/raid1/www/Hosts/bankrupt/TCR_Public/021017.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, October 17, 2002, Vol. 6, No. 206
Headlines
3DFX INTERACTIVE: Voluntary Chapter 11 Case Summary
3DFX INTERACTIVE: Files for Chapter 11 Protection in California
ADVANCED MATERIALS: August 31 Working Capital Deficit Tops $166K
ADVANCED TISSUE: Seek Approval to Use $3 Million DIP Financing
ALLMERICA: Fitch Cuts Units' Financial Strength Ratings to BB-
AMERCO: Fitch Cuts Sr. Unsec. Debt & Preferred Ratings to B+/B-
AMERCO: Brings-In Crossroads to Explore Options & Give Advice
ANC RENTAL CORP: Proposed Sale of Tampa Property Draws Fire
ANGEION CORP: Minnesota Court Approves Disclosure Statement
AQUILA INC: Closes Sale of UK Gas Storage Assets for $34.9 Mill.
ASBESTOS CLAIMS: Texas Court Fixes October 31 Claims Bar Date
AT&T CANADA: Reaches Pact with Bondholders on Restructuring Plan
AT&T CANADA: AT&T Canada Corp. Section 304 Petition Summary
AT&T CANADA: Canada Fibre Section 304 Petition Summary
AT&T CANADA: Canada Inc. Section 304 Petition Summary
AT&T CANADA: Telecom Services Section 304 Petition Summary
AT&T CANADA: MetroNet Fiber US Section 304 Petition Summary
AT&T CANADA: Obtains CCAA Order to Advance Restructuring Plan
BUDGET GROUP: Wins Okay to Pay Prepetition Vehicle Obligations
CAN-CAL RESOURCES: Independent Auditors Air Going Concern Doubt
CARAUSTAR INDUSTRIES: Will Host Conference Call on October 29
CELLSTAR CORP: Pays-Off 5% Convertible Subordinated Notes
CLARK RETAIL: Receives Court Approval of 'First-Day' Motions
COMDIAL CORP: Shea Ventures Discloses 26.1% Equity Stake
COMMSCOPE INC: Will Publish Third Quarter Results on November 4
COMPREHENSIVE MEDICAL: Settles Litigation with Yucatan Holding
CRITICAL PATH: Fails to Meet Nasdaq Continued Listing Standards
DATATEC SYSTEMS: Fails to Comply with Nasdaq Listing Guidelines
DELTA AIR LINES: Third Quarter Net Loss Slides-Down to $326 Mil.
DESA HOLDINGS: Committee Taps Ashby & Geddes as Delaware Counsel
EBT INT'L: Performance Capital Discloses 16.14% Equity Stake
ENRON CORP: Intends to Sell Limbach Business for $80.7 Million
EOTT ENERGY: Honoring Prepetition Employee Obligations
EXIDE TECH.: US Trustee Amends Unsecured Creditors' Committee
FEDERAL-MOGUL: Wants to Keep Plan Filing Exclusivity Until Mar 3
FOUNTAIN PHARMACEUTICALS: Runs Out of Resources to Continue Ops.
FRONTLINE CAPITAL: Looks to Ernst & Young for Audit & Tax Work
GLOBAL CROSSING: Pascazi's Move to Appoint Ch. 11 Trustee Nixed
GLOBAL CROSSING: Asian Affiliate Will Use 30-Day Grace Period
GMAC COMMERCIAL: Fitch Affirms 6 Low-B and a Junk Ratings
INSPIRE INSURANCE: TX Court Will Consider Plan on Oct. 24, 2002
INTEGRATED HEALTH: Panel Wants to Continue Eureka's Engagement
KAISER ALUMINUM: Court OKs MCC Realty as Real Estate Broker
KMART CORP: Bags Approval to Hire Miller Buckfire as Advisors
LERNOUT & HAUSPIE: ScanSoft Repurchases 1.3MM Shares for $6.25MM
LTV CORP: Inks Pact to Sell Tubular Div. to Maverick for $110MM
MERISTAR HOTELS: Shoos-Away PwC and Brings-In KPMG as Auditors
METALS USA: Court Allows Sale of Birmingham Assets to Triple-J
MIRANT CORP: Fitch Places Downgraded Ratings on Watch Negative
NATIONSRENT: LaSalle Wants Debtors to Insure Leased Equipment
NEON COMMUNICATIONS: Plan Confirmation Hearing Set for Oct. 21
NEOTHERAPEUTICS: Nasdaq Approves Listing on SmallCap Market
NETIA HOLDINGS: Nasdaq to Delist ADS' Effective October 15, 2002
NETWORK ACCESS: Court Fixes November 8, 2002 as Claims Bar Date
NEWCOR INC: Files Proposed Joint Chapter 11 Plan in Delaware
NEXTREND INC: Case Summary & Largest Unsecured Creditors
NTL INC: Releases Supplementary Prospectus re Warrants Offering
ONSITE ENERGY: Balance Sheet Insolvency Narrows to $5.2 Million
ORYX TECHNOLOGY: Falls Short of Nasdaq Min. Listing Requirements
POLAROID CORP: Seeking Fourth Extension of Exclusive Periods
PREVIO INC: All Creditors' Claims Due before November 26, 2002
PRUDENTIAL MORTGAGE: Fitch Affirms Low-Bs on 6 Classes of Notes
QUANTUM: Inks Pact to Spin-Off Network Attached Storage Assets
REPUBLIC WESTERN: Fitch Cuts Financial Strength Rating to BB+
REUNION INDUSTRIES: Closes Sale of Kingway Material for $32 Mil.
SAFETY-KLEEN: 3E Closes Asset Sale Under Amended Purchase Pact
SPECIAL METALS: Will Slash 12% of Salaried Workforce by Oct. 31
STARWOOD: Fitch Assigns BB+ Rating to $1.3 Billion Bank Facility
STRUCTURED ASSET: Fitch Affirms Low-B Ratings on 6 Note Classes
TERAFORCE TECHNOLOGY: Completes Restructuring of $4.5MM of Debts
TERAGLOBAL: Will Go Private After 1-for-1,000 Reverse Split
TIAA CMBS: Fitch Affirms Low-B Ratings on 5 Classes of Certs.
TOKHEIM CORP: August 31 Balance Sheet Upside-Down by $223 Mill.
TRANSACTION SYSTEMS: Gets Approval to Continue Listing on Nasdaq
UNITED AMERICAN HEALTHCARE: Working Capital Deficit Tops $3.8MM
US AIRWAYS: Non-Defaulted Ratings Stay on S&P's Watch Developing
VERSATEL TELECOM: Court Confirms First Amended Chapter 11 Plan
WCI COMMUNITIES: Expects to Fall Short of Q3 Earnings Guidance
WILLIAMS COMMS: Exits Chapter 11 Bankruptcy as WilTel Comms.
WORKFLOW MANAGEMENT: Lenders Extend Waiver re Covenant Defaults
WORLD HEART: Commences OTCBB Trading Following Nasdaq Delisting
WORLDCOM INC: Court Okays JA&A Services as Crisis Managers
WORLDCOM: Church Group Calls on FCC to Block Licenses Transfer
XO COMMS: Secures Court Approval of New Agreements with Level 3
* DebtTraders' Real-Time Bond Pricing
*********
3DFX INTERACTIVE: Files for Chapter 11 Protection in California
---------------------------------------------------------------
3dfx Interactive, Inc., (OTCBB:TDFX) has filed a petition with
the United States Bankruptcy Court for the Northern District of
California under Chapter 11 of the United States Bankruptcy Code
requesting that the Court take jurisdiction over the voluntary
Chapter 11 proceedings initiated by the Company.
"At this juncture, we believe that the bankruptcy process
provides the best means of enabling us to repay our creditors,"
said Richard A. Heddleson, President and Chief Executive Officer
of the Company.
3DFX INTERACTIVE: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: 3DFX Interactive, Inc.
P.O. Box 60486
Palo Alto, CA 94306-0486
Bankruptcy Case No.: 02-55795
Chapter 11 Petition Date: October 15, 2002
Court: Northern District of California (San Jose)
Judge: James R. Grube
Debtor's Counsel: Stephen T. O'Neill, Esq.
Law Offices of Murray and Murray
19330 Stevens Creek Blvd. #100
Cupertino, CA 95014-2526
650-852-9000
Total Assets: $534,000 (as of April 30, 2002)
Total Debts: $34,671,000 (as of April 30, 2002)
ADVANCED MATERIALS: August 31 Working Capital Deficit Tops $166K
----------------------------------------------------------------
Advanced Materials Group, Inc., (NASDAQ:ADMG.OB) reported
increased sales of 2% over the prior year period with $27,000 in
net earnings for the third fiscal quarter ended August 31, 2001.
Net sales for the third quarter of fiscal 2002 were $9.6 million
versus $9.4 million for the comparable period of fiscal 2001.
The net income for the third quarter of fiscal 2002 was $27,000
compared to net loss of $426,000 for the third quarter of fiscal
2001.
Net sales for the nine months of fiscal 2002 were $27.5 million
versus $29.3 million for the comparable period of fiscal 2001.
The net loss for the nine months of fiscal 2002 was $369,000,
compared to $2,544,000 for the nine months of fiscal 2001,
including a $1.4 million restructuring charge in fiscal 2001.
At August 31, 2002, the Company's balance sheets show that its
total current liabilities exceeded its total current assets by
about $166,000.
Chief Executive Officer Comments on Results
Commenting on the results, Advanced Materials Group CEO and
President, Steve F. Scott said, "We are encouraged to have
broken back into profitability in the quarter ending August 31,
2002. Advanced Materials Group has made good progress in
reducing expenses, pruning our account mix, and improving profit
elements such as pricing, material yields etc. The market
remains fragile, however.
"There is cost pressure from our polyurethane foam suppliers to
raise prices and there is the usual resistance from the
marketplace to allow these increases to be passed on. The
stability of demand is difficult to predict with customers
keeping a keen eye on inventories. These types of elements are
frequently encountered by all of us in manufacturing but we must
recognize their potential impact by keeping lean and agile.
"We believe we are positioned to be profitable at much lower
sales volumes than one year ago. Our focus on cost containment
and profitable account mix upgrades have positioned us well to
grow with the market or to maintain profitability with a flat or
slightly declining market."
Advanced Materials Group, Inc., is a leading manufacturer and
fabricator of specialty foams, foils, films and pressure-
sensitive adhesive components for a broad base of customers in
the computer, medical, automotive and aerospace industries both
in the U.S. and abroad.
ADVANCED TISSUE: Seek Approval to Use $3 Million DIP Financing
--------------------------------------------------------------
Advanced Tissue Sciences, Inc., together with its debtor-
affiliates ask the U.S. Bankruptcy Court for the Southern
District of California to allow them to incur secured
indebtedness in the amount of $3 million on an interim basis,
and up to $5 million following final approval of a DIP Financing
Facility pursuant to the terms of the Loan and Security
Agreement between the Debtors and Smith & Nephew SNATS, Inc.
In addition to being a partner with Smith & Nephew in the
Dermagraft JV and DermEquip, ATS, through its affiliate ATS
Orthopedics, Inc., is a partner with Smith & Nephew in Advanced
Tissue Sciences - Smith & Nephew, a Delaware general
partnership.
The Debtors relate that they filed their chapter 11 cases to
consummate a sale of their interests in the Dermagraft JV and
DermEquip, and substantially all of the their related assets to
Smith & Nephew, or a successful overbidder. The Debtors believe
that, in order to maintain operations, including investments in
the Dermagraft JV and DermEquip, they require additional
investment capital of at least $20 million over the next 12
months. At the end of September, ATS was left with limited
financing alternatives to meet its capital needs. Therefore, ATS
turned its attention to its current business partners in an
attempt to raise working capital. As a result of those
discussions, an agreement was reached to sell ATS's interest in
the Dermagraft JV and DermEquip, and all related assets thereto,
to Smith & Nephew through a chapter 11 bankruptcy filing.
The Debtors must continue operations to realize the value of
their assets. However, the Debtors simply do not have enough
cash on hand to pay for the on-going operation of the Debtors'
businesses past October 31, 2002. The Debtors must have
financing on an expedited basis to allow them to remain in
business pending the sale of their interests in DermEquip LLC
and their Dermagraft joint venture with Smith & Nephew, which
develops, manufactures and markets their leading products,
Dermagraft and TransCyte and all related assets owned by the
Debtors.
As part of the proposed sale, Smith & Nephew has agreed to
provide post-petition debtor-in-possession financing to the
Debtors in the total amount of up to $5 million in order to
preserve the value of the Debtors' assets for enough time to
close the proposed sale. Without this funding, a sale of the
assets to Smith & Nephew, or anyone else, is virtually
impossible.
Because of the Debtors' imminent depletion of cash on hand and
the importance of maintaining operations to complete the
proposed sale, the Debtors seek expedited approval on an interim
basis to incur secured financing in the amount of $3 million.
Without this funding, the Debtors believe that their assets will
plummet in value and creditors will likely be denied a recovery.
In the absence of the proposed sale of assets to Smith & Nephew,
the Debtors believe that they have no other financial options
and they will be forced to discontinue all operations within 2
weeks. In the absence of the financing to be provided by Smith &
Nephew, that discontinuation would likely happen within one
week.
The Loan and Security Agreement will expire upon the earlier of:
i) 75 days from the Petition Date or December 24, 2002; or,
ii) the occurrence of an Event of Default under the Loan and
Security Agreement.
The Debtors are unable to obtain unsecured credit merely by
allowing a lender an administrative expense. The Debtors'
management have concluded after significant investigation and
consultation with counsel and financial advisors and analysis
that the proposal by Smith & Nephew is the best alternative
available to provide the Debtors' post-petition financing.
Advanced Tissue Sciences, Inc., is engaged in the development
and manufacture of human-based tissue products for tissue repair
and transplantation. The Company filed for chapter 11 protection
on October 10, 2002 at the U.S. Bankruptcy Court for the
Southern District of California (San Diego). Craig H. Millet,
Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP
represent the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed
$32,200,000 in total assets and $16,900,000 in total debts.
ALLMERICA: Fitch Cuts Units' Financial Strength Ratings to BB-
--------------------------------------------------------------
Fitch Ratings lowered the insurer financial strength ratings of
First Allmerica Financial Life Insurance Co., and Allmerica
Financial Life Insurance and Annuity Co., to 'BB-' from 'BBB-'.
In addition, Fitch has lowered its rating on Allmerica Global
Funding LLC's $2 billion global debt program rating to 'BB-'
from 'BBB-'.
Fitch has also lowered Allmerica Financial Corporation's senior
debt rating to 'BB' from 'BB+', Allmerica Financing Trust's
capital securities to 'B+' from 'BB-'. AFC's commercial paper
program remains at 'B', Rating Watch Negative. FAFLIC's,
AFLIAC's, AGF's, and AFC's ratings remain on Rating Watch
Negative.
Fitch's rating actions reflect FAFLIC and AFLIAC's stand-alone
adjusted risk-based capital ratios that are currently within
Fitch's 'BB' guidelines. Fitch believes that AFC does not plan
to commit additional new capital to its life operations. As a
result, Fitch is viewing FAFLIC and AFLIAC capitalization on a
pure stand-alone basis.
On October 7, 2002, AFC announced that going forward, FAFLIC and
AFLIAC will discontinue new sales and will focus on servicing
their current blocks of business. Fitch believes these actions
will reduce statutory capital needs going forward, but that the
run-off creates significant uncertainty.
Fitch estimates that FAFLIC's NAIC risk-based capital at
September 30, 2002, was significantly below 225% of the company
action level set in agreement with the Massachusetts
Commissioner of Insurance. Fitch is unsure how the company will
deal with the shortfall.
Fitch's rating actions also reflects what it considers to be
significant execution risks associated with the broad strategic
options being considered by AFC. These options include
reinsuring or selling blocks of life insurance and annuity
reserves to ease capital needs.
Fitch's rating actions on AFC and AGF reflect its belief that
AFC's property/casualty operation could suffer operationally
from the organization's restructuring efforts. In addition,
Fitch believes that AFC's senior debt-holders and AFT's capital
securities are very unlikely to benefit FAFLIC's and AFLIAC's
operations going forward.
Rating Actions
First Allmerica Financial Life Insurance Co.
-- Insurer financial strength Downgrade 'BB-'/Negative.
Allmerica Financial Life & Annuity Co.
--Insurer financial strength Downgrade 'BB-'/Negative.
Allmerica Global Funding LLC $2 billion global note program
--Long-term issuer rating Downgrade 'BB-'/Negative.
Allmerica Financial Corp.
--Long-term issuer Downgrade 'BB'/Negative;
--Senior debt rating Downgrade 'BB'/Negative;
--Commercial paper rating 'B'/Negative.
Allmerica Financing Trust
--Capital securities rating Downgrade 'B+'/Negative.
AMERCO: Fitch Cuts Sr. Unsec. Debt & Preferred Ratings to B+/B-
---------------------------------------------------------------
Fitch Ratings lowers AMERCO's senior unsecured debt and
preferred stock ratings to 'B+' and 'B-' from 'BB+' and 'BB-',
respectively. Senior unsecured debt guaranteed by AMERCO is also
lowered to 'B+'. The commercial paper rating remains at 'B'. All
ratings remain on Rating Watch Negative reflecting the
resolution of the company's covenant violation under its bank
credit facility. Approximately $899 million of senior debt is
covered by Fitch's action.
Fitch's actions reflect the heightened level of event risk as
the company seeks alternative sources of funds following its
decision to withdraw its proposed $275 million unsecured debt
transaction amid limited appetite for funding from traditional
unsecured sources. Under the terms and conditions of its $205
million bank revolver, AMERCO was required to raise at least
$150 million of new capital by September 30, 2002. AMERCO is
currently in violation of this loan covenant, however, to date
has received waivers from its bank group. Given the limited
appetite for AMERCO's unsecured debt, the current ratings
reflect Fitch's view of where unsecured creditors would fall in
the capital structure if the company is successful in raising
funds to cure this violation and meet current maturities through
secured financings. Specifically, Fitch believes that the bank
group could ask for security in exchange for a permanent waiver
of this covenant, which could disadvantage unsecured creditors.
Under the terms of AMERCO's bank facility a 10% carve out of
consolidated tangible assets is permitted for secured debt, and
senior notes have a similar restriction. However, the covenant,
as written, does not appear to limit the amount of assets which
can be pledged to secure such funds. As of June 30, 2002, the
company had approximately $340 million of capacity under this
covenant. The issuance of secured debt should allow AMERCO to
meet its $275 million of term debt maturities over the next nine
months. On Oct. 9, 2002, AMERCO publicly communicated that it
had sufficient availability under its revolving credit facility
and cash flow to meet its upcoming $100 million debt maturity on
October 15, 2002 and $175 million of senior notes due May 15,
2003. Fitch will resolve the Rating Watch status upon resolution
of the covenant violation.
Based in Reno, Nevada, AMERCO is a holding company whose
principal subsidiaries are U-Haul International, Inc., Republic
Western Insurance Co., Oxford Life Insurance Co., and AMERCO
Real Estate Co. U-Haul is the leading consumer truck and
trailer rental company in North America and maintains a strong
market position in the self-storage market.
AMERCO: Brings-In Crossroads to Explore Options & Give Advice
-------------------------------------------------------------
AMERCO, parent company of U-Haul International, Inc., the leader
in the do-it-yourself moving and self storage industry announced
has retained Crossroads, LLC, as its financial advisor to assist
in assessing its strategic alternatives as the Company moves to
strengthen its financial position. Crossroads is a nationally
renowned consulting firm specializing in financial
restructuring.
"AMERCO is an extremely asset-rich Company that fell victim to
tight capital markets and was forced to repay rather than
refinance its loan commitments during its first quarter-ended
June 30, 2002. We are now in the process of recapitalizing our
balance sheet. Meanwhile, earnings continue to rise," stated
Gary Horton, Chief Financial Officer.
As part of the Company's strategic plan, it has elected to enter
into negotiations to restructure certain of its debt. While the
Company works to recapitalize its balance sheet, it has elected
to temporarily suspend the October 15, 2002 payment of its
Series 1997-C Bond Backed Asset Trust. The Company also intends
to refinance its 3-year Credit Agreement.
"Customer demand for U-Haul products and services is greater
than ever. The Company is experiencing another year of record
rental transactions. While we are taking advantage of this
opportunity to recapitalize our balance sheet, we continue to
make our interest payments to our banks as we have for over 50
years, and it will be business as usual for our customers,
employees, dealer network and service providers, stated Joe
Shoen, Chief Executive Officer.
Providing quality products and services to families that rely on
U-Haul has been the drumbeat by which this company has marched
for over 57 years. I have the utmost confidence in the work
underway that supports AMERCO's plan to recapitalize," declared
Shoen.
AMERCO is the parent company of U-Haul International, Inc.,
Republic Western Insurance Company, Oxford Life Insurance
Company and Amerco Real Estate Company. For more information
about AMERCO, visit http://www.uhaul.com
ANC RENTAL CORP: Proposed Sale of Tampa Property Draws Fire
-----------------------------------------------------------
Joseph Grey, Esq., at Stevens & Lee PC, in Wilmington Delaware,
relates that prior to the Petition Date, Panayes J. Dikeou,
principal of JPD Properties LLC and PJD Properties LLC, retained
a broker to find real estate properties suitable for acquisition
by 2401 Blake LLC, an affiliated entity also owned by Mr.
Dikeou. The broker found two suitable properties in Tampa,
Florida, both owned by ANC Rental Corporation and its debtor-
affiliates, and are identified in the Motion.
Mr. Dikeou, over the last several years, has submitted several
offers on the property. In March 2001, Mr. Dikeou was advised
by Alamo Rent-A-Car and its broker DeLaVergne & Company to
negotiate directly with Newell Turpel of AutoNation. Mr. Dikeou
was told that, since AutoNation had guaranteed an Alamo Rent-A-
Car lease on a parcel of land between the two parcels,
AutoNation had authority to make all decisions on the sale of at
least one of the properties.
Mr. Grey tells the Court that since that time, Mr. Dikeou has
continued to negotiate for the purchase of the properties. Mr.
Dikeou, however, was not advised of the impending sale of the
properties. Despite that, however, Mr. Dikeou, through JPD and
PJD, is still willing and able to pay more than the
$5,368,334.40 offered by Tampa Airport Parking LLC, without
requiring the assumption of DeLaVergne's brokerage as a
condition to its purchase. This leaves more money for the
Debtors' estates. Mr. Dikeou will also make it part of its
contract, on more defined terms, the provision in the current
contract Alamo Rent-A-Car's exclusive, non-revocable right to
use 100 or more parking spaces.
If the Court grants the sale of the property by Tampa Airport
Parking LLC, Mr. Grey asserts that the Debtors will not be
getting the highest value for the property
(2) Liberty Mutual Insurance Company
Sasha L. Azar, Esq., at Jaspan Schlesinger Hoffman LLP, in
Wilmington, Delaware, informs the Court that Liberty Mutual
Insurance Company is not objecting to the sale of the property.
Liberty, however, wants the Court to specifically provide in the
Order granting the sale that the net sale proceeds be held in a
segregated, interest bearing account. The account should be
subject to further Order of the Court and the rights and
interests of Liberty and the other entities that assert a
secured interest in the Property.
(3) Hillsborough County
Senior Assistant County Attorney Brian T. Fitzgerald, Esq., at
Hillsborough County, asserts that the Court should require that
the Tax Collectors' Liens for unpaid ad valorem taxes be paid in
full or attach to the proceeds of the sale.
The Hillsborough County Tax Collector has filed two proofs of
claim for $36,545.27 for the property to be sold.
* * *
As previously reported, Alamo wants to sell the Tampa property
-- 9.48-acre real property located at 5124 and 5402 West Spruce
Street in Tampa, Florida -- to Tampa Airport Parking LLC, free
and clear of any and all liens, claims, encumbrances and
interests.
Pursuant to their Purchase Agreement, ANC Rental Corporation and
its debtor-affiliates will receive $5,368,334.40 or $13 per
gross square foot from Tampa Airport Parking in exchange for the
property. (ANC Rental Bankruptcy News, Issue No. 20; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ANGEION CORP: Minnesota Court Approves Disclosure Statement
-----------------------------------------------------------
The disclosure statement filed by Angeion Corporation and the
official Unsecured Creditors' Committee won approval from the
U.S. Bankruptcy Court for the District of Minnesota. The Court
finds that the company's Disclosure Statement contains adequate
information about the proposed chapter 11 Plan to allow
creditors to make informed decisions about whether to vote to
accept or reject the Plan.
A hearing to consider confirmation of the plan will be held on
October 24, 2002 at 10:00 a.m. in Courtroom No. 228A, U. S.
Courthouse, 316 North Robert Street, St. Paul, Minnesota.
Any written objection to confirmation of the plan must be filed
with the Court and delivered to the Debtors on or before October
19, 2002.
Angeion Corporation conducts all of its operating activities
through its Medical Graphics, Inc., subsidiary. Medical Graphics
Corporation designs and markets cardiopulmonary diagnostic
systems along with related software. The Debtor filed for
chapter 11 protection on June 17, 2002 at the U.S. Bankruptcy
Court for the District of Minnesota. Michael F. McGrath, Esq.,
at Ravich Meyer Kirkman McGrath & Nauman PA represents the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it listed $20,547,745 in assets
and $21,265,525 in debts.
AQUILA INC: Closes Sale of UK Gas Storage Assets for $34.9 Mill.
----------------------------------------------------------------
Aquila, Inc. (NYSE:ILA) -- whose preferred stock is currently
rated by Fitch at BB+ -- has sold its natural gas storage assets
in the United Kingdom to a U.K. energy trader for $34.9 million.
The assets consist principally of Hole House Farm, a natural gas
storage facility near Crewe, Cheshire. The facility has one
operational salt cavern linked to the Transco gas transmission
system with a second about to be brought into operation.
Together these two caverns can provide 10 million therms
(1 billion cubic feet) of quick cycle working gas capacity.
The Hole House sale is part of Aquila's previously announced
restructuring program that includes a goal of selling $1 billion
in assets. To date the company has announced agreements to sell
assets totaling $911 million, of which $731 million have been
completed.
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
ASBESTOS CLAIMS: Texas Court Fixes October 31 Claims Bar Date
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
establishes October 31, 2002, as the deadline to file proofs of
claim against Asbestos Claims Management Corporation or be
forever barred from asserting that claim. In the case of
governmental units, the claims bar date is set for February 17,
2003.
Proof of Claim forms must be received before 4:00 p.m. Central
Time on the Claims Bar Date. Claims must be delivered via
ordinary U.S. mail to:
ACMC Claims Processing Center
c/o Trumbull Services, LLC
P.O. Box 1098
Windsor, CT 06095
Via expedited courier service, hand delivery, or in person, to:
ACMC Claims Processing Center
c/o Trumbull Services, LLC
4 Griffin Road North
Windsor, CT 06095
Proofs of Claim need not be filed if they are on account of:
(i) Claims already properly filed with the Clerk of the
Bankruptcy Court;
(ii) Claims listed on the ACMC's schedules and not listed
as contingent, disputed, unliquidated;
(iii) Claims with respect to administrative expenses of
ACMC's chapter 11 case under section 503(b) of the
Bankruptcy Code;
(iv) Claims allowed by an Order of the Court entered on or
before the Claims Bar Date; and
(v) Asbestos-Related bodily injury claims.
Asbestos Claims Management Corporation filed for chapter 11
protection on August 19, 2002 at the U.S. Bankruptcy Court for
the Northern District of Texas. Michael A. Rosenthal, Esq.,
Aaron G. York, Esq., and Janet M. Weiss, Esq., at Gibson, Dunn &
Crutcher represent the Debtor in its restructuring efforts.
When the Company filed for protection from its creditors it
listed debts and assets of over $100 million.
AT&T CANADA: Reaches Pact with Bondholders on Restructuring Plan
----------------------------------------------------------------
AT&T Canada has reached an agreement in principle with the
financial and legal representatives of a steering committee of
AT&T Canada's public bondholders on a proposed restructuring
plan. The proposed restructuring plan, which is the product of
months of constructive discussions among the parties, will
eliminate all of the funded debt obligations of AT&T Canada,
allowing AT&T Canada to secure its position as a strong, long-
term competitor in the Canadian telecommunications marketplace.
Purdy Crawford, Chairman of the Board, AT&T Canada said, "I want
to commend all of the parties to this plan for conducting a
constructive process that should preserve the value of this
company for the benefit of its stakeholders. This plan has the
support of the Board and we look forward to working with the
bondholder committee to see this plan through to reaching
definitive agreements and timely approval."
Members of the ad hoc steering committee hold approximately 20%
of the company's outstanding public debt. The steering committee
was formed from a broader bondholder group holding more than 70%
of the outstanding public debt.
The plan includes the following key elements:
- In exchange for AT&T Canada's $4.5 billion of outstanding
public debt, AT&T Canada's bondholders will receive, on a pro
rata basis, an estimated aggregate minimum payment of $200
million of cash and 100% of the new equity of AT&T Canada;
- To advance this consensual plan in an orderly and
equitable fashion, AT&T Canada - with the support of AT&T Corp.
and the bondholder committee - filed an application today for an
Order of the Ontario Superior Court of Justice under the
Companies' Creditors Arrangement Act. If granted, the Court
Order being sought will, among other things, enable AT&T Canada
to continue serving its customers and paying employees and
ongoing suppliers without interruption, and minimize the
possibility of any disruptive legal actions against the company
during the restructuring process;
- AT&T Canada will remain fully operational throughout the
capital restructuring process and will continue to do business
as usual with respect to its customers, ongoing suppliers and
employees;
- Completion of the restructuring is subject to entering
into definitive agreements and receipt of material approvals
including, bondholder, regulatory and Court approval.
