/raid1/www/Hosts/bankrupt/TCR_Public/020717.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, July 17, 2002, Vol. 6, No. 140
Headlines
360NETWORKS: Continues to Defer Publishing Financial Results
ANC RENTAL: Asks Court to Approve Inter-Debtor Agreement
ADELPHIA COMMS: Signing-Up Boies Schiller as Special Counsel
ADVANCED GLASSFIBER: S&P Drops Credit & Sub. Debt Ratings to D
ADVANCED MATERIALS: May 31 Working Capital Deficit Tops $290K
AMERICAN CELLULAR: S&P Hatchets Junk Rating Down Two Notches
AMERICAN TISSUE: Receives Nod to Auction 2 of 3 Remaining Mills
AMES DEPARTMENT: Judge Gerber Approves Reclamation Claims Report
APPLIED DIGITAL: Will Seek to Overturn Nasdaq Delisting Decision
ARABIAN AMERICAN: Auditors Doubt Ability to Continue Operations
ARCHIBALD CANDY: Will Delay Form 10-Q Filing with SEC
BGF INDUSTRIES: S&P Drops Ratings to D over Interest Nonpayment
BELL CANADA: Terminates Put Option and Secondary Warrants
BIRMINGHAM STEEL: Wants Until August 5, 2002 to Decide on Leases
CMS ENERGY: Fitch Hatchets Senior Unsecured Debt Rating to BB-
CMS ENERGY: Fitch Says New Credit Pacts Hurt Unsecured Creditors
COMDISCO INC: Secures Approval of Stay Bonus and Incentive Plan
CONTOUR ENERGY: Files for Chapter 11 Reorganization in Texas
CONTOUR ENERGY: Voluntary Chapter 11 Case Summary
COVANTA ENERGY: Court Okays Settlement Agreement with Alfa Alfa
CROWN CORK: Posts Improved Operating Results for Second Quarter
DESA HOLDINGS: Seeks Approval to Hire Ernst & Young as Auditors
DRKOOP.COM: Vitacost.com Acquires All Assets for $186,000
EMEX CORP: Nasdaq Delists Shares Effective July 17, 2002
ELDERTRUST: Working Capital Deficit Slides-Down to $44 Million
ENRON CORP: Selling CommodityLogic Software for $3 Million
ENRON: Proposes Uniform CommodityLogic Sale Bidding Procedures
ENUCLEUS: Must Seek Additional Financing to Continue Operations
EXIDE: Court Okays Morrison & Foerster as Special Counsel
EXODUS: Informart Pressing for $8MM Payment on Rejected Lease
FEI CO: Merger with Veeco Spurs S&P to Keep Watch on B+ Rating
FAIRCHILD DORNIER: Wants Until October 31 to Decide on Leases
FARMLAND INDUSTRIES: Fiscal Q3 Net Loss Burgeons to $189 Million
FLEETWOOD ENTERPRISES: Lenders Relax Covenants Under Credit Pact
GLOBAL CROSSING: North Crescent Wants Prompt $1M+ Rent Payment
GREIF BROTHERS: S&P Rates Proposed $300MM Sr. Notes Gets at B+
JP REALTY: S&P Downgrades Price Dev't Unit's $100M Notes to BB+
KATUN CORP: S&P Assigns B+ Corporate Credit & Bank Loan Ratings
KMART CORP: Court Approves Various Lease Termination Agreements
KMART CORP: SEC Asks Court to Extend Claims Bar Date to Oct. 29
LANTRONIX INC: SEC Initiates Formal Investigation of Company
LERNOUT & HAUSPIE: Seeking Okay of New Mutual Release Agreement
LEVEL 3 COMMS: Releases Clarifications to Proxy Statement
LYONDELL CHEMICAL: Will Pay Quarterly Divided on Sept. 16, 2002
MEASUREMENT SPECIALTIES: Delays Form 10-K Filing with SEC
NTL INC: Court to Consider Pre-Negotiated Plan on September 5
NAPSTER INC: Court Approves $5 Million Post-Petition Financing
NATIONAL STEEL: Intends to Sell DNN Interest for C$6.1 Million
NATIONSRENT: Committee Wins Nod to Hire Traxi as Fin'l Advisors
NETWORK ACCESS: Asks Court to Appoint BSI as Claims Agents
NEWPOWER: Gets OK to Sell Customer Portfolio to Winning Bidders
NEWPOWER: Energy America Agrees to Acquire Customers for $8.25MM
NOVAMED EYECARE: Fails to Meet Nasdaq Listing Requirements
ORYX TECHNOLOGY: Auditors Express Going Concern Doubt
PLANVISTA CORP: Reports Improved Results for Second Quarter
PSINET INC: NTFC Wants Prompt Payment of Admin. Expense Claim
QSERVE COMMS: Committee Signing-Up Niewald Waldeck as Counsel
R&S TRUCK BODY: UST Will Convene Creditors' Meeting on Sept. 26
RAZORFISH: Terminates Arthur Andersen's Engagement as Auditors
RESORT AT SUMMERLIN: Has Until August 31 to Use Cash Collateral
SPECTRASITE HOLDINGS: Tender Offers for Several Notes Expire
SPORTS CLUB: Sets Annual Shareholders' Meeting for Aug. 2, 2002
STARBAND: Seeking Nod to Contract Friedlander Misler as Counsel
SWIFT & COMPANY: S&P Assigns BB- Corporate Credit Ratings
TOKHEIM CORP: Second Quarter EBITDA Plummets to $1.8 Million
TRANSMATION INC: Renegotiates Terms of Credit Facility
VELOCITA CORP: U.S. Trustee Appoints Official Bond Committee
WEBLINK WIRELESS: Files Amended Plan and Disclosure Statement
WESTERN INTEGRATED: SureWest Completes $12MM Asset Acquisition
* Meetings, Conferences and Seminars
*********
360NETWORKS: Continues to Defer Publishing Financial Results
------------------------------------------------------------
360networks continues to defer the issuance of its 2001 annual
and first quarter 2002 financial results, and the related
management's discussion and analysis. The statements were due on
May 21, 2002 and May 30, 2002 respectively.
As announced previously, the company continues to develop a plan
of reorganization with its senior bank lenders and unsecured
creditors. Until a plan is finalized, 360networks is unable to
complete the applicable financial statements and related
documents.
360networks is complying with the provisions of the Alternate
Information Guidelines contained in the Ontario Securities
Commission Policy 57-603, which includes issuing a default
status report every two weeks.
Monthly reports filed by the Canadian court-appointed Monitor
about 360networks' operations, finances and restructuring
efforts are available in the Restructuring section of the
company's Web site at http://www.360.net
360networks offers optical services and network infrastructure
to telecommunications and data communications companies in North
America. The company's optical mesh fiber network is one of the
largest and most advanced on the continent, spanning
approximately 40,000 kilometers (25,000 miles) and connecting
more than 50 major cities in the United States and Canada.
On June 28, 2001, the company and several of its operating
subsidiaries voluntarily filed for protection under the
Companies' Creditors Arrangement Act (CCAA) in the Supreme Court
of British Columbia. Concurrently, the company's principal U.S.
subsidiary, 360networks (USA) inc., and 22 of its affiliates
voluntarily filed for protection under Chapter 11 of the U.S.
Bankruptcy Code in the U.S. Bankruptcy Court for the Southern
District of New York. In October 2001, four operating
subsidiaries that are part of the 360atlantic group of companies
also voluntarily filed for protection in Canada. Insolvency
proceedings for several subsidiaries of the company have been
instituted in Europe and Asia. Additional information is
available at http://www.360.net
ANC RENTAL: Asks Court to Approve Inter-Debtor Agreement
--------------------------------------------------------
ANC Rental Corporation, and its debtor-affiliates seek approval
of an Inter-Debtor Agreement between ANC Rental Corp., Alamo
Rent-A-Car and National Car Rental System Inc., which would
ensure that the standing of the individual creditors of each
Debtor would not be affected with the consolidated operations of
Alamo and National at airports nationwide.
The agreement provides that:
A. Upon the consolidation of a particular airport pursuant to an
Order of the Court, ANC will become indebted to Alamo LLC and
National Inc. in amount sufficient to maintain the same net
asset value at that airport as of the Effective Date of the
airport consolidation. Thereafter, ANC will be indebted to
Alamo and National for the net profit at that airport that
both brand names would have made had there been no
consolidation; and,
B. Before the filing of any Reorganization Plan for Alamo,
National or ANC, the Debtors will review the facts and
consider all factors including the creation of rejection
damages resulting from the approval by the Bankruptcy Court
of the rejection of Alamo's or National's concession
agreements. After consultation with Congress Financial
Corporation, Lehman Brothers Inc., Liberty Mutual Insurance
Company and the Official Committee of Unsecured Creditors,
the Debtors will determine what, if any, adjustment should be
made to ensure that the individual creditors of Alamo and
National are in the same position as they were prior to the
implementation of the airport consolidation.
Bonnie Glantz Fatell, Esq., at Blank Rome Comisky & McCauley LLP
in Wilmington, Delaware, explains the proposed agreement
protects the creditors (and as a matter of course is in the best
interest of the Debtors and their estates) by making sure ANC
will be indebted to Alamo or National for:
A. Any decrease in the net asset value at an individual airport
as of the effective date of the consolidation of that airport
from the net asset value that existed on the day prior to
consolidation; and,
B. The net profit that Alamo or National would have earned at
that airport had there not been consolidation. That net
profit will be determined by reference to the budgeted, stand
alone projections for Alamo and National for the year 2002.
(ANC Rental Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ADELPHIA COMMS: Signing-Up Boies Schiller as Special Counsel
------------------------------------------------------------
Adelphia Communications and its debtor-affiliates seek to employ
the firm of Boies, Schiller & Flexner, LLP as special counsel
for the ACOM Debtors under a general retainer to perform the
legal services.
Prior to the Petition Date, Boies Schiller advised and
represented ACOM in various matters:
A. In April 2001, Boies Schiller was retained by the ACOM
Debtors to provide antitrust advice in connection with the
ACOM Debtors' transaction with Verizon Media Ventures, Inc.
B. In November 2001, Boies Schiller was retained by the ACOM
Debtors to assist in defending it in connection with its
membership in Across Media Network, LLC. David Downey,
derivatively on behalf of Across Media, sued ACOM in Colorado
state court relating to ACOM's membership in Across Media.
The Buchanan Ingersoll firm also represents ACOM in that
litigation.
C. In January 2002, Boies Schiller was retained to provide
transaction advice in connection with the proposed
acquisition of certain cable assets from Milestone
Communications, LP.
D. In April 2002, Boies Schiller was retained to provide advice
to the independent directors of ACOM in connection with
advice relating to and in connection with ACOM's financial
filings and accounting issues; pending securities class
actions and similar litigation that may be commenced; pending
derivative litigation and similar litigation the may be
commenced; and investigations and any related proceedings or
litigation involving the United States Attorney for the
Southern District of New York and the United States Attorney
for the Middle District of Pennsylvania, the United States
Congress, the SEC or the Nasdaq Stock Market.
E. In April 2002, Boies Schiller was retained to provide advice
the Debtors relating to and in connection with financial
filings and accounting issues; pending securities class
actions and similar litigation that may be commenced; pending
derivative litigation and similar litigation that may be
commenced; investigations and any related proceedings or
litigation involving the United States Attorney for the
Southern District of New York and the United States Attorney
for the Middle District of Pennsylvania, the United State
Congress, the SEC and the Nasdaq Stock Market; the sale of
certain assets; an internal investigation of possible related
party transactions; and other matters as might have been
assigned to us by the ACOM Debtors.
In connection with these chapter 11 cases, the Debtors expect
that Boies Schiller will continue rendering services in
Litigation Matters and whatever other services the Debtors may
designate that are not central to ACOM's reorganization.
The ACOM Debtors seek to retain Boies Schiller as special
litigation counsel to represent them in matters relating to:
A. financial filings and accounting issues;
B. pending securities class actions and similar litigation that
may be commenced;
C. pending derivative litigation and similar litigation that may
be commenced;
D. investigations and any related proceedings or litigation
involving the United States Attorney for the Southern
District of New York and the United States Attorney for the
Middle District of Pennsylvania, the United States Congress,
the Securities and Exchange Commission and the Nasdaq Stock
Market;
E. the sale of certain assets;
F. actions that may be commenced on behalf of the Debtors
against former officers, directors, agents and contractors;
G. other matters as may be assigned by the Court.
Randall D. Fisher, the Debtors' Vice President and Corporate
Counsel, submits that Boies Schiller's proposed retention is for
the limited purpose of representing the Debtors as special
counsel regarding the matters identified above. The Debtors
expect Boies Schiller will continue to provide services to the
Debtors in connection with the ongoing investigations by various
federal, state and regulatory authorities and the lawsuits that
have arisen, and other matters as are designated by the Debtors
and do not constitute matters central to the Debtors'
reorganization.
Among other things, Boies Schiller ordinarily will not be
involved in interfacing with this Court and will not be
responsible for any of the Debtors' general restructuring
efforts except in certain limited circumstances. By delineating
Boies Schiller's role, the Debtors intend to ensure there will
be no duplication of services. Also, in rendering any services
to the Debtors, to minimize possible duplication of service
while maximizing the knowledge that Boies Schiller has developed
about the Debtors, Boies Schiller will consult with the Debtors'
board of directors, general counsel, Willkie Farr & Gallagher,
the Debtors' general bankruptcy counsel, and other professionals
as circumstances may dictate.
Mr. Fisher explains that the Debtors selected Boies Schiller
prepetition because, among other things, its attorneys have
extensive experience and knowledge regarding sophisticated
litigation matters and in the field of securities law. Based
upon its historical representation of the Debtors, Boies
Schiller has developed a particular understanding of the
Debtors' legal needs and therefore has extensive knowledge and
an in-depth understanding of the Debtors' complex array of
assets, liabilities and businesses as well as the issues and
facts surrounding the litigation matters facing the Debtors.
This information leaves Boies Schiller uniquely situated to
assist the Debtors in providing the services described above at
what could be a crucial time for the Debtors.
Philip Korologos, Esq., a Boies Schiller member, assures the
Court that his Firm does not have any connection with the
Debtors, their creditors or any other party in interest, or
their respective attorneys. In addition, Boies Schiller does
not represent any interest adverse to the Debtors' estates
respecting the matters on which it is to be retained. However,
the Firm currently represents or in the past has represented
several parties that may have connections with the Debtors in
matters unrelated to these cases including Florida Power & Light
Co., Caithness Corp., Credit Suisse First Boston, Citicorp NA,
Chase Manhattan Bank, Fidelity Investments, Credit Agricole
Indosuez, Credit Lyonnais, Courtroom Television Network LLC,
National Geographic, Lehman Bros., Ernst & Young, State Farm
Insurance, and Yankee Entertainment & Sports Network.
Boies Schiller will be paid its standard hourly rates:
Partners $350 to $720
Associates $230 to $350
Legal Assistants $ 90 to $110
Mr. Korologos informs the Court that Boies Schiller has received
$208,000 for services rendered to the Debtors in 2001 and
$3,100,000 in 2002. Boies Schiller is also holding an $80,000
retainer. (Adelphia Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Adelphia Communications' 10.875% bonds due 2010 (ADEL10USR1),
DebtTraders says, are quoted at a price of 39. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL10USR1
for real-time bond pricing.
ADVANCED GLASSFIBER: S&P Drops Credit & Sub. Debt Ratings to D
--------------------------------------------------------------
Standard & Poor's has lowered its corporate credit and
subordinated debt ratings on Advanced Glassfiber Yarns LLC (AGY)
to 'D' as the company announced that it will not make an
upcoming payment on its subordinated notes. These ratings were
also removed from CreditWatch.
At the same time, Standard & Poor's said that it has lowered its
senior secured debt rating on AGY to double-'C' This rating
remains on CreditWatch with negative implications where it was
placed on November 16, 2001. The rating will be lowered if bank
loan principal is reduced or payments are rescheduled.
These rating actions follow the announcement that the Aiken,
South Carolina-based company will not make the July 15, 2002,
interest payment on its $150 million senior subordinated notes
due 2009. "The company intends to enter into consensual
restructuring discussions with the noteholders during the 30-day
grace period", said Standard & Poor's credit analyst Cynthia
Werneth. "Standard & Poor's believes that full repayment of the
principal amount of the notes is unlikely".
AGY is a manufacturer of glass fiber yarns used in electronics,
aerospace, industrial, and construction end markets.
ADVANCED MATERIALS: May 31 Working Capital Deficit Tops $290K
-------------------------------------------------------------
Advanced Materials Group, Inc., (NASDAQ:ADMG) reported decreased
sales of 7.5% with a net loss of $111,000 for the second fiscal
quarter ended May 31, 2001.
Net sales for the second quarter of fiscal 2002 were $9.3
million versus $10.0 million for the comparable period of fiscal
2001. The net loss for the second quarter of fiscal 2002 was
$111,000 compared to $1,726,000 for the second quarter of fiscal
2001, which included restructuring and other charges aggregating
$1.6 million.
Net sales for the six months of fiscal 2002 were $17.9 million
versus $19.9 million for the comparable period of fiscal 2001.
The net loss for the six months of fiscal 2002 was $394,000,
compared to $2,118,000 for the six months of fiscal 2001,
including the aforementioned $1.6 million in non-recurring
charges.
At May 31,2002, Advanced Materials' balance sheet shows that the
company's total current liabilities eclipsed its total current
assets by about $290,000.
Chief Executive Officer Comments on Results
Commenting on the results, Advanced Materials Group CEO and
President Steve F. Scott said, "The restructuring measures we
took in fiscal 2001 have lowered our breakeven threshold for the
U.S. business, allowing us to improve the bottom line even
though sales were significantly lower in the second quarter of
fiscal 2002 compared to the same period in 2001.
"The decline in sales has been primarily due to a combination of
competitive pricing pressure and lower customer volumes in the
U.S. Sales for the Singapore and Ireland units continue to
improve, though competitive price pressure has made those
operations somewhat less profitable than in prior years."
Advanced Materials Group, Inc., is a leading manufacturer and
fabricator of specialty foams, foils, films and pressure-
sensitive adhesive components for a broad base of customers in
the computer, medical, automotive and aerospace industries both
in the U.S. and abroad.
AMERICAN CELLULAR: S&P Hatchets Junk Rating Down Two Notches
------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on
American Cellular Corp. to triple-'C'-minus from triple-'C'-plus
following its 50%-owner Dobson Communications Corp.'s
announcement that American Cellular will not be in compliance
with the total debt leverage ratio covenant in its bank credit
facility for the second quarter of 2002.
The rating remains on CreditWatch, however, the implications are
revised to negative from developing because discussions with
bank lenders are taking longer than previously anticipated by
Standard & Poor's. Moreover, the possibility exists that the
banks could accelerate repayment of the entire outstanding $916
million.
Standard & Poor's also affirmed its single-'B'-plus corporate
credit rating on Dobson Communications, based on current
information and the assumption that no significant cash infusion
will be made to American Cellular. The outlook on Dobson
Communications is stable.
"As indicated by management and its auditors in American
Cellular's 10-K filing, the uncertainty of the resolution of the
bank loan covenant raises the issue of American Cellular's
ability to continue as a going concern," Standard & Poor's
credit analyst Rosemarie Kalinowski said.
American Cellular is a joint venture between Dobson
Communications and AT&T Wireless Services Inc. (BBB/Stable/A-2).
For analytical purposes, Standard & Poor's has decoupled
American Cellular's rating from those of Dobson Communications
and AT&T Wireless, because no material support is anticipated
from its parents.
AMERICAN TISSUE: Receives Nod to Auction 2 of 3 Remaining Mills
---------------------------------------------------------------
Paper and pulp maker American Tissue Inc., received approval
from Judge Ronald Barliant of the U.S. Bankruptcy Court in
Delaware to begin auctions for two of its three remaining mills
with stalking-horse bids worth a combined $18.5 million,
reported The Daily Deal.
Judge Barliant approved a $17 million initial offer from Cellu
Converting Products Inc., for American Tissue's plant in Neenah,
Wisconsin. The judge also approved a $1.4 million cash-bid for
an American Tissue plant in Hauppauge, New York, by Atlantic
Paper & Foil Corp.
According to the online newspaper, he also approved Atlantic
Paper's proposal to spend $140,000 on sludge removal. Competing
offers for the New York mill must be submitted by July 31 and a
sale approval hearing is set for August 6.
American Tissue filed for chapter 11 bankruptcy protection on
September 10. (ABI World, July 12, 2002)
AMES DEPARTMENT: Judge Gerber Approves Reclamation Claims Report
----------------------------------------------------------------
Judge Gerber approves Ames Department Stores, Inc., and its
debtor-affiliates' Reclamation Claims Report for all purposes in
these cases, including claim allowance, distributions and plan
voting. Accordingly, the Debtors are authorized to make an
interim distribution on account of valid Reclamation Claims of
up to, but no more than, 75% of the amounts listed in the Report
as "Valid Reclamation Claim" to the holders of the valid
Reclamation Claims, subject in all respects to the Debtors' DIP
Credit Agreement.
In addition, Judge Gerber declares that all of the claims
indicated in the Report as being invalid, withdrawn or
previously paid are disallowed for purposes of Bankruptcy Code
Section 546(c). The Debtors are not required to make any
distribution on account of those invalid claims. All "persons,"
as defined in the Bankruptcy Code, which have or sought to
assert any Reclamation Claim against the Debtors in this case
are bound by this Report and this Order.
* * *
As previously reported, the Debtors have reviewed and analyzed
all of the asserted Reclamation Claims and Supporting Documents
and have prepared the Report which reflects:
Total Amount of Reclamation Claims $ 12,938,350
Total of Withdrawn Claims 2,127,037
Amount of Claims Already Paid 2,904,569
Total Invalid Claims 4,361,903
Total of Valid Claims 3,544,840
Neil Berger, Esq., at Togut, Segal & Segal LLP in New York, New
York, says that the Debtors have concluded from their review
that the Valid Reclamation Claims totaling $3,544,840 are
entitled to relief pursuant to Bankruptcy Code Section 546(c).
The Report also provides the basis for the Debtors' objections
to certain Reclamation Claims:
A. The claim does not fall within the reclamation period;
B. The goods are not identifiable or in Debtors' possession;
and,
C. Vendor has been paid for the goods. (AMES Bankruptcy News,
Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
Ames Department Stores' 10% bonds due 2006 (AMES06USR1) are
trading at 1, DebtTraders says. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=AMES06USR1
APPLIED DIGITAL: Will Seek to Overturn Nasdaq Delisting Decision
----------------------------------------------------------------
Applied Digital Solutions, Inc. (Symbol: ADSX), an advanced
technology development company, issued the following statement
from the Company's President, Scott R. Silverman:
"On July 12, 2002, the Company was advised of a Nasdaq
listing qualifications panel's decision to delist the Company's
common stock from The Nasdaq Stock Market, effective with the
open of business on that date. The decision cites the Company's
continuing delinquency in filing with the Securities and
Exchange Commission a quarterly report on Form 10-Q for the
first quarter of 2002 which includes interim financial
statements reviewed by the Company's outside auditors in
accordance with Rule 10-01(d) of Regulation S-X (the SAS 71
review).
"Since filing its Form 10-Q on May 20, 2002, the Company
formally requested continued listing of its stock pending the
Company's receipt of guidance from the SEC's Chief Accountant's
Office regarding various accounting issues stemming from the
merger of Medical Advisory Systems, Inc., and Digital Angel
Corporation, which was completed on March 27, 2002. Resolution
of these accounting issues was viewed as necessary by the
Company and its outside auditors to complete the SAS 71 review.
Equally if not more important, the Company viewed it as in the
best interests of its shareholders and the investing public
generally to obtain guidance on the issues raised with the Chief
Accountant's Office prior to filing an amendment to the Form 10-
Q so as to ensure that a restatement of its financial statements
would not be necessary.
"Throughout the period between the Company's formal request
for continued listing and the communication of the panel's
decision, the Company kept the Nasdaq staff apprised of all
material developments. This included several rounds of written
and oral communications between the Company and the SEC's Chief
Accountant's Office as the Company endeavored expeditiously to
provide responses to the several requests for information made
by the SEC, a process that suggests the complexity and
uniqueness of the issues raised. Further, the Company advised
the Nasdaq staff within minutes of its receipt of definitive
guidance (and the nature of that guidance) from the Chief
Accountant's Office, received on the afternoon of Thursday, July
11, 2002. In light of the Company's efforts to keep the Nasdaq
staff fully informed, the Company finds the delisting decision
perplexing.
"The Company will reflect the SEC's guidance on the
accounting issues raised in the interim financial statements
(and the notes to such financial statements) in the amendment to
the first quarter 2002 Form 10-Q, which will disclose that such
financial statements have been reviewed by the Company's outside
auditors. The Company's goal is to file the amended Form 10-Q
later this week. In conjunction with this filing, the Company
intends to seek to overturn the delisting decision. This may
entail initiating a request that the Nasdaq Listing and Hearing
Review Council review the panel's decision. No assurances can be
provided as to the outcome of the Company's efforts to regain
Nasdaq listing.
"Because the Company is not considered current in all of
its periodic reporting requirements under the Securities
Exchange Act of 1934 (as a function of the delinquent first
quarter Form 10-Q), the Company's stock is not eligible to trade
on the OTC Bulletin Board and, instead, is trading in what is
referred to as the 'Pink Sheets.' Following the filing of the
amended Form 10-Q, the Company's stock will be eligible for
quotation by market makers on the OTC Bulletin Board upon
compliance with applicable Exchange Act rules.
"Although the panel's action is a setback, it will not
distract us from our efforts to execute our business plan. Since
joining the Company as President in March, I have been committed
to the long-term value proposition that our proprietary
technologies present. Digital Angel(TM), VeriChip(TM) and Thermo
Life(TM) are all ground-breaking, life-enhancing technologies
and we will continue to pursue their development and
introduction in the marketplace. For example, last week we
showcased VeriChip's security applications at the Americas'
Security Expo in Miami. Later this week, VeriChip will be on
display at the Airport Security Expo in Las Vegas. We announced
the important 3.0-volt Thermo Life breakthrough just last
Tuesday. Digital Angel Corporation announced last week that it
had recently sold its 25 millionth implantable animal
identification chip. We are moving forward aggressively on all
of these fronts.
"Our shareholders can rest assured that this management
team is committed to your company's future and that we will do
everything in our power to protect the value and liquidity of
your investment."
VeriChip, first announced on December 19, 2001, is a
miniaturized radio frequency identification device (RFID) that
can be used in a variety of security, financial, emergency
identification and healthcare applications. About the size of a
grain of rice, each VeriChip product contains a unique
verification number and will be available in several formats,
some of which will be insertable under the skin. The
verification number is captured by briefly passing a proprietary
scanner over the VeriChip. A small amount of radio frequency
energy passes from the scanner energizing the dormant VeriChip,
which then emits a radio frequency signal transmitting the
verification number. VeriChip Corporation and its parent
company, Applied Digital Solutions, are working with federal
regulators to ensure full compliance with applicable
regulations. VeriChip Corporation is a wholly owned subsidiary
of Applied Digital Solutions.
