond to, on behalf of the
Trustee, necessary applications, motions, answers,
orders, reports and other legal papers in connection
with the administration of the Estate in this case;
d) perform any other legal services for the Trustee, in
connection with this chapter 7 case, except those
requiring specialized expertise which Adelman Lavine is
not qualified to render and for which special counsel
will be retained.
The Customary hourly rates of Adelman Lavine that the Trustee
agreed to pay are:
Shareholders $305 - $390
Associates $130 - $295
Legal Assistants $105 - $120
Net2000 Communications, Inc., providers of state-of-the-art
broadband telecommunications services to high-end customers,
obtained Court approval to convert these cases to chapter 7
Liquidation proceedings on May 13, 2002. Michael G. Wilson, Esq.
and Jason W. Harbour, Esq. at Morris, Nichols, Arsht & Tunnell
represent the Debtors as they wind up their operations.
ORTEC INT'L: Fails to Comply with Nasdaq Listing Guidelines
-----------------------------------------------------------
Ortec International, Inc. (NASDAQ:ORTC) said the Company
received a Nasdaq Staff determination that the Company fails to
comply with the Marketplace Rule 4310(C)(2)(B)(ii) for continued
listing, which requires the common stock market value of the
Company's listed securities to be at least $35,000,000.
Accordingly its common stock is subject to delisting from the
Nasdaq Small Cap Market.
Under Nasdaq rules the scheduled delisting will be stayed and
the Company's common stock will continue to be traded on Nasdaq,
as a result of the Company having requested a hearing before a
Nasdaq Listing Qualifications Panel to review the Staff
determination. The hearing date has not been set and will be
determined by Nasdaq.
Although there can be no assurance the Nasdaq's Listing
Qualifications Panel will be persuaded to change the Staff's
determination, Management intends to pursue a plan to meet the
listing requirements for continued listing.
Ortec is currently implementing a plan to meet the continued
listing requirements of the Nasdaq Small Cap. Specifically,
Ortec is negotiating with Paul Capital on certain modifications
to its interest in Ortec's revenues, which would result in
equity treatment for a significant portion of Paul Capital's $10
million investment made in 2001 and 2002. In addition, in
connection with its previously announced intention to raise
additional equity, Ortec intends to raise between $7.5 to $10
million by sale of Series A Convertible Preferred Stock,
including the conversion of $2.5 million of convertible notes
issued in the 2nd quarter into the Series A Preferred. The
Series A Convertible Preferred Stock is treated as equity on the
balance sheet. Upon completion of Ortec's plan, Ortec's
shareholders' equity should exceed $2.5 million. Shareholders'
equity of that minimum amount is an alternative standard, which
would qualify Ortec's common stock for continued listing, even
if Ortec's market capitalization were below $35,000,000.
Ortec is working diligently with Paul Capital and current and
prospective investors to complete the items outlined above.
Although there can be no assurance that Ortec will be successful
in completing the plan, the Company expects that the
transactions discussed herein will be completed in July.
OWENS CORNING: Court Extends Removal Period Deadline to Feb. 21
---------------------------------------------------------------
Judge Fitzgerald extends the deadline for Owens Corning and its
debtor-affiliates to remove actions pending before the courts
throughout the United States to February 21, 2003. (Owens
Corning Bankruptcy News, Issue No. 34; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
PAXSON COMMS: Lowers Q2 Guidance Prompts S&P to Revise Outlook
--------------------------------------------------------------
Standard & Poor's placed its single-'B'-plus corporate credit
and other ratings, on TV station and network owner Paxson
Communications Corp. on CreditWatch with negative implications.
The action follows the West Palm Beach, Florida-based company's
lowered guidance for its 2002 second quarter, which includes
relatively flat revenue and reduced earnings. Paxson has about
$858 million in debt outstanding.
Paxson indicated that revenue from the important infomercial
category would be flat in the second quarter, compared to mid-
to high-single-digit year-over-year gains projected earlier.
Standard & Poor's is concerned that the improvement in very weak
key credit measures expected for the ratings could be delayed by
slower-than-anticipated advertising growth at the still-
developing network. The CreditWatch placement also considers the
potential for an unwinding of Paxson's relationship with
strategic investor NBC Inc., following the expected August 2002
completion of the binding arbitration proceeding against that
company. Standard & Poor's imputes financial support from NBC
that is fundamental to its rating on Paxson.
In addition, Paxson announced the completion of a bank amendment
that helps avoid a covenant violation. The amendment also
permits the retention of some asset-sale proceeds, enhancing the
company's dwindling liquidity. However, there is still
considerable concern about the longer-term success of the
company's business and its weak financial profile. Standard &
Poor's will likely resolve the CreditWatch listing upon
completion of the arbitration and further review of Paxson's
business and financial prospects.
PEREGRINE: Continues Nasdaq Trading Pending Hearing Outcome
-----------------------------------------------------------
Peregrine Systems, Inc. (Nasdaq: PRGNE) has requested an oral
hearing before a Nasdaq Listing Qualifications Panel to appeal a
notice of delisting of Peregrine's common stock from the Nasdaq
National Market. The hearing date will be set by the panel.
Peregrine's hearing request will stay the delisting of its
common stock pending a decision by the panel. There can be no
assurance that the panel will grant the company's request for
continued listing.
As previously announced, Peregrine received a notice on June 26,
2002 from the Nasdaq Stock Market of a determination that
Peregrine has failed to comply with Nasdaq Marketplace Rule
4310(C)(14), which requires that annual reports contain audited
financial statements. As a result of the filing delinquency,
Peregrine is subject to delisting and the fifth character "E"
was appended to Peregrine's trading symbol, changing it from
PRGN to PRGNE.