- AT&T Canada expects to receive all necessary approvals by
year-end 2002; and
- AT&T Canada expects to emerge from the restructuring
process financially and operationally strong, generating
positive annual free cash flow in 2003 and beyond, with no long-
term debt obligations, cash at closing of approximately $100
million and the strongest balance sheet of any Canadian telecom
company.
Brascan Financial Corporation and CIBC Capital Partners are
continuing to pursue discussions as to whether they will have
any ongoing participation in AT&T Canada.
AT&T Canada believes it has made substantial progress in
discussions with AT&T Corp., aimed at reaching a series of new
commercial agreements that will, among other things: enhance
national and global connectivity for AT&T Canada customers
through the AT&T global network; strengthen the operating,
product, service and branding ties between the two companies;
and improve cross-border service for North American customers.
In the event that new commercial agreements are entered into
between AT&T Canada and AT&T Corp., AT&T Corp., will receive an
initial 7 percent equity interest in AT&T Canada; with further
equity interests of two percent and one percent vesting in the
fourth and fifth years respectively, of the term of such
agreements. The new commercial agreements would have a term of
five years, subject to normal early termination provisions in
certain circumstances, including following 30 months and a
further six month wind-down period as a result of a reduction in
AT&T Corp.'s equity interest below an agreed threshold. There
can be no assurance that AT&T Canada and AT&T Corp., will reach
agreement on definitive commercial agreements.
In connection with its decision to proceed with a CCAA filing,
the company has determined not to exercise its right to make the
bond interest payments due September 15 and September 23, 2002.
John McLennan, Vice Chairman and CEO of AT&T Canada, said, "We
are very pleased to have achieved not only our goal of
establishing a strong capital structure, but also the progress
of discussions with AT&T Corp., aimed at strengthening AT&T
Canada's ties to AT&T Corp., and its global network. Our
operating plan results in the generation of positive free cash
flow and the restructuring plan that we are announcing today
builds on that by eliminating approximately $425 million of
annual cash debt service obligations. This substantially
increases our ability to invest in our business and to continue
providing superior products and services to our customers. In
all, we have reached general agreement on a capital
restructuring plan that significantly advances our goal of
securing AT&T Canada's future as a strong and growing competitor
in the Canadian telecommunications marketplace."
Mr. McLennan continued, "We are entering this process to
implement a solution, rather than to confront a problem. The
dynamics of the process we are following are different from
those of most other companies that have filed under CCAA. First,
AT&T Canada's underlying business is strong, our operating
performance is sound and we enter this process with over $400
million of cash on hand. Second, our filing is made with the
benefit of an agreement on the principles underlying our
proposed capital restructuring. So unlike other companies who
file under this process in the hopes of developing such a plan,
we are entering this process in order to finalize and proceed to
implement a plan. And third, no additional workforce reductions
or other operational restructuring measures are associated with
today's announcement.
"Our challenge has been to overcome unsustainable debt levels in
the face of difficult business conditions. The plan we are
seeking to implement will help us achieve not only a capital
structure free of long-term debt, but to emerge with an even
stronger value proposition for our customers, and continued
opportunity for our employees."
Evan D. Flaschen of Bingham McCutchen LLP, U.S. counsel to the
ad hoc committee of bondholders, stated, "We are pleased that we
have reached agreement with AT&T Canada subject to approval by
the bondholders at large and by the Courts. While our
negotiating group considered a variety of structures and
alternatives, we concluded that a complete deleveraging of AT&T
Canada's balance sheet would best position AT&T Canada as a
strong and successful competitor and, therefore, provide the
greatest value to bondholders through their new equity stake."
During the restructuring process, if the order being sought is
granted, AT&T Canada will continue to conduct its commercial
affairs in a normal fashion, including continuing to provide all
products and services to customers without interruption. The
company intends to pay ongoing suppliers for all goods and
services in the ordinary course of business, regardless if the
goods and services were provided before or after the filing
date. All employees will continue to be paid on their normal
schedules. With more than CDN$400 million in cash on hand, the
company has adequate financial resources to operate
uninterrupted throughout this process.
Positive Outlook
McLennan concluded, "With this announcement we are continuing to
do what we said we would six months ago when we laid out a
three-point plan for establishing AT&T Canada as a strong and
growing competitor. We addressed the first component of that
plan through a series of cost saving and productivity enhancing
measures taken over the summer. [Tues]day's plan, taken together
with last week's completion of the deposit receipt agreement and
the repayment of AT&T Canada's bank debt, addresses the second
component - achieving a strong capital structure. And we
continue to pursue the third - achieving a competitively neutral
regulatory framework that permits Canadian telecom customers to
reap the benefits of true competition.
"The plan we achieved should send a clear message to our
customers that AT&T Canada will remain a strong and successful
competitor, and give our employees a new sense of excitement
about the future. When we emerge from this process, AT&T Canada
will be well along the road to achieving its full potential.
"As the largest competitor to the incumbent telephone companies
we have developed deep customer relationships with many of
Canada's leading corporations. We offer a range of state-of-the-
art data, Internet, local and long distance solutions. We enjoy
a strong market position and significant brand equity. The
renewed relationship with AT&T Corp. would further enhance our
ability to meet our customers' most demanding, national and
global needs. We look forward to working through the
restructuring process and emerging as a financially and
operationally stronger well-positioned to leverage these
qualities for the benefit of all our stakeholders."
* * *
In its application to the Court, AT&T Canada has proposed that
the Toronto office of KPMG Inc., serve as the Court-appointed
monitor during the CCAA process and assist the company in the
implementation of the restructuring plan.
The entities covered by the Order include: AT&T Canada Inc.,
AT&T Canada Corp., AT&T Canada Telecom Services Company, AT&T
Canada Fibre Company, MetroNet Fiber US Inc., MetroNet Fiber
Washington Inc., and Netcom Canada Inc.
In the United States, ancillary court proceedings will be
commenced under U.S. law. These ancillary proceedings formally
recognize the CCAA proceedings in Canada, but they do not
constitute plenary Chapter 11 proceedings.
Osler, Hoskin & Harcourt LLP is serving as AT&T Canada's primary
legal counsel. Greenhill & Co., is serving as AT&T Canada's
financial advisor.
AT&T Canada is the country'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. AT&T Canada Inc. is a public
company. Visit AT&T Canada's Web site at
http://www.attcanada.comfor more information about the company.
AT&T Canada Inc.'s 12% bonds due 2007 (ATTC07CAR2), DebtTraders
reports, are trading at 14 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ATTC07CAR2
for real-time bond pricing.
AT&T CANADA: AT&T Canada Corp. Section 304 Petition Summary
-----------------------------------------------------------
Petitioner: KPMG Inc., as Foreign Representative of
AT&T Canada Corp
200 Wellington Street
Toronto, Ontario
Bankruptcy Case No.: 02-15087
Type of Business: Canada Corp. is part of an integrated
telecommunications business that is
collectively the AT&T Canada Group.
Section 304 Petition Date: October 15, 2002
Court: Southern District of New York (Manhattan)
Judge: Stuart M. Bernstein
Petitioner's Counsel: Brian M. Cogan, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
(212) 806-5400
Fax : (212) 806-6006
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
AT&T CANADA: Canada Fibre Section 304 Petition Summary
------------------------------------------------------
Petitioner: KPMG Inc., as Foreign Representative of
AT&T Canada Fibre Company
200 Wellington Street
Toronto, Ontario
Bankruptcy Case No.: 02-15089
Type of Business: AT&T Fibre is part of an integrated
telecommunications business that is
collectively the AT&T Canada Group.
Section 304 Petition Date: October 15, 2002
Court: Southern District of New York (Manhattan)
Judge: Stuart M. Bernstein
Petitioner's Counsel: Brian M. Cogan, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
(212) 806-5400
Fax : (212) 806-6006
Estimated Assets: $0 to $50,000
Estimated Debts: $0 to $50,000
AT&T CANADA: Canada Inc. Section 304 Petition Summary
-----------------------------------------------------
Petitioner: KPMG Inc., as Foreign Representative of
AT&T Canada Inc.
200 Wellington Street
Toronto, Ontario
Bankruptcy Case No.: 02-15086
Type of Business: AT&T Canada Inc. is part of an integrated
telecommunications business that is
collectively the AT&T Canada Group.
Section 304 Petition Date: October 15, 2002
Court: Southern District of New York (Manhattan)
Judge: Stuart M. Bernstein
Petitioner's Counsel: Brian M. Cogan, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
(212) 806-5400
Fax : (212) 806-6006
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
AT&T CANADA: Telecom Services Section 304 Petition Summary
----------------------------------------------------------
Petitioner: KPMG Inc., as Foreign Representative of
AT&T Canada Telecom Services Company
200 Wellington Street
Toronto, Ontario
Bankruptcy Case No.: 02-15088
Type of Business: Canada Telecom Services is part of an
integrated telecommunications business that
is collectively the AT&T Canada Group.
Section 304 Petition Date: October 15, 2002
Court: Southern District of New York (Manhattan)
Judge: Stuart M. Bernstein
Petitioner's Counsel: Brian M. Cogan, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
(212) 806-5400
Fax : (212) 806-6006
Estimated Assets: $0 to $50,000
Estimated Debts: $0 to $50,000
AT&T CANADA: MetroNet Fiber US Section 304 Petition Summary
-----------------------------------------------------------
Petitioner: KPMG Inc., as Foreign Representative of
MetroNet Fibre US Inc.
200 Wellington Street
Toronto, Ontario
Bankruptcy Case No.: 02-15090
Type of Business: MetroNet Fiber US Inc. is part of an
integrated telecommunications business that
is collectively the AT&T Canada Group.
Section 304 Petition Date: October 15, 2002
Court: Southern District of New York (Manhattan)
Judge: Stuart M. Bernstein
Petitioner's Counsel: Brian M. Cogan, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
(212) 806-5400
Fax : (212) 806-6006
Estimated Assets: $0 to $50,000
Estimated Debts: $0 to $50,000
AT&T CANADA: MetroNet Fiber Wash. Section 304 Petition Summary
--------------------------------------------------------------
Petitioner: KPMG Inc., as Foreign Representative of
MetroNet Fiber Washington Inc.
200 Wellington Street
Toronto, Ontario
Bankruptcy Case No.: 02-15091
Type of Business: MetroNet Fiber Washington is part of an
integrated telecommunications business that
is collectively the AT&T Canada Group.
Section 304 Petition Date: October 15, 2002
Court: Southern District of New York (Manhattan)
Judge: Stuart M. Bernstein
Petitioner's Counsel: Brian M. Cogan, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
(212) 806-5400
Fax : (212) 806-6006
Estimated Assets: $0 to $50,000
Estimated Debts: $0 to $50,000
AT&T CANADA: Netcom Canada Inc. Section 304 Petition Summary
------------------------------------------------------------
Petitioner: KPMG Inc., as Foreign Representative of
Netcom Canada Inc.
200 Wellington Street
Toronto, Ontario
Bankruptcy Case No.: 02-15092
Type of Business: Netcom Canada Inc. is part of an
integrated telecommunications business that
is collectively the AT&T Canada Group.
Section 304 Petition Date: October 15, 2002
Court: Southern District of New York (Manhattan)
Judge: Stuart M. Bernstein
Petitioner's Counsel: Brian M. Cogan, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
(212) 806-5400
Fax : (212) 806-6006
Estimated Assets: $0 to $50,000
Estimated Debts: $0 to $50,000
AT&T CANADA: Obtains CCAA Order to Advance Restructuring Plan
-------------------------------------------------------------
Following the completion of proceedings before the Ontario
Superior Court of Justice that began Tuesday morning, AT&T
Canada Inc., obtained a court Order under the Companies'
Creditors Arrangement Act to advance the announced consensual
capital restructuring plan.
AT&T Canada is the country'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. AT&T Canada Inc., is a public
company. Visit AT&T Canada's Web site, http://www.attcanada.com
for more information about the company.
AT&T CANADA: Files Disclosure Statement on Form 6-K with SEC
------------------------------------------------------------
AT&T Canada Inc., filed a Form 6-K with the Securities and
Exchange Commission in the United States and on SEDAR in Canada
disclosing previously confidential non-public information. The
disclosure of this information by the Company was required
pursuant to the terms of certain confidentiality agreements
entered into in August, 2002 by the Company with certain members
of an ad hoc committee of its senior noteholders in order to
facilitate discussion of a possible financial restructuring of
the Company's capital structure.
AT&T Canada is the country'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
services offering 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.
BUDGET GROUP: Wins Okay to Pay Prepetition Vehicle Obligations
--------------------------------------------------------------
Budget Group Inc., and its debtor-affiliates obtained the
Court's authority to pay amounts owing to certain third party
vendors, as well as certain prepetition payment obligations
owing to various governmental regulatory agencies necessary to
keep the Debtors' vehicles operating and producing revenue.
Vehicle Repair Obligations
In the normal course of the Debtors' rental businesses, the
vehicles rented by the Debtors from TFFC require repairs,
towing, storage, emergency roadside assistance and various types
of maintenance. The terms of the repurchase programs with the
various vehicle manufacturers, require the Debtors to perform
specific preventive maintenance and repairs in order to keep the
Vehicles eligible for repurchase at the end of their rental
life. In the car rental segment, the Debtors use a variety of
car service vendors for these repairs, including US Auto Club as
a nationwide provider of emergency roadside assistance services.
US Auto Club provides its roadside assistance services pursuant
to an expired contract, and therefore the failure to pay
prepetition obligations could result in the loss of the
nationwide services provided by US Auto Club.
In the truck rental segment, the Debtors have established a
truck maintenance purchase order system, known as the Marksman
system, to facilitate the processing of truck repair orders.
The Debtors' truck dealers perform a variety of routine repair
and maintenance tasks that are processed through the Marksman
system. However, since most of the Debtors' dealers do not have
the ability to repair trucks beyond routine maintenance, the
Debtors have established a network consisting of over 100 repair
vendors throughout the country that handle the bulk of truck
repairs. GE Capital Fleet Services provides emergency roadside
assistance for the Debtors' trucks. The Debtors' obligations to
GE Capital Fleet Services are supported by a $2,000,000 letter
of credit. Failure to pay the obligations could result in a draw
on the letter of credit.
The aggregate amount of prepetition obligations that the Debtors
may be required to pay with respect to repairs in the car rental
segment is $4,700,000. In the truck rental segment, the Debtors
estimate the most critical prepetition repair obligations to be
$2,100,000.
Transfer Vendor Obligations
The Debtors, in the ordinary course of business, require the
services of vehicle transfer vendors to move the vehicles
throughout the country in order to meet their customers' needs
and their own fleet management requirements.
In the car rental segment, the Debtors have faced increasingly
tightening credit terms. Several transfer vendors have placed
the Debtors on COD payment terms. It may be necessary to pay
certain prepetition obligations in order to preserve their
non-COD payment terms with their remaining vehicle transfer
vendors. The Debtors estimate that the aggregate amount owing
to these non-COD vehicle transfer vendors is $200,000.
The Debtors estimate that the aggregate amount due to the truck
transfer vendors as of the Petition Date is $300,000.
Fuel Supplier Obligations
The Debtors require a significant amount of fuel at their rental
locations to meet the fuel supply needs of their fleet. There
are relatively few fuel suppliers who are able to serve the
nationwide needs of the Debtors' business. As a consequence,
the Debtors may be required to make prepetition payments in
order to ensure that these vendors continue to supply fuel on
favorable trade credit terms. The Debtors estimate that the
aggregate amount due to the fuel supplier vendors as of the
Petition Date is $350,000.
Vehicle Parts Vendor Obligations
The Debtors have a significant need for replacement parts,
including replacement tires and windshields, in the normal
course of their business. At present, a limited number of tire
manufacturers, windshield manufacturers and other vehicle parts
suppliers have agreed to provide these parts to the Debtors on
reasonable trade credit terms. The Debtors may be required to
make prepetition payments to these manufacturers in order to
ensure that they continue to supply parts on favorable trade
credit terms. The Debtors estimate that the aggregate amount
due to the most critical of these vendors as of the Petition
Date is $815,000.
Parking Ticket Obligations
The Debtors are required to pay a portion of their customers'
parking tickets to certain governmental authorities. The
Debtors do not receive notice of their customers' parking
tickets until at least 90 days after the customer rents its
vehicle. Once the Debtors receive notice of these parking
tickets, the Debtors will attempt to seek reimbursement from
their customers in the amount of these parking tickets. On
average, the Debtors have a 50% success rate in their collection
attempts. The risk of nonpayment of these parking tickets is
that the vehicles will be subject to impoundment or will be
rendered inoperative by some other means. The Debtors estimate
that the average monthly payment of these parking tickets is
$150,000 for the car rental segment and $120,000 for the truck
rental segment. As of the Petition Date, the estimated and
aggregate amount of the Debtors' accrued and unpaid amounts owed
arising from these parking tickets is $810,000.
Registration Obligations
Pursuant to various state statutes, the Debtors are obligated to
make certain payments to each state's Department of Motor
Vehicle Registration in order to register their vehicles.
Although TFFC is the registered owner of most of the Debtors'
Vehicles, the Debtors are obligated by their lease agreements
with TFFC to pay for the registration of the vehicles. The
failure by the Debtors to properly register the Vehicles could
lead to citations for improper registration or in some cases,
the impoundment of vehicles. The Debtors employ third party
vendors to process DMV registrations and remit registration
payments to the various state DMVs. The Debtors typically
provide checks to the DMV Vendors, who then submit the checks to
the DMV for the amount of vehicles it is able to register on a
given day.
The Debtors estimate that there is typically a 20-day processing
lag time for checks issued by the DMV Vendors. To the extent
that any checks issued by the Debtors prepetition on account of
the DMV registration payments have not cleared as of the
Petition Date, the Debtors wants the Court to direct their banks
to honor these transfers on or after the Petition Date. As of
the Petition Date, the estimated aggregate amount of the
Debtors' outstanding checks to the various state DMVs is
$250,000.
As of the Petition Date, the Debtors' estimated aggregate
prepetition liability for all of their prepetition vehicle
obligations is $9,525,000. The Debtors would like to pay their
obligations to each vendor on the condition that the vendors
will continue to supply goods and services to the Debtors on the
same trade terms prior to the Petition Date. The Debtors,
however, reserve the right to negotiate new trade terms with any
vendor as a condition to payment of any prepetition vehicle
obligations. (Budget Group Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
CAN-CAL RESOURCES: Independent Auditors Air Going Concern Doubt
---------------------------------------------------------------
Can-Cal Resources Ltd., incurred a net loss of approximately
$182,600 for the three months ended March 31, 2002. The
Company's current liabilities exceed its current assets by
approximately $230,100 as of March 31, 2002. These factors
create substantial doubt about the Company's ability to continue
as a going concern. The Company's management plans to continue
to fund its operations in the short term with a combination of
debt and equity financing, as well as revenue from operations in
the long term. The ability of the Company to continue as a going
concern is dependent on additional sources of capital and the
success of the Company's plan.
Management intends to continue sampling and testing volcanic
cinder materials from the Pisgah property with a small pilot
plant to be located at a location within approximately one hour
driving time from the Pisgah property, assuming the Company has
the necessary funds. It anticipates using the pilot plant to
process small batches of material for testing purposes and also
plans to obtain an independent reserve report and feasibility
study before building the production plant. However, there is no
assurance that precious metals exist in the volcanic cinders in
commercial quantities or, if they do, that they can be
profitably extracted. The Company has no present plans to
conduct any activities or operations on any of its other
properties.
Can-Cal will depend on sales of stock to Dutchess Private
Equities Fund, L.P., and DRH Investment Company, LLC, who are
providers of the equity line of credit established under an
Investment Agreement with it, to build the pilot plant, obtain
an independent reserve report and an independent feasibility
study, pay general and administrative expenses, and pay debt
service.
At March 31, 2002, and before sale of any stock to Dutchess Fund
and DRH, the Company had approximately $15,400 cash available to
sustain operations, which would cover one month of operations
maximum. In advance of such sales, it may seek additional
capital by sale of restricted stock in private placement
transactions in Canada, loans from directors, or possible
funding or joint venture arrangements with other mining
companies. However, there are no plans or arrangements now in
place to fund the Company by any of these means, and outcome of
the discussions with other companies cannot be predicted.
It is not anticipated that the Company will purchase (or sell)
any significant amount of equipment or other assets, or
experience any significant change in the number of personnel who
perform services for the Company, during the fiscal year ending
December 31, 2002. However, this depends on results of
its ongoing testing programs and financing available to it.
As of March 31, 2002, the Company had a working capital deficit
of $230,100. The working capital deficit as of December 31,
2001, was $70,200.
The Company had no operating income or cash flow from its
mineral operations for the three months ended March 31, 2002 or
the three months ended March 31, 2001. The Company sustained a
loss from operations of $106,400 for the three month period
ended March 31, 2002, compared to a loss of $166,100 for the
three period ended March 31, 2001. The decreased loss was
primarily due to decreases in mine exploration costs of $56,500;
travel and entertainment costs of $18,900; consulting fees of
$8,500, and office expense of $15,200. These reductions were
offset by increases in salaries and wages of $15,000; accounting
and legal fees of $22,900, and insurance costs of $4,700.
Costs and expenses decreased approximately $59,700 to $112,000
(compared to $171,700 in 2001). The changes in costs and
expenses, stated as changes for the period ended March 31, 2002
compared to the same period for 2001, were due to:
-- Accounting and legal costs increased by $22,900 due to
costs incurred as a result of filing a registration statement
with the Securities and Exchange Commission to register shares
for resale.
-- A decrease of $8,500 paid to consultants for research
and development on the Pisgah cinder material.
-- Salaries and wages increased by $15,000 and payroll
taxes by $1,200 because Can-Cal agreed in June 2001 to pay Mr.
Sloan a salary of $60,000 per year. The Company has accrued
these expenses. There were no salary and wages, or payroll taxes
during the same period in 2001.
-- Insurance costs increased $4,700 due to increases in
coverage for directors.
-- Travel and entertainment costs decreased $18,900 due to
less travel by Directors and less travel expenses incurred for
consultants.
-- Depreciation and amortization decreased by $1,900
because some of the equipment has been fully depreciated.
-- Office expense decreased $15,200. During the three month
period ended March 31, 2001, Can=Cal established an office at
the Nye County lab facility. Establishment of the office
resulted in one time expenses for equipment and supplies. The
facility was closed on December 31, 2001.
-- Mine exploration costs decreased $56,500 due to a
reduction in the amount of third party assay tests performed for
the company and discontinuation of exploration on the Owl Canyon
property.
-- Advertising and promotion expenses decreased by $1,100
due to less promotional materials being prepared.
-- Repairs and maintenance decreased by $2,900. No repairs
and maintenance costs were incurred during the first quarter of
2002.
-- Telephone costs decreased by $900 due to lower long
distance telephone rates.
-- Office rent, miscellaneous costs, utilities, and
equipment rental increased by a net $2,400 principally due the
closing of the Nye County lab facility and costs incurred in
moving the equipment and supplies from that facility.
Unless the Company is able to establish the economic viability
of its mining properties, the Company will continue writing off
its expenses of exploration and testing of its properties.
Therefore, losses will continue unless the Company locates and
delineates reserves. If that occurs, the Company may capitalize
certain of those expenses.
CARAUSTAR INDUSTRIES: Will Host Conference Call on October 29
-------------------------------------------------------------
Caraustar Industries, Inc. (Nasdaq: CSAR) announces the
following Webcast:
What: Caraustar Industries, Inc. Third Quarter 2002 Results
When: Tuesday, Oct. 29, 2002, 11 a.m. Eastern
Where: http://www.caraustar.com and click on the "Our
Financials" page or
http://www.firstcallevents.com/service/ajwz367556165gf12.html
How: Live over the Internet - simply log on to the web at
one of the addresses above
Contact: Janice Kuntz, Investor Relations Consultant for
Caraustar Industries, Inc., +1-404-352-2841, or
email, janicekuntz@earthlink.net
If you are unable to participate during the live webcast, the
call will be archived on the Web site http://www.caraustar.com
To access the Web site replay, go to Investor Relations and
click on Conference Calls.
Caraustar, a recycled packaging company, is one of the largest
and lowest-cost manufacturers and converters of recycled
paperboard and recycled packaging products in the United States.
The company has developed its leadership position in the
industry through diversification and integration from raw
materials to finished products. Caraustar is the only major
packaging company that serves the four principal recycled
paperboard product markets: tubes, cores and cans; folding
carton and custom packaging; gypsum wallboard facing paper; and
miscellaneous "other specialty" and converted products.
* * *
On April 8, 2002, Standard & Poor's lowered its corporate credit
ratings on recycled paperboard manufacturer Caraustar Industries
Inc to 'BB' and removed them from CreditWatch where they were
placed on December 20, 2001. Rating outlook is stable.
The rating action reflected expectations that weak market
conditions amid continuing overcapacity will prevent Caraustar
from improving credit measures to levels expected for the prior
rating. Although most of the company's operating issues have
been remedied, and new business volumes are starting to ramp up,
recycled paperboard demand is unlikely to rebound sufficiently
in the near term to significantly boost performance.
CELLSTAR CORP: Pays-Off 5% Convertible Subordinated Notes
---------------------------------------------------------
CellStar Corporation (Nasdaq: CLST), a global value-added
wireless logistics services leader, has paid in full all of its
outstanding 5% Convertible Subordinated Notes due October 15,
2002.
As of October 15, 2002, the Company had $17.4 million
outstanding in principal and interest on the Notes. All of the
Notes were paid in full in cash and payment has been wired to
The Bank of New York, the Trustee.
This is the final payment related to the previously restructured
outstanding $150 million Convertible Subordinated Notes.
Noteholders who require further information should contact the
Investor Relations Dept. at 972-466-5031.
CellStar Corporation is a leading global provider of
distribution and value-added logistics services to the wireless
communications industry, with operations in Asia-Pacific, North
America, Latin America and Europe. CellStar facilitates the
effective and efficient distribution of handsets, related
accessories and other wireless products from leading
manufacturers to network operators, agents, resellers, dealers
and retailers. In many of its markets, CellStar provides
activation services that generate new subscribers for its
wireless carrier customers. For the year ended November 30,
2001, the Company generated revenues of $2.4 billion.
Additional information about CellStar may be found on its Web
site at http://www.cellstar.com
* * *
As reported in Troubled Company Reporter's February 20, 2002,
edition, Standard & Poor's said that it lowered its corporate
credit rating on CellStar Corp., to 'SD' (selective default)
from 'CCC-' and removed its ratings from CreditWatch, where they
had been placed with negative implications on Sept. 6, 2001.
At the same time, Standard & Poor's lowered its rating on the
subordinated debt to 'D' for the distributor of wireless
communications products. As of Aug. 31, 2001, total outstanding
debt was about $200 million.
CLARK RETAIL: Receives Court Approval of 'First-Day' Motions
------------------------------------------------------------
Clark Retail Enterprises, Inc., announced that the Bankruptcy
Court has approved $15 million of interim debtor-in-possession
(DIP) financing and use of cash collateral by the Company to
continue operations, pay employees, and purchase goods and
services. In conjunction with its voluntary restructuring,
which commenced earlier today, Clark received commitments for up
to $56.2 million in DIP financing from Clark's largest
shareholder, Apollo Investment Fund IV, L.P., to fund operations
during the restructuring.
The Court approved, among other things, motions to pay pre-
petition and post-petition employee wages, salaries and
benefits. The Company also announced that it has received
permission from the Court to pay sales and excise taxes and
lottery payments in the ordinary course of business, including
pre-petition amounts, and permission for continued use of its
cash management systems.
"We are gratified by the Court's prompt action," said Clark
Chief Executive Officer Brandon K. Barnholt. "This, combined
with cash flow from operations, provides us with ample liquidity
to fund operating expenses and meet our upcoming obligations.
It should provide reassurance to our employees, suppliers and
customers that Clark will continue to operate without
interruption."
Earlier Tuesday, Clark filed voluntary petitions for
reorganization under Chapter 11 of the U.S. Bankruptcy Code to
alleviate its short-term liquidity issues. Excluded from the
filing is Clark's White Hen Pantry Inc. subsidiary, a premier
convenience store chain in the greater Chicago area with
approximately 250 outlets.
For further information please contact John Matthews, Vice
President, Corporate Communications of Clark Retail Enterprises,
Inc., +1-630-366-3563.
COMDIAL CORP: Shea Ventures Discloses 26.1% Equity Stake
--------------------------------------------------------
Shea Ventures LLC beneficially owns 19,978,480 shares if the
common stock of Comdial Corporation, which represents 26.1% of
the outstanding common stock of Comdial. Shea Ventures purchased
$475,000 of Comdial's 7% senior subordinated convertible
promissory notes on September 9, 2002. The source of the funds
for the purchase by Shea Ventures was working capital of Shea
Ventures. $63,317.50 of the principal amount was converted into
an aggregate of 6,331,750 shares of common stock. The remaining
principal balance of $411,682.50 of the Notes was converted into
an additional private placement of the Company on September 27,
2002. Shea Ventures invested an additional $3,000,000 of working
capital in the Private Placement. In the aggregate, Shea
Ventures received a $3,411,682.50 promissory note and Placement
Warrants for the purchase of 17,058,412.50 shares of common
stock at $0.01 per share in the Private Placement. 20% of the
Placement Warrants cannot be converted until 18 months after the
initial closing of the private placement, and are subject to
forfeiture on a pro rata basis, if the Placement Note is repaid
during the first 18 months after the initial closing.
Pursuant to a subscription agreement, dated September 9, 2002,
between Comdial and Shea Ventures, Comdial issued $475,000 of
the Notes to Shea Ventures.
