/raid1/www/Hosts/bankrupt/TCR_Public/021015.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, October 15, 2002, Vol. 6, No. 204
Headlines
ADELPHIA COMMS: Wants Court Approval to Amend DIP Credit Pact
ADVANCED COMMS: Board Approves Resolution to Increase Shares
ADVANCED LIGHTING: Banks Extend Credit Facility Until Friday
ALDERWOODS GROUP: Continued Labor Negotiations in Chicago
AMC ENTERTAINMENT: Will Host Q2 Conference Call on October 22
AMERCO: S&P Cuts Rating to BB- for Failing to Complete Offering
ANC RENTAL: Gets OK to Consolidate Ops. at Orange County Airport
AQUILA INC: Unit Closes Sale of 70.2% Stake in UnitedNetworks
ASPEN TECHNOLOGY: Lower Sales Spur S&P to Cut Credit Rating to B
ASSET MANAGEMENT: Alberta Regulator Orders Cease Trading
AT&T CANADA: Brascan Representatives Join Board of Directors
AT&T LATIN AMERICA: Transfers Listing to Nasdaq SmallCap Market
BUDGET GROUP: Court Okays Weber Shandwick as PR Consultants
CHILDTIME LEARNING: Commences Trading on Nasdaq SmallCap Market
COSERV ELECTRIC: Realty Unit Exits Ch. 11 Bankruptcy Proceeding
COVANTA ENERGY: Court Okays Assumption of Tampa Bay Water Pact
CRESCENT REAL: Exchange Offer of 9.25% Sr. Notes Expires Today
CROSSWALK.COM: Fails to Meet Nasdaq SmallCap Listing Standards
DATASTAND TECHNOLOGIES: Seeking Merger or Possible Reorg. Deals
ECHOSTAR: Fitch Calls Blocked Merger Short-Term Setback to GM
EL PASO: Unit to Voluntarily Delist 8.25% Preferreds Trading
ENRON: Surety Group Agrees to Provide Committee Requested Docs.
EOTT ENERGY: Case Summary & Largest Unsecured Creditors
FONIX CORP: Reduces Workforce by 40 to Streamline Operations
GENUITY INC: Secures Additional 15-Day Standstill from Lenders
GLOBAL CROSSING: Wants to Hire Innisfree as Balloting Agents
GROUP TELECOM: Continued to Defer Publishing Fiscal Q3 Results
GSO SOLUTIONS: TSX Delists Shares for Failing to Meet Guidelines
HOMESTORE INC: Names Michael R. Douglas as EVP, General Counsel
IMARK CORP: TSX Reviewing Shares re Continued Listing Compliance
INTEGRATED HEALTH: Has Until March 31, 2002 to Decide on Leases
KAISER ALUMINUM: Asks Court to Fix Jan. 31, 2003 Claims Dar Date
KASPER ASL: Hires Crestwalk as Claims Reconciliation Consultant
KENNAMETAL INC: Will Publish First Quarter Results on October 23
KMART CORP: Intends to Amend Real Property Lease with Kimco
KMART CORP: Bluelight.com Selling ISP Assets to United Online
LEAP WIRELESS: Granted Hearing on Nasdaq Delisting Determination
LUCENT TECHNOLOGIES: S&P Slashes Corporate Credit Rating to B-
LUCENT TECH: Fitch Junks Senior Unsecured Debt Rating
LUCENT: Lowers Quarterly EPS Revenue Breakeven Point to $2.5BB
MEDIA 100: Fails to Comply with Nasdaq Listing Requirements
MEDICAL PATHWAYS: TSX Delists Shares Over Listing Noncompliance
METALS USA: Selling Harris County Assets to Capital Commercial
MOBILE TOOL: Turns to The Recovery Group for Financial Advice
MONSANTO COMPANY: Revises Full-Year 2002 Earnings Guidance
MOYCO TECHNOLOGIES: Fails to Maintain Nasdaq Listing Standards
MTS INC/TOWER RECORDS: Completes Sale of Japanese Operations
NATIONSRENT INC: Enters into Third DIP Financing Amendment
NEXIQ TECHNOLOGIES: Files for Chapter 11 Protection in Michigan
NETWORK ACCESS: Committee Taps Crossroads as Financial Advisor
NORTEK: Reclassifies Former Hoover Subsidiary as 'Discontinued'
NORTEL: Positioning Four Key Businesses to Drive Breakeven Model
PACIFIC GAS: Court Approves Settlement Pact with Sierra re PPAs
PG&E NATIONAL ENERGY: S&P Downgrades Credit Rating to B-
PLYMOUTH RUBBER: Inks Debt Restructuring Pact with Lenders
POLYONE: Confirms Q3 Earnings within Thomson First Call Level
PRESIDENT CASINOS: August 31 Balance Sheet Upside-Down by $45MM
ROYAL PRECISION: Working Capital Deficit Tops $1.3MM at Aug. 31
SAFETY-KLEEN CORP: Court Okays Deloitte as Auditors & Advisors
SIRIUS SATELLITE: Firms-Up Recapitalization Talks with Investors
STEAKHOUSE PARTNERS: First Quarter 2002 Revenues Fall to $25.5MM
STRATESEC INC: Withdraws AMEX Delisting Appeal
SUN HEALTHCARE: Wants Waiver of Local Claim Objection Rules
SUN WORLD: S&P Places BB- Credit & B Debt Ratings on Watch Neg.
TELEPANEL SYS: Obtains 120 Days to Regain TSX Listing Compliance
UNITY CHURCH: Case Summary & 19 Largest Unsecured Creditors
US AIRWAYS: Adequate Protection Hearing Continues on November 7
US INDUSTRIES: Receives Amortization Waiver from Bank Group
VELOCITA: Will Auction-Off Substantially All Assets on Thursday
VENTAS INC: Kindred Expects Rise in Professional Liability Costs
VIASYSTEMS: Wants to Continue Rothschild's Retention as Advisor
VICWEST: C$84.0 Million of Subordinated Debt Now in Default
WARREN ELECTRIC: Court Approves Access to $6-Mill. DIP Facility
WELLMAN INC: Taps Keen Realty & CB Richard to Sell Marion Plant
WINSTAR COMMS: Trustee Demands Lucent Prove Validity of Liens
WIRELESS TOWER: S&P Places B+/B Ratings on CreditWatch Negative
WORLD KITCHEN: Appoints James Sharman as Chief Executive Officer
WORLDCOM INC: EDS Corp. Wants Prompt Turnover of Certain Assets
*********
ADELPHIA COMMS: Wants Court Approval to Amend DIP Credit Pact
-------------------------------------------------------------
The Adelphia Communications Debtors seek the Court's approval to
amend their DIP Credit Agreement to allow for the implementation
of an agreement between the ACOM Debtors and Hanover.
Brian E. O'Connor, Esq., at Willkie Farr & Gallagher, in New
York, explains that the DIP Credit Agreement is being amended to
permit the issuance of surety letters of credit to Hanover for
the account of a Borrower. These letters of credit can be used
to satisfy the reimbursement obligations of a Borrower in
another Borrower Group subject to restrictions on the aggregate
amount of collateral available to Hanover in compliance with the
Agreement.
The salient provisions of the proposed DIP Amendment operate to:
A. amend the definitions of Permitted Inter-Group Debt and
Permitted Inter-Group Advances to include all obligations of
a Borrower to reimburse each fronting bank for amounts paid
by it in respect of surety letters of credit issued in
support of Existing Bonds and New Bonds, which benefit a Loan
Party in a Borrower Group different from the Borrower's
Borrower Group;
B. exclude the Specified Inter-Group Reimbursement Obligations
from any restriction on the incurrence of Permitted
Inter-Group Debt or the making of Permitted Inter-Group
Advance:
-- during a financial covenant event of default, or
-- when a loan party is not in compliance with the provisions
on Intercompany Advances in accordance with Section
6.10(d) of the DIP Credit Agreement; and
C. permit the issuance of surety letters of credit to support
Existing Bonds and New Bonds, notwithstanding the requirement
that separate letters of credit be issued for the account of
each Borrower commensurate with the benefit to be received by
the Borrower as a result of the transactions supported by the
obligations supported by the letters of credit, subject to
the restrictions on the aggregate amount of collateral
available to Hanover pursuant to the Agreement and the
restrictions set forth in the DIP Credit Agreement.
Mr. O'Connor adds that in connection with the recent Chapter 11
filing of the Century/ML Debtor, the DIP Amendment also waives
certain requirements of the DIP Credit Agreement inasmuch as the
Century/ML Debtor will not become party to the DIP Credit
Agreement. (Adelphia Bankruptcy News, Issue No. 19; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Adelphia Communications' 9.875% bonds due 2007 (ADEL07USR2),
DebtTraders reports, are trading at 32 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL07USR2
for real-time bond pricing.
ADVANCED COMMS: Board Approves Resolution to Increase Shares
------------------------------------------------------------
Advanced Communications Technologies, Inc., (OTCBB:ADVC) said
that on October 10, 2002, the Company's Board of Directors
approved a resolution authorizing the Company to file an
Information Statement with the Securities and Exchange
Commission to approve a vote by a Majority Written Consent of
the shareholders, to authorize an increase in the Company's
authorized common shares. The record date for the shareholders'
action has been set for November 27, 2002.
Advanced Communications Technologies Inc., holds the exclusive
rights throughout the North, South and Central American markets
to SpectruCell, a software-defined radio multiple protocol
wireless system consisting of hardware and software that enables
network providers to install a single base station and configure
it to any or all protocols (GSM, CDMA, UMTS, W-CDMA, etc).
SpectruCell has been, and other related products are being
developed by Advanced Communications Technologies (Australia)
Pty Ltd., which the Company owns a 20% interest in.
Advanced Communications' March 31, 2002 balance sheets shows a
total shareholders' equity deficit of about $3 million.
ADVANCED LIGHTING: Banks Extend Credit Facility Until Friday
------------------------------------------------------------
Advanced Lighting Technologies, Inc., (Nasdaq: ADLT) has
extended its agreement with the banks under the Company's credit
facility, allowing the Company access to its existing revolving
credit facility until at least October 18, 2002, despite the
Company's default by failure to maintain the minimum debt
service coverage ratio required by the credit agreement. The
principal condition for the original agreement was that the
Company not pay interest due on September 16, 2002 pursuant to
the Company's Senior Notes due 2008. The banks are permitted to
terminate the extension if holders of the Company's Senior Notes
take certain actions adverse to the Company. The extension
keeps in place additional requirements typical of such
agreements, including increased information requirements and
covenants regarding its operations during the forbearance
period. The Company believes that it will continue to be able
to meet these additional requirements.
Wayne Hellman, ADLT Chairman and Chief Executive Officer,
commented, "We believe sales of ongoing operations in our first
quarter will be approximately $34 million, up 6% over last year.
In addition, preliminary results show that operational cash flow
exceeded $2 million in the months of July and August. Positive
cash flow over the last five months has allowed us to reduce our
bank debt by $4 million. All these factors, in addition to our
new lender discussions, give me great confidence that we can
complete restructuring arrangements satisfactory to our banks
and Senior Note holders."
Hellman added, "We are obviously very disappointed that we can
not make the Senior Note interest payment within the grace
period. We are working with our banks, our investment bankers
and our other stakeholders on various alternatives available to
the Company. The Company expects to continue to operate its
business: serving its customers and meeting its obligations to
suppliers and employees. Although we are only beginning to see
the results of our year-long efforts to improve profitability,
we believe the results of the quarter ending September 30 will
demonstrate our ability to increase operating income in a
sluggish economy."
Advanced Lighting Technologies, Inc., is an innovation-driven
designer, manufacturer, and marketer of metal halide lighting
products, including materials, system components and systems.
The Company also develops, manufactures and markets passive
optical telecommunications devices, components and equipment
based on the optical coating technology of its wholly-owned
subsidiary, Deposition Sciences, Inc.
ALDERWOODS GROUP: Continued Labor Negotiations in Chicago
---------------------------------------------------------
For the past several months, ten funeral homes of the Alderwoods
Group Inc., (NASDAQ: AWGI) have been attempting to negotiate a
collective agreement with the Teamsters Local 727 in the Chicago
area. Numerous proposals have been presented which would provide
an economic package better than the one the Teamsters recently
ratified with the Funeral Directors Service Association. The
Company is optimistic that a settlement can be reached, and is
committed to providing superior community service at any
location affected by these negotiations.
On January 2, 2002, Alderwoods Group completed one of the most
complex reorganizations in North American corporate history. As
a result, the Company was able to save almost 10,000 jobs
without asking for economic concessions from its employees.
"Much of our success is due to the professionalism of our
employees," said Gordon Orlikow, Senior Vice President, People.
"Because our employees are the heart of our business,
competitiveness and equity in our compensation arrangements are
a key objective of the Company."
"While we are disappointed that a strike vote has been taken,
strike votes are a normal part of the collective bargaining
process," states Mr. Orlikow. "The Company will continue to
negotiate in good faith, however, we will not negotiate our
contracts in the media."
Alderwoods' top priority remains delivering exceptional service
to its customer families. Consequently, all locations will
remain open regardless of the status of negotiations. The
Company will make every effort to conclude these negotiations
with minimal impact to the communities we serve.
Alderwoods Group's June 15, 2002 balance sheets show that its
total current liabilities exceeded its total current assets by
about $39 million.
AMC ENTERTAINMENT: Will Host Q2 Conference Call on October 22
-------------------------------------------------------------
AMC Entertainment Inc., (AMEX: AEN) will conduct a conference
call and slide presentation to discuss fiscal 2003 second-
quarter results and certain forward-looking information at 9:00
a.m. CDT on Tuesday, October 22, 2002.
Internet access to the call and supporting slides will be
available through AMC's Web site at http://www.amctheatres.com
The call can also be accessed by phone at (877) 307-8182. Media
and individuals will be in a listen-only mode, and participants
are requested to log in a few minutes early.
A replay of the conference call will be available on the Web
site through Tuesday, November 5, 2002.
AMC is scheduled to release earnings earlier in the day on
October 22, 2002.
AMC Entertainment Inc., is a leader in the theatrical exhibition
industry. Through its circuit of AMC Theatres, the Company
operates 242 theatres with 3,500 screens in the United States,
Canada, France, Hong Kong, Japan, Portugal, Spain, Sweden and
the United Kingdom. Its Common Stock trades on the American
Stock Exchange under the symbol AEN. The Company, headquartered
in Kansas City, Mo., has a Web site at
http://www.amctheatres.com
* * *
As reported in Troubled Company Reporter's July 1, 2002 edition,
Standard & Poor's raised its corporate credit rating on AMC
Entertainment Inc., to single-'B' from single-'B'-minus based on
positive financial policy developments at the company.
At the same time, Standard & Poor's raised its subordinated debt
ratings on AMC to triple-'C'-plus from triple-'C' and removed
all of the ratings from CreditWatch. The current outlook is
positive.
* * *
AMC Entertainment Inc.'s 9.875% bonds due 2012 (AEN12USN1) are
trading at 87 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AEN12USN1for
real-time bond pricing.
AMERCO: S&P Cuts Rating to BB- for Failing to Complete Offering
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on AMERCO to double-'B'-minus from double-'B'-plus,
citing the consumer truck company's failure to complete a public
unsecured debt offering. All ratings on AMERCO, parent of U-Haul
International Inc., remain on CreditWatch with negative
implications, where they were placed on July 10, 2002.
"AMERCO's downgrade is based on the company's inability to
complete a planned $275 million public unsecured debt offering
in the current environment, proceeds of which were to be used to
pay a $100 million debt maturity on October 15, 2002," said
Standard & Poor's credit analyst Betsy Snyder. "The company has
indicated it has enough funds available to pay the maturity and
is also seeking other financing alternatives; however, payment
of the maturity will likely leave the company with only a
limited amount of cash on hand," the analyst continued.
AMERCO's financial flexibility has weakened significantly over
the past several months. In June, the company entered into a
$205 million bank facility, half the size of the $400 million
facility it replaced. The company also had to contribute $76
million of equity to its insurance operations to meet regulatory
requirements. In addition, AMERCO has another $175 million of
debt maturing in May 2003. The CreditWatch reflects uncertainty
regarding the company's ultimate success in raising additional
funding. If the company is unsuccessful, ratings could be
lowered further. If AMERCO is successful in raising additional
capital, ratings would likely be affirmed and removed from
CreditWatch. All AMERCO's debt (excluding leases) is currently
unsecured. However, if the company is forced to raise funding
utilizing collateral, its unsecured debt rating could be lowered
to a level below its corporate credit rating.
The ratings on Reno, Nev.-based AMERCO reflect its constrained
liquidity and weakened financial flexibility, offset somewhat by
its leading position in consumer truck rentals. The company's
major operating subsidiary, U-Haul International Inc., is the
largest provider of truck and trailer rentals to retail
customers in North America. The only other major competitor is
this industry is Budget Group Inc., currently operating under
Chapter 11 bankruptcy protection (with the fate of the truck
rental operation uncertain under the recently announced
acquisition of the company by Cendant Corp.). U-Haul accounts
for the major portion (approximately 76%) of AMERCO's
consolidated revenues. The consumer truck rental business is
seasonal, with a large percentage of rentals occurring in the
spring and summer, and has tended to be very price competitive.
AMERCO's other subsidiaries are Amerco Real Estate Co., which
owns and manages most of AMERCO's real estate assets, including
its corporate-owned U-Haul truck rental and self-storage
facilities; and two insurance companies--Republic Western
Insurance Co. and Oxford Life Insurance Co. AMERCO's insurance
operations, which are involved in insurance of property and
casualty and reinsurance of life, health, and annuity insurance
products, are relatively small within the industry. Both
companies have been negatively affected by unprofitable lines of
business as well as write-downs of investments, which has
resulted in reduced profitability and cash flow for AMERCO.
However, results have begun to show improvement. In addition,
AMERCO has had to consolidate the results of SAC Holdings Corp.
and its consolidated subsidiaries (the owner of self-storage
properties managed by AMERCO) with AMERCO.
ANC RENTAL: Gets OK to Consolidate Ops. at Orange County Airport
----------------------------------------------------------------
ANC Rental Corporation and its debtor-affiliates obtained
authority from the U.S. Bankruptcy Court for the District of
Delaware to:
-- reject the Alamo Concession and Lease Agreement dated October
25, 2000 between Alamo and Orange County, California, and
-- assume the National Concession and Lease Agreement dated
October 25, 2000 between National and Orange County and
assign it to ANC.
The operations consolidation at the Orange County Airport will
result in savings to the Debtors of over $1,151,000 per year in
fixed facility costs and other operational cost savings. (ANC
Rental Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
AQUILA INC: Unit Closes Sale of 70.2% Stake in UnitedNetworks
-------------------------------------------------------------
Aquila, Inc., (NYSE:ILA), whose preferred stock is currently
rated by Fitch at 'BB+', announced that its indirect, wholly-
owned subsidiary UtiliCorp N.Z. Limited has completed the sale
of its 70.2 percent interest in UnitedNetworks Limited to VECTOR
Limited for approximately US$503 million.
Aquila expects to book a fourth quarter gain on the transaction
estimated at approximately $28 million.
Under its takeover offer, VECTOR purchased all shares of
UnitedNetworks that were held by UNZ. The takeover offer was
conditional upon Aquila's receipt of bank consents and VECTOR's
acquisition of UNZ's 70.2 percent stake in UnitedNetworks. Both
conditions were satisfied last week. Under New Zealand law,
VECTOR then had seven days to settle its takeover offer in cash,
and it funded the acquisition of UNZ's interest in
UnitedNetworks yesterday in Auckland.
Aquila's share of the net proceeds, estimated to be
approximately $362.0 million, will be used to retire debt
related to Aquila's acquisition of UnitedNetworks and other
utilities in Australia, Canada and the United Kingdom. Last
week, Aquila repurchased the minority stake in UNZ held by its
financial partner for approximately $38.5 million, increasing
its interest in UnitedNetworks from 55.5 percent to 70.2
percent. The sale to VECTOR is the culmination of a bid process
announced in June by UnitedNetworks as part of Aquila's ongoing
effort to sell $1 billion or more in assets to strengthen its
balance sheet and credit ratings.
"Since beginning our strategic restructuring a few months ago,
Aquila has now sold or agreed to sell assets with net proceeds
totaling $876.1 million," said Richard C. Green, Jr., chairman,
president and chief executive officer. "The transfer of
ownership in UnitedNetworks brings the total of completed
transactions to about $696 million, or more than two-thirds of
our stated goal of $1 billion."
Aquila Asset Sales As of October 10, 2002 (Millions)
----------------------------------------- ------------
Lockport power project $ 37.5
Natural gas pipeline and processing assets 265.0
UnitedNetworks 362.0
Texas gas storage assets (pending) 180.0
Quanta stock (open market and private sales) 13.8
Corporate aircraft 15.4
Other businesses 2.4
------
Total asset sales closed or pending $876.1
Green also stated that asset sales, elimination of costs and
management restructuring have been the principal focus of Aquila
as it repositions itself as an electric and gas utility and
owner of fully contracted generation. "As we continue to press
ahead with these important steps, we will now redouble our
efforts toward the next phase of our repositioning, the
continued exit from the remaining non-core elements of our
previous energy merchant strategy. This task is essential to
addressing the concerns expressed by the market."
UnitedNetworks is one of New Zealand's largest network
infrastructure companies, distributing energy to about 30
percent of the country's electricity consumers and more than
half of New Zealand's natural gas consumers. It also owns and
manages telecommunications networks in the central business
districts of Auckland and Wellington. UnitedNetworks was created
by Aquila in 1998 by combining electricity distribution
operations acquired from three different New Zealand utilities,
and later a natural gas network.
Based in Kansas City, Missouri, Aquila operates electricity and
natural gas distribution networks serving customers in seven
states and in Canada, the United Kingdom and Australia. The
company also owns and operates power generation assets. At June
30, 2002, Aquila had total assets of $11.9 billion. More
information is available at http://www.aquila.com
ASPEN TECHNOLOGY: Lower Sales Spur S&P to Cut Credit Rating to B
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Aspen Technology Inc., to single-'B' from single-'B'-
plus, following the company's announcement that it expects to
report sales in the September 2002 quarter lower than previously
expected. As a result, efforts to restore profitability and
positive cash flow are likely to be delayed.
At the same time, the rating on Aspen's subordinated debt was
also lowered, to triple-'C'-plus from single-'B'-minus.
The outlook remains negative on the Cambridge, Massachusetts-
based provider of software to the process industries. Aspen had
total debt, including convertible preferred shares, of $148
million at June 2002.
Aspen now expects to report sales for the September 2002 quarter
of about $77 million, instead of the previously forecast $84
million, following a shortfall in license revenues in the
company's supply chain management software segment. While
substantial additional spending cuts to stem ongoing operating
losses are expected, the timing for software spending decisions
in Aspen's markets is expected to be less predictable over the
near term, challenging the company's efforts to resize costs in
line with sales.
"The negative outlook reflects uncertainties as to when customer
spending for Aspen's software applications will stabilize, as
well as the challenges the company faces realigning its cost
structure," said Standard & Poor's credit analyst Emile
Courtney. "Failure to stem cash usage rates could result in a
downgrade."
Aspen's software products focus on process manufacturing,
specializing in chemicals, petrochemicals, and petroleum
segments. Aspen competes against other specialized process
industry software providers, as well as large, diversified
supply-chain-applications providers.
ASSET MANAGEMENT: Alberta Regulator Orders Cease Trading
--------------------------------------------------------
On October 11, 2002, the Alberta Securities Commission ordered
that trading cease in the securities of Asset Management
Software Systems Corp.
The Cease Trade Order was issued as a result of failure to file
certain required financial information. The Order will remain in
effect until further order of the Commission.
The Alberta Securities Commission is the industry funded
regulatory agency responsible for administering the Alberta
Securities Act. Its mission is to foster a fair and efficient
capital market in Alberta and, together with the other members
of the Canadian Securities Administrators, develop and operate
the Canadian Securities Regulatory System.
AT&T CANADA: Brascan Representatives Join Board of Directors
------------------------------------------------------------
AT&T Canada Inc., announced a number of changes to the company's
board of directors, following the recent announcement that AT&T
Corp., together with Brascan Financial Corporation and CIBC
Capital Partners, completed the purchase of AT&T Canada shares.
Given the changes in the ownership structure of the company as a
result of the completion of the transaction, the company
announced that Steve Chisholm, Alan Horn, Phil Ladouceur, David
Miller and Craig Young left the board on October 8, 2002, upon
the closing of the purchase of the AT&T Canada shares.
Purdy Crawford, Chairman, AT&T Canada said, "On behalf of the
board, I would like to extend my sincere gratitude to all of
these directors for the outstanding contributions they have made
as directors of AT&T Canada. They have helped guide the company
through a number of complex issues with great skill, sound
judgment and integrity. We respect their decision to step down
from the board and we wish them well."
Now joining the board of directors are representatives of
Brascan Financial Corporation.
"Now joining our board are Robert Harding and George Myhal.