Peregrine is currently not in compliance with Nasdaq Marketplace
Rule 4310(C)(14) as a result of its previous announcement that
Arthur Andersen LLP had notified the company's board of
directors that the financial statements of the company and
related audit reports for fiscal 2000 and 2001, and the
unaudited financial statements for the first three quarters of
fiscal 2002, should not be relied upon. Arthur Andersen's
notification to Peregrine was in response to Peregrine's
announcement that it would restate its financial results for the
same periods.
Founded in 1981 and headquartered in San Diego, Peregrine is the
leading provider of Infrastructure Management software. Its
solutions reduce costs, improve profitability and release
capital, generating a lasting and measurable impact on the
productivity of assets and people. Peregrine's software manages
the entire lifecycle of an organization's assets. In addition,
its Employee Self Service solutions empower employees with
anytime, anywhere access to enterprise resources, services and
knowledge, resulting in improved productivity and asset
utilization. For more information, visit Peregrine's Web site at
http://www.peregrine.com
POLAROID: JPMorgan Seeking Protective Order to Quash Subpoenas
--------------------------------------------------------------
JPMorgan Chase Bank, as agent to the Prepetition Secured
Lenders, John P. McDonagh, a Managing Director of JPMorgan Chase
Bank and Edwin N. Ordway, a Managing Director of FTI Policano &
Manzo as the financial advisors to the Prepetition Agent's
counsel, ask the Court for a protective order quashing two
deposition subpoenas purportedly served by Polaroid
Corporation's Official Committee of Unsecured Creditors on the
two Managing Directors.
According to William H. Sudell, Jr., Esq., at Morris, Nichols,
Arsht & Tunnell, in Wilmington, Delaware, the Creditors'
Committee purported to serve on June 24, 2002, the Subpoenas for
the two Managing Directors to attend depositions at the offices
of the Creditors Committee's counsel. The Creditors' Committee
wishes to depose Mr. McDonagh and Mr. Ordway on their opinions
as to the value of the Debtors' estate and how that value
changed in the last few months in anticipation of the contested
Asset Sale Hearing. However, Mr. Sudell says, the Creditors'
Committee was unable to explain how the testimony could possibly
be relevant to any of the legal issues that could arise at the
Sale Hearing. The Creditors' Committee could not also explain
why the deposition is only requested now when the Asset Sale
Motion has been filed for more than two months.
Accordingly, Mr. Sudell contends, the Subpoenas should be
quashed because:
(a) the Subpoenas were served with three days notice. This is
unreasonable and in violation of Rule 45(c)(3)(A) of the
Federal Rules of Civil Procedure;
(b) pursuant to Rule 26(b)(1) of the Federal Rules of Civil
Procedure, the deposition testimony sought by the
Committee is protected by the attorney-client privilege;
and
(c) pursuant to Rule 26(b)(3) of the Federal Rules of Civil
Procedures, the deposition testimony sought by the
Committee is protected by the work-product doctrine when
the Committee cannot substantiate "the need of the
materials in the preparation of the party's case and that
the party is unable without undue hardship to obtain the
substantial equivalent of the materials by other means."
(Polaroid Bankruptcy News, Issue No. 19; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
SUTTON TRADING: Attempting To Raise Funds To Continue Operations
----------------------------------------------------------------
Sutton Trading Solutions, Inc. (OTC Bulletin Board: STTN;
Frankfurt: SZQ), announced that on July 2, 2002 Sutton Data
Services, the Company's wholly owned Czech-based subsidiary,
filed for bankruptcy protection because it was unable to meet
its obligations and the Company was unable to provide the
necessary funding. In addition, Sutton Online, Inc., the
Company's principal subsidiary, substantially terminated its
work force in an effort to conserve its cash.
The Company is attempting to raise additional funds. If it is
unable to do so, and there is no assurance that it will be able
to do so on terms acceptable to the Company or at all, then the
Company will have to consider its strategic alternatives
including a sale of its assets and/or a termination of its
business.
The Company has sufficient cash on hand and good receivables to
continue operations for approximately one month.
TECSTAR INC: Taps Environmental Data Management as Consultant
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gives its
stamp of approval to Don Julian, Inc., formerly known as
Tecstar, Inc., to retain Environmental Data Management as its
environmental consultant to ready the Company's real property
for ultimate sale. Rashmin Pathak, EDM's president, will be
primarily responsible for this engagement.
Environmental Data will assist the Debtors in the partial
closure of the Property, including the preparation of a Closure
Plan and Final Closure Report in accordance to the California
Code of Regulations. Environmental Data will also survey the
property to identify any environmental concerns that the Debtors
may need to address prior to closure and sale of the property.
The Debtors will pay Environmental Data as an ordinary course
professional on a monthly basis, as invoiced, so long as
Environmental Data's fees do not exceed $64,000.
Tecstar, Inc. manufactures high-efficiency solar cells that are
primarily used in the construction of spacecraft and satellite.
The Company filed for chapter 11 protection on February 07,
2002. Tobey M. Daluz, Esq., at Reed Smith LLP and Jeffrey M.
Reisner, Esq., at Irell & Manella LLP represent the Debtors in
their restructuring efforts. When the company filed for
protection from its creditors, it listed assets of over $10
million and debts of over $50 million.
TROY MILLS: Sells Headliner Division to Cosmopolitan Textile Co.