Shea's holding is 19,978,480 shares of common stock, including
13,646,730 shares of common stock issuable upon exercise of
Placement Warrants.
Pursuant to the Placement Subscription Agreement, Shea Ventures
was granted, among other things, registration rights with
respect to its shares of common stock.
Currently Shea Ventures has the power to vote or to direct the
vote, and has sole power to dispose or direct the disposition of
6,631,750 shares of common stock beneficially owned by Shea
Ventures. Upon exercise of the Placement Warrants, Shea Ventures
has the power to vote or to direct the vote, and has sole power
to dispose or direct the disposition of an additional 13,646,730
shares of common stock beneficially owned by Shea Ventures.
Comdial Corporation, headquartered in Sarasota, Florida,
develops and markets sophisticated communications solutions for
small to mid-sized offices, government, and other organizations.
Comdial offers a broad range of solutions to enhance the
productivity of businesses, including voice switching systems,
voice over IP (VoIP), voice processing and computer telephony
integration solutions. For more information about Comdial and
its communications solutions, please visit its Web site at
http://www.comdial.com
* * *
Debt Restructuring
On June 21, 2002, ComVest entered into an agreement with
Comdial's senior bank lender to purchase the bank's
approximately $12.7 million senior secured debt position,
outstanding letters of credit of $1.5 million, and 1,000,000
shares of Series B Alternate Rate Convertible Preferred Stock
(having an aggregate liquidation preference of $10.2 million)
for a total of approximately $8.0 million. Although there can be
no assurances, it is expected that this buy-out by ComVest,
which is subject to closing conditions, will be completed during
2002. In connection with its debt restructuring, Comdial will
seek additional longer term financing which it expects will be
in the form of a new senior bank loan and other debt or equity
funding to be raised during 2002. It is anticipated that the
Bridge Financing will be replaced by or convert into this
subsequent longer term financing. There can be no assurance
that the Company will be successful in obtaining additional
financing or that the terms on which any such funding may be
available will be favorable to the Company.
Nasdaq Delisting
As a result of its immediate convertibility into shares of
common stock, the issuance of the Bridge Notes required
shareholder approval under the corporate governance requirements
of Nasdaq's Marketplace Rules. The failure to obtain shareholder
approval prior to the issuance of the Bridge Notes has resulted
in the Company's shares being delisted from the Nasdaq SmallCap
Market(R). The Company anticipates that its common stock will
be quoted on the NASD's OTC-BB. Nasdaq determined that the
Company was not eligible for immediate listing on the OTC-BB
because part of the delisting order related to public interest
concerns regarding the substantial dilution. Accordingly, the
Company's stock currently trades on the Pink Sheets Electronic
Quotation Service. The application to be quoted on the OTC-BB
must be filed by one or more broker-dealers and the Company must
meet certain requirements, including that its filings under the
Exchange Act must be current. There can be no assurance that
the Company's stock will be quoted on the NASD's OTC-BB in the
future, in which case the Company's stock will continue to trade
through the pink-sheets.
COMMSCOPE INC: Will Publish Third Quarter Results on November 4
---------------------------------------------------------------
CommScope, Inc., (NYSE: CTV) plans to release its third quarter
2002 financial results at 4:00 p.m. Eastern Time on Monday,
November 4, followed by a 4:30 p.m. conference call. You are
invited to listen to the conference call or live webcast with
Frank Drendel, Chairman and CEO; Brian Garrett, President and
COO; and Jearld Leonhardt, Executive Vice President and CFO.
To participate in the conference call, domestic and
international callers should dial 212-896-6107. Please plan to
dial in 10-15 minutes before the start of the call to facilitate
a timely connection. The live, listen-only audio of the
conference call will also be available via the Internet at:
http://www.firstcallevents.com/service/ajwz367543123gf12.html
If you are unable to participate on the call and would like to
hear a replay, you may dial 800-633-8284. International callers
should dial 402-977-9140 for the replay. The replay ID is
20968729. The replay will be available through Wednesday,
November 6. A webcast replay will also be archived for a
limited period of time following the conference call via the
Internet on CommScope's Web site at http://www.commscope.com
CommScope is the world's largest manufacturer of broadband
coaxial cable for Hybrid Fiber Coaxial (HFC) applications and a
leading supplier of high- performance fiber optic and twisted
pair cables for LAN, wireless and other communications
applications.
(Minimum requirements to listen to the broadcast and replay on
the Internet: The Windows Media Player software, downloadable
free from
http://www.microsoft.com/windows/windowsmedia/EN/default.asp
and at least a 28.8Kbps connection to the Internet. If you
experience problems listening to the broadcast, send an email to
webcastsupport@tfprn.com.)
Visit http://www.commscope.comto learn more information on the
Company.
As previously reported, Standard & Poor's raised the CommScope's
rating to BB+ owing to the company's solid performance.
COMPREHENSIVE MEDICAL: Settles Litigation with Yucatan Holding
--------------------------------------------------------------
Yucatan Holding Company, a privately held investment company,
has settled its litigation with Comprehensive Medical
Diagnostics Group, Inc., (OTC Pink Sheets: CMDI) related to the
default of a promissory note in the principal amount of $292,500
issued by Comprehensive Medical to Yucatan Holding Company
(reported in the Sept. 2, 2002, edition of the Troubled Company
Reporter). Following this settlement, Yucatan Holding Company
has dismissed the pending lawsuit with prejudice.
CRITICAL PATH: Fails to Meet Nasdaq Continued Listing Standards
---------------------------------------------------------------
Critical Path, Inc. (Nasdaq:CPTH), a global leader in digital
communications software and services, expects to report revenue
for the third quarter 2002 of approximately $19 million.
Operating expenses, excluding special charges and depreciation,
will be lower than expected at less than $28 million for the
third quarter, and are expected to further decrease sequentially
in the fourth quarter.
"Like every company in our sector, Critical Path's revenues are
being adversely affected by continued sluggishness in corporate
and carrier spending. We continue to demonstrate prudent expense
controls and cash management while simultaneously creating
strategic programs that will increase the value of Critical Path
-- including our recently announced alliance to drive our hosted
messaging business and offer a complete managed messaging
service that is unmatched in terms of scalability, quality and
cost," said William E. McGlashan, Jr., chairman and chief
executive officer.
The Company also announced it received, as expected, a
compliance notice from The Nasdaq Stock Market, Inc. Nasdaq
informed Critical Path that the Company had not maintained the
minimum bid price required for continued listing on the Nasdaq
National Market. Critical Path will have until December 19, 2002
to regain compliance with Nasdaq's minimum bid price for
continued listing. Critical Path intends to take steps to
maintain its listing on the Nasdaq National Market, and
management does not believe the current stock price accurately
reflects the value of the Company.
Critical Path will report results for the third quarter 2002 on
November 5, 2002. Those who would like to participate in the
conference call should dial 877/231-3543 or 706/634-1329
(international) prior to 4:50 PM ET on the day of the call. The
conference call and its replay will also be Web cast and are
accessible from the Company's Web site http://www.cp.net A
telephone replay of the conference call will be available for
seven days following the call. To access the replay, please dial
(800) 642-1687 or (706) 645-9291 (international), passcode
6176124.
Critical Path, Inc., (Nasdaq:CPTH) is a global leader in digital
communications software and services. The company provides
messaging solutions -- from wireless, secure and unified
messaging to basic email and personal information management --
as well as identity management solutions that simplify user
profile management and strengthen information security. The
standards-based Critical Path Communications Platform, built to
perform reliably at the scale of public networks, delivers the
industry's lowest total cost of ownership for messaging
solutions and lays a solid foundation for next-generation
communications services. Solutions are available on a hosted or
licensed basis. Critical Path's customers include more than 700
enterprises, 190 carriers and service providers, eight national
postal authorities and 35 government agencies. Critical Path is
headquartered in San Francisco. More information can be found at
http://www.criticalpath.net
DATATEC SYSTEMS: Fails to Comply with Nasdaq Listing Guidelines
---------------------------------------------------------------
Datatec Systems, Inc. (NASDAQ:DATCE), a leading provider of
technology deployment services and software tools, received a
NASDAQ Staff Determination on October 10, 2002 indicating that
the Company fails to comply with the minimum $4,000,000 net
tangible assets or $10,000,000 stockholders' equity requirements
for continued listing on The NASDAQ National Market set forth in
Marketplace Rules 4450(a)(3)and 4450(b)(1), and that its
securities are therefore subject to delisting from the NASDAQ
National Market.
As disclosed in its recent 10-K filing, the Company anticipated
receiving this notification. It has requested and been granted a
hearing before a NASDAQ Listing Qualifications Panel to review
the Staff Determination. This hearing is scheduled to take place
on or before October 24, 2002. There can be no assurance the
Panel will grant the Company's request for continued NASDAQ
National Market listing.
Datatec will continue to fully inform the investing public with
updated information as it becomes available.
Fairfield, NJ-based Datatec Systems specializes in the rapid,
large-scale market absorption of networking technologies.
Datatec's deployment services utilize a software-enabled
implementation model to configure, integrate and roll out new
technology solutions using a "best practices" structured
process. Its customers include Fortune 1000 companies and world-
class technology providers. Datatec stock is listed on the
Nasdaq Stock Market (DATCE). For more information, visit
http://www.datatec.com/
DELTA AIR LINES: Third Quarter Net Loss Slides-Down to $326 Mil.
----------------------------------------------------------------
Delta Air Lines (NYSE: DAL) reported a net loss of $326 million
for the September 2002 quarter versus a net loss of $259 million
in the September 2001 quarter. Excluding unusual items, the
September 2002 quarter net loss was $212 million versus a net
loss of $295 million in the September 2001 quarter.
"Clearly, [Tues]day's results are disappointing. Our industry
is experiencing unprecedented financial challenges," said Leo F.
Mullin, chairman and chief executive officer. "As we have done
for the past year, Delta will maintain tight control of all
facets of our business and make the difficult but necessary
decisions to ensure that our airline makes it successfully
through these challenging times."
Financial and Operational Performance
Year-over-year comparisons of both financial and operational
performance are significantly impacted by the 9/11 terrorist
attacks, as well as the return to a normal schedule following
the strike by Comair pilots in 2001. Third quarter operating
revenues increased 0.6 percent, and passenger unit revenues
increased 1.5 percent, compared to the September 2001 quarter.
Excluding unusual items, operating expenses decreased 3.7
percent, unit costs decreased 1.3 percent and unit costs on a
fuel price neutralized basis(1) decreased 1.6 percent.
Operating expenses, including unusual items, for the September
2002 quarter increased 4.3 percent. The load factor for the
quarter was 74.3 percent on a 2.4 percent reduction in capacity,
compared to 71.3 percent for the same period a year ago. For
the September 2002 quarter, Delta's completion factor was 99.3
percent versus 93.0 percent during the same period last year.
"We will continue to manage costs and liquidity while
maintaining our financial flexibility," said M. Michele Burns,
executive vice president and chief financial officer. "We are
working to stay ahead of the business environment rather than
allow these challenges to control our decisions."
During the September 2002 quarter, and as outlined below, Delta
has taken and will continue to take significant actions to help
control costs. These include:
* Grounding all MD-11 aircraft and deferring all
deliveries of mainline aircraft to the fleet in 2003 and 2004.
These actions will reduce domestic capacity, operating costs
through fleet simplification, and $1.3 billion in capital
expenditures over the two-year period.
* Continued review of non-performing markets including the
cancellation of flights to Rio de Janeiro and Buenos Aires.
* Implementation of new customer service technology in
airports and through delta.com that provides an increase in
productivity.
In additional savings, Delta's fuel hedging program reduced
costs by $32 million, pretax, for the quarter. Delta hedged 50
percent of its jet fuel requirements in the September 2002
quarter at an average hedge price of $0.66 per gallon. Delta's
total fuel price for the period was $0.71 per gallon. For the
December 2002 quarter, Delta has hedged 50 percent of its
expected jet fuel requirements at an average price of $0.67 per
gallon. For 2003, Delta has hedged 26 percent of its expected
jet fuel requirements at an average price of $0.72 per gallon.
Delta continued to adjust capacity during the third quarter.
Using the year 2000 for comparison, system capacity for the
September quarter was down 8.3 percent and mainline capacity was
down 10.6 percent. Delta's fourth quarter system capacity is
expected to be down 9.0-10.0 percent with mainline capacity down
12.0 percent from the December 2000 quarter.
Delta continued to preserve its financial flexibility, as
discussed in its Form 8-K filed on September 27, 2002. For the
September 2002 quarter, Delta had breakeven cash flow from
operations. At September 30, 2002, Delta had cash and cash
equivalents totaling $1.7 billion. Delta also had liquidity
totaling $920 million available under existing credit
agreements, as well as unencumbered aircraft with an estimated
value of approximately $5.0 billion of which about $2.0 billion
is Section 1110 eligible. These aircraft are available for use
in potential financing transactions.
Delta expects to meet its obligations as they become due through
available cash and cash equivalents, investments, internally
generated funds, borrowings under existing credit agreements and
new financing transactions.
Unusual Items
September 2002 quarter
In the September 2002 quarter, Delta recorded $114 million of
unusual costs, net of taxes, consisting primarily of the
following. Additional details can be found in Note 2 to the
attached consolidated statement of operations.
Gains
* A $22 million gain, net of tax, related to the final
compensation received under the Stabilization Act. Delta's
total compensation received under the Act is $414 million, net
of tax.
Charges
* A $139 million charge, net of tax, for the impairment of
MD-11 and B-727 aircraft and spare parts. This amount results
from the reduction in market value of these assets.
September 2001 quarter
Delta recorded $36 million of unusual gains, net of taxes, in
the September 2001 quarter, consisting primarily of the
following. Additional details can be found in Note 2 to the
attached consolidated statement of operations.
Gains
* A $104 million gain, net of tax, which reflected a
portion of the compensation that Delta received under the
Stabilization Act.
Charges
* A $42 million charge, net of tax, related to the
announcement of staffing reductions.
* A $33 million non-cash charge, net of tax, for fair
market value adjustments of certain equity rights in other
companies and fuel derivative instruments to comply with
Statement of Financial Accounting Standard (SFAS) 133.
Fleet Plan
In its continuing drive to reduce costs and capacity, Delta has
initiated steps to bring seat capacity in line with demand while
simplifying the fleet.
* Beginning early in 2003, Delta will begin to remove its
15 MD-11 aircraft from operations. Twelve of the MD-11's will
be removed by summer of 2003. These MD-11 aircraft will be
replaced on international routes by B767-300ER aircraft which
are currently used in the domestic system. The domestic flying
by the B767 aircraft will be flown by smaller mainline aircraft,
which will reduce Delta's domestic capacity by 2.0% when the
changes are fully implemented. The remaining three MD-11
aircraft will be removed in early 2004. These aircraft will be
replaced by existing B777 aircraft.
* In addition, Delta has deferred all its deliveries of
mainline aircraft in 2003 and 2004:
Delta Revised Mainline Fleet Delivery Schedule
Time Period Planned# Revised# Aircraft Types
2003 5 0 B737-800 (5 deferred)
2004 24 0 B737-800 (23 deferred)
B777 (one deferred)
Total: 29 0
As the chart shows, Delta will:
* Defer delivery of the five Boeing aircraft scheduled for
2003. No other mainline aircraft deliveries will occur in 2003.
* Defer delivery of 24 Boeing aircraft scheduled for 2004.
No other mainline aircraft deliveries will occur in 2004.
* These revisions will reduce the number of delivered
mainline aircraft in 2003 and 2004 from 29 to zero.
"Delta has reached agreement with Boeing to reschedule delivery
of these deferred aircraft," Burns said. "We appreciate the
partnership with Boeing in making these difficult but necessary
decisions."
These fleet changes will result in a $1.3 billion capital
expenditure reduction over the two-year period. This
arrangement adds greater flexibility in making future decisions
about fleet and capacity.
Network Highlights
Delta entered into a proposed marketing agreement with
Continental Airlines and Northwest Airlines during the third
quarter, which is subject to DOT review and approval from
Northwest and Delta pilots. The agreement includes:
codesharing, frequent flyer and airport lounge reciprocity,
convenient schedule connections and coordination of airport
facilities. This alliance is expected to improve Delta's
revenue by approximately $150-200 million per year when fully
implemented, net of the moderating impact of the US
Airways/United alliance.
"At its foundation, this is an initiative oriented to the
customer," said Mullin. "When fully implemented, this effort
will allow our customers to travel more conveniently to more
destinations around the world. From ticketing to frequent flyer
programs to baggage handling, their travel experience will
improve." The proposed marketing agreement also provides for
discussions between the three carriers and their European
counterparts regarding the inclusion of Continental, Northwest
and KLM in SkyTeam.
Delta has made the strategic business decision to cancel its
daily non-stop service from Atlanta to Buenos Aires and Rio de
Janeiro as of December 1. Delta remains committed to Latin
America, but must focus its resources on those markets where it
can be most competitive.
Delta Connection will expand service at Washington-Reagan
National Airport beginning November 1 with 20 daily nonstop
flights using regional jets and serving eight new cities, in
addition to Atlanta, Cincinnati and New York- Kennedy. The new
cities include Charleston, South Carolina; Columbus, Ohio;
Huntsville, Alabama; and the Florida cities of Jacksonville,
Orlando, Tampa, Fort Lauderdale and West Palm Beach.
Customer Service
Delta continues to leverage its technology advantage to attract
and retain customers, as well as to eliminate the hassle factor
at the airports. Delta continues to enhance efficiency and speed
through the roll out of its self- service kiosks, which are now
available at 79 airports. Delta anticipates that by the end of
the year 33 percent of its passengers will be self-service.
Delta Air Lines, the world's second largest carrier in terms of
passengers carried and the U.S. airline with the most
transatlantic destinations, offers 5,781 flights each day to 428
destinations in 77 countries on Delta, Delta Express, Delta
Shuttle, Delta Connection and Delta's worldwide partners. Delta
is a founding member of SkyTeam, a global airline alliance that
provides customers with extensive worldwide destinations,
flights and services. For more information, please go to
http://www.delta.com
DebtTraders reports that Delta Air Lines' 8.3% bonds due 2029
(DAL29USR1) are trading at 45 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=DAL29USR1for
real-time bond pricing.
DESA HOLDINGS: Committee Taps Ashby & Geddes as Delaware Counsel
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of DESA Holdings
Corporation, and its debtor-affiliates sought and obtained a nod
of approval from the U.S. Bankruptcy Court for the District of
Delaware to employ Ashby & Geddes, P.A., effective as of June
20, 2002, as its Delaware counsel.
The professional services the Committee anticipates Ashby &
Geddes will render include:
a. providing legal advice as Delaware counsel regarding the
rules and practices of this Court applicable to the
Committee's powers and duties as an official committee
appointed under section 1102 of the Bankruptcy Code;
b. providing legal advice as Delaware counsel regarding the
rules and practices of this Court applicable to any
disclosure statement and plan filed in these cases and with
respect to the process for approving or disapproving
disclosure statements and confirming or denying
confirmation of a plan;
c. providing legal advice as Delaware counsel regarding the
Debtors' motions to establish bidding procedures and to
sell assets, and to obtain post-petition financing;
d. preparing and reviewing as Delaware counsel applications,
motions, complaints, answers, orders, agreements and other
legal papers filed on or behalf of the Committee for
compliance with the rules and practices of this Court;
e. appearing in Court as Delaware counsel to present necessary
motions, applications and pleadings and otherwise
protecting the interests of the Committee and unsecured
creditors of the Debtors; and
The Committee is also seeking to retain the law firm of Stroock
& Stroock & Lavan LLP as lead counsel. Ashby & Geddes and
Stroock will work together to ensure that there will be no
unnecessary duplication of effort.
The hourly rates applicable to the attorneys and paralegals
proposed to represent the Committee are:
William P. Bowden Partner $350 per hour
Gregory A. Taylor Associate $185 per hour
Cathie J. Boyer Paralegal $120 per hour
DESA, a leading manufacturer, distributor and marketer of vent-
free heating appliances, outdoor heaters, motion sensor
lighting, wireless doorbells, lawn and garden electrical
products and consumer fastening systems in the United States,
filed for chapter 11 protection on June 8, 2002. Laura Davis
Jones, Esq., at Pachulski, Stang, Ziehl Young & Jones represents
the Debtors in their restructuring efforts.
EBT INT'L: Performance Capital Discloses 16.14% Equity Stake
------------------------------------------------------------
Performance Capital Group, LLC beneficially owns 2,370,137
shares of the common stock of eBT International, Inc.,
representing 16.14% of the outstanding common stock of the
Company. Performance has the sole power to vote and dispose of
the stock.
Prior to May 23, 2001, eBT developed and marketed enterprise-
wide Web content management solutions and services. The
Company's shareholders approved a plan of liquidation and
dissolution on November 8, 2001, and a certificate of
dissolution was filed with the state of Delaware on November 8,
2001. The initial liquidation distribution in the amount of
$44,055,000 (or $3.00 per share) was returned to shareholders on
December 13, 2001.
ENRON CORP: Intends to Sell Limbach Business for $80.7 Million
--------------------------------------------------------------
Limbach Facility Services, Inc., a non-debtor Enron affiliate,
provides comprehensive mechanical and electrical construction
services in major metropolitan areas across the United States.
Enron Facility Services, Inc. -- an indirect subsidiary of Enron
Corp., through Enron Energy Services and other debtors and non-
debtor entities -- is its parent company.
When Enron acquired Limbach in 1998, it intended to utilized
Limbach and its subsidiaries as a key delivery arm for the
construction, services and facility management portion of EES'
outsourcing product. However, Limbach and its related companies
were better suited for large-scale construction and services
projects than the servicing needed for EES' contracts.
In 2000, EES made a strategic decision to distance itself from
construction and move towards the service side of the business.
In order to do this, EES created a new company, ServiceCo, using
the service businesses related to Limbach. Concurrently, EES
began to seek buyers for the remaining construction business --
the Limbach Group -- which include:
-- Limbach Facilities Services Inc,
-- EFS Construction and Services Company,
-- EFG Holdings Inc.,
-- Williard Inc.,
-- Williard Inc. Investment Company,
-- Williard Plumbing Company LP,
-- Limbach Company Holding Company,
-- Limbach Company,
-- Limbach Company Investment Company,
-- Marlin Electric Inc.,
-- PBM Mechanical Inc.,
-- MEP Services Inc.,
-- Harper Mechanical Corporation,
-- Jovinole Associates,
-- Mechanical Professional Services Inc., and
-- Harper Mechanical Corporation Investment Company.
In late 2001, EES contacted 35 potential acquirers in the
construction and utility industries and other large service
providers, of which 15 executed confidentiality agreements and
received data packages. Four parties submitted bids and were
included in the second state of auction process, of which three
companies submitted second round bids. The highest and best bid
was submitted by a management buyout group financed by FdG
Associates.
On August 29, 2002, Limbach Facility Services LLC, a Delaware
limited liability company formed by FdG to facilitate the Sale
Transaction, entered into a Purchase Agreement with Limbach
Group setting the terms and conditions of Limbach Group's sale
of their assets and liabilities.
Accordingly, the Debtors ask the Court to authorize and approve:
(a) any necessary and appropriate consent by Enron, by and
through its subsidiaries and affiliates, to the sale of
the Limbach Business to the Buyer pursuant to the terms
and conditions of the Purchase Agreement; and
(b) the consummation of the transactions contemplated.
The salient terms of the Purchase Agreement are:
A. Consideration: The Buyer will pay to Seller $80,725,000,
less adjustments for accounts receivables and environmental
remediation, capped at $3,450,000;
B. Acquired Assets: At the Closing, the Seller will sell,
assign, transfer, deliver and convey to Buyer, and Buyer
will purchase and accept from Seller, for the Purchase
Price, all of the assets, properties and rights:
-- owned by any Seller Party; and
-- used or usable by any Seller Party in the Operation of the
Business of every type and description, real, personal,
and mixed, and tangible and intangible, wherever located
and whether or not reflected on the books and records of a
Seller Party, including any and all Real Property,
Contract Rights, Cash, Leases, Accounts Receivable,
Equipment and Furniture, Inventory, Intellectual Property,
Claims, Seller Permits, the Seller Books and Records, the
Business Insurance Policies, and the Seller Marks as they
exist on the Closing Date, other than the Excluded Assets;
C. Assumed Liabilities: At the Closing, Buyer will assume and
agree to pay, perform, fulfill, and discharge, as or when due
from and after the Closing,
(i) all Liabilities related to or arising out of the
Business and recorded on the Financial Statements;
(ii) all Liabilities incurred in the Ordinary Course;
(iii) all Liabilities in respect of all Contracts, Contract
Obligations, Leases, Seller Permits, Guarantees, and
Accounts Payable of each Seller Party;
(iv) all Liabilities assumed by the Buyer under the
Employee Matters Agreements, the Insurance Matters
Agreement, and the other documents and instruments
executed and delivered by Buyer at Closing; and
(v) all Liabilities arising out of or in respect of the
matters disclosed in Schedule 4.11 and Schedule 4.20
and the contracts described in Schedule 4.13, but
excluding, in each case, all Excluded Liabilities.
Any delegation by Buyer of any of its obligations under the
Purchase Agreement to any Affiliated designee will not
release Buyer from any of its obligations under the Purchase
Agreement, and any Affiliated designee will agree in writing
to be bound by and to comply with the obligations thereunder;
D. Deliveries by Seller: At the Closing, Seller will, among
other things, deliver to Buyer the General Conveyances,
Assumption Agreements, Employee Matters Agreement, Transition
Agreement, Insurance Matters Agreement, Seller Books and
Records, the AR Escrow Agreement and the EV Escrow Agreement;
E. Deliveries by Buyer: At the Closing, Buyer will, among other
things, pay the Closing Payment to Seller, pay the AR Escrow
Amount and the EV Escrow Amount to the Escrow Agent, and
deliver executed copies of the Assumption Agreement, Employee
Matters Agreement, Transition Agreement, Insurance Matters
Agreement and escrow agreements, and other customary
documents;
F. Disclaimer of Warranties: It is the explicit intent of each
Party that Seller is not making any representations or
warranties whatsoever, express or implied, beyond those
expressly given in Article 4 of the Purchase Agreement;
G. Closing Conditions: Closing subject to:
(i) representations and warranties are true as of the
Closing Date;
(ii) covenants and agreements having been performed;
(iii) the Bankruptcy Court Order will have been obtained;
(iv) Seller will have obtained the Management SERP
Releases; and
(v) other customary conditions;
H. Termination: The Purchase Agreement may be terminated by and
The transactions contemplated therein abandoned upon:
(i) Mutual Written Consent of Seller and Buyer;
(ii) by either party if HSR Act approval has not been
obtained by October 31, 2002;
(iii) by either party if the Closing will not have occurred
by December 31, 2002;
(iv) by Buyer, if on or before the Financing Commitment
Date Buyer gives Notice to Seller that Buyer has been
unable to obtain Buyer's Financing Commitments;
(v) by Seller if Buyer has not delivered notice that Buyer
has obtained Buyer's Financing Commitments;
(vi) by either party if the other party has breached any
representation, warranty or covenant; and
(vii) by Seller if, on or before December 31, 2002, Seller
will have accepted or selected, and the parties in the
Bankruptcy Case will have approved, the bid or bids of
any other party to purchase the Business or the
Acquired Assets and Assumed liabilities; and
I. Effect of Termination: In certain circumstances, if the
Purchase Agreement is terminated, Seller may have to pay to
Buyer an amount equal to either:
(i) Buyer's Expenses,
(ii) the Initial Commitment Fees, or
(iii) the Agreement Termination Amount.
Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York,
notes that the sale of the Limbach Business does not directly
involve property of the estate. Nonetheless, the Sale
Transaction affects the Debtors' estate because the Limbach
Group is comprised of indirect wholly owned subsidiaries of the
Debtors. Thus, it is in the best interest of the Debtors',
their creditors and all parties-in-interest to maximize the
value of the Limbach Business.
Ms. Gray reports that Enron's Board of Directors has reviewed
and approved the Sale Transaction.
Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code,
Ms. Gray asserts that the sale is warranted because:
(a) the divesture of the Limbach Business is appropriate and
consistent with its desire to return to its core
operations;
(b) the Limbach Business is not integral to or contemplated
to be part of Enron's reorganization;
(c) the Buyer's offer represents the highest and best offer
for the Limbach Business, given the extensive marketing
and auction it went through; and
(d) the Purchase Agreement was negotiated at arm's length
and represents fair market value for the Limbach
Business.
In accordance with Section 363(f) of the Bankruptcy Code, the
Debtors ask the Court to declare the Limbach Business Sale free
and clear of liens, claims and encumbrances. Ms. Gray informs
Judge Gonzalez that with the exception of St. Paul Surety, no
other lien encumbers the Limbach Business. However, the Closing
is conditioned on the Seller obtaining a release of the lien
from St. Paul. In any case, Ms. Gray proposes that for any
liens asserted to the Limbach Business, those liens be
transferred and attached to the net proceeds of the Sale
Transaction, with the same validity and priority it has on the
Limbach Business.
Moreover, as a good faith purchaser, the Debtors ask the Court
to afford the Buyer the protection provided by Section 363(m) of
the Bankruptcy Code.
The Debtors further ask the Court to declare the Sale
Transaction as a private sale pursuant to Rule 6004(f)(1) of the
Federal Rules of Bankruptcy Procedure as the Debtors had
conducted extensive marketing and auction to obtain the highest
and best offer for the assets. (Enron Bankruptcy News, Issue No.
