/raid1/www/Hosts/bankrupt/TCR_Public/020906.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, September 6, 2002, Vol. 6, No. 177
Headlines
360NETWORKS: Canadian Court Approves Plan of Reorganization
ACTERNA CORPORATION: Implementing New Cost-Savings Initiatives
ADELPHIA COMM: Can't Complete Bankruptcy Schedules Until Dec. 23
AMERICAN AIRLINES: Traffic for August 2002 Slides-Down 9.3%
ASBESTOS CLAIMS: Look for Schedules and Statements on Sept. 19
AVAYA INC: Firms-Up Terms of $561-Million Bank Credit Facility
AVAYA INC: S&P Hatchets Credit Rating Down Two Notches to BB-
BALDWINS INDUSTRIAL: Continuing Use of Lenders' Cash Collateral
BETHLEHEM STEEL: Seeks Approval of Surplus Property Lease Plan
BRIDGE INFO: Dow Jones Asks Court to Invalidate Data Contracts
BRIGHTCUBE INC: Funds May be Insufficient to Pay Maturing Loans
BUCKHEAD AMERICA: Defaults on Certain Note Payable Obligations
BUDGET GROUP: Signs-Up Pennie and Edmonds as Special Counsel
CENTRAL EUROPEAN MEDIA: Court Postpones Ruling in Ukraine Action
CLICKS & FLICKS: Case Summary & 20 Largest Unsecured Creditors
CMS ENERGY: Fitch Ratchets Senior Unsecured Debt Down One Notch
COMDISCO INC: Judge Barliant Orders Debtor to File Status Report
CONSUMERS FINANCIAL: Issues 2.7 Million Shares to CFC Partners
CRYOLIFE INC: Fails to Comply with BofA Term Loan Covenants
DYNEGY INC: Expresses No Recommendation on Main Street's Offer
ELIZABETH ARDEN: Reports Improved Results for Second Quarter
ENCHIRA BIOTECH: Nasdaq Sets Delisting Hearing Date for Sept. 20
ENRON: Capital Wants to Sell MTBE to Nimex Int'l for $2.67 Mill.
ENVIRONMENTAL SAFEGUARDS: Applies to Delist Shares from AMEX
FALCON PRODUCTS: Posts Better Financial Results for Fiscal Q3
FLAG TELECOM: New York Court to Consider Plan on Sept. 26, 2002
FRAWLEY: Needs to Improve Cash Flows to Meet Obligations
GA EXPRESS: Independent Auditors Raise Going Concern Doubt
GENCORP INC: Fitch Affirms Certain Low-B Credit & Debt Ratings
GENCORP INC: S&P Rates $338 Mill. Secured Credit Facility at BB+
GEOWORKS CORP: Falls Below Nasdaq Continue Listing Requirements
GLIMCHER REALTY: S&P Revises Outlook on BB Corp Rating to Stable
GLOBAL CROSSING: Court Fixes September 30, 2002 Claims Bar Date
GLOBAL TECHNOVATIONS: Court Fixes September 13 Claims Bar Date
HORSEHEAD INDUSTRIES: Taps Angel & Frankel as Bankruptcy Counsel
INNOVATIVE GAMING: Fails to Maintain Nasdaq Listing Standards
ISLE OF CAPRI: Shuts Down Tunica Property's Casino Operation
IT GROUP: Court Okays Neilson Elggren as Examiner's Accountant
KAISER ALUMINUM: Asks Court to Enforce Stay Against Safety Nat'l
KAISER ALUMINUM: Board OKs $13.7M Investment in Jamaican Plant
KFX: Must Raise Additional Capital to Continue Operations
KMART CORPORATION: Brings-In Abacus Advisory as Consultant
LEADING EDGE: Independent Auditors Express Going Concern Doubt
LODGIAN: Asks Court to Approve Plan Solicitation Procedures
MARINER POST-ACUTE: Resolves Bank of New York Claim Treatment
MERRILL LYNCH: Fitch Upgrades 1996-C2 Pass-Thru Certificates
MICROFORUM INC: TSX Knocks Off Shares Effective August 29, 2002
MINDARROW SYSTEMS: Gets More Time to Meet Nasdaq Guidelines
MOODY'S CORP: Blaylock & Partners Upgrades Rating to "Buy"
MSX INTL: Weak Credit Protection Spurs S&P to Hold BB- Rating
NATIONAL AIRLINES: Inks Deleveraging $112MM Financing Package
NATIONSLINK FUNDING: Fitch Cuts Classes F to H to Low-B Ratings
NTL INC: New York Court Confirms 2nd Amended Joint Reorg. Plan
NUTRITIONAL SOURCING: Involuntary Chapter 11 Case Summary
NUTRITIONAL SOURCING: Continues to Pursue Debt Workout Plan
PACIFIC GAS: Wants to Pay $3.7MM Prepetition Project Deposits
PENN TRAFFIC: Defaults on $205 Million Secured Revolving Credit
PHOENIX GROUP: Creditors' Meeting to Convene on September 24
RAY & BERNDTSON: Chapter 11 Case Summary
RAY & BERNDTSON: Selling Assets to A.T. Kearney in Chapter 11
ROBECO CBO: S&P Keeping Watch on BB-Rated Class E Notes
SAFETY-KLEEN: Court Okays Bifferato as Debtor's Special Counsel
SCOTIABANK: Moves Argentinean Unit's Assets to Liquidation Trust
SORRENTO NETWORKS: July 31 Balance Sheet Upside-Down by $12MM
STILLWATER MINING: Near the Edge on Bank Facility Covenants
US AIRWAYS: Wins Approval to Hire Seabury as Financial Advisors
US AIRWAYS: August 2002 Revenue Passenger Miles Plummet 17.3%
U.S. STEEL: CEO Outlines Progress Under Steel Tariff Relief
UNIROYAL TECHNOLOGY: Look for Schedules and Statements on Oct. 5
USEC: Outlook Revised to Neg. on Threat of New U.S. Competition
VICWEST CORP: Talking with Sr. Lenders to Amend Credit Facility
VITESSE SEMICONDUCTOR: S&P Hatchets Corporate Credit Rating to B
WORLDCOM INC: Intends to Assume Verizon Billing Agreements
XO COMM: Wants to Assume Amended Lease for Calif. Carrier Center
* Kroll Acquires Zolfo Cooper in $153 Million Transaction
* Mark Shapiro Joins Lehman Bros. to Co-Head Restructuring Group
* BOOK REVIEW: The Phoenix Effect: Nine Revitalizing Strategies
No Business Can Do Without
*********
360NETWORKS: Canadian Court Approves Plan of Reorganization
-----------------------------------------------------------
360networks announced that the Supreme Court of British Columbia
has approved its Canadian plan of reorganization. The ruling by
Justice Tysoe is the final approval required in Canada to
implement the Canadian restructuring of 360networks and ratifies
last week's creditors' vote. Subject to confirming the U.S.
plan, which is expected to occur on October 1, 2002, 360 expects
implementation of both the Canadian and the U.S. plans in
October.
"We are very pleased that the court was supportive and approved
our plan," said Greg Maffei, president and chief executive
officer of 360networks. "We anticipate that a similar result
will occur in the U.S. on October 1st, and that both plans will
be implemented by early October."
The U.S. creditors' vote will be tabulated on September 24, 2002
and the confirmation hearing is scheduled for October 1, 2002.
360networks offers telecommunications services and network
infrastructure in North America to telecommunications and data
communications companies. The company's optical mesh fiber
network is one of the largest and most advanced on the
continent, spanning approximately 25,000 miles (40,000
kilometers) and connecting 48 major cities in Canada and the
United States.
On June 28, 2001, certain companies in the 360networks group
voluntarily filed for protection under the Canadian Companies'
Creditors Arrangement Act (CCAA) and Chapter 11 of the U.S.
Bankruptcy Code. Additional information is available at
http://www.360.net
ACTERNA CORPORATION: Implementing New Cost-Savings Initiatives
--------------------------------------------------------------
Acterna (Nasdaq: ACTR) announced new cost-savings initiatives,
including the elimination of approximately 500 positions across
its worldwide operations.
Acterna will also further reduce its operational costs by
consolidating manufacturing operations and expanding its work
with contract manufacturers. A restructuring charge of
approximately $10 million will be taken in the current fiscal
year related specifically to these actions.
"We have seen a new round of capital spending reductions
indicating that the global telecommunications industry is still
struggling to find its footing," said John Peeler, president of
Acterna Corporation. "These are very difficult decisions, but
are necessary in order to align Acterna's cost structure with
the projected growth of the industry."
Acterna's cost-savings initiatives closely follow other steps
the company recently completed to strengthen its financial
position. On August 14, Acterna closed cash tender offers for
$150 million of its outstanding 9-3/4 percent bonds. In
addition, on August 9, Acterna completed the sale of its Airshow
business unit to Rockwell Collins for $160 million in cash.
Through these two transactions, Acterna has reduced its debt by
more than $230 million and its annual interest expense by
approximately $17 million.
"We are pleased with the progress we have made to restructure
and focus the business on the industry's best growth
opportunities," added Peeler. "Our customers, including the
world's largest providers of telecommunications service for
businesses and consumers, require communications tests solutions
that accelerate the provisioning of new services and help reduce
network maintenance costs. We are committed to delivering this
value to our customers around the world."
Based in Germantown, Maryland, Acterna Corporation is the
holding company for Acterna, da Vinci Systems and Itronix.
Acterna is the world's second largest communications test and
management company. The company offers instruments, systems,
software and services used by service providers, equipment
manufacturers and enterprise users to test and optimize
performance of their optical transport, access, cable, data/IP
and wireless networks and services. da Vinci Systems designs and
markets video color correction systems to the video
postproduction industry. Itronix sells ruggedized computing
devices for field service applications to a range of industries.
Additional information on Acterna is available at
http://www.acterna.com
* * *
As reported in Troubled Company Reporter's Wednesday Edition,
Standard & Poor's Ratings Services lowered its corporate credit
rating on communications test and management company Acterna
Corp., to 'SD' (selective default) from triple-'C'-minus. At the
same time, Standard & Poor's lowered its rating on Acterna's
subordinated note to 'D' from double-'C'. The rating on the
company's senior secured credit facility remains the same at
single-'B'-minus. All ratings on Germantown, Maryland-based
Acterna are removed from CreditWatch with negative implications
where they were placed on August 9, 2002. The total debt
outstanding as of August 29, 2002, was about $870 million.
The rating actions follow the recent completion of the cash
tender offer by Acterna and CD&R Barbados for $149,570,000, the
principal amount of Acterna's outstanding 9_% senior
subordinated notes, with an aggregate purchase price of
approximately $32.9 million. CD&R Barbados is an affiliate of
equity sponsor Clayton, Dubilier & Rice Inc.
Acterna Corp.'s 9.75% bonds due 2008 (ACTR08USR1) are trading at
22 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ACTR08USR1
for real-time bond pricing.
ADELPHIA COMM: Can't Complete Bankruptcy Schedules Until Dec. 23
----------------------------------------------------------------
Since the Petition Date, Shelley C. Chapman, Esq., at Willkie
Farr & Gallagher, in New York, relates that Adelphia
Communications and its debtor-affiliates have expended
substantial efforts responding to the many exigencies and other
matters that are incident to the commencement of any Chapter 11
case. During this period, the Debtors have been called upon to
stabilize their operations, respond to numerous utility demands,
stay violations and vendor inquiries as well as negotiate and
secure a $1,500,000,000 postpetition financing facility. The
Debtors have started the process of preparing the Schedules of
Assets and Liabilities, Statements of Financial Affairs and List
of Executory Contracts and Leases. But in light of the many
competing demands, the Debtors were not yet able to complete
this process.
The Debtors contend that there is "cause" to further extend the
time to file the Schedules and the Lists in view of the facts
and circumstances of these cases. Due to the magnitude and
complexity of these cases, Ms. Chapman explains that the Debtors
have not had sufficient time to collect and assemble all the
requisite financial data and other information in order to
prepare the Schedules and the Lists for filing by September 23,
2002.
At this juncture, the Debtors estimate that a further extension
of 90 days would provide sufficient time to complete, prepare
and file the Schedules and the Lists. Accordingly, the Debtors
ask the Court to extend the time to file Schedules and Lists
through December 23, 2002, without prejudice to the Debtors'
right to seek any further extensions from this Court.
Ms. Chapman assures the Court that the Debtors will work
diligently to compile the information necessary to complete the
Schedules and the Lists. The Debtors have already begun to
review and compile certain information that will be utilized in
connection with the preparation of the Schedules and Lists. The
Debtors expect to be able to complete the preparation and filing
of the Schedules and Lists by or before the extended deadline
proposed. (Adelphia Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Adelphia Communications' 9.875% bonds due 2007 (ADEL07USR2),
DebtTraders says, are trading at 43.5 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL07USR2
for real-time bond pricing.
AMERICAN AIRLINES: Traffic for August 2002 Slides-Down 9.3%
-----------------------------------------------------------
American Airlines reported its systemwide traffic for August
declined 9.3 percent from August 2001, on a capacity decrease
of 9 percent. The system load factor was 75.7 percent, down 0.2
of a point from a year ago.
American's on-time performance, reported to the Department of
Transportation, was 83.6 percent, up 8.4 points from August
2001. The airline's completion factor -- the number of flights
flown expressed as a percentage of the number of flights
scheduled -- was 98.9 compared to 97 in August 2001.
International traffic in August was down 12.1 percent while
international capacity was down 10.8 percent. Domestic traffic
was down 8.1 percent year over year on a capacity decrease of
8.3 percent.
American boarded 9 million passengers in August, down 10.2
percent from a year ago.
* * *
As reported in Troubled Company Reporter's August 20, 2002
edition, American Airlines' net loss for the six months ended
June 30, 2002 topped $1 billion as compared to a net loss of
$489 million for the same period in 2001. American's operating
loss for the six months ended June 30, 2002 was $1,353 million,
compared to an operating loss of $713 million for the same
period in 2001. American's 2002 results continue to be
adversely impacted by the September 11, 2001 terrorist
attacks and the resulting effect on the economy and the air
transportation industry. On April 9, 2001, Trans World Airlines
LLC (TWA LLC, a wholly owned subsidiary of AMR Corporation)
purchased substantially all of the assets and assumed certain
liabilities of Trans World Airlines, Inc. Accordingly, the
operating results of TWA LLC are included in the Americans'
consolidated financial statements for the six month period ended
June 30, 2002 whereas for 2001 the results of TWA LLC were
included only for the period April 10, 2001 through June 30,
2001. All references to American Airlines, Inc. include the
operations of TWA LLC since April 10, 2001 (collectively,
American). In addition, American's 2001 results include: (i) a
$586 million charge ($368 million after-tax) related to the
writedown of the carrying value of its Fokker 100 aircraft and
related rotables in accordance with SFAS 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of", and (ii) a $45 million gain ($29 million after-
tax) from the settlement of a legal matter related to the
Company's 1999 labor disruption.
In June 2002, Standard & Poor's downgraded the credit ratings of
American, and the credit ratings of a number of other major
airlines. The long-term credit ratings of American were removed
from Standand & Poor's Credit Watch with negative implications
and were given a negative outlook. Any additional reductions
in American's credit ratings could result in increased borrowing
costs to the Company and might limit the availability of future
financing needs.
AMR Corp.'s 9% bonds due 2012 (AMR12USR1) are trading at 89
cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AMR12USR1for
real-time bond pricing.
ASBESTOS CLAIMS: Look for Schedules and Statements on Sept. 19
--------------------------------------------------------------
Asbestos Claims Management Corporation secured an extension of
time from the U.S. Bankruptcy Court for the Northern District of
Texas to file its schedules, statement of financial affairs and
statements of executory contracts. The Court gave the Debtor
until September 19, 2002, to prepare and file comprehensive
schedules and statements as required under 11 U.S.C. Sec. 521(1)
and Rule 1007 of the Federal Rules of Bankruptcy Procedure.
Asbestos Claims Management Corporation filed for chapter 11
protection on August 19, 2002 at the U.S. Bankruptcy Court for
the Northern District of Texas. Michael A. Rosenthal, Esq., and
Janet M. Weiss, Esq., at Gibson, Dunn & Crutcher represent the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors it listed debts and assets of over
$100 million.
AVAYA INC: Firms-Up Terms of $561-Million Bank Credit Facility
--------------------------------------------------------------
Avaya Inc., a leading global provider of communications networks
for businesses, completed the execution of amendments to its
existing five-year, $561 million bank credit facility, for which
the company previously received consents from its bank lenders.
Avaya Inc., designs, builds and manages communications networks
for more than one million businesses around the world, including
90 percent of the Fortune 500(R). A world leader in secure and
reliable Internet Protocol telephony systems, communications
software applications and services, Avaya is driving the
convergence of voice and data applications across IT networks,
enabling businesses large and small to leverage existing and new
networks to enhance value, improve productivity and gain
competitive advantage. For more information visit the Avaya Web
site http://www.Avaya.com
* * *
As reported in Troubled Company Reporter's August 2, 2002
edition, Standard & Poor's Ratings Services placed its Avaya
Inc., double-'B'-plus corporate credit rating on CreditWatch
with negative implications. The action reflected continuing weak
operating performance and Standard & Poor's concerns about
financial flexibility stemming from ongoing cash-based special
charges and potential covenant amendments.
Avaya, based in Basking Ridge, New Jersey, is the leading
supplier of enterprise voice communications equipment. It had
$914 million of debt outstanding as of June 30, 2002.
Avaya's announcement of earnings for the June quarter indicated
the prospect of additional softening in demand among enterprise
customers for Avaya's communications products. While Standard &
Poor's has previously stated that it expects sluggish business
conditions to persist for Avaya, sequential declines in
quarterly revenues and contracting EBITDA have resulted in debt-
protection measures that are subpar for the rating level.
AVAYA INC: S&P Hatchets Credit Rating Down Two Notches to BB-
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on enterprise communications equipment and services
provider Avaya Inc., to double-'B'-minus from double-'B'-plus,
lowered its senior secured debt rating to single-'B'-plus from
double-'B'-minus, and lowered its senior unsecured debt rating
to single-'B' from double-'B'-minus. At the same time, Standard
& Poor's removed the ratings from CreditWatch, where they were
placed on July 31, 2002. The outlook is negative.
"The rating actions reflect Standard & Poor's concern that
profitability pressures could continue along with reduced
financial flexibility stemming from diminished liquidity," said
Standard & Poor's credit analyst Joshua G. Davis. Standard &
Poor's rating affects Avaya's $914 million of outstanding debt.
Profitability pressures, driven by a significant tightening in
customer spending activity, have eroded debt-protection
measures. While revenues derived from services have remained
relatively stable, Avaya's sales of new systems and
applications, 46% of total revenues for the 12 months ended June
30, 2002, have eroded significantly in recent quarters. Systems
and applications revenues declined 28% to $2.4 billion in the 12
months ended June 30, 2002, from the 12 months ended September
30, 2001. Quarterly EBITDA has fallen to $50 million-$60 million
over the past three quarters from $120 million-$200 million in
fiscal 2001.
Risks remain that Avaya's actions to reduce costs will not be
sufficient in terms of size and timing to stem further declines
in EBITDA and that debt-protection measures will remain high for
the rating level. Avaya has responded to declining revenues by
lowering its fixed-cost base through head count reductions, real
estate consolidation, and lease termination. Annualized cost
savings from actions announced July 26, 2002, are estimated by
Avaya at $300 million annually and follow $250 million of cost
reductions taken in March 2002. Total debt to EBITDA levels have
steadily increased in recent quarters, however, reaching 5.2
times in the quarter ended June 30, 2002. Given that revenues
are likely to remain depressed over the intermediate term,
EBITDA improvements are dependent on cost reduction actions.
EBITDA recovery is necessary to restore debt protection metrics
that are more consistent with the current rating level.
Cash outlays for restructuring are expected to be $150 million
in the two quarters ending December 31, 2002, which will be
partially funded by existing cash balances. Contributions from
operating cash flows are dependent upon stabilizing revenues
and/or a reduced cost base. Access to external sources of
liquidity is also uncertain. Access to Avaya's $561 million bank
credit line, currently undrawn, is dependent upon meeting
financial covenants. Financial covenants include cumulative
four-quarter minimum bank-defined EBITDA targets, starting with
$100 million in the December 2002 quarter and increasing
thereafter. Asset disposals, including of Avaya's connectivity
business, may provide much-needed cash; however, the timing and
amount of proceeds remain uncertain. Avaya's senior secured debt
rating is now one notch below the corporate credit rating rather
than two, reflecting an improved prospect of recovery. Avaya
reduced the size of its senior secured bank facility, which has
priority over the senior secured notes, to $561 million from
$825 million in August 2002. The reduction in the size of the
bank facility has the effect of improving the prospect of
recovery for senior secured note holders. In accordance with
Standard & Poor's notching criteria, the senior secured debt
rating is assigned at 'B+,' one notch below the corporate credit
rating.
Failure to stem profitability and liquidity declines could cause
the rating to be lowered further, S&P warns.
BALDWINS INDUSTRIAL: Continuing Use of Lenders' Cash Collateral
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas
gave Baldwins Industrial Services, Inc., and Baldwin Leasing, LP
its interim approval to use their Lenders' Cash Collateral.
The Court finds that the Debtors have an immediate need to use
Cash Collateral to avoid immediate and irreparable harm to their
estates pending a final hearing. The Debtors propose adequate
protection for any interest in the Cash Collateral held by
Sterling Bank or Asset Finance Group by granting replacement
liens of equal weight and effect as the Lenders' existing liens
and by providing the Lenders with an accounting for all Cash
Collateral.
The Debtors are allowed to use the Cash Collateral until the
final hearing in strict accord with their 3-Week Cash Budget:
Week Ending
-----------
09/01/02 09/08/02 09/15/02
-------- -------- --------
Beginning Cash $ 200 $ 199 $ 270
Total Receipts 630 375 698
Total Disbursements (631) (505) (378)
Ending Cash 199 270 590
The hearing to consider final approval of the Motion and the
Debtors' permanent ability to dip into their Lenders' Cash
Collateral is scheduled on September 11, 2002 at 9:30 a.m. in
Courtroom 403, United States Courthouse, 515 Rusk Avenue,
Houston, Texas 77002.
Baldwins, one of the largest crane rental companies in the
Southwestern United States, filed for chapter 11 protection on
August 26, 2002. Jack M. Partain, Jr., Esq., at Fulbright &
Jaworksi represents the Debtors in their restructuring efforts.
When the Company filed for chapter 11 protection it listed
assets of not more than 10 million and estimated debts at not
more than 50 million.
BETHLEHEM STEEL: Seeks Approval of Surplus Property Lease Plan
--------------------------------------------------------------
Bethlehem Steel Corporation and its debtor-affiliates seek the
Court's authority to lease certain Surplus Real Property.
Harvey R. Miller, Esq., at Weil, Gotshal & Manges LLP, in New
York, relates that, in the ordinary course of their businesses,
the Debtors have analyzed and evaluated the usefulness of all of
their real property, personal property and intangible assets.
The Debtors set aside those properties that are no longer
beneficial to their businesses -- Surplus Real Property.
Thereafter, the Debtors tried to lease or market the Surplus
Real Properties. However, the Debtors' marketing efforts were
limited since:
-- the value of many parcels of Surplus Real Property was
relatively insignificant to the total value of the whole
business; and
-- the expenses from intensive marketing efforts would offset
any profits that might otherwise be realized.
In order to effect cost-efficient leasing of Surplus Real
Property, the Debtors propose to enter into lease transactions
having a total present value not exceeding $6,000,000. But,
instead of providing notices and conducting a hearing per
transaction, the Debtors want to implement certain Lease
Procedures to streamline the transaction.
According to Mr. Miller, if the Debtors were required to obtain
separate Court approval for every lease of Surplus Real
Property, it would increase administrative expenses for Court
appearances and drafting, serving and filing pleadings. The
proceeds that will be generated by the lease of Surplus Real
Property do not warrant these expenses. In addition, Mr. Miller
continues, the Debtors may face stringent time constraints in
meeting closing deadlines established by interested lessees.
The expedited Lease Procedures will permit the Debtors to be
responsive to the needs of interested lessees, thereby guarding
against lost lease revenues due to delay, while still providing
for a review of the proposed lease by the U.S. Trustee and
creditor representatives.
The salient terms of the Lease Procedures are:
(a) The Debtors will provide a notice of each proposed lease for
any Surplus Real Property if:
-- the Surplus Real Property is subject to any lien or
encumbrance, but only to the extent that the lease will
affect the encumbrance, in addition to the liens and
encumbrances held by or for the benefit of the Debtors'
postpetition or prepetition lenders under the
$320,000,000 revolving credit facility;
-- the proposed aggregate lease payments have a present
value exceeding $500,000;
The Notice Parties will include:
(i) the United States Trustee;
(ii) attorneys for the statutory creditors' committee;
(iii) attorneys for the Debtors' Lenders and;
(iv) the holder of any lien or encumbrance relating to the
Surplus Real Property proposed to be leased;
The Notices will be served by facsimile, so as to be
received by 5:00 p.m. Eastern Time on the date of service.
The Notice will specify:
1. the Surplus Real Property to be leased;
2. the identity of the lessor;
3. the identity of the lessee;
4. an estimate of the aggregate present value of the lease
payments;
5. a brief statement of the Debtors' marketing efforts with
respect to the Surplus Real Property to be leased;
6. a description and estimate of the present value of any
expenses expected to be borne by the Debtors;
7. a brief description of any contingent liabilities of the
Debtors;
8. a brief summary of any restrictions upon assignment by
the lessor; and
9. an estimate of the net present value of the lease.
The Debtors will have the right to make amendments to the
lease terms not set forth in the Notice without serving an
amended Notice on the Notice Parties;
(b) The Notice Parties will have ten days after the Notice is
served to object to the proposed lease. All objections will
be in writing and delivered to the Debtors' counsel, so as
to be actually received by 5:00 p.m. on the deadline. If no
written objection is received prior to the expiration of the
objection period, the Debtors will be authorized to take the
necessary actions to enter into the proposed lease;
(c) If a Notice Party objects to the proposed transaction within
the allowed objection period, the parties involved will use
good faith efforts to resolve the objection. However, if a
consensual resolution has not been reached, the Debtors
would not enter into the proposed lease pursuant to these
procedures, but they may seek Court approval of the proposed
lease upon notice and a hearing;
(d) The Debtors will be authorized to enter into a lease of
Surplus Real Property without providing notice to any
parties if:
-- the property in question is not subject to any lien or
encumbrance, other than an encumbrance that is not
affected by the lease, in addition to the liens or
encumbrances held by or for the benefit of the DIP
Lenders or Inventory Lenders; and
-- the proposed total lease payments have a present value of
$500,000 or less;
(e) To the extent that the entry into a lease of Surplus Real
Property will cause the present value of the aggregate lease
payments owed to the Debtors by any single entity for leases
of Surplus Real Property to exceed $6,000,000, the Debtors
may not seek authorization to enter into a lease pursuant to
the Sale Procedures; and
(f) Nothing in the foregoing procedures will prevent the
Debtors, in their sole discretion, from seeking Court
approval at any time of any proposed lease upon notice and a
hearing. (Bethlehem Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Bethlehem Steel Corporation's 10.375% bonds due 2003 (BS03USR1),
DebtTraders says, are trading at 9.5 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=BS03USR1for
real-time bond pricing.
BRIDGE INFO: Dow Jones Asks Court to Invalidate Data Contracts
--------------------------------------------------------------
Dow Jones & Co. has asked a New York Court to invalidate a
contract its former financial-data distributor, Telerate Inc.,
entered into with Cantor Fitzgerald LP and Market Data Corp.
Cantor Fitzgerald and Market Data assert that Dow Jones is
obligated to honor Telerate's contracts with them because Dow
Jones guaranteed the Telerate contracts. Market Data
and Cantor Fitzgerald are seeking $266,000,000 in damages.
Under the Contract, Dow Jones was supposed to pay $50,000,000
annually to Market Data and Cantor Fitzgerald until 2006.
Dow Jones sold Telerate Inc., to Bridge Information Systems
Inc., in 1998.
In its latest quarterly report filed with the SEC, Dow Jones
discloses that it took a $3 million charge in the second quarter
of 2002 relating to the amortization of the discount on the
contract guarantee. The first quarter of 2002 included a charge
of $3.2 million, or relating to this matter. In 2000, Dow Jones
established a reserve for the present value of the total
estimated payments through October 2006 in connection with its
guarantee of certain minimum payments for data acquired by
Telerate from Cantor Fitzgerald Securities and Market Data
Corporation. As of June 30, 2002, the balance of the reserve
for the contract guarantee was $239 million.
Bridge Information Systems, Inc., Dow Jones relates, made
payments for the data for the post-petition periods through
October 2001, when Telerate ceased operations, went out of
business, sold certain assets and rejected its contracts with
Cantor and MDC.
As previously reported, on February 20, 2001, Market Data Corp.
commenced a lawsuit against Dow Jones in the Supreme Court of
the State of New York, seeking to compel Dow Jones to pay $11.7
million, plus interest, attorneys fees and costs, that MDC
claimed was owed under the guarantee issued to MDC and Cantor
Fitzgerald Securities, together with unspecified consequential
damages that MDC claimed result from Dow Jones' failure to pay
on the guarantee. The guarantee relates to certain annual
"minimum payments" owed by Telerate for data acquired by
Telerate from Cantor Fitzgerald and MDC under contracts entered
into when Telerate was a subsidiary of Dow Jones.
In April 2001, Dow Jones paid $5.8 million to MDC covering the
period January 1 to February 14, 2001 preceding Bridge's Chapter
11 bankruptcy filing. Bridge made the payments for the post-
petition periods through the third quarter of 2001. After
certain amendments were made to the complaint, the remaining
claims in this lawsuit sought the payment of interest on the
payment made in the first quarter of 2001 and for attorneys fees
and costs in this litigation. The parties settled these claims
and this lawsuit was then withdrawn.
In October 2001, the bankruptcy court granted Bridge's motion to
reject Telerate's contracts with Cantor and MDC. Telerate has
indicated that it has ceased operations, is no longer receiving
government securities data from Cantor and MDC and will not make
further payments to Cantor and MDC.
Cantor and MDC advised Dow Jones that they would demand payment
from Dow Jones of an amount they alleged was due on November 15,
2001 under the contract guarantee as well as future amounts due
through October 2006. Dow Jones says it has various substantial
defenses to these claims.