----------------------------------------------------------------
Mirus Corporate Recovery Services has assisted Troy Mills, Inc.,
based in Troy, New Hampshire with the sale of the Company's
headliner product line, which serves major customers and OEMs in
the automotive industry. Cosmopolitan Textile Company, of
Winsford, England acquired the operations out of bankruptcy
through a 363 sale transaction and signed a lease to continue
the operations in the Troy, New Hampshire facility.
Mirus Corporate Recovery Services, a group within RCW Mirus,
Inc. specializing in assisting distressed companies with
mergers, acquisitions and recapitalizations, was retained in
late November to assist Troy Mills, Inc. with finding buyers for
the Company's businesses in West Virginia and New Hampshire.
"Along with the sale of Troy's other manufacturing operations in
West Virginia and New Hampshire, this transaction completes our
engagement and will result in a return of 100 cents-on-the-
dollar for the secured creditors," said Jeff Hamon, a Principal
with Mirus who was close to the transaction.
This transaction represents Mirus' eighth closing of 2002.
Based in Boston, MA and with clients throughout North America,
Mirus provides investment-banking solutions to middle market
corporations in targeted technology and manufacturing
industries. Mirus delivers merger advisory, private placements,
fairness opinions and valuation services to entrepreneurs,
private equity groups and corporate clients. Mirus Corporate
Recovery Services specializes in assisting distressed companies
with mergers, acquisitions and recapitalizations. Information
about the firm is available on Mirus' Web site at
http://www.merger.com
US AIRWAYS: PSA Reaches Pacts with Pilots & Flight Attendants
-------------------------------------------------------------
US Airways Express carrier PSA Airlines, Inc., has reached
tentative agreements with its Air Line Pilots Association and
the Association of Flight Attendants on US Airways'
restructuring plan.
The agreements, subject to ratification by each union's
membership, cover PSA Airlines' approximately 250 pilots and 130
flight attendants. PSA Airlines' agreement with the AFA is
contingent on the participation of all PSA Airlines employees in
US Airways' restructuring plan.
"We are grateful for the diligence and willingness of the
leadership of both unions, which characterized our discussions
throughout, and which led to the conclusion of our agreements in
an amicable and timely manner," said Richard Pfennig, president
and chief executive officer of PSA Airlines. "This will enable
PSA Airlines, a key partner in the US Airways Express network,
to contribute significantly to the successful restructuring of
the company."
PSA Airlines, a wholly owned subsidiary of US Airways Group,
Inc., is based in Dayton, Ohio, and operates 200 daily
departures using a fleet of 30 turbo-prop aircraft, serving 30
destinations centered in the Ohio Valley and in the eastern U.S.
The carrier has more than 1,500 employees.
PSA Airlines announced last month that it had reached agreement
with ALPA's Master Executive Council allowing the operation of
regional jet aircraft by the carrier's pilots.
PSA Airlines is one of four wholly owned US Airways Express
carriers, which together with seven other affiliates, currently
operate more than 2,200 US Airways Express flights daily,
serving 162 destinations in the U.S., Canada and the Caribbean.
US AIRWAYS: TWU Local 545 Agrees to Terms of Restructuring Plan
---------------------------------------------------------------
US Airways, Inc. and the Transport Workers Union of America
Local 545 have reached a tentative agreement on the company's
restructuring plan.
The agreement, which is subject to ratification by its
membership, covers the union's approximately 160 dispatchers and
assistant dispatchers.
"Our ability to reach this comprehensive agreement with the TWU
is a clear demonstration of their willingness and commitment to
making US Airways a much stronger airline. We commend their
leadership for working so hard to finalize this important
agreement," said US Airways Senior Vice President of Employee
Relations Jerry A. Glass.
US Airways earlier this week reached a tentative agreement on
its restructuring plan with the Association of Flight Attendants
and continues discussions with its other unions, comprising the
Air Line Pilots Association, International Association of
Machinists, Communications Workers of America and the TWU's
flight crew training instructors and simulator engineers.
VENTURE HOLDINGS: Makes $14MM Semi-Annual Bond Interest Payment
---------------------------------------------------------------
Venture Holdings Company LLC has made the semi-annual interest
payments due on its bond coupons that last month were deferred
until July 3, 2002.
Venture paid the aggregate $14.375 million interest payments due
on its $125 million principal amount of 11% Senior Notes due
2007 and its $125 million principal payment amount of 12% Senior
Notes due 2009. These interest payments were made within the 30-
day grace period allowed by the Indentures governing each of
Venture's 11% Senior Notes due 2007 and 12% Senior Notes due
2009. The interest payments initially came due on June 3, 2002.
According to Wednesday's 8K filing by Venture, "We are
continuing to consult with our advisors and negotiate with our
customers, lenders, investors and other constituencies with the
goal of obtaining a consensual capital restructuring of our
operations on a worldwide basis. There can be no assurance,
however, that we will be successful in this effort on a timely
basis."
Venture is an industry leader and worldwide, full-service
automotive supplier, systems integrator and manufacturer of
plastic components, modules and systems, as well as an industry
leader in applying new design and engineering technology to
develop innovative products, create new applications and reduce
product development time. The company employs approximately
13,000 persons worldwide. Venture has executive officers in
Fraser, Mich., and operates 63 facilities throughout the world.
VENTURE HOLDINGS: S&P Slashes Rating to SD Following Nonpayment
---------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on Fraser,
Michigan-based Venture Holdings Co. LLC to 'SD' from triple-'C'
following Venture's failure to make required interest payments
on its $125 million 9.5% senior notes and $125 million 11%
senior notes due to restrictive agreements with its bank group.
In addition, the senior unsecured debt rating was lowered to 'D'
from triple-'C'-minus and the subordinated debt rating was
lowered to 'D' from double-'C'. The ratings on the automotive
components manufacturer were removed from CreditWatch, where
they were placed December 19, 2001. The triple-'C' senior
secured rating on Venture remains on CreditWatch with negative
implications.
