/raid1/www/Hosts/bankrupt/TCR_Public/020708.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, July 8, 2002, Vol. 6, No. 133
Headlines
360NETWORKS: Settles Disputes with Canadian Pacific, et. al.
APW LTD: Brings-In Foley & Lardner as Counsel in Actuant Dispute
ACME METALS: Wants to Sept. 20 to Make Lease-Related Decisions
ADELPHIA BUSINESS: Deloitte Severs Client-Auditor Relationship
ADELPHIA COMMS: Maintaining Existing Cash Management System
ADELPHIA COMMS: Fallout Prompts C-Cor.net to Slash 260 Jobs
AMERICAN AIRLINES: Ends Commission Policy for Agents Outside US
AMERICAN GREETINGS: Calls WSJ Report's Implications 'Misleading'
AMERICAN SKIING: Hires KPMG to Replace Andersen as New Auditors
AMERISTAR CASINOS: Will Release Q2 Earnings Results on July 23
ARTHUR ANDERSEN: KPMG Completes Acquisition of Swiss Unit
CALPINE: Adds 48 Megawatts Expansion to Bethpage, NY Power Plant
CANNON EXPRESS: Engages Tulius Taylor to Replace Arthur Andersen
CARIBBEAN PETROLEUM: Taps Poorman-Douglas as Claims Agent
CHELL GROUP: Realigns Management Team for More Effective Ops.
CHINOOK ENERGY: Expects to Close Asset Sale Deal on Aug. 1, 2002
CONTINENTAL AIRLINES: Bolts from US Airways Alliance Discussions
CORECOMM LTD: Auditors Raise Going Concern Doubt
CORPORATE BACKED TRUST: S&P Lowers A-1 Certificate Rating to BB
COVANTA ENERGY: Masse Asks Court to Lift Stay to Pursue Action
CROWN CORK: Expects to Publish Q2 Earnings Results on July 16
CROWN CRAFTS: Fails to Beat July 1 Form 11-K Filing Deadline
CYGNIFI DERIVATIVES: Files Joint Plan and Disclosure Statement
DECORATIVE SURFACES: Gets OK to Hire Pachulski Stang as Counsel
ENRON CORP: Wins Nod to Consent to SK-Enron Securities Sale
ENRON CORP: Seeking Nod to Settle Litigation with Simon Property
ENRON CORP: Eco-Tankship Blocks Excalibur Give-Away to Exmar
FLAG TELECOM: Court Okays Professional Compensation Protocol
FOAMEX INT'L: Signs-Up EDS For IT Infrastracture Services
FOAMEX: Names Eric Hudson as SVP, Chief Information Officer
GLOBAL CROSSING: Subcommittee Taps Greenberg Traurig as Counsel
GUILFORD MILLS: Continuing Andersen's Engagement as Auditors
HERCULES INC: Sells BetzDearborn Assets to Reduce Debt By 50%
IT GROUP: Intends to Amend Chanin Capital Engagement Terms
ICOA: Reports $2 Million Year-End Working Capital Deficit
INTEGRATED HEALTH: Committee Hires Eureka for Financial Advice
JAM JOE: Gets Until July 31 to Make Lease-Related Decisions
KAISER ALUMINUM: Intends to Pay $11M Prepetition Property Taxes
KMART: Selling Dallas Property as Part of $44 Million Agreement
KMART CORP: Institutions' Committee Wants to Modify Wage Order
L-3 COMMS: Completes Tender Offer for $225MM Senior Sub. Notes
LTV: Proposes Bidding Procedures for Copperweld Asset Sale
LA QUINTA CORP: Files Shelf Registration Statement with SEC
LA QUINTA: Pays Off Bank Term Loan Cutting Indebtedness to $812M
LODGIAN INC: Wants to Hire Wallach as St. Louis Special Counsel
LUCENT TECHNOLOGIES: Selling Enterprise Prof. Services to INS
MANHATTAN NATIONAL: S&P Maintaining Watch on BB+ Ratings
MATLACK SYSTEMS: Wants to Maintain Exclusivity through August 23
MED DIVERSIFIED: Mulling Appeal from AMEX Delisting Notice
NEON COMMUNICATIONS: Wants Court to Fix August 5 Claims Bar Date
NORTEL NETWORKS: Declares Preferred Share Dividend
OWENS CORNING: Asks Court to Appoint Prof. McGovern as Mediator
PILLOWTEX CORP: Enters Into 3 New Agreements Pursuant to Plan
POLAROID CORP: Court Approves EPA Bar Date Extension to July 30
PRIME RETAIL: Moody's Further Junks Preferred Shares Ratings
QUESTRON TECHNOLOGY: Court Sets July 22 Claims Filing Bar Date
RVM INDUSTRIES: Ability to Continue Operations Uncertain
ROUNDY'S INC: Will Close Mich. Distribution Center by Year-End
SOLID RESOURCES: Canadian Court Extends CCAA Stay to Sept. 30
SUPERVALU: Says Past Financial Misstatement is Immaterial
SWAN TRANSPORTATION: Gets Green Light to Retain Jackson Walker
TECH LABORATORIES: 6.5% Convertible Noteholders Extend Waiver
TELEMETRIX INC: Ehrhardt Keefe Express Going Concern Doubt
U.S. STEEL: Appoints Robin Sotak as Manager, Industrial Hygiene
UNITED DEFENSE: S&P Affirms BB- Corporate Credit Rating
VIZACOM INC: TW Private Equity Discloses 8.89% Equity Shares
WILLIAMS CONTROLS: American Industrial to Buy Series B Shares
WORLDCOM: Horace Mann Debt Holdings Impact Investment Losses
WORLDCOM INC: Rurban Financial Discloses $2 Million Exposure
WORLDCOM INC: IDT Corp. Unveils its Customer Stabilization Plan
XO COMMUNICATIONS: Files Amended Plan of Reorganization in N.Y.
* BOND PRICING: For the week of July 8 - July 12, 2002
*********
360NETWORKS: Settles Disputes with Canadian Pacific, et. al.
------------------------------------------------------------
360networks Inc. and its debtor-affiliates ask the Court for
authority to:
(i) enter into a settlement agreement and all related
documents and agreements between certain of the Debtors
and their Canadian affiliates on one hand and Canadian
Pacific Railway Company, Soo Line Railroad Company, and
Delaware and Hudson Railway Company Inc. on the other
hand; and
(ii) file the Settlement Agreement under seal.
Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New
York, states that Canadian Pacific is one of the largest
railroad companies in Canada. In general, Canadian Pacific
provides the Debtors with the use of certain real property on
which the Debtors construct, install, operate, maintain and
repair portions of the their fiber optic network.
Ms. Chapman relates that prior to the Petition Date, the Debtors
and Canadian Pacific entered into numerous license and other
agreements governing the use and providing for the monetary and
other consideration payable by the respective 360 Parties to
Canadian Pacific. Specifically, the 360 Parties and
CPR are parties to these agreements:
(a) a Master Fibre Optic Agreement, Edmonton-Toronto CPR
Build, between Canadian Pacific Railway Company,
BCT.TELUS Communications Inc., and Worldwide Fiber Inc.,
and License Agreement, between Canadian Pacific Railway
Company, St. Lawrence & Hudson Railway Company Limited,
and Worldwide Fiber Inc., the "Edmonton-Toronto
Agreement";
(b) a License Agreement between Canadian Pacific Railway
Company, St. Lawrence & Hudson Railway Company Limited,
and Worldwide Fiber Inc., between Canadian Pacific
Railway Company, St. Lawrence & Hudson Railway Company
Limited, and Worldwide Fiber Inc., the "Toronto-Windsor
Agreement";
(c) a License Agreement between Canadian Pacific Railway
Company, St. Lawrence & Hudson Railway Company Limited,
and Worldwide Fiber Inc., between Canadian Pacific
Railway Company, St. Lawrence & Hudson Railway Company
Limited, and Worldwide Fiber Inc., the "Smith Falls-
Brockville Agreement";
(d) a License Agreement between Canadian Pacific Railway
Company, St. Lawrence & Hudson Railway Company Limited,
and Worldwide Fiber Inc., between Canadian Pacific
Railway Company, St. Lawrence & Hudson Railway Company
Limited, and Worldwide Fiber Inc., and the First
Amendment to License Agreement between Canadian Pacific
Railway Company and 360networks Inc., the "Galt-Kitchener
Agreement";
(e) a License Agreement between Canadian Pacific Railway
Company, St. Lawrence & Hudson Railway Company Limited,
Level 3 Communications, LLC, and Worldwide Fiber Inc.
between Canadian Pacific Railway Company, St. Lawrence &
Hudson Railway Company Limited, and Worldwide Fiber Inc.,
and the First Amendment to License Agreement, between
Canadian Pacific Railway Company, St. Lawrence & Hudson
Railway Company Limited, Level 3 Communications, LLC, and
Worldwide Fiber Inc., and the Montreal-Toronto-Guelph
Junction-Fort Erie Bonus Amendment Agreement, between
Canadian Pacific Railway Company, St. Lawrence & Hudson
Railway Company Limited, and Worldwide Fiber Inc., the
"Montreal-Fort Erie Agreement";
(f) an Agreement between Canadian Pacific Railway Company,
St. Lawrence & Hudson Railway Company Limited, and
Worldwide Fiber Inc., the "Conduit Agreement";
(g) a License Agreement between Canadian Pacific Railway
Company, Soo Line Railroad Company, and Worldwide Fiber
Networks, Inc., between Canadian Pacific Railway Company,
Soo Line Railroad Company, and Worldwide Fiber Networks,
Inc., the "North Portal-Rondout Agreement";
(h) a License Agreement between Canadian Pacific Railway
Company, Soo Line Railroad Company, and Worldwide Fiber
Networks, Inc. re: Inner City Loop - Minneapolis, between
Canadian Pacific Railway Company, Soo Line Railroad
Company, and Worldwide Fiber Networks, Inc. re: Inner
City Loop - Minneapolis, the "Inner City-Minneapolis
Agreement";
(i) a License Agreement between Canadian Pacific Railway
Company, Delaware & Hudson Railway Company Inc., and
Worldwide Fiber Networks, Inc. re: Inner City Loop -
Albany, between Canadian Pacific Railway Company,
Delaware & Hudson Railway Company Inc., and Worldwide
Fiber Networks, Inc. re: Inner City Loop - Albany, the
"Inner City-Albany Agreement";
(j) a License Agreement between Canadian Pacific Railway
Company, St. Lawrence & Hudson Railway Company Limited,
Delaware and Hudson Railway Company Inc., Level 3
Communications, LLC and Mi-Link, LLC, between Canadian
Pacific Railway Company, St. Lawrence & Hudson Railway
Company Limited, Delaware and Hudson Railway Company
Inc., Mi-Link, LLC, and 360networks Inc., the "Montreal-
Albany Agreement";
(k) a License Agreement, Vancouver-Calgary, between Canadian
Pacific Railway Company and Fonorola Telecommunications
Limited Partnership, between Canadian Pacific Railway
Company, Call-Net Technology Services Inc., 360networks
(fiber 1) ltd., 360networks (fiber 3) ltd., 360networks
(CN) ltd., and 360networks inc., the "Vancouver-Calgary
Agreement"; and
(l) a License Agreement, Calgary-Rondout, between Canadian
Pacific Railway Company, Soo Line Railroad Company,
Fonorola Telecommunications Limited Partnership, and
Fonorola Fiber Development Inc., between Canadian Pacific
Railway Company, Soo Line Railroad Company, Fonorola
Telecommunications Limited Partnership, Fonorola
Management Inc., and Fonorola Fiber Development Inc., and
the Calgary-Rondout Consent and Second Amending
Agreement, between Canadian Pacific Railway Company, Soo
Line Railroad Company, Call-Net Technology Services Inc.,
CNE Fiber Development Inc., 360networks (fiber 1) ltd.,
360networks (fiber 2) ltd., 360networks (fiber 3) ltd.,
360fiber (USA 1) inc., 360networks (CN) ltd., and
360networks inc., the "Calgary-Rondout Agreement",
collectively with the Edmonton-Toronto Agreement, the
Toronto-Windsor Agreement, the Smith Falls-Brockville
Agreement, the Galt-Kitchener Agreement, the Montreal-
Fort Erie Agreement, the Conduit Agreement, the North
Portal-Rondout Agreement, the Inner City-Minneapolis
Agreement, the Inner City-Albany Agreement, the Montreal-
Albany Agreement and the Vancouver-Calgary Agreement, the
"Prepetition Agreements".
The 360 Parties and Canadian Pacific have negotiated the
Settlement Agreement, which encompasses a restructuring of the
360 Parties' contractual and business relationships with
Canadian Pacific. Ms. Chapman provides the key provisions of
the Settlement Agreement as:
(a) Setoff and Claims Release. The 360 Parties and Canadian
Pacific will setoff, net out, and mutually discharge
known prepetition claims between them. Among other
things, this would result in Canadian Pacific waiving
approximately Canadian $17,500,000 of claims Canadian
Pacific asserts are owed by the 360 Parties after the
setoff and netting out;
(b) Termination of Certain Agreements. The parties will
terminate four prepetition license agreements. The 360
Parties will be released from any obligation to make
payments to Canadian Pacific respecting these agreements.
The 360 Parties will transfer to Canadian Pacific the
existing conduit and related infrastructure that are
located on the routes addressed in two of the terminated
agreements. The 360 Parties have no conduit or related
infrastructure located on the other two routes;
(c) New Agreements. The parties will enter into these new
agreements:
(i) two Master Shelter Sites Leases, one for Canada
and one for the United States, wherein Canadian
Pacific will grant to the 360 Parties leases for
certain shelter sites in North America in
consideration for certain fees that the 360
Parties will pay;
(ii) with respect to the route between the CPR South
Edmonton Yard and the CN Tower located in North
Edmonton, the parties will execute:
(1) a bill of sale conveying certain strands along
the route from the 360 Parties to Canadian
Pacific, the "Conveyed Strands";
(2) a sublicense from the 360 Parties to Canadian
Pacific for a portion of the route that is not
on Canadian Pacific's property; and
(3) a license from Canadian Pacific to the 360
Parties for the route from the CPR South
Edmonton Yard to the point where the existing
cable leaves the CPR right-of-way;
(iii) leases, wherein Canadian Pacific will lease to the
360 Parties certain properties located in London,
Vaughan and Belamy, Ontario;
(iv) transfer and related documents, wherein the 360
Parties will transfer to Canadian Pacific certain
property located in London, Ontario, the "London,
Ontario Conveyance"; and
(v) certain agreements which would confirm the
ownership and use of certain property in Albany,
New York, and certain property that is adjacent to
property subject to the Inner City - Vancouver
License Agreement.
(d) Amendments to Prepetition Agreements. The 360 Parties
and Canadian Pacific will enter into these amendments to
certain existing agreements:
(i) an amendment to the Edmonton-Toronto Agreement,
which, inter alia: would:
(1) remove certain restrictions on Canadian
Pacific's use of the applicable fiber strands;
(2) amend the notice requirements respecting
transfers of fibers by 360;
(3) grant a non-refundable credit toward fees
payable to Canadian Pacific for future fiber
transfers under certain circumstances; and
(4) amend the 360 Parties' obligations to pay
Canadian Pacific in respect of fiber transfers
by the 360 Parties, regardless of the
description or classification of the fibers,
to maximum aggregate amount equal to the
outstanding balance of the remaining unpaid
right-of-way fees due from the 360 Parties;
(ii) an amendment to the Toronto-Windsor Agreement to:
(1) release the 360 Parties' obligation to provide
Canadian Pacific with certain strands between
Guelph Junction and West Toronto; and
(2) substitute a requirement that the 360 Parties
provide to Canadian Pacific six strands along
the same route on a different build;
(iii) an amendment to the Canadian Pacific license
agreements to delete restrictions on Canadian
Pacific's use of its fibers;
(e) Free and Clear Assets. The fibers, conduit, related
infrastructure and associated assets that are to be
transferred to Canadian Pacific by 360 Parties under
the Terminated Agreements, the Conveyed Strands and
London, Ontario Conveyance, collectively, the
"Transferred Assets", will be transferred free and clear
of any liens, interests or encumbrances;
(f) Release. The 360 Parties and Canadian Pacific will
mutually release all claims arising on or before the
Closing of the Settlement Agreement, except for certain
claims detailed in the Settlement Agreement and any
claims arising out of breach of the Settlement Agreement;
(g) Payments Due on Closing. At the Closing, the 360 Parties
will pay Canadian Pacific approximately Canadian$800,000
in connection with the Settlement Agreement. These
payments will be provisionally allocated among the 360
Parties based on the related contractual obligations;
(h) Post-Execution Payments. After the date of execution of
the Settlement Agreement, the 360 Parties will pay to
Canadian Pacific all payments as and when due and
payable;
(i) Non-Disturbance Agreements. At the Closing, Canadian
Pacific will provide the 360 Parties with certain non-
disturbance agreements. After the Closing Canadian
Pacific is to provide the 360 Parties with non-
disturbance agreements from time to time as requested by
the 360 Parties;
(j) Liens. As a condition precedent to Closing, for all
liens that both arise from debts owed by the 360 Parties
to third-parties and affect Canadian Pacific's properties
or assets that will be transferred to Canadian Pacific
under the Settlement Agreement, the 360 Parties will:
(1) cause the liens to have been released or discharged;
(2) ensure that the liens are in the process of being
released or discharged;
(3) secure any liens by a trust or escrow arrangement for
the benefit of a customer of the 360 Parties; or
(4) set aside funds in a trust or escrow agreement on
terms acceptable as security for the release or
discharge of the liens; and
(k) Maintenance Agreement. Canadian Pacific and the 360
Parties will use commercially reasonable efforts to enter
into a maintenance agreement for the Edmonton-Toronto
Route with TELUS, within three weeks of the execution of
the Settlement Agreement.
Furthermore, Ms. Chapman states that the Settlement Agreement is
conditioned upon the occurrence of:
(a) the approval of the Canadian Monitor;
(b) the consent and release of the Debtors' prepetition
lenders' interests that are affected by the Settlement
Agreement;
(c) the approval of the Canadian Court in the CCAA
proceedings;
(d) the approval of this Court; and
(e) the orders of the Canadian and this Court becoming final
and nonappealable prior to June 30, 2002.
* * *
After due deliberation, Judge Gropper authorizes the Debtors to
enter into the Settlement Agreement. The Court further rules
that upon the closing of the transactions in the Settlement
Agreement, the Transferred Assets, which are being transferred
to Canadian Pacific by 360 USA will be transferred free and
clear of all liens, claims, interests, mortgages, charges and
encumbrances. "All proceeds received by the Debtors under the
Settlement Agreement shall be applied as provided in the Cash
Collateral Stipulation," Judge Gropper states. (360 Bankruptcy
News, Issue No. 26; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
APW LTD: Brings-In Foley & Lardner as Counsel in Actuant Dispute
----------------------------------------------------------------
APW Ltd. and Vero Electronics, Inc. ask the U.S. Bankruptcy
Court for the Southern District of New York for permission to
retain and employ Foley & Lardner as their special counsel, nunc
pro tunc to May 16, 2002.
APW and Applied Power, Inc. (n/k/a Actuant) entered into a Tax
Sharing and Indemnification Agreement and are currently engaged
in a dispute regarding the Agreement. Foley & Lardner has
represented APW to advise it regarding its rights and
obligations under the Agreement. As a result of that
prepetition representation of APW, Foley & Lardner is familiar
with the Actuant Dispute. The Debtors believe that Foley &
Lardner is uniquely qualified to assist them with respect to the
Actuant Dispute.
The Debtors request that the Court allows the continued service
of Foley & Lardner and maintain that engaging the firm will be
more cost-effective than finding a new law firm.
It is anticipated that if the Actuant Dispute is settled, the
Debtors' general restructuring counsel, Weil, Gotshal & Manges
LLP will primarily be involved in the negotiation of the
settlement. Foley & Lardner, given its involvement with the
Actuant Dispute, will assist the Debtors and Weil Gotshal. The
Debtors assure that Court that the functions to be performed by
Foley & Lardner will not be duplicative of the work performed by
other law firms retained by the Debtor, but rather, will ensure
the most economic and effective means.
The Debtors agree to pay Foley & Lardner at its current hourly
rates:
Partners $290 to $500
Associates and special counsel $195 to $275
APW, a publicly-held, Bermuda-domiciled company, operates as a
holding company whose principal assets are the shares of stock
of its worldwide operating subsidiaries. APW's operations
consist solely of providing financial, accounting and legal
services to its foreign and domestic direct and indirect
subsidiaries. The Company filed a prepackaged chapter 11 case on
May 16, 2002. Richard P. Krasnow, Esq., at Weil, Gotshal &
Manges represents the Debtors in their restructuring efforts.
When the Company filed for protection from its creditors, it
listed $797,104,000 in total assets and $899,751,000 in total
debts.
ACME METALS: Wants to Sept. 20 to Make Lease-Related Decisions
--------------------------------------------------------------
Acme Metals Incorporated and its debtor-affiliates ask for an
extension of the time within which they must elect whether to
assume, assume and assign, or reject their unexpired
nonresidential real property leases. The Debtors tell the U.S.
Bankruptcy Court for the District of Delaware that they want to
stretch their lease decision period through September 20, 2002.
Currently, the Debtors are lessees and sublessees under 25
unexpired nonresidential real property leases. The Debtors say
that the Unexpired Leases are integral part of their business
because the leased properties include rights-of-way used in
transporting goods and raw materials between facilities as well
as leases for sales and business offices. The Debtors'
continued and uninterrupted use of these leaseholds is integral
to the viability of their business.
At this stage of the restructuring process, given the time-
consuming task of evaluating the Unexpired Leases, the Debtors
have not been able to assess the Unexpired Leases and make
determinations as to which Unexpired Leases should be assumed
and which, if any, should be rejected.
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.
ADELPHIA BUSINESS: Deloitte Severs Client-Auditor Relationship
--------------------------------------------------------------
On June 14, 2002, Adelphia Business Solutions, Inc. received a
letter from Deloitte & Touche LLP, the latter informing Adelphia
of the ceasing of their client-auditor relationship. Prior to
this, on May 14, 2002, Deloitte suspended its audit of the
financial statements of Adelphia Communications Corporation, a
wholly-owned subsidiary of Adelphia before January 11, 2002, and
suspended the audit of the financial statements of the company.
On June 9, 2002, Adelphia dismissed Deloitte as its independent
public accountants. As a result, on the date when Deloitte
ceased its realtionship with Adelphia, the firm had not
completed its audit nor had it issued its report with respect to
the Company's financial statements for the year ended December
31, 2001. Accordingly, the Company has not yet completed its
financial statements or filed its Annual Report on Form 10-K for
the year ended December 31, 2001, nor has the Company filed its
Quarterly Report on Form 10-Q for the quarter ended March 31,
2002.
Neither the Board of Directors of the Company nor the Audit
Committee of the Board of Directors of the Company took any
action with respect to Deloitte's decision to cease being the
Company's independent public accountants.
The Company has not yet determined who it intends to appoint as
its independent public accountants on a going forward basis.
Upon making such appointment, the Company will file a subsequent
Current Report on Form 8-K in accordance with the requirements
of that form.
Adelphia Business is a leading provider of facilities-based
integrated communications services to customers that include
businesses, governmental, and educational end users, and other
communications services providers throughout the United States.
The company filed for Chapter 11 protection on March 27, 2002 at
the Bankruptcy Court for the Southern District of New York
(Manhattan). Judy G.Z. Liu, Esq. at Weil, Gotshal & Manges LLP
is helping the company in its restructuring efforts.
ADELPHIA COMMS: Maintaining Existing Cash Management System
-----------------------------------------------------------
The Adelphia Communications, Inc. Debtors sought and obtained
Court authorization to continue managing their cash receipts and
disbursements in the manner in which they were handled
immediately prior to the Petition Date, subject to tinkering to
satisfy the DIP Lenders.
Prior to the Petition Date, Marc Abrams, Esq., at Willkie Farr &
Gallagher in New York, relates that the ACOM Debtors maintained
a comprehensive cash management system for their daily
operations. ACOM serves as the primary collection and
disbursement agent for the majority of its subsidiaries and the
Managed Rigas Entities. ACOM utilizes a concentration account
maintained at First Union National Bank to manage the collective
cash of Adelphia and the Managed Rigas Entities. Although ACOM,
in effect, operates as a bank for its operating subsidiaries and
the Managed Rigas Entities, to the extent possible, each
intercompany transfer is recorded and each entity's claims and
obligations are reflected in its own books and records.
Mr. Abrams avers that the monies deposited into the
Concentration Account largely consist of monies paid to Adephia
or the Managed Rigas Entities by cable subscribers, borrowings
under the Credit Facilities, and other income generated from
Adelphia's Non-Cable Businesses. Although ACOM does pay certain
expenses directly from the Concentration Account, such as
electronic transfer payments to programmers, large lease
payments, dividends, the purchase price of acquisitions,
interest payments and other debt service obligations under the
Indentures and Credit Facilities, and the expenses associated
with the Debtors' benefit plans, ACOM primarily uses the
Concentration Account to fund a disbursement account maintained
at First Union; the Debtors' two payroll accounts; and
operations of the other Cash Management System Participants, as
needed. To the extent that minimum cash balances are maintained
within the Debtors' cash management system, such funds are
transferred to overnight and other investment accounts. Except
for certain joint liabilities and payroll and tax functions,
which are discussed in greater detail below, ABIZ maintains
separate bank accounts for its operations. In addition, the non-
debtor entities that relate to ACOM's Puerto Rican and South
American operations (Brazil and Venezuela) have their own
network of bank accounts, which they use to collect receivables
and pay disbursements.
Mr. Abrams informs the Court that cable receipts relating to
both ACOM and the Managed Rigas Entities are deposited into
ACOM's cash management system. Such receipts consist of
subscriber payments made by check, credit card, automatic debits
from subscriber accounts, electronic banking transfers, and
cash. Subscriber payments made by check are primarily mailed to
one of six regional post office boxes, which are located in
Charlotte, North Carolina, City of Industry, California and
Pittsburgh, Pennsylvania, processed by either First Union or
Mellon Bank, NA and subsequently deposited into the
Concentration Account on a daily basis. Subscribers' credit
card payments are transferred directly into the Concentration
Account. Lastly, certain subscribers pay for cable service in
person at one of approximately 350 local payment centers
maintained by the Debtors. Each payment center maintains a
local depository account where subscribers' payments are
deposited daily. Lastly, Princeton E-Com, a third party
processing agent, maintains and administers an account on behalf
of the Debtors that is used to process subscriber payments made
via automatic debit and electronic banking transfer. The funds
in the Cable Deposit Accounts are deposited into the
Concentration Account on a daily basis.
Mr. Abrams states that monies of the Cash Management System
Participants deposited into the Concentration Account are
electronically transferred, as needed, to pay significant
obligations such as amounts payable to programmers, debt service
payments under the Indentures and Credit Facilities, large lease
payments, and amounts required to fund the Debtors' benefits
plans. In addition to these disbursements, the Debtors also
transfer funds from the Concentration Account daily to a
disbursement account maintained by Parent at First Union; bi-
weekly to two payroll accounts maintained at Citizens Trust
Company and Bank of America, N.A.; to an ACH account that is
accessed by taxing authorities and other third parties
authorized to debit funds directly from the Debtors; to two
accounts used for customer refunds; and in limited circumstances
where a loan agreement has been authorized and executed, to an
employee loan account.
As part of the management services it performs, Mr. Abrams tells
the Court that ACOM makes disbursements on behalf of its
subsidiaries, the Managed Rigas Entities and, in certain
circumstances, other non-Debtor entities that are not Cash
Management System Participants. In many cases, the Debtors
maintain accounting and cash management controls to track
receipts from, and expenditures made on behalf of such entities.
Specifically, each entity related to the Debtors' enterprise is
affiliated with a cost center and each cost center has a
particular code that is utilized by the Debtors for accounting
purposes. Upon receipt, monies deposited into the Concentration
Account, Cable Deposit Accounts or lockboxes relating to Non-
Cable Businesses are coded to specific cost centers.
Accordingly, at any given time, the Debtors have records
reflecting how much cash each Debtor and each Managed Rigas
Entity has contributed to the cash management system.
Mr. Abrams explains that costs and disbursements generally fall
into one of three categories -- subscriber-based disbursements
(e.g., programming invoices which vary in amount based upon the
number of subscribers), entity-specific disbursements (e.g., tax
payments and fed ex shipments) and overhead expenses (e.g., call
center operations and the administration and cost of funding
components of payroll). Like receipts, the first two types of
disbursements -- costs and expenses relating to numbers of
subscribers and disbursements made on account of specific
entities -- are allocated among entities and coded to cost
centers by the Debtors' accounts payable department. Overhead
expenses incurred by Adelphia on behalf of Cash Management
System Participants and third parties are currently not
allocated.
"As is the case with all Cash Management System Participants,
where a Cost Center Disbursement is made on behalf of a Managed
Rigas Entity, such disbursement is tracked using cost center
codes that relate to the applicable Managed Rigas Entity," Mr.
Abrams says. Once such disbursements are recorded, revenues of
the Managed Rigas Entities that are deposited into Adelphia's
cash management system are used to reimburse the Debtors for
such payments. Historically, the Non-Allocable Disbursements
have not been allocated by the Debtors' accounts payable
department. Thus, Revenues have not been applied on a dollar for
dollar basis to reimburse the Debtors for such disbursements.
Accordingly, Adelphia charges the Managed Rigas Entities a
management fee equal to approximately 3.5% of the Revenues in
respect of the Non-Allocable Disbursements. Designing proper
dollar for dollar allocation and accounting procedures with
respect to such disbursements is a priority task for the
Debtors' restructuring and accounting advisors.
Mr. Abrams assures the Court that the Debtors shall update the
Court and other parties in interest as to their progress in
analyzing their cash management system and implementing controls
relating to accounting and monitoring of third party
transactions. Moreover, at such time as the Debtors are able to
track all receipts and disbursements by entity, verify which
entities are cash flow positive, negative or neutral,
renegotiate certain contracts, whereby the Debtors are obligated
to provide goods or services to, inter alia, Managed Rigas
Entities and ABIZ, and where appropriate, establish separate
cash management systems for certain entities' operations, the
Debtors will seek final approval of their cash management
system. In the interim, the Debtors believe it is in the best
interests of the estates to, in their discretion, honor
obligations of certain non-Debtors and continue their cash
management system in the ordinary course.