Digital Angel Corporation was formed on March 27, 2002, in a
merger between Digital Angel Corporation and Medical Advisory
Systems, Inc., which for two decades has operated a 24/7,
physician-staffed call center in Owings, Maryland. Prior to the
merger, Digital Angel Corporation was a wholly owned subsidiary
of Applied Digital Solutions, Inc. Digital Angel(TM) technology
and patents represent the first-ever combination of advanced
sensors and Web-enabled wireless telecommunications linked to
Global Positioning Systems (GPS). By utilizing advanced sensor
capabilities, Digital Angel will be able to monitor key
functions - such as ambient temperature and physical movement -
and transmit that data, along with accurate emergency location
information, to a ground station or monitoring facility. The
company also invented, manufactures and markets implantable
identification microchips the size of a grain of rice for use in
companion pets, fish, and livestock. Digital Angel Corp. owns
patents for its inventions in applications of the implantable
microchip technology for animals and humans. For more
information about Digital Angel Corporation, visit
http://www.digitalangel.net
Thermo Life is a miniaturized, thermoelectric generator powered
by body heat. On July 9, 2002, the Company announced that it had
achieved an important breakthrough: 3.0-volts of electrical
power successfully generated by Thermo Life in laboratory tests.
The Company believes Thermo Life technology has a wide variety
of potential uses, including the powering of various electronic
devices, wristwatches, medical devices, smoke detectors and
other heat-related sensors. If Thermo Life performs as expected
in commercial applications, this technology could effectively
eliminate the need to periodically replace the power source of
these devices. Thermo Life technology can also provide an
independent, heat-generated power source for security related
sensors. Thermo Life Energy Corporation is a wholly owned
subsidiary of Applied Digital Solutions.
Applied Digital Solutions is an advanced technology development
company that focuses on a range of life-enhancing, personal
safeguard technologies, early warning alert systems,
miniaturized power sources and security monitoring systems
combined with the comprehensive data management services
required to support them. Through its Advanced Technology Group,
the company specializes in security-related data collection,
value-added data intelligence and complex data delivery
systems for a wide variety of end users including commercial
operations, government agencies and consumers. Applied Digital
Solutions is the beneficial owner of a majority position in
Digital Angel Corporation. For more information, visit the
company's Web site at http://www.adsx.com
ARABIAN AMERICAN: Auditors Doubt Ability to Continue Operations
---------------------------------------------------------------
Arabian American Development Company was organized as a Delaware
corporation in 1967. The Company's principal business activities
include refining various specialty petrochemical products and
developing mineral properties in Saudi Arabia and the United
States. All of its mineral properties are presently undeveloped
and require significant capital expenditures before beginning
any commercial operations. The Company's undeveloped mineral
interests are primarily located in Saudi Arabia.
The Company's domestic activities are primarily conducted
through a wholly owned subsidiary, American Shield Refining
Company, which owns all of the capital stock of Texas Oil and
Chemical Co. II, Inc. TOCCO owns all of the capital stock of
South Hampton Refining Company, and South Hampton owns all of
the capital stock of Gulf State Pipe Line Company, Inc. South
Hampton owns and operates a specialty petrochemical products
refinery near Silsbee, Texas that is one of the largest
manufacturers of pentanes consumed domestically. Gulf State owns
and operates three pipelines which connect the South Hampton
refinery to a natural gas line, to South Hampton's truck and
rail loading terminal and to a marine terminal owned by an
unaffiliated third party. The Company also directly owns
approximately 51% of the capital stock of a Nevada mining
company, Pioche-Ely Valley Mines, Inc. Pioche does not conduct
any substantial business activities. American Shield Coal
Company, an inactive wholly owned subsidiary, was merged into
the Company on October 26, 2001.
The Company holds a thirty (30) year mining lease (which
commenced on May 22, 1993) covering an approximate 44 square
kilometer area in the Al Masane area in southwestern Saudi
Arabia. The Company has the option to renew or extend the term
of the lease for additional periods not to exceed twenty (20)
years. The Company was granted exploration licenses for the
other areas in southwestern Saudi Arabia which have expired.
In 1999, the Company applied for an exploration license covering
an area of approximately 2,850 square kilometers surrounding the
mining lease area, where it has previously explored with the
written permission of the Saudi Ministry of Petroleum and
Mineral Resources.
Texas Oil & Chemical Co., acquired 92% of the issued and
outstanding shares of common stock of Productos Quimicos Coin,
S.A. de. C.V., a specialty petrochemical products refining
company, from Spechem, S.A. de. C.V., on January 25, 2000 at a
purchase price of $2.5 million. The refinery is located in
Coatzacoalcos, on the Yucatan Peninsula near Veracruz, Mexico.
An administrative office is located in Mexico City.
The Company incurred a loss of $2,095,128 in 2001 and had an
excess of current liabilities over current assets at December
31, 2001. Additionally, the Company was not in compliance with
certain covenants in its loan agreements. If resolution with the
lender is not achieved, and the Company does not generate
positive cash flow adequate for its operations and loan
obligations, the Company will have to raise debt or equity
capital. There is no assurance that capital would be available.
These matters raise substantial doubt about the Company's
ability to continue as a going concern.
In addition to other issues, management of the Company is
addressing two significant financing issues. These are the $11.0
million note payable due the Saudi Arabian government and
accrued salaries and termination benefits of approximately
$1,260,000 due employees working in Saudi Arabia (this amount
does not include any amounts due the Company's President and
Chief Executive Officer who also primarily works in Saudi Arabia
and is owed accrued salaries and termination benefits of
approximately $1,049,000). The note payable was originally due
in ten annual installments beginning in 1984. While the Company
has not made any repayments, it has not received any payment
demands or other communications from the Saudi government
regarding the note payable. This is despite the fact the Company
remains active in Saudi Arabia and received the Al Masane mining
lease at a time when it had not made any of the agreed upon
repayment installments. Based on its experience to date,
management believes as long as the Company diligently attempts
to explore and develop the Al Masane project that no repayment
demand will be made. The Company has communicated to the Saudi
government that its delay in repaying the note is a direct
result of the government's lengthy delay in granting the Al
Masane lease and requested formal negotiations to restructure
this obligation. Based on its interpretation of the Al Masane
mining lease and other documents, management believes the
government is likely to agree to link repayment of this note to
the operating cash flows generated by the commercial development
of the Al Masane project, which would result in a long-term
installment repayment schedule. In the event the Saudi
government were to demand immediate repayment of this
obligation, which management considers unlikely, the Company
would be unable to pay the entire amount due.
The second issue is the accrued salaries and termination
benefits due employees working in Saudi Arabia. The Company
plans to continue employing these individuals until it is able
to generate sufficient excess funds to begin payment of this
liability. Management will then begin the process of gradually
releasing certain employees and paying its obligation as they
are released from the Company's employment.
A significant component of the Company's assets consists of
undeveloped mineral deposits. There is no assurance that the
Company will ultimately successfully develop either the Al
Masane project or any of the other properties, and if,
developed, whether the mineral acquisition, development and
development costs incurred will be recovered. The recovery of
these costs is dependent upon a number of factors and future
events, many of which are beyond the Company's control.
Furthermore, the Company's ability to develop and realize its
investment in these properties is dependent upon (i) obtaining
significant additional financing and (ii) attaining successful
operations from one or more of these projects.
ARCHIBALD CANDY: Will Delay Form 10-Q Filing with SEC
-----------------------------------------------------
As a consequence of issues arising in connection with the
commencement of bankruptcy proceedings on June 12, 2002 by
Archibald Candy Corporation, its Quarterly Report on Form 10-Q
for the period ended May 25, 2002 could not be filed within the
prescribed time period without unreasonable effort and expense.
The Company anticipates that it will have an operating loss of
approximately $4.2 million for the three months ended May 25,
2002, compared to an operating loss of $14.2 million for the
three months ended May 26, 2001. Excluding the impact of Sweet
Factory Group, Inc., a subsidiary of Archibald Candy Corporation
which filed bankruptcy proceedings on November 15, 2001, the
operating loss for the three months ended May 26, 2001 was $2.4
million. The decrease in operating income, when excluding the
impact of SGI, was the result of weak retail sales during the
Easter holiday period and professional fees associated with the
commencement of bankruptcy proceedings by the Company.
BGF INDUSTRIES: S&P Drops Ratings to D over Interest Nonpayment
---------------------------------------------------------------
Standard & Poor's lowered its ratings, including its triple-'C'-
plus corporate credit rating, on BGF Industries Inc. to 'D' and
removed them from CreditWatch where they were placed with
negative implications on May 17, 2002.
The downgrades follow BGF's announcement that it will not make
the July 15, 2002 interest payment on its $100 million senior
subordinated notes due 2009. The company is blocked from making
the payment due to a breach of certain financial covenants under
its bank credit facility, which has about $30 million currently
outstanding. "If the covenant breach is cured and the company
makes the interest payment on the notes within the 30-day grace
period, ratings could be raised", said Standard & Poor's credit
analyst Cynthia Werneth. "However," she added, "BGF has engaged
a financial advisor to explore strategic alternatives including
a capital restructuring. If noteholders agree to a reduction in
principal, Standard & Poor's would view this as tantamount to a
default".
BGF manufactures glass fiber and other high-performance fabrics
used in electronic, aerospace, marine, filtration, insulation,
and construction products.
BELL CANADA: Terminates Put Option and Secondary Warrants
---------------------------------------------------------
Bell Canada International Inc., had received notice from
American International Underwriters Overseas, Ltd., and American
International Reinsurance Company, Ltd., that the Holders have
sold their indirect interest in Comunicacion Celular - Comcel
S.A., to a wholly owned subsidiary of America MĒvil S.A. de C.V.
Details of the transaction were not disclosed.
Accordingly, the Holders' right to put this interest in Comcel
to BCI pursuant to a December 10, 1998 Put Option Agreement, an
obligation BCI has previously announced it would settle through
the issuance of BCI common shares, has terminated pursuant to
its terms. As a result, no BCI common shares will be issued to
the Holders. As a further consequence of the termination of the
Put Option, the secondary warrants issued on January 11, 2002 in
connection with BCI's Recapitalization Plan have automatically
expired. The termination of both the Put Option and the
secondary warrants eliminates the risk of significant dilution
facing BCI's shareholders, which would have resulted from the
Put Option being exercised.
As of the date hereof, BCI has 4,797,313,658 outstanding common
shares. As announced on June 10, 2002, BCI is proposing, as
part of a Plan of Arrangement, a share consolidation that will
result in BCI having 40 million common shares outstanding
following the consolidation. BCI confirms that the proposed
consolidation ratio will be approximately one to 120. The share
consolidation is subject to required shareholder and court
approvals.
BCI, through Telecom Americas Ltd., holds interests in 4
Brazilian B Band cellular companies serving more than 4.5
million subscribers in territories of Brazil with a population
of approximately 60 million. BCI is a subsidiary of BCE Inc.,
Canada's largest communications company. BCI is listed on the
Toronto Stock Exchange under the symbol BI and on the NASDAQ
National Market under the symbol BCICF. Visit the company's Web
site at http://www.bci.ca
BIRMINGHAM STEEL: Wants Until August 5, 2002 to Decide on Leases
----------------------------------------------------------------
Birmingham Steel Corporation and its debtor-affiliates ask the
U.S. Bankruptcy Court for the District of Delaware for more time
to decide how to treat their unexpired leases. The Debtors want
more time to decide whether to assume, assume and assign, or
reject their unexpired nonresidential real property leases
through August 5, 2002.
The Debtors entered into an Asset Purchase Agreement to sell
substantially all their assets to JAR Acquisition Corp., an
affiliate of Nucor Corporation. The Debtors say that their
proposed sale may be jeopardized if their ability to assume and
assign the Leases is not preserved.
To the extent the Debtors do not assign the Leases to the Buyer,
the Debtors wish to reserve the right to assume and assign the
Leases to other parties as necessary to maximize the value of
their estates. An extensive analysis will be necessary to
determine whether assumption, assignment or rejection of each of
the Leases is in the best interests of the Debtors' estates.
Such an analysis will depend, among other things, on
confirmation of the Debtors' joint plan and the proposed sale to
the Buyer, the Debtors point out.
Birmingham Steel Corporation manufacture and distribute steel.
Without limitation, the Debtors produce steel reinforcing bar
(rebar) for construction industry and merchant steel products
for fabricators and distributors across North America. The
Company filed for chapter 11 protection on June 3, 2002. James
L. Patton, Esq., Michael R. Nestor, Esq., Sharon M Zieg, Esq. at
Young Conaway Stargatt & Taylor, LLP and John Whittington, Esq.,
Patrick Darby, Esq., Lloyd C. Peeples III, Esq. at Bradley Arant
Rose & White LLP represent the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed $487,485,834 in assets and $681,860,489 in
total debts.
CMS ENERGY: Fitch Hatchets Senior Unsecured Debt Rating to BB-
--------------------------------------------------------------
Fitch Ratings has downgraded the ratings of CMS Energy and its
subsidiaries Consumers Energy Co., and CMS Panhandle Eastern
Pipe Line Co. The senior unsecured debt rating of CMS has been
lowered to 'BB-' from 'BB+'. The downgrades of Consumers and
PEPL reflect Fitch's notching criteria with respect to parent
and subsidiary ratings.
CMS, Consumers and PEPL will remain on Rating Watch Negative,
where they were originally placed on June 11, 2002 due to
concerns surrounding CMS' weak liquidity position, high parent
debt levels, and limited financial flexibility. CMS' market
access continues to be constrained by the company's need to
restate its 2000 and 2001 financial statements to eliminate the
effects of 'wash trades' with other energy companies. While
Consumers and PEPL are fundamentally sound, the companies'
financial condition and credit ratings may be adversely affected
by the financial stress of their parent. The Negative Rating
Watch will remain in place pending a meeting with CMS management
within the next several weeks to review the company's updated
business plan.
CMS is a utility holding company whose primary subsidiaries are
Consumers, a regulated electric and gas utility serving
customers in western Michigan, and PEPL, which is primarily
engaged in the interstate transportation and storage of natural
gas. Unregulated activities include independent power
production, oil and gas exploration and production and energy
marketing, services and trading.
Ratings lowered and maintained on Rating Watch Negative
CMS Energy
--Senior unsecured debt to 'BB-' from 'BB+';
--Preferred stock/trust preferred securities to 'B-' from 'BB-'.
Consumers Energy
--Senior secured debt to 'BBB' from 'BBB+';
--Senior unsecured debt to 'BB+' from 'BBB';
--Preferred stock/trust preferred securities to 'BB-' from
'BB+'.
Consumers Power Financing Trust I
--Trust preferred securities to 'BB-' from 'BB+'.
PEPL
--Senior unsecured debt to 'BB+' from 'BBB'.
CMS ENERGY: Fitch Says New Credit Pacts Hurt Unsecured Creditors
----------------------------------------------------------------
Fitch Ratings downgraded the ratings of CMS Energy and its
subsidiaries Consumers Energy Co., and CMS Panhandle Eastern
Pipe Line Co. CMS, Consumers and PEPL will remain on Rating
Watch Negative, where they were originally placed on June 11,
2002 due to concerns surrounding CMS' weak liquidity position,
high parent debt levels, and limited financial flexibility. The
Negative Rating Watch will remain in place pending a meeting
with CMS management within the next several weeks to review the
company's updated business plan.
CMS' revised ratings reflect the negative impact on unsecured
creditors of the company's newly restructured bank credit
facility agreements that were announced early Monday. CMS has
replaced its expired $450 million credit line with a smaller
$295.8 million facility that is secured by a second lien on the
equity of CMS Enterprises. CMS Enterprises is the parent company
of CMS Generation, CMS Oil & Gas, CMS Gas Transmission, CMS
Field Services, CMS International Ventures, CMS Capital and PEPL
(excluding the subsidiaries of PEPL). The current book value of
CMS Enterprises' equity, net of current liabilities, long-term
debt and deferred credits, is approximately $800 million. The
new $295.8 million facility, which is fully drawn, will expire
on March 31, 2003. CMS' existing $300 million credit facility,
which is also fully drawn, has become similarly secured and the
maturity has been shortened by six months to Dec. 15, 2003.
CMS also announced that a new $150 million credit facility has
been established for CMS Enterprises. This facility, which will
mature on December 13, 2002, is secured by a first lien on the
stock of CMS Enterprises. CMS intends to fully draw on this
facility to meet working capital needs.
The new facilities, which aggregate $750 million, are secured
credits with mandatory pre-payment conditions based on the
proceeds from asset sales and capital market issuances. CMS
recently announced its intention to sell CMS Oil and Gas, which
has a book value of $350 million, an interest in Centennial
Pipeline and CMS Viron, a unit of CMS Marketing Services and
Trading. The proceeds from these asset sales were initially
targeted to reduce debt at CMS, which is highly leveraged with a
consolidated debt ratio of 66%. Additionally, the new facilities
contain financial covenants, including a consolidated debt to
consolidated EBITDA test of not more than 5.75:1, and a cash
dividend income to interest expense test of not less than 1.25:1
for the immediately preceding for quarters. As a result of
dividend restrictions imposed in the credit agreements, CMS
intends to cut the company's common dividend by approximately
50%.
In addition, Consumers has replaced its expiring $300 million
unsecured credit facility with a new $250 million one-year
facility, to be secured with first mortgage bonds. Consumers has
also put in place a one-year $300 million secured term loan,
with a one-year extension option, to expire on July 11, 2003. A
mandatory prepayment condition related to Consumers' term loan
requires 50% of net cash proceeds, after the first $100 million
in asset sales, to be used to repay the term loan. Financial
covenants, specifically a debt to capitalization ratio and an
EBIT to interest coverage test, are in place for both the
revolving credit facility and the term loan. The increased
separation between the senior secured and senior unsecured
ratings of Consumers takes into consideration this additional
$550 million of secured debt at the utility.
CMS is a utility holding company whose primary subsidiaries are
Consumers, a regulated electric and gas utility serving
customers in western Michigan, and PEPL, which is primarily
engaged in the interstate transportation and storage of natural
gas. Unregulated activities include independent power
production, oil and gas exploration and production and energy
marketing, services and trading.
COMDISCO INC: Secures Approval of Stay Bonus and Incentive Plan
---------------------------------------------------------------
Comdisco, Inc., and its debtor-affiliates obtained the Court
approval of their Stay Bonus Plan and Management Incentive Plan.
Stay Bonus Plan
As previously reported, the Stay Bonus Plan is a retention
program covering approximately 426 employees, including 65
European employees, directly responsible for the success of the
Plan. Eligible participants under the Plan will accrue one
week's salary for every two weeks of work after April 1, 2002.
One-half of the accrued benefits will be paid in two semi-annual
installments paid on or about May 15 and November 15 of each
year. The remaining one-half will be paid upon job termination
other than for cause or voluntary resignation. The total cost
of the Plan is expected to be approximately $18,500,000.
Employees eligible under this Plan are not eligible to
participate in the Management Incentive Plan. This Plan also
replaces any prior bonus/incentive/commission compensation
programs for which the employees would have been eligible, with
the exception of any payments with respect to previously
approved retention programs and payments from the previously
approved chairman's discretionary fund.
Management Incentive Plan
The Management Incentive Plan covers key managers and employees
directly responsible for the overall direction of a particular
business unit and the results achieved within the business unit.
This Plan also covers key corporate employees whose services are
required to facilitate business operations and to administer
claims and related Chapter 11 matters. Employees who
voluntarily terminate their employment prior to their respective
payment dates under the Plan or are terminated for cause, are
not eligible for any payments from this Plan that have not
already been paid with the exception of payments for previously
approved retention programs and chairman's discretionary fund.
The Plan is tailored for each of the Reorganized Debtors'
business units -- U.S. Leasing, Ventures, European Leasing and
Corporate Asset Management Group -- as well as at the corporate
level. The Plan establishes varying levels of incentive
compensation depending upon whether the business unit reaches
its threshold target or business plan target. For purposes of
measuring achievement relative to the Plan, cash flows will be
discounted using rates specified in each business unit plan at
the time the cash is distributed to creditors. However, prior
to the initial distribution after confirmation, the incremental
cash that would have been available for distribution at the end
of each month will be discounted at the appropriate discount
rate from the end of that month to April 1, 2002.
(i) U.S. Leasing
The Plan for the U.S. Leasing unit covers approximately 32
key employees. All participants are eligible to receive
semi-annual performance bonuses, and approximately 22 of
these employees are eligible to receive upside sharing
opportunities. The Debtors have set a Leasing threshold
target of approximately $571,000,000 and a business plan
target of approximately $649,000,000 on a present value
basis using an appropriate discount rate to April 1, 2002.
The semi-annual performance bonus component is designed to
reward employees for meeting specified business
objectives. The employees who will meet their specified
objectives will accrue bonuses up to a certain percentage
of their annual base salary for each six months of
employment after April 1, 2002. For employees eligible
for an upside sharing bonus, after the end of fiscal year
2003, these semi-annual bonus percentages will be reduced
by one-half. For participants other than sales personnel,
one-half of their accrued bonuses will be paid on or about
May 15 and November 15 of each year; the remaining one-
half will be paid upon job termination other than for
cause or voluntary resignation. Sales personnel will
receive the entire accrued bonus amount at each semi-
annual payment date. One-half of the bonus amounts will
be determined by management's assessment of individual job
performance. The other half will be dependent upon
meeting the business unit's cumulative cash-flow
objectives necessary to achieve the targeted threshold and
plan recoveries.
For the cash flow component, participants are eligible to
receive a range of 70% of their cash flow bonus amount to
100% of the amount. If the unit does not achieve 90% of
the threshold target for that time period, on a cumulative
basis, participants are not eligible to receive cash
flow bonus amount. The total maximum cost of the semi-
annual bonus component for eligible employees under this
unit is approximately $8,800,000.
Participants will be considered fully vested in the upside
sharing plan when 75% or greater of the total present
value recovery has been realized. If terminated without
cause prior to achievement of 75% of the total value
recovery, participants will receive a pro rata share of
the upside sharing amount. However, if prior to
termination, the employee satisfactorily performed all
duties under the plan and at least 50% of the total
present value recovery has been achieved, then the
employee will be considered fully vested.
If substantially all of the U.S. Leasing assets are sold
prior to the unit achieving its business plan target, and
assuming that performance is either tracking or exceeding
the Plan, then the participants will receive the greater
of:
(a) the upside sharing payout at plan target; or
(b) the upside sharing amount if the sale proceeds exceed
the plan target.
(ii) Ventures
The Plan under this unit covers approximately 25 key
employees. This program is structured similarly to that
for the U.S. Leasing unit and includes a semi-annual
performance bonus and an upside sharing opportunity. The
Debtors have set the threshold target for this unit at
$376,000,000 and a business plan target at $427,000,000 on
a present value basis using an appropriate discount rate
to April 1, 2002. For the semi-annual performance bonus,
eligible participant's bonus percentages are based on
position and range from 37.5-50% of annual base salary.
The total maximum cost of the semi-annual bonus component
for eligible employees is approximately $4,000,000. The
upside sharing opportunities has been established at
predetermined levels and is based upon exceeding targeted
present value recovery in connection with the run off of
the Ventures portfolio. In addition, the Ventures leasing
portfolio includes the ability to realize value on
warrants and equity issued to the debtors by customers.
The Debtors have designed the Plan to create potential
value opportunities in their warrant and equity positions
through restructuring the obligations and re-pricing of
warrants while seeking to maximize the value of the
portfolio. Only 25% of every dollar realized in both
warrants and equity proceeds contributes toward achieving
the threshold and plan targets.
(iii) Europe
Aside from the previously approved and implemented
country-specific retention programs, the Chief Executive
Officer and the Chief Financial Officer of European
operations are eligible to participate in the European
Management Incentive Plan. With respect to the core
European countries, the two participants are eligible to
receive a bonus of 1.5 to 2 times base salary in
connection with a sale of those business units depending
upon percentage of Net Book Value realized and speed of
closing a transaction. The total maximum cost of this
Plan in the event of a sale is approximately $1,400,000.
If a sale cannot be timely effectuated or a decision is
made to abandon a sale process, then the sale compensation
plan will not be operative. In its place:
(a) the two participants would be eligible to receive a
semi-annual performance bonus of up to 75% of base
salary if other business objectives related to an
orderly liquidation are satisfied; and
(b) the two participants will receive a one-time payment
of up to 100% of base salary if more than 75% of
book value is ultimately realized on the core
European assets.
With non core European businesses, the two participants
are eligible to receive a bonus payment of up to 50% of
base salary if the leasing portfolios in those countries
are either sold, orderly liquidated or consolidated into
the core countries with the respective offices closed by
December 31, 2002.
All other employees in the core and non-core European
countries are eligible to participate in retention and
incentive programs with a total aggregate cost of
$5,700,000.
(iv) Corporate Asset Management Group
Five key employees are eligible to participate under this
unit relating to the corporate assets not included in U.S.
Leasing, Ventures or European operations. This program is
structured similarly to those of the other units and
includes a semi-annual performance bonus and an upside
sharing opportunity. The Corporate Asset Management group
threshold target has been set to $465,000,000 and a
business plan target of $527,000,000 on a present value
basis using appropriate discount rate to April 1, 2002.
Bonuses will be based on a percentage of a participant's
annual salary for each six months of employment after
April 1, 2002. These percentages are based on position
and range from 50-75% of annual base salary. The total
maximum cost of the semi-annual bonus component for
eligible Corporate Asset Management Group employees is
approximately $1,400,000.
Three of the five eligible employees in this unit will
share in the upside sharing opportunity based upon
exceeding targeted present value recovery in connection
with the sale of all corporate assets not included in the
other units.
Two of the five eligible employees under this unit will
share in 5% of the upside realized from the sale of
specific Electronics and Laboratory and Scientific
Inventory in excess of a threshold target of $29,000,000
and a plan target of $38,400,000. The anticipated cost of
this program is approximately $29,000,000. For these two
participants, the upside sharing bonus is capped at an
achievement of 150% of the plan target.
(v) Corporate
Approximately 17 division executives and members of
corporate management whose services facilitate the overall
functioning of the Company's operations is eligible to
participate in a semi-annual performance bonus plan.
Approximately 10 employees are eligible to participate in
an additional incentive pool based on meeting certain
claims reduction targets. This program is structured
similarly to those of the other units. Bonus percentages
will be based on position and range from 50-150% of annual
base salary. For the Chief Executive Officer, one-half of
the semi-annual bonuses shall be reduced after fiscal year
2003. The Debtors have set a consolidated corporate
threshold target of approximately $1,511,000 and a plan
target of approximately $1,717,000 on a present value
basis using various discount rates to April 1, 2002. The
total maximum cost of the semi-annual bonus component
under this unit is $9,900,000.
In addition, the ten corporate management and staff
participants with direct line responsibility for claims
management is eligible to participate in an incentive
pool based on reducing off-balance sheet claims and tax
claims filed in these Chapter 11 cases. To the extent
that those claims are reduced to below a threshold of
$267,000,000, participants will be eligible to share in a
graduated incentive pool. (Comdisco Bankruptcy News, Issue
No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CONTOUR ENERGY: Files for Chapter 11 Reorganization in Texas
------------------------------------------------------------
Contour Energy Co., filed in the United States Bankruptcy Court
for the Southern District of Texas, Houston Division, a petition
for reorganization under Chapter 11 of the United States
Bankruptcy Code, Case No. 02-37740-H2-11. Contour's
subsidiaries, Contour Energy E&P, LLC (Case No. 02-37741-H2-11),
Kelley Operating Company, Ltd. (Case No. 02-37744-H2-11),
Concorde Gas Marketing, Inc. (Case No. 02-37743-H2-11), Concorde
Gas Intrastate, Inc. (Case No. 02-37742-H2-11) and Petrofunds,
Inc. (Case No. 02-37745-H2-11), also filed Chapter 11 petitions
with the Bankruptcy Court.