These two individuals are highly respected executives and we
welcome them to the board," Crawford said.
AT&T Canada is Canada's largest competitor to the incumbent
telecom companies. With over 18,700 route kilometers of local
and long haul broadband fiber optic network, world class managed
service offerings in data, Internet, voice and IT Services, AT&T
Canada provides a full range of integrated communications
products and services to help Canadian businesses communicate
locally, nationally and globally. Visit AT&T Canada's Web site,
http://www.attcanada.comfor more information about the company.
DebtTraders reports that AT&T Canada Inc.'s 10.625% bonds due
2008 (ATTC08CAR2) are trading at 10 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ATTC08CAR2
for real-time bond pricing.
AT&T LATIN AMERICA: Transfers Listing to Nasdaq SmallCap Market
---------------------------------------------------------------
AT&T Latin America Corp., (Nasdaq: ATTL) filed to transfer its
Class A common stock listing from Nasdaq's National Market to
the Nasdaq Small Cap Market.
The shares will continue to trade under the symbol ATTL.
AT&T Latin America Corp., headquartered in Washington, D.C., is
a facilities-based provider of integrated high-bandwidth
business communications services in five countries: Argentina,
Brazil, Chile, Colombia and Peru. The company offers data,
Internet, voice, video-conferencing and e-business services.
BUDGET GROUP: Court Okays Weber Shandwick as PR Consultants
-----------------------------------------------------------
Budget Group Inc., and its debtor-affiliates obtained permission
from the U.S. Bankruptcy Court for the District of Delaware to
employ and retain Weber Shandwick Worldwide as their corporate
communications consultant pursuant to Section 327(a) of the
Bankruptcy Code.
In particular, Weber Shandwick will provide the corporate
communications support required by the Debtors in connection
with these Chapter 11 cases, including, without limitation:
-- providing communications services;
-- providing ongoing strategic counsel to the Debtors;
-- providing the continued development of a communications plan
in connection with these Chapter 11 cases;
-- preparing employee, customer, supplier and collateral
materials;
-- assisting in the production of management presentation
materials;
-- conducting management training; and
-- providing logistics and media coverage in North America and
Europe.
Weber Shandwick intends to charge for its professional services
on an hourly basis in accordance with its ordinary and customary
hourly rates in effect on the date services are rendered. Weber
Shandwick's hourly billing rates currently range from:
Chairman/CEO $400
Vice Chairman/Partner 375
President 350
Principal 325
Senior Managing Director/EVP 300
Managing Director/SVP 275
Director/VP 225
Group Managers 175
Account Supervisors 150
Senior Associates 135
Associates 115
Junior Associates 90
Account Coordinators 75
Interns 50
(Budget Group Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Budget Group Inc.'s 9.125% bonds due 2006 (BD06USR1),
DebtTraders reports, are trading at 17 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=BD06USR1for
real-time bond pricing.
CHILDTIME LEARNING: Commences Trading on Nasdaq SmallCap Market
---------------------------------------------------------------
Childtime Learning Centers, Inc., (Nasdaq: CTIM) received notice
of the approval by the Nasdaq Listing Qualifications Department
of the Company's application to list its securities on the
Nasdaq SmallCap Market. The Company's securities were
transferred to the Nasdaq SmallCap Market at the opening of
business Friday, October 11, 2002.
On September 10, 2002, the Company requested a hearing to appeal
a determination by the Nasdaq Listing Qualifications Department
stating that the Company's securities would be delisted from the
Nasdaq National Market System for failure to meet the
requirements of Marketplace Rule 4450(a)(2). Subsequently, the
Company determined that its appeal would not be successful.
Accordingly, on October 3, 2002, the Company applied to transfer
from the Nasdaq National Market to the Nasdaq SmallCap Market.
Childtime Learning Centers, Inc., of Farmington Hills, MI
acquired Tutor Time Learning Systems, Inc., on July 19, 2002 and
is now the nation's third largest publicly traded child care
provider with operations in 30 states, the District of Columbia
and internationally. Childtime Learning Centers, Inc., has over
7,500 employees and provides education and care for over 50,000
children daily in over 450 corporate and franchise centers
nationwide.
COSERV ELECTRIC: Realty Unit Exits Ch. 11 Bankruptcy Proceeding
---------------------------------------------------------------
CoServ Realty Holdings, L.P., announced that its Chapter 11 plan
previously confirmed by the U.S. Bankruptcy Court has become
effective, making it the first of three CoServ Chapter 11 plans
to emerge from bankruptcy protection.
As part of the plan and in connection with the plan becoming
effective today, CoServ Realty immediately transferred all of
its assets to affiliates of National Rural Utilities Cooperative
Finance Corporation, its secured lender. The asset transfer to
CFC affiliates consists primarily of residential and commercial
development loans, and also includes the ownership of The Westin
Beechwood Hotel and the Troon Golf-managed Creeks at Beechwood
golf course, which were acquired by CoServ Realty through
foreclosure in 2001.
"While the golf course has been challenged by the oversupply of
golf courses in the area, the hotel has performed remarkably
well during its first year of operation," said Donnie Clary,
chief financial officer of CoServ. "We have been extremely
pleased with the management of these properties by Westin, Troon
and Quorum Hotels during our ownership."
CoServ Realty along with CoServ Electric, CoServ Telecom
Holdings, L.P., and their related sister entities announced on
June 26, 2002 that Chapter 11 plans had been filed with the
court, which embodied the restructuring agreement reached with
CFC. CoServ Electric's plan was confirmed on Sept. 11, 2002, and
a confirmation hearing on the CoServ Telecom plan is scheduled
for Oct. 25. The plans for CoServ Electric and CoServ Telecom
and their related sister entities are projected to become
effective later this year.
"Finalizing the CoServ Realty plan represents the next step
toward bringing the entire CoServ family of companies out of the
reorganization process," said Bill McGinnis, chief executive of
CoServ Electric. "It's important to note that the CoServ Realty
plan produces a very favorable result for CoServ. The
transferred assets were acquired by CoServ Realty through loans
from CFC, and we were able to negotiate an agreement where CFC
gave us a 100% credit against the related debt."
For nearly 65 years, CoServ Electric has provided dependable,
affordable electric power to thousands of customers in the North
Texas area. In 1998, the company expanded both its service area
and its service offerings to include a broad range of services.
CoServ currently provides a wide variety of services, including
electric, gas, telephone, cable television, security and
Internet to several counties in North Texas. Further information
on CoServ Electric is available at http://www.coserv.com
COVANTA ENERGY: Court Okays Assumption of Tampa Bay Water Pact
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
granted Covanta Energy Corporation and its debtor-affiliates'
motion:
(a) authorizing Covanta Tampa Bay to assume, as amended the
O&M Agreement pursuant to Section 365 of the Bankruptcy
Code;
(b) finding no cure amounts due under the O&M Agreement; and
(c) authorizing the Hydranautics Subcontract pursuant to
Section 363(b)(1) of the Bankruptcy Code.
To recall, on July 19, 1999, Tampa Bay Water, a public
authority, entered into an Agreement for the Construction and
Operation of a Seawater Desalination Plan and Water Purchase
Agreement -- the Water Purchase Agreement -- with Tampa Bay
Desal, formerly known as S&W Water LLC.
The Tampa Bay Project involves construction, operation and
maintenance of a $75,000,000 reverse osmosis desalination plant
-- the Facility -- that will provide fresh water to the
communities of Hillsborough County, Pasco County, Pinellas
County, the City of Tampa, the City of St. Petersburg and the
City of New Port Richey in Florida.
Desal then subcontracted certain rights and obligations of the
Water Purchase Agreement to Covanta Tampa Bay, formerly known as
Ogden Water Systems of Tampa Bay, Inc., under:
1. the Turnkey Engineering, Procurement and Construction
Contract -- EPC Contract -- dated December 17, 2000, as
amended, by which Covanta Tampa Bay agreed to design,
engineer, procure, construct and test the Facility; and
2. the Operation, Maintenance, Repair and Replacement
Agreement for a Seawater Desalination Plant" -- O&M
Agreement -- on January 23, 2001 by which Covanta Tampa
Bay agreed to operate, maintain, repair and replace the
Facility once constructed.
In March 2002, Covanta Tampa Bay's rights and duties under the
EPC Contract were assigned to Covanta Tampa Construction Inc., a
non-debtor Covanta subsidiary. In April 2002, Tampa Bay Water
terminated the Water Purchase Agreement with Desal and assumed
Tampa Bay Desal's rights and obligations under the EPC Contract
and the O&M Agreement. Tampa Bay Water thereby established
direct contractual relationships with Covanta Tampa Bay and
Covanta Tampa Construction.
The Parties expect to achieve commercial operation of the
Facility no later than January 24, 2003. Upon completion of the
construction, Covanta Tampa Bay is expected to commence
performance under the O&M Agreement.
Since the Project is approaching a critical start-up stage,
Covanta Tampa Bay has identified and organized the necessary
preparatory arrangements. Tampa Bay Water has also requested
assurances in this regard. Accordingly, Covanta Tampa Bay
negotiated with Hydranautics, a membrane system supplier for
drinking water treatment facilities. The Hydranautics
Subcontract provides that:
-- Covanta Tampa Bay will subcontract responsibility for
certain maintenance and technical support associated with
the reverse osmosis process to Hydranautics;
-- Hydranautics will perform Covanta Tampa Bay's obligation
under the O&M Agreement to post the initial performance
security in the form of an $8,500,000 bond or letter of
credit in favor of Tampa Bay Water to secure Covanta Tampa
Bay's performance under the O&M Agreement; and
-- If the security is drawn upon for any reason other than
the fault of Hydranautics, Covanta Tampa Bay will be
liable for reimbursing Hydranautics for the amount of the
draw. Covanta Tampa Bay's reimbursement obligation is
narrower than it would be if CTB had provided the required
performance security itself. This reimbursement provision
is a contingent, unsecured obligation and, if approved,
will have administrative priority under Section
503(b)(1)(A) to the extent of a payment default by CTB.
In addition, Tampa Bay Water and Covanta Tampa Bay have
negotiated to amend the O&M Agreement to reflect these changes
and establish the O&M Agreement as a postpetition obligation of
Covanta Tampa Bay:
(a) The term "Tampa Bay Water" will be inserted in place of
"Tampa Bay Desal" and other administrative revisions will
be made to reflect the new, direct relationship between
Tampa Bay Water and Covanta Tampa Bay and the fact that
Tampa Bay Water is now the owner of the Project;
(b) Covanta Tampa Bay will be made eligible to receive
additional fees for water produced in excess of
guaranteed production levels;
(c) The existing clause permitting Tampa Bay Water to
terminate the O&M Agreement for convenience will be made
subject to a 180-day notice period. The termination for
convenience clause will be stayed during the first three
years of operation, unless Tampa Bay Water abandons the
Facility; and
(d) Tampa Bay Water's right to terminate the O&M Agreement
because of a bankruptcy filing or insolvency event
relating to CTB or its guarantor, or because of a failure
to maintain the Parent Guaranty, will be suspended during
the course of these bankruptcy proceedings. (Covanta
Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
CRESCENT REAL: Exchange Offer of 9.25% Sr. Notes Expires Today
--------------------------------------------------------------
Crescent Real Estate Equities Limited Partnership (NYSE:CEI) and
Crescent Finance Company, a wholly-owned subsidiary of CREELP
and co-issuer of the 9.25% senior notes due 2009, announced that
their offer to exchange registered 9.25% senior notes due 2009
for the outstanding notes is set to expire today at 5:00 p.m.
ET.
As of 5:00 p.m. ET on October 11, 2002, approximately $324.4
million aggregate principal amount of the $325.0 million of
9.25% Senior Notes due 2009 subject to the exchange offer had
been tendered for exchange and received by the exchange agent.
Crescent Real Estate Equities Company (NYSE:CEI) is one of the
largest publicly held real estate investment trusts in the
nation. Through its subsidiaries and partners, Crescent owns and
manages a portfolio of 74 premier office buildings totaling over
29 million square feet and centered in the Southwestern United
States, with major concentrations in Dallas, Houston, Austin and
Denver. In addition, the company has investments in world-class
resorts and spas and upscale residential developments.
* * *
As reported in the April 3, 2002 edition of Troubled Company
Reporter, Standard & Poor's affirmed its ratings on Crescent
Real Estate Equities Co., and Crescent Real Estate Equities
L.P., and removed them from CreditWatch, where they were placed
on Jan. 23, 2002. The outlook remains negative.
Crescent's financial profile is weak, with low coverage measures
and a largely encumbered portfolio that limits financial
flexibility. The company's core office portfolio performance has
been fairly stable but is highly concentrated in markets with
current weak fundamentals. Sustained portfolio weakness, coupled
with the potential for meaningful activity on the company's
share repurchase program (which has over $400 million
remaining), could stress financial measures further, prompting a
one-notch downgrade. Alternatively, a return to stable would be
driven by successful portfolio performance, despite the current
market softness, and a demonstrated commitment by management to
a more conservative financial profile with a tempered policy
toward share repurchases.
Ratings Affirmed And Removed From CreditWatch
Issue To From
Crescent Real Estate Equities Co.
Corporate credit rating BB BB/Watch Neg
$200 million 6-3/4%
preferred stock B B/Watch Neg
$1.5 billion mixed shelf prelim B/B+ prelim B/B+/Watch Neg
Crescent Real Estate Equities L.P.
Corporate credit rating BB BB/Watch Neg
$150 million 6 5/8% senior
unsecured notes due 2002 B+ B+/Watch Neg
$250 million 7 1/8% senior
unsecured notes due 2007 B+ B+/Watch Neg
CROSSWALK.COM: Fails to Meet Nasdaq SmallCap Listing Standards
--------------------------------------------------------------
Crosswalk.com (Nasdaq: AMEN), the leading Christian Community
Web site on the Internet, has completed the $4.1 million sale of
its crosswalk.com website to Salem Communications Corporation on
October 4, 2002. Crosswalk.com is now transitioning to implement
the shareholder approved business plan to utilize a majority of
the proceeds of the asset sale to among other things, acquire
cash generating assets.
Under the leadership of newly appointed Chairman and Chief
Executive Officer Eric Oliver, and President and Chief Operating
Officer Jon Morgan, the Company intends to focus on value-added
opportunities in three distinct arenas that have historically
generated large amounts of ordinary income. These three areas
are Office Buildings in Secondary Stagnant Markets, Office
Buildings in Out of Favor Growth Markets, and Oil and Gas
Royalties. With this change in direction, imminently, the
Company will be changing its name to AMEN Properties, Inc.
Additionally, on October 9, 2002, the Company received a Nasdaq
Staff Determination indicating that the Company fails to comply
with the minimum $1.00 bid price per share requirement set forth
in Marketplace Rule 4310(C)(2)(A) and that its common stock will
be delisted from The Nasdaq SmallCap Market effective with the
opening of business on October 17, 2002. However, the Company
will file an appeal before this date, requesting an oral hearing
before a Nasdaq Listing Qualifications Panel to review the Staff
Determination. Under Nasdaq Marketplace Rules, the hearing
request will stay the delisting of the Company's common stock
pending the Panel's decision.
DATASTAND TECHNOLOGIES: Seeking Merger or Possible Reorg. Deals
---------------------------------------------------------------
Datastand has commenced efforts to re-direct its current
operations. It is inviting companies and other persons with a
possible strategic interest in Datastand to consider entering
into discussions with the Company looking to a possible business
combination, restructuring or other reorganization transaction.
It is expected that these activities will be unrelated to the
current operation of a Web-based community or Web site. There
are at present no definitive agreements or agreements in
principal relating to the acquisition of any other business
activities by the Company and management is unable to state the
nature of the business activities that may be undertaken in the
future. It is expected that the redirection of the Company's
business activities will involve it in a business combination or
other material transaction.
DataStand Technologies (OTCBB: DATT) is a financial data
provider. DataStand Technologies provides customer-oriented
information research and document delivery services providing
businesses with up-to-date, focused information to meet their
business needs. The company's initial concentration has been in
developing financial data solutions specifically fundamental
corporate data for companies quoted on the OTC-BB. DataStand's
OTC-BB Data provides websites and brokerage firms with critical
information they can provide their users through websites and
integrated within brokerage software solutions.
Datastand's June 30, 2002 balance sheets show a total
shareholders' equity deficit of about $395,000. For Further
information visit http://www.datastand.com
ECHOSTAR: Fitch Calls Blocked Merger Short-Term Setback to GM
-------------------------------------------------------------
Thursday's Federal Communications Commission's decision to block
the proposed merger of Echostar Communications Corp., and Hughes
Electronics Corp., is clearly a short-term setback to General
Motors Corporation, of which Hughes is currently a subsidiary,
says Fitch Ratings.
The FCC vote was 4-0 against the transaction with the FCC
chairman Michael Powell saying that 'based on the record, the
commission cannot find that the merger is in the public
interest.' Although this does not necessarily scuttle the
transaction, as the parties have thirty days to file an amended
application, it clearly creates another hurdle to a successful
divestiture of the Hughes asset.
Fitch has incorporated the eventual sale of Hughes into the
ratings for GM. The divestiture would boost GM's net liquidity
and capacity for funding its pension obligations. Although the
original proceeds were estimated at $4.2 billion (with the
potential for additional upside), Fitch now anticipates that
should the Echostar-Hughes transaction fail to be consummated
that the total expected proceeds from any other transaction
would probably be less than this $4.2 billion figure.
Although a short-term setback, the potential for lower proceeds
and the extended timeframe for the Hughes divestiture do not
necessarily create immediate issues for GM. Given GM's strong
2002 North American market share performance, Fitch believes
that GM continues to be positioned to sustain (on a near-term
basis) the improved levels of production it has demonstrated
through the first three quarters of this year. This strong
production performance will result in continued improvements in
operating cashflow despite higher incentive levels. This, when
combined with positive net liquidity, provides GM with a
substantial cushion to absorb any potential negative short-term
trends. Fitch will continue to monitor the disposition of Hughes
with a focus on what any transaction means to GM's ability to
meet future obligations, especially projected increases in
pension funding.
EchoStar, the #2 US direct broadcast satellite (DBS) TV provider
(behind DIRECTV), operates the DISH Network, providing
programming to nearly 6.5 million subscribers in the continental
US. Subsidiaries develop DBS hardware such as dishes and
integrated receivers and deliver video, audio, and data
services. Echostar Communications' June 30, 2002 balance sheet
shows a total shareholders' equity deficit of about $827
million.
EL PASO: Unit to Voluntarily Delist 8.25% Preferreds Trading
------------------------------------------------------------
El Paso Tennessee Pipeline Co. (NYSE: EPGPR), a wholly-owned
subsidiary of El Paso Corporation (NYSE: EP), announced that it
has taken steps to voluntarily delist its Series A 8-1/4% Junior
Cumulative Preferred Stock from trading on the New York Stock
Exchange. This action is due to the small volumes traded and
allows the company to reduce administrative costs associated
with continuing to list the security. The Series A Preferred
was issued in 1996 as part of El Paso's acquisition of Tenneco
Energy.
The Company stated that the Series A Preferred will continue to
remain an outstanding obligation of the Company, but will no
longer be traded on the NYSE. The Company currently anticipates
that, subject to a twenty-one day SEC comment period, the last
day of trading of the Series A 8-1/4% Junior Cumulative
Preferred Stock on the New York Stock Exchange will be
approximately November 6, 2002.
The Company also anticipates that, following delisting, it will
file a Form 15 with the SEC to deregister the 8-1/4% Series A
Junior Cumulative Preferred Stock pursuant to the Securities
Exchange Act of 1934.
El Paso Tennessee Pipeline Co.'s principal operations include
natural gas transportation, gathering, processing and storage;
energy and energy-related commodities and products marketing;
power generation; and energy infrastructure facility development
and operation.
* * *
On October 2, 2002, Moody's Investors Service downgraded the
debt ratings of El Paso Corporation and its subsidiaries. The
ratings are under review for possible further downgrade.
Rating actions are:
El Paso Corporation
* Senior unsecured debt from Baa2 to Baa3,
* Bank credit facility from Baa2 to Baa3,
* Subordinated Debt from Baa3 to Ba1,
* Senior unsecured shelf from (P)Baa2 to (P)Baa3,
* Subordinate shelf from (P)Baa3 to (P)Ba1,
* Preferred shelf from (P)Ba1 to (P)Ba2,
* Commercial paper from Prime-2 to Prime-3;
El Paso CGP Company
* Senior secured from Baa1 to Baa2,
* Senior unsecured from Baa2 to Baa3,
* Subordinated from Baa3 to Ba1;
ANR Pipeline Company
* Senior unsecured from Baa1 to Baa2,
* Long-term issuer rating from Baa1 to Baa2;
Colorado Interstate Gas Company
* Senior unsecured from Baa1 to Baa2,
* Long-term issuer rating from Baa1 to Baa2;
Coastal Finance I
* Preferred stock from Baa3 to Ba1;
El Paso Natural Gas Company
* Senior unsecured from Baa1 to Baa2,
* Long-term issuer rating from Baa1 to Baa2,
* Commercial paper from Prime-2 to Prime-3;
El Paso Tennessee Pipeline Co.
* Senior unsecured from Baa2 to Baa3,
* Preferred stock from Ba1 to Ba2,
* Senior unsecured shelf from (P)Baa2 to (P)Baa3,
* Preferred shelf from (P)Ba1 to (P)Ba2;
Tennessee Gas Pipeline Company
* Senior unsecured from Baa1 to Baa2,
* Commercial paper from Prime-2 to Prime-3;
Southern Natural Gas Company
* Senior unsecured from Baa1 to Baa2;
El Paso Energy Capital Trust I
* Preferred stock from Baa3 to Ba1;
El Paso Capital Trust II
* Preferred shelf from (P)Baa2/(P)Baa3 to (P)Baa3/(P)Ba1;
El Paso Capital Trust III
* Preferred shelf from (P)Baa2/(P)Baa3 to (P)Baa3/(P)Ba1;
Limestone Electron Trust
* Senior unsecured guaranteed notes from Baa2 to Baa3;
Gemstone Investor Limited
* Senior unsecured guaranteed notes from Baa2 to Baa3.
ENRON: Surety Group Agrees to Provide Committee Requested Docs.
---------------------------------------------------------------
The Surety Group is the issuer of certain surety bonds in
connection with certain of the Mahonia Transaction.
Enron Corporation's Unsecured Creditors' Committee wishes to
review materials in the Surety Groups' possession, custody or
control regarding the Mahonia Surety Transactions without formal
discovery under Rule 2004. The Surety Group intends to
cooperate with the Committee.
Thus, the parties executed a stipulation that will govern the
sharing of confidential information. With the approval of Judge
Gonzalez, the parties agree on these terms:
A. The Surety Group will, at a minimum, provide to the
Committee:
(a) for each Mahonia Surety Transaction, the:
-- regional bond file,
-- home office bond file, and
-- general underwriting file, relating to that
transaction, from each member of the Surety Group
involved in the transaction, or, if one or more
members of the Surety Group do not maintain their
files in that manner, the same substantive categories
of documents, however the documents or files are
organized; and
(b) transcripts of depositions of Surety Group witnesses
in the Surety Litigation. The Surety Group will
attempt, to produce Discovery Material in electronic
form where Discovery Material is so maintained and
reasonably Accessible;
B. The Surety Group may designate Discovery Material as
"Confidential" if it believes, in good faith, that the
Discovery Material contains non-public, confidential,
proprietary, or commercially sensitive information or
information of an intimate, personal nature that requires
the protections provided for in this Stipulation and Order
The Surety Group will use its best efforts to ensure that
only Discovery Material containing Confidential Information
is designated Confidential and will not assert the position
that all Discovery Material produced to the Committee is
Confidential. Notwithstanding the foregoing, the Surety
Group may:
(a) redact commercially sensitive information that is not
material to the issues contested in the Surety
Litigation, and
(b) withhold or redact Discovery Material that is protected
by the attorney-client privilege, the work product
privilege and/or any other applicable privileges;
provided, however, that with respect to any commercially
sensitive information that is redacted, the undersigned
counsel for the Committee may, on seven days' prior
written notice to the Surety Group, review on an
attorneys' eyes only basis the information that has been
redacted and, after such review, may seek to remove the
redaction upon application to the Court;
C. All Discovery Material containing Confidential Information
will be marked with the legend "CONFIDENTIAL" at the time
the Discovery Material is produced to the Committee. The
inadvertent failure to designate Discovery Material as
Confidential Information at the time of production may be
corrected by supplemental written notice that identifies the
Discovery Material with particularity and will not
constitute a waiver of any privilege or confidentiality.