Mr. Abrams claims that all of the Revenues are deposited into
the Debtors' cash management system and, as necessary, utilized
to reimburse the Debtors for expenses incurred on behalf the
Managed Rigas Entities and pay the Management Fee. Moreover,
even if the MRE Revenues are less than the total amount of the
costs and expenses incurred by the Debtors on behalf of the
Managed Rigas Entities, the Debtors believe that having the
authority to continue their cash management system is critical
to preserve the value of the assets of the Managed Rigas
Entities, which are designated to be transferred to the Debtors
pursuant to the Rigas Agreement. Absent the discretion to
satisfy the obligations related to basic operations of the
Managed Rigas Entities, the value of these assets could be
significantly eroded, thereby diminishing the value of the
estates. (Adelphia Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ADELPHIA COMMS: Fallout Prompts C-Cor.net to Slash 260 Jobs
-----------------------------------------------------------
C-Cor.net, a cable television transmission equipment maker, is
blaming Adelphia Communications' bankruptcy filing for its
decision to lay off about 260 workers, including about 20 in
Pennsylvania, according to the Associated Press. Officials at
C-Cor said on Thursday they were trying to decide whether to
write off all or part of the $42 million that Adelphia owes the
company. According to the newswire, most of the layoffs will be
at C-Cor's Tijuana, Mexico-based manufacturing plant, where 200
workers will be laid off. The State College, Pennsylvania,
headquarters and C-Cor's facility in Meridian, Connecticut, each
will lose about 20 jobs. The remaining 20 jobs will be
eliminated in California, where the company has three
facilities, reported AP. (ABI World, July 1, 2002)
DebtTraders reports that Adelphia Communications' 8.375% bonds
due 2007 (ADEL07USR1) are trading between 34.5 and 36.5 . See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL07USR1
for more real-time bond pricing.
AMERICAN AIRLINES: Ends Commission Policy for Agents Outside US
---------------------------------------------------------------
American Airlines announced that, effective October 1, 2002, it
will no longer pay a base commission for tickets issued by
travel agents located outside of the United States (including
Puerto Rico and the U.S. Virgin Islands) and Canada, for flights
on itineraries originating within the territory of the United
States (including Puerto Rico and the U.S. Virgin Islands) and
Canada.
This is an expansion of the policy change American implemented
March 18, 2002, when it announced it would no longer pay a base
commission to travel agents within the U.S. (including Puerto
Rico and U.S. Virgin Islands) and Canada.
The change applies to all tickets, Miscellaneous Charges Orders
(MCOs), Prepaid Ticket Advices (PTAs) and bookings made via the
Internet for travel originating within the United States and
Canada. VUSA (Visit the U.S.A.) fares and oneworld Visit North
America passes are exempt from this policy.
American will have no further comment on this matter. Travel
agents may obtain additional information by referring to the key
word "commission" on the Direct Reference System of the computer
reservations system.
Current AMR Corp. news releases can be accessed via the
Internet. The company's Web site is http://www.amrcorp.com
AMERICAN GREETINGS: Calls WSJ Report's Implications 'Misleading'
----------------------------------------------------------------
As a follow-up statement to its earlier release, American
Greetings Corporation (NYSE: AM) issued the following response
to an article in Wednesday's Wall Street Journal about
reserve accounts.
The Corporation believes that the analysis of the facts
pertaining to American Greetings is incomplete and that the
implications of the article are misleading. American Greetings
had discussed the reasons for the decline in -- as well as the
adequacy of -- its sales returns reserves during its first
quarter conference call on June 27; a summary of these and other
points not taken into account by the article follows below:
The Wall Street Journal article referenced the Corporation's
lower year-over-year first quarter reserve for seasonal card
returns. While the statement that the Corporation's first-
quarter reserve is lower compared to the prior year first-
quarter reserve is correct, the article compares quarterly
reserve figures to annual sales figures, a misleading and
inappropriate comparison, due in part to the quarterly
fluctuations associated with the seasonal nature of the
Corporation's business. Furthermore, the article also attempts
to analyze the accounts receivable reserve without considering
the gross and net receivables movements. The implication of the
analysis in the article is that the entire decrease in the
reserve artificially inflated net income, which is inaccurate.
The following points are important in order to comprehend the
decline in the reserve:
* The reserve for seasonal returns is specifically assigned
to each season and closed out at the end of each season. The
Corporation utilizes both quantitative and qualitative methods
to establish this reserve, and historically has had no major
adjustments affecting net income at the end of any given season.
* The reserve mentioned actually includes reserves for
sales returns and the allowance for doubtful accounts.
* American Greetings has not changed its method of
accounting for returns and doubtful accounts; any such change
would be disclosed in the Company's notes to its financial
statements.
* The Corporation's year-over-year net receivables position
at May 31 decreased by 5 percent, despite a significant sales
increase in the first quarter of this year, which reflects
improved collections and a reduction in past due accounts.
The Corporation's reserve declined for three primary reasons.
First, as the article cites, two major accounts of American
Greetings converted to a scan-based trading business model in
which returns reserves are not required because the Corporation
owns the inventory in the retail stores. The change to a scan-
based trading business model at these two retailers also had the
effect of increasing the prior year's first-quarter reserve to
reflect the commitment to buy back inventory due to the
conversion to the new business model.
The second reason for the decline is that American Greetings
over the past year has reduced its overall seasonal shipments,
which has successfully reduced its seasonal return rates, thus
reducing the reserve.
The third reason relates to the allowance for doubtful accounts,
which reflects the resolution of past due accounts against the
reserve, resulting in lower reserve requirements with no net
effect on the income statement or net accounts receivable.
These three reasons fully explain virtually all the change in
the reserve. The net reduction in the reserve had virtually no
impact on the Corporation's first quarter net income.
At all times, American Greetings maintains adequate reserves and
allowances in accordance with accounting principles generally
accepted in the United States, including seasonal returns and
allowance for doubtful accounts. The "Management's Discussion
and Analysis" and the "Notes to Consolidated Financial
Statements" sections of the Corporation's 10K details the policy
for establishing reserves.
American Greetings Corporation (NYSE: AM) is the world's largest
publicly held creator, manufacturer and distributor of greeting
cards and social expression products. Its staff of artists,
designers and writers comprises one of the largest creative
departments in the world and helps consumers "say it best" by
supplying more than 15,000 greeting card designs to retail
outlets in nearly every English-speaking country. Located in
Cleveland, Ohio, American Greetings generates annual net sales
of approximately $2 billion. For more information on the
Corporation, visit http://corporate.americangreetings.com
on the World Wide Web.
As previously reported on July 2, 2002 edition of Troubled
Company Reporter, Standard & Poor's affirmed American Greetings'
BB+ Subordinated Debt Rating.
AMERICAN SKIING: Hires KPMG to Replace Andersen as New Auditors
---------------------------------------------------------------
American Skiing Company (OTC: AESK) announced that its Board of
Directors and Audit Committee had reached a decision to dismiss
its independent auditor, Arthur Andersen LLP, and appoint KPMG
LLP as its new independent auditor. The change is effective
immediately.
The Company reported that the decision was not based on any
disagreement between it and Arthur Andersen on any matter of
accounting principles and practices, financial statement
disclosure or auditing scope or procedure. In addition, the
audit reports that Arthur Andersen completed on the Company's
financial statements for the fiscal years ended July 30, 2000
and July 29, 2001 did not contain any adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope or accounting principles.
For more information, please refer to the Company's Form 8-K,
dated July 2, 2002, on file with the Securities and Exchange
Commission.
American Skiing Company is one of the largest operators of
alpine ski, snowboard and golf resorts in the United States.
Its resorts include Killington and Mount Snow in Vermont; Sunday
River and Sugarloaf/USA in Maine; Attitash Bear Peak in New
Hampshire; Steamboat in Colorado; and The Canyons in Utah. More
information is available on the Company's Web site
http://www.peaks.com
* * *
As disclosed in the Company's Form 8-K filed with the Securities
and Exchange Commission on May 20, 2002, and Form 10-Q filed on
June 12, 2002, the Company's real estate development subsidiary,
American Skiing Company Resort Properties, Inc., is in payment
default under its senior secured credit facility with Fleet
National Bank. The Company continues to negotiate terms of the
agreement and is hopeful that a mutually agreeable revision to
the terms can be reached.
In addition, as a result of a cross default provision to the
ASCRP facility and non-payment of a $3.8 million note to the
general contractor at the Steamboat Grand Hotel, the Company's
hotel development subsidiary, Grand Summit Resort Properties,
Inc. was in default under its construction loan facility with
Textron Financial Corporation. The Company has reached a verbal
agreement with Textron and participating lenders regarding a
restructuring of that facility. In addition, Textron's and the
participating lenders' willingness to execute the restructuring
may be affected by the Company's ability to negotiate a
successful restructuring of the ASCRP facility.
On April 19, 2002, the Company completed an amendment to the
Indenture governing its $120 million senior subordinated notes
due July 2006. Pursuant to the amendment, the notes are no
longer subject to a cross-default resulting from a default by
the Company's real estate subsidiaries under certain debt which
is non-recourse to the Company, including the ASCRP and GSRP
facilities. As a result, management expects that defaults under
these agreements, or any actions that the lenders may take, will
not impact the operations of resorts or create defaults under
the Company's resort senior secured credit facility. For
additional information, please refer to the Company's 10-Q
filing dated June 12, 2002 on file with the Securities and
Exchange Commission.
Debt Reclassification
As a result of the slow start to the ski season and delays in
completing a major asset sale associated with its restructuring
program, the Company was not in compliance with several
financial covenants under its $156.1 million resort senior
credit facility as of the end of the third quarter of fiscal
2002. In conjunction with the sale of its Heavenly ski resort
on May 9, 2002, the Company completed an amendment to its resort
senior credit facility that revised covenants to reflect the
Company's ongoing operations and business plan and cured the
existing and pending financial covenant defaults. However,
since the sale of Heavenly closed after the end of the third
fiscal quarter ended April 28, 2002, long term resort debt was
classified as short term pending closing of the sale.
Management anticipates that in the future it will reclassify the
appropriate portion of resort debt as long term if it can
reasonably expect to remain in compliance with its covenants
based on internally developed forecasts.
As a result of defaults under lending agreements for its real
estate subsidiary, ASCRP and its hotel development subsidiary,
GSRP, the Company has classified all of the debt associated with
these real estate subsidiaries as short term. If the Company is
successful in restructuring its credit facilities, and can
reasonably expect to remain in compliance based on internally
developed forecasts, it will reclassify the appropriate portion
of real estate debt as long term.
AMERISTAR CASINOS: Will Release Q2 Earnings Results on July 23
--------------------------------------------------------------
Ameristar Casinos, Inc. (Nasdaq: ASCA) plans to release its
second quarter 2002 earnings report on Tuesday, July 23 at 6
p.m. Eastern Time. A conference call discussing the company's
quarterly earnings is scheduled to follow the news release
distribution on Wednesday, July 24, at 10 a.m. Eastern Time.
Conference call participants are requested to dial in at least
five minutes early to ensure a prompt start. The telephone
number is (800) 946-0785.
Ameristar's quarterly earnings conference call will be recorded,
and can be replayed until July 31, 2002. To listen to the
replay, call (888) 203-1112. The replay access code number is
621650.
Ameristar Casinos, Inc. is an innovative, Las Vegas-based gaming
and entertainment company known for its distinctive, quality
conscious hotel-casinos and value orientation. Led by President
and Chief Executive Officer Craig H. Neilsen, the organization's
roots go back nearly five decades to a tiny roadside casino in
the high plateau country that borders Idaho and Nevada.
Publicly held since November 1993, the corporation owns and
operates six properties in Nevada, Missouri, Iowa and
Mississippi, two of which carry the prestigious American
Automobile Association's Four Diamond designation. Ameristar's
Common Stock is traded on the Nasdaq National Market System
under the symbol: ASCA.
As previously reported, Ameristar Casinos reported a working
capital deficit of about $36 million at March 31, 2002. Visit
http://www.ameristarcasinos.comfor more information about the
company.
DebtTraders reports that Ameristar Casinos Inc.'s 10.750% bonds
due 2009 (ASCA09USN1) are quoted between the prices 98.153 and
99.153. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ASCA09USN1
for more real-time bond pricing.
ARTHUR ANDERSEN: KPMG Completes Acquisition of Swiss Unit
---------------------------------------------------------
KPMG Consulting Inc., (Nasdaq: KCIN), one of the world's largest
business consulting and systems integration firms, has signed a
definitive agreement to acquire the business consulting unit of
Arthur Andersen y Cia in Spain. The acquisition is expected to
close August 1st.
The business consulting unit of Arthur Andersen y Cia in Spain
has 22 partners and approximately 750 professionals and
generated over $50 million in net revenues in FY01. The
transaction is pursuant to KPMG Consulting's announcement May
8th that it had signed a Letter of Intent to acquire a number
of independent Andersen business consulting units worldwide.
Separately, KPMG Consulting has also completed the acquisition
of the business consulting unit of the Switzerland member firm
of Andersen Worldwide. This business consulting unit has 9
partners, approximately 160 professionals and generated over $25
million in net revenues in FY01.
Discussions to acquire the Business Consulting Practices of
other Andersen member firms are continuing.
KPMG Consulting, Inc. (Nasdaq: KCIN), based in McLean, Virginia,
is one of the world's largest business consulting and systems
integration firms with approximately US $2.9 billion in annual
revenues for the fiscal year ended June 30, 2001. Around the
world, over 10,000 employees provide business and technology
strategy, systems design and architecture, applications
implementation, network and systems integration, and related
services. The firm helps its clients capitalize on information
technology to achieve their business objectives and build real-
time enterprises. Working with market leading hardware and
software companies the firm serves more than 2,500 clients,
including Global 2000 companies, small and medium-sized
businesses, government agencies and other organizations. KPMG's
business and technology solutions are tailored to meet the
specific needs of the industries it serves, and are delivered
through global industry-focused lines of business, including
communications and content companies, consumer and industrial
markets, financial services industries, high technology
companies, and federal, state and local governments.
For more information about KPMG Consulting, visit its Web site
at http://www.kpmgconsulting.com For news media, visit
http://kpmgconsulting.com/news/media_contacts.html.
KPMG Consulting, Inc. is an independent consulting company, no
longer affiliated with KPMG LLP, the tax and audit firm. Please
reference our company as KPMG Consulting, since KPMG is not an
abbreviated name for our business and is an unaffiliated firm.
CALPINE: Adds 48 Megawatts Expansion to Bethpage, NY Power Plant
----------------------------------------------------------------
Calpine Corporation (NYSE: CPN) has completed a 48-megawatt
expansion of its existing Bethpage Energy Center in Bethpage,
New York The new 48-megawatt unit, fueled by clean natural gas,
is providing much-needed seasonal peaking capacity to the Long
Island Power Authority (LIPA) under a 3.5-year power sales
agreement. With the new peaking unit in place, Calpine's
Bethpage facility can now generate more than 100 megawatts of
much needed electricity for Long Island electricity customers.
According to a recent study published by the New York
Independent System Operator, the Long Island power market
remains at risk due to tight electricity supply and limited
transmission capacity. "Our Bethpage expansion represents an
additional source of cost-effective and environmentally
responsible peaking capability that will help meet Long Island's
growing electricity needs. We are pleased to have achieved this
significant milestone, both in terms of expanding a long-term
business relationship with LIPA and enhancing Calpine's presence
in the dynamic New York power market," stated Paul Barnett,
Calpine vice president, business integration.
The Bethpage peaking unit was successfully installed within an
expedited four-month construction schedule in order to meet
LIPA's critical summer power demand. Construction was performed
under the direction of Calpine's Folsom, California-based
construction management team.
Calpine installed a General Electric LM6000 natural gas-fired
combustion turbine at Calpine's existing Bethpage cogeneration
plant. The expanded facility can now generate approximately 54
megawatts of base load capacity and 48 megawatts of peaking
capacity. The new unit maximizes summer output through the use
of inlet air chilling and reduces air emissions through the use
of Selective Catalytic Reduction and an oxidation catalyst,
making it among the most efficient and cleanest facilities of
its type.
With start-up of the Bethpage peaking unit, Calpine now operates
a portfolio of more than 250 megawatts of natural gas-fired
generation in the New York City/Long Island region. "Calpine is
very proud to be part of the Long Island Power Authority's
competitive power supply solution," added Barnett. "We look
forward to continued opportunities to expand our presence on the
Island and throughout New York."
Based in San Jose, California, Calpine Corporation is an
independent power company that is dedicated to providing
customers with clean, efficient, natural gas-fired power
generation. It generates and markets power through plants it
develops, owns and operates in 21 U.S. states, three provinces
in Canada and in the United Kingdom. Calpine also is the
world's largest producer of renewable geothermal energy, and it
owns 1.3 trillion cubic feet equivalent of proved natural gas
reserves in Canada and the United States. The company was
founded in 1984 and is publicly traded on the New York Stock
Exchange under the symbol CPN. For more information about
Calpine, visit its Web site at http://www.calpine.com
Calpine reported a working capital deficit of about $583 million
as of March 31, 2002.
DebtTraders reports that Calpine Corp.'s 8.250% bonds due 2005
(CPN05USR1) are trading between 79 and 81. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CPN05USR1for
more real-time bond pricing.
CANNON EXPRESS: Engages Tulius Taylor to Replace Arthur Andersen
----------------------------------------------------------------
Based on the recommendation of the Audit Committee, the Board of
Directors of Cannon Express, Inc. dismissed its independent
auditors Arthur Andersen LLP on June 11, 2002. The Board engaged
Tullius, Taylor, Sartain & Sartain headquartered in Tulsa,
Oklahoma with offices in Fayetteville, Arkansas, as its new
independent auditors for the fiscal year ended June 30, 2002, on
June 11, 2002.
The reports of Arthur Andersen on the consolidated financial
statements of Cannon for its fiscal years ending June 30, 2000
and June 30, 2001 contained a statement in the report that the
net losses the Company had incurred and its working capital
deficit raised substantial doubt concerning the ability of the
Company to continue as a going concern.
Cannon Express operates a fleet of 775 tractors and more than
1,600 trailers. The company ships retail and wholesale goods
(largely for discount merchandisers), automotive supplies and
parts, nonperishable food products, and paper goods. Cannon
Express monitors and coordinates routes through a company-
designed computer system. The company also operates CarriersCo-
Op.com, an Internet-based forum for smaller carriers to share or
swap extra loads.
CARIBBEAN PETROLEUM: Taps Poorman-Douglas as Claims Agent
---------------------------------------------------------
Caribbean Petroleum, LP and its debtor-affiliates want the U.S.
Bankruptcy Court for the District of Delaware to appoint
Poorman-Douglas as the official claims agent in their bankruptcy
cases. The number of creditors and other parties in interest
involved in the Debtors' chapter 11 cases may impose heavy
administrative burdens upon the Court and the Office of the
Clerk of the Court. To relieve the Court and the Clerk's Office
of these burdens, the Debtors propose to appoint a claims agent
in these chapter 11 cases.
Under a Claims Agent Agreement, Poorman-Douglas, at the request
of the Debtors or the Clerk's Office, will:
a) maintain copies of all proofs of claim, including
administrative claims, and proofs of interest filed in
these cases;
b) maintain official claims registers in these cases by
docketing all proofs of claims and proofs of interest in
a claim database;
c) implement necessary security measures to ensure the
completeness and integrity of the claims registers;
d) transmit to the Clerk's Office a copy of the claims
registers on a weekly basis, unless requested by the
Clerk's Office on a more or less frequent basis;
e) maintain an up-to-date mailing list for all entities
that have filed proofs of claims or proofs of interest
in these cases and make a list available upon request to
the Clerk's Office or at the expense of any party in
interest;
f) provide access to the public for examination of copies
of the proofs of claim or proofs of interest filed in
these cases without charge during regular business
hours.
g) record all transfers of claims and provide notice of
such transfers to the extent required by the Bankruptcy
Code;
h) provide temporary employees to process claims, as
necessary;
i) promptly comply with such further conditions and
requirements as the Clerk's Office or the Court may at
any time prescribe; and
j) provide such other claims processing, noticing and
related administrative services as may be requested from
time to time by the Debtors.
Pursuant to Poorman-Douglas' fee schedule, the Firm's
Administration/Claims Processing/Reconciliation rates are:
Executive Support/Consulting $125 to $175 per hour
Technical Support/Programming $125 per hour
Case Manager $105 per hour
Associate $75 per hour
Clerical/Analysis Support/
Customer Service $40 to $75 per hour
Caribbean Petroleum L.P. distributes petroleum products and owns
or 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.
CHELL GROUP: Realigns Management Team for More Effective Ops.
-------------------------------------------------------------
Chell Group Corporation, a technology holding company in
business to acquire and grow undervalued technology companies,
announced the realignment of its senior management team to more
efficiently deal with its operating plan, M&A activity and
regulatory management. The Board of Chell Group has approved the
plan which includes the following: Stephen McDermott has been
appointed CEO, from Director Corporate Finance; Don Pagnutti has
been appointed President and CFO, from VP Finance and CFO;
Cameron Chell has been appointed to Chief Technology Strategist,
from President and CEO. Also, Adrian Towning, an independent
director since 1994, has accepted the position of Chairman of
the Board.
Cameron Chell noted: "In an effort to more effectively manage
the company's growth going forward, The Board and I have agreed
to accelerate a succession plan. Our company posted $US 12
Million in sales last year. With the closing of our largest
acquisition to date, Logicorp, our annualized sales are now
approximately $US 45 Million. Subject to the completion of
acquisitions that we are presently negotiating, we will have
annual revenues in excess of $US 150 Million in our next fiscal
year. I feel we have been executing on our operational and M&A
plans. These changes in management will help us more effectively
deal with the management of our exchange listing requirements.
This new management structure provides the right emphasis to
enable us to continue to build out our vision and execute on our
plans -- not just on our operational and M&A sides, but also
with respect to achieving our goal of regaining a listing on a
major stock exchange as soon as possible. While we consider our
options relating to the recent Nasdaq decision to de-list our
shares from its exchange, we have decided in order to protect
shareholder value, Chell Group will seek an immediate listing on
the over the counter bulletin board market (OTC)."
Adrian Towning, Chell Group Chairman, said: "The shifting of
responsibilities to a broader team will ensure we bring focus to
all critical areas of our business and exploit the talents of
our people. We are pleased Stephen McDermott has agreed to take
on the CEO role of our company. He has proven his leadership
ability in the past, delivering significant results in both
public financing and M&A. Don Pagnutti is an experienced
operating manager and his expanded role will help enable us to
ensure that we move forward in a manner which increases our
focus on our regulatory requirements. Cameron Chell, in his new
role as Chief Technology Strategist, will focus on building our
technology strategy and growth initiatives."
Stephen McDermott, CEO, added: "It is important to note that our
business plan remains intact: we will continue to identify,
acquire and grow undervalued technology companies. I look
forward to working in this expanded role knowing the depth of
our team and the specific focus of each member. With our new
management team I feel extremely confident in our ability to
provide our shareholders with the best strategy going forward. I
will make sure, as a team, we will work towards maximizing value
through the execution of our strategy, with the shareholders
best interests as our number one priority."
The Company reiterates the delisting from the Nasdaq Small Cap
is not the result of any investigation or accounting
irregularity. The Company's operations are not effected by the
Nasdaq action and all M&A activity continues as planned.
In addition to the Nasdaq appeal, Chell Group also announced
applications are being filed for it's listing on the NASD OTC:BB
market and is also exploring several other strategic
opportunities that have presented themselves.
Chell Group Corporation is a technology holding company in
business to acquire and grow undervalued technology companies.
Chell Group's portfolio includes Logicorp http://www.logicorp.ca
NTN Interactive Network Inc. http://www.ntnc.com GalaVu
Entertainment Network Inc. http://www.galavu.com Engyro Inc.
(investment subsidiary) http://www.engyro.comand cDemo Inc.
(investment subsidiary) http://www.cdemo.com For more
information on the Chell Group, visit http://www.chell.com
CHINOOK ENERGY: Expects to Close Asset Sale Deal on Aug. 1, 2002
----------------------------------------------------------------
Chinook Energy Services Inc. (TSXV: CKE) announced that the
previously announced transaction of the sale of substantially
all of its assets and business operations is continuing on
schedule and it is expected that the Transaction will close on
or before August 1, 2002. The proposed purchaser pursuant to the
Transaction, AITEC (Western) Inc. removed its financing
condition on June 14, 2002, and the Company will seek
shareholder approval for the Transaction at a shareholder
meeting scheduled for July 31, 2002 in Red Deer, Alberta. Proxy
documentation for the Meeting was mailed to the shareholders on
July 2, 2002.
The Company has applied to the TSX Venture Exchange for
acceptance of the Transaction and has applied to the Alberta
Securities Commission for the approval of the repurchase by the
Company of the shares of Chinook owned or controlled by John
Roth, the President, CEO and a Director of the Company.
Accordingly, the completion of the Transaction is still subject
to a number of conditions including:
1. Chinook obtaining, at the Meeting, all required
shareholder approval, and where required, dis-interested
shareholder approval, of the Transaction and the
repurchase of the Roth shares. Dis-interested
shareholders are shareholders who have no direct
interest in the matter to be voted on; and
2. The Company receiving all required regulatory approvals
and consents for the Transaction and for the repurchase
of Mr. Roth's shares, including, but not limited to, the
acceptance of the TSX Venture Exchange and the Alberta
Securities Commission.
Upon the completion of the Transaction, the Company will be
designated as inactive by the TSX Venture Exchange and will have
eighteen (18) months to complete an acquisition or transaction
which will result in the Company once again meeting the TSX
Venture Exchange Minimum Listing Requirements. To complete any
such acquisition or transaction, the Company will be required to
obtain all required shareholder and regulatory approval,
including the acceptance of the acquisition or transaction by
the TSX Venture Exchange.
As reported in Troubled Company Reporter's May 27, 2002 edition,
Chinook Energy Services Inc. has entered into an agreement to
sell substantially all of its assets, excluding the Company's
receivables and payables as of the closing date, and business
operations for cash proceeds of $2,250,000, $2,000,000 of which
will be paid on closing and $250,000 of which will be paid 30
days after closing upon confirmation that all assets have been
delivered, to a private non-destructive testing company, who is
at arms-length to the Company. Upon the closing of the
Transaction, Chinook will enter a 5-year Non-Competition
Agreement with the Purchaser restricting Chinook from operating
in a non-destructive testing field. Chinook will then change its
name, reconstitute its Board of Directors and will be designated
inactive by the TSX Venture Exchange. The Company will then have
18 months to pursue new business opportunities and complete a
transaction which will result in the Company once again meeting
the TSXV's minimum listing requirements.
CONTINENTAL AIRLINES: Bolts from US Airways Alliance Discussions
----------------------------------------------------------------
Continental Airlines (NYSE: CAL) has discontinued discussions
with US Airways (NYSE: U) regarding the possibility of entering
into an alliance agreement that would include codesharing and
frequent flyer and airport lounge reciprocity between the two
carriers.
Continental made the decision after it determined that an
agreement would not be reached in the near future.
Continental currently has alliance agreements with Northwest
Airlines, KLM Royal Dutch Airlines, Copa Airlines, Air Europa,
EVA, Air China, Alaska Airlines, Hawaiian Airlines and Amtrak.
Continental Airlines is the fifth largest airline in the U.S.,
offering more than 2,100 departures daily to 120 domestic and 91
international destinations. Operating hubs in New York,
Houston, Cleveland and Guam, Continental serves more
international cities than any other U.S. carrier, including
extensive service throughout the Americas, Europe and Asia. For
more information, visit http://www.continental.com
* * *
As reported in Troubled Company Reporter's April 5, 2002
edition, Standard & Poor's affirmed its 'BB-' corporate credit
rating on Continental Airlines Inc. and places it on CreditWatch
Negative.
The rating on Continental Airlines reflects continued risks
relating to the adverse airline industry environment, a heavy
burden of debt and leases, and still limited financial
flexibility, which outweigh the advantages of the company's
better-than-average operating performance and its modern fleet
of aircraft. Continental, the fifth-largest U.S. airline, serves
markets mainly in the southern and eastern U.S. from hubs at
Houston, Texas; Newark, New Jersey; and Cleveland, Ohio.
International routes serve the central Pacific, Japan, Mexico
and Latin America, and Europe. Continental's domestic code-
sharing and frequent flyer program alliance with Northwest
Airlines Inc. forms a domestic route network the size of which
approaches those of the three largest U.S. airlines (American
Airlines Inc., United Air Lines Inc., and Delta Air Lines Inc.)
CORECOMM LTD: Auditors Raise Going Concern Doubt
------------------------------------------------
CoreComm's only material asset is its ownership of approximately
13% of the outstanding capital stock of CoreComm Holdco, Inc.,
referred to as CoreComm Holdco. The Company owned 100% of the
outstanding capital stock of CoreComm Holdco until the
consummation of transactions as part of the Holdco
recapitalization in December 2001. CoreComm Holdco provides
integrated local and toll-related telephone, Internet and high-
speed data services to business and residential customers
located principally in Pennsylvania, Ohio, New Jersey, Michigan,
Wisconsin, Maryland, Illinois, New York, Virginia, Delaware,
Massachusetts, Washington, D.C. and Indiana.
The Company has a liquidity problem that raises substantial
doubt about its ability to continue as a going concern. The
Company intends to resolve its liquidity problem through the
completion of the Holdco recapitalization exchange offers,
although the exchange offers may not be completed.
For the three months ended March 31, 2002 and 2001,
respectively, the Company suffered net losses of $7,152,000 and
$249,661,000.
As a result of the first phase of the Holdco recapitalization,
CoreComm, who formerly owned 100% of CoreComm Holdco's
outstanding capital stock, now own only approximately 13% of
CoreComm Holdco's outstanding capital stock. CoreComm Holdco
owns substantially all of the business operations, which
CoreComm formerly owned indirectly through CoreComm Holdco.
However, CoreComm remains a party liable under the $156.1
million senior secured credit facility and have no right to
withdraw any additional money under that facility. Additionally,
it is co-obligors with CoreComm Holdco for its 10.75% Unsecured
Convertible PIK Notes due April 2011 of $16,599,000, including
accrued PIK interest. In addition, as of March 31, 2002, it had
obligations of approximately $591 million of debt and preferred
securities now held by CoreComm Holdco, the $4.75 million
principal amount of public notes that are not held by CoreComm
Holdco, and other liabilities. In addition, the senior secured
credit facility does not allow CoreComm Holdco to pay any
dividends or distribute assets to CoreComm. As a result of these
financial conditions, the Company currently lacks the resources
to meet its obligations as they become due. Further, the
Company states that it does not contemplate raising any
additional financing in the foreseeable future.
CoreComm provides local and long-distance phone service and
Internet access, bundled at a price comparable to a Bell's toll
for local service. The CLEC (competitive local exchange carrier)
leases local loop lines and operates its own switches; it
operates such facilities in Chicago; Cleveland; Columbus, Ohio;
and Detroit. CoreComm serves up data by offering DSL (digital
subscriber line) service, dedicated lines, and by operating its
nationwide ATM (asynchronous transfer mode) network.
CORPORATE BACKED TRUST: S&P Lowers A-1 Certificate Rating to BB
---------------------------------------------------------------
Standard & Poor's lowered its ratings on Corporate Backed Trust
Certificates Series 2001-6 Trust's and Corporate Backed Trust
Certificates Series 2001-19 Trust's senior class A-1
certificates to double-'B'-minus from double-'B' and removed
them from CreditWatch with negative implications, where they
were placed on September 20, 2001.