The interest payments were due June 1, 2002. The bond indentures
provided for 30-day grace periods, which expired at the end of
June. In addition, Venture has failed to make an interest
payment on its $205 million 9.5% senior notes due 2005 which was
due on July 1, 2002. The company has agreed with its bank group
that it will not make the payment until the expiration of the
30-day grace period.
Venture continues to contest the May 28, 2002, insolvency
petition filed by directors of its European subsidiary, Peguform
GmbH. A temporary administrator has been appointed to determine
whether there is good reason to open insolvency proceedings, and
has 90 days in which to make his determination.
"The inability to access cash flows generated by Peguform would
severely impair Venture's ability to meet future debt service
obligations," said Standard & Poor's analyst Martin King.
Venture's bank group has provided a waiver of certain potential
existing defaults under the company's credit agreement,
including any default caused by the failure to make bond
interest payments. The company is working with certain customers
to receive expedited payments to enhance liquidity, and is in
discussions with various constituencies to restructure its
operations on a global basis.
Standard & Poor's will continue to monitor events as they
develop. The senior secured rating could be lowered should the
company file for bankruptcy or its European operations be
declared insolvent.
VERTICAL COMPUTER: Accountants Express Going Concern Doubt
----------------------------------------------------------
Vertical Computer Systems Inc. maintains its primary focus on
developing its proprietary Emily technology, Web services,
Underpinning Web Technologies, and other products such as
ResponseFlash and UniversityFlash. Its subsidiary, NOW
Solutions, which was acquired in 2001, continues to develop its
services and products in order to grow its customer base.
Additionally, the Company continues to build its global network
of Local Country Partners toward developing an international
network of Bridges that will serve as distribution platforms
throughout the world for its proprietary and licensed
technologies, goods and services.
Vertical Computer Systems Inc. has suffered significant
recurring operating losses, used substantial funds in its
operations, and needs to raise additional funds to accomplish
its objectives. Additional, at March 31, 2002, the Company had
negative working capital of $8,489,509, and is in default on
several of its debt obligations. These factors raise
substantial doubt about the Company's ability to continue as a
going concern. The report of the Company's Independent
Certified Public Accountants for the December 31, 2001 financial
statements included an explanatory paragraph expressing
substantial doubt about the Company's ability to continue as a
going concern.
The Company had total revenues of $1,561,762 in the three months
ended March 31, 2002. This is an increase of $1,104,950 due to
inclusion of Now Solutions for a full quarter as compared to one
month for the three months ended March 31, 2001. Total revenues
primarily consist of software license, consulting and
maintenance fees. Nearly all of these revenues relate to the
business operations of NOW Solutions, a subsidiary in which the
Company acquired a 60% interest in February 2001.
The Company had selling, general and administrative expenses of
$3,300,803 and $2,097,300 in the three months ended March 31,
2002 and 2001, respectively. This increase of $1,203,503 was
attributable to a write down of approximately $720,000 of
goodwill associated with Enfacet, Inc., and two additional
months of selling, general, and administrative expenses NOW
approximating $530,000, less goodwill amortization of
approximately $43,000.
The Company had an operating loss of $1,739,041 and $1,640,488
in the three months ended March 31, 2002 and 2001, respectively.
VISKASE COMPANIES: Amends Rights Agreement with Harris Trust
------------------------------------------------------------
Viskase Companies, Inc. amended its Rights Agreement, dated June
26, 1996, between the Company and Harris Trust and Savings Bank.
Under the Rights Agreement, as amended, from the date of the
amendment through December 31, 2002, all Rights outstanding
(other than those held by a 41%-or-more stockholder and certain
other specified persons) will automatically, without any further
action of the Board of Directors, be exchanged for shares of
common stock of the Company at an exchange rate of one share of
common stock per Right simultaneous with any Person becoming a
41%-or-more stockholder.
Viskase Companies, Inc. has its major interests in food
packaging. Principal products manufactured are cellulosic and
nylon casings used in the preparation and packaging of processed
meat products.
As previously reported, the company's net loss for the year
ended December 31, 2001 was $25.5 million compared with the year
2000 of $17.8 million. Net loss in 2001 includes a
restructuring charge of $4.8 million; a $3.6 million
write-down of inventories to its lower of cost or market value;
a net gain on the final settlement from the sale of the Films
Business of $3.2 million; and an extraordinary gain, net of
taxes, on the early extinguishment of debt of $8.1 million.
The Company's cash flows from operations were insufficient to
pay the 10.25% Notes when they matured on December 1, 2001, and
accordingly the Company did not pay the $163.1 million principal
and $8.4 million interest that became due at that time. In
September 2001, certain of the holders of the 10.25% Notes
formed a committee to participate in the development of a plan
to restructure the Company's capital structure and address its
future cash flow needs. The Company and the Committee are
engaged in negotiations with respect to the Restructuring. No
assurances can be given that an agreement will be reached with
the Committee or what the terms of any such agreement would be.
WILLIAMS COMMS: Will Provide Streaming Media to Golf Channel
------------------------------------------------------------
Williams Communications (OTCBB: WCGRQ), a leading provider of
broadband services to bandwidth-centric customers, has signed a
streaming media services agreement with TheGolfChannel.com, the
leading online provider of golf news, instruction, information
and services and a division of The Golf Channel.