Upon receiving notice, the Committee will thereafter treat
the Discovery Material as Confidential Information; and
D. Dissemination of Confidential Information will be limited
to:
(a) legal and professional advisers to the Committee, subject
to the Committee's internal conflicts protocol, including
clerical and secretarial staff, professionals, data
processing or coding personnel, agents, or others
employed by the advisers;
(b) members of the Committee as part of any report to the
Committee from its legal counsel;
(c) any person retained by the Committee to serve as an
expert witness or otherwise provide specialized advice to
the Committee in connection with the Mahonia
Transactions, provided that such person is first provided
with a copy of this Stipulation and Order and executes a
non-disclosure affidavit; and
(d) the Court and its employees, including as part of any
filing in the Debtors' bankruptcy proceedings, provided,
however, that any portion of a filing that discloses
Confidential Information will be filed under seal with
reference to this Stipulation and Order. (Enron
Bankruptcy News, Issue No. 44; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DebtTraders reports that Enron Corp.'s 9.125% bonds due 2003
(ENRN03USR1) are trading at 12 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1
for real-time bond pricing.
EOTT ENERGY: Case Summary & Largest Unsecured Creditors
-------------------------------------------------------
Lead Debtor: EOTT Energy Partners, L.P.
2000 West Sam Houston Parkway South
Suite 400
Houston, TX 77042
Bankruptcy Case No.: 02-21730
Court: Southern District of Texas (Corpus Christi)
Debtor affiliates filing for separate chapter 11 petitions:
Entity Case No.
------ --------
EOTT Energy Finance Corp. 02-21731
EOTT Energy General Partner LLC 02-21732
EOTT Energy Operating Limited Partnership 02-21733
EOTT Energy Canada Limited Partnership 02-21734
EOTT Energy Pipeline Limited Partnership 02-21735
EOTT Energy Liquids, L.P. 02-21736
Type of Business: EOTT Energy Partners is a major independent
marketer and transporter of crude oil in North
America. EOTT also processes, stores and
transports MTBE, natural gas and other natural
gas liquids products. EOTT transports most of
the lease crude oil it purchases via pipeline
that includes 8,000 miles of intrastate
and interstate pipeline and gathering systems
and a fleet of more than 250 owned or leased
trucks
Chapter 11 Petition Date: October 8, 2002
Judge: Richard S. Schmidt
Debtors' Counsel: Robert D. Albergotti
Trey A. Monsour
Haynes and Boone
901 Main St.
Ste 3100
Dallas, TX 75202-9990
214-651-5613 / 214-651-5137
Fax : 214-200-0350 / 214-200-0532
Email: robert.albergotti@haynesboone.com
Email: monsourt@haynesboone.com
Total Assets: $961,051,000
Total Debts: $928,105,000
A. EOTT Energy Partners' 2 Largest Unsecured Creditors
Entity Nature of Claim Claim Amount
------ --------------- ------------
The Bank of New York 11% Senior Notes $247,925,000
101 Barclay Street
New York, NY 10286
Enron Corporation Trade $55,013,319
B. EOTT Energy Operating's 20-Largest Unsecured Creditors
Creditor Nature of Claim Claim Amount
-------- --------------- ------------
Teppco Crude Oil, L.P. Trade $14,840,504
210 Park Avenue, Suite 1600
Oklahoma City, OK 73102
Continental Resources, Inc. Trade $13,006,404
P.O. Box 1032
Enid, OK 73702
Merit Energy Company Trade $11,058,337
P.O. Box 843727
Dallas, TX 75284
Devon Energy Production Trade $10,122,857
Company, L.P.
P.O. Box 843559
Dallas, TX 75284
Tesoro Refining & Marketing Trade $8,324,975
1225 17th Street, 18th Floor
Denver, CO 80202
Eaglwing Trading, Inc. Trade $7,447,387
Suite 205
7702 East 91st Street
Tulsa, OK 74133
Equiva Trading Company Trade $7,093,108
P.O. Box 7792
2255 N. Ontario Street
Burbank, CA 91510
Burlington Resources Trading Trade $6,700,959
P.O. Box 840656
Dallas, TX 75284
NCRA Trade $6,564,835
P.O. Box 1404
McPherson, KS 67460
Plains Marketing & Trade $6,449,191
Transportation, Inc.
Attn: Run Tickets
333 Clay Street, Suite 2900
Houston, TX 77002
Central Crude Corp. Trade $5,718,276
P.O. Box 21110
Wichita, KS 67208
Chesapeake Energy Marketing Inc. Trade $5,423,500
P.O. Box 99688
Oklahoma City, OK 73199
Apache Corporation Trade $5,308,714
P.O. Box 840133
Dallas, TX 75284
Marathon Oil Company Trade $4,913,121
Dept. 0882
P.O. Box 120001
Dallas, TX 75312
RME Petroleum Company Trade $4,906,699
P.O. Box 730875
Dallas, TX 75373
COHO Resources, Inc. Trade $4,888,944
Suite 860
14785 Preston Road
Dallas, TX 75240
El Paso Merchant Energy- Trade $4,795,898
Petroleum Company
P.O. Box 2511
Houston, TX 77252
Amoco Production Company Trade $4,573,805
P.O. Box 277897
Atlanta, GA 30384
Occidental Permian Ltd. Trade $4,013,307
5 Greenway Plaza, 15th Floor
Houston, TX 77046
Occidental Permian Ltd. Trade $4,013,307
Attn: OEMI-15
P.O. Box 100725
Atlanta, GA 30384
C. EOTT Energy Canada's 20-Largest Unsecured Creditors
Creditor Nature of Claim Claim Amount
-------- --------------- ------------
Tidal Energy Marketing Inc. Trade $867,263
2000 Canterra Tower
400 3rd Avenue S.W.
Calgary, AB T2P 5A6
Centrica Canada Limited Trade $400,171
1000 111 5th Avenue S.W.
Calgary, AB T2P 3Y6
Enerplus Resources Corporation Trade $346,899
WesternCanadian Place, Ste. 3000
7th Avenue S.W.
Calgary, AB T2P 2Z1
Athena Resources Ltd. Trade $285,541
2050, 717 7th Ave. S.W.
Calgary, AB T2P 0Z3
Montana Refining Company Trade $264,538
Suite 1600
100 Crescent Court
Dallas, TX 75201
Petrobank Energy and Resources Trade $240,247
2200, 400 3rd Avenue S.W.
Calgary, AB T2P 4H2
Encana Corporation Trade $239,304
P.O. Box 2850
Calgary, AB T2P 2S5
Tundra Oil and Gas Ltd. Trade $201,560
1111 One Lombard Place
Winnipeg, Manitoba R3B 0X4
Purcell Energy Ltd. Trade $177,834
950, 250 6th Ave. S.W.
Calgary, AB T2P 3H7
Talisman Energy Canada Trade $164,146
Suite 3400
888 3rd Street S.W.
Calgary, AB T2P 5C5
Nexen Marketing Trade $155,100
2900, 801 7th Avenue S.W.
Calgary, AB T2P 3P7
Tiverton Petroleums Ltd. Trade $131,343
710, 635 8th Avenue S.W.
Calgary, AB T2P 3M3
Coastal Energy (A Partnership) Trade $109,157
400, 505 3rd Street S.W.
Calgary, AB T2P 3E6
Kiwi Resources Ltd. Trade $106,431
P.O. Box 908
Virden, Manitoba T2P 4H2
Crispin Energy Inc. Trade $97,274
1720, 510 5 St. S.W.
Calgary, AB T2P 3S2
Gentry Resources Trade $88,801
(Saskatchewan), Ltd.
2500, 101 6th Ave. S.W.
Calgary, AB T2P 3P4
Shiningbank Energy Ltd. Trade $72,312
Suite 1310
111 5th Avenue S.W.
Calgary, AB T2P 3Y6
Sogar Redources Ltd. (D) Trade $63,570
320 McFarlane Tower
700 4th Avenue S.W.
Calgary, AB T2P 3J4
Sogar (B) Joint Venture Trade $53,204
320 McFarlane Tower
700 4th Avenue S.W.
Calgary, AB T2P 3J4
Calpine Canada Resources Ltd. Trade $50,723
1800, 421 7th Ave. S.W.
Calgary, AB T2P 4K9
D. EOTT Energy Pipeline's 20-Largest Unsecured Creditors
Creditor Nature of Claim Claim Amount
-------- --------------- ------------
Big Warrior Trade $2,200,000
57 Arena Drive
P.O. Box 181
Cleveland, AL 35049
Danny Wright Dozer and [sic.] Trade $767,295
4200 N. Broadway
Hinton, OK 73047
Environmental Technology Trade $725,395
8080 North Central Expwy. #1390
Dallas, TX 75206
Andrews & Kurth, Trade $180,494
Mayor, Day, [sic.]
P.O. Box 201785
Houston, TX 77216
Plains Marketing LP Trade $158,194
P.O. Box 4648
Houston, TX 77002
Environmental Plus, Inc. Trade $138,587
P.O. Box 969
Use Remit 001
Eunice, NM 88231
B&H Maintenance & [sic.] Trade $84,727
P.O. Box 970
Eunice, NM 88231
Greg Tucker Construction Co. Trade $82,708
P.O. Box 442
Lindsay, OK 73052
Arguijo Oilfield Services, Inc. Trade $73,261
P.O. Box 886
Kermit, TX 79745
MLM Services, LLC Trade $61,217
P.O. Box 52608
Tulsa, OK 74152
Big State X-Ray, Inc. Trade $45,790
P.O. Box 520
Chickasha, OK 73023
AT&T Trade $43,131
Account No. 1000 149 9267
P.O. Box 78214
Phoenix, AZ 85062
Pratt Well Service Inc. Trade $41,795
P.O. Box 847
Pratt, KS 67124
Chaparral Service, Inc. Trade $41,234
P.O. Drawer 1769
Eunice, NM 88231
Endura Products Corp. Trade $38,443
P.O. Box 3394
Midland, TX 79702
Mills Construction Trade $36,786
P.O. Box 989
Cushing, OK 74023
R.L. Guderian dba [sic.] Trade $33,370
15604 Bethel Road
Shawnee, OK 74801
H&H Valve Services, Inc. Trade $30,793
P.O. Box 69854
Odessa, TX 79769
N Diamond Ranch Trade $25,000
11700 North Grimes
Hobbs, NM 88242
Key Energy Services, Inc. Trade $24,426
Mid Continent Division
P.O. Box 676756
Dallas, TX 75267
E. EOTT Energy Liquids' 20-Largest Unsecured Creditors
Creditor Nature of Claim Claim Amount
-------- --------------- ------------
BP Products North America Trade $2,561,927
501 Westlake Park Boulevard
Houston, TX 77079
Duke Energy Field Services Trade $1,677,405
P.O. Box 5493
Denver, CO 80217
Southern Chemicals Corp. Trade $1,475,000
3303 FM 1960 West, Suite 100
Houston, TX 77068
Houston Pipe Line Trade $520,000
1201 Louisiana, 11th Floor
Houston, TX 77002
JE Merit Constructors, Inc. Trade $78,511
P.O. Box 840381
Dallas, TX 75284
Shaw Constructors, Inc. Trade $61,729
P.O. Box 972343
Dallas, TX 75397
Hydrochem Industrial Trade $54,597
P.O. Box 844876
Dallas, TX 75284
Conoco Trade $50,000
P.O. Box 203192
Houston, TX 77216
Mobley Industrial Painters Inc. Trade $45,567
P.O. Box 596
Deer Park, TX 77536
Diversified Plant Services Trade $37,784
14004 Hwy. 288-B
Angleton, TX 77515
Reliant Energy Solutions Trade $34,785
Acct. 361 166-2
P.O. Box 3765
Houston, TX 77253
Praxair, Inc. Trade $31,890
P.O. Box 840193
Dallas, TX 75284
Industrial Catalyst Services Trade $23,000
P.O. Box 201143
Dallas, TX 75320
Tech 2000 Services Trade $22,789
220 White Plains Road
Suite 530
Tarrytown, NY 10591
Brown & Root Trade $18,094
P.O. Box 951099
Dallas, TX 75395
Jacobs Engineering Group Inc. Trade $16,701
Dept. 8862
Los Angeles, CA 90088
GE Betz Trade $15,138
P.O. Box 846046
Dallas, TX 75284
Philip Reclamation Services Trade $11,603
Department 2
P.O. Box 3069
Houston, TX 77253
Puffer-Sweiven, Inc. Trade $10,878
P.O. Box 200775
Houston, TX 77216
Pinkerton Trade $10,503
P.O. Box 2111
Carol Stream, IL 60132
FONIX CORP: Reduces Workforce by 40 to Streamline Operations
------------------------------------------------------------
Fonix(R) Corporation (OTC Bulletin Board: FONX), a leading
provider of natural-user interface technology for wireless and
mobile devices, Internet and telephony systems, and vehicle
telematics, has re-focused its business to exploit and leverage
its core- competencies in providing embedded speech solutions
for the wireless and mobile devices, automotive and assistive
market segments. Due to the severe downturn in the
telecommunications industry over the last two years and
continuing uncertainly as to its recovery, Fonix has eliminated
its existing sales, marketing and engineering development of the
computer telephony business unit. Further, the Company has
outsourced the sales and marketing of its consumer software
applications. This restructuring creates a more direct
connection between the Company's operations and teams
interfacing directly with customers.
This restructuring effort has currently resulted in a loss of 40
jobs; a reduction of operating costs of approximately $4 million
per year. Fonix retains its intellectual property for both the
computer telephony and consumer applications assets and will
retain existing marketing partnerships with companies like
Nortel and Siebel. The Company has also reduced its book value
of related computer telephony intangible assets.
Fonix has achieved a leading market position in wireless and
mobile speech solutions, automotive and assistive markets with
companies like Microsoft, Panasonic, Hewlett Packard, Dynavox,
Motorola, Samsung, Mitsubishi, Hitachi, Siemens, Texas
Instruments, and Epson. The Company expects to continue to
deliver to these markets speech interface solutions that achieve
broad market appeal and high demand as evidenced by our over
300% revenue increase through the first six months of 2002,
compared to the same period from the prior year. Third quarter
results are expected to show continued revenue growth trends,
but with decreased operating expenses. Final third quarter
results will be announced before November 14, 2002.
"Fonix is positioning operations to focus on markets that will
bring the highest revenue, the strongest margins and the longest
sustainable business in the current environment", said Roger D.
Dudley, Executive Vice President and CFO. "Economic pressures
have created a challenging year. Companies providing value
added enterprise solutions -- especially in our industry -- have
been pounded. Fonix expects to emerge strongly from a difficult
time focused in areas of significant growth."
Payroll is currently being deferred for both current and former
employees, and the Company's operations have been affected
during the past four months from a lack of operating capital.
Fonix has secured a $20 million equity line from a private
institutional investor that will provide the capital to pay
deferred salaries and operating expenses when a Registration
Statement previously filed with the United States Securities and
Exchange Commission covering shares available under the equity
line is declared effective.
"We have the most amazing group of employees anywhere," said
Thomas A. Murdock, President and CEO. "Following employee
meetings explaining the Company's difficult situation due to the
changing economic environment and extended regulatory process,
Fonix employees continue to voluntarily come to work everyday
and deliver customer solutions while enduring very difficult
personal financial challenges. Economic uncertainty, the
technology recession and new federal regulatory reforms have
dramatically affected small public company operations and access
to venture and equity capital markets. None of these conditions
will break the determination of this group of dedicated
employees who sincerely believe the technology products they
deliver will add value to Fonix customers and shareholders."
Fonix Corporation (OTC Bulletin Board: FONX) is a leading
provider of natural-user interface technology solutions for
wireless and mobile devices, Internet and telephony systems, and
vehicle telematics. Leading chip manufacturers, independent
software and hardware vendors, and Internet content and service
providers incorporate Fonix technology to provide their
customers with an easier and more convenient user experience.
Fonix products, including Text-To-Speech (TTS), Automatic Speech
Recognition (ASR), and Handwriting Recognition (HWR), provide
the most natural communication solutions available. For
additional information, visit http://www.fonix.comor contact a
Fonix representative at (801) 553-6600.
In its June 30, 2002 balance sheets, Fonix recorded that its
total current liabilities eclipsed its total current assets by
about $8.4 million.
GENUITY INC: Secures Additional 15-Day Standstill from Lenders
--------------------------------------------------------------
Genuity Inc., a leading provider of enterprise IP networking
services, has received an additional 15-day extension, or
"standstill," from its lenders as the parties work toward
restructuring Genuity's credit facilities with its global
consortium of banks and Verizon Communications Inc. As part of
this latest standstill agreement, Genuity will make a payment of
$12.5 million to the bank group.
"[Fri]day's announcement is another key step in our efforts to
restructure our debt with our lenders," said Paul R. Gudonis,
chairman and CEO of Genuity. "Given the complex nature of these
negotiations, it is important that we receive these extensions
so that we are able to review all of our options and ultimately
reach a final resolution."
The new standstill was agreed upon by all of the banks that
provided the $723 million in funding that Genuity received in
July 2002 as part of its $2 billion line of credit, as well as
from Verizon, which previously loaned Genuity $1.15 billion.
Genuity, the global consortium of banks and Verizon have entered
into several standstill agreements since Verizon's decision on
July 24, 2002, to relinquish its option to acquire a controlling
interest in Genuity. This action resulted in an event of default
for Genuity under its separate credit facilities with Verizon
and with the bank group. This latest extension follows a second
30-day standstill agreement that Genuity announced on September
12, 2002.
Genuity is a leading provider of enterprise IP networking
services. The company combines its Tier 1 network with a full
portfolio of managed Internet services, including dedicated and
broadband access, Internet security, Voice over IP (VoIP), and
Web hosting to provide converged voice and data solutions. With
annual revenues of more than $1 billion, Genuity (NASDAQ: GENU
and NM: Genuity A-RegS 144) is a global company with offices and
operations throughout the U.S., Europe, Asia and Latin America.
Additional information about Genuity can be found at
http://www.genuity.com
GLOBAL CROSSING: Wants to Hire Innisfree as Balloting Agents
------------------------------------------------------------
Mitchell C. Sussis, Global Crossing Ltd., and its debtor-
affiliates' Corporate Secretary, informs the Court that these
Chapter 11 cases involve:
-- eight issues of publicly traded bonds, held through twelve
different identifying numbers, in the aggregate of over
$3,000,000,000, several of which are denominated in foreign
currency and held overseas, and
-- several stock issuances, including two series of preferred
stock and one series of common stock, with over 1,500
stockholders.
Even if the identity of all those entitled to receive
solicitation materials were easily accessible, gathering the
information would be a daunting task. Typically, however,
public securities, including the Debtors' bonds, are primarily
held in "Street name" by a custodian that maintains the identity
of the individual beneficial owners on a confidential basis.
Mr. Sussis tells the Court that the procedures for transmitting
documents to the beneficial owners of securities require
specialized knowledge of custodial holders and the specific
measures necessary to transmit documents to beneficial owners.
In contrast with cases where public securities do not play a
prominent role, the solicitation process for the Debtors will be
exceedingly complex. Significantly, in accordance with the
Debtors' Joint Plan of Reorganization dated September 16, 2002,
all holders of the Debtors' publicly held debt are entitled to
vote on the Plan. Therefore, proper notice and tabulation of
votes of the Debtors' public securities is critical.
By this application, the Debtors seek the Court's authority to
employ and retain Innisfree M&A Incorporated, nunc pro tunc to
September 9, 2002, as balloting and tabulation agent in these
Chapter 11 cases pursuant to Section 327(a) of the Bankruptcy
Code. Innisfree is highly familiar with the relevant
procedures, and has a specialty practice in bankruptcy
solicitations involving publicly held securities, which makes
Innisfree uniquely qualified to begin that undertaking.
Due to the timing of the Debtors' Chapter 11 cases, Mr. Sussis
relates that Innisfree needed to begin ascertaining the identity
of parties entitled to receive notice before their application
for retention is approved. Significantly, Innisfree assisted
the Debtors with the mailing of the Notice of Disclosure
Statement hearing on September 16, 2002 in accordance with Rule
2002(d) of the Federal Rules of Bankruptcy Procedure. As a
result, the Debtors' application to employ Innisfree, nunc pro
tunc to September 9, 2002, is proper.
Innisfree Director Jane Sullivan informs the Court that
Innisfree is an international counseling firm whose employees
are experienced in all areas pertaining to the solicitation and
tabulation of votes of beneficial owners of securities and other
creditors and equity security holders. Innisfree has a state-
of-the-art mailing facility and tabulation system and is highly
experienced in dealing with the back offices of the various
departments of banks and brokerage firms. Ms. Sullivan, who
will be primarily responsible for handling the solicitation and
vote tabulation process for the Debtors, has over 15 years
experience in public securities solicitations and other
transactions, and has specialized in bankruptcy solicitations
since 1991. In addition, the Firm has worked on over 50
prepackaged subscription rights offering and traditional
bankruptcy solicitations, including In re Rhythms
Netconnections, Inc., Case No. 01-14283 (BRL) (Bankr. S.D.N.Y.
2001); In re PennCorp Fin'l Group, Inc., Case No. 00-888 (PJW)
(Bankr. D. Del. 2000); In re JPS Textile Group, Inc., Case No.
97 B 45133 (CB) (Bankr. S.D.N.Y. 1997); In re I.C.H.
Corporation, Case No. 95-35351 (RCM) through 95-36354 (RCM)
(Bankr. N.D. Tex. 1995); In re Barney's Inc. et al., Case
No. 96-40113 (JLG) (Bankr. S.D.N.Y. 1996); In re Zale
Corporation, Case 92-30001 (SAF) (Bankr. N.D.Tex. 1992); In re
America West Airlines Inc., Case No. 91-07505 (RJH) (Bankr.
D.Ariz. 1991); In re Eagle-Pitcher Industries, Inc., Case No.
91-10100 (BP) (Bankr. S.D.Ohio 1991); In re Federated Department
Stores, Inc. and Allied Stores Corporation, Case No. 90-10130
(BP) (Bankr. S.D. Ohio 1990); In re Resorts International, Inc.,
Case No. 89-1019 (RG) (Bankr. D.N.J. 1989); and In re First
RepublicBank Corporation, Case No. 88-34545 (SAF) (Bankr. N.D.
Tex. 1988).
As balloting and tabulation agent, Innisfree will:
-- advise the Debtors regarding all aspects of the solicitation
of votes on the Plan, including timing issues, voting and
tabulation procedures, and documents required for
solicitation and voting;
-- review the voting portions of the disclosure statement and
ballots, particularly as they may relate to beneficial owners
holding securities in "Street name"; and
-- work with the Debtors to request appropriate information for
all classes of public securities entitled to receive Plan
documents. This would include:
* information on the registered record holders of preferred
stock and common stock from the respective transfer agent,
the trustee of the senior subordinated notes, as well as
from The Depository Trust Company;
* Distribute voting and non-voting documents to creditors and
registered record holders of securities;
* Coordinate the distribution of voting and non-voting
documents to street name holders of public securities by
forwarding the appropriate documents to the banks and
brokerage firms holding the securities, who in turn, will
forward them to the beneficial owners;
* Distribute master ballots to the appropriate nominees so
that firms may cast votes on behalf of beneficial owners of
securities entitled to vote;
* Prepare a certificate of service for filing with the Court;
* Handle requests for solicitation documents from parties-in-
interest, including brokerage firms, bank back-offices, and
institutional holders;
* Respond to telephone inquiries from creditors and equity
security holders regarding the disclosure statement and the
voting procedures;
* Upon request, confirm receipt of solicitation documents by
individual creditors and respond to any questions about the
voting procedures;
* Upon request, assist in the identification of the
beneficial owners of the Debtors' securities;
* Receive and examine all ballots and master ballots cast by
bondholders. Innisfree will date- and time-stamp the
originals upon receipt;
* Tabulate all ballots and master ballots received prior to
the voting deadline in accordance with established
procedures, and prepare a vote certification for filing
with the Court; and
* Undertake other duties the Debtors may request during the
course of the assignment.
Ms. Sullivan assures the Court that the services to be rendered
by Innisfree will not duplicate the services provided by BSI.
BSI will continue to serve as the Debtors' claims agent, and,
with regard to the Plan and the Disclosure Statement, will
provide general noticing and balloting to the Debtors' general
unsecured and secured creditors. Innisfree, on the other hand,
will assist the Debtors in connection with the solicitation and
tabulation of votes on the Plan from classes of publicly held
debt securities and the distribution of documents with respect
thereto. In addition, Innisfree will distribute notices of non-
voting status, to the Debtors' equity security holders and those
debt security holders not entitled to vote. The Debtors believe
that this division of labor enables both entities to focus on
their relative core competencies in their areas of expertise.