Also, following extensive negotiations with an informal
committee of holders of more than 75% of their 10-3/8%
subordinated notes, the Company and its subsidiaries filed a
Joint Plan of Reorganization and a Disclosure Statement
regarding the Plan with the Bankruptcy Court embodying the terms
of the proposed restructuring of Contour and its affiliates. The
Plan provides, among other things, for payment of the claims of
holders of the Company's 14% senior secured notes to be funded
with a commercial bank credit facility to be negotiated by the
Company in conjunction with new mezzanine debt financing
contemplated by the Ad Hoc Committee. The Company is seeking the
financing required to consummate the Plan but there is no
assurance that the Company will be able to obtain adequate
financing to satisfy the conditions in the Plan. In addition,
the Plan contemplates the exchange of the Company's subordinated
notes for substantially all of the equity interests in the
reorganized entity and the payment of $750,000 cash pro rata to
existing shareholders of Contour common stock. The Bankruptcy
Court has not approved the Plan, and the Company cannot make any
assurance that the Bankruptcy Court will approve the Plan in its
current form.
Further, the Company has reached an agreement with the majority
holder of its Senior Notes and with the Senior Notes trustee for
the use of cash collateral, subject to the further approval of
the Bankruptcy Court. Pursuant to Sections 1107 and 1108 of the
Bankruptcy Code, the Company and its subsidiaries, as debtors
and debtors in possession, will continue to manage and operate
their assets and businesses subject to the supervision and
orders of the Bankruptcy Court.
Contour Energy Co., is engaged in the exploration, development,
acquisition and production of natural gas and oil.
Contour Energy Co., common stock is traded on the OTC Bulletin
Board under the symbol CONC.
CONTOUR ENERGY: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Contour Energy Co.
1001 McKinney, Suite 900
Houston, Texas 77002
fka Kelly Oil & Gas Corporation
Bankruptcy Case No.: 02-37740
Type of Business: Contour Energy Co., is engaged in the
exploration, development acquisition and
production of oil and natural gas.
Chapter 11 Petition Date: July 15, 2002
Court: Southern District of Texas (Houston)
Judge: William R. Greendyke
Debtors' Counsel: John F. Higgins, IV
Porter & Hedges, LLP
700 Louisiana
Suite 3500
Houston, Texas 77002
713-226-0648
Fax : 713-226-0248
Total Assets: $153,634,032
Total Debts: $272,097,004
COVANTA ENERGY: Court Okays Settlement Agreement with Alfa Alfa
---------------------------------------------------------------
Judge Blackshear permits Covanta Energy Corporation, and its
debtor-affiliates to enter into a Settlement Agreement with Alfa
Alfa. All the Executory Contracts, except for the Xerox
Contract, are rejected. The Xerox Contract is assumed by
Covanta and assigned to Smart Parks-Riverside, Inc. However, the
Court rules that the Settlement Agreement will not release any
claims of Jazzland Inc., against the Debtors.
* * *
As previously reported, the Debtors settle claims dispute with
Alfa under these terms:
(a) Alfa will pay Covanta $3,800,000 to settle all claims
between Alfa and Covanta;
(b) Alfa and Covanta will provide a mutual release of any
further obligations under the Acquisition Agreement;
(c) The Executory Contracts will be terminated and Covanta
will move for rejection of any and all such Executory
Contracts without any claim by Alfa, provided, however,
that Covanta will seek authority to assume and assign to
Smart Parks-Riverside, Inc., an Executory Contract with
Xerox Corporation related to the theme and water park
business.
Pursuant to the Settlement Agreement, the Debtors will assume
the Xerox Contract and reject the Executory Contracts. (Covanta
Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
CROWN CORK: Posts Improved Operating Results for Second Quarter
---------------------------------------------------------------
Crown Cork & Seal Company, Inc. (NYSE: CCK), announced its
results for the second quarter and six months ended June 30,
2002.
Second quarter net income from continuing operations improved to
$0.32 per diluted share over the $0.05 per diluted share in the
second quarter of 2001. On an as-reported basis, second quarter
net income rose to $0.48 per diluted share after an
extraordinary gain over the $0.04 per diluted share reported for
the second quarter of 2001. Year-to-date, the Company reported
net income from continuing operations of $0.23 per diluted share
compared to a net loss of $0.32 per diluted share for the first
six months of 2001. The Company reported a net loss of $7.82 per
diluted share for the six months ended June 30, 2002, after an
extraordinary gain of $0.19 per diluted share on the early
extinguishment of debt and a non-cash charge of $7.89 per
diluted share for the impairment of goodwill recorded as a
cumulative effect of a change in accounting.
Net sales in the second quarter were $1,789 million, 4.7% below
the prior year period, reflecting divested operations, which
accounted for $33 million in the 2001 second quarter, the pass-
through of lower raw material costs and volume decreases in some
product lines partially offset by the effects of currency
translation ($20 million), increased selling prices and
increased volumes across some product lines. The euro and pound
sterling gained considerably against the U.S. dollar during the
month of June (approximately .99 and 1.53, respectively, to the
U.S. dollar at the end of the second quarter). Although the
strengthening of the euro, pound sterling and other currencies
against the U.S. dollar was significant, the impact on the
Company's second quarter results was proportionately less as the
Company's sales and earnings are translated at average rates.
The Company's average income statement conversion rates for the
year through June 30, 2002 were .899 for the euro and 1.445 for
the sterling, improvements of 2.5% and 1.3%, respectively
compared to the Company's year-to-date March 31, 2002 average.
Non-U.S. sales accounted for approximately 61% of total Company
sales through June 30, 2002 with approximately 38% of the
Company's sales for the six months being denominated in either
euros or pounds sterling.
Gross profit (net sales less cost of products sold) as a
percentage of net sales increased to 19.1% compared to 17.2% in
last year's second quarter. The improvement is a result of
selling price increases, improved operating performance and
continuing cost reduction efforts.
Operating income in the second quarter of 2002 increased to $164
million, or 9.2% of net sales, a 16.3% improvement over the $141
million, or 7.5% of net sales, reported in the 2001 second
quarter. Excluding the impact of goodwill amortization from last
year's second quarter results and non-cash pension
expense/income from both the second quarter of 2002 and 2001,
respectively, operating income increased to $172 million, or
9.6% of net sales, an improvement of $15 million, or 9.6% over
second quarter 2001 operating income of $157 million, which was
8.4% of net sales. For the six months, after excluding goodwill
amortization and pension expense/income, operating income of
$275 million, or 8.2% of net sales, was an improvement of $47
million or 20.6% over six month 2001 operating income of $228
million which was 6.4% of net sales.
John W. Conway, Chairman and Chief Executive Officer, commented,
"We are pleased to report that all divisions continued to
perform well compared to the prior year. The Company continues
to focus on its goals of remaining a low cost producer, further
expanding its margins and paying down debt."
In the Americas Division operating income increased to 8.7% of
net sales over the 5.8% in last year's second quarter. Excluding
the impact of goodwill amortization from the prior year and non-
cash pension expense from both the 2002 and 2001 second
quarters, operating income rose to 10.4% of net sales over the
7.3% in the second quarter of 2001 and for the six months ended
June 30, 2002 increased to 9.0% of net sales compared to 5.6%
for the first six months of 2001.
In the European Division operating income increased to 11.6% of
net sales from 11.5% in last year's same quarter. However,
excluding the impact of goodwill amortization from the prior
year and non-cash pension income from both the 2002 and 2001
second quarters, operating income declined to 10.7% of net sales
in the 2002 second quarter from 11.7% in the prior year period.
Year-to-date, operating income is 9.5% to net sales compared to
10.1% for the same six month period of 2001.
Operating income as a percentage of net sales improved to 11.8%
in the Asia-Pacific Division from 7.3% in the second quarter of
2001 and to 11.1% for the first six months of 2002 compared to
7.1% for the same period of 2001.
Net interest expense in the second quarter was $84 million, down
$31 million from the $115 million in the second quarter of 2001.
The decrease reflects both lower average debt outstanding and
lower average borrowing rates.
The Company adopted, effective January 1, 2002, Statement of
Financial Accounting Standards No. 142 "Goodwill and Other
Intangible Assets" (SFAS 142), which requires that goodwill and
certain other long-lived intangible assets no longer be
amortized but be assessed for impairment, at least annually.
Amortization of goodwill amounted to $28 million in the second
quarter of 2001 and $57 million for the six months ended June
30, 2001. During the second quarter of 2002, the Company
completed its transitional impairment review with the assistance
of an appraisal firm and has recorded a $1,014 million non-cash
charge for goodwill, substantially all of which was generated
from the 1996 acquisition of CarnaudMetalbox. The charge, which
is retroactive to the first quarter of 2002 in accordance with
SFAS 142, reflects overall market declines since the
acquisition, is non-operational, and is reflected as a
cumulative effect of a change in accounting in the accompanying
Consolidated Statements of Operations.
On May 23, 2002, the Company announced that its wholly owned
subsidiary, Constar International Inc., had filed a registration
statement with the Securities and Exchange Commission relating
to a proposed initial public offering of common stock and senior
subordinated notes. The Company currently expects to retain an
equity interest in Constar of approximately 45% following
completion of the IPO, which is anticipated during the third
quarter of 2002. Proceeds from the sale of the Company's shares
in Constar and the Constar note offering will be used to repay a
portion of the Company's outstanding indebtedness.
Beginning in the second quarter, the Company entered into
privately negotiated debt for equity exchanges with holders of
the Company's outstanding notes and to date has exchanged 33.4
million shares of common stock for $271 million of principal
amount outstanding notes plus $6 million of accrued interest. As
of June 30, 2002, 24.4 million shares of common stock had been
exchanged for $210 million of debt and $5 million of accrued
interest. As a result of the exchanges completed through June
30, 2002, the Company recorded an extraordinary gain on the
early extinguishment of debt, net of tax, of $25 million in the
second quarter of 2002. Consequently, based on exchanges
completed to date, full year interest expense has been reduced
by $21 million. The exchanges completed had no impact on net
income per diluted share in the second quarter of 2002, are
expected to be two cents accretive for the balance of 2002 and
three cents accretive for a full year.
The Company expects that its debt at December 31, 2002 will be
approximately $4.0 billion compared to $5.3 billion at December
31, 2001, as a result of previously completed divestitures, the
foregoing debt for equity exchanges, free cash flow generation,
and assuming that the Constar IPO is successfully completed.
A registration statement relating to the securities being
offered by Constar has been filed with the Securities and
Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any security nor shall there be
any sale of any securities in any jurisdiction in which such
offer, solicitations or sale would be unlawful.
The Company plans to release its results for the third quarter
on October 17.
Crown Cork & Seal is a leading supplier of packaging products to
consumer marketing companies around the world. World
headquarters are located in Philadelphia, Pennsylvania.
DebtTraders reports Crown Cork & Seal's 8.375% bonds due 2005
(CCK05USR1) are trading around 81 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CCK05USR1for
real-time bond pricing.
DESA HOLDINGS: Seeks Approval to Hire Ernst & Young as Auditors
---------------------------------------------------------------
DESA Holdings Corporation and its debtor-affiliates seek
permission from the U.S. Bankruptcy Court for the District of
Delaware to retain Ernst & Young LLP as their auditor and tax
advisor. The Debtors tell the Court E&Y's services are
necessary to maximize the value of their estates and to
reorganize successfully.
Ernst & Young will:
a) audit and report on the financial statements of the
Debtors for the years ended March 2, 2002 and March 1,
2003;
b) work with the appropriate personnel and/or agents of the
Debtors in developing an understanding of the business
objectives related to the Debtors' chapter 11 cases,
including understanding reorganization and/or
restructuring alternatives the Debtors are evaluating
with its existing bondholders, or other creditors, that
may result in a change in the equity, capitalization
and/or ownership of the shares of the Debtors or their
assets;
c) assist and advise the Debtors in its bankruptcy
restructuring objectives by determining the most optimal
tax manner to achieve these objectives, including,
research and analysis of Internal Revenue Code sections,
treasury regulations, case law and other relevant tax
authority which could be applied to business valuation
restructuring models;
d) provide tax consultation regarding the availability,
limitations, preservation and maximization of tax
attributes, such as net operating losses and alternative
minimum tax credits, minimization of tax costs in
connection with stock or asset sales, if any, assistance
with tax issues arising in the ordinary course of
business while in bankruptcy, such as ongoing assistance
with a federal IRS examination and related issues raised
by the IRS agent and the mitigation of officer liability
issues, and, as needed, research, discussions and
analysis of federal and state income and franchise tax
issues arising during the Chapter 11 Cases;
e) assist with settling tax claims against the Debtors and
obtaining refunds of reduced claims previously paid by
the Debtors for various taxes, including, but not
limited to, federal and state income, franchise,
payroll, sales and use, property, excise and business
license;
f) assist in assessing the validity of tax claims,
including working with bankruptcy counsel to reclassify
tax claims as non-priority;
g) analyze legal and other professional fees incurred
during the Chapter 11 Cases; for purposes of determining
future deductibility of such costs; and
h) document, as appropriate or necessary, tax analysis,
opinions, recommendations, conclusions and
correspondence for any proposed restructuring
alternative, bankruptcy tax issue of other tax matter.
The normal hourly rates charged by Ernst & Young are:
Audit Services Tax Services
-------------- ------------
Partners $601 to $725 $537 to $610
and Principals
Senior Managers $379 to $492 $454 to $552
Managers $285 to $333 $355 to $427
Seniors $188 to $226 $275 to $293
Staff $139 to $156 $181 to $222
DESA, a leading manufacturer, distributor and marketer of vent-
free heating appliances, outdoor heaters, motion sensor
lighting, wireless doorbells, lawn and garden electrical
products and consumer fastening systems in the United States,
filed for chapter 11 protection on June 8, 2002. Laura Davis
Jones, Esq. at Pachulski, Stang, Ziehl Young & Jones represents
the Debtors in their restructuring efforts.
DRKOOP.COM: Vitacost.com Acquires All Assets for $186,000
---------------------------------------------------------
In a move aimed at bringing comprehensive, up-to-date and
trustworthy health information to millions of online consumers,
Vitacost.com has acquired DrKoop.com, a well-known consumer
health Web site. Vitacost.com is a privately held, online
source of consumer health information and high-quality health
products and nutraceuticals.
DrKoop.com is readily recognizable as one of the first and
largest online providers of consumer health information. The
site currently attracts more than 900,000 visitors per month and
has a database of more than 2 million registered users. The
acquisition by Vitacost.com will result in a thorough update of
information pertaining to mainstream medicine and the addition
of information about natural/alternative medicines. This content
will be updated daily after the site's initial relaunch.
"Consumers are increasingly hungry to educate themselves about
how both mainstream and natural or complementary medical
practices can enhance their personal health and wellness," said
Allen S. Josephs, M.D., president of Vitacost.com. "We intend to
build on the trust people hold for DrKoop.com by making it a
single source for scientifically sound information about all
aspects of medicine."
Founded in 1997, DrKoop.com was funded with more than $200
million and reached a market capitalization of more than $1
billion before the crash of the Internet stock market
precipitated the company's bankruptcy filing in December 2001.
Under the terms of the transaction announced today, Vitacost.com
paid $186,000 in cash for DrKoop.com's assets, which included
the brand name, trademarks, domain names, the Web site and the
e-mail addresses of its registered users. (No other personal
information -- names, phone numbers, health information or
purchase histories -- was transferred, and users were given the
option to remove themselves from the database in advance of the
sale.)
"The conservative approach Vitacost.com has taken toward growth
and outside funding was viewed as almost contrarian during the
heyday of the 'dotcom' era. In fact we did not have and do not
have one venture capitalist investor nor did we do an IPO," said
Josephs. "But now our business model has borne itself out -- we
have achieved profitability and are using internally generated
profits to acquire well-known online brands like DrKoop.com and
make good on the value promises sites like these made long ago
to their customers and investors."
Going forward, Vitacost.com will manage the upkeep of mainstream
medical content on DrKoop.com, and enhance the site with
information on natural and complementary medicine.
To produce this content, Vitacost.com will rely on its
scientific advisory board, which is made up of prestigious
medical doctors who integrate natural/complementary medicine
into their mainstream practices. These advisors include doctors
board-certified in internal medicine, neurology, ophthalmology,
ob/gyn, rheumatology, geriatrics and psychiatry. The board
regularly reviews thousands of medical and scientific studies
relevant to Vitacost.com's product lines in order to guide the
company in deciding which products to offer. The board's
responsibilities will now be expanded to include development of
content for DrKoop.com.
Vitacost.com is a privately held, online source of consumer
health information and high-quality health products and
nutraceuticals, whose mission is to help customers better manage
their personal health. The company sells most of its products at
wholesale prices (30 - 75% savings), and further enhances their
value through independent laboratory testing and evaluation of
relevant scientific literature by a panel of prestigious medical
experts.
DrKoop.com, a newly acquired subsidiary of Vitacost.com, is a
consumer-focused interactive Web site that provides
comprehensive healthcare news and information on a wide variety
of subjects.
EMEX CORP: Nasdaq Delists Shares Effective July 17, 2002
--------------------------------------------------------
EMEX Corporation (Nasdaq: EMEX) received a Nasdaq staff
determination on July 9, 2002 indicating that EMEX will be
delisted from The Nasdaq SmallCap Market effective with the
opening of business on July 17, 2002. EMEX was notified in June
that its stock was subject to delisting because the market value
of its listed securities fell below NASD requirements as set
forth in Marketplace Rule 4310(C)(2)(B)(ii). EMEX does not plan
to request a hearing of this determination.
ELDERTRUST: Working Capital Deficit Slides-Down to $44 Million
--------------------------------------------------------------
ElderTrust (NYSE:ETT), an equity healthcare REIT, reported
results for the second quarter ended June 30, 2002.
Funds from operations for the second quarter ended June 30,
2002, totaled $3.1 million on revenues of $5.6 million. In
comparison, FFO for the second quarter of 2001 totaled $2.7
million on revenues of $6.3 million.
Net income for the second quarter of 2002 totaled $0.6 million
from continuing operations and $0.3 million after loss on
discontinued operations. In comparison, for the comparable
quarter of 2001, the net income from continuing operations and
after loss on discontinued operations was $0.3 million.
For the six months ended June 30, 2002, FFO totaled $6.2 million
on revenues of $11.5 million. The net income for the six months
ended June 30, 2002 was $1.2 million for continuing operations
and $1.0 million after loss on discontinued operations. For the
comparable period in 2001, FFO totaled $4.6 million on revenues
of $12.7 million. The net loss from continuing operations and
after loss on discontinued operations for the six months ended
June 30, 2001 was $0.6 million.
The Company's average balance of one-month LIBOR based floating
rate debt for the second quarter 2002 was approximately $34.2
million and for the six months ended June 30, 2002 was
approximately $35.3 million. Of this amount, an average balance
of $30.0 million is assessed interest at one-month LIBOR plus
3%. The remainder is assessed interest at one-month LIBOR plus
3.25%. Average one-month LIBOR for the second quarter 2002 and
the six months ended June 30, 2002 was approximately 1.90% and
1.89%, respectively. The LIBOR rate applicable to these loans
for July 2002 is 1.88%.
During the quarter the Company recognized an impairment loss of
$250,000 on an asset that has been offered for sale, which is
included in loss on discontinued operations.
At June 30, 2002, the Company has a working capital deficit of
about $44 million.
"We are pleased with our operating results during the second
quarter of 2002" said D. Lee McCreary, Jr., ElderTrust President
and Chief Executive Officer.
ElderTrust is a real estate investment trust that invests in
real estate properties used in the healthcare services industry,
principally along the East Coast of the United States. Since
commencing operations in January 1998, the Company has acquired
direct and indirect interests in 32 buildings.
ENRON CORP: Selling CommodityLogic Software for $3 Million
----------------------------------------------------------
Prior to the Petition Date, Enron Net Works LLC was in the
business of providing services related to the development,
operation and maintenance of electronic trading platforms and
other e-commerce initiatives.
Martin J. Bienenstock, Esq., at Weil, Gotshal & Manges LLP, in
New York, relates that Enron Corp., and Enron Net Works have
developed and own certain proprietary software, known as
CommodityLogic. The software was initially composed of four
commercial modules that handle invoices, nominations,
confirmations, and acceleration payments. Mr. Bienenstock
explains that the CommodityLogic Software is a set of internet-
based tools that enables mid- and back-offices of natural gas
and power trading companies to automate the number of manual
processes that otherwise are time-consuming and subject to large
error rates.
The CommodityLogic Software consists of:
(i) source code,
(ii) certain historical data, and
(iii) documentation related to the CommodityLogic Software.
The source code includes code for programs, files, pages and
sites including: AdminLogic, Common Infrastructure,
ConfirmLogic, NomLogic, InvoiceLogic, BankLogic, IOLogic
(including adaptor code), and interfaces to Enron deal capture
and invoicing systems, website HTML files, Java Server Pages,
online help, data description language and certain build
scripts.
According to Mr. Bienenstock, the data relates to information
stored in the integration tables as of December 3, 2001
(comprising snapshot copies of Enron global reference data).
The documentation, prepared by the CommodityLogic development
team, includes: business requirements, use cases, design
documentation, test plans, database diagrams, business overview
documents and technical and business process documents.
Mr. Bienenstock informs Judge Gonzalez that the CommodityLogic
Software was designed to leverage the substantial deal flow
coming from the EnronOnline Internet-based commodities
transaction platforms and was expected to grow to be an
independent "hub" for transactions processing, analysis, and
settlement for the energy industry. The CommodityLogic software
was first revealed to the public in August of 2001, but was not
fully completed at the Petition Date.
Enron Net Works and Commodity Logic LLC, a wholly owned
subsidiary of Enron Net Works, were forced to terminate
virtually all of their commercial, operational and technical
staff when Enron filed for bankruptcy.
The scenario looked bleak for Enron Net Works, with Enron's
trading business disposed and CommodityLogic Software's
developers terminated. Until, Enron Net Works came up with the
bright idea of selling the CommodityLogic Software.
Enron Corp., and Enron Net Works also agree it would be in the
best interest of their estates and creditors to divest their
interests in certain assets associated with the CommodityLogic
Software.
A competitive sale process designed to produce the highest and
best offers for the CommodityLogic Software, was established
early this year by Enron Net Works, together with its financial
advisors and other professionals.
At first, Mr. Bienenstock says, Enron Net Works verbally
solicited interest from 19 parties in these categories:
(a) energy companies,
(b) technology companies, and
(c) energy exchanges (financial and physical).
It resulted in the execution of 16 confidentiality agreements.
A detailed information memorandum describing the assets,
proposed transaction and bidding procedures was also
distributed. From there, Enron Net Works received three non-
binding indicative bids.
During the course of preliminary due diligence and analysis of
the assets to be conveyed, Mr. Bienenstock says, it became
apparent that the sale of the assets would command the highest
value only if:
(i) certain assets held by Enron were included in the
transaction, and
(ii) Commodity Logic and Enron North America, the employers of
the employees engaged in the development of the
CommodityLogic Software, and Enron (whose employees did
not participate in the development of the CommodityLogic
Software but whose employees did administer a central
contracting function for certain computer software
development services and computer hardware) made a
quitclaim type conveyance to Enron Net Works of any rights
that may have vested in them as a result of the
development and administration.
Accordingly, Mr. Bienenstock relates, the proposed sale was
structured to occur concurrently with:
(a) the transfer of certain software and related assets by
Enron to Enron Net Works, and
(b) the conveyance by Enron, ENA and Commodity Logic to Enron
Net Works of all their interests, if any, in the other
Property to be sold that may have arisen as a result of
their employees' participation in its development.
The three indicative bidders then conducted in-depth due
diligence, which included an onsite visit to a comprehensive
data room and a detailed demonstration of the CommodityLogic
Software. Afterwards, two binding bids for the Property were
submitted to Enron Net Works.
After analysis, Enron Net Works declared
IntercontinentalExchange Inc.'s bid as the highest and best
offer for the Property. The parties promptly executed a
Purchase Agreement with these principal terms and conditions
A. Purchase Price: $3,365,000
B. Intercontinental will acquire all of:
(x) Enron Net Works' interest in:
(i) Corp. Software,
(ii) the Corp. Software Copyrights,
(iii) the Corp. Domain Names,
(iv) the Corp. Hardware, and
(v) the Corp. Know How,
acquired from Enron pursuant to the Bill of Sale executed
in connection with the execution of the Agreement, and
(y) Enron Net Works' interests in the Software, Software
Copyrights, Trademarks, Know How, Domain Names, and
Employee Rights.
C. Intercontinental will grant to Enron and Enron Net Works and
their affiliates a limited license to use the Software to
satisfy the UBS License.
D. Sales, use and other taxes shall be borne and timely paid by
Intercontinental
E. Conditions Precedent to the Closing:
(i) execution and delivery of related agreements to
Intercontinental,
(ii) internal and bankruptcy approvals,
(iii) the Approval Order(s) shall not have been stayed as of
the Closing Date, and
(iv) the representations and warranties of the parties taken
as a whole, shall be true and correct in all material
respects on the Closing Date.
F. The Property is being sold "as is," without any
representations or warranties of any kind.
G. The proposed transaction is subject to higher and better
offers; provided however, that Enron Net Works may not enter
into another agreement for the purchase of substantially all
of the Property with any party other than Intercontinental
unless the price exceeds the Purchase Price by at least 4%.
H. Termination Payment: $100,000
In return for its agreement to transfer the Conveyed Property to
Enron Net Works, a portion of the proceeds of the sale will be
allocated to Enron. Specifically, all proceeds received by
Enron Net Works in connection with the transactions contemplated
by the Agreement shall be immediately allocated and distributed:
(i) $3,000,200 for the benefit of the Chapter 11 estate of
Enron Net Works, and
(ii) $364,800 for the benefit of the Chapter 11 estate of
Enron.
But Enron Net Works and Enron cannot use the proceeds until it
obtains:
(i) consent of the Creditors' Committee to the release of
the proceeds, and
(ii) further order of the Court.
Enron, ENA, Commodity Logic and Enron Net Works will also enter
into an Employee Rights Assignment, wherein Enron, ENA and
Commodity Logic will assign to Enron Net Works all of their
right, title and interest, if any, in and to the Property to be
sold, including, without limitation, any rights developed by
their employees in the course and scope of their employment, if
any. Mr. Bienenstock explains that the consummation of the
Rights' Assignment is necessary to ensure that all of the
potential rights and claims to the Property are conveyed to
Intercontinental. "Because the parties are unaware of any
rights or claims, no portion of the proceeds of the sale to
Intercontinental is being allocated to any of Enron, ENA or
Commodity Logic in return for the Rights' Assignment," Mr.
Bienenstock says.
Mr. Bienenstock assures the Court that the terms and conditions
of the proposed Agreement were negotiated at arms' length and in
good faith.
By this Motion, Enron Corp., ENA and Enron Net Works ask the
Court to:
(a) approve the terms and conditions of the Agreement and
the ancillary agreements, and
(b) authorize the consummation of the transactions
contemplated. (Enron Bankruptcy News, Issue No. 36;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Enron Corp.'s 9.125% bonds due 2003 (ENRN03USR1), DebtTraders
reports, are quoted at 11.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1
for real-time bond pricing.