Under the terms of the agreement, Williams Communications will
be TheGolfChannel.com's preferred provider for streaming golf-
related audio and video content. The company will deliver high-
quality streams for all of the innovative golf content on the
interactive, multimedia site for programs including, "Golf
Central," a 30-minute nightly news and entertainment show;
"Academy Live," the one-hour weekly instructional call-in show
and "Golf Talk Live," a live call-in show, which features
present and former players. Williams Communications will also
stream several Golf Channel special event productions throughout
the year.
"Williams Communications' robust content distribution network
and tier-one Internet Protocol backbone provides carrier-class
service for high-volume streaming events, enabling our content-
owner customers, such as The Golf Channel, to focus on their
core businesses," said Michael Schlesier, vice president of
media and entertainment for Williams Communications.
Through its various streaming media offerings, Williams
Communications currently moves more than 63 million audio and
video streams over its network on a monthly basis. The
company's expanding portfolio of IP-based services provides
customers with the ability to leverage the Internet and new web-
based technologies over a nationwide, MPLS-enabled IP network.
Through its expanding IP services and comprehensive broadband
media services, including content gathering and distribution,
digital media management and streaming media, Williams
Communications can create unmatched end-to-end customer
solutions. (Williams Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WILLIAMS CONTROLS: Closes $37MM Recapitalization Transactions
-------------------------------------------------------------
Williams Controls, Inc. (OTC Bulletin Board: WMCO) has completed
a series of recapitalization transactions led by American
Industrial Partners, a San Francisco and New York based private
equity firm. The transactions, aggregating up to $37 million
comprised of $15 million of new securities and up to $22 million
of restructured securities (assuming the exchange of Series A
preferred stock for Series A-1 preferred stock, the "Exchange"),
will provide liquidity to the Company and position Williams to
capitalize on future growth opportunities. The primary feature
of the recapitalization effort is completion of the previously
announced agreement with American Industrial Partners. On
Monday, American Industrial Partners and certain other investors
invested $15 million in a newly created Series B convertible
preferred stock. The Series B shares have an initial dividend
rate of 15% and are convertible into shares of common stock at
$.85 per share.
As additional elements of the AIP transaction, the Company (i)
has entered into a new five-year revolving credit and term loan
agreement with its existing primary lender, Wells Fargo Business
Credit, (ii) will repay $5 million face amount of 12% secured
subordinated debentures, (iii) has eliminated the conversion
feature and extended the maturity of approximately $2 million
face amount of subordinated debentures to July 1, 2004, and (iv)
contemplates exchanging up to $8 million in increasing rate cash
pay Series A preferred shares for non-cash pay Series A-1
preferred shares.
Pro forma for the recapitalization and the Exchange, the Company
will have less than $10 million in cash interest bearing debt
securities, none with a term less than two years from the close
of the AIP transaction. The net result of these recapitalization
transactions is to substantially improve the company's balance
sheet, reduce its cash payment obligations and leave the company
with sufficient cash to fund its operations for the foreseeable
future.
With the completion of the investment by American Industrial
Partners, Gary Arnold, David Eberly and Samuel Greenawalt have
resigned from the Board of Directors and R. Eugene Goodson, W.
Richard Bingham and Kirk R. Ferguson, each designated by AIP,
will assume positions on the Board. American Industrial Partners
is also entitled to designate one additional seat on the Board,
to be filled at a later date, at which point AIP designees will
constitute a majority of the Board. Gene Goodson, a Director of
AIP's Executive Officer Association and former Chairman and CEO
of Oshkosh Truck, a customer of Williams, has been named as
Executive Chairman of the Board of Directors and will assume
operating responsibility for the Company.
The current Chief Executive Officer, Thomas K. Ziegler, has
announced that he will be leaving the Company with the
completion of the AIP transaction, to pursue other interests.
Commenting on the series of transactions announced today, Mr.
Ziegler stated, "This is an outstanding outcome for a company
with the challenges that faced Williams Controls over the last
couple of years. During that time, we have been able to shed
losing operations, convert non-essential assets to cash to pay
down secured debt, provide working capital to the Company and
stabilize operations in our core truck and automotive electronic
throttle control businesses." He continued, "With the completion
of the financial transactions discussed today, the final piece
is now in place to fully complete the restructuring of Williams
Controls." Mr. Ziegler concluded, "I would like to take this
opportunity to thank all of our employees, customers, suppliers
and investors for their patience and support while Williams
successfully worked through this very challenging time."
Gene Goodson, newly named Executive Chairman stated, "It is
exciting to be a part of Williams Controls. The company has a
long successful history and has built strong automotive and
commercial vehicle customer relationships. The company, with its
core market position in electronic throttle controls, coupled
with AIP's investment, can now move forward with a bright
future." Mr. Goodson continued, "vehicles throughout the world
are converting from mechanical to electronic throttle controls,
and Williams is well positioned with technology and systems to
take advantage of this conversion trend." Mr. Goodson concluded,
"I look forward to working with Williams' customers, management
team, employees and suppliers in building upon the success of
the Company to date."
Kirk Ferguson, Managing Director of American Industrial
Partners, commented, "We eagerly anticipate our partnership with
Williams and its employees. This complete capital structure
solution, in combination with the experience of Gene Goodson and
focus of the newly constituted Board, should provide Williams
with the financial footing and strategic support to build upon
its position as a leading provider of electronic throttle
controls to its customers in the automotive, truck and off-
highway markets." Mr. Ferguson added, "This investment in
Williams Controls is precisely of the type that we continue to
seek. It is a classic AIP investment in a niche manufacturing
business in an industry known to us, where the expertise of our
firm's operating executives makes us an attractive, value-added
partner for the company and its management."
Williams Controls designs and manufactures control systems and
sensors for use primarily in the transportation industry.