The Debtors propose to compensate Innisfree pursuant to these
terms:
-- A $25,000 project fee plus $3,500 for each issue of public
securities entitled to vote or $2,000 for each issue of
public securities not entitled to vote but entitled to
receive solicitation documents. These fees include the
services provided to coordinate with all brokerage firms,
banks, institutions and other interested parties, including
the distribution of voting materials, assuming one
distribution of materials, which will be directed to the
firms' proxy departments, and no extensions of the voting
deadline;
-- Charges attendant to distributions of solicitation materials
to all other creditors and equity holders are reflected in
the $25,000 project fee and the estimated labor charges;
-- Estimated labor charges at $1.75-$2.25 per package, depending
on the complexity of the mailing. The charge indicated
assumes a package that would include the disclosure
statement, a ballot, a return envelope, and one other
document, and assumes that a window envelope will be used for
the mailing, and will therefore not require a matched
mailing;
-- A $4,000 minimum charge for up to 500 telephone calls from
security holders and other creditors within a 30-day
solicitation period. If more than 500 calls are received
within the period, those additional calls will be charged at
$8 per call. Any calls to security holders or other
creditors will be charged at $8 per call;
-- A charge of $100 per hour for the tabulation of ballots and
master ballots, plus set-up charges of $1,000 for each
tabulation element. Standard hourly rates will apply for any
time spent by senior executives reviewing and certifying the
tabulation and dealing with special issues that may develop;
-- Consulting hours will be billed at Innisfree's standard
hourly rates or at the standard hourly rates for other
professionals that may work on the case. Consulting services
by Innisfree would include:
* the review and development of materials, including the
disclosure statement, plan, ballots, and master ballots;
* participation in telephone conferences, strategy meetings
or the development of strategy relative to the project;
* efforts related to special balloting procedures, including
issues that may arise during the balloting or tabulation
process;
* computer programming or other project-related data
processing services;
* visits to cities outside of New York for client meetings or
legal or other matters;
* efforts related to the preparation of testimony and
attendance at Court hearings; and
* the preparation of affidavits, certifications, fee
applications, invoices, and reports.
The hourly rates of Innisfree's professionals currently are:
Co-Chairman $375
Managing Director 350
Practice Director 275
Director 250
Account Executive 225
Staff Assistant 150
-- Out-of-Pocket Expenses: All out-of-pocket expenses relating
to any work undertaken by Innisfree will be charged
separately, and will include travel costs, postage,
messengers and couriers, expenses incurred by Innisfree in
obtaining or converting depository participant, creditor,
shareholder and NOBO listings; and appropriate charges for
supplies, in-house photocopying, and telephone usage; and
-- To the extent requested by the Debtors, notice mailings to
beneficial holders of debt securities held in Street name to
be charged at a $10,000 fee and additional $2,500 for
notice mailings to Street name holders of equity securities.
Notice mailings to other parties-in-interest, including
registered holders of securities at $0.50-$0.65 per holder,
plus postage, assuming that labels and electronic data for
these holders would be provided by the trustee, transfer
agent, or the claims agent, as appropriate.
In an effort to reduce the administrative expenses related to
Innisfree's retention, the Debtors seek the Court's authority to
pay Innisfree's fees and expenses without the necessity of
Innisfree filing a formal fee application.
Ms. Sullivan contends that Innisfree is a "disinterested
person", as defined in Section 101(14) of the Bankruptcy Code,
and neither Innisfree nor any of its employees holds or
represents any interest adverse to the Debtors or their estates.
However, Innisfree represents and has represented these parties-
in-interests in matters unrelated to these cases:
A. Affiliate of Outside Director: AT&T, Cendant Corporation,
Chase Manhattan Bank, MCI Communications Corporation, Nextel
Communications Inc., and Prudential;
B. Professionals: KPMG;
C. Strategic Partner: Nortel Networks;
D. Litigation And Non-Litigation Claimant: Qwest Communications
Corporation, Travelers Casualty & Surety Co. Of America,
E. Secured Creditor: City National Bank, First Union, General
Electric Capital Corp., and JP Morgan Chase Bank;
F. Creditor: Chase Manhattan Bank, Washington Mutual Bank,
Alcatel, American Express, Sprint, Century Telephone, and
Polycom;
G. Member Of Unsecured Creditors' Committee: Verizon
Communications Inc., and Bank Of New York; and
H. Indenture Trustee: Chase Manhattan Bank, and Bank Of New
York. (Global Crossing Bankruptcy News, Issue No. 24; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Global Crossing Holdings Ltd.'s 9.625% bonds due 2008
(GBLX08USR1) are trading at a penny on the dollar, DebtTraders
reports. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX08USR1
GROUP TELECOM: Continued to Defer Publishing Fiscal Q3 Results
--------------------------------------------------------------
GT Group Telecom (TSX: GTG.B, GTG.A) continues to defer the
issuance of its fiscal third quarter 2002 financial results and
the related management's discussion and analysis.
As previously announced, GT Group Telecom has delayed the
preparation and filing of its consolidated financial statements
for the nine months ended June 30, 2002 as a result of being
under Companies' Creditors Arrangement Act protection. On June
26, 2002, GT Group Telecom Inc. was granted protection for an
initial period of 30 days, and on July 25, 2002, obtained an
extension of protection to September 10, 2002. On September 10th
the CCAA protection was extended to September 19th, 2002.
Subsequently, the September 19th protection was further extended
to September 25th, at which time, its CCAA protection was
extended to November 4th, 2002.
The company continues to develop a plan of restructuring and has
sought and obtained approval for a merger and acquisition
process that will be led jointly by its Special Committee and
the Canadian court-appointed Monitor PricewaterhouseCoopers.
Until this process is completed, GT Group Telecom is unable to
complete the applicable financial statements and related
documents.
Due to the late filing of its financial results, GT Group
Telecom's securities may be subject to a cease trade order
affecting certain members of management and other insiders. If
GT Group Telecom fails to file its financial statements by
October 31, 2002, a cease trade order may be issued affecting
all of its securities.
GT Group Telecom continues to comply with the Alternate
Information Guidelines set out in Ontario Securities Commission
Policy 57-603, which include issuing a default status report
every two weeks.
Monthly reports, filed by PricewaterhouseCoopers, the Canadian
court- appointed Monitor, can be found under the heading
"Monitor's Reports" when visiting the PricewaterhouseCoopers
information link, on the Group Telecom Web site at
http://www.gt.ca
Group Telecom is Canada's largest independent, facilities-based
telecommunications provider, with a national fibre-optic network
linked by 454,125 strand kilometres of fibre-optics, at March
31, 2002. Group Telecom's unique backbone architecture is built
with technologies such as Gigabit Ethernet for delivery of
enhanced network performance and Synchronous Optical Network for
the highest level of network reliability. Group Telecom offers
next-generation high-speed data, Internet, application and voice
services, delivering enhanced communication solutions to
Canadian businesses. Group Telecom operates with local offices
in 17 markets across nine provinces in Canada. Group Telecom's
national office is in Toronto.
GSO SOLUTIONS: TSX Delists Shares for Failing to Meet Guidelines
----------------------------------------------------------------
Effective at the close of business today, the common shares of
GSO Solutions Inc., were delisted from TSX Venture Exchange for
failing to maintain Exchange Listing Requirements. The
securities of the Company have been suspended in excess of
twelve months.
HOMESTORE INC: Names Michael R. Douglas as EVP, General Counsel
---------------------------------------------------------------
Homestore, Inc. (Nasdaq: HOMS), the leading supplier of online
media and technology tools to real estate professionals,
announced that Michael R. Douglas has joined the company as
Executive Vice President, General Counsel. Douglas assumes the
position previously held by Walter Lowry, who has been
Homestore's General Counsel since September 2001. r. Lowry will
continue to serve the company as a consultant.
"We are extremely pleased to welcome Mike to the senior
management team of Homestore," said Mike Long, Homestore's Chief
Executive Officer. "Mike brings to us significant legal and
management experience and is well versed in corporate governance
issues. He is a great fit for Homestore and we look forward to
working with him as we build a customer-focused culture at
Homestore that can be rewarding for our customers, employees and
shareholders."
Douglas' legal career spans more than 20 years of private
practice, corporate product liability consulting and corporate
counsel. He was Senior Vice President, General Counsel and
Corporate Secretary at Fibreboard Corporation for ten years.
While there, he was an integral part of the management team that
executed one of the most successful company turnarounds in the
building industry. Douglas also oversaw several of Fibreboard's
corporate activities, including human resources and risk
management functions. He received his Juris Doctor from The
George Washington University Law School in 1979.
Douglas and his wife will be relocating from the East Coast to
Westlake Village, Calif., where Homestore is based.
Joe Hanauer, chairman of Homestore stated, "In his last
assignment as a General Counsel, Mike was instrumental in
creating significant value for shareholders and we are thrilled
that he has chosen to add his skills to Homestore.
"At the same time we welcome Mike, we wish to thank Walter
Lowry. We have been fortunate to have someone of Walter's
judgment, dedication and integrity as our General Counsel over
the last year. Walter drew on all these qualities in providing
important contributions to the Board's internal investigation of
accounting matters that was concluded earlier this year."
Homestore (Nasdaq: HOMS) is the real estate industry's leading
media and technology supplier. The company operates the No. 1
network of home and real estate Web sites including flagship
site REALTOR.com(R), the official Web site of the National
Association of REALTORS(R); HomeBuilder.com(TM), the official
new homes site of the National Association of Home Builders;
Homestore.com(TM) Apartments & Rentals; and Homestore.com(TM), a
home information resource. Other Homestore advertising divisions
are Homestore Plans & Publications and Welcome Wagon(R).
Homestore's professional software divisions include Computers
for Tracts, The Enterprise, The Hessel Group, Homestore Imaging,
Top Producer(R) Systems and WyldFyre(TM) Technologies. For more
information: http://homestore.com/corporateinfo
As previously reported, Homestore's June 30, 2002 balance sheets
show a working capital deficit of about $13 million.
IMARK CORP: TSX Reviewing Shares re Continued Listing Compliance
----------------------------------------------------------------
The TSX is reviewing the common shares of IMARK Corporation
(Symbol: IAK) with respect to meeting the continued listing
requirements. The company has been granted 120-days in which to
regain compliance with these requirements, pursuant to the
Remedial Review Process.
INTEGRATED HEALTH: Has Until March 31, 2002 to Decide on Leases
---------------------------------------------------------------
Judge Walrath further extends Integrated Health Services, and
its debtor-affiliates' time period within which to assume,
assume and assign, or reject their Unexpired Leases to and
including March 31, 2003, pursuant to Section 365(d)(4) of the
Bankruptcy Code.
Furthermore, Judge Walrath directs the Debtors, as sublessee, to
notify the Sublandlord and the Overlandlord of the Southwest
Senior Care Center located at 2301 Collin Drive in Las Vegas,
New Mexico, in writing by November 30, 2002, whether or not the
Debtors will:
(a) exercise their option to renew the Sublease for the Second
Renewal Terms; and
(b) assume the Sublease pursuant to Section 365 of the
Bankruptcy Code. (Integrated Health Bankruptcy News, Issue
No. 44; Bankruptcy Creditors' Service, Inc., 609/392-0900)
KAISER ALUMINUM: Asks Court to Fix Jan. 31, 2003 Claims Dar Date
----------------------------------------------------------------
"To complete the reorganization process and make distributions
under any plan or plans of reorganization confirmed in these
cases, [Kaiser Aluminum Corporation and its affiliated debtors]
require, among other things, complete and accurate information
regarding the nature, validity and amount of claims that will be
asserted in these Chapter 11 cases," according to Paul N. Heath,
Esq., at Richards, Layton & Finger. In view of that, the Debtors
ask the Court to establish a deadline for filing proofs of
claims in these Chapter 11 cases.
Accordingly, the Debtors propose these deadlines:
A. General Bar Date:
The Debtors anticipate that they will serve on all known
entities holding potential prepetition claims notice of the
Bar Dates and a proof of claim form on or before November 22,
2002. As a result, the Debtors want to establish January 31,
2003, as the General Bar Date by which all claim holders,
including governmental units, must file proofs of claim.
Setting January 31, 2003 as the General Bar Date will provide
General Claim holders more than two months after receipt of
the Bar Date notice to prepare and file their claims.
B. The Rejection Bar Date
The Debtors expect that certain entities may assert claims in
connection with their rejection of executory contracts and
unexpired leases. So, for any rejection damages claim
allowed by the Court pursuant to an order authorizing the
rejection of a contract or lease, the Debtors suggest that
the Rejection Bar Date be the later of:
(1) the General Bar Date; or
(2) 30 days after the date of the Rejection Order.
C. The Amended Schedule Bar Date
Since the Debtors retain the right to:
-- dispute, or assert offsets or defenses against, any filed
claim or any claim listed or reflected in the Schedules as
to nature, amount, liability, classification or otherwise;
and
-- subsequently designate any claim as disputed, contingent
or unliquidated;
in the event that a Debtor amends its Schedules to reduce the
undisputed, noncontingent and liquidated amount or to change
the nature or classification of a claim against it, the
Debtors will give the affected claimant until:
(1) the General Bar Date; or
(2) 30 days after the date that notice of the applicable
amendment to the Schedules is served on the claimant;
to file a proof of claim or to amend any previously filed
proof of claim in respect of the amended scheduled claim.
Mr. Heath relates that the General Bar Date will apply to all
claims of any kind except "Asbestos-Related Personal Injury
Claims." General Claims include any personal injury or wrongful
death claim that is not in any way connected to asbestos. In
particular, Mr. Heath says, these entities must file proofs of
claim on or before the General Bar Date:
(a) any entity whose prepetition General Claim against a Debtor
is not listed in the applicable Debtor's Schedules or is
listed as disputed, contingent or unliquidated and that
desires to participate in any of these Chapter 11 cases or
share in any distribution in any of these Chapter 11 cases;
and
(b) any entity that believes that its prepetition General Claim
is improperly classified in the Schedules or is listed in an
incorrect amount and that desires to have its General Claim
allowed in a classification or amount other than that
identified in the Schedules.
Claims Not Applicable
These entities, whose claims otherwise would be subject to the
General Bar Date, need not file proofs of claim:
-- any entity that already has properly filed a proof of claim
against one or more of the Debtors;
-- any entity:
(a) whose claim against a Debtor is not listed as disputed,
contingent or unliquidated in the Schedules; and
(b) that agrees with the nature, classification and amount
of its claim as identified in the Schedules;
-- any entity whose claim against a Debtor previously has been
allowed by, or paid pursuant to, an order of the Court;
-- any of the Kaiser Companies, including any Debtors that hold
claims against one or more of the other Debtors; and
-- any entity whose claim is limited exclusively to a claim for
the repayment by the applicable Debtor of principal, interest
and other applicable fees and charges on or under Kaiser
Aluminum & Chemical Corporation's:
* 12-3/4% Senior Subordinated Notes Due 2003;
* 9-7/8% Senior Notes Due 2002;
* 10-7/8% Series B Senior Notes Due 2006 and 10-7/8% Series D
Senior Notes Due 2006;
* various issuances of industrial revenue bonds; or
* their respective indentures.
However:
(a) the indenture trustees under the Indentures will be
required to file proofs of claim on account of Debt
Claims on or under the applicable Debt Instruments on or
before the General Bar Date; and
(b) any holder of the 12-3/4% Notes, 9-7/8% Notes, 10-7/8%
Notes or the Industrial Revenue Bonds that wishes to
assert a claim arising out of or relating to a Debt
Instrument, other than a Debt Claim, will be required to
file a proof of claim on or before the Genera Bar Date.
While the General Bar Date does not apply to Asbestos-Related
Personal Injury Claims, the Debtors reserve the right to request
the establishment of one or more bar dates with respect to
Asbestos-Related Personal Injury Claims.
Additionally, Mr. Heath notes that any entity holding an
administrative expense claim against any Debtor's Chapter 11
case need not file a proof of claim on or before the General Bar
Date. Also, those holding an interest in any Debtor, which
interest is based exclusively on:
(a) the ownership of common or preferred stock in a
corporation;
(b) a membership interest in a limited liability company; or
(c) warrants or rights to purchase, sell or subscribe to a
security or interest,
need not file a proof of interest on or before the General Bar
Date. However, Interest Holders who want to assert claims
against any of the Debtors that arise out of or relate to the
ownership or purchase of an Interest, including claims arising
out of or relating to the sale, issuance or distribution of the
Interest, must file proofs of claim on or before the General Bar
Date.
Failure to File Proofs of Claim
Any entity that fails to file a proof of claim by the applicable
Bar Date will be forever barred, estopped and enjoined from:
-- asserting any General Claim against the Debtors that:
* exceeds the amount, if any, that is identified in the
Schedules on behalf of that entity as undisputed,
non-contingent and liquidated; or
* is of a different nature or a different classification than
any General Claim identified in the Schedules on behalf of
that entity; or
-- voting upon, or receiving distributions under, any plan or
plans of reorganization in these Chapter 11 cases in respect
of an Unscheduled Claim. (Kaiser Bankruptcy News, Issue No.
16; Bankruptcy Creditors' Service, Inc., 609/392-0900)
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.
KASPER ASL: Hires Crestwalk as Claims Reconciliation Consultant
---------------------------------------------------------------
Kasper A.S.L., LTD., and its debtor-affiliates want to employ
Crestwalk Capital Advisors LLC as their claims reconciliation
consultant in these chapter 11 cases, nunc pro tunc to
September 24, 2002.
The Debtors tell the U.S. Bankruptcy Court for the Southern
District of New York that they selected Crestwalk Capital as
their claims reconciliation consultant because of the firm's
extensive experience providing consulting services to
underperforming and troubled companies, including chapter 11
debtors. Given Crestwalk Capital's background and expertise, the
Debtors believe Crestwalk Capital is both well qualified and
uniquely able to provide services to the Debtors in an efficient
and timely manner.
The Debtors will look to Crestwalk Capital to:
a) Conduct an initial review and analysis, in coordination
with the Debtors' accounting and financial staff, of the
claims asserted in these cases, and assist in establishing
guidelines and a process for the reconciliation of such
claims;
b) Establish a list of claims that are objectionable,
including, but not limited to, claims that are duplicative,
superceded, late filed, reclassified and substantively
objectionable;
c) In coordination with the Debtors' bankruptcy counsel,
negotiate objectionable claims and establish a final
accounting of allowed and objectionable claims;
d) Assist counsel in the preparation of objection exhibits;
e) Provide testimony in these cases concerning the subject
encompassed by the Letter Agreement, if appropriate and as
deemed necessary by the Debtors and their counsel;
f) Provide such other advisory services in connection with the
claims reconciliation process as may be necessary and
appropriate; and
g) Provide such other advisory services in connection with
these cases as may be mutually agreed upon by the Debtors
and Crestwalk Capital.
Crestwalk Capital will bill the Debtors $225 an hour for its
services, subject to a $20,000 floor, regardless of the total
number of hours worked.
Kasper A.S.L., Ltd., one of the leading women's branded apparel
companies in the United States filed for chapter 11 protection
on February 05, 2002. Alan B. Miller, Esq., at Weil, Gotshal &
Manges, LLP represents the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed $308,761,000 in assets and $255,157,000 in
debts.
KENNAMETAL INC: Will Publish First Quarter Results on October 23
----------------------------------------------------------------
Kennametal Inc., (NYSE: KMT) will release its first-quarter
fiscal 2003 financial results Wednesday, October 23, 2002. The
results will be made available in an early morning news release
and discussed in a live broadcast over the Internet at 10:00
a.m.
The live conference can be accessed by visiting the Investor
Relations section of Kennametal's corporate Web site:
http://www.kennametal.comand following the prompt at the top of
the page. The conference will be archived online two hours
after completion of the call and will be available for replay
for 14 days. Participants who wish to access the webcast must
have a computer with a soundcard and speaker(s) and are
encouraged to visit Kennametal's website at least 30 minutes
prior to the conference to conduct a pre-event system test.
In addition to quarterly earnings announcements, the company
reports order rates on the 10th working day of each month. They
are available on the Investor Relations page of the company's
Web site at http://www.kennametal.com
Kennametal Inc., aspires to be the premier tooling solutions
supplier in the world with operational excellence throughout the
value chain and best-in-class manufacturing and technology.
Kennametal strives to deliver superior shareowner value through
top-tier financial performance. The company provides customers
a broad range of technologically advanced tools, tooling systems
and engineering services aimed at improving customers'
manufacturing competitiveness. With approximately 14,500
employees worldwide, the company's fiscal 2002 annual sales were
$1.6 billion, with a third coming from sales outside the United
States. Kennametal is a five-time winner of the GM "Supplier of
the Year" award and is represented in more than 60 countries.
Kennametal operations in Europe are headquartered in Furth,
Germany. Kennametal Asia Pacific operations are headquartered in
Singapore. For more information, visit the company's Web site
at http://www.kennametal.com
Kennametal's senior unsecured debt is rated Ba1 by Moody's, and
BBB- by Fitch.
KMART CORP: Intends to Amend Real Property Lease with Kimco
-----------------------------------------------------------
Kmart Corporation, its debtor-affiliates and Kimven Corporation
are parties to two unitary lease agreements:
1) July 9, 1997 Unitary Lease for Three Store Premises
The Lease provides for an initial term expiring on January
31, 2021, with annual basic rent of $956,250. The Lease
covers the premises for three Kmart stores:
Store No. Location
--------- --------
3717 South Tulsa, Oklahoma
3913 West Belt, Texas
3830 West Oaks, Texas
2) July 9, 1997 Unitary Lease for Six Store Premises
This Lease also has an initial term expiring on January 31,
2021. The annual basic rent is $1,912,500. The Lease
includes the premises for the six Kmart stores:
Store No. Location
--------- --------
3583 Waterloo, Iowa
3447 Clive, Iowa
3738 North Arlington, Texas
3743 Redbird, Texas
3776 Garland, Texas
3791 Hulen, Texas
To date, the Debtors have terminated their operations at the
premises in South Tulsa, West Belt, Redbird and Hulen. Thus, in
the light of the store closings, the Debtors and Kimco have
agreed to amend the unitary leases.
Pursuant to the terms of the Amendment, Kimco and Kmart have
agreed to:
-- declare the Lease severable with respect to:
* the South Tulsa Property;
* the West Belt Property;
* the Redbird Property; and
* the Hulen Property;
The parties also have decided to terminate the Leases with
respect to the four premises effective as of September 30,
2002;
-- continue the Lease with respect to:
* the Waterloo Property;
* the Clive Property;
* the North Arlington Property;
* the Garland Property; and
* the West Oaks Property; and
-- reduce the amount of the annual basic rent payable by the
Debtors pursuant to the each of the Leases by $600,000 for
each remaining year of the Initial Term.
To this end, the Debtors sought and obtained the Court's consent
to amend the Kimco leases.
In considering their options, Mark A. McDermott, Esq., at
Skadden, Arps, Slate, Meagher & Flom, relates that the Debtors
consulted with their real estate advisors, Rockwood Gemini
Advisors. Thereafter, the Debtors elected to include the leases
for the four properties subject for rejection in the auction
held on June 18, 2002. There, the Debtors' real estate broker
and disposition consultant, a joint venture between DJM Asset
Management LLC and ChainLinks Retail Advisors Inc., actively
marketed the Properties. But despite their marketing efforts,
no successful bidder was named at the auction.
With the dismal outcome, the Debtors find the amendment to the
unitary lease agreement favorable and in their best interest.
Mr. McDermott explains that the amendment will result in
significant savings for the Debtors. The rejection of the South
Tulsa Property and West Belt Property Leases can result in
annual combined savings of at least $600,000. The termination
of the Redbird Property and Hulen Property Leases can also yield
as much as $600,000 in savings.
Mr. McDermott relates that these savings will favorably affect
the Debtors' cash flow and assist the Debtors in managing their
future operations. The Debtors will also avoid incurring
unnecessary administrative charges for the leased premises that
provide no tangible benefit to their estates and will play no
part in their future operations.
Additionally, the Debtors have determined that it is in their
best interests to continue store operations at the other five
premises for the time being. Mr. McDermott, however, makes it
clear that the amendment is in no way intended as an assumption
of the Leases with respect to the Waterloo Property; the Clive
Property; the North Arlington Property; the Garland Property; or
the West Oaks Property. The Debtors reserve the right to assume
or reject any or all of those Leases, as amended, at a future
date. (Kmart Bankruptcy News, Issue No. 35; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
KMART CORP: Bluelight.com Selling ISP Assets to United Online
-------------------------------------------------------------
BlueLight.com , a wholly owned subsidiary of Kmart Corporation
(NYSE: KM), has filed a motion with the federal bankruptcy court
seeking approval of the sale of assets related to its Internet
access (ISP) business to United Online, Inc. (Nasdaq: UNTD).
The proposed sale was the subject of a competitive bidding
process in which United Online was the winning bidder. The
transaction is subject to a number of closing conditions,
including approval by the bankruptcy court. The sale of the ISP
assets will not affect the Kmart.com online shopping site.
Under the terms of the agreement, United Online will pay,
subject to potential adjustments, approximately $8.4 million for
the assets of BlueLight.com's ISP and email service. The
service currently boasts approximately 165,000 subscribers.
If the transaction is completed, United Online intends to ensure
that there will be no lapse in service for BlueLight.com's
subscribers and that there will be no change to subscribers'
email addresses. The filing is expected to be heard by the
court on or about October 30.
Kmart Corporation is a mass merchandising company that serves
America with more than 1,800 Kmart and Kmart SuperCenter retail
outlets. Kmart in 2001 had sales of $36 billion.
Kmart Corp.'s 9.0% bonds due 2003 (KM03USR6), DebtTraders
reports, are trading at 17 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR6for
real-time bond pricing.