45; Bankruptcy Creditors' Service, Inc., 609/392-0900)
Enron Corp.'s 9.125% bonds due 2003 (ENRN03USR1), DebtTraders
reports, 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: Honoring Prepetition Employee Obligations
------------------------------------------------------
Approximately 1,010 employees work for EOTT Energy Partners,
L.P., and its debtor-affiliates in the United States and 15
workers are employed in Canada. The Debtors seek the Court's
authority to honor their payroll and other employment-related
obligations in the ordinary course of business without regard to
the Chapter 11 filings.
Wage and Salary Obligations
Dana R. Gibbs, President and Chief Executive Officer of EOTT
Energy Corp. (as general partner for EOTT Energy Partners, L.
P.) estimates that the Debtors owe:
$4,822,188 to United States Employees on account of
prepetition payroll and expense checks;
78,523 to Canadian Employees;
979,287 for accrued unused vacation for United States
Employees; and
9,700 to Canadian Employees for accrued unused
vacation for Canada.
----------
$5,889,698
Employee Benefit Programs
The Debtors' request includes honoring all obligations under all
benefit plans. In the ordinary course of their businesses, the
Debtors utilize, maintain, or participate in a variety of
benefits programs designed to compensate and incentivize
Employees. The Benefits Programs are an integral part of the
Debtors' compensation package for the Employees. The Debtors
seek the Court's authority to honor all of the Benefits
Programs, including all prepetition Employee claims that may
arise under the Benefits Programs.
Robert D. Albergotti, Esq., at Haynes and Boone, LLP, argues
that Employees depend on the monetary and non-monetary benefits
provided under the various Benefits Programs for their present
and future personal and familial support as much as the
Employees depend on their regular wages, salaries, and expense
reimbursements. Since the Benefits Programs are so important to
the Employees, maintenance and honoring of the Benefits Programs
is critical to maintaining a loyal, dedicated, and confident
employee body and is essential to maintaining good employee
morale during this initial, critical stage of the Debtors'
bankruptcy proceedings.
* * *
At the First Day Hearing, Judge Schmidt approved the Debtors'
request in all respects. (EOTT Energy Bankruptcy News, Issue No.
2; Bankruptcy Creditors' Service, Inc., 609/392-0900)
EXIDE TECH.: US Trustee Amends Unsecured Creditors' Committee
-------------------------------------------------------------
Donald F. Walton, Acting United States Trustee, amends the
composition the Official Committee of Unsecured Creditors, in
the chapter 11 cases involving Exide Technologies and its
debtor-affiliates, by replacing Daramic Inc., with Tulip
Corporation effective September 24, 2002. The members of the
Official Committee of Unsecured Creditors are:
A. Pension Benefit Guaranty Corporation
Attn: Rodney Carter
1200 K Street, N.W., Washington, DC 20005
Phone: (202) 326-4070 Fax: (202) 842-2643
B. HSBC Bank USA, As Trustee
Attn: Robert A. Conrad, V.P., Issuer Services
452 Fifth Avenue, New York, NY 10018
Phone: (212) 525-1314 Fax: (212) 525-1366
C. The Bank of New York, As Trustee
Attn: Corey Babarovich
5 Penn Plaza, 13th Floor, New York, NY 10001
Phone: (212) 896-7154 Fax: (212) 328-7302
D. Offitbank
Attn: J. William Charlton, Jr.
520 Madison Avenue, 27th Floor, New York, NY 10022
Phone: (212) 350-3776 Fax: (212) 593-2669
E. Turnberry Capital Management, L.P.
Attn: Jeffrey B. Dobbs
410 Greenwich Avenue, Greenwich, CT 06830
Phone: (203) 861-2700 Fax: (203) 861-2716
F. Tulip Corporation
Attn: Fred Teshinsky
14955 E. Salt Lake Avenue, City of Industry, CA 91746
Phone: (626) 968-0044 Fax: (626) 968-1104
G. Transervice Logistics Inc.
Attn: Dennis M. Schneider
5 Dakota Drive, Suite 209, Lake Success, NY 11042
Phone: (516) 488-3400 Fax: (516) 488-3574
(Exide Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
Exide Technologies' 10% bonds due 2005 (EXDT05FRR1) are trading
at 15 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDT05FRR1
for real-time bond pricing.
FEDERAL-MOGUL: Wants to Keep Plan Filing Exclusivity Until Mar 3
----------------------------------------------------------------
Federal-Mogul Corporation and its debtor-affiliates need four
more months to put into paper their reorganization strategy.
Accordingly, the Debtors ask the Court to extend:
(a) their exclusive plan-filing deadline through and including
March 3, 2003; and
(b) their exclusive period to solicit votes for that plan
through and including May 1, 2003.
James O'Neill, Esq., at Pachulski Stang Ziehl Young & Jones
P.C., explains that a further extension is needed considering
the size and complexity of these Chapter 11 cases, the Debtors'
significant progress in negotiating a consensual plan of
reorganization with the principal constituencies in these cases,
and the anticipated course of events in these cases. Mr.
O'Neill notes that these Chapter 11 cases require the Debtors to
coordinate, among other things:
-- the parallel proceedings in the United Kingdom;
-- the affairs of over 450 Debtor and non-Debtor affiliates; and
-- nearly 400,000 unliquidated asbestos-related personal injury
claims.
Mr. O'Neill outlines the Debtors' progress during the three-
month period since the second extension of the Exclusive
Periods:
A. Development of Strategic Business Plan
In early October 2002, the Debtors finalized a comprehensive
five-year strategic business plan that sets forth detailed
proposals for reducing the Debtors' manufacturing and
operations costs over the five-year period of the plan
through the restructuring and consolidation of the Debtors'
operations, as well as certain other cost reduction efforts.
The impact of the plan's proposals is essential to the
determination of a number of the valuations that are
necessary in the plan negotiation process. The final form of
the Debtors' strategic plan was presented to all major
constituencies in these cases that are subject to
confidentiality agreements or comparable confidentiality
restrictions:
(a) the Official Committee of Unsecured Creditors;
(b) the Official Committee of Asbestos Claimants;
(c) the Official Committee of Equity Security Holders;
(d) the Legal Representative of future asbestos claimants;
(e) the Debtors' prepetition lenders; and
(f) the Debtors' postpetition lenders;
B. Claims Processing
The Debtors have taken significant steps toward the goal of
ultimately determining the amount of non-asbestos personal
injury-related claims against both the U.S. Debtors and the
English Debtors. In the U.S. proceedings, the Debtors have
established March 3, 2003 as the bar date for filing proofs
of claim on account of all claims against the U.S. Debtors
except asbestos-related personal injury claims. The Debtors
also set bar date notice procedures.
In Europe, the English Debtors, together with the counsel to
the Administrators, have compiled considerable materials
relating to the claims. This allows them to identify with
reasonable certainty the scope of the commercial claims
pending against the English Debtors as of the Petition Date.
These materials are being distributed to the major
constituencies for their review and analysis;
C. CCR Litigation
The Debtors have participated vigorously in the litigation
against the Center for Claims Resolution. The Litigation
seeks to prevent the drawing of $225,000,000 in surety bonds
entered into by the Debtors in favor of CCR, which are, in
turn, secured by a substantial portion of the Debtors'
assets. At the direction of Judge Wolin, the Debtors and CCR
have completed discovery and have each fully briefed and
filed a comprehensive motion for summary judgment in the
adversary proceeding. The matter is presently ready for
trial; and
D. Discovery Requests
During the Second Extension Period, the Debtors have
continued to respond to significant numbers of discovery
requests made by various parties-in-interest. This includes
substantial requests for documents relating to certain causes
of action being investigated by the Creditors Committee. The
Debtors also have provided extensive information to the
Equity Committee.
Mr. O'Neill reports that during the Second Extension Period,
Judge Wolin convened two informal meetings with the Debtors and
the major constituencies for an update of the progress made in
developing a reorganization plan. A third meeting is scheduled
on October 17, 2002.
Presently, the Debtors are holding negotiations with the major
constituencies in these cases regarding an appropriate plan of
reorganization and parallel schemes of arrangement for the
English Debtors. As part of these plan negotiations, the
Debtors have prepared and circulated two progressive drafts of a
preliminary reorganization plan to the major constituencies for
comment. The Debtors also distributed a draft of the parallel
scheme of arrangement for the English Debtors, to be approved as
part of the administration proceedings. The Debtors anticipate
circulating a third draft of the plan soon.
Mr. O'Neill tells the Court that maintaining the Exclusive
Periods is critical to prevent loss of customer confidence in
the continuation of the Debtors' business and uncertainty among
suppliers to and employees of the Debtors' foreign subsidiaries.
Mr. O'Neill explains that the vendors, customers and
subsidiaries to and of the Debtors' non-U.S. affiliates would
perceive the termination of the Exclusive Periods as evidence of
significant problems and potential disruptions in the Debtors'
business operations. These vendors and suppliers would likely
develop contingency plans for obtaining goods from or selling
goods to alternative parties, thus, seriously affecting the
Debtors' cost of operations as well as the sales in Europe and
in the rest of the world.
The Debtors have also undertaken significant and vigorous
efforts in Europe to maintain the strength and stability of
European affiliates' relationships with suppliers, customers,
joint venture partners, and employees in that region. These
efforts have been met with considerable success.
Mr. O'Neill continues that the termination of the Exclusive
Periods would also disrupt the parallel schemes of arrangement
between the U.S. and U.K. proceedings and the concurrent plenary
proceedings in England and Scotland in these cases, which
involve 134 of the Debtors. The U.S. and U.K. proceedings,
which have so far operated smoothly, could end up in friction.
The Administrators would struggle to address competing plans of
reorganization and work with competing parties-in-interest while
honoring their duties in connection with the English Debtors.
The friction could ultimately result in a bifurcation of the
U.S. and U.K. proceedings, resulting in administrative
uncertainty, increased costs, and a reduction in value of the
reorganized Debtors' businesses.
Clearly, the Court should extend the Exclusive Periods.
(Federal-Mogul Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Federal-Mogul Corporation's 8.80% bonds due 2007 (FMO07USR1) are
trading at 17 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=FMO07USR1for
real-time bond pricing.
FOUNTAIN PHARMACEUTICALS: Runs Out of Resources to Continue Ops.
----------------------------------------------------------------
An Information Statement is being mailed in October 2002, to the
holders of record at the close of business on October 1, 2002,
of the Class A and Class B common stock, $.001 par value per
share (unless otherwise specified) of Fountain Pharmaceuticals,
Inc., in connection with the Company's acquisition of SiriCOMM,
Inc. and the appointment of certain persons to the Board of
Directors of the Company other than at a meeting of the
shareholders of the Company.
The Information Statement is also being mailed to the Company's
shareholders in connection with a proposed action by written
consent to authorize and approve:
1. An amendment and restatement of the Company's
Certificate of Incorporation which (a) changes the name of the
Company to "SiriCOMM, Inc."; (b) combines the outstanding shares
of common stock into a single class of common stock; (c) reverse
splits the outstanding shares of the Company's common stock one-
for-sixty; (d) decreases the par value of the Company's common
stock resulting from the Reverse Split to $.001; (e) increases
the number of shares of common stock the Company is authorized
to issue to 50,000,000; and (f) increases the number of shares
of Preferred Stock, $.001 par value, the Company is authorized
to issue from 2,000,000 to 5,000,000.
2. The adoption of the Company's 2002 Equity Incentive
Plan.
The sole member of the Board of Directors, Mr. Brendon K.
Rennert, beneficially owns 3,500,000 shares of Class A common
stock and 100,000 shares of Class B common stock. These
shareholdings represent approximately 59.6% and 95.7%,
respectively, of the total outstanding votes of all issued and
outstanding common stock of the Company and was sufficient to
take the proposed action on the Record Date. Dissenting
shareholders do not have any statutory appraisal rights as a
result of the action taken. Mr. Rennert, on behalf of Park
Street Acquisition Corp., executed a written consent on July 15,
2002 in favor of the proposed action on behalf of the shares of
the Company which he controls. The Company does not intend to
solicit any proxies or consents from any other shareholders in
connection with these actions.
Pursuant to the provisions of Delaware law and the Company's
Certificate of Incorporation, the amendments require the
approval of a majority of such shares. Accordingly, Mr.
Rennert's vote is sufficient to approve these matters, which he
believes is in the best interests of the Company and its
shareholders. The corporate action will be effective 20 days
after the mailing of the Information Statement.
Fountain Pharmaceuticals, which had relied largely on loans from
chairman James Schuchert, Jr., ran out of time and money. Before
suspending operations and transferring its assets instead of
facing foreclosure, it primarily developed "cosmeceuticals"
based on its proprietary drug-delivery technology -- man-made
microscopic spheres carry pharmaceuticals that are released when
applied to the skin. The technology was used in sunscreens,
lotions, and moisturizers under the Celazome and LyphaZone
brands.
Since Fountain Pharmaceuticals no longer has assets except the
Company's public shell, it no longer has the ability to generate
revenue; therefore, the Company is not in the position to
continue as a going concern.
The Company's Board of Directors is currently pursuing
candidates with potential business interest with which to
merge. The Company has reached an agreement to acquire all of
the issued and outstanding shares of SiriCOMM, Inc.
FRONTLINE CAPITAL: Looks to Ernst & Young for Audit & Tax Work
--------------------------------------------------------------
FrontLine Capital Group asks for authority from the U.S.
Bankruptcy Court for the Southern District of New York to retain
and employ Ernst & Young LLP, to provide audit and related tax
advisory services, nunc pro tunc to August 8, 2002.
The Debtor anticipates that Ernst & Young will:
a) audit and report on the consolidated financial statements
of the Debtor for the year ending December 31, 2002;
b) review the Debtor's unaudited quarterly information in
accordance with applicable professional standards and
consisting primarily of inquiries and analytical
procedures;
c) advise the Debtor regarding specific accounting matters it
may encounter; and
d) advise the Debtor regarding specific minor tax problems it
may encounter as well as on specific minor tax planning
issues.
The Debtors assure the Court that E&Y's services are necessary
in order to enable it to execute its duties as debtor and debtor
in possession. The services to be rendered by Ernst & Young are
not intended to be duplicative with the services performed and
to be performed by any other party retained by the Debtor.
Ernst & Young, in concert with the other professionals retained
by the Debtor, will undertake every reasonable effort to avoid
any duplication of their respective services.
Ernst & Young will charge the Debtor its current hourly rates:
Partners and Principals $475 - $700 per hour
Senior Managers $390 - $545 per hour
Managers $325 - $440 per hour
Seniors $200 - $320 per hour
Staff $165 - $225 per hour
FrontLine Capital Group, a holding company that manages its
interests in a group of companies that provide a range of office
related services, filed for chapter 11 protection on June 12,
2002. John Edward Westerman, Esq., at Westerman Ball Ederer &
Miller, LLP represents the Debtor in its restructuring efforts.
As of March 31, 2002, the Company listed $264,374,000 in assets
and $781,374,000 in debts.
GLOBAL CROSSING: Pascazi's Move to Appoint Ch. 11 Trustee Nixed
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
denied Michael S. Pascazi's request to appoint a trustee, or in
the alternative, an examiner to conduct an investigation of
Global Crossing Ltd., and its debtor-affiliates. Mr. Pascazi
wants a detailed investigation of every allegations of fraud,
dishonesty, incompetence, misconduct, mismanagement, or
irregularity in the management of the affairs of the debtors of
or by current or former management of the debtors.
Mr. Pascazi, also President of Fiber Optek Interconnect Corp.,
is a disgruntled shareholder. Judge Gerber patiently listens to
Mr. Pascazi and summarily rejects his periodic requests and
objections.
A hearing on Global Crossing's latest motion for an extension of
its exclusive periods is scheduled for October 21, 2002, at 9:45
a.m. in Manhattan. Mr. Pascazi is urging "all stockholders,
creditors and others who want to see competing Plans given a
chance [to] attend the hearing and voice their sentiments."
Mr. Pascazi hosts a Web site touting a competing plan for Global
Crossing at http://www.gblxplan.com
GLOBAL CROSSING: Asian Affiliate Will Use 30-Day Grace Period
-------------------------------------------------------------
Asia Global Crossing reported the following preliminary,
unaudited information concerning its business performance for
the quarters ended June 30 and September 30, 2002. The company
also provided certain information relating to its liquidity
position and restructuring process.
Financial Overview
Revenue was $27.8 million for the second quarter and $32.1
million for the third quarter. Recurring services revenue,
which is revenue less amounts related to IRU amortization, was
$21.9 million for the second quarter and $27.2 million for the
third quarter.
Not included in revenues or recurring services revenues are $3.2
million and $2.5 million, for the second and third quarters,
respectively, of revenues due from Global Crossing, the
collectibility of which is uncertain given the bankruptcy of
Global Crossing and several of its affiliates.
During 2001, Asia Global Crossing entered into a number of
transactions in which it provided capacity, services or
facilities to other telecommunications carriers and, at
approximately the same time, purchased or leased capacity,
services or facilities from these same telecommunications
carriers. The company refers such transactions as "reciprocal
transactions."
Following discussions with the United States Securities and
Exchange Commission, Asia Global Crossing has not included any
amounts from reciprocal transactions in the company's reported
revenues and recurring services revenues for the second and
third quarters of 2002 provided herein.
Asia Global Crossing's previously disclosed first quarter 2002
revenue of $44.7 million has been reduced by $9.2 million
related to reciprocal transactions described in the company's
press release dated February 26, 2002.
For the purpose of comparing first quarter revenue with revenues
for the second and third quarters, the first quarter revenue
should be further reduced by $5.8 million related to accounts
receivable from Global Crossing and affiliates. For such
comparative purposes, Asia Global Crossing's first quarter 2002
revenue was $29.7 million and recurring services revenue was
$24.3 million.
A significant number of the company's transactions during 2001
were completed with telecommunications carriers from whom Global
Crossing purchased capacity, services or facilities at
approximately the same time as these carriers purchased
capacity, services or facilities from Asia Global Crossing.
While no such transactions have occurred during 2002, revenue
recognized from prior transactions was approximately $3.0
million for each of the first three quarters of this year.
Asia Global Crossing also has appointed PricewaterhouseCoopers
LLP as its auditors, replacing Arthur Andersen.
Liquidity and Financial Restructuring
Asia Global Crossing had approximately $323.5 million in cash at
the end of the second quarter, excluding $70.1 million held by
its majority-owned subsidiary Pacific Crossing Ltd., and $253.5
million at the end of the third quarter, excluding $11.2 million
held by Pacific Crossing Ltd. Asia Global Crossing currently
has approximately $250.1 million in cash on hand, excluding
approximately $10.7 million held by Pacific Crossing Ltd.
Asia Global Crossing announced today that it will avail itself
of the 30-day grace period for paying the interest due on
October 15th on its $408 million of 13.375% Senior Notes due
2010.
Asia Global Crossing is in discussions with its two principal
subsea cable construction contractors, NEC Corporation and KDDI
Submarine Cable Systems Inc., concerning the company's failure
to pay in a timely manner certain amounts owed to such
contractors under payment deferral agreements negotiated in the
first quarter of the year. Under the terms of these agreements,
each of NEC and KDDI-SCS could demand payment from the company
of all amounts owed thereunder, approximately $347 million. The
outcome of the company's discussions with NEC and KDDI-SCS
cannot be predicted at this time.
As previously announced, Asia Global Crossing continues
discussions looking to a completion of a restructuring of the
company. The outcome of these discussions cannot be predicted
at this time.
Note: The financial information provided above is preliminary
and unaudited and has not been reviewed by
PricewaterhouseCoopers LLP. Actual results may differ, and are
dependent upon completion of an investigation into certain
allegations regarding accounting and reporting which were
discussed in the company's press release dated February 26,
2002. Results of operations will depend materially upon the
final determination of asset impairments and could be affected
by the conclusion of the investigations. Accordingly, no
results of operations beyond revenue for the quarter are
presented.
Asia Global Crossing provides city-to-city connectivity and data
communications solutions to pan-Asian and multinational
enterprises, ISPs and carriers. Asia Global Crossing's largest
shareholders are Global Crossing, Softbank and Microsoft.
Asia Global Crossing's 13.375% bonds due 2010 (AGCX10USN1) are
trading at 20 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AGCX10USN1
for real-time bond pricing.
GMAC COMMERCIAL: Fitch Affirms 6 Low-B and a Junk Ratings
---------------------------------------------------------
Fitch Ratings upgrades the following classes of GMAC Commercial
Mortgage Securities, Inc. pass-through certificates, series
1998-C2: the $126.5 million class B to 'AA+' from 'AA', the
$113.9 million class C to 'A+' from 'A', and the $164.5 million
class D to 'BBB+' from 'BBB'. The $266.0 million class A-1,
$1.37 billion class A-2, and interest only class X are affirmed
at 'AAA' by Fitch. In addition, Fitch affirms the remaining
rated classes as follows: the $38.0 million class E 'BBB-', the
$88.6 million class F 'BB+', the $44.3 million class G 'BB', the
$19.0 million class H 'BB-', the 19.0 million class J 'B+', the
$19.0 million class K 'B', the $25.3 million class L 'B-' and
the $19.0 million class M 'CCC'. Fitch does not rate the $19.0
million class N. The rating upgrades and affirmations follow
Fitch's review of the transaction, which closed in August 1998.
The rating upgrades are primarily attributed to paydown and the
continued strong performance of the pool, including the
performance of the top five loans, which account for 24.8% of
the pool. As of the September 2002 distribution date, the pool's
aggregate certificate balance is $2.33 billion, an 8% reduction
since origination. The weighted average debt service coverage
ratio using servicer normalized financials for year-end 2001 was
1.93 times, which is stable from year-end 2000 (1.94x) and up
from 1.65x at issuance. There are currently four specially
serviced loans, representing 0.45% of the pool, consisting of
three 90-day delinquent loans (0.33%) and one REO asset (0.12%).
Nine loans, representing 2.25% of the pool, reported year-end
2001 DSCRs below 1.0x. The top five loans, have a weighted
average DSCR of 2.74x, and each received an individual Fitch
credit assessment.
The Opers Portfolio (8.15%) consists of 12 retail outlet
centers. The total portfolio occupancy as of year-end 2001 is
94.5%, which is slightly lower than the 97% occupancy at
issuance. The reported sales for 2001 are consistent with
historical performance at the property. The year-end 2001 Fitch
stressed DSCR is 2.23x compared to 2.08x for 2000, and 1.70x at
issuance.
The Arden Portfolio (5.84%) is comprised of 15 office and 7
industrial properties totaling 2.22 million square feet located
in California. Occupancy as of 06/30/02 is approximately 93%,
which is down slightly from the 97% at issuance, and is due
mainly to one 125,000 sq. ft. property in Carlsbad that is 100%
vacant. The year-end 2001 Fitch stressed DSCR is 1.99x compared
to 1.75x for year-end 2000 and 1.33x at issuance.
The Boykin Portfolio (5.38%) is the weakest of the top five
loans and consists of 10 full service Doubletree hotels in
various locations. The total portfolio occupancy as of 6/30/02
is 64.6%, down slightly from 66.2% at 12/31/01 and the 69%
occupancy at issuance. The reported year-end 2001 REVPAR
declined to $56.62 from $60.29 for 2000. June 30, 2002 REVPAR
has declined further to $52.44. The year-end 2001 Fitch stressed
DSCR is 1.49x compared to 1.79x for year-end 2000 and 1.66x at
issuance.
The South Towne Mall (2.75% of pool) is located in Sandy, UT, a
suburb of Salt Lake City and consists of a regional mall and a
big box marketplace. The mall anchors are Dillards, JC Penney,
Meier and Frank and Mervyns. The year-end 2001 Fitch stressed
DSCR is 1.62x, relatively flat compared to 1.66x for 2000, but
up from 1.31x at issuance.
The Grove Property Trust portfolio (2.70% of pool) consists of
17 multifamily developments dispersed throughout CT, MA, and RI.
The reported 2001 occupancy is 99%, up slightly from 94% for
year-end 2000 and 96% at issuance. The year-end 2001 Fitch
stressed DSCR is 1.90x, relatively flat compared to 1.99x at
year-end 2000, but up significantly from 1.42x at issuance.
Fitch will continue to monitor this transaction as surveillance
is ongoing.
INSPIRE INSURANCE: TX Court Will Consider Plan on Oct. 24, 2002
---------------------------------------------------------------
On September 25, 2002, the U.S. Bankruptcy Court for the
Northern District of Texas approved the adequacy of Inspire
Insurance Solutions, Inc., and its debtor-affiliates' Disclosure
Statement -- the document that explains the company's First
Amended Plan of Reorganization.
A hearing to consider confirmation of the Plan will commence on
October 24, 2002 at 1:30 p.m. Central Daylight Time before the
Honorable D. Michael Lynn.
October 21, 2002 at 4:30 p.m. is fixed as the last date for
filing and serving confirmation objections. Objections must be
filed with the court and received before the Objection Deadline.
Copies must also be served on (i) Counsel for the Debtors; (ii)
the Office of the Unites States Trustee; (iii) Counsel for the
Official Committee of Unsecured Creditors; and (iv) Counsel for
CGI Group, Inc.
Andrew E. Jillson, Esq., Linette R. Warman, Esq., and John N.
Schwartz, Esq., at Jenkens & Gilchrist represent the Debtors in
their restructuring efforts.
INTEGRATED HEALTH: Panel Wants to Continue Eureka's Engagement
--------------------------------------------------------------
In accordance with the Eureka order, the Committee, in the
chapter 11 cases involving Integrated Health Services, Inc., and
affiliated debtors, seeks the Court's authority to continue the
retention of Eureka Capital Markets LLC as its financial advisor
on the same terms and conditions previously approved for the
period commencing after November 1, 2002.
Specifically, the Committee and Eureka agree that Eureka's
compensation for services rendered will continue to be a
$100,000 fixed Monthly Advisory Fee, plus reimbursement of out-
of-pocket expenses. Eureka will invoice the Debtors for the
Monthly Advisory Fee and all out-of-pocket expenses it incurred.
Payment is due within five days after the invoice.
Notwithstanding the Monthly Advisory Fee payment structure,
Eureka will prepare and retain time records describing the
professional services rendered in increments of six-minute
intervals. Eureka intends to apply to the Court for allowance
of quarterly interim and final compensation, and reimbursement
of expenses in accordance with applicable provisions of the
Bankruptcy Code, the applicable Federal Rules of Bankruptcy
Procedure and rules and orders of the Court. Eureka has agreed
to promptly return any fees or expenses to the Debtors that are
subsequently disallowed by the Court.
The Debtors have advised Eureka that the Monthly Advisory Fee
and payment procedure is acceptable.
Eureka principal Leslie H. Feldman reaffirms, and the Committee
is satisfied, that Eureka does not have any connection with the
Debtors, their creditors or any other party-in-interest, and
represents no adverse interest to the Committee that would
preclude it from the engagement. (Integrated Health Bankruptcy
News, Issue No. 44; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
KAISER ALUMINUM: Court OKs MCC Realty as Real Estate Broker
-----------------------------------------------------------
Kaiser Aluminum Corporation and its debtor-affiliates obtained
the Court's authority to retain MCC Realty Group Inc., as their
real estate agent and broker in connection with the potential
sale of their interest in certain real estate properties in
California, the largest of which is the Kaiser Center in
Oakland, California. The Kaiser Center is comprised of a 28-
story office building, 3-level mall and a 5-story garage. The
Debtors constructed the Kaiser Center in the 1950s and in the
early 1980s entered into a sale-leaseback with a nondebtor
party. The ownership interests in the Kaiser Center created by
that sale-leaseback transaction remains essentially the same
today.
The Debtors expect MCC Realty to:
A. solicit offers for the Property Interests through
promotional and marketing activities;
B. contact potential purchasers of the Property Interests;
C. assist in the evaluation of offers for the Property
Interests; and
D. assist in the negotiation of the sale of the Property
Interests.
For its services, MCC Realty will earn a 1.5% commission on the
net sales price of the Property Interests received by the
Debtors. No retainer has been paid to MCC Realty for its
services under the parties' Engagement Agreement. Due to the
nature of its services, the Debtors will not compensate MCC
Realty unless and until a transaction involving the Properties
is consummated, pursuant to a Court order. (Kaiser Bankruptcy
News, Issue No. 16; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
KMART CORP: Bags Approval to Hire Miller Buckfire as Advisors
-------------------------------------------------------------
Kmart Corporation and its debtor-affiliates obtained permission
from the U.S. Bankruptcy Court for the Northern District of
Illinois to:
-- assign Dresdner Kleinwort Wasserstein's Engagement Letter
to Miller Buckfire Lewis & Co., LLC pursuant to the
Assignment Agreement dated July 16, 2002;
-- retain Miller Buckfire as financial advisor and
investment banker to the Debtors; and
-- continue the retention of DrKW as investment banker to
the Debtors.
* * *
As previously reported, Dresdner Kleinwort Wasserstein agreed in
principle with the senior executives of its financial
restructuring group, Henry S. Miller, Kenneth A. Buckfire and
Martin F. Lewis, to form an independent firm to provide
strategic and financial advisory services in large-scale
corporate restructuring transactions. The new firm --- Miller
Buckfire Lewis & Co., LLC --- will be owned and controlled by
Messrs. Miller, Buckfire and Lewis and its employees.
The new structure enables Miller Buckfire, as an independent
company, to overcome potential conflicts between the current
restructuring group's provision of its restructuring advisory
services and the financial holdings of Dresdner Bank AG and its
parent, Allianz AG.
In connection with the spin-off, Miller Buckfire and DrKW
entered into a strategic alliance under which DrKW will assist
Miller Buckfire in providing mergers and acquisitions advisory
services as well as private equity and high yield debt placement
services in troubled-company situations. Miller Buckfire also
assumes all of DrKW's existing restructuring engagement,
including all of DrKW's rights and obligations as the Debtors'
financial advisor and investment banker.