ENRON: Proposes Uniform CommodityLogic Sale Bidding Procedures
--------------------------------------------------------------
To generate the maximum recovery for Enron Net Works'
CommodityLogic software, Enron Corporation, and its debtor-
affiliates propose that competing bids be governed by these
terms and conditions:
A. Any entity that wishes to make a bid for the Property must
provide Enron Net Works with sufficient and adequate
information to demonstrate it has the financial ability to
consummate the sale, including evidence of adequate
financing, and including a financial guaranty, if
appropriate;
B. Enron Net Works, upon consultation with the Creditors'
Committee, shall entertain Competing Bids that are on
substantially the same terms and conditions as those of
IntercontinentalExchange's Asset Purchase Agreement;
C. Competing Bids must:
(a) be in writing, and
(b) be received by:
(i) Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: John Cummings,
(ii) Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: Martin A. Sosland, Esq.
Facsimile: 214-746-7700
Attorneys for Enron Net Works,
(iii) Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: David J. Gilberg, Esq.
Facsimile: 212-558-3588
Attorneys for Intercontinental,
(iv) Davis, Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Donald S. Bernstein, Esq.
Facsimile: 212-450-3800
Attorneys for JP Morgan Chase Bank, as Agent,
(v) Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Fredric Sosnick, Esq.
Facsimile: 212-848-7179
Attorneys for Citicorp, as Agent,
and
(vi) Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza
New York, New York 10005
Attention: Luc A. Despins, Esq.
Facsimile: 212-530-5219
Attorneys for the Creditors' Committee
The bid must received by these parties no later than July 31,
2002, at 4:00 p.m. (EDT).
D. Competing Bids must be in an amount that is at least $135,000
greater than the amount of the Purchase Price.
E. All Competing Bids conforming with these terms shall be
considered at the Auction to be held at the offices of Weil,
Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York
10153, or in a manner and at an alternative location as the
Court may direct, on August 6, 2002 commencing at 10:00 a.m.
(EDT).
F. Any Competing Offer must be presented under a contract
substantially similar to the Agreement, marked to show any
modifications made to the Agreement, and the bid must not be
subject to due diligence review or obtaining financing.
G. Enron Net Works, upon consultation with the Creditors'
Committee, shall, after the Bid Deadline and prior to the
Auction, evaluate all bids received, and determine, upon
consultation with the Creditors' Committee, which bid
reflects the highest or best offer for the Property. Enron
Net Works shall announce the determination at the
commencement of the Auction.
H. Subsequent bids at the Auction must be in an amount that is
at least $25,000 more than the prior bid.
I. In the event a competing bidder is the winning bidder (as
determined by Enron Net Works, the Creditors' Committee, and
accepted by the Court), and the winning bidder fails to
consummate the proposed transaction by the Closing Date,
Enron Net Works, upon prior written consent of the Creditors'
Committee, shall be free to consummate the proposed
transaction with the next highest bidder at the final price
bid by the bidder at the Auction (or, if that bidder is
unable to consummate the transaction at that price, Enron Net
Works, upon prior written consent of the Creditors'
Committee, may consummate the transaction with the next
higher bidder, and so forth) without the need for an
additional hearing or order of the Court.
J. All bids for the purchase of the Property shall be subject to
approval of the Bankruptcy Court.
K. No bids shall be considered by Enron Net Works or the
Bankruptcy Court unless a party submitted a Competing Offer
in accordance with the Auction Terms and participated in the
Auction. Enron Net Works, upon consultation with the
Creditors' Committee, may reject any Competing Bids not in
conformity with the requirements of the Bankruptcy Code, the
Bankruptcy Rules or the Local Bankruptcy Rules of the Court,
or contrary to the best interests of Enron Net Works and
parties in interest.
L. All bids are irrevocable until the earlier to occur of:
(i) the closing of the sale on the Closing Date, or
(ii) 30 days following the last date of the Auction (as
may be adjourned).
M. All bids are subject to other terms and conditions as are
announced by Enron Net Works, in consultation with the
Creditors' Committee, at the outset of the Auction.
N. Nothing here shall compel or preclude Enron Net Works, in
consultation with the Creditors' Committee, from determining
that a bid for less than all of the Property is a Competing
Offer in compliance with these terms or the best offer.
O. Enron Net Works, in consultation with the Creditors'
Committee, shall have the right to entertain non-conforming
offers at its discretion.
The Debtors contend that these bidding procedures provide a fair
and reasonable means of ensuring that the Property is sold for
the highest or best offer attainable. (Enron Bankruptcy News,
Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ENUCLEUS: Must Seek Additional Financing to Continue Operations
---------------------------------------------------------------
eNucleus is a wholesaler of Internet infrastructure. Its target
market is comprised of system integrators, web developers and
software providers. Its core product offerings include co-
location - secured data center space, high-speed Internet
access, data storage, and email and virus scanning services.
Together, this offering provides its clients with a scaleable,
brandable and cost effective platform for the development of
their ebusiness initiatives.
On November 6, 2001, eNucleus' Plan of Reorganization was
confirmed thereby enabling the Company to successfully emerge
from its Chapter 11 reorganization. Although the Plan resulted
in a substantial reduction in debt through conversion to equity,
further improvements in its liquidity position will be subject
to the success of initiatives the Company is said to be
undertaking to increase sales, reduce operating expenses and the
effects on its liquidity of market conditions in the industry.
Its uses of capital are expected to include working capital for
operating expenses and satisfaction of current liabilities,
capital expenditures and payments on outstanding debt
facilities.
As shown in the results of operations of the Company, eNucleus
incurred a net loss of $300,000 during the three month period
ending March 31, 2002. During that period in 2002, net cash used
in operating activities totaled $96,000 and was funded from
financing activities under the post petition financing
arrangements.
As part of its Plan of Reorganization, eNucleus entered into a
borrowing facility with Sunami Ventures, LLC (a related party)
for $1.5 million, of which $1.0 million of this facility is
designated for the purpose of financing equipment on behalf of
customers. Sunami shall receive on account of the borrowings,
five shares of New common stock for every dollar loaned and a
Senior Secured Note for the amount of the borrowings. As of
March 31, 2002, eNucleus has received approximately $309,000
under this facility, the proceeds of which have been used to
satisfy certain petitions resulting from the bankruptcy and
post-petition operating requirements. Pursuant to the Sunami
financing agreement, in December, 2001, eNucleus entered into a
three-year $545,000 secured demand loan agreement with Capital
Equity Group. The note agreement is secured by certain Company
assets, guaranteed by John Paulsen, the Company's CEO and bears
interest at the rate of 16%. As of March 31, 2002, eNucleus has
received approximately $224,000 under this facility.
The Company's continued existence is dependent on its ability to
achieve future profitable operations and its ability to obtain
financial support. The satisfaction of the Company's cash
requirements hereafter will depend in large part on its ability
to successfully generate revenues from operations and raise
capital to fund operations. There can, however, be no assurance
that sufficient cash will be generated from operations or that
unanticipated events requiring the expenditure of funds within
its existing operations will not occur. Management is
aggressively pursuing additional sources of funds, the form of
which will vary depending upon prevailing market and other
conditions and may include high-yield financing vehicles, short
or long-term borrowings or the issuance of equity securities.
There can be no assurances that management's efforts in these
regards will be successful. Under any of these scenarios,
management believes that the Company's common stock would likely
be subject to substantial dilution to existing shareholders. The
uncertainty related to these matters and the Company's
bankruptcy status raise substantial doubt about its ability to
continue as a going concern.
EXIDE: Court Okays Morrison & Foerster as Special Counsel
---------------------------------------------------------
Exide Technologies and its debtor-affiliates obtained Court
approval to employ and retain the firm of Morrison & Foerster
LLP as special intellectual property, regulatory and
environmental counsel to represent them in various matters, nunc
pro tunc to April 15, 2002.
Specifically, Morrison is currently representing the Debtors, or
has in the past represented the Debtors, in these regulatory and
environmental-related matters:
A. State of California Department of Toxic Substances Control v.
Alco Pacific, Inc., et al., Case No. 01-09294-MMM (FMOx),
United States District Court for the Central District of
California (and related actions);
B. Flaherty v. Exide Corp., Case No. C-01-0730 CRB, United
States District Court for the Northern District of California
(and related actions).
Morrison also provides the Debtors with advice and
representation with respect to their potential liability and
obligations regarding the Puente Valley Operable Unit. In
another matter, Morrison represents the Debtors in response to
alleged violations of South Coast Air Quality Management permit
requirements by the Debtors' facility at 2700 S. Indiana Street,
Los Angeles, California. Morrison is also providing counsel to
the Debtors on various issues associated with that facility's
hazardous waste permit. In addition to these specific matters,
Morrison is also providing counsel on Proposition 65 issues as
well as general advice on environmental issues to the Debtors as
the Firm serves as general outside environmental to the Debtors
for all California matters.
Morrison represents the Debtors in connection with their global
intellectual property matters, including patent and trademark
prosecution. Moreover, Morrison consults with the Debtors to
select and clear potential new trademarks and to protect those
trademarks in various jurisdictions. Morrison also works with
Exide's marketing department to assure that the Debtors properly
use their own trademarks as well as trademarks licensed from
third parties.
In addition to representing the Debtors on their trademark
prosecution matters, Morrison also represents the Debtors in
connection with three related trademark cases that were filed in
the Delhi High Court against Exide Technologies and Tudor India
in India, Exide Industries Limited v. Exide Corporation, et. al.
(Civil Suit No. 812 of 1997), Exide Industries Limited v. Exide
Corporation, et. al. (Civil Suit No. 725 of 1998), and Exide
Industries Limited v. Tudor India Limited (Civil Suit No. 1162
of 1997), as well as numerous opposition and cancellation
proceedings throughout the world. In each case, the Debtors are
seeking to stop others from using their various trademarks or
are seeking to assure their ability to continue to use the
trademarks.
Morrison also represents the Debtors in connection with their
U.S. and international patent portfolio. Morrison's objectives
include identifying all patent holdings of the Debtors and
managing Exide's portfolio of pending and active patent matters.
In addition, Morrison is currently evaluating an infringement
allegation taken against Exide.
Morrison is also responsible for the maintenance of Exide's
portfolio of active, issued patents. In connection with this
responsibility, Morrison keeps track of issued, active patents,
advises the Debtors on required annuity and maintenance fee
payments associated therewith, and oversees the payment of such
fees. Morrison also oversees the activity of foreign legal
associates handling non-U.S. patent matters on the Debtors'
behalf. These associates act as legal representative before the
local patent issuing authorities. Morrison provides such
associates with instructions for patent matters, based on
Morrison's communication with the Debtors' legal, business, and
technical personnel.
Specifically, Morrison will provide the Debtors a 5% discount
for all work performed by the Firm, starting at zero and up to 1
million in fees. Above 1 million, Morrison will provide a
discount of 10%. The discounts apply on the standard hourly
rates for the attorneys aid other professionals that might be
called upon to perform work for the Debtors.
The principal attorneys and paralegals presently designated to
represent the Debtor and their current standard hourly rates
under the Firm's general rate structure range from:
Partners $360 to $650
Associates $195 to $410
Legal Assistants/Support Staff $ 90 to $405
(Exide Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
Exide Technologies' 10% bonds due 2005 (EXDT05USR1) are trading
at about 15, DebtTraders says. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDT05USR1
EXODUS: Informart Pressing for $8MM Payment on Rejected Lease
-------------------------------------------------------------
Infomart New York LLC insists that Exodus Communications, Inc.,
and its debtor-affiliates immediately pay $8,829,224 as rent for
the leased property located at 636 Eleventh Avenue in New York,
New York. The Debtors had sought the rejection of the lease on
the Confirmation Date of the Chapter 11 Plan. Infomart also
seeks payment of separate amount for attorney's fees and
expenses.
Jami B. Nimeroff, Esq., at Buchanan Ingersoll PC in Wilmington,
Delaware, informs the Court that the rent is for the months of
February 2002 to June 2002. The amount due was arrived at by
adding $364,218 to $9,002,224, less a credit balance of $537,218
from payments received from the Debtors prior to February 2002.
Ms. Nimeroff explains that the lease, dated December 28, 1999,
is between Infomart and Debtor GlobalCenter for a term of 15
years. The lease was amended twice by the parties. Under the
lease, GlobalCenter is responsible for the payment of all rent
which includes the fixed rent and the Tenant's Tax Payment and
Tenant's Operating Payment late charges, overtime or excess
service charges, interest and fees. GlobalCenter was also to
pay the attorneys' fees associated if it failed to perform under
the lease. GlobalCenter's duties were turned over to Exodus
pursuant to a September 28, 2000 Plan of Merger.
Ms. Nimeroff adds that the determination of ownership on tenant
improvements to the property is the subject a separate adversary
proceeding filed by Infomart against the Debtors. (Exodus
Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
Exodus Communications Inc.'s 11.625% bonds due 2010
(EXDS10USR1), DebtTraders reports, are quoted at 5.75. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDS10USR1
for real-time bond pricing.
FEI CO: Merger with Veeco Spurs S&P to Keep Watch on B+ Rating
--------------------------------------------------------------
Standard & Poor's placed its single-'B'-plus corporate credit
rating on FEI Co., on CreditWatch with positive implications.
The action followed the announcement that Hillsboro, Oregon-
based FEI will be acquired by Woodbury, New York-based Veeco
Instruments Inc., (not rated) for a reported $989 million in
Veeco stock.
The CreditWatch affects FEI's $175 million of debt outstanding.
FEI is a leading niche player of metrology equipment to the
semiconductor, data storage and scientific research end markets.
The combination with Veeco, a producer of similar capital
equipment, will result in a potentially more strongly positioned
company with broader customer and end-market penetration.
Metrology equipment allows for measurement, analysis and repair
of structures at the sub-micron level. The combined business
will have $400 million in total debt outstanding and would have
had combined revenues of $771 million for the 12 months ended
March 31, 2002.
The faster-growing but volatile semiconductor end market will
account for an estimated 28% of the combined company's revenues,
compared with nearly 50% for FEI as a standalone business. While
integration of the two companies, which are roughly the same in
size, poses risks, a successful integration would also increase
operating scale.
"We previously identified FEI's limited operating scale, along
with volatility and technology risk of its end markets,
particularly semiconductors, as limitations to the rating," said
Standard & Poor's credit analyst Joshua G. Davis. "We will
assess the degree to which the merger mitigates these limiting
factors."
FAIRCHILD DORNIER: Wants Until October 31 to Decide on Leases
-------------------------------------------------------------
Fairchild Dornier Corporation asks the U.S. Bankruptcy Court for
the Eastern District of Virginia to extend its deadline to
decide what to do with its unexpired nonresidential real
property leases. The Debtor tells the Court that it wants until
October 31, 2002, to decide whether to assume, assume and
assign, or reject its Unexpired Leases.
The Debtor relates that it is a party to a lease with WGP
Associates, LLC and Winchester Regional Airport. DANA -- a non-
debtor affiliate -- utilizes the Airport Lease to operate one
demonstration and one charter airplane.
The Debtor relates that it has not had sufficient time to
evaluate the potential value of the Airport Lease. Due to the
Debtor's complex corporate structure, up to now, the Debtor has
not been able to determine whether the Airport Lease is
important to an its reorganization.
The Debtor says that it is honoring all post-petition lease
obligations, including making timely rent payments. Thus, the
landlord will not be harmed by the requested extension.
Additionally, because this case was commenced as an involuntary
case, the Debtor did not have an adequate opportunity pre-
petition to evaluate reorganization scenarios.
Fairchild Dornier Corporation's involuntary chapter 7 case was
converted to voluntary chapter 11 proceeding under the U.S.
Bankruptcy Code on May 20, 2002. Dylan G. Trache, Esq. at Wiley
Rein & Fielding LLP, at Tyler, Bartl, Gorman & Ramsdell, PLC,
represents the Debtor in its restructuring efforts.
FARMLAND INDUSTRIES: Fiscal Q3 Net Loss Burgeons to $189 Million
----------------------------------------------------------------
Farmland Industries reported for its fiscal third quarter ended
May 31 a net loss of $189.5 million, which included $127.5
million in pre-tax restructuring and reorganization charges and
losses from discontinued operations. In the year-ago third
quarter, the company had a net loss of $42.4 million, including
pre-tax restructuring charges and losses from discontinued
operations of $87.4 million. The results reflect the period
March 1 through May 31, the date Farmland filed for protection
from creditors under Chapter 11 of the U.S. Bankruptcy Code.
Operating losses of $91.0 million for the third quarter were
attributable to a depressed fertilizer manufacturing industry,
lower petroleum margins and maintenance on its refinery in
Coffeyville, Kan., and tighter margins in the beef business. In
the year-ago third quarter, Farmland had operating income of
$35.9 million.
Farmland President and CEO Bob Terry said, "As we stated on May
31 in conjunction with our bankruptcy reorganization filing,
Farmland's third quarter earnings were adversely impacted by a
prolonged downturn in the nitrogen fertilizer industry. In
addition, our petroleum refinery was down for necessary
maintenance for half of the third quarter, further reducing our
earnings potential during the period.
"Since May 31, our board and management team have focused on the
development of a strategic reorganization plan designed to
ensure Farmland emerges a financially strong company for the
benefit of all stakeholders.
"We are encouraged by the support shown in recent weeks by
millions of consumers who enjoy Farmland branded meat products,
along with restaurants and supermarkets, and beef and pork
producers," said Terry. "A strong meat business contributes to
our recovery."
Terry pointed out that Refrigerated Foods, which includes
Farmland beef and pork products, continues to post improved
performance. While those businesses incurred a slight loss in
the third quarter due to reduced margins in both the beef and
pork industries, year-to-date earnings in Refrigerated Foods are
significantly above last year. Unit sales are also higher,
reflecting the growth of the Proud to be farmer owned(R) brand.
Both sales and earnings declined in Farmland's Crop Production
businesses during the third quarter, primarily due to tight
margins coupled with adverse weather conditions that hampered
application of nitrogen-based fertilizers throughout the spring
season. Planned maintenance on Farmland's refinery led to
reduced sales and earnings in the Petroleum division. The
company's refinery was down for major retooling for six weeks of
the 12-week period, and industry margins declined as production
resumed.
The $127.5 million in restructuring and reorganization charges
and losses from discontinued operations primarily represent
impairment of certain company assets from events that occurred
during the third quarter. The charges reflect the shutdown of
manufacturing operations at two fertilizer plants; a decision to
sell its interest in Farmland Hydro LP, which operates a
phosphate fertilizer operation in Florida; the previously
announced closure of international grain trading operations; and
the recognition of deferred finance costs for the company's pre-
filing financing.
Farmland Industries, Inc., Kansas City, Mo., --
http://www.farmland.com-- is a diversified farmer-owned
cooperative focused on meeting the needs of its local
cooperative- and farmer-owners. Farmland and its joint venture
partners supply local cooperatives with agricultural inputs,
such as crop nutrients, crop protection products, and animal
feeds. As part of its farm-to-table mission, Farmland adds value
to its farmer-owners' grain and livestock by processing and
marketing high-quality grain, pork, beef and catfish products
throughout the United States and in more than 30 countries.
FLEETWOOD ENTERPRISES: Lenders Relax Covenants Under Credit Pact
----------------------------------------------------------------
Fleetwood Enterprises, Inc. (NYSE: FLE), the nation's largest
manufacturer of recreational vehicles and a leading producer and
retailer of manufactured housing, announced results for its
fourth quarter and fiscal year ended April 28, 2002. Including
restructuring and asset impairment charges of $14.1 million, the
Company reported a fourth quarter net loss of $40.5 million.
Both the loss and the charges were due primarily to the
deteriorating manufactured housing market. The Company lost
$44.5 million, including $9.2 million in goodwill and
restructuring impairment charges, in the prior year's fourth
quarter.
For fiscal year 2002, the Company reported a net loss of $161.9
million. The loss included non-cash charges of $80.6 million in
a write-down of goodwill related to the adoption of Financial
Accounting Standards No. 142, which the Company was required to
record retroactively as of the first quarter, and $19.9 million
attributable to other restructuring and impairment charges.
This compared with a net loss of $284.0 million for the prior
year, which included non-cash charges of $200.7 million for
goodwill impairment and restructuring charges. Also in the
prior year, Fleetwood recorded a one-time cumulative charge to
earnings of $11.2 million for an accounting change.
Fleetwood also announced positive cash flow from operations for
the year of $34.5 million compared with $11.8 million or 36
cents per share in fiscal 2001.
Consolidated revenues for the fourth quarter totaled $603.2
million, up 10 percent from $547.4 million in last year's fourth
quarter. Revenues for the fiscal year ended April 28, 2002,
were down 10 percent to $2.28 billion from $2.53 billion
recorded last year.
"Despite significantly improved results in our RV Group, our
overall performance continued to be affected in the fourth
quarter by an extremely difficult manufactured housing market,"
said David S. Engelman, interim president and CEO. "In light of
the adverse developments so far this calendar year --
particularly in the financing arena -- industry participants
have revised projections downward. There is an industry-wide
lack of visibility, but we believe that the tight lending
environment and continuing competition from repossessions will
delay any meaningful recovery well into calendar year 2003.
These factors led us to a reevaluation of the carrying value of
our assets and the levels of our reserves and we determined that
it was appropriate to book the considerable non-cash charges.
"Nonetheless, we do believe that we can achieve positive results
during fiscal 2003, at least at the operating income line,"
Engelman continued. "The fact that we were cash flow positive
for the year demonstrates the magnitude and effectiveness of the
cost-cutting adjustments we made in our operations, although we
still face operating challenges and of course the non-cash
charges decimated our results. We expect cash flow from
operations to continue to be positive over the upcoming year as
well. The new and refreshed products in our RV lineup have
produced improved revenues and financial results, and we are
similarly optimistic about the impact of several exciting
introductions scheduled to be released over the next few
months."
Recreational vehicle sales in the fourth quarter rose 28 percent
to $371.4 million from $289.6 million in the prior year's fourth
quarter, primarily due to a 46 percent surge in motor home
sales. Due to continuing losses in the travel trailer segment,
however, the RV Group still had an operating loss of $0.4
million. This compares with a loss of $29.9 million for the
Group in the fourth quarter of 2001. Motor home sales for the
quarter rose to $227 million from $156 million in the prior
year's fourth quarter. In the towable category, travel trailer
sales rose 5 percent to $110 million and folding trailers
increased 16 percent to $34 million compared with the prior
year.
RV sales for the full fiscal year 2002 were up less than 1
percent from the prior year to $1.21 billion. Motor home
revenues increased 12 percent from the prior year to $717
million, while travel trailer sales declined 16 percent to $378
million and folding trailer revenues rose 1 percent to $118
million.
"Not only did RV sales rebound as the fiscal year progressed,
particularly in the motor home division, but our market share
improvements in that division are noteworthy," Engelman said.
"By the end of the first calendar quarter of 2002, we had
recaptured the number one market share position in Class A motor
homes, and many of our motor home and towable brands ranked in
the top 10 of their respective product segments."
Manufactured housing revenues in the fourth quarter fell 11
percent to $222 million from $249 million in the prior year.
Housing revenues included $163 million of wholesale factory
sales and $59 million of retail sales from Fleetwood Retail
Corp. This compares with $155 million and $94 million,
respectively, last year. Quarterly gross manufacturing revenues
declined to $184 million from $189 million last year, and
included $21 million of intercompany sales to our
Company-operated stores compared with $34 million in the prior
period. Manufacturing unit volume was off 6 percent to 6,509,
and homes sold at Fleetwood retail stores dropped 44 percent to
1,259. Much of the decrease in retail sales is attributable to
the 26 percent reduction in the number of Company-operated
stores to 137.
For the fiscal year, housing revenues were off 20 percent to
$1.03 billion from $1.29 billion, which included $705 million
from manufacturing operations and $328 million from FRC compared
with $739 million and $553 million last year, respectively.
Manufacturing unit volume declined 17 percent to 30,056 homes
from 36,201. Gross manufacturing revenues were approximately
$842 million, including intercompany sales of $137 million,
compared with $981 million and $242 million, respectively, in
the prior year.
"Both of our industries have strong futures," Engelman
concluded. "Americans have an ongoing need for affordable
housing and a current consumer survey points to strong demand
for recreational vehicles for at least the next decade. The
steps we have taken in the past two years, while painful in the
short term, position us well to continue our leadership role in
this healthy RV environment and to carefully manage through the
remainder of the prolonged slump in the manufactured housing
market."
Fleetwood also announced that it has executed an agreement with
its lenders to revise the covenants on its credit facility to
reflect current market conditions, and the Company expects that
the combination of its credit line and its cash and cash
equivalents of $111.1 million at fiscal year-end will provide
adequate liquidity for at least the next twelve months. While
the Company expects to report improved results in the first
quarter of fiscal 2003, management does not foresee achieving
profitability in the quarter.
* * *
As reported in the Dec. 17, 2001, edition of Troubled Company
Reporter, Standard & Poor's lowered its corporate credit rating
on Fleetwood Enterprises Inc. to double-'B'-minus and at the
same time dropped the rating on Fleetwood Capital Trust 'D'.
Both ratings were removed from CreditWatch, where they were
placed on March 1, 2001, but the ratings outlook remains
negative.
In the same report, the international rating agency said that
"[t]he lowered corporate credit rating reflects a materially
weakened business position, due to the continued, very
competitive industry conditions for both of Fleetwood's major
business segments. In addition, Fleetwood's financial profile
remains constrained, as reflected by the granting of security to
the company's bank lenders and the recent discontinuation and
deferral of the company's common and preferred dividends,
respectively."
GLOBAL CROSSING: North Crescent Wants Prompt $1M+ Rent Payment
--------------------------------------------------------------
North Crescent Realty V, LLC demands that Global Crossing Ltd.,
and its debtor-affiliates immediately pay to North Crescent
$495,866 as unpaid postpetition, administrative priority rent
due under the lease between North Crescent and the Debtors.
While the Debtors have paid some post-petition, administrative
priority rent, the payment is well short of the amount they owe
to North Crescent on a postpetition, priority basis.
Dwight Yellen, Esq., at Ballon Stoll Bader & Nadler, P.C. in New
York, New York, claims that the Debtors only paid to North
Crescent the sum of $523,080, shortly before they sought to
reject the Lease in April. They were supposed to pay $1,033,219
as postpetition rent. According to the Debtors' management,
this is the correct amount of administrative priority,
postpetition rent due North Crescent under the Lease minus the
amount remaining available under the Letter of Credit, which the
Debtors contend must be applied against the post-petition,
administrative priority claim.
But Mr. Yellen cites that the Debtors first defaulted under the
Lease by failing to pay the rent due on January 1, 2002. Then,
they failed to timely pay the rent due on February 1, March 1
and April 1, 2002 (postpetition payments). The supposed rent
due on these payment schedules totals $996,880. Furthermore,
the Debtors have failed to discharge their obligation to pay
interest on the February, March and April monthly rent, which
continues to accrue. Accrued and unpaid interest for
postpetition rent that was not timely paid amounts to $36,339
through April 30, 2002. Interest continues to accrue at $84 per
day.
Mr. Yellen also relates to the Court that, indeed, prior to the
filing of Debtors' bankruptcy petition, North Crescent exercised
its rights under a letter of credit issued by Chase Manhattan
Bank Delaware and drew $321,814. North Crescent applied that
sum to pay the January rent. Since the Letter of Credit was in
the original face amount of $600,000, following this draw there
remained $278,186 available. On April 24, 2002 North Crescent
made application to the bank to draw the balance under the
Letter of Credit and, upon receipt of the funds, applied them to
North Crescent's prepetition breach of lease claim against the
Debtors' bankruptcy estate.