LEAP WIRELESS: Granted Hearing on Nasdaq Delisting Determination
----------------------------------------------------------------
Leap Wireless International, Inc. (Nasdaq: LWIN), announced that
its request for an oral hearing to appeal the NASDAQ Staff
Determination that the Company has failed to comply with
NASDAQ's continued listing requirements has been granted. As a
result, NASDAQ has stayed the delisting of Leap's common stock
from the Nasdaq National Market pending the hearing. The oral
hearing is scheduled for November 14, 2002. There can be no
assurance that the NASDAQ Listing Qualifications Panel will
grant the Company's request for continued listing. Should the
Company not prevail in its appeal, the Company's Common Stock
will be delisted from the Nasdaq National Market. If the
Company's Common Stock is delisted from The Nasdaq National
Market, the Company believes that its Common Stock will likely
be quoted on the Over-the-Counter Bulletin Board (OTCBB)
following delisting.
Leap, headquartered in San Diego, Calif., is a customer-focused
company providing innovative communications services for the
mass market. Leap pioneered a wireless service that lets
customers make all their local calls from within their local
calling area and receive calls from anywhere for one low, flat
rate. Leap has begun offering new services designed to further
transform wireless communications for consumers. For more
information, please visit http://www.leapwireless.com
LUCENT TECHNOLOGIES: S&P Slashes Corporate Credit Rating to B-
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Lucent Technologies Inc., to 'B-' from 'B' and placed
the company on CreditWatch with negative implications, following
Lucent's announcement that it planned to take an approximately
$1 billion restructuring charge, planned further steps to
downsize, and had cancelled its $1.5 billion revolving credit
agreement.
Standard & Poor's is concerned that distressed industry
conditions may challenge Lucent's ability to return to
profitability and positive cash flows over the coming year, even
after the latest downsizing.
Murray Hill, New Jersey-based Lucent, a major supplier of
communications equipment for service providers, had $8.2 billion
of debt outstanding at June 30, 2002.
Lucent intends to reduce its census by an additional 10,000
positions, to 35,000 positions by the end of the September 2003
fiscal fourth quarter. The company expects to achieve net income
breakeven on quarterly revenues of $2.5 billion by then.
Lucent's cash balance at September 30, 2002, was about $4.4
billion, about $1 billion below the June 30 level. "Although
Lucent anticipates that it will have cash balances of $2 billion
at the end of fiscal 2003, including anticipated operating cash
flow losses and cash restructuring charges, continued cash
consumption at this rate is unsupportable," said Standard &
Poor's credit analyst Bruce Hyman.
Lucent cancelled its undrawn $1.5 billion revolving credit
agreement rather than be in default of the covenants and is
negotiating a new, smaller credit facility. Negotiations could
be protracted. The company has also cancelled its $500 million
accounts receivable sales program, which was not in use, and has
repurchased $100 million in real estate, rather than be in
default of the terms of the lease. The decisions underscore
Lucent's limited financing options.
Lucent reaffirmed its September 13 guidance that September
quarter revenues, to be reported on October 23, were $2.2
billion-$2.4 billion, 20%-25% below the June quarter's $2.95
billion level.
Lucent is taking a noncash charge to address several balance
sheet items, including the write-down of certain inventories.
Lucent is also taking a $3 billion charge to equity, recognizing
the decline in asset value of its management pension plan.
LUCENT TECH: Fitch Junks Senior Unsecured Debt Rating
-----------------------------------------------------
Fitch Ratings has downgraded Lucent Technologies Inc.'s senior
unsecured debt to 'CCC+' from 'B-' and convertible preferred
stock and trust preferred securities to 'CC' from 'CCC-'. The
senior secured credit facility rating of 'B' is withdrawn. The
Rating Outlook remains Negative.
Lucent plans to take more aggressive restructuring actions to
further reduce its break-even revenue levels, cancelled the
undrawn $1.5 billion credit facility maturing February 2003, and
will take an additional $1.0 billion restructuring charge in the
quarter as well as a $3.0 billion charge to equity in
recognition of the company's declining pension assets.
The additional restructuring actions will be implemented to
reduce quarterly earnings per share break-even revenue to $2.5
billion from a previously announced $2.5-$3.0 billion range in
order to return to profitability by the end of fiscal 2003.
However, it is likely that this amount could be reduced further.
The details of this restructuring have not been announced but
Fitch expects that another charge will occur with a certain
portion being cash. The company already has significant cash
obligations from previously announced restructurings, potential
funding for its pension plan in fiscal 2003, along with cash
needed to fund operations, resulting in a significant cash burn
rate for the next 12-18 months. Fitch estimates that Lucent's
revenues for the fiscal fourth quarter ending September 30,
2002, will be approximately $2.3 billion, which is below the
currently planned break-even levels. Total revenues for fiscal
2002 are estimated to be $12.3 billion, a 42% decline from
fiscal 2001. Lucent has stated that it is planning for a 20%
reduction in fiscal 2003 revenues to approximately $10 billion.
Fitch believes telecommunications equipment capital spending,
which is estimated to decline in excess of 45% in 2002, will be
pressured throughout 2003 for both the wireline and wireless
sectors as companies continue to revise spending estimates
downward. Additionally, the potential consolidation in the
wireless industry is also a concern.
In addition, Lucent's financial flexibility is further weakened
by the company's announcement that it has cancelled its undrawn
$1.5 billion bank credit facility in order to avoid default on
the financial covenants. One of the major covenants for the
fiscal fourth quarter was a bank-defined EBITDA of -$325
million. Lucent also cancelled the undrawn $500 million accounts
receivable securitization program and has notified lenders that
it will exercise its right to repurchase real estate for
approximately $100 million under existing lease agreements in
order not to be in default. The company will take a $1 billion
restructuring charge in the fiscal fourth quarter, which should
be mostly non-cash due to inventory write-downs. As previously
mentioned in Fitch's downgrade of Lucent on September 13, 2002,
the company expects to take a charge to equity of approximately
$3 billion due to a decline in pension assets. Fitch continues
to be concerned about potential cash funding requirements for
the approximate $30 billion pension plan going into fiscal 2003
and beyond.
Total debt as of the third quarter ending June 30, 2002, was
approximately $3.0 billion of long-term senior unsecured notes,
$330 million of senior secured debt, $1.8 billion of convertible
trust preferred securities, and $1.9 billion of convertible
preferred securities. The company may defer dividends on the
convertible trust preferred securities for up to 5 years but
they must be paid in cash. The dividends on the convertible
preferred securities are payable in cash or stock and the entire
issue is puttable in August 2004, which could also be satisfied
in cash or stock. However, the potential shareholder dilution
from satisfying the obligation with stock may prompt other
financing alternatives. Lucent has no other significant long-
term debt maturities until 2006, when approximately $1.1 billion
of notes are due.
Cash and marketable securities at September 30, 2002, was
approximately $4.4 billion, a quarterly decline of $1 billion.
Part of the cash decline consisted of a $200 million previously
announced lawsuit settlement and $200 million of restructuring
charges, offset somewhat by cash proceeds of approximately $150
million from the recently completed sale of Lucent's fiber joint
ventures in China to Corning Incorporated, which included $50
million of Corning stock and a future cash payment of $25
million should the ventures achieve certain business milestones.
Lucent estimates that cash at the end of fiscal 2003 will be
approximately $2.0 billion. Fitch believes further pressure will
be put on the company's cash position from additional necessary
restructuring and potential cash funding for the pension plan.
The company's liquidity requirements will continue to be
affected by the execution risks surrounding the restructuring
and weak end-market conditions. In conjunction with cost savings
from the restructuring programs, product line consolidation and
top line growth are the most important factors for the return to
profitability.
The negative rating outlook reflects the uncertain capital
expenditure patterns of the company's customer base and the risk
that further reductions from both wireless and wireline
operators will continue to pressure Lucent's revenues and cash
flow. The operational issues and the execution risks surrounding
the company's restructuring strategy continue to include
significant headcount reductions and organizational changes. In
addition, while the company has clearly reduced its vendor
finance exposure and has improved the credit profile of the
portfolio, Fitch believes it remains a risk as the company
continues to utilize the program to market products. As of June
30, 2002, drawn commitments for vendor financing were
approximately $1.2 billion.
LUCENT: Lowers Quarterly EPS Revenue Breakeven Point to $2.5BB
--------------------------------------------------------------
Lucent Technologies (NYSE: LU) intends to implement a more
aggressive restructuring plan and take its quarterly EPS
breakeven revenue level to $2.5 billion, while working to reduce
it even further. The company had previously set a target range
of $2.5 - $3.0 billion.
"Despite the market challenges, we intend to return to
profitability in fiscal 2003 and we are taking more aggressive
restructuring actions to bring our breakeven down even further,"
said Lucent Technologies Chief Executive Officer Patricia Russo.
"Based on conversations with our customers, we are tightly
focusing our investments on the nearest and clearest market
opportunities that will help them expand their existing networks
and offer next generation services. We will play to our core
strengths in optical, circuit and packet switching, mobility and
network operations software, and increase our focus on
services."
The company indicated it still expects a 20 - 25 percent
sequential decline from third fiscal quarter revenues of $2.95
billion, consistent with its previous guidance.
"In light of our revised forecasts for fiscal 2003 and our new
breakeven plan developed in the last few weeks, we re-evaluated
several balance sheet items, including inventory," said Lucent's
Chief Financial Officer Frank D'Amelio. "The resulting charges
will significantly increase the previously forecasted pro forma
loss(1) of 45 cents per share for the fourth fiscal quarter.
Although we have not finalized our results at this point, we
anticipate an increase in the pro forma loss of up to 20 cents
per share." In addition, the company will record a
restructuring charge of approximately $1 billion.
The company will also record a charge to equity of about $3
billion due to a decline in pension assets in its management
pension plan, primarily as a result of declines in the equity
markets. While the plan meets the requirements of ERISA's
funding rules and does not require cash contributions at this
time, accounting standards dictate that the charge be taken now.
Based on the current set of plans and actions, the company
expects its employee headcount to reach approximately 35,000 by
the end of fiscal 2003. This is a reduction of an additional
10,000 employees from the previously anticipated level of 45,000
employees at the end of calendar year 2002.
The company said it would provide further details on these
restructuring actions and their financial impact when it
announces earnings on Oct. 23.
Lucent Continues To Have Sufficient Liquidity
"Lucent continues to have sufficient liquidity to fund its
operations and business plans," said D'Amelio. With the
company's new restructuring plan and a lower breakeven level,
the company expects to have more than $2 billion in cash at the
end of fiscal 2003 without utilizing any new credit facility.
The company said it had cash and marketable securities of
approximately $4.4 billion as of Sept. 30. The $1 billion
decline from the prior period includes about $200 million in
cash that was part of previously announced business
restructuring charges and about $200 million associated with a
previously announced lawsuit settlement which was included in
our third fiscal quarter results.
Company Cancelled Credit Facilities
The company also announced that it has cancelled its $1.5
billion credit facility and its $500 million accounts receivable
securitization vehicle in order to avoid an anticipated default
on the financial covenants. Lucent had no outstanding balance
on the credit facility, which was scheduled to expire in
February 2003, and nothing drawn against the AR securitization
vehicle.
"Since we didn't expect to draw on our existing credit facility
before it expired in February, we thought it made the most sense
to cancel the facility now instead of risking the anticipated
default on our covenants," said D'Amelio. "We are in
discussions with our bankers concerning a new and smaller credit
facility."
Furthermore, the company has notified lenders that it will
exercise its right to re-purchase certain real estate
properties, for approximately $100 million, under existing lease
agreements. These facilities will be sold as part of the
restructuring efforts. The company is taking this action given
the high probability of defaulting on the terms of the
agreement.
Lucent Technologies, headquartered in Murray Hill, N.J., USA,
designs and delivers networks for the world's largest
communications service providers. Backed by Bell Labs research
and development, Lucent relies on its strengths in mobility,
optical, data and voice networking technologies as well as
software and services to develop next-generation networks. The
company's systems, services and software are designed to help
customers quickly deploy and better manage their networks and
create new, revenue-generating services that help businesses and
consumers. For more information on Lucent Technologies, visit
its Web site at http://www.lucent.com
Lucent Technologies' 7.70% bonds due 2010 (LU10USR1) are trading
at 32 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=LU10USR1for
real-time bond pricing.
MEDIA 100: Fails to Comply with Nasdaq Listing Requirements
-----------------------------------------------------------
Media 100 Inc. (NASDAQ: MDEA), a leading developer of advanced
media systems, has been notified by The Nasdaq Stock Market,
Inc., that the Company's common stock has closed for more than
30 consecutive trading days below the minimum $1.00 per share
requirement for continued inclusion on the NASDAQ National
Market under Marketplace Rule 4450(a)(5).
In accordance with NASDAQ rules, the Company has been afforded
90 calendar days, or until December 31, 2002, to regain
compliance with the minimum bid price requirements. If, at
anytime before December 31, 2002, the bid price of the Company's
common stock closes at $1.00 per share or more for a minimum of
10 consecutive trading days, The Nasdaq Stock Market, Inc., will
provide written notification that the Company complies with
Marketplace Rule 4450(a)(5).
The Company may apply to transfer its common stock to the NASDAQ
SmallCap Market. If the Company does so prior to December 31,
2002 and the application is approved, the Company will be
afforded a 180 calendar day SmallCap Market grace period, or
until March 31, 2003, to regain compliance. The Company may also
then be eligible for an additional 180 calendar day grace
period, or until September 29, 2003, to demonstrate compliance
provided that it meets additional NASDAQ listing criteria for
the SmallCap Market. Furthermore, the Company may be eligible to
transfer back to the NASDAQ National Market if, by September 29,
2003, its bid price maintains the $1.00 per share requirement
for 30 consecutive trading days and it has maintained compliance
with all other continued listing requirements.
Management of the Company is evaluating all available options in
order to regain full compliance with the NASDAQ listing
requirements.
Media 100 develops award-winning advanced media systems for
content design, enabling creative professionals to design highly
evocative effects-intensive work on a personal computer.
Creative artists and content design teams around the world use
Media 100's Emmy Award-winning solutions. The Company is
headquartered in Marlboro, Massachusetts. For more information,
please visit http://www.media100.com
MEDICAL PATHWAYS: TSX Delists Shares Over Listing Noncompliance
---------------------------------------------------------------
Effective at the close of business today, the common shares of
Medical Pathways International Inc., were delisted from TSX
Venture Exchange for failing to maintain Exchange Listing
Requirements. The securities of the Company have been suspended
in excess of twelve months.
METALS USA: Selling Harris County Assets to Capital Commercial
--------------------------------------------------------------
Since the previous sales contract with Clay Development and
Construction Co. was terminated because Clay elected not to
proceed with the purchase the real estate property at 2900 Patio
Dr., Harris County in Houston, Texas, Metals USA, Inc., and its
debtor-affiliates ask the Court to approve the sale of the same
property to Capital Commercial Development, free and clear of
liens, claims and encumbrances.
The property to be sold consists of a 3.6819-acre land owned by
Debtor Texas Aluminum Industries Inc. It is a portion of the
Debtors' Texas Aluminum Houston facility and it has a 100,000-
square foot storage warehouse.
Johnathan C. Bolton, Esq., at Fulbright & Jaworski LLP, in
Houston Texas, relates that due to reductions in overall
inventory, the storage afforded by the warehouse was no longer
needed. Thus, the Debtors decided to sell it.
The Debtors engaged in these marketing efforts in connection
with the property:
-- efforts to sell the 2900 Patio Property began over a year
ago;
-- a sign was placed on the property stating that it was for
sale;
-- the Debtors engaged brokers to assist in the efforts to sell
the 2900 Patio Property -- Ian Russell Company as Principal
Broker and Drumwright of Southwest Realty Advisors as
Cooperating Broker;
-- other brokers and potential industrial users were contacted
via the Internet and mail;
-- the 2900 Patio Property was listed with databases and trade
publications including Loopnet, Houston Business Journal and
The Red News; and
-- the Broker has shown the 2900 Patio Property to at least 12
potential buyers.
After Clay Development backed out of the original sale
transaction, the Debtors entered into a Commercial Contract with
Capital Commercial on August 26, 2002. Its pertinent terms
include:
A. Property to be purchased: The 2900 Patio Property includes
3.6819 acres of land in Harris County Texas of real property
owned by Debtor Texas Aluminum Industries located at 2900
Patio Drive, Harris County in Houston, Texas.
B. Proposed Buyer: Capital Commercial Development Inc.
C. Purchase Price: $1,125,000 cash at closing
D. Broker Commissions: The Broker's commission is 6% of the
first $500,000 of the Purchase Price and 3% of the balance of
the Purchase Price, to be divided equally between Principal
Broker and Cooperating Broker. Debtor Texas Aluminum
Industries has also agreed to pay Capital Commercial
Consultants a fee in the amount of 2% of the Purchase Price.
These fees will be earned upon final closing of the
Commercial Contract and will be paid at closing. (Metals USA
Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
MOBILE TOOL: Turns to The Recovery Group for Financial Advice
-------------------------------------------------------------
Mobile Tool International, Inc., along with its debtor-
affiliates, asks the U.S. Bankruptcy Court for the District of
Delaware for permission to sign-up The Recovery Group as their
Financial Advisor.
The Debtors maintain that The Recovery Group is well-acquainted
with the Debtors' businesses and is uniquely qualified to assist
them in providing effective and efficient service in this case.
The Recovery Group's services will include:
a) advising the Debtors with respect to their financial
condition;
b) evaluating proposals made by potential merger and
acquisition candidates;
c) assisting the Debtors in negotiating the terms of any
proposed transactions;
d) consulting with the Debtors regarding the details
associated with consummating any proposed transactions;
e) assisting the Debtors in preparing cash flow projections
and reports with management;
f) analyzing and assisting in developing and preparing
business plans and financial projections;
g) assisting the Debtors in assessing strategic options;
h) analyzing and assisting in the development and the
negotiation of the plan of reorganization with various
creditors and other parties of interest;
i) assisting in the preparation of documents necessary for the
confirmation of a plan in this proceeding, including
disclosure statement and liquidation analysis;
j) assisting the Debtors with the claims reconciliation
process;
k) advising and assisting the Debtors in assumption and
rejection of executory contracts;
l) providing valuation services in connection with the
potential sale of assets and/or the stock of the Debtors;
and
m) attending, when necessary, court hearings.
The Debtors submit that The Recovery Group is a "disinterested
person" as that phrase is defined in the Bankruptcy Code.
Recovery Group is a firm of independent financial consultants,
operating throughout the United States.
The Recovery Group's standard hourly rates are:
Directors $425 - $475 per hour
Principal Consultants $340 per hour
Senior Consultants $235 per hour
Paraprofessionals $110 - $175 per hour
Mobile Tool International, Inc., is an employee owned
manufacturer and distributor of equipment, including aerial
lifts, digger derricks and pressurization and monitoring
systems, for the telecommunications, CATV, electric utility and
construction industries. The Company filed for chapter 11
protection on September 30, 2002. Steven M. Yoder, Esq.,
Christopher A. Ward, Esq., at The Bayard Firm and Brent R.
Cohen, Esq., at Rothgerber Johnson & Lyons LLP represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from its creditors, it listed $65,250,000 in
total assets and $46,580,000 in total debts.
MONSANTO COMPANY: Revises Full-Year 2002 Earnings Guidance
----------------------------------------------------------
Monsanto Company (NYSE: MON) announced that a continued decline
in sales of Roundup herbicide in the United States, coupled with
lower-than-expected sales in Argentina, would reduce its earlier
earnings projection for 2002. Full-year 2002 earnings per share
are expected to be in the range of $1.15 to $1.23, compared with
previous EPS guidance of approximately $1.50.
As previously announced, this guidance excludes reserves for
potentially uncollectible receivables in Argentina of 38 cents
per share and for restructuring costs projected to be
approximately 32 cents per share for the year.
Despite the reduction in the earnings outlook, the company
expects to meet its earlier projection for free cash flow in the
range of $400 million to $460 million in 2002. Improvements in
working capital will be the primary contributor to the
generation of free cash, which consists of cash flow from
operations less cash used for investing activities.
U.S. Roundup Business
Unusually dry weather in the Midwest and drought conditions in
the Plains have reduced the growth of weeds and thus the need
for herbicides through the summer and early fall. Monsanto's
sales of Roundup herbicide for weed control in Roundup Ready
crops during the summer were particularly hurt by these
conditions. For the full year, sales volumes of Roundup will be
down approximately 4 million to 6 million gallons. This loss
will reduce earnings by 20 cents to 25 cents per share for the
full year. Beyond the dry weather, current indications are that
the Roundup business is performing as expected in a post-patent
environment.
Latin American Operations
In mid-June, the company announced actions that would reduce the
risks of doing business in Latin America, particularly Brazil
and Argentina. These actions were expected to reduce full-year
EPS by approximately 75 cents per share. Of that amount, 21
cents took effect in the second quarter. Monsanto now expects
that a larger percentage of the sales in Argentina will be made
on a cash rather than a grain basis, but at risk-adjusted
prices. This further decline in sales is expected to reduce EPS
by an additional 7 cents to 10 cents for the year. However, the
increase from Latin American cash-based sales also will reduce
receivables in Argentina by $50 million to $75 million from the
$450 million of year-end receivables previously projected for
2002.
As discussed above, earlier this year Monsanto established a
reserve of 38 cents per share for bad debts associated with
receivables in Argentina that were affected by a government tax
on agricultural exports. Charges are being made against this
reserve as appropriate, and the company believes this level of
reserve is adequate for the year.
Third- and Fourth-Quarter Outlook
Third-quarter results are expected to be in the range of 39
cents to 44 cents worse than last year's loss of 15 cents per
share for the quarter, excluding special items in the third
quarter of both years. The third-quarter 2002 results will
reflect the effect of the actions in Latin America, plus the
reduced sales of Roundup in the United States. Free cash flow
for the first nine months of 2002 is expected to be
significantly better than free cash flow in the same period last
year.
Monsanto's business in the fourth quarter will include sales of
seeds and biotechnology traits in the United States as customers
prepare for the 2003 growing season. U.S. agricultural
distributors also traditionally begin stocking the Roundup
family of agricultural products in the fourth quarter in
anticipation of the upcoming spring season. This year, many of
those customers are expected to switch to Monsanto's new Roundup
WeatherMAX, which is a unique, proprietary formulation of
Roundup with improved performance for the farmer.
Monsanto will provide further information on the outlook for
2002 when it reports third-quarter earnings on Oct. 30. The
company is not providing earnings guidance for 2003 at this
time.
Monsanto Company is a leading global supplier of technology-
based solutions and agricultural products that improve farm
productivity and food quality.
* * *
As previously reported, Monsanto Company undertook a 10-year
$200 million public debt offering, as a continuation of its debt
restructuring plan. The proceeds of the offering was used to pay
down short-term borrowings.
In the six-month period ending June 30, 2002, Monsanto reported
a $1.5 billion net loss on $2.7 billion of sales. Sales in the
second quarter of 2002 trailed sales in the comparable 2001
quarter by a half-billion dollars. Monsanto's June 30 Balance
Sheet shows adequate liquidity and significant shareholder
equity.
MOYCO TECHNOLOGIES: Fails to Maintain Nasdaq Listing Standards
--------------------------------------------------------------
Moyco Technologies, Inc. (Nasdaq: MOYC), a manufacturer of
superfine abrasive films, slurries and related products,
reported financial results for its fiscal year and fourth
quarter ended June 30, 2002.
Revenues for the continuing operations of precision abrasives
fell from $9.9 Million in fiscal 2001 to $5.2 million in fiscal
2002. This decline is primarily the result of the severe
downturn in the fiber-optic connector and telecom industry and
other high-tech manufacturing sectors. The substantial net loss
is primarily attributable to the decline in revenues and the
year-end inventory adjustment. During the interim periods,
Moyco accounts for its inventory using the gross profit method.
Due to continued pressures on economic outlook, as well as the
severe downturn in the fiber-optic consumables market, Moyco
expects revenues from its proprietary fiber-optic polishing
films to continue to be depressed during this fiscal year. As a
result, Moyco plans to continue to take steps to reduce costs.
Moyco is also aggressively pursuing opportunities in markets
outside of its core fiber-optic business. While Moyco has
historically manufactured, marketed and sold precision abrasives
into other markets, recently, Moyco has targeted specific
markets that provide the best opportunities to secure
significant sales and earnings.
Subsequent to the fiscal year, Moyco restructured it debt
obligations by entering into a mortgage agreement in the amount
of $1,550,000 with an insurance company. The proceeds were used
to retire all outstanding long-term debt and buy out all capital
leases, as well as providing some additional working capital.
This new loan has a fixed interest rate of 7.42%, a twenty- year
amortization and ten-year term. In addition to providing some
additional working capital, this refinancing reduced Moyco's
annual debt service.