Consequently, on July 16, 2002, DrKW entered into an Assignment
Agreement with Miller Buckfire, thereby assigning to Miller
Buckfire DrKW's rights and obligations under its engagement with
the Debtors. The Debtors consented to the Assignment Agreement.
(Kmart Bankruptcy News, Issue No. 35; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
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.
LERNOUT & HAUSPIE: ScanSoft Repurchases 1.3MM Shares for $6.25MM
----------------------------------------------------------------
In a Form 4 filed with the SEC on September 18, 2002, ScanSoft,
Inc., discloses that Lernout & Hauspie Speech Products N.V.
received 7,400,000 shares of common stock of ScanSoft, Inc.
pursuant to an Asset Purchase Agreement, dated as of December 7,
2001, among L&H, L&H Holdings USA, Inc. (a wholly-owned
subsidiary of L&H) and various of their subsidiaries and
ScanSoft. Subsequently, L&H became an indirect beneficial owner
of an additional 121,359 shares of ScanSoft common stock issued
to Holdings pursuant to an asset purchase agreement, dated as of
February 22, 2002, relating to the sale of Holdings' Audiomining
business to ScanSoft. L&H transferred a total of 181,566 shares
to certain of its creditors in settlement of certain disputes.
By order of the United States Bankruptcy Court for the District
of Delaware, the remaining 7,339,793 shares of ScanSoft common
stock were allocated between L&H and Holdings, 4,040,400 and
3,299,393. On September 16, 2002 pursuant to a purchase
agreement among ScanSoft, L&H and Holdings, ScanSoft repurchased
1,305,387 shares of ScanSoft common stock from Holdings at $4.79
per share. (L&H/Dictaphone Bankruptcy News, Issue No. 31;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
LTV CORP: Inks Pact to Sell Tubular Div. to Maverick for $110MM
---------------------------------------------------------------
Maverick Tube Corporation (NYSE:MVK) has entered into a
definitive agreement with the LTV Corporation and its affiliates
to acquire the assets which comprise the business of LTV's Steel
Tubular Products Division pursuant to Section 363 of the U.S.
Bankruptcy Code. The purchase price for the LTV Tubular Division
is $110 million cash, subject to a working capital adjustment.
The transaction is contingent on Maverick completing a
collective bargaining agreement with the United Steel Workers of
America who represent about 300 employees at four of LTV
Tubular's five facilities. The agreement is also contingent upon
completion of further environmental due diligence, clearance
under the Hart-Scott-Rodino Act and approval of the Bankruptcy
Court. Maverick presently anticipates closing the purchase by
year end. LTV's Tubular Division employs approximately 430
people at five locations in Georgia, Tennessee, Ohio and
Michigan.
The LTV Tubular Division principally produces and sells a full
line of electrical conduit products for the U.S. market, where
it has approximately a 35% market share and well established
customer relationships. LTV Tubular also produces line pipe and
standard pipe products for the energy and construction
industries. For the four years ended 2001, LTV Tubular's annual
revenues averaged over $260 million while proforma EBITDA, prior
to LTV corporate allocations, exceeded $30 million per year.
Maverick plans to fund the $110 million purchase price by
drawing down on its revolving credit facility, which is being
expanded in connection with the proposed transaction to provide
aggregate availability of up to $185 million. Maverick's total
debt at closing is estimated to be $120 million, with an
additional $60 million available under the expanded credit
facility.
Gregg Eisenberg, Maverick's President and CEO said, "We are
pleased to reach an agreement with the LTV Corporation for the
purchase of the Tubular Division. This has been a relatively
stable business that produces good margins under most market
conditions. The electrical conduit market has few suppliers and
is not subject to significant import competition. Their line
pipe and standard pipe business complements our existing
activities and expands our market penetration in both products.
We believe we have several opportunities that may allow us to
enhance the cash flow from this business. Overall, the purchase
is consistent with our strategy to grow our business by
expanding our product lines."
Maverick Tube Corporation is a St. Louis, Missouri, based
manufacturer of tubular products used in the energy industry in
drilling, production, well servicing and line pipe applications
as well as industrial tubing products (HSS, and standard pipe)
used in various industrial applications.
MERISTAR HOTELS: Shoos-Away PwC and Brings-In KPMG as Auditors
--------------------------------------------------------------
Interstate Hotels & Resorts, Inc., (formerly known as MeriStar
Hotels & Resorts, Inc.) and Interstate Hotels Corporation
entered into an Agreement and Plan of Merger, dated May 1, 2002
and as amended on June 3, 2002, in which Interstate Hotels
Corporation merged with and into Interstate Hotels & Resorts. On
July 31, 2002, after receiving the required stockholder
approvals, pursuant to the Merger Agreement, the Company and
Interstate Hotels Corporation completed the Merger. As a result
of the Merger and in accordance with the provisions of
Statements of Financial Accounting Standards No. 141; "Business
Combinations"; Interstate Hotels Corporation is considered the
acquiring enterprise for financial reporting purposes. The
Merger has been accounted for as a reverse acquisition with
Interstate Hotels Corporation as the accounting acquiror, and
Interstate Hotels & Resorts as the surviving company. At the
date of the Merger, PricewaterhouseCoopers LLP were the
independent auditors for Interstate Hotels Corporation, and KPMG
LLP were the independent auditors for MeriStar Hotels & Resorts,
Inc.
On October 4, 2002, upon the recommendation of the Audit
Committee, the Board of Directors dismissed PwC as Interstate
Hotels Corporation's independent auditors and appointed KPMG to
serve as Interstate Hotels & Resorts, Inc.'s independent
auditors for the current fiscal year ending on December 31,
2002.
MeriStar Hotels & Resorts leases and manages more than 275
hotels and resorts throughout Canada, Puerto Rico, and the US.
About half the company's locations are owned by MeriStar
Hospitality, an affiliated real estate investment trust (REIT).
The company also leases and manages almost a dozen golf courses.
MeriStar focuses on upscale, full-service, and limited-service
hotels including most of the top North American brands, such as
Hilton, Holiday Inn, and Sheraton. The company's BridgeStreet
Accommodations unit offers about 3,200 corporate extended stay
apartments. Texas tycoon Robert Bass' Keystone, Inc., investment
firm owns almost 18% of the company.
MeriStar Hotels & Resorts has a working capital deficit of about
$100 million at March 31, 2002.
METALS USA: Court Allows Sale of Birmingham Assets to Triple-J
--------------------------------------------------------------
Metals USA, Inc., and its debtor-affiliates obtained permission
from the U.S. Bankruptcy Court for the Southern District of
Texas to sell their facility in Birmingham, Alabama, along with
its miscellaneous real and personal property, to Triple J Realty
LP free and clear of liens, claims and encumbrances.
The Assets include:
-- the real property (and all buildings, improvements and
structures thereon, and the easements, access rights and
appurtenances thereto) situated in the Southeast Quarter of
Section 36, Township 17 South, Range 4 West and in the
Northwest Quarter of the Southwest Quarter of Section 31,
Township 17 South, Range 3 West of the Huntsville Principal
Median, Jefferson County, Alabama; and
-- the right, title and interest of the Debtors in and to any of
the cranes and other items.
The purchase agreement provides in pertinent part:
A. Real Property to be purchased: The real property situated at
the Southeast Quarter of Section 36, Township 17 South, Range
4 West, and in the Northwest Quarter of the Southwest Quarter
of Section 31, Township 17 South, Range 3 West of the
Huntsville Principal Median, Jefferson County, Alabama and
all buildings, improvements and structures thereon, and the
easements, access rights and appurtenances thereto;
B. Personal Property to be purchased: The cranes and other
personal items;
C. Proposed Buyer: Triple J Realty LP, an Alabama limited
partnership;
D. Purchase Price: $1,850,000; and
E. Broker Commissions: 5% of the purchase price; (Metals USA
Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
MIRANT CORP: Fitch Places Downgraded Ratings on Watch Negative
--------------------------------------------------------------
Fitch Ratings lowered the ratings of Mirant Corp., as follows:
senior notes and convertible senior notes to 'BB' from 'BBB-',
convertible trust preferred securities to 'B+' from 'BB', Short-
term debt to 'B' from 'F3' and withdrawn. Following these
changes, the Rating Outlook remains Negative. Ratings of Mirant
affiliates Mirant Americas Generation, LLC and Mirant Mid-
Atlantic, LLC were also lowered as follows: MAGI senior notes
and senior bank credit facility to 'BB' from 'BBB-'; and MIRMA
Pass-through certificates Series A, B, and C to 'BB+' from
'BBB'. The Rating Outlook for MAGI and MIRMA is changed to
Negative.
The downgrades reflect a host of problems that overshadow the
business environment for all gas and power wholesale merchants
in the U.S. and impair MIR's access to the capital and credit
markets. Mirant and its North American affiliates have been
affected by: reduced trading volumes; lower spot and forward
market prices; reduced profitability of unhedged merchant power
production; the demise of its former auditor Arthur Andersen; an
informal SEC investigation regarding MIR's accounting practices;
and ongoing investigations by the Federal Energy Regulatory
Commission of MIR among other western traders and generators.
The rating also reflects the continuing high consolidated
leverage within the MIR group. Fitch estimates the ratio of
adjusted debt and lease obligations relating to core businesses
at roughly 10 to 11 times 2002 and estimated 2003 cash flow from
operations, a level that is inconsistent with a rating in the
investment grade category.
The Rating Outlook for MIR remains Negative and a Negative
Outlook is assigned to MAGI and MIRMA due to the ongoing
accounting reviews discussed below. Fitch will review the
outlook and consider a change to stable when the accounting
review and informal investigation have been resolved.
Ratings are downgraded at MAGI and MIRMA due to the strong
business interdependency and exchange of cash flows among MIR,
affiliate Mirant Americas Energy Marketing (MAEM), MAGI and
MIRMA. MIRMA's pass-through certificates benefit from structural
features such as a strong collateral package and low individual
debt leverage. While these result in a rating that is a single
notch above that of its direct parent MAGI and ultimate parent
MIR, MIRMA is not considered by Fitch to be 'bankruptcy remote'
from MAGI and MIR, and it depends on receipt of cash from these
entities.
Within the unfavorable environment of the North American power
and gas markets, profits and cash flow of MIR and MAGI have
reduced relative to the prior period. MIRMA's cash flow from
market sales has also reduced, but this difference has been
largely offset by fixed price contracts with MAEM. The cash flow
reductions are moderated by the fact that MIR and MAGI derive a
substantial amount of cash flow (over 80%) from physical asset
positions. Furthermore, the majority of that is hedged by
contracts with credit-worthy counterparties for varying periods.
By way of example, Mirant's marketing arm MAEM has a contract to
sell the output of the Mid-Atlantic power assets to Potomac
Electric Power Co. Recently, PEPCO chose not to exercise its
annual option to reduce the size of its contract for the coming
year, giving evidence that the contract price is either at the
market or more likely slightly below market for the year 2003.
PEPCO will have one more chance to reduce the current contract
in the third quarter of 2003, and in any event the deal will
expire late in 2004. Fitch expects that the facilities that now
serve the PEPCO contract will be vital sources of power supply
for the region and after the expiration of the current contract,
will produce reasonably stable cash flows either under
replacement contracts or in the merchant market.
Fitch expects that MIR will have adequate liquidity to conduct
business and to cover $1.6 billion of maturing debt in 2003 from
a combination of cash on hand plus internal cash generation over
the next year and proceeds of some asset sales. To date,
management has done an effective job of cutting expenses and
capital outlays, managing collateral requirements for contracts
and trading positions, and, importantly, producing the proceeds
on the assets that it has targeted for sale. Fitch notes that
the asset sales conducted so far have been focused on businesses
unrelated to the company's strategic core, with no major
sacrifice of operating cash flow due to divestitures. In recent
months, the company announced the sale of its 49% stake in WPD
Holdings UK, an electric utility offering network service in
Britain, to co-owner PPL Resources and agreed to sell an
independent generating facility in Neenah WI. Mirant has slashed
capital spending on power plant construction and expansions, but
the benefits of these cuts will be more pronounced in 2003 and
2004, since 2002 bears the costs of downsizing and contract
terminations. In the past quarter, MIR renegotiated collateral
requirements relating to its BP gas contract and Perryville
joint venture power plant in order to eliminate ratings triggers
relating to further downgrades that would have required over
$500 million of incremental collateral.
MIR has revealed that it may face an estimated $300 million of
additional collateral needs (over the approximately $750 million
in collateral now held by counterparties) if it were downgraded
below investment grade by Fitch and yet another rating agency.
Mirant currently has around $1.7 billion of liquidity (mostly
cash on hand); absent increased collateral demands relating to
downgrades, it expected to have $1.6 billion of liquidity at
year end. Liquidity is adequate for this need, but MIR is
exploring alternatives to reduce trading in lower-return
segments of its business to redeploy collateral currently
posted. Another likely impact of this downgrade is to trigger a
block on further upstream dividends from the Asia Pacific
subsidiary while a $254 million loan to Asia Pacific remains
outstanding. This is not a major concern, since Mirant can use
cash flows that accumulate in Asia to prepay the loan and
thereafter can receive dividends without interruption.
Previously, Fitch expressed concern about the high percentage of
consolidated cash flows coming from two large power projects in
the Philippines and the company's inability to maintain
insurance cover on these two projects at the level required by
its project finance debt providers. While this remains an open
issue, the lenders have given waivers for two successive six-
month periods and do not seem to be inclined to turn this
technical issue into a default. Over time, if the insurance
industry does not provide products to manage the risks of the
Philippine power plants, Mirant may ultimately have to reduce
its ownership share to mitigate its asset concentration in one
location.
The change from former auditor Arthur Andersen has left MIR
unable to satisfy the SEC's standards for unconditional
certification of its second quarter financial statements.
Currently, the new auditor KPMG is conducting a review of MIR's
accounts which it is expected to conclude by around the end of
this month. The revised ratings assume that Mirant will file
unqualified and certified second quarter and third quarter 10-Q
filings in the near future, probably no later than the mid-
November date for filing the third quarter report. The SEC has
also opened an informal investigation that will probably
continue beyond the completion of KPMG review and filing of the
quarterly 10-Q reports.
Fitch also commented in prior press releases about the company's
exposures to US and California governmental inquiries into
market behavior of generators and outstanding law suits relating
to MAGI's activities as a generator and MAEM's activities as a
trader in the western US power markets in 2000-01. While these
issues have not been resolved, there has not been any credible
evidence that any part of MIR behaved unethically or violated
any laws.
As Mirant Corp., is a parent holding company, parent level debt
is effectively subordinated to the individual debt and
obligations of operating subsidiaries. By Fitch's count, there
is approximately $9 billion of consolidated net debt and debt
equivalents, including off balance sheet items. (Fitch offsets
some cash deposits against debt when the cash is likely to be
used for a proximate debt repayment.) Of that amount, roughly
$4.2 billion is comprised of parent level debt or debt
guaranteed by MIR. Non-core businesses are financed without any
recourse to the parent, providing MIR some optional flexibility.
Mirant has three outstanding revolving credit facilities
totaling $2.7 billion. One of these facilities, totaling $1.125
billion, was set to expire on July 17, 2002 but Mirant took
advantage of the option to draw the facility on a one-year note.
The others expire in 2004 and 2005 ($450 million and $1.125
billion, respectively). Currently, conditions in the bank market
do not bode well for refinancing the facilities, but Mirant has
some time to work out a plan for the maturing bank facilities,
possibly including renewals at lower amounts combined with the
use of proceeds of targeted asset sales. While Fitch has
reasonably strong confidence that Mirant will be able to cover
projected 2003 debt maturities of $1.6 billion, Fitch will
continue to monitor Mirant's third quarter financial results and
ongoing plans regarding the debt maturities of $2.66 billion in
2004.
Factors that could result in unfavorable rating action include:
unfavorable conclusion of the accounting review and
investigation; no credible plan for reducing debt and dealing
with 2004-05 maturities; evidence that MIR or its affiliates
committed unethical or illegal dealings. Factors that could
result in a favorable rating action include: satisfactory
conclusion of investigations by the SEC, FERC, and California;
reasonable operating cash flow for the balance of 2002 and in
view for 2003; ability to negotiate with bank lenders; continued
ability to arrange hedges and conduct risk management activities
with counterparties.
Mirant (formerly Southern Electric Incorporated) was spun off by
its former parent, Southern Company, in April 2001. The company
participates in U.S. and international electric power production
and development, power and gas marketing and trading, and energy
risk management.
Mirant Corp.'s 7.90% bonds due 2009 (MIR09USA1) are trading at
47 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MIR09USA1for
real-time bond pricing.
NATIONSRENT: LaSalle Wants Debtors to Insure Leased Equipment
-------------------------------------------------------------
LaSalle National Leasing Corporation leases a significant amount
of rental equipment to NationsRent Inc., and its debtor-
affiliates under a master equipment lease and certain equipment
schedules. LaSalle and the Debtors are parties to a February
25, 1999 Amendment and Restatement of Equipment Lease Agreement.
They are also parties to 79 separate equipment schedules in
connection with the Master Lease.
Christina M. Maycen, Esq., at Morris, James, Hitchens & Williams
LLP, in Wilmington, Delaware, informs Judge Walsh that LaSalle
has sold its rights under many of the Equipment Schedules, but
it retained its rights under schedule nos. 18, 28, 60, 61, 73,
74, 75, 76 and B-3. However, regardless of whether the rights
in the Equipment Schedules were sold to third parties or
retained by LaSalle, all Equipment Schedules incorporate the
terms of the Master Lease, which requires the Debtors to
maintain property insurance:
"Lessee shall keep the Equipment insured against loss
or damage due to fire and the risks normally included
in extended coverage, malicious mischief and vandalism,
for not less than the greater of the full replacement
value or the Stipulated Loss Value ... with a deductible
not in excess of $25,000 ...."
Ms. Maycen reports that the Debtors have failed to maintain
adequate insurance. Instead, the Debtors provided LaSalle a
copy of a Certificate of Property Insurance, which reflects
that, as of September 2002, they maintain only $25,000,000 of
property insurance on the Rental Equipment. The Debtors also
claimed that the property insurance policy carries a deductible
of $50,000, which is twice the Master Lease's limit, further
increasing LaSalle's exposure. As the aggregate stipulated loss
value of the Rental Equipment alone is $120,000,000, Ms. Maycen
says, the current amount of property insurance is clearly
inadequate.
In view of that, LaSalle demands that the Debtors perform all
postpetition rental obligations, including the maintenance of
adequate property insurance, under the Master Lease and the
remaining Schedules.
"NationsRent has failed to honor its lease obligations, despite
the benefit to NationsRent's estate and the requirement under
Section 365(d)(10) [of the Bankruptcy Code] that NationsRent
timely perform all its lease obligations after 60 days," Ms.
Maycen notes. (NationsRent Bankruptcy News, Issue No. 20;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
NEON COMMUNICATIONS: Plan Confirmation Hearing Set for Oct. 21
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
the Third Amended Disclosure Statement of Neon Communications,
Inc., and Neon Optica, Inc., as containing adequate information
within the meaning of section 1125 of the Bankruptcy Code.
Written responses or objections to confirmation of the Plan are
due by October 18, 2002. A hearing to confirm the Plan is
currently scheduled for October 21, 2002, at 4:00 p.m. in
Wilmington.
NEON Communications, Inc., owns certain rights to fiber and all
of the outstanding stock of NEON Optica, Inc., which owns and
operates a fiber optic network services. The Company filed for
chapter 11 protection on June 25, 2002. David B. Stratton, Esq.,
at Pepper Hamilton LLP and Madlyn Gleich Primoff, Esq., at
Richard Bernard, Esq. represent the Debtors in their
restructuring efforts. When the Debtors filed for protection
from its creditors, it listed $55,398,648 in assets $19,664,234
in debts.
NEOTHERAPEUTICS: Nasdaq Approves Listing on SmallCap Market
-----------------------------------------------------------
NeoTherapeutics, Inc., (Nasdaq: NEOT) announced that the Company
has met all requirements for listing on the NASDAQ Small-Cap
Market and that NASDAQ has approved the Company's Small-Cap
Market application. The Company will begin trading on the
exchange on October 16, 2002 and will continue to trade as
before under the ticker symbol NEOT.
NeoTherapeutics seeks to create value for shareholders through
the development of in-licensed drugs for the treatment and
supportive care of cancer patients. The Company's lead drug,
Satraplatin, is a phase 3 oral anti-cancer drug. Elsamitrucin, a
phase 2 drug, will initially target non-Hodgkin's lymphoma.
Neoquin(TM) is being studied in the treatment of superficial
bladder cancer, and may have applications as a radiation
sensitizer. The Company also has a pipeline of pre-clinical
neurological drug candidates for disorders such as attention-
deficit hyperactivity disorder, schizophrenia, mild cognitive
impairment and pain, which it is actively seeking to out-license
or co-develop. For additional information visit the Company's
Web site at http://www.neot.com
NETIA HOLDINGS: Nasdaq to Delist ADS' Effective October 15, 2002
----------------------------------------------------------------
Netia Holdings S.A. (WSE:NET), Poland's largest alternative
provider of fixed-line telecommunications services (in terms of
value of generated revenues), announced that the Nasdaq Listing
Qualifications Panel decided to delist Netia's American
Depositary Shares from The Nasdaq Stock Market, effective as of
the opening of the business on Oct. 15, 2002. Netia is
considering requesting the review of this decision by the Nasdaq
Listing and Hearing Review Council.
In its decision, dated Oct. 14, 2002, the Nasdaq Listing
Qualifications Panel determined that the continued listing was
no longer appropriate due to the substantial period of time
during which Netia has failed to comply with the minimum net
tangible assets/shareholders' equity requirement and the ongoing
restructuring proceedings. The Nasdaq Listing Qualifications
Panel also invited Netia to reapply for listing on The Nasdaq
Stock Market subject to compliance with the initial listing
standards upon completion of the restructuring. Starting Oct.
15, 2002, Netia's ADSs are eligible to trade over-the-counter.
Wojciech Madalski, Netia's President and Chief Executive
Officer, commented: "Factors surrounding the ongoing debt
restructuring were largely the cause of Netia's non-compliance
with Nasdaq requirements for continued listing. Post
restructuring, Netia will possess a healthy balance sheet and
available capital resources to pursue its strategic objectives.
Netia's ordinary shares will continue to trade on the Warsaw
Stock Exchange, the company's home/primary market."
NETWORK ACCESS: Court Fixes November 8, 2002 as Claims Bar Date
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware schedules
the Bar Date for all creditors of Network Access Solutions
Corporation and NASOP, Inc., to file their proofs of claim or be
forever barred from asserting that claim.
All persons and entities, including individuals, estates,
trusts, and governmental units and the United States Trustee
holding or wishing to assert a claim against the Debtors, are
required to file a proof of claim on or before November 8, 2002.
Proofs of claims need not be filed if the claims are:
i) not listed in the Schedules as contingent, unliquidated
and/or disputed;
ii) already been properly filed with the Bankruptcy Court;
iii) from a debtor having a claim against another Debtor;
iv) administrative expense claims; and
v) on account of an equity interest in the Debtors.
All original proofs of claims, to be timely filed, must be
actually received on or before the Bar Date by:
NAS Claims Processing
P.O. Box 5011
FDR Station New York
NY 10150-5011
or
NAS Claims Processing
c/o Bankruptcy Services LLC
70 East 55th Street
6th floor New York, NY 10022
and
Leon R. Barson, Esquire
Adelman Lavine Gold and Levin
A Professional Corporation
1900 Two Penn Center Plaza Philadelphia
PA 19102 Counsel for the Debtors
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.
NEWCOR INC: Files Proposed Joint Chapter 11 Plan in Delaware
------------------------------------------------------------
Newcor, Inc., and its wholly-owned subsidiaries, as debtors and
debtors-in-possession, filed a proposed Joint Plan of
Reorganization in their chapter 11 cases pending before the
United States Bankruptcy Court for the District of Delaware.
The Plan provides for Newcor to continue as a going concern and
results in a significant reduction of debt from Newcor's capital
structure. Specifically, the Plan provides for the cancellation
of $125 million of senior notes and a distribution of $28
million of new notes to holders of allowed unsecured claims. As
described more fully in the Plan, the Plan provides for, among
other things, holders of administrative claims, priority tax
claims, priority non-tax claims, and secured creditors to be
paid in full. Holders of unsecured claims are to receive their
pro-rated share of the $28 million of new notes and $20 million
in cash, of which $6 million shall be from a rights offering,
that will be guaranteed by EXX, Inc.
Mr. James J. Connor, President and co-Chief Executive Officer of
Newcor stated: "The filing of our Plan of Reorganization is a
significant step toward exiting the bankruptcy process. Under
the proposed Plan Newcor will emerge a financially stronger
company with no disruption of parts and services that we now
provide our customers." Mr. Connor continued, "The company
thanks all of our customers, our employees and our suppliers as
we continue through this financial reorganization."
Confirmation of the Plan is subject to the requisite vote of
creditors and approval by the Bankruptcy Court. The foregoing
discussion is qualified in its entirety by reference to the
specific provisions of the Plan, which are subject
to change before a proposed definitive Plan and related
Disclosure Statement are mailed to Newcor's creditors and
shareholders. Newcor, headquartered in Royal Oak, Michigan,
designs and manufactures precision machined parts, molded rubber
and plastic products, as well as custom machines and
manufacturing systems.
NEXTREND INC: Case Summary & Largest Unsecured Creditors
--------------------------------------------------------
Lead Debtor: Nextrend, Inc.
251 W. Renner Parkway, #200
Richardson, Texas 75080
Bankruptcy Case No.: 02-39030
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
NexTrend Technologies, Inc. 02-39035
Chapter 11 Petition Date: October 10, 2002
Court: Northern District of Texas (Dallas)
Judge: Steven A. Felsenthal
Debtor's Counsel: Stephanie J. Ward, Esq.
Brown McCarroll
2001 Ross Ave., Suite 2000
Dallas, TX 75201
214-999-6100
Patricia B. Tomasco, Esq.
Brown McCarroll
111 Congress Ave., Suite 1400
Austin, TX 78701
512-472-5456
Estimated Debts: $500,000 to $1 Million
A. Debtor's 3 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Northern Trust Bank of Note $250,000
Florida, N.A.
Attn: Loan Department
PO Box 14061
Miami, FL 33101-4061
Chiaro Networks, Ltd. Lease $40,927
Northern Trust Bank of Note $2,606
Florida, N.A.
B. NexTrend Technologies' Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
MCI WorldCom Trade Debt $50,524
S&P ComStock Trade Debt $49,420
Steelcase Financial Svc. Furniture Lease $36,333
Inc.
Nasdaq Trade Debt $32,378
AT&T - Atlanta Trade Debt $28,378
WorldCom (UUNET) Trade Debt $13,572
Newsware, Inc. Trade Debt $13,470
Digitel Corporation Phone System $13,125
The Island ECN General Trade Debt $10,040
Chicago Mercantile Exc. Trade Debt $10,030
Southwestern Bell Trade Debt $9,179
United Healthcare Health Insurance $7,676
Deloitte & Touche, LLP Trade Debt $6,000
Market Guide (Multex.com) Trade Debt $6,000
Zacks Investment Research Trade Debt $6,000
NYSE Trade Debt $5,578
AMEX Trade Debt $5,224
OPRA-Pro Trade Debt $4,190
Austintrends Trade Debt $3,900
Merill Corporation Trade Debt $3,899
NTL INC: Releases Supplementary Prospectus re Warrants Offering
---------------------------------------------------------------
NTL Incorporated (OTCBB: NTLDQ; NASDAQ Europe: NTLI) announced
that a further supplementary prospectus has been published under
the UK Public Offers of Securities Regulations 1995 in relation
to the proposed offering to persons in the UK of warrants in
connection with the Second Amended Joint Reorganization Plan
confirmed by the United States Bankruptcy Court for the Southern
District of New York on September 5, 2002.
Copies of the further supplementary prospectus are available
free of charge at NTL's offices at Bartley Wood Business Park,
Hook, Hampshire, RG27 9UP, UK, during normal business hours on
any weekday (excluding Saturdays and public holidays) until the
effective date of the Reorganization Plan.
ONSITE ENERGY: Balance Sheet Insolvency Narrows to $5.2 Million
---------------------------------------------------------------
Onsite Energy Corporation (OTC Bulletin Board: ONSE) announced
its financial results for the fourth quarter and fiscal year
ended June 30, 2002. Total revenues increased in the fiscal
year ended June 30, 2002 to $12,136,000 from $11,598,000 in the
fiscal year ended June 30, 2001, an increase of $538,000 or 5
percent. This increase is primarily attributable to increases
in energy efficiency projects activity in its West Coast
operations. Net income for the year ended June 30, 2002, was
$255,000 compared to net income of $1,657,000 for fiscal year
ended June 30, 2001, a decrease of $1,402,000. Although
positive net income was achieved for the fiscal year ended June
30, 2002, the effect of accrued but unpaid preferred stock
dividends created a slight loss per share.
Gross margin for the fiscal year ended June 30, 2002, was 32
percent of revenues compared to 38 percent in fiscal year 2001.
The decrease in gross margin rates was attributable primarily to
a major project that was completed in the fourth quarter of
fiscal year 2002. The construction portion of this project,
which accounted for 19 percent of total revenues, was completed
at profit margins that were lower than Onsite's historical
profit margins.
Selling, general and administrative expenses were $3,769,000 or
31 percent of revenues in the fiscal year ended June 30, 2002,
compared to $3,231,000 or 28 percent of revenues in fiscal year
2001. The increase was primarily due to increases in business
development costs associated with the energy projects and
consulting businesses.