The lowered ratings and CreditWatch removal reflects the June
28, 2002 downgrade of Delta Air Lines Inc.'s senior unsecured
debt ratings.
Corporate Backed Trust Certificates Series 2001-6 Trust and
Corporate Backed Certificates Series 2001-19 Trust are swap-
independent synthetic transactions that are weak-linked to the
underlying collateral, Delta Air Lines Inc.'s debt.
RATINGS LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE
Corporate Backed Trust Certificates Series 2001-6 Trust
$57 million corporate-backed trust certs series 2001-6
Rating
Class To From
A-1 BB- BB/Watch Neg
Corporate Backed Trust Certificates Series 2001-19 Trust
$27 million corporate-backed trust certs series 2001-19
Rating
Class To From
A-1 BB- BB/Watch Neg
COVANTA ENERGY: Masse Asks Court to Lift Stay to Pursue Action
--------------------------------------------------------------
The Estate of Auguste Masse, as represented by Jenny Masse and
Claudette Fenelus, ask the Court to lift the automatic stay to
continue to prosecute the Florida Action against Covanta Energy
Corporation and its debtor-affiliates.
Douglas J. Pick, Esq., in New York, narrates that on June 19,
2001, the Movants commenced an action against two Debtors --
Covanta Lee, Inc. and Covanta Energy Services, Inc. -- in the
Circuit Court for the Twelfth Judicial Circuit in and for Lee
County, Florida. The Action seeks damages for the wrongful
death of Auguste Masse who was run over by the front-end loader
being operated by an employee of Covanta.
Mr. Pick states that the Debtor already provided the information
that Covanta is insured by America International Group, Inc. for
a liability of up to $2,500,000 plus excess coverage above the
amount, exclusive of a self-insured amount of $250,000 on the
part of Covanta. Furthermore, Mr. Pick adds, the Florida Action
already completed its discovery with the jury trial scheduled to
commence on July 29, 2002.
Mr. Pick contends that the automatic stay should be lifted
pursuant to Section 362(d)(1) of the Bankruptcy Code because:
(a) permitting the Movants to proceed with the Florida Action
will result in a complete resolution of Covanta's alleged
liability for the wrongful death of Mr. Masse and further
conclusively establish the damages to which the Debtors
are entitled;
(b) permitting the Movants to proceed with the Florida Action
will permit the Movants to liquidate their claim, if any,
against Covanta's Estate up to the self-insured amount of
$250,000;
(c) the Florida Action has no connection to Covanta's
bankruptcy case and permitting the Movants to proceed
would not result in any interference of the Chapter 11
cases;
(d) the Florida Action does not involve Covanta as a
fiduciary;
(e) the Bankruptcy Court is not equipped to resolve the
Movants' wrongful death claims set in the Florida Action;
(f) the Insurer has provided Covanta's defense in the Florida
Action under the Insurance Policy. Covanta's self-
insured amount is merely $250,000 with regard to which
the Movants have consented to submit a claim in this
proceeding and receive payment pursuant to the terms of
the Debtors' plan of reorganization;
(g) the Insurer provides Covanta's defense, thus, the Florida
Action is primarily, between the Movants and the Insurer;
(h) permitting the Movants to proceed with the Florida Action
would not result in any prejudice to the interests of
other creditors since Covanta is almost completely
insured for any potential liability;
(i) any judgment claim arising from the Florida Action will
not be subject to equitable subordination;
(j) the Movants' success in the Florida Action would not
result in an avoidable judicial lien;
(k) permitting the Movants to proceed with the Florida
Action would serve to promote the judicial economy and
the expeditious and economical resolution of litigation
since, inter alia, the parties to the Florida Action have
already conducted significant discovery and are well
along the path to trial;
(l) the Florida Action has been pending for approximately one
year now and a three-week jury trial had been scheduled
to commence on July 29, 2002; and
(m) if the Movants will not be granted the stay relief, they
will suffer substantial harm but Covanta on the other
hand, will not suffer the same substantial harm if the
Movants are permitted to proceed with the Florida Action
due to the presence of its insurance coverage. (Covanta
Bankruptcy News, Issue No. 8; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
CROWN CORK: Expects to Publish Q2 Earnings Results on July 16
-------------------------------------------------------------
Crown Cork & Seal Company, Inc. (NYSE: CCK) will release its
earnings for the second quarter ended June 30, 2002 before
trading begins on the New York Stock Exchange on Tuesday, July
16, 2002. The Company will hold its customary conference call
to discuss these results at 11 a.m. (EDT) the same day.
The dial-in numbers for the conference call are (712) 271-3220
or toll-free (888) 677-1185 and the access password is
"packaging." A replay of the conference call will be available
for a one-week period ending at midnight on Tuesday, July 23.
The telephone numbers for the replay are (402) 998-0482 or
toll free (800) 759-4661 and the access passcode is 4846. A
live web cast of the call will be made available to the public
on the Internet at the Company's Web site,
http://www.crowncork.com
Crown Cork & Seal is a leading supplier of packaging products to
consumer marketing companies around the world. World
headquarters are located in Philadelphia, Pennsylvania.
CROWN CRAFTS: Fails to Beat July 1 Form 11-K Filing Deadline
------------------------------------------------------------
Crown Crafts, Inc. has informed the SEC that there will be a
delay in the filing of its Form 11-K for its 401(k) Plan for the
year ended December 31, 2001 by the July 1, 2002 due date. The
Company's external auditors, Hendry & DeCosimo, have informed
management that they will be unable to complete their audit of
the Plan by the due date and have requested a 15-day extension,
within which they plan to complete the audit of the Plan.
Crown Crafts, Inc. designs, markets and distributes infant &
juvenile consumer products including bedding, blankets, bibs,
bath and accessories, and luxury hand-woven home decor. Its
subsidiaries include Hamco, Inc. in Louisiana, Crown Crafts
Infant Products, Inc. in California, Churchill Weavers in
Kentucky and Burgundy Interamericana in Mexico.
As of December 30, 2001, the company posted a total
shareholders' equity deficit of about $10.8 million.
CYGNIFI DERIVATIVES: Files Joint Plan and Disclosure Statement
--------------------------------------------------------------
Cygnifi Derivatives Services, LLC, and the Official Committee of
Unsecured Creditors jointly filed their Joint Liquidating
Chapter 11 Plan and Disclosure Statement with the United States
Bankruptcy Court for the Southern District of New York. For a
full-text copy of the Plan and Disclosure Statement, go to:
http://www.researcharchives.com/bin/download?id=020702210009
and
http://www.researcharchives.com/bin/download?id=020702205743
The Plan provides for the Creditor Trustees to distribute the
Debtor's Cash or other Assets to the holders of Allowed Class
and Claims, with the holders of Allowed Class 3 Unsecured Claims
to receive a pro rata distribution in Cash. The Debtor estimates
that it will have approximately $5,100,000 in Cash on the
Effective Date before the funding of all required reserves and
approximately $4,300,000 after the funding of such reserves. The
Debtor believes that such amount will be sufficient to make the
payments to the holders of Allowed Claims on the Effective Date.
The Debtor and the Committee believe that the Plan will provide
all holders of Allowed Claims with a greater recovery than would
be available if all of the assets of the Debtor were liquidated
in a case under Chapter 7 of the Bankruptcy Code.
Cygnifi Derivatives Services, LLC filed for Chapter 11 petition
on October 3, 2001. Marc E. Richards, Esq. at Blank Rome Tenzer
Greenblatt, LLP represents the Debtor in its restructuring
effort. When the Company filed for protection from its
creditors, it listed total assets of $34,200,000 and $5,100,000
in total debts.
DECORATIVE SURFACES: Gets OK to Hire Pachulski Stang as Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gives its
stamp of approval to Decorative Surfaces International, Inc. to
employ Pachulski, Stang, Ziehl, Young & Jones PC for legal
services in its chapter 11 case.
The Debtor will pay Pachulski Stang at its customary hourly
rates. The professional who are designated to represent the
Debtor and their current standard hourly rates are:
Laura Davis Jones $550 per hour
James I. Stang $550 per hour
Richard J. Gruber $430 per hour
David J. Barton $430 per hour
Bruce Grohsgal $395 per hour
Natalie Chandler Rosen $380 per hour
Robert M. Saunders $370 per hour
Werner Disse $355 per hour
Marta C. Wade $120 per hour
Bruce Dean Campbell $120 per hour
Camille Ennis $105 per hour
Pachulski Stang is expected to:
a) provide legal advice with respect to its powers and
duties as debtor in possession in the continues
operation of its business and management of its
properties;
b) prepare and pursuing confirmation of a plan and
approval of a disclosure statement;
c) prepare on behalf of the Debtors necessary motions,
answers, orders, reports and other legal papers;
d) appear in Court and protecting the interests of the
Debtor before the Court; and
e) perform all other legal services for the Debtor that
may be necessary and proper in these proceedings.
Decorative Surfaces International, Inc. manufactures wall
coverings, decorative design components for floor tiled and
other laminates. The Company filed for chapter 11 protection on
March 19, 2002. When the Company filed for protection from its
creditors, it listed estimated assets of $10 million to $50
million and estimated debts of $50 million to $100 million.
ENRON CORP: Wins Nod to Consent to SK-Enron Securities Sale
-----------------------------------------------------------
Enron Corporation and its debtor-affiliates may have sought and
obtained the Court's authority to consent to the sale by Enron
International Korea LLC of its Securities in SK-Enron Company
Ltd., though the actual consummation of the $240,000,000
transaction is uncertain.
Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New
York, tells the Court that SK-Enron is a Korean joint stock
company established under the laws of the Republic of Korea.
SK-Enron is the direct or indirect owner of part or all of the
equity securities of several operating companies engaged in:
(a) the gas distribution business,
(b) importing and marketing liquefied petroleum gas and
gassified LPG-air and propane-air mixtures, and
(c) the generation and sale of electricity and steam in South
Korea.
About 50% of SK-Enron is owned by Enron International Korea, a
non-debtor Delaware limited liability company organized and
existing under the laws of Delaware. It is an indirect wholly
owned subsidiary of Enron. The other 50% is held by SK
Corporation pursuant to that certain Stock Subscription and
Purchase Agreement, dated as of December 10, 1998. SK
Corporation is a corporation organized and existing under the
laws of the Republic of Korea.
In addition, Mr. Rosen relates that EIK and SK Corp. are parties
to a certain Shareholders' Agreement, dated as of January 13,
1999, which governs the transfer of shares of SK-Enron. Article
8.3 of the Shareholders' Agreement provides that:
(a) In the event a party to SK-Enron desires to sell, assign,
or otherwise transfer all or a portion of its shares in
SK-Enron and receives a bona fide offer to purchase the
shares, the Selling Party must offer the shares to the
other party to SK-Enron by written notice, specifying the
price, the terms, and the conditions of the sale.
(b) The Selling Party may dispose of its shares for a period
of 90 days after the earlier to occur of 45 days with no
response from the Non-Selling Party or the receipt of a
written rejection of the Offer to transfer or sell the
share. This is provided, however, that the Selling Party
may not sell its interest in the shares to a third party
at a price lower than what was offered to the Non-Selling
Party, or on any terms more favorable than those on which
the shares were offered to the Non-Selling Party.
(c) In the event that the Free Sale Period expires without
the transfer or sale having been consummated, the
transfer or sale of the denominated shares will be
subject to Article 8.3 as if the shares had never been
offered for sale.
EIK wants to sell its Securities to Tractebel LNG Ltd., a United
Kingdom limited liability company. The sale is the culmination
of a comprehensive 10-month process that began in August 2001.
Out of 32 potential purchasers, Tractebel was chosen as the
preferred bidder based on its bid price of $240,000,000. After
more intensive arms-length and good faith negotiations, EIK and
Tractebel entered into a Purchase and Sale Agreement, dated
February 1, 2002.
The Agreement
The Sale Transaction contemplates the delivery of all 5,000,000
outstanding shares of SK-Enron held by EIK, free and clear of
all liens, in exchange for $240,000,000 in cash, minus certain
potential adjustments.
Specifically, the principal terms of the Sale Transaction are:
Securities: EIK will convey 50% of all of the shares of SK-
Enron outstanding immediately prior to the
closing.
Consideration: The purchase price of the Securities will be
$240,000,000 less the amount of any dividends
in respect of the Securities or other payments
paid by SK-Enron to the Seller or any of its
affiliates (whether past or present). The
Purchase Price must be paid by Tractebel to
EIK, in cash, in United States Dollars, by wire
transfer of immediately available funds to a
wire transfer address specified by EIK in
writing no later than two Business Days prior
to the Closing Date. Tractebel's obligation to
pay the Purchase Price is guaranteed by that
Guaranty, executed on February 1, 2002, and
delivered by Tractebel, S.A. for the benefit of
EIK.
Shareholders'
Agreement: Tractebel must, on request by EIK, warrant
and represent to SK Corp. and SK-Enron that the
purchase of the Securities under this Agreement
does not violate any applicable securities
laws. At the Closing, Tractebel must execute
and deliver a document in favor of SK Corp. and
SK-Enron, reasonably satisfactory in form and
substance to counsel for SK-Enron and SK Corp.,
pursuant to which Tractebel will become a party
to the Shareholders' Agreement, acknowledge
that its shares in SK-Enron are subject to
restrictions on sale or other transfer, and
agree to be bound by the provisions of the
Shareholders' Agreement to the same extent as
EIK and any of its affiliates.
Certain
Conditions
to Closing: A. Waiting Period Under the HSR Act:
The Agreement requires that the waiting
period under the HSR Act (if applicable) and
any other applicable Legal Requirements to
which reference is made in EIK's Disclosure
Letter will have expired or been terminated.
B. Waiver or Expiration of Right of First
Refusal:
The Agreement requires that SK Corp. waive
any applicable right of first refusal under
the Shareholders' Agreement or that any
right of first refusal will have expired
unexercised and without dispute by SK Corp.
C. Approval of Debtors In Possession Lenders:
The Agreement requires that the debtors in
possession lenders of Enron must have
either:
(i) approved the Agreement and EIK's
performance of its obligations under
the Agreement, or
(ii) acknowledged in writing that no
approval is required.
D. Approval of the Bankruptcy Court:
The Agreement requires that this Court enter
an order approving the sale of the
Securities, among other things.
E. Assumption or Termination of the Stock
Subscription Agreement:
The Agreement requires that the Stock
Subscription Agreement has terminated
or any requirement under the Shareholders'
Agreement that the Stock Subscription
Agreement be assumed by Tractebel has been
waived in writing.
F. Survival of Representations, Warranties, and
Covenants:
The representations and warranties of EIK
contained in Articles III and IV and those
of Tractebel contained in Article V will
survive the Closing and any investigation by
the parties with respect thereto but will
terminate and be of no further force or
effect on the 18-month anniversary of the
Closing Date.
Indemnification: If the Sale Transaction is consummated subject
to the provisions of Section 10.01(b) of the
Agreement, each of Tractebel, on the one hand,
and EIK, on the other, agrees, from and after
the Closing, to indemnify and hold harmless the
other against any Losses that the Indemnified
Party will actually incur, to the extent that
the Losses:
(a) arise out of or result from the untruth or
breach of any representation or warranty
made in Article III or IV for the benefit
of Tractebel or in Article V for the
benefit of EIK; or
(b) arise out of or result from the non-
performance in accordance with its terms of
any covenant or agreement made for the
benefit of the Indemnified Party by the
Indemnifying Party;
and will reimburse the Indemnified Party for
any reasonable legal or other expenses incurred
by it in connection with investigating or
defending against any Losses or Proceedings.
Except with respect to a failure by Tractebel
to pay the Purchase Price in full at the
Closing, the Indemnifying Party will be liable
to the Indemnified Party under Section 10.02,
but only if the amount of the Losses incurred
by the Indemnified Party exceeds $6,000,000 in
the aggregate; provided, however, that the
amount of the Losses that are subject to
indemnification do not exceed 50% of the
Purchase Price.
Termination
Date: Either EIK or Tractebel have the right to
terminate the Agreement, if the Closing has
not ocurred on or before June 30, 2002. This
is provided, however, that the right to
terminate the Agreement is not available to
either party whose failure to fulfill any
obligation under this Agreement has been,
directly or indirectly, the cause of, or
resulted in, the failure of the Closing to
occur on or before the date.
SK Corp.'s consent is required for the consummation of the Sale
Transaction. However, SK Corp. asserts that the Purchase
Agreement conflicts with the Shareholder's Agreement. As
result, SK Corp. alleges that the Purchase Agreement breaches
the Shareholders' Agreement. EIK contends otherwise and
proposed certain resolutions to address the concerns raised by
SK Corp.
According to Mr. Rosen, when it became clear that this dispute
could not be timely resolved, EIK approached Tractebel to effect
a mutual termination of the Agreement. On its own, EIK does not
have the right to unilaterally terminate the Agreement until
June 30, 2002. Indications that this Purchase Agreement will be
terminated are high.
Mr. Rosen explains that the filing of the Debtors' motion is
only EIK's good faith effort to proceed with the sale to
maximize the value of its interest in the Securities and
minimize any potential liability to EIK and the Debtors'
estates. (Enron Bankruptcy News, Issue No. 35; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ENRON CORP: Seeking Nod to Settle Litigation with Simon Property
----------------------------------------------------------------
Enron Energy Services Operations Inc. and its direct
subsidiaries, including Tenant Services Inc., offer leading edge
electricity products, commodity risk management and related
energy services that reduce their customers' energy costs and
improve energy-related efficiencies, according to Frank A.
Oswald, Esq., at Togut, Segal & Segal LLP, in New York.
Prior to the Petition Date, Mr. Oswald relates that Enron Energy
Services Operations, Tenant Services, and Simon Property Group
LP and certain of its affiliates entered into Agreements.
Enron Energy Services Operations and Tenant Services agreed to
provide Simon Property and its affiliates with energy management
and utility billing services for Simon Property's owned and
managed Facilities.
Mr. Oswald continues that Enron Energy Services Operations also
agreed to design and construct energy projects to increase the
energy efficiency of each Simon Property Facility. Mr. Oswald
notes that the cost of each Project included, but was not
limited to, labor, subcontracts, materials and equipment,
insurance, bonds, permits, architects, third party contractors,
an overhead carrying cost and an administrative support charge.
Enron Energy Services Operations has determined that the Project
Costs incurred in constructing the Projects approximate
$6,490,000.
Pursuant to the Outsource Agreement, Mr. Oswald explains that
Tenant Services was responsible for the collection and
processing of invoices and utility charges from Simon Property's
tenants at the Simon Property Facilities. Mr. Oswald relates
that a portion of Tenant Services' obligations under the
Outsource Agreement was delegated to The Telluride Controls
Company Inc., which is a company that is not affiliated with the
Debtors or Simon Property.
As part of its obligation, Tenant Services opened a bank account
at KeyBank entitled "Enron Energy Services, c/o Tenant Services,
Inc." The Account No. is 769681005138. The Simon Property
Tenants were instructed to deposit their utility payments into
the Account for:
(a) payment to utility service providers, other third party
vendors and subcontractors, and
(b) disbursement of the balance between Tenant Services and
Simon Property in accordance with the terms of the
Outsource Agreement.
Just a couple of days before the Petition Date, Mr. Oswald says,
Enron Energy Services Operations informed Simon Property that
services under the Outsource Agreement would cease. But some
Simon Property Tenants continued to submit payments to the
Account for their December 2001 and January 2002 utility bills.
These Post-November Payments in the Account reached $6,760,000.
On the other hand, Mr. Oswald says, Simon Property made payments
directly to the utility service providers for December 2001 and
January 2002 utility charges. SPG later demanded payment from
Tenant Services and sought a turnover of the Account. However,
the Debtors were reluctant to turnover the Post-November
Payments without a Court order and without first determining
whether the Debtors had claims against Simon Property.
Simon Property and Telluride were not willing to take any
nonsense from the Debtors. Both parties commenced an action
against Tenant Services and KeyBank seeking a turnover of the
balance in the Account. The complaint was lodged in the United
States District Court for the District of Colorado.
This prompted Enron Energy Services Operations, Tenant Services
and the Debtors, with the assistance of their financial advisors
and counsel, to undertake an extensive analysis of the
Agreements and evaluated Simon Property's and the Debtors'
claims against each other. Mr. Oswald notes that several agreed
orders were entered by the Colorado District Court staying the
Civil Action while the parties reviewed their respective claims
under the Agreements. To recall, Mr. Oswald says, it was only
after the filing of the Civil Action that Tenant Services filed
its Chapter 11 petition.
In addition to seeking a turnover of the funds in the Account,
Simon Property asserted it was entitled to payment without
offset, under a constructive trust theory, of approximately
$4,000,000 paid to Tenant Services prior to December 1, 2001 and
not paid to utility service providers for pre-December 2001
utility services. According to Simon Property, the Outsource
Agreement expressly provides that Tenant Services was acting as
its agent and, accordingly, Tenant Services had a fiduciary
obligation to remit the payments received to the utility service
providers. Furthermore, Simon Property also asserted potential
claims of approximately $45,000,000 based on the termination of
the Agreements.
On the other hand, Mr. Oswald notes, Enron Energy Services
Operations and Tenant Services asserted numerous counter-claims
against Simon Property based on the Agreements, including a
claim under the EMA Agreement for the payment of the Project
Costs. According to the EMA Agreement, upon its termination,
Simon Property is required to pay Enron Energy Services
Operations the Project Cost Balance, regardless of default by
either part, without any abatement, defense, counterclaim or
set-off. The Project Cost Balance is $6,490,000 in the
aggregate.
After an exchange of documents and extensive discussions and
negotiations in an effort to resolve the matter consensually,
the parties reached a settlement and compromise. The terms of
their proposed Stipulation provides:
(a) Effective Date of Stipulation and Termination of Civil
Action:
The Stipulation becomes effective on the date it is
"so ordered" by the Bankruptcy Court. This is provided,
however, if the Civil Action is still pending, the
Effective Date does not occur, and this Stipulation will
not become effective, until the Colorado District Court
has entered an order, reasonably satisfactory to the
Debtors, dismissing the Civil Action with prejudice. In
the event the Civil Action is dismissed prior to the
approval of this Stipulation by the Bankruptcy Court, the
Debtors consent that they will not remove or transfer
funds from the Account without:
(1) the written consent of Simon Property, or
(2) order of the Bankruptcy Court;
(b) Telluride Claims Against Account:
Simon Property will indemnify and hold harmless the
Debtors for any claims asserted against any of the
Debtors or any affiliate of Enron by Telluride arising
under or in connection with the Account. Simon Property
must pay and reimburse the Debtors for any costs and
expenses incurred by the Debtors in obtaining a dismissal
of the Civil Action;
(c) Payments to Simon Property:
Within two business days after the Effective Date, the
Debtors shall pay the Post-November Payments of
$6,760,000 plus $3,500,000 to Simon Property;
(d) Waiver of Simon Property Claims:
The payments made pursuant to the Stipulation will be in
full and complete settlement, release and discharge of
any and all claims asserted by Simon Property against
Enron Energy Services Operations, Tenant Services and the
other Debtors;
(e) Payments to Enron Energy Services Operations:
In consideration for the purchase of the Projects, Simon
Property will pay $6,490,000 to Enron Energy Services
Operations, representing the Project Costs;
(f) Transfer of Projects to Simon Property:
Upon receipt by Enron Energy Services Operations of the
Project Cost Payment, title to the Projects will be
deemed transferred to Simon Property and Enron Energy
Services Operations will have no further right, title or
interest to the Projects. Enron Energy Services
Operations must provide Simon Property with a bill of
sale evidencing the transfer "as is, where is";
(g) Section 363(m) Protections Afforded Simon Property:
The purchase of the Projects by Simon Property for the
Project Cost Payment will constitute a "good faith"
transaction and will be entitled to the protections set
forth in Section 363(m) of the Bankruptcy Code;
(h) Simon Property Remaining Tax Obligations:
Notwithstanding the rejection and termination of the
Agreements and the mutual releases, the Stipulation
provides that to the extent Simon Property is obligated
under the Agreements, Simon Property will remain
obligated and responsible for the payment of, and
reimbursement to Enron Energy Services Operations, Tenant
Services, and the Debtors, respectively, for, all taxes
and other charges imposed or levied by any taxing
authority that are required to be paid by Simon Property
and relate to any commodities, services, work,
activities, materials, property and payments provided
for, delivered, purchased, sold, consumed, fabricated,
used or leased under or with respect to the Agreements;
(i) Rejection and Termination of Agreements: On the Effective
Date, each of the Agreements that constitute an executory
contract or an unexpired lease for purposes of the
Bankruptcy Code will be deemed rejected and terminated by
the Debtors pursuant to Section 365 of the Bankruptcy
Code without further liability. Any Agreement not
rejected, if any, that does not constitute an executory
contract or unexpired lease for purposes of the
Bankruptcy Code, will be deemed terminated by mutual
consent on and as of the Effective Date, so that none of
the Parties have any further obligations or liabilities
to the other;
(j) Mutual Release:
Upon satisfaction of the Parties' obligations under the
Stipulation, the Parties release from any and all claims
which the Parties may have in connection with or
relating to any of the Agreements. Notwithstanding the
foregoing, to the extent general liability insurance
covers a claim asserted against Simon Property for bodily
injury arising from Enron Energy Services Operations'
maintenance services during the period when Enron Energy
Services Operations was providing the services under the
Agreements, Simon Property does have the right, at no
cost and liability to the Debtors, to assert a claim
against, and recover solely from, the general liability
insurance policy. Simon Property and the JV Parties
agree that they will not file or otherwise seek to
prosecute a claim in the Chapter 11 cases of any of the
Debtors. Any proofs of claim filed by or on behalf of
Simon Property and the JV Parties in the Debtors' Chapter
11 cases will be deemed immediately expunged without any
further order of the Court. (Enron Bankruptcy News, Issue
No. 35; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
ENRON CORP: Eco-Tankship Blocks Excalibur Give-Away to Exmar
------------------------------------------------------------
Charleston based Eco-Tankship, Inc., a small privately held LNG
(liquefied natural gas) consultancy, has entered the fray over
Enron Corp's attempt to turn over possession of its chartered
and newly built 900 ft. LNG trading ship known as EXCALIBUR to
the Belgian shipping giant Exmar.
Eco-Tankship has been competing in a bankruptcy court bid
process since February and represents the only opposition to
Exmar. The bid process itself prohibits Eco-Tankship from
disclosing details of its offer to Enron.
"Despite a total U.S. embargo on trading with Libya, Exmar's
subsidiary 'Exmar Offshore,' with offices in Houston, is
investing under an agreement with Libya through the "blocked"
oil front the Libyan National Oil Company," commented Eco-
Tankship's President Alexander Schizas.
Schizas continued that he believed that it was "Eco-Tankship's
obligation to bring this information forward, and to continue
our efforts at securing the charter."
The Libyan NOC has been named as a Specially Designated National
or "blocked persons" by the Bush White House. US citizens or
businesses are prohibited from doing business with them,
pursuant to the International Emergency Economic Powers Act and
Executive Order 13224.
"The Belgian parent, meanwhile, is asking the U.S. government
for relief in Enron's New York Bankruptcy Court for its other
subsidiary Exmar Excalibur Shipping that was responsible for
building and financing the EXCALIBUR," reported Schizas.
The EXCALIBUR represents a $150 million investment by Exmar and
its lenders, including Citicorp.
John Kern, Charleston maritime attorney for Eco-Tankship cited
Exmar's apparent problems under the bankruptcy courts "clean
hands" doctrine, noting President Bush's pronouncement at the
Rose Garden announcement on September 24, 2001, in the wake of
September 11, that "If you do business with terrorists, if you
support or sponsor them, you will not do business with the
United States of America."
A final hearing on the matter is scheduled for July 11th at
10:00 a.m. at the Alexander Hamilton U.S. Bankruptcy Courthouse
in lower Manhattan. Eco-Tankship has subpoenaed documents
relative to Exmar's investments in Libya. "We'll be sure to
bring these to the attention of Judge Gonzalez," said Kern.
Eco-Tankship operates the on-line LNG market site "LNGHUB.com,"
from its offices in Charleston, South Carolina.
FLAG TELECOM: Court Okays Professional Compensation Protocol
------------------------------------------------------------
FLAG Telecom Holdings Limited and its debtor-affiliates move the
Court for authority to establish procedures for compensating and
reimbursing professionals. The Debtors seek to apply the
procedures in other large Chapter 11 cases in which
professionals are paid monthly.
Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher LLP, says the
procedures will streamline the process for compensating
professionals and enable the Court and other parties to monitor
effectively professional fees incurred. The procedures exclude
professionals employed in the ordinary course.
The Debtors have filed applications to retain these
professionals:
(a) Gibson, Dunn & Crutcher LLP as counsel on a general
retainer,
(b) The Blackstone Group L.P. as financial advisors and
restructuring consultants,
(c) Appleby, Spurling & Kempe as general Bermuda counsel,
(d) Friedman, Wang & Bleiberg, P.C. as special litigation
counsel, and
(e) Poorman-Douglas Corporation as notice and claims agent.
The Debtors intend to file applications to retain more
professionals, including:
(a) Innisfree M&A Incorporated as balloting agent,
(b) Arthur Andersen as accountants and auditors, and
(c) Elizabeth Gloster Q.C. as special Bermuda counsel.
In addition, the official committee of unsecured creditors has
moved the Court for the retention of Akin Gump Strauss Hauer &
Feld LLP as its counsel.
The Debtors anticipate that as the Chapter 11 cases progress,
they and the creditors committee may need to employ more
professionals.