Also, subsequent to the fiscal year, Moyco was recently notified
by the Nasdaq Stock Market that its common stock has not
maintained a minimum market value of publicly held shares as
required for continued listing. Nasdaq has provided Moyco with
a grace period of 90 calendar days or until January 6, 2003 to
regain compliance. This notice was in addition to the
previously announced notice from Nasdaq to Moyco concerning the
fact that Moyco has been out of compliance with the minimum bid
requirement of $1.00 for continued listing on the Nasdaq
SmallCap market. For that continued listing requirement, Moyco
was extended a grace period until January 22, 2003 to regain
compliance. In the event Moyco is delisted from the Nasdaq
SmallCap market, its common stock will be traded on the over the
counter market between dealers in securities.
Commenting on the fiscal year end, CEO and President Marvin
Sternberg stated, "The results for this past fiscal year were
disappointing. The fiber- optic market, which continues to
provide a substantial percentage of our total revenues, has been
in a severe downturn. In spite of our aggressive cost reduction
program started last year, the initial savings could not offset
the large reduction in revenue. We also incurred the expense of
downsizing such as severance payments." He added, "We are in
the process of developing new markets for Moyco but we do not
expect to see significant positive results from this
diversification plan until the third or fourth quarter of this
fiscal year."
Moyco Technologies, Inc., through its wholly owned subsidiary,
Moyco Precision Abrasives, Inc., manufactures, markets, and
distributes extremely uniform and fine abrasive films,
commercial coated abrasives, slurries, polishing agents and
related products. Moyco also provides technical assistance to
its customers to optimize various polishing processes for the
purpose of improving production yields and finished product
performance. Moyco polishing materials are used by customers in
various industries for a wide range of applications including,
but not limited to, fiber-optics, metallurgical, semiconductor,
lapidary, automotive parts, nail files, surgical and hobby.
Until May 25, 2001, Moyco was also engaged in the manufacturing
and marketing of professional dental supplies.
MTS INC/TOWER RECORDS: Completes Sale of Japanese Operations
------------------------------------------------------------
MTS, Incorporated, dba Tower Records, the leading independent
specialty retailer of entertainment software, announced the
completion of the sale of its Japanese operations to Nikko
Principal Investments Japan Ltd., and the simultaneous
refinancing of the company's bank credit facility. Proceeds
from the sale and a portion of the new credit facility will be
used to reduce the amount of debt outstanding and strengthen the
company's balance sheet.
The company has executed and entered into a three year revolving
line of credit of up to $110 million structured and agented by
CIT Business Credit, a unit of CIT (NYSE: CIT) and a three year
$26 million term loan from the company's existing consortium of
banks, led by JP Morgan Chase. Both the line of credit and term
loan, which will be used for working capital and general
corporate purposes, mature on April 1, 2005. Tower Records'
Chief Financial Officer, Dee Searson commented, "The completion
of the sale of our Japanese operations and our refinancing are a
testament to the fine work undertaken by our banks, Nikko
Principal and our finance team." Searson commented further, "By
strengthening Tower's capital structure, we have enabled the
company to focus more aggressively on its operational
initiatives."
Earlier in September 2002, Tower Records' President and
Chairman, Michael Solomon, announced the appointment of retail
turnaround specialist, Betsy Burton to interim CEO. Today he
commented "We have completed a critical phase of the
Restructuring Plan we put into effect at the beginning of 2001.
Under the guidance of our interim CEO, Betsy Burton, we intend
to act swiftly to effectuate any necessary changes to restore
the company to financial health."
Since 1960 Tower Records has been recognized and respected
throughout the world for its unique brand of retailing. Founded
in Sacramento CA, by Chairman Emeritus, Russ Solomon, the
company's growth over four decades has made Tower Records a
household name.
As of today, Tower Records owns and operates 119 stores
worldwide with 61 franchise operations. The company opened one
of the first Internet music stores on America Online in June
1995 and followed a year later with the launch of
TowerRecords.com. The site was named "Best Music Commerce site"
by Forrester Research.
The founding of Tower Records' own exclusive and independent
record label, 33rd Street Records in 2001, has enabled the
retailer to release popular and niche driven music, while
placing great emphasis on both marketing and artists
development.
Tower Records' commitment to introducing its customers to the
latest trends in new product lines is key to the organization's
retail philosophy. Tower forges ahead with the development of
exciting shopping environments, presenting diverse product
ranges, artist performance stages, personal electronics
departments, and digital centers. Tower Records maintains its
commitment to providing the deepest selection of packaged
entertainment in the world merchandised in stores that celebrate
the unique interests and needs of the local community.
NATIONSRENT INC: Enters into Third DIP Financing Amendment
----------------------------------------------------------
Gearing up for tougher times ahead, NationsRent Inc., and its
debtor-affiliates seek the Court's authority to:
-- enter into a third amendment to the DIP Revolving Credit
Agreement dated December 18, 2001; and
-- pay an amendment fee to the Administrative Agent.
Michael J. Merchant, Esq., at Richards, Layton & Finger, P.A.,
in Wilmington, Delaware, contends that the entry into the Third
Amendment is necessary to ensure that the Debtors have continued
access to the DIP financing provided under the Credit Agreement.
This also ensures sufficient liquidity to continue the Debtors'
business operations without interruption.
According to Mr. Merchant, the parties conditioned the
effectiveness of the Amendment on, among other things, the
agreement of the Debtors' prepetition secured lenders to defer
the adequate protection payments provided for their benefit
under the Final DIP Order. Accordingly, the Prepetition Lenders
have agreed to defer these payments, thus satisfying that
condition.
Parties Settle on New Financial Covenants
The Third Amendment to the Credit Agreement involves the
Debtors, as Borrowers; Fleet National Bank, as the
administrative agent; Wachovia Bank, N.A. formerly known as
First Union National Bank, as syndication agent; and a syndicate
of Bank Lenders including:
* General Electric Capital Corporation,
* Goldman Sachs Credit Partners LP,
* Senior Debt Portfolio,
* Grayson & Co.,
* GMAC Commercial Credit LLC, and
* Eaton Vance Institutional Senior Loan Fund.
The Third Amendment provides, among other things, for the
resetting of the Debtors' covenants regarding EBITDA targets and
capital expenditure limits to better reflect the current state
of the Debtors' business operations. In addition, the Lenders
have agreed to eliminate all of the other financial covenants
that were originally in the Credit Agreement.
-- Minimum Adjusted Consolidated EBITDA
NationsRent covenants that Adjusted Consolidated EBITDA will
be no less than:
Period Minimum EBITDA
------ --------------
One-month period ending 09/30/02 $2,889,000
Two-month period ending 10/31/02 7,984,000
Three-month period ending 11/30/02 10,129,000
-- Capital Expenditures
NationsRent agrees to limit Monthly Capital Expenditures to:
Month Ending Maximum CapEx
------------ -------------
September 2002 $5,000,000
October 2002 2,000,000
November 2002 1,500,000
December 2002 725,000
with the understanding that any amount not spent in one month
may be carried forward to the next month.
Lenders Provide Extra Liquidity
The Parties agree that the Total Commitment will be the
aggregate outstanding amount not to exceed:
* the sum of $55,000,000 before November 30, 2002; and
* the sum of $50,000,000 on and after November 30, 2002.
If the Commitments are terminated pursuant to the provisions of
the Credit Agreement, the Total Commitment will be zero.
The Lenders also have decided to allow the Borrowers to incur
additional Indebtedness, in addition to what's owed under the
Credit Agreement:
* Purchase Money Indebtedness incurred by any of the
Borrowers in the ordinary course of business consistent
with past practices will not exceed $10,000,000 in
aggregate; and
* The Indebtedness arising from the consignment of Inventory
to any of the Borrowers will not exceed $5,000,000 in the
aggregate.
However, the sum of the purchase money Indebtedness and the
consignment Indebtedness must not exceed an aggregate amount of
$12,000,000 at any time. The Lenders further specify that none
of the Borrowers must become a party to or effect any
disposition of assets, other than:
-- the true leases of Inventory;
-- the sales of Specified Resale inventory;
-- dispositions of equipment or inventory by the Borrowers
pursuant to the Exchange Agent Agreement dated September 6,
2002 between Ritchie Bros. Auctioneers (America) Inc. and the
Debtors; and
-- up to $12,000,000 of dispositions of other assets.
This is on the condition that no Default or Event of Default has
occurred and is continuing. In addition to those already
established in the Credit Agreement, additional events of
default include:
(a) Clark Ogle will cease to serve as the Chief Executive
Officer of the Debtors for any reason, unless, within 30
days following the date on which he ceases to serve, a new
permanent chief executive officer has been appointed and
is serving who is reasonably acceptable to the Agents;
(b) the Court will not have entered by October 11, 2002
(i) an order approving the Debtors' engagement of an
investment banking firm of nationally recognized
standing satisfactory to the Administrative Agent to
explore a capital transaction for the Borrowers; or
(ii) an order approving the Debtors' payment of the
amendment fee to be paid to the Banks pursuant to
the Third Amendment to the DIP Revolving Credit
Agreement;
(c) the Debtors will fail to have:
(i) distributed an offering book to potential
investors by October 15, 2002;
(ii) established a deadline no later than
November 20, 2002 for receiving initial indications
of interest from one or more potential investors; or
(iii) established a deadline no later than
December 15, 2002 for receiving a letter of intent
or other similar expression of intent; or
(d) the Borrowers will fail to have received a financing
commitment from one or more institutional lenders
satisfactory to the Administrative Agent, upon terms
satisfactory to the Administrative Agent, by December 15,
2002.
The Administrative Agent, in its sole and absolute discretion,
may extend any of the dates set forth or waive any of the Events
of Default.
Lenders Impose Loans Limits
The Agents and the Banks have agreed to permit the limits on the
Loans that are currently provided under the Credit Agreement to
be changed with the written consent of the Required Banks.
Unless the Required Banks consent in writing, outstanding Loans
to the Borrowers under the Credit Agreement will not exceed the
amounts set forth:
Period Amount
------ ------
09/27/02 to 09/30/02 $7,500,000
10/01/02 to 11/02/02 26,000,000
11/03/02 to 11/30/02 20,000,000
12/01/02 to 12/31/002 14,000,000
Debtors Will Submit Appraisal Results
The Lenders require the Borrowers, at their sole cost and
expense, to obtain and deliver to the Agents and the Banks:
-- by October 20, 2002, a desktop fair market value appraisal of
the Borrowers' rental equipment to which the Borrowers hold
fee title. The appraisal will be adjusted where appropriate
on the basis of the then concluded field sampling fair market
value appraisal by Ritchie Brothers, Inc. of the rental
equipment leased by the Borrowers; and
-- by November 30, 2002, a fair market value appraisal of the
rental equipment owned by the Borrowers. This appraisal
includes the results of a field sampling of the rental
equipment and the size and scope of which sampling will be
acceptable to the Administrative Agent.
The Administrative Agent, in its sole and absolute discretion,
may extend any of the dates set forth.
Payment of Amendment Fee
In consideration for the Banks' entry into the Third Amendment
to the Credit Agreement, the Debtors will pay to the
Administrative Agent, for the benefit of the Banks executing the
Amendment, an amendment fee equal to 0.50% of the Total
Commitment -- i.e., $275,000, since the Total Commitment of all
of the Banks is $55,000,000. (NationsRent Bankruptcy News, Issue
No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900)
NEXIQ TECHNOLOGIES: Files for Chapter 11 Protection in Michigan
---------------------------------------------------------------
NEXIQ Technologies, Inc. (OTC Bulletin Board: NEXQ), and certain
of its subsidiaries have filed voluntary chapter 11 bankruptcy
petitions with the U.S. Bankruptcy Court for the Eastern
District of Michigan. The purpose of the filing is to conduct
and consummate a sale of significantly all of the company's
operations on an expedited basis.
Chapter 11 filings have been made for 3 affiliated entities,
NEXIQ Technologies, Inc., and its two operating subsidiaries,
WPI Micro Processor Systems, Inc., (d/b/a NEXIQ Technologies)
also of Sterling Heights, Michigan, and Diversified Software
Industries, Inc., of Coralville, Iowa.
In conjunction with Monday's chapter 11 petitions, NEXIQ will
ask the Bankruptcy Court to consider a variety of "first day
motions" to support its employees, vendors, customers, and other
constituents. These include motions seeking court permission to
continue payments for employee payroll and health benefits; use
available cash; and retain legal, financial and other
professionals to support the company's actions in conducting an
orderly sale of the business. The company has obtained the
lenders' consent for use of cash.
To conserve capital, NEXIQ will implement a comprehensive cost-
saving program that would include additional workforce
reductions, the timing and extent of which have not yet been
determined.
NEXIQ Technologies, Inc. -- http://www.nexiq.com-- provides
advanced diagnostics and telematics products, solutions and
services for the automotive and commercial vehicle markets. The
company is headquartered in Sterling Heights, Mich., and has
operations in Coralville, Iowa.
NETWORK ACCESS: Committee Taps Crossroads as Financial Advisor
--------------------------------------------------------------
The Official Committee of Unsecured Creditors of Network Access
Solutions Corporation and NASOP, Inc., seeks to employ and
retain Crossroads, LLC to provide financial advisory services in
the Company's Chapter 11 cases.
Crossroads' responsibilities will involve providing financial
advice and analysis regarding all aspects of Network Access'
bankruptcy proceedings including:
-- review and analysis of operating results and uses of cash,
any proposed asset sales and divestitures;
-- advice to the Committee and counsel regarding any proposed
business plan(s), reorganization plan(s), and any
relates negotiations;
-- review and evaluation of any proposed liquidation or
winding up of the affairs of the Company in regard to the
proposed allocation and distribution of any proceeds.
All of the services that Crossroads will provide to the
Committee will be appropriately directed by the Committee to
avoid duplicative efforts among the various professionals
retained in these cases.
Crossroads' professionals will charge for its work on an hourly
basis:
Joel M. Simon $520 per hour
Principal(s) $450 to $595 per hour
Managing Director(s) $385 to $495 per hour
Director(s) $350 to $425 per hour
Senior Consultant(s) $330 to $350 per hour
Consultant(s) $190 to $325 per hour
Network Access Solutions Corporation is a provider of broadband
network solutions and internet service to business customers.
The Company filed for chapter 11 protection on June 4, 2002.
Bradford J. Sandler, Esq., at Adelman Lavine Gold and Levin, PC
represent the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed
$58,221,000 in assets and $84,946,000 in debts.
NORTEK: Reclassifies Former Hoover Subsidiary as 'Discontinued'
---------------------------------------------------------------
Nortek, Inc., (NYSE: NTK) filed in a Current Report on Form 8-K
the audited consolidated balance sheets of Nortek, Inc., and
subsidiaries as of December 31, 2001 and 2000, and the related
audited consolidated statements of operations, stockholders'
investment, and cash flows for each of the three years in the
period ended December 31, 2001 and consolidated selected
financial data as of December 31, 1997, 1998, 1999, 2000 and
2001 and for the five years ended December 31, 2001.
Under applicable rules and regulations of the Securities and
Exchange Commission, the proxy statement to be delivered to
stockholders in connection with the pending acquisition by an
affiliate of Kelso & Company and management must include or
incorporate by reference audited annual financial statements
that reclassify any business sold, since the financial
statements were originally published, as a discontinued
operation for all periods presented in such statements. As
previously announced, Nortek sold its Hoover Treated Wood
Products, Inc., subsidiary on April 2, 2002. Though this
subsidiary was not a significant subsidiary within the meaning
of applicable rules and regulations of the Securities and
Exchange Commission, the rule requiring that Hoover be
reclassified as a discontinued operation in the audited annual
financial statements still applied. If Nortek had not sold this
subsidiary no reaudit of its historical audited annual financial
statements would have been required in connection with the
preparation of the proxy statement. The reaudit does not result
from any inquiry made by the Securities and Exchange Commission
or any other party, and would be required of any similarly
situated public company.
Except for the reclassification of Hoover as a discontinued
operation, the reaudit confirmed, without change, the operating
earnings, earnings per share, balance sheet and cash flow
amounts previously reported.
Nortek is a leading international manufacturer and distributor
of high-quality, competitively priced building, remodeling and
indoor environmental control products for the residential and
commercial markets. The Company offers a broad array of
products for improving the environments where people live and
work. Its products include range hoods and other spot
ventilation products; heating and air conditioning systems;
vinyl products, including windows and doors, siding, decking,
fencing and accessories; indoor air quality systems; and
specialty electronic products.
* * *
As reported in Troubled Company Reporter's July 16, 2002
edition, Standard & Poor's affirmed its single-'B'-plus
corporate credit rating on Nortek Inc., following announcement
of a definitive agreement for Kelso & Co. L.P., to acquire
Nortek in partnership with Richard Bready and other members of
Nortek management for $46 per Nortek share.
Standard & Poor's said that at the same time it has affirmed its
single-'B'-plus senior unsecured debt and single-'B'-minus
subordinated debt ratings on the Providence, Rhode Island-based
company. The outlook is stable.
Nortek Inc.'s 9.875% bonds due 2011 (NTK11USN1), DebtTraders
reports, are trading at 97 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NTK11USN1for
real-time bond pricing.
NORTEL: Positioning Four Key Businesses to Drive Breakeven Model
----------------------------------------------------------------
In a letter to employees issued Friday, Frank Dunn, president
and chief executive officer, Nortel Networks Corporation
(NYSE:NT) (TSX:NT.) updated the employees on the Company's third
quarter 2002 revenues and the Company's progress on its drive to
achieve profitability.
Dunn told employees that the Company's revenues for the third
quarter of 2002 will be US$2.36 billion, in line with previously
stated expectations, and that the Company's cash performance
continued to be strong. Dunn also indicated that the Company is
in the process of positioning itself around its four key
businesses to drive a break even model (not including costs
related to acquisitions and any special charges and gains) at
quarterly revenues of below US$2.4 billion. This break even
model is expected to be in place by the second quarter of 2003.
Nortel Networks plans to release its financial results for the
third quarter of 2002 on October 17, 2002.
Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges
information. The Company is supplying its service provider and
enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and
multimedia services spanning Wireless Networks, Wireline
Networks, Enterprise Networks and Optical Networks. As a global
company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be found
on the Web at http://www.nortelnetworks.com
Nortel Networks Corp.'s 7.4% bonds due 2006 (NT06CAR2),
DebtTraders reports, are trading at 34 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAR2for
real-time bond pricing.
PACIFIC GAS: Court Approves Settlement Pact with Sierra re PPAs
---------------------------------------------------------------
Pacific Gas and Electric Company obtained the Court's authority
to enter into:
(1) a Settlement Agreement resolving ongoing litigation and
claims between PG&E, Sierra Pacific Industries -- SPI, and
the California Independent Systems Operator -- the ISO; and
(2) an Assumption Agreement to assume the Power Purchase
Agreements -- PPAs -- of four Qualifying Facilities -- QFs
-- owned by SPI, namely the Burney Facility, the Quincy
Facility, the Susanville Facility, and the Lincoln Facility.
The Settlement Agreement provides for:
(a) The reinstatement and amendment of the PPAs including:
(1) the provision of a fixed energy price of 5.37 cents per
kWh for four years, pursuant to CPUC Decision 01-06-015,
and after the four-year term reversion to PG&E's short-
run avoided costs -- SRAC -- as determined by the CPUC
pursuant to the provisions of the PPAs;
(2) the addition of provisions allowing for the pooling of
capacity from the four QFs; and
(3) the deletion of the minimum damages clause.
(b) PG&E's cure of all prepetition defaults owing to SPI under
the PPAs for $17,950,371.15, and interest at a 5% rate per
annum;
(c) SPI's payment of amounts due PG&E by SPI or its affiliate
Sierra Pine for energy and energy related services provided
by PG&E during the period from March 1, 2001 through June 1,
2001, $912,050, and interest at a 5% rate per annum,
compounded monthly;
(d) PG&E's agreement not to place SPI on probation for its
failure to deliver either energy or capacity between March
21, 2001 and the date it begins to provide energy and
capacity to PG&E pursuant to the amended PPAs;
(e) The dismissal of both the State Court Action and the Appeal;
(f) Full releases of all known and unknown claims between SPI
and PG&E, other than the Section 503 administrative expense
claims provided for in the Assumption Agreement with respect
to PG&E's prepetition defaults and interest on the defaults;
and
(g) Limited releases between SPI and the ISO, and between PG&E
and the ISO.
The Assumption Agreement provides for the assumption of the
amended PPAs and the cure of any prepetition defaults pursuant
to Section 365 of the Bankruptcy Code. The Assumption Agreement
also provides for SPI's waiver of its right to recover pecuniary
loss damages in connection with the assumption of the amended
PPAs. (Pacific Gas Bankruptcy News, Issue No. 46; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PG&E NATIONAL ENERGY: S&P Downgrades Credit Rating to B-
--------------------------------------------------------
Standard and Poor's lowered the credit rating of PG&E
Corporation's subsidiary PG&E National Energy Group (PG&E NEG)
to B-.
In addition S&P lowered the credit ratings of the following PG&E
NEG units:
-- PG&E Gas Transmission, Northwest Corporation to BB-
-- USGen New England, Inc. to B-
-- PG&E Generating Company, LLC to B-
- PG&E Energy Trading Holdings Corporation to B-
- GenHoldings I, LLC to CC
PG&E Corporation noted that S&P lowered the rating on PG&E Gas
Transmission, Northwest Corporation to reflect S&P's requirement
that an operating unit may not be rated more than three notches
higher than its parent company, among other reasons. Thus,
under its ratings guidelines, lowering PG&E NEG's rating to B-
required S&P to lower the rating of PG&E Gas Transmission,
Northwest Corporation.
PG&E Corporation previously has disclosed that it continues to
explore options for PG&E NEG including sales of assets and
businesses, debt restructuring, and reorganization of existing
operations.
Please visit its Web site at http://www.pgecorp.comfor more
information about the Company.
PLYMOUTH RUBBER: Inks Debt Restructuring Pact with Lenders
----------------------------------------------------------
Plymouth Rubber Company, Inc., (Amex: PLR.A, PLR.B) has reached
an agreement in principle with all of its lenders to restructure
its debt, subject to the execution of mutually satisfactory
documentation.
Under the new arrangements, the lenders will accept
significantly reduced principal payments for the next three
years, eliminate financial covenants, waive all existing
defaults, and rescind demands for accelerated payment, in return
for enhanced collateral positions.
"We are pleased with the new agreement which will provide
immediate benefits in the form of reduced cash flow required for
debt service," commented Joseph J. Berns, Plymouth's CFO.
"Looking forward, this debt restructuring and our return to
profitability year to date ($1.1 million net income) should
provide the stability and financial framework to allow Plymouth
to continue its turnaround."
Plymouth Rubber Company, Inc., manufactures and distributes
plastic and rubber products, including automotive tapes,
insulating tapes, and other industrial tapes and films. The
Company's tape products are used by the electrical supply
industry, electric utilities, and automotive and other original
equipment manufacturers. Through its Brite-Line Technologies
subsidiary, Plymouth manufactures and supplies highway marking
products. The Company's August 30, 2002 balance sheets show a
working capital deficit of about $10.5 million.
POLYONE: Confirms Q3 Earnings within Thomson First Call Level
-------------------------------------------------------------
PolyOne Corporation (NYSE: POL) anticipates earnings before
special charges should be within the range of current Thomson
First Call estimates when the Company releases third-quarter
2002 financial results on October 30, 2002. First Call
estimates for the quarter ended September 30, 2002, range from
$0.13 to $0.17 per share.
PolyOne expects to achieve this earnings level despite a
reduction in September demand from customers in a number of the
Company's North American business units. In early October,
demand in general appears to be strengthening, although not
across all business units.
Entering the third quarter, PolyOne estimated that quarterly
revenues would equal or slightly exceed second-quarter 2002
revenues of $692 million. In fact, revenues for the third
quarter are expected to be below second-quarter 2002 revenues,
but above the third-quarter 2001 level.
PolyOne also expects to report a strong equity earnings
improvement, before special items, in its Resin and
Intermediates segment for third- quarter 2002 compared with the
second quarter of 2002. The Company estimates that results
should be $10 million to $11 million higher because of improved
margins at Oxy Vinyls, LP, its vinyl resin joint venture, and at
its Sunbelt chlor-alkali joint venture. Entering the third
quarter, PolyOne anticipated that R&I operating earnings would
increase $6 million to $8 million over the second-quarter 2002
level.
At the start of the third quarter, PolyOne expected only modest
special charges associated with previously announced 2001
restructurings. OxyVinyls, however, has decided to permanently
close a portion of the Deer Park, Texas, chlor-alkali plant.
PolyOne's share of the third-quarter pre-tax charge is
approximately $4.1 million, relating to asset writeoffs and
decommissioning costs of the closed production unit. The
remaining operations at the Deer Park facility, which were
temporarily idled in December 2001, are expected to restart as
industry margins improve.
PolyOne will provide its outlook for fourth-quarter 2002 when
the Company reports its third-quarter financial results
Wednesday, October 30, 2002. PolyOne will host an analyst
conference call at 9 a.m. Eastern time on Thursday, October 31,
2002. The conference call number is 888-489-0038 or 706-643-
1611 (international), conference topic: PolyOne Earnings Call.