Gain on extinguishment of debt was $162,000 for the fiscal year
ended June 30, 2002, compared to $678,000 for the fiscal year
ended June 30, 2001. The decrease resulted from a reduction in
the number of debt settlements at less than face value. Onsite
continues to pursue opportunities to settle past due debt with
trade creditors for less than face value.
Net income from operations in fiscal 2002 was $99,000, a
decrease of $1,528,000 from the prior year's income of
$1,627,000. As discussed more fully above, the decrease was
mainly attributable to three factors: (i) decreases in gains on
extinguishment of debt; (ii) a reduction in gross margin rates;
and (iii) increases in SG&A expenses associated with increased
business development costs.
Income from discontinued operations was $156,000 and $30,000 for
the fiscal year ended June 30, 2002, and 2001, respectively.
This resulted from the sale of substantially all of the assets
of a subsidiary, Onsite Energy Services, Inc., which occurred in
December 2001.
Revenues for the three-month period ended June 30, 2002, were
$1,888,000 compared to June 30, 2001, revenues of $2,190,000, a
decrease of $302,000 or 14 percent. Net loss for the fourth
quarter ended June 30, 2002, was $702,000, compared to a net
loss of $95,000 for the three months ended June 30, 2001. The
decline was a result of reduced contract backlogs in Onsite's
Southern and Northern California business units.
"Due to the nature of our business, we can experience slow
periods in our work flow. But we continue to focus on building
our western U.S. business and terminating all operations that
are not contributing positively to our core energy services
business," said Richard T. Sperberg, president and CEO. "I
continue to be optimistic about Onsite's future prospects."
Liquidity and Capital Resources
Working capital was a negative $5,531,000 as of June 30, 2002,
compared to a negative $5,619,000 as of June 30, 2001, an
improvement in negative working capital of $88,000. Onsite's
stockholders' deficit also improved from $5,494,000 at June 30,
2001, to $5,207,000 at June 30, 2002.
Onsite Energy Corporation is a comprehensive energy service
company with primary emphasis in the western United States.
Onsite assists its customers in reducing electricity and fuel
costs by developing, designing, constructing, owning and
operating efficient, environmentally sound energy projects and
providing energy information and demand reduction services.
Onsite also offers consulting services, which include energy
assessments, direct access planning and market assessments. It
is Onsite's mission to help customers save money through
independent energy solutions.
ORYX TECHNOLOGY: Falls Short of Nasdaq Min. Listing Requirements
----------------------------------------------------------------
Oryx Technology Corporation (Nasdaq:ORYX), a technology
licensing, investment and management services company, announced
a net loss attributable to common stock of $516,000 on revenues
of $57,000 for the second quarter ended August 31, 2002. This
compares to a net loss attributable to common stock of $278,000
on revenues of $109,000 for the second quarter ended August 31,
2001. The net loss for the second quarter of this year includes
$221,000 for Oryx's pro-rata share of its investment in S2
Technologies. This compares to a $187,000 loss resulting from
Oryx's pro rata share of its investment in S2 Technologies for
the second quarter last year.
For the six months ended August 31, 2002, Oryx reported a net
loss attributable to common stock of $963,000 on revenues of
$113,000. This compares to a net loss attributable to common
stock of $665,000 on revenues of $227,000 for the six months
ended August 31, 2001. The net loss for the six months ended
August 31, 2002 includes a loss of $439,000 related to Oryx's
investment in S2 Technologies. This compares to a $338,000 loss
resulting from Oryx's pro rata share of its investment in S2
Technologies for the six months ended August 31, 2001.
Phil Micciche, President and Chief Executive Officer of Oryx,
said, "The licensees of our SurgX technology continue to
maintain monthly product shipments averaging over 3.5 million
units. We are gratified that this sales momentum is continuing
in this difficult economic environment. To further expand the
acceptance of our SurgX technology, we are focusing our efforts
on improving the electrical performance of SurgX components as
well as expanding the number of licensees selling products
incorporating SurgX technology."
Micciche further stated, "We continue to provide management
services to S2 Technologies, an early stage developer of test
and integration software solutions for embedded systems. While
S2 has a number of ongoing pilot test programs with several OEMs
and is currently being installed in several worldwide divisions
of a leading electronics company, its sales effort continues to
be impacted by the economic slowdown in the technology sector.
"Because of the uncertainty of our future royalty revenues,
there is a significant risk that we will not have sufficient
capital to meet our anticipated working capital requirements
through fiscal year 2003. In addition, we are currently not in
compliance with Nasdaq's minimum tangible net worth requirement
for continued listing on The Nasdaq SmallCap Market. Our Board
of Directors has determined that Oryx will not, at this time,
attempt to undertake an additional equity financing in an amount
sufficient to ensure continued listing on The Nasdaq SmallCap
Market. Our Board has concluded that an equity offering of Oryx
common stock at current prices would be too dilutive to our
stockholders. However, we plan to petition Nasdaq to maintain
our listing on The Nasdaq SmallCap Market, but there can be no
assurance that we will receive a waiver or deferral of Nasdaq's
minimum tangible net worth requirement and maintain our listing.
If our stock is delisted from The Nasdaq SmallCap Market,
trading in Oryx common stock would move to the OTC Bulletin
Board. For further information regarding the OTC Bulletin Board,
please refer to their Web site at http://www.otcbb.com
"Reflecting the potential market opportunities of both our SurgX
technology and S2 Technologies, the Board has declared its
commitment to raising the necessary financing to sustain Oryx as
a going concern. As a result, we are actively exploring
financing opportunities."
Headquartered in San Jose, California, Oryx Technology
Corporation is a technology licensing, investment and management
service company with a proprietary portfolio of high technology
products in surge protection. Oryx also provides management
services to early-stage technology companies through its
affiliate, Oryx Ventures, LLC. Oryx's common stock trades on The
Nasdaq SmallCap Market under the symbol ORYX.
POLAROID CORP: Seeking Fourth Extension of Exclusive Periods
------------------------------------------------------------
For the fourth time, Polaroid Corporation, its debtor-affiliates
and the Official Committee of Unsecured Creditors ask the Court
to extend their co-exclusive right to file one or more plans of
reorganization until December 20, 2002 and their co-exclusive
right to solicit and obtain acceptances for those plans until
February 18, 2003.
If granted, the extension of the Exclusive Periods will be
without prejudice to:
(a) the right of the Debtors and the Committee to seek further
extensions of the Exclusive Periods, or
(b) the right of any party-in-interest to seek to reduce the
Exclusive Periods for cause.
Mark L. Desgrosseilliers, Esq., at Skadden, Arps, Slate, Meagher
& Flom, LLP, in Wilmington, Delaware, explains that the
Exclusivity Order recently approved by the Court in September
represents a compromise between the Debtors and the Committee,
provides for co-exclusivity for the Debtors and the Committee,
and allows both the Debtors and their unsecured creditors to
have input in drafting and filing an amended plan that:
-- accurately reflects the details of the Asset Purchase
Agreement with One Equity Partners; and
-- provides for an equitable distribution of the assets of the
Debtors' estates to the Debtors' creditor constituencies.
To recall, the Plan that has already been filed by the Debtors
is predicated on the consummation of the OEP Sale, post-Sale
liquidation of the Debtors' remaining assets, and the
distribution of the proceeds from the Sale and the other assets
in the Debtors' estates to the Debtors' creditor constituencies.
Although the Sale has been consummated and the Debtors' have
begun to liquidate their estates and distribute the proceeds
from the Sale to the Debtors' creditor constituencies, the Asset
Purchase Agreement approved by the Court differs from the terms
of the Asset Purchase Agreement filed with the Sale Motion.
Specifically, the Asset Purchase Agreement approved pursuant to
the Sale Order provides for the distribution of 35% of the
equity in the new Polaroid Corporation to the Debtors' unsecured
creditors and for the payment of the Debtors' Prepetition
Lenders and certain administrative expenses of the Debtors'
estates.
Given their substantial efforts since the Petition Date, the
Debtors and the Committee believe that they should be given
additional time to negotiate the final terms of the Plan without
the distraction of competing plans filed by other parties-in-
interest.
Thus, the Debtors and the Committee ask Judge Walsh to extend
the Exclusive Periods and prohibit any party, other than them,
from filing a competing plan and soliciting acceptances of any
competing plan during the extended Exclusive Periods.
Mr. Desgrosseilliers points out that courts have identified
several key factors relevant to a determination of whether cause
exists to extend the Exclusive Periods:
(a) the size and complexity of a debtor's case;
(b) the debtor's progress in resolving issues facing its
estate; and
(c) whether an extension of time will harm the debtor's
creditors or other interested parties.
In evaluating whether an extension is warranted, Mr.
Desgrosseilliers notes, courts are given maximum flexibility to
review the particular facts and circumstances of each case.
The Debtors and the Committee assert that extension of the
Exclusive Periods is warranted because, among other things:
-- they have made significant progress in resolving many of
the issues facing the Debtors' estates, including disputes
between the Debtors and the Retiree Committee, and
potential disputes between the Committee and the Debtors'
Prepetition Lenders;
-- an extension of the Exclusive Periods will give them a
reasonable opportunity to negotiate a consensual amended
Plan and ultimately confirm such a Plan without prejudicing
any party-in-interest; and
-- the Debtors' cases are large and complex, and certain
substantial issues remain unresolved.
Mr. Desgrosseilliers outlines the Debtors' progress in these
cases:
1. The Debtors have sold substantially all of their assets to
OEP. In connection with the Sale, the Debtors and the
Committee resolved certain potential disputes with the
Debtors' Prepetition Lenders and provided for the payment of
the Lenders' claims;
2. The Debtors, the Committee, and the Debtors' Lenders have
resolved their disputes with the Retiree Committee. To that
end, the Debtors have filed a stipulation resolving that
dispute, which stipulation is currently under review by the
Court;
3. The Debtors have undertaken various cost-reduction measures,
including the rejection of certain executory contracts and
leases of non-residential real estate. To that end, the
Debtors have rejected several leases of non-residential real
property and numerous other executory contracts that were no
longer necessary for the operation of the Debtors' business
and that were above market value;
4. Under the Debtors' DIP Credit Agreement, numerous reporting
requirements were imposed on the Debtors. These reporting
requirements, which included weekly 13-week cash flow
forecasts and monthly financial reporting, have been
delivered, in each case, to the advisors to the Debtors'
Lenders and the Committee. As a result of the significant
efforts of the Debtors and their advisors, the Debtors'
creditor constituencies have had a constant flow of
information detailing the Debtors' financial condition. In
addition, the Debtors have prepared a detailed three-year
financial plan with the Lenders and the Committee; and
5. The Debtors have diligently marketed and negotiated the sale
of substantially all of their assets on a going-concern
basis, which marketing efforts culminated in the Sale.
"There can be no doubt that the Debtors and the Committee have
acted diligently throughout these reorganization cases," Mr.
Desgrosseilliers says.
Without an extension of the Exclusive Periods, the Debtors and
the Committee fear that a protracted and contentious
confirmation process might evolve -- which would only serve to
increase administrative expenses and decrease recoveries to
their creditors, significantly delaying, if not undermining,
their reorganization efforts.
Mr. Desgrosseilliers assures Judge Walsh that the Debtors and
the Committee are not trying to unfairly prejudice or pressure
the Debtors' creditors. Mr. Desgrosseilliers explains that the
extension requested is merely the exercise of prudent business
judgment and an attempt to have adequate time to negotiate terms
of a liquidating plan or plans of reorganization that reflect
the details of the Asset Purchase Agreement and provide for an
equitable distribution of the assets of the Debtors' estates to
holders of valid claims.
There are over 7,000 proofs of claim filed to date in these
bankruptcy cases. The Debtors face various complex issues, many
of which remain unresolved. These issues include potential
liabilities in connection with the Debtors' pension plan and the
resolution of certain matters in connection with the Sale.
Clearly, Mr. Desgrosseilliers contends, cause exists to extend
the Exclusive Periods.
By application of Del.Bankr.LR 9006-2, the current deadline is
automatically extended through the conclusion of the November
19, 2002 hearing. (Polaroid Bankruptcy News, Issue No. 25;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Polaroid Corporation's 11.50% bonds due 2006 (PRDC06USR1) are
trading at 4.5 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=PRDC06USR1
for real-time bond pricing.
PREVIO INC: All Creditors' Claims Due before November 26, 2002
--------------------------------------------------------------
Previo Inc., has duly filed a Certificate of Dissolution in the
Office of the Delaware Secretary of State under the provisions
of Section 275 of the General Corporation Law of the State of
Delaware, which Certificate became effective on September 25,
2002.
All persons who believe that they have a claim against the
company are required to present such claims against Previo or be
forever barred and estopped from asserting any claim. All Claims
must be received by no later than November 26, 2002 and
addressed to:
The President
Previo, Inc.
12636 High Bluff Drive
Suite 400
San Diego, CA 92130
Previo or a successor entity may make distributions to other
claimants and the stockholders of the company without further
notice to any claimant.
PRUDENTIAL MORTGAGE: Fitch Affirms Low-Bs on 6 Classes of Notes
---------------------------------------------------------------
Prudential's ROCK commercial mortgage pass-through certificates,
series 2001-C1 have been affirmed at the following ratings:
$173.1 million class A-1, $536.1 million class A-2, $542.1
million class X-1 and the $897.7 million class X-2 at 'AAA',
$27.2 million class B at 'AA', $38.6 million class C at 'A',
$9.1 million class D at 'A-', $11.4 million class E at 'BBB+',
$15.9 million class F at 'BBB', $13.6 million class G at 'BBB-',
$13.6 million class H at 'BB+', $22.7 million class J at 'BB',
$6.8 million class K at 'BB-', $4.5 million class L at 'B+',
$9.1 million class M at 'B' and the $4.5 million class N at
'B-'. Fitch does not rate the $11.4 million class O. The rating
affirmations follow Fitch's annual review of the transaction,
which closed in May 2001.
The pool has had relatively stable performance over the past
year with minimal paydown from amortization and no loan payoffs.
The overall weighted average debt service coverage ratio (DSCR)
improved to 1.89 times for YE 2001, an increase from 1.82x at
issuance. This is based on collection of financials for
approximately 99% of the loans in the transaction by the master
servicer. The top five loans, representing 28% of the pool also
saw improved performance over the past year with the weighted
average DSCR increasing to 2.71x for YE 2001 versus a 2.62x
reported at issuance.
One loan, the RREEF America II Portfolio, representing
approximately 10% of the pool, has been given an investment
grade credit assessment by Fitch. The $155,385,000 loan is split
into an A and B note. The $91,000,000 A note is included in the
transaction and the $64,385,000 B note is held outside the
trust. The loan is secured by a diverse portfolio of industrial,
retail, office and multifamily properties located in Delaware,
Texas, California, Florida, Georgia, and Arizona. There is
approximately 3.7 million square feet of commercial space and
176 multifamily units. Servicer reported DSCR has increased to
4.58x for YE 2001, up from 4.29x at issuance. This number is
based upon the A note balance only.
Of concern in the pool is a $11.5 million loan, representing
1.3% of the pool, currently being specially serviced. The
Pulaski Road Shopping Center, located in Chicago, IL, is
anchored by a Kmart, and has had its lease rejected. Based upon
discussions with the special servicer, it appears likely that
there will be a loss on this loan. Additionally, there are two
other loans in the transaction, representing 2.0% of the pool,
with significant Kmart exposure as well. However, at this time,
neither has been placed on a closure list or had its lease
rejected.
Given these concerns in the pool, the current performance and
credit support was adequate to support the ratings affirmations
to the rated classes. Fitch will continue to monitor the
performance of this transaction, as surveillance is ongoing.
QUANTUM: Inks Pact to Spin-Off Network Attached Storage Assets
--------------------------------------------------------------
Quantum Corp. (NYSE: DSS), a leading provider of data protection
systems, has signed a definitive agreement to spin off certain
assets related to its Network Attached Storage business to help
form a new company, Snap Appliance, Inc. This strategic move
enables Snap Appliance, Inc. to leverage Quantum's existing
leadership in NAS through Quantum's Snap Server(R) and
Guardian(TM) product families while allowing Quantum's Storage
Solutions Group to focus exclusively on data protection.
Under the terms of the agreement, Snap Appliance, Inc., will
purchase Quantum's NAS assets for an aggregate purchase price of
$11.3 million, including a minority equity interest, and will
offer employment to a substantial number of Quantum NAS
employees. In addition, Quantum has the option to receive up to
$1.9 million in additional consideration in connection with
future financings. The new company will combine these assets and
key talent with next generation software technology from
privately held Broadband Storage and will be led by key storage
industry executives. Other investors in the new company include
Moore Capital Management and Mellon Ventures, Inc., an affiliate
of Mellon Financial Corporation. The transaction is expected to
close by the end of the month.
"The formation of Snap Appliance, Inc., is an important step for
the Storage Solutions Group as it will enable us to devote all
of our resources to our data protection strategy, while at the
same time positioning Snap Appliance, Inc., to be a clear leader
in the NAS market," said Larry Orecklin, president of Quantum's
Storage Solutions Group. "Quantum will also partner with Snap
Appliance, Inc., to integrate product offerings and work
together on future market opportunities. Our customers will
benefit from better NAS and data protection solutions, and our
partnership will allow us to work hand-in-hand with a focused
development team on complementary and simplified storage
solutions."
"Snap Appliance, Inc., will stand as a powerful combination of
essential ingredients from key industry partners," said Eric
Kelly, president and CEO of Snap Appliance, Inc. "Snap
Appliance, Inc., will leverage the Snap brand and leadership
position as the foundation for delivering simplified storage
solutions. Equally important, Snap Appliance, Inc., and Quantum
will work together strategically to drive ongoing value creation
across the two businesses."
Distribution, Service and Support
Snap Server and Guardian server families will continue to be
available through targeted distributor and reseller channels in
North America. To ensure that existing channel partners can
continue to sell these products without interruption, Quantum
will work with them and Snap Appliance, Inc., to provide for a
seamless transition.
Snap Appliance, Inc., and Quantum will continue to provide
warranty and technical services for all current Quantum NAS
customers worldwide.
Part of Quantum's Broader Restructuring Actions
Today's announcement is a major component of the second phase of
Quantum's two-phased restructuring plan, which was announced on
September 9 and is intended to reduce costs and drive
profitability. Further information about this second phase and
the Snap Appliance, Inc., transaction will be provided when
Quantum announces its fiscal second quarter earnings later this
month.
Quantum Corp., founded in 1980, is a global leader in data
protection systems, meeting the needs of business customers with
enterprise-wide storage solutions and services. Quantum is the
world's largest supplier of tape drives, and its DLTtape(TM)
technology is the standard for backup, archiving, and recovery
of mission-critical data. Quantum is a leader in the design,
manufacture and service of automated tape libraries used to
manage, store and transfer data. This year, the company expanded
into the area of disk-based backup, with a solution that
emulates a tape library and is optimized for data protection.
Quantum sales for the fiscal year ending March 31, 2002, were
approximately $1.1 billion. Quantum Corp., 501 Sycamore Dr.,
Milpitas, CA 95035, 408-944-4000, http://www.quantum.com
* * *
As reported in Troubled Company Reporter's August 29, 2002
edition, Standard & Poor's Ratings Services placed its double-
'B' corporate credit rating and single-'B'-plus subordinated
debt ratings on tape-based enterprise storage company, Quantum
Corp., on CreditWatch with negative implications. The action
resulted from weakened operating performance.
"Quantum's operating performance reflects the ongoing slump in
spending by enterprise customers on information technology.
Revenues of $211 million in the quarter ended June 30, 2002
declined 13% sequentially. Despite being at the beginning of a
positive product cycle, Quantum is suffering from weak volume
demand, pricing pressure in certain product areas, and increased
tape media inventories in the channel," said Standard & Poor's
credit analyst Joshua Davis.
REPUBLIC WESTERN: Fitch Cuts Financial Strength Rating to BB+
-------------------------------------------------------------
Fitch Ratings downgraded its 'BBB-' insurer financial strength
rating on Republic Western Insurance Co., to 'BB+'. The rating
action solely reflects Fitch's lowering of AMERCO's senior
unsecured debt and preferred stock ratings to 'B+' and 'B-' from
'BB+' and 'BB-', respectively. Fitch's rating action on AMERCO
reflects the heightened level of event risk as the company seeks
alternative sources of funds following its decision to withdraw
its proposed $275 million unsecured debt transaction amid
limited appetite for funding from traditional unsecured sources.
AMERCO's ratings remain on Rating Watch Negative reflecting the
resolution of the company's covenant violation under its bank
facility.
Republic Western's rating also remains on Rating Watch Negative,
reflecting the possibility of additional rating actions on
AMERCO. Given Republic Western's role in the overall AMERCO
organization, changes in the financial position of AMERCO can
have an indirect material effect on Republic Western's financial
strength and credit quality.
Republic Western is a wholly owned subsidiary of AMERCO, the
parent company for U-Haul International, Inc. U-Haul has a
leading market position in the consumer truck, trailer and
storage rental industry. Republic Western was initially formed
in 1973 to provide insurance for both U-Haul and its customers.
Over the years, Republic Western has externally expanded its
operation to supplement its U-Haul business.
Rating Action
Republic Western Insurance Company
-- Insurer financial strength Downgrade 'BB+'/Negative.
REUNION INDUSTRIES: Closes Sale of Kingway Material for $32 Mil.
----------------------------------------------------------------
On September 24, 2002, Reunion Industries, Inc., completed the
sale of its Kingway Material Handling division located in
Acworth, Georgia for a purchase price of $32.0 million in cash
and a note to Kingway Acquisition, Inc., a Delaware corporation.
KAI is a portfolio company of American Capital Strategies, Ltd.,
headquartered in Bethesda, Maryland, a lender to and investor in
middle market companies.
The sale was consummated in accordance with an Asset Purchase
Agreement dated September 12, 2002 between Buyer and Seller.
Of the $32.0 million purchase price, cash proceeds totaled $25.0
million. The remainder is a $7.0 million note, the payment of
which is contingent upon KAI's future operating
results over a three year period beginning January 1, 2003. Net
cash proceeds received by Reunion Industries totalled
$24,119,000 after payment of transaction related fees and
expenses. Of the $24,119,000, $18,961,000 was used to reduce
bank revolving credit facility borrowings, $4,108,000 was used
to reduce bank term loans and $1,050,000 was used to repay
accrued overadvance fees. Final determination of the purchase
price is subject to a post-closing working capital adjustment.
Specifically, the purchase price shall be adjusted for the
amount by which Kingway's final agreed-to closing date working
capital exceeds or is less than $5,000,000, Kingway's Seller-
determined working capital at September 24, 2002.
Reunion manufactures and markets a broad range of metal and
plastic products and parts, including seamless steel pressure
vessels, fluid power cylinders, leaf springs, high volume
precision plastics products and thermoset compounds and provides
engineered plastics services. Reunion Industries is
headquartered at 11 Stanwix Street, Suite 1400, Pittsburgh, PA,
15222.
Reunion's June 30, 2002 balance sheet shows a working capital
deficit of about $63 million, and a total shareholders' equity
deficit of about $25.6 million.
SAFETY-KLEEN: 3E Closes Asset Sale Under Amended Purchase Pact
--------------------------------------------------------------
On September 20, 2002, the 3E Company Environmental, Ecological
and Engineering, an indirect majority owned subsidiary of
Safety-Kleen Corporation, completed the sale of substantially
all its assets to New 3E Company Acquisition Corporation. New
3E was formed and capitalized by the minority shareholders of
3E, Messrs. Jess F. Kraus, IV, Robert M. Ward, Christopher
Kraus, Jeremy Kisner and Ms. Linda Allen.
3E was engaged in providing hazardous materials information
management and emergency response services for environmental
health and safety managers.
Coincident with the sale of assets, Safety-Kleen Systems, Inc.,
an indirect wholly owned subsidiary of Safety-Kleen Corporation,
completed the acquisition of 24.22% of 3E stock -- all of the
issued and outstanding shares owned by the Minority Shareholders
-- for a total of $625,000 cash, becoming the sole owner of the
stock of 3E.
Pursuant to the terms of the Asset Purchase Agreement dated as
of August 27, 2002 by and among 3E, New 3E, the Minority
Shareholders, and Systems, as amended, New 3E purchased
substantially all of the assets of 3E for $12.639 million, of
which $3.25 million is a promissory note due to 3E.
Shortly before closing, SK Systems and New 3E Company
Acquisition Corporation, Jess F. Kraus, IV, Linda Allen,
Christopher Kraus, Robert M. Ward, Jeremy Kisner and 3E Company
Environmental, Ecological and Engineering, signed an amendment
to the APA. The amendment removes any and all Liabilities
arising under guarantees or similar instruments relating to
indebtedness for borrowed money incurred by Safety-Kleen or any
of its Affiliates -- other than Old 3E Company, including
without limitation Liabilities as a guarantor pursuant to the
Amended and Restated Credit Agreement, dated as of April 3,
1998, by and among LES, Inc., Laidlaw Environmental Services
(Canada) Ltd., and the lenders and agents thereunder
With this exception, the terms and conditions of the original
Agreement are ratified, approved and confirmed.
Full-text copies of the Asset Purchase Agreement and the First
Amendment are available from the Securities and Exchange
Commission at no charge at:
http://www.sec.gov/Archives/edgar/data/701856/000070185602000053/0000701856-
02-000053.txt
(Safety-Kleen Bankruptcy News, Issue No. 46; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
SPECIAL METALS: Will Slash 12% of Salaried Workforce by Oct. 31
---------------------------------------------------------------
Special Metals Corporation (OTC: SMCXQ) announced that as part
of its restructuring and cost reduction initiatives, the Company
is implementing reductions of approximately 12% of its salaried
employees at its operations based in Huntington, WV, Burnaugh,
KY, Elkhart, IN, New Hartford, NY, Dunkirk, NY, and Hereford,
U.K. These actions are expected to be essentially completed by
October 31, 2002. Special Metals expects to record a one-time
severance expense in the fourth quarter of 2002 to effect the
cost reduction action announced today.
The Company will continue to balance workforce staffing levels,
control costs, and improve efficiencies to adjust to current and
projected business conditions adversely impacted by the weakened
economy and the depressed demand in key market segments,
including commercial aerospace and power generation. Including
this action, salaried employees and full-time equivalent
production employees in the U.S. have each been reduced by more
than 25% over the past twelve months.
"These cost-reduction measures include taking the difficult but
necessary steps to further reduce the staffing levels of our
salaried workforce," said Dr. T. Grant John, Special Metals'
President. "This will contribute to positioning the Company to
remain competitive in light of continuing challenging business
conditions for the foreseeable future."
Special Metals is the world's largest and most-diversified
producer of high-performance nickel-based alloys. Its specialty
metals are used in some of the world's most technically
demanding industries and applications, including: aerospace,
power generation, chemical processing, and oil exploration.
Through its 10 U.S. and European production facilities and a
global distribution network, Special Metals supplies over 5,000
customers and every major world market for high-performance
nickel-based alloys.
Special Metals filed for Chapter 11 protection on March 27,
2002, in the U.S. Bankruptcy Court for the Eastern District of
Kentucky in Lexington.
STARWOOD: Fitch Assigns BB+ Rating to $1.3 Billion Bank Facility
----------------------------------------------------------------
Fitch Ratings has assigned a rating of 'BB+' to the $1.3 billion
bank facility for Starwood Hotels & Resorts Worldwide, Inc.,
(NYSE: HOT). The Rating Outlook remains Negative.
Fitch's ratings reflect Starwood's strong brand names, a
collection of high-quality established assets in attractive
markets, global diversity of cash flows and continued access to
capital markets. Nonetheless, Starwood, like the rest of the US
lodging industry, has faced a dramatic decline in revenues per
available room, room rates and occupancy in the face of weak
economic conditions and the legacy of the events of September
11, 2001. Despite these difficult conditions, Starwood has
responded by reducing costs and cutting capital expenditures,
allowing it to retain credit statistics consistent with the
current rating. This has been accomplished without the benefit
of asset sales. Leverage remains relatively high for the rating
category however, and debt reduction from excess cash flow will
remain moderate over the near-term. Cash flow, although reduced,
has remained flat-to-slightly down, and Starwood has been able
to avoid balance sheet deterioration despite a uniquely adverse
environment over the past year.
After promising signs of a recovery in the early part of 2002,
industry forecasts for the remaining half of 2002 have softened.
Starwood forecasts RevPAR to be down approximately 6% for the
year after falling 13% in the first half of this year. Industry-
wide RevPAR (as of mid-August) is currently running down 3-4%
when compared with the same week in 2001, with particular
softness in the urban and upper-upscale segments (down 5.3%)
where Starwood has concentrations. Comparisons should ease
somewhat in the third and fourth quarters of 2002. Over the
medium-term, Fitch expects the current low level of new room
supply to bode well for industry pricing. Current cost cutting
efforts should translate into improved margins as conditions
recover.
At June 30, 2002, Starwood's leverage as measured by Debt/EBITDA
increased to approximately 5.2 times from below 5x at Dec. 31,
2001. The increase in leverage is primarily a result of an
approximately 26% decline in EBITDA for the first half as the
weak economy and events of September 11 caused a severe decline
in both business and leisure travel. Debt levels have remained
stable and stand at $5.497 billion at June 30, 2002 and are
expected to fall by year-end as a result of the recently
announced sale of part of Starwood's CIGA portfolio of luxury
hotels in Sardinia, Italy. In July 2002, Starwood announced the
sale to a consortium of Italian investors for ?350 million cash
(approximately US$347 million at 6/30/02), subject to regulatory
approvals and final adjustments. Significantly, Starwood retains
the long-term management contracts for the hotels and will
participate in future developments. The Company projects further
debt reduction in 2003 as additional CIGA assets are disposed
and free cash flow is dedicated to debt reduction.