The Debtors propose that professionals be permitted to seek
monthly compensation and reimbursement of expenses under the
following procedures:
(a) On or before the 20th day of each month following the
month for which compensation is sought, each Professional
will serve a monthly statement, by hand or overnight
delivery, on:
(1) FLAG Telecom Holdings Limited
(2) Gibson, Dunn & Crutcher, LLP
(3) Office of the United States Trustee for the
Southern District of New York
(4) Akin Gump Strauss Hauer & Feld LLP
(5) Milbank, Tweed, Hadley & McCloy, LLP
(b) The monthly statement need not be filed with the Court
and a courtesy copy need not be delivered to chambers
because the Order is not intended to alter the fee
application requirements outlined in Bankruptcy Code
sections 330 and 331 and because Professionals are still
required to serve and file interim and final applications
for approval of fees and expenses in accordance with the
relevant provisions of the Bankruptcy Code, the Federal
Rules of the Bankruptcy Procedure and the Local Rules of
this Court;
(c) Each monthly fee statement must contain a list of the
individuals and their respective titles (e.g., attorney,
accountant, or paralegal) who provided services during
the statement period, their respective billing rates, the
aggregate hours spent by each individual, a reasonably
detailed breakdown of the disbursements incurred (no
professional should seek reimbursement of an expense
which would otherwise not be allowed pursuant to the
Court's Administrative Orders dated June 24, 1991 and
April 21, 1995 or the United States Trustee Guidelines
for Reviewing Applications for Compensation and
Reimbursement of Expenses Filed under 11 U.S.C. Section
330 dated January 30,(1996), and contemporaneously
maintained time entries for each individual in increments
of tenths (1/10) of an hour;
(d) Each person receiving a statement will have 15 days after
its receipt to review it and, in the event that he or she
has an objection to the compensation or reimbursement
sought in a particular statement, he or she will, by no
later than the 35th day following the month for which
compensation is sought, serve upon the Professional whose
statement is objected to, and the other persons
designated to receive statements in paragraph (a), a
written "Notice of Objection to Fee Statement", setting
forth the nature of the objection and the amount of fees
of expenses at issue;
(e) At the expiration of the 35 day period, the Debtors will
promptly pay 80 percent of the fees and 100 percent of
the expenses identified in each monthly statement to
which no objection has been served in accordance with
paragraph (d);
(f) If the Debtors receive an objection to a particular
statement, they will withhold payment of that portion of
the fee statement to which the objection is directed and
promptly pay the remainder of the fees and disbursements
in the percentages set forth in paragraph (e);
(g) Similarly, if the parties to an objection are able to
resolve their dispute following the service of Notice of
Objection to Fee Statement and if the party whose
statement was objected to serves on all persons
designated to receive statements in paragraph (a) a
statement indicating that the objection is withdrawn and
describing in detail the terms of the resolution, then
the Debtors will promptly pay, in accordance with
paragraph (e), that portion of the fee statement which is
no longer subject to an objection;
(h) All objections that are not resolved by the parties, will
be preserved and presented to the Court at the next
interim or final fee application hearing to be held by
the Court (see paragraph (j) below);
(i) The service of an objection in accordance with paragraph
(d) will not prejudice the objecting party's right to
object to any fee application made to the Court in
accordance with the Bankruptcy Code on any ground whether
raised in the objection or not. Furthermore, the decision
by any party not to object to a fee statement will not be
a waiver of any kind or prejudice that party's right to
object to any fee application subsequently made to the
Court in accordance with the Bankruptcy Code;
(j) Approximately every 120 days, but no more than every 150
days, each of the Professionals will serve and file with
the Court an application for interim or final Court
approval and allowance, pursuant to sections 330 and 331
of the Bankruptcy Code (as the case may be), of the
compensation and reimbursement of expenses requested;
(k) Any Professional who fails to file an application seeking
approval of compensation and expenses previously paid
under this Order when due will (1) be ineligible to
receive further monthly payments of fees or expenses as
provided herein until further order of this Court and (2)
may be required to disgorge any fees paid since retention
or the last fee application, whichever is later;
(l) The pendency of an application, or a Court order that
payment of compensation or reimbursement of expenses was
improper as to a particular statement, will not
disqualify a Professional from the future payment of
compensation or reimbursement of expenses as set forth
above, unless otherwise ordered by the Court;
(m) Neither the payment of, nor the failure to pay, in whole
or in part, monthly compensation and reimbursement as
provided herein, will have any effect on the Court's
interim and final allowance of compensation and
reimbursement of any Professional; and
(n) Counsel for the Creditors' Committee may, in accordance
with the foregoing procedure for monthly compensation and
reimbursement of Professionals, collect and submit
statements of expenses, with supporting vouchers, from
members of the Creditors' Committee. This is provided,
however, that the committee counsel ensures that these
reimbursement requests comply with this Court's
Administrative Orders dated June 24, 1991 and April 21,
1995.
Mr. Reilly says the Debtors will include in their monthly
operating reports amounts paid to each of the professionals.
Judge Gropper approves the Debtors' proposed procedures for
compensating and reimbursing their retained professionals. (Flag
Telecom Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
FOAMEX INT'L: Signs-Up EDS For IT Infrastracture Services
---------------------------------------------------------
EDS (NYSE: EDS) and Foamex International Inc. (Nasdaq: FMXI)
announced that Foamex will outsource its information technology
function to EDS in a move designed to build a world-class
technology infrastructure and reduce annual IT expenses by more
than $2 million annually over five years.
The largest flexible polyurethane and advanced polymer foam
product manufacturer in North America, Foamex is the market
leader in providing foam for carpeting, automobiles and consumer
goods, such as bedding and furniture, and also manufactures
high-performance polymers for use in the industrial, aerospace,
defense, electronics and computer industries.
Under the agreement, financial terms of which were not
disclosed, EDS will provide and manage a common, leveraged IT
infrastructure that will help standardize and streamline
business processes, systems and operations across Foamex's 59
North American facilities.
"Our IT systems are a key focus of our transformation effort,
and EDS has helped us identify savings and upgrade our IT
service into world-class business processes with only minimal
capital investment," said Tom Chorman, Executive Vice President
and Chief Financial and Administrative Officer of Foamex. "EDS
will allow us to use IT as a competitive business advantage
while we focus on providing superior service to our clients and
on new product development."
Comprehensive Set of Services
EDS will manage Foamex's local- and wide-area global network and
midrange servers and provide desktop management services,
including hardware, software and support to more than 1,500
desktops in Foamex's North American facilities. EDS will also
develop and manage applications and implement an ERP system to
help optimize supply chain management for Foamex.
"EDS has helped many clients transform the way they do business
by optimizing their return on their IT investments," said Pat
Costa, president, U.S. Northeast Region for EDS Operations
Solutions. "EDS will apply its technology and global industry
expertise to mobilize the people, resources, methodologies and
delivery mechanisms for a scalable IT foundation that will
provide Foamex a strong technology and business platform to
support both their existing operations and future growth."
Foamex, headquartered in Linwood, PA, is the world's leading
producer of comfort cushioning for bedding, furniture, carpet
cushion and automotive markets. The Company also manufactures
high-performance polymers for diverse applications in the
industrial, aerospace, defense, electronics and computer
industries as well as filtration and acoustical applications for
the home. For more information visit the Foamex Web site at
http://www.foamex.com
In its March 31, 2002 balance sheet, Foamex International
recorded a total shareholders' equity deficit of about $173
million.
EDS, the leading global services company, provides strategy,
implementation, business transformation and operational
solutions for clients managing the business and technology
complexities of the digital economy. EDS brings together the
world's best technologies to address critical client business
imperatives. It helps clients eliminate boundaries, collaborate
in new ways, establish their customers' trust and continuously
seek improvement. EDS, with its subsidiaries, serves the world's
leading companies and governments in 60 countries. EDS reported
revenues of $21.5 billion in 2001. The company's stock is traded
on the New York Stock Exchange and the London Stock Exchange.
Learn more at http://www.eds.com
FOAMEX: Names Eric Hudson as SVP, Chief Information Officer
-----------------------------------------------------------
Foamex International Inc. (NASDAQ: FMXI), the leading
manufacturer of flexible polyurethane foam products in North
America has promoted Eric B. Hudson to the position of Senior
Vice President, Chief Information Officer.
Mr. Hudson will oversee the Company's information technology
function and will report directly to Foamex's Chief Financial
and Administrative Officer, Tom Chorman. He replaces Larry
Davenport, formerly CIO of Foamex, who has left the company to
pursue other interests.
Mr. Hudson, 37, has been with the company since May of 2000 and
previously held the position of Vice President, Information
Technology. Prior to joining Foamex, Mr. Hudson held information
technology positions of increasing responsibility with companies
such as KOHL'S Corporation, Wachovia Corporation and Safety-
Kleen Corporation. He began his career as a Senior Associate
Programmer at IBM Corporation.
"With over 15 years of experience, Eric is an extremely talented
professional who brings a high level of expertise to the
position," said Tom Chorman. "Eric will oversee the very
important effort of upgrading our IT systems, which will give us
a competitive business advantage through the implementation of
world-class business processes."
Mr. Chorman added, "We would also like to thank Larry Davenport
for his contributions to Foamex over the years, and wish him the
best of luck in his next endeavor."
Foamex, headquartered in Linwood, PA, is the world's leading
producer of comfort cushioning for bedding, furniture, carpet
cushion and automotive markets. The Company also manufactures
high-performance polymers for diverse applications in the
industrial, aerospace, defense, electronics and computer
industries as well as filtration and acoustical applications for
the home. For more information visit the Foamex Web site at
http://www.foamex.com
GLOBAL CROSSING: Subcommittee Taps Greenberg Traurig as Counsel
---------------------------------------------------------------
The Subcommittee of the Official Committee of Unsecured
Creditors in the Chapter 11 of Global Crossing Ltd. and its
debtor-affiliates -- a 3-member team appointed by the U.S.
Trustee consisting of creditors with claims exclusively against
the Global Crossing North America estate -- sought and obtained
Court approval to retain and employ Greenberg Traurig, nunc pro
tunc to March 14, 2002.
* * *
The professional services that Greenberg Traurig will render to
the Subcommittee include:
A. assisting in the Subcommittee's investigation of all issues
arising from, related to or otherwise concerning certain
prepetition transactions within the purview of the
Subcommittee, and any matters that would compromise or
otherwise affect the Subcommittee's investigation;
B. providing the Subcommittee with legal advice with respect to
its rights, duties and powers in these cases;
C. preparing reports, pleadings, motions, applications,
objections and other papers as may be necessary in
furtherance of the Subcommittee's investigation;
D. consultation and discussions with the Debtors, their counsel,
the accountants and financial advisors for the Debtors, the
Committee, its counsel, other professionals retained in these
cases, and the United States Trustee arising from or related
to the Subcommittee's investigation; and
E. representing the Subcommittee in hearings and other judicial
proceedings as necessary in furtherance of the Subcommittee's
investigation.
Compensation will be payable to Greenberg Traurig on an hourly
basis, plus reimbursement of actual and necessary expenses
incurred by Greenberg Traurig in accordance with the ordinary
and customary rates which are in effect on the date the services
are rendered. Because it is probable that the Subcommittee will
require Greenberg Traurig to render potentially significant
legal services, the cost of which cannot be estimated with
certainty, it is necessary and essential that the Subcommittee
employ attorneys under a general retainer to render the
foregoing services. Greenberg Traurig's current attorney and
paralegal fee rates are:
Shareholders $360-$640
Counsel $220-$475
Associates $220-$425
Legal Assistants and Clerks $ 45-$200
Greenberg Traurig has advised the Subcommittee that it expects
that Thomas J. Weber and Richard S. Miller will have primary
responsibility for representation of the Subcommittee in these
cases. However, other attorneys and paralegals will also serve
the Subcommittee in connection with the matters described
herein. (Global Crossing Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
GUILFORD MILLS: Continuing Andersen's Engagement as Auditors
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gives permission to Guilford Mills, Inc. and its debtor-
affiliates to continue employing Arthur Andersen LLP as their
auditors, accounting and tax advisors to complete the Quarterly
Review Services and the Tax Services.
According to Andersen partner Jeffrey L. Burgess, the firm was
engaged prior to the Debtors' filing for chapter 11 protection.
Arthur Andersen's professional services include:
i) the review of the quarterly financial information to be
included in the Debtors' reports filed with the
Securities and Exchange Commission for the year ending
September 29,2002 (Quarterly Review Services) and
ii) the preparation of various federal, state and local tax
returns, as well as assistance with a wide range of
other tax matters (the Tax Services).
The Debtors relate that currently, these services are not
complete.
The Debtors also obtained approval from the Court to engage
Arthur Andersen to conduct an audit of their consolidated
balance sheet as of September 29, 2002, and the related
consolidated statements of operations and cash flows for the
year then ending.
Arthur Andersen will bill at its customary hourly rates:
Audit and Tax
Base Audit Tax Compliance Consulting
Services Services Services
---------- -------------- -------------
Partners/Principals $402 $270-355 $383-503
Senior Managers $348 $246-294 $349-417
Experienced $293 $228-294 $323-417
Managers
Managers $275 $228-294 $311-417
Seniors $182-197 $171-198 $206-281
Experienced $139 $102-121 $145-171
Staff
Staff $101 $90-121 $114-171
Guilford Mills, Inc., a world-wide producer and seller of warp
knit, circular knit, flat-woven and woven velour fabric filed
for chapter 11 protection on March 13, 2002. Albert Togut, Esq.
at Togut, Segal & Segal LLP represent the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $551,064,000 in total assets and
$409,555,000 in total debts.
HERCULES INC: Sells BetzDearborn Assets to Reduce Debt By 50%
-------------------------------------------------------------
At its annual meeting held on June 27, 2002, Hercules
Incorporated (NYSE:HPC) announced the reelection of four
directors for three-year terms: William H. Joyce, Robert D.
Kennedy, Jeffrey M. Lipton and Peter McCausland.
In his presentation to the shareholders on the state of the
company, Dr. William H. Joyce, Chairman and CEO, discussed the
major changes that have taken place in Hercules financial health
over the past year, particularly its improved fixed cost
structure and cash flow, and the successful sale of the
BetzDearborn Water Treatment business.
These actions allowed the company to reduce its debt by over
50%. He also outlined the strong performance of Hercules versus
its specialty chemical peer group.
Dr. Joyce stated he was pleased with the progress and results
over the past year. He emphasized that more work was needed and
discussed the tasks ahead.
"The next six months should see us rise substantially in
profitability and cash generating capability," Dr. Joyce told
the shareholders. "We will end 2002 with most of our past
obligations settled and on a clear path to shareholder gain and
business success."
During the meeting, Samuel J. Heyman, who was elected a Hercules
director in 2001 in a contested election, delivered a report
outlining his perspective on the Company during the past year.
Dr. Joyce rebutted what he considered to be the most significant
errors in Mr. Heyman's report.
After the meeting, Dr. Joyce stated, "I do not believe it is
necessary or appropriate to rebut each of the points Sam Heyman
tried to make. Clearly, I disagree with what he had to say.
"Mr. Heyman has made it clear that he and the other directors
elected on his slate opposed the sale of BetzDearborn," Dr.
Joyce continued. "I believed at the time, and I am even more
firmly convinced today, that this opposition was just plain
wrong. The sale of BetzDearborn was an excellent transaction for
Hercules and it clearly served the interests of our
shareholders. Based on the reaction we have seen from
knowledgeable shareholders and the investment community, it is
clear to me that others also think we made the right decision."
Dr. Joyce concluded: "This management team and the Hercules
Board are committed to serving the interests of all
shareholders. The Company has made great progress over the past
year. We intend to continue to focus on the interests of all of
our shareholders."
Shareholders also approved the reappointment of
PricewaterhouseCoopers LLP as independent accountants and
ratified proposals relating to Hercules Incorporated's Long Term
Incentive Compensation Plan and Non-Employee Director Stock
Accumulation Plan.
The full text of Dr. Joyce's remarks at Hercules annual
shareholders meeting can be found on our Web site at
http://www.herc.com
Hercules manufactures and markets chemical specialties globally
for making a variety of products for home, office and industrial
markets. For more information, visit the Hercules Web site at
http://www.herc.com
* * *
As reported in Troubled Company Reporter's June 6 edition,
Standard & Poor's affirmed its double-'B' corporate credit and
senior secured debt ratings on specialty chemical company
Hercules Inc. and removed them from CreditWatch, where they were
placed on February 12, 2002, with positive implications. At the
same time, Standard & Poor's raised its rating on Hercules' $400
million senior unsecured notes due 2007 to double-'B'-minus from
single-'B'-plus. The rating actions follow the completion of
Hercules' sale of the Water Treatment business of its
BetzDearborn Division to GE Specialty Materials, a unit of
General Electric Co., for $1.8 billion in cash (after-tax
proceeds $1.665 billion). The outlook is positive.
Wilmington, Delaware-based Hercules has about $1.4 billion of
debt outstanding (including $623 million of hybrid preferred
securities).
"As anticipated, proceeds from the sale have been used to
substantially reduce debt, thereby improving Hercules' financial
profile and eliminating concerns about near-term debt maturities
and constrained liquidity due to financial covenant pressures,"
said Standard & Poor's credit analyst Kyle Loughlin. The
CreditWatch resolution also reflects Standard & Poor's view that
the transaction will largely complete management's proactive
strategic review of the business portfolio, thereby reducing
prospects for further M&A activity and rating uncertainty. The
ratings on the senior unsecured notes have been raised to one
notch below the corporate credit rating to reflect the note
holders' improved recovery prospects in a default scenario
following the reduction of a substantial portion of the secured
bank debt.
IT GROUP: Intends to Amend Chanin Capital Engagement Terms
----------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
Cases of IT Group, Inc. and its debtor-affiliates asks the Court
to allow them to amend certain terms of the employment and
retention of Chanin Capital Partners, LLC, the Committee's
financial advisors in these cases.
According to Anthony M. Saccullo, Esq., at The Bayard Firm in
Wilmington, Delaware, with the approval and consummation of the
Debtors' sale agreement with Shaw, the posture of these cases
changed to liquidating Chapter 11 cases. Consequently, the
financial advisory services required of the Committee have
changed.
Mr. Saccullo submits that the Committee and the Debtors have
discussed Chanin's role in these cases going forward and have
agreed to a modification of the terms of their compensation.
Specifically, they have agreed to replace the flat monthly fee
with an hourly rate structure.
Mr. Saccullo relates that, subject to this Court's approval,
effective as of May 1, 2002, Chanin would be compensated on an
hourly basis for its professional services up to a maximum of
$150,000 per month. In addition, Chanin will continue to be
entitled to reimbursement of actual and necessary expenses that
it may incur.
The primary professionals of Chanin who have performed or may
perform services under this new structure, their positions and
respective current hourly rates are:
Professional Position Hourly Rate
---------------- ----------------- -----------
Skip Victor Managing Director $650
Brent Williams Vice President 500
David Macgreevey Associate 350
Robert White Associate 350
David Park Analyst 250
Lois Pillich Analyst 250
Mr. Saccullo further states that the Committee's counsel has
discussed the revised terms of Chanin's retention with the
counsel of the Office of the U.S. Trustee, the Debtors and the
prepetition bank group and they do not oppose to the
modification. (IT Group Bankruptcy News, Issue No. 13;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ICOA: Reports $2 Million Year-End Working Capital Deficit
---------------------------------------------------------
ICOA Inc. was incorporated in Nevada in September, 1983 under
the name Quintonix, Inc. In March, 1989 the name was changed to
ICOA, Inc. On February 15, 1999 the Company created WebCenter
Technologies, Inc., a Nevada corporation and ICOA's wholly-owned
subsidiary.
The Company has deployed an automated network of Internet pay
phone terminals with video advertising displays, through its
wholly owned subsidiary WebCenter Technologies, Inc. It has
installed a managed network to provide telecommunications,
business, and e-commerce services via these terminals. The
services include communication services such as telephone, e-
mail, and facsimile; and business services such as print; and e-
commerce services, including advertising, shopping, and bill
paying.
ICOA began operations in San Francisco International Airport
effective June 1, 2001. It is receiving revenue from this
operation which to date has not met the Company's objectives.
In December 2001, it acquired the kiosk division of Go Online
Network. This acquisition provides significant locations
outside of the airport market. During the first half of 2002,
the Company will integrate these terminals into its network in
order to enhance the services provided to these locations, and
increase the revenue produced. The report of the Company's
auditors on its audited financial statements contains an
explanatory paragraph, which raises substantial doubt about its
ability to continue as a going concern. This going concern
exception to the auditors' report highlights the need to
actively pursue new debt and/or equity financing in order to
continue operations and achieve Company goals. If it does not
acquire significant additional funding within the next 12
months, it may not achieve its current business strategy, which
could force it to restructure or could result in its ceasing
operations entirely.
For the year ended December 31, 2001, the Company lost
$2,563,054 as compared to a loss of $1,340,655 for the year
ended December 31, 2000. The increased loss is mainly due to
additional interest expense associated with its convertible
equity notes, legal expense associated with additional SB-2
filings, payment of commissions in connection with securing the
airport locations, and marketing and travel related to the
execution of its business plan.
For the year ended December 31, 2001 the Company had a working
capital deficit of $2,233,574. Capital expenditures amounted to
$1,153,870.
INTEGRATED HEALTH: Committee Hires Eureka for Financial Advice
--------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
cases of Integrated Health Services, Inc. and its debtor-
affiliates, asks and obtained Court authorization to retain
Eureka Capital Markets, LLC as the Committee's Financial
Advisors. The Committee wants Eureka to provide professional
corporate finance services in place of Andersen Corporate
Finance, effective as of May 1, 2002. The Committee gained the
approval pursuant to, inter alia, 11 U.S.C. Section 327(a),
328(a), 331 and 1103(a) of the Bankruptcy Code.
Judge Walrath makes it clear that, in the event that after the
initial 6 month retention period, the Committee and Eureka have
not reached a mutual agreement for another compensation
arrangement, then Eureka shall be required to serve and file
monthly statements as well as apply to the Court for allowance
of quarterly interim and final compensation and reimbursement of
expenses in accordance with applicable provisions of the
Bankruptcy Code, the applicable Bankruptcy Rules and rules and
orders of the Bankruptcy Court. In the event that Eureka and
the Committee come to a mutual agreement for a compensation
agreement that is not based upon the time expended by Eureka in
the rendition of such services, then a further application
seeking approval of such proposed engagement terms shall be
required.
* * *
As previously reported in the June 17, 2002 issue of the
Troubled Company Reporter, Eureka will assist and advise the
Committee in matters including:
a. the assessment of strategic alternatives for the various IHS
businesses;
b. the valuation of the Debtors' long term care facilities and
other IHS business operations;
c. establishing a process to maximize the value of the IHS
businesses;
d. plans of reorganization for IHS and negotiation of such
plans with various parties-in-interest;
e. the valuation of securities to be issued to creditors;
f. evaluating proposals with regard to merger and acquisition
transactions; and
g. evaluating proposals in connection with any financings.
In accordance with the Committee's agreement with Eureka,
Eureka's compensation for professional services to be rendered
to the Committee shall be, for the first six months of the
engagement, a monthly advisory fee of $100,000, plus
reimbursement and out-of-pocket expenses. According to the
Committee, this Advisory Fee is less than the average monthly
compensation for Andersen Corporate Finance.
After the initial six-month period, if the Committee still needs
Eureka's services and if the Committee and Eureka have not
reached a mutual agreement for another compensation arrangement,
Eureka's compensation for professional services rendered to the
Committee shall be computed at Eureka's customary hourly rates
charged for such services. The current range of customary hourly
rates charged by Eureka for such services are $400 to $800 per
hour. These rates are subject to revision in the normal course
of business. (Integrated Health Bankruptcy News, Issue No. 39;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
JAM JOE: Gets Until July 31 to Make Lease-Related Decisions
-----------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of
Delaware, Jam Joe, LLC, and its debtor-affiliates obtained an
extension of their lease decision period. The Court gives the
Debtors until July 31, 2002, to determine whether to assume,
assume and assign or reject unexpired nonresidential real
property leases.
Jam Joe, L.L.C. filed for bankruptcy protection Under Chapter 11
of the U.S. Bankruptcy Code on July 23, 2001. Christopher S.
Sontchi, Esq. at Ashby & Geddes represents the Debtors in their
restructuring efforts.
KAISER ALUMINUM: Intends to Pay $11M Prepetition Property Taxes
---------------------------------------------------------------
Kaiser Aluminum Corporation and its debtor-affiliates seek
authority, in their sole discretion, to pay certain prepetition
personal and real property taxes pursuant Section 105(a) and
363(b) of the Bankruptcy Code and compromise and settle related
claims of governmental units in respect of these prepetition
taxes.
"The Debtors want to avoid any additional charges that may
accrue from the delayed payment of those taxes and fulfill their
obligations to the local communities in which they are located,"
says Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger
P.A. in Wilmington, Delaware. "The Debtors currently have no
authority to pay these prepetition taxes."
Mr. DeFranceschi estimates that the Debtors' prepetition taxes
total approximately $11,500,000 -- with $3,800,000 coming from
Personal Property Taxes and $7,700,000 in Real Property Taxes.
These taxes come from a substantial amount of equipment and
other personal property currently owned and maintained by the
Debtors as well as approximately 10 parcels of real property
used in connection with their businesses in about 20 states and
the District of Columbia.
Mr. DeFranceschi explains that the bulk of the prepetition taxes
are secured by liens against the respective Personal and Real
Properties that give rise to oversecured claims by the
applicable government units. Many of these government units are
likely to assert that their oversecured claims on account of the
Prepetition Taxes are accruing statutory interest and penalties
(if applicable) in the range from 8.5% per annum to 12% per
annum. "These rates in some cases substantially exceed the
current interest rate under the Debtors' postpetition financing
facility," Mr. DeFranceschi notes.
Additionally, for those prepetition taxes that do not give rise
to oversecured claims, Mr. DeFranceschi deems that the
applicable government units may assert that those taxes and any
related penalties represent eighth priority claims against the
Debtors' estates under Sections 507(a)(8)(B) and 507(a)(8)(G) of
the Bankruptcy Code.
"These oversecured claims eventually will need to be fully
satisfied either under any plan of reorganization confirmed in
these cases or from the proceeds of sale of any of the Personal
Properties and Real Properties," Mr. DeFranceschi points out.
Therefore, Mr. DeFranceschi contends that, in the light of the
oversecured status of these prepetition tax claims, the Debtors'
payments on a discretionary basis may result in a net benefit to
these estates. Upon the payment of these taxes, the government
units' related claims would no longer accrue penalties or
interest that otherwise might accumulate. Plus, the Debtors'
net outlays in respect of these Taxes may be reduced as a result
of the payment authority requested.
Mr. DeFranceschi further notes that the payment of the Taxes
will enable the discharge of tax liens that have been imposed by
operations of law or otherwise on the Personal and Real
Properties. This will help to minimize any arguments that might
be made by any party that the imposition or existence of those
liens technically violates the covenants of leases or other
agreements to which one or more of the Debtors are a party.
(Kaiser Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DebtTraders reports that Kaiser Aluminum & Chemicals's 12.750%
bonds due 2003 (KAISER2) are quoted between 17 and 21. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KAISER2for
more of real-time bond pricing.
KMART: Selling Dallas Property as Part of $44 Million Agreement
---------------------------------------------------------------
Kmart Corporation and its debtor-affiliates want to sell a
parcel of real estate located on Skillman Street in Dallas,
Texas, to a joint venture made up of Kimco Realty Corporation,
Schottenstein Stores Corporation, and Klaff Realty LP.
J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom,
in Chicago, Illinois, relates that one of the leases that is
subject to the Designation Rights Agreement is for the Debtors'
store number 3718 located in Dallas, Texas. Adjacent to the
Leased Property is a vacant parcel of real property owned by the
Debtors that intended to be used as a store. In addition to the
transfer of the Designation Rights to the Joint Venture, Mr.
Ivester says, the Debtors have agreed to sell, transfer and
convey the Dallas Property to the Joint Venture or a designee
identified by the Joint Venture.
Mr. Ivester notes that the $44,000,000 guaranteed amount
provided in the Designation Rights Agreement includes
consideration for the value of the Dallas Property.
The Debtors assert that the proposed sale should be approved
considering that it would be difficult to maximize the value of
the Leased Property and the Dallas Property if disposed in
separate transactions. Mr. Ivester contends that the Debtors'
immediate consummation of the sale of the Dallas Property, in
conjunction with the transfer of the Designation Rights to the
Joint Venture with respect to the 53 leases identified in the
Designation Rights Agreement is the best way to maximize the
value of the Dallas Property given its intended common use with
the Leased Property and its proximity to the Leased Property.
The Debtors also ask the Court that the Dallas Property be
transferred to the Joint Venture free and clear of all liens,
claims and encumbrances, with the liens, claims and encumbrances
to attach to the proceeds to be provided to the Debtors under
the terms of the Designation Rights Agreement. (Kmart Bankruptcy
News, Issue No. 26; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
KMART CORP: Institutions' Committee Wants to Modify Wage Order
--------------------------------------------------------------
The Official Financial Institutions' Committee in the Chapter 11
cases of Kmart Corporation and its debtor-affiliates wants the
Court to stop payments to former management employees under the
prepetition non-qualified benefit programs, including the
Supplemental Executive Retirement Plan and the Voluntary Early
Retirement Plan. "These SERP Payments are in addition to the
qualified benefits that continue to be received by former
management," Ilana N. Glazier, Esq., at Jones, Day, Reavis &
Pogue, in Chicago, Illinois, notes.
According to Ms. Glazier, Kmart carefully inserted in the Wages
Motion a different type of payment to people who were no longer
working on the Petition Date. "The SERP Payments were a small
part of the Wages Motion, which itself was only one of the
substantial set of first-day motion papers, that it was
difficult to spot even the fact of their presence, much less
that they are unjustified," Ms. Glazier explains. These SERP
Payments drain more than $4,000,000 per year out of the estates,
Ms. Glazier reports.
And yet, Ms. Glazier notes, these SERP Payments have no
corresponding benefit to the estates. "The Wages Motion did not
even try to justify how the estates might be helped by spending
millions annually on former management employees," Ms. Glazier
observes. Simply put, Ms. Glazier says, justification is
impossible.
Ms. Glazier explains that the Institutions' Committee is
bringing this issue only now since the Wages Motion and the Wage
Order were issued before the formation of the statutory
committees. Thus, the Institutions' Committee asks the Court to
consider its request for modification.
The Institutions' Committee makes it clear that they support the
payment of wages and benefits to current employees. (Kmart
Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
DebtTraders reports that KMart Corp.'s 9.440% bonds due 2018
(KMART12) are trading between 60 and 65. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KMART12for
real-time bond pricing.
L-3 COMMS: Completes Tender Offer for $225MM Senior Sub. Notes
--------------------------------------------------------------
L-3 Communications (NYSE: LLL), announced that L-3
Communications Corporation, its wholly owned subsidiary,
completed its tender offer to purchase for cash any and all of
its outstanding $225 million aggregate principal amount of 10-
3/8% Senior Subordinated Notes due 2007. As of 5:00 p.m., New
York City time, on Wednesday, July 3, 2002, the expiration date,
the Company had accepted tender of Notes from holders of
$177,195,000 (or approximately 79%) of the $225,000,000
outstanding principal amount of the Notes pursuant to the Offer
to Purchase, dated June 6, 2002, and the related letter of
transmittal. Payment for the Notes tendered after 5:00 p.m., New
York City time, on June 24, 2002 will be made on July 5, 2002.
Payment for the Notes tendered prior to 5:00 p.m., New York City
time, on June 24, 2002, was made on June 28, 2002. The Company
has initiated full redemption of the remaining $47,805,000 of
notes that were not tendered by 5:00 p.m., New York City time,
on Wednesday, July 3, 2002.
Headquartered in New York City, L-3 Communications is a leading
merchant supplier of Intelligence, Surveillance and
Reconnaissance (ISR) products, secure communications systems and
products, avionics and ocean products, training products,
microwave components and telemetry, instrumentation, space and
wireless products. Its customers include the Department of
Defense, selected US government intelligence agencies, aerospace
prime contractors and commercial telecommunications and wireless
customers.