On November 13, 2001, Dow Jones instituted a lawsuit in the
Supreme Court of the State of New York seeking a declaratory
judgment with respect to the contract guarantee and the claims
of Cantor and MDC. In this lawsuit, Dow Jones asks the court to
find that it does not and will not owe any payment under the
contract guarantee through October 2006. In the alternative,
Dow Jones asks the court to find that if any amount is owed, it
must be reduced by amounts that Cantor and MDC receive or should
have received from other distribution of the data. MDC and
Cantor have moved to dismiss Dow Jones' complaint. MDC has
asserted counterclaims demanding payment of $10,197,416
(allegedly the balance owed by Telerate on November 15, 2001),
interest, attorneys' fees, specific performance of the contract
guarantee, and a declaratory judgment as to the validity and
interpretation of the guarantee through October 2006.
Cantor also commenced a separate lawsuit in the Supreme Court of
the State of New York seeking payment of $10 million (allegedly
the balance of the November 2001 minimum payment), payment of
$250 million in breach of contract damages, specific performance
of the guarantee, a declaration that the guarantee remains in
full force and effect, payment of approximately $16 million
allegedly owed by Telerate and guaranteed by Dow Jones in the
contract guarantee for the distribution of certain other data,
attorneys' fees, interest, and other relief.
Dow Jones has moved to oppose MDC's and Cantor's motions,
claims, and counterclaims. Dow Jones asserts that it has
various substantial defenses to these claims as well. (Bridge
Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
BRIGHTCUBE INC: Funds May be Insufficient to Pay Maturing Loans
---------------------------------------------------------------
Brightcube, Inc. (formerly Data Growth, Inc., a publicly traded
shell corporation), is a developer and provider of technology,
products, services and papers for the digital printing markets,
such as the art, photographic, or reproduction markets as well
as point-of-purchase and banner materials. When combined with
the Company's complete end-to-end print-on-demand system for the
secure distribution of intellectual property, called the
"BRIGHTCUBE SOLUTION(TM)," the Company believes that it is able
to provide a single solution for the dissemination and printing
of professional quality images.
Utilizing the Company's image bank provided by premiere
publishers and artists, the BRIGHTCUBE SOLUTION consists of
proprietary hardware which receives high-resolution images over
the Internet and allows storefronts and service centers to print
these images, on-demand on high-end wide-format inkjet
printers, to produce extremely high quality fine art and open
edition prints.
Brightcube has an accumulated deficit of $30,647,500 at June 30,
2002 and incurred a net loss of $3,093,200 for the six months
ended June 30, 2002. Additionally, the Company is in violation
of a loan covenant, which has resulted in $172,500 being held as
restricted cash by City National Bank as of June 30, 2002. The
bank has another $50,300 of restricted cash to secure corporate
credit cards. Primarily as a result of recurring losses, the
Company's independent certified public accountants modified
their report on its December 31, 2001 financial statements to
include an uncertainty paragraph wherein they expressed
substantial doubt about the Company's ability to continue as a
going concern.
The Company has been actively seeking additional capital and had
estimated that its cash on hand at the end of the first quarter
2002 would be sufficient through May 24, 2002. On May 8, 2002
the Company filed a registration statement with the Securities
and Exchange Commission and expected to use the shares
registered under that filing to obtain additional financing. The
Securities and Exchange Commission staff is reviewing this
registration statement and the Company does not have any
estimate as to when to expect its effectiveness. The delay
caused by this review has caused the Company significant
problems with obtaining financing. As of August 14, 2002 and
since the May 8, 2002 filing date of the registration statement,
the Company has been able to raise approximately $200,000 in
short term borrowings with $50,000 coming from existing
shareholders. The Company has laid-off most of its remaining
employees and as of August 15, 2002 has nine remaining employees
on staff. Additionally, the Company has been forced to delay
payments to most of its vendors and defer salaries for
management. If the Company is unable to raise additional capital
almost immediately the Company may be forced to lay-off its
remaining workforce and either restructure or close the Company.
Additionally, if the Company cannot raise sufficient capital to
repay bridge loans due beginning November 2002, the Company will
be forced to issue penalty warrants for the purchase of
2,500,000 shares of common stock per month past due at an
exercise price of $0.06 up to a maximum of warrants for the
purchase of 10,000,000 common stock shares.
BUCKHEAD AMERICA: Defaults on Certain Note Payable Obligations
--------------------------------------------------------------
Buckhead America Corporation has experienced some material
changes in its financial condition. The Company had conducted
recurring operations in three segments of the limited-service
hotel industry - hotel franchising, hotel management, and hotel
operations. The Company generated additional revenues and
results of operations from hotel development and sale activities
which also include servicing notes receivable generated from
hotel sales.
During the fourth quarter of 2001, the Company adopted a plan to
discontinue its hotel management activities. During the second
quarter of 2002, the Company categorized its hotel franchising
business as held for sale. The Company completed its exit from
the hotel management business during the second quarter of 2002.
Certain continuing obligations remain, principally rent, tax
compliance, and other compliance reporting. The Company's June
30, 2002 balance sheet includes current liabilities of
approximately $350,000 relating to such obligations.
The Board of Directors has approved the sale of the Company's
hotel franchising business. The Company's June 30, 2002 balance
sheet includes deferred costs of $879,145 relating to the hotel
franchising business. Management expects proceeds from the sale
to exceed that amount, and has therefore no provision for loss.
The timing and ultimate proceeds from the anticipated sale
remain uncertain.
The Company experienced negative cash flow from operations of
approximately $1.9 million during the first half of 2002,
including approximately $415,000 relating to the Company's
discontinued hotel management and hotel franchising segments. It
also repaid approximately $530,000 of debt obligations, not
including repayments related to the sale of properties. Cash
inflows of approximately $570,000 resulted from principal
receipts on notes receivable and over $1.6 million from the sale
of hotel properties after the repayment of approximately $6.2
million of related mortgage obligations. The combined effect of
these and other activities resulted in a decrease in cash of
approximately $312,000 from December 31, 2001. The Company's
hotel operations are highly seasonal. Historically, the
Company's hotel revenues and operating profits have been
stronger during the second and third quarters as opposed to the
first and fourth quarters. Management expects this trend to
continue and believes that additional cash will be generated
from third quarter hotel operations, from additional sales of
hotel properties, and possibly from the sale of other assets.
As of December 31, 2001 the Company had 15 owned or leased
properties classified as held for sale. Seven hotel properties
were sold during the first and second quarters of 2002 and an
additional property was sold in July 2002. Two others are
presently under contract for sale. Further, three long-term
hotel leases were terminated during the first quarter . All of
the Company's remaining owned hotels are held for sale.
The Company is also exploring the possibility of selling its
notes receivable portfolio. If the Company completes the sale
of its hotel franchising business, its hotels, and its notes
receivable portfolio; virtually all of the Company's assets
will have been sold and the Company's operations, as presently
configured, will have ceased.
Liquidity and Capital Resources
The Company has suspended payment of preferred stock dividends
and has negotiated deferrals of certain note payable
obligations. The Company has significantly reduced personnel
and implemented a salary deferral program. Certain other
overhead costs have been reduced or eliminated. The combination
of these and previously discussed actions are expected to reduce
the Company's negative cash flow from operations to an amount
which management expects could be funded from continued property
sales and other sources.
Buckhead America is presently in default on certain of its note
payable obligations. Management is presently conducting
negotiations with certain of its creditors regarding the
modification of repayment terms. If such negotiations are not
successful, the Company will most likely not be able to satisfy
all its obligations as they become due.
Management is also exploring other sources of liquidity. No
assurance can be given that any of these activities will be
successful. These circumstances raise substantial doubt about
the Company's ability to continue as a going concern.
BUDGET GROUP: Signs-Up Pennie and Edmonds as Special Counsel
------------------------------------------------------------
Since May 2002, Robert L. Aprati, Budget Group Inc.'s Executive
Vice President, General Counsel and Secretary, relates that the
attorneys at Pennie & Edmonds LLP -- along with its co-counsel
Fowler White Burnett, P A., -- have represented the Debtors and
its affiliates as their local and trial counsel with regards to
an ongoing lawsuit brought by Ryder Systems Inc. involving the
Debtors' alleged unauthorized use of the Ryder TRS trademark.
Through their representation of the Debtors, the members of
Pennie have become uniquely and thoroughly familiar with the
Debtors and their business affairs. The members, counsel and
associates of Pennie who will represent the Debtors in
connection with the matters upon which Pennie is retained have
extensive knowledge and expertise in all aspects of trademark
litigation work, especially in the trial context, and the
treatment of these issues in the context of a Chapter 11
bankruptcy. Indeed, Pennie is a firm that specializes solely in
the field of intellectual property law.
Thus, the Debtors seek the Court's authority to employ and
retain Pennie & Edmonds LLP as its special trademark litigation
counsel in connection with these Chapter 11 cases.
The Debtors anticipate that Pennie will provide these services:
-- counseling, providing strategic, advice to, and
representing the Debtors in connection with the Ryder
Litigation;
-- assisting in the trial preparation and defense of the
Ryder Litigation if the case proceeds to trial;
-- rendering any other services as may be in the best
interests of the Debtors in connection with the forgoing;
and
-- providing analysis and advice to the Debtors in
formulating, developing and implementing a litigation
strategy for resolving and defending the Debtors in the
Ryder Lawsuit.
If the Debtors were forced to seek other counsel or defend the
lawsuit themselves at this stage in the litigation, Mr. Aprati
fears that the Debtors' representation in this matter would
likely be jeopardized.
As compensation for its services, Pennie will charge these
hourly billing rates:
Attorneys $500 - $215
Paraprofessionals $135
These hourly rates are subject to periodic increases in the
normal course of Pennie's business. Pennie also expects to
retain expert witnesses who will conduct an investigation of the
facts and issues in the Ryder Lawsuit, formulate and prepare
expert opinions, and provide expert testimony at trial.
Pennie & Edmonds Senior Partner Brian M. Poissant assures the
Court that the Firm, its members, counsel and associates:
-- do not represent or hold any material adverse interest to
the Debtors or their estates with respect to the matters
upon which it is to be employed; and
-- do not have any material connections with the Debtors,
their officers, affiliates, creditors, or any other
party-in-interest or their respective attorneys and
accountants, or the United States Trustee.
However, the Firm currently represents or in the past has
represented these parties in matters unrelated to these cases:
A. Lenders: Credit Suisse First Boston, Bank of America
Securities LLC, Harris Trust & Saving Bank, The Bank of New
York, The Bank of Nova Scotia, BTM Capital Corp., Deutsche
Bank, BNP Paribas, Commerzbank Aktiengesellschaft, Credit
Agricole Indosuez, Credit Lyonnais, Fleet Bank NA, Heller
Financial Inc., Comerica Bank, General Electric Capital
Corp., Merill Lynch & Co. Inc., Sumitomo Mitsui Banking
Corp., and SunTrust Bank;
B. Indenture Trustees: Deutsche Bank, JP Morgan Chase Bank,
Credit Suisse First Boston, The Bank of New York, and Wells
Fargo Bank of Minnesota N.A.;
C. Unsecured Creditors: Wells Fargo Bank of Minnesota N.A., Bear
Sterns & Co. Inc., JP Morgan Chase, Bank of New York, Credit
Suisse First Boston, Wachovia Bank N.A., Morgan Stanley & Co.
Inc., Deutsche Bank, Citibank N.A., Donaldson Lufkin &
Jenrette Securities Corp., Goldman Sachs & Co., Salomon Smith
Barney Inc., GE Capital Corp., Bank of America Securities
LLC, Computer Science Corp., Charles Schwab & Co., UBS
PaineWebber Inc., Prudential Securities Inc., and Worldspan
L.P.;
D. Major Vendors: DaimlerChrysler Corp., General Motors, and
Toyota Motor Corp.;
E. Major Insurance Carries: American International Group Inc.,
CAN Insurance Co., Lloyd's of London, ZC Specialty Insurance
Co., The Travelers Insurance Co., Fidelity & Guaranty Life
Insurance Co., and St. Paul Fire & Marine Insurance Co.;
F. Major Shareholders: Stanford Miller, and Deutsche Bank;
G. Professionals: Ernst & Young LLP, Eversheds, Jeffries & Co.,
KPMG LLP and Lazard Freres & Co.
Mr. Poissant relates that Pennie will conduct an ongoing review
of its files to ensure that no conflicts or other disqualifying
circumstances exist or arise. If any new relevant facts or
relationships are discovered, Pennie will supplement its
Application with a disclosure to the Court. (Budget Group
Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
CENTRAL EUROPEAN MEDIA: Court Postpones Ruling in Ukraine Action
----------------------------------------------------------------
Central European Media Enterprises Ltd., (OTC Bulletin Board:
CETVF.OB) announced that the Court of Cassation hearing
regarding its Ukraine operations has been postponed until a date
to be set within the next few days.
Studio 1+1, the Company's television station in Ukraine, acting
as an interested third party, had appealed a previous decision
of the Kiev (Economic) Court of Appeal, dated July 16, 2002.
The Kiev (Economic) Court of Appeal in turn had upheld a lower
court decision against Studio 1+1 in connection with the license
granted to Studio 1+1, as previously reported in the Company's
last Form 10-K and 10-Q filed with the Securities and Exchange
Commission.
Following discussions on a minor procedural issue earlier today,
the Court of Cassation postponed any discussions on the merits
of the appeal. The Court of Cassation will set a date for the
new hearing within the next few days. It is expected that the
new hearing will take place before the end of September 2002.
Central European Media Enterprises Ltd., is a TV broadcasting
company with leading stations located in Romania, Slovenia,
Slovakia and Ukraine. CME is traded on the Over the Counter
Bulletin Board under the ticker symbol "CETVF.OB".
* * *
As reported in Troubled Company Reporter's Thursday edition,
Andersen's reports on the Company's consolidated financial
statements for the year 2001 was modified on a going concern
basis since in its cash flow projections the Company was relying
on cash flows that were outside the Company management's direct
control.
CLICKS & FLICKS: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Clicks & Flicks, Inc.
49 West 23rd Street
New York, NY 10010
Type of Business: One-hour photo processing counters.
Bankruptcy Case No.: 02-14339
Chapter 11 Petition Date: September 4, 2002
Court: Southern District of New York (Manhattan)
Debtors' Counsel: Kevin J. Nash, Esq.
Finkel Goldstein Berzow Rosenbloom Nash
26 Broadway, Suite 711
New York, NY 10004
(212) 344-2929
Fax : (212) 422-6836
Estimated Assets: $1 to $10 Million
Estimated Debts: $1 to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
ProPrint Trade Debt $71,000
134 5th Avenue., LLC Trade Debt $60,294
Bantax Trade Debt $22,188
H&H Trade Debt $17,785
Staples Trade Debt $8,281
Capuder & Arnoff Trade Debt $7,530
Vista Business Trade Debt $7,000
AFCO Bank Loan $5,684
Office Express Trade Debt $4,081
Capuder, Fazio & Giacola Trade Debt $3,510
ADT Security Trade Debt $3,461
MacKay Envelope Trade Debt $3,428
State Insurance Fund Trade Debt $3,410
Bank of New York __________ $3,381
Adventaire Trade Debt $3,015
Eastman Kodak Co. Trade Debt $2,892
Ldi Color Trade Debt $2,613
Xpedx Trade Debt $2,442
Moore Store Trade Debt $1,936
AFCO Trade Debt $1,736
CMS ENERGY: Fitch Ratchets Senior Unsecured Debt Down One Notch
---------------------------------------------------------------
Fitch Ratings has downgraded 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 'B+'
from 'BB-'. The downgrades of Consumers and PEPL reflect Fitch's
notching criteria with respect to parent and subsidiary ratings.
CMS and Consumers will remain on Rating Watch Negative due to
continuing concerns surrounding CMS' weak liquidity position,
high parent debt levels and limited financial flexibility. The
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. In addition, Fitch has revised the Rating
Watch of PEPL to Evolving from Negative, reflecting the recent
announcement by CMS that it is exploring the sale of PEPL and
related assets, including CMS Field Services, Trunkline Pipeline
and the LNG facility. The Rating Watch takes into consideration
that CMS will ultimately divest of PEPL, and as such, the
ratings of PEPL will no longer be tied to those of CMS.
The revised ratings for CMS and Consumers reflect concerns
regarding projected cash constraints at each of the companies
for the remainder of the year. Consumers' operating cash flow is
forecasted to be negatively impacted over the next several
months due to high capital expenditure requirements for
environmental compliance, gas purchases made during the summer
months and a $103 million dividend to CMS in October. Consumers
is expected to spend between $230-270 million between 2002 and
2004 on environmental compliance costs, and the utility is
currently unable to recover these costs through rates due to the
rate freeze in place through December 31, 2003.
Furthermore, Consumers and CMS continue to be constrained by the
inability to access the capital markets due to CMS' need to
restate its 2000 and 2001 financial statements to eliminate the
effects of 'wash trades' with other energy companies. It is
expected that the special committee established by the Board of
Directors will complete its investigation of these 'wash trades'
in September, after which, new auditors Ernst and Young, will be
able to provide comfort letters on behalf of Consumers and PEPL,
as well as a consolidated CMS opinion. Consumers will need to
access the capital markets in order to meet its dividend payment
to CMS, as well as a $128 million of debt payments in November.
CMS relies on cash distributions from the utility to service its
debt. Alternative financing plans, including a bridge loan or
accessing the bank syndication markets, are currently being
reviewed should Consumers be unable to tap into the public debt
markets.
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
and energy marketing, services and trading.
Ratings lowered and maintained on Rating Watch Negative
CMS Energy
-- Senior unsecured debt to 'B+' from 'BB-';
-- Preferred stock/trust preferred securities to 'CCC+'
from 'B-'.
Consumers Energy
-- Senior secured debt to 'BB+' from 'BBB';
-- Senior unsecured debt to 'BB' from 'BB+';
-- Preferred stock/trust preferred securities to 'B' from
'BB-'.
Consumers Power Financing Trust I
-- Trust preferred securities to 'B' from 'BB-'.
Ratings lowered and placed on Rating Watch Evolving
PEPL
-- Senior unsecured debt to 'BB' from 'BB+'.
COMDISCO INC: Judge Barliant Orders Debtor to File Status Report
----------------------------------------------------------------
The Court directs Comdisco, Inc., and its debtor-affiliates to
file a status report regarding their bankruptcy case and related
cases no later than September 23, 2002. The report should
enable the judge to whom the case will be assigned to quickly
become familiar with the general nature, status, goals and
timetable of the case. The report should contain at least:
(1) Description of the Debtor and Debtor's business;
(2) Present status of the case;
(3) Dates of significant orders previously entered in the
case;
(4) Matters known to the Debtor that remain to be resolved
before the closing of the case, including:
(a) the present status;
(b) the work remaining to be done before matter is ready
for disposition; and
(c) the anticipated timetable for the work and final
disposition; and
(5) Any other matters the Debtor believes will be helpful to
the Court.
In cases where there are multiple similar adversary proceedings,
objections to claims or motions pending, the report should
discuss the matters by category.
The Debtors must furnish the report, together with a copy of the
Order, to all parties entitled to service pleadings, including
the U.S. Trustee and any party to an adversary proceeding or
other matters included in the report. (Comdisco Bankruptcy News,
Issue No. 35; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CONSUMERS FINANCIAL: Issues 2.7 Million Shares to CFC Partners
--------------------------------------------------------------
Consumers Financial Corporation announced that CFC Partners,
Ltd., a New York-based investor group, has acquired a 51%
interest in the Company's common stock through the issuance by
the Company of 2,700,000 authorized but previously unissued
shares.
CFC Partners had obtained an option to acquire the shares in
March 2002, but the option was not exercisable until the Company
completed a tender offer to its preferred shareholders. The
tender offer was completed on August 23, 2002.
The Company had been proceeding with a Plan of Liquidation and
Dissolution previously approved by its shareholders. However,
the Board of Directors determined that the transaction with CFC
Partners, together with the above-referenced tender offer, is in
the best interest of the Company's shareholders because it has
the potential to produce future value for the common
shareholders, who were not expected to receive any distribution
under the Plan of Liquidation, while permitting the preferred
shareholders to exchange their shares for cash. Accordingly, the
Plan of Liquidation has been discontinued. CFC Partners has
indicated its intention to merge or otherwise combine various
existing businesses with the Company.
Under Pennsylvania laws, the new shares of common stock issued
to CFC Partners will not be permitted to vote on any matters
unless and until such voting rights are restored by the
remaining common shareholders (i.e., excluding CFC Partners)
through a solicitation of proxies. CFC Partners intends to
commence such a solicitation of proxies as soon as possible.
In connection with the issuance of the new shares, Donald J.
Hommel, who is the president of CFC Partners, was appointed as a
director of the Company to fill a current vacancy on the
Company's Board of Directors. James C. Robertson and John E.
Groninger, who had been directors of the Company for more than
30 years, resigned from the Board following the appointment of
Mr. Hommel. Mr. Hommel was elected to the Company's Board of
Directors and was named as the Company's President and Chief
Executive Officer as well.
CRYOLIFE INC: Fails to Comply with BofA Term Loan Covenants
-----------------------------------------------------------
CryoLife, Inc. (NYSE: CRY), a life-science company involved in
the development and commercialization of cryopreserved and
manufactured implantable tissues and surgical adhesives, has
filed its 10-Q for the quarter ended June 30, 2002. The document
is certified by the Company's CEO and CFO.
CryoLife revised its previously announced 2002 second quarter
results due to the U.S. Food and Drug Administration Order it
received on August 13, 2002, which ordered non-valved cardiac,
vascular and orthopedic tissue processed since October 3, 2001
by CryoLife to be retained "until it is recalled, destroyed, the
safety of the tissues is confirmed, or an agreement is reached
with the FDA for its proper disposition." CryoLife management
determined that the FDA order was a type one subsequent event as
defined by generally accepted auditing standards requiring
adjustment to the second quarter financial statements as a
result of necessary revisions to accounting estimates. In
connection with the FDA Order, the Company recorded amounts to
provide for the tissue recall, the write-down of deferred
preservation costs, and accruals associated with litigation. As
a result, revenues for the second quarter ended June 30, 2002
decreased to $23.3 million from a previously reported $25.7
million, and the net loss for the quarter increased to $5.5
million from previously reported net income of $2.8 million
The estimated impact of the recall, excluding the write down of
deferred preservation costs, is a reduction in net income for
the second quarter of $1.3 million, or $0.04 per diluted share.
This impact includes a $2.4 million reduction in second quarter
revenues due to credits to be issued to customers, which
generated $1.3 million in gross margins, as well as estimated
costs of $75,000 to conduct the recall.
The Company also recorded a pretax non-cash write-down of
deferred preservation costs of $10.0 million, to reflect the
estimated impairment of deferred preservation costs due to the
FDA Order. Such write-down includes all non-valved cardiac,
vascular and orthopedic tissues processed between October 3,
2001 and June 30, 2002. The Company also recorded pretax
accruals of approximately $1.2 million to provide for potential
settlements and awards associated with outstanding litigation.
Such amount represents the Company's aggregate retention levels
under its product liability and directors' and officers'
insurance policies, as the Company believes that it is now
probable that these limits will be met as a result of the FDA
Order.
Additionally, the Company anticipates that further charges are
expected to be recorded in the third quarter of 2002 as a result
of the FDA Order. The estimated impact of the recall is a
reversal of $1.0 million in revenues recorded in July and August
due to estimated returns of tissue subject to the FDA Order,
which were shipped in July and August. Tissues subject to the
FDA Order processed during the third quarter through August 14,
2002 approximate $3.9 million.
As of June 30, 2002, deferred preservation costs of tissues not
subject to the FDA Order (i.e. tissue processed prior to October
3, 2001) were $829,000 for non-valved cardiac tissues, $7.3
million for vascular tissues, and $4.7 million for orthopedic
tissues. Deferred preservation costs for allograft heart
valves, which are not subject to the FDA Order, were $8.5
million as of June 30, 2002. The Company is continuing to ship
these tissues. Although management believes that the demand for
non-valved cardiac, vascular and orthopedic tissues processed
prior to October 3, 2001 and all allograft heart valves stored
by the Company will be affected by the adverse publicity
surrounding the FDA Order, the Company cannot estimate the
degree to which these tissues have been impaired. The Company
may determine in the future that a substantial write-down of the
deferred preservation costs for these tissues is necessary.
Management will continue to monitor the Company's progress in
satisfying the FDA's requirements and the effect of the FDA
Order and the related adverse publicity on the demand for these
tissues to determine if additional write-downs of deferred
preservation costs are required.
As a result of the FDA Order, Bank of America, the Company's
lender, has determined that a materially adverse event has
occurred and that the Company is not in compliance with its Term
Loan covenants. At present, the Company's lender has elected
not to declare an event of default, but has reserved the right
to do such under the Term Loan. Therefore, all amounts due
under the Term Loan as of June 30, 2002 are reflected as a
current liability on the Company's financial statements.
Additionally, the Company's lender has declared that the Company
is not entitled to any advances under its $10 million line of
credit entered into on July 30, 2002.
On September 3, 2002, the Company announced a reduction in
employee force of approximately 105 employees. The Company
anticipates that severance and related costs will be
approximately $625,000, which will be recorded in the third
quarter of 2002. As a result of the employee reduction,
management anticipates personnel costs will be reduced by
approximately $360,000 per month.
The Company continues to assess the impact of the FDA Order on
its operating activities. The magnitude and nature of
additional charges, if any, resulting from this FDA Order cannot
be estimated until the Company has had the opportunity to obtain
additional information and further assess the impact of the FDA
Order on its business.
Founded in 1984, CryoLife, Inc., is the leader in the
development and commercialization of implantable living human
tissues for use in surgeries throughout the United States and
Canada. The Company's BioGlue(R) surgical adhesive is FDA
approved as an adjunct to sutures and staples for use in adult
patients in open surgical repair of large vessels and is CE
marked in the European Community and approved in Canada and
Australia for use in vascular and pulmonary sealing and repair.
The Company also manufactures the SynerGraft(R) heart valve and
the SynerGraft vascular graft, the world's first tissue-
engineered heart valve and vascular replacement, respectively,
and the CryoLife-O'Brien(R) and CryoLife-Ross(R) stentless
porcine heart valves, which are CE marked for distribution
within the European Community. The human heart valves processed
by CryoLife using the SynerGraft technology are distributed in
the U.S. under the trade name of CryoValve(R)SG.
DYNEGY INC: Expresses No Recommendation on Main Street's Offer
--------------------------------------------------------------
Dynegy Inc., (NYSE:DYN) said it is aware of an unsolicited mini-
tender offer by Main Street AC, Inc., to purchase up to
13,349,070 shares of its Class A common stock, or approximately
4.9% of total Class A shares outstanding, for $2.88 per share.
Dynegy wishes to inform its shareholders that it is in no way
associated with Main Street AC and expresses no recommendation
on the unsolicited offer. Dynegy, however, suggests its
shareholders exercise extreme caution in considering the offer.
Mini-tender offers seek less than 5% of a company's stock,
thereby avoiding many disclosure and procedural requirements of
the Securities and Exchange Commission. As a result, mini-tender
offers do not typically provide the same disclosure and
procedural protections that larger traditional tender offers
provide.
Shareholders should be aware if they tender their Dynegy shares
that Main Street AC has the right to extend its offer
indefinitely. This has the effect of binding the shareholder to
sell the tendered stock to Main Street AC for so long as Main
Street AC elects to keep its offer. Main Street AC is under no
obligation to return the Dynegy stock to the tendering
shareholder.
The SEC has issued an investor alert regarding mini-tender
offers that is available on its Web site at
www.sec.gov/investor/pubs/minitend.htm The SEC has said that
mini-tender offers, "have been increasingly used to catch
investors off-guard."
Dynegy urges stockholders who are considering selling their
shares to consult with their financial advisors and to exercise
caution with respect to this offer.
Dynegy Inc., produces and delivers energy, including natural
gas, power, natural gas liquids and coal, through its owned and
contractually controlled network of physical assets. The company
serves customers by aggregating production and supply and
delivering value-added solutions to meet their energy needs.
* * *
As reported in Troubled Company Reporter's July 29, 2002,
edition, Standard & Poor's Rating Services lowered its corporate
credit rating of Houston, Texas-based energy provider Dynegy
Inc., and subsidiaries to single-'B'-plus from double-'B'.
At the same time, Standard & Poor's lowered the corporate credit
rating of Northern Natural Gas Co., to single-'B'-plus from
triple-'B' minus and the Creditwatch listing was changed to
negative from developing. All other affiliates' ratings remain
on CreditWatch with negative implications.
The rating action -- prior to completion of the Northern Natural
Gas pipeline -- reflected Standard & Poor's analysis that cash
flows were deteriorating.
DYN is continuing to execute a restructuring plan designed
to reduce consolidated debt and improve liquidity.
ELIZABETH ARDEN: Reports Improved Results for Second Quarter
------------------------------------------------------------
Elizabeth Arden, Inc. (NASDAQ: RDEN), a leading global prestige
fragrance and beauty products company, reported its second
consecutive quarter of significantly improved financial results
for fiscal 2003.
Second Quarter Results
Net sales increased 11% to $127.2 million for the second quarter
of fiscal 2003 compared with $114.9 million in the second
quarter of fiscal 2002. Sales growth was driven by strong
performance in the "open sell" program, an innovative marketing
program for mass and mid-tier retailers, new product launches
and the addition of certain popular distribution brands,
partially offset by soft Mother's Day and Father's Day sell-
through and reduced sales associated with fewer prestige
department store doors. Gross profit increased 40% to $48.5
million, for a gross margin of 38%, compared with gross profit
of $34.5 million, for a gross margin of 30%, in the prior year
period. The gross margin increase is a result of an inventory
charge recorded in the prior year period and the sell- through
of the "high cost" Elizabeth Arden inventory which impacted
fiscal 2002 results, offset by changes in the sales mix.
Selling, general and administrative expenses decreased to $47.8
million, or 38% of net sales, compared with $54.6 million, or
48% of net sales, for the same period last year, reflecting the
restructuring of certain international operations, a reduction
in overhead expenses and a favorable impact from foreign
exchange rates.
EBITDA (earnings before interest, taxes, depreciation, and
amortization) for the second quarter was $697,000, exceeding the
Company's previously provided guidance for the quarter of a loss
of $5.0 million to breakeven and significantly higher than the
EBITDA loss of $20.1 million in the second quarter of fiscal
2002. The net loss attributable to common shareholders of $11.0
million was a notable improvement over a net loss of $26.8
million for the same period last year, and also exceeded the
analysts' consensus estimate of a loss of $0.82 per diluted
share.