Thus, as Mr. Yellen points out, the total amount of North
Crescent's claim for administrative priority, postpetition rent
was $1,033,219. Accordingly, the balance due North Crescent as
of April 30, 2002 is $495,866.
Mr. Yellen contends that deducting the balance of the Letter of
Credit is incorrect. The Letter of Credit is an independent
obligation of the issuer and not just a substitute obligation of
the Debtors. Moreover, the Debtors should be compelled to make
the payments because their estates have benefited under the
lease without giving North Crescent the benefit of its bargain.
Indeed, the Debtors obtained authority to reject the Lease
effective as of April 2, 2002. Yet, the Debtors continued to
occupy the Leased Premises until April 15, 2002 before the
Debtors' representatives surrendered the premises to North
Crescent.
Mr. Yellen notes that the lease concerns approximately 86,740
square feet of non-residential real property located at 360
North Crescent Drive, Beverly Hills, California. The Debtors
leased the premises in 1999. (Global Crossing Bankruptcy News,
Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900)
GREIF BROTHERS: S&P Rates Proposed $300MM Sr. Notes Gets at B+
--------------------------------------------------------------
Standard & Poor's assigned its single-'B'-plus rating to Greif
Brothers Corp.'s proposed $300 million senior subordinated notes
due 2012.
In addition, Standard & Poor's assigned its double-'B' rating to
the company's new $500 million senior secured bank credit
facility. At the same time, Standard & Poor's affirmed its
double-'B' corporate credit rating on Delaware, Ohio-based
Greif, a leading industrial containers manufacturer. As of April
30, 2002, Greif had about $665 million in bank debt outstanding.
The outlook is positive.
"The ratings on Greif reflect the company's solid market
positions within the industrial container and corrugated
products markets, combined with a moderately aggressive
financial risk profile," said Standard & Poor's analyst Eric
Ballantine.
Greif benefits from good distribution capabilities throughout
the world and has improving operating efficiencies. Capital
intensity is modest and capital outlays should decline due to
recent plant upgrades during the past several years.
The company's balance sheet is somewhat aggressively leveraged.
As of April 30, 2002, total debt to EBITDA was 3.1 times and
EBITDA interest coverage was about 3.6x. Improvement in credit
protection measures should result from increasing operating
efficiencies and stronger pricing. Following the closing of the
new bank facility, Greif is expected to have more than $150
million in bank credit facility availability and a modest amount
of cash on hand.
The ratings could be raised in the intermediate term if Greif
can demonstrate a commitment to maintaining a supportive capital
structure and improving credit protection measures.
JP REALTY: S&P Downgrades Price Dev't Unit's $100M Notes to BB+
---------------------------------------------------------------
Standard & Poor's withdrew its triple-'B'-minus corporate credit
rating for JP Realty Inc., following the completion of its
merger with General Growth Properties Inc. (General Growth;
triple-'B'-minus). At the same time, the rating on the $100
million 7.29% senior unsecured notes (due 2008) issued by Price
Development Co. L.P. (Price), the operating partnership
subsidiary of JP Realty Inc., is lowered to double-'B'-plus from
triple-'B'-minus. Concurrently, the rating on Price is removed
from CreditWatch with negative implications, where it was placed
on March 5, 2002 after the merger announcement.
Chicago-based General Growth is the second largest mall owner in
the U.S. The company has pursued a secured debt strategy to
leverage its strong relationships with mortgage lenders and to
take advantage of the lower interest rates for secured debt
versus high-yield unsecured corporate debt. Consequently, the
majority of General Growth's property portfolio, and that of the
merged company, is heavily encumbered. While the senior
unsecured notes are reasonably well supported by the
unencumbered assets of the Price Development subsidiary
(approximately 55 to 60% of net operating income is
unencumbered), the legal structure is not bankruptcy-remote. As
a result, Standard & Poor's views the unsecured debt holders on
a consolidated basis to be in a subordinate position relative to
secured lenders. Accordingly, a one notch rating distinction is
being made between General Growth's triple-'B'-minus corporate
credit rating, which was affirmed at the time of the merger
announcement, and the double-'B'-plus rating for the senior
unsecured notes issued by Price Development Co. L.P., which are
now assumed by General Growth.
Rating Withdrawn
JP Realty Inc.
Rating
To From
Corporate Credit Rating NR BBB-/Watch Neg
Rating Lowered and Removed From Creditwatch
Price Development Co. L.P.
Rating
To From
$100 mil. 7.29% sr unsecd nts due 2008 BB+ BBB-/Watch Neg
KATUN CORP: S&P Assigns B+ Corporate Credit & Bank Loan Ratings
---------------------------------------------------------------
Standard & Poor's assigned to Katun Corp., and Parts Now! LLC
its single-'B'-plus corporate credit and bank loan ratings. The
ratings reflect Katun's and Parts Now!'s good positions in niche
office-equipment-parts distribution markets, a relatively small
revenue and earnings base, and leveraged financial profile.
The outlook is positive.
On July 5, 2002, Katun, a distributor of copier parts and
supplies, was acquired by the owner of Parts Now!, a distributor
of replacement parts to the laser printer industry, in a
leveraged, privately sponsored transaction. Katun and Parts Now!
will be managed separately but affiliated under a single holding
company. The combined company is headquartered in Minneapolis,
Minnesota and has $109 million of combined debt outstanding.
Pro forma combined revenues for the 12 months ended April 2002
revenues were $440 million. The combined company has a leading
position within the fragmented and highly competitive niche of
the non-original equipment manufacturer office-parts
distribution industry. The combined company should benefit from
growth in the installed base of office copiers and laser
printers, a diverse customer base, and Katun's broad geographic
presence.
Both Katun and Parts Now! have a consistent record of
profitability and positive free operating cash flow.
"Consistent profitability and a reduction in leverage could lead
to ratings improvement over the next several years," said
Standard & Poor's credit analyst Martha Toll-Reed.
The bank facilities are rated the same as the corporate credit
rating. The bank facilities consist of a five-year, $28 million
revolving credit facility; a five-year, $59 million Term Loan A;
and a seven-year $50 million Term Loan B. Both term loans have
scheduled amortization payments, and the company is required to
use a portion of excess cash flow, as defined, to permanently
reduce borrowings. Pricing is a fixed increment above LIBOR, or
base borrowing rate. Financial covenants include minimum EBITDA
levels, interest coverage ratios, and fixed-charge coverage
ratios, as well as maximum total debt to EBITDA and capital
expenditures.
The credit facilities are secured by substantially all the
domestic assets of the combined company and its subsidiaries. In
addition, the revolving credit is limited to borrowing base
availability. The security is likely to provide a meaningful
level of recovery for the lenders. Based on Standard & Poor's
simulated default scenario, a distressed enterprise value would
be expected to cover more than 50% of the loan facilities.
KMART CORP: Court Approves Various Lease Termination Agreements
---------------------------------------------------------------
In 10 separate Agreed Orders, Kmart Corporation were able to
enter into lease termination agreements with various landlords.
The basic provisions of the lease termination agreements are:
1. Hanover Mall Realty Associates LP
Lease: Store No. 7125
Location: 2280 Sans Souci Pky in Wilkes Barre, Pennsylvania
Termination Fee: $10,000
2. Delta-Sonic Carwash Systems Inc.
Lease: Store No. 3008
Location: 5150 Transit Road in Williamsville, New York
Termination Fee: $50,000, plus $25,000 in full settlement
of previous resolved common area maintenance disputes.
3. Edens & Avant Financing II LP
Lease: Store No. 3734
Location: Palm Bay West Shopping Center in Florida
Termination Fee: $100,000
Indemnification and Pre-Closing Occupancy: Edens will be
granted access to the Premises within a reasonable period
of time prior to Closing. This is provided, however, that
Edens will indemnify and hold Kmart harmless from and
against any and all claims, losses, damages, expenses or
other costs associated with or resulting from the occupancy
by Edens.
4. Reef Associates Ltd.
Lease: Store No. 7150
Location: 11905 S.W. 152 Street in Miami, Florida
Termination Fee: $528,320
5. Colonial Realty Limited Partnership
Lease: Store No. 9652
Location: Colonial Mall in Myrtle Beach, South Carolina
Termination Fee: $50,000.
The Termination Fee will be increased by an additional
amount of $450,000 (which sum consists of $376,956 cash,
plus Colonial's waiver of cure costs due under the Lease in
the amount of $73,044) if Kmart accepts this Agreement not
later than June 11, 2002 and provides a written
confirmation to Colonial that:
(i) the Lease has been removed from the auction sale; and
(ii) Kmart obtains Bankruptcy Court Approval not later
than July 2, 2002.
6. Inland Real Estate Corporation
Lease: Store No. 3599
Location: 257 North Weber Road in Bolingbrook, Illinois
Termination Fee: $0
The consideration for this Lease Termination Agreement will
be the full and final releases and waivers of right found,
including the waiver of Inland's $342,542 cure claim and
Inland's prepetition claim for rejection damages.
7. Graham Realty Investments
Lease: Store No. 4346
Location: 1701 S. Cherry Lane in White Settlement, Texas
Termination Fee: $25,000
8. F&W Partnership
Lease: Store No. 3048
Location: 100 Valley Vista Drive in State College,
Pennsylvania
Termination Fee: $250,000
F&W also agrees to waive any claim it may have against
Kmart for outstanding common area maintenance charges.
9. Franklin-West LLC and Franklin-Edmonds Transitory LLC
Leases: Store Nos. 4208 and 4081
Location: Store No. 4208 is located at 22511 Highway 99 in
Edmonds, Washington while Store No. 4081 is
located at 15015 Main Street in Bellevue,
Washington
Termination Fee: $314,000
Termination Date: June 28, 2002
10. Interstate Properties
Lease: Store No. 9097
Location: Hackettstown Mall in Hackettstown, New Jersey
Termination Fee: $25,000
Judge Sonderby approved all these Agreed Orders on June 28,
2002. Most of the termination dates for the Leases become
effective as of the later of:
(i) the date of the Bankruptcy Court Approval, and
(ii) within five days of completion of Kmart's "going out of
business" sale at the Premises.
Colonial emphasizes that the completion of the "going out of
business" sale for Store No. 9652 must be on or before July 31,
2002. Other salient terms of the Lease Termination Agreement
are:
(a) The lease will terminate effective as of the Termination
Date and Kmart must vacate the premises by that date. As
of the Termination Date, all of Kmart's right, title and
interest in the Lease is surrendered to the Landlord;
(b) Landlord agrees to accept, on the Termination Date, the
Premises in their then "AS IS" and "WHERE IS" physical and
environmental condition, free and clear of all liens;
(c) Landlord agrees to pay, and Kmart agrees to accept the
Termination Fee, which must be paid on or prior to the
Termination Date;
(d) Landlord must reimburse Kmart for prepaid amounts
allocable to the period after the Termination Date;
(e) Landlord will protect, indemnify, save harmless and,
defend Kmart from and against all liabilities,
obligations, damages, etc., asserted against Kmart by
reason of:
(1) any act on the part of the Landlord to terminate or
otherwise adversely affect the rights of any
subtenants located on the Leased Premises other
than in accordance with the applicable Subtenant's
sublease, following the Termination Date; or
(2) any claim by a Subtenant as a result of the
application of any federal or state law which
negatively impacts any Subtenant's right of
occupancy or possession as a result of this Lease
Termination Agreement. (Kmart Bankruptcy News,
Issue No. 27; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
Kmart Corp.'s 9.875% bonds due 2008 (KMART18A), trade around 39
cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KMART18Afor
real-time bond pricing.
KMART CORP: SEC Asks Court to Extend Claims Bar Date to Oct. 29
---------------------------------------------------------------
The United States Securities and Exchange Commission wants an
extension of the time required to file a claim against Kmart
Corporation and its debtor-affiliates until October 29, 2002.
Their current deadline to file proofs of claim is July 31, 2002.
Elinor Sosne, Esq., in Washington D.C., relates that the
Commission's staff is currently investigating potential claims
that it may assert against Kmart. The Commission has not yet
filed a single proof of claim in these cases.
Ms. Sosne asserts that the Court must extend the Commission's
deadline to allow it to determine how large a claim, if any, it
may file in this proceeding. "An extension will also prevent
the Commission from having to prematurely file a substantial
claim merely to protect its potential rights in this case," Ms.
Sosne adds.
Ms. Sosne assures the Court that the Debtors' counsel has agreed
to the extension of time requested. (Kmart Bankruptcy News,
Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900)
LANTRONIX INC: SEC Initiates Formal Investigation of Company
------------------------------------------------------------
Lantronix, Inc. (Nasdaq: LTRXE), has been informed that the
Securities and Exchange Commission has initiated a formal
investigation of the Company. The Company believes that the
investigation will be focused on the events leading to its
recent restatement of its financial statements that were
released on June 25, 2002.
Marc Nussbaum, interim president and chief executive officer,
noted that, "In light of the restatement of financial results,
we have been expecting the Commission to conduct a formal
investigation. We have met with the SEC and are cooperating in
the investigation."
Lantronix, Inc. (Nasdaq: LTRXE), is a provider of hardware and
software solutions ranging from systems that allow users to
remotely manage network infrastructure equipment to technologies
that network-enable devices and appliances. Lantronix was
established in 1989, and its worldwide headquarters are in
Irvine, Calif. For more information, visit the company on the
Internet at http://www.lantronix.com
* * *
As reported in Troubled Company Reporter's June 3, 2002,
edition, Lantronix received notification from Nasdaq on May 23,
2002 that it does not meet the filing requirements for continued
listing on the Nasdaq National Market and is therefore subject
to delisting. Lantronix has requested a hearing before a Nasdaq
listing qualifications panel to review the Staff Determination.
There can be no assurance the Panel will grant the company's
request for continued listing. The notice from NASDAQ was sent
as a result of the company's current non-compliance with
Marketplace Rule 4310(C)(14), which requires timely filing of
the company's quarterly report on Form 10-Q. The company
intends to file its quarterly report promptly upon the
completion of the internal review.
LERNOUT & HAUSPIE: Seeking Okay of New Mutual Release Agreement
---------------------------------------------------------------
Lernout & Hauspie Speech Products N.V. and L&H Holdings, Inc.,
ask Judge Judith Wizmur for an order approving a mutual release
agreement between these two Debtors entered into in connection
with Holdings' First Amended Plan of Liquidation. The Debtors
argue that approval of this mutual release will benefit the
estates by "injecting certainty" into the plan confirmation
process for both Debtors, and by resolving potential claims
against each of the respective bankruptcy estates, removing the
prospect for protracted litigation - the prosecution of which
might provide little, if any, recovery for either estate.
The Debtors reminds Judge Wizmur that the Holdings Plan provides
for a mutual release of claims between L&H NV and Holdings
relating to L&H NV's acquisition of Dragon Systems, Inc. The
Plan contemplates that these mutual releases will be the subject
of an agreement signed by L&H NV and Holdings, and approved by
her contemporaneously with confirmation of the Holdings Plan.
The Dragon Merger Agreement Claims
In June 2000, L&H NV used Holdings as a vehicle to acquire
Dragon, formerly a competitor of L&H NV. Specifically, L&H NV,
Holdings, Dragon, and its principal shareholders signed an
agreement and plan of merger in March 2000, and in June 2000 L&H
NV acquired Dragon through its merger with Holdings. Holdings
and L&H NV have claims against each other for, among other
things, alleged breach of representations and warranties.
The Assigned Claims
In connection with the settlement with the Bakers, the U.S.
Merger Claims against Holdings and the other U.S. Claims against
Holdings were assigned to L&H NV.
Intercompany Allocation Claims
Holdings and L&H NV each hold claims against the other arising
from post-petition transactions. These transactions concern
certain intercompany allocations of shared costs, including
management fees, corporate marketing costs, break-up fees,
professional fees and expenses, DIP fees, interest and related
expenses, and insurance costs.
The Plan Release
The Holdings Plan provides that, on the Effective Date of the
Plan, Holdings and L&H NV each release the other from these
claims, except for certain claims relating to intercompany
allocations of shared costs, and the U.S. Merger Claims and
other U.S. Claims assigned to L&H NV.
The Modified Releases
L&H NV and Holdings now propose to extend these releases to
include the intercompany allocation claims previously excluded,
but still exclude the U.S. Merger Claims and other U.S. Claims
assigned to L&H NV.
Benefit to the Estates
The Debtors argue that this extended release benefits both
estates. Execution of the Mutual Release will save both estates
the prospect of protracted and expensive litigation, the outcome
of which is by no means certain.
The Merger Agreement Claims relate to accounting irregularities,
alleged breach of contract, alleged breach of warranty, and
alleged fraud. Any litigation concerning these claims would be
complex, burdensome, and prolonged, with potentially little
recovery for either estate.
Adjudication of the claims now to be released may have involved
extensive document review and discovery, all of which would have
to be conducted in connection with another, simultaneous
proceeding in a foreign jurisdiction - Belgium. In addition to
inflicting great expense of these estates, any such litigation
might distract L&H NV and Holdings from their efforts to emerge
from chapter 11. Instead, the new Mutual Release Agreement
injects a level of predictability into the plan confirmation
process for these estates by specifically releasing certain
causes of action, such as the Merger Agreement Claims, which
could serve as a basis for considerable contest.
The new Mutual Release Agreement has been reviewed by the L&H
Creditors' Committee and by Togut, Segal & Segal, LLP, serving
as Special Counsel to Holdings. Neither objects to the
agreement, the Debtors advise. (L&H/Dictaphone Bankruptcy News,
Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900)
LEVEL 3 COMMS: Releases Clarifications to Proxy Statement
---------------------------------------------------------
Level 3 Communications, Inc. (Nasdaq: LVLT), issued the
following statement, which can be attributed to Walter Scott,
Jr., chairman of the Board of Directors, and James Q. Crowe,
chief executive officer:
"Since issuing its proxy in June, the company has received
a number of questions from stockholders seeking further
clarification of its proxy, its requested amendment to the Stock
Plan, and its overall compensation philosophy. We would like to
take this opportunity to address the questions we have received
about our compensation program and explain why we believe our
program is in the best interest of our stockholders.
"We thought it would be helpful to utilize a question and
answer format. We have made an effort to thoroughly address the
questions we have received from stockholders, and hope this
clarification is helpful. Additionally, we look forward to
answering any further questions with respect to our proxy
statement during the question and answer session at our annual
meeting on July 24, 2002.
"Q: Why should stockholders vote affirmatively for the
proposal to reserve an additional 50,000,000 shares?
"A: We believe the ability to retain and motivate our
existing employee-owners is critical to our continued success.
We recommend that the stockholders approve the proposal because
we believe that our compensation plan, particularly the equity-
based incentive program, enables the company to attract and hire
qualified employee-owners. More importantly, in today's market
environment, we believe our Stock Plan allows us to retain and
motivate existing employee-owners who we believe, as owners,
outperform employees who do not have equity participation
opportunities. We believe our ability to differentiate the
company from its competitors and aggressively pursue our
business plan is a result of the caliber of our employee-owners.
"Additionally, we believe this type of indexed option plan
aligns our employee-owners' interests with the interests of our
external stockholders more directly than a typical non-qualified
stock option (NQSO) program, where employees may receive value
even if the company's stock underperforms a market-based index.
"Q: Has this amendment been endorsed by any corporate
governance organizations?
"A: Yes. Institutional Shareholder Services (ISS), a
leading provider of proxy voting and corporate governance
services, has endorsed Level 3's proposal to reserve an
additional 50,000,000 shares for its Stock Plan. ISS makes its
determination by measuring the total cost of the compensation
program. This is measured by considering the total dollar cost
of all previously awarded grants under the Stock Plan combined
with all potential future grants under the Stock Plan per the
proposed amendment in the proxy. Additionally, ISS looks at
potential voting power dilution. The total cost of the company's
Stock Plan is then compared to peer companies within the
industry to determine if the Stock Plan proposal should be
approved.
"Q: What is Level 3's compensation philosophy?
"A: We believe it is important to provide a work
environment that encourages each individual to perform to his or
her potential, one that facilitates cooperation toward shared
goals, and one where employee-owner's interests are aligned with
the interests of our external stockholders. We also believe that
short-term financial rewards alone are not sufficient to attract
and retain the most highly qualified employees, and as such, we
have an equity-based, long term incentive program that is tied
to the performance of our stock.
"[Mon]day, our long-term incentive program consists of two
equity-based programs, an indexed option program currently
referred to as the Outperform Stock Option (OSO) program, and a
stock purchase plan referred to as the Shareworks program.
"Our OSO program has been the primary component of Level
3's long-term incentive program. Under the OSO program,
employee-owners are eligible for OSO grants on a quarterly
basis. Each OSO has an Initial Strike Price on the date of grant
that is then adjusted over time (the "Adjusted Strike Price") to
reflect the performance of the S&P 500 Index. At the date of
exercise, the Adjusted Strike Price is then compared to Level
3's common stock price.
"A traditional NQSO program sometimes rewards employees
even if their company's stock price performance is inferior to
investments of similar risk. In contrast, our employee-owners do
not receive value from their OSOs unless Level 3's common stock
outperforms the S&P 500 Index between the OSO grant date and the
OSO exercise date.
"The Shareworks program enables employee-owners to purchase
Level 3 common stock with up to 7% of their cash compensation,
with a matching contribution by the company that vests after
three years. The Shareworks program also enables employee-owners
to receive annual stock grants at the discretion of the
company's Board of Directors.
"Q: Can you explain how the concept of outperformance
works?
"A: Outperformance is measured by the performance of Level
3's stock price in percentage terms relative to the performance
of the S&P 500 Index during any given period of time.
Specifically, outperformance is the increase in the price of a
share of Level 3 common stock from the date of grant until the
date of exercise, relative to the increase in the S&P 500 Index.
"Employee-owners only realize value from an OSO if Level
3's stock outperforms the S&P 500 Index between the date of
grant and the date of exercise. If Level 3's common stock
outperforms the S&P 500 Index, the value of each OSO is based on
a formula that involves a multiplier. The multiplier varies
depending upon the amount of outperformance, and currently
ranges from zero to eight. Under extreme outperformance
scenarios, Level 3 could issue up to 8 shares of common stock to
settle the exercise of one OSO. Under such a scenario, the
external stockholders in the aggregate would receive
approximately 75% of the outperformance value and the employee-
owners would have received approximately 25% of the
outperformance value. The company has the option to settle OSO
exercises with the issuance of common stock or with cash.
"Q: Has Level 3's compensation philosophy changed?
"A: No. From the beginning, employee ownership has been a
fundamental underpinning of our company. We believe employee-
owners outperform employees who do not have such equity
participation opportunities because they have a vested interest
in company success. We believe employee-owners should share in
the value they create, but only after we have provided a market-
based return to our stockholders. Our focus continues to be on
total compensation, and we emphasize performance-based
incentives. We believe in rewards based on results and recognize
that, over the long term, results are best measured by stock
price. Our compensation programs are heavily biased toward Level
3's success -- rewards may be substantial, but only if our stock
outperforms the market from the grant date to the date of
exercise.
"While our compensation philosophy has not changed, we
continually monitor and adjust specific aspects of our program
design as needed to ensure it continues to operate in the best
interests of our company under a wide range of market
conditions. As a result, we may modify our compensation program
in the future.
"Q: What is an example of how the valuation is derived
mathematically for one OSO?
"A: Each OSO is an award of long term equity based
compensation that only has value when Level 3's stock price
outperforms the S&P 500 Index. Each OSO has an initial strike
price based on the current price of Level 3's common stock at
the time of grant. The initial strike price is adjusted over
time (the "Adjusted Strike Price"), until the exercise date, in
an amount equal to the percentage appreciation or depreciation
in the value of the S&P 500 Index from date of grant to date of
exercise. The value of an OSO increases for increasing levels of
outperformance. There is a multiplier for each OSO that
currently ranges from zero to eight depending upon the
performance of Level 3 stock price relative to the S&P 500 Index
as set forth in the table below:
"If Level 3 stock outperforms Then the pre-multiplier
gain(1) the S&P 500 Index by: is multiplied by a success
multiplier of:
0% or less 0.00
1% but less than 11% Outperformance percentage
multiplied by 8/11
11% or more 8.00
"Q: Why is a multiplier appropriate?
"A: The multiplier that is applicable for an OSO at any
given time is dependent upon the relative performance of Level
3's common stock versus the S&P 500 Index. The higher the
outperformance of Level 3's common stock, the higher the
multiplier that is in effect for that OSO. Given that very few
companies outperform the S&P 500 Index consistently by an
appreciable amount, we believe this risk/reward ratio is
appropriate.
"The Compensation Committee of the Board of Directors
administers and makes all determinations under the Stock Plan,
and among other things, determines the type, extent and terms of
the awards to be granted.
"Q: Why is Level 3's stock price a factor in the number of
OSOs that are granted?
"A: As Level 3's stock price has declined, the theoretical
dollar value of each individual OSO decreased as well. In order
to maintain market-based overall compensation levels, the
company issued more OSOs, but at a lower value at the time of
grant. Going forward, the company intends to award long term,
equity-based incentives in an aggregate amount such that at
least approximately 75% of any outperformance value would accrue
to the external stockholders of Level 3, and approximately 25%
of the outperformance value would accrue to the employee-owners.
"Q: How does Level 3 set equity-based long term incentive
targets for its employee-owners?
"A: We have and will continue to look at third party market
surveys to determine overall market compensation practices and
compensation levels. Equity-based long term compensation can be
delivered through a variety of programs such as NQSO grants,
Restricted Stock awards, or outperform stock options. Level 3
primarily uses OSOs to deliver long term equity-based incentives
to its employee-owners.
"[Mon]day, OSO pools are established each quarter and those
pools are then translated into individual targets. Positions
within our company are currently assigned to band levels based
on the relative degree to which the employee-owner performing
that job can affect our company's performance. Employee-owner's
OSO targets are currently based on band level and individual
performance consistent with past practice. The company intends
to set OSO targets based on an aggregate number of OSOs to be
granted versus a theoretical dollar value as we did in the past.
This will appropriately control the percentage of outperformance
value we share with employee-owners under all growth scenarios
and, therefore, will appropriately control potential dilution.
We believe this is consistent with how other organizations set
long term incentive targets. While some organizations have
historically set long term incentive targets in terms of dollar
values, most companies, like Level 3, have recently moved to
managing grants according to a fixed pool of options.
"Q: What is a C-OSO?
"A: A C-OSO is a convertible outperform stock option. The
company adopted a C-OSO program in July 2000 as an extension of
its existing OSO program. A C-OSO offers similar features to
those of an OSO, but provides an employee-owner with the greater
of the value of a single share of the company's stock at
exercise, or the calculated value of one single OSO at the time
of exercise.
"Q: Why doesn't Level 3 have a more traditional stock
option plan?
"A: While there may be times when it is appropriate to use
traditional stock options, we don't anticipate going in this
direction on a broad basis. Traditional plans tend to pay
employees even in situations where the company's common stock
underperforms the broader market, and when stockholders would
have been better served investing in a different company, or
even an index fund.
"Q: How has Level 3 historically settled OSO exercises?