The call will be broadcast live and then via replay for two
weeks on the Company's Web site at http://www.polyone.com
PolyOne Corporation, with 2001 revenues of $2.7 billion, is an
international polymer services company with operations in
thermoplastic compounds, specialty resins, specialty polymer
formulations, engineered films, color and additive systems,
elastomer compounding and thermoplastic resin distribution.
Headquartered in Cleveland, Ohio, PolyOne has employees at
manufacturing sites in North America, Europe, Asia and
Australia, and joint ventures in North America, South America,
Europe, Asia and Australia. Information on the Company's
products and services can be found at http://www.polyone.com
* * *
S&P Credit Rating Remains at BB+
As reported in the September 20, 2002 issue of the Troubled
company Reporter, Standard & Poor's Ratings Services lowered its
corporate credit and senior unsecured debt ratings on PolyOne
Corp., to double- 'B'-plus from triple-'B'-minus, citing slower-
than-expected progress in improvement to the financial profile.
The outlook is negative.
"The rating action reflects the deterioration in operating and
financial performance stemming from adverse business conditions,
and the likelihood that needed improvement to the financial
profile could take longer than anticipated," said Standard &
Poor's credit analyst Peter Kelly. The continuation of
challenging industry fundamentals has weakened the financial
profile and is likely to limit the improvement anticipated in
the prior rating. Standard & Poor's recognizes the company's
efforts to reduce costs and manage cash flow, as well as recent
modest improvement in earnings.
PRESIDENT CASINOS: August 31 Balance Sheet Upside-Down by $45MM
---------------------------------------------------------------
President Casinos, Inc., (OTC:PREZ) announced results of
operations for the second quarter ended August 31, 2002.
For the three-month period ended August 31, 2002, the Company
reported a net loss of $2.0 million, compared to a net loss of
$2.3 million, for the three-month period ended August 31, 2001.
At August 31, 2002, the Company's balance sheets show a working
capital deficit of about $30 million, and a total shareholders'
equity deficit of about $45 million.
Revenues for the three-month period ended August 31, 2002 were
$32.0 million, compared to revenues of $32.8 million for the
three-month period ended August 31, 2001. The Company disposed
of its St. Louis non-gaming riverboat cruise operations in July
2001. Excluding the Gateway operations, revenues for the three-
month period ended August 31, 2001 were $32.4 million.
For the three-month period ended August 31, 2002, the Company
reported EBITDA (earnings before interest, taxes, depreciation
and amortization) before impairment of long-lived assets and
gain (loss) on disposal of assets of $2.7 million, compared to
$2.9 million for the three-month period ended August 31, 2001.
For the three-month period ended August 31, 2002, the Company
reported EBITDA from its casino and hotel operations of $4.2
million, compared to $4.0 million for the three-month period
ended August 31, 2001.
Revenues for the six-month period ended August 31, 2002 were
$65.3 million, compared to revenues of $65.9 million for the
six-month period ended August 31, 2001. Excluding the Gateway
operations, revenues for the six-month period ended August 31,
2001 were $65.1 million.
For the six-month period ended August 31, 2002, the Company
reported a net loss of $4.6 million, compared to a loss of $4.8
million, for the six-month period ended August 31, 2001.
For the six-month period ended August 31, 2002, the Company had
EBITDA before impairment of long-lived assets and gain (loss) on
disposal of assets of $6.6 million, compared to $6.4 million for
the six-month period ended August 31, 2001. Excluding the
Gateway operations, EBITDA was $6.3 million for the six-month
period ended August 31, 2001.
President Casinos, Inc., owns and operates dockside gaming
facilities in Biloxi, Mississippi and downtown St. Louis,
Missouri, north of the Gateway Arch.
ROYAL PRECISION: Working Capital Deficit Tops $1.3MM at Aug. 31
---------------------------------------------------------------
Royal Precision, Inc. (OTC Bulletin Board: RIFL), the
manufacturer of the Rifle(TM) shaft, one of the most widely-used
golf club shafts on the professional golf tours, and distributor
of Royal Grip(R) golf club grips, reported financial results for
the fiscal quarter ended August 31, 2002.
For the first quarter of fiscal year 2003, the Company reported
revenues of $4.5 million, compared to $6.7 million for the same
quarter last year. During the quarter, the Company reported a
net loss of $0.7 million, compared to a net loss of $7.3 million
in the same period last year. These current results reflect a
$0.9 million decrease in gross profit, of which $1.1 million is
primarily attributable to reduced sales of steel and graphite
shafts, resulting from a shift in the mix of products sold which
management attributes to the softening economy. The reduction
in gross profit attributable to shafts was offset by a $0.2
million increase in gross profit of golf club grips. The
current results also reflect a $0.8 million decrease in selling,
general and administrative expenses which is primarily a result
of reduced spending on advertising and the completion of the
previously reported corporate restructuring plan. Also for the
same quarter last year the Company incurred two non-cash
charges; one for $0.8 million to increase the valuation
allowance on deferred income tax assets and another for $5.9
million to write-off a portion of the Company's recorded
goodwill. For last year these two items combined to increase
the reported net loss by $6.7 million.
At August 31, 2002, Royal Precision's total current liabilities
exceeded its total current assets by about $1.3 million.
Royal Precision, Inc., is a leading designer, manufacturer and
distributor of high-quality, innovative golf club shafts,
including the Rifle shaft featuring the Company's "Frequency
Coefficient Matching" technology, or "FCM," designed to provide
consistent flex characteristics to all the clubs in a golfer's
bag. Royal Precision, Inc. is also a designer and distributor
of Royal Grip(R) golf club grips offering a wide variety of
standard and custom models, all of which feature durability and
a distinctive feel and appearance.
SAFETY-KLEEN CORP: Court Okays Deloitte as Auditors & Advisors
--------------------------------------------------------------
Safety-Kleen Corp., and its debtor-affiliates obtained the
Court's authority to employ and retain Deloitte & Touche LLP as
accounting advisors and independent auditors.
To the extent requested by the Debtors and agreed to by Deloitte
under the terms of the Engagement Letters, the nature and extent
of services that Deloitte proposes to render include, but are
not limited to:
(a) auditing the Debtors' annual financial statements
for the year ended August 31, 2002 in accordance
with the terms of the engagement letter between SKC
and Deloitte, dated August 26, 2002;
(b) auditing SKC's annual financial statements for the
two years ended August 31, 2000 and August 31, 2001
in accordance with the terms of the SKC Engagement
Letter, if required;
(c) auditing the financial statements of Safety-Kleen
Envirosystems Company of Puerto Rico, Inc., a
wholly-owned subsidiary of SKC, for the year ended
December 31, 2001, in accordance with the terms of the
engagement letter between SKE and Deloitte, dated
August 26, 2002;
(d) performing reviews of SKC's interim financial
statements for the year ended August 31, 2002;
(e) performing reviews of SKC's interim financial
statements for the year ended August 31, 2001, if
required; and
(f) rendering other professional services, including,
without limitation, general accounting assistance,
as may be requested by the Debtors and agreed to by
Deloitte.
Deloitte intends to apply to the Court for the allowance of
compensation and reimbursement of expenses in accordance with
applicable provisions of the Bankruptcy Code, Bankruptcy Rules,
Local Rules and orders of the Court. Deloitte proposes to
calculate its fees for the professional services provided to the
Debtors based on the time actually expended by each team member
providing the services multiplied by the team member's hourly
billing rate. The range of hourly billing rates for the audit
team members is:
Partner/Principal/Director $390 to 425
Manager 250 to 370
Senior 100 to 240
Staff and Paraprofessionals 65 to 100
(Safety-Kleen Bankruptcy News, Issue No. 46; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
SIRIUS SATELLITE: Firms-Up Recapitalization Talks with Investors
----------------------------------------------------------------
Over the past several days Sirius Satellite Radio (Nasdaq: SIRI)
has been in final discussions with major stakeholders regarding
a substantial recapitalization of the company. While there is no
assurance that a financing agreement will be achieved, the
company is hopeful that an announcement regarding a transaction
can be made shortly.
As with many companies engaged in such discussions, the company
elected to utilize a grace period relating to the payment of
interest on its 8-3/4% Convertible Subordinated Notes due 2009
that was technically due on Monday, September 30th. The
aggregate interest payment was approximately $720,000. The
company currently has approximately $250 million in cash on
hand, sufficient to fund its operations into the second quarter
of 2003.
The failure to pay this interest will not constitute an "Event
of Default" until October 31, 2002, and will have no effect upon
the company's other indebtedness during this grace period. If an
agreement is consummated prior to the expiration of this grace
period, Sirius expects the disposition of this interest payment
will be addressed as part of this arrangement.
The Company retired a majority of these Convertible Notes during
2000 and 2001. There is currently approximately $16,000,000 in
aggregate principal amount of these Convertible Notes
outstanding.
From its three satellites orbiting directly over the U.S.,
Sirius broadcasts 100 channels of digital quality radio
throughout the continental United States for a monthly
subscription fee of $12.95. Sirius delivers 60 original channels
of completely commercial-free music in virtually every genre,
and 40 world-class sports, news and entertainment channels.
DaimlerChrysler has announced plans to offer Sirius radios in 16
models of Chrysler, Dodge and Jeepr vehicles beginning this
fall. Ford is planning to offer Sirius in select vehicle lines
sold in the United States, including Ford, Lincoln, Mercury,
Mazda, Land Rover, Jaguar, Volvo and Aston Martin. BMW has
announced plans to offer Sirius radios as an accessory in its
most popular models through BMW Centers across the country,
including select BMW 3 Series, 5 Series, X5 vehicles, and in
MINI vehicles through MINI dealerships. Nissan is currently
offering Sirius radios in the 2003 Nissan Pathfinder SUV and has
announced plans to offer Sirius radios as an option this fall on
numerous Infiniti and Nissan 2003 models. Future Audi and
Volkswagen models will also offer Sirius. Kenwood, Panasonic,
Clarion, Audiovox, and Jensen satellite receivers, including
models that can adapt any car stereo to receive Sirius, are
available at retailers such as Circuit City, Best Buy, Sears,
Good Guys, Tweeter, Ultimate Electronics and Crutchfield.
For more information about the company, visit
http://www.sirius.com
* * *
Recent news articles, fueled by a misleading report from
Reuters, claim that Sirius Satellite Radio (Nasdaq: SIRI) could
be forced to seek bankruptcy protection if it could not raise
new funds by the second quarter of 2003.
The Company did not address any issues related to:
* increasing year-to-year operating losses;
* negative cash flows from operations;
* Standard & Poor's junk ratings on:
-- $258,200,000 of 15% Notes due December 1, 2007;
-- $200,000,000 of 14-1/2% Notes due May 15, 2009; and
-- $16,460,000 of 8-3/4% Notes due September 29, 2009;
* on-going talks with key debtholders about an equity-for-
debt swap delivering less than par value; or
* discussions with Apollo Management LP and the Blackstone
Group LP about a further equity investment.
"We have a tremendous amount of momentum in the marketplace. All
of our radio, retailer and automobile manufacturing partners are
very excited about our product and the wonderful acceptance it
has received by consumers," said Joseph P. Clayton, President
and CEO of Sirius. "We are making significant progress in
solidifying our balance sheet, and I remain extremely confident
that we will secure additional financing shortly."
STEAKHOUSE PARTNERS: First Quarter 2002 Revenues Fall to $25.5MM
----------------------------------------------------------------
On October 8, 2002 Steakhouse Partners, Inc. (OTC: SIZLQ),
operating as debtor in possession as of February 15, 2002,
announced financial results for the twelve weeks ended March 19,
2002 in its Quarterly Report on Form 10-Q filed with the
Securities Exchange Commission. The Company reported first
quarter 2002 revenues of $25.5 million versus $28.6 million for
the corresponding period of fiscal 2001. The Company reported
the principal reasons for this decline in revenue were the soft
economy and the closure of ten under performing operating units
as a part of the reorganization process the Company is currently
engaged in under Chapter 11 of the United States Bankruptcy
Code.
Net loss for the twelve weeks ended March 19, 2002 was $0.2
million versus a net gain of $45,316 for the corresponding
period of fiscal 2001. The net loss is principally attributable
to the decline in revenue, legal costs directly attributable to
the bankruptcy and continued losses of Pacific Basin Foods, a
wholly owned subsidiary of Steakhouse Partners.
As previously reported on February 15, 2002 the Company filed a
voluntary petition under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the
Central District in California. On February 19, 2002 Paragon
Steakhouse Restaurants, a wholly owned subsidiary of Steakhouse
Partners, and three of Paragon Steakhouse Restaurants, also
filed for relief under Chapter 11 of the Bankruptcy Code. Prior
to filing for protection under Chapter 11, the Company completed
the implementation of a major overhead reduction-in-force that
included eliminating the Chief Executive Officer position
effective February 15, 2002. Hiram J. Woo continues to serve as
President of the Company and manages day-to-day operations.
Thus far in the Chapter 11 reorganization process, the
Bankruptcy Court has approved the rejection of eight leases and
the termination after compromise of seven leases. Eleven
additional leases have been renegotiated to improve unit
profitability. In addition, management has negotiated and the
Bankruptcy Court has approved the sale of the lease hold
interest in two restaurant and related property, plant and
equipment for gross proceeds of $0.9 million. Management
expects to record a net gain of approximately $0.4 million in
connection with these sales.
The Company's outside auditors have completed their field review
of the Company's results for the second quarter of fiscal 2002
and the corresponding quarterly reports will be submitted to the
SEC shortly. The Company will then be current with its periodic
reports required to be filed with the SEC.
Steakhouse Partners, Inc., operates 53 full-service steakhouse
restaurants located in ten states. The Company's restaurants
specialize in complete steak and prime rib meals, and offer
fresh fish and other lunch and dinner dishes. The Company
operates principally under the brand names of Hungry Hunter's,
Hunter's Steakhouse, Mountain Jack's, and Carvers.
STRATESEC INC: Withdraws AMEX Delisting Appeal
----------------------------------------------
Stratesec, Incorporated, (AMEX:SFT) has withdrawn its appeal of
the proposed delisting of its stock from the American Stock
Exchange.
The company has been negotiating the restructuring of its
balance sheet and the consummation of a merger. Although this
could not be accomplished in time to support the appeal, the
company continues such negotiations. The company expects its
stock to be traded on the OTC Bulletin Board (OTCBB).
The company believes that the exchange on which its shares are
traded does not affect the market value or intrinsic value of
the company's business. The company expects its financial
results to begin to show significant improvement starting in the
fourth quarter of this fiscal year.
The OTC Bulletin Board includes over 300 participating market
makers and provides access to more than 3,500 securities, a
number of which qualify for one of the major exchanges, but
prefer the Bulletin Board.
The company's listing on the OTC Bulletin Board affords our
shareholders and prospective investors similar advantages as to
liquidity and availability of trading information, such as
continued listing on major Internet databases. The company also
plans to apply for listing on the new BBX exchange.
Stratesec, Incorporated is a fully integrated single source
security systems company. The company provides consulting and
planning, engineering and design, systems integration, and
maintenance and technical support services to commercial and
government clients worldwide.
Stratesec has completed security projects for airports,
corporations, utilities, prisons, universities, and federal,
state and local governments.
SUN HEALTHCARE: Wants Waiver of Local Claim Objection Rules
-----------------------------------------------------------
The Reorganized Sun Healthcare Group, Inc. Debtors ask the U.S.
Bankruptcy Court for the District of Delaware to set aside the
requirements of Rule 3007-1(f)(i) and (ii) of the Local Rules of
Bankruptcy Court as it applies to them.
According to Mark D. Collins, Esq., at Richards, Layton & Finger
PA, in Wilmington, Delaware, requiring the Debtors to comply
with the requirements of Local Rule 3007-1 would mean asking the
Court to further extend the deadline for objecting to claims in
order to have ample time to resolve or object to the 4,000
remaining claims. A waiver of the Local Rule will enable the
Debtors to quickly resolve or object to the remaining claims so
as to maximize and expedite creditor recovery without undue
delay.
Local Rule 3007-1(f)(i) and (ii) provides that, unless otherwise
ordered by the Court:
(a) each substantive objection to proofs of claim will be
limited to no more than 150 claims; and
(b) no more than two substantive objections may be filed in
each calendar month.
To date, Mr. Collins reports that the Reorganized Debtors have
resolved 59,000 of the nearly 63,000 filed and scheduled claims
in these chapter 11 cases.
Not only would the application of the Local Rule prejudice the
Debtors' ability to object to a substantial amount of claims, it
would likewise substantially delay additional distributions to
creditors. According to Mr. Collins, the Reorganized Debtors
are maintaining a holdback on distributions until all the claims
are resolved.
In the alternative, the Debtors ask the Court to modify the
requirements of the Local Rule so that they may file an
unlimited number of substantive omnibus claims objection in any
given month, with the hearings on the objections scheduled at
the convenience of the Court regardless of the filing date. Mr.
Collins relates that the Debtors will continue their practice of
continuing the hearing date where a substantive objection has
been received. This will enable the parties to exhaust
negotiation efforts before the contested matters are submitted
to the Court for determination. Mr. Collins points out that
this practice has not required the Court to hear and determine
more than 300 claims per month as contemplated by Local Rule
3007.
It is worth noting, Mr. Collins tells Judge Walrath, that in
nearly two and one-half years in which the Debtors have been
objecting to thousands of claims on 28 omnibus objections, the
Court has not held a single evidentiary hearing on a claim
objection. Only one claimant or his counsel -- Rob Singh -- has
ever appeared on the contested basis. (Sun Healthcare Bankruptcy
News, Issue No. 44; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
SUN WORLD: S&P Places BB- Credit & B Debt Ratings on Watch Neg.
---------------------------------------------------------------
Standard & Poor's placed its single-'B'-minus corporate credit
rating and single-'B' senior secured debt rating for Sun World
International Inc., on CreditWatch with negative implications.
Total rated debt is about $115 million.
The rating action follows the announcement by Sun World's
parent, Cadiz Inc., that the board of directors of Metropolitan
Water District of Southern California rejected Cadiz's water
storage project. While MWDSC staff recommended the project's
approval, the board of directors elected not to proceed with the
project.
"Although Sun World has sufficient cash and availability under
its revolving credit facility for the October 15, 2002, interest
payment on the first mortgage bonds, there is near-term
refinancing risk," said Standard & Poor's credit analyst Jayne
M. Ross. "Sun World's one-year secured revolving credit facility
matures in November 2002, and Cadiz's one-year $35 million
secured bank facility matures in January 2003."
Standard & Poor's will monitor the situation and discuss with
management its plans for the company's business strategy and
capital structure.
Sun World is a participant in the highly competitive California-
based agriculture industry, with more than 15,000 acres of owned
land. The company is a grower and marketer of table grapes,
watermelons, sweet peppers, plums, peaches, nectarines,
apricots, and lemons. The company also markets third-party
crops. Sun World is a wholly owned subsidiary of Cadiz, a
California-based organization, whose business strategy is to
create a portfolio of landholdings, water resources, and
agricultural operations within central and southern California.
TELEPANEL SYS: Obtains 120 Days to Regain TSX Listing Compliance
----------------------------------------------------------------
The Toronto Stock Exchange (TSX) is reviewing the common shares
of Telepanel Systems Inc., (Symbol: TLS) with respect to meeting
the continued listing requirements. The company has been granted
120-days in which to regain compliance with these requirements,
pursuant to the Remedial Review Process.
UNITY CHURCH: Case Summary & 19 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Unity Church In Woodbury
9025 Tamarack Road
Woodbury, MN 55125
Bankruptcy Case No.: 02-83314
Type of Business: Church
Chapter 11 Petition Date: October 4, 2002
Court: District of Minnesota (Minneapolis)
Judge: Robert J. Kressel
Debtors' Counsel: Michael F. McGrath, Esq.
80 S 8th Street Room 4545
Minneapolis, MN 55402
612-332-8511
Total Assets: $1,454,867
Total Debts: $1,268,176
Debtor's 19 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
DBA Architects Goods And Services $37,137
Dunn, Mary J Or James Loan $7,450
Morningstar, Dawn Wages $2,455
Contract Interiors Inc Goods And Services $1,413
Minnesota Telephone Inc Goods And Services $1,291
Starwalt, Jean Wages $1,152
Jani-King Of Minnesota Goods And Services $1,110
Devorss & Co Goods And Services $690
Officemax Goods And Services $581
Simplex Grinnel Lp Goods And Services $572
Xcel Energy Utilities $500
Advanced Asphalt Goods And Services $487
Qwest Goods And Services $370
Heartland Business Goods And Services $349
Credit Leasing Services
Woodbury City Directory Goods And Services $303
Church Mutual Insurance Goods And Services $300
Unity School Of Goods And Services $280
Christianity
Kat Keys Goods And Services $222
Leap Publications Goods And Services $220
US AIRWAYS: Adequate Protection Hearing Continues on November 7
---------------------------------------------------------------
US Airways Group maintains that not only do the Parties to these
requests have adequate protection but the Debtors are also
within their rights to reject the leases or abandon the
aircraft.
According to John Wm. Butler, Jr., Esq., at Skadden Arps,
Congress has already legislatively determined what constitutes
adequate protection for a party with an interest in aircraft
equipment covered under Section 1110 of the Bankruptcy Code.
The Parties take the position that the Aircraft and Engines are
covered under Section 1110. However, in exchange for the
extraordinary protections given to aircraft equipment financiers
and lessors under Section 1110, the debtor-in-possession is
given a period of 60 days after the Petition Date to decide its
course of action for the aircraft and engines in consultation
with the lessor. The Section 1110 deadline expires on October
10, 2002.
The Debtors ask the Court to schedule an evidentiary hearing on
the requests to provide the parties with appropriate time to
take discovery and try the complicated factual issues inherent
in the Parties' adequate protection requests. At an evidentiary
hearing, the Debtors will demonstrate that the Parties are
adequately protected from the diminution of the value of the
Aircraft and Engines caused by their continued use.
Specifically the Debtors will demonstrate that:
(a) they are continuing to maintain their aircraft in
accordance with the FAA-approved aircraft maintenance
programs in the ordinary course of business;
(b) they are in material compliance with all applicable
aircraft maintenance governmental rules and regulations;
(c) they are only removing and replacing parts as authorized
under applicable agreements and the Debtors' FAA-approved
maintenance program;
(d) they are maintaining appropriate insurance on the Aircraft
and Engines; and
(e) even if diminution in value occurs because of the use of
the Aircraft and Engines, after taking into account all of
the above protections, the Parties will be adequately
protected by being afforded an opportunity to assert an
administrative claim under Section 503 of the Bankruptcy
Code as compensation for diminution.
* * *
In a Stipulation and Order filed on September 30, 2002, the
Parties and US Airways agree that the hearing will be continued
until November 7, 2002. The Debtors will make available as soon
as reasonably practicable, the records and documents relating to
the Aircraft and Engines. During the adjournment period,
Debtors agree that they will only remove parts and engines as
authorized under applicable operative agreements between the
parties and the Debtors' FAA-approved maintenance programs. (US
Airways Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
US INDUSTRIES: Receives Amortization Waiver from Bank Group
-----------------------------------------------------------
U.S. Industries, Inc., (NYSE:USI) has received a waiver from its
bank group permitting USI to meet the scheduled October 15, 2002
amortization payment under its credit facilities through a
permanent reduction of unfunded revolver and letter of credit
commitments.
U.S. Industries owns several major businesses selling branded
bath and plumbing products, along with its consumer vacuum
cleaner company. The Company's principal brands include Jacuzzi,
Zurn, Sundance Spas, Eljer, and Rainbow Vacuum Cleaners.
* * *
As reported in Troubled Company Reporter's September 16, 2002
edition, Fitch lowered its rating on US Industries, Inc.'s
$250 million 7.125% senior secured notes to 'C' from 'B-'
following the company's announcement that it has commenced an
exchange offer to exchange cash and notes with a higher interest
rate and longer maturity for all of its outstanding 7.125%
senior secured notes due October 15, 2003. The rating on the
7.125% senior secured notes remains on Rating Watch Negative as
it will be lowered to 'D' following the completion of the debt
exchange.
The company's $125 million 7.25% senior secured notes due
December 1, 2006, which are not affected by the exchange offer,
continue to be rated 'B-' and remain on Rating Watch Negative.
The senior secured notes are co-obligations of USI American
Holdings, Inc., and USI Global Corporation and are guaranteed by
USI Atlantic Corp.
VELOCITA: Will Auction-Off Substantially All Assets on Thursday
---------------------------------------------------------------
Velocita Corp., and its debtor-affiliates will conduct an
auction for the sale of all or substantially all of its assets
free and clear of liens and claims. The assets are comprised
primarily of telecommunications equipment, real estate assets,
and other property.
The auction will take place on Thursday, October 17, 2002 at
11:00 a.m. at the offices of Weil, Gotshal & Manges LLP.
Bid must be in the hands of the Debtors' Counsel and Financial
Advisors by 12:00 p.m. today.
A hearing on the proposed sale of the assets will be held on
October 25, 2002 at 10:00 a.m.