As of July 27, 2002, inventories were $245.0 million, 9% below
the prior fiscal year's level of $268.4 million. Short-term
borrowings totaled $74.0 million at the end of the quarter,
compared to $93.6 million at the end of the second quarter of
the prior fiscal year, with approximately $51 million of
availability under the Company's revolving credit facility.
First Half Results
Net sales for the first six months of fiscal 2003 increased 13%
to $267.5 million compared with $237.7 million for the same
period of the prior fiscal year. Gross profit increased 30% to
$102.6 million, for a gross margin of 38%, compared with gross
profit of $79 million, for a gross margin of 33%, in the prior
year period. Selling, general and administrative expenses
decreased to $101.7 million, or 38% of net sales, compared with
$109.3 million, or 46% of net sales, for the same period last
year. EBITDA for the six-month period increased 103% to
$973,000, significantly better than the EBITDA loss of $30.1
million for the same period last year.
E. Scott Beattie, Chairman, President and Chief Executive
Officer of Elizabeth Arden, Inc., commented, "We are very
pleased with our second quarter results. We not only posted a
13% growth in sales for the first half of this year, but also
achieved a significant improvement in EBITDA for the second
consecutive quarter, despite the difficult retail environment.
We have efficiently reduced working capital and improved our
liquidity despite the increase in sales year to date and an
anticipated similar increase in sales for the full year. The $30
million improvement in EBITDA for the first half of this year
reflects the normalized operating performance of the integrated
Elizabeth Arden business and positions the Company for
significantly improved financial performance for fiscal 2003.
"We are also very pleased with the continued strong performance
we are achieving with the 'open sell' program and are currently
testing the program with several additional customers. Our new
marketing initiatives are also resulting in increased sales."
Mr. Beattie added, "The second quarter was also exciting from a
new product and marketing perspective. As planned, this summer
we introduced our new Arden fragrance ardenbeauty and launched
the supporting brand image campaign "Open for Beauty" featuring
Catherine Zeta-Jones, both to a very positive reception. In
addition, our new Elizabeth Taylor fragrance, Forever Elizabeth,
will ship to stores this month. While it is early, we are
optimistic about the ultimate impact of our new fragrance brands
and marketing campaign."
Outlook For Fiscal 2003
The Company reiterates its previous guidance for fiscal 2003 of
estimated net sales of $735 million to $775 million, gross
margin of 42-44% and estimated EBITDA of $95 million to $105
million. With respect to the third quarter, the Company
estimates net sales of $320 million to $330 million and EBITDA
ranging from $75 million to $80 million, compared with net sales
of $286 million and EBITDA of $70 million for the third quarter
of fiscal 2002.
Mr. Beattie concluded, "We are encouraged by the performance of
the first half of fiscal 2003 and remain optimistic about the
balance of the year. Although we continue to operate in a
difficult and uncertain economic environment, particularly with
respect to U.S. department stores and certain international
markets, we remain comfortable with our previously provided
guidance for this fiscal year. We are enthusiastic about the
direction of our business and believe we are well positioned to
achieve the growth and performance goals we have established."
Elizabeth Arden is a leading global marketer and manufacturer of
prestige fragrances and beauty products. The Company's portfolio
of leading brands includes the fragrance brands Red Door,
Elizabeth Arden green tea, 5th Avenue, ardenbeauty, Elizabeth
Taylor's White Diamonds, Passion and Forever Elizabeth, White
Shoulders, Geoffrey Beene's Grey Flannel, Halston, Halston Z-14,
Unbound, PS Fine Cologne for Men, Design and Wings by Giorgio
Beverly Hills; the Elizabeth Arden skin care line including
Ceramides and Millenium; and the Elizabeth Arden cosmetics line.
As reported in the April 15, 2002 edition of Troubled Company
Reporter, Standard & Poor's downgraded Elizabeth Arden's Senior
Unsecured Rating to CCC+.
ENCHIRA BIOTECH: Nasdaq Sets Delisting Hearing Date for Sept. 20
----------------------------------------------------------------
Enchira Biotechnology Corporation (Nasdaq: ENBC) received a
letter from The Nasdaq Stock Market setting a hearing date of
September 20, 2002 in connection with its possible delisting
from The Nasdaq SmallCap Market to be held before the Nasdaq
Listing Qualifications Panel. In the letter, the Company was
also informed by Nasdaq that, in addition to its failure to
comply with the bid price requirement in Marketplace Rule
4310(C)(4) as previously reported, the Company fails to comply
with the net tangible assets/shareholders' equity/market value
of listed securities/net income requirement for continued
listing set forth in Marketplace Rule 4310(C)(2)(B) and that
this deficiency, along with the deficiencies previously
reported, will be considered at the hearing. Nasdaq indicated
that the delisting of the Company's common stock would be stayed
until the hearing unless other deficiencies arise prior to the
hearing. There can be no assurance that the Panel will grant
the Company's request for continued listing.
The Company also announced that it has conducted a successful
auction of most of its furniture and laboratory equipment. Paul
Brown, the Company's President, stated, "We were pleased with
the results of our auction. The proceeds from our recent
auction should provide us with working capital for several
additional months while we continue to review strategic
alternatives and pursue the best possible outcome for our
stockholders."
Additional information is available at the Company's Web site at
http://www.enchira.com
ENRON: Capital Wants to Sell MTBE to Nimex Int'l for $2.67 Mill.
----------------------------------------------------------------
Prior to the Petition Date, Enron Capital & Trade Resources
International Corp., traded in financial and physical
derivatives and bought and sold physical methyl tertiary butyl
ether -- MTBE. To store the MTBE, Melanie Gray, Esq., at Weil,
Gotshal & Manges, LLP, in New York, relates that Enron Capital
entered into a Storage Agreement with Europoint Terminals
Netherlands B.V. on October 4, 2001. Under the Storage
Agreement, 25,000 cubic metres of space are provided to Enron
Capital at Europoint's Amsterdam Storage Facility. Enron
Capital deposited 16,691 tonnes of MTBE, which remains in the
Storage Facility.
Europoint asserts that its storage charges have not been paid
since January 2002. Thus, it is exercising a lien over the MTBE
for the unpaid storage charges.
On August 21, 2001, Ms. Gray continues, Enron Capital entered
into an August Agreement with Nimex International Limited for
the sale of 13,717 tonnes of MTBE. Enron Capital allegedly
defaulted on the delivery of the last two cargoes under the
August Agreement.
Again, in December 2001, Enron Capital agreed to sell to Nimex
13,717 tonnes of MTBE at a discounted price of $160 per tonne.
The discount was for the fact that the previous cargoes had
water content above the contract specification that required
Nimex to discount the cargo to its third party purchaser.
Nimex alleges that delivery did not take place as intended.
Accordingly, on December 2, 2001, Nimex obtained a judicial lien
from the Dutch courts over MTBE held at the Storage Facility.
Nimex claims that due to the two Agreements, it has a title to
the MTBE and Enron Capital is contractually obliged to complete
the sale.
Moreover, Ms. Gray informs the Court, a third lien exists over
the MTBE. Prior to Petition Date, Enron Capital was a party to
various SWAP transactions with Vitol S.A., Vitol Energy S.A.,
Vitol Espana S.A. and Vitol S.A., Inc., wherein Enron Capital is
now alleged to owe Vitol between $2,400,000 to $3,600,000. On
December 10, 2001, the District Court of Amsterdam granted Vitol
a pre-judgment garnishment in respect of these debts. "The
validity of this lien is believed to have been disputed by Nimex
and upheld by the Dutch courts on two occasions," Ms. Gray says.
The MTBE remains at the Storage Facility, subject to the three
liens. The quality of the MTBE is deteriorating and is
approaching the limit of acceptable purity for commercial
purposes. Thus, to realize any economic benefit from this
asset, Enron Capital must arrange for its immediate sale.
Accordingly, the Debtors sought and obtained the Court's
authority for the:
(a) sale of all of MTBE held at the Storage Facility to Nimex
at $160 per tonne or $2,670,560 -- Purchase Price -- under
the Sale Agreement; and
(b) entry of a Settlement Agreement with Nimex, Europoint and
Vitol.
Ms. Gray relates that the Purchase Price will be paid in two
stages:
-- at Completion, Enron Capital will receive 67% of the
Purchase Price; and
-- the 33% will be paid to Enron Capital within 15 days from
Completion and is subject to a price adjustment in the
event the platts rate or the level of purity of the MTBE
decreases from the date of Completion. For every dollar
the platts rate is below $330 per metric tonne, the
Purchase Price is reduced by $0.75. Similarly, for every
incremental 0.1% deterioration in the purity level of MTBE
below the present 98% purity level, the Purchase Price is
reduced by $0.50.
Nimex agrees to purchase the MTBE and waive any claims it may
have against Enron Energy if Enron, Europoint and Vitol settle
their respective claims, thereby extinguishing the various liens
on the MTBE.
In this regard, Nimex agreed to pay Vitol $1,000,000 in full and
final settlement of all past and present indebtedness of Enron
Capital to Vitol. Vitol will execute the deed of release to be
annexed to the Sale Agreement to extinguish its lien over the
MTBE.
In addition, Ms. Gray says, Europoint's charges for storage,
tank cleaning and legal costs of Euro425,000 and $46,045 will be
divided equally between Enron Capital and Nimex and paid to
Europoint. In exchange, Europoint will execute the release to
be annexed to the Sale Agreement to extinguish its lien over the
MTBE.
Pursuant to Section 363 of the Bankruptcy Code and Bankruptcy
Rule 9019, Ms. Gray convinced the Court that the relief is
warranted because:
(a) the Dutch courts purport not to recognize relief granted
in the U.S. Bankruptcy Code;
(b) selling the MTBE instead of breaching its prepetition
contract with Nimex will bring the highest value to the
estate;
(c) the MTBE market price is volatile and seasonal;
(d) the MTBE is rapidly deteriorating;
(e) possible future international litigation, absent the
settlement, could result in additional, unnecessary
expense for Enron Capital; and
(f) the reduction of Vitol claim to $1,000,000 from Nimex
provides Enron Capital with a mechanism by which it can
reduce its liabilities by over $2,000,000. (Enron
Bankruptcy News, Issue No. 42; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ENVIRONMENTAL SAFEGUARDS: Applies to Delist Shares from AMEX
------------------------------------------------------------
Environmental Safeguards, Inc., (Amex: EVV) has filed an
application with the Securities and Exchange Commission to
withdraw its common stock from listing and registration on the
American Stock Exchange. The American Stock Exchange has been
notified of this filing.
The Board of Directors felt that it was in the best interest of
its shareholders to initiate the delisting from the American
Stock Exchange and initiate steps to cause its shares to be
traded on the OTC Bulletin Board.
FALCON PRODUCTS: Posts Better Financial Results for Fiscal Q3
-------------------------------------------------------------
Falcon Products, Inc., (NYSE: FCP), a leading manufacturer of
commercial furniture, announced sales and operating results for
its third quarter ended August 3, 2002.
Net sales for the third quarter of fiscal 2002 were $70.8
million, compared with $77.0 million in the prior year, and net
earnings were $0.3 million, compared with net earnings of
$0.1 million, before restructuring charges in the third quarter
of 2001.
As previously announced, the third-quarter 2001 results included
an $18.0 million pre-tax restructuring charge, equivalent to
$11.2 million, on an after-tax basis, to account for costs
related to the restructuring of the Company's manufacturing
facilities. Including that charge, reported third quarter 2001
results were a loss of $11.1 million.
Franklin A. Jacobs, Chairman and Chief Executive Officer,
stated, "Despite continued weak market performance, we are
continuing to show improvement in our bottom line. This is a
result of the cost reduction measures and operating performance
improvements we have instituted throughout the year. Our
operating income margin during the quarter improved to 7.4% of
sales, compared with 6.9% of sales in the prior year, after
adjusting for goodwill amortization and restructuring charges in
2001."
Mr. Jacobs continued, "The economy is an uncontrollable
variable. I am pleased, however, with how we have responded to
the market and increased profitability over the last two
quarters. We are well positioned to continue on this path."
Falcon reported strong sales growth in the food service market
segment for the third quarter of 2002, as the Company continued
to increase its market share in a difficult environment. At the
same time, the Company's sales in the contract office market
declined from the prior year, although at a substantially lower
rate than the overall decline in the market as reported by The
Business and Institutional Manufacturers Association. In
addition, the Company's sales within the hospitality market
segment were consistent with the overall decline in this market.
The Company's sales during the quarter were also impacted by its
earlier decision to discontinue business in certain channels in
order to more profitably utilize the Company's manufacturing
resources.
Falcon Products, Inc., is the leader in the commercial furniture
markets it serves, with well-known brands, the largest
manufacturing base and the largest sales force. Falcon and its
subsidiaries design, manufacture and market products for the
hospitality and lodging, food service, office, healthcare and
education segments of the commercial furniture market. Falcon,
headquartered in St. Louis, Missouri, currently operates 11
manufacturing facilities throughout the world and has
approximately 3,000 employees.
* * *
As reported in Troubled Company Reporter's May 13, 2002 edition.
Moody's Investors Service lowered its ratings on Falcon
Products, Inc. Outlook for the said ratings is negative.
Rating Action To From
* $30 Million Senior Secured Revolving
Term Facility due 2005 B3 B1
* $44 Million Senior Secured Amortizing
Term Facility due 2005 B3 B1
* $100 Million 11 3/8% Senior
Subordinated Notes due 2009 Caa2 B3
* Senior Implied Rating B3 B1
* Senior Unsecured Issuer Rating Caa1 B2
The ratings downgrade reflect the company's weak sales, its
liquidity constraints and the various restructuring charges it
is experiencing. Falcon recently failed to meet covenant
requirements and has needed to approach its bank group for
modification of its covenants.
The negative outlook reflects the indeterminate nature of
Falcon's finances and its currently reduced revolver
availability. Further deterioration of its operating performance
would mean further ratings downgrade. Conversely, a sustained
improvement of operations cash flow and enhanced liquidity could
mean more positive ratings.
FLAG TELECOM: New York Court to Consider Plan on Sept. 26, 2002
---------------------------------------------------------------
On August 8, 2002, the Unites States Bankruptcy Court for the
Southern District of New York approved the Disclosure Statement
prepared by Flag Telecom Holdings Limited and its debtor-
affiliates explaining the Debtors' Plan of Reorganization. The
Honorable Allan Gropper also set September 20, 2002, as the
deadline by which all votes to accept or reject the plan must be
received by the Debtors' Balloting Agents, Poorman-Douglas
Corporation or Innisfree M&A Incorporated.
A hearing to consider the confirmation of the Debtors' Plan of
Reorganization is set for September 26, 2002, at 11:00 a.m.
prevailing Eastern Time or as soon thereafter as counsel can be
heard.
Any written objections to the confirmation of the Plan must be
filed with the Bankruptcy Court and must be actually received
before 5:00 p.m. on September 16, 2002. Copies must also be
served on:
(i) Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attn: Conor R. Reilly, Esq.
(ii) the Office of the United States Trustee
for the Southern District of New York
33 Whitehall Street, 21st Floor
New York, New York 10004
Attn: Tracy Hoe Davis, Esq.
(iii) Counsel for FLAG Atlantic Limited's
Prepetition Bank Lenders
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attn: Bruce Zirinsky, Esq.
(iv) Counsel for the Official Committee of Unsecured
Creditors
Akin, Gump, Strauss, Hauer & Feld, LLP
590 Madison Avenue
New York, New York 10022
Attn: Michael Stamer, Esq.
(v) Counsel for FTHL's Prepetition Ad Hoc
Noteholders Committee
Kasowitz, Benson, Torres and Friedman, LLP
1633 Broadway
New York, New York 10019
Attn: David S. Rosner, Esq.
(vi) Counsel for the Joint Provisional Liquidators
appointed by the Supreme Court of Bermuda
Milbank, Tweed, Hadley & McCloy, LLP
1 Chase Manhattan Plaza
New York, New York 10005
Attn: Susheel Kirpalani, Esq.
FLAG Telecom is a leading global network services provider and
independent carriers' carrier providing an innovative range of
products and services to the international carrier community,
ASPs and ISPs across an international network platform designed
to support the next generation of IP over optical data networks.
FLAG Telecom has the following cable systems in operation or
under development: FLAG Europe-Asia, FLAG Atlantic-1 and FLAG
North Asian Loop. The Company, together with its debtor-
affiliates filed for Chapter 11 protection on April 12, 2002.
Conor D. Reilly, Esq., and M. Natasha Labovitz, Esq., at Gibson,
Dunn & Crutcher LLP represent the Debtors in their restructuring
efforts.
FRAWLEY: Needs to Improve Cash Flows to Meet Obligations
--------------------------------------------------------
For the quarter ended June 30, 2002, Frawley Corporation's real
estate operating loss was $95,000 compared to a loss in 2001 of
$88,000. During the first six months of this year, real estate
losses were $167,000 as compared to a loss of $181,000 for the
same period in 2001. Real estate losses continue as the Company
incurs carrying costs and costs of improvements required to sell
the property.
Specialized Health Services: Due to the Hospital's continued
losses and its inability to pay interest on its secured
$1,022,000 loan on the hospital property for more than a year,
the Board of Directors of the Company has unanimously voted to
sell or close this business in 2002. The Company is currently
negotiating with a group of non-related former patients who are
interested in purchasing the Schick program. If these
negotiations are not successful, the Company will seek another
purchaser.
Effective February 1, 2002, the Company entered into a
Settlement Agreement with a related party holding outstanding
notes payable in the amount of $1,022,000, secured by the
hospital property in Seattle, Washington. Under the terms of the
agreement, the Company sold the hospital land, building and
related property and equipment to the related party for a
purchase price in the amount of the principal of the notes
($1,022,000) and accrued interest ($174,000). Also effective
February 1st, 2002, the Company entered into a lease agreement
with the related party whereby the Company is permitted to lease
the hospital facility for 36 months, with an option to
repurchase the property from the related party at an amount
equal to the original principal indebtedness plus accumulated
interest and attorney's fees.
During the quarter ended June 30, 2002, the health care
discontinued operations' loss was approximately $105,000. For
the six months ended June 30, 2002, the health care discontinued
operations' net income was approximately $551,000. The net
income reflects a gain from the Settlement Agreement of
$781,000, which resulted from the reduction of debt in the
amount of $1,022,000 and accrued interest of $174,000 less the
net book value of assets sold for $415,000. If the Company had
not entered into the Settlement Agreement, the net loss for the
hospital would have been $230,000 for the six months ended June
30, 2002 as compared to a loss of $17,000 for the same period in
2001.
The Company's recurring losses from continuing operations led to
its decision to discontinue the hospital operations.
Difficulties in generating cash flow sufficient to meet its
obligations raise substantial doubt about the Company's ability
to continue as a going concern.
Real estate and corporate overhead continue to produce losses
that the operating business is unable to absorb. The required
investments in real estate are currently funded by loans. The
Company continues to incur legal expenses and has an obligation
in 2002 to contribute to the Chatham Brothers toxic waste
cleanup lawsuit. Servicing outstanding debt continues to be a
significant burden on the Company's operations.
GA EXPRESS: Independent Auditors Raise Going Concern Doubt
----------------------------------------------------------
GA eXpress, Inc., formerly General Automation, Inc., is engaged
in the development and licensing of computer software and
related software consulting services and has subsidiaries in the
United States, Canada, Australia and England. The Company's US
operations are primarily devoted to the continued enhancement,
licensing, and support of E-Path web products. The US
operations, along with its Canadian subsidiary, have also
continued development of Selva Server web service products. The
Australian and United Kingdom operations continue to focus their
efforts on supporting operating systems (UNIX, Novell, OS/2) and
contract programming utilizing C++ and Visual Basic; the UK
operations began licensing E-Path during 2001.
The Company has incurred significant losses from operations, has
current liabilities in excess of current assets by $3,267,000
and has a total stockholders' deficit of $6,896,000 at June 30,
2002. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
On or about April 3, 2002, the Company's Canadian Subsidiary
licensed certain products to a significant customer, generating
a non-refundable fee of $2,000,000. The Company settled with
Raining Data, Inc., whereby the Company received $1,000,000 in
July 2002, and will receive $1,000,000 within the next 12
months, subject to verification of certain data relied upon by
the parties, by October 26, 2002.
Management plans to re-negotiate, with holders of $4.7 million
of debt, terms and conditions which the Company can better meet
in the future. The Company has received waivers of events of
default until October 1, 2002 on the PMF and related debt,
principal at face value, totaling $3,650,000, and until April 1,
2003 for debts totaling $500,000, as extended. In addition, the
Company is in ongoing negotiations with trade creditors, as well
as with certain former employees owed approximately $700,000.
The Company is currently negotiating material contracts for the
sale of its E-Path and "Selva" products to customers which
management believes will provide liquidity for operations.
Management intends to continue to carefully monitor its
operating costs, and to expand its web services software
development. There are no assurances that management will be
successful in its plans.
Product sales decreased 50% to $679,000 and service revenues
decreased 63% to $1,334,000 principally because of the sale of
the North American hardware and service business in January
2001. In addition Australia's revenues were adversely affected
in the current nine month period because a large sale in the
prior year's period wasn't duplicated.
Australia's product and service revenues declined 54% and 23%,
respectively, during the nine months ended June 30, 2001
principally of the large sale cited above and because of
continuing deterioration in its hardware related business.
Service revenues were less adversely affected because of
emphasis being placed on developing that business category.
Europe's aggregate sales decreased about 27% compared to 2001
principally due to general softness in the computer market in
recent quarters and because some prior year pick-based customers
have gradually migrated to other providers following the
Company's sale of its pick-based product line in August of 2000.
Gross profit, as a percent of revenue exclusive of royalties,
increased to 53% for the nine months ended June 30, 2002, from
39% for the prior year quarter principally because of the sale
of the Company's hardware service business in January 2001. The
gross profit percentage on the Company's continuing service
business is significantly higher than on the service business
that was sold. Additionally the decrease in revenues resulting
from the sale of the Hardware and Service business has
significantly impacted this ratio. No other significant costs
are expected to be incurred in the future for this agreement
except for ongoing costs of developing enhancements to the
Company's products which the licensee has a right to receive at
no additional cost.
Selling, general and administrative expenses decreased 60% to
$1.4 million in 2002 due to the sale of the hardware products
and service business in January 2001 and execution of the
companies restructuring plan. Achieving these cost efficiencies
has resulted in the companies lowest operating expense structure
in its operating history.
Accordingly, more than 90% of the Company's North American staff
remaining after the latter sale was terminated effective January
31, 2001, and have not been replaced. Now that Selva Server is
in the Beta phase attention will be given to developing a sales
and marketing organization and staffing to introduce it to the
marketplace. No other significant costs are expected to be
incurred in the future for this agreement except for ongoing
costs of developing enhancements to the Company's products which
the licensee has a right to receive at no additional cost.
The Company's independent auditors' reports for the years ended
2000 and 2001 contains a "going concern" matter for special
emphasis paragraph.
GENCORP INC: Fitch Affirms Certain Low-B Credit & Debt Ratings
--------------------------------------------------------------
Fitch Ratings has affirmed the 'BB' rating on GenCorp Inc.'s
existing bank credit facilities and the 'B+' rating on its
subordinated convertible notes. Fitch has assigned a 'BB' rating
to GenCorp's proposed $125 million Term Loan B, which GY intends
to use to finance the $90 million acquisition of General
Dynamics' Ordnance and Tactical Systems Space Propulsion and
Fire Suppression business. The Rating Outlook is Positive for
all classes of debt.
GY's ratings and outlook reflect improved financial performance
in 2002 resulting from restructuring initiatives; the favorable
military spending environment; a fully funded pension plan; and
the potential cash flow to be realized from the monetization of
GY's real estate holdings. Concerns include GY's intention to
grow through acquisitions, potential integration issues, and
environmental liabilities. The ratings and outlook also consider
both the benefits to be derived from the GDSS acquisition and
the impact to credit protection measures from the increased
level of debt related to the acquisition.
With approximately $60 million in revenues, GDSS is a world
leader in the field of spacecraft propulsion. GDSS maintains a
broad product offering including monopropellant, bipropellant,
and electric propulsion units; space power processing and
distribution units; solid propellant fire suppression systems;
and complete propulsion systems.
The GDSS acquisition will position GY as a significant player in
all three space propulsion markets (solids, liquids, and
spacecraft). The acquisition provides GY with complimentary
businesses and little program overlap, mitigating some of
Fitch's integration concerns. The addition of GDSS also
diversifies GY's revenue base, reducing the Company's reliance
on the automotive sector, which currently represents 72% of
revenues. GDSS generates solid cash flows and, as of May 26,
2002, had a funded backlog of $40 million, partially mitigating
the impact of the additional debt required to make the
acquisition.
GY's restructuring program has improved financial performance in
2002. The focus of the restructuring program was the GDX
Automotive and the Aerojet Fine Chemicals segments. The
restructuring program at GDX is expected to generate $65 million
in savings. Fitch is encouraged by GDX's continued margin
improvement, but some concern still exists relating to GDX's
exposure to potential OEM pricing pressure. In addition, Fitch
is concerned that GDX operations could be impacted by a slow
down in automotive sales from the current strong sales pace.
Restructuring initiatives at AFC included a 40% head count
reduction and the reduction of marketing costs. With AFC's sales
for the last six months showing strong improvement, GY
anticipates continued revenue and margin improvement and expects
the segment to be profitable for the second half of 2002.
GY is well-positioned to benefit from the current and projected
increase in defense spending, particularly in missile defense.
The Fiscal Year 2003 DOD budget proposal represents a 14.5%
increase versus 2002, and includes a 12% increase for
procurement and research. Of particular importance to GY is the
$7.8 billion proposed for missile defense.
Over the next three years, GenCorp's objective is to grow its
aerospace and defense segment. Fitch views this growth strategy
favorably, as it will increase the Company's presence in a
solidly performing sector while reducing the Company's reliance
on the automotive sector. Fitch anticipates that a considerable
portion of this growth will be achieved through acquisitions. In
light of the relative strength of the aerospace and defense
industry and potentially elevated prices for acquisitions,
concern exists over the impact that additional debt may have on
GY's credit measures. While Fitch views GY's potential growth in
the aerospace and defense sector favorably, any future
transaction could negatively impact credit quality and require
Fitch to review its rating of GY. The Company's ability to
finance acquisitions with equity would mitigate some of the
concerns.
As of May 31, 2002, GenCorp's financial flexibility included
cash of $36 million and availability of $81 million under its
credit facility, offset by $24 million in current maturities and
short-term debt. In addition to funding the acquisition, the
Company expects to use the proceeds from the Term Loan B to pay
down approximately $30 million outstanding under the revolver.
As of May 31, 2002, GY had $271 million of debt outstanding,
representing a debt to capital ratio of 45.2%. For the last
twelve months ending May 31, 2002, leverage, as defined by Debt-
to-EBITDA, was 2.8x, and interest coverage was 4.3x. On a pro
forma basis including the GDSS acquisition, for the last twelve
months ending May 31, 2002, Fitch estimates that GY still
exhibited solid credit measures with a leverage ratio of 3.5x
and interest coverage of 4.0x. Unlike most companies heavily
exposed to the automotive market, GenCorp has a fully funded
pension program minimizing the potential for any required, heavy
near-term contributions in this area.
GENCORP INC: S&P Rates $338 Mill. Secured Credit Facility at BB+
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its double-'B'-plus
rating to GenCorp Inc.'s $338 million secured credit facility.
The facility consists of an existing $137 million revolving
credit facility maturing in 2005, an existing $76 million term
loan A maturing 2005, and a new $125 million term loan B. The
proceeds from the term loan B will be used to finance the
purchase of the assets of General Dynamics' space propulsion
business for $90 million and to pay down borrowings on the
revolver.
At the same time, Standard & Poor's affirmed its double-'B'
corporate credit rating on GenCorp Inc. The outlook is stable.
"The affirmation reflects the improvements in GenCorp's business
position in liquid and space propulsion resulting from the GDSS
acquisition, offset by the increased debt," said Standard &
Poor's credit analyst Christopher DeNicolo. The acquisition is
expected to close, subject to regulatory approval, by the end of
the fourth quarter of 2002.
GenCorp's $338 million secured credit facility is rated double-
'B'-plus, one notch higher than the corporate credit rating. The
facility is secured by substantially all the assets of GenCorp
and all of the assets and stock of its material domestic
subsidiaries, as well as 67% of the stock of material foreign
subsidiaries. The facility has financial covenants related to
minimum interest coverage, minimum consolidated net worth,
minimum fixed charge coverage, and maximum leverage. GenCorp is
expected to remain comfortably within the covenants.
Standard & Poor's believes that in a default scenario there is a
strong likelihood of full recovery of principal due to
significant overcollateralization. Considering the estimated
book value of the eligible assets at May 31, 2002 (greater than
$500 million), consisting of accounts receivable, inventory,
fixed assets and tooling, and real estate, conservatively
discounted, results in approximately 1.2 times coverage of a
fully drawn facility. This estimate does not take into account
the market value of the real estate, which is likely to be
significantly greater than book value, or the GDSS assets to be
acquired.
GenCorp has made significant progress in turning around its
automotive and fine chemicals businesses, the latter of which is
expected to be profitable in 2002. Aerojet, bolstered by the
GDSS acquisition, is well positioned to participate in a number
of key launch vehicle and space programs, including National
Missile Defense.
Management, although acquisitive, is expected to preserve
GenCorp's financial flexibility and a financial risk profile
consistent with current ratings. GenCorp is likely to benefit
from increases in defense spending, especially National Missile
Defense and improved operations at its automotive and fine
chemical segments.
GEOWORKS CORP: Falls Below Nasdaq Continue Listing Requirements
---------------------------------------------------------------
Geoworks Corporation (Nasdaq: GWRX) announced that on August 29,
2002 it received notice from Nasdaq that its securities would be
delisted from the Nasdaq Smallcap Market on September 6, 2002,
primarily due to non-compliance with the minimum bid and minimum
net equity rules, unless the Company appealed this staff
determination. The Company filed an appeal on September 4,
2002. Although the Company will propose a plan to Nasdaq that
delays delisting, the Company continues to expect that its
securities will be delisted after the Panel hearing, which is
anticipated to take place within 30 to 45 days.