* * *
As reported in Troubled Company Reporter's June 24, 2002
edition, Standard & Poor's is anticipating it will raise its
corporate credit rating on New York-based L-3 Communications to
double-'B'-plus from double-'B' after the defense company
completes its proposed offering of approximately $900 million in
common stock and $750 million in senior subordinated debt and
assuming that any pending acquisition activity is on a scale
that can be accommodated by the company's enhanced financial
resources. At the same time, the rating on the company's
subordinated debt would be raised to double-'B'-minus from
single-'B'-plus. The outlook would be stable. The company's
ratings remain on CreditWatch with positive implications, where
they were placed on June 6, 2002.
The proceeds from the sale are expected to refinance and pay
down debt related to the company's recent $1.1 billion purchase
of Raytheon Corp.'s Aircraft Integration Services (AIS) division
and restore the company's capital structure. The securities sale
is expected to be completed by the end of June 2002.
Ratings on L-3 Communications reflect a slightly below average
business risk profile and somewhat elevated debt levels, but
credit quality benefits from an increasingly diverse program
base and efficient operations. Acquisitions are very important
for revenue growth, and the balance sheet has periodically
become highly leveraged because of debt-financed transactions.
However, management has a good record of restoring financial
flexibility by issuing equity.
LTV: Proposes Bidding Procedures for Copperweld Asset Sale
----------------------------------------------------------
The LTV Corporation and its debtor-affiliates ask Judge Bodoh to
(i) establish bidding procedures for the sale of the assets of
the Metal Fabrication Business of Copperweld, (ii) approve
certain bid protections in that connection, and (iii) approve
the form and manner of notice of the asset sale procedures.
The Copperweld assets are owned primarily by LTV, LTV Steel,
Copperweld Corporation and its subsidiaries, Georgia Tubing
Corporation, and certain non-debtor affiliates. The assets
being sold comprise the business facilities and related assets
of the Metal Fabrication Business and, following completion of
this sale, constitute the primary remaining operating assets of
the Debtors' estates. The Debtors assure Judge Bodoh they have
carefully evaluated the appropriate treatment of the assets in
these cases. Based on this evaluation, the Debtors have
determined that completing a going concern sale of some or all
of the Assets may provide the best mechanism to maximize the
value of these Assets for the benefit of the Debtors' estates
and creditors. Moreover, to assist in developing an overall
strategy for the completion of these cases, the Debtors believe
that it would be beneficial to complete any sale of the Assets
by the conclusion of the APP Period or shortly thereafter.
No Sale Yet
With this goal in mind, during the past several months, the
Debtors have engaged in extensive marketing efforts to sell the
Assets. These efforts have included, among other things:
(a) preparing and distributing to certain potential
purchasers detailed offering memoranda describing the
Assets,
(b) organizing and maintaining an extensive data room with
related due diligence information,
(c) conducting site visits and management presentations
for certain of the Potential Purchasers,
(d) receiving and analyzing preliminary bid information
from Potential Purchasers, and
(e) engaging in discussions of potential bids with certain
of the Potential Purchasers.
To date, the Debtors have not yet negotiated and consummated a
definitive sale of any of the Assets.
The Debtors believe that completing a sale of some or all of the
Assets will be assisted by implementing Asset Sale Procedures on
the terms described in the Motion. The Asset Sale Procedures
provide a framework for the competitive bidding process and
permit the Debtors the option of granting certain bid
protections to a successful bidder. The Asset Sale Procedures
are designed to maximize the market value of the Assets for
the benefit of the Debtors' respective estates and creditors.
The Asset Sale Procedures
With the assistance of their professionals, the Debtors have
developed the Asset Sale Procedures to permit the sale of the
Assets to be completed in an orderly, expeditious and efficient
manner and to ensure that they receive the highest and best
price for the Assets for the benefit of their estates and
creditors. The proposed Asset Sale Procedures are set out in
the Motion and in the Solicitation and Notice.
Description of the Assets
The Assets are comprised of:
a. The Bimetallic Business. Headquartered in
Fayetteville, Tennessee. LTV Copperweld's bimetallic
products business manufactures a broad range of
bimetallic wire and strip products. The Bimetallic
Business's primary products are copper-clad aluminum
wire and copper-clad steel wire, which are used as the
center conductors for coaxial cable, as well as in
other telecommunications, utility, electronics and
general industry applications. The assets of the
Bimetallic Business generally are comprised of all
assets related to or otherwise located at the
business's two manufacturing facilities in
Fayetteville, Tennessee; and Telford, Shropshire in
the United Kingdom.
b. The Copperweld Tubular Business. LTV Copperweld's
tubular products business is the largest and most
diverse manufacturer of steel tubing in North America.
The Copperweld Tubular Business produces a full range
of tubing products, including mechanical tubing
(drawn-over mandrel, as-welded and seamless),
structural tubing and stainless tubing, with a
special emphasis on differentiated, often customized
products. The assets of the Copperweld Tubular
Business generally are comprised of all assets related
to or otherwise located at the business's 12
manufacturing and warehouse facilities in Brampton
(three facilities) and Mississauga, Ontario, Canada;
Oak Bluff, Manitoba, Canada; Elizabethtown,
Kentucky; Piqua and Shelby, Ohio; Portland, Oregon;
Chicago and Bedford Park, Illinois; and Birmingham,
Alabama.
c. The LTV Tubular Business. Headquartered in Youngstown,
Ohio, LTV Copperweld's pipe and conduit business is
one of the two largest manufacturers of electrical
metallic conduit and the largest producer of welded
standard and line pipe within the 4-1/2inch to 16 inch
size range in North America. The LTV Tubular Business
also manufactures mechanical steel tubing. The assets
of the LTV Tubular Business generally are
comprised of all assets related to or otherwise
located at the business's five manufacturing
facilities in Cedar Springs, Georgia; Counce,
Tennessee; Elyria and Youngstown, Ohio; and Ferridale,
Michigan.
d. The Automotive Business. Headquartered in Woodstock,
Ontario and operated primarily through nondebtor
affiliate Copperweld Canada Inc., LTV Copperweld's
fabricated automotive components business designs and
manufactures automotive components from tubular steel
foundation. The Automotive Business is a specialized
technology supplier to original equipment
manufacturers and other Tier I automotive parts
suppliers. The Automotive Business is a market leader
in each product that it manufactures, including
instrument panel beams, axle hollows, frame
crossmembers, suspension components and trailer
hitches. The assets of the Automotive Business
generally are comprised of all assets related to or
otherwise located at the business's two manufacturing
facilities in Brantford and Woodstock, Ontario,
Canada.
Pursuant to the Asset Sale Procedures, LTV Copperweld will be
soliciting interest in purchasing all of the Assets of one or
more Businesses. The Debtors believe that all or substantially
all of the Assets are owned by LTV Copperweld. However, the
Debtors seek to sell all of the Assets as described in the
Motion and in the Asset Purchase Agreement, whether owned by LTV
Copperweld or one or more of the other Debtors or their
nondebtor affiliates. Accordingly, to the extent necessary, this
Motion seeks authority for any of the Debtors to take such steps
as are necessary or appropriate to participate in or implement
the Asset Sale Procedures, including the steps as are necessary
or appropriate to accomplish the sale of any Assets held by
their nondebtor affiliates, including the Assets of related
tubular products and bimetallic operations in Canada and the
United Kingdom, whether by sale of the equity of such nondebtor
affiliates, by sale of their assets or otherwise.
The Bidding Process
LTV Copperweld already has engaged in extensive marketing
efforts with respect to the potential sale of the Assets.
Pursuant to that process, LTV Copperweld identified and
recognized a number of bidders as qualified to bid on the
Assets, based on, among other things, statements of interest
(including a non-binding, preliminary range of enterprise
values) and certain financial information demonstrating to LTV
Copperweld's satisfaction the bidders' financial wherewithal to
consummate a purchase of the applicable Assets. All Qualified
Bidders will be notified in writing of their designation as
Qualified Bidders and may participate in the Bidding Process.
Any other party interested in purchasing some or all of the
Assets may seek to become a Qualified Bidder and participate in
the Bidding Process by notifying The Blackstone Group, L.P.
prior to the Bid Deadline of its interest in bidding on some or
all of the Assets (which expression of interest must include a
non-binding, preliminary range of enterprise values comparable
to Qualified Bidders' non-binding, preliminary ranges of
enterprise values for such Assets) and providing such
information as may be required by LTV Copperweld to demonstrate
the potential bidder's financial wherewithal to consummate a
purchase of the applicable Assets. LTV Copperweld, in its
discretion after consultation with the Debtors' postpetition
secured lenders and the Committees, may determine which
additional parties constitute Qualified Bidders. Each additional
Qualified Bidder will be notified in writing of its designation
as a Qualified Bidder.
LTV Copperweld has afforded and will continue to afford any
Qualified Bidder such due diligence access or additional
information as may be reasonably requested by the Qualified
Bidder and that LTV Copperweld, in its business judgment,
determines to be reasonable and appropriate. LTV Copperweld will
coordinate all reasonable requests for additional information
and due diligence access from such Qualified Bidders through
its counsel, Jones, Day, Reavis & Pogue. Unless otherwise
determined by LTV Copperweld in its discretion after
consultation with the Creditors, the availability of additional
due diligence to a Qualified Bidder will cease (a) from and
after the Bid Deadline or (b) if the Bidding Process is
terminated in accordance with its terms with respect to the
relevant Assets.
The APA
As promptly as practical prior to the Bid Deadline, LTV
Copperweld will provide to each Qualified Bidder a form of asset
purchase agreement with respect to the Assets of the applicable
Business or Businesses that the Qualified Bidder desires to
purchase, together with certain other ancillary documents. Any
potential bidder that is not designated as a Qualified Bidder in
accordance with these procedures will be disqualified from
further participation in the Bidding Process. A Non-Qualified
Bidder will not be permitted to conduct due diligence, make a
bid for any of the Assets under the Asset Sale Procedures or
participate in the Bid Negotiations.
The Bid Deadline
Not later than 12:00 p.m., Eastern Time, on July 10, 2002, a
Qualified Bidder that desires to make a bid must deliver written
copies of its bid to: (a) LTV Steel Company, Inc., 6801
Brecksville Road, Independence, Ohio 4413 1, Attention: N. David
Bleisch, Esq. and Sheri H. Edison, Esq., telecopier no. 216-642-
4584; (b) The Blackstone Group L.P., 345 Park Avenue,28th Floor,
New York, New York 10154, Attention: Raffiq Nathoo and Mark
Wasserberger, telecopier no. 212-583-5349; and (c) Jones, Day,
Reavis & Pogue, North Point, 901 Lakeside Avenue, Cleveland,
Ohio 44114, Attention: Lyle G. Ganske, Esq. and David D. Watson,
Esq., telecopier no. 216-579-0212.
LTV Copperweld may provide separate forms of an Asset Purchase
Agreement for the assets of (a) the Bimetallic Business, (b) the
Copperweld Tubular Business, (c) the LTV Tubular Business, (d)
the Automotive Business or (e) a combination of these, including
all of the Businesses, and any such agreement may provide for
the sale of the assets or stock of LTV Copperweld's nondebtor
foreign affiliates.
Bid Requirements
Qualified Bidders may make a bid for the Assets of any one or
more of the Businesses, provided that, if a bid includes both
the Assets of the LTV Tubular Business and one or more of the
other Businesses, the bid must allocate the proposed cash
consideration contained in the bid between (a) the LTV Tubular
Business and (b) other Business or Businesses. LTV Copperweld
reserves the right, in its discretion after consultation with
the Creditors, to consider bids for other combinations of
Assets, but is not required to do so.
A bid is a signed letter from a Qualified Bidder stating that:
a. The Qualified Bidder offers to purchase, for cash, the
Assets of one or more of the Businesses upon the terms
and conditions set forth in a copy of the Asset
Purchase Agreement enclosed, marked to show any
proposed amendments and modifications to the Asset
Purchase Agreement (including any ancillary agreements
distributed therewith);
b. The Qualified Bidder's offer is irrevocable until the
earlier of:
(i) the closing of the sale of the applicable
Business or Businesses, whether or not to such
Qualified Bidder; or
(ii) the termination of an executed Asset Purchase
Agreement and withdrawal of the Assets of the
applicable Business or Businesses from the
Bidding Process by LTV Copperweld; and
c. The Qualified Bidder's offer is not subject to any due
diligence, board approval or financing contingency and
does not contain any other material conditions to
closing not contained in the Asset Purchase Agreement.
A Qualified Bidder must accompany its bid with (a) written
evidence of available cash, a commitment for financing or
ability to obtain a satisfactory financing commitment if
selected as the Successful Bidder (as such term is defined
below) and other evidence of ability to consummate the
transaction as LTV Copperweld may reasonably request; (b) a copy
of a board resolution or similar document demonstrating the
authority of the Qualified Bidder to make a binding and
irrevocable bid on the terms proposed; and (c) any pertinent
factual information regarding the Qualified Bidder's operations
that would assist LTV Copperweld in its analysis of issues
arising with respect to the Hart-Scott-Rodino Anti-Trust
Improvements Act of 1976, as amended, and, if applicable, any
similar laws in other jurisdictions.
The Good Faith Deposit
By the Bid Deadline, a Qualified Bidder must deposit with an
escrow agent selected by LTV Copperweld a good faith deposit of
$1,000,000 for the Assets of each Business included in the bid.
The Good Faith Deposit must be made by certified check or wire
transfer and will be held by the Escrow Agent in accordance with
the terms of an escrow agreement to be provided with the Asset
Purchase Agreement.
A bid received by the Bid Deadline from a Qualified Bidder that
meets the requirements in the Motion is considered a "Qualified
Bid." LTV Copperweld reserves the right, in its discretion after
consultation with the Creditors, to waive noncompliance with any
one or more of these requirements and deem any otherwise non-
qualifying bid to be a Qualifying Bid. A Qualified Bid will be
evaluated based upon factors such as: (a) the purported amount
of the Qualified Bid; (b) the fair value to be provided to LTV
Copperweld under the Qualified Bid; (c) the ability to close or
the likelihood of closing the proposed sale transaction without
delay; and (d) any other factors that LTV Copperweld may deem
relevant.
LTV Copperweld reserves the right to reject any bid, in its
discretion after consultation with the Creditors, if the bid:
a. is on terms that are materially more burdensome or
conditional than the terms of the applicable Asset
Purchase Agreement;
b. proposes to purchase items other than the Assets;
c. requires any indemnification of such Qualified Bidder
in its Marked Agreement;
d. is not received by the Bid Deadline;
e. includes a non-cash instrument or similar
consideration;
f. requires any regulatory or other approval that would
delay the closing;
g. contains any material conditions to closing not
contained in the Asset Purchase Agreement; or
h. does not provide for the complete assumption of all
Assumed Liabilities relating to the Assets to be
purchased.
Any bid rejected will not be considered to be a Qualified Bid.
Bid Negotiations and Selection of Successful Bid
Upon the receipt of Qualified Bids, LTV Copperweld may negotiate
with one or more Qualified Bidders regarding the terms of the
applicable Qualified Bids. In conducting the Bid Negotiations,
LTV Copperweld may, among other things:
(a) solicit modifications to the terms and conditions of
any Qualified Bid for some or all of the Assets;
(b) designate a Successful Bid; or
(c) with respect to any Successful Bid, grant Bid
Protections.
The Bid Negotiations will be concluded no later than July 29,
2002 or a later date as may be established by LTV Copperweld in
its discretion after consultation with the Creditors. Unless
otherwise ordered by the Bankruptcy Court for cause shown, only
a Qualified Bidder that has submitted a Qualified Bid is
eligible to participate in the Bid Negotiations.
On or before July 31, 2002, or a later date as may be
established by LTV Copperweld in its discretion after
consultation with the Creditors, and in conjunction with the Bid
Negotiations, LTV Copperweld, in consultation with its financial
and legal advisors and the Creditors, will:
(a) review each Qualified Bid (as they may be modified
from time to time in connection with the Bid
Negotiations) on the basis of financial and
contractual terms and such factors relevant to the
sale process, including those factors affecting the
speed and certainty of consummating the proposed sale;
(b) in LTV Copperweld's discretion, negotiate and identify
the highest and best bid for the applicable Business
or Businesses); and
(c) file a notice with the Court identifying the name of
the maker of the Successful Bid for the applicable
Assets, and the amount and other material terms of the
Successful Bid. The Successful Bid Notice also will be
served on the parties identified on the General
Service List maintained in these cases and all
Qualified Bidders. Separate Successful Bids may be
designated for separate Businesses, in which case a
separate Successful Bid Notice will be prepared for
each Successful Bid.
Bid Protections
LTV Copperweld will have the authority, in its discretion after
consultation with the Creditors, to grant bid protections to any
Successful Bid:
(a) a break-up fee in an amount not to exceed the greater
of:
(i) the lesser of (x) $1,000,000 for the Assets of
each Business included in any Successful Bid and
(y) 3 % of the cash purchase price; and
(ii) 2% of the cash purchase price (collectively,
the "Break-Up Fee"); and
(b) if LTV Copperweld for any reason considers additional
bids for the Assets included in the Successful Bid,
the bids would be required to include a cash purchase
price of not less than the sum of:
(i) the cash purchase price contained in the Successful
Bid with respect to the applicable Assets; plus
(ii) the Break-Up Fee, if any; plus
(iii) $1,000,000.
A Successful Bidder's entitlement to a Break-Up Fee is expressly
conditioned on (a) the consummation of a sale of all of the
applicable Assets to another party and (b) such other terms and
conditions negotiated by the parties. In addition, LTV
Copperweld will have the authority, in its discretion after
consultation with the Creditors, to include customary expense
reimbursement provisions in any Asset Purchase Agreement with a
Successful Bidder covering circumstances where no Break-Up Fee
is available.
Promptly following any agreement by LTV Copperweld to provide
Bid Protections, LTV Copperweld will provide notice to all
Qualified Bidders that made a Qualified Bid with respect to any
of the applicable Assets of the agreed-upon Bid Protections.
This notice may be incorporated into any Successful Bid Notice.
Conduct and Termination of the Bidding Process
LTV Copperweld will, in its discretion after consultation with
the Creditors:
(a) determine whether any potential bidder is a Qualified
Bidder;
(b) coordinate the efforts of Qualified Bidders in
conducting their respective due diligence
investigations regarding the Assets;
(c) determine whether to remove any of the Assets from the
sale process under the Asset Sale Procedures;
(d) evaluate bids from Qualified Bidders and determine
whether any such bid is a Qualified Bid;
(e) conduct the Bid Negotiations;
(f) designate a Successful Bidder at any time;
(g) determine whether and to what extent to grant Bid
Protections; and
(h) make other determinations as are provided in the Asset
Sale Procedures.
If no Qualified Bids are received with respect to some or all of
the Assets, LTV Copperweld may remove the applicable Assets from
the Bidding Process. Moreover, LTV Copperweld may terminate the
Bidding Process at any time with respect to any or all of the
Assets if LTV Copperweld determines for any reason that the
action is in the best interests of its estates and creditors.
Except as may otherwise be expressly agreed by LTV Copperweld in
a signed Asset Purchase Agreement, any termination of the
Bidding Process will not give rise to any liability to any
Qualified Bidder or any other party by LTV Copperweld.
LTV Copperweld intends to present each Successful Bid to the
Bankruptcy Court for approval at a Sale Hearing.
Notwithstanding this, LTV Copperweld reserves and maintains the
right to determine, in its discretion after consultation with
the Creditors, the appropriate means to conclude the Bidding
Process with respect to any particular Asset, including, among
other things:
(a) presenting a Successful Bid to the Bankruptcy Court
for approval at a Sale Hearing;
(b) re-opening the Bid Negotiations (including granting
Bid Protections) to consider additional bids before
presenting a Successful Bid to the Bankruptcy Court;
or
(c) conducting a formal or informal auction.
Acceptance of Qualified Bids
LTV Copperweld's presentation to the Bankruptcy Court for
approval of any selected bid as a Successful Bid does not
constitute LTV Copperweld's acceptance of the bid. LTV
Copperweld will be deemed to have accepted a Successful Bid only
when a Successful Bid has been approved by the Bankruptcy Court
at a Sale Hearing.
Treatment of Good Faith Deposit
The Good Faith Deposits of all Qualified Bidders will be
retained by the Escrow Agent, notwithstanding Bankruptcy Court
approval of a sale, until 48 hours after the earlier of (1) the
closing of the proposed sale or (2) the termination of an
executed Asset Purchase Agreement and withdrawal of the
applicable Assets for sale by LTV Copperweld, but in any event
not later than 45 days after the Sale Hearing with respect to
the Assets to which the Qualified Bid applies. If the Successful
Bidder does not close the proposed sale, LTV Copperweld will
have the right to present any other bid to the Bankruptcy Court
for approval.
At the closing of the transaction contemplated by the Successful
Bid, the Successful Bidder will be entitled to a credit for the
amount of its Good Faith Deposit or other treatment as set forth
in the applicable Asset Purchase Agreement.
Evaluation of Bids and Modifications
LTV Copperweld may, after consultation with the Creditors:
(a) determine, in its business judgment, which bid or
bids, if any, constitute the highest and best offer
for the applicable Assets; and
(b) reject, at any time before entry of an order of the
Bankruptcy Court approving a bid, any bid that, in LTV
Copperweld's sole discretion, is:
(i) inadequate or insufficient;
(ii) not in conformity with the requirements of the
Bankruptcy Code, the Asset Sale Procedures or
the terms and conditions of sale set forth in
the Asset Purchase Agreement; or
(iii) contrary to the best interests of LTV Copperweld
and its estates and creditors. In its discretion
and after consultation with the Creditors, LTV
Copperweld may extend or alter any deadline
contained herein (with respect to some or all of
the Assets) that will better promote the goals
of the Bidding Process under the circumstances.
Sale Hearing
A Sale Hearing with respect to the applicable Assets will be
scheduled at the time the Sale Motion is filed or at a later
time as a Successful Bid is selected, subject to the terms of
the Motion. If any Successful Bidder is selected by LTV
Copperweld, in its discretion after consultation with the
Creditors and subject to the terms of this Motion, LTV
Copperweld will seek the entry of an order from the Bankruptcy
Court at a Sale Hearing approving and authorizing the proposed
sale to the Successful Bidder on terms and conditions consistent
with the applicable Asset Purchase Agreement (as modified solely
to the extent accepted by LTV Copperweld) and in accordance with
the Asset Sale Procedures.
After a Sale Hearing is scheduled, the Debtors in their
discretion may seek to expedite the Sale Hearing with respect to
some or all of the Assets to permit an earlier closing of the
transaction upon at least ten days' notice to the parties on the
General Service List maintained in these cases, the parties
entitled to notice of the proposed sale and all Qualified
Bidders that made Qualified Bids. In addition, a Sale Hearing
may be adjourned without notice other than by an announcement of
the adjourned date at the Sale Hearing.
Request for Approval of the Asset Sale
Procedures and Form and Manner of Notice
By this Motion, the Debtors seek approval of (a) the Asset Sale
Procedures and (b) the form and manner of providing notice of
these procedures. A debtor in possession may sell property of
the estate outside of the ordinary course of business, subject
to the approval of the court after notice and a hearing. In
accordance with the Federal Rules of Bankruptcy Procedure, sales
of property outside of the ordinary course of business may occur
by private sale or by public auction.
The Debtors have determined that the sale of the Assets pursuant
to the Asset Sale Procedures will enable them to obtain the
highest and best offer for the Assets and maximize the value of
the Assets for its estate. Accordingly, it is in the best
interests of the Debtors' estates to implement the Asset Sale
Procedures. The Debtors have extensively marketed the Assets to
all known parties that may have an interest in purchasing the
Assets. Substantial information concerning the Assets has been
or will be provided to each interested party, along with an
opportunity to conduct additional reasonable due diligence. The
Debtors believe that the solicitation of bids through the Asset
Sale Procedures will maximize the chances of receiving bids for
the Assets in the short term and that the Bidding Process will
enhance the opportunity to generate competitive bidding.
Moreover, in conjunction with the Asset Sale Procedures, the
Debtors will continue their efforts to generate interest in the
Assets. Within three business days following the entry of an
order approving the Asset Sale Procedures or as soon thereafter
as is practicable, the Debtors will disseminate the Bid
Solicitation to the Qualified Bidders and any other Potential
Purchasers that the Debtors believe may have an interest in the
Assets. In addition, within five business days following entry
of the Sale Procedures Order or as soon thereafter as is
practicable, the Debtors will publish a notice of the Asset Sale
Procedures and the Bidding Process in American Metal Market or
similar industry trade publication; the national edition and, in
LTV Copperweld's discretion, the European and/or Asian editions
of The Wall Street Journal; and the U.S. and, in LTV
Copperweld's discretion, the U.K. and/or Continental Europe
editions of The Financial Times. The Bid Solicitation and the
Sale Notice, along with the Debtors' other marketing efforts,
will provide sufficient publicity to apprise interested parties
of the proposed sale of the Assets.
Accordingly, for all of these reasons, the Debtors submit that
the Court should approve the Asset Sale Procedures and the form
and manner of notice of the Bid Solicitation and the Sale
Notice.
Request for Approval of Certain Bid Protections
The Debtors propose that they have the authority to provide Bid
Protections to a Successful Bidder. The provision of break-up
fees and similar bid protections is customary to compensate a
bidder for costs, including lost opportunity costs, incurred as
a result of its willingness to enter into an asset purchase
agreement and accept a role as a leading bidder. The Debtors
believe that the Bid Protections are essential to assist in
attracting interested buyers to enter into a definitive asset
purchase agreement. The Debtors are hopeful that the approval of
the Bid Protections will encourage bidding, which, in turn, will
lead to a successful sale and potentially generate higher and
better offers for the Assets, thereby maximizing the value of
the Assets for the Debtors' estates.
In HM Industries, the court set forth seven factors that it
considered significant in determining whether certain bid
protections, including a break-up fee, were appropriate:
(a) whether the fee requested correlates with a
maximization of value to the debtor's estate;
(b) whether the underlying negotiated agreement is an
arm's-length transaction between the debtor's estate
and the negotiating acquirer;
(c) whether the principal secured creditors and the
official creditors' committee(s) are supportive of the
requested fee;
(d) whether the break-up fee constitutes a fair and
reasonable percentage of the proposed purchase price;
(e) whether the dollar amount of the break-up fee is so
substantial that it provides a "chilling effect" on
other potential bidders;
(f) the existence of available safeguards to the debtor's
estate; and
(g) if unsecured creditors oppose the break-up fee,
whether there exists a substantial adverse impact upon
these creditors.
The Bid Protections satisfy the factors articulated by the HM
Industries court. Specifically, the proposed Bid Protections
(a) are fair and reasonable in light of the circumstances and
proposed transaction; (b) are designed to assist, rather than
hamper, the bidding process; and (c) will benefit creditors by
attracting potential purchasers to maximize the value of the
Assets for the Debtors' estates. Under the circumstances, the
Debtors believe that the proposed Bid Protections are necessary
to generate interest in the Assets to attract definitive bids
and thereby enhance the competitive bidding process.
The amount of the Bid Protections (including the Break-Up Fee)
has been established, in consultation with the Debtors'
financial advisors, to maximize the chances of enticing bidders
and thereby generate interest in the sale of the Assets in a
timely manner. The Debtors thus believe that the Bid Protections
will not chill bidding for the Assets and do not unduly burden
their estates. Accordingly, the Debtors submit that the Court
should approve the Bid Protections, subject to the terms and
conditions described herein. (LTV Bankruptcy News, Issue No. 32;
Bankruptcy Creditors' Service, Inc., 609/392-00900)
LA QUINTA CORP: Files Shelf Registration Statement with SEC
-----------------------------------------------------------
La Quinta(R) Corporation (NYSE: LQI) has filed a shelf
registration statement with the Securities and Exchange
Commission. The shelf registration statement, once declared
effective by the SEC, will replace the company's former shelf
registration statement, which had $1.825 billion of availability
under it.
The shelf registration statement, once declared effective by the
SEC, will facilitate, from time to time, the offer and sale of
up to $750 million of securities, which may include both equity
and debt securities of La Quinta Corporation and its controlled
subsidiary La Quinta Properties, Inc. The actual amount of any
securities to be issued, and the terms of those securities, will
be determined at the time of the sale, if such sale occurs. The
anticipated use of net proceeds from the sale of such securities
is for general business purposes, which may include refinancing
outstanding indebtedness and capital expenditures, including
acquisitions.
The shelf registration statement relating to these securities
has been filed with the SEC but has not yet become effective.
The securities described in the shelf registration statement may
not be sold, nor may offers to buy be accepted, prior to the
time the shelf registration statement becomes effective. This
release shall not constitute an offer to sell or the
solicitation of any offer to buy nor shall there be any sale of
these securities in any state in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of such state.
Dallas-based La Quinta Corporation, a mid-scale limited service
lodging company, owns, operates or franchises over 330 La Quinta
Inns and La Quinta Inn & Suites in 33 states. For more
information about the company http://www.LQ.com
* * *
As reported in Troubled Company Reporter's April 8, 2002
edition, Standard & Poor's affirmed the 'BB-' corporate credit
rating of La Quinta Corp. and took it off Credit Watch. Outlook
for the said rating is negative.
The ratings reflect the company's good quality portfolio of La
Quinta branded properties, which are expected to generate a more
stable level of cash flow as management progresses in rebuilding
its lodging business. These factors are offset by high debt
leverage, and the expectation that the lodging environment will
remain challenging in the near term.
LA QUINTA: Pays Off Bank Term Loan Cutting Indebtedness to $812M
----------------------------------------------------------------
La Quinta(R) Corporation (NYSE: LQI) has recently prepaid the
outstanding balance of its bank term loan. As of June 21, 2002,
total indebtedness has been reduced to $812 million with no
significant near-term debt maturities this year and the company
maintains significant liquidity with cash on hand of $125
million. The company has no borrowings under its $225 million
revolving line of credit.
"Our strategy of selling non-strategic assets continues to
generate significant cash proceeds," commented David L. Rea,
Executive Vice President and Chief Financial Officer. "Proceeds
from additional asset sales, cash on hand and availability under
our revolver gives us the financial flexibility to pursue
investment opportunities as well as manage 2003 debt
maturities."
Dallas-based La Quinta Corporation, a mid-scale limited service
lodging company, owns, operates or franchises over 330 La Quinta
Inns and La Quinta Inn & Suites in 33 states. Other information
about La Quinta is available on the Internet at
http://www.LQ.com
LODGIAN INC: Wants to Hire Wallach as St. Louis Special Counsel
---------------------------------------------------------------
Evan R. Fleck, Esq., at Cadwalader Wickersham & Taft in New
York, New York, informs the Court that with full knowledge of
the commencement of these Chapter 11 cases of Lodgian, Inc., and
its debtor-affiliates, on May 17, 2002, the City of St. Louis,
Missouri filed a Petition in Condemnation in the Circuit Court
of St. Louis County, State of Missouri, against a number of
properties, including a small parcel of land at Lodgian's
Holiday Inn St. Louis Airport North Hotel for the
purpose of runway expansion at Lambert-St. Louis International
Airport. In the Debtors' view, the proposed condemnation will
drastically impact ingress and egress at the St. Louis Hotel.