Velocita Corp., is in the business of building a nationwide
broadband fiber-optic network aimed at serving communications
carriers, internet service providers, data providers, television
and video providers, as well as corporate and government
customers. The Company filed for chapter 11 protection on May
30, 2002 in the U.S. Bankruptcy Court for the District of New
Jersey. Howard S. Greenberg, Esq., at Ravin Greenberg PC and
Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP represent
the Debtors in their restructuring efforts. As of March 31,
2002, the Company listed $482,807,000 in total assets and
$827,000,000 in total debts.
VENTAS INC: Kindred Expects Rise in Professional Liability Costs
----------------------------------------------------------------
Ventas, Inc., (NYSE:VTR) said that after the close of the market
on Thursday it was advised by its primary tenant Kindred,
Healthcare, Inc. (Nasdaq:KIND), that Kindred expects to have
increased professional liability expense and is considering
withdrawal from the Florida skilled nursing market where it
leases 15 facilities from Ventas. The Company said it is
beginning to review these details and gather information from
Kindred.
Ventas said that its rent from the Florida nursing home
portfolio is less than $8.5 million annually, which is about 4.5
percent of the total rent paid by Kindred. Current annualized
rent from Kindred to Ventas is $187 million.
Ventas also said that it estimates that Kindred's EBITDAR at the
Ventas facilities should exceed 1.4 times Ventas rent, taking
into account both the Kindred announcement regarding
professional liability expense and a potential $30 per day
Medicare rate reduction that could materialize if Congress does
not restore Medicare funding under BIPA and BBRA.
Ventas added that it has not yet begun substantive discussions
regarding Kindred's intention to exit the Florida skilled
nursing market, but expects that it will do so in the next week
to ten days. The Company believes that Ventas's consent would be
required for any such action.
"Kindred is experiencing professional liability issues similar
to those suffered by other nursing home operators recently,"
Ventas President and CEO Debra A. Cafaro said. "We have
positioned our portfolio to withstand these unexpected
additional expenses, and we are confident that Ventas's rental
income will remain reliable because our portfolio continues to
be profitable to Kindred."
Ventas, Inc., is a healthcare real estate investment trust whose
properties include 43 hospitals, 215 nursing facilities and
eight personal care facilities in 36 states. For further
information about Ventas, please visit its Web site at
http://www.ventasreit.com
As of June 30, 2002, Ventas reported a total shareholders'
equity deficit of about $95 million.
VIASYSTEMS: Wants to Continue Rothschild's Retention as Advisor
---------------------------------------------------------------
Viasystems Group, Inc., and Viasystems, Inc., ask the U.S.
Bankruptcy Court for the Southern District of New York to permit
their continued retention of Rothschild Inc., as the Company's
financial advisor and investment banker.
The Debtors submit that Rothschild's retention should be
approved because Rothschild is highly qualified and
disinterested, the terms of its retention are fair and
reasonable, and the Debtors believe that the services to be
provided by Rothschild are necessary for the efficient and
successful administration of these chapter 11 cases.
The Debtors retained Rothschild to provide financial advisory
and investment banking services as of February 15, 2002, and
since that time Rothschild has become familiar with the Debtors
and their businesses. Rothschild has played an instrumental role
in connection with the Debtors' negotiations with its creditor
constituencies and the formulation of the Plan, the Debtors
point out.
The Debtors submit that it is necessary to employ and retain
Rothschild to:
a) continue to act as the Company's financial advisors as set
forth more fully in the Rothschild Agreement;
b) advise and attend meetings of third parties and official
constituencies, as necessary;
c) if requested by the Debtors, participate in hearings before
the Bankruptcy Court and provide relevant testimony with
respect to relevant matters and issues arising in
connection with any proposed Plan; and
d) render such other financial advisory and investment banking
services as may be agreed upon by Rothschild and the
Debtors.
Rothschild will be entitled to:
a) A retainer in an amount equal to $1,000,000 payable upon
the execution of the Rothschild Agreement, to be applied
against the fees and expenses of Rothschild.
b) Commencing as of the date of the Rothschild Agreement, and
whether or not a Restructuring Transaction is consummated,
a cash advisory fee of $200,000 per month during the term
of the Rothschild Agreement.
c) A Completion Fee of $6,500,000, payable upon the earlier
of:
(i) the confirmation and effectiveness of a Plan or
(ii) the substantial consummation of a Restructuring
Transaction.
Viasystems Group, Inc., is a holding company whose principal
assets are its shares of stock of Viasystems, Inc. Viasystems,
through its direct and indirect subsidiaries, is a leading,
worldwide, independent provider of electronics manufacturing
services to original equipment manufacturers primarily in the
telecommunication, networking, automotive, consumer, industrial
and computer industries. The Debtors filed for chapter 11
protection on October 1, 2002. Alan B. Miller, Esq., at Weil,
Gotshal & Manges, LLP represents the Debtors in their
restructuring efforts. When the Companies filed for protection
from its creditors, it listed $1.6 Billion in total assets and
$1.025 Billion in total debts.
VICWEST: C$84.0 Million of Subordinated Debt Now in Default
-----------------------------------------------------------
Vicwest Corporation announced that an event of default has
occurred under its March 10, 2000 trust indenture relating to
C$84.0 million of subordinated notes that are listed on the TSX
Venture Exchange under the symbol MGT.DB. Vicwest has
received undertakings from holders of approximately 65% of the
outstanding principal amount of the Notes not to support any
exercise of remedies relating to this event of default prior to
November 15, 2002, subject to certain conditions, in order to
provide stability to Vicwest during that period. The event of
default arose from the non-payment, as a result of the
previously announced default under Vicwest's senior credit
facilities, of approximately C$5.2 million of interest on the
Notes that had been due on September 10, 2002, and the
expiration of the 30-day cure period relating to it.
Vicwest continues to be in constructive discussions with its
senior lenders concerning the previously announced event of
default under its senior credit facilities due to non-compliance
with financial covenants. The outstanding indebtedness under the
senior credit facilities is C$36.7 million.
"We are pleased to have support from holders of the great
majority of our subordinated notes, so that we can work through
these issues in an orderly manner and with a view to continuing
our business without interruption to customers, suppliers, or
employees", said Charles Blackmon, Chief Financial Officer and
Executive Vice President of Vicwest.
WARREN ELECTRIC: Court Approves Access to $6-Mill. DIP Facility
---------------------------------------------------------------
Warren Electric Group received U.S. Bankruptcy Court approval to
immediately obtain Debtor in Possession financing. "Immediate
availability of $6 Million in DIP financing will allow us to
purchase additional inventories and enhance service to our many
customers," said Cheryl L. Thompson-Draper, chairman, president
and chief executive officer.
"After filing for Chapter 11 protection on Sept. 27, 2002, and
then receiving the court's blessing to use our cash collateral
on Oct. 1, we are on track to return to normal operations as we
complete our reorganization plan. Our foremost commitment is to
service our customers at the level they have come to expect from
Warren Electric Group over the years. This additional and very
important step by the Court allows us to deliver on that
commitment," she said.
Headquartered in Houston, the 83-year-old firm of Warren
Electric Group is a premier distributor of top quality
electrical, automation, telephone, and power utility products
throughout the world. Warren has more than 20 warehouse
operations in three states and four foreign countries, with more
than 400 employees and 2001 sales in excess of $270 million.
Warren Electric Group is a certified Woman-Owned and -Managed
Business by Women Business Enterprise National Council and is
the largest woman-owned business in the markets it serves.
WELLMAN INC: Taps Keen Realty & CB Richard to Sell Marion Plant
---------------------------------------------------------------
Wellman, Inc., whose corporate credit rating is currently rated
at BB+ by Standard & Poor's, has retained Keen Realty, LLC and
CB Richard Ellis/Columbia to market and dispose of the company's
manufacturing facility in Marion, South Carolina. Keen Realty is
a real estate firm specializing in restructuring real estate and
lease portfolios and selling excess assets. CB Richard Ellis is
a vertically integrated commercial real estate services company
with a geographically diversified network focusing on
transaction management, financial services, and management
services.
"This 257,735 square foot manufacturing facility is in excellent
condition and is a great opportunity for a manufacturing company
looking to expand," said Eric Leighton of Keen Consultants. "We
are encouraging prospective buyers to put in their offers
immediately. The marketing has just begun and we are already
beginning to receive calls. Interested parties must move fast
for the right offer can be accepted at any moment," Leighton
added.
Available to users and investors is a four building
manufacturing facility totaling 257,735 sq. ft. on 95+ acres of
land in Marion, South Carolina. The facility is located in the
Marion County Industrial Park on Highway 501 By-Pass and U. S.
Highway 76. The office space consists of 3,600 sq. ft., and the
warehouse spaces have 14 to 28 ft. clearance. The buildings are
fully heated, air conditioned and dry sprinklered with excellent
access to major transportation routes.
For more information regarding the sale of this facility for
Wellman Industries, please contact Keen Realty, LLC, 60 Cutter
Mill Road, Suite 407, Great Neck, NY 11021, Telephone: 516-482-
2700, Fax: 516-482-5764, e-mail: krc5@keenconsultants.com Attn:
Eric Leighton or CB Richard Ellis/Columbia, 1136 Washington
Street, Columbia, SC 29202, Telephone: (803) 779-7777, Fax:
(803) 931-8989, e-mail: rsigmon@cbre.com Attn: Richard Sigmon.
WINSTAR COMMS: Trustee Demands Lucent Prove Validity of Liens
-------------------------------------------------------------
Michael G. Menkowitz, Esq., at Fox Rothschild O'Brien & Frankel
LLP, in Wilmington, Delaware, tells the Court that Winstar
Communications, Inc.'s Chapter 7 Trustee Christine Shubert is
challenging the validity, priority and extent of the liens that
Lucent Technologies is asserting against the sale proceeds of
the Debtors' assets to Winstar Holdings.
Mr. Menkowitz explains that Lucent's claim to the sale proceeds
arose from an agreement in 1998. The Debtors and Lucent then
have been discussing forging a strategic partnership under which
they would use each other's strengths to form more competitive
companies and expand their broadband network market. The
discussions culminated in a Supply Agreement dated October 21,
1998. Under the Supply Agreement, the Debtors agreed to
purchase products and services from Lucent to build its
communications network. Lucent, on the other hand, agreed to
provide services, equipment and financing to enable the Debtors
to build their network. Lucent, in addition, agreed to provide
the Debtors with financing. The Supply Agreement provided, in
pertinent part:
"11.3 Financing. Lucent will provide Winstar financing in
accordance with the Credit Agreement and otherwise in
accordance with the terms of this Agreement. Lucent agrees
to provide financing (subject to the terms and conditions
set forth in the Credit Agreement) for all Lucent Products
and Services purchased by Winstar under this Agreement plus
$2,600,000 per Contract Year for amounts drawn down for
Winstar provided RF engineering, with any excess and any
other Winstar provided products and services to be treated
as Other Products and Services. Lucent also agrees to
provide financing for non-Lucent Products and services
associated with the Network..."
The Supply Agreement was for a term of five years with the
possibility for an extension upon agreement by the parties.
Mr. Menkowitz informs the Court that concurrent with the Supply
Agreement, and to implement the financing commitment in the
Supply Agreement, Lucent and the Debtors executed the Credit
Agreement on October 21, 1998. The Credit Agreement was revised
and re-executed on May 4, 2000. Under the Credit Agreement,
Lucent agreed to provide financing for the services and
equipment required under the Supply Agreement. The re-executed
Credit Agreement provided up to $2,000,000,000 in financing to
the Debtors, of which $1,000,000,000 could have been used at any
one time.
Mr. Menkowitz relates that Lucent has asserted as collateral on
the specific assets that the Debtors purchased with Lucent's
financing, held by one or more of the Debtors' subsidiaries that
were established solely for the purpose of holding the Lucent-
financed assets.
According to Mr. Menkowitz, Lucent has not shown any evidence
that it has perfected any liens it purportedly holds in
connection with the Supply and Credit Agreements.
The Chapter 7 Trustee, thus, asks the Court to:
-- require Lucent to prove the validity, priority and extent
of its liens,
-- determine the validity, priority and extent of Lucent's
alleged liens, and
-- to the extent Lucent has valid, perfected liens, determine:
* the value of Lucent's collateral, and
* the appropriate allocation of the proceeds of the sale of
the Debtors' assets to Winstar Holdings LLC to any valid
secured claim that Lucent may hold. (Winstar Bankruptcy
News, Issue No. 34; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
WIRELESS TOWER: S&P Places B+/B Ratings on CreditWatch Negative
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its single-'B'-plus
corporate credit ratings on American Tower Corp. and Crown
Castle International Corp., and its single-'B' corporate credit
rating on SBA Communications Corp., on CreditWatch with negative
implications.
The three companies had combined debt of about $8 billion as of
June 30, 2002.
"The CreditWatch listing reflects our assessment that several
risks to the wireless tower industry have increased so that the
three companies could find it more challenging to improve cash
flow and significantly lower their debt in the next several
years," said Standard & Poor's credit analyst Michael Tsao.
"First, the potential for wireless carriers to reduce tower-
related expenditures has increased. With carrier revenue growth
expected to slow given the weak economy and that U.S. wireless
penetration already exceeds 50%, carriers may be more willing to
pursue consolidation and network sharing opportunities. This
could result in lower demand for both new and existing tower
space going forward. Second, the financial positions of many
smaller wireless carriers have become more tenuous. The
bankruptcy of some of these could have an adverse impact on the
tower operators. Third, in the longer term, advancement in
technologies that enable more efficient spectrum usage could
reduce tower demand. Smart antennas that boost network
efficiency are already in use on a sizable scale in several
markets outside of the U.S."
The main businesses of the three tower companies include leasing
space on towers they control and providing network services such
as design and site development. They are highly leveraged due to
significant debt financing of tower building and acquisition
activities in the past several years. Debt to EBITDA leverage
was about 11 times for each of the companies as of June 30,
2002. The companies had planned to deleverage significantly by
2004 on the assumption that they could rapidly expand cash flow
margin commensurate with high revenue growth. However, boosting
cash flow proved more difficult as credit-challenged customers
went bankrupt starting in 2001 and major carriers scaled back
their network plans due to weak capital market conditions and
unavailability of new spectrum. Given the prospect of slower
cash flow growth, the three companies are unlikely to reduce
debt significantly in the next several years without asset
sales, debt restructuring, or new equity.
In addition to industry risks, Standard & Poor's has immediate
concerns that SBA Communications' slowing cash flow could make
it challenging for the company to meet maintenance covenants on
its bank facility in early 2003 and improve its weak liquidity.
SBA Communications recently lowered its EBITDA guidance for
third quarter 2002 by about 13% due to lower capital
expenditures by wireless carriers and increased property taxes.
If the situation does not improve, the company faces increased
risk of not meeting its recently amended interest coverage,
fixed charge coverage, and debt service covenants in 2003.
Liquidity at the end of June 2002 was comprised of about $31
million in cash and $92 million in bank availability.
Independent of covenant concerns, Standard & Poor's believes
this level of liquidity only provides limited cushion against
execution risks.
With respect to American Tower, Standard & Poor's has concerns
that the prospect of slower cash growth could make it more
challenging for the company to meet a bank covenant, especially
in the second half of 2003, and bank debt amortization beyond
2003. In the absence of an amendment to its bank credit
agreement, the company does not have significant headroom under
its cash flow to pro forma debt service test. Independent of the
covenant issue, liquidity of more than $500 million as of Sept.
30, 2002 should provide adequate funding in the near term.
Unless the company starts to generate sustainable free cash
flow, there is increased risk of it not being able to meet
substantial bank amortization starting in 2004.
The resolution of the CreditWatch listing for American Tower,
Crown Castle, and SBA Communications is dependent on Standard &
Poor's assessment of their liquidity, ability to meet covenants,
and the impact of lower growth on cash flows. As part of the
process, the notching of all debt will be reexamined.
WORLD KITCHEN: Appoints James Sharman as Chief Executive Officer
----------------------------------------------------------------
WKI Holding Company, Inc., which operates principally through
its subsidiary World Kitchen, Inc., announced that James A.
Sharman has been appointed president and chief executive
officer, effective immediately. Mr. Sharman most recently
served as WKI's senior vice president, household products and
supply chain management and will retain those responsibilities.
Steven G. Lamb, WKI's president and chief executive officer
since January 2001, has left the company to accept an executive
position with a company outside of the housewares industry.
"I am honored to have the opportunity to lead World Kitchen at
this crucial time in the company's history," Mr. Sharman said.
"During the past two years we made significant improvements in
important operational areas such as supply chain management,
manufacturing productivity, customer service and inventory
control. We are now benefiting from these accomplishments and
investing in product development and brand-building programs.
We expect to emerge from our financial restructuring with
significantly lower debt levels and a substantially improved
capital structure that will enable us to invest in opportunities
for future growth at World Kitchen.
"World Kitchen is fortunate to have a world-class management
team and outstanding people throughout its ranks, all of whom I
look forward to continuing to work with in my new position," Mr.
Sharman added.
C. Robert Kidder, chairman of the WKI Board of Directors, said:
"All of us on the World Kitchen Board are pleased that Jim
Sharman has assumed overall leadership of the company. Since
joining WKI, Jim has played a central role in every major
initiative we have undertaken, has immersed himself in all
aspects of the business and has nurtured relationships with many
of our customers and suppliers. With more than 20 years of
operations, supply chain and general management experience, he
is well suited to navigate the company through the remainder of
its restructuring and into the next stages of its development.
The Board has full confidence in the World Kitchen management
team's ability to execute the company's business strategy and
realize its considerable potential in the kitchen housewares
marketplace.
"We wish Steve Lamb all the best in his new position and thank
him for his service to World Kitchen," Mr. Kidder concluded.
Mr. Sharman joined World Kitchen in April 2001 as Senior Vice
President of Supply Chain Operations and assumed responsibility
for the company's Household Products division in September 2001.
Before joining World Kitchen he served as Chief Executive
Officer of Rubicon Technology, a Chicago-based manufacturer and
distributor of high-quality synthetic crystal for the
communications, semi-conductor, opto-electronic and optical
industries.
Mr. Sharman previously served as Senior Vice President, Supply
Chain Management for CNH Global N.V., a company created in
November 1999 from the merger of Case Corporation and New
Holland N.V. CNH is a global leader in agricultural and
construction equipment with many well-known brands and products
sold through independent retailers in over 150 countries. While
at CNH, Mr. Sharman successfully led the restructuring and
rationalization of the merged $12 billion Case and New Holland
supply chain and developed and implemented the company's e-
commerce business strategy.
Mr. Sharman was named to his post with CNH at its inception,
having held the position of Vice President and General Manager,
Latin America with Case from 1998. Earlier with Case he had
been Vice President, Supply Chain Management from 1995.
Mr. Sharman began his business career in 1992 as a Manager of
Manufacturing and Reliability Services with International Paper,
after earning his M.B.A. degree from Duke University. He held a
variety of operations, manufacturing and engineering management
positions with the company until joining Case Corporation in
1995. He earned a B.S. degree at the United States Military
Academy at West Point, New York in 1982 and served as an Army
officer from 1982 to 1992 in Europe and the United States.
World Kitchen's principal products are glass, glass ceramic and
metal cookware, bakeware, tabletop products and cutlery sold
under well-known brands including CorningWare(R), Pyrex(R),
Corelle(R), Revere(R), EKCO(R), Baker's Secret(R), Chicago
Cutlery(R) and OXO(R). World Kitchen has been an affiliate of
Borden, Inc., and a member of the Borden Family of Companies
since April 1998. The Company currently employs approximately
3,200 people and has major manufacturing and distribution
operations in the United States, Canada, South America and Asia-
Pacific regions.
WKI Holdings, together with its subsidiaries, filed for Chapter
11 protection on May 31, 2002, in the U.S. Bankruptcy Court for
the Northern District of Illinois.
WORLDCOM INC: EDS Corp. Wants Prompt Turnover of Certain Assets
---------------------------------------------------------------
Electronic Data Systems Corporation asks the Court to determine
that Worldcom Inc., holds the LEC Funds subject to an express
trust for the benefit of the LECs and that the LEC Funds are not
property of the Debtors' estate. In addition, EDS asks the
Court to compel the Debtors to turn over the LEC Funds to EDS or
otherwise pay the LEC Funds in accordance with EDS' direction.
But should the Court determine that no express trust exists, EDS
wants Judge Gonzalez to impose a constructive trust and grant
EDS an allowed administrative claim in an amount equal to the
LEC Funds held by the Debtors.
In early 1999, Electronic Data Systems Corporation, EDS
Information Services LLC, and the Debtors entered into an 11-
year bilateral outsourcing agreement, pursuant to which the
Debtors outsourced its information technology functions to EDS,
and EDS outsourced its telecommunications and network functions
to the Debtors.
According to Mark Broude, Esq., at Latham & Watkins, in New
York, the fundamental terms of the IT outsourcing and networking
components of the parties' agreement were set forth in a
contractually binding "Framework Agreement" entered into on
February 10, 1999, and later supplemented and implemented
through the joint Global Information Technology Services
Agreement and the Global Network Outsourcing Agreement,
concurrently executed and made effective on October 22, 1999.
Under the Outsourcing Agreement, the Debtors perform
telecommunications and network services for EDS and its clients.
The Debtors do not provide communication services itself to all
locations. In many of its customer relationships, if a client
requests the Debtors' services in a location where it does not
provide services, the Debtors may deny the requested service.
According to Mr. Broude, many EDS Clients for which EDS utilizes
the Debtors' services seek coverage in locations where the
Debtors does not provide services. Rather than declining
service to EDS Customers in all these locations, the Debtors
have agreed to provide these services as long as EDS enters into
contracts with the appropriate local exchange carriers in these
locations. In other words, EDS must work with the Local Exchange
Carriers in many locations to provide the Debtors services to
its own customers. These LECs provide EDS' customers with the
required services and send the invoices for these services
directly to EDS. EDS is responsible for paying these invoices.
Failure to pay for these services constitutes a breach of
contract under the terms of EDS' agreements with the LECs.
Mr. Broude relates that EDS was obligated to purchase a minimum
amount of services from the Debtors under the Outsourcing
Agreement. The first $16,300,000 of amounts paid to the LECs by
or on behalf of EDS is included as Network Revenue in
determining EDS' compliance with the Minimum Spend Commitment.
However, the Outsourcing Agreement is silent as to any procedure
by which EDS would make payments to the LECs to ensure that the
actual amounts are included in the calculation of Network
Revenue.
Between 1999 and October 2001, representatives of EDS spoke
periodically with John Kopchak of WorldCom. They discussed the
possibility of entering into an agreement under which EDS would
transfer $16,300,000 on an annual basis to the Debtors for the
sole purpose of providing the Debtors a fund in an amount equal
to the LEC Credit out of which it could pay the LECs on EDS'
behalf.
In September and October 2001, Mr. Broude relates that Uma
Talluri and Elaine Sweet for EDS reached an agreement with Mr.
Kopchak pursuant to which EDS would transfer $16,300,000 to the
Debtors. Then, the Debtors would, at EDS' direction, pay the
LECs. EDS would provide that direction to the Debtors by
periodically providing the Debtors with spreadsheets setting
forth the invoices received from the LECs. Upon receipt of the
spreadsheets, the Debtors would promptly pay the Invoices from
the $16,300,000 provided by EDS.
On May 1, 2002, the Debtors submitted an invoice to EDS for
$16,300,000. On May 31, 2002, EDS wired $16,300,000 in reliance
on the Debtors' promise under the Agreement to pay the Invoices
from these funds in accordance with spreadsheets provided by
EDS. Between June 7, 2002 and August 30, 2002, EDS forwarded
Invoices to the Debtors totaling $16,034,389. However, the
Debtors have paid only $1,558,583 to the LECs on behalf of EDS.
The Debtors continue to hold $14,700,000 of LEC Funds on behalf
of EDS and have refused to use those LEC Funds to pay
$14,400,000 in Invoices.
As a result of the Debtors' failure to pay the LECs, Mr. Broude
informs Judge Gonzalez that several LECs have periodically
discontinued services and have indicated that they will do so
with more frequency as long as the Invoices remain unpaid.
Counsel to EDS first brought this issue to the attention of the
Debtors' counsel on August 20, 2002, and sought a consensual
resolution. However, the Debtors' counsel has informed EDS'
counsel that the Debtors will not release the LEC Funds absent
an order of the Court.
Mr. Broude asserts that this dispute should be resolved
immediately to avoid irreparable harm to EDS. This relief is
required to protect EDS from the significant risk that --
because the LECs are holding EDS and not the Debtors responsible
for paying the Invoices -- the LECs will discontinue services to
EDS' customers, resulting in losses of substantial revenues to
EDS and, given that these customers acquire WorldCom services
through EDS, to the Debtors. (Worldcom Bankruptcy News, Issue
No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900)
Worldcom Inc.'s 8% bonds due 2006 (WCOM06USN1) are trading at
12.5 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM06USN1
for real-time bond pricing.
*********
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.
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