Geoworks Corporation is a provider of leading-edge software
design and engineering services to the mobile and handheld
device industry. With nearly two decades of experience
developing wireless operating systems, related applications and
wireless server technology, Geoworks has worked with industry
leaders in mobile phones and mobile data applications including
Mitsubishi Electric Corporation and Nokia. Based in Emeryville,
California, the company also has a European development center
in the United Kingdom. Additional information can be found on
the World Wide Web at http://www.geoworks.com
GLIMCHER REALTY: S&P Revises Outlook on BB Corp Rating to Stable
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Glimcher Realty Trust to stable from negative. At the same time,
the double-'B' corporate credit rating on Glimcher is affirmed
and its preferred stock rating is affirmed at single-'B'.
The outlook revision reflects the completion of several
financing transactions during the past 18 months, which has
resulted in the expectation for stable to modestly improving
debt coverage measures through the next year as the company
continues noncore asset sales and uses proceeds to pay down
debt. The corporate credit rating affirmation acknowledges this
retail REIT's below-average business position and its relatively
aggressive financial profile. The ratings are supported by a
relatively well-occupied and profitable (but comparatively
smaller) portfolio, which generates stable, predictable cash
flow from a diverse and moderately credit-worthy tenant base.
However, these strengths are offset by near-term vacancy issues
in its noncore community center portfolio, generally higher
leverage and bank line usage, and a mostly encumbered portfolio.
Columbus, Ohio-based Glimcher is a fully integrated REIT with a
retail property focus. Founded in the 1950s as a family
development concern, Glimcher went public in 1994. The
portfolio, which has been pared in recent years, currently
includes 85 properties representing about 27.9 million square
feet of mall, community shopping center, and stand-alone retail
space. The company made a strategic decision about three years
ago to sell most of its community centers and all of its stand-
alone assets; however, progress has been slower than
anticipated. The company has sold 46 properties and 15 outlots
to date, generating $275 million of proceeds (realizing moderate
gains, on average). Another roughly $100 million (nine noncore
properties) in asset sales are pending. After the sale, malls
will represent about 76% of gross leaseable area and 85% of
total minimum rents, up from the current 66% and 74%,
respectively.
The mall portfolio remained well occupied at 91.8% at June 30,
2002, but the community center portfolio occupancy has declined
to 87% as a result of vacancies caused by retail bankruptcies
(primarily Ames and Kmart). However, the mall portfolio is
highly concentrated, with a handful of larger assets (Jersey
Gardens, Lloyd Center, and University Mall) accounting for a
relatively high 21% of the company's net operating income.
Tenant diversity is average, with the top 10 tenants
representing 22% of total minimum base rent. Lease expirations
within the mall portfolio average a manageable 10% (of base
rents) per year, and new leases have generally been signed at
per square foot rents that are greater than the average
portfolio rent per square foot, mitigating the risk of rent
roll-down exposure. The tenant bases of the mall portfolio and
the community center portfolio differ, with the top mall
portfolio in-line tenants including The Limited, Foot Locker,
and The Gap, and the top community center tenants including Wal-
Mart, Kmart, Lowe's, and Kroger. Glimcher's portfolio remains
geographically concentrated, with 27% of the total net operating
income derived from Ohio.
The company demonstrated good access to diverse sources of
capital during the past 18 months with the completion of two
common equity offerings, new mortgages, mortgage paydowns, the
refinancing of a large construction loan, and the extension of
its $170 million credit facility. Following these capital
transactions, leverage has declined modestly. While book value
leverage remains high at 74%, after adjustment for the estimated
value of the portfolio in excess of book value, leverage is
probably closer to 63%, which compares with an average of 59%
for retail REIT peers (all of which are more highly rated).
Large 2003 and 2004 single asset maturities have extension
options, providing some flexibility if refinancing options are
unattractive at the initial maturity dates. Bank line usage has
been high during the past few years, with outstandings averaging
more than 90% of total availability. Usage is expected to remain
higher than desirable, although management intends to apply
asset sale proceeds toward debt reduction. The company's
portfolio is essentially fully encumbered, although the
unencumbered asset pool is expected to increase modestly as
secured bridge loans are repaid with asset sales proceeds.
Debt service and fixed charge coverage measures have improved to
1.9 times and 1.7x, respectively, from historically low but
stable levels. Glimcher's cash flow stream has been benefiting
from the subsidy provided by the lower cost of variable-rate
debt (about 30% of total debt currently). However, the bulk of
this variable-rate debt does have interest rate cap agreements
in place, providing some protection from future interest rate
increases. Debt service and fixed charge coverages are expected
to remain stable to slightly improve over the next year,
supported by stable occupancies, modest rent increases, and debt
reduction with near-term asset sales proceeds. The company's
total dividend payout ratio (including preferred) continues to
hover in the 80% (of funds from operations) range, and the
company is meeting its annual dividends (of about $75 million)
and portfolio capital expenditures (of about $10 million per
year) from operating cash flow.
Outlook: Stable
Glimcher ably met its large 2001 and early 2002 debt maturities
from diverse sources of capital (debt, equity, and asset sales)
while maintaining stable debt service coverage measures. Looking
forward, despite community center vacant space that is not
expected to be released or contribute to cash flow until some
time in 2003, strengthened performance from more recently
completed development projects is expected to continue to
support stable debt coverage measures.
GLOBAL CROSSING: Court Fixes September 30, 2002 Claims Bar Date
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
established September 30, 2002, at 5:00 p.m., Eastern Time, as
the last date and time by which proofs of claim must be filed in
the Chapter 11 cases involving Global Crossing Ltd., and its
debtor-affiliates.
The proof of claim must be received on or before the Bar Date by
the Debtors' claims agent, Bankruptcy Services LLC, either by
mailing, or delivering by messenger or overnight courier, the
original proof of claim to:
Global Crossing Claims Processing
c/o United States Bankruptcy Court
Southern District of New York
P.O. Box 5014
Bowling Green Station
New York, New York 10274-5014
Proofs of Claim sent by facsimile or telecopy will not be
accepted. The Debtors request that all proofs of claim be
deemed timely filed only if actually received by the Global
Crossing Claims Processing Center on or before the Bar Date.
These persons or entities are not required to file a proof of
claim on or before the Bar Date:
A. any person or entity that has already properly filed, with
the Clerk of the United States Bankruptcy Court for the
Southern District of New York, a proof of claim against the
Debtors, utilizing a claim form which substantially conforms
to the Proof of Claim or Official Form No. 10;
B. any person or entity whose claim is listed on the Debtors'
Statements of Financial Affairs, Schedules of Assets and
Liabilities and Schedules of Executory Contracts; whose claim
is not described as "disputed," "contingent," or
"unliquidated"; and who does not dispute the amount or nature
of the claim for the person or entity as listed in the
Schedules;
C. any person holding a claim for an administrative expense;
D. any person or entity whose claim has been paid by the
Debtors;
E. any person or entity that holds a claim arising out of or
based upon an equity interest in the Debtors;
F. any person or entity whose claim is limited exclusively to
the repayment of principal, interest, and other applicable
fees and charges under any bond or note issued by the
Debtors; provided, however, that:
1. the exclusion will not apply to the Indenture Trustee
under the applicable Debt Instruments,
2. the Indenture Trustee will be required to file one proof
of claim, on or before the Bar Date, on account of all of
the Debt Claims on or under each of the Debt Instruments
and
3. any holder of a Debt Claim wishing to assert a claim,
other than a Debt Claim, arising out of or relating to
the Debt Instruments will be required to file a proof of
claim on or before the Bar Date, unless another exception
in this paragraph applies;
G. any person or entity that holds a claim that has been allowed
by an order of the Court entered on or before the Bar Date;
H. any person or entity that holds a claim solely against any of
the Debtors' non-debtor affiliates; and
I. a Debtor in these cases having a claim against another
Debtor. (Global Crossing Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
GLOBAL TECHNOVATIONS: Court Fixes September 13 Claims Bar Date
--------------------------------------------------------------
Pursuant to Rule 3003 of the Federal Rules of Bankruptcy
Procedure, the U.S. Bankruptcy Court for the Eastern District of
Michigan establishes September 13, 2002, as the deadline for
creditors of Global Technovations, Inc., and its debtor-
affiliates to file their proofs of claim . . . or be forever
barred from asserting their claims.
All proofs of claim must be received before 4:00 p.m. on Sept.
13 by the Debtors' Claims Agent, AlixPartners LLC. Claims must
be delivered by mail, hand carry or overnight courier and
addressed to:
Global Technovations, Inc., et al.
c/o AlixPartners LLC
2100 McKinney Avenue, Suite 800
Dallas, Texas 75201
Proofs of Claim need not be filed if they are on account of:
(i) Claims already properly filed with the Clerk Bankruptcy
Court;
(ii) Claims listed in the Debtors' Schedules of Assets and
Liabilities and not described as contingent, disputed
or unliquidated;
(iii) Claims under Sec. 507(a) of the Bankruptcy Code as an
administrative expense of the Chapter 11 cases;
(iv) Claims by any directors, officers or employees of the
Debtors for indemnification, contribution, subrogation
or reimbursement;
(v) Any Debtor having a claim against another Debtor;
(vi) Any direct or indirect non-debtor subsidiary having any
claim against a debtor;
(vii) Claims previously allowed by an Order of the Court.
Global Technovations, Inc., develops, assembles, and markets the
patented MotorCheck and TruckCheck On-Site Analyzer ("an oil
analysis mini-lab in a box"), solid state spectroscopic
analyzers for liquid petroleum marker detection systems, the
PetroAnalytics line of diesel fuel and gasoline properties
analyzers for the automotive, truck and heavy-duty equipment
service markets. The Debtors filed for Chapter 11 protection on
December 18, 2001. Scott A. Griffin, Esq., and John Cunningham,
Esq., at White & Case LLP and Earle Erman, Esq., and David M.
Miller, Esq., at Erman, Miller, Zucker & Freedman, P.C.,
represent the Debtors in their restructuring efforts.
HORSEHEAD INDUSTRIES: Taps Angel & Frankel as Bankruptcy Counsel
----------------------------------------------------------------
Horsehead Industries, Inc., and its debtor-affiliates obtained
permission from the U.S. Bankruptcy Court for the Southern
District of New York to retain Angel & Frankel, P.C., as their
bankruptcy counsel.
The Debtors selected Angel & Frankel because the Firm has
considerable experience in matters of commercial insolvency and
reorganizations under the Bankruptcy Code, and because the
Debtors believe A&F is well qualified to represent them as
debtors and debtors-in-possession.
Angel & Frankel will be:
(a) advising the Debtors with respect to their powers and
duties in the continued operation of their businesses
and management of their property in the Cases as
debtors and debtors-in-possession;
(b) representing the Debtors before this Court, and any
other court of competent jurisdiction, and at all
hearings on matters pertaining to their affairs as
debtors and debtors-in-possession, including
prosecuting and defending litigated matters that may
arise during the Cases;
(c) advising and assisting the Debtors in the preparation
and negotiation of a plan of reorganization with the
creditors and other parties in interest;
(d) preparing all necessary or appropriate applications,
answers, orders, reports and other legal documents; and
(e) performing all other legal services for the Debtors
that may be desirable and necessary in the Cases.
Angel & Frankel's customary billing rates are:
Joshua J. Angel member $650 per hour
Bruce Frankel member $525 per hour
John H. Drucker member $425 per hour
Laurence May member $425 per hour
Jeffrey K. Cymbler member $325 per hour
William M. Kahn of counsel $500 per hour
Bonnie L. Pollack of counsel $325 per hour
Neil Y. Siegel associate $325 per hour
Leonard H. Gerson associate $325 per hour
Rochelle R. Weisburg associate $240 per hour
Frederick E. Schmidt associate $220 per hour
Seth F. Kornbluth associate $175 per hour
Michele E. Cosenza associate $175 per hour
Craig R. Nussbaum law clerk $120 per hour
Horsehead Industries, Inc., d/b/a Zinc Corporation of America,
the largest zinc producer, filed for chapter 11 protection on
August 19, 2002 in the U.S. Bankruptcy Court for the Southern
District of New York. When the Company filed for protection
from its creditors, it listed $215,579,000 in assets and
$231,152,000 in debts.
INNOVATIVE GAMING: Fails to Maintain Nasdaq Listing Standards
-------------------------------------------------------------
Innovative Gaming Corporation of America (Nasdaq: IGCA)
announced that it was recently notified by Nasdaq that it failed
to maintain a sufficient number of independent directors on its
Board of Directors in compliance with Nasdaq Marketplace Rules
4350c and 4350(d)(2). The Marketplace Rules require the Company
to have an audit committee composed of at least three
independent directors. Currently, one of the Company's two
audit committee members is independent. The Company has
previously requested a hearing with Nasdaq that will stay any
delisting action by Nasdaq pending Nasdaq's decision following
the hearing which is scheduled for September 29, 2002.
The Company further announced that Ronald E. Eibensteiner and
Kevin J. Malley have been appointed to the Company's Board of
Directors, and that Edward J. Harris has joined the Company as
Chief Operating Officer and has also been appointed to the
Company's Board of Directors.
Mr. Eibensteiner has been involved in the formation of numerous
technology companies and, as President of Minneapolis-based
Wyncrest Capital, Inc., has been a seed investor in several
early-stage companies. Mr. Eibensteiner is currently a director
of ActiveIQ Technologies, Inc., a publicly traded software
technology company; Chairman of USCardio Vascular, Inc., a
private company; and an active investor and/or board member of
several private companies in industries from medical to software
technology, including Birch Point Medical, Inc. and Matrix
Technologies. Mr. Eibensteiner was a cofounder of both
Diametrics Medical, Inc., a publicly traded company, and
OnHealth Network Company, a private company which was purchased
by WebMD and he served as a director of Big Charts, Inc. prior
to its purchase by MarketWatch.com. Mr. Eibensteiner also serves
as Chairman of KidsFirst Scholarship Fund of Minnesota, a non-
profit organization founded by Mr. Eibensteiner and his wife
Laurie to provide scholarships to low-income families wishing to
send their children to private schools. Active in politics, Mr.
Eibensteiner is serving his second two-year term as Chair of the
Republican Party of Minnesota.
Mr. Malley has over 19 years of direct operating experience in
senior management positions in the resort hotel-casino industry
principally as President and CEO of the Desert Inn Hotel and
Casino and as Executive Vice President of Caesars Palace. He
has 11 years of experience performing gaming-consulting services
for such clients as the City of Detroit, Ontario Casino
Corporation, Isle of Capri and six casino developments in
Colorado. Mr. Malley began his career as a Certified Public
Accountant with KPMG and last served as an audit manager opening
and managing KPMG's Las Vegas office. He was also a member of
KPMG's Los Angeles office's Executive Committee.
Commenting on the appointment of Mr. Eibensteiner and Mr.
Malley, Tom Foley, Chairman of IGCA's Board of Directors, said
"These appointments are a strong indicator of the progress made
by the Company over the past nine months. Ron has substantial
public company experience and has been actively involved in a
number of software technology companies. In addition, Kevin
Malley's vast gaming experience will allow the Company to better
meet the needs of its customers. Ron's and Kevin's input and
guidance will be invaluable to the Board."
Mr. Harris received his Bachelor of Science in Mechanical
Engineering from California State University, Los Angeles in
1963. From 1991 through 1999, Mr. Harris served as President
and Chief Executive Officer of XP Systems which was in the
business of design, development, sales and support for turnkey
financial platform and information systems. He also served as
President of Applied Computer Service, Inc. from 1974 through
1999. Applied Computer Service designed and developed computer-
based systems for aerospace, banking and process control
applications. From 1963 through 1974, Mr. Harris was a System
Analyst for Aerojet General which specialized in scientific
programming system design and project management assignments for
operational satellite systems, aerospace research projects,
naval weapons systems, and automatic programmed tools.
In commenting on the addition of Mr. Harris to the management
and Board of IGCA, Laus M. Abdo, President, CEO and CFO of the
Company, said "Ed's vast experience in managing technology
companies combined with the gaming experience of IGCA's existing
management team provides the Company with the depth and breadth
of talents to move the Company and its products to the next
level. We also believe the addition of Ron Eibensteiner, Kevin
Malley and Ed Harris to the Board of Directors is evidence of
the improving condition of the Company and its future
prospects."
The Company noted that the additions of Messrs. Eibensteiner,
Malley and Harris would assist the Company in achieving
compliance with applicable Nasdaq Marketplace Rules relating to
independent directors and the Company's Audit Committee.
Nevertheless, the Company stated that there can be no assurance
that the Nasdaq Hearing Panel will grant the Company's request
for continued listing on the Nasdaq Small Cap Market.
ISLE OF CAPRI: Shuts Down Tunica Property's Casino Operation
------------------------------------------------------------
Isle of Capri Casinos, Inc., (Nasdaq: ISLE) officials announced
the closing of the company's Tunica property's casino operation.
In anticipation of the previously announced sale of the
company's Tunica property, the company ceased operations of the
Tunica casino facility. The hotel and support facilities will
remain open pending the closing of the transaction, which is
expected to take place within approximately 30 days.
Isle of Capri Casinos, Inc., owns and operates 14 riverboat,
dockside and land-based casinos at 13 locations, including
Biloxi, Vicksburg, Lula and Natchez, Mississippi; Bossier City
and Lake Charles (two riverboats), Louisiana; Black Hawk,
Colorado; Bettendorf, Davenport and Marquette, Iowa; Kansas City
and Boonville, Missouri; and Las Vegas, Nevada. The company
also operates Pompano Park Harness Racing Track in Pompano
Beach, Florida.
* * *
As reported in the March 26, 2002 edition of Troubled Company
Reporter, Standard & Poor's assigned a single-B rating to Isle
of Capri's $200 million senior subordinated notes. S&P gave the
ratings to reflect the company's diverse portfolio of casino
assets, relatively steady operating performance, lower than
expected capital spending levels, and improving credit measures.
These factors are partly offset by competitive market
conditions, the company's aggressive growth strategy, and its
high debt levels.
IT GROUP: Court Okays Neilson Elggren as Examiner's Accountant
--------------------------------------------------------------
R. Todd Neilson, the Court-appointed Examiner in IT Group Inc.'s
and its debtor-affiliates' Chapter 11 cases, obtained permission
from the Court to employ and retain Neilson Elggren LLP, as his
accountants, nunc pro tunc to March 8, 2002, to:
A. Assist and advise in the investigation of the acts,
conduct, assets liabilities and financial condition of the
Debtors businesses and the desirability of the continuance of
such business, and any other matter relevant to the cases or
to the formulation of a plan;
B. Assist to develop one or more detailed plans for the
ongoing operation of the Debtors' business;
C. Assist to develop and make recommendations regarding cost-
cutting and revenue enhancement measures for the Debtors;
D. Assist to explore the prospects for a stand-alone plan of
reorganization for the Debtors in comparison to the
transaction set forth in the Sale Motion;
E. Assist in investigating and fully exploring the potential
lenders, the possible terms of a new DIP facility and
potential exit financing for the Debtors;
F. Assist to investigate and analyze selling any and all of
the Debtors' assets or businesses and, to the extent
necessary to conduct such investigation and analysis, meet
and discuss matters with potential purchasers;
G. Assist in meeting with the Debtors', the Committee and
their respective advisors and attorneys regarding the matters
set forth;
H. Assist the economics of the Debtors' rights and interests
in the Debtors under various agreements that are the subject
of the Motion of Northrop Grunman Technical Services, and
Wackenhut Services, Inc.
I. Assist assessing the potential separate administration or
sale of Landbank Wetlands, LLC and US Wetlands, LLC; and,
J. Assist in the preparation of a report to file in the Court
which will set forth the Examiner's findings as to the
matters mentioned;
David Judd, a Neilson partner, tells the Court that his firm
will bill $85 to $425 an hour for its professional services.
Neilson partner Thomas Jeremiassen, CPA, assures the Court that
Elggren has not otherwise represented the Debtors, their
creditors, equity security holders, or any other party-in-
interest, as their respective accountants, in matters relating
to the Debtors or their estates. (IT Group Bankruptcy News,
Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900)
KAISER ALUMINUM: Asks Court to Enforce Stay Against Safety Nat'l
----------------------------------------------------------------
Paul N. Heath, Esq., at Richards, Layton & Finger P.A., in
Wilmington, relates that more than two years ago, Kaiser
Aluminum Corporation and its debtor-affiliates filed a complaint
with a Superior Court in San Francisco, California against
certain insurers. The Debtors sought the adjudication of its
rights under various liability insurance policies. The
California Action did not include Safety National Casualty
Corporation as a defendant.
On September 15, 2000, London Market Insurers, one of the
defendants, filed a Cross Complaint for Declaratory Relief,
Reimbursement and Subrogation, Contribution and Indemnification
in the California Action. The cross-complaint named Safety
National as a third party defendant. Safety National issued a
single excess liability insurance policy to the Debtors in 1984.
The policy is one of over 300 separate policies that the Debtors
purchased for the time period 1959 to 1985.
Although the Debtors have never sued or asserted any claims
against Safety National in the California Action, Mr. Heath
relates that Safety National recently filed in the California
Action a motion to:
-- compel the Debtors to participate in an arbitration
proceeding to determine the Debtors' rights under the
Safety National policy; and
-- stay the cross-complaint filed by London pending the
completion of the arbitration.
The Debtors presume that Safety National will initiate the
proposed proceeding at a later date.
Nevertheless, Mr. Heath notes that, by its own admission, Safety
National was fully aware of the automatic stay at the time it
filed the motion. Safety National asked the California Court to
determine that the automatic stay does not apply to its motion,
based on its erroneous assertion that it is merely defending
claims brought against it by the Debtors.
The Debtors already warned Safety National that it has violated
the automatic stay by filing the motion. The Debtors demanded
that Safety National promptly withdraw the motion. But Safety
National refused.
By this motion, the Debtors ask the Bankruptcy Court to enforce
the automatic stay against Safety National in the California
Action.
Mr. Heath argues that, in seeking to commence a separate
arbitration action against the Debtors with respect to its
single insurance policy, Safety National is attempting to
initiate a "judicial, administrative, or other action or
proceeding against the debtor." Safety National should have
commenced an arbitration proceeding before the Petition Date
since the London cross-complaint was filed prepetition.
Mr. Heath points out that Safety National is attempting to
commence a proceeding against the Debtors in a state court case
where the Debtors have asserted no claims against it. Safety
National is also trying to exercise control over the property of
the Debtors' estate by compelling the Debtors to participate in
an arbitration of the Debtors' rights under the Insurance
Policy, Mr. Heath adds.
Because Safety National's willful violation of the automatic
stay, Mr. Heath asserts that Safety National should be required
to reimburse the Debtors for the damages they have incurred.
The Debtors demand reimbursement of the costs and attorneys'
fees incurred in opposing Safety National's motion in the
California Action and by filing and prosecuting this motion.
Safety National Reacts
Brian A. Sullivan, Esq., at Werb & Sullivan, in Wilmington,
Delaware, explains that Safety National's Motion to Compel
Arbitration in the California state court is an effort to defend
itself in a lawsuit brought by the Debtors. The motion did not
violate the automatic stay, Mr. Sullivan insists.
"If it did, then every one of over 100 insurers who are
defending themselves in Kaiser's California coverage lawsuit
have also violated the stay," Mr. Sullivan tells Judge
Fitzgerald.
Mr. Sullivan maintains that there is an insurance coverage
dispute between Safety National and the Debtors, which is
subject to the Safety National arbitration clause. Therefore,
the Safety National arbitration clause must be enforced in the
context of this bankruptcy proceeding. Otherwise, the Debtors
will have succeeded in using the automatic stay to litigate
against Safety National while preventing it from defending
itself according to the terms of the parties' contract.
The Safety National policy is an excess policy with limits of
$2,000,000. More importantly, Mr. Sullivan asserts that the
policy contains an arbitration clause that provides for
arbitration of all disputes arising out of the policy:
"... any dispute arising out of this Policy shall be submitted
to the decision of a board of arbitration. The board of
arbitration will be composed of two arbitrators and an
umpire, meeting in St. Louis, Missouri, unless otherwise
agreed."
Under the arbitration clause, the board will make its decision
with regard to the custom and usage of the insurance and re-
insurance business. The board will issue its decision in
writing based upon a hearing in which evidence may be introduced
without following strict rules of evidence but in which cross-
examination and rebuttal will be allowed.
Mr. Sullivan contends that the Debtors are trying to use their
bankruptcy to delete the arbitration clause. To date, the
Debtors have not sought to avoid or cancel the Safety National
policy.
Mr. Sullivan alleges that the Debtors brought an action against
London for insurance coverage and then showed that they intended
to claim coverage from Safety National. The Debtors dropped
Safety National as a defendant purely to avoid arbitration, with
the knowledge that Safety National would remain in the case
because of London's cross-claim. The Debtors have served
extensive discovery on Safety National.
Mr. Sullivan speculates that the Debtors plan to force Safety
National to defend itself and litigate the California action.
Then the Debtors will use the automatic stay to prevent Safety
National from raising the contractual defense of arbitration.
Once enough time has passed, the Debtors can make their claim
against Safety National and contend that Safety National waived
its right to arbitration by litigating.
"This scheme would enable Kaiser to use the automatic stay to
delete the arbitration clause from the Safety National policy
and give Kaiser greater rights than it had pre-bankruptcy," Mr.
Sullivan says.
California Court Waits for Judge Fitzgerald's Ruling
A hearing on Safety National's California motion to compel
arbitration took place on August 16, 2002. Accordingly,
Presiding Judge Richard A. Kramer set a further hearing on
Safety National's motion for September 30, 2002, pending the
disposition of the Bankruptcy Court's determination of the
issues.
Judge Kramer, however, asked both parties' counsels to advise
the Bankruptcy Court to take an expeditious ruling on the
issues. According to Judge Kramer, the Bankruptcy Court's ruling
will assist the California court in moving forward with the
coverage litigation. (Kaiser Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
KAISER ALUMINUM: Board OKs $13.7M Investment in Jamaican Plant
--------------------------------------------------------------
Kaiser Aluminum announced that its board of directors has
approved an expenditure of $13.7 million at its 65%-owned Alpart
alumina refinery to improve efficiency and support the
previously announced expansion of annual production capacity to
1.65 million metric tonnes.
The spending covers two separate projects, both of which are
scheduled for completion by the end of 2003: a new dual-feed
system will enable the facility to more efficiently process
different grades of bauxite and a new cooling system will
improve alumina quality.
The total cost of the two projects is estimated at $21 million,
35% of which is funded by Alpart's minority-interest owner,
Hydro Aluminium AS.
Kaiser President and Chief Executive Officer Jack A. Hockema
said, "Continued capital investment in efficiency, quality, and
growth initiatives is essential for our ongoing efforts to
strengthen the company and emerge from Chapter 11. These two
projects, in particular, are key elements of Alpart's aggressive
plan for significant improvement in operating performance and
market position. The investment reflects our faith in the
Jamaican government's commitment to support ongoing improvements
in the competitive position of this key national industry. In
addition, we are pleased with our board's approval -- and with
the support that these projects have received from the
committees with whom we are working in our Chapter 11 case."
Kaiser Aluminum Corporation (OTCBB:KLUCQ) is a leading producer
of alumina, primary aluminum, and fabricated aluminum products.
Kaiser Aluminum & Chemicals' 12.75% bonds due 2003 (KLU03USR1),
DebtTraders reports, are trading at 17 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KLU03USR1for
real-time bond pricing.
KFX: Must Raise Additional Capital to Continue Operations
---------------------------------------------------------
The energy company KFx has incurred net losses of approximately
$15,177,000, $12,290,000 and $12,730,000 and negative cash flows
from operations of approximately $6,738,000, $5,151,000 and
$3,458,000 in the years ended December 31, 2001, 2000 and 1999,
respectively, and an additional net loss of $10,244,340 and
negative cash flows from operations of $3,013,425 in the six
months ended June 30, 2002 and had an accumulated deficit of
approximately $96,513,000 as of June 30, 2002. These factors,
coupled with the need for additional financing to fund
operations and planned growth in the business, raise substantial
doubt about whether the Company can continue as a going concern.
The Report of Independent Accountants, dated April 12, 2002,
covering the Company's consolidated financial statements for the
year ended December 31, 2001 included an explanatory paragraph
discussing this going concern uncertainty.
In order to mitigate this uncertainty, the Company intends to
seek further capital through various means which may include the
sale of all or a portion of its interest in Pegasus, additional
sales of debt or equity securities, a business combination or
other means and to further reduce expenditures as necessary.
Should the Company not be successful in achieving one or more of
these actions, it is possible that the Company may not be able
to continue as a going concern.
Consolidated revenue for the second quarter of 2002 was
$1,252,924, an increase of $723,920 (137%) compared to the
second quarter of 2001. The increase is due entirely to an
increase in Pegasus revenue resulting from a significant
increase in the number of active installation projects for the
current year that contributed approximately $882,000 to revenue
($451,229 of which was gained through the Pavilion Power
acquisition), an increase of $29,372 in maintenance revenue, an
increase in engineers hired to complete software installations
and increased utilization of software installers. Due to the
increase in the Pegasus backlog, mainly due to the Pavilion
power optimization division acquisition, management expects the
trend of increasing revenue to continue in future quarters.
The second quarter of 2002 produced an operating loss of
$4,246,040, which was $2,399,040 (130%) more than the second
quarter of 2001. Pegasus' portion of the operating loss for the
second quarter of 2002 was $1,017,434, which was $223,588 (28%)
higher than the second quarter of 2001. The increase can be
attributed to costs associated with increased headcount of the
sales and engineering staff, costs of international sales
efforts and an increase in depreciation and amortization expense
of $201,954 due to the cumulative adjustment to recognize
$286,193 of amortization expense for the Pavilion license
agreement offset by an increase in gross profit of $205,133
(137%) due mainly to an increase in the number of active
installation projects and a decrease in research and development
expense. The combined K-Fuel segment and corporate cost portion
of the operating loss for the second quarter of 2002 was
$3,228,606 compared to $1,053,154 in 2001 with the increase in
operating loss due mainly to the recognition of approximately
$2,057,000 in expense for stock appreciation rights and
consulting fees.
The consolidated net loss of $6,623,462 for the second quarter
of 2002 was $3,619,967 more than the net loss for the second
quarter of 2001. Included in the second quarter 2002 and 2001
net losses were non-cash charges approximating $5,398,000 and
$1,687,000, respectively.