Lodgian believes this condemnation, if pursued, will
significantly impair the value of the St. Louis Hotel by
limiting guest access to the hotel property. Despite the
considerable monetary consequences of the proposed condemnation,
the City of St. Louis has made a final written offer prior to
filing its Petition of only approximately $39,000. In order to
oppose the condemnation and, if necessary, obtain appropriate
compensation that is consistent with the anticipated financial
harm to the estates, Lodgian seeks to retain experienced and
knowledgeable special counsel.
By this Application, the Debtors seek to retain The Wallach Law
Firm to serve as their St. Louis Special Counsel in connection
with their Chapter 11 cases effective as of June 20, 2002.
Pursuant to Sections 327(e), 328(a), 329 and 504 of the
Bankruptcy Code, the Debtors request that the court approve the
employment of Wallach to perform the necessary legal work to
oppose the proposed condemnation of the St. Louis Hotel property
located at 4545 North Lindbergh Boulevard, St. Louis, Missouri.
In its capacity as St. Louis Special Counsel, Mr. Fleck explains
that Wallach will represent the interests of the estates in
opposition to the proposed condemnation of a piece of the land
owned by Lodgian. The condemnation has the potential to
significantly impair the value of the Debtors' estates by
restricting access to this property.
Mr. Fleck contends that the services of Wallach as St. Louis
Special Counsel are necessary to enable Lodgian to execute its
duties as debtors and debtors in possession. The services to be
rendered by Wallach are not intended to be duplicative in any
manner with the services performed and to be performed by any
other party retained by Lodgian. In addition, Wallach and any
other party retained by Lodgian will undertake every reasonable
effort to avoid any duplication of their respective services.
Jerome Wallach, a principal at The Wallach Law Firm, ascertains
that the partners, associates and employees of Wallach do not
have any connection with Lodgian, its creditors, or any other
party in interest, or its respective attorneys. In addition,
Wallach is a "disinterested person" as defined in Section
101(14) of the Bankruptcy Code.
Mr. Wallach informs the Court that the Firm proposes to be
retained on a contingent fee basis, in accordance with Wallach's
historical billing practices. As compensation, the Firm's legal
fee shall be 33.33% of all amounts recovered by suit, settlement
or compromise, which are in excess of the final written offer
prior to the filing the condemnation proceedings.
(Lodgian Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
LUCENT TECHNOLOGIES: Selling Enterprise Prof. Services to INS
-------------------------------------------------------------
Lucent Technologies (NYSE: LU) has entered into a definitive
agreement to sell the enterprise portion of its professional
services unit to International Network Services Inc., a recently
created, wholly-owned subsidiary of West Coast Venture Capital,
LLC, a private venture capital firm based in Cupertino,
California.
As part of the agreement, INS will retain the existing
management team of Lucent's Enhanced Services and Sales division
and establish an independent professional services company
focused on the design, integration and operation of enterprise
networks. Lucent, which had already integrated the consultants
for its service provider customers into Lucent Worldwide
Services, will continue providing networking professional
services to its core service provider customers.
Terms of the agreement are not being disclosed. The
transaction, which is subject to customary closing conditions,
is expected to be completed by the end of July.
David Butze, currently president of Lucent's ESS division, will
be named president and chief executive officer of the new
company. ESS was formerly part of International Network
Services, a company Lucent acquired in 1999.
"Moving on independently makes strategic sense for our employees
and our customers, who will benefit from a company solely
focused on their complex, enterprise networking needs," Butze
said. "I look forward to building this business with the
historically strong culture and multi-vendor technologies that
have supported the needs of our clients. As INS, we will retain
the strong engineering and consulting talent that was the basis
of this company's original success."
"This announcement marks another piece of Lucent's strategy to
focus its products and portfolio on the world's largest
communication service providers," said Bill O'Shea, Lucent's
executive vice president, Corporate Strategy and Marketing.
"Lucent will continue to have the industry's premier
professional services team in place to do large-scale consulting
and design work for our service provider customers, while the
enterprise professional services team will be able to position
itself for success on its own."
The new INS, which will be headquartered in Santa Clara, Calif.,
will continue providing industry-leading networking solutions to
its enterprise customers, including some of the world's top
financial services, pharmaceutical, aerospace, energy and
transportation companies. The company has a reputation for
strong multi-vendor expertise based on its design of thousands
of solutions across all major enterprise networking technologies
and products. The company will provide network consulting and
design services to customers in major markets across North
America and Europe.
Lucent Technologies, headquartered in Murray Hill, N.J., USA,
designs and delivers networks for the world's largest
communications service providers. Backed by Bell Labs research
and development, Lucent relies on its strengths in mobility,
optical, data and voice networking technologies as well as
software and services to develop next-generation networks. The
company's systems, services and software are designed to help
customers quickly deploy and better manage their networks to
create new, revenue-generating services that help businesses and
consumers. For more information on Lucent Technologies, visit
its Web site at http://www.lucent.com
As previously reported, Fitch Ratings lowered Lucent
Technologies' Senior Unsecured Debt Rating to B+.
DebtTraders reports that Lucent Technologies' 7.700% bonds due
2010 (LUCENT5) 67 and 72. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=LUCENT5for
real-time bond pricing.
MANHATTAN NATIONAL: S&P Maintaining Watch on BB+ Ratings
--------------------------------------------------------
Standard & Poor's said that its double-'B'-plus counterparty
credit and financial strength ratings on Manhattan National Life
Insurance Co. (MNL) are remaining on CreditWatch with developing
implications, where they were placed on April 12, 2002.
The ratings were initially placed on CreditWatch because of the
then-pending sale of Manhattan National from a subsidiary of
Conseco Inc. to Great American Financial Resources Inc. (GAFRI),
which is a unit of American Financial Group Inc. (AFG). On June
28, 2002, GAFRI completed the acquisition of Manhattan National
for $48.5 million.
Standard & Poor's will be meeting with GAFRI's management to
discuss its strategic and financial plans for integrating
Manhattan National into the larger organization. Although
Manhattan National is not currently writing new policies, the
company reported more than $43 million of statutory renewal
premium in 2001. If Manhattan National is restored as an
operating entity rather than being placed in run-off, or if
there is explicit support from GAFRI, Standard & Poor's might
raise the ratings. If Manhattan National is placed in run-off,
the ratings could remain the same or be lowered.
MATLACK SYSTEMS: Wants to Maintain Exclusivity through August 23
----------------------------------------------------------------
Matlack Systems, Inc. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Distinct of Delaware for a sixth
extension of their exclusive periods. The Debtors want to
extend their exclusive plan filing period through August 23,
2002 and their solicitation period through October 25, 2002.
The Debtors say that winding down their operation is the best
viable option to maximize the estate's returns. The Debtors
have been selling their assets and the sale proceeds now exceed
$43 million. The Debtors are now devoting their resources to
formulating a plan of reorganization.
The Debtors add that since the petition date, together with
their advisors, they have been preoccupied in:
i) handling countless operational issues, including
responding to creditor, vendor, dealer, customer and
employee concerns and questions;
ii) continuing to assess the prospects for a sale of all of
the Debtors assets; and
iii) continuing the claims administration process in which
thousands of claims filed against the Debtors and listed
on their schedules of liabilities are being reviewed and
analyzed.
The Debtors tell the Court that they are actively working with
their own professionals, the Creditors' Committee and their
prepetition lenders to negotiate a reorganized plan. To
facilitate the negotiations, the Debtors are in the process of
conducting an analysis of the potential preference claim
recovery and are reviewing administrative and priority claims
that must be satisfied on or about confirmation.
Matlack Systems, Inc., North America's No. 3 tank truck company,
provides liquid and dry bulk transportation, primarily for the
chemicals industry. The company filed for chapter 11 protection
on March 29, 2001 and is represented by Richard Scott Cobb,
Esq., at Klett Rooney Lieber & Schorling. Matlack's 8Q Report,
filed with the Securities and Exchange Commission on June 3,
200, lists assets of $40,030,168 and liabilities of $85,211,346.
MED DIVERSIFIED: Mulling Appeal from AMEX Delisting Notice
----------------------------------------------------------
The following is a letter from Med Diversified, Inc. (AMEX:
MED), to its employees that the Company placed on its Web site
June 26, 2002:
"To All Med Diversified Employees:
"In a couple of months, Med Diversified, Inc. will celebrate its
first birthday. I am looking forward to this with great
anticipation, as it will mean we faced a tough year of hurdles
and together we persevered. To be sure, our work is long from
over. We are still dealing with key business challenges and they
are not to be under stated.
"From our corporate headquarters in Andover, Massachusetts, a
small team of about 30 people work to manage the operations of a
business that has approximately $500 million in "revenue under
management" on an annualized basis. Because some of you have
recently inquired, "revenue under management" includes $420
million in total combined company sales plus an additional $80
million in sales generated by our joint ventures (NCOE's).
Although we are responsible for the daily management of the NCOE
business, we do not directly recognize this revenue under the
equity method of accounting.
"The team in Andover is proud of your success in field
operations and we applaud you for all of your efforts. As for
the corporate team, we had successes this year as well. We
successfully integrated three diverse entities: e-MedSoft.com,
Chartwell Diversified Services and Tender Loving Care. We saw
the transition of the resulting company--Med Diversified--from a
broken and lost medical Applications Service Provider (ASP), to
a full-fledged home and alternate site health care services
provider. Along the way, we reduced expenses by more than $20
million and decreased our annual cost of capital by $4 million.
"While our successes are indeed strong, we still face many
challenges. In the spirit of open communication, I would like to
share with you the plans and expectations of the Executive
Management Team, correct misunderstandings you may have
resulting from information distributed via various communication
channels and clarify recent developments. I hope to explain how
this team is working to achieve our goal of becoming the best
provider of home health care services in the industry.
Restructuring e-MedSoft.com
"Since August 2001, senior management time has been devoted to
working through the problematic business issues relating
directly to e-MedSoft.com. These included overstaffing;
unfinished technology projects; the dismantling of long-term
employment and earn-out contracts; American Stock Exchange
(AMEX) related matters; negotiations with technology vendors;
and seeking to resolve the tremendous amount of litigation in
which e-Medsoft.com was involved. Additionally, we needed to
reevaluate the technology of e-Medsoft.com--much of which
ultimately proved to be in development stages, had little or no
demand in the marketplace, and ultimately led us to believe it
was unworthy of further financial support. The above is just a
short list of the wreckage of e-MedSoft.com that has required
significant capital and human resources on the part of Med
Diversified to secure positive resolutions.
Fiscal Year Ended 2002: Evaluating Past Performance
"We believe the current price per share of Med Diversified's
stock does not reflect the true value of our company. It does
however, reflect a serious uncertainty within financial markets
about our perceived prospects for profitability and our ability
to navigate through various financing events. We believe this
uncertainty was influenced in part by the global macro-economic
business environment, the Company's weak financial performance
and the fact that certain disclosed transactions did not develop
and finalize as predicted. Additionally, we believe our stock
price was affected by the Company's decision to halt non-
essential press announcements and act in a manner more
appropriate for a Health Care Services business. We defend this
action and believe it is the more appropriate public relations
strategy. The value of our company will not be recognized
through frivolous marketing-focused press releases. Until we
identify and address all the known and unknown skeletons from e-
MedSoft.com and demonstrate corporate successes to the market--
we will not achieve the value we deserve.
"Management invested considerable time and effort examining the
operating units of Med Diversified and evaluating certain assets
for the fourth quarter of fiscal year 2002. To that end, we have
identified assets on our balance sheet, which today, are clearly
not valuable. The Company cannot waste capital and human
resources pursuing projects that either do not have market
opportunities or will never occupy a market leadership position.
These include: e-commerce, physician practice management
software and transcription services, etc. These markets either
never materialized or Med Diversified was so far behind, it was
a fruitless effort to continue. Simultaneously, our management
team is seeking strategic alternatives for our Trestle division.
All of these items will be dealt with during the fourth quarter
of fiscal year 2002 resulting in the expectation that these
issues will not affect the 2003 fiscal year.
"Conversely, we have identified assets within the Company with
the potential to emerge as independent businesses. This opens up
our value proposition to our loyal shareholders and employees.
"It is our goal to achieve profitability in the fourth quarter
of fiscal year 2003. In order for this to happen, we need three
things to occur:
1. Sustained revenue growth
2. Disciplined expense management
3. Elimination of all prior period issues from our fiscal
year 2003 by properly accounting for these issues in fiscal year
2002.
"I am confident we have the ability to accomplish these
milestones.
Reporting of Fiscal Year Results
"Additionally, it is the goal of this operating team to deliver
and report all financial results in a timely and appropriate
manner. Given the extensive review and analysis as detailed
above, the efforts of this team are to be applauded. With regard
to the current year-end review, certain settlement discussions
will likely affect our ability to complete the Fiscal Year End
results prior to the regulatory deadline without an extension.
This completion is contingent upon information tied to certain
dispute resolutions, which are anticipated to cause a delay.
Should this occur, the Company would adhere to all policies and
procedures as governed by the SEC and the AMEX.
American Stock Exchange (AMEX)
"We are continuing to evaluate our appeal of the de-listing
notification we received from the AMEX. Although we are
confident in our decision to challenge the merits of the items
in the de-listing notification and believe four of the five
items of concern could be resolved, based on the financial
results of fiscal year 2002, the Company will not meet the
minimum financial requirements for continued listing.
"As we move toward ultimate resolution of this matter, we will
act in what we feel is in the long-term interest of our
shareholders and the best result for Med Diversified. Should the
Company voluntarily or by AMEX removal cease trading on the
exchange, the alternative would be to trade on the OTC Bulletin
Board--an alternative controlled quotation service.
Addus Healthcare
"On January 8, 2002, Med Diversified announced it had entered
into a definitive agreement to acquire Addus Healthcare, Inc.
contingent upon our review of disclosure documents provided by
Addus. The acquisition of Addus was eagerly anticipated.
"After reviewing several disclosure documents, our management
team had additional questions of Addus. Throughout this process,
we continued to re-negotiate the terms based on these new
disclosures. At all times, we remained ready, willing and able
to close under terms which were more conducive given new
operational and financial updates provided by Addus. Our
management team has held steadfast on this issue. We will not
over pay for this asset.
"By rightfully staking our position to renegotiate terms with
Addus, we have protected the Company and its shareholders.
Recently, we received Addus's financial draft audit for 2001
revealing a material discrepancy between what was represented to
the Company and the actual results. Based on this discrepancy,
and other factors, Med Diversified has decided to proceed with
litigation to protect its interests. This misrepresentation and
delay has caused the Company to lose credibility in the
financial markets and sustain a substantial loss in market
capitalization. We are seeking, among other things, all of our
monies held by Addus to be returned immediately.
Private Investment Bank Limited (PIBL)
and American Reimbursement, LLC
"As you know, during fiscal year 2002, PIBL lent our company $70
million. At this time, we are negotiating with PIBL to extend
the maturity date with a resolution beneficial to both Med
Diversified and the PIBL lenders. Additionally, we created
American Reimbursement, LLC, a special purpose subsidiary,
specifically for the purposes of helping the Company provide
collateral to PIBL for their loan and to indemnify Med
Diversified.
Bond Financing
"On December 27, 2001, Med Diversified announced a $1 billion,
gross revenue accounts receivable-based, bond financing facility
with Swiss-based Societe Financier du Seujet Limited. After
receiving rate reductions from our current senior lender without
the restrictive accounts receivable covenants as in the SFLS
facility, Management has determined that it is in the best
interest of the Company not to access this facility.
Additionally, we feel that our cost of capital rates are now in
line with what was contemplated under the SFSL arrangement.
"We recognize that all of these issues are significant, but they
are certainly not insurmountable. During the last 12 months, our
team has done its level best to restore and improve the
financial security and long-term viability of our Company. Each
day, we work closer toward our goal of profitability. I believe
we have made tremendous strides and we remain steadfast in our
efforts to rebuild this great organization. We are counting on
each one of you to keep up the day-to-day activities of
delivering the highest quality of care to our clients. With each
of us doing our part, we will succeed and win as a team. I
envision a day when all other home health providers look to us
as the benchmark for quality care and health services. Med
Diversified will emerge from these issues as one of the most
respected home care providers. I look forward to working with
each of you to make this a reality."
Sincerely,
Frank P. Magliochetti, Jr.
Med Diversified operates companies in various segments within
health care industry, including pharmacy, home infusion, multi-
media, management, clinical respiratory services, home medical
equipment, home health services and other functions. For more
information, see http://www.meddiversified.com
NEON COMMUNICATIONS: Wants Court to Fix August 5 Claims Bar Date
----------------------------------------------------------------
NEON Communications, Inc., and NEON Optica, Inc., wants the U.S.
Bankruptcy Court for the District of Delaware to fix August 5,
2002 as the deadline by which any entity, except Governmental
Units, mist file their proofs of claim against the estate or be
forever barred from asserting that claim.
Proofs of claims are not required to be filed on account of:
i) Claims not listed as "disputed", "contingent" or
"unliquidated" in the Debtors' Schedules;
ii) Claims that have been allowed by the Bankruptcy Court;
and
iii) Individual holders of the 12-3/4% Senior Notes due 2008,
provided that the aggregate Claim of all of the Claims
of such holders shall be filed by the indenture trustee
for the 12-3/4% Senior Notes due 2008.
Proofs of claim must be received no later than 4:00 p.m., on the
applicable Bar Date at this address:
Claims Agent at NEON Communications, Inc.
NEON Optica, Inc. Claims Processing
P.O. Box 5270, FDR Station
New York, N.Y. 10150-5270
or
Claims Agent at NEON Communications, Inc.
NEON Optica, Inc. Claims Processing,
c/o Bankruptcy Services LLC
70 East 55th Street, 6th Floor
New York, N.Y. 10022-3222
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. 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.
NORTEL NETWORKS: Declares Preferred Share Dividend
--------------------------------------------------
The board of directors of Nortel Networks Limited declared a
dividend on the outstanding Nortel Networks Cumulative
Redeemable Class A Preferred Shares Series 5 (TSX:NTL.PR.F), the
amount of which will be calculated by multiplying (a) the
average prime rate of Royal Bank of Canada and Toronto-Dominion
Bank during July 2002 by (b) the applicable percentage for the
dividend payable for June 2002, as adjusted up or down by a
maximum of 4 percentage points (subject to a maximum applicable
percentage of 100 percent) based on the weighted average trading
price of such shares during July 2002, in each case as
determined in accordance with the terms and conditions attaching
to such shares. The dividend will be payable on August 12, 2002
to shareholders of record at the close of business on July 31,
2002.
Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges
information. The company is supplying its service provider and
enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and
multimedia services spanning Metro and Enterprise Networks,
Wireless Networks and Optical Long Haul Networks. As a global
company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be found
on the Web at http://www.nortelnetworks.com
As previously reported, Moody's has downgraded Nortel Networks'
debt ratings to a low-B Level and its 2001-1 Certificates to
Ba3. Meanwhile, Standard & Poor's lowered the company's Lease
Pass-Through Certificates Rating to BB-.
DebtTraders reports that Nortel Networks Ltd.'s 6.125% bonds due
2006 (NT06CAN1) are trading between 73.5 and 74.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAN1for
more real-time bond pricing.
OWENS CORNING: Asks Court to Appoint Prof. McGovern as Mediator
---------------------------------------------------------------
Owens Corning and its debtor-affiliates ask the Court to approve
the appointment, nunc pro tunc to May 1, 2002, of Professor
Francis E. McGovern as Mediator. Professor McGovern will
facilitate the resolution of various issues that must be
addressed for the Debtors to successfully consummate a
Reorganization Plan. He must periodically report to the
District Court and Bankruptcy Court on the status of the
mediation process.
Norman L. Pernick, Esq., at Saul Ewing LLP in Wilmington,
Delaware, admits the Debtors hope to follow the in the footsteps
of other asbestos-related cases with the appointment of Prof.
McGovern. The appointment of a mediator has facilitated the
successful confirmation of a plan of reorganization in other
asbestos-related bankruptcy cases including that of Eagle-Picher
Industries Inc., John Breuner Co., Zale Corp. and Carabetta
Enterprises Inc.
Mr. Pernick states Prof. McGovern is qualified to serve as
mediator because of his extensive dealings in mass tort cases
and asbestos-related cases. He is presently serving as a
mediator, pursuant to court appointment, in the asbestos-related
consolidated bankruptcy cases of Babcock & Wilcox Inc. and
Federal-Mogul Global Inc. He has, in addition, served as a
special master, court expert, or other neutral expert in
numerous mass tort cases, including the asbestos-related Chapter
11 cases of Johns-Manville, UNR, National Gypsum and Celtotex
Corporation, as well as the non-asbestos-related mass tort cases
of Dow Corning and A.H. Robbins.
The appointment of Professor McGovern is touted by Mr. Pernick
as being in furtherance of the December 28, 2001 Order by Judge
Wolin (then presiding judge of the Debtors' cases) appointing
consultants and special masters. Professor McGovern had been
one of the five individuals covered by the Order, that tasked
them to "advise the Court and to undertake such
responsibilities, including by way of example and not
limitation, mediation of disputes, holding case management
conferences, and consultation with counsel, as the Court may
delegate. . . ."
As mediator, Mr. Pernick submits that Professor McGovern will be
paid a Mediator's fee of $100,000 per month. This will also
cover all of his out-of-the pocket expenses. The fee will be
paid monthly in advance, on the first day of each month, and
will require no Court approval prior to payment. The fee,
however, is subject to review under Section 328(a) of the
Bankruptcy Code. The Mediator's fee is based on the Mediator's
significant attention to the mediation process in the Debtors'
cases. In the event that the level of the Professor McGovern's
attention to the cases is reduced, Mr. Pernick points out the
fee will also be reduced to the amount satisfactory to Professor
McGovern and the Debtors, and subject to Court approval.
Mr. Pernick states the mediation will not affect or delay any
litigation or proceeding in the Bankruptcy Court or the District
Court. The ongoing proceedings of mediation will not be used by
any party-in-interest as an excuse to postpone any matter that
is chosen to be litigated in the Bankruptcy Court or the
District Court. (Owens Corning Bankruptcy News, Issue No. 34;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PILLOWTEX CORP: Enters Into 3 New Agreements Pursuant to Plan
-------------------------------------------------------------
Pillowtex Corporation filed a Report with the Securities and
Exchange Commission on June 10, 2002, under cover of a Form 8-K,
disclosing the terms and conditions of three new agreements
entered into pursuant to their Confirmed Plan of Reorganization.
Full-text copies of the New Agreements are available from the
Securities and Exchange Commission at no charge at:
http://www.sec.gov/Archives/edgar/data/896265/000093066102001972/0000930661-02-001972.txt
The salient terms of these agreements are:
A. Agreement and Plan of Merger
(a) entered into between Pillowtex Corporation, a Texas
corporation, the Parent, and Pillowtex Corporation, a
Delaware corporation, the Subsidiary, as of May 24, 2002;
(b) at the Effective Time and subject to the conditions and
terms in this Plan of Merger, the Delaware based
corporation and the Texas based corporation will be
merged. The existence of the Parent will cease and the
Subsidiary will continue as the surviving corporation;
(c) at the Effective Time, by virtue of the Merger and
without any action on the part of any holder of shares of
Parent Common Stock:
1. each share of Parent Common Stock issued and
outstanding immediately prior to the Effective Time
will be converted into one fully paid and non-
assessable share of common stock, par value $0.01 per
share, of the surviving corporation; and
2. each share of common stock, par value $0.01 per share,
of Subsidiary issued and outstanding immediately prior
to the Effective Time will be canceled without the
payment of consideration.
(d) the officers of the Subsidiary immediately prior to the
Effective Time will be the officers of the surviving
corporation. These persons will be appointed as
directors of the surviving corporation to be effective as
of the Effective Time:
Name Class of Director
---- -----------------
Jeffrey J. Keenan Class I
Kenneth Liang Class I
Bradley I. Dietz Class I
Bruce A. Karsh Class II
Ralph W. LaRovere Class II
Mariusz J. Mazurek Class III
James P. Seery, Jr. Class III
(e) this Plan of Merger may be amended by the Boards of
Directors of Parent and Subsidiary to the extent
permitted;
(f) this Plan of Merger may be terminated and abandoned
by the Boards of Directors of Parent and Subsidiary so
long as the termination and abandonment is permitted; and
(g) As promptly as practicable, the parties will cause the
Merger to be consummated by filing a Certificate of
Ownership and Merger with the Secretary of State of the
State of Delaware and by filing the Articles of Merger
with the Secretary of State of the State of Texas
wherein the Merger will become effective.
B. Loan and Security Agreement
(a) Parties to this Agreement are:
1. Pillowtex Corporation, Ptex Inc., FC Online Inc.,
Beacon Manufacturing Company, Pillowtex Management
Services Company, Fieldcrest Cannon Inc., Opelika
Industries Inc., Encee Inc., and FCC Canada Inc., as
Borrowers;
2. Ptex Holding Company, The Leshner Corporation,
Tennessee Woolen Mills Inc., Fieldcrest Cannon
Financing Inc., Fieldcrest Cannon Licensing Inc., FCI
Corporate, Fieldcrest Cannon Transportation Inc., FCI
Operations and Pillowtex Canada Inc., as Guarantors;
3. Congress Financial Corporation, as Agent; and
4. the Financial Institutions, as Lenders.
(b) Subject to the terms and conditions, each Lender agrees
to fund its Pro Rata Share of Loans to Borrowers from
time to time in amounts requested by Borrowers up to the
aggregate amount outstanding at any time to all Borrowers
equal Borrowing Base or the Maximum Credit;
(c) Except in Agent's discretion, with the consent of all
Lenders, the aggregate principal amount of the Loans
and the Letter of Credit Accommodations outstanding at
any time shall not exceed the Maximum Credit and the
aggregate principal amount of the Loans outstanding at
any time to Borrowers based on the Eligible Inventory
must not exceed the Inventory Loan Limit;
(d) Subject to the terms and conditions, at the request of a
Borrower, Agent agrees, for the ratable risk of each
Lender according to its Pro Rata Share, to provide or
arrange for Letter of Credit Accommodations for the
account of the Borrower containing terms and conditions
acceptable to Agent. Any payments made by or on behalf
of Agent or any Lender to any issuer or related parties
in connection with the Letter of Credit Accommodations
provided to or for the benefit of a Borrower will
constitute additional Loans to the;
(e) in addition to any charges, fees or expenses charged by
any issuer in connection with the Letter of Credit
Accommodations, Borrowers will pay to Agent, for the
benefit of Lenders, a letter of credit fee at a rate
equal to 2 1/2% per annum, on the daily outstanding
balance of the Letter of Credit Accommodations for the
immediately preceding month payable in arrears as of the
first day of each succeeding month, except that Agent
may, and upon the written direction of Required Lenders,
will require Borrowers to pay to Agent for the ratable
benefit of Lenders the letter of credit fee, at a rate
equal to 4-1/2% per annum on a daily outstanding balance
for the period from and after:
1. the date of termination until Agent and Lenders have
received full and final payment of all Obligations
which are not contingent and cash collateral or
letters of credit, as Agent may specify in the
amounts; and
2. the occurrence of an Event of Default for so long as
the Event of Default is continuing as determined by
Agent in good faith. The letter of credit fee will be
calculated on the basis of a 360-day year and actual
days elapsed and the obligation of Borrowers to pay
the fee shall survive the termination of this
Agreement.
(f) the Borrower requesting the Letter of Credit
Accommodation must give Agent two Business Days' prior
written notice of the Borrower's request for the issuance
of a Letter of Credit Accommodation. The notice will be
irrevocable and shall specify the original face amount of
the Letter of Credit Accommodation requested, the
effective date of issuance of the requested Letter of
Credit Accommodation, whether the Letter of Credit
Accommodations may be drawn in a single or in partial
draws, the date on which the requested Letter of Credit
Accommodation is to expire, the purpose for which the
Letter of Credit Accommodation is to be issued, and the
beneficiary of the requested Letter of Credit
Accommodation. The Borrower requesting the Letter
of Credit Accommodation must attach to the notice the
proposed terms of the Letter of Credit Accommodation;
(g) except in Agent's discretion, with the consent of all
Lenders, the amount of all outstanding Letter of Credit
Accommodations and all other commitments and obligations
made or incurred by Agent or any Lender must not at any
time exceed $60,000,000;
(h) Borrowers and Guarantors will indemnify and hold Agent
and Lenders harmless against all losses, claims, damages,
liabilities, costs and expenses which Agent or any Lender
may suffer or incur in connection with any Letter of
Credit Accommodations including any losses, claims,
damages, liabilities, costs and expenses due to any
action taken by any issuer or correspondent except for
losses, claims, damages, liabilities, costs or expenses
that are a direct result of the gross negligence or
willful misconduct of Agent or any Lender. Each Borrower
and Guarantor assumes all risks with respect to the acts
or omissions of the drawer under or beneficiary of any
Letter of Credit Accommodation. Each Borrower and
Guarantor assumes all risks for, and agrees to pay, all
foreign, Federal, State and local taxes, duties and
levies relating to any goods subject to any Letter of
Credit Accommodations. Each Borrower and Guarantor
releases and holds Agent and Lenders harmless against any
acts, waivers, errors, delays or omissions, whether
caused by any Borrower, Guarantor, by any issuer or
correspondent except for the gross negligence or willful
misconduct of Agent or any Lender.
(i) Each Borrower is irrevocably obligated, without
presentment, demand or protest, to pay to Agent any
amounts paid by an issuer of a Letter of Credit
Accommodation. In the event that any Borrower fails to
pay Agent on the date of any payment under a Letter of
Credit Accommodation in an amount equal to the amount of
the payment, Agent must promptly notify each Lender of
the unreimbursed amount of the payment and each Lender
agrees, upon one Business Day's notice, to fund to Agent
the purchase of its participation in the Letter of Credit
Accommodation in an amount equal to its Pro Rata Share of
the unpaid amount;
(j) all Borrowers will be jointly and severally liable for
all amounts due to Agent and Lenders under this Agreement
and the other Financing Agreements, regardless of which
Borrower actually receives the Loans or Letter of Credit
Accommodations. The Obligations to Loans made to a
Borrower, and the Obligations arising as a result of the
joint and several liability of a Borrower, with respect
to Loans made to the other Borrowers, will be separate
and distinct obligations, but all other Obligations will
be primary obligations of all Borrowers.
(k) Borrowers will pay to Agent, for the benefit of Lenders,
interest on the outstanding principal amount of the Loans
at the Interest Rate. All interest accruing on and after
the date any Event of Default exists or has occurred and
is continuing or termination will be payable on demand.
Interest shall be payable by Borrowers to Agent, for the
account of Lenders, monthly in arrears not later than the
first day of each calendar month and will be calculated
on the basis of a 360 day year and actual days elapsed.