Williams Controls is the predominant manufacturer of electronic
throttle controls for the heavy and medium duty truck market, in
addition to supplying some of the world's largest manufactures
in the automotive market, where demand for ETCs is rapidly
expanding. Benefits of ETCs include lower vehicle emissions,
improved fuel economy, integrated cruise control, and the
elimination of complex mechanical linkages. For more information
you can find Williams Controls on the Internet at
http://www.wmco.com
American Industrial Partners manages private equity funds that
have been investing in private and public companies since 1989.
With over $1 billion in invested and committed capital in the
funds that it manages, AIP is actively investing its newly
raised third fund in middle market manufacturing and business
services companies, where it works collaboratively with
management teams to enhance operating performance and company
prospects. AIP distinguishes itself from other private equity
funds through the deep operating expertise of its leadership
team made up of approximately twenty former Presidents and CEOs
of Fortune 200 companies, including such truck and automotive
related companies as Oshkosh Truck, Goodyear Tire and Rubber,
Tenneco Automotive, Stanadyne Automotive Corp. and SANLUIS
Corporation. For more information, you can find American
Industrial Partners on the Internet at http://www.aipartners.com
As previously reported, Williams Controls' March 31, 2002
balance sheet shows a total shareholders' equity deficit of
about $15 million.
WORLDCOM INC: Fails to Comply with Nasdaq Listing Requirements
--------------------------------------------------------------
WorldCom, Inc. (Nasdaq:WCOME, MCITE) has requested a hearing
before a Nasdaq Listing Qualifications Panel to respond to
Nasdaq's notice that the company has not complied with certain
filing and fee requirements necessary for continued listing.
According to Nasdaq rules, WorldCom's common and preferred
stocks will continue to be listed on The Nasdaq National Market
pending the issuance of a written determination by the Panel
after the hearing. There can be no assurance that the Panel will
grant WorldCom's request for the continued listing.
"WorldCom intends to make its case heard, and we believe that
Nasdaq will see that our company is doing everything in its
power to uncover the circumstances of the intended restatement
and to make all the appropriate regulatory filings as soon as
possible," said John W. Sidgmore, WorldCom president and CEO.
WorldCom, Inc. (NASDAQ: WCOME, MCITE) is a pre-eminent global
communications provider for the digital generation, operating in
more than 65 countries. With one of the most expansive, wholly-
owned IP networks in the world, WorldCom provides innovative
data and Internet services for businesses to communicate in
today's market. In April 2002, WorldCom launched The
Neighborhood built by MCI - the industry's first truly any-
distance, all-inclusive local and long-distance offering to
consumers for one fixed monthly price. Effective as of the close
of regular trading on July 12, 2002, WorldCom will eliminate its
tracking stock structure and have one class of common stock. For
more information, go to http://www.worldcom.com
WORLDCOM INC: CEO Sidgmore Says Bankruptcy Filing Not Imminent
--------------------------------------------------------------
WorldCom Inc. president and chief executive John Sidgmore on
July 2, Tuesday, announced that it would be bad for the economy,
national security and the U.S. telecommunications system if the
Clinton, Mississippi-based company, the country's second-largest
long-distance provider, was forced to file for bankruptcy,
reported The Daily Deal. He said the telecommunications giant's
demise would hurt competition and cost hundreds of jobs. Though
Sidgmore said he could not guarantee that the company would stay
out of bankruptcy, the Deal reported, he stressed that WorldCom
has $2 billion in cash for immediate operating expenses.
Separately, discount long-distance provider IDT Inc. made bids
for two different WorldCom units, the Deal reported. (ABI World,
July 3, 2002)
WORLDCOM INC: IDT Corp. to Unveil "Stabilization Plan" Today
------------------------------------------------------------
As widely reported, IDT Corp. made a $5 billion offer to acquire
WorldCom's MFS and Brooks Fiber units and its MCI consumer and
small business long distance units.
"While these acquisitions are a strategic business move by IDT
Corp, the company also believes that as the potential next owner
of MCI, the MFS network and Brooks Fiber, Inc, IDT has a duty
and obligation also to help preserve the integrity and stability
of the national economy and insure that MCI/WorldCom customers
have continued and uninterrupted high quality telecommunications
service whether caused by a bankruptcy court ordered shutdown or
a network outage due to a work stoppage, vandalism to the
network or any other unforeseen reason," IDT says in a written
statement.
IDT Chairman, Howard Jonas, IDT CEO Jim Courter, along with
Winstar CEO Brian Finklestein will unveil IDT's comprehensive
"WorldCom stabilization plan," which is designed to help calm
the fears of WorldCom customers, and thereby keeping them on the
WorldCom network and provide them with back-up and alternative
service, in case of a full or partial shut down of the WorldCom
network, while negotiations between IDT Corp. and WorldCom
continues.
WHEN: 12 Noon Friday July 5, 2002
WHERE: Call-in conference call for qualified members
of media. Members of media must call either
Mary Jennings at (973) 438-3124 or Gil Nielsen
at (973) 438-4002 on Friday July 5, 2002 for a
call-in number.
For Investors and other parties interested will be able listen
to the press conference with a special listen-only call-in
number.
WORLDCOM: Fitch Says Crisis May Impact Niche Fin'l Guarantors
-------------------------------------------------------------
Niche financial guarantors and monoline reinsurers have exposure
to WorldCom that, for some, may result in claims and/or reduced
profitability. However any resulting impact from WorldCom, in
and of itself, is not expected to be of sufficient magnitude to
result in Fitch taking rating action on these companies.