It is estimated that construction of a K-Fuel production
facility will take approximately nine months, thus no royalty
payment would begin until at least nine months after a license
agreement is signed. From time to time, directors of the
Company have provided to the Company short term unsecured
financing and the Company expects that such financing, on at
least a short-term basis, will continue to be available if
needed. Such short-term financing will not, however, cover the
cash needs of the Company on an ongoing basis.
The Company will seek to meet its cash requirements over the
next fiscal year with respect to day-to-day operations and debt
service requirements through (a) cash on hand, which as of
August 12, 2002 approximated $1,069,000; (b) an additional
discretionary investment by Kennecott of $500,000 during the
year; (c) potential additional investment pursuant to the option
in the Third Addendum to the Common Stock and Warrant Purchase
Agreement dated July 19, 2002, whereby the investment group has
an option to invest an additional $10 million in KFx common
stock; (d) potential additional investments in Pegasus and/or
KFx from interested participants in the power generation
industry; (e) potential debt and/or equity offerings of the
Company; (f) potential fees from licensing new K-Fuel
facilities; (g) potential partners in connection with
opportunities to expand the Company's product and service
offerings to the power industry; and (h) unsecured short-term
borrowings for the Company and/or Pegasus from one or more of
its directors and/or other parties. Efforts by the Company to
raise additional funding may be hampered by the put option and
additional financing restrictions as a result of the financing
transactions that have occurred during 2002.
KMART CORPORATION: Brings-In Abacus Advisory as Consultant
----------------------------------------------------------
Kmart Corporation and its 37 subsidiaries seek for supplemental
authority to employ and retain Abacus Advisory & Consulting
Corp., LLC to assist in the Debtors' rent and occupancy expense
reduction program, nunc pro tunc to August 1, 2002.
J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom,
in Chicago, Illinois, claims that the expanded employment and
retention of Abacus is necessary to assist the Debtors in
obtaining rent and other concessions for the Debtors' 1,804
remaining retail locations and all of its warehouses, office
leases, storage facilities, parking lots, and other real estate
assets. Mr. Ivester explains that the Debtors have decided to
commence negotiations with landlords, mortgagees, and other
relevant parties in order to obtain rent and other concessions
for the Debtors' Properties. This, in an effort to reduce rent
and occupancy costs and thereby increase profitability of their
operations.
Consequently, the Debtors solicited and received seven bids to
perform the rent and occupancy reduction services from Abacus,
DJM Asset Management, LLC; Excess Space Disposition, Inc., Hilco
Real Estate, LLC; Keen Consultants, LLC; Retail Consulting
Services; and Richard M. Felner Associates. Of these, the
Debtors selected Abacus as the best candidate based on several
factors:
(1) Abacus' Proposal is the Most Favorable
Under the Abacus proposal, Abacus is entitled to a
commission based only on the first 18 months of rent savings
as opposed to other proposals where commissions were based
on rent savings throughout the primary term of the
underlying lease. In addition, Abacus is paid in arrears
every six months rather than other bidder's proposals, which
call for payment of commissions in advance;
(2) Abacus' Principals Have Extensive Experience and Knowledge
Abacus professionals were involved in real estate
disposition and claim reduction programs of many large
retailers including Service Merchandise Company, Inc.,
Montgomery Ward, LLC, Bradlees Stores, Inc., and County Seat
Stores, Inc.; and
(3) Abacus is Familiarity With the Debtors
Abacus was previously retained as the Debtors' inventory
valuation consultant. Abacus' retention as inventory
valuation consultant concluded under the terms of that
retention agreement on July 31, 2002.
The Debtors believe that hiring Abacus will enhance the Debtors'
ability to minimize their rent and occupancy expenses for the
Properties, thereby maximizing the profitability of the Debtors'
operations.
The current engagement of Abacus contemplates these services:
(a) Develop store information package that will include
information culled from Kmart data and data already
developed by other Kmart professionals as well as additional
information that Abacus and Kmart view as relevant and
necessary to thorough preparation for occupancy concession
negotiations;
(b) Negotiate with landlords, mortgagees, and other relevant
parties to obtain rent and other concessions on the
Properties;
(c) Provide expert testimony at court hearings, Board of
Directors' meetings, and Creditors' Committee meetings as
requested by Kmart; and
(d) Abacus will act as an independent contractor and nothing in
the Agreement will create an agency relationship between
Kmart and Abacus. Abacus understands that it has no
authority to make or imply any commitments that are binding
upon Kmart.
Abacus agrees that it will act only at Kmart's direction and
that Kmart will have full decision-making authority, to be made
in its sole discretion, with respect to any assumption or
rejection of a lease, acceptance or rejection of any occupancy
savings proposal, and any other matters within the scope of the
services to be rendered.
Abacus' professionals who will render these services include:
* Alan Cohen, the Chairman of Abacus, as well as
* Jack Rapp,
* Terrence Corrigan,
* Jim Goldbach and
* Spencer Heine.
As compensation for Abacus' services, the Debtors will pay:
(i) A base fee of $200,000 at the beginning of each month,
effective August 1, 2002, and continuing until
substantially all of the work is completed, up to a maximum
base fee payment of $1,200,000 in the aggregate;
(ii) An incentive fee based on a percentage of monetary
occupancy savings it achieves for Kmart, as follows:
--- 2% of the monetary and occupancy savings up to
$50,000,000 in annual monetary occupancy savings;
--- an additional 1/2% of monetary and occupancy savings
from $50,000,000 to $75,000,000 in annual monetary
occupancy savings; and
--- an additional 1/2% of the annual monetary occupancy
savings in excess of $75,000,000;
Monetary and occupancy savings will include, but not be
limited to, reduction in rent, taxes, and CAM charges. The
incentive fee percentage due Abacus will be capped so that
Abacus will be entitled to its percentage for each lease
only for that period Kmart actually receives and is
entitled to retain the occupancy savings up to a maximum of
18 months and will not include any additional "present
value" of occupancy savings upon assumption of any lease or
the recapture of any occupancy savings upon rejection of
any lease; and
(iii) A reimbursement of its reasonable out-of-pocket expenses.
Mr. Ivester further elaborates that any earned incentive fee
will be paid to Abacus in arrears within 15 days after the end
of each six-month period that Abacus is entitled to receive that
fee under the terms of the Agreement. The first payment will be
payable by February 15, 2003 for any incentive fee earned
between August 1, 2002 and January 31, 2003. In addition, the
compensation that Abacus is due to receive as a result of this
expanded retention will effectively replace the compensation
that it was receiving under the original application to be
retained and employed as inventory and valuation consultant.
Mr. Rapp assures the Court that Abacus is a disinterested
"person" and does not hold or represent an interest adverse to
the Debtors' estates. (Kmart Bankruptcy News, Issue No. 31;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
LEADING EDGE: Independent Auditors Express Going Concern Doubt
--------------------------------------------------------------
Leading-Edge Earth Products, Inc., and Oregon Corporation, is
headquartered in Chicago, IL. The objectives of LEEP are to
develop, manufacture, market and profit from the sale of its
structural, lightweight, insulated composite component, LEEP
STRUCTURAL CORE(TM) to support construction of the LeepCore
Frameless buildings. LeepCore(TM) is a 3-way structural
component used for constructing structural bearing-wall, sub-
roof and sub-floor systems. The LeepCore components
are joined to form sections, which are in turn joined to
construct walls, roofs and floors for residential and non-
residential building construction. LEEP's product is designed to
substitute for traditional materials and building systems. LEEP
believes its products will have major worldwide appeal for
construction of buildings, including: highly insulated, stand-
alone offices, restaurants, retail stores, shops; housing in
Emerging Nations; modular, portable, "knock-down"/reassemble
structures and air lift of MASH units and other military
applications.
LeepCore was designed as an alternative material to substitute
for structural wood, steel and concrete in a variety of
applications. The Civil Engineering Department, Structural
Laboratory, at the University of Washington, previously
supported the Company's product testing, certifications and
confirmed the Company's early product and technology. More
recently, the Company retained RADCO Testing Labs, Long Beach,
CA to perform structural tests in compliance with ASTM E-72 for
obtaining compliance with any of a wide variety of U.S. and
foreign building codes. The Company's structural test results
meet or exceed the structural requirements for both panelized
commercial and panelized residential construction of the
following building codes: ICBO, BOCA, International Building
Code, SBCCI Building Code and the new Florida Building Code.
Since inception LEEP has been entirely dependent on its CEO,
Grant Record, arranging credit facilities, making personal
loans, procuring loans from other stockholders, and selling
stock to qualified investors in order to meet the monthly cash
needs of LEEP. LEEP does not have a regular stream of revenue
from operations.
During 2001, LEEP acquired manufacturing equipment costing
approximately $1,132,000, which has been financed with leases
from finance companies over 60 months with monthly payments of
approximately $23,000. Two Company directors have provided
limited guarantees with recourse, and one of the manufacturers
has provided a remarketing agreement for $872,000. LEEP entered
into agreements with one of the Company directors to provide
financial guarantees requiring LEEP to escrow 1,000,000 shares
of Rule 144 restricted common stock in the director's company
name to be issued in the event of default by LEEP that results
in the director being required to make payments as a guarantor.
Since the inception of the arrangement, the guaranteeing
director's company has paid $131,435 out against the guarantee
and collected 1,314,350 shares. As a part of this agreement,
LEEP was also required to grant the director and his associates
options to purchase 1,300,000 shares of Rule 144 restricted
common stock at $0.15 and $0.20 per share. Both options have
been exercised. During the year ended April 30, 2002, LEEP
continued raising capital from the sale of stock from related
parties and incurring debt from related parties which was
secured by shares of the Company's stock. There has been minimal
capital formation from independent third parties. These
shareholder and related party transactions resulted in proceeds
of $196,829 from the issuance of common stock and net proceeds
of $487,620 from related party loans and notes payable. LEEP
will continue borrowing money and selling stock to fund its
corporate overhead and maintain operations at its Pennsylvania
plant, although there can be no assurance that the Company will
be successful in such financing efforts.
Management believes, in spite of current severe cash
limitations, the Company has been able to plan and maintain a
steady course that will ensure its ultimate success.
Specifically, the last 3 years and $3 million have been invested
in building the fundamentals that promote the Company's ability
to transition to a full-scale manufacturing enterprise. The 5-
year Plan that defines and projects this transition calls for 3
strategically-located automated US plants coming online in
respectively, 2003, 2005 & 2007. A $22 million funding is
required to purchase land, buildings, equipment and support
operations to positive cash flow in the 2004 time frame. A 2-
year all-out effort has been effective in identifying a large-
volume customer base that can effectively use all of LEEP's
planned high-volume (25 million Sq. Ft. per annum per
manufacturing plant) production capacity. In the same time
frame, the Company also brought together a management team to do
the professional planning required to attract a high-level
Investment Banking specialist and institutional fund managers.
Management is confident that the required $22 million funding
will be obtained from investors the Company is "courting" at
this time. This accomplished, LEEP will be able in the near term
to resume manufacturing operations and expand the Company's
Pennsylvania manufacturing operation at a rapid rate to bridge
the Company into its first full-scale manufacturing facility in
2003. Although management is optimistic about realizing the
planned near-term funding goal, no assurances can be made as to
the outcome of the current negotiations with institutional
investors.
Results Of Operations
There were no revenues for the year ended April 30, 2002. As of
LEEP's redirecting its marketing efforts into the Modular
Building industry, the Company's LeepCore product was broadly
accepted and welcomed by Modular Building industry leaders at
the modular industry's major annual trade show in Tampa, Florida
in March, 2002. As a result of the major change of direction
with respect to the Company's target market, the Company recast
its entire five-year Business Plan and strategy and began to
seek funding to activate and perfect the plan. Company efforts
to obtain proper funding have been thwarted by the
Enron/Anderson/WorldCom economic disaster(s) and general
economic uncertainties. In spite of the current trying economic
conditions, management remains confident it will obtain the
required financing, although no assurances of that positive
result can be made by management.
The Company's ability to continue as a going concern is
dependent upon its success in transforming its building panel
technology into a profitable operation and additional financing
or equity funding commensurate with operating activity. The
Company has a net loss of approximately $1.7 million for the
year ended April 30, 2002, has incurred a deficit of
approximately $11 million as of April 30, 2002, and
substantially all of the Company's loans and notes payable are
in default at April 30, 2002. These conditions raise substantial
doubt about the ability of the Company to continue as a going
concern.
LODGIAN: Asks Court to Approve Plan Solicitation Procedures
-----------------------------------------------------------
Lodgian, Inc., and its debtor-affiliates ask the Court to
establish procedures for the solicitation and tabulation of
creditors' votes to accept or reject the Company's chapter 11
Plan of Reorganization.
After the Court has approved the Disclosure Statement as
containing adequate information as required by Section 1125 of
the Bankruptcy Code, the Debtors propose to mail or cause to be
mailed solicitation packages containing copies of:
-- the Order approving this Motion and the Disclosure Statement,
-- the Disclosure Statement Approval Notice,
-- the Confirmation Hearing Notice; and
-- the approved form of the Disclosure Statement.
The Solicitation Packages will be mailed no later than September
30, 2002 to:
-- the parties-in-interest listed on the Master Service List,
-- attorneys for the Committee,
-- the U.S. Trustee,
-- all persons or entities that filed proofs of claim on or
before the date of the Disclosure Statement Notice, except to
the extent that a claim was paid pursuant to, or expunged by,
prior order of the Bankruptcy Court,
-- all persons or entities listed in the Debtors' schedules of
assets and liabilities dated March 5, 2002, as holding
liquidated, non-contingent, and undisputed claims, in an
amount greater than zero,
-- the transfer agent and registered holders of the Debtors'
senior subordinated note claims, and CRESTS claims,
-- all other parties-in-interest that have filed a request for
notice pursuant to Bankruptcy Rule 2002 in the Debtors'
Chapter 11 cases,
-- the Securities & Exchange Commission,
-- the Internal Revenue Service,
-- the Department of Justice,
-- the Pension Benefit & Guaranty Corp.,
-- any entity that has filed with the Court a notice of transfer
of a claim under Bankruptcy Rule 3001(e) prior to the date of
the Disclosure Statement Notice, and
-- any other known holders of claims against the Debtors,
provided that the Debtors will not be required to serve the
foregoing on any of the Debtors' creditors whose claims will
be paid in full prior to the effective date.
Adam C. Rogoff, Esq., at Cadwalader Wickersham & Taft, in New
York, informs the Court that the Solicitation Package will not
be sent to the members of Classes 8, 10-A and 11. Instead, the
members of Classes 8, 10-A and 11 will receive a Notice of
Non-Voting Status. Members of Class 8 will also receive a Short
Form DS. The Debtors do not propose to distribute any
Solicitation Packages to holders of interests in Class 9, as
these holders are either Debtors or affiliates of Debtors.
In addition, the Debtors propose to provide additional
solicitation materials to be included in the Solicitation
Packages. Specifically, holders of claims in classes entitled
to vote to accept or reject the Plan will receive:
-- an appropriate form of Ballot and a Ballot return envelope,
-- a joint letter from the Debtors and the Committee
recommending acceptance of the Plan, and
-- any other materials as the Court may direct.
Mr. Rogoff states that Solicitation Packages for holders of
claims against, or interests in, any Debtor placed within a
class under the Plan that is deemed to accept or reject the Plan
will not include a Ballot. Instead, the Solicitation Packages
for the holders of these claims and interests will include a
Notice of Non-Voting Status. To avoid duplication and reduce
expenses, the Debtors propose that creditors who have multiple
or duplicate claims against the same Debtor entity in any given
class should be required to receive only one Solicitation
Package and one Ballot for voting their claims with respect to
that class. In addition, the Debtors request that if a creditor
holds more than one claim against one or more Debtors, and
therefore may receive multiple Ballots, the Debtors are only
required to send a creditor one Solicitation Package with the
applicable Ballots.
The Debtors also propose that Solicitation Packages not be sent
to creditors whose claims are based solely on amounts scheduled
by the Debtors but whose claims already have been paid in the
full scheduled amount; provided, however, that if, and to the
extent that, any creditor would be entitled to receive a
Solicitation Package for any reason other than by virtue of the
fact that its claim had been scheduled by the Debtors, the
creditor will be sent a Solicitation Package. In addition, the
Debtors request that they not be required to send a Solicitation
Package to any creditor who filed a proof of claim if the amount
asserted in the proof of claim is less than or equal to the
amount already scheduled for the claim and the amount has
already been paid.
The Debtors propose to distribute to certain creditors forms for
the Ballots that are based on Official Form No. 14, but have
been modified to address the particular aspects of these Chapter
11 cases and to include certain additional information that the
Debtors believe to be relevant and appropriate for each class of
claims or interests. Mr. Rogoff assures the Court that the
appropriate Ballot forms will be distributed to classes entitled
to vote to accept or reject the Plan.
In order to simplify the voting process, the Debtors also ask
the Court's permission to send only one Ballot to creditors
holding claims against multiple Debtors in the same class.
Through the use of a single form Ballot per class, creditors can
elect to vote in the same manner for all claims against the
applicable Debtors or can specify separate voting treatment for
all claims against a particular Debtor.
The Debtors propose to send to holders of claims or interests
which are not entitled to vote under the Plan, and all known
parties to executory contracts and unexpired leases who either
do not hold allowed filed or scheduled claims or whose claims
have been scheduled as contingent, unliquidated, or disputed, a
notice of non-voting status, which identifies the treatment of
the classes designated.
Because the holders of interests in Class 9 are Debtors or
affiliates of Debtors, the Debtors do not believe it is
necessary or cost effective to send any Solicitation Packages or
other notices to holders of these interests.
Procedurally, the Debtors propose to send Notices of Non-Voting
Status to the record holders of the Class 8 Old Lodgian Common
Stock Interests as of the close of business on the Record Date,
including, without limitation, brokers, banks, dealers, or other
agents or nominees. Mr. Rogoff assures the Court that each
Stock Intermediary would be entitled to receive reasonably
sufficient copies of the Notice of Non-Voting Status to
distribute to the beneficial owners of the interests for whom
the Stock Intermediary holds the Old Lodgian Common Stock
Interests, and the Debtors will be responsible for each Stock
Intermediary's reasonable costs and expenses associated with the
distribution of copies of the Notice of Non-Voting Status to the
beneficial owners of these interests. To the extent that the
Stock Intermediaries incur out-of-pocket expenses in connection
with distribution of the Notice of Non-Voting Status, the
Debtors request authority to reimburse these entities for their
reasonable, actual, and necessary out-of-pocket expenses
incurred in this regard.
The Debtors anticipate commencing the solicitation period within
6 days after the entry of an order approving the Disclosure
Statement. Based on this schedule, the Debtors propose that in
order to be counted as a vote to accept or reject the Plan, each
Ballot must be properly executed, completed, and delivered to
the Debtors' Vote Tabulation Agent, Poorman Douglas so that it
is received no later than 5:00 p.m. Pacific Time on October 24,
2002, which is at least 24 days after the proposed commencement
of the solicitation period. This solicitation period should be
a sufficient period within which creditors and any applicable
equity interest holders can make an informed decision to accept
or reject the Plan.
Solely for purposes of voting to accept or reject the Plan and
not for the purpose of the allowance of, or distribution on
account of, a claim, and without prejudice to the rights of the
Debtors in any other context, the Debtors propose that each
claim within a class of claims entitled to vote to accept or
reject the Plan be temporarily allowed in an amount equal to the
amount of claim set forth in a timely filed proof of claim, or,
if no proof of claim was filed, the amount of claim as set forth
in the Schedules. The general procedure will be subject to
these exceptions:
-- If a claim is deemed allowed in accordance with the Plan,
that claim is allowed for voting purposes in the deemed
allowed amount set forth in the Plan;
-- If a claim for which a proof of claim has been timely filed
is marked as contingent, unliquidated, or disputed, the
Debtors propose that the claim be temporarily allowed for
voting purposes only in an amount equal to the greater of $1
and that portion of the claim that is non-contingent,
liquidated and undisputed;
-- If a claim has been estimated or otherwise allowed for voting
purposes by order of the Court, the claim is temporarily
allowed in the amount so estimated or allowed by the Court
for voting purposes only, and not for purposes of allowance
or distribution;
-- If a claim is listed in the Schedules as contingent,
unliquidated, or disputed and a proof of claim was not:
a. filed by the applicable bar date for the filing of proofs
of claim established by the Court or
b. deemed timely filed by an order of the Court prior to the
Voting Deadline, unless the Debtors have consented in
writing,
the Debtors propose that the claim be disallowed for voting
purposes and for purposes of allowance and distribution
pursuant to Rule 3003(c) of the Federal Rules of Bankruptcy
Procedure; and
-- If the Debtors have served an objection to a claim at least
10 days before the Voting Deadline, the Debtors propose that
the claim be temporarily disallowed for voting purposes only
and not for purposes of allowance or distribution, except to
the extent and in the manner as may be set forth in the
objection.
If any creditor seeks to challenge the allowance of its claim
for voting purposes in accordance with these procedures, the
Debtors request that the Court direct the creditor to serve on
the Debtors and file with the Court a motion for an order
pursuant to Bankruptcy Rule 3018(a) temporarily allowing the
claim in a different amount for purposes of voting to accept or
reject the Plan on or before the 10th day after the earlier of
service of the Disclosure Statement Approval Notice and service
of notice of an objection, if any, to the claim. The Debtors
further propose, in accordance with Bankruptcy Rule 3018, that
as to any creditor filing a motion, the creditor's Ballot should
not be counted unless temporarily allowed by the Court for
voting purposes, after notice and a hearing.
In tabulating the Ballots, these additional procedures will be
utilized:
-- any Ballot that is properly completed, executed and timely
returned to the Vote Tabulation Agent but does not indicate
an acceptance or rejection of the Plan, or that indicates
both an acceptance and rejection of the Plan, will be deemed
a vote to accept the Plan;
-- if no votes to accept or reject the Plan are received with
respect to a particular class, this class will be deemed to
have voted to accept the Plan;
-- if a creditor or interest holder casts more than one Ballot
voting the same claim or interest before the Voting Deadline,
the latest dated Ballot received before the Voting Deadline
will be deemed to reflect the voter's intent and thus to
supersede any prior Ballots; and
-- creditors and interest holders must vote all of their claims
or Interests within a particular class, with respect to a
particular Debtor under the Plan either to accept or reject
the Plan and may not split their votes within a particular
class; thus, a Ballot within a particular class of a
particular Debtor received from a single creditor or interest
holder that partially rejects and partially accepts the Plan
will be deemed to have voted to accept the Plan.
According to Mr. Rogoff, creditors will be given the option on
the ballot of electing to vote to either accept or reject the
Plan with respect to all of the Debtors in which they hold
claims against in a particular class. If creditors choose not
to vote all of their claims in a particular class against more
than one Debtor the same way, they are required to set forth on
the Ballot each Debtor's name and their vote with respect to
each Debtor's Plan.
The Debtors further propose that these Ballots not be counted or
considered for any purpose in determining whether the Plan has
been accepted or rejected:
-- any Ballot received after the Voting Deadline unless the
Debtors will have granted in writing an extension of the
Voting Deadline with respect to the Ballot;
-- any Ballot that is illegible or contains insufficient
information to permit the identification of the claimant or
interest holder;
-- any Ballot cast by a person or entity that does not hold a
claim in a class that is entitled to vote to accept or reject
the Plan;
-- any Ballot cast for a claim scheduled as unliquidated,
contingent, or disputed for which no proof of claim was
timely filed;
-- any unsigned Ballot; and
-- any Ballot transmitted to PDC by facsimile.
In preparation for the Confirmation Hearing, and pursuant to
Bankruptcy Rules 2002 and 3017(d), the Debtors propose to
provide, together with, and served in the same manner as, the
Solicitation Packages, the Disclosure Statement Approval Notice,
setting forth:
-- the Voting Deadline for the submission of Ballots to accept
or reject the Plan,
-- re-stating the time fixed for filing objections to
confirmation of the Plan as set forth in the Scheduling
Order, and
-- re-stating the time, date and place of the Confirmation
Hearing as set forth in the Scheduling Order.
These procedures regarding the provision of notice of the
Confirmation Hearing and related matters comply with Bankruptcy
Rules 2002 and 3017. Accordingly, the Debtors request that this
proposed notice be deemed good and sufficient notice to all
interested parties.
Mr. Rogoff notes that these are complex Chapter 11 cases with a
substantial number of Debtors, creditors and equity interest
holders. As with any complex case, it is possible that there
has been trading of claims against, or equity interests in, one
or more of the Debtors. Absent the fixing of a record date for
distribution purposes, the Debtors and the Debtors' claims agent
could face potential liability for remitting disbursements on
claims which have been or may in the future be transferred by
the claimant to other entities. Thus, it is imperative that
this Court set a record date for disbursement purposes.
The Debtors ask the Court to set October 22, 2002, as the
Distribution Record Date pursuant to the Plan. The Debtors
further ask the Court to direct that neither the Debtors, nor
the Debtors' Vote Tabulation Agent, are required to make any
disbursement to claimants or equity interest holders whose
claims or interests were acquired subsequent to the Distribution
Record Date, or to claimants whose claims were acquired from
another claimant prior to the Distribution Record Date, but
which transfer was not properly filed with the Court prior to
Distribution Record Date. (Lodgian Bankruptcy News, Issue No.
15; Bankruptcy Creditors' Service, Inc., 609/392-0900)
MARINER POST-ACUTE: Resolves Bank of New York Claim Treatment
-------------------------------------------------------------
Mariner Post-Acute Network, Inc., wants the Court to approve the
stipulation and agreement among the Debtors, the Official
Committee of Unsecured Creditors and the Bank of New York
regarding allowance and treatment of proof of claim Nos. 4565
and 4564 filed against MPAN.
Pursuant to an Indenture under which Bank of New York serves as
Indenture Trustee, MPAN completed a private offering to
institutional investors of $275.0 million in face amount of its
9-1/2% Senior Subordinated Notes Due 2007 and $294.0 million in
face amount of its 10-1/2% Senior Subordinated Discount Notes
due 2007.
In this regard, BONY filed two proofs of claims in MPAN's
Chapter 11 Cases on behalf of itself and the holders of the
Notes. The claims were designated as Claim Number 4564 and
4565.
Claim Number 4564 was in the amount of "[n]ot less than
$294,052,894.54" on account of the Senior Subordinated Discount
Notes. This amount included:
i) the full $294,000,000 face amount of the Senior
Subordinated Discount Notes, without regard to any
unamortized original issue or market discount, and
ii) approximately $53,000 in various indenture trustee fees
and expenses.
Claim Number 4565 was in the amount of "[n]ot less than
$289,348,805.09" on account of the Senior Subordinated Notes,
consisting of:
i) the full $275,000,000 face amount of the Senior
Subordinated Notes, without regard to any unamortized
market discount,
ii) $14,296,180.55 in accrued, unpaid prepetition interest,
and
iii) approximately $53,000 in various indenture trustee fees
and expenses.
The Plan provides that the Notes will be treated in Class UP-2.
Under the Plan, each holder of an Allowed Class UP-2 shall
receive a Pro Rata share of the MPAN Subordinated Note Claims
Distribution Fund.
The Senior Discount Notes were issued at a substantial discount
from their from their face amount, while the Senior Subordinated
Notes were issued at a small discount. Since the Notes were not
scheduled to mature until 2007, much of this original issue
discount and market discount remained unamortized as of the
January 18, 2000 Petition Date. Furthermore, the Debtors'
approved Disclosure Statement stated that the total unamortized
original issue and market discount with respect to the Senior
Subordinated Discount Notes was $73,928,313 as of the Petition
Date, while the total unamortized market discount with respect
to the Senior Subordinated Notes was $878,986 as of the Petition
Date.
The Debtors, the Committee and BONY desire to have the amount of
the Allowed Claims established and distributions to the holders
of the Notes promptly in accordance with the terms of the Plan.
After conversations, the Parties entered into a stipulation and
agreed that:
-- Claim 4565 shall be treated as an Allowed Class UP-2 Claim
in the amount of $289,296,180, consisting of:
i) $275,000,000 face amount of Senior Subordinated Notes,
and
ii) $14,296,180 unpaid interest accrued as of the Petition
Date.
-- Claim 4564 shall be treated as an Allowed Class UP-2 Claim
in the amount of 5220,200,792, consisting of the face
amount of the Senior Subordinated Discount Notes, less
$73,799,208 in unamortized original issue discount.
Holders of Senior Subordinated Notes are entitled to receive a
portion of the distributions made on account of Claim 4565 pro
rata based upon the face amount of such holders' Senior
Subordinated Notes. Each holder of Senior Subordinated Notes
shall receive on account of each $1,000 in face amount of such
notes approximately 0.823998 shares of New MPAN Common Stock and
0.778154 New MPAN Warrants. Holders of Senior Subordinated
Discount Notes shall receive on account of each $1,000 in face
amount of such notes 0.586661 shares of New MPAN Common Stock
and 0.554022 New MPAN Warrants. (Mariner Bankruptcy News, Issue
No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900)
MERRILL LYNCH: Fitch Upgrades 1996-C2 Pass-Thru Certificates
------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc.'s commercial mortgage
pass-through certificates, series 1996-C2, are upgraded by Fitch
Ratings as follows: $68.3 million class B to 'AA+' from 'AA',
$62.6 million class C to 'A+' from 'A', $56.9 million class D to
'BBB+' from 'BBB' and $28.5 million class E to 'BBB' from
'BBB-'. In addition, Fitch affirms the following classes: $79.6
million class A-2, $343.8 million class A-3 and interest-only
class IO at 'AAA'; $62.6 million class F at 'BB-' and $39.8
million class G at 'B-'. Fitch does not rate the $33.6 million
class H certificates. The rating affirmations follow Fitch's
annual review of the transaction, which closed in November 1996.
The upgrades reflect the pool's stable operating performance,
good diversification and a 32% reduction in the certificate
balance since issuance. Fitch expects that the losses currently
projected on the fifteen (7.2%) specially serviced loans will
not exceed the most subordinate tranche, the unrated class H.
The specially serviced loans include fifteen delinquencies. One
loan (0.2%) is 30 days delinquent; 10 loans (4.7%) are 90+ days
delinquent; one loan (0.1%) is in foreclosure; and three loans
(2.1%) are real estate owned (REO). In July 2002, CRIIMI MAE
Services LP, the special servicer, disposed of the eighteen
Service Merchandise loans without a loss to the Trust. These
loans accounted for 4.3% of the pool as of Fitch's December 2001
review.