The interest rate on non-contingent Obligations will
increase or decrease by an amount equal to each increase
or decrease in the Prime Rate effective on the first day
of the month after any change in the Prime Rate is
announced based on the Prime Rate in effect on the last
day of the month in which any change occurs;
(l) Borrowers will pay to Agent for the ratable benefit of
Lenders monthly an unused line fee at a rate equal to the
percentage calculated upon the amount by which the
Maximum Credit as then in effect exceeds the average
daily principal balance of the outstanding Loans and
Letter of Credit Accommodations during the immediately
preceding month while this Agreement is in effect and for
so long as Agent or any Lender may continue to make any
Loans or any Letter of Credit Accommodations are
outstanding. The fee will be payable on the first day of
each month in arrears. The percentage used for
determining the unused line fee will be 3/8%, provided,
that, effective as of the first day of the second month
of each fiscal quarter the percentage used for
determining the unused line fee will be either the
Quarterly Average Excess Availability for the immediately
preceding fiscal quarter is at or within the amounts
indicated for the percentage or the Leverage Ratio as of
the last day of the immediately preceding fiscal quarter;
(m) to secure payment and performance of all Obligations,
each Borrower and Guarantor grants to Agent, a continuing
security interest in, a lien upon, and a right of set off
against, and assigns to Agent, as security, all personal
and real property and fixtures, of each Borrower and
Guarantor, whether now owned or acquired or existing, and
wherever located;
(n) Agent will maintain one or more loan accounts on its
books in which will be recorded:
1. all Loans, Letter of Credit Accommodations and other
Obligations and the Collateral;
2. all payments made by or on behalf of any Borrower or
Guarantor; and
3. all other appropriate debits and credits as provided
in this Agreement, including fees, charges, costs,
expenses and interest.
(o) Borrowers and PT Canada must establish and maintain, at
their expense, blocked accounts or lockboxes with banks
acceptable to Agent into which Borrowers and PT Canada
shall promptly deposit and direct their respective
account debtors and other obligors to directly remit all
payments on Receivables and all payments constituting
proceeds of Inventory or other Collateral in the
identical form in which payments are made, whether by
cash, check or other manner. Borrowers and PT Canada
must, as Agent may in good faith specify at any time and
from time to time, deliver, or cause to be delivered, to
Agent;
(p) Borrowers must use the initial proceeds of the Loans
provided by Agent to Borrowers only for:
1. payments to each of the persons listed in the
disbursement direction letter furnished by Borrowers
to Agent;
2. a prepayment of the Term Loan Debt; and
3. costs, expenses and fees in connection with the
preparation, negotiation, execution and delivery of
this Agreement and the other Financing Agreements.
All other Loans made or Letter of Credit Accommodations
provided for the benefit of any Borrower must be used by
the Borrower only for general operating, working capital
and other proper corporate purposes. None of the
proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or
for the purposes of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any
margin security or for any other purpose which might
cause any of the Loans to be considered a "purpose
credit";
(q) Borrowers must notify Agent promptly of:
1. any material delay in any Borrower's or PT Canada's
performance of any of its material obligations to any
account debtor or the assertion of any material
claims, offsets, defenses or counterclaims by any
account debtor, or any material disputes with account
debtors, or any settlement, adjustment or compromise;
2. all material adverse information known to any Borrower
or Guarantor relating to the financial condition of
any account debtor;
3. any event or circumstance which, to the best of any
Borrower's or Guarantor's knowledge, would cause Agent
to consider any then existing Accounts as no longer
constituting Eligible Accounts;
4. any notice of a material default by any Borrower under
any of the Credit Card Agreements or of any default
which might result in the Credit Card Issuer or Credit
Card Processor ceasing to make payments or suspending
payments to any Borrower;
5. any notice from any Credit Card Issuer or Credit Card
Processor that the person is ceasing or suspending, or
will cease or suspend, any present or future payments
due or to become due to any Borrower from the person,
or that person is terminating or will terminate any of
the Credit Card Agreements; and
6. the failure of any Borrower to comply with any
material terms of the Credit Card Agreements or any
terms which might result in the Credit Card Issuer or
Credit Card Processor ceasing or suspending payments
to any Borrower.
C. Term Loan Agreement
This is a $150,000,000 Term Loan Agreement between Pillowtex
Corporation, as Borrower, Bank of America, as Agent, and the
Lenders. The Agreement provides that:
(a) subject to the terms and conditions of this Agreement,
the Lenders severally agree to make to the Borrower a
$150,000,000 principal amount term loan, which will be
used solely to pay in full the Debt evidenced by the
Designated Postpetition Claims. The Borrower and each
Lender agree that upon the making of the Term Loan the
Designated Postpetition Claims shall be fully satisfied;
(b) the Term Loan will mature, and the outstanding principal
amount will be due and payable on the Maturity Date. In
addition, on the last day of each December and June,
commencing on December 31, 2002 and continuing until the
Term Loan is paid, in full, the Borrower must repay, and
there will become due and payable, a principal
installment consisting of the original principal amount
of the Term Loan multiplied by the percentage set forth
below opposite the payment date:
Payment Dates Installment Amount Due
------------- ----------------------
Dec. 31, 2002 & June 30, 2003 0.5% each
Dec. 31, 2003 & June 30, 2004 2.5% each
Dec. 31, 2004 through and including
Dec. 31, 2006 5.0% each
May 24, 2007 69%
(c) the unpaid principal amount of the Term Loan will bear
interest prior to maturity or the occurrence of an Event
of Default at a fixed rate per annum equal to the Fixed
Rate. After maturity of the Term Loan or upon the
occurrence and during the continuance of an Event of
Default, any outstanding principal of the Term Loan and
any other amount payable by the Borrower under this
Agreement or any other Loan Document will bear interest
at the Default Rate until the same is paid in full.
Interest payable at the Fixed Rate will be payable on the
last day of each March, June, September, and December,
commencing September 30, 2002, and continuing on to the
Maturity Date. Interest payable at the Default Rate will
be payable from time to time on demand;
(d) all payments of principal, interest, and other amounts to
be made by the Borrower under this Agreement and the
other Loan Documents will be made to the Administrative
Agent at its office located at 901 Main Street, Dallas,
Texas for the account of each Lender in Dollars and in
immediately available funds, without setoff, deduction,
or counterclaim, not later than 12 Noon., Dallas, Texas
time on the date on which the payment becomes due. Each
payment received by the Administrative Agent under this
Agreement or any other Loan Document for the account of a
Lender must be paid promptly to the Lender, in
immediately available funds. Whenever any payment under
this Agreement or any other Loan Document is stated
to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day,
and the extension of time will in this case be included
in the computation of the payment of interest and
commitment fee, as the case may be;
(e) the Borrower may prepay the Term Loan in whole or in part
at any time or from time to time without premium or
penalty together with accrued interest from the last
interest payment date to the date of prepayment on the
amount so prepaid, provided that:
1. the Borrower must give the Administrative Agent prior
notice of the prepayment and notice must be received
by the Administrative Agent before 12 Noon, Dallas,
Texas time, one Business Day before the date of
prepayment;
2. the date of the prepayment must be a Business Day; and
3. each partial prepayment must be in the principal
amount of $500,000 or an integral multiple and will be
applied to principal installments of the Term Loan in
inverse order of maturity.
(f) promptly upon receipt by the Borrower or any of its
Subsidiaries of the Net Cash Proceeds from any sale or
other transfer or disposition of any of the Subject
Assets or Moveable Assets, the Borrower must prepay the
Term Loan in a principal amount equal to 100% of such Net
Cash Proceeds;
(g) commencing on March 31, 2004 and on each March 31 subject
to the minimum excess availability requirements in the
Revolving Credit Agreement, the Borrower must prepay the
Term Loan in a principal amount equal to 50% of Excess
Cash Flow, for the fiscal year of the Borrower ending
immediately preceding each March 31. If the Borrower does
not have sufficient availability under the Revolving
Credit Agreement to obtain an advance for purposes of
making 100% of the prepayment on March 31 of any
applicable calendar year the minimum excess availability
requirements in the Revolving Credit Agreement are not
satisfied, then:
1. the Borrower must make a prepayment on March 31 in an
amount equal to the amount the Borrower may borrow
under the Revolving Credit Agreement; and
2. on the Business Day immediately following any day on
which the Borrower has sufficient availability under
the Revolving Credit Agreement to obtain an advance
for purposes of making all or a portion of the
remainder of the prepayment, the Borrower must make a
payment in the amount of availability until the
prepayment is paid, in full.
(h) subject to any minimum excess availability requirements
in the Revolving Credit Agreement, if the aggregate
amount of the initial commitment obtained by the Borrower
exceeds $150,000,000, the Borrower must, prepay the Term
Loan in a principal amount equal to 100% of the lesser of
the amount by which the initial commitment obtained by
the Borrower under the Revolving Credit Agreement exceeds
$150,000,000 or the amount by which the Maximum
Borrowing Base exceeds $150,000,000; and
(i) interest on the Term Loan and all other amounts payable
by the Borrower will be computed on the basis of a year
of 360 days and the actual number of days elapsed unless
the calculation would result in a usurious rate, in which
case interest will be calculated on the basis of a year
of 365 or 366 days, as the case may be.
(Pillowtex Bankruptcy News, Issue No. 30; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
POLAROID CORP: Court Approves EPA Bar Date Extension to July 30
---------------------------------------------------------------
Prior to the expiration of the Bar Date, the Environmental
Protection Agency, along with any federal natural resources
trustee, asked Polaroid Corporation and its debtor-affiliates
for additional time to determine the extend of any potential
claims it may have against the Debtors.
In a Stipulation approved by the Court on June 14, 2002, the
Parties agree:
(a) the General Bar Date by which the Agency must file any
proofs of claim arising prior to October 12, 2001 will
be extended to and including July 30, 2002, except that
the General Claims Bar Date by which the Agency must file
penalty claims arising prior to October 12, 2001, is not
extended;
(b) Except as modified in this Stipulation, all the
provisions of the Bar Date Order will apply to the
Agency;
(c) This Stipulation will not affect the proof of claims bar
date for any creditor other than the Agency; and
(d) The Debtors reserve their right to object to or otherwise
oppose the nature, extent or validity of any claim by the
Agency on any ground under applicable laws that are not
otherwise inconsistent with this Stipulation.
(Polaroid Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DebtTraders reports that Polaroid Corporation's 11.500% bonds
due 2006 (PRD3) are trading between 3 and 5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=PRD3for more
real-time bond pricing.
PRIME RETAIL: Moody's Further Junks Preferred Shares Ratings
------------------------------------------------------------
Moody's Investors Service downgraded the stocks ratings of Prime
Retail, Inc. Rating outlook is negative.
The downgraded stocks ratings are:
Action To From
------ ---- ----
* Series A Senior Preferred Stock Ca Caa3;
* Series B Convertible Preferred Stock C Caa3;
* Preferred Stock Shelf (P)C (P)Caa3.
"These rating actions reflect Prime Retail's substantial accrual
of unpaid preferred stock dividends, the likely restructuring of
the REIT's highly leveraged and complex capital structure,
pressing liquidity challenges, as well as deteriorating
operating performance of its portfolio of outlet centers,"
Moody's says.
The company has not paid dividends on its Series A or Series B
preferred stock since the beginning of 2000, and unlikely to be
in a position to pay dividends for the foreseeable future. Prime
Retail will also need substantial refinancing throughout the
rest of 2002, and in 2003, when over $500 million in property-
level debt comes due.
Prime Retail, Inc., headquartered in Baltimore, Maryland, is the
sole general partner of, Prime Retail, L.P.
QUESTRON TECHNOLOGY: Court Sets July 22 Claims Filing Bar Date
--------------------------------------------------------------
UNITED STATES BANKRUTCY COURT
DISTRICT OF DELAWARE
In re: ) Chapter 11
QUESTRON TECHNOLOGY, INC., ) Case No. 02-10319 (PJW)
et al., ) Jointly Administered
Debtors. )
NOTICE OF BAR DATE REQUIRING FILING OF PROOFS OF CLAIM
TO ALL PERSONS AND ENTITIES WITH CLAIMS AGAINST ANY OF
Questron Technology, Inc., Questron Finance Corp., Questron
Operating Company, Inc., Questron Distribution Logistics, Inc.,
Questnet Components, Inc., Comp-Ware, Inc., Integrated Material
Systems Inc., Power Components, Inc., Power Too, Inc.,
California Fasteners, Inc., Fortune Industries, Inc., Fas-
Tronics, Inc., Action Threaded Products, Inc., Action Threaded
Products of Minnesota, Inc., Action Threaded Products of
Georgia, Inc., Capital Fasteners, Inc., B&G Supply Company,
Inc., and R.S.D. Sales Company, Inc.:
PLEASE TAKE NOTICE that, pursuant to an order of this
Court, dated May 8, 2002, and in accordance with Bankruptcy Rule
3003(c), all persons and entities, including individuals,
partnerships, estates, and trusts (other than governmental
units*) who have a claim or potential claim against any of the
above-listed Debtors that arose to February 3, 2002, no matter
how remote or contingent such claim must be, MUST FILE A PROOF
OF CLAIM on or before 4:00 p.m. (Prevailing Eastern Time), on
July 22, 2002, by mailing an original proof of claim form to
Questron Technology, Inc. c/o AlixPartners LLC (formerly Jay
Alix & Associates), 4004 Beltline Road, Suite 210, Addison,
Texas 75001 (tel: 972-491-1005) so that it is actually received
on or before the Bar Date. Proofs of Claim sent by facsimile or
telecopy will not be accepted. A proof of claim form may be
obtained from any bankruptcy clerk's office, from any lawyer,
from certain business supply stores, or by calling
(972) 491-1005 or http://www.alixpartners.com
ANY PERSON OR ENTITY (EXCEPT A PERSON OR ENTITY WHO IS
EXCUSED BY THE TERMS OF THE BAR DATE ORDER) WHO FAILS TO FILE A
PROOF OF CLAIM ON OR BEFORE THE BAR DATE SHALL BE FOREVER
BARRED, ESTOPPED, AND ENJOINED FROM ASSERTING ANY CLAIM (OR
FILING A PROOF OF CLAIM WITH RESPECT TO ANY CLAIM) AGAINST THE
DEBTORS AND THEIR PROPERTY; THE DEBTORS AND THEIR PROPERTY SHALL
BE FOREVER DISCHARGED FROM ANY AND ALL INDEBTEDNESS OR LIABILITY
WITH RESPECT TO NY SUCH CLAIM; AND SUCH HOLDER SHALL NOT BE
PERMITTED TO VOTE ON ANY PLAN OF REORGANIZATION OR PARTICIPATE
IN ANY DISTRIBUTION IN THESE CHAPTER 11 CASES ON ACCOUNT OF ANY
SUCH CLAIM, OR TO RECEIVE FURTHER NOTICES REGARDING ANY SUCH
CLAIM.
A copy of the Bar Date Order may be obtained from the
Debtors' attorneys: Kasowitz, Benson, Torres & Friedman LLP,
1633 Broadway, New York, New York 10019, (212) 506-1700, Attn:
Evelyn Rodriguez, or Richards, Layton & Finger, P.A., One Rodney
Square, P.O. Box 551, Wilmington, Delaware 19899, (302) 651-
7700, Attn: Amanda Kernish. Additional information concerning
the Bar Date may be obtained by calling 302-651-7700. The
Debtors' schedules can also be viewed on the United States
Bankruptcy Court for the District of Delaware's Web site at
http://www.deb.uscourts.gov
BY ORDER OF THE COURT:
Peter J. Walsh
United States Bankruptcy Judge
* The Bar Date, however, for all governmental units (as
defined in section 101(27) of the Bankruptcy Code) is August 2,
2002 at 4:00 p.m. (Prevailing Eastern Time), which is not less
than the 180-day statutory minimum set forth in section
502(a)(9) of the Bankruptcy Code.
RVM INDUSTRIES: Ability to Continue Operations Uncertain
--------------------------------------------------------
RVM Industries, Inc. is a publicly held holding company.
Ravens, Inc., Albex Aluminum, Inc., and Signs and Blanks, Inc.
(SABI) are wholly owned subsidiaries of RVM. On November
14,2001, Ravens sold its operating assets and liabilities to
Fontaine Trailer Company, Inc. Ravens changed its name to
Waterloo Holding Company.
As of March 31, 2001 and through March 31, 2002, RVM Industries,
Inc. was in violation of certain of its covenants related to
FirstMerit Bank, N.A. The default rendered this debt callable
and as a result, the debt was classified as a current liability
on the balance sheet at March 31, 2001. The loan agreements with
FirstMerit bank were restructured during the year. The Company
made significant payments on the notes through the sale of
Ravens and the Albex extrusion machinery and equipment. In
addition on March 31,2001 and until Ravens was sold, the Company
was in default of other long-term debt of $2,150,000 resulting
from the default on the FirstMerit letter of credit. The default
of other long-term debt of $2,150,000 renders the debt callable
and as a result, the debt has been classified as a current
liability on the balance sheet at March 31, 2001. The Company is
in default as of March 31, 2002, on payment of interest and
principle of debentures in the amount of $419,018. The Company
restructured the debt with FirstMerit on April 5, 2002 and Mr.
Jacob Pollock guaranteed $3,200,000 of the debt. The Company has
liabilities in excess of assets and this raises substantial
doubt as to the Company's ability to continue as a going concern
for a reasonable period of time.
The Company entered into 2002 with the expectation that the
economy would turn around. The recession that was being
experienced by the trucking and extrusion businesses had started
in calendar April 2000, well ahead of the general economy. The
Company had been in default on its loans since September
2000. The Company continued throughout 2001 to work with its
lenders and suppliers to keep the Ravens, Albex and SABI
businesses continuing.
Liquidity became the Company's key issue. Both Ravens and Albex
continued to experience significant sales decreases due to the
trucking and extrusion industries further decline in sales. Both
Ravens and Albex continued to cut costs and reduce inventories
as sales volume declined. The Company continued to look for
alternative financing, but the losses generated and the
continuing bleak forecasts for the trailer and extrusion
industries prevented any interest from lenders.
In August 2001 the Company's Board of Directors approved the
plan to shutdown Albex. Albex' current assets were liquidated
and the cash was used to pay both expenses and secured lenders.
In December 2001 Albex' extrusion machinery and equipment were
sold to a non-related third party. The cash was used to pay
expenses and the secured lenders. The remaining assets of Albex
either will be sold and or are in a foreclosure proceeding. The
cash generated will be used to pay expenses and secured lenders.
On November 14, 2001, Ravens operating assets and liabilities
were sold to Fontaine Trailer Company, Inc. The cash was used to
pay expenses and the secured lenders.
RVM Industries has liabilities greater than its assets. The
Company's intent is to sell SABI and the remaining assets of
Albex. The cash generated from those sales will be used to pay
down the secured debt owed to FirstMerit. However, certain
unsecured vendors (mainly to Albex) have been notified that they
will most likely not be paid. As the Company winds down
operations, its shares will continue to have little value to
stockholders.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $173,392 and
$1,108,115 at March 31, 2002 and 2001, respectively. The Company
could have borrowed approximately $140,743 more on a line of
credit at March 31, 2001. The Company also has a $450,000 draw
down note that was not borrowed against at March 31, 2002. The
Company owes FirstMerit as of March 31, 2002 $3,540,977 on a
five-year note secured by all of its inventory, receivables and
fixed assets.
RVM at March 31, 2001 was not in compliance with its bank
covenants on cash flow coverage and minimum net worth. The
Company owed FirstMerit as of March 31, 2001, $14,039,750 on the
$20,000,000 note secured by all the Company's inventory and
receivables and $5,118,023 on two long term notes secured by
certain fixed assets at Albex and Ravens.
The Company, through the sale of Ravens, the close down of Albex
and the sale of the extrusion machinery and equipment, has been
able to reduce the long-term debt to secured lenders. RVM's
intent is to sell the remaining assets of Albex and then to sell
SABI. The cash generated from these sales will be used to pay
down secured debt to FirstMerit. As liabilities exceed assets,
there is doubt about the Company's ability to continue to
operate as a going concern.
ROUNDY'S INC: Will Close Mich. Distribution Center by Year-End
--------------------------------------------------------------
Roundy's Inc. (Pewaukee, Wisconsin) will close its 215,000
square-foot distribution center in Muskegon, Michigan before the
end of the year, F&D Reports relates in a trade publication.
The facility's operations will be consolidated at Roundy's
683,000 square-foot DC in Westville, Indiana.
According to the Company, F&D continues, its Michigan customers
need a wide range of items to compete with the likes of Wal-Mart
and Meijer (Grand Rapids, Michigan). These needs could not be
fulfilled by the Muskegon facility as it is the smallest of
Roundy's seven DCs and cannot be expanded. Stores served by the
DC already receive frozen foods from Westville. In an effort to
stave off any concerns that this action was prompted by the
Company's recent acquisition by private investment firm Willis
Stein, management indicated the decision was under consideration
prior to the sale.
As reported in Troubled Company Reporter's May 14, 2002 edition,
Standard & Poor's assigned a B rating to Roundy's Inc.'s $200
million senior subordinated notes.
SOLID RESOURCES: Canadian Court Extends CCAA Stay to Sept. 30
-------------------------------------------------------------
Alvin Harter, President and CEO of Solid Resources Ltd.
(TSXV:SRW) announced that an Order was granted on July 3, 2002
extending the Company Creditors' Arrangement Act stay to
September 30, 2002. This extension should allow the Company
sufficient time to implement the Plan of Arrangement and allow
the creditors to vote on the Plan September 5 and 6th, 2002.
The Court of Queens Bench also allowed the filing of a petition
for bankruptcy solely for the purpose of preserving any
limitation periods. The Court immediately stayed all proceedings
under this petition so as to not adversely affect the CCAA
process.
SUPERVALU: Says Past Financial Misstatement is Immaterial
---------------------------------------------------------
On June 25, 2002, Supervalu Inc. announced a charge to earnings
resulting from intentional inventory misstatements by a former
employee that resulted in an understatement of cost of goods
sold. The charge is estimated to be in the range of $19 to $21
million after tax. The situation spanned at least four years and
is confined to the Company's pharmacy division covering 120
pharmacy departments. Sales have been properly reported for all
periods. The Company is currently conducting a thorough review
of the situation with the help of its auditors, the Board's
audit committee, and an independent accounting firm.
Supervalu is in the process of determining whether the total
charge to adjust earnings will be taken in the first quarter of
fiscal 2003 or result in a restatement of prior years'
consolidated financial statements. Supervalu indicates that the
charge, when measured against the substantial cash flow,
inventory and earnings of the Company for the last four years,
does not materially affect the financial condition or results of
Supervalu as a whole.
SUPERVALU is a leading supermarket retailer holding the nation's
largest position in the extreme value grocery retailing segment
and is the nation's most successful food distributor to grocery
retailers.
Supervalu posted a working capital deficit of about $130 million
at December 30, 2001.
SWAN TRANSPORTATION: Gets Green Light to Retain Jackson Walker
--------------------------------------------------------------
Swan Transportation Company sought and obtained Court approval
to employ Jackson Walker, LLP as special counsel with respect to
Tort Claims asserted against the Debtor in prepetition lawsuits.
The U.S. Bankruptcy Court for the District of Delaware approved
the employment of Jackson Walker to:
-- provide historical information concerning the validity,
number, nature and amount of the Tort Claims;
-- monitor state court litigation for the limited
purpose of filing suggestions of bankruptcy in the state
court proceedings as appropriate;
-- provide information to the Debtor concerning the
status of the litigation; and
-- provide notice of claims to insurance carriers.
The Debtors will pay Jackson Walker at their customary hourly
rates. Jackson Walker's professionals and their current rates
are:
Richard E. Griffin Partner $350 per hour
John Kopke Partner $300 per hour
Lisa A. Powell Partner $265 per hour
Mary Lou Flynn Dupart Of Counsel $265 per hour
Nelita Hatch Associate $165 per hour
Earl H. Walker Associate $150 per hour
Kathy Adair Legal Assistant $130 per hour
Heather Currie Legal Assistant $120 per hour
Terrie Huff Legal Assistant $115 per hour
Rosemary St. John Legal Assistant $95 per hour
Jamie Vargo Legal Assistant $90 per hour
Swan Transportation Company filed for chapter 11 protection on
December 20, 2001. Tobey Marie Daluz, Esq., Kurt F. Gwynne, Esq.
at Reed Smith LLP and Samuel M. Stricklin, Esq. at Neligan,
Tarpley, Stricklin, Andrews & Folley, LLP represent the Debtor
in its restructuring efforts. When the Company filed for
protection from its creditors, it listed assets and debts of
over $100 million.
TECH LABORATORIES: 6.5% Convertible Noteholders Extend Waiver
-------------------------------------------------------------
Tech Laboratories, Inc. (OTC Bulletin Board: TCHL) announced
that it had entered an agreement pursuant to which the holders
of its 6.5% convertible promissory notes agreed to waive any
defaults until July 15, 2002, that may otherwise have occurred
under the Amendment to Redemption and Conversion Agreement dated
April 19, 2002, in order to allow the parties time to negotiate
revised terms of their agreement.
The company also announced it had been awarded a United States
Patent, No. 6,414,953 for its Multi-Protocol Cross Connect
Switch. The patent covers aspects of the company's Dynatrax(TM)
Network Management System.
In addition, the company announced that, through its subsidiary,
Tech Logistics, it had received and delivered its Intrusion
Detection Systems to BAE Systems, a defense contractor, and
Dominion(TM), a nuclear and fossil power plant operator. The
BAE Systems order is for upgrading security for the U.S. Air
Force at an undisclosed location. Dominion's(TM) purchase of
the IDS is also to be used for upgrading perimeter security at
an undisclosed location.
Bernard M. Ciongoli, President, stated, "We are pleased to be
awarded a U.S. Patent on our Dynatrax(TM) Technology." Mr.
Ciongoli also stated, "We believe our Intrusion Detection System
will have strong security application as America fights against
terrorism."
TELEMETRIX INC: Ehrhardt Keefe Express Going Concern Doubt
----------------------------------------------------------
Telemetrix Inc. through its subsidiary, Telemetrix Technologies
has developed and patented a universal solution for wireless
telemetry. This system will be sold both to and through
telecommunications companies and digital telecommunications
carriers, which would be companies such as VoiceStream, and
AT&T, as a complete end-to-end solution for telemetry data
customers. The system will also be sold direct to end users
through Telemetrix Technologies. Telemetry is the transmission
of data that represents status information on a remote process,
function or device. Telemetry enables businesses to monitor
activity, detect situations requiring intervention and promptly
respond to such situations. Examples of businesses currently
using telemetry include electric utilities, alarm companies and
vending machine operations and as the technology advances, the
potential applications multiply.
The Company has experienced substantial change over the past two
reporting years. During April 1999, the Company was formed
through a corporate combination between Arnox Corporation and
Telemetrix Resource Group, Inc. Arnox was an inactive corporate
shell prior to the combination. In September 1999, Tracy
Corporation II d/b/a/ Western Total Communication was acquired
for stock. Telemetrix Resource Group, Inc. was comprised of
Telemetrix Resource Group, LTD, a Canadian corporation, which
was later renamed Telemetrix Solutions. Telemetrix Solutions
offered billing services and consulting to telephony companies.
Western Total Communications, later renamed Telemetrix
Technologies, was formed in 1982 to provide wide area paging in
western Nebraska, eastern Wyoming and northeastern Colorado. It
acquired two PCS licenses (30 MHZ and 10MHZ) for Business
Trading Area 411, as defined by the Federal Communications
Commission, and has constructed the 30 MHZ licensed network. It
is also certified as a competitive local exchange carrier in the
State of Nebraska. Telemetrix Technologies developed the T3000
wireless telemetry system.
Currently, the Company is seeking additional financing. In
December 2001, the Company signed an agreement with investment
banker Berthel Fisher and Company Financial Services Inc., Cedar
Rapids, Iowa to work on a best-efforts basis to raise equity or
debt capital as needed at terms favorable to Telemetrix. It is
estimated by the Company that no more than an additional $6
million will be required for manufacturing inventory, working
capital and to re-pay current liabilities. The Company has
immediate need for short and long term financing.
Telemetrix Inc. expects to continue as a going concern. The
Company's strategic plan is to partially exit the design phase
of the business after trial and testing of products. Production
will then commence from contracts generated and develop an
income stream from operations. Previous to and including this
reporting period, minimal revenue has been derived from
operations and most of the funding has been through financing
activities. In late 2002, the Company expects cash flow from
operations to materialize.
Telemetrix reported a net loss of $7.4 million for the most
recent period. The principal components of this net loss were
amortization and depreciation expenses, interest expenses, and
SG&A expenses, as well as operating costs.
Ehrhardt, Keefe, Steiner & Hottman PC, the Company's independent
auditors out of Denver, Colorado, in their April 5, 2002
Auditors Report say, "the Company has suffered recurring losses
from operations that raise substantial doubt about its ability
to continue as a going concern."
U.S. STEEL: Appoints Robin Sotak as Manager, Industrial Hygiene
---------------------------------------------------------------
Charles Prezzia, M.D., general manager of health services and
medical director for United States Steel Corporation (NYSE: X),
announced the appointment of Robin E. Sotak to the position of
manager, industrial hygiene and Carl A. Masters, Jr. to the
position of manager, safety.
Sotak, 37, began her career with U. S. Steel in 1991 as a
management associate in industrial hygiene at the company's Mon
Valley Works near Pittsburgh. In 1992, she was promoted to
supervisor and in 1995 appointed supervisor, industrial hygiene
and environmental health. Sotak moved through a series of
increasingly responsible positions at Mon Valley Works and in
1998 was named department manager, industrial hygiene,
environmental health and loss protection. The following year,
responsibility for plant safety and security was added to her
duties. Sotak was named to her current position in January 2002.
In her new capacity she oversees industrial hygiene at all of
the company's operations and has lead responsibility for
protecting employees from chemical, physical and ergonomic
stresses in the workplace. Sotak replaces James F. Quealy, who
retired at the beginning of the year.
Sotak holds a bachelor's degree in biology from the University
of Pittsburgh, a master's degree in industrial hygiene from the
University of Michigan at Ann Arbor and a master's in business
administration from Duquesne University in Pittsburgh. She is a
member of the American Board of Industrial Hygiene.
Prior to joining U. S. Steel, Masters, 45, spent eight years
with Union Carbide Corporation where he held a variety of
management positions in operations, maintenance and safety. In
1991, he went to work for Enviro Health Technologies as a
project manager and industrial hygienist and was assigned to U.
S. Steel's Pittsburgh-area cokemaking facility, Clairton Works.
In 1994, Masters joined U. S. Steel as supervisor, industrial
hygiene and environmental health, and in 1996 was named
department manager, safety, security and fire protection. The
following year industrial hygiene and environmental health
were added to his responsibilities. Masters was promoted to
manager, labor relations and productivity improvement in 2000,
and in 2001 became department manager, safety, industrial
hygiene, environmental health, security and fire protection for
the coke operations at Clairton Works and at Gary Works in Gary,
Ind. In his new position, Masters will oversee safety at all of
the company's operations. He replaces James P. Jones, who
retired at the end of June.