Liquidity appears sufficient for current needs, given cash from
operations and available credit capacity of $467 million at
6/30/02. Debt maturities have been a significant factor in the
rating, with a heavy maturity schedule going into 2002. The
concerns have been reduced through the April 2002 $1.5 billion
bond issue and the recently completed refinancing of its bank
debt. After completion of the bank refinancing, Starwood still
has $847 million in maturities in 2003 which amount includes
$250 million of public debt at Sheraton Holdings and an 18-month
?450 million loan at Starwood Hotels Italia, each due in the
fourth quarter of 2003. Lastly, Fitch expects that cash proceeds
from asset sales will be used to reduce debt.
Fitch expects that in the event of a further modest
deterioration in the economic environment and Starwood's
results, the company has sufficient room to remain cash flow
positive and to avoid any deterioration in its capital structure
until a recovery occurs. Application of excess cash to debt
reduction and a stable operating environment could lead to a
Stable Rating Outlook in the near term. The four-year, $1.3
billion senior unsecured multi-currency credit facility is
comprised of a $1.0 billion revolving credit facility and a $300
million senior term loan. The borrower is Starwood Hotels and
Resorts Worldwide, Inc. with a guarantee from subsidiary
Sheraton Holding Corp. (Formerly ITT Sheraton). The term loan
will require quarterly amortization of $25 million beginning
nine quarters after closing. Guarantees have been dropped from
the Starwood Hotels and Resorts (REIT) subsidiary and the
Starwood Vacation Ownership Inc. (timeshare) subsidiary but
remain at Sheraton Holding Corp. as Starwood moves to
consolidate borrowings at parent Starwood Hotels & Resorts
Worldwide, Inc. When the new bank facilities closed, the senior
notes due in 2007 and 2012 and the Series B Convertible Senior
Notes released their collateral and guarantees such that they
rank pari passu with the bank facilities.
Ratings affirmed include:
Starwood Hotels & Resorts Worldwide Inc.:
-- Senior Unsecured rating at 'BB+';
-- $311 million Series B Convertible Senior Notes due 2021
at 'BB+';
-- $700 million 7.375% Senior Notes due 2007 at 'BB+';
-- $800 million 7.875% Senior Notes due 2012 at 'BB+';
Sheraton Holding Corp. (formerly ITT Sheraton):
-- $250 million 6.75% Notes due 2003 at 'BB+';
-- $450 million 6.75% Notes due 2005 at 'BB+';
-- $450 million 7.375% Debentures due 2015 at 'BB+';
-- $150 million 7.75% Debentures due 2025 at 'BB+'.
Ratings are assigned to the new bank facility (which replaces
the prior revolving credit and term loan bank facilities) as
follows:
-- $1.0 billion Revolving Credit Facility due 2006 at
'BB+';
-- $300 million Term Loan Facility due 2006 at 'BB+'.
STRUCTURED ASSET: Fitch Affirms Low-B Ratings on 6 Note Classes
---------------------------------------------------------------
Structured Asset Securities Corporation, commercial mortgage
pass-through certificates, series 2001-C8, $244.5 million class
A affirmed at 'AAA', the $25.6 million class B at 'AA+', the
$32.9 million class C at 'AA', the $14.6 million class D at
'AA', the $23.7 million class E at 'AA-', the $23.7 million
class F at 'A+', the $14.6 million class G at 'A', the $21.9
million class H at 'A-', the $25.6 million class J at 'BBB+',
the $21.9 million class K at 'BBB', the $36.5 million class L at
'BBB-', the $18.3 million class M at 'BB+', the $18.3 million
class N at 'BB', the $13.3 million class O at 'BB-', the $13.3
million class P at 'B+', the $13.3 million class Q at 'B', the
$11.7 million class S at 'B-', and the $14.6 million class T at
'CCC'. Fitch does not rate the $56.7 million class U. The rating
affirmations follow Fitch's annual review of the transaction,
which closed in December of 2001.
The rating affirmations are the result of the stable performance
of the loans, the slight increase in subordination levels due to
prepayments, and the interest only nature of the loans in the
transaction. CapMark Services, as master servicer, collected
year-end 2001 operating statements for 93% of the pool by
balance. There are no loans in special servicing and no
delinquent loans.
As of the September 2002 distribution date, eight loans have
paid off and the transactions aggregate certificate balance has
decreased 11.7% to $645.5 million from $731.5 million at
issuance. The certificates are currently collateralized by 43
floating-rate loans on 54 multifamily and commercial properties.
By outstanding balance, the pool consists of office (40%),
retail (28%), hotel (21%), multifamily (9%), and mobile home
park (2%). The properties are located in 20 states, with
concentrations in Texas (25%), District of Columbia (14%),
Florida (10%), Mississippi (9%), Pennsylvania (9%), and Ohio
(7%). The loans mature in 2002 (16%), 2003 (83%) and 2004 (1%).
Fitch will continue to monitor the performance of this
transaction, as surveillance is ongoing.
TERAFORCE TECHNOLOGY: Completes Restructuring of $4.5MM of Debts
----------------------------------------------------------------
TeraForce Technology Corporation (OTCBB:TERA) has completed the
restructuring of $4,500,000 of its $6,600,000 in outstanding
debt, including the repayment of $2,000,000 of this debt with
the proceeds from the sale of common stock.
The Company is in the process of completing the restructuring
with the disposition of $600,000 in notes payable due to a
private investor and of the Company's $1,500,000 credit
agreement with Bank One, N.A., that is guaranteed by this same
private investor. The maturities of these obligations continue
to be extended pending their final resolution. The Company is
also proceeding with its program for the sale of additional
common stock in a series of private placements.
Under the agreements concluded, the Company issued 16,666,668
shares of common stock to two private investors for $2,000,000
in cash. These investors, who had previously guaranteed a
portion of the Company's debt, also received warrants for the
purchase of 400,000 shares of common stock at $0.12 per share.
In addition, warrants for the purchase of 780,000 shares of
common stock, previously issued to these investors, have been
amended to provide for an exercise price of $0.12 per share. The
proceeds from the sale of this common stock were used to reduce
amounts outstanding under the Company's $4,500,000 credit
agreement with Bank One by $2,000,000. The previously reported
condition precedent to these transactions for an additional
$2,000,000 of common equity sales was waived.
The $4,500,000 Bank One credit agreement has been amended to
provide total credit capacity of $2,700,000 on a revolving
basis. This credit facility now has a maturity of March 31, 2004
and provides for certain scheduled reductions in amounts
available for borrowing, beginning December 31, 2002. The
amended credit facility is secured by an irrevocable letter of
credit provided by a private investor.
Based in Richardson, Texas, TeraForce Technology Corporation
(OTCBB:TERA) designs, develops, produces and sells high-density
embedded computing platforms and digital signal processing
products, primarily for applications in the defense electronics
industry. TeraForce's primary operating unit is DNA Computing
Solutions, Inc., http://www.dnacomputingsolutions.com
TERAGLOBAL: Will Go Private After 1-for-1,000 Reverse Split
-----------------------------------------------------------
TeraGlobal Communications Corp., (OTCBB:TGCM) has filed a
definitive Information Statement concerning its going private
transaction with the SEC, and will begin mailing the Information
Statement to shareholders.
On May 15, 2002, the company announced its intent to effect a 1-
for-1,000 reverse split as part of a going private transaction.
Since that time, the company has been revising the disclosure in
the Information Statement in connection with an SEC review of
the transaction. In accordance with state law, the reverse split
can take place twenty days following the mailing of the
Information Statement to shareholders. The reverse split is
therefore expected to take place effective on Nov. 6, 2002.
Terms Of The Reverse Split
The reverse split is a 1-for-1,000 reverse split of the
company's outstanding common stock. The company will not issue
fractional shares generated from the reverse split. Instead it
will purchase fractional shares from stockholders on the basis
of $0.29 cents per share of pre-split common stock.
All stockholders owning less than one full share of common
stock, after giving effect to the split, will be paid cash for
their fractional share and will cease to be stockholders of the
company. Stockholders that own more than one full share after
the reverse split will remain a stockholder of the company
owning any full shares after the reverse split and receiving
cash for any fractional shares.
Stockholders who hold their shares through brokerage accounts
will receive their cash and/or shares directly into their
brokerage accounts shortly after the Nov. 6, 2002 effective date
for the transaction. Shareholders that own physical stock
certificates will receive written instructions following the
effective date on the process for tendering their shares in
order to receive their cash and new shares.
Going Private Transaction
The reverse split is part of a "going private" transaction. The
purpose of the reverse split is to reduce the number of holders
of the company's common stock to less than 100. Immediately
following the Nov. 6, 2002 effective date, the company intends
to file a Form 15 with the SEC to terminate any further
reporting obligations under Section 15(d) of the Securities and
Exchange Act of 1934. Accordingly, the company does not expect
to file any further periodic reports on its operations.
The company's common stock currently trades on the OTC Bulletin
Board under the symbol "TGCM." The company will make an
application with the OTC Bulletin Board to de-list its common
stock effective at the close of business on the effective date
of the reverse split. The de-listing will terminate the public
trading market for trading in the common stock. There is not
expected to be any public market for the company's common stock
after the reverse split, and there are no current plans to
develop a public market for trading the stock in the future.
At June 30, 2002, Teraglobal's balance sheets show a total
shareholders' equity deficit of about $5.7 million.
TIAA CMBS: Fitch Affirms Low-B Ratings on 5 Classes of Certs.
-------------------------------------------------------------
Fitch Ratings affirms TIAA CMBS I Trust, commercial mortgage
pass-through certificates, series 2001-C1, $157.1 million class
A-1, $200.0 million class A-2, $214.6 million class A-3, $400.0
million class A-4, $172.0 million class A-5 and interest only
class X at 'AAA'. In addition Fitch affirms class B at 'AA',
class C at 'A', class D at 'A-', class E at 'BBB+', class F at
'BBB', class G at 'BBB-', class H at 'BB+', class K at 'BB-',
class L at 'B+', class M at 'B', class N at 'B-'. Fitch does not
rate class O or class LR. The ratings affirmations follow
Fitch's annual review of the transaction, which closed in May of
2001. The rating affirmations are the result of the high
weighted average debt service coverage ratio of the mortgage
pool and limited paydown of the certificates. CapMark Services,
as master servicer, collected year-end 2001 operating statements
for 90% of the pool by balance. The YE 2001 weighted average
DSCR for those loans is 1.53 times up from 1.52x at issuance.
Fitch's weighted average DSCR is based on servicer provided net
cash flow.
In addition to the high weighted average DSCR, the transaction
is also diverse by property type and location. Currently the
transaction is collateralized by 257 commercial and multifamily
loans with a total collateral balance of $1.43 billion.
Significant property type concentrations include retail (27%),
multifamily (22%), and cooperative housing (11%). Geographic
concentrations include New York (13%), California (11%), Florida
(8%), New Jersey (7%), and Texas (6%).
There are currently two cross defaulted and cross collateralized
loans in special servicing, which are both current. The loans
transferred once the master servicer discovered a major tenant
filed bankruptcy and vacated its space at one of the properties.
The borrower has used funds from a legal claim against the
bankrupt tenant to keep the property current. An offer has been
made to purchase the property for more than the current debt. At
this time no loss is expected. In addition to the specially
serviced loan Fitch is concerned with five loans that have DSCRs
below 1.0x due mostly to occupancy issues at the underlying
properties.
Given these concerns in the pool, the current performance and
credit support was adequate to support the ratings affirmations
to the rated classes. Fitch will continue to monitor the
performance of this transaction, as surveillance is ongoing.
TOKHEIM CORP: August 31 Balance Sheet Upside-Down by $223 Mill.
---------------------------------------------------------------
Tokheim Corporation (OTCBB:THMC) reported that its earnings
before merger and acquisition costs and other unusual items,
interest, depreciation and amortization (EBITDA) for the three
and nine month periods ended August 31, 2002, were $5.5 and
$13.0 million, respectively, compared to $4.0 and $18.7 million
in the same periods of 2001.
Net sales for the three months ended August 31, 2002, were
$112.9 million compared to $112.9 million for the comparable
2001 three-month period. Customer sales for North America
decreased by 6% to $32.7 million in 2002 from $34.6 million in
2001. This decrease is attributable to the industry wide decline
in the North American market. European and African customer
sales for the period grew slightly to $80.2 million in 2002
compared to $78.3 million in 2001.
Net sales for the nine months ended August 31, 2002, decreased
slightly to $345.3 million compared to $355.9 million for the
comparable 2001 period. Sales for North America decreased by 18%
for the period to $102.1 million in 2002 from $124.0 million in
2001. European and African sales increased by 5% to $243.2
million in 2002 from $231.9 million in 2001. This increase is
primarily attributable to upgrade of products using the Euro
currency.
The Company's August 31, 2002 balance sheets show a working
capital deficit of about $235 million, and a total shareholders'
equity deficit of about $223 million.
Tokheim completed the final test (as prescribed by SFAS No.142
"Goodwill and Other Intangible Assets") of its capitalized
reorganization value in excess of amounts allocable to
identified assets during the third quarter of 2002. The
resulting charge of $145.1 million has been reflected in the
accompanying consolidated financial statements as effect of
accounting change adoption of SFAS 142.
The accompanying financial statements also contain a charge to
operations during the third quarter of 2002 of $27.4 million
related to the estimated impairment of certain North American
assets.
John S. Hamilton, President and Chief Executive Officer of
Tokheim Corporation, said: "Tokheim has maintained U.S. market
share during a continued weak market and during our efforts to
explore strategic options for our Company. The dedication of our
people and the faith in us shown by our customers have been very
gratifying."
Loss applicable to common stock was $39.3 million for the three
months ended August 31, 2002, compared to a loss applicable to
common stock of $15.1 million for the same period in 2001. Loss
applicable to common stock for the nine months ended August 31,
2002, was $14.32 per diluted common share before effect of
accounting change and net loss was $46.76 per diluted common
share compared to $8.94 per diluted common share for the
comparable period in 2001.
Cash provided from operations for the nine-month period ended
August 31, 2002, was $6.6 million versus a negative $3.8 million
in the same period of 2001. Hamilton said, "Tokheim continues to
realize benefit from our improved management of working capital
and reduction of costs. An improvement in cash from operations
of $10.4 million, year over year, is a clear indicator of the
success of these initiatives. In addition, our operations in
Europe continue to provide a benchmark in sales earnings and
cash flow for Tokheim and for the industry."
Merger and acquisition costs and other unusual items were $5.6
million for the nine-month period ended August 31, 2002,
compared to $4.5 million for the same period in 2001. The
increase is due to severance and lease cancellation costs from
facility closures in 2002, related to ongoing cost reduction
efforts.
Tokheim Corporation, based in Fort Wayne, Indiana, is one of the
largest producers of petroleum dispensing devices. Tokheim
Corporation manufactures and services electronic and mechanical
petroleum dispensing systems. These systems include petroleum
dispensers and pumps, retail automation systems (such as point-
of-sale systems), dispenser payment or "pay-at-the-pump"
terminals, replacement parts, and upgrade kits.
TRANSACTION SYSTEMS: Gets Approval to Continue Listing on Nasdaq
----------------------------------------------------------------
Transaction Systems Architects, Inc. (Nasdaq:TSAIE), a leading
global provider of enterprise e-payments and e-commerce
solutions, has received approval to continue trading on the
NASDAQ National Market under the symbol "TSAIE". This approval
is subject to the Company providing NASDAQ with its completed
June 30, 2002 interim financial information by November 29,
2002.
The Company previously announced that its recently appointed
independent accountants, KPMG LLP, would not be able to complete
their review of its financial statements for the three and nine-
months periods ended June 30, 2002 until the re-audit of fiscal
years 2000 and 2001 is complete.
The Company will announce its fourth quarter and September 30,
2002 fiscal year results in conjunction with the announcement of
the results of the re-audit.
"We are pleased to receive the notice from NASDAQ," said Dwight
Hanson, CFO. "Our staff and KPMG are working diligently to
complete the re-audit. We currently believe that we will
complete the re-audit by November 29, 2002."
Transaction Systems Architects' software facilitates electronic
payments by providing consumers and companies access to their
money. Its products are used to process transactions involving
credit cards, debit cards, secure electronic commerce, mobile
commerce, smart cards, secure electronic document delivery and
payment, checks, high-value money transfers, bulk payment
clearing and settlement, and enterprise e-infrastructure.
Transaction Systems Architects' solutions are used on more than
1,650 product systems in 71 countries on six continents.
UNITED AMERICAN HEALTHCARE: Working Capital Deficit Tops $3.8MM
---------------------------------------------------------------
United American Healthcare Corporation (Nasdaq: UAHC), a pioneer
in health care services for Medicaid recipients, announced its
financial results for the fourth quarter and year ended June 30,
2002. Total revenues increased $48.4 million (37%) to $180.1
million in the fiscal year ended June 30, 2002 from $131.7
million in the fiscal year ended June 30, 2001. For the
quarter, revenues increased by $20.4 million to $54 million over
the same quarter one year ago.
The company experienced an earnings loss of $10.9 million for
the year ended June 30, 2002 compared to positive net earnings
of $1.2 million for the year ended June 30, 2001. For the
fourth quarter ended June 30, 2002 there was a loss of $14.4
million compared to earnings of $4.5 million for the same
quarter a year ago. This decrease in earnings was primarily
attributable to a combination of circumstances in the fourth
quarter of fiscal 2002 which were unexpected and not foreseeable
by management. Beginning in February, March and April 2002, the
company's OmniCare-TN subsidiary noticed increases in its claims
payments, investigated, and found that approximately 9,500 new
members added in September-December 2001 represented children
with special needs with medical costs over 100% of the premiums
received, and that many members transferred to OmniCare-TN from
failed managed care organizations also had exceptionally high
medical costs in relation to OmniCare-TN's premiums received.
Beginning in April 2002, OmniCare-TN wrote to the state of
Tennessee's bureau of TennCare seeking risk adjustments and
reimbursements to compensate OmniCare-TN for such medical
expenses, including for actuarially estimated claims incurred
but not yet reported to OmniCare-TN. TennCare responded by
amending its contract with OmniCare-TN in September 2002, so
that OmniCare-TN retroactively elected a certain shared risk
option for the ten months from July 1, 2001 through April 30,
2002. TennCare retroactively agreed to reimburse OmniCare-TN on
a no-risk Administrative Services Only basis for medical
services effective beginning May 1, 2002, and TennCare agreed to
pay OmniCare-TN up to $7.5 million as necessary to meet its
statutory net worth requirement as of June 30, 2002. In
addition, in October 2002, TennCare further agreed to pay
additional funds if further certified actuarial data indicated
it was needed. This constitutes a $7.6 million medical services
revenues receivable of OmniCare-TN as of June 30, 2002 for
statutory accounting purposes, which is recorded in the first
quarter of fiscal 2003 under generally accepted accounting
principles. Additionally, UAHC adjusted for a loss of $2.4
million for the write-down of a patient care software system in
the quarter ended June 30, 2002. These two items comprised $10
million of the $10.9 million loss for the year ended June 30,
2002.
In its June 30, 2002 consolidated balance sheets, the Company's
total current liabilities exceeded its total current assets by
about $3.8 million, while the Company's total shareholders'
equity has shrunk to $1.7 million from $12.3 million as recorded
on the same date last year.
"The third and fourth quarters were challenging for our
company," commented Gregory Moses, President and CEO of United
American Healthcare. "That said, we feel the worst is behind us
and believe that the stabilization policy the state of Tennessee
implemented greatly improves our ability to project and predict
revenue and earnings going forward. The policy stipulates that
managed healthcare plans like OmniCare-TN will no longer have to
bear the risk and responsibility for their members' medical
expenses through December 2003. An additional benefit to the
stabilization policy is that it encourages plans such as
OmniCare-TN to add additional members as an improved cost
structure is achieved and the cost to maintain and acquire
additional members becomes more cost efficient. We feel this
will enhance our already strong membership growth; UAHC's
membership grew 120 percent, from 55,000 members at June 30,
2001 to 120,000 members at June 30, 2002," Mr. Moses continued.
"We believe UAHC has weathered these unusual circumstances and
are optimistic about the future of our company."
Total expenses increased $39.2 million (135 percent) to $68.3
million for the fourth quarter ended June 30, 2002, compared to
$29.1 million for the quarter ended June 30, 2001, and increased
to $191 million for the year ended June 30, 2002, compared to
$130 million for the year ended June 30, 2001. The increases
were principally in medical services expenses from the increased
number of members and from a portion of the added members who
had higher medical costs. In addition, management determined it
was prudent to record a $2.4 million impairment loss on a
patient care software system in the fourth quarter ended June
30, 2002.
The principal uses of funds for the year ended June 30, 2002
were $5.1 million for operating activities, $1.0 million for
capital expenditures and $0.6 million for debt repayment. In
addition, $13.3 million was used to purchase marketable
securities. At June 30, 2002, the Company had cash and cash
equivalents and marketable securities of $18.8 million, compared
to $24.7 million at June 30, 2001.
As previously announced, the Company's management agreement with
OmniCare-MI, a Michigan health maintenance organization, will
terminate November 1, 2002 pursuant to a notice received from
OmniCare-MI. On that date, the Company will cease providing
services to OmniCare-MI, and OmniCare-TN will be the Company's
only managed plan. This termination should have no substantial
impact on UAHC's bottom line, as approximately equal operating
costs offset revenues from that operation since August 1, 2002.
United American Healthcare is a full-service healthcare
management company, pioneering the delivery of healthcare
services to the Medicaid population since 1985. UAHC currently
administers two health maintenance organizations. The Company
owns a 75% interest in and manages OmniCare-TN in western
Tennessee, including Memphis, and administers OmniCare-MI in
Wayne County, Michigan, under management contracts. The
OmniCare-MI contract is scheduled to terminate effective
November 1, 2002. UAHC serves 120,000 enrollees through
OmniCare-TN.
US AIRWAYS: Non-Defaulted Ratings Stay on S&P's Watch Developing
----------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings on US
Airways' various aircraft-backed obligations that have not
defaulted remain on CreditWatch with developing implications, as
do the ratings on two small airport revenue bonds. The
CreditWatch update follows US Airways Group Inc. (D) unit US
Airways Inc. (D) having reached decisions on accepting or
rejecting some of its aircraft financings, as its 60-day period
for making such determinations ended at midnight October 9.
However, the airline is still negotiating with many lessors and
creditors about possible revised terms.
US Airways Inc. affirmed all financing obligations related to
Airbus aircraft and, where applicable, paid past due amounts.
The airline has rejected financings related to its grounded
fleets of older planes (none rated), and 10 Boeing aircraft,
some in rated equipment trust certificates and enhanced
equipment trust certificates. Accordingly, Standard & Poor's
lowered its ratings on the 1988H series of equipment trust
certificates originally issued by Piedmont Aviation Inc. to 'D'
from double-'C'. In addition, some payments on rated equipment
trust certificates fell due and were not paid since US Airways'
Aug. 11, 2002, bankruptcy filing. Accordingly, Standard & Poor's
lowered its ratings on the US Airways Inc. equipment trust
certificate 1990A1-3 and the 1988D series of equipment trust
certificates originally issued by Piedmont Aviation to 'D' from
double-'C'.
On August 11, Arlington, Virginia-based US Airways Group and US
Airways filed for bankruptcy, despite having received
conditional approval for a $900 million federal loan guaranty
(on a $1 billion total credit facility) and reaching tentative
concessionary agreements with most of its unions, judging that
it would not be able to reach satisfactory cost-cutting
agreements with various vendors, aircraft lessors, and holders
of aircraft-secured debt in a timely fashion. Prior to filing
for bankruptcy US Airways Group arranged a $500 million debtor-
in-possession credit facility and lined up an equity investor
and reorganization plan sponsor, TPG Partners III L.P. and
affiliates (Texas Pacific Group). On September 26, 2002, US
Airways Group accepted (and the bankruptcy court approved) an
alternative $240 million investment from the Retirement System
of Alabama in exchange for a 37.5% stake in the reorganized
company, replacing TPG. US Airways plans to emerge from Chapter
11 bankruptcy in the first quarter of 2003. Upon its emergence,
RSA will invest $240 million. At the same time, US Airways will
receive the $1 billion secured loan, 90% backed by a federal
loan guaranty, which would repay the debtor-in-possession
borrowings and bolsters cash reserves.
"Standard & Poor's ratings on US Airways' paying obligations
could be raised if the company makes progress toward
reorganizing, or lowered if reduced liquidity endangers its
continued operation or if particular obligations are rejected by
the company in bankruptcy," said Standard & Poor's credit
analyst Philip Baggaley.
VERSATEL TELECOM: Court Confirms First Amended Chapter 11 Plan
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
confirmed Versatel Telecom International N.V.'s First Amended
Plan of Reorganization. The Court determined that the Plan
complies with the applicable provisions of the Bankruptcy Code.
The Court finds that confirmation of the Plan is not likely to
be followed by liquidation or the need for further financial
reorganization of the Debtors. The Plan presents a workable
scheme of reorganization and there is a reasonable probability
that the provisions of the Plan will be performed. The Court
provides that if the Effective Date will not occur on or before
January 4, 2003, the Confirmation shall be vacated and no
distribution under the Plan shall be made.
After the Effective Date, the Reorganized Debtor will convene an
extraordinary meeting of the shareholders at which the new
supervisory board will be appointed. Four directors of the
supervisory board are to be designated by the Ad Hoc Committee
and no more than three directors of the supervisory board are to
be designated by the Reorganized Debtor. The Court ascertains
that the selection of members of the supervisory board is
consistent with the interests of creditors and equity security
holders and with public policy. On the Effective Date, New
Common Stock will be issued to the Debtor's Noteholders such
that, in the aggregate, the Noteholders will acquire control of
80% of the equity of the Reorganized Debtor.
Versatel Telecom International, N.V., provides broadband
Internet and telecommunications services including voice and
data services, dedicated Internet access services, customized
telecommunication solutions and Internet-enabled applications in
The Netherlands, Belgium and northwest Germany. The Debtor filed
for chapter 11 protection on June 19, 2002. Douglas P. Bartner,
Esq., at Shearman & Sterling represents the Debtor in its
restructuring efforts. When the Company filed for protection
from its creditors, it listed $2,017,758,399 in total assets and
$1,605,897,821 in total debts.
Versatel Telecom BV's 13.25% bonds due 2008 (VERT08NLR1), with
Versatel Telecom Int'l NV as underlying issuer, are trading at
24.5 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=VERT08NLR1
for real-time bond pricing.
WCI COMMUNITIES: Expects to Fall Short of Q3 Earnings Guidance
--------------------------------------------------------------
WCI Communities, Inc. (NYSE:WCI) -- whose $200 million senior
subordinated notes are currently rated by Standard & Poor's at B
-- has issued new guidance for its third quarter and full year
ending December 31, 2002.
-- The company stated that it will fall short of the Q3
guidance previously published. The company expects net income
for the quarter to be in the range of $9 million to $11 million
($0.20 to $0.24 per share) compared to the previous guidance of
$15 to $17 million ($0.32 to $0.37 per share). The company will
release Q3 earnings on October 24th and host a conference call
the same day at 4:30 p.m. EST.
-- The shortfall is related to fully reserving for two
items: (1) The likely default of five purchase contracts at its
luxury Trieste Tower in Naples, Florida, which was completed
during the third quarter; and (2) The potential of up to 48
purchasers under contract in Ventanas I at Tiburon, a mid-rise
in Naples, Florida, exercising their right to cancel their
contracts.
-- For the full year 2002, WCI expects income before
extraordinary items to be in the range of $102 to $106 million
($2.28 to $2.37 per share) compared to its previous guidance of
$110 to $116 million ($2.45 to $2.58 per share).
Trieste: This high-rise was initially pre-sold during the third
quarter of 2000. It is comprised of 106 units for an estimated
aggregate value in excess of $240 million. At the time of
completion of construction during the third quarter of this
year, 84 of the 106 units were in backlog to close. Through
September 30, 2002, 65 units closed with contract values of
$146.3 million. Nineteen units remain in backlog with a contract
value of $40.6 million. Of the nineteen units in backlog, the
company has been notified that the purchasers of five units
intend to default on their contracts. These five units have a
contract value of $10.1 million. The company intends to retain
the deposits totaling $2.9 million, securing performance of such
contracts, but is also continuing to negotiate to accomplish
some or all of the closings for these five units. Based upon
these likely defaults, the company has reversed the revenue and
margin previously recognized on these five units, net of
forfeited deposits, which is expected to have a $3.8 million
pre-tax impact on Q3 earnings and has been incorporated into the
lower guidance published above.
Ventanas Mid-rise: This mid-rise was initially marketed in the
second quarter of 2001. It is comprised of 84 units for an
estimated aggregate value of approximately $45 million.
Construction of Ventanas is expected to be completed in December
of this year. Of the 84 units, 48 were previously sold for
contract values of $30.9 million. Earlier this year during the
course of construction, the Company failed to include the proper
notification required under Florida administrative rules when
sending out amendments of condominium documents to purchasers
which required a 15 day right of rescission. The managers
responsible for sending this deficient notice failed to follow
company policy and procedure relating to sending such notices
and have been terminated. This required notice is now being
given to the purchasers of the 48 units affording them the right
to rescind their contracts. Because of the significant
deterioration in the economic conditions since early 2002, we
expect that most, if not all, of the purchasers of these 48
units will exercise their rescission rights and cancel their
contracts. Based upon the foregoing, the company is fully
reversing the revenue, cost and pre-tax income previously
recognized on these units during this quarter. The result of
this reversal is a reduction of third quarter revenue and pre-
tax income in amounts of $25.3 million and $8.4 million,
respectively, and has been incorporated into the lower guidance
published above.