Fitch is concerned with the exposure to 22 hotel properties
(13.1%), 20 of which (12.5%) are either specially serviced or on
the servicer's watch list. Among these troubled hotel loans are
the four specially serviced 90+ days delinquent Shilo Inn loans
(4.1%) and two REO loans secured by Ramada Inns (1.4%). The
borrowers have filed Chapter 11 bankruptcy for the four cross
defaulted and cross-collateralized Shilo Inns, which reported a
year-to-date May 2002 average occupancy that is significantly
down from issuance. The properties, all located in Oregon, were
found to be in good to excellent condition as of their most
recent inspections (between January and June 2001). The two REO
Ramada Inn loans are also located in Oregon, one in Portland
(0.9%) and one in Beaverton (0.6%). Listing agents have been
engaged for both of these sites, which were found to be in good
condition at their 2002 inspections. To date, appraisal
reductions calculated for the two Ramada Inns total $7.8
million.
As of the August 2002 distribution date, the pool's certificate
balance has been reduced to $775.7 million from $1.14 billion at
issuance. The certificates are collateralized by 218 fixed-rate
mortgage loans, consisting primarily of multifamily (40%),
retail (25%), and hotel (13%) properties, with concentrations in
California (14%), Florida (13%), and Texas (9%).
CRIIMI, the primary servicer, provided year-end 2001 financials
for 92.7% of the pool by principal balance. According to this
information, the 2001 weighted average debt service coverage
ratio is 1.41 times, which is relatively unchanged from 1.40x in
2000, but above the underwritten DSCR for the same loans of
1.31x. A total of 28 loans (11.7%) have 2001 DSCRs below 1.00x,
including five (4%) that are in special servicing. Fitch
reviewed the exception report and found 44 loans (18.4%) with
material exceptions.
Fitch analyzed each loan in the pool and assumed stressed
default probabilities and loss severities for loans of concern,
including the liquidation scenarios of certain specially
serviced loans. The required credit enhancement that resulted
from this remodeling of the pool warranted the upgrades on the
senior classes B, C, D and E. Fitch will continue to monitor
this transaction, as surveillance is ongoing.
MICROFORUM INC: TSX Knocks Off Shares Effective August 29, 2002
---------------------------------------------------------------
Microforum Inc., (TSE: MCF) announced that the Toronto Stock
Exchange has de-listed its shares effective August 29, 2002.
Established in 1987, Microforum sells software solutions to
organizations that seek a competitive edge. The company is
listed on The Toronto Stock Exchange (TSE: MCF).
MINDARROW SYSTEMS: Gets More Time to Meet Nasdaq Guidelines
-----------------------------------------------------------
MindArrow Systems Inc. (Nasdaq:ARRW), an enterprise messaging
software and services provider, has been notified that Nasdaq
has formally extended through Feb. 18, 2003 the period in which
the company may obtain compliance with the $1 minimum bid
requirement for trading in the company's common stock.
As a requirement for continued listing on Nasdaq SmallCap
Market, the company is required to maintain certain continuing
listing criteria, which include a requirement that the minimum
bid price for the company's common stock not fall below $1.
The company demonstrated to Nasdaq that it met the core listing
standards for continued inclusion on the Nasdaq SmallCap Market,
which allowed the company a 180-day grace period to meet the $1
minimum bid price requirement, or until Feb. 18, 2003. If, at
anytime before that date the bid price of the company's common
stock closes at $1 per share or more for a minimum of 10
consecutive trading days, Nasdaq will notify the company that it
complies with this requirement.
MindArrow also announced that it has filed a registration
statement on Form S-4 with the Securities and Exchange
Commission in connection with its previously announced agreement
to acquire Category 5 Technologies Inc., a publicly held company
that provides marketing tools and commerce-enabling technologies
primarily for small- to medium-sized businesses.
In July 2002, the company announced that it had entered into a
definitive merger agreement whereby MindArrow would acquire all
of the outstanding capital stock of Category 5 in exchange for
stock and warrants in MindArrow. The boards of directors of both
companies have approved the merger and have agreed to recommend
that their respective stockholders vote in favor of the merger.
In addition, certain stockholders of each of MindArrow and
Category 5 holding a majority of each company's respective
outstanding common stock have entered into voting agreements
pursuant to which they have agreed to vote in favor of the
merger. The Form S-4 registration statement has not been
declared effective by the SEC, and may be amended in the future.
MindArrow Systems, with headquarters in Southern California and
offices in New York and Hong Kong, provides enterprise messaging
software and services that automate and enhance sales and
marketing communications.
MindArrow's patented and patent-pending technologies allow its
clients to create, manage, deliver and track e-mail marketing
campaigns as well as individual one-to-one communications. The
company's products and services can be deployed on a standalone
basis, or used to augment existing customer relationship
management software.
The company's customer base includes more than 100 leading
companies including Mazda, Johnson & Johnson, Ceridian, Avaya,
Cendant and the NBA (National Basketball Association).
MindArrow's solutions are designed to establish a more effective
line of communication between a company and its customers --
using the right media to deliver the right message at the right
time.
MindArrow Systems has filed a Registration Statement on Form S-4
with the Securities and Exchange Commission that includes a copy
of the definitive merger agreement with Category 5, a prospectus
for the securities being offered in the merger, a joint proxy
statement regarding the stockholders' meetings of MindArrow and
Category 5, and other important information. Please read the
registration statement and all other documents that the company
files with the SEC because they contain important information
regarding the proposed transactions. The documents are available
at the SEC's Web site: http://www.sec.gov When the registration
statement becomes effective, copies of the prospectus and proxy
materials may be obtained without charge from MindArrow by
telephoning 714/536-6200 or by fax at 714/536-6280.
MOODY'S CORP: Blaylock & Partners Upgrades Rating to "Buy"
----------------------------------------------------------
Blaylock & Partners' equity analysts Edward Atorino and
Catherine Flaherty have upgraded their stock rating for
Moody's Corp., (NYSE: MCO) to "Buy" from "Hold" with a price
target of $54 per common share.
In their report, Mr. Atorino and Ms. Flaherty raise their 2002
EPS estimates to $1.82 from $1.76, and 2003 EPS to $2.05 from
$1.96, for 12.6 percent year/year growth. The analysts cite the
following key reasons for upgrading their rating:
* Earnings may exceed expectations on a pick-up in
corporate bond issuance. New issue volume in August was double
that of July, according to Thompson Financial, and may surge in
4Q'02 as corporations shift from short- to long-term financing,
locking in the lowest rates in many years;
* The stock should respond to the potential better-than-
expected earnings;
* Structured finance issuance continues to be driven by
auto, home mortgage and home equity loan demand, and should
remain at a higher level than previously expected the rest of
the year due to the recent decline in mortgage rates;
* Budgetary pressures from revenue shortfalls continue to
boost public finance issuance; and
* The market for high yield issues is recovering, and could
add to overall corporate bond issuance in 4Q'02.
Blaylock & Partners issues "Buy" recommendations when its
analysts expect a covered stock to outperform the generally
recognized market indexes.
Blaylock's ratings system consists of "buy," "hold" and "sell"
recommendations. Investment banking stocks have a "not rated"
designation. Institutional investors interested in receiving
more information should contact Mr. Atorino at 212-715-6655
(eatorino@blaylocklp.com) or Ms. Flaherty at 212-715-6657
(cflaherty@blaylocklp.com). Reporters interested in receiving
a copy of the research report should contact Kevin Foster at
212-252-8545, ext. 18 (kfoster@starkmanassociates.com).
Based in New York, Blaylock & Partners, L.P. has been ranked by
Black Enterprise magazine as the number one minority-owned
investment banking firm for 1999 and 2000. The firm has co-
managed four of the largest most recent IPOs -- Travelers
Property Casualty Corp., Prudential Financial, Inc., Kraft
Foods Inc., and Agere Systems Inc. Blaylock & Partners is a
member of the NASD and SIPC.
Blaylock & Partners, L.P. is a member of the National
Association of Securities Dealers, CRD number 35669.
MSX INTL: Weak Credit Protection Spurs S&P to Hold BB- Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on MSX
International Inc., including the double-'B'-minus corporate
credit rating. At the same time, Standard & Poor's revised its
outlook on the company to negative from stable, citing
continuing weak credit protection measures and the lack of
visibility for intermediate-term improvement.
"The outlook revision follows continuing market pressures and
operating challenges for MSXI," said Standard & Poor's credit
analyst Nancy C. Messer, CFA. The ratings reflect the company's
decent niche market position, offset by an aggressive financial
profile and exposure to cyclical and competitive markets.
Southfield, Michigan-based MSXI is a leading provider of
engineering services, human capital management services, and
other collaborative services, principally to the automotive
industry in the U.S. and Europe. The company has expanded
rapidly in the past few years through a combination of
acquisitions and internal growth that has raised its revenue to
$929 million in 2001 from $565 million in 1997. The company is
owned by Citigroup and affiliates and certain members of
management; Citigroup invested $15 million in the company in the
form of a second secured term loan in July 2002.
MSXI has been expanding its service offerings to other
industries, including the telecommunications and computer
industries, but still derives about three-fourths of its sales
from the automotive industry. Despite MSXI's focus on the design
and product development stage of automotive production, it is
still subject to the cyclical and competitive pressures of the
industry. Demand for the company's services declined
significantly in 2001 due to the original equipment
manufacturers' deferral of product development efforts. Demand
in key nonautomotive end markets was also down.
MSXI has experienced a significant deterioration in
profitability in recent quarters, due to reduced volumes
(primarily in the engineering segment), unfavorable sales mix
(primarily in the information technology staffing segment), and
increased spending in sales, marketing, and product development.
Revenues for 2001 declined 10% from 2000 levels and net income
was down dramatically to $0.5 million compared with $14.9
million in 2000. Demand weakness has continued into 2002, with
sales down 16% for the first half of the year compared with the
first half of 2001, due to lower demand and selected price
reductions. MSXI reported a net loss of $2.6 million for the
first half of 2002, excluding the cumulative effect of the
accounting change for goodwill impairment.
MSXI's credit ratios are weak for the rating, given the
company's inadequate operating performance in the past year.
Standard & Poor's does not see favorable prospects for improved
credit measures over the near term, given the continuing weak
economy and the likelihood that MSXI will make no material debt
pay down during 2003. Debt to EBITDA for the 12 months ended
June 2002 is more than 4.5 times and funds from operations to
debt is near 10%. Reported debt totaled $263 million as of June
30, 2002.
Should continuing market pressures and/or operating challenges
prevent an improvement in credit protection measures or lead to
liquidity or covenant compliance concerns, ratings could be
lowered.
NATIONAL AIRLINES: Inks Deleveraging $112MM Financing Package
-------------------------------------------------------------
National Airlines has reached an agreement for a financing
package valued at approximately $112 million.
Included in this package is a debt-for-equity exchange that will
substantially reduce the company's debt load, plus an infusion
of new cash equity.
With these achievements, the Las Vegas-based carrier now expects
to successfully emerge from reorganization protection in early
October, pending final documentation, modification of the
company's previously confirmed Plan of Reorganization, and court
approval.
Michael J. Conway, president and CEO for National, said, "This
entire financing package is the result of thousands of hours
spent by not only National's management, but by our aircraft
lessors and other major creditors as well. Without the
cooperative participation of all parties, including the
employees of National, this financial package would not have
been possible."
Conway added, "As a result, almost 300,000 monthly passengers
will continue to experience the quality service and affordable
fares offered by National."
Conway noted that in addition to the financing package, National
has achieved reductions in its annual cash operating expenses of
approximately $50 million through re-negotiated aircraft lease
rates, contracts with other major vendors, and employee pay
reductions. "This is truly an example of everyone stepping up
and doing what is necessary to ensure not only National's
survival, but to position the company for long-term success."
The CEO said that National's employees have incurred pay
reductions since last September; the reductions will continue
for varying lengths and amounts, with the most significant
burden borne by the management and the pilot group.
"I'd like to express my thanks to the employees of National.
None of this would have been possible without their continued
support. Their dedication and tenacity in the face of adversity
is a true reflection of their commitment.
"My gratitude also goes out to National's aircraft lessors,
Harrah's Entertainment and other key creditors, who have
supported National throughout the reorganization process and
have recognized the potential of National in the rapidly
changing U.S. airline environment. Of course, the unwavering
support of our loyal and growing customer base and our travel
agent partners cannot be overemphasized.
"This financial package displays the support the private sector
has shown for our business plan and their recognition of the
evolution of the airline industry toward efficient, low-fare
carriers. Unfortunately, the Air Transportation Stabilization
Board (ATSB) failed to recognize this dynamic change in the
industry when they rejected National's loan guarantee
application.
"The ATSB has sent a clear signal that they are committed to
perpetuating certain high-cost, high-fare major airlines, which
runs completely counter to the preferences being made by the
traveling public. We understand that there is a possibility that
Congressional hearings may be held to look into the ATSB
process.
"We would strongly support any such action by Congress to
thoroughly review the ATSB process, a process National believes
is wrought with conflicts of interest and bias. National is
fully prepared to provide sworn testimony on its experience with
the ATSB should the hearings take place."
Conway added, "Despite our view of the ATSB process, National
has the support needed to successfully reorganize, and we are
prepared to move forward. Our low cost structure, combined with
our quality product have clearly been a favorite among
travelers."
The CEO noted that National has been recognized for outstanding
customer service by Conde Nast Traveler magazine's "2000
Reader's Choice Awards," "2001 Zagat Airline Survey," and most
recently Travel & Leisure magazine's "2002 World's Best" survey.
National Airlines operates an all Boeing fleet of (18) 757 jet
aircraft configured with 175 seats including 22 in First Class.
The carrier plans to add two additional B757s by the first
quarter of 2003, and several more aircraft by the end of 2004,
market conditions permitting. National serves major cities to
the east and west of its Las Vegas hub.
National reaffirmed its plans to begin new service at Reno/Tahoe
on Oct. 3 and new seasonal service at West Palm Beach on Nov.
21. The carrier will also add a third daily flight to Miami on
Nov. 21.
Reservations can be made through a travel agent or the National
Airlines Reservations Center at 888/757-5387. To take advantage
of the Web-only additional discount, purchase your travel at
http://www.nationalairlines.com And for great deals on a
complete Las Vegas, Reno/Tahoe air-and-hotel package, call
National Airlines Vacations, the Las Vegas experts, at 888/LAS-
TOUR (527-8687).
NATIONSLINK FUNDING: Fitch Cuts Classes F to H to Low-B Ratings
---------------------------------------------------------------
NationsLink Funding Corp., commercial mortgage pass-through
certificates, series 1996-1, have been upgraded by Fitch Ratings
as follows: $19.4 million class C to 'AAA' from 'AA+', $17.7
million class D to 'AA' from 'A+', $14.5 million class E to
'BBB+' from 'BBB', $10.5 million class F to 'BBB-' from 'BB+',
$5.6 million class G to 'BB+' from 'BB' and $9.7 million class H
to 'B+' from 'B'. In addition, Fitch affirms the following
classes: $43 million class A-3, $16.1 million class B, and
interest only class X at 'AAA'. The $9.3 million class UR is not
rated by Fitch. Classes A-1 and A-2 have paid off and the
ratings have been withdrawn. The rating actions follow Fitch's
annual review of this transaction, which closed in May 1996.
The upgrades reflect the increased subordination levels for all
classes due to additional loan amortization and payoffs.
Subordination levels for the upgraded classes have increased as
follows: class C to 45% from 33%, class D to 33% from 24%, class
E to 24% from 17%, class F to 17% from 12%, class G to 13% from
9%, and class H to 6% from 4%.
The certificates are currently collateralized by 48 multifamily
and commercial real estate loans. By outstanding balance, the
pool consists of multifamily (59%), retail (25%), health care
(9%), industrial (5%) and office (2%) properties. The properties
are located in 25 states, with concentrations in Texas (17%),
Tennessee (8%), Florida (7%) and Georgia (4%).
As of the August 2002 distribution date, the transaction's
aggregate principal balance has decreased 55% to $145.9 million
from $322.6 million at issuance. CapMark Services, L.P., the
master servicer, collected year-end 2001 operating statements
for 93% of the loans. The YE 2001 weighted-average debt service
coverage ratio was 1.80 times compared to a 1.76x as of YE 2000
and 1.50x at issuance. Six loans, comprising 9% of the pool's
outstanding collateral balance, had a DSCR below 1.0x for YE
2001.
Two loans, representing 5% of the pool are in special servicing,
but are both current. The Parkview Manor Nursing Home located in
Pikeville, KY, representing 2.35% of the pool is in special
servicing because the loan matured on Aug. 8, 2002. The borrower
continues to make principal and interest payments, so the loan
is current. The special servicer expects the loan to payoff in
full within the month of September. The second loan, University
Foothills Apartments, a multifamily property located in Reno,
NV, representing 2.82% of the pool, was 90+ days delinquent but
was recently brought current and is being monitored for return
to the master servicer. At this time, there are no delinquent
loans in the transaction. Nineteen loans, representing 39% of
the pool are on the master servicer watchlist for reasons such
as upcoming maturities and vacancy issues. Fitch has reviewed
the watchlist and found 10 loans, 21% of the pool to be of
concern, two of which are already in special servicing. Fitch
has requested a copy of the exception report from JP Morgan
Chase, the trustee, but has not received it yet.
Fitch modeled the transaction and assumed that the ten loans of
concern (21% of the pool) would default. As a result of Fitch's
analysis, subordination levels remained high enough to warrant
an upgrade of the ratings.
NTL INC: New York Court Confirms 2nd Amended Joint Reorg. Plan
--------------------------------------------------------------
NTL Incorporated (OTC BB: NTLDQ; NASDAQ Europe: NTLI) announced
that the United States Bankruptcy Court for the Southern
District of New York confirmed its Second Amended Joint
Reorganization Plan on September 5, 2002, clearing the way for
NTL's emergence from Chapter 11 protection.
Consummation of the Plan remains subject to the satisfaction or
waiver of the conditions set forth in the Plan. The Plan is
expected to be consummated, and NTL expects to emerge from
Chapter 11, in October 2002. The Company and certain of its non-
operating subsidiaries filed Chapter 11 petitions on May 8,
2002.
Commenting on the Court's action, the Company's President and
CEO, Barclay Knapp, said "We are extremely pleased to be
emerging from these cases so quickly. The support we have
received from our various stakeholders has allowed us to move
through this process without significant interruption to our
business. We believe we have taken the steps needed to solidify
NTL's financial position for the future. I would like to extend
our deepest appreciation to our customers and business partners
for their loyalty during this process. I would also like to
extend my personal thanks to all of our employees and advisors
who have worked so diligently during these past months to ensure
the success of this process and the future of our company. Over
the next few weeks we will complete the remaining items of the
plan, including finalizing the exit financing facility for NTL
UK and Ireland, and emerging from this process."
The Plan provides for NTL to be reorganized into two new groups,
the holding companies for which will be the corporations
currently named NTL Communications Corp. and NTL Incorporated.
On the effective date of the Plan:
-- NTL Communications Corp., will be renamed "NTL
Incorporated" and will be the holding company for substantially
all of NTL's businesses and operations in the UK and Ireland;
-- NTL Incorporated will be renamed "NTL Europe, Inc." and
will be the holding company for substantially all of NTL's
businesses and investments in continental Europe as well as
certain other minority investments and interests;
-- NTL UK and Ireland Board of Directors will initially be
constituted as a new nine-member board selected by the Official
Creditors Committee. The following seven members were named as
part of the Company's Confirmation Hearing filing: Jeffrey D.
Benjamin; James E. Bolin; David Elstein; William R. Huff;
Barclay Knapp; Duncan Lewis; and George R. Zoffinger. In
addition, Mr. Edwin Banks was named to be a member of the Board
of Directors upon the naming of a ninth member. It was also
announced that it is the current intention of the parties that
the Board of Directors may be expanded to 11 members in the
future to include the permanent CFO of NTL UK and Ireland (as to
which a search has already commenced) and another person to be
named by the new board. In addition, Barclay Knapp was confirmed
as President and CEO; and -- NTL Euroco will have a new three-
member board. Members named were: Michael J. Cochran; H. Sean
Mathis; and Jeffrey A. Brodsky. In addition, Jeffrey A. Brodsky
will serve as the new company's CEO. Mr. John F. Gregg will
serve as the new company's CFO.
The Company's previously announced rights offering and
noteholder election option to purchase shares of common stock
and warrants in NTL UK and Ireland is expected to commence on
September 6, 2002, and expire at 5:00 p.m., New York City Time,
on October 3, 2002, unless extended in accordance with their
terms. The record date for the rights offering and noteholder
election option was August 26, 2002.
All classes entitled to vote on the Plan voted overwhelmingly in
favor of acceptance of the Plan. The record date for voting for
the Plan was May 8, 2002. The record date for determining
persons entitled to distributions under the Plan is close of
business on September 16, 2002.
As of May 8, 2002, there were 276,626,476 shares of the
Company's old common stock, 183,811.52 shares of the Company's
old senior preferred stock and 4,873,529.52 shares of the
Company's old junior preferred stock issued and outstanding.
Under the terms of the Plan, the outstanding pre-Chapter 11
common stock and preferred stock of the Company and all of the
publicly-traded debt securities of NTL (other than the publicly-
traded debt securities of NTL (Triangle) LLC, the publicly-
traded debt securities of Diamond Holdings Limited, which will
be reinstated under the terms of the Plan, and the Diamond Cable
Communications Limited publicly-traded debt securities
transferred to NTL UK and Ireland under the terms of the Plan)
will be cancelled in exchange for distributions from New NTL and
Euroco substantially as follows:
-- Holders of Diamond Cable Communications Limited notes
will receive their pro rata share of 27,271,736 shares of NTL UK
and Ireland Common Stock;
-- Holders of NTL Communications Corp.'s senior notes will
receive their pro rata share of (i) 165,504,192 shares of NTL UK
and Ireland Common Stock, (ii) 75,800 shares of NTL Euroco
Preferred Stock (assuming a $50.00 liquidation preference per
share), (iii) 0.725% of the Delaware Cash Amount (as defined in
the Plan), (iv) 5.012% of the NTL Cash Amount (as defined in the
Plan), and (v) the value of 331,222 shares of NTL Euroco Common
Stock;
-- Holders of NTL Communications Corp.'s subordinated
notes will receive their pro rata share of (i) 3,292,516 shares
of NTL UK and Ireland Common Stock, (ii) 6,615 shares of NTL
Euroco Common Stock, (iii) 1,520 shares of NTL Euroco Preferred
Stock (assuming a $50.00 liquidation preference per share), (iv)
0.014% of the Delaware Cash Amount, (v) 0.100% of the NTL Cash
Amount, and (vi) the NTL UK and Ireland Noteholder Election
Option allocable to holders of NTL Communications Corp.'s
subordinated notes;
-- Holders of NTL (Delaware), Inc., subordinated notes
(other than France Telecom) will receive their pro rata share of
(i) 2,661,253 shares of NTL UK and Ireland Common Stock, (ii)
10,692,532 shares of NTL Euroco Common Stock, (iii) 5,987,820
shares of NTL Euroco Preferred Stock (assuming a $50.00
liquidation preference per share), (iv) 85.540% of the Delaware
Cash Amount, and (v) the NTL UK and Ireland Noteholder Election
Option allocable to holders of NTL (Delaware), Inc. subordinated
notes (other than France Telecom);
-- Holders of NTL Incorporated's subordinated notes (other
than France Telecom) will receive their pro rata share of (i)
1,270,303 shares of NTL UK and Ireland Common Stock, (ii)
6,270,159 shares of NTL Euroco Common Stock, (iii) 1,434,880
shares of NTL Euroco Preferred Stock (assuming a $50.00
liquidation preference per share), (iv) 13.720% of the Delaware
Cash Amount, (v) 94.887% of the NTL Cash Amount, and (vi) the
NTL UK and Ireland Noteholder Election Option allocable to
holders of NTL Incorporated's subordinated notes (other than
France Telecom);
-- Holders of the Company's old senior preferred stock
will receive their pro rata share of (i) 2,996,475 NTL UK and
Ireland Series A Warrants, (ii) 1,284,203 NTL UK and Ireland
Equity Rights, and (iii) 642,102 shares of NTL Euroco Common
Stock;
-- France Telecom will receive (i) 100% of the Company's
interest in Suez Lyonnaise Telecom, (ii) 22,402,468 NTL UK and
Ireland Series A Warrants, and (iii) 9,601,058 NTL UK and
Ireland Equity Rights;
-- Holders of the Company's old common stock will receive
their pro rata share of (i) 9,601,058 NTL UK and Ireland Series
A Warrants, (ii) 4,114,739 NTL UK and Ireland Equity Rights, and
(iii) 2,057,369 shares of NTL Euroco Common Stock; and
-- Holders of the Company's old warrants and old options
will not be entitled to, and will not, receive or retain any
property or interest on account of such old warrants and old
options.
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 reorganization plan. The members of
the bondholder committee held in the aggregate over 50% of the
face value of the Company's and its debtor subsidiaries'
publicly-traded debt securities. In addition, France Telecom and
another holder of the Company's preferred stock agreed to the
reorganization plan.
-- On May 8, 2002, the Company and certain of its non-
operating subsidiaries filed the First Amended Joint
Reorganization Plan with the Court.
-- On May 24, 2002, the Company and certain of its non-
operating subsidiaries filed the Plan and a disclosure statement
relating thereto with the Court.
-- 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 approved a $630 million
credit facility for the Company including $500 million in new
financing.
-- On July 15, 2002, the Court approved the amended
disclosure statement relating to the Plan and set the date for
the Plan confirmation hearing on September 5, 2002.
-- NTL offers a wide range of communications services to
homes and business customers throughout the United Kingdom,
Ireland, Switzerland, France, Germany and Sweden.
NUTRITIONAL SOURCING: Involuntary Chapter 11 Case Summary
---------------------------------------------------------
Alleged Debtor: Nutritional Sourcing Corporation
f/k/a Pueblo Xtra International, Inc.
1300 N.W. 22nd Street
Pompono Beach, Florida 33069
Involuntary Petition Date: September 4, 2002
Case Number: 02-12550 Chapter: 11
Court: District of Delaware
Petitioner's Counsel: Michael J. Sage, Esq.
Karyn Zeldman, Esq.
Stroock & Stroock & Lavan
180 Maiden Lane
New York, NY 10038
Phone: 212-806-6460
- and -
William Pierce Bowden, Esq.
Ashby & Geddes
222 Delaware Avenue, 17th Floor
Wilmington, DE 19899
Phone: 302-654-1888
Fax : 302-654-2067
Bondholder Petitioners Claim Amount
---------------------- ------------
Barclays Bank, PLC $12,082,000
222 Broadway
New York, New York 10038
Attention: Steven Landsberg, Director
PAM Capital Funding LP $4,032,000
by Highland Capital Management, L.P.
as Collateral Manager
Two Galleria Tower
13455 Noel Road, Suite 1300
Dallas, Texas 75240
Attention: John Dondero, President
ML CBO IV (Cayman) Ltd. $7,000,000
by Highland Capital Management, L.P.
as Collateral Manager
NUTRITIONAL SOURCING: Continues to Pursue Debt Workout Plan
-----------------------------------------------------------
Nutritional Sourcing Corporation announced that an involuntary
petition under Chapter 11 of the United States Bankruptcy Code
was filed in the United States Bankruptcy Court for the District
of Delaware by Barclays Bank, PLC, PAM Capital Funding LP and ML
CBO IV (Cayman) Ltd.
NSC said that it continues to pursue a debt restructuring plan.
As previously announced, the Company and several of its
noteholders have initiated discussions concerning the possible
restructuring of NSC's indebtedness. NSC does not expect that
the involuntary filing will adversely affect its discussions
with noteholders towards a restructuring.
On August 30, 2002, NSC announced improved results for the third
quarter and 40 weeks ended August 10, 2002. Total sales, same
store sales, net income and EBITDA (defined as Earnings Before
Interest Expense-Net, Income Taxes, Depreciation and
Amortization) all showed solid growth. The Company reported
cash and cash equivalents at August 10, 2002 were $24.8 million.
NSC's operations are unaffected by this action and its operating
subsidiaries are not included in the bankruptcy filing. The
subsidiaries will continue to serve all customers, maintain
vendor relationships and continue to pay employees and vendors
in the normal course.
William T. Keon, III, President and CEO of NSC, said, "We regret
that these creditors have taken this action, as we believe we
had been making steady progress in our discussions regarding a
restructuring of our debt and in light of the solid results we
reported on August 30. We continue to be confident that we will
be able to move forward with a reorganization plan that will
reduce our debt and help ensure the long-term success of the
Company."
PACIFIC GAS: Wants to Pay $3.7MM Prepetition Project Deposits
-------------------------------------------------------------
In addition to construction work for gas and electric
distribution lines (line extensions), Pacific Gas and Electric
Company performs other kinds of construction work for its
customers in relation to its provision of gas and electric
service. For example, PG&E may relocate or rearrange PG&E-owned
poles or electric or gas lines for the convenience of the
customer, convert overhead facilities to underground, perform
maintenance or construction work on customer-owned facilities,
or connect facilities such as streetlights. PG&E is often the
first, if not the only, choice for this work.
Usually the customer pays PG&E an advance or deposit for the
engineering work, on the understanding that the deposit will be
returned or credited against any project-related construction
work the applicant asks PG&E to do. The typical advance or
project deposit is $5,000 or less.
PG&E currently holds approximately 3,700 outstanding pre-
petition project deposits, totaling approximately $5 million. Of
that number, PG&E estimates that, 2,880 of the project deposits
aggregating approximately $3.7 million are due to be returned to
the customer.
The average amount owed to the customer with respect to these
project deposits is approximately $1,300.
PG&E wants to return these deposits to the customers.
However, these are pre-petition deposits, and payment of pre-
petition claims prior to confirmation of a plan is generally not
allowed under bankruptcy law, unless the Court approves it.
Janet A. Nexon, Esq., at Howard, Rice, Nemerovski, Canady, Falk
& Rabkin asks the Court to authorize PG&E to pay the Pre-
Petition Project Deposits pursuant to Section 105(a) of the
Bankruptcy Code and the Court's inherent powers.
Ms. Nexon points out that, the amount of money the Debtor
requests to pay represents a very small percentage of the
Debtor's total assets, but the average outstanding amount per
customer amounts to $1,300, which is more significant for
individual customers than the payment is for PG&E. Moreover,
denying refunds to those customers who happen to qualify for but
do not receive refunds prior to the Petition Date may inflict
undue hardship and is fundamentally unfair, Ms. Nexon reminds
the Court. In addition, the affected customers were required to
submit these deposits in connection with what has come to be
recognized as a basic necessity in today's economy, Ms. Nexon
observes. Customers have little choice but to submit deposits
and do so with the understanding that their money will be
preserved and repaid, Ms. Nexon continues.