ACA Financial Guaranty Corp., whose insurer financial strength
rating is 'A', has $10 million of exposure to WorldCom. Like the
'AAA' rated primary financial guarantors, ACA's exposure is
within a CDO. However, because ACA's participation is in the
equity tranche, it is affected by all losses occurring within
the CDO. It should be noted that ACA collects asset management
fees and structuring fees as well as premiums on its CDO
product, and in structuring the transaction, assumed there would
be some losses. Even if there were a 100% loss on the WorldCom
exposure, the transaction would still produce a positive, albeit
lower, return to ACA. Barring additional losses, that return
would be within the range of profitability ACA projected in
originally underwriting the transaction.
ACE Guaranty Re Inc., whose insurer financial strength rating is
'AAA', has $20 million of direct exposure to WorldCom from a
single name credit default swap. If a credit event were to
occur, ACE Guaranty Re's payment obligation would be the
difference between par and average market value of the security,
as calculated over a predetermined period subsequent to the
credit event. ACE Guaranty Re also has indirect exposure to
WorldCom within numerous CDOs and pooled credit default swap
transactions. However, all of these would have significant
remaining subordination at ACE Guaranty Re's level of
participation, even assuming a complete loss on WorldCom.
Therefore ACE Guaranty Re is not expected to pay a claim on the
CDOs and pooled transactions due to WorldCom.
Radian Asset Assurance Inc., rated 'AA' and Radian Reinsurance
Co. Inc., rated 'AAA', have indirect exposure to WorldCom in
numerous CDOs, all but one of which would have significant
subordination remaining, even assuming a complete loss on
WorldCom. On the one of potential concern, Radian insured
portions of a synthetic CDO with exposure to WorldCom through a
bank credit line. However, according to publicly available news
reports, the bank line lapsed on June 30 without being drawn
upon, which would remove that exposure to WorldCom from the CDO.
Radian does not anticipate a payment of any claims on this
facility.
AXA Re Finance S.A., whose insurer financial strength is rated
'AAA', has only $0.4 million of exposure to WorldCom through its
trade credit business which may result in claims. It also has a
small amount of WorldCom exposure through CDOs reinsured from
'AAA' monolines, all of which would have significant
subordination remaining, even assuming a complete loss on
WorldCom. Therefore, none of the CDOs are expected to result in
an insured claim due to WorldCom.
XL Finance Assurance Ltd., whose insurer financial strength is
rated 'AAA', has indirect exposure to WorldCom in several CDOs
insured by 'AAA' monolines, all of which would have significant
subordination remaining, even assuming a complete loss on
WorldCom. Therefore, none are expected to result in an insured
claim due to WorldCom.
Commercial Guaranty Assurance Ltd., whose insurer financial
strength is rated 'AA', has $5.75 million of indirect exposure
within three CDOs. One of the CDOs is already distressed, and so
its $2.5 million of WorldCom exposure may result in incremental
claims. The other $3.25 million are in CDOs that would still
have significant subordination even assuming a total loss on
WorldCom.
As Fitch reported in its June 28 press release, WorldCom
exposure is not expected to affect the 'AAA' rated primary
financial guarantors Ambac Assurance Corp., Financial Security
Assurance Inc., MBIA Insurance Corp., and XL Capital Assurance
Inc. due to first loss protection within the CDOs in which those
companies participate. Financial Guaranty Insurance Co. and CDC
IXIS Financial Guaranty have no exposure to WorldCom.
Worldcom Inc.'s 11.25% bonds due 2007 (WCOM07USA1) are quoted at
a price of 26.5, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM07USA1
for real-time bond pricing.
XEROX CORP: Fitch Downgrades Senior Unsecured Debt Rating to BB-
----------------------------------------------------------------
Fitch Ratings has downgraded Xerox Corp. and its subsidiaries'
senior unsecured debt to 'BB-' from 'BB', and the convertible
trust preferred to 'B' from 'B+'. The Rating Outlook remains
Negative.
The rating actions reflect the structural subordination due to
the security granted under Xerox's new $4.2 billion Amended and
Restated Credit Agreement dated as of June 21, 2002, as well as
the level of increased senior secured debt in the company's
capital structure which incorporates off-balance sheet loans
secured by finance and trade receivables. With a $2.8 billion
paydown of the $7 billion that would have expired in October
2002, Xerox has arranged a new 3-year credit facility expiring
on April 30, 2005, and consisting of: 1) $1.5 billion term loan
A, 2) $500 million secured term loan B, 3) $700 million term
loan C expiring Sept. 30, 2002, and 4) $1.5 billion revolver
fully drawn at the inception. The amortization schedule for term
loan A is $400 million in 2003 and $600 million in 2004, while
term loan B has minimal amortization of $5 million annually. The
covenants for the facility are more strict and diverse than
previously but have not yet been reset due to the company's
restatement of its historical financial statements for the 1997-
2001 period.
The Rating Outlook remains Negative reflecting Xerox's weakened
credit protection measures, significant debt maturities for the
next three years, and Xerox's impaired financial flexibility and
reduced access to the capital markets. The ratings also
incorporate the competitive nature of the printing industry, the
necessity for constant new product introductions, and overall
weak economic conditions. As revenues are forecasted flat to
down, it is crucial that Xerox continues executing its cost
cutting programs beyond the already achieved $1.2 billion 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 its debt obligations and Fitch
anticipates core credit protection measures will continue to be
challenged.