"A: The company has used shares of common stock that were
approved in December 1997. The number of shares originally
approved was 35 million shares, which was automatically
increased to 70 million shares in August 1998 as a result of our
dividend of one share for each outstanding share at that time.
"Q: What do you mean by "reserved" shares?
"A: Stockholders must authorize the number of shares that
are allocated to the Stock Plan. These are called "reserved"
shares. They are not actually issued, but "reserved" to use to
settle awards under the Stock Plan. These reserved shares may
never be issued if Level 3's stock price performance does not
exceed levels defined in the Stock Plan.
"Q: Of the original 70 million shares reserved, how many
shares does Level 3 still have available to use for the Stock
Plan?
"A: As of May 31, 2002, the company has approximately 51
million shares available for its use in connection with the
exercise of awards under the Stock Plan.
"Q: Why does Level 3 require an additional 50 million
shares to be reserved for the Stock Plan now?
"A: Under reasonable stock price performance scenarios, the
previously reserved shares should be sufficient to settle the
exercise of all granted awards under the Stock Plan. However,
under more extreme stock price performance scenarios, we might
not have enough shares reserved under the plan to settle all
awards that have been granted. We believe that an additional 50
million shares are sufficient to satisfy the settlement of
existing and future equity-based, long term incentive awards.
"Q: What will Level 3 do if the stockholders do not approve
the 50 million shares?
"A: If no additional shares are reserved, the Board of
Directors believes Level 3's compensation program would have to
be redesigned. Such redesign could result in our using more of
the company's cash on hand, and cash generated by our business,
for compensation. We believe such alternatives would not be in
the best interests of the company, and prefer to continue to
have a compensation program that includes equity-based
incentives. In the event we continue to issue OSO-type awards,
and are unable to settle exercises with the issuance of shares,
we would be required to settle the exercise of these awards with
available cash, which could, in the case of extreme stock
performance, require the use of a significant amount of cash.
"We continue to believe that current employee-owners as
well as the highly qualified candidates we seek to hire, place
particular emphasis on equity-based programs, and it is possible
a compensation program going forward that emphasizes cash
payments and de-emphasizes equity-based programs will not allow
the company to adequately attract, retain and motivate these
employee-owners.
"Q: What steps has Level 3 taken to address the possibility
of having to use cash to settle exercise under the Stock Plan?
"A: We addressed this issue by reducing the overall number
of OSOs granted. However, given the rapid changes in the market
and the overall volatility of the stock, these changes were not
enough.
"In order to minimize the possibility of Level 3 having to
use cash to settle OSOs or C-OSOs that have previously been
granted, the management team and Board of Directors determined
that in addition to asking for additional shares to be reserved
for the Stock Plan to cover even extreme growth scenarios and
future grants, they would voluntarily restrict their ability to
exercise certain OSOs and C-OSOs in order to minimize any cash
liability the company might incur. Jim Crowe, Doug Bradbury and
non-employee members of the Board of Directors have voluntarily
restricted their ability to exercise all of the OSOs and C-OSOs
that were granted to them during 2001 and the first quarter of
2002. In addition, Kevin O'Hara, Buddy Miller, and all of the
Group Vice Presidents that make up the senior management team in
the company have voluntarily restricted their ability to
exercise the vast majority of the OSOs and C-OSOs that were
granted to them during 2001 and the first quarter 2002. These
voluntary restrictions are revocable by the Board of Directors,
at its discretion.
"Q: What is the dilution that could occur if the Stock Plan
proposal is approved?
"A: If Level 3's common stock does not outperform the S&P
500 Index from the grant date to exercise date, there is no
dilution because the OSOs and C-OSOs would not have any value.
Actual dilution will depend on the degree to which Level 3
outperforms the S&P 500 Index. However, the maximum dilution
that could occur assuming Level 3's stock outperforms the S&P
500 Index would be approximately 20%. This can be derived by
dividing total new common stock that could be issued as a result
of exercises from grants under the Stock Plan by the then total
outstanding shares of common stock. Therefore, maximum dilution,
if Level 3 were to use all shares reserved would be
approximately 20%.
"Q: Isn't the OSO plan different from other stock option
plans with respect to dilution?
"A: Traditional stock option plans award a single option at
a strike price that is typically the market price on the date of
the option grant. If that company's stock price increases, the
stock option can be exchanged for one share of stock. Thus,
there is a one-to-one ratio between the number of stock options
issued, and the potential dilution created by the shares issued
when the option is exercised.
"The OSO plan is different in that employee-owners do not
receive any value, and thus no shares are issued and no dilution
is created unless Level 3 stock outperforms the S&P 500 Index
from the grant date of the OSO to the exercise date of the OSO.
If the company does outperform the S&P 500 Index, each OSO can
be worth multiple shares of Level 3 common stock -- depending
upon the amount of outperformance -- up to 8 shares of stock.
The dilution created by an OSO is based on the degree to which
we outperform the S&P 500 Index. The more our stock price
outperforms the S&P 500 Index, the higher the multiplier and the
higher the dilution.
"An OSO is also different from an NQSO as one OSO has a
higher theoretical value than one NQSO. Since the theoretical
value of one OSO is greater than the theoretical value of one
NQSO, if Level 3 were to have issued NQSOs to its employee-
owners rather than OSOs, the number of NQSOs granted would be
significantly higher than the number of OSOs granted in order to
achieve an equivalent total compensation value awarded.
"We believe we have created an equity-based compensation
plan that better aligns the interests of our employee-owners
with the interests of our external stockholders. We do not
deliver any value to our employee-owners until the Level 3
common stock price passes a hurdle of the S&P 500 Index growth
prior to the OSO having any value.
"Q: Wouldn't Level 3's stock performance have to beat the
S&P 500 Index by extreme amounts to use all the stock currently
available for the Stock Plan?
"A: Yes. Unless our stock price performance exceeds that of
the S&P 500 Index by a substantial amount, in the range of over
100% outperformance per year, we would not use shares in excess
of the 51 million shares already reserved. However, we feel it
is appropriate to ensure that the company has shares reserved in
advance for past and future grants, as it is certainly possible
we could achieve high levels of outperformance that would
require the issuance of more shares than we currently have
reserved.
"Q: Does Level 3 grant OSOs to Corporate Software or
Software Spectrum employees?
"A: At this time, we have not extended our OSO program to
the broad employee population of these two companies, which are
now subsidiaries of Level 3. However, we continue to assess
long-term incentive plans for these employees that are
competitive for their specific labor market.
"Q: Why did the CEO and other executives receive a special,
year-end OSO award?
"A: The Compensation Committee desired to provide
meaningful, long term, equity-based incentives for the
achievement of specific objectives that were completed during
2001. These objectives included restructuring Level 3's sales
strategy, completing a tender offer to repurchase $1.7 billion
of face amount of debt, achieving significant operational
improvements, and reducing costs by approximately 40 percent.
The positive achievement of these and other objectives resulted
in a special year-end OSO award to Jim Crowe, Kevin O'Hara, Doug
Bradbury and Buddy Miller. These OSOs currently have a three
year cliff vesting schedule, but revert to a normal two year
vesting schedule retroactively if the Compensation Committee
determines that they have successfully accomplished the Program
as described in the proxy.
"Q: In summary, why is it important to support this
proposal?
"A: We believe that our future results are largely the
product of the caliber and performance of our employee-owners.
It is critical to our continued success to retain and motivate
these employee-owners, and key to that effort is our
compensation program. We believe our OSO program aligns the
interests of our employee-owners with the interests of our
external stockholders and as such, we ask stockholders to
support the proposal to reserve 50,000,000 additional shares for
our Stock Plan."
Level 3 (Nasdaq: LVLT) is an international communications and
information services company offering a wide selection of
services including IP services, broadband transport, colocation,
metropolitan and intercity dark fiber services, and the
industry's first Softswitch-based services. Its Web address is
http://www.Level3.com
The company offers information services through its wholly-owned
subsidiaries, (i)Structure, Corporate Software and Software
Spectrum. (i)Structure is an Application Infrastructure Provider
that provides managed IT infrastructure services and enables
businesses to outsource IT operations. Its Web address is www.i-
structure.com . Corporate Software and Software Spectrum help
Fortune 500 companies acquire, implement, and manage software.
Their Web addresses are http://www.corporatesoftware.comand
http://www.softwarespectrum.com
Level 3 Communications' 11.25% bonds due 2010 (LVLT3) are quoted
at 36.5, DebtTraders says. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=LVLT3
LYONDELL CHEMICAL: Will Pay Quarterly Divided on Sept. 16, 2002
---------------------------------------------------------------
On July 11, 2002, the Board of Directors of Lyondell Chemical
Company (NYSE: LYO) declared a regular quarterly dividend of
$0.225 per share of common stock, payable September 16, 2002, to
stockholders of record as of the close of business on August 26,
2002.
Lyondell Chemical Company -- http://www.lyondell.com--
headquartered in Houston, Texas, is the world's largest producer
of propylene oxide (PO); the world's number three supplier of
TDI (toluene diisocyanate); a leading producer of propylene
glycol; a leading producer of other PO derivatives such as BDO
(butanediol) and PGE (propylene glycol ether); and a producer of
styrene monomer and MTBE as co-products of PO production.
Through its 41% interest in Equistar Chemicals, LP, Lyondell
also is one of the largest producers of ethylene, propylene and
polyethylene in North America and a leading producer of
polypropylene, ethylene oxide, ethylene glycol, high value-added
specialty polymers and polymeric powder. Through its 58.75%
interest in LYONDELL-CITGO Refining LP, Lyondell is one of the
largest refiners in the United States, processing extra heavy
Venezuelan crude oil to produce gasoline, low sulfur diesel and
jet fuel.
* * *
As reported in Troubled Company Reporter's June 21, 2002,
edition, Standard & Poor's assigned its double-'B' rating to
Lyondell Chemical Co.'s proposed $275 million senior secured
notes due 2012 and affirmed its other ratings on the company,
including the double-'B' corporate credit rating. Proceeds of
the notes will be used to prepay $200 million of an existing
term loan. The balance of the net proceeds (approximately $50
million), together with approximately $100 million from a new
equity issue, will be retained on the balance sheet.
Houston, Texas-based Lyondell has about $3.9 billion of debt
outstanding. The outlook is stable.
DebtTraders reports Lyondell Chemical Co.'s 10.875% bonds due
2009 (LYOCH3) are trading at about 91.005. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=LYOCH3for
real-time bond pricing.
MEASUREMENT SPECIALTIES: Delays Form 10-K Filing with SEC
---------------------------------------------------------
Measurement Specialties, Inc. (Amex: MSS), announced that it is
not currently in a position to file its annual report on Form
10-K for the fiscal year ended March 31, 2002. The American
Stock Exchange will halt trading of the Company's common stock
as a result of this delay.
The Company is unable to file the annual report because the
Company and their auditors have not completed the audited
financial statements to be included in the annual report. At
this time, the Company cannot accurately predict when audited
financial statements will be available. If the annual report is
not filed within a reasonable period, the American Stock
Exchange is likely to initiate delisting proceedings against the
Company.
Measurement Specialties is a designer and manufacturer of
sensors, and sensor-based consumer products. Measurement
Specialties produces a wide variety of sensors that use advanced
technologies to measure precise ranges of physical
characteristics, including pressure, motion, force,
displacement, angle, flow, and distance. Measurement
Specialties uses multiple advanced technologies, including
piezoresistive, application specific integrated circuits, micro-
electromechanical systems, piezopolymers, and strain gages to
allow their sensors to operate precisely and cost effectively.
* * *
As reported in Troubled Company Reporter's July 10, 2002
edition, Measurement Specialties, Inc., has successfully
negotiated and executed an extended forbearance agreement with
its lenders. This agreement provides that the lenders will
forbear, until November 1, 2002, from exercising the rights and
remedies available to them as a result of the Company's defaults
under its credit agreement. The agreement is the critically
important first step in the Company's broader restructuring plan
announced June 19th. In a display of support for the proposed
restructuring plan, the lenders have also agreed to extend
additional credit under the Company's revolving credit facility
as well as allow the Company to apply the proceeds from the
sale/liquidation of certain Company assets against amounts
outstanding under the revolving credit facility (rather than
against amounts outstanding under the term loan as otherwise
required by the credit agreement). As a condition to the
agreement and the lenders' continued forbearance, the Company
has agreed to pledge in favor of the lenders certain
unencumbered assets, and must take certain actions and comply
with strict financial covenants during the forbearance period.
NTL INC: Court to Consider Pre-Negotiated Plan on September 5
-------------------------------------------------------------
NTL Incorporated (OTC BB: NTLD; NASDAQ Europe: NTLI), has
obtained Court approval for the Company's Disclosure Statement,
and that September 5, 2002 has been set as the date for the
hearing to consider confirmation of the pre-negotiated plan.
If confirmed on September 5, the Company's reorganization plan
could be consummated shortly thereafter.
Commenting on the Court's approval, the Company's President and
CEO, Barclay Knapp, said, "The Court's approval is another
successful step forward in our recapitalization plan. With the
scheduling of this date for the confirmation hearing, we are
fully on track to conclude our recapitalization process."
More on NTL:
- On May 2, 2002, NTL announced that the Company, a
steering committee of its lending banks and an unofficial
committee of its public bondholders had reached an agreement in
principle on implementing a recapitalization plan. The members
of the bondholder committee held in the aggregate over 50% of
the face value of NTL and its subsidiaries' public bonds. In
addition, France Telecom and another holder of the Company's
preferred stock have also agreed to the plan of reorganization.
- On May 8, 2002, NTL and certain of its subsidiaries filed
a Chapter 11 "prearranged" plan of reorganization under US law.
- On May 24, NTL filed an amended plan of reorganization
and a disclosure statement.
- On June 21, 2002, an official committee of creditors,
comprised of the members of the unofficial committee of public
bondholders and three additional members, was appointed by the
United States Trustee to oversee the Chapter 11 cases.
- On July 2, 2002, the Court in which the Company's Chapter
11 cases are pending approved a $630 million credit facility for
the Company including $500 million in new financing.
- NTL offers a wide range of communications services to
homes and business customers throughout the UK, Ireland,
Switzerland, France, Germany and Sweden.
NTL Inc.'s 11.875% bonds due 2010 (NLI4) are trading at 42,
DebtTraders reports. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=NLI4
NAPSTER INC: Court Approves $5 Million Post-Petition Financing
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware granted
Napster, Inc., and its debtor-affiliates the authority to obtain
post-petition financing and for the other debtors to guaranty
the Borrower's obligations in connection with the Financing, up
to the aggregate principal amount of $5,125,000 from Bertelsman
AG.
The Debtors disclosed to the Court that they have an immediate
need to obtain the Financing in order to permit, among other
things, the orderly continuation of the operation of their
businesses, to maintain business relationships with vendors and
suppliers and to satisfy other working capital needs. The
Debtors were able to establish that the Financing has been
negotiated in good faith and at arm's-length between the Debtors
and the DIP Lender.
The DIP Lender is also granted a perfected first priority
security interest in and lien upon all cash of the Debtors and
any investment of the funds, and all other pre- and post-
petition property of the Debtors.
Napster, Inc., and its debtor-affiliates own and operate the
peer-to-peer music service known as Napster. The Napster service
has provided music enthusiasts with an easy-to-use, high quality
service for finding and discovering music and communicating
their interests with other members of the Napster community. The
Company filed for chapter 11 protection on June 6, 2002. Daniel
J. DeFranceschi, Esq., Russell C. Silberglied, Esq. at Richards,
Layton & Finger and Richard M. Cieri, Esq., Michelle Morgan
Harner, Esq. at Jones, Day, Reavis & Pogue represent the Debtors
in their restructuring efforts. When the Company filed for
protection from its creditors, it listed debts of more than $100
million.
NATIONAL STEEL: Intends to Sell DNN Interest for C$6.1 Million
--------------------------------------------------------------
National Steel Corporation and its debtor-affiliates are
planning to sell their limited partnership interest in DNN
Galvanizing Limited Partnership and shares of stock in DNN
Galvanizing Corporation to NKK Corporation.
Mark A. Berkoff, Esq., at Piper Marbury Rudnick & Wolfe, in
Chicago, Illinois, states that over 53% of the Debtors' common
stock is owned by NKK U.S.A. Corporation, a wholly-owned
affiliate of NKK. Shares owned by NKK U.S.A. control
approximately 69% of the voting rights of all of the Debtors'
common stock. Through various agreements, the Debtors utilize a
wide range of NKK's steel making, processing and applications
technology, as well as certain engineers and other technical
support personnel.
The Debtors and Dofasco Inc., one of Canada's largest steel
producers, entered into a series of agreements to build and
operate a 400,000-ton per year hot dip galvanizing facility in
Windsor, Canada known as the "DNN Facility". The operation of
the DNN Facility and the legal relationships among the Dofasco
Entities, the NKK Entities and the Debtors' Entities are
primarily governed by these Agreements:
A. Shareholders' Agreement among DNN Galvanizing Corporation,
904153 Ontario, Inc., an Ontario corporation and a wholly
owned subsidiary of Dofasco, National Ontario Corporation, a
Delaware Corporation and a wholly owned subsidiary of the
Debtors and Galvatek America Corporation, a Delaware
corporation and a wholly owned subsidiary of NKK;
B. Partnership Agreement among Dofasco, Inc., National Ontario
II, Limited, a Delaware corporation and a wholly owned
subsidiary of the Debtors, Galvalek Ontario Corporation, and
DNN Corp., establishing a limited partnership named DNN
Galvanizing Limited Partnership; and
C. An Amended and Restated Toll Processing Agreement, among
NKK-USA Corporation, a Delaware Corporation and a wholly-
owned subsidiary of NKK, the Debtors and DNN Corp.
Dofasco asserts that National Steel's bankruptcy filing
constituted a Financial Default of the Toll Processing Agreement
and the Partnership Agreement. It matured when National Steel
failed to cure the default.
NKK served a default notice on May 3, 2002 to preserve its
rights under the agreements.
The Partnership Agreement provides that within 90 days of the
occurrence of a Matured Default, NKK shall buy the Debtors'
partnership interests in DNN LP at a price equal to the fair
market value, taking into consideration any damage caused to the
Partnership, all as determined by an independent valuator. "If
NKK fails to purchase the Debtors' interest, Dofasco has the
option under the Partnership Agreement, at any time prior to
July 16, 2003, to purchase all of the Debtors' and NKK's
partnership interests in DNN LP," Mr. Berkoff adds.
The Shareholder Agreement requires NKK to acquire National
Ontario's shares in DNN Corp. if NKK acquires the Debtors'
partnership interest in DNN LP. The Shareholder Agreement
similarly provides that Dofasco must acquire the shares of NKK
and the Debtors in DNN Corp., if Dofasco purchases the interests
of NKK and National in DNN LP.
In sum, Mr. Berkoff tells the Court:
(1) an automatic mandatory procedure for the valuation of
the Debtors' interests in the DNN Facility and NKK's
purchase of those interests was triggered;
(2) NKK is obligated by the terms of the Partnership Agreement
and of the Shareholder Agreement to purchase the Assets;
(3) due to the various deadlines established in the DNN
Agreements and triggered by Dofasco's Notice of Default,
the Debtors and NKK must close the sale of the Assets on
or before July 16, 2002; and
(4) if NKK does not close the sale, Dofasco will have the
right to purchase both the Debtors' and NKK's interests in
the DNN Facility, and neither NKK nor the Debtors would
have any right under the Toll Processing Agreement to use
the DNN Facility.
The Debtors have concluded that the risk of attempting to
enforce the automatic stay in Canada, with their ability to
utilize the DNN Facility hanging in the balance, is a risk that
their estates should not take. Accordingly, the Debtors desire
to:
(1) sell their interests in the DNN Facility to NKK; and
(2) enter into an arrangement with NKK that allows their steel
to continue to be processed.
NKK has retained, with the Debtors' knowledge and consent, BBK,
Inc., an experienced and highly qualified financial consultant,
to value the Debtors' interests in the DNN Facility. BBK
prepared its valuation report in accordance with the principles
set forth in the Partnership Agreement and has determined that
the Debtors' interests in DNN Corp. and DNN LP are valued at
C$305,000 and C$5,795,000 respectively. Accordingly, the
Purchase Price that NKK is offering for the Assets is
C$6,100,000.
In conjunction with the sale, NKK also agreed to enter into
appropriate documentation with the Debtors that will result in
the Debtors being able to obtain steel processed at the DNN
Facility. "This arrangement will preserve the Debtors' ability
to sell products to the customers to whom they currently sell
their products processed at the DNN Facility," Mr. Berkoff
explains. To enable NKK to have the right to process steel at
the DNN Facility, the Debtors must sell their interests to NKK.
If NKK is not the purchaser of the Assets, Dofasco is expected
to exercise its option and extinguish the Debtors' and NKK's
rights to use the DNN Facility.
Furthermore, Mr. Berkoff states that while the Assets to be sold
to NKK will not be subject to an auction or "shopped" to
competing bidders, the Purchase Price offered by NKK has been
determined by an independent third party valuator acceptable to
both parties, thus ensuring a fair price. NKK has agreed to
maintain this arrangement with the Debtors for so long as the
Debtors remains an NKK subsidiary. This arrangement will also
provide that:
(a) costs incurred by NKK are reimbursed by the Debtors; and
(b) the Debtors will indemnify NKK for any liabilities arising
as a result of this transaction, other than as a result of
NKK's gross negligence or willful misconduct.
NKK Responds
According to Richard G. Smolev, Esq., at Kaye Scholer, in
Chicago, Illinois, NKK Corporation and the Debtors continue to
negotiate the terms of an agreement by which they will process
steel at the processing facility for the Debtors and in turn,
the Debtors will sell substrate steel to NKK.
"The agreement will be conditioned upon the inclusion of a term
waiving any claim against NKK if they are unable to accommodate
the Debtors' processing needs," Mr. Smolev states.
Mitsubishi Objects
Emily S. Gottlieb, Esq., at Gardner Carton & Douglas, in
Chicago, Illinois, contends that the Debtors have not carried
their burden of proving that the sale of their interests in DNN
Galvanizing Limited Partnership and DNN Galvanizing Corporation
to NKK Corporation is a sound exercise of their business
judgment and in the best interests of their estate.
NKK's alleged agreement to provide continued steel processing
services to the Debtors comprises an essential component of the
Debtors' judgment to sell their DNN interests to NKK. However,
Ms. Gottlieb notes that the Debtors have not filed with the
Court or provided to Mitsubishi the terms under which NKK will
allegedly agree to continue to provide the Debtors with the
services. "Absent an understanding of the economic terms of the
tolling arrangements, and their duration, it is impossible to
assess whether this transaction is in the best interests of the
estate," Ms. Gottlieb states.
Although the Debtors have provided Mitsubishi with a draft of
the valuation report that established the purchase price for the
Debtors' DNN interests, Ms. Gottlieb notes, the Debtors have not
filed the valuation report with the Court. "Without the Court
and other parties-in-interest understanding how NKK's financial
advisor determined the value of these interests, it is
impossible to determine the adequacy of the purchase price," Ms.
Gottlieb says.
Moreover, Ms. Gottlieb continues, the Debtors do not appear to
have fully examined other potential ways out of this situation.
Ms. Gottlieb notes that the Debtors have not fully explained
how, consistent with this Court's jurisdiction and the automatic
stay, Dofasco, Inc., is able to take the actions it has
apparently taken with regard to declaring defaults based on the
Debtors' bankruptcy cases. Ms. Gottlieb also relates that it is
not entirely clear how the Debtors could not have access to the
tolling arrangements absent a sale to NKK or the possibility
that a sale to another party, even Dofasco, might not yield a
higher purchase price and more benefit to the Debtors' estate.
Absent more complete answers to these questions, Ms. Gottlieb
asserts, it is impossible to determine whether the sale to NKK
is really fair.
According to Ms. Gottlieb, parties-in-interest including
Mitsubishi simply have not been afforded the opportunity to
evaluate the fairness of the purchase price, the terms of the
processing arrangements going forward, and whether there may not
in fact exist other alternatives than this alleged emergency
sale under apparent duress.
Marubeni Reacts
Marubeni Corporation states that the Debtors only gave them
notice of the proposed sale of the DNN Interests on July 1,
2002. "To justify the shortened notice, the Debtors contend that
they must conclude NKK's purchase of the DNN Interests by July
16, 2002," Jeffrey M. Schwartz, Esq., at Gardner Carton &
Douglas, in Chicago, Illinois, says. However, the Debtors knew
of that supposed "deadline" as early as April 12, 2002, when
Dofasco Corporation served National Ontario II Limited with a
notice of Financial Default. Mr. Schwartz insists that between
April 12, 2002 and July 1, 2002, the Debtors could have informed
their substantial creditors, including Marubeni, of the
circumstances surrounding the DNN matter and the possible need
to consummate a sale to NKK.
"Now, at the eleventh hour, the Debtors are attempting to force
through a sale of the DNN Interests to their controlling
shareholder, NKK," Mr. Schwartz notes. The Debtors urge,
without support, that the consideration that NKK will pay is
sufficient. As assurance of its sufficiency, the Debtors submit
that an independent third party valuator, BBK, Inc. determined
the purchase price. Yet, aside from the purported independence
of BBK, the Debtors have failed to supply any information that
would lend support to the conclusion that BBK is qualified to
perform a competent valuation of the DNN Interests. "The fact
that the Debtors and their controlling shareholder, NKK, chose
BBK without any creditor input also raises questions about
whether BBK truly was "independent" in valuing the DNN
Interests," Mr. Schwartz adds.
Mr. Schwartz tells the Court that the Debtors did not offer
creditors the opportunity to view any valuation work done by
BBK. The Debtors instead ask their creditors and this Court to
rely on the naked assertion that the sale price for the DNN
Interests is reasonable. "This Court and other parties-in-
interest require time and more information to assess the
adequacy of the price and the merit of the proposed sale of the
DNN Interests," Mr. Schwartz asserts.
Of equal significance, Mr. Schwartz notes, the Debtors have
failed to provide any of the terms and conditions of the
contemplated "arrangement" with NKK regarding the prospect for
further processing of steel at the DNN Facility. "Without that
showing, the Debtors cannot demonstrate that the sale amounts to
a proper exercise of their business judgment," Mr. Schwartz
adds. Indeed, all of the Debtors' creditors know, the Debtors
could have reached a similar, if not superior arrangement with
Dofasco.
Accordingly, Marubeni asks the Court to deny the Debtors'
proposed sale of their DNN Interests to NKK Corporation without
giving parties-in-interest and this Court more time and
information to determine the validity of the sale. (National
Steel Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DebtTraders says National Steel Corp.'s 9.875% bonds due 2009
(NSUS09USR1) are quoted at a price of 36. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NSUS09USR1
for real-time bond pricing.
NATIONSRENT: Committee Wins Nod to Hire Traxi as Fin'l Advisors
---------------------------------------------------------------
Judge Walsh allows the Official Committee of Unsecured Creditors
to retain and employ Traxi LLC as Financial Advisors and
Investment Bankers in NationsRent Inc., and its debtor-
affiliates' Chapter 11 cases, effective as of May 1. However,
Traxi will not be entitled to allowance of a Transaction Fee
based exclusively upon the confirmation of a plan for the
Debtors' liquidation.
Traxi replaces Berenson Minella & Company whose retention was
terminated effective as of April 30, 2002.
Traxi will provide the same services as Berenson Minella
including:
A. providing expert testimony on the results of the committee's
and Traxi's findings;
B. analyzing potential divestures of the Debtors' operations;
and,
C. assisting the Committee in developing alternative plans,
including contacting potential plan sponsors, if applicable.