Ms. Nexon also reminds Judge Montali that the Court has
authorized the return of a number of different types of deposits
in this case, including Refund of Pre-Petition Security Deposits
to residential and non-residential customers, and payment of
amounts due under Main Line Extension Contracts, in each case in
amounts far exceeding the $3.7 million requested in this motion.
For all these reasons, the Debtor requests the Court's authority
to refund all customer project deposits in an aggregate amount
of approximately $3,700,000. (Pacific Gas Bankruptcy News, Issue
No. 43; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PAXSON COMMS: Sells Television Station to NBC for $26 Million
-------------------------------------------------------------
Paxson Communications Corporation (AMEX:PAX) announced that NBC
has exercised its right for first refusal on the sale of
Paxson's television station WPXB TV-60, serving Merrimack, New
Hampshire for a cash purchase price of $26 million. The station
currently airs Valuevision Media Inc.'s (Nasdaq:VVTV) Shop NBC
24-7. Contracts signed today for the station transaction are
subject to regulatory approvals. The filing with the Federal
Communications Commission should occur within a few days and the
closing by year-end. The sale price for the Merrimack station
represents an eight-fold premium over the $3.05 million Paxson
paid for the station in May 1995.
Chairman Lowell "Bud" Paxson said, "This transaction, the second
in a series, puts Paxson well on its way toward completion of
our previously announced plans to raise approximately $100
million through the sale of non core assets and maintain the
strength of our liquidity."
Paxson Communications Corporation owns and operates the nation's
largest broadcast television distribution system and PAX TV,
family television. PAX TV reaches 87% of U.S. television
households via nationwide broadcast television, cable and
satellite distribution systems. PAX TV's new fall 2002 primetime
lineup includes original series premieres of "Body & Soul,"
starring Peter Strauss and Larissa Laskin, "Just Cause" starring
Richard Thomas and Elizabeth Lackey, and "Sue Thomas: F.B.Eye,"
starring Deanne Bray in a new series by the producers of "Doc."
Returning original PAX series include "It's A Miracle," "Candid
Camera" and "Doc," starring recording artist Billy Ray Cyrus.
For more information, visit PAX TV's Web site at
http://www.pax.tv
* * *
As reported in Troubled Company Reporter's July 5, 2002,
edition, Standard & Poor's placed its single-'B'-plus corporate
credit and other ratings, on TV station and network owner Paxson
Communications Corp., on CreditWatch with negative implications.
The action follows the West Palm Beach, Florida-based company's
lowered guidance for its 2002 second quarter, which includes
relatively flat revenue and reduced earnings. Paxson has about
$858 million in debt outstanding.
Paxson indicated that revenue from the important infomercial
category would be flat in the second quarter, compared to mid-
to high-single-digit year-over-year gains projected earlier.
Standard & Poor's is concerned that the improvement in very weak
key credit measures expected for the ratings could be delayed by
slower-than-anticipated advertising growth at the still-
developing network. The CreditWatch placement also considers the
potential for an unwinding of Paxson's relationship with
strategic investor NBC Inc., following the expected August 2002
completion of the binding arbitration proceeding against that
company. Standard & Poor's imputes financial support from NBC
that is fundamental to its rating on Paxson.
In addition, Paxson announced the completion of a bank amendment
that helps avoid a covenant violation. The amendment also
permits the retention of some asset-sale proceeds, enhancing the
company's dwindling liquidity. However, there is still
considerable concern about the longer-term success of the
company's business and its weak financial profile. Standard &
Poor's will likely resolve the CreditWatch listing upon
completion of the arbitration and further review of Paxson's
business and financial prospects.
PENN TRAFFIC: Defaults on $205 Million Secured Revolving Credit
---------------------------------------------------------------
Penn Traffic obtained a waiver of a default under its $205
million secured revolving credit and term loan agreement funded
-- according to data obtained from http://www.LoanDataSource.com
-- by Fleet Capital Corporation, GMAC Business Credit, LLC,
AmSouth Bank, Bank of America National Trust and Savings
Association, Heller Financial, Inc., LaSalle Business Credit,
Inc., Citizens Business Credit Company, The CIT Group/Business
Credit, Inc., IBJ Whitehall Business Credit Corporation,
Foothill Capital Corporation, TransAmerica Business Credit
Corporation, Sovereign Bank And The Provident Bank.
The lending consortium agrees to forbear until October 31, 2002,
and continue providing working capital financing to Penn
Traffic, Dairy Dell, Inc., Big M Supermarkets Inc. and Penny
Curtiss Baking Company Inc.
The default occurred after Penn Traffic discovered inventory
overstatements at its Penny Curtiss bakery manufacturing
affiliate.
The waiver and forbearance agreement cost the Company an amount
equal to 1/10th of 1% of the Lenders' Aggregate Exposure --
about $310,000.
Martin A. Fox, Penn Traffic's Executive Vice President and Chief
Financial Officer, explains that the Waiver and Forbearance
Agreement will enable Penn Traffic's Audit Committee to complete
its investigation and permit Penn Traffic to restate its
financial results and assess whether any other modifications to
the Credit Agreement will be required. Penn Traffic anticipates
that on or prior to October 31, 2002, it will enter into a
longer-term amendment to its Credit Agreement with the Lenders
that will enable Penn Traffic to continue to borrow, repay and
reborrow through the end of the stated term of the Credit
Agreement.
PHOENIX GROUP: Creditors' Meeting to Convene on September 24
------------------------------------------------------------
The United States Trustee will convene a meeting of The Phoenix
Group Corporation and Americare Management, Inc.'s creditors on
September 24, 2002 at 10:00 a.m., at the J. Caleb Boggs Federal
Building, 2nd Floor, Room 2112, in Wilmington, Delaware.
This is the first meeting of creditors required under 11 U.S.C.
Sec. 341(a) in all bankruptcy cases. All creditors are invited,
but not required, to attend. This Meeting of Creditors offers
the one opportunity in a bankruptcy proceeding for creditors to
question a responsible office of the Debtor under oath about the
company's financial affairs and operations that would be of
interest to the general body of creditors.
The Phoenix Group Corporation is a holding company for
subsidiaries providing healthcare management and ancillary
services to the long-term care industry and business
acquisitions in the home health care industry. The Company
filed for chapter 11 protection on August 21, 2002 in the U.S.
Bankruptcy Court for the District of Delaware Francis A. Monaco
Jr., Esq., Joseph J. Bodnar, Esq., at Walsh, Monzack & Monaco,
PA and Jeffrey N. Rich, Esq., Robert N. Michaelson, Esq., at
Kirkpatrick & Lockhart LLP represent the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $18,876,457 in assets and
$16,693,089 in debts.
RAY & BERNDTSON: Chapter 11 Case Summary
----------------------------------------
Debtor: Ray & Berndtson, Inc. aka Paul Ray Berndtson, Inc.
301 Commerce Street, Suite 2300
Ft. Worth, TX 76102
Type of Business: Executive search firm.
Bankruptcy Case No.: 02-46548
Chapter 11 Petition Date: August 30, 2002
Court: Northern District of Texas (Fort Worth)
Judge: Barbara J. Houser
Debtors' Counsel: Henry W. Simon, Jr., Esq.
Simon, Warner & Doby
1700 City Center Tower II
301 Commerce St.
Ft. Worth, TX 76102
817-810-5250
Estimated Assets: $0 to $50,000
Estimated Debts: Over $1,000,000
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Bohle, John Stock Note $405,570
Silkener, David S. Deferred Compensation $257,173
4081 Nancy Creek Way NE
Atlanta, Georgia 30319
Executive Search Fee Commissions Payable $200,000
International Ltd.
Farish III, Jay P. Deferred Compensation $190,948
AT&T Trade Debt $180,591
Silkiner, David S. Stock Note $139,026
Freud, John M. Deferred Compensation $136,256
Raben, Stephen A. Deferred Compensation $113,597
City Center Development Lease $112,263
Co.
Clark, Donald B. Stock Note $91,361
Simon, Penny B. Stock Note $76,894
Doyle, John P. Stock Note $76,646
Somers, Scott D. Stock Note $76,134
American Airlines Trade Debt $68,935
Lowry, W. Randall Deferred Compensation $64,153
Tower Leasing, Inc. Lease $62,857
Weed, William Deferred Compensation $60,000
Farish III, Jay P. Stock Note $56,197
Banc One Leasing Corp. Equipment Leases $55,186
Penfield Associates, Inc. Trade Debt $40,000
RAY & BERNDTSON: Selling Assets to A.T. Kearney in Chapter 11
-------------------------------------------------------------
A.T. Kearney, the high-value management consulting subsidiary of
global services leader EDS, has reached an agreement to acquire
certain assets of Ray & Berndtson Inc., a privately held
retained executive search firm based in Forth Worth, Texas.
These assets will become part of A.T. Kearney Executive Search,
which will extend employment agreements to key Ray & Berndtson
Inc., partners and staff, including CEO and chairman Paul R.
Ray, Jr.
Concurrent with the agreement, Ray & Berndtson Inc., has filed
to re-organize under Chapter 11 of the Bankruptcy Code, to
facilitate an orderly business transition. The parties expect
the transaction to close on or before October 1, 2002.
"We are delighted to welcome partners and staff from Ray &
Berndtson Inc. to our team," said Steve Fisher, A.T. Kearney
Executive Search president. "For nearly 40 years, Ray &
Berndtson has been known for great client service, innovation
and integrity in recruiting top-level executives. The addition
of these talented professionals and their deep industry
expertise will create a powerful new force in executive search."
"We see significant opportunities resulting from this
combination," Ray said. "We share with our new colleagues at
A.T. Kearney Executive Search a focus on superior client service
and integrity and a commitment to growth. Our clients and staff
will benefit from access not only to enhanced executive search
services but also to the management consulting capabilities of
A.T. Kearney and the business services and transformation
strengths of EDS."
"Our strategic intent is to harness the synergies between
management consulting and executive search," said A.T. Kearney
CEO Dietmar Ostermann. "On the search side, our clients will
benefit from value-added services such as leadership
assessments. On the management consulting side, clients will
benefit from enhanced capabilities in human capital consulting."
The transaction involves personnel from eight offices of Ray &
Berndtson Inc., located in Atlanta, Chicago, Dallas, Fort Worth,
Houston, Los Angeles, New York and Palo Alto.
Ray & Berndtson Inc., is a "top ten" executive search firm,
specializing in recruiting services for high-level executives.
Distinguished by superior service, Ray & Berndtson Inc.,
professionals deliver leadership in the automotive, business and
professional services, consumer products and services, e-
business, energy and utilities, financial services, healthcare
and life sciences, industrial products and services and
technology industries.
A.T. Kearney -- http://www.atkearney.com-- is one of the
world's largest and fastest-growing management consulting firms.
With a global presence that includes more than 60 offices in 37
countries, spanning major and emerging markets, A.T. Kearney
provides strategic, operational, organizational and technology
consulting and executive search services to the world's leading
companies. A.T. Kearney is the high-value management consulting
subsidiary of global services leader EDS.
EDS, the leading global services company, provides strategy,
implementation, business transformation and operational
solutions for clients managing the business and technology
complexities of the digital economy. EDS brings together the
world's best technologies to address critical client business
imperatives. It helps clients eliminate boundaries, collaborate
in new ways, establish their customers' trust and continuously
seek improvement. EDS, with its management consulting
subsidiary, A.T. Kearney, serves the world's leading companies
and governments in 60 countries. EDS reported revenues of $21.5
billion in 2001. The company's stock is traded on the New York
Stock Exchange (NYSE: EDS) and the London Stock Exchange. Learn
more at http://www.eds.com
ROBECO CBO: S&P Keeping Watch on BB-Rated Class E Notes
-------------------------------------------------------
Standard & Poor's Ratings Services placed its single-'A'-minus
rating on the class C notes, triple-'B' rating on the class D
notes, and the double-'B' rating on the class E notes issued by
Robeco CBO I Ltd. on CreditWatch with negative implications. At
the same time, the triple-'A' rating on the class A notes and
the double-'A' rating on the class B notes are affirmed.
The CreditWatch placements reflect several factors that have
negatively affected the credit enhancement available to support
the notes. These factors include par erosion of the collateral
pool securing the rated notes, a downward migration in the
credit quality of the assets within the pool, and a
deterioration in the weighted average coupon generated by the
performing assets within the collateral pool.
The affirmations reflect the sufficient level of credit
enhancement currently available to support the rated tranches.
The transaction has experienced significant deterioration in its
par value ratios since it became effective in August 2000.
Currently, the class D and E par value ratio tests for Robeco
CBO I Ltd. are out of compliance. As of the July 31, 2002
monthly trustee report, the class A/B par value ratio was
141.30% (the required minimum ratio is 132.00%) versus an
initial ratio of 148.10%. The class C par value ratio was
114.50% (the required minimum ratio is 113.00%) versus an
initial ratio of 121.50%. The class D par value ratio was
110.30% (the required minimum ratio is 111.00%) versus an
initial ratio of 117.30%. The class E par value ratio was
107.09% (the required minimum ratio is 109.10%) versus an
initial ratio of 114.01%.
The credit quality of the assets in the collateral pool has also
deteriorated since the transaction was originated. Currently,
$12.50 million (or approximately 4.57% of the collateral pool)
has defaulted. In addition, $6 million (or approximately 2.30%)
of the performing assets in the collateral pool come from
obligors with a Standard & Poor's credit rating in the triple-
'C' range, and $17 million (or approximately 6.51%) of the
performing assets in the collateral pool come from obligors with
a Standard & Poor's credit rating that is currently on
CreditWatch negative.
Finally, the weighted average coupon generated by the performing
assets within the collateral pool has trended downward.
Currently, the weighted average coupon of the performing assets
is 9.67%, compared to 9.99% when the transaction became
effective in August 2000.
Standard & Poor's will be reviewing the results of current cash
flow runs generated for Robeco CBO I Ltd., to determine the
level of future defaults the rated tranches can withstand under
various stressed default timing and interest rate scenarios
while still paying all of the rated interest and principal due
on the notes. The results of these cash flow runs will be
compared with the projected default performance of the
transaction's current collateral pool to determine whether the
ratings assigned to the class C, D, and E notes are commensurate
with the level of credit enhancement currently available.
Ratings Placed On Creditwatch Negative
Robeco CBO I Ltd.
Rating Balance (Mil. $)
Class To From Orig. Current
C A-/Watch Neg A- 45.000 45.000
D BBB/Watch Neg BBB 9.000 9.000
E BB/Watch Neg BB 7.500 7.500
Ratings Affirmed
Robeco CBO I Ltd.
Balance (Mil. $)
Class Rating Orig. Current
A AAA 180.00 167.062
B AA 25.500 25.500
SAFETY-KLEEN: Court Okays Bifferato as Debtor's Special Counsel
---------------------------------------------------------------
Safety-Kleen Corp., and its debtor-affiliates obtained
permission from the Court to employ and retain Bifferato
Bifferato & Gentilotti, nunc pro tunc to May 29, 2002.
Due to the approaching statute of limitations for the initiation
of certain causes of action, Safety-Kleen Corp., and its debtor-
affiliates are hiring Bifferato as a special litigation counsel
to commence and prosecute these causes of action against third
parties based on the Bankruptcy Code's avoidance and recovery
provisions.
The principal attorneys and paralegals designated to represent
the Debtors and their current standard hourly rates are:
Ian Connor Bifferato $275
Jeffrey M. Gentilotti 275
Vincent A. Bifferato 275
Megan H. Harper 195
George T. Lees 195
Amy W. Kiefer 95
Kristin Wright 95
Debra Loveland 95
These hourly rates are subject to periodic adjustment to reflect
economic and other conditions. Other attorneys and paralegals
may, from time to time, serve the Debtors in connection with
these litigation matters.
SCOTIABANK: Moves Argentinean Unit's Assets to Liquidation Trust
----------------------------------------------------------------
Scotiabank confirmed that its Argentinean subsidiary, Scotiabank
Quilmes S.A., has finalized arrangements with Argentine-based
Banco Comafi S.A., and Banco Bansud S.A., that are intended to
maximize jobs for employees and returns for depositors and
creditors of Scotiabank Quilmes.
"We have been working with the Central Bank over the last
several months to explore all possible options to maximize jobs
for employees and returns for depositors and creditors. We
believe this agreement with Banco Comafi and Banco Bansud is the
best possible solution given the extraordinarily difficult
situation in Argentina," said Scotiabank Chairman and CEO, Peter
Godsoe.
The transaction will protect the interests of Scotiabank
Quilmes' depositors, creditors and employees and will have
minimal financial impact on Scotiabank.
All of the 91 branches of Scotiabank Quilmes are being reopened
by Comafi and Bansud and these banks have also assumed the
deposit obligations of Scotiabank Quilmes. Comafi and Bansud
will initially retain 1,200 former employees of Scotiabank
Quilmes.
Substantially all of Scotiabank Quilmes' assets have been
transferred to a liquidation trust for the benefit of creditors.
The establishment of the liquidation trust is expected to
provide creditors with the best possible recovery in the
circumstances.
All 1,700 former employees of Scotiabank Quilmes have received a
full severance package. While local regulations restricted
Scotiabank Quilmes from making full severance payments to
employees, Scotiabank matched the amount paid by Scotiabank
Quilmes to ensure employees received a fair and full severance
package.
"For the past eight months, Scotiabank Quilmes employees have
been working extremely hard to serve their customers under the
most challenging conditions," said Mr. Godsoe. "This is part of
our commitment to do the right thing and is a tangible way we
can demonstrate goodwill and empathy to affected employees."
"The tragic situation in Argentina continues to have a very real
toll on all Argentines. We hope that Argentina is able to
restore economic confidence and stability for all its people,"
said Mr. Godsoe.
SORRENTO NETWORKS: July 31 Balance Sheet Upside-Down by $12MM
-------------------------------------------------------------
Sorrento Networks (Nasdaq:FIBR), a leading supplier of
intelligent optical networking solutions for metro and regional
applications, announced financial results for its second quarter
of fiscal year 2003.
For the quarter ended July 31, 2002, the Company reported
revenues of $5.2 million, compared to revenues of $6.0 million
for the previous quarter and $8.0 million for the same quarter
of the prior fiscal year, a 13% and 35% revenue decrease,
respectively.
Revenues for the first six months of fiscal year 2003 were $11.2
million, compared to $22.5 million for the same period of the
prior fiscal year, corresponding to a 50% decrease. Second
quarter revenues for the Company's primary operating subsidiary,
Sorrento Networks Inc., were $4.5 million, compared to $4.8
million in the prior quarter, reflecting a 5% decrease.
The Company reported a net loss of $15.8 million for the
quarter, compared to a net loss of $11.0 million for the same
quarter in the prior fiscal year.
Operating loss for the quarter totaled $14.4 million, including
reserves and write-downs of approximately $7.4 million
associated with inventory, bad debts, severance and legal costs.
Excluding these write-downs and reserves, the operating loss for
the Company would have been $7.0 million for the quarter. The
operating loss was $6.5 million in the prior quarter and $9.6
million in the same quarter of the prior fiscal year.
At July 31, 2002, the Company's balance sheet shows a working
capital deficit of about $23 million, and a total shareholders'
equity deficit of about $12 million.
"Our results reflect the continued downturn in the telecom
sector," stated Phil Arneson, chairman and chief executive
officer of Sorrento Networks. "I recognize that the future will
continue to be challenging but we are pleased with the progress
we have made in this difficult marketplace. One of our remaining
challenges is to negotiate a capital restructuring that will
improve the balance sheet and make us more attractive to
potential investors."
Arneson also stated, "We are fortunate to have a strong
installed base with major Cable MSO, Utilicom, and PTT customers
worldwide. We have over 1500 nodes in service and the bulk of
our sales continue to flow from this installed base."
"While prior growth has turned to declines in recent quarters,
we are confident that we are well positioned for the inevitable
recovery in capital spending," added Arneson. "As our customers
revise their operating plans and start spending again, we stand
to benefit. The fundamental drivers of metropolitan area
bandwidth have not changed."
Other Developments
The Company continues to implement expense reduction measures
with respect to personnel and discretionary spending levels. As
indicated in previous announcements, the expense control
measures now in place are expected to yield savings of more than
$3 million per quarter. The Company's goal is to achieve a
spending level that balances strategic investments for future
revenue with conservative cash flow management.
Sorrento continued to ship to its existing customer base during
the quarter and announced a new contract with FiberNet
Communications, an Iowa-based consortium of independent
telecommunications companies. The Company also recently
announced the introduction of significant enhancements to the
GigaMux product line in the areas of improved density,
scalability and operational savings.
The Company held its annual shareholder meeting on Aug. 28,
2002. Business conducted included the election of Larry
Matthews, the co-founder of Zytec Corp., as a member of the
Board of Directors and the re-election of BDO Seidman as the
Company's auditors.
After the end of the quarter, Nasdaq notified the Company that
it is not in compliance with the listing requirements concerning
minimum bid price. Furthermore, due to the net loss generated
during the quarter, the Company will also not qualify under
Nasdaq's minimum stockholder's equity requirements. The Company
is in the process of developing a plan to submit to Nasdaq in
order to address these issues.
Sorrento Networks, headquartered in San Diego, is a leading
supplier of intelligent optical networking solutions for metro
and regional applications worldwide. Sorrento Networks' products
support a wide range of protocols and network traffic over
linear, ring and mesh topologies. Sorrento Networks' existing
customer base and market focus includes carriers in the
telecommunications, cable TV and utilities markets. The storage
area network market is addressed through alliances with SAN
system integrators.
Additional information about Sorrento Networks can be found at
http://www.sorrentonet.com
STILLWATER MINING: Near the Edge on Bank Facility Covenants
-----------------------------------------------------------
Stillwater Mining Company (NYSE: SWC) is revising its PGM
production target for 2002 to approximately 640,000 ounces of
palladium and platinum, a decrease of 40,000 ounces from the
previous target of 680,000 ounces. For the second half of the
year, the Stillwater Mine is now forecast to produce
approximately 240,000 ounces of palladium and platinum and the
East Boulder Mine is forecast to produce approximately 70,000
ounces of palladium and platinum.
Announcing the Company's revised production targets, Stillwater
Chairman and Chief Executive Officer, Francis McAllister said,
"During 2002, we have made significant progress in expanding
production at both of our facilities. For 2002, we expect our
total PGM production will increase 22% over the previous year.
For the first six months of 2002, at the Stillwater Mine,
production was 12% higher than in 2001 and the East Boulder Mine
commenced commercial operations producing 54,000 ounces in the
first half of 2002. However, continued industrial relations
issues and the delay of certain infrastructure projects at the
Company's Stillwater Mine have required us to revise our short-
term production level targets.
As a result, it is possible that the Company will not comply
with the ramp up in its bank credit facility production covenant
as early as the third quarter of this year, and it is also
possible that certain financial covenants might also be breached
in the fourth quarter of this year. The Company is working
closely with the lenders in its credit facility to waive or
amend the relevant covenants in its credit agreement in light of
the above circumstances and the adjusted production figures.
The Company is hopeful of reaching a satisfactory resolution,
although there can be no assurance that the Company will be
successful.
Mr. McAllister said that the lower production level would
adversely affect earnings. With respect to the Company's
liquidity, the Company has $198 million outstanding under its
$250 million credit facility including an outstanding letter of
credit in the amount of $7.5 million. Of the remaining balance,
$25 million is contingent upon the attainment of certain
operating targets. Mr. McAllister further said, "We are
obviously not pleased with our production shortfalls. Our
management is using every effort to address these issues. Mr.
McAllister also said that the Company had approximately
$43 million in cash and cash equivalents at July 31, 2002, which
we believe is satisfactory at this time."
Mr. McAllister added, "East Boulder is unaffected by the
industrial relations and infrastructure issues and continues to
meet its planned 1,000 tons per day production level. During
the month of August, progress was made in reducing dilution in
the sill cut process, the first step in the sub- level mining
method. As a result, ore production grades are trending upward
toward an average grade of .40 ounces per ton even though
approximately 60% of current production continues to come from
sill development. The Company is studying the appropriate
production level at which to operate East Boulder, the outcome
of which could increase annual PGM production from East Boulder
to up to 220,000 ounces of palladium and platinum. "
Stillwater Mining Company is the only U.S. producer of palladium
and platinum and is the largest primary producer of platinum
group metals outside of South Africa. The Company's shares are
traded on the New York Stock Exchange under the symbol SWC.
Information on Stillwater Mining can be found at its Web site at
http://www.stillwatermining.com
US AIRWAYS: Wins Approval to Hire Seabury as Financial Advisors
---------------------------------------------------------------
US Airways Group Inc., and its debtor-affiliates obtained the
Court's authority to employ Seabury Advisors LLC, Seabury
Securities LLC, Seabury Solutions LLC, and Seabury Airport
Advisory Services LLC, as their financial advisors, investment
bankers and consultants.
Seabury will perform these services:
(i) Restructuring Services. Seabury will provide the Debtors
with investment banking services with respect to
successfully arranging either an "out-of-court"
restructuring of certain of its vendor and aircraft
related debt and lease obligations or a restructuring
through a judicial proceeding under a Chapter 11 of the
Bankruptcy Code. In connection with a Restructuring,
Seabury will:
(a) provide financial advice to the Debtors in developing
and soliciting agreement to a Restructuring plan,
which may be a plan under Chapter 11 of the Bankruptcy
Code;
(b) negotiate modifications to the Debtors' material debt
and lease obligations relating to aircraft financings;
(c) provide financial advice and assistance to the Debtors
in structuring any new securities to be issued under
the Plan;
(d) assist the Debtors in negotiations with entities or
groups affected by the Plan; and
(e) in a Chapter 11 proceeding, participate in hearings
before the bankruptcy court with respect to the
matters upon which Seabury has provided advice.
(ii) Financing Services. Seabury will provide the Debtors
with investment banking services with respect to a
Financing:
(a) in connection with an out-of-court restructuring,
assisting the Debtors in applying for a U.S.
government-guaranteed credit facility under the Air
Transportation Stabilization Act;
(b) in connection with a Chapter 11 proceeding, assisting
the Debtors in arranging and negotiating a debtor-in-
possession loan facility; and
(c) in connection with successfully reorganizing under the
Bankruptcy Code, assisting the Debtors in arranging
"Exit Financing" in connection with a Plan of
Reorganization, which may include an ATSB Loan
Facility, other forms of debt financing or new equity
capital from an equity plan sponsor.
(iii) Fleet Restructuring/Divestment Activities. Seabury will
provide the Debtors with certain financial advisory and
consulting services related to:
(a) fleet restructuring;
(b) restructuring existing agreements with airframe and
power plant manufacturers;
(c) negotiating with BFE vendors; and
(d) sale, divestment or sale/leaseback of the Debtors'
flight equipment.
(iv) Strategic Advice. If requested by the Debtors, Seabury
will provide the Debtors' executive management and their
board with strategic advice on its network, business
strategies and related matters;
(v) Sale Transaction Advisory. If requested by the Debtors,
Seabury will provide investment banking advisory services
with respect to a sale of the Debtors, its assets,
operations, business interests, trademarks, intangible
assets or any other assets;
(vi) New Aircraft Acquisition & Financing. Seabury will
provide the Debtors with certain financial advisory and
consulting services related to:
(a) assisting in negotiating principal terms and
conditions of new aircraft financings; and
(b) arranging and closing financing for additional flight
equipment delivered to the Debtors.
(vii) Airport Advisory Services. Seabury will provide the
Debtors with advisory services in connection with
assisting the Debtors in:
(a) securing concessions from airport authorities;
(b) negotiating for the return of surplus gates, ticket
counter space and other terminal facilities;
(c) evaluating prospective opportunities to re-finance
certain airport-related bond issues; and
(d) other similar matters as identified by the Debtors.
The services will be covered under that certain agreement
between the Debtors and Seabury Airport Advisory Services
LLC.
(viii) Credit Card Agreements. Seabury will assist the Debtors
in arranging a new Visa/MasterCard processor including:
(a) assessing the Debtors' needs for a processor;
(b) assisting the Debtors in preparing a request for
proposal;
(c) assisting the Debtors in identifying potential credit
card processors; and
(d) assisting the Debtors in soliciting, securing
commitments, negotiating, and closing an agreement
with a credit card processor.
In connection with work associated with the EDS Contract
only Seabury may contract to provide certain of these
services with third parties for which the Debtors will
agree to reimburse Seabury's direct costs. Third-party
retentions must have the prior approval of the Debtors;
(ix) Business & Operations Restructuring/Reengineering. If
requested by the Debtors, Seabury will provide the
Debtors' executive management and its board with advisory
services with respect to restructuring and reengineering
the Debtors' businesses and operations;
(x) IT Consulting; Flight Profitability System Development.
Seabury Solutions will build a new flight profitability
system for the Debtors as covered under that certain
agreement between Seabury Solutions LLC and the Debtors.
In addition, Seabury Solutions LLC agrees to assist the
Debtors in evaluating the adequacy, cost, and
competitiveness of the Debtors' contractual rights and
obligations with EDS Corporation. If requested by the
Debtors, Seabury Advisors LLC and Seabury Solutions LLC
will assist the Debtors in negotiating and structuring a
revised agreement with EDS, and, in the alternative,
assisting the Debtors in:
(a) preparing a request for proposal and soliciting a
replacement for EDS;
(b) evaluating the alternative bids; and
(c) if appropriate, assisting the Debtors in negotiating a
service agreement with an alternative provider.
In connection with work associated with the EDS Contract
only Seabury may contract to provide certain of these
services with third parties for which the Debtors will
agree to reimburse Seabury's direct costs. Third-party
retentions must have the prior approval of the Debtors.
Seabury will be paid, through wire transfer, a $250,000 monthly
retainer fee. Of this amount, 50% will be creditable to success
fees. The Debtors will pay Seabury debt or lease obligation
restructuring success fees. However, this amount will be capped
at $10,000,000. Seabury will be paid a success fee, based on
the aggregate of the Net Present Value cash liquidity
improvement over the seven years, following the restructuring of
debt, lease or other cash obligations of the Debtors relating to
aircraft, spare engines or related flight equipment as:
for amounts up to the first $500,000,000 0.75%
for the next $500,000,000 0.6250%
for the next $500,000,000 0.50%
for all amounts beyond $1,000,000,000 0.40%
These fees will be capped at $6,500,000.