Masters is a member of the Western Pennsylvania Safety Council
and the National Safety Council. A former union official with
the Oil, Chemical and Atomic Workers International, he has also
served as an industry representative with the Allegheny County
Health Department's Asbestos Professionals Work Group and as
safety representative at the American Coke and Coal Chemicals
Institute.
* * *
As previously reported, Standard & Poor's affirmed its double-
'B' corporate credit and senior unsecured debt ratings on United
States Steel Corp. and removed them from CreditWatch with
negative implications. The ratings had been placed on
CreditWatch following the company's announcement on Jan. 17,
2002, that it entered into an option agreement to acquire NKK's
ownership in National Steel (approximately 53% of National
Steel's outstanding shares) and that USS would seek other
opportunities to consolidate the U.S. steel industry. The
Pittsburgh, Pennsylvania-based integrated steel producer
currently has about $2 billion of total debt (including
operating leases).
The actions reflected the meaningful turnaround expected in the
company's earnings performance, as a result of improving steel
industry conditions in the U.S. following the government's
recent implementation of import tariffs under section 201. The
affirmation also reflected management's commitment to
maintaining a moderate financial profile, evidenced by its
recent $192 million sale of common equity. In addition,
uncertainty regarding funding for USS's plan to consolidate the
U.S. steel industry has been removed, as USS is no longer
expected to engage in a broad consolidation. USS abandoned the
consolidation plan because efforts to obtain relief from the
industry's burdensome retiree medical and pension costs have
been unsuccessful. Rather USS has announced that it will attempt
to purchase select value-added assets. Although the company has
announced that it is considering making additional investments
in Central European operations, Standard & Poor's expects that
management will take actions to preserve its liquidity and fund
growth in a similar fashion to that of its November 2000 Kosice
acquisition in the Slovak Republic, which was mostly financed
with nonrecourse debt or use proceeds from divestitures of
noncore assets.
The ratings on USS reflect the difficult prospects the company
faces as a large, integrated steelmaker and its fair liquidity
position.
UNITED DEFENSE: S&P Affirms BB- Corporate Credit Rating
-------------------------------------------------------
Standard & Poor's affirmed its double-'B'-minus corporate credit
rating on United Defense Industries Inc. (UDI) and removed the
rating from CreditWatch, where it was placed on May 28, 2002.
The outlook is stable.
Arlington, Virginia-based UDI is a leading provider of tracked,
armored combat vehicles to U.S. and foreign militaries, as well
as ship repair services, and has about $730 million in debt.
"The affirmation takes into account the increased debt incurred
by UDI to acquire United States Marine Repair (USMR), offset by
the improved program diversity from the acquisition," said
Standard & Poor's credit analyst Christopher DeNicolo. UDI
acquired USMR for $325 million (including fees) using a $300
million add-on to its secured credit facility and $25 million in
cash on hand. USMR's $107 million in outstanding debt is being
paid off as part of the acquisition. UDI's solid earnings and
cash generation enabled it to incur the additional debt for the
acquisition within the current rating.
The acquisition of USMR will diversify UDI's revenue base,
better balancing Army and Navy programs and increasing the
proportion of the U.S. defense budget that UDI will be able to
bid for. USMR provides ship maintenance and modernization
services for nonnuclear U.S. Navy and other U.S. government
ships, as well as for cruise ships. UDI's key programs include
the Bradley Fighting Vehicle, Crusader artillery system, other
tracked vehicles, and naval guns. The Crusader program (15% of
revenues proforma for the USMR acquisition) is likely to be
cancelled; however, due to termination fees and continued
funding of some Crusader technologies that can be used in the
Future Combat System, the impact on profits and cash flows is
likely to be modest in the 2002-2004 timeframe.
Total debt to capital will increase to 116% at the time of the
acquisition due to the additional debt, but will likely decline
to around 107% by the end of 2002 and below 90% in 2003 due to
debt repayments from solid internal cash generation and higher
equity from positive net income. UDI has negative equity due to
a recapitalization in mid-2001 bolstered somewhat by an initial
public offering at the end of 2001. Solid profitability should
eliminate the equity deficit by 2003. The company is likely to
pursue further debt-financed acquisitions, but they are not
expected to be as large as USMR, at least in the near term.
Interest coverage measures are expected to improve due to solid
profitability and debt repayment. Cash generation will continue
to be solid with funds from operations to debt declining to
around 25% in 2002, but likely increasing to the mid-30% range
in 2003.
UDI's revenues and profitability are expected to remain stable
over the next few years with the improved diversity of its
programs as a result of the USMR acquisition. The likely
cancellation of the Crusader program is not expected to
significantly impact credit measures, but will limit future
revenue growth.
VIZACOM INC: TW Private Equity Discloses 8.89% Equity Shares
------------------------------------------------------------
TW Private Equity Corp.'s directors, Gregory Trautman, Samuel
Wasserman, Mark Barbera and Douglas Greenwood, beneficially own
an aggregate of 335,000 shares of the common stock of Vizacom,
Inc. TW Private Equity together with its directors, may be
deemed to be a member of a group that beneficially owns 551,441
shares of Vizacom's common stock, representing approximately
8.89% of the outstanding shares of the Company's common stock.
TW Private Equity denies the existence of a group with any or
all of its directors, and disclaims any beneficial ownership of
the shares of common stock beneficially owned by any or all of
its directors.
TW Private Equity Corp. is the owner of 216,134, or 3.49%, of
the issued and outstanding shares of Vizacom common stock.
Gregory Trautman, Samuel Wasserman, Mark Barbera and Douglas
Greenwood own 120,985 shares of common stock, 90,784 shares of
common stock, 69,377 shares of common stock and 54,161 shares of
common stock, respectively, or an aggregate of 335,000 shares of
common stock. Because of their relationship, TW Private Equity,
together with any or all of its directors maybe deemed a "group"
within the meaning of rule 13d-5 under the Exchange Act and,
therefore, TW Private Equity may be deemed the beneficial owner,
within the meaning of Rule 13d-3 under the Exchange Act, of any
or all of the shares beneficially owned by Gregory Trautman,
Samuel Wasserman, Mark Barbera and Douglas Greenwood, or an
aggregate of 551,441 shares of common stock, representing
approximately 8.89% of the total outstanding shares of Vizacom
common stock.
Of the 216,134 shares owned by TW Private Equity, that entity
has sole power to vote, or direct the voting of, and sole power
to dispose of, or direct the disposition of, that number of
Vizacom common stock shares.
Vizacom Inc. is a provider of comprehensive professional
internet and technology solutions. Through its Vizy Interactive
New York and PWR Systems subsidiaries, Vizacom develops and
provides to global and top domestic companies a range of service
and product solutions, including: business strategy formation,
web design and user experience, e-commerce application
development, creative media solutions, systems and network
development and integration, and data center services. Vizacom
attracts top, established companies as clients, including:
Martha Stewart Living, Verizon Communications, and Sony Music.
As of March 31, 2002, the company posted a working capital
deficit of about $3.7 million.
WILLIAMS CONTROLS: American Industrial to Buy Series B Shares
-------------------------------------------------------------
An Information Statement was mailed on or about June 25, 2002 by
Williams Controls, Inc., to holders of record of its Series A
Preferred Stock, 7-1/2% Redeemable Convertible Series, par value
$0.01 per share and holders of record of its common stock. As
described in its Tender Offer Statement on Schedule TO, filed
with the Securities and Exchange Commission on June 11, 2002 the
Company has entered into an agreement to sell shares of a newly
designated class of preferred stock, the Series B Preferred
Stock pursuant to a Stock Purchase Agreement dated May 31, 2002,
with American Industrial Partners Capital Fund III, L.P. Under
the terms and subject to the conditions of the Stock Purchase
Agreement, AIP has agreed to purchase at least 100,000 shares of
Series B Stock for $100 per share. In addition to the sale of
the Series B Stock to AIP, Williams Controls is required under
the terms of the Stock Purchase Agreement to sell to other
persons at least 25,000 but not more than 50,000 additional
shares of its Series B Stock. It currently does not have any
binding commitments from any other persons to purchase the
Series B Stock. The sale of the Series B Stock to AIP and the
other persons who agree to purchase shares of the Series B Stock
under the Stock Purchase Agreement is subject to conditions that
are described more fully in the Schedule TO, the Offering
Memorandum attached to the Schedule TO as Exhibit 12(a)(1)(i)
and the Stock Purchase Agreement.
If the Series B Investors complete their purchase of shares of
Series B Stock, those investors will be entitled to elect a
majority of the Company's board of directors. Wiliams Controls
expects that the board of directors will be increased to seven
members prior to the closing of the sale of the Series B Stock;
therefore, the Series B Investors will initially be entitled to
elect four of the seven seats on the board of directors. The
Series B Investors have informed the Company that, if their
purchase of the Series B Stock closes, they intend to nominate
four persons to fill the seats on the board of directors that
have been designated to be filled by Series B Directors.
Williams Controls is sending stockholders this Information
Statement to provide them with certain information about the
Nominees.
If the sale of the Series B Stock is consummated as described in
the Stock Purchase Agreement and the Regulatory Filings, a
change in control of Williams Controls will occur. The persons
acquiring control; the amount of consideration used by those
persons; the basis of control; the percentage of voting
securities of the Company to be acquired by the persons
acquiring control; and the identity of the persons from whom
control would be assumed, are described in the Regulatory
Filings. The source of funds used for the acquisition of control
is the cash reserves of the Series B Investors.
Williams Controls makes electronic throttles, exhaust brakes,
and pneumatic controls for trucks and other heavy equipment.
Other operations include microcircuits, cable assemblies (Aptek
Williams), and global positioning systems (GeoFocus -- which
Williams Controls is selling). The company also makes plastic
parts (Premier Plastic Technologies, which is being sold) and
compressed natural gas conversion kits for cars (NESC Williams).
Major customers include Freightliner, Navistar, and Volvo.
As of December 31, 2001, the company posted a total
shareholders' equity deficit of about $11 million.
WORLDCOM: Horace Mann Debt Holdings Impact Investment Losses
------------------------------------------------------------
Horace Mann Educators Corporation (NYSE: HMN) reported
investment losses and asset impairment charges incurred in the
quarter ended June 30, 2002, including amounts related to fixed
income securities of WorldCom, Inc. The market value of
WorldCom debt securities declined significantly in June 2002,
following announcement of the Securities and Exchange Commission
investigation of WorldCom accounting practices.
As of March 31, 2002, the company held $18.0 million of WorldCom
fixed income securities at market value with an amortized cost
of $22.5 million. During the second quarter of 2002, Horace Mann
sold $14.6 million at amortized cost of WorldCom securities
resulting in an after-tax realized investment loss of $8.1
million. In addition, the Company anticipates recording an
after-tax write-down in value on the remaining WorldCom
securities of approximately $4.5 million. The company's
holdings of WorldCom securities at June 30, 2002 were reduced to
a market value and amortized cost of approximately $1 million.
As a result of current market conditions, Horace Mann
anticipates that in the second quarter of 2002 it will record
impairment charges, in addition to WorldCom, of approximately
$10 to $12 million after tax, related primarily to fixed income
securities issued by other companies in the communications
sector. In total, Horace Mann anticipates reporting after-tax
net realized investment losses of approximately $23 to $26
million for the second quarter of 2002, including the impairment
charges described above.
As of June 30, 2002, the company's investment portfolio had a
market value of approximately $3.3 billion, including a pretax
unrealized gain of approximately $30 million. The second
quarter 2002 realized investment losses will not have a material
effect on Horace Mann's overall financial condition.
Founded in 1945 and headquartered in Springfield, Ill., Horace
Mann sells retirement annuities and automobile, homeowner and
life insurance to the nation's educators and their families.
DebtTraders reports that Worldcom Inc.'s 7.550% bonds due 2004
(WCOM04USR2) are trading between 15 and 16. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM04USR2
for more real-time bond pricing.
WORLDCOM INC: Rurban Financial Discloses $2 Million Exposure
------------------------------------------------------------
Rurban Financial Corp. (Nasdaq: RBNF) reported it holds $2
million in WorldCom Group bonds. Rurban estimates that it will
record an unrealized, after tax loss of $1.1 million in the
second quarter ended June 30, 2002, related to the decline in
market value of its WorldCom investment. Rurban holds $2
million par value of WorldCom maturing in May 2004 as a part of
its $94 million investment portfolio. Market value of the bonds
as of June 30, 2002 was $325,000.
Subsequent events in the WorldCom situation may increase or
decrease Rurban's loss on this investment.
Rurban's second quarter earnings are scheduled for release in
early August.
Rurban Financial Corp. is a publicly held bank holding company
based in Defiance, Ohio and is located on the Internet at
http://www.rurbanfinancial.net
Rurban's common stock is quoted on the Nasdaq National Market
System under the symbol RBNF. The Company currently has
10,000,000 shares of stock authorized and 4,566,721 shares
outstanding. The investment banking firms of McDonald & Co.
Securities Inc. (Trident Securities Division), Sweney Cartwright
and Co., and Friedman, Billings, Ramsey Group, Inc. are the
primary market makers for these shares.
Rurban's wholly owned subsidiaries and operating divisions are
The State Bank and Trust Company, Reliance Financial Services,
N.A., The Peoples Banking Company, The First Bank of Ottawa, The
Citizens Savings Bank Company and Rurbanc Data Services, Inc.
The banks offer a full range of financial services through their
offices in the Northern Ohio counties of Defiance, Paulding,
Fulton, Hancock, Putnam, Sandusky, Wood and Cuyahoga. Reliance
Financial Services offers a diversified array of trust and
financial services to customers nationwide. RDSI provides data
processing services to community banks in Ohio, Michigan and
Indiana.
WORLDCOM INC: IDT Corp. Unveils its Customer Stabilization Plan
---------------------------------------------------------------
IDT Corporation (NYSE: IDT.B, IDT), a leading multinational
carrier and telephone company, has established a plan to protect
WorldCom customers and help insure that they have continued and
uninterrupted high quality telecommunications service in case of
any shut down of the WorldCom network whether caused by
bankruptcy, work stoppage, vandalism or any other unforeseen
reason.
"We want WorldCom customers to keep their existing service. A
business without customers doesn't have much value these days.
We want to keep the customers at WorldCom, so it will still be
worth something when we buy it or take it over," said Howard
Jonas, IDT Chairman. "We have established a stabilization plan
to provide back-up and alternative service, so that WorldCom
customers have no reason to leave."
It has been well publicized that IDT has made an offer for
WorldCom's MFS and Brooks Fiber, units and MCI's consumer and
small business long distance business. IDT also announced that
it may include other financial and/or telecommunications parties
as partners. Communications between IDT and WorldCom are
underway. MFS and Brooks Fiber, like Winstar, provide a real
alternative and competition to the local telephone company
monopoly.
"This [is] not a marketing strategy to gain market share.
WorldCom customers are already flocking to IDT and the other
major carriers," said Jim Courter IDT's CEO. "IDT's
Stabilization Plan is only about stopping the hemorrhaging of
customers at WorldCom and preserving competition in the
telecommunications industry. We believe that everything is in
place to make a deal, and we don't want customer attrition to
get in the way, while negotiations between IDT and WorldCom and
creditors move forward."
IDT's stabilization plan has two elements. Under the first,
customers of WorldCom's MFS and Brooks Fiber units can
supplement their existing service by taking advantage of
Winstar's local access network. Winstar can provide those
customers with highly reliable voice and data connections as a
backup for their WorldCom service. Additionally, because
Winstar's proprietary network does not utilize the last-mile
wiring or network of the incumbent monopoly carriers, it
provides redundancy for businesses seeking back-up service. This
redundancy enabled Winstar to provide uninterrupted telephone
service in lower Manhattan to customers and to the federal
government's disaster relief operations following the September
11th attack on the World Trade Center towers.
"Winstar is in a unique position to set up standby voice and
data service for those MFS and Brooks Fiber customers who want
it, for a fraction of what they currently pay for
telecommunications," said Brian Finkelstein, CEO of Winstar.
Under the second element of the plan, MCI's consumer and small
business long-distance customers can call IDT for special
account numbers that will allow them access to the IDT long
distance network, where they will pay the same or in most cases,
less than they pay currently for MCI long distance. WorldCom
customers can call 1-800-CALL-IDT for either IDT or Winstar
service.
IDT is appointing a special blue ribbon committee of members of
its boards of directors to oversee the stabilization plan.
"WorldCom customers and America can feel secure," Howard Jonas
added. "I believe that WorldCom customers now have a safety net,
and there should be no resulting threat to national security,
however the WorldCom saga ends."
IDT, through its IDT Telecom subsidiary, is a leading
facilities-based, multinational carrier that provides a broad
range of telecommunications services to its retail and wholesale
customers worldwide. Through its own national telecommunications
backbone and fiber optic net work infrastructure, IDT Telecom
provides its customers with integrated and competitively priced
international and domestic long distance telephony and prepaid
calling cards. IDT Media is the IDT subsidiary principally
responsible for the Company's initiatives in media, new video
technologies and print media.
Through its various subsidiaries, IDT has interests in several
telecom, Internet-related and media companies. IDT recently
acquired Winstar Communications. IDT Corporation common shares
trade on the New York Stock Exchange under the ticker symbols
IDT.B and IDT. As of June 10, 2002, there were 53.4 million
shares of Class B common stock (IDT.B) outstanding, and 24.9
million shares of common stock (IDT). Of these, 4.0 million
shares of Class B common stock and 5.4 million shares of common
stock were held by units of IDT Corporation.
XO COMMUNICATIONS: Files Amended Plan of Reorganization in N.Y.
---------------------------------------------------------------
In a First Amended Plan of Reorganization filed with the
Bankruptcy Court in Manhattan, XO Communications, Inc. updates
its estimates of aggregate claim amounts in Classes 3, 4, 5, 10
and 11:
Status/ Est. Amount of
Class Description Voting Right Claims/Interests
----- --------------------- ------------- -----------------
1 Senior Secured Lender Impaired/Yes $1,008,535,928.71
2 Other Secured Claims Unimpaired/No $16,086,068.00
3 Non-Tax Priority Unimpaired/No $5,000.00
4 Convenience Claims Unimpaired/No $385,000.00
5 General Unsecured Impaired/Yes $19,554,000.00
6 Senior Note Claims Impaired/Yes 3,871,499,723.83
7 Subordinated Note Impaired/No $545,272,500.00
8 Securities Claims Impaired/No Undetermined
9 Old Preferred Impaired/No $1,754,006,844.00
Stock Interests
10 Old Common Stock Impaired/No $18,573,030.59
Interests
11 Other Old Equity Impaired/No $236,000.00
Interests
As provided in the initial plan, the Forstmann Little and Telmex
Investment Agreement proposes to exchange an 80% ownership stake
in Reorganized XO in exchange for an $800 million cash
investment. This investment implies that the Forstmann Little
Telmex Transaction delivers value equal, in millions, to:
Cash Purchase Price $800.0
Post-Transaction Equity Ownership 80%
Implied Total Company Equity Value 1,000.0
Plus: Restructured Bank Debt 1,000.0
Plus: Capital Lease Obligations 24.7
Aggregate Implied Post-Money Purchase Price 2,024.7
Less: Net Cash Invested in XO (net of $200
million allocation to Senior Notes) (600.0)
Aggregate Implied Pre-Money Purchase Price 1,424.7
The Implied Multiple of FY 2001 Revenues is 1.1x.
The implied recoveries to the Senior Secured Lenders and Note
Claims pursuant to the Investment Agreement are:
($ in millions except per share value)
Implied Forstmann Little and Telmex Transaction Value $2,025
Less: Restructured Senior Secured Lender Claims (1,000)
Less: Capital Lease 0bligatons est. as of 6/30/02 (25)
-------
Implied Total Restructured Equity Value $1,000
=======
Value Allocation & Recoveries:
Senior Secured Lender Claims:
Allowed Claim Amount $1,000
Amount of Restructured Senior Secured Lender Claims $1,000
Implied Recovery 100.0%
Note Claims:
Allowed Claim Amount Note * (as of June 16, 2002) $3,871
% of Post-Reorganization Equity 17.9%
Implied Equity Value $l79
Plus: Cash 199
------
Total Value Allocated to XO Note Claims $378
Implied Recovery 9.8%
General Unsecured Claims (Class 5):
Estimated Claim Amount $28
% of Post-Reorganization Equity 0.1%
Implied Equity Value $1
Plus: Cash 1
------
Total Value Allocated to XO Note Claims $2
Implied Recovery 8.5%
Note * Represents the aggregate principal balance of the
Company's Senior Notes plus accrued and unpaid interest
through June 16, 2002, excluding those Senior Notes held
by the Company. The Company's Senior Discount Notes
reflect estimated accreted values through June 16, 2002.
The recoveries to Note Claims and General Unsecured Claims are
allocated pro rata after taking into account the subordination
provision between the Note Claims and the Subordinated Note
Claims.
The same as in the initial plan, if XO cannot make a deal with a
third-party, the Transaction Value of a Stand-Alone Plan is:
($ in millions)
Stated Pre-Rights Equity Value $475.0
Plus: Estimated Revolver Drawdown 0.0
Plus: New Junior Secured Loans 500.0
Plus: Capital Lease Obligations 24.7
--------
Aggregate Implied Pre-Rights Enterprise Value $999.7
Plus: Rights Offering Proceeds 250.0
--------
Aggregate Implied Post-Rights Enterprise Value $1,249.7
========
The implied recoveries to the Senior Secured Lenders and Note
Claims under a Stand-alone Plan are:
(a) Assuming No Participation in the Rights Offering
Assumed Pre-Rights Enterprise Value $1,000
Less: New Revolver Botrowing -
Less: Capital Lease Obligations (25)
Less: New Junior Secured Loans (500)
Implied Pre-Rigbts Equity Value $475
Less: Estimated Value of Senior Note Warrants) 17
Less: Estimated Value of Management Option) -
Residual Pre-Rights Offering Equity Value
Available for Distribution $458
Value Allocation & Recoveries:
Amount of Outstanding Bank Debts $1,009
% Allocation of Equity Value 100.0%
- Pre Dilution for Warrants, Rights & Mgmt. Options
Implied Equity Value $458
New Junior Secured Loans (estimated market value) 476
----
Total Implied Allocated Value $934
Implied Recovery 92.6%
Amount of Outstanding Senior Notes
and Senior Discount Note $3,872
% Allocation of Equity Value
- Pre Dilution for Warrants, Rights & Mgmt. Options 0.0%
Implied Equity Value $0
Estimated Value of Warrants $17
Total implied Allocated Value $17
Implied Recovery 0.5%
Amount of General Unsecured Claims $28
% Allocation of Equity Value
- Pre Dilution for Warrants, Rights & Mgmt. Options 0.0%
Implied Equity Value $0
Estimated Value of Warrants 0
Total implied Allocated Value $0
Implied Recovery 0.4%
(b) Assuming Full Participation in the Rights Offering
Revised Recovery Calculation Post Rights Offering:
Assumed Pre-Rights Enterprise Value $1,000
Implied Pre-Rights Offering Equity Value $475
Less: Estimated Value of Senior Note Warrants 27
Less: Estimated Value of Management Options -
Plus: Proceeds from Rights Offering 250
------
Residual Post-Rights Offering Equity Value $752
Available for Distribution
Allocation of Shares in the Rights Offering:
Assumed Amount & Subscription:
Senior Notes & Senior Discount Notes $250 52.6
Subordinated Notes $0 -
Preferred Stock $0 -
Common Stock $0 -
Senior Secured Lenders 100.0
Senior Notes & Senior Discount Notes -
Total Shares post Rights Offering 152.6
% of Shares Allocated in Rights Offering 34.5%
Amount of Outstanding Bank Debts $1,009
% Allocation of Equity Value 65.5%
- Pre Dilution for Warrants & Mgmt. Options
Implied Equity Value $492
New Junior Secured Loans (estimated market value) 476
----
Total Implied Allocated Value $969
Implied Recovery 96.1%
Amount of Outstanding Senior Notes
and Senior Discount Note $3,872
% Allocation of Equity Value
- Pre Dilution for Warrants & Mgmt. Options 34.5%
Implied Equity Value $259
Estimated Value of Warrants 27
Less: Rights Offering Investment (250)
-----
Total implied Allocated Value $36
Implied Recovery 0.9%
Amount of General Unsecured Claims $28
% Allocation of Equity Value
- Pre Dilution for Warrants, Rights & Mgmt. Options 0.0%
Implied Equity Value $0
Estimated Value of Warrants 0
Total implied Allocated Value $0
Implied Recovery 0.6%
Equity Ownership Percentages Post-Rights Offering:
Banks 5.5%
Senior Notes & Senior Discount Notes 34.5%
Subordinated Notes 0.0%
Preferred Stock 0.0%
Common Shares 0.0%
Although the Disclosure Statement provides that, in the event
the Stand-Alone Events occur, Holders of Allowed General
Unsecured Claims and Allowed Senior Note Claims will receive
distributions treated as gifts from the Holders of the Senior
Secured Lender Claims, these distributions will not be treated
as gifts for U.S. federal income tax purposes. Therefore, the
Holders of the Senior Secured Lender Claims will not be treated
as receiving any property gifted to the Holders of Allowed
General Unsecured Claims and Allowed Senior Note Claims.
Instead, the Holders of Allowed General Unsecured Claims and
Allowed Senior Note Claims will be treated as receiving
distributions directly from the Company in exchange for their
Allowed General Unsecured Claims and Allowed Senior Note Claims.
(XO Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
* BOND PRICING: For the week of July 8 - July 12, 2002
-----------------------------------------------------
Issuer Coupon Maturity Price
------ ------ -------- -----
ABGenix Inc. 3.500% 03/15/07 70
AES Corporation 4.500% 08/15/05 57
AES Corporation 8.000% 12/31/08 70
AES Corporation 8.750% 06/15/08 74
AES Corporation 8.875% 02/15/11 68
AES Corporation 9.375% 09/15/10 71
AES Corporation 9.500% 06/01/09 70
Alternative Living Services (Alterra) 5.250% 12/15/02 4
American Tower Corp. 9.375% 02/01/09 64
American & Foreign Power 5.000% 03/01/30 61
Armstrong World Industries 9.750% 04/15/08 53
Atlas Air Inc. 9.250% 04/15/08 51
AT&T Corp. 6.500% 03/15/29 71
Bethlehem Steel 8.450% 03/01/05 14
Borden Inc. 7.875% 02/15/23 60
Borden Inc. 9.250% 06/15/19 61
Boston Celtics 6.000% 06/30/38 63
Burlington Northern 3.200% 01/01/45 44
Burlington Northern 3.800% 01/01/20 63
Calpine Corp. 4.000% 12/26/06 74
Case Corp. 7.250% 01/15/16 74
Centennial Cell 10.750% 12/15/08 57
Century Communications 8.875% 01/15/07 34
Charter Communications, Inc. 5.750% 10/15/05 58
Cincinnati Bell Telephone (Broadwing) 6.300% 12/01/28 70
CIT Group Holdings 5.875% 10/15/08 74
Comcast Corp. 2.000% 10/15/29 20
Comforce Operating 12.000% 12/01/07 61
Cox Communications Inc. 0.426% 04/19/20 40
Cox Communications Inc. 3.000% 03/14/30 27
Cox Communications Inc. 7.750% 11/15/29 26
Critical Path 5.750% 04/01/05 63
Critical Path 5.750% 04/01/05 63
Crown Castle International 9.000% 05/15/11 67
Crown Castle International 9.375% 08/01/11 69
Crown Castle International 9.500% 08/01/11 73
Crown Cork & Seal 7.375% 12/15/26 61
Cubist Pharmacy 5.500% 11/01/08 52
Dana Corp. 7.000% 03/01/29 72
Dana Corp. 7.000% 03/15/28 73
Dobson/Sygnet 12.250% 12/15/08 74
EOTT Energy Partner 11.000% 10/01/09 69
Equistar Chemicals 7.550% 02/15/26 67
Finisar Corp. 5.250% 10/15/08 55
Foster Wheeler 6.750% 11/15/05 54
Gulf Mobile Ohio 5.000% 12/01/56 61
Hasbro Inc. 6.600% 07/15/28 71
Human Genome 3.750% 03/15/07 67
Huntsman Polymer 11.750% 12/01/04 67
Inland Steel Co. 7.900% 01/15/07 50
Level 3 Communications 11.250% 03/15/10 48
Level 3 Communications 9.125% 05/01/08 45
Lucent Technologies 6.450% 03/15/29 56
Lucent Technologies 6.500% 01/15/28 58
Missouri Pacific Railroad 4.750% 01/01/20 67
Missouri Pacific Railroad 4.750% 01/01/30 62
Missouri Pacific Railroad 5.000% 01/01/45 58
MSX International 11.375% 01/15/08 71
Nextel Communications 9.375% 11/15/09 63
Nextel Partners 11.000% 03/15/10 59
Noram Energy 6.000% 03/15/12 58
Northern Pacific Railway 3.000% 01/01/47 46
Northern Pacific Railway 3.000% 01/01/47 46
OSI Pharmaceuticals 4.000% 02/01/09 75
Pegasus Satellite 12.375% 08/01/06 49
Primedia Inc. 7.625% 04/01/08 68
Public Service Electric & Gas 5.000% 07/01/37 72
Qwest Capital 7.625% 08/03/21 69
Qwest Capital 7.750% 02/15/31 70
Royster-Clark 10.250% 04/01/09 75
Rural Cellular 9.625% 05/15/08 58
SBA Communications 10.250% 02/01/09 68
Silicon Graphics 5.250% 09/01/04 68
Solutia Inc. 7.375% 10/15/27 70
Sprint Capital Corp. 6.875% 11/15/28 72
Time Warner Telecom 9.750% 07/15/08 54
Tribune Company 2.000% 05/15/29 66
Ugly Duckling 11.000% 04/15/07 60
United Air Lines 9.125% 01/15/12 60
United Air Lines 10.250% 07/15/21 60
Universal Health Services 0.426% 06/23/20 62
US Timberlands 9.625% 11/15/07 63
US West Capital 6.875% 07/15/28 67
Vesta Insurance Group 8.750% 07/15/25 74
Viropharma Inc. 6.000% 03/01/07 36
Weirton Steel 10.750% 06/01/05 53
Weirton Steel 11.375% 07/01/04 58
Westpoint Stevens 7.875% 06/15/08 58
Wind River System 3.750% 12/15/06 73
Worldcom Inc. 6.400% 08/15/05 58
XO Communications 5.750% 01/15/09 1
*********
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
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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'
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is provided by DebtTraders in New York. DebtTraders is a
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For copies of court documents filed in the District of Delaware,
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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
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Copyright 2002. All rights reserved. ISSN: 1520-9474.
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