Total Homebuilding: Net new contracts for Q3 '02 were 563 units
valued at $274.1 million compared to 585 units valued at $422.8
million for the same period in '01. The average price of a unit
sold in Q3 '02 was $493,000 compared to $723,000 for the same
period last year. The reduction in dollar volume contracted and
average sales price during Q3 this year relates principally to a
shift in mix toward less expensive tower units being sold during
the quarter, and for the first nine months this year compared to
the same periods last year. The average price for a tower unit
sold during the third quarter this year was $782,000 compared to
$1,358,000 for Q3 '01. While it was expected that the average
price for tower units being sold during 2002 would be lower than
the same period last year due to a planned shift of mix of
buildings being initially marketed this year, the average price
is also lower because market conditions have accelerated
absorption in affordable towers and slowed absorption in some
more expensive towers. For the nine months ended 9/30/02 net new
contracts were 1,739 units valued at $791.8 million compared to
1,765 units valued at $926.1 million for the same period last
year. For the nine months of this year the average price was
$455,000 compared to $525,000 for the same period in 2001.
Backlog grew this quarter to $912.1 million reflecting a 3.6%
increase over the same period last year.
Single and Multi-Family Homebuilding: Net New Contracts for Q3
'02 were 363 units valued at $117.8 million compared to 361
units valued at $118.7 million for the same period last year.
The average price was $324,000 for Q3 this year compared to
$329,000 for the same period last year. For the nine months
ended 9/30/02 new contracts were 1,379 for a value of $446.3
million compared to the same period of last year when 1,356
units were sold for $441.7 million. For this nine-month period
the average sales price was $324,000 compared to $326,000 for
the same period in 2001. Backlog grew to 1,167 units valued at
$460.4 million compared to 1,115 units and a contract value of
$398.6 million for the same period last year.
Mid-rise and High-rise Homebuilding: Net New Contracts for Q3
'02 were 200 for a contract value of $156.3 million compared to
224 units for a contract value of $304.1 million for the same
period last year. The average price was $781,500 during the
third quarter this year compared to $1.36 million for the same
period last year. Ending Backlog was $459.6 million for the
quarter compared to $482.2 million for the same period last
year. For the nine-month period ended 9/30/02 the number of new
contracts was 360 for a value of $345.5 million compared to 409
new contracts valued at $484.5 million for the same period last
year. Contracts written during the first nine months this year
had an average price of $954,000 compared to an average price of
$1.18 million during the same period last year.
Traffic and Market Commentary: Total traffic to WCI's 29
locations accepting contracts for the quarter was up slightly at
9,675 visitors compared to 9,506 visitors to its 26 locations
for the same period last year. Total traffic for the first nine
months was up about 1.5% at 43,919 visitors compared to 43,258
during the same period last year. On a same store basis, traffic
for the quarter was down 9%, while on a YTD basis same store
traffic has been up by 3.8% compared to the same periods in
2001. For its Single and Multi-Family Homebuilding activity year
to date 9/30/02, new orders for the Affordable Retirement market
sector are up 35%; new orders for the Primary/Multi-generational
market are up 15% and new orders serving the Second Home/Luxury
market are down 48%, each compared to the same period last year.
For the Mid-rise and High-rise Homebuilding activity, it is
often difficult to distinguish between Retirement and Second
Home Purchasers. On a year to date basis, it appears that much
of the 12% decline in new order comparison for '02 compared to
'01 relates to a significant slowdown in the Second Home sector
of the Luxury market as opposed to the Retirement sector of the
Luxury market. Within the Second Home market, it also appears
that the sales pace in Southwest Florida is off relatively more
than WCI towers located on the East Coast of Florida.
For more than 50 years WCI has been creating amenity-rich,
leisure-oriented master-planned communities that serve affluent
homebuyers in Florida. Based in Bonita Springs, WCI is a
publicly held company with 34 communities located in many of
Florida's coastal markets. WCI's award-winning communities
currently feature more than 600 holes of golf, more than 1,000
boat slips at five deep-water marinas, and various country club,
tennis and recreational facilities and several luxury hotels.
The company's land holdings include approximately 15,000 acres.
WCI's homebuilding operations serve primarily move-up,
retirement and second home buyers, with prices from $100,000 to
more than $10 million. In addition to traditional single homes,
the company also builds luxury high-rise residences. It also
derives income from ancillary businesses including Prudential
Florida WCI Realty, mortgage, title and property management
services, as well as through the operation of its amenities such
as golf courses, restaurants and marinas.
For more information about WCI and its residential communities
visit http://www.wcicommunities.com
WILLIAMS COMMS: Exits Chapter 11 Bankruptcy as WilTel Comms.
------------------------------------------------------------
Williams Communications Group, Inc., (OTC Bulletin Board: WCGRQ)
has completed its financial restructuring and has emerged from
Chapter 11 proceedings as WilTel Communications Group, Inc. (OTC
Bulletin Board: WTELV), a Nevada corporation. Its Plan of
Reorganization, which was confirmed by the United States
Bankruptcy Court for the Southern District of New York on
September 30, 2002, became effective on October 15, 2002. The
Company will continue to operate from its Tulsa headquarters.
The Company emerges with a new $375 million credit facility and
no other substantial debt obligations other than those related
to its headquarters building.
Under the Company's Plan of Reorganization, existing shares of
WCG stock (OTC Bulletin Board: WCGRQ) have been cancelled. The
Company has issued 50,000,000 WilTel Communications shares for
distribution, approximately 54 percent of which have been issued
for distribution to unsecured creditors and 44 percent of which
have been issued to Leucadia National Corporation (NYSE: LUK).
Leucadia has invested $150 million in the Company and purchased
the claims of The Williams Companies for $180 million, which
funds will be released to the Company and The Williams Companies
upon receipt of requisite FCC regulatory approvals which are
expected to be obtained in the fourth quarter of 2002. The
remaining two percent of the new equity has been set aside for
potential recovery by holders of securities-related claims
through a channeling injunction approved by the Court.
The Company noted that its swift emergence and ability to
maintain all of its network business is a testament to the
dedication of its employees and loyal customers.
Separately, the Company announced that Howard Janzen has
resigned as president, CEO and as a director. The WilTel Board
of Directors expressed its appreciation to Mr. Janzen:
"[Wednes]day WilTel emerges as a financially healthy, industry
leader. This is a testament to the foundation created by Howard
and the outstanding leadership provided by him during the
Company's recent restructuring. Howard is a major reason for
the Company's rapid emergence from Chapter 11 and for the
seamless management of operations and customer care since the
company's founding and over these difficult past six months. We
thank him for his commitment and hard work on behalf of the
Company as the Board begins the search for the next leader to
continue WilTel's growth and industry leadership."
The Company will focus on offering solutions to a sophisticated
customer base with complex communications needs, including
leveraging the Company's strategic relationships with global
telecom leaders, while growing its customer base and increasing
sales momentum for its core offerings which include voice and
data services. The Company's 17 years of experience and quality
of service, which are critical for the delivery of video
applications and content, will help it to maintain its
leadership position in the media and entertainment sector.
The Company's Board of Directors consists of J. Patrick Collins,
Ian M. Cumming, William H. Cunningham, Michael Diament, Alan J.
Hirschfield, Jeffrey C. Keil, Michael P. Ressner, Joseph S.
Steinberg, with one seat vacant as a result of Mr. Janzen's
resignation.
WilTel Communications provides data, voice and media transport
solutions to a growing carrier-class customer base with complex
communications needs. Such customers include leading global
telecommunications, media and entertainment companies --
companies where bandwidth is either their primary business or a
core component of the products and services they deliver.
WilTel's advanced network infrastructure reaches border-to-
border and coast- to-coast with international connectivity to
accommodate global traffic. For more detailed information,
visit http://www.wiltelcommunications.com
WORKFLOW MANAGEMENT: Lenders Extend Waiver re Covenant Defaults
---------------------------------------------------------------
Workflow Management, Inc., (Nasdaq:WORK) a leading provider of
print outsourcing solutions, announced that the Company's
lenders have extended the waiver relating to Workflow's covenant
defaults under the Company's secured credit facility.
The extended waiver will be in effect from October 15, 2002
through January 15, 2003.
The waiver agreement, announced between Workflow and its senior
lending group, provides a detailed timetable for the Company,
its management, and its Special Committee and advisors to
complete the process of reviewing strategic and financial
alternatives and implementing a strategic plan. Specifically,
the waiver agreement stipulates that the advisors will make
final recommendations to the Special Committee in mid-November
with the Company finalizing a new business plan by November 30,
2002. Furthermore, the waiver agreement contains certain
covenants, including revised leverage ratios and minimum EBITDA
targets in line with the Company's current projections through
January 15, 2003. In addition, the Company has agreed that it
will not amend or renew the terms and conditions of its
outstanding director and officer loans and that proceeds from
the collection of those loans will be paid to permanently reduce
bank indebtedness.
Thomas D'Agostino, Sr., Chairman, President and CEO stated, "We
are pleased that the Company's lenders have extended the waiver
until January 15, 2003 so that the Special Committee of the
Company's Board of Directors, with the assistance of its
financial advisors, and management, can complete the process of
assessing long-term financial and strategic alternatives. The
Company remains committed to solidifying its capital structure
as part of this process."
Workflow will hold its Annual Meeting of Shareholders on October
28, 2002 in West Palm Beach, Florida. In addition to nominating
the eight current directors of the Company for re-election at
the Annual Meeting, the Board has also nominated two additional
candidates to serve as directors, both of whom are "independent"
as defined under current and proposed NASDAQ and SEC rules. Both
nominees have extensive industry experience. These candidates
are Gerald F. Mahoney and Peter S. Redding. Mr. Mahoney served
as the Chairman, Chief Executive Officer, and Board member of
Mail-Well, Inc., (NYSE: MWL) from 1994 until 2001, one of the
largest commercial printers in North America. Mr. Redding
served as President and Chief Executive Officer for The Standard
Register Company (NYSE:SR), a commercial printing and outsource
fulfillment services company, before retiring in 2000.
Mr. D'Agostino, Sr., continued, "While we have seen little
change in the difficult business climate since our conference
call last month, we are pleased that our revenues and client
base remain stable and that operating profitability remains
relatively strong. We believe that the Company has a number of
attractive alternatives from which to choose during the next
several months. We are looking forward to having two additional
directors, with vast industry experience, involved in the
decision making process."
Workflow Management, Inc., is a leading provider of end-to-end
print outsourcing solutions. Workflow services, from production
of logo-imprinted promotional items to multi-color annual
reports, have a reputation for reliability and innovation.
Workflow's complete set of solutions includes document design
and production consulting; full-service print manufacturing;
warehousing and fulfillment; and iGetSmart - the industry's most
comprehensive e-procurement, management and logistics system.
Through custom combinations of these services, the Company
delivers substantial savings to its customers - eliminating much
of the hidden cost in the print supply chain. By outsourcing
print-related business processes to Workflow, customers
streamline their operations and focus on their core business
objectives.
For more information, visit the Company's Web site at
http://www.workflowmanagement.com
WORLD HEART: Commences OTCBB Trading Following Nasdaq Delisting
---------------------------------------------------------------
Effective Tuesday, October 15, 2002, World Heart Corporation
(OTCBB: WHRT, TSX: WHT) common shares commenced trading on the
Over the Counter Bulletin Board and no longer is traded on the
Nasdaq National Market. Quotes can be obtained through the OTCBB
Web site at http://www.otcbb.com The Company will continue to
trade on the Toronto Stock Exchange (TSX) and continue to meet
the listing requirements of that Exchange.
This action concluded the review process that began in August as
discussed in WorldHeart's news release of August 2, 2002.
"We would have preferred to remain on the Nasdaq National Market
listing," said Rod Bryden, President and CEO of WorldHeart.
"However, trading will continue to be available through the
OTCBB facilities and the company expects to return to the Nasdaq
National Market in due course."
World Heart Corporation, a global medical device company based
in Ottawa, Ontario and Oakland, California, is currently focused
on the development and commercialization of pulsatile
ventricular assist devices. Its Novacor(R) LVAS (Left
Ventricular Assist System) is well established in the
marketplace and its next-generation technology,
HeartSaverVAD(TM), is a fully implantable assist device intended
for long-term support of patients with end stage heart failure.
WORLDCOM INC: Court Okays JA&A Services as Crisis Managers
----------------------------------------------------------
Judge Gonzalez authorizes the Worldcom Inc. Debtors to retain
JA&A Services LLC pursuant to the Engagement Letter and continue
to employ JAS on an interim basis under the Engagement Letter,
nunc pro tunc to July 28, 2002; provided that:
-- The Engagement Letter is revised to provide that JAS
employees serving as officers of the Company will be entitled
to receive only whatever indemnities are made available,
during the term of JAS' engagement, to other officers of the
Company, whether under the Company's by-laws, certificate of
incorporation, applicable corporation laws, or contractual
agreements of general applicability to the Debtors;
-- JAS will not be entitled to receive an Additional Fee to the
extent it is terminated for actions constituting gross
negligence or willful misconduct; and
-- JAS will not be entitled to receive an Additional Fee in the
event the Debtors' cases are converted from cases under
Chapter 11 to Chapter 7 of the Bankruptcy Code, unless the
Chapter 7 trustee appointed after the conversion ratifies and
continues the Engagement Letter.
Judge Gonzalez rules that the Additional Fee contemplated in the
Engagement Letter is subject to approval by the Court at the
conclusion of the cases on a "reasonableness" standard, and is
not pre-approved by this Order under Section 328(a) or
otherwise.
Pursuant to an Engagement Letter dated July 28, 2002, JA&A
Services agreed to provide certain temporary staff to assist the
Debtors in their restructuring process. Pursuant to the terms
of the Engagement Letter, JA&A Services' staff assumed certain
management positions of the Debtors' business. John S. Dubel
serves as the Debtors' Chief Financial Officer while Gregory F.
Rayburn serves as the Debtors' Chief Restructuring Officer.
Working collaboratively with the senior management team, the
Board of Directors and other Company professionals, Messrs.
Dubel and Rayburn will assist the Company in evaluating and
implementing strategic and tactical options through the
restructuring process.
In addition to the CFO and CRO, JA&A Services will provide
additional Temporary Staff as needed. The Debtors will only
enlist the services of additional Temporary Staff after
consulting with and obtaining the approval of the Company's
Chief Executive Officer. The Temporary Staff is expected to:
A. assist in managing the "working group" professionals who are
assisting the Company in the reorganization process or who
are working for the Company's various stakeholders to improve
coordination of their effort and individual work product to
be consistent with the Company's overall restructuring goals;
B. work with the senior management team, the Board of Directors
and other Company professionals to further identify and
implement both short-term as well as long-term liquidity
generating initiatives;
C. assist in developing and implementing cash management
strategies, tactics and processes. Work with the Company's
treasury department and other professionals and coordinate
the activities of the representatives of other constituencies
in the cash management process;
D. assist management with the development of the Company's
revised business plan, and any other related forecasts as may
be required by lenders in connection with negotiations or by
the Company for other corporate purposes;
E. assist in communication and negotiation with outside
constituents including the lenders and its advisors; and
F. assist with any other matters as may be requested that fall
within JA&A Services' expertise and that are mutually
agreeable.
Under the terms of an Engagement Letter, JA&A Services will be
compensated for its services at these hourly rates:
Principals $520 - 640
Senior Associates 395 - 495
Associates 285 - 385
Accountants & Consultants 210 - 280
Analysts 125 - 185
JA&A Services' professionals, who will be primarily engaged in
these cases, and their corresponding hourly rates are:
John S. Dubel (Chief Financial Officer) $590
Greg Rayburn (Chief Restructuring Officer) $590
The Debtors have also agreed to pay a $750,000 retainer to JA&A
Services to secure performance under the Engagement Letter.
(Worldcom Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
WORLDCOM: Church Group Calls on FCC to Block Licenses Transfer
--------------------------------------------------------------
The Office of Communication of the United Church of Christ,
Inc., urged the Federal Communications Commission (FCC) to block
the Debtor-In-Possession (DIP) transfer of the licenses and
authorizations to operate across state lines that scandal-
plagued WorldCom uses to maintain its long-distance, Web and
other key services in the U.S. and abroad. The church group
also requested that the FCC establish "minimum corporate
responsibility standards" for WorldCom and other current and
future telecom licensees. The new FCC standards would be based
on an investigation (also requested by UCC) into the root causes
of the problems that are rocking the telecommunications
industry.
Tuesday's filings parallel events of nearly 40 years ago when
UCC made broadcasting history by petitioning the FCC in 1963 to
take action in relation to the license of another Jackson,
Mississippi communications firm on the same grounds: a
demonstrated lack of fitness to use the public airwaves. In the
historic WLBT-TV case, the FCC rejected the UCC petition for
license renewal denial as groundless and then was overturned by
a court which found sufficient "public interest" violations in
the racist practices of the Jackson television station, which
literally "blacked out" images of civil rights leaders, such as
Thurgood Marshall, during its rebroadcast of network news shows.
Of its call for FCC action against WorldCom, UCC Office of
Communication Director, The Rev. Robert Chase said: "Companies
that manage our nation's telecommunications and Internet
facilities must operate in the public interest, maintaining a
corporate character that assures honest and effective
stewardship. Only the Federal Communications Commission can
send a clear signal to the rest of the telecommunications world
that WorldCom was and is grossly unfit to serve as an
Information Age steward."
UCC counsel Gregg Skall, of the Washington, D.C. law firm of
Womble Carlyle Sandridge & Rice, PLLC, said: "[Tues]day, UCC
filed an objection to WorldCom's applications to transfer its
FCC authorizations from its pre- bankruptcy entity to itself as
Debtor-In-Possession. Of course, WorldCom and WorldCom DIP are
one and the same, which is exactly the point of our filing an
objection against these assignment applications. The FCC has a
well- established process for reviewing the character
qualifications of those who seek FCC licenses and
authorizations. UCC's objection demonstrates that WorldCom's
business practices clearly violated FCC rules and make it
unqualified to be a Commission licensee. Therefore, the
Commission must reject the assignment applications and start the
process for finding a qualified entity to which the
authorizations 'could' be assigned."
The United Church of Christ is a mainline Protestant
denomination of 1.4 million members in more than 6,000 churches,
30 colleges and institutions of higher education, 15 seminaries
and over 340 health and human services centers in every state
and in Puerto Rico.
Key Previsions of the Petitions Filed at the FCC
The highlights of the UCC filings made Tuesday at the FCC are as
follows:
* An objection to the disposition by the FCC of the
transfer of licenses to WorldCom as the Debtor in Possession in
the company's bankruptcy proceeding. Noting that the board and
management of the DIP remain substantially unchanged from
WorldCom at the height of its deceit, UCC maintains that the FCC
cannot possibly argue that the transfer of licenses to the
WorldCom-controlled DIP is in the public interest. In
highlighting the many acts of WorldCom's fraud and deception,
the UCC objection also makes it clear that the company
repeatedly violated FCC rules and disqualified itself from being
a licensee under existing FCC character qualification policy.
* A separate petition in rulemaking and request for a FCC
investigation determining the basis for prospective rules of
corporate conduct for all telecommunications service providers
subject to the FCC's jurisdiction. The goal here is to
encourage a code of "minimum corporate responsibility" to help
avoid future WorldCom-like scandals in the telecommunications
industry.
Chase said: "In the digital age, stewardship of the facilities
are essential to modern e-commerce and must be handled by
companies that are above reproach and that can be trusted to
operate in the public interest. WorldCom and other companies
use the public airwaves under public interest authorizations
and, as such, must be held to the standard of behavior that is
defined in the law. When the Commission undertakes its
investigation, we are confident that it will find that WorldCom
is unsuitable to ever again hold any of its operating licenses
and authorizations and that its behavior provides instruction
for what further measures need to be adopted by the Commission
to forestall new opportunities for deception."
Founded in 1959, the Office of Communication of the United
Church of Christ, Inc., achieved prominence in the 1960s as the
civil rights movement was gaining momentum. After reviewing the
civil rights performance of television stations in the South,
the Office identified Jackson, Mississippi-based WLBT TV as a
frequent target of public complaints and FCC reprimands for
"public interest" violations. In 1963, the Office filed a
"petition to deny renewal" with the FCC, initiating a process
that had far-reaching consequences in U.S. broadcasting. The
FCC's initial response to the petition was to rule that neither
the United Church of Christ nor local citizens had legal
"standing" to participate in its renewal proceedings. The UCC
appealed, and in 1966, Warren Burger, then a federal appeals
court judge, wrote a decision granting such standing to the UCC
and to citizens in general. After a hearing, the FCC renewed
WLBT's license, resulting in another appeal by the UCC. Burger
then wrote a second decision that declared the FCC's record
"beyond repair" and revoked WLBT's license in 1969.
Based on this new right to participate in license proceedings,
the Office of Communication of the UCC began to work with other
reform and citizens' groups to monitor broadcast performance on
a number of issues, including employment discrimination and
fairness. In 1967, the Office's petition to the FCC dealing
with employment issues led to the Commission's adoption of Equal
Employment Opportunity rules for broadcasting. In 1968, it
participated as a "friend of the court" in the landmark Red Lion
case, which confirmed and expanded the Fairness Doctrine.
Beyond the world of broadcast television and radio, the Office
of Communications of the UCC also has worked on such issues as
the deregulation of telecommunications and cable rate setting.
Worldcom Inc,'s 8.0% bonds due 2006 (WCOM06USN1), DebtTraders
reports, are trading at 13.5 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM06USN1
for real-time bond pricing.
XO COMMS: Secures Court Approval of New Agreements with Level 3
---------------------------------------------------------------
XO Communications, Inc., obtained the Court's authority, to
-- enter into the new Master Agreement with Level 3
Communications, Inc., and Level 3 Communications, LLC;
and
-- assume the three related amended prepetition agreements:
the NMCSA, the Master Wavelengths Agreement, and the
Workout Agreement.
Salient Terms of the New Master Agreement
1. Payments by XO Intercity to Level 3
$12,661,000 Paid upon execution of the Master Agreement,
on account of the amounts due under the IRU
Agreement.
$4,339,000 to be paid ($1,580,000 on each of September 30,
2002 and October 30, 2002, and $1,179,000 on
November 30, 2002.
The two amounts add up to $17,000,000. If the transaction
contemplated by the Master Agreement closes, these payments
will constitute payment in full of the Recurring Charge and
certain other expenses due and payable as of August 5, 2002
through January 1, 2003 under the IRU Agreement and the
Amendment of Guaranty Agreement executed by the Debtor in
connection with the IRU Agreement on or about May 9, 2000.
2. Amendments of Various Agreements
At the closing of the transaction, the parties will execute
and deliver the Amendments amending the IRU Agreement and the
three Executory Contracts (contracts that the Debtor entered
into prepetition) -- the National Master Communications
Services Agreement, the Master Wavelengths Agreement, and the
Workout Agreement.
3. Termination
The Agreement may be terminated by either party if the Court
has not issued an order approving the Debtor's entry into the
Master Agreement by October 31, 2002, or if the transactions
have not closed on or prior to February 28, 2003.
In addition, the non-defaulting party may terminate the
agreement if the other party materially defaults, or if there
is a material misrepresentation, and the default is not cured
within three days following written notice of a payment
default and 30 days following written notice of other
breaches.
The Amended IRU Agreement
Pursuant to the IRU Agreement,
-- Level 3 LLC granted to XO Intercity an indefeasible right of
use with respect to certain fibers and an option to acquire
additional fibers. These fibers are an integral and
necessary component of the network operated by the Debtor's
subsidiaries.
-- XO Intercity agreed to pay to Level 3 LLC, among other
things:
a. amounts representing a contribution for the construction
of the fiber optic communications system, and
b. a Recurring Charge relating to XO Intercity's allocable
share of costs of maintenance of the network and certain
relocation costs. The annual cost of XO Intercity's
obligations for this Recurring Charge aggregates
$17,000,000.
Pursuant to the Guaranty, the Debtor guaranteed XO
Intercity's obligations under the IRU Agreement.
Amendment to the IRU Agreement provides for:
* a fixed Recurring Charge of $5,000,000 per year (regardless of
the actual maintenance and relocation expenses incurred by
Level 3) and the elimination of certain adjustments;
* the elimination of certain charges that XO Intercity is
required to pay to Level 3 LLC;
* XO Intercity's surrender of a conduit and certain fibers to
Level 3 LLC without refund by Level 3 LLC of any of the
contribution amounts previously paid by XO Intercity with
respect to the construction of the network;
* the grant of certain Tag-Along Rights to XO Intercity; and
* the grant of an option to XO Intercity, expiring on July 31,
2007, to acquire a 20-year IRU on one additional conduit.
The Amended NMCSA
Pursuant to the National Master Communications Services
Agreement, the Debtor or one of its non-debtor affiliates
provides to Level 3, on a non-exclusive basis, dedicated
"transport" services on the Debtor's network. The Debtor
provides connections from its points-of-presence to Level 3's
gateway facilities in various cities.
The NMSCA has a three-year term, and is renewed automatically
for successive one-year terms unless terminated by one of the
parties at least 60 days prior to the end of the one-year term.
Pursuant to the NMSCA, Level 3 pays to the Debtor recurring
charges and non-recurring charges based on the type of service
provided by the Debtor.
Amendment to the NMCSA includes:
* an extension of the term of the NMCSA through June 1, 2005;
* a requirement that Level 3 LLC pay all taxes relating to the
provision of services (other than income taxes on the Debtor's
net income);
* limiting services to Level 3 LLC to point-to-point private
line services; and
* a grant to Level 3 LLC of a $2.5 million credit that may be
applied to pay amounts owed by Level 3 LLC to the Debtor under
the NMSCA or any other amounts due to the Debtor or its
affiliates.
The Amended Master Wavelength Agreement
The Master Wavelengths Agreement is a five-year agreement that
grants the Debtor the right to obtain transparent, unprotected
virtual channels (or wavelengths) on the Level 3 network between
various "termination nodes" identified by the Debtor when it
places an order for a wavelength.
The Debtor submits non-binding capacity forecasts to Level 3 LLC
on a quarterly basis showing its anticipated need for capacity
during the following year. Upon the acceptance by Level 3 LLC
of any order by the Debtor for capacity upon any route, the
Debtor is granted an IRU of capacity in the route for the term
of the agreement.
Under the terms of the Master Wavelength Agreement, the Debtor
may terminate an IRU prior to the expiration of its individual
term. The Debtor receives a rebate credit for IRUs with an
initial term of more than five years that are terminated, and
the credit may be applied to purchase additional IRUs according
to applicable terms and conditions. Furthermore, the Debtor may
add or remove termination nodes at any time during the term of
the IRU in accordance with the terms and conditions contained in
the agreement. Level 3 LLC provides the Debtor with both
installation delay credits and service outage credits.
Amendment to the Master Wavelength Agreement includes:
* a clarification to the payment schedule for POM Charges
(Power, Operations and Maintenance charges);
* a reconciliation of POM Charges, as of May 1, 2002, owed by
the Debtor to Level 3 LLC and the setoff of this amount
against a certain amount owed by Level 3 LLC to the Debtor for
the purchase of certain transmission gear owned by the Debtor;
and
* a reconciliation of the amount owed by Level 3 LLC to the
Debtor on account of the transmission gear.
The Amended Work Out Agreement
Pursuant to the Workout Agreement:
-- The Debtor and Level 3 and certain affiliates agreed to
terminate a Trans-Atlantic Capacity Agreement;
-- The Debtor agreed to purchase Trans-Atlantic capacity through
a protected STM-4 circuit for a 15-month term;
-- The parties agreed to reduce the purchase price to be paid by
Level 3 to the Debtor, and thus the Debtor's credit, on
account of certain purchased equipment;
-- The Debtor agreed to purchase managed modem services from
Level 3 and to permit Level 3 to offset certain cancellation
charges assessed against Level 3 in an amount not to exceed
$750,000; and
-- Level 3 agreed to issue the Debtor an additional $6,000,000
in credits to be used equally towards the Debtor's purchases
of Level 3 managed modem services and wavelength services.
Amendment to the Workout Agreement includes:
* an increase in the unused $6,000,000 credit to $7,500,000,
which may be used by the Debtor in its sole discretion within
8 years to pay any invoices, including the Recurring Charge
under the IRU Agreement;
* a requirement that the Debtor purchase wavelength services in
the United States and Europe exclusively from Level 3 for a
five-year period upon competitive terms and prices, and if
Level 3 has sufficient capacity and the routed services that
The Debtor wants; and
* an acknowledgement of the Debtor's full payment of amounts due
and owing under certain agreements relating to the
construction of communication facilities in Boston,
Massachusetts. (XO Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
* DebtTraders' Real-Time Bond Pricing
-------------------------------------
Issuer Coupon Maturity Bid - Ask Weekly change
------ ------ -------- --------- -------------
Federal-Mogul 7.5% due 2004 18 - 20 -4
Finova Group 7.5% due 2009 28 - 30 -3
Freeport-McMoran 7.5% due 2006 89 - 91 0
Global Crossing Hldgs 9.5% due 2009 1 - 2 -0.5
Globalstar 11.375% due 2004 2.25 - 3.25 -0.25
Lucent Technologies 6.45% due 2029 31 - 33 -2
Polaroid Corporation 6.75% due 2002 5 - 7 -0.5
Terra Industries 10.5% due 2005 78 - 80 0
Westpoint Stevens 7.875% due 2005 30 - 32 0
Xerox Corporation 8.0% due 2027 39 - 41 -1
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
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2002. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $625 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***