Traxi will be paid a fixed monthly rate of $75,000 beginning
May 1, 2002. The firm will also be allowed a success fee of 1%
of the value attained by the Unsecured Creditors pursuant to a
Plan of Reorganization or Liquidation and reimbursement of
reasonable put-of-pocket expenses and other fees incurred.
(NationsRent Bankruptcy News, Issue No. 15; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
NETWORK ACCESS: Asks Court to Appoint BSI as Claims Agents
----------------------------------------------------------
Network Access Solutions Corporation and NASOP, Inc., ask the
U.S. Bankruptcy Court for the District of Delaware to appoint
Bankruptcy Services LLC as official noticing, claims,
solicitation and balloting agent.
The Debtors want BSI to, among other things, assume full
responsibility for the distribution of notices and proofs of
claim, and the maintenance, processing and docketing of proofs
of claim, as well as soliciting and tabulating acceptances and
rejections of any plan of reorganization filed by the Debtors.
BSI is expected to:
a. notify all potential claimants of the existence of their
claims;
b. notify all potential claimants of the amount of their
respective claims, as established by the Debtors'
records;
c. docket all claims received by the Clerk's Office and by
BSI, maintain the official claims register on behalf of
the Clerk of the Court and provide to the Clerk a
duplicate thereof on a monthly basis;
d. upon completion of the docketing process for all claims
received to date by the Clerk's Office, turn over to the
Clerk a copy of the claims register for the Clerk's
review;
e. specify in the claims register for each claim docketed:
i) the claim number assigned,
ii) the date received,
iii) the name and address of the claimant or agent, and
iv) the amount and classification of the claim asserted
by each claimant;
f. maintain the mailing list of all entities that have
filed proofs of claim, which list shall be available
upon request of any party in interest or the Clerk;
g. provide services relating to the solicitation of
acceptances and rejections of any plan of reorganization
filed by the Debtors; and
h. perform any other services requested by the Clerk's
Office or the Debtors in connection with processing
claims, providing notice to known creditors, and
solicitation and/or balloting activities.
BSI's professional fees are:
Kathy Gerber $195 per hour
Senior Consultants $175 per hour
Programmer $125 - $150 per hour
Associate $125 per hour
Data Entry/Clerical $40 - $60 per hour
Network Access Solutions Corporation, provider of broadband
network solutions and internet service to business customers,
filed for chapter 11 protection on June 4, 2002. Bradford J.
Sandler, Esq. at Adelman Lavine Gold and Levin, PC represent the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $58,221,000 in
assets and $84,946,000 in debts.
NEWPOWER: Gets OK to Sell Customer Portfolio to Winning Bidders
---------------------------------------------------------------
NewPower Holdings, Inc. (Pink Sheets: NWPW), parent of The New
Power Company, announced that pursuant to previously approved
sale and bidding procedures, the United States Bankruptcy Court
for the Northern District of Georgia approved the sale of
NewPower's customer portfolios to the successful bidders.
The sale of NewPower's natural gas customers in Georgia to
Southern Company will proceed as previously announced.
Substantially all of NewPower's natural gas customers in Ohio
and Pennsylvania will be sold to Energy America LLC, a
subsidiary of Centrica plc, whose bid exceeded that of the
previously announced asset purchase agreement with Vectren
Source. In addition, Dominion Retail, Inc., and Interstate Gas
Supply, Inc., were also successful bidders for some of
NewPower's remaining natural gas and electric customers in Ohio,
Pennsylvania and Michigan.
The Bankruptcy Court further approved the turn back of customers
not subject to these transactions to local utilities or the
Provider of Last Resort as appropriate.
NewPower Holdings, Inc., through The New Power Company, is the
first national provider of electricity and natural gas to
residential and small commercial customers in the United States.
The Company offers consumers in restructured retail energy
markets competitive energy prices, pricing choices, improved
customer service and other innovative products, services and
incentives.
NEWPOWER: Energy America Agrees to Acquire Customers for $8.25MM
----------------------------------------------------------------
Centrica plc announced that, following approval of the United
States Bankruptcy Court for the Northern District of Georgia,
its wholly owned subsidiary Energy America, LLC., has agreed to
acquire the gas customers of New Power Holdings, Inc., and its
subsidiaries (NewPower) in Ohio and Pennsylvania for an
estimated consideration of U.S. $8.25 million, subject to a
price adjustment as detailed below. NewPower currently has
around 215,000 gas customers in these markets.
Energy America has also agreed to acquire other specified assets
including gas inventory and certain computer systems relating to
the customers being acquired, which at June 27, 2002 had an
estimated value at completion of $13.6 million.
The price that will ultimately be paid to NewPower is subject to
an adjustment for any shortfall in customers and the projected
forward price curves for gas between 13 June and completion, and
to certain other adjustments. The transaction is also subject to
approvals by regulatory agencies.
"We are pleased to have reached this agreement to acquire
additional customers in key U.S. markets in which we already
operate," said Deryk King, president and chief executive officer
of Centrica's North American operations. "This is an excellent
outcome for these customers who will see no interruption in
service and have the assurance of a financially strong reliable
supplier that is committed to customer service and here for the
long-term. We look forward to a enduring relationship with these
new customers and our existing Ohio and Pennsylvania customers."
Energy America, said it will honor the existing contracts of
NewPower's 215,000 gas customers in Ohio and Pennsylvania, with
no interruption in service.
Notes:
1. Centrica announced on 25 February, that it had signed an
agreement to acquire NewPower Holdings, Inc. through a tender
offer for all of NewPower's outstanding shares. Completion was
subject to approval of the bankruptcy court overseeing Enron's
Chapter 11 bankruptcy proceedings of the settlement of certain
liabilities between NewPower and Enron, the termination of inter
company agreements and the issuance of an injunction restraining
third parties from making claims against New Power in respect of
Enron-related liabilities subject to certain conditions.
2. On 28 March, following Enron's failure to obtain from
the bankruptcy court an order prohibiting claims of third
parties with respect to potential Enron-related liabilities,
Centrica informed NewPower that it had decided not to waive the
applicable condition to Centrica's obligation to purchase
NewPower shares in the tender offer. Accordingly, Centrica and
NewPower agreed to terminate their merger agreement.
3. NewPower filed for Chapter 11 Bankruptcy protection on
11 June, and accordingly the sale process was administered under
the relevant sections of the Bankruptcy Code.
4. Current customer details are as follows:
Market Est. Total # Est Avg AnnualEst. Avg. Annual
Customers Volume (DTh) Bill(1)
Residential Commercial
Columbia Gas of Ohio 159,155 120 307 $825
East Ohio Gas Co 14,588 118 451 $651
Columbia Gas of Pennsylvania 43,852 125 222 $725
Total 217,595
(1) Estimated annual bill includes commodity portion
only.
5. Over 70 per cent of customers are on fixed contracts.
6. The acquisition of the NewPower customer base provides
an opportunity for the Energy Management Group to build on its
current efforts in similar area programs. We are very
comfortable and envision no hurdles in securing reliable
wholesale supply that adheres to our internal counterparty
exposure and risk policies.
7. Post completion, customers will be migrated to the
Energy America brand.
NOVAMED EYECARE: Fails to Meet Nasdaq Listing Requirements
----------------------------------------------------------
NovaMed Eyecare, Inc. (Nasdaq: NOVA), announced that on July 8,
2002 it received formal notification from Nasdaq that the
company's common stock will be delisted from The Nasdaq National
Market because the company did not comply with Nasdaq's minimum
bid price requirements. Specifically, NovaMed did not comply
with Marketplace Rule 4450(a)(5) when the bid price of the
company's common stock closed at less than $1.00 per share for
30 consecutive trading days. After receiving initial
notification from Nasdaq on April 3, 2002, the company was not
able to regain compliance in accordance with Marketplace Rule
4450(e)(2) during the 90-day period ending July 2, 2002.
NovaMed will appeal Nasdaq's delisting determination by
requesting a hearing before a Nasdaq Listing Qualifications
Panel. The delisting proceedings will be stayed and the
company's common stock will continue to be listed on The Nasdaq
National Market pending resolution of this appeal. There can be
no assurance that the Panel will grant the company's request for
continued listing on the National Market.
If NovaMed's appeal is unsuccessful, the company intends to
apply to transfer its common stock to The Nasdaq SmallCap
Market. Although there can be no assurances that it will do so,
if Nasdaq approves the transfer to the SmallCap Market, shares
of NovaMed common stock would continue to be listed under their
existing ticker symbol, NOVA. As with The Nasdaq National
Market, the SmallCap Market requires listed companies to have a
minimum closing bid price of $1.00 per share. On the SmallCap
Market, however, NovaMed would be eligible for an additional 90-
day grace period ending September 30, 2002, to achieve
compliance with the minimum closing bid price requirements. The
company believes that it may also be eligible for an additional
180-day grace period beyond that initial SmallCap Market 90-day
period. If NovaMed is successful in qualifying for the
additional 180-day grace period, the company will have until
March 31, 2003, to achieve compliance with the minimum closing
bid price requirements. If during these SmallCap Market grace
periods the closing bid price of NovaMed's common stock is $1.00
per share or more for 30 consecutive trading days, then the
company will have regained compliance with Nasdaq's minimum bid
price requirements and may also be eligible to transfer its
common stock back to The Nasdaq National Market.
NovaMed is one of the nation's leading owners and operators of
practice-based, single specialty ambulatory surgery centers. It
currently owns and operates 15 ambulatory surgery centers and 13
laser vision correction centers and fixed-site laser services
agreements. NovaMed's executive offices are located in Chicago,
Illinois.
ORYX TECHNOLOGY: Auditors Express Going Concern Doubt
-----------------------------------------------------
Oryx Technology Corporation (Nasdaq:ORYX), a technology
licensing, investment and management services company, announced
a net loss attributable to common stock of $447,000 on revenues
of $56,000 for the first quarter ended May 31, 2002. This
compares to a net loss attributable to common stock of $387,000
on revenues of $118,000 for the first quarter ended May 31,
2001. The net loss for the first quarter of this year includes a
loss of $218,000 for Company's pro-rata share of its investment
in S2 Technologies compared to a loss of $151,000 for the first
quarter of last year.
Phil Micciche, President and Chief Executive Officer of Oryx,
said, "Our SurgX technology licensees continue to report
incremental growth in product shipments. During the quarter
ended May 31st, IRISO, our licensee in Japan, reported shipping
over 5 million SurgX units to its customers. In the month of
May, IRISO shipped 2 million SurgX units, achieving a new record
for monthly shipments of SurgX units. We find this increasing
momentum encouraging. However, IRISO cautions us that future
month-to-month shipment levels may not reflect such significant
growth comparisons because of the current economic climate in
Japan.
"Cooper Electronics, our other SurgX licensee, is currently
shipping over 2 million SurgX units a month. Cooper expects
monthly shipments to increase to approximately 3 million in late
summer and close to 6 million by calendar year-end. We continue
to support Cooper Electronics in their efforts to broaden
adoption of our SurgX technology and are currently focused on
improving the technology's electrical performance. Because of
SurgX's competitive advantages of low capacitance and bi-
directional capability, a number of other manufacturers have
expressed an interest in licensing this technology. We expect to
leverage this increased interest into SurgX licensing agreements
with additional licensees, especially as the technology' s
electrical performance improves. Our goal is to have one or more
additional licensing agreements in place by December 2002."
Commenting on Oryx Ventures and its investment in S2
Technologies, an early stage developer of test and integration
software solutions for embedded systems, Micciche said, "We
continue to be very excited about the prospects for S2's
STRIDE(TM) technology. We just returned from Europe where we
joined S2 in successful meetings with two multi-national high-
technology companies. These industry-leading OEMs showed a great
deal of interest in S2's technology and are set to begin pilot
programs for S2's product. In addition, reflecting the
reliability and strategic advantages of STRIDE(TM) S2 just
received its first commercial order from its current Beta
customer. We are pleased with the increasing customer excitement
about this technology, and we will continue to provide S2 with
strategic counseling and management support."
Regarding Oryx's current capital structure, Micciche stated, "In
May we announced that because of the uncertainty of our future
revenues and cash flows, our independent accountants expressed
their concern about the viability of Oryx as an ongoing business
and as a result, the audit opinion included in our Form 10-KSB
for the year ended February 28, 2002 included a going concern
qualification. We also noted that it was likely that in future
periods Oryx will fail to meet Nasdaq's stockholders' equity
requirement for continued listing of Oryx's common stock on The
Nasdaq SmallCap Market unless we raise additional equity. At our
most recent Board of Directors meeting, the Board decided that
an offering of Oryx common stock at current prices would be too
dilutive to current stockholders and that Oryx would not, at
this time, pursue additional equity financing to ensure its
continued listing on The Nasdaq SmallCap Market. If Oryx's
common stock is delisted from Nasdaq, trading in Oryx common
stock would move to the OTC Bulletin Board." For further
information regarding the OTC Bulletin Board, please refer to
their Web site at http://www.otcbb.com
"At the meeting, the Board did, however, confirm its commitment
to raise the necessary financing to sustain Oryx as a going
concern. The Board believes the value proposition of both SurgX
technology and S2 Technologies represent significant long-term
opportunities to enhance stockholder value and are committed to
helping ensure Oryx's business success."
Headquartered in San Jose, California, Oryx Technology Corp. is
a technology licensing, investment and management service
company with a proprietary portfolio of high technology products
in surge protection. Oryx also provides management services to
early-stage technology companies through its affiliate, Oryx
Ventures, LLC. Oryx's common stock trades on The Nasdaq SmallCap
Market under the symbol ORYX.
PLANVISTA CORP: Reports Improved Results for Second Quarter
-----------------------------------------------------------
PlanVista Corporation (NYSE:PVC) announced that its net income
for the quarter ended June 30, 2002 grew to $1.2 million,
compared to a net loss of $4.0 million during the second quarter
of 2001.
Financial Results
The Company reported operating revenue of $8.5 million in the
second quarter of 2002, compared to $7.9 million during the
first quarter of 2002 and $8.9 million for the same period in
2001. Second quarter net income totaled $1.2 million, compared
to net income of $0.7 million during the first quarter of 2002
and a net loss of $4.0 million during the second quarter of
2001. Costs associated with the new credit facility and debt
restructuring totaled $0.4 million and are included in second
quarter interest expense.
Business Highlights
PlanVista sold 67 new accounts in the second quarter, which
generated approximately $0.5 million in revenue during the
quarter. New accounts signed through June 30, 2002 total 228,
which accounted for $2.1 million of revenue during the second
quarter.
In addition to the new business signed during the second
quarter, the Company recently agreed on an alliance with
National Care Network to provide medical claim fee negotiation
services on behalf of PlanVista customers, which enhances such
customers' medical claim savings.
PlanVista established a new claim processing record of 921,000
claims during the second quarter, which exceeded the record set
in the first quarter of 2002 by 7,400 claims. On a year-to-year
comparison, 2002 Q2 claim volume grew by 172,000 claims, or 23%
over the same period in 2001. The Company set a new monthly
claim processing record in May 2002 of 334,000 claims, exceeding
the previous record by 19,000 claims.
The Company's ClaimPassXL internet repricing system contributed
$2.7 million in revenue in the second quarter, or 31.7% of the
Company's total revenue. Through June 30, 2002, the Company's
internet revenue was $5.1 million, compared to $5.5 million for
the entire calendar year 2001. Second quarter internet claim
volume of 147,000 claims established a new quarterly record and
represented an increase of 35.4% over Q1 2002 volume.
The PayerServ and PlanServ business units continue to drive the
Company's product diversification strategy. Included in these
product offerings are network and data management, data
conversion, electronic repricing, and hospital bill negotiation.
Through June 30, 2002, the new business units have generated
$0.7 million in revenue, or 4.3% of the Company's total revenue
for that period.
New Credit Facility and Debt Restructuring
On April 12, 2002, the Company closed the transaction involving
its new credit facility and debt restructuring. The credit
facility, which has a term of two years and is subject to
interest at a variable rate, generally prime plus 1%, is a term
loan in the amount of $40 million, with nominal quarterly
amortization of principal that commenced in June 2002. In
connection with the transaction, the Company exchanged
approximately $29 million of bank debt for equity in the form of
convertible preferred securities that cannot be converted until
October 12, 2003. In addition, an existing non-bank subordinated
note in the amount of $5 million was automatically converted
into common equity, as was approximately $1.5 million of other
subordinated debt. In total, the Company's debt is nearly one-
half of its debt at year end 2001.
In connection with this new credit facility and debt
restructuring, the Company was required to adopt the accounting
principles prescribed by Emerging Issues Task Force No. 00-27,
Application of Issue No. 98-5 to Certain Convertible
Instruments. In accordance with the accounting requirements of
EITF 00-27, the Company has reflected approximately $14.1
million as an increase to the carrying value of the convertible
preferred securities with a comparable reduction to its
additional paid-in capital. The amount accreted to the
convertible preferred securities is calculated based on (a) the
difference between the closing price of the Company's common
stock on April 12, 2002 and the conversion price per share
available to the holders of the convertible preferred
securities, multiplied by (b) the number of shares of common
stock that will be issued if the convertible preferred shares
are ever converted. (Such shares cannot be converted at any time
prior to October 12, 2003.) This amount is accreted over the
contractual life of the convertible preferred securities. This
non-cash transaction does not affect the Company's net income
but does impact the net income deemed available to common
stockholders for reporting purposes in the second quarter of
2002. Net income per share available to the holders of the
Company's common stock in the second quarter of 2002 was further
reduced by a preferred stock dividend totaling $0.6 million
payable on the convertible preferred securities issued in
connection with the new credit facility and debt restructure.
For the second quarter of 2002, this results in a deemed loss
per share applicable to common stockholders of $0.78.
Outlook
According to PlanVista Chairman and Chief Executive Officer
Phillip S. Dingle, "After several quarters of flat revenue that
we believe was attributable to our balance sheet and the delay
in closing our new credit facility, we are returning to
historical growth patterns. Moreover, because of the operating
leverage in our business model, our revenue growth translates
disproportionately to our bottom line. Approximately 79% of our
revenue growth between our first and second quarters of this
year dropped to operating income. Revenue is clearly our key to
the future."
The Company's 2002 strategy is to expand its business through
internal growth, technology development, and diversification of
product offerings through PayerServ, PlanServ, and other
initiatives currently under development. The Company expects
continued revenue growth during 2002.
PlanVista Solutions is a leading health care technology and
product development company, providing medical cost containment
for health care payers and providers through one of the nation's
largest independently owned full-service preferred provider
organizations. PlanVista Solutions provides network access,
electronic claims repricing, and claims and data management
services to health care payers and provider networks throughout
the United States. Visit the Company's Web site at
http://www.planvista.com
As previously reported, PlanVista's March 31, 2002, balance
sheet shows a total shareholders' equity deficit of about $50
million.
PSINET INC: NTFC Wants Prompt Payment of Admin. Expense Claim
-------------------------------------------------------------
NTFC Capital Corporation tells the Court that on May 1 and May
29, 2001, within one month before the petition date of May 31,
2001, that PSINet failed or refused to pay the periodic amounts
due to NTFC under the NTFC equipment Leases. NTFC has received
no payments under the NTFC Equipment leases since the
commencement of the PSINet Chapter 11 cases.
The Equipment is covered by two master leases and six lease
schedules. These were entered by Nortel Networks Inc., as
lessor, and PSINet Inc., as lessee. Nortel's interests under the
NTFC Leases and lease schedules were assigned to NTFC. In an
adversary proceeding in the cases, the Court has ruled that the
NTFC Leases constitute financing transactions.
The aggregate amount payable under the NTFC Leases is equal to
$3,051,924.12 each month, excluding taxes, NTFC tells the Court.
In light of this, NTFC asserts an administrative expense
priority claim for PSINet's postpetition use of the NTFC
Equipment. This is equal to the aggregate amounts provided for
under the NTFC Leases for the period since the Petition Date.
NTFC submits that it is entitled to this administrative expense
claim in view of PSINet's postpetition use of NTFC's collateral,
high-technology telecommunications equipment.
In this regard, NTFC draws the Court's attention to Section
507(a) of the Bankruptcy Code which provides for allowed
administrative expenses, including the actual, necessary costs
and expenses of preserving the estate, including wages,
salaries, or commissions for services rendered after the
commencement of the case. 11 U.S.C. Sec. 503(b)(1)(A). To
determine whether a claim is entitled to administrative expense
priority, the United States Second Circuit Court of Appeals has
adopted a two-pronged test set. In order for a claim to receive
administrative expense priority treatment, the obligation must
arise from a transaction between the creditor and the debtor in
possession, and the consideration supporting this obligation
must be beneficial to the debtor in possession in the operation
of its business.
In the present case, the Equipment is comprised of sophisticated
Nortel optical equipment, including lasers, amplifiers and
regenerators. The Equipment was used by PSINet postpetition to
transport data through pulses of light along its fiber optic
network, NTFC tells the Court. NTFC asserts that under these
circumstances, its administrative expense priority claim
satisfies the second prong of the Mammoth Mart test because the
NTFC Equipment was utilized by PSINet postpetition in the
operation of its business. As to the first prong of the Mammoth
Mart test, NTFC asserts that performance on a contract not
rejected by the debtor in possession satisfies the test.
Based on these, NTFC requests the Court to allow it an
administrative expense priority claim equal to the aggregate
amounts provided for under the NTFC Leases for the period since
the Petition Date, and to compel the immediate payment of this
claim. (PSINet Bankruptcy News, Issue No. 26; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
QSERVE COMMS: Committee Signing-Up Niewald Waldeck as Counsel
-------------------------------------------------------------
The Official Committee of Unsecured Creditors of qSERVE
Communications, Inc., seeks authority from the U.S. Bankruptcy
Court for the Western District of Missouri to employ Niewald,
Waldeck & Brown, a Professional Corporation, as its counsel in
the Debtor's chapter 11 proceeding.
The Committee informs the Court that Niewald Waldeck has
extensive experience in Chapter 11 bankruptcy proceedings, and
in corporate, litigation, securities, tax, real estate and
solvency matters, particularly as those matters relate to
entities, like the Debtor, engaged in the communication tower
industry. Niewald Waldeck is also familiar with complex
bankruptcy cases like qServe's, and is qualified to represent
the interests of the Unsecured Creditors' Committee in this
matter.
As counsel to the Committee, Niewald Waldeck is expected to:
a) advise the Unsecured Creditors' Committee with respect
to its rights, duties and powers as an official
committee of the unsecured creditors;
b) advise the Unsecured Creditors' Committee with respect
to the terms, conditions and documentation of financing
agreements, cash collateral orders and related
transactions;
c) represent the Unsecured Creditors' Committee in matters
involving contests with the Debtor, alleged secured
creditors and other third parties;
d) investigate and advise the Unsecured Creditors'
Committee with respect to the taking of such actions as
may be necessary to collect and, in accordance with
applicable law, recover property for the benefit of the
estate;
e) prepare on behalf of the Unsecured Creditors' Committee
such applications, motions, pleadings, orders, notices,
schedules and other documents as may be necessary and
appropriate, and to review the financial and other
reports to be filed herein;
f) advise the Unsecured Creditors' Committee concerning and
to prepare responses to applications, motions,
pleadings, notices and other documentation which may be
filed and served herein;
g) investigate the acts, conduct, assets, liabilities, and
financial condition of the Debtor, the operations of the
Debtor's business and the desirability of the
continuance of such business and to advise the Committee
regarding the same;
h) counsel the Committee in connection with the
formulation, negotiation and promulgation of a plan of
reorganization and related documents; and
i) perform such other legal services for and on behalf of
the Committee as may be necessary or appropriate in the
administration of this case.
The Niewald Brown lawyers and paraprofessionals expected to have
primary responsibility for providing services to the Committee,
and their hourly rates, are:
Frank Wendt shareholder $180
Vincent F. O'Flaherty shareholder $180
Greer S. Lang associate $130
Kyle Hommes paralegal $70
qServe Communications, Inc., is an engineering and construction
firm serving the wireless and broadband industries offering
management, installation, erection, inspection, testing and
maintenance services to the communications industry. The Company
filed for chapter 11 protection on June 21, 2002. John Joseph
Cruciani, Esq. at Lentz & Clark, PA represents the Debtor in its
restructuring efforts. When the Company filed for protection
from its creditors, it listed an estimated debt of over $10
million.
R&S TRUCK BODY: UST Will Convene Creditors' Meeting on Sept. 26
---------------------------------------------------------------
The United States Trustee will convene a meeting of R&S Truck
Body Company, Inc.'s creditors on September 26, 2002 at 1:00
p.m., Office of the United States Trustee, 80 Broad Street,
Second Floor, New York, NY 100004-1408. This is the first
meeting of creditors required under 11 U.S.C. Sec. 341(a) in all
bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
R&S is a wholly-owned subsidiary of Barclay Investments, Inc.,
which is a wholly owned subsidiary of Standard Automotive
Corporation, both of which filed for Chapter 11 relief on March
19, 2002. R&S designs, manufactures and sells customized, high
end, steel and aluminum dump truck bodies, platform bodies,
custom large dump trailers, specialized truck suspension systems
and related products and parts. The Company filed for chapter 11
protection on June 3, 2002. J. Andrew Rahl Jr., Esq., at
Anderson Kill & Olick, P.C., represent the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $27,093,513 in assets and
$6,999,464 in debts.
RAZORFISH: Terminates Arthur Andersen's Engagement as Auditors
--------------------------------------------------------------
Effective July 1, 2002, Razorfish, Inc., dismissed Arthur
Andersen LLP, as the Company's independent public accountants.
The decision to dismiss Arthur Andersen was recommended and
approved by the Board of Directors of the Company and its Audit
Committee.
Founded in 1995, Razorfish is a digital solutions provider that
helps leading companies generate competitive value by leveraging
the power of digital technology. From strategy and design to
system integration, Razorfish provides clients with
opportunities to increase their return on investment, enhance
productivity, and maximize the value of their relationships with
customers, employees, and partners.
At March 31, 2002, Razorfish's balance sheet shows a total
shareholders' equity deficit of about $3.3 million.
RESORT AT SUMMERLIN: Has Until August 31 to Use Cash Collateral
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District Of Nevada granted The
Resort at Summerlin, LP, and The Resort at Summerlin, Inc.'s
application to extend use of their secured Lender's cash
collateral. The Debtors are allowed to continue using the Cash
Collateral through August 31, 2002.
The Debtors will use the Cash Collateral on terms and conditions
stipulated in certain Post-Petition Loan Documents. The Debtors
are authorized to use the Cash Collateral to operate their
business, subject to these monthly caps:
May $428,289
June $202,482
July $143,317
August $138,567
Sep - May $351,467
----------
Total $1,264,121
The Cash Collateral shall be available to pay all fees and
expenses incurred by any professionals retained by the Agents or
any Lender. The Agent shall advance monthly funds to the Debtors
sufficient to cover the Debtors' projected operating expenses as
set forth in the Budget.
The Resort at Summerlin Limited Partnership owns and operates
the Regent Las Vegas, a Mediterranean-style luxury hotel, casino
and spa complex. The Company filed for chapter 11 protection on
November 21, 2000. Eric J. Schreiner, Esq. and Eve H. Karasik,
Esq. represent the Debtors in their restructuring efforts.