After Xerox's $2.8 billion partial paydown of its previous
revolver and $1.3 billion of debt that matured in the second
quarter of 2002, Xerox's cash position is estimated to be in
excess of $1.7 billion with total debt greater than $13 billion,
of which more than half is from customer financing, supported by
significant financing receivables. The company recently
announced an extension to its finance receivable monetization
program with GECC which will provide an additional $1 billion in
funding. Of this program $500 million was received in May 2002
and the balance is expected to be received the second half of
2002. Xerox continues outsourcing its customer financing
programs that could provide additional sources of funds. Debt
maturities for second half of 2002 are estimated to be $2
billion, including term loan C for $700 million.
Fitch continues to recognize Xerox's improving operational
performance, strong, technologically competitive product line
and business position, and execution of the cost restructuring
program. In addition Fitch recognizes the progress Xerox has
made in exiting the 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. Xerox 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 billion,
including an agreement to outsource approximately half of its
manufacturing, the common stock dividend has been eliminated,
and Xerox 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.
DebtTraders reports that Xerox Corporation's 9.75% bonds due
2009 (XEROX9A) are trading at about 75. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=XEROX9Afor
real-time bond pricing.
XO COMMS: U.S. Trustee Appoints Unsecured Creditors' Committee
--------------------------------------------------------------
Carolyn S. Schwartz, the United States Trustee, pursuant to
Section 1102(a) and 1102(b) of the Bankruptcy Code, appoints
these five creditors to the Official Committee of Unsecured
Creditors in XO Communications, Inc.'s chapter 11 case:
1. HSBC Bank USA
452 Fifth Avenue
New York, NY 10018
Attn: Robert A. Conrad, Vice President
Tel. No. (121) 525-1314
- or -
Kellye Drye & Warren, LLP
101 Park Avenue
New York, NY 10178
Attn: Mark I. Bane, Esq.
Tel. No. (212) 808-7915
2. Morgan Stanley Investment Management
One Tower Bridge
100 Front Street, Ste. 1100
West Conshohocken, Pa 19428
Attn: Deanna Loughnare, Exe. Director
Tel. No. (610) 940-5000
3. Carlson Capital
2100 McKinney Avenue, Ste. 1600
Dallas, TX 75201
Attn: Thad Teaford, Analyst
Tel. No. (214) 932-9600
4. Appaloosa Management, LP
26 Main Street
Chatam, NJ 07928
Attn: James Bolin
Tel. No. (973) 701-7000
5. Qwest Communication Corporation
1801 California Street
Denver, CO 80202
Tel. No. (303) 896-1208
- or -
Katten Muchin Zavis Rosenman
575 Madison Avenue
New York, NY 10022
Attn: Jeff J. Friedman, Esq.
Tel. No. (212) 940-7035
(XO Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
* BOOK REVIEW: The Phoenix Effect: Nine Revitalizing Strategies
No Business Can Do Without
----------------------------------------------------------------
Authors: Carter Pate and Harlann Platt
Publisher: John Wiley & Sons, Inc.
Softcover: 244 Pages
List Price: $27.95
Review by Gail Owens Hoelscher
Buy a copy for yourself and one for a colleague on-line at
http://amazon.com/exec/obidos/ASIN/0471062626/internetbankrupt
Think of all the managers of faltering companies who dream of
watching those companies rise from the ashes all around them!
With a record number of companies failing in 2001, and another
record-setting year expected for 2002, there are a lot of ashes
from which to rise these days.
Carter Pate and Harlan Platt highly value strong leadership able
to sharpen a company's focus and show the way to the future.
They believe that all too often, appropriate actions required to
improve organizations are overlooked because upper management
either isn't aware of the seriousness of the issues they face or
they don't know where to turn for accurate information to best
address their concerns. In the Phoenix Effect, the authors
present their ideas to "confront, comprehend, and conquer a
company's ills, big and small."
These ideas are grouped into nine steps: (i) Find out whether
the company needs a tune-up, a turnaround, or crisis management.
Locate the source of "the pain." (ii) Analyze the true scope of
the company's operations. Decide whether to stay in the same
businesses, withdraw from existing businesses, or enter new
ones. (iii) Hold the company to its mission statement. If it
strives to be "the most environmentally friendly." Figure out
how. (iv) Manage scale. Should the company grow, stay the same
size, or shrink? (v) Determine debt obligations and work toward
debt relief. (vi) Get the most from the company's assets.
Eliminate superfluous assets and evaluate underused assets.
(vii) Get the most from the company's employees. Increase output
and lower workforce costs. (viii) Get the most from the
company's products. Turn out products that are developed and
marketed to fill actual, current customer needs. (ix) Produce
the product. Search for alternate ways to create the product:
owning or leasing facilities, outsourcing, etc.
The authors believe that "how you're doing is where you're
going." They assert that the "one fundamental source of life in
companies, as in people,.is the capacity for self-renewal, the
ability to excite your team for game after game. to go for broke
season after season." This ability can come from "(g)enetics,
charisma, sheer luck, stock options - all crucial, yes, but the
best renewal insurance is a leader who always knows exactly how
his or her company is doing."
There are a lot of books written on this topic. Pate and Platt
successfully bridge the gap between overgeneralization and too
detail. They are equally adept at advising on how to go about
determining a business's scope and arguing for Monday rather
than Friday for implementing layoffs. They don't dwell on sappy
motivational techniques. They don't condescend to the reader or
depend too much on folksy vernacular and clich‚. Their message
is clear: your company's phoenix, too, can rise from its ashes.
* Carter Pate is a well known turnaround expert at
PricewaterhouseCoopers with more than 20 years experience
providing strategic consulting and implementation strategies.
* Harlan Platt is a professor of finance at Northeastern
University and author of the book Principles of Corporate
Renewal.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
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
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contained herein is obtained from sources believed to be
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*** End of Transmission ***