If US Airways Group receives financial assistance from the Air
Transportation Stabilization Board, or the Debtors secure
alternative credit facilities as a result of the concessions
negotiated by Seabury, Seabury will be paid a success fee equal
to the greater of $1,750,000 million or 20 basis points of the
principal amount of the credit facility.
For assisting the Debtors in arranging a DIP Loan Facility,
Seabury will be paid, upon execution of the financing
commitments, a success fee 0.50% of the commitments.
For assisting the Debtors in arranging equity commitments in
connection with exit financing, Seabury will be paid a success
fee of 1.50% of the Equity Financing.
For assisting the Debtors in arranging an M&A Transaction,
Seabury will receive success fees 0.50% of the total Transaction
Value up to the Net Book Value of the Debtors' assets that are
subject to the Transaction and 0.625% of the Transaction Value
in excess of the Net Book Value of the Debtors' assets. The
fees are capped at $7,500,000.
Seabury will receive $50,000 monthly for advising on aircraft
financing transactions. The Debtors will pay Seabury advisory
fees for debt or lease financing of new aircraft. The amounts
are based on the size and cost of each transaction. Seabury
will be paid a fixed fee of $1,750,000, with reasonable out-of-
pocket expenses, for the development of a Flight Profitability
System.
The Debtors will also reimburse Seabury for all reasonable
actual out-of-pocket expenses in connection with the services.
(US Airways Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
US AIRWAYS: August 2002 Revenue Passenger Miles Plummet 17.3%
-------------------------------------------------------------
US Airways reported that revenue passenger miles for August 2002
declined 17.3 percent compared to August 2001, while available
seat miles for the month were down 18.2 percent compared to the
same period last year. The passenger load factor for August
2002 was 77.1 percent, an increase of 0.9 percentage points
compared to August 2001.
Revenue passenger miles for the first eight months of the year
decreased 17.6 percent compared to the same period in 2001,
while available seat miles were down 19.2 percent year-over-
year. The passenger load factor for the period was 73.2
percent, an increase of 1.5 percentage points compared to the
same period in 2001.
The three wholly owned subsidiaries of US Airways Group, Inc. --
Allegheny Airlines, Inc., Piedmont Airlines, Inc., and PSA,
Inc., -- reported that revenue passenger miles for August 2002
increased 3.4 percent compared to August 2001, while available
seat miles increased 8.3 percent. The passenger load factor for
the month was 55.8 percent, a decrease of 2.6 percentage points
compared to the same period in 2001.
Revenue passenger miles for the first eight months of the year
for the three US Airways Express wholly owned subsidiaries
increased 3.7 percent compared to the same period in 2001, while
available seat miles were up 10.0 percent. The passenger load
factor for the second quarter was 53.2 percent, a decrease of
3.3 percentage points compared to the same period in 2001.
"I am extremely proud of our employees for another month of
outstanding operations across our system," said US Airways
President and Chief Executive Officer David Siegel.
In August, 86.6 percent of US Airways flights arrived on time,
which was the best August in the Company's history. US Airways
also completed 99.2 percent of its flights, another Company best
for the month. "Our hubs have been running smoothly and we have
operated every scheduled transatlantic flight since May," said
Siegel.
Mainline passenger unit revenues continue to fall, with an
expected decline of between 8.5 percent and 9.5 percent for
August 2002, compared to August 2001.
U.S. STEEL: CEO Outlines Progress Under Steel Tariff Relief
-----------------------------------------------------------
Thomas J. Usher, chairman, CEO and president of United States
Steel Corporation (NYSE: X), met with Secretary of Commerce
Donald L. Evans to discuss the company's efforts to restructure
and insure the long-term competitiveness of the domestic steel
industry under the protection of the remedies granted under
Section 201 of the Trade Act of 1974.
"U. S. Steel has an aggressive plan in place to recover from the
devastating flood of steel imports that has crippled our
industry," said Mr. Usher. "But achieving these goals will
require a sustained period of stable market conditions, and we
are only a few months into what is designed to be a three-year
program. While we work to shore up the long-term strength of
our company and the steel industry, the Bush Administration must
preserve the President's steel program to realize the full
potential of the 201 relief. And that means standing strong
against unnecessary exclusions, monitoring and enforcing
excluded products to make sure that these imports are not
undermining relief and continuing efforts to eliminate the root
cause of the American steel crisis: excess global steel
capacity."
Mr. Usher briefed Secretary Evans on numerous steps that U. S.
Steel has initiated or plans to implement within the company.
This confidential progress report emphasized the company's
commitment to pursuing concrete and wide-ranging initiatives
that will add value to the company and respond to the
Administration's call to use the period of safeguard relief to
enhance competitiveness.
Mr. Usher's report highlighted the steps needed to maintain
world-class status for the company in the years ahead. Mr.
Usher emphasized that U. S. Steel has in recent years undertaken
extensive efforts to upgrade facilities, enhance efficiencies
and pursue consolidation steps that will enhance value. However,
the market conditions brought on by the import surge and steel
crisis have hampered the company's - and the industry's -
ability to raise capital and take steps critical to future
competitiveness.
Mr. Usher stated that value-enhancing consolidation will be a
key component of U. S. Steel's strategy going forward, and U. S.
Steel is engaged in ongoing discussions regarding consolidation
opportunities. The company believes that demonstrable and
sustainable synergies would result from such transactions and
will continue to actively pursue them.
Mr. Usher also emphasized that the company is committed to
taking aggressive steps to enhance cost-competitiveness. U. S.
Steel has publicly set a goal to reduce production costs for
domestic operations by $30 per ton over a three-year period
totaling over $300 million by completion: $10 per ton each year
for 2002, 2003 and 2004. The company is on track through July
2002 to attain the yearly targeted $10 per ton savings.
In addition, Mr. Usher stressed the need to establish a
progressive new labor agreement with the United Steelworkers of
America to provide a meaningful reduction in operating costs and
insure the company's competitiveness going forward. And he
outlined detailed steps to improve quality and customer service,
and to develop new products and market opportunities.
Completion of the consolidation strategy described above is
subject to numerous conditions, some of which are described
above. Many of these conditions depend upon actions by other
parties, such as the federal government. There is no assurance
that any consolidation will occur, nor any specificity
concerning the terms upon which it might occur. Financial
performance and results in the steel industry, including the
results of U. S. Steel if any consolidation occurs, will be
influenced by many factors.
* * *
As reported in Troubled Company Reporter's August 12, 2002
edition, Fitch Ratings affirmed the senior unsecured long-term
ratings of U.S. Steel at 'BB' and assigned a 'BB+' rating to the
company's senior secured revolver. The Rating Outlook is Stable.
Since the beginning of the year, the prices of hot-rolled and
cold rolled steel sheet have risen dramatically and with them
U.S. Steel's profits. On shipment increases of 619 thousand tons
and price realizations of $12/ton more, U.S. Steel has turned an
operating loss of $61 million in the first quarter of 2002 into
an operating profit of $47 million in the second quarter. Price
increases have been announced effective in August and September;
the company's order book is extended into October; and the
weaker dollar in concert with 30% disputed steel tariffs should
temper future imports. U.S. Steel's seven domestic furnaces are
operating at near capacity, and the company is projecting a
profit for the year. Liquidity is strong following the company's
mid-May stock offering.
U.S. Steel will likely somehow figure into the politically
encouraged consolidation going on in the steel industry
(Nucor/Trico/Birmingham and Corus/CSN). Recent discussions have
included a potential combination with National Steel, and U.S.
Steel is continuing discussions with third parties. The company
purchased U.S. Steel Kosice (Slovak Republic) in November 2000.
Any substantive change in the business profile of U.S. Steel
could impact the company's ratings.
UNIROYAL TECHNOLOGY: Look for Schedules and Statements on Oct. 5
----------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of
Delaware, Uniroyal Technology Corporation and its debtor-
affiliates obtained an extension of the deadline to file their
schedules and statements. The Court gives the Debtors until
October 5, 2002, to prepare and file comprehensive schedules of
assets and liabilities, schedules of executory contracts and
unexpired leases, and statements of financial affairs required
of all debtors under 11 U.S.C. Sec. 521(1).
Uniroyal Technology Corporation and its subsidiaries are engaged
in the development, manufacture and sale of a broad range of
materials employing compound semiconductor technologies, plastic
vinyl coated fabrics and specialty chemicals used in the
production of consumer, commercial and industrial products. The
Company filed for chapter 11 protection on August 25, 2002 Eric
Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at The Bayard
Firm represent the Debtors in their restructuring efforts. When
the Debtors filed for protection from its creditors, it listed
$85,842,000 in assets and $68,676,000 in debts.
USEC: Outlook Revised to Neg. on Threat of New U.S. Competition
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
uranium processor USEC Inc., to negative from stable on concerns
about possible new competition in the U.S.
Standard & Poor's said that it has affirmed its double-'B'
corporate credit rating on the Bethesda, Maryland-based company.
USEC had total debt of $500 million at June 30, 2002.
Standard & Poor's said that the outlook revision reflected risks
posed to USEC from efforts by a consortium consisting of a
competitor of USEC's and certain major customers to construct a
new uranium enrichment facility in the U.S. "Considerable
uncertainty exists about whether this plan will be realized,
given the regulatory approvals that will be needed", said
Standard & Poor's credit analyst Scott Sprinzen. "However, if
this project goes forward, Standard & Poor's believes it could
undermine the effectiveness of USEC's strategy for improving its
competitive position, while also destabilizing industry
pricing". Mr. Sprinzen said that, specifically, the ratings
could be lowered if the consortium receives a license from the
U.S. Nuclear Regulatory Commission for the proposed project.
Standard & Poor's said that its ratings on USEC Inc. reflect its
position as the world's largest producer of enriched uranium.
The company provides uranium enrichment services, a step in
transforming natural uranium into fuel for nuclear reactors
producing electricity. The company has leading market shares in
North America and globally, but has little influence on prices.
VICWEST CORP: Talking with Sr. Lenders to Amend Credit Facility
---------------------------------------------------------------
Vicwest Corporation is currently in discussions with its senior
lenders to amend its senior credit facility in order to rectify
an event of default which currently exists under the facility
due to non-compliance with financial covenants. All principal
and interest payment obligations under the senior credit
facility have been met. As previously disclosed in Vicwest's
second quarter interim financial statements, an amendment was
entered into with Vicwest's senior lenders to deal with the
financial covenants, which contemplated a capital transaction
that has not been completed, and as a result the event of
default exists. While the senior lenders have not done so, they
have the option to declare the senior debt to be due and
payable. Until the event of default is rectified or the senior
lenders otherwise agree, Vicwest is prohibited from paying
interest to the holders of Vicwest's subordinated notes. The
next scheduled interest payment date for the subordinated notes
is September 10, 2002. Vicwest's subordinated notes are listed
on the TSX Venture Exchange under the symbol MGT.DB.
VITESSE SEMICONDUCTOR: S&P Hatchets Corporate Credit Rating to B
----------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on Vitesse
Semiconductor Corp., to single-'B' from single-'B'-plus. The
outlook remains negative. The action reflects the company's
depressed operating profitability and expectations that business
conditions will remain challenging in at least the intermediate
term.
Camarillo, California-based Vitesse Semiconductor manufactures
high-performance integrated circuits for the fiber-optic
communications industry. In addition, Vitesse Semiconductor
supplies chips for machinery used to test semiconductor chips
during the manufacturing process. Both industries are highly
stressed, and material recovery in the fiber-optic market, in
particular, is currently not expected until 2004.
"If the company cannot stabilize its financial profile in the
intermediate term, ratings could be lowered," said Standard &
Poor's credit analyst Bruce Hyman.
Following a series of restructuring actions, Vitesse is sizing
the company to achieve net income breakeven at $60 million in
quarterly revenues, although it cannot be determined when that
revenue level will be achieved.
Revenues have been about $40 million for the last four fiscal
quarters, compared with peak revenues of $165 million in the
December 2000 period. While the company has sustained R&D
expenses at historical levels to assure its market position when
conditions improve, at current depressed revenue levels, R&D is
approximately 90% of sales. Resulting EBITDA has been negative
since the June 2001 quarter, and is likely to remain so in the
intermediate term. Vitesse Semiconductor's cash burn rate has
averaged about $50 million per quarter following the downturn.
Vitesse has maintained adequate financial flexibility, with
financial assets totaling $480 million at June 30, 2002, while
debt levels totaled $488 million. Vitesse has repurchased debt
when market conditions have warranted.
WORLDCOM INC: Intends to Assume Verizon Billing Agreements
----------------------------------------------------------
Pursuant to Sections 365(a) and (b) of the Bankruptcy Code,
Worldcom Inc., and its debtor-affiliates seek the Court's
authority to assume:
-- the Agreement for Billing and Collection Services by and
between Debtors MCI WorldCom Communications, Inc. and
Telecom*USA, Inc. and Verizon Services Corp., acting on
behalf of itself and its certain affiliated operating
telephone companies, dated September 19, 2001; and
-- the Billing Services Agreement by and between MCI
Telecommunications Corp., Telecom*USA, Inc. and certain
Verizon operating telephone companies, dated October 19,
1997.
By their terms, the Billing Services Agreements are scheduled to
expire on September 10, 2002.
Under the Billing Services Agreements, the Verizon OTCs bill on
Verizon local telephone bills, collect and purchase amounts owed
to the Debtors by its customers for long distance services
rendered by the Debtors on Verizon's local telephone bills. In
return, the Debtors pay the Verizon OTCs billing and service
fees. According to Lori R. Fife, Esq., at Weil Gotshal & Manges
LLP, in New York, the Debtors send the Verizon OTCs two types of
rated traffic to place on their local bills:
-- dial-one traffic pre-packaged into an invoice-ready format by
the Debtors for 2,500,000 customers, and
-- dial-around and casual traffic for 2,300,000 customers,
consisting primarily of services including 1-800 Collect and
programs, whereby customers are able to dial codes including
1010220 prior to making a long distance call.
The Verizon OTCs purchase the Debtors' account receivables at
full retail value. The Verizon OTCs pay the Debtors the
receivables, less any recourse items including unbillables,
adjustments and bad debt items. The Verizon OTCs then invoice
the Debtors for billing and collection fees. The Debtors bill
its customers hundreds of millions of dollars per month in
revenues under the Billing Services Agreements and the Verizon
OTCs bill the Debtors millions of dollars in monthly fees under
the Billing Services Agreements.
If the Billing Services Agreements expire, Ms. Fife fears that
the Debtors' billing system for 4,800,000 customers would be
eliminated. Converting the 2,500,000 invoice-ready customers to
the Debtors' direct billing would create a loss of billing
revenue of tens of millions of dollars through 2003 and
increased expenses totaling of tens of millions of dollars.
Moreover, the expiration of the Billing Services Agreements
would eliminate any opportunity for the Debtors to offer
casually dialed products because, due to the transitory nature
of these services, the Debtors do not have billing names and
addresses for these customers. These services generate hundreds
of millions of dollars per year in revenue, which revenue would
be permanently lost if the Agreements terminate.
On August 22, 2002, the Debtors and the Verizon OTCs entered
into an Agreement for Extension and Assumption of Billing
Services Agreements and For Cure of Defaults, pursuant to which:
1. The Debtors and the Verizon OTCs have agreed to modify the
Billing Services Agreements to extend their term to December
31, 2003, subject to approval of the assumption and
modification by this Court. As extended, all terms of the
Billing Services Agreements will remain in full force and
effect, including the rates set out in the amendment to the
Letter of Agreement that extended the Billing Services
Agreements to June 20, 2002;
2. The Debtors have agreed to cure all defaults under the
Billing Services Agreements. The Debtors owes the Verizon
OTCs at least $34,527,000 under the Billing Services
Agreements and that additional fees or other amounts may also
be owing; and
3. Pursuant to the Utility Order, the Debtors and the Verizon
Entities agree to negotiate in good faith to determine
whether they can reach agreement with respect to potential
rights of setoff and recoupment between the Verizon Entities
and the Debtors. The Assumption Agreement is without
prejudice to the Verizon Entities' and the Debtors'
respective rights, claims and defenses -- including any
rights, claims and defenses of setoff and recoupment -- with
respect to any funds that the Debtors claim that the Verizon
Entities owe or any funds that the Verizon Entities claim
that the Debtors owe in addition to the Verizon OTCs' claims
under the Billing Services Agreements, which claims will be
satisfied in full. The Debtors acknowledge that the Verizon
Entities have disputed a substantial portion of the amounts
which the Debtors claim that the Verizon Entities owe. In
order to preserve their asserted rights of setoff and
recoupment, the Verizon Entities have retained and placed an
administrative freeze on the full amount that the Debtors
allege that Verizon owes them -- with respect to the
receivables that Verizon is holding, as well as additional
amounts that the Debtors claim that Verizon owes them for
other claims. In order to further the negotiations between
the parties, they agreed that the continuation of the
Administrative Freeze, and the absence of any motion by
Verizon for relief from the automatic stay under Section 362
of the Bankruptcy Code to the extent necessary to permit a
setoff, will not be deemed a violation of the automatic stay
during the Standstill Period. The Standstill Period will
begin on the Petition Date and continue through and
including 15 days after written notice of termination of the
Standstill Period is given by the Debtors, which notice may
not be sent by the Debtors any time before 30 days after
entry of an order approving this motion. (Worldcom Bankruptcy
News, Issue No. 6; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
XO COMM: Wants to Assume Amended Lease for Calif. Carrier Center
----------------------------------------------------------------
XO Communications, Inc., currently leases a portion of an office
building located at 600 West Seventh Street in Los Angeles,
California, pursuant to a Telecommunications Office Lease with
Carrier Center LA Inc.
The premises is used by the Debtor as a telecommunications
switching and collocation facility with related administrative
and office purposes. It facilitates the connection of the
Company's network to other carriers.
The Debtor intends to continue these operations at the leased
premises, but wants a smaller area to save some rental expenses.
The current area is 68,000 square feet. The Lease, dated March
30, 2000, has a 15-year term and the Debtor is obligated to pay
base rent plus its proportionate share of certain operating
expenses and taxes.
Accordingly, the Debtor negotiated with the Landlord for an
amendment to the Lease.
As a result, the parties have agreed upon an Amended Lease that
provides for:
Existing Lease Amended Lease
-------------- -------------
Rentable Square Feet 68,000 29,000
Annual Base Rent
Current through Month 36 $1,360,000 $580,000
Months 37-60 $1,428,000 $609,000
Months 61-120 $1,632,000 $696,000
Months 121-180 $1,876,800 $800,400
Tenant Share of Expenses 15.12% 7.31%
The reduction in annual base rent is attributable solely to the
reduction in square footage; the rental rate per rentable square
foot remains unchanged. This alone will save the Debtor over
$13,000,000 -- inclusive of additional rent savings -- over the
remainder of the lease term.
In exchange, the Amendment provides for a $1,100,000 Termination
Fee.
Apart from these, the Amendment also modifies certain lease
provisions relating to services and utilities, supplemental
equipment, signs and telecommunications device areas.
Except for the Termination Fee, the Debtor does not believe that
there is any amount outstanding that it must cure in accordance
with Section 365(b) of the Bankruptcy Code and in connection
with the assumption of the Amended Lease.
Accordingly, the Debtor seeks the Court's authority to assume
the Amended Lease. (XO Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
* Kroll Acquires Zolfo Cooper in $153 Million Transaction
---------------------------------------------------------
Yesterday, September 5, 2002, Kroll, Inc., acquired all of the
equity interests of Zolfo Cooper, LLC and Zolfo Cooper Holdings,
Inc., and their respective subsidiaries. The combined firm will
be known as Kroll Zolfo Cooper.
Zolfo Cooper is a nationally recognized business advisory and
interim management firm that has provided sophisticated
expertise and in-depth knowledge to clients in many diverse
industries over the last 20 years. Together with Kroll's pre-
existing corporate restructuring business in the U.K. and
Canada, Zolfo Cooper forms Kroll's Corporate Advisory and
Restructuring Group.
Zolfo Cooper has been involved, on an annual basis, in the
restructuring and refinancing of billions of dollars worth of
debt through both out-of-court and in-court proceedings. While
Zolfo Cooper has experience in representing all the various
stakeholders involved in a reorganization process, the vast
majority of its engagements have involved representing the
debtor. To a lesser extent, Zolfo Cooper also has represented
institutional creditors or equity stakeholders. Some of Zolfo
Cooper's more notable engagements include Enron (Steve Cooper's
there today), Federated Department Stores, Sunbeam, Laidlaw,
Washington Group International, Polaroid, Morrison Knudsen,
Pegasus Gold, NationsRent, and ICG Communications. In
combination with Kroll's pre-existing U.K. and Canadian
based restructuring group, Zolfo Cooper allows Kroll to offer a
single cross-border solution for large-scale, complex,
transatlantic bankruptcies and restructurings.
In a regulatory filing, Kroll disloses that it paid $100 million
in cash at yesterday's closing and, on January 15, 2003, will
issue 2.9 million shares of its common stock to the former
owners of Zolfo Cooper. In addition, Kroll will issue to them,
as contingent consideration, 625,000 additional shares of our
common stock per year if Zolfo Cooper achieves operating profit
levels exceeding:
Target
Annual Period Operating Profit
------------- ----------------
January 1, 2003 to December 31, 2003 $30 million
January 1, 2004 to December 31, 2004 $31 million
January 1, 2005 to December 31, 2005 $32 million
January 1, 2006 to December 31, 2006 $33 million
To the extent Zolfo Cooper's operating profit exceeds the target
operating profit level for a particular year, 50% of the excess,
up to $5 million, may be credited to the following year's
operating profit to determine if a contingent consideration
payment should be made for that year. Alternatively, to the
extent Zolfo Cooper's operating profit exceeds the target
operating profit for a particular year, 100% of the excess may
be credited to the previous year's operating profit to determine
if a contingent payment should have been made for that previous
year. All of the contingent consideration is payable in full if
Kroll undergos a change of control or if the employment of any
one of the three former principal owners of Zolfo Cooper is
terminated without "cause" or for "good reason" (as these terms
are defined in their employment agreements). The three
former principal owners of Zolfo Cooper -- Stephen Cooper,
Michael France and Leonard LoBiondo -- also agreed, in
connection with the sale of their business, to a non-compete,
subject to certain conditions. Kroll also granted options to
purchase 600,000 shares of our common stock under our existing
stock option plans to the professional staff of Zolfo Cooper.
These options were granted at an exercise price equal to the
closing price of Kroll common stock on September 5, 2002 (just
over $18 per share), and will vest over four years:
10% on the first anniversary of the Closing Date;
20% on the second anniversary;
30% on the third anniversary; and
40% on the fourth anniversary.
In connection with the acquisition, the three former principal
owners and other senior professionals of Zolfo Cooper entered
into employment agreements to serve as executives of Kroll Zolfo
Cooper following the acquisition. The employment agreements
expire on December 31, 2006 and include customary non-compete
and non-solicitation provisions that remain in effect during the
terms of the employment agreements and for one year thereafter
or two years thereafter in the case of the three former
principal owners, unless the employee is terminated without
"cause" or for "good reason", subject to certain conditions.
Kroll also agreed to pay an entity controlled by the three
former principal owners of Zolfo Cooper $2 million per year
until December 31, 2006 for their business use of an airplane
owned by that entity. To the extent the airplane is used in
connection with a client engagement, Kroll may be reimbursed by
the client.
Kroll's disclosure documents give the first public peek into
Zolfo's finances and internal operations:
* Zolfo Cooper performed services for more than 50 clients
in 1999, more than 90 clients in 2000, more than 80 clients in
2001;
* in 1999, 2000 and 2001, 44.2%, 28.2% and 24.1%,
respectively, of Zolfo Cooper's consolidated revenue was derived
from five clients;
* in one instance during the period from 1999 through 2001,
a single client accounted for more than 10% of Zolfo Cooper's
consolidated revenues for the applicable year.
* for the year ending December 31, 2001, Zolfo generated
$59,240,896 in revenues and showed $33,697,605 in net income;
* for the six months ending June 30, 2001, Zolfo generated
$31,794,249 in revenue and earned $19,453,594 in net income; and
* Zolfo's auditors detected a high concentration of credit
risk in the course of the 2001 audit -- Zolfo had $9,256,000 in
cash on deposit at commercial banks in excess of FDIC insured
amounts.
* Mark Shapiro Joins Lehman Bros. to Co-Head Restructuring Group
----------------------------------------------------------------
Lehman Brothers, the leading global investment bank, announced
that Mark J. Shapiro has joined the Firm as a managing director
and co-head of the Global Restructuring Group in its Investment
Banking Division. Mr. Shapiro will co-head the business with
Gilbert W. Sanborn, who formed the group upon joining the Firm
last year.
They report to Robert D. Redmond, head of the Leveraged Finance
Group, and Steven B. Wolitzer, head of Global M&A.
"The strength, technical expertise, and reputation of Lehman
Brothers' Global Restructuring team has facilitated some of the
most innovative and sophisticated transactions involving
distressed companies this year," said Bradley H. Jack, chief
operating officer and global head of Investment Banking. "Mark's
extensive expertise in debtor and creditor bankruptcy and
out-of-court restructurings, financings, and M&A experience,
coupled with the Firm's vast resources in investment banking,
liability management, and distressed sales and trading, is a
win-win for our clients," Mr. Jack added.
Mr. Shapiro comes to the Firm from co-heading Shearman &
Sterling's Bankruptcy and Restructuring Group where he spent 16
years practicing law. During his tenure at Shearman & Sterling,
where he was a partner since 1995, he worked on many large
Chapter 11 cases, out-of-court restructurings and cross-border
insolvencies, including ICG Communications, ICO Global
Communications, HIH Insurance, Microage, Quality Stores, Owens
Corning, Exide Technologies, and Long Term Capital.
Mr. Shapiro was named by Turnarounds & Workouts magazine, in
1999, as one of the top twelve U.S. lawyers in the restructuring
field under the age of 40. In addition, he is a member of the
New York City Bar Association's Bankruptcy Committee. Mr.
Shapiro earned his J.D. from Columbia Law School and his B.A.
from Hobart College. Over the past 12 years, Mr. Sanborn and Mr.
Shapiro have collaborated on a number of workouts and
restructurings. As co-heads of Lehman Brothers' Restructuring
Group, they will continue to expand the Firm's activities in
advising clients on out-of-court and Chapter 11 financial and
strategic restructurings and on Chapter 11 debtor-in-possession
and exit financings.
The Firm has recently worked on a number of full-service
restructuring transactions including: the recapitalization of
Weirton Steel (the only out-of-court restructuring of a major
steel company); the restructuring of Versatel, a Dutch-based
CLEC; Reuters' acquisition of Bridge Information Systems out of
Chapter 11; and, AT&T's acquisition of Northpoint out of Chapter
11. More recently, Lehman Brothers served as The Williams
Companies' lead financial restructuring advisor on a series of
transactions intended to resolve its liquidity issues. The
transactions delivered net cash proceeds of $1.4 billion from
asset sales, and $2 billion in secured financing.
Lehman Brothers (ticker symbol: LEH), an innovator in global
finance, serves the financial needs of corporations, governments
and municipalities, institutional clients, and high-net-worth
individuals worldwide. Founded in 1850, Lehman Brothers
maintains leadership positions in equity and fixed income sales,
trading and research, investment banking, private equity, and
private client services. The Firm is headquartered in New York,
London, and Tokyo and operates in a network of offices around
the world. For further information about Lehman Brothers'
services, products, and recruitment opportunities, visit our Web
site at http://www.lehman.com
* BOOK REVIEW: The Phoenix Effect: Nine Revitalizing Strategies
No Business Can Do Without
----------------------------------------------------------------
Authors: Carter Pate and Harlann Platt
Publisher: John Wiley & Sons, Inc.
Softcover: 244 Pages
List Price: $27.95
Review by Gail Owens Hoelscher
Buy a copy for yourself and one for a colleague on-line at
http://amazon.com/exec/obidos/ASIN/0471062626/internetbankrupt
Think of all the managers of faltering companies who dream of
watching those companies rise from the ashes all around them!
With a record number of companies failing in 2001, and another
record-setting year expected for 2002, there are a lot of ashes
from which to rise these days.
Carter Pate and Harlan Platt highly value strong leadership able
to sharpen a company's focus and show the way to the future.
They believe that all too often, appropriate actions required to
improve organizations are overlooked because upper management
either isn't aware of the seriousness of the issues they face or
they don't know where to turn for accurate information to best
address their concerns. In the Phoenix Effect, the authors
present their ideas to "confront, comprehend, and conquer a
company's ills, big and small."
These ideas are grouped into nine steps: (i) Find out whether
the company needs a tune-up, a turnaround, or crisis management.
Locate the source of "the pain." (ii) Analyze the true scope of
the company's operations. Decide whether to stay in the same
businesses, withdraw from existing businesses, or enter new
ones. (iii) Hold the company to its mission statement. If it
strives to be "the most environmentally friendly." Figure out
how. (iv) Manage scale. Should the company grow, stay the same
size, or shrink? (v) Determine debt obligations and work toward
debt relief. (vi) Get the most from the company's assets.
Eliminate superfluous assets and evaluate underused assets.
(vii) Get the most from the company's employees. Increase output
and lower workforce costs. (viii) Get the most from the
company's products. Turn out products that are developed and
marketed to fill actual, current customer needs. (ix) Produce
the product. Search for alternate ways to create the product:
owning or leasing facilities, outsourcing, etc.
The authors believe that "how you're doing is where you're
going." They assert that the "one fundamental source of life in
companies, as in people,.is the capacity for self-renewal, the
ability to excite your team for game after game. to go for broke
season after season." This ability can come from "(g)enetics,
charisma, sheer luck, stock options - all crucial, yes, but the
best renewal insurance is a leader who always knows exactly how
his or her company is doing."
There are a lot of books written on this topic. Pate and Platt
successfully bridge the gap between overgeneralization and too
detail. They are equally adept at advising on how to go about
determining a business's scope and arguing for Monday rather
than Friday for implementing layoffs. They don't dwell on sappy
motivational techniques. They don't condescend to the reader or
depend too much on folksy vernacular and clich,. Their message
is clear: your company's phoenix, too, can rise from its ashes.
* Carter Pate is a well known turnaround expert at
PricewaterhouseCoopers with more than 20 years experience
providing strategic consulting and implementation strategies.
* Harlan Platt is a professor of finance at Northeastern
University and author of the book Principles of Corporate
Renewal.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2002. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $625 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***