SPECTRASITE HOLDINGS: Tender Offers for Several Notes Expire
------------------------------------------------------------
SpectraSite Holdings, Inc. (Nasdaq:SITE), announced that its
tender offers to purchase a portion of its outstanding 10.75%
Senior Notes due 2010, 12.50% Senior Notes due 2010, 12.00%
Senior Discount Notes due 2008, 11.25% Senior Discount Notes due
2009 and 12.875% Senior Discount Notes due 2010 expired Friday,
July 12, 2002, at 5:00 p.m., New York City time.
The Company no longer purchases any Notes pursuant to the tender
offers because the conditions for the consummation of the tender
offers were not satisfied. All tendered Notes were expected to
be promptly returned to the record holders.
As previously reported, certain holders of the Notes have filed
a complaint alleging that the tender offers and the transactions
contemplated in connection with the tender offers, including the
funding for the tender offers to be provided by Welsh, Carson,
Anderson & Stowe, violate the indentures governing the Notes as
well as the Trust Indenture Act and other securities laws and
breach fiduciary duties owed by the Company, its Board of
Directors and WCAS to holders of the Notes. Although the court
rejected the Noteholders' request to temporarily restrain the
Company from consummating the tender offers, the Company has
determined not to extend the tender offers because, among other
things, the issues raised in the lawsuit remain unresolved. The
Company will continue to vigorously defend against the action
and seek dismissal of all related claims.
SpectraSite also announced that it is terminating its private
offers to bondholders that are "Qualified Institutional Buyers"
to exchange a portion of their outstanding Notes for up to $75
million of new convertible notes. These notes were to have been
issued by SpectraSite Holdings, Inc. and SpectraSite
Intermediate Holdings, LLC, its wholly-owned subsidiary. The
exchange offers were conditioned upon the completion of the
tender offers.
SpectraSite Holdings, Inc. -- http://www.spectrasite.com--
based in Cary, North Carolina, is one of the largest wireless
tower operators in the United States. The Company also is a
leading provider of outsourced services to the wireless
communications and broadcast industries in the United States and
Canada. At March 31, 2002, SpectraSite owned or managed
approximately 20,000 sites, including 8,015 towers primarily in
the top 100 markets in the United States. SpectraSite's
customers are leading wireless communications providers and
broadcasters, including AT&T Wireless, ABC Television, Cingular,
Nextel, Paxson Communications, Sprint PCS, Verizon Wireless and
Voicestream.
* * *
As reported in Troubled Company Reporter's May 21, 2002,
edition, the corporate credit rating on SpectraSite Holdings
Inc., was lowered to 'CC' from 'B', the senior secured bank loan
rating was lowered to 'CC' from 'B+', and the senior unsecured
debt rating was lowered to 'C' from 'CCC+' on May 17, 2002,
following the company's announced debt tender offer to
repurchase portions of five of its senior unsecured note issues
at an average discount to current accreted value of about 65%.
Outlook is negative.
At that time, the corporate credit rating and the five senior
unsecured note issues affected under the tender offer were
placed on CreditWatch with negative implications, and the senior
secured bank loan and the rating on the company's 6.75% senior
convertible notes were placed on CreditWatch with developing
implications.
SPORTS CLUB: Sets Annual Shareholders' Meeting for Aug. 2, 2002
---------------------------------------------------------------
The Annual Meeting of stockholders of The Sports Club Company,
Inc. will be held on August 2, 2002, 10:00 a.m. PST, at The
Sports Club/LA, 1835 Sepulveda Boulevard, Los Angeles, CA 90025.
At the Annual Meeting, stockholders will be asked to:
1. Elect three directors for three-year terms;
2. Approve the issuance of (a) 3,500,000 shares of the
Company's common stock, $0.01 par value, upon conversion of the
Series B Convertible Preferred Stock, which was sold in March
2002 to a limited number of qualified investors, and (b) such
additional shares of common stock that may be issued (i)
pursuant to certain anti-dilution provisions of the Series B
Preferred, and (ii) upon conversion of additional shares of
Series B Preferred that may be issued to holders in lieu of cash
dividends;
3. Approve the issuance of (a) 3,333,333 shares of common
stock upon conversion of a newly-created series of convertible
Preferred Stock to be designated Series C Convertible Preferred
Stock, to be sold to a limited number of qualified investors,
and (b) such additional shares of common stock that may be
issued (i) pursuant to certain anti-dilution provisions of the
Series C Preferred, and (ii) upon conversion of additional
shares of Series C Preferred that may be issued to holders in
lieu of cash dividends; and
4. Transact any other business that may properly come before
the meeting.
Only stockholders owning shares of Company common stock and
Series B Preferred on July 8, 2002 are entitled to notice of,
and to vote at, the meeting.
The Sports Club Company (SCC) operates four sports and fitness
clubs (the Clubs) under The Sports Club/LA name in Los Angeles,
Washington D.C. and at Rockefeller Center and the Upper East
Side in New York City. The Company also operates the Sports
Club/Irvine, The Sports Club/Las Vegas and Reebok Sports
Club/NY. SCC's Clubs offer a wide range of fitness and
recreation options and amenities, and are marketed to affluent,
health-conscious individuals who desire a service-oriented club.
The Company's subsidiary, The SportsMed Company, operates
physical therapy facilities in some Clubs.
On March 31, 2002, Sports Club posted a current working capital
deficit of about $20 million.
STARBAND: Seeking Nod to Contract Friedlander Misler as Counsel
---------------------------------------------------------------
StarBand Communications Inc., seeks Court permission to retain
Friedlander Misler as counsel. The Debtor tells the U.S.
Bankruptcy Court for the District of Delaware that Friedlander
Misler will represent it in all aspects of their reorganization.
The Debtor anticipates that Friedlander Misler will:
a) advise the Debtor of its rights, powers and duties as
debtor and debtor in possession continuing to operate
and manage its respective business and property under
chapter 11 of the Bankruptcy Code;
b) prepare on behalf of the Debtors all necessary and
appropriate application, motions, draft orders, other
pleadings, notices, schedules and other documents, and
review all financial and other reports to be filed in
these chapter 11 cases;
c) advise the Debtor concerning, and prepare responses to,
applications, motions, other pleadings, notices and
other papers that may be filed and served in this
chapter 11 case;
d) advise the Debtor with respect to, and assist in the
negotiation and documentation of, financing agreement
and related transactions;
e) review the nature and validity of any liens asserted
against the Debtor's and advise the Debtor concerning
the enforceability of such liens;
f) advise the Debtor regarding their ability to initiate
actions to collect ad recover property for the benefit
of its estate;
g) counsel the Debtor in connection with the formulation,
negotiation and promulgation of a plan of reorganization
and related documents;
h) advise and assist the Debtor in connection with any
potential property dispositions;
i) advise the Debtor concerning executory contract and
unexpired lease assumptions, assumptions and assignments
and rejections and lease restructurings and
recharacterizations;
j) assist the Debtor in reviewing, estimating and resolving
claims asserted against the Debtor's estate;
k) commence and conduct any and all litigation necessary or
appropriate to asset right held by the Debtor, protect
assets of the Debtor's chapter 11 estate or otherwise
further the goal of completing the Debtor's successful
reorganization;
l) provide corporate governance, litigation and other
general nonbankruptcy services for the Debtor to the
extent requested by the Debtor; and
m) perform all other necessary or appropriate legal
services in connection with this chapter 11 case for or
on behalf of the Debtor.
Friedlander Misler will be paid for services at its customary
hourly rates:
Partners $250 to $325 per hour
Associates $190 per hour
Paralegals $90 per hour
StarBand Communications Inc., currently provides two-way,
always-on, high-speed Internet access via satellite to
residential and small office customers nationwide. The Company
filed for chapter 11 protection on May 31, 2002. Thomas G.
Macauley, Esq., at Zuckerman and Spaeder LLP represents the
Debtor in its restructuring efforts. When the Company filed for
protection form its creditors, it listed $58,072,000 in assets
and $229,537,000 in debts.
SWIFT & COMPANY: S&P Assigns BB- Corporate Credit Ratings
---------------------------------------------------------
Standard & Poor's had assigned its double-'B'-minus corporate
credit rating to beef and pork processor Swift & Company.
At the same time, Standard & Poor's assigned its double-'B'
rating to Swift's proposed $550 million senior secured credit
facilities and a single-'B'-plus rating to the company's $400
million senior unsecured notes due 2009. The company will use
the proceeds from the facilities, which include a revolving
credit facility and a term loan B, for part of its $1.2 billion
acquisition of ConAgra Foods Inc.'s (BBB+/Stable/A-2) meat
processing business. Swift is making the purchase through a new
venture led by Hicks, Muse, Tate & Furst and Booth Creek.
ConAgra will retain a 46% interest in Swift. The expected
closing date is in late July or early August of 2002.
The outlook on the Greeley, Colorado-based Swift is stable.
"The ratings reflect Swift's debt levels, which are relatively
high for a commodity-oriented protein processor with low
margins, operating in a very challenging environment," said
Standard & Poor's credit analyst Ronald Neysmith.
Standard & Poor's added, however, that these concerns are
somewhat mitigated by the firm's strong No. 3 positions in both
U.S. beef and pork processing markets. Other strengths include
the company's diverse customer base and the high barriers for
competitors entering the industry.
The credit facilities will consist of a $350 million revolving
credit facility (with a $125 million carve-out for letters of
credit maturing in 2007), and a $200 million term loan B
maturing in 2008.
Swift processes, prepares, packages and delivers fresh and
value-added beef and pork products for sale to customers in the
United States and international markets. Swift's value-added
products include moisture enhanced, seasoned, marinated and
consumer-ready meat products. Swift sells its meat products to
customers in the foodservice and international distribution
channels, as well as through retail channels and those where the
meat is further processed.
TOKHEIM CORP: Second Quarter EBITDA Plummets to $1.8 Million
------------------------------------------------------------
Tokheim Corporation (OTCBB:THMC) reported that its earnings
before merger and acquisition costs and other unusual items,
interest, depreciation and amortization (EBITDA) for the three
and six month periods ended May 31, 2002 were $1.8 and $7.5
million, respectively, compared to $7.7 and $14.6 million in the
same periods of 2001.
Net sales for the three months ended May 31, 2002 were $112.7
million compared to $121.8 million for the comparable 2001 three
month period. Customer sales for North America decreased by
20.5% to $36.0 million in 2002 from $45.2 million in 2001. This
decrease is attributable to the industry-wide decline in the
North American market. European and African customer sales for
the period grew slightly to $76.8 million in 2002 compared to
$76.6 million in 2001.
Net sales for the six months ended May 31, 2002 were $232.4
million compared to $243.0 million for the comparable 2001
period. Sales for North America decreased by 22.4% for the
period to $69.4 million in 2002 from $89.4 million in 2001.
European and African sales increased by 6.1% to $163.0 million
in 2002 from $153.7 million in 2001. This increase is
attributable to upgrade of products using the Euro currency,
unmanned station projects, as well as the strengthening of
foreign currency rates relative to the U.S. dollar.
John S. Hamilton, President and Chief Executive Officer of
Tokheim Corporation, said, "Our European operations continue to
outperform their forecast and the market in general. This
continues to be our flagship business; its value and
contribution to the overall Company are immeasurable."
"The cost reduction, emerging markets initiatives, and new
product development efforts being achieved in our North American
units are also very significant in positioning this geographic
segment for the future. Our strategies to increase penetration
of certain target customers and geographic segments are
succeeding, but they cannot compensate for the continued decline
in overall North American demand."
Cash provided from operations for the six month period ended May
31, 2002, was $11.5 million versus $0.1 million in the same
period of 2001. Hamilton said, "Our recent emphasis on
receivable and inventory reductions has realized excellent
results."
Loss applicable to common stock was $16.0 million for the three
months ended May 31, 2002, compared to a loss applicable to
common stock of $13.4 million for the same period in 2001. Loss
applicable to common stock was $24.8 million for the six months
ended May 31, 2002, compared to a loss applicable to common
stock of $25.2 million for the same period in 2001.
Merger and acquisition costs and other unusual items were $4.4
million for the six month period ended May 31, 2002, compared to
$3.0 million for the same period in 2001. The increase is due to
increased severance and lease cancellation costs from facility
closures related to ongoing cost reduction efforts in 2002.
Tokheim previously reported the details of the negotiation of an
amendment and waiver of its credit agreement with its lenders.
The Company embarked on a plan of financial restructuring based
upon disappointing results, the Company's inability to comply
with certain financial covenants and the need to restructure
future payments under its credit agreement.
Tokheim Corporation, based in Fort Wayne, Indiana, is one of the
world's largest producers of petroleum dispensing devices.
Tokheim Corporation manufactures and services electronic and
mechanical petroleum dispensing systems. These systems include
petroleum dispensers and pumps, retail automation systems (such
as point-of-sale systems), dispenser payment or "pay-at-the-
pump" terminals, replacement parts, and upgrade kits.
TRANSMATION INC: Renegotiates Terms of Credit Facility
------------------------------------------------------
Transmation, Inc. (Nasdaq: TRNS), a leading business-to-business
distributor and servicer of test, measurement and calibration
instrumentation used in industrial markets, has renegotiated the
terms of its credit facility with its senior lenders.
Transmation, which has repaid over $11 million of the credit
facility in the past year, extended the maturity date of the
credit facility. Effective Monday, July 15, 2002, the new
credit facility consists of one term loan totaling $2.9 million
and an $8.4 million revolving line of credit, of which $6.6
million has been drawn down to date. The amended credit facility
matures on August 1, 2003. The Company is continuing to pursue a
long term refinancing solution of its senior debt.
Carl S. Sassano, Transmation's President and Chief Executive
Officer, stated: "This renegotiated credit facility better
positions us to manage our liquidity and focus on growing our
business. In addition, this evidences our progress toward
restructuring our balance sheet and restoring our financial
health. We view the lenders' willingness to renegotiate the
terms of our credit facility as an endorsement of our current
business strategy."
Transmation, Inc., sells and markets test and measurement
instrumentation and calibration and repair services to a variety
of industries including life sciences, communications,
aerospace, automotive, petroleum refining, chemical
manufacturing, public utility, pharmaceutical, and pulp and
paper.
VELOCITA CORP: U.S. Trustee Appoints Official Bond Committee
------------------------------------------------------------
Pursuant to Section 1102(a)(1) of the Bankruptcy Code, U.S.
Trustee Donald Walton appoints these persons to serve on the
Official Bond Committee in Velocita Corp.'s chapter 11 cases:
1) Daniel L. Russell
Allied Capital Corporation
1919 Pennsylvania Avenue, NW
Washington, DC 20006
Tel: 202 331 2430
Fax: 202 659 2053
2) Romano Peluso
The Bank of New York
5 Penn Plaza
New York, NY 10001
Tel: 212 896 7256
3) James T. Cashman
Soros Fund Management, LLC
888 Seventh Avenue
New York, NY 1016
Tel: 212 397 5543
Fax: 212 664 0544
4) Colette Nakhoul
SW Pelham Fund LP
c/o Smith Whiley & Company
242 Trumbull Street
Hartford, Conn 06103
Tel: 860 548 2513
Fax: 860 548 2518
5) Sharon Manewitz
Teachers Insurance and
Annuity Association of America
730 Third Avenio
New York, NY 100017-3206
Tel: 212 916 5967
Fax: 212 916 6140
Robert K. Malone, Esq. at Drinker Biddle & Shanley represents
the Bond Committee in this proceeding.
Velocita Corp. is in the business of building a nationwide
broadband fiber-optic network aimed at serving communications
carriers, internet service providers, data providers, television
and video providers, as well as corporate and government
customers. The Company filed for chapter 11 protection on May
30, 2002 in the U.S. Bankruptcy Court for the District of New
Jersey. Howard S. Greenberg, Esq., Morris S. Bauer, Esq. at
Ravin Greenberg PC and Gary T. Holtzer, Esq. at Weil, Gotshal &
Manges LLP represent the Debtors in their restructuring efforts.
As of March 31, 2002, the Company listed $482,807,000 in total
assets and $827,000,000 in total debts.
WEBLINK WIRELESS: Files Amended Plan and Disclosure Statement
-------------------------------------------------------------
WebLink Wireless, Inc. (OTC Bulletin Board: WLNKQ), has reached
an agreement with creditors to restructure the Company's debt.
As a result, the Company has filed an amended plan of
reorganization and disclosure statement in its chapter 11
proceedings in the United States Bankruptcy Court for the
Northern District of Texas. The court has approved the adequacy
of the disclosure statement. The Company's secured lenders and
the Official Committee of Unsecured Creditors have announced
their support of the plan of reorganization and intention to
vote in favor of the plan.
Under the plan of reorganization, the Company will emerge from
bankruptcy with $40 million in debt. Interest on $20 million
will be payable in cash and on the other $20 million will be
payable in kind by the issuance of additional notes. All of the
cash pay notes, 89% of the PIK notes, 2,403,000 shares of common
stock of the reorganized Company and an estimated $7 million of
cash will be distributed to the Company's secured creditors. The
remaining 11% of the PIK notes, 297,000 shares of common stock
of the Company and warrants to purchase 12 million shares of
common stock will be distributed to the Company's unsecured
creditors. The warrants are expected to have an initial exercise
price of $13.64 per share, which will be increased by 9% each
year. An additional 300,000 shares of common stock of the
Company will be issued or reserved for issuance pursuant to a
management stock incentive program. The current equity holders
of the Company will receive no distributions under the plan of
reorganization.
"We are happy to reach this agreement with our creditors," said
N. Ross Buckenham, President and CEO of WebLink Wireless.
"WebLink has successfully positioned itself as a leader in the
wireless data market with strong positive cash flow. This
agreement strengthens our balance sheet and supports our
commitment to being "best in class" and a leading network
operator and supplier to strategic and business wireless data
customers. We believe there will be a great demand for wireless
data applications and services running over ReFLEX networks, and
WebLink is pleased to continue to lead the industry as it
evolves."
The Company expects to mail the disclosure statement and ballots
to creditors by July 19, 2002. Ballots must be returned by
August 16, 2002. The confirmation hearing is scheduled for
August 22, 2002 and the Company expects to emerge from
bankruptcy in September 2002.
The new, privately held WebLink Wireless will have a new, five-
member board of directors. N. Ross Buckenham will be Chairman of
the Board in addition to his position as President and Chief
Executive Officer. The secured lenders will appoint three
directors and one will be appointed by the Committee.
WebLink Wireless, Inc., a leader in the wireless data industry,
operates the largest ReFLEX network in the United States. The
Dallas-based company provides 2way wireless messaging, wireless
email, mobile Internet information, customized wireless business
solutions, telemetry and paging to more than 1.3 million
business and consumer customers. WebLink Wireless is the
preferred wireless data network provider for many of the largest
telecommunication companies in the United States who resell
services under their own brand names. WebLink's reliable
simulcast network covers approximately 90 percent of the U.S.
population and, through roaming agreements, extends throughout
most of North America. For more information on WebLink Wireless
please visit its Web site at http://www.weblinkwireless.com
WESTERN INTEGRATED: SureWest Completes $12MM Asset Acquisition
--------------------------------------------------------------
Integrated communications provider SureWest Communications
(Nasdaq:SURW) has completed the acquisition of certain assets of
Western Integrated Networks, LLC, which operated under the
"WINfirst" name. The United States Bankruptcy Court for the
District of Colorado issued an order on Wednesday authorizing
the acquisition for $12 million. SureWest will offer the bundled
high-speed Internet, cable TV and telephone services under the
SureWest Broadband name.
"The acquisition accelerates SureWest Broadband's residential-
market expansion into Sacramento and adds digital cable to our
expanding inventory of services," said Brian Strom, president
and chief executive officer, SureWest Communications. "We
instantly pass 42,000 homes at well below overbuild cost, and
are able to expand a service that already has more than five
thousand subscribers. Our aim is to become the dominant
integrated communications provider in the Sacramento region, and
this is an important step forward in that process."
WIN spent an estimated $200 million during its initial build-out
in Sacramento. The company filed a voluntary petition for
reorganization under Chapter 11 of U.S. Bankruptcy Code on March
11, 2002. SureWest signed an Asset Purchase Agreement on June 19
to acquire certain assets of Western Integrated Networks.
Strom further noted: "Even with the substantial capital
investment to date, the expansion of the network and operations
necessary to gain new customers, like any start-up operation,
will require considerable future investment. WINfirst has served
customers for only nine months, and we anticipate that during
the period of the aggressive development of the network
necessary to gain a critical mass of customers, the results from
our new venture will have a dilutive effect on the Company's
earnings. However, we believe this is a tremendous long-term
opportunity to add significantly to the approximate 200,000
customers in the Sacramento region currently receiving one or
more services from the SureWest family of companies."
Strom added, "SureWest enjoys a number of advantages versus
others that have encountered challenges in deploying these
services. We're a financially strong organization with profits,
good cash-flow and minimal debt-to-equity ratio. We have been
offering facilities-based services in this region for nearly 90
years and have operated a fiber network for more than 20 years,
which we will leverage in deploying the new digital video and
cable telephony services."
Bill DeMuth, vice president and chief technology officer, a 26-
year veteran at SureWest, led SureWest's effort to acquire WIN's
assets. According to DeMuth, critical to the acquisition is
maintaining continuity with current customers and adding new
subscribers in the neighborhoods where service is presently
available. These include the Arden/Arcade and Sierra Oaks
neighborhoods, along with North and South Natomas and
Carmichael.
"With this addition, we leapfrog cable modems to offer
integrated broadband connectivity to residents in an area of
Sacramento where we're already providing broadband to businesses
over fiber," said DeMuth. "A major advantage for customers is
that SureWest Broadband can now offer cable television, high-
speed Internet and telephone service on a single platform and
one bill, and that's efficient and effective for our customers.
We also have the capacity to bundle these with other services we
currently offer, including wireless."
DeMuth adds that SureWest anticipates that it will retain most
of WIN's approximately 150 remaining employees and will evaluate
additional needs as the service rolls out to more neighborhoods.
The asset acquisition includes a dedicated fiber coaxial cable
network that passes 42,000 homes, plus a network operations
center, a call center, video headend (the originating point for
television signals), processing and distribution equipment, and
the lease on a 180,000 square foot state-of-the-art facility
located at McClellan Business Park.
"SureWest's decision to buy these assets is good for
Sacramento," said Sacramento Mayor Heather Fargo. "This decision
helps retain jobs and provides healthy competition in the
Sacramento market."
Current service offerings feature dedicated fiber connection to
a home that provides Internet access with up to 10 megabits per
second (Mbps) of speed, substantially faster than cable modems,
DSL and other high-speed Internet access. Cable television
services feature up to 260 channels of digital video programming
coupled with interactive television including video on demand.
Customers may call 888/946-3477 for information or to have
questions answered.
"Having SureWest move deeper into the Sacramento market is
another step in the right direction for economic development,"
said Larry Booth, chairman of the Board, Sacramento Area
Commerce Trade Organization. "SureWest brings a solid record to
the region as a consistent and dependable company committed to
both residential and business customer service."
SureWest Broadband plans to expand the service into additional
Arden, Natomas, Sierra Oaks and Carmichael neighborhoods by the
end of 2004, and into Land Park, Oak Park and Del Paso Heights
by 2006.
SureWest Communications and its family of companies including
Roseville Telephone Company, SureWest Wireless, SureWest
Broadband, SureWest Internet, SureWest Directories and SureWest
Long Distance create value for customers and shareholders
through an integrated network of highly reliable advanced
communications products and services with unsurpassed customer
care. The company's principal operating subsidiary, Roseville
Telephone Company, is California's third largest
telecommunications company, and has provided telecommunications
services for nearly 90 years as the Incumbent Local Exchange
Carrier (ILEC) to the communities of Roseville, Citrus Heights,
Granite Bay, Antelope and parts of Rocklin. The company, through
its Competitive Local Exchange Carrier (CLEC) and subsidiaries,
is licensed to provide fiber optics, 39 GHz wireless, PCS
wireless, DSL, high-speed Internet access and data transport.
For more information, visit the SureWest web site at
http://www.surewest.com
* Meetings, Conferences and Seminars
------------------------------------
July 17-19, 2002
ASSOCIATION OF INSOLVENCY AND RESTRUCTURING ADVISORS
Bankruptcy Taxation Conference
Snow King Resort, Jackson Hole, WY
Contact: (541) 858-1665 Fax (541) 858-9187 or
aira@airacira.org
August 7-10, 2002
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Conference
Kiawah Island Resort, Kiawaha Island, SC
Contact: 1-703-739-0800 or http://www.abiworld.org
September 19 - 20, 2002
AMERICAN CONFERENCE INSTITUTE
Accounting and Financial Reporting
Marriott East Side New York, New York
Contact: 1-888-224-2480 or 1-877-927-1563 or
mktg@americanconference.com
September 19 - 20, 2002
AMERICAN CONFERENCE INSTITUTE
Securities Enforcement and Litigation
The Russian Tea Room Conference Facility, New York
Contact: 1-888-224-2480 or 1-877-927-1563 or
mktg@americanconference.com
September 24 - 25, 2002
AMERICAN CONFERENCE INSTITUTE
OTC Derivatives
Marriott East Side New York, New York
Contact: 1-888-224-2480 or 1-877-927-1563 or
mktg@americanconference.com
September 26-27, 2002
ALI-ABA
Corporate Mergers and Acquisitions
Marriott Marquis, New York
Contact: 1-800-CLE-NEWS
or http://www.ali-aba.org
September 30 - October 1, 2002
AMERICAN CONFERENCE INSTITUTE
Outsourcing in the Consumer Lending Industry
The Hotel Nikko, San Francisco
Contact: 1-888-224-2480 or 1-877-927-1563 or
mktg@americanconference.com
October 9-11, 2002
INSOL INTERNATIONAL
Annual Regional Conference
Beijing, China
Contact: tina@insol.ision.co.uk or
http://www.insol.org
October 24-28, 2002
TURNAROUND MANAGEMENT ASSOCIATION
Annual Conference
The Broadmoor, Colorado Springs, Colorado
Contact: 312-822-9700 or info@turnaround.org
November 21-24, 2002
COMMERCIAL LAW LEAGUE OF AMERICA
82nd Annual New York Conference
Sheraton Hotel, New York City, New York
Contact: 312-781-2000 or clla@clla.org or
http://www.clla.org/
December 2-3, 2002
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Distressed Investing 2002
The Plaza Hotel, New York City, New York
Contact: 1-800-726-2524 or fax 903-592-5168
or ram@ballistic.com
December 5-8, 2002
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
The Westin, La Paloma, Tucson, Arizona
Contact: 1-703-739-0800 or http://www.abiworld.org
April 10-13, 2003
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
Grand Hyatt, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
May 1-3, 2003 (Tentative)
ALI-ABA
Chapter 11 Business Organizations
New Orleans
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
May 8-10, 2003 (Tentative)
ALI-ABA
Fundamentals of Bankruptcy Law
Seattle
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
July 10-12, 2003
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts, Taxation,
Drafting,
Securities, and Bankruptcy
Eldorado Hotel, Santa Fe, New Mexico
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
December 3-7, 2003
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
La Quinta, La Quinta, California
Contact: 1-703-739-0800 or http://www.abiworld.org
April 15-18, 2004
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
December 2-4, 2004
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Marriott's Camelback Inn, Scottsdale, AZ
Contact: 1-703-739-0800 or http://www.abiworld.org
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via
e-mail to conferences@bankrupt.com are encouraged.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2002. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
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